In a telling public display of dissent, California thrift executives spiritedly attacked a pilot project that would allow the Federal Home Loan Bank of New York to hold multifamily housing loans.

Members of the Western League of Savings Institutions took the chairman of the Federal Housing Finance Board, Bruce A. Morrison, to task on Tuesday for approving a seemingly risky project without weighing their opinions first.

"In the San Francisco (Home Loan) bank, you have 20% of the system's capital, almost all of it mandatory. Under what circumstances does San Francisco have the right to come in and have its own views known?" the trade group's president, Louis H. Nevins, asked at its annual convention.

Dirk S. Adams, group senior vice president of World Savings and Loan, Oakland, Calif., backed up Mr. Nevins. He said the finance board had rushed its approval through in a meeting supposedly limited to technical changes.

The verbal brawl reflects the deep divisions about the future role of the Federal Home Loan Bank System. Founded in the 1930s to support thrifts in making home loans, the system is increasingly seen as an anachronism by many now that the Federal National Mortgage Association and Federal Home Loan Mortgage Corp. set the pace and provide hundreds of billions of dollars for the mortgage market.

Speaking to the thrift executives, Mr. Morrison acknowledged as much. He said the bank would have to justify its mission in present-day terms.

But California thrift executives are worried that, as the system struggles for a new political and business identity, it will take on more risk than they would like. Currently, the Home Loan banks are limited to advancing cash to members against mortgage assets.

Moreover, as Ray Martin, chairman of Coast Federal Bank, Los Angeles, explained later, thrift executives are wonder if the pilot project is paving the way for the Home Loan banks to become full-fledged and competing investors in home loans. Mr. Martin said he and his colleagues are loath to finance a government-sponsored enterprise in the mold of Fannie Mae and Freddie Mac with their mandatory capital.

That's not how supporters of the New York pilot project view the initiative.

Alfred DelliBovi, president of the Federal Home Loan Bank of New York, said he is trying to help his members, who are hamstrung in serving their communities by regulatory limits such as the cap on loans to each borrower.

Under the pilot project, the $30 billion-asset New York bank can hold $250 million in whole loans. The first 25% of the loan value must be held by the bank that makes the loan and the remaining 75% may be held by the Home Loan bank, Mr. DelliBovi explained.

Mr. DelliBovi, who served as deputy secretary of the Department of Housing and Urban Development under Jack Kemp, said the bank's role should be to serve not just thrifts but all community banks, which are fighting for survival against large regionals.

Once a unified bank and thrift charter is in place, "There will be some animal called community banks. They are going to need wholesale sources of funding and access to the capital markets so that communities can survive and flourish, and I think that should be our mission," Mr. DelliBovi said.

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