Ratings firm says regulators give pass to big banks with weak capital ratios

Shades of 2009-2010 — when there were 297 bank failures nationwide — are looming in an unusual battle between the Federal Communications Commission and one of the most recognized bank rating agencies. 

The FCC isn’t a banking regulator, per se, but it dipped into the field late last year when it eliminated the use of Weiss Ratings as the standard for U.S. banks to be considered “acceptable” to the commission for purposes of issuing qualifying program letters of credit. The rule had previously stated banks needed a Weiss credit safety rating of B- or better to participate in FCC programs like the Rural Digital Opportunity Fund. Palm Beach Gardens-based Weiss was founded in 1971, and bills itself as the “nation's only independent bank safety rating agency.”

In a joint letter sent last summer to the FCC, the Independent Community Bankers of America, along with some 70 state banking associations, wrote, in part, that “Weiss was ill-suited to rating bank safety because its ratings were not sufficiently rigorous or transparent and its impartiality was in question.” The ICBA noted in its letter that, for example, “an unregulated cryptocurrency received an A- rating from Weiss while thousands of regulated financial institutions had a safety rating lower than B-.”