Comment Detail

Comment

I have recently read a proposed change in the rules for membership in the Federal Home Loan Bank system. As I understand it, there would be a requirement for 1% of total assets in home mortgage loans and 10% of assets in residential mortgage loans.
May I suggest that this would preclude membership for many small community banks like Jefferson in that while Jefferson Bank looks to serve the community via residential mortgage lending, most of the home loans made today are sold off into the secondary market. As such, the bank(s) do not retain these assets on their balance sheet. The products offered by the secondary market entice borrowers into long term loans at fixed rates which the banks cannot match fund and thus holding these assets represents a rate risk to bank's loan portfolios.
On the other hand, community banks, like Jefferson, offer services to the commercial residential market and the overall real estate market in general by financing retail centers and small office buildings and light industrial real estate that create jobs and provide services to the local community.
The Federal Home Loan Bank is also considered by many local banks, including Jefferson, to be of great value in providing funding for growth and liquidity. The FHLB was critical to tour bank during the recent recession and by providing a source of funding that was sometimes no longer available in the federal funds market.
Thank you for your consideration.

John L Dulle, President--Jefferson Bank