With folks at the Federal Reserve already reportedly concerned that the sale of ING Direct to Capital One could create another too-big-to-fail bank, a group representing the nation’s smaller banks has raised its voice in concern.
“It has been 14 months since the Dodd-Frank Act was passed and we still don’t have a regulatory apparatus in place to deal with those banks over $50 billion in assets,” said the Senior VP of the Independent Community Bankers of America at public Federal Reserve hearing on the CapOne/ING deal. “…and haven’t figured out an accurate way to measure their systemic risk.”
The ICBA has called for a moratorium on big-bank mergers until the Dodd-Frank rules are defined and in force, and that the Fed should not approve any big bank mergers until super-sized institutions have submitted their “living wills,” which would serve as blueprints for their dismantling in the event of failure. These documents are not expected to be handed over to regulators until mid-2012.
Capital One’s head of corporate reputation (yes, that’s an actual job title) defended the purchase of ING, which would make CapOne the fifth-largest U.S. bank by deposits:
Dodd-Frank is clear on a key point: There is no automatic finding of increased risk to our financial system in the event one institution acquires another, even if those institutions are relatively large.
Community banks call for halt on big-bank mergers [ChicagoTribune.com]