The Federal Housing Finance Agency's proposed rule that would require Federal Home Loan Banks' member financial institutions to maintain 10% of their assets in residential mortgages drew 1,300 comments from stakeholders and most of those were negative, according to FHFA Director Mel Watt.

“We had 1,300 comments on this proposal and I have to tell you that this is an unprecedented number of comments,” Watt said during a Tuesday hearing before the House Financial Services Committee. “And I can tell you that the bulk of those comments from stakeholders were negative on the proposal.”

Watt didn't defend the proposals in detail but said the FHFA would take the comments into account when evaluating the proposal. From the agency's viewpoint, the proposal was in accord with existing federal statute, he added.

Both CUNA and NAFCU are on the record  opposing the FHFA proposal.

Meanwhile, Watt took only a few questions on the proposal. He answered more questions about Fannie Mae and Freddie Mac's capital level saying the preferred stock agreement that was put into place when they were conserved effectively prohibited them from building up any reserve capital.

“If there are profits at the end of the year, all those are swept into the treasury,” Watt said, adding if Congress wanted to change that, it could reform the agencies and end their conservatorship legislatively.