12 C.F.R. § 1263.27

Involuntary termination of membership

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(a) Grounds. The board of directors of a Bank may terminate the membership of any institution that:

(1) Fails to comply with any requirement of the Bank Act, any regulation adopted by FHFA, or any requirement of the Bank's capital plan;

(2) Becomes insolvent or otherwise subject to the appointment of a conservator, receiver, or other legal custodian under federal or State law; or

(3) Would jeopardize the safety or soundness of the Bank if it were to remain a member.

(b) Stock redemption periods. The applicable 6-month and 5-year stock redemption periods, respectively, for all of the Class A and Class B stock owned by a member and not already subject to a pending request for redemption, shall commence on the date that the Bank terminates the institution's membership.

(c) Membership rights. An institution whose membership is terminated involuntarily under this section shall cease being a member as of the date on which the board of directors of the Bank acts to terminate the membership, and the institution shall have no right to obtain any of the benefits of membership after that date, but shall be entitled to receive any dividends declared on its stock until the stock is redeemed or repurchased by the Bank.

Notes of Decisions

Cited in 1 case (1 in the last 5 years), 2022–2022 · leading case: Change Lending LLC v. Fed. Home Loan Bank of San Francisco (N.D. Cal. 2022).

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Change Lending LLC v. Fed. Home Loan Bank of San Francisco (N.D. Cal. 2022). · cites it 2× “) In particular, 8 Change alleges, no statute or regulation provides for the retroactive nullification of the 9 approval of an application for membership (see SAC ¶ 127); rather, according to Change, 10 the only lawful manner by which FHFA can end a membership is to…”

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