The Missouri Legislature passed a law in 2004 allowing banks to participate in the state’s college savings plan. The Missouri Bankers Association lobbied hard for the law, which it saw as a way to keep some of the money that was flowing into the mutual-fund-based Missouri Saving for Tuition program.

It sounded simple at the time: Banks would issue special certificates of deposit designed to conform to the special tax rules governing college savings. However, more than four years later, those CDs don’t exist.

The latest setback comes from the Securities and Exchange Commission. On Monday, it refused to issue a “no-action” letter that the Missouri Bankers Association had requested. Such a letter would have exempted the bank CDs from registration under securities laws, and exempted the banks from registering as securities dealers or investment companies.  These wouldn’t be ordinary bank CD’s, the SEC says, because 

… we note that the provisions of Section 529 of the Internal Revenue Code create rights and obligations different from the bank depository instruments.

The banks, in a 14-page letter written by LaDawn Naegle of St. Louis law firm Bryan Cave, say they would treat the college-savings accounts “like other deposits in the bank.” Many banks will be “unable or unwilling to participate” if they’re required to treating the accounts as securities, Naegle writes.

But since the SEC isn’t buying that argument, the banks won’t be selling their college-savings accounts any time soon.