The Independent Community Bankers of America (ICBA) is toasting the Government Accountability Office (GAO) for agreeing to examine the economic benefit that megabanks derive from their too-big-to-fail status.
In a news release Friday, the ICBA thanked the GAO for agreeing to study how banks with assets of $500 billion or more benefit from the belief that the government would not let them fail in a crisis. ICBA's chief executive, Camden Fine, said he was "encouraged" by the GAO's decision, and that the report will "help taxpayers better understand how these institutions affect our financial system and economy."
The ICBA also urged lawmakers and regulators to further address the issue. Doing so "will ensure that free-market principles apply across the entire financial system and address market distortions fostered by government involvement and subsidies of the largest megabanks," the ICBA said in the news release.
In late December, the Senate unanimously passed a bill put forward by Sens. David Vitter, R.-La., and Sherrod Brown, D-Ohio, calling on the GAO to study the issue. The House did not take it up, but the GAO announced this month that it would study the matter.
Vitter and Brown asked the agency in a Jan. 1 letter to examine specifically the favorable debt pricing and funding benefits that banks with $500 billion or more in total assets receive as a result of their actual or perceived backing from the federal government.
The GAO does not have an expected release date for the study, an agency spokesman said.