President's Report

March 31, 2005

At the Bank

Business Update

Advance levels averaged $65.3 billion in February. This is a $3 billion increase year-over-year and is slightly down from January’s advances average of $65.8 billion. The Home Loan Bank held a special offering for a fixed convertible advance with repo convertible rates in February. This special was well subscribed by our members. We continue to look for new opportunities in which we can provide our membership these special, low-cost offerings. Providing customized credit products and helping member lenders meet asset and liability management challenges are the primary ways the Home Loan Bank adds value.

Home Loan Bank Places a $100 Million MPF® Per Member Yearly Cap on Mortgage Deliveries

As of March 15, the Bank limited future commitments for mortgage deliveries from each approved MPF lender to $100 million per year. The Bank imposed this cap to ensure that the MPF program continues to have the capacity to serve medium- to small-sized community banks. The 64 member lenders approved for MPF lending were notified of this change on March 8, 2005. (All approved commitments entered into prior to March 15 will be honored by the Bank.) The objective of the Home Loan Bank is to provide a better deal for our members than they can get elsewhere and at the same time maintain the growth of MPF assets on our books at a manageable rate. The Federal Home Loan Bank of New York is primarily an "advances" Home Loan Bank and offers MPF as an additional product line. Currently, the Home Loan Bank has total assets of $83 billion, of which $1.2 billion are MPF assets. MPF assets represent a manageable 1.4% of total assets. This action will have no effect on the majority of the Bank’s MPF-approved lenders because these lenders maintain an MPF production level below $100 million per year.

Board of Directors Adopts Resolution Opposing Securitization Authority

At the March Board meeting, our Directors unanimously adopted a resolution opposing the granting of securitization authority to the Home Loan Banks in the GSE regulatory reform legislation at this time. The Board and management believe that securitization would be a major business shift for the Home Loan Banks. This is a shift that has not been explored in any detail by the Home Loan Banks, by their regulator, nor by the member lenders of the Bank System. It is not even clear whether the proposal is economically viable or whether the Home Loan Banks would need to establish a central organization to manage such a program. Concern over securitization is high in Washington. In addition, many industry trade groups, such as the ABA, ACB, and the ICBA, oppose including this proposal in GSE regulatory reform. Attached for your information is a copy of the resolution adopted by the Board.

In Washington

In my President’s Report to you last month, the first topic covered was the GSE regulatory reform legislation in response to the problems that had arisen at Fannie Mae and Freddie Mac. The Home Loan Bank supports this objective, and we believe that Congress should focus on fixing what is broken and create a new, independent, world-class regulator for all three housing GSEs: Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks. When our member lenders visit their Senators and Representatives in Congress, we recommend that three points be stressed:

  • Fix the regulatory structure.
  • Don’t damage what is not broken.
  • Congress should not be sidetracked by secondary policy proposals.

I would also like to suggest that our members stress to the policymakers in D.C. that the new housing GSE regulator: (1) be independent and not subject to the Congressional appropriations process, (2) be funded in a manner that provides that the System’s assessments be allocated predominately to the regulation and supervision of the System, (3) possess similar supervision and enforcement powers to those of federal banking regulators to maintain safety and soundness and guard against systemic risk, (4) be organized with a strong emphasis on preserving the current statutory authorities and the cooperative structure of the System, (5) recognize the unique characteristics of the System, and (6) not impede or limit the FHLBanks’ access to the capital markets.

As we went to press with this report, Federal Home Loan Bank Chairman George Engelke has been invited to testify before the Senate Banking Committee on Wednesday, April 13, to discuss, among other things, the role played by the Home Loan Banks in providing liquidity to community banks. Mr. Engelke is, and has been for many years, an exceptionally articulate and strong advocate for community banks in New York and in Washington. His testimony will help Congress understand the importance of community banks, the essential part the Home Loan Banks play in providing liquidity to community banks, and the worth of creating an independent, world-class regulator for the housing GSEs.

The Home Loan Bank team wants to thank our members for your use of our products and services to expand the availability of mortgage credit, to compete effectively in your market, and to promote strong communities.

 

Sincerely,
Alfred A. DelliBovi
President & CEO


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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This report may contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as “projected,” “expects,” “may,” or their negatives or other variations of these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, regulatory and accounting rule adjustments or requirements, changes in interest rates, changes in projected business volumes, changes in prepayment speeds on mortgage assets, the cost of our funding, changes in our membership profile, the withdrawal of one or more large members, competitive pressures, shifts in demand for our products, and general economic conditions. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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