[Congressional Record Volume 164, Number 47 (Monday, March 19, 2018)]
[Senate]
[Pages S1785-S1786]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               HOUSING OPPORTUNITY MORTGAGE EXPANSION ACT

  Mr. SCOTT. Mr. President, as chairman of the Senate Banking 
Subcommittee on Housing, Transportation, and Community Development, 
today I wish to engage in a colloquy to discuss legislation that I 
introduced, the Housing Opportunity Mortgage Expansion, HOME, Act, with 
several of my colleagues to address an issue involving the Federal Home 
Loan Bank, FHLB, system. The FHLB system is a cooperative organization 
of 11 banks that support a mission of ``helping American families 
realize the dream of home ownership, stimulate the creation of 
affordable housing, and improve the local business environment.'' FHLBs 
are privately capitalized by their 7,300 members and are subject to 
strict oversight by the Federal Housing Finance Agency, FHFA. The HOME 
Act is designed to correct the FHFA's perceived statutory limitation in 
the FHL Bank Act that does not permit captive insurers to be considered 
a class of the eligible insurance companies for membership in FHLBs.
  In 2016, the FHFA determined that captive insurance firms were not 
insurance firms for purposes of the FHLB Act. In making this 
determination, the FHFA abruptly terminated the membership of 
approximately four dozen captive insurance entities, including mortgage 
real estate investment trusts, REITs, that were active and responsible 
members of the FHLB system. These insurance captives greatly 
contributed to the affordable housing mission of FHLBs through the use 
of private capital versus taxpayer dollars, something that we should 
always encourage. I thank Senators Duckworth, Johnson, and Baldwin for 
their support of this legislation, which I am hopeful will receive 
favorable consideration by this body in the future.
  I yield to my friend from Illinois.
  Ms. DUCKWORTH. Mr. President, thank you. I thank the chairman and my 
colleagues from Wisconsin for their support of this bipartisan 
legislation, which I introduced in January and filed as an amendment to 
S. 2155. As the chairman stated, as a result of the 2016 regulation, 
many of the FHLB system's captive insurance members have had or will 
soon have their membership terminated. Our legislation seeks to ensure 
that captive insurer affiliates of institutions that are active 
providers of private capital in the mortgage market are eligible to 
restore or continue their membership.
  Their membership is crucial to reliable access to low-cost funding 
for home mortgages and affordable housing initiatives in Illinois. For 
the Federal Home Loan Bank of Chicago, these members serve as an 
important source of private capital in the mortgage market. Their 
membership broadens access

[[Page S1786]]

to credit to financial institutions that would otherwise not be able to 
access credit through their local markets and creates a reliable source 
of liquidity for affordable housing initiatives.
  Our bipartisan bill only seeks to redress those captives that were 
previously granted FHLB membership prior to February 19, 2016. By 
allowing captive insurers to continue to invest in mortgages and 
mortgage-related securities through the FHLB system, they can continue 
to provide both credit and liquidity to the market. Such sources of 
private capital are critical to the long-term financing of the FHLB 
system, and therefore, eligibility in the system should be preserved. 
Our legislation will achieve this purpose. I wish to turn to my friend 
from Wisconsin, Senator Johnson.
  Mr. JOHNSON. Mr. President, I agree with the comments of my 
colleagues on the need to pass S. 2361 during the 115th Congress. The 
legislation is narrowly tailored such that it would provide the 
opportunity for reapplication or continuation of FHLB membership only 
for those captive entities that meet a series of criteria pertaining to 
the mission of their parent companies to serve the residential mortgage 
market. These captive members have proven track records of responsible 
membership, have contributed to the system, and have invested their 
capital in the respective FHLBs. Moreover, each and every captive that 
would be affected by our bill are subsidiaries of financial 
institutions that are aligned with the overall mission of the FHLBs.
  I yield to my colleague from Wisconsin, Senator Baldwin.
  Ms. BALDWIN. Mr. President, unfortunately, including this legislation 
in the recently passed S. 2155 was not possible due to a number of 
procedural objections that could not be overcome. However, it is our 
understanding that the substance of our bill has the support of several 
FHLBs, and we intend to work with our colleagues, the administration, 
and FHFA to find sustainable ways for housing-focused entities such as 
relevant captive insurance companies to participate in the FHLB system.

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