On August 5, 2011, the Federal Housing Finance Agency approved 11 of FHLBanks` requests to amend their existing capital plans (the Federal Home Loan Bank of Chicago has not yet implemented its capital plan). ”FhFA strongly supports the cooperation of banks in the development of this joint agreement that enhances their capital and the safety and soundness of Federal Home Loan Bank Systems,” said Ed DeMarco, Director of the fhFA Act. ”The banks` approach reflects the long-standing practice and requirements before RefCorp to use at least 20 percent of profits to build profit reserves. FHLBanks is jointly and severally liable for its combined commitments. If a single bank was unable to pay a creditor, the other banks must step in and cover that debt. This provides an extra level of security and leads to prudent borrowing at all FHL banks. The law firm Dzivi, P.C. represented the 12 Federal Home Loan Banks when they entered into a joint capital assistance agreement to improve the capital structure of all FHLBanks by creating a limited profit reserve account. The company also advised FHLBanks to obtain approval from the Federal Housing Finance Agency to adapt changes to FHLBanks` capital plans to include the new limited profit reserve account in its capital structure. The changes passed today will come into each bank`s capital plan and prohibit any bank from paying dividends into its limited profit reserve account. Banks` compliance with capital plans is monitored by the FHFA. Washington, D.C. – The Federal Housing Finance Agency (FHFA) announced today that all 12 Federal Home Loan Banks (banks) have fulfilled their obligation to pay interest on the bonds of the Resolution Funding Corporation (RefCorp).
The FHFA also announced that it has approved amended capital plans for all banks except Chicago, which does not currently operate under an approved capital structure plan. The changes to the capital plan require banks to allocate new limited profit reserve accounts to funds previously used to pay interest on RéfCorp bonds. This increases the profits reserves and capital of banks. The Federal Home Loan Bank of Chicago recently introduced a new capital plan containing limited reserves for profits, and the proposed plan is being reviewed by the FHFA. . . .