WASHINGTON Washington Mutual Banks application for multiple memberships in the Federal Home Loan Bank System is being opposed by one of its mortgage rivals, World Savings Bank of Oakland, Calif., and four of the 12 Home Loan banks.
The Home Loan banks have asked their regulator, the Federal Housing Finance Board, to reject the request by the Stockton, Calif.-based Wamu Bank, a subsidiary of the Seattle thrift company Washington Mutual Inc., to join the Federal Home Loan Bank of Dallas while keeping its membership in the San Francisco Home Loan Bank.
Separately, on Tuesday a spokesman for FleetBoston Financial Corp. confirmed that it also wants to hold dual Home Loan bank memberships. The company, which already belongs to the Boston Home Loan Bank, has filed an application to join the New York Home Loan Bank.
The Atlanta, Boston, Des Moines, and San Francisco Home Loan banks have advised the Finance Board not to decide Wamu Banks application but instead to issue a broad rule on the issue of dual memberships.
Bill Glavin, a spokesman for the Finance Board, announced on Tuesday that it is drafting an advance notice of proposed rulemaking that would deal with the systemwide implications of multidistrict membership. Mr. Glavin would not say when a proposed rule would be announced or how it might affect Wamu Banks request.
John Von Seggern, president of the Council of Federal Home Loan Banks an umbrella group representing 10 of the 12 district banks said it formed a working group this month to examine the issue. In letters to the Finance Board regarding Wamu Banks application, industry representatives said the government cannot avoid deciding the issue.
It is clear that industry consolidation of FHLBank System members will continue, and multi-FHLBank membership and/or FHLBank consolidation issues may be more critical over time, wrote Robert R. Davis, managing director of government relations at Americas Community Bankers.
After its parent announced plans to buy Bank United Corp. of Houston, Wamu Bank said it wanted to maintain Bank Uniteds membership in the Dallas Home Loan Bank. It petitioned the Finance Board, which lets banks seek membership in a Home Loan bank district adjoining their own.
The Bank United deal closed last month, but Wamu Bank was not allowed to retain Bank Uniteds membership in the Dallas Home Loan Bank. It has said it wants the dual membership to protect the Dallas Home Loan Bank, whose biggest member was Bank United.
But opponents said the Finance Boards rules only allow membership in one Home Loan bank or an adjoining district not both.
Dean Schultz, president and chief executive officer of the San Francisco Home Loan Bank, said Wamu Banks petition does not sufficiently justify a step as far-reaching as approving the first-ever dual membership and establishing the precedent thereby created without going through comprehensive rulemaking.
Allowing dual membership creates a separate class of members that will be permitted to have multidistrict memberships, and the resulting economic efficiencies, Mr. Schultz wrote in a letter to the Finance Board.
In another letter, Michael A. Jessee, president and chief executive officer of the Boston Home Loan Bank, wrote: The rights of members throughout the bank system could well be affected by the Finance Boards actions relating to the petition.
In its letter opposing Wamu Banks request, World Savings said more analysis is needed of such a moves long-term impact.
If we have reached a point where membership in the Federal Home Loan Banks should be revamped, then we should take the time to do the necessary analysis and seek the necessary legislation, wrote Shawn K. Sax, a vice president and senior counsel at World Savings. This massive potential change to the FHLB System is being advanced inappropriately through the petition process.
Mr. Sax also argued that Wamus legal arguments are wrong, that its request would hurt other Home Loan bank members, and that all members should be treated the same.