Finance Board Eyeing Voluntary Stock

The Federal Housing Finance Board is working on a capital proposal that will address issues related to voluntary stock and retained earnings at the Federal Home Loan Banks."I think there clearly should be limits on voluntary stock," Finance Board Chairman Ronald Rosenfeld told MortgageWire Dec. 21. "FHLBank stock should not be viewed as a growth stock for pure investment purposes. That is simply inconsistent with what the FHLBank System is all about." The chairman said he expects that the Finance Board will consider the capital proposal in the spring and might address capital issues related to the FHLBank mortgage purchase programs. "We haven't reached a definitive conclusion as to the fate of these programs," Mr. Rosenfeld said. However, he stressed that the mortgage programs should be "preserved" for the small FHLBank members "who have found it to be very advantageous."