ICBA Weighs in on FHLB Disclosures to SEC
ICBA, along with the America's Community Bankers and the American Bankers Association, met with the Securities and Exchange Commission (SEC) staff to discuss whether the Federal Home Loan Banks (FHLBs) should voluntarily register with the SEC-and concluded that oversight of the FHLBs' disclosures should remain with the Federal Housing Finance Board (FHFB), rather than be moved to the SEC.
As a follow-up to the meeting, the trade groups-representing 100% of system shareholders-sent a letter to Division of Corporation Finance director Alan Beller, stating they had concluded that SEC registration by the FHLBs would be unnecessarily burdensome for their members and stockholders. Investors in System debt would gain little or nothing. Also, the uncertainties of a transition to SEC registration have a much greater likelihood of causing delays in debt issuances. The trade groups expressed their support for an alternative to SEC registration under Section 12(i) of the Securities Exchange Act of 1934-disclosure by federally regulated institutions through their primary regulator, in this case the Federal Housing Finance Board (FHFB).
Beller responded to the trade groups' concerns in a letter, saying that the SEC has the authority and ability to accomplish the FHLBs' registration in the context of their particular characteristics. Also, according to Beller, the SEC believes the public holders of the FHLBs' and the System's debt are entitled to the same information that is provided to investors in other public debt securities. "We believe our detailed disclosure rules and filing requirements, and our staff review and comment process, provide the best framework for disclosing that information," wrote Beller.
Responding to concerns that a new regulatory process may cause delays in the System's continuous presence in the debt markets, he reiterated the SEC's willingness to work with the FHLBs as they develop their first filings to avoid market interruptions. He noted that the FHFB is looking at various ways to achieve the desired disclosure, including using Section 12(i). However, FHFB chairman John Korsmo has repeatedly stated his desire to move this responsibility from his agency to the SEC.