Congressman Steve Stivers (R – OH) today announced the recent passage of H.R. 3584 – the Capital Access for Small Community Financial Institutions Act – out of the U.S. House of Representatives. Stivers introduced the bipartisan legislation with Democrat co-sponsor Joyce Beatty (D-OH) to provide regulatory relief for small, community-based enterprises in an effort to boost the housing market.
“Purchasing a home is an important part of the American dream,” Stivers, a member of the Financial Services Committee said. “With the continued stagnation in the housing market, I believe it is important to ensure our community based lending institutions offer new mortgages, and this bill does that by allowing more institutions to have access to the home loan bank system. It will help many people live their American Dream of buying a home.”
The Federal Home Loan Bank (FHLB) System, established in 1932, has been an important source of credit and liquidity for mortgage lending over the past 80 years, particularly for main street institutions. Although thousands of large and small institutions are members of the FHLB, there are still a small number of privately-insured credit unions, representing firefighters, teachers, churches, and small business which have been blocked from membership for over 20 years, due to a legislative oversight.
Stivers’ legislation corrects this oversight and provides these institutions the ability to apply for membership in the Home Loan Bank System. Currently, there are a select number of small credit unions in nine states, approximately 132, that are not insured by the federal government, but by a mutual insurance company, governed by credit unions.
Credit unions did not have federal insurance until 1970, and many small institutions decided to remain privately insured and state regulated. All of these institutions would qualify as a small community institution. Private insurance is governed under federal law, and consumer disclosures are regulated by the CFPB.