I
105TH CONGRESS
1ST SESSION
H. R. 31
To reform the Federal Home Loan Bank System, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 7, 1997
Mr. BAKER (for himself and Mr. KANJORSKI) introduced the following bill;
which was referred to the Committee on Banking and Financial Services
A BILL
To reform the Federal Home Loan Bank System, 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; TABLE OF CONTENTS; FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Enterprise Resource Bank Act of 1996’’.
(b) TABLE OF CONTENTS.—The table of sections for
this Act is as follows:
Sec. 1. Short title; table of contents; findings.
Sec. 2. Redesignation of Federal home loan banks as enterprise resource banks.
Sec. 3. Provisions relating to banks and bank ownership.
Sec. 4. Federal Housing Finance Board.
Sec. 5. The Office of Finance.
Sec. 6. Capital.
Sec. 7. Prompt corrective action.
Sec. 8. Management of banks.
Sec. 9. Sustainable economic development program.
Sec. 10. Enforcement authority to promote safety and soundness of enterprise
resource banks.
Sec. 11. Resolution Funding Corporation obligation.
Sec. 12. Powers and duties of banks; technical and conforming amendments.
Sec. 13. Incorporation of banks; corporate powers.
Sec. 14. Succession of enterprise resource banks.
Sec. 15. Definitions.
Sec. 16. Study of overcollateralization.
(c) FINDINGS.—The Congress finds the following:
(1) The Federal Home Loan Bank System was
established in 1932 primarily to provide a source of
intermediate- and long-term credit for State savings
institutions to finance long-term residential mort-
gages and to provide a source for liquidity loans for
such institutions, neither of which was readily avail-
able for such institutions at that time.
(2) Recently, the System’s membership has
been expanded to include other depository institu-
tions that are significant housing lenders.
(3) That portion of depository institutions
which are specialized mortgage lending has de-
creased, both with respect to the volume of loans
and as a percentage of market share and may con-
tinue to decrease.
(4) The establishment of the Federal National
Mortgage Association, the Federal Home Loan
Mortgage Corporation, and the Government Na-
tional Mortgage Association and the subsequent de-
velopment of an extensive private secondary market
for residential mortgages has challenged the Federal
Home 
Loan 
Bank 
System 
as 
a 
source 
of
intermediate- and long-term credit to support pri-
mary residential mortgage lenders.
(5) For most depository institutions, residential
mortgage lending has been incorporated into a prod-
uct mix of community banking that typically pro-
vides a range of mortgage, consumer, and commer-
cial loans in their communities.
(6) Community banks have a difficult time
accessing capital markets and adequately funding
intermediate- and long-term assets held by the bank
for investment purposes, particularly community
banks located in rural areas where nonfarm busi-
nesses tend to rely heavily on community banks as
their primary lender.
(7) Since community banks in rural areas, like
savings associations in the 1930s, tend to draw most
of their funds from local deposits, credit for borrow-
ers in rural areas may be difficult to obtain and the
economy of rural America could benefit from in-
creased competition if community banks in rural
areas were provided with enhanced access to capital
markets.
(8) Access to liquidity through Federal home
loan banks greatly benefits well-managed, adequately
capitalized community banks because—
(A) term advances reduce interest rate
risk; and
(B) the ability of a community bank to ob-
tain advances to offset deposit decreases or to
temporarily fund portfolios during an increase
in loan demands reduces the bank’s overall cost
of operation and allows the community bank to
better serve its market and community.
(9) Used prudently, the Federal Home Loan
Bank System is an integral tool to assist properly
regulated, well-capitalized community banks, espe-
cially community banks in rural areas and under-
served neighborhoods, to obtain a more stable fund-
ing source for intermediate- and long-term assets.
SEC. 2. REDESIGNATION OF FEDERAL HOME LOAN BANKS
AS ENTERPRISE RESOURCE BANKS.
(a) IN GENERAL.—Each Federal home loan bank is
hereby redesignated as an enterprise resource bank.
(b) UNIVERSAL CONFORMING AMENDMENTS.—
(1) FEDERAL HOME LOAN BANK.—The Federal
Home Loan Bank Act (12 U.S.C. 1421 et seq.) is
amended by striking ‘‘Federal Home Loan Bank’’