Two senators who are pushing a bill to reform the Federal Home Loan Bank System have watered down their legislation, but they might not have gone far enough to appease critics.

As early as next week, Sens. Chuck Hagel, R-Neb. and Evan Bayh, D-Ind., plan to submit the Federal Home Loan Bank System Modernization Act of 1999, which would change how the system is capitalized. Banks would contribute capital based on the riskiness of their loan portfolios rather than on asset sizes.

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