Sen. Jerry Moran (R-Kan.) yesterday introduced an American Bankers Association-backed bill to replace current restrictions on brokered deposits with an asset growth restriction that ABA said better reflects today’s financial services environment. ABA described S. 3962—which would replace Section 29 of the Federal Deposit Insurance Act with limitations on asset growth, removing brokered deposit restrictions—as “a much-needed measure to ensure that banks of all sizes have access to a stable and diverse funding base, and are able to innovate to meet the needs and expectations of their customers.”
The association noted in a letter today that Section 29 has not been updated for more than 30 years, and as a result of technological and market changes, “a deposit classified as brokered [today] is labeled as such due to an outdated legal construct, rather than any enhanced risk characteristics.” Instead of relying on classification of deposits as brokered or not to prevent risk to institutions, ABA said that restricting asset growth at troubled banks promotes safety and soundness without “penaliz[ing] well-capitalized banks from using modern technologies to serve their customers and engage in the business of banking.”
