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local edition SECONDARY MARKET For the fourth quarter, BEA's advance GDP report showed the economy had contracted 0.1 percent, but the final report showed the economy actually grew, albeit by just 0.4 percent, which was the weakest growth rate since the first quarter of first quarter from 1 percent in the fourth. The inflation measures take on added significance as the Federal Reserve said it would look to two measures—the unemployment rate and the inflation rate—to determine when to raise interest rates. One report says that the current banking culture will hinder progress in the American economy. WASHINGTON, D.C. // A new report from the Independent Community Bankers of America (ICBA) calls for an end to the "too-big-to-fail" banking culture the group says has been destructive to the American economy. According to ICBA's report—titled simply "End The M Report | 63 se c on da r y m a r k e t No Such Thing as Too-Big-to-Fail A na ly t ic s 2011. The 2.5 percent growth rate for the first quarter, while better than the fourth quarter, is slower than the 3.1 percent growth rate in the third quarter of 2012. In the first quarter last year, the economy grew 2 percent. The personal consumption price index—an alternate measure of inflation watched closely by the Federal Reserve—showed a 1 percent inflation rate in the last year compared with 1.6 percent in the fourth quarter. The core inflation rate—excluding more volatile food and energy prices—was 1.3 percent in the s e r v ic i ng In its efforts to end too-big-to-fail, ICBA endorsed the Terminating Bailouts for Taxpayer Fairness Act of 2013 Too-Big-To-Fail"—the nation's 12 largest banks hold nearly 70 percent of industry assets, "dwarfing the rest of the banking system and representing massive systemic risk." Citing remarks from Eric Holder, in which the attorney general admitted some institutions have too much influence in the global economy for them to be prosecuted, ICBA asserts that large banks use their estimated $83 billion annual subsidy to "unfairly compete, profit, and grow even larger, exacerbating industry consolidation." While banks now have to contend with increased regulation as a result of the fallout of the economic crisis, ICBA says the new guidelines are "nearly unworkable for community banks," further exacerbating the problem. "As we outline in the report, too-big-to-fail distorts free markets, incentivizes risky behavior, holds taxpayers hostage to bailouts, and creates unfair competitive advantages for the largest banks," said ICBA president and CEO Camden R. Fine. "But there is perhaps no greater reminder of the too-bigto-fail impact than the constant, oppressive regulatory burdens that community banks face on a daily basis." In its efforts to end toobig-to-fail, ICBA endorsed the Terminating Bailouts for Taxpayer Fairness Act of 2013, a debated bill introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-Louisiana) that establishes its own minimum capital requirements. "Banks should exist to serve the economy, to provide the credit and other financial services that help launch and expand businesses and create new jobs," ICBA said in the report. "A robust market for financial services helps consumers obtain home mortgages and other loans at competitive rates and on customized terms. When banks compete freely, consumers have access to a range of solutions for savings and investment." Or ig i nat ion Compared with the fourth quarter, total government spending is down $31 billion. The reduction in take-home pay didn't stop consumers. Personal consumption spending rose 3.4 percent in the first quarter compared with 3.2 percent in the original report and an 1.8 percent boost in the fourth quarter. Government spending was a drag on growth, subtracting 0.97 percent from GDP as the effects of the sequester began to kick in. That impact could be deeper in the second quarter, which will—absent any budget deal in Washington—reflect three months of sequester cuts, not just one. By the numbers, GDP rose a net $80.8 billion in the first quarter to just under $13.75 trillion. In the first GDP report a month ago, the quarterly increase was pegged at $84.7 billion. GDP itself, the broadest measure of the economy, is the sum of consumer spending, investment, and government spending, less net exports. Indeed, consumer spending accounted for the entire increase for the quarter—up $81.8 billion—as the combination of the drop in government spending and "net exports" offset consumer activity. Investment—including inventories and residential and non-residential structures—added another $42.1 billion. However, total investment, which had been estimated at $1.991 trillion in the first report, was revised downward to $1.977 trillion, with reduced estimates for inventory investment. That reduction suggests a slowdown in consumer activity in coming quarters. Residential fixed investment was essentially unchanged from the initial report at $397.3 billion, up $11.1 billion from the fourth quarter and $45 billion from the first quarter a year ago. BEA issues three GDP reports for each report. This one was the second "advance" report. The final first-quarter report will be issued on June 26, just four days before the second quarter ends.