Well, it is nice to win one (or two) for a change! The House Financial Services Committee has just completed its work on the systemic risk portion of the regulatory reform bill.
Two very important amendments were passed to help community banks. First and foremost, language was adopted to change the assessment base on FDIC deposit insurance premiums to assets minus capital in lieu of domestic deposits which will lower premiums for 8,122 community banks. If similar language is adopted in the Senate restructuring bill (and it is currently in the discussion draft), community banks can expect to save some 4 billion dollars over the next three year prepaid assessment period. That's 4 billion dollars of deposit insurance premium assessments that now will be transferred to systemically risky banks!
In addition, an amendment was adopted to raise the threshold of banks that would need to pre-fund a potential failure of a systemically risky bank from 10 billion to 50 billion which will exclude our regional banks from paying this onerous fee to help bail out the too big to fail banks.
All week, the ICBA and IBAT and other community banking organizations from across the country have lobbied in favor of these amendments. A Washington DC fly-in was held earlier in the week specifically to lobby these amendments.
While this is but one step in a very long process, it is an important one that demonstrates the grassroots power of the community bank specific lobby. The bill is now expected to go to the floor after Congress returns from the Thanksgiving recess.
Christopher L. Williston, CAE
President and CEO
Independent Bankers Association of Texas