Supporters of Federal Home Loan Bank reform have compromised with Senate Banking Committee Chairman Alfonse M. D'Amato and other opponents, significantly improving their bill's chance of enactment this year.
The deal was hammered out in talks this week between Federal Housing Finance Board Chairman Bruce A. Morrison, a strong reform supporter, and Federal Home Loan Bank of New York President Alfred A. DelliBovi, an opponent.
Under the agreement, a Home Loan bank would have to set aside extra risk-based capital for nontraditional investments, such as mortgage-backed securities. Also, a provision would be added to let banks and thrifts buy nonredeemable stock in Home Loan banks, sources familiar with the deal said.
"The details as they have been explained to me appear to be something that is moving us toward consensus," said John von Seggern, executive vice president of the Council of Federal Home Loan Banks.
The New York bank has led the fight for broader investment powers and nonredeemable stock.
Further appeasing Sen. D'Amato, Sen. Chuck Hagel, the Nebraska Republican sponsoring the bill, has agreed not to attach it to credit union legislation that the Senate is to vote on this month. Instead, Sen. D'Amato will support linking the plan to the Shelby-Mack regulatory relief bill or pushing it forward separately, sources said.