Federal Home Loan Bank of Chicago President Alex J. Pollock was on Capitol Hill last week trying to head off opposition to his bank's plan to fund and hold mortgages originated by its members.
The pilot program, announced Jan. 9, is intended to cut members' costs when they move mortgages off their books. But critics warn the program would turn the Home Loan banks into direct lenders, and they want Congress to shut it down.
House Banking committee staffers said lobbyists from big thrifts, such as Oakland, Calif.-based Golden West Financial Corp., complained that the program puts all members of the Home Loan Bank System at risk.
While lawmakers have not weighed in publicly, sources said Rep. Richard Baker, R-La., is concerned piecemeal lending programs could divert support from a broader overhaul of the system. The influential banking committee member has introduced legislation to expand the lending authority of Home Loan banks.
But Mr. Pollock tried to counter the naysayers during visits with congressional staff members last week. "We think this is dead-on with the core mission of the Federal Home Loan banks," he said. "Every dollar used in funding the program goes directly to putting American families into housing."
America's Community Bankers is gearing up for what is expected to be a hot debate among its members, said Robert R. Davis, the thrift trade group's director of government relations. "The extent to which this poses competition to Home Loan Bank members needs to be evaluated," he said. "There's going to be a lot more heard about this program." Bill McConnell