The U.S. District Court in Austin, Tex., has ruled the Federal Home Loan Bank of Chicago may continue a controversial pilot program.

Judge Sam Sparks on June 25 dismissed a case brought by the Texas Savings and Community Bankers Association and the Western League of Savings Institutions in May 1997. The trade groups had argued that the Federal Housing Finance Board had overstepped its authority by permitting the Chicago Home Loan bank to fund and hold mortgages made by member banks and thrifts.

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