Expanded Collateral Rules Get ABA Commendation

March 24, 2000

The American Bankers Association has commended the Federal Housing Finance Board for publishing rules that allow rural banks to pledge their farm loans for collateral in order to receive lendable funds from the Federal Home Loan Bank System.

Joseph Pigg, ABA senior counsel and FHLB specialist, said, "The Federal Housing Finance Board should be commended for getting this rule out early.We're already working with the home loan banks so that banks can start using the new collateral to get more funds into their communities by the end of the year."

Congress authorized the FHLB system to provide lendable funds to banks that have farm, ranch and small business loans to pledge as collateral for FHLB advances. Rural bank liquidity has become an important issue, and ABA says the expanded access "is more important than ever."