Washington DC has two lumps of coal for community banks this Christmas season. First, a group of Senators used a dubious conclusion from the Congressional Budget Office (CBO) to raise a procedural point of order to kill a two-year extension of the Transaction Account Guarantee (TAG) program. TAG was an emergency measure enacted at the height of the financial crisis to temporarily extend unlimited FDIC deposit insurance to all non-interest bearing accounts. This program leveled a very small piece of the playing field, allowing community banks to keep deposits that would otherwise flee to the safety of megabanks declared to be Systemically Important Financial Institutions. While community banks fought to extend this temporary guarantee, the megabanks cynically sought to have it eliminated, knowing that these deposits would eventually migrate to the safe harbor provided by Too Big To Fail status. In the end, some Senators hypocritically hid behind the same CBO that they excoriated during the healthcare debate in order to do the bidding of their masters on Wall Street, to the detriment of Main Street. Sure, the Senators who killed TAG will claim that they were looking out for the taxpayer by ending a crisis-era “bailout”, but in fact they were eliminating competition for a favored constituent group, the Too Big To Fail banks.

The second blow to community banks, and indeed to all Americans, was the decision by the Department of Justice to not pursue criminal charges against British banking giant HSBC for fostering money-laundering schemes on a massive scale. Instead, HSBC was allowed to pay a fine of $1.92 billion, which their enablers in the DOJ, Treasury Department and Congress trumpeted to show how “serious” they are about corruption. What a joke! A billion dollar fine is eye-catching, but in truth it amounts to only a few weeks earnings for a financial behemoth that measures its assets in the trillions. HSBC moved vast sums of cash for Mexican and Columbian drug cartels, and provided services for the likes of Iran, Sudan, Cuba and Libya. The management of HSBC defied a Cease and Desist order, yet they get off with a fine, albeit a rather large fine, because it was determined that arrests in the HSBC money-laundering scandal would threaten the stability of the financial system. Too Big To Fail, now these financial giants are Too Big to Jail! Meanwhile, community banks are under the gun from examiners to comply with the jots and tittles of the Bank Secrecy Act, lest their boards and officers face personal financial ruin from civil money penalties and criminal charges.

A dangerous relationship exists between Washington and Wall Street. Rules are written to allow the Too Big to just get bigger, and now the top ten banks control approximately half of all the deposits in the United States. Large banks routinely are involved in scandalous behavior, and then transgressions are lawyered down to manageable numbers that these megabanks consider the cost of doing business. Lawmakers and regulators react to public outcry with even more laws and regulations which are strangling community banks as they struggle to build mutually beneficial relationships on Main Streets across America.

Too Big To Fail. Too Big To Jail. The problem is obvious, but the solution demands the political will to break up these greedy and corrupt giants that threaten to engulf our financial system.

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