12 U.S.C. § 1436
(a) Accumulation and maintenance of reserves; payment of dividends
Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors. Each Federal Home Loan Bank shall establish such additional reserves and/or make such charge-offs on account of depreciation or impairment of its assets as the Director shall require from time to time. No dividends shall be paid except out of previously retained earnings or current net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this chapter have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 1441 of this title or payments relating to the Funding Corporation Principal Fund under section 1441b(e) of this title. The reserves of each Federal Home Loan Bank shall be invested, subject to such regulations, restrictions, and limitations as may be prescribed by the Director, in direct obligations of the United States, in obligations, participations, or other instruments of or issued by the Federal National Mortgage Association or the Government National Mortgage Association, in mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 1454 or section 1455 of this title, and in such securities as fiduciary and trust funds may be invested in under the laws of the State in which the Federal Home Loan Bank is located.
(b) Assistance to member institutions in event of severe financial conditions
Notwithstanding subsection (a) or any other provision of this chapter, if the Director determines that severe financial conditions exist threatening the stability of member institutions, the Director may suspend temporarily the requirements of subsection (a) that a portion of net earnings be set aside semiannually by each Federal Home Loan Bank to a reserve account and permit each Federal Home Loan Bank to declare and pay dividends out of undivided profits.
(c) Exception in case of losses in connection with Financing Corporation stock
(1) In general
Notwithstanding subsection (a) of this section, if-
(A) a Federal Home Loan Bank incurs a chargeoff or an expense in connection with such bank's investment in the stock of the Financing Corporation under section 1441 of this title;
(B) the Director determines there is an extraordinary need for the member institutions of the bank to receive dividends; and
(C) the bank has reduced all reserves (other than the reserve account required by the first 2 sentences of subsection (a)) to zero,
the Director may authorize such bank to declare and pay dividends out of undivided profits (as such term is defined in section 1441(d)(7) of this title) or the reserve account required by the first 2 sentences of subsection (a).
(2) Requirements of section 1441 of this title not affected
Notwithstanding any payment of dividends by any Federal Home Loan Bank pursuant to an authorization by the Director under paragraph (1), the applicable provisions of section 1441 of this title shall continue to apply with respect to such bank, and to such bank's investment in the Financing Corporation, in the same manner and to the same extent as if such payment had not been made.
12 U.S.C. § 1436
EDITORIAL NOTES
AMENDMENTS2008- Pub. L. 110-289 substituted "the Director" for "the Board" wherever appearing.1999-Subsec. (a). Pub. L. 106-102 in third sentence substituted "previously retained earnings or current net earnings" for "net earnings" and struck out ", and then only with the approval of the Federal Housing Finance Board" after "section 1441b(e) of this title" and struck out fourth sentence which read as follows: "Beginning on January 1, 1992, the preceding sentence shall be applied by substituting 'previously retained earnings or current net earnings' for 'net earnings'." 1989-Subsec. (a). Pub. L. 101-73 §724(a)(1), substituted "Each Federal Home Loan Bank may carry to a reserve account from time-to-time such portion of its net earnings as may be determined by its board of directors." for "Each Federal Home Loan Bank shall carry to a reserve account semiannually 20 per centum of its net earnings until said reserve account shall show a credit balance equal to 100 per centum of the paid-in capital of such bank. After said reserve has reached 100 per centum of the paid-in capital of said bank, 5 per centum of its net earnings shall be added thereto semiannually. Whenever said reserve shall have been impaired below 100 per centum of the paid-in capital it shall be restored before any dividends are paid." Pub. L. 101-73 §724(a)(2), substituted "No dividends shall be paid except out of net earnings remaining after reductions for all reserves, chargeoffs, purchases of capital certificates of the Financing Corporation, and payments relating to the Funding Corporation required under this chapter have been provided for, other than chargeoffs or expenses incurred by a Bank in connection with the purchase of capital stock of the Financing Corporation under section 1441 of this title or payments relating to the Funding Corporation Principal Fund under section 1441b(e) of this title, and then only with the approval of the Federal Housing Finance Board. Beginning on January 1, 1992, the preceding sentence shall be applied by substituting 'previously retained earnings or current net earnings' for 'net earnings'." for "No dividends shall be paid except out of net earnings remaining after all reserves and charge-offs required under this chapter have been provided for, and then only with the approval of the board." Pub. L. 101-73 §701(b)(1), (3)(A), substituted "Board" for "board" wherever appearing.1987-Subsec. (c). Pub. L. 100-86 added subsec. (c).1982- Pub. L. 97-320 designated existing provisions as subsec. (a) and added subsec. (b). 1974- Pub. L. 93-383 inserted reference to mortgages, obligations, or other securities sold by the Federal Home Loan Mortgage Corporation pursuant to section 1454 or section 1455 of this title. 1968- Pub. L. 90-448 authorized investments in obligations, participations, or other instruments issued by the Government National Mortgage Association.1964- Pub. L. 88-560 substituted "in obligations, participations, or other instruments of or issued by the Federal National Mortgage Association" for "in obligations of the Federal National Mortgage Association".1954-Act Aug. 2, 1954, inserted reference to obligations of Federal National Mortgage Association in last sentence.
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101-73 §724(b), Aug. 9, 1989, 103 Stat. 429, provided that: "The amendment made by subsection (a)(1) [amending this section] shall take effect on January 1, 1992."
EFFECTIVE DATE OF 1968 AMENDMENTFor effective date of amendment by title VIII of Pub. L. 90-448 see section 808 of Pub. L. 90-448 set out as an Effective Date note under section 1716b of this title.
- Director
- The term "Director" means the Director of the Bureau.
- State
- The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands or any federally recognized Indian tribe, as defined by the Secretary of the Interior under section 5131(a) of title 25.
- credit
- The term "credit" means the right granted by a person to a consumer to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment for such purchase.