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Home > News & Events > Press Releases

Joint Press Release
October 17, 2008

Agencies Announce Decision on Regulatory
Capital Impact of Emergency Economic
Stabilization Act of 2008 on Fannie Mae and
Freddie Mac Preferred Stock
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
For immediate release
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The federal banking and thrift regulatory agencies announced today that
they will allow banks, bank holding companies, and thrifts (collectively,
"banking organizations") to recognize the effect of the tax change
enacted in Section 301 of the Emergency Economic Stabilization Act of
2008 (EESA) in their third quarter 2008 regulatory capital calculations.
Section 301 of EESA provides tax relief to banking organizations that
have suffered losses on certain holdings of Federal National Mortgage
Association (Fannie Mae) and Federal Home Loan Mortgage
Corporation (Freddie Mac) preferred stock by changing the character of
these losses from capital to ordinary for federal income tax purposes.
However, because the EESA was not enacted until October 3, 2008,
banking organizations will not be able to recognize the tax effects of the
ordinary losses resulting from Section 301 of EESA in financial
statements prepared in accordance with generally accepted accounting

principles until the fourth quarter of 2008. Today's decision by the
agencies will allow banking organizations to recognize the economic
benefits of the change in the tax treatment of losses on Fannie Mae and
Freddie Mac preferred stock under Section 301 of the EESA in the third
quarter of 2008 for regulatory capital purposes.
The agencies plan to provide regulatory reporting instructions to banking
organizations describing how the effect of the tax change enacted in
Section 301 of EESA should be reflected in the measurement of
regulatory capital in their regulatory reports for September 30, 2008.

Media Contacts:
Federal
Reserve
FDIC
OCC
OTS

Deborah
Lagomarsino

202-4522955
202-898David Barr
6992
202-874Kevin M. Mukri
5770
202-906William Ruberry
6677

Last Update: October 29, 2008

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