Banking agencies issue statement regarding capital impact of Fannie, Freddie lossesMortgagePress.comFannie Mae, Freddie Mac, OCC, Emergency Economic Stabilization Act of 2008,
On Oct. 24, the federal banking agencies issued an interagency
statement regarding the tax relief provisions of the Emergency
Economic Stabilization Act of 2008 (EESA).
Section 301 of EESA provides for tax relief for financial
institutions by treating losses in the sale of the Federal National
Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage
Corporation (Freddie Mac) preferred stock as ordinary losses,
rather than capital losses, for federal tax purposes. The statement
permits financial institutions to adjust the tax effects associated
with the sale of Fannie Mae and Freddie Mac preferred stock as if
Section 301 of EESA had been enacted in the third quarter of 2008,
and reminds financial institutions to continue to follow generally
accepted accounting principles for the purposes of third quarter
regulatory report balance sheets and income statements.
The statement includes detailed appendices to assist different
types of banking organizations with reporting the effect of the
change in the tax treatment of such losses, and also allows banking
organizations that have already filed their regulatory reports for
the third quarter of 2008 to submit amended regulatory reports.
For a copy of the statement, click here.