WASHINGTON—Lawmakers are concerned that the Federal Housing Finance Agency’s proposal to revise Federal Home Loan Bank membership criteria could jeopardize the banks’ liquidity functions for credit unions and community banks.
A bipartisan group of 68 House of Representative members yesterday sent a letter to FHFA Director Mel Watt stating that position, reported NAFCU, which has shared the same concerns.
Led by Reps. Spencer Bachus (R-AL) and David Scott (D-GA), the group wrote that the “FHLBanks serve as a critical source of liquidity for community banks, credit unions and their various other members, as witnessed by the crucial role the FHLBanks played during the financial crisis. The Banks also serve as an important conduit to the secondary markets for community financial institutions.”
The lawmakers said Congress has retained authority to determine the scope and nature of FHLB membership eligibility. “As recently as four years ago, Congress adjusted FHLBank membership rules and did not choose to narrow eligibility for participation in the system, making its intent clear.”
They urged that Watt “reconsider this proposal and begin a dialogue with Congress, where these important policy decisions should be made.”
Comments are due Jan. 12.
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