On Jan. 14, 2025, FHFA issued final rule on unsecured credit limits for FHLBanks.
The final rule will become effective 90 days after publication in the federal register.
On Oct. 3, FHFA proposed rule to amend capital requirements.
FHFA proposed to expand access to liquidity for Federal Home Loan Banks (FHLBanks).
Proposed rule would 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.
Rule Provisions
Amended capital requirements (12 CFR 1277) to modify limits on bank extensions of unsecured credit in their on- and off-balance sheet and derivative transactions.
Currently, overnight federal funds are excluded from the more restrictive general limit on unsecured credit to single counterparty and are limited only by higher overall limit.
Proposed rule added IBDAs and other authorized overnight investments to exclusion.
To provide greater flexibility and improve cost to yield than overnight federal funds.
Added language clarifying that measurement of unsecured credit exposure to a single counterparty also includes intraday exposure and is not limited to overnight exposure.
Replace references to Fed Funds with references to authorized overnight investments.
Clarified that, for purposes of the affiliated counterparty limits, a Bank’s total capital must be calculated in the same manner as provided for the single counterparty limits.
Removed references to sales of federal funds subject to continuing contract; replaced it with reference to any automatic renewal of an authorized overnight investment.
Replaced descriptions of specific reporting requirements with new language referencing FHFA’s Data Reporting Manual (DRM), which sets detailed data reporting requirements.
Consultation
Comments are due 60 days following publication in federal register, on Dec. 2, 2024.
Jan. 2025 FHFA Final Rule
On Jan. 14, 2025, FHFA issued final rule on unsecured credit limits for FHLBanks.
The final rule will become effective 90 days after publication in the federal register.
