WASHINGTON (1/26/11)--The Credit Union National Association (CUNA) in a Tuesday comment letter told the Federal Home Finance Agency (FHFA) that it supports much of a proposed Federal Home Loan Bank (FHLB) voluntary merger rule that “could help maintain a safe and sound FHLB system capable of meeting FHLB-members’ needs.” The merger rule would implement voluntary FHLB merger authority that was added to the FHLB Act by the Housing and Economic Recovery Act of 2008. Many credit unions are members of FHLBs, and FHLBs provide liquidity to credit unions and have frequently awarded affordable housing-related grants to eligible credit unions. While CUNA supported the proposed ratification of a FHLB merger through a membership vote and backed language that would limit the number of votes each member may cast, CUNA questioned whether a proposed state-by-state limitation on FHLB member votes would be appropriate in the FHLB merger context. CUNA emphasized that it is important not to push directorship reductions in a merger to the point where the number of credit union representatives on FHLB boards is reduced. It is already “exceedingly difficult for credit unions to secure election to FHLB boards in the current configuration; it is essential to avoid making this problem worse,” CUNA said. CUNA also noted, however, that FHLB consolidation may create circumstances where it would be appropriate to reduce the number of directorships. Directorships typically represent specific states, and directorships should be equitably apportioned among the states following any FHLB merger, CUNA said. Any related reductions should be phased in slowly, and affected through the agency’s annual designation of directorships or a similar process, CUNA suggested. For the full comment letter, use the resource link.