federal financing bank §811

583

Federal Financing Bank § 811.7

that Federal Financing Bank bills willbe issued in bearer form only.

§ 811.5 Delivery of Federal FinancingBank securities.

A Reserve Bank which has receivedFederal Financing Bank securities andeffected pledges, made entries regard-ing them, or transferred or deliveredthem according to the instructions ofits depositor is not liable for conver-sion or for participation in breach of fi-duciary duty even though the depositorhad no right to dispose of or take otheraction in respect of the securities. AReserve Bank shall be fully dischargedof its obligations under this part by thedelivery of Federal Financing Bank se-curities in definitive form to its deposi-tor or upon the order of such depositor.Customers of a member bank or otherdepository (other than a Reserve Bank)may obtain Federal Financing Bank se-curities in definitive form only bycausing the depositor of the ReserveBank to order the withdrawal thereoffrom the Reserve Bank.

§ 811.6 Registered bonds and notes.Registered Federal Financing Bank

securities deposited with a ReserveBank for any purpose specified in § 811.2

shall be assigned for conversion tobook-entry Federal Financing Bank se-curities. The assignment, which shallbe executed in accordance with the pro-visions of subpart F of 31 CFR, part 306,so far as applicable, shall be to—

Federal Reserve Bank of llllll, asfiscal agent of the United States acting onbehalf of the Federal Financing Bank forconversion to book-entry Federal FinancingBank securities.

§ 811.7 Servicing book-entry FederalFinancing Bank securities; paymentof interest; payment at maturity orupon call.

Interest becoming due on book-entryFederal Financing Bank securitiesshall be charged against the specialagent account maintained by the De-partment of the Treasury for the Fed-eral Financing Bank on the interestdue date and remitted or credited inaccordance with the depositor’s in-structions. Such securities shall be re-deemed and charged against the abovesaid account on the date of maturity orcall, and the redemption proceeds,principal and interest, shall be disposedof in accordance with the depositor’sinstructions.

VerDate 07<MAR>2000 12:38 Mar 10, 2000 Jkt 190037 PO 00000 Frm 00583 Fmt 8010 Sfmt 8010 Y:\SGML\190037T.XXX pfrm08 PsN: 190037T

585

CHAPTER IX—FEDERAL HOUSING FINANCEBOARD

SUBCHAPTER A—GENERAL

Part Page900 Description of organization and functions .............. 587902 Operations ............................................................... 593903 Procedures ............................................................... 596904 Freedom of Information Act regulation .................. 605905 Availability of unpublished information ................. 612906 Information regarding meetings of the Board of Di-

rectors of the Federal Housing Finance Board ..... 617908 Information collection requirements under the Pa-

perwork Reduction Act [Reserved]909 Privacy Act Procedures .......................................... 621910 Consolidated bonds and debentures ......................... 628912 Book-entry procedure for Federal Home Loan

Bank Securities .................................................... 632914 Hearings [Reserved]916 Promulgation of regulations and amendments [Re-

served]918 Implementation of the Equal Access to Justice Act

[Reserved]920 Use of penalty mail in the location and recovery of

missing children [Reserved]924 Practice before the Board of Directors [Reserved]

SUBCHAPTER B—FEDERAL HOME LOAN BANK SYSTEM

931 Definitions .............................................................. 638932 Directors, officers, and employees of the banks ...... 638933 Members of the banks ............................................. 647934 Operations of the banks .......................................... 666935 Advances ................................................................. 670936 Community support requirements .......................... 685937 Financial statements of the banks .......................... 690938 Standby letters of credit ......................................... 691939–940 [Reserved]941 Operations of the Office of Finance ......................... 693


586

12 CFR Ch. IX (1–1–00 Edition)

942 [Reserved]943 Collection, settlement, and processing of payment

instruments .......................................................... 698944 [Reserved]

SUBCHAPTER C—FINANCING CORPORATION

950 Operations ............................................................... 700

SUBCHAPTER D—RESOLUTION FUNDING CORPORATION

955 Authority for bank assistance ................................ 704

SUBCHAPTER E—AFFORDABLE HOUSING

960 Affordable Housing Program ................................... 705

SUBCHAPTER F—COMMUNITY INVESTMENT

970 Community Investment Cash Advance Programs ... 726


587

SUBCHAPTER A—GENERAL

PART 900—DESCRIPTION OFORGANIZATION AND FUNCTIONS

Subpart A—Functions and Responsibilitiesof Finance Board

Sec.900.1 Definitions.900.2 General statement and statutory au-

thority.900.3 Location and business hours.900.4 Federal Home Loan Bank System.900.5 Financing Corporation.

APPENDIX A TO SUBPART A OF PART 900—FED-ERAL HOME LOAN BANKS

Subpart B—General Organization

900.10 Board of Directors.900.11 Chairperson.900.12 Office of the Managing Director.900.13 Office of Policy.900.14 Office of Supervision.900.15 Office of General Counsel.900.16 Office of Inspector General.900.17 Office of Congressional Affairs.900.18 Office of Public Affairs.900.19 Office of Resource Management.

Subpart C—Delegations of Authority

900.30 Office of Finance Board of Directors.

Subpart D—Procedures

900.50 General statement on procedures andforms.

900.51 Forms.900.52 Submittal of requests for informa-

tion.900.53 Official Seal.900.54 Official logo.

AUTHORITY: 5 U.S.C. 552; 12 U.S.C. 1422b(a),1423.

SOURCE: 56 FR 67155, Dec. 30, 1991, unlessotherwise noted.

Subpart A—Functions andResponsibilities of Finance Board

§ 900.1 Definitions.As used in this part:Bank means a Federal Home Loan

Bank.Bank Act means the Federal Home

Loan Bank Act.Bank System means the Federal Home

Loan Bank System, consisting of theFederal Home Loan Banks.

Finance Board means the FederalHousing Finance Board.

§ 900.2 General statement and statu-tory authority.

(a) The Finance Board is an inde-pendent, executive agency in the Fed-eral Government, responsible for regu-lating the Federal Home Loan BankSystem. It is funded through assess-ments levied upon the Federal HomeLoan Banks. These funds are not con-sidered Government Funds or appro-priated monies. The Finance Board isgoverned by a five-member Board ofDirectors and administered by a full-time staff.

(b) The members of the Board of Di-rectors are individually referred to asDirectors. The heads of the various ad-ministrative units, called offices or di-rectorates, are also called Directors.

(c) The Finance Board administerschapter 11 of the Bank Act, as amend-ed, and is authorized to issue rules,regulations and orders affecting theBanks. The Finance Board performs allsuch duties and responsibilities as maybe required by statute. Under section302(b)(2) of the Federal National Mort-gage Association Charter Act, it alsoconducts a monthly survey of all majorlenders to calculate a national averagefor interest rates on mortages for one-family homes, on behalf of the FederalNational Mortgage Association. Undersection 305(b) of the Federal HomeLoan Mortgage Corporation Act, itconducts a similar survey for the Fed-eral Home Loan Mortgage Corporation.

§ 900.3 Location and business hours.

(a) Location. All office units of theFinance Board are located at 1777 FStreet, NW., Washington, DC 20006.

(b) Hours of operation. The regularhours of operation of the FinanceBoard are from 8:30 a.m. to 5:30 p.m.,Monday through Friday.

§ 900.4 Federal Home Loan Bank Sys-tem.

(a) The Finance Board regulates theBanks, created under the Bank Act.Specifically, its duties are:


588

12 CFR Ch. IX (1–1–00 Edition)§ 900.5

(1) To ensure that the Banks operatein a safe and sound manner;

(2) To supervise all lending and re-lated operations of the Banks, whichmay include:

(i) Prescribing conditions upon whichBanks may advance funds to theirmember lending institutions;

(ii) Prescribing rules and conditionsunder which a Bank may borrow funds,pay interest on those funds, or issueobligations;

(iii) Requiring examinations of theBanks;

(iv) Appointing the public membersof the boards of directors of the Banks,conducting the elections of the mem-bers who are elected by the members ofthe Banks, and designating the Chair-man and Vice-Chairman of the boardsof directors of the Banks;

(v) Approving dividends paid by theBanks on their capital stock;

(vi) Approving applications for mem-bership in a Bank; and

(vii) Approving the Bank Presidentsselected by the Banks’ board of direc-tors and approving the salaries of toplevel Bank officers;

(3) To ensure that the Banks fulfilltheir mission of channeling funds tothe housing finance industry by mak-ing long-term loans to financial lend-ing institutions for use in mortgagelending;

(4) To ensure that the Banks remainadequately capitalized; and

(5) To ensure that the Banks are ableto raise funds in the capital markets.

(b) The Finance Board issues the Fed-eral Home Loan Bank consolidatedbonds or notes that are the joint andseveral obligations of the Banks. TheFinance Board issues these obligationsthrough the Office of Finance, which isa joint office of the Bank System.

§ 900.5 Financing Corporation.

The Finance Board oversees the oper-ations of the Financing Corporation,including its issuance of obligations.The Financing Corporation is a mixedownership government corporationchartered by the Finance Board undersection 302 of the Competitive EqualityBanking Act of 1987, 101 Stat. 552, 585(1987) (12 U.S.C. 1441).

APPENDIX A TO SUBPART A OF PART900—FEDERAL HOME LOAN BANKS

FEDERAL HOME LOAN BANK DISTRICT 1

(Connecticut, Maine, Massachusetts, NewHampshire, Rhode Island, Vermont)

Federal Home Loan Bank of Boston

One Financial Center, 20th Floor, Boston,MA 02111


(New Jersey, New York, Puerto Rico, VirginIslands)

Federal Home Loan Bank of New York

One World Trade Center, 103rd Floor, NewYork, NY 10048


(Delaware, Pennsylvania, West Virginia)

Federal Home Loan Bank of Pittsburgh

One Riverfront Center, 20 Stanwix Street,Pittsburgh, PA 15222–4893


(Alabama, District of Columbia, Florida,Georgia, Maryland, North Carolina, SouthCarolina, Virginia)

Federal Home Loan Bank of Atlanta

1475 Peachtree Street, NE., Atlanta, GA 30309


(Kentucky, Ohio, Tennessee)

Federal Home Loan Bank of Cincinnati

2400 Atrium Two, 221 East Fourth Street,Cincinnati, OH 45202


(Indiana, Michigan)

Federal Home Loan Bank of Indianapolis

8250 Woodfield Crossing Boulevard, Indianap-olis, IN 46240


(Illinois, Wisconsin)

Federal Home Loan Bank of Chicago

111 East Wacker Drive, Suite 700, Chicago, IL60601


(Iowa, Minnesota, Missouri, North Dakota,South Dakota)

Federal Home Loan Bank of Des Moines

907 Walnut Street, Des Moines, IA 50309


589

Federal Housing Finance Board § 900.12


(Arkansas, Louisiana, Mississippi, New Mex-ico, Texas)

Federal Home Loan Bank of Dallas

5605 North MacArthur Boulevard, Irving, TX75038


(Colorado, Kansas, Nebraska, Oklahoma)

Federal Home Loan Bank of Topeka

Townsite Plaza Two, 120 East Sixth Street,Topeka, KS 66603


(Arizona, California, Nevada)

Federal Home Loan Bank of San Francisco

600 California Street, San Francisco, CA94108


(Alaska, American Samoa, the Common-wealth of the Northern Mariana Islands,Guam, Hawaii, Idaho, Montana, Oregon,Utah, Washington, Wyoming)

Federal Home Loan Bank of Seattle

1501 Fourth Avenue, 19th Floor, Seattle, WA98101–1693

[56 FR 67155, Dec. 30, 1991, as amended at 63FR 3455, Jan. 23, 1998]

Subpart B—General Organization

§ 900.10 Board of Directors.

The Board of Directors consists offive members (‘‘Directors’’). Four Di-rectors are appointed by the President,with the advice and consent of the Sen-ate, for seven-year terms. The fifth Di-rector, the Secretary of Housing andUrban Development, is an ex officio Di-rector. Not more than three Directorsmay belong to the same political party.By law, the four appointed Directorsmust have backgrounds in housing fi-nance or a demonstrated commitmentto providing specialized housing credit,and one such Director must have abackground with an organization witha two-year record of representing con-sumer or community interests on ei-ther banking services, credit needs, fi-nancial consumer protection or hous-ing. The Board of Directors sets agencypolicy and issues resolutions, rules,regulations and orders, as necessary.

§ 900.11 Chairperson.

The President designates one ap-pointed Director as Chairperson of theBoard of Directors, who presides overthe meetings of the Board of Directors.The Board of Directors has delegated,by resolution, the responsibility ofoverall management and organiza-tional or personnel administration ofthe Finance Board to the Chairperson.

§ 900.12 Office of the Managing Direc-tor.

(a) The Managing Director is the Fi-nance Board’s chief operating officer.By order of the Chairperson, the Man-aging Director has been delegated theauthority and power necessary andconvenient to effect the day-to-daymanagement, functioning, and organi-zation of the Finance Board, includingthe authority to appoint, remove, pro-mote, direct, set compensation for, andpay Finance Board personnel. TheManaging Director is authorized toexecute documents on behalf of theBoard of Directors, including regula-tions, resolutions, or orders dulypassed by the Board of Directors. TheManaging Director is also the FinanceBoard’s Chief Information Officer.

(b) The Executive Secretariat is a di-vision within the Office of the Man-aging Director. The Executive Sec-retary is the recording officer for theBoard of Directors and is responsiblefor maintaining the Finance Board’srecords, including copies of all resolu-tions and rules adopted by the Board ofDirectors and orders issued by theChairperson. The Executive Secretaryalso is responsible for the preparationand maintenance of the minutes orother records of all official actions andproceedings of the Board of Directors,and is responsible for the official sealsof the Finance Board. This divisionalso is responsible for the agency’sFreedom of Information Act, PrivacyAct, and Records Management Pro-grams. The Executive Secretary is theprimary liaison with the Office of theFederal Register.

(c) The District Banks Secretariat isa division within the Office of the Man-aging Director responsible for admin-istering the election of directors of theBanks and for maintaining records on


590

12 CFR Ch. IX (1–1–00 Edition)§ 900.13

each of the Banks’ policies and mar-keting activities.

[61 FR 68129, Dec. 27, 1996]

§ 900.13 Office of Policy.

(a) The Office of Policy coordinatesthe Finance Board’s policy develop-ment activities and provides advice tothe Chairperson and the Board of Di-rectors on the economic, financial,housing and community and economicdevelopment, and competitive environ-ments in which the Bank System andits members operate. The responsibil-ities of the Office of Policy include:

(1) Analysis and modeling of the fi-nancial performance of the Banks;

(2) Collection and analysis of finan-cial data in order to prepare the BankSystem’s annual combined financial re-ports and other periodic reports onBank System operations;

(3) Collection and analysis of data onthe housing and community and eco-nomic development activities of theBanks;

(4) Analysis of the Banks’ perform-ance under the Affordable Housing Pro-gram and the Community InvestmentProgram;

(5) Analysis of policy issues arisingunder the Affordable Housing Programand the Community Investment Pro-gram;

(6) Preparation of the Monthly Sur-vey of Rates and Terms of Conven-tional One-Family Nonfarm MortgageLoans and determination of the con-forming loan limit for Federal Na-tional Mortgage Association (FannieMae) and Federal Home Loan MortgageCorporation (Freddie Mac) purchasesand guarantees; and

(7) Review of the Banks’ quarterlydividend recommendations.

(b) The Office of Policy is the Fi-nance Board’s primary liaison with theBanks’ Chief Financial Officers con-cerning financial management issues,the Banks’ Community Investment Of-ficers concerning community and eco-nomic development, the Banks’ Advi-sory Councils concerning Bank Systemsupport of affordable housing, and theBank System’s fiscal agent, the Officeof Finance. It prepares the annual re-ports to Congress and to the Banks’Advisory Councils concerning Bank

System support for low-income housingand community development.

[61 FR 68130, Dec. 27, 1996]

§ 900.14 Office of Supervision.

The Office of Supervision overseesthe Banks, the Office of Finance andthe Financing Corporation to ensurethat they operate in a financially safeand sound manner, that the Banks arecarrying out their housing and commu-nity and economic development fi-nance mission and are in compliancewith applicable statutes and regula-tions, as well as Finance Board policiesand orders. The responsibilities of theOffice of Supervision include:

(a) The conduct of examinations, atleast annually, of the Banks, the Officeof Finance and the Financing Corpora-tion and the furnishing of reportsthereon to the Chairpersons of theirBoards of Directors;

(b) The follow-up and resolution ofoutstanding examination issues;

(c) Liaison with each Bank’s auditcommittee and the review and evalua-tion of the work of each Bank’s inter-nal audit staff;

(d) The monitoring of Bank and Sys-tem interest rate risk, financial trendsand mission-related activities; and

(e) The review of Community SupportStatements of Bank System members.

[61 FR 68130, Dec. 27, 1996]

§ 900.15 Office of General Counsel.

The General Counsel is the chieflegal officer of the Finance Board. TheOffice of General Counsel provides ad-vice to the Board of Directors, theChairperson, and other Finance Boardofficials, on interpretations of statutesand regulations. The Office of GeneralCounsel prepares all legal documentson behalf of the Finance Board and pre-pares opinions, regulations, and memo-randa of law. It represents the FinanceBoard in all administrative adjudica-tory proceedings before the Board ofDirectors. The Chairman appoints theFinance Board’s Designated AgencyEthics Official from the staff of the Of-fice of General Counsel.

[61 FR 68130, Dec. 27, 1996]


591


§ 900.16 Office of Inspector General.The Inspector General is subject to,

and operates under, the provisions ofthe Inspector General Act of 1978, asamended (5 U.S.C. app. 3). The Inspec-tor General reports to and is under thegeneral supervision of the Chairperson.The Inspector General’s responsibil-ities under the Inspector General Actinclude providing policy direction for,and conducting, supervising, and co-ordinating audits and investigationsrelating to the programs and oper-ations of the Finance Board, and rec-ommending policies for promotingeconomy and efficiency in the adminis-tration of, or preventing and detectingfraud and abuse in, the Finance Board’sprograms and operations. The Inspec-tor General prepares and furnishes tothe Chairman for transmittal to theCongress semiannual reports on the ac-tivities of the Office of Inspector Gen-eral.

[61 FR 68130, Dec. 27, 1996]

§ 900.17 Office of Congressional Af-fairs.

The Office of Congressional Affairs isresponsible for ensuring the effectivecoordination and communication withthe Congress and interest groups, andfor briefing the Chairperson, the otherDirectors, and the Managing Director,on legislative issues before Congresspertaining to the Finance Board, theBank System, and the Financing Cor-poration.

[61 FR 68130, Dec. 27, 1996]

§ 900.18 Office of Public Affairs.The Office of Public Affairs is respon-

sible for the dissemination of informa-tion about the Finance Board to thepublic and the news media. The Officeof Public Affairs is the Finance Board’sprimary liaison with news reporters. Italso responds to general inquiriesabout the activities of the FinanceBoard.

[61 FR 68130, Dec. 27, 1996]

§ 900.19 Office of Resource Manage-ment.

The Office of Resource Managementadvises the Chairperson and the Boardof Directors on internal agency man-

agement and organization and providessupport services to the agency and toindividual employees. The responsibil-ities of the Office of Resource Manage-ment include:

(a) Developing and managing agencypolicies and procedures governing em-ployment and personnel action require-ments, compensation and agency pay-roll requirements, travel, awards, in-surance, retirement benefits, and otheremployee benefits;

(b) Providing support for all facilityand supply requirements;

(c) Agency procurement and con-tracting programs;

(d) Agency financial management,budgeting and accounting; and

(e) Coordinating the design, program-ming, operation, and maintenance ofthe Finance Board’s electronic datasystems.

[61 FR 68130, Dec. 27, 1996]

Subpart C—Delegations ofAuthority

§ 900.30 Office of Finance Board of Di-rectors.

(a) Consolidated obligations. Subject toFinance Board regulations, resolutionsor policies, the Office of Finance Boardof Directors is delegated the authority:

(1) To issue through the Office of Fi-nance the Federal Home Loan Bankconsolidated debentures, bonds ornotes pursuant to the Finance Board’sauthority under section 11 of the BankAct (12 U.S.C. 1431); and

(2) To determine their denomina-tions, interest rate and terms.

(b) Treasury policy. The Office of Fi-nance Board of Directors shall imple-ment this delegation in accordancewith the policies and guidelines issuedby the Secretary of the Treasury undersection 9108 of title 31 of the UnitedStates Code (31 U.S.C. 9108).

[57 FR 6468, Feb. 25, 1992]

Subpart D—Procedures

§ 900.50 General statement on proce-dures and forms.

Regulations and rules of procedure ofthe Finance Board are published inchapter IX of title 12 of the Code of


592

12 CFR Ch. IX (1–1–00 Edition)§ 900.51

Federal Regulations and in supple-mentary material published in theFEDERAL REGISTER. The Finance Boardwill prescribe the procedures governingthe course and conduct of proceedingsbefore the Board of Directors in itsGeneral Regulations. When and wher-ever appropriate, the Finance Boardmay supplement its administrativeprocedures with informal proceduresdesigned to aid the public or facilitatethe proceedings, including the ren-dering of advice or assistance to per-sons dealing with the Finance Board orits Board of Directors.

§ 900.51 Forms.

The following forms are available atthe Finance Board headquarters facil-ity (see § 900.3) and shall be used for thepurpose indicated:

FORM

10–91—Monthly Survey of Rates and Termson Conventional 1 Family Nonfarm Mort-gage Loans.

9102—Certificate of Nomination, Election ofFederal Home Loan Bank Directors.

9103—Election Ballot, Election of FederalHome Loan Bank Directors.

A–1—Appointive Director Candidates—Per-sonal Certification and Disclosure Form.

E–1—Elective Director Nominees—PersonalCertification and Disclosure Form.

90–T04—Local Travel Claim.

[60 FR 49199, Sept. 22, 1995, as amended at 63FR 65687, Nov. 30, 1998]

§ 900.52 Submittal of requests for in-formation.

Requests for general informationconcerning the Finance Board or theBank System should be made in personat the headquarters facility, at the ad-dress listed in § 900.3, or in writing ad-dressed to the Executive Secretary atthe same address.

§ 900.53 Official Seal.This section describes and displays

the official seals used by the FinanceBoard to certify and authenticate offi-

cial documents of the Board of Direc-tors:

(a)(1) Description. A disc with theterm ‘‘SEAL’’ in capital letters in itscenter, encircled by a designationscroll having an outer border with aroped edge and an inner border with abeaded edge, and containing the words‘‘FEDERAL HOUSING FINANCEBOARD’’ in capital letters, in caslontype, with a mullet, in base.

(2) Display.

(b)(1) Description. A disc with a largemullet at its center and the term‘‘FEDERAL’’ atop the term ‘‘HOUS-ING’’ in capital letters, in uncial type,arranged in a curved format on theupper part of the disc above the largemullet and the term ‘‘FINANCE’’ atopthe term ‘‘BOARD’’ in capital letters,in uncial type, both terms arranged ina curved format on the lower part ofthe disc below the mullet, with twosmaller mullets separating the twoaforementioned terms ‘‘HOUSING’’ and‘‘FINANCE’’, and with six mullets ar-ranged three each in a vertical row onthe left and right sides of the disc, andsurrounded by a boarder consisting oftwo plain lines.

(2) Display.


593


(c) Description. A disc having thesame design and description as the offi-cial logo, contained in § 900.54 and dis-played in paragraph (b) of that section.

[56 FR 67155, Dec. 30, 1991; 57 FR 749, Jan. 8,1992]

§ 900.54 Official logo.

This section describes and displaysthe logo adopted by the Board of Direc-tors as the official symbol representingthe Finance Board. It is displayed oncorrespondence and selected docu-ments.

(a) Description. A disc with its centerconsisting of three polygons arrangedin an irregular line partially overlap-ping—each polygon drawn in a mannerresembling a silhouette of a pitchedroof house and with distinctive eavesunder its roof—encircled by a designa-tion scroll having an outer and innerborder of plain heavy lines and con-taining the words ‘‘FEDERAL HOUS-ING FINANCE BOARD’’ in capital let-ters, in sans serif type, with twomullets on the extreme left and rightof the scroll.

(b) Display.

PART 902—OPERATIONS

Sec.902.1 Definitions.902.2 Assessments on the Banks.902.3 Monthly interest rate survey.902.4 Schedule of charges for agency serv-

ices.902.5 Minority Contractors Outreach Pro-

gram.

AUTHORITY: 12 U.S.C. 1422b and 1438(b).

SOURCE: 58 FR 19195, Apr. 13, 1993, unlessotherwise noted.

§ 902.1 Definitions.As used in this part:Bank means a Federal Home Loan

Bank.Bank System means the Federal Home

Loan Bank System, consisting of alltwelve Banks.

Business means an enterprise, includ-ing a firm, corporation, joint stockcompany, partnership, joint venture orassociation that engages in commer-cial activity on a regular basis.

Chairperson means the Chairperson ofthe Board of Directors.


Minority means:(1) A male person or persons classi-

fied as either an African-American, aNative-American, a Hispanic-Amer-ican, or an Asian-American; or

(2) A female person or persons regard-less of ethnic or racial classification.

Minority-owned entity means a busi-ness that is:


594

12 CFR Ch. IX (1–1–00 Edition)§ 902.2

(1) Owned or controlled by any com-bination of African-Americans, Native-Americans, Hispanic-Americans orAsian-Americans, regardless of gender,where such ownership or control in-cludes the management of the dailybusiness operations; or

(2) Owned or controlled by femalepersons, regardless of ethnic origin,where such ownership or control in-cludes the management of its dailybusiness operations.

§ 902.2 Assessments on the Banks.(a) Assessment authority. The Finance

Board may impose a semiannual as-sessment on the Banks in an aggregateamount the Finance Board determinesis sufficient to provide for the paymentof its estimated expenses for the periodfor which it makes such assessment.

(b) Assessment procedure. (1) At ornear the end of each fiscal year, the Fi-nance Board shall approve an annualbudget of Finance Board expenses forthe next fiscal year. The Finance Boardshall promptly provide a copy of theapproved budget to each Bank presi-dent.

(2) The Finance Board shall assessthe Banks semiannually in an aggre-gate amount it determines is sufficientto pay the expenses approved underparagraph (b)(1) of this section. The Fi-nance Board shall offset the amount ofthe semiannual assessments it imposeson the Banks by any amount it deter-mines is remaining from previous semi-annual assessments. The FinanceBoard shall promptly notify each Bankpresident in writing of the amount onany assessment.

(3) Each Bank shall pay a pro ratashare of the semiannual assessmentsimposed under paragraph (b)(2) of thissection. The Finance Board shall cal-culate each Bank’s pro rata share basedon the ratio between the total paid-invalue of the Bank’s capital stock andthe aggregate total paid-in value of thecapital stock of every Bank. The Fi-nance Board shall promptly notify eachBank in writing of the amount of itspro rate share of any semiannual as-sessment.

(4) Unless otherwise instructed inwriting by the Finance Board, eachBank shall pay to the Finance Boardits pro rata share of an assessment in

equal monthly installments during thesemiannual period covered by the as-sessment.

[62 FR 35949, July 3, 1997]

§ 902.3 Monthly interest rate survey.The Finance Board conducts its

Monthly Survey of Rates and Terms onConventional One-Family NonfarmMortgage Loans in the following man-ner:

(a) Initial survey. Each month, the Fi-nance Board samples approximately1,000 mortgage lenders (savings andloan associations, savings banks, com-mercial banks, and mortgage loan com-panies) and asks them to report theterms and conditions on all conven-tional mortgages (not federally insuredor guaranteed) used to purchase single-family homes that each such lendercloses during the last five workingdays of the month. In most cases, theinformation is reported electronicallyin a format similar to Finance BoardForm FHFB 10–91. The data is weightedso that the pattern of weighted re-sponses matches the actual pattern ofmortgage originations by lender typeand by region. The Finance Board tab-ulates the data and publishes standarddata tables late in the followingmonth.

(b) Adjustable-rate mortgage index. Theweighted data, tabulated and publishedpursuant to paragraph (a) of this sec-tion, is used to compile the FinanceBoard’s adjustable-rate mortgageindex, entitled the ‘‘National AverageContract Mortgage Rate for the Pur-chase of Previously Occupied Homes byCombined Lenders.’’ This index is thesuccessor to the index maintained bythe former Federal Home Loan BankBoard and is used for determining themovement of the interest rate on therenegotiable-rate mortgages and onsome other adjustable-rate mortgages.

(c) Means of survey. The FinanceBoard collects the data for the com-pilation of the indices described in thissection by contract. Pursuant to suchcontract, a Finance Board form, enti-tled ‘‘Monthly Survey of Rates andTerms on Conventional One-FamilyNonfarm Mortgage Loans’’ (FHFBForm 10–91), is distributed to selectedlending institutions. The data is col-lected, compiled and processed, and the


595


completed survey results are forwardedto the Housing Finance Directorate ofthe Finance Board for tabulation anddistribution.

§ 902.4 Schedule of charges for agencyservices.

(a) Authority. Section 9701 of title 31,United States Code, directs govern-ment agencies to charge a fee for anyspecial service provided to a selectedsegment of the public that makes useof such special service (31 U.S.C. 9701).The Office of Management and Budg-et’s Circular A–25 contains guidelinesfor agencies to follow when promul-gating regulations for such user feecharges. This section implements thatauthority.

(b) ARM Index special programmingservice. (1) The Finance Board developsand makes available special tabula-tions of its monthly interest rate sur-vey data for individual users, upon re-quest.

(2) Each request for a specialized in-terest rate survey will be made in writ-ing to the Housing Finance Direc-torate.

(3) The fee for such special service isa $100 per hour for the analyist’s time,with a minimum charge of $100, pre-paid, to accompany the written re-quest.

§ 902.5 Minority Contractors OutreachProgram.

(a) Scope. (1) This section establishesthe Finance Board’s Minority Contrac-tors Outreach Program and designatesthe officials responsible for imple-menting the Program and its over-sight.

(2) The Minority Contractor Out-reach Program:

(i) Seeks to encourage the maximumparticipation of minorities in all Fi-nance Board procurement contracts forgoods or services;

(ii) Shall operate consistent with theprinciple of full and open competitionand the concept of contracting for min-imum agency needs at the lowest prac-tical cost; and

(iii) Shall not be construed to be asubstitute means of procurement forthe Finance Board’s established proce-dural process for the procurement ofgoods or services.

(b) Responsibilities. (1) The Director ofAdministration shall have generaloversight of the Minority ContractorsOutreach Program.

(2) The Chairperson shall:(i) Appoint an Minority Contractors

Advocate, who shall—(A) Have primary responsibility for

furthering the purposes of the MinorityContractors Outreach Program;

(B) Be responsible for challengingbarriers to, and promoting maximumparticipation by, minorities or minor-ity-owned entities in the FinanceBoard procurement process; and

(C) Develop a manual describing theprocedures by which the Finance Boardwill implement the Minority Contrac-tors Outreach Program.

(ii) Assign such Advocate only suchduties or responsibilities, with respectto the Minority Contractors OutreachProgram, as are consistent with thissection, and shall not assign such Ad-vocate any duties of a contracting offi-cer or of a technical representative ona contract.

(c) Program components. The MinorityContractors Outreach Program proce-dures shall include the following:

(1) Contractor File. (i) The MinorityContractors Advocate shall compileand maintain an ongoing file con-sisting of minority-owned entities thatare interested in contracting with theFinance Board for goods or servicesthrough the competitive bidding or ne-gotiated procurement process.

(ii) The information in such file shalllist the current name and address ofeach such minority-owned entity andshall categorize each name and addressas follows:

(A) Accounting services;(B) Building support services;(C) Computer services;(D) Consulting services;(E) Legal services;(F) Office supplies and equipment; or(G) Other services.(2) Solicitation. The Minority Contrac-

tors Advocate shall implement a proce-dure for soliciting potential candidatesfor the contractor file provided for inparagraph (c)(1) of this section, bymeans of any of the following:

(i) Referrals from executive depart-ments, agencies or instrumentalities ofthe Federal Government;


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(ii) Direct solicitation of selectedcandidates;

(iii) Advertising by direct mail orpublications specifically directed tominorities, or minority-owned entities;

(iv) Sponsoring Finance Board semi-nars designed to explain the MinorityContractors Outreach Program to mi-nority contractors or minority-ownedentities who have the potential of con-tracting with the Finance Board;

(v) Attendance at conventions, semi-nars or other professional conferencesof minorities or minority-owned enti-ties located in the greater Washingtonmetropolitan area.

(3) Certification. (i) No minority-owned entity (whether solicited by theMinority Contractors Advocate or not)may participate in the Finance Boardprocurement process as a minority-owned entity unless certified as suchby the Chairperson, or designee.

(ii) The certification shall be by ameans and form approved by the Fi-nance Board.

(iii) Nothing in this section shall bedeemed to prevent an non-certified mi-nority-owned entity from participatingin the procurement process as an enti-ty not designated or deemed a minorityor minority-owned entity.

(4) Promotion. (i) The Minority Con-tractors Advocate shall maintain anongoing campaign of promotion of theMinority Contractors Outreach Pro-gram with all certified minority-ownedentities.

(ii) This campaign shall include:(A) Ongoing dissemination of infor-

mation about the Minority ContractorsOutreach Program with certified mi-nority-owned entities;

(B) Alerting appropriate certified mi-nority-owned entities when the Fi-nance Board makes a solicitation for abid or initiates the negotiation of aprocurement contract for goods orservices;

(C) Acting as a liaison between theFinance Board contracting authoritiesand a particular minority-owned enti-ty; and

(D) Assisting any certified minority-owned entity to understand FinanceBoard contracting procedures or otherinformation regarding a particular bidor contract.

(iii) Nothing in this paragraph (c)(4)shall authorize the Minority Contrac-tors Advocate to represent the inter-ests of any minority-owned entity inany contract matter or bid before theFinance Board.

(5) Contract award guidelines—(i) Con-tracts not exceeding $25,000. The FinanceBoard Contracting Officer shall, fromtime to time, award contracts for theprocurement of goods or services, thatdo not exceed $25,000 in costs, to cer-tified minority-owned entities listed inthe contractor file provided for in para-graph (c)(1) of this section, to the ex-tent not inconsistent with the prin-ciples of Federal Government procure-ment laws. Such awards shall be madeafter consultation with the MinorityContractors Advocate.

(ii) Contracts exceeding $25,000. Con-tracts for goods or services that exceed$25,000 will be awarded on the basis andconsistent with the principles of theFederal Government procurement laws.The Finance Board Contracting Officerand the Minority Contractors Advocateshall work to ensure, promote and fa-cilitate the maximum participation ofminority-owned entities in the FinanceBoard’s procurement of goods or serv-ices that exceed $25,000.

PART 903—PROCEDURES

Subpart A—Definitions

Sec.903.1 Definitions.

Subpart B—Waivers, Approvals, No-ActionLetters, and Regulatory Interpretations

903.2 Waivers.903.3 Approvals.903.4 No-Action Letters.903.5 Regulatory Interpretations.903.6 Submission requirements.903.7 Issuance of Waivers, Approvals, No-Ac-

tion Letters, and Regulatory Interpreta-tions.

Subpart C—Case-by-Case Determinations;Review of Disputed Supervisory Deter-minations

903.8 Case-by-Case Determinations.903.9 Review of Disputed Supervisory Deter-

minations.903.10 Petitions.903.11 Requests to Intervene.903.12 Finance Board procedures.


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903.13 Consideration and Final Decisions.903.14 Meetings of the Board of Directors to

consider Petitions.903.15 General provisions.

AUTHORITY: 12 U.S.C. 1422b(a)(1).

SOURCE: 64 FR 30883, June 9, 1999, unlessotherwise noted.


§ 903.1 Definitions.

For purposes of this part:(a) Approval means a written state-

ment issued to a Bank or the Office ofFinance approving a transaction, activ-ity, or item that requires FinanceBoard approval under the Bank Act ora Finance Board rule, regulation, pol-icy, or order.

(b) Bank means a Federal Home LoanBank.

(c) Bank Act means the Federal HomeLoan Bank Act (12 U.S.C. 1421–1449).

(d) Board of Directors means theBoard of Directors of the FinanceBoard.

(e) Case-by-Case Determination meansa Final Decision concerning any mat-ter that requires a determination, find-ing, or approval by the Board of Direc-tors under the Bank Act or FinanceBoard regulations, for which no con-trolling statutory, regulatory, or otherFinance Board standard previously hasbeen established, and that, in the judg-ment of the Board of Directors, is bestresolved on a case-by-case basis by aruling applicable only to the Petitionerand any Intervener, and not by adop-tion of a rule of general applicability.

(f) Chairperson means the Chairpersonof the Board of Directors of the Fi-nance Board.

(g) Final Decision means a decisionrendered by the Board of Directors onissues raised in a Petition or Requestto Intervene that have been acceptedfor consideration.

(h) Finance Board means the agencyestablished as the Federal Housing Fi-nance Board.

(i) Intervener means a Bank, Member,or other entity that has been grantedleave to intervene in the considerationof a Petition by the Board of Directors.

(j) Managing Director means the Man-aging Director of the Finance Board.

(k) Member means an institution ad-mitted to membership and owning cap-ital stock in a Bank.

(l) No-Action Letter means a writtenstatement issued to a Bank or the Of-fice of Finance providing that FinanceBoard staff will not recommend super-visory or other action to the Board ofDirectors for failure to comply with aspecific provision of the Bank Act or aFinance Board rule, regulation, policy,or order, if a requester undertakes aproposed transaction or activity.

(m) Office of Finance means the jointoffice of the Banks established pursu-ant to 12 CFR part 941.

(n) Party means a Petitioner, an In-tervener, or the Finance Board.

(o) Petition means a Petition for Case-by-Case Determination or a Petitionfor Review of a Disputed SupervisoryDetermination.

(p) Petitioner means the Office of Fi-nance or a Bank that has filed a Peti-tion.

(q) Regulatory Interpretation meanswritten guidance issued by FinanceBoard staff with respect to applicationof the Bank Act or a Finance Boardrule, regulation, policy, or order to aproposed transaction or activity.

(r) Requester means an entity or per-son that has submitted an applicationfor a Waiver or Approval or a requestfor a No-Action Letter or RegulatoryInterpretation.

(s) Secretary to the Board means theSecretary to the Board of Directors ofthe Finance Board.

(t) Supervisory determination means aFinance Board finding in a report of ex-amination, order, or directive, or a Fi-nance Board order or directive con-cerning safety and soundness or com-pliance matters that requires manda-tory action by a Bank or the Office ofFinance.

(u) Waiver means a written statementissued to a Bank, a Member, or the Of-fice of Finance that waives a provision,restriction, or requirement of a Fi-nance Board rule, regulation, policy, ororder, or a required submission of in-formation, not otherwise required bylaw, in connection with a particulartransaction or activity.


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12 CFR Ch. IX (1–1–00 Edition)§ 903.2

Subpart B—Waivers, Approvals,No-Action Letters, and Regu-latory Interpretations

§ 903.2 Waivers.(a) Authority. The Board of Directors

reserves the right, in its discretion andin connection with a particular trans-action or activity, to waive any provi-sion, restriction, or requirement of thischapter, or any required submission ofinformation, not otherwise required bylaw, if such waiver is not inconsistentwith the law and does not adversely af-fect any substantial existing rights,upon a determination that applicationof the provision, restriction, or require-ment would adversely affect achieve-ment of the purposes of the Bank Act,or upon a showing of good cause.

(b) Application. A Bank, a Member, orthe Office of Finance may apply for aWaiver in accordance with § 903.6.

§ 903.3 Approvals.(a) Application. A Bank or the Office

of Finance may apply for an Approvalof any transaction, activity, or itemthat requires Finance Board approvalunder the Bank Act or a Finance Boardrule, regulation, policy, or order in ac-cordance with § 903.6, unless alternativeapplication procedures are prescribedby the Bank Act or a Finance Boardrule, regulation, policy, or order forthe transaction, activity, or item atissue.

(b) Reservation. The Finance Boardreserves the right, in its discretion, toprescribe additional or alternative pro-cedures for any application for Ap-proval of a transaction, activity, oritem.

§ 903.4 No-Action Letters.(a) Authority. Finance Board staff, in

its discretion, may issue a No-ActionLetter to a Bank or the Office of Fi-nance stating that staff will not rec-ommend supervisory or other action tothe Board of Directors for failure tocomply with a specific provision of theBank Act or a Finance Board rule, reg-ulation, policy, or order, if a requesterundertakes a proposed transaction oractivity. The Board of Directors maymodify or supersede a No-Action Let-ter.

(b) Requests. A Bank or the Office ofFinance may request a No-Action Let-ter in accordance with § 903.6.

§ 903.5 Regulatory Interpretations.

(a) Authority. Finance Board staff, inits discretion, may issue a RegulatoryInterpretation to a Bank, a Member, anofficial of a Bank or Member, the Of-fice of Finance, or any other entity orperson, providing guidance with re-spect to application of the Bank Act ora Finance Board rule, regulation, pol-icy, or order to a proposed transactionor activity. The Board of Directorsmay modify or supersede a RegulatoryInterpretation.

(b) Requests. A Bank, a Member, anofficial of a Bank or Member, the Of-fice of Finance, or any other entity orperson may request a Regulatory Inter-pretation in accordance with § 903.6.

§ 903.6 Submission requirements.

Applications for a Waiver or Ap-proval and requests for a No-ActionLetter or Regulatory Interpretationshall comply with the following re-quirements:

(a) Filing. Each application or requestshall be in writing. The original andthree copies shall be filed with the Sec-retary to the Board, Federal HousingFinance Board, 1777 F Street NW.,Washington, DC 20006.

(b) Authorization—(1) Waivers and Ap-provals. Applications for Waivers andApprovals shall be signed by an officialwith authority to sign such applica-tions on behalf of the requester. Appli-cations for Waivers and Approvals froma Bank or the Office of Finance shall beaccompanied by a resolution of theboard of directors of the Bank or theOffice of Finance concurring in thesubstance and authorizing the filing ofthe application.

(2) Requests for No-Action Letters. Thepresident of the Bank making a Re-quest for a No-Action Letter shall signthe Request. Requests for a No-ActionLetter from the Office of Finance shallbe signed by the chairperson of theBoard of Directors of the Office of Fi-nance.

(3) Requests for Regulatory Interpreta-tions. The requester or an authorizedrepresentative of the requester shall


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sign a request for a Regulatory Inter-pretation.

(c) Information requirements. Each ap-plication or request shall contain:

(1) The name of the requester, andthe name, title, address, telephonenumber, and electronic mail address, ifany, of the official filing the applica-tion or request on its behalf;

(2) The name, address, telephonenumber, and electronic mail address, ifany, of a contact person from whom Fi-nance Board staff may seek additionalinformation if necessary;

(3) The section numbers of the par-ticular provisions of the Bank Act orFinance Board rules, regulations, poli-cies, or orders to which the applicationor request relates;

(4) Identification of the determina-tion or relief requested, including anyalternative relief requested if the pri-mary relief is denied, and a clear state-ment of why such relief is needed;

(5) A statement of the particularfacts and circumstances giving rise tothe application or request and identi-fying all relevant legal and factualissues;

(6) References to all relevant authori-ties, including the Bank Act, FinanceBoard rules, regulations, policies, andorders, judicial decisions, administra-tive decisions, relevant statutory in-terpretations, and policy statements;

(7) References to any Waivers, No-Ac-tion Letters, Approvals, or RegulatoryInterpretations issued to the requesterin the past in response to cir-cumstances similar to those sur-rounding the request or application;

(8) For any application or request in-volving interpretation of the Bank Actor Finance Board regulations, a rea-soned opinion of counsel supporting therelief or interpretation sought and dis-tinguishing any adverse authority;

(9) Any non-duplicative, relevant sup-porting documentation; and

(10) A certification by a person withknowledge of the facts that the rep-resentations made in the application orrequest are accurate and complete. Thefollowing form of certification is suffi-cient for this purpose: ‘‘I hereby certifythat the statements contained in thesubmission are true and complete tothe best of my knowledge. [Name andTitle].’’

(d) Waiver of requirements. The Man-aging Director may waive any require-ment of this section for good cause.The Managing Director shall provideprompt notice of any such waiver tothe Board of Directors. The Board ofDirectors may overrule any waivergranted by the Managing Directorunder this paragraph.

(e) Withdrawal. Once filed, an applica-tion or request may be withdrawn onlyupon written request. The FinanceBoard will not consider a request forwithdrawal after transmission by theSecretary to the Board to the requesterof a response in final form.

§ 903.7 Issuance of Waivers, Approvals,No-Action Letters, and RegulatoryInterpretations.

(a) Board of Directors review. At leastthree business days prior to issuance tothe requester, the Secretary to theBoard shall transmit each Approval,No-Action Letter, or Regulatory Inter-pretation issued by the Chairperson orFinance Board staff to the Board of Di-rectors for review.

(b) Issuance and effectiveness. A Waiv-er, Approval, No-Action Letter, or Reg-ulatory Interpretation is not effectiveuntil the Secretary to the Board hastransmitted it in final form to the re-quester.

(c) Abbreviated form. The FinanceBoard may respond to an application orrequest in an abbreviated form, con-sisting of a concise statement of thenature of the response, without re-statement of the underlying facts.

Subpart C—Case-by-Case Deter-minations; Review of DisputedSupervisory Determinations

§ 903.8 Case-by-Case Determinations.(a) Petition for Case-by-Case Deter-

mination. A Bank or the Office of Fi-nance may seek a Case-by-Case Deter-mination concerning any matter thatmay require a determination, findingor approval under the Bank Act or Fi-nance Board regulations by the Boardof Directors, and for which no control-ling statutory, regulatory or other Fi-nance Board standard previously hasbeen established. The Office of Financeor a Bank seeking a Case-by-Case De-termination shall file a Petition for


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12 CFR Ch. IX (1–1–00 Edition)§ 903.9

Case-by-Case Determination in accord-ance with § 903.10.

(b) Intervention. A Member, a Bank,or the Office of Finance may file a Re-quest to Intervene in the considerationof the Petition in accordance with§ 903.11 if it believes its rights may beaffected.

§ 903.9 Review of Disputed Super-visory Determinations.

(a) Petition for Review of a DisputedSupervisory Determination. A Bank orthe Office of Finance may seek reviewby the Board of Directors of a FinanceBoard finding in a report of examina-tion, order, or directive, or a FinanceBoard order or directive concerningsafety and soundness or compliancematters requiring mandatory action bythe Bank or Office of Finance. The Of-fice of Finance or a Bank seeking re-view of a disputed Supervisory Deter-mination shall file a Petition for Re-view of a Disputed Supervisory Deter-mination within 60 calendar days fromthe date of the disputed SupervisoryDetermination in accordance with§ 903.10.

(b) No stay while Petition is pending.All Supervisory Determinations di-rected to a Bank or the Office of Fi-nance shall remain in full force and ef-fect while a Petition is pending. That aPetition is pending shall not operate orbe deemed to operate as a suspension ofthe obligation of a Bank or the Officeof Finance to take corrective action asrequired by a Supervisory Determina-tion, except as the Bank or the Officeof Finance may be otherwise directedby order of the Board of Directors.

(c) Notice to affected entities. With theapproval of the Managing Director, aPetitioner may, pursuant to 12 CFR960.12(d) or otherwise, provide notice ofthe issuance of a Supervisory Deter-mination or the filing of a Petition forReview of a Disputed Supervisory De-termination, to another Bank, the Of-fice of Finance, or a Member or otherentity named in 12 CFR 960.12(d), if thePetitioner believes the entity’s rightsmay be affected by the Supervisory De-termination or the Petition.

(d) Intervention. A Bank, the Office ofFinance, a Member, or other entitynamed in 12 CFR 960.12(d) may file aRequest to Intervene in the consider-

ation of a Petition in accordance with§ 903.11 if it believes its rights may beadversely affected by a Final Decisionon the Petition.

§ 903.10 Petitions.Each Petition brought pursuant to

this subpart shall comply with the fol-lowing requirements:

(a) Filing. The Petition shall be inwriting. The original and three copiesshall be filed with the Secretary to theBoard, Federal Housing Finance Board,1777 F Street NW., Washington, DC20006.

(b) Information requirements. Each Pe-tition shall contain:

(1) The name of the Petitioner, andthe name, title, address, telephonenumber, and electronic mail address, ifany, of the official filing the Petitionon its behalf;

(2) The name, address, telephonenumber, and electronic mail address, ifany, of a contact person from whom Fi-nance Board staff may seek additionalinformation if necessary;

(3) The section numbers of the par-ticular provisions of the Bank Act orFinance Board rules, regulations, poli-cies, or orders to which the Petition re-lates, and, if the Petition is for Reviewof a Disputed Supervisory Determina-tion, identification of the disputed Su-pervisory Determination;

(4) Identification of the determina-tion or relief requested, including anyalternative relief requested if the pri-mary relief is denied, and a clear state-ment of why such relief is needed;

(5) A statement of the particularfacts and circumstances giving rise tothe Petition and identifying all rel-evant legal and factual issues;

(6) A summary of any steps taken todate by the Petitioner to address or re-solve the dispute or issue; or, in casesinvolving safety and soundness or com-pliance issues, a summary of any ac-tions taken by the Petitioner in the in-terim to implement corrective action;

(7) The Petitioner’s argument in sup-port of its position, including citationto any supporting legal opinions, pol-icy statements, or other relevantprecedent and supporting documenta-tion, if any;

(8) References to all relevant authori-ties, including the Bank Act, Finance


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Board rules, regulations, policies, andorders, judicial decisions, administra-tive decisions, relevant statutory in-terpretations, and policy statements;

(9) A reasoned opinion of counsel sup-porting the relief or interpretationsought and distinguishing any adverseauthority;

(10) Any non-duplicative, relevantsupporting documentation; and

(11) A certification by a person withknowledge of the facts that the rep-resentations made in the Petition areaccurate and complete. The followingform of certification is sufficient forthis purpose: ‘‘I hereby certify that thestatements contained in the Petitionare true and complete to the best of myknowledge. [Name and Title].’’

(c) Authorization. Each Petition shallbe accompanied by a resolution of thePetitioner’s board of directors concur-ring in the substance and authorizingthe filing of the Petition.

(d) Request to Appear. The Petitionmay contain a request that staff or anagent of the Petitioner be permitted tomake a personal appearance before theBoard of Directors at any meeting con-vened to consider the Petition pursu-ant to these procedures. A statement ofthe reasons a written presentationwould not suffice shall accompany aRequest to Appear. The statementshall specifically:

(1) Identify any questions of fact thatare in dispute;

(2) Summarize the evidence thatwould be presented at the meeting; and

(3) Identify any proposed witnesses,and state the substance of their antici-pated testimony.

§ 903.11 Requests to Intervene.(a) Filing—(1) Date. Any Request to

Intervene in consideration of a Peti-tion under this subpart shall be inwriting and shall be filed with the Sec-retary to the Board within 45 days fromthe date the Petition is filed.

(2) Information requirements. A Re-quest to Intervene shall include the in-formation required by § 903.10(b), whereapplicable, and a concise statement ofthe position and interest of the Inter-vener and the grounds for the proposedintervention.

(3) Authorization. If the entity re-questing intervention is a Bank or the

Office of Finance, the Request to Inter-vene shall be accompanied by a resolu-tion of the Petitioner’s board of direc-tors concurring in the substance andauthorizing the filing of the Request. Ifthe entity requesting intervention isnot a Bank or the Office of Finance,the Request to Intervene shall besigned by an official of the entity withauthority to authorize the filing of theRequest, and shall include a statementdescribing such authority.

(4) Request to Appear. A Request toIntervene may include a Request toAppear before the Board of Directors inany meeting conducted under theseprocedures to consider a Petition. ARequest to Appear shall be accom-panied by a statement containing theinformation required by § 903.10(d), and,in addition, setting forth the likely im-pact that intervention will have on theexpeditious progress of the meeting. ARequest to Appear shall be filed withthe Secretary to the Board either withthe Request to Intervene or at least 20days prior to the meeting scheduled toconsider the Petition.

(5) Intervener is bound. Any Requestto Intervene shall include a statementthat, if such leave to intervene isgranted, the Intervener shall be boundexpressly by the Final Decision of theBoard of Directors, as described in§ 903.13(b), subject only to judicial re-view or as otherwise provided by law.

(b) Grounds for approval. The Man-aging Director may grant leave to in-tervene if the entity requesting inter-vention has complied with paragraph(a) of this section and, in the judgmentof Managing Director:

(1) The presence of the entity re-questing intervention would not un-duly prolong or otherwise prejudice theadjudication of the rights of the origi-nal parties; and

(2) The entity requesting interven-tion may be adversely affected by aFinal Decision on the Petition.

§ 903.12 Finance Board procedures.(a) Notice of Receipt of Petition or Re-

quest to Intervene. No later than threebusiness days following receipt of a Pe-tition or Request to Intervene, the Sec-retary to the Board shall transmit awritten Notice of Receipt to the Peti-tioner or Intervener. In the case of a


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12 CFR Ch. IX (1–1–00 Edition)§ 903.13

Petition for Case-by-Case Determina-tion, the Finance Board shall promptlypublish a notice of receipt of Petition,including a brief summary of theissue(s) involved, in the FEDERAL REG-ISTER.

(b) Transmittal of filings. The Sec-retary to the Board shall promptlytransmit copies of any Petition, Re-quest to Intervene, or other filingunder this subpart to the Board of Di-rectors and all other parties to the fil-ing.

(c) Opportunity to cure defects. TheManaging Director shall afford the Pe-titioner or Intervener a reasonable op-portunity to cure any failure to complywith the requirements of § 903.10.

(d) Information request. The ManagingDirector may request additional infor-mation from the Petitioner or Inter-vener. No later than 20 calendar daysafter the date of a request under thisparagraph, the Petitioner shall provideto the Secretary to the Board all infor-mation requested.

(e) Supplemental information. Upongood cause shown, the Managing Direc-tor may grant permission to a Peti-tioner or Intervener to submit supple-mental written information pertainingto the Petition or Request to Inter-vene.

(f) Consolidation and severance—(1)Consolidation. The Managing Directormay consolidate any or all matters atissue in two or more meetings on Peti-tions where:

(i) There exist common parties orcommon questions of fact or law;

(ii) Consolidation would expedite andsimplify consideration of the issues;and

(iii) Consolidation would not ad-versely affect the rights of parties en-gaged in otherwise separate pro-ceedings.

(2) Severance. The Managing Directormay order any meetings and issues sev-ered with respect to any or all partiesor issues.

(g) Notice of Board Consideration.Within 30 calendar days of receipt of aPetition deemed by the Managing Di-rector to be in compliance with the re-quirements of § 903.10, or, if the Peti-tion has been the subject of a requestunder paragraph (d) of this section,within 30 calendar days of receipt of a

response from the Petitioner deemedby the Managing Director to completethe information necessary for theBoard of Directors to consider the Peti-tion, the Managing Director, after con-sultation with the Board of Directors,through the Secretary to the Board,shall provide all parties with a Noticeof Board Consideration containing thefollowing information:

(1) Identification of the issues accept-ed for consideration;

(2) Any decision to consolidate orsever pursuant to paragraph (f) of thissection;

(3) Whether the Petition will be con-sidered by the Board of Directors onthe written record pursuant to§ 903.13(a)(1), or at a meeting pursuantto § 903.13(a)(2); and

(4) If the Petition will be consideredby the Board of Directors at a meeting:

(i) The date, time and place of themeeting; and

(ii) A decision as to any Request toAppear filed pursuant to §§ 903.10(d) or903.11(a)(4).

§ 903.13 Consideration and Final Deci-sions.

(a) Consideration by Board of Directors.The Board of Directors may consider aPetition and render a decision:

(1) Solely on the basis of the writtenrecord; or

(2) At a regularly scheduled meetingor a meeting convened specifically forthe purpose of considering the Peti-tion. Consideration of a Petition at ameeting shall be governed by the pro-cedures described in § 903.14.

(b) Final Decision. The Board of Direc-tors shall render a Final Decision onthe issue(s) presented in a Petition orRequest to Intervene that has been ac-cepted for consideration, based uponconsideration of the entire record ofthe proceeding. The terms and condi-tions of the Final Decision shall bindthe parties as to any issue(s) presentedin the Petition or Request to Interveneand decided by the Board of Directors.The decision of the Board of Directorsis a final decision for purposes of ob-taining judicial review or as otherwiseprovided by law.


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(c) Time periods. Subject to extensionby such additional time as may reason-ably be required, the Board of Direc-tors shall render a Final Decision with-in 120 calendar days of the date the Pe-tition is received in a form deemed bythe Managing Director to be in compli-ance with the requirements of § 903.10or, if the Petition has been the subjectof a request under § 903.12(d), within 120calendar days of receipt of a responsefrom the Petitioner deemed by theManaging Director to complete the in-formation necessary for the Board ofDirectors to consider the Petition.

(d) Transmittal of Final Decision. TheSecretary to the Board shall transmitthe Final Decision of the Board of Di-rectors to all parties to the submission.

§ 903.14 Meetings of the Board of Di-rectors to consider Petitions.

(a) Full and fair opportunity to beheard. Any meeting of the Board of Di-rectors to consider a Petition shall beconducted in a manner that providesthe parties a full and fair opportunityto be heard on the issues accepted forconsideration. Any such meeting shallbe conducted so as to permit an expedi-tious presentation of such issues.

(b) Participation in meeting. (1) Thepresence of a quorum of the Board ifDirectors is required to conduct ameeting under this section. Members ofthe Board of Directors are deemedpresent if they appear in person or bytelephone.

(2) An act of the Board of Directorsrequires the vote of a majority of themembers of the Board of Directors vot-ing at a meeting at which a quorum ofthe Board of Directors is present.

(3) A Final Decision may be reachedby a vote of the Board of Directorsafter the meeting at which the Petitionhas been considered. Only those mem-bers of the Board of Directors presentat the meeting at which the Petitionwas considered may vote on issues pre-sented in the Petition and accepted forconsideration. A vote of the majorityof the members of the Board of Direc-tors eligible to vote and voting shall bean act of the Board of Directors.

(c) Chairperson—(1) Presiding officer.The Chairperson, or a member of theBoard of Directors designated by theChairperson, shall preside over a meet-

ing of the Board of Directors convenedunder this section.

(2) Authority of the Chairperson. TheChairperson shall have all powers anddiscretion necessary to conduct themeeting in a fair and impartial man-ner, to avoid unnecessary delay, to reg-ulate the course of the meeting and theconduct of the parties and their coun-sel, and to discharge the duties of apresiding officer.

(3) Board of Directors may overrule theChairperson. Any member of the Boardof Directors may, by motion, challengeany action, finding, or determinationmade by the Chairperson in the courseof the meeting, and the Board of Direc-tors, by majority vote, may overruleany action, finding or determination ofthe Chairperson.

(d) Meeting may be closed. A partymay request that the meeting, or por-tion thereof, be closed to public obser-vation. A request to close a meetingshall be processed in accordance withthe requirements of the Government inthe Sunshine Act (5 U.S.C. 552b) andthe Finance Board’s implementing reg-ulation (12 CFR part 906).

(e) Location of meeting. Unless other-wise specified, all meetings of theBoard of Directors will be held in theBoard Room of the Finance Board at1777 F Street, NW., Washington, DC, atthe time specified in the notice ofmeeting issued pursuant to 12 CFR906.6.

(f) Presentation of issues—(1) Stipula-tions. Subject to the Chairperson’s dis-cretion, the parties may agree to stipu-lations of law or fact, including stipu-lations as to the admissibility of exhib-its, and present such stipulations atthe meeting. Stipulations shall bemade a part of the record of the pro-ceeding.

(2) Order of presentation. The Chair-person shall determine the order ofpresentation of the issues, testimony ofany witnesses, presentation of anyother information or document, and allother procedural matters at the meet-ing.

(g) Record. The meeting shall be re-corded and transcribed. Transcripts ofthe proceedings shall be governed by 12CFR 906.5(c). The Petition and all sup-porting documentation shall be made a


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part of the record, unless otherwise de-termined by the Chairperson. TheChairperson may order the record cor-rected, upon motion to correct, uponstipulation of the parties, or at theChairperson’s discretion.

(h) Admissibility of documents and testi-mony. (1) The Chairperson has discre-tion to admit and make a part of therecord documents and testimony thatare relevant, material, and reliable,and may elect not to admit documentsand testimony that are privileged, un-duly repetitious, or of little probativevalue.

(2) The Board of Directors shall givesuch weight to documents and testi-mony admitted and made part of therecord as it may deem reasonable andappropriate.

(3) The Chairperson may admit andmake a part of the record, in lieu oforal testimony, statements of fact oropinion prepared by a witness. The ad-missibility of the information con-tained in the statement shall be sub-ject to the same rules as if the testi-mony were provided orally.

(i) Official notice. All matters offi-cially noticed by the Chairperson shallappear on the record.

(j) Exhibits and documents—(1) Copies.A legible duplicate copy of a documentshall be admissible to the same extentas the original.

(2) Exhibits. Witnesses may use exist-ing or newly created charts, exhibits,calendars, calculations, outlines, orother graphic materials to summarize,illustrate, or simplify the presentationof testimony. Subject to the Chair-person’s discretion, such materialsmay be used with or without being ad-mitted into the record.

(3) Identification. All exhibits offeredinto the record shall be numbered se-quentially and marked with a designa-tion identifying the sponsor. The origi-nal of each exhibit offered into therecord or marked for identificationshall be retained in the record of themeeting, unless the Chairperson per-mits substitution of a copy for theoriginal.

(4) Exchange of Exhibits. One copy ofeach exhibit offered into the recordshall be furnished to each of the partiesand to each member of the Board of Di-rectors. If the Chairperson does not fix

a time for the exchange of exhibits, theparties shall exchange copies of pro-posed exhibits at the earliest prac-ticable time before the commencementof the meeting to consider the Peti-tion. Parties are not required to ex-change exhibits submitted as rebuttalinformation before the meeting com-mences if submission of the exhibits isnot reasonably certain at that time.

(5) Authenticity. The authenticity ofall documents submitted or exchangedas proposed exhibits prior to the meet-ing shall be admitted unless writtenobjection is filed before the commence-ment of the meeting, or unless goodcause is shown for failing to file such awritten objection.

(k) Sanction for obstruction of the pro-ceedings. The Board of Directors mayimpose sanctions it deems appropriatefor violation of any applicable provi-sion of this subpart or any applicablelaw, rule, regulation, or order, or anydilatory, frivolous, or obstructionistconduct by any witness or counsel dur-ing the course of a meeting.

§ 903.15 General provisions.

(a) Waiver of requirements. The Man-aging Director may waive any filing re-quirement or deadline in this subpartfor good cause shown. The ManagingDirector shall provide prompt notice ofany such waiver to the Board of Direc-tors.

(b) Actions of the Managing Directorsubject to the authority of the Board ofDirectors. The Board of Directors mayoverrule any action by the ManagingDirector under this subpart.

(c) Withdrawal. At any time prior tothe issuance by the Managing Directorof a Notice of Board Consideration pur-suant to § 903.12(g), an authorized rep-resentative of a Petitioner may with-draw the Petition, or an authorizedrepresentative of an Intervener maywithdraw the Request to Intervene, byfiling a written request to withdrawwith the Secretary to the Board. Onlythe Board of Directors may grant a re-quest to withdraw after issuance by theManaging Director of a Notice of BoardConsideration pursuant to § 903.12(g).Unless otherwise agreed, withdrawal ofa Petition or Request to Interveneshall not foreclose a Petitioner from


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resubmitting a Petition, or an Inter-vener from submitting a Request to In-tervene, on the same or similar issues.

(d) Settlement agreement. (1) At anytime during the course of proceedingspursuant to this subpart, the FinanceBoard shall give Petitioners andInterveners the opportunity to submitoffers of settlement when the nature ofthe proceedings and the public interestpermit. With the approval of the Man-aging Director, an authorized rep-resentative of a Petitioner or Inter-vener may enter into a proposed settle-ment agreement with the FinanceBoard disposing of some or all of theissues presented in a Petition or Re-quest to Intervene.

(2) No proposed settlement agree-ment shall be final until approved bythe Board of Directors. The Board ofDirectors shall consider any proposedsettlement agreement within 30 cal-endar days of receiving a notice of theproposed settlement agreement. If theBoard of Directors disapproves or failsto approve a proposed settlementagreement within 30 days, the proposedsettlement agreement shall be null andvoid and the previously filed Petitionor Request to Intervene shall be con-sidered in accordance with this sub-part.

(3) A settlement agreement approvedby the Board of Directors shall bedeemed final and binding on all partiesto the agreement. At the time a pro-posed settlement agreement becomesfinal, a Petition or Request to Inter-vene previously filed by a party to theagreement shall be deemed withdrawnas to all issues resolved in the agree-ment, and the parties to the agreementshall be estopped from raising objec-tion to those issues or to the terms ofthe settlement agreement.

(e) No rights created; Finance Boardnot prohibited. Nothing in this subpartshall be deemed to create any sub-stantive or discovery right in anyparty. Nothing in this subpart shalllimit in any manner the right of theFinance Board to conduct any exam-ination or inspection of any Bank orthe Office of Finance, or to take anyaction with respect to a Bank or theOffice of Finance, or its directors, offi-cers, employees or agents, otherwiseauthorized by law.

(f) Exhaustion requirement. When seek-ing a Case-by-Case Determination ofany matter or review by the Board ofDirectors of any Supervisory Deter-mination, a Bank or the Office of Fi-nance shall follow the procedures inthis subpart as a prerequisite to seek-ing judicial review. Failure to do soshall be deemed to be a failure to ex-haust all available administrative rem-edies.

(g) Improper conduct prohibited. Noparty shall, by act or omission, undulyburden or frustrate the efforts of theBoard of Directors to carry out its du-ties under the laws and regulations ofthe Finance Board. A Petitioner or In-tervener shall confine its communica-tions with the Board of Directors, orany individual member thereof, con-cerning issues raised in a pending Peti-tion, to written communications for in-clusion in the record of the proceeding,filed with the Secretary to the Board.

(h) Costs. Petitioners are encouragedto contain costs associated with thepreparation and filing of Petitions andrelated personal appearances, if any, atany meeting held by the Board of Di-rectors under this subpart. The Peti-tioner shall be solely responsible for allcosts associated with any such Peti-tions and appearances.

(i) Procedures are exclusive. All Case-by-Case Determinations by the Boardof Directors and all Reviews of Dis-puted Supervisory Determinationsshall be considered exclusively pursu-ant to the procedures described in thissubpart.

PART 904—FREEDOM OFINFORMATION ACT REGULATION

Sec.904.1 Definitions.904.2 Records available to the public.904.3 Requests for records.904.4 Finance Board response to requests for

records.904.5 Records not disclosed.904.6 Disclosure of Federal Home Loan

Bank examination reports.904.7 Records of financial regulatory agen-

cies held by the Finance Board.904.8 Appeals.904.9 Fees.

AUTHORITY: 5 U.S.C. 552; 52 FR 10012 (Mar.27, 1987).


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SOURCE: 63 FR 37485, July 13, 1998, unlessotherwise noted.


For purposes of this part:(a) Agency has the same meaning as

in 5 U.S.C. 552(f)(1).(b) Duplication means the process of

making a copy of a record in order torespond to a FOIA request, includingpaper copies, microfilm, audio-videomaterials, and computer diskettes orother electronic copies.

(c) Finance Board means the agencyestablished as the Federal Housing Fi-nance Board.

(d) Financial regulatory agency meansthe Board of Governors of the FederalReserve System, Office of the Comp-troller of the Currency, Federal De-posit Insurance Corporation, Office ofThrift Supervision, National CreditUnion Administration, Farm CreditAdministration, or a state officer,agency, supervisor, or other entitythat has regulatory authority over, oris empowered to institute enforcementaction against, a financial institution,including an insurance company.

(e) FOIA means the Freedom of Infor-mation Act, as amended (5 U.S.C. 552).

(f) Record means information or docu-mentary material the Finance Boardmaintains in any form or format, in-cluding an electronic form or format,which the Finance Board:

(1) Made or received under federallaw or in connection with the trans-action of public business;

(2) Preserved or determined is appro-priate for preservation as evidence ofFinance Board operations or activitiesor because of the value the informationit contains; and

(3) Controls at the time it receives arequest.

(g) Requester means any person, in-cluding an individual, corporation,firm, organization, or other entity,who makes a request to the FinanceBoard under FOIA for records.

(h) Review means the process of ex-amining a record to determine whetherall or part of the record may be with-held, and includes redacting or other-wise processing the record for disclo-sure to a requester. It does not includetime spent:

(1) Resolving legal or policy issues re-garding the application of exemptionsto a record; or

(2) At the administrative appeallevel, unless the Finance Board deter-mines that the exemption under whichit withheld records does not apply andthe records are reviewed again to de-termine whether a different exemptionmay apply.

(i) Search means the time spent locat-ing records responsive to a request,manually or by electronic means, in-cluding page-by-page or line-by-lineidentification of responsive materialwithin a record.

(j) Secretary to the Board means theSecretary to the Board of Directors ofthe Finance Board. The address for theSecretary to the Board is ExecutiveSecretariat, Office of the Managing Di-rector, Federal Housing Finance Board,1777 F Street NW., Washington, DC20006.

(k) Unusual circumstances means theneed to:

(1) Search for and collect recordsfrom establishments that are separatefrom the office processing the request;

(2) Search, review, and duplicate avoluminous amount of separate anddistinct records in order to process asingle request; or

(3) Consult with another agency oramong two or more components of theFinance Board that have a substantialinterest in the determination of a re-quest.

(l) Working days do not include Satur-days, Sundays, and legal public holi-days.

§ 904.2 Records available to the public.

(a) General. (1) It is the policy of theFinance Board to respond promptly toall FOIA requests.

(2) The Finance Board may discloserecords that were previously publishedor disclosed or are customarily fur-nished to the public in the course ofthe performance of official duties with-out complying with this part. Theserecords include, but are not limited to,the annual report the Finance Boardsubmits to Congress pursuant to sec-tion 2B(d) of the Federal Home Loan


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Bank Act (12 U.S.C. 1422b(d)), press re-leases, Finance Board forms, and mate-rials published in the FEDERAL REG-ISTER.

(3) Except as provided in the PrivacyAct (5 U.S.C. 552a), the Finance Board’sPrivacy Act regulation (12 CFR part909), or paragraph (a)(2) of this section,the Finance Board shall not discloserecords except in accordance with therequirements of this part.

(b) Reading room. (1) Subject to§§ 904.5 through 904.7, the followingrecords shall be available for public in-spection and copying in the FinanceBoard reading room from 9:00 a.m. to4:00 p.m. each working day:

(i) Final opinions or orders of the Fi-nance Board in the adjudication ofcases.

(ii) A record of the final votes of eachmember of the Board of Directors inevery Finance Board proceeding.

(iii) Statements of policy and inter-pretations adopted by the FinanceBoard that are not published in theFEDERAL REGISTER.

(iv) Administrative staff manuals andinstructions to staff that affect a mem-ber of the public.

(v) Records previously disclosed toany requester pursuant to this partwhich, because of the nature of theirsubject matter, the Finance Board hasdetermined will likely be the subject ofsubsequent requests for substantiallythe same records, and a general indexthereof.

(vi) Current indices that provideidentifying information about all mat-ters issued, adopted, or promulgated bythe Finance Board.

(vii) The report the Finance Boardsubmits to the Attorney General pur-suant to 5 U.S.C. 552(e).

(2) The Finance Board shall makeeach reading room record created on orafter November 1, 1996 available bycomputer telecommunications or otherelectronic means, such as on computerdiskettes or on the Finance Board’sInternet Web site, found at http://www.fhfb.gov.

(3) The Finance Board shall assessfees for searching, reviewing, or dupli-cating reading room records in accord-ance with § 904.9.

§ 904.3 Requests for records.(a) Request requirements. Requests for

access to, or copies of, Finance Boardrecords shall be in writing and ad-dressed to the Secretary to the Board.Each request shall include the fol-lowing:

(1) A description of the requestedrecord that provides sufficient detail toenable the Finance Board to locate therecord with a reasonable amount of ef-fort;

(2) The requester’s full name, mailingaddress, and a telephone number wherethe requester can be reached duringnormal business hours;

(3) A statement that the request ismade pursuant to FOIA; and

(4) At the discretion of the requester,a dollar limit on the fees the FinanceBoard may incur to respond to the re-quest for records. The Finance Boardshall not exceed such limit.

(b) Incomplete requests. If a requestdoes not meet all of the requirementsof paragraph (a) of this section, theSecretary to the Board may advise therequester that additional informationis needed. If the requester submits acorrected request, the Finance Boardshall treat the corrected request as anew request.

§ 904.4 Finance Board response to re-quests for records.

(a) Response deadline. Subject to§ 904.9(f), within 20 working days of re-ceipt of a request meeting the require-ments of § 904.3(a) and any extensionsof time under paragraph (c) of this sec-tion, the Secretary to the Board shall:

(1) Determine whether to grant ordeny the request in whole or in part;

(2) Notify the requester in writing ofthe determination and the reasonstherefor; and

(3) Make the records, if any, availableto the requester.

(b) Denials. If the Secretary to theBoard denies the request in whole or inpart, the notice required under para-graph (a)(2) of this section shall statethat the Secretary to the Board is theperson responsible for the denial, thedenial is not a final agency action, andthe requester may appeal the denialunder § 904.8.

(c) Extensions of time. In unusual cir-cumstances, the Secretary to the


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Board may extend the time limit inparagraph (a) of this section for a pe-riod not to exceed 10 working days bynotifying the requester in writing of:

(1) The reasons for the extension;(2) The date on which a determina-

tion is expected; and(3) The opportunity for the requester

to either limit the scope of the requestso that the Finance Board may processit in accordance with paragraph (a) ofthis section, or arrange an alternativetime frame for processing the requestor a modified request.

(d) Expedited processing. (1) The Fi-nance Board shall process a request forrecords as soon as practicable if it de-termines that expedited processing isappropriate or the requester dem-onstrates a compelling need. To dem-onstrate a compelling need, a requestershall submit a written application cer-tified to be true and correct to the bestof the requester’s knowledge and beliefto the Secretary to the Board. The ap-plication shall state that:

(i) The failure to obtain the recordson an expedited basis could reasonablybe expected to pose an imminent threatto the life or physical safety of an indi-vidual; or

(ii) With respect to a requester who isprimarily engaged in disseminating in-formation, such as a representative ofthe news media as defined in§ 904.9(a)(4)(iv), there is urgency to in-form the public concerning actual oralleged Finance Board activity.

(2) Within 10 working days of receiptof an application for expedited proc-essing that meets the requirements ofparagraph (c)(1) of this section, theSecretary to the Board shall determinewhether to grant or deny the applica-tion and notify the requester in writingof the determination.

(3) A requester may appeal the denialof an application for expedited proc-essing by submitting a written applica-tion stating the grounds for the appealto the Secretary to the Board. The Fi-nance Board shall expeditiously deter-mine whether to grant or deny the ap-peal and shall notify the requester inwriting of the determination, the nameand title or position of the person re-sponsible for the determination, and ofthe provisions for judicial review of

this final action under 5 U.S.C. 552(a)(4) and (6).

(e) Providing responsive records. TheFinance Board shall provide one copyof a record to a requester in any formor format requested if the record isreadily reproducible by the FinanceBoard in that form or format by reg-ular U.S. mail to the address indicatedin the request unless other arrange-ments are made, such as taking deliv-ery of the document at the FinanceBoard. At the option of the requesterand upon the requester’s agreement topay fees in accordance with § 904.9, theFinance Board shall provide copies byfacsimile transmission or other expressdelivery methods.

§ 904.5 Records not disclosed.

(a) Records exempt from disclosure. Ex-cept as otherwise provided in this part,the Finance Board shall not discloserecords that are:

(1) Specifically authorized under cri-teria established by an Executive orderto be kept secret in the interest of na-tional defense or foreign policy and arein fact properly classified pursuant tosuch Executive order.

(2) Related solely to the FinanceBoard’s internal personnel rules andpractices.

(3) Specifically exempted from disclo-sure by a statute other than FOIA ifsuch statute requires the record to bewithheld from the public in such amanner as to leave no discretion on theissue, establishes particular criteria forwithholding, or refers to particulartypes of records to be withheld.

(4) Trade secrets and commercial orfinancial information obtained from aperson and privileged or confidential.

(5) Inter- or intra-agency memoran-dums or letters that would not beavailable by law to a party other thanan agency in litigation with the Fi-nance Board.

(6) Personnel, medical, or similarfiles the disclosure of which would con-stitute a clearly unwarranted invasionof personal privacy.

(7) Compiled for law enforcementpurposes, but only to the extent thatthe production of such law enforcementrecords or information:


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(i) Could reasonably be expected tointerfere with enforcement pro-ceedings;

(ii) Would deprive a person of a rightto a fair trial or an impartial adjudica-tion;

(iii) Could reasonably be expected toconstitute an unwarranted invasion ofpersonal privacy;

(iv) Could reasonably be expected todisclose the identity of a confidentialsource, including a State, local, or for-eign agency or authority, any privateinstitution, or a Federal Home LoanBank, which furnished information ona confidential basis, and, in the case ofa record compiled by criminal law en-forcement authority in the course of acriminal investigation or by an agencyconducting a lawful national securityinvestigation, information furnished bya confidential source;

(v) Would disclose techniques andprocedures for law enforcement inves-tigations or prosecutions, or would dis-close guidelines for law enforcementinvestigations or prosecutions if suchdisclosure could reasonably be ex-pected to risk circumvention of thelaw; or

(vi) Could reasonably be expected toendanger the life or physical safety ofany individual.

(8) Contained in or related to exam-ination, operating, or condition reportsprepared by, on behalf of, or for the useof the Finance Board, a Federal HomeLoan Bank, or a financial regulatoryagency.

(9) Geological and geophysical infor-mation and data, including maps, con-cerning wells.

(b) Reasonably segregable portions. (1)The Finance Board shall provide a re-quester with any reasonably segregableportion of a record after redacting theportion that is exempt from disclosureunder paragraph (a) of this section.

(2) The Finance Board shall make areasonable effort to estimate the vol-ume of redacted information and pro-vide that information to the requesterunless providing the estimate wouldharm an interest protected by the ex-emption under which the redaction ismade.

(3) The Finance Board shall indicatethe estimated volume of redacted in-formation on the released portion of

the record unless providing the esti-mate would harm an interest protectedby the exemption under which the re-daction is made. If technically feasible,the Finance Board shall make the indi-cation at the place in the record wherethe redaction is made.

(c) Public interest. The Finance Boardmay disclose records it has authorityto withhold under paragraph (a) of thissection upon a determination that dis-closure would be in the public interest.

§ 904.6 Disclosure of Federal HomeLoan Bank examination reports.

The Finance Board may disclose anexamination, operating, or conditionreport of a Federal Home Loan Bank ora related record to a financial regu-latory agency upon a determinationthat:

(a) The person requesting the recordon behalf of the financial regulatoryagency has the authority to make suchrequest;

(b) The financial regulatory agency isrequesting the record for a legitimateregulatory purpose; and

(c) The financial regulatory agencymaking the request agrees that it shallnot disclose the record pursuant toFOIA, the agency’s regulations, or anyother authority.

§ 904.7 Records of financial regulatoryagencies held by the FinanceBoard.

The Finance Board shall not disclosean examination, operating, or condi-tion report, or other record preparedby, on behalf of, or for the use of a fi-nancial regulatory agency. Upon a re-ceipt of a request for such records, theFinance Board shall promptly refer therequest to the appropriate agency andnotify the requester of the referral.

§ 904.8 Appeals.

(a) Procedure. (1) If the Secretary tothe Board has denied a request inwhole or in part, the requester may ap-peal the denial by submitting a writtenapplication to the Secretary to theBoard stating the grounds for the ap-peal within 30 working days of the dateof the Finance Board’s determinationunder § 904.4.


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12 CFR Ch. IX (1–1–00 Edition)§ 904.9

(2) Subject to § 904.9(f), within 20working days of receipt of an applica-tion for appeal meeting the require-ments of paragraph (a)(1) of this sec-tion and any extensions of time underparagraph (a)(3) of this section, the Fi-nance Board shall determine whetherto grant or deny the appeal and notifythe requester in writing of the deter-mination, the name and title or posi-tion of the person responsible for thedetermination, and the provisions forjudicial review of this final actionunder 5 U.S.C. 552(a)(4).

(3) In unusual circumstances, theSecretary to the Board may extend thetime limit in paragraph (a)(2) of thissection for a period not to exceed 10working days by notifying the re-quester in writing of the reasons forthe extension and the date on which adetermination is expected.

(b) Appeal during pendency of judicialreview. If a requester files an action ina United States district court under 5U.S.C. 552(a)(4) concerning a request forFinance Board records before exhaust-ing the administrative appeals processfor that request under paragraph (a) ofthis section, the Finance Board may:

(1) Initiate and process an adminis-trative appeal; or

(2) Continue to process an adminis-trative appeal previously filed underparagraph (a) of this section.

§ 904.9 Fees.

(a) Fees. Except as otherwise providedin a statute specifically providing forsetting fees for particular types ofrecords or in this section, the FinanceBoard shall assess against each re-quester the direct costs of respondingto a request for records.

(1) If the records are requested for acommercial use, the direct costs arelimited to the reasonable operatingcosts the Finance Board incurs tosearch, review, and duplicate records.

(2) If the records are not requestedfor a commercial use and the requesteris an educational institution, non-com-mercial scientific institution, or rep-resentative of the news media, the di-rect costs are limited to the reasonableoperating costs the Finance Board in-curs to duplicate records in excess of100 pages.

(3) If neither the request nor the re-quester is described in paragraphs (a)(1) or (2) of this section, the directcosts are limited to the reasonable op-erating costs the Finance Board incursto search in excess of two hours andduplicate records in excess of 100 pages.

(4) For purposes of this section, theterm:

(i) Commercial use request means a re-quest from, or on behalf of, a personwho seeks records for a use or purposethat furthers the commercial, trade, orprofit interests of the requester or theperson on whose behalf the request ismade.

(ii) Educational institution means apreschool, public or private elementaryor secondary school, or institution ofundergraduate, graduate, professional,or vocational higher education that op-erates a program of scholarly research.

(iii) Non-commercial scientific institu-tion means a nonprofit institution op-erated solely for the purpose of con-ducting scientific research the resultsof which are not intended to promoteany particular product or industry.

(iv) Representative of the news mediameans a requester who is activelygathering information that is aboutcurrent events or would be of currentinterest to the public for an entity thatis organized and operated to publish orbroadcast news to the public.

(b) Fees when no records are provided.The Finance Board may assess a fee forthe direct costs of searching for a re-quested record the Finance Board can-not locate or if located, determines tobe exempt from disclosure under § 904.5.

(c) Interest. The Finance Board mayassess interest at the rate prescribed in31 U.S.C. 3717 on any unpaid fees begin-ning 31 days after the earlier of thedate of the Finance Board’s determina-tion under § 904.4 or the date a feestatement is mailed to a requester. In-terest shall accrue from such date.

(d) Exceptions. Notwithstanding para-graphs (a) or (b) of this section, the Fi-nance Board may determine not to as-sess a fee or to reduce a fee if:

(1) The routine cost of collecting andprocessing the fee is likely to equal orexceed the amount of the fee.

(2) The fee is equal to or less than 10dollars.


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(3) Disclosure of the record is in thepublic interest because it is likely tocontribute significantly to public un-derstanding of the operations or activi-ties of the government and is not pri-marily in the commercial interest ofthe requester.

(i) A requester may apply in writingto the Secretary to the Board for awaiver of fees under this paragraph(b)(3). A fee waiver request shall in-clude the following:

(A) The requester’s interest in andproposed use of the record;

(B) Whether the requester will deriveincome or other benefit from therecord;

(C) An explanation of how the publicwill benefit from disclosure, includingthe requester’s ability and intention todisseminate the information to thepublic; and

(D) The requester’s expertise in thesubject area of the record.

(ii) In determining whether disclo-sure of a record is in the public inter-est, the Finance Board shall considerwhether the record:

(A) Concerns identifiable operationsor activities of the Finance Board;

(B) Is meaningfully informative inrelation to the subject matter of therequest;

(C) Contributes to an understandingof the subject matter by the public atlarge, and the significance of that con-tribution; and

(D) Furthers, or is primarily in, therequester’s commercial interest.

(e) Aggregating requests. If the Fi-nance Board reasonably believes that arequester or a group of requesters act-ing in concert is attempting to break arequest down into a series of requestsfor the purpose of evading the assess-ment of fees, it may aggregate such re-

quests and assess fees in accordancewith this section.

(f) Collecting fees. (1) The FinanceBoard shall deem any request for Fi-nance Board records as an agreementby the requester to pay fees and inter-est assessed in accordance with thissection.

(2) To pay fees and interest assessedunder this section, a requester shall de-liver to the Office of Resource Manage-ment, located at the Federal HousingFinance Board, 1777 F Street NW.,Washington, DC 20006, a check ormoney order made payable to the‘‘Federal Housing Finance Board.’’

(3) Prior to disclosing any record, theFinance Board may require a requesterto agree in writing to pay actual feesand interest incurred in accordancewith this section if the estimated feewill likely exceed $25 but not $250.

(4) The Finance Board may require arequester to pay an estimated fee inadvance if:

(i) The Secretary to the Board deter-mines that the fee will likely exceed$250; or

(ii) The requester has previouslyfailed to pay a fee assessed under thissection within 30 days of the earlier ofthe date of the Finance Board’s deter-mination under § 904.4 or the date a feestatement was mailed to a requester.

(5) The Finance Board shall promptlyrefund to a requester any estimated ad-vance fee paid under paragraph (f)(4) ofthis section that exceeds the actualfee. The Finance Board shall assess therequester for the amount by which theactual fee exceeds the estimated ad-vance fee payment.

(g) Fee schedule. The Finance Boardshall assess fees in accordance with thefollowing schedule:

Search:Manual: Supervisory/Professional Staff ............................................ $34.00 per hour.Manual: Clerical Staff ....................................................................... $17.00 per hour.Computer: Operator ........................................................................... $34.00 per hour.Computer output (PC) ....................................................................... actual cost.Diskettes (31⁄2 × 51⁄4) ........................................................................... $5.00 per diskette.Review ............................................................................................... $34.00 per hour.

Duplication:Photocopy ......................................................................................... $.10 per page.Computer generated .......................................................................... $.76 per 1000 lines.Copy of microfiche ............................................................................ $.30 per page.Transcription of audio tape ............................................................... $4.50 per page.Certification, seal and attestation by the Secretary to the Board ... $5.00 per document.

Delivery:


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Facsimile transmission (long distance) ............................................ Long distancecharges plus $.25per page.

Facsimile transmission (local) .......................................................... $.25 per call plus$.25 per page.

Express delivery service .................................................................... Actual cost.

[63 FR 37485, July 13, 1998, as amended at 64FR 5930, Feb. 8, 1999]

PART 905—AVAILABILITY OFUNPUBLISHED INFORMATION≤

Sec.905.1 Definitions.905.2 Purpose and scope.905.3 Prohibition on unauthorized use and

disclosure of unpublished information.905.4 Requests for unpublished information

by document or testimony.905.5 Consideration of requests.905.6 Persons and entities with access to un-

published information.905.7 Availability of unpublished informa-

tion by testimony.905.8 Availability of unpublished informa-

tion by document.905.9 Fees.

AUTHORITY: 5 U.S.C. 301; 12 U.S.C.1422b(a)(1).

SOURCE: 64 FR 44106, Aug. 13, 1999, unlessotherwise noted.

§ 905.1 Definitions.For purposes of this part:(a) Finance Board means the agency

established as the Federal Housing Fi-nance Board.

(b) Legal proceeding means any ad-ministrative, civil, or criminal pro-ceeding, including a grand jury or dis-covery proceeding, in which neither theFinance Board nor the United States isa party.

(c) Unpublished information means in-formation and documents created orobtained by the Finance Board in con-nection with the performance of offi-cial duties, whether the information ordocuments are in the possession of theFinance Board, a current or former Fi-nance Board employee or agent, a su-pervised entity, a Federal Home LoanBank member, government agency, orsome other person or entity; and infor-mation and documents created or ob-tained by, or in the memory of, a cur-rent or former Finance Board employeeor agent, that was acquired in the per-son’s official capacity or in the course

of performing official duties. It doesnot include information or documentsthe Finance Board must disclose underthe Freedom of Information Act (5U.S.C. 552), Privacy Act (5 U.S.C. 552a),or the Finance Board’s implementingregulations (12 CFR parts 904 and 909,respectively). It also does not includeinformation or documents that werepreviously published or disclosed or arecustomarily furnished to the public inthe course of the performance of offi-cial duties such as the annual reportthe Finance Board submits to Congresspursuant to section 2B(d) of the Fed-eral Home Loan Bank Act (12 U.S.C.1422b(d)), press releases, Finance Boardforms, and materials published in theFEDERAL REGISTER.

(d) Supervised entity means a FederalHome Loan Bank, the Office of Fi-nance, and the Financing Corporation.

§ 905.2 Purpose and scope.(a) Purpose. The purposes of this part

are to:(1) Maintain the confidentiality and

control the dissemination of unpub-lished information;

(2) Conserve the time of employeesfor official duties and ensure that Fi-nance Board resources are used in themost efficient manner;

(3) Maintain the Finance Board’s im-partiality among private litigants; and

(4) Establish an orderly mechanismfor the Finance Board to process expe-ditiously and respond appropriately torequests for unpublished information.

(b) Scope. (1) This part applies to a re-quest for and use and disclosure of un-published information, including a re-quest for unpublished information bydocument or testimony arising out of alegal proceeding in which neither theFinance Board nor the United States isa party. It does not apply to a requestfor unpublished information in a legalproceeding in which the Finance Boardor the United States is a party or a re-quest for information or records the Fi-nance Board must disclose under the


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Freedom of Information Act, PrivacyAct, or the Finance Board’s imple-menting regulations.

(2) This part does not, and may notbe relied upon to create any sub-stantive or procedural right or benefitenforceable against the Finance Board.

§ 905.3 Prohibition on unauthorizeduse and disclosure of unpublishedinformation.

(a) In general. Possession or controlby any person, supervised entity, Fed-eral Home Loan Bank member, govern-ment agency, or other entity of unpub-lished information does not constitutea waiver by the Finance Board of anyprivilege or its right to control, super-vise, or impose limitations on, the sub-sequent use and disclosure of the infor-mation.

(b) Current and former employees andagents. Except as authorized by thispart or otherwise by the FinanceBoard, no current or former FinanceBoard employee or agent may discloseor permit the disclosure in any mannerof any unpublished information to any-one other than a Finance Board em-ployee or agent for use in the perform-ance of official duties.

(c) Other persons or entities possessingunpublished information. (1) Except asauthorized in writing by the FinanceBoard, no person, supervised entity,Federal Home Loan Bank member,government agency, or other entity inpossession or control of unpublished in-formation may disclose or permit theuse or disclosure of such information inany manner or for any purpose.

(2) All unpublished information madeavailable under this part remains theproperty of the Finance Board and maynot be used or disclosed for any pur-pose other than that authorized underthis part without the prior written per-mission of the Finance Board.

(3) Reports of examination, super-visory correspondence, and other un-published information lawfully in thepossession of a supervised entity, Fed-eral Home Loan Bank member, or gov-ernment agency remains the propertyof the Finance Board and may not beused or disclosed for any purpose otherthan that authorized under this part

without the prior written permission ofthe Finance Board.

(4) Any person or entity that dis-closes or uses unpublished informationexcept as expressly authorized underthis part may be subject to the pen-alties provided in 18 U.S.C. 641 andother applicable laws. A current Fi-nance Board, Federal Home LoanBank, or Office of Finance employeealso may be subject to administrativeor disciplinary proceedings.

(d) Exception for supervised entities andFederal Home Loan Bank members. Whennecessary or appropriate for businesspurposes, a supervised entity, FederalHome Loan Bank member, or any di-rector, officer, employee, or agentthereof, may disclose unpublished in-formation, including information con-tained in, or related to, supervisorycorrespondence or reports of examina-tion, to a person or entity officiallyconnected with the supervised entityor Federal Home Loan Bank member asofficer, director, employee, attorney,agent, auditor, or independent auditor.A supervised entity, Federal HomeLoan Bank member, or a director, offi-cer, employee, or agent thereof, alsomay disclose unpublished informationto a consultant under this paragraph ifthe consultant is under a written con-tract to provide services to the super-vised entity or Federal Home LoanBank member and the consultant hasagreed in writing:

(1) To abide by the prohibition on thedisclosure of unpublished informationcontained in this section; and

(2) That it will not to use the unpub-lished information for any purposesother than those stated in its contractto provide services to the supervisedentity or Federal Home Loan Bankmember.

(e) Government agencies. The FinanceBoard may make reports of examina-tion, supervisory correspondence, andother unpublished information avail-able to another federal agency or astate agency for use where necessary inthe performance of the agency’s offi-cial duties. As used in this paragraph,the term agency does not include agrand jury.


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12 CFR Ch. IX (1–1–00 Edition)§ 905.4

§ 905.4 Requests for unpublished infor-mation by document or testimony.

(a) Form of requests. A request for un-published information must be sub-mitted to the Finance Board in writingand include a detailed description ofthe basis for the request. At a min-imum, the request must demonstratethat:

(1) The requested information ishighly relevant to the purpose forwhich it is sought;

(2) The requested information is notavailable from any other source;

(3) The need for the informationclearly outweighs the need to maintainits confidentiality; and

(4) The need for the informationclearly outweighs the burden on the Fi-nance Board to produce it.

(b) Requests for documents. If the re-quest is for unpublished information bydocument, the request must includethe elements in paragraph (a) of thissection and also must adequately de-scribe the record or records sought bytype and date.

(c) Requests for testimony. (1) If the re-quest is for unpublished information bytestimony, the request must includethe elements in paragraph (a) of thissection and also must set forth the in-tended use of the testimony, a sum-mary of the scope of the testimony re-quested, and a showing that no docu-ment or the testimony of other non-Fi-nance Board persons, including re-tained experts, could be provided andused in lieu of the testimony.

(2) Upon submitting a request to theFinance Board for unpublished infor-mation by testimony, the requestermust notify all other parties to thematter at issue of the request.

(3) After receipt of a request for un-published information by testimonybut before the requested testimony oc-curs, a party to the matter at issuewho did not join in the request and whowishes to question the witness beyondthe scope of the testimony sought bythe request, must timely submit itsown request for unpublished informa-tion pursuant to this part.

(d) Requests in connection with legalproceedings. If the request for unpub-lished information arises out of a legalproceeding, the Finance Board gen-erally will require that the legal pro-

ceeding already be filed before it willconsider the request. In addition to theelements in paragraph (a) of this sec-tion, requests in connection with legalproceedings must include the captionand docket number of the case; theforum; the name, address, phone num-ber, and electronic mail address, ifavailable, of counsel to all other par-ties to the legal proceeding; the re-quester’s interest in the case; a sum-mary of the issues in litigation; andthe reasons for the request, includingthe relevance of the unpublished infor-mation and how the requested informa-tion will contribute substantially tothe resolution of one or more specifi-cally identified issues in the legal pro-ceeding.

(e) Expedited requests. If a requesterseeks a response in less than 60 days,the request must explain why the re-quest was not submitted earlier andwhy the Finance Board should expeditethe request.

(f) Where to submit requests. Send re-quests for unpublished information tothe Office of General Counsel, FederalHousing Finance Board, 1777 F Street,NW., Washington, DC 20006.

(g) Additional information. (1) From therequester. The Office of General Counselmay consult with the requester to re-fine and limit the scope of the requestto make compliance less burdensomeor to obtain information necessary tomake an informed determination onthe request. A requester’s failure to co-operate in good faith with the Office ofGeneral Counsel may serve as the basisfor a determination not to grant therequest.

(2) From others. The Office of GeneralCounsel may inquire into the facts andcircumstances underlying a request forunpublished information and rely onsources of information other than therequester, including other parties tothe matter at issue.

§ 905.5 Consideration of requests.(a) Discretion. Each decision con-

cerning the availability of unpublishedinformation is at the sole discretion ofthe Finance Board based on a weighingof all appropriate factors. The decisionis a final agency action that exhaustsadministrative remedies for disclosureof the information.


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(b) Time to respond. The FinanceBoard generally will respond in writingto a request for unpublished informa-tion within 60 days of receipt absentexigent or unusual circumstances anddependent upon the scope and com-pleteness of the request.

(c) Factors the Finance Board may con-sider. The factors the Finance Boardmay consider in making a determina-tion regarding the availability of un-published information include:

(1) Whether and how the requestedinformation is relevant to the purposefor which it is sought;

(2) Whether information reasonablysuited to the requester’s needs otherthan the requested information isavailable from another source;

(3) Whether the requested informa-tion is privileged;

(4) If the request is in connectionwith a legal proceeding, whether theproceeding has been filed;

(5) The burden placed on the FinanceBoard to respond to the request;

(6) Whether production of the infor-mation would be contrary to the publicinterest; and

(7) Whether the need for the informa-tion clearly outweighs the need tomaintain the confidentiality of the in-formation.

(d) Disclosure of unpublished informa-tion by others. When a person or entityother than the Finance Board has aclaim of privilege regarding unpub-lished information and the informationis in the possession or control of thatperson or entity, the Finance Board, atits sole discretion, may respond to a re-quest for the information by author-izing the person or entity to disclosethe information to the requester pursu-ant to an appropriate confidentialityorder. Finance Board authorization todisclose information under this para-graph does not preclude the person orentity in possession of the unpublishedinformation from asserting its ownprivilege, arguing that the informationis not relevant, or asserting any otherargument to protect the informationfrom disclosure.

(e) Notice to supervised entities andFederal Home Loan Bank members. TheFinance Board generally will notify asupervised entity or Federal HomeLoan Bank member that it is the sub-

ject of a request, unless the FinanceBoard, in its sole discretion, deter-mines that to do so would advantage orprejudice any of the parties to the mat-ter at issue.

§ 905.6 Persons and entities with ac-cess to unpublished information.

(a) Notice to Finance Board. Any per-son, including a current or former Fi-nance Board employee or agent, or anyentity, including a supervised entity,Federal Home Loan Bank member, orgovernment agency that receives a re-quest for, or is served with a subpoena,order, or other legal process to discloseunpublished information by documentor testimony, must immediately notifythe Office of General Counsel.

(b) Response of person or entity servedwith request. Unless the Finance Boardhas authorized in writing disclosure ofthe requested information:

(1) A current or former FinanceBoard employee or agent or a super-vised entity that must respond to asubpoena, order, or other legal process,must decline to disclose the requestedinformation, citing this part as author-ity.

(2) A non-Finance Board person orentity may not disclose unpublished in-formation unless:

(i) The requester has sought the in-formation from the Finance Boardunder this part; and

(ii) After the Finance Board or theDepartment of Justice has had the op-portunity to appear and oppose disclo-sure, a Federal court has ordered theperson or entity to disclose the infor-mation.

(c) Finance Board response. If the Fi-nance Board does not authorize in writ-ing disclosure of the requested infor-mation, the Finance Board will providea copy of this part to the person or en-tity at whose instance the process wasissued and advise that person or entityor the court or other body that the Fi-nance Board has prohibited disclosureof the information under this part. TheFinance Board or the Department ofJustice may intervene in the matter atissue, attempt to have the compulsoryprocess withdrawn, or register otherappropriate objections.


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12 CFR Ch. IX (1–1–00 Edition)§ 905.7

§ 905.7 Availability of unpublished in-formation by testimony.

(a) Scope. (1) The scope of permissibletestimony is limited to that set forthin the written authorization grantedby the Finance Board. The FinanceBoard may act to ensure that the scopeof testimony provided is consistentwith the written authorization.

(2) A party to the matter at issuethat did not join in a request for un-published information who wishes toquestion a witness beyond the author-ized scope must request expanded au-thorization under this part. The Fi-nance Board will attempt to render de-cisions on such requests in an expe-dited manner.

(3) The Finance Board generally willnot authorize a current employee oragent to provide expert or opinion tes-timony for a private party.

(b) Manner in which testimony is given.(1) The Finance Board ordinarily willmake the authorized testimony of aformer or current employee or agentavailable only through written inter-rogatories or deposition. The FinanceBoard will not authorize testimony ata trial or hearing unless the requestershows that properly developed deposi-tion testimony could not be used orwould be inadequate at the trial orhearing.

(2) If the Finance Board has author-ized testimony in connection with alegal proceeding, the requester mustcause a subpoena to be served on theemployee in accordance with applica-ble rules of procedure, with a copy byregistered or certified mail to the Of-fice of General Counsel.

(3) If the authorized testimony isthrough deposition, the deposition or-dinarily will take place at the FinanceBoard’s offices at a time that willavoid substantial interference with theperformance of the employee’s officialduties.

(4) The requester is responsible for allcosts associated with an employee’s ap-pearance, including provision of a copyof a transcript of the deposition at therequest of the Office of General Coun-sel. The person whose deposition wastranscribed does not waive his or herright to review the transcript and noteerrors.

(c) Restrictions on use and disclosure.The Finance Board may condition itsauthorization of deposition testimonyon an agreement of the parties to ap-propriate limitations, such as an agree-ment to keep the transcript of the tes-timony under seal or to make the tran-script available only to the parties, thecourt or other body, or the jury. Uponrequest made pursuant to this part oron its own initiative, the FinanceBoard may authorize use of a deposi-tion transcript in another legal pro-ceeding or non-adversarial matter.

(d) Responsibility of litigants. If thetestimony is disclosed in connectionwith a legal proceeding, the requesteris responsible for:

(1) Promptly notifying all other par-ties to the legal proceeding of the dis-closure, and, after entry of a protectiveorder, providing copies of the testi-mony to the other parties who are sig-natories and subject to the protectiveorder; and

(2) At the conclusion of the legal pro-ceeding, retrieving the testimony fromthe court or other body’s file as soon asit is no longer required and certifyingto the Finance Board that every partycovered by the protective order has de-stroyed the unpublished information.

§ 905.8 Availability of unpublished in-formation by document.

(a) Scope. The scope of permissibledocument disclosure is limited to thatset forth in the written authorizationgranted by the Finance Board. The Fi-nance Board may act to ensure thatthe scope of documents provided is con-sistent with the written authorization.

(b) Restrictions on use and disclosure.The Finance Board may condition a de-cision to disclose unpublished informa-tion by document on entry of a protec-tive order satisfactory to the FinanceBoard by the court or other body pre-siding in a legal proceeding or, in non-adversarial matters, on a writtenagreement of confidentiality that lim-its access of third parties to the unpub-lished information. In a legal pro-ceeding in which a protective order al-ready has been entered, the Finance


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Board may condition a decision to dis-close unpublished information upon in-clusion of additional or amended provi-sions in the protective order. Upon re-quest made pursuant to this part or onits own initiative, the Finance Boardmay authorize use of the documents inanother legal proceeding or non-adver-sarial matter.

(c) Responsibility of litigants. If thedocuments are disclosed in connectionwith a legal proceeding, the requesteris responsible for:

(1) Promptly notifying all other par-ties to the legal proceeding of the dis-closure, and, after entry of a protectiveorder, providing copies of the docu-ments to the other parties that are sig-natories and subject to the protectiveorder; and

(2) At the conclusion of the legal pro-ceeding, retrieving the documents fromthe court or other body’s file as soon asthey are no longer required and certi-fying to the Finance Board that everyparty covered by the protective orderhas destroyed the unpublished informa-tion.

(d) Certification or authentication. Ifthe Finance Board has authorized dis-closure of unpublished information bydocument, it will provide certified orauthenticated copies of the documentupon request.

§ 905.9 Fees.(a) Fees for records search, copying,

and certification. Unless waived or re-duced, a requester must pay a fee tothe Finance Board for the costs ofsearching, copying, authenticating, orcertifying unpublished information inaccordance with 12 CFR 904.9. The Of-fice of Resource Management generallywill bill a requester upon completion ofthe production, but, in certain in-stances, may require a requester toremit payment prior to providing therequested information. To pay fees as-sessed under this section, a requestermust deliver to the Office of ResourceManagement, located at the FederalHousing Finance Board, 1777 F Street,NW., Washington, DC 20006, a check ormoney order made payable to the‘‘Federal Housing Finance Board.’’

(b) Witness fees and mileage. (1) Cur-rent Finance Board or federal employees.If the Finance Board authorizes disclo-

sure of unpublished information by tes-timony of a current Finance Board em-ployee or agent or a former FinanceBoard employee or agent who is still inthe employ of the United States, uponcompletion of the testimonial appear-ance the requester must remit prompt-ly to the Office of Resource Manage-ment payment for witness fees andmileage computed in accordance with28 U.S.C. 1821.

(2) Former employees or agents. If theFinance Board authorizes disclosure ofunpublished information by testimonyof a former Finance Board employee oragent who is not currently employedby the United States, upon completionof the testimonial appearance the re-quester must remit promptly to thewitness any witness fees or mileage duein accordance with 28 U.S.C. 1821.

PART 906—INFORMATION RE-GARDING MEETINGS OF THEBOARD OF DIRECTORS OF THEFEDERAL HOUSING FINANCEBOARD

Sec.906.1 Purpose and scope.906.2 Definitions.906.3 Open meetings.906.4 Closed meetings.906.5 Procedures for closing meetings.906.6 Notice of meetings.

AUTHORITY: 5 U.S.C. 552b.


§ 906.1 Purpose and scope.(a) This part is issued by the Federal

Housing Finance Board pursuant to theGovernment in the Sunshine Act (5U.S.C. 552b), that requires Federalagencies, headed by collegial bodies, topromulgate regulations to implementits provisions. The purpose of theseregulations is to provide the publicwith access to information regardingthe decisionmaking processes of theBoard of Directors of the FinanceBoard, while protecting the privacyrights of individuals and the ability ofthe Board of Directors to carry out itsresponsibilities.

(b) The Board of Directors shall notjointly conduct or dispose of officialFinance Board business other than inaccordance with this part.


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12 CFR Ch. IX (1–1–00 Edition)§ 906.2

§ 906.2 Definitions.For the purpose of this part:Board of Director or Director means a

member of the Board of Directors.Board of Directors means the five

member governing Board of Directorsof the Federal Housing Finance Board.

Chairperson means the Chairperson ofthe Board of Directors and includes theActing Chairperson.

Executive Secretary means the Execu-tive Secretary to the Board of Direc-tors, and includes the Acting Secretaryin the event the Executive Secretaryposition is vacant.

FHLBank means a Federal HomeLoan Bank.


Meeting means any deliberations ofthree or more Directors of the Board ofDirectors, that determines or results inthe joint conduct or disposition of offi-cial Finance Board business, but doesnot include:

(1) Discussions to determine whethermeetings will be open or closed orwhether information pertaining toclosed meetings will be disclosed;

(2) Discussions to determine whetherto schedule a meeting with less thanseven days notice, or to change thetime, place or subject matter of ascheduled meeting; and

(3) Disposition of Finance Board busi-ness by circulation of written mate-rials on proposed actions to individualDirectors for proposed actions, and no-tational voting by the individual Direc-tors on such proposed actions.

Public observation means the right ofthe general public to attend open meet-ings of the Board of Directors, but doesnot include the right to participatetherein unless invited to do so by theChairperson.

Sunshine Act means the Governmentin the Sunshine Act.

§ 906.3 Open meetings.(a) Except as provided in § 906.4, every

portion of every meeting of the Boardof Directors shall be open to public ob-servation.

(b) Unless otherwise specified in thepublic notice, open meetings of theBoard of Directors shall be held in theBoard Room of the Finance Board at

1777 F Street, NW., Washington, DC, atthe time specified in the public notice.

§ 906.4 Closed meetings.(a) The Board of Directors may close

a meeting, or portion thereof, to publicobservation, or withhold informationfrom the public pertaining to a meet-ing, when it determines that openingthe meeting, or a portion thereof, orthe public disclosure of informationpertaining to such meeting, or portionthereof, is likely to:

(1) Disclose matters that are:(i) Specifically authorized under cri-

teria established by an Executive Orderto be kept secret in the interests of na-tional defense or foreign policy; and

(ii) Are, in fact, properly classifiedpursuant to such Executive Order;

(2) Relate solely to the internal per-sonnel rules and practices of the Fi-nance Board;

(3) Disclose matters specifically ex-empt from disclosure by statute (otherthan the Freedom of Information Act(5 U.S.C. 552)), Provided that such stat-ute:

(i) Requires that the matters be with-held from the public in such a manneras to leave no discretion on the issue;or

(ii) Establishes particular criteria forwithholding matters from the public orrefers to particular types of matters tobe withheld;

(4) Disclose trade secrets or commer-cial or financial information that is ob-tained from a person and is privilegedor confidential;

(5) Involve accusing any person of acrime, or formally censuring any per-son;

(6) Disclose information of a personalnature where disclosure would con-stitute a clearly unwarranted invasionof personal privacy;

(7) Disclose investigatory recordscompiled for law enforcement purposes,or information which if written wouldbe contained in such records, but onlyto the extent that the production ofsuch records or information would:

(i) Interfere with enforcement pro-ceedings;

(ii) Deprive a person of a right to afair trial or an impartial adjudication;

(iii) Constitute an unwarranted inva-sion of personal privacy;


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(iv) Disclose the identity of a con-fidential source and, in the case of arecord compiled by a criminal law en-forcement authority in the course of acriminal investigation or by an agencyconducting a lawful national securityintelligence investigation, confidentialinformation furnished only by the con-fidential source;

(v) Disclose investigative techniquesand procedures; or

(vi) Endanger the life or physicalsafety of law enforcement personnel;

(8) Disclose information contained inor related to examination, operating,or condition reports prepared by, on be-half of, or for the use of the FinanceBoard or another agency responsiblefor the regulation or supervision ofFHLBanks or other financial institu-tions.

(9) Disclose information the pre-mature disclosure of which would belikely to:

(i) (A) Lead to significant financialspeculation in currencies, securities, orcommodities;

(B) Significantly endanger the sta-bility of any of the FHLBanks or anyother financial institution; or

(ii) Significantly frustrate implemen-tation of a proposed Finance Board ac-tion, except that this paragraph shallnot apply in any instance where the Fi-nance Board has already disclosed tothe public the content or nature of itsproposed action, or where the FinanceBoard is required by law to make suchdisclosure on its own initiative prior totaking final action on such proposal; or

(10) Specifically concern the issuanceof a subpoena by the Board of Direc-tors, or the Finance Board’s participa-tion in a civil action or proceeding, anaction in a foreign court or inter-national tribunal, or an arbitration, orthe initiation, conduct or disposition ofa particular case of formal adjudica-tion pursuant to the procedures in 5U.S.C. 554 or otherwise involving a de-termination on the record after oppor-tunity for a hearing.

(b) A meeting or portions of a meet-ing shall not be closed nor informationwithheld pursuant to paragraph (a) ofthis section if the Board of Directorsfinds that the public interest requiresotherwise.

§ 906.5 Procedures for closing meet-ings.

(a) Regular procedures. (1) Except asprovided in paragraph (b) of this sec-tion, a meeting of the Board of Direc-tors, or portion thereof, will be closedto public observation, and informationpertaining to such meeting, or portionthereof, will be withheld from the pub-lic, when a majority of the Board of Di-rectors determines by recorded votethat such meeting, or portion thereof,or the withholding of informationqualifies for exemption under § 906.4,and the Board of Directors does notfind that the public interest requiresotherwise.

(2) Except as provided in paragraph(a)(3) of this section, a separate vote ofthe Board Directors will be taken withrespect to the closing or the with-holding of information as to eachmeeting or portion thereof that is pro-posed to be closed to public observa-tion, or with respect to informationthat is proposed to be withheld pursu-ant to paragraph (a) of this section.

(3) A single vote may be taken withrespect to a series of meetings, a por-tion or portions of which are proposedto be closed to public observation, orwith respect to any information con-cerning such series of meetings pro-posed to be withheld, so long as eachmeeting in such series involves thesame particular matters and is sched-uled to be held no more than thirtydays after the initial meeting in suchseries.

(4) The vote of each Board Directortaken pursuant to paragraph (a) of thissection shall be recorded, and no prox-ies shall be allowed.

(5) Whenever any person’s interestsmay be directly affected by any portionof a meeting for any of the reasons re-ferred to in paragraphs (a) (5), (6), or (7)of § 906.4, such person may send a writ-ten request to the Executive Secretaryasking that such portion of the meet-ing be closed to public observation. TheExecutive Secretary will transmit therequest to each Board Director, andupon the request of a Director, a re-corded vote will be taken of the Boardof Directors whether to close the meet-ing to public observation.

(6)(i) Within one day of any votetaken pursuant to paragraph (a) of this


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12 CFR Ch. IX (1–1–00 Edition)§ 906.5

section, the Finance Board will makepublicly available through the Execu-tive Secretary a written copy of suchvote reflecting the vote of each BoardDirector.

(ii) If a meeting or portion thereof isto be closed to public observation, theFinance Board within one day of thevote taken pursuant to paragraph (a) ofthis section will make publicly avail-able through the Executive Secretary afull, written explanation of its actionclosing the meeting, or portion thereof,together with a list of all persons ex-pected to attend the meeting and theiraffiliation, except to the extent suchinformation is determined by theBoard to be exempt from disclosureunder paragraph (a) of § 906.4.

(7) Any person may request in writ-ing to the Executive Secretary that anannounced closed meeting, or portionthereof, be open to public observation.The Executive Secretary will transmitthe request to each Board Director, andupon the request of a Director, a re-corded vote will be taken of the Boardof Directors on whether to open themeeting to public observation.

(b) Expedited procedures. (1) Since amajority of the meetings, of the Boardof Directors may be closed pursuant toparagraphs (a) (4), (8), (9)(i) or (10) of§ 906.4, 5 U.S.C. 552b(d)(4) allows the Fi-nance Board to use expedited proce-dures in closing such meetings. The fol-lowing are examples of meetings of theBoard of Directors, or portions thereof,that may be closed to the public underthese expedited procedures: sale ofFHLBank consolidated bonds or notes,and review of examination, operatingor condition reports of FHLBanks.

(2) A decision to close a meeting, orportion thereof, under paragraph (b) ofthis section shall be made at the begin-ning of the meeting, or portion thereof,by majority vote of the Directors.

(3)(i) The Finance Board shall main-tain a record of each of the votes takenby its Board of Directors to close ameeting, or portion thereof, or to with-hold public access to informationthereof, under paragraph (b) of this sec-tion.

(ii) A copy of such record, reflectingthe vote of each Board Director on thequestion of closing a meeting, or por-tion thereof, or withhholding public ac-

cess to information thereof, under thisparagraph (b) of this section, shall bemade available to any member of thepublic upon request to the ExecutiveSecretary.

(4) Public announcement of the time,place and subject matter of meetings,or portions thereof, closed under thisparagraph (b) of this section shall bemade at the earliest practical time.

(c) Records of closed proceedings—(1)Transcripts or electronic recording. Ex-cept as provided in paragraph (c)(2) ofthis section, the Finance Board shallmake and maintain a complete tran-script or verbatim electronic recordingof the proceedings at each meeting, orportion thereof, closed to public obser-vation under paragraph (a) or (b) ofthis section.

(2) Minutes. The Finance Board maymake and maintain a set of completeminutes, in lieu of such transcript orelectronic recording, with respect tomeetings, or portions thereof, closed orinformation withheld under paragraphs(a) (8), (9)(i) or (10) of § 906.4. Such set ofminutes shall fully and clearly describeall matters discussed and provide a fulland accurate summary of any actiontaken, and the reasons therefor, includ-ing a description of each of the viewsexpressed on any item and the recordof any roll call vote (reflecting thevote of each Board Director on thequestion). All documents considered inconnection with any action shall beidentified in such set of minutes.

(3) Availability of Records. (i) Thetranscript, electronic recording or setof minutes of an item discussed, or oftestimony received, at a meeting, shallbe made available promptly to the pub-lic through the Executive Secretary ex-cept in cases where the Board of Direc-tors determines that the item or testi-mony contains information which maybe withheld under § 906.4(a).

(ii) Copies of such transcript, elec-tronic recording or set of minutes, dis-closing the identity of each speaker,shall be furnished to any person at theactual cost of duplication or tran-scription.

(iii) The Finance Board shall main-tain a complete copy of the transcript,verbatim electronic recording or com-plete set of minutes of each meeting, orportion thereof closed to the public, for


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at least two years after such meeting,or until one year after the conclusionof any proceeding of the Board of Di-rectors with respect to which the meet-ing or portion thereof was held, which-ever occurs later.

(d) Legal certification for closing meet-ing. (1) For every meeting, or portionthereof, of the Board of Directorsclosed pursuant to paragraphs (a) or (b)of this section, the General Counsel (orin the General Counsel’s absence or in-capacity the senior legal officer avail-able) shall publicly certify that themeeting or portion thereof may beclosed to the public pursuant to theSunshine Act and this part, and specifi-cally state the relevant exemption insupport thereof.

(2) A copy of the certification, to-gether with a statement from theChairperson or, when appropriate, theActing Chairperson or designee, settingforth the time and place of the meetingand the persons present, shall be re-tained in the permanent files of the Fi-nance Board.

§ 906.6 Notice of meetings.

(a) Scope of notice. (1) Except as pro-vided in paragraph (a) of § 906.4 thatsuch information is determined to beexempt from disclosure, each openmeeting of the Board of Directors, oreach meeting closed under the regularprocedures in paragraph (a) of § 906.5,will be preceded by public notice as de-scribed in this section.

(2) The notices for meetings of theBoard of Directors closed under the ex-pedited procedures pursuant to para-graph (b) of § 906.5 will be made in ac-cordance with § 906.5(b)(4).

(b) Content of notice. A notice of anopen meeting or a meeting closedunder the regular procedures in para-graph (a) of § 906.5 will state the time,place, and subject matter of the meet-ing, whether it is to be open or closedto the public, and the name and tele-phone number of the Executive Sec-retary for information about the meet-ing. Each such notice shall be posted inthe lobby of the Finance Board offices,and may be made available in additionby other means or at other locations asdeemed desirable. Immediately fol-lowing the posting of each such notice,

the Finance Board will publish the no-tice in the FEDERAL REGISTER.

(c) Time—(1) Seven days notice. Exceptas provided in paragraph (c)(2) of thissection, a public notice of open meet-ings or meetings closed under para-graph (a) of § 906.5 will be made at leastseven days in advance of each meeting.

(2) Less than seven days notice. When amajority of the Board of Directors de-termine by recorded vote that FinanceBoard business requires a meeting tobe called at any earlier date, the seven-day prior notice rule may be suspendedand notice shall be made at the earliestpracticable time.

(d) Amendment of notice—(1) Time andplace. A change in the time or place ofa meeting following public notice maybe made only if announced at the ear-liest practicable time.

(2) Subject matter. A change in thesubject matter of a meeting or a re-de-termination to open or close a meeting,or portions thereof, may be made, afterpublic notice, only if:

(i) At least a majority of the BoardDirectors determines by recorded votethat Finance Board business so re-quires and that no earlier notice of thechange was possible; and

(ii) The Finance Board publicly an-nounces the change and the vote ofeach Board Director by posting a no-tice thereof in the lobby of the FinanceBoard offices at the earliest prac-ticable time.

(3) Timing of amendment. A public an-nouncement of a change in either thetime, place or subject matter of ameeting may be made after the com-mencement of the meeting affected.

(4) Publication of amendment. Eachchange to a notice of a meeting will bepublished in the FEDERAL REGISTER,following the Finance Board’s publicannouncement of the change.

PART 908—INFORMATION COLLEC-TION REQUIREMENTS UNDER THEPAPERWORK REDUCTION ACT[RESERVED]

PART 909—PRIVACY ACTPROCEDURES

Sec.909.1 General.909.2 Definitions.


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909.3 Procedures for requesting individualrecords in a system of records; appeal ofdenials.

909.4 Time, place and identification require-ments for requests.

909.5 Disclosure of requested records.909.6 Procedures for requesting amendment

to a record in a system of records; appealof denials.

909.7 Fees.909.8 Penalties.909.9 Exemptions.

AUTHORITY: 5 U.S.C. 552a.


§ 909.1 General.(a) Purpose. This part implements the

provisions of the Privacy Act, 5 U.S.C.552a, which require each executiveagency to promulgate regulations forthe protection of the privacy of indi-viduals on whom the agency maintainsinformation that is retrieved by ref-erence to an individual’s name or anidentifying particular assigned to theindividual.

(b) Scope. These regulations establishprocedures by which: an individualmay seek access under the Privacy Actto records pertaining to him or her,may request correction or amendmentof such records, or may seek an ac-counting of disclosures of such recordsmaintained by the agency.

§ 909.2 Definitions.As used in this part:(a) Amendment means any correction,

addition or deletion of informationcontained in a record, as defined inparagraph (g) of this section.

(b) Board of Directors means the fivemember governing Board of Directorsof the Federal Housing Finance Board.

(c) Business days means all days ex-cept Saturdays, Sundays, or FederalGovernment holidays.

(d) Finance Board means the FederalHousing Finance Board.

(e) Individual means a natural personwho is either a citizen of the UnitedStates of America or an alien lawfullyadmitted to the United States for per-manent residence. The term includesthe parent(s) having custody of anyminor or the legal guardian of any in-dividual who has been declared to beincompetent due to physical or mental

incapacity or age by a court of com-petent jurisdiction.

(f) Maintain means to keep or holdand preserve in an existing state, andincludes the terms ‘‘collect,’’ ‘‘use,’’‘‘disseminate’’ and ‘‘control.’’

(g) Record means any item, collec-tion, or grouping of information aboutan individual that is maintained by theFinance Board within a system ofrecords, and that contains such indi-vidual’s name, or identifying number,symbol, or other identifying particularassigned to the individual, including afingerprint, voice print or photograph.

(h) Records systems manager means theemployee responsible for maintaining adesignated system of records at the Fi-nance Board, as such official or em-ployee may be identified through pub-lic notice in the FEDERAL REGISTERfrom time to time by the FinanceBoard entitled: ‘‘Privacy Act of 1974:Systems of Records.’’

(i) Routine use means the use of arecord for a purpose compatible withthe purpose for which it was originallycreated.

(j) System of records means a group ofrecords maintained or controlled bythe Finance Board from which informa-tion is or may be retrieved by the nameof an individual or some identifyingnumber, symbol or other identifyingparticular assigned to the individual.

(k) Designated system of records meansa system of records, as defined in para-graph (j) of this section, that has beenlisted in the FEDERAL REGISTER as re-quired by 5 U.S.C. 552a(e).

§ 909.3 Procedures for requesting indi-vidual records in a system ofrecords; appeal of denials.

(a) Current or former employees. Anycurrent or former Finance Board em-ployee seeking access to such employ-ee’s official personnel record main-tained by the Finance Board shall sub-mit a request to the Finance Board inthe manner prescribed by regulationsof the Office of Personnel Management,at title 5, Code of Federal Regulations.

(b) Other requests. Other requests foraccess to a record that contains infor-mation on the requesting individualand is maintained in a Finance Boarddesignated system of records shall bewriting, shall contain a reasonable,


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succinct description of the recordsought, and shall identify the par-ticular designated system of records inwhich the record may be maintained,as identified in a notice published bythe Finance Board from time to timein the FEDERAL REGISTER.

(c) Accounting for previous disclosures.An individual may use the proceduresof this section to request an account-ing from the Finance Board of previousdisclosures of records pertaining tosuch individual in a designated systemof records, pursuant to the PrivacyAct, 5 U.S.C. 552a(c).

(d) Medical records procedures. Infor-mation on an individual contained inmedical records will be disclosed to arequesting individual in accordancewith the procedures in paragraph (b) ofthis section and the requirements ofthis part, except, if in the judgment ofthe Finance Board the disclosure ofsuch information could have an adverseeffect on the individual, the FinanceBoard may withhold such informationfrom the individual and transmit it toa licensed medical physician named bythe requesting individual.

(e) Response policy. The FinanceBoard will acknowledge, or substan-tially respond to if practicable, a re-quest made under this section withinten (10) business days of its receipt.

(f) Initial review. (1) The ExecutiveSecretary will make the initial deter-mination whether to grant or deny arequest for records under this part,after consultation with the systemsmanager of the appropriate designatedsystem of records.

(2) The Executive Secretary will no-tify the requesting individual whetherthe Finance Board:

(i) Has the requested record in a Fi-nance Board designated system ofrecords; and

(ii) Will release the requested recordor not.

(3) If the request is denied, the Exec-utive Secretary will inform the re-questing individual of the reasons fornondisclosure, and describe the individ-ual’s right to appeal the determina-tion.

(g) Appeal process. (1) An individualwho has been denied a request madepursuant to paragraph (b) of this sec-tion, may appeal to the Board of Direc-

tors, or designee, within 30 businessdays of being notified of the denial pur-suant to paragraph (f) of this section.

(2) The appeal shall be in writing,shall be mailed or delivered to the Ex-ecutive Secretary, and shall give thereasons why the initial determinationshould be overturned.

(3) The Board of Directors, or such of-ficial designated by the Board of Direc-tors, shall decide on the appeal within30 business days following receipt ofthe appeal by the Executive Secretary.The Board of Directors or designatedofficial may extend the time period forgood cause, after giving notice, andreason therefor, to the individual mak-ing the appeal.

(4) If a decision is made to affirm theinitial denial of a request for a recordby an individual, the Board of Direc-tors or designated official shall notifythe individual making the appeal ofthe decision and the reason therefor,and shall inform the individual of theright of judicial review of the appeal.

§ 909.4 Time, place and identificationrequirements for requests.

(a) Time. An individual may hand de-liver a written request for access to oramendment of records, made under§ 909.3(b) or § 909.6 of this part, to theFinance Board on any business day, be-tween the hours of 8:30 a.m. and 5:30p.m.

(b) Place. All written requests for ac-cess to or amendment of records shallbe mailed or hand delivered to the Ex-ecutive Secretary, Federal Housing Fi-nance Board, 1777 F Street, NW., Wash-ington, DC 20006.

(c) Identification—(1) Mailed requests.All requests for access to or amend-ment of records that are mailed to theFinance Board shall be signed by theindividual who is the subject of the re-quested record and who is making therequest. The validity of each such sig-nature shall be attested to by a notarypublic.

(2) Hand delivered requests. All re-quests for access to or amendment ofrecords that are hand delivered to theFinance Board by the requesting indi-vidual shall be authenticated as to theidentity of the requesting individual by


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two forms of identification with photo-graphs, or by one such form of identi-fication and a properly authenticatedbirth certificate.

§ 909.5 Disclosure of requested record.(a) Requesting individual. Except to

the extent that records pertaining toan individual are exempt from disclo-sure under § 909.9 of this part, or werecompiled in reasonable anticipation ofa civil action or proceedings, the Fi-nance Board will make such recordsavailable upon request, pursuant to§ 909.3 of this part in either of the fol-lowing methods, at the option of therequesting individual:

(1) By mailing a copy of the record tothe address of the requesting indi-vidual; or

(2) By making the record availablefor inspection and copying by the re-questing individual, as soon as prac-ticable, at the offices of the ExecutiveSecretary on regular business days,from 9:30 a.m. until 4:30 p.m. The re-questing individual may choose to beaccompanied by another person duringthe inspection and copying by submit-ting a signed statement authorizingthe presence of such person.

(b) Other individuals. (1) The FinanceBoard will disclose a record to a personor entity other than the requesting in-dividual, in the manner provided byparagraph (a) of this section, onlywhen the Finance Board:

(i) Receives a copy of a written au-thorization for disclosure to such per-son or entity signed by the requestingindividual and attested to by a notarypublic; and

(ii) Receives adequate identificationfrom such person or entity.

(2) The restrictions contained inparagraph (b)(1) of this section on dis-closure of a record shall not apply to:

(i) A disclosure to Finance Board of-ficers or employees who have a need forthe record in the performance of theirduties;

(ii) A disclosure otherwise requiredby the Freedom of Information Act (5U.S.C. 552);

(iii) A routine use listed with respectto a designated system of records;

(iv) A disclosure to the Bureau of theCensus for purposes of planning or car-rying out a census or survey or related

activity pursuant to the provisions oftitle 13 of the United States Code;

(v) A disclosure to a recipient whohas provided the Finance Board withadvance written assurance that therecord will be used solely as a statis-tical research or reporting record, andthat the record is to be transferred in aform that is not individually identifi-able;

(vi) A disclosure to the National Ar-chives and Records Administration as arecord with sufficient historical orother value to warrant its continuedpreservation by the Federal Govern-ment or for evaluation by the Archivistof the United States to determinewhether it has such value.

(vii) A disclosure to another agencyor to an instrumentality of any govern-ment jurisdiction within or under thecontrol of the United States for civil orcriminal law enforcement activity au-thorized by law if the head of suchagency or instrumentality has made awritten request to the Finance Boardspecifying the particular record re-quested and the law enforcement activ-ity for which it is sought;

(viii) A disclosure to any person pur-suant to a showing of compelling cir-cumstances affecting the health andsafety of an individual if notificationof the disclosure is transmitted to thelast known address of the individualwho is the subject of the disclosedrecord;

(ix) A disclosure to a joint committeeof Congress, or any subcommitteethereof, or to either House of Congress,or to any committee or joint com-mittee, or subcommittee thereof, butonly to the extent of matter withinsuch joint committee’s, committee’s orsubcommittee’s jurisdiction;

(x) A disclosure to the ComptrollerGeneral, or authorized representative,made in the course of performing theduties of the General Accounting Of-fice.

(xi) Pursuant to the order of a courtof competent jurisdiction; or

(xii) To a consumer reporting agencyin accordance with 31 U.S.C. 3711(f).

(c) The Finance Board, with respectto each system of records under itscontrol shall:


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(1) Except for disclosures made underparagraphs (b)(1) or (b)(2) of this sec-tion, keep an accurate accounting of:

(i) The date, nature, and purpose ofeach disclosure of a record to any per-son or to another agency made underparagraph (b) of this section; and

(ii) The name and address of the per-son or agency to whom the disclosureis made;

(2) Retain the accounting made underparagraph (c)(1) of this section for atleast five years or the life of therecord, whichever is longer, after thedisclosure for which the accounting ismade; and

(3) Except for disclosures made underparagraph (b)(2)(vii) of this section,make the accounting made under para-graph (c)(1) of this section available tothe individual named in the record athis or her request.

(4) When a record has been amendedor corrected or when a statement ofdisagreement has been filed, the Fi-nance Board will advise all prior recipi-ents of the affected record whose iden-tities may be determined pursuant tothe disclosure accountings required bythe Privacy Act or any other account-ing previously made, of the amendmentor correction or the filing of the state-ment of disagreement. Any disclosureof disputed information occurring aftera statement of disagreement has beenfiled will clearly identify the specificinformation disputed and be accom-panied by a copy of the statement ofdisagreement and a copy of the state-ment of explanation, if any, as setforth in § 909.6 of this part.

§ 909.6 Procedures for requestingamendment to a record in a systemof records; appeal of denials.

(a) Scope. This section applies only toamendment of records on an individualmaintained in a Finance Board systemof records used in making a determina-tion about such individual.

(b) Individual request. (1) Any indi-vidual may request the Finance Boardto amend any portion of a record in adesignated system of records per-taining to that individual, where suchportion of the record is not accurate,relevant, timely or complete.

(2) A request to amend a record pur-suant to this section shall be in writ-

ing, shall identify the particular des-ignated system of records containingthe record which the individual re-quests to amend and the portion ofthat record to be amended, and shalldescribe the reasons for the requestedamendment.

(c) Prior proceeding. Nothing in thissection shall permit a collateral attackupon any matter decided in a prior ju-dicial, quasi-judicial or other pro-ceeding.

(d) Response policy. The FinanceBoard shall acknowledge, or substan-tially reply to, if practicable, a requestfor amendment of records under thissection.

(e) Initial review. (1) The ExecutiveSecretary shall acknowledge all re-quests by individuals for amendment ofrecords. The Executive Secretary shallrefer all requests to the appropriatesystems manager of the designated sys-tem of records containing the record tobe reviewed, for disposition of the re-quest within 10 business days of the re-ferral. The systems manager shallpromptly review the request and re-view the record for accuracy, rel-evance, timeliness, completeness or ne-cessity.

(2) The systems manager willpromptly provide to the Executive Sec-retary a recommendation whether therecord should be amended and shallstate any reasons for denying the re-quest in any part.

(3) The Executive Secretary willpromptly notify the requesting indi-vidual of his decision and reasons forany denial, and describe the individ-ual’s right to appeal any denial.

(f) Appeal process. (1) An individualwho has been denied a request madepursuant to this section may appeal tothe Board of Directors, or an officialdesignated by the Board of Directors,within 30 business days of being noti-fied of the denial pursuant to para-graph (e)(3) of this section.

(2) The appeal shall be in writing,shall be mailed to the Executive Sec-retary, and shall give the reasons whythe initial determination should beoverturned.

(3) The Board of Directors, or des-ignated official, shall decide the appealwithin 30 business days of its receipt bythe Executive Secretary. The Board of


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12 CFR Ch. IX (1–1–00 Edition)§ 909.7

Directors or designated official mayextend the 30 day limit for good cause,after giving notice, and the reasonstherefor, to the individual making theappeal.

(4) If a decision is made to affirm theinitial denial of a request for a recordby an individual, the Board of Direc-tors or designated official shall notifythe individual making the appeal ofthe decision and the reason therefor,and shall inform the individual of theright of judicial review of the appeal.

(g) Statements. (1) Within 30 businessdays after being denied an appeal pur-suant to paragraph (f) of this section,an individual may submit a concisewritten statement of disagreement set-ting forth the individual’s reasons fordisagreeing with the Finance Board’srefusal to amend the record.

(2) Such statement shall be providedto persons or other agencies or entitiesto whom the record is disclosed.

(3) The Finance Board may, if deemedappropriate, prepare a concise state-ment of explanation of the reason(s)why the requested amendment or cor-rection was not made. Any statementof explanation will be included in thesystem of records in the same manneras the statement of disagreement. Acopy of the statement of explanationand of the notation of the dispute asmarked on the original record will beprovided to the individual who re-quested correction or amendment ofthe record.

§ 909.7 Fees.The Finance Board, upon a request

for records disclosable pursuant tothese regulations, shall charge a fee of$0.10 per page for duplicating, unless:

(a) The Finance Board determinesthat it shall grant access to the recordonly by making a copy thereof;

(b) The total fee will not exceed $2.00;or

(c) The Finance Board determines, inits sole discretion, that a reduction orwaiver of the fees is warranted for goodcause.

§ 909.8 Penalties.Subsection (i)(3) of the Privacy Act

of 1974 (5 U.S.C. 552a(i)(3)) imposescriminal penalties for obtaining Fi-nance Board records on individuals

under false pretenses. It provides asfollows:

Any person who knowingly and willfully re-quests or obtains any record concerning anindividual from an agency under false pre-tense shall be guilty of a misdemeanor andfined not more than $5,000.00.

§ 909.9 Exemptions.The following information is exempt

from disclosure:(a) The Office of Inspector General

Investigative Files system of records isexempt from all sections of the PrivacyAct (5 U.S.C. 552a) except the following:(b) relating to conditions of disclosure;(c) (1) and (2) relating to keeping andmaintaining a disclosure accounting;(e)(4) (A) through (F) relating to pub-lishing a system notice setting forthname, location, categories of individ-uals and records, routing uses and poli-cies regarding storage, retrievability,access controls, retention and disposalof the records; (e) (6), (7), (9), (10) and(11) relating to dissemination andmaintenance of records, and relating tocriminal penalties. This system ofrecords is also exempt from §§ 909.3,909.4, 909.5 (a) and (c) (3) and (4), and909.6 of this part. This exemption ap-plies to those records and informationcontained in the system of records per-taining to the enforcement of criminallaws.

(b) To the extent that there mayexist within this system of records andinvestigative files compiled for law en-forcement purposes, other than mate-rial within the scope of subsection(j)(2) of the Privacy Act, the InspectorGeneral Investigative Case Files sys-tem of records is exempt from the fol-lowing sections of the Privacy Act (5U.S.C. 552(a)): (c)(3) relating to accessto the disclosure accounting, (d) relat-ing to access to records, (e)(1) relatingto the type of information maintainedin the records; (e)(4) (G), (H) and (I) re-lating to publishing the system noticeinformation as to agency procedures ofaccess and amendment and informationas to the categories of sources orrecords, and (f) relating to developingagency rules for gaining access andmaking corrections. This system ofrecords is also exempt from §§ 909.3,909.4, 909.5 (a) and (c)(3), and 909.6 ofthis part.


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(c) Reason for exemptions. (1) The Of-fice of Inspector General is a compo-nent of the Finance Board which per-forms, as its principal function, activ-ity pertaining to the enforcement ofcriminal laws, within the meaning of 5U.S.C. 552a(j)(2). This exemption ap-plies only to those records and infor-mation contained in the system ofrecords pertaining to criminal inves-tigations. This system of records is ex-empt for one or more of the followingreasons:

(i) To prevent interference with lawenforcement proceedings.

(ii) To avoid unwarranted invasion ofpersonal privacy by disclosure of infor-mation about third parties, includingother subjects of investigation, inves-tigators, and witnesses.

(iii) To protect the identity of Fed-eral employees who furnish a com-plaint or information to the Office ofthe Inspector General, consistent withsection 7(b) of the Inspector GeneralAct of 1978, as amended, 5 U.S.C. App. 3.

(iv) To protect the confidentiality ofnon-Federal employee sources of infor-mation.

(v) To assure access to sources ofconfidential information, includingthose contained in Federal, State andlocal criminal law enforcement infor-mation systems.

(vi) To prevent disclosure of law en-forcement techniques and procedures.

(vii) To avoid endangering the life orphysical safety of confidential sourcesand law enforcement personnel.

(2) Investigative records within thissystem of records which are compiledfor law enforcement purposes, otherthan material within the scope of sub-section (j)(2), are exempt under theprovisions of 5 U.S.C. 552a(k)(2); pro-vided, however, that if any individualis denied any right, privilege, or ben-efit that they would otherwise be enti-tled by Federal law, or for which theywould otherwise be eligible, as a resultof the maintenance of such material,such material shall be provided to suchindividual except to the extent thatthe disclosure of such material wouldreveal the identity of a source who fur-nished information to the Governmentunder an express promise that the iden-tity of the source would be held in con-fidence, or, prior to January 1, 1975,

under an implied promise that theidentity of the source would be held inconfidence. This system of records isexempt for one or more of the followingreasons:

(i) To prevent interference with lawenforcement proceedings.

(ii) To protect investigatory materialcompiled for law enforcement purposes.

(iii) To avoid unwarranted invasionof personal privacy, by disclosure of in-formation about third parties, includ-ing other subjects of investigation, lawenforcement personnel and sources ofinformation.

(iv) To fulfill commitments made toprotect the confidentiality of sources.

(v) To protect the identity of Federalemployees who furnish a complaint orinformation of OIG, consistent withsection 7(b) of the Inspector GeneralAct of 1978, as amended, 5 U.S.C. App. 3.

(vi) To assure access to sources ofconfidential information, includingthose contained in Federal, State andlocal criminal law enforcement sys-tems.

(vii) To prevent disclosure of law en-forcement techniques and procedures.

(viii) To avoid endangering the life orphysical safety of confidential sourcesand law enforcement personnel.

(d) Records within a Finance BoardSystem of records comprised of inves-tigatory material compiled solely forthe purpose of determining suitabilityor eligibility for Federal civilian em-ployment, Federal contractors, or ac-cess to classified information, are ex-empt under the provisions of 5 U.S.C.552a(k)(5), but only to the extent thatdisclosure would reveal the identity ofa source who furnished information tothe Government under an expresspromise that the identity of the sourcewould be held in confidence, or, priorto January 1, 1975, under an impliedpromise that the identity of the sourcewould be held in confidence. This sys-tem of records is exempt for one ormore of the following reasons:

(1) To fulfill commitments made toprotect the confidentiality of sources.

(2) To assure access to sources of con-fidential information; including thosecontained in Federal, State, and localcriminal law enforcement informationsystems.


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(e) Testing or examination materialused solely to determine or assess indi-vidual qualifications for appointmentto employment at the Finance Board,or promotion therein—the disclosure ofwhich would compromise the objec-tivity or fairness of the testing, evalua-tion or examining process is exemptunder 5 U.S.C. 552a(k)(6).

PART 910—CONSOLIDATED BONDSAND DEBENTURES

Sec.910.0 Definitions.910.1 Issuance of consolidated bonds.910.2 Form of consolidated bonds.910.3 Transactions in consolidated bonds.910.4 Lost, stolen, destroyed, mutilated, or

defaced bonds.910.5 Administrative provision.910.6 Reservation of right to revoke or

amend; limitations thereon.910.7 Joint and several liability.

AUTHORITY: 12 U.S.C. 1422a, 1422b and 1431.

§ 910.0 Definitions.(a) Finance Board means the Federal

Housing Finance Board.(b) Bank means Federal Home Loan

Bank.(c) Consolidated bond means any bond

or note issued on behalf of one or moreBanks by the Finance Board pursuantto section 11(c) of the Federal HomeLoan Bank Act, as amended (the Act)(12 U.S.C. 1431(c)).

(d) Senior bonds means consolidatedbonds issued pursuant to 12 U.S.C. 1431and this part and not defeased, otherthan bonds specifically subordinated toany then outstanding consolidatedbonds.

(e) Unsecured, senior liabilities meansall obligations of the Banks recognizedas a liability under Generally AcceptedAccounting Principles, except:

(1) Liabilities that are covered by aperfected security interest;

(2) Consolidated bonds;(3) Bonds issued pursuant to 12 U.S.C.

1431(a); and(4) Allowance for losses for off-bal-

ance sheet obligations.(f) Direct Obligation means an obliga-

tion of a Bank to make any principalor interest payment due on a consoli-dated bond, whether such obligationarises from:

(1) The Bank’s receipt of sale pro-ceeds from the issuance of that consoli-dated bond or the assumption of theobligation in a voluntary transactionsubsequent to the issuance of the bond;

(2) An obligation to make an assist-ance payment to any other Bank,whether made pursuant to an agree-ment between one or more Banks orpursuant to a Finance Board paymentorder; or

(3) An assistance payment reimburse-ment obligation.

(g) Non-complying Bank means anyBank that fails to certify, pursuant to§ 910.7(b)(1) of this part, that it is ableto pay all of its current obligations, in-cluding direct obligations, in full whendue; that fails to make consolidatedbond payments in full when due; that isrequired to file a notice pursuant to§ 910.7(b)(2) or a consolidated bond pay-ment plan pursuant to § 910.7(c); or thatis determined by the Finance Board torequire assistance in meeting its directobligations on consolidated bonds.

[57 FR 62186, Dec. 30, 1992, as amended at 64FR 55130, Oct. 12, 1999]

§ 910.1 Issuance of consolidated bonds.(a) General. The Board will determine

and authorize the issuance of all con-solidated bonds, dates of issue, matu-rities, rates of interest, terms and con-ditions thereof, and the manner inwhich such bonds shall be issued, sub-ject to the provisions of 31 U.S.C. 9108.The Board in its discretion may dele-gate this responsibility.

(b) Leverage limit. The Board shall notissue senior bonds, other than bondsissued to refund consolidated bondspreviously issued, if, immediately fol-lowing such issuance, the aggregateamount of senior bonds and unsecured,senior liabilities of the Federal HomeLoan Banks exceeds twenty (20) timesthe total paid-in capital stock, re-tained earnings and reserves (excludingloss reserves and deposit reserves pur-suant to 12 U.S.C. 1431(g)), of all theFederal Home Loan Banks.

(c) Negative pledge requirement. TheFederal Home Loan Banks shall at alltimes maintain assets of the followingtypes, free from any lien or pledge, ina total amount at least equal to theamount of senior bonds outstanding:

(1) Cash;


629


(2) Obligations of or fully guaranteedby the United States;

(3) Secured advances;(4) Mortgages as to which one or

more Federal Home Loan Banks haveany guaranty or insurance, or commit-ment therefore, by the United Statesor any agency thereof;

(5) Investments described in section16(a) of the Federal Home Loan BankAct, as amended (12 U.S.C. 1436(a)); and

(6) Other securities which have beenassigned a rating or assessment by amajor nationally recognized securitiesrating agency that is equivalent to orhigher than the rating or assessmentassigned by such agency on seniorbonds outstanding.Provided, however, that any assets ofthe types described in paragraphs (c)(1)through (6) of this section which aresubject to a lien or pledge for the ben-efit of the holders of any issue of seniorbonds shall be treated as if they wereassets free from any lien or pledge forpurposes of compliance with this provi-sion.

[57 FR 62186, Dec. 30, 1992]

§ 910.2 Form of consolidated bonds.Consolidated Federal Home Loan

Bank bonds shall be issued in seriesand all consolidated bonds of the sameseries shall be of like date, tenor, andeffect except as to denominations,which shall be in such amounts as maybe authorized by the Board. The formof each consolidated bond shall be pre-scribed by the Board. Consolidatedbonds issued with maturities of 1 yearor less may be designated consolidatednotes.

[42 FR 56316, Oct. 25, 1977. Redesignated at 54FR 36759, Sept. 5, 1989]

§ 910.3 Transactions in consolidatedbonds.

The general regulations of the De-partment of Treasury now or hereafterin force governing transactions inUnited States securities, except 31 CFRpart 357 (regarding book-entry proce-dure), are hereby incorporated into thispart, so far as applicable and as nec-essarily modified to relate to consoli-dated Federal Home Loan Bank bonds,as the regulations of the Board forsimilar transactions in consolidated

Federal Home Loan Bank bonds. Thebook-entry procedure for consolidatedFederal Home Loan Bank bonds is con-tained in part 912 of this subchapter.

[63 FR 8059, Feb. 18, 1998]

§ 910.4 Lost, stolen, destroyed, muti-lated, or defaced bonds.

The statutes of the United Statesnow or hereafter in force, and the regu-lations of the Treasury Department,now or hereafter in force, governing re-lief on account of the loss, theft, de-struction, mutilation, or defacement ofUnited States securities, so far as ap-plicable and as necessarily modified torelate to consolidated Federal HomeLoan Bank bonds, are hereby adoptedas the regulations of the Board for theissuance of substitute consolidatedFederal Home Loan Bank bonds or thepayment of lost, stolen, destroyed, mu-tilated, or defaced consolidated FederalHome Loan Bank bonds.

[23 FR 9878, Dec. 23, 1958. Redesignated at 54FR 36759, Sept. 5, 1989]

§ 910.5 Administrative provision.

The Secretary of the Treasury, or theActing Secretary of the Treasury, ishereby authorized and empowered, asthe agent of the Board and the FederalHome Loan Banks, to administer theregulations of the Board adopted by§§ 910.3 and 910.4, and to delegate suchauthority at his discretion to other of-ficers, employees, and agents of theUnited States Treasury Department.Any such regulations may be waived onbehalf of the Board and the FederalHome Loan Banks by the Secretary ofthe Treasury or the Acting Secretaryof the Treasury or by an officer of theUnited States Treasury Departmentauthorized to waive similar regulationswith respect to United States securi-ties, but only in any particular case inwhich a similar regulation, with re-spect to United States Securities wouldbe waived. The terms ‘‘securities’’ and‘‘bonds’’ as used in this section shall,unless the context otherwise requires,include and apply to coupons and in-terim certificates.

[23 FR 9878, Dec. 23, 1958. Redesignated at 54FR 36759, Sept. 5, 1989, and amended at 55 FR2229, Jan. 23, 1990]


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12 CFR Ch. IX (1–1–00 Edition)§ 910.6

§ 910.6 Reservation of right to revokeor amend; limitations thereon.

(a) General. The right to revoke oramend this part, or to prescribe andissue supplemental or amendatoryrules and regulations thereto, is herebyreserved.

(b) Limitation on amendment of lever-age limit or negative pledge requirement.No revocation or relaxation of any ofthe restrictions or requirements con-tained in or imposed by § 910.1 (b) or (c)shall be effected except:

(1) If there are no senior bonds thenoutstanding or if there shall have beendeposited with the Treasurer of theUnited States, noncallable (or called)direct obligations of the United Statesof America or obligations fully guaran-teed by the United States of Americaof such maturities or redemption datesand interest payment dates, and tobear such interest, as will be sufficientto pay in full (together with any othermoneys placed in trust and irrevocablycommitted for such payment and with-out further investment or reinvest-ment of either the principal amountthereof or the interest earnings there-from) the principal of and interest todate of maturity or to such date des-ignated for redemption and any re-demption premium on all senior bondsthe holders of which have not con-sented to such revocation or relax-ation; or

(2) Section 910.1(b) may be changedby the Board in any manner if theBoard receives either:

(i) Written evidence from at least onemajor nationally recognized securitiesrating agency which rates or makes anassessment of the senior bonds thatsuch change in that provision will notresult in the lowering of its then-cur-rent rating or assessment on seniorbonds outstanding or next to be issued;or

(ii) A written opinion from an invest-ment banking firm that such changewould not have a materially adverse ef-fect on the creditworthiness of seniorbonds outstanding or next to be issued.

[57 FR 62186, Dec. 30, 1992]

§ 910.7 Joint and several liability.(a) In general. (1) Each and every

Bank, individually and collectively,

has an obligation to make full andtimely payment of all principal and in-terest on consolidated bonds when due.

(2) Each and every Bank, individuallyand collectively, shall ensure that thetimely payment of principal and inter-est on all consolidated bonds is givenpriority over, and is paid in full in ad-vance of, any payment to or redemp-tion of shares from any shareholder.

(3) The provisions of this sectionshall not limit, restrict or otherwisediminish, in any manner, the joint andseveral liability of all of the Banks onall of the consolidated bonds issued bythe Finance Board pursuant to section11(c) of the Act.

(b) Certification and reporting. (1) Be-fore the end of each calendar quarter,and before declaring or paying any div-idend for that quarter, the President ofeach Bank shall certify in writing tothe Finance Board that, based onknown current facts and financial in-formation, the Bank will remain incompliance with the liquidity require-ments set forth in section 11(g) of theAct (12 U.S.C. 1431(g)), and the FinanceBoard’s Financial Management Policy(as the same may be amended, modifiedor replaced), and will remain capable ofmaking full and timely payment of allof its current obligations, including di-rect obligations, coming due during thenext quarter.

(2) A Bank shall immediately providewritten notice to the Finance Board ifat any time:

(i) The Bank is unable to provide thecertification required in paragraph(b)(1) of this section;

(ii) The Bank projects at any timethat it will fail to comply with statu-tory or regulatory liquidity require-ments, or will be unable to timely andfully meet all of its current obliga-tions, including direct obligations, dueduring the quarter;

(iii) The Bank actually fails to com-ply with statutory or regulatory li-quidity requirements or to timely andfully meet all of its current obliga-tions, including direct obligations, dueduring the quarter; or

(iv) The Bank negotiates to enter orenters into an agreement with one ormore other Banks to obtain financialassistance from such Bank(s) to meet


631


its current obligations, including di-rect obligations, due during the quar-ter; the notice of which shall be accom-panied by a copy of the agreement,which shall be subject to the approvalof the Finance Board.

(c) Consolidated bond payment plans.(1) A Bank promptly shall file a con-solidated bond payment plan for Fi-nance Board approval:

(i) If it becomes a non-complyingBank as a result of failing to providethe certification required in paragraph(b)(1) of this section;

(ii) If it becomes a non-complyingBank as a result of being required toprovide the notice required pursuant toparagraph (b)(2) of this section, exceptin the event that a failure to make aprincipal or interest payment on a con-solidated bond when due was causedsolely by a temporary interruption inthe Bank’s debt servicing operationsresulting from an external event suchas a natural disaster or a power failure;or

(iii) If the Finance Board determinesthat a Bank will cease to be in compli-ance with the statutory or regulatoryliquidity requirements, or will lack thecapacity to timely and fully meet all ofits current obligations, including di-rect obligations, due during the quar-ter.

(2) A consolidated bond payment planshall specify the measures the non-complying Bank will undertake tomake full and timely payments of allof its current obligations, including di-rect obligations, due during the appli-cable quarter.

(3) A non-complying Bank may con-tinue to incur and pay normal oper-ating expenses incurred in the regularcourse of business (including salaries,benefits, or costs of office space, equip-ment and related expenses), but shallnot incur or pay any extraordinary ex-penses, or declare, or pay dividends, orredeem any capital stock, until suchtime as the Finance Board has ap-proved the Bank’s consolidated bondpayment plan or inter-Bank assistanceagreement, or ordered another remedy,and all of the non-complying Bank’s di-rect obligations have been paid.

(d) Finance Board Payment Orders; Ob-ligation to Reimburse. (1) The Board ofDirectors of the Finance Board, in its

discretion and notwithstanding anyother provision in this section, may atany time order any Bank to make anyprincipal or interest payment due onany consolidated obligation.

(2) To the extent that a Bank makesany payment on any consolidated obli-gation on behalf of another Bank, thepaying Bank shall be entitled to reim-bursement from the non-complyingBank, which shall have a correspondingobligation to reimburse the Bank pro-viding assistance, to the extent of suchpayment and other associated costs(including interest to be determined bythe Finance Board).

(e) Adjustment of equities. (1) Any non-complying Bank shall apply its assetsto fulfill its direct obligations.

(2) If a Bank is required to meet, orotherwise meets, the direct obligationsof another Bank due to a temporaryinterruption in the latter Bank’s debtservicing operations (e.g., in the eventof a natural disaster or power failure),the assisting Bank shall have the sameright to reimbursement as set forth inparagraph (e)(1) of this section.

(3) If the Finance Board determinesthat the assets of a non-complyingBank are insufficient to satisfy all ofits direct obligations as set forth inparagraph (e)(1) of this section, thenthe Finance Board may allocate theoutstanding liability among the re-maining Banks on a pro rata basis inproportion to each Bank’s participa-tion in all consolidated obligationsoutstanding as of the end of the mostrecent month for which the FinanceBoard has data.

(f) Reservation of authority. Nothing inthis section shall affect the FinanceBoard’s authority to adjust the equi-ties between the Banks in any mannerdifferent than the manner described inthis section, or to take such enforce-ment or other action against any Bankpursuant to the Finance Board’s au-thority under the Act or otherwise tosupervise the Banks and ensure thatthey are operated in a safe and soundmanner.

(g) No rights created. (1) Nothing inthis section shall create or be deemedto create any rights in any third party.

(2) Payments made by a Bank towardthe direct obligations of another Bank


632


are made for the sole purpose of dis-charging the joint and several liabilityof the Banks on the consolidatedbonds.

(3) Compliance, or the failure to com-ply, with any provision in this sectionshall not be deemed a default under theterms and conditions of the consoli-dated bonds.

[64 FR 55130, Oct. 12, 1999]

PART 912—BOOK-ENTRY PROCE-DURE FOR Federal HOME LOANBANK SECURITIES

Sec.912.1 Definitions.912.2 Law governing rights and obligations

of Federal Home Loan Banks, FinanceBoard, Office of Finance, United Statesand Federal Reserve Banks; rights of anyPerson against Federal Home LoanBanks, Finance Board, Office of Finance,United States and Federal ReserveBanks.

912.3 Law governing other interests.912.4 Creation of Participant’s Security En-

titlement; security interests.912.5 Obligations of Federal Home Loan

Banks and the Office of Finance; no Ad-verse Claims.

912.6 Authority of Federal Reserve Banks.912.7 Liability of Federal Home Loan

Banks, Finance Board, Office of Financeand Federal Reserve Banks.

912.8 Additional requirements; notice of at-tachment for Book-entry Federal HomeLoan Bank Securities.

912.9 Reference to certain Department ofTreasury commentary and determina-tions.

912.10 Obligations of United States with re-spect to Federal Home Loan Bank Secu-rities.

AUTHORITY: 12 U.S.C. 1422a, 1422b, 1431, 1435.

SOURCE: 63 FR 8059, Feb. 18, 1998, unlessotherwise noted.

§ 912.1 Definitions.For purposes of this part, unless the

context otherwise requires or indi-cates:

(a) Adverse Claim means a claim thata claimant has a property interest in aBook-entry Federal Home Loan BankSecurity and that it is a violation ofthe rights of the claimant for anotherPerson to hold, transfer, or deal withthe Security.

(b) Book-entry Federal Home LoanBank Security means a Federal Home

Loan Bank Security maintained in thebook-entry system of the Federal Re-serve Banks.

(c) Entitlement Holder means a Personor a Federal Home Loan Bank to whoseaccount an interest in a Book-entryFederal Home Loan Bank Security iscredited on the records of a SecuritiesIntermediary.

(d) Federal Home Loan Bank Securitymeans a consolidated bond, debenture,note, or other obligation of the FederalHome Loan Bank issued by the FinanceBoard under authority of section 11 ofthe Federal Home Loan Bank Act (12U.S.C. 1431).

(e) Federal Reserve Bank means a Fed-eral Reserve Bank or branch, acting asfiscal agent for the Office of Finance,unless otherwise indicated.

(f) Federal Reserve Bank Operating Cir-cular means the publication issued byeach Federal Reserve Bank that setsforth the terms and conditions underwhich the Federal Reserve Bank main-tains Book-entry Securities accountsand transfers Book-entry Securities.

(g) Finance Board means the FederalHousing Finance Board.

(h) Funds account means a reserveand/or clearing account at a FederalReserve Bank to which debits or cred-its are posted for transfers against pay-ment, Book-entry Securities trans-action fees, or principal and interestpayments.

(i) Office of Finance means the Officeof Finance established under part 941 ofthis chapter, acting as agent of the Fi-nance Board in all matters relating tothe issuance of Book-entry FederalHome Loan Bank Securities, or asagent of the Federal Home Loan Banksin the performance of all other nec-essary and proper functions relating toBook-entry Federal Home Loan BankSecurities, including the payment ofprincipal and interest due thereon.

(j) Participant means a Person or aFederal Home Loan Bank that main-tains a Participant’s Securities Ac-count with a Federal Reserve Bank.

(k) Participant’s Securities Accountmeans an account in the name of aParticipant at a Federal Reserve Bankto which Book-entry Federal HomeLoan Bank Securities held for a Partic-ipant are or may be credited.


633


(l) Person means and includes an indi-vidual, corporation, company, govern-mental entity, association, firm, part-nership, trust, estate, representative,and any other similar organization, butdoes not mean or include a FederalHome Loan Bank, the Finance Board,the Office of Finance, the UnitedStates, or a Federal Reserve Bank.

(m) Revised Article 8 means UniformCommercial Code, Revised Article 8,Investment Securities (with Con-forming and Miscellaneous Amend-ments to Articles 1, 3, 4, 5, 9, and 10)1994 Official Text. Copies of this publi-cation are available from the Execu-tive Office of the American Law Insti-tute, 4025 Chestnut Street, Philadel-phia, PA 19104, and the National Con-ference of Commissioners on UniformState Laws, 676 North St. Clair Street,Suite 1700, Chicago, IL 60611.

(n) Securities Intermediary means:(1) A Person that is registered as a

‘‘clearing agency’’ under the Federalsecurities laws; a Federal ReserveBank; any other person that providesclearance or settlement services withrespect to a Book-entry Federal HomeLoan Bank Security that would requireit to register as a clearing agencyunder the Federal securities laws butfor an exclusion or exemption from theregistration requirement, it its activi-ties as a clearing corporation, includ-ing promulgation of rules, are subjectto regulation by a Federal or Stategovernmental authority; or

(2) A Person (other than an indi-vidual, unless such individual is reg-istered as a broker or dealer under theFederal securities laws) including abank or broker, that in the ordinarycourse of its business maintains securi-ties accounts for others and is actingin that capacity.

(o) Security Entitlement means therights and property interest of an Enti-tlement Holder with respect to a Book-entry Federal Home Loan Bank Secu-rity.

(p) State means any State of theUnited States, the District of Colum-bia, Puerto Rico, the Virgin Islands, orany other territory or possession of theUnited States.

(q) Transfer Message means an in-struction of a Participant to a FederalReserve Bank to effect a transfer of a

Book-entry Federal Home Loan BankSecurity, as set forth in Federal Re-serve Bank Operating Circulars.

§ 912.2 Law governing rights and obli-gations of Federal Home LoanBanks, Finance Board, Office of Fi-nance, United States and FederalReserve Banks; rights of any Personagainst Federal Home Loan Banks,Finance Board, Office of Finance,United States and Federal ReserveBanks.

(a) Except as provided in paragraph(b) of this section, the rights and obli-gations of the Federal Home LoanBanks, the Finance Board, the Office ofFinance, the United States and theFederal Reserve Banks with respect to:A Book-entry Federal Home LoanBank Security or Security Entitlementand the operation of the Book-entrysystem, as it applies to Federal HomeLoan Bank Securities; and the rights ofany Person, including a Participant,against the Federal Home Loan Banks,the Finance Board, the Office of Fi-nance, the United States and the Fed-eral Reserve Banks with respect to: ABook-entry Federal Home Loan BankSecurity or Security Entitlement andthe operation of the Book-entry sys-tem, as it applies to Federal HomeLoan Bank Securities; are governedsolely by regulations of the FinanceBoard, including the regulations of thispart 912, the applicable offering notice,applicable procedures established bythe Office of Finance, and Federal Re-serve Bank Operating Circulars.

(b) A security interest in a SecurityEntitlement that is in favor of a Fed-eral Reserve Bank from a Participantand that is not recorded on the booksof a Federal Reserve Bank pursuant to§ 912.4(c)(1), is governed by the law (notincluding the conflict-of-law rules) ofthe jurisdiction where the head officeof the Federal Reserve Bank maintain-ing the Participant’s Securities Ac-count is located. A security interest ina Security Entitlement that is in favorof a Federal Reserve Bank from a Per-son that is not a Participant, and thatis not recorded on the books of a Fed-eral Reserve Bank pursuant to§ 912.4(c)(1), is governed by the law de-termined in the manner specified in§ 912.3.


634

12 CFR Ch. IX (1–1–00 Edition)§ 912.3

(c) If the jurisdiction specified in thefirst sentence of paragraph (b) of thissection is a State that has not adoptedRevised Article 8, then the law speci-fied in the first sentence of paragraph(b) of this section shall be the law ofthat State as though Revised Article 8had been adopted by that State.

§ 912.3 Law governing other interests.(a) To the extent not inconsistent

with this part 912, the law (not includ-ing the conflict-of-law rules) of a Secu-rities Intermediary’s jurisdiction gov-erns:

(1) The acquisition of a Security En-titlement from the Securities Inter-mediary;

(2) The rights and duties of the Secu-rities Intermediary and EntitlementHolder arising out of a Security Enti-tlement;

(3) Whether the Securities Inter-mediary owes any duties to an adverseclaimant to a Security Entitlement;

(4) Whether an Adverse Claim can beasserted against a Person who acquiresa Security Entitlement from the Secu-rities Intermediary or a Person whopurchases a Security Entitlement orinterest therein from an EntitlementHolder; and

(5) Except as otherwise provided inparagraph (c) of this section, the per-fection, effect of perfection or non-per-fection, and priority of a security in-terest in a Security Entitlement.

(b) The following rules determine a‘‘Securities Intermediary’s jurisdic-tion’’ for purposes of this section:

(1) If an agreement between the Secu-rities Intermediary and its Entitle-ment Holder specifies that it is gov-erned by the law of a particular juris-diction, that jurisdiction is the Securi-ties Intermediary’s jurisdiction.

(2) If an agreement between the Secu-rities Intermediary and its Entitle-ment Holder does not specify the gov-erning law as provided in paragraph(b)(1) of this section, but expresslyspecifies that the securities account ismaintained at an office in a particularjurisdiction, that jurisdiction is the Se-curities Intermediary’s jurisdiction.

(3) If an agreement between the Secu-rities Intermediary and its Entitle-ment Holder does not specify a juris-diction as provided in paragraph (b)(1)

or (b)(2) of this section, the SecuritiesIntermediary’s jurisdiction is the juris-diction in which is located the officeidentified in an account statement asthe office serving the EntitlementHolder’s account.

(4) If an agreement between the Secu-rities Intermediary and its Entitle-ment Holder does not specify a juris-diction as provided in paragraph (b)(1)or (b)(2) of this section and an accountstatement does not identify an officeserving the Entitlement Holder’s ac-count as provided in paragraph (b)(3) ofthis section, the SecuritiesIntermediary’s jurisdiction is the juris-diction in which is located the chief ex-ecutive office of the Securities Inter-mediary.

(c) Notwithstanding the general rulein paragraph (a)(5) of this section, thelaw (but not the conflict-of-law rules)of the jurisdiction in which the Personcreating a security interest is locatedgoverns whether and how the securityinterest may be perfected automati-cally or by filing a financing state-ment.

(d) If the jurisdiction specified inparagraph (b) of this section is a Statethat has not adopted Revised Article 8,then the law for the matters specifiedin paragraph (a) of this section shall bethe law of that State as though Re-vised Article 8 had been adopted bythat State. For purposes of the applica-tion of the matters specified in para-graph (a) of this section, the FederalReserve Bank maintaining the Securi-ties Account is a clearing corporation,and the Participant’s interest in a Fed-eral Home Loan Bank Book-entry Se-curity is a Security Entitlement.

§ 912.4 Creation of Participant’s Secu-rity Entitlement; security interests.

(a) A Participant’s Security Entitle-ment is created when a Federal Re-serve Bank indicates by book entrythat a Book-entry Federal Home LoanBank Security has been credited to aParticipant’s Securities Account.

(b) A security interest in a SecurityEntitlement of a Participant in favorof the United States to secure depositsof public money, including, withoutlimitation, deposits to the Treasurytax and loan accounts, or other secu-rity interest in favor of the United


635


States that is required by Federal stat-ute, regulation, or agreement, and thatis marked on the books of a FederalReserve Bank is thereby effected andperfected, and has priority over anyother interest in the Securities. Wherea security interest in favor of theUnited States in a Security Entitle-ment of a Participant is marked on thebooks of a Federal Reserve Bank, suchFederal Reserve Bank may rely, and isprotected in relying, exclusively on theorder of an authorized representativeof the United States directing thetransfer of the Security. For purposesof this paragraph (b), an ‘‘authorizedrepresentative of the United States’’ isthe official designated in the applicableregulations or agreement to which aFederal Reserve Bank is a party, gov-erning the security interest.

(c)(1) The Federal Home Loan Banks,the Finance Board, the Office of Fi-nance, the United States and the Fed-eral Reserve Banks have no obligationto agree to act on behalf of any Personor to recognize the interest of anytransferee of a security interest orother limited interest in a Security En-titlement in favor of any Person exceptto the extent of any specific require-ment of Federal law or regulation or tothe extent set forth in any specificagreement with the Federal ReserveBank on whose books the interest ofthe Participant is recorded. To the ex-tent required by such law or regulationor set forth in an agreement with aFederal Reserve Bank, or the FederalReserve Bank Operating Circular, a se-curity interest in a Security Entitle-ment that is in favor of a Federal Re-serve Bank or a Person may be createdand perfected by a Federal ReserveBank marking its books to record thesecurity interest. Except as provided inparagraph (b) of this section, a securityinterest in a Security Entitlementmarked on the books of a Federal Re-serve Bank shall have priority over anyother interest in the Securities.

(2) In addition to the method pro-vided in paragraph (c)(1) of this sec-tion, a security interest in a SecurityEntitlement, including a security in-terest in favor of a Federal ReserveBank, may be perfected by any methodby which a security interest may beperfected under applicable law as de-

scribed in § 912.2(b) or § 912.3. The per-fection, effect of perfection or non-per-fection, and priority of a security in-terest are governed by that applicablelaw. A security interest in favor of aFederal Reserve Bank shall be treatedas a security interest in favor of aclearing corporation in all respectsunder that law, including with respectto the effect of perfection and priorityof the security interest. A Federal Re-serve Bank Operating Circular shall betreated as a rule adopted by a clearingcorporation for such purposes.

§ 912.5 Obligations of the FederalHome Loan Banks and the Office ofFinance; no Adverse Claims.

(a) Except in the case of a securityinterest in favor of the United Statesor a Federal Reserve Bank or otherwiseas provided in § 912.4(c)(1), for the pur-poses of this part 912, the FederalHome Loan Banks, the Office of Fi-nance and the Federal Reserve Banksshall treat the Participant to whoseSecurities Account an interest in aBook-entry Federal Home Loan BankSecurity has been credited as the per-son exclusively entitled to issue aTransfer Message, to receive interestand other payments with respect there-of and otherwise to exercise all therights and powers with respect to theSecurity, notwithstanding any infor-mation or notice to the contrary. Nei-ther the Federal Home Loan Banks,the Finance Board, the Office of Fi-nance, the United States, nor the Fed-eral Reserve Banks are liable to a Per-son asserting or having an AdverseClaim to a Security Entitlement or toa Book-entry Federal Home Loan BankSecurity in a Participant’s SecuritiesAccount, including any such claimarising as a result of the transfer ordisposition of a Book-entry FederalHome Loan Bank Security by a FederalReserve Bank pursuant to a TransferMessage that the Federal Reserve Bankreasonably believes to be genuine.

(b) The obligation of the FederalHome Loan Banks and the Office of Fi-nance to make payments of interestand principal with respect to Book-entry Federal Home Loan Bank Securi-ties is discharged at the time paymentin the appropriate amount is made asfollows:


636

12 CFR Ch. IX (1–1–00 Edition)§ 912.6

(1) Interest on Book-entry FederalHome Loan Bank Securities is eithercredited by a Federal Reserve Bank toa Funds Account maintained at theFederal Reserve Bank or otherwisepaid as directed by the Participant.

(2) Book-entry Federal Home LoanBank Securities are paid, either at ma-turity or upon redemption, in accord-ance with their terms by a Federal Re-serve Bank withdrawing the securitiesfrom the Participant’s Securities Ac-count in which they are maintainedand by either crediting the amount ofthe proceeds, including both principaland interest, where applicable, to aFunds Account at the Federal ReserveBank or otherwise paying such prin-cipal and interest as directed by theParticipant. No action by the Partici-pant is required in connection with thepayment of a Book-entry Federal HomeLoan Bank Security, unless otherwiseexpressly required.

§ 912.6 Authority of Federal ReserveBanks.

(a) Each Federal Reserve Bank ishereby authorized as fiscal agent of theOffice of Finance: To perform functionswith respect to the issuance of Book-entry Federal Home Loan Bank Securi-ties, in accordance with the terms ofthe applicable offering notice and withprocedures established by the Office ofFinance; to service and maintain Book-entry Federal Home Loan Bank Securi-ties in accounts established for suchpurposes; to make payments of prin-cipal, interest and redemption pre-mium (if any), as directed by the Officeof Finance; to effect transfer of Book-entry Federal Home Loan Bank Securi-ties between Participants’ SecuritiesAccounts as directed by the Partici-pants; and to perform such other dutiesas fiscal agent as may be requested bythe Office of Finance.

(b) Each Federal Reserve Bank mayissue Operating Circulars not incon-sistent with this part 912, governingthe details of its handling of Book-entry Federal Home Loan Bank Securi-ties, Security Entitlements, and theoperation of the Book-entry systemunder this part 912.

§ 912.7 Liability of Federal Home LoanBanks, Finance Board, Office of Fi-nance and Federal Reserve Banks.

The Federal Home Loan Banks, theFinance Board, the Office of Financeand the Federal Reserve Banks mayrely on the information provided in atender, transaction request form, othertransaction documentation, or Trans-fer Message, and are not required toverify the information. Neither theFederal Home Loan Banks, the FinanceBoard, the Office of Finance, theUnited States, nor the Federal ReserveBanks shall be liable for any actiontaken in accordance with the informa-tion set out in a tender, transaction re-quest form, other transaction docu-mentation, or Transfer Message, or evi-dence submitted in support thereof.

§ 912.8 Additional requirements; noticeof attachment for Book-entry Fed-eral Home Loan Bank Securities.

(a) Additional requirements. In anycase or any class of cases arising underthe regulations in this part 912, the Of-fice of Finance may require such addi-tional evidence and a bond of indem-nity, with or without surety, as may inits judgment, or in the judgment of theFederal Home Loan Banks or the Fi-nance Board, be necessary for the pro-tection of the interests of the FederalHome Loan Banks, the Finance Board,the Office of Finance or the UnitedStates.

(b) Notice of attachment. The interestof a debtor in a Security Entitlementmay be reached by a creditor only bylegal process upon the Securities Inter-mediary with whom the debtor’s secu-rities account is maintained, exceptwhere a Security Entitlement is main-tained in the name of a secured party,in which case the debtor’s interest maybe reached by legal process upon thesecured party. The regulations in thispart 912 do not purport to establishwhether a Federal Reserve Bank is re-quired to honor an order or other no-tice of attachment in any particularcase or class of cases.

§ 912.9 Reference to certain Depart-ment of Treasury commentary anddeterminations.

(a) The Department of TreasuryTRADES Commentary (31 CFR part


637


357, appendix B) addressing the Depart-ment of Treasury regulations gov-erning book-entry procedure for Treas-ury Securities is hereby referenced, sofar as applicable and as necessarilymodified to relate to Book-entry Fed-eral Home Loan Bank Securities, as aninterpretive aid to this part 912.

(b) Determinations of the Depart-ment of Treasury regarding whether aState shall be considered to haveadopted Revised Article 8 for purposesof 31 CFR part 357, as published in theFEDERAL REGISTER or otherwise, shallalso apply to this part 912.

§ 912.10 Obligations of United Stateswith respect to Federal Home LoanBank Securities.

Federal Home Loan Bank Securitiesare not obligations of the UnitedStates and are not guaranteed by theUnited States.

PART 914—HEARINGS [RESERVED]

PART 916—PROMULGATION OFREGULATIONS AND AMEND-MENTS [RESERVED]

PART 918—IMPLEMENTATION OFTHE EQUAL ACCESS TO JUSTICEACT [RESERVED]

PART 920—USE OF PENALTY MAILIN THE LOCATION AND RECOV-ERY OF MISSING CHILDREN [RE-SERVED]

PART 924—PRACTICE BEFORE THEBOARD OF DIRECTORS [RE-SERVED]


638

SUBCHAPTER B—FEDERAL HOME LOAN BANK SYSTEM

PART 931—DEFINITIONS

Sec.931.1 Act.931.2 Bank.931.3 Board.931.4 Creditor liabilities.931.5 Obligations of the United States.931.6 Paid-in value of stock in a bank.931.7–10 [Reserved]

AUTHORITY: 12 U.S.C. 1422a and 1422b.

SOURCE: 43 FR 46836, Oct. 11, 1978. Redesig-nated at 54 FR 36759, Sept. 5, 1989, unless oth-erwise noted.

§ 931.1 Act.

The Federal Home Loan Bank Act, asamended (12 U.S.C. 1421 et seq.).

§ 931.2 Bank.

A Federal Home Loan Bank.

§ 931.3 Board.

The Federal Housing Finance Boardor any official duly authorized to act inits behalf.

[55 FR 2229, Jan. 23, 1990]

§ 931.4 Creditor liabilities.

Obligations, secured or unsecured, ofa member.

§ 931.5 Obligations of the UnitedStates.

All evidences of indebtedness issued,or fully guaranteed as to principal andinterest, by the United States.

[43 FR 46836, Oct. 11, 1978. Redesignated at 54FR 36759, Sept. 5, 1989, and further redesig-nated at 63 FR 65687, Nov. 30, 1998]

§ 931.6 Paid-in value of stock in abank.

Aggregate payments on the par valueof stock.

[43 FR 46836, Oct. 11, 1978. Redesignated at 54FR 36759, Sept. 5, 1989, and further redesig-nated at 63 FR 65687, Nov. 30, 1998]

§ 931.7–10 [Reserved]

PART 932—DIRECTORS, OFFICERS,AND EMPLOYEES OF THE BANKS


Sec.932.1 Definitions.932.2 Dates.

Subpart B—Bank Directors

932.3 Director elections.932.4 Capital stock report.932.5 Determination of member votes.932.6 Elective director nominations.932.7 Eligibility requirements for elective

directors.932.8 Election process.932.9 Prohibition on actions to influence di-

rector elections.932.10 Selection of appointive directors.932.11 Conflict of interests policy for Bank

directors.932.12 Reporting requirements for Bank di-

rectors932.13 Ineligible Bank directors.932.14 Vacant Bank directorships.932.15 Minimum number of elective direc-

torships.932.16 Site and frequency of board of direc-

tors and committee meetings.932.17 Compensation and expenses of Bank

directors.

Subpart C—Selection of Bank Officers andEmployees [Reserved]

AUTHORITY: 12 U.S.C. 1422a(a)(3), 1422b(a),1426, 1427, and 1432.


§ 932.1 Definitions.For purposes of this part:Act means the Federal Home Loan

Bank Act, as amended (12 U.S.C. 1421 etseq.).

Bank or Banks means a Federal HomeLoan Bank or the Federal Home LoanBanks.

Bona fide resident of a Bank districtmeans an individual who:

(1) Maintains a principal residencewithin the Bank district; or

(2) If serving as an elective director,owns or leases in his or her own namea residence within the Bank district


639


and is an officer or director of a mem-ber located in a voting state within theBank district; or

(3) If serving as an appointive direc-tor, owns or leases in his or her ownname a residence within the Bank dis-trict and is employed within a votingstate within the Bank district.

Docket number means the number as-signed to each member by the FinanceBoard and used by the Finance Boardand the Banks to identify a particularmember.

Finance Board means the agency es-tablished as the Federal Housing Fi-nance Board.

Member means an institution admit-ted to membership and owning capitalstock in a Bank.

Record date means December 31 of thecalendar year immediately precedingthe election year.

Voting state means the District of Co-lumbia, Puerto Rico, or the state of theUnited States in which a member’sprincipal place of business, as deter-mined in accordance with part 933 ofthis chapter, is located as of the recorddate. The voting state of a memberwith a principal place of business lo-cated in the U.S. Virgin Islands as ofthe record date shall be Puerto Rico,and the voting state of a member witha principal place of business located inAmerican Samoa, Guam, or the Com-monwealth of the Northern Mariana Is-lands as of the record date shall be Ha-waii.

[63 FR 65688, Nov. 30, 1998]

§ 932.2 Dates.If any date specified in this part, or

specified by a Bank pursuant to thispart, falls on a Saturday, Sunday, orFederal holiday, the relevant time pe-riod shall be deemed to include thenext business day.

[63 FR 65688, Nov. 30, 1998]

Subpart B—Bank Directors§ 932.3 Director elections.

(a) Responsibilities of the Banks. EachBank annually shall conduct an elec-tion the purpose of which is to fill allelective directorships designated bythe Finance Board as commencing onJanuary 1 of the calendar year imme-

diately following the year of the elec-tion. Subject to the provisions of theAct and in accordance with the re-quirements of this part, the disin-terested members of the board of direc-tors of each Bank, or a committee ofdisinterested directors, shall admin-ister and conduct the annual electionof directors. In so doing, the disin-terested directors may use Bank staffor independent contractors to performministerial and administrative func-tions concerning the elections process.The term of office of each elective di-rectorship shall be 2 years and shallcommence on January 1 of the calendaryear immediately following the year inwhich the election is held. Each Bankshall complete the election in suffi-cient time to allow newly elected di-rectors to assume their seats on Janu-ary 1 of the year immediately fol-lowing the election.

(b) Designation of elective directorships.The Finance Board annually shall es-tablish the number of elective director-ships for each Bank, which are to be al-located as follows:

(1) One elective directorship shall beallocated to each State within theBank district;

(2) If the total number of elective di-rectorships allocated pursuant to para-graph (b)(1) of this section is less thaneight, the Finance Board shall allocateadditional elective directorshipsamong the States, using the method ofequal proportions, until the total allo-cated for the Bank equals eight;

(3) If the number of elective director-ships allocated to any State pursuantto paragraphs (b)(1) and (2) of this sec-tion is less than the number allocatedto that State on December 31, 1960, asspecified in § 932.15, the Finance Boardshall allocate such additional electivedirectorships to that State until thetotal allocated equals the number allo-cated to the Bank on December 31, 1960;

(4) Pursuant to section 7(e) of theAct, the Federal Home Loan Bank ofNew York is hereby allocated one addi-tional elective directorship, which isdesignated as representing the mem-bers in the Commonwealth of PuertoRico;

(5) Pursuant to section 7(a) of theAct, in any Bank district that includesfive or more states, the Finance Board,


640

12 CFR Ch. IX (1–1–00 Edition)§ 932.4

after consultation with the affectedBanks, may increase the number ofelective directorships up to thirteen,and the number of appointive director-ships up to three-fourths of the numberof elective directorships. In deter-mining the number of appointive direc-torships, the Finance Board may roundto the nearest whole number.

(c) Notification. On or before June 1 ofeach year, the Finance Board shall no-tify each Bank in writing of the totalnumber of elective directorships estab-lished for the Bank and the number ofelective directorships designated asrepresenting the members in each vot-ing State in the Bank district. The an-nual designation of elective director-ships shall not cause any incumbent di-rector to surrender his or her director-ship prior to the expiration of the fullterm of office.

(d) In accordance with section 7(c) ofthe Act, unless otherwise designated bythe Finance Board, for purposes of elec-tion of directors a member shall bedeemed to be located in its votingState.

(e) Transition. The term of office ofeach elective directorship existing onthe effective date of this section shallcontinue to its scheduled expirationdate, and the Banks may not thereafteralter the commencement or expirationdate for any elective directorship inconducting the annual election of di-rectors.

[63 FR 65688, Nov. 30, 1998]

§ 932.4 Capital stock report.(a) On or before April 10 of each year,

each Bank shall submit to the FinanceBoard, for its use in designating theelective directorships a capital stockreport that indicates, as of the recorddate, the number of members in eachvoting State in the Bank’s district, andthe number of shares of capital stockrequired to be held by each member(identified by docket number), and theaggregate total number of shares ofcapital stock required to be held by allmembers in each voting State in theBank’s district. The Bank shall certifyto the Finance Board that to the bestof its knowledge the information pro-vided in the capital stock report is ac-curate and complete, and that it hasnotified each member of its minimum

capital stock holdings pursuant to§ 933.22(b)(1) of this chapter.

(b) A Bank shall determine the num-ber of shares of capital stock eachmember is required to hold as of therecord date in the following manner:

(1) The number of shares of capitalstock shall be equal to the greater ofthe advances-to-capital stock require-ment under § 935.15(a) of this chapter,or the minimum capital stock require-ment under § 933.20(a) of this chapter.

(2) If a member has elected to pur-chase its minimum required capitalstock in installments under§ 933.20(b)(2) of this chapter, the numberof shares of capital stock required to beheld as of the record date shall be thecumulative total of shares of capitalstock actually purchased as of therecord date.

[63 FR 65689, Nov. 30, 1998]

§ 932.5 Determination of membervotes.

(a) Authority. The Bank shall deter-mine, in accordance with this section,the number of votes each member ofthe Bank may cast in the election ofdirectors.

(b) Determination. The number ofvotes a member may cast for any elec-tive director nominee shall be the less-er of the number of shares of capitalstock the member was required to holdas of the record date, as determined inaccordance with § 932.4(b), or the aver-age number of shares of capital stockrequired to be held by all of the mem-bers in its voting State as of the recorddate.

[63 FR 65689, Nov. 30, 1998]

§ 932.6 Elective director nominations.

(a) Election announcement. Within areasonable time in advance of an elec-tion, a Bank shall provide to eachmember in its district a written noticeof the election that includes:

(1) The number of elective director-ships designated as representing themembers in each voting State in theBank district;

(2) The name of each incumbent Bankdirector, the name and location of themember at which each elective directorserves, and the name and location of


641


the organization with which each ap-pointive director is affiliated, if any,and the expiration date of each Bankdirector’s term of office;

(3) An attachment indicating thename, location, and docket number ofevery member in the member’s votingState, and the number of votes eachsuch member may cast in the election,as determined in accordance with§ 932.5(b); and (4) A nominating certifi-cate.

(b) Nominations. (1) Any member thatis entitled to vote in the election maynominate an eligible individual to filleach available elective directorship forits voting State by submitting to itsBank, prior to a deadline to be estab-lished by the Bank, a nominating cer-tificate duly adopted by the member’sgoverning body or by an individual au-thorized to act on behalf of the mem-ber’s governing body.

(2) The nominating certificate shallinclude the name of the nominee andthe name, location, and docket numberof the member at which the nomineeserves as an officer or director.

(3) The Bank shall establish a dead-line for submitting nominating certifi-cates, which shall be no earlier than 30calendar days after the date on whichthe Bank mails the notice required byparagraph (a) of this section, and theBank shall not accept certificates re-ceived after that deadline. The Bankshall retain all nominating certificatesfor at least two years after the date ofthe election.

(c) Accepting nominations. A Bankshall notify in writing any person nom-inated for an elective directorshippromptly upon receipt of the nomi-nating certificate. A person may acceptthe nomination only by submitting anexecuted director eligibility certifi-cation, as prescribed by the FinanceBoard, to the Bank prior to the dead-line established by the Bank. A Bankshall allow each nominee at least 30calendar days after the date of the no-tice of nomination within which tosubmit the executed form. A nomineemay decline the nomination by so ad-vising the Bank in writing, or by fail-ing to submit a properly executed di-rector eligibility certification prior tothe deadline. Each Bank shall retainall information received under this

paragraph for at least two years afterthe date of the election.

[63 FR 65689, Nov. 30, 1998]

§ 932.7 Eligibility requirements forelective directors.

(a) Eligibility verification. Based on theinformation provided on the directoreligibility certification form prescribedby the Finance Board, a Bank shallverify that each nominee meets all ofthe eligibility requirements for elec-tive directors set forth in the Act andthis part before placing that nomineeon the ballot prepared by the Bankunder § 932.8(a).

(b) Eligibility requirements. Each elec-tive director, and each nominee, shallbe:

(1) A citizen of the United States;(2) A bona fide resident of the Bank

district; and(3) An officer or director of a member

that is located in the voting State tobe represented by the elective director-ship, that was a member of the Bank asof the record date, and that meets allminimum capital requirements estab-lished by its appropriate federal regu-lator or appropriate State regulator.For purposes of this paragraph (b)(3),the term appropriate federal regulatorhas the same meaning as the term ‘‘ap-propriate Federal banking agency’’ insection 3(q) of the Federal Deposit In-surance Act (12 U.S.C. 1813(q)), and, forfederally insured credit unions, shallmean the National Credit Union Ad-ministration, and the term appropriateState regulator means any State officer,agency, supervisor, or other entitythat has regulatory authority over, oris empowered to institute enforcementaction against, a member.

(c) Restrictions. A nominee is not eli-gible if he or she:

(1) Is an incumbent elective director,unless:

(i) The incumbent director’s term ofoffice would expire before the new termof office would begin; and

(ii) The new term of office would notbe barred by the term limit provisionof section 7(d) of the Act.

(2) Is a former elective director whoseservice would be barred by the termlimit provision of section 7(d) of theAct.


642

12 CFR Ch. IX (1–1–00 Edition)§ 932.8

(3) Is an incumbent appointive direc-tor.

[63 FR 65689, Nov. 30, 1998]

§ 932.8 Election process.

(a) Ballots. Promptly after verifyingthe eligibility of all nominees in ac-cordance with § 932.7(a), a Bank shallprepare a ballot for each voting Statefor which an elective directorship is tobe filled and shall mail the ballot to allmembers within that State that weremembers as of the record date. A ballotshall include at least the following pro-visions:

(1) An alphabetical listing of thenames of each nominee for the mem-ber’s voting State, the name, location,and docket number of the member atwhich each nominee serves, the nomi-nee’s title or position with the mem-ber, and the number of elective direc-torships to be filled by members inthat voting State in the election;

(2) A statement that write-in can-didates are not permitted; and

(3) A confidentiality statement pro-hibiting the Bank from disclosing howa member voted.

(b) Lack of nominees. If, for any vot-ing State, the number of nominees isequal to or less than the number ofelective directorships to be filled in theelection, the Bank shall notify themembers in the affected voting state inwriting (in lieu of providing a ballot)that the directorships are to be filledwithout an election due to a lack ofnominees. The Bank shall declareelected any eligible nominee, who shallbe included as a director-elect in thereport of election required under para-graph (e). If necessary, the board of di-rectors shall fill, any elective director-ship that has become vacant due to alack of a nominee in accordance with§ 932.14(a).

(c) Voting. For each directorship to befilled, a member may cast the numberof votes determined by the Bank pursu-ant to § 932.5. A member may not splitits votes among multiple nominees fora single directorship, nor, where thereare multiple directorships to be filledfor a voting State, may it cumulativelyvote for a single nominee. Any ballotscast in violation of this subsectionshall be void. To vote, a member shall:

(1) Mark on the ballot the name ofnot more than one of the nominees foreach elective directorship to be filledin the member’s voting State. Eachnominee so selected shall receive all ofthe votes that the member is entitledto cast.

(2) Execute the ballot by resolutionof the member’s governing body, or byan appropriate writing signed by an in-dividual authorized to act on behalf ofthe governing body.

(3) Deliver the executed ballot to theBank on or before the closing date thathas been established by the Bank,which shall be no earlier than 30 cal-endar days after the date the ballotsare mailed in accordance with para-graph (a) of this section. A membermay not change a ballot after it hasbeen delivered to the Bank.

(d) Counting ballots. A Bank shall notopen any ballot until after the closingdate, and may not include in the elec-tion results any ballot received afterthe closing date. Promptly after theclosing date, each Bank shall tabulate,by each voting State, the votes cast inaccordance with paragraph (c) of thissection, and shall declare elected thenominee receiving the highest numberof votes.

(1) If more than one elective director-ship is to be filled in a voting State,the Bank shall declare elected eachsuccessive nominee receiving the nexthighest number of votes until all openelective directorships for that votingState are filled.

(2) In the event of a tie for the lastavailable seat, the incumbent board ofdirectors of the Bank shall, by a major-ity vote, declare elected one of thenominees for whom the number ofvotes cast was tied.

(3) The Bank shall retain all ballotsit receives for at least two years afterthe date of the election, and shall notdisclose how any member voted.

(e) Report of election. Promptly fol-lowing the election, each Bank shallprovide written notice to its members,to each nominee, and to the FinanceBoard of the following:

(1) The name of each director-elect,the name and location of the memberat which he or she serves, and his orher title or position at the member;


643


(2) The voting State represented byeach director-elect;

(3) The expiration date of the term ofoffice of each director-elect;

(4) The number of members voting inthe election and the total number ofvotes cast, both reported by State; and

(5) The number of votes cast for eachnominee.

[63 FR 65690, Nov. 30, 1998]

§ 932.9 Prohibition on actions to influ-ence director elections.

(a) Prohibition. Except as provided inparagraph (b) of this section:

(1) No director, officer, attorney, em-ployee, or agent of the Finance Boardor of a Bank may:

(i) Communicate in any manner thata director, officer, attorney, employee,or agent of the Finance Board or of aBank, directly or indirectly, supportsthe nomination or election of a par-ticular individual for an elective direc-torship; or

(ii) Take any other action to influ-ence votes for a directorship.

(2) No member may take any actionprohibited by paragraph (a)(1)(i) of thissection.

(b) Exception for incumbent Bank direc-tors. A Bank director acting in his orher personal capacity may support thenomination or election of any indi-vidual for an elective directorship, pro-vided that no Bank director shall pur-port to represent the views of theBank, the Finance Board, any other di-rector, or any officer, attorney, em-ployee, or agent of the Bank or of theFinance Board concerning the nomina-tion or election of a particular indi-vidual for an elective directorship.

[63 FR 65690, Nov. 30, 1998]

§ 932.10 Selection of appointive direc-tors.

(a) Selection. In accordance with theAct, the Finance Board, in its sole dis-cretion, shall select all appointive di-rectors.

(b) Term of office. The term of officeof each appointive directorship shallcommence on January 1.

[63 FR 65690, Nov. 30, 1998]

§ 932.11 Conflict of interests policy forBank directors.

(a) Adoption of conflict of interests pol-icy. Each Bank shall adopt a writtenconflict of interests policy that shallapply to all Bank directors. At a min-imum, the conflict of interests policyof each Bank shall:

(1) Require the directors to admin-ister the affairs of the Bank fairly andimpartially and without discrimina-tion in favor of or against any memberor nonmember borrower;

(2) Prohibit appointed directors fromserving as an officer of any Bank or asan officer or director of any member,and from owning any equity or debt se-curity issued by a member or from hav-ing any other financial interest in amember;

(3) Prohibit the use of a director’s of-ficial position for personal gain;

(4) Require directors to disclose ac-tual or apparent conflict of interestsand establish procedures for addressingsuch conflicts;

(5) Provide internal controls to en-sure that reports are filed and thatconflicts are disclosed and resolved inaccordance with this section; and

(6) Establish procedures to monitorcompliance with the conflict of inter-ests policy.

(b) Disclosure and recusal. A directorshall disclose to the board of directorsany personal financial interests he orshe has, as well as any financial inter-ests known to the director of any im-mediate family member or business as-sociate of the director, in any matterto be considered by the board of direc-tors and in any other matter in whichanother person or entity does, or pro-poses to do, business with the Bank. Adirector shall fully disclose the natureof his or her interest in the matter andshall provide to the board of directorsany information requested to aid in itsconsideration of the director’s interest.A director shall refrain from consid-ering or voting on any issue in whichthe director, any immediate familymember, or any business associate hasa financial interest.

(c) Confidential Information. Directorsshall not disclose or use confidentialinformation received by them solely byreason of their position with the Bank


644

12 CFR Ch. IX (1–1–00 Edition)§ 932.12

to obtain a financial interest for them-selves or for any other person.

(d) Gifts. Directors shall not accept,and shall discourage their immediatefamily members from accepting, anysubstantial gift where the director hasreason to believe that the gift is givenin order to influence the director’s ac-tions as a member of the Bank’s boardof directors, or where acceptance ofsuch gift gives the appearance of influ-encing the director’s actions as a mem-ber of the board.

(e) Compensation. Directors shall notaccept compensation for services per-formed for the Bank from any sourceother than the Bank for which theservices are performed.

(f) Definitions. For purposes of thissection:

(1) Immediate family member meansparent, sibling, spouse, child, or de-pendent, or any other relative sharingthe same residence as the director.

(2) Financial interest means a direct orindirect financial interest in any activ-ity, transaction, property, or relation-ship that involves receiving or pro-viding something of monetary value,and includes, but is not limited to anyright, contractual or otherwise, to thepayment of money, whether contingentor fixed. It does not include a depositor savings account maintained with amember, nor does it include a loan orextension of credit obtained from amember in the normal course of busi-ness on terms that are generally avail-able to the public.

(3) Business associate means any indi-vidual or entity with whom a directorhas a business relationship, including,but not limited to:

(i) Any corporation or organizationof which the director is an officer orpartner, or in which the director bene-ficially owns ten percent or more ofany class of equity security, includingsubordinated debt;

(ii) Any other partner, officer, or ben-eficial owner of ten percent or more ofany class of equity security, includingsubordinated debt, of any such corpora-tion or organization; and

(iii) Any trust or other estate inwhich a director has a substantial ben-eficial interest or as to which the di-rector serves as trustee or in a similarfiduciary capacity.

(4) Substantial Gifts includes:(i) Gifts of more than token value;(ii) Entertainment or hospitality, the

cost of which is in excess of what isconsidered reasonable, customary, andaccepted business practices; or

(iii) Any other items or services forwhich a director pays less than marketvalue.

[63 FR 65690, Nov. 30, 1998]

§ 932.12 Reporting requirements forBank directors.

(a) Annual reporting. On or beforeMarch 1 of each year, each directorshall submit to his or her Bank the ap-propriate executed director eligibilitycertification, as prescribed by the Fi-nance Board. (The forms are availablepursuant to 12 CFR 900.51). The Bankshall promptly forward to the FinanceBoard a copy of the certification filedby each appointive director.

(b) Report of noncompliance. If an elec-tive or appointive director knows orhas reason to believe that he or she nolonger meets the eligibility require-ments set forth in the Act or this part,the director shall so inform the Bankin writing within 30 calendar days offirst learning of the facts causing theloss of eligibility. An appointive direc-tor also shall inform the Finance Boardin writing at the same time that he orshe informs the Bank.

[63 FR 65691, Nov. 30, 1998]

§ 932.13 Ineligible Bank directors.(a) Elective directors. Upon a deter-

mination by the Finance Board or aBank that an elective director nolonger satisfies the eligibility require-ments set forth in the Act or this part,or has failed to comply with the report-ing requirements of § 932.12, the elec-tive directorship shall immediately be-come vacant. Any elective directorthat is determined to have failed tocomply with the eligibility or report-ing requirements shall not continue toact as a Bank director.

(b) Appointive directors. Except as pro-vided herein, upon a determination bythe Finance Board that an appointivedirector no longer satisfies the eligi-bility requirements set forth in theAct, or has failed to comply with thereporting requirements of § 932.12, the


645


appointive directorship shall imme-diately become vacant. Notwith-standing the vacancy, an appointive di-rector may continue to serve until asuccessor assumes the directorship orthe term of office expires, whicheveroccurs first, and the Finance Board, inits sole discretion, may allow an ap-pointive director up to 90 calendar daysto comply with the eligibility or re-porting requirements.

[63 FR 65691, Nov. 30, 1998]

§ 932.14 Vacant Bank directorships.(a) Vacant elective directorships. (1) As

soon as practicable after a vacancy oc-curs, a Bank shall fill the unexpiredterm of office of a vacant elective di-rectorship by a majority vote of the re-maining Bank directors regardless ofwhether the remaining Bank directorsconstitute a quorum of the Bank’sboard of directors.

(2) An individual so selected to fill avacant elective directorship shall sat-isfy all of the eligibility requirementsfor elective directors set forth in theAct and this part, and shall provide tothe Bank an executed director eligi-bility certification. The Bank shallverify the individual’s eligibility in ac-cordance with § 932.7(a) before allowingthe individual to assume the director-ship, and shall retain the informationit receives in accordance with § 932.6(c).

(3) Promptly after verifying the indi-vidual’s eligibility under paragraph(a)(2) of this section, a Bank shall no-tify the Finance Board and each mem-ber located in the Bank’s district inwriting of the following:

(i) The name of the new elective di-rector, the name, location and docketnumber of the member at which thenew director serves, and the new direc-tor’s title or position with the member;

(ii) The voting State that the newelective director represents; and

(iii) The expiration date of the newelective director’s term of office.

(b) Vacant appointive directorships. (1)As soon as practicable after a vacancyoccurs, the Finance Board shall fill theunexpired term of office of a vacant ap-pointive directorship.

(2) Promptly after filling a vacant ap-pointive directorship, the FinanceBoard shall notify the affected Bank inwriting of the following:

(i) The name of the new appointivedirector, the name and location of theorganization with which the new direc-tor is affiliated, if any, and the new di-rector’s title or position with such or-ganization; and

(ii) The expiration date of the newappointive director’s term of office.

(3) Promptly after receiving the no-tice required by paragraph (b)(2) of thissection, a Bank shall provide each ofits members with the information de-scribed in paragraphs (b)(2)(i) and (ii)of this section.

[63 FR 65691, Nov. 30, 1998]

§ 932.15 Minimum number of electivedirectorships.

Under section 7(c) of the Act, thenumber of elective directorships allo-cated to members located in each Statecannot be less than the number of di-rectorships that were filled by themembers from that State on December31, 1960. The following list sets forththe States whose members held morethan one (1) seat on December 31, 1960:

State

No. of electivedirectorshipson December

31, 1960

California ........................................................ 3Colorado ........................................................ 2Illinois ............................................................. 4Indiana ........................................................... 5Iowa ............................................................... 2Kansas ........................................................... 3Kentucky ........................................................ 2Louisiana ....................................................... 2Massachusetts ............................................... 3Michigan ........................................................ 3Minnesota ...................................................... 2Missouri ......................................................... 2New Jersey .................................................... 4New York ....................................................... 4Ohio ............................................................... 4Oklahoma ...................................................... 2Pennsylvania ................................................. 6Tennessee ..................................................... 2Texas ............................................................. 3Wisconsin ...................................................... 4

[55 FR 1399, Jan. 16, 1990, as amended at 56FR 55221, Oct. 25, 1991. Redesignated andamended at 63 FR 65692, Nov. 30, 1998]

§ 932.16 Site and frequency of board ofdirectors and committee meetings.

(a) Site. Meetings of a Bank’s board ofdirectors and committees thereof usu-ally should be held within the districtserved by the Bank. No meetings of a


646

12 CFR Ch. IX (1–1–00 Edition)§ 932.17

Bank’s board of directors and commit-tees thereof may be held in any loca-tion that is not within the UnitedStates, including its possessions andterritories.

(b) Maintenance of effort. (1) Notwith-standing the limits on annual direc-tors’ compensation established by sec-tion 7(i) of the Act, as amended, theboard of directors of each Bank shallcontinue to maintain its level of over-sight of the management of the Bank,and, except as provided in paragraph(b)(2), the board of directors shall holdno fewer in-person meetings in anyyear than it has held on average overthe immediately preceding three years.

(2) A Bank may apply to the FinanceBoard for approval, upon a showing ofgood cause, to hold in any year fewerthan the number of in-person board ofdirectors meetings required underparagraph (b)(1).

[64 FR 71277, Dec. 21, 1999]

§ 932.17 Compensation and expenses ofbank directors.

(a) Definition. As used in this section,compensation means any payment ofmoney or provision of any other thingof value (or the accrual of a right to re-ceive money or a thing of value in asubsequent year) in consideration of adirector’s performance of official du-ties for the Bank, including, withoutlimitation, daily meeting fees, incen-tive payments and fringe benefits.

(b) Annual compensation policy. Begin-ning in 2000 and annually thereafter,each Bank’s board of directors shalladopt by resolution a written policy toprovide for the payment to Bank direc-tors of reasonable compensation for theperformance of their duties as mem-bers of the Bank’s board of directors,subject to the requirements set forth inparagraph (c) of this section. At a min-imum, such policy shall address the ac-tivities or functions for which attend-ance is necessary and appropriate andmay be compensated, and shall explainand justify the methodology for deter-mining the amount of compensation tobe paid to directors.

(c) Policy requirements. Payment todirectors under each Bank’s policy ondirector compensation may be basedupon factors that the Bank determinesto be appropriate, but each Bank’s pol-

icy shall conform to the following re-quirements:

(1) Statutory limits on annual com-pensation. Pursuant to section 7(i) ofthe Act, as amended, for 2000, the fol-lowing limits on compensation shallapply: for a Chairperson—$25,000; for aVice Chairperson—$20,000; for anyother member of the Bank’s board ofdirectors—$15,000. Beginning in 2001and for subsequent years, these limitson annual compensation shall be ad-justed annually by the Finance Boardto reflect any percentage increase inthe preceding year’s Consumer PriceIndex (CPI) for all urban consumers, aspublished by the Department of Labor.Each year, as soon as practicable afterthe publication of the previous year’sCPI, the Finance Board shall publishnotice by FEDERAL REGISTER, distribu-tion of a memorandum, or otherwise, ofthe CPI-adjusted limits on annual com-pensation.

(2) Compensation permitted only forperformance of official Bank business.The total compensation received byeach director in a year shall reflect theamount of time spent on official Bankbusiness, such that greater or lesser at-tendance at board and committeemeetings during a given year will bereflected in the compensation receivedby the director for that year. A Bankshall not pay fees to a director, such asretainer fees, that do not reflect the di-rector’s performance of official Bankbusiness.

(d) Expenses. Each Bank may pay itsdirectors for such necessary and rea-sonable travel, subsistence and otherrelated expenses incurred in connec-tion with the performance of their offi-cial duties as are payable to senior offi-cers of the Bank under the Bank’s trav-el policy, except that directors maynot be paid for gift or entertainmentexpenses.

(e) Disclosure. Each Bank shall, in itsannual report:

(1) State the sum of the total actualcompensation paid to its directors inthat year;

(2) State the sum of the total actualexpenses paid to its directors in thatyear; and

(3) Summarize its policy on directorcompensation.


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(f) Approval. Payments made to direc-tors in compliance with the limits onannual directors’ compensation and thestandards set forth in this section aredeemed to be approved by the FinanceBoard for purposes of section 7(i) of theAct, as amended.

[61 FR 43154, Aug. 21, 1996. Redesignated at 63FR 65692, Nov. 30, 1998, as amended at 64 FR71278, Dec. 21, 1999]

Subpart C—Selection of Bank Offi-cers and Employees [Re-served]

PART 933—MEMBERS OF THEBANKS


Sec.933.1 Definitions.

Subpart B—Membership ApplicationProcess

933.2 Membership application requirements.933.3 Decision on application.933.4 Automatic membership.933.5 Appeals.

Subpart C—Eligibility Requirements

933.6 General eligibility requirements.933.7 Duly organized requirement.933.8 Subject to inspection and regulation

requirement.933.9 Makes long-term home mortgage loans

requirement.933.10 10 percent requirement for insured de-

pository institution applicants.933.11 Financial condition requirement for

applicants other than insurance compa-nies.

933.12 Character of management require-ment.

933.13 Home financing policy requirement.933.14 De novo insured depository institu-

tion applicants.933.15 Recent merger or acquisition appli-

cants.933.16 Financial condition requirement for

insurance company applicants.933.17 Rebuttable presumptions.933.18 Determination of appropriate Bank

district for membership.

Subpart D—Stock Requirements

933.19 Par value and price of stock.933.20 Stock purchase.933.21 Issuance and form of stock.933.22 Adjustments in stock holdings.933.23 Purchase of excess stock.

Subpart E—Consolidations InvolvingMembers

933.24 Consolidations of members.933.25 Consolidations involving nonmem-

bers.

Subpart F—Withdrawal and Removal FromMembership

933.26 Procedure for withdrawal.933.27 Procedure for removal.933.28 Automatic termination of member-

ship for institutions placed in receiver-ship.

Subpart G—Orderly Liquidation ofAdvances and Redemption of Stock

933.29 Orderly liquidation of advances andredemption of stock.

Subpart H—Reacquisition of Membership

933.30 Reacquisition of membership.

Subpart I—Bank Access to Information

933.31 Reports and examinations.

Subpart J—Membership Insignia

933.32 Official membership insignia.

AUTHORITY: 12 U.S.C. 1422, 1422a, 1422b, 1423,1424, 1426, 1430, 1442.



§ 933.1 Definitions.For purposes of this part:(a) Act means the Federal Home Loan

Bank Act, as amended (12 U.S.C. 1421through 1449).

(b) Adjusted net income means net in-come, excluding extraordinary itemssuch as income received from or ex-pense incurred in sales of securities orfixed assets, reported on a regulatoryfinancial report.

(c) Aggregate unpaid loan principalmeans the aggregate unpaid principalof a subscriber’s or member’s homemortgage loans, home-purchase con-tracts, and similar obligations.

(d) Allowance for loan and lease lossesmeans a specified balance-sheet ac-count held to fund potential losses onloans or leases, that is reported on aregulatory financial report.

(e) Appropriate Federal banking agencyhas the same meaning as used in 12


648

12 CFR Ch. IX (1–1–00 Edition)§ 933.1

U.S.C. 1813(q) and, for federally insuredcredit unions, shall mean the NationalCredit Union Administration.

(f) Appropriate state regulator meansany state officer, agency, supervisor orother entity that has regulatory au-thority over, or is empowered to insti-tute enforcement action against, an ap-plicant for Bank membership.

(g) Bank means a Federal Home LoanBank established under the authorityof the Act.

(h) Board means the Federal HousingFinance Board.

(i) Combination business or farm prop-erty means real property for which thetotal appraised value is attributable toresidential, and business or farm uses.

(j) Composite regulatory examinationrating means a composite rating as-signed to an institution following theguidelines of the Uniform Financial In-stitutions Rating System (Issued bythe Federal Financial Institutions Ex-amination Council; for availabilitycontact the Federal Housing FinanceBoard, FOIA Office, 1777 F Street, NW.,Washington, DC 20006.), including aCAMEL rating, a MACRO rating, orother similar rating, contained in awritten regulatory examination report.

(k) Dwelling unit means a single roomor a unified combination of rooms de-signed for residential use.

(l) Enforcement action means anywritten notice, directive, order oragreement initiated by an applicant forBank membership or by its appropriateregulator to address any operational,financial, managerial or other defi-ciencies of the applicant identified bysuch regulator, but does not include aboard of directors resolution adoptedby the applicant in response to exam-ination weaknesses identified by suchregulator.

(m) Funded residential constructionloan means the portion of a loan se-cured by real property made to financethe on-site construction of dwellingunits on one-to-four family property ormultifamily property disbursed to theborrower.

(n) Home mortgage loan means:(1) A loan, whether or not fully amor-

tizing, or an interest in such a loan,which is secured by a mortgage, deed oftrust, or other security agreement that

creates a first lien on one of the fol-lowing interests in property:

(i) One-to-four family property ormultifamily property, in fee simple;

(ii) A leasehold on one-to-four familyproperty or multifamily propertyunder a lease of not less than 99 yearsthat is renewable, or under a lease hav-ing a period of not less than 50 years torun from the date the mortgage was ex-ecuted; or

(iii) Combination business or farmproperty where at least 50 percent ofthe total appraised value of the com-bined property is attributable to theresidential portion of the property or,in the case of any community financialinstitution, combination business orfarm property, on which is located apermanent structure actually used as aresidence (other than for temporary orseasonal housing), where the residenceconstitutes an integral part of theproperty. For purposes of this subpara-graph, the term community financial in-stitution means an institution that hasaverage total assets of $500,000,000 orless, based on an average of total assetsover the three preceding years. TheBoard shall adjust the limit annuallybased on the annual increase, if any, inthe Consumer Price Index for all urbanconsumers, as published by the Depart-ment of Labor; or

(2) A mortgage pass-through securitythat represents an undivided ownershipinterest in:

(i) Long-term loans, provided that, atthe time of issuance of the security, allof the loans meet the requirements ofparagraph (n)(1) of this section; or

(ii) A security that represents an un-divided ownership interest in long-termloans, provided that, at the time ofissuance of the security, all of theloans meet the requirements of para-graph (n)(1) of this section.

(o) Institutions which are eligible tomake application to become membersmeans, for purposes of 12 U.S.C.1431(e)(2)(A), any building and loan as-sociation, savings and loan association,cooperative bank, homestead associa-tion, insurance company, savings bank,or any insured depository institution,regardless of whether the institutionapplies for or would be approved formembership.


649


(p) Insured depository institutionmeans an insured depository institu-tion as defined in 12 U.S.C. 1422(12).

(q) Long-term means a term to matu-rity of five years or greater.

(r) Manufactured housing means amanufactured home as defined in sec-tion 603(6) of the Manufactured HomeConstruction and Safety Standards Actof 1974, as amended (42 U.S.C. 5402(6)).

(s) Member means an institution thathas been approved for membership in aBank and has purchased capital stockin the Bank in accordance with §§ 933.20or 933.25 of this part.

(t) Multifamily property means:(1) Real property that is solely resi-

dential and includes five or more dwell-ing units; or

(2) Real property that includes five ormore dwelling units combined withcommercial units, provided that theproperty is primarily residential; or

(3) Nursing homes, dormitories, orhomes for the elderly.

(u) Nonperforming loans and leasesmeans the sum of the following, re-ported on a regulatory financial report:Loans and leases that have been pastdue for 90 days (60 days in the case ofcredit union applicants) or longer butare still accruing; loans and leases on anonaccrual basis; and restructuredloans and leases (not already reportedas nonperforming).

(v) Nonresidential real property meansreal property that is not used for resi-dential purposes, including business orindustrial property, hotels, motels,churches, hospitals, educational andcharitable institution buildings or fa-cilities, clubs, lodges, associationbuildings, golf courses, recreational fa-cilities, farm property not containing adwelling unit, or similar types of prop-erty.

(w) One-to-four family property means:(1) Real property that is solely resi-

dential, including one-to-four familydwelling units or more than four fam-ily dwelling units if each dwelling unitis separated from the other dwellingunits by dividing walls that extendfrom ground to roof, such as rowhouses, townhouses or similar types ofproperty;

(2) Manufactured housing if applica-ble state law defines the purchase or

holding of manufactured housing as thepurchase or holding of real property;

(3) Individual condominium dwellingunits or interests in individual cooper-ative housing dwelling units that arepart of a condominium or cooperativebuilding without regard to the numberof total dwelling units therein; or

(4) Real property which includes one-to-four family dwelling units combinedwith commercial units, provided theproperty is primarily residential.

(x) Other real estate owned means allother real estate owned (i.e., foreclosedand repossessed real estate), reportedon a regulatory financial report, anddoes not include direct and indirect in-vestments in real estate ventures.

(y) Appropriate regulator means a reg-ulatory entity listed in § 933.8, as appli-cable.

(z) Regulatory examination reportmeans a written report of examinationprepared by the applicant’s appropriateregulator, containing, in the case of in-sured depository institution appli-cants, a composite rating assigned tothe institution following the guidelinesof the Uniform Financial InstitutionsRating System, including a CAMELrating, a MACRO rating, or other simi-lar rating.

(aa) Regulatory financial report meansa financial report that an applicant isrequired to file with its appropriateregulator on a specific periodic basis,including the quarterly call report forcommercial banks, thrift financial re-port for savings associations, quarterlyor semi-annual call report for creditunions, the National Association of In-surance Commissioners’ annual orquarterly report for insurance compa-nies, or other similar report, includingsuch report maintained by the appro-priate regulator on a computer on-linedatabase.

(bb) Residential mortgage loan meansany one of the following types of loans,whether or not fully amortizing:

(1) Home mortgage loans;(2) Funded residential construction

loans;(3) Loans secured by manufactured

housing whether or not defined bystate law as secured by an interest inreal property;


650

12 CFR Ch. IX (1–1–00 Edition)§ 933.2

(4) Loans secured by junior liens onone-to-four family property or multi-family property;

(5) Mortgage pass-through securitiesrepresenting an undivided ownershipinterest in:

(i) Loans that meet the requirementsof paragraphs (bb) (1) through (4) ofthis section at the time of issuance ofthe security;

(ii) Securities representing an undi-vided ownership interest in loans, pro-vided that, at the time of issuance ofthe security, all of the loans meet therequirements of paragraphs (bb) (1)through (4) of this section; or

(iii) Mortgage debt securities as de-fined in paragraph (bb)(6) of this sec-tion;

(6) Mortgage debt securities securedby:

(i) Loans, provided that, at the timeof issuance of the security, substan-tially all of the loans meet the require-ments of paragraphs (bb) (1) through (4)of this section;

(ii) Securities that meet the require-ments of paragraph (bb)(5) of this sec-tion; or

(iii) Securities secured by assets, pro-vided that, at the time of issuance ofthe security, all of the assets meet therequirements of paragraphs (bb) (1)through (5) of this section;

(7) Home mortgage loans secured by aleasehold interest, as defined in para-graph (n)(1)(ii) of this section, exceptthat the period of the lease term maybe for any duration; or

(8) Loans that finance properties oractivities that, if made by a member,would satisfy the statutory require-ments for the Community InvestmentProgram established under section 10(i)of the Act, or the regulatory require-ments established for any communityinvestment cash advance program au-thorized by section 10(j)(10) of the Act.

(cc) State includes a State of theUnited States, American Samoa, theCommonwealth of the Northern Mar-iana Islands, the District of Columbia,Guam, Puerto Rico, or the Virgin Is-lands of the United States.

(dd) Total assets means the total as-sets reported on a regulatory financialreport.

(ee) Consolidation includes a consoli-dation, a merger, or a purchase of all of

the assets and assumption of all of theliabilities of an entity by another enti-ty.

[61 FR 42542, Aug. 16, 1996, as amended at 63FR 3455, Jan. 23, 1998; 63 FR 35127, June 29,1998; 63 FR 40023, July 27, 1998]

Subpart B—MembershipApplication Process

SOURCE: 61 FR 42543 Aug. 16, 1996, unlessotherwise noted.

§ 933.2 Membership application re-quirements.

(a) Application. An applicant formembership in a Bank shall submit tothat Bank an application that satisfiesthe requirements of this part. The ap-plication shall include a written reso-lution or certification duly adopted bythe applicant’s board of directors, or byan individual with authority to act onbehalf of the applicant’s board of direc-tors, of the following:

(1) Applicant review. Applicant has re-viewed the requirements of this partand, as required by this part, has pro-vided to the best of applicant’s knowl-edge the most recent, accurate andcomplete information available; and

(2) Duty to supplement. Applicant willpromptly supplement the applicationwith any relevant information thatcomes to applicant’s attention prior tothe Bank’s decision on whether to ap-prove or deny the application, and ifthe Bank’s decision is appealed pursu-ant to § 933.5 of this part, prior to reso-lution of any appeal by the Board.

(b) Digest. The Bank shall prepare awritten digest for each applicant stat-ing whether or not the applicant meetseach of the requirements in §§ 933.6 to933.18 of this part, the Bank’s findingsand the reasons therefor.

(c) File. The Bank shall maintain amembership file for each applicant forat least three years after the Bank de-cides whether to approve or deny mem-bership and the resolution of any ap-peal to the Board. The membership fileshall contain at a minimum:

(1) Digest. The digest required byparagraph (b) of this section.

(2) Required documents. All documentsrequired by §§ 933.6 to 933.18 of this part,including those documents required toestablish or rebut a presumption under


651


this part, shall be described in and at-tached to the digest. The Bank may re-tain in the file only the relevant por-tions of the regulatory financial re-ports required by this part. If an appli-cant’s appropriate regulator requiresreturn or destruction of a regulatoryexamination report, the date that thereport is returned or destroyed shall benoted in the file.

(3) Additional documents. Any addi-tional document submitted by the ap-plicant, or otherwise obtained or gen-erated by the Bank, concerning the ap-plicant.

(4) Decision resolution. The decisionresolution described in § 933.3(b) of thispart.

(The information collection requirementscontained in this section have been approvedby the Office of Management and Budgetunder control number 3069–0004)

[61 FR 42543, Aug. 16, 1996, as amended at 63FR 40023, July 27, 1998]

§ 933.3 Decision on application.(a) Authority. The Board authorizes

the Banks to approve or deny all appli-cations for membership, subject to therequirements of this part. The Bankmay delegate the authority to approvemembership applications only to acommittee of the Bank’s board of di-rectors, the Bank president, or a seniorofficer who reports directly to theBank president other than an officerwith responsibility for business devel-opment.

(b) Decision resolution. For each appli-cant, the Bank shall prepare a writtenresolution duly adopted by the Bank’sboard of directors, by a committee ofthe board of directors, or by an officerwith delegated authority to approvemembership applications. The decisionresolution shall state:

(1) That the statements in the digestare accurate to the best of the Bank’sknowledge, and are based on a diligentand comprehensive review of all avail-able information identified in the di-gest; and

(2) The Bank’s decision and the rea-sons therefor. Decisions to approve anapplication should state specificallythat: the applicant is authorized underthe laws of the United States and thelaws of the appropriate state to becomea member of, purchase stock in, do

business with, and maintain depositsin, the Bank to which the applicant hasapplied; and the applicant meets all ofthe membership eligibility criteria ofthe Act and this part.

(c) Action on applications. The Bankshall act on an application within 60calendar days of the date the Bankdeems the application to be complete.An application is ‘‘complete’’ when aBank has obtained all the informationrequired by this part, and any other in-formation the Bank deems necessary,to process the application. If an appli-cation that was deemed complete sub-sequently is deemed incomplete be-cause the Bank determines during thereview process that additional informa-tion is necessary to process the appli-cation, the Bank may stop the 60-dayclock until the application again isdeemed complete, and then resume theclock where it left off. The Bank shallnotify an applicant in writing when itsapplication is deemed by the Bank tobe complete, and shall maintain a copyof such letter in the applicant’s mem-bership file. The Bank shall notify anapplicant if the 60-day clock is stopped,and when the clock is resumed, andshall maintain a written record of suchnotifications in the applicant’s mem-bership file. Within 3 business days of aBank’s decision on an application, theBank shall provide the applicant andthe Board’s Executive Secretary with acopy of the Bank’s decision resolution.



§ 933.4 Automatic membership.

(a) Automatic membership for manda-tory members. Any institution requiredby law to become a member of a Bankautomatically shall become a memberof the Bank of the district in which itsprincipal place of business is locatedupon the purchase of stock in thatBank pursuant to § 933.20(b)(1) of thispart.

(b) Automatic membership for certaincharter conversions. An insured deposi-tory institution member that converts


652

12 CFR Ch. IX (1–1–00 Edition)§ 933.5

from one charter type to another auto-matically shall become a member ofthe Bank of which the converting insti-tution was a member on the effectivedate of such conversion, provided thatthe converting institution continues tobe an insured depository institutionand the assets of the institution imme-diately before and immediately afterthe conversion are not materially dif-ferent. In such case, all relationshipsexisting between the member and theBank at the time of such conversionmay continue.

(c) Automatic membership for transfers.Any member whose membership istransferred pursuant to § 933.18(d) ofthis part automatically shall become amember of the Bank to which it trans-fers.

(d) Automatic membership, in theBank’s discretion, for certain consolida-tions. (1) If a member institution (or in-stitutions) and a nonmember institu-tion are consolidated and the consoli-dated institution has its principalplace of business in a state in the sameBank district as the disappearing insti-tution (or institutions), and the con-solidated institution will operate underthe charter of the nonmember institu-tion, on the effective date of the con-solidation, the consolidated institutionmay, in the discretion of the Bank ofwhich the disappearing institution (orinstitutions) was a member imme-diately prior to the effective date ofthe consolidation, automatically be-come a member of such Bank upon thepurchase of stock in that Bank pursu-ant to § 933.20, provided that:

(i) 90 percent or more of the total as-sets of the consolidated institution arederived from the total assets of the dis-appearing member institution (or insti-tutions); and

(ii) The consolidated institution pro-vides written notice to such Bank,within 60 calendar days after the effec-tive date of the consolidation, that itdesires to be a member of the Bank.

(2) The provisions of § 933.25(d)(1)(i)shall apply, and upon approval of auto-matic membership by the Bank, the

provisions of §§ 933.25(d)(2)(i), (e) and (f)shall apply.


§ 933.5 Appeals.

(a) Appeals by applicants—(1) Filingprocedure. Within 90 calendar days ofthe date of a Bank’s decision to denyan application for membership, the ap-plicant may file a written appeal of thedecision with the Board.

(2) Documents. The applicant’s appealshall be addressed to the ExecutiveSecretary, Federal Housing FinanceBoard, 1777 F Street, NW., Washington,DC 20006, with a copy to the Bank, andshall include the following documents:

(i) Bank’s decision resolution. A copyof the Bank’s decision resolution; and

(ii) Basis for appeal. A statement ofthe basis for the appeal by the appli-cant with sufficient facts, information,analysis and explanation to rebut anyapplicable presumptions and otherwisesupport the applicant’s position.

(b) Record for appeal—(1) Copy of mem-bership file. Upon receiving a copy of anappeal, the Bank whose action has beenappealed (appellee Bank) shall providethe Board with a copy of the appli-cant’s complete membership file. Untilthe Board resolves the appeal, the ap-pellee Bank shall supplement the ma-terials provided to the Board as anynew materials are received.

(2) Additional information. The Boardmay request additional information orfurther supporting arguments from theappellant, the appellee Bank or anyother party that the Board deems ap-propriate.

(c) Deciding appeals. The Board shallconsider the record for appeal de-scribed in paragraph (b) of this sectionand shall resolve the appeal based onthe requirements of the Act and thispart within 90 calendar days of the datethe appeal is filed with the Board. Indeciding the appeal, the Board shallapply the presumptions in this part,unless the appellant or appellee Bank


653


presents evidence to rebut a presump-tion as provided in § 933.17 of this part.


Subpart C—EligibilityRequirements


§ 933.6 General eligibility require-ments.

(a) Requirements. Any building andloan association, savings and loan asso-ciation, cooperative bank, homesteadassociation, insurance company, sav-ings bank, or insured depository insti-tution, upon application satisfying allof the requirements of the Act and thispart, shall be eligible to become amember of a Bank if:

(1) It is duly organized under the lawsof any State or of the United States;

(2) It is subject to inspection and reg-ulation under the banking laws, orunder similar laws, of any State or ofthe United States;

(3) It makes long-term home mort-gage loans;

(4) Its financial condition is suchthat advances may be safely made toit;

(5) The character of its managementis consistent with sound and economi-cal home financing; and

(6) Its home financing policy is con-sistent with sound and economicalhome financing.

(b) Additional eligibility requirement forinsured depository institutions. In orderto be eligible to become a member of aBank, an insured depository institu-tion applicant also must have at least10 percent of its total assets in residen-tial mortgage loans.

(c) Additional eligibility requirement forapplicants that are not insured depositoryinstitutions. In order to be eligible tobecome a member of a Bank, an appli-cant that is not an insured depositoryinstitution also must have mortgage-related assets that reflect a commit-ment to housing finance, as determinedby the Bank in its discretion.

(d) Ineligibility. Except as otherwiseprovided in this part, if an applicant

does not satisfy the requirements ofthis part, the applicant is ineligible formembership.


§ 933.7 Duly organized requirement.

An applicant shall be deemed to beduly organized as required by section4(a)(1)(A) of the Act and § 933.6(a)(1) ofthis part, if it is chartered by a state orfederal agency as a building and loanassociation, savings and loan associa-tion, cooperative bank, homestead as-sociation, insurance company, savingsbank or insured depository institution.


§ 933.8 Subject to inspection and regu-lation requirement.

An applicant shall be deemed to besubject to inspection and regulation asrequired by section 4(a)(1)(B) of the Actand § 933.6(a)(2) of this part, if, in thecase of a depository institution appli-cant, it is subject to inspection andregulation by the Federal Deposit In-surance Corporation, the Federal Re-serve Board, the National Credit UnionAdministration, the Office of theComptroller of the Currency, the Officeof Thrift Supervision, or other appro-priate state regulator, and, in the caseof an insurance company applicant, itis subject to inspection and regulationby an appropriate state regulator ac-credited by the National Association ofInsurance Commissioners.


§ 933.9 Makes long-term home mort-gage loans requirement.

An applicant shall be deemed tomake long-term home mortgage loansas required by section 4(a)(1)(C) of theAct and § 933.6(a)(3) of this part, if,based on the applicant’s most recentregulatory financial report filed withits appropriate regulator, the applicant


654

12 CFR Ch. IX (1–1–00 Edition)§ 933.10

originates or purchases long-termhome mortgage loans.



§ 933.10 10 percent requirement for in-sured depository institution appli-cants.

An insured depository institution ap-plicant shall be deemed to be in com-pliance with the 10 percent require-ment of section 4(a)(2)(A) of the Actand § 933.6(b) of this part, if, based onthe applicant’s most recent regulatoryfinancial report filed with its appro-priate regulator, the applicant has atleast 10 percent of its total assets inresidential mortgage loans, except thatany assets used to secure mortgagedebt securities as described in§ 933.1(bb)(6) of this part shall not beused to meet this requirement.



§ 933.11 Financial condition require-ment for applicants other than in-surance companies.

(a) Review requirement. In deter-mining whether an applicant otherthan an insurance company has com-plied with the financial condition re-quirement of section 4(a)(2)(B) of theAct and § 933.6(a)(4) of this part, theBank shall obtain as a part of themembership application and revieweach of the following documents:

(1) Regulatory financial reports. Theregulatory financial reports filed bythe applicant with its appropriate reg-ulator for the last six calendar quar-ters and three year-ends preceding thedate the Bank receives the application;

(2) Financial statement. In order ofpreference: the most recent inde-pendent audit of the applicant con-ducted in accordance with generallyaccepted auditing standards by a cer-tified public accounting firm whichsubmits a report on the applicant; themost recent independent audit of the

applicant’s parent holding companyconducted in accordance with gen-erally accepted auditing standards by acertified public accounting firm whichsubmits a report on the consolidatedholding company but not on the appli-cant separately; the most recent Direc-tors’ examination of the applicant con-ducted in accordance with generallyaccepted auditing standards by a cer-tified public accounting firm; the mostrecent Directors’ examination of theapplicant performed by other externalauditors; the most recent review of theapplicant’s financial statements by ex-ternal auditors; the most recent Com-pilation of the applicant’s financialstatements by external auditors; or themost recent audit of other proceduresof the applicant;

(3) Regulatory examination report. Theapplicant’s most recent available regu-latory examination report prepared byits appropriate regulator, a summaryprepared by the Bank of the applicant’sstrengths and weaknesses as cited inthe regulatory examination report, anda summary prepared by the Bank orapplicant of actions taken by the appli-cant to respond to examination weak-nesses;

(4) Enforcement actions. A descriptionprepared by the Bank or applicant ofany outstanding enforcement actionsagainst the applicant, responses by theapplicant, reports as required by theenforcement action, and verbal or writ-ten indications, if available, from theappropriate regulator of how the appli-cant is complying with the terms ofthe enforcement action; and

(5) Additional information. Any otherrelevant document or information con-cerning the applicant that comes tothe Bank’s attention in reviewing theapplicant’s financial condition.

(b) Standards. An applicant otherthan an insurance company shall bedeemed to be in compliance with the fi-nancial condition requirement of sec-tion 4(a)(2)(B) of the Act and§ 933.6(a)(4) of this part, if:

(1) Recent composite regulatory exam-ination rating. The applicant has re-ceived a composite regulatory exam-ination rating from its appropriate reg-ulator within two years preceding thedate the Bank receives the application;


655


(2) Capital requirement. The applicantmeets all of its minimum statutoryand regulatory capital requirements asreported in its most recent quarter-endregulatory financial report filed withits appropriate regulator; and

(3) Minimum performance standard. (i)The applicant’s most recent compositeregulatory examination rating from itsappropriate regulator within the pasttwo years was ‘‘1;’’ or, was ‘‘2’’ or ‘‘3’’and, based on the applicant’s most re-cent regulatory financial report filedwith its appropriate regulator, the ap-plicant satisfied all of the followingperformance trend criteria:

(A) Earnings. The applicant’s ad-justed net income was positive in fourof the six most recent calendar quar-ters;

(B) Nonperforming assets. The appli-cant’s nonperforming loans and leasesplus other real estate owned, did notexceed 10 percent of its total loans andleases plus other real estate owned, inthe most recent calendar quarter; and

(C) Allowance for loan and lease losses.The applicant’s ratio of its allowancefor loan and lease losses plus the allo-cated transfer risk reserve to nonper-forming loans and leases was 60 percentor greater during 4 of the 6 most recentcalendar quarters.

(ii) For applicants that are not re-quired to report financial data to theirappropriate regulator on a quarterlybasis, the information required in para-graph (b)(3)(i) of this section may bereported on a semiannual basis.

(c) Eligible collateral not considered.The availability of sufficient eligiblecollateral to secure advances to the ap-plicant is presumed and shall not beconsidered in determining whether anapplicant is in the financial conditionrequired by section 4(a)(2)(B) of the Actand § 933.6(a)(4) of this part.


[61 FR 42545, Aug. 16, 1996, as amended at 63FR 40023, 40024, July 27, 1998]

§ 933.12 Character of management re-quirement.

An applicant shall be deemed to be incompliance with the character of man-agement requirement of section

4(a)(2)(C) of the Act and § 933.6(a)(5) ofthis part, if the applicant provides tothe Bank an unqualified written cer-tification duly adopted by the appli-cant’s board of directors, or by an indi-vidual with authority to act on behalfof the applicant’s board of directors,that:

(a) Enforcement actions. Neither theapplicant nor any of its directors orsenior officers is subject to, or oper-ating under, any enforcement actioninstituted by its appropriate regulator;

(b) Criminal, civil or administrative pro-ceedings. Neither the applicant nor anyof its directors or senior officers hasbeen the subject of any criminal, civilor administrative proceedings reflect-ing upon creditworthiness, businessjudgment, or moral turpitude since themost recent regulatory examinationreport; and

(c) Criminal, civil or administrativemonetary liabilities, lawsuits or judg-ments. There are no known potentialcriminal, civil or administrative mone-tary liabilities, material pending law-suits, or unsatisfied judgments againstthe applicant or any of its directors orsenior officers since the most recentregulatory examination report, thatare significant to the applicant’s oper-ations.



§ 933.13 Home financing policy re-quirement.

(a) Standard. An applicant shall bedeemed to be in compliance with thehome financing policy requirement ofsection 4(a)(2)(C) of the Act and§ 933.6(a)(6) of this part, if the applicanthas received a Community Reinvest-ment Act (CRA) rating of ‘‘Satisfac-tory’’ or better on its most recent for-mal, or if unavailable, informal or pre-liminary, CRA performance evaluation.

(b) Written justification required. Anapplicant that is not subject to theCRA shall file as part of its applicationfor membership a written justificationacceptable to the Bank of how and whythe applicant’s home financing policy


656

12 CFR Ch. IX (1–1–00 Edition)§ 933.14

is consistent with the Bank System’shousing finance mission.


§ 933.14 De novo insured depository in-stitution applicants.

(a)(1) Duly organized, subject to inspec-tion and regulation, financial conditionand character of management require-ments. An insured depository institu-tion applicant whose date of charterapproval is within three years prior tothe date the Bank receives the appli-cant’s application for membership inthe Bank, is deemed to meet the re-quirements of §§ 933.7, 933.8, 933.11 and933.12.

(2) Makes long-term home mortgageloans requirement. The applicant shallbe deemed to make long-term homemortgage loans as required by § 933.9 ofthis part, if it has filed as part of itsapplication for membership a writtenjustification acceptable to the Bank ofhow its home financing credit policyand lending practices will include orig-inating or purchasing long-term homemortgage loans.

(3) 10 percent requirement. The appli-cant shall have until one year aftercommencing its initial business oper-ations to meet the 10 percent require-ment of § 933.10 of this part.

(4) Home financing policy requirement—(i) Conditional approval. An applicantthat has not received its first formal,or if unavailable, informal or prelimi-nary, Community Reinvestment Act(CRA) performance evaluation, shall beconditionally deemed to be in compli-ance with the home financing policyrequirement of section 4(a)(2)(C) of theAct and § 933.6(a)(6) of this part, if theapplicant has filed as part of its appli-cation for membership a written jus-tification acceptable to the Bank ofhow and why its home financing creditpolicy and lending practices will meetthe credit needs of its community. Anapplicant that receives such condi-tional membership approval is subjectto the stock purchase requirements of§ 933.20 of this part and the advancesprovisions of 12 CFR part 935.

(ii) Approval. The applicant shall bedeemed to be in compliance with the

home financing policy requirement ofsection 4(a)(2)(C) of the Act and§ 933.6(a)(6) of this part upon receipt bythe Bank of evidence from the appli-cant that it received a CRA rating of‘‘Satisfactory’’ or better on its firstformal, or if unavailable, informal orpreliminary, CRA performance evalua-tion.

(iii) Conditional approval deemed nulland void. If the applicant’s first suchCRA rating is ‘‘Needs to Improve’’ or‘‘Substantial Non-Compliance,’’ the ap-plicant shall be deemed to be in non-compliance with the home financingpolicy requirement of section 4(a)(2)(C)of the Act and § 933.6(a)(6) of this part,subject to rebuttal by the applicantunder § 933.17(f) of this part, and itsconditional membership approval isdeemed null and void.

(iv) Treatment of outstanding advancesand Bank stock. If the applicant’s con-ditional membership approval isdeemed null and void pursuant to para-graph (a)(4)(iii) of this section, the liq-uidation of any outstanding indebted-ness owed by the applicant to the Bankand redemption of stock of such Bankshall be carried out in accordance with§ 933.29 of this part.

(b) [Reserved]



§ 933.15 Recent merger or acquisitionapplicants.

An applicant that merged with or ac-quired another institution prior to thedate the Bank receives its applicationfor membership is subject to the re-quirements of §§ 933.7 to 933.13 of thispart except as provided in this section.

(a) Financial condition requirement—(i)Regulatory financial reports. For pur-poses of § 933.11(a)(1) of this part, an ap-plicant that, as a result of a merger oracquisition preceding the date theBank receives its application for mem-bership, has not yet filed regulatory fi-nancial reports with its appropriateregulator for the last six calendarquarters and three year-ends precedingsuch date, shall provide any regulatory


657


financial reports that the applicant hasfiled with its appropriate regulator.

(ii) Performance trend criteria. Forpurposes of § 933.11(b)(3)(i) (A) to (C) ofthis part, an applicant that, as a resultof a merger or acquisition precedingthe date the Bank receives its applica-tion for membership, has not yet filedcombined regulatory financial reportswith its appropriate regulator for thelast six calendar quarters precedingsuch date, shall provide pro forma com-bined financial statements for thosecalendar quarters in which actual com-bined regulatory financial reports areunavailable.

(b) Home financing policy requirement.For purposes of § 933.13 of this part, anapplicant that, as a result of a mergeror acquisition preceding the date theBank receives its application for mem-bership, has not received its first for-mal, or if unavailable, informal or pre-liminary, Community ReinvestmentAct performance evaluation, shall fileas part of its application a written jus-tification acceptable to the Bank ofhow and why the applicant’s home fi-nancing credit policy and lending prac-tices will meet the credit needs of itscommunity.

(c) Makes long-term home mortgageloans requirement; 10 percent requirement.For purposes of determining compli-ance with §§ 933.9 and 933.10, a Bankmay, in its discretion, permit an appli-cant that, as a result of a merger or ac-quisition preceding the date the Bankreceives its application for member-ship, has not yet filed a consolidatedregulatory financial report as a com-bined entity with its appropriate regu-lator, to provide the combined proforma financial statement for the com-bined entity filed with the regulatorthat approved the merger or acquisi-tion.


[61 FR 42545, Aug. 16, 1996, as amended at 63FR 40023, 40024, July 27, 1998]

§ 933.16 Financial condition require-ment for insurance company appli-cants.

An insurance company applicantshall be deemed to meet the financial

condition requirement of section4(a)(2)(B) of the Act and § 933.6(a)(4) ofthis part, if, based on the informationcontained in the applicant’s most re-cent regulatory financial report filedwith its appropriate regulator, the ap-plicant meets all of its minimum stat-utory and regulatory capital require-ments and the capital standards estab-lished by the National Association ofInsurance Commissioners.



§ 933.17 Rebuttable presumptions.(a) Rebutting presumptive compliance.

The presumption that an applicantmeeting the requirements of §§ 933.7 to933.16 of this part is in compliance withsection 4(a) of the Act and § 933.6 (a)and (b) of this part, may be rebutted,and the Bank may deny membership tothe applicant, if the Bank obtains sub-stantial evidence to overcome the pre-sumption of compliance.

(b) Rebutting presumptive noncompli-ance. The presumption that an appli-cant not meeting a particular require-ment of §§ 933.8, 933.11, 933.12, 933.13, or933.16 of this part is in noncompliancewith section 4(a) of the Act and§ 933.6(a) (2), (4), (5) or (6) of this part,may be rebutted, and the applicantshall be deemed to meet such require-ment, if the applicable requirements inthis section are satisfied.

(c) Presumptive noncompliance by in-surance company applicant with ‘‘subjectto inspection and regulation’’ requirementof § 933.8. If an insurance company ap-plicant is not subject to inspection andregulation by an appropriate state reg-ulator accredited by the National Asso-ciation of Insurance Commissioners(NAIC), as required by § 933.8 of thispart, the applicant or the Bank shallprepare a written justification thatprovides substantial evidence accept-able to the Bank that the applicant issubject to inspection and regulation asrequired by § 933.6(a)(2) of this part,notwithstanding the lack of NAIC ac-creditation.

(d) Presumptive noncompliance with fi-nancial condition requirements of §§ 933.11


658

12 CFR Ch. IX (1–1–00 Edition)§ 933.17

and 933.16—(1) Applicants other than in-surance companies. For applicants otherthan insurance companies, in the caseof an applicant’s lack of a compositeregulatory examination rating withinthe two-year period required by§ 933.11(b)(1) of this part, a variancefrom the rating required by§ 933.11(b)(3)(i) of this part, or a vari-ance from a performance trend cri-terion required by § 933.11(b)(3)(i) of thispart, the applicant or the Bank shallprepare a written justification per-taining to such requirement that pro-vides substantial evidence acceptableto the Bank that the applicant is in thefinancial condition required by§ 933.6(a)(4) of this part, notwith-standing the lack of rating or variance.

(2) Insurance company applicants. Inthe case of an insurance company ap-plicant’s variance from a capital re-quirement or standard of § 933.16 of thispart, the applicant or the Bank shallprepare a written justification per-taining to such requirement or stand-ard that provides substantial evidenceacceptable to the Bank that the appli-cant is in the financial condition re-quired by § 933.6(a)(4) of this part, not-withstanding the variance.

(e) Presumptive noncompliance withcharacter of management requirement of§ 933.12—(1) Enforcement actions. If anapplicant or any of its directors or sen-ior officers is subject to, or operatingunder, any enforcement action insti-tuted by its appropriate regulator, theapplicant shall provide or the Bankshall obtain:

(i) Regulator confirmation. Written orverbal confirmation from the appli-cant’s appropriate regulator that theapplicant or its directors or senior offi-cers are in substantial compliance withall aspects of the enforcement action;or

(ii) Written analysis. A written anal-ysis acceptable to the Bank indicatingthat the applicant or its directors orsenior officers are in substantial com-pliance with all aspects of the enforce-ment action. The written analysis shallstate each action the applicant or itsdirectors or senior officers are requiredto take by the enforcement action, theactions actually taken by the applicantor its directors or senior officers, andwhether the applicant regards this as

substantial compliance with all aspectsof the enforcement action.

(2) Criminal, civil or administrative pro-ceedings. If an applicant or any of itsdirectors or senior officers has been thesubject of any criminal, civil or admin-istrative proceedings reflecting uponcreditworthiness, business judgment,or moral turpitude since the most re-cent regulatory examination report,the applicant shall provide or the Bankshall obtain:

(i) Regulator confirmation. Written orverbal confirmation from the appli-cant’s appropriate regulator that theproceedings will not likely result in en-forcement action; or

(ii) Written analysis. A written anal-ysis acceptable to the Bank indicatingthat the proceedings will not likely re-sult in enforcement action. The writ-ten analysis shall state the severity ofthe charges, and any mitigating actiontaken by the applicant or its directorsor senior officers.

(3) Criminal, civil or administrativemonetary liabilities, lawsuits or judg-ments. If there are any known potentialcriminal, civil or administrative mone-tary liabilities, material pending law-suits, or unsatisfied judgments againstthe applicant or any of its directors orsenior officers since the most recentregulatory examination report, thatare significant to the applicant’s oper-ations, the applicant shall provide orthe Bank shall obtain:

(i) Regulator confirmation. Written orverbal confirmation from the appli-cant’s appropriate regulator that theliabilities, lawsuits or judgments willnot likely cause the applicant to fallbelow its applicable capital require-ments set forth in §§ 933.11(b)(2) and933.16 of this part; or

(ii) Written analysis. A written anal-ysis acceptable to the Bank indicatingthat the liabilities, lawsuits or judg-ments will not likely cause the appli-cant to fall below its applicable capitalrequirements set forth in §§ 933.11(b)(2)and 933.16 of this part. The writtenanalysis shall state the likelihood ofthe applicant or its directors or seniorofficers prevailing, and the financialconsequences if the applicant or its di-rectors or senior officers do not pre-vail.


659


(f) Presumptive noncompliance withhome financing policy requirements of§§ 933.13, 933.14(a)(4), and 933.14(b)(3). Ifan applicant received a ‘‘SubstantialNon-Compliance’’ rating on its mostrecent formal, or if unavailable, infor-mal or preliminary, Community Rein-vestment Act (CRA) performance eval-uation, or a ‘‘Needs to Improve’’ CRArating on its most recent formal, or ifunavailable, informal or preliminary,CRA performance evaluation and aCRA rating of ‘‘Needs to Improve’’ orbetter on any immediately precedingCRA performance evaluation, the ap-plicant shall provide or the Bank shallobtain:

(1) Regulator confirmation. Written orverbal confirmation from the appli-cant’s appropriate regulator of the ap-plicant’s recent satisfactory CRA per-formance, including any corrective ac-tion that substantially improved uponthe deficiencies cited in the most re-cent CRA performance evaluation(s); or

(2) Written analysis. A written anal-ysis acceptable to the Bank dem-onstrating that the CRA rating is unre-lated to home financing, and providingsubstantial evidence of how and whythe applicant’s home financing creditpolicy and lending practices meet thecredit needs of its community.



§ 933.18 Determination of appropriateBank district for membership.

(a) Eligibility. (1) An institution eligi-ble to become a member of a Bankunder the Act and this part may be-come a member only of the Bank of thedistrict in which the institution’s prin-cipal place of business is located, ex-cept as provided in paragraph (a)(2) ofthis section. A member shall promptlynotify its Bank in writing whenever itrelocates its principal place of businessto another state and the Bank shall in-form the Finance Board in writing ofany such relocation.

(2) An institution eligible to becomea member of a Bank under the Act andthis part may become a member of theBank of a district adjoining the dis-

trict in which the institution’s prin-cipal place of business is located, if de-manded by convenience and then onlywith the approval of the Board.

(b) Principal place of business. Exceptas otherwise designated in accordancewith this section, the principal place ofbusiness of an institution is the statein which the institution maintains itshome office established as such in con-formity with the laws under which theinstitution is organized.

(c) Designation of principal place ofbusiness. (1) A member or an applicantfor membership may request in writingto the Bank in the district where theinstitution maintains its home officethat a state other than the state inwhich it maintains its home office bedesignated as its principal place ofbusiness. Within 90 calendar days of re-ceipt of such written request, the boardof directors of the Bank in the districtwhere the institution maintains itshome office shall designate a stateother than the state where the institu-tion maintains its home office as theinstitution’s principal place of busi-ness, provided all of the following cri-teria are satisfied:

(i) At least 80 percent of the institu-tion’s accounting books, records andledgers are maintained, located or heldin such designated state;

(ii) A majority of meetings of the in-stitution’s board of directors and con-stituent committees are conducted insuch designated state; and

(iii) A majority of the institution’sfive highest paid officers have theirplace of employment located in suchdesignated state.

(2) Written notice of a designationmade pursuant to paragraph (c)(1) ofthis section shall be sent to the Bankin the district containing the des-ignated state, the Board and the insti-tution.

(3) The notice of designation madepursuant to paragraph (c)(1) of this sec-tion shall include the state designatedas the principal place of business andthe resulting Bank to which member-ship will be transferred.

(4) If the board of directors of theBank in the district where the institu-tion maintains its home office fails tomake the designation requested by the


660

12 CFR Ch. IX (1–1–00 Edition)§ 933.19

member or applicant pursuant to para-graph (c)(1) of this section, then themember or applicant may request inwriting that the Board make the des-ignation.

(d) Transfer of membership. (1) Notransfer of membership from one Bankto another Bank shall take effect untilthe Banks involved reach agreement ona method of orderly transfer.

(2) In the event that the Banks in-volved fail to agree on a method of or-derly transfer, the Board shall deter-mine the conditions under which thetransfer shall take place.

(e) Effect of transfer. A transfer ofmembership pursuant to this sectionshall be effective for all purposes, butshall not affect voting rights in theyear of the transfer and shall not besubject to the provisions on termi-nation of membership set forth in sec-tion 6 of the Act or §§ 933.26, 933.27, and933.28, nor the restriction on re-acquiring Bank membership within 10years set forth in § 933.30.


[61 FR 42545, Aug. 16, 1996, as amended at 63FR 65692, Nov. 30, 1998]

Subpart D—Stock Requirements

SOURCE: 58 FR 43542, Aug. 17, 1993, unlessotherwise noted. Redesignated at 61 FR 42542,Aug. 16, 1996.

§ 933.19 Par value and price of stock.The capital stock of each Bank shall

be sold at par, unless the Board hasfixed a higher price.

§ 933.20 Stock purchase.(a) Minimum stock purchase. (1) Each

member shall purchase stock in theBank in which it is a member in anamount equal to one percent of themember’s aggregate unpaid loan prin-cipal, but not less than $500.

(2) If a member has less than 30 per-cent of its total assets in home mort-gage loans, it shall purchase stock inan amount that would be requiredunder paragraph (a)(1) of this section ifat least 30 percent of such member’stotal assets were home mortgage loans.

(b) Timing of minimum stock purchase.(1) Within 60 calendar days after an in-stitution is approved for membershipin a Bank pursuant to § 933.3 of thispart, or an institution is automaticallyapproved for membership pursuant to§ 933.4 (a) or (d) of this part, the institu-tion shall purchase its minimum stockrequirement as set forth in paragraph(a) of this section.

(2) At the election of an institutionapproved for membership, includingthose automatically approved under§ 933.4 (a) or (d) of this part, the institu-tion may purchase its minimum stockrequirement in installments, providedthat not less than one-fourth of thetotal amount shall be purchased within60 calendar days of the date of approvalof membership, and that a further sumof not less than one-fourth of suchtotal shall be purchased at the end ofeach succeeding period of four monthsfrom the date of approval of member-ship.

(c) Commencement of membership. Aninstitution that has been approved formembership shall become a member atthe time it purchases its minimumstock requirement or the first install-ment thereof pursuant to this section.

(d) Failure to purchase minimum stockrequirement. If an institution that hassubmitted an application and been ap-proved for membership fails to pur-chase its minimum stock requirementor its first installment within 60 cal-endar days of the date of its approvalfor membership, such approval shall benull and void and the institution, if itwants to be a member, shall be re-quired to submit a new application formembership.

(e) Reports. The Bank shall makequarterly reports to the Board settingforth purchases by institutions ap-proved for membership of their min-imum stock requirement pursuant tothis section.

[58 FR 43542, Aug. 17, 1993; 58 FR 47181, Sept.7, 1993. Redesignated and amended at 61 FR42542, 42549, Aug. 16, 1996; 63 FR 40024, July 27,1998; 63 FR 65692, Nov. 30, 1998]

§ 933.21 Issuance and form of stock.

(a) A Bank shall issue to each newmember, as of the effective date ofmembership, stock in the member’s


661


name for the amount of stock pur-chased and paid for in full.

(b) If the member purchases stock ininstallments, the stock shall be issuedin installments with the appropriatenumber of shares issued after each pay-ment is made.

(c) Stock may be issued in certifi-cated or uncertificated form at the dis-cretion of the Bank.

(d) A Bank may convert all out-standing certificated stock touncertificated form at its discretion.

§ 933.22 Adjustments in stock holdings.(a) Adjustment in general. A Bank may

from time to time increase or decreasethe amount of stock any member is re-quired to hold.

(b)(1) Annual adjustment. A Bankshall calculate annually, in the mannerset forth in § 933.20(a) of this part, eachmember’s required minimum holdingsof stock in the Bank in which it is amember using calendar year-end finan-cial data provided by the member tothe Bank, pursuant to § 933.31(d) of thispart, and shall notify each member ofthe adjustment. The notice shall clear-ly state that the Bank’s calculation ofeach member’s minimum stock hold-ings is to be used to determine thenumber of votes that the member maycast in that year’s election of directorsand shall identify the state within thedistrict in which the member will vote.A member that does not agree with theBank’s calculation of the minimumstock requirement or with the identi-fication of its voting state may requestthe Finance Board to review theBank’s determination. The FinanceBoard shall promptly determine themember’s minimum required holdingsand its proper voting state, which de-termination shall be final.

(2) Redemption of excess shares. If,after the annual adjustment requiredby paragraph (b)(1) of this section ismade, the amount of stock that amember is required to hold is de-creased, the Bank may, in its discre-tion and upon proper application of themember, retire such excess stock, andthe Bank shall pay for each share uponsurrender of the stock an amount equalto the par value thereof (except that ifat any time the Board finds that thepaid-in capital of a Bank is or is likely

to be impaired as a result of losses inor depreciation of the assets held, theBank shall on the order of the Boardwithhold from the amount to be paid inretirement of the stock a pro rata shareof the amount of such impairment asdetermined by the Board) or, at itselection, the Bank may credit any partof such payment against the member’sdebt to the Bank.

(c) A member’s stock holdings shallnot be reduced under this section to anamount less than required by sections6(b), 10(c) and 10(e) of the Act, 12 U.S.C.1426(b), 1430(c), 1430(e).

(The information collection requirementscontained in this section have been approvedwhere applicable by the Office of Manage-ment and Budget under control number 3069–0004)

[58 FR 43542, Aug. 17, 1993, as amended at 58FR 50837, Sept. 29, 1993; 58 FR 53023, Oct. 13,1993; 58 FR 58231, Oct. 29, 1993. Redesignatedand amended at 61 FR 42542, 42549, Aug. 16,1996; 63 FR 65692, Nov. 30, 1998]

§ 933.23 Purchase of excess stock.

A member may purchase stock in ex-cess of the minimum amount requiredby § 933.20(a) of this part as long as suchpurchase is approved by the member’sBank and the laws under which themember operates permit such pur-chase.

[58 FR 43542, Aug. 17, 1993. Redesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996]

Subpart E—ConsolidationsInvolving Members


§ 933.24 Consolidations of members.

(a) Consolidation of members in samedistrict—(1) Upon consolidation of twoor more member institutions which areall members of the same Bank districtinto one institution operating underthe charter of one of the consolidatinginstitutions, the transfer of the Bankstock held by the disappearing institu-tion(s) to the consolidated institutionshall be deemed approved by the Boardpursuant to section 6(f) of the Act, 12U.S.C. 1426(f).


662

12 CFR Ch. IX (1–1–00 Edition)§ 933.25

(2) The stock of the disappearing in-stitution(s) held by a consolidated in-stitution under this section may be re-deemed, provided that the consolidatedinstitution holds the minimum amountof stock calculated in the manner setforth in § 933.20(a) of this part based onthe consolidated institution’s total as-sets and the consolidated institution’sstock holdings are not reduced to anamount less than required by sections6(b), 10(c) and 10(e) of the Act, 12 U.S.C.1426(b), 1430(c), 1430(e).

(b) Consolidation of members in dif-ferent districts—(1) Termination of mem-bership. Upon consolidation of twomember institutions which are mem-bers of different Banks into one insti-tution operating under the charter ofone of the consolidating institutions,the disappearing institution’s member-ship terminates upon cancellation ofits charter, except that if more than 80percent of the assets of the consoli-dated institution are derived from theassets of the disappearing institution,then the consolidated institution shallcontinue to be a member of the Bank ofwhich the disappearing institution wasa member prior to the consolidationand the membership of the other insti-tution terminates upon consummationof the consolidation.

(2) Treatment of outstanding advancesand Bank stock. The liquidation of anyoutstanding indebtedness owed to thedisappearing institution’s Bank and re-demption of stock of such Bank shallbe carried out in accordance with§ 933.29 of this part.

(3) Dividends on acquired Bank stock.The consolidated institution is entitledto receive dividends on outstandingBank stock acquired in the consolida-tion from the disappearing institutionin accordance with section 6(g) of theAct, 12 U.S.C. 1426(g), and § 934.17 of thischapter.

[58 FR 43542, Aug. 17, 1993. Redesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996;63 FR 65692, Nov. 30, 1998]

§ 933.25 Consolidations involving non-members.

(a) Termination of membership. If amember is consolidated into an institu-tion that is not a member, its member-ship in the Bank terminates upon can-cellation of its charter.

(b) Notification of decision to seek mem-bership. When a consolidated institu-tion resulting from a consolidation de-scribed in paragraph (a) of this sectionhas its principal place of business in astate in the same Bank district as thedisappearing institution, the consoli-dated institution shall have 60 calendardays after the cancellation of the char-ter of the disappearing institution tonotify the disappearing institution’sBank that it intends to apply for mem-bership in such Bank.

(c) Application for membership. If theconsolidated institution has providednotification pursuant to paragraph (b)of this section, it must apply for mem-bership pursuant to subpart B of thispart within 60 calendar days of the no-tification.

(d) Treatment of outstanding advances,Bank stock and minimum stock require-ments—(1) Prior to membership approval.The disappearing institution’s Bankmay permit the consolidated institu-tion to continue to hold any out-standing Bank advances and stock, andthe consolidated institution shall havethe limited rights associated with suchstock in accordance with paragraphs(e) and (f) of this section: (i) During theinitial 60-day notification period; (ii)for 60 calendar days after receipt of no-tification that the consolidated insti-tution intends to apply for member-ship; and (iii) during the processing ofan application for membership.

(2) Upon membership approval. (i) Ifthe application of the consolidated in-stitution for membership is approved,the transfer of the Bank stock held bythe disappearing institution to the con-solidated institution shall be deemedapproved by the Board pursuant to sec-tion 6(f) of the Act, 12 U.S.C. 1426(f).

(ii) If the application of the consoli-dated institution for membership is ap-proved:

(A) The consolidated institution shallpurchase any additional amount ofstock required to meet the minimumstock requirement of § 933.20(a) of thispart, based on the consolidated institu-tion’s total assets, within 60 calendardays of the date of approval of member-ship; or

(B) At the election of the consoli-dated institution, the amount of stockrequired to be purchased to meet the


663


requirement of § 933.20(a) of this partmay be purchased in installments, pro-vided that not less than one-fourth ofsuch total additional amount shall bepurchased within 60 calendar days ofthe date of approval of membership,and that a further sum of not less thanone-fourth of such total additionalamount shall be purchased at the endof each succeeding period of fourmonths from the date of approval ofmembership.

(iii) A consolidated institution thathas been approved for membershipshall become a member at the time itpurchases the additional amount ofstock required to meet the minimumstock requirement of § 933.20(a) of thispart or the first installment thereof.

(3) Upon failure to apply for or be ap-proved for membership. If the consoli-dated institution does not apply formembership, or if its application formembership is denied, then the liquida-tion of any outstanding indebtednessowed to the disappearing institution’sBank and redemption of stock of suchBank shall be carried out in accordancewith § 933.29 of this part, and the con-solidated institution shall have thelimited rights associated with suchstock in accordance with paragraphs(e) and (f) of this section.

(e) Dividends on acquired Bank stock.The consolidated institution is entitledto receive dividends on outstandingBank stock acquired in the consolida-tion from the disappearing institutionin accordance with section 6(g) of theAct, 12 U.S.C. 1426(g), and § 934.17 of thischapter.


[58 FR 43542, Aug. 17, 1993, as amended at 58FR 50837, Sept. 29, 1993. Rdesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996;63 FR 65692, Nov. 30, 1998]

Subpart F—Withdrawal andRemoval From Membership


§ 933.26 Procedure for withdrawal.

(a) Notice of withdrawal. Any memberthat is eligible under applicable law towithdraw from Bank membership maydo so after providing the Board and itsBank at least six months written no-tice of the member’s intention to with-draw from membership.

(b) Cancellation of notice of with-drawal. A member may cancel its no-tice of withdrawal by providing boththe Board and its Bank written noticeof cancellation any time before the ef-fective date of the withdrawal.

(c) Treatment of outstanding advancesand Bank stock. The liquidation of anyoutstanding indebtedness owed to theBank in which membership has beenterminated and redemption of stock ofsuch Bank shall be carried out in ac-cordance with § 933.29 of this part.

(d) Dividends on Bank stock. An insti-tution that has withdrawn from Bankmembership pursuant to this section isentitled to receive dividends on out-standing stock of the Bank in whichmembership has been terminated in ac-cordance with section 6(g) of the Act,12 U.S.C. 1426(g), and § 934.17 of thischapter.


[58 FR 43542, Aug. 17, 1993, as amended at 58FR 50837, Sept. 29, 1993. Redesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996;63 FR 65692, Nov. 30, 1998]

§ 933.27 Procedure for removal.

(a) Bank request for removal. If a Bankbelieves that any of the grounds for re-moval of a member from membershipcontained in paragraph (b) of this sec-tion exists, the Bank may submit awritten request to the Board statingthe grounds for removal and recom-mending removal of the member frommembership.

(b) Grounds. The following aregrounds for removing a member frommembership in a Bank:

(1) Failure by the member to complywith any provision of the Act or anyregulation of the Board adopted underthe Act;


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12 CFR Ch. IX (1–1–00 Edition)§ 933.28

(2) Insolvency of the member. Amember is deemed insolvent if its as-sets are less than its liabilities;

(3) The member’s management orhome-financing policies are incon-sistent with sound and economicalhome financing or with the purposes ofthe Act; or

(4) Any other condition exists withrespect to the member that the Boardbelieves would jeopardize the safetyand soundness of the member’s Bank.

(c) Procedure. (1) If the Board believesthat any of the grounds for removalcontained in paragraph (b) of this sec-tion exist, and it believes that themember should be removed from mem-bership, it shall provide the memberwith at least 30 calendar days writtennotice of its intention to remove themember from membership.

(2) Such notice shall be served as de-termined by the Board and shall statethe grounds for such removal actionand the time and place of a hearing atwhich the member may be heard.

(3) A hearing on such removal actionshall be conducted in accordance withprocedures established by the Board.

(d) Removal by Board. If the Board de-termines, in its sole discretion andafter complying with the requirementsof paragraph (c) of this section, thatany of the grounds for removal of amember contained in paragraph (b) ofthis section exists, it may remove themember from membership.

(e) Treatment of outstanding advancesand Bank stock. The liquidation of anyoutstanding indebtedness owed to theBank in which membership has beenterminated and redemption of stock ofsuch Bank shall be carried out in ac-cordance with § 933.29 of this part.

(f) Dividends on Bank stock. An insti-tution that has been removed fromBank membership pursuant to this sec-tion is entitled to receive dividends onoutstanding stock of the Bank in whichmembership has been terminated in ac-cordance with section 6(g) of the Act,12 U.S.C. 1426(g), and § 934.17 of thischapter.

[58 FR 43542, Aug. 17, 1993; 58 FR 47181, Sept.7, 1993. Redesignated and amended at 61 FR42542, 42549, Aug. 16, 1996; 63 FR 65692, Nov. 30,1998]

§ 933.28 Automatic termination ofmembership for institutions placedin receivership.

(a) Automatic termination. As of the ef-fective date of being placed in receiver-ship, an institution’s Bank membershipautomatically terminates.

(b) Treatment of outstanding advancesand Bank stock. The liquidation of anyoutstanding indebtedness owed to theBank in which membership has beenterminated and redemption of stock ofsuch Bank shall be carried out in ac-cordance with § 933.29 of this part.

(c) Dividends on Bank stock. The re-ceiver is entitled to receive dividendson outstanding Bank stock of the insti-tution placed in receivership in accord-ance with section 6(g) of the Act, 12U.S.C. 1426(g), and § 934.17 of this chap-ter.

[58 FR 43542, Aug. 17, 1993. Redesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996;63 FR 65692, Nov. 30, 1998]

Subpart G—Orderly Liquidation ofAdvances and Redemption ofStock

§ 933.29 Orderly liquidation of ad-vances and redemption of stock.

(a)(1) If an institution ceases to be amember of a Bank pursuant to §§ 933.26,933.27 or 933.28 of this part, the institu-tion, or its receiver under § 933.28 ofthis part, may continue to hold thestock of the Bank of which such insti-tution is no longer a member so long asthe Bank requires that the stock beheld as collateral for any outstandingindebtedness owed to the Bank. If aninstitution ceases to be a member of aBank pursuant to §§ 933.24(b) or933.25(d)(3) of this part, the consoli-dated institution may continue to holdthe stock of the disappearing institu-tion’s Bank so long as such Bank re-quires that the stock be held as collat-eral for any outstanding indebtednessowed to the Bank.

(2) The indebtedness of the institu-tion that has ceased to be a member ofa Bank owed to such Bank shall be liq-uidated in an orderly manner as deter-mined by the Bank in accordance with


665


§ 935.19 of this chapter, and upon com-pletion of such liquidation, such insti-tution’s remaining stock in the Bankshall be surrendered and canceled.

(b) If an institution that has ceasedto be a member of a Bank has no out-standing indebtedness owed to theBank, such institution’s stock in theBank shall be surrendered and can-celed.

(c) An institution that has ceased tobe a member shall receive for stock re-deemed under paragraphs (a)(2) or (b) ofthis section a sum equal to the originalamount paid for the stock redeemed,except that if at any time the Boardfinds that the paid-in capital of theBank is or is likely to be impaired as aresult of losses in or depreciation ofthe assets held by the Bank, the Bankshall on the order of the Board with-hold from the amount to be paid in re-tirement of the stock a pro rata shareof the amount of such impairment asdetermined by the Board.

[58 FR 43542, Aug. 17, 1993; 58 FR 53023, Oct.13, 1993. Redesignated and amended at 61 FR42542, 42549, Aug. 16, 1996]

Subpart H—Reacquisition ofMembership

§ 933.30 Reacquisition of membership.

An institution which withdraws frommembership pursuant to § 933.26 of thispart may acquire membership in aBank only after the expiration of a pe-riod of 10 years thereafter, except:

(a) Such institution may acquiremembership in a Bank if such with-drawal is a consequence of a transfer ofmembership on a non-interrupted basisbetween Banks pursuant to § 933.18 ofthis part; or

(b) Such institution shall acquiremembership in a Bank in connectionwith obtaining a charter as a federallychartered savings association (as de-fined in 12 U.S.C. 1813), or if otherwiserequired by law to become a member ofa Bank, which institution is automati-cally approved for Bank membershippursuant to § 933.4(a) of this part.

[58 FR 43542, Aug. 17, 1993. Redesignated andamended at 61 FR 42542, 42549, Aug. 16, 1996]

Subpart I—Bank Access toInformation

§ 933.31 Reports and examinations.

As a condition precedent to Bankmembership, each member:

(a) Consents to such examinations asthe Bank or the Board may require forpurposes of the Act;

(b) Agrees that reports of examina-tions by local, state or federal agenciesor institutions may be furnished bysuch authorities to the Bank or theBoard upon request;

(c) Agrees to give the Bank or the ap-propriate Federal banking agency,upon request, such information as theBank or the appropriate Federal bank-ing agency may need to compile andpublish cost of funds indices and topublish other reports or statisticalsummaries pertaining to the activitiesof Bank members;

(d) Agrees to provide the Bank withcalendar year-end financial data eachyear, for purposes of making the cal-culation described in § 933.22(b)(1) ofthis part; and

(e) Agrees to provide the Bank withcopies of reports of condition and oper-ations required to be filed with themember’s appropriate Federal bankingagency, if applicable, within 20 cal-endar days of filing, as well as copies ofany annual report of condition and op-erations required to be filed.


[58 FR 43542, Aug. 17, 1993; 58 FR 50837, Sept.29, 1993; 58 FR 53023, Oct. 13, 1993. Redesig-nated and amended at 61 FR 42542, 42549, Aug.16, 1996]

Subpart J—Membership Insignia

§ 933.32 Official membership insignia.

Members may display the approvedinsignia of membership on their docu-ments, advertising and quarters, andlikewise use the words ‘‘Member Fed-eral Home Loan Bank System.’’

[58 FR 43542, Aug. 17, 1993. Redesignated at 61FR 42542, Aug. 16, 1996]


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PART 934—OPERATIONS OF THEBANKS

Sec.934.1 Investments.934.2 Loans guaranteed under the Foreign

Assistance Act of 1961.934.3 Transfer of funds between Banks.934.4 Deposits in banks or trust companies.934.5 Deposits from members.934.6 Trustee powers.934.7 Budget preparation.934.8 Surety bonds.934.9 Insurance.934.10 Safe-keeping accounts.934.11 Securities held in trust or as collat-

eral.934.12 Accounting.934.13 Gold and gold-related transactions.934.14 Office of Thrift Supervision Assess-

ments.934.15 Bank requests for information.934.16 Bank bylaws.934.17 Bank dividends.

AUTHORITY: 12 U.S.C. 1422a, 1422b, 1431(g),1432(a), and 1442.

SOURCE: 43 FR 46841, Oct. 11, 1978. Redesig-nated at 54 FR 36759, Sept. 5, 1989, unless oth-erwise noted.

§ 934.1 Investments.(a) Banks may acquire or dispose of

securities with prior approval of theBoard or its designated representativeor in conformity with:

(1) Authorizations of the Board orsuch representative or (2) stated Boardpolicy. A Bank’s board of directorsmay authorize Bank officer(s) to ac-quire or dispose of securities qualifyingas liquidity for deposits under the in-vestment policy of the Board as in thejudgment of the officer(s) is necessaryin the operation of the Bank. Anyother acquisition or disposition mustbe authorized in advance by a majorityof the board of directors, executivecommittee, or investment committeeconsisting of three or more persons amajority of whom are directors of theBank. Single acquisitions or disposi-tions may be so authorized, or acquisi-tions and/or dispositions of securitiesof a stated amount maturing withinspecified dates as in the judgment ofthe officer(s) designated in the author-ization are necessary in the operationof the Bank, may be so authorized, forperiods of 90 days or less.

(b) Compliance with sections 11 and16 of the act shall be determined based

on the principal amount of obligationsof the United States.

(c) Secured advances to members ma-turing within five years are invest-ments in compliance with section 11(g)of the Act.

(d) Cash reserves may be held tempo-rarily, awaiting investment oppor-tunity, without violating section 16 ofthe Act.

[43 FR 46841, Oct. 11, 1978, as amended at 49FR 34198, Aug. 29, 1984. Redesignated at 54 FR36759, Sept. 5, 1989]

§ 934.2 Loans guaranteed under theForeign Assistance Act of 1961.

With prior approval of the Board, aBank’s board of directors may author-ize it to acquire, hold, or dispose of anyof the following loans, or intereststherein, primarily to facilitate acquisi-tion of participation interests in suchloans by members authorized to makesuch investment:

(a) Housing project loans with anyguaranty under section 221 of the For-eign Assistance Act of 1961, as in effectbefore December 30, 1969;

(b) Loans with any guaranty undersection 224 of such Act, as in effect be-fore December 30, 1969; or

(c) Loans with any guaranty undersection 221 or 222 of such Act, as in ef-fect after December 29, 1969.Prior approval of the Board is not re-quired to repurchase a participation in-terest previously sold to a member.

§ 934.3 Transfer of funds betweenBanks.

Interbank borrowing shall be throughunsecured deposits bearing interest atrates negotiated between Banks. Ifagreement on terms cannot be reached,the Board may establish terms.

[43 FR 46841, Oct. 11, 1978. Redesignated at 54FR 36759, Sept. 5, 1989, and amended at 55 FR2229, Jan. 23, 1990]

§ 934.4 Deposits in banks or trust com-panies.

For purposes of section 11(g) of theAct, the term ‘‘deposits in banks ortrust companies’’ means:

(a) A deposit in another Bank;(b) A demand account in a Federal

Reserve Bank; and(c) A deposit in, or a sale of federal

funds to:


667


(1) An insured depository institution,as defined in section 2(12)(A) of the Act,that is designated by a Bank’s board ofdirectors;

(2) A trust company that is a memberof the Federal Reserve System or in-sured by the Federal Deposit InsuranceCorporation, and is designated by aBank’s board of directors; or

(3) A U.S. branch or agency of a for-eign bank, as defined in the Inter-national Banking Act of 1978, asamended (12 U.S.C. 3101 et seq.), that issubject to the supervision of the Boardof Governors of the Federal ReserveSystem, and is designated by a Bank’sboard of directors.

[62 FR 26922, May 16, 1997]

§ 934.5 Deposits from members.

Banks may accept demand and timedeposits from members, reserving theright to require notice of intention towithdraw any part of time deposits.Rates of interest paid on all depositsshall be set by the Bank’s board of di-rectors (or, between regular meetingsthereof, by a committee of directors se-lected by the board) or by the BankPresident, if so authorized by theboard. Unless otherwise specified bythe board, a Bank President may dele-gate to any officer or employee of theBank any authority he possesses underthis section.

[46 FR 49107, Oct. 6, 1981. Redesignated at 54FR 36759, Sept. 5, 1989, and further redesig-nated at 62 FR 26922, May 16, 1997]

§ 934.6 Trustee powers.

A Bank may act, and make reason-able charges for doing so, as trustee ofany trust affecting the business of anymember or any institution or group ap-plying for membership or for insuranceof accounts, or any group applying fora charter for a Federal Savings Asso-ciation, if:

(a) Such trust is created or arises forthe benefit of the institution or its sav-ers, investors, or borrowers, or for pro-motion of sound and economical homefinancing; and

(b) In the case of applicants, theBank ceases to act as trustee if the ap-plication is withdrawn or rejected.

[43 FR 46841, Oct. 11, 1978. Redesignated at 54FR 36759, Sept. 5, 1989, and amended at 55 FR2229, Jan. 23, 1990. Redesignated at 62 FR26922, May 16, 1997]

§ 934.7 Budget preparation.

(a) Adoption of annual Bank budgets.Each Bank’s board of directors shall beresponsible for the adoption of an an-nual operating expense budget and acapital expenditures budget for theBank, and any subsequent amendmentsthereto, consistent with the require-ments of the Act, this section, otherregulations and policies of the Board,and with the Bank’s responsibility toprotect both its members and the pub-lic interest by keeping its costs to anefficient and effective minimum.

(b) A Bank’s board of directors maynot delegate the authority to approvethe Bank’s annual budgets, or any sub-sequent amendments thereto, to Bankofficers or other Bank employees.

(c) A Bank’s annual budgets shall beprepared based upon an interest ratescenario as determined by the Bank.

(d) A Bank may not exceed its totalannual operating expense budget or itstotal annual capital expenditures budg-et without prior approval by theBank’s board of directors of an amend-ment to such budget.

[61 FR 55880, Oct. 30, 1996. Redesignated at 62FR 26922, May 16, 1997, as amended at 64 FR71278, Dec. 21, 1999]

§ 934.8 Surety bonds.

Each Bank shall maintain suretybonds covering all officers, employees,attorneys, or agents having controlover, or access to, monies or securitiesowned by the Bank or in its possession.

[49 FR 34198, Aug. 29, 1984, as amended at 54FR 6113, Feb. 7, 1989. Redesignated at 54 FR36759, Sept. 5, 1989, and further redesignatedat 62 FR 26922, May 16, 1997]

§ 934.9 Insurance.

Each bank shall maintain insurancerequired by law, and may maintain any


668

12 CFR Ch. IX (1–1–00 Edition)§ 934.10

additional insurance its board of direc-tors considers necessary for its protec-tion.


§ 934.10 Safe-keeping accounts.

Securities owned by each Bank shallbe held at any Federal Reserve Bankor, with prior Board approval, at anydepository commercial bank that is amember of a Federal Reserve Bank.

[45 FR 31046, May 12, 1980. Redesignated at 54FR 36759, Sept. 5, 1989, and further redesig-nated at 62 FR 26922, May 16, 1997]

§ 934.11 Securities held in trust or ascollateral.

Bonds and negotiable securities heldby a Bank as collateral or in trustshall be placed in the custody of a Fed-eral Reserve Bank or branch thereof, afinancial institution which is a mem-ber of the Federal Reserve System or ofthe Federal Deposit Insurance Corpora-tion, or under such other arrangementapproved by the Board. However thissection shall not apply to bonds andnegotiable securities held in custodyunder the plan for holding securitytransactions of member institutionsapproved August 13, 1943.


§ 934.12 Accounting.

Each Bank’s accounting system issubject to approval by the Board, andits accounting forms are subject to ap-proval by the Board or its designee.

[43 FR 46841, Oct. 11, 1978. Redesignated at 54FR 36759, Sept. 5, 1989, and amended at 55 FR2229, Jan. 23, 1990. Redesignated at 60 FR65516, Dec. 20, 1995, and further redesignatedat 62 FR 26922, May 16, 1997]

§ 934.13 Gold and gold-related trans-actions.

No Bank may engage in any capacityor manner in any transaction or activ-ity involving gold (including gold coin)or gold related instruments or securi-ties, except for purchase and sale ofgold coins minted and issued by theUnited States Treasury pursuant to

Pub. L. 99–185, 99 Stat. 1177 (1985), andactivities reasonably incident thereto.

[51 FR 34951, Oct. 1, 1986. Redesignated at 54FR 36759, Sept. 5, 1989. Redesignated at 60 FR65516, Dec. 20, 1995, and further redesignatedat 62 FR 26922, May 16, 1997]

§ 934.14 Office of Thrift Supervisionassessments.

At the request of, and in accordancewith the instructions of, the Directorof the Office of Thrift Supervision, theFederal home loan banks shall remitfunds made available by their membersto satisfy Office of Thrift Supervisionassessments.

[54 FR 36760, Sept. 5, 1989. Redesignated at 60FR 65516, Dec. 20, 1995, and further redesig-nated at 62 FR 26922, May 16, 1997]

§ 934.15 Bank requests for informa-tion.

This section governs the procedureby which a Federal Home Loan Bankwill request and receive ConfidentialInformation, as defined in paragraph(a)(4) of this section, pursuant to sec-tion 22 of the Federal Home Loan BankAct.

(a) Definitions. As used in this sec-tion:

(1) Board means the Federal HousingFinance Board.

(2) Bank means a Federal Home LoanBank, including its directors, officers,employees or agents.

(3) Financial Regulatory Agency meansany of the following:

(i) The Department of the Treasury,including either the Office of theComptroller of the Currency or the Of-fice of Thrift Supervision;

(ii) The Board of Governors of theFederal Reserve System;

(iii) The National Credit Union Ad-ministration; or

(iv) The Federal Deposit InsuranceCorporation.

(4) Confidential Information means anyrecord, data, or report, including butnot limited to examination reports, orany part thereof, that is non-public,privileged or otherwise not intendedfor public disclosure which is in thepossession or control of a FinancialRegulatory Agency and which containsinformation regarding members of aBank or financial institutions withwhich a Bank has had or contemplates


669


having transactions under the BankAct.

(5) Third party means any person orentity except a director, officer, em-ployee or agent of either:

(i) A Bank in possession of any par-ticular confidential information; or

(ii) The Financial Regulatory Agencythat supplied the particular confiden-tial information to such Bank.

(b) Request for confidential informa-tion. A bank shall make all requests forconfidential information to a FinancialRegulatory Agency, or to a regional of-fice of such Agency if mutually agree-able, in accordance with the procedurescontained in this section as well as anyprocedures of general applicability forrequesting information promulgated bysuch Financial Regulatory Agency.This section and its procedures may besupplemented by a confidentialityagreement between a Bank and a Fi-nancial Regulatory Agency.

(c) Form of Request. A request by aBank to a Financial Regulatory Agen-cy for confidential information shall bemade in writing or by such othermeans as may be agreed upon betweenthe Bank and the Financial RegulatoryAgency. The request shall referencesection 22 of the Bank Act, as amended,and this regulation, and shall describethe confidential information requestedand identify its intended use pursuantto the Bank Act. The request shall besigned or otherwise made by any dulyauthorized Bank officer or employee.

(d) Storage of Confidential Information.Each Bank will store all identified con-fidential information in secure storageareas or filing cabinets or other se-cured facilities generally used by suchBank and limit access thereto in thesame manner as it maintains the con-fidentiality of its own members’ privi-leged or non-public information. EachBank shall have in place a written setof procedures and policies designed toinsure the confidentiality of confiden-tial information in its possession, andshall establish an internal review of itsprocedures for storing confidential in-formation and maintaining its con-fidentiality, as a part of its internalaudit process.

(e) Access to Confidential Information.A Bank will insure that access to theConfidential Information stored at its

facility is limited to those with a needto know such information and that em-ployees with access maintain the con-fidentiality of the confidential infor-mation in accordance with the Bank’sown procedures for maintaining theconfidentiality of its members’ privi-leged or non-public information.

(f) Third party requests for ConfidentialInformation—(1) In general. In the eventa Bank receives a request for confiden-tial information in its possession fromany third party, the Bank shall forwardsuch requests to the Financial Regu-latory Agency from which the con-fidential information was obtained.

(2) By subpoena. In the event a Bankreceives a subpoena for confidential in-formation issued by a Federal, state orlocal government department, agency,court or bureau, the Bank shall givetimely written notice of such subpoenato the Financial Regulatory Agencyfrom which the confidential informa-tion was obtained, unless such notice isprohibited by applicable law.Except as limited herein, the Bankmay disclose confidential informationpursuant to the subpoena, after givingtimely written notice, when:

(i) The Financial Regulatory Agencygives written approval to the disclo-sure; or

(ii) A binding order to produce theconfidential information has becomefinal with all rights of appeal either ex-hausted or lapsed.

(3) Nondisclosure to third parties. Ex-cept as provided in paragraph (f)(2) ofthis section, a Bank shall not discloseconfidential information to any thirdparty. A Bank shall refer all thirdparty requests for such confidential in-formation to the Financial RegulatoryAgency that released the confidentialinformation to the Bank.

(4) Disclosure to Board. (i) Neither thissection nor any confidentiality agree-ment executed between a Bank and aFinancial Regulatory Agency shall pre-vent a Bank from disclosing confiden-tial information in its possession tothe Board whenever disclosure is nec-essary to accomplish the Board’s super-vision of Bank membership applica-tions or Bank director eligibilityissues, or disclosing any confidentialinformation in its possession if suchdisclosure is made pursuant to an audit


670

12 CFR Ch. IX (1–1–00 Edition)§ 934.16

conducted pursuant to paragraph (d) ofthis section or section 20 of the BankAct.

(ii) The Board shall keep all con-fidential information received underparagraph (f)(4) of this section in strictconfidence.

(g) Computer data. This section shallnot preclude a bank from arrangingwith any Financial Regulatory Agencyto transmit or allow access to con-fidential information with the consentof such agency by means of an elec-tronic computer system. Any such ar-rangement shall insure the security ofthe computerized data stored in abank’s computer and restrict access tosuch data in order to preserve confiden-tiality in a manner agreed upon by thebank and the Financial RegulatoryAgency.

[55 FR 50545, Dec. 7, 1990. Redesignated at 60FR 65516, Dec. 20, 1995, and further redesig-nated at 62 FR 26922, May 16, 1997]

§ 934.16 Bank bylaws.A Bank’s board of directors shall

have in effect at all times bylaws gov-erning the manner in which the Bankadministers its affairs, and such bylawsshall be consistent with applicable lawsand regulations as administered by theFinance Board.

[64 FR 71278, Dec. 21, 1999]

§ 934.17 Bank dividends.A Bank’s board of directors may de-

clare and pay a dividend only from pre-viously retained earnings or currentnet earnings, and only if such paymentwill not result in a projected impair-ment of the par value of the capitalstock of the Bank. Dividends on suchcapital stock shall be computed with-out preference.

[64 FR 71278, Dec. 21, 1999]

PART 935—ADVANCES

Subpart A—Advances to Members

Sec.935.1 Definitions.935.2 Bank credit mission.935.3 Bank advances policy.935.4 Authorization and application for ad-

vances; obligation to repay advances.935.5 Limitations on access to advances.935.6 Terms and conditions for advances.

935.7 [Reserved]935.8 Fees.935.9 Collateral.935.10 Banks as secured creditors.935.11 Pledged collateral; verification.935.12 Collateral valuation; appraisals.935.13 Restrictions on advances to members

that are not qualified thrift lenders.935.14 Limitations on long-term advances.935.15 Capital stock requirements; unilat-

eral redemption of excess stock.935.16 [Reserved]935.17 Intradistrict transfer of advances.935.18 Special advances to savings associa-

tions.935.19 Liquidation of advances upon termi-

nation of membership.

Subpart B—Advances to Nonmembers

935.20 Advances to the Savings AssociationInsurance Fund.

935.21 Scope.935.22 Nonmember mortgagee eligibility re-

quirements.935.23 Nonmember mortgagee application

process.935.24 Advances to nonmember mortgagees.

AUTHORITY: 12 U.S.C. 1422a(a)(3), 1422b(a)(1),1426, 1429, 1430, 1430b and 1431.

SOURCE: 58 FR 29469, May 20, 1993, unlessotherwise noted.

Subpart A—Advances toMembers

§ 935.1 Definitions.As used in this part:Act means the Federal Home Loan


Actual thrift investment percentage orATIP has the same meaning as used insection 10(m)(4) of the Home Owners’Loan Act (12 U.S.C. 1467a(m)(4)), exceptthat the ATIP will be calculated andapplied for purposes of this part to allmembers of the Banks, whether or notthey are savings associations.

Advance means a loan from a Bankthat is:

(1) Provided pursuant to a writtenagreement;

(2) Supported by a note or other writ-ten evidence of the borrower’s obliga-tion; and

(3) Fully secured by collateral in ac-cordance with the Act and this part.

Affordable Housing Program or AHPmeans the program described in section10(j) of the Act (12 U.S.C. 1430(j)) andpart 960 of the Board’s regulations.


671


Appropriate Federal banking agency.The term appropriate Federal bankingagency has the same meaning as usedin 12 U.S.C. 1813(q) and for federally in-sured credit unions shall mean the Na-tional Credit Union Administration.

Bank means a Federal Home LoanBank established under the authorityof the Act.

Board means the Federal Housing Fi-nance Board established under the au-thority of the Act, its governing Boardof Directors, or an official duly author-ized to act on its behalf.

Capital deficient member means amember that fails to meet its min-imum regulatory capital requirementsas defined or otherwise required by themember’s appropriate federal bankingagency, insurer or, in the case of mem-bers that are not federally insured de-pository institutions, state regulator.

Combination business or farm propertymeans real property for which the totalappraised value is attributable to thecombination of residential, and busi-ness or farm uses.

Community Investment Cash Advanceor CICA means any advance madethrough a program offered by a Bankunder section 1430 of the Act and parts960 and 970 of this chapter to provideadvances for community lending andaffordable housing, including advancesmade under: A Bank’s Rural Develop-ment Advance (RDA) program, offeredunder section 1430(j)(10) of the Act; aBank’s Urban Development Advance(UDA) program, offered under section1430(j)(10) of the Act; a Bank’s Afford-able Housing Program (AHP), offeredunder section 1430(j) of the Act; aBank’s Community Investment Pro-gram (CIP), offered under section1430(i) of the Act; or any other programoffered by a Bank that meets the re-quirements of part 970 of this chapter.

Depository institution means a bank orsavings association, as defined in 12U.S.C. 1813, or a credit union, as de-fined in 12 U.S.C. 1752.

Dwelling unit means, for purposes ofthis part, a single room or a unifiedcombination of rooms designed for resi-dential use by one household.

FDIC means the Federal Deposit In-surance Corporation.

GAAP means Generally Accepted Ac-counting Principles.

HUD means the Department of Hous-ing and Urban Development.

Improved residential real propertymeans residential real property exclud-ing real property to be improved, or inthe process of being improved, by theconstruction of dwelling units.

Insurer means the Federal Deposit In-surance Corporation for ‘‘insured de-pository institutions’’ as defined in 12U.S.C. 1813(c)(2) and the National Cred-it Union Administration for federallyinsured credit unions.

Long-term advance means, for the pur-poses of this part, an advance with anoriginal term to maturity greater thanfive years.

Manufactured housing means a manu-factured home as defined in section603(6) of the Manufactured Home Con-struction and Safety Standards Act of1974, as amended (42 U.S.C. 5402(6)).

Member means an institution that hasbeen admitted to membership in aBank and, pursuant to requirementsestablished by the Board, has pur-chased capital stock in the Bank.

Mortgage-backed security means:(1) An equity security representing

an ownership interest in:(i) Fully disbursed, whole first mort-

gage loans on improved residential realproperty; or

(ii) Mortgage pass-through or partici-pation securities which are themselvesbacked entirely by fully disbursed,whole first mortgage loans on im-proved residential real property; or

(2) An obligation, bond, or other debtsecurity backed entirely by the assetsdescribed in paragraph (1)(i) or (ii) ofthis definition.

Multifamily property means, for pur-poses of this part:

(1)(i) Real property that is solely res-idential and which includes five ormore dwelling units; or

(ii) Real property which includes fiveor more dwelling units with commer-cial units combined, provided the prop-erty is primarily residential.

(2) Multifamily property as defined inthis section includes nursing homes,dormitories and homes for the elderly.

Non-Qualified Thrift Lender membermeans any member that does not meetthe Qualified Thrift Lender test as de-fined in this part.


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12 CFR Ch. IX (1–1–00 Edition)§ 935.1

Nonresidential real property means, forpurposes of this part, real property notused for residential purposes, includingbusiness or industrial property, hotels,motels, churches, hospitals, edu-cational and charitable institutions,clubs, lodges, association buildings,golf courses, recreational facilities,farm property not containing a dwell-ing unit, or similar types of property,except as otherwise determined by theBoard in its discretion.

OCC means the Office of the Comp-troller of the Currency.

One-to-four family property means anyof the following:

(1) Real property containing:(i) One-to-four dwelling units; or(ii) More than four dwelling units if

each unit is separated from the otherunits by dividing walls that extendfrom ground to roof, including rowhouses, townhouses or similar types ofproperty;

(2) Manufactured housing if:(i) Applicable state law defines the

purchase or holding of manufacturedhousing as the purchase or holding ofreal property; and

(ii) The loan to purchase the manu-factured housing is secured by thatmanufactured housing;

(3) Individual condominium dwellingunits or interests in individual cooper-ative housing dwelling units that arepart of a condominium or cooperativebuilding without regard to the numberof total dwelling units therein; or

(4) Real property containing one-to-four dwelling units with commercialunits combined, provided the propertyis primarily residential.

OTS means the Office of Thrift Su-pervision.

Qualified Thrift Lender or QTL meansthe term as defined in section 10(m)(1)of the Home Owners’ Loan Act (12U.S.C. 1467a(m)(1)). A non-savings asso-ciation member which meets the QTLtest as applied by the Banks will betreated as a QTL for purposes of thispart.

Qualified Thrift Lender test or QTL testmeans the asset test described in sec-tion 10(m) of the Home Owners’ LoanAct (12 U.S.C. 1467a(m)), except thatthe QTL test will be applied for pur-poses of this part to all members of the

Banks, whether or not they are savingsassociations.

Residential housing finance assetsmeans any of the following:

(1) Loans secured by residential realproperty;

(2) Mortgage-backed securities;(3) Participations in loans secured by

residential real property;(4) Loans or investments financed by

advances made pursuant to a CICA pro-gram;

(5) Loans secured by manufacturedhousing, regardless of whether suchhousing qualifies as residential realproperty; or

(6) Any loans or investments whichthe Board, in its discretion, otherwisedetermines to be residential housing fi-nance assets.

Residential real property means:(1) Any of the following:(i) One-to-four family property;(ii) Multifamily property;(iii) Real property to be improved by

the construction of dwelling units;(iv) Real property in the process of

being improved by the construction ofdwelling units;

(v) Combination business or farmproperty where at least 50 percent ofthe total appraised value of the com-bined property is attributable to theresidential portion of the property or,in the case of any community financialinstitution, combination business orfarm property, on which is located apermanent structure actually used as aresidence (other than for temporary orseasonal housing), where the residenceconstitutes an integral part of theproperty. For purposes of this subpara-graph, the term community financial in-stitution means an institution that hasaverage total assets of $500,000,000 orless, based on an average of total assetsover the three preceding years. TheBoard shall adjust the limit annuallybased on the annual increase, if any, inthe Consumer Price Index for all urbanconsumers, as published by the Depart-ment of Labor.

(2) The term residential real propertydoes not include nonresidential realproperty as defined in this section.

Savings association means a savingsassociation as defined in section 3(b) ofthe Federal Deposit Insurance Act, asamended (12 U.S.C. 1813(b)).


673


State means a state of the UnitedStates, the District of Columbia,Guam, Puerto Rico or the U.S. VirginIslands.

State housing finance agency or SHFAmeans:

(1) A public agency, authority, orpublicly sponsored corporation thatserves as an instrumentality of anystate or political subdivision of anystate, and functions as a source of resi-dential mortgage loan financing inthat state; or

(2) A legally established agency, au-thority, corporation, or organizationthat serves as an instrumentality ofany Indian tribe, band, group, nation,community, or Alaskan Native villagerecognized by the United States or anystate, and functions as a source of resi-dential mortgage loan financing for theIndian or Alaskan Native community.

State regulator means a state insur-ance commissioner or state regulatoryentity with primary responsibility forsupervising a member borrower that isnot a federally insured depository in-stitution.

Tangible capital means:(1) Capital, calculated according to

GAAP, less ‘‘intangible assets’’ exceptfor purchased mortgage servicingrights to the extent such assets are in-cluded in a member’s core or Tier 1capital, as reported in the member’sThrift Financial Report for memberswhose primary federal regulator is theOTS, or as reported in the Report ofCondition and Income for memberswhose primary federal regulator is theFDIC, the OCC, or the Board of Gov-ernors of the Federal Reserve System.

(2) Capital calculated according toGAAP, less intangible assets, as de-fined by a Bank for members which arenot regulated by the OTS, the FDIC,the OCC, or the Board of Governors ofthe Federal Reserve System; providedthat a Bank shall include a member’spurchased mortgage servicing rights tothe extent such assets are included forthe purpose of meeting regulatory cap-ital requirements.

[58 FR 29469, May 20, 1993, as amended at 58FR 29477, May 20, 1993; 59 FR 2949, Jan. 20,1994; 62 FR 8871, Feb. 27, 1997; 62 FR 12079,Mar. 14, 1997; 63 FR 35128, June 29, 1998; 63 FR65545, Nov. 27, 1998; 64 FR 16621, Apr. 6, 1999]

§ 935.2 Bank credit mission.

(a) The primary credit mission of theBanks shall be to enhance the avail-ability of residential mortgage credit.

(b) Each Bank shall fulfill its pri-mary credit mission by:

(1) Providing a readily available, eco-nomical and affordable source of fundsin the form of advances to its members;and

(2) Offering such advances productsand programs that satisfy the creditneeds of its members.

(c) Notwithstanding paragraph (b) ofthis section, each Bank shall placesuch limitations on the making of ad-vances to its members as shall:

(1) Be specifically prescribed by stat-ute, regulation or policy;

(2) Protect the financial integrity ofthe Bank and accommodate the prac-tical constraints associated with theBank’s ability to raise funds; or

(3) Be required by the Board.

§ 935.3 Bank advances policy.

(a) Each Bank’s board of directorsshall adopt, and review at least semi-annually, a policy on advances to mem-bers consistent with the requirementsof the Act, this part, and policy guide-lines of the Board. Each Bank shallprovide a copy of its advances policy,and any revisions thereto, to theBoard.

(b) A Bank’s board of directors maydesignate officers authorized to extendor deny credit and take other actionconsistent with the Bank’s advancespolicy.

(c) A Bank may make exceptions toits advances policy only with the ap-proval of its board of directors, a com-mittee thereof, or officers specificallyauthorized by the board of directors toapprove such exceptions, provided thatany such exceptions shall comply withthe Act, this part and policy guidelinesof the Board.

(d) A Bank’s board of directors shall:(1) Require the officers designated

pursuant to paragraph (b) of this sec-tion to report promptly to it, or a des-ignated committee of the board, all ac-tions taken under this section; and

(2) Review such actions for compli-ance with this section.


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12 CFR Ch. IX (1–1–00 Edition)§ 935.4

§ 935.4 Authorization and applicationfor advances; obligation to repayadvances.

(a) Application for advances. A Bankmay accept oral or written applica-tions for advances from its members.

(b) Obligation to repay advances. (1) ABank shall require any member towhich an advance is made to enter intoa primary and unconditional obligationto repay such advance and all other in-debtedness to the Bank, together withinterest and any unpaid costs and ex-penses in connection therewith, accord-ing to the terms under which such ad-vance was made or other indebtednessincurred.

(2) Such obligations shall be evi-denced by a written advances agree-ment that shall be reviewed by theBank’s legal counsel to ensure suchagreement is in compliance with appli-cable law.

(c) Secured advances. (1) Each Bankshall make only fully secured advancesto its members as set forth in the Act,the provisions of this part and policyguidelines established by the Board.

(2) The Bank shall execute a writtensecurity agreement with each bor-rowing member which establishes theBank’s security interest in collateralsecuring advances.

(3) Such written security agreementshall, at a minimum, describe the typeof collateral securing the advances andgive the Bank a perfectible security in-terest in the collateral.

(d) Approval— By the Bank’s board ofdirectors. Applications for advances, ad-vances agreements and security agree-ments shall be in substantially suchform as approved by the Bank’s boardof directors, or a committee thereofspecifically authorized by the board ofdirectors to approve such forms.

[58 FR 29469, May 20, 1993, as amended at 64FR 71278, Dec. 21, 1999]

§ 935.5 Limitations on access to ad-vances.

(a) Credit underwriting. A Bank, in itsdiscretion, may:

(1) Limit or deny a member’s applica-tion for an advance if, in the Bank’sjudgment, such member:

(i) Is engaging or has engaged in anyunsafe or unsound banking practices;

(ii) Has inadequate capital;

(iii) Is sustaining operating losses;(iv) Has financial or managerial defi-

ciencies, as determined by the Bank,that bear upon the member’s credit-worthiness; or

(v) Has any other deficiencies, as de-termined by the Bank; or

(2) Make advances and renewals onlyif the Bank determines that it maysafely make such advance or renewalto the member, including advances andrenewals made pursuant to this sec-tion.

(b) New advances to members withoutpositive tangible capital. (1) A Bank shallnot make a new advance to a memberwithout positive tangible capital un-less the member’s appropriate federalbanking agency or insurer requests inwriting that the Bank make such ad-vance. The Bank shall promptly pro-vide the Finance Board with a copy ofany such request.

(2) A Bank shall use the most re-cently available Thrift Financial Re-port, Report of Condition, and Incomeor other regulatory report of financialcondition to determine whether amember has positive tangible capital.

(c) Renewals of advances to memberswithout positive tangible capital—(1) Re-newal for 30-day terms. A Bank mayrenew outstanding advances, for suc-cessive terms of up to 30 days each, toa member without positive tangiblecapital; provided, however, that a Bankshall honor any written request of theappropriate federal banking agency orinsurer that the Bank not renew suchadvances.

(2) Renewal for longer than 30-dayterms. A Bank may renew outstandingadvances to a member without positivetangible capital for a term greaterthan 30 days at the written request ofthe appropriate federal banking agencyor insurer.

(d) Advances to capital deficient butsolvent members. (1) Except as providedin paragraph (d)(2)(i) of this section, aBank may make a new advance orrenew an outstanding advance to a cap-ital deficient member that has positivetangible capital.

(2)(i) A Bank shall not lend to a cap-ital deficient member that has positivetangible capital if it receives writtennotice from the appropriate federalbanking agency or insurer that the


675


member’s use of Bank advances hasbeen prohibited. The Bank shallpromptly provide the Finance Boardwith a copy of any such notice.

(ii) A Bank may resume lending tosuch a capital deficient member if theBank receives a written statementfrom the appropriate federal bankingagency or insurer which re-establishesthe member’s ability to use advances.

(e) Reporting. (1) Each Bank shall pro-vide the Finance Board with a monthlyreport of the advances and commit-ments outstanding to each of its mem-bers.

(2) Such monthly report shall be in aformat or on a form prescribed by theFinance Board.

(3) Each Bank shall, upon written re-quest from a member’s appropriate fed-eral banking agency or insurer, provideto such entity information on advancesand commitments outstanding to themember.

(f) Members without federal regulators.In the case of members that are notfederally insured depository institu-tions, the references in paragraphs (b),(c), (d) and (e) of this section to ‘‘appro-priate federal banking agency or in-surer’’ shall mean the member’s stateregulator acting in a capacity similarto an appropriate federal banking agen-cy or insurer.

(g) Advance commitments. (1) In theevent that a member’s access to ad-vances from a Bank is restricted pursu-ant to this section, the Bank shall notfund outstanding commitments for ad-vances not exercised prior to the impo-sition of the restriction. This require-ment shall apply to all advance com-mitments made by a Bank after August25, 1993.

(2) Each Bank shall include the stipu-lation contained in paragraph (g)(1) ofthis section as a clause in either:

(i) The written advances agreementrequired by § 935.4(b)(2) of this part; or

(ii) The written advances applicationrequired by § 935.4(a) of this part.

[58 FR 29469, May 20, 1993, as amended at 59FR 2949, Jan. 20, 1994; 64 FR 71278, Dec. 21,1999]

§ 935.6 Terms and conditions for ad-vances.

(a) Advance maturities. Each Bankshall offer advances with maturities of

up to ten years, and may offer ad-vances with longer maturities con-sistent with the safe and sound oper-ation of the Bank.

(b) Advance pricing—(1) General. EachBank shall price its advances to mem-bers taking into account the followingfactors:

(i) The marginal cost to the Bank ofraising matching maturity funds in themarketplace; and

(ii) The administrative and operatingcosts associated with making such ad-vances to members.

(2) Differential pricing. (i) Each Bankmay, in pricing its advances, distin-guish among members based upon itsassessment of:

(A) The credit and other risks to theBank of lending to any particularmember; or

(B) Other reasonable criteria thatmay be applied equally to all members.

(ii) Each Bank shall include in theadvances policy required by § 935.3(a) ofthis part, standards and criteria forsuch differential pricing and shallapply such standards and criteria con-sistently and without discriminationto all members applying for advances.

(3) Affordable Housing Program ad-vances. The advance pricing policiesand procedures contained in paragraph(b)(1) of this section shall not apply inthe case of a Bank’s AHP advancesmade pursuant to part 960 of this chap-ter.

(c) Authorization for pricing advances.(1) A Bank’s board of directors, a com-mittee thereof, or the Bank’s presi-dent, if so authorized by the Bank’sboard of directors, shall set the rates ofinterest on advances consistent withparagraph (b) of this section.

(2) A Bank president authorized toset interest rates on advances pursuantto this paragraph (c) may delegate anypart of such authority to any officer oremployee of the Bank.

(d) Putable advances—(1) Disclosure. ABank that offers a putable advance to amember shall disclose in writing tosuch member the type and nature ofthe risks associated with putable ad-vance funding. The disclosure shouldinclude detail sufficient to describesuch risks.

(2) Replacement funding. If a Bank ter-minates a putable advance prior to the


676

12 CFR Ch. IX (1–1–00 Edition)§ 935.8

stated maturity date of such advance,the Bank shall offer to provide replace-ment funding to the member.

(i) Term to maturity. At the option ofthe member, a Bank shall offer replace-ment funding:

(A) For the remaining term to matu-rity of the putable advance; or

(B) For a term to maturity agreedupon between the Bank and the mem-ber.

(ii) Interest rate. At the option of themember, a Bank shall price replace-ment funding:

(A) At the market rate of interest; or(B) At a predetermined rate of inter-

est agreed upon between the Bank andthe member.

(iii) Conversion. For purposes of thispart, replacement funding shall be con-sidered the conversion of an out-standing advance, and shall not be con-sidered the renewal of an existing ad-vance or the extension of a new ad-vance.

(3) Definition. For purposes of thisparagraph (d), the term putable advancemeans an advance that a Bank may, atits discretion, terminate and requirethe member to repay prior to the stat-ed maturity date of the advance.

[58 FR 29469, May 20, 1993, as amended at 61FR 52687, Oct. 8, 1996]

§ 935.7 [Reserved]

§ 935.8 Fees.

(a) Fees in advances policy. All feescharged by each Bank and any sched-ules or formulas pertaining to such feesshall be included in the Bank’s ad-vances policy required by § 935.3(a) ofthis part. Any such fee schedules orformulas shall be applied consistentlyand without discrimination to allmembers.

(b) Prepayment fees. (1) Each Bankshall establish and charge a prepay-ment fee pursuant to a specified for-mula which sufficiently compensatesthe Bank for providing a prepaymentoption on an advance, and which actsto make the Bank financially indif-ferent to the borrower’s decision torepay the advance prior to its maturitydate.

(2) Prepayment fees are not requiredfor:

(i) Advances with original terms tomaturity or repricing periods of sixmonths or less;

(ii) Advances funded by callable debt;or

(iii) Advances which are otherwiseappropriately hedged so that the Bankis financially indifferent to their pre-payment.

(3) The board of directors of eachBank, a designated committee thereof,or officers specifically authorized bythe board of directors, may waive aprepayment fee only if such prepay-ment will not result in an economicloss to the Bank. Any such waivermust subsequently be ratified by theboard of directors.

(4) A Bank, in determining whetheror not to waive a prepayment fee, shallapply consistent standards to all of itsmembers.

(c) Commitment fees. Each Bank maycharge a fee for its commitment tofund an advance.

(d) Other fees. Each Bank is author-ized to charge other fees as it deemsnecessary and appropriate.

§ 935.9 Collateral.

(a) Eligible security for advances. Atthe time of origination or renewal ofan advance, each Bank shall obtain,and thereafter maintain, a security in-terest in collateral that meets the re-quirements of one or more of the fol-lowing categories:

(1) Mortgage loans and privately issuedsecurities. (i) Fully disbursed, wholefirst mortgage loans on improved resi-dential real property not more than 90days delinquent; or

(ii) Privately issued mortgage-backedsecurities, excluding the following:

(A) Securities that represent a shareof only the interest payments or onlythe principal payments from the under-lying mortgage loans;

(B) Securities that represent a subor-dinate interest in the cash flows fromthe underlying mortgage loans;

(C) Securities that represent an in-terest in any residual payments fromthe underlying pool of mortgage loans;or

(D) Such other high-risk securities asthe Board in its discretion may deter-mine.


677


(2) Agency securities. Securitiesissued, insured or guaranteed by theUnited States Government, or anyagency thereof, including without limi-tation:

(i) Mortgage-backed securities, as de-fined in § 935.1 of this part, issued orguaranteed by the Federal Home LoanMortgage Corporation, the Federal Na-tional Mortgage Association, the Gov-ernment National Mortgage Associa-tion, or any other agency of the UnitedStates Government;

(ii) Mortgages or other loans, regard-less of delinquency status, to the ex-tent that the mortgage or loan is in-sured or guaranteed by the UnitedStates or any agency thereof, or other-wise is backed by the full faith andcredit of the United States, and suchinsurance, guarantee or other backingis for the direct benefit of the holder ofthe mortgage or loan; and

(iii) Securities backed by, or rep-resenting an equity interest in, mort-gages or other loans referred to inparagraph (a)(2)(ii) of this section.

(3) Deposits. Deposits in a Bank.(4) Other collateral. (i) Except as pro-

vided in paragraph (a)(4)(iii) of this sec-tion, other real estate-related collat-eral acceptable to the Bank if:

(A) Such collateral has a readily as-certainable value; and

(B) The Bank can perfect a securityinterest in such collateral.

(ii) Eligible other real estate-relatedcollateral may include, but is not lim-ited to:

(A) Privately issued mortgage-backed securities not otherwise eligi-ble under paragraph (a)(1)(ii) of thissection;

(B) Second mortgage loans, includinghome equity loans;

(C) Commercial real estate loans; and(D) Mortgage loan participations.(iii) A Bank shall not permit the ag-

gregate amount of outstanding ad-vances to any one member, secured bysuch other real estate-related collat-eral, to exceed 30 percent of such mem-ber’s capital, as calculated accordingto GAAP, at the time the advance isissued or renewed.

(5) Securities representing equity inter-ests in eligible advances collateral. Anysecurity the ownership of which rep-resents an undivided equity interest in

underlying assets, all of which qualifyeither as:

(i) Eligible collateral under para-graphs (a)(1) or (2) of this section; or

(ii) Cash or cash equivalents.(b) Bank restrictions on eligible ad-

vances collateral. A Bank at its discre-tion may further restrict the types ofeligible collateral acceptable to theBank as security for an advance, basedupon the creditworthiness or oper-ations of the borrower, the quality ofthe collateral, or other reasonable cri-teria.

(c) Additional advances collateral. Theprovisions of paragraph (a) of this sec-tion shall not affect the ability of anyBank to take such steps as it deemsnecessary to protect its secured posi-tion on outstanding advances, includ-ing requiring additional collateral,whether or not such additional collat-eral conforms to the requirements foreligible collateral in paragraph (a) ofthis section or section 10 of the Act (12U.S.C. 1430).

(d) Bank stock as collateral. (1) Pursu-ant to section 10(c) of the Act (12U.S.C. 1430(c)), a Bank shall have a lienupon, and shall hold, the stock of amember in the Bank as further collat-eral security for all indebtedness of themember to the Bank.

(2) The written security agreementused by the Bank shall provide that theborrowing member’s Bank stock is as-signed as additional security by themember to the Bank.

(3) The security interest of the Bankin such member’s Bank stock shall beentitled to the priority provided for insection 10(f) of the Act (12 U.S.C.1430(f)).

(e) Advances collateral security requir-ing formal approval. No home mortgageloan otherwise eligible to be acceptedas collateral for an advance by a Bankunder this section shall be accepted ascollateral for an advance if any direc-tor, officer, employee, attorney oragent of the Bank or of the borrowingmember is personally liable thereon,unless the board of directors of theBank has specifically approved suchacceptance by formal resolution, andthe Board has endorsed such resolu-tion.

[58 FR 29469, May 20, 1993, as amended at 64FR 16621, Apr. 6, 1999]


678

12 CFR Ch. IX (1–1–00 Edition)§ 935.10

§ 935.10 Banks as secured creditors.

(a) Except as provided in paragraph(b) of this section, notwithstanding anyother provision of law, any security in-terest granted to a Bank by a member,or by an affiliate of such member, shallbe entitled to priority over the claimsand rights of any party, including anyreceiver, conservator, trustee or simi-lar party having rights of a lien cred-itor, to such collateral.

(b) A Bank’s security interest as de-scribed in paragraph (a) of this sectionshall not be entitled to priority overthe claims and rights of a party that:

(1) Would be entitled to priorityunder otherwise applicable law; and

(2) Is an actual bona fide purchaserfor value of such collateral or is an ac-tual secured party whose security in-terest in such collateral is perfected inaccordance with applicable state law.

§ 935.11 Pledged collateral;verification.

(a) Collateral safekeeping. (1) A Bankmay permit a member that is a deposi-tory institution to retain documentsevidencing collateral pledged to theBank, provided that the Bank and suchmember have executed a written secu-rity agreement pursuant to § 935.4(c) ofthis part whereby such collateral is re-tained solely for the Bank’s benefit andsubject to the Bank’s control and di-rection.

(2) A Bank shall take any steps nec-essary to ensure that its security inter-est in all collateral pledged by non-de-pository institutions for an advance isas secure as its security interest in col-lateral pledged by depository institu-tions.

(3) A Bank may at any time perfectits security interest in collateral secur-ing an advance to a member.

(b) Collateral verification. Each Bankshall establish written procedures andstandards for verifying the existence ofcollateral securing the Bank’s ad-vances, and shall regularly verify theexistence of the collateral securing itsadvances in accordance with such pro-cedures and standards.


§ 935.12 Collateral valuation; apprais-als.

(a) Each Bank shall establish writtenprocedures for determining the value ofthe collateral securing the Bank’s ad-vances, and shall determine the valueof such collateral in accordance withsuch procedures.

(b) Each Bank shall apply the valu-ation procedures consistently and fair-ly to all borrowing members, and thevaluation ascribed to any item of col-lateral by the Bank shall be conclusiveas between the Bank and the member.

(c) A Bank may require a member toobtain an appraisal of any item of col-lateral, and to perform such other in-vestigations of collateral as the Bankdeems necessary and proper.

§ 935.13 Restrictions on advances tomembers that are not qualifiedthrift lenders.

(a) Restrictions on advances to non-QTL members. (1) Except as provided inparagraphs (a)(4) and (a)(5) of this sec-tion, a Bank may make or renew an ad-vance to a non-QTL member onlyunder the following conditions:

(i) The advance is for the purpose ofpurchasing or funding new or existingresidential housing finance assets, asdetermined pursuant to paragraph(a)(2) of this section;

(ii) The member holds Bank stock atthe time it receives the advance in anamount equal to at least five percent ofthe outstanding principal amount ofthe member’s total advances, dividedby such member’s ATIP, calculatedpursuant to paragraph (a)(3) of this sec-tion; and

(iii) Making the advance will notcause the aggregate amount of ad-vances issued by the twelve Banks tonon-QTL members to exceed 30 percentof the aggregate amount of the twelveBanks’ total outstanding advances.

(2) Prior to approving an applicationfor an advance by a non-QTL member,a Bank shall determine that the prin-cipal amount of all advances out-standing to the member at the timethe advance is requested does not ex-ceed the total book value of residentialhousing finance assets held by suchmember, which shall be determined


679


using the most recent Report of Condi-tion and Income or financial statementmade available by the member.

(3)(i) A Bank shall calculate eachnon-savings association member’sATIP at least annually, between July 1and October 31, based upon financialdata as of June 30 of that calendaryear. The Bank may, in its discretion,calculate a member’s ATIP more fre-quently than annually.

(ii) In determining a non-savings as-sociation member’s annual ATIP, aBank shall use the financial informa-tion from the member’s June 30 call re-port as the primary source of informa-tion. A Bank making ATIP determina-tions other than as part of the annualQTL determination (whether for exist-ing members or new members) shalluse the member’s most recent call re-port, except that in determining theamount of a member’s loan to smallbusinesses a Bank may use the infor-mation for such loans on the member’smost recent June 30 call report. If anyinformation necessary for determiningthe member’s ATIP is not separatelyidentified on a member’s call report,the Bank may rely on a written certifi-cation provided by the member that at-tests to the dollar amount and com-position of those other assets thatmeet the definitions of ‘‘qualifiedthrift investments’’ or ‘‘portfolio as-sets’’ as of the date of the call report.Notwithstanding the preceding twosentences, a Bank may, at its option,accept from a non-savings associationmember preliminary information as tothe dollar amount and composition ofassets that meet the definitions of‘‘qualified thrift investments’’ or‘‘portfolio assets,’’ provided that theBank thereafter verifies against themost recent call report the accuracy ofany items that are also available fromthe call report. In any case in which aBank relies on a certification from anon-savings association member as toits level of ‘‘qualified thrift invest-ments’’ or ‘‘portfolio assets,’’ the cer-tification must recite that the infor-mation is accurate as of the date speci-fied, must be in writing and be signedand dated by the chief executive officerof the member. The chief executive of-ficer may delegate authority to signand date the certification to the chief

financial officer, chief operating offi-cer, or controller of the member.

(iii) For purposes of this section, theterm‘‘call report’’ shall include:

(A) With respect to a commercialbank, the annual or quarterly ‘‘Reportof Condition and Income‘‘ submitted toits appropriate Federal banking agen-cy;

(B) With respect to a credit union,the quarterly or semi-annual call re-port submitted to the National CreditUnion Administration; and

(C) With respect to an insurance com-pany, its National Association of Insur-ance Commissioners annual regulatoryfiling.

(iv) For purposes of this section, theamount of a member’s ‘‘loans to smallbusinesses’’ shall include any commer-cial business loan (or series of loans tothe same borrower) in the originalamount of $1 million or less, any farmloan (or series of loans to the same bor-rower) in the original amount of$500,000 or less, and any loan to a‘‘small business’’ as that term is de-fined by section 3(a) of the Small Busi-ness Act, 15 U.S.C. 632(a), and imple-mented by the Small Business Admin-istration at 13 CFR part 121, or anysuccessor provisions.

(4) The requirements of paragraphs(a) (1), (2), and (3) of this section shallnot apply to:

(i) A savings bank, as defined in sec-tion 3(g) of the Federal Deposit Insur-ance Act, as amended (12 U.S.C.1813(g)); or

(ii) A Federal savings association inexistence as such on August 9, 1989that:

(A) Was a state chartered savingsbank or cooperative bank before Octo-ber 15, 1982; or

(B) Acquired its principal assets froman institution that was a state char-tered savings bank or cooperative bankbefore October 15, 1982.

(5) The requirements of paragraph(a)(2) of this section shall not apply toapplications from non-savings associa-tion members for CICA advances.

(b) Priority for QTL members. (1) Ex-cept as provided in paragraph (b)(3) ofthis section, if a Bank is unable tomeet the aggregate advance demand ofall of its members, the Bank shall givepriority to applications for advances


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12 CFR Ch. IX (1–1–00 Edition)§ 935.14

from its QTL members, subject to thefollowing considerations:

(i) The effect of making the advanceson the financial integrity of the Bank;

(ii) The member’s creditworthiness;(iii) The availability of funding with

maturities compatible with advancesapplications; and

(iv) Any other factors that the Bankdetermines to be relevant.

(2) The institutions identified inparagraph (a)(4) of this section shall betreated as QTLs for purposes of thisparagraph (b).

(3) The requirement of paragraph(b)(1) of this section shall not apply toa Bank’s special, or otherwise limited,advance offerings.

(c) Additional restrictions on advancesto non-QTL savings associations. (1) Ei-ther the Bank’s written advancesagreement required by § 935.4(b)(2) ofthis part or the written advances appli-cation authorized in § 935.4(a) of thispart shall require that each savings as-sociation member, which pursuant tothe QTL requirements of the OTS be-comes ineligible for Bank advances,immediately provide its Bank withwritten notification of its ineligibility.

(2) Except as requested in writing bythe OTS, or as authorized in § 935.18(c)of this part, a Bank shall not make anadvance to a savings association mem-ber after receiving written notificationfrom such member or from the OTSthat such member is ineligible for ad-vances pursuant to the QTL require-ments of the OTS.

(d) Repayment of advances by non-QTLsavings association members. (1) EachBank, if informed by a savings associa-tion member or the OTS that the mem-ber has failed to regain its QTL statusand is required to repay said member’sadvances prior to maturity, shall, inconjunction with the non-QTL savingsassociation member, develop a sched-ule for the prompt and prudent repay-ment of any outstanding advances heldby that member, consistent with themember’s and the Bank’s safe andsound operations.

(2) The schedule agreed to underparagraph (d)(1) of this section shall beprovided promptly by the Bank to theBoard and the OTS.

(e) Advance commitments. Either theBank’s written advances agreement re-

quired by § 935.4(b)(2) of this part or thewritten advances application author-ized in § 935.4(a) of this part shall stipu-late that the Bank shall not honor ad-vance commitments previously madeto members whose access to advancesis subsequently restricted pursuant toparagraphs (a) or (c) of this section.

(The Office of Management and Budget ap-proved the information collection require-ments contained in this section and assignedcontrol number 3069–0057 with an expirationdate of April 30, 2000)

[58 FR 29469, May 20, 1993, as amended at 62FR 52015, Oct. 6, 1997; 63 FR 65545, Nov. 27,1998]

§ 935.14 Limitations on long-term ad-vances.

(a) A Bank shall make long-term ad-vances only for the purpose of enablinga member to purchase or fund new orexisting residential housing finance as-sets.

(b)(1) Prior to approving an applica-tion for a long-term advance, a Bankshall determine that the principalamount of all long-term advances cur-rently held by the member does not ex-ceed the total book value of residentialhousing finance assets held by suchmember. The Bank shall determine thetotal book value of such residentialhousing finance assets, using the mostrecent Thrift Financial Report, Reportof Condition and Income, or financialstatement made available by the mem-ber.

(2) Applications for CICA advancesare exempt from the requirements ofparagraph (b)(1) of this section.

[58 FR 29469, May 20, 1993, as amended at 63FR 65545, Nov. 27, 1998]

§ 935.15 Capital stock requirements;unilateral redemption of excessstock.

(a) Capital stock requirement for ad-vances. (1) At no time shall the aggre-gate amount of outstanding advancesmade by a Bank to a member exceed 20times the amount paid in by suchmember for capital stock in the Bank.

(2) A non-QTL member shall holdstock in the Bank at the time it re-ceives an advance in an amount equalto at least the amount of stock re-quired to be held pursuant to§ 935.13(a)(1)(ii) of this part.


681


(b) Unilateral redemption of excess cap-ital stock; fee in lieu prohibited. (1) ABank, after providing 15 calendar daysadvance written notice to a member,may require the redemption of thatamount of the member’s Bank capitalstock that exceeds the capital stock re-quirements set forth in paragraph (a)of this section or, in the case of a non-QTL member, the capital stock re-quirements set forth in § 935.13(a)(1)(ii)of this part, provided the minimumamount required in sections 6(b)(1) and10(e)(3) of the Act is maintained. TheBank shall have the discretion to de-termine the timing of such unilateralredemption. The Bank’s implementa-tion of its redemption policy shall beconsistent with the requirement of sec-tion 7(j) of the Act (12 U.S.C. 1427(j))that the affairs of the Bank shall be ad-ministered fairly and impartially andwithout discrimination in favor of oragainst any member borrower.

(2) A Bank may not impose on or ac-cept from a member a fee in lieu of re-deeming the member’s excess Bankcapital stock.


§ 935.16 [Reserved]

§ 935.17 Intradistrict transfer of ad-vances.

(a) Advances held by members. A Bankmay allow one of its members to as-sume an advance extended by the Bankto another of its members, provided theassumption complies with the require-ments of this part governing theissuance of new advances. A Bank maycharge an appropriate fee for proc-essing the transfer.

(b) Advances held by nonmembers. ABank may allow one of its members toassume an advance held by a non-member, provided the advance wasoriginated by the Bank and providedthe assumption complies with the re-quirements of this part governing theissuance of new advances. A Bank maycharge an appropriate fee for proc-essing the transfer.

[59 FR 2950, Jan. 20, 1994]

§ 935.18 Special advances to savingsassociations.

(a) Eligible institutions. (1) A Bank,upon receipt of a written request fromthe Director of the OTS, may makeshort-term advances to a savings asso-ciation member.

(2) Such request must certify thatthe member:

(i) Is solvent but presents a super-visory concern to the OTS because ofthe member’s financial condition; and

(ii) Has reasonable and demonstrableprospects of returning to a satisfactoryfinancial condition.

(b) Terms and conditions. Advancesmade by a Bank to a member savingsassociation under this section shall:

(1) Be subject to all applicable collat-eral requirements of the Bank, thispart and section 10(a) of the Act (12U.S.C. 1430(a)); and

(2) Be at the interest rate applicableto advances of similar type and matu-rity that are made available to othermembers that do not pose such a super-visory concern.

§ 935.19 Liquidation of advances upontermination of membership.

If an institution’s membership in aBank is terminated, the Bank shall de-termine an orderly schedule for liqui-dating any indebtedness of such mem-ber to the Bank; this section shall notrequire a Bank to call any such indebt-edness prior to maturity of the ad-vance. The Bank shall deem any suchliquidation a prepayment of the mem-ber’s indebtedness, and the membershall be subject to any fees applicableto such prepayment.

Subpart B—Advances toNonmembers

SOURCE: 62 FR 12079, Mar. 14, 1997, unlessotherwise noted.

§ 935.20 Advances to the Savings Asso-ciation Insurance Fund.

(a) Authority. Upon receipt of a writ-ten request from the FDIC, a Bankmay make advances to the FDIC forthe use of the SavingsAssociation In-surance Fund. The Bank shall providea copy of such request to the Board.


682

12 CFR Ch. IX (1–1–00 Edition)§ 935.21

(b) Requirements. Advances to theFDIC for the use of the Savings Asso-ciation Insurance Fund shall:

(1) Bear a rate of interest not lessthan the Bank’s marginal cost of funds,taking into account the maturities in-volved and reasonable administrativecosts;

(2) Have a maturity acceptable to theBank;

(3) Be subject to any prepayment,commitment, or other appropriate feesof the Bank; and

(4) Be adequately secured by collat-eral acceptable to the Bank.

§ 935.21 Scope.With the exception of § 935.13, and ex-

cept as otherwise provided in § 935.20and § 935.24, the requirements of sub-part A of this part apply to this sub-part.

§ 935.22 Nonmember mortgagee eligi-bility requirements.

(a) Authority. Subject to the provi-sions of the Act and this subpart, aBank may make advances to an entitythat is not a member of the Bank if theBank has certified the entity as a non-member mortgagee.

(b) Eligibility requirements. A Bankmay certify as a nonmember mort-gagee any applicant that meets the fol-lowing requirements:

(1) The applicant is approved undertitle II of the National Housing Act (12U.S.C. 1707, et seq.);

(2) The applicant is a chartered insti-tution having succession;

(3) The applicant is subject to the in-spection and supervision of some gov-ernmental agency;

(4) The principal activity of the ap-plicant in the mortgage field consistsof lending its own funds; and

(5) The financial condition of the ap-plicant is such that advances may besafely made to it.

(c) Satisfaction of eligibility require-ments—(1) HUD approval requirement.An applicant shall be deemed to meetthe requirement in section 10b(a) of theAct and paragraph (b)(1) of this sectionthat it be approved under title II of theNational Housing Act if it submits acurrent HUD Yearly Verification Re-port or other documentation issued byHUD stating that the Federal Housing

Administration of HUD has approvedthe applicant as a mortgagee.

(2) Charter requirement. An applicantshall be deemed to meet the require-ment in section 10b(a) of the Act andparagraph (b)(2) of this section that itbe a chartered institution having suc-cession if it provides evidence satisfac-tory to the Bank, such as a copy of, ora citation to, the statutes and/or regu-lations under which the applicant wascreated, that:

(i) The applicant is a governmentagency; or

(ii) The applicant is chartered understate, federal, local, tribal, or AlaskaNative village law as a corporation orother entity that has rights, character-istics, and powers under applicable lawsimilar to those granted a corporation.

(3) Inspection and supervision require-ment. An applicant shall be deemed tomeet the inspection and supervision re-quirement in section 10b(a) of the Actand paragraph (b)(3) of this section if itprovides evidence satisfactory to theBank, such as a copy of, or a citationto, relevant statutes and/or regula-tions, that, pursuant to statute or reg-ulation, the applicant is subject to theinspection and supervision of a federal,state, local, tribal, or Alaska nativevillage governmental agency. An appli-cant shall be deemed to meet the in-spection requirement if there is a stat-utory or regulatory requirement thatthe applicant be audited or examinedperiodically by a governmental agencyor by an external auditor. An applicantshall be deemed to meet the super-vision requirement if the governmentalagency has statutory or regulatory au-thority to remove an applicant’s offi-cers or directors for cause or otherwiseexercise enforcement or administrativecontrol over actions of the applicant.For purposes of this paragraph (c)(3),the term ‘‘governmental agency’’ in-cludes the governor, legislature, andany other component of a federal,state, local, tribal, or Alaska nativevillage government with authority toact for or on behalf of that govern-ment.

(4) Mortgage activity requirement. Anapplicant shall be deemed to meet themortgage activity requirement in sec-tion 10b(a) of the Act and paragraph


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(b)(4) of this section if it provides docu-mentary evidence satisfactory to theBank, such as a financial statement orother financial documents that includethe applicant’s mortgage loan assetsand their funding liabilities, that itlends its own funds as its principal ac-tivity in the mortgage field. Lendingfunds includes, but is not limited to,the purchase of whole mortgage loans.In the case of a federal, state, local,tribal, or Alaska Native village govern-ment agency, appropriated funds shallbe considered an applicant’s own funds.An applicant shall be deemed to satisfythis requirement notwithstanding thatthe majority of its operations are unre-lated to mortgage lending if its mort-gage activity conforms to this require-ment. An applicant that acts prin-cipally as a broker for others makingmortgage loans, or whose principal ac-tivity is to make mortgage loans forthe account of others, does not meetthis requirement.

(5) Financial condition requirement. Anapplicant shall be deemed to meet thefinancial condition requirement inparagraph (b)(5) of this section if theBank determines that advances may besafely made to the applicant. The ap-plicant shall submit to the Bank copiesof its most recent regulatory audit orexamination report, or external auditreport, and any other documentary evi-dence, such as financial or other infor-mation, that the Bank may require tomake the determination.

(d) State housing finance agencies. Inaddition to meeting the requirementsin paragraph (b) of this section, any ap-plicant seeking access to advances as aSHFA pursuant to § 935.24(b)(2) shallprovide evidence satisfactory to theBank, such as a copy of, or a citationto, the statutes and/or regulations de-scribing the applicant’s structure andresponsibilities, that the applicant is astate housing finance agency as definedin § 935.1.

(e) Ineligibility. Except as otherwiseprovided in this subpart, if an appli-cant does not satisfy the requirementsof this subpart, the applicant is ineli-gible to be certified as a nonmembermortgagee.

(The Office of Management and Budgetapproved the information collection re-quirements contained in this section

and assigned control number 3069–0005with an expiration date of November30, 1999)

§ 935.23 Nonmember mortgagee appli-cation process.

(a) Authority. The Banks are author-ized to approve or deny all applicationsfor certification as a nonmember mort-gagee, subject to the requirements ofthe Act and this subpart. A Bank maydelegate the authority to approve ap-plications for certification as a non-member mortgagee only to a com-mittee of the Bank’s board of directors,the Bank president, or a senior officerwho reports directly to the Bank presi-dent other than an officer with respon-sibility for business development.

(b) Application requirements. An appli-cant for certification as a nonmembermortgagee shall submit an applicationthat satisfies the requirements of theAct and this subpart to the Bank of thedistrict in which the applicant’s prin-cipal place of business, as determinedin accordance with part 933 of thischapter, is located.

(c) Application process—(1) Action onapplications. A Bank shall approve ordeny an application for certification asa nonmember mortgagee within 60 cal-endar days of the date the Bank deemsthe application to be complete. A Bankshall deem an application complete,and so notify the applicant in writing,when it has obtained all of the infor-mation required by this subpart andany other information it deems nec-essary to process the application. If aBank determines during the reviewprocess that additional information isnecessary to process the application,the Bank may deem the application in-complete and stop the 60-day time pe-riod by providing written notice to theapplicant. When the Bank receives theadditional information, it shall againdeem the application complete, so no-tify the applicant in writing, and re-sume the 60-day time period where itstopped.

(2) Decision on applications. The Bankor a duly delegated committee of theBank’s board of directors, the Bankpresident, or a senior officer who re-ports directly to the Bank presidentother than an officer with responsi-bility for business development shall


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12 CFR Ch. IX (1–1–00 Edition)§ 935.24

approve, or the board of directors of aBank shall deny, each application forcertification as a nonmember mort-gagee by a written decision resolutionstating the grounds for the decision.Within three business days of a Bank’sdecision on an application, the Bankshall provide the applicant and theBoard with a copy of the Bank’s deci-sion resolution.

(3) File. The Bank shall maintain acertification file for each applicant forat least three years after the date theBank decides whether to approve ordeny certification or the date theBoard resolves any appeal, whichever islater. At a minimum, the certificationfile shall include all documents sub-mitted by the applicant or otherwiseobtained or generated by the Bank con-cerning the applicant, all documentsthe Bank relied upon in making its de-termination regarding certification, in-cluding copies of statutes and regula-tions, and the decision resolution.

(4) Appeals. Within 90 calendar daysof the date of a Bank’s decision to denyan application for certification as anonmember mortgagee, the applicantmay submit a written appeal to theBoard that includes the Bank’s deci-sion resolution and a statement of thebasis for the appeal with sufficientfacts, information, analysis, and expla-nation to support the applicant’s posi-tion. Appeals shall be sent to the Fed-eral Housing Finance Board, 1777 FStreet, NW., Washington DC 20006, witha copy to the Bank.

(i) Record for appeal. Upon receiving acopy of an appeal, the Bank whose ac-tion has been appealed shall provide tothe Board a complete copy of the appli-cant’s certification file maintained bythe Bank under paragraph (c)(3) of thissection. Until the Board resolves theappeal, the Bank shall promptly pro-vide to the Board any relevant new ma-terials it receives. The Board may re-quest additional information or furthersupporting arguments from the appli-cant, the Bank, or any other party thatthe Board deems appropriate.

(ii) Deciding appeals. Within 90 cal-endar days of the date an applicantfiles an appeal with the Board, theBoard shall consider the record for ap-peal described in paragraph (c)(4)(i) ofthis section and resolve the appeal

based on the requirements of the Actand this subpart.

(The Office of Management and Budgetapproved the information collection re-quirements contained in this sectionand assigned control number 3069–0005with an expiration date of November30, 1999)

§ 935.24 Advances to nonmember mort-gagees.

(a) Authority. Subject to the provi-sions of the Act and this subpart, aBank may make advances only to anonmember mortgagee whose principalplace of business, as determined in ac-cordance with part 933 of this chapter,is located in the Bank’s district.

(b) Collateral requirements—(1) Ad-vances to nonmember mortgagees. A Bankmay make an advance to any non-member mortgagee upon the securityof the following collateral:

(i) Mortgage loans insured by theFederal Housing Administration ofHUD under title II of the NationalHousing Act; or

(ii) Securities representing a wholeinterest in the principal and interestpayments due on a pool of mortgageloans insured by the Federal HousingAdministration of HUD under title II ofthe National Housing Act. A Bank mayonly accept as collateral the securitiesdescribed in this paragraph (b)(1)(ii) ifthe nonmember mortgagee providesevidence that such securities arebacked solely by mortgages of the typedescribed in paragraph (b)(1)(i) of thissection.

(2) Certain advances to SHFAs. (i) Inaddition to the collateral described inparagraph (b)(1) of this section, a Bankmay make an advance to a nonmembermortgagee that has satisfied the re-quirements of § 935.22(d) for the purposeof facilitating residential or commer-cial mortgage lending that benefits in-dividuals or families meeting the in-come requirements in section 142(d) or143(f) of the Internal Revenue Code (26U.S.C. 142(d) or 143(f)) upon the secu-rity of the following collateral:

(A) The collateral described in§ 935.9(a) (1) or (2).

(B) The collateral described in§ 935.9(a)(3). Solely for the purpose of


685


facilitating acceptance of such collat-eral, a Bank may establish a cash col-lateral account for a nonmember mort-gagee that has satisfied the require-ments of § 935.22(d).

(C) The real estate related collateraldescribed in § 935.9(a)(4), provided thatsuch collateral is comprised of mort-gage loans on one-to-four family ormultifamily residential property andthe acceptance of such collateral willnot increase the total amount of ad-vances outstanding to the SHFA se-cured by such collateral beyond 30 per-cent of its GAAP capital, as computedby the Bank.

(ii) Prior to making an advance pur-suant to this paragraph (b)(2), a Bankshall obtain a written certificationfrom the nonmember mortgagee that itshall use the proceeds of the advancefor the purposes described in paragraph(b)(2)(i) of this section.

(c) Terms and conditions—(1) General.Subject to the provisions of this para-graph (c), a Bank, in its discretion,shall determine whether, and on whatterms, it will make advances to a non-member mortgagee.

(2) Advance pricing. (i) A Bank shallprice advances to nonmember mortga-gees in accordance with the require-ments for pricing advances to membersset forth in § 935.6(b). Wherever theterm ‘‘member’’ appears in § 935.6(b),the term shall be construed also tomean ‘‘nonmember mortgagee.’’

(ii) A Bank shall apply the pricingcriteria identified in § 936.5(b)(2) equal-ly to all of its member and nonmembermortgagee borrowers.

(3) Limit on advances. The principalamount of any advance made to a non-member mortgagee may not exceed 90percent of the unpaid principal of themortgage loans or securities pledged assecurity for the advance. This limitdoes not apply to an advance made toa nonmember mortgagee under para-graph (b)(2) of this section.

(d) Transaction accounts. Solely forthe purpose of facilitating the makingof advances to a nonmember mort-gagee, a Bank may establish a trans-action account for each nonmembermortgagee.

(e) Loss of eligibility—(1) Notification ofstatus changes. A Bank shall require anonmember mortgagee that applies for

an advance to agree in writing that itwill promptly inform the Bank of anychange in its status as a nonmembermortgagee.

(2) Verification of eligibility. A Bankmay, from time to time, require a non-member mortgagee to provide evidencethat it continues to satisfy all of theeligibility requirements of the Act andthis subpart.

(3) Loss of eligibility. A Bank shall notextend a new advance or renew an ex-isting advance to a nonmember mort-gagee that no longer meets the eligi-bility requirements of the Act and thissubpart until the entity has providedevidence satisfactory to the Bank thatit is in compliance with such require-ments.

(The Office of Management and Budgetapproved the information collection re-quirements contained in this sectionand assigned control number 3069–0005with an expiration date of November30, 1999)

PART 936—COMMUNITY SUPPORTREQUIREMENTS

Sec.936.1 Definitions.936.2 Community support requirement.936.3 Community support standards.936.4 Decision on community support state-

ments.936.5 Restrictions on access to long-term

advances.936.6 Bank community support programs.936.7 Reports.

AUTHORITY: 12 U.S.C. 1422a(a)(3)(B),1422b(a)(1), 1429, and 1430.

SOURCE: 62 FR 28988, May 29, 1997, unlessotherwise noted.


Bank Act, as amended (12 U.S.C. 1421,et seq.).

(b) Advance has the same meaning asin § 935.1 of this chapter.

(c) Advisory Council means the Advi-sory Council each Bank is required toestablish pursuant to section 10(j)(11)of the Act and part 960 of this chapter.

(d) Affordable Housing Program or AHPmeans the program each Bank is re-quired to establish pursuant to section


686

12 CFR Ch. IX (1–1–00 Edition)§ 936.2

10(j) of the Act and part 960 of thischapter.

(e) Appropriate federal financial super-visory agency means the Office of theComptroller of the Currency for na-tional banks; the Board of Governors ofthe Federal Reserve System for statechartered banks that are members ofthe Federal Reserve System and bankholding companies; the Federal DepositInsurance Corporation for state char-tered banks and savings banks that arenot members of the Federal ReserveSystem and the deposits of which areinsured by the Federal Deposit Insur-ance Corporation; and the Office ofThrift Supervision for savings associa-tions the deposits of which are insuredby the Federal Deposit Insurance Cor-poration and savings and loan holdingcompanies.

(f) Bank or Banks means a FederalHome Loan Bank or the Federal HomeLoan Banks.

(g) CICA or Community InvestmentCash Advance has the same meaning asin § 935.1 of this chapter.

(h) Community lending has the samemeaning as in § 970.3 of this chapter.

(i) CRA means the Community Rein-vestment Act of 1977, as amended (12U.S.C. 2901, et seq.).

(j) CRA evaluation means the publicdisclosure portion of the CRA perform-ance evaluation provided by a mem-ber’s appropriate federal financial su-pervisory agency.

(k) Finance Board means the agencyestablished as the Federal Housing Fi-nance Board.

(l) First-time homebuyer means:(1) An individual and his or her

spouse, if any, who has had no presentownership interest in a principal resi-dence during the three-year periodprior to purchase of a principal resi-dence.

(2) A displaced homemaker who, ex-cept for owning a residence with his orher spouse or residing in a residenceowned by his or her spouse, meets therequirements of paragraph (l)(1) of thissection. For purposes of this paragraph(l)(2), the term displaced homemakermeans an adult who has not workedfull-time, full-year in the labor forcefor a number of years and, during thatperiod, worked primarily without re-muneration to care for a home and

family, and currently is unemployed orunderemployed and is experiencing dif-ficulty in obtaining or upgrading em-ployment.

(3) A single parent who, except forowning a residence with his or herspouse or residing in a residence ownedby his or her spouse, meets the require-ments of paragraph (l)(1) of this sec-tion. For purposes of this paragraph(l)(3), the term single parent means anindividual who is unmarried or legallyseparated from a spouse and has cus-tody or joint custody of one or moreminor children or is pregnant.

(m) Long-term advance means an ad-vance with a term to maturity greaterthan one year.

(n) Member means an institution ad-mitted to membership and owning cap-ital stock in a Bank.

(o) Restriction on access to long-termadvances means a member may not bor-row long-term advances or renew anymaturing advance for a term to matu-rity greater than one year.


§ 936.2 Community support require-ment.

(a) Selection for community support re-view. The Finance Board shall select amember for community support reviewapproximately once every two years.

(b) Notice—(1) By the Finance Board.The Finance Board concurrently shall:

(i) Notify each Bank of the memberswithin its district that are required tosubmit community support statementsduring the calendar quarter; and

(ii) Publish a notice in the FEDERALREGISTER that includes the name andaddress of each member required tosubmit a community support state-ment during the calendar quarter, andthe deadline for submission of the com-munity support statement to the Fi-nance Board. The deadline for submis-sion of a community support statementshall be no earlier than 45 calendardays after the date of publication ofthe notice in the FEDERAL REGISTER.

(2) By the Banks. Within 15 calendardays of the date of publication in theFEDERAL REGISTER of the notice re-quired by paragraph (b)(1)(ii) of thissection, a Bank shall provide writtennotice:


687


(i) To each member within its dis-trict that is named in the FEDERALREGISTER notice, that the member isrequired to submit a community sup-port statement to the Finance Boardby the deadline stated in the FEDERALREGISTER notice; and

(ii) Its Advisory Council and non-profit housing developers, communitygroups, and other interested parties inits district of the name and address ofeach member within its district that isrequired to submit a community sup-port statement during the calendarquarter.

(c) Required documents. Each memberselected for community support reviewshall submit a completed CommunitySupport Statement Form executed byan appropriate senior officer to the Fi-nance Board and any other informationthe Finance Board may require to de-termine whether a member meets thecommunity support standards.

(d) Public comments. In reviewing amember for compliance with the com-munity support requirement, the Fi-nance Board shall take into consider-ation any public comments it has re-ceived concerning the member.

(The Office of Management and Budget ap-proved the information collection require-ments contained in this section and assignedcontrol number 3069–0003 with an expirationdate of December 31, 1999.)

§ 936.3 Community support standards.(a) In general. In reviewing a commu-

nity support statement, the FinanceBoard shall take into account a mem-ber’s performance under the CRA if themember is subject to the requirementsof the CRA, and the member’s record oflending to first-time homebuyers.

(b) CRA standard—(1) Adequate per-formance. A member that is subject tothe requirements of the CRA shall bedeemed to meet the CRA standard ifthe rating in the member’s most recentCRA evaluation is ‘‘outstanding’’ or‘‘satisfactory.’’

(2) Probationary performance. A mem-ber that is subject to the requirementsof the CRA shall be subject to a proba-tionary period if the rating in themember’s most recent CRA evaluationis ‘‘needs to improve.’’ The proba-tionary period shall extend until themember’s appropriate federal financial

supervisory agency completes its nextCRA evaluation and issues a rating.The member will be eligible to receivelong-term advances during the proba-tionary period. If the member does notmeet the CRA standard at the end ofthe probationary period, the FinanceBoard shall restrict the member’s ac-cess to long-term advances in accord-ance with § 936.5.

(3) Inadequate performance. A mem-ber’s access to long-term advancesshall be restricted in accordance with§ 936.5 if the rating in the member’smost recent CRA evaluation is ‘‘sub-stantial noncompliance.’’

(c) First-time homebuyer standard—(1)Adequate performance. In the absence ofpublic comments or other informationto the contrary, a member shall be pre-sumed to meet the first-time home-buyer standard if the member is sub-ject to the requirements of the CRAand the rating in the member’s mostrecent CRA evaluation is ‘‘out-standing.’’ In determining whetherother members meet the first-timehomebuyer standard, the FinanceBoard shall consider a member’s de-scription of its efforts to assist first-time or potential first-time home-buyers or its explanation of factorsthat affect its ability to assist first-time or potential first-time home-buyers. A member shall be deemed tomeet the first-time homebuyer stand-ard if the member otherwise dem-onstrates to the satisfaction of the Fi-nance Board that it:

(i) Has an established record of lend-ing to first-time homebuyers; or

(ii) Has a program whereby it ac-tively seeks to lend or support lendingto first-time homebuyers, including,but not limited to, the following:

(A) Providing special credit productswith flexible underwriting standardsfor first-time homebuyers;

(B) Participating in federal, state, orlocal government, or nationwide home-ownership lending programs that ben-efit, serve, or are targeted to, first-time homebuyers;

(C) Participating in loan consortiafor first-time homebuyer loans or loansthat serve predominantly low- or mod-erate-income borrowers; or


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12 CFR Ch. IX (1–1–00 Edition)§ 936.4

(iii) Has a program whereby it ac-tively seeks to assist or support orga-nizations that assist potential first-time homebuyers to qualify for mort-gage loans, including, but not limitedto, the following:

(A) Providing, participating in, orsupporting special counseling programsor other homeownership education ac-tivities that benefit, serve, or are tar-geted to, first-time homebuyers;

(B) Providing or participating inmarketing plans and related outreachprograms targeted to first-time home-buyers;

(C) Providing technical assistance offinancial support to organizations thatassist first-time homebuyers;

(D) Participating with or financiallysupporting community or nonprofitgroups that assist first-time home-buyers;

(E) Holding investments or makingloans that support first-time home-buyer programs;

(F) Holding mortgage-backed securi-ties that may include a pool of loans tolow- and moderate-income home-buyers;

(G) Participating or investing inservice organizations that assist creditunions in providing mortgages; or

(H) Participating in Bank commu-nity lending programs; or

(iv) Has any combination of the ele-ments described in paragraphs (c)(1)(i),(ii), or (iii) of this section.

(2) Probationary performance. If theevidence of first-time homebuyer per-formance is deemed to be unsatisfac-tory by the Finance Board, the membershall be subject to a one-year proba-tionary period. The member will be eli-gible to receive long-term advancesduring the probationary period. If themember does not demonstrate compli-ance with the first-time homebuyerstandard before the probationary pe-riod ends, the Finance Board shall re-strict the member’s access to long-term advances in accordance with§ 936.5.

(3) Inadequate performance. A mem-ber’s access to long-term advancesshall be restricted in accordance with§ 936.5 if the member provides no evi-dence of first-time homebuyer perform-ance.


§ 936.4 Decision on community supportstatements.

(a) Action on community support state-ments. The Finance Board shall act oneach community support statement inaccordance with the requirements of§ 936.3 within 75 calendar days of thedate the Finance Board deems the com-munity support statement to be com-plete. The Finance Board shall deem acommunity support statement com-plete when it has obtained all of the in-formation required by this part andany other information it deems nec-essary to process the community sup-port statement. If the Finance Boarddetermines during the review processthat additional information is nec-essary to process the community sup-port statement, the Finance Boardmay deem the community supportstatement incomplete and stop the 75-day time period by providing writtennotice to the member. When the Fi-nance Board receives the additional in-formation, it shall again deem thecommunity support statement com-plete and resume the 75-day time pe-riod where it stopped. The FinanceBoard shall have 10 calendar days inaddition to the 75-day time period toact on a community support statementif the Finance Board receives the addi-tional information on or after the sev-entieth day of the 75-day time period.

(b) Decision on community supportstatements. The Finance Board shallprovide written notice to the memberand the member’s Bank of its deter-mination regarding the communitysupport statement submitted by themember. The notice shall identify thereasons for the Finance Board’s deter-mination.

§ 936.5 Restrictions on access to long-term advances.

(a) Requirement. The Finance Boardshall restrict a member’s access tolong-term advances if the member:

(1) Failed to comply with the require-ments of this part;


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(2) Submitted a community supportstatement that was not approved bythe Finance Board;

(3) Did not receive a rating in a CRAevaluation of ‘‘outstanding’’ or ‘‘satis-factory’’ at the end of the probationaryperiod described in § 936.3(b)(2); or

(4) Failed to provide evidence satis-factory to the Finance Board of itsfirst-time homebuyer performance be-fore the end of the probationary perioddescribed in § 936.3(c)(2).

(b) Notice. The Finance Board shallprovide written notice to a memberand the member’s Bank of its deter-mination to restrict the member’s ac-cess to long-term advances, the mem-ber by certified mail, return receipt re-quested, and the member’s Bank byfacsimile and by regular mail.

(c) Effective date. Restrictions on ac-cess to long-term advances shall takeeffect 30 days after the date the noticesrequired under paragraph (b) of thissection are mailed unless the membercomplies with the requirements of thispart before the end of the 30-day pe-riod.

(d) Removing restrictions. (1) The Fi-nance Board may remove restrictionson a member’s access to long-term ad-vances imposed under this section:

(i) If the Finance Board determinesthat application of the restriction mayadversely affect the safety and sound-ness of the member. A member maysubmit a written request to the Fi-nance Board to remove a restriction onaccess to long-term advances underthis paragraph (d)(1)(i). Such writtenrequest shall contain a clear and con-cise statement of the basis for the re-quest, and a statement that applica-tion of the restriction may adverselyaffect the safety and soundness of themember from the member’s appro-priate federal financial supervisoryagency, or the National Credit UnionAdministration for a federally insuredcredit union member, or the member’sappropriate state regulator for a memberthat is not subject to regulation or su-pervision by a federal regulator. TheFinance Board shall consider eachwritten request within 30 calendar daysof receipt. For purposes of this para-

graph (d)(1)(i), the term appropriatestate regulator means any state officer,agency, supervisor, or other entitythat has regulatory authority over, oris empowered to institute enforcementaction against, a member.

(ii) If the Finance Board determinesthat the member subsequently hascomplied with the requirements of thispart. A member may submit a writtenrequest to the Finance Board to re-move a restriction on access to long-term advances under this paragraph(d)(1)(ii). Such written request shallstate with specificity how the memberhas complied with the requirements ofthis part. The Finance Board shall con-sider each written request within 30calendar days of receipt.

(2) The Finance Board shall place amember on probation in accordancewith § 936.3(b)(2), if:

(i) The member’s access to long-termadvances was restricted on the basis ofthe member’s inadequate performanceunder the CRA standard, as describedin § 936.3(b)(3);

(ii) The rating in the member’s subse-quent CRA evaluation is ‘‘needs to im-prove;’’ and

(iii) The member did not receive ei-ther a ‘‘substantial noncompliance’’CRA rating or a ‘‘needs to improve’’CRA rating immediately preceding theCRA rating on which the member’s in-adequate performance under the CRAstandard was based.

(3) The Finance Board shall providewritten notice to the member and themember’s Bank of its determinationunder this paragraph (d), the memberby certified mail, return receipt re-quested, and the member’s Bank byfacsimile and by regular mail. The Fi-nance Board’s determination shall takeeffect on the date the notices aremailed.

(e) CICA. A member that is subject toa restriction on access to long-term ad-vances under this part shall not be eli-gible to participate in a CICA programoffered under parts 960 and 970 of this


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12 CFR Ch. IX (1–1–00 Edition)§ 936.6

chapter. The restriction in this para-graph (e) shall not apply to CICA appli-cations or funding approved before thedate the restriction is imposed.


[62 FR 28988, May 29, 1997, as amended at 62FR 46872, Sept. 5, 1997; 63 FR 65545, Nov. 27,1998]

§ 936.6 Bank community support pro-grams.

(a) Requirement. Consistent with thesafe and sound operation of the Bank,each Bank shall establish and maintaina community support program. ABank’s community support programshall:

(1) Provide technical assistance tomembers;

(2) Promote and expand affordablehousing finance;

(3) Identify opportunities for mem-bers to expand financial and creditservices in underserved neighborhoodsand communities; and

(4) Encourage members to increasetheir community lending and afford-able housing finance activities by pro-viding incentives such as awards ortechnical assistance to nonprofit hous-ing developers or community groupswith outstanding records of participa-tion in community lending or afford-able housing finance partnerships withmembers;

(5) Include an annual CommunityLending Plan, approved by the Bank’sboard of directors and subject to modi-fication, which shall require the Bankto:

(i) Conduct market research in theBank’s district;

(ii) Describe how the Bank will ad-dress identified credit needs and mar-ket opportunities in the Bank’s districtfor community lending;

(iii) Consult with its Advisory Coun-cil and with members, nonmember bor-rowers, and public and private eco-nomic development organizations inthe Bank’s district in developing andimplementing its Community LendingPlan; and

(iv) Establish quantitative commu-nity lending performance goals.

(b) Notice. A Bank shall provide annu-ally to each of its members a writtennotice:

(1) Identifying CICA programs andother Bank activities that may provideopportunities for a member to meet thecommunity support requirements andto engage in community lending; and

(2) Summarizing community lendingand affordable housing activities un-dertaken by members, nonmember bor-rowers, nonprofit housing developers,community groups, or other entities inthe Bank’s district, that may provideopportunities for a member to meet thecommunity support requirements andto engage in community lending.


§ 936.7 Reports.

Each Advisory Council annual reportrequired to be submitted to the Fi-nance Board pursuant to section10(j)(11) of the Act shall include ananalysis of the Bank’s communitylending and affordable housing activi-ties.

[63 FR 65545, Nov. 27, 1998]

PART 937—FINANCIAL STATEMENTSOF THE BANKS

Sec.937.1 Definitions.937.2 Requirement to provide financial and

other information to the Finance Board.937.3 Requirement for voluntary bank dis-

closure.

AUTHORITY: 12 U.S.C. 1422a, 1422b, 1426, 1431,and 1440.

SOURCE: 63 FR 39704, July 24, 1998, unlessotherwise noted.


As used in this part:Bank means a Federal Home Loan

Bank established under the authorityof the Federal Home Loan Bank Act, asamended (12 U.S.C. 1421 et seq.).



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§ 937.2 Requirement to provide finan-cial and other information to theFinance Board.

In order to facilitate the preparationby the Finance Board of combinedBank System annual and quarterly re-ports, each Bank shall provide to theFinance Board in such form and withinsuch timeframes as the Finance Boardshall specify, all financial and other in-formation the Finance Board shall re-quest for that purpose.

§ 937.3 Requirement for voluntarybank disclosure.

Any financial statements containedin an annual or quarterly financial re-port issued by an individual Bank mustbe consistent in both form and contentwith the financial statements pre-sented in the combined Bank Systemannual or quarterly financial reportsprepared and issued by the FinanceBoard.

PART 938—STANDBY LETTERS OFCREDIT

Sec.938.1 Definitions.938.2 Standby letters of credit on behalf of

members.938.3 Standby letters of credit on behalf of

nonmember mortgagees.938.4 Obligation to Bank under all standby

letters of credit.938.5 Additional provisions applying to all

standby letters of credit.

AUTHORITY: 12 U.S.C. 1422b, 1429, 1430, 1430b,1431.

SOURCE: 63 FR 65699, Nov. 30, 1998, unlessotherwise noted.


As used in this part:Act means the Federal Home Loan

Bank Act, as amended (12 U.S.C. 1421–49).

Applicant means a person or entity atwhose request or for whose account astandby letter of credit is issued.


Beneficiary means a person or entitywho, under the terms of a standby let-ter of credit, is entitled to have itscomplying presentation honored.

Community Lending has the meaningset forth in § 970.4 of this chapter.

Confirm means to undertake, at therequest or with the consent of theissuer, to honor a presentation under astandby letter of credit issued by amember or nonmember mortgagee.

Document means a draft or other de-mand, document of title, investmentsecurity, certificate, invoice, or otherrecord, statement, or representation offact, law, right, or opinion that is pre-sented under the terms of a standbyletter of credit.

Finance Board means the agency es-tablished by the Act as the FederalHousing Finance Board.

Issuer means a person or entity thatissues a standby letter of credit.

Member means an institution that hasbeen approved for membership in aBank and has purchased capital stockin the Bank in accordance with § § 933.20and 933.24 of this chapter.

Nonmember mortgagee means an entitycertified as a nonmember mortgageepursuant to § 935.22(b) of this chapter.

Nonmember SHFA means a non-member mortgagee that is a ‘‘statehousing finance agency,’’ as that termis defined in § 935.1 of this chapter, andthat has met the requirements of§ 935.22(d) of this chapter.

Presentation means delivery of a doc-ument to an issuer, or an entity thathas undertaken a confirmation at therequest or with the consent of theissuer, for the giving of value under astandby letter of credit.

Residential housing finance means:(1) The purchase or funding of ‘‘resi-

dential housing finance assets,’’ as thatterm is defined in § 935.1 of this chap-ter; or

(2) Other activities that support thedevelopment or construction of resi-dential housing.

Small business means a ‘‘small busi-ness concern,’’ as that term is definedby section 3(a) of the Small BusinessAct (15 U.S.C. 632(a)) and implementedby the Small Business Administrationat 13 CFR part 121, or any successorprovisions.

Standby letter of credit means a defi-nite undertaking by an issuer on behalfof an applicant that represents an obli-gation to the beneficiary, pursuant to acomplying presentation: to repay


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12 CFR Ch. IX (1–1–00 Edition)§ 938.2

money borrowed by, advanced to, or forthe account of the applicant; to makepayment on account of any indebted-ness undertaken by the applicant; or tomake payment on account of any de-fault by the applicant in the perform-ance of an obligation. The term standbyletter of credit does not include a com-mercial letter of credit, or any short-term self-liquidating instrument usedto finance the movement of goods.

§ 938.2 Standby letters of credit on be-half of members.

(a) Authority and purposes. Each Bankis authorized to issue or confirm on be-half of members standby letters ofcredit that comply with the require-ments of this part, for any of the fol-lowing purposes:

(1) To assist members in facilitatingresidential housing finance;

(2) To assist members in facilitatingcommunity lending that is eligible forany of the Banks’ CICA programsunder part 970 of this chapter;

(3) To assist members with asset/li-ability management; or

(4) To provide members with liquid-ity or other funding.

(b) Fully secured. A Bank, at the timeit issues or confirms a standby letter ofcredit on behalf of a member, shall ob-tain and maintain a security interestin collateral that is sufficient to securefully the member’s unconditional obli-gation described in § 938.4(a)(2) of thispart, and that complies with the re-quirements set forth in paragraph (c) ofthis section.

(c) Eligible collateral. (1) Any standbyletter of credit issued or confirmed onbehalf of a member may be secured bycollateral that is eligible to secure ad-vances under § 935.9(a) of this chapter.Only standby letters of credit issuedfor the purposes described in para-graphs (a)(3) or (a)(4) of this sectionshall be counted in making the calcula-tion required under § 935.9(a)(4)(iii).

(2) A standby letter of credit issuedor confirmed on behalf of a member fora purpose described in paragraph (a)(1)or (a)(2) of this section may, in addi-tion to the collateral described in para-graph (c)(1) of this section, be securedby:

(i) Secured or federally-guaranteedloans to small businesses or securitiesrepresenting interests in such loans; or

(ii) Obligations of state or local gov-ernment units or agencies, rated as in-vestment grade by a nationally-recog-nized rating agency.

§ 938.3 Standby letters of credit on be-half of nonmember mortgagees.

(a) Nonmember mortgagees. Each Bankis authorized to issue or confirm on be-half of nonmember mortgagees standbyletters of credit that are fully securedby collateral described in § § 935.24(b)(1)(i) or (ii) of this chapter, and that oth-erwise comply with the requirementsof this part, for any of the followingpurposes:

(1) To assist nonmember mortgageesin facilitating residential housing fi-nance;

(2) To assist nonmember mortgageesin facilitating community lending thatis eligible for any of the Banks’ CICAprograms under part 970 of this chap-ter;

(3) To assist nonmember mortgageeswith asset/liability management; or

(4) To provide nonmember mortga-gees with liquidity or other funding.

(b) Nonmember SHFAs. Each Bank isauthorized to issue or confirm on be-half of nonmember SHFAs standby let-ters of credit that are fully secured bycollateral described in § 935.24(b)(2)(i)(A), (B) or (C) of this chapter, and thatotherwise comply with the require-ments of this part, for the purpose offacilitating residential or commercialmortgage lending that benefits individ-uals or families meeting the income re-quirements in section 142(d) or 143(f) ofthe Internal Revenue Code (26 U.S.C.142(d) or 143(f)).

§ 938.4 Obligation to Bank under allstandby letters of credit.

(a) Obligation to reimburse. A Bankmay issue or confirm a standby letterof credit only on behalf of a member ornonmember mortgagee that has:

(1) Established with the Bank a cashaccount pursuant to § § 934.5,935.24(b)(2)(i)(B) or 935.24(d) of thischapter; and

(2) Assumed an unconditional obliga-tion to reimburse the Bank for valuegiven by the Bank to the beneficiary


693


under the terms of the standby letterof credit by depositing immediatelyavailable funds into the account de-scribed in paragraph (a)(1) of this sec-tion not later than the date of theBank’s payment of funds to the bene-ficiary.

(b) Prompt action to recover funds. If amember or nonmember mortgagee failsto fulfill the obligation described inparagraph (a)(2) of this section, theBank shall take action promptly to re-cover the funds that such member ornonmember mortgagee is obligated torepay.

(c) Obligation financed by advance.Notwithstanding the obligations andduties of the Bank and its member ornonmember mortgagee under para-graphs (a) and (b) of this section, theBank may, at its discretion, permitsuch member or nonmember mortgageeto finance repayment of the obligationdescribed in paragraph (a)(2) of thissection by receiving an advance thatcomplies with sections 10 or 10b of theAct and part 935 of this chapter.

§ 938.5 Additional provisions applyingto all standby letters of credit.

(a) Written policy; other requirements.Each standby letter of credit issued orconfirmed by a Bank shall:

(1) Be issued or confirmed only incompliance with a written policy, de-veloped and implemented by the Bankto govern its standby letter of creditprograms, that:

(i) Is consistent with the provisionsof the Act and this part;

(ii) Sets forth credit underwritingcriteria, consistent with the provisionsof § 935.5 of this chapter, to be appliedin evaluating applications for standbyletters of credit and renewals thereof;

(iii) Sets forth criteria regarding thepricing of standby letters of credit, in-cluding any special pricing provisionsfor letters of credit that facilitate thefinancing of projects that are eligiblefor any of the Banks’ CICA programsunder part 970 of this chapter; and

(iv) Provides that, for any draw madeby a beneficiary under a standby letterof credit, the applicant will be chargeda processing fee calculated in accord-ance with the requirements of § 943.6(b)of this chapter;

(2) Contain a specific expiration date,or be for a specific term; and

(3) Require approval in advance bythe Bank of any transfer of the standbyletter of credit from the original bene-ficiary to another person or entity;

(b) Additional collateral provisions. (1)A Bank may take such steps as itdeems necessary to protect its securedposition on standby letters of credit,including requiring additional collat-eral, whether or not such additionalcollateral conforms to the require-ments of § § 938.2 or 938.3 of this part.

(2) Collateral pledged by a member ornonmember mortgagee to secure a let-ter of credit issued or confirmed on itsbehalf by a Bank shall be subject to theprovisions of §§ 935.9(b), 935.9(d), 935.9(e),935.10, 935.11 and 935.12 of this chapter.

PARTS 939–940 [RESERVED]

PART 941—OPERATIONS OF THEOFFICE OF FINANCE

Sec.941.1 Definitions.941.2 General.941.3 Federal Housing Finance Board over-

sight.941.4 Office of Finance.941.5 Functions of the Office of Finance.941.6 Director of the Office of Finance.941.7 Office of Finance Board of Directors.941.8 Powers of the Office of Finance Board

of Directors.941.9 Duties of the Office of Finance Board

of Directors.941.10 Meetings of the Office of Finance

Board of Directors.941.11 Budget, funding and expenses.941.12 Savings clause.

AUTHORITY: 12 U.S.C. 1422b, 1431.

SOURCE: 57 FR 2834, Jan. 24, 1992, unlessotherwise noted.

§ 941.1 Definitions.In this part, the following terms

mean:Bank. A Federal Home Loan Bank.Bank Act. The Federal Home Loan

Bank Act.Bank System. The Federal Home Loan

Bank System, consisting of the twelveFederal Home Loan Banks and includ-ing the Office of Finance as a joint of-fice of the Federal Home Loan Banks.

Chair. The Chairperson of the Officeof Finance Board of Directors.


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12 CFR Ch. IX (1–1–00 Edition)§ 941.2

Consolidated obligation. A FederalHome Loan Bank consolidated deben-ture, bond or note issued under author-ity of section 11 of the Federal HomeLoan Bank Act, as amended (12 U.S.C.1431).

Director. The Director of the Office ofFinance.

Finance Board. The Federal HousingFinance Board.

OF Board of Directors. The threemember administrative body respon-sible for management of the Office ofFinance.

§ 941.2 General.This part reorganizes the Office of Fi-

nance, a joint office of the Bank Sys-tem, establishes the OF Board of Direc-tors as the body responsible for themanagement and operations of the Of-fice of Finance, and defines their re-spective duties and responsibilities.

§ 941.3 Federal Housing Finance Boardoversight.

(a) Section 12(a) of the Bank Act (12U.S.C. 1432(a)) provides that all activi-ties of a Bank are subject to the ap-proval of the Finance Board. The Fi-nance Board retains the same oversightauthority over the Office of Financeand the OF Board of Directors as it hasover a Bank and its respective board ofdirectors.

(b) Pursuant to section 20 of theBank Act (12 U.S.C. 1440), the FinanceBoard shall audit and examine the Of-fice of Finance, the OF Board of Direc-tors and the Office of Finance Oper-ations Imprest Fund.

§ 941.4 Office of Finance.(a) Establishment. An Office of Fi-

nance is hereby established which shallhave the responsibilities, duties andfunctions described herein.

(b) Status. The Office of Finance isrecognized as a joint office of the BankSystem.

(c) Mission. The Office of Financeshall:

(1) Issue the consolidated obligationspursuant to section 11 of the Bank Act,as amended (12 U.S.C. 1431);

(2) Perform all other necessary andproper functions in relation to the con-solidated obligations, as fiscal agent onbehalf of the Banks; and

(3) Undertake any other activities ex-pressly approved by the Finance Board.

§ 941.5 Functions of the Office of Fi-nance.

Subject to limitations set by the OFBoard of Directors, the Office of Fi-nance shall have the following dutiesand functions:

(a) Conduct all negotiations relatingto the public or private offering andsale of consolidated obligations, andperform such other related functions asmay be authorized by resolution of theFinance Board;

(b) Perform such functions for the Fi-nancing Corporation and/or the Resolu-tion Funding Corporation, on behalf ofthe Banks, as may be requested byeach such entity; and

(c) Make timely payments on behalfof the Banks of principal and interestdue on all consolidated obligationsissued pursuant hereto.

§ 941.6 Director of the Office of Fi-nance.

(a) The Office of Finance shall beheaded by a Director who shall be re-sponsible for the overall daily manage-ment of the Office of Finance functionsand organization, including:

(1) Implementation of the OF Boardof Directors’ plans and policies for theadministration of the Office of Fi-nance;

(2) Organization and development ofthe personnel structure of the Office ofFinance;

(3) Employment and management ofpersonnel;

(4) Preparation of the budget forpresentation to the OF Board of Direc-tors pursuant to § 941.11; and

(5) Performance of any duty assignedby the OF Board of Directors, includingproviding it any records, reports orother data in the possession of the Of-fice of Finance whenever requested todo so.

(b) The Director shall perform theduties described herein and the func-tions of the Office of Finance subject tothe policies adopted by the OF Board ofDirectors.

(c) The Director shall be:(1) The Fiscal Agent of the Federal

Home Loan Banks;


695


(2) A member of the Directorate ofthe Financing Corporation, pursuant tosection 21(b)(1)(A) of the Federal HomeLoan Bank Act, as amended (12 U.S.C.1441(b)(1)(A)); and

(3) A member of the Directorate ofthe Resolution Funding Corporation,pursuant to section 21B(c)(1)(A) of theFederal Home Loan Bank Act, asamended (12 U.S.C. 1441b(c)(1)(A)).

[57 FR 2834, Jan. 24, 1992, as amended at 57FR 11429, Apr. 3, 1992]

§ 941.7 Office of Finance Board of Di-rectors.

(a) Establishment. The Office of Fi-nance Board of Directors is hereby cre-ated.

(b) Use of facilities or personnel. TheOF Board of Directors may utilize thefacilities or personnel of the Office ofFinance or any Bank in order to per-form its functions.

(c) Membership. The OF Board of Di-rectors shall consist of three part-timemembers appointed by the FinanceBoard as follows:

(1) Bank System. Two Bank Presi-dents; and

(2) Private Citizen. A citizen of theUnited States with a demonstrated ex-pertise in financial markets. Such ap-pointee may not be an officer, directoror employee of a Bank or Bank Systemmember, hold shares, or any other fi-nancial interest in, any member of aBank, or be affiliated with anyFHLBank consolidated obligation sell-ing or dealer group member under con-tract with the Office of Finance.

(d) Terms—(1) Length. Except is pro-vided in paragraphs (d)(3) and (4) of thissection, the OF Board of Directorsshall serve at the pleasure of the Fi-nance Board or for terms, which shallbe staggered, of three years beginningon April 1.

(2) Vacancy. The Finance Board shallfill any vacancy occurring on the OFBoard of Directors. An appointment tofill a vacancy shall be only for the re-mainder of the term during which thevacancy occurred.

(3) Holdover. At the direction of theFinance Board, any member of the OFBoard of Directors is authorized to con-tinue to serve on the OF Board of Di-rectors after the expiration of the

member’s term until a successor hasbeen appointed by the Finance Board.

(4) Initial terms. Notwithstandingparagraph (d)(1) herein, the terms ofthe members of the first OF Board ofDirectors convened pursuant to thispart shall be as follows:

(i) One of the Bank President mem-bers shall serve from the date of ap-pointment until March 31, 1993 or atthe pleasure of the Finance Board andthe other shall serve from the date ofappointment until March 31, 1994 or atthe pleasure of the Finance Board.

(ii) The Private Citizen member shallserve from the date of appointmentuntil March 31, 1995 or at the pleasureof the Finance Board.

(e) Chair. (1) The Finance Board shalldesignate one member of the OF Boardof Directors as the Chair, and anothermember as the Vice Chair.

(2) The Chair shall preside over themeetings of the OF Board of Directors.In the absence of the Chair, the ViceChair shall preside.

(3) The Chair shall be responsible forensuring that the directives and resolu-tions of the OF Board of Directors aredrafted and maintained and for keepingthe minutes of all meetings.

(f) Compensation—(1) Bank Systemmembers. (i) The Bank President mem-bers shall not receive any additionalcompensation or reimbursement as aresult of their service on the OF Boardof Directors.

(ii) Each Bank is authorized to con-tinue to pay its President a salary dur-ing attendance at the OF Board of Di-rectors meetings and to pay in accord-ance with the travel and expense reim-bursement policies in effect at suchPresident’s Bank such President’s trav-el and per diem expenses for attendanceat OF Board of Directors meetings.

(iii) Each Bank shall be entitled to bereimbursed by the Office of Finance forits expenditure of travel and per diemexpenses associated with its BankPresident’s attendance at OF Board ofDirectors meetings as a member there-of.

(2) Private Citizen member. The Officeof Finance shall pay compensation andexpenses to the Private Citizen mem-ber of the OF board of directors in ac-cordance with the requirements forpayment of compensation and expenses


696

12 CFR Ch. IX (1–1–00 Edition)§ 941.8

to Bank directors set forth in § 932.17 ofthis chapter, except that, for these pur-poses:

(i) The Office of Finance policy on di-rector compensation must be approvedby the board of directors of the Fi-nance Board;

(ii) Section 932.17(a)(3) and (c)(1)(ii) ofthis chapter shall not apply; and

(iii) The terms ‘‘average compensa-tion per director’’ and ‘‘ACPD,’’ as usedin § 932.17 of this chapter, shall bedeemed to mean ‘‘maximum compensa-tion of the Private Citizen member’’.

[57 FR 2834, Jan. 24, 1992, as amended at 57FR 11429, Apr. 3, 1992; 61 FR 43155, Aug. 21,1996; 63 FR 65693, Nov. 30, 1998]

§ 941.8 Powers of the Office of FinanceBoard of Directors.

(a) General. The OF Board of Direc-tors shall enjoy such incidental powersunder section 12(a) of the Bank Act (12U.S.C. 1432(a)), as are necessary, con-venient and proper to accomplish theefficient operation and management ofthe Office of Finance pursuant to thispart.

(b) Agent. Subject to any limitationsset by the Finance Board, the OFBoard of Directors, in the performanceof its duties, shall have the power toact:

(1) On behalf of the Finance Board inthe issuing of consolidated obligations;and

(2) On behalf of the Banks in the pay-ing of principal and interest due on theconsolidated obligations.

(c) Delegation. The OF Board of Direc-tors shall be empowered to delegateany of its powers to any employee ofthe Office of Finance in order to enablethe Office of Finance to carry out itsfunctions.

(d) Indemnification. (1) The OF Boardof Directors is empowered to determinethe terms and conditions under whichits members, the Director, and otherofficers and employees of the Office ofFinance will be indemnified by the Of-fice of Finance, provided: that suchterms and conditions will not be incon-sistent with terms and conditions of in-demnification of directors, officers andemployees of the Bank System, gen-erally.

(2) Such indemnification procedures,when duly adopted, may be supple-

mented by a contract of insurance, andall expenses incident to indemnifica-tion will be treated as an expense ofthe Office of Finance.


§ 941.9 Duties of the Office of FinanceBoard of Directors.

(a) General—(1) Bylaws. The OF Boardof Directors shall adopt bylaws gov-erning its operations and issue suchguidance or instructions as will pro-mote the efficient operation of the Of-fice of Finance.

(2) Conduct of Business. The OF Boardof Directors shall conduct its businessby majority vote of its members con-vened at a meeting in accordance withits bylaws.

(b) Oversight. The OF Board of Direc-tors shall:

(1) Have overall responsibility for theperformance of the duties and func-tions of the Office of Finance pursuanthereto and for its efficient and effec-tive operation;

(2) Set policies for the Office of Fi-nance;

(3) Approve a strategic business planfor the Office of Finance and monitorthe progress of its operations undersuch plan;

(4) Subject to Finance Board ap-proval, review, adopt and monitor theannual operating budget of the Officeof Finance including any supplementalexpenditure thereto;

(5) Develop and implement the pric-ing mechanism by which the Office ofFinance will make private or public of-ferings of consolidated obligations, inconsultation with the Finance Board orits designee;

(6) Subject to Finance Board ap-proval, select and employ the Directorunder an annual contract of employ-ment;

(7) Review and approve all contractsof the Office of Finance; and

(8) Assume any other responsibilitiesthat may from time to time be dele-gated to it by the Finance Board.

§ 941.10 Meetings of the Office of Fi-nance Board of Directors.

(a) Meetings. (1) The OF Board of Di-rectors shall adopt procedures for hold-ing meetings which shall be set forth in


697


the bylaws and such meetings shall beheld not less than once each quarter ofeach year.

(2) Due notice shall be given to theFinance Board by the Chair prior toeach meeting.

(b) Quorum. A quorum for purposes ofOF Board of Directors meetings shallbe at least two members.


§ 941.11 Budget, funding and expenses.

(a) General. The budget of the Officeof Finance shall be calculated on a cal-endar year basis.

(b) Initial review. The OF Board of Di-rectors shall be responsible for ini-tially reviewing and approving thebudget of the Office of Finance, whichshall include the budget for the OFBoard of Directors.

(c) Agency review. After its approvalof the budget, pursuant to paragraph(b) herein, the OF Board of Directorsannually shall submit the Office of Fi-nance budget to the Finance Board forits review and approval. Upon approvalby the Finance Board, the OF Board ofDirectors shall transmit a copy of thebudget to each of the Bank Presidents.

(d) Expenses. Upon the approval of thebudget by the Finance Board in accord-ance with paragraph (c) herein, the OFBoard of Directors may authorize theDirector to make payments pursuantto the budget as necessary.

(e) Imprest fund—(1) Checking account.The Office of Finance shall establish achecking account in a financial deposi-tory institution approved by the OFBoard of Directors, to be called the‘‘Office of Finance Operations ImprestFund.’’ The Director shall maintain anamount therein approved by the OFBoard of Directors.

(2) Use. The funds in such checkingaccount shall be:

(i) Available for expenses of the Of-fice of Finance and the OF Board of Di-rectors, according to their approvedbudgets; and

(ii) Subject to withdrawal by checkor draft signed by the Director or otherperson designated by the OF Board ofDirectors.

(f) Funding—(1) General. The BankSystem is responsible for funding the

expenses of the Office of Finance andthe OF Board of Directors.

(2) Method. (i) The Banks shall joint-ly fund the Office of Finance by peri-odically reimbursing the Office of Fi-nance Operations Imprest Fund inorder to maintain in such Fund theamount approved in paragraph (e)(1)herein.

(ii) Each Bank’s respective pro ratashare of the reimbursement describedin paragraph (f)(2)(i) herein shall bebased on the ratio of the total paid-invalue of its capital stock relative tothe total paid-in value of all capitalstock in the Bank System.

(iii) Notwithstanding the formula de-vised herein, the OF Board of Directorsmay devise an alternative formula fordetermining each Bank’s respectiveshare of Office of Finance expenses.Upon approval by the Finance Board,such alternative formula shall super-sede the formula devised herein.

(3) Payment. Each Bank from time totime shall promptly forward funds tothe Office of Finance in an amount rep-resenting its share of the reimburse-ment described in paragraph (f)(2)(i)herein when directed to do so by theDirector pursuant to procedures of theOF Board of Directors.

(4) Receipt. All Bank funds receivedby the Office of Finance pursuant tothis section shall be promptly depos-ited into the checking account de-scribed in paragraph (e)(1) herein anddisbursed according to this part.

(5) Procedures. The OF Board of Direc-tors shall adopt procedures governingthe payment or reimbursement of ex-penses of the Office of Finance and theOF Board of Directors.

§ 941.12 Savings clause.(a) The Office of Finance Operations

Imprest Fund is available to pay for allexpenses of the Office of Finance exist-ing prior to the adoption of this part.

(b) All actions taken by the Office ofFinance as it existed prior to the adop-tion of this part continue to be valid asregards the Finance Board and theBank System.

(c) Notwithstanding any provision ofthis part, the Office of Finance or itsDirector may continue to exercise anypowers delegated to it by the FinanceBoard or the former Federal Home


698


Loan Bank Board, which they exerciseon the date of the adoption of this part,until the first meeting of the OF Boardof Directors created pursuant hereto.

PART 942 [RESERVED]

PART 943—COLLECTION, SETTLE-MENT, AND PROCESSING OFPAYMENT INSTRUMENTS

Sec.943.1 Authority and scope.943.2 Definitions.943.3 General provisions.943.4 Incidental powers.943.5 Operations.943.6 Pricing of services.943.7 Rights, powers, responsibilities, du-

ties, and liabilities.

AUTHORITY: 12 U.S.C. 1430, 1431.

SOURCE: 45 FR 64164, Sept. 29, 1980, unlessotherwise noted. Redesignated at 54 FR 36759,Sept. 5, 1989.

§ 943.1 Authority and scope.(a) Pursuant to section 11(e)(2) of the

Federal Home Loan Bank Act (12U.S.C. 1431(e)(2)) (Bank Act), the Boardhas promulgated this part governingthe collection, processing, and settle-ment, and services incidental thereto,of drafts, checks, and other negotiableand nonnegotiable items and instru-ments by Federal Home Loan Banks.Settlement, collection, and processinginclude the following activities as de-fined in this part: Account processing,data processing, data communication,issuance of forms, transportation ofitems, and storage services.

(b) Any activity authorized by sec-tion 11(e)(2) of the Bank Act shall begoverned by the provisions of this part.

§ 943.2 Definitions.(a) Unless otherwise defined in this

part, the terms used in this part shallconform, in the following order, to:Regulations of the Board, the UniformCommercial Code, regulations of theFederal Reserve System, and generalbanking usage.

(b) The term account processing in-cludes charging, crediting, and settlingof member or eligible institution ac-counts, excluding individual customeraccounts.

(c) As used in this part, the term as-sets includes furniture and equipment,leasehold improvements, and capital-ized start-up costs.

(d) The term data processing includescapture, storage, and assembling of,and computation of, data from pay-ment instruments received from Fed-eral Reserve offices, Federal HomeLoan Banks, clearinghouse associa-tions, depository institutions, andother direct sending entities.

(e) The term data communicationmeans transmitting and receiving ofdata to or from Federal Home LoanBanks, Federal Reserve offices, clear-inghouse associations, depository insti-tutions or their service bureaus, andother direct sending entities, arrange-ment for delivery of information; andtelephone inquiry service.

(f) The term eligible institution meansany institution eligible to make appli-cation to become a member of a Fed-eral Home Loan Bank under section 4of the Bank Act (12 U.S.C. 1424).

(g) The term issuance of forms meansthe designation and distribution ofstandardized forms for use in collec-tion, processing, and settlement serv-ices.

(h) The term presentment means a de-mand for acceptance or payment madeupon the maker, acceptor, drawee orother payor by or on behalf of the hold-er, and may involve the use of elec-tronic transmission of an instrumentor item or transmission of data fromthe instrument or item by electronic ormechanical means.

(i) The term statement packaging in-cludes receiving statement informationfrom members or eligible institutionsor their service bureaus on respectivecustomer cycle dates; printing state-ments; matching customer accountstatements; packaging the statementswith appropriate items and informa-tional materials, as authorized by indi-vidual members and eligible institu-tions, for distribution to their cus-tomers; sending the packages to themembers or eligible institutions ormailing the packages directly to theircustomers.

(j) The term storage services includesfiling, storage, and truncation of items.


699


(k) The term transportation of itemsincludes transporting items from Fed-eral Reserve offices, other FederalHome Loan Banks clearinghouse asso-ciations, depository institutions, andother direct sending entities to a Fed-eral Home Loan Bank; forwardingitems to financial institutions aftersorting and forwarding cash items orreturn items to Federal Reserve officesand other sending entities.

§ 943.3 General provisions.The Federal Home Loan Banks are

authorized (a) to engage in, be agentsor intermediaries for, or otherwise par-ticipate or assist in, the processing,collection, and settlement of checks,drafts, or any other negotiable or non-negotiable items and instruments ofpayment drawn on eligible institutionsor Bank members; and (b) to bedrawees of checks, drafts, and other ne-gotiable and nonnegotiable items andinstruments issued by eligible institu-tions or Bank members.

§ 943.4 Incidental powers.In connection with the collection,

processing, and settlement of itemsand instruments drawn on or issued byeligible institutions or Bank members,a Federal Home Loan Bank may alsoperform the following services, as de-fined in § 943.2:

(a) Statement packaging; and(b) Any other activity that the Board

shall, from time to time, after noticeand comment, find necessary for theexercise of the authority of this part.

[45 FR 64164, Sept. 29, 1980, as amended at 55FR 2231, Jan. 23, 1990]

§ 943.5 Operations.A Federal Home Loan Bank may uti-

lize the services of a Federal ReserveBank and may become a member or usethe services of a clearinghouse, publicor private financial institution, oragency in the exercise of any powers orfunctions under this part.

§ 943.6 Pricing of services.(a) General. Federal Home Loan

Banks shall charge for services author-

ized in this part in a manner consistentwith the principles of section 11(A)(c)of the Federal Reserve Act (12 U.S.C.248a(c)), as interpreted by this part.

(b) Payment instrument account serv-ices. (1) In determining the fees forservices provided under this part, aFederal Home Loan Bank must takeinto account all direct and indirectcosts of providing the services.

(2) Prices must reflect the imputedrate of return that would have beenearned and the taxes that would havebeen paid if the Bank were a privatecorporation, by using a cost of capitaladjustment factor applied to those as-sets used in providing services author-ized under this part.

(c) Review and publication. The Fi-nance Board shall from time to timeand at least annually review the cost ofcapital adjustment factor and reviewprices for services authorized in thispart for compliance with the principlesset forth in paragraphs (a) and (b) ofthis section. All prices for Bank serv-ices authorized in this part will be pub-lished annually in the FEDERAL REG-ISTER, except those for fees charged toan applicant for draws made by a bene-ficiary under a standby letter of credit.

(12 U.S.C. 1431(e); Reorg. Plan No. 3 of 1947, 12FR 4981, 3 CFR, 1943–48 Comp., p. 1071)

[45 FR 64164, Sept. 29, 1980, as amended at 46FR 38900, July 30, 1981. Redesignated at 54 FR36759, Sept. 5, 1989, and amended at 58 FR59936, Nov. 12, 1993; 60 FR 57682, Nov. 17, 1995;63 FR 65700, Nov. 30, 1998]

§ 943.7 Rights, powers, responsibilities,duties, and liabilities.

To the extent it is not inconsistentwith other provisions of this part, theUniform Commercial Code governs therights, powers, responsibilities, duties,and liabilities of Federal Home LoanBanks in the exercise of their author-ity under this part. For purposes ofthis paragraph, the term ‘‘bank,’’ asused in the Uniform Commercial Codeand clearinghouse rules, includes Fed-eral Home Loan Banks and their mem-bers and eligible institutions.

PART 944 [RESERVED]


700

SUBCHAPTER C—FINANCING CORPORATION

PART 950—OPERATIONS

Sec.950.1 Definitions.950.2 General authority.950.3 Authority to establish investment

policies and procedures.950.4 Book-entry procedure for Financing

Corporation obligations.950.5 Bank and Office of Finance employees.950.6 Budget and expenses.950.7 Administrative expenses.950.8 Non-administrative expenses; assess-

ments.950.9 Reports to the Finance Board.950.10 Review of books and records.

AUTHORITY: 12 U.S.C. 1441(b)(8), (c), and (j).

SOURCE: 62 FR 50248, Sept. 25, 1997, unlessotherwise noted.



(b) Administrative expenses:(1) Include general office and oper-

ating expenses such as telephone andphotocopy charges, printing, legal, andprofessional fees, postage, courier serv-ices, and office supplies; and

(2) Do not include any form of em-ployee compensation, custodian fees,issuance costs, or any interest on (andany redemption premium with respectto) any Financing Corporation obliga-tions.

(c) Bank or Banks means a FederalHome Loan Bank or the Federal HomeLoan Banks.

(d) BIF-assessable deposit means a de-posit that is subject to assessment forpurposes of the Bank Insurance Fundunder the Federal Deposit InsuranceAct (12 U.S.C. 1811 et seq.), including adeposit that is treated as a deposit in-sured by the Bank Insurance Fundunder section 5(d)(3) of the Federal De-posit Insurance Act.

(e) Custodian fees means any fee in-curred by the Financing Corporation inconnection with the transfer of any se-curity to, or maintenance of any secu-rity in, the segregated account estab-lished under section 21(g)(2) of the Act,and any other expense incurred by theFinancing Corporation in connection

with the establishment or maintenanceof such account.

(f) Directorate means the board estab-lished under section 21(b) of the Act tomanage the Financing Corporation.

(g) Exit fees means the amounts paidunder sections 5(d)(2)(E) and (F) of theFederal Deposit Insurance Act, andregulations promulgated thereunder (12CFR part 312).

(h) FDIC means the agency estab-lished as the Federal Deposit InsuranceCorporation.

(i) Finance Board means the agencyestablished as the Federal Housing Fi-nance Board.

(j) Insured depository institution hasthe same meaning as in section 3 of theFederal Deposit Insurance Act.

(k) Issuance costs means issuance feesand commissions incurred by the Fi-nancing Corporation in connectionwith the issuance or servicing of Fi-nancing Corporation obligations, in-cluding legal and accounting expenses,trustee, fiscal, and paying agentcharges, securities processing charges,joint collection agent charges, adver-tising expenses, and costs incurred inconnection with preparing and printingoffering materials to the extent the Fi-nancing Corporation incurs such costsin connection with issuing any obliga-tions.

(l) Non-administrative expenses meanscustodian fees, issuance costs, and in-terest on Financing Corporation obli-gations.

(m) Obligations means debentures,bonds, and similar debt securitiesissued by the Financing Corporationunder sections 21(c)(3) and (e) of theAct.

(n) Office of Finance means the jointoffice of the Banks established underpart 941 of this chapter.

(o) Receivership proceeds means theliquidating dividends and paymentsmade on claims received by the FederalSavings and Loan Insurance Corpora-tion Resolution Fund established undersection 11A of the Federal Deposit In-surance Act from receiverships, thatare not required by the ResolutionFunding Corporation to provide fundsfor the Funding Corporation Principal


701


Fund established under section 21B ofthe Act.

(p) SAIF-assessable deposit means a de-posit that is subject to assessment forpurposes of the Savings Association In-surance Fund under the Federal De-posit Insurance Act, including a de-posit that is treated as a deposit in-sured by the Savings Association In-surance Fund under section 5(d)(3) ofthe Federal Deposit Insurance Act.

§ 950.2 General authority.Subject to the limitations and inter-

pretations in this part and such ordersand directions as the Finance Boardmay prescribe, the Financing Corpora-tion shall have authority to exerciseall powers and authorities granted to itby the Act and by its charter and by-laws regardless of whether the powersand authorities are specifically imple-mented in regulation.

§ 950.3 Authority to establish invest-ment policies and procedures.

The Directorate shall have authorityto establish investment policies andprocedures with respect to FinancingCorporation funds provided that the in-vestment policies and procedures areconsistent with the requirements ofsection 21(g) of the Act. The Direc-torate shall promptly notify the Fi-nance Board in writing of any changesto the investment policies and proce-dures.

§ 950.4 Book-entry procedure for Fi-nancing Corporation obligations.

(a) Authority. Any Federal ReserveBank shall have authority to applybook-entry procedure to FinancingCorporation obligations.

(b) Procedure. The book-entry proce-dure for Financing Corporation obliga-tions shall be governed by the book-entry procedure established for Banksecurities, codified at part 912 of thischapter. Wherever the terms ‘‘FederalHome Loan Bank(s),’’ ‘‘Federal HomeLoan Bank security(ies),’’ or ‘‘Book-entry Federal Home Loan Bank secu-rity(ies)’’ appear in part 912, the termsshall be construed also to mean ‘‘Fi-nancing Corporation,’’ ‘‘Financing Cor-poration obligation(s),’’ or ‘‘Book-entry Financing Corporation obliga-tion(s),’’ respectively, if appropriate to

accomplish the purposes of this sec-tion.

§ 950.5 Bank and Office of Finance em-ployees.

Without further approval of the Fi-nance Board, the Financing Corpora-tion shall have authority to utilize theofficers, employees, or agents of anyBank or the Office of Finance in suchmanner as may be necessary to carryout its functions.

§ 950.6 Budget and expenses.(a) Directorate approval. The Financ-

ing Corporation shall submit annuallyto the Directorate for approval, a budg-et of proposed expenditures for thenext calendar year that includes ad-ministrative and non-administrativeexpenses.

(b) Finance Board approval. The Di-rectorate shall submit annually to theFinance Board for approval, the budgetof the Financing Corporation’s pro-posed expenditures it approved pursu-ant to paragraph (a) of this section.

(c) Spending limitation. The FinancingCorporation shall not exceed theamount provided for in the annualbudget approved by the Finance Boardpursuant to paragraph (b) of this sec-tion, or as it may be amended by theDirectorate within limits set by the Fi-nance Board.

(d) Amended budgets. Whenever theFinancing Corporation projects or an-ticipates that it will incur expendi-tures, other than interest on FinancingCorporation obligations, that exceedthe amount provided for in the annualbudget approved by the Finance Boardor the Directorate pursuant to para-graph (b) or (c) of this section, the Fi-nancing Corporation shall submit anamended annual budget to the Direc-torate for approval, and the Direc-torate shall submit such amendedbudget to the Finance Board for ap-proval.

§ 950.7 Administrative expenses.(a) Payment by Banks. The Banks

shall pay all administrative expensesof the Financing Corporation approvedpursuant to § 950.6.

(b) Amount. The Financing Corpora-tion shall determine the amount of ad-ministrative expenses each Bank shall


702

12 CFR Ch. IX (1–1–00 Edition)§ 950.8

pay in the manner provided by section21(b)(7)(B) of the Act. The FinancingCorporation shall bill each Bank forsuch amount periodically.

(c) Adjustments. The Financing Cor-poration shall adjust the amount of ad-ministrative expenses the Banks arerequired to pay in any calendar yearpursuant to paragraphs (a) and (b) ofthis section, by deducting any fundsthat remain from the amount paid bythe Banks for administrative expensesin the prior calendar year.

§ 950.8 Non-administrative expenses;assessments.

(a) Interest expenses. The FinancingCorporation shall determine antici-pated interest expenses on its obliga-tions at least semiannually.

(b) Assessments on insured depositoryinstitutions—(1) Authority. To providesufficient funds to pay the non-admin-istrative expenses of the FinancingCorporation approved under § 950.6, theFinancing Corporation shall, with theapproval of the Board of Directors ofthe FDIC, assess against each insureddepository institution an assessment inthe same manner as assessments aremade by the FDIC under section 7 ofthe Federal Deposit Insurance Act.

(2) Assessment rate—(i) Determination.The Financing Corporation at leastsemiannually shall establish an assess-ment rate formula, which may includerounding methodology, to determinethe rate or rates of the assessment itwill assess against insured depositoryinstitutions pursuant to section 21(f)(2)of the Act and paragraph (b)(1) of thissection.

(ii) Limitation. Until the earlier of De-cember 31, 1999, or the date as of whichthe last savings association ceases toexist, the rate of the assessment im-posed on an insured depository institu-tion with respect to any BIF-assessabledeposit shall be a rate equal to 1⁄5 of therate of the assessment imposed on aninsured depository institution with re-spect to any SAIF-assessable deposit.

(iii) Notice. The Financing Corpora-tion shall notify the FDIC and the col-lection agent, if any, of the formula es-tablished under paragraph (b)(2)(i) ofthis section.

(3) Collecting assessments—(i) Collec-tion agent. The Financing Corporation

shall have authority to collect assess-ments made under section 21(f)(2) ofthe Act and paragraph (b)(1) of this sec-tion through a collection agent of itschoosing.

(ii) Accounts. Each Bank shall permitany insured depository institutionwhose principal place of business is inits district to establish and maintainat least one demand deposit account tofacilitate collection of the assessmentsmade under section 21(f)(2) of the Actand paragraph (b)(1) of this section.

(c) Receivership proceeds—(1) Author-ity. To the extent the amounts col-lected under paragraph (b) of this sec-tion are insufficient to pay the non-ad-ministrative expenses of the FinancingCorporation approved under § 950.6, theFinancing Corporation shall have au-thority to require the FDIC to transferreceivership proceeds to the FinancingCorporation in accordance with section21(f)(3) of the Act.

(2) Procedure. The Directorate shallrequest in writing that the FDIC trans-fer the receivership proceeds to the Fi-nancing Corporation. Such requestshall specify the estimated amount offunds required to pay the non-adminis-trative expenses of the Financing Cor-poration approved under § 950.6.

(d) Exit fees—(1) Authority. To the ex-tent the amounts provided under para-graphs (b) and (c) of this section are in-sufficient to pay the interest due on Fi-nancing Corporation obligations, theFinancing Corporation shall have au-thority to request that the Secretaryof the Treasury order the transfer ofexit fees to the Financing Corporationin accordance with section 5(d)(2)(E) ofthe Federal Deposit Insurance Act oras otherwise may be provided for bystatute.

(2) Procedure. The Directorate shallrequest in writing that the Secretaryof the Treasury order that exit fees betransferred to the Financing Corpora-tion. Such request shall specify the es-timated amount of funds required topay the interest due on Financing Cor-poration obligations.

§ 950.9 Reports to the Finance Board.

The Financing Corporation shall filesuch reports as the Finance Board shalldirect.


703


§ 950.10 Review of books and records.

The Finance Board shall examine theFinancing Corporation at least annu-

ally to determine whether the Financ-ing Corporation is performing its func-tions in accordance with the require-ments of section 21 of the Act and thispart.


704

SUBCHAPTER D—RESOLUTION FUNDING CORPORATION

PART 955—AUTHORITY FOR BANKASSISTANCE

Sec.955.1 Bank employees.955.2 Demand deposit accounts.

AUTHORITY: Secs. 2A, 2B, as added by sec.702, 103 Stat. 413, 414 (12 U.S.C. 1422a, 1422b).

§ 955.1 Bank employees.

Upon the request of the Directorateof the Resolution Funding Corporation,established pursuant to section 21B(b)of the Act, officers, employees, oragents of the Federal home loan banksare authorized to act for and on behalfof the Resolution Funding Corporation

in such manner as may be necessary tocarry out the functions of the Resolu-tion Funding Corporation as providedin section 21B(c)(6)(B) of the Act.

[54 FR 39729, Sept. 28, 1989]

§ 955.2 Demand deposit accounts.Each bank shall allow any Savings

Association Insurance Fund member(‘‘SAIF member’’) whose principalplace of business is in its district to es-tablish and maintain at least one de-mand deposit account for the purposeof facilitating the Resolution FundingCorporation’s assessments pursuant tosection 21B(e)(7) of the Act.

[54 FR 39729, Sept. 28, 1989]


705

SUBCHAPTER E—AFFORDABLE HOUSING

PART 960—AFFORDABLE HOUSINGPROGRAM

Sec.960.1 Definitions.960.2 Required annual AHP contributions.960.3 Operation of Program and adoption of

AHP implementation plan.960.4 Advisory Councils.960.5 Minimum eligibility standards for

AHP projects.960.6 Procedure for approval of applications

for funding.960.7 Modifications of applications prior to

project completion.960.8 Procedure for funding.960.9 Modifications of applications after

project completion.960.10 Initial monitoring requirements.960.11 Long-term monitoring requirements.960.12 Remedial actions for noncompliance.960.13 Agreements.960.14 Temporary suspension of AHP con-

tributions.960.15 Affordable Housing Reserve Fund.960.16 Application to existing AHP projects.

AUTHORITY: 12 U.S.C. 1430(j).





Advance means a loan to a memberfrom a Bank that is:

(1) Provided pursuant to a writtenagreement; (2) Supported by a note orother written evidence of the member’sobligation; and

(3) Fully secured by collateral in ac-cordance with the Act and part 935 ofthis chapter.

Affordable means that the rentcharged for a unit which is to be re-served for occupancy by a householdwith an income at or below 80 percentof the median income for the area, doesnot exceed 30 percent of the income ofa household of the maximum incomeand size expected, under the commit-ment made in the AHP application, tooccupy the unit (assuming occupancyof 1.5 persons per bedroom or 1.0 personper unit without a separate bedroom).

AHP or Program means the AffordableHousing Program established pursuantto 12 U.S.C. 1430(j) and this part.


Board of Directors means the Board ofDirectors of the Finance Board.

CIP means a Bank’s Community In-vestment Program established undersection 10(i) of the Act (12 U.S.C.1430(i)).

Cost of funds means, for purposes of asubsidized advance, the estimated costof issuing Bank System consolidatedobligations with maturities com-parable to that of the subsidized ad-vance.

Direct subsidy means an AHP subsidyin the form of a direct cash payment,but does not include homeownershipset-aside funds.

Family member means any individualrelated to a person by blood, marriageor adoption.


Habitable means suitable for occu-pancy, taking into account localhealth, safety, and building codes.

Homeless household means a house-hold made up of one or more individ-uals, other than individuals imprisonedor otherwise detained pursuant to stateor federal law, who:

(1) Lack a fixed, regular, and ade-quate nighttime residence; or

(2) Have a primary nighttime resi-dence that is:

(i) A supervised publicly or privatelyoperated shelter designed to providetemporary living accommodations (in-cluding welfare hotels, congregateshelters, and transitional housing forthe mentally ill);

(ii) An institution that provides atemporary residence for individuals in-tended to be institutionalized; or

(iii) A public or private place not de-signed for, or ordinarily used as, a reg-ular sleeping accommodation forhuman beings.

Homeownership set-aside funds meansfunds provided to a member by a Bank


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12 CFR Ch. IX (1–1–00 Edition)§ 960.1

pursuant to a Bank’s homeownershipset-aside program.

HUD means the Department of Hous-ing and Urban Development.

Low-or moderate-income household. (1)Owner-occupied projects. For purposes ofan owner-occupied project, low-or mod-erate-income household means a house-hold which, at the time it is qualifiedby the sponsor for participation in theproject, has an income of 80 percent orless of the median income for the area.

(2) Rental projects. (i) In general. Forpurposes of a rental project, low-ormoderate-income household means ahousehold which, upon initial occu-pancy of a rental unit, has an incomeat or below 80 percent of the median in-come for the area.

(ii) Housing with current occupants. Inthe case of projects involving the pur-chase or rehabilitation of rental hous-ing with current occupants, low- ormoderate-income household means an oc-cupying household with an income ator below 80 percent of the median in-come for the area at the time an appli-cation for AHP subsidy is submitted tothe Bank.

(3) Family-size adjustment. The incomelimit for low-or moderate-income house-holds may be adjusted for family size inaccordance with the methodology ofthe applicable median income stand-ard.

Low-or moderate-income neighborhoodmeans any neighborhood in which 51percent or more of the households haveincomes at or below 80 percent of themedian income for the area.

Median income for the area. (1) Owner-occupied projects. A Bank shall identifyin its AHP implementation plan one ormore of the following median incomestandards from which all owner-occu-pied projects may choose for purposesof the AHP:

(i) The median income for the area,as published annually by HUD;

(ii) The applicable median family in-come, as determined under 26 U.S.C.143(f) (Mortgage Revenue Bonds) andpublished by a State agency or instru-mentality;

(iii) The median income for the area,as published by the United States De-partment of Agriculture; or

(iv) The median income for any defin-able geographic area, as published by a

federal, state, or local government en-tity for purposes of that entity’s hous-ing programs, and approved by theBoard of Directors, at the request of aBank, for use under the AHP.

(2) Rental projects. A Bank shall iden-tify in its AHP implementation planone or more of the following median in-come standards from which all rentalprojects may choose for purposes of theAHP:

(i) The median income for the area,as published annually by HUD; or

(ii) The median income for any defin-able geographic area, as published by afederal, state, or local government en-tity for purposes of that entity’s hous-ing programs, and approved by theBoard of Directors, at the request of aBank, for use under the AHP.

(3) Procedure for approval. Prior to re-questing approval by the Board of Di-rectors of a median income standard, aBank shall amend its AHP implemen-tation plan to permit the use of suchstandard, conditioned on Board of Di-rectors approval. Requests for approvalof median income standards shall re-ceive prompt consideration by theBoard of Directors.

Member means an institution that hasbeen approved for membership in aBank and has purchased capital stockin the Bank in accordance with §§ 933.20and 933.24 of this chapter.

Net earnings of a Bank means the netearnings of a Bank for a calendar yearafter deducting the Bank’s pro ratashare of the annual contribution to theResolution Funding Corporation re-quired under sections 21A or 21B of theAct (12 U.S.C. 1441a, 1441b), and beforedeclaring any dividend under section 16of the Act (12 U.S.C. 1436).

Owner-occupied project means aproject involving the purchase, con-struction, or rehabilitation of owner-occupied housing, including condomin-iums and cooperative housing, by or forvery low-or low-or moderate-incomehouseholds.

Owner-occupied unit means a unit inan owner-occupied project. Housingwith two to four dwelling units con-sisting of one owner-occupied unit andone or more rental units shall be con-sidered a single owner-occupied unit.


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Rental project means a project involv-ing the purchase, construction, or re-habilitation of rental housing, includ-ing overnight shelters and transitionalhousing for homeless households andmutual housing, where at least 20 per-cent of the units in the project are oc-cupied by and affordable for very low-income households.

Retention period means:(1) 5 years from closing for an AHP-

assisted owner-occupied unit; and(2) 15 years from the date of project

completion for a rental project.Sponsor means a not-for-profit or for-

profit organization or public entitythat:

(1) Has an ownership interest (includ-ing any partnership interest) in a rent-al project; or

(2) Is integrally involved in an owner-occupied project, such as by exercisingcontrol over the planning, develop-ment, or management of the project, orby qualifying borrowers and providingor arranging financing for the ownersof the units.

State means a state of the UnitedStates, the District of Columbia,Guam, Puerto Rico, or the U.S. VirginIslands.

Subsidized advance means an advanceto a member at an interest rate re-duced below the Bank’s cost of funds,by use of a subsidy.

Subsidy means:(1) A direct subsidy, provided that if

a direct subsidy is used to write downthe interest rate on a loan extended bya member, sponsor, or other party to aproject, the subsidy shall equal the netpresent value of the interest foregonefrom making the loan below the lend-er’s market interest rate (calculated asof the date the AHP application is sub-mitted to the Bank, and subject to ad-justment under § 960.8(c)(3));

(2) The net present value of the inter-est revenue foregone from making asubsidized advance at a rate below theBank’s cost of funds, determined as ofthe earlier of the date of disbursementof the subsidized advance or the dateprior to disbursement on which theBank first manages the funding to sup-port the subsidized advance through itsasset/liability management system, orotherwise; or

(3) Homeownership set-aside funds.

Very low-income household. (1) Owner-occupied projects. For purposes of anowner-occupied project, very low-incomehousehold means a household which, atthe time it is qualified by the sponsorfor participation in the project, has anincome at or below 50 percent of themedian income for the area.

(2) Rental projects. (i) In general. Forpurposes of a rental project, very low-income household means a householdwhich, upon initial occupancy of arental unit, has an income at or below50 percent of the median income for thearea.

(ii) Housing with current occupants. Inthe case of projects involving the pur-chase or rehabilitation of rental hous-ing with current occupants, very low-in-come household means an occupyinghousehold with an income at or below50 percent of the median income for thearea at the time an application forAHP subsidy is submitted to the Bank.

(3) Family-size adjustment. The incomelimit for very low-income householdsmay be adjusted for family size in ac-cordance with the methodology of theapplicable median income standard.

Visitable means, in either owner-occu-pied or rental housing, at least one en-trance is at-grade (no steps) and ap-proached by an accessible route such asa sidewalk, and the entrance door andall interior passage doors are at least 2feet, 10 inches wide, offering 32 inchesof clear passage space.

[62 FR 41828, Aug. 4, 1997, as amended at 63FR 27672, May 20, 1998; 64 FR 24027, May 5,1999]

§ 960.2 Required annual AHP contribu-tions.

Each Bank shall contribute annuallyto its Program the greater of:

(a) 10 percent of the Bank’s net earn-ings for the previous year; or

(b) That Bank’s pro rata share of anaggregate of $100 million to be contrib-uted in total by the Banks, such prora-tion being made on the basis of the netearnings of the Banks for the previousyear.

§ 960.3 Operation of Program andadoption of AHP implementationplan.

(a) Allocation of AHP contributions—(1)Homeownership set-aside programs. Each


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12 CFR Ch. IX (1–1–00 Edition)§ 960.3

Bank, after consultation with its Advi-sory Council, may set aside annually,in the aggregate, up to the greater of$1.5 million or 15 percent of its annualrequired AHP contribution to providefunds to members participating in theBank’s homeownership set-aside pro-grams, pursuant to the requirements ofthis part. In cases where the amount ofhomeownership set-aside funds appliedfor by members in a given year exceedsthe amount available for that year, aBank may allocate up to the greater of$1.5 million or 15 percent of its annualrequired AHP contribution for the sub-sequent year to the current year’shomeownership set-aside programs. ABank may establish one or more home-ownership set-aside programs pursuantto written policies adopted by theBank’s board of directors. A Bank’sboard of directors shall not delegate toBank officers or other Bank employeesthe responsibility for adopting suchpolicies.

(2) Competitive application program.That portion of a Bank’s required an-nual AHP contribution that is not setaside to fund homeownership set-asideprograms shall be provided to membersthrough a competitive application pro-gram, pursuant to the requirements ofthis part.

(b) AHP implementation plan—(1)Adoption of plan. Each Bank’s board ofdirectors shall adopt a written AHPimplementation plan which shall setforth:

(i) The applicable median incomestandard or standards, adopted by theBank consistent with the definition ofmedian income for the area in § 960.1;

(ii) The requirements for any home-ownership set-aside programs adoptedby the Bank pursuant to paragraph(a)(1) of this section;

(iii) The Bank’s project feasibilityguidelines, adopted consistent with§ 960.5(b)(2);

(iv) The Bank’s schedule for AHPfunding periods;

(v) Any additional District eligibilityrequirement, adopted by the Bank pur-suant to § 960.5(b)(10);

(vi) The Bank’s scoring guidelines,adopted by the Bank consistent with§ 960.6(b)(4);

(vii) The Bank’s time limits on use ofAHP subsidies and procedures for

verifying compliance upon disburse-ment of AHP subsidies pursuant to§ 960.8; and

(viii) The Bank’s procedures for car-rying out its monitoring obligationsunder §§ 960.10(c) and 960.11.

(2) No delegation. A Bank’s board ofdirectors shall not delegate to Bank of-ficers or other Bank employees the re-sponsibility for adopting the AHP im-plementation plan, or any subsequentamendments thereto.

(3) Advisory Council review. Prior toadoption of the Bank’s AHP implemen-tation plan, and any subsequentamendments thereto, the Bank shallprovide its Advisory Council an oppor-tunity to review the plan and any sub-sequent amendments, and the AdvisoryCouncil shall provide its recommenda-tions to the Bank’s board of directors.

(4) Submission of plan amendments tothe Finance Board. A Bank shall submitany amendments of its AHP implemen-tation plan to the Finance Board with-in 30 days after the date the Bank’sboard of directors approves suchamendments.

(5) Public Access. A Bank’s initialAHP implementation plan, and anysubsequent amendments, shall be madeavailable to members of the public,upon request.

(c) Conflicts of interest—(1) Bank direc-tors and employees. Each Bank’s boardof directors shall adopt a written pol-icy providing that if a Bank director oremployee, or such person’s familymember, has a financial interest in, oris a director, officer, or employee of anorganization involved in, a project thatis the subject of a pending or approvedAHP application, the Bank director oremployee shall not participate in or at-tempt to influence decisions by theBank regarding the evaluation, ap-proval, funding, monitoring or any re-medial process for such project.

(2) Advisory Council members. EachBank’s board of directors shall adopt awritten policy providing that if an Ad-visory Council member, or such per-son’s family member, has a financialinterest in, or is a director, officer, oremployee of an organization involvedin, a project that is the subject of apending or approved AHP application,the Advisory Council member shall notparticipate in or attempt to influence


709


decisions by the Bank regarding theapproval for such project.

(3) No delegation. A Bank’s board ofdirectors shall not delegate to Bank of-ficers or other Bank employees the re-sponsibility to adopt conflicts of inter-est policies.

(d) Reporting. Each Bank shall pro-vide such reports and documentationconcerning its Program as the FinanceBoard may request from time to time.

[62 FR 41828, Aug. 4, 1997, as amended at 64FR 24027, May 5, 1999]

§ 960.4 Advisory Councils.(a) In general. Each Bank’s board of

directors shall appoint an AdvisoryCouncil of from 7 to 15 persons who re-side in the Bank’s District and aredrawn from community and not-for-profit organizations actively involvedin providing or promoting low- andmoderate-income housing in the Dis-trict.

(b) Nominations and appointments.Each Bank shall solicit nominationsfor membership on the Advisory Coun-cil from community and not-for-profitorganizations pursuant to a nomina-tion process that is as broad and asparticipatory as possible, allowing suf-ficient time for responses. The Bank’sboard of directors shall appoint Advi-sory Council members giving consider-ation to the size of the Bank’s Districtand the diversity of low- and moderate-income housing needs and activitieswithin the District.

(c) Diversity of membership. In ap-pointing the Advisory Council, aBank’s board of directors shall ensurethat the membership includes personsdrawn from a diverse range of organiza-tions, provided that representatives ofno one group shall constitute an undueproportion of the membership of theAdvisory Council.

(d) Terms of Advisory Council members.Advisory Council members shall be ap-pointed by the Bank’s board of direc-tors to serve for terms of three years,and such terms shall be staggered toprovide continuity in experience andservice to the Advisory Council. An Ad-visory Council member appointed tofill a vacancy shall be appointed forthe unexpired term of his or her prede-cessor in office. No Advisory Councilmember may be appointed to serve for

more than three consecutive terms.Appointments for the unexpired termof a predecessor shall not count towardthe three-term limit.

(e) Election of officers. Each AdvisoryCouncil may elect from among itsmembers a chairperson, a vice chair-person, and any other officers the Advi-sory Council deems appropriate.

(f) Duties.—(1) Meetings with theBanks. Representatives of the board ofdirectors of the Bank shall meet withthe Advisory Council at least quarterlyto obtain the Advisory Council’s adviceon ways in which the Bank can bettercarry out its housing finance and com-munity investment mission, including,but not limited to, advice on the low-and moderate-income housing andcommunity investment programs andneeds in the Bank’s District, and onthe use of AHP subsidies, Bank ad-vances, and other Bank credit productsfor these purposes.

(2) Summary of AHP applications. TheBank shall comply with requests fromthe Advisory Council for summary in-formation regarding AHP applicationsfrom prior funding periods.

(3) Annual report to the Finance Board.Each Advisory Council shall submit tothe Finance Board annually by March 1its analysis of the low- and moderate-income housing and community devel-opment activity of the Bank by whichit is appointed.

(g) Expenses. The Bank shall pay Ad-visory Council members travel ex-penses, including transportation andsubsistence, for each day devoted to at-tending meetings with representativesof the board of directors of the Bankand meetings requested by the FinanceBoard.


§ 960.5 Minimum eligibility standardsfor AHP projects.

(a) Homeownership set-aside programs.A Bank’s homeownership set-aside pro-grams must meet the following re-quirements:

(1) Homeownership set-aside fundsmust be provided to members pursuantto allocation criteria established bythe Bank;


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12 CFR Ch. IX (1–1–00 Edition)§ 960.5

(2) Members must provide home-ownership set-aside funds only tohouseholds that:

(i) Are low-or moderate-incomehouseholds, as defined in § 960.1;

(ii) Complete a homebuyer or home-owner counseling program provided by,or based on one provided by, an organi-zation recognized as experienced inhomebuyer or homeowner counseling,respectively; and

(iii) Meet such other eligibility cri-teria that may be established by theBank, such as a matching funds re-quirement or criteria that give priorityfor the purchase or rehabilitation ofhousing in particular areas or as partof a disaster relief effort;

(3) Members must provide home-ownership set-aside funds to house-holds as a grant, in an amount up to amaximum of $10,000 per household, asestablished by the Bank, which limitshall apply to all households;

(4) Households must use homeowner-ship set-aside funds to pay for down-payment, closing cost, counseling, orrehabilitation assistance in connectionwith the household’s purchase or reha-bilitation of an owner-occupied housingunit, including a condominium or coop-erative housing unit, to be used as thehousehold’s primary residence;

(5) A housing unit purchased or reha-bilitated using homeownership set-aside funds must be subject to a reten-tion agreement described in§ 960.13(d)(1);

(6) If a member is providing mortgagefinancing to a participating household,the member must provide financial orother incentives in connection withsuch mortgage financing, and the rateof interest, points, fees, and any othercharges by the member must not ex-ceed a reasonable market rate of inter-est, points, fees, and other charges fora loan of similar maturity, terms, andrisk;

(7) Homeownership set-aside fundsmay be used to pay for counseling costsonly where:

(i) Such costs are incurred in connec-tion with counseling of homebuyerswho actually purchase an AHP-assistedunit;

(ii) The cost of the counseling hasnot been covered by another fundingsource, including the member; and

(iii) The homeownership set-asidefunds are used to pay only for theamount of such reasonable and cus-tomary costs that exceeds the highestamount the member has spent annu-ally on homebuyer counseling costswithin the preceding three years; and

(8) Homeownership set-aside fundsmust be drawn down and used by eligi-ble households within the period oftime specified by the Bank in its AHPimplementation plan.

(b) Competitive application program.Projects receiving AHP subsidies pur-suant to a Bank’s competitive applica-tion program must meet the eligibilityrequirements of this paragraph (b).

(1) Owner-occupied or rental housing. Aproject must be either an owner-occu-pied project or a rental project, as de-fined, respectively, in § 960.1.

(2) Project feasibility and need for sub-sidy—(i) Sources and uses of funds. Theproject’s estimated uses of funds mustequal its estimated sources of funds, asreflected in the project’s developmentbudget. A project’s sources of fundsmust include:

(A) Estimates of funds the projectsponsor intends to obtain from othersources but which have not yet beencommitted to the project; and

(B) Estimates of the market value ofin-kind donations and volunteer profes-sional labor or services committed tothe project, but not the value of sweat-equity.

(ii) Project costs—(A) In general.Project costs, as reflected in theproject’s development budget, must bereasonable and customary, in accord-ance with the Bank’s project feasibilityguidelines, in light of:

(1) Industry standards for the loca-tion of the project; and

(2) The long-term financial needs ofthe project.

(B) Cost of property and services pro-vided by a member. The purchase priceof property or services, as reflected inthe project’s development budget, soldto the project by a member providingAHP subsidy to the project, or, in thecase of property, upon which suchmember holds a mortgage or lien, maynot exceed the market value of suchproperty or services as of the date thepurchase price for the property or serv-ices was agreed upon. In the case of


711


real estate owned property sold to aproject by a member providing AHPsubsidy to a project, or property soldto the project upon which the memberholds a mortgage or lien, the marketvalue of such property is deemed to bethe ‘‘as-is’’ or ‘‘as-rehabilitated’’ valueof the property, whichever is appro-priate, as reflected in an independentappraisal of the property performed bya State certified or licensed appraiser,as defined in 12 CFR 564.2(j) and (k),within six months prior to the date theBank disburses AHP subsidy to theproject.

(iii) Operational feasibility and need forsubsidy. The project must be operation-ally feasible, in accordance with theBank’s project feasibility guidelines,based on relevant factors including,but not limited to, applicable financialratios, geographic location of theproject, needs of tenants, and othernon-financial project characteristics.The requested AHP subsidy must benecessary for the financial feasibilityof the project, as currently structured,and the rate of interest, points, fees,and any other charges for all loans fi-nancing the project must not exceed amarket rate of interest, points, fees,and other charges for loans of similarmaturity, terms, and risk.

(3) Timing of subsidy use. The AHPsubsidy must be likely to be drawndown by the project or used by theproject to procure other financing com-mitments within 12 months of the dateof approval of the application for sub-sidy funding the project.

(4) Prepayment, cancellation, and proc-essing fees. The project must not useAHP subsidies to pay for:

(i) Prepayment fees imposed by aBank on a member for a subsidized ad-vance that is prepaid, unless, subse-quent to such prepayment, the projectwill continue to comply with the termsof the application for the subsidy, asapproved by the Bank, and the require-ments of this part for the duration ofthe original retention period, and anyunused subsidy is returned to the Bankand made available for other AHPprojects;

(ii) Cancellation fees and penaltiesimposed by a Bank on a member for asubsidized advance commitment that iscanceled; or

(iii) Processing fees charged by mem-bers for providing direct subsidies to aproject.

(5) Counseling costs. AHP subsidiesmay be used to pay for counseling costsonly where:

(i) Such costs are incurred in connec-tion with counseling of homebuyerswho actually purchase an AHP-assistedunit; and

(ii) The cost of the counseling hasnot been covered by another fundingsource, including the member.

(6) Refinancing. If the project usesAHP subsidies to refinance an existingsingle-family or multifamily mortgageloan, the equity proceeds of the refi-nancing must be used only for the pur-chase, construction, or rehabilitationof housing units meeting the eligibilityrequirements of this paragraph (b).

(7) Retention—(i) Owner-occupiedprojects. The project’s AHP-assistedunits are or are committed to be sub-ject to a retention agreement describedin § 960.13 (c)(4) or (d)(1).

(ii) Rental projects. AHP-assisted rent-al projects are or are committed to besubject to a retention agreement de-scribed in § 960.13 (c)(5) or (d)(2).

(8) Project sponsor qualifications. Aproject’s sponsor must be qualified andable to perform its responsibilities ascommitted to in the application forsubsidy funding the project.

(9) Fair housing. The project, as pro-posed, must comply with applicableFederal and State laws on fair housingand housing accessibility, including,but not limited to, the Fair HousingAct, the Rehabilitation Act of 1973, theAmericans with Disabilities Act of1990, and the Architectural BarriersAct of 1969, and must demonstrate howthe project will be affirmatively mar-keted.

(10) District eligibility requirements. (i)A project receiving AHP subsidies maybe required by a Bank to meet one ormore of the following additional eligi-bility requirements adopted by aBank’s board of directors, after con-sultation with its Advisory Council:

(A) A requirement that the amountof subsidy requested for the projectdoes not exceed limits established bythe Bank as to the maximum amountof AHP subsidy available per membereach year; or per member, per project,


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12 CFR Ch. IX (1–1–00 Edition)§ 960.6

or per project unit in a single fundingperiod;

(B) A requirement that the project islocated in the Bank’s District; or

(C) A requirement that the membersubmitting the application has madeuse of a minimum amount of a creditproduct offered by the Bank, otherthan AHP or CIP credit products, with-in the previous 12 months, providedthat such a minimum threshold forcredit product usage established by aBank shall not exceed 1.5 percent of amember’s total assets, and all membersshall have access to some amount ofAHP subsidy, as determined by theBank, regardless of whether they meetthe Bank’s minimum threshold forcredit product usage.

(ii) Any limit on the amount of AHPsubsidy available per member must re-sult in equal amounts of AHP subsidyavailable to all members receiving sub-sidy pursuant to such limit.

[62 FR 41828, Aug. 4, 1997, as amended at 63FR 27672, May 20, 1998; 64 FR 23015, Apr. 29,1999; 64 FR 24027, May 5, 1999]

§ 960.6 Procedure for approval of ap-plications for funding.

(a) Homeownership set-aside programs.A Bank shall accept applications forhomeownership set-aside funds frommembers and may, in its discretion, ac-cept applications from institutionswith pending applications for member-ship in the Bank. The Bank shall ap-prove applications in accordance withthe Bank’s criteria governing the allo-cation of funds.

(b) Competitive application program—(1) Funding periods; amounts available. ABank shall accept applications forfunding under its competitive applica-tion program from members and may,in its discretion, accept applicationsfrom institutions with pending applica-tions for membership in the Bank. ABank may accept applications for fund-ing during a specified number of fund-ing periods each year, as determined bythe Bank. The amount of subsidies of-fered in each funding period shall becomparable.

(2) Submission of applications. A Bankshall require applicants for AHP sub-sidies to submit information sufficientfor the Bank to:

(i) Determine that the proposed AHPproject meets the eligibility require-ments of § 960.5(b); and

(ii) Evaluate the application pursu-ant to the scoring criteria in paragraph(b)(4) of this section.

(3) Review of applications for projecteligibility. A Bank shall review applica-tions to determine that the proposedAHP project meets the eligibility re-quirements of § 960.5(b).

(4) Scoring of applications—(i) In gen-eral. A Bank shall score only those ap-plications meeting the eligibility re-quirements of § 960.5(b). A Bank shallnot adopt additional scoring criteria orpoint allocations, except as specificallyauthorized under this paragraph (b)(4).A Bank shall adopt written guidelinesimplementing the scoring require-ments of this paragraph (b)(4).

(ii) Point allocations. A Bank shall al-locate 100 points among the nine scor-ing criteria identified in paragraph(b)(4)(iv) of this section. The scoringcriterion for targeting identified inparagraph (b)(4)(iv)(C) of this sectionshall be allocated at least 20 points.The remaining scoring criteria shall beallocated at least five points each.

(iii) Satisfaction of scoring criteria. ABank shall designate each scoring cri-terion as either a fixed-point or a vari-able-point criterion. Variable-point cri-teria are those where there are varyingdegrees to which an application cansatisfy the criteria. The number ofpoints that may be awarded to an ap-plication for meeting a variable-pointcriterion will vary, depending on theextent to which the application satis-fies the criterion, compared to theother applications being scored. ABank shall designate the targeting andsubsidy-per-unit scoring criteria iden-tified in paragraphs (b)(4)(iv) (C) and(H), respectively, of this section asvariable-point criteria. The applica-tion(s) best achieving each variable-point criterion shall receive the max-imum point score available for thatcriterion, with the remaining applica-tions scored on a declining scale.Fixed-point criteria are those whichcannot be satisfied in varying degrees


713


and are either satisfied, or not. An ap-plication meeting a fixed-point cri-terion shall be awarded the total num-ber of points allocated to that cri-terion.

(iv) Scoring criteria. An applicationfor a proposed project may receivepoints based on satisfaction of the ninescoring criteria set forth in this para-graph (b)(4)(iv).

(A) Use of donated government-ownedor other properties. The creation ofhousing using a significant proportionof units or land donated or conveyedfor a nominal price by the Federal gov-ernment or any agency or instrumen-tality thereof, or by any other party.For purposes of this paragraph, a nomi-nal price is a small, negligible amount,most often one dollar, and may be ac-companied by modest expenses relatedto the conveyance of the property foruse by the project.

(B) Sponsorship by a not-for-profit or-ganization or government entity. Projectsponsorship by a not-for-profit organi-zation, a state or political subdivisionof a state, a state housing agency, alocal housing authority, a NativeAmerican Tribe, an Alaskan NativeVillage, or the government entity forNative Hawaiian Home Lands.

(C) Targeting. The extent to which aproject creates housing for very low-and low- or moderate-income house-holds.

(1) Rental projects. An application fora rental project shall be awarded themaximum number of points availableunder this scoring criterion if 60 per-cent or more of the units in the projectare reserved for occupancy by house-holds with incomes at or below 50 per-cent of the median income for the area.Applications for projects with less than60 percent of the units reserved for oc-cupancy by households with incomes ator below 50 percent of the median in-come for the area shall be awardedpoints on a declining scale based on thepercentage of units in a project thatare reserved for households with in-comes at or below 50 percent of the me-dian income for the area, and on thepercentage of the remaining units re-served for households with incomes ator below 80 percent of the median in-come for the area. In order to facilitatereliance on monitoring by a federal,

state, or local government entity pro-viding funds or allocating federal Low-Income Housing Tax Credits to a pro-posed project, a Bank, in its discretion,may score each project according tothe targeting commitments made bythe project to such entity, and theBank shall include such scoring prac-tice in its AHP implementation plan.

(2) Owner-occupied projects. Applica-tions for owner-occupied projects shallbe awarded points based on a decliningscale, with projects having the highestpercentage of units targeted to house-holds with the lowest percentage ofmedian income for the area awardedthe highest number of points.

(3) Separate scoring. For purposes ofthis scoring criterion, applications forowner-occupied projects and rentalprojects may be scored separately.

(D) Housing for homeless households.The creation of rental housing, exclud-ing overnight shelters, reserving atleast 20 percent of the units for home-less households, the creation of transi-tional housing for homeless householdspermitting a minimum of six monthsoccupancy, or the creation of perma-nent owner-occupied housing reservingat least 20 percent of the units forhomeless households.

(E) Promotion of empowerment. Theprovision of housing in combinationwith a program offering: employment;education; training; homebuyer, home-ownership or tenant counseling;daycare services; resident involvementin decisionmaking affecting the cre-ation or operation of the project; orother services that assist residents tomove toward better economic opportu-nities, such as welfare to work initia-tives.

(F) First District priority. The satisfac-tion of one of the following criteria, orone of a number of the following cri-teria, as recommended by the Bank’sAdvisory Council and adopted by theBank’s board of directors and set forthin the Bank’s AHP implementationplan, as long as the total points avail-able for meeting the criterion or cri-teria adopted under this category donot exceed the total points allocated tothis category:

(1) Special needs. The creation ofhousing in which at least 20 percent ofthe units are reserved for occupancy by


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12 CFR Ch. IX (1–1–00 Edition)§ 960.6

households with special needs, such asthe elderly, mentally or physically dis-abled persons, persons recovering fromphysical abuse or alcohol or drugabuse, or persons with AIDS; or thecreation of housing that is ‘‘visitable’’by persons with physical disabilitieswho are not occupants of such housing;

(2) Community development. The cre-ation of housing meeting housing needsdocumented as part of a community re-vitalization or economic developmentstrategy approved by a unit of a stateor local government;

(3) First-time homebuyers. The financ-ing of housing for first-time home-buyers;

(4) Member financial participation.Member financial participation (ex-cluding the pass-through of AHP sub-sidy) in the project, such as providingmarket rate or concessionary financ-ing, fee waivers, or donations;

(5) Disaster areas. The financing ofhousing located in federally declareddisaster areas;

(6) Rural. The financing of housing lo-cated in rural areas;

(7) Urban. The financing of urban in-fill or urban rehabilitation housing;

(8) Economic diversity. The creation ofhousing that is part of a strategy toend isolation of very low-incomehouseholds by providing economic di-versity through mixed-income housingin low- or moderate-income neighbor-hoods, or providing very low- or low- ormoderate-income households withhousing opportunities in neighborhoodsor cities where the median incomeequals or exceeds the median incomefor the larger surrounding area—suchas the city, county, or Primary Metro-politan Statistical Area—in which theneighborhood or city is located;

(9) Fair housing remedy. The financingof housing as part of a remedy under-taken by a jurisdiction adjudicated bya federal, state, or local court to be inviolation of title VI of the Civil RightsAct of 1964 (42 U.S.C. 2000d et seq.), theFair Housing Act (42 U.S.C. 3601 et seq.),or any other federal, state, or local fairhousing law, or as part of a settlementof such claims;

(10) Community involvement. Dem-onstrated support for the project bylocal government, other than as aproject sponsor, in the form of property

tax deferment or abatement, zoningchanges or variances, infrastructureimprovements, fee waivers, or othersimilar forms of non-cash assistance,or demonstrated support for theproject by community organizations orindividuals, other than as project spon-sors, through the commitment by suchentities or individuals of donated goodsand services, or volunteer labor;

(11) Lender consortia. The involve-ment of financing by a consortium ofat least two financial institutions; or

(12) In-District projects. The creationof housing located in the Bank’s Dis-trict.

(G) Second District priority—definedhousing need in the District. The satis-faction of a housing need in the Bank’sDistrict, as defined and recommendedby the Bank’s Advisory Council andadopted by the Bank’s board of direc-tors and set forth in the Bank’s AHPimplementation plan. The Bank may,but is not required to, use one of thecriteria listed in paragraph (b)(4)(iv)(F)of this section, provided it is differentfrom the criterion or criteria adoptedby the Bank under paragraph(b)(4)(iv)(F) of this section.

(H) AHP subsidy per unit. The extentto which a project proposes to use theleast amount of AHP subsidy per AHP-targeted unit. In the case of an applica-tion for a project financed by a sub-sidized advance, the total amount ofAHP subsidy used by the project shallbe estimated based on the Bank’s costof funds as of the date on which all ap-plications are due for the funding pe-riod in which the application is sub-mitted. For purposes of this scoringcriterion, applications for owner-occu-pied projects and rental projects maybe scored separately.

(I) Community stability. The pro-motion of community stability, such asby rehabilitating vacant or abandonedproperties, being an integral part of aneighborhood stabilization plan ap-proved by a unit of state or local gov-ernment, and not displacing low- ormoderate-income households, or if suchdisplacement will occur, assuring thatsuch households will be assisted tominimize the impact of such displace-ment.


715


(5) Approval of applications—(i) Ap-proval by Bank’s board. The board of di-rectors of each Bank shall approve ap-plications in descending order startingwith the highest scoring applicationuntil the total funding amount for theparticular funding period, except forany amount insufficient to fund thenext highest scoring application, hasbeen allocated. The board of directorsalso shall approve at least the nextfour highest scoring applications as al-ternates and, within one year of ap-proval, may fund such alternates if anypreviously committed AHP subsidiesbecome available.

(ii) No delegation. A Bank’s board ofdirectors shall not delegate to Bank of-ficers or other Bank employees the re-sponsibility to approve or disapproveAHP applications.

[62 FR 41828, Aug. 4, 1997, as amended at 63FR 27673, May 20, 1998; 64 FR 23015, Apr. 29,1999; 64 FR 24028, May 5, 1999]

§ 960.7 Modifications of applicationsprior to project completion.

(a) Modification procedure. If, prior tofinal disbursement of funds to a projectfrom all funding sources, there is orwill be a change in the project thatwould change the score that theproject application received in thefunding period in which it was origi-nally scored and approved, had thechanged facts been operative at thattime, a Bank, in its discretion, may ap-prove in writing a modification to theterms of the approved application, pro-vided that:

(1) The project, incorporating anysuch changes, would meet the eligi-bility requirements of § 960.5(b);

(2) The application, as reflective ofsuch changes, continues to score highenough to have been approved in thefunding period in which it was origi-nally scored and approved by the Bank;and

(3) There is good cause for the modi-fication.

(b) Modifications involving a subsidyincrease. Modifications involving an in-crease in AHP subsidy shall be ap-proved or disapproved by a Bank’sboard of directors. The authority to ap-prove or disapprove such requests shall

not be delegated to Bank officers orother Bank employees.


§ 960.8 Procedure for funding.

(a) Disbursement of subsidies to mem-bers. (1) A Bank may disburse AHP sub-sidies only to institutions that aremembers of the Bank at the time theyrequest a draw-down of subsidy.

(2) If an institution with an approvedapplication for AHP subsidy fails to ob-tain or loses its membership in a Bank,the Bank may disburse subsidies to amember of such Bank to which the in-stitution has transferred its obliga-tions under the approved application,or the Bank may disburse subsidiesthrough another Bank to a member ofthat Bank that has assumed the insti-tution’s obligations under the approvedapplication.

(b) Homeownership set-aside programs—(1) Time limit on use of subsidies. Ifhomeownership set-aside funds are notdrawn down and used by eligible house-holds within the period of time speci-fied by the Bank in its AHP implemen-tation plan, the Bank shall cancel theapplication for funds and make thefunds available for other applicants forhomeownership set-aside funds or forother AHP-eligible projects.

(2) Member certification upon disburse-ment. Prior to disbursement of home-ownership set-aside funds by a Bank toa member, the Bank shall require themember to certify that:

(i) The funds received from the Bankwill be provided to a household meet-ing the eligibility requirements of§ 960.5(a)(2);

(ii) If the member is providing mort-gage financing to the household, themember will provide financial or otherincentives in connection with suchmortgage financing, and the rate of in-terest, points, fees, and any othercharges by the member will not exceeda reasonable market rate of interest,points, fees, and other charges for aloan of similar maturity, terms, andrisk; and

(iii) Funds received from the Bankfor homebuyer counseling costs will beprovided according to the requirementsof § 960.5(a)(7).


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12 CFR Ch. IX (1–1–00 Edition)§ 960.9

(c) Competitive application program—(1) Time limit on use of subsidies. If AHPsubsidies approved for a project under aBank’s competitive application pro-gram are not drawn down and used bythe project within the period of timespecified by the Bank in its AHP imple-mentation plan, the Bank shall cancelits approval of the application for thesubsidies and make the subsidies avail-able for other AHP-eligible projects.

(2) Compliance upon disbursement ofsubsidies. A Bank shall verify prior toits initial disbursement of subsidies foran approved project, and prior to eachdisbursement thereafter, that theproject meets the eligibility require-ments of § 960.5(b) and all obligationscommitted to in the approved applica-tion.

(3) Changes in approved AHP subsidyamount where a direct subsidy is used towrite down prior to closing the principalamount or interest rate on a loan.—(i)Change in subsidy amount. If a memberis approved to receive a direct subsidyto write down prior to closing the prin-cipal amount or the interest rate on aloan to a project and the amount ofsubsidy required to maintain the debtservice cost for the loan decreases fromthe amount of subsidy initially ap-proved by the Bank due to a decreasein market interest rates between thetime of approval and the time the lend-er commits to the interest rate to fi-nance the project, the Bank shall re-duce the subsidy amount accordingly.If market interest rates rise betweenthe time of approval and the time thelender commits to the interest rate tofinance the project, the Bank may, inits discretion, increase the subsidyamount accordingly.

(ii) Reconciliation of AHP fund. If aBank reduces the amount of AHP sub-sidy approved for a project, the amountof such reduction shall be returned tothe Bank’s AHP fund. If a Bank in-creases the amount of AHP subsidy ap-proved for a project, the amount ofsuch increase shall be drawn first fromany currently uncommitted or repaidAHP subsidies and then from theBank’s required AHP contribution forthe next year.

§ 960.9 Modifications of applicationsafter project completion.

Modification procedure. If, after finaldisbursement of funds to a project fromall funding sources, there is or will bea change in the project that wouldchange the score that the project appli-cation received in the funding period inwhich it was originally scored and ap-proved, had the changed facts been op-erative at that time, a Bank, in its dis-cretion, may approve in writing amodification to the terms of the ap-proved application, other than an in-crease in the amount of subsidy ap-proved for the project, provided that:

(a) The project is in financial dis-tress, or is at substantial risk of fallinginto such distress;

(b) The project sponsor or owner hasmade best efforts to avoid noncompli-ance with the terms of the applicationfor subsidy and the requirements ofthis part;

(c) The project, incorporating anymaterial changes, would meet the eli-gibility requirements of § 960.5(b); and

(d) The application, as reflective ofsuch changes, continues to score highenough to have been approved in thefunding period in which it was origi-nally scored and approved by the Bank.

[62 FR 41828, Aug. 4, 1997, as amended at 64FR 23016, Apr. 29, 1999]

§ 960.10 Initial monitoring require-ments.

(a) Requirements for project sponsorsand owners—(1) Owner-occupied projects.(i) During the period of construction orrehabilitation of an owner-occupiedproject, the project sponsor must re-port to the member semiannually onwhether reasonable progress is beingmade towards completion of theproject.

(ii) Where AHP subsidies are used tofinance the purchase of owner-occupiedunits, the project sponsor must certifyannually to the member and the Bank,until all approved AHP subsidies areprovided to eligible households in theproject, that those households receiv-ing AHP subsidies during the year wereeligible households, and such certifi-cations shall be supported by house-hold income verification documenta-tion maintained by the project sponsor


717


and available for review by the memberor the Bank.

(2) Rental projects. (i) During the pe-riod of construction or rehabilitationof a rental project, the project ownermust report to the member semiannu-ally on whether reasonable progress isbeing made towards completion of theproject.

(ii) Within the first year after projectcompletion, the project owner must:

(A) Certify to the member and theBank that the services and activitiescommitted to in the AHP applicationhave been provided in connection withthe project;

(B) Provide a list of actual tenantrents and incomes to the member andthe Bank and certify that:

(1) The tenant rents and incomes areaccurate and in compliance with therent and income targeting commit-ments made in the AHP application;and

(2) The project is habitable; and(C) Maintain documentation regard-

ing tenant rents and incomes andproject habitability available for re-view by the member or the Bank, tosupport such certifications.

(b) Requirements for members—(1)Owner-occupied projects. (i) During theperiod of construction or rehabilitationof an owner-occupied project, the mem-ber must take the steps necessary todetermine whether reasonable progressis being made towards completion ofthe project and must report to theBank semiannually on the status of theproject.

(ii) Within one year after disburse-ment to a project of all approved AHPsubsidies, the member must review theproject documentation and certify tothe Bank that:

(A) The AHP subsidies have beenused according to the commitmentsmade in the AHP application; and

(B) The AHP-assisted units are sub-ject to deed restrictions or other le-gally enforceable retention agreementsor mechanisms meeting the require-ments of § 960.13(c)(4) or (d)(1);

(2) Rental projects. (i) During the pe-riod of construction or rehabilitationof a rental project, the member musttake the steps necessary to determinewhether reasonable progress is beingmade towards completion of the

project and must report to the Banksemiannually on the status of theproject.

(ii) Within the first year after projectcompletion, the member must reviewthe project documentation and certifyto the Bank that:

(A) The project is habitable;(B) The project meets its income tar-

geting commitments; and(C) The rents charged for income-tar-

geted units do not exceed the max-imum levels committed to in the AHPapplication.

(c) Requirements for Banks—(1) Owner-occupied projects. Each Bank musttake the steps necessary to determine,based on a review of the documentationfor a sample of projects and units with-in one year of receiving the certifi-cations described in paragraph (b)(1)(ii)of this section that:

(i) The incomes of the householdsthat own the AHP-assisted units didnot exceed the levels committed to inthe AHP application at the time thehouseholds were qualified by the spon-sor to participate in the project;

(ii) The AHP subsidies were used foreligible purposes, the project’s actualcosts were reasonable and customaryin accordance with the Bank’s projectfeasibility guidelines, and the subsidieswere necessary for the financial feasi-bility of the project, as currentlystructured; and

(iii) The AHP-assisted units are sub-ject to deed restrictions or other le-gally enforceable retention agreementsor mechanisms meeting the require-ments of § 960.13(c)(4) or (d)(1).

(2) Rental projects. Each Bank musttake the steps necessary to determinethat:

(i) Within the first year after comple-tion of a rental project, the servicesand activities committed to in theAHP application have been provided inconnection with the project; and

(ii) The AHP subsidies were used foreligible purposes, the project’s actualcosts were reasonable and customaryin accordance with the Bank’s projectfeasibility guidelines, and the subsidieswere necessary for the financial feasi-bility of the project, as currentlystructured.

(d) Annual adjustment of targeting com-mitments. For purposes of determining


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12 CFR Ch. IX (1–1–00 Edition)§ 960.11

compliance with the targeting commit-ments in an AHP application, suchcommitments shall be considered toadjust annually according to the cur-rent applicable median income data. Arental unit may continue to count to-ward meeting the targeting commit-ment of an approved AHP applicationas long as the rent charged remains af-fordable, as defined in § 960.1, for thehousehold occupying the unit.

§ 960.11 Long-term monitoring require-ments.

(a) Rental projects. For purposes ofmonitoring a rental project, Banks,members, and project owners shallcarry out their long-term monitoringobligations pursuant to one of thethree methods set forth in this para-graph (a).

(1) Reliance on monitoring by a federal,state or local government entity. Forthose projects that receive funds from,or are allocated federal Low-IncomeHousing Tax Credits by, a federal,state, or local government entity, aBank may rely on the monitoring bysuch entity if:

(i) The income targeting require-ments, the rent requirements, and theretention period monitored by such en-tity for purposes of its own programare the same as, or more restrictivethan, those committed to in the AHPapplication;

(ii) The entity agrees to inform theBank of instances where tenant rentsor incomes are found to be in non-compliance with the requirementsbeing monitored by the entity or wherethe project is not habitable; and

(iii) The entity has demonstrated andcontinues to demonstrate to the Bankits ability to carry out monitoringunder its own program, and the Bankdoes not have information that suchmonitoring is not occurring or is inad-equate.

(2) Reliance on monitoring of AHP ap-plication commitments by a contractor.For those projects that receive fundsfrom, or are allocated federal Low-In-come Housing Tax Credits by, a fed-eral, state, or local government entitythat monitors for income targeting re-quirements, rent requirements, or re-tention periods under its own programthat are less restrictive than those

committed to in the project’s AHP ap-plication, a Bank, in its discretion,may rely on the monitoring by suchentity if:

(i) The entity agrees to monitor theincome targeting requirements, therent requirements, and the retentionperiod committed to in the AHP appli-cation;

(ii) The entity agrees to inform theBank of instances where tenant rentsor incomes are found to be in non-compliance with the requirementscommitted to in the AHP applicationor where the project is not habitable;and

(iii) The entity has demonstrated andcontinues to demonstrate to the Bankits ability to carry out such moni-toring, and the Bank does not have in-formation that such monitoring is notoccurring or is inadequate.

(3) Long-term monitoring by the Banks,members, and project owners. In caseswhere a Bank does not rely on moni-toring by a federal, state, or local gov-ernment entity pursuant to paragraphs(a)(1) or (a)(2) of this section, the Bank,members, and project owners shallmonitor rental projects according tothe requirements in this paragraph(a)(3).

(i) Requirements for project owners. Inthe second year after completion of arental project and annually thereafteruntil the end of the project’s retentionperiod, the project owner must:

(A) Certify to the Bank that:(1) The tenant rents and incomes are

in compliance with the rent and in-come targeting commitments made inthe AHP application; and

(2) The project is habitable; and(B) Maintain documentation regard-

ing tenant rents and incomes andproject habitability available for re-view by the Bank, to support such cer-tifications.

(ii) Requirements for members. Forrental projects receiving $500,000 or lessin AHP subsidy from a member, duringthe period from the second year afterproject completion to the end of theproject’s retention period, the membermust certify to the Bank at least onceevery three years, based on an exteriorvisual inspection, that the project ap-pears to be suitable for occupancy.


719


(iii) Requirements for Banks—(A) Cer-tifications received by the Bank. EachBank shall review certifications pro-vided by project owners and membersregarding tenant rents and incomesand project habitability.

(B) Review of project documentation.Each Bank shall review documentationmaintained by the project owner re-garding tenant rents and incomes andproject habitability to verify compli-ance with the rent and income tar-geting commitments in the AHP appli-cation and project habitability, accord-ing to the following schedule:

(1) $50,001 to $250,000. For projects re-ceiving $50,001 to $250,000 of AHP sub-sidies, the Bank must review projectdocumentation for a sample of theproject’s units at least once every sixyears;

(2) $250,001 to $500,000. For projects re-ceiving $250,001 to $500,000 of AHP sub-sidies, the Bank must review projectdocumentation for a sample of theproject’s units at least once every fouryears; and

(3) Over $500,000. For projects receiv-ing over $500,000 of AHP subsidies, theBank must perform an on-site reviewof project documentation for a sampleof the project’s units at least onceevery two years.

(C) Sampling plan. A Bank may use areasonable sampling plan to select theprojects monitored each year and to re-view the project documentation sup-porting the certifications made bymembers and project owners.

(iv) Monitoring by a contractor. ABank, in its discretion, may contractwith a third party to carry out theBank’s monitoring obligations setforth in paragraph (a)(3)(iii) of this sec-tion.

(b) Annual adjustment of targeting com-mitments. For purposes of determiningcompliance with the targeting commit-ments in an AHP application, suchcommitments shall be considered toadjust annually according to the cur-rent applicable median income data. Arental unit may continue to count to-ward meeting the targeting commit-ment of an approved AHP applicationas long as the rent charged remains af-fordable, as defined in § 960.1, for thehousehold occupying the unit.

§ 960.12 Remedial actions for non-compliance.

(a) Repayment of subsidies by mem-bers—(1) Noncompliance by member. Amember shall repay to the Bank theamount of any subsidies (plus interest,if appropriate) that, as a result of themember’s actions or omissions, is notused in compliance with the terms ofthe application for the subsidy, as ap-proved by the Bank, and the require-ments of this part, unless:

(i) The member cures the noncompli-ance within a reasonable period oftime; or

(ii) The circumstances of noncompli-ance are eliminated through a modi-fication of the terms of the applicationfor the subsidy pursuant to §§ 960.7 or960.9.

(2) Noncompliance by project sponsorsor owners—(i) Duty to recover subsidies.A member shall recover from the spon-sor of an owner-occupied project or theowner of a rental project and repay tothe Bank the amount of any subsidies(plus interest, if appropriate) that, as aresult of the sponsor’s or owner’s ac-tions or omissions, is not used in com-pliance with the terms of the applica-tion for the subsidy, as approved by theBank, and the requirements of thispart, unless:

(A) The sponsor or owner cures thenoncompliance within a reasonable pe-riod of time; or

(B) The circumstances of noncompli-ance are eliminated through a modi-fication of the terms of the applicationfor the subsidy pursuant to §§ 960.7 or960.9.

(ii) Limitation on duty to recover sub-sidies. The member shall not be liableto the Bank for the return of amountsthat cannot be recovered from theproject sponsor or owner through rea-sonable collection efforts by the mem-ber.

(b) Repayment of subsidies by projectsponsors or owners. A sponsor of anowner-occupied project and the ownerof a rental project shall repay to themember the amount of any subsidies(plus interest, if appropriate) that, as aresult of the sponsor’s or owner’s ac-tions or omissions, is not used in com-pliance with the terms of the applica-tion for the subsidy, as approved by the


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12 CFR Ch. IX (1–1–00 Edition)§ 960.12

Bank, and the requirements of thispart, unless:

(1) The sponsor or owner cures thenoncompliance within a reasonable pe-riod of time; or

(2) The circumstances of noncompli-ance are eliminated through a modi-fication of the terms of the applicationfor the subsidy pursuant to §§ 960.7 or960.9.

(c) Requirements for Banks—(1) Duty torecover subsidies. A Bank shall recoverfrom a member:

(i) The amount of any subsidies (plusinterest, if appropriate) that, as a re-sult of the member’s actions or omis-sions, is not used in compliance withthe terms of the application for thesubsidy, as approved by the Bank, andthe requirements of this part; and

(ii) The amount of any subsidies re-covered by a member from the sponsorof an owner-occupied project or theowner of a rental project pursuant tothe requirements of paragraph (a)(2) ofthis section.

(2) Settlements. A Bank may enterinto an agreement or other arrange-ment with a member for the purpose ofsettling claims against the member forrepayment of subsidies. If a Bank en-ters into a settlement that results inthe return of a sum that is less thanthe full amount of any AHP subsidythat is not used in compliance with theterms of the application for the sub-sidy, as approved by the Bank, and therequirements of this part, the Bankmay be required by the Finance Boardto reimburse its AHP fund in theamount of any shortfall under para-graph (c)(3) of this section, unless:

(i) The Bank has sufficient docu-mentation showing that the sumagreed to be repaid under the settle-ment is reasonably justified, based onthe facts and circumstances of the non-compliance (including the degree ofculpability of the noncomplying par-ties and the extent of the Bank’s recov-ery efforts); or

(ii) The Bank obtains a determina-tion from the Board of Directors thatthe sum agreed to be repaid under thesettlement is reasonably justified,based on the facts and circumstances ofthe noncompliance (including the de-gree of culpability of the noncomplying

parties and the extent of the Bank’s re-covery efforts).

(3) Reimbursement of AHP fund. TheFinance Board may order a Bank to re-imburse its AHP fund in an appropriateamount upon determining that:

(i) As a result of the Bank’s actionsor omissions, AHP subsidy is not usedin compliance with the terms of the ap-plication for the subsidy, as approvedby the Bank, and the requirements ofthis part; or

(ii) The Bank has failed to recoverAHP subsidy from a member pursuantto the requirements of paragraph (c)(1)of this section, and has not shown suchfailure is reasonably justified, consid-ering factors such as the extent of theBank’s recovery efforts.

(d) Parties to enforcement proceedings.A Bank, in its AHP implementationplan, may provide for a member,project sponsor, or project owner toenter into a written agreement with aBank under which such member, spon-sor, or owner consents to be a party toany enforcement proceeding initiatedby the Finance Board regarding the re-payment of AHP subsidies received bysuch member, sponsor, or owner, or thesuspension or debarment of such par-ties, provided that the member, spon-sor, or owner has agreed to be bound bythe Finance Board’s final determina-tion in the enforcement proceeding.

(e) Use of repaid subsidies. Amountsrepaid to a Bank pursuant to this sec-tion, including any interest, shall bemade available for other AHP-eligibleprojects.

(f) Suspension and debarment—(1) At aBank’s initiative. A Bank may suspendor debar a member, project sponsor, orowner from participation in the Pro-gram if such party shows a pattern ofnoncompliance, or engages in a singleinstance of flagrant noncompliance,with the terms of an application forAHP subsidy or the requirements ofthis part.

(2) At the Finance Board’s initiative.The Finance Board may order a Bankto suspend or debar a member, projectsponsor, or owner from participation inthe Program if such party shows a pat-tern of noncompliance, or engages in asingle instance of flagrant noncompli-ance, with the terms of an application


721


for AHP subsidy or the requirements ofthis part.

(g) Transfer of Program administration.Without limitation on other remedies,the Finance Board, upon determiningthat a Bank has engaged in mis-management of its Program, may des-ignate another Bank to administer allor a portion of the first Bank’s annualAHP contribution, for the benefit ofthe first Bank’s members, under suchterms and conditions as the FinanceBoard may prescribe.

(h) Finance Board actions under thissection. Except as provided in para-graph (c)(2)(ii) of this section, actionstaken by the Finance Board pursuantto this section shall be subject to theFinance Board’s Procedures for Reviewof Disputed Supervisory Determina-tions.


§ 960.13 Agreements.

(a) Agreements between Banks andmembers. A Bank shall have in placewith each member receiving a sub-sidized advance or direct subsidy anagreement or agreements containingthe provisions set forth in this section.

(b) General provisions—(1) Subsidypass-through. The member shall pass onthe full amount of the AHP subsidy tothe project, or household in the case ofhomeownership set-aside funds, forwhich the subsidy was approved.

(2) Use of subsidy—(i) Use of subsidy bythe member. The member shall use theAHP subsidy in accordance with theterms of the member’s application forthe subsidy, as approved by the Bank,and the requirements of this part.

(ii) Use of subsidy by the project spon-sor or owner. The member shall have inplace an agreement with the sponsor ofan owner-occupied project and eachowner of a rental project in which thesponsor or owner agrees to use the AHPsubsidy in accordance with the termsof the member’s application for thesubsidy, as approved by the Bank, andthe requirements of this part.

(3) Repayment of subsidies in case ofnoncompliance—(i) Noncompliance by themember. The member shall repay sub-sidies to the Bank in accordance withthe requirements of § 960.12(a)(1).

(ii) Noncompliance by a project sponsoror owner—(A) Agreement. The membershall have in place an agreement withthe sponsor of an owner-occupiedproject and each owner of a rentalproject in which the sponsor or owneragrees to repay AHP subsidies in ac-cordance with the requirements of§ 960.12(b).

(B) Recovery of subsidies. The membershall recover from the project sponsoror owner and repay to the Bank anysubsidy in accordance with the require-ments of § 960.12(a)(2).

(4) Project monitoring—(i) Monitoringby the member. The member shall com-ply with the monitoring requirementsof §§ 960.10(b) and 960.11(a)(3)(ii).

(ii) Monitoring by the project sponsor.The member shall have in place anagreement with the sponsor of anowner-occupied project in which thesponsor agrees to comply with themonitoring requirements of§ 960.10(a)(1).

(iii) Monitoring by the project owner.The member shall have in place anagreement with the owner of a rentalproject in which the owner agrees tocomply with the monitoring require-ments of §§ 960.10(a)(2) and960.11(a)(3)(i).

(5) Transfer of AHP obligations to an-other member. The member will makebest efforts to transfer its obligationsunder the approved application forAHP subsidy to another member in theevent of its loss of membership in theBank prior to the Bank’s final dis-bursement of AHP subsidies.

(c) Special provisions where membersobtain subsidized advances—(1) Repay-ment schedule. The term of the sub-sidized advance shall be no longer thanthe term of the member’s loan to theproject funded by the advance, and atleast once in every 12-month period,the member shall be scheduled to makea principal repayment to the Bankequal to the amount scheduled to be re-paid to the member on its loan to theproject in that period.

(2) Prepayment fees. Upon a prepay-ment of the subsidized advance, theBank shall charge a prepayment feeonly to the extent the Bank suffers aneconomic loss from the prepayment.

(3) Treatment of loan prepayment byproject. If all or a portion of the loan or


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12 CFR Ch. IX (1–1–00 Edition)§ 960.13

loans financed by a subsidized advanceare prepaid by the project to the mem-ber, the member may, at its option, ei-ther:

(i) Repay to the Bank that portion ofthe advance used to make the loan orloans to the project, and be subject toa fee imposed by the Bank sufficient tocompensate the Bank for any economicloss the Bank experiences in rein-vesting the repaid amount at a rate ofreturn below the cost of funds origi-nally used by the Bank to calculate theinterest rate subsidy incorporated inthe advance; or

(ii) Continue to maintain the advanceoutstanding, subject to the Bank reset-ting the interest rate on that portionof the advance used to make the loanor loans to the project to a rate equalto the cost of funds originally used bythe Bank to calculate the interest ratesubsidy incorporated in the advance.

(4) Retention agreements for owner-oc-cupied units—(i) Units with AHP-assistedpermanent financing. The member shallensure that an owner-occupied unitwith permanent financing obtainedfrom the proceeds of a subsidized ad-vance is subject to a deed restriction orother legally enforceable retentionagreement or mechanism requiringthat:

(A) The Bank or its designee is to begiven notice of any sale or refinancingof the unit occurring prior to the endof the retention period;

(B) In the case of a refinancing priorto the end of the retention period, thefull amount of the interest rate subsidyreceived by the owner, based on the prorata portion of the interest rate sub-sidy imputed to the subsidized advanceduring the period the owner occupiedthe unit prior to refinancing, shall berepaid to the Bank from any net gainrealized upon the refinancing, unlessthe unit continues to be subject to adeed restriction or other legally en-forceable retention agreement ormechanism described in this paragraph(c)(4)(i); and

(C) The obligation to repay AHP sub-sidy to the Bank shall terminate afterany foreclosure.

(ii) Units constructed or rehabilitatedwith AHP-assisted financing. The mem-ber shall ensure that an owner-occu-pied unit constructed or rehabilitated

with a loan from the proceeds of a sub-sidized advance but which does nothave permanent financing from theproceeds of a subsidized advance, issubject to a deed restriction or otherlegally enforceable retention agree-ment or mechanism requiring that:

(A) The Bank or its designee is to begiven notice of any sale or refinancingof the unit occurring prior to the endof the retention period;

(B) In the case of a sale prior to theend of the retention period, an amountequal to the pro rata portion of the in-terest rate subsidy imputed to the sub-sidized advance that financed the con-struction or rehabilitation loan for theunit, reduced for every year the sellerowned the unit, shall be repaid to theBank from any net gain realized uponthe sale of the unit after deduction forsales expenses, unless the purchaser isa low- or moderate-income household;

(C) In the case of a refinancing priorto the end of the retention period, anamount equal to the pro rata portion ofthe interest rate subsidy imputed tothe subsidized advance that financedthe construction or rehabilitation loanfor the unit, reduced for every year theowner occupied the unit, shall be re-paid to the Bank from any net gain re-alized upon the refinancing, unless theunit continues to be subject to a deedrestriction or other legally enforceableretention agreement or mechanism de-scribed in this paragraph (c)(4)(ii); and

(D) The obligation to repay AHP sub-sidy to the Bank shall terminate afterany foreclosure.

(5) Retention agreements for rentalprojects. The member shall ensure thata rental project financed by a loanfrom the proceeds of a subsidized ad-vance is subject to a deed restriction orother legally enforceable retentionagreement or mechanism requiringthat:

(i) The project’s rental units, or ap-plicable portion thereof, must remainoccupied by and affordable for house-holds with incomes at or below the lev-els committed to be served in the AHPapplication for the duration of the re-tention period;

(ii) The Bank or its designee is to begiven notice of any sale or refinancingof the project occurring prior to theend of the retention period;


723


(iii) In the case of a sale or refi-nancing of the project prior to the endof the retention period, the full amountof the interest rate subsidy received bythe owner, based on the pro rata por-tion of the interest rate subsidy im-puted to the subsidized advance duringthe period the owner owned the projectprior to the sale or refinancing, shallbe repaid to the Bank, unless theproject continues to be subject to adeed restriction or other legally en-forceable retention agreement ormechanism incorporating the income-eligibility and affordability restric-tions committed to in the AHP applica-tion for the duration of the retentionperiod; and

(iv) The income-eligibility and af-fordability restrictions applicable tothe project terminate after any fore-closure.

(6) Transfer of AHP obligations to anonmember. If, after final disbursementof AHP subsidies to the member, themember undergoes an acquisition or aconsolidation resulting in a successororganization that is not a member ofthe Bank, the nonmember successor or-ganization assumes the member’s obli-gations under its approved applicationfor AHP subsidy upon prepayment ororderly liquidation by the nonmemberof the subsidized advance.

(d) Special provisions where membersobtain direct subsidies—(1) Retentionagreements for owner-occupied units. Themember shall ensure that an owner-oc-cupied unit that is purchased, con-structed, or rehabilitated with the pro-ceeds of a direct subsidy is subject to adeed restriction or other legally en-forceable retention agreement ormechanism requiring that:

(i) The Bank or its designee is to begiven notice of any sale or refinancingof the unit occurring prior to the endof the retention period;

(ii) In the case of a sale prior to theend of the retention period, an amountequal to a pro rata share of the directsubsidy that financed the purchase,construction, or rehabilitation of theunit, reduced for every year the sellerowned the unit, shall be repaid to theBank from any net gain realized uponthe sale of the unit after deduction forsales expenses, unless the purchaser isa low- or moderate-income household;

(iii) In the case of a refinancing priorto the end of the retention period, anamount equal to a pro rata share of thedirect subsidy that financed the pur-chase, construction, or rehabilitationof the unit, reduced for every year theoccupying household has owned theunit, shall be repaid to the Bank fromany net gain realized upon the refi-nancing, unless the unit continues tobe subject to a deed restriction orother legally enforceable retentionagreement or mechanism described inthis paragraph (d)(1); and

(iv) The obligation to repay AHP sub-sidy to the Bank shall terminate afterany foreclosure.

(2) Retention agreements for rentalprojects. The member shall ensure thata rental project financed by the pro-ceeds of a direct subsidy is subject to adeed restriction or other legally en-forceable retention agreement ormechanism requiring that:

(i) The project’s rental units, or ap-plicable portion thereof, must remainoccupied by and affordable for house-holds with incomes at or below the lev-els committed to be served in the AHPapplication for the duration of the re-tention period;

(ii) The Bank or its designee is to begiven notice of any sale or refinancingof the project occurring prior to theend of the retention period;

(iii) In the case of a sale or refi-nancing of the project prior to the endof the retention period, an amountequal to the full amount of the directsubsidy shall be repaid to the Bank,unless the project continues to be sub-ject to a deed restriction or other le-gally enforceable retention agreementor mechanism incorporating the in-come-eligibility and affordability re-strictions committed to in the AHP ap-plication for the duration of the reten-tion period; and

(iv) The income-eligibility and af-fordability restrictions applicable tothe project terminate after any fore-closure.

(3) Lending of direct subsidies. If amember or a project sponsor lends a di-rect subsidy to a project, any repay-ments of principal and payments of in-terest received by the member or theproject sponsor must be paid forthwithto the Bank.


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12 CFR Ch. IX (1–1–00 Edition)§ 960.14

(4) Transfer of AHP obligations to anonmember. If, after final disbursementof AHP subsidies to the member, themember undergoes an acquisition or aconsolidation resulting in a successororganization that is not a member ofthe Bank, the nonmember successor or-ganization assumes the member’s obli-gations under its approved applicationfor AHP subsidy.


§ 960.14 Temporary suspension of AHPcontributions.

(a) Application for temporary suspen-sion—(1) Notification to Finance Board.If a Bank finds that the contributionsrequired pursuant to § 960.2 are contrib-uting to the financial instability of theBank, the Bank shall notify the Fi-nance Board promptly, and may applyin writing to the Finance Board for atemporary suspension of such contribu-tions.

(2) Contents. A Bank’s application fora temporary suspension of contribu-tions shall include:

(i) The period of time for which theBank seeks a suspension;

(ii) The grounds for a suspension;(iii) A plan for returning the Bank to

a financially stable position; and(iv) The Bank’s annual financial re-

port for the preceding year, if avail-able, and the Bank’s most recent quar-terly and monthly financial statementsand any other financial data the Bankwishes the Finance Board to consider.

(b) Board of Directors review of applica-tion for temporary suspension—(1) Deter-mination of financial instability. In de-termining the financial instability of aBank, the Board of Directors shall con-sider such factors as:

(i) Whether the Bank’s earnings areseverely depressed;

(ii) Whether there has been a sub-stantial decline in the Bank’s member-ship capital; and

(iii) Whether there has been a sub-stantial reduction in the Bank’s ad-vances outstanding.

(2) Limitations on grounds for suspen-sion. The Board of Directors shall dis-approve an application for a temporarysuspension if it determines that the

Bank’s reduction in earnings is a resultof:

(i) A change in the terms of advancesto members which is not justified bymarket conditions;

(ii) Inordinate operating and admin-istrative expenses; or

(iii) Mismanagement.(c) Board of Directors decision. The

Board of Directors’ decision shall be inwriting and shall be accompanied byspecific findings and reasons for its ac-tion. If the Board of Directors approvesa Bank’s application for a temporarysuspension, the Board of Directors’written decision shall specify the pe-riod of time such suspension shall re-main in effect.

(d) Monitoring. During the term of atemporary suspension approved by theBoard of Directors, the affected Bankshall provide to the Board of Directorssuch financial reports as the Board ofDirectors shall require to monitor thefinancial condition of the Bank.

(e) Termination of suspension. If, priorto the conclusion of the temporary sus-pension period, the Board of Directorsdetermines that the Bank has returnedto a position of financial stability, theBoard of Directors may, upon writtennotice to the Bank, terminate the tem-porary suspension.

(f) Application for extension of tem-porary suspension period. If a Bank’sboard of directors determines that theBank has not returned to, or is notlikely to return to, a position of finan-cial stability at the conclusion of thetemporary suspension period, the Bankmay apply in writing for an extensionof the temporary suspension period,stating the grounds for such extension.

§ 960.15 Affordable Housing ReserveFund.

(a) Reserve Fund—(1) Deposits. If aBank fails to use or commit the fullamount it is required to contribute tothe Program in any year pursuant to§ 960.2, 90 percent of the unused or un-committed amount shall be depositedby the Bank in an Affordable HousingReserve Fund established and adminis-tered by the Finance Board. The re-maining 10 percent of the unused anduncommitted amount retained by the


725


Bank should be fully used or com-mitted by the Bank during the fol-lowing year, and any remaining por-tion must be deposited in the Afford-able Housing Reserve Fund.

(2) Use or commitment of funds. Ap-proval of applications for AHP sub-sidies sufficient to exhaust the amounta Bank is required to contribute pursu-ant to § 960.2 shall constitute use orcommitment of funds. Amounts re-maining unused or uncommitted atyear-end are deemed to be used or com-mitted if, in combination with AHPsubsidies that have been returned tothe Bank or de-committed from can-celed projects, they are insufficient tofund:

(i) The next highest scoring AHP ap-plication in the Bank’s final fundingperiod of the year for its competitiveapplication program; or

(ii) Pending applications for fundsunder the Bank’s homeownership set-aside programs.

Such insufficient amounts shall becarried over for use or commitmentduring the following year.

(b) Annual statement. By January 15of each year, each Bank shall provideto the Finance Board a statement indi-cating the amount of unused and un-committed funds from the prior year, ifany, which will be deposited in the Af-fordable Housing Reserve Fund.

(c) Annual notification. By January 31of each year, the Finance Board shallnotify the Banks of the total amountof funds, if any, available in the Afford-able Housing Reserve Fund.

§ 960.16 Application to existing AHPprojects.

The requirements of section 10(j) ofthe Act and the provisions of this part,as amended, are incorporated into allagreements between Banks, members,sponsors, or owners receiving AHP sub-sidies. To the extent the requirementsof this part are amended from time totime, such agreements are deemed toincorporate the amendments to con-form to any new requirements of thispart. No amendment to this part shallaffect the legality of actions takenprior to the effective date of suchamendment.


726

SUBCHAPTER F—COMMUNITY INVESTMENT

PART 970—COMMUNITY INVEST-MENT CASH ADVANCE PRO-GRAMS

Sec.970.1 Scope.970.2 Purpose.970.3 Definitions.970.4 Community Lending Plan.970.5 Community Investment Cash Advance

Programs.970.6 Reporting.970.7 Documentation.

AUTHORITY: 12 U.S.C. 1422b(a)(1) and 1430.

SOURCE: 63 FR 65546, Nov. 27, 1998, unlessotherwise noted.

§ 970.1 Scope.

Section 10(j)(10) of the Act authorizesthe Banks to offer Community Invest-ment Cash Advance (CICA) programs.(See 12 U.S.C. 1430(j)(10)). This part es-tablishes requirements for all CICAprograms offered by a Bank, except fora Bank’s Affordable Housing Program(AHP), which is governed specificallyby part 960 of this chapter.

§ 970.2 Purpose.

The purpose of this part is to identifycommunity lending projects that theBanks may support through the estab-lishment of CICA programs under sec-tion 10(j)(10) of the Act. (12 U.S.C.1430(j)(10)). Pursuant to this part, aBank may offer Rural Development Ad-vance (RDA) or Urban DevelopmentAdvance (UDA) programs, or both, forcommunity lending using the targetedbeneficiaries or targeted income levelsspecified in § 970.3 of this part, withoutprior Finance Board approval. A Bankalso may offer other CICA programs forcommunity lending using targetedbeneficiaries and targeted income lev-els other than those specified in § 970.3of this part, established by the Bankwith the prior approval of the FinanceBoard. In addition, a Bank shall offerCICA programs under section 10(i) ofthe Act (Community Investment Pro-gram (CIP), 12 U.S.C. 1430(i)), and sec-tion 10(j) of the Act (Affordable Hous-ing Program (AHP), 12 U.S.C. 1430(j)).




Advance has the same meaning as in§ 935.1 of this chapter.

AHP means the Affordable HousingProgram, the CICA program requiredto be offered pursuant to section 10(j)of the Act (12 U.S.C. 1430(j)) and part960 of this chapter.


Board of Directors means the Board ofDirectors of the Finance Board.

Champion Community means a com-munity which developed a strategicplan and applied for designation by ei-ther the Secretary of HUD or the Sec-retary of the USDA as an Empower-ment Zone or Enterprise Community,but was designated a Champion Com-munity.

CICA or Community Investment CashAdvance has the same meaning as in§ 935.1 of this chapter.

CICA program or Community Invest-ment Cash Advance program means:

(1) A Bank’s AHP;(2) A Bank’s CIP;(3) REA Bank’s RDA program or UDA

program using any combination of thetargeted beneficiaries and targeted in-come levels specified in § 970.3 of thispart; and

(4) Any other program offered by aBank using targeted beneficiaries andtargeted income levels other thanthose specified in § 970.3 of this part, es-tablished by the Bank with the priorapproval of the Finance Board.

CIP means the Community Invest-ment Program, a CICA program re-quired to be offered pursuant to section10(i) of the Act (12 U.S.C. 1430(i)).

Community lending means providingfinancing for economic developmentprojects for targeted beneficiaries.

Economic development projects means:(1) Commercial, industrial, manufac-

turing, social service, and public facil-ity projects and activities; and


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(2) Public or private infrastructureprojects, such as roads, utilities, andsewers.

Family means one or more personsliving in the same dwelling unit.


Housing projects means projects or ac-tivities that involve the purchase, con-struction or rehabilitation of, orpredevelopment financing for:

(1) Individual owner-occupied hous-ing units, each of which is purchased orowned by a family with an income ator below the targeted income level;

(2) Projects involving multiple unitsof owner-occupied housing in which atleast 51% of the units are owned or areintended to be purchased by familieswith incomes at or below the targetedincome level;

(3) Rental housing where at least 51%of the units in the project are occupiedby, or the rents are affordable to, fami-lies with incomes at or below the tar-geted income level; or

(4) Manufactured housing parkswhere:

(i) At least 51% of the units in theproject are occupied by, or the rentsare affordable to, families with in-comes at or below the targeted incomelevel; or

(ii) The project is located in a neigh-borhood with a median income at orbelow the targeted income level.

HUD means the United States De-partment of Housing and Urban Devel-opment.

Median income for the area. (1) Owner-occupied housing projects and economicdevelopment projects. For purposes ofowner-occupied housing projects andeconomic development projects, me-dian income for the area means one ormore of the following, as determinedby the Bank:

(i) The median income for the area,as published annually by HUD;

(ii) The applicable median family in-come, as determined under 26 U.S.C.143(f) (Mortgage Revenue Bonds) andpublished by a State agency or instru-mentality;

(iii) The median income for the area,as published by the USDA; or

(iv) The median income for any defin-able geographic area, as published by a

Federal, State, or local government en-tity for purposes of that entity’s hous-ing and economic development pro-grams, and approved by the Board ofDirectors, at the request of a Bank, foruse under the Bank’s CICA programs.

(2) Rental housing projects. For pur-poses of rental housing projects, me-dian income for the area means one ormore of the following, as determinedby the Bank:

(i) The median income for the area,as published annually by HUD; or

(ii) The median income for any defin-able geographic area, as published by aFederal, State, or local government en-tity for purposes of that entity’s hous-ing programs, and approved by theBoard of Directors, at the request of aBank, for use under the Bank’s CICAprograms.

Member means an institution that hasbeen approved for membership in aBank and has purchased capital stockin the Bank in accordance with § § 933.20and 933.25 of this chapter.

MSA means a Metropolitan Statis-tical Area as designated by the Officeof Management and Budget.

Neighborhood means:(1) A census tract or block numbering

area;(2) A unit of local government with a

population of 25,000 or less;(3) A rural county; or(4) A geographic location designated

in comprehensive plans, ordinances, orother local documents as a neighbor-hood, village, or similar geographicdesignation that is within the bound-ary of but does not encompass the en-tire area of a unit of general local gov-ernment.

Nonmember borrower means an entitythat has been approved as a non-member mortgagee pursuant to Sub-part B of part 935 of this chapter.

Provide financing means:(1) Originating loans;(2) Purchasing a participation inter-

est, or providing financing to partici-pate, in a loan consortium for CICA-el-igible housing or economic develop-ment projects;

(3) Making loans to entities that, inturn, make loans for CICA-eligiblehousing or economic developmentprojects;


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12 CFR Ch. IX (1–1–00 Edition)§ 970.3

(4) Purchasing mortgage revenuebonds or mortgage-backed securities,where all of the loans financed by suchbonds and all of the loans backing suchsecurities, respectively, meet the eligi-bility requirements of the CICA pro-gram under which the member or non-member borrower receives an advance;

(5) Creating or maintaining a sec-ondary market for loans, where allsuch loans are mortgage loans meetingthe eligibility requirements of theCICA program under which the memberor nonmember borrower receives an ad-vance;

(6) Originating CICA-eligible loanswithin 3 months prior to receiving theCICA advance; and

(7) Purchasing low-income housingtax credits.

RDA or Rural Development Advancemeans an advance made pursuant to anRDA program.

RDA program or Rural DevelopmentAdvance program means a program of-fered by a Bank for community lendingin rural areas.

Rural area means:(1) A unit of general local govern-

ment with a population of 25,000 orless;

(2) An unincorporated area outside anMSA; or

(3) An unincorporated area within anMSA that qualifies for housing or eco-nomic development assistance from theUSDA.

Small business means a ‘‘small busi-ness concern,’’ as that term is definedby section 3(a) of the Small BusinessAct (15 U.S.C. 632(a)) and implementedby the Small Business Administrationunder 13 CFR part 121, or any successorprovisions.

Targeted beneficiaries means bene-ficiaries determined by the geo-graphical area in which a project is lo-cated (Geographically Defined Bene-ficiaries), by the individuals who ben-efit from a project as employees orservice recipients (Individual Bene-ficiaries), or by the nature of theproject itself (Activity Beneficiaries),as follows:

(1) Geographically Defined Bene-ficiaries:

(i) The project is located in a neigh-borhood with a median income at orbelow the targeted income level;

(ii) The project is located in a ruralChampion Community, or a rural Em-powerment Zone or rural EnterpriseCommunity, as designated by the Sec-retary of the USDA;

(iii) The project is located in anurban Champion Community, or anurban Empowerment Zone or urban En-terprise Community, as designated bythe Secretary of HUD;

(iv) The project is located in an In-dian area, as defined by the NativeAmerican Housing Assistance and Self-Determination Act of 1996 (25 U.S.C.4101 et seq.), Alaskan Native Village, orNative Hawaiian Home Land;

(v) The project is located in an areaand involves a property eligible for aBrownfield Tax Credit;

(vi) The project is located in an areaaffected by a military base closing andis a ‘‘community in the vicinity of theinstallation’’ as defined by the Depart-ment of Defense at 32 CFR part 176;

(vii) The project is located in a des-ignated community under the Commu-nity Adjustment and Investment Pro-gram as defined under 22 U.S.C. 290m-2;

(viii) The project is located in a Fed-erally declared disaster area; or

(ix) The project is located in a statedeclared disaster area, or qualifies forassistance under another Federal orState targeted economic developmentprogram, approved by the FinanceBoard.

(2) Individual Beneficiaries:(i) The annual salaries for at least

51% of the permanent full- and part-time jobs, computed on a full-timeequivalent basis, created or retained bythe project, other than constructionjobs, are at or below the targeted in-come level; or

(ii) At least 51% of the families whootherwise benefit from (other thanthrough employment), or are providedservices by, the project have incomesat or below the targeted income level.

(3) Activity Beneficiaries: Projectsthat qualify as small businesses.

(4) Other Targeted Beneficiaries. ABank may designate, with the prior ap-proval of the Finance Board, other tar-geted beneficiaries for its communitylending.

(5) Only targeted beneficiaries identi-fied in paragraphs (1)(i) through (1)(iv),


729


and (2)(i) and (2)(ii) of this definitionare eligible for CIP advances.

Targeted income level means:(1) For rural areas, incomes at or

below 115 percent of the median incomefor the area, as adjusted for family sizein accordance with the methodology ofthe applicable area median incomestandard or, at the option of the Bank,for a family of four;

(2) For urban areas, incomes at orbelow 100 percent of the median incomefor the area, as adjusted for family sizein accordance with the methodology ofthe applicable area median incomestandard or, at the option of the Bank,for a family of four;

(3) For CICA advances provided underCIP:

(i) For economic developmentprojects, incomes at or below 80 per-cent of the median income for the area;or

(ii) For housing projects, incomes ator below 115 percent of the median in-come for the area, both as adjusted forfamily size in accordance with themethodology of the applicable area me-dian income standard or, at the optionof the Bank, for a family of four; or

(4) For CICA advances provided underany other CICA program offered by aBank, a targeted income level estab-lished by the Bank with the prior ap-proval of the Finance Board.

UDA or Urban Development Advancemeans an advance made pursuant to aUDA program.

UDA program or Urban DevelopmentAdvance program means a program of-fered by a Bank for community lendingin urban areas.

Urban area means:(1) A unit of general local govern-

ment with a population of more than25,000; or

(2) An unincorporated area within anMSA that does not qualify for housingor economic development assistancefrom the USDA.

USDA means the United States De-partment of Agriculture.

§ 970.4 Community Lending Plan

Each Bank shall develop and adoptan annual Community Lending Planpursuant to § 936.6 of this chapter.

§ 970.5 Community Investment CashAdvance Programs.

(a) In general. (1) Each Bank shalloffer an AHP in accordance with part960 of this chapter.

(2) Each Bank shall offer a CIP toprovide financing for housing projectsand for eligible community lending atthe appropriate targeted income levels.

(3) Each Bank may offer RDA pro-grams or UDA programs, or both, forcommunity lending using the targetedbeneficiaries or targeted income levelsspecified in § 970.3 of this part, withoutprior Finance Board approval.

(4) Each Bank may offer CICA pro-grams for community lending usingtargeted beneficiaries and targeted in-come levels other than those specifiedin § 970.3 of this part, established by theBank with the prior approval of the Fi-nance Board.

(b) Mixed-use projects. (1) For projectsfunded under CICA programs otherthan CIP, involving a combination ofhousing projects and economic develop-ment projects, only the economic de-velopment components of the projectmust meet the appropriate targeted in-come level for the respective CICA pro-gram.

(2) For projects funded under CIP,both the housing and economic devel-opment components of the projectmust meet the appropriate targeted in-come levels.

(c) Refinancing. CICA advances otherthan AHP may be used to refinanceeconomic development projects andhousing projects, provided that any eq-uity proceeds of the refinancing ofrental housing and manufactured hous-ing parks are used to rehabilitate theprojects or to preserve affordability forcurrent residents.

(d) Pricing and Availability of CICA ad-vances—(1) Advances to members. ForCICA programs other than AHP andCIP, a Bank shall price advances tomembers as provided in § 935.6 of thischapter, and may price such advancesat rates below the price of advances ofsimilar amounts, maturities and termsmade pursuant to section 10(a) of theAct. (12 U.S.C. 1430(a)).

(2) Pricing of CIP advances. The priceof CICA advances made under CIP shallnot exceed the Bank’s cost of issuingconsolidated obligations of comparable


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12 CFR Ch. IX (1–1–00 Edition)§ 970.6

maturity, taking into account reason-able administrative costs.

(3) Pricing of AHP advances. A Bankshall price CICA advances made underAHP in accordance with parts 935 and960 of this chapter.

(4) Advances to nonmember borrowers.(i) A Bank may offer advances underCICA programs to nonmember bor-rowers at the Bank’s option, except forAHP and CIP, which are available onlyto members.

(ii) A Bank shall price advances tononmember borrowers as provided in§ 935.24 of this chapter, and may pricesuch advances at rates below the priceof advances of similar amounts, matu-rities and terms made pursuant to sec-tion 10b of the Act. (12 U.S.C. 1430b).

(5) Pricing pass-through. A Bank mayrequire that borrowers receiving CICAadvances pass through the benefit ofany price reduction from regular ad-vance pricing to their borrowers.

(6) Discount Fund. (i) A Bank may es-tablish a fund which the Bank may useto reduce the price of CIP or otherCICA advances below the advanceprices provided for by this part.

(ii) Price reductions made throughthe Discount Fund shall be made in ac-cordance with a fair distributionscheme.

§ 970.6 Reporting.(a) By July 1, 1999, each Bank shall

provide to the Finance Board an initialassessment of the credit needs andmarket opportunities in a Bank’s dis-trict for community lending.

(b) Effective in 2000, each Bank annu-ally shall provide to the FinanceBoard, on or before January 31, a Com-munity Lending Plan.

(c) Each Bank shall provide suchother reports concerning its CICA pro-grams as the Finance Board may re-quest from time to time.

§ 970.7 Documentation.

(a) A Bank shall require the borrowerto certify to the Bank that eachproject funded by a CICA advance(other than AHP) meets the respectivetargeting requirements of the CICAprogram. Such certification shall in-clude a description of how the projectmeets the requirements, and where ap-propriate, a statistical summary or listof incomes of the borrowers, rents forthe project, or salaries of jobs createdor retained.

(b) For those CICA-funded projectsthat also receive funds from anothertargeted Federal economic develop-ment program that has income tar-geting requirements that are the sameas, or more restrictive than, the tar-geting requirements of the applicableCICA program, the Bank shall permitthe borrower to certify that compli-ance with the criteria of such Federaleconomic development program willmeet the requirements of the respec-tive CICA program.

(c) Such certifications shall satisfythe Bank’s obligations to documentcompliance with the CICA lending pro-visions of this part.
