Expanded Access to Bank System Benefits. On November 12, 1999, the President signed into law the Federal Home Loan Bank System Modernization Act of 1999 (Modernization Act) 1 which, among other things, amended the Bank Act by providing smaller lenders with greater access to membership in the Bank System and greater access to Bank advances. The Modernization Act established a category of members consisting of depository institutions whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) that have less than $500,000,000 in average total assets (based on an average of total assets over three years) called community financial institutions (CFIs),2 and authorized the Banks to make long-term advances to CFI members for the purposes of providing funds for small businesses, small farms and small agri-businesses. See Modernization Act, sections 602, 604(a)(2), 605. The Modernization Act also authorized the Banks to accept from CFI members as security for advances secured loans for small business, agriculture, or securities representing a whole interest in such secured loans. See id., section 604(a)(5)(C). For all members, the Modernization Act removed the statutory limit on the amount of aggregate outstanding advances that could be secured by ‘‘other real estate-related collateral,’’ which had been capped at 30 percent of a member’s capital. See id., section 604(a)(5)(B). The Banks, therefore, are now authorized to accept other real estate-related collateral as security for advances to any member as long as the collateral has a readily ascertainable value and the Bank is able to perfect a security interest in that collateral. See 12 U.S.C. 1430(a)(3)(D) (as amended).
