WASHINGTON -- The Clinton administration is taking its time in filling open seats on the Federal Housing Finance Board, and now the system's barons are saying that's fine with them.

In a House subcommittee hearing, Alfred A. DelliBovi, president of the Federal Home Loan Bank of New York, said the three empty seats on the board should be left vacant until Congress takes up "the comprehensive legislation we know is coming."

Meanwhile, he said, the law should be changed so that two sitting members constitute a quorum needed to make policy decisions. Current law requires three members to be present to transact business.

The New York bank president appeared before the House Banking subcommittee on general oversight, investigations, and the resolution of failed financial institutions.

Its chairman, Rep. Floyd Flake, D-N.Y., has been engaged in a broad review of the Federal Home Loan Bank System, which he sees as a catalyst for economic development.

Mr. DelliBovi, one of 12 district Home Loan bank presidents, seemed to find a receptive audience. Dean Schultz, president of the San Francisco bank, made the same proposal in his testimony, and lawmakers and industry representatives endorsed it.

"We don't think appointments should be made until there is legislation," said David Holland, president of the Savings and Community Bankers of America.

Agreeing was Rep. Richard Baker, R-La., the principal advocate on Capitol Hill of legislation to overhaul the Federal Home Loan Bank System.

However, Rep. Baker said he is hopeful that upcoming negotiations on community development bank legislation could provide a forum for a broad look at the bank system.

The House version of the bill contains an amendment sponsored by Rep. Baker that would permit district banks to funnel up to 40% of their loans to commercial bank members, compared with 30% now.

"This conference could be more productive than people think," he said.

Rep. Baker also downplayed rumors that he is ready to compromise on the issue of bank membership.

"There's certainly room for discussion, but I'm not discussing it at this moment," he said.

Some industry sources say conferees could adopt the Baker amendment, which is opposed by much of the thrift industry, but add language that would permit savings and loans to pull some of their stock out of the system.

The SCBA's Mr. Holland said his group has no objection to increased commercial bank participation in the system, but not until other membership requirements are equalized.

Thrifts are now bound by the qualified thrift lender test, which requires them to invest 65% of assets in housing-related loans.

"A QTL member who falls below 65% can't borrow one penny from the district bank," Mr. Holland said. Commercial banks can keep just 10% of assets in housing loans.

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