SB428 Alabama 2016 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Jimmy Holley
Republican
Session: Regular Session 2016
Title: Banks and Banking, delinquency procedure regarding federal home loan banks, Sec. 27-32-27.1 added
Summary: SB428 creates new protections and procedures related to federal home loan banks and insurer members in delinquency cases in Alabama.
What This Bill Does
Adds a new section defining Federal Home Loan Bank (FHLB) and insurer member, and limits the insurer member receiver's power to void transfers or obligations tied to FHLB security agreements, collateral arrangements, or stock actions made in ordinary course. Requires the FHLB to repurchase any excess stock held by an insurer member when it exercises its rights over collateral, to the extent allowed by law and the bank's capital plan. After a receiver is appointed, the FHLB must provide a process and timelines for releasing collateral, handling remaining collateral after repayment, paying fees and deposits, and addressing potential redemption or repurchase of FHLB stock. Gives options for renewing or restructuring advances to defer prepayment fees, subject to market conditions, existing terms, bank policies, and applicable law, and clarifies certain rights related to advances.

Who It Affects
Insurer members of federal home loan banks operating in Alabama, whose collateral and stock holdings may be affected in delinquency proceedings.
Receivers appointed for insurer members in delinquency proceedings, whose authority to void FHLB-related transfers is limited and who must coordinate with the FHLB on collateral and stock matters.
Federal Home Loan Banks themselves, which must manage collateral rights, stock repurchases, and provide process timelines and options for restructuring advances.

Key Provisions
Defines terms: Federal Home Loan Bank and Insurer Member.
Limits the receiver's ability to void transfers or obligations under FHLB security agreements and related collateral arrangements, and restricts voiding stock redemptions/repurchases made in ordinary course unless there is intent to hinder or defraud.
Requires the FHLB to repurchase excess stock if it exercises collateral rights, to the extent permissible by law, regulations, capital plan, and current stock practices.
After a receiver's appointment, requires the FHLB to provide a process and timelines for collateral release, release of remaining collateral after full repayment, payment of fees, and possible stock redemptions or repurchases.
Requires the FHLB to offer options to renew or restructure an outstanding advance to defer prepayment fees, subject to market conditions and applicable rules.
Preserves the receiver's rights regarding advances under 12 C.F.R. 1266.4 and sets a rule that after 14 days from delinquency, the insurer member's FHLB may not be stayed from exercising collateral rights.
Effective date: becomes law on the first day of the third month after passage and governor's approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Banks and Banking