WASHINGTON, July 26: In the wake of Freddie Mac’s accounting scandal, the Bush administration is pressing the Federal Home Loan Banks, a dozen cooperatively owned regional institutions, to disclose more financial information.
In a letter to the chair of the Boston Federal Home Loan Bank made public on Friday, officials including Treasury Secretary John Snow urged the government-sponsored banks to meet reporting standards on a par with those adopted last year by mortgage finance companies Fannie Mae and Freddie Mac.
Snow, Housing and Urban Development Secretary Mel Martinez Martinez and the federal regulator of the home loan banks, Federal Housing Finance Board Chair John Korsmo, suggested the recent accounting woes at Freddie Mac heightened the importance of disclosure from institutions that benefit from their connection to the government.
Events of recent months serve to remind all who own, operate, or regulate government-sponsored enterprises of the importance of providing periodic financial and governance reports on terms familiar to investors, the three officials said in the letter, which is dated July 24.
Freddie Mac replaced its top management in June over accounting irregularities. Some lawmakers want the Treasury Department to assume oversight of the two mortgage finance companies and the home loan banks.
The Federal Home Loan Banks are 12 regional banks established by Congress to help expand US home ownership. The banks, with more than 8,000 member institutions and assets of around $780 billion, are not publicly traded.
Fannie Mae and Freddie Mac, which are shareholder-owned and also congressionally chartered to expand homeownership, agreed under pressure in 2002 to register their common stock with the Securities and Exchange Commission and file the same disclosure forms as other publicly traded companies.
The Bush administration said at the time the home loan banks should adopt similar disclosure standards, but the banks said their structures make it harder to coordinate and present data.
Member banks can borrow from home loan banks at lower rates than those available on the commercial market.
A 1999 financial services modernization law gave the home loan banks the ability to give banks advances not only for mortgages but for rural, agricultural, and small business loans.—Reuters