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  • Comment Detail

  • Date: 03/17/23
    First Name: Larry
    Last Name: Thompson
    Email: lthompson@firstmontanabank.com
    Organization Type: other
    Organization: First Montana Bank

  • Comment

    FHFA - It is my understanding that you are requesting comments about the FHLB System as part of a current review of the System. My comments are as follows.
    Our bank is a small bank by today's standards, we are a little over $500 million in total assets. We rely on the FHLB Des Moines as a primary source of funding. The stability of our credit line, and ease with which to access the vast array of products offered by the Des Moines bank has made them an extremely valuable partner in the operation of our bank allowing us to fund community investment activities such as a hospital remodel/expansion and provide commercial financing to businesses, in addition to financing 1 to 4 family homes and multi-family housing.
    I have been reading lately that the FHFA wants to refocus the FHLB's mission to primarily create affordable housing. I know you realize that commercial financing creates and protects jobs. No job, no home loan. Enough said on that topic.
    It is also my understanding that the FHFA is considering allowing higher risk institutions to become members. Higher risk institutions such as REIT's, mortgage banks, and captive insurance companies have limited if any regulatory oversight and allowing them to join the FHLB would be a considerable increase in risk to the FHLB system. This would be a very bad mistake.
    Another item I have heard that is being considered is no longer allowing large banks to be members. Large banks provide a safe and sound source of income to the FHLB. This helps the FHLB keep costs low for all members, which helps us smaller banks compete and provide the aforementioned lending opportunities to our communities. Large banks should be allowed to continue to hold membership in the FHLB.
    There has also been talk about requiring tracking of advance proceeds, and ongoing mission-related and collateral tests. This is easier said than done. These functions would be impractical and very expensive to attempt to track. I certainly hope you don't decide to implement such requirements.