ICBA pushback on FHFA capital standards rules makes headlines

Oct. 24, 2022

ICBA’s joint letter urging the Federal Housing Finance Agency to align its capital standards with federal banking agencies was covered in PoliticoPro, American Banker, and Housing Wire.

Regulatory Inconsistencies: In a joint letter, ICBA, its affiliated state associations, and other banking organizations said the FHFA’s capital restrictions on accessing Federal Home Loan Bank advances threatens to transform the short-term market decline in bond prices into a longer-term problem for the banking system if the agency doesn’t update its standard to match banking regulators’ accounting requirements.

Proposed Fix: To ensure the FHFA is using the most up-to-date capital definition ICBA and others called on the agency to issue an interim final rule aligning its regulations on tangible capital with relevant FDIC regulations regarding Tier 1 capital.

More: In a new blog post, ICBA’s Anne Balcer noted the consequences of uncoordinated regulatory standards could endanger community banks’ ability to lend to local customers.

Agency Obligation: “The financial regulators have the power and obligation to fully mitigate the consequences of the federal response to the pandemic and its economic consequences,” Balcer said. “Just like the regulators took swift action and worked with community banks to respond to the pandemic, they can now ensure that these same institutions are not penalized as a result.”