Federal Home Loan Banks' Mission Activities Act
This bill, the Federal Home Loan Banks' Mission Activities Act, would broaden and strengthen the Federal Home Loan Bank System’s (FHLB) mission and tools. It aims to (a) expand how the FHLBs can support housing (including affordable housing), agricultural and small business lending, and broader community economic development; (b) explicitly authorize grants, subsidized financing, advances, and credit enhancement as valid tools; (c) add credit unions and community development financial institutions (CDFIs) to the definition of eligible community financial institutions; (d) create and fund an Affordable Housing Program with mandatory funding levels and grant options; (e) align executive compensation with mission-related outcomes; and (f) increase transparency by requiring annual reporting on collateral. The bill would also extend disaster recovery flexibilities for housing programs and set new rules for who can be a member of the FHLB system. In short, the bill would make it easier for FHLBs to fund and subsidize housing and community development, broaden eligibility to include more mission-focused financial institutions, tie leadership pay to mission results, and increase reporting and accountability to Congress.
Key Points
- 1Expanded eligibility and participation: Adds credit unions and community development financial institutions (CDFIs) to the definition of eligible community financial institutions, using criteria such as insured deposits or CDFI certification, with asset thresholds (less than $1 billion in average assets) or certification by the Treasury Secretary. This broadens who can access FHLB support for housing and community development activities.
- 2Affordable Housing Program with grants: Reforms Section 10 to create an Affordable Housing Program that finances long-term, low- or moderate-income housing (owner-occupied and affordable rental) by subsidizing the interest rate on advances or by providing grants to members. Requires that loans funded by subsidized advances also have subsidized interest rates. Directors would regulate, and the program would be funded by specific annual allocations.
- 3Funding and use of net income: From 2025 onward, 30% of each bank’s preceding year net income must support the Affordable Housing Program (with a floor ensuring aggregate funding of at least $200 million per year across the Banks). The Banks can, with Advisory Council input, allocate up to 15% of net income to non-competitive grants or investments that support below-market or grant-based activities for affordable housing or community needs in low- or moderate-income, Tribal, or rural communities, including under programs beyond the core Program.
- 4Expanded program scope and flexibility: The Program and related grants/advances would cover broader housing and community development activities, including new provisions for disaster recovery (e.g., temporary use of vacant rental units for displaced households and temporary easing of certain requirements to aid recovery after disasters).
- 5Executive compensation aligned with mission: Rewrites the compensation framework for FHLB executive officers to be reasonable and comparable to similarly publicly subsidized financial institutions (e.g., regional Federal Reserve Banks). In setting pay, the Director would consider mission-related metrics (e.g., share of member institutions using program benefits, number of housing program sponsors, investment in community finance, etc.) and could justify higher compensation if goals align with mission achievements.
- 6Enhanced reporting on collateral: Requires an annual report to Congress detailing collateral pledged to the FHLBs, including breakdowns by type and by Bank district, increasing transparency over the Bank System’s risk and collateral arrangements.