Washington, D.C. — Bank Policy Institute SVP and Senior Associate General Counsel Tabitha Edgens issued the following statement on today’s speech at a Brookings Institution event by FDIC Chairman Martin Gruenberg:
Notably absent from Chairman Gruenberg’s speech today was any discussion of the costs of imposing a long-term debt requirement on regional and midsize banks, which seems highly relevant given that these banks are already facing significant deposit funding cost increases. With this proposal, the government will be forcing a large supply of bank debt into the market, but it’s unclear whether there is going to be sufficient demand for it, meaning this proposal could end up doing more harm than good. Furthermore, indiscriminately requiring midsize and regional banks to meet the same “capital refill” long-term debt standard as GSIBs also undermines Congress’s determination in S. 2155 that prudential requirements should be tailored to the risk an institution presents.
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The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
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