Banking and Finance Law Daily FHFA seeks input on FHLBank membership
Tuesday, February 25, 2020

FHFA seeks input on FHLBank membership

By Charles A. Menke, J.D.

The FHFA is seeking input on several broad questions relating to FHLBank membership requirements, as well as on certain more specific questions related to the implementation of the agency’s current regulation.

The Federal Housing Finance Agency has issued a Request for Input (RFI) on whether the agency’s existing FHLBank membership regulation (12 CFR Part 1263) ensures that the FHLBank System remains safe and sound, provides liquidity for housing finance through the housing and business cycle, and supports the FHLBanks' housing finance and community development mission. Comments are due by June 23, 2020.

The FHFA noted that the RFI is part of a comprehensive review of FHLBank membership. "We look forward to hearing from all interested parties about how FHFA's membership regulations affect the safety and soundness and mission of the FHLBanks," FHFA Director Mark Calabria said. "There is no predetermined outcome for this RFI, other than to ensure that membership rules are clear, consistently applied to all applicants, and that access to the Banks' low cost advances do not jeopardize the System's role as a key source of liquidity to support housing finance."

The questions address topics ranging from general eligibility and affiliate issues, to specific safety and soundness and mission requirements, to more technical matters relating to the application of the regulation. The responses received through the RFI will help FHFA determine what actions, if any, may be appropriate to take to update the FHLBank membership regulation, the agency said.

The FHFA’s previously conducted a major review of the membership regulation in 2010. That review resulted in a 2016 final rule effectively banning captive insurance companies from FHLBank membership, as well as making several other more minor revisions to the membership regulation. The FHFA again amended the regulation in 2017 to implement new statutory provisions making certain credit unions without federal share insurance eligible for membership. Subsequently, questions regarding FHLBank membership have continued to arise prompting the current review and RFI.

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