As the Federal Housing Finance Agency moves forward with implementing the recommendations in its recently completed review of the Federal Home Loan Bank system, it is important that the process the agency uses to make those changes is transparent and inclusive, ABA and 52 state bankers associations said last week in a letter to the agency.
FHFA in November released its long-awaited review of the FHLB system in which it proposed several steps to enhance the system’s liquidity mission and expand its housing and community development focus. Some of the recommendations—such as doubling the statutory minimum for the FHLBs’ affordable housing programs—require acts of Congress. In their letter, the associations urged FHFA to follow the Administrative Procedure Act’s public notice-and-comment process when proposing any changes under its purview. They also strongly discouraged the use of agency guidance, supervisory letters or changes made through the examination process to implement any of the recommendations, “as those avenues do not provide [FHLB] members with adequate opportunities for input or understanding before changes are made.”
“The proposals set forth can dramatically impact that mission and the continued ability of the FHLBs to meet it for all members,” the associations said. “In the wake of the recent report, a number of observers have speculated that implementation of the recommendations could result in more limited or more difficult access to the FHLBs liquidity and programs creating uncertainty in the market. FHFA can reduce that uncertainty by committing to a clear, transparent, open and inclusive process going forward. We ask that you do so, and state as such publicly.”