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NAFCU staff met with Federal Housing Finance Agency's Division of FHLBank Regulation Thursday on the agency's proposed amendments to Federal Home Loan Bank membership criteria.

The FHFA proposal would require FHLB members and applicants to keep 1 percent of assets in home mortgage loans and 10 percent in residential mortgage loans on an ongoing basis. Currently, the 10 percent requirement only applies when an applicant first seeks membership in an FHLB.

NAFCU has expressed concerns with the proposal and has asked FHFA for a 60-day extension of the current comment period. Currently, comments are due Nov. 12 to FHFA on its proposed changes.

NAFCU believes the requirement to keep 10 percent of assets in residential mortgage loans would be unnecessary and prohibitive, especially for credit unions, which have not participated in the type of activities the proposal targets. NAFCU's regulatory affairs staff note the proposal would make it more difficult for credit unions to provide credit to their members and could prevent many credit unions who have long been FHLB members from continuing their membership.

Last month, Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, also requested the agency allow a 60-day extension of the comment period, saying "any change to membership criteria should only be undertaken after thorough consideration."

Nineteen percent of FICUs are FHLB members, with the number continuing to grow as credit unions recognize FHLBs as an important source of liquidity.