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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 24, 2015 11:10 AM (EDT)
In this episode of A.M.BestTV, the Federal Home Loan Banks' (FHLBank) proposal to eliminate captives from the system is causing concerns among captives and an increase in captives hoping to join the system while they still can. Click on http://www.ambest.com/v.asp?v=fhlba815 to view the video program.
There are 12 FHLBanks spread across the country. These government-sponsored institutions provide on-demand, low-cost funding for things like home mortgages, small businesses and economic development. The Federal Housing Finance Agency, which regulates the FHLBanks, put a temporary moratorium on captives joining the system, and is considering banning them altogether. Frank Klimko, BestWeek's associate editor, explains that the agency felt that some companies were using the system as a loophole to obtain financing that they weren't entitled to.
Numerous captive regulators expressed concern about the changes at the Vermont Captive Association 2015 Annual Conference. Delaware's Captive Insurance Director Steve Kinion said the FHLBanks provide a tremendous amount of liquidity in times of need. "We, as captive insurance regulators, and in terms of solvency, look at that very, very favorably," he said.
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