CUNA Regulatory Comment Call

March 30, 2000

Amendments to Federal Home Loan Bank Rules on Membership and Advances


The Federal Housing Finance Board (Board) requests comments on an interim rule that amends its regulations to obtain membership in and advances from the Federal Home Loan Banks (FHLBanks). This April 10th notice was published in the Federal Register on March 15, 2000 and the interim final rule was effective as of March 15, 2000. The Board must receive, written comments on or before April 14, 2000. Please submit your comments to CUNA by April 10, 2000, by fax at 202/371-8240 or by e-mail to CUNA's Assistant General Counsel Michelle Profit at You may access a copy of the notice here. The interim rule will do the following:


The Federal Home Loan Bank System is comprised of twelve FHLBanks, which are cooperatives. The members of a FHLBank own the capital stock of a FHLBank. Any insured depository institution may become a member of a FHLBank if it meets certain criteria and purchases a specified amount of the FHLBank's capital stock. Only these members and eligible nonmembers' borrowers (such as state housing finance agencies) may obtain access to the products the FHLBank provides. Each FHLBank provides products that enhance the availability of residential mortgage and community lending credit to its members and eligible nonmembers.

As a government-sponsored-enterprise, the FHLBanks can offer these products because they are granted certain privileges that enable them to borrow funds in the capital markets on terms more favorable than those that could be obtained by others. The FHLBanks pass along their GSE funding advantage to their members by providing advances (secured loans) and other financial services at rates that would not otherwise be available to their members. The FHLBanks have authority to make advances in support of housing finance and community lending. In particular, they are required to offer two programs, the Affordable Housing Program and the Community Investment Program, to provide subsidized or at-cost advances, respectively, in support of unmet housing finance or targeted economic development credit needs. In addition, the FHLBanks may establish Community Investment Cash Advances Program for community lending, which is defined as providing financing for economic development projects for targeted beneficiaries.

Credit unions became eligible to become members of a FHLBank with the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. According to the FHLBank of Seattle, there are 4,298 credit unions eligible for membership; however, only 405 of these credit unions, approximately 9 percent, are members.


Do you think these changes will facilitate credit unions use of the FHLBank system? Why or why not?

Should any other changes, suggestions or comments be made to the FHLBank system?

The Board requests comments on what source of data should be used in calculating the average of total assets over the three preceding years.

Eric Richard • General Counsel • (202) 508-6742 •

Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •

Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •

Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •