Press Release Tools E-mail This Press Release Printer-Friendly Format

America’s Community Bankers has urged the Federal Housing Finance Board to clarify its proposed regulation governing the election of Federal Home Loan Bank directors so that the process is understandable to Bank System members and outsiders.

“The proposal is so complex that it will be difficult for the Banks and the individual members to hold elections and constitute boards of directors that they can be assured are in compliance,” ACB said in its comment letter to the FHFB. ACB said that the process being proposed “could result in renewed confusion every year as the number of [board] seats in each district may be reallocated.”

The 1999 financial modernization law increased the terms of elected directors to three years from two and the FHFB subsequently interpreted the law to be effective immediately. The FHFB then extended existing board terms and declared there were no open seats, effectively negating the 1999 elections.

ACB also urged the FHFB to consider reconfiguring the FHLBank boards so that each charter type of members is represented. ACB suggested allocating board seats based on the amount of advances outstanding. Currently, seats for each state are allocated based on the amount of stock members own in the FHLBank.

ACB said, “It has become increasingly apparent that the Banks’ boards do not, as a matter of course, reflect the most active users of the system, which we believe impairs the effectiveness of the directors.”