ICBA Warns on FHFA Reforms

The Independent Community Bankers of America (ICBA) has called on the Federal Housing Finance Agency (FHFA) not to disrupt the Federal Home Loan Bank (FHLBank) System.

FHFA published the report ‘FHLBank System at 100: Focusing on the Future’ in August to outline recommendations for strengthening the FHLBank System.

The recommendations include modernizing the system’s membership structure to ensure the FHLBanks remain relevant and accessible to a broad range of financial institutions.

ICBA president and CEO Rebeca Romero Rainey said: “As the FHFA considers rulemakings, guidance, and legislative recommendations to improve the ability of the 11 FHLBs to fulfill their mission, the agency must not... Allow participation by unregulated nonbanks or restrict large banks from membership.”

She added: “We call on the FHFA to ensure any actions it takes on the Federal Home Loan Bank System do not disrupt this important source of liquidity for community banks.”

ICBA also emphasized that the changes must not compromise the system’s cooperative structure, place additional restrictions on community bank members or consolidate the system without the grassroots leadership of its member-owners.

Sandra Thompson, FHFA director, said: “FHFA is focused on ensuring that the FHLBank System serves as a stable and reliable source of liquidity in support of its housing finance and community development objectives — and does so in a safe and sound manner.”

The review was praised by the American Bankers Association for recognizing “the essential role of the Federal Home Loan Bank system”. However, it also noted that some of the recommendations outlined in the report “raise concern”.

ICBA criticized the Small Business Administration’s (SBA) granting new lending licenses, arguing that by opening the program to non-bank lenders it “risks undermining this vital program and the borrowers who rely on it”.