Bill Overview
Title: Asset Growth Restriction Act of 2022
Description: This bill repeals restrictions related to brokered deposits and provides for asset growth restrictions applicable to insured depository institutions. Brokered deposits are deposits made to an insured institution, such as a bank, through a third-party broker for investment purposes. Currently, only well-capitalized banks are allowed to solicit and accept brokered deposits, while institutions that are adequately capitalized may accept if granted a waiver. Undercapitalized banks are prohibited from accepting these deposits. The bill repeals these brokered deposit restrictions and directs the Federal Deposit Insurance Corporation to establish limits on growth of average total assets for less than well-capitalized institutions to maintain their safety and soundness.
Sponsors: Sen. Moran, Jerry [R-KS]
Target Audience
Population: Individuals using brokered deposits
Estimated Size: 16500000
- The bill impacts insured depository institutions that participate or wish to participate in brokered deposits as it repeals existing restrictions.
- Currently, there are around 4,500 FDIC-insured depository institutions in the U.S., including banks and thrifts.
- The bill will specifically impact less than well-capitalized institutions by imposing asset growth restrictions, affecting their operational strategies.
- Well-capitalized banks may see more competition from less than well-capitalized institutions due to the removal of restrictions on brokered deposits.
- The change in law will indirectly impact depositors and investors who use brokered deposit services, although they may not experience direct regulatory changes.
- Any changes in bank operations might affect clients seeking investment products from affected banks.
Reasoning
- The policy mainly impacts institutions that participate in or wish to use brokered deposits, thus affecting their business operations and service offerings to clients.
- About 450 of the approximately 4,500 FDIC-insured banks are less than well-capitalized and will directly deal with asset growth restrictions, impacting their financial strategies and depositor offerings.
- The population characteristics include high reassurance among well-capitalized banks but potential mixed impacts on smaller or riskier institutions.
- There could be heightened competition for client funds, which can affect the interest rates offered to depositors connected to these banks.
- Individuals who have accounts with or investments tied to banks with depository brokers will feel the indirect effects, such as changes in interest rates or investment growth opportunities.
- The selected interviewees will cover a range of such individuals, from institutional clients to regular bank customers with brokered deposits.
- Considering the budget allocation, ongoing evaluations will monitor the effects over the next few years, ensuring that the policy limits negative impacts while promoting bank stability.
Simulated Interviews
Bank Manager (New York, NY)
Age: 42 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Removing brokered deposit restrictions could open opportunities for undercapitalized banks to attract more deposits.
- Asset growth restrictions pose challenges to expanding our portfolio sustainably.
- This policy could help stabilize financial health, but careful management of asset growth is crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 4 |
| Year 20 | 7 | 3 |
Financial Advisor (Chicago, IL)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This policy might adjust the dynamics of products I can recommend to clients.
- Could see broader options but also increased competition between financial institutions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Investor (Austin, TX)
Age: 56 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I am curious about how these changes might impact my investment returns from brokered deposits.
- There could be potential benefits from improved rates but I remain cautious.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Retired (San Francisco, CA)
Age: 65 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I'm concerned about the steadiness of income from my brokered deposits due to these regulatory changes.
- Any variation in interest rates could impact my retirement income.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 6 | 8 |
| Year 20 | 5 | 7 |
Tech Entrepreneur (Los Angeles, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 6/20
Statement of Opinion:
- Changes might offer better deposit terms for my business accounts.
- However, asset growth restrictions at my bank concern me regarding access to new products.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
College Professor (Miami, FL)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 3/20
Statement of Opinion:
- This policy update sparks a fascinating conversation on regulatory balance in banking.
- I see limited direct impact on my personal finances, focus may be more scholarly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Real Estate Investor (Houston, TX)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- Increased opportunities but with asset caps might demand revised financial tactics.
- Seeing how my bank reacts will affect future investment decisions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Small Business Owner (Boston, MA)
Age: 61 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- Restrictions removal is a relief but growth caps are worrying.
- Access to reliable financial products is essential for my business continuity.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Graduate Student (Atlanta, GA)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- These changes offer intriguing case studies for my coursework.
- Minimal immediate effect on my financial planning but curious academically.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Financial Regulators (Seattle, WA)
Age: 48 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 2/20
Statement of Opinion:
- This law poses new challenges in monitoring financial institutions at the state level.
- Efficiency in its execution needs our close watch and guidance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $2500000 (Low: $2000000, High: $3000000)
Year 2: $2000000 (Low: $1500000, High: $2500000)
Year 3: $2000000 (Low: $1500000, High: $2500000)
Year 5: $2000000 (Low: $1500000, High: $2500000)
Year 10: $2000000 (Low: $1500000, High: $2500000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Monitoring the impact on banking stability and ensuring new asset growth regulations are not overly burdensome.
- Ensuring fair competition in the deposit market as the restrictions on brokered deposits are lifted.
- Evaluating the macroeconomic impacts on growth and stability due to shifts in bank practices.