Joint ABA and State Bankers Associations Letter to the FDIC on Adjusting and Indexing Certain Regulatory Thresholds

Dear Sir or Madam,

The American Bankers Association and the undersigned bankers associations appreciate the opportunity to comment on the Federal Deposit Insurance Corporation’s (FDIC) proposal (the proposal) to adjust and index certain regulatory thresholds. The proposal would amend certain regulatory thresholds to reflect inflation from the date of initial implementation, or the most recent adjustment, and provide for future adjustments pursuant to an indexing methodology.

We support the FDIC’s proposal to adjust and index the regulatory thresholds under its statutory authority, including those in 12 CFR Part 363. This initiative represents a long-overdue modernization of a regulatory framework that has not kept pace with economic growth, the evolving structure of the banking sector, or inflation. We commend the FDIC for taking this important step toward aligning regulatory coverage with real-world conditions.

However, we strongly encourage the FDIC to consider methodological changes to ensure that indexing mechanisms are appropriately tailored to the nature and purpose of each threshold. Specifically, we urge the agency to reconsider the application of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to asset-based thresholds.

To better preserve the original intent of asset-based thresholds, nominal Gross Domestic Product (GDP) would serve as a more suitable alternative. Indexing to nominal GDP would help ensure that asset thresholds remain proportionate to the size of the broader economy (see page 3). At the same time, we support the use of CPI-W or a comparable price index for consumer-facing dollar-based thresholds. These thresholds are more appropriately tied to general price levels and consumer inflation.

We view this proposal as a critical first step and encourage the FDIC to continue pursuing indexing efforts internally, through interagency coordination, and in collaboration with Congress.

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