Oppose Royce/Maloney Amendment to Add FHLBanks to GSE Legislation (H.R. 2575)
Joint State Community Banking Trade Association Memo
To: House Financial Services Committee Members
Re: Oppose Royce/Maloney Amendment to Add FHLBanks to GSE Legislation (H.R. 2575)
Date: October 6, 2003
The 30 undersigned state community banking trade associations strongly oppose any efforts to include the Federal Home Loan Banks in legislation to create a new supervisory and regulatory structure for Fannie Mae and Freddie Mac. The FHLBanks should continue to be regulated by a separate and independent agency. We are greatly concerned that shifting supervision and regulation of the FHLBanks under Treasury could hinder community banks in accessing this key funding source. This issue is critically important to community banks.
With expanded access to the FHLBank System as part of 1999's Gramm-Leach-Bliley Act, community banks have become increasingly dependent on FHLBank advances as a competitive and flexible funding source. Community banks are not able to access the capital markets individually as larger banks can for competitive wholesale funding. The capital, ownership and business model of the FHLBanks are unique and substantially different from that of Fannie/Freddie. Prospective concerns that the FHLBanks would be at a competitive funding disadvantage because of their regulatory structure are highly speculative. Thus, we believe it would be highly premature and unwise to change FHLBank regulation in legislation to overhaul the Fannie/Freddie regulatory structure.
This Wednesday, October 8, the House Financial Services Committee plans to mark up the GSE bill, H.R. 2575. Reps. Ed Royce (R-CA) and Carolyn Maloney (D-NY) are expected to offer an amendment to shift regulation and supervision of the FHLBanks from their current independent regulator, the Federal Housing Finance Board, to the Treasury Department. For the reasons listed above, we join with our national affiliate, the Independent Community Bankers of America, as well as other key national financial and housing trade groups, including the National Association of Home Builders and the National Association of Realtors, in opposing this flawed and unnecessary shift in FHLBank regulation. Please oppose the expected Royce/Maloney amendment.
The Community Bankers Association of Alabama