ADVANCES.

SEC. 714. ADVANCES. (a) In General.—Subsection (a) of section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430(a)) is amended by striking everything after “members” to the end period and inserting the following “upon collateral sufficient, in the judgment of the Bank, to fully secure advances obtained from the Bank under this section or section 11(g) of this Act. All long-term advances shall only be made for the purpose of providing funds for residential housing finance. A Bank, at the time of origination or renewal of a loan or advance, shall obtain and maintain a security interest in collateral eligible pursuant to one or more of the following categories: 103 STAT. 420 “(1) Fully disbursed, whole first mortgages on improved residential property (not more than 90 days delinquent), or securities representing a whole interest in such mortgages. “(2) Securities issued, insured, or guaranteed by the United States Government or any agency thereof (including without limitation, mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association). “(3) Deposits of a Federal Home Loan Bank. “(4) Other real estate related collateral acceptable to the Bank if such collateral has a readily ascertainable value and the Bank can perfect its interest in the collateral. The aggregate amount of outstanding advances secured by such other real estate related collateral shall not exceed 30 percent of such member’s capital. “(5) Paragraphs (1) through (4) shall not affect the ability of any Federal Home Loan Bank to take such steps as it deems necessary to protect its security position with respect to outstanding advances, including requiring deposits of additional collateral security, whether or not such additional security would be eligible to originate an advance. If an advance existing on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 matures and the member does not have sufficient eligible collateral to fully secure a renewal of such advance, a Bank may renew such advance secured by such collateral as the Bank and the Board determines is appropriate. A member that has an advance secured by such insufficient eligible collateral must reduce its level of outstanding advances promptly and prudently in accordance with a schedule determined by the Board.“. (b) Reduced Eligibility for Advances.—Section 10(e) of the Federal Home Loan Bank Act (12 U.S.C. 1430(e)) is amended to read as follows: “(e) Qualified Thrift Lender Status.— “(1) In general.—A member that is not a qualified thrift lender may only receive an advance if it holds stock in its Federal Home Loan Bank at the time it receives that advance in an amount equal to at least— “(A) 5 percent of that member’s total advances, divided by “(B) such member’s actual thrift investment percentage. Such members that are not qualified thrift lenders may only apply for advances under this section for the purpose of obtaining funds for housing finance. “(2) Priority.—The Board, by regulation, shall establish a priority for advances to members that are qualified thrift lenders. The aggregate amount of any Bank’s advances to members that are not qualified thrift lenders shall not exceed 30 percent of a Bank’s total advances. “(3) Minimum stock purchase requirement for membership.—Each member of a Federal Home Loan Bank shall, at a minimum, purchase and maintain stock in its Federal Home Loan Bank in the amount that would be required under section 6(b) if at least 30 percent of such member’s assets were home mortgage loans. 103 STAT. 421 “(4) Exceptions.—Paragraphs (1) and (2) of this subsection do not apply to— “(A) a savings bank as defined in section 3 of the Federal Deposit Insurance Act; or “(B) a Federal savings association in existence as a Federal savings association on the date of enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989— “(i) that was chartered as a savings bank or cooperative bank prior to October 15, 1982; or “(ii) that acquired its principal assets from an institution which was chartered prior to October 15, 1982, as a savings bank or cooperative bank under State law. “(5) Definitions.—As used in this subsection— “(A) Savings association.—The term ‘savings association’ has the same meaning as in section 10(a)(1)(A) of the Home Owners’ Loan Act. “(B) Qualified thrift lender.—The term ‘qualified thrift lender’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act. “(C) Actual thrift investment percentage.—The term ‘actual thrift investment percentage’ has the same meaning as in section 10(m) of the Home Owners’ Loan Act.”. (c) Special Liquidity Advances.—Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 1430) (as amended by section 710(c) of this Act) is amended by adding at the end the following new subsection: “(h) Special Liquidity Advances.— “(1) In general.—Subject to paragraph (2), the Federal Home Loan Banks may, upon the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association that— “(A) is solvent but presents a supervisory concern because of such association’s poor financial condition; and “(B) has reasonable and demonstrable prospects of returning to a satisfactory financial condition. “(2) Interest on and security for special liquidity advances.—Any loan by a Federal Home Loan Bank pursuant to paragraph (1) shall be subject to all applicable collateral requirements, including the requirements of section 10(a) of this Act, and shall be at an interest rate no less favorable than those made available for similar short-term liquidity advances to savings associations that do not present such supervisory concern.”.