Banking group ‘strongly’ opposes non-bank membership in FHLB system

An influential banking industry group this week said: Federal Housing Finance Administration (FHFA) should not allow non-bank lenders and real estate investment trusts to be members of the $1 Trillion. federal mortgage bank system.

In a statement released on Tuesday, President Rebecca Romero Rainey said: Independent Community Bankers of Americasaid the FHLB “needs to continue to be a strong, stable and reliable source of funding for community banks, including many agricultural financiers.”

The FHFA has been conducting a comprehensive review of its 90-year-old FHLB system, which currently comprises 11 regional FHL banks and approximately 6,800 member institutions, since the fall. FHL’s banks distribute funds from the global bond markets to its members, including thousands of commercial lenders, thrift banks, credit unions and insurance companies in the United States. Member institutions can borrow money cheaply and pass savings on to their members.

ICBA does not “compromise” the regional and collaborative structure of the system, allow non-deposit banks access to FHLB programs and services, or integrate the system without the “grassroots leadership” of member owners. He said he would “strongly” oppose any attempt to do so.

FHFA to regulate similar to FHLB system fannie mae When freddie macsaid they are particularly interested in receiving feedback in six key areas. FHLBank Organization, Operational Efficiency and Effectiveness. His FHLBanks role in promoting affordable, sustainable, equitable and resilient housing and community investment. Address the unique needs of rural and economically vulnerable communities. Member Products, Services and Additional Requirements. Membership Eligibility and Requirements.

On the other hand, ICBA and American Bankers Association While non-banks have voiced their opposition to gaining access to the FHLB system, other influential industry groups say the FHLB system is outdated and primarily directs government subsidies to large banks. , seeks a different outcome, claiming that it does not best serve the housing market.

of Mortgage Bankers Association In particular, we are promoting the inclusion of non-banks and real estate investment trusts. In a letter to his FHFA director at the time, Mark Calabria, in 2020, the trade group said the expansion would “better reflect the diverse providers of single-family and multifamily housing finance across the country. ’ said it should.

Legislation will be needed and probably many years to open up membership to non-banks and real estate investment trusts.

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