Capital Briefs: Home Loan Bank Correspondent Pricing Hit

The Federal Home Loan Bank of Des Moines is undercutting private-sector institutions in the correspondent banking market, the president and chief executive of a Missouri bank has told the House Banking Committee.

In an April 12 letter to Chairman Jim Leach, Camden R. Fine of Midwest Independent Bank in Jefferson City wrote that the Home Loan bank's government backing allows it to offer services such as check processing at below-market prices. This poses unfair competition to private institutions like his that offer these same services, Mr. Fine wrote in the letter, which was released Monday by the committee.

"I deeply resent a tax-free, regulation-free, government sponsored entity ... directly soliciting banks for correspondent banking services," Mr. Fine wrote. "Each (Home Loan bank) is free to offer certain products at a loss, subsidized from profits of other products - all the while under government protection."

Spokeswoman Nicky Schissel said the Des Moines Federal Home Loan Bank is barred from offering corespondent services at lower prices than private institutions.

Nevertheless, in a May 6 reply to Mr. Fine's letter, Rep. Leach said the issue deserved review in legislation pending to modernize the Home Loan Bank System.

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