The American Bankers Association on Friday raised several concerns about proposed changes to a Treasury Department program that invests in community development financial institutions and minority depository institutions so they can increase financial support to communities hard hit by the COVID-19 pandemic.
In August, the Treasury Department invited public comment on proposed guidelines for describing circumstances and processes under which it may sell an Emergency Capital Investment Program, or ECIP, investment to the issuer or any other entity. (ECIP investments take the form of preferred stock or subordinated debt issued by participating institutions.) In comments, ABA made several recommendations for improving what it viewed as flaws in the proposal.
Among other things, ABA worried that the guidelines narrowed the options for institutions that wish to exit the program. It instead urged the Treasury Department to remain consistent with congressional intent when establishing those requirements. The association suggested eliminating proposed thresholds for the sale or repurchase of an ECIP investment based on an institution’s past performance, saying performance metrics should look forward rather than backward. It also urged the department to maintain current capital treatment for ECIP investments, and it warned against new restrictions on nonprofit affiliates that CDFIs and MDIs use to support their operations.
