H.F. _____ Section 1. Section 507C.2, Code 2014, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 10A. “Federal home loan bank” means a 3 federal home loan bank established under the federal Home Loan 4 Bank Act, 12 U.S.C. §1421 et seq. 5 NEW SUBSECTION . 16A. “Insurer-member” means an insurer who 6 is a member of a federal home loan bank. 7 Sec. 2. Section 507C.5, Code 2014, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 3. a. Notwithstanding any other provision 10 to the contrary, a federal home loan bank shall not be stayed 11 or prohibited from exercising its rights regarding collateral 12 pledged by an insurer-member. 13 b. If a federal home loan bank exercises its rights 14 regarding collateral pledged by an insurer-member who is 15 subject to a delinquency proceeding, the federal home loan 16 bank shall repurchase any outstanding capital stock that is in 17 excess of that amount of federal home loan bank stock that the 18 insurer-member is required to hold as a minimum investment, to 19 the extent the federal home loan bank in good faith determines 20 the repurchase to be permissible under applicable laws, 21 regulations, regulatory obligations, and the federal home loan 22 bank’s capital plan, and consistent with the federal home loan 23 bank’s current capital stock practices applicable to its entire 24 membership. 25 c. Following the appointment of a receiver for an 26 insurer-member, the federal home loan bank shall, within ten 27 business days after a request from the receiver, provide a 28 process and establish a timeline for all of the following: 29 (1) The release of collateral that exceeds the amount 30 required to support secured obligations remaining after 31 any repayment of loans as determined in accordance with the 32 applicable agreements between the federal home loan bank and 33 the insurer-member. 34 (2) The release of any of the insurer-member’s collateral 35 -1- LSB 5775HC (2) 85 rn/nh 1/ 4

H.F. _____ remaining in the federal home loan bank’s possession following 1 repayment of all outstanding secured obligations of the 2 insurer-member in full. 3 (3) The payment of fees owed by the insurer-member and the 4 operation of deposits and other accounts of the insurer-member 5 with the federal home loan bank. 6 (4) The possible redemption or repurchase of federal 7 home loan bank stock or excess stock of any class that an 8 insurer-member is required to own. 9 d. Upon request from a receiver, the federal home loan 10 bank shall provide any available options for an insurer-member 11 subject to a delinquency proceeding to renew or restructure 12 a loan to defer associated prepayment fees, subject to 13 market conditions, the terms of any loans outstanding to the 14 insurer-member, the applicable policies of the federal home 15 loan bank, and the federal home loan bank’s compliance with 16 federal laws and regulations. 17 Sec. 3. Section 507C.28A, Code 2014, is amended by adding 18 the following new subsection: 19 NEW SUBSECTION . 10. Notwithstanding any other provision 20 of this chapter to the contrary, the receiver for an 21 insurer-member shall not void any transfer of, or any 22 obligation to transfer, money or any other property arising 23 under or in connection with any federal home loan bank 24 security agreement, or any pledge, security, collateral, 25 or guarantee agreement, or any other similar arrangement 26 or credit enhancement relating to a federal home loan bank 27 security agreement made in the ordinary course of business 28 and in compliance with the applicable federal home loan bank 29 agreement. However, a transfer may be avoided under this 30 subsection if the transfer was made with actual intent to 31 hinder, delay, or defraud the insurer-member, the receiver for 32 the insurer-member, or existing or future creditors. This 33 subsection shall not affect a receiver’s rights regarding 34 advances to an insurer-member in delinquency proceedings 35 -2- LSB 5775HC (2) 85 rn/nh 2/ 4

H.F. _____ pursuant to 12 C.F.R. §1266.4. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill relates to federal home loan bank rights regarding 5 collateral pledged by insurer-members in delinquency or 6 receivership proceedings. The bill defines a “federal home 7 loan bank” to mean a federal home loan bank established under 8 the federal Home Loan Bank Act, and an “insurer-member” to mean 9 an insurer who is a member of a federal home loan bank. 10 The bill provides that a federal home loan bank shall not 11 be stayed or prohibited from exercising its rights regarding 12 collateral pledged by an insurer-member. 13 The bill provides that if a federal home loan bank exercises 14 its rights regarding collateral pledged by an insurer-member 15 who is subject to a delinquency proceeding, the federal home 16 loan bank shall repurchase any outstanding capital stock that 17 is in excess of that amount of federal home loan bank stock 18 that the insurer-member is required to hold as a minimum 19 investment, to the extent the federal home loan bank in 20 good faith determines the repurchase to be permissible under 21 applicable laws, regulations, regulatory obligations, and the 22 federal home loan bank’s capital plan, and consistent with 23 the federal home loan bank’s current capital stock practices 24 applicable to its entire membership. 25 The bill provides that after the appointment of a receiver 26 for an insurer-member, the federal home loan bank shall, 27 within 10 business days after a request from the receiver, 28 provide a process and establish a timeline for the release of 29 collateral that exceeds the amount required to support secured 30 obligations remaining after any repayment of loans, the release 31 of any of the insurer-member’s collateral remaining in the 32 federal home loan bank’s possession following repayment of 33 all outstanding secured obligations of the insurer-member in 34 full, the payment of fees owed by the insurer-member and the 35 -3- LSB 5775HC (2) 85 rn/nh 3/ 4

H.F. _____ operation of deposits and other accounts of the insurer-member 1 with the federal home loan bank, and the possible redemption or 2 repurchase of federal home loan bank stock or excess stock of 3 any class that an insurer-member is required to own. 4 The bill additionally provides that upon request from 5 a receiver, the federal home loan bank shall provide 6 any available options for an insurer-member subject to a 7 delinquency proceeding to renew or restructure a loan to defer 8 associated prepayment fees. Such a renewal or restructuring 9 would be subject to market conditions, the terms of any loans 10 outstanding to the insurer-member, the applicable policies of 11 the federal home loan bank, and the federal home loan bank’s 12 compliance with federal laws and regulations. 13 The bill also provides that a receiver for an insurer-member 14 shall not void any transfer of, or any obligation to transfer, 15 money or any other property arising under or in connection with 16 any federal home loan bank security agreement, or any pledge, 17 security, collateral, or guarantee agreement, or any other 18 similar arrangement or credit enhancement relating to a federal 19 home loan bank security agreement made in the ordinary course 20 of business and in compliance with the applicable federal 21 home loan bank agreement, unless the transfer was made with 22 actual intent to hinder, delay, or defraud the insurer-member, 23 the receiver for the insurer-member, or existing or future 24 creditors. The bill adds that this provision shall not affect 25 a receiver’s rights regarding advances to an insurer-member in 26 delinquency proceedings pursuant to federal law. 27 -4- LSB 5775HC (2) 85 rn/nh 4/ 4