The Federal Housing Finance Board is signaling that it may give the Federal Home Loan Banks more time to build up their retained earnings so they won't have to cut their stock dividends by 50%.Finance Board Chairman Ronald Rosenfeld revealed the possible change in response to a congressional inquiry about proposed capital revisions that have sparked widespread opposition from FHLBank members. "Our regulation should not materially alter the value of membership in an FHLBank," Mr. Rosenfeld says in a July 26 letter. "For example, the time allowed each Bank to reach its required level of retained earnings must reflect the need for each Bank to offer value to its members, including members' expectations of a reasonable dividend yield on their investments in the Bank." The letter is addressed to House Financial Services Committee Chairman Michael Oxley, R-Ohio, and Rep. Barney Frank, D-Mass. As originally proposed, the 12 FHLBanks would have three years to meet the new retained earnings requirement, and during that transition period dividends could be cut by 50%.

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