WASHINGTON - In a joint letter to the Federal Housing Finance Board, CUNA and NAFCU asked the board to reconsider a notice of proposed rulemaking that could make it less likely for Federal Home Loan Bank members to receive dividends.
The proposed rule would prescribe a minimum amount of retained earnings and cap the excess stock a Federal Home Loan Bank can have outstanding. It would also bar a FHLB from selling excess stock to members or paying stock dividends, and restrict the bank's ability to pay dividends when retained earnings fall below the minimum.
The groups said they supported efforts to enhance the safety and soundness of the FHLB System. However, the letter read, "The FHLB dividends are an important issue, and we support the ability of the FHLBs to pay dividends, to the extent such action is consistent with maintaining the safety and soundness of the FHLB system.
"Although modifications to the FHLB System may certainly be necessary as a means to enhance the safety and soundness of the FHLBs, the changes outlined in the proposal are so significant, and possibly detrimental to the FHLB members. We believe the FHFB should solicit and carefully consider the views of all those that would be impacted by these changes before issuing any specific proposals. For this reason, we suggest that the FHFB withdraw the proposed rule and begin the process of soliciting the views of all the interested parties, including credit unions."
CUNA and NAFCU suggested the FHFB sponsor a series of meetings with interested parties prior to issuing an advance notice of proposed rulemaking. "We are hopeful such a process will help ensure that a significant number of credit unions can continue to rely on the FHLB System as an important source of funding for themselves and for the members they serve," the letter concluded.
More than 800 credit unions are FHLB members. -scooke@cutimes.com
