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 January 15, 2004 #04-02
E-mail: [email protected]

ACB REQUESTS FINANCE BOARD TO WITHDRAW PROPOSAL TO FORCE FHLBANK REGISTRATION WITH SEC

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WASHINGTON, D.C. — America’s Community Bankers today asked the Federal Housing Finance Board to withdraw a proposal that would force the Federal Home Loan Banks to “voluntarily” register their securities with the Securities and Exchange Commission.

“ACB strongly believes that the Finance Board does not have the statutory authority to repeal the FHLBanks’ long-recognized exemption from SEC registration,” ACB said in its comment letter. “Because of our significant concerns, ACB requests the Finance Board to withdraw this proposal.”

ACB said the Finance Board’s proposal “will not produce an improved, enhanced FHLBank disclosure system.” Instead, ACB said “a statutorily authorized approach would be for the Finance Board to develop its own enhanced disclosure regime for the FHLBanks that meets the stated objectives of the board and the administration. This would avoid the legal and practical pitfalls found in this proposal. Regardless, ACB believes strongly that the Finance Board must promulgate rules that are statutorily defensible.”

Under ACB’s recommended approach, the Finance Board would use its safety and soundness authority in a manner similar to the banking agencies to adopt and enforce relevant SEC disclosure requirements. The Finance Board would consult with the SEC about accommodations to address the FHLBanks’ cooperative form and other unique characteristics. The Finance Board would adopt the rules in this area following a normal notice-and-comment procedure, and enforce the rules just as it enforces all others that apply to the FHLBanks.

When the Finance Board issued its proposal last fall, Chairman John Korsmo said the 120-day comment period would give the FHLBanks time to initiate individual discussions with the SEC that would lead to each Bank making a commitment to voluntarily register. But he also said that if some Banks resist SEC registration, the proposal could be finalized to require SEC registration.

The proposal would also imprudently force otherwise responsible corporate directors to undertake all of the risks associated with voluntary registration without a clear understanding of the operational and accounting issues it raises, ACB said. “If those issues cannot be resolved, the proposal’s arguable legal protection from shareholder lawsuits is a totally inadequate response to the board members’ fiduciary responsibilities.”

ACB also noted that the proposal is ill-timed because the FHLBanks are in the midst of implementing new capital structures.

ACB told the Finance Board that it reserves the right to submit further comments because the agency did not provide a thorough and timely response to ACB’s Freedom of Information Act request for research, analysis and findings that would demonstrate the impact that SEC registration would have on the Bank System. “Either such material does not exist or was redacted,” ACB said. “The timing and inadequacy of the Finance Board’s response has not afforded ACB and its members the opportunity to fully review the Finance Board’s rationale for its proposal, which was at the heart of our FOIA request.”

Click here for the comment letter.

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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