---
kind: "section"
citation: "12 U.S.C. § 1424"
title: "12"
title_heading: "Banks and Banking"
number: "1424"
heading: "Eligibility for membership"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1424"
units:
  - "Chapter 11 — Federal Home Loan Banks"
---

# §1424. Eligibility for membership

- (a) **Criteria for eligibility—**
  - (1) **In general—** Any building and loan association, savings and loan association, cooperative [bank](/usc/12/1422.md?p=1-A), homestead association, insurance company, savings [bank](/usc/12/1422.md?p=1-A), community development financial institution, or any [insured depository institution](/usc/12/1422.md?p=9) (as defined in [section 1422 of this title](/usc/12/1422.md)), shall be eligible to become a [member](/usc/12/1422.md?p=3) of a [Federal Home Loan Bank](/usc/12/1422.md?p=1-A) if such institution—
    - (A) is duly organized under the laws of any [State](/usc/12/1422.md?p=2) or of the United States;
    - (B) is subject to inspection and regulation under the banking laws, or under similar laws, of the [State](/usc/12/1422.md?p=2) or of the United States or, in the case of a community development financial institution, is certified as a community development financial institution under the Community Development Banking and Financial Institutions Act of 1994 [[12 U.S.C. 4701](/usc/12/4701.md) et seq.].;[^1] and
    - (C) makes such [home mortgage loans](/usc/12/1422.md?p=4) as, in the judgment of the [Director](/usc/12/1422.md?p=11), are long-term loans (except that in the case of a savings [bank](/usc/12/1422.md?p=1-A), this subparagraph applies only if, in the judgment of the [Director](/usc/12/1422.md?p=11), its time deposits, as defined in [section 461 of this title](/usc/12/461.md), warrant its making such loans).
  - (2) **Qualified thrift lender—** An [insured depository institution](/usc/12/1422.md?p=9) that is not a [member](/usc/12/1422.md?p=3) on January 1, 1989, may become a [member](/usc/12/1422.md?p=3) of a [Federal Home Loan Bank](/usc/12/1422.md?p=1-A) only if—
    - (A) the [insured depository institution](/usc/12/1422.md?p=9) (other than a [community financial institution](/usc/12/1422.md?p=10-A)) has at least 10 percent of its total assets in residential [mortgage](/usc/12/1707.md?p=a) loans;
    - (B) the [insured depository institution](/usc/12/1422.md?p=9)’s financial condition is such that advances may be safely made to such institution; and
    - (C) the character of its management and its home-financing policy are consistent with sound and economical home financing.
  - (3) **Certain institutions—** An [insured depository institution](/usc/12/1422.md?p=9) commencing its initial business operations after January 1, 1989, may become a [member](/usc/12/1422.md?p=3) of a [Federal Home Loan Bank](/usc/12/1422.md?p=1-A) if it complies with regulations and orders prescribed by the [Director](/usc/12/1422.md?p=11) for the 10 percent asset requirement (described in the[^2] [paragraph (2)](#a-2)) within one year after the commencement of its operations.
  - (4) **Limited exemption for community financial institutions—** A [community financial institution](/usc/12/1422.md?p=10-A) that otherwise meets the requirements of [paragraph (2)](#a-2) may become a [member](/usc/12/1422.md?p=3) without regard to the percentage of its total assets that is represented by residential [mortgage](/usc/12/1707.md?p=a) loans, as described in [subparagraph (A)](#a-2-A) of paragraph (2).
  - (5) **Certain privately insured credit unions—**
    - (A) **In general—** Subject to the requirements of [subparagraph (B)](#a-5-B), a [credit](/usc/12/5481.md?p=7) union shall be treated as an [insured depository institution](/usc/12/1422.md?p=9) for purposes of determining the eligibility of such [credit](/usc/12/5481.md?p=7) union for membership in a [Federal home loan bank](/usc/12/1422.md?p=1-A) under paragraphs [(1)](#a-1), [(2)](#a-2), and [(3)](#a-3).
    - (B) **Certification by appropriate supervisor—**
      - (i) **In general—** For purposes of this paragraph and subject to [clause (ii)](#a-5-B-ii), a [credit](/usc/12/5481.md?p=7) union which lacks Federal deposit insurance and which has applied for membership in a [Federal home loan bank](/usc/12/1422.md?p=1-A) may be treated as meeting all the eligibility requirements for Federal deposit insurance only if the appropriate supervisor of the [State](/usc/12/1422.md?p=2) in which the [credit](/usc/12/5481.md?p=7) union is chartered has determined that the [credit](/usc/12/5481.md?p=7) union meets all the eligibility requirements for Federal deposit insurance as of the date of the application for membership.
      - (ii) **Certification deemed valid—** If, in the case of any [credit](/usc/12/5481.md?p=7) union to which [clause (i)](#a-5-B-i) applies, the appropriate supervisor of the [State](/usc/12/1422.md?p=2) in which such [credit](/usc/12/5481.md?p=7) union is chartered fails to make a determination pursuant to such clause by the end of the 6-month period beginning on the date of the application, the [credit](/usc/12/5481.md?p=7) union shall be deemed to have met the requirements of [clause (i)](#a-5-B-i).
    - (C) **Security interests of Federal home loan bank not avoidable—** Notwithstanding any provision of [State](/usc/12/1422.md?p=2) law authorizing a conservator or liquidating agent of a [credit](/usc/12/5481.md?p=7) union to repudiate contracts, no such provision shall apply with respect to—
      - (i) any extension of [credit](/usc/12/5481.md?p=7) from any [Federal home loan bank](/usc/12/1422.md?p=1-A) to any [credit](/usc/12/5481.md?p=7) union which is a [member](/usc/12/1422.md?p=3) of any such [bank](/usc/12/1422.md?p=1-A) pursuant to this paragraph; or
      - (ii) any security interest in the assets of such [credit](/usc/12/5481.md?p=7) union securing any such extension of [credit](/usc/12/5481.md?p=7).
    - (D) **Protection for certain Federal home loan bank advances—** Notwithstanding any [State](/usc/12/1422.md?p=2) law to the contrary, if a [Bank](/usc/12/1422.md?p=1-A) makes an advance under [section 1430 of this title](/usc/12/1430.md) to a [State](/usc/12/1422.md?p=2)-chartered [credit](/usc/12/5481.md?p=7) union that is not federally insured—
      - (i) the [Bank](/usc/12/1422.md?p=1-A)’s interest in any collateral securing such advance has the same priority and is afforded the same standing and rights that the security interest would have had if the advance had been made to a federally [insured credit union](/usc/12/5481.md?p=17); and
      - (ii) the [Bank](/usc/12/1422.md?p=1-A) has the same right to access such collateral that the [Bank](/usc/12/1422.md?p=1-A) would have had if the advance had been made to a federally [insured credit union](/usc/12/5481.md?p=17).
- (b) **Location requirement—** An institution eligible to become a [member](/usc/12/1422.md?p=3) under this section may become a [member](/usc/12/1422.md?p=3) only of, or secure advances from, the [Federal Home Loan Bank](/usc/12/1422.md?p=1-A) of the district in which is located the institution’s principal place of business, or of the [bank](/usc/12/1422.md?p=1-A) of a district adjoining such district, if demanded by convenience and then only with the approval of the [Director](/usc/12/1422.md?p=11).
- (c) **Inspection and regulation requirements—** Notwithstanding the provisions of [clause (2)](#a-2) of subsection (a) of this section requiring inspection and regulation under law as a condition with respect to eligibility for membership, any building and loan association which would be eligible to become a [member](/usc/12/1422.md?p=3) of a [Federal Home Loan Bank](/usc/12/1422.md?p=1-A) except for the fact that it is not subject to inspection and regulation under the banking laws or similar laws of the [State](/usc/12/1422.md?p=2) in which such association is organized shall, upon subjecting itself to such inspection and regulation as the [Director](/usc/12/1422.md?p=11) shall prescribe, be eligible to become a [member](/usc/12/1422.md?p=3).

## Footnotes

[^1]: So in original.
[^2]: So in original. The word “the” probably should not appear.

## Source credit

(July 22, 1932, ch. 522, § 4, 47 Stat. 726; June 13, 1933, ch. 64, § 3, 48 Stat. 129; Pub. L. 101–73, title VII, §§ 701(b)(1), (3)(A), 704(a), 710(b)(1), Aug. 9, 1989, 103 Stat. 412, 415, 418; Pub. L. 106–102, title VI, § 605, Nov. 12, 1999, 113 Stat. 1452; Pub. L. 110–289, div. A, title II, §§ 1204(8), 1206, July 30, 2008, 122 Stat. 2786, 2787; Pub. L. 114–94, div. G, title LXXXII, § 82001(a), Dec. 4, 2015, 129 Stat. 1795.)

## Notes

### Editorial Notes

### References in Text

The Community Development Banking and Financial Institutions Act of 1994, referred to in subsec. (a)(1)(B), is subtitle A (§§ 101–121) of title I of Pub. L. 103–325, Sept. 23, 1994, 108 Stat. 2163, which is classified principally to subchapter I (§ 4701 et seq.) of chapter 47 of this title. For complete classification of subtitle A to the Code, see Short Title note set out under section 4701 of this title and Tables.

Section 461 of this title, referred to in subsec. (a)(1)(C), was in the original “section 19 of the Federal Reserve Act”. Definition provisions of section 19 are classified to section 461 of this title. Other provisions of section 19 are classified to sections 142, 371b, 371b–1, 374, 374a, 463 to 466, 505, and 506 of this title.

### Amendments

2015—Subsec. (a)(5). Pub. L. 114–94 added par. (5).

2008—Subsec. (a)(1). Pub. L. 110–289, § 1206(1), which directed insertion of “community development financial institution,” after “savings bank,”, was executed by making the insertion after “savings bank,” the first time appearing.

Subsec. (a)(1)(B). Pub. L. 110–289, § 1206(2), which directed insertion of “or, in the case of a community development financial institution, is certified as a community development financial institution under the Community Development Banking and Financial Institutions Act of 1994.” after “United States,”, was executed by making the insertion after “United States” to reflect the probable intent of Congress.

Subsecs. (a)(1)(C), (3), (b), (c). Pub. L. 110–289, § 1204(8), substituted “the Director” for “the Board” wherever appearing.

1999—Subsec. (a)(2) to (4). Pub. L. 106–102 inserted “(other than a community financial institution)” after “institution” in par. (2)(A), designated concluding provisions of par. (2) as par. (3), inserted heading and substituted “paragraph (2)” for “preceding sentence”, and added par. (4).

1989—Subsec. (a). Pub. L. 101–73, § 704(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, or savings bank shall be eligible to become a member of, or a nonmember borrower of, a Federal Home Loan Bank if such institution (1) is duly organized under the laws of any State or of the United States; (2) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and (3) makes such home mortgage loans as in the judgment of the board, are long-term loans (and in the case of a savings bank if, in the judgment of the board, its time deposits, as defined in section 461 of this title, warrant its making such loans). No institution shall be eligible to become a member of, or a nonmember borrower of, a Federal Home Loan Bank if, in the judgment of the board, its financial condition is such that advances may not safely be made to such institution or the character of its management or its home-financing policy is inconsistent with sound and economical home financing, or with the purposes of this chapter.”

Subsec. (b). Pub. L. 101–73, § 710(b)(1), struck out “or a nonmember borrower” after “eligible to become a member”.

Pub. L. 101–73, § 701(b)(1), (3)(A), substituted “Board” for “board”.

Subsec. (c). Pub. L. 101–73, § 701(b)(1), (3)(A), substituted “Board” for “board”.

1933—Subsec. (d). Act June 13, 1933, struck out subsec. (d) which provided for direct loans to homeowners. See chapter 12 (§ 1461 et seq.) of this title.