Home Loan Banks to Trim the Fat; Finance Board Seeks a Streamlining of Back Offices
Cope, Debra, American Banker
Home Loan Banks to Trim the Fat
WASHINGTON - The government is taking what may be a first step to consolidating the 12 banks in the Federal Home Loan Bank System.
The Federal Housing Finance Board said Thursday that it had launched a drive to streamline the back offices of the regional Home Loan banks. The initiative may set the stage for eventual mergers of the banks.
Speculation has been rising about consolidations of the 12 banks, which were established in the 1930s to provide liquidity to home lenders and have seen their activities constrained along with the thrift industry's troubles.
Over the next 90 days, a Finance Board task force will conduct a thorough review of the operations and begin to eliminate overlapping functions, particularly in the cost-intensive data systems area.
Planned Phase-In for Cuts
Officials of the Finance Board - an agency set up in 1989 to oversee the Home Loan banks - anticipate they can cut operating expenses by $10 million to $20 million a year. That would be a noticeable chunk of total expenditures, estimated at $260 million in 1991.
Once recommendations are in hand, cost-cutting measures will be phased in over the next year.
Each of the 12 Home Loan banks maintains an independent data-processing system for tracking such elements as investments, loans, and collateral. By sharing hardware, software, and personnel, they could slash expenses dramatically, agency officials maintain.
The task force - headed by Finance Board Directors Lawrence U. Costiglio and Marilyn R. Seymann - has begun taking inventory of all operations, from equipment purchases to maintenance contracts to telephone services. …