The Federal Housing Finance Agency today issued a notice of proposed rulemaking that would make substantial changes to the governance structure of the 11 Federal Home Loan Banks, including requiring the banks to adopt conflict of interest policies.
The proposed revisions to the FHLBank governance and FHLBank Office of Finance would update and clarify regulatory requirements on multiple corporate governance topics, according to the agency. “These proposed revisions will not only help ensure boards of directors demonstrate the knowledge, expertise and experience to act in the public interest, but will also strengthen the system’s capacity to respond to developments and emerging risks in housing finance,” FHFA Director Sandra Thompson said.
According to an FHFA summary of the proposed changes, FHLBanks would be required to expand the experience qualifications for independent directors to include artificial intelligence, Community Development Financial Institution business models, climate risk, information technology and security, and modeling. The proposal also would revise the requirements for public interest independent directors to emphasize a need for direct and substantial experience on behalf, or for direct benefit, of consumers or communities.
FHLBanks would be required to adopt conflicts of interest policies that address outside positions and financial interests of bank employees, close family members and associates. The policies also must prohibit FHLBank executive officers and senior management from holding paid positions at potential and existing members, housing associates or their affiliates.
FHFA will hold a webinar on Wednesday, Oct. 30, at 2 p.m. ET on the proposed rule.
