"An abrupt cutoff of advances could adversely impact many community banks and impair credit access for millions of small businesses, consumers, and communities. The FHFA must act immediately to avert an unnecessary economic challenge by conforming its capital rules to those of the Primary Federal Regulators.”
Congressman David Scott (GA-13), chairman of the House Agriculture Committee and senior member of the House Financial Services Committee, sent a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson urging the agency to take immediate action to modernize its regulatory capital standards.
In the letter, which was co-led alongside Reps. French Hill (AR-02), Ann McLane Kuster (NH-02), Blaine Luetkemeyer (MO-03) and Sean Casten (IL-06), the bipartisan group of lawmakers highlight how the FHFA’s policy on tangible capital is wholly inconsistent with all other federal banking regulators and creates barriers for well-capitalized community banks seeking to access Federal Home Loan Bank advances. The lawmakers also highlight the important role of the primary federal banking regulators in providing the necessary waivers for community banks to continue accessing FHLB advances. Citing the potential economic challenges posed by misaligned capital standards, the lawmakers urged regulators to immediately work together toward a solution that preserves access to credit and promotes economic stability.
“FHLB advances are a critical source of liquidity for thousands of community banks and will help support their activities in the current economic uncertainty and possibly imminent recession. An abrupt cutoff of advances could adversely impact many community banks and impair credit access for millions of small businesses, consumers, and communities,” wrote the lawmakers.
