Sponsors (2)
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Last progress June 9, 2025 (8 months ago)
Introduced on June 9, 2025 by James E. Banks
Amends the Federal Home Loan Bank Act to change how executive officer pay rules for Federal Home Loan Banks are written. It replaces part of the existing compensation subsection, explicitly allows the Director to set reasonable and comparable compensation for any FHLB executive officer under regulations (even if other statutory language would limit that authority), and removes an older transition rule.
Amend Section 7 of the Federal Home Loan Bank Act (12 U.S.C. 1427) by changing the first subsection (l) heading (relating to withholding of compensation). The draft indicates the subsection heading is struck and replaced.
Replace the text of the first subsection (l) with a new paragraph labeled “(1) Withholding of compensation” beginning with the word “Notwithstanding” (the draft shows the subsection text is struck and a new “Withholding of compensation” paragraph is inserted).
Add at the end of subsection (l) a new paragraph labeled “(1) Setting compensation” that states: Notwithstanding section 1318(d) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518(d)), the Director may establish compensation for any executive officer of a Federal Home Loan Bank that is reasonable and comparable in accordance with regulations promulgated by the Director.
Strike the second subsection (l) of Section 7 (the provision described as the transition rule). The draft indicates the second subsection (l) is removed.
Primary effects:
Federal Home Loan Banks and their executive officers: The amendment changes the legal basis for setting executive pay by making the Director's regulatory authority explicit and overriding competing statutory constraints. That makes it easier for the supervising agency to issue uniform pay standards across the FHLBank System.
FHFA / Director: Gives the Director clearer, express authority to define and implement compensation rules by regulation. The Director will need to draft, propose, and finalize regulations that define "reasonable and comparable," which can include public notice-and-comment requirements.
Boards and governance: FHLBank boards may need to revise internal compensation policies to comply with any new regulations; boards will face clearer regulatory expectations about comparability and reasonableness of pay.
Member institutions and markets: Indirectly affected through governance or market perceptions; changes in executive compensation policy could influence recruitment, retention, and cost structures at the FHLBanks.
Budgetary and program impacts:
Legal and administrative considerations:
Overall, the change is a technical statutory amendment that clarifies regulatory authority over executive compensation rather than prescribing specific pay levels or new programs.