Federal Home Loan Bank System Modernization Act of 1995

Federal Home Loan Bank System Modernization Act of 1995 - Amends the Federal Home Loan Bank Act (FHLBA) to declare that the mission of the Federal Home Loan Bank System is to: (1) be a profit-making enterprise whose purpose is to support residential mortgage lending (including low- and moderate-income housing), and related community and economic development lending through a program of collateralized advances and other financial services; and (2) facilitate such lending by providing long-term credit and liquidity and other financial services to members of Federal home loan banks (FHLBs).

Establishes 12 regional FHLB districts. (Currently, the Federal Housing Finance Board (Board) is required to establish between eight and 12 such districts.) Prescribes guidelines for FHLB mergers.

Modifies from annual to periodic the congressional reporting requirements of the Board regarding the safety and soundness of the FHLB system. Alters the makeup of the Board to: (1) reduce its membership from five to three directors; and (2) repeal the statutory mandate that it consist of the Secretary of Housing and Urban Development and at least one consumer representative. States that two directors constitutes a quorum.

Establishes the Office of Finance Corporation (the Corporation) as a federally chartered instrumentality to issue FHLB bonds and debentures. Transfers to the Corporation the functions of the Office of Finance of the FHLBs. Vests Corporation management in a board of directors composed of elected representatives from each FHLB. Treats the Corporation as an FHLB for purposes of any law.

Revises the parameters for subscription and retirement of FHLB stock. Revises the procedure for termination of FHLB membership. Reduces from ten years to five years the period of time before a withdrawn member may resume membership.

Amends the Home Owners' Loan Act to repeal: (1) the proscription against granting cash advances to savings associations that have failed to acquire or maintain qualified thrift lender status; and (2) the requirement that such associations repay outstanding FHLB advances in a prompt and prudent manner.

Revises the FHLB membership guidelines to change membership status from mandatory to voluntary for each Federal savings association.

Amends the FHLBA to direct the Finance Board to establish a uniform capital requirement for FHLBs which takes into consideration interest rate risk, credit risk, and all other risks and obligations associated with bank operations. Prescribes bank capital guidelines. Revises the guidelines for: (1) bank management; (2) FHLB annual contributions to the Resolution Funding Corporation; and (3) FHLB contributions to the Affordable Housing Program.

Provides that any member which receives a rating of satisfactory or better in its most recent examination in connection with the Community Reinvestment Act of 1977 shall be treated as having satisfied specified statutory requirements.

Revises incorporation guidelines to: (1) declare the Finance Board custodian of FHLB organizational certificates; and (2) instruct the Finance Board to prohibit FHLBs from providing excessive compensation to employees.