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  • Comment Detail

  • Date: 09/22/14
    First Name: Michael
    Last Name: Tucker
    Organization: Greenfield Co-operative Bank
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA39

  • Comment

    September 22, 2014

    Alfred M. Pollard, General Counsel
    Attention: Comments/RIN 2590-AA39
    Federal Housing Finance Agency - Fourth Floor
    1700 G Street, NW
    Washington, D.C. 20552

    Re: Notice of Proposed Rulemaking and Request for Comments – Members of Federal Home Loan Banks (RIN 2590-AA39)

    Dear Mr. Pollard:

    I am writing to the Federal Housing Finance Agency in response to notice of proposed rulemaking on Federal Home Loan Bank membership requirements. I am President & CEO of Greenfield Co-operative Bank (“GCB”), a Massachusetts chartered mutual cooperative bank with some $349 million in assets. GCB originates both residential and commercial loans here in Franklin and Hampshire Counties in Western Massachusetts. We currently have about $9.7mm in borrowings from the Federal Home Loan of Boston. GCB has traditionally used deposits to fund our loans, though at times we have used FHLB borrowings as a short term liquidity solution. It also helps us ladder our liabilities for interest rate risk management purposes. I appreciate the opportunity to submit this comment on the Proposed Rule.

    I am concerned that the proposed rule would unnecessarily limit banks’ (like mine) access to the FHLB system. Clearly, the proposed changes would significantly increase FHLB bank membership requirements for existing and prospective members, which would reduce the availability and negatively affecting the reliability of liquidity on which we depend. Moreover, stricter requirements will call into question our ability to borrow under all future economic scenarios. For example, while we have traditionally used FHLB for liquidity purposes, we have also used FHLB advances to match fund longer term community development loans. This has helped our liquidity position and allowed us to provide longer term fixed rate pricing for community development projects like a SRO living development for low to moderate income individuals in a local Franklin County community. Restrictions on membership would discourage potential members from joining, and the net effect would be to inhibit the FHLB banks’ ability to serve the liquidity and housing and community development needs of their districts. This could indirectly impact our ability to access the FHLB system for our own bank’s needs in the future.

    The Federal Home Loan Bank Act includes requirements to become a member of a FHLB bank. In the past, Congress has taken action to amend the Act in ways that have expanded membership and expanded eligible collateral. Congress has not sought to require continuous testing of such requirements or a percentage of assets to demonstrate a commitment to housing finance. With all due respect to the Federal Housing Finance Agency, I would point out that limiting membership should stay within Congress’ purview to do so, not the FHFA’s.
    Greenfield Co-operative Bank has been a member of the Federal Home Loan Bank of Boston base in New England. The Federal Home Loan Bank system has been supporting the New England region extremely successfully for more than 80 years. I am also not aware of any credit loss or any safety and soundness issues that the Federal Home Loan Banks have experienced associated with doing business with FHLB bank members.

    During the 2008 recent financial crisis, when dislocations in the capital markets made funding from other sources difficult, the FHLB was a critical source of liquidity for my bank. Policies that would unnecessarily restrict FHLB access, such as the proposed membership changes, could have had serious consequences had they been in effect by needlessly removing current members in good standing and exacerbating the harmful effects on financial institutions and our economy. The FHFA proposal for membership requirements would impose additional regulatory burdens on FHLB members and add an element of uncertainty to FHLB membership. My bank would be required to manage our balance sheet to make certain we have ample assets to meet the proposed membership requirements to ensure access to FHLB funding products. As a result, if the Proposed Rule were adopted, the FHLB would be a far less reliable funding partner.

    In closing, I wish to emphasize how important reliable access to FHLB Boston is to our financial institution. The Proposed Rule would create uncertainty in our region and beyond and impede the slowly improving housing market and its positive effect on a continued economic recovery. If adopted, the Proposed Rule would seriously alter, and even harm, the strong and stable relationship with the FHLB banks that my bank and other community banks (that are FHLB members) have relied on for decades.

    For these reasons, we request that the Proposed Rule be withdrawn. If you or your staff have any questions, you can call me at the number below. Thank you for the opportunity to submit a comment.

    Sincerely,

    Michael E. Tucker, Esq.
    President & CEO
    Greenfield Co-operative Bank
    63 Federal Street
    Greenfield, MA 01301
    (413) 772-0293, ext 124