After several months of backlash from community banking groups and mortgage-backed securities players - and faced with the possibility of a legislative moratorium - Federal Housing Finance Board Chairman Bruce Morrison last week agreed to withdraw a controversial proposed rule that would have realigned the Federal Home Loan Bank's capital structure and, among other directives, would have called for the FHLBanks to divest their nearly $60 billion of MBS investments.

In a letter to the House and Senate chairmen of the congressional conference committee working on financial modernization legislation, Morrison assured that he would withdraw the FHFB's initiative, entitled the Financial Management and Mission Achievement (FMMA) proposal, pending final congressional enactment of a banking bill that is designed to modernize the FHLBank system.

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