Federal Home Loan Bank Financial Management and Mission Achievement

Résumé

The Federal Housing Finance Board (Finance Board) is proposing to adopt new financial management and mission achievement regulations, and amend certain existing regulations, for the Federal Home Loan Banks (Banks). The proposal would modernize policies governing the business activities of the Banks and, for the first time, would establish regulatory standards for mission achievement by the Banks and a definition of mission assets. The proposal includes a risk-based capital requirement, pursuant to which the amount of capital required to be maintained by a Bank would be based on the credit, market, and operations risks to which it is exposed. The risk-based capital regime builds upon the regulatory framework used by other financial institution and government-sponsored enterprise (GSE) regulators. The mission achievement requirement in the proposal would: codify the authority of the Banks to hold mortgage assets, including mortgage- backed securities; allow mortgage assets meeting certain regulatory requirements to be counted as mission assets; and eliminate the use of the Banks' GSE advantages in issuing debt to fund arbitrage investments. The proposal also sets forth in the regulat