Contact Reps to Push For Independence of New GSE Regulator and FHLBanks' Regulator
The House Financial Services Committee is scheduled to mark up legislation (H.R. 2575) this week (10/2) to overhaul the supervision and regulation of the housing GSEs-Fannie Mae, Freddie Mac and, possibly, the Federal Home Loan Bank (FHLB) System. The issues are very important to community banks using the secondary mortgage market and those who are members of the FHLBank System. High Treasury officials have been critical of the FHLBank System, and Treasury Secretary Snow has testified that regulation of the FHLBanks should be moved under Treasury along with the regulation of Fannie Mae and Freddie Mac. We urge you to lobby Congress with two messages:
First, the U.S. Treasury has proposed that the new regulator to be established in the Treasury Department not have responsibility for their final budget and spending authority, nor the clearance of their regulations or congressional testimony. These authorities would rest with politically appointed officials at Treasury. The ICBA has always supported independent, topnotch regulatory agencies like the Federal Reserve, the FDIC, the OCC and the OTS, which are insulated from the political process. Legislation authorizing any new regulator established at the Treasury over Fannie Mae and Freddie Mac (and the FHLBanks) should contain strong firewalls between the regulator and Treasury's political appointees.
Contact members of the House Financial Services Committee and urge them to ensure that the new GSE regulator at Treasury will be truly independent, modeled after the OCC or the OTS.
Second, please oppose Secretary Snow's proposal to include the FHLBanks in this new regulatory structure. Rep. Ed Royce (R-CA) will push this proposal at the House Financial Services Committee markup of the legislation. The markup could come as early as this Thursday. FHLBanks are different animals than Fannie and Freddie in structure, in ownership, in the manner they meet affordable housing goals, and in their business model. FHLBanks should continue to be regulated as an independent agency, and not under an umbrella regulator in the Treasury Department that includes Fannie and Freddie. Please recall that it was Bush administration Treasury officials who floated the idea that banks using FHLBank advances should be assessed higher risk-based FDIC premiums. Treasury has also announced that it is undertaking a broad-gauged review of the FHLBanks and their regulator. But before jumping into the Treasury frying pan, it would be wise to ascertain the intent of this potentially hostile regulatory chef.
Urge House Financial Services Committee members to maintain the independence of the FHLBanks' regulator and vote NO on any amendment to transfer the Federal Housing Finance Board to the Treasury Department.
Legislators who share our position (which is also shared by the National Association of Home Builders, the National Association of Realtors, and top officials of the Federal Housing Finance Board) urge your active involvement in this key legislation. Please call or e-mail (go to www.icba.org) your congressperson immediately.