Dec. 21, 2009 CODE OF FEDERAL REGULATIONS 12 Part 900 to End Revised as of January 1, 2010 Banks and Banking Containing a codification of documents of general applicability and future effect As of January 1, 2010 With Ancillaries

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 Table of Contents Page Explanation v Title 12: Chapter IX—Federal Housing Finance Board 3 Chapter XI—Federal Financial Institutions Examination Council 177 Chapter XII—Federal Housing Finance Agency 213 Chapter XIV—Farm Credit System Insurance Corporation 317 Chapter XV—Department of the Treasury 355 Chapter XVII—Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development 377 Chapter XVIII—Community Development Financial Institutions Fund, Department of the Treasury 587 Finding Aids: Table of CFR Titles and Chapters 625 Alphabetical List of Agencies Appearing in the CFR 645 List of CFR Sections Affected 655

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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 XII—Federal Housing Finance Agency, 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, 2010.

For this volume, Jonn V. Lilyea was Chief Editor. The Code of Federal Regulations publication program is under the direction of Michael L. White, assisted by Ann Worley.

 <LRH>12 CFR Ch. IX (1-1-10 Edition)</LRH> <RRH>Federal Housing Finance Board</RRH> <CFRTITLE> <TITLEHD> <PRTPAGE P="1"/> <HD SOURCE="HED">Title 12—Banks and Banking</HD> <P>(This book contains part 900 to end)</P> </TITLEHD> <CFRTOC> <PTHD>Part</PTHD> <CHAPTI> <SUBJECT> <E T="04">chapter ix</E>—Federal Housing Finance Board</SUBJECT> <PG>900</PG> <SUBJECT> <E T="04">chapter xi</E>—Federal Financial Institutions Examination Council</SUBJECT> <PG>1101</PG> <SUBJECT> <E T="04">chapter xii</E>—Federal Housing Finance Agency</SUBJECT> <PG>1231</PG> <SUBJECT> <E T="04">chapter xiv</E>—Farm Credit System Insurance Corporation</SUBJECT> <PG>1400</PG> <SUBJECT> <E T="04">chapter xv</E>—Department of the Treasury</SUBJECT> <PG>1510</PG> <SUBJECT> <E T="04">chapter xvii</E>—Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development</SUBJECT> <PG>1700</PG> <SUBJECT> <E T="04">chapter xviii</E>—Community Development Financial Institutions Fund, Department of the Treasury</SUBJECT> <PG>1805</PG> </CHAPTI> </CFRTOC> </CFRTITLE> <CHAPTER> <TOC> <TOCHD> <PRTPAGE P="3"/> <HD SOURCE="HED">CHAPTER IX—FEDERAL HOUSING FINANCE BOARD</HD> </TOCHD> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—GENERAL DEFINITIONS</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>900</PT> <SUBJECT>General definitions applying to all finance board regulations</SUBJECT> <PG>5</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER B—FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS</HD> </SUBCHAP> <CHAPTI> <PT>905</PT> <SUBJECT>Description of organization and functions</SUBJECT> <PG>8</PG> <PT>906</PT> <SUBJECT>Operations</SUBJECT> <PG>12</PG> <PT>907</PT> <SUBJECT>Procedures</SUBJECT> <PG>14</PG> <PT>908</PT> <SUBJECT>Rules of practice and procedure in hearings on the record</SUBJECT> <PG>23</PG> <PT>911</PT> <SUBJECT>Availability of unpublished information</SUBJECT> <PG>52</PG> <PT>912</PT> <SUBJECT>Information regarding meetings of the Board of Directors of the Federal Housing Finance Board</SUBJECT> <PG>57</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER C—GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS</HD> </SUBCHAP> <CHAPTI> <PT>914</PT> <SUBJECT>Data availability and reporting</SUBJECT> <PG>63</PG> <PT>917</PT> <SUBJECT>Powers and responsibilities of Bank boards of directors and senior management</SUBJECT> <PG>63</PG> <PT>918</PT> <SUBJECT>Bank director compensation and expenses</SUBJECT> <PG>70</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER D—FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES</HD> </SUBCHAP> <CHAPTI> <PT>925</PT> <SUBJECT>Members of the Banks</SUBJECT> <PG>72</PG> <PT>926</PT> <SUBJECT>Federal Home Loan Bank housing associates</SUBJECT> <PG>90</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER E—FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL STANDARDS</HD> </SUBCHAP> <CHAPTI> <PT>930</PT> <SUBJECT>Definitions applying to risk management and capital regulations</SUBJECT> <PG>93</PG> <PT>931</PT> <SUBJECT>Federal Home Loan Bank capital stock</SUBJECT> <PG>94</PG> <PT>932</PT> <SUBJECT>Federal Home Loan Bank capital requirements</SUBJECT> <PG>98<PRTPAGE P="4"/> </PG> <PT>933</PT> <SUBJECT>Bank capital structure plans</SUBJECT> <PG>110</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER F—FEDERAL HOME LOAN BANK MISSION</HD> </SUBCHAP> <CHAPTI> <PT>940</PT> <SUBJECT>Core mission activities</SUBJECT> <PG>116</PG> <PT>944</PT> <SUBJECT>Community support requirements</SUBJECT> <PG>117</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER G—FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS</HD> </SUBCHAP> <CHAPTI> <PT>950</PT> <SUBJECT>Advances</SUBJECT> <PG>122</PG> <PT>952</PT> <SUBJECT>Community Investment Cash Advance Programs</SUBJECT> <PG>132</PG> <PT>955</PT> <SUBJECT>Acquired member assets</SUBJECT> <PG>137</PG> <PT>956</PT> <SUBJECT>Federal Home Loan Bank Investments</SUBJECT> <PG>140</PG> <PT>960</PT> <SUBJECT>Standby letters of credit</SUBJECT> <PG>142</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER H—FEDERAL HOME LOAN BANK LIABILITIES</HD> </SUBCHAP> <CHAPTI> <PT>965</PT> <SUBJECT>Source of funds</SUBJECT> <PG>145</PG> <PT>966</PT> <SUBJECT>Consolidated obligations</SUBJECT> <PG>145</PG> <PT>969</PT> <SUBJECT>Deposits</SUBJECT> <PG>150</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER I—MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND AUTHORITIES</HD> </SUBCHAP> <CHAPTI> <PT>975</PT> <SUBJECT>Collection, settlement, and processing of payment instruments</SUBJECT> <PG>151</PG> <PT>977</PT> <SUBJECT>Miscellaneous bank authorities</SUBJECT> <PG>153</PG> <PT>978</PT> <SUBJECT>Bank requests for information</SUBJECT> <PG>153</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER J—NEW FEDERAL HOME LOAN BANK ACTIVITIES</HD> </SUBCHAP> <CHAPTI> <PT>980</PT> <SUBJECT>New business activities</SUBJECT> <PG>156</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER K—OFFICE OF FINANCE</HD> </SUBCHAP> <CHAPTI> <PT>985</PT> <SUBJECT>The Office of Finance</SUBJECT> <PG>159</PG> <PT>987</PT> <SUBJECT>Book-entry procedure for consolidated obligations</SUBJECT> <PG>163</PG> <PT>989</PT> <SUBJECT>Financial statements of the Banks</SUBJECT> <PG>168</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER L—NON-BANK SYSTEM ENTITIES</HD> </SUBCHAP> <CHAPTI> <PT>995</PT> <SUBJECT>Financing Corporation operations</SUBJECT> <PG>170</PG> <PT>996</PT> <SUBJECT>Authority for Bank assistance of the Resolution Funding Corporation</SUBJECT> <PG>173</PG> <PT>997</PT> <SUBJECT>Resolution Funding Corporation obligations of the Banks</SUBJECT> <PG>173</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER M—FEDERAL HOME LOAN BANK DISCLOSURES</HD> </SUBCHAP> <CHAPTI> <PT>998</PT> <SUBJECT>Registration of Federal Home Loan Bank equity securities</SUBJECT> <PG>176</PG> </CHAPTI> </TOC> <SUBCHAP TYPE="N"> <PRTPAGE P="5"/> <HD SOURCE="HED">SUBCHAPTER A—GENERAL DEFINITIONS</HD> <PART> <EAR>Pt. 900</EAR> <HD SOURCE="HED">PART 900—GENERAL DEFINITIONS APPLYING TO ALL FINANCE BOARD REGULATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>900.1</SECTNO> <SUBJECT>Basic terms relating to the Finance Board, the Bank System and related entities.</SUBJECT> <SECTNO>900.2</SECTNO> <SUBJECT>Terms relating to Bank operations, mission and supervision.</SUBJECT> <SECTNO>900.3</SECTNO> <SUBJECT>Terms relating to other entities and concepts used throughout 12 CFR chapter IX.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 12842, Mar. 20, 2002, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 900.1</SECTNO> <SUBJECT>Basic terms relating to the Finance Board, the Bank System and related entities.</SUBJECT> <P>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:</P> <P> <E T="03">Act</E> means the Federal Home Loan Bank Act, as amended (12 U.S.C. 1421 through 1449).</P> <P> <E T="03">Bank,</E> written in title case, means a Federal Home Loan Bank established under section 12 of the Act (12 U.S.C. 1432).</P> <P> <E T="03">Bank System</E> means the Federal Home Loan Bank System, consisting of the 12 Banks and the Office of Finance.</P> <P> <E T="03">Board of Directors,</E> written in title case, means the Board of Directors of the Federal Housing Finance Board; the term <E T="03">board of directors,</E> written in lower case, has the meaning indicated in context.</P> <P> <E T="03">Chairperson</E> means the Chairperson of the Board of Directors of the Finance Board.</P> <P> <E T="03">Executive Secretary</E> means an employee within the Office of Management of the Finance Board who is responsible for records management.</P> <P> <E T="03">Finance Board</E> means the Federal Housing Finance Board established by section 2A of the Act (12 U.S.C. 1422a).</P> <P> <E T="03">Financing Corporation</E> or <E T="03">FICO</E> 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.</P> <P> <E T="03">Housing associate</E> means an entity that has been approved as a housing associate pursuant to part 926 of this chapter.</P> <P> <E T="03">Member</E> means an institution that has been approved for membership in a Bank and has purchased capital stock in the Bank in accordance with §§ 925.20 or 925.24(b) of this chapter.</P> <P> <E T="03">Office of Finance</E> or <E T="03">OF</E> 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.</P> <P> <E T="03">Resolution Funding Corporation</E> or <E T="03">REFCORP</E> 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.</P> <P> <E T="03">Secretary to the Board</E> means employees within the Office of General Counsel of the Finance Board who are responsible for issues concerning meetings of the Board of Directors.</P> <CITA>[67 FR 12842, Mar. 20, 2002, as amended at 68 FR 38169, June 27, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 900.2</SECTNO> <SUBJECT>Terms relating to Bank operations, mission and supervision.</SUBJECT> <P>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:</P> <P> <E T="03">Acquired member assets</E> or <E T="03">AMA</E> means those assets that may be acquired by a Bank under part 955 of this chapter.</P> <P> <E T="03">Advance</E> means a loan from a Bank that is:</P> <P>(1) Provided pursuant to a written agreement;</P> <P>(2) Supported by a note or other written evidence of the borrower's obligation; and</P> <P>(3) Fully secured by collateral in accordance with the Act and part 950 of this chapter.</P> <P> <E T="03">Affordable Housing Program</E> or AHP means the Affordable Housing Program, the CICA program that each Bank is required to establish pursuant <PRTPAGE P="6"/>to section 10(j) of the Act (12 U.S.C. 1430(j)) and part 951 of this chapter.</P> <P> <E T="03">Capital plan</E> 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 Board, unless the context of the regulation refers to the capital plan prior to its approval by the Finance Board.</P> <P> <E T="03">CIP</E> 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)).</P> <P> <E T="03">Community Investment Cash Advance</E> or <E T="03">CICA</E> 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.</P> <P> <E T="03">Community lending</E> means providing financing for economic development projects for targeted beneficiaries, and, for community financial institutions (as defined in § 925.1 of this chapter), purchasing or funding small business loans, small farm loans or small agri-business loans (as defined in § 950.1 of this chapter).</P> <P> <E T="03">Consolidated obligation</E> or <E T="03">CO</E> 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.</P> <P> <E T="03">Data Reporting Manual</E> or <E T="03">DRM</E> means a manual issued by the Finance Board and amended from time to time containing reporting requirements for the Banks.</P> <P> <E T="03">Excess stock</E> means that amount of a Bank's capital stock owned by a member or other institution in excess of that member's or other institution's minimum investment in capital stock required under the Bank's capital plan, the Act, or the Finance Board's regulations, as applicable.</P> <P> <E T="03">Financial Management Policy</E> or <E T="03">FMP</E> 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).</P> <CITA>[67 FR 12842, Mar. 20, 2002, as amended at 71 FR 35499, June 21, 2006; 71 FR 78050, Dec. 28, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 900.3</SECTNO> <SUBJECT>Terms relating to other entities and concepts used throughout 12 CFR chapter IX.</SUBJECT> <P>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:</P> <P> <E T="03">Appropriate Federal banking agency</E> 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.</P> <P> <E T="03">Appropriate state regulator</E> 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.</P> <P> <E T="03">Fannie Mae</E> means the Federal National Mortgage Association established under authority of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716, <E T="03">et seq.</E>).</P> <P> <E T="03">FDIC</E> means the Federal Deposit Insurance Corporation.</P> <P> <E T="03">FRB</E> means the Board of Governors of the Federal Reserve System.<PRTPAGE P="7"/> </P> <P> <E T="03">Freddie Mac</E> means the Federal Home Loan Mortgage Corporation established under authority of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451, <E T="03">et seq.</E>).</P> <P> <E T="03">Generally Accepted Accounting Principles</E> or <E T="03">GAAP</E> means accounting principles generally accepted in the United States.</P> <P> <E T="03">Ginnie Mae</E> means the Government National Mortgage Association established under authority of the Federal National Mortgage Association Charter Act (12 U.S.C. 1716, <E T="03">et seq.</E>).</P> <P> <E T="03">GLB Act</E> means the Gramm-Leach-Bliley Act (Pub. L. 106-102 (1999)).</P> <P> <E T="03">HUD</E> means the United States Department of Housing and Urban Development.</P> <P> <E T="03">NCUA</E> means the National Credit Union Administration.</P> <P> <E T="03">NRSRO</E> means a credit rating organization regarded as a Nationally Recognized Statistical Rating Organization by the Securities and Exchange Commission.</P> <P> <E T="03">OCC</E> means the Office of the Comptroller of the Currency.</P> <P> <E T="03">OTS</E> means the Office of Thrift Supervision.</P> <P> <E T="03">SBIC</E> means a small business investment company formed pursuant to section 301 of the Small Business Investment Act (15 U.S.C. 681).</P> <P> <E T="03">SEC</E> means the United States Securities and Exchange Commission.</P> <P> <E T="03">State</E> 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.</P> <P> <E T="03">1934 Act</E> means the Securities Exchange Act of 1934 (15 U.S.C. 78a <E T="03">et seq.</E>).</P> <CITA>[67 FR 12842, Mar. 20, 2002, as amended at 69 FR 38811, June 29, 2004]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="8"/> <HD SOURCE="HED">SUBCHAPTER B—FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS</HD> <PART> <EAR>Pt. 905</EAR> <HD SOURCE="HED">PART 905—DESCRIPTION OF ORGANIZATION AND FUNCTIONS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Functions and Responsibilities of Finance Board</HD> <SECHD>Sec.</SECHD> <SECTNO>905.1</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>905.2</SECTNO> <SUBJECT>General statement and statutory authority.</SUBJECT> <SECTNO>905.3</SECTNO> <SUBJECT>Location and business hours.</SUBJECT> <SECTNO>905.4</SECTNO> <SUBJECT>Duties of the Finance Board.</SUBJECT> <APP>Appendix A to Subpart A of Part 905—Federal Home Loan Banks</APP> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—General Organization</HD> <SECTNO>905.10</SECTNO> <SUBJECT>Board of Directors.</SUBJECT> <SECTNO>905.11</SECTNO> <SUBJECT>Office of Inspector General.</SUBJECT> <SECTNO>905.12</SECTNO> <SUBJECT>Office of Management.</SUBJECT> <SECTNO>905.13</SECTNO> <SUBJECT>Office of Supervision.</SUBJECT> <SECTNO>905.14</SECTNO> <SUBJECT>Office of General Counsel.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Miscellaneous</HD> <SECTNO>905.25</SECTNO> <SUBJECT>Forms.</SUBJECT> <SECTNO>905.26</SECTNO> <SUBJECT>Official logo and seal.</SUBJECT> <SECTNO>905.27</SECTNO> <SUBJECT>OMB control numbers assigned under the Paperwork Reduction Act.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 552; 12 U.S.C. 1422b(a) and 1423; 44 U.S.C. 3507; 5 CFR 1320.5 and 1320.8.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>56 FR 67155, Dec. 30, 1991, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—Functions and Responsibilities of Finance Board</HD> <SECTION> <SECTNO>§ 905.1</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 905.2</SECTNO> <SUBJECT>General statement and statutory authority.</SUBJECT> <P>(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.</P> <P>(b) The members of the Board of Directors individually are referred to as Directors. Other than the Office of Inspector General and the Office of General Counsel, the heads of the administrative units, called offices, also are called Directors. The head of the Office of Inspector General is called the Inspector General and the head of the Office of General Counsel is called the General Counsel.</P> <P>(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.</P> <CITA>[56 FR 67155, Dec. 30, 1991, as amended at 65 FR 8256, Feb. 18, 2000; 67 FR 12843, Mar. 20, 2002; 68 FR 38169, June 27, 2003]</CITA> </SECTION> <SECTION> <SECTNO>§ 905.3</SECTNO> <SUBJECT>Location and business hours.</SUBJECT> <P>(a) <E T="03">Location.</E> All office units of the Finance Board are located at 1777 F Street, NW., Washington, DC 20006.</P> <P>(b) <E T="03">Hours of operation.</E> The regular hours of operation of the Finance Board are from 8:30 a.m. to 5:30 p.m., Monday through Friday.</P> </SECTION> <SECTION> <SECTNO>§ 905.4</SECTNO> <SUBJECT>Duties of the Finance Board.</SUBJECT> <P>(a) <E T="03">Bank System.</E> The Finance Board supervises and regulates the Banks and the Office of Finance. Specifically, its duties are:</P> <P>(1) To ensure that the Banks operate in a safe and sound manner;</P> <P>(2) To supervise all business operations of the Banks, which may include:</P> <P>(i) Prescribing conditions upon which Banks may advance funds to their members and housing associates;</P> <P>(ii) Prescribing rules and conditions under which a Bank may borrow funds, <PRTPAGE P="9"/>pay interest on those funds, or issue obligations;</P> <P>(iii) Requiring examinations of the Banks; and</P> <P>(iv) Appointing the public interest members of the boards of directors of the Banks;</P> <P>(3) To ensure that the Banks fulfill their housing finance and community lending mission;</P> <P>(4) To ensure that the Banks remain adequately capitalized; and</P> <P>(5) To ensure that the Banks are able to raise funds in the capital markets.</P> <P>(b) <E T="03">Financing Corporation.</E> The Finance Board also oversees the operations of the Financing Corporation, including its issuance of obligations.</P> <CITA>[67 FR 12843, Mar. 20, 2002]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 905, Subpt. A, App. A</EAR> <HD SOURCE="HED">Appendix A to Subpart A of Part 905—Federal Home Loan Banks</HD> <HD SOURCE="HD1">Federal Home Loan Bank District 1</HD> <FP SOURCE="FP-1">(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Boston</HD> <FP SOURCE="FP-1">111 Huntington Avenue, 24th Floor, Boston, MA 02199-7614</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 2</HD> <FP SOURCE="FP-1">(New Jersey, New York, Puerto Rico, Virgin Islands)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of New York</HD> <FP SOURCE="FP-1">101 Park Avenue, New York, NY 10178-0599</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 3</HD> <FP SOURCE="FP-1">(Delaware, Pennsylvania, West Virginia)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Pittsburgh</HD> <FP SOURCE="FP-1">601 Grant Street, Pittsburgh, PA 15219-4455</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 4</HD> <FP SOURCE="FP-1">(Alabama, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Atlanta</HD> <FP SOURCE="FP-1">1475 Peachtree Street, NE., Atlanta, GA 30309</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 5</HD> <FP SOURCE="FP-1">(Kentucky, Ohio, Tennessee)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Cincinnati</HD> <FP SOURCE="FP-1">221 East Fourth Street, Suite 1000, Cincinnati, OH 45202</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 6</HD> <FP SOURCE="FP-1">(Indiana, Michigan)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Indianapolis</HD> <FP SOURCE="FP-1">8250 Woodfield Crossing Boulevard, Indianapolis, IN 46240</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 7</HD> <FP SOURCE="FP-1">(Illinois, Wisconsin)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Chicago</HD> <FP SOURCE="FP-1">111 East Wacker Drive, Suite 700, Chicago, IL 60601</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 8</HD> <FP SOURCE="FP-1">(Iowa, Minnesota, Missouri, North Dakota, South Dakota)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Des Moines</HD> <FP SOURCE="FP-1">907 Walnut Street, Des Moines, IA 50309</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 9</HD> <FP SOURCE="FP-1">(Arkansas, Louisiana, Mississippi, New Mexico, Texas)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Dallas</HD> <FP SOURCE="FP-1">8500 Freeport Parkway South, Suite 100, Irving, TX 75063-2547</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 10</HD> <FP SOURCE="FP-1">(Colorado, Kansas, Nebraska, Oklahoma)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Topeka</HD> <FP SOURCE="FP-1">One Security Benefit Place, Suite 100, Topeka, KS 66606-2444</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 11</HD> <FP SOURCE="FP-1">(Arizona, California, Nevada)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of San Francisco</HD> <FP SOURCE="FP-1">600 California Street, San Francisco, CA 94108</FP> <HD SOURCE="HD1">Federal Home Loan Bank District 12</HD> <FP SOURCE="FP-1">(Alaska, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Hawaii, Idaho, Montana, Oregon, Utah, Washington, Wyoming)</FP> <HD SOURCE="HD2">Federal Home Loan Bank of Seattle</HD> <FP SOURCE="FP-1">1501 Fourth Avenue, 19th Floor, Seattle, WA 98101-1693</FP> <CITA>[56 FR 67155, Dec. 30, 1991, as amended at 63 FR 3455, Jan. 23, 1998; 67 FR 12843, Mar. 20, 2002; 68 FR 38170, June 27, 2003]</CITA> </APPENDIX> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—General Organization</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>68 FR 38170, June 27, 2003, unless otherwise noted.</P> </SOURCE> <SECTION> <PRTPAGE P="10"/> <SECTNO>§ 905.10</SECTNO> <SUBJECT>Board of Directors.</SUBJECT> <P>(a) <E T="03">Board of Directors</E>—(1) <E T="03">General.</E> The Bank Act vests management of the Finance Board in a five-member Board of Directors consisting of four members appointed by the President with the advice and consent of the Senate to serve staggered seven-year terms, and one <E T="03">ex-officio</E> member, the Secretary of the U.S. Department of Housing and Urban Development. The four appointed directors must have backgrounds in housing finance or a demonstrated commitment to providing specialized housing credit and at least one appointed 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, housing or financial consumer protections. Not more than three of the five directors may belong to the same political party.</P> <P>(2) <E T="03">Responsibilities.</E> The Board of Directors is responsible for setting agency policy and issuing resolutions, rules, regulations, orders and policies as necessary.</P> <P>(b) <E T="03">Chairperson</E>—(1) <E T="03">General.</E> The President designates an appointed director as chairperson of the Board of Directors.</P> <P>(2) <E T="03">Responsibilities.</E> The responsibilities of the chairperson include:</P> <P>(i) Presiding over the meetings of the Board of Directors;</P> <P>(ii) Effecting the overall management, functioning and organization of the Finance Board;</P> <P>(iii) Ensuring effective coordination and communication with the Congress and interest groups on legislative issues pertaining to the Finance Board, the Bank System, and the Financing Corporation; and</P> <P>(iv) Disseminating information about the Finance Board to other government agencies, the public and the news media.</P> </SECTION> <SECTION> <SECTNO>§ 905.11</SECTNO> <SUBJECT>Office of Inspector General.</SUBJECT> <P>(a) <E T="03">General.</E> The Inspector General reports directly to the chairperson of the Board of Directors and is subject to, and operates under, the provisions of the Inspector General Act of 1978, as amended (5 U.S.C. app. 3).</P> <P>(b) <E T="03">Responsibilities.</E> The responsibilities of the Office of Inspector General under the Inspector General Act include:</P> <P>(1) Conducting and supervising audits and investigations relating to the programs and operations of the Finance Board;</P> <P>(2) Providing leadership and coordination, and recommending policies for Finance Board activities designed to promote the economy, efficiency and effectiveness of programs and operations, and preventing and detecting fraud and abuse in programs and operations; and</P> <P>(3) Providing a means for keeping the Board of Directors, agency managers and the Congress fully and currently informed regarding on-going investigations and, if needed, the necessity for and progress of corrective action.</P> </SECTION> <SECTION> <SECTNO>§ 905.12</SECTNO> <SUBJECT>Office of Management.</SUBJECT> <P>(a) <E T="03">General.</E> The Office of Management is the principal advisor to the chairperson and the Board of Directors on management and organizational policies and is responsible for the Finance Board's administrative management programs.</P> <P>(b) <E T="03">Responsibilities.</E> The responsibilities of the Office of Management include:</P> <P>(1) 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;</P> <P>(2) Facilities and property management and supply requirements;</P> <P>(3) Procurement and contracting programs;</P> <P>(4) Agency financial management, budgeting and accounting;</P> <P>(5) Records management; and</P> <P>(6) Coordinating the design, programming, operation and maintenance of the Finance Board's technology and information systems.</P> </SECTION> <SECTION> <SECTNO>§ 905.13</SECTNO> <SUBJECT>Office of Supervision.</SUBJECT> <P>(a) <E T="03">General.</E> The Office of Supervision is responsible for conducting on-site examinations of the twelve Federal <PRTPAGE P="11"/>Home Loan Banks and the Office of Finance and conducting off-site monitoring and analysis. The Office of Supervision also is responsible for providing expert policy advice and analyzing and reporting on economic, housing finance, community investment and competitive environments in which the Bank System and its members operate.</P> <P>(b) <E T="03">Responsibilities.</E> The responsibilities of the Office of Supervision include:</P> <P>(1) Conducting examinations, at least annually, of the Banks, the Office of Finance and the Financing Corporation and resolving outstanding examination issues;</P> <P>(2) Monitoring Bank and Bank System market, credit and operational risks;</P> <P>(3) Analyzing the financial performance of the Banks;</P> <P>(4) Preparing the Monthly Survey of Rates and Terms of Conventional One-Family Nonfarm Mortgage Loans (MIRS) and determining the conforming loan limit for Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) purchases and guarantees;</P> <P>(5) Analyzing the Banks' performance and policy issues arising under the Affordable Housing Program and the Community Investment Program; and</P> <P>(6) Collecting and analyzing data on the housing and community and economic development activities of the Banks.</P> </SECTION> <SECTION> <SECTNO>§ 905.14</SECTNO> <SUBJECT>Office of General Counsel.</SUBJECT> <P>(a) <E T="03">General.</E> The General Counsel is the chief legal officer of the Finance Board and is responsible for advising the Board of Directors, the chairperson and other Finance Board officials on interpretations of law, regulation and policy.</P> <P>(b) <E T="03">Responsibilities.</E> The responsibilities of the Office of General Counsel include:</P> <P>(1) Preparing all legal documents on behalf of the Finance Board such as opinions, regulations and memoranda of law;</P> <P>(2) Representing the Finance Board in all administrative adjudicatory proceedings before the Board of Directors and in all other administrative matters involving the agency;</P> <P>(3) Representing the Finance Board in judicial proceedings involving the agency's supervisory or regulatory authority over the Federal Home Loan Banks;</P> <P>(4) Administering the Finance Board's Ethics, Freedom of Information Act, Privacy Act, Paperwork Reduction Act, and Government in the Sunshine Act programs; and</P> <P>(5) Secretary to the Board functions.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Miscellaneous</HD> <SECTION> <SECTNO>§ 905.25</SECTNO> <SUBJECT>Forms.</SUBJECT> <P>The following forms are available at the Finance Board headquarters facility and shall be used for the purpose indicated:</P> <EXTRACT> <HD SOURCE="HD1">Form</HD> <FP SOURCE="FP-2">10-91—Monthly Survey of Rates and Terms on Conventional 1 Family Nonfarm Mortgage Loans.</FP> <FP SOURCE="FP-2">9102—Certificate of Nomination, Election of Federal Home Loan Bank Directors.</FP> <FP SOURCE="FP-2">9103—Election Ballot, Election of Federal Home Loan Bank Directors.</FP> <FP SOURCE="FP-2">A-1—Appointive Director Candidates—Personal Certification and Disclosure Form.</FP> <FP SOURCE="FP-2">E-1—Elective Director Nominees—Personal Certification and Disclosure Form.</FP> <FP SOURCE="FP-2">90-T04—Local Travel Claim.</FP> </EXTRACT> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 905.26</SECTNO> <SUBJECT>Official logo and seal.</SUBJECT> <P>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.</P> <P>(a) <E T="03">Description.</E> 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 <PRTPAGE P="12"/>HOUSING FINANCE BOARD” in capital letters with serifs, with two mullets on the extreme left and right of the scroll.</P> <P>(b) <E T="03">Display.</E> The Finance Board's official seal and logo appears below:</P> <GPH DEEP="126" SPAN="1"> <GID>ER20MR02.004</GID> </GPH> <CITA>[67 FR 12843, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 905.27</SECTNO> <SUBJECT>OMB control numbers assigned under the Paperwork Reduction Act.</SUBJECT> <P>(a) <E T="03">Purpose</E>. This section collects and displays the control numbers assigned to information collection requirements contained in Finance Board regulations by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) and OMB regulations (5 CFR 1320.5 and 1320.8). The Finance Board may not sponsor or conduct, and a person is not required to respond to, an information collection unless the agency displays a currently valid OMB control number.</P> <P>(b) <E T="03">Display</E>.</P> <GPOTABLE CDEF="s25,10,xs40" COLS="3" OPTS="L2"> <BOXHD> <CHED H="1">12 CFR part or section where identified and<LI>described</LI> </CHED> <CHED H="1">OMB<LI>control No.</LI> </CHED> <CHED H="1">Expiration date</CHED> </BOXHD> <ROW> <ENT I="01">906.5</ENT> <ENT>3069-0001</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">915.3</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.4</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.5</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.6</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.7</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.8</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.10</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">915.12</ENT> <ENT>3069-0002</ENT> <ENT>Nov. 2007.</ENT> </ROW> <ROW> <ENT I="01">925.2</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.3</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.5</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.6</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.7</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.8</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.9</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.11</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.12</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.13</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.15</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.16</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.17</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.18</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.22</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.24</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.26</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">925.31</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">926.1</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">926.2</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">926.3</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">926.4</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">926.5</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">926.6</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">931.3</ENT> <ENT>3069-0059</ENT> <ENT>Feb. 2007.</ENT> </ROW> <ROW> <ENT I="01">931.7</ENT> <ENT>3069-0004</ENT> <ENT>May 2007.</ENT> </ROW> <ROW> <ENT I="01">933.2</ENT> <ENT>3069-0059</ENT> <ENT>Feb. 2007.</ENT> </ROW> <ROW> <ENT I="01">944.2</ENT> <ENT>3069-0003</ENT> <ENT>Feb. 2006.</ENT> </ROW> <ROW> <ENT I="01">944.3</ENT> <ENT>3069-0003</ENT> <ENT>Feb. 2006.</ENT> </ROW> <ROW> <ENT I="01">944.4</ENT> <ENT>3069-0003</ENT> <ENT>Feb. 2006.</ENT> </ROW> <ROW> <ENT I="01">944.5</ENT> <ENT>3069-0003</ENT> <ENT>Feb. 2006.</ENT> </ROW> <ROW> <ENT I="01">950.17</ENT> <ENT>3069-0005</ENT> <ENT>Nov. 2005.</ENT> </ROW> <ROW> <ENT I="01">951.1</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.3</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.4</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.6</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.7</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.8</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.10</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.11</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.13</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">951.15</ENT> <ENT>3069-0006</ENT> <ENT>July 2007.</ENT> </ROW> <ROW> <ENT I="01">955.4</ENT> <ENT>3069-0058</ENT> <ENT>Mar. 2007.</ENT> </ROW> </GPOTABLE> <CITA>[70 FR 9508, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 906</EAR> <HD SOURCE="HED">PART 906—OPERATIONS</HD> <CONTENTS> <SUBPART> <RESERVED>Subpart A [Reserved]</RESERVED> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Monthly Interest Rate Survey (MIRS)</HD> <SECHD>Sec.</SECHD> <SECTNO>906.5</SECTNO> <SUBJECT>Monthly interest rate survey.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Contractor Outreach Program for Businesses Owned by Minorities, Women, or Individuals With Disabilities</HD> <SECTNO>906.10</SECTNO> <SUBJECT>Why does the Finance Board have this outreach program?</SUBJECT> <SECTNO>906.11</SECTNO> <SUBJECT>Who may participate in the outreach program?</SUBJECT> <SECTNO>906.12</SECTNO> <SUBJECT>What outreach efforts are included in this program?</SUBJECT> <SECTNO>906.13</SECTNO> <SUBJECT>How does the Finance Board oversee and monitor the outreach program?</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 4516.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>70 FR 9509, Feb. 28, 2005, unless otherwise noted.</P> </SOURCE> <SUBPART> <RESERVED>Subpart A [Reserved]</RESERVED> </SUBPART> <SUBPART> <PRTPAGE P="13"/> <HD SOURCE="HED">Subpart B—Monthly Interest Rate Survey (MIRS)</HD> <SECTION> <SECTNO>§ 906.5</SECTNO> <SUBJECT>Monthly interest rate survey.</SUBJECT> <P>The Finance Board conducts its Monthly Survey of Rates and Terms on Conventional One-Family Non-farm Mortgage Loans in the following manner:</P> <P>(a) <E T="03">Initial survey</E>. 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 (<E T="03">i.e.</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.</P> <P>(b) <E T="03">Adjustable-rate mortgage index</E>. 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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Contractor Outreach Program for Businesses Owned by Minorities, Women, or Individuals With Disabilities</HD> <SECTION> <SECTNO>§ 906.10</SECTNO> <SUBJECT>Why does the Finance Board have this outreach program?</SUBJECT> <P>The Finance Board awards contracts consistent with the principles of full and open competition and best value acquisition. The purpose of this outreach program is to ensure that minorities, women, and individuals with disabilities, and businesses unconditionally owned by them, have the maximum practicable opportunity to participate fully in all contracts awarded by the Finance Board.</P> </SECTION> <SECTION> <SECTNO>§ 906.11</SECTNO> <SUBJECT>Who may participate in the outreach program?</SUBJECT> <P>Minorities, women, and individuals with disabilities, and businesses unconditionally owned by them, may participate in the outreach program. As used in this subpart:</P> <P>(a) <E T="03">Disability</E> with respect to an individual has the same meaning as defined by the Equal Employment Opportunity Commission at 29 CFR 1630.2(g) and 1630.3.</P> <P>(b) <E T="03">Minority</E> means Black or African American, American Indian or Alaska Native, Hispanic or Latino American, Asian American, and Native Hawaiian or Other Pacific Islander.</P> <P>(c) <E T="03">Unconditional ownership</E> means ownership of at least 51 percent of a business by one or more members of a minority group, women, or individuals with disabilities. In the case of a corporation, it means ownership of at least 51 percent of each class of voting stock. In the case of a partnership, it means ownership of at least 51 percent of the partnership interest.</P> </SECTION> <SECTION> <SECTNO>§ 906.12</SECTNO> <SUBJECT>What outreach efforts are included in this program?</SUBJECT> <P>The Finance Board's outreach program includes the following:</P> <P>(a) Identifying businesses unconditionally owned by minorities, women, and individuals with disabilities by obtaining lists and directories that may be maintained by government agencies, trade groups, and other organizations;</P> <P>(b) Contacting businesses unconditionally owned by minorities, women, and individuals with disabilities to provide information about, and technical assistance to participate in, the Finance Board contracting process;</P> <P>(c) Advertising contracting opportunities with the Finance Board through media targeted to reach businesses unconditionally owned by minorities, women, and individuals with disabilities;<PRTPAGE P="14"/> </P> <P>(d) Participating, to the extent practicable, in events such as conventions, seminars, and professional meetings that are intended primarily to promote business opportunities for minorities, women, and individuals with disabilities, and businesses unconditionally owned by them; and</P> <P>(e) Ensuring that Finance Board contracting staff understand and promote the outreach program.</P> </SECTION> <SECTION> <SECTNO>§ 906.13</SECTNO> <SUBJECT>How does the Finance Board oversee and monitor the outreach program?</SUBJECT> <P>The Chairperson will appoint an Outreach Advocate who will be responsible for program advocacy, oversight, and monitoring. In addition, the Outreach Advocate will be responsible for providing the Finance Board with technical assistance and guidance to facilitate identifying and soliciting participation in the contracting process of minorities, women, and individuals with disabilities, and businesses unconditionally owned by them.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 907</EAR> <HD SOURCE="HED">PART 907—PROCEDURES</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Definitions</HD> <SECHD>Sec.</SECHD> <SECTNO>907.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Waivers, Approvals, No-Action Letters, and Regulatory Interpretations</HD> <SECTNO>907.2</SECTNO> <SUBJECT>Waivers.</SUBJECT> <SECTNO>907.3</SECTNO> <SUBJECT>Approvals.</SUBJECT> <SECTNO>907.4</SECTNO> <SUBJECT>No-Action Letters.</SUBJECT> <SECTNO>907.5</SECTNO> <SUBJECT>Regulatory Interpretations.</SUBJECT> <SECTNO>907.6</SECTNO> <SUBJECT>Submission requirements.</SUBJECT> <SECTNO>907.7</SECTNO> <SUBJECT>Issuance of Waivers, Approvals, No-Action Letters, and Regulatory Interpretations.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Case-by-Case Determinations; Review of Disputed Supervisory Determinations</HD> <SECTNO>907.8</SECTNO> <SUBJECT>Case-by-Case Determinations.</SUBJECT> <SECTNO>907.9</SECTNO> <SUBJECT>Review of Disputed Supervisory Determinations.</SUBJECT> <SECTNO>907.10</SECTNO> <SUBJECT>Petitions.</SUBJECT> <SECTNO>907.11</SECTNO> <SUBJECT>Requests to Intervene.</SUBJECT> <SECTNO>907.12</SECTNO> <SUBJECT>Finance Board procedures.</SUBJECT> <SECTNO>907.13</SECTNO> <SUBJECT>Consideration and Final Decisions.</SUBJECT> <SECTNO>907.14</SECTNO> <SUBJECT>Meetings of the Board of Directors to consider Petitions.</SUBJECT> <SECTNO>907.15</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>907.16</SECTNO> <SUBJECT>Rules of practice.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a)(1).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>64 FR 30883, June 9, 1999, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Nomenclature changes to part 907 appear at 67 FR 12844, Mar. 20, 2002.</P> </EDNOTE> <SUBPART> <HD SOURCE="HED">Subpart A—Definitions</HD> <SECTION> <SECTNO>§ 907.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Approval</E> 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.</P> <P> <E T="03">Case-by-Case Determination</E> 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.</P> <P> <E T="03">Final Decision</E> means a decision rendered by the Board of Directors on issues raised in a Petition or Request to Intervene that have been accepted for consideration.</P> <P> <E T="03">Intervenor</E> 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.</P> <P> <E T="03">Managing Director</E> means the Managing Director of the Finance Board.</P> <P> <E T="03">No-Action Letter</E> 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.</P> <P> <E T="03">Party</E> means a Petitioner, an Intervenor, or the Finance Board.</P> <P> <E T="03">Petition</E> means a Petition for Case-by-Case Determination or a Petition for Review of a Disputed Supervisory Determination.<PRTPAGE P="15"/> </P> <P> <E T="03">Petitioner</E> means the Office of Finance or a Bank that has filed a Petition.</P> <P> <E T="03">Regulatory Interpretation</E> 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.</P> <P> <E T="03">Requester</E> 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.</P> <P> <E T="03">Supervisory determination</E> 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.</P> <P> <E T="03">Waiver</E> 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.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000; 67 FR 12844, Mar. 20, 2002]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Waivers, Approvals, No-Action Letters, and Regulatory Interpretations</HD> <SECTION> <SECTNO>§ 907.2</SECTNO> <SUBJECT>Waivers.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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.</P> <P>(b) <E T="03">Application.</E> A Bank, a Member, or the Office of Finance may apply for a Waiver in accordance with § 907.6.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.3</SECTNO> <SUBJECT>Approvals.</SUBJECT> <P>(a) <E T="03">Application.</E> 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 § 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.</P> <P>(b) <E T="03">Reservation.</E> 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.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.4</SECTNO> <SUBJECT>No-Action Letters.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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 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.</P> <P>(b) <E T="03">Requests.</E> A Bank or the Office of Finance may request a No-Action Letter in accordance with § 907.6.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.5</SECTNO> <SUBJECT>Regulatory Interpretations.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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 <PRTPAGE P="16"/>modify or supersede a Regulatory Interpretation.</P> <P>(b) <E T="03">Requests.</E> 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 § 907.6.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.6</SECTNO> <SUBJECT>Submission requirements.</SUBJECT> <P>Applications for a Waiver or Approval and requests for a No-Action Letter or Regulatory Interpretation shall comply with the following requirements:</P> <P>(a) <E T="03">Filing.</E> 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.</P> <P>(b) <E T="03">Authorization</E>—(1) <E T="03">Waivers and Approvals.</E> 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.</P> <P>(2) <E T="03">Requests for No-Action Letters.</E> 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.</P> <P>(3) <E T="03">Requests for Regulatory Interpretations.</E> The requester or an authorized representative of the requester shall sign a request for a Regulatory Interpretation.</P> <P>(c) <E T="03">Information requirements.</E> Each application or request shall contain:</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(5) A statement of the particular facts and circumstances giving rise to the application or request and identifying all relevant legal and factual issues;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(9) Any non-duplicative, relevant supporting documentation; and</P> <P>(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].”</P> <P>(d) <E T="03">Waiver of requirements.</E> 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.</P> <P>(e) <E T="03">Withdrawal.</E> 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 <PRTPAGE P="17"/>Secretary to the Board to the requester of a response in final form.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000; 67 FR 12844, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.7</SECTNO> <SUBJECT>Issuance of Waivers, Approvals, No-Action Letters, and Regulatory Interpretations.</SUBJECT> <P>(a) <E T="03">Board of Directors review.</E> 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.</P> <P>(b) <E T="03">Issuance and effectiveness.</E> 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.</P> <P>(c) <E T="03">Abbreviated form.</E> 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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Case-by-Case Determinations; Review of Disputed Supervisory Determinations</HD> <SECTION> <SECTNO>§ 907.8</SECTNO> <SUBJECT>Case-by-Case Determinations.</SUBJECT> <P>(a) <E T="03">Petition for Case-by-Case Determination.</E> 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 § 907.10.</P> <P>(b) <E T="03">Intervention.</E> A Member, a Bank, or the Office of Finance may file a Request to Intervene in the consideration of the Petition in accordance with § 907.11 if it believes its rights may be affected.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.9</SECTNO> <SUBJECT>Review of Disputed Supervisory Determinations.</SUBJECT> <P>(a) <E T="03">Petition for Review of a Disputed Supervisory Determination.</E> 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 § 907.10.</P> <P>(b) <E T="03">No stay while Petition is pending.</E> 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 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.</P> <P>(c) <E T="03">Notice to affected entities.</E> 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.</P> <P>(d) <E T="03">Intervention.</E> 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 § 907.11 if it believes its rights may be adversely affected by a Final Decision on the Petition.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <PRTPAGE P="18"/> <SECTNO>§ 907.10</SECTNO> <SUBJECT>Petitions.</SUBJECT> <P>Each Petition brought pursuant to this subpart shall comply with the following requirements:</P> <P>(a) <E T="03">Filing.</E> 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.</P> <P>(b) <E T="03">Information requirements.</E> Each Petition shall contain:</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(5) A statement of the particular facts and circumstances giving rise to the Petition and identifying all relevant legal and factual issues;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(9) A reasoned opinion of counsel supporting the relief or interpretation sought and distinguishing any adverse authority;</P> <P>(10) Any non-duplicative, relevant supporting documentation; and</P> <P>(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].”</P> <P>(c) <E T="03">Authorization.</E> 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.</P> <P>(d) <E T="03">Request to Appear.</E> 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:</P> <P>(1) Identify any questions of fact that are in dispute;</P> <P>(2) Summarize the evidence that would be presented at the meeting; and</P> <P>(3) Identify any proposed witnesses, and state the substance of their anticipated testimony.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.11</SECTNO> <SUBJECT>Requests to Intervene.</SUBJECT> <P>(a) <E T="03">Filing</E>—(1) <E T="03">Date.</E> 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.</P> <P>(2) <E T="03">Information requirements.</E> A Request to Intervene shall include the information required by § 907.10(b), where applicable, and a concise statement of the position and interest of the Intervenor and the grounds for the proposed intervention.</P> <P>(3) <E T="03">Authorization.</E> If the entity requesting intervention is a Bank or the <PRTPAGE P="19"/>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.</P> <P>(4) <E T="03">Request to Appear.</E> 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 § 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.</P> <P>(5) <E T="03">Intervenor is bound.</E> 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 § 907.13(b), subject only to judicial review or as otherwise provided by law.</P> <P>(b) <E T="03">Grounds for approval.</E> 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:</P> <P>(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</P> <P>(2) The entity requesting intervention may be adversely affected by a Final Decision on the Petition.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.12</SECTNO> <SUBJECT>Finance Board procedures.</SUBJECT> <P>(a) <E T="03">Notice of Receipt of Petition or Request to Intervene.</E> 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 <E T="04">Federal Register</E>.</P> <P>(b) <E T="03">Transmittal of filings.</E> 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.</P> <P>(c) <E T="03">Opportunity to cure defects.</E> The Managing Director shall afford the Petitioner or Intervenor a reasonable opportunity to cure any failure to comply with the requirements of § 907.10.</P> <P>(d) <E T="03">Information request.</E> 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.</P> <P>(e) <E T="03">Supplemental information.</E> Upon good cause shown, the Managing Director may grant permission to a Petitioner or Intervenor to submit supplemental written information pertaining to the Petition or Request to Intervene.</P> <P>(f) <E T="03">Consolidation and severance</E>—(1) <E T="03">Consolidation.</E> The Managing Director may consolidate any or all matters at issue in two or more meetings on Petitions where:</P> <P>(i) There exist common parties or common questions of fact or law;</P> <P>(ii) Consolidation would expedite and simplify consideration of the issues; and</P> <P>(iii) Consolidation would not adversely affect the rights of parties engaged in otherwise separate proceedings.</P> <P>(2) <E T="03">Severance.</E> The Managing Director may order any meetings and issues severed with respect to any or all parties or issues.</P> <P>(g) <E T="03">Notice of Board Consideration.</E> Within 30 calendar days of receipt of a Petition deemed by the Managing Director to be in compliance with the requirements of § 907.10, or, if the Petition has been the subject of a request <PRTPAGE P="20"/>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:</P> <P>(1) Identification of the issues accepted for consideration;</P> <P>(2) Any decision to consolidate or sever pursuant to paragraph (f) of this section;</P> <P>(3) Whether the Petition will be considered by the Board of Directors on the written record pursuant to § 907.13(a)(1), or at a meeting pursuant to § 907.13(a)(2); and</P> <P>(4) If the Petition will be considered by the Board of Directors at a meeting:</P> <P>(i) The date, time and place of the meeting; and</P> <P>(ii) A decision as to any Request to Appear filed pursuant to §§ 907.10(d) or 907.11(a)(4).</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.13</SECTNO> <SUBJECT>Consideration and Final Decisions.</SUBJECT> <P>(a) <E T="03">Consideration by Board of Directors.</E> The Board of Directors may consider a Petition and render a decision:</P> <P>(1) Solely on the basis of the written record; or</P> <P>(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 § 907.14.</P> <P>(b) <E T="03">Final Decision.</E> 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.</P> <P>(c) <E T="03">Time periods.</E> 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 § 907.10 or, if the Petition has been the subject of a request under § 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.</P> <P>(d) <E T="03">Transmittal of Final Decision.</E> The Secretary to the Board shall transmit the Final Decision of the Board of Directors to all parties to the submission.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.14</SECTNO> <SUBJECT>Meetings of the Board of Directors to consider Petitions.</SUBJECT> <P>(a) <E T="03">Full and fair opportunity to be heard.</E> 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 be conducted so as to permit an expeditious presentation of such issues.</P> <P>(b) <E T="03">Participation in meeting.</E> (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.</P> <P>(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.</P> <P>(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.<PRTPAGE P="21"/> </P> <P>(c) <E T="03">Chairperson</E>—(1) <E T="03">Presiding officer.</E> 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.</P> <P>(2) <E T="03">Authority of the Chairperson.</E> 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.</P> <P>(3) <E T="03">Board of Directors may overrule the Chairperson.</E> 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.</P> <P>(d) <E T="03">Meeting may be closed.</E> 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).</P> <P>(e) <E T="03">Location of meeting.</E> 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.</P> <P>(f) <E T="03">Presentation of issues</E>—(1) <E T="03">Stipulations.</E> 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.</P> <P>(2) <E T="03">Order of presentation.</E> 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.</P> <P>(g) <E T="03">Record.</E> 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.</P> <P>(h) <E T="03">Admissibility of documents and testimony.</E> (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.</P> <P>(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.</P> <P>(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.</P> <P>(i) <E T="03">Official notice.</E> All matters officially noticed by the Chairperson shall appear on the record.</P> <P>(j) <E T="03">Exhibits and documents</E>—(1) <E T="03">Copies.</E> A legible duplicate copy of a document shall be admissible to the same extent as the original.</P> <P>(2) <E T="03">Exhibits.</E> 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.</P> <P>(3) <E T="03">Identification.</E> 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.</P> <P>(4) <E T="03">Exchange of Exhibits.</E> One copy of each exhibit offered into the record <PRTPAGE P="22"/>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.</P> <P>(5) <E T="03">Authenticity.</E> 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.</P> <P>(k) <E T="03">Sanction for obstruction of the proceedings.</E> 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.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.15</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) <E T="03">Waiver of requirements.</E> 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.</P> <P>(b) <E T="03">Actions of the Managing Director subject to the authority of the Board of Directors.</E> The Board of Directors may overrule any action by the Managing Director under this subpart.</P> <P>(c) <E T="03">Withdrawal.</E> At any time prior to the issuance by the Managing Director of a Notice of Board Consideration pursuant to § 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 § 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.</P> <P>(d) <E T="03">Settlement agreement.</E> (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.</P> <P>(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 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.</P> <P>(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.</P> <P>(e) <E T="03">No rights created; Finance Board not prohibited.</E> 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 <PRTPAGE P="23"/>action with respect to a Bank or the Office of Finance, or its directors, officers, employees or agents, otherwise authorized by law.</P> <P>(f) <E T="03">Exhaustion requirement.</E> 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.</P> <P>(g) <E T="03">Improper conduct prohibited.</E> 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.</P> <P>(h) <E T="03">Costs.</E> 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.</P> <P>(i) <E T="03">Procedures are exclusive.</E> 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.</P> <CITA>[64 FR 30883, June 9, 1999, as amended at 65 FR 8257, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 907.16</SECTNO> <SUBJECT>Rules of practice.</SUBJECT> <P>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</P> <CITA>[67 FR 9903, Mar. 5, 2002]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 908</EAR> <HD SOURCE="HED">PART 908—RULES OF PRACTICE AND PROCEDURE IN HEARINGS ON THE RECORD</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Introduction</HD> <SECHD>Sec.</SECHD> <SECTNO>908.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>908.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>908.3</SECTNO> <SUBJECT>Rules of construction.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Scope and Authority—Enforcement Proceedings</HD> <SECTNO>908.4</SECTNO> <SUBJECT>Cease and desist proceedings.</SUBJECT> <SECTNO>908.5</SECTNO> <SUBJECT>Temporary cease and desist orders.</SUBJECT> <SECTNO>908.6</SECTNO> <SUBJECT>Civil money penalties.</SUBJECT> <SECTNO>908.7</SECTNO> <SUBJECT>Service of notice.</SUBJECT> <SECTNO>908.8</SECTNO> <SUBJECT>Subpoenas.</SUBJECT> <SECTNO>908.9</SECTNO> <SUBJECT>Hearings on the record.</SUBJECT> <SECTNO>908.10</SECTNO> <SUBJECT>Judicial review.</SUBJECT> <SECTNO>908.11</SECTNO> <SUBJECT>Jurisdiction and enforcement.</SUBJECT> <SECTNO>908.12</SECTNO> <SUBJECT>Notice after separation.</SUBJECT> <SECTNO>908.13</SECTNO> <SUBJECT>Public disclosure of final orders.</SUBJECT> <SECTNO>908.14</SECTNO> <SUBJECT>No implied private right of action.</SUBJECT> <SECTNO>908.15-908.19</SECTNO> <SUBJECT>[Reserved]</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—General Rules</HD> <SECTNO>908.20</SECTNO> <SUBJECT>Authority of the Board of Directors.</SUBJECT> <SECTNO>908.21</SECTNO> <SUBJECT>Authority of the presiding officer.</SUBJECT> <SECTNO>908.22</SECTNO> <SUBJECT>Public hearings.</SUBJECT> <SECTNO>908.23</SECTNO> <SUBJECT>Good faith certification.</SUBJECT> <SECTNO>908.24</SECTNO> <SUBJECT>Ex parte communications.</SUBJECT> <SECTNO>908.25</SECTNO> <SUBJECT>Filing of papers.</SUBJECT> <SECTNO>908.26</SECTNO> <SUBJECT>Service of papers.</SUBJECT> <SECTNO>908.27</SECTNO> <SUBJECT>Computing time.</SUBJECT> <SECTNO>908.28</SECTNO> <SUBJECT>Change of time limits.</SUBJECT> <SECTNO>908.29</SECTNO> <SUBJECT>Witness fees and expenses.</SUBJECT> <SECTNO>908.30</SECTNO> <SUBJECT>Settlement or other dispute resolution.</SUBJECT> <SECTNO>908.31</SECTNO> <SUBJECT>Right to supervise the Banks.</SUBJECT> <SECTNO>908.32</SECTNO> <SUBJECT>Collateral attacks on proceedings under this part.</SUBJECT> <SECTNO>908.33-908.39</SECTNO> <SUBJECT>[Reserved]</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Pre-Hearing Proceedings</HD> <SECTNO>908.40</SECTNO> <SUBJECT>Commencement of proceeding and contents of notices.</SUBJECT> <SECTNO>908.41</SECTNO> <SUBJECT>Answer.</SUBJECT> <SECTNO>908.42</SECTNO> <SUBJECT>Amended pleadings.</SUBJECT> <SECTNO>908.43</SECTNO> <SUBJECT>Failure to appear.</SUBJECT> <SECTNO>908.44</SECTNO> <SUBJECT>Consolidation and severance of actions.</SUBJECT> <SECTNO>908.45</SECTNO> <SUBJECT>Motions.</SUBJECT> <SECTNO>908.46</SECTNO> <SUBJECT>Discovery.</SUBJECT> <SECTNO>908.47</SECTNO> <SUBJECT>Request for document discovery from parties.</SUBJECT> <SECTNO>908.48</SECTNO> <SUBJECT>Document subpoenas to nonparties.</SUBJECT> <SECTNO>908.49</SECTNO> <SUBJECT>Deposition of witness unavailable for hearing.</SUBJECT> <SECTNO>908.50</SECTNO> <SUBJECT>Interlocutory review.</SUBJECT> <SECTNO>908.51</SECTNO> <SUBJECT>Summary disposition.</SUBJECT> <SECTNO>908.52</SECTNO> <SUBJECT>Partial summary disposition.</SUBJECT> <SECTNO>908.53</SECTNO> <SUBJECT>Scheduling and prehearing conferences.<PRTPAGE P="24"/> </SUBJECT> <SECTNO>908.54</SECTNO> <SUBJECT>Pre-hearing submissions.</SUBJECT> <SECTNO>908.55</SECTNO> <SUBJECT>Hearing subpoenas.</SUBJECT> <SECTNO>908.56-908.59</SECTNO> <SUBJECT>[Reserved]</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Hearing and Post-hearing Proceedings</HD> <SECTNO>908.60</SECTNO> <SUBJECT>Conduct of hearings.</SUBJECT> <SECTNO>908.61</SECTNO> <SUBJECT>Evidence.</SUBJECT> <SECTNO>908.62</SECTNO> <SUBJECT>Post-hearing filings.</SUBJECT> <SECTNO>908.63</SECTNO> <SUBJECT>Recommended decision and filing of record.</SUBJECT> <SECTNO>908.64</SECTNO> <SUBJECT>Exceptions to recommended decision.</SUBJECT> <SECTNO>908.65</SECTNO> <SUBJECT>Review by Board of Directors.</SUBJECT> <SECTNO>908.66</SECTNO> <SUBJECT>Exhaustion of administrative remedies.</SUBJECT> <SECTNO>908.67</SECTNO> <SUBJECT>Stay of final decision and order pending judicial review.</SUBJECT> <SECTNO>908.68-908.69</SECTNO> <SUBJECT>[Reserved]</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Rules of Practice Before the Finance Board</HD> <SECTNO>908.70</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>908.71</SECTNO> <SUBJECT>Practice before the Finance Board.</SUBJECT> <SECTNO>908.72</SECTNO> <SUBJECT>Appearances and practice in proceedings before the Finance Board.</SUBJECT> <SECTNO>908.73</SECTNO> <SUBJECT>Conflicts of interest.</SUBJECT> <SECTNO>908.74</SECTNO> <SUBJECT>Sanctions.</SUBJECT> <SECTNO>908.75</SECTNO> <SUBJECT>Censure, suspension, disbarment and reinstatement.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>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).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>67 FR 9903, Mar. 5, 2002, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—Introduction</HD> <SECTION> <SECTNO>§ 908.1</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>This part prescribes rules of practice and procedure applicable to any hearing with regard to:</P> <P>(a) Cease and desist proceedings under section 2B(a)(5) of the Act (12 U.S.C. 1422b(a)(5)); or</P> <P>(b) Civil money penalty assessment proceedings under section 2B(a)(5) of the Act (12 U.S.C. 1422b(a)(5)).</P> </SECTION> <SECTION> <SECTNO>§ 908.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this part—</P> <P> <E T="03">Decisional employee</E> 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.</P> <P> <E T="03">Hearing</E> means an adjudicatory proceeding conducted pursuant to this part;</P> <P> <E T="03">Notice</E> 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 § 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.</P> <P> <E T="03">Party</E> means, for purposes of subparts C through F of this part only, the Finance Board or respondent.</P> <P> <E T="03">Person</E> 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.</P> <P> <E T="03">Presiding officer</E> 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.</P> <P> <E T="03">Representative of record</E> 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 § 908.72.</P> <P> <E T="03">Respondent</E> means any person named in a notice of charges or notice of determination to impose civil money penalties issued by the Finance Board.</P> <P> <E T="03">Safety and Soundness Act</E> 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).</P> <P> <E T="03">Violation</E> 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 <PRTPAGE P="25"/>applicable law, regulation, or order of the Finance Board.</P> </SECTION> <SECTION> <SECTNO>§ 908.3</SECTNO> <SUBJECT>Rules of construction.</SUBJECT> <P>For purposes of this part—</P> <P>(a) Any term in the singular includes the plural and the plural includes the singular, if such use would be appropriate;</P> <P>(b) Any use of a masculine, feminine, or neuter gender encompasses all three, if such use would be appropriate; and</P> <P>(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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Scope and Authority—Enforcement Proceedings</HD> <SECTION> <SECTNO>§ 908.4</SECTNO> <SUBJECT>Cease and desist proceedings.</SUBJECT> <P>(a) <E T="03">Notice of charges</E>—(1) <E T="03">Grounds.</E> 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:</P> <P>(i) An unsafe or unsound practice in conducting the business of the Bank;</P> <P>(ii) Any conduct that violates any provision of the Act or any applicable law, order, rule or regulation; or</P> <P>(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.</P> <P>(2) <E T="03">Content of notice of charges.</E> 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 § 908.40.</P> <P>(b) <E T="03">Cease and desist order</E>—(1) <E T="03">Issuance of order.</E> 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 § 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 § 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.</P> <P>(2) <E T="03">Affirmative action.</E> 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—</P> <P>(i) Make restitution or provide reimbursement, indemnification, or guarantee against loss if—</P> <P>(A) The respondent was unjustly enriched in connection with the violation, conduct or practice described in the order; or</P> <P>(B) The violation, conduct or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Finance Board;</P> <P>(ii) Restrict the growth of the Bank;</P> <P>(iii) Dispose of any loan or asset involved;</P> <P>(iv) Rescind any agreement or contract;</P> <P>(v) Employ qualified officers or employees (who may be subject to approval by the Finance Board, as directed by the Finance Board); and</P> <P>(vi) Take such other action as the Finance Board determines to be appropriate.</P> <P>(3) <E T="03">Authority to limit activities.</E> 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.</P> <P>(c) <E T="03">Effective date of order.</E> 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 <PRTPAGE P="26"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.5</SECTNO> <SUBJECT>Temporary cease and desist orders.</SUBJECT> <P>(a) <E T="03">Grounds.</E> 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 § 908.4(b)(2).</P> <P>(b) <E T="03">Incomplete records.</E> 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:</P> <P>(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</P> <P>(2) Take affirmative action to restore the books or records to a complete and accurate state.</P> <P>(c) <E T="03">Effective date.</E> Any temporary order issued pursuant to this section shall become effective upon service upon the respondent.</P> <P>(d) <E T="03">Effective period.</E> (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.</P> <P>(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.</P> <P>(e) <E T="03">Judicial relief.</E> As authorized by section 2B(a)(5) of the Act (12 U.S.C. 1422b(a)(5)) and sections 1372(d) and 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.</P> <P>(f) <E T="03">Enforcement of temporary order.</E> 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)).</P> </SECTION> <SECTION> <SECTNO>§ 908.6</SECTNO> <SUBJECT>Civil money penalties.</SUBJECT> <P>(a) <E T="03">Notice of assessment</E>—(1) <E T="03">Grounds.</E> 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:<PRTPAGE P="27"/> </P> <P>(i) Violates any provision of the Act, or any order, rule, or regulation issued under the Act;</P> <P>(ii) Violates any final or temporary cease and desist order issued by the Finance Board pursuant to the Act;</P> <P>(iii) Violates any written agreement between a Bank and the Finance Board; or</P> <P>(iv) Engages in any conduct that causes or is likely to cause a loss to a Bank.</P> <P>(2) <E T="03">Content of notice.</E> 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 § 908.40.</P> <P>(b) <E T="03">Order assessing penalty.</E> 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 § 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 § 908.43), the Board of Directors may issue and serve upon the respondent an order assessing a civil money penalty.</P> <P>(c) <E T="03">Amount of penalty.</E> (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;</P> <P>(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:</P> <P>(i) Is part of a pattern of misconduct; or</P> <P>(ii) Involved recklessness and caused or would be likely to cause a material loss to a Bank; or</P> <P>(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.</P> <P>(d) <E T="03">Factors in determining the amount of the penalty.</E> 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.</P> <P>(e) <E T="03">Judicial relief.</E> Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 1422b(a)(5)) 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 § 908.10, in accordance with section 1374 of the Safety and Soundness Act (12 U.S.C. 4634).</P> <P>(f) <E T="03">Judicial enforcement of an order imposing a penalty.</E> 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:</P> <P>(1) After the order is final and no longer subject to judicial review under § 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;</P> <P>(2) The Finance Board may, in addition, seek such other relief as may be available from the District Court;<PRTPAGE P="28"/> </P> <P>(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</P> <P>(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.</P> <P>(g) <E T="03">Board of Directors' authority to review.</E> The Board of Directors may:</P> <P>(1) Review any order to assess a civil money penalty or any interlocutory ruling arising from a hearing on the record, or</P> <P>(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.</P> <P>(h) <E T="03">Availability of other remedies.</E> 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.</P> <P>(i) <E T="03">Prohibition of reimbursement or indemnification.</E> 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.</P> <P>(j) <E T="03">Applicability.</E> Any penalty under this part may be imposed only for conduct or violations occurring after November 12, 1999.</P> <P>(k) <E T="03">Adjustment of civil money penalties by the rate of inflation.</E> 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).</P> </SECTION> <SECTION> <SECTNO>§ 908.7</SECTNO> <SUBJECT>Service of notice.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.8</SECTNO> <SUBJECT>Subpoenas.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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:</P> <P>(1) To administer oaths and affirmations;</P> <P>(2) To take and preserve testimony under oath;</P> <P>(3) To issue subpoenas and subpoenas <E T="03">duces tecum</E>; and</P> <P>(4) To revoke, quash, or modify subpoenas and subpoenas <E T="03">duces tecum</E> issued by the Finance Board pursuant to this part.</P> <P>(b) <E T="03">Witnesses and documents.</E> 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.</P> <P>(c) <E T="03">Enforcement.</E> 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 <E T="03">duces tecum</E> 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 <E T="03">duces tecum.</E> </P> <P>(d) <E T="03">Fees and expenses.</E> 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 <PRTPAGE P="29"/>expenses shall be paid by the Bank or from its assets.</P> </SECTION> <SECTION> <SECTNO>§ 908.9</SECTNO> <SUBJECT>Hearings on the record.</SUBJECT> <P>(a) <E T="03">Requirements</E>—(1) <E T="03">Venue and record.</E> 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 §§ 908.4 or 908.6 shall be held on the record and in the District of Columbia.</P> <P>(2) <E T="03">Timing.</E> 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.</P> <P>(3) <E T="03">Procedure.</E> Any hearing held pursuant to §§ 908.4 or 908.6 shall be conducted in accordance with chapter 5 of Title 5 of the United States Code.</P> <P>(4) <E T="03">Failure to appear.</E> 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.</P> <P>(5) <E T="03">Open to the public.</E> 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.</P> <P>(b) <E T="03">Issuance of final order.</E> 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.</P> <P>(c) <E T="03">Judicial review and modification of final orders.</E> Judicial review of any such final decision and order shall be exclusively as provided for in § 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 § 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.10</SECTNO> <SUBJECT>Judicial review.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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 §§ 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 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.</P> <P>(b) <E T="03">Filing of record.</E> 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).</P> <P>(c) <E T="03">Jurisdiction.</E> 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 § 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.</P> <P>(d) <E T="03">Review.</E> 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 <E T="03">et seq.</E>).</P> <P>(e) <E T="03">Order to pay civil money penalty.</E> In connection with its review of a final order pursuant to this part, the court <PRTPAGE P="30"/>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.</P> <P>(f) <E T="03">No automatic stay.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.11</SECTNO> <SUBJECT>Jurisdiction and enforcement.</SUBJECT> <P>(a) <E T="03">Enforcement.</E> 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.</P> <P>(b) <E T="03">Limitation on jurisdiction.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.12</SECTNO> <SUBJECT>Notice after separation.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.13</SECTNO> <SUBJECT>Public disclosure of final orders.</SUBJECT> <P>(a) <E T="03">In general.</E> The Finance Board shall make available to the public—</P> <P>(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;</P> <P>(2) Any order that is issued by the Board of Directors and that has become final in accordance with this part; and</P> <P>(3) Any modification to or termination of any final order made public pursuant to this part.</P> <P>(b) <E T="03">Delay of public disclosure under exceptional circumstances.</E> If the Finance Board determines in writing that the 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.</P> <P>(c) <E T="03">Documents filed under seal.</E> 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.</P> <P>(d) <E T="03">Retention of documents.</E> 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.</P> <P>(e) <E T="03">Disclosure to Congress.</E> 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.</P> </SECTION> <SECTION> <PRTPAGE P="31"/> <SECTNO>§ 908.14</SECTNO> <SUBJECT>No implied private right of action.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§§ 908.15-908.19</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—General Rules</HD> <SECTION> <SECTNO>§ 908.20</SECTNO> <SUBJECT>Authority of the Board of Directors.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.21</SECTNO> <SUBJECT>Authority of the presiding officer.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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.</P> <P>(b) <E T="03">Powers.</E> 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—</P> <P>(1) Set and change the date, time and place of the hearing upon reasonable notice to the parties;</P> <P>(2) Continue or recess the hearing in whole or in part for a reasonable period of time;</P> <P>(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;</P> <P>(4) Administer oaths and affirmations;</P> <P>(5) Issue subpoenas, subpoenas <E T="03">duces tecum,</E> and protective orders, as authorized by this part, and to revoke, quash, or modify such subpoenas;</P> <P>(6) Take and preserve testimony under oath;</P> <P>(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;</P> <P>(8) Regulate the scope and timing of discovery;</P> <P>(9) Regulate the course of the hearing and the conduct of representatives and parties;</P> <P>(10) Examine witnesses;</P> <P>(11) Receive, exclude, limit, or otherwise rule on evidence;</P> <P>(12) Upon motion of a party, take official notice of facts;</P> <P>(13) Recuse herself/himself upon motion made by a party or on her or his own motion;</P> <P>(14) Prepare and present to the Board of Directors a recommended decision as provided in this part;</P> <P>(15) Establish time, place and manner limitations on the attendance of the public and the media for any public hearing; and</P> <P>(16) Do all other things necessary and appropriate to discharge the duties of a presiding officer.</P> </SECTION> <SECTION> <SECTNO>§ 908.22</SECTNO> <SUBJECT>Public hearings.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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 <E T="03">sua sponte</E> at any time by written notice to all parties.</P> <P>(b) <E T="03">Motion for closed hearing.</E> 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 § 908.45.<PRTPAGE P="32"/> </P> <P>(c) <E T="03">Filing documents under seal.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.23</SECTNO> <SUBJECT>Good faith certification.</SUBJECT> <P>(a) <E T="03">General requirement.</E> 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.</P> <P>(b) <E T="03">Effect of signature.</E> (1) By signing a document, the representative of record or party certifies that—</P> <P>(i) The representative of record or party has read the filing or submission of record;</P> <P>(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</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Effect of making oral motion or argument.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.24</SECTNO> <SUBJECT>Ex parte communications.</SUBJECT> <P>(a) <E T="03">Definition.</E>(1) <E T="03">Ex parte</E> 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—</P> <P>(i) An interested person outside the Finance Board (including the person's representative); and</P> <P>(ii) The presiding officer handling the proceeding, the Board of Directors or 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.</P> <P>(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 <E T="03">ex parte</E> communication.</P> <P>(b) <E T="03">Prohibition of ex parte communications.</E> 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 § 908.65, no person referred to in paragraph (a)(1)(i) of this section shall knowingly make or cause to be made an <E T="03">ex parte</E> 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 <E T="03">ex parte</E> communication.</P> <P>(c) <E T="03">Procedure upon occurrence of ex parte communication.</E> If an <E T="03">ex parte</E> 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 <PRTPAGE P="33"/>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 <E T="03">ex parte</E> 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.</P> <P>(d) <E T="03">Sanctions.</E> Any party or representative for a party who makes an <E T="03">ex parte</E> 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.</P> <P>(e) <E T="03">Consultations by presiding officer.</E> Except to the extent required for the disposition of <E T="03">ex parte</E> 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.</P> <P>(f) <E T="03">Separation of functions.</E> 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 § 908.65, except as a witness or counsel in a hearing.</P> </SECTION> <SECTION> <SECTNO>§ 908.25</SECTNO> <SUBJECT>Filing of papers.</SUBJECT> <P>(a) <E T="03">Filing.</E> 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.</P> <P>(b) <E T="03">Manner of filing.</E> Unless otherwise specified by the Finance Board or the presiding officer, filing shall be accomplished by:</P> <P>(1) Personal service;</P> <P>(2) Delivery to the U.S. Postal Service or to a reliable commercial delivery service for same day or overnight delivery;</P> <P>(3) Mailing by first class, registered, or certified mail; or</P> <P>(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.</P> <P>(c) <E T="03">Formal requirements as to papers filed</E>—(1) <E T="03">Form.</E> 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<FR>1/2</FR> × 11-inch paper and must be clear and legible.</P> <P>(2) <E T="03">Signature.</E> All papers must be dated and signed as provided in § 908.23.</P> <P>(3) <E T="03">Caption.</E> All papers filed must include at the head thereof, or on a title 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.</P> <P>(4) <E T="03">Number of copies.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.26</SECTNO> <SUBJECT>Service of papers.</SUBJECT> <P>(a) <E T="03">By the parties.</E> 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.</P> <P>(b) <E T="03">Method of service.</E> 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:</P> <P>(1) Personal service;</P> <P>(2) Delivery to the U.S. Postal Service or to a reliable commercial delivery service for same day or overnight delivery;</P> <P>(3) Mailing by first class, registered, or certified mail; or</P> <P>(4) Transmission by electronic media, only if the parties mutually agree. Any papers served by electronic media shall <PRTPAGE P="34"/>also concurrently be served in accordance with the requirements of § 908.25(c).</P> <P>(c) <E T="03">By the Finance Board or the presiding officer.</E> (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 § 908.72 may be served by any means specified in paragraph (b) of this section.</P> <P>(2) If a notice of appearance has not been filed in the proceeding for a party in accordance with § 908.72, the Finance Board or the presiding officer shall make service upon such party by any of the following methods:</P> <P>(i) By personal service;</P> <P>(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;</P> <P>(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;</P> <P>(iv) By registered or certified mail addressed to the person's last known address; or</P> <P>(v) By any other method reasonably calculated to give actual notice.</P> <P>(d) <E T="03">Subpoenas.</E> Subject to applicable provisions in this part, service of a subpoena may be made:</P> <P>(1) By personal service;</P> <P>(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;</P> <P>(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;</P> <P>(4) By registered or certified mail addressed to the person's last known address; or</P> <P>(5) By any other method reasonably calculated to give actual notice.</P> <P>(e) <E T="03">Area of service.</E> 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.</P> <P>(f) <E T="03">Proof of service.</E> 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 supplied, unless to do so would result in material prejudice to a party.</P> </SECTION> <SECTION> <SECTNO>§ 908.27</SECTNO> <SUBJECT>Computing time.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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.</P> <P>(b) <E T="03">When papers are deemed to be filed or served.</E> (1) Filing and service are deemed to be effective—</P> <P>(i) In the case of personal service or same day reliable commercial delivery service, upon actual service;<PRTPAGE P="35"/> </P> <P>(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</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Calculation of time for service and filing of responsive papers.</E> 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:</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 908.28</SECTNO> <SUBJECT>Change of time limits.</SUBJECT> <P>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 § 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.29</SECTNO> <SUBJECT>Witness fees and expenses.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.30</SECTNO> <SUBJECT>Settlement or other dispute resolution.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.31</SECTNO> <SUBJECT>Right to supervise the Banks.</SUBJECT> <P>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 <PRTPAGE P="36"/>orders or directives pursuant to section 2B(a)(1), or any other provision, of the Act (12 U.S.C. 1422b(a)(1)).</P> </SECTION> <SECTION> <SECTNO>§ 908.32</SECTNO> <SUBJECT>Collateral attacks on proceedings under this part.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§§ 908.33-908.39</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Pre-Hearing Proceedings</HD> <SECTION> <SECTNO>§ 908.40</SECTNO> <SUBJECT>Commencement of proceeding and contents of notices.</SUBJECT> <P>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 § 908.7 shall state all of the following:</P> <P>(a) The legal authority for the proceeding and for the Finance Board's jurisdiction over the proceeding;</P> <P>(b) A statement of the matters of fact or law showing that the Finance Board is entitled to relief;</P> <P>(c) A proposed order or prayer for an order granting the requested relief;</P> <P>(d) The time, place and nature of the hearing;</P> <P>(e) The time within which to file an answer;</P> <P>(f) The time within which to request a hearing; and</P> <P>(g) The address for filing the answer and/or request for a hearing.</P> </SECTION> <SECTION> <SECTNO>§ 908.41</SECTNO> <SUBJECT>Answer.</SUBJECT> <P>(a) <E T="03">Deadline for filing answer.</E> Unless otherwise specified by the Finance Board in the notice, respondent shall file an answer within twenty (20) days of service of the notice.</P> <P>(b) <E T="03">Content of answer.</E> 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 prayer for relief or proposed order. The answer shall set forth affirmative defenses, if any, asserted by the respondent.</P> <P>(c) <E T="03">Default.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.42</SECTNO> <SUBJECT>Amended pleadings.</SUBJECT> <P>(a) <E T="03">Amendments.</E> The notice or answer may be amended or supplemented by the Finance Board prior to the scheduling conference held in accordance with § 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.</P> <P>(b) <E T="03">Amendments to conform to the evidence.</E> When issues not raised in the notice or answer are tried at the hearing <PRTPAGE P="37"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.43</SECTNO> <SUBJECT>Failure to appear.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.44</SECTNO> <SUBJECT>Consolidation and severance of actions.</SUBJECT> <P>(a) <E T="03">Consolidation.</E> 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.</P> <P>(b) <E T="03">Severance.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.45</SECTNO> <SUBJECT>Motions.</SUBJECT> <P>(a) <E T="03">Written motions.</E> (1) Except as otherwise provided herein, an application or request for an order or ruling must be made by written motion.</P> <P>(2) All written motions shall state with particularity the relief sought and must be accompanied by a proposed order.</P> <P>(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.</P> <P>(b) <E T="03">Oral motions.</E> 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.</P> <P>(c) <E T="03">Filing of motions.</E> 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 § 908.64.</P> <P>(d) <E T="03">Responses.</E> (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.</P> <P>(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 <PRTPAGE P="38"/>substantially in the form of the order accompanying the motion.</P> <P>(e) <E T="03">Dilatory motions.</E> Frivolous, dilatory, or repetitive motions are prohibited. The filing of such motions may form the basis for sanctions.</P> <P>(f) <E T="03">Dispositive motions.</E> Dispositive motions shall be governed by §§ 908.51 and 908.52.</P> </SECTION> <SECTION> <SECTNO>§ 908.46</SECTNO> <SUBJECT>Discovery.</SUBJECT> <P>(a) <E T="03">Limits on discovery.</E> 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 <E T="03">documents</E> 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.</P> <P>(b) <E T="03">Relevance.</E> 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 § 908.47.</P> <P>(c) <E T="03">Forms of discovery.</E> 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.</P> <P>(d) <E T="03">Privileged matter.</E> 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.</P> <P>(e) <E T="03">Time limits.</E> 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 § 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.47</SECTNO> <SUBJECT>Request for document discovery from parties.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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.</P> <P>(b) <E T="03">Production or copying.</E> 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 <PRTPAGE P="39"/>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 § 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.</P> <P>(c) <E T="03">Obligation to update responses.</E> A party who has responded to a discovery request is not required to supplement the response, unless:</P> <P>(1) The responding party learns that in some material respect the information disclosed is incomplete or incorrect, and</P> <P>(2) The additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.</P> <P>(d) <E T="03">Motions to strike or limit discovery requests.</E> (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 § 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 § 908.45 are waived.</P> <P>(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.</P> <P>(e) <E T="03">Privilege.</E> 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.</P> <P>(f) <E T="03">Motions to compel production.</E> (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 § 908.45 for the issuance of a subpoena compelling production.</P> <P>(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 written response to the motion. No other party may file a response.</P> <P>(g) <E T="03">Ruling on motions.</E> 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.</P> <P>(h) <E T="03">Enforcing discovery subpoenas.</E> 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 <PRTPAGE P="40"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.48</SECTNO> <SUBJECT>Document subpoenas to nonparties.</SUBJECT> <P>(a) <E T="03">General rules.</E> (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.</P> <P>(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 § 908.46(e) and in accordance with § 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.</P> <P>(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.</P> <P>(b) <E T="03">Motion to quash or modify.</E> (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.</P> <P>(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 § 908.47 and during the same time limits during which such an objection could be filed.</P> <P>(c) <E T="03">Enforcing document subpoenas.</E> 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 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.49</SECTNO> <SUBJECT>Deposition of witness unavailable for hearing.</SUBJECT> <P>(a) <E T="03">General rules.</E> (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 <E T="03">duces tecum,</E> requiring the attendance of the witness at a deposition. The presiding officer may issue a deposition subpoena under this section upon a showing that—</P> <P>(i) The testimony is reasonably expected to be material; and</P> <P>(ii) Taking the deposition will not result in any undue burden to any other party and will not cause undue delay of the proceeding.</P> <P>(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 <PRTPAGE P="41"/>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.</P> <P>(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.</P> <P>(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.</P> <P>(b) <E T="03">Objections to deposition subpoenas.</E> (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 § 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.</P> <P>(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.</P> <P>(c) <E T="03">Procedure upon deposition.</E> (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.</P> <P>(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.</P> <P>(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 by the witness, the court reporter taking the deposition shall certify that the transcript is a true and complete transcript of the deposition.</P> <P>(d) <E T="03">Enforcing subpoenas.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.50</SECTNO> <SUBJECT>Interlocutory review.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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.</P> <P>(b) <E T="03">Procedure.</E> 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 <PRTPAGE P="42"/>asserted grounds for interlocutory review of the ruling in question.</P> <P>(c) <E T="03">Scope of review.</E> The Board of Directors may exercise interlocutory review of a ruling of the presiding officer if it finds that—</P> <P>(1) The ruling involves a controlling question of law or policy as to which substantial grounds exist for a difference of opinion;</P> <P>(2) Immediate review of the ruling may materially advance the ultimate termination of the proceeding;</P> <P>(3) Subsequent modification of the ruling at the conclusion of the proceeding would be an inadequate remedy; or</P> <P>(4) Subsequent modification of the ruling would cause unusual delay or expense.</P> <P>(d) <E T="03">Suspension of proceeding.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.51</SECTNO> <SUBJECT>Summary disposition.</SUBJECT> <P>(a) <E T="03">In general.</E> 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—</P> <P>(1) There is no genuine issue as to any material fact; and</P> <P>(2) The movant is entitled to a decision in its favor as a matter of law.</P> <P>(b) <E T="03">Filing of motions and responses.</E> (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.</P> <P>(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 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.</P> <P>(c) <E T="03">Hearing on motion.</E> At the request of any party or on his own motion, the presiding officer may hear oral argument on the motion for summary disposition.</P> <P>(d) <E T="03">Decision on motion.</E> 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 § 908.63.</P> </SECTION> <SECTION> <SECTNO>§ 908.52</SECTNO> <SUBJECT>Partial summary disposition.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <PRTPAGE P="43"/> <SECTNO>§ 908.53</SECTNO> <SUBJECT>Scheduling and prehearing conferences.</SUBJECT> <P>(a) <E T="03">Scheduling conference.</E> 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.</P> <P>(b) <E T="03">Pre-hearing conference.</E> 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:</P> <P>(1) Simplification and clarification of the issues;</P> <P>(2) Stipulations, admissions of fact and the contents, authenticity and admissibility into evidence of documents;</P> <P>(3) Matters of which official notice may be taken;</P> <P>(4) Limitation of the number of witnesses;</P> <P>(5) Summary disposition of any or all issues;</P> <P>(6) Resolution of discovery issues or disputes;</P> <P>(7) Amendments to pleadings; and</P> <P>(8) Such other matters as may aid in the orderly disposition of the proceeding.</P> <P>(c) <E T="03">Transcript.</E> 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.</P> <P>(d) <E T="03">Scheduling or pre-hearing orders.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.54</SECTNO> <SUBJECT>Pre-hearing submissions.</SUBJECT> <P>(a) <E T="03">Service deadline.</E> 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:</P> <P>(1) Pre-hearing statement;</P> <P>(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;</P> <P>(3) List of the exhibits to be introduced at the hearing along with a copy of each exhibit; and</P> <P>(4) Stipulations of fact, if any.</P> <P>(b) <E T="03">Effect of failure to comply.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.55</SECTNO> <SUBJECT>Hearing subpoenas.</SUBJECT> <P>(a) <E T="03">Issuance.</E> (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 <E T="03">duces tecum</E> 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.</P> <P>(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 <PRTPAGE P="44"/>application for a subpoena orally on the record before the presiding officer.</P> <P>(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.</P> <P>(b) <E T="03">Motion to quash or modify.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Enforcing subpoenas.</E> 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 § 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.</P> </SECTION> <SECTION> <SECTNO>§§ 908.56-908.59</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Hearing and Post-hearing Proceedings</HD> <SECTION> <SECTNO>§ 908.60</SECTNO> <SUBJECT>Conduct of hearings.</SUBJECT> <P>(a) <E T="03">General rules</E>—(1) <E T="03">Hearings.</E> 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.</P> <P>(2) <E T="03">Order of hearing.</E> The Finance Board shall present its case-in-chief 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.</P> <P>(3) <E T="03">Examination of witnesses.</E> 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.</P> <P>(4) <E T="03">Stipulations.</E> 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.</P> <P>(b) <E T="03">Transcript.</E> The hearing shall be recorded and transcribed. The transcript shall be made available to any <PRTPAGE P="45"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 908.61</SECTNO> <SUBJECT>Evidence.</SUBJECT> <P>(a) <E T="03">Admissibility.</E> (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.</P> <P>(2) Evidence that would be admissible under the Federal Rules of Evidence (<E T="03">see generally,</E> 28 U.S.C.) is admissible in a proceeding conducted pursuant to this subpart.</P> <P>(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.</P> <P>(b) <E T="03">Official notice.</E> (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.</P> <P>(2) All matters officially noticed by the presiding officer or the Finance Board shall appear on the record.</P> <P>(3) If official notice is requested of any material fact, the parties, upon timely request, shall be afforded an opportunity to object.</P> <P>(c) <E T="03">Documents.</E> (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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Objections.</E> (1) Objections to the admissibility of evidence must be timely made and rulings on all objections must appear in the record.</P> <P>(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. The proffer may be by representation of the representative or by direct interrogation of the witness.</P> <P>(3) The presiding officer shall retain rejected exhibits, adequately marked for identification, for the record and transmit such exhibits to the Board of Directors.</P> <P>(4) Failure to object to admission of evidence or to any evidentiary ruling constitutes a waiver of the objection.</P> <P>(e) <E T="03">Stipulations.</E> 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.</P> <P>(f) <E T="03">Depositions of unavailable witnesses.</E> (1) If a witness is unavailable to testify at a hearing and that witness has testified in a deposition in accordance with § 908.49, a party may offer as evidence all or any part of the transcript of the deposition, including deposition exhibits, if any.</P> <P>(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.<PRTPAGE P="46"/> </P> <P>(3) Only those portions of a deposition received in evidence at the hearing constitute a part of the record.</P> <CITA>[67 FR 9903, Mar. 5, 2002; 67 FR 34990, May 16, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 908.62</SECTNO> <SUBJECT>Post-hearing filings.</SUBJECT> <P>(a) <E T="03">Proposed findings and conclusions and supporting briefs.</E> (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.</P> <P>(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.</P> <P>(3) Any party is deemed to have waived any issue not raised in proposed findings or conclusions timely filed by that party.</P> <P>(b) <E T="03">Reply briefs.</E> 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.</P> <P>(c) <E T="03">Simultaneous filing required.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.63</SECTNO> <SUBJECT>Recommended decision and filing of record.</SUBJECT> <P>(a) <E T="03">Filing of recommended decision and record.</E> Within forty-five (45) days after expiration of the time allowed for filing reply briefs under § 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.</P> <P>(b) <E T="03">Filing of index.</E> At the same time the presiding officer files with and certifies to the Board of Directors, for final determination, the record of the 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.64</SECTNO> <SUBJECT>Exceptions to recommended decision.</SUBJECT> <P>(a) <E T="03">Filing exceptions.</E> Within thirty (30) days after service of the recommended decision, recommended findings and conclusions, and proposed order under § 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 <PRTPAGE P="47"/>may be filed at the time the exceptions are filed, either as part of the same document or in a separate document.</P> <P>(b) <E T="03">Effect of failure to file or raise exceptions.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Contents.</E> (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.</P> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 908.65</SECTNO> <SUBJECT>Review by Board of Directors.</SUBJECT> <P>(a) <E T="03">Notice of submission to the Board of Directors.</E> 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.</P> <P>(b) <E T="03">Oral argument before the Board of Directors.</E> 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 § 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.</P> <P>(c) <E T="03">Board of Directors' final decision and order.</E> (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 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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 908.66</SECTNO> <SUBJECT>Exhaustion of administrative remedies.</SUBJECT> <P>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 § 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 § 908.65.</P> </SECTION> <SECTION> <PRTPAGE P="48"/> <SECTNO>§ 908.67</SECTNO> <SUBJECT>Stay of final decision and order pending judicial review.</SUBJECT> <P>The commencement of proceedings for judicial review of all or part of a final order issued by the Board of Directors in accordance with § 908.65, as provided in § 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.</P> </SECTION> <SECTION> <SECTNO>§§ 908.68-908.69</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Rules of Practice Before the Finance Board</HD> <SECTION> <SECTNO>§ 908.70</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>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, §§ 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.71</SECTNO> <SUBJECT>Practice before the Finance Board.</SUBJECT> <P>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 Bank for use in the ordinary course of its business.</P> </SECTION> <SECTION> <SECTNO>§ 908.72</SECTNO> <SUBJECT>Appearances and practice in proceedings before the Finance Board.</SUBJECT> <P>(a) <E T="03">Appearances in proceedings before the Finance Board</E>—(1) <E T="03">By attorneys.</E> 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.</P> <P>(2) <E T="03">By non-attorneys.</E> 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.</P> <P>(b) <E T="03">Notice of appearance.</E> 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 <PRTPAGE P="49"/>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 <E T="03">pro se</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.73</SECTNO> <SUBJECT>Conflicts of interest.</SUBJECT> <P>(a) <E T="03">Conflict of interest in representation.</E> 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.</P> <P>(b) <E T="03">Certification and waiver.</E> 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 § 908.72:</P> <P>(1) That the representative has personally and fully discussed the possibility of conflicts of interest with each such party and nonparty;</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 908.74</SECTNO> <SUBJECT>Sanctions.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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—</P> <P>(1) Constitutes contemptuous conduct. Contemptuous conduct includes dilatory, obstructionist, egregious, contumacious, unethical, or other improper conduct at any phase of any proceeding, hearing, or appearance before the Board of Directors;</P> <P>(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;</P> <P>(3) Is a clear and unexcused violation of an applicable statute, regulation, or order; or</P> <P>(4) Has delayed the proceeding unduly.</P> <P>(b) <E T="03">Sanctions.</E> Sanctions that may be imposed include, but are not limited to, any one or more of the following:</P> <P>(1) Issuing an order against a party;</P> <P>(2) Rejecting or striking any testimony or documentary evidence offered, or other papers filed, by the party;</P> <P>(3) Precluding the party from contesting specific issues or findings;</P> <P>(4) Precluding the party from offering certain evidence or from challenging or contesting certain evidence offered by another party;</P> <P>(5) Precluding the party from making a late filing or conditioning a late filing on any terms that may be just; or</P> <P>(6) Assessing reasonable expenses, including attorney's fees, incurred by any other party as a result of the improper action or failure to act.</P> <P>(c) <E T="03">Procedure for imposition of sanctions.</E> (1) The presiding officer, on the <PRTPAGE P="50"/>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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Sanctions for contemptuous conduct.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 908.75</SECTNO> <SUBJECT>Censure, suspension, disbarment and reinstatement.</SUBJECT> <P>(a) <E T="03">Discretionary censure, suspension and disbarment.</E> (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—</P> <P>(i) Not to possess the requisite qualifications or competence to represent others;</P> <P>(ii) To be seriously lacking in character or integrity or to have engaged in material unethical or improper professional conduct;</P> <P>(iii) To have caused unfair and material injury or prejudice to another party, such as prejudicial delay or unnecessary expenses including attorney's fees;</P> <P>(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;</P> <P>(v) To have engaged in contemptuous conduct before the Finance Board;</P> <P>(vi) With intent to defraud in any manner, to have willfully and knowingly deceived, misled, or threatened any client or prospective client; or</P> <P>(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.</P> <P>(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.</P> <P>(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 <PRTPAGE P="51"/>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.</P> <P>(b) <E T="03">Mandatory suspension and disbarment.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Notices to be filed.</E> (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.</P> <P>(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.</P> <P>(d) <E T="03">Reinstatement.</E> (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 this paragraph (d)(1) may, in the Finance Board's sole discretion, be afforded a hearing.</P> <P>(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.</P> <P>(e) <E T="03">Conferences.</E> (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 <PRTPAGE P="52"/>respondent, the stipulation may be entered in the record at the request of either party to the proceeding.</P> <P>(2) <E T="03">Resignation or voluntary suspension.</E> 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.</P> <P>(f) <E T="03">Hearings under this section.</E> 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.</P> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 911</EAR> <HD SOURCE="HED">PART 911—AVAILABILITY OF UNPUBLISHED INFORMATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>911.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>911.2</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <SECTNO>911.3</SECTNO> <SUBJECT>Prohibition on unauthorized use and disclosure of unpublished information.</SUBJECT> <SECTNO>911.4</SECTNO> <SUBJECT>Requests for unpublished information by document or testimony.</SUBJECT> <SECTNO>911.5</SECTNO> <SUBJECT>Consideration of requests.</SUBJECT> <SECTNO>911.6</SECTNO> <SUBJECT>Persons and entities with access to unpublished information.</SUBJECT> <SECTNO>911.7</SECTNO> <SUBJECT>Availability of unpublished information by testimony.</SUBJECT> <SECTNO>911.8</SECTNO> <SUBJECT>Availability of unpublished information by document.</SUBJECT> <SECTNO>911.9</SECTNO> <SUBJECT>Fees.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 301; 12 U.S.C. 1422b(a)(1).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>64 FR 44106, Aug. 13, 1999, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 911.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Legal proceeding</E> 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.</P> <P> <E T="03">Supervised entity</E> means a Bank, the Office of Finance, and the Financing Corporation.</P> <P> <E T="03">Unpublished information</E> 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 <E T="04">Federal Register</E>.</P> <CITA>[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000; 67 FR 12844, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 911.2</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <P>(a) <E T="03">Purpose.</E> The purposes of this part are to:</P> <P>(1) Maintain the confidentiality and control the dissemination of unpublished information;<PRTPAGE P="53"/> </P> <P>(2) Conserve the time of employees for official duties and ensure that Finance Board resources are used in the most efficient manner;</P> <P>(3) Maintain the Finance Board's impartiality among private litigants; and</P> <P>(4) Establish an orderly mechanism for the Finance Board to process expeditiously and respond appropriately to requests for unpublished information.</P> <P>(b) <E T="03">Scope.</E> (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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 911.3</SECTNO> <SUBJECT>Prohibition on unauthorized use and disclosure of unpublished information.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Current and former employees and agents.</E> 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.</P> <P>(c) <E T="03">Other persons or entities possessing unpublished information.</E> (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 information in any manner or for any purpose.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Exception for supervised entities and Bank members.</E> 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:</P> <P>(1) To abide by the prohibition on the disclosure of unpublished information contained in this section; and</P> <P>(2) That it will not to use the unpublished information for any purposes <PRTPAGE P="54"/>other than those stated in its contract to provide services to the supervised entity or Bank member.</P> <P>(e) <E T="03">Government agencies.</E> 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.</P> <CITA>[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000; 67 FR 12844, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 911.4</SECTNO> <SUBJECT>Requests for unpublished information by document or testimony.</SUBJECT> <P>(a) <E T="03">Form of requests.</E> 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:</P> <P>(1) The requested information is highly relevant to the purpose for which it is sought;</P> <P>(2) The requested information is not available from any other source;</P> <P>(3) The need for the information clearly outweighs the need to maintain its confidentiality; and</P> <P>(4) The need for the information clearly outweighs the burden on the Finance Board to produce it.</P> <P>(b) <E T="03">Requests for documents.</E> 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.</P> <P>(c) <E T="03">Requests for testimony.</E> (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.</P> <P>(2) Upon submitting a request to the Finance Board for unpublished information by testimony, the requester must notify all other parties to the matter at issue of the request.</P> <P>(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.</P> <P>(d) <E T="03">Requests in connection with legal proceedings.</E> 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.</P> <P>(e) <E T="03">Expedited requests.</E> 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.</P> <P>(f) <E T="03">Where to submit requests.</E> Send requests for unpublished information to the Office of General Counsel, Federal Housing Finance Board, 1777 F Street, NW., Washington, DC 20006.</P> <P>(g) <E T="03">Additional information</E>—(1) <E T="03">From the requester.</E> 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.<PRTPAGE P="55"/> </P> <P>(2) <E T="03">From others.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 911.5</SECTNO> <SUBJECT>Consideration of requests.</SUBJECT> <P>(a) <E T="03">Discretion.</E> 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.</P> <P>(b) <E T="03">Time to respond.</E> 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.</P> <P>(c) <E T="03">Factors the Finance Board may consider.</E> The factors the Finance Board may consider in making a determination regarding the availability of unpublished information include:</P> <P>(1) Whether and how the requested information is relevant to the purpose for which it is sought;</P> <P>(2) Whether information reasonably suited to the requester's needs other than the requested information is available from another source;</P> <P>(3) Whether the requested information is privileged;</P> <P>(4) If the request is in connection with a legal proceeding, whether the proceeding has been filed;</P> <P>(5) The burden placed on the Finance Board to respond to the request;</P> <P>(6) Whether production of the information would be contrary to the public interest; and</P> <P>(7) Whether the need for the information clearly outweighs the need to maintain the confidentiality of the information.</P> <P>(d) <E T="03">Disclosure of unpublished information by others.</E> 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 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.</P> <P>(e) <E T="03">Notice to supervised entities and Bank members.</E> 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.</P> <CITA>[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 911.6</SECTNO> <SUBJECT>Persons and entities with access to unpublished information.</SUBJECT> <P>(a) <E T="03">Notice to Finance Board.</E> 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.</P> <P>(b) <E T="03">Response of person or entity served with request.</E> Unless the Finance Board has authorized in writing disclosure of the requested information:</P> <P>(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.</P> <P>(2) A non-Finance Board person or entity may not disclose unpublished information unless:</P> <P>(i) The requester has sought the information from the Finance Board under this part; and</P> <P>(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.<PRTPAGE P="56"/> </P> <P>(c) <E T="03">Finance Board response.</E> 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.</P> <CITA>[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 911.7</SECTNO> <SUBJECT>Availability of unpublished information by testimony.</SUBJECT> <P>(a) <E T="03">Scope.</E> (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.</P> <P>(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.</P> <P>(3) The Finance Board generally will not authorize a current employee or agent to provide expert or opinion testimony for a private party.</P> <P>(b) <E T="03">Manner in which testimony is given.</E> (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.</P> <P>(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 employee in accordance with applicable rules of procedure, with a copy by registered or certified mail to the Office of General Counsel.</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Restrictions on use and disclosure.</E> 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.</P> <P>(d) <E T="03">Responsibility of litigants.</E> If the testimony is disclosed in connection with a legal proceeding, the requester is responsible for:</P> <P>(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</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 911.8</SECTNO> <SUBJECT>Availability of unpublished information by document.</SUBJECT> <P>(a) <E T="03">Scope.</E> 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 <PRTPAGE P="57"/>the scope of documents provided is consistent with the written authorization.</P> <P>(b) <E T="03">Restrictions on use and disclosure.</E> 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.</P> <P>(c) <E T="03">Responsibility of litigants.</E> If the documents are disclosed in connection with a legal proceeding, the requester is responsible for:</P> <P>(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</P> <P>(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.</P> <P>(d) <E T="03">Certification or authentication.</E> If the Finance Board has authorized disclosure of unpublished information by document, it will provide certified or authenticated copies of the document upon request.</P> </SECTION> <SECTION> <SECTNO>§ 911.9</SECTNO> <SUBJECT>Fees.</SUBJECT> <P>(a) <E T="03">Fees for records search, copying, and certification.</E> 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 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.”</P> <P>(b) <E T="03">Witness fees and mileage</E>—(1) <E T="03">Current Finance Board or federal employees.</E> 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.</P> <P>(2) <E T="03">Former employees or agents.</E> 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.</P> <CITA>[64 FR 44106, Aug. 13, 1999, as amended at 65 FR 8258, Feb. 18, 2000]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 912</EAR> <HD SOURCE="HED">PART 912—INFORMATION REGARDING MEETINGS OF THE BOARD OF DIRECTORS OF THE FEDERAL HOUSING FINANCE BOARD</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>912.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>912.2</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <SECTNO>912.3</SECTNO> <SUBJECT>Open meetings.</SUBJECT> <SECTNO>912.4</SECTNO> <SUBJECT>Closed meetings.</SUBJECT> <SECTNO>912.5</SECTNO> <SUBJECT>Procedures for closing meetings.</SUBJECT> <SECTNO>912.6</SECTNO> <SUBJECT>Notice of meetings.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 552b.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 19202, Apr. 13, 1993, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <PRTPAGE P="58"/> <SECTNO>§ 912.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Board Director</E> or <E T="03">Director</E> means a member of the Board of Directors.</P> <P> <E T="03">Chairperson</E> includes the Acting Chairperson.</P> <P> <E T="03">Meeting</E> 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:</P> <P>(1) Discussions to determine whether meetings will be open or closed or whether information pertaining to closed meetings will be disclosed;</P> <P>(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</P> <P>(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.</P> <P> <E T="03">Public observation</E> 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.</P> <P> <E T="03">Secretary to the Board</E> includes the Acting Secretary if the position of Secretary is vacant.</P> <P> <E T="03">Sunshine Act</E> means the Government in the Sunshine Act (5 U.S.C. 552b).</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 912.2</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <P>(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.</P> <P>(b) The Board of Directors shall not jointly conduct or dispose of official Finance Board business other than in accordance with this part.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 912.3</SECTNO> <SUBJECT>Open meetings.</SUBJECT> <P>(a) Except as provided in § 912.4, every portion of every meeting of the Board of Directors shall be open to public observation.</P> <P>(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.</P> <CITA>[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 912.4</SECTNO> <SUBJECT>Closed meetings.</SUBJECT> <P>(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:</P> <P>(1) Disclose matters that are:</P> <P>(i) Specifically authorized under criteria established by an Executive Order to be kept secret in the interests of national defense or foreign policy; and</P> <P>(ii) Are, in fact, properly classified pursuant to such Executive Order;</P> <P>(2) Relate solely to the internal personnel rules and practices of the Finance Board;</P> <P>(3) Disclose matters specifically exempt from disclosure by statute (other than the Freedom of Information Act (5 U.S.C. 552)), <E T="03">provided</E> that such statute:</P> <P>(i) Requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or</P> <P>(ii) Establishes particular criteria for withholding matters from the public or refers to particular types of matters to be withheld;</P> <P>(4) Disclose trade secrets or commercial or financial information that is obtained from a person and is privileged or confidential;<PRTPAGE P="59"/> </P> <P>(5) Involve accusing any person of a crime, or formally censuring any person;</P> <P>(6) Disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy;</P> <P>(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:</P> <P>(i) Interfere with enforcement proceedings;</P> <P>(ii) Deprive a person of a right to a fair trial or an impartial adjudication;</P> <P>(iii) Constitute an unwarranted invasion of personal privacy;</P> <P>(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;</P> <P>(v) Disclose investigative techniques and procedures; or</P> <P>(vi) Endanger the life or physical safety of law enforcement personnel;</P> <P>(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;</P> <P>(9) Disclose information the premature disclosure of which would be likely to:</P> <P>(i) (A) Lead to significant financial speculation in currencies, securities, or commodities;</P> <P>(B) Significantly endanger the stability of any of the Banks or any other financial institution; or</P> <P>(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</P> <P>(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.</P> <P>(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.</P> <CITA>[58 FR 19202, Apr. 13, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000, as amended at 67 FR 12844, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 912.5</SECTNO> <SUBJECT>Procedures for closing meetings.</SUBJECT> <P>(a) <E T="03">Regular procedures.</E> (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 § 912.4, and the Board of Directors does not find that the public interest requires otherwise.</P> <P>(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.</P> <P>(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 <PRTPAGE P="60"/>days after the initial meeting in such series.</P> <P>(4) The vote of each Board Director taken pursuant to paragraph (a) of this section shall be recorded, and no proxies shall be allowed.</P> <P>(5) Whenever any person's interests may be directly affected by any portion of a meeting for any of the reasons referred to in § 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.</P> <P>(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.</P> <P>(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 § 912.4(a).</P> <P>(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.</P> <P>(b) <E T="03">Expedited procedures.</E> (1) Since a majority of the meetings, of the Board of Directors may be closed pursuant to § 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 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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Records of closed proceedings</E>—(1) <E T="03">Transcripts or electronic recording.</E> 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.</P> <P>(2) <E T="03">Minutes.</E> 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 § 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 <PRTPAGE P="61"/>with any action shall be identified in such set of minutes.</P> <P>(3) <E T="03">Availability of Records.</E> (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 § 912.4(a).</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Legal certification for closing meeting.</E> (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.</P> <P>(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.</P> <CITA>[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000; 65 FR 12844, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 912.6</SECTNO> <SUBJECT>Notice of meetings.</SUBJECT> <P>(a) <E T="03">Scope of notice.</E> (1) Except as provided in § 912.4(a) that such information is determined to be exempt from disclosure, each open meeting of the Board of Directors, or each meeting closed under the regular procedures in § 912.5(a), will be preceded by public notice as described in this section.</P> <P>(2) The notices for meetings of the Board of Directors closed under the expedited procedures pursuant to § 912.5(b) will be made in accordance with § 912.5(b)(4).</P> <P>(b) <E T="03">Content of notice.</E> A notice of an open meeting or a meeting closed under the regular procedures in § 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 <E T="04">Federal Register</E>.</P> <P>(c) <E T="03">Time</E>—(1) <E T="03">Seven days notice.</E> Except as provided in paragraph (c)(2) of this section, a public notice of open meetings or meetings closed under § 912.5(a) will be made at least seven days in advance of each meeting.</P> <P>(2) <E T="03">Less than seven days notice.</E> 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.</P> <P>(d) <E T="03">Amendment of notice</E>—(1) <E T="03">Time and place.</E> A change in the time or place of a meeting following public notice may be made only if announced at the earliest practicable time.</P> <P>(2) <E T="03">Subject matter.</E> 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:</P> <P>(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</P> <P>(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 <PRTPAGE P="62"/>Board offices at the earliest practicable time.</P> <P>(3) <E T="03">Timing of amendment.</E> 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.</P> <P>(4) <E T="03">Publication of amendment.</E> Each change to a notice of a meeting will be published in the <E T="04">Federal Register,</E> following the Finance Board's public announcement of the change.</P> <CITA>[58 FR 19202, Apr. 13, 1993, as amended at 65 FR 8258, Feb. 18, 2000; 67 FR 12845, Mar. 20, 2002]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="63"/> <HD SOURCE="HED">SUBCHAPTER C—GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS</HD> <PART> <EAR>Pt. 914</EAR> <HD SOURCE="HED">PART 914—DATA AVAILABILITY AND REPORTING</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>914.1</SECTNO> <SUBJECT>Regulatory Report defined.</SUBJECT> <SECTNO>914.2</SECTNO> <SUBJECT>Filing Regulatory Reports.</SUBJECT> <SECTNO>914.3</SECTNO> <SUBJECT>Access to books and records.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a)(1), and 1440.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>71 FR 35499, June 21, 2006, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 914.1</SECTNO> <SUBJECT>Regulatory Report defined.</SUBJECT> <P>(a) <E T="03">Definition. Regulatory Report</E> means any report of raw or summary data needed to evaluate the safe and sound condition and operations of a Bank or to determine compliance with any:</P> <P>(1) Provision in the Act or other law, order, rule, or regulation;</P> <P>(2) Condition imposed in writing by the Finance Board in connection with the granting of any application or other request by a Bank; or</P> <P>(3) Written agreement entered into between the Finance Board and a Bank.</P> <P>(b) <E T="03">Examples.</E> Regulatory Report includes:</P> <P>(1) Call reports and reports of instrument-level risk modeling data;</P> <P>(2) Reports related to a Bank's housing mission achievement, such as reports related to AMA, AHP, CIP, and other CICA programs; and</P> <P>(3) Reports submitted in response to requests to one or more Banks for information on a nonrecurring basis.</P> </SECTION> <SECTION> <SECTNO>§ 914.2</SECTNO> <SUBJECT>Filing Regulatory Reports.</SUBJECT> <P>Each Bank shall file Regulatory Reports with the Finance Board in accordance with the forms, instructions, and schedules issued by the Finance Board from time to time. If no regularly scheduled reporting dates are established, Regulatory Reports shall be filed as requested by the Finance Board.</P> </SECTION> <SECTION> <SECTNO>§ 914.3</SECTNO> <SUBJECT>Access to books and records.</SUBJECT> <P>Each Bank shall make its books and records readily available for inspection and other supervisory purposes within a reasonable period upon request by the Finance Board, at a location acceptable to the Finance Board. For requests for documents made during the course of an onsite examination and pursuant to the examination's scope, a reasonable period is presumed to be no longer than 1 business day. For requests for documents made outside of an onsite examination, a reasonable period is presumed to be 3 business days.</P> </SECTION> </PART> <PART> <EAR>Pt. 917</EAR> <HD SOURCE="HED">PART 917—POWERS AND RESPONSIBILITIES OF BANK BOARDS OF DIRECTORS AND SENIOR MANAGEMENT</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>917.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>917.2</SECTNO> <SUBJECT>General authorities and duties of Bank boards of directors.</SUBJECT> <SECTNO>917.3</SECTNO> <SUBJECT>Risk management.</SUBJECT> <SECTNO>917.4</SECTNO> <SUBJECT>Bank Member Products Policy.</SUBJECT> <SECTNO>917.5</SECTNO> <SUBJECT>Strategic business plan.</SUBJECT> <SECTNO>917.6</SECTNO> <SUBJECT>Internal control system.</SUBJECT> <SECTNO>917.7</SECTNO> <SUBJECT>Audit committees.</SUBJECT> <SECTNO>917.8</SECTNO> <SUBJECT>Budget preparation.</SUBJECT> <SECTNO>917.9</SECTNO> <SUBJECT>Dividends.</SUBJECT> <SECTNO>917.10</SECTNO> <SUBJECT>Bank bylaws.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1426, 1427, 1432(a), 1436(a), 1440.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 25274, May 1, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 917.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Business risk</E> 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.</P> <P> <E T="03">Community financial institution</E> has the meaning set forth in § 925.1 of this chapter.</P> <P> <E T="03">Contingency liquidity</E> 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:</P> <P>(1) Marketable assets with a maturity of one year or less;</P> <P>(2) Self-liquidating assets with a maturity of seven days or less;<PRTPAGE P="64"/> </P> <P>(3) Assets that are generally accepted as collateral in the repurchase agreement market; and</P> <P>(4) Irrevocable lines of credit from financial institutions rated not lower than the second highest credit rating category by an NRSRO.</P> <P> <E T="03">Credit risk</E> 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.</P> <P> <E T="03">Immediate family member</E> means a parent, sibling, spouse, child, dependent, or any relative sharing the same residence.</P> <P> <E T="03">Internal auditor</E> means the individual responsible for the internal audit function at the Bank.</P> <P> <E T="03">Liquidity risk</E> 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.</P> <P> <E T="03">Market risk</E> 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.</P> <P> <E T="03">Operational liquidity</E> 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.</P> <P> <E T="03">Operations risk</E> 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.</P> <P> <E T="03">Reportable conditions</E> 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.</P> <CITA>[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.2</SECTNO> <SUBJECT>General authorities and duties of Bank boards of directors.</SUBJECT> <P>(a) <E T="03">Management of a Bank.</E> 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.</P> <P>(b) <E T="03">Duties of Bank directors.</E> Each Bank director shall have the duty to:</P> <P>(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;</P> <P>(2) Administer the affairs of the Bank fairly and impartially and without discrimination in favor of or against any member;</P> <P>(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</P> <P>(4) Direct the operations of the Bank in conformity with the requirements set forth in the Act and this chapter.</P> <P>(c) <E T="03">Authority regarding staff and outside consultants.</E> (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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 917.3</SECTNO> <SUBJECT>Risk management.</SUBJECT> <P>(a) <E T="03">Risk management policy</E>—(1) <E T="03">Adoption.</E> 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 <PRTPAGE P="65"/>risk and that conforms to the requirements of paragraph (b) of this section and to all applicable Finance Board regulations and policies.</P> <P>(2) <E T="03">Review and compliance.</E> Each Bank's board of directors shall:</P> <P>(i) Review the Bank's risk management policy at least annually;</P> <P>(ii) Amend the risk management policy as appropriate;</P> <P>(iii) Re-adopt the Bank's risk management policy, including interim amendments, not less often than every three years; and</P> <P>(iv) Ensure that policies and procedures are in place that are reasonably designed to achieve continuing Bank compliance with the risk management policy.</P> <P>(b) <E T="03">Risk management policy requirements.</E> In addition to meeting any other requirements set forth in this chapter, each Bank's risk management policy shall:</P> <P>(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;</P> <P>(2) Set forth the Bank's tolerance levels for the market and credit risk components; and</P> <P>(3) Set forth standards for the Bank's management of each risk component, including but not limited to:</P> <P>(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;</P> <P>(ii) Regarding market risk, standards for the methods and models used to measure and monitor such risk;</P> <P>(iii) Regarding day-to-day operational liquidity needs and contingency liquidity needs:</P> <P>(A) An enumeration of specific types of investments to be held for such liquidity purposes; and</P> <P>(B) The methodology to be used for determining the Bank's operational and contingency liquidity needs;</P> <P>(iv) Regarding operations risk, standards for an effective internal control system, including periodic testing and reporting; and</P> <P>(v) Regarding business risk, strategies for mitigating such risk, including contingency plans where appropriate.</P> <P>(c) <E T="03">Risk assessment.</E> 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.</P> <CITA>[65 FR 25274, May 1, 2000, as amended at 66 FR 8308, Jan. 30, 2001; 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.4</SECTNO> <SUBJECT>Bank Member Products Policy.</SUBJECT> <P>(a) <E T="03">Adoption and review of member products policy</E>—(1) <E T="03">Adoption.</E> 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.</P> <P>(2) <E T="03">Review and compliance.</E> Each Bank's board of directors shall:</P> <P>(i) Review the Bank's member products policy annually;</P> <P>(ii) Amend the member products policy as appropriate; and</P> <P>(iii) Re-adopt the member products policy, including interim amendments, not less often than every three years.</P> <P>(b) <E T="03">Member products policy requirements.</E> In addition to meeting any other <PRTPAGE P="66"/>requirements set forth in this chapter, each Bank's member products policy shall:</P> <P>(1) Address credit underwriting criteria to be applied in evaluating applications for advances, standby letters of credit, and renewals;</P> <P>(2) Address appropriate levels of collateralization, valuation of collateral and discounts applied to collateral values for advances and standby letters of credit;</P> <P>(3) Address advances-related fees to be charged by each Bank, including any schedules or formulas pertaining to such fees;</P> <P>(4) Address standards and criteria for pricing member products, including differential pricing of advances pursuant to § 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;</P> <P>(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 § 975.6(b) of this chapter;</P> <P>(6) Address the maintenance of appropriate systems, procedures and internal controls; and</P> <P>(7) Address the maintenance of appropriate operational and personnel capacity.</P> <CITA>[65 FR 44426, July 18, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.5</SECTNO> <SUBJECT>Strategic business plan.</SUBJECT> <P>(a) <E T="03">Adoption of strategic business plan.</E> 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:</P> <P>(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;</P> <P>(2) Discuss how the Bank will:</P> <P>(i) Address credit needs and market opportunities identified through ongoing market research and consultations with members, associates and public and private organizations; and</P> <P>(ii) Notify members and associates of relevant programs and initiatives;</P> <P>(3) Establish quantitative performance goals for Bank products related to multi-family housing, small business, small farm and small agri-business lending;</P> <P>(4) Describe any proposed new business activities or enhancements of existing activities; and</P> <P>(5) Be supported by appropriate and timely research and analysis of relevant market developments and member and associate demand for Bank products and services.</P> <P>(b) <E T="03">Review and monitoring.</E> Each Bank's board of directors shall:</P> <P>(1) Review the Bank's strategic business plan at least annually;</P> <P>(2) Amend the strategic business plan as appropriate;</P> <P>(3) Re-adopt the Bank's strategic business plan, including interim amendments, not less often than every three years; and</P> <P>(4) Establish management reporting requirements and monitor implementation of the strategic business plan and the operating goals and objectives contained therein.</P> <P>(c) <E T="03">Report to Finance Board.</E> 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.</P> <CITA>[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.6</SECTNO> <SUBJECT>Internal control system.</SUBJECT> <P>(a) <E T="03">Establishment and maintenance.</E> (1) Each Bank shall establish and maintain an effective internal control system that addresses:</P> <P>(i) The efficiency and effectiveness of Bank activities;</P> <P>(ii) The safeguarding of Bank assets;</P> <P>(iii) The reliability, completeness and timely reporting of financial and management information and transparency of such information to the <PRTPAGE P="67"/>Bank's board of directors and to the Finance Board; and</P> <P>(iv) Compliance with applicable laws, regulations, policies, supervisory determinations and directives of the Bank's board of directors and senior management.</P> <P>(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:</P> <P>(i) Top level reviews by the Bank's board of directors and senior management, including review of financial presentations and performance reports;</P> <P>(ii) Activity controls, including review of standard performance and exception reports by department-level management on an appropriate periodic basis;</P> <P>(iii) Physical and procedural controls to safeguard, and prevent the unauthorized use of, assets;</P> <P>(iv) Monitoring for compliance with the risk tolerance limits set forth in the Bank's risk management policy;</P> <P>(v) Any required approvals and authorizations for specific activities; and</P> <P>(vi) Any required verifications and reconciliations for specific activities.</P> <P>(b) <E T="03">Internal control responsibilities of Banks' boards of directors.</E> 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:</P> <P>(1) Conducting periodic discussions with senior management regarding the effectiveness of the internal control system;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(6) Reporting any internal control deficiencies found, and the corrective action taken, to the Finance Board in a timely manner;</P> <P>(7) Establishing, documenting and communicating an organizational structure that clearly shows lines of authority within the Bank, provides for effective communication throughout the Bank, and ensures that there are no gaps in the lines of authority;</P> <P>(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</P> <P>(9) Establishing reporting requirements, including specifying the nature and frequency of reports it receives.</P> <P>(c) <E T="03">Internal control responsibilities of Banks' senior management.</E> 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:</P> <P>(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;</P> <P>(2) Ensuring that all Bank personnel fully understand and comply with all policies, procedures and legal requirements applicable to their positions and responsibilities;</P> <P>(3) Ensuring that there is appropriate segregation of duties among Bank personnel and that personnel are not assigned conflicting responsibilities;</P> <P>(4) Establishing effective paths of communication upward, downward and <PRTPAGE P="68"/>across the organization in order to ensure that Bank personnel receive necessary and appropriate information, including:</P> <P>(i) Information relating to the operational policies and procedures of the Bank;</P> <P>(ii) Information relating to the actual operational performance of the Bank;</P> <P>(iii) Adequate and comprehensive internal financial, operational and compliance data; and</P> <P>(iv) External market information about events and conditions that are relevant to decision making;</P> <P>(5) Developing and implementing procedures that translate the major business strategies and policies established by the Bank's board of directors into operating standards;</P> <P>(6) Ensuring adherence to the lines of authority and responsibility established by the Bank's board of directors;</P> <P>(7) Overseeing the implementation and maintenance of management information and other systems;</P> <P>(8) Establishing and implementing an effective system to track internal control weaknesses and the actions taken to correct them; and</P> <P>(9) Monitoring and reporting to the Bank's board of directors the effectiveness of the internal control system on an ongoing basis.</P> <CITA>[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.7</SECTNO> <SUBJECT>Audit committees.</SUBJECT> <P>(a) <E T="03">Establishment.</E> The board of directors of each Bank shall establish an audit committee, consistent with the requirements set forth in this section.</P> <P>(b) <E T="03">Composition.</E> (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.</P> <P>(2) The audit committee shall include a balance of representatives of:</P> <P>(i) Community financial institutions and other members; and</P> <P>(ii) Appointive and elective directors of the Bank.</P> <P>(3) The terms of audit committee members shall be appropriately staggered so as to provide for continuity of service.</P> <P>(4) At least one member of the audit committee shall have extensive accounting or related financial management experience.</P> <P>(c) <E T="03">Independence.</E> 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:</P> <P>(1) Being employed by the Bank in the current year or any of the past five years;</P> <P>(2) Accepting any compensation from the Bank other than compensation for service as a board director;</P> <P>(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</P> <P>(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.</P> <P>(d) <E T="03">Charter.</E> (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.</P> <P>(2) The audit committee and the board of directors of each Bank shall:</P> <P>(i) Review, assess the adequacy of and, where appropriate, amend the Bank's audit committee charter on an annual basis;</P> <P>(ii) Amend the audit committee charter as appropriate; and</P> <P>(iii) Re-adopt and re-approve, respectively, the Bank's audit committee charter not less often than every three years.</P> <P>(3) Each Bank's audit committee charter shall:</P> <P>(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;<PRTPAGE P="69"/> </P> <P>(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</P> <P>(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.</P> <P>(e) <E T="03">Duties.</E> Each Bank's audit committee shall have the duty to:</P> <P>(1) Direct senior management to maintain the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Bank;</P> <P>(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;</P> <P>(3) Oversee the internal audit function by:</P> <P>(i) Reviewing the scope of audit services required, significant accounting policies, significant risks and exposures, audit activities and audit findings;</P> <P>(ii) Assessing the performance and determining the compensation of the internal auditor; and</P> <P>(iii) Reviewing and approving the internal auditor's work plan;</P> <P>(4) Oversee the external audit function by:</P> <P>(i) Approving the external auditor's annual engagement letter;</P> <P>(ii) Reviewing the performance of the external auditor; and</P> <P>(iii) Making recommendations to the Bank's board of directors regarding the appointment, renewal, or termination of the external auditor;</P> <P>(5) Provide an independent, direct channel of communication between the Bank's board of directors and the internal and external auditors;</P> <P>(6) Conduct or authorize investigations into any matters within the audit committee's scope of responsibilities;</P> <P>(7) Ensure that senior management has established and is maintaining an adequate internal control system within the Bank by:</P> <P>(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</P> <P>(ii) Reviewing the programs and policies of the Bank designed to ensure compliance with applicable laws, regulations and policies and monitoring the results of these compliance efforts;</P> <P>(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</P> <P>(9) Report periodically its findings to the Bank's board of directors.</P> <P>(f) <E T="03">Meetings.</E> The audit committee shall prepare written minutes of each audit committee meeting.</P> <CITA>[65 FR 25274, May 1, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.8</SECTNO> <SUBJECT>Budget preparation.</SUBJECT> <P>(a) <E T="03">Adoption of budgets.</E> 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.</P> <P>(b) <E T="03">No delegation of budget authority.</E> 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.</P> <P>(c) <E T="03">Interest rate scenario.</E> A Bank's annual budgets shall be prepared based upon an interest rate scenario as determined by the Bank.<PRTPAGE P="70"/> </P> <P>(d) <E T="03">Board approval for deviations.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 917.9</SECTNO> <SUBJECT>Dividends.</SUBJECT> <P>(a) A Bank's board of directors may declare and pay a dividend only from previously retained earnings or current net earnings and only in accordance with any other applicable limitations on dividends set forth in the Act or this chapter. Dividends on such capital stock shall be computed without preference.</P> <P>(b) A Bank's board of directors may not declare or pay a dividend based on projected or anticipated earnings and may not declare or pay a dividend if the par value of the Bank's stock is impaired or is projected to become impaired after paying such dividend.</P> <P>(c) The requirement in paragraph (a) of this section that dividends be computed without preference shall cease to apply to any Bank that has established any dividend preferences for 1 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.</P> <CITA>[71 FR 78051, Dec. 28, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 917.10</SECTNO> <SUBJECT>Bank bylaws.</SUBJECT> <P>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.</P> </SECTION> </PART> <PART> <EAR>Pt. 918</EAR> <HD SOURCE="HED">PART 918—BANK DIRECTOR COMPENSATION AND EXPENSES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>918.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>918.2</SECTNO> <SUBJECT>Annual directors' compensation policy.</SUBJECT> <SECTNO>918.3</SECTNO> <SUBJECT>Directors' compensation policy requirements.</SUBJECT> <SECTNO>918.4</SECTNO> <SUBJECT>Directors' expenses.</SUBJECT> <SECTNO>918.5</SECTNO> <SUBJECT>Approval by Finance Board.</SUBJECT> <SECTNO>918.6</SECTNO> <SUBJECT>Disclosure.</SUBJECT> <SECTNO>918.7</SECTNO> <SUBJECT>Maintenance of effort.</SUBJECT> <SECTNO>918.8</SECTNO> <SUBJECT>Site of board of directors and committee meetings.</SUBJECT> <SECTNO>918.9</SECTNO> <SUBJECT>Date of applicability of removal of requirements regarding compensation of bank officers and employees.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a), 1427.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 8260, Feb. 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 918.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Compensation</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 918.2</SECTNO> <SUBJECT>Annual directors' compensation policy.</SUBJECT> <P>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 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 § 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.</P> <CITA>[65 FR 8260, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 918.3</SECTNO> <SUBJECT>Compensation policy requirements.</SUBJECT> <P>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:</P> <P>(a)(1) <E T="03">Statutory limits on annual compensation.</E> 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 <PRTPAGE P="71"/>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 <E T="04">Federal Register,</E> distribution of a memorandum, or otherwise, of the CPI-adjusted limits on annual compensation.</P> <P>(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.</P> <P>(b) <E T="03">Compensation permitted only for performance of official Bank business.</E> 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.</P> <CITA>[65 FR 8260, Feb. 18, 2000, as amended at 65 FR 13666, Mar. 14, 2000; 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 918.4</SECTNO> <SUBJECT>Directors' expenses.</SUBJECT> <P>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.</P> <CITA>[65 FR 8260, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 918.5</SECTNO> <SUBJECT>Approval by Finance Board.</SUBJECT> <P>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)).</P> <CITA>[65 FR 8260, Feb. 18, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 918.6</SECTNO> <SUBJECT>Disclosure.</SUBJECT> <P>Each Bank shall, in its annual report:</P> <P>(a) State the sum of the total actual compensation paid to its directors in that year;</P> <P>(b) State the sum of the total actual expenses paid to its directors in that year; and</P> <P>(c) Summarize its policy on director compensation.</P> </SECTION> <SECTION> <SECTNO>§ 918.7</SECTNO> <SUBJECT>Maintenance of effort.</SUBJECT> <P>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 level of oversight, the board of directors of a Bank shall hold at least six in-person meetings in any year.</P> <CITA>[66 FR 24264, May 14, 2001, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 918.8</SECTNO> <SUBJECT>Site of board of directors and committee meetings.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 918.9</SECTNO> <SUBJECT>Date of applicability of removal of requirements regarding compensation of bank officers and employees.</SUBJECT> <P>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.</P> <CITA>[65 FR 13666, Mar. 14, 2000, as amended at 67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="72"/> <HD SOURCE="HED">SUBCHAPTER D—FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES</HD> <PART> <EAR>Pt. 925</EAR> <HD SOURCE="HED">PART 925—MEMBERS OF THE BANKS</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Definitions</HD> <SECHD>Sec.</SECHD> <SECTNO>925.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Membership Application Process</HD> <SECTNO>925.2</SECTNO> <SUBJECT>Membership application requirements.</SUBJECT> <SECTNO>925.3</SECTNO> <SUBJECT>Decision on application.</SUBJECT> <SECTNO>925.4</SECTNO> <SUBJECT>Automatic membership.</SUBJECT> <SECTNO>925.5</SECTNO> <SUBJECT>Appeals.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Eligibility Requirements</HD> <SECTNO>925.6</SECTNO> <SUBJECT>General eligibility requirements.</SUBJECT> <SECTNO>925.7</SECTNO> <SUBJECT>Duly organized requirement.</SUBJECT> <SECTNO>925.8</SECTNO> <SUBJECT>Subject to inspection and regulation requirement.</SUBJECT> <SECTNO>925.9</SECTNO> <SUBJECT>Makes long-term home mortgage loans requirement.</SUBJECT> <SECTNO>925.10</SECTNO> <SUBJECT>10 percent requirement for certain insured depository institution applicants.</SUBJECT> <SECTNO>925.11</SECTNO> <SUBJECT>Financial condition requirement for applicants other than insurance companies.</SUBJECT> <SECTNO>925.12</SECTNO> <SUBJECT>Character of management requirement.</SUBJECT> <SECTNO>925.13</SECTNO> <SUBJECT>Home financing policy requirement.</SUBJECT> <SECTNO>925.14</SECTNO> <SUBJECT>De novo insured depository institution applicants.</SUBJECT> <SECTNO>925.15</SECTNO> <SUBJECT>Recent merger or acquisition applicants.</SUBJECT> <SECTNO>925.16</SECTNO> <SUBJECT>Financial condition requirement for insurance company applicants.</SUBJECT> <SECTNO>925.17</SECTNO> <SUBJECT>Rebuttable presumptions.</SUBJECT> <SECTNO>925.18</SECTNO> <SUBJECT>Determination of appropriate Bank district for membership.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Stock Requirements</HD> <SECTNO>925.19</SECTNO> <SUBJECT>Par value and price of stock.</SUBJECT> <SECTNO>925.20</SECTNO> <SUBJECT>Stock purchase.</SUBJECT> <SECTNO>925.21</SECTNO> <SUBJECT>Issuance and form of stock.</SUBJECT> <SECTNO>925.22</SECTNO> <SUBJECT>Adjustments in stock holdings.</SUBJECT> <SECTNO>925.23</SECTNO> <SUBJECT>Excess stock.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Consolidations Involving Members</HD> <SECTNO>925.24</SECTNO> <SUBJECT>Consolidations involving members.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Withdrawal and Removal From Membership</HD> <SECTNO>925.26</SECTNO> <SUBJECT>Voluntary withdrawal from membership.</SUBJECT> <SECTNO>925.27</SECTNO> <SUBJECT>Involuntary termination of membership.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart G—Orderly Liquidation of Advances and Redemption of Stock</HD> <SECTNO>925.29</SECTNO> <SUBJECT>Disposition of claims.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart H—Reacquisition of Membership</HD> <SECTNO>925.30</SECTNO> <SUBJECT>Readmission to membership.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart I—Bank Access to Information</HD> <SECTNO>925.31</SECTNO> <SUBJECT>Reports and examinations.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart J—Membership Insignia</HD> <SECTNO>925.32</SECTNO> <SUBJECT>Official membership insignia.</SUBJECT> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430, 1442.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 43542, Aug. 17, 1993, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—Definitions</HD> <SECTION> <SECTNO>§ 925.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this part:</P> <P> <E T="03">Adjusted net income</E> 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.</P> <P> <E T="03">Aggregate unpaid loan principal</E> means the aggregate unpaid principal of a subscriber's or member's home mortgage loans, home-purchase contracts and similar obligations.</P> <P> <E T="03">Allowance for loan and lease losses</E> means a specified balance-sheet account held to fund potential losses on loans or leases, that is reported on a regulatory financial report.</P> <P> <E T="03">Appropriate regulator</E> means a regulatory entity listed in § 925.8, as applicable.</P> <P> <E T="03">Combination business or farm property</E> means real property for which the total appraised value is attributable to residential, and business or farm uses.</P> <P> <E T="03">Community financial institution</E> or <E T="03">CFI</E> means an institution:</P> <P>(1) The deposits of which are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811, <E T="03">et seq.</E>); and<PRTPAGE P="73"/> </P> <P>(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.</P> <P> <E T="03">Community financial institution asset cap</E> 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 <E T="04">Federal Register</E> of the CPI-adjusted cap.</P> <P> <E T="03">Composite regulatory examination rating</E> 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.</P> <P> <E T="03">Consolidation</E> 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.</P> <P> <E T="03">Dwelling unit</E> means a single room or a unified combination of rooms designed for residential use.</P> <P> <E T="03">Enforcement action</E> 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.</P> <P> <E T="03">Funded residential construction loan</E> 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.</P> <P> <E T="03">Home mortgage loan</E> means:</P> <P>(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:</P> <P>(i) One-to-four family property or multifamily property, in fee simple;</P> <P>(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</P> <P>(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</P> <P>(2) A mortgage pass-through security that represents an undivided ownership interest in:</P> <P>(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</P> <P>(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.</P> <P> <E T="03">Insured depository institution</E> means an insured depository institution as defined in section 2(12) of the Act (12 U.S.C. 1422(12)).</P> <P> <E T="03">Long-term</E> means a term to maturity of five years or greater.</P> <P> <E T="03">Manufactured housing</E> means a manufactured home as defined in section <PRTPAGE P="74"/>603(6) of the Manufactured Home Construction and Safety Standards Act of 1974, as amended (42 U.S.C. 5402(6)).</P> <P> <E T="03">Multifamily property</E> means:</P> <P>(1) Real property that is solely residential and includes five or more dwelling units;</P> <P>(2) Real property that includes five or more dwelling units combined with commercial units, provided that the property is primarily residential; or</P> <P>(3) Nursing homes, dormitories, or homes for the elderly.</P> <P> <E T="03">Nonperforming loans and leases</E> means the sum of the following, reported on a regulatory financial report:</P> <P>(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;</P> <P>(2) Loans and leases on a nonaccrual basis; and</P> <P>(3) Restructured loans and leases (not already reported as nonperforming).</P> <P> <E T="03">Nonresidential real property</E> 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.</P> <P> <E T="03">One-to-four family property</E> means:</P> <P>(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;</P> <P>(2) Manufactured housing if applicable state law defines the purchase or holding of manufactured housing as the purchase or holding of real property;</P> <P>(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</P> <P>(4) Real property which includes one-to-four family dwelling units combined with commercial units, provided the property is primarily residential.</P> <P> <E T="03">Other real estate owned</E> 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.</P> <P> <E T="03">Regulatory examination report</E> 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.</P> <P> <E T="03">Regulatory financial report</E> 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.</P> <P> <E T="03">Residential mortgage loan</E> means any one of the following types of loans, whether or not fully amortizing:</P> <P>(1) Home mortgage loans;</P> <P>(2) Funded residential construction loans;</P> <P>(3) Loans secured by manufactured housing whether or not defined by state law as secured by an interest in real property;</P> <P>(4) Loans secured by junior liens on one-to-four family property or multifamily property;</P> <P>(5) Mortgage pass-through securities representing an undivided ownership interest in:</P> <P>(i) Loans that meet the requirements of paragraphs (1) through (4) of this definition at the time of issuance of the security;</P> <P>(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</P> <P>(iii) Mortgage debt securities as defined in paragraph (6) of this definition;<PRTPAGE P="75"/> </P> <P>(6) Mortgage debt securities secured by:</P> <P>(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;</P> <P>(ii) Securities that meet the requirements of paragraph (5) of this definition; or</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P> <E T="03">Total assets</E> means the total assets reported on a regulatory financial report.</P> <CITA>[67 FR 12846, Mar. 20, 2002]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Membership Application Process</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 42543 Aug. 16, 1996, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 925.2</SECTNO> <SUBJECT>Membership application requirements.</SUBJECT> <P>(a) <E T="03">Application.</E> 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:</P> <P>(1) <E T="03">Applicant review.</E> 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</P> <P>(2) <E T="03">Duty to supplement.</E> 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 § 925.5 of this part, prior to resolution of any appeal by the Finance Board.</P> <P>(b) <E T="03">Digest.</E> The Bank shall prepare a written digest for each applicant stating whether or not the applicant meets each of the requirements in §§ 925.6 to 925.18 of this part, the Bank's findings and the reasons therefor.</P> <P>(c) <E T="03">File.</E> 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:</P> <P>(1) <E T="03">Digest.</E> The digest required by paragraph (b) of this section.</P> <P>(2) <E T="03">Required documents.</E> All documents required by §§ 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.</P> <P>(3) <E T="03">Additional documents.</E> Any additional document submitted by the applicant, or otherwise obtained or generated by the Bank, concerning the applicant.</P> <P>(4) <E T="03">Decision resolution.</E> The decision resolution described in § 925.3(b) of this part.</P> <CITA>[61 FR 42543, Aug. 16, 1996, as amended at 63 FR 40023, July 27, 1998; 65 FR 8261, Feb. 18, 2000; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.3</SECTNO> <SUBJECT>Decision on application.</SUBJECT> <P>(a) <E T="03">Authority.</E> The Finance Board authorizes the Banks to approve or deny all applications for membership, subject to the requirements of this part. The Bank may delegate the authority to approve membership applications only to a committee of the Bank's board of directors, the Bank president, <PRTPAGE P="76"/>or a senior officer who reports directly to the Bank president other than an officer with responsibility for business development.</P> <P>(b) <E T="03">Decision resolution.</E> 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:</P> <P>(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</P> <P>(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.</P> <P>(c) <E T="03">Action on applications.</E> 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.4</SECTNO> <SUBJECT>Automatic membership.</SUBJECT> <P>(a) <E T="03">Automatic membership for certain charter conversions.</E> 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.</P> <P>(b) <E T="03">Automatic membership for transfers.</E> Any member whose membership is transferred pursuant to § 925.18(d) of this part automatically shall become a member of the Bank to which it transfers.</P> <P>(c) <E T="03">Automatic membership, in the Bank's discretion, for certain consolidations.</E> (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 purchase of stock in that Bank pursuant to § 925.20, provided that:</P> <P>(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<PRTPAGE P="77"/> </P> <P>(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.</P> <P>(2) The provisions of § 925.24(b)(4)(i) shall apply, and upon approval of automatic membership by the Bank, the provisions of §§ 925.24(c) and (d) shall apply.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.5</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) <E T="03">Appeals by applicants</E>—(1) <E T="03">Filing procedure.</E> 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.</P> <P>(2) <E T="03">Documents.</E> 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:</P> <P>(i) <E T="03">Bank's decision resolution.</E> A copy of the Bank's decision resolution; and</P> <P>(ii) <E T="03">Basis for appeal.</E> 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.</P> <P>(b) <E T="03">Record for appeal</E>—(1) <E T="03">Copy of membership file.</E> 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.</P> <P>(2) <E T="03">Additional information.</E> 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.</P> <P>(c) <E T="03">Deciding appeals.</E> 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 § 925.17 of this part.</P> <CITA>[61 FR 42543, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Eligibility Requirements</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>61 FR 42545, Aug. 16, 1996, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 925.6</SECTNO> <SUBJECT>General eligibility requirements.</SUBJECT> <P>(a) <E T="03">Requirements.</E> 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:</P> <P>(1) It is duly organized under the laws of any State or of the United States;</P> <P>(2) It is subject to inspection and regulation under the banking laws, or under similar laws, of any State or of the United States;</P> <P>(3) It makes long-term home mortgage loans;</P> <P>(4) Its financial condition is such that advances may be safely made to it;</P> <P>(5) The character of its management is consistent with sound and economical home financing; and</P> <P>(6) Its home financing policy is consistent with sound and economical home financing.</P> <P>(b) <E T="03">Additional eligibility requirement for insured depository institutions other than community financial institutions.</E> 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.</P> <P>(c) <E T="03">Additional eligibility requirement for applicants that are not insured depository institutions.</E> In order to be eligible to become a member of a Bank, an applicant that is not an insured depository <PRTPAGE P="78"/>institution also must have mortgage-related assets that reflect a commitment to housing finance, as determined by the Bank in its discretion.</P> <P>(d) <E T="03">Ineligibility.</E> Except as otherwise provided in this part, if an applicant does not satisfy the requirements of this part, the applicant is ineligible for membership.</P> <CITA>[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 13870, Mar. 15, 2000; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.7</SECTNO> <SUBJECT>Duly organized requirement.</SUBJECT> <P>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 § 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.</P> <CITA>[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.8</SECTNO> <SUBJECT>Subject to inspection and regulation requirement.</SUBJECT> <P>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 § 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.</P> <CITA>[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.9</SECTNO> <SUBJECT>Makes long-term home mortgage loans requirement.</SUBJECT> <P>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 § 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.10</SECTNO> <SUBJECT>10 percent requirement for certain insured depository institution applicants.</SUBJECT> <P>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 § 925.1 of this part shall not be used to meet this requirement.</P> <CITA>[65 FR 13870, Mar. 15, 2000, as amended at 67 FR 12848, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.11</SECTNO> <SUBJECT>Financial condition requirement for applicants other than insurance companies.</SUBJECT> <P>(a) <E T="03">Review requirement.</E> 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 § 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:</P> <P>(1) <E T="03">Regulatory financial reports.</E> 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;</P> <P>(2) <E T="03">Financial statement.</E> 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 <PRTPAGE P="79"/>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;</P> <P>(3) <E T="03">Regulatory examination report.</E> 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;</P> <P>(4) <E T="03">Enforcement actions.</E> 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</P> <P>(5) <E T="03">Additional information.</E> Any other relevant document or information concerning the applicant that comes to the Bank's attention in reviewing the applicant's financial condition.</P> <P>(b) <E T="03">Standards.</E> 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 § 925.6(a)(4) of this part, if:</P> <P>(1) <E T="03">Recent composite regulatory examination rating.</E> The applicant has received a composite regulatory examination rating from its appropriate regulator within two years preceding the date the Bank receives the application;</P> <P>(2) <E T="03">Capital requirement.</E> 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</P> <P>(3) <E T="03">Minimum performance standard.</E> (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:</P> <P>(A) <E T="03">Earnings.</E> The applicant's adjusted net income was positive in four of the six most recent calendar quarters;</P> <P>(B) <E T="03">Nonperforming assets.</E> 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</P> <P>(C) <E T="03">Allowance for loan and lease losses.</E> 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 or greater during 4 of the 6 most recent calendar quarters.</P> <P>(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.</P> <P>(c) <E T="03">Eligible collateral not considered.</E> 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 § 925.6(a)(4) of this part.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.12</SECTNO> <SUBJECT>Character of management requirement.</SUBJECT> <P>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. <PRTPAGE P="80"/>1424(a)(2)(C)) and § 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:</P> <P>(a) <E T="03">Enforcement actions.</E> 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;</P> <P>(b) <E T="03">Criminal, civil or administrative proceedings.</E> 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</P> <P>(c) <E T="03">Criminal, civil or administrative monetary liabilities, lawsuits or judgments.</E> 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.13</SECTNO> <SUBJECT>Home financing policy requirement.</SUBJECT> <P>(a) <E T="03">Standard.</E> 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 § 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.</P> <P>(b) <E T="03">Written justification required.</E> 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.</P> <CITA>[61 FR 42545, Aug. 16, 1996, as amended at 65 FR 8261, Feb. 18, 2000; 67 FR 12848, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.14</SECTNO> <SUBJECT>De novo insured depository institution applicants.</SUBJECT> <P>(a) <E T="03">Duly organized, subject to inspection and regulation, financial condition and character of management requirements.</E> 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 §§ 925.7, 925.8, 925.11 and 925.12.</P> <P>(b) <E T="03">Makes long-term home mortgage loans requirement.</E> A de novo applicant shall be deemed to make long-term home mortgage loans as required by § 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.</P> <P>(c) <E T="03">10 percent requirement</E>—(1) <E T="03">One-year requirement.</E> 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 § 925.6(b) shall have until one year after commencing its initial business operations to meet the 10 percent requirement of § 925.10.</P> <P>(2) <E T="03">Conditional approval.</E> 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 § 925.6(b). A de novo applicant that receives such conditional membership approval is subject to the stock purchase requirements of § 925.20 and the advances provisions of part 950 of this chapter.</P> <P>(3) <E T="03">Approval.</E> 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 § 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 <PRTPAGE P="81"/>the Bank that the applicant satisfies the 10 percent requirement.</P> <P>(4) <E T="03">Conditional approval deemed null and void.</E> 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 § 925.6(b), and its conditional membership approval is deemed null and void.</P> <P>(5) <E T="03">Treatment of outstanding advances and Bank stock.</E> 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 § 925.29.</P> <P>(d) <E T="03">Home financing policy requirement</E>—(1) <E T="03">Conditional approval.</E> 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 § 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 § 925.20 and the advances provisions of part 950 of this chapter.</P> <P>(2) <E T="03">Approval.</E> 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 § 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.</P> <P>(3) <E T="03">Conditional approval deemed null and void.</E> 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 § 925.6(a)(6), subject to rebuttal by the applicant under § 925.17(f), and its conditional membership approval is deemed null and void.</P> <P>(4) <E T="03">Treatment of outstanding advances and Bank stock.</E> 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 § 925.29.</P> <CITA>[67 FR 12848, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.15</SECTNO> <SUBJECT>Recent merger or acquisition applicants.</SUBJECT> <P>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 §§ 925.7 to 925.13 of this part except as provided in this section.</P> <P>(a) <E T="03">Financial condition requirement</E>—(1) <E T="03">Regulatory financial reports.</E> For purposes of § 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.</P> <P>(2) <E T="03">Performance trend criteria.</E> For purposes of § 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.</P> <P>(b) <E T="03">Home financing policy requirement.</E> For purposes of § 925.13 of this part, an <PRTPAGE P="82"/>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.</P> <P>(c) <E T="03">Makes long-term home mortgage loans requirement; 10 percent requirement.</E> For purposes of determining compliance with §§ 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.</P> <CITA>[61 FR 42545, Aug. 16, 1996, as amended at 63 FR 40023, 40024, July 27, 1998; 65 FR 8261, Feb. 18, 2000; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.16</SECTNO> <SUBJECT>Financial condition requirement for insurance company applicants.</SUBJECT> <P>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 § 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.17</SECTNO> <SUBJECT>Rebuttable presumptions.</SUBJECT> <P>(a) <E T="03">Rebutting presumptive compliance.</E> The presumption that an applicant meeting the requirements of §§ 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 § 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.</P> <P>(b) <E T="03">Rebutting presumptive noncompliance.</E> The presumption that an applicant not meeting a particular requirement of §§ 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 § 925.6(a)(2), (4), (5), or (6) of this part, may be rebutted, and the applicant shall be deemed to meet such requirement, if the applicable requirements in this section are satisfied.</P> <P>(c) <E T="03">Presumptive noncompliance by insurance company applicant with “subject to inspection and regulation” requirement of § 925.8.</E> 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 § 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 § 925.6(a)(2) of this part, notwithstanding the lack of NAIC accreditation.</P> <P>(d) <E T="03">Presumptive noncompliance with financial condition requirements of §§ 925.11 and 925.16</E>—(1) <E T="03">Applicants other than insurance companies.</E> 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 § 925.11(b)(1) of this part, a variance from the rating required by § 925.11(b)(3)(i) of this part, or a variance from a performance trend criterion required by § 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 § 925.6(a)(4) of this part, notwithstanding the lack of rating or variance.<PRTPAGE P="83"/> </P> <P>(2) <E T="03">Insurance company applicants.</E> In the case of an insurance company applicant's variance from a capital requirement or standard of § 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 § 925.6(a)(4) of this part, notwithstanding the variance.</P> <P>(e) <E T="03">Presumptive noncompliance with character of management requirement of § 925.12</E>—(1) <E T="03">Enforcement actions.</E> 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:</P> <P>(i) <E T="03">Regulator confirmation.</E> 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</P> <P>(ii) <E T="03">Written analysis.</E> 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.</P> <P>(2) <E T="03">Criminal, civil or administrative proceedings.</E> 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:</P> <P>(i) <E T="03">Regulator confirmation.</E> Written or verbal confirmation from the applicant's appropriate regulator that the proceedings will not likely result in enforcement action; or</P> <P>(ii) <E T="03">Written analysis.</E> 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.</P> <P>(3) <E T="03">Criminal, civil or administrative monetary liabilities, lawsuits or judgments.</E> 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 are significant to the applicant's operations, the applicant shall provide or the Bank shall obtain:</P> <P>(i) <E T="03">Regulator confirmation.</E> 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 §§ 925.11(b)(2) and 925.16 of this part; or</P> <P>(ii) <E T="03">Written analysis.</E> 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 §§ 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.</P> <P>(f) <E T="03">Presumptive noncompliance with home financing policy requirements of §§ 925.13 and 925.14(d).</E> 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:<PRTPAGE P="84"/> </P> <P>(1) <E T="03">Regulator confirmation.</E> 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</P> <P>(2) <E T="03">Written analysis.</E> 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.18</SECTNO> <SUBJECT>Determination of appropriate Bank district for membership.</SUBJECT> <P>(a) <E T="03">Eligibility.</E> (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.</P> <P>(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.</P> <P>(b) <E T="03">Principal place of business.</E> 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.</P> <P>(c) <E T="03">Designation of principal place of business.</E> (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 institution's principal place of business, provided all of the following criteria are satisfied:</P> <P>(i) At least 80 percent of the institution's accounting books, records and ledgers are maintained, located or held in such designated state;</P> <P>(ii) A majority of meetings of the institution's board of directors and constituent committees are conducted in such designated state; and</P> <P>(iii) A majority of the institution's five highest paid officers have their place of employment located in such designated state.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Transfer of membership.</E> (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.</P> <P>(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.</P> <P>(e) <E T="03">Effect of transfer.</E> A transfer of membership pursuant to this section shall be effective for all purposes, but shall not affect voting rights in the <PRTPAGE P="85"/>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 §§ 925.26 and 925.27, nor the restriction on reacquiring Bank membership set forth in § 925.30.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Stock Requirements</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 43542, Aug. 17, 1993, unless otherwise noted. Redesignated at 61 FR 42542, Aug. 16, 1996.</P> </SOURCE> <SECTION> <SECTNO>§ 925.19</SECTNO> <SUBJECT>Par value and price of stock.</SUBJECT> <P>The capital stock of each Bank shall be sold at par, unless the Board has fixed a higher price.</P> </SECTION> <SECTION> <SECTNO>§ 925.20</SECTNO> <SUBJECT>Stock purchase.</SUBJECT> <P>(a) <E T="03">Minimum stock purchase.</E> Each member shall purchase stock in the Bank in which it is a member in an amount equal to the greater of:</P> <P>(1) $500;</P> <P>(2) 1 percent of the member's aggregate unpaid loan principal; or</P> <P>(3) 5 percent of the member's aggregate amount of outstanding advances.</P> <P>(b) <E T="03">Timing of minimum stock purchase.</E> (1) Within 60 calendar days after an institution is approved for membership in a Bank pursuant to § 925.3 of this part, or an institution is automatically approved for membership pursuant to § 925.4(c) of this part, the institution shall purchase its minimum stock requirement as set forth in paragraph (a) of this section.</P> <P>(2) At the election of an institution approved for membership, including those automatically approved under § 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.</P> <P>(c) <E T="03">Commencement of membership.</E> 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.</P> <P>(d) <E T="03">Failure to purchase minimum stock requirement.</E> 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.</P> <P>(e) <E T="03">Reports.</E> The Bank shall make reports to the Finance Board setting forth purchases by institutions approved for membership of their minimum stock requirement pursuant to this section in accordance with the instructions provided in the Data Reporting Manual issued by the Finance Board, as amended from time to time.</P> <CITA>[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; 71 FR 35500, June 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.21</SECTNO> <SUBJECT>Issuance and form of stock.</SUBJECT> <P>(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.</P> <P>(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.</P> <P>(c) Stock may be issued in certificated or uncertificated form at the discretion of the Bank.</P> <P>(d) A Bank may convert all outstanding certificated stock to uncertificated form at its discretion.</P> </SECTION> <SECTION> <SECTNO>§ 925.22</SECTNO> <SUBJECT>Adjustments in stock holdings.</SUBJECT> <P>(a) <E T="03">Adjustment in general.</E> A Bank may from time to time increase or decrease the amount of stock any member is required to hold.</P> <P>(b)(1) <E T="03">Annual adjustment.</E> A Bank shall calculate annually, in the manner <PRTPAGE P="86"/>set forth in § 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 § 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.</P> <P>(2) <E T="03">Redemption of excess shares.</E> 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 <E T="03">pro rata</E> 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.</P> <P>(c) A member's stock holdings shall not be reduced under this section to an amount less than required by sections 6(b), 10(c) and 10(e) of the Act (12 U.S.C. 1426(b), 1430(c), 1430(e)).</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.23</SECTNO> <SUBJECT>Excess stock.</SUBJECT> <P>(a) <E T="03">Sale of excess stock.</E> Subject to the restriction in paragraph (b) of this section, a member may purchase excess stock as long as the purchase is approved by the member's Bank and is permitted by the laws under which the member operates.</P> <P>(b) <E T="03">Restriction.</E> Any Bank with excess stock greater than 1 percent of its total assets shall not declare or pay any dividends in the form of additional shares of Bank stock or otherwise issue any excess stock. A Bank shall not issue excess stock, as a dividend or otherwise, if after the issuance, the outstanding excess stock at the Bank would be greater than 1 percent of its total assets.</P> <CITA>[71 FR 78051, Dec. 28, 2006]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Consolidations Involving Members</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 43542, Aug. 17, 1993, unless otherwise noted. Redesignated at 61 FR 42542, Aug. 16, 1996.</P> </SOURCE> <SECTION> <SECTNO>§ 925.24</SECTNO> <SUBJECT>Consolidations involving members.</SUBJECT> <P>(a) <E T="03">Consolidation of members.</E> 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 <PRTPAGE P="87"/>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.</P> <P>(b) <E T="03">Consolidation into nonmember</E>—(1) <E T="03">In general.</E> 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.</P> <P>(2) <E T="03">Notification.</E> 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 § 925.29.</P> <P>(3) <E T="03">Application.</E> 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 § 925.29.</P> <P>(4) <E T="03">Outstanding indebtedness.</E> If a member has consolidated into a nonmember institution, the Bank need not 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 § 925.29, during:</P> <P>(i) The initial 60 calendar-day notification period;</P> <P>(ii) The 60 calendar-day period following receipt of a notification that the consolidated institution intends to apply for membership; and</P> <P>(iii) The period of time during which the Bank processes the application for membership.</P> <P>(5) <E T="03">Approval of membership.</E> 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 § 925.20 and § 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.</P> <P>(6) <E T="03">Disapproval of membership.</E> 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 § 925.29.</P> <P>(c) <E T="03">Dividends on acquired Bank stock.</E> 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 § 931.4(a) of this chapter.</P> <P>(d) <E T="03">Stock transfers.</E> 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 <PRTPAGE P="88"/>transfer shall be deemed to be approved by the Finance Board by compliance in all applicable respects with the requirements of this section.</P> <CITA>[66 FR 8308, Jan. 30, 2001, as amended at 67 FR 12849, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Withdrawal and Removal From Membership</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 43542, Aug. 17, 1993, unless otherwise noted. Redesignated at 61 FR 42542, Aug. 16, 1996.</P> </SOURCE> <SECTION> <SECTNO>§ 925.26</SECTNO> <SUBJECT>Voluntary withdrawal from membership.</SUBJECT> <P>(a) <E T="03">In general.</E> (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.</P> <P>(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.</P> <P>(b) <E T="03">Effective date of withdrawal.</E> 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 the effective date of the termination of its membership.</P> <P>(c) <E T="03">Stock redemption periods.</E> 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.</P> <P>(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.</P> <CITA>[66 FR 8309, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001; 67 FR 12849, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 925.27</SECTNO> <SUBJECT>Involuntary termination of membership.</SUBJECT> <P>(a) <E T="03">Grounds.</E> The board of directors of a Bank may terminate the membership of any institution that:</P> <P>(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;</P> <P>(2) Becomes insolvent or otherwise subject to the appointment of a conservator, receiver, or other legal custodian under federal or state law; or</P> <P>(3) Would jeopardize the safety or soundness of the Bank if it were to remain a member.</P> <P>(b) <E T="03">Stock redemption periods.</E> 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.<PRTPAGE P="89"/> </P> <P>(c) <E T="03">Membership rights.</E> 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.</P> <CITA>[66 FR 8309, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart G—Orderly Liquidation of Advances and Redemption of Stock</HD> <SECTION> <SECTNO>§ 925.29</SECTNO> <SUBJECT>Disposition of claims.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Bank stock.</E> 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart H—Reacquisition of Membership</HD> <SECTION> <SECTNO>§ 925.30</SECTNO> <SUBJECT>Readmission to membership.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Exceptions.</E> 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart I—Bank Access to Information</HD> <SECTION> <SECTNO>§ 925.31</SECTNO> <SUBJECT>Reports and examinations.</SUBJECT> <P>As a condition precedent to Bank membership, each member:</P> <P>(a) Consents to such examinations as the Bank or the Finance Board may require for purposes of the Act;</P> <P>(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;</P> <P>(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;</P> <P>(d) Agrees to provide the Bank with calendar year-end financial data each year, for purposes of making the calculation described in § 925.22(b)(1) of this part; and</P> <P>(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 <PRTPAGE P="90"/>any annual report of condition and operations required to be filed.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart J—Membership Insignia</HD> <SECTION> <SECTNO>§ 925.32</SECTNO> <SUBJECT>Official membership insignia.</SUBJECT> <P>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.”</P> <CITA>[58 FR 43542, Aug. 17, 1993. Redesignated at 61 FR 42542, Aug. 16, 1996]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 926</EAR> <HD SOURCE="HED">PART 926—FEDERAL HOME LOAN BANK HOUSING ASSOCIATES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>926.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>926.2</SECTNO> <SUBJECT>Bank authority to make advances to housing associates.</SUBJECT> <SECTNO>926.3</SECTNO> <SUBJECT>Housing associate eligibility requirements.</SUBJECT> <SECTNO>926.4</SECTNO> <SUBJECT>Satisfaction of eligibility requirements.</SUBJECT> <SECTNO>926.5</SECTNO> <SUBJECT>Housing associate application process.</SUBJECT> <SECTNO>926.6</SECTNO> <SUBJECT>Appeals.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a), 1430b.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 44426, July 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 926.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Governmental agency</E> 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.</P> <P> <E T="03">State housing finance agency</E> or <E T="03">SHFA</E> means:</P> <P>(1) A public agency, authority, or publicly sponsored corporation that 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</P> <P>(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.</P> <CITA>[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 926.2</SECTNO> <SUBJECT>Bank authority to make advances to housing associates.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 926.3</SECTNO> <SUBJECT>Housing associate eligibility requirements.</SUBJECT> <P>(a) <E T="03">General.</E> A Bank may certify as a housing associate any applicant that meets the following requirements, as determined using the criteria set forth in § 926.4:</P> <P>(1) The applicant is approved under title II of the National Housing Act (12 U.S.C. 1707, <E T="03">et seq.</E>);</P> <P>(2) The applicant is a chartered institution having succession;</P> <P>(3) The applicant is subject to the inspection and supervision of some governmental agency;</P> <P>(4) The principal activity of the applicant in the mortgage field consists of lending its own funds; and</P> <P>(5) The financial condition of the applicant is such that advances may be safely made to it.</P> <P>(b) <E T="03">State housing finance agencies.</E> In addition to meeting the requirements in paragraph (a) of this section, any applicant seeking access to advances as a SHFA pursuant to § 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 § 926.1.</P> </SECTION> <SECTION> <SECTNO>§ 926.4</SECTNO> <SUBJECT>Satisfaction of eligibility requirements.</SUBJECT> <P>(a) <E T="03">HUD approval requirement.</E> An applicant shall be deemed to meet the requirement in section 10b(a) of the Act (12 U.S.C. 1430b(a)) and § 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 <PRTPAGE P="91"/>or other documentation issued by HUD stating that the Federal Housing Administration of HUD has approved the applicant as a mortgagee.</P> <P>(b) <E T="03">Charter requirement.</E> An applicant shall be deemed to meet the requirement in section 10b(a) of the Act and § 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:</P> <P>(1) The applicant is a government agency; or</P> <P>(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.</P> <P>(c) <E T="03">Inspection and supervision requirement.</E> (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 § 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.</P> <P>(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.</P> <P>(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 cause or otherwise exercise enforcement or administrative control over actions of the applicant.</P> <P>(d) <E T="03">Mortgage activity requirement.</E> 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 § 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.</P> <P>(e) <E T="03">Financial condition requirement.</E> An applicant shall be deemed to meet the financial condition requirement in § 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.</P> <CITA>[65 FR 44426, July 18, 2000, as amended at 67 FR 12849, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 926.5</SECTNO> <SUBJECT>Housing associate application process.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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.</P> <P>(b) <E T="03">Application requirements.</E> 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 <PRTPAGE P="92"/>place of business, as determined in accordance with part 925 of this chapter, is located.</P> <P>(c) <E T="03">Bank decision process</E>—(1) <E T="03">Action on applications.</E> 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.</P> <P>(2) <E T="03">Decision on applications.</E> 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 Board with a copy of the Bank's decision resolution.</P> <P>(3) <E T="03">File.</E> 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.</P> <CITA>[65 FR 44426, July 18, 2000, as amended at 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 926.6</SECTNO> <SUBJECT>Appeals.</SUBJECT> <P>(a) <E T="03">General.</E> 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.</P> <P>(b) <E T="03">Record for appeal.</E> 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 § 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.</P> <P>(c) <E T="03">Deciding appeals.</E> 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.</P> <CITA>[65 FR 44426, July 18, 2000, as amended at 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="93"/> <HD SOURCE="HED">SUBCHAPTER E—FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL STANDARDS</HD> <PART> <EAR>Pt. 930</EAR> <HD SOURCE="HED">PART 930—DEFINITIONS APPLYING TO RISK MANAGEMENT AND CAPITAL REGULATIONS</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1436(a), 1440, 1443, and 1446.</P> </AUTH> <SECTION> <SECTNO>§ 930.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subchapter:</P> <P> <E T="03">Affiliated counterparty</E> 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.</P> <P> <E T="03">Certain drawdown</E> means a legally binding agreement that commits the Bank to make an advance or acquire a loan, at or by a specified future date.</P> <P> <E T="03">Charges against the capital of the Bank</E> 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.</P> <P> <E T="03">Class A stock</E> means capital stock issued by a Bank, including subclasses, that has the characteristics specified by § 931.1(a) of this subchapter.</P> <P> <E T="03">Class B stock</E> means capital stock issued by a Bank, including subclasses, that has the characteristics specified by § 931.1(b) of this subchapter.</P> <P> <E T="03">Contingency liquidity</E> 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:</P> <P>(1) Marketable assets with a maturity of one year or less;</P> <P>(2) Self-liquidating assets with a maturity of seven days or less;</P> <P>(3) Assets that are generally accepted as collateral in the repurchase agreement market; and</P> <P>(4) Irrevocable lines of credit from financial institutions rated not lower than the second highest credit rating category by an NRSRO.</P> <P> <E T="03">Credit derivative contract</E> means a derivative contract that transfers credit risk.</P> <P> <E T="03">Credit risk</E> 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.</P> <P> <E T="03">Derivative contract</E> 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.</P> <P> <E T="03">Exchange rate contracts</E> include cross-currency interest-rate swaps, forward foreign exchange rate contracts, currency options purchased, and any similar instruments that give rise to similar risks.</P> <P> <E T="03">General allowance for losses</E> 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.</P> <P> <E T="03">Government Sponsored Enterprise, or GSE,</E> 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.</P> <P> <E T="03">Interest rate contracts</E> 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.</P> <P> <E T="03">Investment grade</E> means:</P> <P>(1) A credit quality rating in one of the four highest credit rating categories by an NRSRO and not below the fourth highest rating category by any NRSRO; or</P> <P>(2) If there is no credit quality rating by an NRSRO, a determination by a <PRTPAGE P="94"/>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.</P> <P> <E T="03">Market risk</E> 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.</P> <P> <E T="03">Marketable</E> 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.</P> <P> <E T="03">Market value at risk</E> 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 § 932.5 of this chapter.</P> <P> <E T="03">Minimum investment</E> 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 § 931.3 of this chapter.</P> <P> <E T="03">Operations risk</E> 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.</P> <P> <E T="03">Permanent capital</E> means the retained earnings of a Bank, determined in accordance with GAAP, plus the amount paid-in for the Bank's Class B stock.</P> <P> <E T="03">Redeem or Redemption</E> 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.</P> <P> <E T="03">Regulatory risk-based capital requirement</E> means the amount of permanent capital that a Bank is required to maintain in accordance with § 932.3 of this chapter.</P> <P> <E T="03">Regulatory total capital requirement</E> means the amount of total capital that a Bank is required to maintain in accordance with § 932.2 of this chapter.</P> <P> <E T="03">Repurchase</E> 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.</P> <P> <E T="03">Repurchase agreement</E> 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.</P> <P> <E T="03">Sales of federal funds subject to a continuing contract</E> means an overnight federal funds loan that is automatically renewed each day unless terminated by either the lender or the borrower.</P> <P> <E T="03">Total assets</E> means the total assets of a Bank, as determined in accordance with GAAP.</P> <P> <E T="03">Total capital</E> 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.</P> <P> <E T="03">Walkaway clause</E> 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.</P> <CITA>[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; 71 FR 78051, Dec. 28, 2006]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 931</EAR> <HD SOURCE="HED">PART 931—FEDERAL HOME LOAN BANK CAPITAL STOCK</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>931.1</SECTNO> <SUBJECT>Classes of capital stock.</SUBJECT> <SECTNO>931.2</SECTNO> <SUBJECT>Issuance of capital stock.</SUBJECT> <SECTNO>931.3</SECTNO> <SUBJECT>Minimum investment in capital stock.</SUBJECT> <SECTNO>931.4</SECTNO> <SUBJECT>Dividends.</SUBJECT> <SECTNO>931.5</SECTNO> <SUBJECT>Liquidation, merger, or consolidation.</SUBJECT> <SECTNO>931.6</SECTNO> <SUBJECT>Transfer of capital stock.</SUBJECT> <SECTNO>931.7</SECTNO> <SUBJECT>Redemption and repurchase of capital stock.</SUBJECT> <SECTNO>931.8</SECTNO> <SUBJECT>Other restrictions on the repurchase or redemption of Bank stock.</SUBJECT> <SECTNO>931.9</SECTNO> <SUBJECT>Transition provision.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>66 FR 8310, Jan. 30, 2001, unless otherwise noted.</P> </SOURCE> <SECTION> <PRTPAGE P="95"/> <SECTNO>§ 931.1</SECTNO> <SUBJECT>Classes of capital stock.</SUBJECT> <P>The authorized capital stock of a Bank shall consist of the following instruments:</P> <P>(a) Class A stock, which shall:</P> <P>(1) Have a par value as determined by the board of directors of the Bank and stated in the Bank's capital plan;</P> <P>(2) Be issued, redeemed, and repurchased only at its stated par value; and</P> <P>(3) Be redeemable in cash only on six-months written notice to the Bank.</P> <P>(b) Class B stock, which shall:</P> <P>(1) Have a par value as determined by the board of directors of the Bank and stated in the Bank's capital plan;</P> <P>(2) Be issued, redeemed, and repurchased only at its stated par value;</P> <P>(3) Be redeemable in cash only on five-years written notice to the Bank; and</P> <P>(4) Confer an ownership interest in the retained earnings, surplus, undivided profits, and equity reserves of the Bank; and</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 931.2</SECTNO> <SUBJECT>Issuance of capital stock.</SUBJECT> <P>(a) <E T="03">In general.</E> A Bank may issue either one or both classes of its capital stock (including subclasses), as authorized by § 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.</P> <P>(b) <E T="03">Initial issuance.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 931.3</SECTNO> <SUBJECT>Minimum investment in capital stock.</SUBJECT> <P>(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 with the Bank against which the Bank is required to maintain capital.</P> <P>(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.</P> <P>(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.</P> <P>(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 <PRTPAGE P="96"/>member in accordance with the Bank's capital plan.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 931.4</SECTNO> <SUBJECT>Dividends.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Limitation on payment of dividends.</E> 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 931.5</SECTNO> <SUBJECT>Liquidation, merger, or consolidation.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 931.6</SECTNO> <SUBJECT>Transfer of capital stock.</SUBJECT> <P>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.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 931.7</SECTNO> <SUBJECT>Redemption and repurchase of capital stock.</SUBJECT> <P>(a) <E T="03">Redemption.</E> 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 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 <PRTPAGE P="97"/>shall not be obligated to redeem its capital stock other than in accordance with this paragraph.</P> <P>(b) <E T="03">Repurchase.</E> 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.</P> <P>(c) <E T="03">Limitation.</E> 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 § 931.3.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 931.8</SECTNO> <SUBJECT>Other restrictions on the repurchase or redemption of Bank stock.</SUBJECT> <P>(a) <E T="03">Capital impairment.</E> 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.</P> <P>(b) <E T="03">Bank discretion to suspend redemption.</E> 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 §§ 932.2 or 932.3 of this chapter, would prevent the 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 931.9</SECTNO> <SUBJECT>Transition provision.</SUBJECT> <P>(a) <E T="03">In general.</E> Each Bank shall comply with the minimum leverage and risk-based capital requirements specified in § 932.2 and § 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 § 925.20 and § 925.22 of this chapter.<PRTPAGE P="98"/> </P> <P>(b) <E T="03">Transition period</E>—(1) <E T="03">Bank transition.</E> A Bank that will not be in compliance with the minimum leverage and risk-based capital requirements specified in § 932.2 and § 932.3 of this chapter as of the effective date of its capital plan shall maintain compliance with the leverage limit requirements in § 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 § 932.2 and § 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 § 932.2 of this chapter, the leverage limit requirements of § 966.3(a) of this chapter shall cease to apply to that Bank.</P> <P>(2) <E T="03">Member transition.</E> (i) <E T="03">Existing members.</E> 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.</P> <P>(ii) <E T="03">New members.</E> 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.</P> <P>(3) <E T="03">New business.</E> 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.</P> </SECTION> </PART> <PART> <EAR>Pt. 932</EAR> <HD SOURCE="HED">PART 932—FEDERAL HOME LOAN BANK CAPITAL REQUIREMENTS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>932.1</SECTNO> <SUBJECT>Risk management.</SUBJECT> <SECTNO>932.2</SECTNO> <SUBJECT>Total capital requirement.</SUBJECT> <SECTNO>932.3</SECTNO> <SUBJECT>Risk-based capital requirement.</SUBJECT> <SECTNO>932.4</SECTNO> <SUBJECT>Credit risk capital requirement.</SUBJECT> <SECTNO>932.5</SECTNO> <SUBJECT>Market risk capital requirement.</SUBJECT> <SECTNO>932.6</SECTNO> <SUBJECT>Operations risk capital requirement.</SUBJECT> <SECTNO>932.7</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <SECTNO>932.8</SECTNO> <SUBJECT>Minimum liquidity requirements.</SUBJECT> <SECTNO>932.9</SECTNO> <SUBJECT>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.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>66 FR 8310, Jan. 30, 2001, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 932.1</SECTNO> <SUBJECT>Risk management.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 932.2</SECTNO> <SUBJECT>Total capital requirement.</SUBJECT> <P>(a) Each Bank shall maintain at all times:</P> <P>(1) Total capital in an amount at least equal to 4.0 percent of the Bank's total assets; and</P> <P>(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 <PRTPAGE P="99"/>by 1.5 and adding to this product all other components of total capital.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 932.3</SECTNO> <SUBJECT>Risk-based capital requirement.</SUBJECT> <P>(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 §§ 932.4, 932.5 and 932.6, respectively.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 932.4</SECTNO> <SUBJECT>Credit risk capital requirement.</SUBJECT> <P>(a) <E T="03">General requirement.</E> 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.</P> <P>(b) <E T="03">Credit risk capital charge for assets.</E> 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.</P> <P>(c) <E T="03">Credit risk capital charge for off-balance sheet items.</E> 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.</P> <P>(d) <E T="03">Credit risk capital charge for derivative contracts</E>—(1) <E T="03">Derivative contracts with non-member counterparties.</E> 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 :</P> <P>(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:</P> <P>(A) The remaining maturity of the derivative contract shall be deemed to be less than one year for the purpose of applying Table 1.1 or 1.3 of this part; and</P> <P>(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</P> <P>(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.</P> <P>(2) <E T="03">Derivative contracts with a member.</E> 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.</P> <P>(e) <E T="03">Determination of credit risk percentage requirements</E>—(1) <E T="03">Finance Board determination of credit risk percentage requirements.</E> The Finance Board shall determine, and update periodically, the <PRTPAGE P="100"/>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.</P> <P>(2) <E T="03">Bank determination of credit risk percentage requirements.</E> (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:</P> <GPOTABLE CDEF="s25,10" COLS="2" OPTS="L2"> <TTITLE>Table 1.1—Requirement for Advances</TTITLE> <BOXHD> <CHED H="1">Type of advances</CHED> <CHED H="1">Percentage applicable to advances</CHED> </BOXHD> <ROW> <ENT I="11">Advances with:</ENT> </ROW> <ROW> <ENT I="02">Remaining maturity <= 4 years</ENT> <ENT>0.07</ENT> </ROW> <ROW> <ENT I="02">Remaining maturity > 4 years to 7 years</ENT> <ENT>0.20</ENT> </ROW> <ROW> <ENT I="02">Remaining maturity > 7 years to 10 years</ENT> <ENT>0.30</ENT> </ROW> <ROW> <ENT I="02">Remaining maturity > 10 years</ENT> <ENT>0.35</ENT> </ROW> </GPOTABLE> <GPOTABLE CDEF="s25,10" COLS="2" OPTS="L2"> <TTITLE>Table 1.2—Requirement for Rated Residential Mortgage Assets</TTITLE> <BOXHD> <CHED H="1">Type of residential mortgage asset</CHED> <CHED H="1">Percentage applicable to residential mortgage assets</CHED> </BOXHD> <ROW> <ENT I="01">Highest Investment Grade</ENT> <ENT>0.37</ENT> </ROW> <ROW> <ENT I="01">Second Highest Investment Grade</ENT> <ENT>0.60</ENT> </ROW> <ROW> <ENT I="01">Third Highest Investment Grade</ENT> <ENT>0.86</ENT> </ROW> <ROW> <ENT I="01">Fourth Highest Investment Grade</ENT> <ENT>1.20</ENT> </ROW> <ROW> <ENT I="11">If Downgraded to Below Investment Grade After Acquisition By Bank:</ENT> </ROW> <ROW> <ENT I="02">Highest Below Investment Grade</ENT> <ENT>2.40</ENT> </ROW> <ROW> <ENT I="02">Second Highest Below Investment Grade</ENT> <ENT>4.80</ENT> </ROW> <ROW> <ENT I="02">All Other Below Investment Grade</ENT> <ENT>34.00</ENT> </ROW> <ROW> <ENT I="11">Subordinated Classes of Mortgage Assets:</ENT> </ROW> <ROW> <ENT I="02">Highest Investment Grade</ENT> <ENT>0.37</ENT> </ROW> <ROW> <ENT I="02">Second Highest Investment Grade</ENT> <ENT>0.60</ENT> </ROW> <ROW> <ENT I="02">Third Highest Investment Grade</ENT> <ENT>1.60</ENT> </ROW> <ROW> <ENT I="02">Fourth Highest Investment Grade</ENT> <ENT>4.45</ENT> </ROW> <ROW> <ENT I="11">If Downgraded to Below Investment Grade After Acquisition By Bank:</ENT> </ROW> <ROW> <ENT I="02">Highest Below Investment Grade</ENT> <ENT>13.00</ENT> </ROW> <ROW> <ENT I="02">Second Highest Below Investment Grade</ENT> <ENT>34.00</ENT> </ROW> <ROW> <ENT I="02">All Other Below Investment Grade</ENT> <ENT>100.00</ENT> </ROW> </GPOTABLE> <GPOTABLE CDEF="s100,10,10,10,10,10" COLS="6" OPTS="L2"> <TTITLE>Table 1.3—Requirement for rated Assets or Rated Items Other Than Advances or Residential Mortgage Assets</TTITLE> <TDESC>[Based on remaining maturity]</TDESC> <BOXHD> <CHED H="1"/> <CHED H="1">Applicable percentage</CHED> <CHED H="2">≤ 1 year</CHED> <CHED H="2">>1 yr to 3 yrs</CHED> <CHED H="2">>3 yrs to 7yrs</CHED> <CHED H="2">>7 yrs to 10 yrs</CHED> <CHED H="2">>10 yrs</CHED> </BOXHD> <ROW> <ENT I="01">U.S. Government Securities</ENT> <ENT>0.00</ENT> <ENT>0.00</ENT> <ENT>0.00</ENT> <ENT>0.00</ENT> <ENT>0.00</ENT> </ROW> <ROW> <ENT I="01">Highest Investment Grade</ENT> <ENT>0.15</ENT> <ENT>0.40</ENT> <ENT>0.90</ENT> <ENT>1.40</ENT> <ENT>2.20</ENT> </ROW> <ROW> <ENT I="01">Second Highest Investment Grade</ENT> <ENT>0.20</ENT> <ENT>0.45</ENT> <ENT>1.00</ENT> <ENT>1.45</ENT> <ENT>2.30</ENT> </ROW> <ROW> <ENT I="01">Third Highest Investment Grade</ENT> <ENT>0.70</ENT> <ENT>1.10</ENT> <ENT>1.60</ENT> <ENT>2.05</ENT> <ENT>2.95</ENT> </ROW> <ROW> <ENT I="01">Fourth Highest Investment Grade</ENT> <ENT>2.50</ENT> <ENT>3.70</ENT> <ENT>4.45</ENT> <ENT>5.50</ENT> <ENT>7.05</ENT> </ROW> <ROW> <ENT I="11">If Downgraded Below Investment Grade After Acquisition by Bank:</ENT> </ROW> <ROW> <ENT I="03">Highest Below Investment Grade</ENT> <ENT>10.00</ENT> <ENT>13.00</ENT> <ENT>13.00</ENT> <ENT>13.00</ENT> <ENT>13.00</ENT> </ROW> <ROW> <ENT I="03">Second Highest Below Investment Grade</ENT> <ENT>26.00</ENT> <ENT>34.00</ENT> <ENT>34.00</ENT> <ENT>34.00</ENT> <ENT>34.00</ENT> </ROW> <ROW> <ENT I="03">All Other</ENT> <ENT>100.00</ENT> <ENT>100.00</ENT> <ENT>100.00</ENT> <ENT>100.00</ENT> <ENT>100.00</ENT> </ROW> </GPOTABLE> <GPOTABLE CDEF="s25,10" COLS="2" OPTS="L2"> <TTITLE>Table 1.4—Requirement for Unrated Assets</TTITLE> <BOXHD> <CHED H="1">Type of unrated asset</CHED> <CHED H="1">Applicable percentage</CHED> </BOXHD> <ROW> <ENT I="01">Cash</ENT> <ENT>0.00</ENT> </ROW> <ROW> <ENT I="01">Premises, Plant, and Equipment</ENT> <ENT>8.00</ENT> </ROW> <ROW> <ENT I="01">Investments Under § 940.3(e) & (f)</ENT> <ENT>8.00</ENT> </ROW> </GPOTABLE> <P>(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:</P> <P>(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.</P> <P>(B) When using Table 1.3 of this part, for an asset, off-balance sheet item, or <PRTPAGE P="101"/>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:</P> <P>(<E T="03">1</E>) 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 § 950.1 of this chapter;</P> <P>(<E T="03">2</E>) Legally available to absorb losses;</P> <P>(<E T="03">3</E>) Of a readily determinable value at which it can be liquidated by the Bank;</P> <P>(<E T="03">4</E>) Held in accordance with the provisions of the Bank's member products policy established pursuant to § 917.4 of this chapter; and</P> <P>(<E T="03">5</E>) 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.</P> <P>(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:</P> <P>(<E T="03">1</E>) The highest short-term credit rating shall be equivalent to the third highest long-term rating;</P> <P>(<E T="03">2</E>) The second highest short-term rating shall be equivalent to the fourth highest long-term rating;</P> <P>(<E T="03">3</E>) The third highest short-term rating shall be equivalent to the fourth highest long-term rating; and</P> <P>(<E T="03">4</E>) 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.</P> <P>(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.</P> <P>(E) The credit risk percentage requirement for mortgage assets that are acquired member assets described in § 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 § 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.<PRTPAGE P="102"/> </P> <P>(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:</P> <P>(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.</P> <P>(B) Where a credit rating has a modifier (<E T="03">e.g.,</E> 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 T="03">e.g.,</E> A-1+ = A-1 and A+ or A-= A);</P> <P>(f) <E T="03">Calculation of credit equivalent amount for off-balance sheet items</E>—(1) <E T="03">General requirement.</E> 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:</P> <GPOTABLE CDEF="s50,12" COLS="2" OPTS="L2"> <TTITLE>Table 2—Credit Conversion Factors for Off-Balance Sheet Items</TTITLE> <BOXHD> <CHED H="1">Instrument</CHED> <CHED H="1">Credit conversion factor<LI>(In percent)</LI> </CHED> </BOXHD> <ROW> <ENT I="01">Asset sales with recourse where the credit risk remains with the Bank</ENT> <ENT>100</ENT> </ROW> <ROW> <ENT I="01">Commitments to make advances subject to certain drawdown</ENT> </ROW> <ROW> <ENT I="01">Commitments to acquire loans subject to certain drawdown</ENT> </ROW> <ROW> <ENT I="01">Standby letters of credit</ENT> <ENT>50</ENT> </ROW> <ROW> <ENT I="01">Other commitments with original maturity of over one year</ENT> </ROW> <ROW> <ENT I="01">Other commitments with original maturity of one year or less</ENT> <ENT>20</ENT> </ROW> </GPOTABLE> <P>(2) <E T="03">Exceptions.</E> 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.</P> <P>(g) <E T="03">Calculation of current and potential future credit exposures for single derivative contracts</E>—(1) <E T="03">Current credit exposure.</E> 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:</P> <P>(i) If the mark-to-market value of the contract is positive, the mark-to-market value of the contract; or</P> <P>(ii) If the mark-to-market value of the contract is zero or negative, zero.</P> <P>(2) <E T="03">Potential future credit exposure.</E> (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:</P> <GPOTABLE CDEF="s100,9.1,9.1,10,10,10" COLS="6" OPTS="L2"> <TTITLE>Table 3—Credit Conversion Factors for Potential Future Credit Exposure Derivative Contracts</TTITLE> <TDESC>[In percent]</TDESC> <BOXHD> <CHED H="1">Residual maturity</CHED> <CHED H="1">Interest rate</CHED> <CHED H="1">Foreign<LI>exchange and gold</LI> </CHED> <CHED H="1">Equity</CHED> <CHED H="1">Precious metals except gold</CHED> <CHED H="1">Other commodities</CHED> </BOXHD> <ROW> <ENT I="01">One year or less</ENT> <ENT>0</ENT> <ENT>1</ENT> <ENT>6</ENT> <ENT>7</ENT> <ENT>10</ENT> </ROW> <ROW> <ENT I="01">Over 1 year to five years</ENT> <ENT>.5</ENT> <ENT>5</ENT> <ENT>8</ENT> <ENT>7</ENT> <ENT>12</ENT> </ROW> <ROW> <ENT I="01">Over five years</ENT> <ENT>1.5</ENT> <ENT>7.5</ENT> <ENT>10</ENT> <ENT>8</ENT> <ENT>15</ENT> </ROW> </GPOTABLE> <PRTPAGE P="103"/> <P>(ii) In applying the credit conversion factors in Table 3 of this part the following modifications shall be made:</P> <P>(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</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(h) <E T="03">Calculation of current and potential future credit exposures for multiple derivative contracts subject to a qualifying bilateral netting contract</E>—(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:</P> <P>(i) The net sum of all positive and negative mark-to-market values of the individual derivative contracts subject to a qualifying bilateral netting contract, if the net sum of the mark-to-market values is positive; or</P> <P>(ii) Zero, if the net sum of the mark-to-market values is zero or negative.</P> <P>(2) <E T="03">Potential future credit exposure.</E> 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: </P> <FP SOURCE="FP-1">A<E T="52">net</E> = 0.4 × A<E T="52">gross</E> + (0.6 × NGR × A<E T="52">gross</E>),</FP> <FP>where:</FP> <P>(i) A<E T="52">net</E> is the potential future credit exposure for an individual derivative contract subject to the qualifying bilateral netting contract;</P> <P>(ii) A<E T="52">gross</E> is the gross potential future credit exposure, <E T="03">i.e.,</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;</P> <P>(iii) NGR is the net to gross ratio, <E T="03">i.e.,</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</P> <P>(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.</P> <P>(3) <E T="03">Qualifying bilateral netting contract.</E> A bilateral netting contract shall be considered a qualifying bilateral netting contract if the following conditions are met:</P> <P>(i) The netting contract is in writing;</P> <P>(ii) The netting contract is not subject to a walkaway clause;<PRTPAGE P="104"/> </P> <P>(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;</P> <P>(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:</P> <P>(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;</P> <P>(B) The law of the jurisdiction that governs the individual derivative contracts covered by the netting contract; and</P> <P>(C) The law of the jurisdiction that governs the netting contract;</P> <P>(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</P> <P>(vi) The Bank maintains in its files documentation adequate to support the netting of a derivative contract.</P> <P>(i) <E T="03">Credit risk capital charge for assets hedged with credit derivatives</E>—(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.</P> <P>(2) <E T="03">Credit derivatives with a remaining maturity of less than one year.</E> 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 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.</P> <P>(3) <E T="03">Capital charge reduced to zero.</E> 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:</P> <P>(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:</P> <P>(A) The asset referenced in the credit derivative is identical to the hedged asset; or</P> <P>(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</P> <P>(ii) The credit risk capital charge for the credit derivative contract calculated pursuant to paragraph (d) of this section is still applied.</P> <P>(4) <E T="03">Capital charge reduction in certain other cases.</E> 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:</P> <P>(i) The remaining maturity for the credit derivative is less than the remaining maturity for the hedged asset and either:</P> <P>(A) The asset referenced in the credit derivative is identical to the hedged asset; or</P> <P>(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 <PRTPAGE P="105"/>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</P> <P>(ii) The credit risk capital charge for the unhedged portion of the asset equals:</P> <P>(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</P> <P>(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</P> <P>(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.</P> <P>(j) <E T="03">Zero Credit risk capital charge for certain derivative contracts.</E> The credit risk capital charge for the following derivative contracts shall be zero:</P> <P>(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</P> <P>(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.</P> <P>(k) <E T="03">Date of calculations.</E> 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 932.5</SECTNO> <SUBJECT>Market risk capital requirement.</SUBJECT> <P>(a) <E T="03">General requirement.</E> (1) Each Bank's market risk capital requirement shall equal the sum of:</P> <P>(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</P> <P>(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:</P> <P>(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</P> <P>(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 § 932.7 of this part.</P> <P>(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:</P> <P>(i) The Bank obtains Finance Board approval of the internal cash flow model and of the assumptions to be applied to the model; and</P> <P>(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.</P> <P>(b) <E T="03">Measurement of market value at risk under a Bank's internal market risk model.</E> (1) Except as provided under paragraph (a)(2) of this section, each <PRTPAGE P="106"/>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.</P> <P>(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.</P> <P>(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.</P> <P>(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:</P> <P>(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;</P> <P>(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;</P> <P>(iii) The total number of, and specific historical observations identified by the Bank as, stress scenarios shall be:</P> <P>(A) Satisfactory to the Finance Board;</P> <P>(B) Representative of the periods of the greatest potential market stress given the Bank's portfolio, and</P> <P>(C) Comprehensive given the modeling capabilities available to the Bank; and</P> <P>(iv) The measure of the market value of the Bank's portfolio at risk may incorporate empirical correlations among interest rates.</P> <P>(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:</P> <P>(i) The probability of a loss greater than that estimated shall not exceed one percent;</P> <P>(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</P> <P>(iii) The total number of, and specific historical observations identified by the Bank as, stress scenarios shall be:</P> <P>(A) Satisfactory to the Finance Board;</P> <P>(B) Representative of the periods of greatest potential stress given the Bank's portfolio; and</P> <P>(C) Comprehensive given the modeling capabilities available to the Bank; and</P> <P>(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.</P> <P>(c) <E T="03">Independent validation of Bank internal market risk model or internal cash flow model.</E> (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 <PRTPAGE P="107"/>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.</P> <P>(2) The results of such independent validations shall be reviewed by the Bank's board of directors and provided promptly to the Finance Board.</P> <P>(d) <E T="03">Finance Board approval of Bank internal market risk model or internal cash flow model.</E> 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.</P> <P>(e) <E T="03">Date of calculations.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 932.6</SECTNO> <SUBJECT>Operations risk capital requirement.</SUBJECT> <P>(a) <E T="03">General requirement.</E> 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.</P> <P>(b) <E T="03">Alternative requirements.</E> 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:</P> <P>(1) The Bank provides an alternative methodology for assessing and quantifying an operations risk capital requirement; or</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 932.7</SECTNO> <SUBJECT>Reporting requirements.</SUBJECT> <P>Each Bank shall report to the Finance Board by the 15th business day of 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.</P> </SECTION> <SECTION> <SECTNO>§ 932.8</SECTNO> <SUBJECT>Minimum liquidity requirements.</SUBJECT> <P>In addition to meeting the deposit liquidity requirements contained in § 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.</P> </SECTION> <SECTION> <SECTNO>§ 932.9</SECTNO> <SUBJECT>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.</SUBJECT> <P>(a) <E T="03">Unsecured extensions of credit to a single counterparty.</E> 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.</P> <P>(1) <E T="03">Term limits.</E> 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 <PRTPAGE P="108"/>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:</P> <P>(i) The Bank's total capital; or</P> <P>(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.</P> <P>(2) <E T="03">Overall limits including sales of overnight federal funds.</E> 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.</P> <P>(3) <E T="03">Limits for certain obligations issued by state, local or tribal governmental agencies.</E> 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 § 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 § 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.</P> <P>(4) <E T="03">Bank determination of applicable maximum capital exposure limits.</E> (i) Except as set forth in paragraph (a)(4)(ii) or (a)(4)(iii) of this section, the applicable maximum capital exposure limits 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:</P> <GPOTABLE CDEF="s25,12" COLS="2" OPTS="L2"> <TTITLE>Table 4—Maximum Limits on Unsecured Extensions of Credit to a Single Counterparty by Counterparty Long-Term Credit Rating Category</TTITLE> <BOXHD> <CHED H="1">Long-term credit rating of counterparty category</CHED> <CHED H="1">Maximum capital exposure limit<LI>(in percent)</LI> </CHED> </BOXHD> <ROW> <ENT I="01">Highest Investment Grade</ENT> <ENT>15</ENT> </ROW> <ROW> <ENT I="01">Second Highest Investment Grade</ENT> <ENT>14</ENT> </ROW> <ROW> <ENT I="01">Third Highest Investment Grade</ENT> <ENT>9</ENT> </ROW> <ROW> <ENT I="01">Fourth Highest Investment Grade</ENT> <ENT>3</ENT> </ROW> <ROW> <ENT I="01">Below Investment Grade or Other</ENT> <ENT>1</ENT> </ROW> </GPOTABLE> <P>(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:</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P>(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 <PRTPAGE P="109"/>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.</P> <P>(5) <E T="03">Bank determination of applicable credit ratings.</E> The following criteria shall be applied to determine a counterparty's credit rating:</P> <P>(i) The counterparty's most recent credit rating from a given NRSRO shall be considered;</P> <P>(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;</P> <P>(iii) Where a credit rating has a modifier, the credit rating is deemed to be the credit rating without the modifier;</P> <P>(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</P> <P>(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.</P> <P>(b) <E T="03">Unsecured extensions of credit to affiliated counterparties</E>—(1) <E T="03">In general.</E> 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.</P> <P>(2) <E T="03">Relation to individual limits.</E> 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.</P> <P>(c) <E T="03">Special limits for GSEs</E>—(1) <E T="03">In general.</E> 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 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:</P> <P>(i) The Bank's total capital; or</P> <P>(ii) The GSE's total capital (as defined by the GSE's principal regulator) or some similar comparable measure identified by the Bank.</P> <P>(2) <E T="03">Sub-limit for subordinated debt.</E> 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.</P> <P>(3) <E T="03">Limits applying to a GSE after a downgrade.</E> 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.</P> <P>(4) <E T="03">Extensions of unsecured credit to other Banks.</E> The limits of this section do not apply to unsecured credit extended by one Bank to another Bank.</P> <P>(d) <E T="03">Extensions of unsecured credit after downgrade or placement on credit watch.</E> 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 <PRTPAGE P="110"/>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.</P> <P>(e) <E T="03">Reporting requirements</E>—(1) <E T="03">Total unsecured extensions of credit.</E> 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:</P> <P>(i) The Bank's total capital; or</P> <P>(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.</P> <P>(2) <E T="03">Total secured and unsecured extensions of credit.</E> 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.</P> <P>(3) <E T="03">Extensions of credit in excess of limits.</E> 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.</P> <P>(f) <E T="03">Measurement of unsecured extensions of credit</E>—(1) <E T="03">In general.</E> For purposes of this section, unsecured extensions of credit will be measured as follows:</P> <P>(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;</P> <P>(ii) For off-balance sheet transactions, an amount equal to the credit equivalent amount of such item, calculated in accordance with § 932.4(f) of this part; and</P> <P>(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 §§ 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 § 932.4(e)(2)(ii)(B) of this part against the credit exposure from the derivative contract.</P> <P>(2) <E T="03">Status of debt obligations purchased by the Bank.</E> Any debt obligation or debt security (other than mortgage-backed securities or acquired member assets that are identified in §§ 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:</P> <P>(i) Any amount owed the Bank against which the Bank holds collateral in accordance with § 932.4(e)(2)(ii)(B) of this part; or</P> <P>(ii) Any amount which the Finance Board has determined on a case-by-case basis shall not be considered an unsecured extension of credit.</P> <P>(g) <E T="03">Obligations of the United States.</E> Obligations of, or guaranteed by, the United States are not subject to the requirements of this section.</P> <CITA>[66728, Dec. 27, 2002]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 933</EAR> <HD SOURCE="HED">PART 933—BANK CAPITAL STRUCTURE PLANS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>933.1</SECTNO> <SUBJECT>Submission of plan.<PRTPAGE P="111"/> </SUBJECT> <SECTNO>933.2</SECTNO> <SUBJECT>Contents of plan.</SUBJECT> <SECTNO>933.3</SECTNO> <SUBJECT>Independent review of capital plan.</SUBJECT> <SECTNO>933.4</SECTNO> <SUBJECT>Transition provisions.</SUBJECT> <SECTNO>933.5</SECTNO> <SUBJECT>Disclosure to members concerning capital plan and capital stock conversion.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1440, 1443, 1446.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>66 FR 8310, Jan. 30, 2001, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 933.1</SECTNO> <SUBJECT>Submission of plan.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Failure to submit a capital plan.</E> 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.</P> <P>(c) <E T="03">Consideration of the plan.</E> 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, and may require that the capital plans of all Banks take effect on the same date.</P> </SECTION> <SECTION> <SECTNO>§ 933.2</SECTNO> <SUBJECT>Contents of plan.</SUBJECT> <P>The capital plan for each Bank shall include, at a minimum, provisions addressing the following matters:</P> <P>(a) <E T="03">Minimum investment.</E> (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 § 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.</P> <P>(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.</P> <P>(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.</P> <P>(4) The minimum investment established by the capital plan shall be set at a level that, when applied to all <PRTPAGE P="112"/>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.</P> <P>(b) <E T="03">Classes of capital stock.</E> 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 § 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.</P> <P>(c) <E T="03">Dividends.</E> 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.</P> <P>(d) <E T="03">Initial issuance.</E> 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 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.</P> <P>(e) <E T="03">Members wishing not to convert existing stock.</E> 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 §§ 925.26(b) and (c) of this chapter, provided, however, that the applicable stock redemption periods calculated under § 925.26(c) of this chapter shall commence on date the member first submitted its written notice to withdraw to the Finance Board.</P> <P>(f) <E T="03">Stock transactions.</E> 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:<PRTPAGE P="113"/> </P> <P>(1) Shall provide that the Bank may not issue stock other than in accordance with § 931.2 of this chapter;</P> <P>(2) Shall provide that the stock of the Bank may be issued only to and held only by the members of that Bank;</P> <P>(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 § 931.6 of this chapter;</P> <P>(4) Shall specify that the stock of the Bank may be traded only between the Bank and its members;</P> <P>(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;</P> <P>(6) Shall specify the fee, if any, to be imposed on a member that cancels a request to redeem Bank stock; and</P> <P>(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.</P> <P>(g) <E T="03">Termination of membership.</E> 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.</P> <P>(h) <E T="03">Implementation.</E> 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.</P> <CITA>[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 933.3</SECTNO> <SUBJECT>Independent review of capital plan.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 933.4</SECTNO> <SUBJECT>Transition provisions.</SUBJECT> <P>(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.</P> <P>(b) Any transition provision shall comply with the requirements of § 931.9.</P> </SECTION> <SECTION> <SECTNO>§ 933.5</SECTNO> <SUBJECT>Disclosure to members concerning capital plan and capital stock conversion.</SUBJECT> <P>(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 § 933.2(e).</P> <P>(b) The following information shall be provided to members about the Class A and/or Class B stock that a <PRTPAGE P="114"/>Bank intends to issue on the effective date of its capital plan:</P> <P>(1) With regard to each class or subclass of authorized stock, a description of:</P> <P>(i) Dividend rights;</P> <P>(ii) The terms of conversion;</P> <P>(iii) Redemption and repurchase rights;</P> <P>(iv) Voting rights and preferences,</P> <P>(v) Liquidation rights; and</P> <P>(vi) Any liability to further calls or to assessments by the Banks;</P> <P>(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.</P> <P>(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</P> <P>(4) A description of any other material features concerning the Bank's initial issuance of Class A and/or Class B stock.</P> <P>(c) In addition to the disclosure about Class A and/or Class B stock, the following information shall be provided to members:</P> <P>(1) The Bank shall disclose financial information as follows:</P> <P>(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 § 989.4 of this chapter;</P> <P>(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 estimates of its risk-based capital requirement, calculated in accordance with § 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</P> <P>(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 § 989.4 of this chapter or an annual or quarterly Bank System report, and the disclosure identifies the information being incorporated by reference;</P> <P>(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.</P> <P>(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;</P> <P>(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:</P> <P>(i) A description of the minimum stock investment requirements set forth in the capital plan;</P> <P>(ii) A statement outlining the requirements for amending the capital plan;</P> <P>(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;</P> <P>(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 § 933.2(e) of this part) for the member not to have its existing Bank stock <PRTPAGE P="115"/>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</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P>(d) Nothing in this section shall create or be deemed to create any rights in any third party.</P> <CITA>[66 FR 54109, Oct. 26, 2001]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="116"/> <HD SOURCE="HED">SUBCHAPTER F—FEDERAL HOME LOAN BANK MISSION</HD> <PART> <EAR>Pt. 940</EAR> <HD SOURCE="HED">PART 940—CORE MISSION ACTIVITIES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>940.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>940.2</SECTNO> <SUBJECT>Mission of the Banks.</SUBJECT> <SECTNO>940.3</SECTNO> <SUBJECT>Core mission activities.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1430, 1430b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 25278, May 1, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 940.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Targeted income level</E> has the meaning set forth in paragraphs (1) and (2) of the definition of “targeted income level” in § 952.1 of this chapter.</P> <CITA>[67 FR 12850, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 940.2</SECTNO> <SUBJECT>Mission of the Banks.</SUBJECT> <P>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:</P> <P>(a) Financing of housing, including single-family and multi-family housing serving consumers at all income levels; and</P> <P>(b) Community lending.</P> <CITA>[65 FR 25278, May 1, 2000, as amended at 67 FR 12850, Mar. 20, 2002; 67 FR 39791, June 10, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 940.3</SECTNO> <SUBJECT>Core mission activities.</SUBJECT> <P>The following Bank activities qualify as core mission activities:</P> <P>(a) Advances;</P> <P>(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);</P> <P>(c) Standby letters of credit;</P> <P>(d) Intermediary derivative contracts;</P> <P>(e) Debt or equity investments:</P> <P>(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:</P> <P>(i) Housing;</P> <P>(ii) Economic development;</P> <P>(iii) Community services;</P> <P>(iv) Permanent jobs; or</P> <P>(v) Area revitalization or stabilization;</P> <P>(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</P> <P>(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;</P> <P>(f) Investments in SBICs, where one or more members or housing associates of the Bank also make a material investment in the same activity;</P> <P>(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 <E T="03">et seq.</E>);</P> <P>(h) Section 108 Interim Notes and Participation Certificates guaranteed by the Department of Housing and Urban Development under section 108 <PRTPAGE P="117"/>of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5308); and</P> <P>(i) Investments and obligations issued or guaranteed under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <E T="03">et seq.</E>).</P> <CITA>[65 FR 43981, July 17, 2000]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 944</EAR> <HD SOURCE="HED">PART 944—COMMUNITY SUPPORT REQUIREMENTS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>944.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>944.2</SECTNO> <SUBJECT>Community support requirement.</SUBJECT> <SECTNO>944.3</SECTNO> <SUBJECT>Community support standards.</SUBJECT> <SECTNO>944.4</SECTNO> <SUBJECT>Decision on community support statements.</SUBJECT> <SECTNO>944.5</SECTNO> <SUBJECT>Restrictions on access to long-term advances.</SUBJECT> <SECTNO>944.6</SECTNO> <SUBJECT>Bank community support programs.</SUBJECT> <SECTNO>944.7</SECTNO> <SUBJECT>Reports.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3)(B), 1422b(a)(1), 1430(g).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>62 FR 28988, May 29, 1997, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 944.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this part:</P> <P> <E T="03">Advisory Council</E> 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.</P> <P> <E T="03">CRA</E> means the Community Reinvestment Act of 1977, as amended (12 U.S.C. 2901, et seq.).</P> <P> <E T="03">CRA evaluation</E> means the public disclosure portion of the CRA performance evaluation provided by a member's appropriate Federal banking agency.</P> <P> <E T="03">Displaced homemaker</E> 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.</P> <P> <E T="03">First-time homebuyer</E> means:</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P> <E T="03">Long-term advance</E> means an advance with a term to maturity greater than one year.</P> <P> <E T="03">Restriction on access to long-term advances</E> means a member may not borrow long-term advances or renew any maturing advance for a term to maturity greater than one year.</P> <P> <E T="03">Single parent</E> 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.</P> <P> <E T="03">Targeted community lending</E> has the meaning set forth in § 952.1 of this chapter.</P> <CITA>[67 FR 12850, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 944.2</SECTNO> <SUBJECT>Community support requirement.</SUBJECT> <P>(a) <E T="03">Selection for community support review.</E> The Finance Board shall select a member for community support review approximately once every two years.</P> <P>(b) <E T="03">Notice</E>—(1) <E T="03">By the Finance Board.</E> The Finance Board concurrently shall:</P> <P>(i) Notify each Bank of the members within its district that are required to submit community support statements during the calendar quarter; and</P> <P>(ii) Publish a notice in the <E T="04">Federal Register</E> 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 <E T="04">Federal Register.</E> </P> <P>(2) <E T="03">By the Banks.</E> Within 15 calendar days of the date of publication in the <PRTPAGE P="118"/> <E T="04">Federal Register</E> of the notice required by paragraph (b)(1)(ii) of this section, a Bank shall provide written notice to:</P> <P>(i) Each member within its district that is named in the <E T="04">Federal Register</E> notice, that the member is required to submit a community support statement to the Finance Board by the deadline stated in the <E T="04">Federal Register</E> notice; and</P> <P>(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.</P> <P>(c) <E T="03">Required documents.</E> 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.</P> <P>(d) <E T="03">Public comments.</E> 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.</P> <CITA>[62 FR 28988, May 29, 1997, as amended at 65 FR 5739, Feb. 7, 2000; 67 FR 12850, Mar. 20, 2002; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 944.3</SECTNO> <SUBJECT>Community support standards.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">CRA standard</E>—(1) <E T="03">Adequate performance.</E> 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.”</P> <P>(2) <E T="03">Probationary performance.</E> 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 § 944.5.</P> <P>(3) <E T="03">Inadequate performance.</E> A member's access to long-term advances shall be restricted in accordance with § 944.5 if the rating in the member's most recent CRA evaluation is “substantial noncompliance.”</P> <P>(c) <E T="03">First-time homebuyer standard</E>—(1) <E T="03">Adequate performance.</E> 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:</P> <P>(i) Has an established record of lending to first-time homebuyers;</P> <P>(ii) Has a program whereby it actively seeks to lend or support lending to first-time homebuyers, including, but not limited to, the following:</P> <P>(A) Providing special credit products with flexible underwriting standards for first-time homebuyers;</P> <P>(B) Participating in federal, state, or local government, or nationwide homeownership lending programs that benefit, serve, or are targeted to, first-time homebuyers; or</P> <P>(C) Participating in loan consortia for first-time homebuyer loans or loans that serve predominantly low- or moderate-income borrowers;<PRTPAGE P="119"/> </P> <P>(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:</P> <P>(A) Providing, participating in, or supporting special counseling programs or other homeownership education activities that benefit, serve, or are targeted to, first-time homebuyers;</P> <P>(B) Providing or participating in marketing plans and related outreach programs targeted to first-time homebuyers;</P> <P>(C) Providing technical assistance of financial support to organizations that assist first-time homebuyers;</P> <P>(D) Participating with or financially supporting community or nonprofit groups that assist first-time homebuyers;</P> <P>(E) Holding investments or making loans that support first-time homebuyer programs;</P> <P>(F) Holding mortgage-backed securities that may include a pool of loans to low- and moderate-income homebuyers;</P> <P>(G) Participating or investing in service organizations that assist credit unions in providing mortgages; or</P> <P>(H) Participating in Bank targeted community lending programs; or</P> <P>(iv) Has any combination of the elements described in paragraphs (c)(1)(i), (ii), or (iii) of this section.</P> <P>(2) <E T="03">Probationary performance.</E> 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 § 944.5.</P> <P>(3) <E T="03">Inadequate performance.</E> A member's access to long-term advances shall be restricted in accordance with § 944.5 if the member provides no evidence of first-time homebuyer performance.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <SECTNO>§ 944.4</SECTNO> <SUBJECT>Decision on community support statements.</SUBJECT> <P>(a) <E T="03">Action on community support statements.</E> The Finance Board shall act on each community support statement in accordance with the requirements of § 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.</P> <P>(b) <E T="03">Decision on community support statements.</E> 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 member. The notice shall identify the reasons for the Finance Board's determination.</P> <CITA>[62 FR 28988, May 29, 1997, as amended at 65 FR 5739, Feb. 7, 2000; 65 FR 8262, Feb. 18, 2000; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <PRTPAGE P="120"/> <SECTNO>§ 944.5</SECTNO> <SUBJECT>Restrictions on access to long-term advances.</SUBJECT> <P>(a) <E T="03">Requirement.</E> The Finance Board shall restrict a member's access to long-term advances if the member:</P> <P>(1) Failed to comply with the requirements of this part;</P> <P>(2) Submitted a community support statement that was not approved by the Finance Board;</P> <P>(3) Did not receive a rating in a CRA evaluation of “outstanding” or “satisfactory” at the end of the probationary period described in § 944.3(b)(2); or</P> <P>(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 § 944.3(c)(2).</P> <P>(b) <E T="03">Notice.</E> 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.</P> <P>(c) <E T="03">Effective date.</E> 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.</P> <P>(d) <E T="03">Removing restrictions.</E> (1) The Finance Board may remove restrictions on a member's access to long-term advances imposed under this section:</P> <P>(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.</P> <P>(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.</P> <P>(2) The Finance Board shall place a member on probation in accordance with § 944.3(b)(2), if:</P> <P>(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 § 944.3(b)(3);</P> <P>(ii) The rating in the member's subsequent CRA evaluation is “needs to improve;” and</P> <P>(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.</P> <P>(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.</P> <P>(e) <E T="03">CICA.</E> 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 chapter. The restriction in this paragraph (e) shall not apply to CICA applications or funding approved before the date the restriction is imposed.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> <SECTION> <PRTPAGE P="121"/> <SECTNO>§ 944.6</SECTNO> <SUBJECT>Bank community support programs.</SUBJECT> <P>(a) <E T="03">Requirement.</E> 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:</P> <P>(1) Provide technical assistance to members;</P> <P>(2) Promote and expand affordable housing finance;</P> <P>(3) Identify opportunities for members to expand financial and credit services in underserved neighborhoods and communities;</P> <P>(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</P> <P>(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:</P> <P>(i) Conduct market research in the Bank's district;</P> <P>(ii) Describe how the Bank will address identified credit needs and market opportunities in the Bank's district for targeted community lending;</P> <P>(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</P> <P>(iv) Establish quantitative targeted community lending performance goals.</P> <P>(b) <E T="03">Notice.</E> A Bank shall provide annually to each of its members a written notice:</P> <P>(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</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 944.7</SECTNO> <SUBJECT>Reports.</SUBJECT> <P>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.</P> <CITA>[63 FR 65545, Nov. 27, 1998, as amended at 65 FR 44428, July 18, 2000; 67 FR 12850, Mar. 20, 2002]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="122"/> <HD SOURCE="HED">SUBCHAPTER G—FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS</HD> <PART> <EAR>Pt. 950</EAR> <HD SOURCE="HED">PART 950—ADVANCES</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Advances to Members</HD> <SECHD>Sec.</SECHD> <SECTNO>950.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>950.2</SECTNO> <SUBJECT>Authorization and application for advances; obligation to repay advances.</SUBJECT> <SECTNO>950.3</SECTNO> <SUBJECT>Purpose of long-term advances; Proxy text.</SUBJECT> <SECTNO>950.4</SECTNO> <SUBJECT>Limitations on access to advances.</SUBJECT> <SECTNO>950.5</SECTNO> <SUBJECT>Terms and conditions for advances.</SUBJECT> <SECTNO>950.6</SECTNO> <SUBJECT>Fees.</SUBJECT> <SECTNO>950.7</SECTNO> <SUBJECT>Collateral.</SUBJECT> <SECTNO>950.8</SECTNO> <SUBJECT>Banks as secured creditors.</SUBJECT> <SECTNO>950.9</SECTNO> <SUBJECT>Pledged collateral; verification.</SUBJECT> <SECTNO>950.10</SECTNO> <SUBJECT>Collateral valuation; appraisals.</SUBJECT> <SECTNO>950.11</SECTNO> <SUBJECT>Capital stock requirements; unilateral redemption of excess stock.</SUBJECT> <SECTNO>950.12</SECTNO> <SUBJECT>Intradistrict transfer of advances.</SUBJECT> <SECTNO>950.13</SECTNO> <SUBJECT>Special advances to savings associations.</SUBJECT> <SECTNO>950.14</SECTNO> <SUBJECT>Advances to the Savings Association Insurance Fund.</SUBJECT> <SECTNO>950.15</SECTNO> <SUBJECT>Liquidation of advances upon termination of membership.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Advances to Housing Associates</HD> <SECTNO>950.16</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>950.17</SECTNO> <SUBJECT>Advances to housing associates.</SUBJECT> </SUBPART> </CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart C—Advances to Out-of-District Members and Housing Associates</HD> <SECTNO>950.25</SECTNO> <SUBJECT>Advances to out-of-district members and housing associates.</SUBJECT> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1426, 1429, 1430, 1430b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>58 FR 29469, May 20, 1993, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart A—Advances to Members</HD> <SECTION> <SECTNO>§ 950.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Affiliate</E> means any business entity that controls, is controlled by, or is under common control with, a member.</P> <P> <E T="03">Capital deficient member</E> 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.</P> <P> <E T="03">Cash equivalents</E> means investments that—</P> <P>(1) Are readily convertible into known amounts of cash;</P> <P>(2) Have a remaining maturity of 90 days or less at the acquisition date; and</P> <P>(3) Are held for liquidity purposes.</P> <P> <E T="03">CFI member</E> means a member that is a Community Financial Institution, as defined in § 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:</P> <P>(1) Based on the average of total assets drawn from the institution's regulatory financial reports (as defined in § 925.1 of this chapter) filed with its appropriate regulator (as defined in § 925.1 of this chapter) for the three most recent calendar year-ends; and</P> <P>(2) Annually, and shall be effective April 1 of each year.</P> <P> <E T="03">Credit union</E> means a credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).</P> <P> <E T="03">Depository institution</E> means a bank, savings association, or credit union.</P> <P> <E T="03">Dwelling unit</E> means a single room or a unified combination of rooms designed for residential use by one household.</P> <P> <E T="03">Improved residential real property</E> means residential real property excluding real property to be improved, or in the process of being improved, by the construction of dwelling units.</P> <P> <E T="03">Insurer</E> 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.</P> <P> <E T="03">Long-term advance</E> means an advance with an original term to maturity greater than five years.</P> <P> <E T="03">Manufactured housing</E> means a manufactured home as defined in section <PRTPAGE P="123"/>603(6) of the Manufactured Home Construction and Safety Standards Act of 1974, as amended (42 U.S.C. 5402(6)).</P> <P> <E T="03">Mortgage-backed security</E> means:</P> <P>(1) An equity security representing an ownership interest in:</P> <P>(i) Fully disbursed, whole first mortgage loans on improved residential real property; or</P> <P>(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</P> <P>(2) An obligation, bond, or other debt security backed entirely by the assets described in paragraph (1)(i) or (ii) of this definition.</P> <P> <E T="03">Multifamily property</E> means:</P> <P>(1)(i) Real property that is solely residential and which includes five or more dwelling units; or</P> <P>(ii) Real property which includes five or more dwelling units with commercial units combined, provided the property is primarily residential.</P> <P>(2) Multifamily property as defined in this section includes nursing homes, dormitories and homes for the elderly.</P> <P> <E T="03">Nonresidential real property</E> 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.</P> <P> <E T="03">One-to-four family property</E> means any of the following:</P> <P>(1) Real property containing:</P> <P>(i) One-to-four dwelling units; or</P> <P>(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;</P> <P>(2) Manufactured housing if:</P> <P>(i) Applicable state law defines the purchase or holding of manufactured housing as the purchase or holding of real property; and</P> <P>(ii) The loan to purchase the manufactured housing is secured by that manufactured housing;</P> <P>(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</P> <P>(4) Real property containing one-to-four dwelling units with commercial units combined, provided the property is primarily residential.</P> <P> <E T="03">Residential housing finance assets</E> means any of the following:</P> <P>(1) Loans secured by residential real property;</P> <P>(2) Mortgage-backed securities;</P> <P>(3) Participations in loans secured by residential real property;</P> <P>(4) Loans or investments qualifying under the definition of “community lending” in § 900.1 of this chapter;</P> <P>(5) Loans secured by manufactured housing, regardless of whether such housing qualifies as residential real property; or</P> <P>(6) Any loans or investments which the Finance Board, in its discretion, otherwise determines to be residential housing finance assets.</P> <P> <E T="03">Residential real property</E> means:</P> <P>(1) Any of the following:</P> <P>(i) One-to-four family property;</P> <P>(ii) Multifamily property;</P> <P>(iii) Real property to be improved by the construction of dwelling units;</P> <P>(iv) Real property in the process of being improved by the construction of dwelling units;</P> <P>(2) The term residential real property does not include nonresidential real property as defined in this section.</P> <P> <E T="03">Savings association</E> means a savings association as defined in section 3(b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. 1813(b)).</P> <P> <E T="03">Small agri-business loans</E> 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).<PRTPAGE P="124"/> </P> <P> <E T="03">Small business loans</E> 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).</P> <P> <E T="03">Small farm loans</E> 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).</P> <P> <E T="03">State housing finance agency</E> or <E T="03">SHFA</E> has the meaning set forth in § 926.1 of this chapter.</P> <P> <E T="03">State regulator</E> 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.</P> <P> <E T="03">Tangible capital</E> means:</P> <P>(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.</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.2</SECTNO> <SUBJECT>Authorization and application for advances; obligation to repay advances.</SUBJECT> <P>(a) <E T="03">Application for advances.</E> A Bank may accept oral or written applications for advances from its members.</P> <P>(b) <E T="03">Obligation to repay advances.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Secured advances.</E> (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.</P> <P>(2) The Bank shall execute a written security agreement with each borrowing member which establishes the Bank's security interest in collateral securing advances.</P> <P>(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.</P> <P>(d) <E T="03">Form of applications and agreements.</E> 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 <PRTPAGE P="125"/>specifically authorized by the board of directors to approve such forms.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.3</SECTNO> <SUBJECT>Purpose of long-term advances; Proxy test.</SUBJECT> <P>(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.</P> <P>(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.</P> <P>(2) Applications for CICA advances are exempt from the requirements of paragraph (b)(1) of this section.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.4</SECTNO> <SUBJECT>Limitations on access to advances.</SUBJECT> <P>(a) <E T="03">Credit underwriting.</E> A Bank, in its discretion, may:</P> <P>(1) Limit or deny a member's application for an advance if, in the Bank's judgment, such member:</P> <P>(i) Is engaging or has engaged in any unsafe or unsound banking practices;</P> <P>(ii) Has inadequate capital;</P> <P>(iii) Is sustaining operating losses;</P> <P>(iv) Has financial or managerial deficiencies, as determined by the Bank, that bear upon the member's creditworthiness; or</P> <P>(v) Has any other deficiencies, as determined by the Bank; or</P> <P>(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.</P> <P>(b) <E T="03">New advances to members without positive tangible capital.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Renewals of advances to members without positive tangible capital</E>—(1) <E T="03">Renewal for 30-day terms.</E> 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.</P> <P>(2) <E T="03">Renewal for longer than 30-day terms.</E> 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.</P> <P>(d) <E T="03">Advances to capital deficient but solvent members.</E> (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.</P> <P>(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.</P> <P>(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.<PRTPAGE P="126"/> </P> <P>(e) <E T="03">Reporting.</E> (1) Each Bank shall provide the Finance Board with a report of the advances and commitments outstanding to each of its members in accordance with the instructions provided in the Data Reporting Manual issued by the Finance Board, as amended from time to time.</P> <P>(2) 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.</P> <P>(f) <E T="03">Members without federal regulators.</E> 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.</P> <P>(g) <E T="03">Advance commitments.</E> (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.</P> <P>(2) Each Bank shall include the stipulation contained in paragraph (g)(1) of this section as a clause in either:</P> <P>(i) The written advances agreement required by § 950.2(b)(2) of this part; or</P> <P>(ii) The written advances application required by § 950.2(a) of this part.</P> <CITA>[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; 71 FR 35500, June 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.5</SECTNO> <SUBJECT>Terms and conditions for advances.</SUBJECT> <P>(a) <E T="03">Advance maturities.</E> 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.</P> <P>(b) <E T="03">Advance pricing</E>—(1) <E T="03">General.</E> A Bank shall not price its advances to members below:</P> <P>(i) The marginal cost to the Bank of raising matching term and maturity funds in the marketplace, including embedded options; and</P> <P>(ii) The administrative and operating costs associated with making such advances to members.</P> <P>(2) <E T="03">Differential pricing.</E> (i) Each Bank may, in pricing its advances, distinguish among members based upon its assessment of:</P> <P>(A) The credit and other risks to the Bank of lending to any particular member; or</P> <P>(B) Other reasonable criteria that may be applied equally to all members.</P> <P>(ii) Each Bank shall include in its member products policy required by § 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.</P> <P>(3) <E T="03">Exceptions.</E> The advance pricing policies contained in paragraph (b)(1) of this section shall not apply in the case of:</P> <P>(i) A Bank's CICA programs; and</P> <P>(ii) Any other advances programs that are volume limited and specifically approved by the Bank's board of directors.</P> <P>(c) <E T="03">Authorization for pricing advances.</E> (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.</P> <P>(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.</P> <P>(d) <E T="03">Putable or convertible advances</E>—(1) <E T="03">Disclosure.</E> 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.</P> <P>(2) <E T="03">Replacement funding for putable advances.</E> 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 <PRTPAGE P="127"/>the member, provided the member is able to satisfy the normal credit and collateral requirements of the Bank for the replacement funding requested.</P> <P>(3) <E T="03">Definition.</E> For purposes of this paragraph (d), the term <E T="03">putable advance</E> 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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.6</SECTNO> <SUBJECT>Fees.</SUBJECT> <P>(a) <E T="03">Fees in member products policy.</E> 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 § 917.4 of this chapter. Any such fee schedules or formulas shall be applied consistently and without discrimination to all members.</P> <P>(b) <E T="03">Prepayment fees.</E> (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.</P> <P>(2) Prepayment fees are not required for:</P> <P>(i) Advances with original terms to maturity or repricing periods of six months or less;</P> <P>(ii) Advances funded by callable debt; or</P> <P>(iii) Advances which are otherwise appropriately hedged so that the Bank is financially indifferent to their prepayment.</P> <P>(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.</P> <P>(4) A Bank, in determining whether or not to waive a prepayment fee, shall apply consistent standards to all of its members.</P> <P>(c) <E T="03">Commitment fees.</E> Each Bank may charge a fee for its commitment to fund an advance.</P> <P>(d) <E T="03">Other fees.</E> Each Bank is authorized to charge other fees as it deems necessary and appropriate.</P> <CITA>[58 FR 29469, May 20, 1993; 65 FR 8263, Feb. 18, 2000. Redesignated and amended at 65 FR 44429, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.7</SECTNO> <SUBJECT>Collateral.</SUBJECT> <P>(a) <E T="03">Eligible security for advances to all members.</E> 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:</P> <P>(1) <E T="03">Mortgage loans and privately issued securities.</E> (i) Fully disbursed, whole first mortgage loans on improved residential real property not more than 90 days delinquent; or</P> <P>(ii) Privately issued mortgage-backed securities, excluding the following:</P> <P>(A) Securities that represent a share of only the interest payments or only the principal payments from the underlying mortgage loans;</P> <P>(B) Securities that represent a subordinate interest in the cash flows from the underlying mortgage loans;</P> <P>(C) Securities that represent an interest in any residual payments from the underlying pool of mortgage loans; or</P> <P>(D) Such other high-risk securities as the Finance Board in its discretion may determine.</P> <P>(2) <E T="03">Agency securities.</E> Securities issued, insured or guaranteed by the United States Government, or any agency thereof, including without limitation:</P> <P>(i) Mortgage-backed securities issued or guaranteed by Freddie Mac, Fannie Mae, Ginnie Mae, or any other agency of the United States Government;</P> <P>(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 <PRTPAGE P="128"/>is for the direct benefit of the holder of the mortgage or loan; and</P> <P>(iii) Securities backed by, or representing an equity interest in, mortgages or other loans referred to in paragraph (a)(2)(ii) of this section.</P> <P>(3) <E T="03">Cash or deposits.</E> Cash or deposits in a Bank.</P> <P>(4) <E T="03">Other real estate-related collateral.</E> (i) Other real estate-related collateral provided that:</P> <P>(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</P> <P>(B) The Bank can perfect a security interest in such collateral.</P> <P>(ii) Eligible other real estate-related collateral may include, but is not limited to:</P> <P>(A) Privately issued mortgage-backed securities not otherwise eligible under paragraph (a)(1)(ii) of this section;</P> <P>(B) Second mortgage loans, including home equity loans;</P> <P>(C) Commercial real estate loans; and</P> <P>(D) Mortgage loan participations.</P> <P>(5) <E T="03">Securities representing equity interests in eligible advances collateral.</E> Any security the ownership of which represents an undivided equity interest in underlying assets, all of which qualify either as:</P> <P>(i) Eligible collateral under paragraphs (a)(1), (2), (3) or (4) of this section; or</P> <P>(ii) Cash equivalents.</P> <P>(b) <E T="03">Additional collateral eligible as security for advances to CFI members or their affiliates</E>—(1) <E T="03">General.</E> 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:</P> <P>(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</P> <P>(ii) The Bank can perfect a security interest in such collateral.</P> <P>(2) <E T="03">Change in CFI status.</E> 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:</P> <P>(i) Permit the advances of such member to run to their stated maturities; and</P> <P>(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.</P> <P>(c) <E T="03">Bank restrictions on eligible advances collateral.</E> 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.</P> <P>(d) <E T="03">Additional advances collateral.</E> 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).</P> <P>(e) <E T="03">Bank stock as collateral.</E> (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.</P> <P>(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.</P> <P>(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)).<PRTPAGE P="129"/> </P> <P>(f) <E T="03">Advances collateral security requiring formal approval.</E> 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.</P> <P>(g) <E T="03">Pledge of advances collateral by affiliates.</E> 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:</P> <P>(1) The collateral is pledged to secure either:</P> <P>(i) The member's obligation to repay advances; or</P> <P>(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</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.8</SECTNO> <SUBJECT>Banks as secured creditors.</SUBJECT> <P>(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.</P> <P>(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:</P> <P>(1) Would be entitled to priority under otherwise applicable law; and</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.9</SECTNO> <SUBJECT>Pledged collateral; verification.</SUBJECT> <P>(a) <E T="03">Collateral safekeeping.</E> (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 § 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.</P> <P>(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.</P> <P>(3) A Bank may at any time perfect its security interest in collateral securing an advance to a member.</P> <P>(b) <E T="03">Collateral verification.</E> 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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.10</SECTNO> <SUBJECT>Collateral valuation; appraisals.</SUBJECT> <P>(a) <E T="03">Collateral valuation.</E> 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 § 917.4 of this chapter.<PRTPAGE P="130"/> </P> <P>(b) <E T="03">Fair application of procedures.</E> 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.</P> <P>(c) <E T="03">Appraisals.</E> 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.</P> <CITA>[65 FR 44430, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.11</SECTNO> <SUBJECT>Capital stock requirements; unilateral redemption of excess stock.</SUBJECT> <P>(a) <E T="03">Capital stock requirement for advances.</E> 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.</P> <P>(b) <E T="03">Unilateral redemption of excess capital stock; fee in lieu prohibited.</E> (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.</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.12</SECTNO> <SUBJECT>Intradistrict transfer of advances.</SUBJECT> <P>(a) <E T="03">Advances held by members.</E> 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.</P> <P>(b) <E T="03">Advances held by nonmembers.</E> 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.</P> <CITA>[59 FR 2950, Jan. 20, 1994. Redesignated at 65 FR 44430, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.13</SECTNO> <SUBJECT>Special advances to savings associations.</SUBJECT> <P>(a) <E T="03">Eligible institutions.</E> (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.</P> <P>(2) Such request must certify that the member:</P> <P>(i) Is solvent but presents a supervisory concern to the OTS because of the member's financial condition; and</P> <P>(ii) Has reasonable and demonstrable prospects of returning to a satisfactory financial condition.</P> <P>(b) <E T="03">Terms and conditions.</E> Advances made by a Bank to a member savings association under this section shall:</P> <P>(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</P> <P>(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.</P> <CITA>[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 and further redesignated at 65 FR 44430, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.14</SECTNO> <SUBJECT>Advances to the Savings Association Insurance Fund.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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 <PRTPAGE P="131"/>a copy of such request to the Finance Board.</P> <P>(b) <E T="03">Requirements.</E> Advances to the FDIC for the use of the Savings Association Insurance Fund shall:</P> <P>(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;</P> <P>(2) Have a maturity acceptable to the Bank;</P> <P>(3) Be subject to any prepayment, commitment, or other appropriate fees of the Bank; and</P> <P>(4) Be adequately secured by collateral acceptable to the Bank.</P> <CITA>[58 FR 29469, May 20, 1993, as amended at 65 FR 8262, Feb. 18, 2000. Redesignated at 65 FR 44430, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.15</SECTNO> <SUBJECT>Liquidation of advances upon termination of membership.</SUBJECT> <P>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.</P> <CITA>[58 FR 29469, May 20, 1993. Redesignated at 65 FR 8256, Feb. 18, 2000 and further redesignated at 65 FR 44430, July 18, 2000]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Advances to Housing Associates</HD> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>62 FR 12079, Mar. 14, 1997, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 950.16</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>Except as otherwise provided in §§ 950.14 and 950.17, the requirements of subpart A apply to this subpart.</P> <CITA>[58 FR 29469, May 20, 1993. Redesignated at 65 FR 44430, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 950.17</SECTNO> <SUBJECT>Advances to housing associates.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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.</P> <P>(b) <E T="03">Collateral requirements</E>—(1) <E T="03">Advances to housing associates.</E> A Bank may make an advance to any housing associate upon the security of the following collateral:</P> <P>(i) Mortgage loans insured by the Federal Housing Administration of HUD under title II of the National Housing Act; or</P> <P>(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.</P> <P>(2) <E T="03">Certain advances to SHFAs.</E> (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 § 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:</P> <P>(A) The collateral described in § 950.7(a)(1) or (2).</P> <P>(B) The collateral described in § 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 § 926.3(b).</P> <P>(C) The other real estate-related collateral described in § 950.7(a)(4), provided that such collateral comprises mortgage loans on one-to-four family or multifamily residential property.</P> <P>(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.<PRTPAGE P="132"/> </P> <P>(c) <E T="03">Terms and conditions</E>—(1) <E T="03">General.</E> 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.</P> <P>(2) <E T="03">Advance pricing.</E> (i) A Bank shall price advances to housing associates in accordance with the requirements for pricing advances to members set forth in § 950.3(b). Wherever the term “member” appears in § 950.3(b), the term shall be construed also to mean “housing associate.”</P> <P>(ii) A Bank shall apply the pricing criteria identified in § 950.5(b)(2) equally to all of its member and housing associate borrowers.</P> <P>(3) <E T="03">Limit on advances.</E> 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.</P> <P>(d) <E T="03">Transaction accounts.</E> 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.</P> <P>(e) <E T="03">Loss of eligibility</E>—(1) <E T="03">Notification of status changes.</E> 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.</P> <P>(2) <E T="03">Verification of eligibility.</E> 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.</P> <P>(3) <E T="03">Loss of eligibility.</E> 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.</P> <CITA>[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; 70 FR 9510, Feb. 28, 2005]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Advances to Out-of-District Members and Housing Associates</HD> <SECTION> <SECTNO>§ 950.25</SECTNO> <SUBJECT>Advances to out-of-district members and housing associates.</SUBJECT> <P>(a) <E T="03">Establishment of creditor/debtor relationship.</E> 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.</P> <P>(b) <E T="03">Applicability of advances requirements.</E> 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.</P> <CITA>[65 FR 43981, July 17, 2000; 65 FR 46049, July 26, 2000, as amended at 67 FR 12852, Mar. 20, 2002]</CITA> </SECTION> </SUBPART> </PART> <PART> <EAR>Pt. 952</EAR> <HD SOURCE="HED">PART 952—COMMUNITY INVESTMENT CASH ADVANCE PROGRAMS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>952.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>952.2</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>952.3</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>952.4</SECTNO> <SUBJECT>Targeted Community Lending Plan.</SUBJECT> <SECTNO>952.5</SECTNO> <SUBJECT>Community Investment Cash Advance Programs.</SUBJECT> <SECTNO>952.6</SECTNO> <SUBJECT>Reporting.</SUBJECT> <SECTNO>952.7</SECTNO> <SUBJECT>Documentation.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a)(1), 1430.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>63 FR 65546, Nov. 27, 1998, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 952.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Champion Community</E> means a community which developed a strategic <PRTPAGE P="133"/>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.</P> <P> <E T="03">CICA program</E> or <E T="03">Community Investment Cash Advance program</E> means:</P> <P>(1) A Bank's AHP;</P> <P>(2) A Bank's CIP;</P> <P>(3) A Bank's RDF program or UDF program using any combination of the targeted beneficiaries and targeted income levels specified in § 952.1 of this part; and</P> <P>(4) Any other advance or grant program offered by a Bank using targeted beneficiaries and targeted income levels other than those specified in § 952.1 of this part, established by the Bank with the prior approval of the Finance Board.</P> <P> <E T="03">Economic development projects</E> means:</P> <P>(1) Commercial, industrial, manufacturing, social service, and public facility projects and activities; and</P> <P>(2) Public or private infrastructure projects, such as roads, utilities, and sewers.</P> <P> <E T="03">Family</E> means one or more persons living in the same dwelling unit.</P> <P> <E T="03">Housing projects</E> means projects or activities that involve the purchase, construction, rehabilitation or refinancing (subject to § 952.5(c) of this part) of, or predevelopment financing for:</P> <P>(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;</P> <P>(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;</P> <P>(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</P> <P>(4) Manufactured housing parks where:</P> <P>(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</P> <P>(ii) The project is located in a neighborhood with a median income at or below the targeted income level.</P> <P> <E T="03">Median income for the area</E>—(1) <E T="03">Owner-occupied housing projects and economic development projects.</E> 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:</P> <P>(i) The median income for the area, as published annually by HUD;</P> <P>(ii) The median income for the area obtained from the Federal Financial Institutions Examination Council;</P> <P>(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;</P> <P>(iv) The median income for the area, as published by the USDA; or</P> <P>(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.</P> <P>(2) <E T="03">Rental housing projects.</E> For purposes of rental housing projects, median income for the area means one or more of the following, as determined by the Bank:</P> <P>(i) The median income for the area, as published annually by HUD; or</P> <P>(ii) The median income for the area obtained from the Federal Financial Institutions Examination Council;</P> <P>(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.</P> <P> <E T="03">MSA</E> means a Metropolitan Statistical Area as designated by the Office of Management and Budget.</P> <P> <E T="03">Neighborhood</E> means:</P> <P>(1) A census tract or block numbering area;</P> <P>(2) A unit of local government with a population of 25,000 or less;</P> <P>(3) A rural county; or</P> <P>(4) A geographic location designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographic <PRTPAGE P="134"/>designation that is within the boundary of but does not encompass the entire area of a unit of general local government.</P> <P> <E T="03">Provide financing</E> means:</P> <P>(1) Originating loans;</P> <P>(2) Purchasing a participation interest, or providing financing to participate, in a loan consortium for CICA-eligible housing or economic development projects;</P> <P>(3) Making loans to entities that, in turn, make loans for CICA-eligible housing or economic development projects;</P> <P>(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 funding;</P> <P>(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;</P> <P>(6) Originating CICA-eligible loans within 3 months prior to receiving the CICA funding; and</P> <P>(7) Purchasing low-income housing tax credits.</P> <P> <E T="03">RDF</E> or <E T="03">Rural Development Funding program</E> means an advance or grant program offered by a Bank for targeted community lending in rural areas.</P> <P> <E T="03">Rural area</E> means:</P> <P>(1) A unit of general local government with a population of 25,000 or less;</P> <P>(2) An unincorporated area outside an MSA; or</P> <P>(3) An unincorporated area within an MSA that qualifies for housing or economic development assistance from the USDA.</P> <P> <E T="03">Small business</E> 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.</P> <P> <E T="03">Targeted beneficiaries</E> 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:</P> <P>(1) Geographically Defined Beneficiaries:</P> <P>(i) The project is located in a neighborhood with a median income at or below the targeted income level;</P> <P>(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;</P> <P>(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;</P> <P>(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 <E T="03">et seq.</E>), Alaskan Native Village, or Native Hawaiian Home Land;</P> <P>(v) The project is located in an area and involves a property eligible for a Brownfield Tax Credit;</P> <P>(vi) The project is located in an area affected by a military base closing and is a “community in the vicinity of the installation” as defined by the Department of Defense at 32 CFR part 176;</P> <P>(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;</P> <P>(viii) The project is located in a Federally declared disaster area; or</P> <P>(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.</P> <P>(2) Individual Beneficiaries:</P> <P>(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</P> <P>(ii) At least 51% of the families who otherwise benefit from (other than <PRTPAGE P="135"/>through employment), or are provided services by, the project have incomes at or below the targeted income level.</P> <P>(3) Activity Beneficiaries: Projects that qualify as small businesses.</P> <P>(4) Other Targeted Beneficiaries. A Bank may designate, with the prior approval of the Finance Board, other targeted beneficiaries for its targeted community lending.</P> <P>(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.</P> <P> <E T="03">Targeted community lending</E> means providing financing for economic development projects for targeted beneficiaries.</P> <P> <E T="03">Targeted income level</E> means:</P> <P>(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;</P> <P>(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;</P> <P>(3) For advances provided under CIP:</P> <P>(i) For economic development projects, incomes at or below 80 percent of the median income for the area; or</P> <P>(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</P> <P>(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.</P> <P> <E T="03">UDF program</E> or <E T="03">Urban Development Funding program</E> means an advance or grant program offered by a Bank for targeted community lending in urban areas.</P> <P> <E T="03">Urban area</E> means:</P> <P>(1) A unit of general local government with a population of more than 25,000; or</P> <P>(2) An unincorporated area within an MSA that does not qualify for housing or economic development assistance from the USDA.</P> <P> <E T="03">USDA</E> means the United States Department of Agriculture.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 952.2</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 952.3</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>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 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 § 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 § 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.</P> <CITA>[67 FR 12852, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <PRTPAGE P="136"/> <SECTNO>§ 952.4</SECTNO> <SUBJECT>Targeted Community Lending Plan</SUBJECT> <P>Each Bank shall develop and adopt an annual Targeted Community Lending Plan pursuant to § 944.6 of this chapter.</P> <CITA>[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 FR 44431, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 952.5</SECTNO> <SUBJECT>Community Investment Cash Advance Programs.</SUBJECT> <P>(a) <E T="03">In general.</E> (1) Each Bank shall offer an AHP in accordance with part 951 of this chapter.</P> <P>(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.</P> <P>(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 § 952.1 of this part, without prior Finance Board approval.</P> <P>(4) Each Bank may offer CICA programs for targeted community lending using targeted beneficiaries and targeted income levels other than those specified in § 952.1 of this part, established by the Bank with the prior approval of the Finance Board.</P> <P>(b) <E T="03">Mixed-use projects.</E> (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.</P> <P>(2) For projects funded under CIP, both the housing and economic development components of the project must meet the appropriate targeted income levels.</P> <P>(c) <E T="03">Refinancing.</E> 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.</P> <P>(d) <E T="03">Pricing and Availability of advances</E>—(1) <E T="03">Advances to members.</E> For CICA programs other than AHP and CIP, a Bank shall price advances to members as provided in § 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)).</P> <P>(2) <E T="03">Pricing of CIP advances.</E> 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.</P> <P>(3) <E T="03">Pricing of AHP advances.</E> A Bank shall price advances made under AHP in accordance with parts 950 and 951 of this chapter.</P> <P>(4) <E T="03">Advances to housing associate borrowers.</E> (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.</P> <P>(ii) A Bank shall price advances to housing associate borrowers as provided in § 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).</P> <P>(5) <E T="03">Pricing pass-through.</E> 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.</P> <P>(6) <E T="03">Discount Fund.</E> (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.</P> <P>(ii) Price reductions made through the Discount Fund shall be made in accordance with a fair distribution scheme.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 952.6</SECTNO> <SUBJECT>Reporting.</SUBJECT> <P>(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.<PRTPAGE P="137"/> </P> <P>(b) Effective in 2000, each Bank annually shall provide to the Finance Board, on or before January 31, a Targeted Community Lending Plan.</P> <P>(c) Each Bank shall provide such other reports concerning its CICA programs as the Finance Board may request from time to time.</P> <CITA>[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, as amended at 65 FR 44431, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 952.7</SECTNO> <SUBJECT>Documentation.</SUBJECT> <P>(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.</P> <P>(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.</P> <P>(c) Such certifications shall satisfy the Bank's obligations to document compliance with the CICA funding provisions of this part.</P> <CITA>[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, as amended at 66 FR 50296, Oct. 3, 2001]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 955</EAR> <HD SOURCE="HED">PART 955—ACQUIRED MEMBER ASSETS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>955.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>955.2</SECTNO> <SUBJECT>Authorization to hold acquired member assets.</SUBJECT> <SECTNO>955.3</SECTNO> <SUBJECT>Required credit-risk sharing structure.</SUBJECT> <SECTNO>955.4</SECTNO> <SUBJECT>Reporting requirements for acquired member assets.</SUBJECT> <SECTNO>955.5</SECTNO> <SUBJECT>Administrative and investment transactions between Banks.</SUBJECT> <SECTNO>955.6</SECTNO> <SUBJECT>Risk-based capital requirement for acquired member assets.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1430, 1430b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 43981, July 17, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 955.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Affiliate</E> means any business entity that controls, is controlled by, or is under common control with, a member.</P> <P> <E T="03">Expected losses</E> means the base loss scenario in the methodology of an NRSRO applicable to that type of AMA asset.</P> <P> <E T="03">Residential real property</E> has the meaning set forth in § 950.1 of this chapter.</P> <CITA>[67 FR 12852, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 955.2</SECTNO> <SUBJECT>Authorization to hold acquired member assets.</SUBJECT> <P>Subject to the requirements of part 980 of this chapter, each Bank may hold assets acquired from or through Bank System members or housing associates by means of either a purchase or a funding transaction (AMA), subject to each of the following requirements:</P> <P>(a) <E T="03">Loan type requirement.</E> The assets are either:</P> <P>(1) Whole loans that are eligible to secure advances under §§ 950.7(a)(1)(i), (a)(2)(ii), (a)(4), or (b)(1) of this chapter, excluding:</P> <P>(i) Single-family mortgages where the loan amount exceeds the limits established pursuant to 12 U.S.C. 1717(b)(2); and</P> <P>(ii) Loans made to an entity, or secured by property, not located in a state;</P> <P>(2) Whole loans secured by manufactured housing, regardless of whether such housing qualifies as residential real property; or</P> <P>(3) State and local housing finance agency bonds;</P> <P>(b) <E T="03">Member or housing associate nexus requirement.</E> The assets are:</P> <P>(1) Either:</P> <P>(i) Originated or issued by, through, or on behalf of a Bank System member or housing associate, or an affiliate thereof; or</P> <P>(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<PRTPAGE P="138"/> </P> <P>(2) Acquired either:</P> <P>(i) From a member or housing associate of the acquiring Bank;</P> <P>(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:</P> <P>(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;</P> <P>(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</P> <P>(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;</P> <P>(iii) From another Bank; and</P> <P>(c) <E T="03">Credit risk-sharing requirement.</E> The transactions through which the Bank acquires the assets either:</P> <P>(1) Meet the credit risk-sharing requirements of § 955.3 of this part; or</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 955.3</SECTNO> <SUBJECT>Required credit risk-sharing structure.</SUBJECT> <P>(a) <E T="03">Determination of necessary credit enhancement.</E> 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.</P> <P>(b) <E T="03">Credit risk-sharing structure.</E> 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 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:</P> <P>(1) A portion of the credit enhancement may be provided by:</P> <P>(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;</P> <P>(ii) Purchasing loan-level insurance, which may include United States government insurance or guarantee, but only where:</P> <P>(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</P> <P>(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;</P> <P>(iii) Purchasing pool-level insurance, but only where such insurance:<PRTPAGE P="139"/> </P> <P>(A) Insures that portion of the required credit enhancement attributable to the geographic concentration and size of the pool; and</P> <P>(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</P> <P>(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;</P> <P>(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:</P> <P>(i) From the first dollar of loss up to the amount of expected losses; or</P> <P>(ii) Immediately following expected losses, but in an amount equal to or exceeding the amount of expected losses;</P> <P>(3) The portion of the credit enhancement that is an obligation of a Bank System member or housing associate shall be fully secured; and</P> <P>(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:</P> <P>(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</P> <P>(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.</P> <P>(c) <E T="03">Timing of NRSRO opinions.</E> 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.</P> <CITA>[65 FR 43981, July 17, 2000, as amended at 67 FR 12852, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 955.4</SECTNO> <SUBJECT>Reporting requirement for acquired member assets.</SUBJECT> <P>Each Bank shall report information related to AMA in accordance with the instructions provided in the Data Reporting Manual issued by the Finance Board, as amended from time to time.</P> <CITA>[71 FR 35500, June 21, 2006]</CITA> </SECTION> <SECTION> <SECTNO>§ 955.5</SECTNO> <SUBJECT>Administrative and investment transactions between Banks.</SUBJECT> <P>(a) <E T="03">Delegation of administrative duties.</E> 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.</P> <P>(b) <E T="03">Terminability of Agreements.</E> 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.</P> <P>(c) <E T="03">Delegation of Pricing Authority.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 955.6</SECTNO> <SUBJECT>Risk-based capital requirement for acquired member assets.</SUBJECT> <P>(a) <E T="03">General.</E> 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 <PRTPAGE P="140"/>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.</P> <GPOTABLE CDEF="s200,14" COLS="2" OPTS="L2"> <TTITLE>Table 1</TTITLE> <BOXHD> <CHED H="1">Putative rating of single-family mortgage assets</CHED> <CHED H="1">Percentage applicable to on-balance sheet equivalent value of AMA</CHED> </BOXHD> <ROW> <ENT I="01">Third Highest Investment Grade</ENT> <ENT>0.90</ENT> </ROW> <ROW> <ENT I="01">Fourth Highest Investment Grade</ENT> <ENT>1.50</ENT> </ROW> <ROW> <ENT I="22">If Downgraded to Below Investment Grade After Acquisition By Bank:</ENT> </ROW> <ROW> <ENT I="03">Highest Below Investment Grade</ENT> <ENT>2.25</ENT> </ROW> <ROW> <ENT I="03">Second Highest Below Investment Grade</ENT> <ENT>2.60</ENT> </ROW> <ROW> <ENT I="03">All Other Below Investment Grade</ENT> <ENT>100.00</ENT> </ROW> </GPOTABLE> <P>(b) <E T="03">Recalculation of credit enhancement.</E> 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.</P> </SECTION> </PART> <PART> <EAR>Pt. 956</EAR> <HD SOURCE="HED">PART 956—FEDERAL HOME LOAN BANK INVESTMENTS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>956.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>956.2</SECTNO> <SUBJECT>Authorized investments.</SUBJECT> <SECTNO>956.3</SECTNO> <SUBJECT>Prohibited investments and prudential rules.</SUBJECT> <SECTNO>956.4</SECTNO> <SUBJECT>Risk-based capital requirement for investments.</SUBJECT> <SECTNO>956.5</SECTNO> <SUBJECT>Authorization for derivative contracts and other transactions.</SUBJECT> <SECTNO>956.6</SECTNO> <SUBJECT>Use of hedging instruments.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1429, 1430, 1430b, 1431, 1436.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 43985, July 17, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 956.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Deposits in banks or trust companies</E> has the meaning set forth in § 965.1 of this chapter.</P> <P> <E T="03">Derivative contract</E> 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.</P> <P> <E T="03">Investment grade</E> means:</P> <P>(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</P> <P>(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.</P> <P> <E T="03">Repurchase agreement</E> 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.</P> <CITA>[67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 956.2</SECTNO> <SUBJECT>Authorized investments.</SUBJECT> <P>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:</P> <P>(a) Obligations of the United States;</P> <P>(b) Deposits in banks or trust companies;</P> <P>(c) Obligations, participations or other instruments of, or issued by, Fannie Mae or Ginnie Mae;</P> <P>(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);<PRTPAGE P="141"/> </P> <P>(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</P> <P>(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.</P> <CITA>[65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 956.3</SECTNO> <SUBJECT>Prohibited investments and prudential rules.</SUBJECT> <P>(a) <E T="03">Prohibited investments.</E> A Bank may not invest in:</P> <P>(1) Instruments that provide an ownership interest in an entity, except for investments described in §§ 940.3(e) and (f) of this chapter;</P> <P>(2) Instruments issued by non-United States entities, except United States branches and agency offices of foreign commercial banks;</P> <P>(3) Debt instruments that are not rated as investment grade, except:</P> <P>(i) Investments described in § 940.3(e) of this chapter;</P> <P>(ii) Debt instruments that were downgraded to a below investment grade rating after acquisition by the Bank; or</P> <P>(4) Whole mortgages or other whole loans, or interests in mortgages or loans, except:</P> <P>(i) Acquired member assets;</P> <P>(ii) Investments described in § 940.3(e) of this chapter;</P> <P>(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;</P> <P>(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</P> <P>(v) Loans held or acquired pursuant to section 12(b) of the Act (12 U.S.C. 1432(b)).</P> <P>(b) <E T="03">Foreign currency or commodity positions prohibited.</E> 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 § 966.8(d) of this chapter, and all other applicable requirements related to issuing consolidated obligations.</P> <CITA>[65 FR 43985, July 17, 2000, as amended at 66 FR 8320, Jan. 30, 2001; 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 956.4</SECTNO> <SUBJECT>Risk-based capital requirement for investments.</SUBJECT> <P>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:</P> <P>(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</P> <P>(b) 0.08 for assets having neither a putative nor actual rating.</P> <CITA>[65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 956.5</SECTNO> <SUBJECT>Authorization for derivative contracts and other transactions.</SUBJECT> <P>A Bank may enter into the following types of transactions:</P> <P>(a) Derivative contracts;</P> <P>(b) Standby letters of credit, pursuant to the requirements of part 960 of this chapter;</P> <P>(c) Forward asset purchases and sales;</P> <P>(d) Commitments to make advances; and</P> <P>(e) Commitments to make or purchase other loans.</P> <CITA>[66 FR 8320, Jan. 30, 2001, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <PRTPAGE P="142"/> <SECTNO>§ 956.6</SECTNO> <SUBJECT>Use of hedging instruments.</SUBJECT> <P>(a) <E T="03">Applicability of GAAP.</E> 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.</P> <P>(b) <E T="03">Documentation requirements.</E> (1) Transactions with a single counterparty shall be governed by a single master agreement when practicable.</P> <P>(2) A Bank's agreement with the counterparty for over-the-counter derivative contracts shall include:</P> <P>(i) A requirement that market value determinations and subsequent adjustments of collateral be made at least on a monthly basis;</P> <P>(ii) A statement that failure of a counterparty to meet a collateral call will result in an early termination event;</P> <P>(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</P> <P>(iv) A requirement that the Bank's consent be obtained prior to the transfer of an agreement or contract by a counterparty.</P> <CITA>[66 FR 8321, Jan. 30, 2001]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 960</EAR> <HD SOURCE="HED">PART 960—STANDBY LETTERS OF CREDIT</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>960.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>960.2</SECTNO> <SUBJECT>Standby letters of credit on behalf of members.</SUBJECT> <SECTNO>960.3</SECTNO> <SUBJECT>Standby letters of credit on behalf of housing associates.</SUBJECT> <SECTNO>960.4</SECTNO> <SUBJECT>Obligation to Bank under all standby letters of credit.</SUBJECT> <SECTNO>960.5</SECTNO> <SUBJECT>Additional provisions applying to all standby letters of credit.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b, 1429, 1430, 1430b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>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.</P> </SOURCE> <SECTION> <SECTNO>§ 960.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Applicant</E> means a person or entity at whose request or for whose account a standby letter of credit is issued.</P> <P> <E T="03">Beneficiary</E> means a person or entity who, under the terms of a standby letter of credit, is entitled to have its complying presentation honored.</P> <P> <E T="03">Confirm</E> 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.</P> <P> <E T="03">Document</E> 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.</P> <P> <E T="03">Investment grade</E> means:</P> <P>(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</P> <P>(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.</P> <P> <E T="03">Issuer</E> means a person or entity that issues a standby letter of credit.</P> <P> <E T="03">Presentation</E> 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.</P> <P> <E T="03">Residential housing finance</E> means:</P> <P>(1) The purchase or funding of “residential housing finance assets,” as that term is defined in § 950.1 of this chapter; or</P> <P>(2) Other activities that support the development or construction of residential housing.</P> <P> <E T="03">SHFA associate</E> means a housing associate that is a “state housing finance agency,” as that term is defined in § 926.1 of this chapter, and that has met the requirements of § 926.3(b) of this chapter.</P> <P> <E T="03">Standby letter of credit</E> means a definite undertaking by an issuer on behalf <PRTPAGE P="143"/>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 <E T="03">standby letter of credit</E> does not include a commercial letter of credit, or any short-term self-liquidating instrument used to finance the movement of goods.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 960.2</SECTNO> <SUBJECT>Standby letters of credit on behalf of members.</SUBJECT> <P>(a) <E T="03">Authority and purposes.</E> 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:</P> <P>(1) To assist members in facilitating residential housing finance;</P> <P>(2) To assist members in facilitating community lending;</P> <P>(3) To assist members with asset/liability management; or</P> <P>(4) To provide members with liquidity or other funding.</P> <P>(b) <E T="03">Fully secured.</E> 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 § 960.4(a)(2) of this part, and that complies with the requirements set forth in paragraph (c) of this section.</P> <P>(c) <E T="03">Eligible collateral.</E> (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 § 950.7 of this chapter.</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 960.3</SECTNO> <SUBJECT>Standby letters of credit on behalf of housing associates.</SUBJECT> <P>(a) <E T="03">Housing associates.</E> 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 §§ 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:</P> <P>(1) To assist housing associates in facilitating residential housing finance;</P> <P>(2) To assist housing associates in facilitating community lending;</P> <P>(3) To assist housing associates with asset/liability management; or</P> <P>(4) To provide housing associates with liquidity or other funding.</P> <P>(b) <E T="03">SHFA associates.</E> 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 § 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)).</P> <CITA>[63 FR 65699, Nov. 30, 1998, as amended at 65 FR 8265, Feb. 18, 2000; 65 FR 44431, July 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 960.4</SECTNO> <SUBJECT>Obligation to Bank under all standby letters of credit.</SUBJECT> <P>(a) <E T="03">Obligation to reimburse.</E> A Bank may issue or confirm a standby letter of credit only on behalf of a member or housing associate that has:</P> <P>(1) Established with the Bank a cash account pursuant to §§ 950.17(b)(2)(i)(B), 950.17(d), or 969.2 of this chapter; and</P> <P>(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 <PRTPAGE P="144"/>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.</P> <P>(b) <E T="03">Prompt action to recover funds.</E> 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.</P> <P>(c) <E T="03">Obligation financed by advance.</E> 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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 960.5</SECTNO> <SUBJECT>Additional provisions applying to all standby letters of credit.</SUBJECT> <P>(a) <E T="03">Requirements.</E> Each standby letter of credit issued or confirmed by a Bank shall:</P> <P>(1) Contain a specific expiration date, or be for a specific term; and</P> <P>(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.</P> <P>(b) <E T="03">Additional collateral provisions.</E> (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 §§ 960.2 or 960.3 of this part.</P> <P>(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 §§ 950.7(d), 950.7(e), 950.8, 950.9 and 950.10 of this chapter.</P> <CITA>[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]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="145"/> <HD SOURCE="HED">SUBCHAPTER H—FEDERAL HOME LOAN BANK LIABILITIES</HD> <PART> <EAR>Pt. 965</EAR> <HD SOURCE="HED">PART 965—SOURCE OF FUNDS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>965.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>965.2</SECTNO> <SUBJECT>Authorized liabilities.</SUBJECT> <SECTNO>965.3</SECTNO> <SUBJECT>Liquidity reserves for deposits.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a, 1422b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 36298, June 7, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 965.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Deposits in banks or trust companies</E> means:</P> <P>(1) A deposit in another Bank;</P> <P>(2) A demand account in a Federal Reserve Bank;</P> <P>(3) A deposit in, or a sale of Federal funds to:</P> <P>(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;</P> <P>(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</P> <P>(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 <E T="03">et seq.</E>), that is subject to the supervision of the FRB, and is designated by a Bank's board of directors.</P> <P> <E T="03">Repurchase agreement</E> 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.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 965.2</SECTNO> <SUBJECT>Authorized liabilities.</SUBJECT> <P>As a source of funds for business operations, each Bank is authorized to incur liabilities by:</P> <P>(a) Accepting proceeds from the issuance of consolidated obligations issued in accordance with part 966 of this chapter;</P> <P>(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 §§ 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));</P> <P>(c) Purchasing Federal funds; and</P> <P>(d) Entering into repurchase agreements.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 965.3</SECTNO> <SUBJECT>Liquidity reserves for deposits.</SUBJECT> <P>Each Bank shall at all times have at least an amount equal to the current deposits received from its members invested in:</P> <P>(a) Obligations of the United States;</P> <P>(b) Deposits in banks or trust companies; or</P> <P>(c) Advances with a maturity of not to exceed five years that are made to members in conformity with part 950 of this chapter.</P> </SECTION> </PART> <PART> <EAR>Pt. 966</EAR> <HD SOURCE="HED">PART 966—CONSOLIDATED OBLIGATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>966.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>966.2</SECTNO> <SUBJECT>Issuance of consolidated obligations.</SUBJECT> <SECTNO>966.3</SECTNO> <SUBJECT>Leverage limit and credit rating requirements.</SUBJECT> <SECTNO>966.4</SECTNO> <SUBJECT>Form of consolidated obligations.</SUBJECT> <SECTNO>966.5</SECTNO> <SUBJECT>Transactions in consolidated obligations.</SUBJECT> <SECTNO>966.6</SECTNO> <SUBJECT>Lost, stolen, destroyed, mutilated or defaced consolidated obligations.</SUBJECT> <SECTNO>966.7</SECTNO> <SUBJECT>Administrative provision.</SUBJECT> <SECTNO>966.8</SECTNO> <SUBJECT>Conditions for issuance of consolidated obligations.</SUBJECT> <SECTNO>966.9</SECTNO> <SUBJECT>Joint and several liability.</SUBJECT> <SECTNO>966.10</SECTNO> <SUBJECT>Savings clause.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a, 1422b, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 36298, June 7, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 966.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Non-complying Bank</E> means a Bank that has failed to provide the liquidity certification as required under § 966.9(b)(1).</P> <CITA>[67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <PRTPAGE P="146"/> <SECTNO>§ 966.2</SECTNO> <SUBJECT>Issuance of consolidated obligations.</SUBJECT> <P>(a) <E T="03">Consolidated obligations issued by the Finance Board.</E> 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.</P> <P>(b) <E T="03">Consolidated obligations issued by the Banks.</E> (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 § 966.9 of this part.</P> <P>(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.</P> <P>(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)).</P> <P>(c) <E T="03">Negative pledge requirement.</E> 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 <E T="03">pro rata</E> 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, <E T="03">provided that</E> 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:</P> <P>(1) Cash;</P> <P>(2) Obligations of or fully guaranteed by the United States;</P> <P>(3) Secured advances;</P> <P>(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;</P> <P>(5) Investments described in section 16(a) of the Act (12 U.S.C. 1436(a)); and</P> <P>(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.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 966.3</SECTNO> <SUBJECT>Leverage limit and credit rating requirements.</SUBJECT> <P>(a) <E T="03">Bank leverage.</E> (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.</P> <P>(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:</P> <P>(i) Advances;</P> <P>(ii) Acquired member assets, including all United States government-insured or guaranteed whole single-family or multi-family residential mortgage loans;<PRTPAGE P="147"/> </P> <P>(iii) Standby letters of credit;</P> <P>(iv) Intermediary derivative contracts;</P> <P>(v) Debt or equity investments:</P> <P>(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:</P> <P>(<E T="03">1</E>) Housing;</P> <P>(<E T="03">2</E>) Economic development;</P> <P>(<E T="03">3</E>) Community services;</P> <P>(<E T="03">4</E>) Permanent jobs; or</P> <P>(<E T="03">5</E>) Area revitalization or stabilization;</P> <P>(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</P> <P>(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;</P> <P>(vi) Investments in SBICs, where one or more members or housing associates of the Bank also make a material investment in the same activity;</P> <P>(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 <E T="03">et seq</E>);</P> <P>(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);</P> <P>(ix) Investments and obligations issued or guaranteed under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <E T="03">et seq.</E>).</P> <P>(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;</P> <P>(xi) Other MBS, CMOs, and REMICs rated in the highest rating category by a NRSRO;</P> <P>(xii) Asset-backed securities collateralized by manufactured housing loans or home equity loans and rated in the highest rating category by a NRSRO; and</P> <P>(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.</P> <P>(b) <E T="03">Credit ratings.</E> (1) The Banks, collectively, shall obtain from an NRSRO and, at all times, maintain a current credit rating on the Banks' consolidated obligations.</P> <P>(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.</P> <P>(c) <E T="03">Individual Bank credit rating.</E> 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 Finance Board, to reflect any material changes in the condition of the Bank.</P> <P>(d) <E T="03">Transition provision.</E> Each Bank shall obtain the credit rating from an <PRTPAGE P="148"/>NRSRO required under paragraph (c) of this section by July 1, 2001.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002; 67 FR 35715, May 21, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 966.4</SECTNO> <SUBJECT>Form of consolidated obligations.</SUBJECT> <P>(a) All consolidated obligations shall be issued <E T="03">in pari passu.</E> </P> <P>(b) Consolidated obligations with maturities of one year or less may be designated consolidated notes.</P> </SECTION> <SECTION> <SECTNO>§ 966.5</SECTNO> <SUBJECT>Transactions in consolidated obligations.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 966.6</SECTNO> <SUBJECT>Lost, stolen, destroyed, mutilated or defaced consolidated obligations.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 966.7</SECTNO> <SUBJECT>Administrative provision.</SUBJECT> <P>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 §§ 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.</P> </SECTION> <SECTION> <SECTNO>§ 966.8</SECTNO> <SUBJECT>Conditions for issuance of consolidated obligations.</SUBJECT> <P>(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.</P> <P>(b) COs may be offered for sale only to the extent that Banks are committed to take the proceeds.</P> <P>(c) COs shall not be directly placed with any Bank.</P> <P>(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:</P> <P>(1) The relevant foreign exchange, equity price or commodity price risks associated with the CO must be hedged in accordance with § 956.6 of this chapter;</P> <P>(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.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 66 FR 8321, Jan. 30, 2001; 67 FR 12853, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 966.9</SECTNO> <SUBJECT>Joint and several liability.</SUBJECT> <P>(a) <E T="03">In general.</E> (1) Each and every Bank, individually and collectively, has an obligation to make full and timely payment of all principal and interest on consolidated obligations when due.</P> <P>(2) Each and every Bank, individually and collectively, shall ensure that the <PRTPAGE P="149"/>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.</P> <P>(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)).</P> <P>(b) <E T="03">Certification and reporting.</E> (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.</P> <P>(2) A Bank shall immediately provide written notice to the Finance Board if at any time the Bank:</P> <P>(i) Is unable to provide the certification required by paragraph (b)(1) of this section;</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P>(c) <E T="03">Consolidated obligation payment plans.</E> (1) A Bank promptly shall file a consolidated obligation payment plan for Finance Board approval:</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Finance Board payment orders; Obligation to reimburse.</E> (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 <PRTPAGE P="150"/>payment due on any consolidated obligation.</P> <P>(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).</P> <P>(e) <E T="03">Adjustment of equities.</E> (1) Any non-complying Bank shall apply its assets to fulfill its direct obligations.</P> <P>(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 T="03">e.g.,</E> 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.</P> <P>(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 <E T="03">pro rata</E> 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.</P> <P>(f) <E T="03">Reservation of authority.</E> 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.</P> <P>(g) <E T="03">No rights created.</E> (1) Nothing in this part shall create or be deemed to create any rights in any third party.</P> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 966.10</SECTNO> <SUBJECT>Savings clause.</SUBJECT> <P>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.</P> <CITA>[65 FR 36298, June 7, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 969</EAR> <HD SOURCE="HED">PART 969—DEPOSITS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>969.1</SECTNO> <SUBJECT>Definitions. [Reserved]</SUBJECT> <SECTNO>969.2</SECTNO> <SUBJECT>Deposits from members.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a)(1), 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 8266, Feb 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 969.1</SECTNO> <RESERVED>Definitions. [Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 969.2</SECTNO> <SUBJECT>Deposits from members.</SUBJECT> <P>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.</P> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="151"/> <HD SOURCE="HED">SUBCHAPTER I—MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND AUTHORITIES</HD> <PART> <EAR>Pt. 975</EAR> <HD SOURCE="HED">PART 975—COLLECTION, SETTLEMENT, AND PROCESSING OF PAYMENT INSTRUMENTS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>975.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>975.2</SECTNO> <SUBJECT>Authority and scope.</SUBJECT> <SECTNO>975.3</SECTNO> <SUBJECT>General provisions.</SUBJECT> <SECTNO>975.4</SECTNO> <SUBJECT>Incidental powers.</SUBJECT> <SECTNO>975.5</SECTNO> <SUBJECT>Operations.</SUBJECT> <SECTNO>975.6</SECTNO> <SUBJECT>Pricing of services.</SUBJECT> <SECTNO>975.7</SECTNO> <SUBJECT>Rights, powers, responsibilities, duties, and liabilities.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1430, 1431.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>45 FR 64164, Sept. 29, 1980, unless otherwise noted. Redesignated at 54 FR 36759, Sept. 5, 1989, and further redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 975.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>(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.</P> <P>(b) As used in this part:</P> <P> <E T="03">Account processing</E> includes charging, crediting, and settling of member or eligible institution accounts, excluding individual customer accounts.</P> <P> <E T="03">Assets</E> includes furniture and equipment, leasehold improvements, and capitalized start-up costs.</P> <P> <E T="03">Data communication</E> 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.</P> <P> <E T="03">Data processing</E> 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.</P> <P> <E T="03">Eligible institution</E> 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.</P> <P> <E T="03">Issuance of forms</E> means the designation and distribution of standardized forms for use in collection, processing, and settlement services.</P> <P> <E T="03">Presentment</E> 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.</P> <P> <E T="03">Statement packaging</E> 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.</P> <P> <E T="03">Storage services</E> includes filing, storage, and truncation of items.</P> <P> <E T="03">Transportation of items</E> 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.</P> <CITA>[67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.2</SECTNO> <SUBJECT>Authority and scope.</SUBJECT> <P>(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 <PRTPAGE P="152"/>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.</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.3</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>The Banks are authorized to:</P> <P>(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</P> <P>(b) Be drawees of checks, drafts, and other negotiable and nonnegotiable items and instruments issued by eligible institutions or Bank members.</P> <CITA>[67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.4</SECTNO> <SUBJECT>Incidental powers.</SUBJECT> <P>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:</P> <P>(a) Statement packaging; and</P> <P>(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.</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.5</SECTNO> <SUBJECT>Operations.</SUBJECT> <P>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.</P> <CITA>[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.6</SECTNO> <SUBJECT>Pricing of services.</SUBJECT> <P>(a) <E T="03">General.</E> 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.</P> <P>(b) <E T="03">Payment instrument account services.</E> (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.</P> <P>(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.</P> <P>(c) <E T="03">Review and publication.</E> 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 <E T="04">Federal Register,</E> except those for fees charged to an applicant for draws made by a beneficiary under a standby letter of credit.</P> <SECAUTH>(12 U.S.C. 1431(e); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 1943-48 Comp., p. 1071)</SECAUTH> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 975.7</SECTNO> <SUBJECT>Rights, powers, responsibilities, duties, and liabilities.</SUBJECT> <P>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, <PRTPAGE P="153"/>includes Banks and their members and eligible institutions.</P> <CITA>[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 977</EAR> <HD SOURCE="HED">PART 977—MISCELLANEOUS BANK AUTHORITIES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>977.1</SECTNO> <SUBJECT>Definitions. [Reserved]</SUBJECT> <SECTNO>977.2</SECTNO> <SUBJECT>Transfer of funds between Banks.</SUBJECT> <SECTNO>977.3</SECTNO> <SUBJECT>Trustee powers.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1431(a), 1431(e), 1432(a).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 8266, Feb. 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 977.1</SECTNO> <RESERVED>Definitions. [Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 977.2</SECTNO> <SUBJECT>Transfer of funds between Banks.</SUBJECT> <P>Inter-Bank borrowing shall be through unsecured deposits bearing interest at rates negotiated between Banks.</P> </SECTION> <SECTION> <SECTNO>§ 977.3</SECTNO> <SUBJECT>Trustee powers.</SUBJECT> <P>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:</P> <P>(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</P> <P>(b) In the case of applicants, the Bank ceases to act as trustee if the application is withdrawn or rejected.</P> </SECTION> </PART> <PART> <EAR>Pt. 978</EAR> <HD SOURCE="HED">PART 978—BANK REQUESTS FOR INFORMATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>978.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>978.2</SECTNO> <SUBJECT>Scope.</SUBJECT> <SECTNO>978.3</SECTNO> <SUBJECT>Request for confidential information.</SUBJECT> <SECTNO>978.4</SECTNO> <SUBJECT>Form of request.</SUBJECT> <SECTNO>978.5</SECTNO> <SUBJECT>Storage of confidential information.</SUBJECT> <SECTNO>978.6</SECTNO> <SUBJECT>Access to confidential information.</SUBJECT> <SECTNO>978.7</SECTNO> <SUBJECT>Third party requests for confidential information.</SUBJECT> <SECTNO>978.8</SECTNO> <SUBJECT>Computer data.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a), 1442.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 8266, Feb. 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 978.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Confidential information</E> 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.</P> <P> <E T="03">Financial regulatory agency</E> means any of the following:</P> <P>(1) The Department of the Treasury, including either the OCC or the OTS;</P> <P>(2) The FRB;</P> <P>(3) The NCUA; or</P> <P>(4) The FDIC.</P> <P> <E T="03">Third party</E> means any person or entity except a director, officer, employee or agent of either:</P> <P>(1) A Bank in possession of any particular confidential information; or</P> <P>(2) The financial regulatory agency that supplied the particular confidential information to such Bank.</P> <CITA>[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 978.2</SECTNO> <SUBJECT>Scope.</SUBJECT> <P>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).</P> <CITA>[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 978.3</SECTNO> <SUBJECT>Request for confidential information.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <PRTPAGE P="154"/> <SECTNO>§ 978.4</SECTNO> <SUBJECT>Form of request.</SUBJECT> <P>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.</P> <CITA>[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 978.5</SECTNO> <SUBJECT>Storage of confidential information.</SUBJECT> <P>Each Bank shall:</P> <P>(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;</P> <P>(b) Have in place a written set of procedures and policies designed to ensure the confidentiality of confidential information in its possession; and</P> <P>(c) Establish an internal review of its procedures for storing confidential information and maintaining its confidentiality, as a part of its internal audit process.</P> </SECTION> <SECTION> <SECTNO>§ 978.6</SECTNO> <SUBJECT>Access to confidential information.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 978.7</SECTNO> <SUBJECT>Third party requests for confidential information.</SUBJECT> <P>(a) <E T="03">General.</E> 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.</P> <P>(b) <E T="03">Subpoena.</E> 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:</P> <P>(1) The financial regulatory agency gives written approval to the disclosure; or</P> <P>(2) A binding order to produce the confidential information has become final with all rights of appeal either exhausted or lapsed.</P> <P>(c) <E T="03">Nondisclosure to third parties.</E> 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.</P> <P>(d) <E T="03">Disclosure to Finance Board.</E> (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 § 978.5 or section 20 of the Act (12 U.S.C. 1440).</P> <P>(2) The Finance Board shall keep all confidential information received under paragraph (d) of this section in strict confidence.</P> <CITA>[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <PRTPAGE P="155"/> <SECTNO>§ 978.8</SECTNO> <SUBJECT>Computer data.</SUBJECT> <P>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.</P> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="156"/> <HD SOURCE="HED">SUBCHAPTER J—NEW FEDERAL HOME LOAN BANK ACTIVITIES</HD> <PART> <EAR>Pt. 980</EAR> <HD SOURCE="HED">PART 980—NEW BUSINESS ACTIVITIES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>980.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>980.2</SECTNO> <SUBJECT>Limitation on Bank authority to undertake new business activities.</SUBJECT> <SECTNO>980.3</SECTNO> <SUBJECT>New business activity notice requirement.</SUBJECT> <SECTNO>980.4</SECTNO> <SUBJECT>Commencement of new business activities.</SUBJECT> <SECTNO>980.5</SECTNO> <SUBJECT>Notice by the Finance Board.</SUBJECT> <SECTNO>980.6</SECTNO> <SUBJECT>Finance Board consent.</SUBJECT> <SECTNO>980.7</SECTNO> <SUBJECT>Examinations; requests for additional information.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a), 1431(a), 1432(a).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 44431, July 18, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 980.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">New business activity</E> 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:</P> <P>(1) Involves the acceptance of collateral enumerated under § 950.7(a)(4) of this chapter;</P> <P>(2) Involves the acceptance of classes of collateral enumerated under § 950.7(b) of this chapter for the first time;</P> <P>(3) Entails risks not previously and regularly managed by that Bank, its members, or both, as appropriate; or</P> <P>(4) Involves operations not previously undertaken by that Bank.</P> </SECTION> <SECTION> <SECTNO>§ 980.2</SECTNO> <SUBJECT>Limitation on Bank authority to undertake new business activities.</SUBJECT> <P>No Bank shall undertake any new business activity except in accordance with the procedures set forth in this part.</P> </SECTION> <SECTION> <SECTNO>§ 980.3</SECTNO> <SUBJECT>New business activity notice requirement.</SUBJECT> <P>At least sixty days prior to undertaking a new business activity, except as provided in § 980.4(b), a Bank shall submit to the Finance Board a written notice containing the following information:</P> <P>(a) <E T="03">General requirements.</E> Except as provided in paragraph (b) of this section, a Bank's notice of new business activity shall include:</P> <P>(1) An opinion of counsel citing the statutory, regulatory, or other legal authority for the new business activity;</P> <P>(2) A good faith estimate of the anticipated dollar volume of the activity over the short-and long-term;</P> <P>(3) A full description of:</P> <P>(i) The purpose and operation of the proposed activity;</P> <P>(ii) The market targeted by the activity;</P> <P>(iii) The delivery system for the activity; and</P> <P>(iv) The effect of the activity on the housing, or relevant community lending, market;</P> <P>(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;</P> <P>(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</P> <P>(6) The criteria that the Bank will use to determine the eligibility of its members or housing associates to participate in the new activity.</P> <P>(b) <E T="03">New collateral activities.</E> If a proposed new business activity relates to the acceptance of collateral under § 950.7 of this chapter, a Bank's notice of new business activity shall include:</P> <P>(1) A description of the classes or amounts of collateral proposed to be accepted by the Bank;<PRTPAGE P="157"/> </P> <P>(2) A copy of the Bank's member products policy, adopted pursuant to § 917.4 of this chapter;</P> <P>(3) A copy of the Bank's procedures for determining the value of the collateral in question, established pursuant to § 950.10 of this chapter; and</P> <P>(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.</P> <CITA>[65 FR 44431, July 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 980.4</SECTNO> <SUBJECT>Commencement of new business activities.</SUBJECT> <P>A Bank may commence a new business activity:</P> <P>(a) Sixty days after receipt by the Finance Board of the notice of new business activity under § 980.3, if the Finance Board has not issued to the Bank a notice as described in § 980.5(a)(1) through (4);</P> <P>(b) In the case of the acceptance of collateral enumerated under § 950.7(a)(4) of this chapter, immediately upon receipt by the Finance Board of a notice of new business activity under § 980.3; or</P> <P>(c) Immediately upon issuance by the Finance Board of a letter of approval under § 980.6.</P> </SECTION> <SECTION> <SECTNO>§ 980.5</SECTNO> <SUBJECT>Notice by the Finance Board.</SUBJECT> <P>(a) <E T="03">Issuance.</E> Within sixty days after receipt of a notice of new business activity under § 980.3, the Finance Board may issue to a Bank a notice that:</P> <P>(1) Disapproves the new business activity;</P> <P>(2) Instructs the Bank not to commence the new business pending further consideration by the Finance Board;</P> <P>(3) Declares an intent to examine the Bank;</P> <P>(4) Requests additional information including but not limited to the requests listed in § 980.7;</P> <P>(5) Establishes conditions for the Finance Board's approval of the new business activity, including but not limited to the conditions listed in § 980.7; or</P> <P>(6) Contains other instructions or information that the Finance Board deems appropriate under the circumstances.</P> <P>(b) <E T="03">Effect.</E> 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 § 980.6.</P> </SECTION> <SECTION> <SECTNO>§ 980.6</SECTNO> <SUBJECT>Finance Board consent.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 980.7</SECTNO> <SUBJECT>Examinations; requests for additional information.</SUBJECT> <P>(a) <E T="03">General.</E> Nothing in this part shall limit in any manner the right of the Finance Board to conduct any examination of any Bank.</P> <P>(b) <E T="03">Requests for additional information and conditions for approval.</E> With respect to a new business activity, nothing in this part shall limit the right of the Finance Board at any time to:</P> <P>(1) Request further information from a Bank concerning a new business activity; and</P> <P>(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:</P> <P>(i) Successful completion of pre- or post-implementation safety and soundness examinations;</P> <P>(ii) Demonstration by the Bank of adequate operational capacity, including the existence of appropriate policies, procedures and controls;</P> <P>(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;</P> <P>(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<PRTPAGE P="158"/> </P> <P>(v) Finance Board review of any contracts or agreements between the Bank and its members or housing associates.</P> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="159"/> <HD SOURCE="HED">SUBCHAPTER K—OFFICE OF FINANCE</HD> <PART> <EAR>Pt. 985</EAR> <HD SOURCE="HED">PART 985—THE OFFICE OF FINANCE</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>985.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>985.2</SECTNO> <SUBJECT>Authority of the OF.</SUBJECT> <SECTNO>985.3</SECTNO> <SUBJECT>Functions of the OF.</SUBJECT> <SECTNO>985.4</SECTNO> <SUBJECT>Finance Board oversight.</SUBJECT> <SECTNO>985.5</SECTNO> <SUBJECT>Funding of the OF.</SUBJECT> <SECTNO>985.6</SECTNO> <SUBJECT>Debt management duties of the OF.</SUBJECT> <SECTNO>985.7</SECTNO> <SUBJECT>Structure of the OF board of directors.</SUBJECT> <SECTNO>985.8</SECTNO> <SUBJECT>General duties of the OF board of directors.</SUBJECT> <APP>Appendix A to Part 985—Exceptions to the General Disclosure Standards</APP> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(b)(2), 1431(a), 1431(c), 1432(a).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 36300, June 7, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 985.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Chair</E> means the chairperson of the board of directors of the Office of Finance.</P> <P> <E T="03">Managing Director</E> means the managing director of the Office of Finance.</P> <CITA>[67 FR 12854, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 985.2</SECTNO> <SUBJECT>Authority of the OF.</SUBJECT> <P>(a) <E T="03">General.</E> 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.</P> <P>(b) <E T="03">Agent.</E> The OF in the performance of its duties, shall have the power to act on behalf of:</P> <P>(1) The Banks in issuing consolidated obligations pursuant to section 11(a) of the Act (12 U.S.C. 1431(a));</P> <P>(2) By delegation of the Finance Board under § 966.2 of this chapter in issuing consolidated obligations pursuant to section 11(c) of the Act (12 U.S.C. 1431(c)); and</P> <P>(3) The Banks in paying principal and interest due on the consolidated obligations, or other obligations of the Banks.</P> <P>(c) <E T="03">Assessments.</E> The OF shall have authority to assess the Banks for the funding of its operations in accordance with § 985.5.</P> </SECTION> <SECTION> <SECTNO>§ 985.3</SECTNO> <SUBJECT>Functions of the OF.</SUBJECT> <P>(a) <E T="03">Joint debt issuance.</E> 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)).</P> <P>(b) <E T="03">Preparation of combined financial reports.</E> The OF shall prepare and issue the combined annual and quarterly financial reports for the Bank System in accordance with the requirements of § 985.6(b) and appendix A of this part.</P> <P>(c) <E T="03">Fiscal agent.</E> The OF shall function as the Fiscal Agent of the Banks.</P> <P>(d) <E T="03">Financing Corporation and Resolution Funding Corporation.</E> 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)).</P> <CITA>[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 985.4</SECTNO> <SUBJECT>Finance Board oversight.</SUBJECT> <P>(a) <E T="03">Oversight and enforcement actions.</E> 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.</P> <P>(b) <E T="03">Examinations.</E> Pursuant to section 20 of the Act (12 U.S.C. 1440), the Finance Board shall examine the OF, all <PRTPAGE P="160"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 985.5</SECTNO> <SUBJECT>Funding of the OF.</SUBJECT> <P>(a) <E T="03">Generally.</E> 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.</P> <P>(b) <E T="03">Funding policies.</E> (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:</P> <P>(i) Available for expenses of the Office of Finance and the OF board of directors, according to their approved budgets; and</P> <P>(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.</P> <P>(2) Each Bank's respective <E T="03">pro rata</E> 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.</P> <P>(c) <E T="03">Alternative formula for assessment.</E> 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.</P> <P>(d) <E T="03">Prompt reimbursement.</E> 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.</P> <P>(e) <E T="03">Indemnification expenses.</E> 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.</P> <P>(f) <E T="03">Operating funds shall be segregated.</E> (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.</P> <P>(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)).</P> </SECTION> <SECTION> <SECTNO>§ 985.6</SECTNO> <SUBJECT>Debt management duties of the OF.</SUBJECT> <P>(a) <E T="03">Issuance and servicing of COs.</E> The OF shall issue and service (including making timely payments on principal and interest due, subject to §§ 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.</P> <P>(b) <E T="03">Combined financial reports requirements.</E> The OF shall prepare and distribute the combined annual and quarterly financial reports for the Bank System in accordance with the following requirements:</P> <P>(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).</P> <P>(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” <PRTPAGE P="161"/>(FASB 131) applied to the combined annual and quarterly financial reports of the Bank System.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(7) Nothing in this section shall create or be deemed to create any rights in any third party.</P> <P>(c) <E T="03">Capital markets data.</E> The OF board of directors shall provide capital markets information concerning debt to the Banks.</P> <P>(d) <E T="03">NRSROs.</E> The OF board of directors shall manage relationships with NRSROs in connection with their rating of consolidated obligations.</P> <P>(e) <E T="03">Research.</E> The OF shall conduct research reasonably related to the issuance or servicing of consolidated obligations.</P> <P>(f) <E T="03">Monitor Banks' credit exposure.</E> The OF shall timely monitor each Bank's and the Bank System's unsecured credit exposure to individual counterparties.</P> <CITA>[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 985.7</SECTNO> <SUBJECT>Structure of the OF board of directors.</SUBJECT> <P>(a) <E T="03">Membership.</E> The OF board of directors shall consist of three part-time members appointed by the Finance Board as follows:</P> <P>(1) Two Bank Presidents; and</P> <P>(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.</P> <P>(b) <E T="03">Terms.</E> (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.</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Chair.</E> (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.</P> <P>(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.</P> <P>(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.</P> <P>(d) <E T="03">Compensation.</E> (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.</P> <P>(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.</P> <P>(3) The Office of Finance shall pay compensation and expenses to the private citizen member of the OF board of <PRTPAGE P="162"/>directors in accordance with the requirements for payment of compensation and expenses to Bank chairs as set forth in part 918 of this chapter.</P> <P>(e) <E T="03">Indemnification.</E> (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, <E T="03">provided that</E> such terms and conditions are consistent with the terms and conditions of indemnification of directors, officers and employees of the Bank System generally.</P> <P>(2) The OF board of directors shall adopt indemnification procedures, which shall be supplemented by a contract of insurance.</P> <P>(f) <E T="03">Delegation.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 985.8</SECTNO> <SUBJECT>General duties of the OF board of directors.</SUBJECT> <P>(a) <E T="03">General</E>—(1) <E T="03">Conduct of business.</E> Each director shall have the duties prescribed in § 917.2(b) of this chapter, as appropriate.</P> <P>(2) <E T="03">Bylaws.</E> The OF board of directors shall adopt bylaws in accordance with the provisions of § 917.10 of this chapter.</P> <P>(b) <E T="03">Meetings and quorum.</E> 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.</P> <P>(c) <E T="03">Duties regarding COs.</E> The OF board of directors shall establish policies regarding COs that shall:</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(4) Require that COs shall be issued efficiently and at the lowest all-in funding costs over time, consistent with:</P> <P>(i) Prudent risk-management practices, prudential debt parameters, short and long-term market conditions, and the Banks' role as government-sponsored enterprises;</P> <P>(ii) Maintaining reliable access to the short-term and long-term capital markets; and</P> <P>(iii) Positioning the issuance of debt to take advantage of current and future capital market opportunities.</P> <P>(d) <E T="03">Other duties.</E> The OF board of directors shall:</P> <P>(1) Set policies for management and operation of the OF;</P> <P>(2) Approve a strategic business plan for the OF in accordance with the provisions of § 917.5 of this chapter, as appropriate;</P> <P>(3) Review, adopt and monitor annual operating and capital budgets of the OF in accordance with the provisions of § 917.8 of this chapter, as appropriate;</P> <P>(4) Constitute and perform the duties of an audit committee, which to the extent possible shall operate consistent with:</P> <P>(i) The requirements of § 917.7 of this chapter, and<PRTPAGE P="163"/> </P> <P>(ii) The requirements pertaining to audit committee reports set forth in Item 306 of Regulation S-K promulgated by the Securities and Exchange Commission.</P> <P>(5) Select, employ, determine the compensation for, and assign the duties and functions of a Managing Director of the OF who shall:</P> <P>(i) Be the chief executive officer for the OF and shall direct the implementation of the OF board of directors' policies;</P> <P>(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</P> <P>(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)).</P> <P>(6) Review and approve all contracts of the OF;</P> <P>(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;</P> <P>(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</P> <P>(9) Assume any other responsibilities that may from time to time be delegated to it by the Finance Board.</P> <P>(e) <E T="03">No rights created.</E> Nothing in this part shall create or be deemed to create any rights in any third party.</P> <CITA>[65 FR 36300, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002; 67 FR 18807, Apr. 17, 2002]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 985, App. A</EAR> <HD SOURCE="HED">Appendix A to Part 985—Exceptions to the General Disclosure Standards</HD> <P> <E T="03">A. Related-party transactions.</E> 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.</P> <P> <E T="03">B. Biographical information.</E> 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.</P> <P> <E T="03">C. Compensation.</E> 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).</P> <P> <E T="03">D. Submission of matters to a vote of stockholders.</E> 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.</P> <P> <E T="03">E. Exhibits.</E> The exhibits required by Item 601 of Regulation S-K, 17 CFR 229.601, are not applicable and will not be provided.</P> <P> <E T="03">F. Per share information.</E> 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.</P> <P> <E T="03">G. Beneficial ownership.</E> 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.</P> </APPENDIX> </PART> <PART> <EAR>Pt. 987</EAR> <HD SOURCE="HED">PART 987—BOOK-ENTRY PROCEDURE FOR CONSOLIDATED OBLIGATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>987.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>987.2</SECTNO> <SUBJECT>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.</SUBJECT> <SECTNO>987.3</SECTNO> <SUBJECT>Law governing other interests.</SUBJECT> <SECTNO>987.4</SECTNO> <SUBJECT>Creation of Participant's Security Entitlement; security interests.</SUBJECT> <SECTNO>987.5</SECTNO> <SUBJECT>Obligations of Banks and the Office of Finance; no Adverse Claims.<PRTPAGE P="164"/> </SUBJECT> <SECTNO>987.6</SECTNO> <SUBJECT>Authority of Federal Reserve Banks.</SUBJECT> <SECTNO>987.7</SECTNO> <SUBJECT>Liability of Banks, Finance Board, Office of Finance and Federal Reserve Banks.</SUBJECT> <SECTNO>987.8</SECTNO> <SUBJECT>Additional requirements; notice of attachment for Book-entry consolidated obligations.</SUBJECT> <SECTNO>987.9</SECTNO> <SUBJECT>Reference to certain Department of Treasury commentary and determinations.</SUBJECT> <SECTNO>987.10</SECTNO> <SUBJECT>Obligations of United States with respect to consolidated obligations.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a, 1422b, 1431, 1435.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>63 FR 8059, Feb. 18, 1998, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 987.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part, unless the context otherwise requires or indicates:</P> <P> <E T="03">Adverse Claim</E> 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.</P> <P> <E T="03">Book-entry consolidated obligation</E> means a consolidated obligation maintained in the book-entry system of the Federal Reserve Banks.</P> <P> <E T="03">Entitlement Holder</E> 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.</P> <P> <E T="03">Federal Reserve Bank</E> means a Federal Reserve Bank or branch, acting as fiscal agent for the Office of Finance, unless otherwise indicated.</P> <P> <E T="03">Federal Reserve Bank Operating Circular</E> 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.</P> <P> <E T="03">Funds account</E> 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.</P> <P> <E T="03">Office of Finance</E> 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.</P> <P> <E T="03">Participant</E> means a Person or a Bank that maintains a Participant's Securities Account with a Federal Reserve Bank.</P> <P> <E T="03">Participant's Securities Account</E> 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.</P> <P> <E T="03">Person</E> 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.</P> <P> <E T="03">Revised Article 8</E> 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.</P> <P> <E T="03">Securities Intermediary</E> means:</P> <P>(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</P> <P>(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.<PRTPAGE P="165"/> </P> <P> <E T="03">Security Entitlement</E> means the rights and property interest of an Entitlement Holder with respect to a Book-entry consolidated obligation.</P> <P> <E T="03">Transfer Message</E> 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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.2</SECTNO> <SUBJECT>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.</SUBJECT> <P>(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.</P> <P>(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 § 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 § 987.4(c)(1), is governed by the law determined in the manner specified in § 987.3.</P> <P>(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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.3</SECTNO> <SUBJECT>Law governing other interests.</SUBJECT> <P>(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:</P> <P>(1) The acquisition of a Security Entitlement from the Securities Intermediary;</P> <P>(2) The rights and duties of the Securities Intermediary and Entitlement Holder arising out of a Security Entitlement;</P> <P>(3) Whether the Securities Intermediary owes any duties to an adverse claimant to a Security Entitlement;</P> <P>(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</P> <P>(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.</P> <P>(b) The following rules determine a “Securities Intermediary's jurisdiction” for purposes of this section:</P> <P>(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.</P> <P>(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 <PRTPAGE P="166"/>maintained at an office in a particular jurisdiction, that jurisdiction is the Securities Intermediary's jurisdiction.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.4</SECTNO> <SUBJECT>Creation of Participant's Security Entitlement; security interests.</SUBJECT> <P>(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.</P> <P>(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.</P> <P>(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.<PRTPAGE P="167"/> </P> <P>(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 § 987.2(b) or § 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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.5</SECTNO> <SUBJECT>Obligations of the Banks and the Office of Finance; no Adverse Claims.</SUBJECT> <P>(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 § 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.</P> <P>(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:</P> <P>(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.</P> <P>(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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.6</SECTNO> <SUBJECT>Authority of Federal Reserve Banks.</SUBJECT> <P>(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.<PRTPAGE P="168"/> </P> <P>(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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.7</SECTNO> <SUBJECT>Liability of Banks, Finance Board, Office of Finance and Federal Reserve Banks.</SUBJECT> <P>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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.8</SECTNO> <SUBJECT>Additional requirements; notice of attachment for Book-entry consolidated obligations.</SUBJECT> <P>(a) <E T="03">Additional requirements.</E> 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.</P> <P>(b) <E T="03">Notice of attachment.</E> 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.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.9</SECTNO> <SUBJECT>Reference to certain Department of Treasury commentary and determinations.</SUBJECT> <P>(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.</P> <P>(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 <E T="04">Federal Register</E> or otherwise, shall also apply to this part 987.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 987.10</SECTNO> <SUBJECT>Obligations of United States with respect to consolidated obligations.</SUBJECT> <P>Consolidated obligations are not obligations of the United States and are not guaranteed by the United States.</P> <CITA>[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 989</EAR> <HD SOURCE="HED">PART 989—FINANCIAL STATEMENTS OF THE BANKS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>989.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>989.2</SECTNO> <SUBJECT>Audit requirements.</SUBJECT> <SECTNO>989.3</SECTNO> <SUBJECT>Requirement to provide financial and other information to the Finance Board and the Office of Finance.</SUBJECT> <SECTNO>989.4</SECTNO> <SUBJECT>Requirement for voluntary bank disclosure.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a, 1422b, 1426, 1431, 1440.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>63 FR 39704, July 24, 1998, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 989.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:<PRTPAGE P="169"/> </P> <P> <E T="03">Audit</E> 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.</P> <P> <E T="03">Audit report</E> 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.</P> <CITA>[65 FR 36303, June 7, 2000, as amended at 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 989.2</SECTNO> <SUBJECT>Audit requirements.</SUBJECT> <P>(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.</P> <P>(b) The OF board of directors shall obtain an audit and an audit report on the combined annual financial statements for the Bank System.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <CITA>[65 FR 36303, June 7, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 989.3</SECTNO> <SUBJECT>Requirement to provide financial and other information to the Finance Board and the Office of Finance.</SUBJECT> <P>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.</P> <CITA>[65 FR 36303, June 7, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 989.4</SECTNO> <SUBJECT>Requirement for voluntary bank disclosure.</SUBJECT> <P>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 .</P> <CITA>[63 FR 39704, July 24, 1998. Redesignated and amended at 65 FR 36303, 36304, June 7, 2000.]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="170"/> <HD SOURCE="HED">SUBCHAPTER L—NON-BANK SYSTEM ENTITIES</HD> <PART> <EAR>Pt. 995</EAR> <HD SOURCE="HED">PART 995—FINANCING CORPORATION OPERATIONS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>995.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>995.2</SECTNO> <SUBJECT>General authority.</SUBJECT> <SECTNO>995.3</SECTNO> <SUBJECT>Authority to establish investment policies and procedures.</SUBJECT> <SECTNO>995.4</SECTNO> <SUBJECT>Book-entry procedure for Financing Corporation obligations.</SUBJECT> <SECTNO>995.5</SECTNO> <SUBJECT>Bank and Office of Finance employees.</SUBJECT> <SECTNO>995.6</SECTNO> <SUBJECT>Budget and expenses.</SUBJECT> <SECTNO>995.7</SECTNO> <SUBJECT>Administrative expenses.</SUBJECT> <SECTNO>995.8</SECTNO> <SUBJECT>Non-administrative expenses; assessments.</SUBJECT> <SECTNO>995.9</SECTNO> <SUBJECT>Reports to the Finance Board.</SUBJECT> <SECTNO>995.10</SECTNO> <SUBJECT>Review of books and records.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1441(b)(8), (c), (j).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>62 FR 50248, Sept. 25, 1997, unless otherwise noted. Redesignated at 65 FR 8256, Feb. 18, 2000.</P> </SOURCE> <SECTION> <SECTNO>§ 995.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Administrative expenses:</E> </P> <P>(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</P> <P>(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.</P> <P> <E T="03">BIF-assessable deposit</E> 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 <E T="03">et seq.</E>), 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)).</P> <P> <E T="03">Custodian fees</E> 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.</P> <P> <E T="03">Directorate</E> means the board established under section 21(b) of the Act (12 U.S.C. 1441(b)) to manage the Financing Corporation.</P> <P> <E T="03">Exit fees</E> 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).</P> <P> <E T="03">Insured depository institution</E> has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).</P> <P> <E T="03">Issuance costs</E> 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.</P> <P> <E T="03">Non-administrative expenses</E> means custodian fees, issuance costs, and interest on Financing Corporation obligations.</P> <P> <E T="03">Obligations</E> 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)).</P> <P> <E T="03">Receivership proceeds</E> 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).</P> <P> <E T="03">SAIF-assessable deposit</E> means a deposit that is subject to assessment for <PRTPAGE P="171"/>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)).</P> <CITA>[67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 995.2</SECTNO> <SUBJECT>General authority.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 995.3</SECTNO> <SUBJECT>Authority to establish investment policies and procedures.</SUBJECT> <P>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.</P> <CITA>[62 FR 50248, Sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, as amended at 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 995.4</SECTNO> <SUBJECT>Book-entry procedure for Financing Corporation obligations.</SUBJECT> <P>(a) <E T="03">Authority.</E> Any Federal Reserve Bank shall have authority to apply book-entry procedure to Financing Corporation obligations.</P> <P>(b) <E T="03">Procedure.</E> 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.</P> <CITA>[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 67 FR 12855, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 995.5</SECTNO> <SUBJECT>Bank and Office of Finance employees.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 995.6</SECTNO> <SUBJECT>Budget and expenses.</SUBJECT> <P>(a) <E T="03">Directorate approval.</E> 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.</P> <P>(b) <E T="03">Finance Board approval.</E> 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.</P> <P>(c) <E T="03">Spending limitation.</E> 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.</P> <P>(d) <E T="03">Amended budgets.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 995.7</SECTNO> <SUBJECT>Administrative expenses.</SUBJECT> <P>(a) <E T="03">Payment by Banks.</E> The Banks shall pay all administrative expenses <PRTPAGE P="172"/>of the Financing Corporation approved pursuant to § 995.6.</P> <P>(b) <E T="03">Amount.</E> 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.</P> <P>(c) <E T="03">Adjustments.</E> 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.</P> <CITA>[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 67 FR 12856, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 995.8</SECTNO> <SUBJECT>Non-administrative expenses; assessments.</SUBJECT> <P>(a) <E T="03">Interest expenses.</E> The Financing Corporation shall determine anticipated interest expenses on its obligations at least semiannually.</P> <P>(b) <E T="03">Assessments on insured depository institutions</E>—(1) <E T="03">Authority.</E> To provide sufficient funds to pay the non-administrative expenses of the Financing Corporation approved under § 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.</P> <P>(2) <E T="03">Assessment rate</E>—(i) <E T="03">Determination.</E> 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.</P> <P>(ii) <E T="03">Limitation.</E> 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 <FR>1/5</FR> of the rate of the assessment imposed on an insured depository institution with respect to any SAIF-assessable deposit.</P> <P>(iii) <E T="03">Notice.</E> 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.</P> <P>(3) <E T="03">Collecting assessments</E>—(i) <E T="03">Collection agent.</E> 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.</P> <P>(ii) <E T="03">Accounts.</E> 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.</P> <P>(c) <E T="03">Receivership proceeds</E>—(1) <E T="03">Authority.</E> 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 § 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)).</P> <P>(2) <E T="03">Procedure.</E> 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 § 995.6.</P> <P>(d) <E T="03">Exit fees</E>—(1) <E T="03">Authority.</E> 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.</P> <P>(2) <E T="03">Procedure.</E> The Directorate shall request in writing that the Secretary of the Treasury order that exit fees be <PRTPAGE P="173"/>transferred to the Financing Corporation. Such request shall specify the estimated amount of funds required to pay the interest due on Financing Corporation obligations.</P> <CITA>[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, 8269, Feb. 18, 2000; 67 FR 12856, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 995.9</SECTNO> <SUBJECT>Reports to the Finance Board.</SUBJECT> <P>The Financing Corporation shall file such reports as the Finance Board shall direct.</P> </SECTION> <SECTION> <SECTNO>§ 995.10</SECTNO> <SUBJECT>Review of books and records.</SUBJECT> <P>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.</P> <CITA>[62 FR 50248, sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, as amended at 67 FR 12856, Mar. 20, 2002]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 996</EAR> <HD SOURCE="HED">PART 996—AUTHORITY FOR BANK ASSISTANCE OF THE RESOLUTION FUNDING CORPORATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>996.1</SECTNO> <SUBJECT>[Reserved]</SUBJECT> <SECTNO>996.2</SECTNO> <SUBJECT>Bank employees.</SUBJECT> <SECTNO>996.3</SECTNO> <SUBJECT>Demand deposit accounts.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a, 1422b.</P> </AUTH> <SECTION> <SECTNO>§ 996.1</SECTNO> <RESERVED>[Reserved]</RESERVED> </SECTION> <SECTION> <SECTNO>§ 996.2</SECTNO> <SUBJECT>Bank employees.</SUBJECT> <P>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)).</P> <CITA>[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]</CITA> </SECTION> <SECTION> <SECTNO>§ 996.3</SECTNO> <SUBJECT>Demand deposit accounts.</SUBJECT> <P>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)).</P> <CITA>[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]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 997</EAR> <HD SOURCE="HED">PART 997—RESOLUTION FUNDING CORPORATION OBLIGATIONS OF THE BANKS</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>997.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>997.2</SECTNO> <SUBJECT>Reduction of the payment term.</SUBJECT> <SECTNO>997.3</SECTNO> <SUBJECT>Extension of the payment term.</SUBJECT> <SECTNO>997.4</SECTNO> <SUBJECT>Calculation of the quarterly present-value determination.</SUBJECT> <SECTNO>997.5</SECTNO> <SUBJECT>Termination of the obligation.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422b(a) and 1441b(f).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>65 FR 17438, Apr. 3, 2000, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 997.1</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this part:</P> <P> <E T="03">Actual quarterly payment</E> 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.</P> <P> <E T="03">Benchmark quarterly payment</E> means $75 million, or such amount that may result from adjustments required by calculations made in accordance with §§ 997.2 and 997.3.</P> <P> <E T="03">Current benchmark quarterly payment</E> means the benchmark quarterly payment that corresponds to the date of the actual quarterly payment.</P> <P> <E T="03">Deficit quarterly payment</E> means the amount by which the actual quarterly payment falls short of the current benchmark quarterly payment.</P> <P> <E T="03">Estimated interest rate</E> 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 <PRTPAGE P="174"/>date closest to the date of the payment being defeased.</P> <P> <E T="03">Excess quarterly payment</E> means the amount by which the actual quarterly payment exceeds the current benchmark quarterly payment.</P> <P> <E T="03">Quarterly present-value determination</E> 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), <E T="03">as amended by</E> Pub. L. 106-102, sec. 607, 113 Stat.1456-57.</P> <CITA>[65 FR 17438, Apr. 3, 2000, as amended at 67 FR 12856, Mar. 20, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 997.2</SECTNO> <SUBJECT>Reduction of the payment term.</SUBJECT> <P>(a) <E T="03">Generally.</E> 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.</P> <P>(b) <E T="03">Excess quarterly payment.</E> Where there is an excess quarterly payment, the quarterly present-value determination shall be as follows:</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 997.3</SECTNO> <SUBJECT>Extension of the payment term.</SUBJECT> <P>(a) <E T="03">Generally.</E> 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.</P> <P>(b) <E T="03">Deficit quarterly payment.</E> Where there is a deficit quarterly payment, the quarterly present-value determination shall be as follows:</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(c) <E T="03">Term beyond maturity.</E> 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.</P> </SECTION> <SECTION> <PRTPAGE P="175"/> <SECTNO>§ 997.4</SECTNO> <SUBJECT>Calculation of the quarterly present-value determination.</SUBJECT> <P>(a) <E T="03">Applicable interest rates.</E> 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 §§ 997.2 and 997.3.</P> <P>(b) <E T="03">Calculation by the Finance Board.</E> If § 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.</P> <P>(c) <E T="03">Records.</E> The Finance Board will maintain the official record of the results of all quarterly present-value determinations made under this part.</P> </SECTION> <SECTION> <SECTNO>§ 997.5</SECTNO> <SUBJECT>Termination of the obligation.</SUBJECT> <P>(a) <E T="03">Generally.</E> 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.</P> <P>(b) <E T="03">Date of the final payment.</E> 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 §§ 997.2 and 997.3, exactly equals the actual quarterly payment.</P> <CITA>[65 FR 17438, Apr. 3, 2000, as amended at 65 FR 40492, June 30, 2000]</CITA> </SECTION> </PART> </SUBCHAP> <SUBCHAP TYPE="P"> <PRTPAGE P="176"/> <HD SOURCE="HED">SUBCHAPTER M—FEDERAL HOME LOAN BANK DISCLOSURES</HD> <PART> <EAR>Pt. 998</EAR> <HD SOURCE="HED">PART 998—REGISTRATION OF FEDERAL HOME LOAN BANK EQUITY SECURITIES</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>998.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <SECTNO>998.2</SECTNO> <SUBJECT>Registration and periodic disclosures.</SUBJECT> <SECTNO>998.3</SECTNO> <SUBJECT>Reservation of authority.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 1422a(a)(3), 1422b(a)(1).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>69 FR 38811, June 29, 2004, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 998.1</SECTNO> <SUBJECT>Purpose.</SUBJECT> <P>The purposes of this part are to enhance the quality of the financial disclosures provided by each Bank, to promote a greater degree of consistency and uniformity of such disclosures from Bank to Bank, to provide a greater degree of transparency regarding the financial condition of each Bank, and to conform the disclosure practices of the Banks to those of other financial institutions who raise funds in the global debt markets.</P> </SECTION> <SECTION> <SECTNO>§ 998.2</SECTNO> <SUBJECT>Registration and periodic disclosures.</SUBJECT> <P>(a) <E T="03">Registration.</E> (1) Each Bank shall file a registration statement by no later than June 30, 2005 to register a class of its equity securities pursuant to the provisions of section 12(g)(1) of the 1934 Act. Each Bank shall ensure that its registration statement becomes effective as provided in section 12 no later than August 29, 2005.</P> <P>(2) Notwithstanding paragraph (a)(1) of this section, the Finance Board may by order extend the registration date for one or more Banks if it determines, based on factors presented in a written request to the Finance Board, that good cause exists to do so.</P> <P>(b) <E T="03">Periodic disclosures.</E> Consistent with the registration required pursuant to paragraph (a) of this section, each Bank, after registering a class of equity securities with the SEC, shall comply with the periodic disclosure requirements of the 1934 Act by preparing and filing with the SEC such annual, quarterly, and current reports, as well as any other materials required pursuant to SEC rules, regulations, or interpretations, including those related to audited financial statements, as may be required by the SEC under the 1934 Act.</P> <P>(c) <E T="03">Submission to Finance Board.</E> Unless otherwise directed by the Finance Board, each Bank shall provide to the Finance Board on a concurrent basis copies of all disclosure documents filed with the SEC.</P> </SECTION> <SECTION> <SECTNO>§ 998.3</SECTNO> <SUBJECT>Reservation of authority.</SUBJECT> <P>The requirements of this part do not diminish, or otherwise restrict the ability of the Finance Board to exercise, any and all authority conferred by the Bank Act to ensure that the Banks operate in a financially safe and sound manner, that they carry out their housing finance mission, and that they remain adequately capitalized and able to raise funds in the capital markets. Nor do the requirements of part 998 diminish or otherwise restrict the Finance Board's authority to supervise the Banks, to conduct examinations, to require reports and other disclosures, and to enforce compliance with applicable laws, rules, orders or agreements.</P> </SECTION> </PART> </SUBCHAP> </CHAPTER> <CHAPTER> <LRH>12 CFR Ch. XI (1-1-10 Edition)</LRH> <RRH>Federal Financial Institutions Examination Council</RRH> <TOC> <TOCHD> <PRTPAGE P="177"/> <HD SOURCE="HED">CHAPTER XI—FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL</HD> </TOCHD> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>1101</PT> <SUBJECT>Description of office, procedures, public information</SUBJECT> <PG>179</PG> <PT>1102</PT> <SUBJECT>Appraiser regulation</SUBJECT> <PG>184</PG> </CHAPTI> </TOC> <PART> <PRTPAGE P="179"/> <EAR>Pt. 1101</EAR> <HD SOURCE="HED">PART 1101—DESCRIPTION OF OFFICE, PROCEDURES, PUBLIC INFORMATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>1101.1</SECTNO> <SUBJECT>Scope and purpose.</SUBJECT> <SECTNO>1101.2</SECTNO> <SUBJECT>Authority and functions.</SUBJECT> <SECTNO>1101.3</SECTNO> <SUBJECT>Organization and methods of operation.</SUBJECT> <SECTNO>1101.4</SECTNO> <SUBJECT>Disclosure of information, policies, and records.</SUBJECT> <SECTNO>1101.5</SECTNO> <SUBJECT>Testimony and production of documents in response to subpoena, order, etc.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 552; 12 U.S.C. 3307.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>45 FR 46794, July 11, 1980, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1101.1</SECTNO> <SUBJECT>Scope and purpose.</SUBJECT> <P>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.</P> </SECTION> <SECTION> <SECTNO>§ 1101.2</SECTNO> <SUBJECT>Authority and functions.</SUBJECT> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 1101.3</SECTNO> <SUBJECT>Organization and methods of operation.</SUBJECT> <P>(a) Statutory requirements relating to the Council's organization are stated in 12 U.S.C. 3303.</P> <P>(b) <E T="03">Council staff.</E> 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.</P> <P>(c) <E T="03">Agency Liaison Group, Task Forces and Legal Advisory Group.</E> 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.</P> <P>(d) <E T="03">State Liaison Committee.</E> Under 12 U.S.C. 3306, the Council has established a State Liaison Committee, composed of five representatives of state financial institutions supervisory agencies.</P> <P>(e) <E T="03">Council address.</E> Council offices are located at 1776 G Street, NW., Suite 701, Washington, DC 20006.</P> <CITA>[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 1101.4</SECTNO> <SUBJECT>Disclosure of information, policies, and records.</SUBJECT> <P>(a) <E T="03">Statements of policy published in the Federal Register or available for public inspection and copying; indices.</E> Under 5 U.S.C. 552(a)(1), the Council publishes general rules, policies and interpretations in the <E T="04">Federal Register.</E> 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 public inspection and copying at the address set out in § 1101.3(e) of this part <PRTPAGE P="180"/>during regular business hours. The preceding materials may be withheld from disclosure under the principles stated in paragraph (b)(1) of this section.</P> <P>(b) <E T="03">Other records of the Council available for public inspection; procedures</E>—(1) <E T="03">General rule and exemptions.</E> 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:</P> <P>(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.</P> <P>(ii) A record, or portion thereof, relating solely to the internal personnel rules and practices of an agency.</P> <P>(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.</P> <P>(iv) A record, or portion thereof, containing trade secrets and commercial or financial information obtained from a person and privileged or confidential.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(ix) A record, or portion thereof, which contains or is related to geological and geophysical information and data, including maps, concerning wells.</P> <P>(2) <E T="03">Waiver of exemption.</E> Notwithstanding the applicability of an exemption, the Council or the Council's designee may elect, under the circumstances of a particular request, to <PRTPAGE P="181"/>disclose all or a portion of any requested record where permitted by law. Such disclosure has no precedential significance whatsoever.</P> <P>(3) <E T="03">Procedure for records request</E>—(i) <E T="03">Initial request.</E> Requests for records shall be submitted in writing to the Executive Secretary of the Council, at the address set out in § 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.</P> <P>(ii) <E T="03">Council response to initial requests.</E> 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.</P> <P>(iii) <E T="03">Appeals of responses to initial requests.</E> 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 § 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.</P> <P>(iv) <E T="03">Council response to appeals.</E> 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.</P> <P>(4) <E T="03">Procedure for access to records if request is granted.</E> 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.</P> <P>(5) <E T="03">Fees for document search, review, and duplication; waiver and reduction of fees</E>—(i) <E T="03">Definitions</E>—(A) <E T="03">Direct costs</E> means those expenditures which the Council actually incurs in searching for, duplicating, and reviewing documents to respond to a FOIA request.</P> <P>(B) <E T="03">Search</E> 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.</P> <P>(C) <E T="03">Duplication</E> means the process of making a copy of a document necessary to respond to a FOIA request.</P> <P>(D) <E T="03">Review</E> means the process of examining documents located in response to a request that is for a commercial use (<E T="03">see</E> § 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.</P> <P>(E) <E T="03">Commercial use request</E> 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.</P> <P>(F) <E T="03">Educational institution</E> 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.</P> <P>(G) <E T="03">Noncommercial scientific institution</E> means an institution that is not operated on a “commercial” basis as that term is referenced in § 1101.4(b)(i)(E), 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.<PRTPAGE P="182"/> </P> <P>(H) <E T="03">Representative of the news media</E> 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.</P> <P>(ii) <E T="03">Fees to be charged.</E> 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.</P> <P>(A) <E T="03">Manual searches and review.</E> The Council will charge fees at the following rates for manual searches for and review of records:</P> <P>(<E T="03">1</E>) 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;</P> <P>(<E T="03">2</E>) 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.</P> <P>(B) <E T="03">Computer searches.</E> 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.</P> <P>(C) <E T="03">Duplication of records.</E> (<E T="03">1</E>) The per-page fee for paper copy reproduction of a document is $.25;</P> <P>(<E T="03">2</E>) 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.).</P> <P>(<E T="03">3</E>) If any other method of duplication is used, the Council will charge the actual direct cost of duplicating the documents.</P> <P>(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.</P> <P>(E) <E T="03">Fees to exceed $25.</E> 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.</P> <P>(F) <E T="03">Other services.</E> 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.</P> <P>(G) <E T="03">Restriction on assessing fees.</E> 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.</P> <P>(H) <E T="03">Waiving or reducing fees.</E> 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.</P> <P>(<E T="03">1</E>) The Council will make a determination of whether the public interest requirement above is met based on the following factors:</P> <P>(<E T="03">i</E>) The subject of the request: Whether the subject of the requested records concerns the operations or activities of the government;</P> <P>(<E T="03">ii</E>) The informative value of the information to be disclosed: Whether the disclosure is likely to contribute to an understanding of government operations or activities;</P> <P>(<E T="03">iii</E>) The contribution to an understanding of the subject by the general public likely to result from disclosure: Whether disclosure of the requested information will contribute to public understanding;<PRTPAGE P="183"/> </P> <P>(<E T="03">iv</E>) 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.</P> <P>(<E T="03">2</E>) If the public interest requirement is met, the Council will make a determination on the commercial interest requirement based upon the following factors:</P> <P>(<E T="03">i</E>) 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</P> <P>(<E T="03">ii</E>) 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.</P> <P>(<E T="03">3</E>) 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.</P> <P>(iii) <E T="03">Categories of requesters.</E> (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.</P> <P>(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.</P> <P>(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.</P> <P>(D) All requesters must specifically describe records sought.</P> <P>(iv) <E T="03">Interest on unpaid fees.</E> 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.</P> <P>(v) <E T="03">Fees for unsuccessful search and review.</E> 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.</P> <P>(vi) <E T="03">Aggregating requests.</E> 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.</P> <P>(vii) <E T="03">Advance payment of fees.</E> The Council will not require a requester to make an assurance of payment or an advance payment unless:</P> <P>(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</P> <P>(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 § 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.</P> <P>(C) When the Council acts under § 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, <PRTPAGE P="184"/>plus permissible extensions of these time limits) will begin only after the Council has received the fee payments described.</P> <P>(6) <E T="03">Records of another agency.</E> 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.</P> <CITA>[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988]</CITA> </SECTION> <SECTION> <SECTNO>§ 1101.5</SECTNO> <SUBJECT>Testimony and production of documents in response to subpoena, order, etc.</SUBJECT> <P>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.</P> </SECTION> </PART> <PART> <EAR>Pt. 1102</EAR> <HD SOURCE="HED">PART 1102—APPRAISER REGULATION</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Temporary Waiver Requests</HD> <SECHD>Sec.</SECHD> <SECTNO>1102.1</SECTNO> <SUBJECT>Authority, purpose, and scope.</SUBJECT> <SECTNO>1102.2</SECTNO> <SUBJECT>Requirements for requests.</SUBJECT> <SECTNO>1102.3</SECTNO> <SUBJECT>Other requests and information submissions.</SUBJECT> <SECTNO>1102.4</SECTNO> <SUBJECT>Notice and comment.</SUBJECT> <SECTNO>1102.5</SECTNO> <SUBJECT>Subcommittee determination.</SUBJECT> <SECTNO>1102.6</SECTNO> <SUBJECT>Waiver extension.</SUBJECT> <SECTNO>1102.7</SECTNO> <SUBJECT>Waiver termination.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Rules of Practice for Proceedings</HD> <SECTNO>1102.20</SECTNO> <SUBJECT>Authority, purpose, and scope.</SUBJECT> <SECTNO>1102.21</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>1102.22</SECTNO> <SUBJECT>Appearance and practice before the Subcommittee.</SUBJECT> <SECTNO>1102.23</SECTNO> <SUBJECT>Formal requirements as to papers filed.</SUBJECT> <SECTNO>1102.24</SECTNO> <SUBJECT>Filing requirements.</SUBJECT> <SECTNO>1102.25</SECTNO> <SUBJECT>Service.</SUBJECT> <SECTNO>1102.26</SECTNO> <SUBJECT>When papers are deemed filed or served.</SUBJECT> <SECTNO>1102.27</SECTNO> <SUBJECT>Computing time.</SUBJECT> <SECTNO>1102.28</SECTNO> <SUBJECT>Documents and exhibits in proceedings public.</SUBJECT> <SECTNO>1102.29</SECTNO> <SUBJECT>Conduct of proceedings.</SUBJECT> <SECTNO>1102.30</SECTNO> <SUBJECT>Rules of evidence.</SUBJECT> <SECTNO>1102.31</SECTNO> <SUBJECT>Burden of proof.</SUBJECT> <SECTNO>1102.32</SECTNO> <SUBJECT>Notice of Intention to Commence a Proceeding.</SUBJECT> <SECTNO>1102.33</SECTNO> <SUBJECT>Rebuttal or Notice Not To Contest.</SUBJECT> <SECTNO>1102.34</SECTNO> <SUBJECT>Briefs, memoranda and statements.</SUBJECT> <SECTNO>1102.35</SECTNO> <SUBJECT>Opportunity for informal settlement.</SUBJECT> <SECTNO>1102.36</SECTNO> <SUBJECT>Oral presentations.</SUBJECT> <SECTNO>1102.37</SECTNO> <SUBJECT>Decision of the Subcommittee and judicial review.</SUBJECT> <SECTNO>1102.38</SECTNO> <SUBJECT>Compliance activities.</SUBJECT> <SECTNO>1102.39</SECTNO> <SUBJECT>Duty to cooperate.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Rules Pertaining to the Privacy of Individuals and Systems of Records Maintained by the Appraisal Subcommittee</HD> <SECTNO>1102.100</SECTNO> <SUBJECT>Authority, purpose and scope.</SUBJECT> <SECTNO>1102.101</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>1102.102</SECTNO> <SUBJECT>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.</SUBJECT> <SECTNO>1102.103</SECTNO> <SUBJECT>Disclosure of requested records.</SUBJECT> <SECTNO>1102.104</SECTNO> <SUBJECT>Special procedure: Medical records.</SUBJECT> <SECTNO>1102.105</SECTNO> <SUBJECT>Requests for amendment of records.</SUBJECT> <SECTNO>1102.106</SECTNO> <SUBJECT>Review of requests for amendment.</SUBJECT> <SECTNO>1102.107</SECTNO> <SUBJECT>Appeal of initial adverse agency determination regarding access or amendment.</SUBJECT> <SECTNO>1102.108</SECTNO> <SUBJECT>General provisions.<PRTPAGE P="185"/> </SUBJECT> <SECTNO>1102.109</SECTNO> <SUBJECT>Fees.</SUBJECT> <SECTNO>1102.110</SECTNO> <SUBJECT>Penalties.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Description of Office, Procedures, Public Information</HD> <SECTNO>1102.300</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <SECTNO>1102.301</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>1102.302</SECTNO> <SUBJECT>ASC authority and functions.</SUBJECT> <SECTNO>1102.303</SECTNO> <SUBJECT>Organization and methods of operation.</SUBJECT> <SECTNO>1102.304</SECTNO> <SUBJECT>Federal Register publication.</SUBJECT> <SECTNO>1102.305</SECTNO> <SUBJECT>Publicly available records.</SUBJECT> <SECTNO>1102.306</SECTNO> <SUBJECT>Procedures for requesting records.</SUBJECT> <SECTNO>1102.307</SECTNO> <SUBJECT>Disclosure of exempt records.</SUBJECT> <SECTNO>1102.308</SECTNO> <SUBJECT>Right to petition for issuance, amendment and repeal of rules of general application.</SUBJECT> <SECTNO>1102.309</SECTNO> <SUBJECT>Confidential treatment procedures.</SUBJECT> <SECTNO>1102.310</SECTNO> <SUBJECT>Service of process.</SUBJECT> </SUBPART> </CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—Temporary Waiver Requests</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 3348(b).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>57 FR 10982, Apr. 1, 1992, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1102.1</SECTNO> <SUBJECT>Authority, purpose and scope.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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. § 3348(b)).</P> <P>(b) <E T="03">Purpose and scope.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.2</SECTNO> <SUBJECT>Requirements for requests.</SUBJECT> <P>A request will not be deemed received by the ASC unless it fully and accurately sets out:</P> <P>(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;</P> <P>(b) The requirement or requirements of State law from which relief is being sought;</P> <P>(c) A description of all significant problems currently being encountered in efforts to comply with Title XI;</P> <P>(d) The nature of the scarcity of certified or licensed appraisers (including supporting documentation);</P> <P>(e) The extent of the delays anticipated or experienced in obtaining the services of certified or licensed appraisers (including supporting documentation);</P> <P>(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</P> <P>(g) A specific plan for expeditiously alleviating the scarcity and the service delays.</P> </SECTION> <SECTION> <SECTNO>§ 1102.3</SECTNO> <SUBJECT>Other requests and information submissions.</SUBJECT> <P>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 § 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 § 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 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 <PRTPAGE P="186"/>initiate a temporary waiver procedure. When the ASC initiates a temporary waiver proceeding, these documents shall correspond to a received request under § 1102.4 of this subpart.</P> </SECTION> <SECTION> <SECTNO>§ 1102.4</SECTNO> <SUBJECT>Notice and comment.</SUBJECT> <P>The ASC shall publish promptly in the <E T="04">Federal Register</E> a notice respecting:</P> <P>(a) The received request; or</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.5</SECTNO> <SUBJECT>Subcommittee determination.</SUBJECT> <P>Within 45 calendar days of the date of the publication of the notice or initiation order in the <E T="04">Federal Register,</E> 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 <E T="04">Federal Register,</E> 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 § 1120.4 of this subpart. Any ASC approval order shall be effective only upon Federal Financial Institution Examination Council concurrence.</P> </SECTION> <SECTION> <SECTNO>§ 1102.6</SECTNO> <SUBJECT>Waiver extension.</SUBJECT> <P>The ASC may initiate an extension of temporary waiver relief and shall follow §§ 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.7</SECTNO> <SUBJECT>Waiver termination.</SUBJECT> <P>The ASC at any time may terminate a waiver order on the finding that:</P> <P>(a) The significant delays in obtaining the services of certified or licensed appraisers no longer exist; or</P> <P>(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 <E T="04">Federal Register,</E> 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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Rules of Practice for Proceedings</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 3332, 3335, 3347, and 3348(c).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>57 FR 31650, July 17, 1992, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1102.20</SECTNO> <SUBJECT>Authority, purpose, and scope.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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)).</P> <P>(b) <E T="03">Purpose and scope.</E> 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)).</P> <CITA>[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.21</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>As used in this subpart:</P> <P>(a) <E T="03">Subcommittee</E> or <E T="03">ASC</E> means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council, as established under section 1011 of Title XI (12 U.S.C. 3310).</P> <P>(b) <E T="03">Party</E> means the ASC or a person, agency or other entity named as a party, including, when appropriate, <PRTPAGE P="187"/>persons appearing in the proceeding under § 1102.22 of this subpart.</P> <P>(c) <E T="03">Respondent</E> means any party other than the ASC.</P> <P>(d) <E T="03">Secretary</E> means the Secretary of the ASC under its Rules of Operation.</P> </SECTION> <SECTION> <SECTNO>§ 1102.22</SECTNO> <SUBJECT>Appearance and practice before the Subcommittee.</SUBJECT> <P>(a) <E T="03">By attorneys and notice of appearance.</E> 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.</P> <P>(b) <E T="03">By non-attorneys.</E> 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.</P> <P>(c) <E T="03">Conduct during proceedings.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.23</SECTNO> <SUBJECT>Formal requirements as to papers filed.</SUBJECT> <P>(a) <E T="03">Form.</E> All papers filed under this subpart must be double-spaced and printed or typewritten on 8<FR>1/2</FR>″×11″ paper. All copies shall be clear and legible.</P> <P>(b) <E T="03">Caption.</E> 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.</P> <P>(c) <E T="03">Party names, signatures, certificates of service.</E> 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.</P> <P>(d) <E T="03">Copies.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.24</SECTNO> <SUBJECT>Filing requirements.</SUBJECT> <P>(a) <E T="03">Filing.</E> All papers filed with the ASC in any proceeding shall be filed with the Secretary, Appraisal Subcommittee, 2000 K Street, NW., Suite 310, Washington, DC 20006.</P> <P>(b) <E T="03">Manner of filing.</E> Unless otherwise specified by the ASC, filing may be accomplished by:</P> <P>(1) Personal service;</P> <P>(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</P> <P>(3) Mailing the papers by first class, registered, or certified mail.</P> <CITA>[57 FR 31650, July 17, 1992, as amended at 69 FR 2501, Jan. 16, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.25</SECTNO> <SUBJECT>Service.</SUBJECT> <P>(a) <E T="03">Methods; appearing party.</E> A serving party, who has made an appearance under § 1102.22 of this subpart, shall use one or more of the following methods of service:</P> <P>(1) Personal service;</P> <P>(2) Delivering the papers to a reliable commercial courier service, overnight <PRTPAGE P="188"/>delivery service, or to the U.S. Post Office for Express Mail delivery; and</P> <P>(3) Mailing the papers by first class, registered, or certified mail.</P> <P>(b) <E T="03">Methods; non-appearing party.</E> If a party has not appeared in the proceeding in accordance with § 1102.22 of this subpart, the ASC or any other party shall make service by any of the following methods:</P> <P>(1) By personal service;</P> <P>(2) By delivery to a person of suitable age and discretion at the party's last known address;</P> <P>(3) By registered or certified mail addressed to the party's last known address; or</P> <P>(4) By any other manner reasonably calculated to give actual notice.</P> <P>(c) <E T="03">By the Subcommittee.</E> 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.</P> <P>(d) <E T="03">By the respondent.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.26</SECTNO> <SUBJECT>When papers are deemed filed or served.</SUBJECT> <P>(a) <E T="03">Effectiveness.</E> Filing and service are deemed effective:</P> <P>(1) For personal service or same-day commercial courier delivery, upon actual delivery; and</P> <P>(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.</P> <P>(b) <E T="03">Modification.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.27</SECTNO> <SUBJECT>Computing time.</SUBJECT> <P>(a) <E T="03">General rule.</E> 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.</P> <P>(b) <E T="03">For service and filing responsive papers.</E> 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:</P> <P>(1) If service is made by first class, registered or certified mail, add three days to the prescribed period; and</P> <P>(2) If service is made by express mail or overnight delivery service, add one day to the prescribed period.</P> </SECTION> <SECTION> <SECTNO>§ 1102.28</SECTNO> <SUBJECT>Documents and exhibits in proceedings public.</SUBJECT> <P>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 § 1102.24 of this subpart.</P> </SECTION> <SECTION> <SECTNO>§ 1102.29</SECTNO> <SUBJECT>Conduct of proceedings.</SUBJECT> <P>(a) <E T="03">In general.</E> Unless otherwise provided in the notice of proceedings, all proceedings under this subpart shall be conducted as hereinafter provided.</P> <P>(b) <E T="03">Written submissions.</E> All aspects of the proceeding shall be conducted by written submissions only, with the exception of oral presentations allowed under § 1102.36 of this subpart.</P> <P>(c) <E T="03">Disqualification.</E> 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.</P> <P>(d) <E T="03">User of ASC staff.</E> Appropriate members of the ASC's staff who are not engaged in the performance of investigative or prosecuting functions in the <PRTPAGE P="189"/>proceeding may advise and assist the ASC in the consideration of the case and in the preparation of appropriate documents for its disposition.</P> <P>(e) <E T="03">Authority of Subcommittee Chairperson.</E> 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.</P> <P>(f) <E T="03">Conferences.</E> (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:</P> <P>(i) Scheduling of matters, including a timetable for the information-gathering phase of the proceeding;</P> <P>(ii) Simplification and clarification of the issues;</P> <P>(iii) Stipulations and admissions of fact and of the content and authenticity of documents;</P> <P>(iv) Matters of which official notice will be taken; and</P> <P>(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.</P> <P>(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.</P> <P>(g) <E T="03">Changes or extensions of time and changes of place of proceeding.</E> The ASC, in connection with initiating a specific proceedings under § 1102.32 of this subpart, may instruct the Secretary to publish in the <E T="04">Federal Register</E> 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.</P> <P>(h) <E T="03">Call for further briefs, memoranda, statements; reopening of matters.</E> 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.</P> <CITA>[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.30</SECTNO> <SUBJECT>Rules of evidence.</SUBJECT> <P>(a) <E T="03">In general.</E> (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 <E T="03">et seq.</E>) and other applicable law.</P> <P>(2) Evidence that would be admissible under the Federal Rules of Evidence is admissible in a proceeding conducted under this subpart.</P> <P>(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.</P> <P>(b) <E T="03">Stipulations.</E> 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.</P> <P>(c) <E T="03">Official notice.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.31</SECTNO> <SUBJECT>Burden of proof.</SUBJECT> <P>The ultimate burden of proof shall be on the respondent. The burden of going <PRTPAGE P="190"/>forward with a <E T="03">prima facie</E> case shall be on the ASC.</P> </SECTION> <SECTION> <SECTNO>§ 1102.32</SECTNO> <SUBJECT>Notice of Intention to Commence a Proceeding.</SUBJECT> <P>The ASC shall instruct the Secretary or other designated officer acting for the ASC to publish in the <E T="04">Federal Register</E> 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 § 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.33</SECTNO> <SUBJECT>Rebuttal or Notice Not To Contest.</SUBJECT> <P>(a) <E T="03">When required.</E> 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.</P> <P>(b) <E T="03">Requirements of Rebuttal; effect of failure to deny.</E> 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.</P> <P>(c) <E T="03">Notice Not To Contest.</E> 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.</P> <P>(d) <E T="03">Effect of failure to file Rebuttal or Notice Not To Contest.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.34</SECTNO> <SUBJECT>Briefs, memoranda and statements.</SUBJECT> <P>(a) <E T="03">By the parties.</E> 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.</P> <P>(b) <E T="03">By interested persons, in non-recognition proceedings.</E> 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 <PRTPAGE P="191"/>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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.35</SECTNO> <SUBJECT>Opportunity for informal settlement.</SUBJECT> <P>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 § 1102.33(c) or by the submission of the case to the ASC on a stipulation of facts.</P> </SECTION> <SECTION> <SECTNO>§ 1102.36</SECTNO> <SUBJECT>Oral presentations.</SUBJECT> <P>(a) <E T="03">In general.</E> 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.</P> <P>(b) <E T="03">Method and time of request.</E> 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.</P> <P>(c) <E T="03">ASC processing.</E> 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.</P> <P>(d) <E T="03">Procedure on presentation day.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.37</SECTNO> <SUBJECT>Decision of the Subcommittee and judicial review.</SUBJECT> <P>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 <E T="04">Federal Register.</E> 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.</P> </SECTION> <SECTION> <PRTPAGE P="192"/> <SECTNO>§ 1102.38</SECTNO> <SUBJECT>Compliance activities.</SUBJECT> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.39</SECTNO> <SUBJECT>Duty to cooperate.</SUBJECT> <P>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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Rules Pertaining to the Privacy of Individuals and Systems of Records Maintained by the Appraisal Subcommittee</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>12 U.S.C. 552a.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>57 FR 36357, Aug. 13, 1992, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1102.100</SECTNO> <SUBJECT>Authority, purpose and scope.</SUBJECT> <P>(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.</P> <P>(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 <PRTPAGE P="193"/>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.</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.101</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>The following definitions shall apply for purposes of this subpart:</P> <P>(a) The terms <E T="03">individual, maintain, record, system of records,</E> and <E T="03">routine use</E> 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).</P> <P>(b) <E T="03">ASC</E> or <E T="03">Subcommittee</E> means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.</P> <P>(c) <E T="03">Privacy Act Officer</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.102</SECTNO> <SUBJECT>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.</SUBJECT> <P>(a) <E T="03">Place to make request.</E> 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 2000 K Street, NW., Suite 310, Washington, DC 20006, or by mail addressed to: Privacy Act Officer, ASC, 2000 K Street, NW., Suite 310, Washington, DC 20006. 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.”</P> <P>(1) <E T="03">Information to be included in requests.</E> 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 <E T="04">Federal Register,</E> 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.</P> <P>(2) <E T="03">Verification of identity.</E> 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 2000 K Street, NW., Suite 310, Washington, DC, between 9 a.m. to 4:30 p.m., <PRTPAGE P="194"/>Monday through Friday. The ASC's Office is not open on Saturdays, Sundays or Federal holidays.</P> <P>(3) <E T="03">Methods for verifying identity—appearance in person.</E> 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.</P> <P>(4) <E T="03">Method for verifying identity—by mail.</E> 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.</P> <P>(5) <E T="03">Additional procedures for verifying identity.</E> 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.</P> <P>(b) <E T="03">Acknowledgement of requests for information pertaining to individual records in a record system or for access to individual records.</E> (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.</P> <CITA>[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.103</SECTNO> <SUBJECT>Disclosure of requested records.</SUBJECT> <P>(a) <E T="03">Initial review.</E> 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.</P> <P>(b) <E T="03">Grant of request for access.</E> (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 § 1102.109 of this subpart.</P> <P>(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.</P> <P>(c) <E T="03">Denial of request for access.</E> 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 § 1102.107 of this subpart.</P> <P>(d) <E T="03">Time for acting on requests for access.</E> 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 <PRTPAGE P="195"/>it is anticipated that access may be granted or denied.</P> <P>(e) <E T="03">Authorization to allow designated person to review and discuss records pertaining to another individual.</E> 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.</P> <P>(f) <E T="03">Exclusion for certain records.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.104</SECTNO> <SUBJECT>Special procedure: Medical records.</SUBJECT> <P>(a) <E T="03">Statement of physician or mental health professional.</E> 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.</P> <P>(b) <E T="03">Designation of physician or mental health professional to receive records.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.105</SECTNO> <SUBJECT>Requests for amendment of records.</SUBJECT> <P>(a) <E T="03">Place to make requests.</E> 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 2000 K Street, NW., Suite 310, Washington, DC , or by mail addressed to the Privacy Act Officer, ASC, 2000 K Street, NW., Suite 310, Washington, DC 20006.</P> <P>(1) <E T="03">Information to be included in requests.</E> 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 § 1102.102(a) (2), (3), (4) and (5) may also be required.</P> <P>(2) <E T="03">Basis for amendment.</E> 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.</P> <P>(b) <E T="03">Acknowledgement of requests for amendment.</E> Receipt of a request to amend a record pertaining to an individual normally will be acknowledged <PRTPAGE P="196"/>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.</P> <CITA>[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.106</SECTNO> <SUBJECT>Review of requests for amendment.</SUBJECT> <P>(a) <E T="03">Initial review.</E> 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.</P> <P>(b) <E T="03">Standards to be applied in reviewing requests.</E> 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), <E T="03">i.e.,</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.</P> <P>(c) <E T="03">Time for acting on requests.</E> 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.</P> <P>(d) <E T="03">Grant of requests to amend records.</E> If a request to amend a record is granted in whole or in part, the Privacy Act Officer will:</P> <P>(1) Advise the individual making the request in writing of the extent to which it has been granted;</P> <P>(2) Amend the record accordingly; and</P> <P>(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.</P> <P>(e) <E T="03">Denial of requests to amend records.</E> If an individual's request to amend a record pertaining to him is denied in whole or in part, the Privacy Act Officer will:</P> <P>(1) Promptly advise the individual making the request in writing of the extent to which the request has been denied;</P> <P>(2) State the reasons for the denial of the request;</P> <P>(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</P> <P>(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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.107</SECTNO> <SUBJECT>Appeal of initial adverse agency determination regarding access or amendment.</SUBJECT> <P>(a) <E T="03">Administrative review.</E> Any person who has been notified pursuant to § 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 § 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 §§ 1102.103(d) <PRTPAGE P="197"/>and 1102.106(c) of this subpart), may appeal the adverse determination or failure to respond by applying for an order 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.</P> <P>(1) The application shall be in writing and shall describe the record in issue and set forth the proposed amendment and the reasons therefor.</P> <P>(2) The application shall be delivered to the ASC, 2000 K Street, NW., Suite 310, Washington, DC, or by mail addressed to the Privacy Act Officer, ASC, 2000 K Street, NW., Suite 310, Washington, DC 20006.</P> <P>(3) The applicant may state such facts and cite such legal or other authorities in support of the application.</P> <P>(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.</P> <P>(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 § 1102.106(b).</P> <P>(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 § 1102.103(b).</P> <P>(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 § 1102.106(d) of this subpart, to the extent applicable.</P> <P>(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:</P> <P>(i) The order;</P> <P>(ii) The reasons for denying access; and</P> <P>(iii) The individual's right to obtain judicial review of the decision pursuant to 5 U.S.C. 552a(g)(1)(B).</P> <P>(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:</P> <P>(i) The order refusing to amend the record and the reasons therefor;</P> <P>(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;</P> <P>(iii) The procedures for filing such a statement of disagreement with the Executive Director;</P> <P>(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;</P> <P>(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</P> <P>(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).</P> <P>(b) <E T="03">Statement of disagreement.</E> 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.</P> <P>(1) Such statement of disagreement shall be delivered to the ASC, 2000 K Street, NW., Suite 310, Washington, DC 20006, 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.<PRTPAGE P="198"/> </P> <P>(2) Such statement of disagreement shall concisely state the basis for the 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.</P> <P>(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.</P> <CITA>[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.108</SECTNO> <SUBJECT>General provisions.</SUBJECT> <P>(a) <E T="03">Extensions of time.</E> Pursuant to §§ 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, <E T="03">good cause</E> and <E T="03">unusual circumstances</E> shall include, but only to the extent reasonably necessary to the proper processing of a particular request:</P> <P>(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.</P> <P>(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.</P> <P>(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.</P> <P>(b) <E T="03">Effective date of action.</E> 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.</P> <P>(c) <E T="03">Records in use by a member of the ASC or its staff.</E> 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.</P> <P>(d) <E T="03">Missing or lost records.</E> 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.</P> <P>(e) <E T="03">Oral requests; misdirected written requests</E>—(1) <E T="03">Telephone and other oral requests.</E> 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 <PRTPAGE P="199"/>to records who believes that the request has been improperly denied should resubmit the request in appropriate written form to obtain proper consideration and, if need be, administrative review.</P> <P>(2) <E T="03">Misdirected written requests.</E> 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 §§ 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 § 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.109</SECTNO> <SUBJECT>Fees.</SUBJECT> <P>(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 § 1101.4(b)(5)(ii) of 12 CFR part 1101.</P> <P>(b) <E T="03">Waiver or reduction of fees.</E> 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.</P> </SECTION> <SECTION> <SECTNO>§ 1102.110</SECTNO> <SUBJECT>Penalties.</SUBJECT> <P>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.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Description of Office, Procedures, Public Information</HD> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 552, 553(e); and Executive Order 12600, 52 FR 23781 (3 CFR, 1987 Comp., p. 235).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>57 FR 60724, Dec. 22, 1992, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1102.300</SECTNO> <SUBJECT>Purpose and scope.</SUBJECT> <P>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 <E T="04">Federal Register.</E> 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.</P> <CITA>[64 FR 72496, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <PRTPAGE P="200"/> <SECTNO>§ 1102.301</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For purposes of this subpart:</P> <P>(a) <E T="03">ASC</E> means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.</P> <P>(b) <E T="03">Commercial use request</E> 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.</P> <P>(c) <E T="03">Direct costs</E> 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.</P> <P>(d) <E T="03">Disclose or disclosure</E> 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.</P> <P>(e) <E T="03">Duplication</E> 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 T="03">e.g.,</E> magnetic tape or computer disk).</P> <P>(f) <E T="03">Educational institution</E> 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.</P> <P>(g) <E T="03">Field review</E> 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.</P> <P>(h) <E T="03">Non-commercial scientific institution</E> 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.</P> <P>(i) <E T="03">Record</E> includes records, files, documents, reports correspondence, books, and accounts, or any portion thereof, in any form the ASC regularly maintains them.</P> <P>(j) <E T="03">Representative of the news media</E> 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.</P> <P>(k) <E T="03">Review</E> 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 T="03">e.g,</E> 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.</P> <P>(l) <E T="03">Search</E> 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.</P> <P>(m) <E T="03">State appraiser regulatory agency</E> 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 <PRTPAGE P="201"/>that require the services of a State licensed or certified appraiser.</P> <CITA>[64 FR 72496, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.302</SECTNO> <SUBJECT>ASC authority and functions.</SUBJECT> <P>(a) <E T="03">Authority.</E> 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.</P> <P>(b) <E T="03">Functions.</E> The ASC's statutory functions are generally set out in 12 U.S.C. 3332. In summary, the ASC must:</P> <P>(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;</P> <P>(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;</P> <P>(3) Monitor and review the practices, procedures, activities and organizational structure of the Appraisal Foundation; and</P> <P>(4) Maintain a national registry of State certified and licensed appraisers eligible to perform appraisals in federally related transactions.</P> </SECTION> <SECTION> <SECTNO>§ 1102.303</SECTNO> <SUBJECT>Organization and methods of operation.</SUBJECT> <P>(a) <E T="03">Statutory and other guidelines.</E> 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).</P> <P>(b) <E T="03">ASC members and staff.</E> 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.</P> <P>(c) <E T="03">FFIEC.</E> Title XI placed the ASC within FFIEC as a separate, appropriated agency of the United States Government with specific statutory responsibilities under Federal law.</P> <P>(d) <E T="03">ASD Address</E> ASC offices are located at 2000 K Street, NW., Suite 310; Washington, DC 20006.</P> <CITA>[57 FR 60724, Dec. 22, 1992, as amended at 64 FR 72497, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.304</SECTNO> <SUBJECT>Federal Register publication.</SUBJECT> <P>The ASC publishes the following information in the <E T="04">Federal Register</E> for the guidance of the public:</P> <P>(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;</P> <P>(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;</P> <P>(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;</P> <P>(d) Substantive rules of general applicability adopted as authorized by law, and statements of general policy <PRTPAGE P="202"/>or interpretations of general applicability formulated and adopted by the ASC;</P> <P>(e) Every amendment, revision or repeal of the foregoing; and</P> <P>(f) General notices of proposed rulemaking.</P> <CITA>[64 FR 72497, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.305</SECTNO> <SUBJECT>Publicly available records.</SUBJECT> <P>(a) <E T="03">Records available on the ASCs World Wide Web site</E>—(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: <E T="03">http://www.asc.gov.</E> The ASC has elected to publish a broad range to materials on its Web site.</P> <P>(2) <E T="03">Documents required to be made available via computer telecommunications.</E> (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: <E T="03">http://www.asc.gov:</E> </P> <P>(A) Final opinions, including concurring and dissenting opinions, as well as final orders, made in the adjudication of cases;</P> <P>(B) Statements of policy and interpretations adopted by the ASC that are not published in the <E T="04">Federal Register</E>;</P> <P>(C) Administrative staff manuals and instructions to staff that affect a member of the public;</P> <P>(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 § 1102.306 that, because of the nature of their subject matter, the ASC has determined are likely to be the subject of subsequent requests;</P> <P>(E) A general index of the records referred to in paragraph (a)(2)(i)(D) of this section.</P> <P>(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.</P> <P>(b) <E T="03">Types of written communications.</E> The following types of written communications shall be subject to paragraph (a) of this section:</P> <P>(1) The ASC's annual report to Congress;</P> <P>(2) All final opinions and orders made in the adjudication of cases;</P> <P>(3) All statements of general policy not published in the <E T="04">Federal Register</E>.</P> <P>(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;</P> <P>(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</P> <P>(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.</P> <P>(c) <E T="03">Applicable fees.</E> (1) If applicable, fees for furnishing records under this section are as set forth in § 1102.306(e).</P> <P>(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 § 1102.306(e).</P> <CITA>[59 FR 1902, Jan. 13, 1994, as amended at 64 FR 72497, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.306</SECTNO> <SUBJECT>Procedures for requesting records.</SUBJECT> <P>(a) <E T="03">Making a request for records.</E> (1) The request shall be submitted in writing to the Executive Director:</P> <P>(i) By facsimile clearly marked “Freedom of Information Act Request” to (202) 293-6251;</P> <P>(ii) By letter to the Executive Director marked “Freedom of Information Act Request”; 2000 K Street, NW., Suite 301; Washington, DC 20006; or<PRTPAGE P="203"/> </P> <P>(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.</P> <P>(2) The request shall contain the following information:</P> <P>(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;</P> <P>(ii) Whether the requester is an educational institution, non-commercial scientific institution, or news media representative;</P> <P>(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</P> <P>(iv) The preferred form and format of any responsive information requested, if other than paper copies.</P> <P>(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.</P> <P>(b) <E T="03">Defective requests.</E> 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.</P> <P>(c) <E T="03">Processing requests</E>—(1) <E T="03">Receipt of requests.</E> Upon receipt of any request that satisfies paragraph (a) of this section, the Executive Director shall assign the request to the appropriate processing track pursuant to this section. The date of receipt for any request, including one that is addressed incorrectly or that is referred by another agency, is the date the Executive Director actually receives the request.</P> <P>(2) <E T="03">Expedited processing.</E> (i) Where a person requesting expedited access to records has demonstrated a compelling need for the records, or where the ASC has determined to expedite the response, the ASC shall process the request as soon as practicable. To show a compelling need for expedited processing, the requester shall provide a statement demonstrating that:</P> <P>(A) 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</P> <P>(B) The requester can establish that it is primarily engaged in information dissemination as its main professional occupation or activity, and there is urgency to inform the public of the government activity involved in the re request; and</P> <P>(C) The requester's statement must be certified to be true and correct to the best of the person's knowledge and belief and explain in detail the basis for requesting expedited processing.</P> <P>(ii) The formality of the certification required to obtain expedited treatment may be waived by the Executive Director as a matter of administrative discretion.</P> <P>(3) A requester seeking expedited processing will be notified whether expedited processing has been granted within ten (10) working days of the receipt of the request. If the request for expedited processing is denied, the requester may file an appeal pursuant to the procedures set forth in paragraph (g) of this section, and the ASC shall respond to the appeal within ten (10) working days after receipt of the appeal.</P> <P>(4) <E T="03">Priority of responses.</E> Consistent with sound administrative process, the ASC processes requests in the order they are received. However, in the ASC's discretion, or upon a court order in a matter to which the ASC is a party, a particular request may be processed out of turn.</P> <P>(5) <E T="03">Notification.</E> (i) The time for response to requests will be twenty (20) working days except:</P> <P>(A) In the case of expedited treatment under paragraph (c)(2) of this section;</P> <P>(B) Where the running of such time is suspended for the calculation of a cost estimate for the requester if the ASC determines that the processing of the request may exceed the requester's maximum fee provision or if the <PRTPAGE P="204"/>charges are likely to exceed $250 as provided for in paragraph (e)(1)(iv) of this section;</P> <P>(C) Where the running of such time is suspended for the payment of fees pursuant to the paragraph (c)(5)(i)(B) and (e)(1) of this section; or</P> <P>(D) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B) and further described in paragraph (c)(5)(iii) of this section.</P> <P>(ii) In unusual circumstances as referred to in paragraph (c)(5)(i)(D) of this section, the time limit may be extended for a period of:</P> <P>(A) Ten (10) working days as provided by written notice to the requester, setting forth the reasons for the extension and the date on which a determination is expected to be dispatched; or</P> <P>(B) Such alternative time period as agreed to by the requester or as reasonably determined by the ASC when the ASC notifies the requester that the request cannot be processed in the specified time limit.</P> <P>(iii) Unusual circumstances may arise when:</P> <P>(A) The records are in facilities that are not located at the ASC's Washington office;</P> <P>(B) The records requested are voluminous or are not in close proximity to one another; or</P> <P>(C) There is a need to consult with another agency or among two or more components of the ASC having a substantial interest in the determination.</P> <P>(6) <E T="03">Response to request.</E> In response to a request that satisfies the requirements of paragraph (a) of this section, a search shall be conducted of records maintained by the ASC in existence on the date of receipt of the request, and a review made of any responsive information located. To the extent permitted by law, the ASC may redact identifying details when it makes available or publishes any records. If redaction is appropriate, 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. The ASC shall notify the requester of:</P> <P>(i) The ASC's determination of the request;</P> <P>(ii) The reasons for the determination;</P> <P>(iii) If the response is a denial of an initial request or if any information is withheld, the ASC will advise the requester in writing:</P> <P>(A) If the denial is in part or in whole;</P> <P>(B) The name and title of each person responsible for the denial (when other than the person signing the notification);</P> <P>(C) The exemptions relied on for the denial; and</P> <P>(D) The right of the requester to appeal the denial to the Chairman of the ASC within 30 business days following receipt of the notification, as specified in paragraph (h) of this section.</P> <P>(d) <E T="03">Providing responsive records.</E> (1) Copies of requested records shall be sent to the requester by regular U.S. mail to the address indicated in the request, unless the requester elects to take delivery of the documents at the ASC or makes other acceptable arrangements, or the ASC deems it appropriate to send the documents by another means.</P> <P>(2) The ASC shall provide a copy of the record in any form or format requested if the record is readily reproducible by the ASC in that form or format, but the ASC need not provide more than one copy of any record to a requester.</P> <P>(3) By arrangement with the requester, the ASC may elect to send the responsive records electronically if a substantial portion of the request is in electronic format. If the information requested is made pursuant to the Privacy Act of 1974, 5 U.S.C. 552a, it will not be sent by electronic means unless reasonable security measures can be provided.</P> <P>(e) <E T="03">Fees</E>—(1) <E T="03">General rules.</E> (i) Persons requesting records of the ASC shall be charged for the direct costs of search, duplication, and review as set forth in paragraphs (e)(2) and (e)(3) of this section, unless such costs are less than the ASC's cost of processing the requester's remittance.</P> <P>(ii) Requesters will be charged for search and review costs even if responsive records are not located or, if located, are determined to be exempt from disclosure.<PRTPAGE P="205"/> </P> <P>(iii) Multiple requests seeking similar or related records from the same requester or group of requesters will be aggregated for the purposes of this section.</P> <P>(iv) If the ASC determines that the estimated costs of search, duplication, or review of requested records will exceed the dollar amount specified in the request, or if no dollar amount is specified, the ASC will advise the requester of the estimated costs. The requester must agree in writing to pay the costs of search, duplication, and review prior to the ASC initiating any records search.</P> <P>(v) If the ASC estimates that its search, duplication, and review costs will exceed $250, the requester must pay an amount equal to 20 percent of the estimated costs prior to the ASC initiating any records search.</P> <P>(vi) The ASC ordinarily will collect all applicable fees under the final invoice before releasing copies of requested records to the requester.</P> <P>(vii) The ASC may require any requester who has previously failed to pay charges under this section within 30 calendar days of mailing of the invoice to pay in advance the total estimated costs of search, duplication, and review. The ASC also may require a requester who has any charges outstanding in excess of 30 calendar days following mailing of the invoice to pay the full amount due, or demonstrate that the fee has been paid in full, prior to the ASC initiating any additional records search.</P> <P>(viii) The ASC may begin assessing interest charges on unpaid bills on the 31st day following the day on which the invoice was sent. Interest will be at the rate prescribed in § 3717 of title 31 of the United States Code and will accrue from the date of the invoice.</P> <P>(ix) The time limit for the ASC to respond to a request will not begin to run until the ASC has received the requester's written agreement under paragraph (e)(1)(iv) of this section, and advance payment under paragraph (e)(1)(v) or (vii) of this section, or payment of outstanding charges under paragraph (e)(1)(vii) or (viii) of this section.</P> <P>(x) As part of the initial request, a requester may ask that the ASC waive or reduce fees if disclosure of the records 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. Determinations as to a waiver or reduction of fees will be made by the Executive Director (or designee), and the requester will be notified in writing of his or her determination. A determination not to grant a request for a waiver or reduction of fees under this paragraph may be appealed to the ASC's Chairman pursuant to the procedure set forth in paragraph (g) of this section.</P> <P>(2) <E T="03">Chargeable fees by category of requester.</E> (i) Commercial use requesters shall be charged search, duplication, and review costs.</P> <P>(ii) Educational institutions, noncommercial scientific institutions, and news media representatives shall be charged duplication costs, except for the first 100 pages.</P> <P>(iii) Requesters not described in paragraph (e)(2)(i) or (ii) of this section shall be charged the full reasonable direct cost of search and duplication, except for the first two hours of search time and first 100 pages of duplication.</P> <P>(3) <E T="03">Fee schedule.</E> The dollar amount of fees which the ASC may charge to records requesters will be established by the Executive Director. The ASC may charge fees that recoup the full allowable direct costs it incurs. Fees are subject to change as costs change. The fee schedule will be published periodically on the ASC's Internet World Wide Web site (<E T="03">http://www.asc.gov</E>) and will be effective on the date of publication. Copies of the fee schedule may be obtained by request at no charge by contacting the Executive Director by letter, Internet email or facsimile.</P> <P>(i) <E T="03">Manual searches for records.</E> The ASC will charge for manual searches for records at the basic rate of pay of the employee making the search plus 16 percent to cover employee benefit costs.</P> <P>(ii) <E T="03">Computer searches for records.</E> The fee for searches of computerized records is the actual direct cost of the <PRTPAGE P="206"/>search, including computer time, computer runs, and the operator's time apportioned to the search multiplied by the operator's basic rate of pay plus 16 percent to cover employee benefit costs.</P> <P>(iii) <E T="03">Duplication of records.</E> (A) The per-page fee for paper copy reproduction of documents is $.25.</P> <P>(B) For other methods of reproduction or duplication, the ASC will charge the actual direct costs of reproducing or duplicating the documents, including each involved employee's basic rate of pay plus 16 percent to cover employee benefit costs.</P> <P>(iv) <E T="03">Review of records.</E> The ASC will charge commercial use requesters for the review of records at the time of processing the initial request to determine whether they are exempt from mandatory disclosure at the basic rate of pay of the employee making the search plus 16 percent to cover employee benefit costs. The ASC will not charge at the administrative appeal level for review of an exemption already applied. When records or portions of records are withheld in full under an exemption which is subsequently determined not to apply, the ASC may charge for a subsequent review to determine the applicability of other exemptions not previously considered.</P> <P>(v) <E T="03">Other services.</E> Complying with requests for special services, other than a readily produced electronic form or format, is at the ASC's discretion. The ASC may recover the full costs of providing such services to the requester.</P> <P>(4) <E T="03">Use of contractors.</E> The ASC may contact with independent contractors to locate, reproduce, and/or disseminate records; provided, however, that the ASC has determined that the ultimate cost to the requester will be no greater than it would be if the ASC performed these tasks itself. In no case will the ASC contract our responsibilities which FOIA provides that the ASC alone may discharge, such as determining the applicability of an exemption or whether to waive or reduce fees.</P> <P>(f) <E T="03">Exempt information.</E> A request for records may be denied if the requested record contains information that falls into one or more of the following categories. <SU>1</SU> <FTREF/> If the requested record contains both exempt and nonexempt information, the nonexempt portions, which may reasonable be segregated from the exempt portions, will be released to the requester. If redaction 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. The categories of exempt records are as follows:</P> <FTNT> <P> <SU>1</SU> Classification of a record as exempt from disclosure under the provisions of this paragraph (f) shall not be construed as authority to withhold the record if it is otherwise subject to disclosure under the Privacy Act of 1974 (5 U.S.C. 552a) or other Federal statute, any applicable regulation of ASC or any other Federal agency having jurisdiction thereof, or any directive or order of any court of competent jurisdiction.</P> </FTNT> <P>(1) Records that are 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;</P> <P>(2) Records related solely to the internal personnel rules and practices of the ASC;</P> <P>(3) Records specifically exempted from disclosure by statute, provided that such statute:</P> <P>(i) Requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or</P> <P>(ii) Establishes particular criteria for withholding or refers to particular types of matters to be withheld;</P> <P>(4) Trade secrets and commercial or financial information obtained from a person that is privileged or confidential;</P> <P>(5) Interagency or intra-agency memoranda or letters that would not be available by law to a private party in litigation with the ASC;</P> <P>(6) Personnel, medical, and similar files (including financial files) the disclosure of which would constitute a clearly unwarranted invasion of personal privacy;</P> <P>(7) Records compiled for law enforcement purposes, but only to the extent <PRTPAGE P="207"/>that the production of such law enforcement records:</P> <P>(i) Could reasonably be expected to interfere with enforcement proceedings;</P> <P>(ii) Would deprive a person of a right to a fair trail or an impartial adjudication;</P> <P>(ii) Could reasonably be expected to constitute an unwarranted invasion of personal privacy;</P> <P>(iv) 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 records on a confidential basis;</P> <P>(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</P> <P>(vi) Could reasonably be expected to endanger the life or physical safety of any individual;</P> <P>(8) Records that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the ASC or any agency responsible for the regulation or supervision of financial institutions; or</P> <P>(9) Geological and geophysical information and data, including maps, concerning wells.</P> <P>(g) <E T="03">Appeals.</E> (1) Appeals should be addressed to the Executive Director; ASC; 2000 K Street, NW., Suite 310; Washington, DC 20006.</P> <P>(2) A person whose initial request for records under this section, or whose request for a waiver of fees under paragraph (e)(1)(x) of this section, has been denied, either in part or in whole, has the right to appeal the denial to the ASC's Chairman (or designee) within 30 business days after receipt of notification of the denial. Appeals of denials of initial requests or for a waiver of fees must be in writing and include any additional information relevant to consideration of the appeal.</P> <P>(3) Except in the case of an appeal for expedited treatment under paragraph (c)(3) of this section, the ASC will notify the appellant in writing within 20 business days after receipt of the appeal and will state:</P> <P>(i) Whether it is granted or denied in whole or in part;</P> <P>(ii) The name and title of each person responsible for the denial (if other than the person signing the notification);</P> <P>(iii) The exemptions relied upon for the denial in the case of initial requests for records; and</P> <P>(iv) The right to judicial review of the denial under the FOIA.</P> <P>(4) If a requester is appealing for denial of expedited treatment, the ASC will notify the appellant within ten business days after receipt of the appeal of the ASC's disposition.</P> <P>(5) Complete payment of any outstanding fee invoice will be required before an appeal is processed.</P> <P>(h) <E T="03">Records of another agency.</E> 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 ASC 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.</P> <CITA>[64 FR 72497, Dec. 28, 1999; 65 FR 31960, May 19, 2000, as amended at 69 FR 2501, Jan. 16, 2004]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.307</SECTNO> <SUBJECT>Disclosure of exempt records.</SUBJECT> <P>(a) <E T="03">Disclosure prohibited.</E> Except as provided in paragraph (b) of this section or by 12 CFR part 1102, subpart C, no person shall disclose or permit the disclosure of any exempt records, or information contained therein, to any persons other than those officers, directors, employees, or agents of the ASC or a State appraiser regulatory agency who has a need for such records in the performance of their official duties. In any instance in which any person has possession, custody or control of ASC exempt records or information contained therein, all copies of such records shall remain the property of the ASC and under no circumstances shall any person, entity or agency disclose or make public in any manner the <PRTPAGE P="208"/>exempt records or information without written authorization from the Executive Director, after consultation with the ASC General Counsel.</P> <P>(b) <E T="03">Disclosure authorized.</E> Exempt records or information of the ASC may be disclosed only in accordance with the conditions and requirements set forth in this paragraph (b). Requests for discretionary disclosure of exempt records of information pursuant to this paragraph (b) may be submitted directly to the Executive Director. Such administrative request must clearly state that it seeks discretionary disclosure of exempt records, clearly identify the records sought, provide sufficient information for the ASC to evaluate whether there is good cause for disclosure, and meet all other conditions set forth in paragraph (b)(1) through (3) of this section. Authority to disclose or authorize disclosure of exempt records of the ASC is delegated to the Executive Director, after consultation with the ASC General Counsel.</P> <P>(1) <E T="03">Disclosure by Executive Director.</E> (i) The Executive Director, or designee, may disclose or authorize the disclosure of any exempt record in response to a valid judicial subpoena, court order, or other legal process, and authorize any current or former member, officer, employee, agent of the ASC, or third party, to appear and testify regarding an exempt record or any information obtained in the performance of such person's official duties, at any administrative or judicial hearing or proceeding where such person has been served with a valid subpoena, court order, or other legal process requiring him or her to testify. The Executive Director shall consider the relevancy of such exempt records or testimony to the ligation, and the interests of justice, in determining whether to disclose such records or testimony. Third parties seeking disclosure of exempt records or testimony in litigation to which the ASC is not a party shall submit a request for discretionary disclosure directly to the Executive Director. Such requests shall specify the information sought with reasonable particularity and shall be accompanied by a statement with supporting documentation showing in detail the relevance of such exempt information to the litigation, justifying good cause for disclosure, and a commitment to be bound by a protective order. Failure to exhaust such administration request prior to service of a subpoena or other legal process may, in the Executive Director's discretion, serve as a basis for objection to such subpoena or legal process.</P> <P>(ii) The Executive Director, or designee, may in his or her discretion and for good cause, disclose or authorize disclosure of any exempt record or testimony by a current or former member, officer, employee, agent of the ASC, or third party, sought in connection with any civil or criminal hearing, proceeding or investigation without the service of a judicial subpoena, or other legal process requiring such disclosure or testimony. If he or she determines that the records or testimony are relevant to the hearing, proceeding or investigation and that disclosure is in the best interests of justice and not otherwise prohibited by Federal statute. Where the Executive Director or designee authorizes a current or former member, officer, director, empl9oyee or agent of the ASC to testify or disclose exempt records pursuant to this paragraph (b)(1), he or she may, in his or her discretion, limit the authorization to so much of the record or testimony as is relevant to the issues at such hearing, proceeding or investigation, and he or she shall give authorization only upon fulfillment of such conditions as he or she deems necessary and practicable to protect the confidential nature of such records or testimony.</P> <P>(2) <E T="03">Authorization for disclosure by the Chairman of the ASC.</E> Except where expressly prohibited by law, the Chairman of the ASC may, in his or her discretion, authorize the disclosure of any ASC records. Except where disclosure is required by law, the Chairman may direct any current or former member, officer, director, employee or agent of the ASC to refuse to disclose any record or to give testimony if the Chairman determines, in his or her discretion, that refusal to permit such disclosure is in the public interest.</P> <P>(3) <E T="03">Limitations on disclosure.</E> All steps practicable shall be taken to protect the confidentiality of exempt records <PRTPAGE P="209"/>and information. Any disclosure permitted by paragraph (b) of this section is discretionary and nothing in paragraph (b) of this section shall be construed as requiring the disclosure of information. Further, nothing in paragrah (b) of this section shall be construed as restricting, in any manner, the authority of the ASC, the Chairman of the ASC, the Executive Director, the ASC General Counsel, or their designees, in their discretion and in light of the facts and circumstances attendant in any given case, to require conditions upon, and to limit, the form, manner, and extent of any disclosure permitted by this section. Wherever practicable, disclosure of exempt records shall be made pursuant to a protective order and redacted to exclude all irrelevant or non-responsive exempt information.</P> <CITA>[64 FR 72500, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.308</SECTNO> <SUBJECT>Right to petition for issuance, amendment and repeal of rules of general application.</SUBJECT> <P>Any person desiring the issuance, amendment or repeal of a rule of general application may file a petition for those purposes with the Executive Director of the ASC. The petition shall include a statement setting forth the text or substance of any proposed rule or amendment desired or shall specify the rule for which repeal is desired. The petitioner also shall state the nature of his or her interest and the reasons for seeking ASC action. The Executive Director shall acknowledge receipt of the petition within ten business days of receipt. As soon as reasonably practicable, the ASC shall consider the petition and related staff recommendations and shall take such action as it deems appropriate. The Executive Director shall notify the petitioner in writing of the ASC action within ten business days of the action.</P> <CITA>[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.309</SECTNO> <SUBJECT>Confidential treatment procedures.</SUBJECT> <P>(a) <E T="03">In general.</E> Any submitter of written information to the ASC who desires that some or all of his or her submission be afforded confidential treatment under 5 U.S.C. 552(b)(4) (<E T="03">i.e.,</E> trade secrets and commercial or financial information obtained from a person and privileged or confidential) shall file a request for confidential treatment with the Executive Director of the ASC at the time the written information is submitted to the ASC or within ten business days thereafter. Nothing in this section limits the authority of the ASC and its staff to make determinations regarding access to documents under this subpart.</P> <P>(b) <E T="03">Form of request.</E> A request for confidential treatment shall be submitted in a separate letter or memorandum conspicuously entitled, “Request for Confidential Treatment.” Each request shall state in reasonable detail the facts and arguments supporting the request and its legal justification. If the submitter had been required by the ASC to provide the particular information, conclusory statements that the information would be useful to competitors or would impair sales or similar statements generally will not be considered sufficient to justify confidential treatment. When the submitter had voluntarily provided the particular information to the ASC, the submitter must specifically identify the documents or information which are of a kind the submitter would not customarily make available to the public.</P> <P>(c) <E T="03">Designation and separation of confidential material.</E> Submitters shall clearly designate all information considered confidential and shall clearly separate such information from other non-confidential information, whenever possible.</P> <P>(d) <E T="03">ASC action on request.</E> A request for confidential treatment of information will be considered only in connection with a request for access to the information under FOIA as implemented by this subpart. Upon the receipt of a request for access, the Executive Director or his or her designee (“ASC Officer”) as soon as possible shall provide the submitter with a written notice describing the request and shall provide the submitter with a reasonable opportunity, no longer than ten business days, to submit written objections to disclosure of the information. Notice may be given orally, and such notice shall be promptly confirmed in writing. <PRTPAGE P="210"/>The ASC Officer may provide a submitter with a notice if the submitter did not request confidential treatment of the requested information. If the ASC required the submitter to provide the requested information, the ASC Officer would need substantial reason to believe that disclosure of the requested information would result in substantial competitive harm to the submitter. If the submitter provided the information voluntarily to the ASC, the ASC officer would need to believe that the information is of a kind the submitter would not customarily make available to the public. The ASC Officer similarly shall notify the person seeking disclosure of the information under FOIA of the existence of a request for confidential treatment. These notice requirements need not be followed if the ASC Officer determines under this subpart that the information should not be disclosed; the information has been published or has been officially made available to the public; disclosure of the information is required by law (other than FOIA); or the submitter's request for confidential treatment appears obviously frivolous, in such instance the submitter shall be given written notice of the determination to disclose the information at least five business days prior to release. The ASC Officer shall carefully consider the issues involved, and if disclosure of the requested information is warranted, a written notice, containing a brief description of why the submitter's objections were not sustained, must be forwarded to the submitter within ten business days. The time for response may be extended up to ten additional business days, as provided in 5 U.S.C. 552(a)(6)(B), or for other periods by agreement between the requester and the ASC Officer. This notice shall be provided to the submitter at least five business days prior to release of the requested information.</P> <P>(e) <E T="03">Notice of lawsuit.</E> The ASC Officer shall notify a submitter of any filing of any suit against the ASC pursuant to 5 U.S.C. 552 to compel disclosure of documents or information covered by the submitter's request for confidential treatment within ten business days of service of the suit. The ASC Officer also shall notify the requester of the documents or information of any suit filed by the submitter against the ASC to enjoin their disclosure within ten business days of service of the suit.</P> <CITA>[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 1102.310</SECTNO> <SUBJECT>Service of process.</SUBJECT> <P>(a) <E T="03">Service.</E> Any subpoena or other legal process to obtain information maintained by the ASC shall be duly issued by a court having jurisdiction over the ASC, and served upon the Chairman ASC; 2000 K Street, NW., Suite 310; Washington, DC 20006. Where the ASC is named as a party, service of process shall be made pursuant to the Federal Rules of Civil Procedure upon the Chairman at the above address. The Chairman shall immediately forward any subpoena, court order or legal process to the General Counsel. If consistent with the terms of the subpoena, court order or legal process, the ASC may require the payment of fees, in accordance with the fee schedule referred to in § 1102.306(e) prior to the release of any records requested pursuant to any subpoena or other legal process.</P> <P>(b) <E T="03">Notification by person served.</E> If any current or former member, officer, employee or agent of the ASC, or any other person who has custody of records belonging to the ASC, is served with a subpoena, court order, or other process requiring that person's attendance as a witness concerning any matter related to official duties, or the production of any exempt record of the ASC, such person shall promptly advise the Executive Director of such service, the testimony and records described in the subpoena, and all relevant facts that may assist the Executive Director, in consultation with the ASC General Counsel, in determining whether the individual in question should be authorized to testify or the records should be produced. Such person also should inform the court or tribunal that issued the process and the attorney for the party upon whose application the process was issued, if known, of the substance of this section.</P> <P>(c) <E T="03">Appearance by person served.</E> Absent the written authorization of the Executive Director or designee to disclose the requested information, any current or former member, officer, employee, or agent of the ASC, and any <PRTPAGE P="211"/>other person having custody of records of the ASC, who is required to respond to a subpoena or other legal process, shall attend at the time and place therein specified and respectfully decline to produce any such record or give any testimony with respect thereto, basing such refusal on this section.</P> <CITA>[64 FR 72501, Dec. 28, 1999]</CITA> </SECTION> </SUBPART> </PART> </CHAPTER> <CHAPTER> <LRH>12 CFR Ch. XII (1-1-10 Edition)</LRH> <RRH>Federal Housing Finance Agency.</RRH> <TOC> <TOCHD> <PRTPAGE P="213"/> <HD SOURCE="HED">CHAPTER XII—FEDERAL HOUSING FINANCE AGENCY</HD> </TOCHD> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—ORGANIZATION AND OPERATIONS</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>1202</PT> <SUBJECT>Freedom of Information Act</SUBJECT> <PG>214</PG> <PT>1204</PT> <SUBJECT>Privacy Act implementation</SUBJECT> <PG>222</PG> <PT>1206</PT> <SUBJECT>Assessments</SUBJECT> <PG>228</PG> <PT>1212</PT> <SUBJECT>Post-employment restriction for senior examiners</SUBJECT> <PG>231</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER B—ENTITY REGULATIONS</HD> </SUBCHAP> <CHAPTI> <PT>1229</PT> <SUBJECT>Capital classifications and prompt corrective action</SUBJECT> <PG>233</PG> <PT>1231</PT> <SUBJECT>Golden parachute payments</SUBJECT> <PG>242</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER C—ENTERPRISES</HD> </SUBCHAP> <CHAPTI> <PT>1250</PT> <SUBJECT>Flood insurance</SUBJECT> <PG>245</PG> <PT>1252</PT> <SUBJECT>Portfolio holdings</SUBJECT> <PG>246</PG> <PT>1253</PT> <SUBJECT>Prior approval for enterprise products</SUBJECT> <PG>246</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER D—FEDERAL HOME LOAN BANKS</HD> </SUBCHAP> <CHAPTI> <PT>1261</PT> <SUBJECT>Federal Home Loan Bank directors</SUBJECT> <PG>261</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER E—HOUSING GOALS AND MISSION</HD> </SUBCHAP> <CHAPTI> <PT>1282</PT> <SUBJECT>Enterprise housing goals and mission</SUBJECT> <PG>273</PG> <PT>1291</PT> <SUBJECT>Federal Home Loan Banks' Affordable Housing Program</SUBJECT> <PG>292</PG> </CHAPTI> </TOC> <SUBCHAP TYPE="P"> <PRTPAGE P="214"/> <HD SOURCE="HED">SUBCHAPTER A—ORGANIZATION AND OPERATIONS</HD> <PART> <EAR>Pt. 1202</EAR> <HD SOURCE="HED">PART 1202—FREEDOM OF INFORMATION ACT</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>1202.1</SECTNO> <SUBJECT>Why did FHFA issue this part?</SUBJECT> <SECTNO>1202.2</SECTNO> <SUBJECT>What do the terms in this part mean?</SUBJECT> <SECTNO>1202.3</SECTNO> <SUBJECT>What information can I obtain through FOIA?</SUBJECT> <SECTNO>1202.4</SECTNO> <SUBJECT>What information is exempt from disclosure?</SUBJECT> <SECTNO>1202.5</SECTNO> <SUBJECT>How do I request information from FHFA under FOIA?</SUBJECT> <SECTNO>1202.6</SECTNO> <SUBJECT>What if my request does not have all the information FHFA requires?</SUBJECT> <SECTNO>1202.7</SECTNO> <SUBJECT>How will FHFA respond to my FOIA request?</SUBJECT> <SECTNO>1202.8</SECTNO> <SUBJECT>If the records I request contain confidential commercial information, what procedures will FHFA follow?</SUBJECT> <SECTNO>1202.9</SECTNO> <SUBJECT>How do I appeal a response denying my FOIA request?</SUBJECT> <SECTNO>1202.10</SECTNO> <SUBJECT>Will FHFA expedite my request or appeal?</SUBJECT> <SECTNO>1202.11</SECTNO> <SUBJECT>What will it cost to get the records I requested?</SUBJECT> <SECTNO>1202.12</SECTNO> <SUBJECT>Is there anything else I need to know about FOIA procedures?</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Pub. L. 110-289, 122 Stat. 2654; 5 U.S.C. 301, 552; 12 U.S.C. 4526; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235; E.O. 13392, 70 FR 75373-75377, 3 CFR, 2006 Comp., p. 216-200.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>74 FR 2342, Jan. 15, 2009, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1202.1</SECTNO> <SUBJECT>Why did FHFA issue this part?</SUBJECT> <P>(a) The Freedom of Information Act (FOIA) (5 U.S.C. 552), is a federal law that requires the Federal Housing Finance Agency (FHFA) and other government agencies to disclose records to the public.</P> <P>(b) This part explains the rules that FHFA follows when processing and responding to requests for records under the FOIA. It also explains what you must do to request records from FHFA under the FOIA. You should read this part together with the FOIA, which explains in more detail your rights and the records FHFA may release to you.</P> <P>(c) If you want to request information about yourself under the Privacy Act (5 U.S.C. 552a), you should file your request using FHFA's Privacy Act regulations at part 1204 of this Title. If you file a FOIA request for information about yourself, FHFA will process it as a request under the separate Privacy Act rules.</P> <P>(d) FHFA may make public information that it routinely publishes or discloses when performing its activities without following these procedures.</P> </SECTION> <SECTION> <SECTNO>§ 1202.2</SECTNO> <SUBJECT>What do the terms in this part mean?</SUBJECT> <P>Some of the terms you need to understand while reading the regulations in this part are—</P> <P> <E T="03">Appeals Officer</E> or <E T="03">FOIA Appeals Officer</E> means a person designated by the Director of the Federal Housing Finance Agency (FHFA) to process appeals of denials of requests for FHFA records under the FOIA.</P> <P> <E T="03">Confidential commercial information</E> means records provided to the government by a submitter that arguably contain material exempt from release under Exemption 4 of the Freedom of Information Act, 5 U.S.C. 552(b)(4), because disclosure could reasonably be expected to cause substantial competitive harm.</P> <P> <E T="03">Days,</E> unless stated as “calendar days,” are working days and do not include Saturdays, Sundays, and federal holidays. If the last day of any period prescribed herein falls on a Saturday, Sunday, or federal holiday, the last day of the period will be the next working day that is not a Saturday, Sunday, or federal holiday.</P> <P> <E T="03">Direct costs</E> means the expenses, including for contract services, incurred by FHFA in search time, or reviewing and duplicating records to respond to a request for information. In the case of a commercial use request, the term also means those expenditures FHFA actually incurs in reviewing records to respond to the request. Direct costs include the cost of the time of the employee performing the work, the cost of any computer searches, and the cost of operating duplication equipment. Direct costs do not include overhead expenses such as costs of space, and heating or lighting the facility in which the records are stored.</P> <P> <E T="03">Employee,</E> for the purposes of this part, means any person holding an appointment to a position of employment <PRTPAGE P="215"/>with FHFA or any person who formerly held such an appointment; any conservator appointed by FHFA; or any agent or independent contractor acting on behalf of FHFA, even though the appointment or contract has terminated.</P> <P> <E T="03">FHFA</E> means the Federal Housing Finance Agency and includes its predecessor agencies, the Office of Federal Housing Enterprise Oversight (OFHEO) and, the Federal Housing Finance Board (FHFB). FHFA is an agency responsible for the regulation or supervision of financial institutions.</P> <P> <E T="03">FOIA Officer</E> and <E T="03">Chief FOIA Officer</E> are persons designated by the Director of FHFA to process and respond to requests for FHFA records under the FOIA. The mailing address for the FOIA Officer or the Chief FOIA Officer is FHFA, 1700 G Street, NW., Washington, DC 20552.</P> <P> <E T="03">Readily reproducible</E> means that the requested record or records exist in electronic format and can be downloaded or transferred intact to a computer disk, tape, or other electronic medium with equipment and software currently in use by FHFA.</P> <P> <E T="03">Record</E> means information or documentary material FHFA maintains in any form or format, including electronic, which FHFA—</P> <P>(1) Created or received under federal law or in connection with the transaction of public business;</P> <P>(2) Preserved or determined is appropriate for preservation as evidence of FHFA's operations or activities or because of the value of the information it contains; and</P> <P>(3) Controls at the time it receives a request for disclosure.</P> <P> <E T="03">Regulated entities</E> means the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Federal National Mortgage Association (“Fannie Mae”), any Federal Home Loan Bank and/or any affiliate thereof that is subject to the regulatory authority of FHFA.</P> <P> <E T="03">Requester</E> means any person seeking access to FHFA records under the FOIA.</P> <P> <E T="03">Search time</E> means the amount of time spent by or on behalf of FHFA in attempting to locate 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 or extraction of electronic information from electronic storage media.</P> <P> <E T="03">Submitter</E> means any person or entity providing confidential information to the government. The term submitter includes, but is not limited to corporations, state governments, and foreign governments.</P> <P> <E T="03">Unusual circumstances</E> means the need to—</P> <P>(1) Search for and collect records from agencies, offices, facilities, or locations that are separate from the office processing the request;</P> <P>(2) Search, review, and duplicate a voluminous amount of separate and distinct records in order to process a single request; or</P> <P>(3) Consult with another agency or among two or more components of FHFA that have a substantial interest in the determination of a request.</P> </SECTION> <SECTION> <SECTNO>§ 1202.3</SECTNO> <SUBJECT>What information can I obtain through FOIA?</SUBJECT> <P>(a) <E T="03">General.</E> FHFA generally follows a policy prohibiting employees from releasing or disclosing confidential or otherwise non-public information that FHFA possesses, except as authorized by this part or by the Director of FHFA, when the disclosure is necessary for the performance of official duties</P> <P>(b) <E T="03">Records.</E> You may request that FHFA disclose to you its records on a subject of interest to you. The FOIA only requires the disclosure of records. It does not require FHFA to create compilations of information or to provide narrative responses to questions or queries. Some information is exempt from disclosure.</P> <P>(c) <E T="03">Reading rooms.</E> (1) FHFA maintains electronic and physical reading rooms. The physical reading room is located at 1700 G Street, NW., Fourth Floor, Washington, DC 20552, and is open to the public by appointment from 9 a.m. to 3 p.m. each business day. For an appointment, contact the FOIA Officer by calling 202-414-6425 or by e-mail at <E T="03">foia@fhfa.gov.</E> The electronic reading room is part of the FHFA Web site at <E T="03">http://www.fhfa.gov.</E> </P> <P>(2) Each reading room has the following records created by FHFA or its predecessor agencies after November 1, <PRTPAGE P="216"/>1996, and current indices to all of the following records created by FHFA or its predecessor agencies before or after November 1, 1996:</P> <P>(i) Final opinions or orders issued in adjudication;</P> <P>(ii) Statements of policy and interpretation that are not published in the <E T="04">Federal Register</E>;</P> <P>(iii) Administrative staff manuals and instructions to staff that affect a member of the public, and are not exempt from disclosure under FOIA; and</P> <P>(iv) Copies of records released under FOIA that FHFA determines have become or are likely to become the subject of subsequent requests for substantially the same records.</P> <CITA>[74 FR 2342, Jan. 15, 2009, as amended at 74 FR 18624, Apr. 24, 2009]</CITA> </SECTION> <SECTION> <SECTNO>§ 1202.4</SECTNO> <SUBJECT>What information is exempt from disclosure?</SUBJECT> <P>(a) <E T="03">General.</E> Unless the Director of FHFA, his or her designee, any FHFA regulation, or a statute specifically authorizes disclosure, FHFA will not release records of matters that are—</P> <P>(1) Specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy, and is in fact properly classified pursuant to such Executive order.</P> <P>(2) Related solely to FHFA's internal personnel rules and practices.</P> <P>(3) Specifically exempted from disclosure by statute (other than 5 U.S.C. 552b), provided that such statute—</P> <P>(i) Requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or</P> <P>(ii) Establishes particular criteria for withholding or refers to particular types of matters to be withheld.</P> <P>(4) Trade secrets and commercial or financial information obtained from a person and privileged or confidential.</P> <P>(5) Contained in inter-agency or intra-agency memoranda or letters that would not be available by law to a private party in litigation with FHFA.</P> <P>(6) Contained in personnel, medical or similar files (including financial files) the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.</P> <P>(7) Compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information—</P> <P>(i) Could reasonably be expected to interfere with enforcement proceedings;</P> <P>(ii) Would deprive a person of a right to fair trial or an impartial adjudication;</P> <P>(iii) Could reasonably be expected to constitute an unwarranted invasion of personal privacy;</P> <P>(iv) 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 or an entity that is regulated and examined by FHFA that furnished information on a confidential basis, 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, information furnished by a confidential source;</P> <P>(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</P> <P>(vi) Could reasonably be expected to endanger the life or physical safety of any individual.</P> <P>(8) Contained in or related to examination, operating, or condition reports that are prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.</P> <P>(9) Geological and geophysical information and data, including maps, concerning wells.</P> <P>(b) <E T="03">Discretion To Apply Exemptions.</E> Although records or parts of them may be exempt from disclosure, FHFA may elect under the circumstances of any particular request not to apply an exemption. This election does not generally waive the exemption and it does not have precedential effect. FHFA may still apply the exemption to any other records or portions of records, regardless of when the request is received.<PRTPAGE P="217"/> </P> <P>(c) <E T="03">Redacted Portion.</E> If a requested record contains exempt information and information that can be disclosed and the portions can reasonably be segregated from each other, the portion of the record that can be disclosed will be released to the requester after FHFA deletes the exempt portions. If it is technically feasible, FHFA will indicate the amount of the information deleted at the place in the record where the deletion is made and include a notation identifying the exemption that was applied, unless including that indication would harm an interest protected by an exemption.</P> <P>(d) <E T="03">Exempt and Redacted Material.</E> FHFA is not required to provide an itemized index correlating each withheld document (or redacted portion) with a specific exemption justification.</P> <P>(e) <E T="03">Disclosure to Congress.</E> This section does not allow FHFA to withhold any information from, or to prohibit the disclosure of any information to, the Congress or any congressional committee or subcommittee.</P> </SECTION> <SECTION> <SECTNO>§ 1202.5</SECTNO> <SUBJECT>How do I request information from FHFA under FOIA?</SUBJECT> <P>(a) <E T="03">Where To Send Your Request.</E> FOIA requests must be in writing. You may make a request for FHFA records by writing directly to the FOIA Office through electronic mail, regular mail, or fax. The electronic mail address is: <E T="03">foia@fhfa.gov</E>. The regular mail address is: FOIA Officer, Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. The fax number is: (202) 414-8917. You can help FHFA process your request by marking electronic mail, letter, or fax and the subject line, envelope, or fax cover sheet “FOIA Request.” You may find the FHFA's “Freedom of Information Act Reference Guides,” available electronically on the FHFA's Web site, <E T="03">http://www.fhfa.gov</E>, helpful in making your request.</P> <P>(b) <E T="03">Provide Your Name and Address.</E> Your request must include your full name, your address and, if different, the address at which FHFA is to notify you about your request; a telephone number at which you can be reached during normal business hours, and an electronic mail address, if any.</P> <P>(c) <E T="03">Request Is Under FOIA.</E> Your request must have a statement identifying it as being made under FOIA.</P> <P>(d) <E T="03">Your FOIA Status.</E> If you are submitting your request as a “commercial use” requester, an “educational institution” requester, a “non-commercial scientific institution” requester, or a “representative of the news media” for the purposes of the fee provisions of FOIA, your request must include a statement specifically identifying your status.</P> <P>(e) <E T="03">Describing the Records You Request.</E> You must describe the records that you seek in enough detail to enable FHFA personnel to locate them with a reasonable amount of effort. Your request should include as much specific information as possible that you know about each record you request, such as the date, title or name, author, recipient, subject matter, and file designations or descriptions of the record.</P> <P>(f) <E T="03">How You Want the Records Produced to You.</E> Your request must tell FHFA whether you will inspect the records before duplication or want them duplicated and furnished without inspection.</P> <P>(g) <E T="03">Agreement To Pay Fees.</E> Your FOIA request is an agreement by you to pay all applicable fees charged under section 1202.11, up to $100.00, unless you seek a fee waiver. When making a request, you may specify a higher or lower amount you will pay without consultation. Your inability to pay a fee does not justify granting a fee waiver.</P> <P>(h) <E T="03">Valid Requests.</E> FHFA will only process valid requests. A valid request must meet all the requirements of this section.</P> </SECTION> <SECTION> <SECTNO>§ 1202.6</SECTNO> <SUBJECT>What if my request does not have all the information FHFA requires?</SUBJECT> <P>If the FHFA determines that your request does not reasonably describe the records you seek, is overly broad, or otherwise lacks required information, we will inform you in writing to explain why your request is incomplete or insufficient and give you 30 calendar days to modify your request to meet all the requirements. The first request for additional information tolls the 20 <PRTPAGE P="218"/>days period for FHFA to respond to your request under § 1202.7.</P> <P>(a) If you respond with an amended request, FHFA will process the amended request as a new request.</P> <P>(b) If you do not respond or provide additional information within the time allowed, or if the additional information you provide is still incomplete or insufficient, FHFA will consider the request withdrawn.</P> <P>(c) If the additional information you are required to provide concerns fees that may be incurred or an agreement to pay fees, FHFA may toll the 20 days response time under section 1202.7, as often as necessary to obtain the additional information.</P> </SECTION> <SECTION> <SECTNO>§ 1202.7</SECTNO> <SUBJECT>How will FHFA respond to my FOIA request?</SUBJECT> <P>(a) <E T="03">Authority to Grant or Deny Requests.</E> The FOIA Officer and the Chief FOIA Officer are authorized to grant or deny any request for FHFA records.</P> <P>(b) <E T="03">Multi-Track Request Processing.</E> FHFA uses a multi-track system to process FOIA requests. This means that FOIA requests are processed based on their complexity. When FHFA receives your request, it is assigned to a Standard Track or Complex Track. FHFA will notify you if your request is assigned to the Complex Track as described in paragraph (e) of this section for extensions of time.</P> <P>(1) <E T="03">Standard Track.</E> FHFA assigns FOIA requests that are routine and require little or no search time, review, or analysis to the Standard Track. We respond to these requests within 20 days after receipt, in the order in which they are received. If FHFA determines while processing your Standard Track request, that it is more appropriately a Complex Track request, we will reassign it to the Complex Track and notify you as described in paragraph (e) of this section for extensions of time.</P> <P>(2) <E T="03">Complex Track.</E> FHFA assigns requests that are not routine to the Complex Track. Complex Track requests are those to which FHFA determines that that response will be voluminous, involve two or more FHFA units, require consultation with other agencies or entities, require searches of archived documents; or when FHFA determines that the request seeks confidential commercial information as described in section 1202.8, or will require an unusually high level of effort to search for, review and or duplicate records, or will cause undue disruption to the day-to-day activities of FHFA regulating and supervising the regulated entities. FHFA will respond to Complex Track requests as soon as reasonably possible, regardless of the date of receipt.</P> <P>(c) <E T="03">Referrals to Other Agencies.</E> When FHFA receives a request seeking records that originated in another Federal Government agency, FHFA refers the request to the other agency for response. FHFA will notify you if your request is referred to another agency.</P> <P>(d) <E T="03">Responses to FOIA Requests.</E> FHFA will respond to your request by granting or denying it in full, or by granting and denying it in parts. FHFA's response will be in writing. In determining which records are responsive to your request, we ordinarily will include only records we possess as of the date the request.</P> <P>(1) <E T="03">Requests That FHFA Grants.</E> If FHFA grants your request in full, the response will include the requested records or details about how FHFA will provide them to you, and the amount of any fees charged.</P> <P>(2) <E T="03">Requests That FHFA Denies or Grants and Denies in Parts.</E> If FHFA denies your request in full or grants and denies separate parts of it, the response will be signed by the official responding. If we deny your request in whole or in part because a requested record does not exist or cannot be located, is not readily reproducible in the form or format you sought, is not subject to the FOIA, or is exempt from disclosure, the written response will include the requested records, if any, the amount of any fees charged, the reasons for any denial, and a notice and description of your right to file an administrative appeal under section 1202.9.</P> <P>(e) <E T="03">Format and Delivery of Disclosed Records.</E> If FHFA grants, in whole or in part, your request for disclosure of records under FOIA, we will make the records available to you in the form or format you requested, if it is readily reproducible in that form or format. We will send them to the address you provided by regular U.S. Mail or by <PRTPAGE P="219"/>electronic mail unless we agree with you on alternate arrangements, such as your agreement to pay express or expedited delivery service fees or to pick up records at our office.</P> <P>(f) <E T="03">Extensions of Time.</E> In unusual circumstances, FHFA may extend the time limit in paragraph (b) of this section for no more than ten (10) days and notify you of—</P> <P>(1) The reason for the extension;</P> <P>(2) The date on which the determination in accordance with paragraph (b) of this section is expected; and</P> <P>(3) The opportunity to limit the scope of the request so that the FHFA may process it on the simple track, or arrange an alternative time period for processing the request or a modified request.</P> </SECTION> <SECTION> <SECTNO>§ 1202.8</SECTNO> <SUBJECT>If the records I request contain confidential commercial information, what procedures will FHFA follow?</SUBJECT> <P>(a) <E T="03">General.</E> FHFA will not disclose confidential commercial information in response to your FOIA request except as described in this section.</P> <P>(b) <E T="03">Designation of Confidential Commercial Information.</E> Submitters of commercial information should use good-faith efforts to designate, by appropriate markings, either at the time of submission or at a reasonable time thereafter, those portions of the information they deem to be protected under 5 U.S.C. 552(b)(4) and section 1202.4(a)(4). Any such designation expired ten (10) years after they were submitted to the Government, unless the submitter requests, and provides reasonable justification for, a designation period of longer duration.</P> <P>(c) <E T="03">Predisclosure Notification.</E> Except as provided in paragraph (e) of this section, if your FOIA request encompasses confidential commercial information, FHFA will, prior to disclosure of the information and to the extent permitted by law, provide prompt written notice to a submitter that confidential commercial information was requested when—</P> <P>(1) The submitter has in good faith designated the information as confidential commercial information protected from disclosure under 5 U.S.C. 552(b)(4) and section 1202.4(a)(4); or</P> <P>(2) FHFA has reason to believe that the request seeks confidential commercial information, the disclosure of which may result in substantial competitive harm to the submitter.</P> <P>(d) <E T="03">Content of Predisclosure Notification</E>. When FHFA sends a predisclosure notification to a submitter, it will contain—</P> <P>(1) A description of the exact nature of the confidential commercial information requested or copies of the records or portions thereof containing the confidential business information; and</P> <P>(2) An opportunity to object to disclosure within ten (10) days by providing to FHFA a detailed written statement demonstrating all reasons the submitter opposes disclosure.</P> <P>(e) <E T="03">Exceptions to Predisclosure Notification</E>. FHFA is not required to send a predisclosure notification if—</P> <P>(1) FHFA determines that information should not be disclosed;</P> <P>(2) The information lawfully has been published or has been officially made available to the public;</P> <P>(3) Disclosure of the information is required by law, other than the FOIA;</P> <P>(4) The information requested is not designated by the submitter as confidential commercial information pursuant to this section; or</P> <P>(5) The designation made by the submitter, under paragraph (b) of this section, appears obviously frivolous; except that, FHFA will provide the submitter with written notice of any final decision to disclose the designated confidential commercial information within a reasonable number of days prior to a specified disclosure date.</P> <P>(f) <E T="03">Submitter's Objection to Disclosure</E>. A submitter may object to disclosure within ten (10) days after date of the Predisclosure Notification, or such other time period that FHFA may allow, by delivering to FHFA a statement demonstrating all grounds on which it opposes disclosure, and all reasons supporting its contention that the information should not be disclosed. The submitter's objection must contain a certification by the submitter, or an officer or authorized representative of the submitter, that the grounds and reasons presented are true <PRTPAGE P="220"/>and correct to the best of the submitter's knowledge. The submitter's objection may itself be subject to disclosure under the FOIA.</P> <P>(g) <E T="03">Notice of Intent to Disclose Information</E>. FHFA will consider carefully all grounds and reasons provided by a submitter objecting to disclosure. If FHFA decides to disclose confidential commercial information over the objection of the submitter, it will provide to the submitter, at least ten (10) days before the date of disclosure, written notice containing—</P> <P>(1) A statement of the reasons for not sustaining the submitter's objections to disclosure;</P> <P>(2) A description of the confidential commercial information to be disclosed; and</P> <P>(3) A specified disclosure date.</P> <P>(h) <E T="03">Notice to Requester</E>. FHFA will give a requester whose request encompasses confidential commercial information the following notices—</P> <P>(1) At the time a Predisclosure Notification is provided to the submitter, written notice that the request encompasses confidential commercial information that may be exempt from disclosure under 5 U.S.C. 552(b)(4) and section 1202.4(a)(4) and that the submitter of the information has been given the opportunity to comment on the proposed disclosure of the information; and</P> <P>(2) At the time a Notice of Intent to Disclose is provided to the submitter, a copy of the Notice of Intent to Disclose, at least days before the specified disclosure date.</P> <P>(i) <E T="03">Notice of FOIA Lawsuit</E>. FHFA will promptly notify the submitter whenever a requester files suit seeking to compel disclosure of the submitter's confidential commercial information.</P> </SECTION> <SECTION> <SECTNO>§ 1202.9</SECTNO> <SUBJECT>How do I Appeal a Response Denying my FOIA Request?</SUBJECT> <P>(a) <E T="03">Right of Appeal</E>. If FHFA denied your request in whole or in part, you may appeal the denial to: FOIA Appeals Officer, Federal Housing Finance Agency, 1700 G Street, NW., Washington DC 20552. If you use a mail, express, or courier delivery service to file your appeal, include a clear marking identifying it as a “FOIA APPEAL.” You may file your appeal electronically by sending it to: <E T="03">foia@fhfa.gov</E> with “FOIA Appeal” in the subject line. You may file an appeal by facsimile addressed to the attention of the FOIA Appeals Officer at (202) 414-6504, clearly identifying on the cover sheet that it is a “FOIA Appeal.”</P> <P>(b) <E T="03">Timing, Form, Content and Receipt of an Appeal</E>. Your appeal must be written and submitted within 30 calendar days after you received FHFA's response denying your request. Your appeal must include a copy of the initial request, a copy of the letter denying the request in whole or in part, and a statement of the circumstances, reasons, or arguments you believe support disclosure of the requested record. FHFA will not consider an improperly addressed appeal to have been received for the purposes of the 20 days time period of paragraph (d) of this section, until it is actually received by the Appeals Officer, or would have been received by the Appeals Officer if due diligence were exercised.</P> <P>(c) <E T="03">Extensions of Time To Appeal</E>. If you need more time to file your appeal, you may request an extension of time of no more than ten (10) days in which to file your appeal, but only if your request is made within the original 30 calendar days time period for filing the appeal. The FOIA Appeals Officer has discretion to grant extensions of time to file appeals.</P> <P>(d) <E T="03">Final Action on Appeal</E>. FHFA's determination on your appeal will be in writing, signed by the FOIA Appeals Officer, and mailed within 20 days after the appeal is received or by the last day of the last extension under paragraph (e) of this section. The determination of an appeal is the final action of FHFA on a FOIA request. A determination—</P> <P>(1) Affirming in whole or in part the denial of a request and including a brief statement of the reason or reasons for affirmance, including each FOIA exemption relied on.</P> <P>(2) Reversing the denial of a request in whole or in part, requiring the request to be processed promptly in accordance with the determination.</P> <P>(3) Remanding a request to the FOIA Officer for re-processing, stating the time limits for responding to the remanded request.<PRTPAGE P="221"/> </P> <P>(e) <E T="03">Notice of Delayed Determinations on Appeal</E>. If FHFA cannot mail a determination on your appeal within the time limit, the Appeals Officer will continue to process the appeal and upon expiration of the time limit, will inform you the reason for the delay and the date on which a determination may be expected to be mailed. In this notice of delay, the FOIA Appeals Officer may request that you forebear seeking judicial review until a final determination of the appeal.</P> <P>(f) <E T="03">Judicial Review</E>. If the denial of your request for records is upheld in whole or in part, or if a determination on the appeal has not been mailed at the end of the 20 days period in paragraph (d) of this section, or the last extension thereof, you my seek judicial review under 5 U.S.C. 552(a)(4).</P> </SECTION> <SECTION> <SECTNO>§ 1202.10</SECTNO> <SUBJECT>Will FHFA expedite my request or appeal?</SUBJECT> <P>(a) <E T="03">Applications for Expedited Processing</E>. You may apply for expedited processing of an initial request or of an appeal. Your application must be in writing. FHFA will grant expedited processing, and give the request or appeal priority if your application demonstrates a compelling need for expedited processing by showing—</P> <P>(1) Circumstances in which the lack of expedited treatment could reasonably be expected to pose an imminent threat to the life or physical safety of an individual;</P> <P>(2) An urgency to inform the public about an actual or alleged Federal government activity if you are a person primarily engaged in disseminating information;</P> <P>(3) The loss of substantial due process or rights;</P> <P>(4) A matter of widespread and exceptional media interest in which there exists possible questions about the government's integrity, affecting public confidence; or</P> <P>(5) Humanitarian need.</P> <P>(b) <E T="03">Certification of Compelling Need</E>. Your application for expedited processing must include a statement certifying that the reasons you present to demonstrate a compelling need are true and correct to the best of your knowledge.</P> <P>(c) <E T="03">Determination on Application</E>. FHFA will notify you within ten (10) days of receipt of your application whether expedited processing has been granted. If your application is denied, you may appeal under section 1202.9.</P> </SECTION> <SECTION> <SECTNO>§ 1202.11</SECTNO> <SUBJECT>What will it cost to get the records I requested?</SUBJECT> <P>(a) <E T="03">Assessment of Fees, Generally</E>. FHFA will assess you for fees covering the direct costs of responding to your request and costs for duplicating records, except as otherwise provided in a statute with respect to the determination of fees that may be assessed for disclosure, search time, or review of particular records.</P> <P>(b) <E T="03">Assessment of Fees, Categories of Requesters</E>. The fees that FHFA may assess vary depending on the type of request or the type of requester you are—</P> <P>(1) <E T="03">Commercial Use</E>. If you request records for a commercial use, the fees that FHFA may assess are limited to FHFA's operating costs incurred in search time, and/or to review and duplicate records.</P> <P>(2) <E T="03">Educational Institution, Noncommercial Scientific Institution, Representative of the News Media</E>. If you are not requesting records for commercial use and you are an educational institution, a noncommercial scientific institution or a representative of the news media, the fees that FHFA may assess are limited to FHFA's costs incurred for duplication in excess of 100 pages, or an electronic equivalent of 100 pages.</P> <P>(3) <E T="03">Other</E>. If neither paragraph (b)(1) nor paragraph (b)(2) of this section applies, the fees FHFA may assess you are limited to the costs FHFA incurs in search time and review in excess of two hours and to duplicate in excess of 100 pages, or an electronic equivalent of 100 pages.</P> <P>(c) <E T="03">Fee Schedule</E>. FHFA will maintain a current schedule of fees on its Web site at: <E T="03">http://www.fhfa.gov</E>.</P> <P>(d) <E T="03">Notice of Anticipated Fees in Excess of $100.00</E>. When FHFA determines or estimates that the fees chargeable to you will exceed $100.00, FHFA will notify you of the actual or estimated amount of fees you will incur, unless you earlier indicated your willingness <PRTPAGE P="222"/>to pay fees as high as those anticipated. When you are notified that the actual or estimated fees exceed $100.00, your FOIA request will not be considered received by FHFA until you agree to pay the anticipated total fee.</P> <P>(e) <E T="03">Advance Payment of Fees</E>. FHFA may request that you pay estimated fees or a deposit in advance of responding to your request. If FHFA requests advance payment or a deposit, your request will not be considered received by FHFA until the advance payment or deposit is received. FHFA will request advance payment or a deposit only if—</P> <P>(1) The fees are likely to exceed $500.00. If it appears that the fees will exceed $500.00, FHFA will notify you of the likely cost and obtain satisfactory assurance of full payment if you have a history of prompt payment of FOIA fees to FHFA. If you do not have a history of payment, or if the estimate of fees exceeds $1,000.00, FHFA may require an advance payment of fees in an amount up to the full estimated charge that will be incurred; or</P> <P>(2) You previously failed to pay a fee to FHFA in a timely fashion, <E T="03">i.e.</E>, within 30 calendar days of the date of a billing. FHFA may require you to make advance payment of the full amount of the fees anticipated before processing a new request or finishing processing of a pending request. If you have an outstanding balance due from a prior request, FHFA may require you to pay the full amount owed plus any applicable interest, as provided in paragraph (f) of this section, or demonstrate that the fee owed has been paid, as well as payment of the full amount of anticipated fees before processing your request.</P> <P>(f) <E T="03">Interest</E>. FHFA may charge you interest on an unpaid bill starting on the 31st calendar day following the day on which the bill was sent. Once a fee payment has been received by FHFA, even if not processed, FHFA will stay the accrual of interest. Interest charges shall be assessed at the rate prescribed by 31 U.S.C. 3717 and shall accrue from the date of the billing.</P> <P>(g) <E T="03">FHFA Assistance To Reduce Costs</E>. If FHFA notifies you of estimated fees exceeding $100.00 or requests advance payment or a deposit, you will have an opportunity to consult with FHFA staff to modify or reformulate your request to meet your needs at a lower cost.</P> </SECTION> <SECTION> <SECTNO>§ 1202.12</SECTNO> <SUBJECT>Is there anything else I need to know about FOIA procedures?</SUBJECT> <P>These FOIA regulations in this part do not and shall not be construed to create any right or to entitle any person, as of right, to any service or to the disclosure of any record to which such person is not entitled under FOIA. This part only provides procedures for requesting records under FOIA.</P> </SECTION> </PART> <PART> <EAR>Pt. 1204</EAR> <HD SOURCE="HED">PART 1204—PRIVACY ACT IMPLEMENTATION</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>1204.1</SECTNO> <SUBJECT>Why did FHFA issue this part?</SUBJECT> <SECTNO>1204.2</SECTNO> <SUBJECT>What do the terms in this part mean?</SUBJECT> <SECTNO>1204.3</SECTNO> <SUBJECT>How do I make a Privacy Act request?</SUBJECT> <SECTNO>1204.4</SECTNO> <SUBJECT>How will FHFA respond to my Privacy Act request?</SUBJECT> <SECTNO>1204.5</SECTNO> <SUBJECT>What if I am dissatisfied with the FHFA response to my Privacy Act request?</SUBJECT> <SECTNO>1204.6</SECTNO> <SUBJECT>What does it cost to get records under the Privacy Act?</SUBJECT> <SECTNO>1204.7</SECTNO> <SUBJECT>Are there any exemptions from the Privacy Act?</SUBJECT> <SECTNO>1204.8</SECTNO> <SUBJECT>How are records secured?</SUBJECT> <SECTNO>1204.9</SECTNO> <SUBJECT>Does FHFA collect and use Social Security numbers?</SUBJECT> <SECTNO>1204.10</SECTNO> <SUBJECT>What are FHFA employee responsibilities under the Privacy Act?</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>5 U.S.C. 552a.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>74 FR 33908, July 14, 2009, unless otherwise noted.</P> </SOURCE> <SECTION> <SECTNO>§ 1204.1</SECTNO> <SUBJECT>Why did FHFA issue this part?</SUBJECT> <P>FHFA issued this part to:</P> <P>(a) Implement the Privacy Act of 1974, 5 U.S.C. 552a, as amended (Privacy Act), a Federal law that helps protect private information about individuals that Federal agencies collect or maintain. You should read this part together with the Privacy Act, which provides additional information about records maintained on individuals;</P> <P>(b) Establish rules that apply to all FHFA maintained systems of records retrieved by an individual's name or other personal identifier;</P> <P>(c) Describe procedures through which you may request access to records, request amendment or correction of those records, and request an <PRTPAGE P="223"/>accounting of disclosures of those records by FHFA;</P> <P>(d) Inform you, that when it is appropriate to do so, FHFA automatically processes a Privacy Act request for access to records under both the Privacy Act and the FOIA, following the rules contained in this part and part 1202 of this subchapter so you will receive the maximum amount of information available to you by law; and</P> <P>(e) Notify you that this regulation does not entitle you to any service or to the disclosure of any record to which you are not entitled under the Privacy Act. It also does not, and may not be relied upon to create any substantive or procedural right or benefit enforceable against FHFA.</P> </SECTION> <SECTION> <SECTNO>§ 1204.2</SECTNO> <SUBJECT>What do the terms in this part mean?</SUBJECT> <P>The following definitions apply to the terms used in this part—</P> <P> <E T="03">Access</E> means making a record available to a subject individual.</P> <P> <E T="03">Amendment</E> means any correction of, addition to, or deletion from a record.</P> <P> <E T="03">Court</E> means any entity conducting a legal proceeding.</P> <P> <E T="03">FHFA</E> means the Federal Housing Finance Agency.</P> <P> <E T="03">FHFB</E> means the Federal Housing Finance Board.</P> <P> <E T="03">FOIA</E> means the Freedom of Information Act, as amended (5 U.S.C. 552).</P> <P> <E T="03">Individual</E> means a natural person who is either a citizen ofhe United States of America or an alien lawfully admitted for permanent residence.</P> <P> <E T="03">Maintain</E> includes collect, use, disseminate, or control.</P> <P> <E T="03">OFHEO</E> means the Office of Federal Housing Enterprise Oversight.</P> <P> <E T="03">Privacy Act</E> means the Privacy Act of 1974, as amended (5 U.S.C. 552a).</P> <P> <E T="03">Privacy Act Appeals Officer</E> means the FHFA employee who has been delegated the authority to determine Privacy Act appeals.</P> <P> <E T="03">Privacy Act Officer</E> means the FHFA employee who has primary responsibility for privacy and data protection policy and is authorized to determine Privacy Act requests.</P> <P> <E T="03">Record</E> means any item, collection, or grouping of information about an individual that FHFA maintains within a system of records, including, but not limited to, the individual's name, an identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or photograph.</P> <P> <E T="03">Routine use</E> means the purposes for which records and information contained in a system of records may be disclosed by FHFA without the consent of the subject of the record. Routine uses for records are identified in each System of Records Notice. Routine use does not include disclosure that subsection (b) of the Privacy Act (5 U.S.C. 552a(b)) otherwise permits.</P> <P> <E T="03">Senior Agency Official for Privacy</E> means the FHFA employee delegated the authority and responsibility to oversee and supervise the FHFA privacy program and implementation of the Privacy Act.</P> <P> <E T="03">System of records</E> means a group of records FHFA maintains or controls from which information is retrieved by the name of an individual or by some identifying number, symbol, or other identifying particular assigned to the individual. Single records or groups of records that are not retrieved by a personal identifier are not part of a system of records.</P> </SECTION> <SECTION> <SECTNO>§ 1204.3</SECTNO> <SUBJECT>How do I make a Privacy Act request?</SUBJECT>