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America’s Community Bankers has brought to the attention of the leadership of the House and Senate Banking Committees the concerns of ACB members over a recent Federal Housing Finance Board proposal to define the mission of the Federal Home Loan Bank System by creating “core mission activities” and a new category of asset called “acquired member assets” that, if implemented, “would fundamentally alter” the Bank System.

ACB said if the proposal is finalized, “it will establish a precedent to impose mission-related quotas that would micro manage each FHLBank’s investment activities for reasons other than safety and soundness.” ACB said in its letter to the lawmakers that Congress “clearly defined the FHLBank System’s mission and directed the individual FHLBanks, through the statutory shift of governance, to carry out this mission for their members and communities.”

ACB noted that FHFB Chairman Bruce Morrison had pledged to Congress last October, during consideration of the Gramm-Leach-Bliley Act, that the FHFB would not “take any action to promulgate proposed or final regulations limiting investments” until capital rules for the FHLBanks are final and the statutory period for submission of the Banks’ capital plans had expired.

ACB has strongly urged the FHFB not to move forward until the process for implementing a new capital structure is complete, as agreed to in the FHFB’s letter to Congress.

A copy of this letter is linked.