[Federal Register Volume 71, Number 137 (Tuesday, July 18, 2006)]
[Rules and Regulations]
[Pages 40643-40648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11306]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 915
[No. 2006-12]
RIN 3069-AB31
Federal Home Loan Bank Elective Directors
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
its rules relating to the election of Federal Home Loan Bank (Bank)
directors to allow each Bank greater latitude in providing members
information about the range of skills and experience among board
members the Bank believes is best suited to administer its affairs. The
final rule is intended to enhance the corporate governance of each Bank
by allowing a Bank to provide to its members, during the election
process, information about the expertise the Bank has identified as
appropriate to enhance the board of directors in providing overall
board management of the Bank. The final rule also revises and
reorganizes the prohibitions on actions during the election process.
DATES: Effective Date: The final rule is effective July 18, 2006.
FOR FURTHER INFORMATION CONTACT: John P. Kennedy, General Counsel, 202-
408-2983, kennedyj@fhfb.gov; or Thomas P. Jennings, Senior Attorney
Advisor, Office of General Counsel, 202-408-2553, jenningst@fhfb.gov.
You can send mail to the Federal Housing Finance Board, 1625 Eye
Street, NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Congress has delegated to the Finance Board broad authority to
fulfill its statutory mandates. Section 2B of the Federal Home Loan
Bank Act (Bank Act) states that the Finance Board has the power ``[t]o
supervise the Federal Home Loan Banks and to promulgate and enforce
such regulations and orders as are necessary from time to time to carry
out the provisions of'' the Bank Act. 12 U.S.C. 1422b(a)(1).
The primary mandate for the Finance Board is to ``ensure that the
Federal Home Loan Banks operate in a financially safe and sound
manner.'' 12 U.S.C. 1422a(a)(3)(A). Within this broad authority,
Congress also specifically authorized the Finance Board to ``prescribe
such rules and regulations as it may deem necessary or appropriate for
the nomination and election of directors of Federal home loan banks.''
12 U.S.C. 1427(d).
The Finance Board has long had in place regulations addressing the
manner in which persons are nominated and elected to the boards of the
Banks. Effective December 30, 1998, the Finance Board amended various
provisions of its regulations relating to director elections to devolve
to each Bank, through its board of directors, the responsibility for
administering the process for electing Bank directors. See Resolution
Number 1998-47, published at 63 FR 65683 (November 30, 1998) (available
electronically in the FOIA Reading Room on the Finance Board Web site
at: http://www.fhfb.gov/Default.aspx?Page=59). Notwithstanding that
devolution of authority to the Banks, the Finance Board remains
responsible for the safety and soundness of the Banks and for
periodically reviewing its regulations to ensure that they continue to
carry out their intended purposes in a logical and efficient manner.
The Finance Board believes that an informed and capable board of
directors is one of the more important elements in maintaining a safe
and sound Bank. In recent months, the Finance Board has received
suggestions that the electoral process could be improved if certain
provisions of its regulations were revised to permit the Banks to be
more involved in the process of identifying qualified and capable
individuals to serve on the boards.
Accordingly, on April 18, 2006, the Finance Board published a
proposed regulation with a 45-day comment period that would amend part
915--the provision of its regulations dealing with the election of
directors--to allow the Banks more flexibility in providing information
to their members during the election process. Briefly stated, the
proposed rule would have allowed any Bank to assess the skills and
experience of the existing individuals on the board of directors, to
determine what skills or experience might be useful in enhancing the
capabilities of the board, and to communicate its assessment of
existing and desired skills to the members when soliciting nominations
from and providing ballots to the members of the Bank. The proposed
rule also would have removed certain provisions of the regulations that
prohibit persons associated with the Finance Board from being involved
in the elections process, because those provisions dated to a time at
which the Finance Board actually administered the elections at each of
the Banks. See Resolution Number 2006-04, published at 71 FR 19832
(April 18, 2006) (available electronically in the FOIA Reading Room on
the Finance Board Web site at: http://www.fhfb.gov/Default.aspx?Page=59). The final rule generally amends the various
provisions of part 915 as set forth in the proposed rule.
II. Analysis of the Public Comments and Final Rule
The Finance Board received 17 comments in response to the proposed
rule, which addressed the Finance Board's proposal to expand the
ability of the Banks to communicate with their members during the
election process and its proposal to remove prohibitions on the conduct
of persons associated with the Finance Board. The commenters included 6
Banks. Most commenters supported the proposal, though almost all
offered suggested revisions to the rule. Three commenters opposed the
proposal, 2 citing a perceived potential for the process to further
impede the ability of some members to obtain representation on the Bank
boards of directors, and 1 expressing a concern about the possible bias
in the information to be provided to the members as well as the
perception created by the deletion of prohibitions barring the
involvement of Finance Board employees in the elections process. The
comments can be divided into 6 substantive areas, which are discussed
separately below.
A. Self-Assessments Under Sec. 915.9(a)
Section 915.9(a) of the proposed rule would have allowed the board
of directors of each Bank to conduct an annual assessment of the skills
and experience needed on the board of directors and to inform its
members of those identified needs. The final rule adopts this provision
substantially as proposed.
Section 915.9(a) of the final rule is permissive in nature--it
authorizes, but does not require, a board of directors to assess how
well the skills and experience of the incumbent board members align
with the needs of the Bank. It also authorizes, but does not require, a
board to determine whether it could benefit from the addition of
[[Page 40644]]
persons with particular skills or experience and, if so, whether to
provide the members with that information in advance of the nominations
and voting process. The Finance Board believes that the board of
directors of a Bank, as the body charged by Congress to ``administer
the affairs of the bank fairly and impartially and without
discrimination in favor of or against any member,'' 12 U.S.C. 1427(j),
is the most appropriate body to oversee the self-assessment. The final
rule does not prescribe the process or the procedures through which the
board of directors is to conduct a self-assessment of its needs,
although it vests ultimate responsibility for these decisions with the
board. Thus, the rule would allow a board of directors to consult with
the members or with management in assessing what skills and experience
would be of most use to the board.
Although the rule includes a list of skills and experience as part
of Sec. 915.9(a), it is intended only as an example of the types of
skills that a Bank might determine it needs on its board of directors.
A board may well decide that it could benefit from the addition of
persons with other skills, and it could include those skills as part of
its assessment. Indeed, because the business plans of the Banks vary,
the needs of the individual Banks with respect to the skill sets of the
boards as a whole also will likely vary. The rule is intended to allow
each Bank adequate flexibility to determine its own particular needs.
The commenters addressed several issues relating to the assessment
of director skills and experience. Some commenters suggested that the
rule include a more expansive list of skills, while others were
concerned that identifying specific skills in the rule might make it
more difficult for the chief executive officer of a member--who may
have a broad range of business and financial skills, rather than the
individual skills listed--to be nominated or elected. Because the list
of skills is intended to be illustrative rather than exclusive, the
Finance Board does not believe that the list needs to be expanded. In a
similar fashion, the Finance Board believes that the concerns about
chief executive officers being handicapped in their ability to be
nominated or elected are not well-founded. The rule does not affect the
ability of a member to nominate a person of its choosing, and any
member can nominate its own officers or directors. The rule also does
not limit the right of a member to vote for whomever it believes to be
the best qualified, regardless of whether that person possesses the
qualifications identified by the assessment. Moreover, because all
elected directors must either be an officer or a director of a member
of the Bank, it is likely that the list of nominees will continue to
include a significant number of persons who serve as chief executives
of their institution.
Other commenters questioned the need or usefulness of the rule,
contending that there is no need for such a rule because such
assessments are not barred by statute or regulation, it would allow
certain members to perpetuate their representation on the board, or
would be unlikely to produce better candidates than are nominated under
the current structure.
Although it is correct that there are no statutory or regulatory
impediments to conducting a self-assessment, the final rule responds to
concerns expressed by some parties that the rules be amended to state
more clearly that such actions are permissible. Moreover, certain
provisions of the existing regulations--Sec. Sec. 915.6 and 915.8--do
regulate the content of the notice that the Banks provide to their
members regarding nominations, which starts the election process, as
well as the content of the ballots. Given both of those facts, the
Finance Board believes that it is appropriate to include these new
provisions as part of the rules that already address communications
with the members during the elections process. Moreover, such
provisions will ensure--for those Banks that undertake the assessment
and inform their members of the desired skills and experience--that
members receive the information at a time when it can assist them in
deciding who they may want to nominate.
As to the concern about a self-perpetuating board, the Finance
Board notes that all directors not only have a statutory duty to act
fairly and impartially to all members, as set forth in 12 U.S.C.
1427(j), but also a fiduciary duty as representatives of the members.
The Finance Board believes that any conduct by a director that placed
the interests of the individual director or the director's institution
above the interests of the Bank likely would violate both of those
duties and would be sanctioned accordingly.
The Finance Board acknowledges, as suggested by the comments, that
the process of assessing the qualifications of the board as a whole and
identifying the needs of a Bank will not by itself result in the
election of a more qualified board. The objective of the rule, however,
is to provide both the Banks and their members an avenue through which
they may improve the quality of the boards. The Finance Board believes
that key factors in achieving that result include information as to the
needs of the Bank's board and information as to the qualifications of
the nominees for the directorships. To the extent that the collective
skills and experience of a Bank's board of directors may not align
precisely with the needs of the Bank despite efforts to achieve that
result, the board of directors still would retain the authority to hire
consultants to advise it in any areas where the collective skills of
the board members may be less than optimum. The Finance Board believes
that a Bank should do all that it reasonably can to obtain a well-
performing board of directors, even if those efforts are not guaranteed
to succeed every time.
Other commenters suggested that the Finance Board allow members a
greater role in conducting the self-assessment, allow Banks to form
nominations committees composed of Bank directors and other
representatives from members, and allow management to work with the
board in the nominations and election process. As noted previously, by
statute the board of directors of each Bank is charged with
responsibility for administering the affairs of the Bank and the
Finance Board believes that the board is the appropriate body to
determine what skills and experience are most likely to enhance its
ability to carry out its duties. Moreover, the suggestions that the
final rule allow the establishment of nominations committees and the
greater involvement of management in the nominations process go beyond
the scope of the proposed rule. The proposal was intended to allow an
opportunity for the Banks to develop and then provide to the members
additional information regarding the needs of the boards and the skills
and experience of individual candidates seeking election to the board.
It was not intended to alter the substantive nature of the nominations
process, which is tied closely to the statutory provisions that
authorize the members, and not the Bank, to nominate persons to stand
for election to the boards of the Banks. Accordingly, the final rule
does not include provisions addressing the issues raised by those
commenters. As the party responsible for conducting the assessment, the
board also has the authority to determine what resources, if any, it
needs in order to conduct any self-assessment. Clearly, Bank management
works for the board of directors and, if so directed by the board, can
undertake tasks to aid the board in doing the self-assessment.
[[Page 40645]]
B. Information at the Nominations Stage--Sec. 915.6(a)(3)
Proposed Sec. 915.6(a)(3) would have authorized each Bank to send
to the members, as part of the initial notice for nominations, a brief
statement of the skills and experience that the Bank's board of
directors has identified. The final rule adopts the substance of Sec.
915.6(a)(3) as proposed with clarifying changes to the language used.
Some commenters raised concerns about providing the members with
such information at the start of the nominations process, including
concerns that the information might steer nominations to a preferred
candidate, or that it might cause persons with other qualifications not
to be nominated, and suggested that the rule explicitly state that a
member can nominate any eligible person without regard to whether that
person has the experience identified by the Bank.
As to the timing concern, the purpose of the rule is to allow both
the Bank and its members to be better informed about the needs of the
Bank at the board level and the qualifications that prospective
nominees might bring to the board. If a Bank opts to undertake the
self-assessment, the Finance Board believes that it is better for the
members to receive the information at the beginning of the election
process, before nominations are due. Accordingly, the final rule
retains the provision allowing the information to be made available to
the members prior to the submission of nominations.
With respect to the concern about steering nominations, the Finance
Board does not believe that the risks of that occurring are
significant. As an initial matter, the information provided to the
members will relate only to the needs of the Bank; it will not be
specific to any individuals and should not cause any member to fail to
nominate an individual the member believes is an appropriate candidate.
Moreover, each member has a legal right to nominate any eligible
person, without regard to whether the person possesses the skills or
experience identified by the Bank. Having directors who meet the
eligibility requirements is a minimum standard, while having directors
with the skills and experience identified by the Banks is a goal to
which the Banks would aspire.
Commenters suggested that the rule require a Bank to include with
the statement identifying the needed skills and experience a statement
that a member may nominate any otherwise eligible persons. Existing
Finance Board rules already include a provision stating that any member
eligible to vote in an election may nominate persons for that election.
Consequently, the Finance Board does not believe such a revision to the
final rule is necessary and has not adopted that suggestion.
Some commenters suggested that the final rule prescribe how a Bank
must describe the identified skills and experience in any communication
sent to the members, while others sought revisions to clearly state
that only the board of directors can decide what information to include
in the initial notice. Because the current regulations at 12 CFR
915.6(a) provide that ``a Bank'' must provide the notice to the
members, the Finance Board views the preparation and sending of the
notice as a ministerial function which is subject to the oversight of a
Bank's board of directors, which can determine how much, or how little,
involvement to have. Moreover, Sec. 915.3(a) of the Finance Board
regulations requires the disinterested directors, or a committee
thereof, to provide the oversight with respect to the election of
directors. The Finance Board views this provision as requiring that the
disinterested directors carry out the details of providing the
information to the members. Proposed Sec. 915.6(a)(3) would require
that the statement of skills be brief and that it be a statement of the
skills identified pursuant to Sec. 915.9, which are the skills
identified by the board of directors. Prescriptive regulation should
not be necessary in order to assure that the skills identified by the
boards of directors are indeed described accurately and briefly, if at
all, in the initial notice to members.
C. Information Accompanying the Ballots--Sec. 915.8(b).
Proposed Sec. 915.8(b) would have allowed each Bank to send with
the ballots a brief statement of the skills and experience that the
Bank's board of directors has identified as needed on the board. The
Finance Board has retained that provision in the final rule with some
clarifying changes.
The Finance Board received comments similar to those made with
respect to the initial notice under proposed Sec. 915.6(a)(3). The
Finance Board believes that its response to the comments on the initial
notice are equally applicable to the similar comments on proposed Sec.
915.8(b). The Finance Board also received comments raising other
issues, including a request that the final rule authorize the Banks to
form a nominations committee. One commenter recommended that the
committee be permitted to make nominations, while the other suggested
that the committee make recommendations to members, but allow the
members to decide whether to nominate those persons. These commenters
would allow the Banks to endorse particular candidates or to provide
information in the form of a proxy statement that contains information
about the candidates and the Bank's recommendations or endorsements of
specific individuals.
The Finance Board is not prepared to expand the final rule to
incorporate the recommendations made by these commenters. As an initial
matter, the suggestions relating to nominations committees and proxy
statements go beyond the scope of the changes at the heart of the
proposed rule, which were intended to allow the Banks to provide
greater information to members about the needs of the Banks and the
experience of the prospective directors. They were not intended to
alter the nature of the nominations process, which each of those
suggestions would do to some degree. Those suggestions also raise
questions as to the legal limits on what type of changes to the
nominations and election process would be permissible under the Bank
Act, which the Finance Board has not addressed in the proposed rule.
Moreover, since 1989, Finance Board rules have prohibited Bank
personnel (other than incumbents acting in their personal capacity)
from communicating that the Bank endorses specific individuals. In
light of that history and the policy reasons underlying it, the Finance
Board declines to go beyond authorizing the disclosures set forth in
the final rule.
Two commenters requested that the final rule prevent a Bank from
altering the statement that it provides to its members between the
initial distribution with the nominations announcement and the
subsequent distribution of the ballots. Those persons were concerned
that in the absence of such a provision a Bank would be free to change
its directorship needs assessment for the purpose of directing votes to
particular candidates. In the preamble to the proposed rule, the
Finance Board stated that the two statements are not required to be the
same. See 71 FR at 19834.
Although the Finance Board believes that in most situations there
would be no reason to change the information from one communication to
the next, it is possible that events could occur after the initial
distribution that could cause the initial communication to no longer be
full, complete, or accurate. For example, directors could resign or
become ineligible to serve between the
[[Page 40646]]
time of nominations and the election, thus creating a need that was not
apparent when the Bank distributed the results of the assessment to its
members at the nominations stage of the process. If such an event were
to occur, the Finance Board believes that the board of directors should
be able to provide its members with a revised statement of the most
current skills assessment by the board, and the Finance Board is
revising the rule accordingly. The Finance Board also is revising the
final rule to require each Bank to explain to its voting members why
any changes to the statement are warranted.
The Finance Board recognizes that, for purposes of the elections
occurring this year, it is likely that the Banks will not have included
the results of a self-assessment with the nominations notice previously
sent to the members. If any Bank has conducted a self-assessment prior
to the distribution of the ballots, the Finance Board believes that the
Bank and its members should be able to benefit from that effort.
Accordingly, the Finance Board will permit any such Banks to include
the results of their assessment with the ballots that it provides to
its members. We anticipate that in subsequent years the Banks that
choose to conduct a self-assessment and inform their members of that
action will do so sufficiently in advance of the start of the
nominations process to allow the inclusion of those materials with the
nominations materials as well as with the ballots.
D. Ballot Information About the Nominees--Sec. 915.8(a).
Proposed Sec. 915.8(a)(1) would have authorized the Banks to
include on the ballots a brief description of each nominee's skills and
experience. Like the authorizations in proposed Sec. Sec. 915.6(a) and
915.8(b) with respect to information that could be included in the
initial notice and with the ballots, such information would be
permitted, but is not required to be on the ballots.
Several commenters suggested revisions to the provisions addressing
the information that may be provided on the ballots. Some suggested
that the final rule prescribe how such information would be obtained
and displayed on the ballots; others suggested that only the board of
directors be permitted to decide how to describe a nominee's skills and
experience, while others would allow each nominee to describe his or
her skills and experience. Three commenters opposed any such statement
on the ballots, believing that it could not be done in a purely neutral
fashion.
The Finance Board believes that the Banks, under the oversight of
their disinterested directors and through the use of resources
available to them, have the capability to obtain information on each
candidate's skills and experience and to prepare a brief statement of
such skills and experience, should they choose to do so. The intent of
the proposed and final rule is to afford the Banks the opportunity to
provide certain information to the members at various stages of the
electoral process, but not to require that they do so. Given that the
rule is not mandatory, and that the disinterested directors of the
Banks already administer the elections, the Finance Board does not
believe that it is necessary for the final rule to impose the level of
detail that these comments suggest. The Finance Board, therefore, is
adopting the language in Sec. 915.8(a) substantially as proposed, but
is adding a new sentence to clarify that even though other provisions
on the ballots are mandatory, the inclusion of the candidates' skills
and experience is at the discretion of each Bank's disinterested
directors.
E. Finance Board Involvement in the Election Process--Sec. 915.9(b)
and (c)
Proposed Sec. 915.9 would have reorganized the prohibitions in
current Sec. 915.9 and authorized the board of directors of a Bank to
assess its current and needed skills. Part of this reorganization would
delete the prohibitions in current Sec. 915.9(a)(1), which bar persons
associated with the Finance Board from being involved in the elections
process. As explained in the preamble to the proposed rule (see 71 FR
at 19834), the Finance Board believes that these prohibitions are no
longer necessary, because the Finance Board no longer administers the
elections, as it did when these prohibitions were implemented.
Several comments expressed concern that removing the prohibitions
would allow the Finance Board to become more involved in the election
process. Other commenters expressed a similar concern that removal of
the prohibition reflected a desire by the Finance Board to become more
involved in the election process. On the other hand, another commenter
suggested that the Finance Board remove all the prohibitions that limit
the ability of other persons and entities to become involved in the
elections process.
As noted above, the prohibition on involvement by Finance Board
personnel in the elections process ceased to have any significant
effect on the administration of elections when the Finance Board
devolved that responsibility to the individual Banks. Nevertheless,
because some commenters believe that removal of the prohibition would
allow or encourage Finance Board involvement in the election of
directors, the Finance Board has accepted their suggestion that the
prohibitions on the conduct of Finance Board directors, officers,
attorneys, employees, and agents not be removed. The final rule revises
proposed Sec. 915.9(c) to make the prohibition applicable to both Bank
and Finance Board directors, officers, attorneys, employees, and
agents.
F. Adequate Representation.
Four commenters, 2 representing community banks and 2 representing
credit unions, expressed concern that the proposed rule might adversely
affect the ability of smaller members to have an adequate voice on the
boards of directors of the Banks. In general, these commenters
expressed a desire that the Finance Board take action that would enable
more ``minority'' members to be represented on the boards of directors
of the Banks, and expressed the view that the rule is likely to hinder
the ability of such members to be represented on the boards.
As an initial matter, adding provisions to the final rule to
address the type of issues raised by these commenters, i.e., whether
the interests of all members are equally represented on the boards of
directors of the Banks, would go well beyond the scope of the proposed
rule. The purpose of the proposed rule was to authorize a process
through which the Banks could take certain actions to provide members
with additional information to allow them to improve the quality of
their boards of directors, if they so choose. The purpose was not to
allocate representation on the boards of the Banks to particular
segments of the membership base.
Moreover, the Finance Board is not persuaded that the proposed
rule, in and of itself, will have the effect perceived by those
commenters, who have not offered any factual basis to support their
concerns. The board structure of the Banks is set by statute, as are
the voting rights of the members, which in certain respects already
favor the smaller members. For example, the Bank Act limits the number
of votes that each member may cast in an election to the average number
of shares of stock required to be held by all members located in that
state. 12 U.S.C. 1227(b). The effect of that provision is to
disenfranchise the largest members of a Bank; to the extent that they
own shares in excess of the average, those shares
[[Page 40647]]
have no voting rights. Smaller members are not affected by that
limitation. While it may be true that at some Banks certain segments of
the membership base do not have representatives from their industry on
the boards of the Banks, that result reflects the fact that the Banks
are cooperatives and operate with a board structure and voting rights
that have been set by statute. If, as the Finance Board hopes, the
final rule will facilitate a process wherein the members can nominate
and vote for candidates who possess skills and experience needed by the
Bank to carry out its housing finance mission in a safe and sound
manner, then the interests of all members should benefit.
III. Effective Date
Pursuant to 5 U.S.C. 553(d)(3), the Finance Board has found that
``good cause'' exists to have the final rule take effect immediately
upon publication in the Federal Register. First, the rule requires no
mandatory actions on the part of the Banks. The rule authorizes the
Banks to take actions during the election process, but it does not
require that those actions be taken. Thus, no Banks are required to
take any steps to prepare for the effective date of the final rule.
Second, now is the time when most Banks begin their yearly election
process. Some Banks already may have started the process by sending
their first notice to the members. Having an effective date immediately
upon publication in the Federal Register will give the Banks more of an
opportunity to use the provisions of the final rule in this year's
election process than they otherwise would have.
Third, Sec. 915.9(b) and (c) removes prohibitions on certain
conduct. This rule will not require any preparation efforts on the part
of the Banks in order to adjust to the rule being in effect.
IV. Paperwork Reduction Act
The final rule will have no substantive effect on any collection of
information covered by the Paperwork Reduction Act of 1995 (PRA). See
44 U.S.C. 3501 et seq. Therefore, the Finance Board has not submitted
this rule to the Office of Management and Budget for review.
V. Regulatory Flexibility Act
The final rule will apply only to the Banks, which do not come
within the meaning of ``small entities'' as defined in the Regulatory
Flexibility Act (RFA). See 5 U.S.C. 601(6). Thus, in accordance with
section 605(b) of the RFA, 5 U.S.C. 605(b), the Finance Board hereby
certifies that the final rule will not have a significant economic
impact on a substantial number of small entities.
List of Subjects in 12 CFR Part 915
Banks, Banking, Conflict of interests, Elections, Federal home loan
banks, Reporting and recordkeeping requirements.
0
For the reasons stated in the preamble, the Finance Board hereby amends
12 CFR part 915, as follows:
PART 915--BANK DIRECTOR ELIGIBILITY, APPOINTMENT AND ELECTIONS
0
1. The authority citation for part 915 continues to read as follows:
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1427, and
1432.
0
2. Amend Sec. 915.6, by redesignating paragraphs (a)(3) and (a)(4) as
paragraphs (a)(4) and (a)(5), respectively, adding a new paragraph
(a)(3), and revising redesignated paragraph (a)(4) to read as follows:
Sec. 915.6 Elective director nominations.
(a) * * *
(3) A brief statement describing the skills and experience the Bank
believes are most likely to add strength to the board of directors,
provided that the Bank previously has conducted the annual assessment
permitted by Sec. 915.9 and the Bank has elected to provide the
results of the assessment to the members;
(4) An attachment indicating the name, location, and FHFB ID number
of every member in the member's voting state, and the number of votes
each such member may cast for each directorship to be filled in the
election, as determined in accordance with Sec. 915.5; and
* * * * *
0
3. Amend Sec. 915.8, by revising paragraph (a), redesignating
paragraphs (b), (c), (d), and (e) as paragraphs (c), (d), (e), and (f),
respectively, and adding a new paragraph (b) to read as follows:
Sec. 915.8 Election process.
(a) Ballots. Promptly after verifying the eligibility of all
nominees in accordance with Sec. 915.7(a), a Bank shall prepare a
ballot for each voting State for which an elective directorship is to
be filled and shall mail the ballot to all members within that State
that were members as of the record date.
(1) A ballot shall include at least the following provisions:
(i) An alphabetical listing of the names of each nominee for the
member's voting state, the name, location, and FHFB ID number of the
member each nominee serves, the nominee's title or position with the
member, and the number of elective directorships to be filled by
members in that voting state in the election;
(ii) A statement that write-in candidates are not permitted; and
(iii) A confidentiality statement prohibiting the Banks from
disclosing how a member voted.
(2) At the election of the Bank, a ballot also may include, in the
body or as an attachment, a brief description of the skills and
experience of each individual nominee.
(b) Statement on skills and experience. If a Bank has conducted an
annual assessment permitted by Sec. 915.9 and has included the results
of the assessment as part of the notice to members required by Sec.
915.6(a), it may include with each ballot a statement regarding the
types of skills and experience the Bank has determined are most likely
to add strength to the board of directors. If the statement differs
from the statement provided under Sec. 915.6(a)(3), the Bank also
shall include an explanation of why the statements differ.
* * * * *
0
4. Revise Sec. 915.9 to read as follows:
Sec. 915.9 Actions affecting director elections.
(a) Banks. Each Bank, acting through its board of directors, may
conduct an annual assessment of the skills and experience possessed by
the members of its board of directors as a whole and may determine
whether the capabilities of the board would be enhanced through the
addition of persons with particular skills and experience. If the board
of directors determines that the Bank could benefit by the addition to
the board of directors of persons with particular qualifications, such
as in financial management, accounting, hedging, risk management,
capital markets, securities laws, or housing finance, it may identify
those qualifications and so inform the members as part of the
announcement of elections.
(b) Incumbent Bank directors. A Bank director acting in his or her
personal capacity may support the nomination or election of any person
for an elective directorship, provided that no such director may
purport to represent the views of the Bank or its board of directors in
doing so.
(c) Prohibition. Except as provided in paragraphs (a) and (b) of
this section, no director, officer, attorney, employee, or agent of a
Bank or the Finance Board may:
[[Page 40648]]
(1) Communicate in any manner that a director, officer, attorney,
employee, or agent of a Bank, directly or indirectly, supports the
nomination or election of a particular person for an elective
directorship; or
(2) Take any other action to influence votes for a directorship.
Sec. 915.16 [Amended]
0
5. Amend the last sentence of Sec. 915.16(e) by revising the reference
``Sec. 915.8(e)'' to read ``Sec. 915.8(f)''.
Sec. 915.17 [Amended]
0
6. Amend the last sentence of Sec. 915.17(b)(1) by revising the
reference ``Sec. 915.8(b)'' to read ``Sec. 915.8(c)''.
Dated: July 12, 2006.
By the Board of Directors of the Federal Housing Finance Board.
Ronald A. Rosenfeld,
Chairman.
[FR Doc. E6-11306 Filed 7-17-06; 8:45 am]
BILLING CODE 6725-01-P