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America’s Community Bankers has strongly supported the initiative of the Office of Thrift Supervision to free savings associations from unnecessary burdens by eliminating restrictions on repurchase obligations through a direct final rulemaking procedure.

ACB said it agreed with OTS that the existing regulation is unnecessary and overly burdensome on savings associations. Other depository institutions do not face similar restrictions.

ACB said that eliminating the regulation would help savings associations remain competitive by allowing them to offer sweep accounts to accommodate the cash management needs of their business customers. While savings associations have the authority to offer sweep accounts, many smaller associations must use repurchase agreements to do so rather than other methods.

The current regulation prohibits savings associations from issuing repurchase agreement obligations in amounts under $100,000 and with a maturity of 90 days or more, unless the obligation is issued to an FDIC-insured institution or a broker or dealer registered with the Securities and Exchange Commission.

Last November, America’s Community Bankers petitioned OTS to repeal the regulation. The direct final rule will automatically become effective on May 30, unless significant adverse comments are received.