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ICBA Adamantly Rejects Senate Effort to Cut Off More Community Bank Income

ICBA called on key senators to oppose a proposal that would reduce the dividend that the Federal Reserve pays on the stock that banks are required to hold as members of the Federal Reserve System.

The proposal, which would use the proceeds to offset the cost of reauthorizing the Highway Trust Fund, would undermine a key agreement that has underpinned the U.S. banking system for 100 years, ICBA and a coalition of trade groups wrote in a letter to the Senate Environment and Public Works Committee.

The coalition noted that owning Federal Reserve Bank stock is not an investment choice but a legal mandate, one that also requires members to pay 6 percent of their capital to their regional Reserve Bank. Dramatically reducing the rate to pay for a completely unrelated congressional priority will weaken the financial stability of banking institutions and reduce liquidity in the financial system, the groups wrote. Read Coalition Letter.

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