WASHINGTON -- One of the two remaining members of the Federal Housing Finance Board endorsed an amendment sponsored by Rep. Richard Baker, R-La., that would allow commercial banks to increase their borrowing from the Federal Home Loan Bank system..

Although the Clinton administration opposes the amendment, Lawrence U. Costiglio, a member of the finance board, told Rep. Baker in a letter that his legislation would help fulfill housing needs without jeopardizing the system's safety.

"I fully support your amendment as a means of facilitating increased housing and community development lending in a manner that does not affect system safety and soundness," he said.

Comprehensive Legislation Mr. Costiglio said he also supports the comprehensive legislation that the Clinton administration plans to propose next year.

But unlike other administration officials, Mr. Costiglio said he sees no reason why the Baker amendment would diminish. prospects for the comprehensive bill.

"Considering the limited, almost technical nature, of your amendment, I do not believe that its adoption in any way precludes or compromises the prospects for comprehensive system legislation next year," he added.

Three of the five seats on the Federal Housing Finance Board are vacant, leaving the board with neither a quorum nor a means of setting policy when the two sitting directors disagree.

As a result, Mr. Costiglio's letter represents his views as a director, rather than the views of the agency.

A spokesman for the board declined to comment.

A Boost for the Amendment

However, an aide to Rep. Baker said the endorsement is just one more bit of support that will help the amendment in the expected upcoming HouseSenate negotiations on the measure.

The Baker amendment was included in the House version of the Community Development Financial Institutions bill. The Senate-passed bill does not address the issue.

The House conferees are expected to support the measure strongly. However, the Senate is divided, and appears to he leaning against the measure.

Of the five Senate conferees appointed to negotiate with the House, two - Senate Banking Committee Chairman Donald W. Riegle, D-Mich. and Sen. Paul Sarbanes, D-Md., are expected to vote against it.

The two Republican conferees, Sen. Alfonse M. D'Amato of New York and Sen. Phil Gramm of Texas, are in favor of it, according to congressional sources.

That leaves Sen. Christopher J. Dodd, D-Conn., as the swing vote, and he may be leaning against the amendment, An aide to Sen. Dodd said the lawmaker was uncommitted, but noted that most of the Connecticut thrifts that have contacted the office are opposed.

Thrifts, which are required to own stock in the home loan bank system, are reluctant to expand the borrowing rights of non-qualified thrift lender members - mostly commercial banks - except in the context of broader reform.

Savings associations are required to meet the qualified thrift lender, or QTL, test which mandates that they hold 65% or more of their assets in housing-related loans.

Non-QTL institutions can now take up to 30% of the loans from all 12 district Home Loan Banks. That limit applies to the system as a whole, rather than any one institution. The Baker amendment would bump it up to 40%.

Advocates of the Baker amendment note that, in some districts, non-QTL borrowings are bumping up against the limit, suggesting the potential for systemwide borrowings to hit the 30% ceiling.

However, Paul Schosberg, president of Savings and Community Bankers of America, the thrift industry's major trade group, said growth in non-QTL borrowings have been negligible.

"From Jan. 1 of this year until the present, non-QTL borrowings have gone from 8% to 9.5%," he said. "That's a one and a half percentage point increase. So there's no big surge in borrowings."

In addition, the trade group's chief lobbyist, Randall McFarlane, pointed out that many commercial banks can borrow as QTL members, since their portfolios are dominated by mortgage and real estate loans. Concern over Clinton Stance Some commercial bankers are concerned that the Clinton administration wants to keep the Baker amendment issues on the table to use as leverage with commercial banks next year.

Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, said a report prepared by the Department of Housing and Urban Development suggests that the Home Loan banks should be assigned more responsibility for supporting low-income housing.

"There are sensitive and controversial issues in HUD's report to Congress regarding the future regulation of the Federal Home Loan Bank System and the purpose of the system," he said.

He said that Treasury Under Secretary Frank Newman "clearly wants these issues [in the Baker amendment] held over until 1995 so that he can leverage the banking industry."

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