Banking Group's Efforts Surge Prior To GSE Bill Markup

Fri. May 9, 2008


The trade group representing the Federal Home Loan Bank System is making a last-minute bid for a panel to oversee its 12 regional banks as well as mortgage giants Fannie Mae and Freddie Mac, as opposed to the creation of a single regulator. The Council of Federal Home Loan Banks faces an uphill bid in its lobbying campaign as the Senate Banking Committee attempts to mark up legislation next week that would revamp oversight at government-sponsored enterprises Fannie and Freddie as well as the Federal Home Loan Bank System. Negotiations on the GSE bill are ongoing; the markup has tentatively been pushed back to later in the week. The Bush administration has led the push to consolidate supervision of the three into a single regulator and has support on both sides of the aisle. The system is regulated by a five-member board. But a House-passed bill would create a single regulator for all three, requiring them to adhere to the same mission oversight.

John von Seggern, council president, said his banks should be treated differently because they are cooperatives that serve 8,100 banks, thrifts and credit unions on various types of loans, as opposed to the two stock-owned firms that now are responsible for up to 80 percent of the mortgage-backed securities market. "We don't think we should be in the same mission as Fannie and Freddie," von Seggern said. "We're very different institutions." He noted that the council's position on the issue has evolved, but that it wanted to put forth the proposal of a three- or five-member panel to Banking staff as they attempt to reach a consensus after years of wrangling.

While the council itself may not carry the lobbying heft, its member banks certainly do, and it has been reaching out to them. Ike Jones, a lobbyist for the Independent Community Bankers of America, said his group agreed with the proposal. "We think that sounds like a good idea. We think a diversity of opinions and talents over someone who is going to have a lot of control over the funding sources for mortgages ... is good," Jones said. The system has been playing a greater role in providing liquidity to the mortgage market, and its secured loans to its members increased by 37 percent last year to a total of $875 billion. One lobbyist noted that the panel could play a role by slowing down any merger of the 12 regional banks, a continuing issue of debate within the system. The Dallas and Chicago banks recently ended merger talks. "The regulators could come in with a lot of power. You know what I think? Topeka and Seattle should merge for HR efficiencies," the lobbyist said. "The problem with the way it is drafted unless you put some really strong language in it ... the regulator will have pretty strong powers over the Federal Home Loan Banks."

by Bill Swindell

Fri. May 9, 2008

  •  
  •