WASHINGTON (12/13/13)--Sens. Sherrod Brown (D-Ohio) and Rob Portman (R-Ohio) introduced bipartisan legislation Thursday intended to make it easier for privately insured credit unions to offer loans through the Federal Home Loan Bank (FHLB) system.
Currently, privately insured credit unions are unable to gain access to the FHLB system, which prevents them from receiving secured loans to make mortgage, small business, and other economic-development loans to their members.
Brown said that expanding the eligibility of the FHLB system to privately insured credit unions is long-overdue. "By providing these financial intuitions with the ability to join the federal home loan bank system, we help these community institutions keep more local dollars invested in local communities."
The legislation is supported by the Credit Union National Association and the Ohio Credit Union League.
Brown and Portman said their legislation would provide more than 150 privately insured credit unions in nine states--including their own--access to additional forms of liquidity through membership in the FHLB system. The current prohibition on these institutions' participation stems from a 1989 statutory change that expanded FHLB membership only to commercial banks and federally insured credit unions.
The FHLB system is comprised nationally of 12 banks and more than 8,000 member institutions.