Congressional Financial Services Leaders See Need For Pause in FHFB Proposal

WASHINGTON – The leadership of the House Financial Services Committee wrote a letter to the Federal Housing Finance Board chairman saying that all the objections raised to its proposal that would lessen the likelihood of member dividends require a second look. The FHFB recently proposed minimum retained earnings levels for each of the Federal Home Loan Banks and that would limit the amount of excess stock a bank can have outstanding. It would also bar the banks from selling excess stock to members and restrict dividends. CUNA and NAFCU weighed in with a joint letter recently opposing the move. "In our view, the potential impact of this proposal is critically important to the Banks, their members, and the housing finance system. The fact that the proposal has been criticized by the leadership of all twelve Banks and key industry trade groups indicates to us a need for pause," Committee Chairman Mike Oxley (R-Ohio) and Ranking Member Barney Frank (D-Mass.) wrote. "We are concerned that the proposed changes may go too far and actually harm the Bank system more than protect it." Given the lack of urgency on the issue, the lawmakers encouraged "an open-minded, cautious approach on such a far reaching proposal."