I 
116TH CONGRESS 
2D SESSION 
H. R. 8872 
To amend the Federal Home Loan Bank Act to enable captive insurance 
companies to apply for membership in the Federal Home Loan Bank 
System, to add additional membership criteria for captive insurance 
companies, to require a study on Federal Home Loan Bank membership, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 4, 2020 
Mr. HOLLINGSWORTH (for himself and Mr. HECK) introduced the following 
bill; which was referred to the Committee on Financial Services 
A BILL 
To amend the Federal Home Loan Bank Act to enable 
captive insurance companies to apply for membership 
in the Federal Home Loan Bank System, to add addi-
tional membership criteria for captive insurance compa-
nies, to require a study on Federal Home Loan Bank 
membership, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Transparency in Fed-
eral Home Loan Bank Membership Act of 2020’’. 
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SEC. 2. DEFINITIONS. 
Section 2 of the Federal Home Loan Bank Act (12 
U.S.C. 1422) is amended by adding at the end the fol-
lowing: 
‘‘(13) CAPTIVE
INSURANCE
COMPANY.—The 
term ‘captive insurance company’ means an insur-
ance company whose primary business is the insur-
ance of its affiliates. 
‘‘(14) INSURANCE COMPANY.—The term‘ insur-
ance company’ means an entity that holds an insur-
ance license or charter under the laws of a State. 
‘‘(15) PARENT
COMPANY.—The term ‘parent 
company’ means the ultimate parent company.’’. 
SEC. 3. CAPTIVE INSURANCE COMPANY ELIGIBILITY FOR 
MEMBERSHIP. 
(a) IN GENERAL.—Section 4(a) of the Federal Home 
Loan Bank Act (12 U.S.C. 1424(a)) is amended by adding 
at the end the following: 
‘‘(6) ELIGIBLE
CAPTIVE
INSURANCE
COMPA-
NIES.— 
‘‘(A) IN
GENERAL.—A captive insurance 
company shall be eligible to become a member 
of a Federal Home Loan Bank only if the par-
ent company of the captive insurance company 
meets the following requirements: 
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‘‘(i) MISSION
ALIGNMENT
STAND-
ARDS.— 
‘‘(I) HOUSING INVESTMENT.—At 
least 51 percent of the total assets of 
the parent company are invested in 
residential mortgage loans. 
‘‘(II) FORM OF INVESTMENTS.— 
At least 60 percent of the total assets 
of the parent company are held in real 
estate assets, cash and cash equiva-
lents, and government securities (as 
such terms are used under section 
856(c)(4)(A) of the Internal Revenue 
Code of 1986). 
‘‘(ii) 
CAPITAL
STANDARDS.—Such 
capital standards as the Director deter-
mines appropriate, by rule, which shall be 
as close as practicable to those capital 
standards applicable to insured depository 
institutions (as defined under section 3 of 
the Federal Deposit Insurance Act). 
‘‘(B) ONGOING MEMBERSHIP.— 
‘‘(i) 
REPORTING
REQUIREMENT.— 
Every 5 years after becoming a member of 
a Federal Home Loan Bank, a captive in-
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surance company shall submit a report, 
prepared by a third-party auditor, to the 
Director containing information on compli-
ance by the parent company with the re-
quirements described under subparagraph 
(A). 
‘‘(ii) PARENT
COMPANY
REQUIRE-
MENTS.—A parent company of a captive 
insurance company that is a member of a 
Federal Home Loan Bank shall— 
‘‘(I) maintain the mission align-
ment standards described under sub-
paragraph (A)(i); 
‘‘(II) maintain the capital stand-
ards described under subparagraph 
(A)(ii); 
‘‘(III) be deemed a ‘regulated en-
tity’ under section 1314 of the Fed-
eral Housing Enterprises Financial 
Safety and Soundness Act of 1992 
(12 U.S.C. 4514); and 
‘‘(IV) be subject to such addi-
tional reporting requirements as the 
Director determines appropriate, by 
rule. 
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‘‘(iii) FAILURE
TO
MEET
MISSION 
ALIGNMENT STANDARDS REQUIREMENT.— 
If the Director determines that a parent 
company no longer meets the mission 
alignment standards described under sub-
paragraph (A)(i), the Director shall require 
the parent company to file quarterly re-
ports with the Director for a 1-year period, 
showing how the parent company is seek-
ing to comply with such mission alignment 
standards. 
‘‘(iv) REPORT ON PARENT COMPANY 
COMPLIANCE WITH CAPITAL STANDARDS.— 
‘‘(I) IN GENERAL.—Each captive 
insurance company that is a member 
of a Federal Home Loan Bank shall 
issue a quarterly report to the Bank 
containing information on the compli-
ance, by the parent company of the 
captive insurance company, with the 
capital standards described under sub-
paragraph (A)(ii). 
‘‘(II) REPORT
ON
NON-COMPLI-
ANCE.—If a Federal Home Loan 
Bank 
receiving 
reports 
described 
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under subclause (I) determines that a 
parent company has failed to meet the 
capital standards described under sub-
paragraph (A)(ii) for 2 consecutive 
quarters, the Bank shall notify the 
Director of such failure. 
‘‘(v) FAILURE
TO
MEET
CAPITAL 
STANDARDS REQUIREMENT.—If the Direc-
tor determines that a parent company no 
longer meets the capital standards de-
scribed under subparagraph (A)(ii), the 
Director shall require the parent company 
to file a capital restoration plan with the 
Director and the Federal Home Loan 
Bank with respect to which the parent 
company’s captive insurance company is a 
member. 
‘‘(vi) 
TERMINATION
OF
MEMBER-
SHIP.—A captive insurance company’s 
membership of a Federal Home Loan 
Bank shall be terminated, in accordance 
with section 6(d)(2) of the Federal Home 
Loan Bank Act (12 U.S.C. 1426(d)(2)), 
if— 
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‘‘(I) the parent company of the 
captive insurance company does not 
submit a capital restoration plan re-
quired under clause (v) that is sub-
stantially in compliance with section 
1369C of the Federal Housing Enter-
prises Financial Safety and Sound-
ness Act of 1992 (12 U.S.C. 4622) 
within the applicable period; 
‘‘(II) the Director does not ap-
prove such a capital restoration plan 
required under clause (v); 
‘‘(III) the Director determines 
that the parent company has failed to 
comply with such a capital restoration 
plan; or 
‘‘(IV) with respect to a parent 
company that the Director has deter-
mined no longer meets the mission 
alignment standards described under 
subparagraph (A)(i), the parent com-
pany has not returned to compliance 
with such standards before the end of 
the 1-year period described under 
clause (iii). 
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‘‘(vii) REAPPLICATION.—A captive in-
surance company whose membership in a 
Federal Home Loan Bank is terminated 
under clause (vi) may not reapply for 
membership in a Federal Home Loan 
Bank until the end of the 5-year period be-
ginning on the date of such termination. 
‘‘(C) PARENT COMPANY SUPPORT.— 
‘‘(i) IN GENERAL.—The Director shall 
require the parent company of the captive 
insurance company, in the event that the 
captive insurance company defaults on any 
amounts owed to a Federal Home Loan 
Bank, to pay the Bank the amount of any 
such default. 
‘‘(ii) ENFORCEMENT
POWERS.—For 
purposes of enforcing this subparagraph, a 
parent company shall be deemed a regu-
lated entity under sections 1371, 1372, 
and 1376 of the Federal Housing Enter-
prises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4631, 4632, and 
4636). 
‘‘(D) CLARIFICATION OF PRIORITY OF SE-
CURED
INTERESTS.—Any 
security 
interest 
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