PACB Memo to PA Congressional Delegation

To: Members of the Pennsylvania Congressional Delegation

From: Frank A. Pinto, President/CEO

Subject: Community Banks Support for Federal Home Loan Bank System

Date: April 7, 2005

On behalf of PACB and our almost 200 community banks and their employees, customers, and the communities they serve, we are writing to inform you of our strong support for the Federal Home Loan Bank System. Our members work in an invisible but critical partnership with the Federal Home Loan Bank of Pittsburgh to bring financial services to homebuyers, homebuilders, small businesses, and the wide range of economic interests essential to thriving communities.

As Congress works to reform the regulatory structure governing Government Sponsored Enterprises (GSEs), we urge you to take special care to do nothing that will harm the ability of the Federal Home Loan Banks across the country to continue to provide essential liquidity and other services to their 8,000 financial institution member/owners and the communities they serve.

As Congress considers this legislation, the following principles should guide the development of a new “world class” regulator:

• The new regulatory structure must recognize that the FHLBank System is a unique structure of 12 individually operated cooperatives that provide liquidity to over 8,000 financial institutions and the communities they serve. The legislation and eventual regulator must recognize and facilitate the differences between Freddie Mac / Fannie Mae and the Federal Home Loan Banks. The three GSEs share common goals but achieve their missions through very different but successful structures.
• No changes should be allowed that could unnecessarily raise the cost of funding or disrupt the System’s ability to access capital markets on behalf of its members.
• It is important that the FHLBank mortgage programs be able to evolve in a manner that enhances the safety and soundness of the FHLBanks. Any changes to the existing statute that would restrict Home Loan Bank mortgage programs must be opposed.
• FHLBanks are working to register with the SEC. This legislation provides an opportunity to ensure that the goals of SEC registration are met while mitigating possible negative unintended consequences for FHLBanks and their members.

Please contact your colleagues on the House Financial Services Committee and the Senate Banking Committee including the Chairmen and ranking members and urge them to follow these principles as they craft this important legislation. Your leadership on these issues will ensure that the communities we both serve will continue to reap the benefits of the FHLBank System. We look forward to working with you and your staff on this important legislation.