ICBA expressed support for a new bipartisan letter from members of Congress urging the Federal Housing Finance Agency to align its capital rules with those of federal banking regulators to avoid penalizing community banks for supporting local communities during the COVID-19 pandemic.
New Letter: The letter from Reps. David Scott (D-Ga.), Blaine Luetkemeyer (R-Mo.), French Hill (R-Ark.), Ann McLane Kuster (D-N.H.), and Sean Casten (D-Ill.) urges the FHFA to avert an unnecessary liquidity crunch that would be wholly attributable to outdated FHFA capital rules.
Background: While banking regulations dictate that banks do not need to recognize a loss until bonds are sold, the Federal Housing Finance Agency employs a "mark-to-market" accounting standard that requires banks to count losses that have not been realized in their capital calculations.
ICBA Recommendations: In a recent letter to the agencies, ICBA offered several approaches to resolve the impact of the agencies’ inconsistent regulations, including an FHFA interim final rule aligning its regulations on tangible capital with those of the banking agencies. Read more.
