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Last update: 07/23/14

ICBA Policy Resolutions for 2014
Track I: Legislation and Regulation

CORRESPONDENT BANKING

Position

  • ICBA welcomes and supports the vital and unique role that correspondent banks -- bankers’ banks and community banks offering correspondent banking services -- play in providing products and services tailored uniquely for community banks and their customers.

  • ICBA urges the federal banking agencies to avoid risk management requirements that would alter adversely the successful and long-standing correspondent banking relationships that mutually benefit community banks and their correspondents.

  • ICBA maintains ongoing relationships with federal banking agencies and Federal Reserve Financial Services to raise awareness and understanding of the correspondent banks serving the community banking marketplace.

  • ICBA supports Regulation D (Reserve Requirements of Depository Institutions) provisions that maintain a balanced and competitive marketplace between Federal Reserve Banks and private-sector correspondent banks.

Background

Regulatory scrutiny and oversight of bankers’ banks and other small correspondent banks should not impede the ability of these banks to continue providing the services community banks need to operate and prosper. Banking agencies should extend special consideration to this well-functioning business model when contemplating policies. Additionally, examiners should have a specific understanding of these correspondent banking models.

The Federal Reserve Board must not use its authority under Regulation D to develop programs and products for the purpose of conducting monetary policy that allow Federal Reserve Banks to compete unfairly with private-sector correspondents for respondent bank funds. Such action would be contrary to the Board’s long-standing posture of prescribing policies supporting a balanced and competitive marketplace between Federal Reserve Banks and private-sector competitors.

Staff Contact: Viveca Ware

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