Multiple Memberships Needed to Keep Regional Structure
of the Home Loan Bank System
Contact: Eric Amig - 212 441-6807 |
March 4, 2002 |
New York, NY – The Federal Home Loan Bank of New York responded today with a resounding yes to the Federal Housing Finance Board's request for comments on allowing multi-district membership. In an 18-page response, the New York Bank stressed its support of multi-district membership to keep strong regional partnerships and current levels of Affordable Housing dollars.
"The success of the Home Loan Bank System is built on local relationships and regional knowledge," said Alfred DelliBovi, President of the Home Loan Bank of New York. "Multi-district membership will permit today's proven partnerships to continue for the benefit of the member lenders and the communities these 7,900 lenders serve. Because these barriers ignore reality, assets will continue to shift to those Home Loan Banks with the largest bank members causing severe future concentration of assets, inefficiencies and reductions in the individual Home Loan Bank's Affordable Housing Program. Local and regional ties and relationships with community based housing advocates will wither."
The Home Loan Bank of New York has experienced the negative impact of consolidation without multi-district membership first hand. Two of its most active member lenders -- Summit Bank and The Dime Savings Bank -- were recently acquired by Fleet Bank and Washington Mutual Bank. In both cases the acquiring institutions desired to maintain a partnership with the New York Bank but were blocked by antiquated regulations which prohibit joint memberships in Home Loan Banks. As a result the partnership roots were cut and the organizations which contributed 20% of the funds to the New York Home Loan Bank's Affordable Housing Program over the past five years are no longer eligible participants in the New York program.
"These AHP dollars will be shifted to other Home Loan Banks who are simply unfamiliar with the needs and unique housing problems of the New Jersey/New York/Caribbean region," added Mr. DelliBovi. "And even if an application from our region should end up being considered by a Federal Home Loan Bank across the country, the scorings official charged with overseeing the program grants will have limited knowledge of what is happening with the grant or the neighborhood or project for which the money was given. Frankly, I doubt they would know the differences between Elmira and Elmhurst."
In support of permitting multi-district membership, the Home Loan Bank of New York also pointed out in the written comments that: the Bank System needs to evolve with changing conditions in our members’ industry; membership in a Home Loan Bank of an acquired member bank is an asset that should accrue to the acquirer -- similar to other business mergers; the loss of business of large members will increase the cost of funds for smaller member lenders; multi-district membership will limit the growth of one member in a particular Home Loan Bank which eases the burden of managing large customer relationships; multi-district membership allows member lenders and the Bank System to remain responsive to local housing needs in an age member consolidation; and lastly, not permitting multi-district membership will impair the FHLBanks' ability to meet their mission to provide low cost affordable housing.
The Federal Home Loan Bank of New York is an $80 billion, AAA-rated, Congressionally chartered, wholesale Bank. It is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned banks. The Federal Home Loan Bank of New York which serves 300 community lenders in New York, New Jersey, New York, New York, Puerto Rico and the U.S. Virgin Islands. The mission of the Home Loan Bank is to advance housing opportunity and local community development by maximizing the capacity of community-based member-lenders to serve their markets. Additional information about the Bank is available in the About Us section of the web site.