FHLBs Scrap Capital Plan

WASHINGTON – The Federal Housing Finance Board agreed Friday to eliminate a controversial plan to boost capital at the 12 Federal Home Loan Banks, which could have required several of the banks to trim the generous dividends they pay their thrift, bank and credit union members. Instead, the federal regulator will review each of the banks’ capital adequacy on an individual basis. The reversal of course came after the thrifts and banks waged a major campaign in opposition to the plan, generating more than 1,100 comment letters against the measure. Both CUNA and NAFCU joined the banking lobby in opposition to the capital plan. The Finance Board also took the first steps towards filling almost 200 public directors seats at the 12 FHLBs by extending the terms of some 60 directors for another year.