FHFA Drops ICBA-Opposed Asset Test from FHLBank Rule
Washington, DC (PRWEB) January 12, 2016 -- The Independent Community Bankers of America® (ICBA) said today’s Federal Housing Finance Agency final rule on Federal Home Loan Bank membership addresses problematic provisions that would have needlessly restricted access to mortgage credit. The final rule removes an ICBA-opposed plan that would have required FHLBank members to hold between 1 percent and 10 percent of their assets in home mortgage loans at all times.
“The FHFA wisely heeded community bank concerns and dropped the ongoing asset test for FHLBank members, which would have reduced access to credit and driven many long-term members from the system,” ICBA President and CEO Camden R. Fine said. “The FHLBanks have long stabilized the housing-finance market—particularly in small and rural communities—so this change will avoid negative consequences for many borrowers.”
As ICBA wrote in a comment letter, the FHFA’s proposal to implement an ongoing asset test to retain FHLBank membership would have forced community banks to either hold more mortgage-backed securities in portfolio or possibly pass up opportunities to make other types of consumer, small-business or agriculture loans. Community banks affected by these changes would have been unable to best serve their communities because of an arbitrary test that is contrary to the actions of Congress, which has always worked to expand FHLBank membership and access to credit. In addition to actively opposing the provision, including a massive grassroots effort that produced more than 1,300 comment letters from bankers urging the FHFA to withdraw the proposed rule, ICBA has also supported legislation directing the Government Accountability Office to study the rule.
ICBA remains concerned with a provision in the FHFA final rule barring captive insurance companies from FHLBank membership and requiring existing captive insurers to exit the system within five years. The exit of captive insurance companies from the system could increase the cost of certain FHLBank advances, raising the cost of funding for mortgage lending in those markets. ICBA urges the FHFA to amend its final rule to rescind this exclusion for captive insurers, which play an important role in providing mortgage financing.
About ICBA
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit http://www.icba.org.
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Aleis Stokes, Independent Community Bankers of America, +1 (202) 821-4457, [email protected]
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