The Federal Housing Finance Board - which regulates the Federal Home Loan Bank system - last week signed an agreement with FHLB Chicago's board to implement changes to FHLB Chicago's risk and capital management, governance and internal audit control practices and procedures.

In response to this move, Standard & Poor's lowered its long-term counterparty credit rating on FHLB Chicago to AA+' from AAA.' S&P also affirmed the A-1+' short-term counterparty credit rating on the bank. The outlook is negative.

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