Making capital investments in minority depository institutions (MDIs) and community development financial institutions (CDFIs) through a new program of the Treasury Department is supported in an interim final rule issued Tuesday by the federal banking agencies.
According to the agencies – the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) – the interim rule revises the agencies’ capital rules to provide that Treasury’s investments under the Emergency Capital Investment Program (ECIP) qualify as regulatory capital of insured depository institutions and holding companies.
The rule is effective immediately upon publication in the Federal Register (yet to occur); a 60-day comment period opens then as well, the agencies said.
In a joint release, the three agencies said they stand behind the Treasury’s ECIP, which is focused on supporting financial institution efforts to provide loans, grants and forbearance to small businesses, minority-owned businesses and consumers “especially in low-income and underserved communities, which may be disproportionately affected by COVID-19.”
Under the program, the agencies said Treasury will purchase preferred stock or subordinated debt from qualifying MDIs and CDFIs. Corresponding dividends or interest rates will be based on the institution meeting lending targets, according to the agencies.