The American Bankers Association (ABA) has been implicated in the recent veto of the controversial SAB 121 Bill by President Biden. A new revelation suggests that the ABA played an unusual role in this decision, as it was discovered that the association wrote a letter to President Biden appealing for the veto.

The H.J. Res.109 Challenge to the SEC's SAB 121

The content of the ABA's letter includes a request for President Biden to sign H.J. Res.109 into law. This resolution is a Congregational Review Act that aims to disapprove the Securities and Exchange Commission's (SEC) "Staff Accounting Bulletin 121." The letter highlights that H.J. Res. 109 was introduced by some of the strongest bipartisan lawmakers in the country, including Senator Cynthia Lummis, Rep Mike Flood, and Rep Wiley Nickel.

Contestable Positions of SAB 121

One of the main contestable positions of SAB 121 is that it mandates banks to include customers' crypto assets on their balance sheets. This move has been opposed by several high-profile representatives, including Senators Cynthia Lummis, Kirsten Gillibrand, Patrick McHenry, French Hill, Ritchie Torres, Mike Flood, and Wiley Nickel.

The SEC released the SAB 121 motion in March 2022 without seeking or consulting with the appropriate authorities or asking for public comment. This action led to strife in the market and prompted legislators to team up to repeal the SEC SAB 121, arguing that the Commission needed to pass through Congress before going forward with the policy. Their efforts birthed the H.J. Res.109, which seeks to overturn SAB 121. However, President Biden has now placed a veto on the proposed legislation.

Lawmakers and ABA Urge Reconsideration of the Veto

Lawmakers have immediately urged President Biden to reconsider his decision to veto H.J. Res.109, citing the overwhelming bipartisan votes and recognizing the SEC's amending or rescinding powers of the bulletin. The ABA's letter to President Biden is seen as the association's way of lending its voice to the repeal already made by these U.S. lawmakers. The ABA highlighted that SAB 121 reflects a significant departure from longstanding accounting treatment for custodial assets and threatens the industry's ability to provide its customers with sound custody of digital assets.