Magazine article Independent Banker

Ending Too-Big-to-Fail

Magazine article Independent Banker

Ending Too-Big-to-Fail

Article excerpt

Too-big-to-fail-people everywhere are talking about it. Debated in Congress many times and acknowledged by President Obama, it has been widely reported throughout the news media during the financial markets crisis and recession. Today, average Americans are discussing it in their everyday conversations, in barbershops and beauty salons, on Web blogs and chat rooms, and across kitchen tables. Sometimes used interchangeably with "systemic risk," another contemporary catchphrase, too-big-to-fail has become part of our common vocabulary.

Just as important, Americans today appreciate the serious hazards and consequences of excessive financial concentration. They witnessed our whole economy being held hostage because of the reckless behavior of a few huge wayward Wall Street financial firms. They saw those giant institutions, instead of being held accountable, propped up with trillions in taxpayer money because they were too big to punish.

None of this is news to ICBA and the nation's community bankers. For over 20 years, ICBA has warned of the dangers of too-big-to-fail and excessive financial concentration, and now most Americans agree that the problem is real and that it must be dealt with. For community banks and Main Street America, this awareness and understanding is vital progress.

Once a banking industry insider's term, "too-big-to-fail" would not have registered with the average American citizen even three years ago. And not so long ago even top banking regulators and policymakers, despite conspicuous examples to the contrary, officially denied that it even existed. Of course, those regulators and policy makers were rationalizing the profound dangers they allowed to multiply steadily each year. Fortunately, that's no longer the case. Every top federal regulator and top policymaker, including Secretary Geithner, Federal Reserve Board Chairman Ben Bernanke and FDIC Chairman Sheila Bair, agrees too-big-to-fail is a real danger that must end. …

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