The Field Is Ours

OK, community bankers, it’s time for our industry to lace up our combat boots again and take the field together. We now face another monumental, must-win policy confrontation in Washington. This time Congress is taking a hard look at enacting further legislation to end too-big-to fail once and for all, and that’s great news for Main Street and for America.

Fortunately, with our industry on the offensive, the tide of opinion and constructive policy solutions has turned our way, and our momentum continues to build almost daily.

A critical jump-start to the too-big-to-fail debate in Congress was the introduction of the Terminating Bailouts for Taxpayer Fairness Act (S. 798) introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.). Designed to limit taxpayer exposures, protect against future crises and level the playing field for community banks, the TBTF Act would set minimum equity capital standards according to a financial institution’s size and complexity. The bigger the bank, the greater its systemic risk, the higher its minimum capital requirement would be.

That central prescription for addressing financial overconcentration is so practical, feasible and transparent that it’s scaring the daylights out of Wall Street’s risk management geniuses, who have been accustomed to dictating what’s supposedly safe and appropriate for their too-big-to-manage institutions. So of course the megabank lobby is desperately opposing this legislation, both publicly and behind the scenes, with all of its immense resources. This legislation, and just as ominously for them the momentum behind it, presents a huge threat to the megabanks’ preferential, can’t-lose hegemony in the financial marketplace.

So for Wall Street, and its half-dozen national financial trade groups, this will be an all-out fight, where virtually no political tactic will be off the table.

Nevertheless, ICBA has given its full and enthusiastic backing to the Brown-Vitter legislation, which was introduced while community bankers were visiting their congressional delegations during ICBA’s Washington Policy Summit in April. But fortunately the TBTF Act is only one bipartisan measure being discussed in Washington. Several other members of Congress, from House Financial Services Monetary Policy Subcommittee Chairman John Campbell (R-Calif.) to Sen. Bernie Sanders (I-Vt.), have introduced separate bills taking dead aim at too-big-to-fail. Even FDIC Vice Chairman Thomas Hoenig and Federal Reserve Bank of Dallas President and CEO Richard Fisher have introduced their own widely considered legislative plans.

Make no mistake, finishing off too-big-to-fail will take commitment. Grasping hold of this brass ring is far from guaranteed. But as a community banking industry we can do this. We’ve been in similar foxholes together before, and you’ve always responded with energy, passion, intelligence and integrity that have been overpowering and impossible to ignore. In this way, we’ve faced down Wal-Mart, mega-credit unions and Wall Street itself.

So put on your combat boots one more time. Let’s stay on the offensive and end too-big-to-fail. The momentum is ours to keep. Let’s finish the job for Main Street America and all Americans, current and future.