FHFB Requests Input on Multiple FHLB Memberships

WASHINGTON-The Federal Housing Finance Board adopted a resolution, requesting comment from the Federal Home Loan Banks regarding financial institutions’ ability to join more than one bank, during its December board meeting. CUNA has supported credit unions’ ability to join multiple Federal Home Loan Banks, both in comment letters and a meeting with FHLB Chairman John Korsmo earlier this year. Despite debate whether the board has the authority to address membership questions, the nationalization and merging of American businesses needs to be addressed, Korsmo said during the meeting. “When Congress created the system 70 years ago, it anticipated Home Loan Banks operating where their members’ capital was located, and that meant right in their home districts,” he said. “Now, many member banks do business literally across the nation, and that means their capital is not concentrated in any one region. This very important development requires a fresh look at single versus multi-district memberships, and especially at the impact that limiting memberships might have on safety and soundness.” Korsmo added that, if membership modernization is deemed warranted, he hopes to have a final rule to the board by the June 2003 meeting. Earlier this year, four banks that had submitted petitions for multidistrict memberships withdrew their requests, as per Korsmo, so further discussion could ensue. He noted that these banks had waited two years for action already. The board approved the resolution 4-1.