Magazine article American Banker

Acorn to Urge a Wider Role for U.S. Home Loan Banks

Magazine article American Banker

Acorn to Urge a Wider Role for U.S. Home Loan Banks

Article excerpt

WASHINGTON - At a time of mounting stress on the Federal Home Loan Banks, antipoverty organizations will urge Congress this week to expand the bank system's mission to include a role in rebuilding the nation's cities.

"We feel the public purpose of the banks needs to be brought up to date," said Chris Lewis, a lobyist for the Association of Community Organization for Reform Now.

In the wake of the Los Angeles riots, Acorn is seeking legislation that would require the district banks to purchase small-business loans originated by member institutions in distressed areas.

5% of Assets Suggested Target

Mr. Lewis said the organization had not settled on an amount, though others who have talked with the organization said a target of 5% of assets was suggested.

The loans would be originated by thrifts and banks that belong to the Home Loan Bank System. Those institutions would continue to hold a portion of any such loans sold to the district Home Loan banks as a means of ensuring prudent underwriting.

Acorn's views will get an airing this week, as the House Banking Committee begins a series of hearings today on legislation sponsored by Rep. Richard Baker, R-La., that would overhaul the bank system. The two proposals could be bundled as a package.

Bundling the Bills

The Baker bill is aimed at revitalizing the system by limiting its contribution to the savings and loan bailout, equalizing membership requirements for banks and thrifts, and encouraging consolidation. …

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