WASHINGTON (9/8/14)--The Credit Union National Association has requested a meeting with Federal Housing Finance Agency (FHFA) Director Mel Watt regarding the agency's new Federal Home Loan Bank (FHLB) membership proposal to follow up on concerns of credit union parity and other issues. CUNA also met with FHLB representatives last week to discuss concerns and how efforts could be maximized to address issues with the proposal.
The proposal would 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.
CUNA said the proposal "could create significant barriers to credit union membership in FHLBs," in a letter sent to Watt and signed by CUNA interim President/CEO Bill Hampel. 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.
The proposed rule would require all credit unions to hold the 10% in residential mortgage loans, but only certain banks, due to a statutory limitation in the Federal Home Loan Bank Act. CUNA is concerned that the rule raises parity concerns by placing credit unions under a more burdensome set of rules.
In addition, CUNA has requested an additional 60 days for the comment period on the proposed rule, saying the extra time is "needed to ensure a more open dialogue concerning the need for the proposal and the very serious policy issues embedded in it."
"The allotted 60-day comment period is not enough time to review the proposal, summarize it, distribute it to our members, allow them time to review it, and work with them to develop our response, given the important policy issues involved," Hampel wrote.