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Project: Corporate Governance

Agency: Federal Home Loan Bank System (FHLBanks), Office of Finance

As part of the Office of Finance’s continuing efforts to evaluate and improve the quality of its financial reporting practices, the Office of Finance engaged the independent services of Falcon Capital Advisors to assess the actions taken by the Office of Finance to implement the recommendations made by an August 10, 2009 report on the Combined Financial Report and the Audit Committee of the Office of Finance Board (CFR Report).  The CFR Report, an initiative of the Office of Finance Board of Directors, made recommendations for improvements to:

  1. System level disclosures and guiding principles

  2. The interaction with the Federal Housing Finance Agency (FHFA) in connection with the preparation of the CFR

  3. The Audit Committee of the Office of Finance Board of Directors

In addition, the CFR Report offered commentary on the current decentralized structure of the Federal Home Loan Bank System. 


Falcon was tasked to review and assess the Office of Finance’s performance relative to industry best practices in its financial reporting, disclosure, and governance practices and methodologies.  In conducting an independent best practices review and performance assessment of the Office of Finance’s implementation strategies, Falcon reviewed corporate documents and processes, and interviewed personnel to evaluate the FHLBanks disclosures, operations, and corrective action plans. Falcon worked with the Office of Finance’s management to correct identified deficiencies, and presented to the Board of Directors a fully documented report that provided assurances that best practices recommendations were fully implemented.


Falcon’s report was intended to independently document and assess the steps undertaken by the Office of Finance to properly address the recommendations made by the CFR Report. The report included:

  • An examination of the history and merits of the current structure of the FHLBanks

  • The necessary context for other policy decisions by presenting an overview of the mission and history of the FHLBanks, including an analysis of the FHLBank System’s performance during the most recent financial crisis

  • Results of the sampling of the broker-dealer network and large investors to determine their views on FHLBanks disclosures