The Federal Housing Finance Agency (FHFA) issued a notice of proposed rulemaking on Federal Home Loan Bank (FHLBank) Unsecured Credit Limits.
According to a statement from the FHFA, the proposed rule is designed to “improve the FHLBanks’ ability to provide liquidity to members by aligning the treatment of interest-bearing deposit accounts (IBDAs) and other authorized overnight investments with the treatment of Federal Funds sales. This updated regulatory treatment would allow the FHLBanks to better manage and respond to the intraday liquidity needs of their members.”
Additionally, the proposed rule would clarify the terms used by the FHLBanks to determine limits on unsecured credit to counterparties.
“The Federal Home Loan Banks have played a key role in helping homeowners and renters obtain affordable, sustainable housing for over 90 years,” said FHFA Director Sandra L. Thompson. “These modernizations will create more flexibility for the FHLBanks in their liquidity management, which will allow them to better serve their members, particularly during periods of market stress.”
FHFA will accept online public comments on the proposed rule for 60 days following its publication in the Federal Register.
Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, issued a statement that said, “Enhancements that support the FHLBanks’ ability to provide liquidity to their members is something that we support. As FHFA notes, the changes in this proposed rule are in furtherance of the agency’s effort to modernize the FHLBanks’ ability to meet the liquidity needs of members.”
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