Credit Union Trades Blast New FHFA Proposal
Former NCUA Board Member Geoff Bacino has recommended all credit unions review the Federal Housing Finance Agency’s proposed rule that would require them to maintain 10% of all assets in residential mortgages to retain membership in the Federal Home Loan Bank system.
“If enacted, this rule could dramatically affect the ability of credit unions to utilize this valuable liquidity option. Comments are due by January 12, 2015. Recently, 68 House members sent a letter to FHFA Director Mel Watt requesting that the agency reconsider this proposal. While the proposed rule would affect all credit unions, it would only affect banks with assets of $1.1 billion and higher,” Bacino wrote in a newsletter.
NAFCU President/CEO Dan Berger called the proposal another layer of regulatory burden on credit unions.
“Some credit unions will be immediately and negatively impacted by this and it will be a deterrent for credit unions to join the federal home loan bank system. Further, small banks have a statutory exemption and credit unions need parity,” he said.
Mary Dunn, CUNA SVP and deputy general counsel, said CUNA opposes the proposal and plans to file a strong comment letter.
“We have also been encouraging credit unions that are a member of an FHLB, or are even considering becoming one, to weigh in,” she told CU Times. “We have requested a meeting with FHFA Director Mel Watt and have already written to the agency to voice our general concerns about the barriers to FHLB membership that this proposal would create if adopted.”
Dunn added, “We will continue to follow up with the agency while the proposal is pending – and beyond as necessary – to make sure the FHFA is fully aware of credit unions’ concerns and acts accordingly.”
The NCUA declined to comment on the FHFA’s proposal.