Logo: Independent Community Bankers of America - ICBA The Nation's Voice for Community Banks (R)
Username:
Password:

Graphic: Arrow Forgot password?
Graphic: Arrow Request Login
Contact ICBA Site Map Search ICBA
ArrowICBA Home
ArrowAbout ICBA
ArrowAbout Community Banking
ArrowAdvocacy
ArrowConsumer Education & Resources
ArrowEducation
ArrowConvention
ArrowIndustry Resources
ArrowMarketing Resources
ArrowMembership
ArrowPress Room
ArrowSocial Media
ArrowMain Street MarketĀ®
ArrowPublications





Members Only = Access Restricted
Last update: 04/16/14

ICBA News Release

ICBA Independent Community Bankers of America

Media Contact
Karen Tyson 
(202) 821-4454

Media Contact
Bill Grassano
(202) 821-4457

 

FOR IMMEDIATE RELEASE

ICBA Says FHLB Advances Should Not Be a Factor in Determining FDIC Assessment Rates

Washington, D.C. (June 24, 2008)—The Independent Community Bankers of America (ICBA) told the Federal Deposit Insurance Corporation (FDIC) that although it generally agrees with the FDIC's interim covered bond policy statement, ICBA strongly opposes including secured liabilities — and in particular Federal Home Loan Bank (FHLBank) advances — as part of an institution's assessment base or as a factor for determining the insurance assessment rate.

"FHLBank advances are a consistent, reliable source of liquidity for all FHLBank members," said Karen Thomas, ICBA executive vice president and director of government relations. "If the use of FHLBank advances is discouraged, FHLBank members would be forced to seek alternative and more costly and volatile funding sources, thereby reducing profitability and increasing liquidity risk."

In its comment letter to the FDIC, ICBA pointed out that FHLBank advances are particularly important to community banks which represent a significant majority of the FHLBank System's members. These institutions do not have reliable access to other sources of cost-effective wholesale funding and rely on the availability of FHLBank advances as a critical tool for managing their balance sheets and implementing their business plans. Discouraging the use of the FHLBank funding would be counterproductive to the current efforts to restore liquidity and bolster confidence in the mortgage market.

A relatively new innovation in the United States, covered bonds are general obligation bonds of the issuing bank secured by a pledge of loans that remain on the bank's balance sheet. ICBA said that the FDIC's interim policy statement on treatment of covered bonds when a bank is under FDIC receivership and conservatorship will provide important guidance to potential bond issuers and investors and will encourage more banks to use covered bonds. In issuing the interim policy statement on covered bonds, the FDIC asked whether an institution's percentage of secured liabilities to total liabilities should be factored into an institution's insurance assessment rate or whether the total secured liabilities should be included in the assessment base.

Read ICBA's comment letter to the FDIC on covered bonds at www.icba.org.






ArrowsPrintable version



Button: Share

All contents copyright 2014 Independent Community Bankers of America. All rights reserved.
Privacy Statement | Legal Notice