FHFA Announces Final Rule Expanding Access to Liquidity for the Federal Home Loan Bank System

Washington, D.C. – The Federal Housing Finance Agency (FHFA) published a final rule today designed to improve access to liquidity for the Federal Home Loan Bank (FHLBank) System by adjusting the treatment of certain short-term FHLBank investments.

The rule modifies FHLBank limits on the extension of certain forms of unsecured credit. Previously, an FHLBank’s deposits held in member-provided interest-bearing deposit accounts (IBDAs) counted toward a more restrictive limit set in FHFA’s existing regulation governing FHLBank capital requirements. Under the final rule published today, these deposits will count toward a more flexible limit — similar to the treatment of federal funds sales — allowing the FHLBanks to better manage and respond to the liquidity needs of their members in a safe and sound manner.

“FHFA’s priority is to ensure that the Federal Home Loan Banks manage their balance sheets and financial transactions responsibly, remaining safe and sound while providing necessary liquidity to their members,” said FHFA Director Sandra L. Thompson. “This regulation better enables the FHLBanks to meet their mission by providing them with greater flexibility to deploy tools to facilitate the expansion of affordable, sustainable housing.”

The rule also clarifies terms for the FHLBanks to determine limits on unsecured credit to counterparties. Based on feedback on the proposed rule, the final rule establishes an exception for certain amounts in operations and custodial accounts that the proposed rule would have counted toward the intra-day unsecured credit limit and clarifies that the limits are focused on liquidity activities.

Final Rule: Unsecured Credit Limits for Federal Home Loan Banks