FOR IMMEDIATE RELEASE
ICBA Unanimously Opposes Royce/Maloney Amendment
30 State Community Banking Associations Also Oppose Expected Amendment
Washington, D.C. (Oct. 6, 2003) - At its annual meeting currently being held in New Orleans, the Board of Directors of the Independent Community Bankers of America (ICBA) today voted unanimously to oppose an amendment by Reps. Ed Royce (R-Calif.) and Carolyn Maloney (D-N.Y.) that would include the Federal Home Loan Banks in legislation (H.R. 2575) to revise regulation of Fannie Mae and Freddie Mac.
At the same time, 30 state community banking trade associations affiliated with ICBA issued a joint memo also opposing the anticipated Royce/Maloney amendment, which could be offered at the House Financial Services Committee's scheduled mark up of H.R. 2575, presently scheduled for this Wednesday, Oct. 8. ICBA and the state community banking trade groups listed on the memo oppose shifting regulation and supervision of the FHLBanks from their current regulator, the Federal Housing Finance Board, to the U.S. Treasury Department.
"The FHLBanks should continue to be regulated by a separate and independent agency," the joint state trade group memo notes. "We are greatly concerned that shifting supervision and regulation of the FHLBanks under the Treasury could hinder community banks in accessing this key funding source. This issue is critically important to community banks."
The memo continues: "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," the joint trade group memo adds.
Addressing other issues associated with this GSE legislation, ICBA President and CEO Kenneth A. Guenther stated today that, "There is still a major fight in other areas such as program approval standards. Treasury should not have the authority to inhibit the ability of the housing GSEs to innovate, including with lender partners like the ICBA. Regulators should not micro-manage new product development."