ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release December 20, 2000 #00-140
E-mail: [email protected]

ACB COMMENDS THE FHFB FOR FHLBANK CAPITAL RULE

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Statement by Diane M. Casey, president, America’s Community Bankers, on the adoption today by the Federal Housing Finance Board of a capital rule for the Federal Home Loan Bank System:

The capital rule for the Federal Home Loan Bank System adopted unanimously today by the Federal Housing Finance Board embraces virtually all of the significant changes urged by America’s Community Bankers on behalf of Bank System members.

We are pleased that the FHFB agreed with ACB on the importance of preserving the System as a cooperative, maintaining the user-friendly character of the FHLBanks, and recognizing the need to minimize any adverse consequences from the conversion of members’ current stock to the new classes of stock.

The rule will give the FHLBanks the necessary flexibility to develop capital plans appropriate for their stockholders while ensuring that a suitable degree of commonality exists. The new risk-based capital rule will enhance the FHLBank System’s excellent record of safety and soundness.

While the final rule is a very positive step for members of the FHLBank System, ACB will work with the FHFB, the FHLBanks and others to resolve several outstanding issues. These include the need to ensure that products like the mortgage partnership programs are capitalized by member-users through activity-based stock purchases; deciding how to capitalize joint mortgage partnership-type programs between the FHLBanks; and ensuring that any prospective changes in the voting rights and allocation of FHLBank directors give fair and equitable representation to all members of the System.

ACB commends the FHFB for agreeing to address any other issues that may arise as the FHLBanks develop their capital plans. The FHFB specifically recognized that these may include any stock conversion problems, such as tax and accounting consequences. ACB will also work with the banking regulators to address the regulatory capital treatment of the new FHLBank stock.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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