Tax Treatment of Fannie and Freddie Preferred Stock

Section 301 of the Emergency Economic Stabilization Act allows certain banking organizations to change the character of losses on certain holdings of Fannie Mae and Freddie Mac preferred stock from capital losses to ordinary losses for federal income tax purposes. The federal banking and thrift regulatory agencies announced that these banking organizations can recognize the economic benefit of these changes in tax treatment in the third quarter of 2008 for regulatory capital purposes.  FDIC Press Release.