Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Fame Reserve Cap topic
No spam. Unsubscribe anytime.
Committee advances bill to raise FAME loan insurance reserve cap to $65 million
Summary
LD 1208 would raise the combined cap on the Finance Authority of Maine's loan insurance reserves and mortgage insurance fund to $65 million and continue a mechanism allowing up to $1 million in surplus general fund transfers; FAME officials said the reserves leverage lending and support larger, capital-intensive loans.
Senator Trip Curry introduced LD 12 08, a bill to increase the statutory cap on the Finance Authority of Maine's combined loan insurance reserve and mortgage insurance fund from $50 million to $65 million and to continue a mechanism allowing transfers of up to $1 million from the general fund in surplus years. "This bill increases the cap on the combined amount that FAME may have in its loan insurance reserve and mortgage insurance fund from $50,000,000 to $65,000,000," Curry said.
Carlos Mello, chief executive officer of the Finance Authority of Maine (FAME), told the committee the commercial loan insurance program leverages state support to produce much larger lending volumes through private lenders. "Since inception, the state has invested $41,000,000 in funding into this program," Mello said. "We've in turn ... led to approximately $1,600,000,000 in lending in the state and supported over 103,000 Maine jobs." He said a higher cap would let FAME accept more risk and support larger transactions, including capital-intensive industries, and that the current reserve balance at the time of testimony was approximately $52 million, partly due to recent transfers and investment earnings.
Senator Seth M. Bennett moved the committee into a work session on the bill and later moved the bill ought to pass. The motion was seconded and the committee clerk conducted a roll call. The work session record shows the committee voted "ought to pass" on LD 12 08; committee minutes indicate the vote was unanimous of those present and that five members were absent. The committee chair noted the statutory cascade permitting transfers in surplus years remained available and that no emergency clause was required to preserve the cascade for future surpluses.
Committee members asked staff about the fund's leverage ratio and portfolio risk management. Mello said each $1 million in reserves allows FAME to expose roughly $5 million in lending capacity and increases per-borrower limits by about $250,000; he also described program underwriting, fees charged to participating lenders and cumulative claims that remain well below the state's total invested amount.
On a work session motion, the committee recorded an "ought to pass" recommendation for LD 12 08.
