Arrington Leads Republican Colleagues in Letter Supporting Community Banks During Instability

This week, Rep. Jodey Arrington (TX-19) led eleven of his Republican colleagues in sending a letter to U.S. Secretary of the Treasury Janet Yellen expressing concerns about potential disproportionate impacts of recent regulator actions on small community banks across the country. The signers agreed that lenders who provide credit and capital to our communities should not be punished for poor risk management by the few and significant failures by regulators.

An excerpt of this letter is included below:

“Community banks play a critical role in driving our economy and provide necessary deposit and lending services. We are deeply concerned the actions taken to support financial institutions that were irresponsibly managed and inadequately overseen by state and federal regulators will have a disproportionate impact on community banks, particularly those which are well-managed, in the form of high special assessments and/or increased premiums to the DIF, or other penalties.”

Background

• Small banks are a crucial part of supporting rural America. The FDIC’s 2020 Community Banking Study showed that while community banks accounted for just 15 percent of the banking industry’s total loans, these smaller lenders held 36 percent of small business loans and 70 percent of agriculture loans.
• When a bank fails, the FDIC’s Deposit Insurance Fund (DIF) pays depositors for their losses. Banks pay fees and premiums to replenish the fund—regardless of whether or not they are well-managed or well-regulated.

Full text of the letter can be found here.