Executive Letter: Advocacy Win: FCC Allows Banks to Issue LOCs to Recipients of High-Cost Support Awards
By Rose Oswald Poels
In actions which first began back in February, WBA lead industry efforts to convince the Federal Communications Commission (FCC) of the need to revise rules which required banks to obtain a Weiss bank safety rating of B- or better in order to be eligible to provide a letter of credit (LOC) to recipients of FCC’s Rural Digital Opportunity Fund.
In those efforts, I am extremely proud to have been able to partner with other state banking associations to become engaged in these efforts and of the success in August of having 75 State Banking Associations join with WBA to file a coalition letter asking for FCC to revise their rules and eliminate the requirement for banks to maintain a Weiss bank safety rating of B- or better.
I am excited to report that in actions taken last week, FCC announced the elimination of the use of the Weiss bank safety rating as the standard for banks to be considered “acceptable to FCC” for the purpose of issuing qualifying program LOCs. FCC revised their rules to make a bank “acceptable to FCC” if it is a United States bank insured by FDIC that meets the criteria to be considered “well capitalized” as determined by FDIC, FRB, or OCC.
When future LOCs are submitted by FCC program recipients to demonstrate compliance with FCC rules, FCC will require a certification from a United States bank’s officer that the bank meets the criteria to be considered well capitalized by FDIC, FRB, or OCC. FCC will confirm the bank’s status on publicly-available metrics.
In addition, FCC did not expand the program to allow credit unions to participate as being “acceptable to FCC” under the program rules. FCC received this request during the open comment period of their rule revision process.
Often, results on the advocacy front can take a long time. However, thanks to the efforts of several WBA members who shared their insights with me regarding the matter earlier this year, WBA’s repeated advocacy, as well as broad industry advocacy, the FCC staff conducted a thoughtful and thorough review of their rules’ requirements and of the impacts of using an unreliable bank safety rating tool on the mission of their programs and on rural communities. Thanks to the actions by FCC, rural communities will continue to have the support of eligible telecommunications carriers and banks can continue to support their local carriers and communities while still protecting the integrity of FCC’s programs.
