President's Report

March 31, 2004

At the Bank

Business Update

Advance levels continued upward in February. They averaged $62.3 billion, up $900 million from January's average and up $1.3 billion from December. Another positive indication of strengthening demand is that, at month-end, we had $64.2 billion on our books, substantially above the monthly average. Providing customized credit products and helping members meet asset and liability management challenges are the primary ways the Home Loan Bank adds value.

Board of Directors Approves Retained Earnings Policy

At the regular Board meeting on March 18, 2004, the Board of Directors unanimously adopted a retained earnings policy. The adoption of this policy meets the request from our regulator, the Federal Housing Finance Board (FHFB), that all 12 Federal Home Loan Banks adopt such a policy by March 31, 2004. The policy implements the nine-point "Statement of Principles" on retained earnings developed by the Home Loan Bank in December (please see my December 31, 2003, Report from the President).

The policy states that the Home Loan Bank's intention to grow retained earnings by retaining a higher portion of our earnings than we have in the past. More specifically and as previously reported, the Home Loan Bank commits to increasing retained earnings by 50% of net income during 2004 and to paying the remainder of net income as a dividend. With the adoption of this policy, the Home Loan Bank continues to embrace the goal of balancing the growth of retained earnings and dividend payouts so that members' paid-in capital remains well protected while continuing to earn a reasonable return.

Home Loan Bank of New York To Mail Reps and Warranties Document on Predatory Lending

The Home Loan Bank's Collateral Services Group has from time to time amended the documentation that the Home Loan Bank requires from members in order to remain current with changing legal requirements. One issue that has garnered many headlines over the past few years has been predatory lending. In response, several state and local anti-predatory lending laws now ascribe assignee liability in the purchase or sale of loans deemed to fall under such laws. As a liquidity provider against certain customer assets, the Home Loan Bank could be alleged to be a facilitator of predatory or abusive lending practices if a customer were to pledge such loans as collateral for advances and other obligations.

To help mitigate this legal liability, the Collateral Services Group will be mailing to all customers, in April, a representations and warranties document stating that the customer will not pledge loans prohibited under predatory lending laws. Execution of the representations and warranties and indemnification document by customers should aid the Federal Home Loan Bank of New York, and you as our shareholders, in protecting against that liability. If you have any questions about the mailing, please call Marianne Totaro, Senior Vice President, Collateral Services Group, at (201) 356-1060.

In Washington

FHFB Chairman John Korsmo Resigns From Board

As reported in the press, FHFB Chairman John Korsmo submitted his resignation to The White House on March 19, 2004. The effective date of the resignation is April 13, 2004. Under Chairman Korsmo's leadership, the FHFB has increased the number of examiners in its Office of Supervision. This action will do much to ensure that the Bank System remains one of the best-regulated GSEs in the country.

At this time, The White House has not designated a new Chair of the FHFB. The four members remaining on the five-member Board are: Directors Alicia R. Castaneda, Franz S. Leichter, Allan I. Mendelowitz, and John C. Weicher. Director Weicher is the HUD Secretary's nominee on the Board.

House of Representatives Passes Regulatory Relief Bill,
H.R. 1375, With Three Home Loan Bank Amendments

On March 18, 2004, the House of Representatives by a vote of 392 to 25 passed H.R. 1375, the "Financial Services Regulatory Relief Act of 2003." The bill contains three Home Loan Bank provisions. They would: 1) permit state-chartered, privately insured credit unions to apply for membership at a Home Loan Bank; 2) eliminate caps on Federal Home Loan Bank director compensation; and 3) extend the terms of appointed and elected Federal Home Loan Bank directors from three to four years. The measure has been referred to the Senate Committee on Banking, Housing, and Urban Affairs. No immediate action is expected on the bill.

Senator Shelby Releases Draft Regulatory Reform Legislation

As we go to print with this report, Senate Banking Chairman Richard Shelby floated a draft of GSE regulatory reform legislation. The draft bill is 182 pages, and we are in the process of very carefully reviewing the document. On first reading, the bill is a solid piece of work that demonstrates it was thoughtfully drafted. A mark-up of the bill is scheduled for 2:00 p.m. on April 1, 2004.

This month saw a significant change in the senior management of the Home Loan Bank. David C. Altilio, Chief Financial Officer and Executive Vice President, retired after 24 years of dedicated service. His strong technical skills combined with his knowledge of the Home Loan Bank and the markets were an important resource that helped the Home Loan Bank to move forward. We wish Dave the best.

Taking the reins as CFO will be Patrick Morgan. Pat has been with the Home Loan Bank since February 1999 as Controller and Director of Accounting. Pat brings to the CFO position a wealth of experience. He has been working in the financial services industry for over 20 years and has served in various managerial positions, including most recently before joining the Home Loan Bank, as a vice president for financial management at Citigroup. Prior to Citigroup, Pat was a senior audit manager with one of the Big Four public accounting firms.

Pat will play a lead role as the Home Loan Bank continues to expand its financial disclosures and prepares to every extent practicable to meet SEC reporting requirements. Pat will also assist the Home Loan Bank in ensuring that the Bank complies with appropriate sections of the Sarbanes-Oxley Act.

The Home Loan Bank team wants to thank our members for your use of our products and services to expand the availability of mortgage credit, to compete effectively in your market, and to promote strong communities.


Alfred A. DelliBovi
President & CEO

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This report may contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as “projected,” “expects,” “may,” or their negatives or other variations of these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, regulatory and accounting rule adjustments or requirements, changes in interest rates, changes in projected business volumes, changes in prepayment speeds on mortgage assets, the cost of our funding, changes in our membership profile, the withdrawal of one or more large members, competitive pressures, shifts in demand for our products, and general economic conditions. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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