SECTION 7. Temporary Authority

for Federal Home Loan Banks to Guarantee Tax-Exempt Bonds

Section 3023 of the 2008 Housing Act added new § 149(b)(3)(A)(iv) to provide a temporary exception to the general restriction against Federal guarantees of tax-exempt bonds under § 149(b) for certain guarantees made by Federal Home Loan Banks. In particular, new § 149(b)(3)(A)(iv) provides that this Fed

October 6, 2008 819 2008–40 I.R.B.

and soundness collateral requirements as described therein.

An interpretive question has arisen regarding the meaning of an “original issuance” during the relevant period and whether both bonds for new money purposes ( e.g., to finance construction or acquisition costs in the first instance) and refunding bonds for refinancing purposes may be treated as originally issued during the relevant period and thereby be eligible for Federal Home Loan Bank guarantees. For this purpose, any tax-exempt bond, including a bond for new money purposes and a bond that is part of a refunding issue (as defined in § 1.150–1(d) of the Income Tax Regulations) that is issued during the relevant period may be eligible for Federal Home Loan Bank guarantees under new § 149(b)(3)(A)(iv).