Magazine article American Banker

FHLBs Explain Silence on SEC Registration Plan

Magazine article American Banker

FHLBs Explain Silence on SEC Registration Plan

Article excerpt

Under a controversial new plan, the 12 Federal Home Loan banks would be required to register with the Securities and Exchange Commission, release uniform quarterly financial data, and present detailed analyses of their risks and prospects.

Home Loan bank officials have been fighting this idea for a year, arguing that SEC registration would create an unnecessary layer of regulation and increase costs. Yet most Home Loan bank executives have been strangely silent since Sept. 10, when the proposal was formally unveiled by the Federal Housing Finance Board.

John L. von Seggern, the president of the Council of Federal Home Loan Banks, said executives are preoccupied with pending legislation that would create a new regulator for Fannie Mae and Freddie Mac. "It's just a matter of timing and allocation of resources," Mr. von Seggern said. "We're probably a long time away from getting much out of the Federal Home Loan banks" on the SEC registration plan.

The Finance Board did give the system until Jan. 15 to submit comments.

Finance Board Chairman John T. Korsmo has said SEC registration would ensure the stability of the Home Loan banks by holding them to the same disclosure standards as publicly traded companies. The plan is designed to bring the Home Loan banks in line with Fannie Mae and Freddie Mac, which voluntarily agreed in summer 2002 to register with the SEC. But bank officials asked the Finance Board to mandate the registration to protect them from lawsuits.

"We didn't want to hide anything -- we want full disclosure -- but we were concerned about director liability," said J. Edward Norris 3d, the chairman and president of Plantation Federal Bank in Pawleys Island, S.C., and the chairman of the board of directors at the Federal Home Loan Bank of Atlanta.

The Federal Home Loan Bank of Pittsburgh opposes the Finance Board's proposal, arguing that the higher regulatory costs could translate into reduced dividends and higher borrowing costs for financial institution member and could slash millions from affordable-housing programs. …

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