Senate now debating Tester’s Wall Street reform amendment for rural banks
Senator: Don’t leave rural banks ‘holding the bag’ for Wall Street
(WASHINGTON, D.C.) – The U.S. Senate this afternoon is debating Senator Jon Tester’s bipartisan plan to make sure rural banks are not forced to pay more than their fair share for federal bank insurance.
Tester’s amendment—which he introduced just last week—is among the first being debated for the Senate’s landmark Wall Street reform bill.
“Small community banks make rural America run,” Tester said. “They don’t deserve to be left holding the bag for the risky behavior of big banks. When I think about the impact that the community banks have in my state and the role that they play—originating mortgages and providing small businesses and farms with credit—it pains me to see them suffer as a result of the risky behavior of larger banks.”
The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000. As the recession has forced hundreds of banks to close their doors, the FDIC’s resources have become strained. To ensure continued federal insurance, banks are being slammed with emergency assessments by the FDIC to make up for this shortfall.
Small community banks are being disproportionately affected by these costs, even though Montana’s community banks and credit union have played by the rules. Currently, community banks pay 30 percent of all FDIC premiums while holding only 20 percent of the nation’s banking assets.
Tester’s bipartisan amendment, cosponsored by Senators Kay Bailey Hutchison, R-Texas, and Scott Brown, R-Mass., would direct the FDIC to implement risk-based assessments when deciding how much a bank should pay in premiums, so that larger and riskier banks pay an appropriate amount.
“[Tester’s] amendment is fundamentally about fairness, which I think is one of its most important features,” said Senator Chris Dodd, Chairman of the Senate Banking Committee. “Community banks, as we all know, have been victims of severe economic recession brought on by the behavior of major Wall Street firms… This is a great help to community banks across the country, of which Senator Tester has been a champion since his arrival in the Senate.”
The amendment is available on Tester’s website HERE.