Page 52 - The GSE Report March-April 2018

FEDERAL HOME LOAN BANK MJARN.U-ARPYR.20210818
Net income was $3,376 million for 2017, a decrease of $32 million, resulting primarily by lower gains on litigation settlements. Combined Financial Report for the Year Ended December 31, 2017, Federal Home Loan Banks, 03/23/18)
FHFA issues proposed rule amending the FHLBs’ Affordable Housing Program regulation
The Federal Housing Finance Agency (FHFA) is seeking comments on proposed amendments to its regulation on the Federal Home Loan Banks’ (FHLBs) Affordable Housing Program (AHP).
The proposed amendments would authorize the FHLBs to redesign their project selection systems and create special targeted funds, which would allow the FHLBs more flexibility to align their
AHP funds with the distinct affordable housing needs in their districts. The amendments would also make the program easier to use, both for the FHLBanks and award recipients, by reducing regulatory requirements that are redundant with other federal programs. In 2017, the FHLBanks’ net income generated $384 million in AHP funding, and the average contribution for the last five years has exceeded $300 million per year.
“The FHLBanks’ Affordable Housing Program is a continuing success story. Since it began in 1990, the program has awarded funds to support over one million units of housing affordable to low-income homebuyers and renters,” said FHFA Director Melvin L. Watt. “We look forward to stakeholder comments that will enable us to continue to build on the AHP’s success.”
Written comments must be submitted to FHFA on or before by June 12, 2018. (Press Release, Federal Housing Finance Agency, 03/06/18; Federal Register, page 11,344, 03/14/18)
Bill to reverse FHFA’ FHLB membership rule is dividing the FHLB community
A bill, sponsored by Senator Tammy Duckworth (D-IL), to reverse a 2016 rule by the Federal Housing Finance Agency that expelled captive insurance companies from FHLB membership would allow 47 insurers to rejoin or maintain their FHLB membership. The FHFA rule has had a “particularly devastating impact on the Chicago FHLB’s membership because its long-standing captive insurers provide the bank with nearly one-third of its total borrowings,” according to Duckworth.
Small banks and the FHLBs opposed FHFA’s membership rule and support Duckworth’s bill. However, other argue that the bill goes too far in allowing membership for captive insurance companies, which could expose the FHLB system to new risks. “We have not taken an official position on the captive insurer bill, ... but ICBA, like most FHLBs, are concerned the bill could
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