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September 18, 2014

Johnson, Crapo urge more time for FHLB member criteria

Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, wrote Federal House Finance Agency Director Mel Watt requesting a 60-day extension of the comment period regarding proposed changes to Federal Home Loan Bank membership criteria.

"Given the important role the Federal Home Loan Banks play in providing liquidity to small financial institutions and supporting community development efforts, including through Community Development Financial Institution membership, any change to membership criteria should only be undertaken after thorough consideration," the senators wrote Watt on Wednesday.

The letter adds that "a longer comment period would allow respondents the time to provide FHFA with the feedback that a rule of this importance requires."

About 19 percent of all credit unions are eligible to join the FHLBs, which can be a source of liquidity for credit union mortgage lending. A key change in the proposed rule would require a credit union to have 1 percent of assets in home mortgage loans and, in some cases, 10 percent in residential mortgage loans on an ongoing basis. Currently, those are one-time requirements for application.

NAFCU also asked FHFA for a 60-day extension of the current comment period on Sept. 4. Currently, comments are due Nov. 12 to FHFA on its proposed changes.