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CUNA analysis of FHLB change starting July 5

Mon, Jun 26, 2017

With privately insured credit unions that meet certain requirements eligible to join the Federal Home Loan Bank (FHLB) program starting July 5, CUNA has developed a final rule analysis with an overview of new requirements. The FHLB program serves as a low-cost source of liquidity for financial institutions.

Federally insured depository institutions, including state and federally chartered credit unions whose member accounts are insured by the National Credit Union Share Insurance Fund, have been eligible for FHLB membership since 1989.

The final rule imposes several new eligibility requirements. The credit union must:

  • Be duly organized under Federal or state law;
  • Be subject to inspection and regulation under Federal or state banking (or similar) laws;
  • Make long-term home mortgage loans;
  • Be of sufficient financial condition that FHLB determines advances may be made safely to the credit union;
  • Have both management and a home financing policy consistent with sound and economical home financing; and
  • Have at least 10% of its assets in residential mortgage loans.

The rule also requires an FHLB member credit union to:

  • Agree that examination reports prepared by its Federal or state regulator or a private entity providing share insurance shall be provided to FHLB upon request; and
  • Provide FHLB, within 20 days of filing, any report of condition required to be filed with the credit union’s Federal or state regulator, or private entity providing share insurance.

CUNA’s final rule analysis is available for CUNA members, and additional details can be found on CUNA’s CompBlog.

In addition to CompBlog, CUNA’s Compliance Community contains discussion boards and a number of other resources for credit union compliance professionals around the country.