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  • Comment Detail

  • Date: 12/22/14
    First Name: stephen
    Last Name: lewis
    Organization: Thomaston Savings Bank
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA39

  • Comment

    December 22, 2014

    Alfred M. Pollard, General Counsel
    Attention: Comments/RIN 2590-AA39
    Federal Housing Finance Agency
    400 Seventh Street SW
    Washington, D.C. 20024

    Re: Notice of Proposed Rulemaking and Request for Comments- Members of the FHLB Banks (RIN 2590-AA39)

    Dear Mr. Pollard:

    I am Stephen Lewis, President and Chief Executive Officer of Thomaston Savings Bank (TSB). I am writing to express my concerns about the notice of proposed rulemaking regarding membership eligibility in Federal Home Loan Bank (FHLB) put forward by the Federal Housing Finance Agency (FHFA). The proposed rule includes significant and unnecessary changes to long-standing membership rules for the FHLB system. The proposed changes are inconsistent with Congressional intent and the Federal Home Loan Bank Act (FHLB Act). For these reasons Thomaston Savings Bank opposes this proposed rule.

    The proposed regulation on FHLB membership creates many concerns for us. While TSB would meet the proposed rule requirements of the proposed rule today, I feel that the rule establishes a problematic precedent. There remains a chance that at some point in the future, due to prudent management of interest rate risk, economic or regulatory changes, our institution could fail the test. Our bank should be free to manage our balance sheet in light of what’s best for us, not the demands of the FHLB. Not to mention, the proposed regulation conflicts with concerns from financial regulators that financial institutions reduce holdings of long-term fixed rate mortgages and sell them in the secondary market.

    It is also crucial to point out that more than 25 years ago, Congress made it clear that community financial institutions (CFIs) such as TSB may use advances for purposes other than residential housing finance. It remains the intent of Congress today that CFIs may utilize FHLB liquidity for commercial real estate, small business, agricultural real estate and agricultural operating loans. This fact alone highlights how this proposed rule runs counter to existing federal statute.

    Broadly speaking, the FHLB of Boston serves as a critical source of liquidity for financial institutions in New England. They have proven to be a reliable and competitive source of liquidity. This rule, if adopted, would remove the certainty that the FHLB can be counted on to be a reliable source of liquidity in all market conditions. And, we are very concerned, our regulators may not view the FHLB as a reliable source of liquidity as well.

    Access to advances is critically important to TSB because FHLB liquidity allows us to offer competitive rates to our customers that we might not otherwise be able to offer. This is an important liquidity source in times of need. Additionally, having a credit line and borrowing capacity with FHLB of Boston promotes the safe and sound management of our institution.

    Because the proposals would harm FHLB members and hurt housing, credit and economic growth, we ask that the FHFA withdraw the new membership rules contained in its September 12, 2014 Notice of Proposed Rulemaking and work with FHLB members to preserve the FHLBs as a reliable partner of its members that benefits local lending institutions, communities, housing, homeownership and the nation’s economy.

    Sincerely,
    Stephen Lewis
    President & CEO
    Thomaston Savings Bank