WASHINGTON — The federal banking agencies have been assessing the
exposures of banks and thrifts to Fannie Mae and Freddie Mac. The agencies
believe that, while many institutions hold common or preferred shares of these
two government-sponsored enterprises, a limited number of smaller institutions
have holdings that are significant compared to their capital.
The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office
of the Comptroller of the Currency, and the Office of Thrift Supervision are
prepared to work with these institutions to develop capital-restoration plans
pursuant to the capital regulations and the prompt corrective action provisions
of the Federal Deposit Insurance Corporation Improvement Act.
All institutions are reminded that investments in preferred stock and common
stock with readily determinable fair value should be reported as
available-for-sale equity security holdings, and that any net unrealized losses
on these securities are deducted from regulatory capital.
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