[Federal Register Volume 79, Number 122 (Wednesday, June 25, 2014)]
[Proposed Rules]
[Pages 35960-35963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14512]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 79, No. 122 / Wednesday, June 25, 2014 /
Proposed Rules
[[Page 35960]]
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1207
RIN 2590-AA67
Minority and Women Inclusion Amendments
AGENCY: Federal Housing Finance Agency.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing to
amend its regulation on minority and women inclusion by requiring the
Federal Home Loan Banks (Banks), and the Office of Finance to include
in the contents of their annual reports certain demographic information
related to their boards of directors as well as a description of their
related activities during the reporting year.
DATES: Written comments must be received on or before August 25, 2014.
ADDRESSES: You may submit your comments, identified by Regulatory
Information Number (RIN) 2590-AA67, by any of the following methods:
Agency Web site: www.fhfa.gov/open-for-comment-or-input.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. If you submit your
comment to the Federal eRulemaking Portal, please also send it by email
to FHFA at [email protected] to ensure timely receipt by the agency.
Please include Comments/RIN 2590-AA67 in the subject line of the
message.
Courier/Hand Delivery: The hand delivery address is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA67,
Federal Housing Finance Agency, 400 Seventh Street SW., Eighth Floor,
Washington, DC 20024. Deliver the package to the Seventh Street
entrance Guard Desk, First Floor, on business days between 9 a.m. to 5
p.m.
U.S. Mail, United Parcel Service, Federal Express or Other
Mail Service: The mailing address for comments is: Alfred M. Pollard,
General Counsel, Attention: Comments/RIN 2590-AA67, Federal Housing
Finance Agency, 400 Seventh Street SW., Eighth Floor, Washington, DC
20024.
FOR FURTHER INFORMATION CONTACT: Nancy Burnett, Acting Associate
Director, Office of Minority and Women Inclusion, (202) 649-3017; or
Karen Lambert, Associate General Counsel, (202) 649-3094 (not toll-free
numbers), Federal Housing Finance Agency, 400 Seventh Street SW.,
Washington, DC 20024. The telephone number for the Telecommunications
Device for the Hearing Impaired is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Comments
FHFA invites comments on all aspects of the proposed regulation,
and will develop final regulations after taking all comments into
consideration. Copies of all comments received will be posted without
change on the FHFA Web site at http://www.fhfa.gov, and will include
any personal information you provide, such as your name, address, email
address, and telephone number. Copies of all comments received will be
made available for examination by the public on business days between
the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency,
400 Seventh Street SW., Eighth Floor, Washington, DC 20024. To make an
appointment to inspect comments, please call the Office of General
Counsel at (202) 649-3804.
II. Background
Effective July 30, 2008, the Housing and Economic Recovery Act of
2008 (HERA), Public Law 110-289, amended the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501
et seq.) (Safety and Soundness Act) to establish FHFA as an independent
agency of the Federal government. HERA transferred the supervisory and
oversight responsibilities of the Office of Federal Housing Enterprise
Oversight over the Federal National Mortgage Association (Fannie Mae),
the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively,
Enterprises), and of the Federal Housing Finance Board over the Banks
and the Bank System's Office of Finance to FHFA.\1\ The Enterprises and
the Banks are collectively referred to as the regulated entities.
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\1\ For Fannie Mae and Freddie Mac, the term ``regulated
entity'' includes any affiliates thereof; for the Banks, the term
``regulated entity'' only includes the Banks. See 12 U.S.C.
4502(20).
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The Safety and Soundness Act provides that FHFA is headed by a
Director with general supervisory and regulatory authority over the
regulated entities. FHFA is charged, among other things, with
overseeing the prudential operations of the regulated entities. FHFA is
also charged with ensuring that the regulated entities: operate in a
safe and sound manner including maintenance of adequate capital and
internal controls; foster liquid, efficient, competitive, and resilient
national housing finance markets; comply with the Safety and Soundness
Act, and the respective authorizing statutes of the regulated entities;
and carry out their missions through activities authorized and
consistent with the Safety and Soundness Act and their authorizing
statutes; and, that the activities and operations of the regulated
entities are consistent with the public interest.\2\
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\2\ Section 1102 of HERA, 122 Stat. 2663 and 2664.
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Section 1116 of HERA amended section 1319A of the Safety and
Soundness Act, 12 U.S.C. 4520, to require, in part, that the regulated
entities establish or designate an office to carry out the requirements
of an Office of Minority and Women Inclusion (OMWI). That office is
responsible for: all matters relating to diversity in the entity's
management, employment, and business activities; the development and
implementation of standards and procedures to promote diversity in all
business and activities of the regulated entity; and the submission of
an annual report to FHFA detailing the actions taken to promote
diversity and inclusion. Furthermore, 12 U.S.C. 1833e, and Executive
Order 11478, generally require FHFA and the regulated entities to
promote equal opportunity in employment and contracting.
FHFA has adopted regulations to implement section 1116 of HERA, 12
U.S.C. 1833e, and Executive Order 11478, and to set forth the minimum
requirements for the regulated entities' diversity programs and
reporting requirements. Those regulations, which are located at 12 CFR
part 1207, require each regulated entity and the Office of Finance to
establish an OMWI office, or to designate another office, that would
[[Page 35961]]
be responsible for fulfilling the entity's OMWI responsibilities under
the statute and regulations. Each of these entities must implement
policies and procedures to ensure, to the maximum extent possible in
balance with financially safe and sound business practices, the
inclusion and utilization of minorities, women, individuals with
disabilities, and minority-, women-, and disabled-owned businesses in
all business and activities and at all levels of the regulated entity
and the Office of Finance, including in management, employment,
procurement, insurance, and all types of contracts.\3\ These policies
also must encourage the consideration of diversity in nominating or
soliciting nominees for positions on boards of directors and engage in
recruiting and outreach directed at encouraging individuals who are
minorities, women and individuals with disabilities to seek or apply
for employment with the regulated entity or the Office of Finance.\4\
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\3\ 12 CFR 1207.21(b).
\4\ 12 CFR 1207.21(b)(5).
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Part 1207 also requires each regulated entity and the Office of
Finance to submit to the FHFA Director, on or before March 1 of each
year, a detailed annual report summarizing its activities during the
reporting year (January 1 through December 31 of the preceding year) to
comply with the OMWI regulatory requirements.\5\ To that end, each
regulated entity and the Office of Finance is required to submit as
part of its annual report the EEO-1 Employer Information Report (Form
EEO-1 used by the Equal Employment Opportunity Commission and the
Office of Federal Contract Compliance Programs to collect certain
demographic information) or similar report.\6\ The Form EEO-1 pertains
only to broad occupational categories of employees such as executives/
senior level officials, first/mid-level officials and managers,
professionals, technicians, and other employee job categories, and
those employees' gender, race, and ethnicity classifications.\7\
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\5\ 12 CFR 1207.23.
\6\ 12 CFR 1207.23(b)(1).
\7\ The race and ethnicity categories used on the Form EEO-1
are: Hispanic or Latino; White (Not Hispanic or Latino); Black or
African American (Not Hispanic or Latino); Native Hawaiian or Other
Pacific Islander (Not Hispanic or Latino); Asian (Not Hispanic or
Latino); American Indian or Alaska Native (Not Hispanic or Latino);
Two or More Races (Not Hispanic or Latino).
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In addition, part 1207 provides that the FHFA Director has broad
enforcement authority in that he or she may enforce this regulation and
standards issued under it in any manner and through any means within
his or her authority, including through identifying matters requiring
attention, corrective action orders, directives, or enforcement actions
under 12 U.S.C. 4513b and 4514.\8\ To that end, the FHFA Director may
conduct examinations of a regulated entity's or the Office of Finance's
activities under and in compliance with this part pursuant to 12 U.S.C.
4517.\9\
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\8\ 12 CFR 1207.24.
\9\ Id.
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The Bank System (System) was created by the Federal Home Loan Bank
Act of 1932 (Bank Act) as another GSE to support mortgage lending and
related community investment. It is composed of 12 Banks, Bank member
financial institutions, and the System's fiscal agent, the Office of
Finance. The Banks fulfill their statutory mission primarily through
providing secured loans (advances) to their members.
Section 1202 of HERA altered the composition of the Banks' boards
of directors by amending section 7 of the Bank Act (12 U.S.C. 1427) to
require the management of each Bank to be vested in a board of 13
directors, or such other number as the Director determines appropriate,
and that each board be comprised of both a majority of member directors
and at least 40% of independent directors. Each member of the board of
directors is elected by plurality vote of the members, in accordance
with FHFA regulations. Previously, section 7 of the Bank Act required
each Bank's board of directors to be comprised of 14 directors, 8 of
whom were elected by members and 6 of whom were appointed by the former
Federal Housing Finance Board.
The Office of Finance is a joint office of the Banks, the primary
responsibility of which is to act as their agent in offerings, issuing,
and servicing the consolidated obligations that are issued to fund the
operations of the Banks. The Office of Finance also prepares the
combined financial reports for the System, functions as its fiscal
agent, and performs certain duties relating to the Financing
Corporation and Resolution Funding Corporation, respectively.\10\ The
board of directors of the Office of Finance consists of 17 members,
which includes the 12 Bank presidents, who serve ex officio, and five
independent directors. The independent directors must each be a citizen
of the United States, and not have any material relationship with a
Bank or the Office of Finance. As a group, the independent directors
must have substantial experience in financial and accounting
matters.\11\ The initial independent directors were appointed by FHFA,
however, once their terms expire or positions otherwise become vacant,
the succeeding independent directors must be elected by majority vote
of the Office of Finance board of directors.\12\
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\10\ 12 CFR 1273.3.
\11\ 12 CFR 1273.7(a).
\12\ 12 CFR 1273.7(d); See 75 FR 23152, 23163 (May 3, 2010).
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III. Analysis of Proposed Rule
The current regulations require the regulated entities and the
Office of Finance to have policies that, among other things, encourage
the consideration of diversity in nominating or soliciting nominations
for positions on the boards of directors. The regulations also require
the annual OMWI report to include the institution's Form EEO-1 as well
as the demographic information of those applying for employment, hired,
separated, or promoted during the reporting year.
The proposed rule would revise the existing reporting requirements
to require each Bank and the Office of Finance to include in the
contents of its annual report data showing the demographic status of
its respective board members, which is to be provided without any
personally identifiable information. Such data would be obtained by
each Bank and the Office of Finance through a request for information
of its board members who could then voluntarily choose to self-identify
using the same demographic classifications as those used for the Form
EEO-1.
The current rule does not require the regulated entities and the
Office of Finance to collect demographic data about the boards of
directors. That is because the occupational or job categories included
on the Form EEO-1 pertain only to employees and the members of the
board of directors of each institution are not employees.
As conservator of Fannie Mae and Freddie Mac, FHFA is involved in
the selection of their board members. At this time, FHFA does not
believe that it is necessary to consider promulgating regulations
pertaining to the Enterprises with respect to these requirements.
Requiring the Banks and the Office of Finance to report on the
demographic profile of their boards of directors is a logical extension
of the current regulation, which requires the development,
implementation, and maintenance of policies and procedures for
promoting board diversity. The aggregate demographic data related to
the boards of directors of each Bank and the Office of Finance would
establish a
[[Page 35962]]
baseline to analyze future trends, and could be used to assess the
effectiveness of the strategies developed by the Banks and the Office
of Finance related to promoting demographic board diversity.
In addition, the proposed rule will require the Banks and the
Office of Finance to include in the contents of their annual reports a
description of their outreach activities and strategies related to
promoting demographic diversity in nominating or soliciting nominees
for positions on boards of directors. By requiring the submission of
this information, the proposed rule would better enable FHFA to
determine the effectiveness of those policies and procedures in
encouraging demographic diversity in the processes of nominating and
soliciting nominees for positions on boards of directors. Currently,
Sec. 1207.22(c) requires each Bank and the Office of Finance to submit
an annual report to FHFA on or before March 1 of each year, reporting
on the period of January 1 through December 31 of the preceding year.
The proposed amendment to Sec. 1207.22(c) would require the board
demographic data and description of outreach activities and strategies
related to promoting the demographic diversity of board nominees to be
included in the contents of the annual report submitted to FHFA
beginning with the report required to be submitted by March 1, 2015.
Proposed Sec. 1207.23(b)(9)(i) would require each Bank and the
Office of Finance to include in the contents of its annual report the
aggregate number of individuals on its board of directors by
demographic classification. The proposed regulation would require each
Bank and the Office of Finance to collect and report the data using the
same classifications as those on the Form EEO-1. The directors of each
Bank and the Office of Finance would be provided an opportunity to
voluntarily self-identify their demographic classification without
personally identifiable information.
In sending the request to each board member, FHFA expects the Banks
and the Office of Finance to inform their board members about the
voluntary nature of the data collection and of its intended uses and
purposes. The Banks and the Office of Finance are expected to report
aggregate results only of their respective data collections based on
the board members' voluntary demographic self-identification.
Proposed Sec. 1207.23(b)(9)(ii) would require the Banks and the
Office of Finance to include in the contents of their annual reports a
description of their outreach activities and related strategies
executed during the preceding year to promote diversity in nominating
or soliciting nominees for positions on their respective boards of
directors.
The proposed amendment to re-designated Sec. 1207.23(b)(10) would
clarify that the Banks and the Office of Finance are to include in
their annual report comparisons of the data required to be submitted by
proposed paragraph (b)(9).
IV. Consideration of Differences Between the Banks and the Enterprises
Section 1313(f) of the Safety and Soundness Act, as amended by
HERA, requires the Director, when promulgating regulations relating to
the Banks, to consider the differences between the Banks and the
Enterprises with respect to the Banks': Cooperative ownership
structure; mission of providing liquidity to members; affordable
housing and community development mission; capital structure; joint and
several liability; and any other differences the Director considers
appropriate. See 12 U.S.C. 4513(f). In preparing this proposed rule,
the Director considered the differences between the Banks and the
Enterprises as they relate to the above factors, and determined that
the proposed rule does not implicate any of the above factors.
Nevertheless, FHFA requests comments on whether these factors should
result in a revision of the proposed amendment as it relates to the
Banks.
V. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) requires that FHFA
consider the impact of paperwork and other information collection
burdens imposed on the public.\13\ Under the PRA and the implementing
regulations of the Office of Management and Budget (OMB), an agency may
not collect or sponsor the collection of information, nor may it impose
an information collection requirement unless it displays a currently
valid control number assigned by OMB.\14\ This proposed rule contains a
proposed new information collection requirement, which is described
below. As required by the PRA, FHFA has submitted an analysis of the
proposed collection of information contained in this proposed rule to
OMB for review.\15\
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\13\ See 44 U.S.C. 3507(a) and (d).
\14\ See 44 U.S.C. 3512(a); 5 CFR 1320.8(b)(3)(vi).
\15\ See 44 U.S.C. 3507(d).
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Summary: Under proposed Sec. 1207.23(b)(9)(i), each Bank and the
Office of Finance would be required to request annually that each
member of its board of directors provide, on a voluntary basis, self-
identification of his or her demographic classification (using the same
minority and gender classifications as those used on the Form EEO-1),
without including personally identifiable information. Proposed Sec.
1207.23(b)(9) and proposed Sec. 1207.22(c) would require that each
Bank and the Office of Finance submit the baseline board demographic
information collected to FHFA as part of the annual report it is
already required to submit under existing part 1207.
Use: FHFA would use the information collected under proposed Sec.
1207.23(b)(9)(i) to assess the effectiveness of the policies and
procedures that each Bank and the Office of Finance is required to
implement to promote demographic diversity in all of its business and
activities ``at all levels'' and, specifically, to encourage
demographic diversity in the nomination and solicitation of nominees
for members of its boards of directors. FHFA would also use the
information to establish a baseline to analyze future trends related to
the demographic diversity of the boards of directors of the Banks and
the Office of Finance.
Respondents: Respondents would be the approximately 210 individuals
serving on the boards of directors of the regulated entities and the
Office of Finance in any given year.
Frequency: The information would be collected annually.
Annual Burden Estimate: FHFA estimates the total annualized hour
burden for all respondents to the proposed information collection to be
21 hours. FHFA estimates that an average of 210 board directors will
provide information annually and that each response will take
approximately 0.1 hours on average (210 respondents x 0.1 hours per
response = 21 hours). There will be no annualized cost to the Federal
government.
Comment Request: FHFA will accept written comments concerning the
accuracy of the burden estimates and suggestions for reducing the
burden at the address listed above. Comments may also be submitted to
the Office of Information and Regulatory Affairs, OMB, Attention: Desk
Officer for Federal Housing Finance Agency, Room 10102, New Executive
Office Building, 725 17th Street NW., Washington, DC 20503; Fax: (202)
395-6974; or Email: [email protected].
Written comments are requested on: (1) Whether the proposed
collection of information is necessary for the proper performance of
FHFA functions, including whether the information has practical
utility; (2) the accuracy of FHFA estimates of the burdens of the
collection of information; (3) ways to
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enhance the quality, utility, and clarity of the information collected;
and (4) ways to minimize the burden of the proposed collection of
information on board respondents, including through the use of
automated collection techniques or other forms of information
technology.
Individuals and organizations may send comments on the proposed
information collection requirement by August 25, 2014.
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the
proposed rule under the Regulatory Flexibility Act.
The General Counsel of FHFA certifies that the proposed rule, if
adopted as a final rule, is not likely to have a significant economic
impact on a substantial number of small entities because the regulation
is applicable only to the regulated entities and the Office of Finance,
which are not small entities for purposes of the Regulatory Flexibility
Act.
List of Subjects in 12 CFR Part 1207
Discrimination, Diversity, Equal employment opportunity, Government
contracts, Minority businesses, Office of Finance, Outreach, Regulated
entities.
Authority and Issuance
For the reasons stated in the SUPPLEMENTARY INFORMATION, and under
the authority of 12 U.S.C. 4526, FHFA proposes to amend Subpart C of
part 1207 of title 12 of the Code of Federal Regulations as follows:
PART 1207--MINORITY AND WOMEN INCLUSION
0
1. The authority citation for part 1207 continues to read as follows:
Authority: 12 U.S.C. 4520 and 4526; 12 U.S.C. 1833e; E.O. 11478.
Subpart C--Minority and Women Inclusion and Diversity at Regulated
Entities and the Office of Finance
0
2. Amend Sec. 1207.22 by adding a new sentence at the end of paragraph
(c) to read as follows:
Sec. 1207.22 Regulated entity and Office of Finance reports.
* * * * *
(c) * * * The data required to be reported by Sec. 1207.23(b)(9)
herein shall be included in each annual report beginning with the
report required by March 1, 2015.
* * * * *
0
3. Amend Sec. 1207.23 as follows:
0
a. Redesignate paragraphs (b)(9) through (19) as paragraphs (b)(10)
through (20); and
0
b. Add new paragraph (b)(9) and amend newly redesignated paragraph
(b)(10) to read as follows:
Sec. 1207.23 Annual reports--format and contents.
* * * * *
(b) * * *
(9)(i) Data showing for the reporting year by minority and gender
classification, the number of individuals on the board of directors of
each Bank and the Office of Finance--
(A) Using data collected by each Bank and the Office of Finance
through an information collection requesting each director's voluntary
self-identification of his or her minority and gender classification
without personally identifiable information;
(B) Using the same classifications as those on the Form EEO-1; and
(ii) A description of the outreach activities and strategies
executed during the preceding year to promote diversity in nominating
or soliciting nominees for positions on boards of directors of the
Banks and the Office of Finance;
(10) A comparison of the data reported by Fannie Mae and Freddie
Mac under paragraphs (b)(1) through (8) of this section, and by the
Banks and the Office of Finance under paragraphs (b)(1) through (9) of
this section, to such data as reported in the previous year together
with a narrative analysis;
* * * * *
Dated: June 12, 2014.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2014-14512 Filed 6-24-14; 8:45 am]
BILLING CODE 8070-01-P