§ 1272.3 - New business activity notice requirement.  


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  • § 1272.3 New business activity notice requirement.

    At least sixty days prior Prior to undertaking a new business activity, except as provided in § 1272.4(b), an NBA, a Bank shall submit to the FHFA a written notice containing the following information:

    (a) General requirements. Except as provided in paragraph (b) of this section, a Bank's notice of new business activity shall include:

    (1) An opinion of counsel citing the

    of the proposed NBA that provides a thorough, meaningful, complete, and specific description of the activity such that FHFA will be able to make an informed decision regarding the proposed activity. At a minimum, the notice should include the following information:

    (a) A written opinion of counsel identifying the specific statutory, regulatory, or other legal

    authority for the new business activity;

    (2) A good faith estimate of the anticipated dollar volume of the activity over the short-and long-term;

    (3

    authorities under which the NBA is authorized and, for submissions raising legal questions of first impression, a reasoned analysis explaining how the cited authorities can be construed to authorize the new activity;

    (b) A full description of

    : (i) The purpose and operation of

    the proposed activity

    ;

    (ii) The market targeted by the activity;

    (iii) The delivery system for the activity; and

    (iv) The effect of the activity on the housing, or relevant community lending, market;

    (4) A demonstration of the Bank's capacity, through staff, or contractors employed by the Bank, sufficiency of experience and expertise, to safely administer and manage the risks associated with the new activity;

    (5) An assessment of the risks associated with the activity, including the Bank's ability to manage these risks and the Bank's ability to manage the risks associated with increasing volumes of the new activity; and

    (6) The criteria that the Bank will use to determine the eligibility of its members or housing associates to participate in the new activity.

    (b) New collateral activities. If a proposed new business activity relates to the acceptance of collateral under § 1266.7 of this chapter, a Bank's notice of new business activity shall include:

    (1) A description of the classes or amounts of collateral proposed to be accepted by the Bank;

    (2) A copy of the Bank's member products policy, adopted pursuant to § 917.4 of this title;

    (3) A copy of the Bank's procedures for determining the value of the collateral in question, established pursuant to § 1266.10 of this chapter; and

    (4) A demonstration of the Bank's capacity, personnel, technology, experience and expertise to value, discount and manage the risks associated with the collateral in question.

    [65 FR 44431, July 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]

    , including, when applicable, infographics and definitions of key terms. In addition, the Bank shall indicate whether the proposed activity represents a modification to a previously approved activity in which the Bank is engaged or is an activity that FHFA has approved for any other Banks, if known to the requesting Bank, and if applicable;

    (c) A discussion of why the Bank proposes to engage in the new activity and how the activity supports the housing finance and community investment mission of the Bank;

    (d) A discussion of the risks presented by the new activity and how the Bank will manage these risks; and

    (e) A good faith estimate of the anticipated dollar volume of the activity, and the income and expenses associated with implementing and operating the new activity, over the initial three years of operation.