ICBA and other groups called on the Treasury Department to exercise flexibility in Emergency Capital Investment Program participation.
Lack of Clarity: In a joint letter, the groups noted that several Subchapter S banks have been assigned to one of the first two ECIP closing windows even though Sub S and mutual banks have not received clarity on the terms of the program.
Troubled Terms: Because these institutions are limited to receiving subordinated debt—rather than preferred equity—they are heavily disfavored under the terms of the program, which will provide more than $8.7 billion in investments to minority and community development financial institutions.
No Response: The groups previously urged the Fed to address the problem by creating ECIP-specific exceptions for S-corps and mutuals, but the Fed has not provided policy guidance. Further, many affected banks that have requested waivers from their reserve banks have not heard back.
Bottom Line: “We strongly urge the Treasury to recognize the unique circumstances of each bank seeking to participate in ECIP,” the groups said. “We ask that Treasury make every effort to grant any requests by these recipients for additional time and/or accommodations during the closing process.”
