FOR IMMEDIATE RELEASE
ICBA Applauds FHLBanks for Capital Enhancement Agreement
Washington, D.C. (March 1, 2011)-Camden R. Fine, president and CEO of the Independent Community Bankers of America (ICBA) issued the following statement today following the Federal Home Loan Bank System's announcement of a Joint Capital Enhancement Agreement to set aside at least 20 percent of net income in restricted retained earnings accounts established by each FHLBank as obligations related to the Resolution Funding Corporation are repaid early.
"Our nation's community banks depend on the health and vitality of the FHLBank System so they can continue to serve the needs of their Main Street customers. This became even more apparent during the recent financial crisis. While many of the FHLBanks experienced financial challenges, they continued to provide advances to their thousands of community bank members without disruptions, while other segments of the capital markets ceased to function. This demonstrates exactly why the FHLBanks must remain a healthy, stable and a reliable source of funding for community banks. The action announced today will help the FHLBanks rebuild their financial strength and position them to face any future challenges.
"ICBA applauds the FHLBanks for the early repayment of their obligations and efforts to further strengthen their financial condition through the building of retained earnings. ICBA has advocated that once the FHLBanks complete their REFCorp payments, the earnings that would otherwise go to the REFCorp payments should be kept by the FHLBanks to build retained earnings and protect their financial condition."
For more information, visit www.icba.org.