On October 16, the FHFA released its NPRM to revise regulations governing the boards of directors and management of the FHLBank System. The proposed rule would update and clarify regulatory requirements on director eligibility, nomination, election, removal processes, and the conducts of board and committee meetings. The rule would expand the required qualifying experience for regular independent directors to include AI, information technology and security, climate-related risk, CDFI business models, and modeling.

The proposed changes were informed by the FHLBank System at 100 Report, published in November 2023 (covered by InfoBytes here). The report laid out four regulatory actions: clarifying the qualifications for public interest independent directors, expanding the list of qualifying experience for regular independent directors, encouraging the FHLBanks to address gaps in board knowledge, and facilitating the nomination of individuals with technical subject matter expertise. Additionally, the proposed rule would require each FHLBank to conduct an annual assessment of the skills and experience possessed by its board and to take active steps to seek nominees who possess needed skills and experience. This would include prioritizing knowledge and experience relevant to the business, programs and mission of the FHLBank. Comments were opened on October 21 and must be received within 90 days after publication of the NPRM in the Federal Register.