Privately Insured CUs Can Become Members of FHLBs

Privately insured credit unions can now become members of the Federal Home Loan Banks (FHLBs).

President Obama on December 4 signed into law the Highway Bill (H.R. 22).

Section 82001 of the bill allows privately insured credit unions to join the Federal Home Loan Banks "only if the appropriate supervisor of the State in which the credit union is chartered has determined that the credit union meets all the eligibility requirements for Federal deposit insurance as of the date of the application for membership."

Also, the bill protects FHLB advances from loss by giving FHLBs priority to collateral backing FHLB advances.

This section of the bill also authorizes the GAO to conduct an audit on the adequacy of insurance reserves held by a private
deposit insurer and on the level of compliance with Federal regulations relating to the disclosure of a lack of Federal deposit insurance.

American Share Insurance is the only private insurer of credit unions.

Read the bill.