New legislation would require GAO report on market distortions and risk by megabanks.
Washington, D.C. (Dec. 19, 2012) — The Independent Community Bankers of America (ICBA) released this statement following the introduction of legislation sponsored by Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio) directing the Government Accountability Office (GAO) to study potential market distortions caused by too-big-to-fail financial institutions. The requested GAO study would focus on financial institutions with more than $500 billion in consolidated assets.
“ICBA is encouraging the Senate to quickly advance legislation requiring the GAO to study the potential market distortions surrounding the nation’s largest megabanks. We should all want free-market principles to apply across the financial system and do everything possible to ferret out any market distortions fostered by government involvement and subsidies of the largest megabanks.
“After the financial crisis of 2008, policymakers should seek all available data to address and unwind too-big-to-fail market distortions. It would be shameful for anyone to block legislation designed to provide much-needed insight on how the nation’s largest and systemically risky institutions affect our financial system and economy. Directing the GAO to investigate whether these banks are able to raise funds more cheaply than smaller institutions and receive higher credit ratings due to their implicit government support will go a long way toward addressing these market distortions.
“We thank Sens. Vitter and Brown for introducing this important legislation, and we strongly urge senators to support this necessary measure.”
The Independent Community Bankers of America®, the nation’s voice for more than 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.