Better Markets filed a Comment Letter with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board in response to the joint notice of regulatory review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
Why It Matters. EGRPRA requires the Federal Financial Institutions Examination Council (Council) and the financial regulatory agencies to periodically review all regulations prescribed by the Council. At least every 10 years, the banking regulators provide public notice and solicit public comment. The public is asked to identify areas of the regulations that are outdated, unnecessary, or unduly burdensome. In this review, the regulators aske for comment on regulations in three categories:
- Rules of Procedure,
- Safety and Soundness, and
- Securities.
What We Said.
- First, we support holding large banks accountable for having strong living wills and recovery plans. These do not add regulatory burden or cost to community banks and therefore should not be weakened.
- Second, it was a mistake to stop the rulemaking that would have closed dangerous loopholes in the brokered deposit rules because these deposits can increase the likelihood and cost of bank failures. The banking regulators should reinstate the 2024 rulemaking to protect the safety and soundness of the banking industry and reduce the severity of a future banking crisis.
- Third, the banking regulators should strengthen liquidity requirements to increase the largest banks’ ability to withstand periods of higher liquidity outflows.
Bottom Line. Financial regulations are vital to protect Main Street Americans and financial stability. Community banks unquestionably benefit by maintaining strong rules and regulations for large and complex banks. This approach results in a stronger and more stable economy and financial system. Better Markets welcomes this opportunity to contribute to the review of these regulations and encourages the Agencies to implement changes as soon as practicable.
