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The Small-bank Lobby Has A Point

From Monday's FT--on who should foot the bill for the sort of systemic risk regulator Obama and Geithner favor (which would have the authority to unwind various non-bank financial institutions):

The cost of the resolution authority and a proposed systemic risk regulator could be borne by both large banks and small, according to people involved, in spite of the entreaties from the hundreds of small US institutions that they should not pay a levy.

Cam Fine, chief executive of the Independent Community Bankers of America, said the authority “should be totally funded by those institutions that are regarded as systemically important or too big to fail”. He said he “felt pretty good about where we stand” and was confident of Mr Geithner’s support.

There may be a reasonable argument for why small banks, whose failures don't threaten the financial system, should pay to help unwind big, non-bank institutions whose failures do. But I can't think of one off the top of my head. After all, so far as I know, hedge funds, investment banks, and insurance companies don't pay premiums to the FDIC to help fund the unwinding of small banks.

--Noam Scheiber