Since December 2000 the Finance Board has received four petitions seeking clarification on whether a bank can simultaneously be a member of two or more Federal Home Loan Banks.
1. On December 11, 2000, the Federal Housing Finance Board received a petition from the FHLBank of Dallas requesting that the Finance Board approve the membership of Washington Mutual Bank, FA (WMBFA) in the FHLBank of Dallas. WMBFA is currently a member of the San Francisco FHLBank, and is merging with Bank United, which is a member of the FHLBank of Dallas. The effect of approving WMBFA's membership in the FHLBank of Dallas would be to allow WMBFA to be a member of both the San Francisco and the Dallas FHLBanks.
The petition was made under the "demanded by convenience standard" for membership in an adjoining FHLBank District contained in the Federal Home Loan Bank Act (FHLBank Act) and in the Finance Board's regulations. The Finance Board has not established any specific standards; guidelines or criteria for what constitutes "demanded by convenience" under the FHLBank Act, and has never acted under this provision.
After reviewing the petition, and acting under its regulations, the Finance Board requested on January 11 that the FHLBank of Dallas provide supplemental information to the Finance Board regarding the request. The FHLBank of Dallas replied to the request on January 31.
The Finance Board has received "Requests to Intervene” from a variety of interested parties. Those parties are World Savings Bank,FSB, Washington Mutual Bank, FA, the Fifth Ward Community Redevelopment Corporation, and the Federal Home Loan Banks of Atlanta, Boston, and San Francisco.
The Finance Board has also received comment letters from the FHLBanks of Des Moines and Indianapolis, the Local Inititatives Support Corporation, America's Community Bankers, and the Tejano Center for Community Concerns.
The FHLBank of Dallas also submitted on April 24 a "Response to Requests to Intervene."
2. On May 8, 2001, the Finance Board received a petition from the FHLBank of New York for approval of an application by Fleet National Bank, Providence, Rhode Island, to become a member of the FHLBank of New York. Fleet is currently a member of the FHLBank of Boston.
3. On May 29 the Finance Board received a petition from the FHLBank of Chicago regarding the merger of its member, Liberty Bank, with Charter One Bank, a member of the Federal Home Loan Bank of Cincinnati.
4. On September 26, 2001, the Finance Board voted to solicit comments on the issue of multi-FHLBank membership.
5. On December 28, 2001, the Finance Board received a petition from the FHLBank of Atlanta for approval of an application by National Bank of Commerce, Memphis, Tennessee, to become a member of the FHLBank of Atlanta. The National Bank of Commerce is currently a member of the FHLBank of Cincinnati.
6. On January 22, 2002, Finance Board Chairman John Korsmo sent letters to the presidents of the FHLBanks that have petitioned or requested to intervene in the multi-FHLBank membership issue informing them of his intention to defer Finance Board action until after the comment period has closed.
7. In separate letters to the Finance Board, the Letters of Petition from the FHLBanks of Dallas, Chicago, Atlanta, and New York were withdrawn on February 19, February 27, March 15, and March 25, respectively.
8. On December 11, 2002, Chairman Korsmo released an independent legal analysis by Morrison & Foerster that reaffirmed the agency's authority to continue to regulate the terms of membership in the Federal Home Loan Bank System as part of its mandate to supervise the System's safety and soundness.
9. On December 20, 2002, the Federal Housing Finance Board adopted Resolution 2002-63 asking the 12 Federal Home Loan Banks to respond to questions concerning membership in light of widespread changes in the financial services industry.
10. On February 7, 2003, the 12 Federal Home Loan Banks responded to the FHFB resolution asking for answers to questions concerning membership issues and the financial services industry. The responses are available here.