FHFA Finalizes Rule To Modernize Governance Of FHLBs’ Risk-Based Capital Requirements

WASHINGTON—The Federal Housing Finance Agency has finalized a rule it said will modernize the regulation governing Federal Home Loan Banks' (FHLBs) risk-based

FHFA

capital requirements to align it with Dodd-Frank Act requirements.

The final rule carries over most of the current regulations without material change, but substantively revises the credit risk component of the risk-based capital requirement and the limitations on extensions of unsecured credit, reported NAFCU.

"The principal revisions to those provisions remove requirements that the Banks calculate credit risk capital charges and unsecured credit limits based on ratings issued by a Nationally Recognized Statistical Rating Organization (NRSRO), and instead require that the Banks use their own internal rating methodology," the final rule explains.

NAFCU noted that it had warned that some of the changes "may put the FHLBs' investment abilities at risk, impact the pricing of advances, and lead to inconsistent treatment of FHLB assets."

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