WASHINGTON (9/18/14)--The top Democrat and Republican of the Senate Banking Committee are asking the Federal Housing Finance Agency (FHFA) to apply the brakes on a recent proposal that would change Federal Home Loan Bank (FHLB) membership rules.
Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) Tuesday asked FHFA Director Mel Watt to extend the comment period for the proposed rule by 60 days.
On Sept. 2, the FHFA issued a notice of proposed rulemaking that would, in part, require all credit unions to hold 10% of assets in residential mortgage loans on a constant basis to become and remain members of the FHLB system. Currently, the rule requires the 10% to be held only at the time membership is approved.
In a letter to the agency, the senators wrote, "Given the important role the Federal Home Loan Banks play in providing liquidity to small financial institutions and supporting community development efforts ... any change to membership criteria should only be undertaken after thorough consideration."
The Credit Union National Association backs a longer comment period. In a Sept. 8 letter to Watt, CUNA interim President/CEO Bill Hampel warned the proposal "could create significant barriers to credit union membership in FHLBs." The letter went on to cite the critical role FHLBs play as a source for credit union liquidity.
"The FHFA has not explained why this proposal should be processed on an accelerated basis and thus, we are not aware of the need to expedite it now, particularly since the Advance Note of Proposed Rulemaking was initially issued almost four years ago," the letter reads.
CUNA is deeply concerned that credit unions are not given membership parity with community banks that are not required to maintain the 10% threshold on an ongoing basis in order to retain their FHLB membership.