Atlanta FHLBank Says Rule Forces Dividend Cut

The Federal Home Loan Bank of Atlanta said it would have to cut dividends to meet a higher level of retained earnings proposed by its regulator -- the Federal Housing Financing Board.If the proposal is finalized, the Atlanta FHLBank estimates it would take two complete quarters to reach the new minimum level of retained earnings. "During such time, the bank's dividends would be significantly less than those historically paid by the bank." And going forward, dividends may fall below historic levels to remain in compliance, the FHLBank said. The proposed rule issued by the Federal Housing Finance Board for 120-day comment period requires the 12 FHLBanks to maintain minimum retained earnings of a least $50 million plus 1% of non-advance assets. The New York and Dallas FHLBanks have said they should be able to meet the proposed hike in retained earnings by the time a final rule goes into effect.