Washington, D.C. – The Bank Policy Institute (BPI) has voiced support for the Federal Deposit Insurance Corporation’s (FDIC) initiative to update regulatory thresholds in response to inflation and broader economic shifts. In a formal comment letter submitted today, BPI emphasized that aligning prudential standards with current economic conditions would create a more accurate reflection of institutional risk, size, and complexity. The organization highlighted that such adjustments could serve as a foundation for future interagency efforts to implement automatic recalibrations of key regulatory benchmarks. As a central recommendation, BPI proposed linking these thresholds to nominal GDP growth rather than inflation alone, arguing it offers a more comprehensive measure of economic expansion.\n\n”This move is a positive step forward, but full alignment with a growing economy demands coordinated action across all banking regulators,” said Sarah Flowers, BPI Senior Vice President and Head of Capital Advocacy. “As the national economy expands, bank assets naturally increase—not necessarily due to higher risk, but because of macroeconomic trends. Regulatory requirements that remain static over time may impose unnecessary burdens on smaller institutions, limiting their capacity to allocate capital efficiently and serve local communities.”\n\nBPI warned that outdated thresholds risk misclassifying institutions as systemically significant when they pose no such threat, potentially triggering compliance obligations disproportionate to actual risk. Indexing to nominal GDP, the group argues, would provide a more dynamic and equitable framework, ensuring regulations evolve alongside the financial landscape.\n\nFor further details, refer to BPI’s accompanying policy brief.\n\n— news from Bank Policy Institute\n\n— News Original —\nBPI Supports FDIC Proposal to Adjust Regulatory Thresholds for Economic Changes\nWashington, D.C. – The FDIC’s proposal to adjust regulatory thresholds for inflation marks progress toward a bank regulatory framework that better reflects a bank’s size, complexity and risk profile, the Bank Policy Institute said in a comment letter submitted today. The proposal could also lay the groundwork for future interagency initiatives to automatically adjust important prudential regulatory thresholds. As a key recommendation, BPI calls for indexing prudential regulatory thresholds to nominal GDP rather than inflation. n n“This proposal takes a step in the right direction, but the goal of aligning regulatory thresholds with a growing economy requires further action from all the banking agencies. As the overall economy grows, so do bank assets, but that doesn’t mean banks are increasing in risk. Rather than being frozen in time, periodic adjustments to account for inflation would help prevent needlessly saddling smaller institutions with additional safeguards that interfere with their ability to deploy capital and serve their communities.” – Sarah Flowers, BPI Senior Vice President and Head of Capital Advocacy n nTo learn more about this issue, see the factsheet below. n n### n nAbout Bank Policy Institute n nThe Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.
