Thrift Groups Flex Lobbying Muscle OnFHLB Proposal
WASHINGTON - (07/03/06) The once-powerful S&Llobby, which retreated into the background for more than a decadeafter the financial debacle of the 1990's, is flexing some of itslobbying might these days and has convinced Congress to weigh in onthe controversial proposal to raise capital at the Federal HomeLoan Banks. Both the top Republican and Democrat on the HouseFinancial Services Committee called on the Federal Housing FinanceBoard Friday for a public accounting of the reasons for the newcapital proposal, which has been overwhelmingly opposed by theS&Ls, which make up the majority of the FHLBs 9,000member institutions. In a letter sent to Ronald Rosenfeld, chairmanof the FHFB, which regulates the 12 regional FHLBs, Rep. MichaelOxley, the Republican Chairman of Financial Services, and Rep.Barney Frank, the top ranking Democrat, said the committee willhold hearings on the proposal and top FHFB representatives shouldbe prepared to testify.The fact that the proposal has beencriticized by the leadership of all twelve (FHLB) Banks and keyindustry trade groups indicates to us a need for a pause,said the letter, according to a copy obtained by The Credit UnionJournal. The proposal would limit the amount of excess stock anFHLB can have outstanding; prohibit an FHLB from selling excessstock to its members; or restrict an FHLBs ability to paydividends when its retained earnings are below the prescribedminimum. FHLB dividends, some which have risen to 5% or more forthe second quarter, are among the best available investments formember institutions, including the 1,000 credit union members. BothCUNA and NAFCU have also weighed in against theproposal.