WASHINGTON -- In a step toward restructuring, the agency that oversees the Federal Home Loan Bank system directed its members to begin preparing for public forums this fall.

In a letter, federal housing commissioner Nicolas P. Retsinas asked each of the 12 district banks to hold discussions with member institutions on three issues: the system's contribution to housing and community development lending, its capacity to support community lenders, and system restructuring.

Mr. Retsinas, a member of the Federal Housing Finance Board, which oversees the Home Loan Bank System, called for records of the discussions by Sept. 15 in order to prepare for public comment hearings this fall.

Sense of the System

"The most important thing we'll get out of these discussions is a greater understanding of how the system contributes to housing finance and community redevelopment lending," Mr. Retsinas said, who is also assistant HUD secretary. "It'll put some flesh onto what constitutes community redevelopment lending."

The primary function of the Federal Home Loan Banks is providing advances to member financial institutions to help make home mortgages more available and affordable. Members include commercial banks, thrifts, credit unions, and insurance companies.

A recent HUD study found member banks need to expand support for multifamily lending, ease access to advances to support nonresidential lending in a community development context, and more aggressively promote low- and moderate-income homeownership.

The study, prepared for the House and Senate Banking Committees, is one of five such reports that are fueling efforts to overhaul the system.

"Part of it is we need a reaffirmation of the system's mission," said Acting Managing Director for the Finance Board Rita Fair. "We need a little expansion in community development.

"From these discussions, we hope to get information that demonstrates the contribution that the system is making to community lending, not only through special programs but also through regular advances."

The capital structure of the system needs some work as well, according to Ms. Fair.

"Since community banks joined the system, they've been able to leave and take their capital with them," she said. "We're working on some way to provide more permanent capital."

The finance board was established by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 to ensure the safety of the bank system and to administer the Affordable Housing and Community Investment programs.

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