WASHINGTON — Steve Cross, the primary author of a failed proposal two years ago to require the Federal Home Loan banks to retain more of their earnings, is getting another chance to turn his project into a reality.

Mr. Cross, who ran the Federal Housing Finance Board's supervision department for more than six years, was named the Federal Housing Finance Agency's deputy director in charge of the 12 Home Loan banks this week.

The new job is effectively a promotion. Mr. Cross has managed an extensive policy portfolio related to the Home Loan banks, but he is identified most closely with a March 2006 proposal that would have required the banks to slash dividends in half until their retained earnings portfolio totaled at least $50 million plus 1% of nonadvance assets.

The plan, which angered many in the Federal Home Loan Bank System, left him with in a tense relationship with some of the banks.

But in an interview Tuesday, Finance Agency Director James Lockhart sought to distance Mr. Cross from the proposal.

"The retained earnings policy was not his policy," Mr. Lockhart said. "It was the Finance Board's policy. And obviously, as the director of supervision in those days, he was very involved."

Mr. Lockhart would not reveal whether a retained earnings policy was imminent, but he emphasized the need for capital at the Home Loan banks.

"What I've told the [Home Loan Bank] presidents is I think capital is a significant issue for any financial institution at this point, especially given the marketplace we're in, and especially being in the mortgage market, it's important to have adequate capital," he said. "It probably makes sense at this point to think about building capital, and all of them are doing that."

The importance of retained earnings clearly has not been lost on the Home Loan banks since the proposal was tabled in December 2006. The Home Loan Bank of Cincinnati, one of the more vocal opponents to Mr. Cross' plan, said Monday that its retained earnings rose more than 11% in the first nine months of the year, to $319 million.

Retained earnings at the 12 banks increased 4% in the first half of the year, to $3.8 billion. The system will release combined third-quarter figures next month.

Still, Mr. Cross' new position could set the stage for a fresh round of regulatory wrangling at the Home Loan banks.

"There is certainly not a warm relationship between the banks and Mr. Cross," said Bert Ely, an independent consultant in Alexandria, Va. "The real question becomes what does this mean longer term in terms of the role for the Federal Home Loan banks vis a vis Fannie and Freddie and housing finance generally."

Mr. Cross did not respond to an interview request Tuesday, but his supporters said he has no axe to grind.

Geoff Bacino, a director at the Finance Board, was the first senior official there to express doubt about Mr. Cross' proposal in 2006. Ultimately, Mr. Bacino persuaded his colleagues to table the idea. Though he had qualms with the proposal, he said Tuesday that Mr. Cross would not disrupt the Home Loan banks as part of his new role.

"Their lives are going to go along as they're going," he said. "He's been here. He's familiar with the issues. He's familiar with the people. Steve knows these guys, and they know Steve. You're not getting any hidden agendas, which is good in these times."

Mr. Lockhart said he hired Mr. Cross "because we felt that he had done and continues to do a good job."

But a source close to the Home Loan banks acknowledged concerns.

"He is a known quantity, but unfortunately, his background is a compliance background, which is somewhat rigid," said the source, who asked not to be identified. "In this extraordinary crisis, where markets face this huge liquidity crisis, he might not have the right skill sets. He doesn't see the forest through the trees."

Mr. Cross joined the Office of the Comptroller of the Currency in 1984 and took charge of compliance issues there in 1991.

He moved to the Federal Deposit Insurance Corp. in 1999 to serve as head of compliance and consumer affairs before joining the Federal Housing Finance Board in 2002.

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