FHFA Seeks to Tighten Membership Rules for Home Loan Banks
By Brian Collins
Banks, credit unions and insurance companies would have to hold more mortgages on their books in order to maintain their membership in the Federal Home Loan Bank System under a new regulatory proposal unveiled Tuesday. The Federal Housing Finance Agency issued a plan that would require Home Loan Bank members to hold at least 1% of their assets in home mortgages and “do so on an ongoing basis,” according to the proposal, which is already running into opposition from the banks. But industry representatives objected to the proposal, arguing it would hurt liquidity in the system. Industry analysts said the proposal would have a big impact if finalized. “It’s obviously a very significant change,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics. “Mel Watt is putting his stamp on the Home Loan Banks as a mission-driven source of mortgage funding. It will create a significant strategic challenge for some of the banks.”
http://www.americanbanker.com/issues/179_169/fhfa-seeks-to-tighten-membership-rules-for-home-loan-banks-1069715-1.html