Change in FHLB Membership Criteria Proposed; Export-Import Bank Charter Extended

General information

The Federal Housing Finance Agency (FHFA) has proposed significant changes to eligibility for membership in the Federal Home Loan Bank (FHLB) system. Under the proposed rule, members would be required to hold 1% of assets in home mortgage loans, and they would also be required to have at least 10% of assets in residential mortgage loans on an ongoing basis, not just upon application for membership.

The FHLBs would be required to ensure member compliance with these requirements each year, calculating the relevant ratios based on a three-year rolling average. FHLB members not meeting these requirements would be given one year to return to compliance.

Currently, there is a letter addressed to FHFA Director Mel Watt being circulated on Capitol Hill by Representatives Spencer Bachus (R-AL) and David Scott (D-GA),  which expresses concern over this proposed rule change, and urges Director Watt to begin a dialogue with Congress, where these important policy decisions should be made. CBA is fully supportive of efforts to delay or rescind the proposed rule, and fully supportive of efforts to engage congressional representatives in these efforts.

Additionally, both the House and Senate recently passed a short-term funding bill, which includes a provision extending the charter of the Export-Import Bank through June 2015. The president is fully expected to sign the funding bill.