Excess Stock Restrictions and Retained Earnings Requirements for the Federal Home Loan Banks
Limitation on Issuance of Excess Stock
FOR FURTHER INFORMATION CONTACT: Daniel E. Coates, Associate Director, Office of Supervision, coatesd@fhfb.gov or (202) 408-2959; or Thomas E. Joseph, Senior Attorney-Advisor, Office of General Counsel, josepht@fhfb.gov or (202) 408-2512. You can send regular mail to the Federal Housing Finance Board, 1625 Eye Street, NW., Washington DC 20006.
SUMMARY: The Federal Housing Finance Board (Finance Board) is adopting a final rule limiting the ability of a Federal Home Loan Bank (Bank) to create member excess stock under certain circumstances. Under the rule, any Bank with excess stock greater than 1 percent of its total assets will be barred from further increasing member excess stock by paying dividends in the form of shares of stock (stock dividends) or otherwise issuing new excess stock. The final rule is based on a proposed rule that sought to impose a limit on excess stock and establish a minimum retained earnings requirement. The final rule deals only with the excess stock provisions of the proposal. The Finance Board intends to address retained earnings in a later rulemaking.
EFFECTIVE DATES: This rule will become effective on January 29, 2007.