Dear Director Thompson:
We are writing on behalf of the American Bankers Association and the undersigned 52 State Bankers Associations. Our mutual members followed with great interest the Comprehensive Review of the Federal Home Loan Banks undertaken by the Federal Housing Finance Agency (FHFA) over the course of the last year. We commend you for the process undertaken for the review, which allowed numerous opportunities for stakeholder input and engagement: in person, via virtual participation, and through written comments. The FHFA recently issued the report FHLB System at 100: Focusing on the Future which set forth 50 recommendations that are a result of the review. We have a range of views on these recommendations and look forward to sharing those views as efforts are undertaken to effectuate them. Our focus today, however, is on the next steps and the importance of an open, transparent, and inclusive process.
As FHFA takes steps to implement the report’s recommendations it is essential that the open, transparent, and inclusive process employed during the review continues. This can be best served using the notice and comment process under the Administrative Procedures Act when proposing any changes under the agency’s purview. Many of the proposals set forth by FHFA could have profound implications for members’ ability to access FHLB funding and programs. It is essential that members of the System, of all sizes and charters, understand the processes, regulations and supervisory requirements governing that access. To that end, we strongly discourage the use of guidance, supervisory letters or changes made through the examination process to effectuate any of the recommendations, as those avenues do not provide members with adequate opportunities for input or understanding before changes are made.
As FHFA noted in the report, the FHLBs have an important dual mission to provide liquidity and advance affordable housing. The proposals set forth can dramatically impact that mission and the continued ability of the FHLBs to meet it for all members. In the wake of the recent report, a number of observers have speculated that implementation of the recommendations could result in more limited or more difficult access to the FHLBs liquidity and programs creating uncertainty in the market. FHFA can reduce that uncertainty by committing to a clear, transparent, open, and inclusive process going forward. We ask that you do so, and state as such publicly.
Thank you for considering our views on this most important manner.
