Following advocacy by ABA, four House members on Friday introduced bipartisan legislation to stop the Federal Housing Finance Agency from moving ahead with its proposed limitations on Federal Home Loan Bank membership. Sponsored by Reps. Blaine Luetkemeyer (R-Mo.), Denny Heck (D-Wash.), Patrick McHenry (R-N.C.) and John Carney (D-Del.), H.R. 3808 would also require the Government Accountability Office to study the effects the FHFA proposal would have on the FHLBs and their members.
“Congress, not the Federal Housing Finance Agency, has historically decided the membership requirements of Federal Home Loan Banks,” Luetkemeyer said. “Decisions should not be made in a vacuum. They should be made by Congress and based on public input and extensive analysis.”
In a letter to Congress last month, ABA urged a legislative solution, noting that the FHFA approach “will create regulatory burden and drive up costs of membership in the system and ultimately the costs of those communities and individuals served by FHLB members. It will also lead to far less stability in the system, making membership and access to liquidity less certain.”
The FHFA’s proposed changes — which FHFA Director Mel Watt recently said would be finalized by early 2016 — would require FHLB members to hold 1 percent of assets in home mortgage loans and require those subject to a 10 percent residential mortgage asset base to maintain that ratio on an ongoing basis. They would also revise insurer eligibility to exclude captive insurers. ABA, its American Bankers Insurance Association affiliate and the state bankers associations have strongly opposed the proposal.