Connecticut Senate Bill SB00980

Connecticut 2013 Regular Session

• Introduced: 2/27/13
• Refer: 2/27/13

Caption

An Act Concerning The Debt Security Limits For Connecticut Banks.

Impact

By updating Section 36a-275 of the general statutes, SB00980 will modify the legal framework surrounding how Connecticut banks can approach investing in debt securities. The new provisions will allow banks to invest in debt securities that are rated highly or deemed prudent by the bank’s governing board. Furthermore, it establishes a cap of 25% of total equity capital and reserves for any individual issuer of debt securities to mitigate risk exposure, thus protecting both the banks and their depositors.

Summary

Bill SB00980 proposes amendments to the existing law on the investment limits for Connecticut banks, specifically concerning their capabilities to purchase and hold debt securities and debt mutual funds. The bill aims to allow more flexibility in the types of debt securities that banks can invest in while imposing specific quantitative limits to ensure prudent investment practices. This move is expected to enhance the financial resilience of state banks, allowing them to optimize their portfolios in a changing financial landscape.

Contention

While proponents of the bill argue that it modernizes bank investment strategies and aligns with current financial best practices, there may be concerns from regulatory bodies about the potential risks involved with such investments. Critics might argue that increasing permissible investment types could lead to greater exposure to financial volatility. However, the bill seeks to balance investment opportunities with restrictions, aiming to enhance financial security without overstepping prudent investment guidelines.