Comment Detail

Comment

Hello,
Please see responses for selected questions in response to the Request for Input for the FHLBank System Mission:

Mission Questions
Mission Question 1: How should the mission statement for the FHLBanks reflect the connection between the liquidity provided by the FHLBanks and their support for housing and community development?

Response: There should be a direct connection between the liquidity provided by the FHLBanks and their support for housing and community development by incorporating financial incentives to member banks that have a demonstrated connection to the FHLBank system mission.

Mission Question 2:
Are there components in addition to providing liquidity and supporting housing and community development that should be included in the mission statement?

Response: There should be a consideration for the mission referencing the importance of supporting Fair and Responsible Banking. Community development should also be expanded to "community economic development" to align with the need to support small business and workforce development initiatives.

Measurement of Mission Achievement
Question 1:
Are there characteristics other than those listed on pp. 9-10 that FHFA should consider in developing measures of mission achievement? Please provide the rationale for consideration of any other characteristics.

Response: The FHLB should consider adding the characteristic of improving racial equity through initiatives that close the wealth gap for the BIPOC community as part of their core mission activities. The Empowering Black Homeownership initiative was a powerful tool to increase generational wealth through homeownership opportunities for historically underserved Black communities. Similar programs should be expanded to include other marginalized communities including Hispanic and Asian.

Question 2:
Should all activities in the CMA regulation qualify as core mission activities? Are there items that should be added to or removed from the list of core mission activities? Please provide the rationale for any additions or deletions.

Response: It is recommended that the CMA should include activities that address the ever increasing racial wealth gap, particularly in the homeownership rate and access to business capital for BIPOC individuals.

Question 3:
In developing multiple measurements, what additional aspects of mission achievement should FHFA assess? What additional measurements should FHFA adopt to assess support for housing and community development, including support for lower income households or other groups with identified needs?

Response: It is important to develop metrics and thresholds based on local and regional community needs, demographics and barriers. Although measures should be clear and objective, they should be developed based on local data and social economic needs. One shoe does not fit all particularly with the high cost of living in certain states such as California. The Middle Income Downpayment Assistance Program was effective, but it was quickly exhausted due to the high demand and need for supporting low to middle income working families.

a. Should some core mission activities be weighted differently from others? For example, in assessing support for housing and community development, should advances or other activities
involving members with a stronger mission focus be given greater weight?

Response: Yes, some core mission activities should be weighted differently from others based on the primary community development needs in the state(s) served by the FHLBanks. Members with a stronger mission aligned with community needs should be given greater weight.

b. Should all FHLBank advances count as core mission activities or should there be limits or exclusions for advances (or other activity) involving members that have only a limited connection to housing and community development? How might this be
measured? Should the type of collateral securing an advance be considered in evaluating advances? (Alternatively, this type of approach could be used for calculating one or more additional measurements.)

Response: FHLBank advances should have limits or exclusions for members that have a limited connection to housing and community economic development. This can be tied to a member bank's CRA performance, but also tied to how aligned the member bank's community development programs are connected to the core mission activities of the corresponding FHLBank. Key factors to consider should include innovative programs that are responsive to local community needs such as offering Special Purpose Credit Programs, alternative underwriting programs, proprietary down payment assistance programs. Any member banks with underperforming CRA or that practice predatory, unfair and irresponsible banking should be excluded by the being able to receive advances.

Member Incentive
Question 1:
What factors should FHFA and the FHLBs consider in determining each member’s commitment to housing finance and community development under a member incentive program?

Response: Similarly in response to above to the question above: FHLBank should consider the level of connection that members banks have to housing and community economic development as aligned to the corresponding FHLB. This can be tied to a member bank's CRA performance, but also tied to how aligned the member bank's community development programs are connected to the core mission activities of the corresponding FHLBank. Key factors to consider should include innovative programs that are responsive to local community needs such as offering Special Purpose Credit Programs, alternative underwriting programs, proprietary down payment assistance programs. Any member banks with underperforming CRA or that practice predatory, unfair and irresponsible banking should be excluded from the member incentive program.

Question 2:
What metrics and activities should be used to determine each membership category threshold? Are there housing- or community development-related activities that should not count or should be
discounted in the calculation? Are there some that should count for a greater amount? How would flow business that might not be reflected on the member’s balance sheet be reasonably considered?

Response: The following factors should be taken into consideration when determining membership category threshold: Any violations of Fair Lending guidelines; use of predatory products including abusive subprime lending rates, ballon payments, negative amortization, etc.; CRA performance rating of Needs to Improve or Substantial Noncompliance.

Question 3:
Member activity that supports the housing finance and community development mission may change over time. How frequently should members be evaluated and classified as to their incentive category? Should the members self-report their level of housing and community development activity and provide documentation or a certification to the FHLBank, or should the measurements be performed by the FHLBank? What should the steps or process be for re-assigning members whose engagement in housing finance and community development activities has shifted, resulting in a change of category?

Response: It is recommended that members be evaluated every 3 years as to their incentive category using a self-reporting method of housing and community economic development activities with documentation. It is not recommended that measurements be performed by the FHLBank. For member banks that have shifted away from housing and community economic development activities, they should be provided a one year curing period and be allowed to returned to their classified category if activities return to acceptable threshold levels.

Question 4:
What additional benefits should accrue to members in each category?

Response: Additional benefits for members should include priority to accessing certain advance and CIP programs.

Question 6:
Should there be requirements that ensure members who obtain the benefits of such programs are not engaged in conduct inconsistent with the public interest, such as predatory, discriminatory, or unfair practices?

Response: Yes, there should be a requirement that member banks not be engaged in conduct and activities that are inconsistent with the public interest and not aligned with FHLBank priorities such as predatory, discriminatory, or unfair practices.