ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release November 12, 2003 #03-55
E-mail: [email protected]

ACB TELLS CONGRESS FASB INTERPRETATION UNDERMINES CAPITAL RAISING BY COMMUNITY BANKS

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WASHINGTON, D.C. — America’s Community Bankers told Congress today that an interpretation by the Financial Accounting Standards Board may undermine the ability of community banks to raise capital by issuing trust preferred securities.

In a statement submitted to the Senate Securities and Investment Subcommittee, which is holding a hearing today, ACB said FASB’s FIN 46 threatens the status of $70 billion in bank capital raised since 1996, and makes it more difficult for community banks to raise new capital to better serve the financial needs of small businesses and their communities.

“It is unfortunate that a proposal to deal with clear accounting abuses by Enron could undermine a capital-raising technique that community banks have just begun to fully utilize,” ACB said.

ACB recently announced a partnership with Citigroup to offer community banks a cost-effective way to raise capital through the issuance of pooled trust preferred securities.

“ACB urges this subcommittee to continue exercising its oversight role over the Securities and Exchange Commission and FASB to help them avoid unintended and harmful consequences of their decisions, particularly ones that undermine financial techniques approved and overseen by federal banking regulators,” ACB said.

FIN 46 has called into question whether trust preferred securities can continue to be treated as Tier 1 capital. The Federal Reserve Board announced earlier that bank holding companies can continue to count trust preferred securities for up to 25 percent of Tier 1 capital pending a final interpretation by FASB.

Click here for ACB’s statement for the record.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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