[Federal Register Volume 63, Number 229 (Monday, November 30, 1998)]
[Rules and Regulations]
[Pages 65683-65693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31786]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Parts 900, 922, 931, 932, 933, 934, and 941
[No. 98-47]
RIN 3069-AA55
Election of Federal Home Loan Bank Directors
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
its regulations on the election of Federal Home Loan Bank (Bank)
directors. The final rule devolves responsibility for determining the
eligibility of elective directors and administering the election
process from the Finance Board to the Banks. The final rule is part of
the Finance Board's continuing effort to transfer management and
governance responsibilities to the Banks and is consistent with the
goals of the Regulatory Reinvention Initiative of the National
Performance Review.
EFECTIVE DATE: The Final Rule will become effective on December 30,
1998.
FOR FURTHER INFORMATION CONTACT: Patricia L. Sweeney, Program Analyst,
Compliance Assistance Division, Office of Policy, 202/408-2872, or Roy
S. Turner, Jr., Attorney-Advisor, Office of General Counsel, 202/408-
2512, Federal Housing Finance Board, 1777 F Street, NW, Washington, DC
20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Pursuant to section 7 of the Federal Home Loan Bank Act (Act),
which sets forth the eligibility requirements and the procedures for
electing and appointing Bank directors, and regulations promulgated
thereunder, the Finance Board's predecessor, the former Federal Home
Loan Bank Board (FHLBB), determined the eligibility of all Bank
directors, administered the Bank director elections, and appointed
public interest directors. See 12 U.S.C. 1427 (1989); 12 CFR part 522
(1989). After Congress abolished the FHLBB in 1989, see Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA),
Pub.L. 101-73, sec. 401, 103 Stat. 183 (Aug. 9, 1989), the Finance
Board adopted the FHLBB regulations on Bank directors, without change.
See 54 FR 36757 (Sept. 5, 1989), codified at 12 CFR part 932. The
Finance Board subsequently amended its regulations to implement the
changes FIRREA made to the eligibility requirements for, and to apply
the conflicts of interest limitations FIRREA imposed on, Bank
directors. 55 FR 1393 (Jan. 16, 1990); 56 FR 55205 (Oct. 25, 1991); see
FIRREA, secs. 707, 710(b)(4), 103 Stat. 417, 418, codified at 12 U.S.C.
1427.
Since the enactment of FIRREA the Finance Board has determined the
eligibility of all Bank directors, has administered the election of
Bank directors, and has appointed public interest directors. As part of
its policy of removing itself from the management and governance
functions of the Banks and devolving those responsibilities to the
Banks, the Finance Board is transferring the administration of the
elections, including the responsibility to determine the eligibility of
elective directors, to the Banks. This action does not affect the
appointment of public interest directors for the Banks, who will
continue to be appointed in the sole discretion of the Finance Board.
The final rule amends, redesignates, or eliminates various
provisions of part 932, and includes conforming amendments to parts
900, 931, 933, 934, and 941. The Finance Board also is repealing the
current conflict of interest and financial disclosure requirements
established by part 922 of its regulations for the appointed members of
the Board of Directors of the Finance Board. All of the changes are
consistent with the goals of the Regulatory Reinvention Initiative of
the National Performance Review. See E.O. 12861, 58 FR 48255 (Sept. 11,
1993).
[[Page 65684]]
II. Analysis of the Public Comments and Final Rule
The Finance Board received seven comment letters in response to its
proposal to devolve the management and administration of the election
process to the Banks. The proposed rule was published in the Federal
Register, with a 45-day period for public comment. 63 FR 26532 (May 13,
1998). Commenters included six Banks and one member. Most commenters
supported the devolution of the election process to the Banks, though
they also offered suggested revisions to the rule. Two commenters
opposed the proposal, citing the potential administrative burden that
could be placed on the Banks. One of these commenters also
characterized the regulation as too detailed and restrictive and
failing to devolve to the Banks any meaningful control over the
election process.
Notwithstanding those concerns, the Board believes that the
election of directors to serve on the board of a corporate entity is a
responsibility more appropriately assigned to the entity than to its
safety and soundness regulator. Accordingly, the Board is adopting the
regulation largely as proposed, with revisions made to take into
account a number of revisions proposed by the commenters. Those
revisions are discussed below.
A. Definitions--Sec. 932.1
1. ``Bona Fide Resident''-- Sec. 932.1
The proposed definition of ``bona fide resident'' that appeared in
the Federal Register included a typographical error, which prompted two
commenters to question whether appointive directors need always have
some residence within the district. The final rule corrects the error,
making clear that an appointive director who does not maintain a
principal residence within the district may, nonetheless, be a ``bona
fide resident'' if he or she owns or leases in his or her own name a
residence within the district and is employed within a voting state in
the district. The same test applies to elective directors.
2. ``Voting State''--Sec. 932.1
Under the proposal, a member's ``voting state'' is the state in
which the member's principal place of business, ``as determined in
accordance with part 933,'' is located on the record date. One
commenter contended that the definition might bar a member from voting
if its principal place of business were located outside the district of
the Bank in which the institution is a member. Because that scenario
could occur only in rare circumstances, which would require Finance
Board approval, and the existing regulations and statutes would address
the matter, the final rule adopts the definition as proposed.
By statute, an institution must become a member of the Bank whose
district includes the state in which the institution maintains its
principal place of business, unless the institution requests membership
in an adjoining district, which is permissible only if it is ``demanded
by convenience'' and only if it is approved by the Finance Board. 12
U.S.C. 1424(b). Thus, a member could have its principal place of
business outside of its normal Bank district only pursuant to the
``demanded by convenience'' provision. If such a transfer were to
occur, it would be governed by the regulations of the Finance Board,
principally Section 933.18(a) and (b). Those provisions authorize
membership in another Bank under the ``demanded by convenience''
provision and provide that ``[e]xcept as otherwise designated in
accordance with this section'' a member's principal place of business
is the state in which it maintains its home office. The latter
provision contemplates that the Finance Board may ``otherwise
designate'' a state other than the one in which a member maintains its
home office as its principal place of business, which the Finance Board
would have to do if the home office were outside the district. As the
regulations address the concern of the commenter, especially when read
in conjunction with section 1427(c), which requires the Finance Board
to designate the state in which each member is deemed to be located for
voting purposes, the Finance Board does not believe it is necessary to
revise this definition.
B. Director Elections--Sec. 932.3
1. Responsibilities of the Banks
Consistent with the proposed rule, the final rule transfers the
responsibility for the conduct and administration of the director
elections from the Finance Board to the Banks. Two commenters believed
that the regulatory language should expressly permit the Banks to use
staff and contractors to run the elections process, even though the
preamble to the proposal indicated that Bank staff could be used. As it
was never the Finance Board's intent to have the board of directors
personally perform those tasks, the final rule clarifies that the
disinterested members of the board of directors, or a committee of
disinterested directors, may use staff or an outside contractor to
perform the ministerial and administrative tasks associated with the
elections process. The final rule retains the language that the
disinterested members, or committee of disinterested members, are
responsible for overseeing the election process, which means that they
must ensure that the persons administering the election are competent
and act in accordance with these regulations.
Further, three commenters suggested that the Finance Board share
information with, and offer the appropriate training to, the Banks as a
part of its devolution of the election process. The Finance Board
intends to provide the information and training necessary to ensure a
smooth transition of the management of the election process from the
Finance Board to the Banks and anticipates that it will do so in
consultation with the Banks in advance of the 1999 election cycle. No
regulatory changes are necessary to provide such assistance.
2. Designation of elective directorships.
For any Bank district with five or more states, the Act authorizes
the Finance Board to increase the number of elective directorships up
to thirteen, and the number of appointive directorships up to three-
fourths of the number of elective directorships. 12 U.S.C. 1427(a). The
proposed rule had provided that in creating any additional appointive
directorships under this authority the Finance Board may round up to
the nearest whole number. Two Banks objected to the rounding provision,
contending that it could result in a Bank having a number of appointive
directors in excess of the three-fourths statutory limit.
The principal difficulty in applying the statutory limit is that it
results in a whole number of appointive directors only when the number
of elective directors is eight or twelve. If a Bank has nine, ten, or
eleven elective directors, the formula results in a fractional cap on
the number of appointive directors, i.e., 6.75, 7.5, and 8.25,
respectively. It is not clear from the statute how Congress intended
the cap to be applied when it includes a fraction. The Finance Board
could disregard all fractions altogether, meaning that it would have to
``round down'' to the nearest whole number in all cases. Alternatively,
the Finance Board could follow standard rounding conventions and round
to the nearest whole number in all cases. The Finance Board has
determined that the most reasonable means of applying the limitation is
to use standard rounding conventions whenever the ``three-fourths''
formula results in something other than a whole number. Thus, for any
fraction of one-half or more the Finance Board will round up to the
[[Page 65685]]
nearest whole number, and for any fraction of less than one-half the
Finance Board will round down to the nearest whole number.
The Finance Board believes that this interpretation is permissible
and is in accord with the standards of statutory interpretation.
Chevron, U.S.A., Inc. v. Natural Resources Defense Council Inc., 467
U.S. 837, 844 (1984). The final rule amends the proposed language by
deleting the term ``up,'' to make clear that fractions less than one-
half will be rounded down, and adds a provision requiring the Finance
Board to consult with the affected Banks prior to increasing the number
of elective or appointive directorships.
One commenter suggested that the Finance Board establish separate
seats on the board of directors of a Bank for co-operative banks and
federal savings and loan associations, as those institutions are too
small to have sufficient votes to elect their own representatives. The
Finance Board cannot make such a change because it is not permitted by
the statute. The Finance Board has no authority to set up separate
classes of directors to represent different segments of the membership
base.
C. Capital Stock Report--Sec. 932.4
The proposed rule would have required each Bank, by April 10 of
each year, to submit to the Finance Board and to each member a capital
stock report, which would indicate the minimum number of shares of Bank
stock each member was required to hold at the end of the preceding
calendar year. The proposal also would have allowed each member to
obtain Finance Board review of the Bank's determination of its minimum
stock holdings. Two commenters objected to this provision, contending
that providing the capital stock report to the members would be
confusing because the report would not indicate the number of votes
each member would be entitled to cast in the election, and that the
appeals process would delay the elections.
The Finance Board believes that there is some merit in the
suggestion about member confusion, but also believes that it is
important for each member to have the opportunity to review for itself
and, if necessary, to obtain Finance Board review of the Bank's
calculation of the member's minimum stock purchase requirement (which
is used to determine the member's voting rights) and to confirm that
the Bank has included the member in the appropriate voting state. To
balance those concerns, the final rule relocates the reporting and
review provisions from the election regulation to the membership
regulation, at section 933.22(b)(1).
Section 933.22(b)(1) currently directs the Banks annually to
calculate each member's minimum stock purchase requirement and to
notify the member of any required adjustment. The final rule amends
section 933.22(b)(1) to require the Banks to include as part of the
notice a statement informing the member that the Bank's minimum stock
calculation will be used to determine the number of votes the member
may cast in that year's election, and identifying the state in which
the member will vote. If a member does not agree with the Bank's
calculation of the minimum stock holdings or the Bank's identification
of the voting state, the member may request the Finance Board to
resolve either matter. The Finance Board must do so promptly and its
determination is final.
By requiring the Bank to notify the member of its voting state the
final rule affords each member the opportunity to confirm that the
records of the Bank correctly indicate the location of its principal
place of business. This should minimize the possibility that a member
may be assigned to vote in the wrong state, which might occasionally
occur as members merge, consolidate, or relocate across state lines.
Although the Banks do not designate the state in which a member is
deemed to be located for voting purposes (that is done by the Finance
Board), they do need to know promptly whenever a member relocates its
principal place of business (i.e., its home office) to another state.
Toward that end, the final rule also amends Sec. 933.18(a)(1) to
require that a member promptly notify its Bank whenever it relocates
its principal place of business to another state. The Bank, in turn,
must inform the Finance Board of any such relocation.
Section 7(c) of the Act requires the Finance Board to designate the
state in which each member is deemed to be located for voting purposes
and, if the member has its principal place of business in a state
within the district, the Finance Board must designate that state as its
voting state for purposes of the election. 12 U.S.C. 1427(c). The
Finance Board has made such a designation in its current regulations,
12 CFR 932.11(a) (1998), and the final rule retains a comparable
provision, amending Section 932.3(d) to provide that for purposes of
director elections a member is deemed to be located in its voting
state.
D. Determination of Member Votes--Sec. 932.5
Section 7(b) of the Act provides that in electing directors, each
member may cast a number of votes equal to the number of shares of
capital stock in the Bank the member was required to hold as of the
record date (December 31 of the prior year), but the number of votes
may not exceed the average number of shares required to be held by all
of the members in that state as of the record date. 12 U.S.C. 1427(b).
Because the statute establishes voting rights as of the record
date, the proposal would not have terminated those rights based on
events occurring subsequent to the record date, such as a merger or
consolidation into a nonmember, transfer to another Bank, or withdrawal
from the Bank. Consequently, in the event of such a transaction the
proposed rule would have allowed the legal successor to the member to
exercise whatever voting rights the member possessed as of the record
date, but only for the election occurring in the year of the merger or
other transaction. In subsequent years the successor's right to vote,
if any, would be determined by its own membership status.
Three commenters objected to any provision that might allow
institutions that were not members at the time of the election to vote
in the election for Bank directors. One commenter questioned whether a
member that was subject to the maximum cap on the number of votes it
may cast (i.e., not to exceed the average stock purchase requirement
for all members) would be permitted to cast the votes belonging to
another member that had merged into the first member subsequent to the
record date.
The final rule retains the provisions under which voting rights are
to be determined as of the record date. The Finance Board has decided
not to introduce a number of exceptions to this rule that would
terminate a member's voting rights based on corporate transactions
occurring after the record date. The Finance Board is mindful of the
concerns expressed about entities that are not members being allowed to
vote in the election of directors for the Banks, but is persuaded that
the Banks should conduct their elections in the same manner as other
corporate entities, which use a record date to determine which
shareholders may vote for directors. If the concept of the record date
is to be applied in a meaningful fashion, events occurring subsequently
should not alter the voting rights that existed as of the record date.
Thus, if a member merges into a nonmember subsequent to the record date
but prior
[[Page 65686]]
to the election, or if a member relocates its home office to another
Bank district or withdraws from the Bank System, the successor or the
former member may vote those shares if it wishes to do so. Similarly,
if a member that has reached the maximum number of votes that a single
member may cast in an election acquires by merger or consolidation
another member that was entitled to vote in the election, and in the
same state, as of the record date, the resulting member would be
entitled to cast its own votes, as well as those of the acquired
member, but only in the election occurring in the year of the merger.
Thereafter, the voting rights of the member would be determined by the
number of shares it was required to hold as of the next following
record date.
Moreover, as a practical matter the Finance Board is not persuaded
that terminating the voting rights of members that merge, relocate, or
withdraw from the System after the record date can be done in a manner
that would treat each such member the same. At some point prior to the
distribution of the ballots the Banks must finalize their lists of
institutions that are entitled to vote in the election, even though
there may be a period of several weeks `` during which time other
mergers could occur `` before the balloting closes. Thus, there always
could be some institutions receiving ballots that no longer would be
members at the time of the election. In addition, terminating the
voting rights of even a single member that has participated in such a
transaction will affect the voting rights of every other member that is
subject to the cap on the maximum number of votes that it may cast in
the election, because the cap--the average stock holdings of all
members--will increase or decrease depending on the size of the former
member.
At some point, the voting membership and the number of votes per
member must be fixed. To select any date other than the record date may
result in disparate treatment of similarly situated members, hamper the
ability of the Banks to administer the election process, and subject
the election to challenge by some members. Given those difficulties,
the Finance Board believes that reliance solely on the record date is
consistent with general corporate practice and best ensures that all
members having voting rights on the record date will be treated
equitably in the election for the subsequent year.
One commenter suggested that the Finance Board be made the sole
authority to resolve ``voting determination disputes,'' such as vote
tabulation, principal residence requirement, and record date stock
requirement. Aside from the determination of the number of shares of
stock each member is required to maintain as of the record date and the
state in which the member may vote, for which Finance Board review is
available as noted previously, the Finance Board believes that these
matters are best left to the Banks as a part of the devolution of the
election process. The Banks may adopt dispute resolution procedures and
make elective director eligibility and voting determinations, as they
deem appropriate, consistent with the Act and these regulations.
E. Eligibility Requirements for Elective Directors--Sec. 932.7
The proposed rule, at Sec. 932.7, would have required the Banks to
verify that a director nominee meets the statutory and regulatory
eligibility requirements before placing the name of the nominee on the
ballot. One commenter suggested that the regulation be revised to
require the Banks to rely on the director eligibility certification
form (``Form E-1'') and to refer as well to any successor forms, so
that the Banks have clear guidance as to the source of information from
which they are required to assess a potential nominee's eligibility.
The final rule modifies the proposal to indicate that the Banks are
required to determine eligibility based on the forms provided by the
directors. It also amends the rule to refer to an executed ``director
eligibility certification'' as prescribed by the Finance Board rather
than to refer to the form by its current designation.
F. Conflicts of Interest Policy for Bank Directors--Sec. 932.11
To prevent conflicts of interest that may affect a Bank director in
the performance of his or her official duties, the final rule includes
a conflicts of interest provision that would replace the financial
disclosure requirements and the prohibitions on service, financial
interests, financial relationships, and gifts in the current
regulation. See 12 CFR 932.18(b)-(d), 932.21(b)-(c)(1998). Like the
proposal, the final rule requires each Bank to adopt a written
conflicts of interest policy and specifies the minimum contents for the
policy. The final rule also requires directors to disclose conflicts of
interest to the board of directors and to refrain from voting on
matters in which they have a financial interest.
One commenter suggested that Sec. 932.11(a) (requiring the adoption
of the policy and specifying its minimum contents) be deleted as being
duplicative of the Act and common law duties and lacking any practical
enforcement mechanism. The commenter believed that the disclosure and
recusal provisions in proposed Sec. 932.11(b) to be sufficient. The
Finance Board believes that the Banks, like other business
corporations, are well served by having clear corporate policies on
matters such as conflict of interests of their directors. The final
rule includes only two provisions, Sec. 932.11(a)(1) and (2), that
parallel provisions of the Act, but does not otherwise duplicate the
Act or common law. The Finance Board believes the inclusion of these
provisions is appropriate to remind directors of the obligations
imposed by the Act. Indeed, the provision relating to appointive
directors was added to the final rule on the basis of comments received
on the proposal. The remaining provisions in Sec. 932.11(a) describe
what the Finance Board believes to be minimal requirements for an
effective conflict of interests policy, which the individual Banks are
free to supplement as they believe appropriate.
Some commenters criticized various aspects of Sec. 932.11(b), the
disclosure and recusal provisions, which prompted the Finance Board to
revise that paragraph in its entirety. The final rule requires full
disclosure of any conflicts to the board of directors, applies to the
personal financial interests of the director and those of certain
family members and business associates, and requires recusal from
consideration or voting on matters in which a director has such an
interest. The interests of family members and business associates
require disclosure only if they are known to the director and arise in
connection with any matter to be considered by the board of directors
or any matter in which the other party does, or proposes to do,
business with the Bank. A director is required to disclose the full
nature of his or her interest, and should provide whatever information
that he or she has about the matter to the board. The definition of
``financial interest'' has been revised in the final rule to make clear
that it does not include deposits or savings accounts maintained with a
member or loans obtained in the ordinary course of business. This
exception was added in order that the provision barring appointed
directors from having any financial interest in a member not be read as
prohibiting ordinary business transactions with the member in which
there would be no real risk of conflict or abuse.
One commenter suggested that the disclosure requirements apply only
to
[[Page 65687]]
financial interests that would materially affect board decisions. The
definition of ``financial interest'' has been modified as noted above,
to exclude certain ordinary business transactions.
One commenter suggested that the rule incorporate the conflict of
interests provisions applicable to the Federal Reserve Banks. The
Finance Board reviewed those provisions, as well as those of other
corporate entities, in considering the proposed and final rules, but
does not believe it necessary to adopt the same policies that apply to
the Reserve Banks. If any Bank wishes to include provisions comparable
to those applicable to the Reserve Banks in their own conflict policies
they are free to do so.
III. Regulatory Flexibility Act
The final rule implements statutory requirements binding on all
Banks, all Bank members, and all prospective and incumbent Bank
directors. The Finance Board is not at liberty to make adjustments in
those requirements to accommodate small entities. The Finance Board has
not imposed any additional regulatory requirements that will have a
disproportionate impact on small entities. In addition, in an effort to
reduce the reporting burden on prospective and incumbent Bank
directors, the Finance Board has streamlined Form E-1, the Elective
Director Eligibility Certification Form, and Form A-1, the Appointive
Director Eligibility Certification Form, eliminated Forms E-2 and A-2,
and will allow individuals to certify that no changes have occurred
since they last submitted required information rather than completing
anew the entire form. Thus, in accordance with the provisions of the
Regulatory Flexibility Act, the Finance Board hereby certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities. See 5 U.S.C. 605(b).
IV. Paperwork Reduction Act
As part of the proposed rulemaking, the Finance Board published a
request for comments concerning the collection of information contained
in proposed rule. See 63 FR 26532 (May 13, 1998). The Finance Board
received one comment in support of the Finance Board's efforts to
reduce the burden of regulatory reporting requirements. The Finance
Board submitted an analysis of the information collection to the Office
of Management and Budget (OMB) for review in accordance with section
2507 of the Paperwork Reduction Act of 1995. See 44 U.S.C. 3507. OMB
assigned a control number, 3069-0002, and approved the information
collection without conditions with an expiration date of June 30, 2001.
Potential respondents are not required to respond to the collection of
information unless the regulation collecting the information displays a
currently valid control number assigned by OMB. See id. 3512(a).
Although the final rule does not modify the approved information
collection, the revised collection reduces the reporting and
recordkeeping burden imposed on many respondents by streamlining Forms
E-1 and A-1 and eliminating Forms E-2 and A-2 and permitting
individuals to certify that no changes have occurred since they last
submitted required information rather than completing anew the entire
form.
The following table discloses the estimated annual reporting and
recordkeeping burden:
a. Number of respondents....................................... 3442
b. Total annual responses...................................... 3442
Percentage of these responses collected electronically....... 0
c. Total annual hours requested................................ 1,172
d. Current OMB inventory....................................... 376
e. Difference................................................ 796
The estimated annual reporting and recordkeeping cost burden is:
a. Total annualized capital/startup costs............... $180,000.00
b. Total annual costs (O&M)............................. 24,000.00
c. Total annualized cost requested...................... 0
d. Current OMB inventory................................ 0
e. Difference........................................... $204,000.00
Any comments concerning the information collection should be
submitted to Elaine L. Baker, Executive Secretary, Federal Housing
Finance Board, 1777 F. Street, NW, Washington, DC 20006, and the Office
of Information and Regulatory Affairs of the Office of Management and
Budget, Attention: Desk Officer for Federal Housing Finance Board,
Washington, DC 20503.
List of Subjects
12 CFR Part 900
Organization and functions (Government agencies).
12 CFR Part 922
Conflict of interests.
12 CFR Part 931
Banks, Banking, Federal home loan banks.
12 CFR Part 932
Banks, Banking, Conflict of interests, Elections, Ethical conduct,
Federal home loan banks, Financial disclosure, Reporting and
recordkeeping requirements.
12 CFR Part 933
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
12 CFR Part 934
Federal home loan banks, Securities, Surety bonds.
12 CFR Part 941
Federal home loan banks, Organization and functions (government
agencies).
Accordingly, the Federal Housing Finance Board hereby amends
chapter IX, title 12, parts 900, 922, 931, 932, 933, 934, and 941 of
the Code of Federal Regulations as follows:
PART 900--[Amended]
1. The authority citation for part 900 continues to read as
follows:
Authority: 5 U.S.C. 552;(12 U.S.C. 1422b(a).
Sec. 900.51 [Amended]
2. Amend Sec. 900.51 by removing ``A-2--Appointive Directors--
Personal Certification and Disclosure Form'' and ``E-2--Elective
Directors--Personal Certification and Disclosure Form.''
PART 922--[Removed]
1. Under the authority in 12 U.S.C. 1422a and 1422b, remove part
922.
PART 931--DEFINITIONS
1. The authority citation for part 931 continues to read as
follows:
Authority: 12 U.S.C. 1422a and 1422b.
Secs. 931.13 through 931.40 [Removed]
2. Remove Secs. 931.13 through 931.40.
Secs. 931.11 and 931.12 [Redesignated as Secs. 931.5 and 931.6]
3. Redesignate Secs. 931.11 and 931.12 as Secs. 931.5 and 931.6,
respectively.
PART 934--OPERATIONS OF THE BANKS
1. The authority citation for part 934 continues to read as
follows:
Authority: 12 U.S.C. 1422a, 1422b, 1431(g), 1432(a), and 1442.
Sec. 932.3 [Redesignated as Sec. 934.17]
2. Redesignate Sec. 932.3 as Sec. 934.17.
PART 932--DIRECTORS, OFFICERS, AND EMPLOYEES OF THE BANKS
1. Revise the heading of part 932 to read as set forth above.
2. Revise the authority citation for part 932 to read as follows:
[[Page 65688]]
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1427, and
1432; 42 U.S.C. 8101 et seq.
3. Revise the table of contents of part 932 to read as follows:
Subpart A--Definitions
Sec.
932.1 Definitions.
932.2 Dates.
Subpart B--Bank Directors
Sec.
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 director elections.
932.10 Selection of appointive directors.
932.11 Conflict of interests policy for Bank directors.
932.12 Reporting requirements for Bank directors
932.13 Ineligible Bank directors.
932.14 Vacant Bank directorships.
932.15 Minimum number of elective directorships.
932.16 Site of board of directors and committee meetings.
932.17 Compensation and expenses of Bank directors.
Subpart C--Selection of Bank Officers and Employees
Sec.
932.18 Selection of Bank officer and employees
932.19 Compensation of Bank officers and employees
4. Designate Secs. 932.1 and 932.2 as subpart A and add a subpart
heading to read as follows:
Subpart A--Definitions
5. Revise Sec. 932.1 to read as follows:
Sec. 932.1 Definitions.
For purposes of this part:
Act means the Federal Home Loan Bank Act, as amended (12 U.S.C.
1421 et seq.).
Bank or Banks means a Federal Home Loan Bank or the Federal Home
Loan Banks.
Bona fide resident of a Bank district means an individual who:
(1) Maintains a principal residence within the Bank district; or
(2) If serving as an elective director, owns or leases in his or
her own name a residence within the Bank district and is an officer or
director of a member located in a voting state within the Bank
district; or
(3) If serving as an appointive director, owns or leases in his or
her own name a residence within the Bank district and is employed
within a voting state within the Bank district.
Docket number means the number assigned to each member by the
Finance Board and used by the Finance Board and the Banks to identify a
particular member.
Finance Board means the agency established as the Federal Housing
Finance Board.
Member means an institution admitted to membership and owning
capital stock in a Bank.
Record date means December 31 of the calendar year immediately
preceding the election year.
Voting state means the District of Columbia, Puerto Rico, or the
state of the United States in which a member's principal place of
business, as determined in accordance with part 933 of this chapter, is
located as of the record date. The voting state of a member with a
principal place of business located in the U.S. Virgin Islands as of
the record date shall be Puerto Rico, and the voting state of a member
with a principal place of business located in American Samoa, Guam, or
the Commonwealth of the Northern Mariana Islands as of the record date
shall be Hawaii.
6. Add Sec. 932.2 to subpart A to read as follows:
Sec. 932.2 Dates.
If any date specified in this part, or specified by a Bank pursuant
to this part, falls on a Saturday, Sunday, or federal holiday, the
relevant time period shall be deemed to include the next business day.
7. Designate Secs. 932.3 through 932.17 as subpart B and add a
subpart heading to read as follows:
Subpart B--Bank Directors
8. Add Sec. 932.3 to subpart B to read as follows:
Sec. 932.3 Director elections.
(a) Responsibilities of the Banks. Each Bank annually shall conduct
an election the purpose of which is to fill all elective directorships
designated by the Finance Board as commencing on January 1 of the
calendar year immediately following the year of the election. Subject
to the provisions of the Act and in accordance with the requirements of
this part, the disinterested members of the board of directors of each
Bank, or a committee of disinterested directors, shall administer and
conduct the annual election of directors. In so doing, the
disinterested directors may use Bank staff or independent contractors
to perform ministerial and administrative functions concerning the
elections process. The term of office of each elective directorship
shall be two years and shall commence on January 1 of the calendar year
immediately following the year in which the election is held. Each Bank
shall complete the election in sufficient time to allow newly elected
directors to assume their seats on January 1 of the year immediately
following the election.
(b) Designation of elective directorships. The Finance Board
annually shall establish the number of elective directorships for each
Bank, which are to be allocated as follows:
(1) One elective directorship shall be allocated to each state
within the Bank district;
(2) If the total number of elective directorships allocated
pursuant to paragraph (b)(1) of this section is less than eight, the
Finance Board shall allocate additional elective directorships among
the states, using the method of equal proportions, until the total
allocated for the Bank equals eight;
(3) If the number of elective directorships allocated to any state
pursuant to paragraphs (b)(1) and (2) of this section is less than the
number allocated to that state on December 31, 1960, as specified in
Sec. 932.15, the Finance Board shall allocate such additional elective
directorships to that state until the total allocated equals the number
allocated to the Bank on December 31, 1960;
(4) Pursuant to section 7(e) of the Act, the Federal Home Loan Bank
of New York is hereby allocated one additional elective directorship,
which is designated as representing the members in the Commonwealth of
Puerto Rico;
(5) Pursuant to section 7(a) of the Act, in any Bank district that
includes five or more states, the Finance Board, after consultation
with the affected Banks, may increase the number of elective
directorships up to thirteen, and the number of appointive
directorships up to three-fourths of the number of elective
directorships. In determining the number of appointive directorships,
the Finance Board may round to the nearest whole number.
(c) Notification. On or before June 1 of each year, the Finance
Board shall notify each Bank in writing of the total number of elective
directorships established for the Bank and the number of elective
directorships designated as representing the members in each voting
state in the Bank district. The annual designation of elective
directorships shall not cause any incumbent director to surrender his
or her directorship prior to the expiration of the full term of office.
[[Page 65689]]
(d) In accordance with section 7(c) of the Act, unless otherwise
designated by the Finance Board, for purposes of election of directors
a member shall be deemed to be located in its voting state.
(e) Transition. The term of office of each elective directorship
existing on the effective date of this section shall continue to its
scheduled expiration date, and the Banks may not thereafter alter the
commencement or expiration date for any elective directorship in
conducting the annual election of directors.
9. Add Sec. 932.4 to Subpart B to read as follows:
Sec. 932.4 Capital stock report.
(a) On or before April 10 of each year, each Bank shall submit to
the Finance Board, for its use in designating the elective
directorships a capital stock report that indicates, as of the record
date, the number of members in each voting state in the Bank's
district, and the number of shares of capital stock required to be held
by each member (identified by docket number), and the aggregate total
number of shares of capital stock required to be held by all members in
each voting state in the Bank's district. The Bank shall certify to the
Finance Board that to the best of its knowledge the information
provided in the capital stock report is accurate and complete, and that
it has notified each member of its minimum capital stock holdings
pursuant to Sec. 933.22(b)(1) of this chapter.
(b) A Bank shall determine the number of shares of capital stock
each member is required to hold as of the record date in the following
manner:
(1) The number of shares of capital stock shall be equal to the
greater of the advances-to-capital stock requirement under
Sec. 935.15(a) of this chapter, or the minimum capital stock
requirement under Sec. 933.20(a) of this chapter.
(2) If a member has elected to purchase its minimum required
capital stock in installments under Sec. 933.20(b)(2) of this chapter,
the number of shares of capital stock required to be held as of the
record date shall be the cumulative total of shares of capital stock
actually purchased as of the record date.
10. Add Sec. 932.5 to subpart B to read as follows:
Sec. 932.5 Determination of member votes.
(a) Authority. The Bank shall determine, in accordance with this
section, the number of votes each member of the Bank may cast in the
election of directors.
(b) Determination. The number of votes a member may cast for any
elective director nominee shall be the lesser of the number of shares
of capital stock the member was required to hold as of the record date,
as determined in accordance with Sec. 932.4(b), or the average number
of shares of capital stock required to be held by all of the members in
its voting state as of the record date.
11. Add Sec. 932.6 to subpart B to read as follows:
Sec. 932.6 Elective director nominations.
(a) Election announcement. Within a reasonable time in advance of
an election, a Bank shall provide to each member in its district a
written notice of the election that includes:
(1) The number of elective directorships designated as representing
the members in each voting state in the Bank district;
(2) The name of each incumbent Bank director, the name and location
of the member at which each elective director serves, and the name and
location of the organization with which each appointive director is
affiliated, if any, and the expiration date of each Bank director's
term of office;
(3) An attachment indicating the name, location, and docket number
of every member in the member's voting state, and the number of votes
each such member may cast in the election, as determined in accordance
with Sec. 932.5(b); and (4) A nominating certificate.
(b) Nominations. (1) Any member that is entitled to vote in the
election may nominate an eligible individual to fill each available
elective directorship for its voting state by submitting to its Bank,
prior to a deadline to be established by the Bank, a nominating
certificate duly adopted by the member's governing body or by an
individual authorized to act on behalf of the member's governing body.
(2) The nominating certificate shall include the name of the
nominee and the name, location, and docket number of the member at
which the nominee serves as an officer or director.
(3) The Bank shall establish a deadline for submitting nominating
certificates, which shall be no earlier than 30 calendar days after the
date on which the Bank mails the notice required by paragraph (a) of
this section, and the Bank shall not accept certificates received after
that deadline. The Bank shall retain all nominating certificates for at
least two years after the date of the election.
(c) Accepting nominations. A Bank shall notify in writing any
person nominated for an elective directorship promptly upon receipt of
the nominating certificate. A person may accept the nomination only by
submitting an executed director eligibility certification, as
prescribed by the Finance Board, to the Bank prior to the deadline
established by the Bank. A Bank shall allow each nominee at least 30
calendar days after the date of the notice of nomination within which
to submit the executed form. A nominee may decline the nomination by so
advising the Bank in writing, or by failing to submit a properly
executed director eligibility certification prior to the deadline. Each
Bank shall retain all information received under this paragraph for at
least two years after the date of the election.
12. Add Sec. 932.7 to subpart B read as follows:
Sec. 932.7 Eligibility requirements for elective directors.
(a) Eligibility verification. Based on the information provided on
the director eligibility certification form prescribed by the Finance
Board, a Bank shall verify that each nominee meets all of the
eligibility requirements for elective directors set forth in the Act
and this part before placing that nominee on the ballot prepared by the
Bank under Sec. 932.8(a).
(b) Eligibility requirements. Each elective director, and each
nominee, shall be:
(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 to be represented by the elective directorship, that was a
member of the Bank as of the record date, and that meets all minimum
capital requirements established by its appropriate federal regulator
or appropriate state regulator. For purposes of this paragraph (b)(3),
the term appropriate federal regulator has the same meaning as the term
``appropriate Federal banking agency'' in section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q)), and, for federally insured
credit unions, shall mean the National Credit Union Administration, and
the term appropriate state regulator means any state officer, agency,
supervisor, or other entity that has regulatory authority over, or is
empowered to institute enforcement action against, a member.
(c) Restrictions. A nominee is not eligible if he or she:
(1) Is an incumbent elective director, unless:
(i) The incumbent director's term of office would expire before the
new term of office would begin; and
[[Page 65690]]
(ii) The new term of office would not be barred by the term limit
provision of section 7(d) of the Act.
(2) Is a former elective director whose service would be barred by
the term limit provision of section 7(d) of the Act.
(3) Is an incumbent appointive director.
13. Revise Sec. 932.8 to read as follows:
Sec. 932.8 Election process.
(a) Ballots. Promptly after verifying the eligibility of all
nominees in accordance with Sec. 932.7(a), a Bank shall prepare a
ballot for each voting state for which an elective directorship is to
be filled and shall mail the ballot to all members within that state
that were members as of the record date. A ballot shall include at
least the following provisions:
(1) An alphabetical listing of the names of each nominee for the
member's voting state, the name, location, and docket number of the
member at which each nominee serves, the nominee's title or position
with the member, and the number of elective directorships to be filled
by members in that voting state in the election;
(2) A statement that write-in candidates are not permitted; and
(3) A confidentiality statement prohibiting the Bank from
disclosing how a member voted.
(b) Lack of nominees. If, for any voting state, the number of
nominees is equal to or less than the number of elective directorships
to be filled in the election, the Bank shall notify the members in the
affected voting state in writing (in lieu of providing a ballot) that
the directorships are to be filled without an election due to a lack of
nominees. The Bank shall declare elected any eligible nominee, who
shall be included as a director-elect in the report of election
required under paragraph (e). If necessary, the board of directors
shall fill, any elective directorship that has become vacant due to a
lack of a nominee in accordance with Sec. 932.14(a).
(c) Voting. For each directorship to be filled, a member may cast
the number of votes determined by the Bank pursuant to Sec. 932.5. A
member may not split its votes among multiple nominees for a single
directorship, nor, where there are multiple directorships to be filled
for a voting state, may it cumulatively vote for a single nominee. Any
ballots cast in violation of this subsection shall be void. To vote, a
member shall:
(1) Mark on the ballot the name of not more than one of the
nominees for each elective directorship to be filled in the member's
voting state. Each nominee so selected shall receive all of the votes
that the member is entitled to cast.
(2) Execute the ballot by resolution of the member's governing
body, or by an appropriate writing signed by an individual authorized
to act on behalf of the governing body.
(3) Deliver the executed ballot to the Bank on or before the
closing date that has been established by the Bank, which shall be no
earlier than 30 calendar days after the date the ballots are mailed in
accordance with paragraph (a) of this section. A member may not change
a ballot after it has been delivered to the Bank.
(d) Counting ballots. A Bank shall not open any ballot until after
the closing date, and may not include in the election results any
ballot received after the closing date. Promptly after the closing
date, each Bank shall tabulate, by each voting state, the votes cast in
accordance with paragraph (c) of this section, and shall declare
elected the nominee receiving the highest number of votes.
(1) If more than one elective directorship is to be filled in a
voting state, the Bank shall declare elected each successive nominee
receiving the next highest number of votes until all open elective
directorships for that voting state are filled.
(2) In the event of a tie for the last available seat, the
incumbent board of directors of the Bank shall, by a majority vote,
declare elected one of the nominees for whom the number of votes cast
was tied.
(3) The Bank shall retain all ballots it receives for at least two
years after the date of the election, and shall not disclose how any
member voted.
(e) Report of election. Promptly following the election, each Bank
shall provide written notice to its members, to each nominee, and to
the Finance Board of the following:
(1) The name of each director-elect, the name and location of the
member at which he or she serves, and his or her title or position at
the member;
(2) The voting state represented by each director-elect;
(3) The expiration date of the term of office of each director-
elect;
(4) The number of members voting in the election and the total
number of votes cast, both reported by state; and (5) The number of
votes cast for each nominee.
14. Revise Sec. 932.9 to read as follows:
Sec. 932.9 Prohibition on actions to influence director elections.
(a) Prohibition. Except as provided in paragraph (b) of this
section:
(1) No director, officer, attorney, employee, or agent of the
Finance Board or of a Bank may:
(i) Communicate in any manner that a director, officer, attorney,
employee, or agent of the Finance Board or of a Bank, directly or
indirectly, supports the nomination or election of a particular
individual for an elective directorship; or
(ii) Take any other action to influence votes for a directorship.
(2) No member may take any action prohibited by paragraph (a)(1)(i)
of this section.
(b) Exception for incumbent Bank directors. A Bank director acting
in his or her personal capacity may support the nomination or election
of any individual for an elective directorship, provided that no Bank
director shall purport to represent the views of the Bank, the Finance
Board, any other director, or any officer, attorney, employee, or agent
of the Bank or of the Finance Board concerning the nomination or
election of a particular individual for an elective directorship.
15. Revise Sec. 932.10 to read as follows:
Sec. 932.10 Selection of appointive directors.
(a) Selection. In accordance with the Act, the Finance Board, in
its sole discretion, shall select all appointive directors.
(b) Term of office. The term of office of each appointive
directorship shall commence on January 1.
16. Revise Sec. 932.11 to read as follows:
Sec. 932.11 Conflict of interests policy for Bank directors.
(a) Adoption of conflict of interests policy. Each Bank shall adopt
a written conflict of interests policy that shall apply to all Bank
directors. At a minimum, the conflict of interests policy of each Bank
shall:
(1) Require the directors to administer the affairs of the Bank
fairly and impartially and without discrimination in favor of or
against any member or nonmember borrower;
(2) Prohibit appointed directors from serving as an officer of any
Bank or as an officer or director of any member, and from owning any
equity or debt security issued by a member or from having any other
financial interest in a member;
(3) Prohibit the use of a director's official position for personal
gain;
(4) Require directors to disclose actual or apparent conflict of
interests and establish procedures for addressing such conflicts;
(5) Provide internal controls to ensure that reports are filed and
that conflicts are disclosed and resolved in accordance with this
section; and
[[Page 65691]]
(6) Establish procedures to monitor compliance with the conflict of
interests policy.
(b) Disclosure and recusal. A director shall disclose to the board
of directors any personal financial interests he or she has, as well as
any financial interests known to the director of any immediate family
member or business associate of the director, in any matter to be
considered by the board of directors and in any other matter in which
another person or entity does, or proposes to do, business with the
Bank. A director shall fully disclose the nature of his or her interest
in the matter and shall provide to the board of directors any
information requested to aid in its consideration of the director's
interest. A director shall refrain from considering or voting on any
issue in which the director, any immediate family member, or any
business associate has a financial interest.
(c) Confidential Information. Directors shall not disclose or use
confidential information received by them solely by reason of their
position with the Bank to obtain a financial interest for themselves or
for any other person.
(d) Gifts. Directors shall not accept, and shall discourage their
immediate family members from accepting, any substantial gift where the
director has reason to believe that the gift is given in order to
influence the director's actions as a member of the Bank's board of
directors, or where acceptance of such gift gives the appearance of
influencing the director's actions as a member of the board.
(e) Compensation. Directors shall not accept compensation for
services performed for the Bank from any source other than the Bank for
which the services are performed.
(f) Definitions. For purposes of this section:
(1) Immediate family member means parent, sibling, spouse, child,
or dependent, or any other relative sharing the same residence as the
director.
(2) Financial interest means a direct or indirect financial
interest in any activity, transaction, property, or relationship that
involves receiving or providing something of monetary value, and
includes, but is not limited to any right, contractual or otherwise, to
the payment of money, whether contingent or fixed. It does not include
a deposit or savings account maintained with a member, nor does it
include a loan or extension of credit obtained from a member in the
normal course of business on terms that are generally available to the
public.
(3) Business associate means any individual or entity with whom a
director has a business relationship, including, but not limited to:
(i) Any corporation or organization of which the director is an
officer or partner, or in which the director beneficially owns ten
percent or more of any class of equity security, including subordinated
debt;
(ii) Any other partner, officer, or beneficial owner of ten percent
or more of any class of equity security, including subordinated debt,
of any such corporation or organization; and
(iii) Any trust or other estate in which a director has a
substantial beneficial interest or as to which the director serves as
trustee or in a similar fiduciary 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 is considered reasonable, customary, and accepted business
practices; or
(iii) Any other items or services for which a director pays less
than market value.
17. Revise Sec. 932.12 to read as follows:
Sec. 932.12 Reporting requirements for Bank directors.
(a) Annual reporting. On or before March 1 of each year, each
director shall submit to his or her Bank the appropriate executed
director eligibility certification, as prescribed by the Finance Board.
(The forms are available pursuant to 12 CFR 900.51). The Bank shall
promptly forward to the Finance Board a copy of the certification filed
by each appointive director.
(b) Report of noncompliance. If an elective or appointive director
knows or has reason to believe that he or she no longer meets the
eligibility requirements set forth in the Act or this part, the
director shall so inform the Bank in writing within 30 calendar days of
first learning of the facts causing the loss of eligibility. An
appointive director also shall inform the Finance Board in writing at
the same time that he or she informs the Bank.
18. Revise Sec. 932.13 to read as follows:
Sec. 932.13 Ineligible Bank directors.
(a) Elective directors. Upon a determination by the Finance Board
or a Bank that an elective director no longer satisfies the eligibility
requirements set forth in the Act or this part, or has failed to comply
with the reporting requirements of Sec. 932.12, the elective
directorship shall immediately become vacant. Any elective director
that is determined to have failed to comply with the eligibility or
reporting requirements shall not continue to act as a Bank director.
(b) Appointive directors. Except as provided herein, upon a
determination by the Finance Board that an appointive director no
longer satisfies the eligibility requirements set forth in the Act, or
has failed to comply with the reporting requirements of Sec. 932.12,
the appointive directorship shall immediately become vacant.
Notwithstanding the vacancy, an appointive director may continue to
serve until a successor assumes the directorship or the term of office
expires, whichever occurs first, and the Finance Board, in its sole
discretion, may allow an appointive director up to 90 calendar days to
comply with the eligibility or reporting requirements.
19. Revise Sec. 932.14 to read as follows:
Sec. 932.14 Vacant Bank directorships.
(a) Vacant elective directorships. (1) As soon as practicable after
a vacancy occurs, a Bank shall fill the unexpired term of office of a
vacant elective directorship by a majority vote of the remaining Bank
directors regardless of whether the remaining Bank directors constitute
a quorum of the Bank's board of directors.
(2) An individual so selected to fill a vacant elective
directorship shall satisfy all of the eligibility requirements for
elective directors set forth in the Act and this part, and shall
provide to the Bank an executed director eligibility certification. The
Bank shall verify the individual's eligibility in accordance with
Sec. 932.7(a) before allowing the individual to assume the
directorship, and shall retain the information it receives in
accordance with Sec. 932.6(c).
(3) Promptly after verifying the individual's eligibility under
paragraph (a)(2) of this section, a Bank shall notify the Finance Board
and each member located in the Bank's district in writing of the
following:
(i) The name of the new elective director, the name, location and
docket number of the member at which the new director serves, and the
new director's title or position with the member;
(ii) The voting state that the new elective director represents;
and
(iii) The expiration date of the new elective director's term of
office.
(b) Vacant appointive directorships. (1) As soon as practicable
after a vacancy occurs, the Finance Board shall fill the unexpired term
of office of a vacant appointive directorship.
(2) Promptly after filling a vacant appointive directorship, the
Finance Board shall notify the affected Bank in writing of the
following:
(i) The name of the new appointive director, the name and location
of the organization with which the new director is affiliated, if any,
and the new
[[Page 65692]]
director's title or position with such organization; and
(ii) The expiration date of the new appointive director's term of
office.
(3) Promptly after receiving the notice required by paragraph
(b)(2) of this section, a Bank shall provide each of its members with
the information described in paragraphs (b)(2)(i) and (ii) of this
section.
Secs. 932.15 through 932.19 [Removed]
20. Remove Secs. 932.15 through 932.19.
Secs. 932.20 [Redesignated as Sec. 932.15]
21. Redesignate Sec. 932.20 as Sec. 932.15 and revise the second
sentence and table to read as follows:
Sec. 932.15 Minimum number of elective directorships
* * * The following list sets forth the states whose members held
more than one (1) seat on December 31, 1960:
------------------------------------------------------------------------
No. of
elective
State directorships
on December
31, 1960
------------------------------------------------------------------------
California.............................................. 3
Colorado................................................ 2
Illinois................................................ 4
Indiana................................................. 5
Iowa.................................................... 2
Kansas.................................................. 3
Kentucky................................................ 2
Louisiana............................................... 2
Massachusetts........................................... 3
Michigan................................................ 3
Minnesota............................................... 2
Missouri................................................ 2
New Jersey.............................................. 4
New York................................................ 4
Ohio.................................................... 4
Oklahoma................................................ 2
Pennsylvania............................................ 6
Tennessee............................................... 2
Texas................................................... 3
Wisconsin............................................... 4
------------------------------------------------------------------------
Secs. 932.21 through 932.25 [Removed]
22. Remove Secs. 932.21 through 932.23.
Sec. 932.26 [Redesignated as Sec. 932.16]
23. Redesignate Sec. 932.26 as Sec. 932.16 of subpart B.
Sec. 932.27 [Redesignated as Sec. 932.17]
24. Redesignate Sec. 932.27 as Sec. 932.17 of subpart B.
Secs. 932.28 through 932.39 [Removed]
25. Remove Secs. 932.28 through and 932.39.
26. Designate Secs. 932.18 and 932.19 as subpart C and add a
subpart heading to read as follows:
Subpart C--Selection of Bank Officers and Employees
Sec. 932.40 [Redesignated as Sec. 932.18]
27. Redesignate Sec. 932.40 as Sec. 932.18 of subpart C, remove
paragraph (d), and revise the section heading and paragraph (a)
introductory text to read as follows:
Sec. 932.18 Selection of Bank officers and employees.
(a) Bank presidents. The board of directors of each Bank may
appoint a president, who shall be the chief executive officer of the
Bank, subject to the following limitations:
* * * * *
Sec. 932.41 [Redesignated as Sec. 932.19]
28. Redesignate Sec. 932.41 as Sec. 932.19 of subpart C and revise
the section heading to read as follows:
Sec. 932.19 Compensation of Bank officers and employees.
* * * * *
Secs. 932.42 through 932.62 [Removed]
29. Remove Secs. 932.42 through 932.62.
PART 933--MEMBERS OF THE BANKS
1. The authority citation for part 933 continues to read as
follows:
Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430,
1442.
2. Part 933 is amended by removing ``Sec. 932.3'' wherever it
appears and adding ``Sec. 934.17'' in its place in the following
locations:
a. 933.24(b)(3)
b. 933.25(e)
c. 933.26(d)
d. 933.27(f)
e. 933.28(c)
Sec. 933.18 [Amended]
3. Amend Sec. 933.18 by adding a sentence to paragraph (a)(1) and
revising paragraph (e) as follows:
Sec. 933.18 Determination of appropriate Bank district for membership.
(a) Eligibility. (1) * * * A member shall promptly notify its Bank
in writing whenever it relocates its principal place of business to
another state and the Bank shall inform the Finance Board in writing of
any such relocation.
* * * * *
(e) Effect of transfer. A transfer of membership pursuant to this
section shall be effective for all purposes, but shall not affect
voting rights in the year of the transfer and shall not be subject to
the provisions on termination of membership set forth in section 6 of
the Act or Secs. 933.26, 933.27, and 933.28, nor the restriction on
reacquiring Bank membership within 10 years set forth in Sec. 933.30.
* * * * *
4. Amend Sec. 933.20 by revising paragraph (e) to read as follows:
Sec. 933.20 Stock purchase.
* * * * *
(e) Reports. The Bank shall make quarterly reports to the Board
setting forth purchases by institutions approved for membership of
their minimum stock requirement pursuant to this section.
5. Amend Sec. 933.22 by adding three sentences to paragraph (b)(1)
as follows:
Sec. 933.22 Adjustments in stock holdings.
* * * * *
(b)(1) Annual Adjustment. * * * The notice shall clearly state that
the Bank's calculation of each member's minimum stock holdings is to be
used to determine the number of votes that the member may cast in that
year's election of directors and shall identify the state within the
district in which the member will vote. A member that does not agree
with the Bank's calculation of the minimum stock requirement or with
the identification of its voting state may request the Finance Board to
review the Bank's determination. The Finance Board shall promptly
determine the member's minimum required holdings and its proper voting
state, which determination shall be final.
* * * * *
Sec. 933.24 [Amended]
6. Amend Sec. 933.24 by removing paragraph (b)(4).
Sec. 933.25 [Amended]
7. Amend Sec. 933.25 by removing paragraph (f).
Sec. 933.26 [Amended]
8. Amend Sec. 933.26 by removing paragraph (e).
Sec. 933.27 [Amended]
9. Amend Sec. 933.27 by removing paragraph (g).
Sec. 933.28 [Amended]
10. Amend Sec. 933.28 by removing paragraph (d).
PART 941--OPERATIONS OF THE OFFICE OF FINANCE
1. The authority citation for part 941 continues to read as
follows:
Authority: 12 U.S.C. 1422b, 1431.
2. Amend Sec. 941.7 by revising paragraph (f)(2) to read as
follows:
Sec. 941.7 Office of Finance Board of Directors.
* * * * *
[[Page 65693]]
(f) * * *
(2) Private Citizen member. The Office of Finance shall pay
compensation and expenses to the Private Citizen member of the OF board
of directors in accordance with the requirements for payment of
compensation and expenses to Bank directors set forth in Sec. 932.17 of
this chapter, except that, for these purposes:
(i) The Office of Finance policy on director compensation must be
approved by the board of directors of the Finance Board;
(ii) Section 932.17(a)(3) and (c)(1)(ii) of this chapter shall not
apply; and
(iii) The terms ``average compensation per director'' and ``ACPD,''
as used in Sec. 932.17 of this chapter, shall be deemed to mean
``maximum compensation of the Private Citizen member''.
Dated: October 28, 1998.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairperson.
[FR Doc. 98-31786 Filed 11-27-98; 8:45 am]
BILLING CODE 6725-01-P
