Federal Housing Finance Agency.The Federal Housing Finance Agency (Finance Agency) is the newly established federal regulator for the FHLBanks, Fannie Mae and Freddie Mac, as set forth in the Housing and Economic Recovery Act of 2008, enacted July 30, 2008. The Federal Housing Finance Board (Finance Board), our former regulator, will be abolished one year after date of enactment. During the one-year transition period, the Finance Board will be responsible for winding down its affairs. Effective upon enactment, James B. Lockhart assumed the position of Director, Federal Housing Finance Agency.

Housing and Economic Recovery Act of 2008 signed into law. On July 30, 2008, the "Housing and Economic Recovery Act of 2008" (the "Act") was enacted. The Act is designed to, among other things, address the current housing finance crisis, expand the Federal Housing Administration’s financing authority and address GSE reform issues. Highlights of significant provisions of the Act that directly affect the FHLBank include the following:

• Creates a newly established federal agency regulator, the Federal Housing Finance Agency (the "Finance Agency"), which will be the new federal regulator of the FHLBanks, Fannie Mae and Freddie Mac effective on the date of enactment of the Act. The Federal Housing Finance Board (“Finance Board”), our former regulator, will be abolished one year after the date of enactment. Finance Board regulations, policies, and directives immediately transfer to the new Finance Agency, and during the one year transition the Finance Board will be responsible for winding up its affairs. The Finance Agency will be overseen by a director (Agency Director).



• Authorizes the U.S. Treasury to purchase obligations issued by the FHLBanks, in any amount deemed appropriate by the U.S. Treasury. This temporary authorization expires December 31, 2009 and supplements the existing limit of $4 billion.



• Requires the Agency Director to consider the differences between the FHLBanks and the enterprises (Fannie and Freddie) prior to issuing new regulations, orders and guidelines.



• Retains the function of the Office of Finance to act as the FHLBank System’s debt agent.



• Establishes 13-member boards of directors, or other number as Agency Director deems appropriate, comprised of a majority of member directors. Requires that two-fifths (2/5) of the FHLBank's board of directors be non-member "independent" directors, (nominated by the FHLBank's board of directors in consultation with the advisory council of the FHLBank). Two (2) of the “independent” directors must have experience in consumer or community interests and the remaining directors must have demonstrated financial experience. All directors will be elected by FHLBank membership for four-year terms, with a three consecutive term limit. The statutory “grandfathering” rules for the number of member director seats by states remain, unless an FHLBank merges. For our FHLBank these seats are as follows: Kentucky-2; Ohio-4; Tennessee-2.



• Removes the maximum statutory annual limit on board of directors' compensation and provides the Agency Director with authority over and ability to restrict executive compensation.



• Allows the Agency Director to liquidate or reorganize an FHLBank upon notice and hearing.



• Allows FHLBank districts to be reduced to less than eight (8) districts as a result of a voluntary merger or as a result of the Agency Director's action to liquidate an FHLBank.



• Provides FHLBank membership eligibility to qualifying Community Development Financial Institutions.



• Requires a study of collateral used to secure FHLBank Advances to determine consistency with interagency guidance on non-tradition mortgage products.



• Requires a study of risks and/or benefits of securitization for the Mortgage Purchase Program.



• Increases the secondary market conforming loan limits for home mortgages eligible for purchase under the Mortgage Purchase Program and authorizes the Agency Director to establish low- and very low-income housing goals for the program.



• Authorizes an FHLBank on behalf of one or more members to issue letters of credit to support tax-exempt, non-housing municipal bond issuances. This authority expires December 31, 2010.



• Authorizes an FHLBank under its Affordable Housing Program to use a portion of designated subsidy for the refinancing of home loans for families having an income at or below 80% of the applicable area median income. This authority expires two years after enactment.