The Federal Housing Finance Board is working on a regulation to address a problem that bank consolidation is causing for the Federal Home Loan Bank affordable housing program.The proposal would ensure that the benefits of the AHP are distributed more equitably across FHLBank districts. Current rules funnel affordable housing funds to the FHLBank district where member institutions are headquartered, even when they own depository institutions in other FHLBank districts. Rep. Barney Frank, D-Mass., has been encouraging Finance Board Chairman Ronald Rosenfeld to address this problem because several large New England banks have been acquired by institutions headquartered outside the Boston FHLBank district. "We are working on it right now," Mr. Rosenfeld said at a congressional hearing. The chairman also said he does not have the authority to approve multidistrict memberships, which would solve the AHP problem by allowing a depository institution to be a member of two or more FHLBank districts. The Finance Board chairman also testified that 10 of the 12 FHLBanks have filed draft registration forms with the Securities and Exchange Commission, and nine of the banks have received comment letters from the SEC. The FHLBanks are in the process of registering their stock with the SEC.

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