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WASHINGTON-Federal Housing Finance Board Director John Korsmo said last week that he was neither hot nor cold about privately insured credit unions becoming eligible for Federal Home Loan Bank membership. Following a speech at America’s Community Bankers Government Affairs Conference, Korsmo told reporters, “The banks are divided on that. Obviously the Cincinnati bank is a big proponent, which is why the sponsors are who they are.” House Financial Services Chairman Mike Oxley (R-Ohio) has been trying to push and shove regulatory relief legislation-which includes a provision to allow privately insured credit unions to join the FHLB System-through Congress for more than a year now. The director also indicated that the decision was out of his hands. “Congress tells us who the members of the system are going to be,” he said. Also concerning credit unions, Korsmo talked during his speech about financial institutions being permitted to join more than one FHLB. He said that his office is currently studying the issue, but there are no guarantees. “This very important development requires, I believe, a fresh look at single versus multidistrict memberships, and especially at the impact limiting memberships might have on the safety and soundness of individual banks or the system,” he commented. Korsmo said only two sure things came out of discussions with the FHLBs on the subject: 1) consolidation will continue, and 2) it will affect the FHLBs “in some way.” Beyond that, he said, opinions are splintered. Multi-district membership typically arises when institutions merge across state lines.

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