The American Bankers Association and several trade groups sent a joint letter to Treasury Secretary Janet Yellen on Friday, urging the agency to provide flexibility for Subchapter S and mutual banks on their closing timelines for participation in the Emergency Capital Investment Program.
The letter is a follow-up to feedback provided by ABA and the associations last year urging the Federal Reserve to uniformly waive the debt-to-equity leverage ratio and double leverage ratio for Subchapter S and mutual banks that are ECIP participants. To date, according to the trade groups, the Fed has failed to provide policy guidance on this matter. “By default, many affected individual banks have submitted requests for waivers from these policies through their respective regional Federal Reserve banks. Only a very small number have received responses while the large majority have requests pending,” the associations wrote.
Late last week, Treasury notified several banks that they were assigned to one of the two first ECIP closing windows. These banks are still waiting for a response from their regional Federal Reserve banks.
“ECIP promises to be transformative to participating institutions and the communities they serve,” the associations wrote, noting that they are “well aligned with Treasury” in wanting to make the program successful. “Yet, we believe the unnecessarily rushed closing process, coupled with the ultimatum to select a final investment amount while waiver requests are pending, and rigid closing dates place undue stress on the small institutions that are eager to participate in the program.”