In wake of recent issues with First Republic and Silicon Valley Bank, community bank leaders tell FOX Business that sharing the financial burden with larger institutions is unfair.
The deal comes after big banks received an influx of billions of deposits from midsize lenders, including First Republic, over the past week in the wake of the collapse of SVB. are arguing the nation’s 4,235 community banks should not have to pay for the mistakes of SVB.
"The real question here is ‘how is this paid for?’" said Independent Community Bankers of America CEO Rebeca Romero Rainey. "We believe it should not be paid for by the taxpayers, and we believe it should not be paid for by community banks. This should be paid for by the largest, riskiest institutions that really are very different from what community banking is.
Community bank leaders tell FOX Business that sharing the financial burden with larger institutions is unfair. They say those costs come like any other expense on their companies, which impacts profitability and undermines the ability to attract capital used to support new lending going forward. Higher FDIC insurance would also be levied against depositors.
"It’s circular," Peapack-Gladstone Bank CEO Doug Kennedy said. "While it’s not directly hitting the client, it does factor into the viability of our company to be able to provide a competitive return on capital."
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