WASHINGTON (5/21/15, UPDATED 5:50 p.m. ET)--Reps. William Lacy Clay (D-Mo.) and Randy Neugebauer (R-Texas) have unveiled a CUNA-backed bill to address credit union parity in Federal Home Loan Bank (FHLB) membership rules.
Clay and Neugebauer are the ranking member and chair of the House Financial Services subcommittee on financial institutions and consumer credit.
Currently, a Federal Housing Finance Authority rule exempts community banks under $1 billion in assets from meeting a requirement of holding 10% of assets in residential mortgages on an ongoing basis to maintain FHLB membership. However, credit unions must meet that requirement. The FHFA has oversight over the FHLB system.
Clay and Neugebauer introduced H.R. 2473, which would amend the Federal Home Loan Bank Act. The new bill would ensure the eligibility requirements for similarly sized credit unions and banks are the same by including credit unions in the act's definition of "community financial institution."
"Federal Home Loan Banks are a reliable, low-cost source of liquidity for financial institutions," said Sam Whitfield, CUNA's deputy chief advocacy officer said upon introduction of the bill. "During the latest financial crisis, the FHLBs served as a key liquidity source for credit unions--ensuring that their service to their members was uninterrupted.
"It is just sound policy that credit unions be treated equally to similarly sized community banks."