UNDER SECRETARY

DEPARTMENT OF THE TREASURY                         WASHINGTON                   September 12, 1997

The Honorable Tom Bliley
Chairman
Committee on Commerce
U.S. House of Representatives
Washington, D.C. 20515-6050

Dear Mr. Chairman:

You have requested our views on whether the Federal Home Loan Bank (FHLBank) System's statutory exemption from registering its securities with the Securities and Exchange Commission should be repealed.

Following abuses in the government securities market uncovered in 1991, the Treasury Department, the SEC, and the Board of Governors of the Federal Reserve System issued a report entitled Joint Report on the Government Securities Market (January 1992). In that report, the three agencies recommended that all government sponsored enterprises, including the FHLBank System, be required to register their equity and unsecured debt securities with the SEC.

A copy of that recommendation, and the rationale for it, is enclosed.

We note that in 1993 Congress passed the Government Securities Act Amendments that provided additional safeguards against abuses in that market. The regulatory agencies have now adopted regulations implementing those amendments.

Sincerely,

/s/

John D. Hawke, Jr.
Under Secretary
for Domestic Finance

Enclosure [not attached]