[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Rules and Regulations]
[Pages 50247-50250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25305]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 950
[No. 97-57]
RIN 3069-AA57
Revision of Financing Corporation Operations Regulation
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
its regulation on Financing Corporation (FICO) operations to comply
with new statutory requirements, eliminate provisions that have been
rendered obsolete by statutory changes, and clarify the practices and
procedures of the Finance Board and FICO. The final rule is consistent
with the goals of the
[[Page 50248]]
Regulatory Reinvention Initiative of the National Performance Review.
EFFECTIVE DATE: The final rule will become effective October 27, 1997.
FOR FURTHER INFORMATION CONTACT: Joseph A. McKenzie, Associate
Director, Financial Analysis and Reporting Division, Office of Policy,
202/408-2845, or Janice A. Kaye, Attorney-Advisor, Office of General
Counsel, 202/408-2505, Federal Housing Finance Board, 1777 F Street,
N.W., Washington, D.C. 20006.
SUPPLEMENTARY INFORMATION:
I. Regulatory Background and Analysis of the Final Rule
In November 1996, the Finance Board approved an interim final rule
amending its FICO operations regulation, 12 CFR part 950, to comply
with new statutory requirements, eliminate provisions that were
rendered obsolete by statutory changes, and clarify the practices and
procedures of the Finance Board and FICO. See 61 FR 59311 (Nov. 22,
1996). The 30-day public comment period for the interim final rule,
which became effective upon publication in the Federal Register, closed
on December 23, 1996. See id. The Finance Board received no public
comments. Therefore, with the exception noted below, and for the
reasons set forth in detail in the interim final rulemaking, the
Finance Board is adopting the interim final rule as published.
In order to accommodate the terms of a memorandum of understanding
(MOU) signed by FICO and the Federal Deposit Insurance Corporation
(FDIC) after publication of the interim final rule in the Federal
Register, the Finance Board has amended Sec. 950.8(b)(2)(i) of the
interim final rule to require FICO to determine an assessment rate
formula rather than the actual assessment rate. Under the MOU, the FDIC
will handle administrative tasks, such as computing each insured
depository institution's assessment, issuing invoices notifying insured
depository institutions of the amount to be paid and the date of
payment, and arranging for the collection of the assessment through the
payments system. See FICO-FDIC MOU (Jan. 23, 1997). Among other things,
the MOU provides that the FDIC will compute the assessment rate in
accordance with an assessment rate formula adopted by FICO. See id.
para. 3. Section 950.8(b)(2)(i) of the interim final rule required FICO
to determine the assessment rate by considering historical data
regarding assessment collections and current information concerning the
Savings Association Insurance Fund and Bank Insurance Fund deposit
bases and the location of insured depository institutions that is
available only to the FDIC. For consistency with the terms of the MOU,
Sec. 950.8(b)(2)(i) of the final rule requires FICO to establish a
formula the FDIC will use to determine at least semiannually the rate
of the assessment FICO will assess against insured depository
institutions in order to pay its non-administrative expenses.
II. Paperwork Reduction Act
This rule does not contain any collections of information pursuant
to the Paperwork Reduction Act of 1995. See 44 U.S.C. 3501 et seq.
Consequently, the Finance Board has not submitted any information to
the Office of Management and Budget for review.
III. Regulatory Flexibility Act
The Finance Board adopted the changes to part 950 in the form of an
interim final rule and not as a proposed rule. Therefore, the
provisions of the Regulatory Flexibility Act did not apply. See 5
U.S.C. 601(2), 603(a).
List of Subjects in Part 950
Federal home loan banks, Securities.
Accordingly, the Federal Housing Finance Board hereby adopts the
interim final rule adding 12 CFR part 950 that was published at 61 FR
59311 on November 22, 1996, as a final rule and revises part 950 to
read as follows:
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; assessments.
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).
Sec. 950.1 Definitions.
For purposes of this part:
(a) Act means the Federal Home Loan Bank Act, as amended (12 U.S.C.
1421 et seq.).
(b) Administrative expenses:
(1) Include general office and operating expenses such as telephone
and photocopy charges, printing, legal, and professional fees, postage,
courier services, and office supplies; and
(2) Do not include any form of employee compensation, custodian
fees, issuance costs, or any interest on (and any redemption premium
with respect to) any Financing Corporation obligations.
(c) Bank or Banks means a Federal Home Loan Bank or the Federal
Home Loan Banks.
(d) BIF-assessable deposit means a deposit that is subject to
assessment for purposes of the Bank Insurance Fund under the Federal
Deposit Insurance Act (12 U.S.C. 1811 et seq.), including a deposit
that is treated as a deposit insured by the Bank Insurance Fund under
section 5(d)(3) of the Federal Deposit Insurance Act.
(e) Custodian fees means any fee incurred by the Financing
Corporation in connection with the transfer of any security to, or
maintenance of any security in, the segregated account established
under section 21(g)(2) of the Act, and any other expense incurred by
the Financing Corporation in connection with the establishment or
maintenance of such account.
(f) Directorate means the board established under section 21(b) of
the Act to manage the Financing Corporation.
(g) Exit fees means the amounts paid under sections 5(d)(2)(E) and
(F) of the Federal Deposit Insurance Act, and regulations promulgated
thereunder (12 CFR part 312).
(h) FDIC means the agency established as the Federal Deposit
Insurance Corporation.
(i) Finance Board means the agency established as the Federal
Housing Finance Board.
(j) Insured depository institution has the same meaning as in
section 3 of the Federal Deposit Insurance Act.
(k) Issuance costs means issuance fees and commissions incurred by
the Financing Corporation in connection with the issuance or servicing
of Financing Corporation obligations, including legal and accounting
expenses, trustee, fiscal, and paying agent charges, securities
processing charges, joint collection agent charges, advertising
expenses, and costs incurred in connection with preparing and printing
offering materials to the extent the Financing Corporation incurs such
costs in connection with issuing any obligations.
(l) Non-administrative expenses means custodian fees, issuance
costs, and interest on Financing Corporation obligations.
(m) Obligations means debentures, bonds, and similar debt
securities issued by the Financing Corporation under sections 21(c)(3)
and (e) of the Act.
[[Page 50249]]
(n) Office of Finance means the joint office of the Banks
established under part 941 of this chapter.
(o) Receivership proceeds means the liquidating dividends and
payments made on claims received by the Federal Savings and Loan
Insurance Corporation Resolution Fund established under section 11A of
the Federal Deposit Insurance Act from receiverships, that are not
required by the Resolution Funding Corporation to provide funds for the
Funding Corporation Principal Fund established under section 21B of the
Act.
(p) SAIF-assessable deposit means a deposit that is subject to
assessment for purposes of the Savings Association Insurance Fund under
the Federal Deposit Insurance Act, including a deposit that is treated
as a deposit insured by the Savings Association Insurance Fund under
section 5(d)(3) of the Federal Deposit Insurance Act.
Sec. 950.2 General authority.
Subject to the limitations and interpretations in this part and
such orders and directions as the Finance Board may prescribe, the
Financing Corporation shall have authority to exercise all powers and
authorities granted to it by the Act and by its charter and bylaws
regardless of whether the powers and authorities are specifically
implemented in regulation.
Sec. 950.3 Authority to establish investment policies and procedures.
The Directorate shall have authority to establish investment
policies and procedures with respect to Financing Corporation funds
provided that the investment policies and procedures are consistent
with the requirements of section 21(g) of the Act. The Directorate
shall promptly notify the Finance Board in writing of any changes to
the investment policies and procedures.
Sec. 950.4 Book-entry procedure for Financing Corporation obligations.
(a) Authority. Any Federal Reserve Bank shall have authority to
apply book-entry procedure to Financing Corporation obligations.
(b) Procedure. The book-entry procedure for Financing Corporation
obligations shall be governed by the book-entry procedure established
for Bank securities, codified at part 912 of this chapter. Wherever the
terms ``Federal Home Loan Bank(s),'' ``Federal Home Loan Bank
security(ies),'' or ``Book-entry Federal Home Loan Bank security(ies)''
appear in part 912, the terms shall be construed also to mean
``Financing Corporation,'' ``Financing Corporation obligation(s),'' or
``Book-entry Financing Corporation obligation(s),'' respectively, if
appropriate to accomplish the purposes of this section.
Sec. 950.5 Bank and Office of Finance employees.
Without further approval of the Finance Board, the Financing
Corporation shall have authority to utilize the officers, employees, or
agents of any Bank or the Office of Finance in such manner as may be
necessary to carry out its functions.
Sec. 950.6 Budget and expenses.
(a) Directorate approval. The Financing Corporation shall submit
annually to the Directorate for approval, a budget of proposed
expenditures for the next calendar year that includes administrative
and non-administrative expenses.
(b) Finance Board approval. The Directorate shall submit annually
to the Finance Board for approval, the budget of the Financing
Corporation's proposed expenditures it approved pursuant to paragraph
(a) of this section.
(c) Spending limitation. The Financing Corporation shall not exceed
the amount provided for in the annual budget approved by the Finance
Board pursuant to paragraph (b) of this section, or as it may be
amended by the Directorate within limits set by the Finance Board.
(d) Amended budgets. Whenever the Financing Corporation projects or
anticipates that it will incur expenditures, other than interest on
Financing Corporation obligations, that exceed the amount provided for
in the annual budget approved by the Finance Board or the Directorate
pursuant to paragraph (b) or (c) of this section, the Financing
Corporation shall submit an amended annual budget to the Directorate
for approval, and the Directorate shall submit such amended budget to
the Finance Board for approval.
Sec. 950.7 Administrative expenses.
(a) Payment by Banks. The Banks shall pay all administrative
expenses of the Financing Corporation approved pursuant to Sec. 950.6.
(b) Amount. The Financing Corporation shall determine the amount of
administrative expenses each Bank shall pay in the manner provided by
section 21(b)(7)(B) of the Act. The Financing Corporation shall bill
each Bank for such amount periodically.
(c) Adjustments. The Financing Corporation shall adjust the amount
of administrative expenses the Banks are required to pay in any
calendar year pursuant to paragraphs (a) and (b) of this section, by
deducting any funds that remain from the amount paid by the Banks for
administrative expenses in the prior calendar year.
Sec. 950.8 Non-administrative expenses; assessments.
(a) Interest expenses. The Financing Corporation shall determine
anticipated interest expenses on its obligations at least semiannually.
(b) Assessments on insured depository institutions--(1) Authority.
To provide sufficient funds to pay the non-administrative expenses of
the Financing Corporation approved under Sec. 950.6, the Financing
Corporation shall, with the approval of the Board of Directors of the
FDIC, assess against each insured depository institution an assessment
in the same manner as assessments are made by the FDIC under section 7
of the Federal Deposit Insurance Act.
(2) Assessment rate--(i) Determination. The Financing Corporation
at least semiannually shall establish an assessment rate formula, which
may include rounding methodology, to determine the rate or rates of the
assessment it will assess against insured depository institutions
pursuant to section 21(f)(2) of the Act and paragraph (b)(1) of this
section.
(ii) Limitation. Until the earlier of December 31, 1999, or the
date as of which the last savings association ceases to exist, the rate
of the assessment imposed on an insured depository institution with
respect to any BIF-assessable deposit shall be a rate equal to \1/5\ of
the rate of the assessment imposed on an insured depository institution
with respect to any SAIF-assessable deposit.
(iii) Notice. The Financing Corporation shall notify the FDIC and
the collection agent, if any, of the formula established under
paragraph (b)(2)(i) of this section.
(3) Collecting assessments--(i) Collection agent. The Financing
Corporation shall have authority to collect assessments made under
section 21(f)(2) of the Act and paragraph (b)(1) of this section
through a collection agent of its choosing.
(ii) Accounts. Each Bank shall permit any insured depository
institution whose principal place of business is in its district to
establish and maintain at least one demand deposit account to
facilitate collection of the assessments made under section 21(f)(2) of
the Act and paragraph (b)(1) of this section.
(c) Receivership proceeds--(1) Authority. To the extent the amounts
collected under paragraph (b) of this
[[Page 50250]]
section are insufficient to pay the non-administrative expenses of the
Financing Corporation approved under Sec. 950.6, the Financing
Corporation shall have authority to require the FDIC to transfer
receivership proceeds to the Financing Corporation in accordance with
section 21(f)(3) of the Act.
(2) Procedure. The Directorate shall request in writing that the
FDIC transfer the receivership proceeds to the Financing Corporation.
Such request shall specify the estimated amount of funds required to
pay the non-administrative expenses of the Financing Corporation
approved under Sec. 950.6.
(d) Exit fees--(1) Authority. To the extent the amounts provided
under paragraphs (b) and (c) of this section are insufficient to pay
the interest due on Financing Corporation obligations, the Financing
Corporation shall have authority to request that the Secretary of the
Treasury order the transfer of exit fees to the Financing Corporation
in accordance with section 5(d)(2)(E) of the Federal Deposit Insurance
Act or as otherwise may be provided for by statute.
(2) Procedure. The Directorate shall request in writing that the
Secretary of the Treasury order that exit fees be transferred to the
Financing Corporation. Such request shall specify the estimated amount
of funds required to pay the interest due on Financing Corporation
obligations.
Sec. 950.9 Reports to the Finance Board.
The Financing Corporation shall file such reports as the Finance
Board shall direct.
Sec. 950.10 Review of books and records.
The Finance Board shall examine the Financing Corporation at least
annually to determine whether the Financing Corporation is performing
its functions in accordance with the requirements of section 21 of the
Act and this part.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairperson.
[FR Doc. 97-25305 Filed 9-24-97; 8:45 am]
BILLING CODE 6725-01-U
