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Contact:
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Robert Schmermund
(202) 857-3104
Jim Eberle
(202) 857-3145
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Jim Eberle
(202) 857-3145 (work)
(703) 893-2593 (home)
[email protected]
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For Immediate Release
March 12, 2002
#02-18 |
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E-mail:
[email protected] |
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AMERICA’S COMMUNITY BANKERS URGES TREASURY DEPARTMENT
TO ADDRESS RETAIL INVESTMENT INSTRUMENTS OF FANNIE, FREDDIE
WASHINGTON, D.C. — America’s Community Bankers has urged the Treasury Department to address the competition and disclosure issues raised by Fannie Mae and Freddie Mac selling debt investment instruments to consumers
in increments of as little as $1,000. ACB is seeking a
minimum purchase requirement of $100,000, or the prevailing deposit insurance limit, with full disclosure of the risks.
ACB President and CEO Diane M. Casey, in a letter to Treasury Secretary Paul H. O’Neill, said ACB believes the small denomination debt instruments “are inconsistent” with the companies’ charters and threaten the deposit base
of banks and thrifts.
The debt instruments appear to many ACB members to be intended to establish the Fannie Mae and Freddie Mac names as retail brand names that would facilitate their entry into other retail markets, including deposit-like instruments and home mortgage loan originations, said Casey.
She said that over time, these products could weaken the ability of financial institutions to respond to the credit needs of their communities, including the need for mortgage credit.
Based on previous ACB discussions with Fannie and Freddie, the companies modified their prospectuses to delete language that had reserved the right to sell
directly to the public.
But Casey said there is now evidence that dealers are marketing the instruments to relatively unsophisticated consumers, and are possibly representing the securities
as fully guaranteed by the U.S. government. Casey attached two examples of recent
marketing pieces.
The letter is ATTACHED.
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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