Community banks, which have rushed to join the Federal Home Loan Bank system in recent years are now trying to influence the system's policies.
The Independent Bankers Association of America is urging community bankers to run for 52 Federal Home Loan Bank seats, up for election this year.
The elections are being held in 35 states. The deadline for nominations is July 15. In all there are 109 seats.
"We are trying to get them interested to run, to go for it," said Kenneth Guenther, executive vice president of the IBAA.
The Federal Home Loan Bank system, was set up in the 1930s to provide low cost funds to thrifts. In 1989, it was opened to mortgage-minded commercial banks.
Community bankers say they should have more say as to how things are run because there are now more bank members than thrift members. Since 1989, bank membership has soared to 2,442, compared with 2,145 thrifts. Meantime, community banks - or banks with assets up to $2 billion - increased their outstanding borrowings from the system to $7.3 billion at yearend 1993 from $1.1 billion two years earlier.
Said David Ballweg, president of Community State Bank, Union Grove, Wis. "As policies are set at district bank board levels and systemwide, it is going to be increasingly important that the community banking industry have some input."
Mr. Ballweg, whose bank has $85 million of assets, plans to run for a seat on the Federal Home Loan Bank of Chicago. He ran a year ago but lost.
He says there are inequities in the system, and he thinks changes should be made. For example, commercial banks that don't meet the qualified thrift lender test can only have 30% of the systems borrowings as a group. The bankers think it should be increased to 40%.
But Mr. Guenther isn't expecting community bankers to win a slew of seats right away. "It is a bit of an uphill struggle," he said. "I think this is a longterm project."
The fight is a slow one because votes are weighted according to the capital stock institutions hold in the system. As of May 31, community banks held just $1.5 billion, thrifts $8.4 billion.
Savings and loan members aren't threatened with the IBAA efforts. "I strongly believe in the democratic process," said David F. Holland, a director of the Federal Home Loan Bank of Boston and president of Boston Federal Savings Bank.
"If they own the stock they certainly ought to be represented," added Robert S. Duncan, chairman of Magna Bancorp, a $1 billion-asset thrift in Hattiesburg, Miss. "We are so close to commercial banks and in many instances our state organizations have consolidated with them. If a guy is running from Mississippi and he's a commercial banker and he's good, I'm going to vote for him."
Mr. Holland agrees with Mr. Ballweg on the need for comprehensive legislation for reform.
He and other thrift operators don't like being required to be members of the system. "We all should be equal," he said.
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