Cincy FHLBank Suspends AH Programs

The Federal Home Loan Bank of Cincinnati has suspended two voluntary affordable housing programs for Katrina victims and minority homebuyers due to proposed capital changes that could carry a $500 million price tag.A preliminary estimate by the Cincinnati bank shows that it would need to increase retained capital by $109 million and repurchase $421 million in excess stock if the Federal Housing Finance Board finalizes the proposed capital rule. The comment period on the proposal ends July 13. FHLBank Board Chairman Charles Koch said the board of directors is "deeply disappointed" about temporarily suspending the two AH programs. "Good corporate governance will not allow us to continue funding the multimillion-dollar voluntary housing programs until we are in a position to know the full extent of our retained earnings shortfall and the negative impact this proposed regulation would have on our business model," he said. Mr. Koch is chairman of Charter One Bank NA.