WASHINGTON, D.C. — U.S. Sens. Johnny Isakson, R-Ga., and Saxby Chambliss, R-Ga., met with federal bank regulators Thursday to demand answers for Georgia banks on the delays in processing applications for funds from the Troubled Asset Relief Program authorized by the Emergency Economic Stabilization Act.
“Georgia banks are being left in the dark by the federal government concerning the TARP funds and regulators are aggravating an already complex situation,” Isakson said. “There must be more transparency in this process and I wanted to make sure the federal government understands the difficulty Georgia’s banks are facing.”
“Banks from all across Georgia have expressed their concerns with the complex application process for TARP funds,” said Chambliss. “Treasury and the regulators need to shed some light on these complex programs and provide greater transparency into their application process.”
During the meeting with officials from the Department of Treasury, Federal Reserve, FDIC, Comptroller of the Currency and Office of Thrift Supervision, Isakson and Chambliss also addressed the lack of transparency in the application process for the Troubled Asset Relief Program as well as the lack of information available regarding the status of an individual bank’s application. The senators also discussed the significant stress Georgia banks will face under the FDIC’s plan to impose a one-time $15 billion increase in insurance fees collected from the nation’s banks.
Isakson and Chambliss expressed their concern that mark-to-market accounting rules are disproportionately penalizing the people they serve. Given the declines our nation has seen in the mortgage-backed securities and in real-estate, mark-to-market has caused tremendous problems for our nation’s banks. Isakson and Chambliss believe mark-to-market rules should be replaced with a mechanism of amortization or “smoothing” to absorb the assets over time. This will allow the absorption of those assets over time to be more reflective of reality and less reflective of the dire straits that our nation is currently in today.
“This is devastating to our bankers as real estate is absorbed over time and not in one fell swoop. Mark-to-market should not be an arbitrary write-down to zero, it should be a recognition of the transition of values in a down market or in an up market,” Isakson said. “This issue hits at the heart of residential real estate construction lending thereby further crippling our economy from returning to a prosperous nation.”
“It is paramount to continue to stabilize the banking industry in order to enable housing construction, home mortgages, car loans, working capital for small businesses, and the other services that community banks provide every day for their customers and communities,” said Chambliss.
“Reforming mark-to-market regulations would be a significant step towards this objective and would begin to re-open the free flow of capital that is necessary for our economic recovery.”