A recent request for input on the Federal Home Loan Banks’ mission suggests that regulators are considering significant regulatory action without first receiving direction from Congress, the American Bankers Association and 52 state bankers associations said today. The Federal Housing Finance Agency issued the RFI in May following the release of an agency report on the future of the FHLB system, which recommended that the FHFA clarify the system’s mission and update how it evaluates system banks achieving those goals. The agency will likely issue rulemaking in the near future based on the report and feedback it receives from the RFI.
In their letter, the associations said it is important to recognize that the evolution of the FHLB system has been the result of statutory changes made by Congress, but the RFI appears to contemplate future rulemaking without congressional direction. “Absent clear directive from Congress that changes are needed to the mission of or incentives provided to the [FHLB] system, the FHFA should exercise extreme caution that it does not exceed its regulatory mandate when proposing changes.,” they said.
The associations also provided answers to several questions sought by the FHFA and took issue with the agency’s claim that its recent review was the first “comprehensive” review of the FHLB system. “That assertion ignores the fact that there have been numerous legislative and regulatory changes to the system over its 92 years of operation,” they said.
