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  • Comment Detail

  • Date: 10/02/14
    First Name: Bart
    Last Name: Colwell
    Organization: Terre Haute Savings Bank
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA39

  • Comment

    As a member of the Federal Home Loan Bank of Indianapolis, I am very concerned about the proposed rules regarding FHLB membership. There are numerous areas that concern me:

    1. The "Makes Mortgages" and "Holds Mortgages" tests could change the way our bank manages its balance sheet and could have a negative impact on interest rate risk management, liquidity and profitability.

    2. Insurance companies borrow 60% of FHLBI advances. If the "Makes and Holds" tests become too stringent, the insurance companies will become ineligible for membership. If that happens, profitability at FHLBI will be reduced, which will mean that Affordable Housing grant funds will be reduced since the FHLBI sets aside 10% of its earnings for said grants. The end result will be reduced home ownership availability for low-to-moderate income borrowers. Community banks work hand-in-hand with the FHLBI to increase home ownership opportunities.

    3. If the FHLBI becomes less profitable, its long-term viability might come into question, thus perhaps closing a primary liquidity avenue for community banks. If liquidity is squeezed, banks will not make as many home mortgage loans. First, advances might no longer be available as a source of loan funding and second, community banks rely on the FHLBI to purchase long-term residential mortgages so that liquidity flows to the banks' balance sheets which allows more home loans to be originated.

    4. Quite honestly, the proposed rules seem to be a case of regulatory overreach where by the FHFA is trying to usurp the Federal Home Loan Bank Act passed by Congress into law in 1932. There is no good reason for the rules being proposed.

    Thank you for your consideration.