Federal Home Loan Bank Activities
SEC Disclosure Turmoil Continues. Department of Housing and Urban Development secretary Mel Martinez told an ACB conference this week that HUD, which holds a key seat on the Federal Housing Finance Board, was still reviewing the issue of whether Federal Home Loan Banks should come under the SEC as FHFB chairman John T. Korsmo has unfortunately proposed. The ICBA wrote to Secretary Martinez welcoming his ongoing review of this controversial proposal and reiterating the ICBA's opposition to it.
ICBA convention attendees will recall that Al DelliBovi, president of the FHLB of New York, characterized this proposal-first floated by the Treasury's Peter Fisher-as "goofy." A delegation of FHLB presidents will be meeting with the SEC to discuss the issues.
Hearing on Unsecured Credits. This week the Federal Housing Finance Board (FHFB) conducted a hearing on the unsecured credit-primarily money market investments-held by the Federal Home Loan Banks (FHLBs) for liquidity and other financial management purposes. In opening the hearing, FHFB chairman John Korsmo stated that its purpose was educational and no FHLB has had a loss on any of its unsecured credits. "We are raising no red flags today, we are merely raising our level of understanding," said Chairman Korsmo.
New qualification for public interest directors proposed. The Federal Housing Finance Board proposed a rule regarding the qualifications for the public interest directors it appoints to the boards of the Federal Home Loan Banks. The FHFB appoints 82 public interest directors to three-year terms. The proposal would require that at least one of the public interest directors on each of the 12 FHLBs' boards possess a strong understanding of the risks, including the interest rate risk, market risk and options risk, arising from the FHLB's activities. The proposed rule will be published in the Federal Register with a 90-day comment period.
Director appointed to Office of Finance board. The FHFB appointed Terry C. Smith, president of the Federal Home Loan Bank of Dallas, to a three-year term on board of directors of the FHLBs' Office of Finance. He replaces Patrick J. Conway, president of the FHLB of Des Moines, whose term expires at the end of March. The Office of Finance issues and services all debt securities of the FHLBs.