I 

110TH CONGRESS 

2D SESSION H. R. 5723 

To amend the Federal Home Loan Bank Act to allow Federal home loan 

banks to invest surplus funds in student loan securities and make advances for student loan financing, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 8, 2008 

Mr. KANJORSKI introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Federal Home Loan Bank Act to allow Federal home loan banks to invest surplus funds in student 

loan securities and make advances for student loan financing, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Emergency Student 

5 Loan Market Liquidity Act’’. 

6 SEC. 2. EMERGENCY STUDENT LOAN MARKET LIQUIDITY. 

7 The Federal Home Loan Bank Act (12 U.S.C. 1421 

8 et seq.) is amended— 


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1 (1) by redesignating section 30 as section 31; 

2 and 

3 (2) by inserting after section 29, the following 

4 new section: 

5 ‘‘SEC. 30. EMERGENCY AUTHORITY. 

6 ‘‘(a) INVESTMENT OF SURPLUS.—Such part of the 

7 assets of each Federal home loan bank (except reserves 

8 and amounts provided for in subsection (g) of section 11) 

9 as are not required for advances to members, may be in10 vested in student loan-related securities in addition to the 

11 other investments described in subsection (h) of such sec12 tion. 

13 ‘‘(b) COLLATERAL.—For purposes of section 

14 10(a)(3), the following shall be considered eligible collat15 eral in addition to the other categories of eligible collateral 

16 described in such section: 

17 ‘‘(1) Student loan-related securities. 

18 ‘‘(2) Student loans. 

19 ‘‘(c) LONG-TERM ADVANCES.—Notwithstanding sec20 tion 10(a)(2), any Federal home loan bank may make se21 cured long-term advances upon sufficient collateral for 

22 purposes of providing funds to any member for financing 

23 the origination of student loans or the purchase or financ24 ing of student loan-related securities. 


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1 ‘‘(d) DEFINITIONS.—For purposes of this section, the 

2 following definitions shall apply: 

3 ‘‘(1) STUDENT LOAN-RELATED SECURITY.—The 

4 term ‘student loan-related security’ means a security 

5 that— 

6 ‘‘(A) is rated in 1 of the 3 highest rating 

7 categories (without regard to any refinement or 

8 gradation of such rating category by a numer9 ical modifier or otherwise) by at least one na10 tionally recognized statistical rating organiza11 tion; and 

12 ‘‘(B) is described in at least 1 of the 

13 clauses: 

14 ‘‘(i) Represents an interest in student 

15 loans. 

16 ‘‘(ii) Is a bond, note or other obliga17 tion payable from and secured by an inter18 est in student loans. 

19 ‘‘(iii) Is a bond, note or other obliga20 tion that— 

21 ‘‘(I) is part of an issue of securi22 ties issued for the purpose of pro23 viding funds to purchase or originate 

24 student loans; and 


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1 ‘‘(II) will be payable from and se2 cured by an interest in such student 

3 loans. 

4 ‘‘(2) INTEREST IN STUDENT LOANS.—The term 

5 ‘interest in student loans’ includes ownership rights 

6 in, or certificates of interest or participation inter7 ests in, such student loans or the promissory notes 

8 evidencing such student loans and rights designated 

9 to assure servicing of such promissory notes, or the 

10 receipt or timely receipt of amounts payable and 

11 under such promissory notes or the timely distribu12 tion thereof to the holders of such interest. 

13 ‘‘(3) STUDENT LOAN.—The term ‘student loan’ 

14 means any loan made under subtitle B of title IV of 

15 the Higher Education Act of 1965 (whether to a 

16 student, the parents of a student, or a consolidating 

17 borrower). 

18 ‘‘(e) TEMPORARY NATURE OF RELIEF.— 

19 ‘‘(1) EFFECTIVE PERIOD.—Except as provided 

20 in paragraph (2), this section shall be effective for 

21 investments and advances made between February 

22 1, 2008, and the end of the 2-year period beginning 

23 on the date of the enactment of the Emergency Stu24 dent Loan Market Liquidity Act. 


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1 ‘‘(2) EXCEPTION.—Notwithstanding the expira2 tion of the effective period of this section— 

3 ‘‘(A) any investment by any Federal home 

4 loan bank under subsection (a) in any student 

5 loan-related security shall remain an authorized 

6 investment of such bank through the maturity 

7 of such security; and 

8 ‘‘(B) any student loan-related securities or 

9 student loans held by any Federal home loan 

10 bank as collateral under subsection (b) for an 

11 advance to a member under subsection (c) may 

12 continue to be held by the bank as security 

13 until the advance matures or is otherwise re14 paid or extinguished.’’. 

Æ 


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