The Bank Policy Institute (BPI) has expressed support for the Federal Deposit Insurance Corporation’s (FDIC) recent proposal to adjust regulatory thresholds for inflation. In a comment letter, BPI stated that this move is a step toward creating a regulatory framework that more accurately reflects the size, complexity, and risk profile of banks.
The FDIC’s proposal could also serve as a foundation for future interagency efforts to automatically update key prudential regulatory thresholds. BPI recommended that these thresholds be indexed to nominal gross domestic product (GDP) rather than just inflation.
Sarah Flowers, BPI Senior Vice President and Head of Capital Advocacy, commented: “This proposal takes a step in the right direction, but the goal of aligning regulatory thresholds with a growing economy requires further action from all the banking agencies. As the overall economy grows, so do bank assets, but that doesn’t mean banks are increasing in risk. Rather than being frozen in time, periodic adjustments to account for inflation would help prevent needlessly saddling smaller institutions with additional safeguards that interfere with their ability to deploy capital and serve their communities.”
BPI describes itself as a nonpartisan public policy, research and advocacy group representing universal banks, regional banks and major foreign banks operating in the United States. The organization conducts academic research on regulatory and monetary policy issues and represents the financial services industry on matters such as cybersecurity and information security.
For more information about this issue or to access related materials, contact Tara Payne at tara.payne@bpi.com.