§ 1424. — Eligibility for membership.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1424]
TITLE 12--BANKS AND BANKING
CHAPTER 11--FEDERAL HOME LOAN BANKS
Sec. 1424. Eligibility for membership
(a) Criteria for eligibility
(1) In general
Any building and loan association, savings and loan association,
cooperative bank, homestead association, insurance company, savings
bank, or any insured depository institution (as defined in section
1422 of this title), shall be eligible to become a member of a
Federal Home Loan Bank if such institution--
(A) is duly organized under the laws of any State or of the
United States;
(B) is subject to inspection and regulation under the
banking laws, or under similar laws, of the State or of the
United States; and
(C) makes such home mortgage loans as, in the judgment of
the Board, are long-term loans (except that in the case of a
savings bank, this subparagraph applies only if, in the judgment
of the Board, its time deposits, as defined in section 461 of
this title, warrant its making such loans).
(2) Qualified thrift lender
An insured depository institution that is not a member on
January 1, 1989, may become a member of a Federal Home Loan Bank
only if--
(A) the insured depository institution (other than a
community financial institution) has at least 10 percent of its
total assets in residential mortgage loans;
(B) the insured depository institution's financial condition
is such that advances may be safely made to such institution;
and
(C) the character of its management and its home-financing
policy are consistent with sound and economical home financing.
(3) Certain institutions
An insured depository institution commencing its initial
business operations after January 1, 1989, may become a member of a
Federal Home Loan Bank if it complies with regulations and orders
prescribed by the Board for the 10 percent asset requirement
(described in the \1\ paragraph (2)) within one year after the
commencement of its operations.
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\1\ So in original. The word ``the'' probably should not appear.
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(4) Limited exemption for community financial institutions
A community financial institution that otherwise meets the
requirements of paragraph (2) may become a member without regard to
the percentage of its total assets that is represented by
residential mortgage loans, as described in subparagraph (A) of
paragraph (2).
(b) Location requirement
An institution eligible to become a member under this section may
become a member only of, or secure advances from, the Federal Home Loan
Bank of the district in which is located the institution's principal
place of business, or of the bank of a district adjoining such district,
if demanded by convenience and then only with the approval of the Board.
(c) Inspection and regulation requirements
Notwithstanding the provisions of clause (2) of subsection (a) of
this section requiring inspection and regulation under law as a
condition with respect to eligibility for membership, any building and
loan association which would be eligible to become a member of a Federal
Home Loan Bank except for the fact that it is not subject to inspection
and regulation under the banking laws or similar laws of the State in
which such association is organized shall, upon subjecting itself to
such inspection and regulation as the Board shall prescribe, be eligible
to become a member.
(July 22, 1932, ch. 522, Sec. 4, 47 Stat. 726; June 13, 1933, ch. 64,
Sec. 3, 48 Stat. 129; Pub. L. 101-73, title VII, Secs. 701(b)(1),
(3)(A), 704(a), 710(b)(1), Aug. 9, 1989, 103 Stat. 412, 415, 418; Pub.
L. 106-102, title VI, Sec. 605, Nov. 12, 1999, 113 Stat. 1452.)
References in Text
Section 461 of this title, referred to in subsec. (a)(1)(C), was in
the original ``section 19 of the Federal Reserve Act''. Definition
provisions of section 19 are classified to section 461 of this title.
Other provisions of section 19 are classified to sections 142, 371a,
371b, 371b-1, 374, 374a, 463 to 466, 505, and 506 of this title.
Amendments
1999--Subsec. (a)(2) to (4). Pub. L. 106-102 inserted ``(other than
a community financial institution)'' after ``institution'' in par.
(2)(A), designated concluding provisions of par. (2) as par. (3),
inserted heading and substituted ``paragraph (2)'' for ``preceding
sentence'', and added par. (4).
1989--Subsec. (a). Pub. L. 101-73, Sec. 704(a), amended subsec. (a)
generally. Prior to amendment, subsec. (a) read as follows: ``Any
building and loan association, savings and loan association, cooperative
bank, homestead association, insurance company, or savings bank shall be
eligible to become a member of, or a nonmember borrower of, a Federal
Home Loan Bank if such institution (1) is duly organized under the laws
of any State or of the United States; (2) is subject to inspection and
regulation under the banking laws, or under similar laws, of the State
or of the United States; and (3) makes such home mortgage loans as in
the judgment of the board, are long-term loans (and in the case of a
savings bank if, in the judgment of the board, its time deposits, as
defined in section 461 of this title, warrant its making such loans). No
institution shall be eligible to become a member of, or a nonmember
borrower of, a Federal Home Loan Bank if, in the judgment of the board,
its financial condition is such that advances may not safely be made to
such institution or the character of its management or its home-
financing policy is inconsistent with sound and economical home
financing, or with the purposes of this chapter.''
Subsec. (b). Pub. L. 101-73, Sec. 710(b)(1), struck out ``or a
nonmember borrower'' after ``eligible to become a member''.
Pub. L. 101-73, Sec. 701(b)(1), (3)(A), substituted ``Board'' for
``board''.
Subsec. (c). Pub. L. 101-73, Sec. 701(b)(1), (3)(A), substituted
``Board'' for ``board''.
1933--Subsec. (d). Act June 13, 1933, struck out subsec. (d) which
provided for direct loans to homeowners. See chapter 12 (Sec. 1461 et
seq.) of this title.
Section Referred to in Other Sections
This section is referred to in section 1431 of this title.