[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2003 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



                    12


          Part 900 to End

                         Revised as of January 1, 2003

Banks and Banking





          Containing a codification of documents of general 
          applicability and future effect
          As of January 1, 2003
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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               ----------------------------------------------------------
               As of January 1, 2003
               Title 12, Part 600 to End
               Revised as of January 1, 2002
               Is Replaced by Two Volumes
               Title 12, Parts 600 to 899
               and
               Title 12, Part 900 to End
                                      
               ----------------------------------------------------------


                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003



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[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 12:
          Chapter IX--Federal Housing Finance Board                  3
          Chapter XI--Federal Financial Institutions 
          Examination Council                                      235
          Chapter XIV--Farm Credit System Insurance 
          Corporation                                              271
          Chapter XV--Department of the Treasury                   303
          Chapter XVII--Office of Federal Housing Enterprise 
          Oversight, Department of Housing and Urban 
          Development                                              325
          Chapter XVIII--Community Development Financial 
          Institutions Fund, Department of the Treasury            549
  Finding Aids:
      Material Approved for Incorporation by Reference........     589
      Table of CFR Titles and Chapters........................     591
      Alphabetical List of Agencies Appearing in the CFR......     609
      List of CFR Sections Affected...........................     619



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  12 CFR 900.1 refers 
                       to title 12, part 900, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2003), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2003.



[[Page ix]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of seven volumes. The parts 
in these volumes are arranged in the following order: parts 1-199, 200-
219, 220-299, 300-499, 500-599, part 600-899, and 900-end. The first 
volume containing parts 1-199 is comprised of chapter I--Comptroller of 
the Currency, Department of the Treasury. The second and third volumes 
containing parts 200-299 are comprised of chapter II--Federal Reserve 
System. The fourth volume containing parts 300-499 is comprised of 
chapter III--Federal Deposit Insurance Corporation and chapter IV--
Export-Import Bank of the United States. The fifth volume containing 
parts 500-599 is comprised of chapter V--Office of Thrift Supervision, 
Department of the Treasury. The sixth volume containing parts 600-899 is 
comprised of chapter VI--Farm Credit Administration, chapter VII--
National Credit Union Administration, chapter VIII--Federal Financing 
Bank. The seventh volume containing part 900-end is comprised of chapter 
IX--Federal Housing Finance Board, chapter XI--Federal Financial 
Institutions Examination Council, chapter XIV--Farm Credit System 
Insurance Corporation, chapter XV--Department of the Treasury, chapter 
XVII--Office of Federal Housing Enterprise Oversight, Department of 
Housing and Urban Development and chapter XVIII--Community Development 
Financial Institutions Fund, Department of the Treasury. The contents of 
these volumes represent all of the current regulations codified under 
this title of the CFR as of January 1, 2003.

[[Page x]]





[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains part 900 to end)

  --------------------------------------------------------------------
                                                                    Part

chapter ix--Federal Housing Finance Board...................         900

chapter xi--Federal Financial Institutions Examination 
  Council...................................................        1101

chapter xiv--Farm Credit System Insurance Corporation.......        1400

chapter xv--Department of the Treasury......................        1510

chapter xvii--Office of Federal Housing Enterprise 
  Oversight, Department of Housing and Urban Development....        1700

chapter xviii--Community Development Financial Institutions 
  Fund, Department of the Treasury..........................        1805

[[Page 3]]



                CHAPTER IX--FEDERAL HOUSING FINANCE BOARD




  --------------------------------------------------------------------

                    SUBCHAPTER A--GENERAL DEFINITIONS
Part                                                                Page
900             General definitions applying to all finance 
                    board regulations.......................           5
 SUBCHAPTER B--FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS
905             Description of organization and functions...           8
906             Operations..................................          12
907             Procedures..................................          16
908             Rules of practice and procedure in hearings 
                    on the record...........................          25
910             Freedom of Information Act regulation.......          54
911             Availability of unpublished information.....          60
912             Information regarding meetings of the Board 
                    of Directors of the Federal Housing 
                    Finance Board...........................          66
913             Privacy Act Procedures......................          70
 SUBCHAPTER C--GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS
915             Bank director eligibility, appointment and 
                    elections...............................          77
917             Powers and responsibilities of Bank boards 
                    of directors and senior management......          94
918             Bank director compensation and expenses.....         100
   SUBCHAPTER D--FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES
925             Members of the Banks........................         103
926             Federal Home Loan Bank housing associates...         121
    SUBCHAPTER E--FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL 
                                STANDARDS
930             Definitions applying to risk management and 
                    capital regulations.....................         125

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931             Federal Home Loan Bank capital stock........         127
932             Federal Home Loan Bank capital requirements.         130
933             Bank capital structure plans................         143
              SUBCHAPTER F--FEDERAL HOME LOAN BANK MISSION
940             Core Mission Activities.....................         148
944             Community support requirements..............         149
 SUBCHAPTER G--FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS
950             Advances....................................         154
951             Affordable Housing Program..................         164
952             Community Investment Cash Advance Programs..         187
955             Acquired Member Assets......................         191
956             Federal Home Loan Bank Investments..........         198
960             Standby letters of credit...................         200
            SUBCHAPTER H--FEDERAL HOME LOAN BANK LIABILITIES
965             Source of funds.............................         203
966             Consolidated obligations....................         203
969             Deposits....................................         208
   SUBCHAPTER I--MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND 
                               AUTHORITIES
975             Collection, settlement, and processing of 
                    payment instruments.....................         209
977             Miscellaneous bank authorities..............         211
978             Bank requests for information...............         211
           SUBCHAPTER J--NEW FEDERAL HOME LOAN BANK ACTIVITIES
980             New business activities.....................         214
                     SUBCHAPTER K--OFFICE OF FINANCE
985             The Office of Finance.......................         217
987             Book-entry procedure for consolidated 
                    obligations.............................         221
989             Financial statements of the Banks...........         226
                 SUBCHAPTER L--NON-BANK SYSTEM ENTITIES
995             Financing Corporation operations............         228
996             Authority for Bank assistance of the 
                    Resolution Funding Corporation..........         231
997             Resolution Funding Corporation obligations 
                    of the Banks............................         231

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                    SUBCHAPTER A--GENERAL DEFINITIONS





PART 900--GENERAL DEFINITIONS APPLYING TO ALL FINANCE BOARD REGULATIONS--Table of Contents




Sec.
900.1  Basic terms relating to the Finance Board, the Bank System and 
          related entities.
900.2  Terms relating to Bank operations, mission and supervision.
900.3  Terms relating to other entities and concepts used throughout 12 
          CFR chapter IX.

    Authority: 12 U.S.C. 1422b(a).

    Source: 67 FR 12842, Mar. 20, 2002, unless otherwise amended.



Sec. 900.1  Basic terms relating to the Finance Board, the Bank System and related entities.

    As used throughout this chapter, the following basic terms relating 
to the Finance Board, the Bank System and related entities have the 
meanings set forth below, unless otherwise indicated in a particular 
subchapter, part, section, or paragraph:
    Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 1421 
through 1449).
    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Act (12 U.S.C. 1432).
    Bank System means the Federal Home Loan Bank System, consisting of 
the 12 Banks and the Office of Finance.
    Board of Directors, written in title case, means the Board of 
Directors of the Federal Housing Finance Board; the term board of 
directors, written in lower case, has the meaning indicated in context.
    Chairperson means the Chairperson of the Board of Directors of the 
Finance Board.
    Finance Board means the Federal Housing Finance Board established by 
section 2A of the Act (12 U.S.C. 1422a).
    Financing Corporation or FICO means the Financing Corporation 
established and supervised by the Finance Board under section 21 of the 
Act (12 U.S.C. 1441) and part 995 of this chapter.
    Housing associate means an entity that has been approved as a 
housing associate pursuant to part 926 of this chapter.
    Member means an institution that has been approved for membership in 
a Bank and has purchased capital stock in the Bank in accordance with 
Secs. 925.20 or 925.24(b) of this chapter.
    Office of Finance or OF means the Office of Finance, a joint office 
of the Banks referred to in section 2B of the Act (12 U.S.C. 1422b) and 
established under part 985 of this chapter.
    Resolution Funding Corporation or REFCORP means the Resolution 
Funding Corporation established by section 21B of the Act (12 U.S.C. 
1441b) and addressed in parts 996 and 997 of this chapter.
    Secretary to the Board means the Executive Secretary to the Board of 
Directors, an officer within the Office of the Managing Director of the 
Finance Board.



Sec. 900.2  Terms relating to Bank operations, mission and supervision.

    As used throughout this chapter, the following terms relating to 
Bank operations, mission and supervision have the meanings set forth 
below, unless otherwise indicated in a particular subchapter, part, 
section or paragraph:
    Acquired member assets or AMA means those assets that may be 
acquired by a Bank under part 955 of this chapter.
    Advance means a loan from a Bank that is:
    (1) Provided pursuant to a written agreement;
    (2) Supported by a note or other written evidence of the borrower's 
obligation; and
    (3) Fully secured by collateral in accordance with the Act and part 
950 of this chapter.
    Affordable Housing Program or AHP means the Affordable Housing 
Program, the CICA program that each Bank is required to establish 
pursuant to section 10(j) of the Act (12 U.S.C. 1430(j)) and part 951 of 
this chapter.
    Capital plan means the capital structure plan required for each Bank 
by section 6(b) of the Act, as amended (12 U.S.C. 1426(b)), and part 933 
of this chapter, as approved by the Finance

[[Page 6]]

Board, unless the context of the regulation refers to the capital plan 
prior to its approval by the Finance Board.
    CIP means the Community Investment Program, an advance program under 
CICA required to be offered pursuant to section 10(i) of the Act (12 
U.S.C. 1430(i)).
    Community Investment Cash Advance or CICA means any advance made 
through a program offered by a Bank under section 10 of the Act (12 
U.S.C. 1430) and parts 951 and 952 of this chapter to provide funding 
for targeted community lending and affordable housing, including 
advances made under a Bank's Rural Development Funding (RDF) program, 
offered under section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10)); a 
Bank's Urban Development Funding (UDF) program, offered under section 
10(j)(10) of the Act (12 U.S.C. 1430(j)(10)); a Bank's Affordable 
Housing Program (AHP), offered under section 10(j) of the Act (12 U.S.C. 
1430(j)); a Bank's Community Investment Program (CIP), offered under 
section 10(i) of the Act (12 U.S.C. 1430(i)); or any other program 
offered by a Bank that meets the requirements of part 952 of this 
chapter.
    Community lending means providing financing for economic development 
projects for targeted beneficiaries, and, for community financial 
institutions (as defined in Sec. 925.1 of this chapter), purchasing or 
funding small business loans, small farm loans or small agri-business 
loans (as defined in Sec. 950.1 of this chapter).
    Consolidated obligation or CO means any bond, debenture, or note 
authorized under part 966 of this chapter to be issued jointly by the 
Banks pursuant to section 11(a) of the Act, as amended (12 U.S.C. 
1431(a)), or any bond or note issued by the Finance Board on behalf of 
all Banks pursuant to section 11(c) of the Act (12 U.S.C. 1431(c)), on 
which the Banks are jointly and severally liable.
    Financial Management Policy or FMP means the Financial Management 
Policy For The Federal Home Loan Bank System approved by the Finance 
Board pursuant to Finance Board Resolution No. 96-45 (July 3, 1996), as 
amended by Finance Board Resolution No. 96-90 (Dec. 6, 1996), Finance 
Board Resolution No. 97-05 (Jan. 14, 1997), and Finance Board Resolution 
No. 97-86 (Dec. 17, 1997).



Sec. 900.3  Terms relating to other entities and concepts used throughout 12 CFR chapter IX.

    As used throughout this chapter, the following terms relating to 
other entities and concepts used throughout 12 CFR chapter IX have the 
meanings set forth below, unless otherwise indicated in a particular 
subchapter, part, section or paragraph:
    Appropriate Federal banking agency has the meaning set forth in 
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) 
and, for federally-insured credit unions, means the NCUA.
    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 particular 
institution.
    Fannie Mae means the Federal National Mortgage Association 
established under authority of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1716, et seq.).
    FDIC means the Federal Deposit Insurance Corporation.
    FRB means the Board of Governors of the Federal Reserve System.
    Freddie Mac means the Federal Home Loan Mortgage Corporation 
established under authority of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1451, et seq.).
    Generally Accepted Accounting Principles or GAAP means accounting 
principles generally accepted in the United States.
    Ginnie Mae means the Government National Mortgage Association 
established under authority of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1716, et seq.).
    HUD means the United States Department of Housing and Urban 
Development.
    NCUA means the National Credit Union Administration.
    NRSRO means a credit rating organization regarded as a Nationally 
Recognized Statistical Rating Organization by the Securities and 
Exchange Commission.

[[Page 7]]

    OCC means the Office of the Comptroller of the Currency.
    OTS means the Office of Thrift Supervision.
    SBIC means a small business investment company formed pursuant to 
section 301 of the Small Business Investment Act (15 U.S.C. 681).
    State means a state of the United States, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the District of Columbia, 
Guam, Puerto Rico, or the United States Virgin Islands.

[[Page 8]]



 SUBCHAPTER B--FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS





PART 905--DESCRIPTION OF ORGANIZATION AND FUNCTIONS--Table of Contents




       Subpart A--Functions and Responsibilities of Finance Board

Sec.
905.1  [Reserved]
905.2  General statement and statutory authority.
905.3  Location and business hours.
905.4  Duties of the Finance Board.

Appendix A to Subpart A of Part 905--Federal Home Loan Banks

                     Subpart B--General Organization

905.10  Board of Directors.
905.11  Chairperson.
905.12  Office of the Managing Director.
905.13  Office of Policy.
905.14  Office of Supervision.
905.15  Office of General Counsel.
905.16  Office of Inspector General.
905.17  Office of Congressional Affairs.
905.18  Office of Public Affairs.
905.19  Office of Resource Management.

                        Subpart C--Miscellaneous

905.25  Forms.
905.26  Official logo and seal.

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

    Source: 56 FR 67155, Dec. 30, 1991, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



       Subpart A--Functions and Responsibilities of Finance Board



Sec. 905.1  [Reserved]



Sec. 905.2  General statement and statutory authority.

    (a) The Finance Board is an independent, executive agency in the 
Federal Government, responsible for regulating the Bank System. It is 
funded through assessments levied upon the Banks. These funds are not 
considered Government Funds or appropriated monies. The Finance Board is 
governed by a five-member Board of Directors and administered by a full-
time staff.
    (b) The members of the Board of Directors are individually referred 
to as Directors. The heads of the various administrative units, called 
offices, are also called Directors.
    (c) The Finance Board administers the Act and is authorized to issue 
rules, regulations and orders affecting the Bank System. The Finance 
Board performs all such duties and responsibilities as may be required 
by statute. As required by section 302(b)(2) of the Federal National 
Mortgage Association Charter Act (12 U.S.C. 1717(b)), it also conducts a 
monthly survey of all major lenders to calculate a national average for 
interest rates on mortgages for one-family homes, on behalf of the 
Fannie Mae. As required by section 305(b) of the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 1454(b)), it conducts a similar 
survey for the Freddie Mac.

[56 FR 67155, Dec. 30, 1991, as amended at 65 FR 8256, Feb. 18, 2000; 67 
FR 12843, Mar. 20, 2002]



Sec. 905.3  Location and business hours.

    (a) Location. All office units of the Finance Board are located at 
1777 F Street, NW., Washington, DC 20006.
    (b) Hours of operation. The regular hours of operation of the 
Finance Board are from 8:30 a.m. to 5:30 p.m., Monday through Friday.



Sec. 905.4  Duties of the Finance Board.

    (a) Bank System. The Finance Board supervises and regulates the 
Banks and the Office of Finance. Specifically, its duties are:
    (1) To ensure that the Banks operate in a safe and sound manner;
    (2) To supervise all business operations of the Banks, which may 
include:
    (i) Prescribing conditions upon which Banks may advance funds to 
their members and housing associates;
    (ii) Prescribing rules and conditions under which a Bank may borrow 
funds, pay interest on those funds, or issue obligations;
    (iii) Requiring examinations of the Banks; and

[[Page 9]]

    (iv) Appointing the public interest members of the boards of 
directors of the Banks;
    (3) To ensure that the Banks fulfill their housing finance and 
community lending mission;
    (4) To ensure that the Banks remain adequately capitalized; and
    (5) To ensure that the Banks are able to raise funds in the capital 
markets.
    (b) Financing Corporation. The Finance Board also oversees the 
operations of the Financing Corporation, including its issuance of 
obligations.

[67 FR 12843, Mar. 20, 2002]

      Appendix A to Subpart A of Part 905--Federal Home Loan Banks

                    Federal Home Loan Bank District 1

(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, 
Vermont)

                    Federal Home Loan Bank of Boston

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

                    Federal Home Loan Bank District 2

(New Jersey, New York, Puerto Rico, Virgin Islands)

                   Federal Home Loan Bank of New York

200 Park Avenue, New York, NY 10166-4193

                    Federal Home Loan Bank District 3

(Delaware, Pennsylvania, West Virginia)

                  Federal Home Loan Bank of Pittsburgh

601 Grant Street, Pittsburgh, PA 15219-4455

                    Federal Home Loan Bank District 4

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

                    Federal Home Loan Bank of Atlanta

1475 Peachtree Street, NE., Atlanta, GA 30309

                    Federal Home Loan Bank District 5

(Kentucky, Ohio, Tennessee)

                  Federal Home Loan Bank of Cincinnati

221 East Fourth Street, Suite 1000, Cincinnati, OH 45201-0598

                    Federal Home Loan Bank District 6

(Indiana, Michigan)

                 Federal Home Loan Bank of Indianapolis

8250 Woodfield Crossing Boulevard, Indianapolis, IN 46240

                    Federal Home Loan Bank District 7

(Illinois, Wisconsin)

                    Federal Home Loan Bank of Chicago

111 East Wacker Drive, Suite 700, Chicago, IL 60601

                    Federal Home Loan Bank District 8

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

                  Federal Home Loan Bank of Des Moines

907 Walnut Street, Des Moines, IA 50309

                    Federal Home Loan Bank District 9

(Arkansas, Louisiana, Mississippi, New Mexico, Texas)

                    Federal Home Loan Bank of Dallas

5605 North MacArthur Boulevard, Irving, TX 75038

                   Federal Home Loan Bank District 10

(Colorado, Kansas, Nebraska, Oklahoma)

                    Federal Home Loan Bank of Topeka

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

                   Federal Home Loan Bank District 11

(Arizona, California, Nevada)

                 Federal Home Loan Bank of San Francisco

600 California Street, San Francisco, CA 94108

                   Federal Home Loan Bank District 12

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

                    Federal Home Loan Bank of Seattle

1501 Fourth Avenue, 19th Floor, Seattle, WA 98101-1693

[56 FR 67155, Dec. 30, 1991, as amended at 63 FR 3455, Jan. 23, 1998; 67 
FR 12843, Mar. 20, 2002]



                     Subpart B--General Organization



Sec. 905.10  Board of Directors.

    The Board of Directors consists of five members (``Directors''). 
Four Directors are appointed by the President, with the advice and 
consent of the Senate, for seven-year terms. The fifth Director, the 
Secretary of Housing and Urban Development, is an ex officio Director. 
Not more than three Directors may belong to the same political party.

[[Page 10]]

By law, the four appointed Directors must have backgrounds in housing 
finance or a demonstrated commitment to providing specialized housing 
credit, and one such Director must have a background with an 
organization with a two-year record of representing consumer or 
community interests on either banking services, credit needs, financial 
consumer protection or housing. The Board of Directors sets agency 
policy and issues resolutions, rules, regulations and orders, as 
necessary.



Sec. 905.11  Chairperson.

    The President designates one appointed Director as Chairperson of 
the Board of Directors, who presides over the meetings of the Board of 
Directors. The Board of Directors has delegated, by resolution, the 
responsibility of overall management and organizational or personnel 
administration of the Finance Board to the Chairperson.



Sec. 905.12  Office of the Managing Director.

    (a) The Managing Director is the Finance Board's chief operating 
officer. By order of the Chairperson, the Managing Director has been 
delegated the authority and power necessary and convenient to effect the 
day-to-day management, functioning, and organization of the Finance 
Board, including the authority to appoint, remove, promote, direct, set 
compensation for, and pay Finance Board personnel. The Managing Director 
is authorized to execute documents on behalf of the Board of Directors, 
including regulations, resolutions, or orders duly passed by the Board 
of Directors. The Managing Director is also the Finance Board's Chief 
Information Officer.
    (b) The Executive Secretariat is a division within the Office of the 
Managing Director. The Executive Secretary is the recording officer for 
the Board of Directors and is responsible for maintaining the Finance 
Board's records, including copies of all resolutions and rules adopted 
by the Board of Directors and orders issued by the Chairperson. The 
Executive Secretary also is responsible for the preparation and 
maintenance of the minutes or other records of all official actions and 
proceedings of the Board of Directors, and is responsible for the 
official seals of the Finance Board. This division also is responsible 
for the agency's Freedom of Information Act, Privacy Act, and Records 
Management Programs. The Executive Secretary is the primary liaison with 
the Office of the Federal Register.
    (c) The District Banks Secretariat is a division within the Office 
of the Managing Director responsible for administering the election of 
directors of the Banks and for maintaining records on each of the Banks' 
policies and marketing activities.

[61 FR 68129, Dec. 27, 1996]



Sec. 905.13  Office of Policy.

    (a) The Office of Policy coordinates the Finance Board's policy 
development activities and provides advice to the Chairperson and the 
Board of Directors on the economic, financial, housing and community and 
economic development, and competitive environments in which the Bank 
System and its members operate. The responsibilities of the Office of 
Policy include:
    (1) Analysis and modeling of the financial performance of the Banks;
    (2) Collection and analysis of financial data in order to prepare 
the Bank System's annual combined financial reports and other periodic 
reports on Bank System operations;
    (3) Collection and analysis of data on the housing and community and 
economic development activities of the Banks;
    (4) Analysis of the Banks' performance under the Affordable Housing 
Program and the Community Investment Program;
    (5) Analysis of policy issues arising under the Affordable Housing 
Program and the Community Investment Program;
    (6) Preparation of the Monthly Survey of Rates and Terms of 
Conventional One-Family Nonfarm Mortgage Loans and determination of the 
conforming loan limit for Federal National Mortgage Association (Fannie 
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) purchases 
and guarantees; and
    (7) Review of the Banks' quarterly dividend recommendations.

[[Page 11]]

    (b) The Office of Policy is the Finance Board's primary liaison with 
the Banks' Chief Financial Officers concerning financial management 
issues, the Banks' Community Investment Officers concerning community 
and economic development, the Banks' Advisory Councils concerning Bank 
System support of affordable housing, and the Bank System's fiscal 
agent, the Office of Finance. It prepares the annual reports to Congress 
and to the Banks' Advisory Councils concerning Bank System support for 
low-income housing and community development.

[61 FR 68130, Dec. 27, 1996]



Sec. 905.14  Office of Supervision.

    The Office of Supervision oversees the Banks, the Office of Finance 
and the Financing Corporation to ensure that they operate in a 
financially safe and sound manner, that the Banks are carrying out their 
housing and community and economic development finance mission and are 
in compliance with applicable statutes and regulations, as well as 
Finance Board policies and orders. The responsibilities of the Office of 
Supervision include:
    (a) The conduct of examinations, at least annually, of the Banks, 
the Office of Finance and the Financing Corporation and the furnishing 
of reports thereon to the Chairpersons of their Boards of Directors;
    (b) The follow-up and resolution of outstanding examination issues;
    (c) Liaison with each Bank's audit committee and the review and 
evaluation of the work of each Bank's internal audit staff;
    (d) The monitoring of Bank and Bank System interest rate risk, 
financial trends and mission-related activities; and
    (e) The review of Community Support Statements of Bank System 
members.

[61 FR 68130, Dec. 27, 1996, as amended at 65 FR 8256, 8257, Feb. 18, 
2000]



Sec. 905.15  Office of General Counsel.

    The General Counsel is the chief legal officer of the Finance Board. 
The Office of General Counsel provides advice to the Board of Directors, 
the Chairperson, and other Finance Board officials, on interpretations 
of statutes and regulations. The Office of General Counsel prepares all 
legal documents on behalf of the Finance Board and prepares opinions, 
regulations, and memoranda of law. It represents the Finance Board in 
all administrative adjudicatory proceedings before the Board of 
Directors. The Chairman appoints the Finance Board's Designated Agency 
Ethics Official from the staff of the Office of General Counsel.

[61 FR 68130, Dec. 27, 1996]



Sec. 905.16  Office of Inspector General.

    The Inspector General is subject to, and operates under, the 
provisions of the Inspector General Act of 1978, as amended (5 U.S.C. 
app. 3). The Inspector General reports to and is under the general 
supervision of the Chairperson. The Inspector General's responsibilities 
under the Inspector General Act include providing policy direction for, 
and conducting, supervising, and coordinating audits and investigations 
relating to the programs and operations of the Finance Board, and 
recommending policies for promoting economy and efficiency in the 
administration of, or preventing and detecting fraud and abuse in, the 
Finance Board's programs and operations. The Inspector General prepares 
and furnishes to the Chairman for transmittal to the Congress semiannual 
reports on the activities of the Office of Inspector General.

[61 FR 68130, Dec. 27, 1996]



Sec. 905.17  Office of Congressional Affairs.

    The Office of Congressional Affairs is responsible for ensuring the 
effective coordination and communication with the Congress and interest 
groups, and for briefing the Chairperson, the other Directors, and the 
Managing Director, on legislative issues before Congress pertaining to 
the Finance Board, the Bank System, and the Financing Corporation.

[61 FR 68130, Dec. 27, 1996]



Sec. 905.18  Office of Public Affairs.

    The Office of Public Affairs is responsible for the dissemination of 
information about the Finance Board to the public and the news media. 
The Office

[[Page 12]]

of Public Affairs is the Finance Board's primary liaison with news 
reporters. It also responds to general inquiries about the activities of 
the Finance Board.

[61 FR 68130, Dec. 27, 1996]



Sec. 905.19  Office of Resource Management.

    The Office of Resource Management advises the Chairperson and the 
Board of Directors on internal agency management and organization and 
provides support services to the agency and to individual employees. The 
responsibilities of the Office of Resource Management include:
    (a) Developing and managing agency policies and procedures governing 
employment and personnel action requirements, compensation and agency 
payroll requirements, travel, awards, insurance, retirement benefits, 
and other employee benefits;
    (b) Providing support for all facility and supply requirements;
    (c) Agency procurement and contracting programs;
    (d) Agency financial management, budgeting and accounting; and
    (e) Coordinating the design, programming, operation, and maintenance 
of the Finance Board's electronic data systems.

[61 FR 68130, Dec. 27, 1996]



                        Subpart C--Miscellaneous



Sec. 905.25  Forms.

    The following forms are available at the Finance Board headquarters 
facility and shall be used for the purpose indicated:

                                  Form

10-91--Monthly Survey of Rates and Terms on Conventional 1 Family 
          Nonfarm Mortgage Loans.
9102--Certificate of Nomination, Election of Federal Home Loan Bank 
          Directors.
9103--Election Ballot, Election of Federal Home Loan Bank Directors.
A-1--Appointive Director Candidates--Personal Certification and 
          Disclosure Form.
E-1--Elective Director Nominees--Personal Certification and Disclosure 
          Form.
90-T04--Local Travel Claim.

[60 FR 49199, Sept. 22, 1995, as amended at 63 FR 65687, Nov. 30, 1998; 
65 FR 8257, Feb. 18, 2000. Redesignated and amended at 67 FR 12843, Mar. 
20, 2002]



Sec. 905.26  Official logo and seal.

    This section describes and displays the logo adopted by the Board of 
Directors as the official symbol representing the Finance Board. It is 
displayed on correspondence and selected documents. This logo also 
serves as the official seal used to certify and authenticate official 
documents of the Board of Directors.
    (a) Description. The logo is a disc with its center consisting of 
three polygons arranged in an irregular line partially overlapping--each 
polygon drawn in a manner resembling a silhouette of a pitched roof 
house and with distinctive eaves under its roof--encircled by a 
designation scroll having an outer and inner border of plain heavy lines 
and containing the words ``FEDERAL HOUSING FINANCE BOARD'' in capital 
letters with serifs, with two mullets on the extreme left and right of 
the scroll.
    (b) Display. The Finance Board's official seal and logo appears 
below:
[GRAPHIC] [TIFF OMITTED] TR20MR02.004


[67 FR 12843, Mar. 20, 2002]



PART 906--OPERATIONS--Table of Contents




Sec.
906.1  Definitions.
906.2  Assessments on the Banks.
906.3  Monthly interest rate survey.
906.4  Schedule of charges for agency services.
906.5  Minority Contractors Outreach Program.


[[Page 13]]


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

    Source: 58 FR 19195, Apr. 13, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 906.1  Definitions.

    As used in this part:
    Business means an enterprise, including a firm, corporation, joint 
stock company, partnership, joint venture or association that engages in 
commercial activity on a regular basis.
    Minority means:
    (1) A male person or persons classified as either an African-
American, a Native-American, a Hispanic-American, or an Asian-American; 
or
    (2) A female person or persons regardless of ethnic or racial 
classification.
    Minority-owned entity means a business that is:
    (1) Owned or controlled by any combination of African-Americans, 
Native-Americans, Hispanic-Americans or Asian-Americans, regardless of 
gender, where such ownership or control includes the management of the 
daily business operations; or
    (2) Owned or controlled by female persons, regardless of ethnic 
origin, where such ownership or control includes the management of its 
daily business operations.

[58 FR 19195, Apr. 13, 1993, as amended at 65 FR 8257, Feb. 18, 2000; 67 
FR 12844, Mar. 20, 2002]



Sec. 906.2  Assessments on the Banks.

    (a) Assessment authority. The Finance Board may impose a semiannual 
assessment on the Banks in an aggregate amount the Finance Board 
determines is sufficient to provide for the payment of its estimated 
expenses for the period for which it makes such assessment.
    (b) Assessment procedure. (1) At or near the end of each fiscal 
year, the Finance Board shall approve an annual budget of Finance Board 
expenses for the next fiscal year. The Finance Board shall promptly 
provide a copy of the approved budget to each Bank president.
    (2) The Finance Board shall assess the Banks semiannually in an 
aggregate amount it determines is sufficient to pay the expenses 
approved under paragraph (b)(1) of this section. The Finance Board shall 
offset the amount of the semiannual assessments it imposes on the Banks 
by any amount it determines is remaining from previous semiannual 
assessments. The Finance Board shall promptly notify each Bank president 
in writing of the amount on any assessment.
    (3) Each Bank shall pay a pro rata share of the semiannual 
assessments imposed under paragraph (b)(2) of this section. The Finance 
Board shall calculate each Bank's pro rata share based on the ratio 
between the total paid-in value of the Bank's capital stock and the 
aggregate total paid-in value of the capital stock of every Bank. The 
Finance Board shall promptly notify each Bank in writing of the amount 
of its pro rata share of any semiannual assessment.
    (4) Unless otherwise instructed in writing by the Finance Board, 
each Bank shall pay to the Finance Board its pro rata share of an 
assessment in equal monthly installments during the semiannual period 
covered by the assessment.

[62 FR 35949, July 3, 1997, as amended at 67 FR 12844, Mar. 20, 2002]



Sec. 906.3  Monthly interest rate survey.

    The Finance Board conducts its Monthly Survey of Rates and Terms on 
Conventional One-Family Nonfarm Mortgage Loans in the following manner:
    (a) Initial survey. Each month, the Finance Board samples 
approximately 1,000 mortgage lenders (savings and loan associations, 
savings banks, commercial banks, and mortgage loan companies) and asks 
them to report the terms and conditions on all conventional mortgages 
(not federally insured or guaranteed) used to purchase single-family 
homes that each such lender closes during the last five working days of 
the month. In most cases, the information is reported electronically in 
a format similar to Finance Board Form FHFB 10-91. The data is weighted 
so that the pattern of weighted responses matches the actual pattern of 
mortgage originations by lender type and by region. The Finance Board 
tabulates the data and publishes standard data tables late in the 
following month.

[[Page 14]]

    (b) Adjustable-rate mortgage index. The weighted data, tabulated and 
published pursuant to paragraph (a) of this section, is used to compile 
the Finance Board's adjustable-rate mortgage index, entitled the 
``National Average Contract Mortgage Rate for the Purchase of Previously 
Occupied Homes by Combined Lenders.'' This index is the successor to the 
index maintained by the former Federal Home Loan Bank Board and is used 
for determining the movement of the interest rate on the renegotiable-
rate mortgages and on some other adjustable-rate mortgages.
    (c) Means of survey. The Finance Board collects the data for the 
compilation of the indices described in this section by contract. 
Pursuant to such contract, a Finance Board form, entitled ``Monthly 
Survey of Rates and Terms on Conventional One-Family Nonfarm Mortgage 
Loans'' (FHFB Form 10-91), is distributed to selected lending 
institutions. The data is collected, compiled and processed, and the 
completed survey results are forwarded to the Finance Board for 
tabulation and distribution.

[58 FR 19195, Apr. 13, 1993, as amended at 65 FR 8257, Feb. 18, 2000]

    Effective Date Note: At 67 FR 78961, Dec. 27, 2002, Sec. 906.3 was 
revised, effective Jan. 27, 2003. For the convenience of the user, the 
revised text is set forth as follows:

Sec. 906.3  Monthly interest rate survey.

    The Finance Board conducts its Monthly Survey of Rates and Terms on 
Conventional One-Family Non-farm Mortgage Loans in the following manner:
    (a) Initial survey. Each month, the Finance Board samples savings 
institutions, commercial banks, and mortgage loan companies, and asks 
them to report the terms and conditions on all conventional mortgages 
(i.e., those not federally insured or guaranteed) used to purchase 
single-family homes that each such lender closes during the last five 
working days of the month. In most cases, the information is reported 
electronically in a format similar to Finance Board Form FHFB 10-91. The 
initial weights are based on lender type and lender size. The data also 
is weighted so that the pattern of weighted responses matches the actual 
pattern of mortgage originations by lender type and by region. The 
Finance Board tabulates the data and publishes standard data tables late 
in the following month.
    (b) Adjustable-rate mortgage index. The weighted data, tabulated and 
published pursuant to paragraph (a) of this section, is used to compile 
the Finance Board's adjustable-rate mortgage index, entitled the 
``National Average Contract Mortgage Rate for the Purchase of Previously 
Occupied Homes by Combined Lenders.'' This index is the successor to the 
index maintained by the former Federal Home Loan Bank Board and is used 
for determining the movement of the interest rate on renegotiable-rate 
mortgages and on some other adjustable-rate mortgages.



Sec. 906.4  Schedule of charges for agency services.

    (a) Authority. Section 9701 of title 31, United States Code (31 
U.S.C. 9701), directs government agencies to charge a fee for any 
special service provided to a selected segment of the public that makes 
use of such special service. The Office of Management and Budget's 
Circular A-25 contains guidelines for agencies to follow when 
promulgating regulations for such user fee charges. This section 
implements that authority.
    (b) ARM Index special programming service. (1) The Finance Board 
develops and makes available special tabulations of its monthly interest 
rate survey data for individual users, upon request.
    (2) Each request for a specialized interest rate survey must be made 
in writing to the Finance Board.
    (3) The fee for such special service is a $100 per hour for the 
analyst's time, with a minimum charge of $100, prepaid, to accompany the 
written request.

[58 FR 19195, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12844, Mar. 20, 2002]

    Effective Date Note: At 67 FR 78961, Dec. 27, 2002, Sec. 906.4 was 
removed and reserved, effective Jan. 27, 2003.



Sec. 906.5  Minority Contractors Outreach Program.

    (a) Scope. (1) This section establishes the Finance Board's Minority 
Contractors Outreach Program and designates the officials responsible 
for implementing the Program and its oversight.
    (2) The Minority Contractor Outreach Program:

[[Page 15]]

    (i) Seeks to encourage the maximum participation of minorities in 
all Finance Board procurement contracts for goods or services;
    (ii) Shall operate consistent with the principle of full and open 
competition and the concept of contracting for minimum agency needs at 
the lowest practical cost; and
    (iii) Shall not be construed to be a substitute means of procurement 
for the Finance Board's established procedural process for the 
procurement of goods or services.
    (b) Responsibilities. (1) The Director of the Office of Resource 
Management shall have general oversight of the Minority Contractors 
Outreach Program.
    (2) The Chairperson shall:
    (i) Appoint an Minority Contractors Advocate, who shall--
    (A) Have primary responsibility for furthering the purposes of the 
Minority Contractors Outreach Program;
    (B) Be responsible for challenging barriers to, and promoting 
maximum participation by, minorities or minority-owned entities in the 
Finance Board procurement process; and
    (C) Develop a manual describing the procedures by which the Finance 
Board will implement the Minority Contractors Outreach Program.
    (ii) Assign such Advocate only such duties or responsibilities, with 
respect to the Minority Contractors Outreach Program, as are consistent 
with this section, and shall not assign such Advocate any duties of a 
contracting officer or of a technical representative on a contract.
    (c) Program components. The Minority Contractors Outreach Program 
procedures shall include the following:
    (1) Contractor File. (i) The Minority Contractors Advocate shall 
compile and maintain an ongoing file consisting of minority-owned 
entities that are interested in contracting with the Finance Board for 
goods or services through the competitive bidding or negotiated 
procurement process.
    (ii) The information in such file shall list the current name and 
address of each such minority-owned entity and shall categorize each 
name and address as follows:
    (A) Accounting services;
    (B) Building support services;
    (C) Computer services;
    (D) Consulting services;
    (E) Legal services;
    (F) Office supplies and equipment; or
    (G) Other services.
    (2) Solicitation. The Minority Contractors Advocate shall implement 
a procedure for soliciting potential candidates for the contractor file 
provided for in paragraph (c)(1) of this section, by means of any of the 
following:
    (i) Referrals from executive departments, agencies or 
instrumentalities of the Federal Government;
    (ii) Direct solicitation of selected candidates;
    (iii) Advertising by direct mail or publications specifically 
directed to minorities, or minority-owned entities;
    (iv) Sponsoring Finance Board seminars designed to explain the 
Minority Contractors Outreach Program to minority contractors or 
minority-owned entities who have the potential of contracting with the 
Finance Board; or
    (v) Attendance at conventions, seminars or other professional 
conferences of minorities or minority-owned entities located in the 
greater Washington metropolitan area.
    (3) Certification. (i) No minority-owned entity (whether solicited 
by the Minority Contractors Advocate or not) may participate in the 
Finance Board procurement process as a minority-owned entity unless 
certified as such by the Chairperson, or designee.
    (ii) The certification shall be by a means and form approved by the 
Finance Board.
    (iii) Nothing in this section shall be deemed to prevent an non-
certified minority-owned entity from participating in the procurement 
process as an entity not designated or deemed a minority or minority-
owned entity.
    (4) Promotion. (i) The Minority Contractors Advocate shall maintain 
an ongoing campaign of promotion of the Minority Contractors Outreach 
Program with all certified minority-owned entities.
    (ii) This campaign shall include:
    (A) Ongoing dissemination of information about the Minority 
Contractors Outreach Program with certified minority-owned entities;

[[Page 16]]

    (B) Alerting appropriate certified minority-owned entities when the 
Finance Board makes a solicitation for a bid or initiates the 
negotiation of a procurement contract for goods or services;
    (C) Acting as a liaison between the Finance Board contracting 
authorities and a particular minority-owned entity; and
    (D) Assisting any certified minority-owned entity to understand 
Finance Board contracting procedures or other information regarding a 
particular bid or contract.
    (iii) Nothing in this paragraph (c)(4) shall authorize the Minority 
Contractors Advocate to represent the interests of any minority-owned 
entity in any contract matter or bid before the Finance Board.
    (5) Contract award guidelines--(i) Contracts not exceeding $25,000. 
The Finance Board Contracting Officer shall, from time to time, award 
contracts for the procurement of goods or services, that do not exceed 
$25,000 in costs, to certified minority-owned entities listed in the 
contractor file provided for in paragraph (c)(1) of this section, to the 
extent not inconsistent with the principles of Federal Government 
procurement laws. Such awards shall be made after consultation with the 
Minority Contractors Advocate.
    (ii) Contracts exceeding $25,000. Contracts for goods or services 
that exceed $25,000 will be awarded on the basis and consistent with the 
principles of the Federal Government procurement laws. The Finance Board 
Contracting Officer and the Minority Contractors Advocate shall work to 
ensure, promote and facilitate the maximum participation of minority-
owned entities in the Finance Board's procurement of goods or services 
that exceed $25,000.

[58 FR 19195, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12844, Mar. 20, 2002]



PART 907--PROCEDURES--Table of Contents




                         Subpart A--Definitions

Sec.
907.1  Definitions.

    Subpart B--Waivers, Approvals, No-Action Letters, and Regulatory 
                             Interpretations

907.2  Waivers.
907.3  Approvals.
907.4  No-Action Letters.
907.5  Regulatory Interpretations.
907.6  Submission requirements.
907.7  Issuance of Waivers, Approvals, No-Action Letters, and Regulatory 
          Interpretations.

 Subpart C--Case-by-Case Determinations; Review of Disputed Supervisory 
                             Determinations

907.8  Case-by-Case Determinations.
907.9  Review of Disputed Supervisory Determinations.
907.10  Petitions.
907.11  Requests to Intervene.
907.12  Finance Board procedures.
907.13  Consideration and Final Decisions.
907.14  Meetings of the Board of Directors to consider Petitions.
907.15  General provisions.
907.16  Rules of practice.

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

    Source: 64 FR 30883, June 9, 1999, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

    Editorial Note: Nomenclature changes to part 907 appear at 67 FR 
12844, Mar. 20, 2002.



                         Subpart A--Definitions



Sec. 907.1  Definitions.

    As used in this part:
    Approval means a written statement issued to a Bank or the Office of 
Finance approving a transaction, activity, or item that requires Finance 
Board approval under the Act or a Finance Board rule, regulation, 
policy, or order.
    Case-by-Case Determination means a Final Decision concerning any 
matter that requires a determination, finding, or approval by the Board 
of Directors under the Act or Finance Board regulations, for which no 
controlling statutory, regulatory, or other Finance Board standard 
previously has been established, and that, in the judgment of the Board 
of Directors, is best resolved on a case-by-case basis by a ruling 
applicable only to the Petitioner and any Intervenor, and not by 
adoption of a rule of general applicability.
    Final Decision means a decision rendered by the Board of Directors 
on

[[Page 17]]

issues raised in a Petition or Request to Intervene that have been 
accepted for consideration.
    Intervenor means a Bank, Member, or other entity that has been 
granted leave to intervene in the consideration of a Petition by the 
Board of Directors.
    Managing Director means the Managing Director of the Finance Board.
    No-Action Letter means a written statement issued to a Bank or the 
Office of Finance providing that Finance Board staff will not recommend 
supervisory or other action to the Board of Directors for failure to 
comply with a specific provision of the Act or a Finance Board rule, 
regulation, policy, or order, if a requester undertakes a proposed 
transaction or activity.
    Party means a Petitioner, an Intervenor, or the Finance Board.
    Petition means a Petition for Case-by-Case Determination or a 
Petition for Review of a Disputed Supervisory Determination.
    Petitioner means the Office of Finance or a Bank that has filed a 
Petition.
    Regulatory Interpretation means written guidance issued by Finance 
Board staff with respect to application of the Act or a Finance Board 
rule, regulation, policy, or order to a proposed transaction or 
activity.
    Requester means an entity or person that has submitted an 
application for a Waiver or Approval or a request for a No-Action Letter 
or Regulatory Interpretation.
    Supervisory determination means a Finance Board finding in a report 
of examination, order, or directive, or a Finance Board order or 
directive concerning safety and soundness or compliance matters that 
requires mandatory action by a Bank or the Office of Finance.
    Waiver means a written statement issued to a Bank, a Member, or the 
Office of Finance that waives a provision, restriction, or requirement 
of a Finance Board rule, regulation, policy, or order, or a required 
submission of information, not otherwise required by law, in connection 
with a particular transaction or activity.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000; 67 
FR 12844, Mar. 20, 2002]



    Subpart B--Waivers, Approvals, No-Action Letters, and Regulatory 
                             Interpretations



Sec. 907.2  Waivers.

    (a) Authority. The Board of Directors reserves the right, in its 
discretion and in connection with a particular transaction or activity, 
to waive any provision, restriction, or requirement of this chapter, or 
any required submission of information, not otherwise required by law, 
if such waiver is not inconsistent with the law and does not adversely 
affect any substantial existing rights, upon a determination that 
application of the provision, restriction, or requirement would 
adversely affect achievement of the purposes of the Act, or upon a 
showing of good cause.
    (b) Application. A Bank, a Member, or the Office of Finance may 
apply for a Waiver in accordance with Sec. 907.6.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.3  Approvals.

    (a) Application. A Bank or the Office of Finance may apply for an 
Approval of any transaction, activity, or item that requires Finance 
Board approval under the Act or a Finance Board rule, regulation, 
policy, or order in accordance with Sec. 907.6, unless alternative 
application procedures are prescribed by the Act or a Finance Board 
rule, regulation, policy, or order for the transaction, activity, or 
item at issue.
    (b) Reservation. The Finance Board reserves the right, in its 
discretion, to prescribe additional or alternative procedures for any 
application for Approval of a transaction, activity, or item.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.4  No-Action Letters.

    (a) Authority. Finance Board staff, in its discretion, may issue a 
No-Action Letter to a Bank or the Office of Finance stating that staff 
will not recommend supervisory or other action to the Board of Directors 
for failure to comply with a specific provision of the

[[Page 18]]

Act or a Finance Board rule, regulation, policy, or order, if a 
requester undertakes a proposed transaction or activity. The Board of 
Directors may modify or supersede a No-Action Letter.
    (b) Requests. A Bank or the Office of Finance may request a No-
Action Letter in accordance with Sec. 907.6.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.5  Regulatory Interpretations.

    (a) Authority. Finance Board staff, in its discretion, may issue a 
Regulatory Interpretation to a Bank, a Member, an official of a Bank or 
Member, the Office of Finance, or any other entity or person, providing 
guidance with respect to application of the Act or a Finance Board rule, 
regulation, policy, or order to a proposed transaction or activity. The 
Board of Directors may modify or supersede a Regulatory Interpretation.
    (b) Requests. A Bank, a Member, an official of a Bank or Member, the 
Office of Finance, or any other entity or person may request a 
Regulatory Interpretation in accordance with Sec. 907.6.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.6  Submission requirements.

    Applications for a Waiver or Approval and requests for a No-Action 
Letter or Regulatory Interpretation shall comply with the following 
requirements:
    (a) Filing. Each application or request shall be in writing. The 
original and three copies shall be filed with the Secretary to the 
Board, Federal Housing Finance Board, 1777 F Street NW., Washington, DC 
20006.
    (b) Authorization--(1) Waivers and Approvals. Applications for 
Waivers and Approvals shall be signed by an official with authority to 
sign such applications on behalf of the requester. Applications for 
Waivers and Approvals from a Bank or the Office of Finance shall be 
accompanied by a resolution of the board of directors of the Bank or the 
Office of Finance concurring in the substance and authorizing the filing 
of the application.
    (2) Requests for No-Action Letters. The president of the Bank making 
a Request for a No-Action Letter shall sign the Request. Requests for a 
No-Action Letter from the Office of Finance shall be signed by the 
chairperson of the board of directors of the Office of Finance.
    (3) Requests for Regulatory Interpretations. The requester or an 
authorized representative of the requester shall sign a request for a 
Regulatory Interpretation.
    (c) Information requirements. Each application or request shall 
contain:
    (1) The name of the requester, and the name, title, address, 
telephone number, and electronic mail address, if any, of the official 
filing the application or request on its behalf;
    (2) The name, address, telephone number, and electronic mail 
address, if any, of a contact person from whom Finance Board staff may 
seek additional information if necessary;
    (3) The section numbers of the particular provisions of the Act or 
Finance Board rules, regulations, policies, or orders to which the 
application or request relates;
    (4) Identification of the determination or relief requested, 
including any alternative relief requested if the primary relief is 
denied, and a clear statement of why such relief is needed;
    (5) A statement of the particular facts and circumstances giving 
rise to the application or request and identifying all relevant legal 
and factual issues;
    (6) References to all relevant authorities, including the Act, 
Finance Board rules, regulations, policies, and orders, judicial 
decisions, administrative decisions, relevant statutory interpretations, 
and policy statements;
    (7) References to any Waivers, No-Action Letters, Approvals, or 
Regulatory Interpretations issued to the requester in the past in 
response to circumstances similar to those surrounding the request or 
application;
    (8) For any application or request involving interpretation of the 
Act or Finance Board regulations, a reasoned opinion of counsel 
supporting the relief or interpretation sought and distinguishing any 
adverse authority;

[[Page 19]]

    (9) Any non-duplicative, relevant supporting documentation; and
    (10) A certification by a person with knowledge of the facts that 
the representations made in the application or request are accurate and 
complete. The following form of certification is sufficient for this 
purpose: ``I hereby certify that the statements contained in the 
submission are true and complete to the best of my knowledge. [Name and 
Title].''
    (d) Waiver of requirements. The Managing Director may waive any 
requirement of this section for good cause. The Managing Director shall 
provide prompt notice of any such waiver to the Board of Directors. The 
Board of Directors may overrule any waiver granted by the Managing 
Director under this paragraph.
    (e) Withdrawal. Once filed, an application or request may be 
withdrawn only upon written request. The Finance Board will not consider 
a request for withdrawal after transmission by the Secretary to the 
Board to the requester of a response in final form.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000; 67 
FR 12844, Mar. 20, 2002]



Sec. 907.7  Issuance of Waivers, Approvals, No-Action Letters, and Regulatory Interpretations.

    (a) Board of Directors review. At least three business days prior to 
issuance to the requester, the Secretary to the Board shall transmit 
each Approval, No-Action Letter, or Regulatory Interpretation issued by 
the Chairperson or Finance Board staff to the Board of Directors for 
review.
    (b) Issuance and effectiveness. A Waiver, Approval, No-Action 
Letter, or Regulatory Interpretation is not effective until the 
Secretary to the Board has transmitted it in final form to the 
requester.
    (c) Abbreviated form. The Finance Board may respond to an 
application or request in an abbreviated form, consisting of a concise 
statement of the nature of the response, without restatement of the 
underlying facts.



 Subpart C--Case-by-Case Determinations; Review of Disputed Supervisory 
                             Determinations



Sec. 907.8  Case-by-Case Determinations.

    (a) Petition for Case-by-Case Determination. A Bank or the Office of 
Finance may seek a Case-by-Case Determination concerning any matter that 
may require a determination, finding or approval under the Act or 
Finance Board regulations by the Board of Directors, and for which no 
controlling statutory, regulatory or other Finance Board standard 
previously has been established. The Office of Finance or a Bank seeking 
a Case-by-Case Determination shall file a Petition for Case-by-Case 
Determination in accordance with Sec. 907.10.
    (b) Intervention. A Member, a Bank, or the Office of Finance may 
file a Request to Intervene in the consideration of the Petition in 
accordance with Sec. 907.11 if it believes its rights may be affected.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.9  Review of Disputed Supervisory Determinations.

    (a) Petition for Review of a Disputed Supervisory Determination. A 
Bank or the Office of Finance may seek review by the Board of Directors 
of a Finance Board finding in a report of examination, order, or 
directive, or a Finance Board order or directive concerning safety and 
soundness or compliance matters requiring mandatory action by the Bank 
or Office of Finance. The Office of Finance or a Bank seeking review of 
a disputed Supervisory Determination shall file a Petition for Review of 
a Disputed Supervisory Determination within 60 calendar days from the 
date of the disputed Supervisory Determination in accordance with 
Sec. 907.10.
    (b) No stay while Petition is pending. All Supervisory 
Determinations directed to a Bank or the Office of Finance shall remain 
in full force and effect while a Petition is pending. That a Petition is 
pending shall not operate or be deemed to operate as a suspension of the 
obligation of a Bank or the Office

[[Page 20]]

of Finance to take corrective action as required by a Supervisory 
Determination, except as the Bank or the Office of Finance may be 
otherwise directed by order of the Board of Directors.
    (c) Notice to affected entities. With the approval of the Managing 
Director, a Petitioner may, pursuant to 12 CFR 951.12(d) or otherwise, 
provide notice of the issuance of a Supervisory Determination or the 
filing of a Petition for Review of a Disputed Supervisory Determination, 
to another Bank, the Office of Finance, or a Member or other entity 
named in 12 CFR 951.12(d), if the Petitioner believes the entity's 
rights may be affected by the Supervisory Determination or the Petition.
    (d) Intervention. A Bank, the Office of Finance, a Member, or other 
entity named in 12 CFR 951.12(d) may file a Request to Intervene in the 
consideration of a Petition in accordance with Sec. 907.11 if it 
believes its rights may be adversely affected by a Final Decision on the 
Petition.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.10  Petitions.

    Each Petition brought pursuant to this subpart shall comply with the 
following requirements:
    (a) Filing. The Petition shall be in writing. The original and three 
copies shall be filed with the Secretary to the Board, Federal Housing 
Finance Board, 1777 F Street NW., Washington, DC 20006.
    (b) Information requirements. Each Petition shall contain:
    (1) The name of the Petitioner, and the name, title, address, 
telephone number, and electronic mail address, if any, of the official 
filing the Petition on its behalf;
    (2) The name, address, telephone number, and electronic mail 
address, if any, of a contact person from whom Finance Board staff may 
seek additional information if necessary;
    (3) The section numbers of the particular provisions of the Act or 
Finance Board rules, regulations, policies, or orders to which the 
Petition relates, and, if the Petition is for Review of a Disputed 
Supervisory Determination, identification of the disputed Supervisory 
Determination;
    (4) Identification of the determination or relief requested, 
including any alternative relief requested if the primary relief is 
denied, and a clear statement of why such relief is needed;
    (5) A statement of the particular facts and circumstances giving 
rise to the Petition and identifying all relevant legal and factual 
issues;
    (6) A summary of any steps taken to date by the Petitioner to 
address or resolve the dispute or issue; or, in cases involving safety 
and soundness or compliance issues, a summary of any actions taken by 
the Petitioner in the interim to implement corrective action;
    (7) The Petitioner's argument in support of its position, including 
citation to any supporting legal opinions, policy statements, or other 
relevant precedent and supporting documentation, if any;
    (8) References to all relevant authorities, including the Act, 
Finance Board rules, regulations, policies, and orders, judicial 
decisions, administrative decisions, relevant statutory interpretations, 
and policy statements;
    (9) A reasoned opinion of counsel supporting the relief or 
interpretation sought and distinguishing any adverse authority;
    (10) Any non-duplicative, relevant supporting documentation; and
    (11) A certification by a person with knowledge of the facts that 
the representations made in the Petition are accurate and complete. The 
following form of certification is sufficient for this purpose: ``I 
hereby certify that the statements contained in the Petition are true 
and complete to the best of my knowledge. [Name and Title].''
    (c) Authorization. Each Petition shall be accompanied by a 
resolution of the Petitioner's board of directors concurring in the 
substance and authorizing the filing of the Petition.
    (d) Request to Appear. The Petition may contain a request that staff 
or an agent of the Petitioner be permitted to make a personal appearance 
before the Board of Directors at any meeting convened to consider the 
Petition pursuant to these procedures. A statement of the reasons a 
written presentation would not suffice shall accompany a Request to 
Appear. The statement shall specifically:

[[Page 21]]

    (1) Identify any questions of fact that are in dispute;
    (2) Summarize the evidence that would be presented at the meeting; 
and
    (3) Identify any proposed witnesses, and state the substance of 
their anticipated testimony.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.11  Requests to Intervene.

    (a) Filing--(1) Date. Any Request to Intervene in consideration of a 
Petition under this subpart shall be in writing and shall be filed with 
the Secretary to the Board within 45 days from the date the Petition is 
filed.
    (2) Information requirements. A Request to Intervene shall include 
the information required by Sec. 907.10(b), where applicable, and a 
concise statement of the position and interest of the Intervenor and the 
grounds for the proposed intervention.
    (3) Authorization. If the entity requesting intervention is a Bank 
or the Office of Finance, the Request to Intervene shall be accompanied 
by a resolution of the Petitioner's board of directors concurring in the 
substance and authorizing the filing of the Request. If the entity 
requesting intervention is not a Bank or the Office of Finance, the 
Request to Intervene shall be signed by an official of the entity with 
authority to authorize the filing of the Request, and shall include a 
statement describing such authority.
    (4) Request to Appear. A Request to Intervene may include a Request 
to Appear before the Board of Directors in any meeting conducted under 
these procedures to consider a Petition. A Request to Appear shall be 
accompanied by a statement containing the information required by 
Sec. 907.10(d), and, in addition, setting forth the likely impact that 
intervention will have on the expeditious progress of the meeting. A 
Request to Appear shall be filed with the Secretary to the Board either 
with the Request to Intervene or at least 20 days prior to the meeting 
scheduled to consider the Petition.
    (5) Intervenor is bound. Any Request to Intervene shall include a 
statement that, if such leave to intervene is granted, the Intervenor 
shall be bound expressly by the Final Decision of the Board of 
Directors, as described in Sec. 907.13(b), subject only to judicial 
review or as otherwise provided by law.
    (b) Grounds for approval. The Managing Director may grant leave to 
intervene if the entity requesting intervention has complied with 
paragraph (a) of this section and, in the judgment of Managing Director:
    (1) The presence of the entity requesting intervention would not 
unduly prolong or otherwise prejudice the adjudication of the rights of 
the original parties; and
    (2) The entity requesting intervention may be adversely affected by 
a Final Decision on the Petition.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.12  Finance Board procedures.

    (a) Notice of Receipt of Petition or Request to Intervene. No later 
than three business days following receipt of a Petition or Request to 
Intervene, the Secretary to the Board shall transmit a written Notice of 
Receipt to the Petitioner or Intervenor. In the case of a Petition for 
Case-by-Case Determination, the Finance Board shall promptly publish a 
notice of receipt of Petition, including a brief summary of the issue(s) 
involved, in the Federal Register.
    (b) Transmittal of filings. The Secretary to the Board shall 
promptly transmit copies of any Petition, Request to Intervene, or other 
filing under this subpart to the Board of Directors and all other 
parties to the filing.
    (c) Opportunity to cure defects. The Managing Director shall afford 
the Petitioner or Intervenor a reasonable opportunity to cure any 
failure to comply with the requirements of Sec. 907.10.
    (d) Information request. The Managing Director may request 
additional information from the Petitioner or Intervenor. No later than 
20 calendar days after the date of a request under this paragraph, the 
Petitioner shall provide to the Secretary to the Board all information 
requested.
    (e) Supplemental information. Upon good cause shown, the Managing 
Director may grant permission to a Petitioner or Intervenor to submit 
supplemental written information pertaining

[[Page 22]]

to the Petition or Request to Intervene.
    (f) Consolidation and severance--(1) Consolidation. The Managing 
Director may consolidate any or all matters at issue in two or more 
meetings on Petitions where:
    (i) There exist common parties or common questions of fact or law;
    (ii) Consolidation would expedite and simplify consideration of the 
issues; and
    (iii) Consolidation would not adversely affect the rights of parties 
engaged in otherwise separate proceedings.
    (2) Severance. The Managing Director may order any meetings and 
issues severed with respect to any or all parties or issues.
    (g) Notice of Board Consideration. Within 30 calendar days of 
receipt of a Petition deemed by the Managing Director to be in 
compliance with the requirements of Sec. 907.10, or, if the Petition has 
been the subject of a request under paragraph (d) of this section, 
within 30 calendar days of receipt of a response from the Petitioner 
deemed by the Managing Director to complete the information necessary 
for the Board of Directors to consider the Petition, the Managing 
Director, after consultation with the Board of Directors, through the 
Secretary to the Board, shall provide all parties with a Notice of Board 
Consideration containing the following information:
    (1) Identification of the issues accepted for consideration;
    (2) Any decision to consolidate or sever pursuant to paragraph (f) 
of this section;
    (3) Whether the Petition will be considered by the Board of 
Directors on the written record pursuant to Sec. 907.13(a)(1), or at a 
meeting pursuant to Sec. 907.13(a)(2); and
    (4) If the Petition will be considered by the Board of Directors at 
a meeting:
    (i) The date, time and place of the meeting; and
    (ii) A decision as to any Request to Appear filed pursuant to 
Secs. 907.10(d) or 907.11(a)(4).

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.13  Consideration and Final Decisions.

    (a) Consideration by Board of Directors. The Board of Directors may 
consider a Petition and render a decision:
    (1) Solely on the basis of the written record; or
    (2) At a regularly scheduled meeting or a meeting convened 
specifically for the purpose of considering the Petition. Consideration 
of a Petition at a meeting shall be governed by the procedures described 
in Sec. 907.14.
    (b) Final Decision. The Board of Directors shall render a Final 
Decision on the issue(s) presented in a Petition or Request to Intervene 
that has been accepted for consideration, based upon consideration of 
the entire record of the proceeding. The terms and conditions of the 
Final Decision shall bind the parties as to any issue(s) presented in 
the Petition or Request to Intervene and decided by the Board of 
Directors. The decision of the Board of Directors is a final decision 
for purposes of obtaining judicial review or as otherwise provided by 
law.
    (c) Time periods. Subject to extension by such additional time as 
may reasonably be required, the Board of Directors shall render a Final 
Decision within 120 calendar days of the date the Petition is received 
in a form deemed by the Managing Director to be in compliance with the 
requirements of Sec. 907.10 or, if the Petition has been the subject of 
a request under Sec. 907.12(d), within 120 calendar days of receipt of a 
response from the Petitioner deemed by the Managing Director to complete 
the information necessary for the Board of Directors to consider the 
Petition.
    (d) Transmittal of Final Decision. The Secretary to the Board shall 
transmit the Final Decision of the Board of Directors to all parties to 
the submission.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.14  Meetings of the Board of Directors to consider Petitions.

    (a) Full and fair opportunity to be heard. Any meeting of the Board 
of Directors to consider a Petition shall be conducted in a manner that 
provides the parties a full and fair opportunity to be heard on the 
issues accepted for consideration. Any such meeting shall

[[Page 23]]

be conducted so as to permit an expeditious presentation of such issues.
    (b) Participation in meeting. (1) The presence of a quorum of the 
Board if Directors is required to conduct a meeting under this section. 
Members of the Board of Directors are deemed present if they appear in 
person or by telephone.
    (2) An act of the Board of Directors requires the vote of a majority 
of the members of the Board of Directors voting at a meeting at which a 
quorum of the Board of Directors is present.
    (3) A Final Decision may be reached by a vote of the Board of 
Directors after the meeting at which the Petition has been considered. 
Only those members of the Board of Directors present at the meeting at 
which the Petition was considered may vote on issues presented in the 
Petition and accepted for consideration. A vote of the majority of the 
members of the Board of Directors eligible to vote and voting shall be 
an act of the Board of Directors.
    (c) Chairperson--(1) Presiding officer. The Chairperson, or a member 
of the Board of Directors designated by the Chairperson, shall preside 
over a meeting of the Board of Directors convened under this section.
    (2) Authority of the Chairperson. The Chairperson shall have all 
powers and discretion necessary to conduct the meeting in a fair and 
impartial manner, to avoid unnecessary delay, to regulate the course of 
the meeting and the conduct of the parties and their counsel, and to 
discharge the duties of a presiding officer.
    (3) Board of Directors may overrule the Chairperson. Any member of 
the Board of Directors may, by motion, challenge any action, finding, or 
determination made by the Chairperson in the course of the meeting, and 
the Board of Directors, by majority vote, may overrule any action, 
finding or determination of the Chairperson.
    (d) Meeting may be closed. A party may request that the meeting, or 
portion thereof, be closed to public observation. A request to close a 
meeting shall be processed in accordance with the requirements of the 
Government in the Sunshine Act (5 U.S.C. 552b) and the Finance Board's 
implementing regulation (12 CFR part 912).
    (e) Location of meeting. Unless otherwise specified, all meetings of 
the Board of Directors will be held in the Board Room of the Finance 
Board at 1777 F Street, NW., Washington, DC, at the time specified in 
the notice of meeting issued pursuant to 12 CFR 912.6.
    (f) Presentation of issues--(1) Stipulations. Subject to the 
Chairperson's discretion, the parties may agree to stipulations of law 
or fact, including stipulations as to the admissibility of exhibits, and 
present such stipulations at the meeting. Stipulations shall be made a 
part of the record of the proceeding.
    (2) Order of presentation. The Chairperson shall determine the order 
of presentation of the issues, testimony of any witnesses, presentation 
of any other information or document, and all other procedural matters 
at the meeting.
    (g) Record. The meeting shall be recorded and transcribed. 
Transcripts of the proceedings shall be governed by 12 CFR 912.5(c). The 
Petition and all supporting documentation shall be made a part of the 
record, unless otherwise determined by the Chairperson. The Chairperson 
may order the record corrected, upon motion to correct, upon stipulation 
of the parties, or at the Chairperson's discretion.
    (h) Admissibility of documents and testimony. (1) The Chairperson 
has discretion to admit and make a part of the record documents and 
testimony that are relevant, material, and reliable, and may elect not 
to admit documents and testimony that are privileged, unduly 
repetitious, or of little probative value.
    (2) The Board of Directors shall give such weight to documents and 
testimony admitted and made part of the record as it may deem reasonable 
and appropriate.
    (3) The Chairperson may admit and make a part of the record, in lieu 
of oral testimony, statements of fact or opinion prepared by a witness. 
The admissibility of the information contained in the statement shall be 
subject to the same rules as if the testimony were provided orally.

[[Page 24]]

    (i) Official notice. All matters officially noticed by the 
Chairperson shall appear on the record.
    (j) Exhibits and documents--(1) Copies. A legible duplicate copy of 
a document shall be admissible to the same extent as the original.
    (2) Exhibits. Witnesses may use existing or newly created charts, 
exhibits, calendars, calculations, outlines, or other graphic materials 
to summarize, illustrate, or simplify the presentation of testimony. 
Subject to the Chairperson's discretion, such materials may be used with 
or without being admitted into the record.
    (3) Identification. All exhibits offered into the record shall be 
numbered sequentially and marked with a designation identifying the 
sponsor. The original of each exhibit offered into the record or marked 
for identification shall be retained in the record of the meeting, 
unless the Chairperson permits substitution of a copy for the original.
    (4) Exchange of Exhibits. One copy of each exhibit offered into the 
record shall be furnished to each of the parties and to each member of 
the Board of Directors. If the Chairperson does not fix a time for the 
exchange of exhibits, the parties shall exchange copies of proposed 
exhibits at the earliest practicable time before the commencement of the 
meeting to consider the Petition. Parties are not required to exchange 
exhibits submitted as rebuttal information before the meeting commences 
if submission of the exhibits is not reasonably certain at that time.
    (5) Authenticity. The authenticity of all documents submitted or 
exchanged as proposed exhibits prior to the meeting shall be admitted 
unless written objection is filed before the commencement of the 
meeting, or unless good cause is shown for failing to file such a 
written objection.
    (k) Sanction for obstruction of the proceedings. The Board of 
Directors may impose sanctions it deems appropriate for violation of any 
applicable provision of this subpart or any applicable law, rule, 
regulation, or order, or any dilatory, frivolous, or obstructionist 
conduct by any witness or counsel during the course of a meeting.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.15  General provisions.

    (a) Waiver of requirements. The Managing Director may waive any 
filing requirement or deadline in this subpart for good cause shown. The 
Managing Director shall provide prompt notice of any such waiver to the 
Board of Directors.
    (b) Actions of the Managing Director subject to the authority of the 
Board of Directors. The Board of Directors may overrule any action by 
the Managing Director under this subpart.
    (c) Withdrawal. At any time prior to the issuance by the Managing 
Director of a Notice of Board Consideration pursuant to Sec. 907.12(g), 
an authorized representative of a Petitioner may withdraw the Petition, 
or an authorized representative of an Intervenor may withdraw the 
Request to Intervene, by filing a written request to withdraw with the 
Secretary to the Board. Only the Board of Directors may grant a request 
to withdraw after issuance by the Managing Director of a Notice of Board 
Consideration pursuant to Sec. 907.12(g). Unless otherwise agreed, 
withdrawal of a Petition or Request to Intervene shall not foreclose a 
Petitioner from resubmitting a Petition, or an Intervenor from 
submitting a Request to Intervene, on the same or similar issues.
    (d) Settlement agreement. (1) At any time during the course of 
proceedings pursuant to this subpart, the Finance Board shall give 
Petitioners and Intervenors the opportunity to submit offers of 
settlement when the nature of the proceedings and the public interest 
permit. With the approval of the Managing Director, an authorized 
representative of a Petitioner or Intervenor may enter into a proposed 
settlement agreement with the Finance Board disposing of some or all of 
the issues presented in a Petition or Request to Intervene.
    (2) No proposed settlement agreement shall be final until approved 
by the Board of Directors. The Board of Directors shall consider any 
proposed settlement agreement within 30 calendar days of receiving a 
notice of the

[[Page 25]]

proposed settlement agreement. If the Board of Directors disapproves or 
fails to approve a proposed settlement agreement within 30 days, the 
proposed settlement agreement shall be null and void and the previously 
filed Petition or Request to Intervene shall be considered in accordance 
with this subpart.
    (3) A settlement agreement approved by the Board of Directors shall 
be deemed final and binding on all parties to the agreement. At the time 
a proposed settlement agreement becomes final, a Petition or Request to 
Intervene previously filed by a party to the agreement shall be deemed 
withdrawn as to all issues resolved in the agreement, and the parties to 
the agreement shall be estopped from raising objection to those issues 
or to the terms of the settlement agreement.
    (e) No rights created; Finance Board not prohibited. Nothing in this 
subpart shall be deemed to create any substantive or discovery right in 
any party. Nothing in this subpart shall limit in any manner the right 
of the Finance Board to conduct any examination or inspection of any 
Bank or the Office of Finance, or to take any action with respect to a 
Bank or the Office of Finance, or its directors, officers, employees or 
agents, otherwise authorized by law.
    (f) Exhaustion requirement. When seeking a Case-by-Case 
Determination of any matter or review by the Board of Directors of any 
Supervisory Determination, a Bank or the Office of Finance shall follow 
the procedures in this subpart as a prerequisite to seeking judicial 
review. Failure to do so shall be deemed to be a failure to exhaust all 
available administrative remedies.
    (g) Improper conduct prohibited. No party shall, by act or omission, 
unduly burden or frustrate the efforts of the Board of Directors to 
carry out its duties under the laws and regulations of the Finance 
Board. A Petitioner or Intervenor shall confine its communications with 
the Board of Directors, or any individual member thereof, concerning 
issues raised in a pending Petition, to written communications for 
inclusion in the record of the proceeding, filed with the Secretary to 
the Board.
    (h) Costs. Petitioners are encouraged to contain costs associated 
with the preparation and filing of Petitions and related personal 
appearances, if any, at any meeting held by the Board of Directors under 
this subpart. The Petitioner shall be solely responsible for all costs 
associated with any such Petitions and appearances.
    (i) Procedures are exclusive. All Case-by-Case Determinations by the 
Board of Directors and all Reviews of Disputed Supervisory 
Determinations shall be considered exclusively pursuant to the 
procedures described in this subpart.

[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 907.16  Rules of practice.

    In connection with any matter initiated or pending pursuant to this 
part, petitioners, requestors or intervenors, or their representatives, 
shall be subject to the provisions of subpart F of 12 CFR part 908. No 
other provision of part 908 shall apply under this part

[67 FR 9903, Mar. 5, 2002]



PART 908--RULES OF PRACTICE AND PROCEDURE IN HEARINGS ON THE RECORD--Table of Contents




                         Subpart A--Introduction

Sec.
908.1  Scope.
908.2  Definitions.
908.3  Rules of construction.

         Subpart B--Scope and Authority--Enforcement Proceedings

908.4  Cease and desist proceedings.
908.5  Temporary cease and desist orders.
908.6  Civil money penalties.
908.7  Service of notice.
908.8  Subpoenas.
908.9  Hearings on the record.
908.10  Judicial review.
908.11  Jurisdiction and enforcement.
908.12  Notice after separation.
908.13  Public disclosure of final orders.
908.14  No implied private right of action.
908.15-908.19  [Reserved]

                        Subpart C--General Rules

908.20  Authority of the Board of Directors.
908.21  Authority of the presiding officer.
908.22  Public hearings.
908.23  Good faith certification.

[[Page 26]]

908.24  Ex parte communications.
908.25  Filing of papers.
908.26  Service of papers.
908.27  Computing time.
908.28  Change of time limits.
908.29  Witness fees and expenses.
908.30  Settlement or other dispute resolution.
908.31  Right to supervise the Banks.
908.32  Collateral attacks on proceedings under this part.
908.33-908.39  [Reserved]

                   Subpart D--Pre-Hearing Proceedings

908.40  Commencement of proceeding and contents of notices.
908.41  Answer.
908.42  Amended pleadings.
908.43  Failure to appear.
908.44  Consolidation and severance of actions.
908.45  Motions.
908.46  Discovery.
908.47  Request for document discovery from parties.
908.48  Document subpoenas to nonparties.
908.49  Deposition of witness unavailable for hearing.
908.50  Interlocutory review.
908.51  Summary disposition.
908.52  Partial summary disposition.
908.53  Scheduling and prehearing conferences.
908.54  Pre-hearing submissions.
908.55  Hearing subpoenas.
908.56-908.59  [Reserved]

             Subpart E--Hearing and Post-hearing Proceedings

908.60  Conduct of hearings.
908.61  Evidence.
908.62  Post-hearing filings.
908.63  Recommended decision and filing of record.
908.64  Exceptions to recommended decision.
908.65  Review by Board of Directors.
908.66  Exhaustion of administrative remedies.
908.67  Stay of final decision and order pending judicial review.
908.68-908.69  [Reserved]

          Subpart F--Rules of Practice Before the Finance Board

908.70  Scope.
908.71  Practice before the Finance Board.
908.72  Appearances and practice in proceedings before the Finance 
          Board.
908.73  Conflicts of interest.
908.74  Sanctions.
908.75  Censure, suspension, disbarment and reinstatement.

    Authority: 12 U.S.C. 1422b(a)(5), 4631(c) and (f), and 4632-4641. 
Section 908.4 is also authorized by 12 U.S.C. 1818(b)(6) and (7).

    Source: 67 FR 9903, Mar. 5, 2002, unless otherwise noted.



                         Subpart A--Introduction



Sec. 908.1  Scope.

    This part prescribes rules of practice and procedure applicable to 
any hearing with regard to:
    (a) Cease and desist proceedings under section 2B(a)(5) of the Act 
(12 U.S.C. 1422b(a)(5)); or
    (b) Civil money penalty assessment proceedings under section 
2B(a)(5) of the Act (12 U.S.C. 1422b(a)(5)).



Sec. 908.2  Definitions.

    For purposes of this part--
    Decisional employee means any employee of the Finance Board, except 
the Office of General Counsel, or any member of the presiding officer's 
staff who has not engaged in an investigative or prosecutorial role in 
connection with the subject cease and desist or civil money penalty 
proceedings and who may assist the Board of Directors or the presiding 
officer, respectively, in preparing orders, recommended decisions, 
decisions and other documents under this part.
    Hearing means an adjudicatory proceeding conducted pursuant to this 
part;
    Notice means a written notice of charges or notice of assessment of 
a civil money penalty so titled that served by the Finance Board upon a 
respondent, which conforms to Sec. 908.40 and describes the alleged 
violations with sufficient specificity to put the respondent on notice 
of the nature and scope of the charges being brought against him, except 
in the context of the plain meaning of the word notice in a provision, 
such as reasonable notice or actual notice.
    Party means, for purposes of subparts C through F of this part only, 
the Finance Board or respondent.
    Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency, Bank, or other entity or organization with the 
exception of the Finance Board.

[[Page 27]]

    Presiding officer means an administrative law judge or other 
qualified, neutral individual who is appointed by the Finance Board 
under applicable law, and, pursuant to Title 5 of the United States 
Code, may conduct a hearing or adjudicatory proceeding under this part.
    Representative of record means an individual who is authorized to 
represent a respondent (and includes a respondent who represents 
himself) at a hearing conducted under this part and who has filed a 
notice of appearance in accordance with Sec. 908.72.
    Respondent means any person named in a notice of charges or notice 
of determination to impose civil money penalties issued by the Finance 
Board.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501-4641) (Title 
XIII of the Housing and Community Development Act of 1992, Pub. L. No. 
102-550).
    Violation includes any act or omission by any person, undertaken 
alone or with one or more others, that causes directly or indirectly, 
counsels, participates in, or otherwise furthers, aids or abets a 
violation of the Act, other applicable law, regulation, or order of the 
Finance Board.



Sec. 908.3  Rules of construction.

    For purposes of this part--
    (a) Any term in the singular includes the plural and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate; and
    (c) Unless the context requires otherwise, a party's representative 
of record, if any, may, on behalf of that party, take any action 
required to be taken by the party.



         Subpart B--Scope and Authority--Enforcement Proceedings



Sec. 908.4  Cease and desist proceedings.

    (a) Notice of charges--(1) Grounds. The Finance Board may issue and 
serve a notice of charges upon a Bank or any executive officer or 
director of a Bank if the Finance Board determines that such party is 
engaging or has engaged in, or, if the Finance Board has reasonable 
cause to believe is about to engage in:
    (i) An unsafe or unsound practice in conducting the business of the 
Bank;
    (ii) Any conduct that violates any provision of the Act or any 
applicable law, order, rule or regulation; or
    (iii) Any conduct that violates any condition imposed in writing by 
the Finance Board in connection with the granting of any application or 
other request by the Bank, or any written agreement between the Bank and 
the Finance Board.
    (2) Content of notice of charges. A notice of charges shall contain 
a statement of the facts constituting the alleged conduct or violation 
and otherwise shall conform to the requirements set forth in 
Sec. 908.40.
    (b) Cease and desist order--(1) Issuance of order. An order to cease 
and desist shall be issued in writing and only after the respondent has 
been given the opportunity for a hearing on the record in accordance 
with the requirements set forth in Sec. 908.9. If the Board of Directors 
finds, based on the record of the hearing, that any conduct or violation 
specified in the notice of charges has been established or if a 
respondent consents (or is deemed to have consented pursuant to 
Sec. 908.43), the Board of Directors may issue and serve upon the 
respondent an order requiring the respondent to cease and desist from 
any such practice, violation or conduct, to take affirmative action to 
correct or remedy the conditions resulting from any such practice, 
violation or conduct, or to comply with such limitations on activities 
or functions as may be prescribed therein.
    (2) Affirmative action. The authority of the Board of Directors to 
issue and serve a cease and desist order that requires a respondent to 
take affirmative action to correct or remedy any conditions resulting 
from any violation or practice with respect to which such order is 
issued includes the authority to require a respondent to--
    (i) Make restitution or provide reimbursement, indemnification, or 
guarantee against loss if--

[[Page 28]]

    (A) The respondent was unjustly enriched in connection with the 
violation, conduct or practice described in the order; or
    (B) The violation, conduct or practice involved a reckless disregard 
for the law or any applicable regulations or prior order of the Finance 
Board;
    (ii) Restrict the growth of the Bank;
    (iii) Dispose of any loan or asset involved;
    (iv) Rescind any agreement or contract;
    (v) Employ qualified officers or employees (who may be subject to 
approval by the Finance Board, as directed by the Finance Board); and
    (vi) Take such other action as the Finance Board determines to be 
appropriate.
    (3) Authority to limit activities. The authority of the Board of 
Directors to issue and serve a cease and desist order includes the 
authority to place limitations on the activities or functions of a 
respondent.
    (c) Effective date of order. An order issued under paragraph (b) of 
this section shall become effective upon the expiration of the 30-day 
period beginning on the date of service of the order upon the 
respondent, (except in the case of an order issued upon consent, which 
shall become effective at the time specified therein), and shall remain 
effective and enforceable as provided in the order, except to the extent 
that the order is stayed, modified, terminated, or set aside by action 
of the Board of Directors or otherwise as provided for in this part.



Sec. 908.5  Temporary cease and desist orders.

    (a) Grounds. Whenever the Board of Directors determines that any 
conduct or violation, or threatened conduct or violation, specified in a 
notice of charges issued and served upon a respondent, or the 
continuation of such conduct or violation, is likely to cause 
insolvency, a significant depletion of total capital, or irreparable 
harm to a Bank prior to the completion of the cease and desist 
proceeding, the Board of Directors may issue a temporary order requiring 
the respondent to cease and desist from any such conduct or violation, 
or such threatened conduct or violation, and to take affirmative action 
to prevent or remedy such insolvency, depletion, or harm pending 
completion of such proceedings. Such order may include any requirement 
authorized under Sec. 908.4(b)(2).
    (b) Incomplete records. If a notice of charges specifies that the 
books and records of a Bank are so incomplete or inaccurate that the 
Finance Board is unable, through the normal supervisory process, to 
determine the financial condition of the Bank or the details or purpose 
of any transaction or transactions that may have a material effect on 
the financial condition of a Bank, the Finance Board may issue a 
temporary order requiring a respondent to:
    (1) Cease and desist from any activity or practice that caused or 
contributed to, whether in whole or in part, the incomplete or 
inaccurate state of the books or records of a Bank; or
    (2) Take affirmative action to restore the books or records to a 
complete and accurate state.
    (c) Effective date. Any temporary order issued pursuant to this 
section shall become effective upon service upon the respondent.
    (d) Effective period. (1) Any temporary order issued under paragraph 
(a) of this section, unless set aside, limited, or suspended by a court 
in a proceeding under paragraph (e) of this section, shall remain in 
effect and enforceable pending the completion of the proceeding on the 
notice of charges and shall remain effective until the Board of 
Directors dismisses the charges specified in the notice of charges or it 
is superceded by a cease and desist order.
    (2) Any temporary order issued under paragraph (b) of this section, 
unless set aside, limited, or suspended by a court in proceedings 
pursuant to paragraph (e) of this section, shall remain in effect and 
enforceable until the earlier of the completion of the proceeding on the 
notice of charges, or the date that the Finance Board determines, by 
examination or otherwise, that the books and records of the Bank are 
accurate and reflect the financial condition of the Bank.
    (e) Judicial relief. As authorized by section 2B(a)(5) of the Act 
(12 U.S.C. 1422b(a)(5)) and sections 1372(d) and

[[Page 29]]

1375(b) of the Safety and Soundness Act (12 U.S.C. 4632(d) and 4635(b)), 
a respondent that has been served with a temporary order may apply to 
the United States District Court for the District of Columbia within ten 
days after such service for an injunction setting aside, limiting, or 
suspending the enforcement, operation, or effectiveness of the order 
pending the completion of the hearing pursuant to the notice of charges.
    (f) Enforcement of temporary order. If a respondent violates, 
threatens to violate, or fails to obey, a temporary order issued 
pursuant to this section, the Finance Board may bring an action in the 
United States District Court for the District of Columbia for an 
injunction to enforce such temporary order, as authorized by sections 
2B(a)(5) and 2B(a)(7) of the Act (12 U.S.C. 1422b(a)(5) and (a)(7)) and 
section 1372(e) of the Safety and Soundness Act (12 U.S.C. 4632(e)).



Sec. 908.6  Civil money penalties.

    (a) Notice of assessment. (1) Grounds. The Finance Board may issue 
and serve a notice of assessment of a civil money penalty on any Bank or 
any executive officer or director of a Bank that:
    (i) Violates any provision of the Act, or any order, rule, or 
regulation issued under the Act;
    (ii) Violates any final or temporary cease and desist order issued 
by the Finance Board pursuant to the Act;
    (iii) Violates any written agreement between a Bank and the Finance 
Board; or
    (iv) Engages in any conduct that causes or is likely to cause a loss 
to a Bank.
    (2) Content of notice. A notice of assessment of a civil money 
penalty shall contain a statement of the facts constituting the alleged 
conduct or violation and otherwise conform to the requirements set forth 
in Sec. 908.40.
    (b) Order assessing penalty. An order assessing a civil money 
penalty shall be issued in writing and only after the respondent has 
been given the opportunity for a hearing on the record in accordance 
with the procedures set forth in Sec. 908.9. If the Board of Directors 
finds, based on the record of the hearing, that any conduct or violation 
specified in the notice of assessment of a civil money penalty has been 
established or if a respondent consents (or is deemed to have consented 
pursuant to Sec. 908.43), the Board of Directors may issue and serve 
upon the respondent an order assessing a civil money penalty.
    (c) Amount of penalty. (1) The Finance Board may impose a civil 
money penalty under paragraph (b) of this section against a Bank for a 
violation described in paragraph (a)(i) through (iii) of this section in 
an amount not to exceed $5,000.00 for each day that such violation 
continues;
    (2) The Finance Board may impose a civil money penalty on an 
executive officer or director of a Bank in an amount not to exceed 
$10,000.00, or on a Bank in an amount not to exceed $25,000.00, for each 
day that a violation or conduct described in paragraph (a) of this 
section continues, if the Finance Board finds that the violation or 
conduct:
    (i) Is part of a pattern of misconduct; or
    (ii) Involved recklessness and caused or would be likely to cause a 
material loss to a Bank; or
    (3) The Finance Board may impose a civil money penalty on an 
executive officer or director of a Bank in an amount not to exceed 
$100,000.00, or on a Bank in an amount not to exceed $1,000,000.00, for 
each day that a violation or conduct described in paragraph (a) of this 
section continues, if the Finance Board finds that the violation or 
conduct was knowing and caused or would be likely to cause a substantial 
loss to a Bank.
    (d) Factors in determining the amount of the penalty. In determining 
the amount of the civil money penalty to be assessed under this section, 
the Finance Board shall consider such factors as the gravity of the 
violation, any history of prior violations, the good faith of the 
officer or director of a Bank, the effect of the penalty on promoting or 
protecting the safety and soundness of a Bank or the Bank System, any 
injury to members of the subject Bank or to the public at large, any 
benefits received, and the potential for the deterrence of future 
violations.
    (e) Judicial relief. Pursuant to section 2B(a)(5) of the Act (12 
U.S.C. 1422b(a)(5))

[[Page 30]]

and section 1376(c)(3) of the Safety and Soundness Act (12 U.S.C. 
4636(c)(3)), an order of the Board of Directors imposing a civil money 
penalty under this subsection shall not be subject to judicial review 
except as otherwise provided in Sec. 908.10, in accordance with section 
1374 of the Safety and Soundness Act (12 U.S.C. 4634).
    (f) Judicial enforcement of an order imposing a penalty. Pursuant to 
sections 2B(a)(5) and 2B(a)(7) of the Act (12 U.S.C. 1422b(a)(5) and 
(a)(7)) and section 1376(d) of the Safety and Soundness Act (12 U.S.C. 
4636(d)), if a Bank, or an executive officer or director of a Bank, 
fails to comply with an order of the Board of Directors imposing a civil 
money penalty, the Finance Board may seek to enforce the order as 
follows:
    (1) After the order is final and no longer subject to judicial 
review under Sec. 908.10, the Finance Board may bring an action in the 
United States District Court for the District of Columbia to obtain a 
monetary judgment against a Bank or the executive officer or director of 
a Bank;
    (2) The Finance Board may, in addition, seek such other relief as 
may be available from the District Court;
    (3) The monetary judgment may, in the discretion of the District 
Court, include any attorneys fees and other expenses incurred by the 
Finance Board in connection with the action; and
    (4) The validity and appropriateness of the Board of Directors' 
order assessing a civil money penalty shall not be subject to review of 
the United States District Court for the District of Columbia.
    (g) Board of Directors' authority to review. The Board of Directors 
may:
    (1) Review any order to assess a civil money penalty or any 
interlocutory ruling arising from a hearing on the record, or
    (2) Settle, modify, or remit in whole or in part, any civil money 
penalty, which may be or may have been assessed under this section.
    (h) Availability of other remedies. Any civil money penalty assessed 
under this section shall be in addition to any other available civil 
remedy and may be assessed whether or not the Finance Board imposes 
other administrative sanctions pursuant to this part.
    (i) Prohibition of reimbursement or indemnification. A Bank shall 
not reimburse, indemnify, or otherwise compensate directly or indirectly 
any executive officer or director for any penalty imposed against such 
individual under paragraph (c)(3) of this section.
    (j) Applicability. Any penalty under this part may be imposed only 
for conduct or violations occurring after November 12, 1999.
    (k) Adjustment of civil money penalties by the rate of inflation. 
Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended by the Debt Collection Improvement Act of 1996, Pub. 
Law No. 104-134 (1996) (collectively, the Inflation Adjustment Act) (to 
be codified at 28 U.S.C. 2461 note), the Finance Board is required to 
adjust each civil money penalty set forth herein by a prescribed cost-
of-living adjustment at least once every four years. The adjustment is 
based on the formula prescribed in section 5(b) of the Inflation 
Adjustment Act (28 U.S.C. 2461 note).



Sec. 908.7  Service of notice.

    In accordance with section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1379A of the Safety and Soundness Act (12 
U.S.C. 4640), any service required or authorized to be made by the 
Finance Board under this part may be made by registered mail, or in such 
other manner reasonably calculated to give actual notice as the Finance 
Board may by regulation or otherwise provide.



Sec. 908.8  Subpoenas.

    (a) Authority. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1379B of the Safety and Soundness Act (12 
U.S.C. 4641), the Finance Board, in the course of or in connection with 
a hearing under this part, shall have the authority:
    (1) To administer oaths and affirmations;
    (2) To take and preserve testimony under oath;
    (3) To issue subpoenas and subpoenas duces tecum; and
    (4) To revoke, quash, or modify subpoenas and subpoenas duces tecum 
issued by the Finance Board pursuant to this part.

[[Page 31]]

    (b) Witnesses and documents. The attendance of witnesses and the 
production of documents provided for in this subsection may be required 
from any place in any State at any designated place where such 
proceeding is being conducted.
    (c) Enforcement. The Finance Board may file an action in the United 
States district court for the judicial district where the proceeding is 
being conducted or where the witness resides or conducts business, or in 
the United States District Court for the District of Columbia, for 
enforcement of any subpoena or subpoena duces tecum issued pursuant to 
this section. Such courts shall have jurisdiction over such actions and 
power to order and require compliance with such subpoenas and subpoenas 
duces tecum.
    (d) Fees and expenses. Witnesses subpoenaed under this section shall 
be paid the same fees and mileage that are paid witnesses in the 
district courts of the United States. Any court having jurisdiction of 
any proceeding instituted under this section by a Bank may allow to any 
such party such reasonable expenses and attorneys fees as the court 
deems just and proper. Such expenses shall be paid by the Bank or from 
its assets.



Sec. 908.9  Hearings on the record.

    (a) Requirements--(1) Venue and record. Pursuant to section 2B(a)(5) 
of the Act (12 U.S.C. 1422b(a)(5)) and section 1373 of the Safety and 
Soundness Act (12 U.S.C. 4633), any hearing conducted pursuant to 
Secs. 908.4 or 908.6 shall be held on the record and in the District of 
Columbia.
    (2) Timing. Any hearing shall be set for a date not earlier than 
thirty (30) days nor later than sixty (60) days after service of a 
notice, unless an earlier or a later date is set by the presiding 
officer at the request of the party served.
    (3) Procedure. Any hearing held pursuant to Secs. 908.4 or 908.6 
shall be conducted in accordance with chapter 5 of Title 5 of the United 
States Code.
    (4) Failure to appear. If a respondent fails to appear at a hearing 
individually or through a duly authorized representative, the respondent 
shall be deemed to have consented to the issuance of a cease and desist 
order or an order assessing a civil money penalty for which the hearing 
is held.
    (5) Open to the public. All hearings on the record with respect to 
any notice issued by the Finance Board shall be open to the public, 
unless the Board of Directors, in its discretion, determines that 
holding an open hearing would be contrary to the public interest.
    (b) Issuance of final order. After a hearing on the record has been 
concluded, and within 90 days after the parties have been notified that 
the case has been submitted to the Board of Directors for final 
decision, the Board of Directors shall render the final decision (which 
shall include findings of fact upon which the decision is predicated) 
and shall issue and serve upon each party to the proceeding a final 
order or orders consistent with the provisions.
    (c) Judicial review and modification of final orders. Judicial 
review of any such final decision and order shall be exclusively as 
provided for in Sec. 908.10, pursuant to section 2B(a)(5) of the Act (12 
U.S.C. 1422b(a)(5)) and sections 1373 and 1374 of the Safety and 
Soundness Act (12 U.S.C. 4633 and 4634). Unless a petition for review is 
timely filed as provided in Sec. 908.10, and thereafter until the record 
in the proceeding has been filed as so provided, the Board of Directors 
may at any time modify, terminate, or set aside any such final decision 
and order, upon such notice and in such manner as the Board of 
Directors, in its sole discretion, considers proper. Upon such filing of 
the record, the Board of Directors may modify, terminate, or set aside 
any such final decision and order with permission of the court.



Sec. 908.10  Judicial review.

    (a) Authority. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374 of the Safety and Soundness Act (12 U.S.C. 
4634), any party to a hearing may obtain judicial review of a final 
decision and order issued under Secs. 908.4 or 908.6 exclusively by 
filing a written petition in the United States Court of Appeals for the 
District of Columbia Circuit within

[[Page 32]]

thirty (30) days after the date of service of the final decision and 
order, requesting the court to modify, terminate or set aside the final 
decision and order.
    (b) Filing of record. Upon receiving a copy of the petition from the 
clerk of the court of appeals, the Finance Board shall file the hearing 
record with the clerk, as provided in section 2112 of Title 28 of the 
United States Code (28 U.S.C. 2112).
    (c) Jurisdiction. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374(c) of the Safety and Soundness Act (12 
U.S.C. 4634(c)), upon the filing of a petition, the court of appeals 
shall have jurisdiction, which upon the filing of the record by the 
Finance Board (except as otherwise provided in Sec. 908.9) shall be 
exclusive, to affirm, modify, terminate or set aside, in whole or in 
part, a final decision and order of the Board of Directors.
    (d) Review. Review by the court of appeals of a final decision and 
order of the Board of Directors and the record of any hearing conducted 
pursuant to this part shall be governed by chapter 7 of Title 5 of the 
United States Code (5 U.S.C. 701 et seq.).
    (e) Order to pay civil money penalty. In connection with its review 
of a final order pursuant to this part, the court of appeals shall have 
authority in accordance with section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374(e) of the Safety and Soundness Act (12 
U.S.C. 4634(e)), to order payment of any civil money penalty imposed by 
the Finance Board.
    (f) No automatic stay. In accordance with section 2B(a)(5) of the 
Act (12 U.S.C. 1422b(a)(5)) and section 1374(f) of the Safety and 
Soundness Act (12 U.S.C. 4634(f)), the commencement of an action for 
judicial review of a final decision and order of the Board of Directors 
under this section shall not operate as a stay of any such order, unless 
the court of appeals specifically orders a stay of the order in whole or 
in part.



Sec. 908.11  Jurisdiction and enforcement.

    (a) Enforcement. In accordance with sections 2B(a)(5) and 2B(a)(7) 
of the Act (12 U.S.C. 1422b(a)(5) and (a)(7)) and section 1375(a) of the 
Safety and Soundness Act (12 U.S.C. 4635(a)), the Finance Board may 
bring an action in the United States District Court for the District of 
Columbia for the enforcement of any effective order issued by the Board 
of Directors under this part. Such court shall have jurisdiction and 
power to order and require compliance with such order.
    (b) Limitation on jurisdiction. In accordance with sections 2B(a)(5) 
and 2B(a)(7) of the Act (12 U.S.C. 1422b(a)(5) and (a)(7)) and section 
1375(b) of the Safety and Soundness Act (12 U.S.C. 4635(b)), and except 
as otherwise provided in the Act, no court shall have jurisdiction to 
affect, by injunction or otherwise, the issuance or enforcement of any 
order issued by the Board of Directors under this part, or to review, 
modify, suspend, terminate, or set aside any such notice or order.



Sec. 908.12  Notice after separation.

    The resignation, termination of employment or participation, or 
separation of a director or executive officer of a Bank shall not affect 
the jurisdiction and authority of the Finance Board to issue any notice 
and proceed under this part against any such director or executive 
officer, if such notice is served before the end of the two-year period 
beginning on the date such director or executive officer ceases to be 
associated with the Bank.



Sec. 908.13  Public disclosure of final orders.

    (a) In general. The Finance Board shall make available to the 
public--
    (1) Any written agreement or other written statement for which a 
violation may be redressed by the Finance Board or any modification to 
or termination thereof, unless the Finance Board in its discretion, 
determines that public disclosure would be contrary to the public 
interest;
    (2) Any order that is issued by the Board of Directors and that has 
become final in accordance with this part; and
    (3) Any modification to or termination of any final order made 
public pursuant to this part.
    (b) Delay of public disclosure under exceptional circumstances. If 
the Finance Board determines in writing that the

[[Page 33]]

public disclosure, pursuant to paragraph (a) of this section, of any 
final decision and order of the Board of Directors would seriously 
threaten the financial health or security of a Bank, the Finance Board 
may delay the public disclosure of such decision and order for a 
reasonable time.
    (c) Documents filed under seal. The Finance Board may file any 
document or part thereof under seal in any hearing commenced by the 
Finance Board under this part, if it determines in writing that 
disclosure thereof would be contrary to the public interest.
    (d) Retention of documents. The Finance Board shall keep and 
maintain a record, for not less than six years, of all documents 
described in paragraph (a) of this section and all enforcement 
agreements and other supervisory actions and supporting documents issued 
with respect to or in connection with any enforcement proceeding 
initiated by the Finance Board under this part or any other law.
    (e) Disclosure to Congress. This section may not be construed to 
authorize the withholding, or to prohibit the disclosure, of any 
information to the Congress or any committee or subcommittee thereof.



Sec. 908.14  No implied private right of action.

    This part shall not create any private right of action on behalf of 
any person against a Bank or any director or executive officer of a Bank 
or impair any existing private right of action under applicable law.



Secs. 908.15-908.19  [Reserved]



                        Subpart C--General Rules



Sec. 908.20  Authority of the Board of Directors.

    The Board of Directors may, at any time during the pendency of a 
proceeding under this part, perform, direct the performance of, or waive 
the performance of any act that could be done or ordered by the 
presiding officer.



Sec. 908.21  Authority of the presiding officer.

    (a) General rule. All cease and desist or civil money penalty 
proceedings governed by this subpart shall be conducted in a hearing on 
the record in accordance with the provisions of the Administrative 
Procedure Act, 5 U.S.C. 551-559. The presiding officer shall have 
complete charge of the hearing, conduct a fair and impartial hearing, 
avoid unnecessary delay, and assure that a record of the hearing is 
made.
    (b) Powers. The presiding officer shall have all powers necessary to 
conduct the hearing in accordance with paragraph (a) of this section and 
5 U.S.C. 556(c). The presiding officer is authorized to--
    (1) Set and change the date, time and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding, including settlement conferences, mediation or other 
consensual methods of dispute resolution;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas, subpoenas duces tecum, and protective orders, 
as authorized by this part, and to revoke, quash, or modify such 
subpoenas;
    (6) Take and preserve testimony under oath;
    (7) Rule on motions and other procedural matters appropriate in a 
hearing, except that only the Board of Directors shall have the power to 
grant any motion to dismiss a cease and desist or civil money penalty 
proceeding or to make a final determination on the merits of such 
proceedings;
    (8) Regulate the scope and timing of discovery;
    (9) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (10) Examine witnesses;
    (11) Receive, exclude, limit, or otherwise rule on evidence;
    (12) Upon motion of a party, take official notice of facts;
    (13) Recuse herself/himself upon motion made by a party or on her or 
his own motion;

[[Page 34]]

    (14) Prepare and present to the Board of Directors a recommended 
decision as provided in this part;
    (15) Establish time, place and manner limitations on the attendance 
of the public and the media for any public hearing; and
    (16) Do all other things necessary and appropriate to discharge the 
duties of a presiding officer.



Sec. 908.22  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the Finance Board, in its discretion, determines that holding an open 
hearing would be contrary to the public interest. The Finance Board may 
make such determination sua sponte at any time by written notice to all 
parties.
    (b) Motion for closed hearing. Within twenty (20) days of service of 
a notice, any party or respondent may file with the presiding officer a 
motion for a non-public hearing and any party may file a pleading in 
reply to the motion. The presiding officer shall forward the motion and 
any reply, together with a recommended decision on the motion, to the 
Board of Directors, who shall make a final determination. Such motions 
and replies shall be governed by Sec. 908.45.
    (c) Filing documents under seal. The Finance Board, in its 
discretion, may file any document, or any part of any document, under 
seal if the agency makes a written determination that disclosure of the 
document would be contrary to the public interest. The presiding officer 
shall take all appropriate steps to preserve the confidentiality of such 
documents or parts thereof, including closing portions of the hearing to 
the public.



Sec. 908.23  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice by the Finance Board shall be signed 
by at least one representative of record in her or his individual name 
and shall state that representative's address and telephone number and 
the names, addresses and telephone numbers of all other representatives 
of record for the person making the filing or submission.
    (b) Effect of signature. (1) By signing a document, the 
representative of record or party certifies that--
    (i) The representative of record or party has read the filing or 
submission of record;
    (ii) To the best of her or his knowledge, information and belief 
formed after reasonable inquiry, the filing or submission of record is 
well-grounded in fact and is warranted by existing law or a good faith, 
non-frivolous argument for the extension, modification, or reversal of 
existing law, regulation or Finance Board policy or order; and
    (iii) The filing or submission of record is not made for any 
improper purpose, such as to harass or to cause unnecessary delay or 
needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the presiding 
officer shall strike the filing or submission of record, unless it is 
signed promptly after the omission is called to the attention of the 
pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any representative or party shall 
constitute a certification that to the best of her or his knowledge, 
information, and belief, formed after reasonable inquiry, such 
expressions or statements are well-grounded in fact and are warranted by 
existing law or a good faith, non-frivolous argument for the extension, 
modification, or reversal of existing law, regulation, or Finance Board 
policy or order, and are not made for any improper purpose, such as to 
harass or to cause unnecessary delay or needless increase in the cost of 
litigation.



Sec. 908.24  Ex parte communications.

    (a) Definition.(1) Ex parte communication means any material oral or 
written communication relevant to the merits of a cease and desist or 
civil money penalty proceeding under this part that was neither on the 
record nor on reasonable prior notice to all parties that takes place 
between--
    (i) An interested person outside the Finance Board (including the 
person's representative); and
    (ii) The presiding officer handling the proceeding, the Board of 
Directors or

[[Page 35]]

any member thereof, a decisional employee of the Finance Board assigned 
to that proceeding, or any other person who is or may reasonably be 
expected to be involved in the decisional process.
    (2) A communication that does not concern the merits of a proceeding 
under this part, such as a request for status of the proceeding, does 
not constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time that a 
notice commencing a proceeding under this part is issued by the Finance 
Board until the date that the Board of Directors issues its final 
decision pursuant to Sec. 908.65, no person referred to in paragraph 
(a)(1)(i) of this section shall knowingly make or cause to be made an ex 
parte communication. The Board of Directors, any member thereof 
individually, the presiding officer, or an employee of the Finance 
Board, shall not knowingly make or cause to be made an ex parte 
communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by any person identified in paragraph 
(a) of this section, that person promptly shall cause all such written 
communications (or, if the communication is oral, a memorandum stating 
the substance of the communication) to be placed on the record of the 
proceeding and served on all parties. All parties to the proceeding 
shall have an opportunity, within ten days of receipt of service of the 
ex parte communication or the written record of an oral communication, 
to file responses thereto and to recommend any sanctions, in accordance 
with paragraph (d) of this section, that they believe to be appropriate 
under the circumstances.
    (d) Sanctions. Any party or representative for a party who makes an 
ex parte communication, or who encourages or solicits another person or 
entity to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Board of Directors or the presiding 
officer, including, but not limited to, exclusion from the proceedings 
and an adverse ruling on the issue that is the subject of the prohibited 
communication.
    (e) Consultations by presiding officer. Except to the extent 
required for the disposition of ex parte matters as authorized by law, 
the presiding officer may not consult a person or party on any matter 
relevant to the merits of a proceeding, unless on notice and opportunity 
for all parties to participate.
    (f) Separation of functions. An employee or agent engaged in the 
performance of investigative or prosecuting functions for the Finance 
Board in a case may not, in that or a factually related case, 
participate or advise in the decision, recommended decision, or Board of 
Directors' review of the recommended decision under Sec. 908.65, except 
as a witness or counsel in a hearing.



Sec. 908.25  Filing of papers.

    (a) Filing. Any papers required to be filed shall be addressed to 
the presiding officer and filed with the Finance Board, 1777 F Street, 
NW., Washington, DC 20006.
    (b) Manner of filing. Unless otherwise specified by the Finance 
Board or the presiding officer, filing shall be accomplished by:
    (1) Personal service;
    (2) Delivery to the U.S. Postal Service or to a reliable commercial 
delivery service for same day or overnight delivery;
    (3) Mailing by first class, registered, or certified mail; or
    (4) Transmission by electronic media upon any conditions specified 
by the Finance Board or the presiding officer. All papers filed by 
electronic media shall also concurrently be filed in accordance with 
paragraph (c) of this section.
    (c) Formal requirements as to papers filed--(1) Form. All papers 
must set forth the name, address and telephone number of the 
representative or party making the filing and must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced and printed or 
typewritten on 8\1/2\ x 11-inch paper and must be clear and legible.
    (2) Signature. All papers must be dated and signed as provided in 
Sec. 908.23.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title

[[Page 36]]

page, the name of the Finance Board and of the filing party, the title 
and docket number of the proceeding and the subject of the particular 
paper.
    (4) Number of copies. Unless otherwise specified by the Finance 
Board or the presiding officer, an original and one copy of all 
documents, papers, transcripts of testimony, and exhibits shall be 
filed.



Sec. 908.26  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers or serving a subpoena shall serve a copy upon the representative 
of record for each party to the proceeding so represented and upon any 
party not so represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivery to the U.S. Postal Service or to a reliable commercial 
delivery service for same day or overnight delivery;
    (3) Mailing by first class, registered, or certified mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall also concurrently be 
served in accordance with the requirements of Sec. 908.25(c).
    (c) By the Finance Board or the presiding officer. (1) All papers 
required to be served by the Finance Board or the presiding officer upon 
a party who has appeared in the proceeding in accordance with 
Sec. 908.72 may be served by any means specified in paragraph (b) of 
this section.
    (2) If a notice of appearance has not been filed in the proceeding 
for a party in accordance with Sec. 908.72, the Finance Board or the 
presiding officer shall make service upon such party by any of the 
following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the person's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.
    (d) Subpoenas. Subject to applicable provisions in this part, 
service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) By any other method reasonably calculated to give actual notice.
    (e) Area of service. Service in any State, commonwealth, possession, 
territory of the United States or the District of Columbia on any person 
doing business in any State, commonwealth, possession, territory of the 
United States or the District of Columbia, or on any person as otherwise 
permitted by law, is effective without regard to the place where the 
hearing is held.
    (f) Proof of service. Proof of service of papers filed by a party 
shall be filed before action is taken thereon. The proof of service, 
which shall serve as prima facie evidence of the fact and date of 
service, shall show the date and manner of service and may be by written 
acknowledgment of service, by declaration of the person making service, 
or by certificate of a representative of record. However, failure to 
file proof of service contemporaneously with the papers shall not affect 
the validity of actual service. The presiding officer may allow the 
proof to be amended or

[[Page 37]]

supplied, unless to do so would result in material prejudice to a party.



Sec. 908.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act or event that commences the 
designated period of time is not included. The last day so computed is 
included unless it is a Saturday, Sunday, or Federal holiday. When the 
last day is a Saturday, Sunday or Federal holiday, the period shall run 
until the end of the next day that is not a Saturday, Sunday, or Federal 
holiday. Intermediate Saturdays, Sundays and Federal holidays are 
included in the computation of time. However, when the time period 
within which an act is to be performed is ten (10) days or less, not 
including any additional time allowed for in paragraph (c) of this 
section, intermediate Saturdays, Sundays and Federal holidays are not 
included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective--
    (i) In the case of personal service or same day reliable commercial 
delivery service, upon actual service;
    (ii) In the case of U.S. Postal Service or reliable commercial 
overnight delivery service, or first class, registered, or certified 
mail, upon deposit in or delivery to an appropriate point of collection; 
or
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing in the case of filing, and as 
agreed among the parties in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Finance Board or the 
presiding officer in the case of filing or by agreement of the parties 
in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice or paper, the applicable time limits shall be 
calculated as follows:
    (1) If service was made by first class, registered, or certified 
mail, or by delivery to the U.S. Postal Service for longer than 
overnight delivery service, add three (3) calendar days to the 
prescribed period for the responsive filing.
    (2) If service was made by U.S. Postal Service or reliable 
commercial overnight delivery service, add one (1) calendar day to the 
prescribed period for the responsive filing.
    (3) If service was made by electronic media transmission, add one 
(1) calendar day to the prescribed period for the responsive filing, 
unless otherwise determined by the Board of Directors or the presiding 
officer in the case of filing, or by agreement among the parties in the 
case of service.



Sec. 908.28  Change of time limits.

    Except as otherwise provided by law, the presiding officer may, for 
good cause shown, extend the time limits prescribed above or prescribed 
by any notice or non-dispositive order issued under this part. After the 
referral of the case to the Board of Directors pursuant to Sec. 908.63, 
the Board of Directors may grant extensions of the time limits for good 
cause shown. Extensions may be granted on the motion of a party after 
notice and opportunity to respond is afforded all nonmoving parties, or 
on the Board of Directors' or the presiding officer's own motion.



Sec. 908.29  Witness fees and expenses.

    Witnesses (other than parties) subpoenaed for testimony or 
depositions shall be paid the same fees for attendance and mileage as 
are paid to witnesses pursuant to the Federal Rules of Civil Procedure 
(title 28 of the U.S. Code) governing proceedings in the United States 
district courts, in which the United States is a party, provided that, 
in the case of a discovery subpoena addressed to a party, no witness 
fees or mileage shall be paid. Fees for witnesses shall be tendered in 
advance by the party requesting the subpoena, except that fees and 
mileage need not be tendered in advance where the Finance Board is the 
issuer of the subpoena. The Finance Board shall not be responsible for 
or required to pay any fees to or expenses of any witness not subpoenaed 
by the Finance Board.

[[Page 38]]



Sec. 908.30  Settlement or other dispute resolution.

    Any respondent may, at any time in a cease and desist or civil money 
penalty proceeding, unilaterally submit to the Finance Board's counsel 
of record written offers or proposals for settlement of such proceeding 
in whole or in part without prejudice to the rights of any of the 
parties. Any such offer or proposal shall be made exclusively to the 
Finance Board. Submission of a written settlement offer does not provide 
a basis for adjourning or otherwise delaying all or any portion of a 
proceeding under this part. Any party to a proceeding under this part 
may request a neutral individual preside over settlement negotiations. 
No settlement offer or proposal, or any subsequent negotiation or 
resolution, is admissible as evidence in any proceeding under this part 
or any court.



Sec. 908.31  Right to supervise the Banks.

    Nothing contained in this part shall limit in any manner the right 
of the Finance Board to conduct any examination, inspection, or 
visitation of any Bank, or the right of the Finance Board to conduct or 
continue any form of investigation authorized by law. Nothing set forth 
in this part shall restrict or be deemed to restrict the authority of 
the Finance Board to supervise the Banks or to issue or enforce orders 
or directives pursuant to section 2B(a)(1), or any other provision, of 
the Act (12 U.S.C. 1422b(a)(1)).



Sec. 908.32  Collateral attacks on proceedings under this part.

    If a respondent files in any court a collateral attack that purports 
to challenge all or any portion of a proceeding under this part, the 
hearing on the merits shall continue without regard to the pendency of 
any such challenge action. No default or other failure to act as 
directed in the hearing within the times prescribed in this subpart 
shall be excused based on the pendency of any such challenge action.



Secs. 908.33-908.39  [Reserved]



                   Subpart D--Pre-Hearing Proceedings



Sec. 908.40  Commencement of proceeding and contents of notices.

    Proceedings under this part are commenced by the issuance of a 
notice of charges or a notice of assessment of a civil money penalty 
(notice). A notice that is served by the Finance Board upon a respondent 
in accordance with Sec. 908.7 shall state all of the following:
    (a) The legal authority for the proceeding and for the Finance 
Board's jurisdiction over the proceeding;
    (b) A statement of the matters of fact or law showing that the 
Finance Board is entitled to relief;
    (c) A proposed order or prayer for an order granting the requested 
relief;
    (d) The time, place and nature of the hearing;
    (e) The time within which to file an answer;
    (f) The time within which to request a hearing; and
    (g) The address for filing the answer and/or request for a hearing.



Sec. 908.41  Answer.

    (a) Deadline for filing answer. Unless otherwise specified by the 
Finance Board in the notice, respondent shall file an answer within 
twenty (20) days of service of the notice.
    (b) Content of answer. An answer shall respond specifically to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has the 
effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice that is not denied in the answer is deemed admitted for purposes 
of the proceeding. A respondent is not required to respond to the 
portion of a notice that constitutes the

[[Page 39]]

prayer for relief or proposed order. The answer shall set forth 
affirmative defenses, if any, asserted by the respondent.
    (c) Default. Failure of a respondent to file an answer required by 
this section within the time provided constitutes a waiver of such 
respondent's right to appear and contest the allegations in the notice. 
If no timely answer is filed, the Finance Board's counsel of record may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
presiding officer shall file with the Board of Directors a recommended 
decision containing the findings and the relief sought in the notice. 
Any final order issued by the Board of Directors based upon a 
respondent's failure to answer shall be deemed to be an order issued 
upon consent.



Sec. 908.42  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
by the Finance Board prior to the scheduling conference held in 
accordance with Sec. 908.53, or at any stage of the proceeding with the 
permission of the presiding officer for good cause shown. The respondent 
must answer an amended notice within the time remaining for the 
respondent's answer to the original notice, or within ten (10) days 
after service of the amended notice, whichever period is longer, unless 
the Board of Directors or the presiding officer orders otherwise for 
good cause shown.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing by express or implied 
consent of the parties, they shall be treated in all respects as if they 
had been raised in the notice or answer, and no formal amendments shall 
be required. If evidence is objected to at the hearing on the ground 
that it is not within the issues raised by the notice or answer, the 
presiding officer may admit the evidence when admission is likely to 
assist in adjudicating the merits of the action. The presiding officer 
will do so freely when the determination of the merits of the action is 
served thereby and the objecting party fails to satisfy the presiding 
officer that the admission of such evidence would unfairly prejudice 
that party's action or defense upon the merits. The presiding officer 
may grant a continuance to enable the objecting party to meet such 
evidence.



Sec. 908.43  Failure to appear.

    Failure of a respondent to appear in person or by a duly authorized 
representative at the hearing constitutes a waiver of respondent's right 
to a hearing and is deemed an admission of the facts as alleged and 
consent to the relief sought in the notice. Without further proceedings 
or notice to the respondent, the presiding officer shall file with the 
Board of Directors a recommended decision containing the findings and 
the relief sought in the notice.



Sec. 908.44  Consolidation and severance of actions.

    (a) Consolidation. On the motion of any party, or on the Finance 
Board's or the presiding officer's own motion, the presiding officer may 
consolidate, for some or all purposes, any two or more proceedings, if 
each such proceeding involves or arises out of the same transaction, 
occurrence or series of transactions or occurrences, or involves at 
least one common respondent or a material common question of law or 
fact, unless such consolidation would cause unreasonable delay or 
injustice. In the event of consolidation under this section, appropriate 
adjustment to the pre-hearing schedule must be made to avoid unnecessary 
expense, inconvenience, or delay.
    (b) Severance. The presiding officer may, upon the motion of the 
Finance Board or any party, sever the proceeding for separate resolution 
of the matter as to any respondent only if the presiding officer finds 
that undue prejudice or injustice to the moving party would result from 
not severing the proceeding and such undue prejudice or injustice would 
outweigh the interests of judicial economy and expedition in the 
complete and final resolution of the proceeding.



Sec. 908.45  Motions.

    (a) Written motions. (1) Except as otherwise provided herein, an 
application

[[Page 40]]

or request for an order or ruling must be made by written motion.
    (2) All written motions shall state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the presiding officer. Written memoranda, briefs, 
affidavits, or other relevant material or documents may be filed in 
support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally and on the record at a 
hearing, unless the presiding officer directs that such motion be 
reduced to writing and filed with the presiding officer. Oral motions 
must be made a part of the record of the hearing, and accompanied by a 
proposed order.
    (c) Filing of motions. Motions shall be filed with the presiding 
officer, except that following the filing of a recommended decision with 
the Board of Directors, motions must be filed with the Board of 
Directors in accordance with Sec. 908.64.
    (d) Responses. (1) Except as otherwise provided herein, any party 
may file a written response to a motion within ten days after service of 
any written motion, or within such other period of time as may be 
established by the presiding officer or the Board of Directors. The 
presiding officer shall not rule on any oral or written motion before 
each party has had an opportunity to file a response.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed to be consent by that party to the 
entry of an order substantially in the form of the order accompanying 
the motion.
    (e) Dilatory motions. Frivolous, dilatory, or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (f) Dispositive motions. Dispositive motions shall be governed by 
Secs. 908.51 and 908.52.



Sec. 908.46  Discovery.

    (a) Limits on discovery. Subject to the limitations set out in 
paragraphs (b), (d), and (e) of this section, any party to a hearing 
under this part may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term documents may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic form, 
and other data compilations from which information can be obtained or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form, as well as written material of all kinds.
    (b) Relevance. A party may obtain document discovery regarding any 
matter not privileged provided that the information sought has a logical 
connection to consequential facts (i.e., material) or may tend to prove 
or disprove a matter in issue (i.e., relevant) related to the merits of 
the pending action. Any request to produce documents that calls for 
irrelevant or immaterial information, or that is unreasonable, 
oppressive, excessive in scope, unduly burdensome, or repetitive of 
previous requests, or that seeks to obtain privileged documents, shall 
be denied or modified. A request is unreasonable, oppressive, excessive 
in scope, or unduly burdensome if, among other things, it fails to 
include justifiable limitations on the time period covered and the 
geographic locations to be searched, the time provided to respond in the 
request is inadequate, or the request calls for copies of documents to 
be delivered to the requesting party and fails to include the 
requestor's written agreement to pay in advance for the copying, in 
accordance with Sec. 908.47.
    (c) Forms of discovery. Document discovery shall be limited to 
requests for production of documents for inspection and copying. No 
other form of discovery shall be allowed. Discovery by use of 
interrogatories may be permitted. This paragraph shall not be 
interpreted to require the creation of a document.
    (d) Privileged matter. Privileged documents shall not be 
discoverable. Privileges include the attorney-client privilege, work-
product privilege, any government's or government agency's deliberative 
process privilege and any other privileges provided by the Constitution, 
any applicable act of Congress, or the principles of common law.

[[Page 41]]

    (e) Time limits. All discovery, including all responses to discovery 
requests, shall be completed within the time set by the presiding 
officer, but in no case later than ten (10) days prior to the service 
deadline for pre-hearing submissions in accordance with Sec. 908.54. No 
exception to this time limit shall be permitted, unless the presiding 
officer finds on the record that good cause exists for waiving the 
requirements of this paragraph.



Sec. 908.47  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. Copies of the request shall be served on all other parties. The 
request must identify the documents to be produced either by individual 
item or by category and must describe each item and category with 
reasonable particularity. Documents must be produced as they are kept in 
the usual course of business or they shall be labeled and organized to 
correspond with the categories in the request.
    (b) Production or copying. The request shall specify a reasonable 
time, place and manner for production and performing any related acts. 
In lieu of inspecting the documents, the requesting party may specify 
that all or some of the responsive documents be copied and the copies 
delivered to the requesting party. If copying of fewer than 250 pages is 
requested, the party to whom the request is addressed shall bear the 
cost of copying and shipping charges. If a party requests more than 250 
pages of copying, the requesting party shall pay for copying and 
shipping charges. Copying charges are at the current rate per page 
imposed by the Finance Board at Sec. 910.9(g) of this chapter for 
requests for documents filed under the Freedom of Information Act, 5 
U.S.C. 552. The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request is not required to supplement the response, unless:
    (1) The responding party learns that in some material respect the 
information disclosed is incomplete or incorrect, and
    (2) The additional or corrective information has not otherwise been 
made known to the other parties during the discovery process or in 
writing.
    (d) Motions to strike or limit discovery requests. (1) Any party 
that objects to a discovery request may, within ten (10) days of being 
served with such request, file a motion in accordance with the 
provisions of Sec. 908.45 requesting the presiding officer order the 
request be stricken or otherwise limited. If an objection is made to 
only a portion of an item or category in a request, the objection shall 
specify that portion. Any objections not made in accordance with this 
paragraph and Sec. 908.45 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike or limit may file a written response within five (5) days of 
service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, all 
documents withheld on the grounds of privilege must be reasonably 
identified, together with a statement of the basis for the assertion of 
privilege. When similar documents that are protected by deliberative 
process, attorney work-product, or attorney-client privilege are 
voluminous, these documents may be identified by category instead of by 
individual document. The presiding officer has discretion to determine 
when the identification by category is insufficient.
    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within (10) ten days of the assertion 
of privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 908.45 for the issuance of a subpoena compelling production.
    (2) The party who asserted the privilege or failed to comply with 
the request may, within five (5) days of service of a motion for the 
issuance of a subpoena compelling production, file a

[[Page 42]]

written response to the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses to 
motions pursuant to this section has expired, the presiding officer 
shall rule promptly on all such motions. If the presiding officer 
determines that a discovery request or any of its terms calls for 
irrelevant material, is unreasonable, oppressive, excessive in scope, 
unduly burdensome, or repetitive of previous requests, or seeks to 
obtain privileged documents, he or she may deny or modify the request 
and may issue appropriate protective orders, upon such conditions as 
justice may require. The pendency of a motion to strike or limit 
discovery or to compel production shall not be a basis for staying or 
continuing the proceeding, unless otherwise ordered by the presiding 
officer. Notwithstanding any other provision in this part, the presiding 
officer may not release, or order a party to produce, documents withheld 
on grounds of privilege if the party has stated to the presiding officer 
its intention to file a timely motion for interlocutory review of the 
presiding officer's order to produce the documents, until the motion for 
interlocutory review has been decided.
    (h) Enforcing discovery subpoenas. If the presiding officer issues a 
subpoena compelling production of documents by a party, the subpoenaing 
party may, in the event of noncompliance and to the extent authorized by 
applicable law, apply to any appropriate United States district court 
for an order requiring compliance with the subpoena. A party's right to 
seek court enforcement of a subpoena shall not in any manner limit the 
sanctions that may be imposed by the presiding officer against a party 
who fails to produce or induces another to fail to produce subpoenaed 
documents.



Sec. 908.48  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the presiding officer 
for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and manner 
for production in response to the subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 908.46(e) and in accordance with 
Sec. 908.47. The party requesting the document subpoena is responsible 
for serving it on the subpoenaed person and for serving copies on all 
parties. Document subpoenas may be served in any State, territory, or 
possession of the United States, the District of Columbia, or as 
otherwise provided by law.
    (3) The presiding officer shall promptly issue any document subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for the 
issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he may refuse to 
issue the subpoena or may issue it in a modified form upon such 
conditions as may be determined by the presiding officer.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such subpoena, 
accompanied by a statement of the basis for quashing or modifying the 
subpoena. The movant shall serve the motion on all parties and any party 
may respond to such motion within ten days of service of the motion.
    (2) Any motion to quash or modify a document subpoena shall be filed 
on the same basis, including the assertion of privilege, upon which a 
party could object to a discovery request under Sec. 908.47 and during 
the same time limits during which such an objection could be filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order of 
the presiding officer that directs compliance with all or any portion of 
a document subpoena, the subpoenaing party or any other aggrieved party 
may, to the extent authorized by applicable law, apply to an

[[Page 43]]

appropriate United States district court for an order requiring 
compliance with any part of the subpoena that the presiding officer has 
not quashed or modified. A party's right to seek court enforcement of a 
document subpoena shall in no way limit the sanctions that may be 
imposed by the presiding officer on a party who induces a failure to 
comply with subpoenas issued under this section.



Sec. 908.49  Deposition of witness unavailable for hearing.

    (a) General rules. (1) A party desiring to preserve that witness' 
testimony for the record may apply in accordance with the procedures set 
forth in paragraph (a)(2) of this section to the presiding officer for 
the issuance of a subpoena, including a subpoena duces tecum, requiring 
the attendance of the witness at a deposition. The presiding officer may 
issue a deposition subpoena under this section upon a showing that--
    (i) The testimony is reasonably expected to be material; and
    (ii) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed anywhere within the 
United States and its possessions and territories in which that witness 
resides or has a regular place of employment or such other convenient 
place as the presiding officer shall fix.
    (3) A subpoena shall be promptly issued upon request, unless the 
presiding officer determines that the request fails to set forth a valid 
basis under this section for its issuance. The presiding officer shall 
make a determination that there is a valid basis for issuing the 
subpoena. The presiding officer may require a written response from the 
party requesting the subpoena or require attendance at a conference to 
determine whether there is a valid basis upon which to issue the 
requested subpoena.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the presiding officer orders otherwise, no deposition under this section 
shall be taken on fewer than ten (10) days' notice to the witness and 
all parties. Deposition subpoenas may be served anywhere within the 
United States or its possessions or territories on any person doing 
business anywhere within the United States or its possessions or 
territories, or as otherwise permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion under Sec. 908.45 with the 
presiding officer to quash or modify the subpoena prior to the time for 
compliance specified in the subpoena, but not more than ten (10) days 
after service of the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section shall accompany the motion. The 
motion must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena shall be duly sworn and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or documents is not deemed a waiver except where the 
ground for objection might have been avoided if the objection had been 
presented timely. All questions, answers and objections must be 
recorded.
    (2) Any party may move before the presiding officer for an order 
compelling the witness to answer any questions the witness has refused 
to answer or submit any evidence that, during the deposition, the 
witness has refused to submit.
    (3) The deposition shall be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or the 
witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed

[[Page 44]]

by the witness, the court reporter taking the deposition shall certify 
that the transcript is a true and complete transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or with any order of the 
presiding officer made upon motion under paragraph (c)(2) of this 
section, the subpoenaing party or other aggrieved party may, to the 
extent authorized by applicable law, apply to an appropriate United 
States district court for an order requiring compliance with the 
portions of the subpoena that the presiding officer has ordered 
enforced. A party's right to seek court enforcement of a deposition 
subpoena in no way limits the sanctions that may be imposed by the 
presiding officer on a party who fails to comply with or induces a 
failure to comply with a subpoena issued under this section.



Sec. 908.50  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
presiding officer prior to the certification of the record to the Board 
of Directors only in accordance with the procedures set forth in this 
section.
    (b) Procedure. Any motion for interlocutory review shall be filed by 
a party with the presiding officer within ten (10) days of his ruling. 
Upon the expiration of the time for filing all responses, the presiding 
officer shall refer the matter to the Board of Directors for final 
disposition. In referring the matter to the Board of Directors, the 
presiding officer may indicate agreement or disagreement with the 
asserted grounds for interlocutory review of the ruling in question.
    (c) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of the presiding officer if it finds 
that--
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the presiding officer or the Board of Directors.



Sec. 908.51  Summary disposition.

    (a) In general. The presiding officer shall recommend that the Board 
of Directors issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that--
    (1) There is no genuine issue as to any material fact; and
    (2) The movant is entitled to a decision in its favor as a matter of 
law.
    (b) Filing of motions and responses. (1) Any party who believes 
there is no genuine issue of material fact to be determined and that 
such party is entitled to a decision as a matter of law may move at any 
time for summary disposition in its favor of all or any part of the 
proceeding. Any party, within twenty (20) days after service of such 
motion or within such time period as allowed by the presiding officer, 
may file a response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of material facts as to which the movant contends there is no 
genuine issue. Such motion must be supported by documentary evidence, 
which may take the form of admissions in pleadings, stipulations, 
written interrogatory responses, depositions, investigatory depositions, 
transcripts, affidavits and any other evidentiary materials that the 
movant contends support its position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the movant. Any party opposing a motion for summary 
disposition must file a statement setting

[[Page 45]]

forth those material facts as to which such party contends a genuine 
dispute exists. Such opposition must be supported by evidence of the 
same type as that submitted with the motion for summary disposition and 
a brief containing the points and authorities in support of the 
contention that summary disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his own 
motion, the presiding officer may hear oral argument on the motion for 
summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the presiding officer shall 
determine whether the movant is entitled to summary disposition. If the 
presiding officer finds that the moving party is not entitled to summary 
disposition, the presiding officer shall make a ruling denying the 
motion. If the presiding officer determines that summary disposition is 
warranted, the presiding officer shall submit a recommended decision to 
that effect to the Board of Directors under Sec. 908.63.



Sec. 908.52  Partial summary disposition.

    If the presiding officer determines that a party is entitled to 
summary disposition as to certain claims only, he or she shall defer 
submitting a recommended decision to the Board of Directors as to those 
claims. A hearing on the remaining issues must be ordered. Those claims 
for which the presiding officer has determined that summary disposition 
is warranted will be addressed in the recommended decision filed at the 
conclusion of the hearing.



Sec. 908.53  Scheduling and prehearing conferences.

    (a) Scheduling conference. Within thirty (30) days of service of the 
notice or order commencing a proceeding or at such other time as the 
parties may agree, the presiding officer shall direct representatives 
for all parties to meet with him or her in person at a specified time 
and place prior to the hearing or to confer by telephone for the purpose 
of scheduling the course and conduct of the proceeding. This meeting or 
telephone conference is called a ``scheduling conference.'' The 
identification of potential witnesses, the time for and manner of 
discovery and the exchange of any pre-hearing materials including 
witness lists, statements of issues, stipulations, exhibits and any 
other materials may also be determined at the scheduling conference.
    (b) Pre-hearing conference. The presiding officer may, in addition 
to the scheduling conference, on his own motion or at the request of any 
party, direct representatives for the parties to meet with him (in 
person or by telephone) at a pre-hearing conference to address any or 
all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and
    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The presiding officer, in his discretion, may 
require that a scheduling or prehearing conference be recorded by a 
court reporter. A transcript of the conference and any materials filed, 
including orders, becomes part of the record of the proceeding. A party 
may obtain a copy of the transcript at such party's expense.
    (d) Scheduling or pre-hearing orders. Within a reasonable time 
following the conclusion of the scheduling conference or any pre-hearing 
conference, the presiding officer shall serve on each party an order 
setting forth any agreements reached and any procedural determinations.



Sec. 908.54  Pre-hearing submissions.

    (a) Service deadline. Within the time set by the presiding officer, 
but in no case later than 10 (ten) days before the start of the hearing, 
each party shall serve on every other party the serving party's:
    (1) Pre-hearing statement;

[[Page 46]]

    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the pre-hearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.



Sec. 908.55  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
materiality or relevance and reasonableness of scope of the testimony or 
other evidence sought, the presiding officer may issue a subpoena or a 
subpoena duces tecum requiring the attendance of a witness at the 
hearing or the production of documentary or physical evidence at such 
hearing. The application for a hearing subpoena must also contain a 
proposed subpoena specifying the attendance of a witness or the 
production of evidence from any State, commonwealth, possession, 
territory of the United States, or the District of Columbia, or as 
otherwise provided by law at any designated place where the hearing is 
being conducted. The party making the application shall serve a copy of 
the application and the proposed subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of or during a hearing. During a hearing, a party may make 
an application for a subpoena orally on the record before the presiding 
officer.
    (3) The presiding officer shall promptly issue any hearing subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for the 
issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he may refuse to 
issue the subpoena or may issue the subpoena in a modified form upon any 
conditions consistent with this subpart. Upon issuance by the presiding 
officer, the party making the application shall serve the subpoena on 
the person named in the subpoena and on each party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
such subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but no more 
than ten days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
presiding officer that directs compliance with all or any portion of a 
hearing subpoena, the subpoenaing party or any other aggrieved party may 
seek enforcement of the subpoena pursuant to Sec. 908.8(c). A party's 
right to seek court enforcement of a hearing subpoena shall in no way 
limit the sanctions that may be imposed by the presiding officer on a 
party who fails, or induces a failure, to comply with any subpoena 
issued under this section.



Secs. 908.56-908.59  [Reserved]



             Subpart E--Hearing and Post-hearing Proceedings



Sec. 908.60  Conduct of hearings.

    (a) General rules--(1) Hearings. Hearings shall be conducted in 
accordance with chapter 5 of Title 5 of the United States Code (5 U.S.C. 
501-559) and other applicable law, so as to provide a fair and 
expeditious presentation of the relevant disputed issues. Except as 
limited by this subpart, each party has the right to present its case or 
defense by oral and documentary evidence and to conduct such cross-
examination of witnesses as may be required for full disclosure of the 
facts.
    (2) Order of hearing. The Finance Board shall present its case-in-
chief

[[Page 47]]

first, unless otherwise ordered by the presiding officer or unless 
otherwise expressly specified by law or regulation. The Finance Board 
shall be the first party to present an opening statement and a closing 
statement and may make a rebuttal statement after the respondent's 
closing statement. If there are multiple respondents, respondents may 
agree among themselves as to their order or presentation of their cases, 
but if they do not agree, the presiding officer shall fix the order.
    (3) Examination of witnesses. Only one representative for each party 
may conduct an examination of a witness, except that in the case of 
extensive direct examination, the presiding officer may permit more than 
one representative for the party presenting the witness to conduct the 
examination. A party may have one representative conduct the direct 
examination and another representative conduct re-direct examination of 
a witness, or may have one representative conduct the cross examination 
of a witness and another representative conduct the re-cross examination 
of a witness.
    (4) Stipulations. Unless the presiding officer directs otherwise, 
all documents that the parties have stipulated as admissible shall be 
admitted into evidence upon commencement of the hearing.
    (b) Transcript. The hearing shall be recorded and transcribed. The 
transcript shall be made available to any party upon payment of the cost 
thereof. The presiding officer shall have authority to order the record 
corrected, either upon motion to correct, upon stipulation of the 
parties, or following notice to the parties upon the presiding officer's 
own motion.



Sec. 908.61  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551-559) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence (see generally, 28 U.S.C.) is admissible in a proceeding 
conducted pursuant to this subpart.
    (3) The presiding officer may admit evidence, which otherwise would 
be inadmissible under the Federal Rules of Evidence (28 U.S.C.), upon a 
finding made on the record that the evidence is relevant, material, 
probative and reliable, and would not prejudice the rights of or cause 
an undue burden to any party to the proceeding.
    (b) Official notice. (1) Official notice may be taken of any 
material fact that may be judicially noticed by a United States district 
court and any material information in the official public records of any 
Federal or State government agency.
    (2) All matters officially noticed by the presiding officer or the 
Finance Board shall appear on the record.
    (3) If official notice is requested of any material fact, the 
parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a)(1) of this section, 
any document, including a report of examination, oversight activity, 
inspection, or visitation, prepared by the Finance Board or by another 
Federal or State financial institutions regulatory agency is admissible 
either with or without a sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines, or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the presiding officer's discretion, be used 
with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear in the record.
    (2) When an objection to a question or line of questioning is 
sustained, the examining representative of record may make a specific 
proffer on the record of what he expected to prove by the expected 
testimony of the witness.

[[Page 48]]

The proffer may be by representation of the representative or by direct 
interrogation of the witness.
    (3) The presiding officer shall retain rejected exhibits, adequately 
marked for identification, for the record and transmit such exhibits to 
the Board of Directors.
    (4) Failure to object to admission of evidence or to any evidentiary 
ruling constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing and that witness has testified in a 
deposition in accordance with Sec. 908.49, a party may offer as evidence 
all or any part of the transcript of the deposition, including 
deposition exhibits, if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the depositions, the presiding officer may, on that basis, limit 
the admissibility of the deposition in any manner that justice requires.
    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.

[67 FR 9903, Mar. 5, 2002; 67 FR 34990, May 16, 2002]



Sec. 908.62  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the presiding officer 
shall serve notice upon each party that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed. Any party may 
file with the presiding officer proposed findings of fact, proposed 
conclusions of law and a proposed order within thirty (30) days after 
the parties have received notice that the transcript has been filed with 
the presiding officer, unless otherwise ordered by the presiding 
officer.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page references to any relevant 
portions of the record. A post-hearing brief may be filed in support of 
proposed findings and conclusions, either as part of the same document 
or in a separate document.
    (3) Any party is deemed to have waived any issue not raised in 
proposed findings or conclusions timely filed by that party.
    (b) Reply briefs. Reply briefs may be filed within fifteen (15) days 
after the date on which the parties' proposed findings and conclusions 
and proposed order are due. Reply briefs must be limited strictly to 
responding to new matters, issues, or arguments raised in another 
party's papers. A party who has not filed proposed findings of fact and 
conclusions of law or a post-hearing brief shall not file a reply brief.
    (c) Simultaneous filing required. The presiding officer shall not 
order the filing by any party of any brief or reply brief supporting 
proposed findings and conclusions in advance of the other party's filing 
of its brief.



Sec. 908.63  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within forty-five 
(45) days after expiration of the time allowed for filing reply briefs 
under Sec. 908.62(b), the presiding officer shall file with and certify 
to the Board of Directors, for decision, the record of the proceeding. 
The record must include the presiding officer's recommended decision, 
recommended findings of fact and conclusions of law, and proposed order; 
all pre-hearing and hearing transcripts, exhibits and rulings; and the 
motions, briefs, memoranda and other supporting papers filed in 
connection with the hearing. The presiding officer shall serve upon each 
party the recommended decision, recommended findings and conclusions, 
and proposed order.
    (b) Filing of index. At the same time the presiding officer files 
with and certifies to the Board of Directors, for final determination, 
the record of the

[[Page 49]]

proceeding, the presiding officer shall furnish to the Board of 
Directors a certified index of the entire record of the proceeding. The 
certified index shall include, at a minimum, an entry for each paper, 
document or motion filed with the presiding officer in the proceeding, 
the date of the filing, and the identity of the filer. The certified 
index shall also include an exhibit index containing, at a minimum, an 
entry consisting of exhibit number and title or description for each 
exhibit introduced and admitted into evidence at the hearing; each 
exhibit introduced but not admitted into evidence at the hearing; each 
exhibit introduced and admitted into evidence after the completion of 
the hearing; and each exhibit introduced but not admitted into evidence 
after the completion of the hearing.



Sec. 908.64  Exceptions to recommended decision.

    (a) Filing exceptions. Within thirty (30) days after service of the 
recommended decision, recommended findings and conclusions, and proposed 
order under Sec. 908.63, a party may file with the Finance Board written 
exceptions to the presiding officer's recommended decision, recommended 
findings and conclusions, or proposed order; to the admission or 
exclusion of evidence; or to the failure of the presiding officer to 
make a ruling proposed by a party. A supporting brief may be filed at 
the time the exceptions are filed, either as part of the same document 
or in a separate document.
    (b) Effect of failure to file or raise exceptions. (1) Failure of a 
party to file exceptions to those matters specified in paragraph (a) of 
this section within the time prescribed is deemed a waiver of objection 
thereto.
    (2) No exception need be considered by the Board of Directors if the 
party taking exception had an opportunity to raise the same objection, 
issue, or argument before the presiding officer and failed to do so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular matters in or omissions 
from the presiding officer's recommendations to which that party takes 
exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
presiding officer's recommendations to which exception is taken, the 
page or paragraph references to those portions of the record relied upon 
to support each exception and the legal authority relied upon to support 
each exception. Exceptions and briefs in support shall not exceed a 
total of 30 pages, except by leave of the Finance Board on motion.
    (3) Each party may submit one reply brief within ten (10) days of 
service of exceptions and briefs in support of exceptions. Reply briefs 
shall not exceed 15 pages, except by leave of the Finance Board on 
motion.



Sec. 908.65  Review by Board of Directors.

    (a) Notice of submission to the Board of Directors. When the Board 
of Directors determines that the record in the proceeding is complete, 
the Finance Board shall serve notice upon the parties that the 
proceeding has been submitted to the Board of Directors for final 
decision and order in accordance with this section.
    (b) Oral argument before the Board of Directors. Upon the initiative 
of the Board of Directors or on the written request of any party filed 
with the Board of Directors within the time for filing exceptions under 
Sec. 908.64, the Board of Directors may order and hear oral argument on 
the recommended findings, conclusions, decision and order of the 
presiding officer. A written request by a party must show good cause for 
oral argument and state reasons why arguments cannot be presented 
adequately in writing. A denial of a request for oral argument may be 
set forth in the Board of Directors' final decision and order. Oral 
argument before the Board of Directors must be transcribed.
    (c) Board of Directors' final decision and order. (1) Decisional 
employees may advise and assist the Board of Directors in the 
consideration and disposition of the case, and in the preparation of the 
final decision and order. The final decision and order of the Board of 
Directors will be based upon

[[Page 50]]

review of the entire record of the proceeding, except that the Board of 
Directors may limit the issues to be reviewed to those findings and 
conclusions to which opposing arguments or exceptions have been filed by 
the parties in accordance with this part.
    (2) The Board of Directors shall render and issue a final decision 
and order within ninety (90) days after notification of the parties that 
the case has been submitted to the Board of Directors, unless the Board 
of Directors orders that the action or any aspect thereof be remanded to 
the presiding officer for further proceedings in accordance with 
instructions as may be specified by the Board of Directors. Copies of 
the final decision and order of the Board of Directors shall be served 
upon each party to the proceeding and otherwise, as may be required by 
the Board of Directors in accordance with applicable law.



Sec. 908.66  Exhaustion of administrative remedies.

    To exhaust administrative remedies as to any issue on which a party 
disagrees with the presiding officer's recommendations, a party must 
file exceptions with the Board of Directors under Sec. 908.64. A party 
must exhaust administrative remedies as a precondition to seeking 
judicial review of any final decision and order, in whole or in part, 
issued by the Board of Directors under Sec. 908.65.



Sec. 908.67  Stay of final decision and order pending judicial review.

    The commencement of proceedings for judicial review of all or part 
of a final order issued by the Board of Directors in accordance with 
Sec. 908.65, as provided in Sec. 908.10 may not, unless specifically 
ordered by the Board of Directors or a reviewing court, operate as a 
stay of any order issued by the Board of Directors. The Board of 
Directors may, in its discretion and on such terms as it finds just, 
stay the effectiveness of all or any part of an order of the Board of 
Directors pending a final decision on a petition for judicial review of 
that order.



Secs. 908.68-908.69  [Reserved]



          Subpart F--Rules of Practice Before the Finance Board



Sec. 908.70  Scope.

    This subpart contains rules governing practice by parties or their 
representatives in any proceeding before the Finance Board. In 
particular, these rules of practice shall apply to any appearances 
before the Board of Directors under this part or part 907 of this 
chapter. This subpart also shall govern the imposition of sanctions by 
the Finance Board or a presiding officer against parties or their 
representatives in a hearing under this part or a proceeding under part 
907 of this chapter. In the sole discretion of the Finance Board, 
Secs. 908.74 and 908.75 may be applied to persons who appear in a 
representational capacity in any hearing under this part or any 
proceeding under part 907 of this chapter, or in any other matter that 
involves contacting the Finance Board as a principal or agent with 
respect to asserting the rights, privileges, or liabilities of an 
individual or entity, including presentations to or communications with 
the Board of Directors or any member of the Board of Directors. This 
representation includes, but is not limited to, the practice of 
attorneys and accountants. Employees of the Finance Board are not 
subject to disciplinary proceedings under this subpart.



Sec. 908.71  Practice before the Finance Board.

    Practice before the Finance Board for the purposes of this subpart, 
includes, but is not limited to, transacting any business with the 
Finance Board as counsel, representative or agent for any other person, 
unless the Finance Board orders otherwise. Practice before the Finance 
Board also includes the preparation of any statement, opinion, or other 
paper by a counsel, representative or agent that is filed with the 
Finance Board in any request, certification, notification, application, 
report, or other document, with the consent of such counsel, 
representative or agent. Practice before the Finance Board does not 
include work prepared for a Bank solely at the request of the

[[Page 51]]

Bank for use in the ordinary course of its business.



Sec. 908.72  Appearances and practice in proceedings before the Finance Board.

    (a) Appearances in proceedings before the Finance Board--(1) By 
attorneys. A party may be represented by an attorney who is a member in 
good standing of the bar of the highest court of any State, 
commonwealth, possession, territory of the United States, or the 
District of Columbia and who is not currently suspended or disbarred 
from practice before the Finance Board.
    (2) By non-attorneys. An individual may appear on his own behalf. A 
member of a partnership may represent the partnership and a duly 
authorized officer, board of director member, employee, or other agent 
of any corporation or other entity not specifically listed herein may 
represent such corporation or other entity; provided that such officer, 
board of director member, employee, or other agent is not currently 
suspended or disbarred from practice before the Finance Board. A duly 
authorized officer or employee of any Government unit, agency, or 
authority may represent that unit, agency, or authority.
    (b) Notice of appearance. Any person appearing in a representative 
capacity on behalf of a party, including the Finance Board, shall 
execute and file a notice of appearance with the presiding officer at or 
before the time such person submits papers or otherwise appears on 
behalf of a party in a hearing under this part. Such notice of 
appearance shall include a written declaration that the individual is 
currently qualified as provided in paragraphs (a)(1) or (a)(2) of this 
section and is authorized to represent the particular party. By filing a 
notice of appearance on behalf of a party in a hearing under this part, 
the representative thereby agrees and represents that he is authorized 
to accept service on behalf of the represented party and that, in the 
event of withdrawal from representation, he or she will, if required by 
the presiding officer, continue to accept service until a new 
representative has filed a notice of appearance or until the represented 
party indicates that he or she will proceed on a pro se basis. Unless 
the representative filing the notice is an attorney, the notice of 
appearance shall also be executed by the person represented or, if the 
person is not an individual, by the chief executive officer, or duly 
authorized officer of that person.



Sec. 908.73  Conflicts of interest.

    (a) Conflict of interest in representation. No representative shall 
represent another person in an adjudicatory proceeding if it reasonably 
appears that such representation may be limited materially by that 
representative's responsibilities to a third person or by that 
representative's own interests. The presiding officer may take 
corrective measures at any stage of a proceeding to cure a conflict of 
interest in representation, including the issuance of an order limiting 
the scope of representation or disqualifying an individual from 
appearing in a representative capacity for the duration of the 
proceeding.
    (b) Certification and waiver. If any person appearing as counsel or 
other representative represents two or more parties in a proceeding 
under this part or also represents a nonparty on a matter relevant to an 
issue in the proceeding, that representative must certify in writing at 
the time of filing the notice of appearance required by Sec. 908.72:
    (1) That the representative has personally and fully discussed the 
possibility of conflicts of interest with each such party and nonparty;
    (2) That each such party and nonparty waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.



Sec. 908.74  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed during the 
course of any proceeding when any party or representative of record has 
acted or failed to act in a manner required by applicable statute, 
regulation, or order, and that act or failure to act--
    (1) Constitutes contemptuous conduct. Contemptuous conduct includes 
dilatory, obstructionist, egregious,

[[Page 52]]

contumacious, unethical, or other improper conduct at any phase of any 
proceeding, hearing, or appearance before the Board of Directors;
    (2) Has caused some other party material and substantive injury, 
including, but not limited to, incurring expenses including attorney's 
fees or experiencing prejudicial delay;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has delayed the proceeding unduly.
    (b) Sanctions. Sanctions that may be imposed include, but are not 
limited to, any one or more of the following:
    (1) Issuing an order against a party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that may be just; or
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Procedure for imposition of sanctions. (1) The presiding 
officer, on the motion of any party, or on his own motion, and after 
such notice and responses as may be directed by the presiding officer, 
may impose any sanction authorized by this section. The presiding 
officer shall submit to the Board of Directors for final ruling any 
sanction that would result in a final order that terminates the case on 
the merits or is otherwise dispositive of the case.
    (2) Except as provided in paragraph (d) of this section, no sanction 
authorized by this section, other than refusing to accept late papers, 
shall be imposed without prior notice to all parties and an opportunity 
for any representative or party against whom sanctions would be imposed 
to be heard. The presiding officer shall determine and direct the 
appropriate notice and form for such opportunity to be heard. The 
opportunity to be heard may be limited to an opportunity to respond 
verbally immediately after the act or inaction in question is noted by 
the presiding officer.
    (3) For purposes of interlocutory review, motions for the imposition 
of sanctions by any party and the imposition of sanctions shall be 
treated the same as motions for any other ruling by the presiding 
officer.
    (4) Nothing in this section shall be read to preclude the presiding 
officer or the Finance Board from taking any other action or imposing 
any other restriction or sanction authorized by any applicable statute 
or regulation.
    (d) Sanctions for contemptuous conduct. If, during the course of any 
proceeding, a presiding officer finds any representative or any 
individual representing himself to have engaged in contemptuous conduct, 
the presiding officer may summarily suspend that individual from 
participating in that or any related proceeding or impose any other 
appropriate sanction.



Sec. 908.75  Censure, suspension, disbarment and reinstatement.

    (a) Discretionary censure, suspension and disbarment. (1) The 
Finance Board may censure any individual who practices or attempts to 
practice before it or suspend or revoke the privilege to appear or 
practice before the Finance Board of such individual if, after notice of 
and opportunity for a hearing in the matter, that individual is found by 
the Finance Board--
    (i) Not to possess the requisite qualifications or competence to 
represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have caused unfair and material injury or prejudice to 
another party, such as prejudicial delay or unnecessary expenses 
including attorney's fees;
    (iv) To have engaged in, or aided and abetted, a material and 
knowing violation of the Act or the rules or regulations issued under 
the Act or any other law or regulation governing Bank operations;
    (v) To have engaged in contemptuous conduct before the Finance 
Board;

[[Page 53]]

    (vi) With intent to defraud in any manner, to have willfully and 
knowingly deceived, misled, or threatened any client or prospective 
client; or
    (vii) Within the last ten years, to have been convicted of an 
offense involving moral turpitude, dishonesty or breach of trust, if the 
conviction has not been reversed on appeal. A conviction within the 
meaning of this paragraph shall be deemed to have occurred when the 
convicting court enters its judgment or order, regardless of whether an 
appeal is pending or could be taken and includes a judgment or an order 
on a plea of nolo contendere or on consent, regardless of whether a 
violation is admitted in the consent.
    (2) Suspension or revocation on the grounds set forth in paragraphs 
(a)(1) (ii), (iii), (iv), (v), (vi) and (vii) of this section shall only 
be ordered upon a further finding that the individual's conduct or 
character was sufficiently egregious as to justify suspension or 
revocation. Suspension or disbarment under this paragraph shall continue 
until the applicant has been reinstated by the Finance Board for good 
cause shown or until, in the case of a suspension, the suspension period 
has expired.
    (3) If the final order against the respondent is for censure, the 
individual may be permitted to practice before the Finance Board, but 
such individual's future representations may be subject to conditions 
designed to promote high standards of conduct. If a written letter of 
censure is issued, a copy will be maintained in the Finance Board's 
files.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any State, commonwealth, possession, territory of the United 
States or the District of Columbia; any accountant or other licensed 
expert whose license to practice has been revoked in any State, 
commonwealth, possession, territory of the United States or the District 
of Columbia; any person who has been and remains suspended or barred 
from practice before the Department of Housing and Urban Development, 
the Office of the Comptroller of the Currency, the Board of Governors of 
the Federal Reserve System, the Office of Thrift Supervision, the 
Federal Deposit Insurance Corporation, the National Credit Union 
Administration, the Office of Federal Housing Enterprise Oversight, the 
Farm Credit Administration, the Securities and Exchange Commission, or 
the Commodity Futures Trading Commission is also suspended automatically 
from appearing or practicing before the Finance Board. A disbarment or 
suspension within the meaning of this paragraph shall be deemed to have 
occurred when the disbarring or suspending agency or tribunal enters its 
judgment or order, regardless of whether an appeal is pending or could 
be taken and regardless of whether a violation is admitted in the 
consent.
    (2) A suspension or disbarment from practice before the Finance 
Board under paragraph (b)(1) of this section shall continue until the 
person suspended or disbarred is reinstated under paragraph (d)(2) of 
this section.
    (c) Notices to be filed. (1) Any individual appearing or practicing 
before Finance Board who is the subject of an order, judgment, decree, 
or finding of the types set forth in paragraph (b)(1) of this section 
shall file promptly with the Finance Board a copy thereof, together with 
any related opinion or statement of the agency or tribunal involved.
    (2) Any individual appearing or practicing before the Finance Board 
who is or within the last ten years has been convicted of a felony or of 
a misdemeanor that resulted in a sentence of prison term or in a fine or 
restitution order totaling more than $5,000 shall file a notice promptly 
with the Finance Board. The notice shall include a copy of the order 
imposing the sentence or fine, together with any related opinion or 
statement of the court involved.
    (d) Reinstatement. (1) Unless otherwise ordered by the Finance 
Board, an application for reinstatement for good cause may be made in 
writing by a person suspended or disbarred under paragraph (a)(1) of 
this section at any time more than three years after the effective date 
of the suspension or disbarment and, thereafter, at any time more than 
one year after the person's most recent application for reinstatement. 
An applicant for reinstatement under

[[Page 54]]

this paragraph (d)(1) may, in the Finance Board's sole discretion, be 
afforded a hearing.
    (2) An application for reinstatement for good cause by any person 
suspended or disbarred under paragraph (b)(1) of this section may be 
filed at any time, but not less than one (1) year after the applicant's 
most recent application. An applicant for reinstatement for good cause 
under this paragraph (d)(2) may, in the Finance Board's sole discretion, 
be afforded a hearing. However, if all the grounds for suspension or 
disbarment under paragraph (b)(1) of this section have been removed by a 
reversal of the order of suspension or disbarment or by termination of 
the underlying suspension or disbarment, any person suspended or 
disbarred under paragraph (b)(1) of this section may apply immediately 
for reinstatement and shall be reinstated upon written application 
notifying the Finance Board that the grounds have been removed.
    (e) Conferences. (1) The Finance Board may confer with a proposed 
respondent concerning allegations of misconduct or other grounds for 
censure, disbarment or suspension, regardless of whether a proceeding 
for censure, disbarment or suspension has been commenced. If a 
conference results in a stipulation in connection with a proceeding in 
which the individual is the respondent, the stipulation may be entered 
in the record at the request of either party to the proceeding.
    (2) Resignation or voluntary suspension. In order to avoid the 
institution of or a decision in a disbarment or suspension proceeding, a 
person who practices before the Finance Board may consent to censure, 
suspension or disbarment from practice. At the discretion of the Finance 
Board, the individual may be censured, suspended or disbarred in 
accordance with the consent offered.
    (f) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under this part, provided that in proceedings to terminate an 
existing suspension or disbarment order, the person seeking the 
termination of the order shall bear the burden of going forward with an 
application supported with proof that the suspension should be 
terminated. The Finance Board may, in its sole discretion, direct that 
any proceeding to terminate an existing suspension or disbarment be 
limited to written submissions. All hearings held under this section 
shall be closed to the public unless the Finance Board, on its own 
motion or upon the request of a party, otherwise directs that the 
hearing be open to the public.



PART 910--FREEDOM OF INFORMATION ACT REGULATION--Table of Contents




Sec.
910.1  Definitions.
910.2  Records available to the public.
910.3  Requests for records.
910.4  Finance Board response to requests for records.
910.5  Records not disclosed.
910.6  Disclosure of Federal Home Loan Bank examination reports.
910.7  Records of financial regulatory agencies held by the Finance 
          Board.
910.8  Appeals.
910.9  Fees.

    Authority: 5 U.S.C. 552.

    Source: 63 FR 37485, July 13, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

    Editorial Note: Nomenclature changes for part 910 appear at 65 FR 
20346, Apr. 17, 2000.



Sec. 910.1  Definitions.

    As user in this part:
    Agency has the meaning set forth in 5 U.S.C. 552(f)(1).
    Duplication means the process of making a copy of a record in order 
to respond to a FOIA request, including paper copies, microfilm, audio-
video materials, and computer diskettes or other electronic copies.
    Financial regulatory agency means the FRB, OCC, FDIC, OTS, NCUA, 
Farm Credit Administration, or a state officer, agency, supervisor, or 
other entity that has regulatory authority over, or is empowered to 
institute enforcement action against, a financial institution, including 
an insurance company.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    FOIA Officer means the Finance Board employee who is authorized to 
make determinations as provided in this part. The mailing address for 
the

[[Page 55]]

FOIA Officer is Federal Housing Finance Board, 1777 F Street, NW, 
Washington, DC 20006.
    Record means information or documentary material the Finance Board 
maintains in any form or format, including an electronic form or format, 
which the Finance Board:
    (1) Made or received under federal law or in connection with the 
transaction of public business;
    (2) Preserved or determined is appropriate for preservation as 
evidence of Finance Board operations or activities or because of the 
value the information it contains; and
    (3) Controls at the time it receives a request.
    Requester means any person, including an individual, corporation, 
firm, organization, or other entity, who makes a request to the Finance 
Board under FOIA for records.
    Review means the process of examining a record to determine whether 
all or part of the record may be withheld, and includes redacting or 
otherwise processing the record for disclosure to a requester. It does 
not include time spent:
    (1) Resolving legal or policy issues regarding the application of 
exemptions to a record; or
    (2) At the administrative appeal level, unless the Finance Board 
determines that the exemption under which it withheld records does not 
apply and the records are reviewed again to determine whether a 
different exemption may apply.
    Search means the time spent locating records responsive to a 
request, manually or by electronic means, including page-by-page or 
line-by-line identification of responsive material within a record.
    Unusual circumstances means the need to:
    (1)Search for and collect records from establishments that are 
separate from the office processing the request;
    (2) Search, review, and duplicate a voluminous amount of separate 
and distinct records in order to process a single request; or
    (3) Consult with another agency or among two or more components of 
the Finance Board that have a substantial interest in the determination 
of a request.
    Working days do not include Saturdays, Sundays, and legal public 
holidays.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, 8258, Feb. 18, 
2000; 65 FR 20346, Apr. 17, 2000; 67 FR 12844, Mar. 20, 2002]



Sec. 910.2  Records available to the public.

    (a) General. (1) It is the policy of the Finance Board to respond 
promptly to all FOIA requests.
    (2) The Finance Board may disclose records that were previously 
published or disclosed or are customarily furnished to the public in the 
course of the performance of official duties without complying with this 
part. These records include, but are not limited to, the annual report 
the Finance Board submits to Congress pursuant to section 2B(d) of the 
Act (12 U.S.C. 1422b(d)), press releases, Finance Board forms, and 
materials published in the Federal Register.
    (3) Except as provided in the Privacy Act (5 U.S.C. 552a), the 
Finance Board's Privacy Act regulation (12 CFR part 913), or paragraph 
(a)(2) of this section, the Finance Board shall not disclose records 
except in accordance with the requirements of this part.
    (b) Reading room. (1) Subject to Secs. 910.5 through 910.7, the 
following records shall be available for public inspection and copying 
in the Finance Board reading room from 9:00 a.m. to 4:00 p.m. each 
working day:
    (i) Final opinions or orders of the Finance Board in the 
adjudication of cases.
    (ii) A record of the final votes of each member of the Board of 
Directors in every Finance Board proceeding.
    (iii) Statements of policy and interpretations adopted by the 
Finance Board that are not published in the Federal Register.
    (iv) Administrative staff manuals and instructions to staff that 
affect a member of the public.
    (v) Records previously disclosed to any requester pursuant to this 
part which, because of the nature of their subject matter, the Finance 
Board has determined will likely be the subject of subsequent requests 
for substantially

[[Page 56]]

the same records, and a general index thereof.
    (vi) Current indices that provide identifying information about all 
matters issued, adopted, or promulgated by the Finance Board.
    (vii) The report the Finance Board submits to the Attorney General 
pursuant to 5 U.S.C. 552(e).
    (2) The Finance Board shall make each reading room record created on 
or after November 1, 1996 available by computer telecommunications or 
other electronic means, such as on computer diskettes or on the Finance 
Board's Internet Web site, found at http://www.fhfb.gov.
    (3) The Finance Board shall assess fees for searching, reviewing, or 
duplicating reading room records in accordance with Sec. 910.9.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, 8258, Feb. 18, 
2000]



Sec. 910.3  Requests for records.

    (a) Request requirements. Requests for access to, or copies of, 
Finance Board records shall be in writing and addressed to the FOIA 
Officer. Each request shall include the following:
    (1) A description of the requested record that provides sufficient 
detail to enable the Finance Board to locate the record with a 
reasonable amount of effort;
    (2) The requester's full name, mailing address, and a telephone 
number where the requester can be reached during normal business hours;
    (3) A statement that the request is made pursuant to FOIA; and
    (4) At the discretion of the requester, a dollar limit on the fees 
the Finance Board may incur to respond to the request for records. The 
Finance Board shall not exceed such limit.
    (b) Incomplete requests. If a request does not meet all of the 
requirements of paragraph (a) of this section, the FOIA Officer may 
advise the requester that additional information is needed. If the 
requester submits a corrected request, the FOIA Officer shall treat the 
corrected request as a new request.

[63 FR 37485, July 13, 1998, as amended at 65 FR 20346, Apr. 17, 2000]



Sec. 910.4  Finance Board response to requests for records.

    (a) Response deadline. Subject to Sec. 910.9(f), within 20 working 
days of receipt of a request meeting the requirements of Sec. 910.3(a) 
and any extensions of time under paragraph (c) of this section, the FOIA 
Officer shall:
    (1) Determine whether to grant or deny the request in whole or in 
part;
    (2) Notify the requester in writing of the determination and the 
reasons therefor; and
    (3) Make the records, if any, available to the requester.
    (b) Denials. If the FOIA Officer denies the request in whole or in 
part, the notice required under paragraph (a)(2) of this section shall 
state that the FOIA Officer is the person responsible for the denial, 
the denial is not a final agency action, and the requester may appeal 
the denial under Sec. 910.8.
    (c) Extensions of time. In unusual circumstances, the FOIA Officer 
may extend the time limit in paragraph (a) of this section for a period 
not to exceed 10 working days by notifying the requester in writing of:
    (1) The reasons for the extension;
    (2) The date on which a determination is expected; and
    (3) The opportunity for the requester to either limit the scope of 
the request so that the FOIA Officer may process it in accordance with 
paragraph (a) of this section, or arrange an alternative time frame for 
processing the request or a modified request.
    (d) Expedited processing. (1) The FOIA Officer shall process a 
request for records as soon as practicable if it is determined that 
expedited processing is appropriate or the requester demonstrates a 
compelling need. To demonstrate a compelling need, a requester shall 
submit a written application certified to be true and correct to the 
best of the requester's knowledge and belief to the FOIA Officer. The 
application shall state that:
    (i) The failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (ii) With respect to a requester who is primarily engaged in 
disseminating information, such as a representative of

[[Page 57]]

the news media as defined in Sec. 910.9(a)(4)(iv), there is urgency to 
inform the public concerning actual or alleged Finance Board activity.
    (2) Within 10 working days of receipt of an application for 
expedited processing that meets the requirements of paragraph (d)(1) of 
this section, the FOIA Officer shall determine whether to grant or deny 
the application and notify the requester in writing of the 
determination.
    (3) A requester may appeal the denial of an application for 
expedited processing by submitting a written application stating the 
grounds for the appeal to the FOIA Officer. The Finance Board shall 
expeditiously determine whether to grant or deny the appeal and shall 
notify the requester in writing of the determination, the name and title 
or position of the person responsible for the determination, and of the 
provisions for judicial review of this final action under 5 U.S.C. 
552(a) (4) and (6).
    (e) Providing responsive records. The FOIA Officer shall provide one 
copy of a record to a requester in any form or format requested if the 
record is readily reproducible by the Finance Board in that form or 
format by regular U.S. mail to the address indicated in the request 
unless other arrangements are made, such as taking delivery of the 
document at the Finance Board. At the option of the requester and upon 
the requester's agreement to pay fees in accordance with Sec. 910.9, the 
FOIA Officer shall provide copies by facsimile transmission or other 
express delivery methods.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, 8258, Feb. 18, 
2000; 65 FR 20346, Apr. 17, 2000; 67 FR 12844, Mar. 20, 2002]



Sec. 910.5  Records not disclosed.

    (a) Records exempt from disclosure. Except as otherwise provided in 
this part, the Finance Board shall not disclose records that are:
    (1) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interest of national defense or 
foreign policy and are in fact properly classified pursuant to such 
Executive order.
    (2) Related solely to the Finance Board's internal personnel rules 
and practices.
    (3) Specifically exempted from disclosure by a statute other than 
FOIA if such statute requires the record to be withheld from the public 
in such a manner as to leave no discretion on the issue, establishes 
particular criteria for withholding, or refers to particular types of 
records to be withheld.
    (4) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential.
    (5) Inter- or intra-agency memorandums or letters that would not be 
available by law to a party other than an agency in litigation with the 
Finance Board.
    (6) Personnel, medical, or similar files the disclosure of which 
would constitute a clearly unwarranted invasion of personal privacy.
    (7) Compiled for law enforcement purposes, but only to the extent 
that the production of such law enforcement records or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority, any private institution, or a Bank, which furnished 
information on a confidential basis, and, in the case of a record 
compiled by criminal law enforcement authority in the course of a 
criminal investigation or by an agency conducting a lawful national 
security investigation, information furnished by a confidential source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (8) Contained in or related to examination, operating, or condition 
reports

[[Page 58]]

prepared by, on behalf of, or for the use of the Finance Board, a Bank, 
or a financial regulatory agency.
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (b) Reasonably segregable portions. (1) The Finance Board shall 
provide a requester with any reasonably segregable portion of a record 
after redacting the portion that is exempt from disclosure under 
paragraph (a) of this section.
    (2) The Finance Board shall make a reasonable effort to estimate the 
volume of redacted information and provide that information to the 
requester unless providing the estimate would harm an interest protected 
by the exemption under which the redaction is made.
    (3) The Finance Board shall indicate the estimated volume of 
redacted information on the released portion of the record unless 
providing the estimate would harm an interest protected by the exemption 
under which the redaction is made. If technically feasible, the Finance 
Board shall make the indication at the place in the record where the 
redaction is made.
    (c) Public interest. The Finance Board may disclose records it has 
authority to withhold under paragraph (a) of this section upon a 
determination that disclosure would be in the public interest.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 910.6  Disclosure of Federal Home Loan Bank examination reports.

    The Finance Board may disclose an examination, operating, or 
condition report of a Bank or a related record to a financial regulatory 
agency upon a determination that:
    (a) The person requesting the record on behalf of the financial 
regulatory agency has the authority to make such request;
    (b) The financial regulatory agency is requesting the record for a 
legitimate regulatory purpose; and
    (c) The financial regulatory agency making the request agrees that 
it shall not disclose the record pursuant to FOIA, the agency's 
regulations, or any other authority.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, Feb. 18, 2000]



Sec. 910.7  Records of financial regulatory agencies held by the Finance Board.

    The Finance Board shall not disclose an examination, operating, or 
condition report, or other record prepared by, on behalf of, or for the 
use of a financial regulatory agency. Upon a receipt of a request for 
such records, the FOIA Officer shall promptly refer the request to the 
appropriate agency and notify the requester of the referral.

[65 FR 20346, Apr. 17, 2000]



Sec. 910.8  Appeals.

    (a) Procedure. (1) If the FOIA Officer has denied a request in whole 
or in part, the requester may appeal the denial by submitting a written 
application to the FOIA Officer stating the grounds for the appeal 
within 30 working days of the date of the determination under 
Sec. 910.4.
    (2) Subject to Sec. 910.9(f), within 20 working days of receipt of 
an application for appeal meeting the requirements of paragraph (a)(1) 
of this section and any extensions of time under paragraph (a)(3) of 
this section, the Finance Board shall determine whether to grant or deny 
the appeal and notify the requester in writing of the determination, the 
name and title or position of the person responsible for the 
determination, and the provisions for judicial review of this final 
action under 5 U.S.C. 552(a)(4).
    (3) In unusual circumstances, the FOIA Officer may extend the time 
limit in paragraph (a)(2) of this section for a period not to exceed 10 
working days by notifying the requester in writing of the reasons for 
the extension and the date on which a determination is expected.
    (b) Appeal during pendency of judicial review. If a requester files 
an action in a United States district court under 5 U.S.C. 552(a)(4) 
concerning a request for Finance Board records before exhausting the 
administrative appeals process for that request under paragraph (a) of 
this section, the Finance Board may:
    (1) Initiate and process an administrative appeal; or

[[Page 59]]

    (2) Continue to process an administrative appeal previously filed 
under paragraph (a) of this section.

[63 FR 37485, July 13, 1998, as amended at 65 FR 8257, 8258, Feb. 18, 
2000; 65 FR 20346, Apr. 17, 2000]



Sec. 910.9  Fees.

    (a) Fees. Except as otherwise provided in a statute specifically 
providing for setting fees for particular types of records or in this 
section, the Finance Board shall assess against each requester the 
direct costs of responding to a request for records.
    (1) If the records are requested for a commercial use, the direct 
costs are limited to the reasonable operating costs the Finance Board 
incurs to search, review, and duplicate records.
    (2) If the records are not requested for a commercial use and the 
requester is an educational institution, non-commercial scientific 
institution, or representative of the news media, the direct costs are 
limited to the reasonable operating costs the Finance Board incurs to 
duplicate records in excess of 100 pages.
    (3) If neither the request nor the requester is described in 
paragraphs (a) (1) or (2) of this section, the direct costs are limited 
to the reasonable operating costs the Finance Board incurs to search in 
excess of two hours and duplicate records in excess of 100 pages.
    (4) For purposes of this section, the term:
    (i) Commercial use request means a request from, or on behalf of, a 
person who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made.
    (ii) Educational institution means a preschool, public or private 
elementary or secondary school, or institution of undergraduate, 
graduate, professional, or vocational higher education that operates a 
program of scholarly research.
    (iii) Non-commercial scientific institution means a nonprofit 
institution operated solely for the purpose of conducting scientific 
research the results of which are not intended to promote any particular 
product or industry.
    (iv) Representative of the news media means a requester who is 
actively gathering information that is about current events or would be 
of current interest to the public for an entity that is organized and 
operated to publish or broadcast news to the public.
    (b) Fees when no records are provided. The Finance Board may assess 
a fee for the direct costs of searching for a requested record the 
Finance Board cannot locate or if located, determines to be exempt from 
disclosure under Sec. 910.5.
    (c) Interest. The Finance Board may assess interest at the rate 
prescribed in 31 U.S.C. 3717 on any unpaid fees beginning 31 days after 
the earlier of the date of the determination under Sec. 910.4 or the 
date a fee statement is mailed to a requester. Interest shall accrue 
from such date.
    (d) Exceptions. Notwithstanding paragraphs (a) or (b) of this 
section, the FOIA Officer may determine not to assess a fee or to reduce 
a fee if:
    (1) The routine cost of collecting and processing the fee is likely 
to equal or exceed the amount of the fee.
    (2) The fee is equal to or less than 10 dollars.
    (3) Disclosure of the record is in the public interest because it is 
likely to contribute significantly to public understanding of the 
operations or activities of the government and is not primarily in the 
commercial interest of the requester.
    (i) A requester may apply in writing to the FOIA Officer for a 
waiver of fees under this paragraph (d)(3). A fee waiver request shall 
include the following:
    (A) The requester's interest in and proposed use of the record;
    (B) Whether the requester will derive income or other benefit from 
the record;
    (C) An explanation of how the public will benefit from disclosure, 
including the requester's ability and intention to disseminate the 
information to the public; and
    (D) The requester's expertise in the subject area of the record.
    (ii) In determining whether disclosure of a record is in the public 
interest, the FOIA Officer shall consider whether the record:
    (A) Concerns identifiable operations or activities of the Finance 
Board;

[[Page 60]]

    (B) Is meaningfully informative in relation to the subject matter of 
the request;
    (C) Contributes to an understanding of the subject matter by the 
public at large, and the significance of that contribution; and
    (D) Furthers, or is primarily in, the requester's commercial 
interest.
    (e) Aggregating requests. If the FOIA Officer reasonably believes 
that a requester or a group of requesters acting in concert is 
attempting to break a request down into a series of requests for the 
purpose of evading the assessment of fees, the FOIA Officer may 
aggregate such requests and assess fees in accordance with this section.
    (f) Collecting fees. (1) The Finance Board shall deem any request 
for Finance Board records as an agreement by the requester to pay fees 
and interest assessed in accordance with this section.
    (2) To pay fees and interest assessed under this section, a 
requester shall deliver to the Office of Resource Management, located at 
the Federal Housing Finance Board, 1777 F Street NW., Washington, DC 
20006, a check or money order made payable to the ``Federal Housing 
Finance Board.''
    (3) Prior to disclosing any record, the FOIA Officer may require a 
requester to agree in writing to pay actual fees and interest incurred 
in accordance with this section if the estimated fee will likely exceed 
$25 but not $250.
    (4) The FOIA Officer may require a requester to pay an estimated fee 
in advance if:
    (i) It is determined that the fee will likely exceed $250; or
    (ii) The requester has previously failed to pay a fee assessed under 
this section within 30 days of the earlier of the date of the 
determination under Sec. 910.4 or the date a fee statement was mailed to 
a requester.
    (5) The Finance Board shall promptly refund to a requester any 
estimated advance fee paid under paragraph (f)(4) of this section that 
exceeds the actual fee. The FOIA Officer shall assess the requester for 
the amount by which the actual fee exceeds the estimated advance fee 
payment.
    (g) Fee schedule. The FOIA Officer shall assess fees in accordance 
with the following schedule:

Search:
    Manual: Supervisory/Professional       $34.00 per hour.
     Staff.
    Manual: Clerical Staff...............  $17.00 per hour.
    Computer: Operator...................  $34.00 per hour.
    Computer output (PC).................  actual cost.
    Diskettes (3\1/2\ x 5\1/4\)..........  $5.00 per diskette.
    Review...............................  $34.00 per hour.
Duplication:
    Photocopy............................  $.10 per page.
    Computer generated...................  $.76 per 1000 lines.
    Copy of microfiche...................  $.30 per page.
    Transcription of audio tape..........  $4.50 per page.
    Certification, seal and attestation    $5.00 per document.
     by the FOIA Officer.
Delivery:
    Facsimile transmission (long           Long distance charges plus
     distance).                             $.25 per page.
    Facsimile transmission (local).......  $.25 per call plus $.25 per
                                            page.
    Express delivery service.............  Actual cost.
 


[63 FR 37485, July 13, 1998, as amended at 64 FR 5930, Feb. 8, 1999, as 
amended at 65 FR 8257, 8258, Feb. 18, 2000; 65 FR 20346, Apr. 17, 2000; 
67 FR 12844, Mar. 20, 2002]



PART 911--AVAILABILITY OF UNPUBLISHED INFORMATION--Table of Contents




Sec.
911.1  Definitions.
911.2  Purpose and scope.
911.3  Prohibition on unauthorized use and disclosure of unpublished 
          information.
911.4  Requests for unpublished information by document or testimony.
911.5  Consideration of requests.
911.6  Persons and entities with access to unpublished information.
911.7  Availability of unpublished information by testimony.
911.8  Availability of unpublished information by document.
911.9  Fees.

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

    Source: 64 FR 44106, Aug. 13, 1999, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

[[Page 61]]



Sec. 911.1  Definitions.

    As used in this part:
    Legal proceeding means any administrative, civil, or criminal 
proceeding, including a grand jury or discovery proceeding, in which 
neither the Finance Board nor the United States is a party.
    Supervised entity means a Bank, the Office of Finance, and the 
Financing Corporation.
    Unpublished information means information and documents created or 
obtained by the Finance Board in connection with the performance of 
official duties, whether the information or documents are in the 
possession of the Finance Board, a current or former Finance Board 
employee or agent, a supervised entity, a Bank member, government 
agency, or some other person or entity; and information and documents 
created or obtained by, or in the memory of, a current or former Finance 
Board employee or agent, that was acquired in the person's official 
capacity or in the course of performing official duties. It does not 
include information or documents the Finance Board must disclose under 
the Freedom of Information Act (5 U.S.C. 552), Privacy Act (5 U.S.C. 
552a), or the Finance Board's implementing regulations (12 CFR parts 910 
and 913, respectively). It also does not include information or 
documents that were previously published or disclosed or are customarily 
furnished to the public in the course of the performance of official 
duties such as the annual report the Finance Board submits to Congress 
pursuant to section 2B(d) of the Act (12 U.S.C. 1422b(d)), press 
releases, Finance Board forms, and materials published in the Federal 
Register.

[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000; 67 
FR 12844, Mar. 20, 2002]



Sec. 911.2  Purpose and scope.

    (a) Purpose. The purposes of this part are to:
    (1) Maintain the confidentiality and control the dissemination of 
unpublished information;
    (2) Conserve the time of employees for official duties and ensure 
that Finance Board resources are used in the most efficient manner;
    (3) Maintain the Finance Board's impartiality among private 
litigants; and
    (4) Establish an orderly mechanism for the Finance Board to process 
expeditiously and respond appropriately to requests for unpublished 
information.
    (b) Scope. (1) This part applies to a request for and use and 
disclosure of unpublished information, including a request for 
unpublished information by document or testimony arising out of a legal 
proceeding in which neither the Finance Board nor the United States is a 
party. It does not apply to a request for unpublished information in a 
legal proceeding in which the Finance Board or the United States is a 
party or a request for information or records the Finance Board must 
disclose under the Freedom of Information Act, Privacy Act, or the 
Finance Board's implementing regulations.
    (2) This part does not, and may not be relied upon to create any 
substantive or procedural right or benefit enforceable against the 
Finance Board.



Sec. 911.3  Prohibition on unauthorized use and disclosure of unpublished information.

    (a) In general. Possession or control by any person, supervised 
entity, Bank member, government agency, or other entity of unpublished 
information does not constitute a waiver by the Finance Board of any 
privilege or its right to control, supervise, or impose limitations on, 
the subsequent use and disclosure of the information.
    (b) Current and former employees and agents. Except as authorized by 
this part or otherwise by the Finance Board, no current or former 
Finance Board employee or agent may disclose or permit the disclosure in 
any manner of any unpublished information to anyone other than a Finance 
Board employee or agent for use in the performance of official duties.
    (c) Other persons or entities possessing unpublished information. 
(1) Except as authorized in writing by the Finance Board, no person, 
supervised entity, Bank member, government agency, or other entity in 
possession or control of unpublished information may disclose or permit 
the use or disclosure of such

[[Page 62]]

information in any manner or for any purpose.
    (2) All unpublished information made available under this part 
remains the property of the Finance Board and may not be used or 
disclosed for any purpose other than that authorized under this part 
without the prior written permission of the Finance Board.
    (3) Reports of examination, supervisory correspondence, and other 
unpublished information lawfully in the possession of a supervised 
entity, Bank member, or government agency remains the property of the 
Finance Board and may not be used or disclosed for any purpose other 
than that authorized under this part without the prior written 
permission of the Finance Board.
    (4) Any person or entity that discloses or uses unpublished 
information except as expressly authorized under this part may be 
subject to the penalties provided in 18 U.S.C. 641 and other applicable 
laws. A current Finance Board, Bank, or Office of Finance employee also 
may be subject to administrative or disciplinary proceedings.
    (d) Exception for supervised entities and Bank members. When 
necessary or appropriate for business purposes, a supervised entity, 
Bank member, or any director, officer, employee, or agent thereof, may 
disclose unpublished information, including information contained in, or 
related to, supervisory correspondence or reports of examination, to a 
person or entity officially connected with the supervised entity or Bank 
member as officer, director, employee, attorney, agent, auditor, or 
independent auditor. A supervised entity, Bank member, or a director, 
officer, employee, or agent thereof, also may disclose unpublished 
information to a consultant under this paragraph if the consultant is 
under a written contract to provide services to the supervised entity or 
Bank member and the consultant has agreed in writing:
    (1) To abide by the prohibition on the disclosure of unpublished 
information contained in this section; and
    (2) That it will not to use the unpublished information for any 
purposes other than those stated in its contract to provide services to 
the supervised entity or Bank member.
    (e) Government agencies. The Finance Board may make reports of 
examination, supervisory correspondence, and other unpublished 
information available to another federal agency or a state agency for 
use where necessary in the performance of the agency's official duties. 
As used in this paragraph, the term agency does not include a grand 
jury.

[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000; 67 
FR 12844, Mar. 20, 2002]



Sec. 911.4  Requests for unpublished information by document or testimony.

    (a) Form of requests. A request for unpublished information must be 
submitted to the Finance Board in writing and include a detailed 
description of the basis for the request. At a minimum, the request must 
demonstrate that:
    (1) The requested information is highly relevant to the purpose for 
which it is sought;
    (2) The requested information is not available from any other 
source;
    (3) The need for the information clearly outweighs the need to 
maintain its confidentiality; and
    (4) The need for the information clearly outweighs the burden on the 
Finance Board to produce it.
    (b) Requests for documents. If the request is for unpublished 
information by document, the request must include the elements in 
paragraph (a) of this section and also must adequately describe the 
record or records sought by type and date.
    (c) Requests for testimony. (1) If the request is for unpublished 
information by testimony, the request must include the elements in 
paragraph (a) of this section and also must set forth the intended use 
of the testimony, a summary of the scope of the testimony requested, and 
a showing that no document or the testimony of other non-Finance Board 
persons, including retained experts, could be provided and used in lieu 
of the testimony.
    (2) Upon submitting a request to the Finance Board for unpublished 
information by testimony, the requester

[[Page 63]]

must notify all other parties to the matter at issue of the request.
    (3) After receipt of a request for unpublished information by 
testimony but before the requested testimony occurs, a party to the 
matter at issue who did not join in the request and who wishes to 
question the witness beyond the scope of the testimony sought by the 
request, must timely submit its own request for unpublished information 
pursuant to this part.
    (d) Requests in connection with legal proceedings. If the request 
for unpublished information arises out of a legal proceeding, the 
Finance Board generally will require that the legal proceeding already 
be filed before it will consider the request. In addition to the 
elements in paragraph (a) of this section, requests in connection with 
legal proceedings must include the caption and docket number of the 
case; the forum; the name, address, phone number, and electronic mail 
address, if available, of counsel to all other parties to the legal 
proceeding; the requester's interest in the case; a summary of the 
issues in litigation; and the reasons for the request, including the 
relevance of the unpublished information and how the requested 
information will contribute substantially to the resolution of one or 
more specifically identified issues in the legal proceeding.
    (e) Expedited requests. If a requester seeks a response in less than 
60 days, the request must explain why the request was not submitted 
earlier and why the Finance Board should expedite the request.
    (f) Where to submit requests. Send requests for unpublished 
information to the Office of General Counsel, Federal Housing Finance 
Board, 1777 F Street, NW., Washington, DC 20006.
    (g) Additional information. (1) From the requester. The Office of 
General Counsel may consult with the requester to refine and limit the 
scope of the request to make compliance less burdensome or to obtain 
information necessary to make an informed determination on the request. 
A requester's failure to cooperate in good faith with the Office of 
General Counsel may serve as the basis for a determination not to grant 
the request.
    (2) From others. The Office of General Counsel may inquire into the 
facts and circumstances underlying a request for unpublished information 
and rely on sources of information other than the requester, including 
other parties to the matter at issue.



Sec. 911.5  Consideration of requests.

    (a) Discretion. Each decision concerning the availability of 
unpublished information is at the sole discretion of the Finance Board 
based on a weighing of all appropriate factors. The decision is a final 
agency action that exhausts administrative remedies for disclosure of 
the information.
    (b) Time to respond. The Finance Board generally will respond in 
writing to a request for unpublished information within 60 days of 
receipt absent exigent or unusual circumstances and dependent upon the 
scope and completeness of the request.
    (c) Factors the Finance Board may consider. The factors the Finance 
Board may consider in making a determination regarding the availability 
of unpublished information include:
    (1) Whether and how the requested information is relevant to the 
purpose for which it is sought;
    (2) Whether information reasonably suited to the requester's needs 
other than the requested information is available from another source;
    (3) Whether the requested information is privileged;
    (4) If the request is in connection with a legal proceeding, whether 
the proceeding has been filed;
    (5) The burden placed on the Finance Board to respond to the 
request;
    (6) Whether production of the information would be contrary to the 
public interest; and
    (7) Whether the need for the information clearly outweighs the need 
to maintain the confidentiality of the information.
    (d) Disclosure of unpublished information by others. When a person 
or entity other than the Finance Board has a claim of privilege 
regarding unpublished information and the information is in the 
possession or control of that person or entity, the Finance Board, at

[[Page 64]]

its sole discretion, may respond to a request for the information by 
authorizing the person or entity to disclose the information to the 
requester pursuant to an appropriate confidentiality order. Finance 
Board authorization to disclose information under this paragraph does 
not preclude the person or entity in possession of the unpublished 
information from asserting its own privilege, arguing that the 
information is not relevant, or asserting any other argument to protect 
the information from disclosure.
    (e) Notice to supervised entities and Bank members. The Finance 
Board generally will notify a supervised entity or Bank member that it 
is the subject of a request, unless the Finance Board, in its sole 
discretion, determines that to do so would advantage or prejudice any of 
the parties to the matter at issue.

[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]



Sec. 911.6  Persons and entities with access to unpublished information.

    (a) Notice to Finance Board. Any person, including a current or 
former Finance Board employee or agent, or any entity, including a 
supervised entity, Bank member, or government agency that receives a 
request for, or is served with a subpoena, order, or other legal process 
to disclose unpublished information by document or testimony, must 
immediately notify the Office of General Counsel.
    (b) Response of person or entity served with request. Unless the 
Finance Board has authorized in writing disclosure of the requested 
information:
    (1) A current or former Finance Board employee or agent or a 
supervised entity that must respond to a subpoena, order, or other legal 
process, must decline to disclose the requested information, citing this 
part as authority.
    (2) A non-Finance Board person or entity may not disclose 
unpublished information unless:
    (i) The requester has sought the information from the Finance Board 
under this part; and
    (ii) After the Finance Board or the Department of Justice has had 
the opportunity to appear and oppose disclosure, a Federal court has 
ordered the person or entity to disclose the information.
    (c) Finance Board response. If the Finance Board does not authorize 
in writing disclosure of the requested information, the Finance Board 
will provide a copy of this part to the person or entity at whose 
instance the process was issued and advise that person or entity or the 
court or other body that the Finance Board has prohibited disclosure of 
the information under this part. The Finance Board or the Department of 
Justice may intervene in the matter at issue, attempt to have the 
compulsory process withdrawn, or register other appropriate objections.

[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]



Sec. 911.7  Availability of unpublished information by testimony.

    (a) Scope. (1) The scope of permissible testimony is limited to that 
set forth in the written authorization granted by the Finance Board. The 
Finance Board may act to ensure that the scope of testimony provided is 
consistent with the written authorization.
    (2) A party to the matter at issue that did not join in a request 
for unpublished information who wishes to question a witness beyond the 
authorized scope must request expanded authorization under this part. 
The Finance Board will attempt to render decisions on such requests in 
an expedited manner.
    (3) The Finance Board generally will not authorize a current 
employee or agent to provide expert or opinion testimony for a private 
party.
    (b) Manner in which testimony is given. (1) The Finance Board 
ordinarily will make the authorized testimony of a former or current 
employee or agent available only through written interrogatories or 
deposition. The Finance Board will not authorize testimony at a trial or 
hearing unless the requester shows that properly developed deposition 
testimony could not be used or would be inadequate at the trial or 
hearing.
    (2) If the Finance Board has authorized testimony in connection with 
a legal proceeding, the requester must cause a subpoena to be served on 
the

[[Page 65]]

employee in accordance with applicable rules of procedure, with a copy 
by registered or certified mail to the Office of General Counsel.
    (3) If the authorized testimony is through deposition, the 
deposition ordinarily will take place at the Finance Board's offices at 
a time that will avoid substantial interference with the performance of 
the employee's official duties.
    (4) The requester is responsible for all costs associated with an 
employee's appearance, including provision of a copy of a transcript of 
the deposition at the request of the Office of General Counsel. The 
person whose deposition was transcribed does not waive his or her right 
to review the transcript and note errors.
    (c) Restrictions on use and disclosure. The Finance Board may 
condition its authorization of deposition testimony on an agreement of 
the parties to appropriate limitations, such as an agreement to keep the 
transcript of the testimony under seal or to make the transcript 
available only to the parties, the court or other body, or the jury. 
Upon request made pursuant to this part or on its own initiative, the 
Finance Board may authorize use of a deposition transcript in another 
legal proceeding or non-adversarial matter.
    (d) Responsibility of litigants. If the testimony is disclosed in 
connection with a legal proceeding, the requester is responsible for:
    (1) Promptly notifying all other parties to the legal proceeding of 
the disclosure, and, after entry of a protective order, providing copies 
of the testimony to the other parties who are signatories and subject to 
the protective order; and
    (2) At the conclusion of the legal proceeding, retrieving the 
testimony from the court or other body's file as soon as it is no longer 
required and certifying to the Finance Board that every party covered by 
the protective order has destroyed the unpublished information.



Sec. 911.8  Availability of unpublished information by document.

    (a) Scope. The scope of permissible document disclosure is limited 
to that set forth in the written authorization granted by the Finance 
Board. The Finance Board may act to ensure that the scope of documents 
provided is consistent with the written authorization.
    (b) Restrictions on use and disclosure. The Finance Board may 
condition a decision to disclose unpublished information by document on 
entry of a protective order satisfactory to the Finance Board by the 
court or other body presiding in a legal proceeding or, in non-
adversarial matters, on a written agreement of confidentiality that 
limits access of third parties to the unpublished information. In a 
legal proceeding in which a protective order already has been entered, 
the Finance Board may condition a decision to disclose unpublished 
information upon inclusion of additional or amended provisions in the 
protective order. Upon request made pursuant to this part or on its own 
initiative, the Finance Board may authorize use of the documents in 
another legal proceeding or non-adversarial matter.
    (c) Responsibility of litigants. If the documents are disclosed in 
connection with a legal proceeding, the requester is responsible for:
    (1) Promptly notifying all other parties to the legal proceeding of 
the disclosure, and, after entry of a protective order, providing copies 
of the documents to the other parties that are signatories and subject 
to the protective order; and
    (2) At the conclusion of the legal proceeding, retrieving the 
documents from the court or other body's file as soon as they are no 
longer required and certifying to the Finance Board that every party 
covered by the protective order has destroyed the unpublished 
information.
    (d) Certification or authentication. If the Finance Board has 
authorized disclosure of unpublished information by document, it will 
provide certified or authenticated copies of the document upon request.



Sec. 911.9  Fees.

    (a) Fees for records search, copying, and certification. Unless 
waived or reduced, a requester must pay a fee to the Finance Board for 
the costs of searching, copying, authenticating, or certifying 
unpublished information in

[[Page 66]]

accordance with 12 CFR 910.9. The Office of Resource Management 
generally will bill a requester upon completion of the production, but, 
in certain instances, may require a requester to remit payment prior to 
providing the requested information. To pay fees assessed under this 
section, a requester must deliver to the Office of Resource Management, 
located at the Federal Housing Finance Board, 1777 F Street, NW., 
Washington, DC 20006, a check or money order made payable to the 
``Federal Housing Finance Board.''
    (b) Witness fees and mileage. (1) Current Finance Board or federal 
employees. If the Finance Board authorizes disclosure of unpublished 
information by testimony of a current Finance Board employee or agent or 
a former Finance Board employee or agent who is still in the employ of 
the United States, upon completion of the testimonial appearance the 
requester must remit promptly to the Office of Resource Management 
payment for witness fees and mileage computed in accordance with 28 
U.S.C. 1821.
    (2) Former employees or agents. If the Finance Board authorizes 
disclosure of unpublished information by testimony of a former Finance 
Board employee or agent who is not currently employed by the United 
States, upon completion of the testimonial appearance the requester must 
remit promptly to the witness any witness fees or mileage due in 
accordance with 28 U.S.C. 1821.

[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]



PART 912--INFORMATION REGARDING MEETINGS OF THE BOARD OF DIRECTORS OF THE FEDERAL HOUSING FINANCE BOARD--Table of Contents




Sec.
912.1  Definitions.
912.2  Purpose and scope.
912.3  Open meetings.
912.4  Closed meetings.
912.5  Procedures for closing meetings.
912.6  Notice of meetings.

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

    Source: 58 FR 19202, Apr. 13, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 912.1  Definitions.

    As used in this part:
    Board Director or Director means a member of the Board of Directors.
    Chairperson includes the Acting Chairperson.
    Meeting means any deliberations of three or more Directors of the 
Board of Directors, that determines or results in the joint conduct or 
disposition of official Finance Board business, but does not include:
    (1) Discussions to determine whether meetings will be open or closed 
or whether information pertaining to closed meetings will be disclosed;
    (2) Discussions to determine whether to schedule a meeting with less 
than seven days notice, or to change the time, place or subject matter 
of a scheduled meeting; and
    (3) Disposition of Finance Board business by circulation of written 
materials on proposed actions to individual Directors for proposed 
actions, and notational voting by the individual Directors on such 
proposed actions.
    Public observation means the right of the general public to attend 
open meetings of the Board of Directors, but does not include the right 
to participate therein unless invited to do so by the Chairperson.
    Secretary to the Board includes the Acting Secretary if the position 
of Secretary is vacant.
    Sunshine Act means the Government in the Sunshine Act (5 U.S.C. 
552b).

[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12844, Mar. 20, 2002]



Sec. 912.2  Purpose and scope.

    (a) This part is issued by the Finance Board pursuant to the 
Sunshine Act, which requires Federal agencies, headed by collegial 
bodies, to promulgate regulations to implement its provisions. The 
purpose of these regulations is to provide the public with access to 
information regarding the decisionmaking processes of the Board of 
Directors of the Finance Board, while protecting the privacy rights of 
individuals and the ability of the Board of Directors to carry out its 
responsibilities.
    (b) The Board of Directors shall not jointly conduct or dispose of 
official

[[Page 67]]

Finance Board business other than in accordance with this part.

[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12844, Mar. 20, 2002]



Sec. 912.3  Open meetings.

    (a) Except as provided in Sec. 912.4, every portion of every meeting 
of the Board of Directors shall be open to public observation.
    (b) Unless otherwise specified in the public notice, open meetings 
of the Board of Directors shall be held in the Board Room of the Finance 
Board at 1777 F Street, NW., Washington, DC, at the time specified in 
the public notice.

[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000]



Sec. 912.4  Closed meetings.

    (a) The Board of Directors may close a meeting, or portion thereof, 
to public observation, or withhold information from the public 
pertaining to a meeting, when it determines that opening the meeting, or 
a portion thereof, or the public disclosure of information pertaining to 
such meeting, or portion thereof, is likely to:
    (1) Disclose matters that are:
    (i) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interests of national defense 
or foreign policy; and
    (ii) Are, in fact, properly classified pursuant to such Executive 
Order;
    (2) Relate solely to the internal personnel rules and practices of 
the Finance Board;
    (3) Disclose matters specifically exempt from disclosure by statute 
(other than the Freedom of Information Act (5 U.S.C. 552)), provided 
that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding matters from 
the public or refers to particular types of matters to be withheld;
    (4) Disclose trade secrets or commercial or financial information 
that is obtained from a person and is privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings;
    (ii) Deprive a person of a right to a fair trial or an impartial 
adjudication;
    (iii) Constitute an unwarranted invasion of personal privacy;
    (iv) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source;
    (v) Disclose investigative techniques and procedures; or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Finance Board or another agency responsible for the 
regulation or supervision of Banks or other financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to:
    (i) (A) Lead to significant financial speculation in currencies, 
securities, or commodities;
    (B) Significantly endanger the stability of any of the Banks or any 
other financial institution; or
    (ii) Significantly frustrate implementation of a proposed Finance 
Board action, except that this paragraph shall not apply in any instance 
where the Finance Board has already disclosed to the public the content 
or nature of its proposed action, or where the Finance Board is required 
by law to make such disclosure on its own initiative prior to taking 
final action on such proposal; or

[[Page 68]]

    (10) Specifically concern the issuance of a subpoena by the Board of 
Directors, or the Finance Board's participation in a civil action or 
proceeding, an action in a foreign court or international tribunal, or 
an arbitration, or the initiation, conduct or disposition of a 
particular case of formal adjudication pursuant to the procedures in 5 
U.S.C. 554 or otherwise involving a determination on the record after 
opportunity for a hearing.
    (b) A meeting or portions of a meeting shall not be closed nor 
information withheld pursuant to paragraph (a) of this section if the 
Board of Directors finds that the public interest requires otherwise.

[58 FR 19202, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12844, Mar. 20, 2002]



Sec. 912.5  Procedures for closing meetings.

    (a) Regular procedures. (1) Except as provided in paragraph (b) of 
this section, a meeting of the Board of Directors, or portion thereof, 
will be closed to public observation, and information pertaining to such 
meeting, or portion thereof, will be withheld from the public, when a 
majority of the Board of Directors determines by recorded vote that such 
meeting, or portion thereof, or the withholding of information qualifies 
for exemption under Sec. 912.4, and the Board of Directors does not find 
that the public interest requires otherwise.
    (2) Except as provided in paragraph (a)(3) of this section, a 
separate vote of the Board Directors will be taken with respect to the 
closing or the withholding of information as to each meeting or portion 
thereof that is proposed to be closed to public observation, or with 
respect to information that is proposed to be withheld pursuant to 
paragraph (a) of this section.
    (3) A single vote may be taken with respect to a series of meetings, 
a portion or portions of which are proposed to be closed to public 
observation, or with respect to any information concerning such series 
of meetings proposed to be withheld, so long as each meeting in such 
series involves the same particular matters and is scheduled to be held 
no more than thirty days after the initial meeting in such series.
    (4) The vote of each Board Director taken pursuant to paragraph (a) 
of this section shall be recorded, and no proxies shall be allowed.
    (5) Whenever any person's interests may be directly affected by any 
portion of a meeting for any of the reasons referred to in 
Sec. 912.4(a)(5), (6), or (7), such person may send a written request to 
the Secretary to the Board asking that such portion of the meeting be 
closed to public observation. The Secretary to the Board will transmit 
the request to each Board Director, and upon the request of a Director, 
a recorded vote will be taken of the Board of Directors whether to close 
the meeting to public observation.
    (6)(i) Within one day of any vote taken pursuant to paragraph (a) of 
this section, the Finance Board will make publicly available through the 
Secretary to the Board a written copy of such vote reflecting the vote 
of each Board Director.
    (ii) If a meeting or portion thereof is to be closed to public 
observation, the Finance Board within one day of the vote taken pursuant 
to paragraph (a) of this section will make publicly available through 
the Secretary to the Board a full, written explanation of its action 
closing the meeting, or portion thereof, together with a list of all 
persons expected to attend the meeting and their affiliation, except to 
the extent such information is determined by the Board of Directors to 
be exempt from disclosure under Sec. 912.4(a).
    (7) Any person may request in writing to the Secretary to the Board 
that an announced closed meeting, or portion thereof, be open to public 
observation. The Secretary to the Board will transmit the request to 
each Board Director, and upon the request of a Director, a recorded vote 
will be taken of the Board of Directors on whether to open the meeting 
to public observation.
    (b) Expedited procedures. (1) Since a majority of the meetings, of 
the Board of Directors may be closed pursuant to Sec. 912.4(a)(4), (8), 
(9)(i) or (10), 5 U.S.C. 552b(d)(4) allows the Finance Board to use 
expedited procedures in closing

[[Page 69]]

such meetings. The following are examples of meetings of the Board of 
Directors, or portions thereof, that may be closed to the public under 
these expedited procedures: sale of consolidated obligations, and review 
of examination, operating or condition reports of Banks.
    (2) A decision to close a meeting, or portion thereof, under 
paragraph (b) of this section shall be made at the beginning of the 
meeting, or portion thereof, by majority vote of the Directors.
    (3)(i) The Finance Board shall maintain a record of each of the 
votes taken by its Board of Directors to close a meeting, or portion 
thereof, or to withhold public access to information thereof, under 
paragraph (b) of this section.
    (ii) A copy of such record, reflecting the vote of each Board 
Director on the question of closing a meeting, or portion thereof, or 
withhholding public access to information thereof, under this paragraph 
(b) of this section, shall be made available to any member of the public 
upon request to the Secretary to the Board.
    (4) Public announcement of the time, place and subject matter of 
meetings, or portions thereof, closed under this paragraph (b) of this 
section shall be made at the earliest practical time.
    (c) Records of closed proceedings--(1) Transcripts or electronic 
recording. Except as provided in paragraph (c)(2) of this section, the 
Finance Board shall make and maintain a complete transcript or verbatim 
electronic recording of the proceedings at each meeting, or portion 
thereof, closed to public observation under paragraph (a) or (b) of this 
section.
    (2) Minutes. The Finance Board may make and maintain a set of 
complete minutes, in lieu of such transcript or electronic recording, 
with respect to meetings, or portions thereof, closed or information 
withheld under Sec. 912.4(a)(8), (9)(i) or (10). Such set of minutes 
shall fully and clearly describe all matters discussed and provide a 
full and accurate summary of any action taken, and the reasons therefor, 
including a description of each of the views expressed on any item and 
the record of any roll call vote (reflecting the vote of each Board 
Director on the question). All documents considered in connection with 
any action shall be identified in such set of minutes.
    (3) Availability of Records. (i) The transcript, electronic 
recording or set of minutes of an item discussed, or of testimony 
received, at a meeting, shall be made available promptly to the public 
through the Secretary to the Board except in cases where the Board of 
Directors determines that the item or testimony contains information 
which may be withheld under Sec. 912.4(a).
    (ii) Copies of such transcript, electronic recording or set of 
minutes, disclosing the identity of each speaker, shall be furnished to 
any person at the actual cost of duplication or transcription.
    (iii) The Finance Board shall maintain a complete copy of the 
transcript, verbatim electronic recording or complete set of minutes of 
each meeting, or portion thereof closed to the public, for at least two 
years after such meeting, or until one year after the conclusion of any 
proceeding of the Board of Directors with respect to which the meeting 
or portion thereof was held, whichever occurs later.
    (d) Legal certification for closing meeting. (1) For every meeting, 
or portion thereof, of the Board of Directors closed pursuant to 
paragraphs (a) or (b) of this section, the General Counsel (or in the 
General Counsel's absence or incapacity the senior legal officer 
available) shall publicly certify that the meeting or portion thereof 
may be closed to the public pursuant to the Sunshine Act and this part, 
and specifically state the relevant exemption in support thereof.
    (2) A copy of the certification, together with a statement from the 
Chairperson or, when appropriate, the Acting Chairperson or designee, 
setting forth the time and place of the meeting and the persons present, 
shall be retained in the permanent files of the Finance Board.

[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000; 65 
FR 12844, Mar. 20, 2002]



Sec. 912.6  Notice of meetings.

    (a) Scope of notice. (1) Except as provided in Sec. 912.4(a) that 
such information

[[Page 70]]

is determined to be exempt from disclosure, each open meeting of the 
Board of Directors, or each meeting closed under the regular procedures 
in Sec. 912.5(a), will be preceded by public notice as described in this 
section.
    (2) The notices for meetings of the Board of Directors closed under 
the expedited procedures pursuant to Sec. 912.5(b) will be made in 
accordance with Sec. 912.5(b)(4).
    (b) Content of notice. A notice of an open meeting or a meeting 
closed under the regular procedures in Sec. 912.5(a) will state the 
time, place, and subject matter of the meeting, whether it is to be open 
or closed to the public, and the name and telephone number of the 
Secretary to the Board for information about the meeting. Each such 
notice shall be posted in the lobby of the Finance Board offices, and 
may be made available in addition by other means or at other locations 
as deemed desirable. Immediately following the posting of each such 
notice, the Finance Board will publish the notice in the Federal 
Register.
    (c) Time--(1) Seven days notice. Except as provided in paragraph 
(c)(2) of this section, a public notice of open meetings or meetings 
closed under Sec. 912.5(a) will be made at least seven days in advance 
of each meeting.
    (2) Less than seven days notice. When a majority of the Board of 
Directors determine by recorded vote that Finance Board business 
requires a meeting to be called at any earlier date, the seven-day prior 
notice rule may be suspended and notice shall be made at the earliest 
practicable time.
    (d) Amendment of notice--(1) Time and place. A change in the time or 
place of a meeting following public notice may be made only if announced 
at the earliest practicable time.
    (2) Subject matter. A change in the subject matter of a meeting or a 
re-determination to open or close a meeting, or portions thereof, may be 
made, after public notice, only if:
    (i) At least a majority of the Board Directors determines by 
recorded vote that Finance Board business so requires and that no 
earlier notice of the change was possible; and
    (ii) The Finance Board publicly announces the change and the vote of 
each Board Director by posting a notice thereof in the lobby of the 
Finance Board offices at the earliest practicable time.
    (3) Timing of amendment. A public announcement of a change in either 
the time, place or subject matter of a meeting may be made after the 
commencement of the meeting affected.
    (4) Publication of amendment. Each change to a notice of a meeting 
will be published in the Federal Register, following the Finance Board's 
public announcement of the change.

[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000; 67 
FR 12845, Mar. 20, 2002]



PART 913--PRIVACY ACT PROCEDURES--Table of Contents




Sec.
913.1  Definitions.
913.2  General.
913.3  Procedures for requesting individual records in a system of 
          records; appeal of denials.
913.4  Time, place and identification requirements for requests.
913.5  Disclosure of requested records.
913.6  Procedures for requesting amendment to a record in a system of 
          records; appeal of denials.
913.7  Fees.
913.8  Penalties.
913.9  Exemptions.

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

    Source: 58 FR 19205, Apr. 13, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

    Editorial Note: Nomenclature changes to part 913 appear at 67 FR 
12845, Mar. 20, 2002.



Sec. 913.1  Definitions.

    As used in this part:
    Amendment means any correction, addition or deletion of information 
contained in a record, as defined in this section.
    Business days means all days except Saturdays, Sundays, or Federal 
Government holidays.
    Designated system of records means a system of records, as defined 
in this section, that has been listed in the Federal Register as 
required by 5 U.S.C. 552a(e).
    Individual means a natural person who is either a citizen of the 
United States of America or an alien lawfully

[[Page 71]]

admitted to the United States for permanent residence. The term includes 
the parent(s) having custody of any minor or the legal guardian of any 
individual who has been declared to be incompetent due to physical or 
mental incapacity or age by a court of competent jurisdiction.
    Maintain means to keep or hold and preserve in an existing state, 
and includes the terms ``collect,'' ``use,'' ``disseminate'' and 
``control.''
    Record means any item, collection, or grouping of information about 
an individual that is maintained by the Finance Board within a system of 
records, and that contains such individual's name, or identifying 
number, symbol, or other identifying particular assigned to the 
individual, including a fingerprint, voice print or photograph.
    Records systems manager means the employee responsible for 
maintaining a designated system of records at the Finance Board, as such 
official or employee may be identified through public notice in the 
Federal Register from time to time by the Finance Board entitled: 
``Privacy Act of 1974: Systems of Records.''
    Routine use means the use of a record for a purpose compatible with 
the purpose for which it was originally created.
    System of records means a group of records maintained or controlled 
by the Finance Board from which information is or may be retrieved by 
the name of an individual or some identifying number, symbol or other 
identifying particular assigned to the individual.

[58 FR 19205, Apr. 13, 1993, as amended at 65 FR 8259, Feb. 18, 2000. 
Redesignated at 67 FR 12845, Mar. 20, 2002]



Sec. 913.2  General.

    (a) Purpose. This part implements the provisions of the Privacy Act, 
5 U.S.C. 552a, which require each executive agency to promulgate 
regulations for the protection of the privacy of individuals on whom the 
agency maintains information that is retrieved by reference to an 
individual's name or an identifying particular assigned to the 
individual.
    (b) Scope. These regulations establish procedures by which: an 
individual may seek access under the Privacy Act to records pertaining 
to him or her, may request correction or amendment of such records, or 
may seek an accounting of disclosures of such records maintained by the 
agency.

[58 FR 19205, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, 
and further redesignated at 67 FR 12845, Mar. 20, 2002]



Sec. 913.3  Procedures for requesting individual records in a system of records; appeal of denials.

    (a) Current or former employees. Any current or former Finance Board 
employee seeking access to such employee's official personnel record 
maintained by the Finance Board shall submit a request to the Finance 
Board in the manner prescribed by regulations of the Office of Personnel 
Management, at title 5, Code of Federal Regulations.
    (b) Other requests. Other requests for access to a record that 
contains information on the requesting individual and is maintained in a 
Finance Board designated system of records shall be in writing, shall 
contain a reasonable, succinct description of the record sought, and 
shall identify the particular designated system of records in which the 
record may be maintained, as identified in a notice published by the 
Finance Board from time to time in the Federal Register.
    (c) Accounting for previous disclosures. An individual may use the 
procedures of this section to request an accounting from the Finance 
Board of previous disclosures of records pertaining to such individual 
in a designated system of records, pursuant to the Privacy Act, 5 U.S.C. 
552a(c).
    (d) Medical records procedures. Information on an individual 
contained in medical records will be disclosed to a requesting 
individual in accordance with the procedures in paragraph (b) of this 
section and the requirements of this part, except, if in the judgment of 
the Finance Board the disclosure of such information could have an 
adverse effect on the individual, the Finance Board may withhold such 
information from the individual and transmit it to a licensed medical 
physician named by the requesting individual.

[[Page 72]]

    (e) Response policy. The Finance Board will acknowledge, or 
substantially respond to if practicable, a request made under this 
section within ten (10) business days of its receipt.
    (f) Initial review. (1) The Secretary to the Board will make the 
initial determination whether to grant or deny a request for records 
under this part, after consultation with the systems manager of the 
appropriate designated system of records.
    (2) The Secretary to the Board will notify the requesting individual 
whether the Finance Board:
    (i) Has the requested record in a Finance Board designated system of 
records; and
    (ii) Will release the requested record or not.
    (3) If the request is denied, the Secretary to the Board will inform 
the requesting individual of the reasons for nondisclosure, and describe 
the individual's right to appeal the determination.
    (g) Appeal process. (1) An individual who has been denied a request 
made pursuant to paragraph (b) of this section, may appeal to the Board 
of Directors, or designee, within 30 business days of being notified of 
the denial pursuant to paragraph (f) of this section.
    (2) The appeal shall be in writing, shall be mailed or delivered to 
the Secretary to the Board, and shall give the reasons why the initial 
determination should be overturned.
    (3) The Board of Directors, or such official designated by the Board 
of Directors, shall decide on the appeal within 30 business days 
following receipt of the appeal by the Secretary to the Board. The Board 
of Directors or designated official may extend the time period for good 
cause, after giving notice, and reason therefor, to the individual 
making the appeal.
    (4) If a decision is made to affirm the initial denial of a request 
for a record by an individual, the Board of Directors or designated 
official shall notify the individual making the appeal of the decision 
and the reason therefor, and shall inform the individual of the right of 
judicial review of the appeal.

[58 FR 19205, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12845, Mar. 20, 2002]



Sec. 913.4  Time, place and identification requirements for requests.

    (a) Time. An individual may hand deliver a written request for 
access to or amendment of records, made under Sec. 913.3(b) or 
Sec. 913.6 of this part, to the Finance Board on any business day, 
between the hours of 8:30 a.m. and 5:30 p.m.
    (b) Place. All written requests for access to or amendment of 
records shall be mailed or hand delivered to the Secretary to the Board, 
Federal Housing Finance Board, 1777 F Street, NW., Washington, DC 20006.
    (c) Identification--(1) Mailed requests. All requests for access to 
or amendment of records that are mailed to the Finance Board shall be 
signed by the individual who is the subject of the requested record and 
who is making the request. The validity of each such signature shall be 
attested to by a notary public.
    (2) Hand delivered requests. All requests for access to or amendment 
of records that are hand delivered to the Finance Board by the 
requesting individual shall be authenticated as to the identity of the 
requesting individual by two forms of identification with photographs, 
or by one such form of identification and a properly authenticated birth 
certificate.

[58 FR 19205, Apr. 13, 1993, as amended at 65 FR 8259, Feb. 18, 2000]



Sec. 913.5  Disclosure of requested record.

    (a) Requesting individual. Except to the extent that records 
pertaining to an individual are exempt from disclosure under Sec. 913.9 
of this part, or were compiled in reasonable anticipation of a civil 
action or proceedings, the Finance Board will make such records 
available upon request, pursuant to Sec. 913.3 of this part in either of 
the following methods, at the option of the requesting individual:
    (1) By mailing a copy of the record to the address of the requesting 
individual; or
    (2) By making the record available for inspection and copying by the 
requesting individual, as soon as practicable, at the offices of the 
Secretary to the Board on regular business days,

[[Page 73]]

from 9:30 a.m. until 4:30 p.m. The requesting individual may choose to 
be accompanied by another person during the inspection and copying by 
submitting a signed statement authorizing the presence of such person.
    (b) Other individuals. (1) The Finance Board will disclose a record 
to a person or entity other than the requesting individual, in the 
manner provided by paragraph (a) of this section, only when the Finance 
Board:
    (i) Receives a copy of a written authorization for disclosure to 
such person or entity signed by the requesting individual and attested 
to by a notary public; and
    (ii) Receives adequate identification from such person or entity.
    (2) The restrictions contained in paragraph (b)(1) of this section 
on disclosure of a record shall not apply to:
    (i) A disclosure to Finance Board officers or employees who have a 
need for the record in the performance of their duties;
    (ii) A disclosure otherwise required by the Freedom of Information 
Act (5 U.S.C. 552);
    (iii) A routine use listed with respect to a designated system of 
records;
    (iv) A disclosure to the Bureau of the Census for purposes of 
planning or carrying out a census or survey or related activity pursuant 
to the provisions of title 13 of the United States Code;
    (v) A disclosure to a recipient who has provided the Finance Board 
with advance written assurance that the record will be used solely as a 
statistical research or reporting record, and that the record is to be 
transferred in a form that is not individually identifiable;
    (vi) A disclosure to the National Archives and Records 
Administration as a record with sufficient historical or other value to 
warrant its continued preservation by the Federal Government or for 
evaluation by the Archivist of the United States to determine whether it 
has such value;
    (vii) A disclosure to another agency or to an instrumentality of any 
government jurisdiction within or under the control of the United States 
for civil or criminal law enforcement activity authorized by law if the 
head of such agency or instrumentality has made a written request to the 
Finance Board specifying the particular record requested and the law 
enforcement activity for which it is sought;
    (viii) A disclosure to any person pursuant to a showing of 
compelling circumstances affecting the health and safety of an 
individual if notification of the disclosure is transmitted to the last 
known address of the individual who is the subject of the disclosed 
record;
    (ix) A disclosure to a joint committee of Congress, or any 
subcommittee thereof, or to either House of Congress, or to any 
committee or joint committee, or subcommittee thereof, but only to the 
extent of matter within such joint committee's, committee's or 
subcommittee's jurisdiction;
    (x) A disclosure to the Comptroller General, or authorized 
representative, made in the course of performing the duties of the 
General Accounting Office.
    (xi) Pursuant to the order of a court of competent jurisdiction; or
    (xii) To a consumer reporting agency in accordance with 31 U.S.C. 
3711(f).
    (c) Accounting. The Finance Board, with respect to each system of 
records under its control shall:
    (1) Except for disclosures made under paragraphs (b)(1) or (b)(2) of 
this section, keep an accurate accounting of:
    (i) The date, nature, and purpose of each disclosure of a record to 
any person or to another agency made under paragraph (b) of this 
section; and
    (ii) The name and address of the person or agency to whom the 
disclosure is made;
    (2) Retain the accounting made under paragraph (c)(1) of this 
section for at least five years or the life of the record, whichever is 
longer, after the disclosure for which the accounting is made; and
    (3) Except for disclosures made under paragraph (b)(2)(vii) of this 
section, make the accounting made under paragraph (c)(1) of this section 
available to the individual named in the record at his or her request.
    (4) When a record has been amended or corrected or when a statement 
of

[[Page 74]]

disagreement has been filed, the Finance Board will advise all prior 
recipients of the affected record whose identities may be determined 
pursuant to the disclosure accountings required by the Privacy Act or 
any other accounting previously made, of the amendment or correction or 
the filing of the statement of disagreement. Any disclosure of disputed 
information occurring after a statement of disagreement has been filed 
will clearly identify the specific information disputed and be 
accompanied by a copy of the statement of disagreement and a copy of the 
statement of explanation, if any, as set forth in Sec. 913.6 of this 
part.

[58 FR 19205, Apr. 13, 1993, as amended at 65 FR 8259, Feb. 18, 2000; 67 
FR 12845, Mar. 20, 2002]



Sec. 913.6  Procedures for requesting amendment to a record in a system of records; appeal of denials.

    (a) Scope. This section applies only to amendment of records on an 
individual maintained in a Finance Board system of records used in 
making a determination about such individual.
    (b) Individual request. (1) Any individual may request the Finance 
Board to amend any portion of a record in a designated system of records 
pertaining to that individual, where such portion of the record is not 
accurate, relevant, timely or complete.
    (2) A request to amend a record pursuant to this section shall be in 
writing, shall identify the particular designated system of records 
containing the record which the individual requests to amend and the 
portion of that record to be amended, and shall describe the reasons for 
the requested amendment.
    (c) Prior proceeding. Nothing in this section shall permit a 
collateral attack upon any matter decided in a prior judicial, quasi-
judicial or other proceeding.
    (d) Response policy. The Finance Board shall acknowledge, or 
substantially reply to, if practicable, a request for amendment of 
records under this section.
    (e) Initial review. (1) The Secretary to the Board shall acknowledge 
all requests by individuals for amendment of records. The Secretary to 
the Board shall refer all requests to the appropriate systems manager of 
the designated system of records containing the record to be reviewed, 
for disposition of the request within 10 business days of the referral. 
The systems manager shall promptly review the request and review the 
record for accuracy, relevance, timeliness, completeness or necessity.
    (2) The systems manager will promptly provide to the Secretary to 
the Board a recommendation whether the record should be amended and 
shall state any reasons for denying the request in any part.
    (3) The Secretary to the Board will promptly notify the requesting 
individual of his decision and reasons for any denial, and describe the 
individual's right to appeal any denial.
    (f) Appeal process. (1) An individual who has been denied a request 
made pursuant to this section may appeal to the Board of Directors, or 
an official designated by the Board of Directors, within 30 business 
days of being notified of the denial pursuant to paragraph (e)(3) of 
this section.
    (2) The appeal shall be in writing, shall be mailed to the Secretary 
to the Board, and shall give the reasons why the initial determination 
should be overturned.
    (3) The Board of Directors, or designated official, shall decide the 
appeal within 30 business days of its receipt by the Secretary to the 
Board. The Board of Directors or designated official may extend the 30 
day limit for good cause, after giving notice, and the reasons therefor, 
to the individual making the appeal.
    (4) If a decision is made to affirm the initial denial of a request 
for a record by an individual, the Board of Directors or designated 
official shall notify the individual making the appeal of the decision 
and the reason therefor, and shall inform the individual of the right of 
judicial review of the appeal.
    (g) Statements. (1) Within 30 business days after being denied an 
appeal pursuant to paragraph (f) of this section, an individual may 
submit a concise written statement of disagreement setting forth the 
individual's reasons for disagreeing with the Finance Board's refusal to 
amend the record.

[[Page 75]]

    (2) Such statement shall be provided to persons or other agencies or 
entities to whom the record is disclosed.
    (3) The Finance Board may, if deemed appropriate, prepare a concise 
statement of explanation of the reason(s) why the requested amendment or 
correction was not made. Any statement of explanation will be included 
in the system of records in the same manner as the statement of 
disagreement. A copy of the statement of explanation and of the notation 
of the dispute as marked on the original record will be provided to the 
individual who requested correction or amendment of the record.



Sec. 913.7  Fees.

    The Finance Board, upon a request for records disclosable pursuant 
to these regulations, shall charge a fee of $0.10 per page for 
duplicating, unless:
    (a) The Finance Board determines that it shall grant access to the 
record only by making a copy thereof;
    (b) The total fee will not exceed $2.00; or
    (c) The Finance Board determines, in its sole discretion, that a 
reduction or waiver of the fees is warranted for good cause.



Sec. 913.8  Penalties.

    Subsection (i)(3) of the Privacy Act of 1974 (5 U.S.C. 552a(i)(3)) 
imposes criminal penalties for obtaining Finance Board records on 
individuals under false pretenses. It provides as follows:

Any person who knowingly and willfully requests or obtains any record 
concerning an individual from an agency under false pretense shall be 
guilty of a misdemeanor and fined not more than $5,000.00.



Sec. 913.9  Exemptions.

    The following information is exempt from disclosure:
    (a) The Office of Inspector General Investigative Files system of 
records is exempt from all sections of the Privacy Act (5 U.S.C. 552a) 
except the following: (b) relating to conditions of disclosure; (c)(1) 
and (2) relating to keeping and maintaining a disclosure accounting; 
(e)(4)(A) through (F) relating to publishing a system notice setting 
forth name, location, categories of individuals and records, routing 
uses and policies regarding storage, retrievability, access controls, 
retention and disposal of the records; (e)(6), (7), (9), (10) and (11) 
relating to dissemination and maintenance of records, and relating to 
criminal penalties. This system of records is also exempt from 
Secs. 913.3, 913.4, 913.5(a) and (c)(3) and (4), and 913.6 of this part. 
This exemption applies to those records and information contained in the 
system of records pertaining to the enforcement of criminal laws.
    (b) To the extent that there may exist within this system of records 
and investigative files compiled for law enforcement purposes, other 
than material within the scope of subsection (j)(2) of the Privacy Act, 
the Inspector General Investigative Case Files system of records is 
exempt from the following sections of the Privacy Act (5 U.S.C. 552(a)): 
(c)(3) relating to access to the disclosure accounting, (d) relating to 
access to records, (e)(1) relating to the type of information maintained 
in the records; (e)(4)(G), (H) and (I) relating to publishing the system 
notice information as to agency procedures of access and amendment and 
information as to the categories of sources or records, and (f) relating 
to developing agency rules for gaining access and making corrections. 
This system of records is also exempt from Secs. 913.3, 913.4, 913.5(a) 
and (c)(3), and 913.6 of this part.
    (c) Reason for exemptions. (1) The Office of Inspector General is a 
component of the Finance Board which performs, as its principal 
function, activity pertaining to the enforcement of criminal laws, 
within the meaning of 5 U.S.C. 552a(j)(2). This exemption applies only 
to those records and information contained in the system of records 
pertaining to criminal investigations. This system of records is exempt 
for one or more of the following reasons:
    (i) To prevent interference with law enforcement proceedings.
    (ii) To avoid unwarranted invasion of personal privacy by disclosure 
of information about third parties, including other subjects of 
investigation, investigators, and witnesses.

[[Page 76]]

    (iii) To protect the identity of Federal employees who furnish a 
complaint or information to the Office of the Inspector General, 
consistent with section 7(b) of the Inspector General Act of 1978, as 
amended (5 U.S.C. App. 3).
    (iv) To protect the confidentiality of non-Federal employee sources 
of information.
    (v) To assure access to sources of confidential information, 
including those contained in Federal, State and local criminal law 
enforcement information systems.
    (vi) To prevent disclosure of law enforcement techniques and 
procedures.
    (vii) To avoid endangering the life or physical safety of 
confidential sources and law enforcement personnel.
    (2) Investigative records within this system of records which are 
compiled for law enforcement purposes, other than material within the 
scope of subsection (j)(2), are exempt under the provisions of 5 U.S.C. 
552a(k)(2); provided, however, that if any individual is denied any 
right, privilege, or benefit that they would otherwise be entitled by 
Federal law, or for which they would otherwise be eligible, as a result 
of the maintenance of such material, such material shall be provided to 
such individual except to the extent that the disclosure of such 
material would reveal the identity of a source who furnished information 
to the Government under an express promise that the identity of the 
source would be held in confidence, or, prior to January 1, 1975, under 
an implied promise that the identity of the source would be held in 
confidence. This system of records is exempt for one or more of the 
following reasons:
    (i) To prevent interference with law enforcement proceedings.
    (ii) To protect investigatory material compiled for law enforcement 
purposes.
    (iii) To avoid unwarranted invasion of personal privacy, by 
disclosure of information about third parties, including other subjects 
of investigation, law enforcement personnel and sources of information.
    (iv) To fulfill commitments made to protect the confidentiality of 
sources.
    (v) To protect the identity of Federal employees who furnish a 
complaint or information of OIG, consistent with section 7(b) of the 
Inspector General Act of 1978, as amended (5 U.S.C. App. 3).
    (vi) To assure access to sources of confidential information, 
including those contained in Federal, State and local criminal law 
enforcement systems.
    (vii) To prevent disclosure of law enforcement techniques and 
procedures.
    (viii) To avoid endangering the life or physical safety of 
confidential sources and law enforcement personnel.
    (d) Records within a Finance Board System of records comprising 
investigatory material compiled solely for the purpose of determining 
suitability or eligibility for Federal civilian employment, Federal 
contractors, or access to classified information, are exempt under the 
provisions of 5 U.S.C. 552a(k)(5), but only to the extent that 
disclosure would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to January 1, 1975, 
under an implied promise that the identity of the source would be held 
in confidence. This system of records is exempt for one or more of the 
following reasons:
    (1) To fulfill commitments made to protect the confidentiality of 
sources.
    (2) To assure access to sources of confidential information; 
including those contained in Federal, State, and local criminal law 
enforcement information systems.
    (e) Testing or examination material used solely to determine or 
assess individual qualifications for appointment to employment at the 
Finance Board, or promotion therein--the disclosure of which would 
compromise the objectivity or fairness of the testing, evaluation or 
examining process is exempt under 5 U.S.C. 552a(k)(6).

[58 FR 19205, Apr. 13, 1993, as amended at 65 FR 8259, Feb. 18, 2000; 67 
FR 19845, Mar. 20, 2002]

[[Page 77]]



 SUBCHAPTER C--GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS





PART 915--BANK DIRECTOR ELIGIBILITY, APPOINTMENT AND ELECTIONS--Table of Contents




Sec.
915.1  Definitions.
915.2  Dates.
915.3  Director elections.
915.4  Capital stock report.
915.5  Determination of member votes.
915.6  Elective director nominations.
915.7  Eligibility requirements for elective directors.
915.8  Election process.
915.9  Prohibition on actions to influence director elections.
915.10  Selection of appointive directors.
915.11  Conflict of interests policy for Bank directors.
915.12  Reporting requirements for Bank directors
915.13  Ineligible Bank directors.
915.14  Vacant Bank directorships.
915.15  Minimum number of elective directorships.
915.16  1999 and 2000 Election of Directors.
915.17  Staggered directorships in the 2000 and 2001 elections.

Appendix A to part 915--Staggering for FHLBank Boards of Directors.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1427, and 1432.

    Source: 63 FR 65688, Nov. 30, 2000, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

    Editorial Note: Nomenclature changes to part 915 appear at 67 FR 
12845, Mar. 20, 2002.



Sec. 915.1  Definitions.

    For purposes of this part:
    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 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.
    Discretionary directorship means an elective or appointive 
directorship created by the Finance Board pursuant to section 7(a) of 
the Act (12 U.S.C. 1427(a)) for districts that include five or more 
states.
    FHFB ID 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.
    Guaranteed directorship means an elective directorship that is 
required by section 7(b) of the Act (12 U.S.C. 1427(b)) and Sec. 915.15 
to be designated as representing Bank members that are located in a 
particular state.
    Non-guaranteed directorship means an elective directorship that is 
either a discretionary directorship or a stock directorship.
    Record date means December 31 of the calendar year immediately 
preceding the election year.
    Stock directorship means an elective directorship that is designated 
by the Finance Board as representing the members located in a particular 
state based on the amount of Bank stock held by the members in that 
state, and which is in excess of the number of guaranteed directorships 
allocated to that state.
    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 925 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.

[63 FR 65688, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 65 
FR 41568, July 6, 2000; 67 FR 12845, Mar. 20, 2002]



Sec. 915.2  Dates.

    If any date specified in this part, or specified by a Bank pursuant 
to this part, falls on a Saturday, Sunday, or

[[Page 78]]

Federal holiday, the relevant time period shall be deemed to include the 
next business day.

[63 FR 65688, Nov. 30, 1998]



Sec. 915.3  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 director shall be three 
years, except as adjusted pursuant to section 7(d) of the Act (12 U.S.C. 
1427(d)) and Sec. 915.17 of this part to achieve a staggered board, 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 designate each elective directorship as representing the 
members that are located in a particular state. The Finance Board shall 
conduct the annual designation of directorships for each Bank based on 
the number of shares of Bank stock required to be held by the members in 
each state as of December 31 of the preceding calendar year. If a Bank 
has issued more than one class of stock, the Finance Board shall 
designate the directorships for that Bank based on the combined number 
of shares required to be held by the members in each state. For purposes 
of conducting the designation, if a Bank's capital plan was not in 
effect on the immediately preceding December 31st, the number of shares 
of Bank stock that the members were required to hold as of that date 
shall be determined in accordance with Sec. 925.20 and Sec. 925.22. If a 
Bank's capital plan was in effect on the immediately preceding December 
31st, the number of shares of Bank stock that the members were required 
to hold as of that date shall be determined in accordance with the 
minimum investment established by the capital plan for that Bank, 
provided, however, that for any members whose Bank stock is less than 
the minimum investment during a transition period, the amount of stock 
to be used in the designation of directorships shall be the number of 
shares of Bank stock actually owned by those members as of December 
31st. In all cases, the Finance Board shall designate the directorships 
by using the information provided by the Banks in the capital stock 
report required by Sec. 915.4. The Finance Board shall allocate the 
elective directorships among the states 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 (b)(2) of this section is less than 
the number allocated to that State on December 31, 1960, as specified in 
Sec. 915.15, the Finance Board shall allocate such additional elective 
directorships to that State until the total allocated equals the number 
allocated to that State on December 31, 1960;
    (4) Pursuant to section 7(e) of the Act (12 U.S.C. 1427(e)), 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 (12 U.S.C. 1427(a)), in any 
Bank district that includes five or more states, the Finance Board, 
after consultation with

[[Page 79]]

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. The annual designation of directorships shall 
indicate the number of discretionary directorships, if any, to be 
authorized for the succeeding year. If the Finance Board eliminates an 
existing discretionary directorship, or designates such a directorship 
to another state, the term of any appointive or elective director 
affected by that action shall terminate after the close of business on 
the immediately following December 31.
    (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. If the annual designation of elective 
directorships results in an existing stock directorship being 
redesignated as representing members in a different state, the notice 
also shall state that the directorship must be filled by an officer or 
director of a member located in the newly designated state as of January 
1 of the immediately following year, regardless of whether the term for 
the incumbent director would have expired by that date.
    (d) Location of member. In accordance with section 7(c) of the Act 
(12 U.S.C. 1427(c)), 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) 2000 designation. For any stock directorship with a term ending 
December 31, 2001 that is redesignated from one state to another state 
by the 2000 designation of directorships, the board of directors of the 
Bank shall determine which incumbent director from the former state 
shall become ineligible to serve as a result of the redesignation on the 
basis of the most recent election.

[63 FR 65688, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 65 
FR 41568, July 6, 2000; 66 FR 8307, Jan. 30, 2001; 67 FR 12845, Mar. 20, 
2002]



Sec. 915.4  Capital stock report.

    (a) On or before April 10 of each year, each Bank shall submit to 
the Finance Board a capital stock report that indicates, as of the 
record date, the number of members located in each voting state in the 
Bank's district, the number of shares of Bank stock that each member 
(identified by its FHFB ID number) was required to hold, and the number 
of shares of Bank stock that all members located in each voting state 
were required to hold. If a Bank has issued more than one class of 
stock, it shall report the total shares of stock of all classes required 
to be held by the members. 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. 925.22(b)(1) of this chapter.
    (b) If a Bank's capital plan was not in effect as of the record 
date, the number of shares of Bank stock that the members are required 
to hold as of the record date shall be determined in accordance with 
Sec. 925.20 and Sec. 925.22. If a Bank's capital plan was in effect as 
of the record date, the number of shares of Bank stock that the members 
were required to hold as of that date shall be determined in accordance 
with the minimum investment established by the capital plan for that 
Bank, provided, however, that for any members whose Bank stock is less 
than the minimum investment during a transition period, the amount of 
Bank stock to be reported shall be the number of shares of Bank stock 
actually owned by those members as of the record date.

[66 FR 8307, Jan. 30, 2001]



Sec. 915.5  Determination of member votes.

    (a) In general. Each Bank shall determine, in accordance with this 
section, the number of votes that each member

[[Page 80]]

of the Bank may cast for each directorship that is to be filled by the 
vote of the members that are located in a particular state.
    (b) Number of votes. For each directorship that is to be filled in 
an election, each member that is located in the state to be represented 
by the directorship shall be entitled to cast one vote for each share of 
Bank stock that the member was required to hold as of the record date. 
Notwithstanding the preceding sentence, the number of votes that any 
member may cast for any one directorship shall not exceed the average 
number of shares of Bank stock that were required to be held by all 
members located in that state as of the record date. If a Bank has 
issued more than one class of stock, it shall calculate the average 
number of shares separately for each class of stock and shall apply 
those limits separately in determining the maximum number of votes that 
any member owning that class of stock may cast in the election. If a 
Bank's capital plan was not in effect as of the record date, the number 
of shares of Bank stock that a member was required to hold as of the 
record date shall be determined in accordance with Sec. 925.20 and 
Sec. 925.22. If a Bank's capital plan was in effect as of the record 
date, the number of shares of Bank stock that a member was required to 
hold as of the record date shall be determined in accordance with the 
minimum investment established by the Bank's capital plan, provided, 
however, that for any members whose Bank stock is less than the minimum 
investment during a transition period, the amount of Bank stock to be 
used shall be the number of shares of Bank stock actually owned by those 
members as of the record date.
    (c) Voting preferences. If the board of directors of a Bank includes 
any voting preferences as part of its approved capital plan, those 
preferences shall supercede the provisions of paragraph (b) of this 
section that otherwise would allow a member to cast one vote for each 
share of Bank stock it was required to hold as of the record date. If a 
Bank establishes a voting preference for a class of stock, the members 
with voting rights shall remain subject to the provisions of section 
7(b) of the Act (12 U.S.C. 1427(b)) that prohibit any member from 
casting any vote in excess of the average number of shares of stock 
required to be held by all members in its state.

[66 FR 8308, Jan. 30, 2001, as amended at 67 FR 12845, Mar. 20, 2002]



Sec. 915.6  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 FHFB ID number 
of every member in the member's voting state, and the number of votes 
each such member may cast for each directorship to be filled in the 
election, as determined in accordance with Sec. 915.5.
    (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 FHFB ID 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

[[Page 81]]

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.

[63 FR 65689, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 66 
FR 8308, Jan. 30, 2001]



Sec. 915.7  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. 915.8(a). A Bank shall not declare elected a nominee that it 
has reason to know is ineligible to serve, nor shall it seat a director-
elect that it has reason to know is ineligible to serve.
    (b) Eligibility requirements. Each elective director, and each 
nominee, shall be:
    (1) A citizen of the United States;
    (2) 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 banking agency or 
appropriate state regulator.
    (c) Restrictions. (1) A nominee is not eligible if he or she:
    (i) Is an incumbent elective director, unless:
    (A) The incumbent director's term of office would expire before the 
new term of office would begin; and
    (B) The new term of office would not be barred by the term limit 
provision of section 7(d) of the Act (12 U.S.C. 1427(d)).
    (ii) Is a former elective director whose service would be barred by 
the term limit provision of section 7(d) of the Act; or
    (iii) Is an incumbent appointive director.
    (2) For purposes of applying the term limit provision of section 
7(d) of the Act (12 U.S.C. 1427(d)), a term of office that has been 
adjusted to a period of less than three years in accordance with 
Sec. 915.17(a)(2) shall not be deemed to be a full term.
    (d) Loss of eligibility. (1) An elective director shall become 
ineligible to remain in office if, during his or her term of office, the 
stock directorship to which he or she has been elected is eliminated or 
is redesignated by the Finance Board as representing members located in 
another state, in accordance with Sec. 915.3(b). The incumbent director 
shall become ineligible after the close of business on December 31 of 
the year in which the directorship is redesignated or eliminated.
    (2) In the case of a redesignation to another state, the stock 
directorship shall become vacant after the close of business on December 
31 of the year in which the directorship is redesignated and the 
resulting vacancy shall be filled by the board of directors of the Bank 
for the remainder of the unexpired term with a person who is an officer 
or director of a member located in the newly designated state, pursuant 
to section 7(f) of the Act (12 U.S.C. 1427(f)).

[63 FR 65689, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 65 
FR 41569, July 6, 2000; 66 FR 8308, Jan. 30, 2001; 67 FR 12845, Mar. 20, 
2002; 67 FR 39791, June 10, 2002]



Sec. 915.8  Election process.

    (a) Ballots. Promptly after verifying the eligibility of all 
nominees in accordance with Sec. 915.7(a), a Bank shall prepare a ballot 
for each voting State for which an elective directorship is to

[[Page 82]]

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 FHFB ID 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, all directorships to 
be filled in an election are the same with regard to their respective 
terms and status as guaranteed or non-guaranteed directorships, and the 
number of nominees from that state is equal to or less than the number 
of such directorships, 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) of this section. If necessary, the Bank's board of 
directors shall fill any elective directorship that has become vacant 
due to a lack of a nominee in accordance with Sec. 915.14(a).
    (c) Voting. For each directorship to be filled, a member may cast 
the number of votes determined by the Bank pursuant to Sec. 915.5. 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

[[Page 83]]

    (5) The number of votes cast for each nominee.

[63 FR 65690, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 65 
FR 41569, July 6, 2000; 67 FR 12845, Mar. 20, 2002]



Sec. 915.9  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.

[63 FR 65690, Nov. 30, 1998]



Sec. 915.10  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 be three years, except as adjusted pursuant to 
section 7(d) of the Act (12 U.S.C. 1427(d)) to achieve a staggered 
board, and shall commence on January 1. In appointing directors for the 
terms commencing on January 1, 2001 and 2002, respectively, the Finance 
Board shall adjust the terms of any appointive directorships as 
necessary to achieve the one-third staggering of the board of directors 
required by section 7(d) of the Act (12 U.S.C. 1427(d)), in accordance 
with the requirements of this part and the applicable matrix from the 
Appendix to this part. In the case of a discretionary appointive 
directorship that is terminated pursuant to Sec. 915.3(b)(5), the term 
of office of the directorship shall end after the close of business on 
December 31 of that year.

[63 FR 65690, Nov. 30, 1998, as amended at 65 FR 41569, July 6, 2000; 67 
FR 12845, Mar. 20, 2002]



Sec. 915.11  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
    (6) Establish procedures to monitor compliance with the conflict of 
interests policy.
    (b) Disclosure and recusal. A director shall disclose to the Bank's 
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 Bank's 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

[[Page 84]]

and shall provide to the Bank's 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 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.

[63 FR 65690, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000]



Sec. 915.12  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 Sec. 905.25 of this chapter). 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.

[63 FR 65691, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000; 67 
FR 12845, Mar. 20, 2002]



Sec. 915.13  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,

[[Page 85]]

or has failed to comply with the reporting requirements of Sec. 915.12, 
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. 915.12, 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.

[63 FR 65691, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000]



Sec. 915.14  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. 915.7(a) before 
allowing the individual to assume the directorship, and shall retain the 
information it receives in accordance with Sec. 915.6(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 
FHFB ID 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 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.

[63 FR 65691, Nov. 30, 1998, as amended at 65 FR 8259, Feb. 18, 2000]



Sec. 915.15  Minimum number of elective directorships.

    Under section 7(c) of the Act (12 U.S.C. 1427(c)), the number of 
elective directorships allocated to members located in each State cannot 
be less than the number of directorships that were filled by the members 
from that State on December 31, 1960. 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

[[Page 86]]

 
New York................................................               4
Ohio....................................................               4
Oklahoma................................................               2
Pennsylvania............................................               6
Tennessee...............................................               2
Texas...................................................               3
Wisconsin...............................................               4
------------------------------------------------------------------------


[55 FR 1399, Jan. 16, 1990, as amended at 56 FR 55221, Oct. 25, 1991. 
Redesignated and amended at 63 FR 65692, Nov. 30, 1998; 67 FR 12846, 
Mar. 20, 2002]



Sec. 915.16  1999 and 2000 Election of Directors.

    (a) In general. The annual designation of Bank directorships 
conducted by the Finance Board in 2000 pursuant to Sec. 915.3(b) shall 
control with respect to the number of elective directorships to be 
allocated to each state with terms commencing on January 1, 2001.
    (b) Conduct of 2000 elections. After assigning any adjusted terms 
that may be required by Sec. 915.17(a)(3), the board of directors of 
each Bank shall determine either:
    (1) To conduct new elections for every state in the district for 
which an elective directorship is to commence on January 1, 2001, or
    (2) To conduct new elections only in those states for which this 
section requires a new election to be held and, for all other states 
within the district, to use the results of the 1999 elections for the 
purpose of electing directors whose terms are to commence on January 1, 
2001.
    (c) 1999 election results. If the number of nominees from any state 
for the 1999 election of directors who remain eligible to serve as a 
Bank director equals or exceeds the number of directorships designated 
to that state with terms commencing on January 1, 2001, the board of 
directors of the Bank may declare elected the nominee receiving the most 
votes in the 1999 election and, if more than one directorship is to be 
filled for that state, shall also declare elected each successive 
nominee receiving the next greatest number of votes, until all 
directorships designated for that state are filled. Before declaring 
elected any such nominee, the board of directors of the Bank shall 
confirm that the nominee is eligible to serve as a director from that 
state.
    (d) 2000 elections. If the number of directorships designated to any 
state with terms commencing on January 1, 2001, exceeds the number of 
nominees from that state in the 1999 election who remain eligible to 
serve as a Bank director, then the board of directors of the Bank shall 
conduct a new election for that state for all of the directorships with 
terms commencing on January 1, 2001.
    (e) Report of election. If the board of directors of a Bank adopts 
the 1999 election results for any state, it shall provide written notice 
of its decision to the Finance Board, the directors-elect, and to each 
member in the affected state. The notice shall indicate the date on 
which the term of office of each director-elect shall expire, and shall 
indicate which terms have been adjusted in order to stagger the board of 
directors as required by section 7(d) of the Act (12 U.S.C. 1427(d)). 
Any such adjustments shall be made in compliance with Sec. 915.17. Such 
notice shall be deemed to constitute the report of election for the 2000 
election required by Sec. 915.8(e).
    (f) Safe harbor. In determining whether to ratify the 1999 election 
results or to hold new elections in 2000, an individual director that 
would be affected by the decision of the board shall not be deemed to 
have violated any regulation or Bank policy pertaining to conflicts of 
interest solely by virtue of having participated in the deliberations or 
by having voted on the matter.

[65 FR 41569, July 6, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 915.17  Staggered directorships in the 2000 and 2001 elections.

    (a) In general. (1) In conjunction with the annual designations of 
directorships for elected directors with terms commencing on January 1, 
2001 and January 1, 2002, the Finance Board shall, in addition to 
allocating directorships among the states, indicate the term of each 
elective directorship and which directorships are to be designated as 
non-guaranteed directorships. A non-guaranteed directorship

[[Page 87]]

shall retain that designation in all subsequent elections, unless the 
directorship is eliminated by the Finance Board pursuant to section 7(a) 
of the Act (12 U.S.C. 1427(a)) or as a consequence of a change in the 
amount of Bank stock held by members located in that state. In such 
subsequent elections, any non-guaranteed directorships shall be assigned 
on the basis of votes received, with the directors-elect who received 
the fewest votes being assigned the non-guaranteed directorships.
    (2) The board of directors of each Bank shall adjust the terms of 
any directorships that are to commence on January 1, 2001 or January 1, 
2002, in accordance with this section and the matrix for that Bank set 
forth in the appendix to this part, and shall inform the Finance Board 
which directorships have been assigned adjusted terms.
    (3) Where the matrix for a Bank indicates that two or more 
guaranteed directorships are to be filled by persons elected from 
different states in the same year, and which are to have different 
terms, the board of directors of the Bank shall assign the shorter terms 
among the states on any reasonable basis, as determined by Bank's board, 
provided that:
    (i) It uses the same methodology in making all such adjustments; and
    (ii) It assigns the terms to the respective states before 
determining whether to adopt the 1999 election results, in accordance 
with Sec. 915.16(b).
    (b) Adjustment of terms. (1) Where the matrix for a Bank indicates 
that two or more guaranteed directorships are to be filled from the same 
state in the same year, but which are to have different terms, the board 
of directors of the Bank shall assign the terms among the eligible 
nominees who have received a sufficient number of votes to be elected, 
such that the nominees receiving the greater number of votes are 
assigned the longer terms and those nominees receiving the lesser number 
of votes are assigned the shorter terms. If the directors from any state 
have been declared elected without a vote, in accordance with 
Sec. 915.8(b) because the number of nominees from that state was less 
than or equal to the number of directorships to be filled, then the 
board of directors of Bank shall assign the terms on the basis of the 
most recent election.
    (2) In the elections occurring in 2000 and 2001, if the matrix for 
any Bank indicates that both guaranteed and non-guaranteed directorships 
are to be filled from the same state in the same year, the board of 
directors shall assign directorships among the eligible nominees who 
have received a sufficient number of votes to be elected, such that the 
nominees receiving the greatest number of votes are assigned the 
guaranteed directorships and those nominees receiving the fewest votes 
are assigned the non-guaranteed directorships. In the event that the 
matrix for a Bank assigns a guaranteed directorship for a particular 
state a shorter term than it assigns to a non-guaranteed directorship 
for the same state for that year, the board of directors shall assign 
the guaranteed directorship to the nominee receiving the greatest number 
of votes.
    (c) Safe harbor. In determining which directorships shall be 
assigned a reduced term, an individual director that could be affected 
by the decision of the board shall not be deemed to have violated any 
regulation or Bank policy pertaining to conflicts of interest solely by 
virtue of having participated in the deliberations or by having voted on 
the matter.
    (d) Other adjustments. The board of directors of the Bank may not 
adjust the term of any director other than as provided in this section.

[65 FR 41570, July 6, 2000, as amended at 67 FR 12846, Mar. 20, 2002]

[[Page 88]]

   Appendix A to Part 915--Staggering For FHLBank Boards of Directors

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
     Boston FHLBank  (10 seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
6 Seats to be filled in 2000
 Election:
                                       * Board must allocate 1
                                        Seat to a 2-year term.
    Mass. Seat.......................  3/2 Years*.
    Conn. Seat.......................  3/2 Years*.
    Maine Seat.......................  3/2 Years*.
    R. I. Seat.......................  3/2 Years*.
    Mass. Seat.......................  2 Years.................
    Conn. Seat.......................  2 Years.................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
4 Seats to be filled in 2001
 Election:
    Mass. Seat.......................  3 Years.
    N.H. Seat........................  3 Years.
    Vermont Seat.....................  3 Years.
    Mass. Seat.......................  1 Year..................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (4 seats):
    Mass./Conn./Maine/Rhode Island Seat (board to pick 1 of 4)
    Mass. Seat
    Conn. Seat (not guaranteed by statute)
    Mass. Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    Mass./Conn./Maine/Rhode Island Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    Mass. Seat
    N.H. Seat
    Vermont Seat
----------------------------------------------------------------------------------------------------------------


                                                     Table 2
----------------------------------------------------------------------------------------------------------------
                                                                                        Guaranteed staggering: 3-
N.Y. FHLBank  (11 Seats: 9 Guaranteed            Term             Non-guaranteed seats  3-3  Total staggering: 3-
   by Statute and 2 Not Guaranteed)                                                                4-4
----------------------------------------------------------------------------------------------------------------
7 Seats to be filled in 2000
 election:
    New York Seat....................  3 Years.................
    New Jersey Seat..................  3 Years.................
    Puerto Rico Seat.................  3 Years.................
    New York Seat....................  3 Years.................  Not Guaranteed (Stock
                                                                  Seat).
    New York Seat....................  2 Years.................
    New York Seat....................  2 Years.................
    New Jersey Seat..................  2 Years.................
4 Seats to be filled in 2001
 election:
    New York Seat....................  3 Years.................
    New York Seat....................  3 Years.................  Not Guaranteed (Stock
                                                                  Seat).
    New Jersey Seat..................  3 Years.................
    New Jersey Seat..................  3 Years ................
Class with Terms Expiring Dec. 31, 2002 (3 seats):
  New York Seat
  New York Seat
  New Jersey Seat
Class with Terms Expiring Dec. 31, 2003 (4 seats):
  New York Seat
  New York Seat (not guaranteed by statute)
  New Jersey Seat
  Puerto Rico Seat
Class with Terms Expiring Dec. 31, 2004 (4 seats):
  New York Seat
  New York Seat (not guaranteed by statute)
  New Jersey Seat
  New Jersey Seat
----------------------------------------------------------------------------------------------------------------


[[Page 89]]


                                                     Table 3
----------------------------------------------------------------------------------------------------------------
                                                                                        Guaranteed staggering: 2-
    Pitts. FHLBank   (8 seats: all               Term             Non-guaranteed seats  3-3  Total staggering: 2-
        guaranteed by statute)                                                                     3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Penn. Seat.......................  3 Years.
    Penn. Seat.......................  3 Years.
    Penn. Seat.......................  3 Years.
    Penn. Seat.......................  2 Years.
4 Seats to be filled in 2001 Election
    West Va. Seat....................  3 Years.
    Delaware Seat....................  3 Years.
    Penn. Seat.......................  3 Years.
    Penn. Seat.......................  1 Year.
Class with Terms Expiring Dec. 31, 2002 (2 seats):
    Penn. Seat
    Penn Seat
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    Penn. Seat
    Penn. Seat
    Penn. Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    Penn. Seat
    Delaware Seat
    West Va. Seat
----------------------------------------------------------------------------------------------------------------


                                                     Table 4
----------------------------------------------------------------------------------------------------------------
     Atlanta FHLBank  (9 Seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 1 not               Term             Non-guaranteed seats  3-3  Total staggering: 3-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
                                       * Board must allocate 1
                                        Seat to a 2-year term.
    D.C. Seat........................  3/2 Years*.
    Alabama Seat.....................  3/2 Years*.
    Virginia Seat....................  3/2 Years*.
    S. Carolina Seat.................  3/2 Years*.
5 Seats to be filled in 2001
 Election:
                                       * Board must allocate 1
                                        Seat to a 1-year term
    N. Carolina Seat.................  3/1 Years*.
    Georgia Seat.....................  3/1 Years*.
    Maryland Seat....................  3/1 Years*.
    Florida Seat.....................  3/1 Years*.
    N. Carolina Seat.................  1 Year*.................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (3 seats):
    North Carolina Seat (not guaranteed by statute)
    D.C./Alabama/Virginia/So. Carolina Seat (board to pick 1 of 4)
    No. Carolina/Georgia/Maryland/Florida Seat (board to pick 1 of 4)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    D.C./Alabama/Virginia/So. Carolina Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    No. Carolina/Georgia/Maryland/Florida Seat (board to pick 3 of 4)
----------------------------------------------------------------------------------------------------------------


                                                     Table 5
----------------------------------------------------------------------------------------------------------------
   Cincinnati FHLBank  (9 seats: 8                                                      Guaranteed staggering: 2-
   guaranteed by statute and 1 not               Term             Non-guaranteed seats  3-3  Total staggering: 3-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
                                       * Board must allocate 1
                                        Seat to a 2-year term.
    Kentucky Seat....................  3 Years.
    Ohio Seat........................  3 Years.

[[Page 90]]

 
    Kentucky Seat....................  3/2 Years *.
    Ohio Seat........................  3/2 Years *.
5 Seats to be filled in 2001
 Election:
                                       * Board must allocate 1
                                        Seat to a 1-year term.
    Ohio Seat........................  3 Years.
    Tennessee Seat...................  3 Years.
    Tennessee Seat...................  3/1 Years *.
    Ohio Seat........................  3/1 Years *.
    Ohio Seat........................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (3 seats):
 Kentucky or Ohio Seat (board to decide)
 Ohio Seat (not guaranteed by statute)
 Tennessee or Ohio Seat (board to decide)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
 Kentucky Seat
 Ohio Seat
 Kentucky or Ohio Seat (board to decide)
Class with Terms Expiring Dec. 31, 2004 (3 seats):
 Ohio Seat
 Tennessee Seat
     Tennessee or Ohio Seat (board to decide)
----------------------------------------------------------------------------------------------------------------


                                                     Table 6
----------------------------------------------------------------------------------------------------------------
  Indianapolis FHLBank  (10 seats: 8                                                    Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Indiana Seat.....................  3 Years.
    Indiana Seat.....................  3 Years.
    Michigan Seat....................  3 Years.
    Indiana Seat.....................  2 Years.
6 Seats to be filled in 2001
 Election:
                                       * Board must allocate 1
                                        Seat to a 1-year term.
    Michigan Seat....................  3 Years.
    Indiana Seat.....................  3 Years.
    Michigan Seat....................  3/1 Years *.
    Indiana Seat.....................  3/1 Years *.
    Michigan Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
    Michigan Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (4 seats):
     Indiana Seat.
     Michigan or Indiana Seat (board to decide).
 Michigan Seat (not guaranteed by statute).
 Michigan Seat (not guaranteed by statute).
Class with Terms Expiring Dec. 31, 2003 (3 seats).
     Indiana Seat.
     Indiana Seat.
     Michigan Seat.
Class with Terms Expiring Dec. 31, 2004 (3 seats).
     Michigan Seat.
     Indiana Seat.
     Michigan or Indiana Seat (board to decide).
----------------------------------------------------------------------------------------------------------------


[[Page 91]]


                                                     Table 7
----------------------------------------------------------------------------------------------------------------
    Chicago FHLBank  (10 seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Illinois Seat....................  3 Years.
    Wisconsin Seat...................  3 Years.
    Wisconsin Seat...................  3 Years.
    Wisconsin Seat...................  2 Years.
6 Seats to be filled in 2001
 Election:
    Wisconsin Seat...................  3 Years.
    Illinois Seat....................  3 Years.
    Illinois Seat....................  3 Years.
    Illinois Seat....................  1 Year.
    Illinois Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
    Illinois Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Wisconsin Seat
    Illinois Seat
    Illinois Seat (not guaranteed by statute)
    Illinois Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Illinois Seat
    Wisconsin Seat
    Wisconsin Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Wisconsin Seat
    Illinois Seat
    Illinois Seat
----------------------------------------------------------------------------------------------------------------


                                                     Table 8
----------------------------------------------------------------------------------------------------------------
    Des Moines Bank  (10 seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
6 Seats to be filled in 2000
 Election:
                                       * Board must allocate 1
                                        Seat to a 2-year term
    Missouri Seat....................  3/2 Years*.
    South Dakota Seat................  3/2 Years*.
    Iowa Seat........................  3/2 Years*.
    Minnesota Seat...................  3/2 Years*.
    Iowa Seat........................  2 Years.
    Minnesota Seat...................  2 Years.................  Not Guaranteed (Stock
                                                                  Seat).
4 Seats to be filled in 2001
 Election:
    Missouri Seat....................  3 Years.
    Minnesota Seat...................  3 Years.
    North Dakota Seat................  3 Years.
    Missouri Seat....................  1 Year..................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (4 seats):
  Iowa Seat
  Missouri/So.Dakota/Iowa/Minnesota Seat (board to pick 1 of 4)
  Minnesota Seat (not guaranteed by statute)
  Missouri Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
  Missouri/So. Dakota/Iowa/Minnesota Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats):
  Missouri Seat
  Minnesota Seat
  North Dakota Seat
----------------------------------------------------------------------------------------------------------------


[[Page 92]]


                                                     Table 9
----------------------------------------------------------------------------------------------------------------
     Dallas FHLBank  (9 seats: 8                                                        Guaranteed staggering: 2-
   guaranteed by statute and 1 not               Term             Non-guaranteed seats  3-3  Total staggering: 3-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Texas Seat.......................  3 Years.
    Louisiana Seat...................  3 Years.
    Arkansas Seat....................  3 Years.
    Louisiana Seat...................  2 Years.
5 Seats to be filled in 2001
 Election:
    Texas Seat.......................  3 Years.
    Mississippi Seat.................  3 Years.
    New Mexico Seat..................  3 Years.
    Texas Seat.......................  1 Year.
    Texas Seat.......................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (3 seats):
    Louisiana Seat
    Texas Seat
    Texas Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    Texas Seat
    Louisiana Seat
    Arkansas Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    Texas Seat
    Mississippi Seat
    New Mexico Seat
----------------------------------------------------------------------------------------------------------------


                                                    Table 10
----------------------------------------------------------------------------------------------------------------
     Topeka FHLBank  (10 seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-Guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
5 Seats to be filled in 2000
 Election:
    Colorado Seat....................  3 Years.
    Oklahoma Seat....................  3 Years.
    Kansas Seat......................  3 Years.
    Colorado Seat....................  2 Years.
    Kansas Seat......................  2 Years.
5 Seats to be filled in 2001
 Election:
    Kansas Seat......................  3 Years.
    Oklahoma Seat....................  3 Years.
    Nebraska Seat....................  3 Years.
    Nebraska Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
    Nebraska Seat....................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (4 seats):
    Colorado Seat
    Kansas Seat
    Nebraska Seat (not guaranteed by statute)
    Nebraska Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    Colorado Seat
    Oklahoma Seat
    Kansas Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    Kansas Seat
    Oklahoma Seat
    Nebraska Seat
----------------------------------------------------------------------------------------------------------------


[[Page 93]]


                                                    Table 11
----------------------------------------------------------------------------------------------------------------
  San Francisco FHLBank  (8 seats: 5                                                    Guaranteed staggering: 1-
   guaranteed by statute and 3 not               Terms            Non-guaranteed seats  2-2  Total staggering: 2-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    California Seat..................  3 Years.
    California Seat..................  3 Years.
    California Seat..................  3 Years.................  Not Guaranteed (Stock
                                                                  Seat).
    California Seat..................  2 Years.................  Not Guaranteed (Stock
                                                                  Seat).
4 Seats to be filled in 2001
 Election:
                                       *Board must allocate 1
                                        seat to a 1-year term
    California Seat..................  3/1 Years*.
    Nevada Seat......................  3/1 Years*.
    Arizona Seat.....................  3/1 Years*.
    California Seat..................  1 Year..................  Not Guaranteed (Stock
                                                                  Seat).
Class with Terms Expiring Dec. 31, 2002 (3 seats):
    California/Nevada/Arizona Seat (board to pick 1 of 3)
    California Seat (not guaranteed by statute)
    California Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    California Seat
    California Seat
    California Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2004 (2 seats):
    California/Nevada/Arizona Seat (board to pick 2 of 3)
----------------------------------------------------------------------------------------------------------------


                                                    Table 12
----------------------------------------------------------------------------------------------------------------
    Seattle FHLBank  (10 seats: 8                                                       Guaranteed staggering: 2-
   guaranteed by statute and 2 not               Term             Non-guaranteed seats  3-3  Total staggering: 4-
             guaranteed)                                                                           3-3
----------------------------------------------------------------------------------------------------------------
5 Seats to be filled in 2000
 Election:
    Hawaii Seat......................  3 Years.
    Utah Seat........................  3 Years.
    Alaska Seat......................  3 Years.
    Washington Seat..................  2 Years.................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
    Washington Seat..................  2 Years.................  Not Guaranteed
                                                                  (Discretionary
                                                                  Seat).
5 Seats to be filled in 2001
 Election:
                                       * Board must allocate 2
                                        seats to 1-year terms
    Montana Seat.....................  3/1 Years*.
    Oregon Seat......................  3/1 Years*.
    Washington Seat..................  3/1 Years*.
    Idaho Seat.......................  3/1 Years*.
    Wyoming Seat.....................  3/1 Years*.
Class with Terms Expiring Dec. 31, 2002 (4 seats):
    Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 2 of 5)
    Washington Seat (not guaranteed by statute)
    Washington Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats):
    Hawaii Seat
    Utah Seat
    Alaska Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats):
    Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 3 of 5)
----------------------------------------------------------------------------------------------------------------


[65 FR 41570, July 6, 2000]

[[Page 94]]



PART 917--POWERS AND RESPONSIBILITIES OF BANK BOARDS OF DIRECTORS AND SENIOR MANAGEMENT--Table of Contents




Sec.
917.1  Definitions.
917.2  General authorities and duties of Bank boards of directors.
917.3  Risk management.
917.4  Bank Member Products Policy.
917.5  Strategic business plan.
917.6  Internal control system.
917.7  Audit committees.
917.8  Budget preparation.
917.9  Dividends.
917.10  Bank bylaws.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1426, 1427, 1432(a), 
1436(a), 1440.

    Source: 65 FR 25274, May 1, 2000, unless otherwise noted.



Sec. 917.1  Definitions.

    As used in this part:
    Business risk means the risk of an adverse impact on a Bank's 
profitability resulting from external factors as may occur in both the 
short and long run.
    Community financial institution has the meaning set forth in 
Sec. 925.1 of this chapter.
    Contingency liquidity means the sources of cash a Bank may use to 
meet its operational requirements when its access to the capital markets 
is impeded, and includes:
    (1) Marketable assets with a maturity of one year or less;
    (2) Self-liquidating assets with a maturity of seven days or less;
    (3) Assets that are generally accepted as collateral in the 
repurchase agreement market; and
    (4) Irrevocable lines of credit from financial institutions rated 
not lower than the second highest credit rating category by an NRSRO.
    Credit risk means the risk that the market value, or estimated fair 
value if market value is not available, of an obligation will decline as 
a result of deterioration in creditworthiness.
    Immediate family member means a parent, sibling, spouse, child, 
dependent, or any relative sharing the same residence.
    Internal auditor means the individual responsible for the internal 
audit function at the Bank.
    Liquidity risk means the risk that a Bank will be unable to meet its 
obligations as they come due or meet the credit needs of its members and 
associates in a timely and cost-efficient manner.
    Market risk means the risk that the market value, or estimated fair 
value if market value is not available, of a Bank's portfolio will 
decline as a result of changes in interest rates, foreign exchange 
rates, equity and commodity prices.
    Operational liquidity means sources of cash from both a Bank's 
ongoing access to the capital markets and its holding of liquid assets 
to meet operational requirements in a Bank's normal course of business.
    Operations risk means the risk of an unexpected loss to a Bank 
resulting from human error, fraud, unenforceability of legal contracts, 
or deficiencies in internal controls or information systems.
    Reportable conditions means matters that represent significant 
deficiencies in the design or operation of the internal control system 
that could adversely affect a Bank's ability to record, process, 
summarize and report financial data consistent with the assertions of 
management.

[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 917.2  General authorities and duties of Bank boards of directors.

    (a) Management of a Bank. The management of each Bank shall be 
vested in its board of directors. While Bank boards of directors may 
delegate the execution of operational functions to Bank personnel, the 
ultimate responsibility of each Bank's board of directors for that 
Bank's management is non-delegable.
    (b) Duties of Bank directors. Each Bank director shall have the duty 
to:
    (1) Carry out his or her duties as director in good faith, in a 
manner such director believes to be in the best interests of the Bank, 
and with such care, including reasonable inquiry, as an ordinarily 
prudent person in a like position would use under similar circumstances;

[[Page 95]]

    (2) Administer the affairs of the Bank fairly and impartially and 
without discrimination in favor of or against any member;
    (3) At the time of appointment or election, or within a reasonable 
time thereafter, have a working familiarity with basic finance and 
accounting practices, including the ability to read and understand the 
Bank's balance sheet and income statement and to ask substantive 
questions of management and the internal and external auditors; and
    (4) Direct the operations of the Bank in conformity with the 
requirements set forth in the Act and this chapter.
    (c) Authority regarding staff and outside consultants. (1) In 
carrying out its duties and responsibilities under the Act and this 
chapter, each Bank's board of directors and all committees thereof shall 
have authority to retain staff and outside counsel, independent 
accountants, or other outside consultants at the expense of the Bank.
    (2) Bank staff providing services to the board of directors or any 
committee of the board under paragraph (c)(1) of this section may be 
required by the board of directors or such committee to report directly 
to the board or such committee, as appropriate.



Sec. 917.3  Risk management.

    (a) Risk management policy. (1) Adoption. Beginning August 29, 2000, 
each Bank's board of directors shall have in effect at all times a risk 
management policy that addresses the Bank's exposure to credit risk, 
market risk, liquidity risk, business risk and operations risk and that 
conforms to the requirements of paragraph (b) of this section and to all 
applicable Finance Board regulations and policies.
    (2) Review and compliance. Each Bank's board of directors shall:
    (i) Review the Bank's risk management policy at least annually;
    (ii) Amend the risk management policy as appropriate;
    (iii) Re-adopt the Bank's risk management policy, including interim 
amendments, not less often than every three years; and
    (iv) Ensure that policies and procedures are in place that are 
reasonably designed to achieve continuing Bank compliance with the risk 
management policy.
    (b) Risk management policy requirements. In addition to meeting any 
other requirements set forth in this chapter, each Bank's risk 
management policy shall:
    (1) After the Finance Board has approved a Bank's capital plan, but 
before the plan takes effect, the Bank shall amend its risk management 
policy to describe the specific steps the Bank will take to comply with 
its capital plan and to include specific target ratios of total capital 
and permanent capital to total assets at which the Bank intends to 
operate. The target operating capital-to-assets ratios to be specified 
in the risk management policy shall be in excess of the minimum leverage 
and risk-based capital ratios and may be expressed as a range of ratios 
or as a single ratio;
    (2) Set forth the Bank's tolerance levels for the market and credit 
risk components; and
    (3) Set forth standards for the Bank's management of each risk 
component, including but not limited to:
    (i) Regarding credit risk arising from all secured and unsecured 
transactions, standards and criteria for, and timing of, periodic 
assessment of the creditworthiness of issuers, obligors, or other 
counterparties including identifying the criteria for selecting dealers, 
brokers and other securities firms with which the Bank may execute 
transactions;
    (ii) Regarding market risk, standards for the methods and models 
used to measure and monitor such risk;
    (iii) Regarding day-to-day operational liquidity needs and 
contingency liquidity needs:
    (A) An enumeration of specific types of investments to be held for 
such liquidity purposes; and
    (B) The methodology to be used for determining the Bank's 
operational and contingency liquidity needs;
    (iv) Regarding operations risk, standards for an effective internal 
control system, including periodic testing and reporting; and
    (v) Regarding business risk, strategies for mitigating such risk, 
including contingency plans where appropriate.

[[Page 96]]

    (c) Risk assessment. The senior management of each Bank shall 
perform, at least annually, a risk assessment that is reasonably 
designed to identify and evaluate all material risks, including both 
quantitative and qualitative aspects, that could adversely affect the 
achievement of the Bank's performance objectives and compliance 
requirements. The risk assessment shall be in written form and shall be 
reviewed by the Bank's board of directors promptly upon its completion.

[65 FR 25274, May 1, 2000, as amended at 66 FR 8308, Jan. 30, 2001; 67 
FR 12846, Mar. 20, 2002]



Sec. 917.4  Bank Member Products Policy.

    (a) Adoption and review of member products policy--(1) Adoption. 
Beginning November 15, 2000, each Bank's board of directors shall have 
in effect at all times a policy that addresses the Bank's management of 
products offered by the Bank to members and housing associates, 
including but not limited to advances, standby letters of credit and 
acquired member assets, consistent with the requirements of the Act, 
paragraph (b) of this section, and all applicable Finance Board 
regulations and policies.
    (2) Review and compliance. Each Bank's board of directors shall:
    (i) Review the Bank's member products policy annually;
    (ii) Amend the member products policy as appropriate; and
    (iii) Re-adopt the member products policy, including interim 
amendments, not less often than every three years.
    (b) Member products policy requirements. In addition to meeting any 
other requirements set forth in this chapter, each Bank's member 
products policy shall:
    (1) Address credit underwriting criteria to be applied in evaluating 
applications for advances, standby letters of credit, and renewals;
    (2) Address appropriate levels of collateralization, valuation of 
collateral and discounts applied to collateral values for advances and 
standby letters of credit;
    (3) Address advances-related fees to be charged by each Bank, 
including any schedules or formulas pertaining to such fees;
    (4) Address standards and criteria for pricing member products, 
including differential pricing of advances pursuant to Sec. 950.5(b)(2) 
of this chapter, and criteria regarding the pricing of standby letters 
of credit, including any special pricing provisions for standby letters 
of credit that facilitate the financing of projects that are eligible 
for any of the Banks' CICA programs under part 952 of this chapter;
    (5) Provide that, for any draw made by a beneficiary under a standby 
letter of credit, the member will be charged a processing fee calculated 
in accordance with the requirements of Sec. 975.6(b) of this chapter;
    (6) Address the maintenance of appropriate systems, procedures and 
internal controls; and
    (7) Address the maintenance of appropriate operational and personnel 
capacity.

[65 FR 44426, July 18, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 917.5  Strategic business plan.

    (a) Adoption of strategic business plan. Beginning on July 30, 2000, 
each Bank's board of directors shall have in effect at all times a 
strategic business plan that describes how the business activities of 
the Bank will achieve the mission of the Bank consistent with part 940 
of this chapter. Specifically, each Bank's strategic business plan 
shall:
    (1) Enumerate operating goals and objectives for each major business 
activity and for all new business activities, which must include plans 
for maximizing activities that enhance the carrying out of the mission 
of the Bank, consistent with part 940 of this chapter;
    (2) Discuss how the Bank will:
    (i) Address credit needs and market opportunities identified through 
ongoing market research and consultations with members, associates and 
public and private organizations; and
    (ii) Notify members and associates of relevant programs and 
initiatives;
    (3) Establish quantitative performance goals for Bank products 
related to multi-family housing, small business, small farm and small 
agri-business lending;

[[Page 97]]

    (4) Describe any proposed new business activities or enhancements of 
existing activities; and
    (5) Be supported by appropriate and timely research and analysis of 
relevant market developments and member and associate demand for Bank 
products and services.
    (b) Review and monitoring. Each Bank's board of directors shall:
    (1) Review the Bank's strategic business plan at least annually;
    (2) Amend the strategic business plan as appropriate;
    (3) Re-adopt the Bank's strategic business plan, including interim 
amendments, not less often than every three years; and
    (4) Establish management reporting requirements and monitor 
implementation of the strategic business plan and the operating goals 
and objectives contained therein.
    (c) Report to Finance Board. Each Bank shall submit to the Finance 
Board annually a report analyzing and describing the Bank's performance 
in achieving the goals described in paragraph (a)(3) of this section.

[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 917.6  Internal control system.

    (a) Establishment and maintenance. (1) Each Bank shall establish and 
maintain an effective internal control system that addresses:
    (i) The efficiency and effectiveness of Bank activities;
    (ii) The safeguarding of Bank assets;
    (iii) The reliability, completeness and timely reporting of 
financial and management information and transparency of such 
information to the Bank's board of directors and to the Finance Board; 
and
    (iv) Compliance with applicable laws, regulations, policies, 
supervisory determinations and directives of the Bank's board of 
directors and senior management.
    (2) Ongoing internal control activities necessary to maintain the 
internal control system required under paragraph (a)(1) of this section 
shall include, but are not limited to:
    (i) Top level reviews by the Bank's board of directors and senior 
management, including review of financial presentations and performance 
reports;
    (ii) Activity controls, including review of standard performance and 
exception reports by department-level management on an appropriate 
periodic basis;
    (iii) Physical and procedural controls to safeguard, and prevent the 
unauthorized use of, assets;
    (iv) Monitoring for compliance with the risk tolerance limits set 
forth in the Bank's risk management policy;
    (v) Any required approvals and authorizations for specific 
activities; and
    (vi) Any required verifications and reconciliations for specific 
activities.
    (b) Internal control responsibilities of Banks' boards of directors. 
Each Bank's board of directors shall ensure that the internal control 
system required under paragraph (a)(1) of this section is established 
and maintained, and shall oversee senior management's implementation of 
such a system on an ongoing basis, by:
    (1) Conducting periodic discussions with senior management regarding 
the effectiveness of the internal control system;
    (2) Ensuring that an internal audit of the internal control system 
is performed annually and that such annual audit is reasonably designed 
to be effective and comprehensive;
    (3) Requiring that internal control deficiencies be reported to the 
Bank's board of directors in a timely manner and that such deficiencies 
are addressed promptly;
    (4) Conducting a timely review of evaluations of the effectiveness 
of the internal control system made by internal auditors, external 
auditors and Finance Board examiners;
    (5) Directing senior management to address promptly and effectively 
recommendations and concerns expressed by internal auditors, external 
auditors and Finance Board examiners regarding weaknesses in the 
internal control system;
    (6) Reporting any internal control deficiencies found, and the 
corrective action taken, to the Finance Board in a timely manner;
    (7) Establishing, documenting and communicating an organizational 
structure that clearly shows lines of

[[Page 98]]

authority within the Bank, provides for effective communication 
throughout the Bank, and ensures that there are no gaps in the lines of 
authority;
    (8) Reviewing all delegations of authority to specific personnel or 
committees and requiring that such delegations state the extent of the 
authority and responsibilities delegated; and
    (9) Establishing reporting requirements, including specifying the 
nature and frequency of reports it receives.
    (c) Internal control responsibilities of Banks' senior management. 
Each Bank's senior management shall be responsible for carrying out the 
directives of the Bank's board of directors, including the 
establishment, implementation and maintenance of the internal control 
system required under paragraph (a)(1) of this section, by:
    (1) Establishing, implementing and effectively communicating to Bank 
personnel policies and procedures that are adequate to ensure that 
internal control activities necessary to maintain an effective internal 
control system, including the activities enumerated in paragraph (a)(2) 
of this section, are an integral part of the daily functions of all Bank 
personnel;
    (2) Ensuring that all Bank personnel fully understand and comply 
with all policies, procedures and legal requirements applicable to their 
positions and responsibilities;
    (3) Ensuring that there is appropriate segregation of duties among 
Bank personnel and that personnel are not assigned conflicting 
responsibilities;
    (4) Establishing effective paths of communication upward, downward 
and across the organization in order to ensure that Bank personnel 
receive necessary and appropriate information, including:
    (i) Information relating to the operational policies and procedures 
of the Bank;
    (ii) Information relating to the actual operational performance of 
the Bank;
    (iii) Adequate and comprehensive internal financial, operational and 
compliance data; and
    (iv) External market information about events and conditions that 
are relevant to decision making;
    (5) Developing and implementing procedures that translate the major 
business strategies and policies established by the Bank's board of 
directors into operating standards;
    (6) Ensuring adherence to the lines of authority and responsibility 
established by the Bank's board of directors;
    (7) Overseeing the implementation and maintenance of management 
information and other systems;
    (8) Establishing and implementing an effective system to track 
internal control weaknesses and the actions taken to correct them; and
    (9) Monitoring and reporting to the Bank's board of directors the 
effectiveness of the internal control system on an ongoing basis.

[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 917.7  Audit committees.

    (a) Establishment. The board of directors of each Bank shall 
establish an audit committee, consistent with the requirements set forth 
in this section.
    (b) Composition. (1) The audit committee shall comprise five or more 
persons drawn from the Bank's board of directors, each of whom shall 
meet the criteria of independence set forth in paragraph (c) of this 
section.
    (2) The audit committee shall include a balance of representatives 
of:
    (i) Community financial institutions and other members; and
    (ii) Appointive and elective directors of the Bank.
    (3) The terms of audit committee members shall be appropriately 
staggered so as to provide for continuity of service.
    (4) At least one member of the audit committee shall have extensive 
accounting or related financial management experience.
    (c) Independence. Any member of the Bank's board of directors shall 
be considered to be sufficiently independent to serve as a member of the 
audit committee if that director does not have a disqualifying 
relationship with the Bank or its management that would interfere with 
the exercise of that director's independent judgment. Such disqualifying 
relationships include, but are not limited to:

[[Page 99]]

    (1) Being employed by the Bank in the current year or any of the 
past five years;
    (2) Accepting any compensation from the Bank other than compensation 
for service as a board director;
    (3) Serving or having served in any of the past five years as a 
consultant, advisor, promoter, underwriter, or legal counsel of or to 
the Bank; or
    (4) Being an immediate family member of an individual who is, or has 
been in any of the past five years, employed by the Bank as an executive 
officer.
    (d) Charter. (1) The audit committee of each Bank shall adopt, and 
the Bank's board of directors shall approve, a formal written charter 
that specifies the scope of the audit committee's powers and 
responsibilities, as well as the audit committee's structure, processes 
and membership requirements.
    (2) The audit committee and the board of directors of each Bank 
shall:
    (i) Review, assess the adequacy of and, where appropriate, amend the 
Bank's audit committee charter on an annual basis;
    (ii) Amend the audit committee charter as appropriate; and
    (iii) Re-adopt and re-approve, respectively, the Bank's audit 
committee charter not less often than every three years.
    (3) Each Bank's audit committee charter shall:
    (i) Provide that the audit committee has the responsibility to 
select, evaluate and, where appropriate, replace the internal auditor 
and that the internal auditor may be removed only with the approval of 
the audit committee;
    (ii) Provide that the internal auditor shall report directly to the 
audit committee on substantive matters and that the internal auditor is 
ultimately accountable to the audit committee and board of directors; 
and
    (iii) Provide that both the internal auditor and the external 
auditor shall have unrestricted access to the audit committee without 
the need for any prior management knowledge or approval.
    (e) Duties. Each Bank's audit committee shall have the duty to:
    (1) Direct senior management to maintain the reliability and 
integrity of the accounting policies and financial reporting and 
disclosure practices of the Bank;
    (2) Review the basis for the Bank's financial statements and the 
external auditor's opinion rendered with respect to such financial 
statements (including the nature and extent of any significant changes 
in accounting principles or the application therein) and ensure that 
policies are in place that are reasonably designed to achieve disclosure 
and transparency regarding the Bank's true financial performance and 
governance practices;
    (3) Oversee the internal audit function by:
    (i) Reviewing the scope of audit services required, significant 
accounting policies, significant risks and exposures, audit activities 
and audit findings;
    (ii) Assessing the performance and determining the compensation of 
the internal auditor; and
    (iii) Reviewing and approving the internal auditor's work plan;
    (4) Oversee the external audit function by:
    (i) Approving the external auditor's annual engagement letter;
    (ii) Reviewing the performance of the external auditor; and
    (iii) Making recommendations to the Bank's board of directors 
regarding the appointment, renewal, or termination of the external 
auditor;
    (5) Provide an independent, direct channel of communication between 
the Bank's board of directors and the internal and external auditors;
    (6) Conduct or authorize investigations into any matters within the 
audit committee's scope of responsibilities;
    (7) Ensure that senior management has established and is maintaining 
an adequate internal control system within the Bank by:
    (i) Reviewing the Bank's internal control system and the resolution 
of identified material weaknesses and reportable conditions in the 
internal control system, including the prevention or detection of 
management override or compromise of the internal control system; and
    (ii) Reviewing the programs and policies of the Bank designed to 
ensure

[[Page 100]]

compliance with applicable laws, regulations and policies and monitoring 
the results of these compliance efforts;
    (8) Review the policies and procedures established by senior 
management to assess and monitor implementation of the Bank's strategic 
business plan and the operating goals and objectives contained therein; 
and
    (9) Report periodically its findings to the Bank's board of 
directors.
    (f) Meetings. The audit committee shall prepare written minutes of 
each audit committee meeting.

[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 20002]



Sec. 917.8  Budget preparation.

    (a) Adoption of budgets. Each Bank's board of directors shall be 
responsible for the adoption of an annual operating expense budget and a 
capital expenditures budget for the Bank, and any subsequent amendments 
thereto, consistent with the requirements of the Act, this section, 
other regulations and policies of the Finance Board, and with the Bank's 
responsibility to protect both its members and the public interest by 
keeping its costs to an efficient and effective minimum.
    (b) No delegation of budget authority. A Bank's board of directors 
may not delegate the authority to approve the Bank's annual budgets, or 
any subsequent amendments thereto, to Bank officers or other Bank 
employees.
    (c) Interest rate scenario. A Bank's annual budgets shall be 
prepared based upon an interest rate scenario as determined by the Bank.
    (d) Board approval for deviations. A Bank may not exceed its total 
annual operating expense budget or its total annual capital expenditures 
budget without prior approval by the Bank's board of directors of an 
amendment to such budget.



Sec. 917.9  Dividends.

    (a) A Bank's board of directors may declare and pay a dividend only 
from previously retained earnings or current net earnings and only if 
such payment will not result in a projected impairment of the par value 
of the capital stock of the Bank. Dividends on such capital stock shall 
be computed without preference.
    (b) The requirement in paragraph (a) of this section that dividends 
shall be computed without preference shall cease to apply to any Bank 
that has established any dividend preferences for one or more classes or 
subclasses of its capital stock as part of its approved capital plan, as 
of the date on which the capital plan takes effect.

[65 FR 25274, May 1, 2000, as amdended at 66 FR 8308, Jan. 30, 2001]



Sec. 917.10  Bank bylaws.

    A Bank's board of directors shall have in effect at all times bylaws 
governing the manner in which the Bank administers its affairs and such 
bylaws shall be consistent with applicable laws and regulations as 
administered by the Finance Board.



PART 918--BANK DIRECTOR COMPENSATION AND EXPENSES--Table of Contents




Sec.
918.1  Definitions.
918.2  Annual directors' compensation policy.
918.3  Directors' compensation policy requirements.
918.4  Directors' expenses.
918.5  Approval by Finance Board.
918.6  Disclosure.
918.7  Maintenance of effort.
918.8  Site of board of directors and committee meetings.
918.9  Date of applicability of removal of requirements regarding 
          compensation of bank officers and employees.

    Authority: 12 U.S.C. 1422b(a), 1427.

    Source: 65 FR 8260, Feb. 18, 2000, unless otherwise indicated.



Sec. 918.1  Definitions.

    As used in this part:
    Compensation means any payment of money or provision of any other 
thing of value (or the accrual of a right to receive money or a thing of 
value in a subsequent year) in consideration of a director's performance 
of official duties for the Bank, including, without limitation, daily 
meeting fees, incentive payments and fringe benefits.



Sec. 918.2  Annual directors' compensation policy.

    Beginning in 2000 and annually thereafter, each Bank's board of 
directors shall adopt by resolution a written policy to provide for the 
payment to Bank

[[Page 101]]

directors of reasonable compensation for the performance of their duties 
as members of the Bank's board of directors, subject to the requirements 
set forth in Sec. 918.3. At a minimum, such policy shall address the 
activities or functions for which attendance is necessary and 
appropriate and may be compensated, and shall explain and justify the 
methodology for determining the amount of compensation to be paid to 
directors.

[65 FR 8260, Feb. 18, 2000]



Sec. 918.3  Compensation policy requirements.

    Payment to directors under each Bank's policy on director 
compensation may be based upon factors that the Bank determines to be 
appropriate, but each Bank's policy shall conform to the following 
requirements:
    (a)(1) Statutory limits on annual compensation. Pursuant to section 
7(i) of the Act (12 U.S.C. 1427(i)), for 2000, the following limits on 
compensation shall apply: for a Chairperson--$25,000; for a Vice 
Chairperson--$20,000; for any other member of the Bank's board of 
directors--$15,000. Beginning in 2001 and for subsequent years, these 
limits on annual compensation shall be adjusted annually by the Finance 
Board to reflect any percentage increase in the preceding year's 
Consumer Price Index (CPI) for all urban consumers, as published by the 
Department of Labor. Each year, as soon as practicable after the 
publication of the previous year's CPI, the Finance Board shall publish 
notice by Federal Register, distribution of a memorandum, or otherwise, 
of the CPI-adjusted limits on annual compensation.
    (2) Starting in 2000, the annual compensation limits set forth in 
paragraph (a)(1) of this section shall apply to the year in which any 
deferred compensation was accrued or earned by a director, and not to 
the year in which it is paid to the director.
    (b) Compensation permitted only for performance of official Bank 
business. The total compensation received by each director in a year 
shall reflect the amount of time spent on official Bank business, and 
greater or lesser attendance at board and committee meetings during a 
given year shall be reflected in the compensation received by the 
director for that year. A Bank shall not pay a director who regularly 
fails to attend board or committee meetings. A Bank shall not pay fees 
to a director, such as retainer fees, that do not reflect the director's 
performance of official Bank business conducted prior to the payment of 
such fees.

[65 FR 8260, Feb. 18, 2000, as amended at 65 FR 13666, Mar. 14, 2000; 67 
FR 12846, Mar. 20, 2002]



Sec. 918.4  Directors' expenses.

    Each Bank may pay its directors for such necessary and reasonable 
travel, subsistence and other related expenses incurred in connection 
with the performance of their official duties as are payable to senior 
officers of the Bank under the Bank's travel policy, except that 
directors may not be paid for gift or entertainment expenses.

[65 FR 8260, Feb. 18, 2000]



Sec. 918.5  Approval by Finance Board.

    Payments made to directors in compliance with the limits on annual 
directors' compensation and the standards set forth in this section are 
deemed to be approved by the Finance Board for purposes of section 7(i) 
of the Act (12 U.S.C. 1427(i)).

[65 FR 8260, Feb. 18, 2000, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 918.6  Disclosure.

    Each Bank shall, in its annual report:
    (a) State the sum of the total actual compensation paid to its 
directors in that year;
    (b) State the sum of the total actual expenses paid to its directors 
in that year; and
    (c) Summarize its policy on director compensation.



Sec. 918.7  Maintenance of effort.

    Notwithstanding the limits on annual directors' compensation 
established by section 7(i) of the Act (12 U.S.C. 1427(i)), the board of 
directors of each Bank shall continue to maintain its level of oversight 
of the management of the Bank. In maintaining its

[[Page 102]]

level of oversight, the board of directors of a Bank shall hold at least 
six in-person meetings in any year.

[66 FR 24264, May 14, 2001, as amended at 67 FR 12846, Mar. 20, 2002]



Sec. 918.8  Site of board of directors and committee meetings.

    Meetings of a Bank's board of directors and committees thereof 
usually should be held within the district served by the Bank. No 
meetings of a Bank's board of directors and committees thereof may be 
held in any location that is not within the United States, including its 
possessions and territories.



Sec. 918.9  Date of applicability of removal of requirements regarding compensation of bank officers and employees.

    The removal of the requirements relating to compensation of Bank 
officers and employees in former 12 CFR 932.19 (in the Code of Federal 
Regulations revised as of January 1, 1999), is applicable for all Bank 
officer and employee compensation years starting after December 21, 
1999.

[65 FR 13666, Mar. 14, 2000, as amended at 67 FR 12846, Mar. 20, 2002]

[[Page 103]]



   SUBCHAPTER D--FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES





PART 925--MEMBERS OF THE BANKS--Table of Contents




                         Subpart A--Definitions

Sec.
925.1  Definitions.

                Subpart B--Membership Application Process

925.2  Membership application requirements.
925.3  Decision on application.
925.4  Automatic membership.
925.5  Appeals.

                   Subpart C--Eligibility Requirements

925.6  General eligibility requirements.
925.7  Duly organized requirement.
925.8  Subject to inspection and regulation requirement.
925.9  Makes long-term home mortgage loans requirement.
925.10  10 percent requirement for certain insured depository 
          institution applicants.
925.11  Financial condition requirement for applicants other than 
          insurance companies.
925.12  Character of management requirement.
925.13  Home financing policy requirement.
925.14  De novo insured depository institution applicants.
925.15  Recent merger or acquisition applicants.
925.16  Financial condition requirement for insurance company 
          applicants.
925.17  Rebuttable presumptions.
925.18  Determination of appropriate Bank district for membership.

                      Subpart D--Stock Requirements

925.19  Par value and price of stock.
925.20  Stock purchase.
925.21  Issuance and form of stock.
925.22  Adjustments in stock holdings.
925.23  Purchase of excess stock.

               Subpart E--Consolidations Involving Members

925.24  Consolidations involving members.

            Subpart F--Withdrawal and Removal From Membership

925.26  Voluntary withdrawal from membership.
925.27  Involuntary termination of membership.

   Subpart G--Orderly Liquidation of Advances and Redemption of Stock

925.29  Disposition of claims.

                 Subpart H--Reacquisition of Membership

925.30  Readmission to membership.

                  Subpart I--Bank Access to Information

925.31  Reports and examinations.

                     Subpart J--Membership Insignia

925.32  Official membership insignia.

    Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430, 
1442.

    Source: 58 FR 43542, Aug. 17, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



                         Subpart A--Definitions



Sec. 925.1  Definitions.

    For purposes of this part:
    Adjusted net income means net income, excluding extraordinary items 
such as income received from, or expense incurred in, sales of 
securities or fixed assets, reported on a regulatory financial report.
    Aggregate unpaid loan principal means the aggregate unpaid principal 
of a subscriber's or member's home mortgage loans, home-purchase 
contracts and similar obligations.
    Allowance for loan and lease losses means a specified balance-sheet 
account held to fund potential losses on loans or leases, that is 
reported on a regulatory financial report.
    Appropriate regulator means a regulatory entity listed in 
Sec. 925.8, as applicable.
    Combination business or farm property means real property for which 
the total appraised value is attributable to residential, and business 
or farm uses.
    Community financial institution or CFI means an institution:
    (1) The deposits of which are insured under the Federal Deposit 
Insurance Act (12 U.S.C. 1811, et seq.); and

[[Page 104]]

    (2) That has, as of the date of the transaction at issue, less than 
the community financial institution asset cap in total assets, based on 
an average of total assets over three years, which shall be calculated 
by the Bank based on the average of total assets drawn from the 
institution's regulatory financial reports filed with its appropriate 
regulator for the most recent calendar quarter and the immediately 
preceding 11 calendar quarters.
    Community financial institution asset cap means, for 2000, $500 
million. Beginning in 2001 and for subsequent years, the cap shall be 
adjusted annually by the Finance Board to reflect any percentage 
increase in the preceding year's Consumer Price Index (CPI) for all 
urban consumers, as published by the U.S. Department of Labor. Each 
year, as soon as practicable after the publication of the previous 
year's CPI, the Finance Board shall publish notice by the Federal 
Register of the CPI-adjusted cap.
    Composite regulatory examination rating means a composite rating 
assigned to an institution following the guidelines of the Uniform 
Financial Institutions Rating System (Issued by the Federal Financial 
Institutions Examination Council; for availability contact the Federal 
Housing Finance Board, FOIA Office, 1777 F Street, NW., Washington, DC 
20006), including a CAMEL rating, a MACRO rating, or other similar 
rating, contained in a written regulatory examination report.
    Consolidation includes a consolidation, a merger, or a purchase of 
all of the assets and assumption of all of the liabilities of an entity 
by another entity.
    Dwelling unit means a single room or a unified combination of rooms 
designed for residential use.
    Enforcement action means any written notice, directive, order or 
agreement initiated by an applicant for Bank membership or by its 
appropriate regulator to address any operational, financial, managerial 
or other deficiencies of the applicant identified by such regulator, but 
does not include a board of directors resolution adopted by the 
applicant in response to examination weaknesses identified by such 
regulator.
    Funded residential construction loan means the portion of a loan 
secured by real property made to finance the on-site construction of 
dwelling units on one-to-four family property or multifamily property 
disbursed to the borrower.
    Home mortgage loan means:
    (1) A loan, whether or not fully amortizing, or an interest in such 
a loan, which is secured by a mortgage, deed of trust, or other security 
agreement that creates a first lien on one of the following interests in 
property:
    (i) One-to-four family property or multifamily property, in fee 
simple;
    (ii) A leasehold on one-to-four family property or multifamily 
property under a lease of not less than 99 years that is renewable, or 
under a lease having a period of not less than 50 years to run from the 
date the mortgage was executed; or
    (iii) Combination business or farm property where at least 50 
percent of the total appraised value of the combined property is 
attributable to the residential portion of the property or, in the case 
of any community financial institution, combination business or farm 
property, on which is located a permanent structure actually used as a 
residence (other than for temporary or seasonal housing), where the 
residence constitutes an integral part of the property; or
    (2) A mortgage pass-through security that represents an undivided 
ownership interest in:
    (i) Long-term loans, provided that, at the time of issuance of the 
security, all of the loans meet the requirements of paragraph (1) of 
this definition; or
    (ii) A security that represents an undivided ownership interest in 
long-term loans, provided that, at the time of issuance of the security, 
all of the loans meet the requirements of paragraph (1) of this 
definition.
    Insured depository institution means an insured depository 
institution as defined in section 2(12) of the Act (12 U.S.C. 1422(12)).
    Long-term means a term to maturity of five years or greater.
    Manufactured housing means a manufactured home as defined in section

[[Page 105]]

603(6) of the Manufactured Home Construction and Safety Standards Act of 
1974, as amended (42 U.S.C. 5402(6)).
    Multifamily property means:
    (1) Real property that is solely residential and includes five or 
more dwelling units;
    (2) Real property that includes five or more dwelling units combined 
with commercial units, provided that the property is primarily 
residential; or
    (3) Nursing homes, dormitories, or homes for the elderly.
    Nonperforming loans and leases means the sum of the following, 
reported on a regulatory financial report:
    (1) Loans and leases that have been past due for 90 days (60 days in 
the case of credit union applicants) or longer but are still accruing;
    (2) Loans and leases on a nonaccrual basis; and
    (3) Restructured loans and leases (not already reported as 
nonperforming).
    Nonresidential real property means real property that is not used 
for residential purposes, including business or industrial property, 
hotels, motels, churches, hospitals, educational and charitable 
institution buildings or facilities, clubs, lodges, association 
buildings, golf courses, recreational facilities, farm property not 
containing a dwelling unit, or similar types of property.
    One-to-four family property means:
    (1) Real property that is solely residential, including one-to-four 
family dwelling units or more than four family dwelling units if each 
dwelling unit is separated from the other dwelling units by dividing 
walls that extend from ground to roof, such as row houses, townhouses or 
similar types of property;
    (2) Manufactured housing if applicable state law defines the 
purchase or holding of manufactured housing as the purchase or holding 
of real property;
    (3) Individual condominium dwelling units or interests in individual 
cooperative housing dwelling units that are part of a condominium or 
cooperative building without regard to the number of total dwelling 
units therein; or
    (4) Real property which includes one-to-four family dwelling units 
combined with commercial units, provided the property is primarily 
residential.
    Other real estate owned means all other real estate owned (i.e., 
foreclosed and repossessed real estate), reported on a regulatory 
financial report, and does not include direct and indirect investments 
in real estate ventures.
    Regulatory examination report means a written report of examination 
prepared by the applicant's appropriate regulator, containing, in the 
case of insured depository institution applicants, a composite rating 
assigned to the institution following the guidelines of the Uniform 
Financial Institutions Rating System, including a CAMEL rating, a MACRO 
rating, or other similar rating.
    Regulatory financial report means a financial report that an 
applicant is required to file with its appropriate regulator on a 
specific periodic basis, including the quarterly call report for 
commercial banks, thrift financial report for savings associations, 
quarterly or semi-annual call report for credit unions, the National 
Association of Insurance Commissioners' annual or quarterly report for 
insurance companies, or other similar report, including such report 
maintained by the appropriate regulator on a computer on-line database.
    Residential mortgage loan means any one of the following types of 
loans, whether or not fully amortizing:
    (1) Home mortgage loans;
    (2) Funded residential construction loans;
    (3) Loans secured by manufactured housing whether or not defined by 
state law as secured by an interest in real property;
    (4) Loans secured by junior liens on one-to-four family property or 
multifamily property;
    (5) Mortgage pass-through securities representing an undivided 
ownership interest in:
    (i) Loans that meet the requirements of paragraphs (1) through (4) 
of this definition at the time of issuance of the security;
    (ii) Securities representing an undivided ownership interest in 
loans, provided that, at the time of issuance of the security, all of 
the loans meet the requirements of paragraphs (1) through (4) of this 
definition; or
    (iii) Mortgage debt securities as defined in paragraph (6) of this 
definition;

[[Page 106]]

    (6) Mortgage debt securities secured by:
    (i) Loans, provided that, at the time of issuance of the security, 
substantially all of the loans meet the requirements of paragraphs (1) 
through (4) of this definition;
    (ii) Securities that meet the requirements of paragraph (5) of this 
definition; or
    (iii) Securities secured by assets, provided that, at the time of 
issuance of the security, all of the assets meet the requirements of 
paragraphs (1) through (5) of this definition;
    (7) Home mortgage loans secured by a leasehold interest, as defined 
in paragraph (1)(ii) of the definition of ``home mortgage loan,'' except 
that the period of the lease term may be for any duration; or
    (8) Loans that finance properties or activities that, if made by a 
member, would satisfy the statutory requirements for the CIP established 
under section 10(i) of the Act (12 U.S.C. 1430(i)), or the regulatory 
requirements established for any CICA program.
    Total assets means the total assets reported on a regulatory 
financial report.

[67 FR 12846, Mar. 20, 2002]



                Subpart B--Membership Application Process

    Source: 61 FR 42543 Aug. 16, 1996, unless otherwise noted.



Sec. 925.2  Membership application requirements.

    (a) Application. An applicant for membership in a Bank shall submit 
to that Bank an application that satisfies the requirements of this 
part. The application shall include a written resolution or 
certification duly adopted by the applicant's board of directors, or by 
an individual with authority to act on behalf of the applicant's board 
of directors, of the following:
    (1) Applicant review. Applicant has reviewed the requirements of 
this part and, as required by this part, has provided to the best of 
applicant's knowledge the most recent, accurate and complete information 
available; and
    (2) Duty to supplement. Applicant will promptly supplement the 
application with any relevant information that comes to applicant's 
attention prior to the Bank's decision on whether to approve or deny the 
application, and if the Bank's decision is appealed pursuant to 
Sec. 925.5 of this part, prior to resolution of any appeal by the 
Finance Board.
    (b) Digest. The Bank shall prepare a written digest for each 
applicant stating whether or not the applicant meets each of the 
requirements in Secs. 925.6 to 925.18 of this part, the Bank's findings 
and the reasons therefor.
    (c) File. The Bank shall maintain a membership file for each 
applicant for at least three years after the Bank decides whether to 
approve or deny membership and the resolution of any appeal to the 
Finance Board. The membership file shall contain at a minimum:
    (1) Digest. The digest required by paragraph (b) of this section.
    (2) Required documents. All documents required by Secs. 925.6 to 
925.18 of this part, including those documents required to establish or 
rebut a presumption under this part, shall be described in and attached 
to the digest. The Bank may retain in the file only the relevant 
portions of the regulatory financial reports required by this part. If 
an applicant's appropriate regulator requires return or destruction of a 
regulatory examination report, the date that the report is returned or 
destroyed shall be noted in the file.
    (3) Additional documents. Any additional document submitted by the 
applicant, or otherwise obtained or generated by the Bank, concerning 
the applicant.
    (4) Decision resolution. The decision resolution described in 
Sec. 925.3(b) of this part.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42543, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000]



Sec. 925.3  Decision on application.

    (a) Authority. The Finance Board authorizes the Banks to approve or 
deny all applications for membership, subject to the requirements of 
this part.

[[Page 107]]

The Bank may delegate the authority to approve membership applications 
only to a committee of the Bank's board of directors, the Bank 
president, or a senior officer who reports directly to the Bank 
president other than an officer with responsibility for business 
development.
    (b) Decision resolution. For each applicant, the Bank shall prepare 
a written resolution duly adopted by the Bank's board of directors, by a 
committee of the board of directors, or by an officer with delegated 
authority to approve membership applications. The decision resolution 
shall state:
    (1) That the statements in the digest are accurate to the best of 
the Bank's knowledge, and are based on a diligent and comprehensive 
review of all available information identified in the digest; and
    (2) The Bank's decision and the reasons therefor. Decisions to 
approve an application should state specifically that: the applicant is 
authorized under the laws of the United States and the laws of the 
appropriate state to become a member of, purchase stock in, do business 
with, and maintain deposits in, the Bank to which the applicant has 
applied; and the applicant meets all of the membership eligibility 
criteria of the Act and this part.
    (c) Action on applications. The Bank shall act on an application 
within 60 calendar days of the date the Bank deems the application to be 
complete. An application is ``complete'' when a Bank has obtained all 
the information required by this part, and any other information the 
Bank deems necessary, to process the application. If an application that 
was deemed complete subsequently is deemed incomplete because the Bank 
determines during the review process that additional information is 
necessary to process the application, the Bank may stop the 60-day clock 
until the application again is deemed complete, and then resume the 
clock where it left off. The Bank shall notify an applicant in writing 
when its application is deemed by the Bank to be complete, and shall 
maintain a copy of such letter in the applicant's membership file. The 
Bank shall notify an applicant if the 60-day clock is stopped, and when 
the clock is resumed, and shall maintain a written record of such 
notifications in the applicant's membership file. Within 3 business days 
of a Bank's decision on an application, the Bank shall provide the 
applicant and the Finance Board's Secretary to the Board with a copy of 
the Bank's decision resolution.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42543, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002]



Sec. 925.4  Automatic membership.

    (a) Automatic membership for certain charter conversions. An insured 
depository institution member that converts from one charter type to 
another automatically shall become a member of the Bank of which the 
converting institution was a member on the effective date of such 
conversion, provided that the converting institution continues to be an 
insured depository institution and the assets of the institution 
immediately before and immediately after the conversion are not 
materially different. In such case, all relationships existing between 
the member and the Bank at the time of such conversion may continue.
    (b) Automatic membership for transfers. Any member whose membership 
is transferred pursuant to Sec. 925.18(d) of this part automatically 
shall become a member of the Bank to which it transfers.
    (c) Automatic membership, in the Bank's discretion, for certain 
consolidations. (1) If a member institution (or institutions) and a 
nonmember institution are consolidated and the consolidated institution 
has its principal place of business in a state in the same Bank district 
as the disappearing institution (or institutions), and the consolidated 
institution will operate under the charter of the nonmember institution, 
on the effective date of the consolidation, the consolidated institution 
may, in the discretion of the Bank of which the disappearing institution 
(or institutions) was a member immediately prior to the effective date 
of the consolidation, automatically become a member of such Bank upon 
the

[[Page 108]]

purchase of stock in that Bank pursuant to Sec. 925.20, provided that:
    (i) 90 percent or more of the total assets of the consolidated 
institution are derived from the total assets of the disappearing member 
institution (or institutions); and
    (ii) The consolidated institution provides written notice to such 
Bank, within 60 calendar days after the effective date of the 
consolidation, that it desires to be a member of the Bank.
    (2) The provisions of Sec. 925.25(b)(4)(i) shall apply, and upon 
approval of automatic membership by the Bank, the provisions of 
Secs. 925.24(c) and (d) shall apply.

[61 FR 42543, Aug. 16, 1996, as amended at 63 FR 40024, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 65 FR 13870, Mar. 15, 2000; 67 FR 12848, Mar. 
20, 2002]



Sec. 925.5  Appeals.

    (a) Appeals by applicants--(1) Filing procedure. Within 90 calendar 
days of the date of a Bank's decision to deny an application for 
membership, the applicant may file a written appeal of the decision with 
the Finance Board.
    (2) Documents. The applicant's appeal shall be addressed to the 
Secretary to the Board, Federal Housing Finance Board, 1777 F Street, 
NW., Washington, DC 20006, with a copy to the Bank, and shall include 
the following documents:
    (i) Bank's decision resolution. A copy of the Bank's decision 
resolution; and
    (ii) Basis for appeal. A statement of the basis for the appeal by 
the applicant with sufficient facts, information, analysis and 
explanation to rebut any applicable presumptions and otherwise support 
the applicant's position.
    (b) Record for appeal--(1) Copy of membership file. Upon receiving a 
copy of an appeal, the Bank whose action has been appealed (appellee 
Bank) shall provide the Finance Board with a copy of the applicant's 
complete membership file. Until the Finance Board resolves the appeal, 
the appellee Bank shall supplement the materials provided to the Finance 
Board as any new materials are received.
    (2) Additional information. The Finance Board may request additional 
information or further supporting arguments from the appellant, the 
appellee Bank or any other party that the Finance Board deems 
appropriate.
    (c) Deciding appeals. The Finance Board shall consider the record 
for appeal described in paragraph (b) of this section and shall resolve 
the appeal based on the requirements of the Act and this part within 90 
calendar days of the date the appeal is filed with the Finance Board. In 
deciding the appeal, the Finance Board shall apply the presumptions in 
this part, unless the appellant or appellee Bank presents evidence to 
rebut a presumption as provided in Sec. 925.17 of this part.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42543, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 
FR 12848, Mar. 20, 2002]



                   Subpart C--Eligibility Requirements

    Source: 61 FR 42545, Aug. 16, 1996, unless otherwise noted.



Sec. 925.6  General eligibility requirements.

    (a) Requirements. Any building and loan association, savings and 
loan association, cooperative bank, homestead association, insurance 
company, savings bank, or insured depository institution, upon 
application satisfying all of the requirements of the Act and this part, 
shall be eligible to become a member of a Bank if:
    (1) It is duly organized under the laws of any State or of the 
United States;
    (2) It is subject to inspection and regulation under the banking 
laws, or under similar laws, of any State or of the United States;
    (3) It makes long-term home mortgage loans;
    (4) Its financial condition is such that advances may be safely made 
to it;
    (5) The character of its management is consistent with sound and 
economical home financing; and
    (6) Its home financing policy is consistent with sound and 
economical home financing.
    (b) Additional eligibility requirement for insured depository 
institutions other than

[[Page 109]]

community financial institutions. In order to be eligible to become a 
member of a Bank, an insured depository institution applicant other than 
a community financial institution also must have at least 10 percent of 
its total assets in residential mortgage loans.
    (c) Additional eligibility requirement for applicants that are not 
insured depository institutions. In order to be eligible to become a 
member of a Bank, an applicant that is not an insured depository 
institution also must have mortgage-related assets that reflect a 
commitment to housing finance, as determined by the Bank in its 
discretion.
    (d) Ineligibility. Except as otherwise provided in this part, if an 
applicant does not satisfy the requirements of this part, the applicant 
is ineligible for membership.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 13870, Mar. 15, 2000]



Sec. 925.7  Duly organized requirement.

    An applicant shall be deemed to be duly organized as required by 
section 4(a)(1)(A) of the Act (12 U.S.C. 1424(a)(1)(A)) and 
Sec. 925.6(a)(1) of this part, if it is chartered by a state or federal 
agency as a building and loan association, savings and loan association, 
cooperative bank, homestead association, insurance company, savings bank 
or insured depository institution.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 
FR 12848, Mar. 20, 2002]



Sec. 925.8  Subject to inspection and regulation requirement.

    An applicant shall be deemed to be subject to inspection and 
regulation as required by section 4(a)(1)(B) of the Act (12 U.S.C. 
1424(a)(1)(B)) and Sec. 925.6(a)(2) of this part, if, in the case of a 
depository institution applicant, it is subject to inspection and 
regulation by the FDIC, FRB, NCUA, OCC, OTS, or other appropriate state 
regulator, and, in the case of an insurance company applicant, it is 
subject to inspection and regulation by an appropriate state regulator 
accredited by the National Association of Insurance Commissioners.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 
FR 12848, Mar. 20, 2002]



Sec. 925.9  Makes long-term home mortgage loans requirement.

    An applicant shall be deemed to make long-term home mortgage loans 
as required by section 4(a)(1)(C) of the Act (12 U.S.C. 1424(a)(1)(C)) 
and Sec. 925.6(a)(3) of this part, if, based on the applicant's most 
recent regulatory financial report filed with its appropriate regulator, 
the applicant originates or purchases long-term home mortgage loans.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002]



Sec. 925.10  10 percent requirement for certain insured depository institution applicants.

    An insured depository institution applicant that is subject to the 
10 percent requirement of section 4(a)(2)(A) of the Act (12 U.S.C. 
1424(a)(2)(A))and section 925.6(b) of this part, shall be deemed to be 
in compliance with such requirement if, based on the applicant's most 
recent regulatory financial report filed with its appropriate regulator, 
the applicant has at least 10 percent of its total assets in residential 
mortgage loans, except that any assets used to secure mortgage debt 
securities as described in paragraph (6) of the definition of 
``residential mortgage loan'' set forth in Sec. 925.1 of this part shall 
not be used to meet this requirement.

[65 FR 13870, Mar. 15, 2000, as amended at 67 FR 12848, Mar. 20, 2002]

[[Page 110]]



Sec. 925.11  Financial condition requirement for applicants other than insurance companies.

    (a) Review requirement. In determining whether an applicant other 
than an insurance company has complied with the financial condition 
requirement of section 4(a)(2)(B) of the Act (12 U.S.C. 1424(a)(2)(B)) 
and Sec. 925.6(a)(4) of this part, the Bank shall obtain as a part of 
the membership application and review each of the following documents:
    (1) Regulatory financial reports. The regulatory financial reports 
filed by the applicant with its appropriate regulator for the last six 
calendar quarters and three year-ends preceding the date the Bank 
receives the application;
    (2) Financial statement. In order of preference: the most recent 
independent audit of the applicant conducted in accordance with 
generally accepted auditing standards by a certified public accounting 
firm which submits a report on the applicant; the most recent 
independent audit of the applicant's parent holding company conducted in 
accordance with generally accepted auditing standards by a certified 
public accounting firm which submits a report on the consolidated 
holding company but not on the applicant separately; the most recent 
Directors' examination of the applicant conducted in accordance with 
generally accepted auditing standards by a certified public accounting 
firm; the most recent Directors' examination of the applicant performed 
by other external auditors; the most recent review of the applicant's 
financial statements by external auditors; the most recent Compilation 
of the applicant's financial statements by external auditors; or the 
most recent audit of other procedures of the applicant;
    (3) Regulatory examination report. The applicant's most recent 
available regulatory examination report prepared by its appropriate 
regulator, a summary prepared by the Bank of the applicant's strengths 
and weaknesses as cited in the regulatory examination report, and a 
summary prepared by the Bank or applicant of actions taken by the 
applicant to respond to examination weaknesses;
    (4) Enforcement actions. A description prepared by the Bank or 
applicant of any outstanding enforcement actions against the applicant, 
responses by the applicant, reports as required by the enforcement 
action, and verbal or written indications, if available, from the 
appropriate regulator of how the applicant is complying with the terms 
of the enforcement action; and
    (5) Additional information. Any other relevant document or 
information concerning the applicant that comes to the Bank's attention 
in reviewing the applicant's financial condition.
    (b) Standards. An applicant other than an insurance company shall be 
deemed to be in compliance with the financial condition requirement of 
section 4(a)(2)(B) of the Act (12 U.S.C. 1424(a)(2)(B)) and 
Sec. 925.6(a)(4) of this part, if:
    (1) Recent composite regulatory examination rating. The applicant 
has received a composite regulatory examination rating from its 
appropriate regulator within two years preceding the date the Bank 
receives the application;
    (2) Capital requirement. The applicant meets all of its minimum 
statutory and regulatory capital requirements as reported in its most 
recent quarter-end regulatory financial report filed with its 
appropriate regulator; and
    (3) Minimum performance standard. (i) The applicant's most recent 
composite regulatory examination rating from its appropriate regulator 
within the past two years was ``1;'' or was ``2'' or ``3'' and, based on 
the applicant's most recent regulatory financial report filed with its 
appropriate regulator, the applicant satisfied all of the following 
performance trend criteria:
    (A) Earnings. The applicant's adjusted net income was positive in 
four of the six most recent calendar quarters;
    (B) Nonperforming assets. The applicant's nonperforming loans and 
leases plus other real estate owned, did not exceed 10 percent of its 
total loans and leases plus other real estate owned, in the most recent 
calendar quarter; and
    (C) Allowance for loan and lease losses. The applicant's ratio of 
its allowance for loan and lease losses plus the allocated transfer risk 
reserve to nonperforming loans and leases was 60 percent

[[Page 111]]

or greater during 4 of the 6 most recent calendar quarters.
    (ii) For applicants that are not required to report financial data 
to their appropriate regulator on a quarterly basis, the information 
required in paragraph (b)(3)(i) of this section may be reported on a 
semiannual basis.
    (c) Eligible collateral not considered. The availability of 
sufficient eligible collateral to secure advances to the applicant is 
presumed and shall not be considered in determining whether an applicant 
is in the financial condition required by section 4(a)(2)(B) of the Act 
(12 U.S.C. 1424(a)(2)(B)) and Sec. 925.6(a)(4) of this part.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, 40024, July 27, 
1998; 65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002]



Sec. 925.12  Character of management requirement.

    An applicant shall be deemed to be in compliance with the character 
of management requirement of section 4(a)(2)(C) of the Act (12 U.S.C. 
1424(a)(2)(C)) and Sec. 925.6(a)(5) of this part, if the applicant 
provides to the Bank an unqualified written certification duly adopted 
by the applicant's board of directors, or by an individual with 
authority to act on behalf of the applicant's board of directors, that:
    (a) Enforcement actions. Neither the applicant nor any of its 
directors or senior officers is subject to, or operating under, any 
enforcement action instituted by its appropriate regulator;
    (b) Criminal, civil or administrative proceedings. Neither the 
applicant nor any of its directors or senior officers has been the 
subject of any criminal, civil or administrative proceedings reflecting 
upon creditworthiness, business judgment, or moral turpitude since the 
most recent regulatory examination report; and
    (c) Criminal, civil or administrative monetary liabilities, lawsuits 
or judgments. There are no known potential criminal, civil or 
administrative monetary liabilities, material pending lawsuits, or 
unsatisfied judgments against the applicant or any of its directors or 
senior officers since the most recent regulatory examination report, 
that are significant to the applicant's operations.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002]



Sec. 925.13  Home financing policy requirement.

    (a) Standard. An applicant shall be deemed to be in compliance with 
the home financing policy requirement of section 4(a)(2)(C) of the Act 
(12 U.S.C. 1424(a)(2)(C)) and Sec. 925.6(a)(6) of this part, if the 
applicant has received a Community Reinvestment Act (CRA) rating of 
``Satisfactory'' or better on its most recent formal, or if unavailable, 
informal or preliminary, CRA performance evaluation.
    (b) Written justification required. An applicant that is not subject 
to the CRA shall file as part of its application for membership a 
written justification acceptable to the Bank of how and why the 
applicant's home financing policy is consistent with the Bank System's 
housing finance mission.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 
FR 12848, Mar. 20, 2002]



Sec. 925.14  De novo insured depository institution applicants.

    (a) Duly organized, subject to inspection and regulation, financial 
condition and character of management requirements. An insured 
depository institution applicant whose date of charter approval is 
within three years prior to the date the Bank receives the applicant's 
application for membership in the Bank (de novo applicant) is deemed to 
meet the requirements of Secs. 925.7, 925.8, 925.11 and 925.12.
    (b) Makes long-term home mortgage loans requirement. A de novo 
applicant shall be deemed to make long-term home mortgage loans as 
required by

[[Page 112]]

Sec. 925.9 if it has filed as part of its application for membership a 
written justification acceptable to the Bank of how its home financing 
credit policy and lending practices will include originating or 
purchasing long-term home mortgage loans.
    (c) 10 percent requirement. (1) One-year requirement. A de novo 
applicant that is subject to the 10 percent requirement of section 
4(a)(2)(A) of the Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 925.6(b) shall 
have until one year after commencing its initial business operations to 
meet the 10 percent requirement of Sec. 925.10.
    (2) Conditional approval. A de novo applicant shall be conditionally 
deemed to be in compliance with the 10 percent requirement of section 
4(a)(2)(A) of the Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 925.6(b). A de 
novo applicant that receives such conditional membership approval is 
subject to the stock purchase requirements of Sec. 925.20 and the 
advances provisions of part 950 of this chapter.
    (3) Approval. A de novo applicant shall be deemed to be in 
compliance with the 10 percent requirement of section 4(a)(2)(A) of the 
Bank Act (12 U.S.C. 1424(a)(2)(A)) and Sec. 925.6(b) upon receipt by the 
Bank from the applicant, within one year after commencement of the 
applicant's initial business operations, of evidence acceptable to the 
Bank that the applicant satisfies the 10 percent requirement.
    (4) Conditional approval deemed null and void. If the requirements 
of paragraph (c)(3) of this section are not satisfied, a de novo 
applicant shall be deemed to be in noncompliance with the 10 percent 
requirement of section 4(a)(2)(A) of the Act (12 U.S.C. 1424(a)(2)(A)) 
and Sec. 925.6(b), and its conditional membership approval is deemed 
null and void.
    (5) Treatment of outstanding advances and Bank stock. If a de novo 
applicant's conditional membership approval is deemed null and void 
pursuant to paragraph (c)(4) of this section, the liquidation of any 
outstanding indebtedness owed by the applicant to the Bank and 
redemption of stock of such Bank shall be carried out in accordance with 
Sec. 925.29.
    (d) Home financing policy requirement. (1) Conditional approval. A 
de novo applicant that has not received its first formal, or, if 
unavailable, informal or preliminary, Community Reinvestment Act (CRA) 
performance evaluation, shall be conditionally deemed to be in 
compliance with the home financing policy requirement of section 
4(a)(2)(C) of the Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 925.6(a)(6), if 
the applicant has filed as part of its application for membership a 
written justification acceptable to the Bank of how and why its home 
financing credit policy and lending practices will meet the credit needs 
of its community. An applicant that receives such conditional membership 
approval is subject to the stock purchase requirements of Sec. 925.20 
and the advances provisions of part 950 of this chapter.
    (2) Approval. A de novo applicant that has been granted conditional 
approval under paragraph (d)(1) of this section shall be deemed to be in 
compliance with the home financing policy requirement of section 
4(a)(2)(C) of the Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 925.6(a)(6) 
upon receipt by the Bank of evidence from the applicant that it received 
a CRA rating of ``Satisfactory'' or better on its first formal, or if 
unavailable, informal or preliminary, CRA performance evaluation.
    (3) Conditional approval deemed null and void. If the de novo 
applicant's first such CRA rating is ``Needs to Improve'' or 
``Substantial Non-Compliance,'' the applicant shall be deemed to be in 
noncompliance with the home financing policy requirement of section 
4(a)(2)(C) of the Act (12 U.S.C. 1424(a)(2)(C)) and Sec. 925.6(a)(6), 
subject to rebuttal by the applicant under Sec. 925.17(f), and its 
conditional membership approval is deemed null and void.
    (4) Treatment of outstanding advances and Bank stock. If the 
applicant's conditional membership approval is deemed null and void 
pursuant to paragraph (d)(3) of this section, the liquidation of any 
outstanding indebtedness owed by the applicant to the Bank and 
redemption of stock of such Bank shall be carried out in accordance with 
Sec. 925.29.

[67 FR 12848, Mar. 20, 2002]

[[Page 113]]



Sec. 925.15  Recent merger or acquisition applicants.

    An applicant that merged with or acquired another institution prior 
to the date the Bank receives its application for membership is subject 
to the requirements of Secs. 925.7 to 925.13 of this part except as 
provided in this section.
    (a) Financial condition requirement--(1) Regulatory financial 
reports. For purposes of Sec. 925.11(a)(1) of this part, an applicant 
that, as a result of a merger or acquisition preceding the date the Bank 
receives its application for membership, has not yet filed regulatory 
financial reports with its appropriate regulator for the last six 
calendar quarters and three year-ends preceding such date, shall provide 
any regulatory financial reports that the applicant has filed with its 
appropriate regulator.
    (2) Performance trend criteria. For purposes of Sec. 925.11(b)(3)(i) 
(A) to (C) of this part, an applicant that, as a result of a merger or 
acquisition preceding the date the Bank receives its application for 
membership, has not yet filed combined regulatory financial reports with 
its appropriate regulator for the last six calendar quarters preceding 
such date, shall provide pro forma combined financial statements for 
those calendar quarters in which actual combined regulatory financial 
reports are unavailable.
    (b) Home financing policy requirement. For purposes of Sec. 925.13 
of this part, an applicant that, as a result of a merger or acquisition 
preceding the date the Bank receives its application for membership, has 
not received its first formal, or if unavailable, informal or 
preliminary, Community Reinvestment Act performance evaluation, shall 
file as part of its application a written justification acceptable to 
the Bank of how and why the applicant's home financing credit policy and 
lending practices will meet the credit needs of its community.
    (c) Makes long-term home mortgage loans requirement; 10 percent 
requirement. For purposes of determining compliance with Secs. 925.9 and 
925.10, a Bank may, in its discretion, permit an applicant that, as a 
result of a merger or acquisition preceding the date the Bank receives 
its application for membership, has not yet filed a consolidated 
regulatory financial report as a combined entity with its appropriate 
regulator, to provide the combined pro forma financial statement for the 
combined entity filed with the regulator that approved the merger or 
acquisition.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, 40024, July 27, 
1998; 65 FR 8261, Feb. 18, 2000]



Sec. 925.16  Financial condition requirement for insurance company applicants.

    An insurance company applicant shall be deemed to meet the financial 
condition requirement of section 4(a)(2)(B) of the Act (12 U.S.C. 
1424(a)(2)(B)) and Sec. 925.6(a)(4) of this part, if, based on the 
information contained in the applicant's most recent regulatory 
financial report filed with its appropriate regulator, the applicant 
meets all of its minimum statutory and regulatory capital requirements 
and the capital standards established by the National Association of 
Insurance Commissioners.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 67 FR 12849, Mar. 20, 2002]



Sec. 925.17  Rebuttable presumptions.

    (a) Rebutting presumptive compliance. The presumption that an 
applicant meeting the requirements of Secs. 925.7 to 925.16 of this part 
is in compliance with section 4(a) of the Act (12 U.S.C. 1424(a)) and 
Sec. 925.6 (a) and (b) of this part, may be rebutted, and the Bank may 
deny membership to the applicant, if the Bank obtains substantial 
evidence to overcome the presumption of compliance.
    (b) Rebutting presumptive noncompliance. The presumption that an 
applicant not meeting a particular requirement of Secs. 925.8, 925.11, 
925.12, 925.13, or 925.16 of this part is in noncompliance with section 
4(a) of the Act (12 U.S.C. 1424(a)) and Sec. 925.6(a)(2), (4), (5), or 
(6) of

[[Page 114]]

this part, may be rebutted, and the applicant shall be deemed to meet 
such requirement, if the applicable requirements in this section are 
satisfied.
    (c) Presumptive noncompliance by insurance company applicant with 
``subject to inspection and regulation'' requirement of Sec. 925.8. If 
an insurance company applicant is not subject to inspection and 
regulation by an appropriate state regulator accredited by the National 
Association of Insurance Commissioners (NAIC), as required by Sec. 925.8 
of this part, the applicant or the Bank shall prepare a written 
justification that provides substantial evidence acceptable to the Bank 
that the applicant is subject to inspection and regulation as required 
by Sec. 925.6(a)(2) of this part, notwithstanding the lack of NAIC 
accreditation.
    (d) Presumptive noncompliance with financial condition requirements 
of Secs. 925.11 and 925.16--(1) Applicants other than insurance 
companies. For applicants other than insurance companies, in the case of 
an applicant's lack of a composite regulatory examination rating within 
the two-year period required by Sec. 925.11(b)(1) of this part, a 
variance from the rating required by Sec. 925.11(b)(3)(i) of this part, 
or a variance from a performance trend criterion required by 
Sec. 925.11(b)(3)(i) of this part, the applicant or the Bank shall 
prepare a written justification pertaining to such requirement that 
provides substantial evidence acceptable to the Bank that the applicant 
is in the financial condition required by Sec. 925.6(a)(4) of this part, 
notwithstanding the lack of rating or variance.
    (2) Insurance company applicants. In the case of an insurance 
company applicant's variance from a capital requirement or standard of 
Sec. 925.16 of this part, the applicant or the Bank shall prepare a 
written justification pertaining to such requirement or standard that 
provides substantial evidence acceptable to the Bank that the applicant 
is in the financial condition required by Sec. 925.6(a)(4) of this part, 
notwithstanding the variance.
    (e) Presumptive noncompliance with character of management 
requirement of Sec. 925.12--(1) Enforcement actions. If an applicant or 
any of its directors or senior officers is subject to, or operating 
under, any enforcement action instituted by its appropriate regulator, 
the applicant shall provide or the Bank shall obtain:
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the applicant or its directors or 
senior officers are in substantial compliance with all aspects of the 
enforcement action; or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the applicant or its directors or senior officers are in 
substantial compliance with all aspects of the enforcement action. The 
written analysis shall state each action the applicant or its directors 
or senior officers are required to take by the enforcement action, the 
actions actually taken by the applicant or its directors or senior 
officers, and whether the applicant regards this as substantial 
compliance with all aspects of the enforcement action.
    (2) Criminal, civil or administrative proceedings. If an applicant 
or any of its directors or senior officers has been the subject of any 
criminal, civil or administrative proceedings reflecting upon 
creditworthiness, business judgment, or moral turpitude since the most 
recent regulatory examination report, the applicant shall provide or the 
Bank shall obtain:
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the proceedings will not likely 
result in enforcement action; or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the proceedings will not likely result in enforcement 
action. The written analysis shall state the severity of the charges, 
and any mitigating action taken by the applicant or its directors or 
senior officers.
    (3) Criminal, civil or administrative monetary liabilities, lawsuits 
or judgments. If there are any known potential criminal, civil or 
administrative monetary liabilities, material pending lawsuits, or 
unsatisfied judgments against the applicant or any of its directors or 
senior officers since the most recent regulatory examination report, 
that

[[Page 115]]

are significant to the applicant's operations, the applicant shall 
provide or the Bank shall obtain:
    (i) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator that the liabilities, lawsuits or 
judgments will not likely cause the applicant to fall below its 
applicable capital requirements set forth in Secs. 925.11(b)(2) and 
925.16 of this part; or
    (ii) Written analysis. A written analysis acceptable to the Bank 
indicating that the liabilities, lawsuits or judgments will not likely 
cause the applicant to fall below its applicable capital requirements 
set forth in Secs. 925.11(b)(2) and 925.16 of this part. The written 
analysis shall state the likelihood of the applicant or its directors or 
senior officers prevailing, and the financial consequences if the 
applicant or its directors or senior officers do not prevail.
    (f) Presumptive noncompliance with home financing policy 
requirements of Secs. 925.13 and 925.14(d). If an applicant received a 
``Substantial Non-Compliance'' rating on its most recent formal, or if 
unavailable, informal or preliminary, Community Reinvestment Act (CRA) 
performance evaluation, or a ``Needs to Improve'' CRA rating on its most 
recent formal, or if unavailable, informal or preliminary, CRA 
performance evaluation and a CRA rating of ``Needs to Improve'' or 
better on any immediately preceding CRA performance evaluation, the 
applicant shall provide or the Bank shall obtain:
    (1) Regulator confirmation. Written or verbal confirmation from the 
applicant's appropriate regulator of the applicant's recent satisfactory 
CRA performance, including any corrective action that substantially 
improved upon the deficiencies cited in the most recent CRA performance 
evaluation(s); or
    (2) Written analysis. A written analysis acceptable to the Bank 
demonstrating that the CRA rating is unrelated to home financing, and 
providing substantial evidence of how and why the applicant's home 
financing credit policy and lending practices meet the credit needs of 
its community.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 
65 FR 8261, Feb. 18, 2000; 67 FR 12849, Mar. 20, 2002]



Sec. 925.18  Determination of appropriate Bank district for membership.

    (a) Eligibility. (1) An institution eligible to become a member of a 
Bank under the Act and this part may become a member only of the Bank of 
the district in which the institution's principal place of business is 
located, except as provided in paragraph (a)(2) of this section. 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.
    (2) An institution eligible to become a member of a Bank under the 
Act and this part may become a member of the Bank of a district 
adjoining the district in which the institution's principal place of 
business is located, if demanded by convenience and then only with the 
approval of the Finance Board.
    (b) Principal place of business. Except as otherwise designated in 
accordance with this section, the principal place of business of an 
institution is the state in which the institution maintains its home 
office established as such in conformity with the laws under which the 
institution is organized.
    (c) Designation of principal place of business. (1) A member or an 
applicant for membership may request in writing to the Bank in the 
district where the institution maintains its home office that a state 
other than the state in which it maintains its home office be designated 
as its principal place of business. Within 90 calendar days of receipt 
of such written request, the board of directors of the Bank in the 
district where the institution maintains its home office shall designate 
a state other than the state where the institution maintains its home 
office as the

[[Page 116]]

institution's principal place of business, provided all of the following 
criteria are satisfied:
    (i) At least 80 percent of the institution's accounting books, 
records and ledgers are maintained, located or held in such designated 
state;
    (ii) A majority of meetings of the institution's board of directors 
and constituent committees are conducted in such designated state; and
    (iii) A majority of the institution's five highest paid officers 
have their place of employment located in such designated state.
    (2) Written notice of a designation made pursuant to paragraph 
(c)(1) of this section shall be sent to the Bank in the district 
containing the designated state, the Finance Board and the institution.
    (3) The notice of designation made pursuant to paragraph (c)(1) of 
this section shall include the state designated as the principal place 
of business and the resulting Bank to which membership will be 
transferred.
    (4) If the board of directors of the Bank in the district where the 
institution maintains its home office fails to make the designation 
requested by the member or applicant pursuant to paragraph (c)(1) of 
this section, then the member or applicant may request in writing that 
the Finance Board make the designation.
    (d) Transfer of membership. (1) No transfer of membership from one 
Bank to another Bank shall take effect until the Banks involved reach 
agreement on a method of orderly transfer.
    (2) In the event that the Banks involved fail to agree on a method 
of orderly transfer, the Finance Board shall determine the conditions 
under which the transfer shall take place.
    (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 (12 U.S.C. 1426) or Secs. 925.26 and 925.27, nor the restriction on 
reacquiring Bank membership set forth in Sec. 925.30.

(The information collection requirements contained in this section have 
been approved by the Office of Management and Budget under control 
number 3069-0004)

[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 65692, Nov. 30, 1998; 
65 FR 8261, Feb. 18, 2000; 65 FR 13870, Mar. 15, 2000; 67 FR 12849, Mar. 
20, 2002]



                      Subpart D--Stock Requirements

    Source: 58 FR 43542, Aug. 17, 1993, unless otherwise noted. 
Redesignated at 61 FR 42542, Aug. 16, 1996.



Sec. 925.19  Par value and price of stock.

    The capital stock of each Bank shall be sold at par, unless the 
Board has fixed a higher price.



Sec. 925.20  Stock purchase.

    (a) Minimum stock purchase. Each member shall purchase stock in the 
Bank in which it is a member in an amount equal to the greater of:
    (1) $500;
    (2) 1 percent of the member's aggregate unpaid loan principal; or
    (3) 5 percent of the member's aggregate amount of outstanding 
advances.
    (b) Timing of minimum stock purchase. (1) Within 60 calendar days 
after an institution is approved for membership in a Bank pursuant to 
Sec. 925.3 of this part, or an institution is automatically approved for 
membership pursuant to Sec. 925.4(c) of this part, the institution shall 
purchase its minimum stock requirement as set forth in paragraph (a) of 
this section.
    (2) At the election of an institution approved for membership, 
including those automatically approved under Sec. 925.4(c) of this part, 
the institution may purchase its minimum stock requirement in 
installments, provided that not less than one-fourth of the total amount 
shall be purchased within 60 calendar days of the date of approval of 
membership, and that a further sum of not less than one-fourth of such 
total shall be purchased at the end of each succeeding period of four 
months from the date of approval of membership.

[[Page 117]]

    (c) Commencement of membership. An institution that has been 
approved for membership shall become a member at the time it purchases 
its minimum stock requirement or the first installment thereof pursuant 
to this section.
    (d) Failure to purchase minimum stock requirement. If an institution 
that has submitted an application and been approved for membership fails 
to purchase its minimum stock requirement or its first installment 
within 60 calendar days of the date of its approval for membership, such 
approval shall be null and void and the institution, if it wants to be a 
member, shall be required to submit a new application for membership.
    (e) Reports. The Bank shall make quarterly reports to the Finance 
Board setting forth purchases by institutions approved for membership of 
their minimum stock requirement pursuant to this section.

[58 FR 43542, Aug. 17, 1993; 58 FR 47181, Sept. 7, 1993. Redesignated 
and amended at 61 FR 42542, 42549, Aug. 16, 1996; 63 FR 40024, July 27, 
1998; 63 FR 65692, Nov. 30, 1998; 65 FR 8261, Feb. 18, 2000; 65 FR 
13870, Mar. 15, 2000]



Sec. 925.21  Issuance and form of stock.

    (a) A Bank shall issue to each new member, as of the effective date 
of membership, stock in the member's name for the amount of stock 
purchased and paid for in full.
    (b) If the member purchases stock in installments, the stock shall 
be issued in installments with the appropriate number of shares issued 
after each payment is made.
    (c) Stock may be issued in certificated or uncertificated form at 
the discretion of the Bank.
    (d) A Bank may convert all outstanding certificated stock to 
uncertificated form at its discretion.



Sec. 925.22  Adjustments in stock holdings.

    (a) Adjustment in general. A Bank may from time to time increase or 
decrease the amount of stock any member is required to hold.
    (b)(1) Annual adjustment. A Bank shall calculate annually, in the 
manner set forth in Sec. 925.20(a) of this part, each member's required 
minimum holdings of stock in the Bank in which it is a member using 
calendar year-end financial data provided by the member to the Bank, 
pursuant to Sec. 925.31(d) of this part, and shall notify each member of 
the 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.
    (2) Redemption of excess shares. If, after the annual adjustment 
required by paragraph (b)(1) of this section is made, the amount of 
stock that a member is required to hold is decreased, the Bank may, in 
its discretion and upon proper application of the member, retire such 
excess stock, and the Bank shall pay for each share upon surrender of 
the stock an amount equal to the par value thereof (except that if at 
any time the Finance Board finds that the paid-in capital of a Bank is 
or is likely to be impaired as a result of losses in or depreciation of 
the assets held, the Bank shall on the order of the Finance Board 
withhold from the amount to be paid in retirement of the stock a pro 
rata share of the amount of such impairment as determined by the Finance 
Board) or, at its election, the Bank may credit any part of such payment 
against the member's debt to the Bank.
    (c) A member's stock holdings shall not be reduced under this 
section to an amount less than required by sections

[[Page 118]]

6(b), 10(c) and 10(e) of the Act (12 U.S.C. 1426(b), 1430(c), 1430(e)).

(The information collection requirements contained in this section have 
been approved where applicable by the Office of Management and Budget 
under control number 3069-0004)

[58 FR 43542, Aug. 17, 1993, as amended at 58 FR 50837, Sept. 29, 1993; 
58 FR 53023, Oct. 13, 1993; 58 FR 58231, Oct. 29, 1993. Redesignated and 
amended at 61 FR 42542, 42549, Aug. 16, 1996; 63 FR 65692, Nov. 30, 
1998; 65 FR 8261, Feb. 18, 2000; 67 FR 12849, Mar. 20, 2002]



Sec. 925.23  Purchase of excess stock.

    A member may purchase stock in excess of the minimum amount required 
by Sec. 925.20(a) of this part as long as such purchase is approved by 
the member's Bank and the laws under which the member operates permit 
such purchase.

[58 FR 43542, Aug. 17, 1993. Redesignated and amended at 61 FR 42542, 
42549, Aug. 16, 1996; 65 FR 8262, Feb. 18, 2000]



               Subpart E--Consolidations Involving Members

    Source: 58 FR 43542, Aug. 17, 1993, unless otherwise noted. 
Redesignated at 61 FR 42542, Aug. 16, 1996.



Sec. 925.24  Consolidations involving members.

    (a) Consolidation of members. Upon the consolidation of two or more 
institutions that are members of the same Bank into one institution 
operating under the charter of one of the consolidating institutions, 
the membership of the surviving institution shall continue and the 
membership of each disappearing institution shall terminate on the 
cancellation of its charter. Upon the consolidation of two or more 
institutions, at least two of which are members of different Banks, into 
one institution operating under the charter of one of the consolidating 
institutions, the membership of the surviving institution shall continue 
and the membership of each disappearing institution shall terminate upon 
cancellation of its charter, provided, however, that if more than 80 
percent of the assets of the consolidated institution are derived from 
the assets of a disappearing institution, then the consolidated 
institution shall continue to be a member of the Bank of which that 
disappearing institution was a member prior to the consolidation, and 
the membership of the other institutions shall terminate upon the 
effective date of the consolidation.
    (b) Consolidation into nonmember--(1) In general. Upon the 
consolidation of a member into an institution that is not a member of a 
Bank, where the consolidated institution operates under the charter of 
the nonmember institution, the membership of the disappearing 
institution shall terminate upon the cancellation of its charter.
    (2) Notification. If a member has consolidated into a nonmember that 
has its principal place of business in a state in the same Bank district 
as the former member, the consolidated institution shall have 60 
calendar days after the cancellation of the charter of the former member 
within which to notify the Bank of the former member that the 
consolidated institution intends to apply for membership in such Bank. 
If the consolidated institution does not so notify the Bank by the end 
of the period, the Bank shall require the liquidation of any outstanding 
indebtedness owed by the former member, shall settle all outstanding 
business transactions with the former member, and shall redeem or 
repurchase the Bank stock owned by the former member in accordance with 
Sec. 925.29.
    (3) Application. If such a consolidated institution has notified the 
appropriate Bank of its intent to apply for membership, the consolidated 
institution shall submit an application for membership within 60 
calendar days of so notifying the Bank. If the consolidated institution 
does not submit an application for membership by the end of the period, 
the Bank shall require the liquidation of any outstanding indebtedness 
owed by the former member, shall settle all outstanding business 
transactions with the former member, and shall redeem or repurchase the 
Bank stock owned by the former member in accordance with Sec. 925.29.
    (4) Outstanding indebtedness. If a member has consolidated into a 
nonmember institution, the Bank need not

[[Page 119]]

require the former member or its successor to liquidate any outstanding 
indebtedness owed to the Bank or to redeem its Bank stock, as otherwise 
may be required under Sec. 925.29, during:
    (i) The initial 60 calendar-day notification period;
    (ii) The 60 calendar-day period following receipt of a notification 
that the consolidated institution intends to apply for membership; and
    (iii) The period of time during which the Bank processes the 
application for membership.
    (5) Approval of membership. If the application of such a 
consolidated institution is approved, the consolidated institution shall 
become a member of that Bank upon the purchase of the amount of Bank 
stock required by section 6 of the Act (12 U.S.C. 1426). If a Bank's 
capital plan has not taken effect, the amount of stock that the 
consolidated institution is required to own shall be as provided in 
Sec. 925.20 and Sec. 925.22. If the capital plan for the Bank has taken 
effect, the amount of stock that the consolidated institution is 
required to own shall be equal to the minimum investment established by 
the capital plan for that Bank.
    (6) Disapproval of membership. If the Bank disapproves the 
application for membership of the consolidated institution, the Bank 
shall require the liquidation of any outstanding indebtedness owed by, 
and the settlement of all other outstanding business transactions with, 
the former member, and shall redeem or repurchase the Bank stock owned 
by the former member in accordance with Sec. 925.29.
    (c) Dividends on acquired Bank stock. A consolidated institution 
shall be entitled to receive dividends on the Bank stock that it 
acquires as a result of a consolidation with a member in accordance with 
Sec. 931.4(a) of this chapter.
    (d) Stock transfers. With regard to any transfer of Bank stock from 
a disappearing member to the surviving or consolidated member, as 
appropriate, for which the approval of the Finance Board is required 
pursuant to section 6(f) of the Act (12 U.S.C. 1426(f)), as in effect 
prior to November 12, 1999, such transfer shall be deemed to be approved 
by the Finance Board by compliance in all applicable respects with the 
requirements of this section.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0004 with an expiration date of April 30, 2001)

[66 FR 8308, Jan. 30, 2001, as amended at 67 FR 12849, Mar. 20, 2002]



            Subpart F--Withdrawal and Removal From Membership

    Source: 58 FR 43542, Aug. 17, 1993, unless otherwise noted. 
Redesignated at 61 FR 42542, Aug. 16, 1996.



Sec. 925.26  Voluntary withdrawal from membership.

    (a) In general. (1) Any institution may withdraw from membership by 
providing to the Bank written notice of its intent to withdraw from 
membership. A member that has so notified its Bank shall be entitled to 
have continued access to the benefits of membership until the effective 
date of its withdrawal, but the Bank need not commit to providing any 
further services, including advances, to a withdrawing member that would 
mature or otherwise terminate subsequent to the effective date of the 
withdrawal. A member may cancel its notice of withdrawal at any time 
prior to its effective date by providing a written cancellation notice 
to the Bank. A Bank may impose a fee on a member that cancels a notice 
of withdrawal, provided that the fee or the manner of its calculation is 
specified in the Bank's capital plan.
    (2) A Bank shall notify the Finance Board within 10 calendar days of 
receipt of any notice of withdrawal or notice of cancellation of 
withdrawal from membership.
    (b) Effective date of withdrawal. The membership of an institution 
that has submitted a notice of withdrawal shall terminate as of the date 
on which the last of the applicable stock redemption periods ends for 
the stock that the member is required to hold, as of the date that the 
notice of withdrawal is submitted, under the terms of a Bank's capital 
plan as a condition of membership, unless the institution has cancelled 
its notice of withdrawal prior to

[[Page 120]]

the effective date of the termination of its membership.
    (c) Stock redemption periods. The receipt by a Bank of a notice of 
withdrawal shall commence the applicable 6-month and 5-year stock 
redemption periods, respectively, for all of the Class A and Class B 
stock held by that member that is not already subject to a pending 
request for redemption. In the case of an institution the membership of 
which has been terminated as a result of a merger or other consolidation 
into a nonmember or into a member of another Bank, the applicable stock 
redemption periods for any stock that is not subject to a pending notice 
of redemption shall be deemed to commence on the date on which the 
charter of the former member is cancelled.
    (d) Certification. No institution may withdraw from membership 
unless, on the date that the membership is to terminate, there is in 
effect a certification from the Finance Board that the withdrawal of a 
member will not cause the Bank System to fail to satisfy its 
requirements under section 21B(f)(2)(C) of the Act (12 U.S.C. 
1441b(f)(2)(C)) to contribute toward the interest payments owed on 
obligations issued by the Resolution Funding Corporation.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0004 with an expiration date of April 30, 2001)

[66 FR 8309, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001; 67 
FR 12849, Mar. 20, 2002]



Sec. 925.27  Involuntary termination of membership.

    (a) Grounds. The board of directors of a Bank may terminate the 
membership of any institution that:
    (1) Fails to comply with any requirement of the Act, any regulation 
adopted by the Finance Board, or any requirement of the Bank's capital 
plan;
    (2) Becomes insolvent or otherwise subject to the appointment of a 
conservator, receiver, or other legal custodian under federal or state 
law; or
    (3) Would jeopardize the safety or soundness of the Bank if it were 
to remain a member.
    (b) Stock redemption periods. The applicable 6-month and 5-year 
stock redemption periods, respectively, for all of the Class A and Class 
B stock owned by a member and not already subject to a pending request 
for redemption, shall commence on the date that the Bank terminates the 
institution's membership.
    (c) Membership rights. An institution whose membership is terminated 
involuntarily under this section shall cease being a member as of the 
date on which the board of directors of the Bank acts to terminate the 
membership, and the institution shall have no right to obtain any of the 
benefits of membership after that date, but shall be entitled to receive 
any dividends declared on its stock until the stock is redeemed or 
repurchased by the Bank.

[66 FR 8309, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001]



   Subpart G--Orderly Liquidation of Advances and Redemption of Stock



Sec. 925.29  Disposition of claims.

    (a) In general. If an institution withdraws from membership or its 
membership is otherwise terminated, the Bank shall determine an orderly 
manner for liquidating all outstanding indebtedness owed by that member 
to the Bank and for settling all other claims against the member. After 
all such obligations and claims have been extinguished or settled, the 
Bank shall return to the member all collateral pledged by the member to 
the Bank to secure its obligations to the Bank.
    (b) Bank stock. If an institution that has withdrawn from membership 
or that otherwise has had its membership terminated remains indebted to 
the Bank or has outstanding any business transactions with the Bank 
after the effective date of its termination of membership, the Bank 
shall not redeem or repurchase any Bank stock that is required to 
support the indebtedness or the business transactions until after all 
such indebtedness and business transactions have been extinguished or 
settled.

[66 FR 8310, Jan. 30, 2001]

[[Page 121]]



                 Subpart H--Reacquisition of Membership



Sec. 925.30  Readmission to membership.

    (a) In general. An institution that has withdrawn from membership or 
otherwise has had its membership terminated and which has divested all 
of its shares of Bank stock, may not be readmitted to membership in any 
Bank, or acquire any capital stock of any Bank, for a period of 5 years 
from the date on which its membership terminated and it divested all of 
its shares of Bank stock.
    (b) Exceptions. An institution that transfers membership between two 
Banks without interruption shall not be deemed to have withdrawn from 
Bank membership or had its membership terminated. Any institution that 
withdrew from Bank membership prior to December 31, 1997, and for which 
the 5-year period has not expired, may apply for membership in a Bank at 
any time, subject to the approval of the Finance Board and the 
requirements of this part 925.

[66 FR 8310, Jan. 30, 2001]



                  Subpart I--Bank Access to Information



Sec. 925.31  Reports and examinations.

    As a condition precedent to Bank membership, each member:
    (a) Consents to such examinations as the Bank or the Finance Board 
may require for purposes of the Act;
    (b) Agrees that reports of examinations by local, state or federal 
agencies or institutions may be furnished by such authorities to the 
Bank or the Finance Board upon request;
    (c) Agrees to give the Bank or the appropriate Federal banking 
agency, upon request, such information as the Bank or the appropriate 
Federal banking agency may need to compile and publish cost of funds 
indices and to publish other reports or statistical summaries pertaining 
to the activities of Bank members;
    (d) Agrees to provide the Bank with calendar year-end financial data 
each year, for purposes of making the calculation described in 
Sec. 925.22(b)(1) of this part; and
    (e) Agrees to provide the Bank with copies of reports of condition 
and operations required to be filed with the member's appropriate 
Federal banking agency, if applicable, within 20 calendar days of 
filing, as well as copies of any annual report of condition and 
operations required to be filed.

(The information collection requirements contained in this section have 
been approved where applicable by the Office of Management and Budget 
under control number 3069-0004)

[58 FR 43542, Aug. 17, 1993; 58 FR 50837, Sept. 29, 1993; 58 FR 53023, 
Oct. 13, 1993. Redesignated and amended at 61 FR 42542, 42549, Aug. 16, 
1996; 65 FR 8262, Feb. 18, 2000; 67 FR 12849, Mar. 20, 2002]



                     Subpart J--Membership Insignia



Sec. 925.32  Official membership insignia.

    Members may display the approved insignia of membership on their 
documents, advertising and quarters, and likewise use the words ``Member 
Federal Home Loan Bank System.''

[58 FR 43542, Aug. 17, 1993. Redesignated at 61 FR 42542, Aug. 16, 1996]



PART 926--FEDERAL HOME LOAN BANK HOUSING ASSOCIATES--Table of Contents




Sec.
926.1  Definitions.
926.2  Bank authority to make advances to housing associates.
926.3  Housing associate eligibility requirements.
926.4  Satisfaction of eligibility requirements.
926.5  Housing associate application process.
926.6  Appeals.

    Authority: 12 U.S.C. 1422b(a), 1430b.

    Source: 65 FR 44426, July 18, 2000, unless otherwise noted.



Sec. 926.1  Definitions.

    As used in this part:
    Governmental agency means the governor, legislature, and any other 
component of a federal, state, local, tribal, or Alaskan native village 
government with authority to act for or on behalf of that government.
    State housing finance agency or SHFA means:
    (1) A public agency, authority, or publicly sponsored corporation 
that

[[Page 122]]

serves as an instrumentality of any state or political subdivision of 
any state, and functions as a source of residential mortgage loan 
financing in that state; or
    (2) A legally established agency, authority, corporation, or 
organization that serves as an instrumentality of any Indian tribe, 
band, group, nation, community, or Alaskan Native village recognized by 
the United States or any state, and functions as a source of residential 
mortgage loan financing for the Indian or Alaskan Native community.

[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002]



Sec. 926.2  Bank authority to make advances to housing associates.

    Subject to the provisions of the Act and part 950 of this chapter, a 
Bank may make advances to an entity that is not a member of the Bank if 
the Bank has certified the entity as a housing associate under the 
provisions of this part.



Sec. 926.3  Housing associate eligibility requirements.

    (a) General. A Bank may certify as a housing associate any applicant 
that meets the following requirements, as determined using the criteria 
set forth in Sec. 926.4:
    (1) The applicant is approved under title II of the National Housing 
Act (12 U.S.C. 1707, et seq.);
    (2) The applicant is a chartered institution having succession;
    (3) The applicant is subject to the inspection and supervision of 
some governmental agency;
    (4) The principal activity of the applicant in the mortgage field 
consists of lending its own funds; and
    (5) The financial condition of the applicant is such that advances 
may be safely made to it.
    (b) State housing finance agencies. In addition to meeting the 
requirements in paragraph (a) of this section, any applicant seeking 
access to advances as a SHFA pursuant to Sec. 950.17(b)(2) of this 
chapter shall provide evidence satisfactory to the Bank, such as a copy 
of, or a citation to, the statutes and/or regulations describing the 
applicant's structure and responsibilities, that the applicant is a 
state housing finance agency as defined in Sec. 926.1.



Sec. 926.4  Satisfaction of eligibility requirements.

    (a) HUD approval requirement. An applicant shall be deemed to meet 
the requirement in section 10b(a) of the Act (12 U.S.C. 1430b(a)) and 
Sec. 926.3(a)(1) that it be approved under title II of the National 
Housing Act if it submits a current HUD Yearly Verification Report or 
other documentation issued by HUD stating that the Federal Housing 
Administration of HUD has approved the applicant as a mortgagee.
    (b) Charter requirement. An applicant shall be deemed to meet the 
requirement in section 10b(a) of the Act and Sec. 926.3(a)(2) that it be 
a chartered institution having succession if it provides evidence 
satisfactory to the Bank, such as a copy of, or a citation to, the 
statutes and/or regulations under which the applicant was created, that:
    (1) The applicant is a government agency; or
    (2) The applicant is chartered under state, federal, local, tribal, 
or Alaskan Native village law as a corporation or other entity that has 
rights, characteristics, and powers under applicable law similar to 
those granted a corporation.
    (c) Inspection and supervision requirement. (1) An applicant shall 
be deemed to meet the inspection and supervision requirement in section 
10b(a) of the Act (12 U.S.C. 1430b(a)) and Sec. 926.3(a)(3) if it 
provides evidence satisfactory to the Bank, such as a copy of, or a 
citation to, relevant statutes and/or regulations, that, pursuant to 
statute or regulation, the applicant is subject to the inspection and 
supervision of a federal, state, local, tribal, or Alaskan native 
village governmental agency.
    (2) An applicant shall be deemed to meet the inspection requirement 
if there is a statutory or regulatory requirement that the applicant be 
audited or examined periodically by a governmental agency or by an 
external auditor.
    (3) An applicant shall be deemed to meet the supervision requirement 
if the governmental agency has statutory or regulatory authority to 
remove an applicant's officers or directors for

[[Page 123]]

cause or otherwise exercise enforcement or administrative control over 
actions of the applicant.
    (d) Mortgage activity requirement. An applicant shall be deemed to 
meet the mortgage activity requirement in section 10b(a) of the Act (12 
U.S.C. 1430b(a)) and Sec. 926.3(a)(4) if it provides documentary 
evidence satisfactory to the Bank, such as a financial statement or 
other financial documents that include the applicant's mortgage loan 
assets and their funding liabilities, that it lends its own funds as its 
principal activity in the mortgage field. For purposes of this 
paragraph, lending funds includes, but is not limited to, the purchase 
of whole mortgage loans. In the case of a federal, state, local, tribal, 
or Alaskan Native village government agency, appropriated funds shall be 
considered an applicant's own funds. An applicant shall be deemed to 
satisfy this requirement notwithstanding that the majority of its 
operations are unrelated to mortgage lending if its mortgage activity 
conforms to this requirement. An applicant that acts principally as a 
broker for others making mortgage loans, or whose principal activity is 
to make mortgage loans for the account of others, does not meet this 
requirement.
    (e) Financial condition requirement. An applicant shall be deemed to 
meet the financial condition requirement in Sec. 926.3(a)(5) if the Bank 
determines that advances may be safely made to the applicant. The 
applicant shall submit to the Bank copies of its most recent regulatory 
audit or examination report, or external audit report, and any other 
documentary evidence, such as financial or other information, that the 
Bank may require to make the determination.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0005 with an expiration date of November 30, 2002.)

[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002]



Sec. 926.5  Housing associate application process.

    (a) Authority. The Banks are authorized to approve or deny all 
applications for certification as a housing associate, subject to the 
requirements of the Act and this part. A Bank may delegate the authority 
to approve applications for certification as a housing associate only to 
a committee of the Bank's board of directors, the Bank president, or a 
senior officer who reports directly to the Bank president other than an 
officer with responsibility for business development.
    (b) Application requirements. An applicant for certification as a 
housing associate shall submit an application that satisfies the 
requirements of the Act and this part to the Bank of the district in 
which the applicant's principal place of business, as determined in 
accordance with part 925 of this chapter, is located.
    (c) Bank decision process--(1) Action on applications. A Bank shall 
approve or deny an application for certification as a housing associate 
within 60 calendar days of the date the Bank deems the application to be 
complete. A Bank shall deem an application complete, and so notify the 
applicant in writing, when it has obtained all of the information 
required by this part and any other information it deems necessary to 
process the application. If a Bank determines during the review process 
that additional information is necessary to process the application, the 
Bank may deem the application incomplete and stop the 60-day time period 
by providing written notice to the applicant. When the Bank receives the 
additional information, it shall again deem the application complete, so 
notify the applicant in writing, and resume the 60-day time period where 
it stopped.
    (2) Decision on applications. The Bank or a duly delegated committee 
of the Bank's board of directors, the Bank president, or a senior 
officer who reports directly to the Bank president other than an officer 
with responsibility for business development shall approve, or the board 
of directors of a Bank shall deny, each application for certification as 
a housing associate by a written decision resolution stating the grounds 
for the decision. Within three business days of a Bank's decision on an 
application, the Bank shall provide the applicant and the Finance

[[Page 124]]

Board with a copy of the Bank's decision resolution.
    (3) File. The Bank shall maintain a certification file for each 
applicant for at least three years after the date the Bank decides 
whether to approve or deny certification or the date the Finance Board 
resolves any appeal, whichever is later. At a minimum, the certification 
file shall include all documents submitted by the applicant or otherwise 
obtained or generated by the Bank concerning the applicant, all 
documents the Bank relied upon in making its determination regarding 
certification, including copies of statutes and regulations, and the 
decision resolution.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0005 with an expiration date of November 30, 2002.)



Sec. 926.6  Appeals.

    (a) General. Within 90 calendar days of the date of a Bank's 
decision to deny an application for certification as a housing 
associate, the applicant may submit a written appeal to the Finance 
Board that includes the Bank's decision resolution and a statement of 
the basis for the appeal with sufficient facts, information, analysis, 
and explanation to support the applicant's position. Appeals shall be 
sent to the Federal Housing Finance Board, 1777 F Street, NW, 
Washington, DC 20006, with a copy to the Bank.
    (b) Record for appeal. Upon receiving a copy of an appeal, the Bank 
whose action has been appealed shall provide to the Finance Board a 
complete copy of the applicant's certification file maintained by the 
Bank under Sec. 926.5(c)(3). Until the Finance Board resolves the 
appeal, the Bank shall promptly provide to the Finance Board any 
relevant new materials it receives. The Finance Board may request 
additional information or further supporting arguments from the 
applicant, the Bank, or any other party that the Finance Board deems 
appropriate.
    (c) Deciding appeals. Within 90 calendar days of the date an 
applicant files an appeal with the Finance Board, the Finance Board 
shall consider the record for appeal described in paragraph (b) of this 
section and resolve the appeal based on the requirements of the Act and 
this part.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0005 with an expiration date of November 30, 2002.)

[[Page 125]]



    SUBCHAPTER E--FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL 
                                STANDARDS





PART 930--DEFINITIONS APPLYING TO RISK MANAGEMENT AND CAPITAL REGULATIONS--Table of Contents




    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.



Sec. 930.1  Definitions.

    As used in this subchapter:
    Affiliated counterparty means a counterparty of a Bank that 
controls, is controlled by or is under common control with another 
counterparty of the Bank. For the purposes of this definition only, 
direct or indirect ownership (including beneficial ownership) of more 
than 50 percent of the voting securities or voting interests of an 
entity constitutes control.
    Certain drawdown means a legally binding agreement that commits the 
Bank to make an advance or acquire a loan, at or by a specified future 
date.
    Charges against the capital of the Bank means an other than 
temporary decline in the Bank's total equity that causes the value of 
total equity to fall below the Bank's aggregate capital stock amount.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified by Sec. 931.1(a) of 
this subchapter.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified by Sec. 931.1(b) of 
this subchapter.
    Contingency liquidity means the sources of cash a Bank may use to 
meet its operational requirements when its access to the capital markets 
is impeded, and includes:
    (1) Marketable assets with a maturity of one year or less;
    (2) Self-liquidating assets with a maturity of seven days or less;
    (3) Assets that are generally accepted as collateral in the 
repurchase agreement market; and
    (4) Irrevocable lines of credit from financial institutions rated 
not lower than the second highest credit rating category by an NRSRO.
    Credit derivative contract means a derivative contract that 
transfers credit risk.
    Credit risk means the risk that the market value, or estimated fair 
value if market value is not available, of an obligation will decline as 
a result of deterioration in creditworthiness.
    Derivative contract means generally a financial contract the value 
of which is derived from the values of one or more underlying assets, 
reference rates, or indices of asset values, or credit-related events. 
Derivative contracts include interest rate, foreign exchange rate, 
equity, precious metals, commodity, and credit contracts, and any other 
instruments that pose similar risks.
    Excess stock means that amount of capital stock of a Bank held by a 
member in excess of the minimum investment in Bank stock required by 
Sec. 931.3 of this chapter.
    Exchange rate contracts include cross-currency interest-rate swaps, 
forward foreign exchange rate contracts, currency options purchased, and 
any similar instruments that give rise to similar risks.
    General allowance for losses means an allowance established by a 
Bank in accordance with GAAP for losses, but which does not include any 
amounts held against specific assets of the Bank.
    Government Sponsored Enterprise, or GSE, means a United States 
Government-sponsored agency or instrumentality originally established or 
chartered to serve public purposes specified by the United States 
Congress, but whose obligations are not obligations of the United States 
and are not guaranteed by the United States.
    Interest rate contracts include, single currency interest-rate 
swaps, basis swaps, forward rate agreements, interest-rate options, and 
any similar instrument that gives rise to similar risks, including when-
issued securities.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below

[[Page 126]]

the fourth highest rating category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or other similar standards.
    Market risk means the risk that the market value, or estimated fair 
value if market value is not available, of a Bank's portfolio will 
decline as a result of changes in interest rates, foreign exchange 
rates, equity and commodity prices.
    Marketable means, with respect to an asset, that the asset can be 
sold with reasonable promptness at a price that corresponds reasonably 
to its fair value.
    Market value at risk is the loss in the market value of a Bank's 
portfolio measured from a base line case, where the loss is estimated in 
accordance with Sec. 932.5 of this chapter.
    Minimum investment means the minimum amount of Class A and/or Class 
B stock that a member is required to own in order to be a member of a 
Bank and in order to obtain advances and to engage in other business 
activities with the Bank in accordance with Sec. 931.3 of this chapter.
    Operations risk means the risk of an unexpected loss to a Bank 
resulting from human error, fraud, unenforceability of legal contracts, 
or deficiencies in internal controls or information systems.
    Permanent capital means the retained earnings of a Bank, determined 
in accordance with GAAP, plus the amount paid-in for the Bank's Class B 
stock.
    Redeem or Redemption means the acquisition by a Bank of its 
outstanding Class A or Class B stock at par value following the 
expiration of the six-month or five-year statutory redemption period, 
respectively, for the stock.
    Regulatory risk-based capital requirement means the amount of 
permanent capital that a Bank is required to maintain in accordance with 
Sec. 932.3 of this chapter.
    Regulatory total capital requirement means the amount of total 
capital that a Bank is required to maintain in accordance with 
Sec. 932.2 of this chapter.
    Repurchase means the acquisition by a Bank of excess stock prior to 
the expiration of the six-month or five-year statutory redemption period 
for the stock.
    Repurchase agreement means an agreement between a seller and a buyer 
whereby the seller agrees to repurchase a security or similar securities 
at an agreed upon price, with or without a stated time for repurchase.
    Sales of federal funds subject to a continuing contract means an 
overnight federal funds loan that is automatically renewed each day 
unless terminated by either the lender or the borrower.
    Total assets means the total assets of a Bank, as determined in 
accordance with GAAP.
    Total capital of a Bank means the sum of permanent capital, the 
amounts paid-in for Class A stock, the amount of any general allowance 
for losses, and the amount of other instruments identified in a Bank's 
capital plan that the Finance Board has determined to be available to 
absorb losses incurred by such Bank.
    Walkaway clause means a provision in a bilateral netting contract 
that permits a nondefaulting counterparty to make a lower payment than 
it would make otherwise under the bilateral netting contract, or no 
payment at all, to a defaulter or the estate of a defaulter, even if the 
defaulter or the estate of the defaulter is a net creditor under the 
bilateral netting contract.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001; 66 
FR 66728, Dec. 27, 2001; 67 FR 12849, Mar. 20, 2002]

    Effective Date Note: At 66 FR 66728, Dec. 27, 2001, Sec. 930.1 was 
amended by revising the definition of Affiliated counterparty, and 
adding, the definition for Sales of federal funds subject to a 
continuing contract, effective March 27, 2002. For the convenience of 
the user the revised and added text is set forth as follows:

Sec. 930.1  Definitions.

                                * * * * *

    Affiliated counterparty means a counterparty of a Bank that 
controls, is controlled by or is under common control with another 
counterparty of the Bank. For the

[[Page 127]]

purposes of this definition only, direct or indirect ownership 
(including beneficial ownership) of more than 50 percent of the voting 
securities or voting interests of an entity constitutes control.

                                * * * * *

    Sales of federal funds subject to a continuing contract means an 
overnight federal funds loan that is automatically renewed each day 
unless terminated by either the lender or the borrower.

                                * * * * *



PART 931--FEDERAL HOME LOAN BANK CAPITAL STOCK--Table of Contents




Sec.
931.1  Classes of capital stock.
931.2  Issuance of capital stock.
931.3  Minimum investment in capital stock.
931.4  Dividends.
931.5  Liquidation, merger, or consolidation.
931.6  Transfer of capital stock.
931.7  Redemption and repurchase of capital stock.
931.8  Other restrictions on the repurchase or redemption of Bank stock.
931.9  Transition provision.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.

    Source: 66 FR 8310, Jan. 30, 2001, unless otherwise noted.



Sec. 931.1  Classes of capital stock.

    The authorized capital stock of a Bank shall consist of the 
following instruments:
    (a) Class A stock, which shall:
    (1) Have a par value as determined by the board of directors of the 
Bank and stated in the Bank's capital plan;
    (2) Be issued, redeemed, and repurchased only at its stated par 
value; and
    (3) Be redeemable in cash only on six-months written notice to the 
Bank.
    (b) Class B stock, which shall:
    (1) Have a par value as determined by the board of directors of the 
Bank and stated in the Bank's capital plan;
    (2) Be issued, redeemed, and repurchased only at its stated par 
value;
    (3) Be redeemable in cash only on five-years written notice to the 
Bank; and
    (4) Confer an ownership interest in the retained earnings, surplus, 
undivided profits, and equity reserves of the Bank; and
    (c) Any one or more subclasses of Class A or Class B stock, each of 
which may have different rights, terms, conditions, or preferences as 
may be authorized in the Bank's capital plan, provided, however, that 
each subclass of stock shall have all of the characteristics of its 
respective class, as specified in paragraph (a) or (b) of this section.



Sec. 931.2  Issuance of capital stock.

    (a) In general. A Bank may issue either one or both classes of its 
capital stock (including subclasses), as authorized by Sec. 931.1, and 
shall not issue any other class of capital stock. A Bank shall issue its 
stock only to its members and only in book-entry form, and the Bank 
shall act as its own transfer agent. All capital stock shall be issued 
in accordance with the Bank's capital plan.
    (b) Initial issuance. In connection with the initial issuance of its 
Class A and/or Class B stock (or any subclass of either), a Bank may 
issue such stock in exchange for its existing stock, through a 
conversion of its existing stock, or through any other fair and 
equitable transaction or method of distribution. As part of its initial 
stock issuance transaction, a Bank may distribute any portion of its 
then-existing unrestricted retained earnings as shares of Class B stock.



Sec. 931.3  Minimum investment in capital stock.

    (a) A Bank shall require each member to maintain a minimum 
investment in the capital stock of the Bank, both as a condition to 
becoming and remaining a member of the Bank and as a condition to 
transacting business with the Bank or obtaining advances and other 
services from the Bank. The amount of the required minimum investment 
shall be determined in accordance with the Bank's capital plan and shall 
be sufficient to ensure that the Bank remains in compliance with its 
minimum capital requirements. A Bank shall require each member to 
maintain its minimum investment for as long as the institution remains a 
member of the Bank and for as long as the member engages in any activity

[[Page 128]]

with the Bank against which the Bank is required to maintain capital.
    (b) A Bank may establish the minimum investment required of each 
member as a percentage of the total assets of the member, as a 
percentage of the advances outstanding to the member, as a percentage of 
any other business activity conducted with the member, on any other 
basis that is approved by the Finance Board, or any combination thereof.
    (c) A Bank may require each member to satisfy the minimum investment 
requirement through the purchase of either Class A or Class B stock, or 
through the purchase of one or more combinations of Class A and Class B 
stock that have been authorized by the board of directors of the Bank in 
its capital plan. A Bank, in its discretion, may establish a lower 
minimum investment for members that invest in Class B stock than is 
required for members that invest in Class A stock, provided that such 
reduced investment provides sufficient capital for the Bank to remain in 
compliance with its minimum capital requirements.
    (d) Each member of a Bank shall at all times maintain an investment 
in the capital stock of the Bank in an amount that is sufficient to 
satisfy the minimum investment required for that member in accordance 
with the Bank's capital plan.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0059 with an expiration date of November 30, 2003)



Sec. 931.4  Dividends.

    (a) In general. A Bank may pay dividends on Class A or Class B 
stock, including any subclasses of such stock, only out of previously 
retained earnings or current net earnings, and shall declare and pay 
dividends only as provided by its capital plan. The capital plan may 
establish different dividend rates or preferences for each class or 
subclass of stock, which may include a dividend that tracks the economic 
performance of certain Bank assets, such as Acquired Member Assets. A 
member, including a member that has provided the Bank with a notice of 
intent to withdraw from membership or one whose membership is otherwise 
terminated, shall be entitled to receive any dividends that a Bank 
declares on its capital stock while the member owns the stock.
    (b) Limitation on payment of dividends. In no event shall a Bank 
declare or pay any dividend on its capital stock if after doing so the 
Bank would fail to meet any of its minimum capital requirements, nor 
shall a Bank that is not in compliance with any of its minimum capital 
requirements declare or pay any dividend on its capital stock.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]



Sec. 931.5  Liquidation, merger, or consolidation.

    The respective rights of the Class A and Class B stockholders, in 
the event that the Bank is liquidated, or is merged or otherwise 
consolidated with another Bank, shall be determined in accordance with 
the capital plan of the Bank.



Sec. 931.6  Transfer of capital stock.

    A Bank in its capital plan may allow a member to transfer any excess 
capital stock of the Bank to another member of that Bank or to an 
institution that has been approved for membership in that Bank and that 
has satisfied all conditions for becoming a member, other than the 
purchase of the minimum amount of Bank stock that it is required to hold 
as a condition of membership. Any such stock transfers shall be at par 
value and shall be effective upon being recorded on the appropriate 
books and records of the Bank. The Bank may, in its capital plan, 
require a member to receive the approval of the Bank before a transfer 
of the Bank's stock, as allowed under this section, is completed.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]



Sec. 931.7  Redemption and repurchase of capital stock.

    (a) Redemption. A member may have its capital stock in a Bank 
redeemed by providing written notice to the Bank in accordance with this 
section. For Class A stock, a member shall provide six-months written 
notice, and for

[[Page 129]]

Class B stock a member shall provide five-years written notice. The 
notice shall indicate the number of shares of Bank stock that are to be 
redeemed, and a member shall not have more than one notice of redemption 
outstanding at one time for the same shares of Bank stock. A member may 
cancel a notice of redemption by so informing the Bank in writing, and 
the Bank may impose a fee (to be specified in its capital plan) on any 
member that cancels a pending notice of redemption. At the expiration of 
the applicable notice period, the Bank shall pay the stated par value of 
that stock to the member in cash. A request by a member (whose 
membership has not been terminated) to redeem specific shares of stock 
shall automatically be cancelled if the Bank is prevented from redeeming 
the member's stock by paragraph (c) of this section within five business 
days from the end of the expiration of the applicable redemption notice 
period because the member would fail to maintain its minimum investment 
in the stock of the Bank after such redemption. The automatic 
cancellation of a member's redemption request shall have the same effect 
as if the member had cancelled its notice to redeem stock prior to the 
end of the redemption notice period, and a Bank may impose a fee (to be 
specified in its capital plan) for automatic cancellation of a 
redemption request. A Bank shall not be obligated to redeem its capital 
stock other than in accordance with this paragraph.
    (b) Repurchase. A Bank, in its discretion and without regard to the 
applicable redemption periods, may repurchase from a member any 
outstanding Class A or Class B capital stock that is in excess of the 
amount of that class of Bank stock that the member is required to hold 
as a minimum investment, in accordance with the capital plan of that 
Bank. A Bank undertaking such a stock repurchase at its own initiative 
shall provide the member with reasonable notice prior to repurchasing 
any excess stock, with the period of such notice to be specified in the 
Bank's capital plan, and shall pay the stated par value of that stock to 
the member in cash. For purposes of this section, any Bank stock owned 
by a member shall be considered to be excess stock if the member is not 
required to hold such stock either as a condition of remaining a member 
of the Bank or as a condition of obtaining advances or transacting other 
business with the Bank. A member's submission of a notice of intent to 
withdraw from membership, or its termination of membership in any other 
manner, shall not, in and of itself, cause any Bank stock to be deemed 
excess stock for purposes of this section.
    (c) Limitation. In no event may a Bank redeem or repurchase any 
stock if, following the redemption or repurchase, the Bank would fail to 
meet any minimum capital requirement, or if the member would fail to 
maintain its minimum investment in the stock of the Bank, as required by 
Sec. 931.3.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0004 with an expiration date of April 30, 2001)

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]



Sec. 931.8  Other restrictions on the repurchase or redemption of Bank stock.

    (a) Capital impairment. A Bank may not redeem or repurchase any 
capital stock without the prior written approval of the Finance Board if 
the Finance Board or the board of directors of the Bank has determined 
that the Bank has incurred or is likely to incur losses that result in 
or are likely to result in charges against the capital of the Bank. This 
prohibition shall apply even if a Bank is in compliance with its minimum 
capital requirements, and shall remain in effect for however long the 
Bank continues to incur such charges or until the Finance Board 
determines that such charges are not expected to continue.
    (b) Bank discretion to suspend redemption. A Bank, upon the approval 
of its board of directors, or of a subcommittee thereof, may suspend 
redemption of stock if the Bank reasonably believes that continued 
redemption of stock would cause the Bank to fail to meet its minimum 
capital requirements as set forth in Secs. 932.2 or 932.3 of this 
chapter, would prevent the

[[Page 130]]

Bank from maintaining adequate capital against a potential risk that may 
not be adequately reflected in its minimum capital requirements, or 
would otherwise prevent the Bank from operating in a safe and sound 
manner. A Bank shall notify the Finance Board in writing within two 
business days of the date of the decision to suspend the redemption of 
stock, informing the Finance Board of the reasons for the suspension and 
of the Bank's strategies and time frames for addressing the conditions 
that led to the suspension. The Finance Board may require the Bank to 
re-institute the redemption of member stock. A Bank shall not repurchase 
any stock without the written permission of the Finance Board during any 
period in which the Bank has suspended redemption of stock under this 
paragraph.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]



Sec. 931.9  Transition provision.

    (a) In general. Each Bank shall comply with the minimum leverage and 
risk-based capital requirements specified in Sec. 932.2 and Sec. 932.3 
of this chapter, respectively, and each member shall comply with the 
minimum investment established in the capital plan, as of the effective 
date of that Bank's capital plan. The effective date of a Bank's capital 
plan shall be the date on which the Bank first issues any Class A or 
Class B stock. Prior to the effective date, the issuance and retention 
of Bank stock shall be as provided in Sec. 925.20 and Sec. 925.22 of 
this chapter.
    (b) Transition period. (1) Bank transition. A Bank that will not be 
in compliance with the minimum leverage and risk-based capital 
requirements specified in Sec. 932.2 and Sec. 932.3 of this chapter as 
of the effective date of its capital plan shall maintain compliance with 
the leverage limit requirements in Sec. 966.3(a) of this chapter and 
shall include in its capital plan a description of the steps that the 
Bank will take to achieve compliance with the minimum capital 
requirements specified in Sec. 932.2 and Sec. 932.3 of this chapter. The 
period of time for compliance with the minimum capital requirements 
shall be stated in the plan and shall not exceed three years from the 
effective date of the capital plan. When the Bank has achieved 
compliance with the leverage requirement of Sec. 932.2 of this chapter, 
the leverage limit requirements of Sec. 966.3(a) of this chapter shall 
cease to apply to that Bank.
    (2) Member transition. (i) Existing members. A Bank's capital plan 
shall require any institution that was a member on November 12, 1999, 
and whose investment in Bank stock as of the effective date of the 
capital plan will be less than the minimum investment required by the 
plan, to comply with the minimum investment by a date specified in the 
Bank's capital plan. The length of the transition period shall be 
specified in the capital plan and shall not exceed three years. The 
capital plan shall describe the actions that the existing members are 
required to take to achieve compliance with the minimum investment, and 
may require such members to purchase additional Bank stock periodically 
over the course of the transition period.
    (ii) New members. A Bank's capital plan shall require any 
institution that became a member after November 12, 1999, but prior to 
the effective date of the capital plan, to comply with the minimum 
investment specified in the Bank's capital plan as of the effective date 
of the plan. A Bank's capital plan shall require any institution that 
becomes a member after the effective date of the capital plan, to comply 
with the minimum investment upon becoming a member.
    (3) New business. A Bank's capital plan shall require any member 
that obtains an advance or other services from the Bank, or that 
initiates any other business activity with the Bank against which the 
Bank is required to hold capital, after the effective date of the 
capital plan to comply with the minimum investment specified in the 
Bank's capital plan for such advance, services, or activity at the time 
the transaction occurs.



PART 932--FEDERAL HOME LOAN BANK CAPITAL REQUIREMENTS--Table of Contents




Sec.
932.1  Risk management.
932.2  Total capital requirement.
932.3  Risk-based capital requirement.

[[Page 131]]

932.4  Credit risk capital requirement.
932.5  Market risk capital requirement.
932.6  Operations risk capital requirement.
932.7  Reporting requirements.
932.8  Minimum liquidity requirements.
932.9  Limits on unsecured extensions of credit to one counterparty or 
          affiliated counterparties; reporting requirements for total 
          extensions of credit to one counterparty or affiliated 
          counterparties.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.

    Source: 66 FR 8310, Jan. 30, 2001, unless otherwise noted.



Sec. 932.1  Risk management.

    Before its new capital plan may take effect, each Bank shall obtain 
the approval of the Finance Board for the internal market risk model or 
the internal cash flow model used to calculate the market risk component 
of its risk-based capital requirement, and for the risk assessment 
procedures and controls (whether established as part of its risk 
management policy or otherwise) to be used to manage its credit, market, 
and operations risks.



Sec. 932.2  Total capital requirement.

    (a) Each Bank shall maintain at all times:
    (1) Total capital in an amount at least equal to 4.0 percent of the 
Bank's total assets; and
    (2) A leverage ratio of total capital to total assets of at least 
5.0 percent of the Bank's total assets. For purposes of determining the 
leverage ratio, total capital shall be computed by multiplying the 
Bank's permanent capital by 1.5 and adding to this product all other 
components of total capital.
    (b) For reasons of safety and soundness, the Finance Board may 
require an individual Bank to have and maintain a greater amount of 
total capital than mandated by paragraph (a)(1) of this section.



Sec. 932.3  Risk-based capital requirement.

    (a) Each Bank shall maintain at all times permanent capital in an 
amount at least equal to the sum of its credit risk capital requirement, 
its market risk capital requirement, and its operations risk capital 
requirement, calculated in accordance with Secs. 932.4, 932.5 and 932.6, 
respectively.
    (b) For reasons of safety and soundness, the Finance Board may 
require an individual Bank to have and maintain a greater amount of 
permanent capital than required by paragraph (a) of this section.



Sec. 932.4  Credit risk capital requirement.

    (a) General requirement. Each Bank's credit risk capital requirement 
shall be equal to the sum of the Bank's credit risk capital charges for 
all assets, off-balance sheet items and derivative contracts.
    (b) Credit risk capital charge for assets. Except as provided in 
paragraph (i) of this section, each Bank's credit risk capital charge 
for an asset shall be equal to the book value of the asset multiplied by 
the credit risk percentage requirement assigned to that asset pursuant 
to paragraph (e)(2) of this section.
    (c) Credit risk capital charge for off-balance sheet items. Each 
Bank's credit risk capital charge for an off-balance sheet item shall be 
equal to the credit equivalent amount of such item, as determined 
pursuant to paragraph (f) of this section multiplied by the credit risk 
percentage requirement assigned to that item pursuant to paragraph 
(e)(2) of this section, except that the credit risk percentage 
requirement applied to the credit equivalent amount for a stand-by 
letter of credit shall be that for an advance with the same remaining 
maturity as that stand-by letter of credit.
    (d) Credit risk capital charge for derivative contracts. (1) 
Derivative contracts with non-member counterparties. Except as provided 
in paragraph (j) of this section, each Bank's credit risk capital charge 
for a specific derivative contract entered into between a Bank and a 
non-member institution shall equal the sum of :
    (i) The current credit exposure for the derivative contract, 
calculated in accordance with paragraph (g) or (h) of this section, as 
applicable, multiplied by the credit risk percentage requirement 
assigned to that derivative contract pursuant to paragraph (e)(2) of 
this section, provided that:
    (A) The remaining maturity of the derivative contract shall be 
deemed to

[[Page 132]]

be less than one year for the purpose of applying Table 1.1 or 1.3 of 
this part; and
    (B) Any collateral held against an exposure from the derivative 
contract shall be applied to reduce the portion of the credit risk 
capital charge corresponding to the current credit exposure in 
accordance with the requirements of paragraph (e)(2)(ii)(B) of this 
section; plus
    (ii) The potential future credit exposure for the derivative 
contract calculated in accordance with paragraph (g) or (h) of this 
section, as applicable, multiplied by the credit risk percentage 
requirement assigned to that derivative contract pursuant to paragraph 
(e)(2) of this section, where the actual remaining maturity of the 
derivative contract is used to apply Table 1.1 or Table 1.3 of this 
part.
    (2) Derivative contracts with a member. Except as provided in 
paragraph (j) of this section, the credit risk capital charge for any 
derivative contract entered into between a Bank and one of its member 
institutions shall be calculated in accordance with paragraph (d)(1) of 
this section. However, the credit risk percentage requirements used in 
the calculations shall be found in Table 1.1 of this part, which sets 
forth the credit risk percentage requirements for advances.
    (e) Determination of credit risk percentage requirements--(1) 
Finance Board determination of credit risk percentage requirements. The 
Finance Board shall determine, and update periodically, the credit risk 
percentage requirements set forth in Tables 1.1 through 1.4 of this part 
applicable to a Bank's assets, off-balance sheet items, and derivative 
contracts.
    (2) Bank determination of credit risk percentage requirements. (i) 
Each Bank shall determine the credit risk percentage requirement 
applicable to each asset, each off-balance sheet item and each 
derivative contract by identifying the category set forth in Table 1.1, 
Table 1.2, Table 1.3 or Table 1.4 of this part to which the asset, item 
or derivative belongs, given, if applicable, its demonstrated credit 
rating and remaining maturity (as determined in accordance with 
paragraphs (e)(2)(ii) and (e)(2)(iii) of this section). The applicable 
credit risk percentage requirement for an asset, off-balance sheet item 
or derivative contract shall be used to calculate the credit risk 
capital charge for such asset, item, or derivative contract in 
accordance with paragraphs (b), (c) or (d) of this section respectively. 
The relevant categories and credit risk percentage requirements are 
provided in the following Tables 1.1 through 1.4 of this part:

                  Table 1.1.--Requirement for Advances
------------------------------------------------------------------------
                                                              Percentage
                      Type of advances                        applicable
                                                             to advances
------------------------------------------------------------------------
Advances with:
  Remaining maturity <= 4 years............................         0.07
  Remaining maturity  4 years to 7 years........         0.20
  Remaining maturity  7 years to 10 years.......         0.30
  Remaining maturity  10 years..................         0.35
------------------------------------------------------------------------


      Table 1.2.--Requirement for Rated Residential Mortgage Assets
------------------------------------------------------------------------
                                                              Percentage
                                                              applicable
                                                                  to
             Type of residential mortgage asset              residential
                                                               mortgage
                                                                assets
------------------------------------------------------------------------
Highest Investment Grade...................................         0.37
Second Highest Investment Grade............................         0.60
Third Highest Investment Grade.............................         0.86
Fourth Highest Investment Grade............................         1.20
If Downgraded to Below Investment Grade After Acquisition
 By Bank:
  Highest Below Investment Grade...........................         2.40
  Second Highest Below Investment Grade....................         4.80
  All Other Below Investment Grade.........................        34.00
Subordinated Classes of Mortgage Assets:
  Highest Investment Grade.................................         0.37
  Second Highest Investment Grade..........................         0.60
  Third Highest Investment Grade...........................         1.60
  Fourth Highest Investment Grade..........................         4.45
If Downgraded to Below Investment Grade After Acquisition
 By Bank:
  Highest Below Investment Grade...........................        13.00
  Second Highest Below Investment Grade....................        34.00
  All Other Below Investment Grade.........................       100.00
------------------------------------------------------------------------


[[Page 133]]


   Table 1.3.--Requirement for rated Assets or Rated Items Other Than Advances or Residential Mortgage Assets
                                          [Based on remaining maturity]
----------------------------------------------------------------------------------------------------------------
                                                                    Applicable percentage
                                           ---------------------------------------------------------------------
                                                                                     7
                                            [lE] 1 year  1  3    yrs to 10   10
                                                          yr to 3 yrs   yrs to 7yrs       yrs           yrs
----------------------------------------------------------------------------------------------------------------
U.S. Government Securities................         0.00          0.00          0.00          0.00          0.00
Highest Investment Grade..................         0.15          0.40          0.90          1.40          2.20
Second Highest Investment Grade...........         0.20          0.45          1.00          1.45          2.30
Third Highest Investment Grade............         0.70          1.10          1.60          2.05          2.95
Fourth Highest Investment Grade...........         2.50          3.70          4.45          5.50          7.05
If Downgraded Below Investment Grade After
 Acquisition by Bank:
    Highest Below Investment Grade........        10.00         13.00         13.00         13.00         13.00
    Second Highest Below Investment Grade.        26.00         34.00         34.00         34.00         34.00
    All Other.............................       100.00        100.00        100.00        100.00        100.00
----------------------------------------------------------------------------------------------------------------


               Table 1.4.--Requirement for Unrated Assets
------------------------------------------------------------------------
                                                              Applicable
                   Type of unrated asset                      percentage
------------------------------------------------------------------------
Cash.......................................................         0.00
Premises, Plant, and Equipment.............................         8.00
Investments Under Sec.  940.3(e) & (f).....................         8.00
------------------------------------------------------------------------

    (ii) When determining the applicable credit risk percentage 
requirement from Tables 1.2 or 1.3 of this part, each Bank shall apply 
the following criteria:
    (A) For assets or items that are rated directly by an NRSRO, the 
credit rating shall be the NRSRO's credit rating for the asset or item 
as determined in accordance with paragraph (e)(2)(iii) of this section.
    (B) When using Table 1.3 of this part, for an asset, off-balance 
sheet item, or derivative contract that is not rated directly by an 
NRSRO, but for which an NRSRO rating has been assigned to any 
corresponding obligor counterparty, third party guarantor, or collateral 
backing the asset, item, or derivative, the credit rating that shall 
apply to the asset, item, or derivative, or portion of the asset, item, 
or derivative so guaranteed or collateralized, shall be the credit 
rating corresponding to such obligor counterparty, third party 
guarantor, or underlying collateral, as determined in accordance with 
paragraph (e)(2)(iii) of this section. If there are multiple obligor 
counterparties, third party guarantors, or collateral instruments 
backing an asset, item, or derivative not rated directly by an NRSRO, or 
any specific portion thereof, then the credit rating that shall apply to 
that asset, item, or derivative or specific portion thereof, shall be 
the highest credit rating among such obligor counterparties, third party 
guarantors, or collateral instruments, as determined in accordance with 
paragraph (e)(2)(iii) of this section. Assets, items or derivatives 
shall be deemed to be backed by collateral for purposes of this 
paragraph if the collateral is:
    (1) Actually held by the Bank or an independent, third-party 
custodian, or, if permitted under the Bank's collateral agreement with 
such party, by the Bank's member or an affiliate of that member where 
the term ``affiliate'' has the same meaning as in Sec. 950.1 of this 
chapter;
    (2) Legally available to absorb losses;
    (3) Of a readily determinable value at which it can be liquidated by 
the Bank;
    (4) Held in accordance with the provisions of the Bank's member 
products policy established pursuant to Sec. 917.4 of this chapter; and
    (5) Subject to an appropriate discount to protect against price 
decline during the holding period, as well as the costs likely to be 
incurred in the liquidation of the collateral.
    (C) When using Table 1.3 of this part, for an asset with a short-
term credit rating from a given NRSRO, the credit risk percentage 
requirement shall be based on the remaining maturity of the asset and 
the long-term credit rating provided for the issuer of the asset by the 
same NRSRO. Should the issuer of the short-term asset not have a long-
term credit rating, the long-term equivalent rating shall be determined 
as follows:

[[Page 134]]

    (1) The highest short-term credit rating shall be equivalent to the 
third highest long-term rating;
    (2) The second highest short-term rating shall be equivalent to the 
fourth highest long-term rating;
    (3) The third highest short-term rating shall be equivalent to the 
fourth highest long-term rating; and
    (4) If the short-term rating is downgraded to below investment grade 
after acquisition by the Bank, the short-term rating shall be equivalent 
to the second highest below investment grade long-term rating.
    (D) For residential mortgage assets and other assets or items, or 
relevant portion of an asset or item, that do not meet the requirements 
of paragraphs (e)(2)(ii)(A), (e)(2)(ii)(B) or (e)(2)(ii)(C) of this 
section, and are not identified in Tables 1.1 or Table 1.4 of this part, 
each Bank shall determine its own credit rating for such assets or 
items, or relevant portion thereof, using credit rating standards 
available from an NRSRO or other similar standards. This credit rating, 
as determined by the Bank, shall be used to identify the applicable 
credit risk percentage requirement under Table 1.2 of this part for 
residential mortgage assets, or under Table 1.3 of this part for all 
other assets or items.
    (E) The credit risk percentage requirement for mortgage assets that 
are acquired member assets described in Sec. 955.2 of this chapter shall 
be assigned from Table 1.2 of this part based on the rating of those 
assets after taking into account any credit enhancement required by 
Sec. 955.3 of this chapter. Should a Bank further enhance a pool of 
loans through the purchase of insurance or by some other means, the 
credit risk percentage requirement shall be based on the rating of such 
pool after the supplemental credit enhancement, except that the Finance 
Board retains the right to adjust the credit capital charge to account 
for any deficiencies with the supplemental enhancement on a case-by-case 
basis.
    (iii) In determining the credit ratings under paragraph 
(e)(2)(ii)(A), (e)(2)(ii)(B) and (e)(2)(ii)(C) of this section, each 
Bank shall apply the following criteria:
    (A) The most recent credit rating from a given NRSRO shall be 
considered. If only one NRSRO has rated an asset or item, that NRSRO's 
rating shall be used. If an asset or item has received credit ratings 
from more than one NRSRO, the lowest credit rating from among those 
NRSROs shall be used.
    (B) Where a credit rating has a modifier (e.g., A-1+ for short-term 
ratings and A+ or A- for long-term ratings) the credit rating is deemed 
to be the credit rating without the modifier (e.g., A-1+ = A-1 and A+ or 
A-= A);
    (f) Calculation of credit equivalent amount for off-balance sheet 
items. (1) General requirement. The credit equivalent amount for an off-
balance sheet item shall be determined by a Finance Board approved model 
or shall be equal to the face amount of the instrument multiplied by the 
credit conversion factor assigned to such risk category of instruments, 
subject to the exceptions in paragraph (f)(2) of this section, provided 
in the following Table 2 of this part:

     TABLE 2--CREDIT CONVERSION FACTORS FOR OFF-BALANCE SHEET ITEMS
------------------------------------------------------------------------
                                                              Credit
                                                            conversion
                       Instrument                           factor  (In
                                                             percent)
------------------------------------------------------------------------
Asset sales with recourse where the credit risk remains              100
 with the Bank..........................................
Commitments to make advances subject to certain drawdown
Commitments to acquire loans subject to certain drawdown
Standby letters of credit...............................              50
Other commitments with original maturity of over one
 year...................................................
Other commitments with original maturity of one year or               20
 less...................................................
------------------------------------------------------------------------

    (2) Exceptions. The credit conversion factor shall be zero for Other 
Commitments With Original Maturity of Over One Year and Other 
Commitments With Original Maturity of One Year or Less, for which credit 
conversion factors of 50 percent or 20 percent would otherwise apply, 
that are unconditionally cancelable, or that effectively provide for 
automatic cancellation, due to the deterioration in a borrower's 
creditworthiness, at any time by the Bank without prior notice.

[[Page 135]]

    (g) Calculation of current and potential future credit exposures for 
single derivative contracts. (1) Current credit exposure. The current 
credit exposure for a derivative contract that is not subject to a 
qualifying bilateral netting contract described in paragraph (h)(3) of 
this section shall be:
    (i) If the mark-to-market value of the contract is positive, the 
mark-to-market value of the contract; or
    (ii) If the mark-to-market value of the contract is zero or 
negative, zero.
    (2) Potential future credit exposure. (i) The potential future 
credit exposure for a single derivative contract, including a derivative 
contract with a negative mark-to-market value, shall be calculated using 
an internal model approved by the Finance Board or, in the alternative, 
by multiplying the effective notional amount of the derivative contract 
by one of the assigned credit conversion factors, modified as may be 
required by paragraph (g)(2)(ii) of this section, for the appropriate 
category as provided in the following Table 3 of this part:

          Table 3.--Credit Conversion Factors for Potential Future Credit Exposure Derivative Contracts
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
                                                                Foreign                   Precious
              Residual maturity                  Interest    exchange and     Equity       metals       Other
                                                   rate          gold                   except gold  commodities
----------------------------------------------------------------------------------------------------------------
One year or less.............................           0             1              6            7           10
Over 1 year to five years....................            .5           5              8            7           12
Over five years..............................           1.5           7.5           10            8           15
----------------------------------------------------------------------------------------------------------------

    (ii) In applying the credit conversion factors in Table 3 of this 
part the following modifications shall be made:
    (A) For derivative contracts with multiple exchanges of principal, 
the conversion factors are multiplied by the number of remaining 
payments in the derivative contract; and
    (B) For derivative contracts that automatically reset to zero value 
following a payment, the residual maturity equals the time until the 
next payment; however, interest rate contracts with remaining maturities 
of greater than one year shall be subject to a minimum conversion factor 
of 0.5 percent.
    (iii) If a Bank uses an internal model to determine the potential 
future credit exposure for a particular type of derivative contract, the 
Bank shall use the same model for all other similar types of contracts. 
However, the Bank may use an internal model for one type of derivative 
contract and Table 3 of this part for another type of derivative 
contract.
    (iv) Forwards, swaps, purchased options and similar derivative 
contracts not included in the Interest Rate, Foreign Exchange and Gold, 
Equity, or Precious Metals Except Gold categories shall be treated as 
other commodities contracts when determining potential future credit 
exposures using Table 3 of this part.
    (v) If a Bank uses Table 3 of this part to determine the potential 
future credit exposures for credit derivative contracts, the credit 
conversion factors provided in Table 3 for equity contracts shall also 
apply to the credit derivative contracts entered into with investment 
grade counterparties. If the counterparty is downgraded to below 
investment grade, the credit conversion factor provided in Table 3 of 
this part for other commodity contracts shall apply.
    (h) Calculation of current and potential future credit exposures for 
multiple derivative contracts subject to a qualifying bilateral netting 
contract--(1) Current credit exposure. The current credit exposure for 
multiple derivative contracts executed with a single counterparty and 
subject to a qualifying bilateral netting contract described in 
paragraph (h)(3) of this section, shall be calculated on a net basis and 
shall equal:
    (i) The net sum of all positive and negative mark-to-market values 
of the individual derivative contracts subject

[[Page 136]]

to a qualifying bilateral netting contract, if the net sum of the mark-
to-market values is positive; or
    (ii) Zero, if the net sum of the mark-to-market values is zero or 
negative.
    (2) Potential future credit exposure. The potential future credit 
exposure for each individual derivative contract from among a group of 
derivative contracts that are executed with a single counterparty and 
subject to a qualifying bilateral netting contract described in 
paragraph (h)(3) of this section shall be calculated as follows:

Anet = 0.4 x Agross + (0.6 x NGR x 
    Agross),


where:
    (i) Anet is the potential future credit exposure for an 
individual derivative contract subject to the qualifying bilateral 
netting contract;
    (ii) Agross is the gross potential future credit 
exposure, i.e., the potential future credit exposure for the individual 
derivative contract, calculated in accordance with paragraph (g)(2) of 
this section but without regard to the fact that the contract is subject 
to the qualifying bilateral netting contract;
    (iii) NGR is the net to gross ratio, i.e., the ratio of the net 
current credit exposure of all the derivative contracts subject to the 
qualifying bilateral netting contract, calculated in accordance with 
paragraph (h)(1) of this section, to the gross current credit exposure; 
and
    (iv) The gross current credit exposure is the sum of the positive 
current credit exposures of all the individual derivative contracts 
subject to the qualifying bilateral netting contract, calculated in 
accordance with paragraph (g)(1) of this section but without regard to 
the fact that the contract is subject to the qualifying bilateral 
netting contract.
    (3) Qualifying bilateral netting contract. A bilateral netting 
contract shall be considered a qualifying bilateral netting contract if 
the following conditions are met:
    (i) The netting contract is in writing;
    (ii) The netting contract is not subject to a walkaway clause;
    (iii) The netting contract provides that the Bank would have a 
single legal claim or obligation either to receive or to pay only the 
net amount of the sum of the positive and negative mark-to-market values 
on the individual derivative contracts covered by the netting contract 
in the event that a counterparty, or a counterparty to whom the netting 
contract has been assigned, fails to perform due to default, insolvency, 
bankruptcy, or other similar circumstance;
    (iv) The Bank obtains a written and reasoned legal opinion that 
represents, with a high degree of certainty, that in the event of a 
legal challenge, including one resulting from default, insolvency, 
bankruptcy, or similar circumstances, the relevant court and 
administrative authorities would find the Bank's exposure to be the net 
amount under:
    (A) The law of the jurisdiction by which the counterparty is 
chartered or the equivalent location in the case of non-corporate 
entities, and if a branch of the counterparty is involved, then also 
under the law of the jurisdiction in which the branch is located;
    (B) The law of the jurisdiction that governs the individual 
derivative contracts covered by the netting contract; and
    (C) The law of the jurisdiction that governs the netting contract;
    (v) The Bank establishes and maintains procedures to monitor 
possible changes in relevant law and to ensure that the netting contract 
continues to satisfy the requirements of this section; and
    (vi) The Bank maintains in its files documentation adequate to 
support the netting of a derivative contract.
    (i) Credit risk capital charge for assets hedged with credit 
derivatives--(1) Credit derivatives with a remaining maturity of one 
year or more. The credit risk capital charge for an asset that is hedged 
with a credit derivative that has a remaining maturity of one year or 
more may be reduced only in accordance with paragraph (i)(3) or (i)(4) 
of this section and only if the credit derivative provides substantial 
protection against credit losses.
    (2) Credit derivatives with a remaining maturity of less than one 
year. The credit risk capital charge for an asset that is hedged with a 
credit derivative that has a remaining maturity of less than one year 
may be reduced only in accordance with paragraph (i)(3) of this

[[Page 137]]

section and only if the remaining maturity on the credit derivative is 
identical to or exceeds the remaining maturity of the hedged asset and 
the credit derivative provides substantial protection against credit 
losses.
    (3) Capital charge reduced to zero. The credit risk capital charge 
for an asset shall be zero if a credit derivative is used to hedge the 
credit risk on that asset in accordance with paragraph (i)(1) or (i)(2) 
of this section, provided that:
    (i) The remaining maturity for the credit derivative used for the 
hedge is identical to or exceeds the remaining maturity for the hedged 
asset, and either:
    (A) The asset referenced in the credit derivative is identical to 
the hedged asset; or
    (B) The asset referenced in the credit derivative is different from 
the hedged asset, but only if the asset referenced in the credit 
derivative and the hedged asset have been issued by the same obligor, 
the asset referenced in the credit derivative ranks pari passu to or 
more junior than the hedged asset and has the same maturity as the 
hedged asset, and cross-default clauses apply; and
    (ii) The credit risk capital charge for the credit derivative 
contract calculated pursuant to paragraph (d) of this section is still 
applied.
    (4) Capital charge reduction in certain other cases. The credit risk 
capital charge for an asset hedged with a credit derivative in 
accordance with paragraph (i)(1) of this section shall equal the sum of 
the credit risk capital charges for the hedged and unhedged portion of 
the asset provided that:
    (i) The remaining maturity for the credit derivative is less than 
the remaining maturity for the hedged asset and either:
    (A) The asset referenced in the credit derivative is identical to 
the hedged asset; or
    (B) The asset referenced in the credit derivative is different from 
the hedged asset, but only if the asset referenced in the credit 
derivative and the hedged asset have been issued by the same obligor, 
the asset referenced in the credit derivative ranks pari passu to or 
more junior than the hedged asset and has the same maturity as the 
hedged asset, and cross-default clauses apply; and
    (ii) The credit risk capital charge for the unhedged portion of the 
asset equals:
    (A) The credit risk capital charge for the hedged asset, calculated 
as the book value of the hedged asset multiplied by the hedged asset's 
credit risk percentage requirement assigned pursuant to paragraph (e)(2) 
of this section where the appropriate credit rating is that for the 
hedged asset and the appropriate maturity is the remaining maturity of 
the hedged asset; minus
    (B) The credit risk capital charge for the hedged asset, calculated 
as the book value of the hedged asset multiplied by the hedged asset's 
credit risk percentage requirement assigned pursuant to paragraph (e)(2) 
of this section where the appropriate credit rating is that for the 
hedged asset but the appropriate maturity is deemed to be the remaining 
maturity of the credit derivative; and
    (iii) The credit risk capital charge for the hedged portion of the 
asset is equal to the credit risk capital charge for the credit 
derivative, calculated in accordance with paragraph (d) of this section.
    (j) Zero Credit risk capital charge for certain derivative 
contracts. The credit risk capital charge for the following derivative 
contracts shall be zero:
    (1) A foreign exchange rate contract with an original maturity of 14 
calendar days or less (gold contracts do not qualify for this 
exception); and
    (2) A derivative contract that is traded on an organized exchange 
requiring the daily payment of any variations in the market value of the 
contract.
    (k) Date of calculations. Unless otherwise directed by the Finance 
Board, each Bank shall perform all calculations required by this section 
using the assets, off-balance sheet items, and derivative contracts held 
by the Bank, and, if applicable, the values or credit ratings of such 
assets, items, or derivatives as of the close of business of the last 
business day of the month for which the credit risk capital charge is 
being calculated.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]

[[Page 138]]



Sec. 932.5  Market risk capital requirement.

    (a) General requirement. (1) Each Bank's market risk capital 
requirement shall equal the sum of:
    (i) The market value of the Bank's portfolio at risk from movements 
in interest rates, foreign exchange rates, commodity prices, and equity 
prices that could occur during periods of market stress, where the 
market value of the Bank's portfolio at risk is determined using an 
internal market risk model that fulfills the requirements of paragraph 
(b) of this section and that has been approved by the Finance Board; and
    (ii) The amount, if any, by which the Bank's current market value of 
total capital is less than 85 percent of the Bank's book value of total 
capital, where:
    (A) The current market value of the total capital is calculated by 
the Bank using the internal market risk model approved by the Finance 
Board under paragraph (d) of this section; and
    (B) The book value of total capital is the same as the amount of 
total capital reported by the Bank to the Finance Board under Sec. 932.7 
of this part.
    (2) A Bank may substitute an internal cash flow model to derive a 
market risk capital requirement in place of that calculated using an 
internal market risk model under paragraph (a)(1) of this section, 
provided that:
    (i) The Bank obtains Finance Board approval of the internal cash 
flow model and of the assumptions to be applied to the model; and
    (ii) The Bank demonstrates to the Finance Board that the internal 
cash flow model subjects the Bank's assets and liabilities, off-balance 
sheet items and derivative contracts, including related options, to a 
comparable degree of stress for such factors as will be required for an 
internal market risk model.
    (b) Measurement of market value at risk under a Bank's internal 
market risk model. (1) Except as provided under paragraph (a)(2) of this 
section, each Bank shall use an internal market risk model that 
estimates the market value of the Bank's assets and liabilities, off-
balance sheet items, and derivative contracts, including any related 
options, and measures the market value of the Bank's portfolio at risk 
of its assets and liabilities, off-balance sheet items, and derivative 
contracts, including related options, from all sources of the Bank's 
market risks, except that the Bank's model need only incorporate those 
risks that are material.
    (2) The Bank's internal market risk model may use any generally 
accepted measurement technique, such as variance-covariance models, 
historical simulations, or Monte Carlo simulations, for estimating the 
market value of the Bank's portfolio at risk, provided that any 
measurement technique used must cover the Bank's material risks.
    (3) The measures of the market value of the Bank's portfolio at risk 
shall include the risks arising from the non-linear price 
characteristics of options and the sensitivity of the market value of 
options to changes in the volatility of the options' underlying rates or 
prices.
    (4) The Bank's internal market risk model shall use interest rate 
and market price scenarios for estimating the market value of the Bank's 
portfolio at risk, but at a minimum:
    (i) The Bank's internal market risk model shall provide an estimate 
of the market value of the Bank's portfolio at risk such that the 
probability of a loss greater than that estimated shall be no more than 
one percent;
    (ii) The Bank's internal market risk model shall incorporate 
scenarios that reflect changes in interest rates, interest rate 
volatility, and shape of the yield curve, and changes in market prices, 
equivalent to those that have been observed over 120-business day 
periods of market stress. For interest rates, the relevant historical 
observations should be drawn from the period that starts at the end of 
the previous month and goes back to the beginning of 1978;
    (iii) The total number of, and specific historical observations 
identified by the Bank as, stress scenarios shall be:
    (A) Satisfactory to the Finance Board;
    (B) Representative of the periods of the greatest potential market 
stress given the Bank's portfolio, and

[[Page 139]]

    (C) Comprehensive given the modeling capabilities available to the 
Bank; and
    (iv) The measure of the market value of the Bank's portfolio at risk 
may incorporate empirical correlations among interest rates.
    (5) For any consolidated obligations denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, each Bank 
shall, in addition to fulfilling the criteria of paragraph (b)(4) of 
this section, calculate an estimate of the market value of its portfolio 
at risk due to the material foreign exchange, equity price or commodity 
price risk, such that, at a minimum:
    (i) The probability of a loss greater than that estimated shall not 
exceed one percent;
    (ii) The scenarios reflect changes in foreign exchange, equity, or 
commodity market prices that have been observed over 120-business day 
periods of market stress, as determined using historical data that is 
from an appropriate period; and
    (iii) The total number of, and specific historical observations 
identified by the Bank as, stress scenarios shall be:
    (A) Satisfactory to the Finance Board;
    (B) Representative of the periods of greatest potential stress given 
the Bank's portfolio; and
    (C) Comprehensive given the modeling capabilities available to the 
Bank; and
    (iv) The measure of the market value of the Bank's portfolio at risk 
may incorporate empirical correlations within or among foreign exchange 
rates, equity prices, or commodity prices.
    (c) Independent validation of Bank internal market risk model or 
internal cash flow model. (1) Each Bank shall conduct an independent 
validation of its internal market risk model or internal cash flow model 
within the Bank that is carried out by personnel not reporting to the 
business line responsible for conducting business transactions for the 
Bank. Alternatively, the Bank may obtain independent validation by an 
outside party qualified to make such determinations. Validations shall 
be done on an annual basis, or more frequently as required by the 
Finance Board.
    (2) The results of such independent validations shall be reviewed by 
the Bank's board of directors and provided promptly to the Finance 
Board.
    (d) Finance Board approval of Bank internal market risk model or 
internal cash flow model. Each Bank shall obtain Finance Board approval 
of an internal market risk model or an internal cash flow model, 
including subsequent material adjustments to the model made by the Bank, 
prior to the use of any model. Each Bank shall make such adjustments to 
its model as may be directed by the Finance Board.
    (e) Date of calculations. Unless otherwise directed by the Finance 
Board, each Bank shall perform any calculations or estimates required 
under this section using the assets and liabilities, off-balance sheet 
items, and derivative contracts held by the Bank, and if applicable, the 
values of any such holdings, as of the close of business of the last 
business day of the month for which the market risk capital requirement 
is being calculated.



Sec. 932.6  Operations risk capital requirement.

    (a) General requirement. Except as authorized under paragraph (b) of 
this section, each Bank's operations risk capital requirement shall at 
all times equal 30 percent of the sum of the Bank's credit risk capital 
requirement and market risk capital requirement.
    (b) Alternative requirements. With the approval of the Finance 
Board, each Bank may have an operations risk capital requirement equal 
to less than 30 percent but no less than 10 percent of the sum of the 
Bank's credit risk capital requirement and market risk capital 
requirement if:
    (1) The Bank provides an alternative methodology for assessing and 
quantifying an operations risk capital requirement; or
    (2) The Bank obtains insurance to cover operations risk from an 
insurer rated at least the second highest investment grade credit rating 
by an NRSRO.



Sec. 932.7  Reporting requirements.

    Each Bank shall report to the Finance Board by the 15th business day 
of

[[Page 140]]

each month its risk-based capital requirement by component amounts, and 
its actual total capital amount and permanent capital amount, calculated 
as of the close of business of the last business day of the preceding 
month, or more frequently, as may be required by the Finance Board.



Sec. 932.8  Minimum liquidity requirements.

    In addition to meeting the deposit liquidity requirements contained 
in Sec. 965.3 of this chapter, each Bank shall hold contingency 
liquidity in an amount sufficient to enable the Bank to meet its 
liquidity needs, which shall, at a minimum, cover five business days of 
inability to access the consolidated obligation debt markets. An asset 
that has been pledged under a repurchase agreement cannot be used to 
satisfy minimum liquidity requirements.



Sec. 932.9  Limits on unsecured extensions of credit to one counterparty or affiliated counterparties; reporting requirements for total extensions of credit to 
          one counterparty or affiliated counterparties.

    (a) Unsecured extensions of credit to a single counterparty. A Bank 
shall not extend unsecured credit to any single counterparty (other than 
a GSE) in an amount that would exceed the limits of this paragraph. A 
Bank shall not extend unsecured credit to a GSE in an amount that would 
exceed the limits set forth in paragraph (c) of this section. If a 
third-party provides an irrevocable, unconditional guarantee of 
repayment of a credit (or any part thereof), the third-party guarantor 
shall be considered the counterparty for purposes of calculating and 
applying the unsecured credit limits of this section with respect the to 
guaranteed portion of the transaction.
    (1) Term limits. All unsecured extensions of credit by a Bank to a 
single counterparty that arise from the Bank's on- and off-balance sheet 
and derivative transactions (but excluding the amount of sales of 
federal funds with a maturity of one day or less and sales of federal 
funds subject to a continuing contract) shall not exceed the product of 
the maximum capital exposure limit applicable to such counterparty, as 
determined in accordance with paragraph (a)(4) of this section and Table 
4 of this part, multiplied by the lesser of:
    (i) The Bank's total capital; or
    (ii) The counterparty's Tier 1 capital, or if Tier 1 capital is not 
available, total capital (as defined by the counterparty's principal 
regulator) or some similar comparable measure identified by the Bank.
    (2) Overall limits including sales of overnight federal funds. All 
unsecured extensions of credit by a Bank to a single counterparty that 
arise from the Bank's on- and off-balance sheet and derivative 
transactions, including the amounts of sales of federal funds with a 
maturity of one day or less and sales of federal funds subject to a 
continuing contract, shall not exceed twice the limit calculated 
pursuant to paragraph (a)(1) of this section.
    (3) Limits for certain obligations issued by state, local or tribal 
governmental agencies. The term limit set forth in paragraph (a)(1) of 
this section when applied to the marketable direct obligations of state, 
local or tribal government unit or agencies that are acquired member 
assets identified in Sec. 955.2(a)(3) of this chapter or are otherwise 
excluded from the prohibition against investments in whole mortgages or 
whole loan or interests in such mortgages or loans by 
Sec. 956.3(a)(4)(iii) of this chapter shall be calculated based on the 
Bank's total capital and the credit rating assigned to the particular 
obligation as determined in accordance with paragraph (a)(5) of this 
section. If a Bank owns series or classes of obligations issued by a 
particular state, local or tribal government unit or agency or has 
extended other forms of unsecured credit to such entity falling into 
different rating categories, the total amount of unsecured credit 
extended by the Bank to that government unit or agency shall not exceed 
the term limit associated with the highest-rated obligation issued by 
the entity and actually purchased by the Bank.
    (4) Bank determination of applicable maximum capital exposure 
limits. (i) Except as set forth in paragraph (a)(4)(ii) or (a)(4)(iii) 
of this section, the applicable maximum capital exposure limits

[[Page 141]]

are assigned to each counterparty based upon the long-term credit rating 
of the counterparty, as determined in accordance with paragraph (a)(5) 
of this section, and are provided in the following Table 4 of this part:

 Table 4.--Maximum Limits on Unsecured Extensions of Credit to a Single
      Counterparty by Counterparty Long-Term Credit Rating Category
------------------------------------------------------------------------
                                                              Maximum
                                                              capital
    Long-term credit rating of counterparty category      exposure limit
                                                            (in percent)
------------------------------------------------------------------------
Highest Investment Grade................................              15
Second Highest Investment Grade.........................              14
Third Highest Investment Grade..........................               9
Fourth Highest Investment Grade.........................               3
Below Investment Grade or Other.........................               1
------------------------------------------------------------------------

    (ii) If a counterparty does not have a long-term credit rating but 
has received a short-term credit rating from an NRSRO, the maximum 
capital exposure limit applicable to that counterparty shall be based 
upon the short-term credit rating, as determined in accordance with 
paragraph (a)(5) of this section, as follows:
    (A) The highest short-term investment grade credit rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the third highest long-term investment grade rating;
    (B) The second highest short-term investment grade rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the fourth highest long-term investment grade rating; and
    (C) The third highest short-term investment grade rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the fourth highest long-term investment grade rating.
    (iii) If a specific debt obligation issued by a counterparty 
receives a credit rating from an NRSRO that is lower than the 
counterparty's long-term credit rating, the total amount of the lower-
rated obligation held by the Bank may not exceed a sub-limit calculated 
in accordance with paragraph (a)(1) of this section, except that the 
Bank shall use the credit rating associated with the specific obligation 
to determine the applicable maximum capital exposure limit. For purposes 
of this paragraph, the credit rating of the debt obligation shall be 
determined in accordance with paragraph (a)(5) of this section.
    (5) Bank determination of applicable credit ratings. The following 
criteria shall be applied to determine a counterparty's credit rating:
    (i) The counterparty's most recent credit rating from a given NRSRO 
shall be considered;
    (ii) If only one NRSRO has rated the counterparty, that NRSRO's 
rating shall be used. If a counterparty has received credit ratings from 
more than one NRSRO, the lowest credit rating from among those NRSROs 
shall be used;
    (iii) Where a credit rating has a modifier, the credit rating is 
deemed to be the credit rating without the modifier;
    (iv) If a counterparty is placed on a credit watch for a potential 
downgrade by an NRSRO, the credit rating from that NRSRO at the next 
lower grade shall be used; and
    (v) If a counterparty is not rated by an NRSRO, the Bank shall 
determine the applicable credit rating by using credit rating standards 
available from an NRSRO or other similar standards.
    (b) Unsecured extensions of credit to affiliated counterparties. (1) 
In general. The total amount of unsecured extensions of credit by a Bank 
to a group of affiliated counterparties that arise from the Bank's on- 
and off-balance sheet and derivative transactions, including sales of 
federal funds with a maturity of one day or less and sales of federal 
funds subject to a continuing contract, shall not exceed thirty percent 
of the Bank's total capital.
    (2) Relation to individual limits. The aggregate limits calculated 
under this paragraph shall apply in addition to the limits on extensions 
of unsecured credit to a single counterparty imposed by paragraph (a) of 
this section.
    (c) Special limits for GSEs. (1) In general. Unsecured extensions of 
credit by a Bank to a GSE that arise from the Bank's on- and off-balance 
sheet and derivative transactions, including from the purchase of any 
subordinated debt subject to the sub-limit set forth in paragraph (c)(2) 
of this section, from

[[Page 142]]

any sales of federal funds with a maturity of one day or less and from 
sales of federal funds subject to a continuing contract, shall not 
exceed the lesser of:
    (i) The Bank's total capital; or
    (ii) The GSE's total capital (as defined by the GSE's principal 
regulator) or some similar comparable measure identified by the Bank.
    (2) Sub-limit for subordinated debt. The maximum amount of 
subordinated debt issued by a GSE and held by a Bank shall not exceed 
the term limit calculated under paragraph (a)(1) of this section, except 
that a Bank shall use the credit rating of the GSE's subordinated debt 
to determine the applicable maximum capital exposure limit. The credit 
rating of the subordinated debt shall be determined in accordance with 
paragraph (a)(5) of this section.
    (3) Limits applying to a GSE after a downgrade. If any NRSRO assigns 
a credit rating to any senior debt obligation issued (or to be issued) 
by a GSE that is below the highest investment grade or downgrades, or 
places on a credit watch for a potential downgrade of the credit rating 
on any senior unsecured obligation issued by a GSE to below the highest 
investment grade, the special limits on unsecured extensions of credit 
under paragraph (c)(1) of this section shall cease to apply, and 
instead, the Bank shall calculate the maximum amount of its unsecured 
extensions of credit to that GSE in accordance with paragraphs (a)(1) 
and (a)(2) of this section.
    (4) Extensions of unsecured credit to other Banks. The limits of 
this section do not apply to unsecured credit extended by one Bank to 
another Bank.
    (d) Extensions of unsecured credit after downgrade or placement on 
credit watch. If an NRSRO downgrades the credit rating applicable to any 
counterparty or places any counterparty on a credit watch for a 
potential downgrade, a Bank need not unwind or liquidate any existing 
transaction or position with that counterparty that complied with the 
limits of this section at the time it was entered. In such a case, 
however, a Bank may extend any additional unsecured credit to such a 
counterparty only in compliance with the limitations that are calculated 
using the lower maximum exposure limits. For the purposes of this 
section, the renewal of an existing unsecured extension of credit, 
including any decision not to terminate any sales of federal funds 
subject to a continuing contract, shall be considered an additional 
extension of unsecured credit that can be undertaken only in accordance 
with the lower limit.
    (e) Reporting requirements. (1) Total unsecured extensions of 
credit. Each Bank shall report monthly to the Finance Board the amount 
of the Bank's total unsecured extensions of credit arising from on- and 
off-balance sheet and derivative transactions to any single counterparty 
or group of affiliated counterparties that exceeds 5 percent of:
    (i) The Bank's total capital; or
    (ii) The counterparty's, or affiliated counterparties' combined, 
Tier 1 capital, or if Tier 1 capital is not available, total capital (as 
defined by each counterparty's principal regulator) or some similar 
comparable measure identified by the Bank.
    (2) Total secured and unsecured extensions of credit. Each Bank 
shall report monthly to the Finance Board the amount of the Bank's total 
secured and unsecured extensions of credit arising from on- and off-
balance sheet and derivative transactions to any single counterparty or 
group of affiliated counterparties that exceeds 5 percent of the Bank's 
total assets.
    (3) Extensions of credit in excess of limits. A Bank shall report 
promptly to the Finance Board any extensions of unsecured credit that 
exceeds any limit set forth in paragraphs (a), (b) or (c) of this 
section. In making this report, a Bank shall provide the name of the 
counterparty or group of affiliated counterparties to which the excess 
unsecured credit has been extended, the dollar amount of the applicable 
limit which has been exceeded, the dollar amount by which the Bank's 
extension of unsecured credit exceeds such limit, the dates for which 
the Bank was not in compliance with the limit, and, if applicable, a 
brief explanation of any extenuating circumstances which caused the 
limit to be exceeded.

[[Page 143]]

    (f) Measurement of unsecured extensions of credit. (1) In general. 
For purposes of this section, unsecured extensions of credit will be 
measured as follows:
    (i) For on-balance sheet transactions, an amount equal to the sum of 
the book value of the item plus net payments due the Bank;
    (ii) For off-balance sheet transactions, an amount equal to the 
credit equivalent amount of such item, calculated in accordance with 
Sec. 932.4(f) of this part; and
    (iii) For derivative transactions, an amount equal to the sum of the 
current and potential future credit exposures for the derivative 
contract, where those values are calculated in accordance with 
Secs. 932.4(g) or 932.4(h) of this part, as applicable, less the amount 
of any collateral that is held in accordance with the requirements of 
Sec. 932.4(e)(2)(ii)(B) of this part against the credit exposure from 
the derivative contract.
    (2) Status of debt obligations purchased by the Bank. Any debt 
obligation or debt security (other than mortgage-backed securities or 
acquired member assets that are identified in Secs. 955.2(a)(1) and (2) 
of this chapter) purchased by a Bank shall be considered an unsecured 
extension of credit for the purposes of this section, except:
    (i) Any amount owed the Bank against which the Bank holds collateral 
in accordance with Sec. 932.4(e)(2)(ii)(B) of this part; or
    (ii) Any amount which the Finance Board has determined on a case-by-
case basis shall not be considered an unsecured extension of credit.
    (g) Obligations of the United States. Obligations of, or guaranteed 
by, the United States are not subject to the requirements of this 
section.

[66728, Dec. 27, 2002]



PART 933--BANK CAPITAL STRUCTURE PLANS--Table of Contents




Sec.
933.1  Submission of plan.
933.2  Contents of plan.
933.3  Independent review of capital plan.
933.4  Transition provisions.
933.5  Disclosure to members concerning capital plan and capital stock 
          conversion.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.

    Source: 66 FR 8310, Jan. 30, 2001, unless otherwise noted.



Sec. 933.1  Submission of plan.

    (a) In general. By no later than October 29, 2001, the board of 
directors of each Bank shall submit to the Finance Board a plan to 
establish and implement a new capital structure for that Bank, which 
plan shall comply with part 931 of this chapter and under which, when 
implemented, the Bank shall have sufficient total and permanent capital 
to comply with the regulatory capital requirements established by part 
932 of this chapter. The Finance Board, upon a demonstration of good 
cause submitted by the board of directors of a Bank, may approve a 
reasonable extension of the 270-day period for submission of the capital 
plan. A Bank shall not implement its capital plan, or any amendment to 
the plan, without Finance Board approval.
    (b) Failure to submit a capital plan. If a Bank fails to submit a 
capital plan to the Finance Board by October 29, 2001, including any 
approved extension, the Finance Board may establish a capital plan for 
that Bank, take any enforcement action against the Bank, its directors, 
or its executive officers authorized by section 2B(a) of the Act (12 
U.S.C. 1422b(a)), or merge the Bank pursuant to section 26 of the Act 
(12 U.S.C. 1446) into any other Bank that has submitted a capital plan.
    (c) Consideration of the plan. After receipt of a Bank's capital 
plan, the Finance Board may return the plan to the Bank if it does not 
comply with section 6 of the Act (12 U.S.C. 1426) or any regulatory 
requirement or is otherwise incomplete or materially deficient. If the 
Finance Board accepts a capital plan for review, it may require the Bank 
to submit additional information regarding its plan or to amend the 
plan, prior to determining whether to approve the plan. The Finance 
Board may approve a capital plan as submitted or as amended, or may 
condition its approval on the Bank's compliance with certain stated 
conditions,

[[Page 144]]

and may require that the capital plans of all Banks take effect on the 
same date.



Sec. 933.2  Contents of plan.

    The capital plan for each Bank shall include, at a minimum, 
provisions addressing the following matters:
    (a) Minimum investment. (1) The capital plan shall require each 
member to purchase and maintain a minimum investment in the capital 
stock of the Bank, in accordance with Sec. 931.3, of this chapter and 
shall prescribe the manner in which the minimum investment is to be 
calculated. The plan shall require each member to maintain its minimum 
investment in the Bank's stock for as long as it remains a member and, 
with regard to Bank stock purchased to support an advance or other 
business activity, for as long as the advance or business activity 
remains outstanding.
    (2) The capital plan shall specify the amount and class (or classes) 
of Bank stock that an institution is required to own in order to become 
and remain a member of the Bank, and shall specify the amount and class 
(or classes) of Bank stock that a member is required to own in order to 
obtain advances from, or to engage in other business transactions with, 
the Bank. If a Bank requires its members to satisfy its minimum 
investment through the purchase of one or more combinations of Class A 
and Class B stock, the authorized combinations of stock shall be 
specified in the capital plan, which shall afford the members the option 
of satisfying the minimum investment through the purchase of any such 
combination of stock.
    (3) The capital plan may establish a minimum investment that is 
calculated as a percentage of the total assets of the member, as a 
percentage of the advances outstanding to the member, as a percentage of 
the other business activities conducted with the member, on any other 
basis approved by the Finance Board, or on any combination of the above.
    (4) The minimum investment established by the capital plan shall be 
set at a level that, when applied to all members, provides sufficient 
capital for the Bank to comply with its minimum capital requirements, as 
specified in part 932 of this chapter. The capital plan shall require 
the board of directors of the Bank to monitor and, as necessary, to 
adjust, the minimum investment to ensure that the stock required to be 
purchased and maintained by the members is sufficient to allow the Bank 
to comply with its minimum capital requirements. The plan shall require 
each member to comply promptly with any adjusted minimum investment 
established by the board of directors of the Bank, but may allow a 
member a reasonable time to do so and may allow a member to reduce its 
outstanding business with the Bank as an alternative to purchasing 
additional stock.
    (b) Classes of capital stock. The capital plan shall specify the 
class or classes of stock (including subclasses, if any) that the Bank 
will issue, and shall establish the par value, rights, terms, and 
preferences associated with each class (or subclass) of stock. A Bank 
may establish preferences relating to, but not limited to, the dividend, 
voting, or liquidation rights for each class or subclass of Bank stock. 
Any voting preferences established by the Bank pursuant to Sec. 915.5 of 
this chapter shall expressly state the voting rights of each class of 
stock with regard to the election of Bank directors. The capital plan 
shall provide that the owners of the Class B stock own the retained 
earnings, surplus, undivided profits, and equity reserves of the Bank, 
but shall have no right to receive any portion of those items, except 
through declaration of a dividend or capital distribution approved by 
the board of directors or through the liquidation of the Bank.
    (c) Dividends. The capital plan shall establish the manner in which 
the Bank will pay dividends, if any, on each class or subclass of stock, 
and shall provide that the Bank may not declare or pay any dividends if 
it is not in compliance with any capital requirement or if after paying 
the dividend it would not be in compliance with any capital requirement.
    (d) Initial issuance. The capital plan shall specify the date on 
which the Bank will implement the new capital structure, and shall 
establish the manner in which the Bank will issue Class

[[Page 145]]

A and/or Class B stock to its existing members, as well as to eligible 
institutions that subsequently become members. The capital plan shall 
address how the Bank will retire the stock that is outstanding as of the 
effective date, including stock held by a member that does not 
affirmatively elect to convert or exchange its existing stock to either 
Class A or Class B stock, or some combination thereof.
    (e) Members wishing not to convert existing stock. The capital plan 
shall establish an opt-out date on or before which a member that does 
not wish to convert its existing stock into Class A and/or Class B stock 
must file a written notice to withdraw from membership with the Finance 
Board. This opt-out date shall not be more than six months before the 
effective date of the capital plan. (For purposes of applying this 
provision, the membership of an institution that files its notice to 
withdraw with the Finance Board on or before the opt-out date 
established in a capital plan shall terminate six months from the date 
that the notice of withdrawal was filed with the Finance Board or on the 
effective date of the Bank's capital plan, whichever date is earlier.) 
The capital plan shall further provide that any member that is in the 
process of withdrawing on the effective date of the capital plan but did 
not file its written notice to withdraw from membership with the Finance 
Board on or before this opt-out date, shall have its existing stock 
converted into Class A and/or Class B stock as required by the capital 
plan, and that the effective date of withdrawal for such member shall be 
established in accordance with Secs. 925.26(b) and (c) of this chapter, 
provided, however, that the applicable stock redemption periods 
calculated under Sec. 925.26(c) of this chapter shall commence on date 
the member first submitted its written notice to withdraw to the Finance 
Board.
    (f) Stock transactions. The capital plan shall establish the 
criteria for the issuance, redemption, repurchase, transfer, and 
retirement of stock issued by the Bank. The capital plan also:
    (1) Shall provide that the Bank may not issue stock other than in 
accordance with Sec. 931.2 of this chapter;
    (2) Shall provide that the stock of the Bank may be issued only to 
and held only by the members of that Bank;
    (3) Shall specify whether the stock of the Bank may be transferred 
among members, and, if such transfer is allowed, shall specify the 
procedures that a member should follow to effect such transfer, and that 
the transfer shall be undertaken only in accordance with Sec. 931.6 of 
this chapter;
    (4) Shall specify that the stock of the Bank may be traded only 
between the Bank and its members;
    (5) May provide for a minimum investment for members that purchase 
Class B stock that is lower than the minimum investment for members that 
purchase Class A stock, provided that the level of investment is 
sufficient for the Bank to comply with its regulatory capital 
requirements;
    (6) Shall specify the fee, if any, to be imposed on a member that 
cancels a request to redeem Bank stock; and
    (7) Shall specify the period of notice that the Bank will provide to 
a member before the Bank, on its own initiative, determines to 
repurchase any excess Bank stock from a member.
    (g) Termination of membership. The capital plan shall address the 
manner in which the Bank will provide for the disposition of its capital 
stock that is held by institutions that terminate their membership, and 
the manner in which the Bank will liquidate claims against its members, 
including claims resulting from prepayment of advances prior to their 
stated maturity.
    (h) Implementation. The capital plan shall demonstrate that the Bank 
has made a good faith determination that the Bank will be able to 
implement the plan as submitted and that the Bank will be in compliance 
with its regulatory total capital requirement and its regulatory risk-
based capital requirement after the plan is implemented.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0059 with an expiration date of November 30, 2003)

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]

[[Page 146]]



Sec. 933.3  Independent review of capital plan.

    Prior to submitting its capital plan, each Bank shall conduct a 
review of the plan by an independent certified public accountant to 
ensure, to the extent possible, that the implementation of the plan 
would not result in any write-down of the redeemable stock owned by its 
members, and shall conduct a separate review by at least one NRSRO to 
determine, to the extent possible, whether the implementation of the 
plan would have a material effect on the credit rating of the Bank. The 
Bank shall submit a copy of each report to the Finance Board as part of 
its proposed capital plan.



Sec. 933.4  Transition provisions.

    (a) The capital plan of a Bank may include a transition provision 
that would allow a period of time, not to exceed three years, during 
which the Bank shall increase its total and permanent capital to levels 
that are sufficient to comply with its minimum leverage capital 
requirement and its minimum risk-based capital requirement. The capital 
plan of a Bank may also include a transition provision that would allow 
a period of time, not to exceed three years, during which institutions 
that were members of the Bank on November 12, 1999, shall increase the 
amount of Bank stock to a level that is sufficient to comply with the 
minimum investment established by the capital plan. The length of the 
transition periods need not be identical.
    (b) Any transition provision shall comply with the requirements of 
Sec. 931.9.



Sec. 933.5  Disclosure to members concerning capital plan and capital stock conversion.

    (a) No capital plan shall become effective until disclosure required 
by paragraphs (b) and (c) of this section has been provided to members. 
All disclosure required under this section shall be transmitted, sent or 
given to members not less than 45 days and not more than 60 days prior 
to the opt-out date established in the Bank's capital plan in accordance 
with Sec. 933.2(e).
    (b) The following information shall be provided to members about the 
Class A and/or Class B stock that a Bank intends to issue on the 
effective date of its capital plan:
    (1) With regard to each class or subclass of authorized stock, a 
description of:
    (i) Dividend rights;
    (ii) The terms of conversion;
    (iii) Redemption and repurchase rights;
    (iv) Voting rights and preferences,
    (v) Liquidation rights; and
    (vi) Any liability to further calls or to assessments by the Banks;
    (2) A description of any material differences between the securities 
to be converted into Class A and/or Class B stock and the Class A and/or 
Class B stock with regard to the rights addressed in paragraph (b)(1) of 
this section.
    (3) A statement of the reasons for the conversion to Class A and/or 
Class B stock and of the general effect thereof upon the rights of 
existing members; and
    (4) A description of any other material features concerning the 
Bank's initial issuance of Class A and/or Class B stock.
    (c) In addition to the disclosure about Class A and/or Class B 
stock, the following information shall be provided to members:
    (1) The Bank shall disclose financial information as follows:
    (i) Audited balance sheets as of the end of the two most recent 
fiscal years, audited statements of income and cash flows for each of 
the three fiscal years preceding the date of the most recent audited 
balance sheet being presented, and unaudited interim balance sheets and 
statements of income and cash flows as of and for appropriate interim 
dates that in form and content meet the requirements of Sec. 989.4 of 
this chapter;
    (ii) A pro forma capitalization table that reflects the Bank's 
projected new capital structure relative to its actual capitalization as 
of the date of the latest balance sheet required to be provided to 
members by paragraph (c)(1)(i) of this section. The Bank shall also 
provide a description of any material assumptions underlying the pro 
forma capitalization table and the basis for these assumptions, and 
shall provide

[[Page 147]]

estimates of its risk-based capital requirement, calculated in 
accordance with Sec. 932.3 of this chapter, and of its total capital-to-
asset ratio (both of which shall be based on the same financial data 
used for the capitalization table), along with a discussion of material 
assumptions underlying these estimates and the basis for these 
assumptions; and
    (iii) Any of the financial information required to be disclosed by 
paragraph (c)(1) of this section may be incorporated by reference, 
provided the information being incorporated is contained in an annual or 
quarterly Bank report prepared in accordance with Sec. 989.4 of this 
chapter or an annual or quarterly Bank System report, and the disclosure 
identifies the information being incorporated by reference;
    (2) A narrative discussion of anticipated developments that could 
materially affect the liquidity, capital, earnings or continuing 
operations of the Bank, including those affecting dividends, product 
volumes, investment volumes, new business lines and risk profile.
    (3) A description of any amendments anticipated to be made to the 
Bank's by-laws, policies or other governance documents as a result of 
the implementation of the capital plan;
    (4) To the extent that such information has not been provided under 
paragraph (b) of this section, the Bank shall disclose information 
related to the capital plan as follows:
    (i) A description of the minimum stock investment requirements set 
forth in the capital plan;
    (ii) A statement outlining the requirements for amending the capital 
plan;
    (iii) A description of any restrictions or limitations under a 
Bank's capital plan on a member's rights to buy, or redeem its class A 
or class B stock, to have such stock repurchased, or otherwise to make 
use of such stock to fulfill the member's minimum stock investment 
requirement;
    (iv) A statement setting forth the opt-out date, on or before which 
a member's written notice to withdraw must be filed with the Finance 
Board (as established in accordance with Sec. 933.2(e) of this part) for 
the member not to have its existing Bank stock converted to Class A or 
Class B stock on the effective date of the Bank's capital plan and 
describing the effect on a member's effective date of withdrawal of 
failing to file its notice to withdraw on or before the opt-out date; 
and
    (v) A description of a member's rights under the capital plan to 
have its stock redeemed or repurchased upon voluntary or involuntary 
termination of its membership;
    (5) The Bank should state the name, address and telephone number 
where members may direct written or oral requests for a copy of the 
capital plan and any other instrument or document that defines the 
rights of the member/stockholders. This information shall be provided to 
the members without charge; and
    (6) The Bank shall provide a statement as to the anticipated 
accounting treatment for the transaction and the federal income tax 
implications of the transaction that members should consider in 
consultation with their own accounting and tax advisors.
    (d) Nothing in this section shall create or be deemed to create any 
rights in any third party.

[66 FR 54109, Oct. 26, 2001]

[[Page 148]]



              SUBCHAPTER F--FEDERAL HOME LOAN BANK MISSION





PART 940--CORE MISSION ACTIVITIES--Table of Contents




Sec.
940.1  Definitions.
940.2  Mission of the Banks.
940.3  Core mission activities.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1430, 1430b, 1431.

    Source: 65 FR 25278, May 1, 2000, unless otherwise noted.



Sec. 940.1  Definitions.

    As used in this part:
    Targeted income level has the meaning set forth in paragraphs (1) 
and (2) of the definition of ``targeted income level'' in Sec. 952.1 of 
this chapter.

[67 FR 12850, Mar. 20, 2002]



Sec. 940.2  Mission of the Banks.

    The mission of the Banks is to provide to their members' and housing 
associates financial products and services, including but not limited to 
advances, that assist and enhance such members' and housing associates 
financing:
    (a) Financing of housing, including single-family and multi-family 
housing serving consumers at all income levels; and
    (b) Community lending.

[65 FR 25278, May 1, 2000, as amended at 67 FR 12850, Mar. 20, 2002; 67 
FR 39791, June 10, 2002]



Sec. 940.3  Core mission activities.

    The following Bank activities qualify as core mission activities:
    (a) Advances;
    (b) Acquired member assets (AMA), except that United States 
government-insured or guaranteed whole single-family residential 
mortgage loans acquired under a commitment entered into after April 12, 
2000 shall qualify only in a cumulative dollar amount up to 33 percent 
of: The cumulative total dollar amount of AMA acquired by a Bank after 
April 12, 2000, less the cumulative dollar amount of United States 
government-insured or guaranteed whole single-family residential 
mortgage loans acquired after April 12, 2000 under commitments entered 
into on or before April 12, 2000 (which calculation, at the discretion 
of two or more Banks, may be made based on aggregate transactions among 
those Banks);
    (c) Standby letters of credit;
    (d) Intermediary derivative contracts;
    (e) Debt or equity investments:
    (1) That primarily benefit households having a targeted income 
level, a significant proportion of which must benefit households with 
incomes at or below 80 percent of area median income, or areas targeted 
for redevelopment by local, state, tribal or Federal government 
(including Federal Empowerment Zones and Enterprise and Champion 
Communities), by providing or supporting one or more of the following 
activities:
    (i) Housing;
    (ii) Economic development;
    (iii) Community services;
    (iv) Permanent jobs; or
    (v) Area revitalization or stabilization;
    (2) In the case of mortgage- or asset-backed securities, the 
acquisition of which would expand liquidity for loans that are not 
otherwise adequately provided by the private sector and do not have a 
readily available or well established secondary market; and
    (3) That involve one or more members or housing associates in a 
manner, financial or otherwise, and to a degree to be determined by the 
Bank;
    (f) Investments in SBICs, where one or more members or housing 
associates of the Bank also make a material investment in the same 
activity;
    (g) SBIC debentures, the short term tranche of SBIC securities, ore 
other debentures that are guaranteed by the Small Business 
Administration under title III of the Small Business Investment Act of 
1958, as amended (15 U.S.C. 681 et seq.);
    (h) Section 108 Interim Notes and Participation Certificates 
guaranteed by the Department of Housing and Urban Development under 
section 108

[[Page 149]]

of the Housing and Community Development Act of 1974, as amended (42 
U.S.C. 5308); and
    (i) Investments and obligations issued or guaranteed under the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.).

[65 FR 43981, July 17, 2000]



PART 944--COMMUNITY SUPPORT REQUIREMENTS--Table of Contents




Sec.
944.1  Definitions.
944.2  Community support requirement.
944.3  Community support standards.
944.4  Decision on community support statements.
944.5  Restrictions on access to long-term advances.
944.6  Bank community support programs.
944.7  Reports.

    Authority: 12 U.S.C. 1422a(a)(3)(B), 1422b(a)(1), 1430(g).

    Source: 62 FR 28988, May 29, 1997, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 944.1  Definitions.

    For purposes of this part:
    Advisory Council means the Advisory Council each Bank is required to 
establish pursuant to section 10(j)(11) of the Act (12 U.S.C. 
1430(j)(11)) and part 951 of this chapter.
    CRA means the Community Reinvestment Act of 1977, as amended (12 
U.S.C. 2901, et seq.).
    CRA evaluation means the public disclosure portion of the CRA 
performance evaluation provided by a member's appropriate Federal 
banking agency.
    Displaced homemaker means an adult who has not worked full-time, 
full-year in the labor force for a number of years and, during that 
period, worked primarily without remuneration to care for a home and 
family, and currently is unemployed or underemployed and is experiencing 
difficulty in obtaining or upgrading employment.
    First-time homebuyer means:
    (1) An individual and his or her spouse, if any, who has had no 
present ownership interest in a principal residence during the three-
year period prior to purchase of a principal residence.
    (2) A displaced homemaker who, except for owning a residence with 
his or her spouse or residing in a residence owned by his or her spouse, 
meets the requirements of paragraph (1) of this definition.
    (3) A single parent who, except for owning a residence with his or 
her spouse or residing in a residence owned by his or her spouse, meets 
the requirements of paragraph (1) of this definition.
    Long-term advance means an advance with a term to maturity greater 
than one year.
    Restriction on access to long-term advances means a member may not 
borrow long-term advances or renew any maturing advance for a term to 
maturity greater than one year.
    Single parent means an individual who is unmarried or legally 
separated from a spouse and has custody or joint custody of one or more 
minor children or is pregnant.
    Targeted community lending has the meaning set forth in Sec. 952.1 
of this chapter.

[67 FR 12850, Mar. 20, 2002]



Sec. 944.2  Community support requirement.

    (a) Selection for community support review. The Finance Board shall 
select a member for community support review approximately once every 
two years.
    (b) Notice--(1) By the Finance Board. The Finance Board concurrently 
shall:
    (i) Notify each Bank of the members within its district that are 
required to submit community support statements during the calendar 
quarter; and
    (ii) Publish a notice in the Federal Register that includes the name 
and address of each member required to submit a community support 
statement during the calendar quarter, and the deadline for submission 
of the community support statement to the Finance Board. The deadline 
for submission of a community support statement shall be no earlier than 
45 calendar days after the date of publication of the notice in the 
Federal Register.
    (2) By the Banks. Within 15 calendar days of the date of publication 
in the

[[Page 150]]

Federal Register of the notice required by paragraph (b)(1)(ii) of this 
section, a Bank shall provide written notice to:
    (i) Each member within its district that is named in the Federal 
Register notice, that the member is required to submit a community 
support statement to the Finance Board by the deadline stated in the 
Federal Register notice; and
    (ii) Its Advisory Council and nonprofit housing developers, 
community groups, and other interested parties in its district of the 
name and address of each member within its district that is required to 
submit a community support statement during the calendar quarter.
    (c) Required documents. Each member selected for community support 
review shall submit a completed Community Support Statement Form 
executed by an appropriate senior officer to the Finance Board and any 
other information the Finance Board may require to determine whether a 
member meets the community support standards.
    (d) Public comments. In reviewing a member for compliance with the 
community support requirement, the Finance Board shall take into 
consideration any public comments it has received concerning the member.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0003 with an expiration date of January 31, 2003.)

[62 FR 28988, May 29, 1997, as amended at 65 FR 5739, Feb. 7, 2000; 67 
FR 12850, Mar. 20, 2002]



Sec. 944.3  Community support standards.

    (a) In general. In reviewing a community support statement, the 
Finance Board shall take into account a member's performance under the 
CRA if the member is subject to the requirements of the CRA, and the 
member's record of lending to first-time homebuyers.
    (b) CRA standard--(1) Adequate performance. A member that is subject 
to the requirements of the CRA shall be deemed to meet the CRA standard 
if the rating in the member's most recent CRA evaluation is 
``outstanding'' or ``satisfactory.''
    (2) Probationary performance. A member that is subject to the 
requirements of the CRA shall be subject to a probationary period if the 
rating in the member's most recent CRA evaluation is ``needs to 
improve.'' The probationary period shall extend until the member's 
appropriate Federal banking agency completes its next CRA evaluation and 
issues a rating. The member will be eligible to receive long-term 
advances during the probationary period. If the member does not meet the 
CRA standard at the end of the probationary period, the Finance Board 
shall restrict the member's access to long-term advances in accordance 
with Sec. 944.5.
    (3) Inadequate performance. A member's access to long-term advances 
shall be restricted in accordance with Sec. 944.5 if the rating in the 
member's most recent CRA evaluation is ``substantial noncompliance.''
    (c) First-time homebuyer standard--(1) Adequate performance. In the 
absence of public comments or other information to the contrary, a 
member shall be presumed to meet the first-time homebuyer standard if 
the member is subject to the requirements of the CRA and the rating in 
the member's most recent CRA evaluation is ``outstanding.'' In 
determining whether other members meet the first-time homebuyer 
standard, the Finance Board shall consider a member's description of its 
efforts to assist first-time or potential first-time homebuyers or its 
explanation of factors that affect its ability to assist first-time or 
potential first-time homebuyers. A member shall be deemed to meet the 
first-time homebuyer standard if the member otherwise demonstrates to 
the satisfaction of the Finance Board that it:
    (i) Has an established record of lending to first-time homebuyers;
    (ii) Has a program whereby it actively seeks to lend or support 
lending to first-time homebuyers, including, but not limited to, the 
following:
    (A) Providing special credit products with flexible underwriting 
standards for first-time homebuyers;

[[Page 151]]

    (B) Participating in federal, state, or local government, or 
nationwide homeownership lending programs that benefit, serve, or are 
targeted to, first-time homebuyers; or
    (C) Participating in loan consortia for first-time homebuyer loans 
or loans that serve predominantly low- or moderate-income borrowers;
    (iii) Has a program whereby it actively seeks to assist or support 
organizations that assist potential first-time homebuyers to qualify for 
mortgage loans, including, but not limited to, the following:
    (A) Providing, participating in, or supporting special counseling 
programs or other homeownership education activities that benefit, 
serve, or are targeted to, first-time homebuyers;
    (B) Providing or participating in marketing plans and related 
outreach programs targeted to first-time homebuyers;
    (C) Providing technical assistance of financial support to 
organizations that assist first-time homebuyers;
    (D) Participating with or financially supporting community or 
nonprofit groups that assist first-time homebuyers;
    (E) Holding investments or making loans that support first-time 
homebuyer programs;
    (F) Holding mortgage-backed securities that may include a pool of 
loans to low- and moderate-income homebuyers;
    (G) Participating or investing in service organizations that assist 
credit unions in providing mortgages; or
    (H) Participating in Bank targeted community lending programs; or
    (iv) Has any combination of the elements described in paragraphs 
(c)(1)(i), (ii), or (iii) of this section.
    (2) Probationary performance. If the evidence of first-time 
homebuyer performance is deemed to be unsatisfactory by the Finance 
Board, the member shall be subject to a one-year probationary period. 
The member will be eligible to receive long-term advances during the 
probationary period. If the member does not demonstrate compliance with 
the first-time homebuyer standard before the probationary period ends, 
the Finance Board shall restrict the member's access to long-term 
advances in accordance with Sec. 944.5.
    (3) Inadequate performance. A member's access to long-term advances 
shall be restricted in accordance with Sec. 944.5 if the member provides 
no evidence of first-time homebuyer performance.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0003 with an expiration date of January 31, 2003.)

[62 FR 28988, May 29, 1997, as amended at 65 FR 5739, Feb. 7, 2000; 65 
FR 8262, Feb. 18, 2000; 65 FR 44428, July 18, 2000; 67 FR 12850, Mar. 
20, 2002]



Sec. 944.4  Decision on community support statements.

    (a) Action on community support statements. The Finance Board shall 
act on each community support statement in accordance with the 
requirements of Sec. 944.3 within 75 calendar days of the date the 
Finance Board deems the community support statement to be complete. The 
Finance Board shall deem a community support statement complete when it 
has obtained all of the information required by this part and any other 
information it deems necessary to process the community support 
statement. If the Finance Board determines during the review process 
that additional information is necessary to process the community 
support statement, the Finance Board may deem the community support 
statement incomplete and stop the 75-day time period by providing 
written notice to the member. When the Finance Board receives the 
additional information, it shall again deem the community support 
statement complete and resume the 75-day time period where it stopped. 
The Finance Board shall have 10 calendar days in addition to the 75-day 
time period to act on a community support statement if the Finance Board 
receives the additional information on or after the seventieth day of 
the 75-day time period.
    (b) Decision on community support statements. The Finance Board 
shall provide written notice to the member and the member's Bank of its 
determination regarding the community support statement submitted by the

[[Page 152]]

member. The notice shall identify the reasons for the Finance Board's 
determination.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0003 with an expiration date of January 31, 2003.)

[62 FR 28988, May 29, 1997, as amended at 65 FR 5739, Feb. 7, 2000; 65 
FR 8262, Feb. 18, 2000]



Sec. 944.5  Restrictions on access to long-term advances.

    (a) Requirement. The Finance Board shall restrict a member's access 
to long-term advances if the member:
    (1) Failed to comply with the requirements of this part;
    (2) Submitted a community support statement that was not approved by 
the Finance Board;
    (3) Did not receive a rating in a CRA evaluation of ``outstanding'' 
or ``satisfactory'' at the end of the probationary period described in 
Sec. 944.3(b)(2); or
    (4) Failed to provide evidence satisfactory to the Finance Board of 
its first-time homebuyer performance before the end of the probationary 
period described in Sec. 944.3(c)(2).
    (b) Notice. The Finance Board shall provide written notice to a 
member and the member's Bank of its determination to restrict the 
member's access to long-term advances: the member by certified mail, 
return receipt requested, and the member's Bank by facsimile and by 
regular mail.
    (c) Effective date. Restrictions on access to long-term advances 
shall take effect 30 days after the date the notices required under 
paragraph (b) of this section are mailed unless the member complies with 
the requirements of this part before the end of the 30-day period.
    (d) Removing restrictions. (1) The Finance Board may remove 
restrictions on a member's access to long-term advances imposed under 
this section:
    (i) If the Finance Board determines that application of the 
restriction may adversely affect the safety and soundness of the member. 
A member may submit a written request to the Finance Board to remove a 
restriction on access to long-term advances under this paragraph 
(d)(1)(i). Such written request shall contain a clear and concise 
statement of the basis for the request, and a statement that application 
of the restriction may adversely affect the safety and soundness of the 
member from the member's appropriate Federal banking agency, or the 
member's appropriate state regulator for a member that is not subject to 
regulation or supervision by a federal regulator. The Finance Board 
shall consider each written request within 30 calendar days of receipt.
    (ii) If the Finance Board determines that the member subsequently 
has complied with the requirements of this part. A member may submit a 
written request to the Finance Board to remove a restriction on access 
to long-term advances under this paragraph (d)(1)(ii). Such written 
request shall state with specificity how the member has complied with 
the requirements of this part. The Finance Board shall consider each 
written request within 30 calendar days of receipt.
    (2) The Finance Board shall place a member on probation in 
accordance with Sec. 944.3(b)(2), if:
    (i) The member's access to long-term advances was restricted on the 
basis of the member's inadequate performance under the CRA standard, as 
described in Sec. 944.3(b)(3);
    (ii) The rating in the member's subsequent CRA evaluation is ``needs 
to improve;'' and
    (iii) The member did not receive either a ``substantial 
noncompliance'' CRA rating or a ``needs to improve'' CRA rating 
immediately preceding the CRA rating on which the member's inadequate 
performance under the CRA standard was based.
    (3) The Finance Board shall provide written notice to the member and 
the member's Bank of its determination under this paragraph (d): the 
member by certified mail, return receipt requested, and the member's 
Bank by facsimile and by regular mail. The Finance Board's determination 
shall take effect on the date the notices are mailed.
    (e) CICA. A member that is subject to a restriction on access to 
long-term advances under this part shall not be eligible to participate 
in a CICA program offered under parts 951 and 952 of this

[[Page 153]]

chapter. The restriction in this paragraph (e) shall not apply to CICA 
applications or funding approved before the date the restriction is 
imposed.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0003 with an expiration date of January 31, 2003.)

[62 FR 28988, May 29, 1997, as amended at 62 FR 46872, Sept. 5, 1997; 63 
FR 65545, Nov. 27, 1998; 65 FR 5739, Feb. 7, 2000; 65 FR 8262, Feb. 18, 
2000; 67 FR 12850, Mar. 20, 2002]



Sec. 944.6  Bank community support programs.

    (a) Requirement. Consistent with the safe and sound operation of the 
Bank, each Bank shall establish and maintain a community support 
program. A Bank's community support program shall:
    (1) Provide technical assistance to members;
    (2) Promote and expand affordable housing finance;
    (3) Identify opportunities for members to expand financial and 
credit services in underserved neighborhoods and communities;
    (4) Encourage members to increase their targeted community lending 
and affordable housing finance activities by providing incentives such 
as awards or technical assistance to nonprofit housing developers or 
community groups with outstanding records of participation in targeted 
community lending or affordable housing finance partnerships with 
members; and
    (5) Include an annual Targeted Community Lending Plan, approved by 
the Bank's board of directors and subject to modification, which shall 
require the Bank to:
    (i) Conduct market research in the Bank's district;
    (ii) Describe how the Bank will address identified credit needs and 
market opportunities in the Bank's district for targeted community 
lending;
    (iii) Consult with its Advisory Council and with members, housing 
associates, and public and private economic development organizations in 
the Bank's district in developing and implementing its Targeted 
Community Lending Plan; and
    (iv) Establish quantitative targeted community lending performance 
goals.
    (b) Notice. A Bank shall provide annually to each of its members a 
written notice:
    (1) Identifying CICA programs and other Bank activities that may 
provide opportunities for a member to meet the community support 
requirements and to engage in targeted community lending; and
    (2) Summarizing targeted community lending and affordable housing 
activities undertaken by members, housing associates, nonprofit housing 
developers, community groups, or other entities in the Bank's district, 
that may provide opportunities for a member to meet the community 
support requirements and to engage in targeted community lending.

[62 FR 28988, May 29, 1997, as amended at 63 FR 65545, Nov. 27, 1998; 65 
FR 44428, July 18, 2000; 67 FR 12850, Mar. 20, 2002]



Sec. 944.7  Reports.

    Each Advisory Council annual report required to be submitted to the 
Finance Board pursuant to section 10(j)(11) of the Act (12 U.S.C. 
1430(j)(11)) shall include an analysis of the Bank's targeted community 
lending and affordable housing activities.

[63 FR 65545, Nov. 27, 1998, as amended at 65 FR 44428, July 18, 2000; 
67 FR 12850, Mar. 20, 2002]

[[Page 154]]



 SUBCHAPTER G--FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS





PART 950--ADVANCES--Table of Contents




                     Subpart A--Advances to Members

Sec.
950.1  Definitions.
950.2  Authorization and application for advances; obligation to repay 
          advances.
950.3  Purpose of long-term advances; Proxy text.
950.4  Limitations on access to advances.
950.5  Terms and conditions for advances.
950.6  Fees.
950.7  Collateral.
950.8  Banks as secured creditors.
950.9  Pledged collateral; verification.
950.10  Collateral valuation; appraisals.
950.11  Capital stock requirements; unilateral redemption of excess 
          stock.
950.12  Intradistrict transfer of advances.
950.13  Special advances to savings associations.
950.14  Advances to the Savings Association Insurance Fund.
950.15  Liquidation of advances upon termination of membership.

                Subpart B--Advances to Housing Associates

950.16  Scope.
950.17  Advances to housing associates.



  Subpart C--Advances to Out-of-District Members and Housing Associates

950.25  Advances to out-of-district members and housing associates.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1426, 1429, 1430, 
1430b, 1431.

    Source: 58 FR 29469, May 20, 1993, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



                     Subpart A--Advances to Members



Sec. 950.1  Definitions.

    As used in this part:
    Affiliate means any business entity that controls, is controlled by, 
or is under common control with, a member.
    Capital deficient member means a member that fails to meet its 
minimum regulatory capital requirements as defined or otherwise required 
by the member's appropriate federal banking agency, insurer or, in the 
case of members that are not federally insured depository institutions, 
state regulator.
    Cash equivalents means investments that--
    (1) Are readily convertible into known amounts of cash;
    (2) Have a remaining maturity of 90 days or less at the acquisition 
date; and
    (3) Are held for liquidity purposes.
    CFI member means a member that is a Community Financial Institution, 
as defined in Sec. 925.1 of this chapter, except that, for purposes of 
this part, the member's average of total assets over three years shall 
be calculated by the Bank:
    (1) Based on the average of total assets drawn from the 
institution's regulatory financial reports (as defined in Sec. 925.1 of 
this chapter) filed with its appropriate regulator (as defined in 
Sec. 925.1 of this chapter) for the three most recent calendar year-
ends; and
    (2) Annually, and shall be effective April 1 of each year.
    Credit union means a credit union as defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752).
    Depository institution means a bank, savings association, or credit 
union.
    Dwelling unit means a single room or a unified combination of rooms 
designed for residential use by one household.
    Improved residential real property means residential real property 
excluding real property to be improved, or in the process of being 
improved, by the construction of dwelling units.
    Insurer means the FDIC for insured depository institutions, as 
defined section 3(c)(2) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(c)(2)), and the NCUA for federally-insured credit unions.
    Long-term advance means an advance with an original term to maturity 
greater than five years.
    Manufactured housing means a manufactured home as defined in section

[[Page 155]]

603(6) of the Manufactured Home Construction and Safety Standards Act of 
1974, as amended (42 U.S.C. 5402(6)).
    Mortgage-backed security means:
    (1) An equity security representing an ownership interest in:
    (i) Fully disbursed, whole first mortgage loans on improved 
residential real property; or
    (ii) Mortgage pass-through or participation securities which are 
themselves backed entirely by fully disbursed, whole first mortgage 
loans on improved residential real property; or
    (2) An obligation, bond, or other debt security backed entirely by 
the assets described in paragraph (1)(i) or (ii) of this definition.
    Multifamily property means:
    (1)(i) Real property that is solely residential and which includes 
five or more dwelling units; or
    (ii) Real property which includes five or more dwelling units with 
commercial units combined, provided the property is primarily 
residential.
    (2) Multifamily property as defined in this section includes nursing 
homes, dormitories and homes for the elderly.
    Nonresidential real property means real property not used for 
residential purposes, including business or industrial property, hotels, 
motels, churches, hospitals, educational and charitable institutions, 
clubs, lodges, association buildings, golf courses, recreational 
facilities, farm property not containing a dwelling unit, or similar 
types of property, except as otherwise determined by the Finance Board 
in its discretion.
    One-to-four family property means any of the following:
    (1) Real property containing:
    (i) One-to-four dwelling units; or
    (ii) More than four dwelling units if each unit is separated from 
the other units by dividing walls that extend from ground to roof, 
including row houses, townhouses or similar types of property;
    (2) Manufactured housing if:
    (i) Applicable state law defines the purchase or holding of 
manufactured housing as the purchase or holding of real property; and
    (ii) The loan to purchase the manufactured housing is secured by 
that manufactured housing;
    (3) Individual condominium dwelling units or interests in individual 
cooperative housing dwelling units that are part of a condominium or 
cooperative building without regard to the number of total dwelling 
units therein; or
    (4) Real property containing one-to-four dwelling units with 
commercial units combined, provided the property is primarily 
residential.
    Residential housing finance assets means any of the following:
    (1) Loans secured by residential real property;
    (2) Mortgage-backed securities;
    (3) Participations in loans secured by residential real property;
    (4) Loans or investments qualifying under the definition of 
``community lending'' in Sec. 900.1 of this chapter;
    (5) Loans secured by manufactured housing, regardless of whether 
such housing qualifies as residential real property; or
    (6) Any loans or investments which the Finance Board, in its 
discretion, otherwise determines to be residential housing finance 
assets.
    Residential real property means:
    (1) Any of the following:
    (i) One-to-four family property;
    (ii) Multifamily property;
    (iii) Real property to be improved by the construction of dwelling 
units;
    (iv) Real property in the process of being improved by the 
construction of dwelling units;
    (2) The term residential real property does not include 
nonresidential real property as defined in this section.
    Savings association means a savings association as defined in 
section 3(b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. 
1813(b)).
    Small agri-business loans means loans to finance agricultural 
production and other loans to farmers that are within the legal lending 
limit of the reporting CFI member, and that are reported on either: 
Schedule RC-C, Part I, item 3 of the Report of Condition and Income 
filed by insured commercial banks and FDIC-supervised savings banks; or 
Schedule SC300, SC303 or SC306 of the Thrift Financial Report filed by 
savings associations (or equivalent successor schedules).

[[Page 156]]

    Small business loans means commercial and industrial loans that are 
within the legal lending limit of the reporting CFI member and that are 
reported on either: Schedule RC-C, Part I, item 1.e or Schedule RC-C, 
Part I, item 4 of the Report of Condition and Income filed by insured 
commercial banks and FDIC-supervised savings banks; or Schedule SC300, 
SC303 or SC306 of the Thrift Financial Report filed by savings 
associations (or equivalent successor schedules).
    Small farm loans means loans secured primarily by farmland that are 
within the legal lending limit of the reporting CFI member, and that are 
reported on either: Schedule RC-C, Part I, item 1.a. or 1.b. of the 
Report of Condition and Income filed by insured commercial banks and 
FDIC-supervised savings banks; or Schedule SC260 of the Thrift Financial 
Report filed by savings associations (or equivalent successor 
schedules).
    State housing finance agency or SHFA has the meaning set forth in 
Sec. 926.1 of this chapter.
    State regulator means a state insurance commissioner or state 
regulatory entity with primary responsibility for supervising a member 
borrower that is not a federally insured depository institution.
    Tangible capital means:
    (1) Capital, calculated according to GAAP, less ``intangible 
assets'' except for purchased mortgage servicing rights to the extent 
such assets are included in a member's core or Tier 1 capital, as 
reported in the member's Thrift Financial Report for members whose 
primary federal regulator is the OTS, or as reported in the Report of 
Condition and Income for members whose primary federal regulator is the 
FDIC, the OCC, or the FRB.
    (2) Capital calculated according to GAAP, less intangible assets, as 
defined by a Bank for members that are not regulated by the OTS, the 
FDIC, the OCC, or the FRB; provided that a Bank shall include a member's 
purchased mortgage servicing rights to the extent such assets are 
included for the purpose of meeting regulatory capital requirements.

[58 FR 29469, May 20, 1993, as amended at 58 FR 29477, May 20, 1993; 59 
FR 2949, Jan. 20, 1994; 62 FR 8871, Feb. 27, 1997; 62 FR 12079, Mar. 14, 
1997; 63 FR 35128, June 29, 1998; 63 FR 65545, Nov. 27, 1998; 64 FR 
16621, Apr. 6, 1999; 65 FR 8262, Feb. 18, 2000; 65 FR 44428, July 18, 
2000; 66 FR 50295, Oct. 3, 2001; 67 FR 12850, Mar. 20, 2002]



Sec. 950.2  Authorization and application for advances; obligation to repay advances.

    (a) Application for advances. A Bank may accept oral or written 
applications for advances from its members.
    (b) Obligation to repay advances. (1) A Bank shall require any 
member to which an advance is made to enter into a primary and 
unconditional obligation to repay such advance and all other 
indebtedness to the Bank, together with interest and any unpaid costs 
and expenses in connection therewith, according to the terms under which 
such advance was made or other indebtedness incurred.
    (2) Such obligations shall be evidenced by a written advances 
agreement that shall be reviewed by the Bank's legal counsel to ensure 
such agreement is in compliance with applicable law.
    (c) Secured advances. (1) Each Bank shall make only fully secured 
advances to its members as set forth in the Act, the provisions of this 
part and policy guidelines established by the Finance Board.
    (2) The Bank shall execute a written security agreement with each 
borrowing member which establishes the Bank's security interest in 
collateral securing advances.
    (3) Such written security agreement shall, at a minimum, describe 
the type of collateral securing the advances and give the Bank a 
perfectible security interest in the collateral.
    (d) Form of applications and agreements. Applications for advances, 
advances agreements and security agreements shall be in substantially 
such form as approved by the Bank's board of directors, or a committee 
thereof

[[Page 157]]

specifically authorized by the board of directors to approve such forms.

[58 FR 29469, May 20, 1993, as amended at 64 FR 71278, Dec. 21, 1999; 65 
FR 8262, Feb. 18, 2000. Redesignated at 65 FR 44429, July 18, 2000; 67 
FR 12851, Mar. 20, 2002]



Sec. 950.3  Purpose of long-term advances; Proxy test.

    (a) A Bank shall make long-term advances only for the purpose of 
enabling any member to purchase or fund new or existing residential 
housing finance assets, which include, for CFI members, small business 
loans, small farm loans and small agri-business loans.
    (b)(1) Prior to approving an application for a long-term advance, a 
Bank shall determine that the principal amount of all long-term advances 
currently held by the member does not exceed the total book value of 
residential housing finance assets held by such member. The Bank shall 
determine the total book value of such residential housing finance 
assets, using the most recent Thrift Financial Report, Report of 
Condition and Income, financial statement or other reliable 
documentation made available by the member.
    (2) Applications for CICA advances are exempt from the requirements 
of paragraph (b)(1) of this section.

[58 FR 29469, May 20, 1993, as amended at 63 FR 65545, Nov. 27, 1998. 
Redesignated and amended at 65 FR 44429, July 18, 2000]



Sec. 950.4  Limitations on access to advances.

    (a) Credit underwriting. A Bank, in its discretion, may:
    (1) Limit or deny a member's application for an advance if, in the 
Bank's judgment, such member:
    (i) Is engaging or has engaged in any unsafe or unsound banking 
practices;
    (ii) Has inadequate capital;
    (iii) Is sustaining operating losses;
    (iv) Has financial or managerial deficiencies, as determined by the 
Bank, that bear upon the member's creditworthiness; or
    (v) Has any other deficiencies, as determined by the Bank; or
    (2) Make advances and renewals only if the Bank determines that it 
may safely make such advance or renewal to the member, including 
advances and renewals made pursuant to this section.
    (b) New advances to members without positive tangible capital. (1) A 
Bank shall not make a new advance to a member without positive tangible 
capital unless the member's appropriate federal banking agency or 
insurer requests in writing that the Bank make such advance. The Bank 
shall promptly provide the Finance Board with a copy of any such 
request.
    (2) A Bank shall use the most recently available Thrift Financial 
Report, Report of Condition, and Income or other regulatory report of 
financial condition to determine whether a member has positive tangible 
capital.
    (c) Renewals of advances to members without positive tangible 
capital--(1) Renewal for 30-day terms. A Bank may renew outstanding 
advances, for successive terms of up to 30 days each, to a member 
without positive tangible capital; provided, however, that a Bank shall 
honor any written request of the appropriate federal banking agency or 
insurer that the Bank not renew such advances.
    (2) Renewal for longer than 30-day terms. A Bank may renew 
outstanding advances to a member without positive tangible capital for a 
term greater than 30 days at the written request of the appropriate 
federal banking agency or insurer.
    (d) Advances to capital deficient but solvent members. (1) Except as 
provided in paragraph (d)(2)(i) of this section, a Bank may make a new 
advance or renew an outstanding advance to a capital deficient member 
that has positive tangible capital.
    (2)(i) A Bank shall not lend to a capital deficient member that has 
positive tangible capital if it receives written notice from the 
appropriate federal banking agency or insurer that the member's use of 
Bank advances has been prohibited. The Bank shall promptly provide the 
Finance Board with a copy of any such notice.
    (ii) A Bank may resume lending to such a capital deficient member if 
the Bank receives a written statement from the appropriate federal 
banking agency or insurer which re-establishes the member's ability to 
use advances.

[[Page 158]]

    (e) Reporting. (1) Each Bank shall provide the Finance Board with a 
quarterly report of the advances and commitments outstanding to each of 
its members.
    (2) Such quarterly report shall be in a format or on a form 
prescribed by the Finance Board.
    (3) Each Bank shall, upon written request from a member's 
appropriate federal banking agency or insurer, provide to such entity 
information on advances and commitments outstanding to the member.
    (f) Members without federal regulators. In the case of members that 
are not federally insured depository institutions, the references in 
paragraphs (b), (c), (d) and (e) of this section to ``appropriate 
federal banking agency or insurer'' shall mean the member's state 
regulator acting in a capacity similar to an appropriate federal banking 
agency or insurer.
    (g) Advance commitments. (1) In the event that a member's access to 
advances from a Bank is restricted pursuant to this section, the Bank 
shall not fund outstanding commitments for advances not exercised prior 
to the imposition of the restriction. This requirement shall apply to 
all advance commitments made by a Bank after August 25, 1993.
    (2) Each Bank shall include the stipulation contained in paragraph 
(g)(1) of this section as a clause in either:
    (i) The written advances agreement required by Sec. 950.2(b)(2) of 
this part; or
    (ii) The written advances application required by Sec. 950.2(a) of 
this part.

[58 FR 29469, May 20, 1993, as amended at 59 FR 2949, Jan. 20, 1994; 64 
FR 71278, Dec. 21, 1999; 65 FR 8263, Feb. 18, 2000. Redesignated at 65 
FR 44429, July 18, 2000, as amended at 67 FR 12851, Mar. 20, 2002]



Sec. 950.5  Terms and conditions for advances.

    (a) Advance maturities. Each Bank shall offer advances with 
maturities of up to ten years, and may offer advances with longer 
maturities consistent with the safe and sound operation of the Bank.
    (b) Advance pricing--(1) General. A Bank shall not price its 
advances to members below:
    (i) The marginal cost to the Bank of raising matching term and 
maturity funds in the marketplace, including embedded options; and
    (ii) The administrative and operating costs associated with making 
such advances to members.
    (2) Differential pricing. (i) Each Bank may, in pricing its 
advances, distinguish among members based upon its assessment of:
    (A) The credit and other risks to the Bank of lending to any 
particular member; or
    (B) Other reasonable criteria that may be applied equally to all 
members.
    (ii) Each Bank shall include in its member products policy required 
by Sec. 917.4 of this chapter, standards and criteria for such 
differential pricing and shall apply such standards and criteria 
consistently and without discrimination to all members applying for 
advances.
    (3) Exceptions. The advance pricing policies contained in paragraph 
(b)(1) of this section shall not apply in the case of:
    (i) A Bank's CICA programs; and
    (ii) Any other advances programs that are volume limited and 
specifically approved by the Bank's board of directors.
    (c) Authorization for pricing advances. (1) A Bank's board of 
directors, a committee thereof, or the Bank's president, if so 
authorized by the Bank's board of directors, shall set the rates of 
interest on advances consistent with paragraph (b) of this section.
    (2) A Bank president authorized to set interest rates on advances 
pursuant to this paragraph (c) may delegate any part of such authority 
to any officer or employee of the Bank.
    (d) Putable or convertible advances--(1) Disclosure. A Bank that 
offers a putable or convertible advance to a member shall disclose in 
writing to such member the type and nature of the risks associated with 
putable or convertible advance funding. The disclosure should include 
detail sufficient to describe such risks.
    (2) Replacement funding for putable advances. If a Bank terminates a 
putable advance prior to the stated maturity date of such advance, the 
Bank shall offer to provide replacement funding to

[[Page 159]]

the member, provided the member is able to satisfy the normal credit and 
collateral requirements of the Bank for the replacement funding 
requested.
    (3) Definition. For purposes of this paragraph (d), the term putable 
advance means an advance that a Bank may, at its discretion, terminate 
and require the member to repay prior to the stated maturity date of the 
advance.

[58 FR 29469, May 20, 1993, as amended at 61 FR 52687, Oct. 8, 1996; 65 
FR 8263, Feb. 18, 2000. Redesignated and amended at 65 FR 44429, July 
18, 2000]



Sec. 950.6  Fees.

    (a) Fees in member products policy. All fees charged by each Bank 
and any schedules or formulas pertaining to such fees shall be included 
in the Bank's member products policy required by Sec. 917.4 of this 
chapter. Any such fee schedules or formulas shall be applied 
consistently and without discrimination to all members.
    (b) Prepayment fees. (1) Except where an advance product contains a 
prepayment option, each Bank shall establish and charge a prepayment fee 
pursuant to a specified formula which makes the Bank financially 
indifferent to the borrower's decision to repay the advance prior to its 
maturity date.
    (2) Prepayment fees are not required for:
    (i) Advances with original terms to maturity or repricing periods of 
six months or less;
    (ii) Advances funded by callable debt; or
    (iii) Advances which are otherwise appropriately hedged so that the 
Bank is financially indifferent to their prepayment.
    (3) The board of directors of each Bank, a designated committee 
thereof, or officers specifically authorized by the board of directors, 
may waive a prepayment fee only if such prepayment will not result in an 
economic loss to the Bank. Any such waiver must subsequently be ratified 
by the board of directors.
    (4) A Bank, in determining whether or not to waive a prepayment fee, 
shall apply consistent standards to all of its members.
    (c) Commitment fees. Each Bank may charge a fee for its commitment 
to fund an advance.
    (d) Other fees. Each Bank is authorized to charge other fees as it 
deems necessary and appropriate.

[58 FR 29469, May 20, 1993; 65 FR 8263, Feb. 18, 2000. Redesignated and 
amended at 65 FR 44429, July 18, 2000]



Sec. 950.7  Collateral.

    (a) Eligible security for advances to all members. At the time of 
origination or renewal of an advance, each Bank shall obtain from the 
borrowing member or, in accordance with paragraph (g) of this section, 
an affiliate of the borrowing member, and thereafter maintain, a 
security interest in collateral that meets the requirements of one or 
more of the following categories:
    (1) Mortgage loans and privately issued securities. (i) Fully 
disbursed, whole first mortgage loans on improved residential real 
property not more than 90 days delinquent; or
    (ii) Privately issued mortgage-backed securities, excluding the 
following:
    (A) Securities that represent a share of only the interest payments 
or only the principal payments from the underlying mortgage loans;
    (B) Securities that represent a subordinate interest in the cash 
flows from the underlying mortgage loans;
    (C) Securities that represent an interest in any residual payments 
from the underlying pool of mortgage loans; or
    (D) Such other high-risk securities as the Finance Board in its 
discretion may determine.
    (2) Agency securities. Securities issued, insured or guaranteed by 
the United States Government, or any agency thereof, including without 
limitation:
    (i) Mortgage-backed securities issued or guaranteed by Freddie Mac, 
Fannie Mae, Ginnie Mae, or any other agency of the United States 
Government;
    (ii) Mortgages or other loans, regardless of delinquency status, to 
the extent that the mortgage or loan is insured or guaranteed by the 
United States or any agency thereof, or otherwise is backed by the full 
faith and credit of the United States, and such insurance, guarantee or 
other backing

[[Page 160]]

is for the direct benefit of the holder of the mortgage or loan; and
    (iii) Securities backed by, or representing an equity interest in, 
mortgages or other loans referred to in paragraph (a)(2)(ii) of this 
section.
    (3) Cash or deposits. Cash or deposits in a Bank.
    (4) Other real estate-related collateral. (i) Other real estate-
related collateral provided that:
    (A) Such collateral has a readily ascertainable value, can be 
reliably discounted to account for liquidation and other risks, and can 
be liquidated in due course; and
    (B) The Bank can perfect a security interest in such collateral.
    (ii) Eligible other real estate-related collateral may include, but 
is not limited to:
    (A) Privately issued mortgage-backed securities not otherwise 
eligible under paragraph (a)(1)(ii) of this section;
    (B) Second mortgage loans, including home equity loans;
    (C) Commercial real estate loans; and
    (D) Mortgage loan participations.
    (5) Securities representing equity interests in eligible advances 
collateral. Any security the ownership of which represents an undivided 
equity interest in underlying assets, all of which qualify either as:
    (i) Eligible collateral under paragraphs (a)(1), (2), (3) or (4) of 
this section; or
    (ii) Cash equivalents.
    (b) Additional collateral eligible as security for advances to CFI 
members or their affiliates--(1) General. Subject to the requirements 
set forth in part 980 of this chapter, a Bank is authorized to accept 
from CFI members or their affiliates as security for advances small 
business loans, small farm loans or small agri-business loans fully 
secured by collateral other than real estate, or securities representing 
a whole interest in such loans, provided that:
    (i) Such collateral has a readily ascertainable value, can be 
reliably discounted to account for liquidation and other risks, and can 
be liquidated in due course; and
    (ii) The Bank can perfect a security interest in such collateral.
    (2) Change in CFI status. If a Bank determines, as of April 1 of 
each year, that a member that has previously qualified as a CFI no 
longer qualifies as a CFI, and the member has total advances outstanding 
that exceed the amount that can be fully secured by collateral under 
paragraph (a) of this section, the Bank may:
    (i) Permit the advances of such member to run to their stated 
maturities; and
    (ii) Renew such member's advances to mature no later than March 31 
of the following year; provided that the total of the member's advances 
under paragraphs (b)(2)(i) and (ii) of this section shall be fully 
secured by collateral set forth in paragraphs (a) and (b) of this 
section.
    (c) Bank restrictions on eligible advances collateral. A Bank at its 
discretion may further restrict the types of eligible collateral 
acceptable to the Bank as security for an advance, based upon the 
creditworthiness or operations of the borrower, the quality of the 
collateral, or other reasonable criteria.
    (d) Additional advances collateral. The provisions of paragraph (a) 
of this section shall not affect the ability of any Bank to take such 
steps as it deems necessary to protect its secured position on 
outstanding advances, including requiring additional collateral, whether 
or not such additional collateral conforms to the requirements for 
eligible collateral in paragraphs (a) or (b) of this section or section 
10 of the Act (12 U.S.C. 1430).
    (e) Bank stock as collateral. (1) Pursuant to section 10(c) of the 
Act (12 U.S.C. 1430(c)), a Bank shall have a lien upon, and shall hold, 
the stock of a member in the Bank as further collateral security for all 
indebtedness of the member to the Bank.
    (2) The written security agreement used by the Bank shall provide 
that the borrowing member's Bank stock is assigned as additional 
security by the member to the Bank.
    (3) The security interest of the Bank in such member's Bank stock 
shall be entitled to the priority provided for in section 10(e) of the 
Act (12 U.S.C. 1430(e)).

[[Page 161]]

    (f) Advances collateral security requiring formal approval. No home 
mortgage loan otherwise eligible to be accepted as collateral for an 
advance by a Bank under this section shall be accepted as collateral for 
an advance if any director, officer, employee, attorney or agent of the 
Bank or of the borrowing member is personally liable thereon, unless the 
board of directors of the Bank has specifically approved such acceptance 
by formal resolution, and the Finance Board has endorsed such 
resolution.
    (g) Pledge of advances collateral by affiliates. Assets held by an 
affiliate of a member that are eligible as collateral under paragraphs 
(a) or (b) of this section may be used to secure advances to that member 
only if:
    (1) The collateral is pledged to secure either:
    (i) The member's obligation to repay advances; or
    (ii) A surety or other agreement under which the affiliate has 
assumed, along with the member, a primary obligation to repay advances 
made to the member; and
    (2) The Bank obtains and maintains a legally enforceable security 
interest pursuant to which the Bank's legal rights and privileges with 
respect to the collateral are functionally equivalent in all material 
respects to those that the Bank would possess if the member were to 
pledge the same collateral directly, and such functional equivalence is 
supported by adequate documentation.

[58 FR 29469, May 20, 1993, as amended at 64 FR 16621, Apr. 6, 1999; 65 
FR 8262, Feb. 18, 2000. Redesignated and amended at 65 FR 44429, July 
18, 2000; 67 FR 12851, Mar. 20, 2002]



Sec. 950.8  Banks as secured creditors.

    (a) Except as provided in paragraph (b) of this section, 
notwithstanding any other provision of law, any security interest 
granted to a Bank by a member, or by an affiliate of a member, shall be 
entitled to priority over the claims and rights of any party, including 
any receiver, conservator, trustee or similar party having rights of a 
lien creditor, to such collateral.
    (b) A Bank's security interest as described in paragraph (a) of this 
section shall not be entitled to priority over the claims and rights of 
a party that:
    (1) Would be entitled to priority under otherwise applicable law; 
and
    (2) Is an actual bona fide purchaser for value of such collateral or 
is an actual secured party whose security interest in such collateral is 
perfected in accordance with applicable state law.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44429, July 18, 2000, as amended at 67 
FR 12851, Mar. 20, 2002]



Sec. 950.9  Pledged collateral; verification.

    (a) Collateral safekeeping. (1) A Bank may permit a member that is a 
depository institution to retain documents evidencing collateral pledged 
to the Bank, provided that the Bank and such member have executed a 
written security agreement pursuant to Sec. 950.2(c) of this part 
whereby such collateral is retained solely for the Bank's benefit and 
subject to the Bank's control and direction.
    (2) A Bank shall take any steps necessary to ensure that its 
security interest in all collateral pledged by non-depository 
institutions for an advance is as secure as its security interest in 
collateral pledged by depository institutions.
    (3) A Bank may at any time perfect its security interest in 
collateral securing an advance to a member.
    (b) Collateral verification. Each Bank shall establish written 
procedures and standards for verifying the existence of collateral 
securing the Bank's advances, and shall regularly verify the existence 
of the collateral securing its advances in accordance with such 
procedures and standards.

[58 FR 29469, May 20, 1993, as amended at 64 FR 16621, Apr. 6, 1999; 65 
FR 8263, Feb. 18, 2000. Redesignated at 65 FR 44430, July 18, 2000; 67 
FR 12851, Mar. 20, 2002]



Sec. 950.10  Collateral valuation; appraisals.

    (a) Collateral valuation. Each Bank shall determine the value of 
collateral securing the Bank's advances in accordance with the 
collateral valuation procedures set forth in the Bank's member products 
policy established pursuant to Sec. 917.4 of this chapter.

[[Page 162]]

    (b) Fair application of procedures. Each Bank shall apply the 
collateral valuation procedures consistently and fairly to all borrowing 
members, and the valuation ascribed to any item of collateral by the 
Bank shall be conclusive as between the Bank and the member.
    (c) Appraisals. A Bank may require a member to obtain an appraisal 
of any item of collateral, and to perform such other investigations of 
collateral as the Bank deems necessary and proper.

[65 FR 44430, July 18, 2000]



Sec. 950.11  Capital stock requirements; unilateral redemption of excess stock.

    (a) Capital stock requirement for advances. At no time shall the 
aggregate amount of outstanding advances made by a Bank to a member 
exceed 20 times the amount paid in by such member for capital stock in 
the Bank.
    (b) Unilateral redemption of excess capital stock; fee in lieu 
prohibited. (1) A Bank, after providing 15 calendar days advance written 
notice to a member, may require the redemption of that amount of the 
member's Bank capital stock that exceeds the capital stock requirements 
set forth in paragraph (a) of this section, provided the minimum amount 
required in section 6(b)(1) of the Act (12 U.S.C. 1426(b)(1)) is 
maintained. The Bank shall have the discretion to determine the timing 
of such unilateral redemption. The Bank's implementation of its 
redemption policy shall be consistent with the requirement of section 
7(j) of the Act (12 U.S.C. 1427(j)) that the affairs of the Bank shall 
be administered fairly and impartially and without discrimination in 
favor of or against any member borrower.
    (2) A Bank may not impose on or accept from a member a fee in lieu 
of redeeming the member's excess Bank capital stock.

[58 FR 29469, May 20, 1993, as amended at 64 FR 16791, Apr. 6, 1999; 65 
FR 8263, Feb. 18, 2000; 65 FR 13870, Mar. 15, 2000. Redesignated at 65 
FR 44430, July 18, 2000, as amended at 67 FR 12851, Mar. 20, 2002]



Sec. 950.12  Intradistrict transfer of advances.

    (a) Advances held by members. A Bank may allow one of its members to 
assume an advance extended by the Bank to another of its members, 
provided the assumption complies with the requirements of this part 
governing the issuance of new advances. A Bank may charge an appropriate 
fee for processing the transfer.
    (b) Advances held by nonmembers. A Bank may allow one of its members 
to assume an advance held by a nonmember, provided the advance was 
originated by the Bank and provided the assumption complies with the 
requirements of this part governing the issuance of new advances. A Bank 
may charge an appropriate fee for processing the transfer.

[59 FR 2950, Jan. 20, 1994. Redesignated at 65 FR 44430, July 18, 2000]



Sec. 950.13  Special advances to savings associations.

    (a) Eligible institutions. (1) A Bank, upon receipt of a written 
request from the Director of the OTS, may make short-term advances to a 
savings association member.
    (2) Such request must certify that the member:
    (i) Is solvent but presents a supervisory concern to the OTS because 
of the member's financial condition; and
    (ii) Has reasonable and demonstrable prospects of returning to a 
satisfactory financial condition.
    (b) Terms and conditions. Advances made by a Bank to a member 
savings association under this section shall:
    (1) Be subject to all applicable collateral requirements of the 
Bank, this part and section 10(a) of the Act (12 U.S.C. 1430(a)); and
    (2) Be at the interest rate applicable to advances of similar type 
and maturity that are made available to other members that do not pose 
such a supervisory concern.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44430, July 18, 2000]



Sec. 950.14  Advances to the Savings Association Insurance Fund.

    (a) Authority. Upon receipt of a written request from the FDIC, a 
Bank may make advances to the FDIC for the use of the Savings 
Association Insurance Fund. The Bank shall provide

[[Page 163]]

a copy of such request to the Finance Board.
    (b) Requirements. Advances to the FDIC for the use of the Savings 
Association Insurance Fund shall:
    (1) Bear a rate of interest not less than the Bank's marginal cost 
of funds, taking into account the maturities involved and reasonable 
administrative costs;
    (2) Have a maturity acceptable to the Bank;
    (3) Be subject to any prepayment, commitment, or other appropriate 
fees of the Bank; and
    (4) Be adequately secured by collateral acceptable to the Bank.

[58 FR 29469, May 20, 1993, as amended at 65 FR 8262, Feb. 18, 2000. 
Redesignated at 65 FR 44430, July 18, 2000]



Sec. 950.15  Liquidation of advances upon termination of membership.

    If an institution's membership in a Bank is terminated, the Bank 
shall determine an orderly schedule for liquidating any indebtedness of 
such member to the Bank; this section shall not require a Bank to call 
any such indebtedness prior to maturity of the advance. The Bank shall 
deem any such liquidation a prepayment of the member's indebtedness, and 
the member shall be subject to any fees applicable to such prepayment.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 
and further redesignated at 65 FR 44430, July 18, 2000]



                Subpart B--Advances to Housing Associates

    Source: 62 FR 12079, Mar. 14, 1997, unless otherwise noted.



Sec. 950.16  Scope.

    Except as otherwise provided in Sec. Sec. 950.14 and 950.17, the 
requirements of subpart A apply to this subpart.

[58 FR 29469, May 20, 1993. Redesignated at 65 FR 44430, July 18, 2000]



Sec. 950.17  Advances to housing associates.

    (a) Authority. Subject to the provisions of the Act and this 
subpart, a Bank may make advances only to a housing associate whose 
principal place of business, as determined in accordance with part 925 
of this chapter, is located in the Bank's district.
    (b) Collateral requirements--(1) Advances to housing associates. A 
Bank may make an advance to any housing associate upon the security of 
the following collateral:
    (i) Mortgage loans insured by the Federal Housing Administration of 
HUD under title II of the National Housing Act; or
    (ii) Securities representing a whole interest in the principal and 
interest payments due on a pool of mortgage loans insured by the Federal 
Housing Administration of HUD under title II of the National Housing 
Act. A Bank may only accept as collateral the securities described in 
this paragraph (b)(1)(ii) if the housing associate provides evidence 
that such securities are backed solely by mortgages of the type 
described in paragraph (b)(1)(i) of this section.
    (2) Certain advances to SHFAs. (i) In addition to the collateral 
described in paragraph (b)(1) of this section, a Bank may make an 
advance to a housing associate that has satisfied the requirements of 
Sec. 926.3(b) for the purpose of facilitating residential or commercial 
mortgage lending that benefits individuals or families meeting the 
income requirements in section 142(d) or 143(f) of the Internal Revenue 
Code (26 U.S.C. 142(d) or 143(f)) upon the security of the following 
collateral:
    (A) The collateral described in Sec. 950.7(a)(1) or (2).
    (B) The collateral described in Sec. 950.7(a)(3). Solely for the 
purpose of facilitating acceptance of such collateral, a Bank may 
establish a cash collateral account for a housing associate that has 
satisfied the requirements of Sec. 926.3(b).
    (C) The other real estate-related collateral described in 
Sec. 950.7(a)(4), provided that such collateral comprises mortgage loans 
on one-to-four family or multifamily residential property.
    (ii) Prior to making an advance pursuant to this paragraph (b)(2), a 
Bank shall obtain a written certification from the housing associate 
that it shall use the proceeds of the advance for the purposes described 
in paragraph (b)(2)(i) of this section.

[[Page 164]]

    (c) Terms and conditions--(1) General. Subject to the provisions of 
this paragraph (c), a Bank, in its discretion, shall determine whether, 
and on what terms, it will make advances to a housing associate.
    (2) Advance pricing. (i) A Bank shall price advances to housing 
associates in accordance with the requirements for pricing advances to 
members set forth in Sec. 950.3(b). Wherever the term ``member'' appears 
in Sec. 950.3(b), the term shall be construed also to mean ``housing 
associate.''
    (ii) A Bank shall apply the pricing criteria identified in 
Sec. 950.5(b)(2) equally to all of its member and housing associate 
borrowers.
    (3) Limit on advances. The principal amount of any advance made to a 
housing associate may not exceed 90 percent of the unpaid principal of 
the mortgage loans or securities pledged as security for the advance. 
This limit does not apply to an advance made to a housing associate 
under paragraph (b)(2) of this section.
    (d) Transaction accounts. Solely for the purpose of facilitating the 
making of advances to a housing associate, a Bank may establish a 
transaction account for each housing associate.
    (e) Loss of eligibility--(1) Notification of status changes. A Bank 
shall require a housing associate that applies for an advance to agree 
in writing that it will promptly inform the Bank of any change in its 
status as a housing associate.
    (2) Verification of eligibility. A Bank may, from time to time, 
require a housing associate to provide evidence that it continues to 
satisfy all of the eligibility requirements of the Act, this subpart and 
part 926 of this chapter.
    (3) Loss of eligibility. A Bank shall not extend a new advance or 
renew an existing advance to a housing associate that no longer meets 
the eligibility requirements of the Act, this subpart and part 926 of 
this chapter until the entity has provided evidence satisfactory to the 
Bank that it is in compliance with such requirements.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0005 with an expiration date of November 30, 2002.)

[58 FR 29469, May 20, 1993, as amended by 65 FR 203, Jan. 4, 2000; 65 FR 
8263, Feb. 18, 2000. Redesignated and amended at 65 FR 44430, July 18, 
2000; 67 FR 12851, Mar. 20, 2002]



  Subpart C--Advances to Out-of-District Members and Housing Associates



Sec. 950.25  Advances to out-of-district members and housing associates.

    (a) Establishment of creditor/debtor relationship. Any Bank may 
become a creditor to a member or housing associate of another Bank 
through the purchase of an outstanding advance, or a participation 
interest therein, from the other Bank, or through an arrangement with 
the other Bank that provides for the establishment of such a creditor/
debtor relationship at the time an advance is made.
    (b) Applicability of advances requirements. Any creditor/debtor 
relationship established pursuant to paragraph (a) of this section shall 
be subject to all of the provisions of this part that would apply to an 
advance made by a Bank to its own members or housing associates.

[65 FR 43981, July 17, 2000; 65 FR 46049, July 26, 2000, as amended at 
67 FR 12852, Mar. 20, 2002]



PART 951--AFFORDABLE HOUSING PROGRAM--Table of Contents




Sec.
951.1  Definitions.
951.2  Required annual AHP contributions.
951.3  Operation of Program and adoption of AHP implementation plan.
951.4  Advisory Councils.
951.5  Minimum eligibility standards for AHP projects.
951.6  Procedure for approval of applications for funding.
951.7  Modifications of applications prior to or after project 
          completion.
951.8  Procedure for funding.

[[Page 165]]

951.10  Initial monitoring requirements.
951.11  Long-term monitoring requirements.
951.12  Remedial actions for noncompliance.
951.13  Agreements.
951.14  Temporary suspension of AHP contributions.
951.15  Affordable Housing Reserve Fund.
951.16  Application to existing AHP projects.

    Authority: 12 U.S.C. 1430(j).

    Source: 62 FR 41828, Aug. 4, 1997, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.

    Editorial Note: Nomenclature changes appear at 66 FR 50301, Oct. 3, 
2001.



Sec. 951.1  Definitions.

    As used in this part:
    Affordable means that the rent charged for a unit which is to be 
reserved for occupancy by a household with an income at or below 80 
percent of the median income for the area, does not exceed 30 percent of 
the income of a household of the maximum income and size expected, under 
the commitment made in the AHP application, to occupy the unit (assuming 
occupancy of 1.5 persons per bedroom or 1.0 person per unit without a 
separate bedroom).
    Cost of funds means, for purposes of a subsidized advance, the 
estimated cost of issuing Bank System consolidated obligations with 
maturities comparable to that of the subsidized advance.
    Direct subsidy means an AHP subsidy in the form of a direct cash 
payment, but does not include homeownership set-aside funds.
    Family member means any individual related to a person by blood, 
marriage or adoption.
    Habitable means suitable for occupancy, taking into account local 
health, safety, and building codes.
    Homeownership set-aside funds means funds provided to a member by a 
Bank pursuant to a Bank's homeownership set-aside program.
    Low-or moderate-income household. (1) Owner-occupied projects. For 
purposes of an owner-occupied project, low-or moderate-income household 
means a household which, at the time it is qualified by the sponsor for 
participation in the project, has an income of 80 percent or less of the 
median income for the area.
    (2) Rental projects. (i) In general. For purposes of a rental 
project, low-or moderate-income household means a household which, upon 
initial occupancy of a rental unit, has an income at or below 80 percent 
of the median income for the area.
    (ii) Housing with current occupants. In the case of projects 
involving the purchase or rehabilitation of rental housing with current 
occupants, low- or moderate-income household means an occupying 
household with an income at or below 80 percent of the median income for 
the area at the time an application for AHP subsidy is submitted to the 
Bank.
    (3) Family-size adjustment. The income limit for low-or moderate-
income households may be adjusted for family size in accordance with the 
methodology of the applicable median income standard.
    Habitable means suitable for occupancy, taking into account local 
health, safety and building codes.
    Low-or moderate-income neighborhood means any neighborhood in which 
51 percent or more of the households have incomes at or below 80 percent 
of the median income for the area.
    Median income for the area. (1) Owner-occupied projects. A Bank 
shall identify in its AHP implementation plan one or more of the 
following median income standards from which all owner-occupied projects 
may choose for purposes of the AHP:
    (i) The median income for the area, as published annually by HUD;
    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The applicable median family income, as determined under 26 
U.S.C. 143(f) (Mortgage Revenue Bonds) and published by a State agency 
or instrumentality;
    (iv) The median income for the area, as published by the United 
States Department of Agriculture; or
    (v) The median income for any definable geographic area, as 
published by a federal, state, or local government entity for purposes 
of that entity's housing programs, and approved by the Board of 
Directors, at the request of a Bank, for use under the AHP.

[[Page 166]]

    (2) Rental projects. A Bank shall identify in its AHP implementation 
plan one or more of the following median income standards from which all 
rental projects may choose for purposes of the AHP:
    (i) The median income for the area, as published annually by HUD; or
    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The median income for any definable geographic area, as 
published by a federal, state, or local government entity for purposes 
of that entity's housing programs, and approved by the Board of 
Directors, at the request of a Bank, for use under the AHP.
    (3) Procedure for approval. Prior to requesting approval by the 
Board of Directors of a median income standard, a Bank shall amend its 
AHP implementation plan to permit the use of such standard, conditioned 
on Board of Directors approval. Requests for approval of median income 
standards shall receive prompt consideration by the Board of Directors.
    Net earnings of a Bank means the net earnings of a Bank for a 
calendar year after deducting the Bank's annual contribution to the 
Resolution Funding Corporation required under sections 21A or 21B of the 
Act (12 U.S.C. 1441a, 1441b), and before declaring any dividend under 
section 16 of the Act (12 U.S.C. 1436).
    Owner-occupied project means a project involving the purchase, 
construction, or rehabilitation of owner-occupied housing, including 
condominiums and cooperative housing, by or for very low-or low-or 
moderate-income households.
    Owner-occupied unit means a unit in an owner-occupied project. 
Housing with two to four dwelling units consisting of one owner-occupied 
unit and one or more rental units shall be considered a single owner-
occupied unit.
    Program means the Affordable Housing Program.
    Rental project means a project involving the purchase, construction, 
or rehabilitation of rental housing, including overnight shelters and 
transitional housing for homeless households and mutual housing, where 
at least 20 percent of the units in the project are occupied by and 
affordable for very low-income households.
    Retention period means:
    (1) 5 years from closing for an AHP-assisted owner-occupied unit; 
and
    (2) 15 years from the date of project completion for a rental 
project.
    Sponsor means a not-for-profit or for-profit organization or public 
entity that:
    (1) Has an ownership interest (including any partnership interest) 
in a rental project; or
    (2) Is integrally involved in an owner-occupied project, such as by 
exercising control over the planning, development, or management of the 
project, or by qualifying borrowers and providing or arranging financing 
for the owners of the units.
    Subsidized advance means an advance to a member at an interest rate 
reduced below the Bank's cost of funds, by use of a subsidy.
    Subsidy means:
    (1) A direct subsidy, provided that if a direct subsidy is used to 
write down the interest rate on a loan extended by a member, sponsor, or 
other party to a project, the subsidy shall equal the net present value 
of the interest foregone from making the loan below the lender's market 
interest rate (calculated as of the date the AHP application is 
submitted to the Bank, and subject to adjustment under 
Sec. 951.8(c)(3));
    (2) The net present value of the interest revenue foregone from 
making a subsidized advance at a rate below the Bank's cost of funds, 
determined as of the earlier of the date of disbursement of the 
subsidized advance or the date prior to disbursement on which the Bank 
first manages the funding to support the subsidized advance through its 
asset/liability management system, or otherwise; or
    (3) Homeownership set-aside funds.
    Very low-income household. (1) Owner-occupied projects. For purposes 
of an owner-occupied project, very low-income household means a 
household which, at the time it is qualified by the sponsor for 
participation in the project, has an income at or below 50 percent of 
the median income for the area.
    (2) Rental projects. (i) In general. For purposes of a rental 
project, very low-income household means a household

[[Page 167]]

which, upon initial occupancy of a rental unit, has an income at or 
below 50 percent of the median income for the area.
    (ii) Housing with current occupants. In the case of projects 
involving the purchase or rehabilitation of rental housing with current 
occupants, very low-income household means an occupying household with 
an income at or below 50 percent of the median income for the area at 
the time an application for AHP subsidy is submitted to the Bank.
    (3) Family-size adjustment. The income limit for very low-income 
households may be adjusted for family size in accordance with the 
methodology of the applicable median income standard.
    Visitable means, in either owner-occupied or rental housing, at 
least one entrance is at-grade (no steps) and approached by an 
accessible route such as a sidewalk, and the entrance door and all 
interior passage doors are at least 2 feet, 10 inches wide, offering 32 
inches of clear passage space.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27672, May 20, 1998; 64 
FR 24027, May 5, 1999; 65 FR 5419, Feb. 4, 2000; 65 FR 8263, Feb. 18, 
2000; 65 FR 17437, Apr. 3, 2000; 67 FR 12852, Mar. 20, 2002; 67 FR 
18804, Apr. 17, 2002]



Sec. 951.2  Required annual AHP contributions.

    Each Bank shall contribute annually to its Program the greater of:
    (a) 10 percent of the Bank's net earnings for the previous year; or
    (b) That Bank's pro rata share of an aggregate of $100 million to be 
contributed in total by the Banks, such proration being made on the 
basis of the net earnings of the Banks for the previous year.



Sec. 951.3  Operation of Program and adoption of AHP implementation plan.

    (a) Allocation of AHP contributions--(1) Homeownership set-aside 
programs. (i) Homeownership set-aside programs subject to $3.0 million 
or 25 percent cap. Each Bank, after consultation with its Advisory 
Council, and pursuant to written policies adopted by the Bank's board of 
directors, may set aside annually, in the aggregate, up to the greater 
of $3.0 million or 25 percent of its annual required AHP contribution to 
provide funds to members participating in the Bank's homeownership set-
aside programs, pursuant to the requirements of this part. In cases 
where the amount of homeownership set-aside funds applied for by members 
in a given year exceeds the amount available for that year, a Bank may 
allocate up to the greater of $3.0 million or 25 percent of its annual 
required AHP contribution for the subsequent year to the current year's 
homeownership set-aside programs pursuant to written policies adopted by 
the Bank's board of directors. A Bank may establish one or more 
homeownership set-aside programs pursuant to written policies adopted by 
the Bank's board of directors.
    (ii) Additional first-time homebuyer set-aside program subject to 
$1.5 million or 10 percent cap. In addition to the authority provided 
under paragraph (a)(1)(i) of this section, each Bank, after consultation 
with its Advisory Council, and pursuant to written policies adopted by 
the Bank's board of directors, may set aside annually up to the greater 
of $1.5 million or 10 percent of its annual required AHP contribution to 
provide funds to members participating in a Bank homeownership set-aside 
program to assist first-time homebuyers, pursuant to the requirements of 
this part. In cases where the amount of homeownership set-aside funds 
applied for by members in a given year under such a program exceeds the 
amount available for that year, a Bank may allocate up to the greater of 
$1.5 million or 10 percent of its annual required AHP contribution for 
the subsequent year to the current year's program pursuant to written 
policies adopted by the Bank's board of directors.
    (iii) Requirements applicable to all homeownership set-aside 
programs. Beginning in 2003 and for subsequent years, the maximum dollar 
limits set forth in paragraphs (a)(1)(i) and (a)(1)(ii) of this section 
shall be adjusted annually by the Finance Board to reflect any 
percentage increase in the preceding year's Consumer Price Index (CPI) 
for all urban consumers, as

[[Page 168]]

published by the Department of Labor. Each year, as soon as practicable 
after the publication of the previous year's CPI, the Finance Board 
shall publish notice by Federal Register, distribution of a memorandum, 
or otherwise, of the CPI-adjusted limits on the maximum set-aside dollar 
amount. A Bank's board of directors shall not delegate to Bank officers 
or other Bank employees the responsibility for adopting its 
homeownership set-aside program policies.
    (2) Competitive application program. That portion of a Bank's 
required annual AHP contribution that is not set aside to fund 
homeownership set-aside programs shall be provided to members through a 
competitive application program, pursuant to the requirements of this 
part. A Bank may allocate up to the greater of $3 million or 25 percent 
of its annual required AHP contribution for the subsequent year to the 
current year's competitive application program. Beginning in 2002 and 
for subsequent years, the maximum dollar limit set forth in this 
paragraph (a)(2) shall be adjusted annually by the Finance Board to 
reflect any percentage increase in the preceding year's Consumer Price 
Index (CPI) for all urban consumers, as published by the Department of 
Labor. Each year, as soon as practicable after the publication of the 
previous year's CPI, the Finance Board shall publish notice by Federal 
Register, distribution of a memorandum, or otherwise, of the CPI-
adjusted limit on the maximum competitive application dollar amount.
    (b) AHP implementation plan--(1) Adoption of plan. Each Bank's board 
of directors shall adopt a written AHP implementation plan which shall 
set forth:
    (i) The applicable median income standard or standards, adopted by 
the Bank consistent with the definition of median income for the area in 
Sec. 951.1;
    (ii) The requirements for any homeownership set-aside programs 
adopted by the Bank pursuant to paragraph (a)(1) of this section;
    (iii) The Bank's project feasibility guidelines, adopted consistent 
with Sec. 951.5(b)(2);
    (iv) The Bank's schedule for AHP funding periods;
    (v) Any additional District eligibility requirement, adopted by the 
Bank pursuant to Sec. 951.5(b)(10);
    (vi) The Bank's scoring guidelines, adopted by the Bank consistent 
with Sec. 951.6(b)(4);
    (vii) The Bank's time limits on use of AHP subsidies and procedures 
for verifying compliance upon disbursement of AHP subsidies pursuant to 
Sec. 951.8;
    (viii) The Bank's procedures for carrying out its monitoring 
obligations under Secs. 951.10(c) and 951.11; and
    (ix) Any requirements, including time limits, for re-use of repaid 
AHP direct subsidy, adopted by the Bank pursuant to Sec. 951.12(e)(2).
    (2) No delegation. A Bank's board of directors shall not delegate to 
Bank officers or other Bank employees the responsibility for adopting 
the AHP implementation plan, or any subsequent amendments thereto.
    (3) Advisory Council review. Prior to adoption of the Bank's AHP 
implementation plan, and any subsequent amendments thereto, the Bank 
shall provide its Advisory Council an opportunity to review the plan and 
any subsequent amendments, and the Advisory Council shall provide its 
recommendations to the Bank's board of directors.
    (4) Submission of plan amendments to the Finance Board. A Bank shall 
submit any amendments of its AHP implementation plan to the Finance 
Board within 30 days after the date the Bank's board of directors 
approves such amendments.
    (5) Public Access. A Bank's initial AHP implementation plan, and any 
subsequent amendments, shall be made available to members of the public, 
upon request.
    (c) Conflicts of interest--(1) Bank directors and employees. Each 
Bank's board of directors shall adopt a written policy providing that if 
a Bank director or employee, or such person's family member, has a 
financial interest in, or is a director, officer, or employee of an 
organization involved in, a project that is the subject of a pending or 
approved AHP application, the Bank director or employee shall not 
participate in or attempt to influence decisions by the

[[Page 169]]

Bank regarding the evaluation, approval, funding, monitoring or any 
remedial process for such project.
    (2) Advisory Council members. Each Bank's board of directors shall 
adopt a written policy providing that if an Advisory Council member, or 
such person's family member, has a financial interest in, or is a 
director, officer, or employee of an organization involved in, a project 
that is the subject of a pending or approved AHP application, the 
Advisory Council member shall not participate in or attempt to influence 
decisions by the Bank regarding the approval for such project.
    (3) No delegation. A Bank's board of directors shall not delegate to 
Bank officers or other Bank employees the responsibility to adopt 
conflicts of interest policies.
    (d) Reporting. Each Bank shall provide such reports and 
documentation concerning its Program as the Finance Board may request 
from time to time.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 64 FR 24027, May 5, 1999; 65 
FR 5419, Feb. 4, 2000; 65 FR 8263, Feb. 18, 2000; 66 FR 50301, Oct. 3, 
2001; 67 FR 18804, Apr. 17, 2002; 67 FR 58981, Sept. 19, 2002]



Sec. 951.4  Advisory Councils.

    (a) In general. Each Bank's board of directors shall appoint an 
Advisory Council of from 7 to 15 persons who reside in the Bank's 
District and are drawn from community and not-for-profit organizations 
actively involved in providing or promoting low- and moderate-income 
housing and community and not-for-profit organizations actively involved 
in providing or promoting community lending, in the District.
    (b) Nominations and appointments. Each Bank shall solicit 
nominations for membership on the Advisory Council from community and 
not-for-profit organizations pursuant to a nomination process that is as 
broad and as participatory as possible, allowing sufficient time for 
responses. The Bank's board of directors shall appoint Advisory Council 
members giving consideration to the size of the Bank's District and the 
diversity of low- and moderate-income housing and community lending 
needs and activities within the District.
    (c) Diversity of membership. In appointing the Advisory Council, a 
Bank's board of directors shall ensure that the membership includes 
persons drawn from a diverse range of organizations, provided that 
representatives of no one group shall constitute an undue proportion of 
the membership of the Advisory Council.
    (d) Terms of Advisory Council members. Advisory Council members 
shall be appointed by the Bank's board of directors to serve for terms 
of three years, and such terms shall be staggered to provide continuity 
in experience and service to the Advisory Council. An Advisory Council 
member appointed to fill a vacancy shall be appointed for the unexpired 
term of his or her predecessor in office. No Advisory Council member may 
be appointed to serve for more than three consecutive terms. 
Appointments for the unexpired term of a predecessor shall not count 
toward the three-term limit.
    (e) Election of officers. Each Advisory Council may elect from among 
its members a chairperson, a vice chairperson, and any other officers 
the Advisory Council deems appropriate.
    (f) Duties.--(1) Meetings with the Banks. Representatives of the 
board of directors of the Bank shall meet with the Advisory Council at 
least quarterly to obtain the Advisory Council's advice on ways in which 
the Bank can better carry out its housing finance and community lending 
mission, including, but not limited to, advice on the low- and moderate-
income housing and community lending programs and needs in the Bank's 
District, and on the use of AHP subsidies, Bank advances, and other Bank 
credit products for these purposes.
    (2) Summary of AHP applications. The Bank shall comply with requests 
from the Advisory Council for summary information regarding AHP 
applications from prior funding periods.
    (3) Annual report to the Finance Board. Each Advisory Council shall 
submit to the Finance Board annually by March 1 its analysis of the low- 
and moderate-

[[Page 170]]

income housing and community lending activity of the Bank by which it is 
appointed.
    (g) Expenses. The Bank shall pay Advisory Council members' travel 
expenses, including transportation and subsistence, for each day devoted 
to attending meetings with representatives of the board of directors of 
the Bank and meetings requested by the Finance Board.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27672, May 20, 1998; 65 
FR 5419, Feb. 4, 2000; 66 FR 50302, Oct. 3, 2001; 67 FR 12852, Mar. 20, 
2002; 67 FR 15011, Mar. 28, 2002]



Sec. 951.5  Minimum eligibility standards for AHP projects.

    (a) Homeownership set-aside programs. A Bank's homeownership set-
aside programs must meet the following requirements:
    (1) Homeownership set-aside funds must be provided to members 
pursuant to allocation criteria established by the Bank;
    (2) Members must provide homeownership set-aside funds only to 
households that:
    (i) Are low-or moderate-income households, as defined in Sec. 951.1;
    (ii) Complete a homebuyer or homeowner counseling program provided 
by, or based on one provided by, an organization recognized as 
experienced in homebuyer or homeowner counseling, respectively; and
    (iii) Meet the first-time homebuyer requirement, in the case of 
households receiving funds pursuant to a first-time homebuyer set-aside 
program established pursuant to Sec. 951.3(a)(1)(ii), and meet such 
other eligibility criteria that may be established by the Bank, such as 
a matching funds requirement or criteria that give priority for the 
purchase or rehabilitation of housing in particular areas or as part of 
a disaster relief effort, in the case of households receiving funds 
pursuant to homeownership set-aside programs established pursuant to 
Sec. 951.3(a)(1)(i) or (ii);
    (3) Members must provide homeownership set-aside funds to households 
as a grant, in an amount up to a maximum of $15,000 per household, as 
established by the Bank, which limit shall apply to all households;
    (4) Households must use homeownership set-aside funds to pay for 
downpayment, closing cost, counseling, or rehabilitation assistance in 
connection with the household's purchase or rehabilitation of an owner-
occupied housing unit, including a condominium or cooperative housing 
unit, to be used as the household's primary residence;
    (5) A housing unit purchased or rehabilitated using homeownership 
set-aside funds must be subject to a retention agreement described in 
Sec. 951.13(d)(1);
    (6) If a member is providing mortgage financing to a participating 
household, the member must provide financial or other incentives in 
connection with such mortgage financing, and the rate of interest, 
points, fees, and any other charges by the member must not exceed a 
reasonable market rate of interest, points, fees, and other charges for 
a loan of similar maturity, terms, and risk;
    (7) Homeownership set-aside funds may be used to pay for counseling 
costs only where:
    (i) Such costs are incurred in connection with counseling of 
homebuyers who actually purchase an AHP-assisted unit;
    (ii) The cost of the counseling has not been covered by another 
funding source, including the member; and
    (8) Homeownership set-aside funds must be drawn down and used by 
eligible households within the period of time specified by the Bank in 
its AHP implementation plan.
    (b) Competitive application program. Projects receiving AHP 
subsidies pursuant to a Bank's competitive application program must meet 
the eligibility requirements of this paragraph (b).
    (1) Owner-occupied or rental housing. A project must be either an 
owner-occupied project or a rental project, as defined, respectively, in 
Sec. 951.1.
    (2) Project feasibility and need for subsidy--(i) Sources and uses 
of funds. The project's estimated uses of funds must equal its estimated 
sources of funds, as

[[Page 171]]

reflected in the project's development budget. A project's sources of 
funds must include:
    (A) Estimates of funds the project sponsor intends to obtain from 
other sources, but which have not yet been committed to the project; and
    (B) Estimates of the market value of in-kind donations and volunteer 
professional labor or services committed to the project, but not the 
value of sweat-equity.
    (ii) Project costs--(A) In general. Project costs, as reflected in 
the project's development budget, must be reasonable and customary, in 
accordance with the Bank's project feasibility guidelines, in light of:
    (1) Industry standards for the location of the project; and
    (2) The long-term financial needs of the project.
    (B) Cost of property and services provided by a member. The purchase 
price of property or services, as reflected in the project's development 
budget, sold to the project by a member providing AHP subsidy to the 
project, or, in the case of property, upon which such member holds a 
mortgage or lien, may not exceed the market value of such property or 
services as of the date the purchase price for the property or services 
was agreed upon. In the case of real estate owned property sold to a 
project by a member providing AHP subsidy to a project, or property sold 
to the project upon which the member holds a mortgage or lien, the 
market value of such property is deemed to be the ``as-is'' or ``as-
rehabilitated'' value of the property, whichever is appropriate, as 
reflected in an independent appraisal of the property performed by a 
State certified or licensed appraiser, as defined in 12 CFR 564.2(j) and 
(k), within six months prior to the date the Bank disburses AHP subsidy 
to the project.
    (iii) Operational feasibility and need for subsidy. The project must 
be operationally feasible, in accordance with the Bank's project 
feasibility guidelines, based on relevant factors including, but not 
limited to, applicable financial ratios, geographic location of the 
project, needs of tenants, and other non-financial project 
characteristics. The requested AHP subsidy must be necessary for the 
financial feasibility of the project, as currently structured, and the 
rate of interest, points, fees, and any other charges for all loans 
financing the project must not exceed a market rate of interest, points, 
fees, and other charges for loans of similar maturity, terms, and risk.
    (3) Timing of subsidy use. The AHP subsidy must be likely to be 
drawn down by the project or used by the project to procure other 
financing commitments within 12 months of the date of approval of the 
application for subsidy funding the project.
    (4) Prepayment, cancellation, and processing fees. The project must 
not use AHP subsidies to pay for:
    (i) Prepayment fees imposed by a Bank on a member for a subsidized 
advance that is prepaid, unless, subsequent to such prepayment, the 
project will continue to comply with the terms of the application for 
the subsidy, as approved by the Bank, and the requirements of this part 
for the duration of the original retention period, and any unused 
subsidy is returned to the Bank and made available for other AHP 
projects;
    (ii) Cancellation fees and penalties imposed by a Bank on a member 
for a subsidized advance commitment that is canceled; or
    (iii) Processing fees charged by members for providing direct 
subsidies to a project.
    (5) Counseling costs. AHP subsidies may be used to pay for 
counseling costs only where:
    (i) Such costs are incurred in connection with counseling of 
homebuyers who actually purchase an AHP-assisted unit; and
    (ii) The cost of the counseling has not been covered by another 
funding source, including the member.
    (6) Refinancing. If the project uses AHP subsidies to refinance an 
existing single-family or multifamily mortgage loan, the equity proceeds 
of the refinancing must be used only for the purchase, construction, or 
rehabilitation of housing units meeting the eligibility requirements of 
this paragraph (b).
    (7) Retention--(i) Owner-occupied projects. The project's AHP-
assisted

[[Page 172]]

units are or are committed to be subject to a retention agreement 
described in Sec. 951.3(c)(4) or (d)(1).
    (ii) Rental projects. AHP-assisted rental projects are or are 
committed to be subject to a retention agreement described in 
Sec. 951.3(c)(5) or (d)(2).
    (8) Project sponsor qualifications. A project's sponsor must be 
qualified and able to perform its responsibilities as committed to in 
the application for subsidy funding the project.
    (9) Fair housing. The project, as proposed, must comply with 
applicable Federal and State laws on fair housing and housing 
accessibility, including, but not limited to, the Fair Housing Act, the 
Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, 
and the Architectural Barriers Act of 1969, and must demonstrate how the 
project will be affirmatively marketed.
    (10) District eligibility requirements. (i) A project receiving AHP 
subsidies may be required by a Bank to meet one or more of the following 
additional eligibility requirements adopted by a Bank's board of 
directors, after consultation with its Advisory Council:
    (A) A requirement that the amount of subsidy requested for the 
project does not exceed limits established by the Bank as to the maximum 
amount of AHP subsidy available per member each year; or per member, per 
project, or per project unit in a single funding period;
    (B) A requirement that the project is located in the Bank's 
District; or
    (C) A requirement that the member submitting the application has 
made use of a minimum amount of a credit product offered by the Bank, 
other than AHP or CIP credit products, within the previous 12 months, 
provided that such a minimum threshold for credit product usage 
established by a Bank shall not exceed 1.5 percent of a member's total 
assets, and all members shall have access to some amount of AHP subsidy, 
as determined by the Bank, regardless of whether they meet the Bank's 
minimum threshold for credit product usage.
    (ii) Any limit on the amount of AHP subsidy available per member 
must result in equal amounts of AHP subsidy available to all members 
receiving subsidy pursuant to such limit.

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27672, May 20, 1998; 64 
FR 23015, Apr. 29, 1999; 64 FR 24027, May 5, 1999; 65 FR 8263, Feb. 18, 
2000; 66 FR 50302, Oct. 3, 2001; 67 FR 12852, Mar. 20, 2002; 67 FR 
58982, Sept. 19, 2002]



Sec. 951.6  Procedure for approval of applications for funding.

    (a) Homeownership set-aside programs. A Bank shall accept 
applications for homeownership set-aside funds from members and may, in 
its discretion, accept applications from institutions with pending 
applications for membership in the Bank. The Bank shall approve 
applications in accordance with the Bank's criteria governing the 
allocation of funds.
    (b) Competitive application program--(1) Funding periods; amounts 
available. A Bank shall accept applications for funding under its 
competitive application program from members and may, in its discretion, 
accept applications from institutions with pending applications for 
membership in the Bank. A Bank may accept applications for funding 
during a specified number of funding periods each year, as determined by 
the Bank.
    (2) Submission of applications. A Bank shall require applicants for 
AHP subsidies to submit information sufficient for the Bank to:
    (i) Determine that the proposed AHP project meets the eligibility 
requirements of Sec. 951.5(b); and
    (ii) Evaluate the application pursuant to the scoring criteria in 
paragraph (b)(4) of this section.
    (3) Review of applications for project eligibility. A Bank shall 
review applications to determine that the proposed AHP project meets the 
eligibility requirements of Sec. 951.5(b).
    (4) Scoring of applications--(i) In general. A Bank shall not adopt 
additional scoring criteria or point allocations, except as specifically 
authorized under this paragraph (b)(4). A Bank shall adopt written 
guidelines implementing the scoring requirements of this paragraph 
(b)(4).
    (ii) Point allocations. A Bank shall allocate 100 points among the 
nine scoring criteria identified in paragraph (b)(4)(iv) of this 
section. The scoring

[[Page 173]]

criterion for targeting identified in paragraph (b)(4)(iv)(C) of this 
section shall be allocated at least 20 points. The remaining scoring 
criteria shall be allocated at least five points each.
    (iii) Satisfaction of scoring criteria. A Bank shall designate each 
scoring criterion as either a fixed-point or a variable-point criterion. 
Variable-point criteria are those where there are varying degrees to 
which an application can satisfy the criteria. The number of points that 
may be awarded to an application for meeting a variable-point criterion 
will vary, depending on the extent to which the application satisfies 
the criterion, compared to the other applications being scored. A Bank 
shall designate the targeting and subsidy-per-unit scoring criteria 
identified in paragraphs (b)(4)(iv)(C) and (H), respectively, of this 
section as variable-point criteria. The application(s) best achieving 
each variable-point criterion shall receive the maximum point score 
available for that criterion, with the remaining applications scored on 
a declining scale. Fixed-point criteria are those which cannot be 
satisfied in varying degrees and are either satisfied, or not. An 
application meeting a fixed-point criterion shall be awarded the total 
number of points allocated to that criterion.
    (iv) Scoring criteria. An application for a proposed project may 
receive points based on satisfaction of the nine scoring criteria set 
forth in this paragraph (b)(4)(iv).
    (A) Use of donated or conveyed government-owned or other properties. 
The creation of housing using a significant proportion of:
    (1) Land or units donated or conveyed by the Federal government or 
any agency or instrumentality thereof; or
    (2) Land or units donated or conveyed by any other party for an 
amount significantly below the fair market value of the property, as 
defined by the Bank in its AHP implementation plan.
    (B) Sponsorship by a not-for-profit organization or government 
entity. Project sponsorship by a not-for-profit organization, a state or 
political subdivision of a state, a state housing agency, a local 
housing authority, a Native American Tribe, an Alaskan Native Village, 
or the government entity for Native Hawaiian Home Lands.
    (C) Targeting. The extent to which a project creates housing for 
very low- and low- or moderate-income households.
    (1) Rental projects. An application for a rental project shall be 
awarded the maximum number of points available under this scoring 
criterion if 60 percent or more of the units in the project are reserved 
for occupancy by households with incomes at or below 50 percent of the 
median income for the area. Applications for projects with less than 60 
percent of the units reserved for occupancy by households with incomes 
at or below 50 percent of the median income for the area shall be 
awarded points on a declining scale based on the percentage of units in 
a project that are reserved for households with incomes at or below 50 
percent of the median income for the area, and on the percentage of the 
remaining units reserved for households with incomes at or below 80 
percent of the median income for the area. In order to facilitate 
reliance on monitoring by a federal, state, or local government entity 
providing funds or allocating federal Low-Income Housing Tax Credits to 
a proposed project, a Bank, in its discretion, may score each project 
according to the targeting commitments made by the project to such 
entity, and the Bank shall include such scoring practice in its AHP 
implementation plan.
    (2) Owner-occupied projects. Applications for owner-occupied 
projects shall be awarded points based on a declining scale, with 
projects having the highest percentage of units targeted to households 
with the lowest percentage of median income for the area awarded the 
highest number of points.
    (3) Separate scoring. For purposes of this scoring criterion, 
applications for owner-occupied projects and rental projects may be 
scored separately.
    (D) Housing for homeless households. The creation of rental housing, 
excluding overnight shelters, reserving at least 20 percent of the units 
for homeless households, the creation of transitional housing for 
homeless households permitting a minimum of six months occupancy, or the 
creation of permanent owner-occupied housing reserving

[[Page 174]]

at least 20 percent of the units for homeless households. For purposes 
of this paragraph, the term ``homeless households'' shall have the 
meaning as defined by the Bank in its AHP implementation plan.
    (E) Promotion of empowerment. The provision of housing in 
combination with a program offering: employment; education; training; 
homebuyer, homeownership or tenant counseling; daycare services; 
resident involvement in decisionmaking affecting the creation or 
operation of the project; or other services that assist residents to 
move toward better economic opportunities, such as welfare to work 
initiatives.
    (F) First District priority. The satisfaction of one of the 
following criteria, or one of a number of the following criteria, as 
recommended by the Bank's Advisory Council and adopted by the Bank's 
board of directors and set forth in the Bank's AHP implementation plan, 
as long as the total points available for meeting the criterion or 
criteria adopted under this category do not exceed the total points 
allocated to this category:
    (1) Special needs. The creation of housing in which at least 20 
percent of the units are reserved for occupancy by households with 
special needs, such as the elderly, mentally or physically disabled 
persons, persons recovering from physical abuse or alcohol or drug 
abuse, or persons with AIDS; or the creation of housing that is 
``visitable'' by persons with physical disabilities who are not 
occupants of such housing;
    (2) Community development. The creation of housing meeting housing 
needs documented as part of a community revitalization or economic 
development strategy approved by a unit of a state or local government;
    (3) First-time homebuyers. The financing of housing for first-time 
homebuyers;
    (4) Member financial participation. Member financial participation 
(excluding the pass-through of AHP subsidy) in the project, such as 
providing market rate or concessionary financing, fee waivers, or 
donations;
    (5) Disaster areas. The financing of housing located in federally 
declared disaster areas;
    (6) Rural. The financing of housing located in rural areas;
    (7) Urban. The financing of urban in-fill or urban rehabilitation 
housing;
    (8) Economic diversity. The creation of housing that is part of a 
strategy to end isolation of very low-income households by providing 
economic diversity through mixed-income housing in low- or moderate-
income neighborhoods, or providing very low- or low- or moderate-income 
households with housing opportunities in neighborhoods or cities where 
the median income equals or exceeds the median income for the larger 
surrounding area--such as the city, county, or Primary Metropolitan 
Statistical Area--in which the neighborhood or city is located;
    (9) Fair housing remedy. The financing of housing as part of a 
remedy undertaken by a jurisdiction adjudicated by a federal, state, or 
local court to be in violation of title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d et seq.), the Fair Housing Act (42 U.S.C. 3601 et 
seq.), or any other federal, state, or local fair housing law, or as 
part of a settlement of such claims;
    (10) Community involvement. Demonstrated support for the project by 
local government, other than as a project sponsor, in the form of 
property tax deferment or abatement, zoning changes or variances, 
infrastructure improvements, fee waivers, or other similar forms of non-
cash assistance, or demonstrated support for the project by community 
organizations or individuals, other than as project sponsors, through 
the commitment by such entities or individuals of donated goods and 
services, or volunteer labor;
    (11) Lender consortia. The involvement of financing by a consortium 
of at least two financial institutions; or
    (12) In-District projects. The creation of housing located in the 
Bank's District.
    (G) Second District priority--defined housing need in the District. 
The satisfaction of a housing need in the Bank's District, as defined 
and recommended by the Bank's Advisory Council and adopted by the Bank's 
board of directors and set forth in the Bank's AHP implementation plan. 
The Bank may, but is not required to, use one of the criteria listed in 
paragraph (b)(4)(iv)(F)

[[Page 175]]

of this section, provided it is different from the criterion or criteria 
adopted by the Bank under paragraph (b)(4)(iv)(F) of this section.
    (H) AHP subsidy per unit. The extent to which a project proposes to 
use the least amount of AHP subsidy per AHP-targeted unit. In the case 
of an application for a project financed by a subsidized advance, the 
total amount of AHP subsidy used by the project shall be estimated based 
on the Bank's cost of funds as of the date on which all applications are 
due for the funding period in which the application is submitted. For 
purposes of this scoring criterion, applications for owner-occupied 
projects and rental projects may be scored separately.
    (I) Community stability. The promotion of community stability, such 
as by rehabilitating vacant or abandoned properties, being an integral 
part of a neighborhood stabilization plan approved by a unit of state or 
local government, and not displacing low- or moderate-income households, 
or if such displacement will occur, assuring that such households will 
be assisted to minimize the impact of such displacement.
    (5) Approval of applications--(i) Approval by Bank's board. The 
board of directors of each Bank shall approve applications in descending 
order starting with the highest scoring application until the total 
funding amount for the particular funding period, except for any amount 
insufficient to fund the next highest scoring application, has been 
allocated. The board of directors also shall approve at least the next 
four highest scoring applications as alternates and, within one year of 
approval, may fund such alternates if any previously committed AHP 
subsidies become available.
    (ii) No delegation. A Bank's board of directors shall not delegate 
to Bank officers or other Bank employees the responsibility to approve 
or disapprove AHP applications.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27673, May 20, 1998; 64 
FR 23015, Apr. 29, 1999; 64 FR 24028, May 5, 1999; 65 FR 5419, Feb. 4, 
2000; 65 FR 8263, Feb. 18, 2000; 67 FR 18804, Apr. 17, 2002]



Sec. 951.7  Modifications of applications prior to or after project completion.

    (a) Modification procedure. If, prior to or after final disbursement 
of funds to a project from all funding sources, there is or will be a 
change in the project that would change the score that the project 
application received in the funding period in which it was originally 
scored and approved, had the changed facts been operative at that time, 
a Bank, in its discretion, may approve in writing a modification to the 
terms of the approved application, provided that:
    (1) The project, incorporating any such changes, would meet the 
eligibility requirements of Sec. 951.5(b);
    (2) The application, as reflective of such changes, continues to 
score high enough to have been approved in the funding period in which 
it was originally scored and approved by the Bank; and
    (3) There is good cause for the modification.
    (b) Modifications involving a subsidy increase. Modifications 
involving an increase in AHP subsidy shall be approved or disapproved by 
a Bank's board of directors. The authority to approve or disapprove such 
requests shall

[[Page 176]]

not be delegated to Bank officers or other Bank employees.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27673, May 20, 1998; 65 
FR 5419, Feb. 4, 2000; 65 FR 8263, Feb. 18, 2000; 67 FR 18804, Apr. 17, 
2002]



Sec. 951.8  Procedure for funding.

    (a) Disbursement of subsidies to members. (1) A Bank may disburse 
AHP subsidies only to institutions that are members of the Bank at the 
time they request a draw-down of subsidy.
    (2) If an institution with an approved application for AHP subsidy 
fails to obtain or loses its membership in a Bank, the Bank may disburse 
subsidies to a member of such Bank to which the institution has 
transferred its obligations under the approved application, or the Bank 
may disburse subsidies through another Bank to a member of that Bank 
that has assumed the institution's obligations under the approved 
application.
    (b) Homeownership set-aside programs--(1) Time limit on use of 
subsidies. If homeownership set-aside funds are not drawn down and used 
by eligible households within the period of time specified by the Bank 
in its AHP implementation plan, the Bank shall cancel the application 
for funds and make the funds available for other applicants for 
homeownership set-aside funds or for other AHP-eligible projects.
    (2) Member certification upon disbursement. Prior to disbursement by 
a Bank to a member of homeownership set-aside funds, or prior to 
disbursement by a member of homeownership set-aside funds repaid to and 
retained by such member pursuant to a subsidy re-use program authorized 
by the Bank under Sec. 951.12(e)(2), the Bank shall require the member 
to certify that:
    (i) The funds received by the member will be provided to a household 
meeting the eligibility requirements of Sec. 951.5(a)(2);
    (ii) If the member is providing mortgage financing to the household, 
the member will provide financial or other incentives in connection with 
such mortgage financing, and the rate of interest, points, fees, and any 
other charges by the member will not exceed a reasonable market rate of 
interest, points, fees, and other charges for a loan of similar 
maturity, terms, and risk; and
    (iii) Funds received by the member for homebuyer counseling costs 
will be provided according to the requirements of Sec. 951.5(a)(7).
    (c) Competitive application program--(1) Time limit on use of 
subsidies. If AHP subsidies approved for a project under a Bank's 
competitive application program are not drawn down and used by the 
project within the period of time specified by the Bank in its AHP 
implementation plan, the Bank shall cancel its approval of the 
application for the subsidies and make the subsidies available for other 
AHP-eligible projects.
    (2) Compliance upon disbursement of subsidies. A Bank shall verify 
prior to its initial disbursement of subsidies for an approved project, 
and prior to each disbursement thereafter, that the project meets the 
eligibility requirements of Sec. 951.5(b) and all obligations committed 
to in the approved application.
    (3) Changes in approved AHP subsidy amount where a direct subsidy is 
used to write down prior to closing the principal amount or interest 
rate on a loan. If a member is approved to receive a direct subsidy to 
write down prior to closing the principal amount or the interest rate on 
a loan to a project and the amount of subsidy required to maintain the 
debt service cost for the loan decreases from the amount of subsidy 
initially approved by the Bank due to a decrease in market interest 
rates between the time of approval and the time the lender commits to 
the interest rate to finance the project, the Bank shall reduce the 
subsidy amount accordingly. If market interest rates rise between the 
time of approval and the time the lender commits to the interest rate to 
finance the project, the Bank may, in its discretion, increase the 
subsidy amount accordingly.
    (4) AHP outlay adjustment. If a Bank reduces the amount of AHP 
subsidy approved for a project, the amount of such reduction shall be 
returned to the Bank's AHP fund. If a Bank increases

[[Page 177]]

the amount of AHP subsidy approved for a project, the amount of such 
increase shall be drawn first from any currently uncommitted or repaid 
AHP subsidies and then from the Bank's required AHP contribution for the 
next year.
    (5) Project sponsor notification of re-use of repaid AHP direct 
subsidy. Prior to disbursement by a project sponsor of AHP direct 
subsidy repaid to and retained by such project sponsor pursuant to a 
subsidy re-use program authorized by the Bank under Sec. 951.12(e)(2), 
the project sponsor shall provide written notice to the member and the 
Bank of its intent to disburse the repaid subsidy to a household 
satisfying the requirements of this part and the commitments in the 
approved AHP application.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 65 FR 5419, Feb. 4, 2000; 65 
FR 8263, 8264, Feb. 18, 2000; 66 FR 50302, Oct. 3, 2001; 67 FR 18804, 
Apr. 17, 2002]



Sec. 951.10  Initial monitoring requirements.

    (a) Requirements for project sponsors and owners--(1) Owner-occupied 
projects. (i) During the period of construction or rehabilitation of an 
owner-occupied project, the project sponsor must report to the member 
semiannually on whether reasonable progress is being made towards 
completion of the project.
    (ii) Where AHP subsidies are used to finance the purchase or 
rehabilitation of owner-occupied units, the project sponsor must 
maintain household income verification documentation available for 
review by the member or the Bank.
    (2) Rental projects. (i) During the period of construction or 
rehabilitation of a rental project, the project owner must report to the 
member semiannually on whether reasonable progress is being made towards 
completion of the project.
    (ii) Within the first year after project completion, the project 
owner must:
    (A) Certify to the Bank that the services and activities committed 
to in the AHP application have been provided in connection with the 
project;
    (B) Provide a list of actual tenant rents and incomes to the Bank 
and certify that:
    (1) The tenant rents and incomes are accurate and in compliance with 
the rent and income targeting commitments made in the AHP application; 
and
    (2) The project is habitable; and
    (C) Maintain documentation regarding tenant rents and incomes and 
project habitability available for review by the Bank, to support such 
certifications.
    (b) Requirements for members--(1) Owner-occupied projects. (i) 
During the period of construction or rehabilitation of an owner-occupied 
project, the member must take the steps necessary to determine whether 
reasonable progress is being made towards completion of the project and 
must report to the Bank semiannually on the status of the project.
    (ii) Within one year after disbursement to a project of all approved 
AHP subsidies, or in the case of a re-use of repaid AHP direct subsidy 
pursuant to Sec. 951.12(e)(2), within 60 days after receipt of a notice 
of disbursement of such repaid subsidy provided by a project sponsor 
pursuant to Sec. 951.8(c)(5), the member must review the project 
documentation and certify to the Bank that:
    (A) The AHP subsidies have been used according to the commitments 
made in the AHP application; and
    (B) The AHP-assisted units are subject to deed restrictions or other 
legally enforceable retention agreements or mechanisms meeting the 
requirements of Sec. 951.13(c)(4) or (d)(1);
    (2) Rental projects. During the period of construction or 
rehabilitation of a rental project, the member must take the steps 
necessary to determine whether reasonable progress is being made towards 
completion of the project and must report to the Bank semiannually on 
the status of the project.
    (c) Requirements for Banks--(1) Owner-occupied projects. Each Bank 
must take the steps necessary to determine, based

[[Page 178]]

on a review of the documentation for a sample of projects and units 
within one year of receiving the member certifications described in 
paragraph (b)(1)(ii) of this section, or, in the case of a re-use of 
repaid AHP direct subsidy pursuant to Sec. 951.12(e)(2), based on a 
review of the documentation for the re-use upon receipt of the member 
certification for such re-use described in paragraph (b)(1)(ii) of this 
section, that:
    (i) The incomes of the households that own the AHP-assisted units 
did not exceed the levels committed to in the AHP application at the 
time the households were qualified by the sponsor to participate in the 
project;
    (ii) The AHP subsidies were used for eligible purposes, the 
project's actual costs were reasonable and customary in accordance with 
the Bank's project feasibility guidelines, and the subsidies were 
necessary for the financial feasibility of the project, as currently 
structured; and
    (iii) The AHP-assisted units are subject to deed restrictions or 
other legally enforceable retention agreements or mechanisms meeting the 
requirements of Sec. 951.13(c)(4) or (d)(1).
    (2) Rental projects. Each Bank must take the steps necessary to 
determine that, based on a review of the documentation described in 
paragraph (a)(2)(ii) of this section within one year and 120 days after 
completion of a rental project:
    (i) The services and activities committed to in the AHP application 
have been provided in connection with the project; and
    (ii) The AHP subsidies were used for eligible purposes, the 
project's actual costs were reasonable and customary in accordance with 
the Bank's project feasibility guidelines, and the subsidies were 
necessary for the financial feasibility of the project, as currently 
structured.
    (d) Annual adjustment of targeting commitments. For purposes of 
determining compliance with the targeting commitments in an AHP 
application, such commitments shall be considered to adjust annually 
according to the current applicable median income data. A rental unit 
may continue to count toward meeting the targeting commitment of an 
approved AHP application as long as the rent charged remains affordable, 
as defined in Sec. 951.1, for the household occupying the unit.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997; as amended at 65 FR 5419, Feb. 4, 2000; 65 
FR 8264, Feb. 18, 2000; 66 FR 50302, Oct. 3, 2001; 67 FR 12852, Mar. 20, 
2002; 67 FR 18804, Apr. 17, 2002]



Sec. 951.11  Long-term monitoring requirements.

    (a) Rental projects. For purposes of monitoring a rental project, 
Banks, members, and project owners shall carry out their long-term 
monitoring obligations pursuant to one of the three methods set forth in 
this paragraph (a).
    (1) Reliance on monitoring by a federal, state or local government 
entity. For those projects that receive funds from, or are allocated 
federal Low-Income Housing Tax Credits by, a federal, state, or local 
government entity, a Bank may rely on the monitoring by such entity if:
    (i) The income targeting requirements, the rent requirements, and 
the retention period monitored by such entity for purposes of its own 
program are the same as, or more restrictive than, those committed to in 
the AHP application;
    (ii) The entity agrees to inform the Bank of instances where tenant 
rents or incomes are found to be in noncompliance with the requirements 
being monitored by the entity or where the project is not habitable; and
    (iii) The entity has demonstrated and continues to demonstrate to 
the Bank its ability to carry out monitoring under its own program, and 
the Bank does not have information that such monitoring is not occurring 
or is inadequate.
    (2) Reliance on monitoring of AHP application commitments by a 
contractor. For those projects that receive funds from, or are allocated 
federal Low-Income Housing Tax Credits by, a federal, state, or local 
government entity that monitors for income targeting requirements, rent 
requirements, or retention periods under its own program

[[Page 179]]

that are less restrictive than those committed to in the project's AHP 
application, a Bank, in its discretion, may rely on the monitoring by 
such entity if:
    (i) The entity agrees to monitor the income targeting requirements, 
the rent requirements, and the retention period committed to in the AHP 
application;
    (ii) The entity agrees to inform the Bank of instances where tenant 
rents or incomes are found to be in noncompliance with the requirements 
committed to in the AHP application or where the project is not 
habitable; and
    (iii) The entity has demonstrated and continues to demonstrate to 
the Bank its ability to carry out such monitoring, and the Bank does not 
have information that such monitoring is not occurring or is inadequate.
    (3) Long-term monitoring by the Banks, members, and project owners. 
In cases where a Bank does not rely on monitoring by a federal, state, 
or local government entity pursuant to paragraphs (a)(1) or (a)(2) of 
this section, the Bank, members, and project owners shall monitor rental 
projects according to the requirements in this paragraph (a)(3).
    (i) Requirements for project owners. In the second year after 
completion of a rental project and annually thereafter until the end of 
the project's retention period, the project owner must:
    (A) Certify to the Bank that:
    (1) The tenant rents and incomes are in compliance with the rent and 
income targeting commitments made in the AHP application; and
    (2) The project is habitable; and
    (B) Maintain documentation regarding tenant rents and incomes and 
project habitability available for review by the Bank, to support such 
certifications.
    (ii) Requirements for members. For rental projects receiving 
$500,000 or less in AHP subsidy from a member, during the period from 
the second year after project completion to the end of the project's 
retention period, the member must certify to the Bank at least once 
every three years, based on an exterior visual inspection, that the 
project appears to be suitable for occupancy.
    (iii) Requirements for Banks--(A) Certifications received by the 
Bank. Each Bank shall review certifications provided by project owners 
and members regarding tenant rents and incomes and project habitability.
    (B) Review of project documentation. Each Bank shall review 
documentation maintained by the project owner regarding tenant rents and 
incomes and project habitability to verify compliance with the rent and 
income targeting commitments in the AHP application and project 
habitability, according to the following schedule:
    (1) $50,001 to $250,000. For projects receiving $50,001 to $250,000 
of AHP subsidies, the Bank must review project documentation for a 
sample of the project's units at least once every six years;
    (2) $250,001 to $500,000. For projects receiving $250,001 to 
$500,000 of AHP subsidies, the Bank must review project documentation 
for a sample of the project's units at least once every four years; and
    (3) Over $500,000. For projects receiving over $500,000 of AHP 
subsidies, the Bank must perform an on-site review of project 
documentation for a sample of the project's units at least once every 
two years.
    (C) Sampling plan. A Bank may use a reasonable sampling plan to 
select the projects monitored each year and to review the project 
documentation supporting the certifications made by members and project 
owners.
    (iv) Monitoring by a contractor. A Bank, in its discretion, may 
contract with a third party to carry out the Bank's monitoring 
obligations set forth in paragraph (a)(3)(iii) of this section.
    (b) Annual adjustment of targeting commitments. For purposes of 
determining compliance with the targeting commitments in an AHP 
application, such commitments shall be considered to adjust annually 
according to the current applicable median income data. A rental unit 
may continue to count toward meeting the targeting commitment of an 
approved AHP application

[[Page 180]]

as long as the rent charged remains affordable, as defined in 
Sec. 951.1, for the household occupying the unit.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[ 62 FR 41828, Aug. 4, 1997, as amended at 65 FR 5419, Feb. 4, 2000; 65 
FR 8264, Feb. 18, 2000]



Sec. 951.12  Remedial actions for noncompliance.

    (a) Repayment of subsidies by members--(1) Noncompliance by member. 
A member shall repay to the Bank the amount of any subsidies (plus 
interest, if appropriate) that, as a result of the member's actions or 
omissions, is not used in compliance with the terms of the application 
for the subsidy, as approved by the Bank, and the requirements of this 
part, unless:
    (i) The member cures the noncompliance within a reasonable period of 
time; or
    (ii) The circumstances of noncompliance are eliminated through a 
modification of the terms of the application for the subsidy pursuant to 
Sec. 951.7.
    (2) Noncompliance by project sponsors or owners--(i) Duty to recover 
subsidies. A member shall recover from the sponsor of an owner-occupied 
project or the owner of a rental project and repay to the Bank the 
amount of any subsidies (plus interest, if appropriate) that, as a 
result of the sponsor's or owner's actions or omissions, is not used in 
compliance with the terms of the application for the subsidy, as 
approved by the Bank, and the requirements of this part, unless:
    (A) The sponsor or owner cures the noncompliance within a reasonable 
period of time; or
    (B) The circumstances of noncompliance are eliminated through a 
modification of the terms of the application for the subsidy pursuant to 
Sec. 951.7.
    (ii) Limitation on duty to recover subsidies. The member shall not 
be liable to the Bank for the return of amounts that cannot be recovered 
from the project sponsor or owner through reasonable collection efforts 
by the member.
    (b) Repayment of subsidies by project sponsors or owners. A sponsor 
of an owner-occupied project and the owner of a rental project shall 
repay to the member the amount of any subsidies (plus interest, if 
appropriate) that, as a result of the sponsor's or owner's actions or 
omissions, is not used in compliance with the terms of the application 
for the subsidy, as approved by the Bank, and the requirements of this 
part, unless:
    (1) The sponsor or owner cures the noncompliance within a reasonable 
period of time; or
    (2) The circumstances of noncompliance are eliminated through a 
modification of the terms of the application for the subsidy pursuant to 
Sec. 951.7.
    (c) Requirements for Banks--(1) Duty to recover subsidies. A Bank 
shall recover from a member:
    (i) The amount of any subsidies (plus interest, if appropriate) 
that, as a result of the member's actions or omissions, is not used in 
compliance with the terms of the application for the subsidy, as 
approved by the Bank, and the requirements of this part; and
    (ii) The amount of any subsidies recovered by a member from the 
sponsor of an owner-occupied project or the owner of a rental project 
pursuant to the requirements of paragraph (a)(2) of this section.
    (2) Settlements. A Bank may enter into an agreement or other 
arrangement with a member for the purpose of settling claims against the 
member for repayment of subsidies. If a Bank enters into a settlement 
that results in the return of a sum that is less than the full amount of 
any AHP subsidy that is not used in compliance with the terms of the 
application for the subsidy, as approved by the Bank, and the 
requirements of this part, the Bank may be required by the Finance Board 
to reimburse its AHP fund in the amount of any shortfall under paragraph 
(c)(3) of this section, unless:
    (i) The Bank has sufficient documentation showing that the sum 
agreed to be repaid under the settlement is reasonably justified, based 
on the facts and circumstances of the noncompliance (including the 
degree of culpability of the noncomplying parties and the extent of the 
Bank's recovery efforts); or

[[Page 181]]

    (ii) The Bank obtains a determination from the Board of Directors 
that the sum agreed to be repaid under the settlement is reasonably 
justified, based on the facts and circumstances of the noncompliance 
(including the degree of culpability of the noncomplying parties and the 
extent of the Bank's recovery efforts).
    (3) Reimbursement of AHP fund. The Finance Board may order a Bank to 
reimburse its AHP fund in an appropriate amount upon determining that:
    (i) As a result of the Bank's actions or omissions, AHP subsidy is 
not used in compliance with the terms of the application for the 
subsidy, as approved by the Bank, and the requirements of this part; or
    (ii) The Bank has failed to recover AHP subsidy from a member 
pursuant to the requirements of paragraph (c)(1) of this section, and 
has not shown such failure is reasonably justified, considering factors 
such as the extent of the Bank's recovery efforts.
    (d) Parties to enforcement proceedings. A Bank, in its AHP 
implementation plan, may provide for a member, project sponsor, or 
project owner to enter into a written agreement with a Bank under which 
such member, sponsor, or owner consents to be a party to any enforcement 
proceeding initiated by the Finance Board regarding the repayment of AHP 
subsidies received by such member, sponsor, or owner, or the suspension 
or debarment of such parties, provided that the member, sponsor, or 
owner has agreed to be bound by the Finance Board's final determination 
in the enforcement proceeding.
    (e) Use of repaid subsidies--(1) Use of repaid AHP subsidies in 
other AHP-eligible projects. Except as provided in paragraph (e)(2) of 
this section, amounts of AHP subsidy, including any interest, repaid to 
a Bank pursuant to this part shall be made available by the Bank for 
other AHP-eligible projects.
    (2) Re-use of repaid AHP direct subsidies in same project. AHP 
direct subsidy, including any interest, repaid to a member or project 
sponsor under a homeownership set-aside program or the competitive 
application program, respectively, may be repaid by such parties to the 
Bank for subsequent disbursement to and re-use by such parties, or 
retained by such parties for subsequent re-use, as authorized by the 
Bank, in its discretion, in its AHP implementation plan, provided all of 
the following requirements are satisfied:
    (i) The member or the project sponsor originally provided the direct 
subsidy as downpayment, closing cost, rehabilitation or interest rate 
buydown assistance to an eligible household to purchase or rehabilitate 
an owner-occupied unit pursuant to an approved AHP application;
    (ii) The AHP direct subsidy, including any interest, was repaid to 
the member or project sponsor as a result of a sale by the household of 
the unit prior to the end of the retention period to a purchaser that is 
not a low-or moderate-income household; and
    (iii) The repaid AHP direct subsidy is made available by the member 
or project sponsor, within the period of time specified by the Bank in 
its AHP implementation plan, to another AHP-eligible household to 
purchase or rehabilitate an owner-occupied unit in the same project in 
accordance with the terms of the approved AHP application.
    (f) Suspension and debarment--(1) At a Bank's initiative. A Bank may 
suspend or debar a member, project sponsor, or owner from participation 
in the Program if such party shows a pattern of noncompliance, or 
engages in a single instance of flagrant noncompliance, with the terms 
of an application for AHP subsidy or the requirements of this part.
    (2) At the Finance Board's initiative. The Finance Board may order a 
Bank to suspend or debar a member, project sponsor, or owner from 
participation in the Program if such party shows a pattern of 
noncompliance, or engages in a single instance of flagrant 
noncompliance, with the terms of an application for AHP subsidy or the 
requirements of this part.
    (g) Transfer of Program administration. Without limitation on other 
remedies, the Finance Board, upon determining that a Bank has engaged in 
mismanagement of its Program, may designate another Bank to administer 
all or a portion of the first Bank's annual AHP contribution, for the 
benefit of the first Bank's members, under such

[[Page 182]]

terms and conditions as the Finance Board may prescribe.
    (h) Finance Board actions under this section. Except as provided in 
paragraph (c)(2)(ii) of this section, actions taken by the Finance Board 
pursuant to this section shall be subject to the Finance Board's 
procedures for review of disputed supervisory determinations set forth 
in Sec. 907.9 of this chapter.

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27673, May 20, 1998; 65 
FR 8264, Feb. 18, 2000; 67 FR 12852, Mar. 20, 2002; 67 FR 18805, Apr. 
17, 2002]



Sec. 951.13  Agreements.

    (a) Agreements between Banks and members. A Bank shall have in place 
with each member receiving a subsidized advance or direct subsidy an 
agreement or agreements containing the provisions set forth in this 
section.
    (b) General provisions--(1) Subsidy pass-through. The member shall 
pass on the full amount of the AHP subsidy to the project, or household 
in the case of homeownership set-aside funds, for which the subsidy was 
approved.
    (2) Use of subsidy--(i) Use of subsidy by the member. The member 
shall use the AHP subsidy in accordance with the terms of the member's 
application for the subsidy, as approved by the Bank, and the 
requirements of this part.
    (ii) Use of subsidy by the project sponsor or owner. The member 
shall have in place an agreement with the sponsor of an owner-occupied 
project and each owner of a rental project in which the sponsor or owner 
agrees to use the AHP subsidy in accordance with the terms of the 
member's application for the subsidy, as approved by the Bank, and the 
requirements of this part.
    (3) Repayment of subsidies in case of noncompliance--(i) 
Noncompliance by the member. The member shall repay subsidies to the 
Bank in accordance with the requirements of Sec. 951.12(a)(1).
    (ii) Noncompliance by a project sponsor or owner--(A) Agreement. The 
member shall have in place an agreement with the sponsor of an owner-
occupied project and each owner of a rental project in which the sponsor 
or owner agrees to repay AHP subsidies in accordance with the 
requirements of Sec. 951.12(b).
    (B) Recovery of subsidies. The member shall recover from the project 
sponsor or owner and repay to the Bank any subsidy in accordance with 
the requirements of Sec. 951.12(a)(2).
    (4) Project monitoring--(i) Monitoring by the member. The member 
shall comply with the monitoring requirements of Secs. 951.10(b) and 
951.11(a)(3)(ii).
    (ii) Monitoring by the project sponsor. The member shall have in 
place an agreement with the sponsor of an owner-occupied project in 
which the sponsor agrees to comply with the monitoring requirements of 
Sec. 951.10(a)(1).
    (iii) Monitoring by the project owner. The member shall have in 
place an agreement with the owner of a rental project in which the owner 
agrees to comply with the monitoring requirements of Secs. 951.10(a)(2) 
and 951.11(a)(3)(i).
    (5) Transfer of AHP obligations to another member. The member will 
make best efforts to transfer its obligations under the approved 
application for AHP subsidy to another member in the event of its loss 
of membership in the Bank prior to the Bank's final disbursement of AHP 
subsidies.
    (c) Special provisions where members obtain subsidized advances--(1) 
Repayment schedule. The term of the subsidized advance shall be no 
longer than the term of the member's loan to the project funded by the 
advance, and at least once in every 12-month period, the member shall be 
scheduled to make a principal repayment to the Bank equal to the amount 
scheduled to be repaid to the member on its loan to the project in that 
period.
    (2) Prepayment fees. Upon a prepayment of the subsidized advance, 
the Bank shall charge a prepayment fee only to the extent the Bank 
suffers an economic loss from the prepayment.
    (3) Treatment of loan prepayment by project. If all or a portion of 
the loan or loans financed by a subsidized advance are prepaid by the 
project to the member, the member may, at its option, either:
    (i) Repay to the Bank that portion of the advance used to make the 
loan or loans to the project, and be subject to a fee imposed by the 
Bank sufficient to compensate the Bank for any economic

[[Page 183]]

loss the Bank experiences in reinvesting the repaid amount at a rate of 
return below the cost of funds originally used by the Bank to calculate 
the interest rate subsidy incorporated in the advance; or
    (ii) Continue to maintain the advance outstanding, subject to the 
Bank resetting the interest rate on that portion of the advance used to 
make the loan or loans to the project to a rate equal to the cost of 
funds originally used by the Bank to calculate the interest rate subsidy 
incorporated in the advance.
    (4) Retention agreements for owner-occupied units--(i) Units with 
AHP-assisted permanent financing. The member shall ensure that an owner-
occupied unit with permanent financing obtained from the proceeds of a 
subsidized advance is subject to a deed restriction or other legally 
enforceable retention agreement or mechanism requiring that:
    (A) The Bank or its designee is to be given notice of any sale or 
refinancing of the unit occurring prior to the end of the retention 
period;
    (B) In the case of a refinancing prior to the end of the retention 
period, the full amount of the interest rate subsidy received by the 
owner, based on the pro rata portion of the interest rate subsidy 
imputed to the subsidized advance during the period the owner occupied 
the unit prior to refinancing, shall be repaid to the Bank from any net 
gain realized upon the refinancing, unless the unit continues to be 
subject to a deed restriction or other legally enforceable retention 
agreement or mechanism described in this paragraph (c)(4)(i); and
    (C) The obligation to repay AHP subsidy to the Bank shall terminate 
after any foreclosure.
    (ii) Units constructed or rehabilitated with AHP-assisted financing. 
The member shall ensure that an owner-occupied unit constructed or 
rehabilitated with a loan from the proceeds of a subsidized advance but 
which does not have permanent financing from the proceeds of a 
subsidized advance, is subject to a deed restriction or other legally 
enforceable retention agreement or mechanism requiring that:
    (A) The Bank or its designee is to be given notice of any sale or 
refinancing of the unit occurring prior to the end of the retention 
period;
    (B) In the case of a sale prior to the end of the retention period, 
an amount equal to the pro rata portion of the interest rate subsidy 
imputed to the subsidized advance that financed the construction or 
rehabilitation loan for the unit, reduced for every year the seller 
owned the unit, shall be repaid to the Bank from any net gain realized 
upon the sale of the unit after deduction for sales expenses, unless the 
purchaser is a low- or moderate-income household;
    (C) In the case of a refinancing prior to the end of the retention 
period, an amount equal to the pro rata portion of the interest rate 
subsidy imputed to the subsidized advance that financed the construction 
or rehabilitation loan for the unit, reduced for every year the owner 
occupied the unit, shall be repaid to the Bank from any net gain 
realized upon the refinancing, unless the unit continues to be subject 
to a deed restriction or other legally enforceable retention agreement 
or mechanism described in this paragraph (c)(4)(ii); and
    (D) The obligation to repay AHP subsidy to the Bank shall terminate 
after any foreclosure.
    (5) Retention agreements for rental projects. The member shall 
ensure that a rental project financed by a loan from the proceeds of a 
subsidized advance is subject to a deed restriction or other legally 
enforceable retention agreement or mechanism requiring that:
    (i) The project's rental units, or applicable portion thereof, must 
remain occupied by and affordable for households with incomes at or 
below the levels committed to be served in the AHP application for the 
duration of the retention period;
    (ii) The Bank or its designee is to be given notice of any sale or 
refinancing of the project occurring prior to the end of the retention 
period;
    (iii) In the case of a sale or refinancing of the project prior to 
the end of the retention period, the full amount of the interest rate 
subsidy received by the owner, based on the pro rata portion of the 
interest rate subsidy imputed to the subsidized advance during the 
period the owner owned the project prior to the sale or refinancing, 
shall

[[Page 184]]

be repaid to the Bank, unless the project continues to be subject to a 
deed restriction or other legally enforceable retention agreement or 
mechanism incorporating the income-eligibility and affordability 
restrictions committed to in the AHP application for the duration of the 
retention period; and
    (iv) The income-eligibility and affordability restrictions 
applicable to the project terminate after any foreclosure.
    (6) Transfer of AHP obligations to a nonmember. If, after final 
disbursement of AHP subsidies to the member, the member undergoes an 
acquisition or a consolidation resulting in a successor organization 
that is not a member of the Bank, the nonmember successor organization 
assumes the member's obligations under its approved application for AHP 
subsidy upon prepayment or orderly liquidation by the nonmember of the 
subsidized advance.
    (d) Special provisions where members obtain direct subsidies--(1) 
Retention agreements for owner-occupied units. The member shall ensure 
that an owner-occupied unit that is purchased, constructed, or 
rehabilitated with the proceeds of a direct subsidy is subject to a deed 
restriction or other legally enforceable retention agreement or 
mechanism requiring that:
    (i) The Bank or its designee is to be given notice of any sale or 
refinancing of the unit occurring prior to the end of the retention 
period;
    (ii) In the case of a sale of the unit prior to the end of the 
retention period, an amount equal to a pro rata share of the direct 
subsidy that financed the purchase, construction, or rehabilitation of 
the unit, reduced for every year the seller owned the unit, shall be 
repaid to the following parties, as applicable, from any net gain 
realized upon the sale of the unit after deduction for sales expenses, 
unless the purchaser is a low-or moderate-income household:
    (A) To the Bank: If the Bank has not authorized re-use of the repaid 
subsidy pursuant to Sec. 951.12(e)(2); if the Bank has authorized re-use 
of the repaid subsidy but not retention of such subsidy by the member or 
project sponsor pursuant to Sec. 951.12(e)(2); or if the Bank has 
authorized retention and re-use of such subsidy by the member or project 
sponsor pursuant to Sec. 951.12(e)(2) and the repaid subsidy is not re-
used in accordance with the requirements of the Bank and 
Sec. 951.12(e)(2); or
    (B) To the member or project sponsor for re-use by such member or 
project sponsor, if the Bank has authorized retention and re-use of such 
subsidy by the member or project sponsor pursuant to Sec. 951.12(e)(2);
    (iii) In the case of a refinancing prior to the end of the retention 
period, an amount equal to a pro rata share of the direct subsidy that 
financed the purchase, construction, or rehabilitation of the unit, 
reduced for every year the occupying household has owned the unit, shall 
be repaid to the following parties, as applicable, from any net gain 
realized upon the refinancing, unless the unit continues to be subject 
to a deed restriction or other legally enforceable retention agreement 
or mechanism described in this paragraph (d)(1):
    (A) To the Bank: If the Bank has not authorized re-use of the repaid 
subsidy pursuant to Sec. 951.12(e)(2); if the Bank has authorized re-use 
of the repaid subsidy but not retention of such subsidy by the member or 
project sponsor pursuant to Sec. 951.12(e)(2); or if the Bank has 
authorized retention and re-use of such subsidy by the member or project 
sponsor pursuant to Sec. 951.12(e)(2) and the repaid subsidy is not re-
used in accordance with the requirements of the Bank and 
Sec. 951.12(e)(2); or
    (B) To the member or project sponsor for re-use by such member or 
project sponsor, if the Bank has authorized retention and re-use of such 
subsidy by the member or project sponsor pursuant to Sec. 951.12(e)(2); 
and
    (iv) The obligation to repay AHP subsidy to the Bank, or to the 
member or project sponsor, as applicable, shall terminate after any 
foreclosure.
    (2) Retention agreements for rental projects. The member shall 
ensure that a rental project financed by the proceeds of a direct 
subsidy is subject to a deed restriction or other legally enforceable 
retention agreement or mechanism requiring that:
    (i) The project's rental units, or applicable portion thereof, must 
remain

[[Page 185]]

occupied by and affordable for households with incomes at or below the 
levels committed to be served in the AHP application for the duration of 
the retention period;
    (ii) The Bank or its designee is to be given notice of any sale or 
refinancing of the project occurring prior to the end of the retention 
period;
    (iii) In the case of a sale or refinancing of the project prior to 
the end of the retention period, an amount equal to the full amount of 
the direct subsidy shall be repaid to the Bank, unless the project 
continues to be subject to a deed restriction or other legally 
enforceable retention agreement or mechanism incorporating the income-
eligibility and affordability restrictions committed to in the AHP 
application for the duration of the retention period; and
    (iv) The income-eligibility and affordability restrictions 
applicable to the project terminate after any foreclosure.
    (3) Lending of direct subsidies. If a member or a project sponsor 
lends a direct subsidy to a project, any repayments of principal and 
payments of interest received by the member or the project sponsor must 
be paid forthwith to the Bank.
    (4) Transfer of AHP obligations to a nonmember. If, after final 
disbursement of AHP subsidies to the member, the member undergoes an 
acquisition or a consolidation resulting in a successor organization 
that is not a member of the Bank, the nonmember successor organization 
assumes the member's obligations under its approved application for AHP 
subsidy.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 63 FR 27673, May 20, 1998; 65 
FR 5419, Feb. 4, 2000; 65 FR 8264, Feb. 18, 2000; 67 FR 18805, Apr. 17, 
2002]



Sec. 951.14  Temporary suspension of AHP contributions.

    (a) Application for temporary suspension--(1) Notification to 
Finance Board. If a Bank finds that the contributions required pursuant 
to Sec. 951.2 are contributing to the financial instability of the Bank, 
the Bank shall notify the Finance Board promptly, and may apply in 
writing to the Finance Board for a temporary suspension of such 
contributions.
    (2) Contents. A Bank's application for a temporary suspension of 
contributions shall include:
    (i) The period of time for which the Bank seeks a suspension;
    (ii) The grounds for a suspension;
    (iii) A plan for returning the Bank to a financially stable 
position; and
    (iv) The Bank's annual financial report for the preceding year, if 
available, and the Bank's most recent quarterly and monthly financial 
statements and any other financial data the Bank wishes the Finance 
Board to consider.
    (b) Board of Directors review of application for temporary 
suspension--(1) Determination of financial instability. In determining 
the financial instability of a Bank, the Board of Directors shall 
consider such factors as:
    (i) Whether the Bank's earnings are severely depressed;
    (ii) Whether there has been a substantial decline in the Bank's 
membership capital; and
    (iii) Whether there has been a substantial reduction in the Bank's 
advances outstanding.
    (2) Limitations on grounds for suspension. The Board of Directors 
shall disapprove an application for a temporary suspension if it 
determines that the Bank's reduction in earnings is a result of:
    (i) A change in the terms of advances to members which is not 
justified by market conditions;
    (ii) Inordinate operating and administrative expenses; or
    (iii) Mismanagement.
    (c) Board of Directors decision. The Board of Directors' decision 
shall be in writing and shall be accompanied by specific findings and 
reasons for its action. If the Board of Directors approves a Bank's 
application for a temporary suspension, the Board of Directors' written 
decision shall specify the period of time such suspension shall remain 
in effect.
    (d) Monitoring. During the term of a temporary suspension approved 
by the Board of Directors, the affected Bank

[[Page 186]]

shall provide to the Board of Directors such financial reports as the 
Board of Directors shall require to monitor the financial condition of 
the Bank.
    (e) Termination of suspension. If, prior to the conclusion of the 
temporary suspension period, the Board of Directors determines that the 
Bank has returned to a position of financial stability, the Board of 
Directors may, upon written notice to the Bank, terminate the temporary 
suspension.
    (f) Application for extension of temporary suspension period. If a 
Bank's board of directors determines that the Bank has not returned to, 
or is not likely to return to, a position of financial stability at the 
conclusion of the temporary suspension period, the Bank may apply in 
writing for an extension of the temporary suspension period, stating the 
grounds for such extension.

[62 FR 41828, Aug. 4, 1997, as amended at 65 FR 8264, Feb. 18, 2000]



Sec. 951.15  Affordable Housing Reserve Fund.

    (a) Reserve Fund--(1) Deposits. If a Bank fails to use or commit the 
full amount it is required to contribute to the Program in any year 
pursuant to Sec. 951.2, 90 percent of the unused or uncommitted amount 
shall be deposited by the Bank in an Affordable Housing Reserve Fund 
established and administered by the Finance Board. The remaining 10 
percent of the unused and uncommitted amount retained by the Bank should 
be fully used or committed by the Bank during the following year, and 
any remaining portion must be deposited in the Affordable Housing 
Reserve Fund.
    (2) Use or commitment of funds. Approval of applications for AHP 
subsidies sufficient to exhaust the amount a Bank is required to 
contribute pursuant to Sec. 951.2 shall constitute use or commitment of 
funds. Amounts remaining unused or uncommitted at year-end are deemed to 
be used or committed if, in combination with AHP subsidies that have 
been returned to the Bank or de-committed from canceled projects, they 
are insufficient to fund:
    (i) The next highest scoring AHP application in the Bank's final 
funding period of the year for its competitive application program; or
    (ii) Pending applications for funds under the Bank's homeownership 
set-aside programs;
    (iii) Project modifications approved by the Bank pursuant to the 
requirements of this part.
    (3) Carryover of insufficient amounts. Such insufficient amounts as 
described in paragraph (a)(2) of this section shall be carried over for 
use or commitment in the following year in the Bank's competitive 
application program or homeownership set-aside programs.
    (b) Annual statement. By January 15 of each year, each Bank shall 
provide to the Finance Board a statement indicating the amount of unused 
and uncommitted funds from the prior year, if any, which will be 
deposited in the Affordable Housing Reserve Fund.
    (c) Annual notification. By January 31 of each year, the Finance 
Board shall notify the Banks of the total amount of funds, if any, 
available in the Affordable Housing Reserve Fund.

(The Office of Management and Budget has approved the information 
collection contained in this section and assigned control number 3069-
0006 with an expiration date of June 30, 2004)

[62 FR 41828, Aug. 4, 1997, as amended at 65 FR 5419, Feb. 4, 2000; 65 
FR 8264, Feb. 18, 2000; 66 FR 50302, Oct. 3, 2001]



Sec. 951.16  Application to existing AHP projects.

    The requirements of section 10(j) of the Act (12 U.S.C. 1430(j)) and 
the provisions of this part, as amended, are incorporated into all 
agreements between Banks, members, sponsors, or owners receiving AHP 
subsidies. To the extent the requirements of this part are amended from 
time to time, such agreements are deemed to incorporate the amendments 
to conform to any new requirements of this part. No amendment to this 
part shall affect the legality of actions taken prior to the effective 
date of such amendment.

[62 FR 41828, Aug. 4, 1997, as amended at 67 FR 12852, Mar. 20, 2002]

[[Page 187]]



PART 952--COMMUNITY INVESTMENT CASH ADVANCE PROGRAMS--Table of Contents




Sec.
952.1  Definitions.
952.2  Scope.
952.3  Purpose.
952.4  Targeted Community Lending Plan.
952.5  Community Investment Cash Advance Programs.
952.6  Reporting.
952.7  Documentation.

    Authority: 12 U.S.C. 1422b(a)(1), 1430.

    Source: 63 FR 65546, Nov. 27, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 952.1  Definitions.

    As used in this part:
    Champion Community means a community which developed a strategic 
plan and applied for designation by either the Secretary of HUD or the 
Secretary of the USDA as an Empowerment Zone or Enterprise Community, 
but was designated a Champion Community.
    CICA program or Community Investment Cash Advance program means:
    (1) A Bank's AHP;
    (2) A Bank's CIP;
    (3) A Bank's RDF program or UDF program using any combination of the 
targeted beneficiaries and targeted income levels specified in 
Sec. 952.1 of this part; and
    (4) Any other advance or grant program offered by a Bank using 
targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1 of this part, established by the Bank with the 
prior approval of the Finance Board.
    Economic development projects means:
    (1) Commercial, industrial, manufacturing, social service, and 
public facility projects and activities; and
    (2) Public or private infrastructure projects, such as roads, 
utilities, and sewers.
    Family means one or more persons living in the same dwelling unit.
    Housing projects means projects or activities that involve the 
purchase, construction, rehabilitation or refinancing (subject to 
Sec. 952.5(c) of this part) of, or predevelopment financing for:
    (1) Individual owner-occupied housing units, each of which is 
purchased or owned by a family with an income at or below the targeted 
income level;
    (2) Projects involving multiple units of owner-occupied housing in 
which at least 51% of the units are owned or are intended to be 
purchased by families with incomes at or below the targeted income 
level;
    (3) Rental housing where at least 51% of the units in the project 
are occupied by, or the rents are affordable to, families with incomes 
at or below the targeted income level; or
    (4) Manufactured housing parks where:
    (i) At least 51% of the units in the project are occupied by, or the 
rents are affordable to, families with incomes at or below the targeted 
income level; or
    (ii) The project is located in a neighborhood with a median income 
at or below the targeted income level.
    Median income for the area. (1) Owner-occupied housing projects and 
economic development projects. For purposes of owner-occupied housing 
projects and economic development projects, median income for the area 
means one or more of the following, as determined by the Bank:
    (i) The median income for the area, as published annually by HUD;
    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The applicable median family income, as determined under 26 
U.S.C. 143(f) (Mortgage Revenue Bonds) and published by a State agency 
or instrumentality;
    (iv) The median income for the area, as published by the USDA; or
    (v) The median income for the area obtained from another public 
entity or a private source and approved by the Board of Directors, at 
the request of a Bank, for use under the Bank's CICA programs.
    (2) Rental housing projects. For purposes of rental housing 
projects, median income for the area means one or more of the following, 
as determined by the Bank:
    (i) The median income for the area, as published annually by HUD; or

[[Page 188]]

    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The median income for the area obtained from another public 
entity or a private source and approved by the Board of Directors, at 
the request of a Bank, for use under the Bank's CICA programs.
    MSA means a Metropolitan Statistical Area as designated by the 
Office of Management and Budget.
    Neighborhood means:
    (1) A census tract or block numbering area;
    (2) A unit of local government with a population of 25,000 or less;
    (3) A rural county; or
    (4) A geographic location designated in comprehensive plans, 
ordinances, or other local documents as a neighborhood, village, or 
similar geographic designation that is within the boundary of but does 
not encompass the entire area of a unit of general local government.
    Provide financing means:
    (1) Originating loans;
    (2) Purchasing a participation interest, or providing financing to 
participate, in a loan consortium for CICA-eligible housing or economic 
development projects;
    (3) Making loans to entities that, in turn, make loans for CICA-
eligible housing or economic development projects;
    (4) Purchasing mortgage revenue bonds or mortgage-backed securities, 
where all of the loans financed by such bonds and all of the loans 
backing such securities, respectively, meet the eligibility requirements 
of the CICA program under which the member or housing associate borrower 
receives an funding;
    (5) Creating or maintaining a secondary market for loans, where all 
such loans are mortgage loans meeting the eligibility requirements of 
the CICA program under which the member or housing associate borrower 
receives funding;
    (6) Originating CICA-eligible loans within 3 months prior to 
receiving the CICA funding; and
    (7) Purchasing low-income housing tax credits.
    RDF or Rural Development Funding program means an advance or grant 
program offered by a Bank for targeted community lending in rural areas.
    Rural area means:
    (1) A unit of general local government with a population of 25,000 
or less;
    (2) An unincorporated area outside an MSA; or
    (3) An unincorporated area within an MSA that qualifies for housing 
or economic development assistance from the USDA.
    Small business means a ``small business concern,'' as that term is 
defined by section 3(a) of the Small Business Act (15 U.S.C. 632(a)) and 
implemented by the Small Business Administration under 13 CFR part 121, 
or any successor provisions.
    Targeted beneficiaries means beneficiaries determined by the 
geographical area in which a project is located (Geographically Defined 
Beneficiaries), by the individuals who benefit from a project as 
employees or service recipients (Individual Beneficiaries), or by the 
nature of the project itself (Activity Beneficiaries), as follows:
    (1) Geographically Defined Beneficiaries:
    (i) The project is located in a neighborhood with a median income at 
or below the targeted income level;
    (ii) The project is located in a rural Champion Community, or a 
rural Empowerment Zone or rural Enterprise Community, as designated by 
the Secretary of the USDA;
    (iii) The project is located in an urban Champion Community, or an 
urban Empowerment Zone or urban Enterprise Community, as designated by 
the Secretary of HUD;
    (iv) The project is located in an Indian area, as defined by the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.), Alaskan Native Village, or Native Hawaiian 
Home Land;
    (v) The project is located in an area and involves a property 
eligible for a Brownfield Tax Credit;
    (vi) The project is located in an area affected by a military base 
closing and is a ``community in the vicinity of the

[[Page 189]]

installation'' as defined by the Department of Defense at 32 CFR part 
176;
    (vii) The project is located in a designated community under the 
Community Adjustment and Investment Program as defined under 22 U.S.C. 
290m-2;
    (viii) The project is located in a Federally declared disaster area; 
or
    (ix) The project is located in a state declared disaster area, or 
other area that qualifies for assistance under another Federal or State 
targeted economic development program, approved by the Finance Board.
    (2) Individual Beneficiaries:
    (i) The annual salaries for at least 51% of the permanent full- and 
part-time jobs, computed on a full-time equivalent basis, created or 
retained by the project, other than construction jobs, are at or below 
the targeted income level; or
    (ii) At least 51% of the families who otherwise benefit from (other 
than through employment), or are provided services by, the project have 
incomes at or below the targeted income level.
    (3) Activity Beneficiaries: Projects that qualify as small 
businesses.
    (4) Other Targeted Beneficiaries. A Bank may designate, with the 
prior approval of the Finance Board, other targeted beneficiaries for 
its targeted community lending.
    (5) Only targeted beneficiaries identified in paragraphs (1)(i) 
through (1)(iv), and (2)(i) and (2)(ii) of this definition are eligible 
for CIP advances.
    Targeted community lending means providing financing for economic 
development projects for targeted beneficiaries.
    Targeted income level means:
    (1) For rural areas, incomes at or below 115 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four;
    (2) For urban areas, incomes at or below 100 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four;
    (3) For advances provided under CIP:
    (i) For economic development projects, incomes at or below 80 
percent of the median income for the area; or
    (ii) For housing projects, incomes at or below 115 percent of the 
median income for the area, both as adjusted for family size in 
accordance with the methodology of the applicable area median income 
standard or, at the option of the Bank, for a family of four; or
    (4) For advances or grants provided under any other CICA program 
offered by a Bank, a targeted income level established by the Bank with 
the prior approval of the Finance Board.
    UDF program or Urban Development Funding program means an advance or 
grant program offered by a Bank for targeted community lending in urban 
areas.
    Urban area means:
    (1) A unit of general local government with a population of more 
than 25,000; or
    (2) An unincorporated area within an MSA that does not qualify for 
housing or economic development assistance from the USDA.
    USDA means the United States Department of Agriculture.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000; 66 FR 50295, Oct. 3, 2001. Redesignated and 
amended at 67 FR 12852, Mar. 20, 2002]



Sec. 952.2  Scope.

    Section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10) authorizes the 
Banks to offer Community Investment Cash Advance (CICA) programs. This 
part establishes requirements for all CICA programs offered by a Bank, 
except for a Bank's Affordable Housing Program (AHP), which is governed 
specifically by part 951 of this chapter.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12852, Mar. 20, 2002]



Sec. 952.3  Purpose.

    The purpose of this part is to identify targeted community lending 
projects that the Banks may support through the establishment of CICA 
programs under section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10)). 
Pursuant to this

[[Page 190]]

part, a Bank may offer Rural Development Funding (RDF) or Urban 
Development Funding (UDF) programs, or both, for targeted community 
lending using the targeted beneficiaries or targeted income levels 
specified in Sec. 952.1, without prior Finance Board approval. A Bank 
also may offer other CICA programs for targeted community lending using 
targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1, established by the Bank with the prior approval 
of the Finance Board. In addition, a Bank shall offer CICA programs 
under section 10(i) of the Act (12 U.S.C. 1430(i)) (Community Investment 
Program (CIP)) and section 10(j) of the Act (12 U.S.C. 1430(j)) 
(Affordable Housing Program (AHP)). A Bank may provide advances or 
grants under its CICA programs except for CIP programs, under which a 
Bank may only provide advances.

[67 FR 12852, Mar. 20, 2002]



Sec. 952.4  Targeted Community Lending Plan

    Each Bank shall develop and adopt an annual Targeted Community 
Lending Plan pursuant to Sec. 944.6 of this chapter.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000]



Sec. 952.5  Community Investment Cash Advance Programs.

    (a) In general. (1) Each Bank shall offer an AHP in accordance with 
part 951 of this chapter.
    (2) Each Bank shall offer a CIP to provide financing for housing 
projects and for eligible targeted community lending at the appropriate 
targeted income levels.
    (3) Each Bank may offer RDF programs or UDF programs, or both, for 
targeted community lending using the targeted beneficiaries or targeted 
income levels specified in Sec. 952.1 of this part, without prior 
Finance Board approval.
    (4) Each Bank may offer CICA programs for targeted community lending 
using targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1 of this part, established by the Bank with the 
prior approval of the Finance Board.
    (b) Mixed-use projects. (1) For projects funded under CICA programs 
other than CIP, involving a combination of housing projects and economic 
development projects, only the economic development components of the 
project must meet the appropriate targeted income level for the 
respective CICA program.
    (2) For projects funded under CIP, both the housing and economic 
development components of the project must meet the appropriate targeted 
income levels.
    (c) Refinancing. CICA funding other than AHP may be used to 
refinance economic development projects and housing projects, provided 
that any equity proceeds of the refinancing of rental housing and 
manufactured housing parks are used to rehabilitate the projects or to 
preserve affordability for current residents.
    (d) Pricing and Availability of advances--(1) Advances to members. 
For CICA programs other than AHP and CIP, a Bank shall price advances to 
members as provided in Sec. 950.5 of this chapter, and may price such 
advances at rates below the price of advances of similar amounts, 
maturities and terms made pursuant to section 10(a) of the Act. (12 
U.S.C. 1430(a)).
    (2) Pricing of CIP advances. The price of advances made under CIP 
shall not exceed the Bank's cost of issuing consolidated obligations of 
comparable maturity, taking into account reasonable administrative 
costs.
    (3) Pricing of AHP advances. A Bank shall price advances made under 
AHP in accordance with parts 950 and 951 of this chapter.
    (4) Advances to housing associate borrowers. (i) A Bank may offer 
advances under CICA programs to housing associate borrowers at the 
Bank's option, except for AHP and CIP, which are available only to 
members.
    (ii) A Bank shall price advances to housing associate borrowers as 
provided in Sec. 950.17 of this chapter, and may price such advances at 
rates below the price of advances of similar amounts, maturities and 
terms made pursuant to section 10b of the Act. (12 U.S.C. 1430b).

[[Page 191]]

    (5) Pricing pass-through. A Bank may require that borrowers 
receiving advances made under CICA programs pass through the benefit of 
any price reduction from regular advance pricing to their borrowers.
    (6) Discount Fund. (i) A Bank may establish a Discount Fund which 
the Bank may use to reduce the price of CIP or other advances made under 
CICA programs below the advance prices provided for by this part.
    (ii) Price reductions made through the Discount Fund shall be made 
in accordance with a fair distribution scheme.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000; 66 FR 50296, Oct. 3, 2001; 67 FR 12852, Mar. 
20, 2002]



Sec. 952.6  Reporting.

    (a) By July 1, 1999, each Bank shall provide to the Finance Board an 
initial assessment of the credit needs and market opportunities in a 
Bank's district for targeted community lending.
    (b) Effective in 2000, each Bank annually shall provide to the 
Finance Board, on or before January 31, a Targeted Community Lending 
Plan.
    (c) Each Bank shall provide such other reports concerning its CICA 
programs as the Finance Board may request from time to time.

[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 65 FR 44431, July 18, 2000]



Sec. 952.7  Documentation.

    (a) A Bank shall require the borrower to certify to the Bank that 
each project funded under a CICA program (other than AHP) meets the 
respective targeting requirements of the CICA program. Such 
certification shall include a description of how the project meets the 
requirements, and where appropriate, a statistical summary or list of 
incomes of the borrowers, rents for the project, or salaries of jobs 
created or retained.
    (b) For those CICA-funded projects that also receive funds from 
another targeted Federal economic development program that has income 
targeting requirements that are the same as, or more restrictive than, 
the targeting requirements of the applicable CICA program, the Bank 
shall permit the borrower to certify that compliance with the criteria 
of such Federal economic development program will meet the requirements 
of the respective CICA program.
    (c) Such certifications shall satisfy the Bank's obligations to 
document compliance with the CICA funding provisions of this part.

[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 66 FR 50296, Oct. 3, 2001]



PART 955--ACQUIRED MEMBER ASSETS--Table of Contents




Sec.
955.1  Definitions.
955.2  Authorization to hold acquired member assets.
955.3  Required credit-risk sharing structure.
955.4  Reporting requirements for acquired member assets.
955.5  Administrative and investment transactions between Banks.
955.6  Risk-based capital requirement for acquired member assets.

Appendix A to Part 955--Reporting requirements for single-family 
          acquired member assets that are residential mortgages: loan-
          level data elements
Appendix B to Part 955--Reporting requirements for multi-family acquired 
          member assets that are residential mortgages: loan-level data 
          elements

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1430, 1430b, 1431.

    Source: 65 FR 43981, July 17, 2000, unless otherwise noted.



Sec. 955.1  Definitions.

    As used in this part:
    Affiliate means any business entity that controls, is controlled by, 
or is under common control with, a member.
    Expected losses means the base loss scenario in the methodology of 
an NRSRO applicable to that type of AMA asset.
    Residential real property has the meaning set forth in Sec. 950.1 of 
this chapter.

[67 FR 12852, Mar. 20, 2002]



Sec. 955.2  Authorization to hold acquired member assets.

    Subject to the requirements of part 980 of this chapter, each Bank 
may hold assets acquired from or through

[[Page 192]]

Bank System members or housing associates by means of either a purchase 
or a funding transaction (AMA), subject to each of the following 
requirements:
    (a) Loan type requirement. The assets are either:
    (1) Whole loans that are eligible to secure advances under 
Secs. 950.7(a)(1)(i), (a)(2)(ii), (a)(4), or (b)(1) of this chapter, 
excluding:
    (i) Single-family mortgages where the loan amount exceeds the limits 
established pursuant to 12 U.S.C. 1717(b)(2); and
    (ii) Loans made to an entity, or secured by property, not located in 
a state;
    (2) Whole loans secured by manufactured housing, regardless of 
whether such housing qualifies as residential real property; or
    (3) State and local housing finance agency bonds;
    (b) Member or housing associate nexus requirement. The assets are:
    (1) Either:
    (i) Originated or issued by, through, or on behalf of a Bank System 
member or housing associate, or an affiliate thereof; or
    (ii) Held for a valid business purpose by a Bank System member or 
housing associate, or an affiliate thereof, prior to acquisition by a 
Bank; and
    (2) Acquired either:
    (i) From a member or housing associate of the acquiring Bank;
    (ii) From a member or housing associate of another Bank, pursuant to 
an arrangement with that Bank, which, in the case of state and local 
finance agency bonds only, may be reached in accordance with the 
following process:
    (A) The housing finance agency shall first offer the Bank in whose 
district the agency is located (local Bank) a right of first refusal to 
purchase, or negotiate the terms of, its proposed bond offering;
    (B) If the local Bank indicates, within a three day period, that it 
will negotiate in good faith to purchase the bonds, the agency may not 
offer to sell or negotiate the terms of a purchase with another Bank; 
and
    (C) If the local Bank declines the offer, or has failed to respond 
within the three day period, the acquiring Bank will be considered to 
have an arrangement with the local Bank for purposes of this section and 
may offer to buy or negotiate the terms of a bond sale with the agency;
    (iii) From another Bank; and
    (c) Credit risk-sharing requirement. The transactions through which 
the Bank acquires the assets either:
    (1) Meet the credit risk-sharing requirements of Sec. 955.3 of this 
part; or
    (2) Were authorized by the Finance Board under section II.B.12 of 
the FMP and are within any total dollar cap established by the Finance 
Board at the time of such authorization.



Sec. 955.3  Required credit risk-sharing structure.

    (a) Determination of necessary credit enhancement. At the earlier of 
270 days from the date of the Bank's acquisition of the first loan in a 
pool, or the date at which the amount of a pool's assets reaches $100 
million, a Bank shall determine the total credit enhancement necessary 
to enhance the asset or pool of assets to a credit quality that is 
equivalent to that of an instrument having at least the fourth highest 
credit rating from an NRSRO, or such higher credit rating as the Bank 
may require. The Bank shall make this determination for each AMA product 
using a methodology that is confirmed in writing by an NRSRO to be 
comparable to a methodology that the NRSRO would use in determining 
credit enhancement levels when conducting a rating review of the asset 
or pool of assets in a securitization transaction.
    (b) Credit risk-sharing structure. A Bank acquiring AMA shall 
implement, and have in place at all times, a credit risk-sharing 
structure for each AMA product under which a member or housing associate 
of the Bank or, with the approval of both Banks, a member or housing 
associate of another Bank, provides a sufficient credit enhancement from 
the first dollar of credit loss for each asset or pool of assets such 
that the acquiring Bank's exposure to credit risk for the life of the 
asset or pool of assets is no greater than that of an asset rated in the 
fourth highest credit rating category, as determined

[[Page 193]]

pursuant to paragraph (a) of this section, or such higher rating as the 
acquiring Bank may require. This credit enhancement structure shall meet 
the following requirements:
    (1) A portion of the credit enhancement may be provided by:
    (i) Contracting with an insurance affiliate of that member or 
housing associate to provide an enhancement or undertaking against 
losses to the Bank, but only where such insurance is positioned in the 
credit enhancement structure so as to cover only losses remaining after 
the member or housing associate has borne losses as required under 
paragraph (b)(2) of this section;
    (ii) Purchasing loan-level insurance, which may include United 
States government insurance or guarantee, but only where:
    (A) The member or housing associate is legally obligated at all 
times to maintain such insurance with an insurer rated not lower than 
the second highest credit rating category; and
    (B) Such insurance is positioned in the credit enhancement structure 
so as to cover only losses remaining after the member or housing 
associate has borne losses as required under paragraph (b)(2) of this 
section;
    (iii) Purchasing pool-level insurance, but only where such 
insurance:
    (A) Insures that portion of the required credit enhancement 
attributable to the geographic concentration and size of the pool; and
    (B) Is positioned last in the credit enhancement structure so as to 
cover only those losses remaining after all other elements of the credit 
enhancement structure have been exhausted; or
    (iv) Contracting with another member or housing associate in the 
Bank's district or in another Bank's district, pursuant to an 
arrangement with that Bank, to provide an enhancement or undertaking 
against losses to the Bank in return for some compensation;
    (2) The member or housing associate that is providing the credit 
enhancement required under paragraph (b)(1) of this section shall in all 
cases bear the direct economic consequences of actual credit losses on 
the asset or pool of assets:
    (i) From the first dollar of loss up to the amount of expected 
losses; or
    (ii) Immediately following expected losses, but in an amount equal 
to or exceeding the amount of expected losses;
    (3) The portion of the credit enhancement that is an obligation of a 
Bank System member or housing associate shall be fully secured; and
    (4) The Bank shall obtain written verification from an NRSRO that 
concludes to the satisfaction of the Finance Board, based on the 
underlying economic terms of the credit enhancement structure as 
represented by the Bank for each AMA product, that either:
    (i) The level of credit enhancement provided by the member or 
housing associate is generally sufficient to enhance the asset or pool 
of assets to a credit quality that is equivalent to that of an 
instrument having the fourth highest credit rating from an NRSRO, or 
such higher rating as the Bank may require; or
    (ii) The methodology used by the Bank for estimating the level of 
credit enhancement provided by the member or housing associate is in 
accordance with the practices established by the NRSRO.
    (c) Timing of NRSRO opinions. For AMA programs already in operation 
at the time of the effective date of this rule, a Bank shall have 90 
days from the effective date of this rule to obtain the NRSRO 
verifications required under paragraphs (a) and (b)(4) of this section.

[65 FR 43981, July 17, 2000, as amended at 67 FR 12852, Mar. 20, 2002]



Sec. 955.4  Reporting requirements for acquired member assets.

    (a) Loan-Level Data Elements. Each Bank that acquires AMA that are 
residential mortgages shall collect and maintain loan-level data on each 
mortgage held, as specified in appendix A (for single-family mortgage 
assets) or appendix B (for multifamily mortgage assets) to this part.
    (b) Quarterly Mortgage Reports. Beginning with calendar year 2001, 
within 60 days of the end of every quarter of every calendar year, each 
Bank that acquires AMA that are residential mortgages shall submit to 
the Finance Board a Mortgage Report, which shall include:

[[Page 194]]

    (1) Aggregations of the loan-level mortgage data compiled by the 
Bank pursuant to paragraph (a) of this section for year-to-date mortgage 
acquisitions, in a format specified by the Finance Board;
    (2) Year-to-date dollar volume, number of units and number of 
mortgages on owner-occupied and rental properties relating to AMA 
acquired by the Bank; and
    (3) For the second and fourth quarter Mortgage Reports only, year-
to-date loan-level data that:
    (i) Comprises the data elements required to be collected and 
maintained by the Bank under paragraph (a) of this section; and
    (ii) Appears in a machine-readable format specified by the Finance 
Board.
    (c) Additional Reports. The Finance Board may at any time require a 
Bank to submit reports in addition to those required under paragraph (b) 
of this section.



Sec. 955.5  Administrative and investment transactions between Banks.

    (a) Delegation of administrative duties. A Bank may delegate the 
administration of an AMA program to another Bank whose administrative 
office has been examined and approved by the Finance Board to process 
AMA transactions. The existence of such a delegation, or the possibility 
that such a delegation may be made, must be disclosed to any potential 
participating member or housing associate as part of any AMA-related 
agreements are signed with that member or housing associate.
    (b) Terminability of Agreements. Any agreement made between two or 
more Banks in connection with any AMA program shall be made terminable 
by either party after a reasonable notice period.
    (c) Delegation of Pricing Authority. A Bank that has delegated its 
AMA pricing function to another Bank shall retain a right to refuse to 
acquire AMA at prices it does not consider appropriate.



Sec. 955.6  Risk-based capital requirement for acquired member assets.

    (a) General. Each Bank shall hold retained earnings plus general 
allowance for losses as support for the credit risk of all AMA estimated 
by the Bank to represent a credit risk that is greater than that of 
comparable instruments that have received the second highest credit 
rating from an NRSRO in an amount equal to or greater than the 
outstanding balance of the assets or pools of assets times a factor 
associated with the putative credit rating of the assets or pools of 
assets as determined by the Finance Board on a case-by-case basis. For 
single-family mortgage assets, the factors are as set forth in Table 1 
of this part.

                                 Table 1
------------------------------------------------------------------------
                                                           Percentage
                                                        applicable to on-
   Putative rating of single-family mortgage assets       balance sheet
                                                        equivalent value
                                                             of AMA
------------------------------------------------------------------------
Third Highest Investment Grade........................              0.90
Fourth Highest Investment Grade.......................              1.50
If Downgraded to Below Investment Grade After
 Acquisition By Bank:
    Highest Below Investment Grade....................              2.25
    Second Highest Below Investment Grade.............              2.60
    All Other Below Investment Grade..................            100.00
------------------------------------------------------------------------

    (b) Recalculation of credit enhancement. For risk-based capital 
purposes, each Bank shall recalculate the estimated credit rating of a 
pool of AMA if there is evidence that a decline in the credit quality of 
that pool may have occurred.

    Appendix A to Part 955--Reporting Requirements for Single-Family 
 Acquired Member Assets That Are Residential Mortgages: Loan-Level Data 
                                Elements

    1. Bank District Flag--Two-digit numeric code designating the 
District Bank that originally acquired the loan.

[[Page 195]]

    2. Participating Bank District Flag--Two-digit numeric code 
designating the District Bank that purchased a participation in the 
loan.
    3. Loan Number--Unique numeric identifier used by the Banks for each 
mortgage acquisition.
    4. US Postal State--Two-digit numeric Federal Information Processing 
Standard (FIPS) code.
    5. US Postal Zip Code--Five-digit zip code for the property.
    6. MSA Code--Four-digit numeric code for the property's metropolitan 
statistical area (MSA) if the property is located in an MSA.
    7. Place Code--Five-digit numeric FIPS code.
    8. County--County, as designated in the most recent decennial census 
by the Bureau of the Census.
    9. Census Tract/Block Numbering Area (BNA)--Tract/BNA number as used 
in the most recent decennial census by the Bureau of the Census.
    10. Census Tract-Percent Minority--Percentage of a census tract's 
population that is minority based on the most recent decennial census by 
the Bureau of the Census.
    11. Census Tract-Median Income--Median family income for the census 
tract based on the most recent decennial census.
    12. Local Area Median Income--Median income for the area based on 
the most recent decennial census.
    13. Tract Income Ratio--Ratio of the census tract median income 
based on the most recent decennial census to that year's local area 
median income (i.e., loan-level data element number 11 divided by loan-
level data element number 12).
    14. Borrower(s) Annual Income--Combined income of all borrowers.
    15. Area Median Family Income--Current median family income for a 
family of four for the area as established by HUD.
    16. Borrower Income Ratio--Ratio of Borrower(s) annual income to 
area median family income.
    17. Acquisition Unpaid Principal Balance (UPB)--UPB in whole dollars 
of the mortgage when acquired by the Bank.
    18. Loan-to-Value (LTV) Ratio at Origination--LTV ratio of the 
mortgage at the time of origination.
    19. Participation Percentage--Where the mortgage acquisition is a 
participation, the percentage of the mortgage for each Bank listed in 
loan-level data element number 2.
    20. Date of Mortgage Note--Date the mortgage note was created.
    21. Date of Acquisition--Date the Bank acquired the mortgage.
    22. Purpose of Loan--Indicates whether the mortgage was a purchase 
money mortgage, a refinancing, a construction mortgage, or a financing 
of property rehabilitation.
    23. Cooperative Unit Mortgage--Indicates whether the mortgage is on 
a dwelling unit in a cooperative housing building.
    24. Product Type--Indicates the product type of the mortgage (i.e., 
fixed rate, adjustable rate mortgage (ARM), balloon, graduated payment 
mortgage (GPM) or growing equity mortgages (GEM), reverse annuity 
mortgage, or other).
    25. Federal Guarantee--Numeric code that indicates whether the 
mortgage has a Federal guarantee, and from which agency.
    26. Term of Mortgage at Origination--Term of the mortgage at the 
time of origination in months.
    27. Amortization Term--For amortizing mortgages, the amortization 
term of the mortgage in months.
    28. Acquiring Lender Institution--Name of the institution from which 
the Bank acquired the mortgage.
    29. Acquiring Lender City--City location of the institution from 
which the Bank acquired the mortgage.
    30. Acquiring Lender State--State location of the institution from 
which the Bank acquired the mortgage.
    31. Type of Acquiring Lender Institution--Type of institution that 
the Bank acquired the mortgage from (i.e., mortgage company, Savings 
Association Insurance Fund (SAIF) insured depositary institution, Bank 
Insurance Fund (BIF) insured depositary institution, National Credit 
Union Association (NCUA) insured credit union, or other seller).
    32. Number of Borrowers--Number of borrowers.
    33. First-Time Home Buyer--Numeric code indicating whether the 
mortgagor(s) are first-time homebuyers (second mortgages and 
refinancings are not treated as first-time homebuyers).
    34. Mortgage Purchased under the Banks' Community Investment Cash 
Advances (CICA) Programs--Indicates whether the mortgage is on a project 
funded under an AHP, CIP or other CICA program.
    35. Acquisition Type--Indicates whether the Bank acquired the 
mortgage with cash, by swap, with a credit enhancement, a bond or debt 
purchase, reinsurance, risk-sharing, real estate investment trust 
(REIT), or a real estate mortgage investment conduit (REMIC), or other.
    36. Bank Real Estate Owned--Indicates whether the mortgage is on a 
property that was in the Bank's real estate owned (REO) inventory.
    37. Borrower Race or National Origin--Numeric code indicating the 
race or national origin of the borrower.
    38. Co-Borrower Race or National Origin--Numeric code indicating the 
race or national origin of the co-borrower.
    39. Borrower Gender--Numeric code that indicates whether the 
borrower is male or female.

[[Page 196]]

    40. Co-Borrower Gender--Numeric code that indicates whether the co-
borrower is male or female.
    41. Age of Borrower--Age of borrower in years.
    42. Age of Co-Borrower--Age of co-borrower in years.
    43. Occupancy Code--Indicates whether the mortgaged property is an 
owner-occupied principal residence, a second home, or a rental 
investment property.
    44. Number of Units--Indicates the number of units in the mortgaged 
property.
    45. Unit--Number of Bedrooms--Where the property contains non-owner-
occupied dwelling units, the number of bedrooms in each of those units.
    46. Unit--Affordable Category--Where the property contains non-
owner-occupied dwelling units, indicates under which, if any, of the 
special affordable goals the units qualified.
    47. Unit--Reported Rent Level--Where the property contains non-
owner-occupied dwelling units, the rent level for each unit in whole 
dollars.
    48. Unit--Reported Rent Plus Utilities--Where the property contains 
non-owner-occupied dwelling units, the rent level plus the utility cost 
for each unit in whole dollars.
    49. Unit--Owner Occupied--Indicates whether each of the units are 
owner-occupied.
    50. Geographically Targeted Indicator--Numeric code that indicates 
loans made in census tracts classified as underserved by HUD.
    51. Interest Rate--Note rate on the loan.
    52. Loan Amount--Loan balance at origination.
    53. Front-end Ratio--Ratio of principal, interest, taxes, and 
insurance to borrower(s) income.
    54. Back-end Ratio--Ratio of all debt payments to borrower(s) 
income.
    55. Borrower FICO Score--Fair, Isaacs, Co. credit score of borrower.
    56. Co-Borrower FICO Score--Fair, Isaacs, Co. credit score of co-
borrower.
    57. PMI Percent--Percent of original loan balance covered by private 
mortgage insurance.
    58. Credit Enhancement--Numeric code indicating type of credit 
enhancement.
    59. Self-Employed Indicator--Numeric indicator for whether the 
borrower is self-employed.
    60. Property Type--Numeric indicator for whether the property is 
single-family detached, condominium, townhouse, PUD, etc.
    61. Default Status--Numeric indicator for whether the loan is 
currently in default.
    62. Termination Date--Date on which the loan terminated.
    63. Termination Type--Numeric indicator for whether the loan 
terminated in a prepayment, foreclosure, or other types of termination.
    64. ARM Index--Index used for the calculation of interest on an ARM.
    65. ARM margin--Margin added to the index for calculation of the 
interest on an ARM.
    66. Prepayment Penalty Terms--Numeric indicator for types of 
prepayment penalties.

Appendix B to Part 955--Reporting Requirements for Multi-Family Acquired 
 Member Assets That Are Residential Mortgages: Loan-Level Data Elements

    1. Bank District Flag--Two-digit numeric code designating the 
District Bank that originally acquired the loan.
    2. Participating Bank District Flag--Two-digit numeric code 
designating the District Bank that purchased a participation in the 
loan.
    3. Loan Number--Unique numeric identifier used by the Banks for each 
mortgage acquisition.
    4. US Postal State--Two-digit numeric Federal Information Processing 
Standard (FIPS) code.
    5. US Postal Zip Code--Five-digit zip code for the property.
    6. MSA Code--Four-digit numeric code for the property's metropolitan 
statistical area (MSA) if the property is located in an MSA.
    7. Place Code--Five-digit numeric FIPS code.
    8. County--County, as designated in the most recent decennial census 
by the Bureau of the Census.
    9. Census Tract/Block Numbering Area (BNA)--Tract/BNA number as used 
in the most recent decennial census by the Bureau of the Census.
    10. Census Tract-Percent Minority--Percentage of a census tract's 
population that is minority based on the most recent decennial census by 
the Bureau of the Census.
    11. Census Tract-Median Income--Median family income for the census 
tract based on the most recent decennial census.
    12. Local Area Median Income--Median income for the area based on 
the most recent decennial census.
    13. Tract Income Ratio--Ratio of the census tract median income 
based on the most recent decennial census to that year's local area 
median income (i.e., loan-level data element number 11 divided by loan-
level data element number 12).
    14. Area Median Family Income--Current median family income for a 
family of four for the area as established by HUD.
    15. Affordability Category--Indicates under which, if any, of the 
special affordable goals mandated by HUD for Fannie Mae and Freddie Mac, 
the property would qualify.
    16. Acquisition Unpaid Principal Balance (UPB)--UPB in whole dollars 
of the mortgage when purchased by the Bank.

[[Page 197]]

    17. Loan-to-Value (LTV) Ratio at Origination--LTV ratio of the 
mortgage at the time of origination.
    18. Participation Percentage--Where the mortgage acquisition is a 
participation, the percentage of the mortgage when the note was created 
for each Bank listed in loan-level data element number 2.
    19. Date of Mortgage Note--Date the mortgage note was created.
    20. Date of Acquisition--Date the Bank acquired the mortgage.
    21. Purpose of Loan--Indicates whether the mortgage was a purchase 
money mortgage, a refinancing, a construction mortgage, or a financing 
of property rehabilitation.
    22. Cooperative Project Loan--Indicates whether the mortgage is a 
project loan on a cooperative housing building.
    23. Mortgagor Type--Indicates the type of mortgagor (i.e., an 
individual, a for-profit entity such as a corporation or partnership, a 
nonprofit entity such as a corporation or partnership, a public entity, 
or other type of entity).
    24. Product Type--Indicates the product type of the mortgage (i.e., 
fixed rate, adjustable rate mortgage (ARM), balloon, graduated payment 
mortgage (GPM) or growing equity mortgages (GEM), reverse annuity 
mortgage, or other).
    25. Construction Loan--Indicates whether the mortgage is for a 
construction loan.
    26. Government Insurance--Indicates whether any part of the mortgage 
has government insurance.
    27. FHA Risk Share Percent--The percentage of the risk assumed for 
the mortgage purchased under a risk-sharing arrangement with FHA.
    28. Mortgage Purchased under the Banks' Community Investment Cash 
Advances (CICA) Programs--Indicates whether the mortgage is on a project 
under an AHP, CIP or other CICA program.
    29. Acquisition Type--Indicates whether the FHLBank acquired the 
mortgage with cash, by swap, with a credit enhancement, a bond or debt 
purchase, reinsurance, risk-sharing, real estate investment trust 
(REIT), or a real estate mortgage investment conduit (REMIC), or other.
    30. Term of Mortgage at Origination--Term of the mortgage at the 
time of origination in months.
    31. Amortization Term--For amortizing mortgages, the amortization 
term of the mortgage in months.
    32. Acquiring Lender Institution--Name of the entity from which the 
Bank acquired the mortgage.
    33. Acquiring Lender City--City location of the entity from which 
the Bank acquired the mortgage.
    34. Acquiring Lender State--State location of the institution from 
which the Bank acquired the mortgage.
    35. Type of Acquiring Lender Institution--Type of institution that 
the Bank acquired the mortgage from (i.e., mortgage company, Savings 
Association Insurance Fund (SAIF) insured depositary institution, Bank 
Insurance Fund (BIF) insured depositary institution, National Credit 
Union Association (NCUA) insured credit union, or other seller).
    36. Bank Real Estate Owned--Indicates whether the mortgage is on a 
property that was in the Bank's real estate owned (REO) inventory.
    37. Number of Units--Indicates the number of units in the mortgaged 
property.
    38. Geographically Targeted Indicator--Numeric code that indicates 
loans made in census tracts classified as underserved by HUD.
    39. Public Subsidy Program--Indicates whether the mortgage property 
is involved in a public subsidy program and which level(s) of government 
are involved in the subsidy program (i.e., Federal government only, 
other only, Federal government, etc.).
    40. Unit Class Level--The following data apply to unit types in a 
particular mortgaged property. The unit types are defined by the Banks 
for each property and are differentiated based on the number of bedrooms 
in the units and on the average contract rent for the units. A unit type 
must be included for each bedroom size category in the property;
    A. Unit Type XX-Number of Bedroom(s)--the number of bedrooms in the 
unit type;
    B. Unit Type XX-Number of Units--the number of units in the property 
within the unit type;
    C. Unite Type XX-Average Reported Rent Level--the average rent level 
for the unit type in whole dollars; and
    D. Unit Type XX-Average Reported Rent Plus Utilities--the average 
reported rent level plus the utility cost for each unit in whole 
dollars; and
    E. Unit Type XX-Affordability Level--the ratio of the average 
reported rent plus utilities for the unit type to the adjusted area 
median income;
    F. Unit Type XX-Tenant Income Indicator--indicates whether the 
tenant's income is less than 60 percent of area median income, greater 
than or equal to 60 percent but less than 80 percent of area median 
income, greater than or equal to 80 percent but less than 100 percent of 
area median income, or greater than or equal to 100 percent of area 
median income.
    41. Interest Rate--Note rate on the loan.
    42. Debt Service Coverage Ratio--Ratio of net operating income to 
debt service.
    43. Total Number of Units--Indicates the number of dwelling units in 
the mortgaged property.
    44. Default Status--Numeric indicator for whether the loan is 
currently in default.
    45. Termination Date--Date on which the loan terminated.

[[Page 198]]

    46. Termination Type--Numeric indicator for whether the loan 
terminated in a prepayment, foreclosure, or other types of termination.
    47. ARM Index--Index used for the calculation of interest on an ARM.
    48. ARM margin--Margin added to the index for calculation of the 
interest on an ARM.
    49. Prepayment Penalty Terms--Numeric indicator for types of 
prepayment penalties.



PART 956--FEDERAL HOME LOAN BANK INVESTMENTS--Table of Contents




Sec.
956.1  Definitions.
956.2  Authorized investments.
956.3  Prohibited investments and prudential rules.
956.4  Risk-based capital requirement for investments.
956.5  Authorization for derivative contracts and other transactions.
956.6  Use of hedging instruments.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1429, 1430, 1430b, 1431, 
1436.

    Source: 65 FR 43985, July 17, 2000, unless otherwise noted.



Sec. 956.1  Definitions.

    As used in this part:
    Deposits in banks or trust companies has the meaning set forth in 
Sec. 965.1 of this chapter.
    Derivative contract means generally a financial contract the value 
of which is derived from the values of one or more underlying assets, 
reference rates, or indices of asset values, or credit-related events. 
Derivative contracts include interest rate, foreign exchange rate, 
equity, precious metals, commodity, and credit contracts, and any other 
instruments that pose similar risks.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest credit rating 
category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or other similar standards.
    Repurchase agreement means an agreement between a seller and a buyer 
whereby the seller agrees to repurchase a security or similar securities 
at an agreed upon price, with or without a stated time for repurchase.

[67 FR 12853, Mar. 20, 2002]



Sec. 956.2  Authorized investments.

    In addition to assets enumerated in parts 950 and 955 of this 
chapter and subject to the applicable limitations set forth in this 
part, in the Financial Management Policy and in part 980 of this 
chapter, each Bank may invest in:
    (a) Obligations of the United States;
    (b) Deposits in banks or trust companies;
    (c) Obligations, participations or other instruments of, or issued 
by, Fannie Mae or Ginnie Mae;
    (d) Mortgages, obligations, or other securities that are, or ever 
have been, sold by Freddie Mac pursuant to section 305 or 306 of the 
Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454 or 1455);
    (e) Stock, obligations, or other securities of any small business 
investment company formed pursuant to 15 U.S.C. 681(d), to the extent 
such investment is made for purposes of aiding members of the Bank; and
    (f) Instruments that the Bank has determined are permissible 
investments for fiduciary or trust funds under the laws of the state in 
which the Bank is located.

65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.3  Prohibited investments and prudential rules.

    (a) Prohibited investments. A Bank may not invest in:
    (1) Instruments that provide an ownership interest in an entity, 
except for investments described in Sec. Sec. 940.3(e) and (f) of this 
chapter;
    (2) Instruments issued by non-United States entities, except United 
States branches and agency offices of foreign commercial banks;
    (3) Debt instruments that are not rated as investment grade, except:
    (i) Investments described in Sec. 940.3(e) of this chapter;
    (ii) Debt instruments that were downgraded to a below investment 
grade rating after acquisition by the Bank; or

[[Page 199]]

    (4) Whole mortgages or other whole loans, or interests in mortgages 
or loans, except:
    (i) Acquired member assets;
    (ii) Investments described in Sec. 940.3(e) of this chapter;
    (iii) Marketable direct obligations of state, local, or tribal 
government units or agencies, having at least the second highest credit 
rating from an NRSRO, where the purchase of such obligations by the Bank 
provides to the issuer the customized terms, necessary liquidity, or 
favorable pricing required to generate needed funding for housing or 
community lending;
    (iv) Mortgage-backed securities, or asset-backed securities 
collateralized by manufactured housing loans or home equity loans, that 
meet the definition of the term ``securities'' under 15 U.S.C. 
77b(a)(1); and
    (v) Loans held or acquired pursuant to section 12(b) of the Act (12 
U.S.C. 1432(b)).
    (b) Foreign currency or commodity positions prohibited. A Bank may 
not take a position in any commodity or foreign currency. A Bank may 
participate in consolidated obligations denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, provided that 
the Bank meets the requirements of Sec. 966.8(d) of this chapter, and 
all other applicable requirements related to issuing consolidated 
obligations.

[65 FR 43985, July 17, 2000, as amended at 66 FR 8320, Jan. 30, 2001; 67 
FR 12853, Mar. 20, 2002]



Sec. 956.4  Risk-based capital requirement for investments.

    Each Bank shall hold retained earnings plus general allowance for 
losses as support for the credit risk of all investments that are not 
rated by an NRSRO, or are rated or have a putative rating below the 
second highest credit rating, in an amount equal to or greater than the 
outstanding balance of the investments multiplied by:
    (a) A factor associated with the credit rating of the investments as 
determined by the Finance Board on a case-by-case basis for rated assets 
to be sufficient to raise the credit quality of the asset to the second 
highest credit rating category; and
    (b) 0.08 for assets having neither a putative nor actual rating.

[65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.5  Authorization for derivative contracts and other transactions.

    A Bank may enter into the following types of transactions:
    (a) Derivative contracts;
    (b) Standby letters of credit, pursuant to the requirements of part 
960 of this chapter;
    (c) Forward asset purchases and sales;
    (d) Commitments to make advances; and
    (e) Commitments to make or purchase other loans.

[66 FR 8320, Jan. 30, 2001, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.6  Use of hedging instruments.

    (a) Applicability of GAAP. Derivative instruments that do not 
qualify as hedging instruments pursuant to GAAP may be used only if a 
non-speculative use is documented by the Bank.
    (b) Documentation requirements. (1) Transactions with a single 
counterparty shall be governed by a single master agreement when 
practicable.
    (2) A Bank's agreement with the counterparty for over-the-counter 
derivative contracts shall include:
    (i) A requirement that market value determinations and subsequent 
adjustments of collateral be made at least on a monthly basis;
    (ii) A statement that failure of a counterparty to meet a collateral 
call will result in an early termination event;
    (iii) A description of early termination pricing and methodology, 
with the methodology reflecting a reasonable estimate of the market 
value of the over-the-counter derivative contract at termination 
(standard International Swaps and Derivatives Association, Inc. language 
relative to early termination pricing and methodology may be used to 
satisfy this requirement); and

[[Page 200]]

    (iv) A requirement that the Bank's consent be obtained prior to the 
transfer of an agreement or contract by a counterparty.

[66 FR 8321, Jan. 30, 2001]



PART 960--STANDBY LETTERS OF CREDIT--Table of Contents




Sec.
960.1  Definitions.
960.2  Standby letters of credit on behalf of members.
960.3  Standby letters of credit on behalf of housing associates.
960.4  Obligation to Bank under all standby letters of credit.
960.5  Additional provisions applying to all standby letters of credit.

    Authority: 12 U.S.C. 1422b, 1429, 1430, 1430b, 1431.

    Source: 63 FR 65699, Nov. 30, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000 and further redesignated at 67 
FR 12853, Mar. 20, 2002.



Sec. 960.1  Definitions.

    As used in this part:
    Applicant means a person or entity at whose request or for whose 
account a standby letter of credit is issued.
    Beneficiary means a person or entity who, under the terms of a 
standby letter of credit, is entitled to have its complying presentation 
honored.
    Confirm means to undertake, at the request or with the consent of 
the issuer, to honor a presentation under a standby letter of credit 
issued by a member or housing associate.
    Document means a draft or other demand, document of title, 
investment security, certificate, invoice, or other record, statement, 
or representation of fact, law, right, or opinion that is presented 
under the terms of a standby letter of credit.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest credit rating 
category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or other similar standards.
    Issuer means a person or entity that issues a standby letter of 
credit.
    Presentation means delivery of a document to an issuer, or an entity 
that has undertaken a confirmation at the request or with the consent of 
the issuer, for the giving of value under a standby letter of credit.
    Residential housing finance means:
    (1) The purchase or funding of ``residential housing finance 
assets,'' as that term is defined in Sec. 950.1 of this chapter; or
    (2) Other activities that support the development or construction of 
residential housing.
    SHFA associate means a housing associate that is a ``state housing 
finance agency,'' as that term is defined in Sec. 926.1 of this chapter, 
and that has met the requirements of Sec. 926.3(b) of this chapter.
    Standby letter of credit means a definite undertaking by an issuer 
on behalf of an applicant that represents an obligation to the 
beneficiary, pursuant to a complying presentation: to repay money 
borrowed by, advanced to, or for the account of the applicant; to make 
payment on account of any indebtedness undertaken by the applicant; or 
to make payment on account of any default by the applicant in the 
performance of an obligation. The term standby letter of credit does not 
include a commercial letter of credit, or any short-term self-
liquidating instrument used to finance the movement of goods.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002]



Sec. 960.2  Standby letters of credit on behalf of members.

    (a) Authority and purposes. Each Bank is authorized to issue or 
confirm on behalf of members standby letters of credit that comply with 
the requirements of this part, for any of the following purposes:
    (1) To assist members in facilitating residential housing finance;
    (2) To assist members in facilitating community lending;
    (3) To assist members with asset/liability management; or

[[Page 201]]

    (4) To provide members with liquidity or other funding.
    (b) Fully secured. A Bank, at the time it issues or confirms a 
standby letter of credit on behalf of a member, shall obtain and 
maintain a security interest in collateral that is sufficient to secure 
fully the member's unconditional obligation described in 
Sec. 960.4(a)(2) of this part, and that complies with the requirements 
set forth in paragraph (c) of this section.
    (c) Eligible collateral. (1) Any standby letter of credit issued or 
confirmed on behalf of a member may be secured in accordance with the 
requirements for advances under Sec. 950.7 of this chapter.
    (2) A standby letter of credit issued or confirmed on behalf of a 
member for a purpose described in paragraphs (a)(1) or (a)(2) of this 
section may, in addition to the collateral described in paragraph (c)(1) 
of this section, be secured by obligations of state or local government 
units or agencies rated as investment grade by an NRSRO.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002]



Sec. 960.3  Standby letters of credit on behalf of housing associates.

    (a) Housing associates. Each Bank is authorized to issue or confirm 
on behalf of housing associates standby letters of credit that are fully 
secured by collateral described in Sec. Sec. 950.17(b)(1)(i) or (ii) of 
this chapter, and that otherwise comply with the requirements of this 
part, for any of the following purposes:
    (1) To assist housing associates in facilitating residential housing 
finance;
    (2) To assist housing associates in facilitating community lending;
    (3) To assist housing associates with asset/liability management; or
    (4) To provide housing associates with liquidity or other funding.
    (b) SHFA associates. Each Bank is authorized to issue or confirm on 
behalf of SHFA associates standby letters of credit that are fully 
secured by collateral described in Sec. 950.17(b)(2)(i) (A), (B) or (C) 
of this chapter, and that otherwise comply with the requirements of this 
part, for the purpose of facilitating residential or commercial mortgage 
lending that benefits individuals or families meeting the income 
requirements in section 142(d) or 143(f) of the Internal Revenue Code 
(26 U.S.C. 142(d) or 143(f)).

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000]



Sec. 960.4  Obligation to Bank under all standby letters of credit.

    (a) Obligation to reimburse. A Bank may issue or confirm a standby 
letter of credit only on behalf of a member or housing associate that 
has:
    (1) Established with the Bank a cash account pursuant to 
Secs. 950.17(b)(2)(i)(B), 950.17(d), or 969.2 of this chapter; and
    (2) Assumed an unconditional obligation to reimburse the Bank for 
value given by the Bank to the beneficiary under the terms of the 
standby letter of credit by depositing immediately available funds into 
the account described in paragraph (a)(1) of this section not later than 
the date of the Bank's payment of funds to the beneficiary.
    (b) Prompt action to recover funds. If a member or housing associate 
fails to fulfill the obligation described in paragraph (a)(2) of this 
section, the Bank shall take action promptly to recover the funds that 
such member or housing associate is obligated to repay.
    (c) Obligation financed by advance. Notwithstanding the obligations 
and duties of the Bank and its member or housing associate under 
paragraphs (a) and (b) of this section, the Bank may, at its discretion, 
permit such member or housing associate to finance repayment of the 
obligation described in paragraph (a)(2) of this section by receiving an 
advance that complies with sections 10 or 10b of the Act (12 U.S.C. 
1430, 1430(b)) and part 950 of this chapter.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002]



Sec. 960.5  Additional provisions applying to all standby letters of credit.

    (a) Requirements. Each standby letter of credit issued or confirmed 
by a Bank shall:

[[Page 202]]

    (1) Contain a specific expiration date, or be for a specific term; 
and
    (2) Require approval in advance by the Bank of any transfer of the 
standby letter of credit from the original beneficiary to another person 
or entity.
    (b) Additional collateral provisions. (1) A Bank may take such steps 
as it deems necessary to protect its secured position on standby letters 
of credit, including requiring additional collateral, whether or not 
such additional collateral conforms to the requirements of 
Sec. Sec. 960.2 or 960.3 of this part.
    (2) Collateral pledged by a member or housing associate to secure a 
letter of credit issued or confirmed on its behalf by a Bank shall be 
subject to the provisions of Secs. 950.7(d), 950.7(e), 950.8, 950.9 and 
950.10 of this chapter.

[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 
FR 44431, July 18, 2000. Redesignated and amended at 67 FR 12853, Mar. 
20, 2002]

[[Page 203]]



            SUBCHAPTER H--FEDERAL HOME LOAN BANK LIABILITIES





PART 965--SOURCE OF FUNDS--Table of Contents




Sec.
965.1  Definitions.
965.2  Authorized liabilities.
965.3  Liquidity reserves for deposits.

    Authority: 12 U.S.C. 1422a, 1422b, 1431.

    Source: 65 FR 36298, June 7, 2000, unless otherwise noted.



Sec. 965.1  Definitions.

    As used in this part:
    Deposits in banks or trust companies means:
    (1) A deposit in another Bank;
    (2) A demand account in a Federal Reserve Bank;
    (3) A deposit in, or a sale of Federal funds to:
    (i) An insured depository institution, as defined in section 
2(12)(A) of the Act (12 U.S.C. 1422(12)(A)), that is designated by a 
Bank's board of directors;
    (ii) A trust company that is a member of the Federal Reserve System 
or insured by the FDIC, and is designated by a Bank's board of 
directors; or
    (iii) A U.S. branch or agency of a foreign bank, as defined in the 
International Banking Act of 1978, as amended (12 U.S.C. 3101 et seq.), 
that is subject to the supervision of the FRB, and is designated by a 
Bank's board of directors.
    Repurchase agreement means an agreement in which a Bank sells 
securities and simultaneously agrees to repurchase those securities or 
similar securities at an agreed upon price, with or without a stated 
time for repurchase.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 965.2  Authorized liabilities.

    As a source of funds for business operations, each Bank is 
authorized to incur liabilities by:
    (a) Accepting proceeds from the issuance of consolidated obligations 
issued in accordance with part 966 of this chapter;
    (b) Accepting time or demand deposits from members, other Banks or 
instrumentalities of the United States, and cash accounts from members 
or associates pursuant to Sec. Sec. 969.2, 950.17(b)(2)(i)(B), 950.17(d) 
or 960.4(a)(1), or other institutions for which the Bank is providing 
correspondent services pursuant to section 11(e) of the Act (12 U.S.C. 
1431(e));
    (c) Purchasing Federal funds; and
    (d) Entering into repurchase agreements.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 965.3  Liquidity reserves for deposits.

    Each Bank shall at all times have at least an amount equal to the 
current deposits received from its members invested in:
    (a) Obligations of the United States;
    (b) Deposits in banks or trust companies; or
    (c) Advances with a maturity of not to exceed five years that are 
made to members in conformity with part 950 of this chapter.



PART 966--CONSOLIDATED OBLIGATIONS--Table of Contents




Sec.
966.1  Definitions.
966.2  Issuance of consolidated obligations.
966.3  Leverage limit and credit rating requirements.
966.4  Form of consolidated obligations.
966.5  Transactions in consolidated obligations.
966.6  Lost, stolen, destroyed, mutilated or defaced consolidated 
          obligations.
966.7  Administrative provision.
966.8  Conditions for issuance of consolidated obligations.
966.9  Joint and several liability.
966.10  Savings clause.

    Authority: 12 U.S.C. 1422a, 1422b, 1431.

    Source: 65 FR 36298, June 7, 2000, unless otherwise noted.



Sec. 966.1  Definitions.

    As used in this part:
    Non-complying Bank means a Bank that has failed to provide the 
liquidity certification as required under Sec. 966.9(b)(1).

[67 FR 12853, Mar. 20, 2002]

[[Page 204]]



Sec. 966.2  Issuance of consolidated obligations.

    (a) Consolidated obligations issued by the Finance Board. The 
Finance Board may issue consolidated obligations under section 11(c) of 
the Act (12 U.S.C. 1431(c)), including the determination of the dates of 
issue, maturities, rates of interest, terms and conditions thereof, and 
the manner in which such consolidated obligations shall be issued. The 
Finance Board in its discretion from time to time may delegate this by 
resolution of the Board of Directors, or may terminate such delegation.
    (b) Consolidated obligations issued by the Banks. (1) Pursuant to 
the Banks' housing finance mission set forth in section 2A(a)(3)(B)(ii) 
of the Act (12 U.S.C. 1422a(a)(3)(B)(ii)), pursuant to the Finance 
Board's duty to ensure that the Banks carry out that mission and remain 
adequately capitalized and able to raise funds in the capital markets 
under section 2A(a)(3)(B)(ii) and (iii) of the Act (12 U.S.C. 
1422a(a)(3)(B)(ii) and (iii)), and subject to the provisions of this 
part and such rules, regulations, terms and conditions as the Finance 
Board may prescribe, the Banks are authorized to issue joint debt under 
section 11(a) of the Act (12 U.S.C. 1431(a)), which shall be called 
consolidated obligations and on which the Banks shall be jointly and 
severally liable under Sec. 966.9 of this part.
    (2) Consolidated obligations shall be issued only through the Office 
of Finance, as agent of the Banks pursuant to this part and part 985 of 
this chapter.
    (3) The authorization contained herein shall be deemed to constitute 
satisfaction of the requirement for Finance Board approval of the 
``terms and conditions'' of the consolidated obligations pursuant to 
section 11(a) of the Act (12 U.S.C. 1431(a)).
    (c) Negative pledge requirement. Each Bank shall at all times 
maintain assets described in paragraphs (c)(1) through (c)(6) of this 
section free from any lien or pledge, in an amount at least equal to a 
pro rata share of the total amount of currently outstanding consolidated 
obligations jointly issued by the Banks pursuant to section 11(a) of the 
Act (12 U.S.C. 1431(a)) and by the Finance Board pursuant to section 
11(c) of the Act (12 U.S.C. 1431(c)) and equal to such Bank's 
participation in all such COs outstanding, provided that any assets that 
are subject to a lien or pledge for the benefit of the holders of any 
issue of consolidated obligations shall be treated as if they were 
assets free from any lien or pledge for purposes of compliance with this 
paragraph (c). Eligible assets are:
    (1) Cash;
    (2) Obligations of or fully guaranteed by the United States;
    (3) Secured advances;
    (4) Mortgages as to which one or more Banks have any guaranty or 
insurance, or commitment therefor, by the United States or any agency 
thereof;
    (5) Investments described in section 16(a) of the Act (12 U.S.C. 
1436(a)); and
    (6) Other securities that have been assigned a rating or assessment 
by an NRSRO that is equivalent to or higher than the rating or 
assessment assigned by that NRSRO to consolidated obligations 
outstanding.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 966.3  Leverage limit and credit rating requirements.

    (a) Bank leverage. (1) Except as provided in paragraph (a)(2) of 
this section, the total assets of any Bank shall not exceed 21 times the 
total of paid-in capital stock, retained earnings, and reserves 
(excluding loss reserves and liquidity reserves for deposits pursuant to 
section 11(g) of the Act (12 U.S.C. 1431(g)) of that Bank.
    (2) The aggregate amount of assets of any Bank may be up to 25 times 
the total paid-in capital stock, retained earnings, and reserves of that 
Bank, provided that non-mortgage assets, after deducting the amount of 
deposits and capital, do not exceed 11 percent of such total assets. For 
the purposes of this section, the amount of non-mortgage assets equals 
total assets after deduction of:
    (i) Advances;

[[Page 205]]

    (ii) Acquired member assets, including all United States government-
insured or guaranteed whole single-family or multi-family residential 
mortgage loans;
    (iii) Standby letters of credit;
    (iv) Intermediary derivative contracts;
    (v) Debt or equity investments:
    (A) That primarily benefit households having a targeted income 
level, a significant proportion of which must benefit households with 
incomes at or below 80 percent of area median income, or areas targeted 
for redevelopment by local, state, tribal or Federal government 
(including Federal Empowerment Zones and Enterprise and Champion 
Communities), by providing or supporting one or more of the following 
activities:
    (1) Housing;
    (2) Economic development;
    (3) Community services;
    (4) Permanent jobs; or
    (5) Area revitalization or stabilization;
    (B) In the case of mortgage-or asset-backed securities, the 
acquisition of which would expand liquidity for loans that are not 
otherwise adequately provided by the private sector and do not have a 
readily available or well established secondary market; and
    (C) That involve one or more members or housing associates in a 
manner, financial or otherwise, and to a degree to be determined by the 
Bank;
    (vi) Investments in SBICs, where one or more members or housing 
associates of the Bank also make a material investment in the same 
activity;
    (vii) SBIC debentures, the short term tranche of SBIC securities, or 
other debentures that are guaranteed by the Small Business 
Administration under title III of the Small Business Investment Act of 
1958, as amended (15 U.S.C. 681 et seq);
    (viii) Section 108 Interim Notes and Participation Certificates 
guaranteed by the Department of Housing and Urban Development under 
section 108 of the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5308);
    (ix) Investments and obligations issued or guaranteed under the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.).
    (x) Securities representing an interest in pools of mortgages (MBS) 
issued, guaranteed, or fully insured by the Government National Mortgage 
Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation 
(Freddie Mac), or the Federal National Mortgage Association (Fannie 
Mae), or Collateralized Mortgage Obligations (CMOs), including Real 
Estate Mortgage Investment Conduits (REMICs), backed by such securities;
    (xi) Other MBS, CMOs, and REMICs rated in the highest rating 
category by a NRSRO;
    (xii) Asset-backed securities collateralized by manufactured housing 
loans or home equity loans and rated in the highest rating category by a 
NRSRO; and
    (xiii) Marketable direct obligations of state or local government 
units or agencies, rated in one of the two highest rating categories by 
a NRSRO, where the purchase of such obligations by a Bank provides to 
the issuer the customized terms, necessary liquidity, or favorable 
pricing required to generate needed funding for housing or community 
development.
    (b) Credit ratings. (1) The Banks, collectively, shall obtain from 
an NRSRO and, at all times, maintain a current credit rating on the 
Banks' consolidated obligations.
    (2) Each Bank shall operate in such a manner and take any actions 
necessary, including without limitation reducing Bank leverage, to 
ensure that the Banks' consolidated obligations receive and continue to 
receive the highest credit rating from any NRSRO by which the 
consolidated obligations have then been rated.
    (c) Individual Bank credit rating. Each Bank shall operate in such a 
manner and take any actions necessary to ensure that the Bank has and 
maintains an individual issuer credit rating of at least the second 
highest credit rating from any NRSRO providing a rating, where such 
rating is a meaningful measure of the individual Bank's financial 
strength and stability, and is updated at least annually by an NRSRO, or 
more frequently as required by the

[[Page 206]]

Finance Board, to reflect any material changes in the condition of the 
Bank.
    (d) Transition provision. Each Bank shall obtain the credit rating 
from an NRSRO required under paragraph (c) of this section by July 1, 
2001.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002; 67 
FR 35715, May 21, 2002]



Sec. 966.4  Form of consolidated obligations.

    (a) All consolidated obligations shall be issued in pari passu.
    (b) Consolidated obligations with maturities of one year or less may 
be designated consolidated notes.



Sec. 966.5  Transactions in consolidated obligations.

    The general regulations of the Department of the Treasury now or 
hereafter in force governing transactions in United States securities, 
except 31 CFR part 357 regarding book-entry procedure, are hereby 
incorporated into this part 966, so far as applicable and as necessarily 
modified to relate to consolidated obligations, as the regulations of 
the Finance Board for similar transactions on consolidated obligations. 
The book-entry procedure for consolidated obligations is contained in 
part 987 of this subchapter.



Sec. 966.6  Lost, stolen, destroyed, mutilated or defaced consolidated obligations.

    United States statutes and regulations of the Department of the 
Treasury now or hereafter in force governing relief on account of the 
loss, theft, destruction, mutilation or defacement of United States 
securities, so far as applicable and as necessarily modified to relate 
to consolidated obligations, are hereby adopted as the regulations of 
the Finance Board for the issuance of substitute consolidated 
obligations or the payment of lost, stolen, destroyed, mutilated or 
defaced consolidated obligations.



Sec. 966.7  Administrative provision.

    The Secretary of the Treasury or the Acting Secretary of the 
Treasury is hereby authorized and empowered, as the agent of the Finance 
Board and the Banks, to administer Secs. 966.5 and 966.6, and to 
delegate such authority at their discretion to other officers, 
employees, and agents of the Department of the Treasury. Any such 
regulations may be waived on behalf of the Finance Board and the Banks 
by the Secretary of the Treasury, the Acting Secretary of the Treasury, 
or by an officer of the Department of the Treasury authorized to waive 
similar regulations with respect to United States securities, but only 
in any particular case in which a similar regulation with respect to 
United States securities would be waived. The terms ``securities'' and 
``bonds'' as used in this section shall, unless the context otherwise 
requires, include and apply to coupons and interim certificates.



Sec. 966.8  Conditions for issuance of consolidated obligations.

    (a) The Office of Finance board of directors shall authorize the 
offering for current and forward settlement (up to 12 months) or the 
reopening of COs, as necessary, and authorize the maturities, rates of 
interest, terms and conditions thereof, subject to the provisions of 31 
U.S.C. 9108.
    (b) COs may be offered for sale only to the extent that Banks are 
committed to take the proceeds.
    (c) COs shall not be directly placed with any Bank.
    (d) If a Bank participates in any CO denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, then the Bank 
shall meet the following requirements:
    (1) The relevant foreign exchange, equity price or commodity price 
risks associated with the CO must be hedged in accordance with 
Sec. 956.6 of this chapter;
    (2) If there is a default on the part of a counterparty to a 
contract hedging the foreign exchange, equity or commodity price risk 
associated with a CO, the Bank shall enter into a replacement contract 
in a timely manner and as soon as market conditions permit.

[65 FR 36298, June 7, 2000, as amended at 66 FR 8321, Jan. 30, 2001; 67 
FR 12853, Mar. 20, 2002]



Sec. 966.9  Joint and several liability.

    (a) In general. (1) Each and every Bank, individually and 
collectively, has an obligation to make full and

[[Page 207]]

timely payment of all principal and interest on consolidated obligations 
when due.
    (2) Each and every Bank, individually and collectively, shall ensure 
that the timely payment of principal and interest on all consolidated 
obligations is given priority over, and is paid in full in advance of, 
any payment to or redemption of shares from any shareholder.
    (3) The provisions of this part shall not limit, restrict or 
otherwise diminish, in any manner, the joint and several liability of 
all of the Banks on all of the consolidated obligations issued by the 
Finance Board pursuant to section 11(c) of the Act (12 U.S.C. 1431(c)) 
and by the Banks pursuant to section 11(a) of the Act (12 U.S.C. 
1431(a)).
    (b) Certification and reporting. (1) Before the end of each calendar 
quarter, and before declaring or paying any dividend for that quarter, 
the President of each Bank shall certify in writing to the Finance Board 
that, based on known current facts and financial information, the Bank 
will remain in compliance with the liquidity requirements set forth in 
section 11(g) of the Act (12 U.S.C. 1431(g)), and the Finance Board's 
FMP or any regulations (as the same may be amended, modified or 
replaced), and will remain capable of making full and timely payment of 
all of its current obligations, including direct obligations, coming due 
during the next quarter.
    (2) A Bank shall immediately provide written notice to the Finance 
Board if at any time the Bank:
    (i) Is unable to provide the certification required by paragraph 
(b)(1) of this section;
    (ii) Projects at any time that it will fail to comply with statutory 
or regulatory liquidity requirements, or will be unable to timely and 
fully meet all of its current obligations, including direct obligations, 
due during the quarter;
    (iii) Actually fails to comply with statutory or regulatory 
liquidity requirements or to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter; or
    (iv) Negotiates to enter or enters into an agreement with one or 
more other Banks to obtain financial assistance to meet its current 
obligations, including direct obligations, due during the quarter; the 
notice of which shall be accompanied by a copy of the agreement, which 
shall be subject to the approval of the Finance Board.
    (c) Consolidated obligation payment plans. (1) A Bank promptly shall 
file a consolidated obligation payment plan for Finance Board approval:
    (i) If the Bank becomes a non-complying Bank as a result of failing 
to provide the certification required in paragraph (b)(1) of this 
section;
    (ii) If the Bank becomes a non-complying Bank as a result of being 
required to provide the notice required pursuant to paragraph (b)(2) of 
this section, except in the event that a failure to make a principal or 
interest payment on a consolidated obligation when due was caused solely 
by a temporary interruption in the Bank's debt servicing operations 
resulting from an external event such as a natural disaster or a power 
failure; or
    (iii) If the Finance Board determines that the Bank will cease to be 
in compliance with the statutory or regulatory liquidity requirements, 
or will lack the capacity to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter.
    (2) A consolidated obligation payment plan shall specify the 
measures the non-complying Bank will undertake to make full and timely 
payments of all of its current obligations, including direct 
obligations, due during the applicable quarter.
    (3) A non-complying Bank may continue to incur and pay normal 
operating expenses incurred in the regular course of business (including 
salaries, benefits, or costs of office space, equipment and related 
expenses), but shall not incur or pay any extraordinary expenses, or 
declare, or pay dividends, or redeem any capital stock, until such time 
as the Finance Board has approved the Bank's consolidated obligation 
payment plan or inter-Bank assistance agreement, or ordered another 
remedy, and all of the non-complying Bank's direct obligations have been 
paid.

[[Page 208]]

    (d) Finance Board payment orders; Obligation to reimburse. (1) The 
Finance Board, in its discretion and notwithstanding any other provision 
in this section, may at any time order any Bank to make any principal or 
interest payment due on any consolidated obligation.
    (2) To the extent that a Bank makes any payment on any consolidated 
obligation on behalf of another Bank, the paying Bank shall be entitled 
to reimbursement from the non-complying Bank, which shall have a 
corresponding obligation to reimburse the Bank providing assistance, to 
the extent of such payment and other associated costs (including 
interest to be determined by the Finance Board).
    (e) Adjustment of equities. (1) Any non-complying Bank shall apply 
its assets to fulfill its direct obligations.
    (2) If a Bank is required to meet, or otherwise meets, the direct 
obligations of another Bank due to a temporary interruption in the 
latter Bank's debt servicing operations (e.g., in the event of a natural 
disaster or power failure), the assisting Bank shall have the same right 
to reimbursement set forth in paragraph (d)(2) of this section.
    (3) If the Finance Board determines that the assets of a non-
complying Bank are insufficient to satisfy all of its direct obligations 
as set forth in paragraph (e)(1) of this section, then the Finance Board 
may allocate the outstanding liability among the remaining Banks on a 
pro rata basis in proportion to each Bank's participation in all 
consolidated obligations outstanding as of the end of the most recent 
month for which the Finance Board has data, or otherwise as the Finance 
Board may prescribe.
    (f) Reservation of authority. Nothing in this section shall affect 
the Finance Board's authority to adjust equities between the Banks in a 
manner different than the manner described in paragraph (e) of this 
section, or to take enforcement or other action against any Bank 
pursuant to the Finance Board's authority under the Act or otherwise to 
supervise the Banks and ensure that they are operated in a safe and 
sound manner.
    (g) No rights created. (1) Nothing in this part shall create or be 
deemed to create any rights in any third party.
    (2) Payments made by a Bank toward the direct obligations of another 
Bank are made for the sole purpose of discharging the joint and several 
liability of the Banks on consolidated obligations.
    (3) Compliance, or the failure to comply, with any provision in this 
section shall not be deemed a default under the terms and conditions of 
the consolidated obligations.



Sec. 966.10  Savings clause.

    Any agreements or other instruments entered into in connection with 
the issuance of COs prior to the amendments made to this part shall 
continue in effect with respect to all COs issued under the authority of 
section 11 of the Act (12 U.S.C. 1431) and pursuant to this part. 
References to consolidated obligations in such agreements and 
instruments shall be deemed to refer to all joint and several 
obligations of the Banks.

65 FR 36298, June 7, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



PART 969--DEPOSITS--Table of Contents




Sec.
969.1  Definitions. [Reserved]
969.2  Deposits from members.

    Authority: 12 U.S.C. 1422b(a)(1), 1431.

    Source: 65 FR 8266, Feb 18, 2000, unless otherwise noted.



Sec. 969.1  Definitions. [Reserved]



Sec. 969.2  Deposits from members.

    Banks may accept demand and time deposits from members, reserving 
the right to require notice of intention to withdraw any part of time 
deposits. Rates of interest paid on all deposits shall be set by the 
Bank's board of directors (or, between regular meetings thereof, by a 
committee of directors selected by the board) or by the Bank President, 
if so authorized by the board. Unless otherwise specified by the board, 
a Bank President may delegate to any officer or employee of the Bank any 
authority he possesses under this section.

[[Page 209]]



   SUBCHAPTER I--MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND 
                               AUTHORITIES





PART 975--COLLECTION, SETTLEMENT, AND PROCESSING OF PAYMENT INSTRUMENTS--Table of Contents




Sec.
975.1  Definitions.
975.2  Authority and scope.
975.3  General provisions.
975.4  Incidental powers.
975.5  Operations.
975.6  Pricing of services.
975.7  Rights, powers, responsibilities, duties, and liabilities.

    Authority: 12 U.S.C. 1430, 1431.

    Source: 45 FR 64164, Sept. 29, 1980, unless otherwise noted. 
Redesignated at 54 FR 36759, Sept. 5, 1989. Redesignated at 65 FR 8256, 
Feb. 18, 2000.



Sec. 975.1  Definitions.

    (a) Unless otherwise defined in this part, the terms used in this 
part shall conform, in the following order, to: Regulations of the 
Finance Board, the Uniform Commercial Code, regulations of the Federal 
Reserve System, and general banking usage.
    (b) As used in this part:
    Account processing includes charging, crediting, and settling of 
member or eligible institution accounts, excluding individual customer 
accounts.
    Assets includes furniture and equipment, leasehold improvements, and 
capitalized start-up costs.
    Data communication means transmitting and receiving of data to or 
from Banks, Federal Reserve offices, clearinghouse associations, 
depository institutions or their service bureaus, and other direct 
sending entities, arrangement for delivery of information; and telephone 
inquiry service.
    Data processing includes capture, storage, and assembling of, and 
computation of, data from payment instruments received from Federal 
Reserve offices, Banks, clearinghouse associations, depository 
institutions, and other direct lending entities.
    Eligible institution means any institution that is eligible to make 
application to become a member of a Bank under section 4 of the Act (12 
U.S.C. 1424), including any building and loan association, savings and 
loan association, cooperative bank, homestead association, insurance 
company, savings bank, or any insured depository institution (as defined 
in section 2(12) of the Act (12 U.S.C. 1422(12))), regardless of whether 
the institution applies for or would be approved for membership.
    Issuance of forms means the designation and distribution of 
standardized forms for use in collection, processing, and settlement 
services.
    Presentment means a demand for acceptance or payment made upon the 
maker, acceptor, drawee or other payor by or on behalf of the holder, 
and may involve the use of electronic transmission of an instrument or 
item or transmission of data from the instrument or item by electronic 
or mechanical means.
    Statement packaging includes receiving statement information from 
members or eligible institutions or their service bureaus on respective 
customer cycle dates; printing statements; matching customer account 
statements; packaging the statements with appropriate items and 
informational materials, as authorized by individual members and 
eligible institutions, for distribution to their customers; sending the 
packages to the members or eligible institutions or mailing the packages 
directly to their customers.
    Storage services includes filing, storage, and truncation of items.
    Transportation of items includes transporting items from Federal 
Reserve offices, other Banks' clearinghouse associations, depository 
institutions, and other direct sending entities to a Bank; forwarding 
items to financial institutions after sorting and forwarding cash items 
or return items to Federal Reserve offices and other sending entities.

[67 FR 12854, Mar. 20, 2002]



Sec. 975.2  Authority and scope.

    (a) Pursuant to section 11(e)(2) of the Act (12 U.S.C. 1431(e)(2)) , 
the Finance Board has promulgated this part governing the collection, 
processing, and settlement, and services incidental

[[Page 210]]

thereto, of drafts, checks, and other negotiable and nonnegotiable items 
and instruments by Banks. Settlement, collection, and processing include 
the following activities as defined in this part: Account processing, 
data processing, data communication, issuance of forms, transportation 
of items, and storage services.
    (b) Any activity authorized by section 11(e)(2) of the Act (12 
U.S.C. 1431(e)(2)) shall be governed by the provisions of this part.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12854, Mar. 20, 2002]



Sec. 975.3  General provisions.

    The Banks are authorized to:
    (a) Engage in, be agents or intermediaries for, or otherwise 
participate or assist in, the processing, collection, and settlement of 
checks, drafts, or any other negotiable or nonnegotiable items and 
instruments of payment drawn on eligible institutions or Bank members; 
and
    (b) Be drawees of checks, drafts, and other negotiable and 
nonnegotiable items and instruments issued by eligible institutions or 
Bank members.

[67 FR 12854, Mar. 20, 2002]



Sec. 975.4  Incidental powers.

    In connection with the collection, processing, and settlement of 
items and instruments drawn on or issued by eligible institutions or 
Bank members, a Bank may also perform the following services:
    (a) Statement packaging; and
    (b) Any other activity that the Finance Board shall, from time to 
time, after notice and comment, find necessary for the exercise of the 
authority of this part.

[45 FR 64164, Sept. 29, 1980, as amended at 55 FR 2231, Jan. 23, 1990; 
65 FR 8266, Feb. 18, 2000; 67 FR 12854, Mar. 20, 2002]



Sec. 975.5  Operations.

    A Bank may utilize the services of a Federal Reserve Bank and may 
become a member or use the services of a clearinghouse, public or 
private financial institution, or agency in the exercise of any powers 
or functions under this part.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]



Sec. 975.6  Pricing of services.

    (a) General. Banks shall charge for services authorized in this part 
in a manner consistent with the principles of section 11(A)(c) of the 
Federal Reserve Act (12 U.S.C. 248a(c)), as interpreted by this part.
    (b) Payment instrument account services. (1) In determining the fees 
for services provided under this part, a Bank must take into account all 
direct and indirect costs of providing the services.
    (2) Prices must reflect the imputed rate of return that would have 
been earned and the taxes that would have been paid if the Bank were a 
private corporation, by using a cost of capital adjustment factor 
applied to those assets used in providing services authorized under this 
part.
    (c) Review and publication. The Finance Board shall from time to 
time and at least annually review the cost of capital adjustment factor 
and review prices for services authorized in this part for compliance 
with the principles set forth in paragraphs (a) and (b) of this section. 
All prices for Bank services authorized in this part will be published 
annually in the Federal Register, except those for fees charged to an 
applicant for draws made by a beneficiary under a standby letter of 
credit.

(12 U.S.C. 1431(e); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 1943-
48 Comp., p. 1071)

[45 FR 64164, Sept. 29, 1980, as amended at 46 FR 38900, July 30, 1981. 
Redesignated at 54 FR 36759, Sept. 5, 1989, and amended at 58 FR 59936, 
Nov. 12, 1993; 60 FR 57682, Nov. 17, 1995; 63 FR 65700, Nov. 30, 1998; 
65 FR 8266, Feb. 18, 2000]



Sec. 975.7  Rights, powers, responsibilities, duties, and liabilities.

    To the extent it is not inconsistent with other provisions of this 
part, the Uniform Commercial Code governs the rights, powers, 
responsibilities, duties, and liabilities of Banks in the exercise of 
their authority under this part. For purposes of this paragraph, the 
term ``bank,'' as used in the Uniform Commercial Code and clearinghouse 
rules,

[[Page 211]]

includes Banks and their members and eligible institutions.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]



PART 977--MISCELLANEOUS BANK AUTHORITIES--Table of Contents




Sec.
977.1  Definitions. [Reserved]
977.2  Transfer of funds between Banks.
977.3  Trustee powers.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1431(a), 1431(e), 
1432(a).

    Source: 65 FR 8266, Feb. 18, 2000, unless otherwise noted.



Sec. 977.1  Definitions. [Reserved]



Sec. 977.2  Transfer of funds between Banks.

    Inter-Bank borrowing shall be through unsecured deposits bearing 
interest at rates negotiated between Banks.



Sec. 977.3  Trustee powers.

    A Bank may act, and make reasonable charges for doing so, as trustee 
of any trust affecting the business of any member or any institution or 
group applying for membership or for insurance of accounts, or any group 
applying for a charter for a Federal Savings Association, if:
    (a) Such trust is created or arises for the benefit of the 
institution or its depositors, investors, or borrowers, or for the 
promotion of sound and economical home financing; and
    (b) In the case of applicants, the Bank ceases to act as trustee if 
the application is withdrawn or rejected.



PART 978--BANK REQUESTS FOR INFORMATION--Table of Contents




Sec.
978.1  Definitions.
978.2  Scope.
978.3  Request for confidential information.
978.4  Form of request.
978.5  Storage of confidential information.
978.6  Access to confidential information.
978.7  Third party requests for confidential information.
978.8  Computer data.

    Authority: 12 U.S.C. 1422b(a), 1442.

    Source: 65 FR 8266, Feb. 18, 2000, unless other noted.



Sec. 978.1  Definitions.

    As used in this part:
    Confidential information means any record, data, or report, 
including but not limited to examination reports, or any part thereof, 
that is non-public, privileged or otherwise not intended for public 
disclosure which is in the possession or control of a financial 
regulatory agency and which contains information regarding members of a 
Bank or financial institutions with which a Bank has had or contemplates 
having transactions under the Act.
    Financial regulatory agency means any of the following:
    (1) The Department of the Treasury, including either the OCC or the 
OTS;
    (2) The FRB;
    (3) The NCUA; or
    (4) The FDIC.
    Third party means any person or entity except a director, officer, 
employee or agent of either:
    (1) A Bank in possession of any particular confidential information; 
or
    (2) The financial regulatory agency that supplied the particular 
confidential information to such Bank.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.2  Scope.

    This part governs the procedure by which a Bank will request and 
receive confidential information pursuant to section 22 of the Act (12 
U.S.C. 1442).

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.3  Request for confidential information.

    A Bank shall make all requests for confidential information to a 
financial regulatory agency, or to a regional office of such agency if 
mutually agreeable, in accordance with the procedures contained in this 
part as well as any procedures of general applicability for requesting 
information promulgated by such financial regulatory agency. This part 
and its procedures may be supplemented by a confidentiality agreement 
between a Bank and a financial regulatory agency.

[[Page 212]]



Sec. 978.4  Form of request.

    A request by a Bank to a financial regulatory agency for 
confidential information shall be made in writing or by such other means 
as may be agreed upon between the Bank and the financial regulatory 
agency. The request shall reference section 22 of the Act (12 U.S.C. 
1442), as amended, and this regulation, and shall describe the 
confidential information requested and identify its intended use 
pursuant to the Act. The request shall be signed or otherwise made by 
any duly authorized Bank officer or employee.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.5  Storage of confidential information.

    Each Bank shall:
    (a) Store all identified confidential information in secure storage 
areas or filing cabinets or other secured facilities generally used by 
such Bank and limit access thereto in the same manner as it maintains 
the confidentiality of its own members' privileged or non-public 
information;
    (b) Have in place a written set of procedures and policies designed 
to ensure the confidentiality of confidential information in its 
possession; and
    (c) Establish an internal review of its procedures for storing 
confidential information and maintaining its confidentiality, as a part 
of its internal audit process.



Sec. 978.6  Access to confidential information.

    Each Bank shall ensure that access to the confidential information 
stored at its facility is limited to those with a need to know such 
information and that employees with access maintain the confidentiality 
of the confidential information in accordance with the Bank's own 
procedures for maintaining the confidentiality of its members' 
privileged or non-public information.



Sec. 978.7  Third party requests for confidential information.

    (a) General. In the event a Bank receives a request for confidential 
information in its possession from any third party, the Bank shall 
forward such request to the financial regulatory agency from which the 
confidential information was obtained.
    (b) Subpoena. In the event a Bank receives a subpoena for 
confidential information issued by a Federal, state or local government 
department, agency, court or bureau, the Bank shall give timely written 
notice of such subpoena to the financial regulatory agency from which 
the confidential information was obtained, unless such notice is 
prohibited by applicable law. Except as limited in this part, the Bank 
may disclose confidential information pursuant to the subpoena, after 
giving timely written notice, when:
    (1) The financial regulatory agency gives written approval to the 
disclosure; or
    (2) A binding order to produce the confidential information has 
become final with all rights of appeal either exhausted or lapsed.
    (c) Nondisclosure to third parties. Except as provided in paragraph 
(b) of this section, a Bank shall not disclose confidential information 
to any third party. A Bank shall refer all third party requests for such 
confidential information to the financial regulatory agency that 
released the confidential information to the Bank.
    (d) Disclosure to Finance Board. (1) Neither this part nor any 
confidentiality agreement executed between a Bank and a financial 
regulatory agency shall prevent a Bank from disclosing confidential 
information in its possession to the Finance Board whenever disclosure 
is necessary to accomplish the Finance Board's supervision of Bank 
membership applications or Bank director eligibility issues, or 
disclosing any confidential information in its possession if such 
disclosure is made pursuant to an audit conducted pursuant to Sec. 978.5 
or section 20 of the Act (12 U.S.C. 1440).
    (2) The Finance Board shall keep all confidential information 
received under paragraph (d) of this section in strict confidence.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]

[[Page 213]]



Sec. 978.8  Computer data.

    Nothing in this part shall preclude a Bank from arranging with any 
financial regulatory agency to transmit or allow access to confidential 
information with the consent of such agency by means of an electronic 
computer system. Any such arrangement shall ensure the security of the 
computerized data stored in a Bank's computer and restrict access to 
such data in order to preserve confidentiality in a manner agreed upon 
by the Bank and the financial regulatory agency.

[[Page 214]]



           SUBCHAPTER J--NEW FEDERAL HOME LOAN BANK ACTIVITIES





PART 980--NEW BUSINESS ACTIVITIES--Table of Contents




Sec.
980.1  Definitions.
980.2  Limitation on Bank authority to undertake new business 
          activities.
980.3  New business activity notice requirement.
980.4  Commencement of new business activities.
980.5  Notice by the Finance Board.
980.6  Finance Board consent.
980.7  Examinations; requests for additional information.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1431(a), 1432(a).

    Source: 65 FR 44431, July 18, 2000, unless otherwise noted.



Sec. 980.1  Definitions.

    As used in this part:
    New business activity means any business activity undertaken, 
transacted, conducted, or engaged in by a Bank that has not been 
previously undertaken, transacted, conducted, or engaged in by that 
Bank, or was previously undertaken, transacted, conducted, or engaged in 
under materially different terms and conditions, such that it:
    (1) Involves the acceptance of collateral enumerated under 
Sec. 950.7(a)(4) of this chapter;
    (2) Involves the acceptance of classes of collateral enumerated 
under Sec. 950.7(b) of this chapter for the first time;
    (3) Entails risks not previously and regularly managed by that Bank, 
its members, or both, as appropriate; or
    (4) Involves operations not previously undertaken by that Bank.



Sec. 980.2  Limitation on Bank authority to undertake new business activities.

    No Bank shall undertake any new business activity except in 
accordance with the procedures set forth in this part.



Sec. 980.3  New business activity notice requirement.

    At least sixty days prior to undertaking a new business activity, 
except as provided in Sec. 980.4(b), a Bank shall submit to the Finance 
Board a written notice containing the following information:
    (a) General requirements. Except as provided in paragraph (b) of 
this section, a Bank's notice of new business activity shall include:
    (1) An opinion of counsel citing the statutory, regulatory, or other 
legal authority for the new business activity;
    (2) A good faith estimate of the anticipated dollar volume of the 
activity over the short-and long-term;
    (3) A full description of:
    (i) The purpose and operation of the proposed activity;
    (ii) The market targeted by the activity;
    (iii) The delivery system for the activity; and
    (iv) The effect of the activity on the housing, or relevant 
community lending, market;
    (4) A demonstration of the Bank's capacity, through staff, or 
contractors employed by the Bank, sufficiency of experience and 
expertise, to safely administer and manage the risks associated with the 
new activity;
    (5) An assessment of the risks associated with the activity, 
including the Bank's ability to manage these risks and the Bank's 
ability to manage the risks associated with increasing volumes of the 
new activity; and
    (6) The criteria that the Bank will use to determine the eligibility 
of its members or housing associates to participate in the new activity.
    (b) New collateral activities. If a proposed new business activity 
relates to the acceptance of collateral under Sec. 950.7 of this 
chapter, a Bank's notice of new business activity shall include:
    (1) A description of the classes or amounts of collateral proposed 
to be accepted by the Bank;

[[Page 215]]

    (2) A copy of the Bank's member products policy, adopted pursuant to 
Sec. 917.4 of this chapter;
    (3) A copy of the Bank's procedures for determining the value of the 
collateral in question, established pursuant to Sec. 950.10 of this 
chapter; and
    (4) A demonstration of the Bank's capacity, personnel, technology, 
experience and expertise to value, discount and manage the risks 
associated with the collateral in question.

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



Sec. 980.4  Commencement of new business activities.

    A Bank may commence a new business activity:
    (a) Sixty days after receipt by the Finance Board of the notice of 
new business activity under Sec. 980.3, if the Finance Board has not 
issued to the Bank a notice as described in Sec. 980.5(a)(1) through 
(4);
    (b) In the case of the acceptance of collateral enumerated under 
Sec. 950.7(a)(4) of this chapter, immediately upon receipt by the 
Finance Board of a notice of new business activity under Sec. 980.3; or
    (c) Immediately upon issuance by the Finance Board of a letter of 
approval under Sec. 980.6.



Sec. 980.5  Notice by the Finance Board.

    (a) Issuance. Within sixty days after receipt of a notice of new 
business activity under Sec. 980.3, the Finance Board may issue to a 
Bank a notice that:
    (1) Disapproves the new business activity;
    (2) Instructs the Bank not to commence the new business pending 
further consideration by the Finance Board;
    (3) Declares an intent to examine the Bank;
    (4) Requests additional information including but not limited to the 
requests listed in Sec. 980.7;
    (5) Establishes conditions for the Finance Board's approval of the 
new business activity, including but not limited to the conditions 
listed in Sec. 980.7; or
    (6) Contains other instructions or information that the Finance 
Board deems appropriate under the circumstances.
    (b) Effect. Following receipt of a notice issued pursuant to 
paragraph (a) of this section, a Bank may not undertake any new business 
activity that is the subject of the notice until the Bank has received 
the Finance Board's consent pursuant to Sec. 980.6.



Sec. 980.6  Finance Board consent.

    The Finance Board may at any time provide consent for a Bank to 
undertake a particular new business activity and setting forth the terms 
and conditions that apply to the activity, with which the Bank shall 
comply if the Bank undertakes the activity in question.



Sec. 980.7  Examinations; requests for additional information.

    (a) General. Nothing in this part shall limit in any manner the 
right of the Finance Board to conduct any examination of any Bank.
    (b) Requests for additional information and conditions for approval. 
With respect to a new business activity, nothing in this part shall 
limit the right of the Finance Board at any time to:
    (1) Request further information from a Bank concerning a new 
business activity; and
    (2) Require a Bank to comply with certain conditions in order to 
undertake, or continue to undertake, the new business activity in 
question, including but not limited to:
    (i) Successful completion of pre- or post-implementation safety and 
soundness examinations;
    (ii) Demonstration by the Bank of adequate operational capacity, 
including the existence of appropriate policies, procedures and 
controls;
    (iii) Demonstration by the Bank of its ability to manage the risks 
associated with accepting increasing volumes of particular collateral, 
or holding increasing volumes of particular assets, including the Bank's 
capacity reliably to value, discount and market the collateral or assets 
for liquidation;
    (iv) Demonstration by the Bank that the new business activity is 
consistent with the housing finance and community lending mission of the 
Banks and the cooperative nature of the Bank System; and

[[Page 216]]

    (v) Finance Board review of any contracts or agreements between the 
Bank and its members or housing associates.

[[Page 217]]



                     SUBCHAPTER K--OFFICE OF FINANCE





PART 985--THE OFFICE OF FINANCE--Table of Contents




Sec.
985.1  Definitions.
985.2  Authority of the OF.
985.3  Functions of the OF.
985.4  Finance Board oversight.
985.5  Funding of the OF.
985.6  Debt management duties of the OF.
985.7  Structure of the OF board of directors.
985.8  General duties of the OF board of directors.

Appendix A to Part 985--Exceptions to the General Disclosure Standards

    Authority: 12 U.S.C. 1422b(b)(2), 1431(a), 1431(c), 1432(a).

    Source: 65 FR 36300, June 7, 2000, unless otherwise noted.



Sec. 985.1  Definitions.

    As used in this part:
    Chair means the chairperson of the board of directors of the Office 
of Finance.
    Managing Director means the managing director of the Office of 
Finance.

[67 FR 12854, Mar. 20, 2002]



Sec. 985.2  Authority of the OF.

    (a) General. The OF shall enjoy such incidental powers under section 
12(a) of the Act (12 U.S.C. 1432(a)), as are necessary, convenient and 
proper to accomplish the efficient execution of its duties and functions 
pursuant to this part, including the authority to contract with a Bank 
or Banks for the use of Bank facilities or personnel in order to perform 
its functions or duties.
    (b) Agent. The OF in the performance of its duties, shall have the 
power to act on behalf of:
    (1) The Banks in issuing consolidated obligations pursuant to 
section 11(a) of the Act (12 U.S.C. 1431(a));
    (2) By delegation of the Finance Board under Sec. 966.2 of this 
chapter in issuing consolidated obligations pursuant to section 11(c) of 
the Act (12 U.S.C. 1431(c)); and
    (3) The Banks in paying principal and interest due on the 
consolidated obligations, or other obligations of the Banks.
    (c) Assessments. The OF shall have authority to assess the Banks for 
the funding of its operations in accordance with Sec. 985.5.



Sec. 985.3  Functions of the OF.

    (a) Joint debt issuance. Subject to parts 965 and 966 of this 
chapter, and this part, the OF as agent shall offer, issue and service 
(including making timely payments on principal and interest due) 
consolidated obligations on which the Banks are jointly and severally 
liable on behalf of the Finance Board pursuant to section 11(c) of the 
Act (12 U.S.C. 1431(c), or the Banks pursuant to section 11(a) of the 
Act (12 U.S.C. 1431(a)).
    (b) Preparation of combined financial reports. The OF shall prepare 
and issue the combined annual and quarterly financial reports for the 
Bank System in accordance with the requirements of Sec. 985.6(b) and 
Appendix A of this part.
    (c) Fiscal agent. The OF shall function as the Fiscal Agent of the 
Banks.
    (d) Financing Corporation and Resolution Funding Corporation. The OF 
shall perform such duties and responsibilities for the Financing 
Corporation (FICO) as may be required under part 995 of this chapter, or 
for the Resolution Funding Corporation (REFCORP) as may be required 
under part 996 of this chapter or authorized by the Finance Board 
pursuant to section 21B(c)(6)(B) of the Act (12 U.S.C. 1441b(c)(6)(B)).

[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]



Sec. 985.4  Finance Board oversight.

    (a) Oversight and enforcement actions. The Finance Board shall have 
the same regulatory oversight authority and enforcement powers over the 
OF, the OF board of directors, the directors, officers, employees, 
agents, attorneys, accountants or other OF staff, as it has over a Bank 
and its respective directors, officers, employees, attorneys, 
accountants, agents or other staff.
    (b) Examinations. Pursuant to section 20 of the Act (12 U.S.C. 
1440), the Finance Board shall examine the OF, all

[[Page 218]]

funds and accounts that may be established pursuant to this part 985, 
and the operations and activities of the OF, as provided for in the Act 
or any regulations promulgated pursuant thereto.



Sec. 985.5  Funding of the OF.

    (a) Generally. The Banks are responsible for jointly funding all of 
the expenses of the Office of Finance, including the costs of 
indemnifying the members of the OF board of directors, the Managing 
Director and other officers and employees of the OF, as provided for in 
this part.
    (b) Funding policies. (1) At the direction of, and pursuant to 
policies and procedures adopted by, the OF board of directors, the Banks 
shall periodically reimburse the OF in order to maintain sufficient 
operating funds under the budget approved by the OF board of directors. 
The OF operating funds shall be:
    (i) Available for expenses of the Office of Finance and the OF board 
of directors, according to their approved budgets; and
    (ii) Subject to withdrawal by check, wire transfer or draft signed 
by the Managing Director or other person designated by the OF board of 
directors.
    (2) Each Bank's respective pro rata share of the reimbursement 
described in paragraph (b)(1) of this section shall be based on the 
ratio of the total paid-in value of its capital stock relative to the 
total paid-in value of all capital stock in the Bank System.
    (c) Alternative formula for assessment. With the prior approval of 
the Finance Board, the OF board of directors may implement an 
alternative formula for determining each Bank's respective share of the 
OF expenses or, by contract with a Bank or Banks, may choose to be 
reimbursed through a fee structure in lieu of or in addition to 
assessment, for services provided to the Bank or Banks.
    (d) Prompt reimbursement. Each Bank from time to time shall promptly 
forward funds to the OF in an amount representing its share of the 
reimbursement described in paragraph (b) of this section when directed 
to do so by the Managing Director pursuant to procedures of the OF board 
of directors.
    (e) Indemnification expenses. All expenses incident to 
indemnification of the members of the OF board of directors, the 
Managing Director, and other officers and employees of the OF shall be 
treated as an expense of the OF to be reimbursed by the Banks under the 
provisions of this part.
    (f) Operating funds shall be segregated. (1) Any funds received by 
the OF from the Banks pursuant to this section for OF operating expenses 
promptly shall be deposited into one or more accounts and shall not be 
commingled with any proceeds from the sale of consolidated obligations 
in any manner.
    (2) Neither the proceeds from the sale of consolidated obligations 
under part 966, nor any operating expense reimbursements received by the 
OF from assessments on the Banks under this section shall be construed 
to be Government Funds or appropriated monies or subject to 
apportionment for the purposes of chapter 15 of title 31 of the United 
States Code, or any other authority, in accordance with section 2B(b)(1) 
of the Act (12 U.S.C. 1422b(b)(1)).



Sec. 985.6  Debt management duties of the OF.

    (a) Issuance and servicing of COs. The OF shall issue and service 
(including making timely payments on principal and interest due, subject 
to Secs. 966.8 and 966.9 of this chapter) consolidated obligations 
pursuant to and in accordance with the policies and procedures 
established by the OF board of directors under this part.
    (b) Combined financial reports requirements. The OF shall prepare 
and distribute the combined annual and quarterly financial reports for 
the Bank System in accordance with the following requirements:
    (1) The scope, form and content of the disclosure generally shall be 
consistent with the requirements of the Securities and Exchange 
Commission's Regulations S-K and S-X (17 CFR parts 229 and 210).
    (2) Information about each Bank shall be presented as a segment of 
the Bank System as if Statement of Financial Accounting Standards No. 
131, titled ``Disclosures about Segments of an Enterprise and Related 
Information''

[[Page 219]]

(FASB 131) applied to the combined annual and quarterly financial 
reports of the Bank System.
    (3) The standards set forth in paragraphs (b)(1) and (2) of this 
section are subject to the exceptions set forth in the Appendix to this 
part.
    (4) The combined Bank System annual report shall be filed with the 
Finance Board and distributed to each Bank and Bank member within 90 
days after the end of the fiscal year. The combined Bank System 
quarterly reports shall be filed with the Finance Board and distributed 
to each Bank and Bank member within 45 days after the end of the first 
three fiscal quarters of each year.
    (5) The Finance Board in its sole discretion shall determine whether 
or not a combined Bank System annual or quarterly financial report 
complies with the standards of this part.
    (6) The OF board of directors shall comply promptly with any 
directive of the Finance Board regarding the preparation, filing, 
amendment or distribution of the combined Bank System annual or 
quarterly financial reports.
    (7) Nothing in this section shall create or be deemed to create any 
rights in any third party.
    (c) Capital markets data. The OF board of directors shall provide 
capital markets information concerning debt to the Banks.
    (d) NRSROs. The OF board of directors shall manage relationships 
with NRSROs in connection with their rating of consolidated obligations.
    (e) Research. The OF shall conduct research reasonably related to 
the issuance or servicing of consolidated obligations.
    (f) Monitor Banks' credit exposure. The OF shall timely monitor each 
Bank's and the Bank System's unsecured credit exposure to individual 
counterparties.

[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]



Sec. 985.7  Structure of the OF board of directors.

    (a) Membership. The OF board of directors shall consist of three 
part-time members appointed by the Finance Board as follows:
    (1) Two Bank Presidents; and
    (2) A citizen of the United States with a demonstrated expertise in 
financial markets. Such appointee may not be an officer, director or 
employee of a Bank or Bank System member, hold shares, or any other 
financial interest in, any member of a Bank, or be affiliated with any 
consolidated obligation selling or dealer group member under contract 
with the OF.
    (b) Terms. (1) Except as provided in paragraph (b)(2) of this 
section, the members of the OF board of directors shall serve for three-
year terms (which shall be staggered), and shall be subject to removal 
or suspension for cause by the Finance Board.
    (2) The Finance Board shall fill any vacancy occurring on the OF 
board of directors. An appointment to fill a vacancy shall be only for 
the remainder of the term during which the vacancy occurred.
    (3) Any member of the OF board of directors is authorized to 
continue to serve on the OF board of directors after the expiration of 
the member's term until a successor has been appointed by the Finance 
Board.
    (c) Chair. (1) The private citizen member of the OF board of 
directors shall serve as the Chair, and the Vice Chair shall be selected 
by a majority vote of the members of the OF board of directors.
    (2) The Chair shall preside over the meetings of the OF board of 
directors. In the absence of the Chair, the Vice Chair shall preside.
    (3) The Chair shall be responsible for ensuring that the directives 
and resolutions of the OF board of directors are drafted and maintained 
and for keeping the minutes of all meetings.
    (d) Compensation. (1) The Bank President members shall not receive 
any additional compensation or reimbursement as a result of their 
service on the OF board of directors.
    (2) Each Bank shall be entitled to be reimbursed by from the Office 
of Finance for its expenditure of travel and per diem expenses 
associated with its Bank President's attendance at an OF board of 
directors meeting as a director member thereof.
    (3) The Office of Finance shall pay compensation and expenses to the 
private citizen member of the OF board of

[[Page 220]]

directors in accordance with the requirements for payment of 
compensation and expenses to Bank chairs as set forth in part 918 of 
this chapter.
    (e) Indemnification. (1) The OF board of directors shall indemnify 
its members, the Managing Director, and other officers and employees of 
the OF under such terms and conditions as shall be determined by the OF 
board of directors, provided that such terms and conditions are 
consistent with the terms and conditions of indemnification of 
directors, officers and employees of the Bank System generally.
    (2) The OF board of directors shall adopt indemnification 
procedures, which shall be supplemented by a contract of insurance.
    (f) Delegation. The OF board of directors may delegate any of its 
authority or duties to any employee of the OF in order to enable the OF 
to carry out its functions.



Sec. 985.8  General duties of the OF board of directors.

    (a) General. (1) Conduct of business. Each director shall have the 
duties prescribed in Sec. 917.2(b) of this chapter, as appropriate.
    (2) Bylaws. The OF board of directors shall adopt bylaws in 
accordance with the provisions of Sec. 917.10 of this chapter.
    (b) Meetings and quorum. The OF board of directors shall conduct its 
business by majority vote of its members at meetings convened in 
accordance with its bylaws, and shall hold no fewer than six in-person 
meetings annually. Due notice shall be given to the Finance Board by the 
Chair prior to each meeting. A quorum, for purposes of meetings of the 
OF board of directors, shall be not less than two members.
    (c) Duties regarding COs. The OF board of directors shall establish 
policies regarding COs that shall:
    (1) Govern the frequency and timing of issuance, issue size, minimum 
denomination, CO concessions, underwriter qualifications, currency of 
issuance, interest-rate change or conversion features, call features, 
principal indexing features, selection and retention of outside counsel, 
selection of clearing organizations, and the selection and compensation 
of underwriters for consolidated obligations, which shall be in 
accordance with the requirements and limitations set forth in paragraph 
(c)(4) of this section;
    (2) Prohibit the issuance of COs intended to be privately placed 
with or sold without the participation of an underwriter to retail 
investors, or issued with a concession structure designed to facilitate 
the placement of the COs in retail accounts, unless the OF has given 
notice to the board of directors of each Bank describing a policy 
permitting such issuances, soliciting comments from each Bank's board of 
directors, and considering the comments received before adopting a 
policy permitting such issuance activities;
    (3) Require all broker-dealers or underwriters under contract to the 
OF to have and maintain adequate suitability sales practices and 
policies, which shall be acceptable to, and subject to review by, the 
Office of Finance;
    (4) Require that COs shall be issued efficiently and at the lowest 
all-in funding costs over time, consistent with:
    (i) Prudent risk-management practices, prudential debt parameters, 
short and long-term market conditions, and the Banks' role as 
government-sponsored enterprises;
    (ii) Maintaining reliable access to the short-term and long-term 
capital markets; and
    (iii) Positioning the issuance of debt to take advantage of current 
and future capital market opportunities.
    (d) Other duties. The OF board of directors shall:
    (1) Set policies for management and operation of the OF;
    (2) Approve a strategic business plan for the OF in accordance with 
the provisions of Sec. 917.5 of this chapter, as appropriate;
    (3) Review, adopt and monitor annual operating and capital budgets 
of the OF in accordance with the provisions of Sec. 917.8 of this 
chapter, as appropriate;
    (4) Constitute and perform the duties of an audit committee, which 
to the extent possible shall operate consistent with:
    (i) The requirements of Sec. 917.7 of this chapter, and

[[Page 221]]

    (ii) The requirements pertaining to audit committee reports set 
forth in Item 306 of Regulation S-K promulgated by the Securities and 
Exchange Commission.
    (5) Select, employ, determine the compensation for, and assign the 
duties and functions of a Managing Director of the OF who shall:
    (i) Be the chief executive officer for the OF and shall direct the 
implementation of the OF board of directors' policies;
    (ii) Serve as a member of the Directorate of the Financing 
Corporation, pursuant to section 21(b)(1)(A) of the Act (12 U.S.C. 
1441(b)(1)(A)); and
    (iii) Serve as a member of the Directorate of the Resolution Funding 
Corporation, pursuant to section 21B(c)(1)(A) of the Act (12 U.S.C. 
1441b(c)(1)(A)).
    (6) Review and approve all contracts of the OF;
    (7) Have the exclusive authority to employ and contract for the 
services of an independent, external auditor for the Banks' annual and 
quarterly combined financial statements;
    (8) Select, evaluate, determine the compensation of, and, where 
appropriate, replace the internal auditor, who may be removed only by 
vote of the OF board of directors; and
    (9) Assume any other responsibilities that may from time to time be 
delegated to it by the Finance Board.
    (e) No rights created. Nothing in this part shall create or be 
deemed to create any rights in any third party.

[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002; 67 
FR 18807, Apr. 17, 2002]

 Appendix A to Part 985--Exceptions to the General Disclosure Standards

    A. Related-party transactions. Item 404 of Regulation S-K, 17 CFR 
229.404, requires the disclosure of certain relationships and related 
party transactions. In light of the cooperative nature of the Bank 
System, related-party transactions are to be expected, and a disclosure 
of all related-party transactions that meet the threshold would not be 
meaningful. Instead, the combined annual report will disclose the 
percent of advances to members an officer of which serves as a Bank 
director, and list the top ten holders of advances in the Bank System 
and the top five holders of advances by Bank, with a further disclosure 
indicating which of these members had an officer that served as a Bank 
director.
    B. Biographical information. The biographical information required 
by Items 401 and 405 of Regulation S-K, 17 CFR 229.401 and 405, will be 
provided only for the members of the Board of Directors of the Finance 
Board, Bank presidents, chairs and vice chairs, and the directors and 
Managing Director of the OF.
    C. Compensation. The information on compensation required by Item 
402 of Regulation S-K, 17 CFR 229.402, will be provided only for Bank 
presidents and the Managing Director of the OF. Since stock in each Bank 
trades at par, the Office of Finance will not include the performance 
graph specified in Item 402(1) of Regulation S-K, 17 CFR 229.402(1).
    D. Submission of matters to a vote of stockholders. No information 
will be presented on matters submitted to shareholders for a vote, as 
otherwise required by Item 4 of the SEC's form 10-K, 17 CFR 249.310. The 
only item shareholders vote upon is the annual election of directors.
    E. Exhibits. The exhibits required by Item 601 of Regulation S-K, 17 
CFR 229.601, are not applicable and will not be provided.
    F. Per share information. The statement of financial information 
required by Items 301 and 302 of Rule S-K, 17 CFR 229.301 and 302, is 
inapplicable because the shares of the Banks are subscription capital 
that trades at par, and the shares expand or contract with changes in 
member assets or advance levels.
    G. Beneficial ownership. Item 403 of Rule S-K, 17 CFR 229.403, 
requires the disclosure of security ownership of certain beneficial 
owners and management. The combined financial report will provide a 
listing of the ten largest holders of capital stock in the Bank System 
and a listing of the five largest holders of capital stock by Bank. This 
listing will also indicate which members had an officer that served as a 
director of a Bank.



PART 987--BOOK-ENTRY PROCEDURE FOR CONSOLIDATED OBLIGATIONS--Table of Contents




Sec.
987.1  Definitions.
987.2  Law governing rights and obligations of Banks, Finance Board, 
          Office of Finance, United States and Federal Reserve Banks; 
          rights of any Person against Banks, Finance Board, Office of 
          Finance, United States and Federal Reserve Banks.
987.3  Law governing other interests.
987.4  Creation of Participant's Security Entitlement; security 
          interests.
987.5  Obligations of Banks and the Office of Finance; no Adverse 
          Claims.

[[Page 222]]

987.6  Authority of Federal Reserve Banks.
987.7  Liability of Banks, Finance Board, Office of Finance and Federal 
          Reserve Banks.
987.8  Additional requirements; notice of attachment for Book-entry 
          consolidated obligations.
987.9  Reference to certain Department of Treasury commentary and 
          determinations.
987.10  Obligations of United States with respect to consolidated 
          obligations.

    Authority: 12 U.S.C. 1422a, 1422b, 1431, 1435.

    Source: 63 FR 8059, Feb. 18, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 987.1  Definitions.

    As used in this part, unless the context otherwise requires or 
indicates:
    Adverse Claim means a claim that a claimant has a property interest 
in a Book-entry consolidated obligation and that it is a violation of 
the rights of the claimant for another Person to hold, transfer, or deal 
with the Security.
    Book-entry consolidated obligation means a consolidated obligation 
maintained in the book-entry system of the Federal Reserve Banks.
    Entitlement Holder means a Person or a Bank to whose account an 
interest in a Book-entry consolidated obligation is credited on the 
records of a Securities Intermediary.
    Federal Reserve Bank means a Federal Reserve Bank or branch, acting 
as fiscal agent for the Office of Finance, unless otherwise indicated.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Federal Reserve Bank maintains Book-entry Securities 
accounts and transfers Book-entry Securities.
    Funds account means a reserve and/or clearing account at a Federal 
Reserve Bank to which debits or credits are posted for transfers against 
payment, Book-entry Securities transaction fees, or principal and 
interest payments.
    Office of Finance means the Office of Finance acting as agent of the 
Banks in all matters relating to the issuance of Book-entry consolidated 
obligations and in the performance of all other necessary and proper 
functions relating to Book-entry consolidated obligations, including the 
payment of principal and interest due thereon.
    Participant means a Person or a Bank that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    Participant's Securities Account means an account in the name of a 
Participant at a Federal Reserve Bank to which Book-entry consolidated 
obligations held for a Participant are or may be credited.
    Person means and includes an individual, corporation, company, 
governmental entity, association, firm, partnership, trust, estate, 
representative, and any other similar organization, but does not mean or 
include a Bank, the Finance Board, the Office of Finance, the United 
States, or a Federal Reserve Bank.
    Revised Article 8 means Uniform Commercial Code, Revised Article 8, 
Investment Securities (with Conforming and Miscellaneous Amendments to 
Articles 1, 3, 4, 5, 9, and 10) 1994 Official Text. Copies of this 
publication are available from the Executive Office of the American Law 
Institute, 4025 Chestnut Street, Philadelphia, PA 19104, and the 
National Conference of Commissioners on Uniform State Laws, 676 North 
St. Clair Street, Suite 1700, Chicago, IL 60611.
    Securities Intermediary means:
    (1) A Person that is registered as a ``clearing agency'' under the 
Federal securities laws; a Federal Reserve Bank; any other person that 
provides clearance or settlement services with respect to a Book-entry 
consolidated obligation that would require it to register as a clearing 
agency under the Federal securities laws but for an exclusion or 
exemption from the registration requirement, it its activities as a 
clearing corporation, including promulgation of rules, are subject to 
regulation by a Federal or State governmental authority; or
    (2) A Person (other than an individual, unless such individual is 
registered as a broker or dealer under the Federal securities laws) 
including a bank or broker, that in the ordinary course of its business 
maintains securities accounts for others and is acting in that capacity.

[[Page 223]]

    Security Entitlement means the rights and property interest of an 
Entitlement Holder with respect to a Book-entry consolidated obligation.
    Transfer Message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry consolidated 
obligation, as set forth in Federal Reserve Bank Operating Circulars.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 
FR 12855, Mar. 20, 2002]



Sec. 987.2  Law governing rights and obligations of Banks, Finance Board,

Office of Finance, United States and Federal Reserve Banks; rights of any Person 
          against Banks, Finance Board, Office of Finance, United States 
          and Federal Reserve Banks.

    (a) Except as provided in paragraph (b) of this section, the rights 
and obligations of the Banks, the Finance Board, the Office of Finance, 
the United States and the Federal Reserve Banks with respect to: A Book-
entry consolidated obligation or Security Entitlement and the operation 
of the Book-entry system, as it applies to consolidated obligations; and 
the rights of any Person, including a Participant, against the Banks, 
the Finance Board, the Office of Finance, the United States and the 
Federal Reserve Banks with respect to: A Book-entry consolidated 
obligation or Security Entitlement and the operation of the Book-entry 
system, as it applies to consolidated obligations; are governed solely 
by regulations of the Finance Board, including the regulations of this 
part 987, the applicable offering notice, applicable procedures 
established by the Office of Finance, and Federal Reserve Bank Operating 
Circulars.
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 987.4(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 987.4(c)(1), is 
governed by the law determined in the manner specified in Sec. 987.3.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8, 
then the law specified in the first sentence of paragraph (b) of this 
section shall be the law of that State as though Revised Article 8 had 
been adopted by that State.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.3  Law governing other interests.

    (a) To the extent not inconsistent with this part 987, the law (not 
including the conflict-of-law rules) of a Securities Intermediary's 
jurisdiction governs:
    (1) The acquisition of a Security Entitlement from the Securities 
Intermediary;
    (2) The rights and duties of the Securities Intermediary and 
Entitlement Holder arising out of a Security Entitlement;
    (3) Whether the Securities Intermediary owes any duties to an 
adverse claimant to a Security Entitlement;
    (4) Whether an Adverse Claim can be asserted against a Person who 
acquires a Security Entitlement from the Securities Intermediary or a 
Person who purchases a Security Entitlement or interest therein from an 
Entitlement Holder; and
    (5) Except as otherwise provided in paragraph (c) of this section, 
the perfection, effect of perfection or non-perfection, and priority of 
a security interest in a Security Entitlement.
    (b) The following rules determine a ``Securities Intermediary's 
jurisdiction'' for purposes of this section:
    (1) If an agreement between the Securities Intermediary and its 
Entitlement Holder specifies that it is governed by the law of a 
particular jurisdiction, that jurisdiction is the Securities 
Intermediary's jurisdiction.
    (2) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify the governing law as provided in 
paragraph (b)(1) of this section, but expressly specifies that the 
securities account is

[[Page 224]]

maintained at an office in a particular jurisdiction, that jurisdiction 
is the Securities Intermediary's jurisdiction.
    (3) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
office identified in an account statement as the office serving the 
Entitlement Holder's account.
    (4) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section and an account statement does 
not identify an office serving the Entitlement Holder's account as 
provided in paragraph (b)(3) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
chief executive office of the Securities Intermediary.
    (c) Notwithstanding the general rule in paragraph (a)(5) of this 
section, the law (but not the conflict-of-law rules) of the jurisdiction 
in which the Person creating a security interest is located governs 
whether and how the security interest may be perfected automatically or 
by filing a financing statement.
    (d) If the jurisdiction specified in paragraph (b) of this section 
is a State that has not adopted Revised Article 8, then the law for the 
matters specified in paragraph (a) of this section shall be the law of 
that State as though Revised Article 8 had been adopted by that State. 
For purposes of the application of the matters specified in paragraph 
(a) of this section, the Federal Reserve Bank maintaining the Securities 
Account is a clearing corporation, and the Participant's interest in a 
Bank Book-entry Security is a Security Entitlement.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.4  Creation of Participant's Security Entitlement; security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book entry that a Book-entry consolidated 
obligation has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including, without limitation, deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the Securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Federal Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the Security. For purposes of this 
paragraph (b), an ``authorized representative of the United States'' is 
the official designated in the applicable regulations or agreement to 
which a Federal Reserve Bank is a party, governing the security 
interest.
    (c)(1) The Banks, the Finance Board, the Office of Finance, the 
United States and the Federal Reserve Banks have no obligation to agree 
to act on behalf of any Person or to recognize the interest of any 
transferee of a security interest or other limited interest in a 
Security Entitlement in favor of any Person except to the extent of any 
specific requirement of Federal law or regulation or to the extent set 
forth in any specific agreement with the Federal Reserve Bank on whose 
books the interest of the Participant is recorded. To the extent 
required by such law or regulation or set forth in an agreement with a 
Federal Reserve Bank, or the Federal Reserve Bank Operating Circular, a 
security interest in a Security Entitlement that is in favor of a 
Federal Reserve Bank or a Person may be created and perfected by a 
Federal Reserve Bank marking its books to record the security interest. 
Except as provided in paragraph (b) of this section, a security interest 
in a Security Entitlement marked on the books of a Federal Reserve Bank 
shall have priority over any other interest in the Securities.

[[Page 225]]

    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest in a Security Entitlement, including a 
security interest in favor of a Federal Reserve Bank, may be perfected 
by any method by which a security interest may be perfected under 
applicable law as described in Sec. 987.2(b) or Sec. 987.3. The 
perfection, effect of perfection or non-perfection, and priority of a 
security interest are governed by that applicable law. A security 
interest in favor of a Federal Reserve Bank shall be treated as a 
security interest in favor of a clearing corporation in all respects 
under that law, including with respect to the effect of perfection and 
priority of the security interest. A Federal Reserve Bank Operating 
Circular shall be treated as a rule adopted by a clearing corporation 
for such purposes.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.5  Obligations of the Banks and the Office of Finance; no Adverse Claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in 
Sec. 987.4(c)(1), for the purposes of this part 987, the Banks, the 
Office of Finance and the Federal Reserve Banks shall treat the 
Participant to whose Securities Account an interest in a Book-entry 
consolidated obligations has been credited as the person exclusively 
entitled to issue a Transfer Message, to receive interest and other 
payments with respect thereof and otherwise to exercise all the rights 
and powers with respect to the Security, notwithstanding any information 
or notice to the contrary. Neither the Banks, the Finance Board, the 
Office of Finance, the United States, nor the Federal Reserve Banks are 
liable to a Person asserting or having an Adverse Claim to a Security 
Entitlement or to Book-entry consolidated obligations in a Participant's 
Securities Account, including any such claim arising as a result of the 
transfer or disposition of a Book-entry consolidated obligation by a 
Federal Reserve Bank pursuant to a Transfer Message that the Federal 
Reserve Bank reasonably believes to be genuine.
    (b) The obligation of the Banks and the Office of Finance to make 
payments of interest and principal with respect to Book-entry 
consolidated obligations is discharged at the time payment in the 
appropriate amount is made as follows:
    (1) Interest on Book-entry consolidated obligations is either 
credited by a Federal Reserve Bank to a Funds Account maintained at the 
Federal Reserve Bank or otherwise paid as directed by the Participant.
    (2) Book-entry consolidated obligations are paid, either at maturity 
or upon redemption, in accordance with their terms by a Federal Reserve 
Bank withdrawing the securities from the Participant's Securities 
Account in which they are maintained and by either crediting the amount 
of the proceeds, including both principal and interest, where 
applicable, to a Funds Account at the Federal Reserve Bank or otherwise 
paying such principal and interest as directed by the Participant. No 
action by the Participant is required in connection with the payment of 
a Book-entry consolidated obligation, unless otherwise expressly 
required.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 
FR 12855, Mar. 20, 2002]



Sec. 987.6  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the Office of Finance: To perform functions with respect to the 
issuance of Book-entry consolidated obligations, in accordance with the 
terms of the applicable offering notice and with procedures established 
by the Office of Finance; to service and maintain Book-entry 
consolidated obligations in accounts established for such purposes; to 
make payments of principal, interest and redemption premium (if any), as 
directed by the Office of Finance; to effect transfer of Book-entry 
consolidated obligations between Participants' Securities Accounts as 
directed by the Participants; and to perform such other duties as fiscal 
agent as may be requested by the Office of Finance.

[[Page 226]]

    (b) Each Federal Reserve Bank may issue Operating Circulars not 
inconsistent with this part 987, governing the details of its handling 
of Book-entry consolidated obligations, Security Entitlements, and the 
operation of the Book-entry system under this part 987.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.7  Liability of Banks, Finance Board, Office of Finance and Federal Reserve Banks.

    The Banks, the Finance Board, the Office of Finance and the Federal 
Reserve Banks may rely on the information provided in a tender, 
transaction request form, other transaction documentation, or Transfer 
Message, and are not required to verify the information. Neither the 
Banks, the Finance Board, the Office of Finance, the United States, nor 
the Federal Reserve Banks shall be liable for any action taken in 
accordance with the information set out in a tender, transaction request 
form, other transaction documentation, or Transfer Message, or evidence 
submitted in support thereof.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.8  Additional requirements; notice of attachment for Book-entry consolidated obligations.

    (a) Additional requirements. In any case or any class of cases 
arising under the regulations in this part 987, the Office of Finance 
may require such additional evidence and a bond of indemnity, with or 
without surety, as may in its judgment, or in the judgment of the Banks 
or the Finance Board, be necessary for the protection of the interests 
of the Banks, the Finance Board, the Office of Finance or the United 
States.
    (b) Notice of attachment. The interest of a debtor in a Security 
Entitlement may be reached by a creditor only by legal process upon the 
Securities Intermediary with whom the debtor's securities account is 
maintained, except where a Security Entitlement is maintained in the 
name of a secured party, in which case the debtor's interest may be 
reached by legal process upon the secured party. The regulations in this 
part 987 do not purport to establish whether a Federal Reserve Bank is 
required to honor an order or other notice of attachment in any 
particular case or class of cases.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.9  Reference to certain Department of Treasury commentary and determinations.

    (a) The Department of Treasury TRADES Commentary (31 CFR part 357, 
appendix B) addressing the Department of Treasury regulations governing 
book-entry procedure for Treasury Securities is hereby referenced, so 
far as applicable and as necessarily modified to relate to Book-entry 
consolidated obligations, as an interpretive aid to this part 987.
    (b) Determinations of the Department of Treasury regarding whether a 
State shall be considered to have adopted Revised Article 8 for purposes 
of 31 CFR part 357, as published in the Federal Register or otherwise, 
shall also apply to this part 987.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.10  Obligations of United States with respect to consolidated obligations.

    Consolidated obligations are not obligations of the United States 
and are not guaranteed by the United States.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



PART 989--FINANCIAL STATEMENTS OF THE BANKS--Table of Contents




Sec.
989.1  Definitions.
989.2  Audit requirements.
989.3  Requirement to provide financial and other information to the 
          Finance Board and the Office of Finance.
989.4  Requirement for voluntary bank disclosure.

    Authority: 12 U.S.C. 1422a, 1422b, 1426, 1431, 1440.

    Source: 63 FR 39704, July 24, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 989.1  Definitions.

    As used in this part:

[[Page 227]]

    Audit means an examination of the financial statements by an 
independent accountant in accordance with Generally Accepted Auditing 
Standards for the purpose of expressing an opinion thereon.
    Audit report means a document in which an independent accountant 
indicates the scope of the audit made and sets forth an opinion 
regarding the financial statement taken as a whole, or an assertion to 
the effect that an overall opinion cannot be expressed. When an overall 
opinion cannot be expressed, the reasons therefor shall be stated.

[65 FR 36303, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]



Sec. 989.2  Audit requirements.

    (a) Each Bank, the OF and the Financing Corporation shall obtain 
annually an independent, external audit of and an audit report on its 
individual financial statement.
    (b) The OF board of directors shall obtain an audit and an audit 
report on the combined annual financial statements for the Bank System.
    (c) All audits must be conducted in accordance with generally 
accepted auditing standards and in accordance with the most current 
government auditing standards issued by the Office of the Comptroller 
General of the United States.
    (d) An independent, external auditor must meet at least twice each 
year with the audit committee of each Bank, the OF board of directors, 
and the Financing Corporation Directorate.
    (e) Finance Board examiners shall have unrestricted access to all 
auditors' work papers and to the auditors to address substantive 
accounting issues that may arise during the course of any audit.

[65 FR 36303, June 7, 2000]



Sec. 989.3  Requirement to provide financial and other information to the Finance Board and the Office of Finance.

    In order to facilitate the preparation by the Office of Finance of 
combined Bank System annual and quarterly reports, each Bank shall 
provide to the Office of Finance in such form and within such timeframes 
as the Finance Board or the Office of Finance shall specify, all 
financial and other information and assistance the Office of Finance 
shall request for that purpose. Nothing in this section shall contravene 
or be deemed to circumscribe in any manner the authority of the Finance 
Board to obtain any information from any Bank related to the preparation 
or review of any financial report.

[65 FR 36303, June 7, 2000]



Sec. 989.4  Requirement for voluntary bank disclosure.

    Any financial statements contained in an annual or quarterly 
financial report issued by an individual Bank must be consistent in both 
form and content with the financial statements presented in the combined 
Bank System annual or quarterly financial reports prepared and issued by 
the Office of Finance .

[63 FR 39704, July 24, 1998. Redesignated and amended at 65 FR 36303, 
36304, June 7, 2000.]

[[Page 228]]



                 SUBCHAPTER L--NON-BANK SYSTEM ENTITIES





PART 995--FINANCING CORPORATION OPERATIONS--Table of Contents




Sec.
995.1  Definitions.
995.2  General authority.
995.3  Authority to establish investment policies and procedures.
995.4  Book-entry procedure for Financing Corporation obligations.
995.5  Bank and Office of Finance employees.
995.6  Budget and expenses.
995.7  Administrative expenses.
995.8  Non-administrative expenses; assessments.
995.9  Reports to the Finance Board.
995.10  Review of books and records.

    Authority: 12 U.S.C. 1441(b)(8), (c), (j).

    Source: 62 FR 50248, Sept. 25, 1997, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 995.1  Definitions.

    As used in this part:
    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.
    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 (12 U.S.C. 1815(d)(3)).
    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 (12 U.S.C. 1441(g)(2)), and any other expense 
incurred by the Financing Corporation in connection with the 
establishment or maintenance of such account.
    Directorate means the board established under section 21(b) of the 
Act (12 U.S.C. 1441(b)) to manage the Financing Corporation.
    Exit fees means the amounts paid under sections 5(d)(2)(E) and (F) 
of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(2)(E) and (F)), 
and regulations promulgated thereunder (12 CFR part 312).
    Insured depository institution has the same meaning as in section 3 
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    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.
    Non-administrative expenses means custodian fees, issuance costs, 
and interest on Financing Corporation obligations.
    Obligations means debentures, bonds, and similar debt securities 
issued by the Financing Corporation under sections 21(c)(3) and (e) of 
the Act (12 U.S.C. 1421(c)(3) and (e)).
    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 (12 U.S.C. 1821a) 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 (12 U.S.C. 1441b).
    SAIF-assessable deposit means a deposit that is subject to 
assessment for

[[Page 229]]

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 (12 U.S.C. 1815(d)(3)).

[67 FR 12855, Mar. 20, 2002]



Sec. 995.2  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. 995.3  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 (12 U.S.C. 1441(g)). The 
Directorate shall promptly notify the Finance Board in writing of any 
changes to the investment policies and procedures.

[62 FR 50248, Sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12855, Mar. 20, 2002]



Sec. 995.4  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 consolidated obligations, codified at part 987 of this chapter. 
Wherever the terms ``Bank(s),'' ``consolidated obligation(s)'' or 
``Book-entry consolidated obligation(s)'' appear in part 987, 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.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 
67 FR 12855, Mar. 20, 2002]



Sec. 995.5  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. 995.6  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. 995.7  Administrative expenses.

    (a) Payment by Banks. The Banks shall pay all administrative 
expenses

[[Page 230]]

of the Financing Corporation approved pursuant to Sec. 995.6.
    (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 (12 U.S.C. 1441(b)(7)(B)). 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.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 
67 FR 12856, Mar. 20, 2002]



Sec. 995.8  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. 995.6, 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 (12 U.S.C. 1441(f)(2)) 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 (12 U.S.C. 1441(f)(2)) 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 (12 
U.S.C. 1441(f)(2)) and paragraph (b)(1) of this section.
    (c) Receivership proceeds--(1) Authority. To the extent the amounts 
collected under paragraph (b) of this section are insufficient to pay 
the non-administrative expenses of the Financing Corporation approved 
under Sec. 995.6, 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 (12 U.S.C. 
1441(f)(3)).
    (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. 995.6.
    (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 
(12 U.S.C. 1815(d)(2)(E)) 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

[[Page 231]]

transferred to the Financing Corporation. Such request shall specify the 
estimated amount of funds required to pay the interest due on Financing 
Corporation obligations.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, 8269, Feb. 18, 
2000; 67 FR 12856, Mar. 20, 2002]



Sec. 995.9  Reports to the Finance Board.

    The Financing Corporation shall file such reports as the Finance 
Board shall direct.



Sec. 995.10  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 (12 U.S.C. 1441) and this part.

[62 FR 50248, sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12856, Mar. 20, 2002]



PART 996--AUTHORITY FOR BANK ASSISTANCE OF THE RESOLUTION FUNDING CORPORATION--Table of Contents




Sec.
996.1  [Reserved]
996.2  Bank employees.
996.3  Demand deposit accounts.

    Authority: 12 U.S.C. 1422a, 1422b.



Sec. 996.1  [Reserved]



Sec. 996.2  Bank employees.

    Upon the request of the Directorate of the Resolution Funding 
Corporation, established pursuant to section 21B(b) of the Act (12 
U.S.C. 1441b(b)), officers, employees, or agents of the Banks are 
authorized to act for and on behalf of the Resolution Funding 
Corporation in such manner as may be necessary to carry out the 
functions of the Resolution Funding Corporation as provided in section 
21B(c)(6)(B) of the Act (12 U.S.C. 1441b(c)(6)(B)).

[54 FR 39729, Sept. 28, 1989, as amended at 65 FR 8269, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12856, Mar. 20, 2002]



Sec. 996.3  Demand deposit accounts.

    Each Bank shall allow any Savings Association Insurance Fund member 
whose principal place of business is in its district to establish and 
maintain at least one demand deposit account for the purpose of 
facilitating the Resolution Funding Corporation's assessments pursuant 
to section 21B(e)(7) of the Act (12 U.S.C. 1441b(e)(7)).

[54 FR 39729, Sept. 28, 1989, as amended at 65 FR 8269, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12856, Mar. 20, 2002]



PART 997--RESOLUTION FUNDING CORPORATION OBLIGATIONS OF THE BANKS--Table of Contents




Sec.
997.1  Definitions.
997.2  Reduction of the payment term.
997.3  Extension of the payment term.
997.4  Calculation of the quarterly present-value determination.
997.5  Termination of the obligation.

    Authority: 12 U.S.C. 1422b(a) and 1441b(f).

    Source: 65 FR 17438, Apr. 3, 2000, unless otherwise noted.



Sec. 997.1  Definitions.

    As used in this part:
    Actual quarterly payment means the quarterly amount paid by the 
Banks to fulfill the Banks' obligation to pay toward interest owed on 
bonds issued by the REFCORP. The amount will equal the aggregate of 20 
percent of the quarterly net earnings of each Bank, or such other amount 
assessed in accordance with the Act and the regulations adopted 
thereunder.
    Benchmark quarterly payment means $75 million, or such amount that 
may result from adjustments required by calculations made in accordance 
with Secs. 997.2 and 997.3.
    Current benchmark quarterly payment means the benchmark quarterly 
payment that corresponds to the date of the actual quarterly payment.
    Deficit quarterly payment means the amount by which the actual 
quarterly payment falls short of the current benchmark quarterly 
payment.
    Estimated interest rate means the interest rate provided to the 
Finance Board by the Department of the Treasury on a zero-coupon 
Treasury bond, the maturity of which is the same as the date of the 
benchmark quarterly payment that is being defeased, or if no bond 
matures on that date, then is the

[[Page 232]]

date closest to the date of the payment being defeased.
    Excess quarterly payment means the amount by which the actual 
quarterly payment exceeds the current benchmark quarterly payment.
    Quarterly present-value determination means the quarterly 
calculation that will determine the extent to which an excess quarterly 
payment or deficit quarterly payment alters the term of the Banks' 
obligation to the REFCORP. This determination will fulfill the 
requirements of 21B(f)(2)(C)(ii) of the Act (12 U.S.C 
1441b(f)(2)(C)(ii), as amended by Pub. L. 106-102, sec. 607, 113 
Stat.1456-57.

[65 FR 17438, Apr. 3, 2000, as amended at 67 FR 12856, Mar. 20, 2002]



Sec. 997.2  Reduction of the payment term.

    (a) Generally. The Finance Board shall shorten the term of the 
obligation of the Banks to make payments toward the interest owed on 
bonds issued by the REFCORP for each quarter in which there is an excess 
quarterly payment.
    (b) Excess quarterly payment. Where there is an excess quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the excess quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be subtracted from the amount of the last non-defeased quarterly 
benchmark payment.
    (3) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is greater than zero, then the last non-defeased 
quarterly benchmark payment is reduced by the future value of the excess 
quarterly payment.
    (4) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is less than zero, then the last non-defeased 
quarterly benchmark payment shall be defeased and the payment term shall 
be shortened.
    (5) The amount of the excess quarterly payment that has not already 
been applied to defeasing the payment under paragraph (b)(4) of this 
section shall be applied toward defeasing the last non-defeased 
quarterly benchmark payment using the applicable estimated interest 
rate.



Sec. 997.3  Extension of the payment term.

    (a) Generally. The Finance Board will extend the term of the 
obligation of the Banks to make payments toward interest owed on bonds 
issued by the REFCORP for each calendar quarter in which there is a 
deficit quarterly payment.
    (b) Deficit quarterly payment. Where there is a deficit quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the deficit quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment, or to the first quarter 
thereafter if the last non-defeased benchmark quarterly payment already 
equals $75 million.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be added to the amount of the last non-defeased quarterly 
benchmark payment if that sum is $75 million or less.
    (3) If the sum calculated in paragraph (b)(2) of this section 
exceeds $75 million, the last non-defeased quarterly benchmark payment 
will become $75 million, and the quarterly benchmark payment term will 
be extended.
    (4) The extended payment will equal the future value of the amount 
of the deficit quarterly payment that has not already been applied to 
raising the quarterly benchmark payment to $75 million under paragraph 
(b)(3) of this section, using the estimated interest rate corresponding 
to the date of the extended benchmark quarterly payment.
    (c) Term beyond maturity. The benchmark quarterly payment term may 
be extended beyond April 15, 2030, if such extension is necessary to 
ensure that the value of the aggregate amounts paid by the Banks exactly 
equals the present value of an annuity of $300 million per year that 
commences on the date on which the first obligation of the REFCORP was 
issued and ends on April 15, 2030.

[[Page 233]]



Sec. 997.4  Calculation of the quarterly present-value determination.

    (a) Applicable interest rates. The Finance Board shall obtain from 
the Department of the Treasury the applicable estimated interest rates 
and provide those rates to the REFCORP so that the REFCORP can perform 
the calculations required under Secs. 997.2 and 997.3.
    (b) Calculation by the Finance Board. If Sec. 997.3 requires that 
the term for the Banks' actual quarterly payments extend beyond April 
15, 2030 or if, for any reason, the REFCORP is unable to perform the 
calculations or to provide the Finance Board with the results of the 
calculations, the Finance Board shall make all calculations required 
under this part.
    (c) Records. The Finance Board will maintain the official record of 
the results of all quarterly present-value determinations made under 
this part.



Sec. 997.5  Termination of the obligation.

    (a) Generally. The Banks' obligation to the REFCORP, or to the 
Department of the Treasury if the term of that obligation extends beyond 
April 15, 2030, will terminate when the aggregate actual quarterly 
payments made by the Banks exactly equal the present value of an annuity 
of $300 million per year that commences on the date on which the first 
obligation of the REFCORP was issued and ends on April 15, 2030.
    (b) Date of the final payment. The aggregate actual quarterly 
payments made by the Banks exactly equal the present value of the 
annuity described in paragraph (a) of this section when the value of any 
remaining benchmark quarterly payment(s), after the benchmark quarterly 
payments have been adjusted as required by Secs. 997.2 and 997.3, 
exactly equals the actual quarterly payment.

[65 FR 17438, Apr. 3, 2000, as amended at 65 FR 40492, June 30, 2000]

[[Page 235]]



     CHAPTER XI--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL




  --------------------------------------------------------------------
Part                                                                Page
1101            Description of office, procedures, public 
                    information.............................         237
1102            Appraiser regulation........................         242

[[Page 237]]



PART 1101--DESCRIPTION OF OFFICE, PROCEDURES, PUBLIC INFORMATION--Table of Contents




Sec.
1101.1  Scope and purpose.
1101.2  Authority and functions.
1101.3  Organization and methods of operation.
1101.4  Disclosure of information, policies, and records.
1101.5  Testimony and production of documents in response to subpoena, 
          order, etc.

    Authority: 5 U.S.C. 552; 12 U.S.C. 3307.

    Source: 45 FR 46794, July 11, 1980, unless otherwise noted.



Sec. 1101.1  Scope and purpose.

    This part implements the Freedom of Information Act (FOIA), 5 U.S.C. 
552, with respect to the Federal Financial Institutions Examination 
Council (Council), and establishes related information disclosure 
procedures.



Sec. 1101.2  Authority and functions.

    (a) The Council was established by the Federal Financial 
Institutions Examination Council Act of 1978 (Act), 12 U.S.C. 3301-3308. 
It is composed of the Comptroller of the Currency; the Chairman of the 
Federal Deposit Insurance Corporation; a Governor of the Board of 
Governors of the Federal Reserve System; the Chairman of the Federal 
Home Loan Bank Board; and the Chairman of the National Credit Union 
Administration Board.
    (b) The statutory functions of the Council are set out at 12 U.S.C. 
3305. In summary, the mission of the Council is to promote consistency 
and progress in federal examination and supervision of financial 
institutions and their affiliates. The Council is empowered to prescribe 
uniform principles, standards, and reporting forms and systems; make 
recommendations in the interest of uniformity; and conduct examiner 
schools open to personnel of the agencies represented on the Council and 
employees of state financial institutions supervisory agencies.



Sec. 1101.3  Organization and methods of operation.

    (a) Statutory requirements relating to the Council's organization 
are stated in 12 U.S.C. 3303.
    (b) Council staff. Administrative support and substantive 
coordination for Council activities are provided by a small staff 
detailed on a full-time basis from the five member agencies. The 
Executive Secretary and Deputy Executive Secretary of the Council 
supervise this staff.
    (c) Agency Liaison Group, Task Forces and Legal Advisory Group. Most 
staff support in the substantive areas of the Council's duties is 
provided by interagency task forces and the Council's Legal Advisory 
Group (LAG). These task forces and the LAG are responsible for securing 
the services, as needed, of staff experts from the five agencies; 
supervising research and other investigative work for the Council; and 
preparing reports and recommendations for the Council. The Agency 
Liaison Group (ALG) is responsible for the overall coordination of the 
respective agencies' staff contributions to Council business. The ALG, 
the task forces, and the LAG are each composed of Council member agency 
staff serving the Council on a part-time basis.
    (d) State Liaison Committee. Under 12 U.S.C. 3306, the Council has 
established a State Liaison Committee, composed of five representatives 
of state financial institutions supervisory agencies.
    (e) Council address. Council offices are located at 1776 G Street, 
NW., Suite 701, Washington, DC 20006.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988]



Sec. 1101.4  Disclosure of information, policies, and records.

    (a) Statements of policy published in the Federal Register or 
available for public inspection and copying; indices. Under 5 U.S.C. 
552(a)(1), the Council publishes general rules, policies and 
interpretations in the Federal Register. Under 5 U.S.C. 552(a)(2), 
policies and interpretations adopted by the Council, including 
instructions to Council staff affecting members of the public, and an 
index to the same, are available for

[[Page 238]]

public inspection and copying at the address set out in Sec. 1101.3(e) 
of this part during regular business hours. The preceding materials may 
be withheld from disclosure under the principles stated in paragraph 
(b)(1) of this section.
    (b) Other records of the Council available for public inspection; 
procedures--(1) General rule and exemptions. Under 5 U.S.C. 552(a)(3), 
all other records of the Council are available for public inspection and 
copying, except those exempted from disclosure as provided in this 
paragraph. Except as specifically authorized by the Council, the 
following records, and portions thereof, are not available to the 
public:
    (i) A record, or portion thereof, which is specifically authorized 
under criteria established by an Executive order to be kept secret in 
the interest of national defense or foreign policy and which is, in 
fact, properly classified pursuant to such Executive order.
    (ii) A record, or portion thereof, relating solely to the internal 
personnel rules and practices of an agency.
    (iii) A record, or portion thereof, specifically exempted from 
disclosure by statute (other than 5 U.S.C. 552b), provided that such 
statute (A) requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or (B) establishes 
particular criteria for withholding or refers to particular types of 
matters to be withheld.
    (iv) A record, or portion thereof, containing trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential.
    (v) An intraagency or interagency memorandum or letter that would 
not be routinely available by law to a private party in litigation, 
including, but not limited to, memoranda, reports, and other documents 
prepared by the personnel of the Council or its constituent agencies.
    (vi) A personnel, medical, or similar record, including a financial 
record, or any portion thereof, the disclosure of which would constitute 
a clearly unwarranted invasion of personal privacy.
    (vii) Records or information compiled for law enforcement purposes, 
including records relating to a proceeding by a financial institution's 
regulatory agency for the issuance of a cease-and-desist order, or order 
of suspension or removal, or assessment of a civil money penalty and the 
granting, withholding, or revocation of any approval, permission, or 
authority, but only to the extent that the production of such law 
enforcement records or information (A) could reasonably be expected to 
interfere with enforcement proceedings; (B) would deprive a person of a 
right to a fair trial or an impartial adjudication; (C) could reasonably 
be expected to constitute an unwarranted invasion of personal privacy; 
(D) could reasonably be expected to disclose the identity of a 
confidential source, including a state, local, or foreign agency or 
authority or any private institution which furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source; (E) would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or (F) could 
reasonably be expected to endanger the life or physical safety of any 
individual.
    (viii) A record, or portion thereof, containing, relating to, or 
derived from an examination, operating, or condition report prepared by, 
or on behalf of, or for the use of any agency directly or indirectly 
responsible for the regulation or supervision of financial institutions, 
relating to the affairs of any financial institution or affiliate 
thereof, financial institution holding company or subsidiary, broker, 
finance company, or any other person engaged, or proposing to engage, in 
the business of operating, managing or controlling financial 
institutions.
    (ix) A record, or portion thereof, which contains or is related to 
geological and geophysical information and data, including maps, 
concerning wells.

[[Page 239]]

    (2) Waiver of exemption. Notwithstanding the applicability of an 
exemption, the Council or the Council's designee may elect, under the 
circumstances of a particular request, to disclose all or a portion of 
any requested record where permitted by law. Such disclosure has no 
precedential significance whatsoever.
    (3) Procedure for records request--(i) Initial request. Requests for 
records shall be submitted in writing to the Executive Secretary of the 
Council, at the address set out in Sec. 1101.3(e) of this part. Mailed 
requests should be marked ``Freedom of Information Request,'' ``FOIA 
Request,'' or the like on the envelope. Requests must reasonably 
describe the records sought. The Executive Secretary will aid members of 
the public in formulating their requests. All requests should give the 
complete telephone number of the individual seeking the records, if 
possible.
    (ii) Council response to initial requests. The Executive Secretary 
will respond by mail to all properly submitted initial requests within 
10 working days of receipt. The time for response may be extended up to 
10 additional working days, as provided in 5 U.S.C. 552(a)(6)(B), or for 
other periods by agreement between the requesting party and the 
Executive Secretary.
    (iii) Appeals of responses to initial requests. If a request is 
denied in whole or in part, the individual making the request may appeal 
in writing, within 35 days of the date of the denial, to the Chairman of 
the Council, at the address set out in Sec. 1101.3(e) of this part. 
Mailed requests should be marked ``Freedom of Information Appeal,'' 
``FOIA Appeal,'' or the like on the envelope. Appeals should refer to 
the date of the original request and the date of the Council's initial 
ruling. Appeals should include an explanation of the basis for the 
appeal.
    (iv) Council response to appeals. The Chairman of the Council, or 
another member designated by the Chairman, will respond by mail to all 
properly submitted appeals within 20 working days of receipt. The time 
for response may be extended up to 10 additional working days, as 
provided in 5 U.S.C. 552(a)(6)(B), or for other periods by agreement 
between the requesting party and the Chairman or the Chairman's 
designee.
    (4) Procedure for access to records if request is granted. When a 
request for access to records is granted, in whole or in part, a copy of 
the records to be disclosed will be promptly delivered to the requesting 
party or made available for inspection, whichever was requested. 
Inspection of records, or duplication and delivery of copies of records 
will be arranged so as not to interfere with their use by the Council 
and other users of the records.
    (5) Fees for document search, review, and duplication; waiver and 
reduction of fees--(i) Definitions--(A) Direct costs means those 
expenditures which the Council actually incurs in searching for, 
duplicating, and reviewing documents to respond to a FOIA request.
    (B) Search means all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Searches may be done 
manually or by computer using existing programming.
    (C) Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request.
    (D) Review means the process of examining documents located in 
response to a request that is for a commercial use (see 
Sec. 1101.4(b)(5)(i)(E)) to determine whether any portion of any 
document located is permitted to be withheld and processing such 
documents for disclosure.
    (E) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made.
    (F) Educational institution means a preschool, an elementary or 
secondary school, an institution of undergraduate higher education, an 
institution of graduate higher education, an institution of professional 
education, and an institution of vocational education, which operates a 
program or programs of scholarly research.
    (G) Noncommercial scientific institution means an institution that 
is not operated on a ``commercial'' basis as that term is referenced in 
Sec. 1101.4(b)(i)(E),

[[Page 240]]

and which is operated solely for the purposes of conducting scientific 
research, the results of which are not intended to promote any 
particular product or industry.
    (H) Representative of the news media means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the public. The term ``news'' means information 
that is about current events or that would be of current interest to the 
public.
    (ii) Fees to be charged. The Council will charge fees that recoup 
the full allowable direct costs it incurs. The Council may contract with 
the private sector to locate, reproduce, and/or disseminate records. 
Provided, however, that the Council has ensured that the ultimate cost 
to the requester is no greater than it would be if the Council performed 
these tasks. Fees are subject to change as costs change. In no case will 
the Council contract out responsibilities which the FOIA provides that 
it alone may discharge, such as determining the applicability of an 
exemption, or determining whether to waive or reduce fees.
    (A) Manual searches and review. The Council will charge fees at the 
following rates for manual searches for and review of records:
    (1) If search/review is done by clerical staff, the hourly rate for 
GS-7, step 5, plus 16 percent of the rate to cover benefits;
    (2) If search/review is done by professional staff, the hourly rate 
for GS-13, step 5, plus 16 percent of the rate to cover benefits.
    (B) Computer searches. The Council will charge fees at the hourly 
rate for GS-13, step 5, plus 16 percent of the rate to cover benefits, 
plus the hourly cost of operating the computer for computer searches for 
records.
    (C) Duplication of records. (1) The per-page fee for paper copy 
reproduction of a document is $.25;
    (2) The fee for documents generated by computer is the hourly rate 
for the computer operator (at GS 7, step 5, plus 16 percent for benefits 
if clerical staff, and GS 13, step 5, plus 16 percent for benefits if 
professional staff) plus the cost of materials (computer paper, tapes, 
labels, etc.).
    (3) If any other method of duplication is used, the Council will 
charge the actual direct cost of duplicating the documents.
    (D) If search, duplication and/or review is provided by personnel of 
member agencies of the Council, fees will reflect their actual hourly 
rates, plus 16 percent for benefits.
    (E) Fees to exceed $25. If the Council estimates that duplication 
and/or search fees are likely to exceed $25, it will notify the 
requester of the estimated amount of fees, unless the requester has 
indicated in advance his/her willingness to pay fees as high as those 
anticipated. In the case of such notification by the Council, the 
requester will then have the opportunity to confer with Council 
personnel with the object of reformulating the request to meet his/her 
needs at a lower cost.
    (F) Other services. Complying with requests for special services is 
entirely at the discretion of the Council. The Council will recover the 
full costs of providing such services to the extent it elects to provide 
them.
    (G) Restriction on assessing fees. The Council will not charge fees 
to any requester, including commercial use requesters, if the cost of 
collecting a fee would be equal to or greater than the fee itself.
    (H) Waiving or reducing fees. The Council shall waive or reduce fees 
under this section whenever disclosure of information is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester.
    (1) The Council will make a determination of whether the public 
interest requirement above is met based on the following factors:
    (i) The subject of the request: Whether the subject of the requested 
records concerns the operations or activities of the government;
    (ii) The informative value of the information to be disclosed: 
Whether the disclosure is likely to contribute to an understanding of 
government operations or activities;
    (iii) The contribution to an understanding of the subject by the 
general public likely to result from disclosure:

[[Page 241]]

Whether disclosure of the requested information will contribute to 
public understanding;
    (iv) The significance of the contribution to the public 
understanding: Whether the disclosure is likely to contribute 
significantly to public understanding of government operations or 
activities.
    (2) If the public interest requirement is met, the Council will make 
a determination on the commercial interest requirement based upon the 
following factors:
    (i) The existence and magnitude of a commercial interest: Whether 
the requester has a commercial interest that would be furthered by the 
requested disclosure; and if so
    (ii) The primary interest in disclosure: Whether the magnitude of 
the identified commercial interest of the requester is sufficiently 
large in comparison with the public interest in disclosure; that 
disclosure is primarily in the commercial interest of the requester.
    (3) If the required public interest exists and the requester's 
commercial interest is not primary in comparison to it, the Council will 
waive or reduce fees.
    (iii) Categories of requesters. (A) Commercial use requesters. The 
Council will assess fees for commercial use requesters which recover the 
full direct costs of searching for, reviewing for release, the 
duplicating the records sought. Commercial use requesters are not 
entitled to two hours of free search time nor 100 free pages of 
reproduction of documents.
    (B) Requesters who are representatives of the news media, 
educational and noncommercial scientific institution requesters. The 
Council shall provide documents to requesters in these categories for 
the cost of reproduction alone, excluding fees for the first 100 pages.
    (C) All other requesters. The Council shall charge requesters who do 
not fit into any of the categories above fees which recover the full 
reasonable direct cost of searching for and reproducing records that are 
responsive to the request, except that the first 100 pages of 
reproduction and the first two hours of search time shall be furnished 
without a fee.
    (D) All requesters must specifically describe records sought.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.
    (v) Fees for unsuccessful search and review. The Council may assess 
fees for time spent searching and reviewing, even if it fails to locate 
the records or if records located are determined to be exempt from 
disclosure.
    (vi) Aggregating requests. A requester(s) may not file multiple 
requests each seeking portions of a document or documents, solely in 
order to avoid payment of fees. If this is done, the Council may 
aggregate any such requests and charge accordingly. In no case will the 
Council aggregate multiple requests on unrelated subjects from the same 
requester.
    (vii) Advance payment of fees. The Council will not require a 
requester to make an assurance of payment or an advance payment unless:
    (A) The Council estimates or determines that allowable charges that 
a requester may be required to pay are likely to exceed $250. The 
Council will notify the requester of the likely cost and obtain 
satisfactory assurance of full payment where the requester has a history 
of prompt payment of FOIA fees, or require an advance payment of an 
amount up to the full estimated charges in the case of requesters with 
no history of payment; or
    (B) A requester has previously failed to pay a fee charged in a 
timely fashion. The Council may require the requester to pay the full 
amount owed plus any applicable interest as provided in 
Sec. 1101.4(b)(5)(iv) or demonstrate that he/she has, in fact, paid the 
fee, and to make an advance payment of the full amount of the estimated 
fee before the Council begins to process a new request or a pending 
request from that requester.

[[Page 242]]

    (C) When the Council acts under Sec. 1101.4(b)(5)(vii) (A) or (B), 
the administrative time limits prescribed in subsection (a)(6) of the 
FOIA (i.e., 10 working days from receipt of initial requests and 20 
working days from receipt of appeals from initial denial, plus 
permissible extensions of these time limits) will begin only after the 
Council has received the fee payments described.
    (6) Records of another agency. If a requested record is the property 
of another federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the Council will 
promptly inform the requester of this ownership and immediately shall 
forward the request to the proprietary agency or department either for 
processing in accordance with the latter's regulations or for guidance 
with respect to disposition.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988]



Sec. 1101.5  Testimony and production of documents in response to subpoena, order, etc.

    No person shall testify, in court or otherwise, as a result of 
activities on behalf of the Council without prior written authorization 
from the Council. This section shall not restrict the authority of a 
Council member to testify before Congress on matters within his or her 
official responsibilities as a Council member. No person shall furnish 
documents reflecting information of the Council in compliance with a 
subpoena, order, or otherwise, without prior written authorization from 
the Council. The Council may authorize testimony or production of 
documents after the litigant (or the litigant's attorney) submits an 
affidavit to the Council setting forth the interest of the litigant and 
the testimony or documents desired. Authorization to testify or produce 
documents is limited to authority expressly granted by the Council. When 
the Council has not authorized testimony or production of documents, the 
individual to whom the subpoena or order has been directed will appear 
in court and respectfully state that he or she is unable to comply 
further with the subpoena or order by reason of this section.



PART 1102--APPRAISER REGULATION--Table of Contents




                  Subpart A--Temporary Waiver Requests

Sec.
1102.1  Authority, purpose, and scope.
1102.2  Requirements for requests.
1102.3  Other requests and information submissions.
1102.4  Notice and comment.
1102.5  Subcommittee determination.
1102.6  Waiver extension.
1102.7  Waiver termination.

              Subpart B--Rules of Practice for Proceedings

1102.20  Authority, purpose, and scope.
1102.21  Definitions.
1102.22  Appearance and practice before the Subcommittee.
1102.23  Formal requirements as to papers filed.
1102.24  Filing requirements.
1102.25  Service.
1102.26  When papers are deemed filed or served.
1102.27  Computing time.
1102.28  Documents and exhibits in proceedings public.
1102.29  Conduct of proceedings.
1102.30  Rules of evidence.
1102.31  Burden of proof.
1102.32  Notice of Intention to Commence a Proceeding.
1102.33  Rebuttal or Notice Not To Contest.
1102.34  Briefs, memoranda and statements.
1102.35  Opportunity for informal settlement.
1102.36  Oral presentations.
1102.37  Decision of the Subcommittee and judicial review.
1102.38  Compliance activities.
1102.39  Duty to cooperate.

Subpart C--Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

1102.100  Authority, purpose and scope.
1102.101  Definitions.
1102.102  Times, places and requirements for requests pertaining to 
          individual records in a record system and for the 
          identification of individuals making requests for access to 
          records pertaining to them.
1102.103  Disclosure of requested records.
1102.104  Special procedure: Medical records.
1102.105  Requests for amendment of records.
1102.106  Review of requests for amendment.

[[Page 243]]

1102.107  Appeal of initial adverse agency determination regarding 
          access or amendment.
1102.108  General provisions.
1102.109  Fees.
1102.110  Penalties.

    Subpart D--Description of Office, Procedures, Public Information

1102.300  Purpose and scope.
1102.301  Definitions.
1102.302  ASC authority and functions.
1102.303  Organization and methods of operation.
1102.304  Federal Register publication.
1102.305  Publicly available records.
1102.306  Procedures for requesting records.
1102.307  Disclosure of exempt records.
1102.308  Right to petition for issuance, amendment and repeal of rules 
          of general application.
1102.309  Confidential treatment procedures.
1102.310  Service of process.



                  Subpart A--Temporary Waiver Requests

    Authority: 12 U.S.C. 3348(b).

    Source: 57 FR 10982, Apr. 1, 1992, unless otherwise noted.



Sec. 1102.1  Authority, purpose and scope.

    (a) Authority. This subpart is issued under section 1119(b) of Title 
XI of the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (``FIRREA'') (12 U.S.C. Sec. 3348(b)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing temporary waiver proceedings under Section 1119(b) 
of Title XI of FIRREA (12 U.S.C. 3348(b)). These procedures apply 
whenever a State appraiser regulatory agency requests the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') for a waiver of any requirement relating to certification or 
licensing of a person to perform appraisals under Title XI of FIRREA. 
They also apply whenever the ASC, based on sufficient, credible 
information or requests received from other persons or entities, 
initiates a temporary waiver proceeding.



Sec. 1102.2  Requirements for requests.

    A request will not be deemed received by the ASC unless it fully and 
accurately sets out:
    (a) If the requester is a State Appraiser Regulatory Agency, a 
written, duly authorized determination by the State Appraiser Regulatory 
Agency that there is a scarcity of State licensed or State certified 
appraisers leading to significant delays in obtaining appraisals in 
federally related transactions. The scarcity can relate to the entire 
State or to particular geographical or political subdivisions. In the 
absence of such a written determination, a State Appraiser Regulatory 
Agency must ask the ASC for such a determination;
    (b) The requirement or requirements of State law from which relief 
is being sought;
    (c) A description of all significant problems currently being 
encountered in efforts to comply with Title XI;
    (d) The nature of the scarcity of certified or licensed appraisers 
(including supporting documentation);
    (e) The extent of the delays anticipated or experienced in obtaining 
the services of certified or licensed appraisers (including supporting 
documentation);
    (f) The reasons why the requester believes that the requirement or 
requirements are causing the scarcity of certified or licensed 
appraisers and the service delays; and
    (g) A specific plan for expeditiously alleviating the scarcity and 
the service delays.



Sec. 1102.3  Other requests and information submissions.

    The federal financial institutions regulatory agencies and the 
Resolution Trust Corporation, their respective regulated financial 
institutions, and other persons or institutions with a demonstrable 
interest in appraiser regulation, may ask the ASC for a determination 
under Sec. 1102.2(a) of this subpart, and may ask that the ASC exercise 
its discretionary authority to initiate a temporary waiver proceeding. 
Such regulated financial institutions and other persons or institutions 
do not need to comply with Sec. 1102.2(g) of this subpart, but are 
strongly encouraged to include meaningful suggestions and 
recommendations for remedying the situation. A copy of the request or

[[Page 244]]

informational submission shall be forwarded promptly to the State 
Appraiser Regulatory Agency. The ASC shall consider these submissions 
and requests in exercising its authority to initiate a temporary waiver 
procedure. When the ASC initiates a temporary waiver proceeding, these 
documents shall correspond to a received request under Sec. 1102.4 of 
this subpart.



Sec. 1102.4  Notice and comment.

    The ASC shall publish promptly in the Federal Register a notice 
respecting:
    (a) The received request; or
    (b) The ASC order initiating a temporary waiver proceeding. The 
notice or initiation order shall contain a concise general statement of 
the nature and basis for the action and shall give interested persons 30 
calendar days from its publication in which to submit written data, 
views and arguments.



Sec. 1102.5  Subcommittee determination.

    Within 45 calendar days of the date of the publication of the notice 
or initiation order in the Federal Register, the ASC, by order, shall 
either grant or deny a waiver in whole, in part, and upon specified 
terms and conditions, including provisions for waiver termination. Such 
order shall respond to comments received from interested members of the 
public and shall provide the reasons for the ASC's finding. The order 
shall be published promptly in the Federal Register, which, in the case 
of an approval order, shall be after Federal Financial Institution 
Examination Council concurrence. Upon the ASC's determination that an 
emergency exists, the ASC may issue an interim approval order 
simultaneously with its action under Sec. 1120.4 of this subpart. Any 
ASC approval order shall be effective only upon Federal Financial 
Institution Examination Council concurrence.



Sec. 1102.6  Waiver extension.

    The ASC may initiate an extension of temporary waiver relief and 
shall follow Secs. 1102.4, 1102.5 and 1102.7 of this subpart. A State 
Appraiser Regulatory Agency also may request an extension of temporary 
waiver relief by forwarding an additional written request to the ASC. A 
request for an extension from State Appraiser Regulatory Agency shall be 
subject to all the requirements of this subpart.



Sec. 1102.7  Waiver termination.

    The ASC at any time may terminate a waiver order on the finding 
that:
    (a) The significant delays in obtaining the services of certified or 
licensed appraisers no longer exist; or
    (b) The terms and conditions of the waiver order are not being 
satisfied. The ASC shall publish a finding of waiver termination 
promptly in the Federal Register, giving interested persons no less than 
30 calendar days from publication in which to submit written data, views 
and arguments. In the absence of further ASC action to the contrary, the 
finding of waiver termination automatically shall become final 21 
calendar days after the close of the comment period.



              Subpart B--Rules of Practice for Proceedings

    Authority: 12 U.S.C. 3332, 3335, 3347, and 3348(c).

    Source: 57 FR 31650, July 17, 1992, unless otherwise noted.



Sec. 1102.20  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under sections 1103, 1106, 
1118 and 1119(c) of Title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 3332, 3335, 
3347, and 3348(c)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing non-recognition proceedings under section 1118 of 
Title XI (12 U.S.C. 3347); and other proceedings necessary to carry out 
the purposes of Title XI under section 1119(c) of Title XI (12 U.S.C. 
3348(c)).

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.21  Definitions.

    As used in this subpart:
    (a) Subcommittee or ASC means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination

[[Page 245]]

Council, as established under section 1011 of Title XI (12 U.S.C. 3310).
    (b) Party means the ASC or a person, agency or other entity named as 
a party, including, when appropriate, persons appearing in the 
proceeding under Sec. 1102.22 of this subpart.
    (c) Respondent means any party other than the ASC.
    (d) Secretary means the Secretary of the ASC under its Rules of 
Operation.



Sec. 1102.22  Appearance and practice before the Subcommittee.

    (a) By attorneys and notice of appearance. Any person who is a 
member in good standing of the bar of the highest court of any State or 
of the District of Columbia, or of any possession, territory, or 
commonwealth of the United States, may represent parties before the ASC 
upon filing with the Secretary a written notice of appearance stating 
that he or she is currently qualified as provided in this paragraph and 
is authorized to represent the particular party on whose behalf he or 
she acts.
    (b) By non-attorneys. An individual may appear on his or her own 
behalf. A member of a partnership may represent the partnership, and an 
officer, director or employee of any government unit, agency, 
institution, corporation or authority may represent that unit, agency, 
institution, corporation or authority. The partner, officer, director or 
employee must file with the Secretary a written statement that he or she 
has been duly authorized by the partnership, government unit, agency, 
institution, corporation or authority to act on its behalf. The ASC may 
require the representative to attach to the statement appropriate 
supporting documentation, such as a corporate resolution.
    (c) Conduct during proceedings. All participants in a proceeding 
shall conduct themselves with dignity and in an orderly and ethical 
manner. The attorney or other representative of a party shall make every 
effort to restrain a client from improper conduct in connection with a 
proceeding. Improper language or conduct, refusal to comply with 
directions, use of dilatory tactics, or refusal to adhere to reasonable 
standards of orderly and ethical conduct constitute grounds for 
immediate exclusion from the proceeding at the direction of the ASC.



Sec. 1102.23  Formal requirements as to papers filed.

    (a) Form. All papers filed under this subpart must be double-spaced 
and printed or typewritten on 8\1/2\x11 paper. All 
copies shall be clear and legible.
    (b) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the ASC and of the filing party, the title 
and/or docket number of the proceeding and the subject of the particular 
paper.
    (c) Party names, signatures, certificates of service. All papers 
filed must set forth the name, address and telephone number of the 
attorney or party making the filing, must be signed by the attorney or 
party, and must be accompanied by a certification setting forth when and 
how service has been made on all other parties.
    (d) Copies. Unless otherwise specifically provided in the notice of 
proceeding or by the ASC during the proceeding, an original and one copy 
of all documents and papers shall be furnished to the Secretary.



Sec. 1102.24  Filing requirements.

    (a) Filing. All papers filed with the ASC in any proceeding shall be 
filed with the Secretary, Appraisal Subcommittee, 2100 Pennsylvania 
Avenue, NW., suite 200, Washington, DC 20037.
    (b) Manner of filing. Unless otherwise specified by the ASC, filing 
may be accomplished by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.



Sec. 1102.25  Service.

    (a) Methods; appearing party. A serving party, who has made an 
appearance under Sec. 1102.22 of this subpart, shall use one or more of 
the following methods of service:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight

[[Page 246]]

delivery service, or to the U.S. Post Office for Express Mail delivery; 
and
    (3) Mailing the papers by first class, registered, or certified 
mail.
    (b) Methods; non-appearing party. If a party has not appeared in the 
proceeding in accordance with Sec. 1102.22 of this subpart, the ASC or 
any other party shall make service by any of the following methods:
    (1) By personal service;
    (2) By delivery to a person of suitable age and discretion at the 
party's last known address;
    (3) By registered or certified mail addressed to the party's last 
known address; or
    (4) By any other manner reasonably calculated to give actual notice.
    (c) By the Subcommittee. All papers required to be served by the ASC 
shall be served by the Secretary unless some other person shall be 
designated for such purpose by the ASC.
    (d) By the respondent. All papers filed in a proceeding under this 
subpart shall be served by a respondent on the Secretary and each 
party's attorney, or, if any party is not so represented, then upon such 
party. Such service may be made by any of the appropriate methods 
specified in paragraphs (a) and (b) of this section.



Sec. 1102.26  When papers are deemed filed or served.

    (a) Effectiveness. Filing and service are deemed effective:
    (1) For personal service or same-day commercial courier delivery, 
upon actual delivery; and
    (2) For overnight commercial delivery service, U.S. Express Mail 
delivery, or first class, registered, or certified mail, upon deposit 
in, or delivery to, an appropriate point of collection.
    (b) Modification. The effective times for filing and service in 
paragraph (a) of this section may be modified by the ASC in the case of 
filing or by agreement of the parties in the case of service.



Sec. 1102.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act, event or default from 
which the designated period of time begins to run is not included. The 
last day so computed is included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the period runs until the end of the 
next day which is not a Saturday, Sunday or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays shall not be 
included in the computation.
    (b) For service and filing responsive papers. Whenever a time limit 
is measured by a prescribed period from the service of any notice or 
paper, the applicable time periods are calculated as follows:
    (1) If service is made by first class, registered or certified mail, 
add three days to the prescribed period; and
    (2) If service is made by express mail or overnight delivery 
service, add one day to the prescribed period.



Sec. 1102.28  Documents and exhibits in proceedings public.

    Unless and until otherwise ordered by the ASC or unless otherwise 
provided by statute or by ASC regulation, all documents, papers and 
exhibits filed in connection with any proceeding, other than those that 
may be withheld from disclosure under applicable law, shall be placed by 
the Secretary in the proceeding's public file and will be available for 
public inspection and copying at the address set out in Sec. 1102.24 of 
this subpart.



Sec. 1102.29  Conduct of proceedings.

    (a) In general. Unless otherwise provided in the notice of 
proceedings, all proceedings under this subpart shall be conducted as 
hereinafter provided.
    (b) Written submissions. All aspects of the proceeding shall be 
conducted by written submissions only, with the exception of oral 
presentations allowed under Sec. 1102.36 of this subpart.
    (c) Disqualification. A Subcommittee member who deems himself or 
herself disqualified may at any time withdraw. Upon receipt of a timely 
and sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record and 
decision in the case.
    (d) User of ASC staff. Appropriate members of the ASC's staff who 
are not engaged in the performance of investigative or prosecuting 
functions in the

[[Page 247]]

proceeding may advise and assist the ASC in the consideration of the 
case and in the preparation of appropriate documents for its 
disposition.
    (e) Authority of Subcommittee Chairperson. The Chairperson of the 
ASC, in consultation with other members of the ASC whenever appropriate, 
shall have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings in accordance 
with this subpart.
    (f) Conferences. (1) The ASC may on its own initiative or at the 
request of any party, direct all parties or counsel to meet with one or 
more duly authorized ASC members or staff at a specified time and place, 
or to submit to the ASC or its designee, suggestions in writing for the 
purpose of considering any or all of the following:
    (i) Scheduling of matters, including a timetable for the 
information-gathering phase of the proceeding;
    (ii) Simplification and clarification of the issues;
    (iii) Stipulations and admissions of fact and of the content and 
authenticity of documents;
    (iv) Matters of which official notice will be taken; and
    (v) Such other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the names of persons submitting 
affidavits or other documents and exhibits which may be introduced into 
the public file of the proceeding.
    (2) Such conferences will not be recorded, but the Secretary shall 
place in the proceeding's public file a memorandum summarizing the 
results of the conference and shall provide a copy of the memorandum to 
each party. The memorandum shall control the subsequent course of the 
proceedings, unless the ASC for good cause shown by one or more parties 
to the conference, modifies those results and instructs the Secretary to 
place an amendatory memorandum to that effect in the public file.
    (g) Changes or extensions of time and changes of place of 
proceeding. The ASC, in connection with initiating a specific 
proceedings under Sec. 1102.32 of this subpart, may instruct the 
Secretary to publish in the Federal Register time limits different from 
those specified in this subpart, and may, on its own initiative or for 
good cause shown, issue an exemption changing the place of the 
proceeding or extending any time limit prescribed by this subpart, 
including the date for ending the information-gathering phase of the 
proceeding.
    (h) Call for further briefs, memoranda, statements; reopening of 
matters. The ASC may call for the production of further information upon 
any issue, the submission of briefs, memoranda and statements (together 
with written responses), and, upon appropriate notice, may reopen any 
aspect of the proceeding at any time prior to a decision on the matter.

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.30  Rules of evidence.

    (a) In general. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted under this subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may be deemed or ruled admissible in a proceeding conducted 
under this subpart if such evidence is relevant, material, reliable and 
not unduly repetitive.
    (b) Stipulations. Any party may stipulate in writing as to any 
relevant matters of fact, law, or the authenticity of any relevant 
documents. The Secretary shall place such stipulations in the public 
file, and they shall be binding on the parties.
    (c) Official notice. Every matter officially noticed by the ASC 
shall appear in the public file, unless the ASC determines that the 
matter must be withheld from public disclosure under applicable Federal 
law.



Sec. 1102.31  Burden of proof.

    The ultimate burden of proof shall be on the respondent. The burden 
of going

[[Page 248]]

forward with a prima facie case shall be on the ASC.



Sec. 1102.32  Notice of Intention to Commence a Proceeding.

    The ASC shall instruct the Secretary or other designated officer 
acting for the ASC to publish in the Federal Register a Notice of 
Intention To Commence A Proceeding (Notice of Intention). The Notice of 
Intention shall be served upon the party or parties to the proceeding 
and shall commence at the time of service. The Notice of Intention shall 
state the legal authority and jurisdiction under which the proceeding is 
to be held; shall contain, or incorporate by appropriate reference, a 
specific statement of the matters of fact or law constituting the 
grounds for the proceeding; and shall state a date no sooner than 25 
days after service of the Notice of Intention is made for termination of 
the information-gathering phase of the proceeding. The Notice of 
Intention also must contain a bold-faced warning respecting the effect 
of a failure to file a Rebuttal or Notice Not To Contest under 
Sec. 1102.33(d) of this subpart. The ASC may amend a Notice of Intention 
in any manner and to the extent consistent with provisions of applicable 
law.



Sec. 1102.33  Rebuttal or Notice Not To Contest.

    (a) When required. A party to the proceeding may file either a 
Rebuttal or a Notice Not to Contest the statements contained in the 
Notice of Intention or any amendment thereto with the Secretary within 
15 days after being served with the Notice of Intention or an amendment 
to such Notice. The Secretary shall place the Rebuttal or the Notice Not 
To Contest in the public file.
    (b) Requirements of Rebuttal; effect of failure to deny. A Rebuttal 
filed under this section shall specifically admit, deny or state that 
the party does not have sufficient information to admit or deny each 
statement in the Notice of Intention. A statement of lack of information 
shall have the effect of a denial. Any statement not denied shall be 
deemed to be admitted. When a party intends to deny only a part or a 
qualification of a statement, the party shall admit so much of it as is 
true and shall deny only the remainder.
    (c) Notice Not To Contest. A party filing a Notice Not To Contest 
the statement of fact set forth in the Notice of Intention shall 
constitute a waiver of the party's opportunity to rebut the facts 
alleged, and together with the Notice of Intention and any referenced 
documents, will provide a record basis on which the ASC shall decide the 
matter. The filing of a Notice Not To Contest shall not constitute a 
waiver of the right of such party to a judicial review of the ASC's 
decision, findings and conclusions.
    (d) Effect of failure to file Rebuttal or Notice Not To Contest. 
Failure of a party to file a response required by this section within 
the time provided shall constitute a waiver of the party's opportunity 
to rebut and to contest the statements in the Notice of Intention and 
shall constitute authorization for the ASC to find the facts to be as 
presented in the Notice of Intention and to file with the Secretary a 
decision containing such findings and appropriate conclusions. The ASC, 
for good cause shown, will permit the filing of a Rebuttal after the 
prescribed time.



Sec. 1102.34  Briefs, memoranda and statements.

    (a) By the parties. Until the end of the information-gathering phase 
of the proceeding, any party may file with the Secretary a written 
brief, memorandum or other statement providing factual data and policy 
and legal arguments regarding the matters set out in the Notice of 
Intention. The filing party shall simultaneously serve other parties to 
the proceeding with a copy of the document. No later than ten days after 
such service, any party may file with the Secretary a written response 
to the document and must simultaneously serve a copy thereof on the 
other parties to the proceeding. The Secretary will receive documents 
and responses and will place them in the public file.
    (b) By interested persons, in non-recognition proceedings. Until the 
end of the information-gathering phase of a proceeding under section 
1118 of FIRREA (12 U.S.C. 3347), any person with a demonstrable, direct 
interest in

[[Page 249]]

the outcome of the proceeding may file with the Secretary a written 
brief, memorandum or other statement providing factual data and policy 
and legal arguments regarding the matters set out in the Notice of 
Intention. The ASC's Chairperson or his or her designee may not accept 
any such written brief, memorandum or other statement if the submitting 
person cannot demonstrate a direct interest in the outcome of the 
proceeding. Upon acceptance of the written brief, memorandum or other 
statement, the Secretary shall make copies of the document and forward 
one copy thereof to each party to the proceeding. No later than ten days 
after such service, any party may file with the Secretary a written 
response to the document and must simultaneously serve one copy thereof 
on the other parties to the proceeding. The Secretary will place a copy 
of such briefs, memoranda, statements and responses in the public file.



Sec. 1102.35  Opportunity for informal settlement.

    Any party may at any time submit to the Secretary, for consideration 
by the Subcommittee, written offers or proposals for settlement of a 
proceeding, without prejudice to the rights of the parties. No offer or 
proposal shall be included in the proceeding's public file over the 
objection of any party to such proceeding. This paragraph shall not 
preclude settlement of any proceeding by the filing of a Notice Not To 
Contest as provided in Sec. 1102.33(c) or by the submission of the case 
to the ASC on a stipulation of facts.



Sec. 1102.36  Oral presentations.

    (a) In general. A party does not have a right to an oral 
presentation. Under this section, a party's request to make an oral 
presentation may be denied if such a denial is appropriate and 
reasonable under the circumstances. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding.
    (b) Method and time of request. Between the commencement of the 
proceeding and ten days before the end of the information-gathering 
phase, any party to the proceeding may file with the Secretary a letter 
requesting that the Secretary schedule an opportunity for the party to 
give an oral presentation to the ASC. That letter shall include the 
reasons why an oral presentation is necessary.
    (c) ASC processing. The Secretary must promptly forward the letter 
request to the Chairman of the ASC. The Chairman, after informally 
contacting other ASC members and the ASC's senior staff for their views, 
will instruct the Secretary to forward a letter to the party either: 
Scheduling a date and time for the oral presentation and specifying the 
allowable duration of the presentation; or declining the request and 
providing the reasons therefor. The party's letter request and the ASC's 
response will be included in the proceeding's public file.
    (d) Procedure on presentation day. On the appropriate date and time, 
the party or his or her attorney (if any) will make the oral 
presentation before the ASC. Any ASC member may ask the party or the 
attorney, as the case may be, pertinent questions relating to the 
content of the oral presentation. Oral presentations will not be 
recorded or otherwise transcribed. The Secretary must enter promptly 
into the proceeding's public file a memorandum summarizing the subjects 
discussed during the oral presentation.



Sec. 1102.37  Decision of the Subcommittee and judicial review.

    At a reasonable time after the end of the information-gathering 
phase of the proceeding, but not exceeding 35 days, the ASC shall issue 
a final decision, containing specified terms and conditions as it deems 
appropriate, in the matter and shall cause the decision to be published 
promptly in the Federal Register. The final decision shall be effective 
on issuance. The Secretary shall serve the decision upon the parties 
promptly, shall place it in the proceeding's public file and shall 
furnish it to such other persons as the ASC may direct. Pursuant to the 
provisions of chapter 7 of title 5 of the U.S. Code and section 
1118(c)(3) of title XI of FIRREA (12 U.S.C. 3348(c)(3)), a final 
decision of the ASC is a prerequisite to seeking judicial review.

[[Page 250]]



Sec. 1102.38  Compliance activities.

    (a) Where, from complaints received from members of the public, 
communications from Federal or State agencies, examination of 
information by the ASC, or otherwise, it appears that a person has 
violated, is violating or is about to violate title XI of FIRREA or the 
rules or regulations thereunder, the ASC staff may commence an informal, 
preliminary inquiry into the matter. If, upon such inquiry, it appears 
that one or more allegations relate to possible violations of 
regulations administered by another agency or instrumentality of the 
Federal Government, then the matter shall be referred to that agency or 
instrumentality for appropriate action. The ASC, pursuant to its 
responsibilities under section 1103(a)(2) of title XI (12 U.S.C. 
3332(a)(2)) and section 1119(c) of title XI (12 U.S.C. 3348)), shall 
monitor the matter. If, upon inquiry, it appears that one or more 
allegations are within the ASC's jurisdiction, then the ASC, in its 
discretion, may determine to commence a formal investigation respecting 
the matter and shall instruct the Secretary to create a public file for 
the formal investigation. The Secretary shall place in that file a 
memorandum naming the person or persons subject to the investigation and 
the statutory basis for the investigation.
    (b) Unless otherwise instructed by the ASC or required by law, the 
Secretary shall ensure that all other papers, documents and materials 
gathered or submitted in connection with the investigation are non-
public and for ASC use only.
    (c) Persons who become involved in preliminary inquiries or formal 
investigations may, on their own initiative, submit a written statement 
to the Secretary setting forth their interests, positions or views 
regarding the subject matter of the investigation. Upon request, the 
staff, in its discretion, may advise such persons of the general nature 
of the investigation, including the indicated violations as they pertain 
to them and the amount of time that may be available for preparing and 
submitting such a statement prior to the presentation of a staff 
recommendation to the ASC. Upon the commencement of a formal 
investigation or a proceeding under this subpart, the Secretary shall 
place any such statement in the appropriate public file.
    (d) In instances where the staff has concluded its inquiry of a 
particular matter and has determined that it will not recommend the 
commencement of a formal investigation or a proceeding under this 
subpart against a person, the staff shall advise the person that its 
inquiry has been terminated. Such advice, if given, must in no way be 
construed as indicating that the person has been exonerated or that no 
action may ultimately result from the staff's inquiry into the 
particular matter.



Sec. 1102.39  Duty to cooperate.

    In the course of the investigations and proceedings, the ASC (and 
its staff, with appropriate authorization) must provide parties or 
persons ample opportunity to work out problems by consent, by 
settlement, or in some other manner.



Subpart C--Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

    Authority: 12 U.S.C. 552a.

    Source: 57 FR 36357, Aug. 13, 1992, unless otherwise noted.



Sec. 1102.100  Authority, purpose and scope.

    (a) This subpart is issued under the Privacy Act of 1974, Public Law 
93-579, 88 Stat. 1896; 12 U.S.C. 552a, as amended.
    (b) The Privacy Act of 1974 is based, in part, on the finding by 
Congress that ``in order to protect the privacy of individuals 
identified in information systems maintained by Federal agencies, it is 
necessary and proper for the Congress to regulate the collection, 
maintenance, use, and dissemination of information by such agencies.'' 
To achieve this objective, the Act generally provides that Federal 
agencies must advise an individual upon request whether records 
maintained by the agency in a system of records pertain to the 
individual and must grant the individual access to such records. The

[[Page 251]]

Act further provides that individuals may request amendments to records 
pertaining to them that are maintained by the agency, and that the 
agency shall either grant the requested amendments or set forth fully 
its reasons for refusing to do so.
    (c) The Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC), pursuant to subsection (f) of the Privacy 
Act, adopts the following rules and procedures to implement the 
provisions of the Act summarized above and other provisions of the Act. 
These rules and procedures are applicable to all requests for 
information and access or amendment to records pertaining to an 
individual that are contained in any system of records that is 
maintained by the ASC.



Sec. 1102.101  Definitions.

    The following definitions shall apply for purposes of this subpart:
    (a) The terms individual, maintain, record, system of records, and 
routine use are defined for purposes of these rules as they are defined 
in 5 U.S.C. 552a(a)(2), (a)(3), (a)(4), (a)(5) and (a)(7).
    (b) ASC or Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (c) Privacy Act Officer means the ASC's Associate Director for 
Administration or such other ASC staff officer, other than the Executive 
Director, duly designated by the ASC's Executive Director.



Sec. 1102.102  Times, places and requirements for requests pertaining to individual records in a record system and for the identification of individuals making 
          requests for access to records pertaining to them.

    (a) Place to make request. Any request by an individual to be 
advised whether any system of records maintained by the ASC and named by 
the individual contains a record pertaining to him or her, or any 
request by an individual for access to a record pertaining to him or her 
that is contained in a system of records maintained by the ASC, shall be 
submitted in person at the ASC between 9 a.m. and 4:30 p.m., Monday 
through Friday, which is located at 2100 Pennsylvania Avenue, NW., suite 
200, Washington, DC. 20037, or by mail addressed to: Privacy Act 
Officer, ASC, 2100 Pennsylvania Avenue, NW., suite 200, Washington, DC. 
20037. All requests will be required to be put in writing and signed by 
the individual making the request. In the case of requests for access 
that are made by mail, the envelope should be clearly marked ``Privacy 
Act Request.''
    (1) Information to be included in requests. Each request by an 
individual concerning whether the ASC maintains in a system of records a 
record that pertains to the individual, or for access to any record 
pertaining to the individual that is maintained by the ASC in a system 
of records, shall include such information as will assist the ASC in 
identifying those records as to which the individual is seeking 
information or access. Where practicable, the individual should identify 
the system of records that is the subject of his or her request by 
reference to the ASC's notices of systems of records, which are 
published in the Federal Register, as required by section (e)(4) of the 
Privacy Act, 5 U.S.C. 552a(e)(4). Where a system of records is compiled 
on the basis of a specific identification scheme, the individual should 
include in his or her request the identification number or other 
identifier assigned to the individual. In the event the individual does 
not know that number or identifier, the individual shall provide other 
information, including his or her full name, address, date of birth and 
subject matter of the record, to aid in processing his or her request. 
If additional information is required before a request can be processed, 
the individual shall be so advised.
    (2) Verification of identity. When the fact of the existence of a 
record is not required to be disclosed under the Freedom of Information 
Act, 5 U.S.C. 552, as amended, or when a record as to which access has 
been requested is not required to be disclosed under that Act, the 
individual seeking the information or requesting access to the record 
shall be required to verify his or her identity before access will be 
granted or information given. For this purpose, individuals shall appear 
at the ASC located at 2100 Pennsylvania Avenue, NW., suite 200, 
Washington, DC., between 9

[[Page 252]]

a.m. to 4:30 p.m., Monday through Friday. The ASC's Office is not open 
on Saturdays, Sundays or Federal holidays.
    (3) Methods for verifying identity--appearance in person. For the 
purpose of verifying identity, an individual seeking information 
regarding pertinent records or access to those records shall furnish 
documentation that may reasonably be relied on to establish the 
individual's identity. Such documentation might include a valid birth 
certificate, driver's license, employee or military identification card, 
and medicare card.
    (4) Method for verifying identity--by mail. Where an individual 
cannot appear at the ASC's Office for the purpose of verifying identity, 
the individual shall submit, along with the request for information or 
access, a signed and notarized statement attesting to his or her 
identity. Where access is being sought, the sworn statement shall 
include a representation that the records being sought pertain to the 
individual and a stipulation that the individual is aware that knowingly 
and willfully requesting or obtaining records pertaining to an 
individual from the ASC under false pretenses is a criminal offense.
    (5) Additional procedures for verifying identity. When it appears 
appropriate to the Privacy Act Officer, other arrangements may be made 
for the verification of identity as are reasonable under the 
circumstances and appear to be effective to prevent unauthorized 
disclosure of, or access to, individual records.
    (b) Acknowledgement of requests for information pertaining to 
individual records in a record system or for access to individual 
records. (1) Except where an immediate acknowledgement is given for 
requests made in person, the receipt of a request for information 
pertaining to individual records in a record system will be acknowledged 
within 10 days, excluding Saturdays, Sundays and Federal holidays. 
Requests will be processed as promptly as possible and a response to 
such requests will be given within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) unless, within the 30 day period and for 
cause shown, the individual making the request is notified in writing 
that a longer period is necessary.



Sec. 1102.103  Disclosure of requested records.

    (a) Initial review. Requests by individuals for access to records 
pertaining to them will be referred to the ASC's Privacy Act Officer, 
who initially will determine whether access will be granted.
    (b) Grant of request for access. (1) If it is determined that a 
request for access to records pertaining to an individual will be 
granted, the individual will be advised by mail that access will be 
given at the ASC or a copy of the requested record will be provided by 
mail if the individual shall so indicate. Where the individual requests 
that copies of the record be mailed to or her or requests copies of a 
record upon reviewing it at the ASC, the individual shall pay the cost 
of making requested copies, as set forth in Sec. 1102.109 of this 
subpart.
    (2) In granting access to an individual to a record pertaining to 
him or her, the ASC staff shall take steps to prevent the unauthorized 
disclosure of information pertaining to other individuals.
    (c) Denial of request for access. If it is determined that access 
will not be granted, the individual making the request will be notified 
of that fact and given the reasons why access is being denied. The 
individual also will be advised of his or her right to seek review by 
the Executive Director of the initial decision to deny access, in 
accordance with the procedures set forth in Sec. 1102.107 of this 
subpart.
    (d) Time for acting on requests for access. Access to a record 
pertaining to an individual normally will be granted or denied within 30 
days (excluding Saturdays, Sundays, and Federal holidays) after the 
receipt of the request for access, unless the individual making the 
request is notified in writing within the 30 day period that, for good 
cause shown, a longer time is required. In such cases, the individual 
making the request shall be informed in writing of the difficulties 
encountered and an indication shall be given as to when it is 
anticipated that access may be granted or denied.

[[Page 253]]

    (e) Authorization to allow designated person to review and discuss 
records pertaining to another individual. An individual, who is granted 
access to records pertaining to him or her and who appears at the ASC 
Office to review the records, may be accompanied by another person of 
his or her choosing. Where the records as to which access has been 
granted are not required to be disclosed under provisions of the Freedom 
of Information Act, 5 U.S.C. 552, as amended, the individual requesting 
the records, before being granted access, shall execute a written 
statement, signed by him or her, specifically authorizing the latter 
individual to review and discuss the records. If such authorization has 
not been given as described, the person who has accompanied the 
individual making the request will be excluded from any review or 
discussion of the records.
    (f) Exclusion for certain records. Nothing contained in these rules 
shall allow an individual access to any information compiled in 
reasonable anticipation of an administrative judicial or civil action or 
proceeding.



Sec. 1102.104  Special procedure: Medical records.

    (a) Statement of physician or mental health professional. When an 
individual requests access to records pertaining to the individual that 
include medical and/or psychological information, the ASC, if it deems 
it necessary under the particular circumstances, may require the 
individual to submit with the request a signed statement by the 
individual's physician or a mental health professional indicating that, 
in his or her opinion, disclosure of the requested records or 
information directly to the individual will not have an adverse effect 
on the individual.
    (b) Designation of physician or mental health professional to 
receive records. If the ASC believes, in good faith, that disclosure of 
medical and/or psychological information, directly to an individual 
could have an adverse effect on that individual, the individual may be 
asked to designate in writing a physician or mental health professional 
to whom the individual would like the records to be disclosed, and 
disclosure that otherwise would be made to the individual will instead 
be made to the designated physician or mental health professional.



Sec. 1102.105  Requests for amendment of records.

    (a) Place to make requests. A request by an individual to amend 
records pertaining to him or her may be made in person during normal 
business hours at the ASC located at 2100 Pennsylvania Avenue, NW., 
Suite 200, Washington, DC, or by mail addressed to the Privacy Act 
Officer, ASC, 2100 Pennsylvania Avenue, NW., suite 200, Washington, DC 
20037.
    (1) Information to be included in requests. Each request to amend an 
ASC record shall reasonably describe the record sought to be amended. 
Such description should include, for example, relevant names, dates and 
subject matter to permit the record to be located among the records 
maintained by the ASC. An individual who has requested that a record 
pertaining to the individual be amended will be advised promptly if the 
record cannot be located on the basis of the description given and that 
further identifying information is necessary before the request can be 
processed. An initial evaluation of a request presented in person will 
be made immediately to ensure that the request is complete and to 
indicate what, if any, additional information will be required. 
Verification of the individual's identity as set forth in 
Sec. 1102.102(a) (2), (3), (4) and (5) may also be required.
    (2) Basis for amendment. An individual requesting an amendment to a 
record pertaining to the individual shall specify the substance of the 
amendment and set forth facts and provide such materials that would 
support his or her contention that the record as maintained by the ASC 
is not accurate, timely or complete, or that the record is not necessary 
and relevant to accomplish a statutory purpose of the ASC as authorized 
by law or by Executive Order of the President.
    (b) Acknowledgement of requests for amendment. Receipt of a request 
to amend a record pertaining to an individual normally will be 
acknowledged

[[Page 254]]

in writing within 10 days after such request has been received, 
excluding Saturdays, Sundays and Federal holidays. When a request to 
amend is made in person, the individual making the request will be given 
a written acknowledgement when the request is presented. The 
acknowledgement will describe the request received and indicate when it 
is anticipated that action will be taken on the request. No 
acknowledgement will be sent when the request for amendment will be 
reviewed, and an initial decision made, within the 10 day period after 
such request has been received.



Sec. 1102.106  Review of requests for amendment.

    (a) Initial review. As in the case of requests for access, requests 
by individuals for amendment to records pertaining to them will be 
referred to the ASC's Privacy Act Officer for an initial determination.
    (b) Standards to be applied in reviewing requests. In reviewing 
requests to amend records, the Privacy Act Officer will be guided by the 
criteria set forth in 5 U.S.C. 552(e) (1) and (5), i.e., that records 
maintained by the ASC shall contain only such information as is 
necessary and relevant to accomplish a statutory purpose of the ASC as 
required by statute or Executive Order of the President and that such 
information also be accurate, timely, relevant and complete. These 
criteria will be applied whether the request is to add material to a 
record or to delete information from a record.
    (c) Time for acting on requests. Initial review of a request by an 
individual to amend a record shall be completed as promptly as is 
reasonably possible and normally within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) from the date the request was received, 
unless unusual circumstances preclude completion of review within that 
time. If the anticipated completion date indicated in the 
acknowledgement cannot be met, the individual requesting the amendment 
will be advised in writing of the delay and the reasons therefor, and 
also advised when action is expected to be completed.
    (d) Grant of requests to amend records. If a request to amend a 
record is granted in whole or in part, the Privacy Act Officer will:
    (1) Advise the individual making the request in writing of the 
extent to which it has been granted;
    (2) Amend the record accordingly; and
    (3) Where an accounting of disclosures of the record has been kept 
pursuant to 5 U.S.C. 552a(c), advise all previous recipients of the 
record of the fact that the record has been amended and the substance of 
the amendment.
    (e) Denial of requests to amend records. If an individual's request 
to amend a record pertaining to him is denied in whole or in part, the 
Privacy Act Officer will:
    (1) Promptly advise the individual making the request in writing of 
the extent to which the request has been denied;
    (2) State the reasons for the denial of the request;
    (3) Describe the procedures established by the ASC to obtain further 
review within the ASC of the request to amend, including the name and 
address of the person to whom the appeal is to be addressed; and
    (4) Inform the individual that the Privacy Act Officer will provide 
information and assistance to the individual in perfecting an appeal of 
the initial decision.



Sec. 1102.107  Appeal of initial adverse agency determination regarding access or amendment.

    (a) Administrative review. Any person who has been notified pursuant 
to Sec. 1102.103(c) that a request for access to records pertaining to 
him or her has been denied in whole or in part, or pursuant to 
Sec. 1102.106(e) of this subpart that a request for amendment has been 
denied in whole or in part, or who has received no response to a request 
for access or to amend within 30 days (excluding Saturdays, Sundays and 
Federal holidays) after the request was received by the ASC's staff (or 
within such extended period as may be permitted in accordance with 
Secs. 1102.103(d) and 1102.106(c) of this subpart), may appeal the 
adverse determination or failure to respond by applying for an order

[[Page 255]]

of the Executive Director determining and directing that access to the 
record be granted or that the record be amended in accordance with his 
or her request.
    (1) The application shall be in writing and shall describe the 
record in issue and set forth the proposed amendment and the reasons 
therefor.
    (2) The application shall be delivered to the ASC, 2100 Pennsylvania 
Avenue, NW., suite 200, Washington, DC, or by mail addressed to the 
Privacy Act Officer, ASC, 2100 Pennsylvania Avenue, NW., suite 200, 
Washington, DC 20037.
    (3) The applicant may state such facts and cite such legal or other 
authorities in support of the application.
    (4) The Executive Director will make a determination with respect to 
any appeal within 30 days after the receipt of such appeal (excluding 
Saturdays, Sundays, and Federal holidays), unless for good cause shown, 
the Executive Director shall extend that period. If such an extension is 
made, the individual who is appealing shall be advised in writing of the 
extension, the reasons therefor, and the anticipated date when the 
appeal will be decided.
    (5) In considering an appeal from a denial of a request to amend a 
record, the Executive Director shall apply the same standards as set 
forth in Sec. 1102.106(b).
    (6) If the Executive Director concludes that access should be 
granted, the Executive Director shall issue an order granting access and 
instructing the Privacy Act Officer to comply with Sec. 1102.103(b).
    (7) If the Executive Director concludes that the request to amend 
the record should be granted in whole or in part, the Executive Director 
shall issue an order granting the requested amendment in whole or in 
part and instructing the Privacy Act Officer to comply with the 
requirements of Sec. 1102.106(d) of this subpart, to the extent 
applicable.
    (8) If the Executive Director affirms the initial decision denying 
access, the Executive Director shall issue an order denying access and 
advising the individual seeking access of:
    (i) The order;
    (ii) The reasons for denying access; and
    (iii) The individual's right to obtain judicial review of the 
decision pursuant to 5 U.S.C. 552a(g)(1)(B).
    (9) If the Executive Director determines that the decision of the 
Privacy Act Officer denying a request to amend a record should be 
upheld, the Executive Director shall issue an order denying the request 
and the individual shall be advised of:
    (i) The order refusing to amend the record and the reasons therefor;
    (ii) The individual's right to file a concise statement setting 
forth his or her disagreement with the Executive Director's decision not 
to amend the record;
    (iii) The procedures for filing such a statement of disagreement 
with the Executive Director;
    (iv) The fact that any such statement of disagreement will be made 
available to anyone to whom the record is disclosed, together with, if 
the Executive Director deems it appropriate, a brief statement setting 
forth the Executive Director's reasons for refusing to amend;
    (v) The fact that prior recipients of the record in issue will be 
provided with the statement of disagreement and the Executive Director's 
statement, if any, to the extent that an accounting of such disclosures 
has been maintained pursuant to 5 U.S.C. 552a(c); and
    (vi) The individual's right to seek judicial review of the Executive 
Director's refusal to amend, pursuant to 5 U.S.C. 552a(g)(1)(A).
    (b) Statement of disagreement. As noted in paragraph (a)(9)(ii) of 
this section, an individual may file with the Executive Director a 
statement setting forth his or her disagreement with the Executive 
Director's denial of his or her request to amend a record.
    (1) Such statement of disagreement shall be delivered to the ASC, 
2100 Pennsylvania Avenue, NW., Suite 200, Washington, DC 20037, within 
30 days after receipt by the individual of the Executive Director's 
order denying the amendment, excluding Saturdays, Sundays and Federal 
holidays. For good cause shown, this period can be extended for a 
reasonable time.
    (2) Such statement of disagreement shall concisely state the basis 
for the

[[Page 256]]

individual's disagreement. Unduly lengthy or irrelevant materials will 
be returned to the individual by the Executive Director for appropriate 
revisions before they become a permanent part of the individual's 
record.
    (3) The record about which a statement of disagreement has been 
filed will clearly note which part of the record is disputed and the 
Executive Director will provide copies of the statement of disagreement 
and, if the Executive Director deems it appropriate, provide a concise 
statement of his or her reasons for refusing to amend the record, to 
persons or other agencies to whom the record has been or will be 
disclosed.



Sec. 1102.108  General provisions.

    (a) Extensions of time. Pursuant to Secs. 1102.103(b), 1102.104(d), 
1102.109(c) and 1102.109(a)(4) of this subpart, the time within which a 
request for information, access or amendment by an individual with 
respect to records maintained by the ASC that pertain to him or her 
normally would be processed may be extended for good cause shown or 
because of unusual circumstances. As used in these rules, good cause and 
unusual circumstances shall include, but only to the extent reasonably 
necessary to the proper processing of a particular request:
    (1) The need to search for and collect the requested records from 
establishments that are separate from the ASC. Some records of the ASC 
may be stored in Federal Records Centers in accordance with law--
including many of the documents that have been on file with the ASC for 
more than 2 years--and cannot be made available promptly. Any person who 
has requested for personal examination a record stored at the Federal 
Records Center will be notified when the record will be made available.
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which may be demanded 
in a single request. While every reasonable effort will be made to 
comply fully with each request as promptly as possible on a first-come, 
first-served basis, work done to search for, collect and appropriately 
examine records in response to a request for a large number of records 
will be contingent upon the availability of processing personnel in 
accordance with an equitable allocation of time to all members of the 
public who have requested or wish to request records.
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or more components within 
the ASC having substantial subject-matter interest herein.
    (b) Effective date of action. Whenever it is provided in this 
subpart that an acknowledgement or response to a request will be given 
by specific times, deposit in the mails of such acknowledgement or 
response by that time, addressed to the person making the request, will 
be deemed full compliance.
    (c) Records in use by a member of the ASC or its staff. Although 
every effort will be made to make a record in use by a member of the ASC 
or its staff available when requested, it may occasionally be necessary 
to delay making such a record available when doing so at the time the 
request is made would seriously interfere with the work of the ASC or 
its staff.
    (d) Missing or lost records. Any person who has requested a record 
or a copy of a record pertaining to him or her will be notified if the 
record sought cannot be found. If the person so requests, he or she will 
be notified if the record subsequently is found.
    (e) Oral requests; misdirected written requests--(1) Telephone and 
other oral requests. Before responding to any request by an individual 
for information concerning whether records maintained by the ASC in a 
system of records pertain to the individual or to any request for access 
to records by an individual, such request must be in writing and signed 
by the individual making the request. The Executive Director will not 
entertain any appeal from an alleged denial of failure to comply with an 
oral request. Any person who has made an oral request for information or 
access to records who believes that the request has been improperly 
denied should resubmit the request in appropriate written form to obtain 
proper

[[Page 257]]

consideration and, if need be, administrative review.
    (2) Misdirected written requests. The ASC cannot assure that a 
timely or satisfactory response will be given to written requests for 
information, access or amendment by an individual with respect to 
records pertaining to him or her that are directed to the ASC other than 
in a manner prescribed in Secs. 1102.103(a), 1102.106(a), 
1102.108(a)(2), and 1102.110 of this subpart. Any staff member who 
receives a written request for information, access or amendment should 
promptly forward the request to the Privacy Act Officer. Misdirected 
requests for records will be considered to have been received by the ASC 
only when they have been actually received by the Privacy Act Officer in 
cases under Sec. 1102.108(a)(2). The Executive Director will not 
entertain any appeal from an alleged denial or failure to comply with a 
misdirected request, unless it is clearly shown that the request was in 
fact received by the Privacy Act Officer.



Sec. 1102.109  Fees.

    (a) There will be no charge assessed to the individual for the ASC's 
expense involved in searching for or reviewing the record. Copies of the 
ASC's records will be provided by a commercial copier at rates 
established by a contract between the copier and the ASC or by the ASC 
at the rates in Sec. 1101.4(b)(5)(ii) of 12 CFR part 1101.
    (b) Waiver or reduction of fees. Whenever the Executive Director of 
the ASC determines that good cause exists to grant a request for 
reduction or waiver of fees for copying documents, he or she may reduce 
or waive any such fees.



Sec. 1102.110  Penalties.

    Title 18 U.S.C. 1001 makes it a criminal offense, subject to a 
maximum fine of $10,000, or imprisonment for not more than 5 years or 
both, to knowingly and willingly make or cause to be made any false or 
fraudulent statements or representations in any matter within the 
jurisdiction of any agency of the United States. 5 U.S.C. 552a(i) makes 
it a misdemeanor punishable by a fine of not more than $5,000 for any 
person knowingly and willfully to request or obtain any record 
concerning an individual from the ASC under false pretenses. 5 U.S.C. 
552a(i) (1) and (2) provide criminal penalties for certain violations of 
the Privacy Act by officers and employees of the ASC.



    Subpart D--Description of Office, Procedures, Public Information

    Authority: 5 U.S.C. 552, 553(e); and Executive Order 12600, 52 FR 
23781 (3 CFR, 1987 Comp., p. 235).

    Source: 57 FR 60724, Dec. 22, 1992, unless otherwise noted.



Sec. 1102.300  Purpose and scope.

    This part sets forth the basic policies of the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') regarding information it maintains and the procedures for 
obtaining access to such information. This part does not apply to the 
Federal Financial Institutions Examination Council. Section 1102.301 
sets forth definitions applicable to this part 1102, subpart D. Section 
1102.302 describes the ASC's statutory authority and functions. Section 
1102.303 describes the ASC's organization and methods of operation. 
Section 1102.304 describes the types of information and documents 
typically published in the Federal Register. Section 1102.305 explains 
how to access public records maintained on the ASC's World Wide Web site 
and at the ASC's office and describes the categories of records 
generally found there. Section 1102.306 implements the Freedom of 
Information Act (``FOIA'') (5 U.S.C. 552). Section 1102.307 authorizes 
the discretionary disclosure of exempt records under certain limited 
circumstances. Section 1102.308 provides anyone with the right to 
petition the ASC to issue, amend, and repeal rules of general 
application. Section 1102.309 sets out the ASC's confidential treatment 
procedures. Section 1102.310 outlines procedures for serving a subpoena 
or other legal process to obtain information maintained by the ASC.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.301  Definitions.

    For purposes of this subpart:

[[Page 258]]

    (a) ASC means the Appraisal Subcommittee of the Federal Financial 
Institutions Examination Council.
    (b) Commercial use request means a request from, or on behalf of, a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the ASC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (c) Direct costs means those expenditures the ASC actually incurs in 
searching for, duplicating, and, in the case of commercial requesters, 
reviewing records in response to a request for records.
    (d) Disclose or disclosure mean to give access to a record, whether 
by producing the written record or by oral discussion of its contents. 
Where the ASC member or employee authorized to release ASC documents 
makes a determination that furnishing copies of the documents is 
necessary, these words include the furnishing of copies of documents or 
records.
    (e) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy, 
microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (f) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (g) Field review includes, but is not limited to, formal and 
informal investigations of potential irregularities occurring at State 
appraiser regulatory agencies involving suspected violations of Federal 
or State civil or criminal laws, as well as such other investigations as 
may conducted pursuant to law.
    (h) Non-commercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (b) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (i) Record includes records, files, documents, reports 
correspondence, books, and accounts, or any portion thereof, in any form 
the ASC regularly maintains them.
    (j) Representative of the news media means any person primarily 
engaged in gathering news for, or a free-lance journalist who can 
demonstrate a reasonable expectation of having his or her work product 
published or broadcast by, an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
general public.
    (k) Review means the process of examining documents located in a 
response to a request that is for a commercial use to determine whether 
any portion of any document located is permitted to be withheld. It also 
includes processing any documents for disclosure, e.g, doing all that is 
necessary to excise them and otherwise prepare them for release. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    (l) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.
    (m) State appraiser regulatory agency includes, but is not limited 
to, any board, commission, individual or other entity that is authorized 
by State law to license, certify, and supervise the activities or 
persons authorized to perform appraisals in connections with federally 
related transactions and real estate related financial transactions that 
require the services of a State licensed or certified appraiser.

[64 FR 72496, Dec. 28, 1999]

[[Page 259]]



Sec. 1102.302  ASC authority and functions.

    (a) Authority. The ASC was established on August 9, 1989, pursuant 
to title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (``FIRREA''), 12 U.S.C. 3331 and 
3310 through 3351. Title XI is intended ``to provide that Federal 
financial and public policy interests in real estate related 
transactions will be protected by requiring that real estate appraisals 
utilized in connection with federally related transactions are performed 
in writing, in accordance with uniform standards, by individuals whose 
competency has been demonstrated and whose professional conduct will be 
subject to effective supervision.'' 12 U.S.C. 3331.
    (b) Functions. The ASC's statutory functions are generally set out 
in 12 U.S.C. 3332. In summary, the ASC must:
    (1) Monitor the requirements established by the States for the 
certification and licensing of individuals who are qualified to perform 
appraisals in connection with federally related transactions, including 
a code of professional responsibility;
    (2) Monitor the requirements of the Federal financial institutions 
regulatory agency and Resolution Trust Corporation with respect to 
appraisal standards for federally related transactions and 
determinations as to which federally related transactions require the 
services of a State certified appraiser and which require the services 
of a State licensed appraiser;
    (3) Monitor and review the practices, procedures, activities and 
organizational structure of the Appraisal Foundation; and
    (4) Maintain a national registry of State certified and licensed 
appraisers eligible to perform appraisals in federally related 
transactions.



Sec. 1102.303  Organization and methods of operation.

    (a) Statutory and other guidelines. Statutory requirements relating 
to the ASC's organization are stated in 12 U.S.C. 3310, 3333 and 3334. 
The ASC has adopted and published Rules of Operation guiding its 
administration, meetings and procedures. These Rules of Operation were 
published at 56 FR 28561 (June 21, 1991) and 56 FR 33451 (July 22, 
1991).
    (b) ASC members and staff. The ASC is composed of six members, each 
being designated by the head of their respective agencies: the Board of 
Governors of the Federal Reserve System, Federal Deposit Insurance 
Corporation, Office of the Comptroller of the Currency, National Credit 
Union Administration, Office of Thrift Supervision, and the Department 
of Housing and Urban Development. Administrative support and substantive 
program, policy, and legal guidance for ASC activities are provided by a 
small, full-time, professional staff supervised by an Executive 
Director.
    (c) FFIEC. Title XI placed the ASC within FFIEC as a separate, 
appropriated agency of the United States Government with specific 
statutory responsibilities under Federal law.
    (d) ASD Address ASC offices are located at 2000 K Street, NW., Suite 
310; Washington, DC 20006.

[57 FR 60724, Dec. 22, 1992, as amended at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.304  Federal Register publication.

    The ASC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Description of its organization and the established places at 
which, the officers from whom, and the methods whereby, the public may 
secure information, make submittals or re nests, or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the ASC;
    (e) Every amendment, revision or repeal of the foregoing; and

[[Page 260]]

    (f) General notices of proposed rulemaking.

[64 FR 72497, Dec. 28, 1999]



Sec. 1102.305  Publicly available records.

    (a) Records available on the ASCs World Wide Web site--(1) 
Discretionary release of documents. The ASC encourages the public to 
explore the wealth of resources available on the ASC's Internet World 
Wide Web site, located at: http://www.asc.gov. The ASC has elected to 
publish a broad range to materials on its Web site.
    (2) Documents required to be made available via computer 
telecommunications. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available through 
computer telecommunications, may be found on the ASC's Internet World 
Wide Web site located at: http://www.asc.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders, made in the adjudication of cases;
    (B) Statements of policy and interpretations adopted by the ASC that 
are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (D) Copies of all records (regardless of form or format), such as 
correspondence relating to field reviews or other regulatory subjects, 
released to any person under Sec. 1102.306 that, because of the nature 
of their subject matter, the ASC has determined are likely to be the 
subject of subsequent requests;
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the ASC may delete identifying 
details when it makes available or publishes any records. If reduction 
is necessary, the ASC will, to the extent technically feasible, indicate 
the amount of material deleted at the place in the record where such 
deletion is made unless that indication in and of itself will jeopardize 
the purpose for the redaction.
    (b) Types of written communications. The following types of written 
communications shall be subject to paragraph (a) of this section:
    (1) The ASC's annual report to Congress;
    (2) All final opinions and orders made in the adjudication of cases;
    (3) All statements of general policy not published in the Federal 
Register.
    (4) Requests for the ASC or its staff to provide interpretive advice 
with respect to the meaning or application of any statute administered 
by the ASC or any rule or regulation adopted thereunder and any ASC 
responses thereto;
    (5) Requests for a statement that, on the basis of the facts 
presented in such a request, the ASC would not take any enforcement 
action pertaining to the facts as represented and any ASC responses 
thereto: and
    (6) Correspondence between the ASC and a State appraiser regulatory 
agency arising out of the ASC's field review of the State agency's 
appraiser regulatory program.
    (c) Applicable fees. (1) If applicable, fees for furnishing records 
under this section are as set forth in Sec. 1102.306(e).
    (2) Information on the ASC's World Wide Web site is available to the 
public without charge. If, however, information available on the ASC's 
World Wide Web site is provided pursuant to a Freedom of Information Act 
request processed under g 1102.306 then fees apply and will be assessed 
pursuant to Sec. 1102.306(e).

[59 FR 1902, Jan. 13, 1994, as amended at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.306  Procedures for requesting records.

    (a) Making a request for records. (1) The request shall be submitted 
in writing to the Executive Director:
    (i) By facsimile clearly marked ``Freedom of Information Act 
Request'' to (202) 872-7501;
    (ii) By letter to the Executive Director marked ``Freedom of 
Information Act Request''; 2000 K Street, NW., Suite 301; Washington, DC 
20006; or
    (iii) By sending Internet e-mail to the Executive Director marked 
``Freedom of Information Act Request'' at his or her e-mail address 
listed on the ASC's World Wide Web site.

[[Page 261]]

    (2) The request shall contain the following information:
    (i) The name and address of the requester, an electronic mail 
address, if available, and the telephone number at which the requester 
may be reached during normal business hours;
    (ii) Whether the requester is an educational institution, non-
commercial scientific institution, or news media representative;
    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying a maximum fee that is acceptable to the requester, 
or a request for a waiver or reduction of fees that satisfies paragraph 
(e)(1)(x) of this section; and
    (iv) The preferred form and format of any responsive information 
requested, if other than paper copies.
    (3) A request for identifiable records shall reasonably describe the 
records in a way that enables the ASC's staff to identify and produce 
the records with reasonable effort and without unduly burdening or 
significantly interfering with any ASC operations.
    (b) Defective requests. The ASC need not accept or process a request 
that does not reasonably describe the records requested or that does not 
otherwise comply with the requirements of this subpart. The ASC may 
return a defective request, specifying the deficiency. The requester may 
submit a corrected request, which will be treated as a new request