2014-25923. Proposed Collection; Comment Request

AGENCY:

Federal Housing Finance Agency.

ACTION:

30-day Notice of Submission of Information Collection for Approval from the Office of Management and Budget.

SUMMARY:

In accordance with the Paperwork Reduction Act of 1995, the Federal Housing Finance Agency (FHFA) is seeking public comments concerning the information collection known as “Federal Home Loan Bank Directors,” which has been assigned control number 2590-0006 by the Office of Management and Budget (OMB). FHFA intends to submit the information collection to OMB for review and approval of a three-year extension of the control number, which is due to expire on October 31, 2014.

DATES:

Interested persons may submit comments on or before December 1, 2014.

ADDRESSES:

Submit comments to the Office of Information and Regulatory Affairs of the Office of Management and Budget, Attention: Desk Officer for the Federal Housing Finance Agency, Washington, DC 20503, Fax: [phone], Email: [e-mail]. Please also submit comments to FHFA using any one of the following methods:

• Agency Web site: www.fhfa.gov/​open-for-comment-or-input.
• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. If you submit your comment to the Federal eRulemaking Portal, please also send it by email to FHFA at [e-mail] to ensure timely receipt by the agency.
• Mail/Hand Delivery: Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20024, Attention: Public Comments/Proposed Collection; Comment Request: “Federal Home Loan Bank Directors (No. 2014-N-12).”

We will post all public comments we receive without change, including any personal information you provide, such as your name and address, email address, and telephone number, on the FHFA Web site at http://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20024. To make an appointment to inspect comments, please call the Office of General Counsel at [phone].

FOR FURTHER INFORMATION CONTACT:

Patricia Sweeney, Management Analyst, Division of Bank Regulation, by email at [e-mail] or by telephone at [phone]; or Eric Raudenbush, Assistant General Counsel, by email at [e-mail] or by telephone at [phone] (not toll-free numbers); or by regular mail at Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20024. The telephone number for the Telecommunications Device for the Hearing Impaired is [phone].

SUPPLEMENTARY INFORMATION:

A. Need For and Use of the Information Collection

Section 7 of the Federal Home Loan Bank Act (Bank Act) vests the management of each Federal Home Loan Bank (Bank) in its board of directors.^[1] As required by section 7, each Bank's board comprises two types of directors: (1) Member directors, who are drawn from the officers and directors of member institutions located in the Bank's district and who are elected every four years to represent members in a particular state in that district; and (2) independent directors, who are unaffiliated with any of the Bank's member institutions, but who reside in the Bank's district and are elected every four years on an at-large basis.^[2] Section 7 and FHFA's implementing regulation, codified at 12 CFR part 1261, establish the eligibility requirements for both types of Bank directors and the required professional qualifications for independent directors, and set forth the procedures for their election.

Part 1261 of the regulations requires each Bank, as part of its responsibility to administer its annual director election process, to determine the eligibility of candidates to serve as member and independent directors on its board. Specifically, each Bank must require each candidate for either type of directorship, including any incumbent that may be a candidate for reelection, to complete and return to the Bank a form that solicits information about the candidate's statutory eligibility to serve and, in the case of independent director candidates, about his or her professional qualifications for the directorship being sought.^[3] Member director candidates are required to complete the Federal Home Loan Bank Member Director Eligibility Certification Form (Member Director Eligibility Certification Form), while independent director candidates must complete the Federal Home Loan Bank Independent Director Application Form (Independent Director Application Form).

Under part 1261, each Bank must also require each of its incumbent directors to certify annually that he or she continues to meet all of the applicable statutory eligibility requirements.^[4] Member directors do this by completing the Member Director Eligibility Certification Form again every year, while independent directors complete the abbreviated Federal Home Loan Bank Independent Director Annual Certification Form (Independent Director Annual Certification Form) to certify their ongoing eligibility.

The OMB control number for the information collection is 2590-0006, which is due to expire on October 31, 2014. The likely respondents are individuals who are prospective and incumbent Bank directors. Copies of each of the forms appear at the end of this notice.

B. Burden Estimate

FHFA estimates the total annual hour burden imposed upon respondents by this information collection is 145 hours. This estimate is based on the following calculations:

1. Member Director Eligibility Certification Form

FHFA estimates the total annual hour burden on all member director candidates and incumbent member directors associated with review and completion of the Member Director Eligibility Certification Form is 37 hours. This includes a total annual average of 68 member director candidates, with 1 response per individual taking an average of 15 minutes (.25 hours) (68 respondents × .25 hours = 17 hours). It also includes a total annual average of 80 incumbent member directors, with 1 response per individual taking an average of 15 minutes (.25 hours) (80 individuals × .25 hours = 20 hours).

2. Independent Director Application Form

FHFA estimates the total annual hour burden on all independent director candidates associated with review and completion of the Independent Director Application Form is 75 hours. This includes a total annual average of 25 independent director candidates, with 1 response per individual taking an average of 3 hours (25 individuals × 3 hours = 75 hours).

3. Independent Director Annual Certification Form

FHFA estimates the total annual hour burden on all incumbent independent directors associated with review and completion of the Independent Director Annual Certification Form is 33 hours. This includes a total annual average of 66 incumbent independent directors, with 1 response per individual taking an average of 30 minutes (.5 hours) (66 individuals × .5 hours = 33 hours).

C. Comment Request

1. Comment Received in Response to the Initial Notice

In accordance with the requirements of 5 CFR 1320.8(d), FHFA published a request for public comments regarding this information collection in the Federal Register on August 11, 2014. See 79 FR 46801 (Aug. 11, 2014). The 60-day comment period closed on October 10, 2014. FHFA received one comment letter, signed jointly by two Members of Congress, that suggested several revisions to the forms and questioned the accuracy of FHFA's burden estimate pertaining to completion of the Independent Director Application Form. For the reasons stated below, the agency has decided against making any of the suggested revisions or changing the burden estimate.

Citing the importance of diversity among Bank directors, the commenters suggested that FHFA revise the forms to include questions regarding the gender, race, ethnicity, and geographic location of the respondent. With respect to a respondent's geographic location, the application forms already address that issue by requiring respondents to provide their home and business addresses. With respect to the other three elements, FHFA anticipates obtaining that information through a separate rulemaking. In June 2014 FHFA issued a proposed rule to amend its regulations on Minority and Women Inclusion (MWI), located at 12 CFR part 1207. That proposal would require each Bank annually to request that each member of its board of directors voluntarily provide the Bank with information about his or her minority and gender classification. The Banks would then provide that information, on an aggregate basis and without including personally identifiable information, to FHFA as part of their annual MWI reports to the agency.^[5] The comment period for that rulemaking ended on August 25, 2014, and FHFA is in the process of reviewing the comments received and developing a final rule. Because FHFA anticipates having in place another avenue for receiving information about the diversity of Bank boards of directors, it does not believe that it is necessary to collect that same information through the director application forms.

The Bank Act requires that at least two of each Bank's independent directors qualify as “public interest” directors—i.e., that they have more than four years of experience representing consumer or community interests on banking services, credit needs, housing, or consumer financial protections.^[6] The commenters' second suggested revision relates to question 3 in the “Statutory Eligibility Requirements” section of the Independent Director Application Form, which asks respondents who are interested in serving as a “public interest” director to “provide information on how you have represented such consumer or community interests for more than four years.” The commenters suggest that FHFA revise this question to require that each such respondent also be required to specify the “leadership role” that the individual has held in a “mission-driven organization.”

The agency has declined to make this revision for several reasons. First, the principal purpose of the form is to determine whether the respondent satisfies the statutory and regulatory eligibility requirements for being a public interest director. While it has been FHFA's experience that most, if not all, of the Banks' “public interest” director candidates have in fact served in a leadership position with a “mission-driven” organization, the Bank Act does not require that an individual fulfill the “public interest” requirement in this particular manner in order to be eligible. If the question were to be revised as suggested, it would then imply that serving in such a position is a necessary means of fulfilling the eligibility requirements and would likely cause confusion among potential applicants about the actual eligibility requirements. Second, FHFA, which reviews the completed form for every individual a Bank proposes to nominate for an independent directorship, is unaware of any instance in recent years in which an applicant responding to question 3 has failed to specify the position or positions he or she held with any organization mentioned therein. In most cases, respondents have provided additional detail as to the duties undertaken while holding those positions. Both the Banks and FHFA review the information provided in order to confirm that the persons actually satisfy the statutory eligibility requirements for the public interest directorships. If an applicant for a “public interest” independent directorship did not include such information, it is likely that the Bank, or FHFA, would require the respondent to provide such information before he or she could be considered for the directorship. Finally, question 1 in the “Selection Criteria” section of the Independent Director Application Form already requests that applicants provide detailed information about their leadership experience, and their responses to that question should provide the Banks and FHFA with information about the leadership roles they have had with any consumer- or community interest-focused organizations.

The commenters' third suggested revision relates to question 2(G) in the “Selection Criteria” section of the Independent Director Application Form, which is intended to elicit information on experience that the respondent may have that is related to “the mission of the Banks.” The question characterizes the Banks' mission as being “to support the housing finance activities of their members, which includes residential mortgage finance and community and economic development lending activities.” Noting that “Congress has consistently defined the [Banks'] mission as serving both housing and community economic development needs of people and their communities,” the commenters suggest that FHFA revise question 2(G) so that it instead describes the mission of the Banks as being to support the “housing and community economic development activities of its members.” There is no specific definition of the Banks' mission. Nonetheless, since its inception in 1932, the principal activity of the Banks has been to support their members' residential housing finance business by providing loans to their members (known as “advances”) that are secured by the members' assets, most typically other residential mortgage loans. In 1989, Congress further required the Banks to establish Affordable Housing Programs, through which members can support access to housing for persons with lower or moderate incomes, and to support their members' community and economic development activities. Thereafter, the Federal Housing Finance Board, FHFA's predecessor agency as regulator of the Banks, construed the “housing finance mission” of the Banks broadly, and to include two elements: Providing support for their members' residential mortgage lending, and providing support for their members' community and economic development activities. FHFA has embraced the view that support for the members' community and economic development activities is a core aspect of the Banks' housing finance mission and believes that the existing language of the form, which explicitly refers to “community and economic development activities,” is consistent with that view and need not be changed.

Finally, the commenters assert that FHFA's estimate that it will take a respondent an average of 3 hours to complete the Independent Director Application Form is too high and suggest that an estimate of one hour would be more accurate. The commenters argue that the types of individuals being considered for a Bank directorship would be likely to have already prepared similar information for other purposes, which could be drawn upon to reduce the time needed to complete the form. In deciding upon a burden estimate of 3 hours per form, FHFA considered the amount of time it would take an individual completing the form for the first time to: (1) Read through the questions and background information to understand the statutory requirements and the reasoning behind the questions; (2) gather the information requested on the form and any additional materials he or she wishes to provide; (3) prepare narrative answers of sufficient detail to demonstrate his or her eligibility and qualifications to serve; and (4) sign the form and transmit it to the Bank. Undoubtedly, many respondents will have materials at hand containing relevant information that can be readily incorporated into the electronic version of the form, which may reduce the amount of time it will take them to complete the form. It may also be true that an incumbent seeking reelection may require less time to update a previously completed version of the form. Those situations will not necessarily be the case for all respondents, however, because FHFA has observed that a number of applicants still complete the eligibility forms by hand, which takes longer to do. Moreover, in developing its burden estimates for collections of information, it has been the agency's practice to err on the high side and not to assume that all respondents will use the most efficient methods for completing the forms. Because there is no way of knowing what time-saving resources a respondent may be able to draw upon in completing the form, the agency has decided to retain the existing estimate of 3 hours.

2. Further Comments Requested in Response to This Notice

In response to this notice, FHFA requests written comments on the following: (1) Whether the collection of information is necessary for the proper performance of FHFA functions, including whether the information has practical utility; (2) the accuracy of FHFA's estimates of the burdens of the collection of information; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

Date: October 27, 2014.

Kevin Winkler,

Chief Information Officer, Federal Housing Finance Agency.

Footnotes

1.  See 12 U.S.C. 1427(a)(1).

2.  See 12 U.S.C. 1427(b) and (d).

3.  See 12 CFR 1261.7(c) and (f); 12 CFR 1261.14(b).

4.  See 12 CFR 1261.12.

5.  See 79 FR 35960 (June 25, 2014). The proposed rule would also apply to the Bank System's Office of Finance.

6.  See 12 U.S.C. 1427(a)(3)(B)(ii).