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Proposed Rule Regarding FHLBank Membership

On September 12, the Federal Housing Finance Agency published a Notice of Proposed Rulemaking and Request for Comments - Members of Federal Home Loan Banks (RIN 2590-AA39). The proposed changes would make certain members ineligible for membership, discourage prospective members from joining, and ultimately reduce the availability of funding to meet member liquidity and funding needs as well as their ability to meet the housing and economic development demands of the communities they serve. On an ongoing basis:

  • All member credit unions, as well as banks with assets greater than or equal to $1.09 billion, would be required to keep at least 10 percent of their assets in "residential mortgage loans."

  • All FHLBank members would need to hold one percent of their assets in "home mortgage loans" to satisfy the statutory requirement that an institution make long-term home mortgage loans.

  • Noncompliant members would have their FHLBank membership terminated.

  • Captive insurance companies would be excluded from membership.

These proposed changes threaten to limit access to FHLBank low-cost funding as policymakers look for ways to jumpstart economic activity and encourage financial institutions to increase residential mortgage, investment, and business lending.

FHLB Boston will be submitting a comment letter, and encourages members and other stakeholders to do so as well. The comment period closes on January 12, 2015.

To view the NPR and submit a comment, please go to https://www.fhfa.gov/SupervisionRegulation/Rules/Pages/Members-of-Federal-Home-Loan-Banks-2014.aspx and include RIN 2590-AA39 in the subject line of your comment.

To learn more about how you can help, please contact your relationship manager or EVP and Chief Business Officer Susan Elliott at 617-292-9615 or susan.elliott@fhlbboston.com

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