In a July 17, 2017 letter, the Community Bankers Association of Illinois (CBAI) urged the Illinois members of the United States House of Representative to cosponsor the Housing Opportunity Mortgage Expansion Act (H.R. 2890), which is bi-partisan legislation introduced by Representatives Randy Hultgren (R-IL-14th) and Gwen Moore (D-WI-4th). This bill will grandfather the Federal Home Loan Bank (FHLB) memberships of approximately 20 captive insurance companies which are threatened as a result of a regulation implemented by the Federal Housing Finance Agency that prohibits new captive insurers from joining a FHLB and requires existing captive members to terminate their memberships in the coming years.
Two of the Chicago FHLB’s largest borrowers are captive insurers, cumulatively accounting for about one-third of its total advances/borrowings. Unless Congress acts, the FHFA’s rule will terminate the memberships of these Chicago FHLB members, significantly reducing its size and scale, as well as its overall profitability. Also, the borrowing costs for community bank members will likely increase while the amount of FHLB funding devoted to affordable housing and community investment programs will decrease. A regulation that results in a smaller and less efficient Chicago FHLB, with lower profits and less ability to carry out its mission, is the wrong approach and will hurt efforts to revive and sustain Illinois housing markets and local economies.
CBAI partnered with the Chicago FHLB in Capitol Hill meetings urging support for this legislation, and as a result of this cooperative effort Illinois Representatives Mike Bost (R-12th), Danny Davis (D-7th), Rodney Davis (D-13th), Bill Foster (D-11th), Robin Kelly (D-2nd), Darin LaHood (R-18th), Peter Roskam (R-6th), Bobby Rush (D-1st), and Brad Schneider (D-10th) are now cosponsoring this legislation. Read Letter.