FOR IMMEDIATE RELEASE
ICBA Opposes Change in FHLB Election Process
Rule Would Create Bias Against Community Bank Involvement
Washington, D.C. (June 5, 2006)—The Independent Community Bankers of America (ICBA) told the Federal Housing Finance Board that it opposes its proposed rule to permit Federal Home Loan Banks to tell their members what skills to look for when nominating directors and which nominees fit the bill at election time-in essence communicating who they want elected.
"While the rule is intended to improve governance in the FHLBanks, it is more likely to undermine good governance as FHLBank directors would be given the ability to influence elections in an improper manner," ICBA wrote in its comment letter on the proposal. "Many community bankers, including some currently serving as FHLBank directors, have told ICBA that they see the proposal as 'anti-small member' and an attempt to get more representatives of the largest members on the boards-members that otherwise would not have sufficient votes to be elected."
The FHFB suggests the FHLBanks communicate to members that they need directors with skills and experience such as financial management and/or financial accounting or hedging, but the FHLBanks would have unfettered flexibility to determine what skills or experience they want directors to have, flexibility that ICBA fears could be abused and used to target certain individuals for directorships. While ICBA recognizes that the operations of FHLBanks have become increasingly sophisticated and complex, it does not believe that having a certain skill set automatically guarantees a person will be a good board member.
Rather, ICBA called for using consultants, hiring management and staff with the needed skills, and providing educational opportunities for board members to ensure that the FHLBanks have the leadership and expertise they need rather than jeopardize the integrity of the election process.
Read the full text of ICBA's letter at www.icba.org.