Thanks Mary and Jonathan for writing this timely article.
Every banker should recognize the systematic paralysis arising from this out-of-date regulation and interpretation. It is obvious that any bank today that has to deal with the unrealistic expectations of being forbidden to pay above 1.30% on a 12-month CD while they could simultaneously invest those deposits in a 12-month at 2.66%. They would be forbidden to pay more than 136 basis point below US Treasuries! This is a broken regulatory infrastructure. It needs to be addressed immediately.
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Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 11-14-2018 12:19
From: Mary Fowler
Subject: Rate cap rules threaten efforts to serve the underbanked
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Every banker should recognize the systematic paralysis arising from this out-of-date regulation and interpretation. It is obvious that any bank today that has to deal with the unrealistic expectations of being forbidden to pay above 1.30% on a 12-month CD while they could simultaneously invest those deposits in a 12-month at 2.66%. They would be forbidden to pay more than 136 basis point below US Treasuries! This is a broken regulatory infrastructure. It needs to be addressed immediately.
------------------------------
Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 11-14-2018 12:19
From: Mary Fowler
Subject: Rate cap rules threaten efforts to serve the underbanked
Our CFO (who is also my son) wrote this article which went up on BankThink today:
https://www.americanbanker.com/opinion/fdics-rate-caps-threaten-efforts-to-serve-the-underbanked
The rate cap rule has a disparate impact on the customers of banks who serve a net-borrower customer base. Many times these banks, like ours, serve the underbanked, low income, middle income, minority, and ethnic populations. Economic inclusion is being restricted by outdated rules.
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