Rosenfeld: FHLBanks Need 'Predatory' Standards

Federal Housing Finance Board Chairman Ronald Rosenfeld has agreed with a key senator that the Federal Home Loan Banks should have standards that bar accepting collateral or purchasing mortgage loans with predatory terms and conditions."This is something the Federal Home Loan Banks could, should, and will do," Mr. Rosenfeld told Sen. Paul Sarbanes, D-Md., at a Senate Banking Committee hearing on government-sponsored enterprise legislation. The senator noted that Fannie Mae and Freddie Mac established anti-predatory-lending standards several years ago but that he has heard of only one FHLBank with a similar standard. Chairman Rosenfeld also told the Senate panel that the Finance Board will set a cap on the size of the FHLBank mortgage portfolios later this summer. "We are not going to let these portfolios get to a level or size that we believe will jeopardize safety and soundness," he testified. He is considering a cap based on a percentage of assets or setting an activity-based capital requirement.