Bill would align Oregon law with federal rules for Federal Home Loan Bank collateral

Rick Betzger, representing the Federal Home Loan Bank of Des Moines, told the House Committee on Commerce, Consumer Protection that Senate Bill 102 would “harmonize state and federal law when it comes to how collateral is treated for loans made to members from the Federal Home Loan Bank System.”

Betzger said the Federal Home Loan Bank (FHLB) System—created by Congress in 1932 and organized as a cooperative of 11 regional banks—must receive secured collateral for loans and have immediate access to that collateral in receivership. He said insurers are creatures of state law and, absent a statutory change in Oregon, the FHLB’s secured position could be less certain for insurer members than for banks and credit unions, which would reduce borrowing capacity for insurers and the liquidity supporting homeownership.

The bill, Betzger said, reflects work with state agencies: the Oregon Department of Justice and the Division of Financial Regulation in the Department of Consumer and Business Services recommended changes that are included in SB 102. He told the committee that more than half the states have adopted similar legislation and that the National Conference of Insurance Legislators recommended the approach. Written testimony attached to the hearing included support from Oregon credit unions, the Oregon Bankers Association and Standard Insurance.

Why it matters: proponents said the change would allow FHLBs to lend to Oregon insurance-company members on terms comparable with banks and credit unions and preserve liquidity that supports mortgage origination and affordable-housing programs. Betzger noted that the Des Moines FHLB also contributes a portion of net income to affordable housing grants and highlighted prior grants to Oregon nonprofits as examples.

The committee closed the public hearing on SB 102 after testimony and questions; no formal action was recorded at the hearing.