TITLE VI -- FEDERAL HOME LOAN BANK SYSTEM MODERNIZATION

• Banks with less than $500 million in assets may use long-term advances for loans to small businesses, small farms and small agri-businesses.

• A new, permanent capital structure for the Federal Home Loan Banks is established. Two classes of stock are authorized, redeemable on 6-months and 5-years notice. Federal Home Loan Banks must meet a 5% leverage minimum tied to total capital and a risk-based requirement tied to permanent capital

• Equalizes the stock purchase requirements for banks and thrifts.

• Voluntary membership for Federal savings associations takes effect six months after enactment.

• The current annual $300 million funding formula for the REFCORP obligations of the Federal Home Loan Banks is changed to 20% of annual net earnings.

• Governance of the Federal Home Loan Banks is decentralized from the Federal Housing Finance Board to the individual Federal Home Loan Banks. Changes include the election of chairperson and vice chairperson of each Federal Home Loan Bank by its directors rather than the Finance Board, and a statutory limit on Federal Home Loan Bank directors' compensation.