The Federal Housing Finance Board is considering changes to its capital proposal that would make it less onerous and difficult for the Federal Home Loan Banks to come into compliance with new retained earnings requirements."Some commentators made valid points [in comment letters]," FHFB Chairman Ronald Rosenfeld told a congressional panel. "There is room for movement on several important issues." Since the 12 FHLBanks are well capitalized, many questioned the need for a 50% dividend payout limit while the FHLBanks raise their retained earnings to meet the proposed minimum requirement of $50 million plus 1% of non-advance assets. "That is a constructive observation, and we should consider a higher dividend payout ratio, which would extend the time for the FHLBanks to reach the retained earnings minimum," Mr. Rosenfeld said. Many members of the House Finance Services Committee urged the FHFB chairman to withdraw the proposed rule, contending that it would harm the FHLBanks and their affordable housing programs. But Mr. Rosenfeld did not give any indication that he would back down.

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