The FDIC finalized a new regulatory capital rule Wednesday that will give lenders who package and resell mortgages and other loans a little breathing room when it comes to accounting for these assets on their books.

The federal agency’s rule directly addresses the Financial Accounting Standards Board’s (FASB) adoption of FAS 166 and 167, which beginning January 1, 2010 moves most securitizations – including residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) – back onto the issuer’s balance sheet.

For years, banks have been able to sell bundled mortgages in the secondary market and essentially pass the debt and the risk associated with it off to investors. While this approach gave banks additional liquidity to make more loans to consumers and businesses, many pundits argue that it was the dirty little secret that ultimately brought the financial system to its knees because it fostered unsound lending practices since the loan originators weren’t retaining any of the risk.

The move by FASB to institute FAS 166 and 167 was a direct push-back to Wall Street banks to help rein in the lax lending practices that sent the economy into a tailspin, but the financial institutions that peddle in the secondary market argue that the additional capital requirements that come with the new accounting rules could foil the beginnings of an already fragile recovery and make credit even tighter.

Banks have been lobbying for a three-year transitional period to phase in the new accounting directives for securitized assets. The FDIC gave them 12 months.

“I believe this rule moves in the right direction and will reduce the likelihood of a recurrence of some of the problems we have experienced in the financial and securitization markets,” said FDIC Chairman Sheila Bair. “The capital relief we are offering banks for the transition period should ease the impact of this accounting change on banks’ regulatory capital requirements, and enable banks to maintain consumer lending and credit availability as they adjust their business practices to the new accounting rules.”

The agency’s final rule gives banks the option of excluding risk-based capital and allowances for lease and loan losses related to RMBS, CMBS, and other securitized loans for the first two quarters of next year. Banks can use the next two quarters as a phase-in period, in which they are allowed to include only 50 percent of their securitized assets in risk-based capital and loss reserve calculations.

Jim Gross, associate vice president of accounting, tax, and bank regulation with the Mortgage Bankers Association (MBA), commented to MBA’s NewsLink publication, “The transition rules are consistent with what MBA recommended; however, the FDIC did not grant permanent relief for residential mortgage-backed securities and commercial mortgage-backed securities that we requested.”

Securitization has held the spotlight in the FDIC’s recent regulatory actions. The agency’s final rule on FAS 166 and 167 capital requirements follows an advance notice of proposed rule-making issued Tuesday regarding its safe harbor provision for securitized loans seized from failed banks.