"FEDERAL HOUSING FINANCE AGENCY
NEWS RELEASE
For Immediate Release Contact: Corinne Russell (202) 414-6921
August 5, 2011 Stefanie Johnson (202) 414-6376
FHFA Announces Completion of RefCorp Obligation and
Approves FHLB Plans to Build Capital
Washington, DC -- The Federal Housing Finance Agency (FHFA) announced today that the12 Federal Home Loan Banks (Banks) have fulfilled their obligation to pay interest on Resolution Funding Corporation (RefCorp) bonds. FHFA also announced that it has approved
amended capital plans for all Banks except Chicago, which is not currently operating under an approved capital structure plan. The capital plan amendments obligate the Banks to allocate funds previously used to pay interest on the RefCorp bonds to new restricted retained earnings accounts. This will increase the Banks’ retained earnings and capital. The Federal Home LoanBank of Chicago has recently submitted a new capital plan, which includes the restrictedretained earnings provisions, and the proposed plan is under review by FHFA.Authorized by Congress, RefCorp bonds were issued from 1989 to 1991 to help financeresolution of failing thrift institutions. The Banks originally were required to pay $300 millionper year toward the RefCorp obligation, but since 1999 each Bank has been required to pay 20percent of its net earnings after Affordable Housing Program contributions to service the RefCorp debt. FHFA has determined that the Banks completed their RefCorp obligations with
the payment made on July 15, 2011.
In anticipation of completion of their RefCorp payment obligations, the 12 Banks signed a Joint
Capital Enhancement Agreement on Feb. 28, 2011. The Agreement requires that beginning
Sept. 30, 2011 each Bank allocate 20 percent of its net income to a restricted retained earnings
account until the Bank’s account equals one percent of that Bank’s outstanding consolidated
obligations. The amendments approved today will make this requirement part of each Bank’s
capital plan and will prohibit each Bank from paying dividends out of its restricted retained
earnings account. The Banks’ compliance with their capital plans is monitored by FHFA.
“FHFA strongly supports the Banks’ collaboration in developing this Joint Agreement, which
enhances their capital and the safety and soundness of the Federal Home Loan Bank System,”
said FHFA Acting Director Ed DeMarco. “The approach taken by the Banks reflects the longstanding
practice and requirements pre-RefCorp of directing at least 20 percent of earnings to
building retained earnings. The Banks’ cooperative approach to establishing and building
restricted retained earnings accounts will enhance the System’s safety and soundness and is an
appropriate action in view of the Banks’ joint and several obligation to pay System debt
obligations.”
The 12 Federal Home Loan Banks are: Boston, New York, Pittsburgh, Atlanta, Cincinnati, Indianapolis, Chicago, Des Moines, Dallas, Topeka, San Francisco and Seattle.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions."
__________________
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
"FEDERAL HOUSING FINANCE AGENCY
NEWS RELEASE
For Immediate Release Contact: Corinne Russell (202) 414-6921
August 5, 2011 Stefanie Johnson (202) 414-6376
FHFA Announces Completion of RefCorp Obligation and
Approves FHLB Plans to Build Capital
Washington, DC -- The Federal Housing Finance Agency (FHFA) announced today that the12 Federal Home Loan Banks (Banks) have fulfilled their obligation to pay interest on Resolution Funding Corporation (RefCorp) bonds. FHFA also announced that it has approved
amended capital plans for all Banks except Chicago, which is not currently operating under an approved capital structure plan. The capital plan amendments obligate the Banks to allocate funds previously used to pay interest on the RefCorp bonds to new restricted retained earnings accounts. This will increase the Banks’ retained earnings and capital. The Federal Home LoanBank of Chicago has recently submitted a new capital plan, which includes the restrictedretained earnings provisions, and the proposed plan is under review by FHFA.Authorized by Congress, RefCorp bonds were issued from 1989 to 1991 to help financeresolution of failing thrift institutions. The Banks originally were required to pay $300 millionper year toward the RefCorp obligation, but since 1999 each Bank has been required to pay 20percent of its net earnings after Affordable Housing Program contributions to service the RefCorp debt. FHFA has determined that the Banks completed their RefCorp obligations with
the payment made on July 15, 2011.
In anticipation of completion of their RefCorp payment obligations, the 12 Banks signed a Joint
Capital Enhancement Agreement on Feb. 28, 2011. The Agreement requires that beginning
Sept. 30, 2011 each Bank allocate 20 percent of its net income to a restricted retained earnings
account until the Bank’s account equals one percent of that Bank’s outstanding consolidated
obligations. The amendments approved today will make this requirement part of each Bank’s
capital plan and will prohibit each Bank from paying dividends out of its restricted retained
earnings account. The Banks’ compliance with their capital plans is monitored by FHFA.
“FHFA strongly supports the Banks’ collaboration in developing this Joint Agreement, which
enhances their capital and the safety and soundness of the Federal Home Loan Bank System,”
said FHFA Acting Director Ed DeMarco. “The approach taken by the Banks reflects the longstanding
practice and requirements pre-RefCorp of directing at least 20 percent of earnings to
building retained earnings. The Banks’ cooperative approach to establishing and building
restricted retained earnings accounts will enhance the System’s safety and soundness and is an
appropriate action in view of the Banks’ joint and several obligation to pay System debt
obligations.”
The 12 Federal Home Loan Banks are: Boston, New York, Pittsburgh, Atlanta, Cincinnati, Indianapolis, Chicago, Des Moines, Dallas, Topeka, San Francisco and Seattle.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions."
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125