WBA Files Reply Comments on FCC Weiss Bank Safety Rating Requirement

Earlier this week, WBA filed a second comment letter with FCC regarding the agency’s requirement that a bank obtain a Weiss bank safety rating in order to be eligible to provide a letter of credit (LOC) to recipients of FCC’s Rural Digital Opportunity Fund. This second letter was a reply comment letter in which WBA responded to other comments filed with FCC regarding the matter.  

In reviewing the record of filed comments with the FCC, nearly all are in support of eliminating the Weiss bank safety rating requirement altogether. It is the consensus of the majority of commenters that the Weiss bank safety rating is one that can no longer be relied upon. Indeed, WBA along with 74 other banking associations, the ABA and ICBA, noted the lack of transparency and questionable research as two concerns among others in continuing to rely on the Weiss organization.  

WBA also pointed out that there is nothing substantive in the letter filed by the Weiss organization that was responsive to the concerns raised by many regarding the ongoing use of the rating. Furthermore, there is nothing in the statement filed by Weiss to provide any insight into how they arrive at their bank safety ratings. Instead, the letter confuses and misdirects readers citing decades-old unrelated research and events. 

In the reply letter, WBA repeated the recommendation that FCC discontinue any further use of any Weiss bank safety rating requirements. WBA restated its belief that existing bank regulatory structure and supervision of banks provides FCC with strong assurance that banks that issue a LOC do not present risk of failure. WBA also repeated its alternative suggestion that if FCC insists on retaining some verification method as part of its bank eligibility rules, FCC should allow banks to qualify in one of two ways: have a rating issued by a nationally recognized statistical rating organization that is equivalent to a BBB- or better rating by Standard & Poor’s, or provide an affidavit signed by an officer of the issuing bank stating that the bank is “adequately capitalized” or “well capitalized” as of the date the LOC is issued, along with a representation that the bank officer will promptly notify the telco provider customer if the bank’s capital ratio changes such that it is less than “adequately capitalized.”