June 3, 2025 – The FCC is now facing scrutiny for ignoring risks in 649 banks by Weiss Ratings and investors alike.
Weiss Ratings, the nation’s sole independent bank safety rating agency, has raised alarms regarding the Federal Communications Commission (FCC) and federal banking regulators for their recent decision to significantly relax standards for banks eligible to provide letters of credit.
This decision impacts 649 banks rated D+ or lower, which indicates a high probability of financial instability.
Shift in Standards
Historically, the FCC permitted only banks with a Weiss rating of B- or better—approximately 1,639 robust institutions—to qualify for letters of credit for FCC programs.
However, under pressure from banking associations, the FCC has adopted a new criterion that allows any bank classified as “well capitalized” by regulators to qualify, thereby including a significant number of banks that are considered weak.
Dr. Martin D. Weiss, founder of Weiss Ratings, criticized this move, stating, “The problem starts with the banking regulators—the Fed, FDIC, and OCC.
Their bar is so low that they include some of the nation’s weakest banks in their ‘well capitalized’ category.”
Alarming Statistics
Currently, a staggering 99.4% of the 4,484 banks in the U.S. are deemed “well capitalized,” leaving only 27 classified as “undercapitalized.”
This classification is troubling, especially considering that key measures of bank capital have been declining since 2019.
Among the banks that now fall under the “well capitalized” label are major institutions such as Bank of America, which, despite being the second-largest bank in the country with $2.6 trillion in assets, exhibits the weakest capital ratios among the 50 largest banks.
It reports $49.7 in unrealized losses for every $100 of Tier 1 capital, a scenario that could severely jeopardize its financial standing if losses need to be realized.
Broader Implications
The implications of the FCC’s decision are significant, as many banks now classified as stable could pose risks similar to those seen during the Great Financial Crisis.
Notably, several of the large banks that failed or required bailouts during that period would have met the new “well capitalized” standards.
Weiss Ratings warns that these relaxed standards could jeopardize the financial safety of America’s 129 million households and 37 million businesses.
Dr. Weiss added, “This decision undermines the scrutiny, clarity, and disclosure that Americans deserve regarding the safety of their financial institutions.”
Upcoming Discussions
The FCC is scheduled to meet on June 4, 2025, to discuss these recent changes.
Stakeholders are urging for a reassessment of the standards to ensure the stability and integrity of the banking system.
About Weiss Ratings
Founded in 1971, Weiss Ratings has a long-standing reputation for providing accurate assessments of financial institutions.
The agency has successfully predicted 97.1% of bank failures from January 2008 to May 2025, highlighting its credibility in the field.
Weiss Ratings has never accepted payment from rated entities for its evaluations, ensuring its independence and objectivity.
As the FCC prepares to revisit its decision, the pressing concerns raised by Weiss Ratings spotlight the potential risks lurking within the banking sector.
With many institutions now classified as “financially stable,” the call for heightened scrutiny is more critical than ever to safeguard the financial interests of millions of Americans.
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