FUNDING 
              CORPORATION.

    (a) Funding of Interest Payments by the Resolution Funding 
Corporation.--Subsection 21B(f)(2)(C) of the Federal Home Loan Bank Act 
(12 U.S.C. 1441b(f)(2)(C)) is amended to read as follows:
                    ``(C) Payments by federal home loan banks.--
                            ``(i) In general.--To the extent the 
                        amounts available pursuant to subparagraphs (A) 
                        and (B) are insufficient to cover the amount of 
                        interest payments, the Federal home loan banks 
                        shall pay to the Funding Corporation each 
                        calendar year $300,000,000.
                            ``(ii) Individual bank share.--Each Federal 
                        home loan bank's share of the amount required 
                        to be paid under clause (i) for any year shall 
                        be determined by dividing--
                                    ``(I) the daily average minimum 
                                level of tangible capital which such 
                                bank was required to maintain in order 
                                to comply with the bank's minimum 
                                capital requirement for the adequately 
                                capitalized category established 
                                pursuant to section 28(b)(2); by
                                    ``(II) the sum of the daily average 
                                minimum levels of tangible capital 
                                which all the banks were required to 
                                maintain in order to comply with each 
                                such bank's minimum capital requirement 
                                for the adequately capitalized 
                                category.''
    (b) Bank Contributions to the Bank's Affordable Housing Program.--
            ``(1) 1995.--Subsection 10(j)(5)(C) of the Federal Home 
        Loan Bank Act (12 U.S.C. 1430(j)(5)(C)) is amended to read as 
        follows:
                    ``(C) In 1995, the greater of--
                            ``(i) 10 percent of the net income of the 
                        bank in the preceding year; or
                            ``(ii) such prorated sum as the Finance 
                        Board may determine to be necessary to assure 
                        that the aggregate contribution of all the 
                        Federal home loan banks shall not be less than 
                        $100,000,000 for 1995.''
    (c) 1996 and Subsequent Years.--Subsection 10(j)(5) of the Federal 
Home Loan Bank Act (12 U.S.C. 1430(j)(5)) is amended by adding at the 
end the following new subparagraph:
                    ``(D) In 1996 and subsequent years, 10 percent of 
                the net income of the bank in the preceding year, as 
                determined after deducting the payment made by each 
                Federal home loan bank to the Funding Corporation under 
                section 21B(f)(2)(C).''.

SEC. 9. COMMUNITY SUPPORT REQUIREMENTS.

    Subsection (g) of section 10 of the Federal Home Loan Bank Act (12 
U.S.C. 1430(g)) is amended by adding at the end the following new 
paragraph:
            ``(3) Safe harbor for member's receiving cra ratings of 
        satisfactory or better.--Notwithstanding paragraphs (1) and 
        (2), any member which receives a rating of satisfactory or 
        outstanding pursuant to section 807 of the Community 
        Reinvestment Act of 1977 in such member's most recent 
        examination shall be treated as having satisfied the 
        requirements of such paragraphs.''.

SEC. 10. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Section 9.--Section 9 of the Federal Home Loan Bank Act (12 
U.S.C. 1429) is amended--
            (1) in the 2d sentence, by striking ``with the approval of 
        the Board''; and
            (2) in the 3d sentence, by striking ``, subject to the 
        approval of the Board,''.
    (b) Section 10.--
            (1) Subsection (a) of section 10 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1430(a)) is amended--
                    (A) in the 1st sentence before paragraph (1), by 
                striking ``or section 11(g) of this Act'';
                    (B) in the 2d sentence before paragraph (1), by 
                striking ``housing finance'' and inserting ``mortgage 
                assets'';
                    (C) in the 2d sentence of paragraph (5), by 
                striking ``and the Board''; and
                    (D) in the last sentence of paragraph (5), by 
                striking ``Board'' and inserting ``bank''.
            (2) The last sentence of section 10(b) of the Federal Home 
        Loan Bank Act (12 U.S.C. 1430(b)) is amended by striking 
        ``Board'' and inserting ``bank''.
            (3) Section 10(c) of the Federal Home Loan Bank Act (12 
        U.S.C. 1430(c) is amended--
                    (A) in the 1st sentence, by striking ``Board'' and 
                inserting ``bank''; and
                    (B) by striking the 2d sentence.
            (4) The last sentence of section 10(d) of the Federal Home 
        Loan Bank Act (12 U.S.C. 1430(d)) is amended by striking 
        ``Subject to the approval of the Board, any'' and inserting 
        ``Any''.
            (5) Section 10 of the Federal Home Loan Bank Act (12 U.S.C. 
        1430) is amended by striking the 1st of the 2 subsections 
        designated as subsection (e).
    (c) Section 10b.--Subsection (a) of section 10b of the Federal Home 
Loan Bank Act (12 U.S.C. 1430b) is amended--
            (1) by striking ``Board'' and inserting ``bank''; and
            (2) by inserting ``home'' before ``mortgage loan''.
    (d) Section 11.--
            (1) Subsection (a) of section 11 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1431(a)) is amended--
                    (A) by striking ``(a) Each Federal Home Loan Bank'' 
                and inserting ``(a) Borrowing Authority.--
            ``(1) In general.--Each Federal home loan bank'';
                    (B) by striking ``, subject to rules and 
                regulations prescribed by the Board'';
                    (C) by striking ``Board'' and inserting ``board of 
                directors of the bank''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(2) Borrowing through the office of finance corporation 
        only.--Notwithstanding paragraph (1), all notes, bonds, and 
        debentures issued by any Federal home loan bank shall be issued 
        through the Office of Finance Corporation.''
            (2) Subsection (b) of section 11 of the Federal Home Loan 
        Bank Act (12 U.S.C. 1431(b)) is amended to read as follows:
    ``(b) Issuance of Federal Home Loan Bank Bonds.--
            ``(1) In general.--Effective as of the date the Finance 
        Board transfers the functions of the Office of Finance to the 
        Office of Finance Corporation pursuant to section 4(a)(3), the 
        Office of Finance Corporation may issue consolidated Federal 
        home loan bank bonds and other consolidated obligations on 
        behalf of the banks.
            ``(2) Joint and several obligation; terms and conditions.--
        Consolidated obligations issued by the Office of Finance 
        Corporation under paragraph (1) shall--
                    ``(A) be the joint and several obligations of all 
                the Federal home loan banks; and
                    ``(B) shall be issued upon such terms and 
                conditions as shall be established by the Office of 
                Finance Corporation.''.
            (3) Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 
        1431) is amended by striking subsections (c) and (d) and by 
        redesignating subsections (e), (f), (g), (h), (i), (j) and (k) 
        as subsections (c), (d), (e), (f), (g), (h) and (i), 
        respectively.
            (4) Subsection (d) of section 11 of the Federal Home Loan 
        Bank Act (as so redesignated by paragraph (3)) is amended to 
        read as follows:
    ``(d) Rediscount of Notes Held by Other Banks; Purchase of Bonds of 
Other Banks.--The Federal home loan banks may--
            ``(1) rediscount the discounted notes of members held by 
        other Federal home loan banks;
            ``(2) make loans to, or make deposits with, other Federal 
        home loan banks; or
            ``(3) purchase any bonds or debentures issued under this 
        section.''.
    (e) Repeal of Sections 2A and 2B.--The Federal Home Loan Bank Act 
(12 U.S.C. 1421 et seq.) is amended by striking sections 2A and 2B.

SEC. 11. INCORPORATION OF BANKS; CORPORATE POWERS.

    Section 12 of the Federal Home Loan Bank Act is amended to read as 
follows:

``SEC. 12. INCORPORATION OF BANKS; CORPORATE POWERS.

    ``(a) Organizational Certificates.--
            ``(1) Custodianship.--The Finance Board shall be the 
        custodian of the organizational certificates of the Federal 
        home loan banks previously filed with the Federal Home Loan 
        Bank Board (as in existence before the end of the 60-day period 
        beginning on the date of the enactment of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989) or 
        the Finance Board.
            ``(2) Replacement of lost or destroyed certificate.--If the 
        organizational certificate of a Federal home loan bank is lost 
        or destroyed, the board of directors of the bank shall provide 
        the Finance Board with a substitute certificate containing such 
        information as the Finance Board may require.
            ``(3) Amendment in case of merger, combination, or 
        consolidation.--If 2 or more Federal home loan banks merge, 
        combine, or otherwise consolidate, the resulting bank shall 
        provide the Finance Board with an amended organizational 
        certificate containing such information as the Finance Board 
        may require.
    ``(b) Corporate Status.--Each Federal home loan bank shall be a 
corporation.
    ``(c) Powers.--Each Federal home loan bank shall have the following 
powers:
            ``(1) To adopt, alter, and use a corporate seal.
            ``(2) To make contracts.
            ``(3) To purchase or lease and hold or dispose of such real 
        estate as may be necessary or convenient for the transaction of 
        the business of the bank.
            ``(4) To sue and be sued, to complain, and to defend, in 
        any court of competent jurisdiction.
            ``(5) To select, employ, and fix the compensation of such 
        officers, employees, attorneys, and agents as the board of 
        directors determines to be necessary for the transaction of the 
        business of the bank.
            ``(6) To define the duties of, and require bonds of, 
        officers, employees, attorneys, and agents of the bank and fix 
        the penalties of any such bonds.
            ``(7) To dismiss at pleasure officers, employees, 
        attorneys, and agents of the bank.
            ``(8) By the board of directors, to prescribe, amend, and 
        repeal bylaws and policies governing the manner in which the 
        affairs of the bank may be administered.
            ``(9) Such incidental powers as are not inconsistent with 
        the provisions of this Act and are customary and usual in 
        corporations generally.
    ``(d) Prohibition on Excessive Compensation.--
            ``(1) In general.--The Finance Board shall prohibit the 
        Federal home loan banks from providing compensation to any 
        employee of the bank that is not reasonable and comparable with 
        compensation for employment in other similar businesses 
        (including other financial institutions or major financial 
        services companies) involving similar duties and 
        responsibilities.
            ``(2) Limitation on Finance Board's Authority to Set 
        Compensation.--In carrying out paragraph (1), the Finance Board 
        may not prescribe or set a specific level or range of 
        compensation.''.

SEC. 12. LIQUIDATION OR REORGANIZATION.

    Section 25 of the Federal Home Loan Bank Act (12 U.S.C. 1445) is 
amended by striking ``the Board under this Act'' and inserting 
``operation of law''.

SEC. 13. DEFINITIONS.

    (a) Finance Board Defined.--Paragraph (1) of section 2 of the 
Federal Home Loan Bank Act (12 U.S.C. 1422(1)) is amended to read as 
follows:
            ``(1) Finance board.--The term `Finance Board' means the 
        Federal Housing Finance Board established under section 3.''
    ``(b) Home Mortgage Loan Defined.--Section 2 of the Federal Home 
Loan Bank Act (12 U.S.C. 1422) is amended by striking paragraphs (5) 
and (6) and inserting the following new paragraph:
            ``(5) Home mortgage loan.--
                    ``(A) In general.--The term `home mortgage loan' 
                means a loan made by a member or a nonmember borrower 
                upon the security of--
                            ``(i) a mortgage, deed of trust or other 
                        security arrangement upon qualified real 
                        estate, in fee simple; or
                            ``(ii) on a qualified leasehold--
                                    ``(I) under a lease which has a 
                                period to maturity of not less than 99 
                                years and is renewable; or
                                    ``(II) under a lease having a 
                                period of not less than 50 years to run 
                                from the date the mortgage, deed of 
                                trust, or other security arrangement 
                                was executed.
                    ``(B) Certain loans included.--The term `home 
                mortgage loan' includes--
                            ``(i) such classes of first liens as are 
                        commonly given to secure advances on real 
                        estate, under the laws of the State in which 
                        the real estate is located, by institutions 
                        authorized under this Act to become members of 
                        a Federal home loan bank; and
                            ``(ii) the credit instruments, if any, 
                        secured by such liens.
                    ``(C) Qualified real estate; qualified leasehold.--
                The terms `qualified real estate' and `qualified 
                leasehold' mean real estate upon which is located, or 
                which comprises or includes, 1 or more homes or other 
                dwelling units.
                    ``(D) Definition of further terms.--The Finance 
                Board may define any term used in this paragraph.''.
    (c) Residential Mortgage Assets Defined.--Section 2 of the Federal 
Home Loan Bank Act (12 U.S.C. 1422) is amended--
            (1) by redesignating paragraphs (7), (8), (9), (10), (11), 
        and (12) as paragraphs (6), (7), (8), (9), (10), (11), 
        respectively; and
            (2) by adding at the end the following new paragraph:
            ``(12) Residential mortgage assets.--The term `residential 
        mortgage asset'--
                    ``(A) means a home mortgage, deed of trust, or 
                other security arrangement upon real estate that is 
                solely residential; and
                    ``(B) includes any mortgage pass-through security 
                or mortgage debt security representing an interest in, 
                or which is collateralized by, a home mortgage loan.''
    (d) Regulated Financial Institution Defined.--Section 2 of the 
Federal Home Loan Bank Act (12 U.S.C. 1422) is amended by adding after 
paragraph (12) (as added by subsection (c) of this section) the 
following new paragraph:
            ``(13) Regulated financial institution.--The term 
        `regulated financial institution' means--
                    ``(A) any insured depository institution; and
                    ``(B) any building and loan association, saving and 
                loan association, cooperative bank, homestead 
                association, or savings bank which is duly organized 
                under the laws of any state or of the United States.''.
    (e) Capital Distribution Defined.--Section 2 of the Federal Home 
Loan Bank Act (12 U.S.C. 1422) is amended by adding after paragraph 
(13) (as added by subsection (d) of this section) the following new 
paragraph:
            ``(14) Capital distribution.--The term `capital 
        distribution' means--
                    ``(A) any dividend or other distribution in cash or 
                other property made with respect to any shares of, or 
                other ownership interest in, a Federal home loan bank, 
                other than a dividend consisting only of shares of any 
                such bank;
                    ``(B) any payment in cash or other property made by 
                a Federal home loan bank to repurchase, redeem, retire, 
                or otherwise acquire any of the shares of the bank, 
                including any extension of credit made to finance an 
                acquisition by a bank of such shares; and
                    ``(C) any transaction that the Finance Board 
                determines by regulation to be, in substance, a 
                distribution of capital of a Federal home loan bank.''.

SEC. 14. EFFECTIVE DATE.

    Except as otherwise expressly provided in this Act, this Act and 
the amendments made by this Act shall take effect on the first January 
1 which occurs after the date of the enactment of this Act.
                                 
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Output: Federal Home Loan Bank System Modernization Act of 1995 - Amends the Federal Home Loan Bank Act (FHLBA) to declare that the mission of the Federal Home Loan Bank System is to:  (1) be a profit-making enterprise whose purpose is to support residential mortgage lending (including low- and moderate-income housing), and related community and economic development lending through a program of collateralized advances and other financial services; and (2) facilitate such lending by providing long-term credit and liquidity and other financial services to members of Federal home loan banks (FHLBs). 
Establishes 12 regional FHLB districts.  (Currently, the Federal Housing Finance Board (Board) is required to establish between eight and 12 such districts.)  Prescribes guidelines for FHLB mergers. 
Modifies from annual to periodic the congressional reporting requirements of the Board regarding the safety and soundness of the FHLB system.  Alters the makeup of the Board to:  (1) reduce its membership from five to three directors; and (2) repeal the statutory mandate that it consist of the Secretary of Housing and Urban Development and at least one consumer representative.  States that two directors constitutes a quorum. 
Establishes the Office of Finance Corporation (the Corporation) as a federally chartered instrumentality to issue FHLB bonds and debentures.  Transfers to the Corporation the functions of the Office of Finance of the FHLBs.  Vests Corporation management in a board of directors composed of elected representatives from each FHLB.  Treats the Corporation as an FHLB for purposes of any law. 
Revises the parameters for subscription and retirement of FHLB stock.  Revises the procedure for termination of FHLB membership. Reduces from ten years to five years the period of time before a withdrawn member may resume membership. 
Amends the Home Owners' Loan Act to repeal:  (1) the proscription against granting cash advances to savings associations that have failed to acquire or maintain qualified thrift lender status; and (2) the requirement that such associations repay outstanding FHLB advances in a prompt and prudent manner. 
Revises the FHLB membership guidelines to change membership status from mandatory to voluntary for each Federal savings association. 
Amends the FHLBA to direct the Finance Board to establish a uniform capital requirement for FHLBs which takes into consideration interest rate risk, credit risk, and all other risks and obligations associated with bank operations.  Prescribes bank capital guidelines. Revises the guidelines for:  (1) bank management; (2) FHLB annual contributions to the Resolution Funding Corporation; and (3) FHLB contributions to the Affordable Housing Program. 
Provides that any member which receives a rating of satisfactory or better in its most recent examination in connection with the Community Reinvestment Act of 1977 shall be treated as having satisfied specified statutory requirements. 
Revises incorporation guidelines to:  (1) declare the Finance Board custodian of FHLB organizational certificates; and (2) instruct the Finance Board to prohibit FHLBs from providing excessive compensation to employees.