OBL Files Comment Pushing Back on FHLB Mission Change

07/17/24

Last year the Federal Housing Finance Agency's (FHFA) launched a yearlong listening tour to examine the Federal Home Loan Bank (FHLB) system. Following the release of the agency report on the future of the FHLB system, FHFA issued a Request For Information in May, to clarify the FHLB system's mission and update how it evaluates system banks achieving those goals. The agency will likely issue rulemaking in the near future based on the report and feedback it receives from the RFI.

In our letter, we state it is important to recognize that the evolution of the FHLB system has been the result of statutory changes made by Congress, but the RFI appears to contemplate future rulemaking without congressional direction. "Absent clear directive from Congress that changes are needed to the mission of or incentives provided to the [FHLB] system, the FHFA should exercise extreme caution that it does not exceed its regulatory mandate when proposing changes.,". This RFI suggest that regulators are considering significant changes to the system without first receiving direction from Congress. The associations also provided answers to several questions sought by the FHFA and took issue with the agency's claim that its recent review was the first "comprehensive" review of the FHLB system. "That assertion ignores the fact that there have been numerous legislative and regulatory changes to the system over its 92 years of operation," they said.

Since FHFA launched the listening tour the OBL has been pushing back every step of the way as we believe the FHLB is a vital tool banks in Ohio use for liquidity and housing investments, and the FHFA should not change the system to accomplish broader public policy goals without first examining the unintended consequences to the safety and soundness of the system.