WASHINGTON Several trade groups representing Federal Home Loan bank members are urging a federal regulator to extend the comment period on a controversial proposal to change the systems membership requirements.
The Federal Housing Finance Agency proposal would require most banks, thrifts or credit unions to maintain at least 10% of their assets in the form of home loans or mortgage-backed securities on their balance sheets.
The new asset requirement is supposed to show that the member is providing ongoing support for residential mortgage market. But it is fueling a lot of opposition from the industry, which strongly opposed a similar proposal floated in 2010.
The FHFA issued the proposal on Sept. 2 for a 60-day comment period.
But the Council of Federal Home Loan Banks is urging FHFA to extend the comment period for another 60 days.
"The proposed rule is a complex one that could result in profound changes to longstanding regulations and policies concerning the FHLBanks," Council Chairman Steven Rosenbaum wrote in a letter to FHFA Director Mel Watt.
"The proposal is likely to have a significant impact not only on the FHLBanks, but also existing and prospective shareholder institutions in the FHLBanks as well as the communities across the nation that are served by them," Rosenbaum said.
The National Association of Federal Credit Unions and the American Bankers Association are also requesting a 60-day extension.
"This proposal is complex and could have a lasting impact on credit unions and their ability to establish and maintain membership in the FHLBs," Dan Berger, NAFCU's president and chief executive, said in a Sept. 4 letter to the GSE regulator.