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NAFCU Senior Regulatory Affairs Counsel Aminah Moore wrote to the Federal Housing Finance Agency (FHFA) Friday in response to the agency’s comprehensive review of the Federal Home Loan Bank (FHLB) System as it approaches its centennial. Overall, Moore urged the FHFA to avoid disrupting the FHLB System as a result of this review and recommended any expansion of FHLB membership should exclude non-depository institutions, such as underregulated fintechs, because they are not subject to capital requirements or regulated by a prudential regulator.

NAFCU previously wrote to the FHFA in response to its request for input on FHLB membership. The association wrote that any membership expansion should only include entities that are subject to a regulatory scheme, and that the agency should “prohibit the use of conduits as they inject significant serious risk to the system and cannot demonstrate a nexus to the FHLB’s public policy mission.”

In addition, Moore called on the FHFA to waive the prohibition in its tangible capital rule in the short term and align its tangible capital rule with the capital definition of federal financial regulators in the longer term.

“Many of NAFCU’s member credit unions rely on the FHLBs for liquidity purposes to fully serve their membership’s mortgage and community development needs,” wrote Moore. “As of the end of 2022’s second quarter, the System had 1,574 credit union members, an increase of more than 30 percent over the past 10 years.” She went on to note that credit unions now account for nearly 25 percent of the System’s total membership base.

Moore also requested that the FHFA support NAFCU in its efforts to correct the exclusion of credit unions from the statutory definition of community financial institutions.

NAFCU earlier this year wrote to the House Rules Committee urging Committee members to support an amendment filed by Rep. Ritchie Torres, D -N.Y., which would “expand the definition of Community Financial Institutions in the Federal Home Loan Bank Act to include credit unions and Treasury-certified non-depository community development financial institutions.” This status would enable credit unions to pledge small business, small agriculture, and community development loans as collateral within the FHLB System.

Earlier this month, Moore provided remarks during the FHFA’s three-day public listening session on the FHLB System where she reiterated many of these same points.

As a leader in housing finance reform efforts, NAFCU advocates for credit unions' ability to help provide safe, sustainable, and equitable housing for all communities.