WASHINGTON -- The Clinton administration mounted a new attack this week on legislative efforts to expand commercial bank membership in the Federal Home Loan Bank System, drawing a rebuke from a key Republican lawmaker.
Rep. Richard Baker, R-La., told the administration that its argument against "piecemeal" reform "is just not acceptable."
His amendments, he said in a letter to Treasury Under Secretary Frank Newman, would increase the pool of capital available for affordable housing and community development.
Delay Recommended
In a letter to Senate Banking Committee Chairman Donald W. Riegle, D-Mich., Mr. Newman and Nicholas Retsinas, assistant Housing and Urban Development secretary, said Congress should wait until next year to overhaul the system.
At that time, they said, a comprehensive package of reforms could be considered.
However, Mr. Baker told the two that change has to come one step at a time in the bank system.
"We have had nothing but piecemeal reform of the FHLB System over the past five years," he said, adding: "I have not heard one valid argument on the merits against the Baker amendment."
Wider Availability
Rep. Baker's amendment to the Community Development Financial Institutions bill would permit the bank system to direct up to 40% of its advances to institutions that don't meet the qualified thrift lender test -- mostly commercial banks -- up from 30%.
It would also permit loans to nonmember institutions, and provides incentives to participate in the system's community investment program.
The two administration officials said that as of May 31, only 9.5% of the current 30% limit was being used -- a fact they said shows that the Baker amendment is not needed immediately.
