TITLE 12 - BANKS AND BANKING

CHAPTER IX - FEDERAL HOUSING FINANCE BOARD

SUBCHAPTER G - FEDERAL HOME LOAN BANK ASSETS AND OFF - BALANCE SHEET ITEMS

PART 960 - STANDBY LETTERS OF CREDIT

960.2 - Standby letters of credit on behalf of members.

  (a) Authority and purposes. Each Bank is authorized to issue or confirm on behalf of members standby letters of credit that comply with the requirements of this part, for any of the following purposes: (1) To assist members in facilitating residential housing finance; (2) To assist members in facilitating community lending; (3) To assist members with asset/liability management; or (4) To provide members with liquidity or other funding.

  (b) Fully secured. A Bank, at the time it issues or confirms a standby letter of credit on behalf of a member, shall obtain and maintain a security interest in collateral that is sufficient to secure fully the member's unconditional obligation described in 960.4(a)(2) of this part, and that complies with the requirements set forth in paragraph (c) of this section.

  (c) Eligible collateral. (1) Any standby letter of credit issued or confirmed on behalf of a member may be secured in accordance with the requirements for advances under 950.7 of this chapter.

  (2) A standby letter of credit issued or confirmed on behalf of a member for a purpose described in paragraphs (a)(1) or (a)(2) of this section may, in addition to the collateral described in paragraph (c)(1) of this section, be secured by obligations of state or local government units or agencies rated as investment grade by an NRSRO.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar.

20, 2002]