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Trouble Brewing At Home Loan Banks

PITTSBURGH, Pa.-Two more home loan banks reported financial losses raising the profile of the regional mortgage financiers just as the cry in Congress is being raised for regulatory reform of the system.

The FHLB of Atlanta told its 1,194 members, including 110 CUs, that a write-down of its mortgage hedging portfolio caused it to book a $9.1 million loss for the third quarter, and the FHLB of Pittsburgh its 352 members, including 17 credit unions, that losses on its investments will push it into the red to the tune of $6.5 million for the third quarter.

Both banks said they will pay a third quarter dividend out of retained earnings. Christopher McEntee, a spokesman for the Atlanta Bank, emphasized to The Journal that the third quarter loss was due to the mark-to-market devaluation of the bank's derivatives and could be reversed in future periods. The news comes just weeks after the FHLB of New York reported that a $193-million loss on its investments caused it to halt dividends for the third quarter.

Growing concerns over the FHLB System, which provides low-cost mortgage funding to more than 600 credit unions, has prompted several members of Congress to back proposals to join the FHLBs into a new regulatory scheme being drawn for Fannie Mae and Freddie Mac. (See related story at right)

House Passes Check 21

WASHINGTON-The House overwhelmingly approved the Check 21 Act Wednesday sending the final version on for concurrence by the Senate.

The bill will expedite check clearing by allowing credit unions and banks to exchange checks electronically and give the electronic versions of checks the same legal status as the paper versions.

Credit union members may still request substitute checks or facsimiles of the original checks when they need them.

Workers Picket Kellogg CCFCU

BATTLE CREEK, Mich.-Employees for Kellogg Community Creek FCU began a strike of the $200-million credit union Wednesday after their union, the local 3-G of the Bakers, Confectioners, Tobacco Workers and Grain Millers, rejected the credit union's latest contract proposal.

Negotiations over a new collective bargaining agreement are stalled over the issues of pay and health care premiums. The previous three-year contract expired July 31.

NCUA OKs Low-Income Expansions

ALEXANDRIA, Va.-NCUA said it has approved several large expansions into low-income communities.

They include requests from: Honeywell FCU, Minneapolis, to serve 550,000 residents of eight Minnesota communities; People's Alliance FCU, Hauppauge, N.Y., to serve more than 500,000 residents in Nassau and Suffolk counties (Long Island), N.Y.; Butte FCU, Biggs, Calif., to serve 420,000 residents of six rural California counties; and Old Ocean FCU, Old Ocean, Texas, to serve 250,000 residents in Brazoria County, Texas.

Lafayette FCU Seeks New CEO

KENSINGTON, Md.-William Brooks, the longtime CEO of Lafayette FCU and a well-known figure in the credit union community, has resigned from the $300- million credit union to start his own consulting business.

The new business, tentatively called CUProsper, will focus on helping small and medium-sized credit unions build mortgage and business lending programs, taking advantage of NCUA's new member business loan rules, and provide assistance in several other areas.

Brooks ran Lafayette FCU for 16 years, and sits on the board of NAFCU, and was an NCUA examiner for seven years at the start of his career.

Charitable Gifts Mark New Branch

SAN DIEGO-North Island Financial CU made two separate $5,000 donations to help mark the opening of its new branch in nearby Vista. The dual contributions went to the Boys & Girls Club and North County Solutions for Change.

The new branch opening also featured several events, including a local radio station broadcast, prizes, food, clowns and face-painting for children.

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