[Congressional Record (Bound Edition), Volume 149 (2003), Part 2]
[Extensions of Remarks]
[Page 2167]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   THE FEDERAL HOME LOAN BANK SYSTEM

                                 ______
                                 

                           HON. WM. LACY CLAY

                              of missouri

                    in the house of representatives

                      Wednesday, January 29, 2003

  Mr. CLAY. Mr. Speaker, I stand today to ask for further congressional 
scrutinizing of recommended changes to the Federal Home Loan Bank 
system.
  The Federal Home Loan Bank system has enjoyed continued success as a 
regionally based cooperative that provides critical liquidity to its 
constituent member institutions.
  The currently proposed changes involve three major issues that 
include the assumption of new powers, the dismantling of the regional 
character of the System, both of which bring into issue concerns about 
corporate transparency, and whether the FHLBank's disclosure practices 
are adequate.
  It is thought by many in Congress and in the industry that efforts by 
some members of the FHLBank system to create a new market for 
securitization of mortgages would expand its mission in an era of 
economic uncertainty. Congress should have an opportunity to assess the 
effectiveness of any proposed reforms before the system is allowed to 
abrogate its traditional mission.
  Moreover, the adoption of a multi-district charter would undermine 
the strength of the system which lies in its regional structure that 
allows each bank to have independence and flexibility in addressing its 
varying needs. As a result, further consolidation could threaten 
competition and lead to a limitation of access to credit for home 
ownership.
  Finally, any expansion of FHLBank powers and activities should be 
accompanied by more stringent disclosure requirements; additional 
statutory standards such as affordable housing goals; and appropriate 
capital requirements.
  In order to safeguard the continued viability of the Federal Home 
Loan Bank system, any changes to its fundamental mission should receive 
adequate congressional scrutiny.

                          ____________________