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New Law Alters FHLBank Director Appointment Process
The process for becoming a Federal Home Loan Bank (FHLBank) public interest director has been changed by the housing stimulus legislation (H.R. 3221) signed into law last month.
The legislation has replaced the Federal Housing Finance Board (FHFB) with the Federal Housing Finance Agency (FHFA), which has regulatory oversight over Fannie Mae and Freddie Mac as well as the Federal Home Loan Bank System.
Previously, FHLBank boards both elected and appointed directors — who were officers or directors of member banks within an FHLBank’s district — apportioned among the states in the district.
For appointed directors, each board was responsible for conducting a preliminary assessment of the candidates in its district and forwarding those it found most qualified to the FHFB for its consideration. The FHFB could appoint or reject any of the recommended candidates and could also call for the submission of additional candidates.
Under the new process initiated by the housing bill, all directors are elected by FHLBank members. There is a requirement for some of the directors not to have ties to member institutions, and some of these must represent the public interest. However, the new regulator has no role in selecting directors.
The FHLBanks will now nominate qualified candidates, and member banks within the district will elect directors from the list of qualified candidates.
Candidates will continue to be required to submit a standardized eligibility form directly to the FHLBanks for consideration.
All of the details in the new process are not yet known, but NAHB understands that sitting appointed directors will be able to serve out their terms.
Among the provisions in the new law:
- Thirteen directors, or a number determined to be appropriate by the FHFA director, will manage each Federal Home Loan Bank.
- The board of directors of each bank will be made up first, of a majority of member directors and second, of independent directors, who will comprise at least two-fifths of the board membership.
- At least two of the independent directors will be public interest directors who have more than four years of experience in representing consumer or community interests on banking services, credit needs, housing or financial consumer protections.
- Independent directors, including public interest directors, will be elected by the members entitled to vote, from among eligible persons nominated by the board of directors of the FHLBank; and independent directors will be elected by a plurality of the votes of the members of the bank.
- The terms of each director have been increased from three to four years.
- Directors can be paid reasonable compensation for their time and necessary expenses in performance of their duties. There will no longer be specific limits on compensation.
More details will be provided on this process as they become available.
To read H.R. 3221, click here and enter the bill number in the box at the center of the page.
For more information, e-mail John Dimitri at NAHB, or call him at 800-368-5242 x8529.
 Want to Know the Housing Forecast for the Top 100 Metros?
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To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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