The Federal Home Loan Bank of Boston ("Bank" or "FHLB Boston") has adopted the following set of corporate governance principles as a framework for its corporate governance structure.

The Federal Home Loan Bank System
FHLB Boston is one of twelve Federal Home Loan Banks ("Banks"). All of these entities operate as financial institution cooperatives and all are established to provide services that aid their member financial institutions in meeting the housing and economic development credit needs of their communities. Each Bank is federally chartered and operates under the Federal Home Loan Bank Act (the "Bank Act") and the regulations of the Federal Housing Finance Agency (the "Finance Agency"). The Bank Act and these regulations provide the overall framework for all of the Banks' required corporate governance structures. Each Bank is wholly owned by its member financial institutions, each of which is required to purchase stock in its Bank based primarily on the extent of the member's use of its Bank's services. FHLB Boston is owned by more than 470 member banks in the six New England states. The Bank is governed by a board of directors. All directors are New Englanders. A majority of the directors is elected by member financial institutions. Other directors are appointed from the public sector by the Federal Housing Finance Agency, the Bank's regulator in Washington, D.C.

The Bank's corporate governance standards and procedures fully comply with all applicable legal requirements. In addition, taking into account the requirements of the Bank Act and regulations of the Finance Agency and the unique structure of the Banks, to the greatest extent possible FHLB Boston has made its corporate governance and disclosure policies and procedures consistent with the requirements applicable to companies with publicly traded securities.

Governance Structure
Contemporary corporate governance is based on several critical principles. They include: an independent, active and engaged board of directors which has the skill to properly oversee and direct management; a set of ethical principles to guide directors, managers and employees in their daily administration of the Bank's work; the imposition of effective controls and monitoring systems; and the dissemination of timely, accurate information to the regulators and the public. The following addresses how the Bank has integrated all these elements into its corporate governance structure.

The Board of Directors
The Bank's Board of Directors ("Board") is accountable to the Bank's shareholders and other stakeholders to ensure that the Bank is managed in a safe and sound manner and with an appropriate balance between financial performance and fulfillment of its public purpose. To fulfill their fiduciary duties, the Directors must be independent of the management of the Bank; familiar with the Bank's business and general financial and accounting principles; and actively engaged in directing and overseeing management. The Board's primary responsibilities are to:

(a) Select, employ, and regularly evaluate a highly qualified President to provide leadership for the management of the Bank;

(b) Ensure that the Bank maintains a highly qualified senior management team committed to fulfilling the Bank's mission with the highest standards of ethics and integrity;

(c) Ensure that an internal control system is established and maintained and oversee Senior Management's implementation of such system;"

(d) Establish appropriate policies for the Bank's safe and sound management;

(e) Provide strategic direction for the Bank's business; and

(f) Review regularly the effectiveness of the Board corporate governance structure and the performance of the Board.

The Senior Management Team
The Bank's Senior Management team is accountable to the Board to manage the Bank in accordance with the policies and principles established by the Board and applicable legal requirements. Senior Management's primary responsibilities are to:

(a) Manage the Bank safely and soundly, and in accordance with the highest standards of ethics and integrity;

(b) Implement the strategic direction established by the Board;

(c) Establish and maintain a strong system of internal controls;

(d) Implement the policies established by the Board; and

(e) Ensure the Bank's compliance with applicable legal and regulatory requirements.

The Bank's Basic Operating Principles
The Bank has designed and implemented an effective corporate governance structure based on these principles to ensure that the Bank is well managed and satisfies all legal and regulatory requirements. In order to carry out these objectives, the Bank and the Board are committed to operating in accordance with the following standards:

(a) Directors should be independent and accountable to the Bank's shareholder members;

(b) Directors' oversight should be active and engaged;

(c) Directors should be knowledgeable about the business and operations of the Bank;

(d) Directors and employees should act with absolute integrity and honesty;

(e) The Bank should maintain a strong control environment; and

(f) The governance and operations of the Bank should be transparent to its constituencies.

Conclusion
The Bank's corporate governance structure is designed to establish and maintain an environment in which the highest standards of ethical business conduct, as modeled by its Directors and senior management, provide the foundation for its success in meeting the needs of its members and the public.