Federal Home Loan Bank System Modernization Act of 1999

Federal Home Loan Bank System Modernization Act of 1999 - Amends the Federal Home Loan Bank Act (FHLBA) to instruct the Federal Housing Finance Board (the FHF Board) to divide the States into not fewer than one Federal Home Loan Bank district (currently 8 to 12 districts).

(Sec. 4) Amends Federal Home Loan Bank (FHLB) membership parameters to make a Federal savings association's membership in the FHLB system voluntary instead of mandatory.

(Sec. 5) Modifies guidelines governing long-term advances to: (1) allow advances to any community financial institution for small businesses, agricultural, rural development, or low-income community development lending; (2) make the cash (as well as the deposits) of an FHLB eligible collateral for securing a bank's interest in a loan or advance; and (3) repeal the 30 percent of capital cap on the aggregate amount of outstanding advances secured by real estate related collateral. Includes within the categories of collateral eligible for a bank loan secured loans for small business, agriculture, rural development, or low-income community development, or securities representing a whole interest in such secured loans in the case of any community financial institution. Authorizes the FHF Board to review certain collateral standards and require an increase in such standards for safety and soundness purposes. Authorizes an FHLB to renew certain advances on its own determination without concurrence by the FHF Board. Requires an FHLB member with an advance secured by insufficient eligible collateral to reduce its level of outstanding advances according to a schedule determined by the FHLB (currently, by the FHF Board).

(Sec. 6) Revises eligibility criteria to permit certain community financial institutions to gain FHLB membership regardless of the percentage of total assets represented by residential mortgage loans.

(Sec. 7) Repeals certain requirements for advances to qualified thrift lenders (QTLs) and to FHLB members that are not QTLs.

Amends the Home Owners' Loan Act to repeal the ineligibility of a non-QTL savings association to obtain new advances from a FHLB bank (thus making such savings associations eligible for such advances).

Declares that, beginning three years after a savings association should have become or ceases to be a QTL, the savings association shall not retain any investment (including an investment in any subsidiary) or engage, directly or indirectly, in any activity unless that investment or activity would be permissible for the savings association if it were a national bank, and is also permissible for the savings association as a savings association.

(Sec. 8) Amends the FHLBA to establish the Federal Home Loan Bank Finance Corporation (Corporation) as a federally chartered instrumentality of the United States to issue and service consolidated debt obligations of the Federal Home Loan Banks. Vests management of the Corporation in a board of directors. Prescribes procedural guidelines for Corporation issuance of voting capital stock to each member Bank. Transfers to the Corporation the functions of the Office of Finance of the Federal Home Loan Banks.

(Sec. 9) Permits an FHLB to include as part of its capital structure plan provisions establishing a structure for its elective and appointive directors other than the structure prescribed by the FHLBA.

(Sec. 10) Authorizes the Corporation to issue consolidated bonds.

(Sec. 11) Modifies mergers and consolidations guidelines to permit: (1) voluntary mergers, combinations, or consolidations of FHLB banks; and (2) FHLBs to establish, subject to FHF Board approval and supervision, a subsidiary or holding company to perform administrative or operational functions.

(Sec. 12) Terminates the Housing Opportunity Hotline program.

Repeals the requirement that an FHLB receive prior approval of the FHF Board for the purchase, construction, or leasing of buildings. Specifies the FHF Board's power to issue notices of violations to any FHLB, and to take affirmative action to correct resulting conditions. Repeals: (1) the FHF Board's authority to approve FHLB advances; and (2) the attendant loan limitation restriction.

Requires each Federal home loan bank to contribute annually ten percent of the preceding year's net income or the prorated sums required to assure that the aggregate contribution of the banks shall not be less than $100 million for each such year, to support subsidies, including subsidized advances, through the Affordable Housing Program.

Declares that no FHLB dividends shall be paid except out of previously retained earnings or current net earnings (currently, net earnings) remaining after certain reductions.

Repeals the FHF Board's authority to levy a special one-time assessment upon FHLBs for its estimated transitional expenses.

(Sec. 13) States that FHLB payments to the Resolution Funding Corporation to cover interest payments on obligations shall be a specified percentage of net earnings (currently an aggregate sum certain).

(Sec. 14) Revamps FHLB capital structure parameters to direct: (1) the Finance Board to issue uniform capital standards regulations governing FHLB leverage limitation and risk-based capital requirements; and (2) each FHLB board of directors to submit for FHF Board approval a capital structure plan determined to be best suited for the bank's condition and operation as well as for the interests of its shareholders. Prescribes plan contents.