[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2011 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          Title 12

Banks and Banking


________________________

Part 900 to End

                         Revised as of January 1, 2011

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2011
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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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                                      145
          Chapter XII--Federal Housing Finance Agency              181
          Chapter XIV--Farm Credit System Insurance 
          Corporation                                              371
          Chapter XV--Department of the Treasury                   409
          Chapter XVII--Office of Federal Housing Enterprise 
          Oversight, Department of Housing and Urban 
          Development                                              431
          Chapter XVIII--Community Development Financial 
          Institutions Fund, Department of the Treasury            621
  Finding Aids:
      Table of CFR Titles and Chapters........................     673
      Alphabetical List of Agencies Appearing in the CFR......     693
      List of CFR Sections Affected...........................     703

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

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

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

[[Page v]]



                               EXPLANATION

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

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

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

LEGAL STATUS

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HOW TO USE THE CODE OF FEDERAL REGULATIONS

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    To determine whether a Code volume has been amended since its 
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OMB CONTROL NUMBERS

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collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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[[Page vii]]

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    Office of the Federal Register.
    January 1, 2011.







[[Page ix]]



                               THIS TITLE

    Title 12--Banks and Banking is composed of seven volumes. The parts 
in these volumes are arranged in the following order: Parts 1-199, 200-
219, 220-299, 300-499, 500-599, part 600-899, and 900-end. The first 
volume containing parts 1-199 is comprised of chapter I--Comptroller of 
the Currency, Department of the Treasury. The second and third volumes 
containing parts 200-299 are comprised of chapter II--Federal Reserve 
System. The fourth volume containing parts 300-499 is comprised of 
chapter III--Federal Deposit Insurance Corporation and chapter IV--
Export-Import Bank of the United States. The fifth volume containing 
parts 500-599 is comprised of chapter V--Office of Thrift Supervision, 
Department of the Treasury. The sixth volume containing parts 600-899 is 
comprised of chapter VI--Farm Credit Administration, chapter VII--
National Credit Union Administration, chapter VIII--Federal Financing 
Bank. The seventh volume containing part 900-end is comprised of chapter 
IX--Federal Housing Finance Board, chapter XI--Federal Financial 
Institutions Examination Council, chapter XIV--Farm Credit System 
Insurance Corporation, chapter XV--Department of the Treasury, chapter 
XVII--Office of Federal Housing Enterprise Oversight, Department of 
Housing and Urban Development and chapter XVIII--Community Development 
Financial Institutions Fund, Department of the Treasury. The contents of 
these volumes represent all of the current regulations codified under 
this title of the CFR as of January 1, 2011.

    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.

[[Page 1]]



                       TITLE 12--BANKS AND BANKING




                  (This book contains part 900 to end)

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

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

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

chapter xii--Federal Housing Finance Agency.................        1206

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

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

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

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

[[Page 3]]



                CHAPTER IX--FEDERAL HOUSING FINANCE BOARD




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

                    SUBCHAPTER A--GENERAL DEFINITIONS
Part                                                                Page
900             General definitions applying to all finance 
                    board regulations.......................           5
 SUBCHAPTER B--FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS
905             Description of organization and functions...           8
906             Operations..................................          12
907             Procedures..................................          14
908             Rules of practice and procedure in hearings 
                    on the record...........................          23
911             Availability of unpublished information.....          52
912             Information regarding meetings of the Board 
                    of Directors of the Federal Housing 
                    Finance Board...........................          57
 SUBCHAPTER C--GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS
914             Data availability and reporting.............          63
917             Powers and responsibilities of Bank boards 
                    of directors and senior management......          63
   SUBCHAPTER D--FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES
                ............................................          71
    SUBCHAPTER E--FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL 
                                STANDARDS
930             Definitions applying to risk management and 
                    capital regulations.....................          72
931             Federal Home Loan Bank capital stock........          73
932             Federal Home Loan Bank capital requirements.          77

[[Page 4]]

933             Bank capital structure plans................          89
              SUBCHAPTER F--FEDERAL HOME LOAN BANK MISSION
                ............................................          95
 SUBCHAPTER G--FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS
950             Advances....................................          96
952             Community Investment Cash Advance Programs..         108
955             Acquired member assets......................         112
956             Federal Home Loan Bank Investments..........         115
            SUBCHAPTER H--FEDERAL HOME LOAN BANK LIABILITIES
965             Source of funds.............................         118
966             Consolidated obligations....................         118
969             Deposits....................................         123
   SUBCHAPTER I--MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND 
                               AUTHORITIES
975             Collection, settlement, and processing of 
                    payment instruments.....................         124
977             Miscellaneous bank authorities..............         126
978             Bank requests for information...............         126
           SUBCHAPTER J--NEW FEDERAL HOME LOAN BANK ACTIVITIES
980             New business activities.....................         129
                     SUBCHAPTER K--OFFICE OF FINANCE
987             Book-entry procedure for consolidated 
                    obligations.............................         132
                 SUBCHAPTER L--NON-BANK SYSTEM ENTITIES
995             Financing Corporation operations............         138
996             Authority for Bank assistance of the 
                    Resolution Funding Corporation..........         141
997             Resolution Funding Corporation obligations 
                    of the Banks............................         141
            SUBCHAPTER M--FEDERAL HOME LOAN BANK DISCLOSURES
998             Registration of Federal Home Loan Bank 
                    equity securities.......................         144

[[Page 5]]



                    SUBCHAPTER A_GENERAL DEFINITIONS





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



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

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

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



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

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

[67 FR 12842, Mar. 20, 2002, as amended at 68 FR 38169, June 27, 2003]



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

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

[[Page 6]]

to section 10(j) of the Act (12 U.S.C. 1430(j)) and part 951 of this 
chapter.
    Capital plan means the capital structure plan required for each Bank 
by section 6(b) of the Act, as amended (12 U.S.C. 1426(b)), and part 933 
of this chapter, as approved by the Finance Board, unless the context of 
the regulation refers to the capital plan prior to its approval by the 
Finance Board.
    CIP means the Community Investment Program, an advance program under 
CICA required to be offered pursuant to section 10(i) of the Act (12 
U.S.C. 1430(i)).
    Community Investment Cash Advance or CICA means any advance made 
through a program offered by a Bank under section 10 of the Act (12 
U.S.C. 1430) and parts 951 and 952 of this chapter to provide funding 
for targeted community lending and affordable housing, including 
advances made under a Bank's Rural Development Funding (RDF) program, 
offered under section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10)); a 
Bank's Urban Development Funding (UDF) program, offered under section 
10(j)(10) of the Act (12 U.S.C. 1430(j)(10)); a Bank's Affordable 
Housing Program (AHP), offered under section 10(j) of the Act (12 U.S.C. 
1430(j)); a Bank's Community Investment Program (CIP), offered under 
section 10(i) of the Act (12 U.S.C. 1430(i)); or any other program 
offered by a Bank that meets the requirements of part 952 of this 
chapter.
    Community lending means providing financing for economic development 
projects for targeted beneficiaries, and, for community financial 
institutions (as defined in Sec. 925.1 of this chapter), purchasing or 
funding small business loans, small farm loans or small agri-business 
loans (as defined in Sec. 950.1 of this chapter).
    Consolidated obligation or CO means any bond, debenture, or note 
authorized under part 966 of this chapter to be issued jointly by the 
Banks pursuant to section 11(a) of the Act, as amended (12 U.S.C. 
1431(a)), or any bond or note issued by the Finance Board on behalf of 
all Banks pursuant to section 11(c) of the Act (12 U.S.C. 1431(c)), on 
which the Banks are jointly and severally liable.
    Data Reporting Manual or DRM means a manual issued by the Finance 
Board and amended from time to time containing reporting requirements 
for the Banks.
    Excess stock 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.
    Financial Management Policy or FMP means the Financial Management 
Policy For The Federal Home Loan Bank System approved by the Finance 
Board pursuant to Finance Board Resolution No. 96-45 (July 3, 1996), as 
amended by Finance Board Resolution No. 96-90 (Dec. 6, 1996), Finance 
Board Resolution No. 97-05 (Jan. 14, 1997), and Finance Board Resolution 
No. 97-86 (Dec. 17, 1997).

[67 FR 12842, Mar. 20, 2002, as amended at 71 FR 35499, June 21, 2006; 
71 FR 78050, Dec. 28, 2006]



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

    As used throughout this chapter, the following terms relating to 
other entities and concepts used throughout 12 CFR chapter IX have the 
meanings set forth below, unless otherwise indicated in a particular 
subchapter, part, section or paragraph:
    Appropriate Federal banking agency has the meaning set forth in 
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)) 
and, for federally-insured credit unions, means the NCUA.
    Appropriate state regulator means any state officer, agency, 
supervisor or other entity that has regulatory authority over, or is 
empowered to institute enforcement action against, a particular 
institution.
    Fannie Mae means the Federal National Mortgage Association 
established under authority of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1716, et seq.).
    FDIC means the Federal Deposit Insurance Corporation.
    FRB means the Board of Governors of the Federal Reserve System.

[[Page 7]]

    Freddie Mac means the Federal Home Loan Mortgage Corporation 
established under authority of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1451, et seq.).
    Generally Accepted Accounting Principles or GAAP means accounting 
principles generally accepted in the United States.
    Ginnie Mae means the Government National Mortgage Association 
established under authority of the Federal National Mortgage Association 
Charter Act (12 U.S.C. 1716, et seq.).
    GLB Act means the Gramm-Leach-Bliley Act (Pub. L. 106-102 (1999)).
    HUD means the United States Department of Housing and Urban 
Development.
    NCUA means the National Credit Union Administration.
    NRSRO means a credit rating organization regarded as a Nationally 
Recognized Statistical Rating Organization by the Securities and 
Exchange Commission.
    OCC means the Office of the Comptroller of the Currency.
    OTS means the Office of Thrift Supervision.
    SBIC means a small business investment company formed pursuant to 
section 301 of the Small Business Investment Act (15 U.S.C. 681).
    SEC means the United States Securities and Exchange Commission.
    State means a state of the United States, American Samoa, the 
Commonwealth of the Northern Mariana Islands, the District of Columbia, 
Guam, Puerto Rico, or the United States Virgin Islands.
    1934 Act means the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.).

[67 FR 12842, Mar. 20, 2002, as amended at 69 FR 38811, June 29, 2004]

[[Page 8]]



 SUBCHAPTER B_FEDERAL HOUSING FINANCE BOARD ORGANIZATION AND OPERATIONS





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



        Subpart A_Functions and Responsibilities of Finance Board

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

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

                     Subpart B_General Organization

905.10 Board of Directors.
905.11 Office of Inspector General.
905.12 Office of Management.
905.13 Office of Supervision.
905.14 Office of General Counsel.

                         Subpart C_Miscellaneous

905.25 Forms.
905.26 Official logo and seal.
905.27 OMB control numbers assigned under the Paperwork Reduction Act.

    Authority: 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.

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



        Subpart A_Functions and Responsibilities of Finance Board



Sec. 905.1  [Reserved]



Sec. 905.2  General statement and statutory authority.

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

[56 FR 67155, Dec. 30, 1991, as amended at 65 FR 8256, Feb. 18, 2000; 67 
FR 12843, Mar. 20, 2002; 68 FR 38169, June 27, 2003]



Sec. 905.3  Location and business hours.

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



Sec. 905.4  Duties of the Finance Board.

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

[[Page 9]]

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

[67 FR 12843, Mar. 20, 2002]



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

                    Federal Home Loan Bank District 1

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

                    Federal Home Loan Bank of Boston

111 Huntington Avenue, 24th Floor, Boston, MA 02199-7614

                    Federal Home Loan Bank District 2

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

                   Federal Home Loan Bank of New York

101 Park Avenue, New York, NY 10178-0599

                    Federal Home Loan Bank District 3

(Delaware, Pennsylvania, West Virginia)

                  Federal Home Loan Bank of Pittsburgh

601 Grant Street, Pittsburgh, PA 15219-4455

                    Federal Home Loan Bank District 4

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

                    Federal Home Loan Bank of Atlanta

1475 Peachtree Street, NE., Atlanta, GA 30309

                    Federal Home Loan Bank District 5

(Kentucky, Ohio, Tennessee)

                  Federal Home Loan Bank of Cincinnati

221 East Fourth Street, Suite 1000, Cincinnati, OH 45202

                    Federal Home Loan Bank District 6

(Indiana, Michigan)

                 Federal Home Loan Bank of Indianapolis

8250 Woodfield Crossing Boulevard, Indianapolis, IN 46240

                    Federal Home Loan Bank District 7

(Illinois, Wisconsin)

                    Federal Home Loan Bank of Chicago

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

                    Federal Home Loan Bank District 8

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

                  Federal Home Loan Bank of Des Moines

907 Walnut Street, Des Moines, IA 50309

                    Federal Home Loan Bank District 9

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

                    Federal Home Loan Bank of Dallas

8500 Freeport Parkway South, Suite 100, Irving, TX 75063-2547

                   Federal Home Loan Bank District 10

(Colorado, Kansas, Nebraska, Oklahoma)

                    Federal Home Loan Bank of Topeka

One Security Benefit Place, Suite 100, Topeka, KS 66606-2444

                   Federal Home Loan Bank District 11

(Arizona, California, Nevada)

                 Federal Home Loan Bank of San Francisco

600 California Street, San Francisco, CA 94108

                   Federal Home Loan Bank District 12

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

                    Federal Home Loan Bank of Seattle

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

[56 FR 67155, Dec. 30, 1991, as amended at 63 FR 3455, Jan. 23, 1998; 67 
FR 12843, Mar. 20, 2002; 68 FR 38170, June 27, 2003]



                     Subpart B_General Organization

    Source: 68 FR 38170, June 27, 2003, unless otherwise noted.

[[Page 10]]



Sec. 905.10  Board of Directors.

    (a) Board of Directors--(1) General. 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 ex-officio 
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.
    (2) Responsibilities. The Board of Directors is responsible for 
setting agency policy and issuing resolutions, rules, regulations, 
orders and policies as necessary.
    (b) Chairperson--(1) General. The President designates an appointed 
director as chairperson of the Board of Directors.
    (2) Responsibilities. The responsibilities of the chairperson 
include:
    (i) Presiding over the meetings of the Board of Directors;
    (ii) Effecting the overall management, functioning and organization 
of the Finance Board;
    (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
    (iv) Disseminating information about the Finance Board to other 
government agencies, the public and the news media.



Sec. 905.11  Office of Inspector General.

    (a) General. 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).
    (b) Responsibilities. The responsibilities of the Office of 
Inspector General under the Inspector General Act include:
    (1) Conducting and supervising audits and investigations relating to 
the programs and operations of the Finance Board;
    (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
    (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.



Sec. 905.12  Office of Management.

    (a) General. 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.
    (b) Responsibilities. The responsibilities of the Office of 
Management include:
    (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;
    (2) Facilities and property management and supply requirements;
    (3) Procurement and contracting programs;
    (4) Agency financial management, budgeting and accounting;
    (5) Records management; and
    (6) Coordinating the design, programming, operation and maintenance 
of the Finance Board's technology and information systems.



Sec. 905.13  Office of Supervision.

    (a) General. The Office of Supervision is responsible for conducting 
on-site examinations of the twelve Federal

[[Page 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.
    (b) Responsibilities. The responsibilities of the Office of 
Supervision include:
    (1) Conducting examinations, at least annually, of the Banks, the 
Office of Finance and the Financing Corporation and resolving 
outstanding examination issues;
    (2) Monitoring Bank and Bank System market, credit and operational 
risks;
    (3) Analyzing the financial performance of the Banks;
    (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;
    (5) Analyzing the Banks' performance and policy issues arising under 
the Affordable Housing Program and the Community Investment Program; and
    (6) Collecting and analyzing data on the housing and community and 
economic development activities of the Banks.



Sec. 905.14  Office of General Counsel.

    (a) General. 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.
    (b) Responsibilities. The responsibilities of the Office of General 
Counsel include:
    (1) Preparing all legal documents on behalf of the Finance Board 
such as opinions, regulations and memoranda of law;
    (2) Representing the Finance Board in all administrative 
adjudicatory proceedings before the Board of Directors and in all other 
administrative matters involving the agency;
    (3) Representing the Finance Board in judicial proceedings involving 
the agency's supervisory or regulatory authority over the Federal Home 
Loan Banks;
    (4) Administering the Finance Board's Ethics, Freedom of Information 
Act, Privacy Act, Paperwork Reduction Act, and Government in the 
Sunshine Act programs; and
    (5) Secretary to the Board functions.



                         Subpart C_Miscellaneous



Sec. 905.25  Forms.

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

                                  Form

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

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



Sec. 905.26  Official logo and seal.

    This section describes and displays the logo adopted by the Board of 
Directors as the official symbol representing the Finance Board. It is 
displayed on correspondence and selected documents. This logo also 
serves as the official seal used to certify and authenticate official 
documents of the Board of Directors.
    (a) Description. The logo is a disc with its center consisting of 
three polygons arranged in an irregular line partially overlapping--each 
polygon drawn in a manner resembling a silhouette of a pitched roof 
house and with distinctive eaves under its roof--encircled by a 
designation scroll having an outer and inner border of plain heavy lines 
and containing the words ``FEDERAL

[[Page 12]]

HOUSING FINANCE BOARD'' in capital letters with serifs, with two mullets 
on the extreme left and right of the scroll.
    (b) Display. The Finance Board's official seal and logo appears 
below:
[GRAPHIC] [TIFF OMITTED] TR20MR02.004


[67 FR 12843, Mar. 20, 2002]



Sec. 905.27  OMB control numbers assigned under the Paperwork Reduction Act.

    (a) Purpose. 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.
    (b) Display.

------------------------------------------------------------------------
    12 CFR part or section where          OMB
      identified and  described       control No.     Expiration date
------------------------------------------------------------------------
906.5...............................    3069-0001  July 2007.
915.3...............................    3069-0002  Nov. 2007.
915.4...............................    3069-0002  Nov. 2007.
915.5...............................    3069-0002  Nov. 2007.
915.6...............................    3069-0002  Nov. 2007.
915.7...............................    3069-0002  Nov. 2007.
915.8...............................    3069-0002  Nov. 2007.
915.10..............................    3069-0002  Nov. 2007.
915.12..............................    3069-0002  Nov. 2007.
925.2...............................    3069-0004  May 2007.
925.3...............................    3069-0004  May 2007.
925.5...............................    3069-0004  May 2007.
925.6...............................    3069-0004  May 2007.
925.7...............................    3069-0004  May 2007.
925.8...............................    3069-0004  May 2007.
925.9...............................    3069-0004  May 2007.
925.11..............................    3069-0004  May 2007.
925.12..............................    3069-0004  May 2007.
925.13..............................    3069-0004  May 2007.
925.15..............................    3069-0004  May 2007.
925.16..............................    3069-0004  May 2007.
925.17..............................    3069-0004  May 2007.
925.18..............................    3069-0004  May 2007.
925.22..............................    3069-0004  May 2007.
925.24..............................    3069-0004  May 2007.
925.26..............................    3069-0004  May 2007.
925.31..............................    3069-0004  May 2007.
926.1...............................    3069-0005  Nov. 2005.
926.2...............................    3069-0005  Nov. 2005.
926.3...............................    3069-0005  Nov. 2005.
926.4...............................    3069-0005  Nov. 2005.
926.5...............................    3069-0005  Nov. 2005.
926.6...............................    3069-0005  Nov. 2005.
931.3...............................    3069-0059  Feb. 2007.
931.7...............................    3069-0004  May 2007.
933.2...............................    3069-0059  Feb. 2007.
944.2...............................    3069-0003  Feb. 2006.
944.3...............................    3069-0003  Feb. 2006.
944.4...............................    3069-0003  Feb. 2006.
944.5...............................    3069-0003  Feb. 2006.
950.17..............................    3069-0005  Nov. 2005.
951.1...............................    3069-0006  July 2007.
951.3...............................    3069-0006  July 2007.
951.4...............................    3069-0006  July 2007.
951.6...............................    3069-0006  July 2007.
951.7...............................    3069-0006  July 2007.
951.8...............................    3069-0006  July 2007.
951.10..............................    3069-0006  July 2007.
951.11..............................    3069-0006  July 2007.
951.13..............................    3069-0006  July 2007.
951.15..............................    3069-0006  July 2007.
955.4...............................    3069-0058  Mar. 2007.
------------------------------------------------------------------------


[70 FR 9508, Feb. 28, 2005]



PART 906_OPERATIONS--Table of Contents



Subpart A [Reserved]

              Subpart B_Monthly Interest Rate Survey (MIRS)

Sec.
906.5 Monthly interest rate survey.

     Subpart C_Contractor Outreach Program for Businesses Owned by 
           Minorities, Women, or Individuals With Disabilities

906.10 Why does the Finance Board have this outreach program?
906.11 Who may participate in the outreach program?
906.12 What outreach efforts are included in this program?
906.13 How does the Finance Board oversee and monitor the outreach 
          program?

    Authority: 12 U.S.C. 4516.

    Source: 70 FR 9509, Feb. 28, 2005, unless otherwise noted.

Subpart A [Reserved]

[[Page 13]]



              Subpart B_Monthly Interest Rate Survey (MIRS)



Sec. 906.5  Monthly interest rate survey.

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



     Subpart C_Contractor Outreach Program for Businesses Owned by 
           Minorities, Women, or Individuals With Disabilities

    Effective Date Note: At 75 FR 81402, Dec. 28, 2010, subpart C was 
removed, effective Jan. 27, 2011.



Sec. 906.10  Why does the Finance Board have this outreach program?

    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.



Sec. 906.11  Who may participate in the outreach program?

    Minorities, women, and individuals with disabilities, and businesses 
unconditionally owned by them, may participate in the outreach program. 
As used in this subpart:
    (a) Disability 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.
    (b) Minority means Black or African American, American Indian or 
Alaska Native, Hispanic or Latino American, Asian American, and Native 
Hawaiian or Other Pacific Islander.
    (c) Unconditional ownership 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.



Sec. 906.12  What outreach efforts are included in this program?

    The Finance Board's outreach program includes the following:
    (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;
    (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;

[[Page 14]]

    (c) Advertising contracting opportunities with the Finance Board 
through media targeted to reach businesses unconditionally owned by 
minorities, women, and individuals with disabilities;
    (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
    (e) Ensuring that Finance Board contracting staff understand and 
promote the outreach program.



Sec. 906.13  How does the Finance Board oversee and monitor the 
outreach program?

    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.



PART 907_PROCEDURES--Table of Contents



                          Subpart A_Definitions

Sec.
907.1 Definitions.

    Subpart B_Waivers, Approvals, No-Action Letters, and Regulatory 
                             Interpretations

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

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

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

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

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

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



                          Subpart A_Definitions



Sec. 907.1  Definitions.

    As used in this part:
    Approval means a written statement issued to a Bank or the Office of 
Finance approving a transaction, activity, or item that requires Finance 
Board approval under the Act or a Finance Board rule, regulation, 
policy, or order.
    Case-by-Case Determination means a Final Decision concerning any 
matter that requires a determination, finding, or approval by the Board 
of Directors under the Act or Finance Board regulations, for which no 
controlling statutory, regulatory, or other Finance Board standard 
previously has been established, and that, in the judgment of the Board 
of Directors, is best resolved on a case-by-case basis by a ruling 
applicable only to the Petitioner and any Intervenor, and not by 
adoption of a rule of general applicability.
    Final Decision means a decision rendered by the Board of Directors 
on issues raised in a Petition or Request to Intervene that have been 
accepted for consideration.
    Intervenor means a Bank, Member, or other entity that has been 
granted leave to intervene in the consideration of a Petition by the 
Board of Directors.
    Managing Director means the Managing Director of the Finance Board.
    No-Action Letter means a written statement issued to a Bank or the 
Office of Finance providing that Finance Board staff will not recommend 
supervisory or other action to the Board of Directors for failure to 
comply with a specific provision of the Act or a Finance Board rule, 
regulation, policy, or order, if a requester undertakes a proposed 
transaction or activity.

[[Page 15]]

    Party means a Petitioner, an Intervenor, or the Finance Board.
    Petition means a Petition for Case-by-Case Determination or a 
Petition for Review of a Disputed Supervisory Determination.
    Petitioner means the Office of Finance or a Bank that has filed a 
Petition.
    Regulatory Interpretation means written guidance issued by Finance 
Board staff with respect to application of the Act or a Finance Board 
rule, regulation, policy, or order to a proposed transaction or 
activity.
    Requester means an entity or person that has submitted an 
application for a Waiver or Approval or a request for a No-Action Letter 
or Regulatory Interpretation.
    Supervisory determination means a Finance Board finding in a report 
of examination, order, or directive, or a Finance Board order or 
directive concerning safety and soundness or compliance matters that 
requires mandatory action by a Bank or the Office of Finance.
    Waiver means a written statement issued to a Bank, a Member, or the 
Office of Finance that waives a provision, restriction, or requirement 
of a Finance Board rule, regulation, policy, or order, or a required 
submission of information, not otherwise required by law, in connection 
with a particular transaction or activity.

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



    Subpart B_Waivers, Approvals, No-Action Letters, and Regulatory 
                             Interpretations



Sec. 907.2  Waivers.

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

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



Sec. 907.3  Approvals.

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

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



Sec. 907.4  No-Action Letters.

    (a) Authority. Finance Board staff, in its discretion, may issue a 
No-Action Letter to a Bank or the Office of Finance stating that staff 
will not recommend supervisory or other action to the Board of Directors 
for failure to comply with a specific provision of the Act or a Finance 
Board rule, regulation, policy, or order, if a requester undertakes a 
proposed transaction or activity. The Board of Directors may modify or 
supersede a No-Action Letter.
    (b) Requests. A Bank or the Office of Finance may request a No-
Action Letter in accordance with Sec. 907.6.

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



Sec. 907.5  Regulatory Interpretations.

    (a) Authority. Finance Board staff, in its discretion, may issue a 
Regulatory Interpretation to a Bank, a Member, an official of a Bank or 
Member, the Office of Finance, or any other entity or person, providing 
guidance with respect to application of the Act or a Finance Board rule, 
regulation, policy, or

[[Page 16]]

order to a proposed transaction or activity. The Board of Directors may 
modify or supersede a Regulatory Interpretation.
    (b) Requests. A Bank, a Member, an official of a Bank or Member, the 
Office of Finance, or any other entity or person may request a 
Regulatory Interpretation in accordance with Sec. 907.6.

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



Sec. 907.6  Submission requirements.

    Applications for a Waiver or Approval and requests for a No-Action 
Letter or Regulatory Interpretation shall comply with the following 
requirements:
    (a) Filing. Each application or request shall be in writing. The 
original and three copies shall be filed with the Secretary to the 
Board, Federal Housing Finance Board, 1777 F Street NW., Washington, DC 
20006.
    (b) Authorization--(1) Waivers and Approvals. Applications for 
Waivers and Approvals shall be signed by an official with authority to 
sign such applications on behalf of the requester. Applications for 
Waivers and Approvals from a Bank or the Office of Finance shall be 
accompanied by a resolution of the board of directors of the Bank or the 
Office of Finance concurring in the substance and authorizing the filing 
of the application.
    (2) Requests for No-Action Letters. The president of the Bank making 
a Request for a No-Action Letter shall sign the Request. Requests for a 
No-Action Letter from the Office of Finance shall be signed by the 
chairperson of the board of directors of the Office of Finance.
    (3) Requests for Regulatory Interpretations. The requester or an 
authorized representative of the requester shall sign a request for a 
Regulatory Interpretation.
    (c) Information requirements. Each application or request shall 
contain:
    (1) The name of the requester, and the name, title, address, 
telephone number, and electronic mail address, if any, of the official 
filing the application or request on its behalf;
    (2) The name, address, telephone number, and electronic mail 
address, if any, of a contact person from whom Finance Board staff may 
seek additional information if necessary;
    (3) The section numbers of the particular provisions of the Act or 
Finance Board rules, regulations, policies, or orders to which the 
application or request relates;
    (4) Identification of the determination or relief requested, 
including any alternative relief requested if the primary relief is 
denied, and a clear statement of why such relief is needed;
    (5) A statement of the particular facts and circumstances giving 
rise to the application or request and identifying all relevant legal 
and factual issues;
    (6) References to all relevant authorities, including the Act, 
Finance Board rules, regulations, policies, and orders, judicial 
decisions, administrative decisions, relevant statutory interpretations, 
and policy statements;
    (7) References to any Waivers, No-Action Letters, Approvals, or 
Regulatory Interpretations issued to the requester in the past in 
response to circumstances similar to those surrounding the request or 
application;
    (8) For any application or request involving interpretation of the 
Act or Finance Board regulations, a reasoned opinion of counsel 
supporting the relief or interpretation sought and distinguishing any 
adverse authority;
    (9) Any non-duplicative, relevant supporting documentation; and
    (10) A certification by a person with knowledge of the facts that 
the representations made in the application or request are accurate and 
complete. The following form of certification is sufficient for this 
purpose: ``I hereby certify that the statements contained in the 
submission are true and complete to the best of my knowledge. [Name and 
Title].''
    (d) Waiver of requirements. The Managing Director may waive any 
requirement of this section for good cause. The Managing Director shall 
provide prompt notice of any such waiver to the Board of Directors. The 
Board of Directors may overrule any waiver granted by the Managing 
Director under this paragraph.
    (e) Withdrawal. Once filed, an application or request may be 
withdrawn only upon written request. The Finance

[[Page 17]]

Board will not consider a request for withdrawal after transmission by 
the Secretary to the Board to the requester of a response in final form.

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



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

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



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



Sec. 907.8  Case-by-Case Determinations.

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

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



Sec. 907.9  Review of Disputed Supervisory Determinations.

    (a) Petition for Review of a Disputed Supervisory Determination. A 
Bank or the Office of Finance may seek review by the Board of Directors 
of a Finance Board finding in a report of examination, order, or 
directive, or a Finance Board order or directive concerning safety and 
soundness or compliance matters requiring mandatory action by the Bank 
or Office of Finance. The Office of Finance or a Bank seeking review of 
a disputed Supervisory Determination shall file a Petition for Review of 
a Disputed Supervisory Determination within 60 calendar days from the 
date of the disputed Supervisory Determination in accordance with Sec. 
907.10.
    (b) No stay while Petition is pending. All Supervisory 
Determinations directed to a Bank or the Office of Finance shall remain 
in full force and effect while a Petition is pending. That a Petition is 
pending shall not operate or be deemed to operate as a suspension of the 
obligation of a Bank or the Office of Finance to take corrective action 
as required by a Supervisory Determination, except as the Bank or the 
Office of Finance may be otherwise directed by order of the Board of 
Directors.
    (c) Notice to affected entities. With the approval of the Managing 
Director, a Petitioner may, pursuant to 12 CFR 951.12(d) or otherwise, 
provide notice of the issuance of a Supervisory Determination or the 
filing of a Petition for Review of a Disputed Supervisory Determination, 
to another Bank, the Office of Finance, or a Member or other entity 
named in 12 CFR 951.12(d), if the Petitioner believes the entity's 
rights may be affected by the Supervisory Determination or the Petition.
    (d) Intervention. A Bank, the Office of Finance, a Member, or other 
entity named in 12 CFR 951.12(d) may file a Request to Intervene in the 
consideration of a Petition in accordance with Sec. 907.11 if it 
believes its rights may be

[[Page 18]]

adversely affected by a Final Decision on the Petition.

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



Sec. 907.10  Petitions.

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

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



Sec. 907.11  Requests to Intervene.

    (a) Filing--(1) Date. Any Request to Intervene in consideration of a 
Petition under this subpart shall be in writing and shall be filed with 
the Secretary to the Board within 45 days from the date the Petition is 
filed.
    (2) Information requirements. A Request to Intervene shall include 
the information required by Sec. 907.10(b), where applicable, and a 
concise statement of the position and interest of the Intervenor and the 
grounds for the proposed intervention.

[[Page 19]]

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

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



Sec. 907.12  Finance Board procedures.

    (a) Notice of Receipt of Petition or Request to Intervene. No later 
than three business days following receipt of a Petition or Request to 
Intervene, the Secretary to the Board shall transmit a written Notice of 
Receipt to the Petitioner or Intervenor. In the case of a Petition for 
Case-by-Case Determination, the Finance Board shall promptly publish a 
notice of receipt of Petition, including a brief summary of the issue(s) 
involved, in the Federal Register.
    (b) Transmittal of filings. The Secretary to the Board shall 
promptly transmit copies of any Petition, Request to Intervene, or other 
filing under this subpart to the Board of Directors and all other 
parties to the filing.
    (c) Opportunity to cure defects. The Managing Director shall afford 
the Petitioner or Intervenor a reasonable opportunity to cure any 
failure to comply with the requirements of Sec. 907.10.
    (d) Information request. The Managing Director may request 
additional information from the Petitioner or Intervenor. No later than 
20 calendar days after the date of a request under this paragraph, the 
Petitioner shall provide to the Secretary to the Board all information 
requested.
    (e) Supplemental information. Upon good cause shown, the Managing 
Director may grant permission to a Petitioner or Intervenor to submit 
supplemental written information pertaining to the Petition or Request 
to Intervene.
    (f) Consolidation and severance--(1) Consolidation. The Managing 
Director may consolidate any or all matters at issue in two or more 
meetings on Petitions where:
    (i) There exist common parties or common questions of fact or law;
    (ii) Consolidation would expedite and simplify consideration of the 
issues; and
    (iii) Consolidation would not adversely affect the rights of parties 
engaged in otherwise separate proceedings.
    (2) Severance. The Managing Director may order any meetings and 
issues severed with respect to any or all parties or issues.
    (g) Notice of Board Consideration. Within 30 calendar days of 
receipt of a

[[Page 20]]

Petition deemed by the Managing Director to be in compliance with the 
requirements of Sec. 907.10, or, if the Petition has been the subject 
of a request under paragraph (d) of this section, within 30 calendar 
days of receipt of a response from the Petitioner deemed by the Managing 
Director to complete the information necessary for the Board of 
Directors to consider the Petition, the Managing Director, after 
consultation with the Board of Directors, through the Secretary to the 
Board, shall provide all parties with a Notice of Board Consideration 
containing the following information:
    (1) Identification of the issues accepted for consideration;
    (2) Any decision to consolidate or sever pursuant to paragraph (f) 
of this section;
    (3) Whether the Petition will be considered by the Board of 
Directors on the written record pursuant to Sec. 907.13(a)(1), or at a 
meeting pursuant to Sec. 907.13(a)(2); and
    (4) If the Petition will be considered by the Board of Directors at 
a meeting:
    (i) The date, time and place of the meeting; and
    (ii) A decision as to any Request to Appear filed pursuant to 
Sec. Sec. 907.10(d) or 907.11(a)(4).

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



Sec. 907.13  Consideration and Final Decisions.

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

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



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

    (a) Full and fair opportunity to be heard. Any meeting of the Board 
of Directors to consider a Petition shall be conducted in a manner that 
provides the parties a full and fair opportunity to be heard on the 
issues accepted for consideration. Any such meeting shall be conducted 
so as to permit an expeditious presentation of such issues.
    (b) Participation in meeting. (1) The presence of a quorum of the 
Board if Directors is required to conduct a meeting under this section. 
Members of the Board of Directors are deemed present if they appear in 
person or by telephone.
    (2) An act of the Board of Directors requires the vote of a majority 
of the members of the Board of Directors voting at a meeting at which a 
quorum of the Board of Directors is present.
    (3) A Final Decision may be reached by a vote of the Board of 
Directors after the meeting at which the Petition has been considered. 
Only those members of the Board of Directors present at the meeting at 
which the Petition was considered may vote on issues presented in the 
Petition and accepted for consideration. A vote of the majority

[[Page 21]]

of the members of the Board of Directors eligible to vote and voting 
shall be an act of the Board of Directors.
    (c) Chairperson--(1) Presiding officer. The Chairperson, or a member 
of the Board of Directors designated by the Chairperson, shall preside 
over a meeting of the Board of Directors convened under this section.
    (2) Authority of the Chairperson. The Chairperson shall have all 
powers and discretion necessary to conduct the meeting in a fair and 
impartial manner, to avoid unnecessary delay, to regulate the course of 
the meeting and the conduct of the parties and their counsel, and to 
discharge the duties of a presiding officer.
    (3) Board of Directors may overrule the Chairperson. Any member of 
the Board of Directors may, by motion, challenge any action, finding, or 
determination made by the Chairperson in the course of the meeting, and 
the Board of Directors, by majority vote, may overrule any action, 
finding or determination of the Chairperson.
    (d) Meeting may be closed. A party may request that the meeting, or 
portion thereof, be closed to public observation. A request to close a 
meeting shall be processed in accordance with the requirements of the 
Government in the Sunshine Act (5 U.S.C. 552b) and the Finance Board's 
implementing regulation (12 CFR part 912).
    (e) Location of meeting. Unless otherwise specified, all meetings of 
the Board of Directors will be held in the Board Room of the Finance 
Board at 1777 F Street, NW., Washington, DC, at the time specified in 
the notice of meeting issued pursuant to 12 CFR 912.6.
    (f) Presentation of issues--(1) Stipulations. Subject to the 
Chairperson's discretion, the parties may agree to stipulations of law 
or fact, including stipulations as to the admissibility of exhibits, and 
present such stipulations at the meeting. Stipulations shall be made a 
part of the record of the proceeding.
    (2) Order of presentation. The Chairperson shall determine the order 
of presentation of the issues, testimony of any witnesses, presentation 
of any other information or document, and all other procedural matters 
at the meeting.
    (g) Record. The meeting shall be recorded and transcribed. 
Transcripts of the proceedings shall be governed by 12 CFR 912.5(c). The 
Petition and all supporting documentation shall be made a part of the 
record, unless otherwise determined by the Chairperson. The Chairperson 
may order the record corrected, upon motion to correct, upon stipulation 
of the parties, or at the Chairperson's discretion.
    (h) Admissibility of documents and testimony. (1) The Chairperson 
has discretion to admit and make a part of the record documents and 
testimony that are relevant, material, and reliable, and may elect not 
to admit documents and testimony that are privileged, unduly 
repetitious, or of little probative value.
    (2) The Board of Directors shall give such weight to documents and 
testimony admitted and made part of the record as it may deem reasonable 
and appropriate.
    (3) The Chairperson may admit and make a part of the record, in lieu 
of oral testimony, statements of fact or opinion prepared by a witness. 
The admissibility of the information contained in the statement shall be 
subject to the same rules as if the testimony were provided orally.
    (i) Official notice. All matters officially noticed by the 
Chairperson shall appear on the record.
    (j) Exhibits and documents--(1) Copies. A legible duplicate copy of 
a document shall be admissible to the same extent as the original.
    (2) Exhibits. Witnesses may use existing or newly created charts, 
exhibits, calendars, calculations, outlines, or other graphic materials 
to summarize, illustrate, or simplify the presentation of testimony. 
Subject to the Chairperson's discretion, such materials may be used with 
or without being admitted into the record.
    (3) Identification. All exhibits offered into the record shall be 
numbered sequentially and marked with a designation identifying the 
sponsor. The original of each exhibit offered into the record or marked 
for identification shall be retained in the record of the

[[Page 22]]

meeting, unless the Chairperson permits substitution of a copy for the 
original.
    (4) Exchange of Exhibits. One copy of each exhibit offered into the 
record shall be furnished to each of the parties and to each member of 
the Board of Directors. If the Chairperson does not fix a time for the 
exchange of exhibits, the parties shall exchange copies of proposed 
exhibits at the earliest practicable time before the commencement of the 
meeting to consider the Petition. Parties are not required to exchange 
exhibits submitted as rebuttal information before the meeting commences 
if submission of the exhibits is not reasonably certain at that time.
    (5) Authenticity. The authenticity of all documents submitted or 
exchanged as proposed exhibits prior to the meeting shall be admitted 
unless written objection is filed before the commencement of the 
meeting, or unless good cause is shown for failing to file such a 
written objection.
    (k) Sanction for obstruction of the proceedings. The Board of 
Directors may impose sanctions it deems appropriate for violation of any 
applicable provision of this subpart or any applicable law, rule, 
regulation, or order, or any dilatory, frivolous, or obstructionist 
conduct by any witness or counsel during the course of a meeting.

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



Sec. 907.15  General provisions.

    (a) Waiver of requirements. The Managing Director may waive any 
filing requirement or deadline in this subpart for good cause shown. The 
Managing Director shall provide prompt notice of any such waiver to the 
Board of Directors.
    (b) Actions of the Managing Director subject to the authority of the 
Board of Directors. The Board of Directors may overrule any action by 
the Managing Director under this subpart.
    (c) Withdrawal. At any time prior to the issuance by the Managing 
Director of a Notice of Board Consideration pursuant to Sec. 907.12(g), 
an authorized representative of a Petitioner may withdraw the Petition, 
or an authorized representative of an Intervenor may withdraw the 
Request to Intervene, by filing a written request to withdraw with the 
Secretary to the Board. Only the Board of Directors may grant a request 
to withdraw after issuance by the Managing Director of a Notice of Board 
Consideration pursuant to Sec. 907.12(g). Unless otherwise agreed, 
withdrawal of a Petition or Request to Intervene shall not foreclose a 
Petitioner from resubmitting a Petition, or an Intervenor from 
submitting a Request to Intervene, on the same or similar issues.
    (d) Settlement agreement. (1) At any time during the course of 
proceedings pursuant to this subpart, the Finance Board shall give 
Petitioners and Intervenors the opportunity to submit offers of 
settlement when the nature of the proceedings and the public interest 
permit. With the approval of the Managing Director, an authorized 
representative of a Petitioner or Intervenor may enter into a proposed 
settlement agreement with the Finance Board disposing of some or all of 
the issues presented in a Petition or Request to Intervene.
    (2) No proposed settlement agreement shall be final until approved 
by the Board of Directors. The Board of Directors shall consider any 
proposed settlement agreement within 30 calendar days of receiving a 
notice of the proposed settlement agreement. If the Board of Directors 
disapproves or fails to approve a proposed settlement agreement within 
30 days, the proposed settlement agreement shall be null and void and 
the previously filed Petition or Request to Intervene shall be 
considered in accordance with this subpart.
    (3) A settlement agreement approved by the Board of Directors shall 
be deemed final and binding on all parties to the agreement. At the time 
a proposed settlement agreement becomes final, a Petition or Request to 
Intervene previously filed by a party to the agreement shall be deemed 
withdrawn as to all issues resolved in the agreement, and the parties to 
the agreement shall be estopped from raising objection to those issues 
or to the terms of the settlement agreement.
    (e) No rights created; Finance Board not prohibited. Nothing in this 
subpart shall be deemed to create any substantive or discovery right in 
any

[[Page 23]]

party. Nothing in this subpart shall limit in any manner the right of 
the Finance Board to conduct any examination or inspection of any Bank 
or the Office of Finance, or to take any action with respect to a Bank 
or the Office of Finance, or its directors, officers, employees or 
agents, otherwise authorized by law.
    (f) Exhaustion requirement. When seeking a Case-by-Case 
Determination of any matter or review by the Board of Directors of any 
Supervisory Determination, a Bank or the Office of Finance shall follow 
the procedures in this subpart as a prerequisite to seeking judicial 
review. Failure to do so shall be deemed to be a failure to exhaust all 
available administrative remedies.
    (g) Improper conduct prohibited. No party shall, by act or omission, 
unduly burden or frustrate the efforts of the Board of Directors to 
carry out its duties under the laws and regulations of the Finance 
Board. A Petitioner or Intervenor shall confine its communications with 
the Board of Directors, or any individual member thereof, concerning 
issues raised in a pending Petition, to written communications for 
inclusion in the record of the proceeding, filed with the Secretary to 
the Board.
    (h) Costs. Petitioners are encouraged to contain costs associated 
with the preparation and filing of Petitions and related personal 
appearances, if any, at any meeting held by the Board of Directors under 
this subpart. The Petitioner shall be solely responsible for all costs 
associated with any such Petitions and appearances.
    (i) Procedures are exclusive. All Case-by-Case Determinations by the 
Board of Directors and all Reviews of Disputed Supervisory 
Determinations shall be considered exclusively pursuant to the 
procedures described in this subpart.

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



Sec. 907.16  Rules of practice.

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

[67 FR 9903, Mar. 5, 2002]



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



                         Subpart A_Introduction

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

          Subpart B_Scope and Authority_Enforcement Proceedings

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

                         Subpart C_General Rules

908.20 Authority of the Board of Directors.
908.21 Authority of the presiding officer.
908.22 Public hearings.
908.23 Good faith certification.
908.24 Ex parte communications.
908.25 Filing of papers.
908.26 Service of papers.
908.27 Computing time.
908.28 Change of time limits.
908.29 Witness fees and expenses.
908.30 Settlement or other dispute resolution.
908.31 Right to supervise the Banks.
908.32 Collateral attacks on proceedings under this part.
908.33-908.39 [Reserved]

                    Subpart D_Pre-Hearing Proceedings

908.40 Commencement of proceeding and contents of notices.
908.41 Answer.
908.42 Amended pleadings.
908.43 Failure to appear.
908.44 Consolidation and severance of actions.
908.45 Motions.
908.46 Discovery.
908.47 Request for document discovery from parties.
908.48 Document subpoenas to nonparties.
908.49 Deposition of witness unavailable for hearing.

[[Page 24]]

908.50 Interlocutory review.
908.51 Summary disposition.
908.52 Partial summary disposition.
908.53 Scheduling and prehearing conferences.
908.54 Pre-hearing submissions.
908.55 Hearing subpoenas.
908.56-908.59 [Reserved]

             Subpart E_Hearing and Post-hearing Proceedings

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

          Subpart F_Rules of Practice Before the Finance Board

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

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

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



                         Subpart A_Introduction



Sec. 908.1  Scope.

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



Sec. 908.2  Definitions.

    For purposes of this part--
    Decisional employee means any employee of the Finance Board, except 
the Office of General Counsel, or any member of the presiding officer's 
staff who has not engaged in an investigative or prosecutorial role in 
connection with the subject cease and desist or civil money penalty 
proceedings and who may assist the Board of Directors or the presiding 
officer, respectively, in preparing orders, recommended decisions, 
decisions and other documents under this part.
    Hearing means an adjudicatory proceeding conducted pursuant to this 
part;
    Notice means a written notice of charges or notice of assessment of 
a civil money penalty so titled that served by the Finance Board upon a 
respondent, which conforms to Sec. 908.40 and describes the alleged 
violations with sufficient specificity to put the respondent on notice 
of the nature and scope of the charges being brought against him, except 
in the context of the plain meaning of the word notice in a provision, 
such as reasonable notice or actual notice.
    Party means, for purposes of subparts C through F of this part only, 
the Finance Board or respondent.
    Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency, Bank, or other entity or organization with the 
exception of the Finance Board.
    Presiding officer means an administrative law judge or other 
qualified, neutral individual who is appointed by the Finance Board 
under applicable law, and, pursuant to Title 5 of the United States 
Code, may conduct a hearing or adjudicatory proceeding under this part.
    Representative of record means an individual who is authorized to 
represent a respondent (and includes a respondent who represents 
himself) at a hearing conducted under this part and who has filed a 
notice of appearance in accordance with Sec. 908.72.
    Respondent means any person named in a notice of charges or notice 
of determination to impose civil money penalties issued by the Finance 
Board.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501-4641) (Title 
XIII of the Housing and Community Development Act of 1992, Pub. L. No. 
102-550).
    Violation includes any act or omission by any person, undertaken 
alone

[[Page 25]]

or with one or more others, that causes directly or indirectly, 
counsels, participates in, or otherwise furthers, aids or abets a 
violation of the Act, other applicable law, regulation, or order of the 
Finance Board.



Sec. 908.3  Rules of construction.

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



          Subpart B_Scope and Authority_Enforcement Proceedings



Sec. 908.4  Cease and desist proceedings.

    (a) Notice of charges--(1) Grounds. The Finance Board may issue and 
serve a notice of charges upon a Bank or any executive officer or 
director of a Bank if the Finance Board determines that such party is 
engaging or has engaged in, or, if the Finance Board has reasonable 
cause to believe is about to engage in:
    (i) An unsafe or unsound practice in conducting the business of the 
Bank;
    (ii) Any conduct that violates any provision of the Act or any 
applicable law, order, rule or regulation; or
    (iii) Any conduct that violates any condition imposed in writing by 
the Finance Board in connection with the granting of any application or 
other request by the Bank, or any written agreement between the Bank and 
the Finance Board.
    (2) Content of notice of charges. A notice of charges shall contain 
a statement of the facts constituting the alleged conduct or violation 
and otherwise shall conform to the requirements set forth in Sec. 
908.40.
    (b) Cease and desist order--(1) Issuance of order. An order to cease 
and desist shall be issued in writing and only after the respondent has 
been given the opportunity for a hearing on the record in accordance 
with the requirements set forth in Sec. 908.9. If the Board of 
Directors finds, based on the record of the hearing, that any conduct or 
violation specified in the notice of charges has been established or if 
a respondent consents (or is deemed to have consented pursuant to Sec. 
908.43), the Board of Directors may issue and serve upon the respondent 
an order requiring the respondent to cease and desist from any such 
practice, violation or conduct, to take affirmative action to correct or 
remedy the conditions resulting from any such practice, violation or 
conduct, or to comply with such limitations on activities or functions 
as may be prescribed therein.
    (2) Affirmative action. The authority of the Board of Directors to 
issue and serve a cease and desist order that requires a respondent to 
take affirmative action to correct or remedy any conditions resulting 
from any violation or practice with respect to which such order is 
issued includes the authority to require a respondent to--
    (i) Make restitution or provide reimbursement, indemnification, or 
guarantee against loss if--
    (A) The respondent was unjustly enriched in connection with the 
violation, conduct or practice described in the order; or
    (B) The violation, conduct or practice involved a reckless disregard 
for the law or any applicable regulations or prior order of the Finance 
Board;
    (ii) Restrict the growth of the Bank;
    (iii) Dispose of any loan or asset involved;
    (iv) Rescind any agreement or contract;
    (v) Employ qualified officers or employees (who may be subject to 
approval by the Finance Board, as directed by the Finance Board); and
    (vi) Take such other action as the Finance Board determines to be 
appropriate.
    (3) Authority to limit activities. The authority of the Board of 
Directors to issue and serve a cease and desist order includes the 
authority to place limitations on the activities or functions of a 
respondent.
    (c) Effective date of order. An order issued under paragraph (b) of 
this section shall become effective upon the

[[Page 26]]

expiration of the 30-day period beginning on the date of service of the 
order upon the respondent, (except in the case of an order issued upon 
consent, which shall become effective at the time specified therein), 
and shall remain effective and enforceable as provided in the order, 
except to the extent that the order is stayed, modified, terminated, or 
set aside by action of the Board of Directors or otherwise as provided 
for in this part.



Sec. 908.5  Temporary cease and desist orders.

    (a) Grounds. Whenever the Board of Directors determines that any 
conduct or violation, or threatened conduct or violation, specified in a 
notice of charges issued and served upon a respondent, or the 
continuation of such conduct or violation, is likely to cause 
insolvency, a significant depletion of total capital, or irreparable 
harm to a Bank prior to the completion of the cease and desist 
proceeding, the Board of Directors may issue a temporary order requiring 
the respondent to cease and desist from any such conduct or violation, 
or such threatened conduct or violation, and to take affirmative action 
to prevent or remedy such insolvency, depletion, or harm pending 
completion of such proceedings. Such order may include any requirement 
authorized under Sec. 908.4(b)(2).
    (b) Incomplete records. If a notice of charges specifies that the 
books and records of a Bank are so incomplete or inaccurate that the 
Finance Board is unable, through the normal supervisory process, to 
determine the financial condition of the Bank or the details or purpose 
of any transaction or transactions that may have a material effect on 
the financial condition of a Bank, the Finance Board may issue a 
temporary order requiring a respondent to:
    (1) Cease and desist from any activity or practice that caused or 
contributed to, whether in whole or in part, the incomplete or 
inaccurate state of the books or records of a Bank; or
    (2) Take affirmative action to restore the books or records to a 
complete and accurate state.
    (c) Effective date. Any temporary order issued pursuant to this 
section shall become effective upon service upon the respondent.
    (d) Effective period. (1) Any temporary order issued under paragraph 
(a) of this section, unless set aside, limited, or suspended by a court 
in a proceeding under paragraph (e) of this section, shall remain in 
effect and enforceable pending the completion of the proceeding on the 
notice of charges and shall remain effective until the Board of 
Directors dismisses the charges specified in the notice of charges or it 
is superceded by a cease and desist order.
    (2) Any temporary order issued under paragraph (b) of this section, 
unless set aside, limited, or suspended by a court in proceedings 
pursuant to paragraph (e) of this section, shall remain in effect and 
enforceable until the earlier of the completion of the proceeding on the 
notice of charges, or the date that the Finance Board determines, by 
examination or otherwise, that the books and records of the Bank are 
accurate and reflect the financial condition of the Bank.
    (e) Judicial relief. As authorized by section 2B(a)(5) of the Act 
(12 U.S.C. 1422b(a)(5)) and sections 1372(d) and 1375(b) of the Safety 
and Soundness Act (12 U.S.C. 4632(d) and 4635(b)), a respondent that has 
been served with a temporary order may apply to the United States 
District Court for the District of Columbia within ten days after such 
service for an injunction setting aside, limiting, or suspending the 
enforcement, operation, or effectiveness of the order pending the 
completion of the hearing pursuant to the notice of charges.
    (f) Enforcement of temporary order. If a respondent violates, 
threatens to violate, or fails to obey, a temporary order issued 
pursuant to this section, the Finance Board may bring an action in the 
United States District Court for the District of Columbia for an 
injunction to enforce such temporary order, as authorized by sections 
2B(a)(5) and 2B(a)(7) of the Act (12 U.S.C. 1422b(a)(5) and (a)(7)) and 
section 1372(e) of the Safety and Soundness Act (12 U.S.C. 4632(e)).



Sec. 908.6  Civil money penalties.

    (a) Notice of assessment--(1) Grounds. The Finance Board may issue 
and serve

[[Page 27]]

a notice of assessment of a civil money penalty on any Bank or any 
executive officer or director of a Bank that:
    (i) Violates any provision of the Act, or any order, rule, or 
regulation issued under the Act;
    (ii) Violates any final or temporary cease and desist order issued 
by the Finance Board pursuant to the Act;
    (iii) Violates any written agreement between a Bank and the Finance 
Board; or
    (iv) Engages in any conduct that causes or is likely to cause a loss 
to a Bank.
    (2) Content of notice. A notice of assessment of a civil money 
penalty shall contain a statement of the facts constituting the alleged 
conduct or violation and otherwise conform to the requirements set forth 
in Sec. 908.40.
    (b) Order assessing penalty. An order assessing a civil money 
penalty shall be issued in writing and only after the respondent has 
been given the opportunity for a hearing on the record in accordance 
with the procedures set forth in Sec. 908.9. If the Board of Directors 
finds, based on the record of the hearing, that any conduct or violation 
specified in the notice of assessment of a civil money penalty has been 
established or if a respondent consents (or is deemed to have consented 
pursuant to Sec. 908.43), the Board of Directors may issue and serve 
upon the respondent an order assessing a civil money penalty.
    (c) Amount of penalty. (1) The Finance Board may impose a civil 
money penalty under paragraph (b) of this section against a Bank for a 
violation described in paragraph (a)(i) through (iii) of this section in 
an amount not to exceed $5,000.00 for each day that such violation 
continues;
    (2) The Finance Board may impose a civil money penalty on an 
executive officer or director of a Bank in an amount not to exceed 
$10,000.00, or on a Bank in an amount not to exceed $25,000.00, for each 
day that a violation or conduct described in paragraph (a) of this 
section continues, if the Finance Board finds that the violation or 
conduct:
    (i) Is part of a pattern of misconduct; or
    (ii) Involved recklessness and caused or would be likely to cause a 
material loss to a Bank; or
    (3) The Finance Board may impose a civil money penalty on an 
executive officer or director of a Bank in an amount not to exceed 
$100,000.00, or on a Bank in an amount not to exceed $1,000,000.00, for 
each day that a violation or conduct described in paragraph (a) of this 
section continues, if the Finance Board finds that the violation or 
conduct was knowing and caused or would be likely to cause a substantial 
loss to a Bank.
    (d) Factors in determining the amount of the penalty. In determining 
the amount of the civil money penalty to be assessed under this section, 
the Finance Board shall consider such factors as the gravity of the 
violation, any history of prior violations, the good faith of the 
officer or director of a Bank, the effect of the penalty on promoting or 
protecting the safety and soundness of a Bank or the Bank System, any 
injury to members of the subject Bank or to the public at large, any 
benefits received, and the potential for the deterrence of future 
violations.
    (e) Judicial relief. Pursuant to section 2B(a)(5) of the Act (12 
U.S.C. 1422b(a)(5)) and section 1376(c)(3) of the Safety and Soundness 
Act (12 U.S.C. 4636(c)(3)), an order of the Board of Directors imposing 
a civil money penalty under this subsection shall not be subject to 
judicial review except as otherwise provided in Sec. 908.10, in 
accordance with section 1374 of the Safety and Soundness Act (12 U.S.C. 
4634).
    (f) Judicial enforcement of an order imposing a penalty. Pursuant to 
sections 2B(a)(5) and 2B(a)(7) of the Act (12 U.S.C. 1422b(a)(5) and 
(a)(7)) and section 1376(d) of the Safety and Soundness Act (12 U.S.C. 
4636(d)), if a Bank, or an executive officer or director of a Bank, 
fails to comply with an order of the Board of Directors imposing a civil 
money penalty, the Finance Board may seek to enforce the order as 
follows:
    (1) After the order is final and no longer subject to judicial 
review under Sec. 908.10, the Finance Board may bring an action in the 
United States District Court for the District of Columbia to obtain a 
monetary judgment against a

[[Page 28]]

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



Sec. 908.7  Service of notice.

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



Sec. 908.8  Subpoenas.

    (a) Authority. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1379B of the Safety and Soundness Act (12 
U.S.C. 4641), the Finance Board, in the course of or in connection with 
a hearing under this part, shall have the authority:
    (1) To administer oaths and affirmations;
    (2) To take and preserve testimony under oath;
    (3) To issue subpoenas and subpoenas duces tecum; and
    (4) To revoke, quash, or modify subpoenas and subpoenas duces tecum 
issued by the Finance Board pursuant to this part.
    (b) Witnesses and documents. The attendance of witnesses and the 
production of documents provided for in this subsection may be required 
from any place in any State at any designated place where such 
proceeding is being conducted.
    (c) Enforcement. The Finance Board may file an action in the United 
States district court for the judicial district where the proceeding is 
being conducted or where the witness resides or conducts business, or in 
the United States District Court for the District of Columbia, for 
enforcement of any subpoena or subpoena duces tecum issued pursuant to 
this section. Such courts shall have jurisdiction over such actions and 
power to order and require compliance with such subpoenas and subpoenas 
duces tecum.
    (d) Fees and expenses. Witnesses subpoenaed under this section shall 
be paid the same fees and mileage that are paid witnesses in the 
district courts of

[[Page 29]]

the United States. Any court having jurisdiction of any proceeding 
instituted under this section by a Bank may allow to any such party such 
reasonable expenses and attorneys fees as the court deems just and 
proper. Such expenses shall be paid by the Bank or from its assets.



Sec. 908.9  Hearings on the record.

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



Sec. 908.10  Judicial review.

    (a) Authority. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374 of the Safety and Soundness Act (12 U.S.C. 
4634), any party to a hearing may obtain judicial review of a final 
decision and order issued under Sec. Sec. 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.
    (b) Filing of record. Upon receiving a copy of the petition from the 
clerk of the court of appeals, the Finance Board shall file the hearing 
record with the clerk, as provided in section 2112 of Title 28 of the 
United States Code (28 U.S.C. 2112).
    (c) Jurisdiction. Pursuant to section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374(c) of the Safety and Soundness Act (12 
U.S.C. 4634(c)), upon the filing of a petition, the court of appeals 
shall have jurisdiction, which upon the filing of the record by the 
Finance Board (except as otherwise provided in Sec. 908.9) shall be 
exclusive, to affirm, modify, terminate or set aside, in whole or in 
part, a final decision and order of the Board of Directors.
    (d) Review. Review by the court of appeals of a final decision and 
order of the Board of Directors and the record of any hearing conducted 
pursuant to

[[Page 30]]

this part shall be governed by chapter 7 of Title 5 of the United States 
Code (5 U.S.C. 701 et seq.).
    (e) Order to pay civil money penalty. In connection with its review 
of a final order pursuant to this part, the court of appeals shall have 
authority in accordance with section 2B(a)(5) of the Act (12 U.S.C. 
1422b(a)(5)) and section 1374(e) of the Safety and Soundness Act (12 
U.S.C. 4634(e)), to order payment of any civil money penalty imposed by 
the Finance Board.
    (f) No automatic stay. In accordance with section 2B(a)(5) of the 
Act (12 U.S.C. 1422b(a)(5)) and section 1374(f) of the Safety and 
Soundness Act (12 U.S.C. 4634(f)), the commencement of an action for 
judicial review of a final decision and order of the Board of Directors 
under this section shall not operate as a stay of any such order, unless 
the court of appeals specifically orders a stay of the order in whole or 
in part.



Sec. 908.11  Jurisdiction and enforcement.

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



Sec. 908.12  Notice after separation.

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



Sec. 908.13  Public disclosure of final orders.

    (a) In general. The Finance Board shall make available to the 
public--
    (1) Any written agreement or other written statement for which a 
violation may be redressed by the Finance Board or any modification to 
or termination thereof, unless the Finance Board in its discretion, 
determines that public disclosure would be contrary to the public 
interest;
    (2) Any order that is issued by the Board of Directors and that has 
become final in accordance with this part; and
    (3) Any modification to or termination of any final order made 
public pursuant to this part.
    (b) Delay of public disclosure under exceptional circumstances. If 
the Finance Board determines in writing that the public disclosure, 
pursuant to paragraph (a) of this section, of any final decision and 
order of the Board of Directors would seriously threaten the financial 
health or security of a Bank, the Finance Board may delay the public 
disclosure of such decision and order for a reasonable time.
    (c) Documents filed under seal. The Finance Board may file any 
document or part thereof under seal in any hearing commenced by the 
Finance Board under this part, if it determines in writing that 
disclosure thereof would be contrary to the public interest.
    (d) Retention of documents. The Finance Board shall keep and 
maintain a record, for not less than six years, of all documents 
described in paragraph (a) of this section and all enforcement 
agreements and other supervisory actions and supporting documents issued 
with respect to or in connection with any enforcement proceeding 
initiated by the Finance Board under this part or any other law.
    (e) Disclosure to Congress. This section may not be construed to 
authorize the

[[Page 31]]

withholding, or to prohibit the disclosure, of any information to the 
Congress or any committee or subcommittee thereof.



Sec. 908.14  No implied private right of action.

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



Sec. Sec. 908.15-908.19  [Reserved]



                         Subpart C_General Rules



Sec. 908.20  Authority of the Board of Directors.

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



Sec. 908.21  Authority of the presiding officer.

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



Sec. 908.22  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the Finance Board, in its discretion, determines that holding an open 
hearing would be contrary to the public interest. The Finance Board may 
make such determination sua sponte at any time by written notice to all 
parties.
    (b) Motion for closed hearing. Within twenty (20) days of service of 
a notice, any party or respondent may file with the presiding officer a 
motion for a non-public hearing and any party may file a pleading in 
reply to the motion. The presiding officer shall forward the motion and 
any reply, together with a recommended decision on the motion, to the 
Board of Directors, who shall

[[Page 32]]

make a final determination. Such motions and replies shall be governed 
by Sec. 908.45.
    (c) Filing documents under seal. The Finance Board, in its 
discretion, may file any document, or any part of any document, under 
seal if the agency makes a written determination that disclosure of the 
document would be contrary to the public interest. The presiding officer 
shall take all appropriate steps to preserve the confidentiality of such 
documents or parts thereof, including closing portions of the hearing to 
the public.



Sec. 908.23  Good faith certification.

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



Sec. 908.24  Ex parte communications.

    (a) Definition.(1) Ex parte communication means any material oral or 
written communication relevant to the merits of a cease and desist or 
civil money penalty proceeding under this part that was neither on the 
record nor on reasonable prior notice to all parties that takes place 
between--
    (i) An interested person outside the Finance Board (including the 
person's representative); and
    (ii) The presiding officer handling the proceeding, the Board of 
Directors or any member thereof, a decisional employee of the Finance 
Board assigned to that proceeding, or any other person who is or may 
reasonably be expected to be involved in the decisional process.
    (2) A communication that does not concern the merits of a proceeding 
under this part, such as a request for status of the proceeding, does 
not constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time that a 
notice commencing a proceeding under this part is issued by the Finance 
Board until the date that the Board of Directors issues its final 
decision pursuant to Sec. 908.65, no person referred to in paragraph 
(a)(1)(i) of this section shall knowingly make or cause to be made an ex 
parte communication. The Board of Directors, any member thereof 
individually, the presiding officer, or an employee of the Finance 
Board, shall not knowingly make or cause to be made an ex parte 
communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by any person identified in paragraph 
(a) of this section, that person promptly shall cause all such written 
communications (or, if

[[Page 33]]

the communication is oral, a memorandum stating the substance of the 
communication) to be placed on the record of the proceeding and served 
on all parties. All parties to the proceeding shall have an opportunity, 
within ten days of receipt of service of the ex parte communication or 
the written record of an oral communication, to file responses thereto 
and to recommend any sanctions, in accordance with paragraph (d) of this 
section, that they believe to be appropriate under the circumstances.
    (d) Sanctions. Any party or representative for a party who makes an 
ex parte communication, or who encourages or solicits another person or 
entity to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Board of Directors or the presiding 
officer, including, but not limited to, exclusion from the proceedings 
and an adverse ruling on the issue that is the subject of the prohibited 
communication.
    (e) Consultations by presiding officer. Except to the extent 
required for the disposition of ex parte matters as authorized by law, 
the presiding officer may not consult a person or party on any matter 
relevant to the merits of a proceeding, unless on notice and opportunity 
for all parties to participate.
    (f) Separation of functions. An employee or agent engaged in the 
performance of investigative or prosecuting functions for the Finance 
Board in a case may not, in that or a factually related case, 
participate or advise in the decision, recommended decision, or Board of 
Directors' review of the recommended decision under Sec. 908.65, except 
as a witness or counsel in a hearing.



Sec. 908.25  Filing of papers.

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



Sec. 908.26  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers or serving a subpoena shall serve a copy upon the representative 
of record for each party to the proceeding so represented and upon any 
party not so represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivery to the U.S. Postal Service or to a reliable commercial 
delivery service for same day or overnight delivery;
    (3) Mailing by first class, registered, or certified mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall

[[Page 34]]

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



Sec. 908.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act or event that commences the 
designated period of time is not included. The last day so computed is 
included unless it is a Saturday, Sunday, or Federal holiday. When the 
last day is a Saturday, Sunday or Federal holiday, the period shall run 
until the end of the next day that is not a Saturday, Sunday, or Federal 
holiday. Intermediate Saturdays, Sundays and Federal holidays are 
included in the computation of time. However, when the time period 
within which an act is to be performed is ten (10) days or less, not 
including any additional time allowed for in paragraph (c) of this 
section, intermediate Saturdays, Sundays and Federal holidays are not 
included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective--
    (i) In the case of personal service or same day reliable commercial 
delivery service, upon actual service;

[[Page 35]]

    (ii) In the case of U.S. Postal Service or reliable commercial 
overnight delivery service, or first class, registered, or certified 
mail, upon deposit in or delivery to an appropriate point of collection; 
or
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing in the case of filing, and as 
agreed among the parties in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Finance Board or the 
presiding officer in the case of filing or by agreement of the parties 
in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice or paper, the applicable time limits shall be 
calculated as follows:
    (1) If service was made by first class, registered, or certified 
mail, or by delivery to the U.S. Postal Service for longer than 
overnight delivery service, add three (3) calendar days to the 
prescribed period for the responsive filing.
    (2) If service was made by U.S. Postal Service or reliable 
commercial overnight delivery service, add one (1) calendar day to the 
prescribed period for the responsive filing.
    (3) If service was made by electronic media transmission, add one 
(1) calendar day to the prescribed period for the responsive filing, 
unless otherwise determined by the Board of Directors or the presiding 
officer in the case of filing, or by agreement among the parties in the 
case of service.



Sec. 908.28  Change of time limits.

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



Sec. 908.29  Witness fees and expenses.

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



Sec. 908.30  Settlement or other dispute resolution.

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



Sec. 908.31  Right to supervise the Banks.

    Nothing contained in this part shall limit in any manner the right 
of the Finance Board to conduct any examination, inspection, or 
visitation of any Bank, or the right of the Finance Board to conduct or 
continue any form of investigation authorized by law. Nothing set forth 
in this part shall restrict or be deemed to restrict the authority of 
the Finance Board to supervise the Banks or to issue or enforce

[[Page 36]]

orders or directives pursuant to section 2B(a)(1), or any other 
provision, of the Act (12 U.S.C. 1422b(a)(1)).



Sec. 908.32  Collateral attacks on proceedings under this part.

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



Sec. Sec. 908.33-908.39  [Reserved]



                    Subpart D_Pre-Hearing Proceedings



Sec. 908.40  Commencement of proceeding and contents of notices.

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



Sec. 908.41  Answer.

    (a) Deadline for filing answer. Unless otherwise specified by the 
Finance Board in the notice, respondent shall file an answer within 
twenty (20) days of service of the notice.
    (b) Content of answer. An answer shall respond specifically to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has the 
effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice that is not denied in the answer is deemed admitted for purposes 
of the proceeding. A respondent is not required to respond to the 
portion of a notice that constitutes the prayer for relief or proposed 
order. The answer shall set forth affirmative defenses, if any, asserted 
by the respondent.
    (c) Default. Failure of a respondent to file an answer required by 
this section within the time provided constitutes a waiver of such 
respondent's right to appear and contest the allegations in the notice. 
If no timely answer is filed, the Finance Board's counsel of record may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
presiding officer shall file with the Board of Directors a recommended 
decision containing the findings and the relief sought in the notice. 
Any final order issued by the Board of Directors based upon a 
respondent's failure to answer shall be deemed to be an order issued 
upon consent.



Sec. 908.42  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
by the Finance Board prior to the scheduling conference held in 
accordance with Sec. 908.53, or at any stage of the proceeding with the 
permission of the presiding officer for good cause shown. The respondent 
must answer an amended notice within the time remaining for the 
respondent's answer to the original notice, or within ten (10) days 
after service of the amended notice, whichever period is longer, unless 
the Board of Directors or the presiding officer orders otherwise for 
good cause shown.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing

[[Page 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.



Sec. 908.43  Failure to appear.

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



Sec. 908.44  Consolidation and severance of actions.

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



Sec. 908.45  Motions.

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

[[Page 38]]

substantially in the form of the order accompanying the motion.
    (e) Dilatory motions. Frivolous, dilatory, or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (f) Dispositive motions. Dispositive motions shall be governed by 
Sec. Sec. 908.51 and 908.52.



Sec. 908.46  Discovery.

    (a) Limits on discovery. Subject to the limitations set out in 
paragraphs (b), (d), and (e) of this section, any party to a hearing 
under this part may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term documents may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic form, 
and other data compilations from which information can be obtained or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form, as well as written material of all kinds.
    (b) Relevance. A party may obtain document discovery regarding any 
matter not privileged provided that the information sought has a logical 
connection to consequential facts (i.e., material) or may tend to prove 
or disprove a matter in issue (i.e., relevant) related to the merits of 
the pending action. Any request to produce documents that calls for 
irrelevant or immaterial information, or that is unreasonable, 
oppressive, excessive in scope, unduly burdensome, or repetitive of 
previous requests, or that seeks to obtain privileged documents, shall 
be denied or modified. A request is unreasonable, oppressive, excessive 
in scope, or unduly burdensome if, among other things, it fails to 
include justifiable limitations on the time period covered and the 
geographic locations to be searched, the time provided to respond in the 
request is inadequate, or the request calls for copies of documents to 
be delivered to the requesting party and fails to include the 
requestor's written agreement to pay in advance for the copying, in 
accordance with Sec. 908.47.
    (c) Forms of discovery. Document discovery shall be limited to 
requests for production of documents for inspection and copying. No 
other form of discovery shall be allowed. Discovery by use of 
interrogatories may be permitted. This paragraph shall not be 
interpreted to require the creation of a document.
    (d) Privileged matter. Privileged documents shall not be 
discoverable. Privileges include the attorney-client privilege, work-
product privilege, any government's or government agency's deliberative 
process privilege and any other privileges provided by the Constitution, 
any applicable act of Congress, or the principles of common law.
    (e) Time limits. All discovery, including all responses to discovery 
requests, shall be completed within the time set by the presiding 
officer, but in no case later than ten (10) days prior to the service 
deadline for pre-hearing submissions in accordance with Sec. 908.54. No 
exception to this time limit shall be permitted, unless the presiding 
officer finds on the record that good cause exists for waiving the 
requirements of this paragraph.



Sec. 908.47  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. Copies of the request shall be served on all other parties. The 
request must identify the documents to be produced either by individual 
item or by category and must describe each item and category with 
reasonable particularity. Documents must be produced as they are kept in 
the usual course of business or they shall be labeled and organized to 
correspond with the categories in the request.
    (b) Production or copying. The request shall specify a reasonable 
time, place and manner for production and performing any related acts. 
In lieu of inspecting the documents, the requesting party may specify 
that all or some of the responsive documents be copied and the copies 
delivered to the requesting party. If copying of fewer than 250 pages is 
requested, the party to whom the request is addressed shall bear the

[[Page 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 Sec. 910.9(g) of this chapter for 
requests for documents filed under the Freedom of Information Act, 5 
U.S.C. 552. The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request is not required to supplement the response, unless:
    (1) The responding party learns that in some material respect the 
information disclosed is incomplete or incorrect, and
    (2) The additional or corrective information has not otherwise been 
made known to the other parties during the discovery process or in 
writing.
    (d) Motions to strike or limit discovery requests. (1) Any party 
that objects to a discovery request may, within ten (10) days of being 
served with such request, file a motion in accordance with the 
provisions of Sec. 908.45 requesting the presiding officer order the 
request be stricken or otherwise limited. If an objection is made to 
only a portion of an item or category in a request, the objection shall 
specify that portion. Any objections not made in accordance with this 
paragraph and Sec. 908.45 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike or limit may file a written response within five (5) days of 
service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, all 
documents withheld on the grounds of privilege must be reasonably 
identified, together with a statement of the basis for the assertion of 
privilege. When similar documents that are protected by deliberative 
process, attorney work-product, or attorney-client privilege are 
voluminous, these documents may be identified by category instead of by 
individual document. The presiding officer has discretion to determine 
when the identification by category is insufficient.
    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within (10) ten days of the assertion 
of privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 908.45 for the issuance of a subpoena compelling production.
    (2) The party who asserted the privilege or failed to comply with 
the request may, within five (5) days of service of a motion for the 
issuance of a subpoena compelling production, file a written response to 
the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses to 
motions pursuant to this section has expired, the presiding officer 
shall rule promptly on all such motions. If the presiding officer 
determines that a discovery request or any of its terms calls for 
irrelevant material, is unreasonable, oppressive, excessive in scope, 
unduly burdensome, or repetitive of previous requests, or seeks to 
obtain privileged documents, he or she may deny or modify the request 
and may issue appropriate protective orders, upon such conditions as 
justice may require. The pendency of a motion to strike or limit 
discovery or to compel production shall not be a basis for staying or 
continuing the proceeding, unless otherwise ordered by the presiding 
officer. Notwithstanding any other provision in this part, the presiding 
officer may not release, or order a party to produce, documents withheld 
on grounds of privilege if the party has stated to the presiding officer 
its intention to file a timely motion for interlocutory review of the 
presiding officer's order to produce the documents, until the motion for 
interlocutory review has been decided.
    (h) Enforcing discovery subpoenas. If the presiding officer issues a 
subpoena compelling production of documents by a party, the subpoenaing 
party may, in the event of noncompliance and to the extent authorized by 
applicable law, apply to any appropriate United States district court 
for an order requiring compliance with the subpoena. A party's right to 
seek court enforcement of a subpoena shall not in any manner

[[Page 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.



Sec. 908.48  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the presiding officer 
for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and manner 
for production in response to the subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 908.46(e) and in accordance with Sec. 
908.47. The party requesting the document subpoena is responsible for 
serving it on the subpoenaed person and for serving copies on all 
parties. Document subpoenas may be served in any State, territory, or 
possession of the United States, the District of Columbia, or as 
otherwise provided by law.
    (3) The presiding officer shall promptly issue any document subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for the 
issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he may refuse to 
issue the subpoena or may issue it in a modified form upon such 
conditions as may be determined by the presiding officer.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such subpoena, 
accompanied by a statement of the basis for quashing or modifying the 
subpoena. The movant shall serve the motion on all parties and any party 
may respond to such motion within ten days of service of the motion.
    (2) Any motion to quash or modify a document subpoena shall be filed 
on the same basis, including the assertion of privilege, upon which a 
party could object to a discovery request under Sec. 908.47 and during 
the same time limits during which such an objection could be filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order of 
the presiding officer that directs compliance with all or any portion of 
a document subpoena, the subpoenaing party or any other aggrieved party 
may, to the extent authorized by applicable law, apply to an appropriate 
United States district court for an order requiring compliance with any 
part of the subpoena that the presiding officer has not quashed or 
modified. A party's right to seek court enforcement of a document 
subpoena shall in no way limit the sanctions that may be imposed by the 
presiding officer on a party who induces a failure to comply with 
subpoenas issued under this section.



Sec. 908.49  Deposition of witness unavailable for hearing.

    (a) General rules. (1) A party desiring to preserve that witness' 
testimony for the record may apply in accordance with the procedures set 
forth in paragraph (a)(2) of this section to the presiding officer for 
the issuance of a subpoena, including a subpoena duces tecum, requiring 
the attendance of the witness at a deposition. The presiding officer may 
issue a deposition subpoena under this section upon a showing that--
    (i) The testimony is reasonably expected to be material; and
    (ii) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed anywhere within the 
United States and its possessions

[[Page 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.
    (3) A subpoena shall be promptly issued upon request, unless the 
presiding officer determines that the request fails to set forth a valid 
basis under this section for its issuance. The presiding officer shall 
make a determination that there is a valid basis for issuing the 
subpoena. The presiding officer may require a written response from the 
party requesting the subpoena or require attendance at a conference to 
determine whether there is a valid basis upon which to issue the 
requested subpoena.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the presiding officer orders otherwise, no deposition under this section 
shall be taken on fewer than ten (10) days' notice to the witness and 
all parties. Deposition subpoenas may be served anywhere within the 
United States or its possessions or territories on any person doing 
business anywhere within the United States or its possessions or 
territories, or as otherwise permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion under Sec. 908.45 with the 
presiding officer to quash or modify the subpoena prior to the time for 
compliance specified in the subpoena, but not more than ten (10) days 
after service of the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section shall accompany the motion. The 
motion must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena shall be duly sworn and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or documents is not deemed a waiver except where the 
ground for objection might have been avoided if the objection had been 
presented timely. All questions, answers and objections must be 
recorded.
    (2) Any party may move before the presiding officer for an order 
compelling the witness to answer any questions the witness has refused 
to answer or submit any evidence that, during the deposition, the 
witness has refused to submit.
    (3) The deposition shall be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or the 
witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed by the witness, the court reporter taking 
the deposition shall certify that the transcript is a true and complete 
transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or with any order of the 
presiding officer made upon motion under paragraph (c)(2) of this 
section, the subpoenaing party or other aggrieved party may, to the 
extent authorized by applicable law, apply to an appropriate United 
States district court for an order requiring compliance with the 
portions of the subpoena that the presiding officer has ordered 
enforced. A party's right to seek court enforcement of a deposition 
subpoena in no way limits the sanctions that may be imposed by the 
presiding officer on a party who fails to comply with or induces a 
failure to comply with a subpoena issued under this section.



Sec. 908.50  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
presiding officer prior to the certification of the record to the Board 
of Directors only in accordance with the procedures set forth in this 
section.
    (b) Procedure. Any motion for interlocutory review shall be filed by 
a party with the presiding officer within ten (10) days of his ruling. 
Upon the expiration of the time for filing all responses, the presiding 
officer shall refer the matter to the Board of Directors for final 
disposition. In referring the matter to the Board of Directors, the 
presiding officer may indicate agreement or disagreement with the

[[Page 42]]

asserted grounds for interlocutory review of the ruling in question.
    (c) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of the presiding officer if it finds 
that--
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the presiding officer or the Board of Directors.



Sec. 908.51  Summary disposition.

    (a) In general. The presiding officer shall recommend that the Board 
of Directors issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that--
    (1) There is no genuine issue as to any material fact; and
    (2) The movant is entitled to a decision in its favor as a matter of 
law.
    (b) Filing of motions and responses. (1) Any party who believes 
there is no genuine issue of material fact to be determined and that 
such party is entitled to a decision as a matter of law may move at any 
time for summary disposition in its favor of all or any part of the 
proceeding. Any party, within twenty (20) days after service of such 
motion or within such time period as allowed by the presiding officer, 
may file a response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of material facts as to which the movant contends there is no 
genuine issue. Such motion must be supported by documentary evidence, 
which may take the form of admissions in pleadings, stipulations, 
written interrogatory responses, depositions, investigatory depositions, 
transcripts, affidavits and any other evidentiary materials that the 
movant contends support its position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the movant. Any party opposing a motion for summary 
disposition must file a statement setting forth those material facts as 
to which such party contends a genuine dispute exists. Such opposition 
must be supported by evidence of the same type as that submitted with 
the motion for summary disposition and a brief containing the points and 
authorities in support of the contention that summary disposition would 
be inappropriate.
    (c) Hearing on motion. At the request of any party or on his own 
motion, the presiding officer may hear oral argument on the motion for 
summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the presiding officer shall 
determine whether the movant is entitled to summary disposition. If the 
presiding officer finds that the moving party is not entitled to summary 
disposition, the presiding officer shall make a ruling denying the 
motion. If the presiding officer determines that summary disposition is 
warranted, the presiding officer shall submit a recommended decision to 
that effect to the Board of Directors under Sec. 908.63.



Sec. 908.52  Partial summary disposition.

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

[[Page 43]]



Sec. 908.53  Scheduling and prehearing conferences.

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



Sec. 908.54  Pre-hearing submissions.

    (a) Service deadline. Within the time set by the presiding officer, 
but in no case later than 10 (ten) days before the start of the hearing, 
each party shall serve on every other party the serving party's:
    (1) Pre-hearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the pre-hearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.



Sec. 908.55  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
materiality or relevance and reasonableness of scope of the testimony or 
other evidence sought, the presiding officer may issue a subpoena or a 
subpoena duces tecum requiring the attendance of a witness at the 
hearing or the production of documentary or physical evidence at such 
hearing. The application for a hearing subpoena must also contain a 
proposed subpoena specifying the attendance of a witness or the 
production of evidence from any State, commonwealth, possession, 
territory of the United States, or the District of Columbia, or as 
otherwise provided by law at any designated place where the hearing is 
being conducted. The party making the application shall serve a copy of 
the application and the proposed subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of or during a hearing. During a hearing, a party may make 
an

[[Page 44]]

application for a subpoena orally on the record before the presiding 
officer.
    (3) The presiding officer shall promptly issue any hearing subpoena 
applied for under this section; except that, if the presiding officer 
determines that the application does not set forth a valid basis for the 
issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he may refuse to 
issue the subpoena or may issue the subpoena in a modified form upon any 
conditions consistent with this subpart. Upon issuance by the presiding 
officer, the party making the application shall serve the subpoena on 
the person named in the subpoena and on each party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
such subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but no more 
than ten days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
presiding officer that directs compliance with all or any portion of a 
hearing subpoena, the subpoenaing party or any other aggrieved party may 
seek enforcement of the subpoena pursuant to Sec. 908.8(c). A party's 
right to seek court enforcement of a hearing subpoena shall in no way 
limit the sanctions that may be imposed by the presiding officer on a 
party who fails, or induces a failure, to comply with any subpoena 
issued under this section.



Sec. Sec. 908.56-908.59  [Reserved]



             Subpart E_Hearing and Post-hearing Proceedings



Sec. 908.60  Conduct of hearings.

    (a) General rules--(1) Hearings. Hearings shall be conducted in 
accordance with chapter 5 of Title 5 of the United States Code (5 U.S.C. 
501-559) and other applicable law, so as to provide a fair and 
expeditious presentation of the relevant disputed issues. Except as 
limited by this subpart, each party has the right to present its case or 
defense by oral and documentary evidence and to conduct such cross-
examination of witnesses as may be required for full disclosure of the 
facts.
    (2) Order of hearing. The Finance Board shall present its case-in-
chief first, unless otherwise ordered by the presiding officer or unless 
otherwise expressly specified by law or regulation. The Finance Board 
shall be the first party to present an opening statement and a closing 
statement and may make a rebuttal statement after the respondent's 
closing statement. If there are multiple respondents, respondents may 
agree among themselves as to their order or presentation of their cases, 
but if they do not agree, the presiding officer shall fix the order.
    (3) Examination of witnesses. Only one representative for each party 
may conduct an examination of a witness, except that in the case of 
extensive direct examination, the presiding officer may permit more than 
one representative for the party presenting the witness to conduct the 
examination. A party may have one representative conduct the direct 
examination and another representative conduct re-direct examination of 
a witness, or may have one representative conduct the cross examination 
of a witness and another representative conduct the re-cross examination 
of a witness.
    (4) Stipulations. Unless the presiding officer directs otherwise, 
all documents that the parties have stipulated as admissible shall be 
admitted into evidence upon commencement of the hearing.
    (b) Transcript. The hearing shall be recorded and transcribed. The 
transcript shall be made available to any

[[Page 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.



Sec. 908.61  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551-559) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence (see generally, 28 U.S.C.) is admissible in a proceeding 
conducted pursuant to this subpart.
    (3) The presiding officer may admit evidence, which otherwise would 
be inadmissible under the Federal Rules of Evidence (28 U.S.C.), upon a 
finding made on the record that the evidence is relevant, material, 
probative and reliable, and would not prejudice the rights of or cause 
an undue burden to any party to the proceeding.
    (b) Official notice. (1) Official notice may be taken of any 
material fact that may be judicially noticed by a United States district 
court and any material information in the official public records of any 
Federal or State government agency.
    (2) All matters officially noticed by the presiding officer or the 
Finance Board shall appear on the record.
    (3) If official notice is requested of any material fact, the 
parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a)(1) of this section, 
any document, including a report of examination, oversight activity, 
inspection, or visitation, prepared by the Finance Board or by another 
Federal or State financial institutions regulatory agency is admissible 
either with or without a sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines, or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the presiding officer's discretion, be used 
with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear in the record.
    (2) When an objection to a question or line of questioning is 
sustained, the examining representative of record may make a specific 
proffer on the record of what he expected to prove by the expected 
testimony of the witness. The proffer may be by representation of the 
representative or by direct interrogation of the witness.
    (3) The presiding officer shall retain rejected exhibits, adequately 
marked for identification, for the record and transmit such exhibits to 
the Board of Directors.
    (4) Failure to object to admission of evidence or to any evidentiary 
ruling constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing and that witness has testified in a 
deposition in accordance with Sec. 908.49, a party may offer as 
evidence all or any part of the transcript of the deposition, including 
deposition exhibits, if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the depositions, the presiding officer may, on that basis, limit 
the admissibility of the deposition in any manner that justice requires.

[[Page 46]]

    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.

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



Sec. 908.62  Post-hearing filings.

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



Sec. 908.63  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within forty-five 
(45) days after expiration of the time allowed for filing reply briefs 
under Sec. 908.62(b), the presiding officer shall file with and certify 
to the Board of Directors, for decision, the record of the proceeding. 
The record must include the presiding officer's recommended decision, 
recommended findings of fact and conclusions of law, and proposed order; 
all pre-hearing and hearing transcripts, exhibits and rulings; and the 
motions, briefs, memoranda and other supporting papers filed in 
connection with the hearing. The presiding officer shall serve upon each 
party the recommended decision, recommended findings and conclusions, 
and proposed order.
    (b) Filing of index. At the same time the presiding officer files 
with and certifies to the Board of Directors, for final determination, 
the record of the proceeding, the presiding officer shall furnish to the 
Board of Directors a certified index of the entire record of the 
proceeding. The certified index shall include, at a minimum, an entry 
for each paper, document or motion filed with the presiding officer in 
the proceeding, the date of the filing, and the identity of the filer. 
The certified index shall also include an exhibit index containing, at a 
minimum, an entry consisting of exhibit number and title or description 
for each exhibit introduced and admitted into evidence at the hearing; 
each exhibit introduced but not admitted into evidence at the hearing; 
each exhibit introduced and admitted into evidence after the completion 
of the hearing; and each exhibit introduced but not admitted into 
evidence after the completion of the hearing.



Sec. 908.64  Exceptions to recommended decision.

    (a) Filing exceptions. Within thirty (30) days after service of the 
recommended decision, recommended findings and conclusions, and proposed 
order under Sec. 908.63, a party may file with the Finance Board 
written exceptions to the presiding officer's recommended decision, 
recommended findings and conclusions, or proposed order; to the 
admission or exclusion of evidence; or to the failure of the presiding 
officer to make a ruling proposed by a party. A supporting brief

[[Page 47]]

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



Sec. 908.65  Review by Board of Directors.

    (a) Notice of submission to the Board of Directors. When the Board 
of Directors determines that the record in the proceeding is complete, 
the Finance Board shall serve notice upon the parties that the 
proceeding has been submitted to the Board of Directors for final 
decision and order in accordance with this section.
    (b) Oral argument before the Board of Directors. Upon the initiative 
of the Board of Directors or on the written request of any party filed 
with the Board of Directors within the time for filing exceptions under 
Sec. 908.64, the Board of Directors may order and hear oral argument on 
the recommended findings, conclusions, decision and order of the 
presiding officer. A written request by a party must show good cause for 
oral argument and state reasons why arguments cannot be presented 
adequately in writing. A denial of a request for oral argument may be 
set forth in the Board of Directors' final decision and order. Oral 
argument before the Board of Directors must be transcribed.
    (c) Board of Directors' final decision and order. (1) Decisional 
employees may advise and assist the Board of Directors in the 
consideration and disposition of the case, and in the preparation of the 
final decision and order. The final decision and order of the Board of 
Directors will be based upon review of the entire record of the 
proceeding, except that the Board of Directors may limit the issues to 
be reviewed to those findings and conclusions to which opposing 
arguments or exceptions have been filed by the parties in accordance 
with this part.
    (2) The Board of Directors shall render and issue a final decision 
and order within ninety (90) days after notification of the parties that 
the case has been submitted to the Board of Directors, unless the Board 
of Directors orders that the action or any aspect thereof be remanded to 
the presiding officer for further proceedings in accordance with 
instructions as may be specified by the Board of Directors. Copies of 
the final decision and order of the Board of Directors shall be served 
upon each party to the proceeding and otherwise, as may be required by 
the Board of Directors in accordance with applicable law.



Sec. 908.66  Exhaustion of administrative remedies.

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

[[Page 48]]



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

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



Sec. Sec. 908.68-908.69  [Reserved]



          Subpart F_Rules of Practice Before the Finance Board



Sec. 908.70  Scope.

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



Sec. 908.71  Practice before the Finance Board.

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



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

    (a) Appearances in proceedings before the Finance Board--(1) By 
attorneys. A party may be represented by an attorney who is a member in 
good standing of the bar of the highest court of any State, 
commonwealth, possession, territory of the United States, or the 
District of Columbia and who is not currently suspended or disbarred 
from practice before the Finance Board.
    (2) By non-attorneys. An individual may appear on his own behalf. A 
member of a partnership may represent the partnership and a duly 
authorized officer, board of director member, employee, or other agent 
of any corporation or other entity not specifically listed herein may 
represent such corporation or other entity; provided that such officer, 
board of director member, employee, or other agent is not currently 
suspended or disbarred from practice before the Finance Board. A duly 
authorized officer or employee of any Government unit, agency, or 
authority may represent that unit, agency, or authority.
    (b) Notice of appearance. Any person appearing in a representative 
capacity on behalf of a party, including the Finance Board, shall 
execute and file a notice of appearance with the presiding

[[Page 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 pro se basis. Unless 
the representative filing the notice is an attorney, the notice of 
appearance shall also be executed by the person represented or, if the 
person is not an individual, by the chief executive officer, or duly 
authorized officer of that person.



Sec. 908.73  Conflicts of interest.

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



Sec. 908.74  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed during the 
course of any proceeding when any party or representative of record has 
acted or failed to act in a manner required by applicable statute, 
regulation, or order, and that act or failure to act--
    (1) Constitutes contemptuous conduct. Contemptuous conduct includes 
dilatory, obstructionist, egregious, contumacious, unethical, or other 
improper conduct at any phase of any proceeding, hearing, or appearance 
before the Board of Directors;
    (2) Has caused some other party material and substantive injury, 
including, but not limited to, incurring expenses including attorney's 
fees or experiencing prejudicial delay;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has delayed the proceeding unduly.
    (b) Sanctions. Sanctions that may be imposed include, but are not 
limited to, any one or more of the following:
    (1) Issuing an order against a party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that may be just; or
    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Procedure for imposition of sanctions. (1) The presiding 
officer, on the

[[Page 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.
    (2) Except as provided in paragraph (d) of this section, no sanction 
authorized by this section, other than refusing to accept late papers, 
shall be imposed without prior notice to all parties and an opportunity 
for any representative or party against whom sanctions would be imposed 
to be heard. The presiding officer shall determine and direct the 
appropriate notice and form for such opportunity to be heard. The 
opportunity to be heard may be limited to an opportunity to respond 
verbally immediately after the act or inaction in question is noted by 
the presiding officer.
    (3) For purposes of interlocutory review, motions for the imposition 
of sanctions by any party and the imposition of sanctions shall be 
treated the same as motions for any other ruling by the presiding 
officer.
    (4) Nothing in this section shall be read to preclude the presiding 
officer or the Finance Board from taking any other action or imposing 
any other restriction or sanction authorized by any applicable statute 
or regulation.
    (d) Sanctions for contemptuous conduct. If, during the course of any 
proceeding, a presiding officer finds any representative or any 
individual representing himself to have engaged in contemptuous conduct, 
the presiding officer may summarily suspend that individual from 
participating in that or any related proceeding or impose any other 
appropriate sanction.



Sec. 908.75  Censure, suspension, disbarment and reinstatement.

    (a) Discretionary censure, suspension and disbarment. (1) The 
Finance Board may censure any individual who practices or attempts to 
practice before it or suspend or revoke the privilege to appear or 
practice before the Finance Board of such individual if, after notice of 
and opportunity for a hearing in the matter, that individual is found by 
the Finance Board--
    (i) Not to possess the requisite qualifications or competence to 
represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have caused unfair and material injury or prejudice to 
another party, such as prejudicial delay or unnecessary expenses 
including attorney's fees;
    (iv) To have engaged in, or aided and abetted, a material and 
knowing violation of the Act or the rules or regulations issued under 
the Act or any other law or regulation governing Bank operations;
    (v) To have engaged in contemptuous conduct before the Finance 
Board;
    (vi) With intent to defraud in any manner, to have willfully and 
knowingly deceived, misled, or threatened any client or prospective 
client; or
    (vii) Within the last ten years, to have been convicted of an 
offense involving moral turpitude, dishonesty or breach of trust, if the 
conviction has not been reversed on appeal. A conviction within the 
meaning of this paragraph shall be deemed to have occurred when the 
convicting court enters its judgment or order, regardless of whether an 
appeal is pending or could be taken and includes a judgment or an order 
on a plea of nolo contendere or on consent, regardless of whether a 
violation is admitted in the consent.
    (2) Suspension or revocation on the grounds set forth in paragraphs 
(a)(1) (ii), (iii), (iv), (v), (vi) and (vii) of this section shall only 
be ordered upon a further finding that the individual's conduct or 
character was sufficiently egregious as to justify suspension or 
revocation. Suspension or disbarment under this paragraph shall continue 
until the applicant has been reinstated by the Finance Board for good 
cause shown or until, in the case of a suspension, the suspension period 
has expired.
    (3) If the final order against the respondent is for censure, the 
individual may be permitted to practice before the Finance Board, but 
such individual's future representations may be

[[Page 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.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any State, commonwealth, possession, territory of the United 
States or the District of Columbia; any accountant or other licensed 
expert whose license to practice has been revoked in any State, 
commonwealth, possession, territory of the United States or the District 
of Columbia; any person who has been and remains suspended or barred 
from practice before the Department of Housing and Urban Development, 
the Office of the Comptroller of the Currency, the Board of Governors of 
the Federal Reserve System, the Office of Thrift Supervision, the 
Federal Deposit Insurance Corporation, the National Credit Union 
Administration, the Office of Federal Housing Enterprise Oversight, the 
Farm Credit Administration, the Securities and Exchange Commission, or 
the Commodity Futures Trading Commission is also suspended automatically 
from appearing or practicing before the Finance Board. A disbarment or 
suspension within the meaning of this paragraph shall be deemed to have 
occurred when the disbarring or suspending agency or tribunal enters its 
judgment or order, regardless of whether an appeal is pending or could 
be taken and regardless of whether a violation is admitted in the 
consent.
    (2) A suspension or disbarment from practice before the Finance 
Board under paragraph (b)(1) of this section shall continue until the 
person suspended or disbarred is reinstated under paragraph (d)(2) of 
this section.
    (c) Notices to be filed. (1) Any individual appearing or practicing 
before Finance Board who is the subject of an order, judgment, decree, 
or finding of the types set forth in paragraph (b)(1) of this section 
shall file promptly with the Finance Board a copy thereof, together with 
any related opinion or statement of the agency or tribunal involved.
    (2) Any individual appearing or practicing before the Finance Board 
who is or within the last ten years has been convicted of a felony or of 
a misdemeanor that resulted in a sentence of prison term or in a fine or 
restitution order totaling more than $5,000 shall file a notice promptly 
with the Finance Board. The notice shall include a copy of the order 
imposing the sentence or fine, together with any related opinion or 
statement of the court involved.
    (d) Reinstatement. (1) Unless otherwise ordered by the Finance 
Board, an application for reinstatement for good cause may be made in 
writing by a person suspended or disbarred under paragraph (a)(1) of 
this section at any time more than three years after the effective date 
of the suspension or disbarment and, thereafter, at any time more than 
one year after the person's most recent application for reinstatement. 
An applicant for reinstatement under this paragraph (d)(1) may, in the 
Finance Board's sole discretion, be afforded a hearing.
    (2) An application for reinstatement for good cause by any person 
suspended or disbarred under paragraph (b)(1) of this section may be 
filed at any time, but not less than one (1) year after the applicant's 
most recent application. An applicant for reinstatement for good cause 
under this paragraph (d)(2) may, in the Finance Board's sole discretion, 
be afforded a hearing. However, if all the grounds for suspension or 
disbarment under paragraph (b)(1) of this section have been removed by a 
reversal of the order of suspension or disbarment or by termination of 
the underlying suspension or disbarment, any person suspended or 
disbarred under paragraph (b)(1) of this section may apply immediately 
for reinstatement and shall be reinstated upon written application 
notifying the Finance Board that the grounds have been removed.
    (e) Conferences. (1) The Finance Board may confer with a proposed 
respondent concerning allegations of misconduct or other grounds for 
censure, disbarment or suspension, regardless of whether a proceeding 
for censure, disbarment or suspension has been commenced. If a 
conference results in a stipulation in connection with a proceeding in 
which the individual is the

[[Page 52]]

respondent, the stipulation may be entered in the record at the request 
of either party to the proceeding.
    (2) Resignation or voluntary suspension. In order to avoid the 
institution of or a decision in a disbarment or suspension proceeding, a 
person who practices before the Finance Board may consent to censure, 
suspension or disbarment from practice. At the discretion of the Finance 
Board, the individual may be censured, suspended or disbarred in 
accordance with the consent offered.
    (f) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under this part, provided that in proceedings to terminate an 
existing suspension or disbarment order, the person seeking the 
termination of the order shall bear the burden of going forward with an 
application supported with proof that the suspension should be 
terminated. The Finance Board may, in its sole discretion, direct that 
any proceeding to terminate an existing suspension or disbarment be 
limited to written submissions. All hearings held under this section 
shall be closed to the public unless the Finance Board, on its own 
motion or upon the request of a party, otherwise directs that the 
hearing be open to the public.



PART 911_AVAILABILITY OF UNPUBLISHED INFORMATION--Table of Contents



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

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

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



Sec. 911.1  Definitions.

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

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



Sec. 911.2  Purpose and scope.

    (a) Purpose. The purposes of this part are to:
    (1) Maintain the confidentiality and control the dissemination of 
unpublished information;

[[Page 53]]

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



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

    (a) In general. Possession or control by any person, supervised 
entity, Bank member, government agency, or other entity of unpublished 
information does not constitute a waiver by the Finance Board of any 
privilege or its right to control, supervise, or impose limitations on, 
the subsequent use and disclosure of the information.
    (b) Current and former employees and agents. Except as authorized by 
this part or otherwise by the Finance Board, no current or former 
Finance Board employee or agent may disclose or permit the disclosure in 
any manner of any unpublished information to anyone other than a Finance 
Board employee or agent for use in the performance of official duties.
    (c) Other persons or entities possessing unpublished information. 
(1) Except as authorized in writing by the Finance Board, no person, 
supervised entity, Bank member, government agency, or other entity in 
possession or control of unpublished information may disclose or permit 
the use or disclosure of such information in any manner or for any 
purpose.
    (2) All unpublished information made available under this part 
remains the property of the Finance Board and may not be used or 
disclosed for any purpose other than that authorized under this part 
without the prior written permission of the Finance Board.
    (3) Reports of examination, supervisory correspondence, and other 
unpublished information lawfully in the possession of a supervised 
entity, Bank member, or government agency remains the property of the 
Finance Board and may not be used or disclosed for any purpose other 
than that authorized under this part without the prior written 
permission of the Finance Board.
    (4) Any person or entity that discloses or uses unpublished 
information except as expressly authorized under this part may be 
subject to the penalties provided in 18 U.S.C. 641 and other applicable 
laws. A current Finance Board, Bank, or Office of Finance employee also 
may be subject to administrative or disciplinary proceedings.
    (d) Exception for supervised entities and Bank members. When 
necessary or appropriate for business purposes, a supervised entity, 
Bank member, or any director, officer, employee, or agent thereof, may 
disclose unpublished information, including information contained in, or 
related to, supervisory correspondence or reports of examination, to a 
person or entity officially connected with the supervised entity or Bank 
member as officer, director, employee, attorney, agent, auditor, or 
independent auditor. A supervised entity, Bank member, or a director, 
officer, employee, or agent thereof, also may disclose unpublished 
information to a consultant under this paragraph if the consultant is 
under a written contract to provide services to the supervised entity or 
Bank member and the consultant has agreed in writing:
    (1) To abide by the prohibition on the disclosure of unpublished 
information contained in this section; and
    (2) That it will not to use the unpublished information for any 
purposes

[[Page 54]]

other than those stated in its contract to provide services to the 
supervised entity or Bank member.
    (e) Government agencies. The Finance Board may make reports of 
examination, supervisory correspondence, and other unpublished 
information available to another federal agency or a state agency for 
use where necessary in the performance of the agency's official duties. 
As used in this paragraph, the term agency does not include a grand 
jury.

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



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

    (a) Form of requests. A request for unpublished information must be 
submitted to the Finance Board in writing and include a detailed 
description of the basis for the request. At a minimum, the request must 
demonstrate that:
    (1) The requested information is highly relevant to the purpose for 
which it is sought;
    (2) The requested information is not available from any other 
source;
    (3) The need for the information clearly outweighs the need to 
maintain its confidentiality; and
    (4) The need for the information clearly outweighs the burden on the 
Finance Board to produce it.
    (b) Requests for documents. If the request is for unpublished 
information by document, the request must include the elements in 
paragraph (a) of this section and also must adequately describe the 
record or records sought by type and date.
    (c) Requests for testimony. (1) If the request is for unpublished 
information by testimony, the request must include the elements in 
paragraph (a) of this section and also must set forth the intended use 
of the testimony, a summary of the scope of the testimony requested, and 
a showing that no document or the testimony of other non-Finance Board 
persons, including retained experts, could be provided and used in lieu 
of the testimony.
    (2) Upon submitting a request to the Finance Board for unpublished 
information by testimony, the requester must notify all other parties to 
the matter at issue of the request.
    (3) After receipt of a request for unpublished information by 
testimony but before the requested testimony occurs, a party to the 
matter at issue who did not join in the request and who wishes to 
question the witness beyond the scope of the testimony sought by the 
request, must timely submit its own request for unpublished information 
pursuant to this part.
    (d) Requests in connection with legal proceedings. If the request 
for unpublished information arises out of a legal proceeding, the 
Finance Board generally will require that the legal proceeding already 
be filed before it will consider the request. In addition to the 
elements in paragraph (a) of this section, requests in connection with 
legal proceedings must include the caption and docket number of the 
case; the forum; the name, address, phone number, and electronic mail 
address, if available, of counsel to all other parties to the legal 
proceeding; the requester's interest in the case; a summary of the 
issues in litigation; and the reasons for the request, including the 
relevance of the unpublished information and how the requested 
information will contribute substantially to the resolution of one or 
more specifically identified issues in the legal proceeding.
    (e) Expedited requests. If a requester seeks a response in less than 
60 days, the request must explain why the request was not submitted 
earlier and why the Finance Board should expedite the request.
    (f) Where to submit requests. Send requests for unpublished 
information to the Office of General Counsel, Federal Housing Finance 
Board, 1777 F Street, NW., Washington, DC 20006.
    (g) Additional information--(1) From the requester. The Office of 
General Counsel may consult with the requester to refine and limit the 
scope of the request to make compliance less burdensome or to obtain 
information necessary to make an informed determination on the request. 
A requester's failure to cooperate in good faith with the Office of 
General Counsel may serve as the basis for a determination not to grant 
the request.

[[Page 55]]

    (2) From others. The Office of General Counsel may inquire into the 
facts and circumstances underlying a request for unpublished information 
and rely on sources of information other than the requester, including 
other parties to the matter at issue.



Sec. 911.5  Consideration of requests.

    (a) Discretion. Each decision concerning the availability of 
unpublished information is at the sole discretion of the Finance Board 
based on a weighing of all appropriate factors. The decision is a final 
agency action that exhausts administrative remedies for disclosure of 
the information.
    (b) Time to respond. The Finance Board generally will respond in 
writing to a request for unpublished information within 60 days of 
receipt absent exigent or unusual circumstances and dependent upon the 
scope and completeness of the request.
    (c) Factors the Finance Board may consider. The factors the Finance 
Board may consider in making a determination regarding the availability 
of unpublished information include:
    (1) Whether and how the requested information is relevant to the 
purpose for which it is sought;
    (2) Whether information reasonably suited to the requester's needs 
other than the requested information is available from another source;
    (3) Whether the requested information is privileged;
    (4) If the request is in connection with a legal proceeding, whether 
the proceeding has been filed;
    (5) The burden placed on the Finance Board to respond to the 
request;
    (6) Whether production of the information would be contrary to the 
public interest; and
    (7) Whether the need for the information clearly outweighs the need 
to maintain the confidentiality of the information.
    (d) Disclosure of unpublished information by others. When a person 
or entity other than the Finance Board has a claim of privilege 
regarding unpublished information and the information is in the 
possession or control of that person or entity, the Finance Board, at 
its sole discretion, may respond to a request for the information by 
authorizing the person or entity to disclose the information to the 
requester pursuant to an appropriate confidentiality order. Finance 
Board authorization to disclose information under this paragraph does 
not preclude the person or entity in possession of the unpublished 
information from asserting its own privilege, arguing that the 
information is not relevant, or asserting any other argument to protect 
the information from disclosure.
    (e) Notice to supervised entities and Bank members. The Finance 
Board generally will notify a supervised entity or Bank member that it 
is the subject of a request, unless the Finance Board, in its sole 
discretion, determines that to do so would advantage or prejudice any of 
the parties to the matter at issue.

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



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

    (a) Notice to Finance Board. Any person, including a current or 
former Finance Board employee or agent, or any entity, including a 
supervised entity, Bank member, or government agency that receives a 
request for, or is served with a subpoena, order, or other legal process 
to disclose unpublished information by document or testimony, must 
immediately notify the Office of General Counsel.
    (b) Response of person or entity served with request. Unless the 
Finance Board has authorized in writing disclosure of the requested 
information:
    (1) A current or former Finance Board employee or agent or a 
supervised entity that must respond to a subpoena, order, or other legal 
process, must decline to disclose the requested information, citing this 
part as authority.
    (2) A non-Finance Board person or entity may not disclose 
unpublished information unless:
    (i) The requester has sought the information from the Finance Board 
under this part; and
    (ii) After the Finance Board or the Department of Justice has had 
the opportunity to appear and oppose disclosure, a Federal court has 
ordered the person or entity to disclose the information.

[[Page 56]]

    (c) Finance Board response. If the Finance Board does not authorize 
in writing disclosure of the requested information, the Finance Board 
will provide a copy of this part to the person or entity at whose 
instance the process was issued and advise that person or entity or the 
court or other body that the Finance Board has prohibited disclosure of 
the information under this part. The Finance Board or the Department of 
Justice may intervene in the matter at issue, attempt to have the 
compulsory process withdrawn, or register other appropriate objections.

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



Sec. 911.7  Availability of unpublished information by testimony.

    (a) Scope. (1) The scope of permissible testimony is limited to that 
set forth in the written authorization granted by the Finance Board. The 
Finance Board may act to ensure that the scope of testimony provided is 
consistent with the written authorization.
    (2) A party to the matter at issue that did not join in a request 
for unpublished information who wishes to question a witness beyond the 
authorized scope must request expanded authorization under this part. 
The Finance Board will attempt to render decisions on such requests in 
an expedited manner.
    (3) The Finance Board generally will not authorize a current 
employee or agent to provide expert or opinion testimony for a private 
party.
    (b) Manner in which testimony is given. (1) The Finance Board 
ordinarily will make the authorized testimony of a former or current 
employee or agent available only through written interrogatories or 
deposition. The Finance Board will not authorize testimony at a trial or 
hearing unless the requester shows that properly developed deposition 
testimony could not be used or would be inadequate at the trial or 
hearing.
    (2) If the Finance Board has authorized testimony in connection with 
a legal proceeding, the requester must cause a subpoena to be served on 
the employee in accordance with applicable rules of procedure, with a 
copy by registered or certified mail to the Office of General Counsel.
    (3) If the authorized testimony is through deposition, the 
deposition ordinarily will take place at the Finance Board's offices at 
a time that will avoid substantial interference with the performance of 
the employee's official duties.
    (4) The requester is responsible for all costs associated with an 
employee's appearance, including provision of a copy of a transcript of 
the deposition at the request of the Office of General Counsel. The 
person whose deposition was transcribed does not waive his or her right 
to review the transcript and note errors.
    (c) Restrictions on use and disclosure. The Finance Board may 
condition its authorization of deposition testimony on an agreement of 
the parties to appropriate limitations, such as an agreement to keep the 
transcript of the testimony under seal or to make the transcript 
available only to the parties, the court or other body, or the jury. 
Upon request made pursuant to this part or on its own initiative, the 
Finance Board may authorize use of a deposition transcript in another 
legal proceeding or non-adversarial matter.
    (d) Responsibility of litigants. If the testimony is disclosed in 
connection with a legal proceeding, the requester is responsible for:
    (1) Promptly notifying all other parties to the legal proceeding of 
the disclosure, and, after entry of a protective order, providing copies 
of the testimony to the other parties who are signatories and subject to 
the protective order; and
    (2) At the conclusion of the legal proceeding, retrieving the 
testimony from the court or other body's file as soon as it is no longer 
required and certifying to the Finance Board that every party covered by 
the protective order has destroyed the unpublished information.



Sec. 911.8  Availability of unpublished information by document.

    (a) Scope. The scope of permissible document disclosure is limited 
to that set forth in the written authorization granted by the Finance 
Board. The Finance Board may act to ensure that

[[Page 57]]

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



Sec. 911.9  Fees.

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

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



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



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

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

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

[[Page 58]]



Sec. 912.1  Definitions.

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

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



Sec. 912.2  Purpose and scope.

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

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



Sec. 912.3  Open meetings.

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

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



Sec. 912.4  Closed meetings.

    (a) The Board of Directors may close a meeting, or portion thereof, 
to public observation, or withhold information from the public 
pertaining to a meeting, when it determines that opening the meeting, or 
a portion thereof, or the public disclosure of information pertaining to 
such meeting, or portion thereof, is likely to:
    (1) Disclose matters that are:
    (i) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interests of national defense 
or foreign policy; and
    (ii) Are, in fact, properly classified pursuant to such Executive 
Order;
    (2) Relate solely to the internal personnel rules and practices of 
the Finance Board;
    (3) Disclose matters specifically exempt from disclosure by statute 
(other than the Freedom of Information Act (5 U.S.C. 552)), provided 
that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding matters from 
the public or refers to particular types of matters to be withheld;
    (4) Disclose trade secrets or commercial or financial information 
that is obtained from a person and is privileged or confidential;

[[Page 59]]

    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings;
    (ii) Deprive a person of a right to a fair trial or an impartial 
adjudication;
    (iii) Constitute an unwarranted invasion of personal privacy;
    (iv) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source;
    (v) Disclose investigative techniques and procedures; or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Finance Board or another agency responsible for the 
regulation or supervision of Banks or other financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to:
    (i) (A) Lead to significant financial speculation in currencies, 
securities, or commodities;
    (B) Significantly endanger the stability of any of the Banks or any 
other financial institution; or
    (ii) Significantly frustrate implementation of a proposed Finance 
Board action, except that this paragraph shall not apply in any instance 
where the Finance Board has already disclosed to the public the content 
or nature of its proposed action, or where the Finance Board is required 
by law to make such disclosure on its own initiative prior to taking 
final action on such proposal; or
    (10) Specifically concern the issuance of a subpoena by the Board of 
Directors, or the Finance Board's participation in a civil action or 
proceeding, an action in a foreign court or international tribunal, or 
an arbitration, or the initiation, conduct or disposition of a 
particular case of formal adjudication pursuant to the procedures in 5 
U.S.C. 554 or otherwise involving a determination on the record after 
opportunity for a hearing.
    (b) A meeting or portions of a meeting shall not be closed nor 
information withheld pursuant to paragraph (a) of this section if the 
Board of Directors finds that the public interest requires otherwise.

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



Sec. 912.5  Procedures for closing meetings.

    (a) Regular procedures. (1) Except as provided in paragraph (b) of 
this section, a meeting of the Board of Directors, or portion thereof, 
will be closed to public observation, and information pertaining to such 
meeting, or portion thereof, will be withheld from the public, when a 
majority of the Board of Directors determines by recorded vote that such 
meeting, or portion thereof, or the withholding of information qualifies 
for exemption under Sec. 912.4, and the Board of Directors does not 
find that the public interest requires otherwise.
    (2) Except as provided in paragraph (a)(3) of this section, a 
separate vote of the Board Directors will be taken with respect to the 
closing or the withholding of information as to each meeting or portion 
thereof that is proposed to be closed to public observation, or with 
respect to information that is proposed to be withheld pursuant to 
paragraph (a) of this section.
    (3) A single vote may be taken with respect to a series of meetings, 
a portion or portions of which are proposed to be closed to public 
observation, or with respect to any information concerning such series 
of meetings proposed to be withheld, so long as each meeting in such 
series involves the same particular matters and is scheduled to be held 
no more than thirty

[[Page 60]]

days after the initial meeting in such series.
    (4) The vote of each Board Director taken pursuant to paragraph (a) 
of this section shall be recorded, and no proxies shall be allowed.
    (5) Whenever any person's interests may be directly affected by any 
portion of a meeting for any of the reasons referred to in Sec. 
912.4(a)(5), (6), or (7), such person may send a written request to the 
Secretary to the Board asking that such portion of the meeting be closed 
to public observation. The Secretary to the Board will transmit the 
request to each Board Director, and upon the request of a Director, a 
recorded vote will be taken of the Board of Directors whether to close 
the meeting to public observation.
    (6)(i) Within one day of any vote taken pursuant to paragraph (a) of 
this section, the Finance Board will make publicly available through the 
Secretary to the Board a written copy of such vote reflecting the vote 
of each Board Director.
    (ii) If a meeting or portion thereof is to be closed to public 
observation, the Finance Board within one day of the vote taken pursuant 
to paragraph (a) of this section will make publicly available through 
the Secretary to the Board a full, written explanation of its action 
closing the meeting, or portion thereof, together with a list of all 
persons expected to attend the meeting and their affiliation, except to 
the extent such information is determined by the Board of Directors to 
be exempt from disclosure under Sec. 912.4(a).
    (7) Any person may request in writing to the Secretary to the Board 
that an announced closed meeting, or portion thereof, be open to public 
observation. The Secretary to the Board will transmit the request to 
each Board Director, and upon the request of a Director, a recorded vote 
will be taken of the Board of Directors on whether to open the meeting 
to public observation.
    (b) Expedited procedures. (1) Since a majority of the meetings, of 
the Board of Directors may be closed pursuant to Sec. 912.4(a)(4), (8), 
(9)(i) or (10), 5 U.S.C. 552b(d)(4) allows the Finance Board to use 
expedited procedures in closing such meetings. The following are 
examples of meetings of the Board of Directors, or portions thereof, 
that may be closed to the public under these expedited procedures: sale 
of consolidated obligations, and review of examination, operating or 
condition reports of Banks.
    (2) A decision to close a meeting, or portion thereof, under 
paragraph (b) of this section shall be made at the beginning of the 
meeting, or portion thereof, by majority vote of the Directors.
    (3)(i) The Finance Board shall maintain a record of each of the 
votes taken by its Board of Directors to close a meeting, or portion 
thereof, or to withhold public access to information thereof, under 
paragraph (b) of this section.
    (ii) A copy of such record, reflecting the vote of each Board 
Director on the question of closing a meeting, or portion thereof, or 
withhholding public access to information thereof, under this paragraph 
(b) of this section, shall be made available to any member of the public 
upon request to the Secretary to the Board.
    (4) Public announcement of the time, place and subject matter of 
meetings, or portions thereof, closed under this paragraph (b) of this 
section shall be made at the earliest practical time.
    (c) Records of closed proceedings--(1) Transcripts or electronic 
recording. Except as provided in paragraph (c)(2) of this section, the 
Finance Board shall make and maintain a complete transcript or verbatim 
electronic recording of the proceedings at each meeting, or portion 
thereof, closed to public observation under paragraph (a) or (b) of this 
section.
    (2) Minutes. The Finance Board may make and maintain a set of 
complete minutes, in lieu of such transcript or electronic recording, 
with respect to meetings, or portions thereof, closed or information 
withheld under Sec. 912.4(a)(8), (9)(i) or (10). Such set of minutes 
shall fully and clearly describe all matters discussed and provide a 
full and accurate summary of any action taken, and the reasons therefor, 
including a description of each of the views expressed on any item and 
the record of any roll call vote (reflecting the vote of each Board 
Director on the question). All documents considered in connection

[[Page 61]]

with any action shall be identified in such set of minutes.
    (3) Availability of Records. (i) The transcript, electronic 
recording or set of minutes of an item discussed, or of testimony 
received, at a meeting, shall be made available promptly to the public 
through the Secretary to the Board except in cases where the Board of 
Directors determines that the item or testimony contains information 
which may be withheld under Sec. 912.4(a).
    (ii) Copies of such transcript, electronic recording or set of 
minutes, disclosing the identity of each speaker, shall be furnished to 
any person at the actual cost of duplication or transcription.
    (iii) The Finance Board shall maintain a complete copy of the 
transcript, verbatim electronic recording or complete set of minutes of 
each meeting, or portion thereof closed to the public, for at least two 
years after such meeting, or until one year after the conclusion of any 
proceeding of the Board of Directors with respect to which the meeting 
or portion thereof was held, whichever occurs later.
    (d) Legal certification for closing meeting. (1) For every meeting, 
or portion thereof, of the Board of Directors closed pursuant to 
paragraphs (a) or (b) of this section, the General Counsel (or in the 
General Counsel's absence or incapacity the senior legal officer 
available) shall publicly certify that the meeting or portion thereof 
may be closed to the public pursuant to the Sunshine Act and this part, 
and specifically state the relevant exemption in support thereof.
    (2) A copy of the certification, together with a statement from the 
Chairperson or, when appropriate, the Acting Chairperson or designee, 
setting forth the time and place of the meeting and the persons present, 
shall be retained in the permanent files of the Finance Board.

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



Sec. 912.6  Notice of meetings.

    (a) Scope of notice. (1) Except as provided in Sec. 912.4(a) that 
such information is determined to be exempt from disclosure, each open 
meeting of the Board of Directors, or each meeting closed under the 
regular procedures in Sec. 912.5(a), will be preceded by public notice 
as described in this section.
    (2) The notices for meetings of the Board of Directors closed under 
the expedited procedures pursuant to Sec. 912.5(b) will be made in 
accordance with Sec. 912.5(b)(4).
    (b) Content of notice. A notice of an open meeting or a meeting 
closed under the regular procedures in Sec. 912.5(a) will state the 
time, place, and subject matter of the meeting, whether it is to be open 
or closed to the public, and the name and telephone number of the 
Secretary to the Board for information about the meeting. Each such 
notice shall be posted in the lobby of the Finance Board offices, and 
may be made available in addition by other means or at other locations 
as deemed desirable. Immediately following the posting of each such 
notice, the Finance Board will publish the notice in the Federal 
Register.
    (c) Time--(1) Seven days notice. Except as provided in paragraph 
(c)(2) of this section, a public notice of open meetings or meetings 
closed under Sec. 912.5(a) will be made at least seven days in advance 
of each meeting.
    (2) Less than seven days notice. When a majority of the Board of 
Directors determine by recorded vote that Finance Board business 
requires a meeting to be called at any earlier date, the seven-day prior 
notice rule may be suspended and notice shall be made at the earliest 
practicable time.
    (d) Amendment of notice--(1) Time and place. A change in the time or 
place of a meeting following public notice may be made only if announced 
at the earliest practicable time.
    (2) Subject matter. A change in the subject matter of a meeting or a 
re-determination to open or close a meeting, or portions thereof, may be 
made, after public notice, only if:
    (i) At least a majority of the Board Directors determines by 
recorded vote that Finance Board business so requires and that no 
earlier notice of the change was possible; and
    (ii) The Finance Board publicly announces the change and the vote of 
each Board Director by posting a notice thereof in the lobby of the 
Finance

[[Page 62]]

Board offices at the earliest practicable time.
    (3) Timing of amendment. A public announcement of a change in either 
the time, place or subject matter of a meeting may be made after the 
commencement of the meeting affected.
    (4) Publication of amendment. Each change to a notice of a meeting 
will be published in the Federal Register, following the Finance Board's 
public announcement of the change.

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

[[Page 63]]



  SUBCHAPTER C_GOVERNANCE AND MANAGEMENT OF THE FEDERAL HOME LOAN BANKS





PART 914_DATA AVAILABILITY AND REPORTING--Table of Contents



Sec.
914.1 Regulatory Report defined.
914.2 Filing Regulatory Reports.
914.3 Access to books and records.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), and 1440.

    Source: 71 FR 35499, June 21, 2006, unless otherwise noted.



Sec. 914.1  Regulatory Report defined.

    (a) Definition. Regulatory Report 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:
    (1) Provision in the Act or other law, order, rule, or regulation;
    (2) Condition imposed in writing by the Finance Board in connection 
with the granting of any application or other request by a Bank; or
    (3) Written agreement entered into between the Finance Board and a 
Bank.
    (b) Examples. Regulatory Report includes:
    (1) Call reports and reports of instrument-level risk modeling data;
    (2) Reports related to a Bank's housing mission achievement, such as 
reports related to AMA, AHP, CIP, and other CICA programs; and
    (3) Reports submitted in response to requests to one or more Banks 
for information on a nonrecurring basis.



Sec. 914.2  Filing Regulatory Reports.

    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.



Sec. 914.3  Access to books and records.

    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.



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



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

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

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



Sec. 917.1  Definitions.

    As used in this part:
    Business risk means the risk of an adverse impact on a Bank's 
profitability resulting from external factors as may occur in both the 
short and long run.
    Community financial institution has the meaning set forth in Sec. 
925.1 of this chapter.
    Contingency liquidity means the sources of cash a Bank may use to 
meet its operational requirements when its access to the capital markets 
is impeded, and includes:
    (1) Marketable assets with a maturity of one year or less;
    (2) Self-liquidating assets with a maturity of seven days or less;

[[Page 64]]

    (3) Assets that are generally accepted as collateral in the 
repurchase agreement market; and
    (4) Irrevocable lines of credit from financial institutions rated 
not lower than the second highest credit rating category by an NRSRO.
    Credit risk means the risk that the market value, or estimated fair 
value if market value is not available, of an obligation will decline as 
a result of deterioration in creditworthiness.
    Immediate family member means a parent, sibling, spouse, child, 
dependent, or any relative sharing the same residence.
    Internal auditor means the individual responsible for the internal 
audit function at the Bank.
    Liquidity risk means the risk that a Bank will be unable to meet its 
obligations as they come due or meet the credit needs of its members and 
associates in a timely and cost-efficient manner.
    Market risk means the risk that the market value, or estimated fair 
value if market value is not available, of a Bank's portfolio will 
decline as a result of changes in interest rates, foreign exchange 
rates, equity and commodity prices.
    Operational liquidity means sources of cash from both a Bank's 
ongoing access to the capital markets and its holding of liquid assets 
to meet operational requirements in a Bank's normal course of business.
    Operations risk means the risk of an unexpected loss to a Bank 
resulting from human error, fraud, unenforceability of legal contracts, 
or deficiencies in internal controls or information systems.
    Reportable conditions means matters that represent significant 
deficiencies in the design or operation of the internal control system 
that could adversely affect a Bank's ability to record, process, 
summarize and report financial data consistent with the assertions of 
management.

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



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

    (a) Management of a Bank. The management of each Bank shall be 
vested in its board of directors. While Bank boards of directors may 
delegate the execution of operational functions to Bank personnel, the 
ultimate responsibility of each Bank's board of directors for that 
Bank's management is non-delegable.
    (b) Duties of Bank directors. Each Bank director shall have the duty 
to:
    (1) Carry out his or her duties as director in good faith, in a 
manner such director believes to be in the best interests of the Bank, 
and with such care, including reasonable inquiry, as an ordinarily 
prudent person in a like position would use under similar circumstances;
    (2) Administer the affairs of the Bank fairly and impartially and 
without discrimination in favor of or against any member;
    (3) At the time of appointment or election, or within a reasonable 
time thereafter, have a working familiarity with basic finance and 
accounting practices, including the ability to read and understand the 
Bank's balance sheet and income statement and to ask substantive 
questions of management and the internal and external auditors; and
    (4) Direct the operations of the Bank in conformity with the 
requirements set forth in the Act and this chapter.
    (c) Authority regarding staff and outside consultants. (1) In 
carrying out its duties and responsibilities under the Act and this 
chapter, each Bank's board of directors and all committees thereof shall 
have authority to retain staff and outside counsel, independent 
accountants, or other outside consultants at the expense of the Bank.
    (2) Bank staff providing services to the board of directors or any 
committee of the board under paragraph (c)(1) of this section may be 
required by the board of directors or such committee to report directly 
to the board or such committee, as appropriate.



Sec. 917.3  Risk management.

    (a) Risk management policy--(1) Adoption. Beginning August 29, 2000, 
each Bank's board of directors shall have in effect at all times a risk 
management policy that addresses the Bank's exposure to credit risk, 
market risk, liquidity risk, business risk and operations

[[Page 65]]

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

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



Sec. 917.4  Bank Member Products Policy.

    (a) Adoption and review of member products policy--(1) Adoption. 
Beginning November 15, 2000, each Bank's board of directors shall have 
in effect at all times a policy that addresses the Bank's management of 
products offered by the Bank to members and housing associates, 
including but not limited to advances, standby letters of credit and 
acquired member assets, consistent with the requirements of the Act, 
paragraph (b) of this section, and all applicable Finance Board 
regulations and policies.
    (2) Review and compliance. Each Bank's board of directors shall:
    (i) Review the Bank's member products policy annually;
    (ii) Amend the member products policy as appropriate; and
    (iii) Re-adopt the member products policy, including interim 
amendments, not less often than every three years.
    (b) Member products policy requirements. In addition to meeting any 
other

[[Page 66]]

requirements set forth in this chapter, each Bank's member products 
policy shall:
    (1) Address credit underwriting criteria to be applied in evaluating 
applications for advances, standby letters of credit, and renewals;
    (2) Address appropriate levels of collateralization, valuation of 
collateral and discounts applied to collateral values for advances and 
standby letters of credit;
    (3) Address advances-related fees to be charged by each Bank, 
including any schedules or formulas pertaining to such fees;
    (4) Address standards and criteria for pricing member products, 
including differential pricing of advances pursuant to Sec. 950.5(b)(2) 
of this chapter, and criteria regarding the pricing of standby letters 
of credit, including any special pricing provisions for standby letters 
of credit that facilitate the financing of projects that are eligible 
for any of the Banks' CICA programs under part 952 of this chapter;
    (5) Provide that, for any draw made by a beneficiary under a standby 
letter of credit, the member will be charged a processing fee calculated 
in accordance with the requirements of Sec. 975.6(b) of this chapter;
    (6) Address the maintenance of appropriate systems, procedures and 
internal controls; and
    (7) Address the maintenance of appropriate operational and personnel 
capacity.

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



Sec. 917.5  Strategic business plan.

    (a) Adoption of strategic business plan. Beginning on July 30, 2000, 
each Bank's board of directors shall have in effect at all times a 
strategic business plan that describes how the business activities of 
the Bank will achieve the mission of the Bank consistent with part 940 
of this chapter. Specifically, each Bank's strategic business plan 
shall:
    (1) Enumerate operating goals and objectives for each major business 
activity and for all new business activities, which must include plans 
for maximizing activities that enhance the carrying out of the mission 
of the Bank, consistent with part 940 of this chapter;
    (2) Discuss how the Bank will:
    (i) Address credit needs and market opportunities identified through 
ongoing market research and consultations with members, associates and 
public and private organizations; and
    (ii) Notify members and associates of relevant programs and 
initiatives;
    (3) Establish quantitative performance goals for Bank products 
related to multi-family housing, small business, small farm and small 
agri-business lending;
    (4) Describe any proposed new business activities or enhancements of 
existing activities; and
    (5) Be supported by appropriate and timely research and analysis of 
relevant market developments and member and associate demand for Bank 
products and services.
    (b) Review and monitoring. Each Bank's board of directors shall:
    (1) Review the Bank's strategic business plan at least annually;
    (2) Amend the strategic business plan as appropriate;
    (3) Re-adopt the Bank's strategic business plan, including interim 
amendments, not less often than every three years; and
    (4) Establish management reporting requirements and monitor 
implementation of the strategic business plan and the operating goals 
and objectives contained therein.
    (c) Report to Finance Board. Each Bank shall submit to the Finance 
Board annually a report analyzing and describing the Bank's performance 
in achieving the goals described in paragraph (a)(3) of this section.

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



Sec. 917.6  Internal control system.

    (a) Establishment and maintenance. (1) Each Bank shall establish and 
maintain an effective internal control system that addresses:
    (i) The efficiency and effectiveness of Bank activities;
    (ii) The safeguarding of Bank assets;
    (iii) The reliability, completeness and timely reporting of 
financial and management information and transparency of such 
information to the

[[Page 67]]

Bank's board of directors and to the Finance Board; and
    (iv) Compliance with applicable laws, regulations, policies, 
supervisory determinations and directives of the Bank's board of 
directors and senior management.
    (2) Ongoing internal control activities necessary to maintain the 
internal control system required under paragraph (a)(1) of this section 
shall include, but are not limited to:
    (i) Top level reviews by the Bank's board of directors and senior 
management, including review of financial presentations and performance 
reports;
    (ii) Activity controls, including review of standard performance and 
exception reports by department-level management on an appropriate 
periodic basis;
    (iii) Physical and procedural controls to safeguard, and prevent the 
unauthorized use of, assets;
    (iv) Monitoring for compliance with the risk tolerance limits set 
forth in the Bank's risk management policy;
    (v) Any required approvals and authorizations for specific 
activities; and
    (vi) Any required verifications and reconciliations for specific 
activities.
    (b) Internal control responsibilities of Banks' boards of directors. 
Each Bank's board of directors shall ensure that the internal control 
system required under paragraph (a)(1) of this section is established 
and maintained, and shall oversee senior management's implementation of 
such a system on an ongoing basis, by:
    (1) Conducting periodic discussions with senior management regarding 
the effectiveness of the internal control system;
    (2) Ensuring that an internal audit of the internal control system 
is performed annually and that such annual audit is reasonably designed 
to be effective and comprehensive;
    (3) Requiring that internal control deficiencies be reported to the 
Bank's board of directors in a timely manner and that such deficiencies 
are addressed promptly;
    (4) Conducting a timely review of evaluations of the effectiveness 
of the internal control system made by internal auditors, external 
auditors and Finance Board examiners;
    (5) Directing senior management to address promptly and effectively 
recommendations and concerns expressed by internal auditors, external 
auditors and Finance Board examiners regarding weaknesses in the 
internal control system;
    (6) Reporting any internal control deficiencies found, and the 
corrective action taken, to the Finance Board in a timely manner;
    (7) Establishing, documenting and communicating an organizational 
structure that clearly shows lines of authority within the Bank, 
provides for effective communication throughout the Bank, and ensures 
that there are no gaps in the lines of authority;
    (8) Reviewing all delegations of authority to specific personnel or 
committees and requiring that such delegations state the extent of the 
authority and responsibilities delegated; and
    (9) Establishing reporting requirements, including specifying the 
nature and frequency of reports it receives.
    (c) Internal control responsibilities of Banks' senior management. 
Each Bank's senior management shall be responsible for carrying out the 
directives of the Bank's board of directors, including the 
establishment, implementation and maintenance of the internal control 
system required under paragraph (a)(1) of this section, by:
    (1) Establishing, implementing and effectively communicating to Bank 
personnel policies and procedures that are adequate to ensure that 
internal control activities necessary to maintain an effective internal 
control system, including the activities enumerated in paragraph (a)(2) 
of this section, are an integral part of the daily functions of all Bank 
personnel;
    (2) Ensuring that all Bank personnel fully understand and comply 
with all policies, procedures and legal requirements applicable to their 
positions and responsibilities;
    (3) Ensuring that there is appropriate segregation of duties among 
Bank personnel and that personnel are not assigned conflicting 
responsibilities;
    (4) Establishing effective paths of communication upward, downward 
and

[[Page 68]]

across the organization in order to ensure that Bank personnel receive 
necessary and appropriate information, including:
    (i) Information relating to the operational policies and procedures 
of the Bank;
    (ii) Information relating to the actual operational performance of 
the Bank;
    (iii) Adequate and comprehensive internal financial, operational and 
compliance data; and
    (iv) External market information about events and conditions that 
are relevant to decision making;
    (5) Developing and implementing procedures that translate the major 
business strategies and policies established by the Bank's board of 
directors into operating standards;
    (6) Ensuring adherence to the lines of authority and responsibility 
established by the Bank's board of directors;
    (7) Overseeing the implementation and maintenance of management 
information and other systems;
    (8) Establishing and implementing an effective system to track 
internal control weaknesses and the actions taken to correct them; and
    (9) Monitoring and reporting to the Bank's board of directors the 
effectiveness of the internal control system on an ongoing basis.

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



Sec. 917.7  Audit committees.

    (a) Establishment. The board of directors of each Bank shall 
establish an audit committee, consistent with the requirements set forth 
in this section.
    (b) Composition. (1) The audit committee shall comprise five or more 
persons drawn from the Bank's board of directors, each of whom shall 
meet the criteria of independence set forth in paragraph (c) of this 
section.
    (2) The audit committee shall include a balance of representatives 
of:
    (i) Community financial institutions and other members; and
    (ii) Appointive and elective directors of the Bank.
    (3) The terms of audit committee members shall be appropriately 
staggered so as to provide for continuity of service.
    (4) At least one member of the audit committee shall have extensive 
accounting or related financial management experience.
    (c) Independence. Any member of the Bank's board of directors shall 
be considered to be sufficiently independent to serve as a member of the 
audit committee if that director does not have a disqualifying 
relationship with the Bank or its management that would interfere with 
the exercise of that director's independent judgment. Such disqualifying 
relationships include, but are not limited to:
    (1) Being employed by the Bank in the current year or any of the 
past five years;
    (2) Accepting any compensation from the Bank other than compensation 
for service as a board director;
    (3) Serving or having served in any of the past five years as a 
consultant, advisor, promoter, underwriter, or legal counsel of or to 
the Bank; or
    (4) Being an immediate family member of an individual who is, or has 
been in any of the past five years, employed by the Bank as an executive 
officer.
    (d) Charter. (1) The audit committee of each Bank shall adopt, and 
the Bank's board of directors shall approve, a formal written charter 
that specifies the scope of the audit committee's powers and 
responsibilities, as well as the audit committee's structure, processes 
and membership requirements.
    (2) The audit committee and the board of directors of each Bank 
shall:
    (i) Review, assess the adequacy of and, where appropriate, amend the 
Bank's audit committee charter on an annual basis;
    (ii) Amend the audit committee charter as appropriate; and
    (iii) Re-adopt and re-approve, respectively, the Bank's audit 
committee charter not less often than every three years.
    (3) Each Bank's audit committee charter shall:
    (i) Provide that the audit committee has the responsibility to 
select, evaluate and, where appropriate, replace the internal auditor 
and that the internal auditor may be removed only with the approval of 
the audit committee;

[[Page 69]]

    (ii) Provide that the internal auditor shall report directly to the 
audit committee on substantive matters and that the internal auditor is 
ultimately accountable to the audit committee and board of directors; 
and
    (iii) Provide that both the internal auditor and the external 
auditor shall have unrestricted access to the audit committee without 
the need for any prior management knowledge or approval.
    (e) Duties. Each Bank's audit committee shall have the duty to:
    (1) Direct senior management to maintain the reliability and 
integrity of the accounting policies and financial reporting and 
disclosure practices of the Bank;
    (2) Review the basis for the Bank's financial statements and the 
external auditor's opinion rendered with respect to such financial 
statements (including the nature and extent of any significant changes 
in accounting principles or the application therein) and ensure that 
policies are in place that are reasonably designed to achieve disclosure 
and transparency regarding the Bank's true financial performance and 
governance practices;
    (3) Oversee the internal audit function by:
    (i) Reviewing the scope of audit services required, significant 
accounting policies, significant risks and exposures, audit activities 
and audit findings;
    (ii) Assessing the performance and determining the compensation of 
the internal auditor; and
    (iii) Reviewing and approving the internal auditor's work plan;
    (4) Oversee the external audit function by:
    (i) Approving the external auditor's annual engagement letter;
    (ii) Reviewing the performance of the external auditor; and
    (iii) Making recommendations to the Bank's board of directors 
regarding the appointment, renewal, or termination of the external 
auditor;
    (5) Provide an independent, direct channel of communication between 
the Bank's board of directors and the internal and external auditors;
    (6) Conduct or authorize investigations into any matters within the 
audit committee's scope of responsibilities;
    (7) Ensure that senior management has established and is maintaining 
an adequate internal control system within the Bank by:
    (i) Reviewing the Bank's internal control system and the resolution 
of identified material weaknesses and reportable conditions in the 
internal control system, including the prevention or detection of 
management override or compromise of the internal control system; and
    (ii) Reviewing the programs and policies of the Bank designed to 
ensure compliance with applicable laws, regulations and policies and 
monitoring the results of these compliance efforts;
    (8) Review the policies and procedures established by senior 
management to assess and monitor implementation of the Bank's strategic 
business plan and the operating goals and objectives contained therein; 
and
    (9) Report periodically its findings to the Bank's board of 
directors.
    (f) Meetings. The audit committee shall prepare written minutes of 
each audit committee meeting.

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



Sec. 917.8  Budget preparation.

    (a) Adoption of budgets. Each Bank's board of directors shall be 
responsible for the adoption of an annual operating expense budget and a 
capital expenditures budget for the Bank, and any subsequent amendments 
thereto, consistent with the requirements of the Act, this section, 
other regulations and policies of the Finance Board, and with the Bank's 
responsibility to protect both its members and the public interest by 
keeping its costs to an efficient and effective minimum.
    (b) No delegation of budget authority. A Bank's board of directors 
may not delegate the authority to approve the Bank's annual budgets, or 
any subsequent amendments thereto, to Bank officers or other Bank 
employees.
    (c) Interest rate scenario. A Bank's annual budgets shall be 
prepared based upon an interest rate scenario as determined by the Bank.

[[Page 70]]

    (d) Board approval for deviations. A Bank may not exceed its total 
annual operating expense budget or its total annual capital expenditures 
budget without prior approval by the Bank's board of directors of an 
amendment to such budget.



Sec. 917.9  Dividends.

    (a) A Bank's board of directors may declare and pay a dividend only 
from previously retained earnings or current net earnings and only 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.
    (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.
    (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.

[71 FR 78051, Dec. 28, 2006]



Sec. 917.10  Bank bylaws.

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

[[Page 71]]



   SUBCHAPTER D_FEDERAL HOME LOAN BANK MEMBERS AND HOUSING ASSOCIATES



[[Page 72]]



    SUBCHAPTER E_FEDERAL HOME LOAN BANK RISK MANAGEMENT AND CAPITAL 
                                STANDARDS





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



    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1436(a), 1440, 
1443, and 1446.



Sec. 930.1  Definitions.

    As used in this subchapter:
    Affiliated counterparty means a counterparty of a Bank that 
controls, is controlled by or is under common control with another 
counterparty of the Bank. For the purposes of this definition only, 
direct or indirect ownership (including beneficial ownership) of more 
than 50 percent of the voting securities or voting interests of an 
entity constitutes control.
    Certain drawdown means a legally binding agreement that commits the 
Bank to make an advance or acquire a loan, at or by a specified future 
date.
    Charges against the capital of the Bank means an other than 
temporary decline in the Bank's total equity that causes the value of 
total equity to fall below the Bank's aggregate capital stock amount.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified by Sec. 931.1(a) of 
this subchapter.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified by Sec. 931.1(b) of 
this subchapter.
    Contingency liquidity means the sources of cash a Bank may use to 
meet its operational requirements when its access to the capital markets 
is impeded, and includes:
    (1) Marketable assets with a maturity of one year or less;
    (2) Self-liquidating assets with a maturity of seven days or less;
    (3) Assets that are generally accepted as collateral in the 
repurchase agreement market; and
    (4) Irrevocable lines of credit from financial institutions rated 
not lower than the second highest credit rating category by an NRSRO.
    Credit derivative contract means a derivative contract that 
transfers credit risk.
    Credit risk means the risk that the market value, or estimated fair 
value if market value is not available, of an obligation will decline as 
a result of deterioration in creditworthiness.
    Derivative contract means generally a financial contract the value 
of which is derived from the values of one or more underlying assets, 
reference rates, or indices of asset values, or credit-related events. 
Derivative contracts include interest rate, foreign exchange rate, 
equity, precious metals, commodity, and credit contracts, and any other 
instruments that pose similar risks.
    Exchange rate contracts include cross-currency interest-rate swaps, 
forward foreign exchange rate contracts, currency options purchased, and 
any similar instruments that give rise to similar risks.
    General allowance for losses means an allowance established by a 
Bank in accordance with GAAP for losses, but which does not include any 
amounts held against specific assets of the Bank.
    Government Sponsored Enterprise, or GSE, means a United States 
Government-sponsored agency or instrumentality originally established or 
chartered to serve public purposes specified by the United States 
Congress, but whose obligations are not obligations of the United States 
and are not guaranteed by the United States.
    Interest rate contracts include, single currency interest-rate 
swaps, basis swaps, forward rate agreements, interest-rate options, and 
any similar instrument that gives rise to similar risks, including when-
issued securities.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest rating category 
by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a

[[Page 73]]

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

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54107, Oct. 26, 2001; 66 
FR 66728, Dec. 27, 2001; 67 FR 12849, Mar. 20, 2002; 71 FR 78051, Dec. 
28, 2006]



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



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

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

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

[[Page 74]]



Sec. 931.1  Classes of capital stock.

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



Sec. 931.2  Issuance of capital stock.

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



Sec. 931.3  Minimum investment in capital stock.

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

[[Page 75]]

member in accordance with the Bank's capital plan.

[66 FR 8310, Jan. 30, 2001, as amended at 70 FR 9510, Feb. 28, 2005]



Sec. 931.4  Dividends.

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

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



Sec. 931.5  Liquidation, merger, or consolidation.

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



Sec. 931.6  Transfer of capital stock.

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

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



Sec. 931.7  Redemption and repurchase of capital stock.

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

[[Page 76]]

shall not be obligated to redeem its capital stock other than in 
accordance with this paragraph.
    (b) Repurchase. A Bank, in its discretion and without regard to the 
applicable redemption periods, may repurchase from a member any 
outstanding Class A or Class B capital stock that is in excess of the 
amount of that class of Bank stock that the member is required to hold 
as a minimum investment, in accordance with the capital plan of that 
Bank. A Bank undertaking such a stock repurchase at its own initiative 
shall provide the member with reasonable notice prior to repurchasing 
any excess stock, with the period of such notice to be specified in the 
Bank's capital plan, and shall pay the stated par value of that stock to 
the member in cash. For purposes of this section, any Bank stock owned 
by a member shall be considered to be excess stock if the member is not 
required to hold such stock either as a condition of remaining a member 
of the Bank or as a condition of obtaining advances or transacting other 
business with the Bank. A member's submission of a notice of intent to 
withdraw from membership, or its termination of membership in any other 
manner, shall not, in and of itself, cause any Bank stock to be deemed 
excess stock for purposes of this section.
    (c) Limitation. In no event may a Bank redeem or repurchase any 
stock if, following the redemption or repurchase, the Bank would fail to 
meet any minimum capital requirement, or if the member would fail to 
maintain its minimum investment in the stock of the Bank, as required by 
Sec. 931.3.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001; 70 
FR 9510, Feb. 28, 2005]



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

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

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



Sec. 931.9  Transition provision.

    (a) In general. Each Bank shall comply with the minimum leverage and 
risk-based capital requirements specified in Sec. 932.2 and Sec. 932.3 
of this chapter, respectively, and each member shall comply with the 
minimum investment established in the capital plan, as of the effective 
date of that Bank's capital plan. The effective date of a Bank's capital 
plan shall be the date on which the Bank first issues any Class A or 
Class B stock. Prior to the effective date, the issuance and retention 
of Bank stock shall be as provided in Sec. 925.20 and Sec. 925.22 of 
this chapter.

[[Page 77]]

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



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



Sec.
932.1 Risk management.
932.2 Total capital requirement.
932.3 Risk-based capital requirement.
932.4 Credit risk capital requirement.
932.5 Market risk capital requirement.
932.6 Operations risk capital requirement.
932.7 Reporting requirements.
932.8 Minimum liquidity requirements.
932.9 Limits on unsecured extensions of credit to one counterparty or 
          affiliated counterparties; reporting requirements for total 
          extensions of credit to one counterparty or affiliated 
          counterparties.

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

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



Sec. 932.1  Risk management.

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



Sec. 932.2  Total capital requirement.

    (a) Each Bank shall maintain at all times:
    (1) Total capital in an amount at least equal to 4.0 percent of the 
Bank's total assets; and
    (2) A leverage ratio of total capital to total assets of at least 
5.0 percent of the Bank's total assets. For purposes of determining the 
leverage ratio, total capital shall be computed by multiplying the 
Bank's permanent capital

[[Page 78]]

by 1.5 and adding to this product all other components of total capital.
    (b) For reasons of safety and soundness, the Finance Board may 
require an individual Bank to have and maintain a greater amount of 
total capital than mandated by paragraph (a)(1) of this section.



Sec. 932.3  Risk-based capital requirement.

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



Sec. 932.4  Credit risk capital requirement.

    (a) General requirement. Each Bank's credit risk capital requirement 
shall be equal to the sum of the Bank's credit risk capital charges for 
all assets, off-balance sheet items and derivative contracts.
    (b) Credit risk capital charge for assets. Except as provided in 
paragraph (i) of this section, each Bank's credit risk capital charge 
for an asset shall be equal to the book value of the asset multiplied by 
the credit risk percentage requirement assigned to that asset pursuant 
to paragraph (e)(2) of this section.
    (c) Credit risk capital charge for off-balance sheet items. Each 
Bank's credit risk capital charge for an off-balance sheet item shall be 
equal to the credit equivalent amount of such item, as determined 
pursuant to paragraph (f) of this section multiplied by the credit risk 
percentage requirement assigned to that item pursuant to paragraph 
(e)(2) of this section, except that the credit risk percentage 
requirement applied to the credit equivalent amount for a stand-by 
letter of credit shall be that for an advance with the same remaining 
maturity as that stand-by letter of credit.
    (d) Credit risk capital charge for derivative contracts--(1) 
Derivative contracts with non-member counterparties. Except as provided 
in paragraph (j) of this section, each Bank's credit risk capital charge 
for a specific derivative contract entered into between a Bank and a 
non-member institution shall equal the sum of :
    (i) The current credit exposure for the derivative contract, 
calculated in accordance with paragraph (g) or (h) of this section, as 
applicable, multiplied by the credit risk percentage requirement 
assigned to that derivative contract pursuant to paragraph (e)(2) of 
this section, provided that:
    (A) The remaining maturity of the derivative contract shall be 
deemed to be less than one year for the purpose of applying Table 1.1 or 
1.3 of this part; and
    (B) Any collateral held against an exposure from the derivative 
contract shall be applied to reduce the portion of the credit risk 
capital charge corresponding to the current credit exposure in 
accordance with the requirements of paragraph (e)(2)(ii)(B) of this 
section; plus
    (ii) The potential future credit exposure for the derivative 
contract calculated in accordance with paragraph (g) or (h) of this 
section, as applicable, multiplied by the credit risk percentage 
requirement assigned to that derivative contract pursuant to paragraph 
(e)(2) of this section, where the actual remaining maturity of the 
derivative contract is used to apply Table 1.1 or Table 1.3 of this 
part.
    (2) Derivative contracts with a member. Except as provided in 
paragraph (j) of this section, the credit risk capital charge for any 
derivative contract entered into between a Bank and one of its member 
institutions shall be calculated in accordance with paragraph (d)(1) of 
this section. However, the credit risk percentage requirements used in 
the calculations shall be found in Table 1.1 of this part, which sets 
forth the credit risk percentage requirements for advances.
    (e) Determination of credit risk percentage requirements--(1) 
Finance Board determination of credit risk percentage requirements. The 
Finance Board shall determine, and update periodically, the

[[Page 79]]

credit risk percentage requirements set forth in Tables 1.1 through 1.4 
of this part applicable to a Bank's assets, off-balance sheet items, and 
derivative contracts.
    (2) Bank determination of credit risk percentage requirements. (i) 
Each Bank shall determine the credit risk percentage requirement 
applicable to each asset, each off-balance sheet item and each 
derivative contract by identifying the category set forth in Table 1.1, 
Table 1.2, Table 1.3 or Table 1.4 of this part to which the asset, item 
or derivative belongs, given, if applicable, its demonstrated credit 
rating and remaining maturity (as determined in accordance with 
paragraphs (e)(2)(ii) and (e)(2)(iii) of this section). The applicable 
credit risk percentage requirement for an asset, off-balance sheet item 
or derivative contract shall be used to calculate the credit risk 
capital charge for such asset, item, or derivative contract in 
accordance with paragraphs (b), (c) or (d) of this section respectively. 
The relevant categories and credit risk percentage requirements are 
provided in the following Tables 1.1 through 1.4 of this part:

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


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


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


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

    (ii) When determining the applicable credit risk percentage 
requirement from Tables 1.2 or 1.3 of this part, each Bank shall apply 
the following criteria:
    (A) For assets or items that are rated directly by an NRSRO, the 
credit rating shall be the NRSRO's credit rating for the asset or item 
as determined in accordance with paragraph (e)(2)(iii) of this section.
    (B) When using Table 1.3 of this part, for an asset, off-balance 
sheet item, or

[[Page 80]]

derivative contract that is not rated directly by an NRSRO, but for 
which an NRSRO rating has been assigned to any corresponding obligor 
counterparty, third party guarantor, or collateral backing the asset, 
item, or derivative, the credit rating that shall apply to the asset, 
item, or derivative, or portion of the asset, item, or derivative so 
guaranteed or collateralized, shall be the credit rating corresponding 
to such obligor counterparty, third party guarantor, or underlying 
collateral, as determined in accordance with paragraph (e)(2)(iii) of 
this section. If there are multiple obligor counterparties, third party 
guarantors, or collateral instruments backing an asset, item, or 
derivative not rated directly by an NRSRO, or any specific portion 
thereof, then the credit rating that shall apply to that asset, item, or 
derivative or specific portion thereof, shall be the highest credit 
rating among such obligor counterparties, third party guarantors, or 
collateral instruments, as determined in accordance with paragraph 
(e)(2)(iii) of this section. Assets, items or derivatives shall be 
deemed to be backed by collateral for purposes of this paragraph if the 
collateral is:
    (1) Actually held by the Bank or an independent, third-party 
custodian, or, if permitted under the Bank's collateral agreement with 
such party, by the Bank's member or an affiliate of that member where 
the term ``affiliate'' has the same meaning as in Sec. 950.1 of this 
chapter;
    (2) Legally available to absorb losses;
    (3) Of a readily determinable value at which it can be liquidated by 
the Bank;
    (4) Held in accordance with the provisions of the Bank's member 
products policy established pursuant to Sec. 917.4 of this chapter; and
    (5) Subject to an appropriate discount to protect against price 
decline during the holding period, as well as the costs likely to be 
incurred in the liquidation of the collateral.
    (C) When using Table 1.3 of this part, for an asset with a short-
term credit rating from a given NRSRO, the credit risk percentage 
requirement shall be based on the remaining maturity of the asset and 
the long-term credit rating provided for the issuer of the asset by the 
same NRSRO. Should the issuer of the short-term asset not have a long-
term credit rating, the long-term equivalent rating shall be determined 
as follows:
    (1) The highest short-term credit rating shall be equivalent to the 
third highest long-term rating;
    (2) The second highest short-term rating shall be equivalent to the 
fourth highest long-term rating;
    (3) The third highest short-term rating shall be equivalent to the 
fourth highest long-term rating; and
    (4) If the short-term rating is downgraded to below investment grade 
after acquisition by the Bank, the short-term rating shall be equivalent 
to the second highest below investment grade long-term rating.
    (D) For residential mortgage assets and other assets or items, or 
relevant portion of an asset or item, that do not meet the requirements 
of paragraphs (e)(2)(ii)(A), (e)(2)(ii)(B) or (e)(2)(ii)(C) of this 
section, and are not identified in Tables 1.1 or Table 1.4 of this part, 
each Bank shall determine its own credit rating for such assets or 
items, or relevant portion thereof, using credit rating standards 
available from an NRSRO or other similar standards. This credit rating, 
as determined by the Bank, shall be used to identify the applicable 
credit risk percentage requirement under Table 1.2 of this part for 
residential mortgage assets, or under Table 1.3 of this part for all 
other assets or items.
    (E) The credit risk percentage requirement for mortgage assets that 
are acquired member assets described in Sec. 955.2 of this chapter 
shall be assigned from Table 1.2 of this part based on the rating of 
those assets after taking into account any credit enhancement required 
by Sec. 955.3 of this chapter. Should a Bank further enhance a pool of 
loans through the purchase of insurance or by some other means, the 
credit risk percentage requirement shall be based on the rating of such 
pool after the supplemental credit enhancement, except that the Finance 
Board retains the right to adjust the credit capital charge to account 
for any deficiencies with the supplemental enhancement on a case-by-case 
basis.

[[Page 81]]

    (iii) In determining the credit ratings under paragraph 
(e)(2)(ii)(A), (e)(2)(ii)(B) and (e)(2)(ii)(C) of this section, each 
Bank shall apply the following criteria:
    (A) The most recent credit rating from a given NRSRO shall be 
considered. If only one NRSRO has rated an asset or item, that NRSRO's 
rating shall be used. If an asset or item has received credit ratings 
from more than one NRSRO, the lowest credit rating from among those 
NRSROs shall be used.
    (B) Where a credit rating has a modifier (e.g., A-1+ for short-term 
ratings and A+ or A- for long-term ratings) the credit rating is deemed 
to be the credit rating without the modifier (e.g., A-1+ = A-1 and A+ or 
A-= A);
    (f) Calculation of credit equivalent amount for off-balance sheet 
items--(1) General requirement. The credit equivalent amount for an off-
balance sheet item shall be determined by a Finance Board approved model 
or shall be equal to the face amount of the instrument multiplied by the 
credit conversion factor assigned to such risk category of instruments, 
subject to the exceptions in paragraph (f)(2) of this section, provided 
in the following Table 2 of this part:

     Table 2--Credit Conversion Factors for Off-Balance Sheet Items
------------------------------------------------------------------------
                                                              Credit
                                                            conversion
                       Instrument                           factor  (In
                                                             percent)
------------------------------------------------------------------------
Asset sales with recourse where the credit risk remains              100
 with the Bank..........................................
Commitments to make advances subject to certain drawdown
Commitments to acquire loans subject to certain drawdown
Standby letters of credit...............................              50
Other commitments with original maturity of over one
 year...................................................
Other commitments with original maturity of one year or               20
 less...................................................
------------------------------------------------------------------------

    (2) Exceptions. The credit conversion factor shall be zero for Other 
Commitments With Original Maturity of Over One Year and Other 
Commitments With Original Maturity of One Year or Less, for which credit 
conversion factors of 50 percent or 20 percent would otherwise apply, 
that are unconditionally cancelable, or that effectively provide for 
automatic cancellation, due to the deterioration in a borrower's 
creditworthiness, at any time by the Bank without prior notice.
    (g) Calculation of current and potential future credit exposures for 
single derivative contracts--(1) Current credit exposure. The current 
credit exposure for a derivative contract that is not subject to a 
qualifying bilateral netting contract described in paragraph (h)(3) of 
this section shall be:
    (i) If the mark-to-market value of the contract is positive, the 
mark-to-market value of the contract; or
    (ii) If the mark-to-market value of the contract is zero or 
negative, zero.
    (2) Potential future credit exposure. (i) The potential future 
credit exposure for a single derivative contract, including a derivative 
contract with a negative mark-to-market value, shall be calculated using 
an internal model approved by the Finance Board or, in the alternative, 
by multiplying the effective notional amount of the derivative contract 
by one of the assigned credit conversion factors, modified as may be 
required by paragraph (g)(2)(ii) of this section, for the appropriate 
category as provided in the following Table 3 of this part:

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


[[Page 82]]

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

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


where:
    (i) Anet is the potential future credit exposure for an 
individual derivative contract subject to the qualifying bilateral 
netting contract;
    (ii) Agross is the gross potential future credit 
exposure, i.e., the potential future credit exposure for the individual 
derivative contract, calculated in accordance with paragraph (g)(2) of 
this section but without regard to the fact that the contract is subject 
to the qualifying bilateral netting contract;
    (iii) NGR is the net to gross ratio, i.e., the ratio of the net 
current credit exposure of all the derivative contracts subject to the 
qualifying bilateral netting contract, calculated in accordance with 
paragraph (h)(1) of this section, to the gross current credit exposure; 
and
    (iv) The gross current credit exposure is the sum of the positive 
current credit exposures of all the individual derivative contracts 
subject to the qualifying bilateral netting contract, calculated in 
accordance with paragraph (g)(1) of this section but without regard to 
the fact that the contract is subject to the qualifying bilateral 
netting contract.
    (3) Qualifying bilateral netting contract. A bilateral netting 
contract shall be considered a qualifying bilateral netting contract if 
the following conditions are met:
    (i) The netting contract is in writing;
    (ii) The netting contract is not subject to a walkaway clause;

[[Page 83]]

    (iii) The netting contract provides that the Bank would have a 
single legal claim or obligation either to receive or to pay only the 
net amount of the sum of the positive and negative mark-to-market values 
on the individual derivative contracts covered by the netting contract 
in the event that a counterparty, or a counterparty to whom the netting 
contract has been assigned, fails to perform due to default, insolvency, 
bankruptcy, or other similar circumstance;
    (iv) The Bank obtains a written and reasoned legal opinion that 
represents, with a high degree of certainty, that in the event of a 
legal challenge, including one resulting from default, insolvency, 
bankruptcy, or similar circumstances, the relevant court and 
administrative authorities would find the Bank's exposure to be the net 
amount under:
    (A) The law of the jurisdiction by which the counterparty is 
chartered or the equivalent location in the case of non-corporate 
entities, and if a branch of the counterparty is involved, then also 
under the law of the jurisdiction in which the branch is located;
    (B) The law of the jurisdiction that governs the individual 
derivative contracts covered by the netting contract; and
    (C) The law of the jurisdiction that governs the netting contract;
    (v) The Bank establishes and maintains procedures to monitor 
possible changes in relevant law and to ensure that the netting contract 
continues to satisfy the requirements of this section; and
    (vi) The Bank maintains in its files documentation adequate to 
support the netting of a derivative contract.
    (i) Credit risk capital charge for assets hedged with credit 
derivatives--(1) Credit derivatives with a remaining maturity of one 
year or more. The credit risk capital charge for an asset that is hedged 
with a credit derivative that has a remaining maturity of one year or 
more may be reduced only in accordance with paragraph (i)(3) or (i)(4) 
of this section and only if the credit derivative provides substantial 
protection against credit losses.
    (2) Credit derivatives with a remaining maturity of less than one 
year. The credit risk capital charge for an asset that is hedged with a 
credit derivative that has a remaining maturity of less than one year 
may be reduced only in accordance with paragraph (i)(3) of this section 
and only if the remaining maturity on the credit derivative is identical 
to or exceeds the remaining maturity of the hedged asset and the credit 
derivative provides substantial protection against credit losses.
    (3) Capital charge reduced to zero. The credit risk capital charge 
for an asset shall be zero if a credit derivative is used to hedge the 
credit risk on that asset in accordance with paragraph (i)(1) or (i)(2) 
of this section, provided that:
    (i) The remaining maturity for the credit derivative used for the 
hedge is identical to or exceeds the remaining maturity for the hedged 
asset, and either:
    (A) The asset referenced in the credit derivative is identical to 
the hedged asset; or
    (B) The asset referenced in the credit derivative is different from 
the hedged asset, but only if the asset referenced in the credit 
derivative and the hedged asset have been issued by the same obligor, 
the asset referenced in the credit derivative ranks pari passu to or 
more junior than the hedged asset and has the same maturity as the 
hedged asset, and cross-default clauses apply; and
    (ii) The credit risk capital charge for the credit derivative 
contract calculated pursuant to paragraph (d) of this section is still 
applied.
    (4) Capital charge reduction in certain other cases. The credit risk 
capital charge for an asset hedged with a credit derivative in 
accordance with paragraph (i)(1) of this section shall equal the sum of 
the credit risk capital charges for the hedged and unhedged portion of 
the asset provided that:
    (i) The remaining maturity for the credit derivative is less than 
the remaining maturity for the hedged asset and either:
    (A) The asset referenced in the credit derivative is identical to 
the hedged asset; or
    (B) The asset referenced in the credit derivative is different from 
the hedged asset, but only if the asset referenced in the credit 
derivative and the hedged

[[Page 84]]

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

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



Sec. 932.5  Market risk capital requirement.

    (a) General requirement. (1) Each Bank's market risk capital 
requirement shall equal the sum of:
    (i) The market value of the Bank's portfolio at risk from movements 
in interest rates, foreign exchange rates, commodity prices, and equity 
prices that could occur during periods of market stress, where the 
market value of the Bank's portfolio at risk is determined using an 
internal market risk model that fulfills the requirements of paragraph 
(b) of this section and that has been approved by the Finance Board; and
    (ii) The amount, if any, by which the Bank's current market value of 
total capital is less than 85 percent of the Bank's book value of total 
capital, where:
    (A) The current market value of the total capital is calculated by 
the Bank using the internal market risk model approved by the Finance 
Board under paragraph (d) of this section; and
    (B) The book value of total capital is the same as the amount of 
total capital reported by the Bank to the Finance Board under Sec. 
932.7 of this part.
    (2) A Bank may substitute an internal cash flow model to derive a 
market risk capital requirement in place of that calculated using an 
internal market risk model under paragraph (a)(1) of this section, 
provided that:
    (i) The Bank obtains Finance Board approval of the internal cash 
flow model and of the assumptions to be applied to the model; and
    (ii) The Bank demonstrates to the Finance Board that the internal 
cash flow model subjects the Bank's assets and liabilities, off-balance 
sheet items and derivative contracts, including related options, to a 
comparable degree of stress for such factors as will be required for an 
internal market risk model.
    (b) Measurement of market value at risk under a Bank's internal 
market risk model. (1) Except as provided under paragraph (a)(2) of this 
section, each

[[Page 85]]

Bank shall use an internal market risk model that estimates the market 
value of the Bank's assets and liabilities, off-balance sheet items, and 
derivative contracts, including any related options, and measures the 
market value of the Bank's portfolio at risk of its assets and 
liabilities, off-balance sheet items, and derivative contracts, 
including related options, from all sources of the Bank's market risks, 
except that the Bank's model need only incorporate those risks that are 
material.
    (2) The Bank's internal market risk model may use any generally 
accepted measurement technique, such as variance-covariance models, 
historical simulations, or Monte Carlo simulations, for estimating the 
market value of the Bank's portfolio at risk, provided that any 
measurement technique used must cover the Bank's material risks.
    (3) The measures of the market value of the Bank's portfolio at risk 
shall include the risks arising from the non-linear price 
characteristics of options and the sensitivity of the market value of 
options to changes in the volatility of the options' underlying rates or 
prices.
    (4) The Bank's internal market risk model shall use interest rate 
and market price scenarios for estimating the market value of the Bank's 
portfolio at risk, but at a minimum:
    (i) The Bank's internal market risk model shall provide an estimate 
of the market value of the Bank's portfolio at risk such that the 
probability of a loss greater than that estimated shall be no more than 
one percent;
    (ii) The Bank's internal market risk model shall incorporate 
scenarios that reflect changes in interest rates, interest rate 
volatility, and shape of the yield curve, and changes in market prices, 
equivalent to those that have been observed over 120-business day 
periods of market stress. For interest rates, the relevant historical 
observations should be drawn from the period that starts at the end of 
the previous month and goes back to the beginning of 1978;
    (iii) The total number of, and specific historical observations 
identified by the Bank as, stress scenarios shall be:
    (A) Satisfactory to the Finance Board;
    (B) Representative of the periods of the greatest potential market 
stress given the Bank's portfolio, and
    (C) Comprehensive given the modeling capabilities available to the 
Bank; and
    (iv) The measure of the market value of the Bank's portfolio at risk 
may incorporate empirical correlations among interest rates.
    (5) For any consolidated obligations denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, each Bank 
shall, in addition to fulfilling the criteria of paragraph (b)(4) of 
this section, calculate an estimate of the market value of its portfolio 
at risk due to the material foreign exchange, equity price or commodity 
price risk, such that, at a minimum:
    (i) The probability of a loss greater than that estimated shall not 
exceed one percent;
    (ii) The scenarios reflect changes in foreign exchange, equity, or 
commodity market prices that have been observed over 120-business day 
periods of market stress, as determined using historical data that is 
from an appropriate period; and
    (iii) The total number of, and specific historical observations 
identified by the Bank as, stress scenarios shall be:
    (A) Satisfactory to the Finance Board;
    (B) Representative of the periods of greatest potential stress given 
the Bank's portfolio; and
    (C) Comprehensive given the modeling capabilities available to the 
Bank; and
    (iv) The measure of the market value of the Bank's portfolio at risk 
may incorporate empirical correlations within or among foreign exchange 
rates, equity prices, or commodity prices.
    (c) Independent validation of Bank internal market risk model or 
internal cash flow model. (1) Each Bank shall conduct an independent 
validation of its internal market risk model or internal cash flow model 
within the Bank that is carried out by personnel not reporting to the 
business line responsible for conducting business transactions for the

[[Page 86]]

Bank. Alternatively, the Bank may obtain independent validation by an 
outside party qualified to make such determinations. Validations shall 
be done on an annual basis, or more frequently as required by the 
Finance Board.
    (2) The results of such independent validations shall be reviewed by 
the Bank's board of directors and provided promptly to the Finance 
Board.
    (d) Finance Board approval of Bank internal market risk model or 
internal cash flow model. Each Bank shall obtain Finance Board approval 
of an internal market risk model or an internal cash flow model, 
including subsequent material adjustments to the model made by the Bank, 
prior to the use of any model. Each Bank shall make such adjustments to 
its model as may be directed by the Finance Board.
    (e) Date of calculations. Unless otherwise directed by the Finance 
Board, each Bank shall perform any calculations or estimates required 
under this section using the assets and liabilities, off-balance sheet 
items, and derivative contracts held by the Bank, and if applicable, the 
values of any such holdings, as of the close of business of the last 
business day of the month for which the market risk capital requirement 
is being calculated.



Sec. 932.6  Operations risk capital requirement.

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



Sec. 932.7  Reporting requirements.

    Each Bank shall report to the Finance Board by the 15th business day 
of each month its risk-based capital requirement by component amounts, 
and its actual total capital amount and permanent capital amount, 
calculated as of the close of business of the last business day of the 
preceding month, or more frequently, as may be required by the Finance 
Board.



Sec. 932.8  Minimum liquidity requirements.

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



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

of credit to 
          one counterparty or affiliated counterparties.

    (a) Unsecured extensions of credit to a single counterparty. A Bank 
shall not extend unsecured credit to any single counterparty (other than 
a GSE) in an amount that would exceed the limits of this paragraph. A 
Bank shall not extend unsecured credit to a GSE in an amount that would 
exceed the limits set forth in paragraph (c) of this section. If a 
third-party provides an irrevocable, unconditional guarantee of 
repayment of a credit (or any part thereof), the third-party guarantor 
shall be considered the counterparty for purposes of calculating and 
applying the unsecured credit limits of this section with respect the to 
guaranteed portion of the transaction.
    (1) Term limits. All unsecured extensions of credit by a Bank to a 
single counterparty that arise from the Bank's on- and off-balance sheet 
and derivative transactions (but excluding

[[Page 87]]

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

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

    (ii) If a counterparty does not have a long-term credit rating but 
has received a short-term credit rating from an NRSRO, the maximum 
capital exposure limit applicable to that counterparty shall be based 
upon the short-term credit rating, as determined in accordance with 
paragraph (a)(5) of this section, as follows:
    (A) The highest short-term investment grade credit rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the third highest long-term investment grade rating;
    (B) The second highest short-term investment grade rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the fourth highest long-term investment grade rating; and
    (C) The third highest short-term investment grade rating shall 
correspond to the maximum capital exposure limit provided in Table 4 of 
this part for the fourth highest long-term investment grade rating.
    (iii) If a specific debt obligation issued by a counterparty 
receives a credit rating from an NRSRO that is lower than the 
counterparty's long-term credit rating, the total amount of

[[Page 88]]

the lower-rated obligation held by the Bank may not exceed a sub-limit 
calculated in accordance with paragraph (a)(1) of this section, except 
that the Bank shall use the credit rating associated with the specific 
obligation to determine the applicable maximum capital exposure limit. 
For purposes of this paragraph, the credit rating of the debt obligation 
shall be determined in accordance with paragraph (a)(5) of this section.
    (5) Bank determination of applicable credit ratings. The following 
criteria shall be applied to determine a counterparty's credit rating:
    (i) The counterparty's most recent credit rating from a given NRSRO 
shall be considered;
    (ii) If only one NRSRO has rated the counterparty, that NRSRO's 
rating shall be used. If a counterparty has received credit ratings from 
more than one NRSRO, the lowest credit rating from among those NRSROs 
shall be used;
    (iii) Where a credit rating has a modifier, the credit rating is 
deemed to be the credit rating without the modifier;
    (iv) If a counterparty is placed on a credit watch for a potential 
downgrade by an NRSRO, the credit rating from that NRSRO at the next 
lower grade shall be used; and
    (v) If a counterparty is not rated by an NRSRO, the Bank shall 
determine the applicable credit rating by using credit rating standards 
available from an NRSRO or other similar standards.
    (b) Unsecured extensions of credit to affiliated counterparties--(1) 
In general. The total amount of unsecured extensions of credit by a Bank 
to a group of affiliated counterparties that arise from the Bank's on- 
and off-balance sheet and derivative transactions, including sales of 
federal funds with a maturity of one day or less and sales of federal 
funds subject to a continuing contract, shall not exceed thirty percent 
of the Bank's total capital.
    (2) Relation to individual limits. The aggregate limits calculated 
under this paragraph shall apply in addition to the limits on extensions 
of unsecured credit to a single counterparty imposed by paragraph (a) of 
this section.
    (c) Special limits for GSEs--(1) In general. Unsecured extensions of 
credit by a Bank to a GSE that arise from the Bank's on- and off-balance 
sheet and derivative transactions, including from the purchase of any 
subordinated debt subject to the sub-limit set forth in paragraph (c)(2) 
of this section, from any sales of federal funds with a maturity of one 
day or less and from sales of federal funds subject to a continuing 
contract, shall not exceed the lesser of:
    (i) The Bank's total capital; or
    (ii) The GSE's total capital (as defined by the GSE's principal 
regulator) or some similar comparable measure identified by the Bank.
    (2) Sub-limit for subordinated debt. The maximum amount of 
subordinated debt issued by a GSE and held by a Bank shall not exceed 
the term limit calculated under paragraph (a)(1) of this section, except 
that a Bank shall use the credit rating of the GSE's subordinated debt 
to determine the applicable maximum capital exposure limit. The credit 
rating of the subordinated debt shall be determined in accordance with 
paragraph (a)(5) of this section.
    (3) Limits applying to a GSE after a downgrade. If any NRSRO assigns 
a credit rating to any senior debt obligation issued (or to be issued) 
by a GSE that is below the highest investment grade or downgrades, or 
places on a credit watch for a potential downgrade of the credit rating 
on any senior unsecured obligation issued by a GSE to below the highest 
investment grade, the special limits on unsecured extensions of credit 
under paragraph (c)(1) of this section shall cease to apply, and 
instead, the Bank shall calculate the maximum amount of its unsecured 
extensions of credit to that GSE in accordance with paragraphs (a)(1) 
and (a)(2) of this section.
    (4) Extensions of unsecured credit to other Banks. The limits of 
this section do not apply to unsecured credit extended by one Bank to 
another Bank.
    (d) Extensions of unsecured credit after downgrade or placement on 
credit watch. If an NRSRO downgrades the credit rating applicable to any 
counterparty or places any counterparty on a credit watch for a 
potential downgrade, a Bank need not unwind or liquidate any existing 
transaction or position with

[[Page 89]]

that counterparty that complied with the limits of this section at the 
time it was entered. In such a case, however, a Bank may extend any 
additional unsecured credit to such a counterparty only in compliance 
with the limitations that are calculated using the lower maximum 
exposure limits. For the purposes of this section, the renewal of an 
existing unsecured extension of credit, including any decision not to 
terminate any sales of federal funds subject to a continuing contract, 
shall be considered an additional extension of unsecured credit that can 
be undertaken only in accordance with the lower limit.
    (e) Reporting requirements--(1) Total unsecured extensions of 
credit. Each Bank shall report monthly to the Finance Board the amount 
of the Bank's total unsecured extensions of credit arising from on- and 
off-balance sheet and derivative transactions to any single counterparty 
or group of affiliated counterparties that exceeds 5 percent of:
    (i) The Bank's total capital; or
    (ii) The counterparty's, or affiliated counterparties' combined, 
Tier 1 capital, or if Tier 1 capital is not available, total capital (as 
defined by each counterparty's principal regulator) or some similar 
comparable measure identified by the Bank.
    (2) Total secured and unsecured extensions of credit. Each Bank 
shall report monthly to the Finance Board the amount of the Bank's total 
secured and unsecured extensions of credit arising from on- and off-
balance sheet and derivative transactions to any single counterparty or 
group of affiliated counterparties that exceeds 5 percent of the Bank's 
total assets.
    (3) Extensions of credit in excess of limits. A Bank shall report 
promptly to the Finance Board any extensions of unsecured credit that 
exceeds any limit set forth in paragraphs (a), (b) or (c) of this 
section. In making this report, a Bank shall provide the name of the 
counterparty or group of affiliated counterparties to which the excess 
unsecured credit has been extended, the dollar amount of the applicable 
limit which has been exceeded, the dollar amount by which the Bank's 
extension of unsecured credit exceeds such limit, the dates for which 
the Bank was not in compliance with the limit, and, if applicable, a 
brief explanation of any extenuating circumstances which caused the 
limit to be exceeded.
    (f) Measurement of unsecured extensions of credit--(1) In general. 
For purposes of this section, unsecured extensions of credit will be 
measured as follows:
    (i) For on-balance sheet transactions, an amount equal to the sum of 
the book value of the item plus net payments due the Bank;
    (ii) For off-balance sheet transactions, an amount equal to the 
credit equivalent amount of such item, calculated in accordance with 
Sec. 932.4(f) of this part; and
    (iii) For derivative transactions, an amount equal to the sum of the 
current and potential future credit exposures for the derivative 
contract, where those values are calculated in accordance with 
Sec. Sec. 932.4(g) or 932.4(h) of this part, as applicable, less the 
amount of any collateral that is held in accordance with the 
requirements of Sec. 932.4(e)(2)(ii)(B) of this part against the credit 
exposure from the derivative contract.
    (2) Status of debt obligations purchased by the Bank. Any debt 
obligation or debt security (other than mortgage-backed securities or 
acquired member assets that are identified in Sec. Sec. 955.2(a)(1) and 
(2) of this chapter) purchased by a Bank shall be considered an 
unsecured extension of credit for the purposes of this section, except:
    (i) Any amount owed the Bank against which the Bank holds collateral 
in accordance with Sec. 932.4(e)(2)(ii)(B) of this part; or
    (ii) Any amount which the Finance Board has determined on a case-by-
case basis shall not be considered an unsecured extension of credit.
    (g) Obligations of the United States. Obligations of, or guaranteed 
by, the United States are not subject to the requirements of this 
section.

[66728, Dec. 27, 2002]



PART 933_BANK CAPITAL STRUCTURE PLANS--Table of Contents



Sec.
933.1 Submission of plan.

[[Page 90]]

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

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

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



Sec. 933.1  Submission of plan.

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



Sec. 933.2  Contents of plan.

    The capital plan for each Bank shall include, at a minimum, 
provisions addressing the following matters:
    (a) Minimum investment. (1) The capital plan shall require each 
member to purchase and maintain a minimum investment in the capital 
stock of the Bank, in accordance with Sec. 931.3, of this chapter and 
shall prescribe the manner in which the minimum investment is to be 
calculated. The plan shall require each member to maintain its minimum 
investment in the Bank's stock for as long as it remains a member and, 
with regard to Bank stock purchased to support an advance or other 
business activity, for as long as the advance or business activity 
remains outstanding.
    (2) The capital plan shall specify the amount and class (or classes) 
of Bank stock that an institution is required to own in order to become 
and remain a member of the Bank, and shall specify the amount and class 
(or classes) of Bank stock that a member is required to own in order to 
obtain advances from, or to engage in other business transactions with, 
the Bank. If a Bank requires its members to satisfy its minimum 
investment through the purchase of one or more combinations of Class A 
and Class B stock, the authorized combinations of stock shall be 
specified in the capital plan, which shall afford the members the option 
of satisfying the minimum investment through the purchase of any such 
combination of stock.
    (3) The capital plan may establish a minimum investment that is 
calculated as a percentage of the total assets of the member, as a 
percentage of the advances outstanding to the member, as a percentage of 
the other business activities conducted with the member, on any other 
basis approved by the Finance Board, or on any combination of the above.
    (4) The minimum investment established by the capital plan shall be 
set at a level that, when applied to all

[[Page 91]]

members, provides sufficient capital for the Bank to comply with its 
minimum capital requirements, as specified in part 932 of this chapter. 
The capital plan shall require the board of directors of the Bank to 
monitor and, as necessary, to adjust, the minimum investment to ensure 
that the stock required to be purchased and maintained by the members is 
sufficient to allow the Bank to comply with its minimum capital 
requirements. The plan shall require each member to comply promptly with 
any adjusted minimum investment established by the board of directors of 
the Bank, but may allow a member a reasonable time to do so and may 
allow a member to reduce its outstanding business with the Bank as an 
alternative to purchasing additional stock.
    (b) Classes of capital stock. The capital plan shall specify the 
class or classes of stock (including subclasses, if any) that the Bank 
will issue, and shall establish the par value, rights, terms, and 
preferences associated with each class (or subclass) of stock. A Bank 
may establish preferences relating to, but not limited to, the dividend, 
voting, or liquidation rights for each class or subclass of Bank stock. 
Any voting preferences established by the Bank pursuant to Sec. 915.5 
of this chapter shall expressly state the voting rights of each class of 
stock with regard to the election of Bank directors. The capital plan 
shall provide that the owners of the Class B stock own the retained 
earnings, surplus, undivided profits, and equity reserves of the Bank, 
but shall have no right to receive any portion of those items, except 
through declaration of a dividend or capital distribution approved by 
the board of directors or through the liquidation of the Bank.
    (c) Dividends. The capital plan shall establish the manner in which 
the Bank will pay dividends, if any, on each class or subclass of stock, 
and shall provide that the Bank may not declare or pay any dividends if 
it is not in compliance with any capital requirement or if after paying 
the dividend it would not be in compliance with any capital requirement.
    (d) Initial issuance. The capital plan shall specify the date on 
which the Bank will implement the new capital structure, and shall 
establish the manner in which the Bank will issue Class A and/or Class B 
stock to its existing members, as well as to eligible institutions that 
subsequently become members. The capital plan shall address how the Bank 
will retire the stock that is outstanding as of the effective date, 
including stock held by a member that does not affirmatively elect to 
convert or exchange its existing stock to either Class A or Class B 
stock, or some combination thereof.
    (e) Members wishing not to convert existing stock. The capital plan 
shall establish an opt-out date on or before which a member that does 
not wish to convert its existing stock into Class A and/or Class B stock 
must file a written notice to withdraw from membership with the Finance 
Board. This opt-out date shall not be more than six months before the 
effective date of the capital plan. (For purposes of applying this 
provision, the membership of an institution that files its notice to 
withdraw with the Finance Board on or before the opt-out date 
established in a capital plan shall terminate six months from the date 
that the notice of withdrawal was filed with the Finance Board or on the 
effective date of the Bank's capital plan, whichever date is earlier.) 
The capital plan shall further provide that any member that is in the 
process of withdrawing on the effective date of the capital plan but did 
not file its written notice to withdraw from membership with the Finance 
Board on or before this opt-out date, shall have its existing stock 
converted into Class A and/or Class B stock as required by the capital 
plan, and that the effective date of withdrawal for such member shall be 
established in accordance with Sec. Sec. 925.26(b) and (c) of this 
chapter, provided, however, that the applicable stock redemption periods 
calculated under Sec. 925.26(c) of this chapter shall commence on date 
the member first submitted its written notice to withdraw to the Finance 
Board.
    (f) Stock transactions. The capital plan shall establish the 
criteria for the issuance, redemption, repurchase, transfer, and 
retirement of stock issued by the Bank. The capital plan also:

[[Page 92]]

    (1) Shall provide that the Bank may not issue stock other than in 
accordance with Sec. 931.2 of this chapter;
    (2) Shall provide that the stock of the Bank may be issued only to 
and held only by the members of that Bank;
    (3) Shall specify whether the stock of the Bank may be transferred 
among members, and, if such transfer is allowed, shall specify the 
procedures that a member should follow to effect such transfer, and that 
the transfer shall be undertaken only in accordance with Sec. 931.6 of 
this chapter;
    (4) Shall specify that the stock of the Bank may be traded only 
between the Bank and its members;
    (5) May provide for a minimum investment for members that purchase 
Class B stock that is lower than the minimum investment for members that 
purchase Class A stock, provided that the level of investment is 
sufficient for the Bank to comply with its regulatory capital 
requirements;
    (6) Shall specify the fee, if any, to be imposed on a member that 
cancels a request to redeem Bank stock; and
    (7) Shall specify the period of notice that the Bank will provide to 
a member before the Bank, on its own initiative, determines to 
repurchase any excess Bank stock from a member.
    (g) Termination of membership. The capital plan shall address the 
manner in which the Bank will provide for the disposition of its capital 
stock that is held by institutions that terminate their membership, and 
the manner in which the Bank will liquidate claims against its members, 
including claims resulting from prepayment of advances prior to their 
stated maturity.
    (h) Implementation. The capital plan shall demonstrate that the Bank 
has made a good faith determination that the Bank will be able to 
implement the plan as submitted and that the Bank will be in compliance 
with its regulatory total capital requirement and its regulatory risk-
based capital requirement after the plan is implemented.

[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001; 70 
FR 9510, Feb. 28, 2005]



Sec. 933.3  Independent review of capital plan.

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



Sec. 933.4  Transition provisions.

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



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

    (a) No capital plan shall become effective until disclosure required 
by paragraphs (b) and (c) of this section has been provided to members. 
All disclosure required under this section shall be transmitted, sent or 
given to members not less than 45 days and not more than 60 days prior 
to the opt-out date established in the Bank's capital plan in accordance 
with Sec. 933.2(e).
    (b) The following information shall be provided to members about the 
Class A and/or Class B stock that a

[[Page 93]]

Bank intends to issue on the effective date of its capital plan:
    (1) With regard to each class or subclass of authorized stock, a 
description of:
    (i) Dividend rights;
    (ii) The terms of conversion;
    (iii) Redemption and repurchase rights;
    (iv) Voting rights and preferences,
    (v) Liquidation rights; and
    (vi) Any liability to further calls or to assessments by the Banks;
    (2) A description of any material differences between the securities 
to be converted into Class A and/or Class B stock and the Class A and/or 
Class B stock with regard to the rights addressed in paragraph (b)(1) of 
this section.
    (3) A statement of the reasons for the conversion to Class A and/or 
Class B stock and of the general effect thereof upon the rights of 
existing members; and
    (4) A description of any other material features concerning the 
Bank's initial issuance of Class A and/or Class B stock.
    (c) In addition to the disclosure about Class A and/or Class B 
stock, the following information shall be provided to members:
    (1) The Bank shall disclose financial information as follows:
    (i) Audited balance sheets as of the end of the two most recent 
fiscal years, audited statements of income and cash flows for each of 
the three fiscal years preceding the date of the most recent audited 
balance sheet being presented, and unaudited interim balance sheets and 
statements of income and cash flows as of and for appropriate interim 
dates that in form and content meet the requirements of Sec. 989.4 of 
this chapter;
    (ii) A pro forma capitalization table that reflects the Bank's 
projected new capital structure relative to its actual capitalization as 
of the date of the latest balance sheet required to be provided to 
members by paragraph (c)(1)(i) of this section. The Bank shall also 
provide a description of any material assumptions underlying the pro 
forma capitalization table and the basis for these assumptions, and 
shall provide estimates of its risk-based capital requirement, 
calculated in accordance with Sec. 932.3 of this chapter, and of its 
total capital-to-asset ratio (both of which shall be based on the same 
financial data used for the capitalization table), along with a 
discussion of material assumptions underlying these estimates and the 
basis for these assumptions; and
    (iii) Any of the financial information required to be disclosed by 
paragraph (c)(1) of this section may be incorporated by reference, 
provided the information being incorporated is contained in an annual or 
quarterly Bank report prepared in accordance with Sec. 989.4 of this 
chapter or an annual or quarterly Bank System report, and the disclosure 
identifies the information being incorporated by reference;
    (2) A narrative discussion of anticipated developments that could 
materially affect the liquidity, capital, earnings or continuing 
operations of the Bank, including those affecting dividends, product 
volumes, investment volumes, new business lines and risk profile.
    (3) A description of any amendments anticipated to be made to the 
Bank's by-laws, policies or other governance documents as a result of 
the implementation of the capital plan;
    (4) To the extent that such information has not been provided under 
paragraph (b) of this section, the Bank shall disclose information 
related to the capital plan as follows:
    (i) A description of the minimum stock investment requirements set 
forth in the capital plan;
    (ii) A statement outlining the requirements for amending the capital 
plan;
    (iii) A description of any restrictions or limitations under a 
Bank's capital plan on a member's rights to buy, or redeem its class A 
or class B stock, to have such stock repurchased, or otherwise to make 
use of such stock to fulfill the member's minimum stock investment 
requirement;
    (iv) A statement setting forth the opt-out date, on or before which 
a member's written notice to withdraw must be filed with the Finance 
Board (as established in accordance with Sec. 933.2(e) of this part) 
for the member not to have its existing Bank stock

[[Page 94]]

converted to Class A or Class B stock on the effective date of the 
Bank's capital plan and describing the effect on a member's effective 
date of withdrawal of failing to file its notice to withdraw on or 
before the opt-out date; and
    (v) A description of a member's rights under the capital plan to 
have its stock redeemed or repurchased upon voluntary or involuntary 
termination of its membership;
    (5) The Bank should state the name, address and telephone number 
where members may direct written or oral requests for a copy of the 
capital plan and any other instrument or document that defines the 
rights of the member/stockholders. This information shall be provided to 
the members without charge; and
    (6) The Bank shall provide a statement as to the anticipated 
accounting treatment for the transaction and the federal income tax 
implications of the transaction that members should consider in 
consultation with their own accounting and tax advisors.
    (d) Nothing in this section shall create or be deemed to create any 
rights in any third party.

[66 FR 54109, Oct. 26, 2001]

[[Page 95]]



               SUBCHAPTER F_FEDERAL HOME LOAN BANK MISSION



[[Page 96]]



 SUBCHAPTER G_FEDERAL HOME LOAN BANK ASSETS AND OFF-BALANCE SHEET ITEMS





PART 950_ADVANCES--Table of Contents



    Effective Date Note: At 75 FR 76622, Dec. 9, 2010, part 950 was 
redesignated at part 1266, effective Jan. 10, 2011.

                      Subpart A_Advances to Members

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

                Subpart B_Advances to Housing Associates

950.16 Scope.
950.17 Advances to housing associates.



  Subpart C_Advances to Out-of-District Members and Housing Associates

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

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

    Effective Date Note: At 75 FR 76622, Dec. 9, 2010, the part 950 
authority citation was revised, effective Jan. 10, 2011. For the 
convenience of the user, the added and revised text is set forth as 
follows:
    Authority: 12 U.S.C. 1426, 1429, 1430, 1430b, 1431, 4511(b), 4513, 
4526(a).

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



                      Subpart A_Advances to Members



Sec. 950.1  Definitions.

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

[[Page 97]]

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

[[Page 98]]

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

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

    Effective Date Note: At 75 FR 76622, Dec. 9, 2011, Sec. 950.1 was 
redesignated as Sec. 1266.1 and amended by adding in correct 
alphabetical order definitions for ``Advance'', ``Bank'', ``Bank Act'', 
``Community development'', ``Community development loan'', ``FHFA'', and 
``Targeted beneficiaries'', and revise the definition of ``Residential 
housing finance assets'', effective . For the convenience of the user, 
the added text is set forth as follows:



Sec. 1266.1  Definitions.

                                * * * * *

    Advance means a loan from a Bank that is:
    (1) Provided pursuant to a written agreement;
    (2) Supported by a note or other written evidence of the borrower's 
obligation; and
    (3) Fully secured by collateral in accordance with the Bank Act and 
this part.

                                * * * * *

    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act, as amended (12 U.S.C. 
1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).

                                * * * * *

    Community development has the same meaning as under the definition 
set forth in the Community Reinvestment rule for the Federal Reserve 
System (12 CFR part 228), Federal Deposit Insurance Corporation (12 CFR 
part 345), the Office of Thrift Supervision (12 CFR part 563e) or the 
Office of the Comptroller of the Currency (12 CFR part 25), whichever is 
the CFI member's primary Federal regulator.
    Community development loan means a loan, or a participation interest 
in such loan, that has as its primary purpose community development, but 
such loans shall not include:

[[Page 99]]

    (1) Any loan or instrument that qualifies as eligible security for 
an advance under Sec. 1266.7(a) of this part;
    (2) Any loan that qualifies as a small agri-business loan, small 
business loan or small farm loan, under definitions set forth in this 
section; or
    (3) Consumer loans or credit extended to one or more individuals for 
household, family or other personal expenditures.

                                * * * * *

    FHFA means the Federal Housing Finance Agency.

                                * * * * *

    Residential housing finance assets means any of the following:
    (1) Loans secured by residential real property;
    (2) Mortgage-backed securities;
    (3) Participations in loans secured by residential real property;
    (4) Loans or investments providing financing for economic 
development projects for targeted beneficiaries;
    (5) Loans secured by manufactured housing, regardless of whether 
such housing qualifies as residential real property;
    (6) Any loans or investments which FHFA, in its discretion, 
otherwise determines to be residential housing finance assets; and
    (7) For CFI members, and to the extent not already included in 
categories (1) through (6), small business loans, small farm loans, 
small agri-business loans, or community development loans.

                                * * * * *

    Targeted beneficiaries has the meaning set forth in Sec. 952.1 of 
this title.



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

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

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

    Effective Date Note: At 75 FR 76623, Dec. 9, 2010, Sec. 950.2 was 
redesignated as Sec. 1266.2 and amended by adding (e), effective Jan. 
10, 2011. For the convenience of the user, the added text is set forth 
as follows:



Sec. 1266.2  Authorization and application for advances; obligation to 
          repay advances.

                                * * * * *

    (e) Status of secured lending. All secured transactions, regardless 
of the form of the transaction, for money borrowed from a Bank by a 
member of any Bank shall be considered an advance subject to the 
requirements of this part.



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

    (a) A Bank shall make long-term advances only for the purpose of 
enabling any member to purchase or fund new or existing residential 
housing finance assets, which include, for CFI members, small business 
loans, small farm loans and small agri-business loans.
    (b)(1) Prior to approving an application for a long-term advance, a 
Bank

[[Page 100]]

shall determine that the principal amount of all long-term advances 
currently held by the member does not exceed the total book value of 
residential housing finance assets held by such member. The Bank shall 
determine the total book value of such residential housing finance 
assets, using the most recent Thrift Financial Report, Report of 
Condition and Income, financial statement or other reliable 
documentation made available by the member.
    (2) Applications for CICA advances are exempt from the requirements 
of paragraph (b)(1) of this section.

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

    Effective Date Note: At 75 FR 76623, Dec. 9, 2010, Sec. 950.3 was 
redesignated as Sec. 1266.3 and revised, effective Jan. 10, 2011. For 
the convenience of the user, the revised text is set forth as follows:



Sec. 1266.3  Purpose of long-term advances; Proxy test.

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



Sec. 950.4  Limitations on access to advances.

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

[[Page 101]]

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

[58 FR 29469, May 20, 1993, as amended at 59 FR 2949, Jan. 20, 1994; 64 
FR 71278, Dec. 21, 1999; 65 FR 8263, Feb. 18, 2000. Redesignated at 65 
FR 44429, July 18, 2000, as amended at 67 FR 12851, Mar. 20, 2002; 71 FR 
35500, June 21, 2006]



Sec. 950.5  Terms and conditions for advances.

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

[[Page 102]]

include detail sufficient to describe such risks.
    (2) Replacement funding for putable advances. If a Bank terminates a 
putable advance prior to the stated maturity date of such advance, the 
Bank shall offer to provide replacement funding to the member, provided 
the member is able to satisfy the normal credit and collateral 
requirements of the Bank for the replacement funding requested.
    (3) Definition. For purposes of this paragraph (d), the term putable 
advance means an advance that a Bank may, at its discretion, terminate 
and require the member to repay prior to the stated maturity date of the 
advance.

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



Sec. 950.6  Fees.

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

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



Sec. 950.7  Collateral.

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

[[Page 103]]

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

[[Page 104]]

borrowing member's Bank stock is assigned as additional security by the 
member to the Bank.
    (3) The security interest of the Bank in such member's Bank stock 
shall be entitled to the priority provided for in section 10(e) of the 
Act (12 U.S.C. 1430(e)).
    (f) Advances collateral security requiring formal approval. No home 
mortgage loan otherwise eligible to be accepted as collateral for an 
advance by a Bank under this section shall be accepted as collateral for 
an advance if any director, officer, employee, attorney or agent of the 
Bank or of the borrowing member is personally liable thereon, unless the 
board of directors of the Bank has specifically approved such acceptance 
by formal resolution, and the Finance Board has endorsed such 
resolution.
    (g) Pledge of advances collateral by affiliates. Assets held by an 
affiliate of a member that are eligible as collateral under paragraphs 
(a) or (b) of this section may be used to secure advances to that member 
only if:
    (1) The collateral is pledged to secure either:
    (i) The member's obligation to repay advances; or
    (ii) A surety or other agreement under which the affiliate has 
assumed, along with the member, a primary obligation to repay advances 
made to the member; and
    (2) The Bank obtains and maintains a legally enforceable security 
interest pursuant to which the Bank's legal rights and privileges with 
respect to the collateral are functionally equivalent in all material 
respects to those that the Bank would possess if the member were to 
pledge the same collateral directly, and such functional equivalence is 
supported by adequate documentation.

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

    Effective Date Note: At 75 FR 76623, Dec. 9, 2011, Sec. 950.7 was 
redesignated as Sec. 1266.7 and amended by revising (b)(1), effective 
Jan. 10, 2010. For the convenience of the user, the revised text is set 
forth as follows:



Sec. 1266.7  Collateral.

                                * * * * *

    (b) * * *
    (1) General. Subject to the requirements set forth in part 1272 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, small agri-business loans, or community development loans, in 
each case fully secured by collateral other than real estate, or 
securities representing a whole interest in such secured loans, provided 
that:
    (i) Such collateral has a readily ascertainable value, can be 
reliably discounted to account for liquidation and other risks, and can 
be liquidated in due course; and
    (ii) The Bank can perfect a security interest in such collateral.

                                * * * * *



Sec. 950.8  Banks as secured creditors.

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

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



Sec. 950.9  Pledged collateral; verification.

    (a) Collateral safekeeping. (1) A Bank may permit a member that is a 
depository institution to retain documents evidencing collateral pledged 
to the Bank, provided that the Bank and such member have executed a 
written security agreement pursuant to Sec. 950.2(c) of this part 
whereby such collateral is retained solely for the Bank's benefit and

[[Page 105]]

subject to the Bank's control and direction.
    (2) A Bank shall take any steps necessary to ensure that its 
security interest in all collateral pledged by non-depository 
institutions for an advance is as secure as its security interest in 
collateral pledged by depository institutions.
    (3) A Bank may at any time perfect its security interest in 
collateral securing an advance to a member.
    (b) Collateral verification. Each Bank shall establish written 
procedures and standards for verifying the existence of collateral 
securing the Bank's advances, and shall regularly verify the existence 
of the collateral securing its advances in accordance with such 
procedures and standards.

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



Sec. 950.10  Collateral valuation; appraisals.

    (a) Collateral valuation. Each Bank shall determine the value of 
collateral securing the Bank's advances in accordance with the 
collateral valuation procedures set forth in the Bank's member products 
policy established pursuant to Sec. 917.4 of this chapter.
    (b) Fair application of procedures. Each Bank shall apply the 
collateral valuation procedures consistently and fairly to all borrowing 
members, and the valuation ascribed to any item of collateral by the 
Bank shall be conclusive as between the Bank and the member.
    (c) Appraisals. A Bank may require a member to obtain an appraisal 
of any item of collateral, and to perform such other investigations of 
collateral as the Bank deems necessary and proper.

[65 FR 44430, July 18, 2000]



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

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

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

    Effective Date Note: At 75 FR 76623, Dec. 9, 2011, Sec. 950.11 was 
redesignated as Sec. 1266.11 and revised, effective Jan. 10, 2011. For 
the convenience of the user, the revised text is set forth as follows:



Sec. 1266.11  Capital stock requirements; redemption of excess stock.

    (a) Capital stock requirement for advances. For a Bank that has not 
converted to the capital structure authorized by the Gramm-Leach-Bliley 
Act, the aggregate amount of outstanding advance made by the Bank to a 
member shall not exceed 20 times the amount paid in by such member for 
capital stock in the Bank.
    (b) Unilateral Redemption of excess stock. A Bank that has not 
converted to the capital structure authorized by the Gramm-Leach-Bliley 
Act:
    (1) May, after providing 15 calendar days advance written notice to 
a member, require the redemption of that amount of the member's Bank 
capital stock that exceeds the applicable capital stock requirements in 
paragraph (a) of this section, provided that the member continues to 
comply with the minimum stock purchase requirement set forth in Sec. 
1263.20(a) of this chapter; and
    (2) May not impose on, or accept from, a member a fee in lieu of 
redeeming a member's excess stock.

[[Page 106]]



Sec. 950.12  Intradistrict transfer of advances.

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

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



Sec. 950.13  Special advances to savings associations.

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

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



Sec. 950.14  Advances to the Savings Association Insurance Fund.

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

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



Sec. 950.15  Liquidation of advances upon termination of membership.

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

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



                Subpart B_Advances to Housing Associates

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



Sec. 950.16  Scope.

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

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

[[Page 107]]



Sec. 950.17  Advances to housing associates.

    (a) Authority. Subject to the provisions of the Act and this 
subpart, a Bank may make advances only to a housing associate whose 
principal place of business, as determined in accordance with part 925 
of this chapter, is located in the Bank's district.
    (b) Collateral requirements--(1) Advances to housing associates. A 
Bank may make an advance to any housing associate upon the security of 
the following collateral:
    (i) Mortgage loans insured by the Federal Housing Administration of 
HUD under title II of the National Housing Act; or
    (ii) Securities representing a whole interest in the principal and 
interest payments due on a pool of mortgage loans insured by the Federal 
Housing Administration of HUD under title II of the National Housing 
Act. A Bank may only accept as collateral the securities described in 
this paragraph (b)(1)(ii) if the housing associate provides evidence 
that such securities are backed solely by mortgages of the type 
described in paragraph (b)(1)(i) of this section.
    (2) Certain advances to SHFAs. (i) In addition to the collateral 
described in paragraph (b)(1) of this section, a Bank may make an 
advance to a housing associate that has satisfied the requirements of 
Sec. 926.3(b) for the purpose of facilitating residential or commercial 
mortgage lending that benefits individuals or families meeting the 
income requirements in section 142(d) or 143(f) of the Internal Revenue 
Code (26 U.S.C. 142(d) or 143(f)) upon the security of the following 
collateral:
    (A) The collateral described in Sec. 950.7(a)(1) or (2).
    (B) The collateral described in Sec. 950.7(a)(3). Solely for the 
purpose of facilitating acceptance of such collateral, a Bank may 
establish a cash collateral account for a housing associate that has 
satisfied the requirements of Sec. 926.3(b).
    (C) The other real estate-related collateral described in Sec. 
950.7(a)(4), provided that such collateral comprises mortgage loans on 
one-to-four family or multifamily residential property.
    (ii) Prior to making an advance pursuant to this paragraph (b)(2), a 
Bank shall obtain a written certification from the housing associate 
that it shall use the proceeds of the advance for the purposes described 
in paragraph (b)(2)(i) of this section.
    (c) Terms and conditions--(1) General. Subject to the provisions of 
this paragraph (c), a Bank, in its discretion, shall determine whether, 
and on what terms, it will make advances to a housing associate.
    (2) Advance pricing. (i) A Bank shall price advances to housing 
associates in accordance with the requirements for pricing advances to 
members set forth in Sec. 950.3(b). Wherever the term ``member'' 
appears in Sec. 950.3(b), the term shall be construed also to mean 
``housing associate.''
    (ii) A Bank shall apply the pricing criteria identified in Sec. 
950.5(b)(2) equally to all of its member and housing associate 
borrowers.
    (3) Limit on advances. The principal amount of any advance made to a 
housing associate may not exceed 90 percent of the unpaid principal of 
the mortgage loans or securities pledged as security for the advance. 
This limit does not apply to an advance made to a housing associate 
under paragraph (b)(2) of this section.
    (d) Transaction accounts. Solely for the purpose of facilitating the 
making of advances to a housing associate, a Bank may establish a 
transaction account for each housing associate.
    (e) Loss of eligibility--(1) Notification of status changes. A Bank 
shall require a housing associate that applies for an advance to agree 
in writing that it will promptly inform the Bank of any change in its 
status as a housing associate.
    (2) Verification of eligibility. A Bank may, from time to time, 
require a housing associate to provide evidence that it continues to 
satisfy all of the eligibility requirements of the Act, this subpart and 
part 926 of this chapter.
    (3) Loss of eligibility. A Bank shall not extend a new advance or 
renew an existing advance to a housing associate that no longer meets 
the eligibility requirements of the Act, this subpart and part 926 of 
this chapter until the entity

[[Page 108]]

has provided evidence satisfactory to the Bank that it is in compliance 
with such requirements.

[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]



  Subpart C_Advances to Out-of-District Members and Housing Associates



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

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

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



PART 952_COMMUNITY INVESTMENT CASH ADVANCE PROGRAMS--Table of Contents



Sec.
952.1 Definitions.
952.2 Scope.
952.3 Purpose.
952.4 Targeted Community Lending Plan.
952.5 Community Investment Cash Advance Programs.
952.6 Reporting.
952.7 Documentation.

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

    Source: 63 FR 65546, Nov. 27, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 952.1  Definitions.

    As used in this part:
    Champion Community means a community which developed a strategic 
plan and applied for designation by either the Secretary of HUD or the 
Secretary of the USDA as an Empowerment Zone or Enterprise Community, 
but was designated a Champion Community.
    CICA program or Community Investment Cash Advance program means:
    (1) A Bank's AHP;
    (2) A Bank's CIP;
    (3) A Bank's RDF program or UDF program using any combination of the 
targeted beneficiaries and targeted income levels specified in Sec. 
952.1 of this part; and
    (4) Any other advance or grant program offered by a Bank using 
targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1 of this part, established by the Bank with the 
prior approval of the Finance Board.
    Economic development projects means:
    (1) Commercial, industrial, manufacturing, social service, and 
public facility projects and activities; and
    (2) Public or private infrastructure projects, such as roads, 
utilities, and sewers.
    Family means one or more persons living in the same dwelling unit.
    Housing projects means projects or activities that involve the 
purchase, construction, rehabilitation or refinancing (subject to Sec. 
952.5(c) of this part) of, or predevelopment financing for:
    (1) Individual owner-occupied housing units, each of which is 
purchased or owned by a family with an income at or below the targeted 
income level;
    (2) Projects involving multiple units of owner-occupied housing in 
which at least 51% of the units are owned or are intended to be 
purchased by families with incomes at or below the targeted income 
level;
    (3) Rental housing where at least 51% of the units in the project 
are occupied by, or the rents are affordable to, families with incomes 
at or below the targeted income level; or
    (4) Manufactured housing parks where:
    (i) At least 51% of the units in the project are occupied by, or the 
rents are affordable to, families with incomes at or below the targeted 
income level; or

[[Page 109]]

    (ii) The project is located in a neighborhood with a median income 
at or below the targeted income level.
    Median income for the area--(1) Owner-occupied housing projects and 
economic development projects. For purposes of owner-occupied housing 
projects and economic development projects, median income for the area 
means one or more of the following, as determined by the Bank:
    (i) The median income for the area, as published annually by HUD;
    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The applicable median family income, as determined under 26 
U.S.C. 143(f) (Mortgage Revenue Bonds) and published by a State agency 
or instrumentality;
    (iv) The median income for the area, as published by the USDA; or
    (v) The median income for the area obtained from another public 
entity or a private source and approved by the Board of Directors, at 
the request of a Bank, for use under the Bank's CICA programs.
    (2) Rental housing projects. For purposes of rental housing 
projects, median income for the area means one or more of the following, 
as determined by the Bank:
    (i) The median income for the area, as published annually by HUD; or
    (ii) The median income for the area obtained from the Federal 
Financial Institutions Examination Council;
    (iii) The median income for the area obtained from another public 
entity or a private source and approved by the Board of Directors, at 
the request of a Bank, for use under the Bank's CICA programs.
    MSA means a Metropolitan Statistical Area as designated by the 
Office of Management and Budget.
    Neighborhood means:
    (1) A census tract or block numbering area;
    (2) A unit of local government with a population of 25,000 or less;
    (3) A rural county; or
    (4) A geographic location designated in comprehensive plans, 
ordinances, or other local documents as a neighborhood, village, or 
similar geographic designation that is within the boundary of but does 
not encompass the entire area of a unit of general local government.
    Provide financing means:
    (1) Originating loans;
    (2) Purchasing a participation interest, or providing financing to 
participate, in a loan consortium for CICA-eligible housing or economic 
development projects;
    (3) Making loans to entities that, in turn, make loans for CICA-
eligible housing or economic development projects;
    (4) Purchasing mortgage revenue bonds or mortgage-backed securities, 
where all of the loans financed by such bonds and all of the loans 
backing such securities, respectively, meet the eligibility requirements 
of the CICA program under which the member or housing associate borrower 
receives funding;
    (5) Creating or maintaining a secondary market for loans, where all 
such loans are mortgage loans meeting the eligibility requirements of 
the CICA program under which the member or housing associate borrower 
receives funding;
    (6) Originating CICA-eligible loans within 3 months prior to 
receiving the CICA funding; and
    (7) Purchasing low-income housing tax credits.
    RDF or Rural Development Funding program means an advance or grant 
program offered by a Bank for targeted community lending in rural areas.
    Rural area means:
    (1) A unit of general local government with a population of 25,000 
or less;
    (2) An unincorporated area outside an MSA; or
    (3) An unincorporated area within an MSA that qualifies for housing 
or economic development assistance from the USDA.
    Small business means a ``small business concern,'' as that term is 
defined by section 3(a) of the Small Business Act (15 U.S.C. 632(a)) and 
implemented by the Small Business Administration under 13 CFR part 121, 
or any successor provisions.

[[Page 110]]

    Targeted beneficiaries means beneficiaries determined by the 
geographical area in which a project is located (Geographically Defined 
Beneficiaries), by the individuals who benefit from a project as 
employees or service recipients (Individual Beneficiaries), or by the 
nature of the project itself (Activity Beneficiaries), as follows:
    (1) Geographically Defined Beneficiaries:
    (i) The project is located in a neighborhood with a median income at 
or below the targeted income level;
    (ii) The project is located in a rural Champion Community, or a 
rural Empowerment Zone or rural Enterprise Community, as designated by 
the Secretary of the USDA;
    (iii) The project is located in an urban Champion Community, or an 
urban Empowerment Zone or urban Enterprise Community, as designated by 
the Secretary of HUD;
    (iv) The project is located in an Indian area, as defined by the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.), Alaskan Native Village, or Native Hawaiian 
Home Land;
    (v) The project is located in an area and involves a property 
eligible for a Brownfield Tax Credit;
    (vi) The project is located in an area affected by a military base 
closing and is a ``community in the vicinity of the installation'' as 
defined by the Department of Defense at 32 CFR part 176;
    (vii) The project is located in a designated community under the 
Community Adjustment and Investment Program as defined under 22 U.S.C. 
290m-2;
    (viii) The project is located in a Federally declared disaster area; 
or
    (ix) The project is located in a state declared disaster area, or 
other area that qualifies for assistance under another Federal or State 
targeted economic development program, approved by the Finance Board.
    (2) Individual Beneficiaries:
    (i) The annual salaries for at least 51% of the permanent full- and 
part-time jobs, computed on a full-time equivalent basis, created or 
retained by the project, other than construction jobs, are at or below 
the targeted income level; or
    (ii) At least 51% of the families who otherwise benefit from (other 
than through employment), or are provided services by, the project have 
incomes at or below the targeted income level.
    (3) Activity Beneficiaries: Projects that qualify as small 
businesses.
    (4) Other Targeted Beneficiaries. A Bank may designate, with the 
prior approval of the Finance Board, other targeted beneficiaries for 
its targeted community lending.
    (5) Only targeted beneficiaries identified in paragraphs (1)(i) 
through (1)(iv), and (2)(i) and (2)(ii) of this definition are eligible 
for CIP advances.
    Targeted community lending means providing financing for economic 
development projects for targeted beneficiaries.
    Targeted income level means:
    (1) For rural areas, incomes at or below 115 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four;
    (2) For urban areas, incomes at or below 100 percent of the median 
income for the area, as adjusted for family size in accordance with the 
methodology of the applicable area median income standard or, at the 
option of the Bank, for a family of four;
    (3) For advances provided under CIP:
    (i) For economic development projects, incomes at or below 80 
percent of the median income for the area; or
    (ii) For housing projects, incomes at or below 115 percent of the 
median income for the area, both as adjusted for family size in 
accordance with the methodology of the applicable area median income 
standard or, at the option of the Bank, for a family of four; or
    (4) For advances or grants provided under any other CICA program 
offered by a Bank, a targeted income level established by the Bank with 
the prior approval of the Finance Board.
    UDF program or Urban Development Funding program means an advance or 
grant program offered by a Bank for targeted community lending in urban 
areas.
    Urban area means:

[[Page 111]]

    (1) A unit of general local government with a population of more 
than 25,000; or
    (2) An unincorporated area within an MSA that does not qualify for 
housing or economic development assistance from the USDA.
    USDA means the United States Department of Agriculture.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000; 66 FR 50295, Oct. 3, 2001. Redesignated and 
amended at 67 FR 12852, Mar. 20, 2002]



Sec. 952.2  Scope.

    Section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10) authorizes the 
Banks to offer Community Investment Cash Advance (CICA) programs. This 
part establishes requirements for all CICA programs offered by a Bank, 
except for a Bank's Affordable Housing Program (AHP), which is governed 
specifically by part 951 of this chapter.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12852, Mar. 20, 2002]



Sec. 952.3  Purpose.

    The purpose of this part is to identify targeted community lending 
projects that the Banks may support through the establishment of CICA 
programs under section 10(j)(10) of the Act (12 U.S.C. 1430(j)(10)). 
Pursuant to this part, a Bank may offer Rural Development Funding (RDF) 
or Urban Development Funding (UDF) programs, or both, for targeted 
community lending using the targeted beneficiaries or targeted income 
levels specified in Sec. 952.1, without prior Finance Board approval. A 
Bank also may offer other CICA programs for targeted community lending 
using targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1, established by the Bank with the prior 
approval of the Finance Board. In addition, a Bank shall offer CICA 
programs under section 10(i) of the Act (12 U.S.C. 1430(i)) (Community 
Investment Program (CIP)) and section 10(j) of the Act (12 U.S.C. 
1430(j)) (Affordable Housing Program (AHP)). A Bank may provide advances 
or grants under its CICA programs except for CIP programs, under which a 
Bank may only provide advances.

[67 FR 12852, Mar. 20, 2002]



Sec. 952.4  Targeted Community Lending Plan

    Each Bank shall develop and adopt an annual Targeted Community 
Lending Plan pursuant to Sec. 944.6 of this chapter.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000]



Sec. 952.5  Community Investment Cash Advance Programs.

    (a) In general. (1) Each Bank shall offer an AHP in accordance with 
part 951 of this chapter.
    (2) Each Bank shall offer a CIP to provide financing for housing 
projects and for eligible targeted community lending at the appropriate 
targeted income levels.
    (3) Each Bank may offer RDF programs or UDF programs, or both, for 
targeted community lending using the targeted beneficiaries or targeted 
income levels specified in Sec. 952.1 of this part, without prior 
Finance Board approval.
    (4) Each Bank may offer CICA programs for targeted community lending 
using targeted beneficiaries and targeted income levels other than those 
specified in Sec. 952.1 of this part, established by the Bank with the 
prior approval of the Finance Board.
    (b) Mixed-use projects. (1) For projects funded under CICA programs 
other than CIP, involving a combination of housing projects and economic 
development projects, only the economic development components of the 
project must meet the appropriate targeted income level for the 
respective CICA program.
    (2) For projects funded under CIP, both the housing and economic 
development components of the project must meet the appropriate targeted 
income levels.
    (c) Refinancing. CICA funding other than AHP may be used to 
refinance economic development projects and housing projects, provided 
that any equity proceeds of the refinancing of rental housing and 
manufactured housing parks are used to rehabilitate the

[[Page 112]]

projects or to preserve affordability for current residents.
    (d) Pricing and Availability of advances--(1) Advances to members. 
For CICA programs other than AHP and CIP, a Bank shall price advances to 
members as provided in Sec. 950.5 of this chapter, and may price such 
advances at rates below the price of advances of similar amounts, 
maturities and terms made pursuant to section 10(a) of the Act. (12 
U.S.C. 1430(a)).
    (2) Pricing of CIP advances. The price of advances made under CIP 
shall not exceed the Bank's cost of issuing consolidated obligations of 
comparable maturity, taking into account reasonable administrative 
costs.
    (3) Pricing of AHP advances. A Bank shall price advances made under 
AHP in accordance with parts 950 and 951 of this chapter.
    (4) Advances to housing associate borrowers. (i) A Bank may offer 
advances under CICA programs to housing associate borrowers at the 
Bank's option, except for AHP and CIP, which are available only to 
members.
    (ii) A Bank shall price advances to housing associate borrowers as 
provided in Sec. 950.17 of this chapter, and may price such advances at 
rates below the price of advances of similar amounts, maturities and 
terms made pursuant to section 10b of the Act. (12 U.S.C. 1430b).
    (5) Pricing pass-through. A Bank may require that borrowers 
receiving advances made under CICA programs pass through the benefit of 
any price reduction from regular advance pricing to their borrowers.
    (6) Discount Fund. (i) A Bank may establish a Discount Fund which 
the Bank may use to reduce the price of CIP or other advances made under 
CICA programs below the advance prices provided for by this part.
    (ii) Price reductions made through the Discount Fund shall be made 
in accordance with a fair distribution scheme.

[63 FR 65546, Nov. 27, 1998, as amended at 65 FR 8264, Feb. 18, 2000; 65 
FR 44431, July 18, 2000; 66 FR 50296, Oct. 3, 2001; 67 FR 12852, Mar. 
20, 2002]



Sec. 952.6  Reporting.

    (a) By July 1, 1999, each Bank shall provide to the Finance Board an 
initial assessment of the credit needs and market opportunities in a 
Bank's district for targeted community lending.
    (b) Effective in 2000, each Bank annually shall provide to the 
Finance Board, on or before January 31, a Targeted Community Lending 
Plan.
    (c) Each Bank shall provide such other reports concerning its CICA 
programs as the Finance Board may request from time to time.

[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 65 FR 44431, July 18, 2000]



Sec. 952.7  Documentation.

    (a) A Bank shall require the borrower to certify to the Bank that 
each project funded under a CICA program (other than AHP) meets the 
respective targeting requirements of the CICA program. Such 
certification shall include a description of how the project meets the 
requirements, and where appropriate, a statistical summary or list of 
incomes of the borrowers, rents for the project, or salaries of jobs 
created or retained.
    (b) For those CICA-funded projects that also receive funds from 
another targeted Federal economic development program that has income 
targeting requirements that are the same as, or more restrictive than, 
the targeting requirements of the applicable CICA program, the Bank 
shall permit the borrower to certify that compliance with the criteria 
of such Federal economic development program will meet the requirements 
of the respective CICA program.
    (c) Such certifications shall satisfy the Bank's obligations to 
document compliance with the CICA funding provisions of this part.

[63 FR 65546, Nov. 27, 1998. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 66 FR 50296, Oct. 3, 2001]



PART 955_ACQUIRED MEMBER ASSETS--Table of Contents



Sec.
955.1 Definitions.

[[Page 113]]

955.2 Authorization to hold acquired member assets.
955.3 Required credit-risk sharing structure.
955.4 Reporting requirements for acquired member assets.
955.5 Administrative and investment transactions between Banks.
955.6 Risk-based capital requirement for acquired member assets.

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

    Source: 65 FR 43981, July 17, 2000, unless otherwise noted.



Sec. 955.1  Definitions.

    As used in this part:
    Affiliate means any business entity that controls, is controlled by, 
or is under common control with, a member.
    Expected losses means the base loss scenario in the methodology of 
an NRSRO applicable to that type of AMA asset.
    Residential real property has the meaning set forth in Sec. 950.1 
of this chapter.

[67 FR 12852, Mar. 20, 2002]



Sec. 955.2  Authorization to hold acquired member assets.

    Subject to the requirements of part 980 of this chapter, each Bank 
may hold assets acquired from or through Bank System members or housing 
associates by means of either a purchase or a funding transaction (AMA), 
subject to each of the following requirements:
    (a) Loan type requirement. The assets are either:
    (1) Whole loans that are eligible to secure advances under 
Sec. Sec. 950.7(a)(1)(i), (a)(2)(ii), (a)(4), or (b)(1) of this 
chapter, excluding:
    (i) Single-family mortgages where the loan amount exceeds the limits 
established pursuant to 12 U.S.C. 1717(b)(2); and
    (ii) Loans made to an entity, or secured by property, not located in 
a state;
    (2) Whole loans secured by manufactured housing, regardless of 
whether such housing qualifies as residential real property; or
    (3) State and local housing finance agency bonds;
    (b) Member or housing associate nexus requirement. The assets are:
    (1) Either:
    (i) Originated or issued by, through, or on behalf of a Bank System 
member or housing associate, or an affiliate thereof; or
    (ii) Held for a valid business purpose by a Bank System member or 
housing associate, or an affiliate thereof, prior to acquisition by a 
Bank; and
    (2) Acquired either:
    (i) From a member or housing associate of the acquiring Bank;
    (ii) From a member or housing associate of another Bank, pursuant to 
an arrangement with that Bank, which, in the case of state and local 
finance agency bonds only, may be reached in accordance with the 
following process:
    (A) The housing finance agency shall first offer the Bank in whose 
district the agency is located (local Bank) a right of first refusal to 
purchase, or negotiate the terms of, its proposed bond offering;
    (B) If the local Bank indicates, within a three day period, that it 
will negotiate in good faith to purchase the bonds, the agency may not 
offer to sell or negotiate the terms of a purchase with another Bank; 
and
    (C) If the local Bank declines the offer, or has failed to respond 
within the three day period, the acquiring Bank will be considered to 
have an arrangement with the local Bank for purposes of this section and 
may offer to buy or negotiate the terms of a bond sale with the agency;
    (iii) From another Bank; and
    (c) Credit risk-sharing requirement. The transactions through which 
the Bank acquires the assets either:
    (1) Meet the credit risk-sharing requirements of Sec. 955.3 of this 
part; or
    (2) Were authorized by the Finance Board under section II.B.12 of 
the FMP and are within any total dollar cap established by the Finance 
Board at the time of such authorization.



Sec. 955.3  Required credit risk-sharing structure.

    (a) Determination of necessary credit enhancement. At the earlier of 
270 days from the date of the Bank's acquisition of the first loan in a 
pool, or the date at which the amount of a pool's assets reaches $100 
million, a Bank shall determine the total credit enhancement

[[Page 114]]

necessary to enhance the asset or pool of assets to a credit quality 
that is equivalent to that of an instrument having at least the fourth 
highest credit rating from an NRSRO, or such higher credit rating as the 
Bank may require. The Bank shall make this determination for each AMA 
product using a methodology that is confirmed in writing by an NRSRO to 
be comparable to a methodology that the NRSRO would use in determining 
credit enhancement levels when conducting a rating review of the asset 
or pool of assets in a securitization transaction.
    (b) Credit risk-sharing structure. A Bank acquiring AMA shall 
implement, and have in place at all times, a credit risk-sharing 
structure for each AMA product under which a member or housing associate 
of the Bank or, with the approval of both Banks, a member or housing 
associate of another Bank, provides a sufficient credit enhancement from 
the first dollar of credit loss for each asset or pool of assets such 
that the acquiring Bank's exposure to credit risk for the life of the 
asset or pool of assets is no greater than that of an asset rated in the 
fourth highest credit rating category, as determined pursuant to 
paragraph (a) of this section, or such higher rating as the acquiring 
Bank may require. This credit enhancement structure shall meet the 
following requirements:
    (1) A portion of the credit enhancement may be provided by:
    (i) Contracting with an insurance affiliate of that member or 
housing associate to provide an enhancement or undertaking against 
losses to the Bank, but only where such insurance is positioned in the 
credit enhancement structure so as to cover only losses remaining after 
the member or housing associate has borne losses as required under 
paragraph (b)(2) of this section;
    (ii) Purchasing loan-level insurance, which may include United 
States government insurance or guarantee, but only where:
    (A) The member or housing associate is legally obligated at all 
times to maintain such insurance with an insurer rated not lower than 
the second highest credit rating category; and
    (B) Such insurance is positioned in the credit enhancement structure 
so as to cover only losses remaining after the member or housing 
associate has borne losses as required under paragraph (b)(2) of this 
section;
    (iii) Purchasing pool-level insurance, but only where such 
insurance:
    (A) Insures that portion of the required credit enhancement 
attributable to the geographic concentration and size of the pool; and
    (B) Is positioned last in the credit enhancement structure so as to 
cover only those losses remaining after all other elements of the credit 
enhancement structure have been exhausted; or
    (iv) Contracting with another member or housing associate in the 
Bank's district or in another Bank's district, pursuant to an 
arrangement with that Bank, to provide an enhancement or undertaking 
against losses to the Bank in return for some compensation;
    (2) The member or housing associate that is providing the credit 
enhancement required under paragraph (b)(1) of this section shall in all 
cases bear the direct economic consequences of actual credit losses on 
the asset or pool of assets:
    (i) From the first dollar of loss up to the amount of expected 
losses; or
    (ii) Immediately following expected losses, but in an amount equal 
to or exceeding the amount of expected losses;
    (3) The portion of the credit enhancement that is an obligation of a 
Bank System member or housing associate shall be fully secured; and
    (4) The Bank shall obtain written verification from an NRSRO that 
concludes to the satisfaction of the Finance Board, based on the 
underlying economic terms of the credit enhancement structure as 
represented by the Bank for each AMA product, that either:
    (i) The level of credit enhancement provided by the member or 
housing associate is generally sufficient to enhance the asset or pool 
of assets to a credit quality that is equivalent to that of an 
instrument having the fourth highest credit rating from an NRSRO, or 
such higher rating as the Bank may require; or
    (ii) The methodology used by the Bank for estimating the level of 
credit enhancement provided by the member or housing associate is in 
accordance

[[Page 115]]

with the practices established by the NRSRO.
    (c) Timing of NRSRO opinions. For AMA programs already in operation 
at the time of the effective date of this rule, a Bank shall have 90 
days from the effective date of this rule to obtain the NRSRO 
verifications required under paragraphs (a) and (b)(4) of this section.

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



Sec. 955.4  Reporting requirement for acquired member assets.

    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.

[71 FR 35500, June 21, 2006]



Sec. 955.5  Administrative and investment transactions between Banks.

    (a) Delegation of administrative duties. A Bank may delegate the 
administration of an AMA program to another Bank whose administrative 
office has been examined and approved by the Finance Board to process 
AMA transactions. The existence of such a delegation, or the possibility 
that such a delegation may be made, must be disclosed to any potential 
participating member or housing associate as part of any AMA-related 
agreements are signed with that member or housing associate.
    (b) Terminability of Agreements. Any agreement made between two or 
more Banks in connection with any AMA program shall be made terminable 
by either party after a reasonable notice period.
    (c) Delegation of Pricing Authority. A Bank that has delegated its 
AMA pricing function to another Bank shall retain a right to refuse to 
acquire AMA at prices it does not consider appropriate.



Sec. 955.6  Risk-based capital requirement for acquired member assets.

    (a) General. Each Bank shall hold retained earnings plus general 
allowance for losses as support for the credit risk of all AMA estimated 
by the Bank to represent a credit risk that is greater than that of 
comparable instruments that have received the second highest credit 
rating from an NRSRO in an amount equal to or greater than the 
outstanding balance of the assets or pools of assets times a factor 
associated with the putative credit rating of the assets or pools of 
assets as determined by the Finance Board on a case-by-case basis. For 
single-family mortgage assets, the factors are as set forth in Table 1 
of this part.

                                 Table 1
------------------------------------------------------------------------
                                                           Percentage
                                                        applicable to on-
   Putative rating of single-family mortgage assets       balance sheet
                                                        equivalent value
                                                             of AMA
------------------------------------------------------------------------
Third Highest Investment Grade........................              0.90
Fourth Highest Investment Grade.......................              1.50
If Downgraded to Below Investment Grade After
 Acquisition By Bank:
    Highest Below Investment Grade....................              2.25
    Second Highest Below Investment Grade.............              2.60
    All Other Below Investment Grade..................            100.00
------------------------------------------------------------------------

    (b) Recalculation of credit enhancement. For risk-based capital 
purposes, each Bank shall recalculate the estimated credit rating of a 
pool of AMA if there is evidence that a decline in the credit quality of 
that pool may have occurred.



PART 956_FEDERAL HOME LOAN BANK INVESTMENTS--Table of Contents



Sec.
956.1 Definitions.
956.2 Authorized investments.
956.3 Prohibited investments and prudential rules.
956.4 Risk-based capital requirement for investments.

[[Page 116]]

956.5 Authorization for derivative contracts and other transactions.
956.6 Use of hedging instruments.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1429, 1430, 1430b, 1431, 
1436.

    Source: 65 FR 43985, July 17, 2000, unless otherwise noted.



Sec. 956.1  Definitions.

    As used in this part:
    Deposits in banks or trust companies has the meaning set forth in 
Sec. 965.1 of this chapter.
    Derivative contract means generally a financial contract the value 
of which is derived from the values of one or more underlying assets, 
reference rates, or indices of asset values, or credit-related events. 
Derivative contracts include interest rate, foreign exchange rate, 
equity, precious metals, commodity, and credit contracts, and any other 
instruments that pose similar risks.
    Investment grade means:
    (1) A credit quality rating in one of the four highest credit rating 
categories by an NRSRO and not below the fourth highest credit rating 
category by any NRSRO; or
    (2) If there is no credit quality rating by an NRSRO, a 
determination by a Bank that the issuer, asset or instrument is the 
credit equivalent of investment grade using credit rating standards 
available from an NRSRO or other similar standards.
    Repurchase agreement means an agreement between a seller and a buyer 
whereby the seller agrees to repurchase a security or similar securities 
at an agreed upon price, with or without a stated time for repurchase.

[67 FR 12853, Mar. 20, 2002]



Sec. 956.2  Authorized investments.

    In addition to assets enumerated in parts 950 and 955 of this 
chapter and subject to the applicable limitations set forth in this 
part, in the Financial Management Policy and in part 980 of this 
chapter, each Bank may invest in:
    (a) Obligations of the United States;
    (b) Deposits in banks or trust companies;
    (c) Obligations, participations or other instruments of, or issued 
by, Fannie Mae or Ginnie Mae;
    (d) Mortgages, obligations, or other securities that are, or ever 
have been, sold by Freddie Mac pursuant to section 305 or 306 of the 
Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454 or 1455);
    (e) Stock, obligations, or other securities of any small business 
investment company formed pursuant to 15 U.S.C. 681(d), to the extent 
such investment is made for purposes of aiding members of the Bank; and
    (f) Instruments that the Bank has determined are permissible 
investments for fiduciary or trust funds under the laws of the state in 
which the Bank is located.

[65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.3  Prohibited investments and prudential rules.

    (a) Prohibited investments. A Bank may not invest in:
    (1) Instruments that provide an ownership interest in an entity, 
except for investments described in Sec. Sec. 940.3(e) and (f) of this 
chapter;
    (2) Instruments issued by non-United States entities, except United 
States branches and agency offices of foreign commercial banks;
    (3) Debt instruments that are not rated as investment grade, except:
    (i) Investments described in Sec. 940.3(e) of this chapter;
    (ii) Debt instruments that were downgraded to a below investment 
grade rating after acquisition by the Bank; or
    (4) Whole mortgages or other whole loans, or interests in mortgages 
or loans, except:
    (i) Acquired member assets;
    (ii) Investments described in Sec. 940.3(e) of this chapter;
    (iii) Marketable direct obligations of state, local, or tribal 
government units or agencies, having at least the second highest credit 
rating from an NRSRO, where the purchase of such obligations by the Bank 
provides to the issuer the customized terms, necessary liquidity, or 
favorable pricing required to generate needed funding for housing or 
community lending;
    (iv) Mortgage-backed securities, or asset-backed securities 
collateralized by manufactured housing loans or

[[Page 117]]

home equity loans, that meet the definition of the term ``securities'' 
under 15 U.S.C. 77b(a)(1); and
    (v) Loans held or acquired pursuant to section 12(b) of the Act (12 
U.S.C. 1432(b)).
    (b) Foreign currency or commodity positions prohibited. A Bank may 
not take a position in any commodity or foreign currency. A Bank may 
participate in consolidated obligations denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, provided that 
the Bank meets the requirements of Sec. 966.8(d) of this chapter, and 
all other applicable requirements related to issuing consolidated 
obligations.

[65 FR 43985, July 17, 2000, as amended at 66 FR 8320, Jan. 30, 2001; 67 
FR 12853, Mar. 20, 2002]



Sec. 956.4  Risk-based capital requirement for investments.

    Each Bank shall hold retained earnings plus general allowance for 
losses as support for the credit risk of all investments that are not 
rated by an NRSRO, or are rated or have a putative rating below the 
second highest credit rating, in an amount equal to or greater than the 
outstanding balance of the investments multiplied by:
    (a) A factor associated with the credit rating of the investments as 
determined by the Finance Board on a case-by-case basis for rated assets 
to be sufficient to raise the credit quality of the asset to the second 
highest credit rating category; and
    (b) 0.08 for assets having neither a putative nor actual rating.

[65 FR 43985, July 17, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.5  Authorization for derivative contracts and other transactions.

    A Bank may enter into the following types of transactions:
    (a) Derivative contracts;
    (b) Standby letters of credit, pursuant to the requirements of part 
960 of this chapter;
    (c) Forward asset purchases and sales;
    (d) Commitments to make advances; and
    (e) Commitments to make or purchase other loans.

[66 FR 8320, Jan. 30, 2001, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 956.6  Use of hedging instruments.

    (a) Applicability of GAAP. Derivative instruments that do not 
qualify as hedging instruments pursuant to GAAP may be used only if a 
non-speculative use is documented by the Bank.
    (b) Documentation requirements. (1) Transactions with a single 
counterparty shall be governed by a single master agreement when 
practicable.
    (2) A Bank's agreement with the counterparty for over-the-counter 
derivative contracts shall include:
    (i) A requirement that market value determinations and subsequent 
adjustments of collateral be made at least on a monthly basis;
    (ii) A statement that failure of a counterparty to meet a collateral 
call will result in an early termination event;
    (iii) A description of early termination pricing and methodology, 
with the methodology reflecting a reasonable estimate of the market 
value of the over-the-counter derivative contract at termination 
(standard International Swaps and Derivatives Association, Inc. language 
relative to early termination pricing and methodology may be used to 
satisfy this requirement); and
    (iv) A requirement that the Bank's consent be obtained prior to the 
transfer of an agreement or contract by a counterparty.

[66 FR 8321, Jan. 30, 2001]

[[Page 118]]



             SUBCHAPTER H_FEDERAL HOME LOAN BANK LIABILITIES





PART 965_SOURCE OF FUNDS--Table of Contents



Sec.
965.1 Definitions.
965.2 Authorized liabilities.
965.3 Liquidity reserves for deposits.

    Authority: 12 U.S.C. 1422a, 1422b, 1431.

    Source: 65 FR 36298, June 7, 2000, unless otherwise noted.



Sec. 965.1  Definitions.

    As used in this part:
    Deposits in banks or trust companies means:
    (1) A deposit in another Bank;
    (2) A demand account in a Federal Reserve Bank;
    (3) A deposit in, or a sale of Federal funds to:
    (i) An insured depository institution, as defined in section 
2(12)(A) of the Act (12 U.S.C. 1422(12)(A)), that is designated by a 
Bank's board of directors;
    (ii) A trust company that is a member of the Federal Reserve System 
or insured by the FDIC, and is designated by a Bank's board of 
directors; or
    (iii) A U.S. branch or agency of a foreign bank, as defined in the 
International Banking Act of 1978, as amended (12 U.S.C. 3101 et seq.), 
that is subject to the supervision of the FRB, and is designated by a 
Bank's board of directors.
    Repurchase agreement means an agreement in which a Bank sells 
securities and simultaneously agrees to repurchase those securities or 
similar securities at an agreed upon price, with or without a stated 
time for repurchase.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 965.2  Authorized liabilities.

    As a source of funds for business operations, each Bank is 
authorized to incur liabilities by:
    (a) Accepting proceeds from the issuance of consolidated obligations 
issued in accordance with part 966 of this chapter;
    (b) Accepting time or demand deposits from members, other Banks or 
instrumentalities of the United States, and cash accounts from members 
or associates pursuant to Sec. Sec. 969.2, 950.17(b)(2)(i)(B), 
950.17(d) or 960.4(a)(1), or other institutions for which the Bank is 
providing correspondent services pursuant to section 11(e) of the Act 
(12 U.S.C. 1431(e));
    (c) Purchasing Federal funds; and
    (d) Entering into repurchase agreements.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 965.3  Liquidity reserves for deposits.

    Each Bank shall at all times have at least an amount equal to the 
current deposits received from its members invested in:
    (a) Obligations of the United States;
    (b) Deposits in banks or trust companies; or
    (c) Advances with a maturity of not to exceed five years that are 
made to members in conformity with part 950 of this chapter.



PART 966_CONSOLIDATED OBLIGATIONS--Table of Contents



Sec.
966.1 Definitions.
966.2 Issuance of consolidated obligations.
966.3 Leverage limit and credit rating requirements.
966.4 Form of consolidated obligations.
966.5 Transactions in consolidated obligations.
966.6 Lost, stolen, destroyed, mutilated or defaced consolidated 
          obligations.
966.7 Administrative provision.
966.8 Conditions for issuance of consolidated obligations.
966.9 Joint and several liability.
966.10 Savings clause.

    Authority: 12 U.S.C. 1422a, 1422b, 1431.

    Source: 65 FR 36298, June 7, 2000, unless otherwise noted.



Sec. 966.1  Definitions.

    As used in this part:
    Non-complying Bank means a Bank that has failed to provide the 
liquidity certification as required under Sec. 966.9(b)(1).

[67 FR 12853, Mar. 20, 2002]

[[Page 119]]



Sec. 966.2  Issuance of consolidated obligations.

    (a) Consolidated obligations issued by the Finance Board. The 
Finance Board may issue consolidated obligations under section 11(c) of 
the Act (12 U.S.C. 1431(c)), including the determination of the dates of 
issue, maturities, rates of interest, terms and conditions thereof, and 
the manner in which such consolidated obligations shall be issued. The 
Finance Board in its discretion from time to time may delegate this by 
resolution of the Board of Directors, or may terminate such delegation.
    (b) Consolidated obligations issued by the Banks. (1) Pursuant to 
the Banks' housing finance mission set forth in section 2A(a)(3)(B)(ii) 
of the Act (12 U.S.C. 1422a(a)(3)(B)(ii)), pursuant to the Finance 
Board's duty to ensure that the Banks carry out that mission and remain 
adequately capitalized and able to raise funds in the capital markets 
under section 2A(a)(3)(B)(ii) and (iii) of the Act (12 U.S.C. 
1422a(a)(3)(B)(ii) and (iii)), and subject to the provisions of this 
part and such rules, regulations, terms and conditions as the Finance 
Board may prescribe, the Banks are authorized to issue joint debt under 
section 11(a) of the Act (12 U.S.C. 1431(a)), which shall be called 
consolidated obligations and on which the Banks shall be jointly and 
severally liable under Sec. 966.9 of this part.
    (2) Consolidated obligations shall be issued only through the Office 
of Finance, as agent of the Banks pursuant to this part and part 985 of 
this chapter.
    (3) The authorization contained herein shall be deemed to constitute 
satisfaction of the requirement for Finance Board approval of the 
``terms and conditions'' of the consolidated obligations pursuant to 
section 11(a) of the Act (12 U.S.C. 1431(a)).
    (c) Negative pledge requirement. Each Bank shall at all times 
maintain assets described in paragraphs (c)(1) through (c)(6) of this 
section free from any lien or pledge, in an amount at least equal to a 
pro rata share of the total amount of currently outstanding consolidated 
obligations jointly issued by the Banks pursuant to section 11(a) of the 
Act (12 U.S.C. 1431(a)) and by the Finance Board pursuant to section 
11(c) of the Act (12 U.S.C. 1431(c)) and equal to such Bank's 
participation in all such COs outstanding, provided that any assets that 
are subject to a lien or pledge for the benefit of the holders of any 
issue of consolidated obligations shall be treated as if they were 
assets free from any lien or pledge for purposes of compliance with this 
paragraph (c). Eligible assets are:
    (1) Cash;
    (2) Obligations of or fully guaranteed by the United States;
    (3) Secured advances;
    (4) Mortgages as to which one or more Banks have any guaranty or 
insurance, or commitment therefor, by the United States or any agency 
thereof;
    (5) Investments described in section 16(a) of the Act (12 U.S.C. 
1436(a)); and
    (6) Other securities that have been assigned a rating or assessment 
by an NRSRO that is equivalent to or higher than the rating or 
assessment assigned by that NRSRO to consolidated obligations 
outstanding.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002]



Sec. 966.3  Leverage limit and credit rating requirements.

    (a) Bank leverage. (1) Except as provided in paragraph (a)(2) of 
this section, the total assets of any Bank shall not exceed 21 times the 
total of paid-in capital stock, retained earnings, and reserves 
(excluding loss reserves and liquidity reserves for deposits pursuant to 
section 11(g) of the Act (12 U.S.C. 1431(g)) of that Bank.
    (2) The aggregate amount of assets of any Bank may be up to 25 times 
the total paid-in capital stock, retained earnings, and reserves of that 
Bank, provided that non-mortgage assets, after deducting the amount of 
deposits and capital, do not exceed 11 percent of such total assets. For 
the purposes of this section, the amount of non-mortgage assets equals 
total assets after deduction of:
    (i) Advances;
    (ii) Acquired member assets, including all United States government-
insured or guaranteed whole single-family or multi-family residential 
mortgage loans;

[[Page 120]]

    (iii) Standby letters of credit;
    (iv) Intermediary derivative contracts;
    (v) Debt or equity investments:
    (A) That primarily benefit households having a targeted income 
level, a significant proportion of which must benefit households with 
incomes at or below 80 percent of area median income, or areas targeted 
for redevelopment by local, state, tribal or Federal government 
(including Federal Empowerment Zones and Enterprise and Champion 
Communities), by providing or supporting one or more of the following 
activities:
    (1) Housing;
    (2) Economic development;
    (3) Community services;
    (4) Permanent jobs; or
    (5) Area revitalization or stabilization;
    (B) In the case of mortgage-or asset-backed securities, the 
acquisition of which would expand liquidity for loans that are not 
otherwise adequately provided by the private sector and do not have a 
readily available or well established secondary market; and
    (C) That involve one or more members or housing associates in a 
manner, financial or otherwise, and to a degree to be determined by the 
Bank;
    (vi) Investments in SBICs, where one or more members or housing 
associates of the Bank also make a material investment in the same 
activity;
    (vii) SBIC debentures, the short term tranche of SBIC securities, or 
other debentures that are guaranteed by the Small Business 
Administration under title III of the Small Business Investment Act of 
1958, as amended (15 U.S.C. 681 et seq);
    (viii) Section 108 Interim Notes and Participation Certificates 
guaranteed by the Department of Housing and Urban Development under 
section 108 of the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5308);
    (ix) Investments and obligations issued or guaranteed under the 
Native American Housing Assistance and Self-Determination Act of 1996 
(25 U.S.C. 4101 et seq.).
    (x) Securities representing an interest in pools of mortgages (MBS) 
issued, guaranteed, or fully insured by the Government National Mortgage 
Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation 
(Freddie Mac), or the Federal National Mortgage Association (Fannie 
Mae), or Collateralized Mortgage Obligations (CMOs), including Real 
Estate Mortgage Investment Conduits (REMICs), backed by such securities;
    (xi) Other MBS, CMOs, and REMICs rated in the highest rating 
category by a NRSRO;
    (xii) Asset-backed securities collateralized by manufactured housing 
loans or home equity loans and rated in the highest rating category by a 
NRSRO; and
    (xiii) Marketable direct obligations of state or local government 
units or agencies, rated in one of the two highest rating categories by 
a NRSRO, where the purchase of such obligations by a Bank provides to 
the issuer the customized terms, necessary liquidity, or favorable 
pricing required to generate needed funding for housing or community 
development.
    (b) Credit ratings. (1) The Banks, collectively, shall obtain from 
an NRSRO and, at all times, maintain a current credit rating on the 
Banks' consolidated obligations.
    (2) Each Bank shall operate in such a manner and take any actions 
necessary, including without limitation reducing Bank leverage, to 
ensure that the Banks' consolidated obligations receive and continue to 
receive the highest credit rating from any NRSRO by which the 
consolidated obligations have then been rated.
    (c) Individual Bank credit rating. Each Bank shall operate in such a 
manner and take any actions necessary to ensure that the Bank has and 
maintains an individual issuer credit rating of at least the second 
highest credit rating from any NRSRO providing a rating, where such 
rating is a meaningful measure of the individual Bank's financial 
strength and stability, and is updated at least annually by an NRSRO, or 
more frequently as required by the Finance Board, to reflect any 
material changes in the condition of the Bank.
    (d) Transition provision. Each Bank shall obtain the credit rating 
from an

[[Page 121]]

NRSRO required under paragraph (c) of this section by July 1, 2001.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12853, Mar. 20, 2002; 67 
FR 35715, May 21, 2002]



Sec. 966.4  Form of consolidated obligations.

    (a) All consolidated obligations shall be issued in pari passu.
    (b) Consolidated obligations with maturities of one year or less may 
be designated consolidated notes.



Sec. 966.5  Transactions in consolidated obligations.

    The general regulations of the Department of the Treasury now or 
hereafter in force governing transactions in United States securities, 
except 31 CFR part 357 regarding book-entry procedure, are hereby 
incorporated into this part 966, so far as applicable and as necessarily 
modified to relate to consolidated obligations, as the regulations of 
the Finance Board for similar transactions on consolidated obligations. 
The book-entry procedure for consolidated obligations is contained in 
part 987 of this subchapter.



Sec. 966.6  Lost, stolen, destroyed, mutilated or defaced consolidated
obligations.

    United States statutes and regulations of the Department of the 
Treasury now or hereafter in force governing relief on account of the 
loss, theft, destruction, mutilation or defacement of United States 
securities, so far as applicable and as necessarily modified to relate 
to consolidated obligations, are hereby adopted as the regulations of 
the Finance Board for the issuance of substitute consolidated 
obligations or the payment of lost, stolen, destroyed, mutilated or 
defaced consolidated obligations.



Sec. 966.7  Administrative provision.

    The Secretary of the Treasury or the Acting Secretary of the 
Treasury is hereby authorized and empowered, as the agent of the Finance 
Board and the Banks, to administer Sec. Sec. 966.5 and 966.6, and to 
delegate such authority at their discretion to other officers, 
employees, and agents of the Department of the Treasury. Any such 
regulations may be waived on behalf of the Finance Board and the Banks 
by the Secretary of the Treasury, the Acting Secretary of the Treasury, 
or by an officer of the Department of the Treasury authorized to waive 
similar regulations with respect to United States securities, but only 
in any particular case in which a similar regulation with respect to 
United States securities would be waived. The terms ``securities'' and 
``bonds'' as used in this section shall, unless the context otherwise 
requires, include and apply to coupons and interim certificates.



Sec. 966.8  Conditions for issuance of consolidated obligations.

    (a) The Office of Finance board of directors shall authorize the 
offering for current and forward settlement (up to 12 months) or the 
reopening of COs, as necessary, and authorize the maturities, rates of 
interest, terms and conditions thereof, subject to the provisions of 31 
U.S.C. 9108.
    (b) COs may be offered for sale only to the extent that Banks are 
committed to take the proceeds.
    (c) COs shall not be directly placed with any Bank.
    (d) If a Bank participates in any CO denominated in a currency other 
than U.S. Dollars or linked to equity or commodity prices, then the Bank 
shall meet the following requirements:
    (1) The relevant foreign exchange, equity price or commodity price 
risks associated with the CO must be hedged in accordance with Sec. 
956.6 of this chapter;
    (2) If there is a default on the part of a counterparty to a 
contract hedging the foreign exchange, equity or commodity price risk 
associated with a CO, the Bank shall enter into a replacement contract 
in a timely manner and as soon as market conditions permit.

[65 FR 36298, June 7, 2000, as amended at 66 FR 8321, Jan. 30, 2001; 67 
FR 12853, Mar. 20, 2002]



Sec. 966.9  Joint and several liability.

    (a) In general. (1) Each and every Bank, individually and 
collectively, has an obligation to make full and timely payment of all 
principal and interest on consolidated obligations when due.
    (2) Each and every Bank, individually and collectively, shall ensure 
that the

[[Page 122]]

timely payment of principal and interest on all consolidated obligations 
is given priority over, and is paid in full in advance of, any payment 
to or redemption of shares from any shareholder.
    (3) The provisions of this part shall not limit, restrict or 
otherwise diminish, in any manner, the joint and several liability of 
all of the Banks on all of the consolidated obligations issued by the 
Finance Board pursuant to section 11(c) of the Act (12 U.S.C. 1431(c)) 
and by the Banks pursuant to section 11(a) of the Act (12 U.S.C. 
1431(a)).
    (b) Certification and reporting. (1) Before the end of each calendar 
quarter, and before declaring or paying any dividend for that quarter, 
the President of each Bank shall certify in writing to the Finance Board 
that, based on known current facts and financial information, the Bank 
will remain in compliance with the liquidity requirements set forth in 
section 11(g) of the Act (12 U.S.C. 1431(g)), and the Finance Board's 
FMP or any regulations (as the same may be amended, modified or 
replaced), and will remain capable of making full and timely payment of 
all of its current obligations, including direct obligations, coming due 
during the next quarter.
    (2) A Bank shall immediately provide written notice to the Finance 
Board if at any time the Bank:
    (i) Is unable to provide the certification required by paragraph 
(b)(1) of this section;
    (ii) Projects at any time that it will fail to comply with statutory 
or regulatory liquidity requirements, or will be unable to timely and 
fully meet all of its current obligations, including direct obligations, 
due during the quarter;
    (iii) Actually fails to comply with statutory or regulatory 
liquidity requirements or to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter; or
    (iv) Negotiates to enter or enters into an agreement with one or 
more other Banks to obtain financial assistance to meet its current 
obligations, including direct obligations, due during the quarter; the 
notice of which shall be accompanied by a copy of the agreement, which 
shall be subject to the approval of the Finance Board.
    (c) Consolidated obligation payment plans. (1) A Bank promptly shall 
file a consolidated obligation payment plan for Finance Board approval:
    (i) If the Bank becomes a non-complying Bank as a result of failing 
to provide the certification required in paragraph (b)(1) of this 
section;
    (ii) If the Bank becomes a non-complying Bank as a result of being 
required to provide the notice required pursuant to paragraph (b)(2) of 
this section, except in the event that a failure to make a principal or 
interest payment on a consolidated obligation when due was caused solely 
by a temporary interruption in the Bank's debt servicing operations 
resulting from an external event such as a natural disaster or a power 
failure; or
    (iii) If the Finance Board determines that the Bank will cease to be 
in compliance with the statutory or regulatory liquidity requirements, 
or will lack the capacity to timely and fully meet all of its current 
obligations, including direct obligations, due during the quarter.
    (2) A consolidated obligation payment plan shall specify the 
measures the non-complying Bank will undertake to make full and timely 
payments of all of its current obligations, including direct 
obligations, due during the applicable quarter.
    (3) A non-complying Bank may continue to incur and pay normal 
operating expenses incurred in the regular course of business (including 
salaries, benefits, or costs of office space, equipment and related 
expenses), but shall not incur or pay any extraordinary expenses, or 
declare, or pay dividends, or redeem any capital stock, until such time 
as the Finance Board has approved the Bank's consolidated obligation 
payment plan or inter-Bank assistance agreement, or ordered another 
remedy, and all of the non-complying Bank's direct obligations have been 
paid.
    (d) Finance Board payment orders; Obligation to reimburse. (1) The 
Finance Board, in its discretion and notwithstanding any other provision 
in this section, may at any time order any Bank to make any principal or 
interest

[[Page 123]]

payment due on any consolidated obligation.
    (2) To the extent that a Bank makes any payment on any consolidated 
obligation on behalf of another Bank, the paying Bank shall be entitled 
to reimbursement from the non-complying Bank, which shall have a 
corresponding obligation to reimburse the Bank providing assistance, to 
the extent of such payment and other associated costs (including 
interest to be determined by the Finance Board).
    (e) Adjustment of equities. (1) Any non-complying Bank shall apply 
its assets to fulfill its direct obligations.
    (2) If a Bank is required to meet, or otherwise meets, the direct 
obligations of another Bank due to a temporary interruption in the 
latter Bank's debt servicing operations (e.g., in the event of a natural 
disaster or power failure), the assisting Bank shall have the same right 
to reimbursement set forth in paragraph (d)(2) of this section.
    (3) If the Finance Board determines that the assets of a non-
complying Bank are insufficient to satisfy all of its direct obligations 
as set forth in paragraph (e)(1) of this section, then the Finance Board 
may allocate the outstanding liability among the remaining Banks on a 
pro rata basis in proportion to each Bank's participation in all 
consolidated obligations outstanding as of the end of the most recent 
month for which the Finance Board has data, or otherwise as the Finance 
Board may prescribe.
    (f) Reservation of authority. Nothing in this section shall affect 
the Finance Board's authority to adjust equities between the Banks in a 
manner different than the manner described in paragraph (e) of this 
section, or to take enforcement or other action against any Bank 
pursuant to the Finance Board's authority under the Act or otherwise to 
supervise the Banks and ensure that they are operated in a safe and 
sound manner.
    (g) No rights created. (1) Nothing in this part shall create or be 
deemed to create any rights in any third party.
    (2) Payments made by a Bank toward the direct obligations of another 
Bank are made for the sole purpose of discharging the joint and several 
liability of the Banks on consolidated obligations.
    (3) Compliance, or the failure to comply, with any provision in this 
section shall not be deemed a default under the terms and conditions of 
the consolidated obligations.



Sec. 966.10  Savings clause.

    Any agreements or other instruments entered into in connection with 
the issuance of COs prior to the amendments made to this part shall 
continue in effect with respect to all COs issued under the authority of 
section 11 of the Act (12 U.S.C. 1431) and pursuant to this part. 
References to consolidated obligations in such agreements and 
instruments shall be deemed to refer to all joint and several 
obligations of the Banks.

[65 FR 36298, June 7, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



PART 969_DEPOSITS--Table of Contents



Sec.
969.1 Definitions. [Reserved]
969.2 Deposits from members.

    Authority: 12 U.S.C. 1422b(a)(1), 1431.

    Source: 65 FR 8266, Feb 18, 2000, unless otherwise noted.



Sec. 969.1  Definitions. [Reserved]



Sec. 969.2  Deposits from members.

    Banks may accept demand and time deposits from members, reserving 
the right to require notice of intention to withdraw any part of time 
deposits. Rates of interest paid on all deposits shall be set by the 
Bank's board of directors (or, between regular meetings thereof, by a 
committee of directors selected by the board) or by the Bank President, 
if so authorized by the board. Unless otherwise specified by the board, 
a Bank President may delegate to any officer or employee of the Bank any 
authority he possesses under this section.

[[Page 124]]



    SUBCHAPTER I_MISCELLANEOUS FEDERAL HOME LOAN BANK OPERATIONS AND 
                               AUTHORITIES





PART 975_COLLECTION, SETTLEMENT, AND PROCESSING OF PAYMENT 
INSTRUMENTS--Table of Contents



Sec.
975.1 Definitions.
975.2 Authority and scope.
975.3 General provisions.
975.4 Incidental powers.
975.5 Operations.
975.6 Pricing of services.
975.7 Rights, powers, responsibilities, duties, and liabilities.

    Authority: 12 U.S.C. 1430, 1431.

    Source: 45 FR 64164, Sept. 29, 1980, unless otherwise noted. 
Redesignated at 54 FR 36759, Sept. 5, 1989, and further redesignated at 
65 FR 8256, Feb. 18, 2000.



Sec. 975.1  Definitions.

    (a) Unless otherwise defined in this part, the terms used in this 
part shall conform, in the following order, to: Regulations of the 
Finance Board, the Uniform Commercial Code, regulations of the Federal 
Reserve System, and general banking usage.
    (b) As used in this part:
    Account processing includes charging, crediting, and settling of 
member or eligible institution accounts, excluding individual customer 
accounts.
    Assets includes furniture and equipment, leasehold improvements, and 
capitalized start-up costs.
    Data communication means transmitting and receiving of data to or 
from Banks, Federal Reserve offices, clearinghouse associations, 
depository institutions or their service bureaus, and other direct 
sending entities, arrangement for delivery of information; and telephone 
inquiry service.
    Data processing includes capture, storage, and assembling of, and 
computation of, data from payment instruments received from Federal 
Reserve offices, Banks, clearinghouse associations, depository 
institutions, and other direct lending entities.
    Eligible institution means any institution that is eligible to make 
application to become a member of a Bank under section 4 of the Act (12 
U.S.C. 1424), including any building and loan association, savings and 
loan association, cooperative bank, homestead association, insurance 
company, savings bank, or any insured depository institution (as defined 
in section 2(12) of the Act (12 U.S.C. 1422(12))), regardless of whether 
the institution applies for or would be approved for membership.
    Issuance of forms means the designation and distribution of 
standardized forms for use in collection, processing, and settlement 
services.
    Presentment means a demand for acceptance or payment made upon the 
maker, acceptor, drawee or other payor by or on behalf of the holder, 
and may involve the use of electronic transmission of an instrument or 
item or transmission of data from the instrument or item by electronic 
or mechanical means.
    Statement packaging includes receiving statement information from 
members or eligible institutions or their service bureaus on respective 
customer cycle dates; printing statements; matching customer account 
statements; packaging the statements with appropriate items and 
informational materials, as authorized by individual members and 
eligible institutions, for distribution to their customers; sending the 
packages to the members or eligible institutions or mailing the packages 
directly to their customers.
    Storage services includes filing, storage, and truncation of items.
    Transportation of items includes transporting items from Federal 
Reserve offices, other Banks' clearinghouse associations, depository 
institutions, and other direct sending entities to a Bank; forwarding 
items to financial institutions after sorting and forwarding cash items 
or return items to Federal Reserve offices and other sending entities.

[67 FR 12854, Mar. 20, 2002]



Sec. 975.2  Authority and scope.

    (a) Pursuant to section 11(e)(2) of the Act (12 U.S.C. 1431(e)(2)) , 
the Finance Board has promulgated this part governing the collection, 
processing, and settlement, and services incidental

[[Page 125]]

thereto, of drafts, checks, and other negotiable and nonnegotiable items 
and instruments by Banks. Settlement, collection, and processing include 
the following activities as defined in this part: Account processing, 
data processing, data communication, issuance of forms, transportation 
of items, and storage services.
    (b) Any activity authorized by section 11(e)(2) of the Act (12 
U.S.C. 1431(e)(2)) shall be governed by the provisions of this part.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12854, Mar. 20, 2002]



Sec. 975.3  General provisions.

    The Banks are authorized to:
    (a) Engage in, be agents or intermediaries for, or otherwise 
participate or assist in, the processing, collection, and settlement of 
checks, drafts, or any other negotiable or nonnegotiable items and 
instruments of payment drawn on eligible institutions or Bank members; 
and
    (b) Be drawees of checks, drafts, and other negotiable and 
nonnegotiable items and instruments issued by eligible institutions or 
Bank members.

[67 FR 12854, Mar. 20, 2002]



Sec. 975.4  Incidental powers.

    In connection with the collection, processing, and settlement of 
items and instruments drawn on or issued by eligible institutions or 
Bank members, a Bank may also perform the following services:
    (a) Statement packaging; and
    (b) Any other activity that the Finance Board shall, from time to 
time, after notice and comment, find necessary for the exercise of the 
authority of this part.

[45 FR 64164, Sept. 29, 1980, as amended at 55 FR 2231, Jan. 23, 1990; 
65 FR 8266, Feb. 18, 2000; 67 FR 12854, Mar. 20, 2002]



Sec. 975.5  Operations.

    A Bank may utilize the services of a Federal Reserve Bank and may 
become a member or use the services of a clearinghouse, public or 
private financial institution, or agency in the exercise of any powers 
or functions under this part.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]



Sec. 975.6  Pricing of services.

    (a) General. Banks shall charge for services authorized in this part 
in a manner consistent with the principles of section 11(A)(c) of the 
Federal Reserve Act (12 U.S.C. 248a(c)), as interpreted by this part.
    (b) Payment instrument account services. (1) In determining the fees 
for services provided under this part, a Bank must take into account all 
direct and indirect costs of providing the services.
    (2) Prices must reflect the imputed rate of return that would have 
been earned and the taxes that would have been paid if the Bank were a 
private corporation, by using a cost of capital adjustment factor 
applied to those assets used in providing services authorized under this 
part.
    (c) Review and publication. The Finance Board shall from time to 
time and at least annually review the cost of capital adjustment factor 
and review prices for services authorized in this part for compliance 
with the principles set forth in paragraphs (a) and (b) of this section. 
All prices for Bank services authorized in this part will be published 
annually in the Federal Register, except those for fees charged to an 
applicant for draws made by a beneficiary under a standby letter of 
credit.

(12 U.S.C. 1431(e); Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 1943-
48 Comp., p. 1071)

[45 FR 64164, Sept. 29, 1980, as amended at 46 FR 38900, July 30, 1981. 
Redesignated at 54 FR 36759, Sept. 5, 1989, and amended at 58 FR 59936, 
Nov. 12, 1993; 60 FR 57682, Nov. 17, 1995; 63 FR 65700, Nov. 30, 1998; 
65 FR 8266, Feb. 18, 2000]



Sec. 975.7  Rights, powers, responsibilities, duties, and liabilities.

    To the extent it is not inconsistent with other provisions of this 
part, the Uniform Commercial Code governs the rights, powers, 
responsibilities, duties, and liabilities of Banks in the exercise of 
their authority under this part. For purposes of this paragraph, the 
term ``bank,'' as used in the Uniform Commercial Code and clearinghouse 
rules,

[[Page 126]]

includes Banks and their members and eligible institutions.

[45 FR 64164, Sept. 5, 1989, as amended at 65 FR 8266, Feb. 18, 2000]



PART 977_MISCELLANEOUS BANK AUTHORITIES--Table of Contents



Sec.
977.1 Definitions. [Reserved]
977.2 Transfer of funds between Banks.
977.3 Trustee powers.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1431(a), 1431(e), 
1432(a).

    Source: 65 FR 8266, Feb. 18, 2000, unless otherwise noted.



Sec. 977.1  Definitions. [Reserved]



Sec. 977.2  Transfer of funds between Banks.

    Inter-Bank borrowing shall be through unsecured deposits bearing 
interest at rates negotiated between Banks.



Sec. 977.3  Trustee powers.

    A Bank may act, and make reasonable charges for doing so, as trustee 
of any trust affecting the business of any member or any institution or 
group applying for membership or for insurance of accounts, or any group 
applying for a charter for a Federal Savings Association, if:
    (a) Such trust is created or arises for the benefit of the 
institution or its depositors, investors, or borrowers, or for the 
promotion of sound and economical home financing; and
    (b) In the case of applicants, the Bank ceases to act as trustee if 
the application is withdrawn or rejected.



PART 978_BANK REQUESTS FOR INFORMATION--Table of Contents



Sec.
978.1 Definitions.
978.2 Scope.
978.3 Request for confidential information.
978.4 Form of request.
978.5 Storage of confidential information.
978.6 Access to confidential information.
978.7 Third party requests for confidential information.
978.8 Computer data.

    Authority: 12 U.S.C. 1422b(a), 1442.

    Source: 65 FR 8266, Feb. 18, 2000, unless otherwise noted.



Sec. 978.1  Definitions.

    As used in this part:
    Confidential information means any record, data, or report, 
including but not limited to examination reports, or any part thereof, 
that is non-public, privileged or otherwise not intended for public 
disclosure which is in the possession or control of a financial 
regulatory agency and which contains information regarding members of a 
Bank or financial institutions with which a Bank has had or contemplates 
having transactions under the Act.
    Financial regulatory agency means any of the following:
    (1) The Department of the Treasury, including either the OCC or the 
OTS;
    (2) The FRB;
    (3) The NCUA; or
    (4) The FDIC.
    Third party means any person or entity except a director, officer, 
employee or agent of either:
    (1) A Bank in possession of any particular confidential information; 
or
    (2) The financial regulatory agency that supplied the particular 
confidential information to such Bank.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.2  Scope.

    This part governs the procedure by which a Bank will request and 
receive confidential information pursuant to section 22 of the Act (12 
U.S.C. 1442).

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.3  Request for confidential information.

    A Bank shall make all requests for confidential information to a 
financial regulatory agency, or to a regional office of such agency if 
mutually agreeable, in accordance with the procedures contained in this 
part as well as any procedures of general applicability for requesting 
information promulgated by such financial regulatory agency. This part 
and its procedures may be supplemented by a confidentiality agreement 
between a Bank and a financial regulatory agency.

[[Page 127]]



Sec. 978.4  Form of request.

    A request by a Bank to a financial regulatory agency for 
confidential information shall be made in writing or by such other means 
as may be agreed upon between the Bank and the financial regulatory 
agency. The request shall reference section 22 of the Act (12 U.S.C. 
1442), as amended, and this regulation, and shall describe the 
confidential information requested and identify its intended use 
pursuant to the Act. The request shall be signed or otherwise made by 
any duly authorized Bank officer or employee.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 978.5  Storage of confidential information.

    Each Bank shall:
    (a) Store all identified confidential information in secure storage 
areas or filing cabinets or other secured facilities generally used by 
such Bank and limit access thereto in the same manner as it maintains 
the confidentiality of its own members' privileged or non-public 
information;
    (b) Have in place a written set of procedures and policies designed 
to ensure the confidentiality of confidential information in its 
possession; and
    (c) Establish an internal review of its procedures for storing 
confidential information and maintaining its confidentiality, as a part 
of its internal audit process.



Sec. 978.6  Access to confidential information.

    Each Bank shall ensure that access to the confidential information 
stored at its facility is limited to those with a need to know such 
information and that employees with access maintain the confidentiality 
of the confidential information in accordance with the Bank's own 
procedures for maintaining the confidentiality of its members' 
privileged or non-public information.



Sec. 978.7  Third party requests for confidential information.

    (a) General. In the event a Bank receives a request for confidential 
information in its possession from any third party, the Bank shall 
forward such request to the financial regulatory agency from which the 
confidential information was obtained.
    (b) Subpoena. In the event a Bank receives a subpoena for 
confidential information issued by a Federal, state or local government 
department, agency, court or bureau, the Bank shall give timely written 
notice of such subpoena to the financial regulatory agency from which 
the confidential information was obtained, unless such notice is 
prohibited by applicable law. Except as limited in this part, the Bank 
may disclose confidential information pursuant to the subpoena, after 
giving timely written notice, when:
    (1) The financial regulatory agency gives written approval to the 
disclosure; or
    (2) A binding order to produce the confidential information has 
become final with all rights of appeal either exhausted or lapsed.
    (c) Nondisclosure to third parties. Except as provided in paragraph 
(b) of this section, a Bank shall not disclose confidential information 
to any third party. A Bank shall refer all third party requests for such 
confidential information to the financial regulatory agency that 
released the confidential information to the Bank.
    (d) Disclosure to Finance Board. (1) Neither this part nor any 
confidentiality agreement executed between a Bank and a financial 
regulatory agency shall prevent a Bank from disclosing confidential 
information in its possession to the Finance Board whenever disclosure 
is necessary to accomplish the Finance Board's supervision of Bank 
membership applications or Bank director eligibility issues, or 
disclosing any confidential information in its possession if such 
disclosure is made pursuant to an audit conducted pursuant to Sec. 
978.5 or section 20 of the Act (12 U.S.C. 1440).
    (2) The Finance Board shall keep all confidential information 
received under paragraph (d) of this section in strict confidence.

[65 FR 8266, Feb. 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]

[[Page 128]]



Sec. 978.8  Computer data.

    Nothing in this part shall preclude a Bank from arranging with any 
financial regulatory agency to transmit or allow access to confidential 
information with the consent of such agency by means of an electronic 
computer system. Any such arrangement shall ensure the security of the 
computerized data stored in a Bank's computer and restrict access to 
such data in order to preserve confidentiality in a manner agreed upon 
by the Bank and the financial regulatory agency.

[[Page 129]]



           SUBCHAPTER J_NEW FEDERAL HOME LOAN BANK ACTIVITIES





PART 980_NEW BUSINESS ACTIVITIES--Table of Contents



    Effective Date Note: At 75 FR 76622, Dec. 9, 2010, part 980 was was 
redesignated part 1272, effective Jan. 10, 2011.
Sec.
980.1 Definitions.
980.2 Limitation on Bank authority to undertake new business activities.
980.3 New business activity notice requirement.
980.4 Commencement of new business activities.
980.5 Notice by the Finance Board.
980.6 Finance Board consent.
980.7 Examinations; requests for additional information.

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1431(a), 1432(a).

    Source: 65 FR 44431, July 18, 2000, unless otherwise noted.

    Editorial Note: Nomenclature changes to part appear at 75 FR 76624, 
Dec. 9, 2011.

    Effective Date Note: At 75 FR 76622, Dec. 9, 2010, the authority 
citation of redesignated part 1272 was revised, effective Jan. 10, 2011. 
For the convenience of the user, the revised text is set forth as 
follows:
    Authority: 12 U.S.C. 1431(a), 1432(a), 4511(b), 4513, 4526(a).



Sec. 980.1  Definitions.

    As used in this part:
    New business activity means any business activity undertaken, 
transacted, conducted, or engaged in by a Bank that has not been 
previously undertaken, transacted, conducted, or engaged in by that 
Bank, or was previously undertaken, transacted, conducted, or engaged in 
under materially different terms and conditions, such that it:
    (1) Involves the acceptance of collateral enumerated under Sec. 
950.7(a)(4) of this chapter;
    (2) Involves the acceptance of classes of collateral enumerated 
under Sec. 950.7(b) of this chapter for the first time;
    (3) Entails risks not previously and regularly managed by that Bank, 
its members, or both, as appropriate; or
    (4) Involves operations not previously undertaken by that Bank.

    Effective Date Note: At 75 FR 76622, Dec. 9, 2010, redesignated 
Sec. 1272.1 was amended by adding in correct alphabetical order 
definitions for ``Bank,'' ``Bank Act'' and ``FHFA'', effective Jan. 10, 
2011. For the convenience of the user, the added text is set forth as 
follows:



Sec. 1272.1  Definitions.

                                * * * * *

    Bank, written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act, as amended (12 U.S.C. 
1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    FHFA means the Federal Housing Finance Agency.



Sec. 980.2  Limitation on Bank authority to undertake new business activities.

    No Bank shall undertake any new business activity except in 
accordance with the procedures set forth in this part.



Sec. 980.3  New business activity notice requirement.

    At least sixty days prior to undertaking a new business activity, 
except as provided in Sec. 980.4(b), a Bank shall submit to the Finance 
Board a written notice containing the following information:
    (a) General requirements. Except as provided in paragraph (b) of 
this section, a Bank's notice of new business activity shall include:
    (1) An opinion of counsel citing the statutory, regulatory, or other 
legal authority for the new business activity;
    (2) A good faith estimate of the anticipated dollar volume of the 
activity over the short-and long-term;
    (3) A full description of:
    (i) The purpose and operation of the proposed activity;
    (ii) The market targeted by the activity;

[[Page 130]]

    (iii) The delivery system for the activity; and
    (iv) The effect of the activity on the housing, or relevant 
community lending, market;
    (4) A demonstration of the Bank's capacity, through staff, or 
contractors employed by the Bank, sufficiency of experience and 
expertise, to safely administer and manage the risks associated with the 
new activity;
    (5) An assessment of the risks associated with the activity, 
including the Bank's ability to manage these risks and the Bank's 
ability to manage the risks associated with increasing volumes of the 
new activity; and
    (6) The criteria that the Bank will use to determine the eligibility 
of its members or housing associates to participate in the new activity.
    (b) New collateral activities. If a proposed new business activity 
relates to the acceptance of collateral under Sec. 950.7 of this 
chapter, a Bank's notice of new business activity shall include:
    (1) A description of the classes or amounts of collateral proposed 
to be accepted by the Bank;
    (2) A copy of the Bank's member products policy, adopted pursuant to 
Sec. 917.4 of this chapter;
    (3) A copy of the Bank's procedures for determining the value of the 
collateral in question, established pursuant to Sec. 950.10 of this 
chapter; and
    (4) A demonstration of the Bank's capacity, personnel, technology, 
experience and expertise to value, discount and manage the risks 
associated with the collateral in question.

[65 FR 44431, July 18, 2000, as amended at 67 FR 12854, Mar. 20, 2002]



Sec. 980.4  Commencement of new business activities.

    A Bank may commence a new business activity:
    (a) Sixty days after receipt by the Finance Board of the notice of 
new business activity under Sec. 980.3, if the Finance Board has not 
issued to the Bank a notice as described in Sec. 980.5(a)(1) through 
(4);
    (b) In the case of the acceptance of collateral enumerated under 
Sec. 950.7(a)(4) of this chapter, immediately upon receipt by the 
Finance Board of a notice of new business activity under Sec. 980.3; or
    (c) Immediately upon issuance by the Finance Board of a letter of 
approval under Sec. 980.6.



Sec. 980.5  Notice by the Finance Board.

    (a) Issuance. Within sixty days after receipt of a notice of new 
business activity under Sec. 980.3, the Finance Board may issue to a 
Bank a notice that:
    (1) Disapproves the new business activity;
    (2) Instructs the Bank not to commence the new business pending 
further consideration by the Finance Board;
    (3) Declares an intent to examine the Bank;
    (4) Requests additional information including but not limited to the 
requests listed in Sec. 980.7;
    (5) Establishes conditions for the Finance Board's approval of the 
new business activity, including but not limited to the conditions 
listed in Sec. 980.7; or
    (6) Contains other instructions or information that the Finance 
Board deems appropriate under the circumstances.
    (b) Effect. Following receipt of a notice issued pursuant to 
paragraph (a) of this section, a Bank may not undertake any new business 
activity that is the subject of the notice until the Bank has received 
the Finance Board's consent pursuant to Sec. 980.6.



Sec. 980.6  Finance Board consent.

    The Finance Board may at any time provide consent for a Bank to 
undertake a particular new business activity and setting forth the terms 
and conditions that apply to the activity, with which the Bank shall 
comply if the Bank undertakes the activity in question.



Sec. 980.7  Examinations; requests for additional information.

    (a) General. Nothing in this part shall limit in any manner the 
right of the Finance Board to conduct any examination of any Bank.
    (b) Requests for additional information and conditions for approval. 
With respect to a new business activity, nothing in this part shall 
limit the right of the Finance Board at any time to:

[[Page 131]]

    (1) Request further information from a Bank concerning a new 
business activity; and
    (2) Require a Bank to comply with certain conditions in order to 
undertake, or continue to undertake, the new business activity in 
question, including but not limited to:
    (i) Successful completion of pre- or post-implementation safety and 
soundness examinations;
    (ii) Demonstration by the Bank of adequate operational capacity, 
including the existence of appropriate policies, procedures and 
controls;
    (iii) Demonstration by the Bank of its ability to manage the risks 
associated with accepting increasing volumes of particular collateral, 
or holding increasing volumes of particular assets, including the Bank's 
capacity reliably to value, discount and market the collateral or assets 
for liquidation;
    (iv) Demonstration by the Bank that the new business activity is 
consistent with the housing finance and community lending mission of the 
Banks and the cooperative nature of the Bank System; and
    (v) Finance Board review of any contracts or agreements between the 
Bank and its members or housing associates.

[[Page 132]]



                     SUBCHAPTER K_OFFICE OF FINANCE





PART 987_BOOK-ENTRY PROCEDURE FOR CONSOLIDATED OBLIGATIONS--
Table of Contents



Sec.
987.1 Definitions.
987.2 Law governing rights and obligations of Banks, Finance Board, 
          Office of Finance, United States and Federal Reserve Banks; 
          rights of any Person against Banks, Finance Board, Office of 
          Finance, United States and Federal Reserve Banks.
987.3 Law governing other interests.
987.4 Creation of Participant's Security Entitlement; security 
          interests.
987.5 Obligations of Banks and the Office of Finance; no Adverse Claims.
987.6 Authority of Federal Reserve Banks.
987.7 Liability of Banks, Finance Board, Office of Finance and Federal 
          Reserve Banks.
987.8 Additional requirements; notice of attachment for Book-entry 
          consolidated obligations.
987.9 Reference to certain Department of Treasury commentary and 
          determinations.
987.10 Obligations of United States with respect to consolidated 
          obligations.

    Authority: 12 U.S.C. 1422a, 1422b, 1431, 1435.

    Source: 63 FR 8059, Feb. 18, 1998, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 987.1  Definitions.

    As used in this part, unless the context otherwise requires or 
indicates:
    Adverse Claim means a claim that a claimant has a property interest 
in a Book-entry consolidated obligation and that it is a violation of 
the rights of the claimant for another Person to hold, transfer, or deal 
with the Security.
    Book-entry consolidated obligation means a consolidated obligation 
maintained in the book-entry system of the Federal Reserve Banks.
    Entitlement Holder means a Person or a Bank to whose account an 
interest in a Book-entry consolidated obligation is credited on the 
records of a Securities Intermediary.
    Federal Reserve Bank means a Federal Reserve Bank or branch, acting 
as fiscal agent for the Office of Finance, unless otherwise indicated.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Federal Reserve Bank maintains Book-entry Securities 
accounts and transfers Book-entry Securities.
    Funds account means a reserve and/or clearing account at a Federal 
Reserve Bank to which debits or credits are posted for transfers against 
payment, Book-entry Securities transaction fees, or principal and 
interest payments.
    Office of Finance means the Office of Finance acting as agent of the 
Banks in all matters relating to the issuance of Book-entry consolidated 
obligations and in the performance of all other necessary and proper 
functions relating to Book-entry consolidated obligations, including the 
payment of principal and interest due thereon.
    Participant means a Person or a Bank that maintains a Participant's 
Securities Account with a Federal Reserve Bank.
    Participant's Securities Account means an account in the name of a 
Participant at a Federal Reserve Bank to which Book-entry consolidated 
obligations held for a Participant are or may be credited.
    Person means and includes an individual, corporation, company, 
governmental entity, association, firm, partnership, trust, estate, 
representative, and any other similar organization, but does not mean or 
include a Bank, the Finance Board, the Office of Finance, the United 
States, or a Federal Reserve Bank.
    Revised Article 8 means Uniform Commercial Code, Revised Article 8, 
Investment Securities (with Conforming and Miscellaneous Amendments to 
Articles 1, 3, 4, 5, 9, and 10) 1994 Official Text. Copies of this 
publication are available from the Executive Office of the American Law 
Institute, 4025 Chestnut Street, Philadelphia, PA 19104, and the 
National Conference of Commissioners on Uniform State Laws, 676 North 
St. Clair Street, Suite 1700, Chicago, IL 60611.
    Securities Intermediary means:

[[Page 133]]

    (1) A Person that is registered as a ``clearing agency'' under the 
Federal securities laws; a Federal Reserve Bank; any other person that 
provides clearance or settlement services with respect to a Book-entry 
consolidated obligation that would require it to register as a clearing 
agency under the Federal securities laws but for an exclusion or 
exemption from the registration requirement, it its activities as a 
clearing corporation, including promulgation of rules, are subject to 
regulation by a Federal or State governmental authority; or
    (2) A Person (other than an individual, unless such individual is 
registered as a broker or dealer under the Federal securities laws) 
including a bank or broker, that in the ordinary course of its business 
maintains securities accounts for others and is acting in that capacity.
    Security Entitlement means the rights and property interest of an 
Entitlement Holder with respect to a Book-entry consolidated obligation.
    Transfer Message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry consolidated 
obligation, as set forth in Federal Reserve Bank Operating Circulars.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 
FR 12855, Mar. 20, 2002]



Sec. 987.2  Law governing rights and obligations of Banks, Finance Board,
Office of Finance, United States and Federal Reserve Banks; rights of

any Person 
          against Banks, Finance Board, Office of Finance, United States 
          and Federal Reserve Banks.

    (a) Except as provided in paragraph (b) of this section, the rights 
and obligations of the Banks, the Finance Board, the Office of Finance, 
the United States and the Federal Reserve Banks with respect to: A Book-
entry consolidated obligation or Security Entitlement and the operation 
of the Book-entry system, as it applies to consolidated obligations; and 
the rights of any Person, including a Participant, against the Banks, 
the Finance Board, the Office of Finance, the United States and the 
Federal Reserve Banks with respect to: A Book-entry consolidated 
obligation or Security Entitlement and the operation of the Book-entry 
system, as it applies to consolidated obligations; are governed solely 
by regulations of the Finance Board, including the regulations of this 
part 987, the applicable offering notice, applicable procedures 
established by the Office of Finance, and Federal Reserve Bank Operating 
Circulars.
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 987.4(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 987.4(c)(1), is 
governed by the law determined in the manner specified in Sec. 987.3.
    (c) If the jurisdiction specified in the first sentence of paragraph 
(b) of this section is a State that has not adopted Revised Article 8, 
then the law specified in the first sentence of paragraph (b) of this 
section shall be the law of that State as though Revised Article 8 had 
been adopted by that State.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.3  Law governing other interests.

    (a) To the extent not inconsistent with this part 987, the law (not 
including the conflict-of-law rules) of a Securities Intermediary's 
jurisdiction governs:
    (1) The acquisition of a Security Entitlement from the Securities 
Intermediary;
    (2) The rights and duties of the Securities Intermediary and 
Entitlement Holder arising out of a Security Entitlement;
    (3) Whether the Securities Intermediary owes any duties to an 
adverse claimant to a Security Entitlement;
    (4) Whether an Adverse Claim can be asserted against a Person who 
acquires a Security Entitlement from the Securities Intermediary or a 
Person who

[[Page 134]]

purchases a Security Entitlement or interest therein from an Entitlement 
Holder; and
    (5) Except as otherwise provided in paragraph (c) of this section, 
the perfection, effect of perfection or non-perfection, and priority of 
a security interest in a Security Entitlement.
    (b) The following rules determine a ``Securities Intermediary's 
jurisdiction'' for purposes of this section:
    (1) If an agreement between the Securities Intermediary and its 
Entitlement Holder specifies that it is governed by the law of a 
particular jurisdiction, that jurisdiction is the Securities 
Intermediary's jurisdiction.
    (2) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify the governing law as provided in 
paragraph (b)(1) of this section, but expressly specifies that the 
securities account is maintained at an office in a particular 
jurisdiction, that jurisdiction is the Securities Intermediary's 
jurisdiction.
    (3) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
office identified in an account statement as the office serving the 
Entitlement Holder's account.
    (4) If an agreement between the Securities Intermediary and its 
Entitlement Holder does not specify a jurisdiction as provided in 
paragraph (b)(1) or (b)(2) of this section and an account statement does 
not identify an office serving the Entitlement Holder's account as 
provided in paragraph (b)(3) of this section, the Securities 
Intermediary's jurisdiction is the jurisdiction in which is located the 
chief executive office of the Securities Intermediary.
    (c) Notwithstanding the general rule in paragraph (a)(5) of this 
section, the law (but not the conflict-of-law rules) of the jurisdiction 
in which the Person creating a security interest is located governs 
whether and how the security interest may be perfected automatically or 
by filing a financing statement.
    (d) If the jurisdiction specified in paragraph (b) of this section 
is a State that has not adopted Revised Article 8, then the law for the 
matters specified in paragraph (a) of this section shall be the law of 
that State as though Revised Article 8 had been adopted by that State. 
For purposes of the application of the matters specified in paragraph 
(a) of this section, the Federal Reserve Bank maintaining the Securities 
Account is a clearing corporation, and the Participant's interest in a 
Bank Book-entry Security is a Security Entitlement.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.4  Creation of Participant's Security Entitlement; 
security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book entry that a Book-entry consolidated 
obligation has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including, without limitation, deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is 
marked on the books of a Federal Reserve Bank is thereby effected and 
perfected, and has priority over any other interest in the Securities. 
Where a security interest in favor of the United States in a Security 
Entitlement of a Participant is marked on the books of a Federal Reserve 
Bank, such Federal Reserve Bank may rely, and is protected in relying, 
exclusively on the order of an authorized representative of the United 
States directing the transfer of the Security. For purposes of this 
paragraph (b), an ``authorized representative of the United States'' is 
the official designated in the applicable regulations or agreement to 
which a Federal Reserve Bank is a party, governing the security 
interest.
    (c)(1) The Banks, the Finance Board, the Office of Finance, the 
United States and the Federal Reserve Banks have no obligation to agree 
to act on behalf of any Person or to recognize

[[Page 135]]

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.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest in a Security Entitlement, including a 
security interest in favor of a Federal Reserve Bank, may be perfected 
by any method by which a security interest may be perfected under 
applicable law as described in Sec. 987.2(b) or Sec. 987.3. The 
perfection, effect of perfection or non-perfection, and priority of a 
security interest are governed by that applicable law. A security 
interest in favor of a Federal Reserve Bank shall be treated as a 
security interest in favor of a clearing corporation in all respects 
under that law, including with respect to the effect of perfection and 
priority of the security interest. A Federal Reserve Bank Operating 
Circular shall be treated as a rule adopted by a clearing corporation 
for such purposes.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.5  Obligations of the Banks and the Office of Finance;
no Adverse Claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in Sec. 
987.4(c)(1), for the purposes of this part 987, the Banks, the Office of 
Finance and the Federal Reserve Banks shall treat the Participant to 
whose Securities Account an interest in a Book-entry consolidated 
obligations has been credited as the person exclusively entitled to 
issue a Transfer Message, to receive interest and other payments with 
respect thereof and otherwise to exercise all the rights and powers with 
respect to the Security, notwithstanding any information or notice to 
the contrary. Neither the Banks, the Finance Board, the Office of 
Finance, the United States, nor the Federal Reserve Banks are liable to 
a Person asserting or having an Adverse Claim to a Security Entitlement 
or to Book-entry consolidated obligations in a Participant's Securities 
Account, including any such claim arising as a result of the transfer or 
disposition of a Book-entry consolidated obligation by a Federal Reserve 
Bank pursuant to a Transfer Message that the Federal Reserve Bank 
reasonably believes to be genuine.
    (b) The obligation of the Banks and the Office of Finance to make 
payments of interest and principal with respect to Book-entry 
consolidated obligations is discharged at the time payment in the 
appropriate amount is made as follows:
    (1) Interest on Book-entry consolidated obligations is either 
credited by a Federal Reserve Bank to a Funds Account maintained at the 
Federal Reserve Bank or otherwise paid as directed by the Participant.
    (2) Book-entry consolidated obligations are paid, either at maturity 
or upon redemption, in accordance with their terms by a Federal Reserve 
Bank withdrawing the securities from the Participant's Securities 
Account in which they are maintained and by either crediting the amount 
of the proceeds, including both principal and interest, where 
applicable, to a Funds Account at the Federal Reserve Bank or otherwise 
paying such principal and interest as directed by the Participant. No 
action by the Participant is required in connection with the payment of 
a Book-entry consolidated obligation, unless otherwise expressly 
required.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000; 67 
FR 12855, Mar. 20, 2002]

[[Page 136]]



Sec. 987.6  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the Office of Finance: To perform functions with respect to the 
issuance of Book-entry consolidated obligations, in accordance with the 
terms of the applicable offering notice and with procedures established 
by the Office of Finance; to service and maintain Book-entry 
consolidated obligations in accounts established for such purposes; to 
make payments of principal, interest and redemption premium (if any), as 
directed by the Office of Finance; to effect transfer of Book-entry 
consolidated obligations between Participants' Securities Accounts as 
directed by the Participants; and to perform such other duties as fiscal 
agent as may be requested by the Office of Finance.
    (b) Each Federal Reserve Bank may issue Operating Circulars not 
inconsistent with this part 987, governing the details of its handling 
of Book-entry consolidated obligations, Security Entitlements, and the 
operation of the Book-entry system under this part 987.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.7  Liability of Banks, Finance Board, Office of Finance 
and Federal Reserve Banks.

    The Banks, the Finance Board, the Office of Finance and the Federal 
Reserve Banks may rely on the information provided in a tender, 
transaction request form, other transaction documentation, or Transfer 
Message, and are not required to verify the information. Neither the 
Banks, the Finance Board, the Office of Finance, the United States, nor 
the Federal Reserve Banks shall be liable for any action taken in 
accordance with the information set out in a tender, transaction request 
form, other transaction documentation, or Transfer Message, or evidence 
submitted in support thereof.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.8  Additional requirements; notice of attachment for
Book-entry consolidated obligations.

    (a) Additional requirements. In any case or any class of cases 
arising under the regulations in this part 987, the Office of Finance 
may require such additional evidence and a bond of indemnity, with or 
without surety, as may in its judgment, or in the judgment of the Banks 
or the Finance Board, be necessary for the protection of the interests 
of the Banks, the Finance Board, the Office of Finance or the United 
States.
    (b) Notice of attachment. The interest of a debtor in a Security 
Entitlement may be reached by a creditor only by legal process upon the 
Securities Intermediary with whom the debtor's securities account is 
maintained, except where a Security Entitlement is maintained in the 
name of a secured party, in which case the debtor's interest may be 
reached by legal process upon the secured party. The regulations in this 
part 987 do not purport to establish whether a Federal Reserve Bank is 
required to honor an order or other notice of attachment in any 
particular case or class of cases.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]



Sec. 987.9  Reference to certain Department of Treasury commentary 
and determinations.

    (a) The Department of Treasury TRADES Commentary (31 CFR part 357, 
appendix B) addressing the Department of Treasury regulations governing 
book-entry procedure for Treasury Securities is hereby referenced, so 
far as applicable and as necessarily modified to relate to Book-entry 
consolidated obligations, as an interpretive aid to this part 987.
    (b) Determinations of the Department of Treasury regarding whether a 
State shall be considered to have adopted Revised Article 8 for purposes 
of 31 CFR part 357, as published in the Federal Register or otherwise, 
shall also apply to this part 987.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]

[[Page 137]]



Sec. 987.10  Obligations of United States with respect to consolidated
obligations.

    Consolidated obligations are not obligations of the United States 
and are not guaranteed by the United States.

[63 FR 8059, Feb. 18, 1998, as amended at 65 FR 8268, Feb. 18, 2000]

[[Page 138]]



                  SUBCHAPTER L_NON-BANK SYSTEM ENTITIES





PART 995_FINANCING CORPORATION OPERATIONS--Table of Contents



Sec.
995.1 Definitions.
995.2 General authority.
995.3 Authority to establish investment policies and procedures.
995.4 Book-entry procedure for Financing Corporation obligations.
995.5 Bank and Office of Finance employees.
995.6 Budget and expenses.
995.7 Administrative expenses.
995.8 Non-administrative expenses; assessments.
995.9 Reports to the Finance Board.
995.10 Review of books and records.

    Authority: 12 U.S.C. 1441(b)(8), (c), (j).

    Source: 62 FR 50248, Sept. 25, 1997, unless otherwise noted. 
Redesignated at 65 FR 8256, Feb. 18, 2000.



Sec. 995.1  Definitions.

    As used in this part:
    Administrative expenses:
    (1) Include general office and operating expenses such as telephone 
and photocopy charges, printing, legal, and professional fees, postage, 
courier services, and office supplies; and
    (2) Do not include any form of employee compensation, custodian 
fees, issuance costs, or any interest on (and any redemption premium 
with respect to) any Financing Corporation obligations.
    BIF-assessable deposit means a deposit that is subject to assessment 
for purposes of the Bank Insurance Fund under the Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.), including a deposit that is 
treated as a deposit insured by the Bank Insurance Fund under section 
5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)).
    Custodian fees means any fee incurred by the Financing Corporation 
in connection with the transfer of any security to, or maintenance of 
any security in, the segregated account established under section 
21(g)(2) of the Act (12 U.S.C. 1441(g)(2)), and any other expense 
incurred by the Financing Corporation in connection with the 
establishment or maintenance of such account.
    Directorate means the board established under section 21(b) of the 
Act (12 U.S.C. 1441(b)) to manage the Financing Corporation.
    Exit fees means the amounts paid under sections 5(d)(2)(E) and (F) 
of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(2)(E) and (F)), 
and regulations promulgated thereunder (12 CFR part 312).
    Insured depository institution has the same meaning as in section 3 
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
    Issuance costs means issuance fees and commissions incurred by the 
Financing Corporation in connection with the issuance or servicing of 
Financing Corporation obligations, including legal and accounting 
expenses, trustee, fiscal, and paying agent charges, securities 
processing charges, joint collection agent charges, advertising 
expenses, and costs incurred in connection with preparing and printing 
offering materials to the extent the Financing Corporation incurs such 
costs in connection with issuing any obligations.
    Non-administrative expenses means custodian fees, issuance costs, 
and interest on Financing Corporation obligations.
    Obligations means debentures, bonds, and similar debt securities 
issued by the Financing Corporation under sections 21(c)(3) and (e) of 
the Act (12 U.S.C. 1421(c)(3) and (e)).
    Receivership proceeds means the liquidating dividends and payments 
made on claims received by the Federal Savings and Loan Insurance 
Corporation Resolution Fund established under section 11A of the Federal 
Deposit Insurance Act (12 U.S.C. 1821a) from receiverships, that are not 
required by the Resolution Funding Corporation to provide funds for the 
Funding Corporation Principal Fund established under section 21B of the 
Act (12 U.S.C. 1441b).
    SAIF-assessable deposit means a deposit that is subject to 
assessment for

[[Page 139]]

purposes of the Savings Association Insurance Fund under the Federal 
Deposit Insurance Act, including a deposit that is treated as a deposit 
insured by the Savings Association Insurance Fund under section 5(d)(3) 
of the Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)).

[67 FR 12855, Mar. 20, 2002]



Sec. 995.2  General authority.

    Subject to the limitations and interpretations in this part and such 
orders and directions as the Finance Board may prescribe, the Financing 
Corporation shall have authority to exercise all powers and authorities 
granted to it by the Act and by its charter and bylaws regardless of 
whether the powers and authorities are specifically implemented in 
regulation.



Sec. 995.3  Authority to establish investment policies and procedures.

    The Directorate shall have authority to establish investment 
policies and procedures with respect to Financing Corporation funds 
provided that the investment policies and procedures are consistent with 
the requirements of section 21(g) of the Act (12 U.S.C. 1441(g)). The 
Directorate shall promptly notify the Finance Board in writing of any 
changes to the investment policies and procedures.

[62 FR 50248, Sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12855, Mar. 20, 2002]



Sec. 995.4  Book-entry procedure for Financing Corporation obligations.

    (a) Authority. Any Federal Reserve Bank shall have authority to 
apply book-entry procedure to Financing Corporation obligations.
    (b) Procedure. The book-entry procedure for Financing Corporation 
obligations shall be governed by the book-entry procedure established 
for Bank consolidated obligations, codified at part 987 of this chapter. 
Wherever the terms ``Bank(s),'' ``consolidated obligation(s)'' or 
``Book-entry consolidated obligation(s)'' appear in part 987, the terms 
shall be construed also to mean ``Financing Corporation,'' ``Financing 
Corporation obligation(s),'' or ``Book-entry Financing Corporation 
obligation(s),'' respectively, if appropriate to accomplish the purposes 
of this section.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 
67 FR 12855, Mar. 20, 2002]



Sec. 995.5  Bank and Office of Finance employees.

    Without further approval of the Finance Board, the Financing 
Corporation shall have authority to utilize the officers, employees, or 
agents of any Bank or the Office of Finance in such manner as may be 
necessary to carry out its functions.



Sec. 995.6  Budget and expenses.

    (a) Directorate approval. The Financing Corporation shall submit 
annually to the Directorate for approval, a budget of proposed 
expenditures for the next calendar year that includes administrative and 
non-administrative expenses.
    (b) Finance Board approval. The Directorate shall submit annually to 
the Finance Board for approval, the budget of the Financing 
Corporation's proposed expenditures it approved pursuant to paragraph 
(a) of this section.
    (c) Spending limitation. The Financing Corporation shall not exceed 
the amount provided for in the annual budget approved by the Finance 
Board pursuant to paragraph (b) of this section, or as it may be amended 
by the Directorate within limits set by the Finance Board.
    (d) Amended budgets. Whenever the Financing Corporation projects or 
anticipates that it will incur expenditures, other than interest on 
Financing Corporation obligations, that exceed the amount provided for 
in the annual budget approved by the Finance Board or the Directorate 
pursuant to paragraph (b) or (c) of this section, the Financing 
Corporation shall submit an amended annual budget to the Directorate for 
approval, and the Directorate shall submit such amended budget to the 
Finance Board for approval.



Sec. 995.7  Administrative expenses.

    (a) Payment by Banks. The Banks shall pay all administrative 
expenses

[[Page 140]]

of the Financing Corporation approved pursuant to Sec. 995.6.
    (b) Amount. The Financing Corporation shall determine the amount of 
administrative expenses each Bank shall pay in the manner provided by 
section 21(b)(7)(B) of the Act (12 U.S.C. 1441(b)(7)(B)). The Financing 
Corporation shall bill each Bank for such amount periodically.
    (c) Adjustments. The Financing Corporation shall adjust the amount 
of administrative expenses the Banks are required to pay in any calendar 
year pursuant to paragraphs (a) and (b) of this section, by deducting 
any funds that remain from the amount paid by the Banks for 
administrative expenses in the prior calendar year.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, Feb. 18, 2000; 
67 FR 12856, Mar. 20, 2002]



Sec. 995.8  Non-administrative expenses; assessments.

    (a) Interest expenses. The Financing Corporation shall determine 
anticipated interest expenses on its obligations at least semiannually.
    (b) Assessments on insured depository institutions--(1) Authority. 
To provide sufficient funds to pay the non-administrative expenses of 
the Financing Corporation approved under Sec. 995.6, the Financing 
Corporation shall, with the approval of the board of directors of the 
FDIC, assess against each insured depository institution an assessment 
in the same manner as assessments are made by the FDIC under section 7 
of the Federal Deposit Insurance Act.
    (2) Assessment rate--(i) Determination. The Financing Corporation at 
least semiannually shall establish an assessment rate formula, which may 
include rounding methodology, to determine the rate or rates of the 
assessment it will assess against insured depository institutions 
pursuant to section 21(f)(2) of the Act (12 U.S.C. 1441(f)(2)) and 
paragraph (b)(1) of this section.
    (ii) Limitation. Until the earlier of December 31, 1999, or the date 
as of which the last savings association ceases to exist, the rate of 
the assessment imposed on an insured depository institution with respect 
to any BIF-assessable deposit shall be a rate equal to \1/5\ of the rate 
of the assessment imposed on an insured depository institution with 
respect to any SAIF-assessable deposit.
    (iii) Notice. The Financing Corporation shall notify the FDIC and 
the collection agent, if any, of the formula established under paragraph 
(b)(2)(i) of this section.
    (3) Collecting assessments--(i) Collection agent. The Financing 
Corporation shall have authority to collect assessments made under 
section 21(f)(2) of the Act (12 U.S.C. 1441(f)(2)) and paragraph (b)(1) 
of this section through a collection agent of its choosing.
    (ii) Accounts. Each Bank shall permit any insured depository 
institution whose principal place of business is in its district to 
establish and maintain at least one demand deposit account to facilitate 
collection of the assessments made under section 21(f)(2) of the Act (12 
U.S.C. 1441(f)(2)) and paragraph (b)(1) of this section.
    (c) Receivership proceeds--(1) Authority. To the extent the amounts 
collected under paragraph (b) of this section are insufficient to pay 
the non-administrative expenses of the Financing Corporation approved 
under Sec. 995.6, the Financing Corporation shall have authority to 
require the FDIC to transfer receivership proceeds to the Financing 
Corporation in accordance with section 21(f)(3) of the Act (12 U.S.C. 
1441(f)(3)).
    (2) Procedure. The Directorate shall request in writing that the 
FDIC transfer the receivership proceeds to the Financing Corporation. 
Such request shall specify the estimated amount of funds required to pay 
the non-administrative expenses of the Financing Corporation approved 
under Sec. 995.6.
    (d) Exit fees--(1) Authority. To the extent the amounts provided 
under paragraphs (b) and (c) of this section are insufficient to pay the 
interest due on Financing Corporation obligations, the Financing 
Corporation shall have authority to request that the Secretary of the 
Treasury order the transfer of exit fees to the Financing Corporation in 
accordance with section 5(d)(2)(E) of the Federal Deposit Insurance Act 
(12 U.S.C. 1815(d)(2)(E)) or as otherwise may be provided for by 
statute.
    (2) Procedure. The Directorate shall request in writing that the 
Secretary of the Treasury order that exit fees be

[[Page 141]]

transferred to the Financing Corporation. Such request shall specify the 
estimated amount of funds required to pay the interest due on Financing 
Corporation obligations.

[62 FR 50248, Sept. 25, 1997, as amended at 65 FR 8268, 8269, Feb. 18, 
2000; 67 FR 12856, Mar. 20, 2002]



Sec. 995.9  Reports to the Finance Board.

    The Financing Corporation shall file such reports as the Finance 
Board shall direct.



Sec. 995.10  Review of books and records.

    The Finance Board shall examine the Financing Corporation at least 
annually to determine whether the Financing Corporation is performing 
its functions in accordance with the requirements of section 21 of the 
Act (12 U.S.C. 1441) and this part.

[62 FR 50248, sept. 25, 1997. Redesignated at 65 FR 8256, Feb. 18, 2000, 
as amended at 67 FR 12856, Mar. 20, 2002]



PART 996_AUTHORITY FOR BANK ASSISTANCE OF THE RESOLUTION FUNDING 
CORPORATION--Table of Contents



Sec.
996.1 [Reserved]
996.2 Bank employees.
996.3 Demand deposit accounts.

    Authority: 12 U.S.C. 1422a, 1422b.



Sec. 996.1  [Reserved]



Sec. 996.2  Bank employees.

    Upon the request of the Directorate of the Resolution Funding 
Corporation, established pursuant to section 21B(b) of the Act (12 
U.S.C. 1441b(b)), officers, employees, or agents of the Banks are 
authorized to act for and on behalf of the Resolution Funding 
Corporation in such manner as may be necessary to carry out the 
functions of the Resolution Funding Corporation as provided in section 
21B(c)(6)(B) of the Act (12 U.S.C. 1441b(c)(6)(B)).

[54 FR 39729, Sept. 28, 1989, as amended at 65 FR 8269, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12856, Mar. 20, 2002]



Sec. 996.3  Demand deposit accounts.

    Each Bank shall allow any Savings Association Insurance Fund member 
whose principal place of business is in its district to establish and 
maintain at least one demand deposit account for the purpose of 
facilitating the Resolution Funding Corporation's assessments pursuant 
to section 21B(e)(7) of the Act (12 U.S.C. 1441b(e)(7)).

[54 FR 39729, Sept. 28, 1989, as amended at 65 FR 8269, Feb. 18, 2000. 
Redesignated and amended at 67 FR 12856, Mar. 20, 2002]



PART 997_RESOLUTION FUNDING CORPORATION OBLIGATIONS OF THE BANKS--
Table of Contents



Sec.
997.1 Definitions.
997.2 Reduction of the payment term.
997.3 Extension of the payment term.
997.4 Calculation of the quarterly present-value determination.
997.5 Termination of the obligation.

    Authority: 12 U.S.C. 1422b(a) and 1441b(f).

    Source: 65 FR 17438, Apr. 3, 2000, unless otherwise noted.



Sec. 997.1  Definitions.

    As used in this part:
    Actual quarterly payment means the quarterly amount paid by the 
Banks to fulfill the Banks' obligation to pay toward interest owed on 
bonds issued by the REFCORP. The amount will equal the aggregate of 20 
percent of the quarterly net earnings of each Bank, or such other amount 
assessed in accordance with the Act and the regulations adopted 
thereunder.
    Benchmark quarterly payment means $75 million, or such amount that 
may result from adjustments required by calculations made in accordance 
with Sec. Sec. 997.2 and 997.3.
    Current benchmark quarterly payment means the benchmark quarterly 
payment that corresponds to the date of the actual quarterly payment.
    Deficit quarterly payment means the amount by which the actual 
quarterly payment falls short of the current benchmark quarterly 
payment.
    Estimated interest rate means the interest rate provided to the 
Finance Board by the Department of the Treasury on a zero-coupon 
Treasury bond, the maturity of which is the same as the date of the 
benchmark quarterly payment that is being defeased, or if no bond 
matures on that date, then is the

[[Page 142]]

date closest to the date of the payment being defeased.
    Excess quarterly payment means the amount by which the actual 
quarterly payment exceeds the current benchmark quarterly payment.
    Quarterly present-value determination means the quarterly 
calculation that will determine the extent to which an excess quarterly 
payment or deficit quarterly payment alters the term of the Banks' 
obligation to the REFCORP. This determination will fulfill the 
requirements of 21B(f)(2)(C)(ii) of the Act (12 U.S.C 
1441b(f)(2)(C)(ii), as amended by Pub. L. 106-102, sec. 607, 113 
Stat.1456-57.

[65 FR 17438, Apr. 3, 2000, as amended at 67 FR 12856, Mar. 20, 2002]



Sec. 997.2  Reduction of the payment term.

    (a) Generally. The Finance Board shall shorten the term of the 
obligation of the Banks to make payments toward the interest owed on 
bonds issued by the REFCORP for each quarter in which there is an excess 
quarterly payment.
    (b) Excess quarterly payment. Where there is an excess quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the excess quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be subtracted from the amount of the last non-defeased quarterly 
benchmark payment.
    (3) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is greater than zero, then the last non-defeased 
quarterly benchmark payment is reduced by the future value of the excess 
quarterly payment.
    (4) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is less than zero, then the last non-defeased 
quarterly benchmark payment shall be defeased and the payment term shall 
be shortened.
    (5) The amount of the excess quarterly payment that has not already 
been applied to defeasing the payment under paragraph (b)(4) of this 
section shall be applied toward defeasing the last non-defeased 
quarterly benchmark payment using the applicable estimated interest 
rate.



Sec. 997.3  Extension of the payment term.

    (a) Generally. The Finance Board will extend the term of the 
obligation of the Banks to make payments toward interest owed on bonds 
issued by the REFCORP for each calendar quarter in which there is a 
deficit quarterly payment.
    (b) Deficit quarterly payment. Where there is a deficit quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the deficit quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment, or to the first quarter 
thereafter if the last non-defeased benchmark quarterly payment already 
equals $75 million.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be added to the amount of the last non-defeased quarterly 
benchmark payment if that sum is $75 million or less.
    (3) If the sum calculated in paragraph (b)(2) of this section 
exceeds $75 million, the last non-defeased quarterly benchmark payment 
will become $75 million, and the quarterly benchmark payment term will 
be extended.
    (4) The extended payment will equal the future value of the amount 
of the deficit quarterly payment that has not already been applied to 
raising the quarterly benchmark payment to $75 million under paragraph 
(b)(3) of this section, using the estimated interest rate corresponding 
to the date of the extended benchmark quarterly payment.
    (c) Term beyond maturity. The benchmark quarterly payment term may 
be extended beyond April 15, 2030, if such extension is necessary to 
ensure that the value of the aggregate amounts paid by the Banks exactly 
equals the present value of an annuity of $300 million per year that 
commences on the date on which the first obligation of the REFCORP was 
issued and ends on April 15, 2030.

[[Page 143]]



Sec. 997.4  Calculation of the quarterly present-value determination.

    (a) Applicable interest rates. The Finance Board shall obtain from 
the Department of the Treasury the applicable estimated interest rates 
and provide those rates to the REFCORP so that the REFCORP can perform 
the calculations required under Sec. Sec. 997.2 and 997.3.
    (b) Calculation by the Finance Board. If Sec. 997.3 requires that 
the term for the Banks' actual quarterly payments extend beyond April 
15, 2030 or if, for any reason, the REFCORP is unable to perform the 
calculations or to provide the Finance Board with the results of the 
calculations, the Finance Board shall make all calculations required 
under this part.
    (c) Records. The Finance Board will maintain the official record of 
the results of all quarterly present-value determinations made under 
this part.



Sec. 997.5  Termination of the obligation.

    (a) Generally. The Banks' obligation to the REFCORP, or to the 
Department of the Treasury if the term of that obligation extends beyond 
April 15, 2030, will terminate when the aggregate actual quarterly 
payments made by the Banks exactly equal the present value of an annuity 
of $300 million per year that commences on the date on which the first 
obligation of the REFCORP was issued and ends on April 15, 2030.
    (b) Date of the final payment. The aggregate actual quarterly 
payments made by the Banks exactly equal the present value of the 
annuity described in paragraph (a) of this section when the value of any 
remaining benchmark quarterly payment(s), after the benchmark quarterly 
payments have been adjusted as required by Sec. Sec. 997.2 and 997.3, 
exactly equals the actual quarterly payment.

[65 FR 17438, Apr. 3, 2000, as amended at 65 FR 40492, June 30, 2000]

[[Page 144]]



             SUBCHAPTER M_FEDERAL HOME LOAN BANK DISCLOSURES





PART 998_REGISTRATION OF FEDERAL HOME LOAN BANK EQUITY SECURITIES--
Table of Contents



Sec.
998.1 Purpose.
998.2 Registration and periodic disclosures.
998.3 Reservation of authority.

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

    Source: 69 FR 38811, June 29, 2004, unless otherwise noted.



Sec. 998.1  Purpose.

    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.



Sec. 998.2  Registration and periodic disclosures.

    (a) Registration. (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.
    (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.
    (b) Periodic disclosures. 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.
    (c) Submission to Finance Board. 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.



Sec. 998.3  Reservation of authority.

    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.

[[Page 145]]



     CHAPTER XI--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL




  --------------------------------------------------------------------
Part                                                                Page
1101            Description of office, procedures, public 
                    information.............................         147
1102            Appraiser regulation........................         153

[[Page 147]]



PART 1101_DESCRIPTION OF OFFICE, PROCEDURES, PUBLIC INFORMATION--
Table of Contents



Sec.
1101.1 Scope and purpose.
1101.2 Authority and functions.
1101.3 Organization and methods of operation.
1101.4 Disclosure of information, policies, and records.
1101.5 Testimony and production of documents in response to subpoena, 
          order, etc.

    Authority: 5 U.S.C. 552; 12 U.S.C. 3307.

    Source: 45 FR 46794, July 11, 1980, unless otherwise noted.



Sec. 1101.1  Scope and purpose.

    This part implements the Freedom of Information Act (FOIA), 5 U.S.C. 
552, with respect to the Federal Financial Institutions Examination 
Council (Council), and establishes related information disclosure 
procedures.



Sec. 1101.2  Authority and functions.

    (a) The Council was established by the Federal Financial 
Institutions Examination Council Act of 1978 (Act), 12 U.S.C. 3301-3308. 
It is composed of the Comptroller of the Currency; the Chairman of the 
Federal Deposit Insurance Corporation; a Governor of the Board of 
Governors of the Federal Reserve System; the Chairman of the Federal 
Home Loan Bank Board; and the Chairman of the National Credit Union 
Administration Board.
    (b) The statutory functions of the Council are set out at 12 U.S.C. 
3305. In summary, the mission of the Council is to promote consistency 
and progress in federal examination and supervision of financial 
institutions and their affiliates. The Council is empowered to prescribe 
uniform principles, standards, and reporting forms and systems; make 
recommendations in the interest of uniformity; and conduct examiner 
schools open to personnel of the agencies represented on the Council and 
employees of state financial institutions supervisory agencies.



Sec. 1101.3  Organization and methods of operation.

    (a) Statutory requirements relating to the Council's organization 
are stated in 12 U.S.C. 3303.
    (b) Council staff. Administrative support and substantive 
coordination for Council activities are provided by a small staff 
detailed on a full-time basis from the five member agencies. The 
Executive Secretary and Deputy Executive Secretary of the Council 
supervise this staff.
    (c) Agency Liaison Group, Task Forces and Legal Advisory Group. Most 
staff support in the substantive areas of the Council's duties is 
provided by interagency task forces and the Council's Legal Advisory 
Group (LAG). These task forces and the LAG are responsible for securing 
the services, as needed, of staff experts from the five agencies; 
supervising research and other investigative work for the Council; and 
preparing reports and recommendations for the Council. The Agency 
Liaison Group (ALG) is responsible for the overall coordination of the 
respective agencies' staff contributions to Council business. The ALG, 
the task forces, and the LAG are each composed of Council member agency 
staff serving the Council on a part-time basis.
    (d) State Liaison Committee. Under 12 U.S.C. 3306, the Council has 
established a State Liaison Committee, composed of five representatives 
of state financial institutions supervisory agencies.
    (e) Council address. Council offices are located at 3501 Fairfax 
Drive, Room B-7081a, Arlington, VA, 22226-3550.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988; 75 
FR 71014, Nov. 22, 2010]



Sec. 1101.4  Disclosure of information, policies, and records.

    (a) Statements of policy published in the Federal Register or 
available for public inspection and copying; indices. Under 5 U.S.C. 
552(a)(1), the Council publishes general rules, policies and 
interpretations in the Federal Register. Under 5 U.S.C. 552(a)(2), 
policies and interpretations adopted by the Council, including 
instructions to Council staff affecting members of the public, and an 
index to the same, are available for

[[Page 148]]

public inspection and copying at the office of the Executive Secretary 
of the Council, 3501 Fairfax Drive, Room B-7081a, Arlington, VA, 22226-
3550, during regular business hours. Policies and interpretations of the 
Council may be withheld from disclosure under the principles stated in 
paragraph (b)(1) of this section.
    (b) Other records of the Council available to the public upon 
request; procedures--(1) General rule and exemptions. Under 5 U.S.C. 
552(a)(3), all other records of the Council are available to the public 
upon request, except to the extent exempted from disclosure as provided 
in this paragraph (b). Except as specifically authorized by the Council, 
the following records, and portions thereof, are not available to the 
public:
    (i) A record, or portion thereof, which is specifically authorized 
under criteria established by an Executive Order to be kept secret in 
the interest of national defense or foreign policy and which is, in 
fact, properly classified pursuant to such Executive Order.
    (ii) A record, or portion thereof, relating solely to the internal 
personnel rules and practices of an agency.
    (iii) A record, or portion thereof, specifically exempted from 
disclosure by statute (other than 5 U.S.C. 552b), provided that such 
statute (A) requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or (B) establishes 
particular criteria for withholding or refers to particular types of 
matters to be withheld.
    (iv) A record, or portion thereof, containing trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential.
    (v) An intra-agency 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, 
and records of deliberations of the Council and discussions of meetings 
of the Council, any Council Committee, or Council staff, that are not 
subject to 5 U.S.C. 552b (the Government in the Sunshine Act).
    (vi) A personnel, medical, or similar record, including a financial 
record, or any portion thereof, the disclosure of which would constitute 
a clearly unwarranted invasion of personal privacy.
    (vii) Records or information compiled for law enforcement purposes, 
to the extent permitted under 5 U.S.C. 552(b)(7), including records 
relating to a proceeding by a financial institution's state or federal 
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.
    (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 state or federal agency directly 
or indirectly responsible for the regulation or supervision of financial 
institutions.
    (ix) A record, or portion thereof, which contains or is related to 
geological and geophysical information and data, including maps, 
concerning wells.
    (2) Discretionary release of exempt information. Notwithstanding the 
applicability of an exemption, the Council or the Council's designee may 
elect, under the circumstances of a particular request, to disclose all 
or a portion of any requested record where permitted by law. Such 
disclosure has no precedential significance.
    (3) Procedure for records request--(i) Initial request. Requests for 
records shall be submitted in writing to the Executive Secretary of the 
Council:
    (A) By sending a letter to: FFIEC, Attn: Executive Secretary, 3501 
Fairfax Drive, Room B-7081a, Arlington, VA 22226-3550. Both the mailing 
envelope and the request should be marked ``Freedom of Information 
Request,'' ``FOIA Request,'' or the like; or
    (B) By facsimile clearly marked ``Freedom of Information Act 
Request,'' ``FOIA Request,'' or the like to the Executive Secretary at 
(703) 562-6446; or
    (C) By e-mail to the address provided on the FFIEC's World Wide Web 
page, found at: http://www.ffiec.gov. Requests must reasonably describe 
the records sought.
    (ii) Contents of request. All requests should contain the following 
information:

[[Page 149]]

    (A) The name and mailing 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;
    (B) A statement as to whether the information is intended for 
commercial use, and whether the requester is an educational or 
noncommercial scientific institution, or news media representative;
    (C) A statement agreeing to pay all applicable fees, or a statement 
identifying any desired fee limitation, or a request for a waiver or 
reduction of fees that satisfies paragraph (b)(5)(ii)(H) of this 
section.
    (iii) Defective requests. The Council 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 section. The 
Executive Secretary may return a defective request specifying the 
deficiency. The requester may submit a corrected request, which will be 
treated as an initial request.
    (iv) Expedited processing. (A) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the Executive Secretary has determined to expedite the response, 
the Executive Secretary shall process the request as soon as 
practicable. To show a compelling need for expedited processing, the 
requester shall provide a statement demonstrating that:
    (1) 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
    (2) The requester is primarily engaged in information dissemination 
as a main professional occupation or activity, and there is urgency to 
inform the public of the government activity involved in the request.
    (B) 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.
    (C) The formality of the certification required to obtain expedited 
treatment may be waived by the Executive Secretary as a matter of 
administrative discretion.
    (v) Response to initial requests. (A) Except where the Executive 
Secretary has determined to expedite the processing of a request, the 
Executive Secretary will respond by mail or electronic mail to all 
properly submitted initial requests 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 requester and the Executive Secretary.
    (B) In response to a request that reasonably describes the records 
sought and otherwise satisfies the requirements of this section, a 
search shall be conducted of records in existence and maintained by the 
Council on the date of receipt of the request, and a review made of any 
responsive information located. The Executive Secretary shall notify the 
requester of:
    (1) The Executive Secretary's determination of the response to the 
request;
    (2) The reasons for the determination;
    (3) If the response is a denial of an initial request or if any 
information is withheld, the Executive Secretary will advise the 
requester in writing:
    (i) If the denial is in part or in whole;
    (ii) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (iii) The exemptions relied on for the denial; and
    (iv) The right of the requester to appeal the denial to the Chairman 
of the Council within 10 working days following the date of issuance of 
the notification, as specified in paragraph (b)(3)(vi) of this section.
    (vi) Appeals of responses to initial requests. If a request is 
denied in whole or in part, the requester may appeal in writing, within 
10 working days of the date of issuance of a denial determination. 
Appeals shall be submitted to the Chairman of the Council: (A) By 
sending a letter to: FFIEC, Attn: Executive Secretary, 3501 Fairfax 
Drive, Room B-7081a, Arlington, VA, 22226-3550. Both the mailing 
envelope and the request

[[Page 150]]

should be marked ``Freedom of Information Act Appeal,'' ``FOIA Appeal,'' 
or the like; or (B) By facsimile clearly marked ``Freedom of Information 
Act Appeal,'' ``FOIA Appeal,'' or the like to the Executive Secretary at 
(703) 562-6446. Appeals should refer to the date and tracking number of 
the original request and the date of the Council's initial ruling. 
Appeals should include an explanation of the basis for the appeal.
    (vii) Council response to appeals. The Chairman of the Council, or 
another member designated by the Chairman, will respond to all properly 
submitted appeals within 20 working days of actual receipt of the appeal 
by the Executive Secretary. 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 requester and the Chairman or the 
Chairman's designee.
    (4) Procedure for access to records if request is granted. (i) 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 
requester 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.
    (ii) When delivery to the requester is to be made, copies of 
requested records shall be sent to the requester by regular U.S. mail to 
the address indicated in the request, unless the Executive Secretary 
deems it appropriate to send the documents by another means.
    (iii) The Council shall provide a copy of the record in any form or 
format requested if the record is readily reproducible by the Council in 
that form or format, but the Council need not provide more than one copy 
of any record to a requester.
    (iv) By arrangement with the requester, the Executive Secretary may 
elect to send the responsive records electronically if a substantial 
portion of the records is in electronic format. If the information 
requested is subject to disclosure under the Privacy Act of 1974, 5 
U.S.C. 552a, it will not be sent by electronic means unless reasonable 
security measures can be established.
    (5) Fees for document search, review, and duplication; waiver and 
reduction of fees--(i) Definitions--(A) Direct costs means those 
expenditures which the Council actually incurs in searching for, 
duplicating, and reviewing documents to respond to a FOIA request.
    (B) Search means all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Searches may be done 
manually or by computer using existing programming.
    (C) Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request. Such copies can take the form of 
paper copy, microfilm, audiovisual records, or machine readable records 
(e.g., magnetic tape or computer disk).
    (D) Review means the process of examining documents located in 
response to a request that is for a commercial use (see paragraph 
(b)(5)(i)(E) of this section) to determine whether any portion of any 
document located is permitted to be withheld and processing such 
documents for disclosure.
    (E) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made. In determining whether a request falls 
within this category, the Executive Secretary will determine the use to 
which a requester will put the records requested and seek additional 
information as the Executive Secretary deems necessary.
    (F) Educational institution means a preschool, an elementary or 
secondary school, an institution of undergraduate higher education, an 
institution of graduate higher education, an institution of professional 
education, and an institution of vocational education, which operates a 
program or programs of scholarly research.
    (G) Noncommercial scientific institution means an institution that 
is not operated on a ``commercial'' basis as that term is referenced in 
paragraph (b)(5)(i)(E) of this section, and which is

[[Page 151]]

operated solely for the purposes of conducting scientific research, the 
results of which are not intended to promote any particular product or 
industry.
    (H) Representative of the news media means any person or entity that 
gathers information of potential interest to a segment of the public, 
uses its editorial skills to turn the raw materials into a distinct 
work, and distributes that work to an audience. In this clause, the term 
``news'' means information that is about current events or that would be 
of current interest to the public. Examples of news-media entities are 
television or radio stations broadcasting to the public at large and 
publishers of periodicals (but only if such entities qualify as 
disseminators of ``news'') who make their products available for 
purchase by or subscription by or free distribution to the general 
public. These examples are not all-inclusive. Moreover, as methods of 
news delivery evolve (for example, the adoption of the electronic 
dissemination of newspapers through telecommunications services), such 
alternative media shall be considered to be news-media entities. A 
freelance journalist shall be regarded as working for a news-media 
entity if the journalist can demonstrate a solid basis for expecting 
publication through that entity, whether or not the journalist is 
actually employed by the entity. A publication contract would present a 
solid basis for such an expectation; the Council may also consider the 
past publication record of the requester in making such a determination.
    (ii) Fees to be charged. The Council will charge fees that recoup 
the full allowable direct costs it incurs. The Council may contract with 
the private sector to locate, reproduce, and/or disseminate records. 
Provided, however, that the Council has ensured that the ultimate cost 
to the requester is no greater than it would be if the Council performed 
these tasks. Fees are subject to change as costs change. In no case will 
the Council contract out responsibilities which the FOIA provides that 
it alone may discharge, such as determining the applicability of an 
exemption, or determining whether to waive or reduce fees.
    (A) Manual searches and review. The Council will charge fees at the 
following rates for manual searches for and review of records:
    (1) If search/review is done by clerical staff, the hourly rate for 
GS-7, step 5, plus 16 percent of the rate to cover benefits;
    (2) If search/review is done by professional staff, the hourly rate 
for GS-13, step 5, plus 16 percent of the rate to cover benefits.
    (B) Computer searches. The Council will charge fees at the hourly 
rate for GS-13, step 5, plus 16 percent of the rate to cover benefits, 
plus the hourly cost of operating the computer for computer searches for 
records.
    (C) Duplication of records. (1) The per-page fee for paper copy 
reproduction of a document is $.25;
    (2 ) The fee for documents generated by computer is the hourly rate 
for the computer operator (at GS 7, step 5, plus 16 percent for benefits 
if clerical staff, and GS 13, step 5, plus 16 percent for benefits if 
professional staff) plus the cost of materials (computer paper, tapes, 
disks, labels, etc.).
    (3) If any other method of duplication is used, the Council will 
charge the actual direct cost of duplicating the documents.
    (D) If search, duplication and/or review is provided by personnel of 
member agencies of the Council, fees will reflect their actual hourly 
rates, plus 16 percent for benefits.
    (E) Fees to exceed $25. If the Council estimates that duplication 
and/or search fees are likely to exceed $25, it will notify the 
requester of the estimated amount of fees, unless the requester has 
indicated in advance his/her willingness to pay fees as high as those 
anticipated. In the case of such notification by the Council, the 
requester will then have the opportunity to confer with Council 
personnel with the object of reformulating the request to meet his/her 
needs at a lower cost.
    (F) Other services. Complying with requests for special services 
such as certifying records as true copies or mailing records by express 
mail 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.

[[Page 152]]

    (G) Restriction on assessing fees. The Council will not charge fees 
to any requester, including commercial use requesters, if the cost of 
collecting a fee would be equal to or greater than the fee itself.
    (H) Waiving or reducing fees. As part of the initial request for 
records, a requester may ask that the Council 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 Council and is not primarily in the commercial 
interest of the requester. The initial request for records must also 
state the justification for a waiver or reduction of fees. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Secretary of the Council and the requester will be notified in 
writing of his/her determination. A determination not to grant a request 
for a waiver or reduction of fees under this paragraph may be appealed 
to the Chairman of the Council pursuant to the procedure set forth in 
paragraph (b)(3)(vi) of this section.
    (iii) Categories of requesters. (A) Commercial use requesters. The 
Council will assess fees for commercial use requesters sufficient to 
recover the full direct costs of searching for, reviewing for release, 
the duplicating the records sought.
    (iii) Categories of requesters. (A) Commercial use requesters. The 
Council will assess fees for commercial use requesters which recover the 
full direct costs of searching for, reviewing for release, the 
duplicating the records sought. Commercial use requesters are not 
entitled to two hours of free search time nor 100 free pages of 
reproduction of documents.
    (B) Requesters who are representatives of the news media, 
educational and noncommercial scientific institution requesters. The 
Council shall provide documents to requesters in these categories for 
the cost of reproduction alone, excluding fees for the first 100 pages.
    (C) All other requesters. The Council shall charge requesters who do 
not fit into any of the categories above fees which recover the full 
reasonable direct cost of searching for and reproducing records that are 
responsive to the request, except that the first 100 pages of 
reproduction and the first two hours of search time shall be furnished 
without a fee.
    (D) All requesters must specifically describe records sought.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.
    (iv) Interest on unpaid fees. The Council may begin assessing 
interest charges on an unpaid bill starting on the 31st day following 
the day on which the bill was sent. Interest will be at the rate 
prescribed in 31 U.S.C. 3717 and will accrue from the date of the 
billing.
    (vi) Aggregating requests. A requester(s) may not file multiple 
requests each seeking portions of a document or documents, solely in 
order to avoid payment of fees. If this is done, the Council may 
aggregate any such requests and charge accordingly. In no case will the 
Council aggregate multiple requests on unrelated subjects from the same 
requester.
    (vii) Advance payment of fees. The Council will not require a 
requester to make an assurance of payment or an advance payment unless:
    (A) The Council estimates or determines that allowable charges that 
a requester may be required to pay are likely to exceed $250. The 
Council will notify the requester of the likely cost and obtain 
satisfactory assurance of full payment where the requester has a history 
of prompt payment of FOIA fees, or require an advance payment of an 
amount up to the full estimated charges in the case of requesters with 
no history of payment; or
    (B) A requester has previously failed to pay a fee charged in a 
timely fashion. The Council may require the requester to pay the full 
amount owed plus any applicable interest as provided in paragraph 
(b)(5)(iv) of this section 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

[[Page 153]]

process a new request or a pending request from that requester.
    (C) When the Council acts under paragraph (b)(5)(vii) (A) or (B) of 
this section, the administrative time limits prescribed in subsection 
(a)(6) of the FOIA (i.e., 20 working days from receipt of initial 
requests, plus permissible extensions of these time limits) will begin 
only after the Council has received the fee payments described.
    (6) Records of another agency. If a requested record originated with 
or incorporates the information of another state or federal agency or 
department, upon receipt of a request for the record the Council will 
promptly inform the requester of this circumstance and immediately shall 
forward the request to the originating agency or department either for 
processing in accordance with the latter's regulations or for guidance 
with respect to disposition.

[45 FR 46794, July 11, 1980, as amended at 53 FR 7341, Mar. 8, 1988; 75 
FR 71014, Nov. 22, 2010]



Sec. 1101.5  Testimony and production of documents in response 
to subpoena, order, etc.

    No person shall testify, in court or otherwise, as a result of 
activities on behalf of the Council without prior written authorization 
from the Council. This section shall not restrict the authority of a 
Council member to testify before Congress on matters within his or her 
official responsibilities as a Council member. No person shall furnish 
documents reflecting information of the Council in compliance with a 
subpoena, order, or otherwise, without prior written authorization from 
the Council. The Council may authorize testimony or production of 
documents after the litigant (or the litigant's attorney) submits an 
affidavit to the Council setting forth the interest of the litigant and 
the testimony or documents desired. Authorization to testify or produce 
documents is limited to authority expressly granted by the Council. When 
the Council has not authorized testimony or production of documents, the 
individual to whom the subpoena or order has been directed will appear 
in court and respectfully state that he or she is unable to comply 
further with the subpoena or order by reason of this section.



PART 1102_APPRAISER REGULATION--Table of Contents



                   Subpart A_Temporary Waiver Requests

Sec.
1102.1 Authority, purpose, and scope.
1102.2 Requirements for requests.
1102.3 Other requests and information submissions.
1102.4 Notice and comment.
1102.5 Subcommittee determination.
1102.6 Waiver extension.
1102.7 Waiver termination.

               Subpart B_Rules of Practice for Proceedings

1102.20 Authority, purpose, and scope.
1102.21 Definitions.
1102.22 Appearance and practice before the Subcommittee.
1102.23 Formal requirements as to papers filed.
1102.24 Filing requirements.
1102.25 Service.
1102.26 When papers are deemed filed or served.
1102.27 Computing time.
1102.28 Documents and exhibits in proceedings public.
1102.29 Conduct of proceedings.
1102.30 Rules of evidence.
1102.31 Burden of proof.
1102.32 Notice of Intention to Commence a Proceeding.
1102.33 Rebuttal or Notice Not To Contest.
1102.34 Briefs, memoranda and statements.
1102.35 Opportunity for informal settlement.
1102.36 Oral presentations.
1102.37 Decision of the Subcommittee and judicial review.
1102.38 Compliance activities.
1102.39 Duty to cooperate.

Subpart C_Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

1102.100 Authority, purpose and scope.
1102.101 Definitions.
1102.102 Times, places and requirements for requests pertaining to 
          individual records in a record system and for the 
          identification of individuals making requests for access to 
          records pertaining to them.
1102.103 Disclosure of requested records.
1102.104 Special procedure: Medical records.
1102.105 Requests for amendment of records.
1102.106 Review of requests for amendment.

[[Page 154]]

1102.107 Appeal of initial adverse agency determination regarding access 
          or amendment.
1102.108 General provisions.
1102.109 Fees.
1102.110 Penalties.

     Subpart D_Description of Office, Procedures, Public Information

1102.300 Purpose and scope.
1102.301 Definitions.
1102.302 ASC authority and functions.
1102.303 Organization and methods of operation.
1102.304 Federal Register publication.
1102.305 Publicly available records.
1102.306 Procedures for requesting records.
1102.307 Disclosure of exempt records.
1102.308 Right to petition for issuance, amendment and repeal of rules 
          of general application.
1102.309 Confidential treatment procedures.
1102.310 Service of process.



                   Subpart A_Temporary Waiver Requests

    Authority: 12 U.S.C. 3348(b).

    Source: 57 FR 10982, Apr. 1, 1992, unless otherwise noted.



Sec. 1102.1  Authority, purpose and scope.

    (a) Authority. This subpart is issued under section 1119(b) of Title 
XI of the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (``FIRREA'') (12 U.S.C. Sec. 3348(b)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing temporary waiver proceedings under Section 1119(b) 
of Title XI of FIRREA (12 U.S.C. 3348(b)). These procedures apply 
whenever a State appraiser regulatory agency requests the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') for a waiver of any requirement relating to certification or 
licensing of a person to perform appraisals under Title XI of FIRREA. 
They also apply whenever the ASC, based on sufficient, credible 
information or requests received from other persons or entities, 
initiates a temporary waiver proceeding.



Sec. 1102.2  Requirements for requests.

    A request will not be deemed received by the ASC unless it fully and 
accurately sets out:
    (a) If the requester is a State Appraiser Regulatory Agency, a 
written, duly authorized determination by the State Appraiser Regulatory 
Agency that there is a scarcity of State licensed or State certified 
appraisers leading to significant delays in obtaining appraisals in 
federally related transactions. The scarcity can relate to the entire 
State or to particular geographical or political subdivisions. In the 
absence of such a written determination, a State Appraiser Regulatory 
Agency must ask the ASC for such a determination;
    (b) The requirement or requirements of State law from which relief 
is being sought;
    (c) A description of all significant problems currently being 
encountered in efforts to comply with Title XI;
    (d) The nature of the scarcity of certified or licensed appraisers 
(including supporting documentation);
    (e) The extent of the delays anticipated or experienced in obtaining 
the services of certified or licensed appraisers (including supporting 
documentation);
    (f) The reasons why the requester believes that the requirement or 
requirements are causing the scarcity of certified or licensed 
appraisers and the service delays; and
    (g) A specific plan for expeditiously alleviating the scarcity and 
the service delays.



Sec. 1102.3  Other requests and information submissions.

    The federal financial institutions regulatory agencies and the 
Resolution Trust Corporation, their respective regulated financial 
institutions, and other persons or institutions with a demonstrable 
interest in appraiser regulation, may ask the ASC for a determination 
under Sec. 1102.2(a) of this subpart, and may ask that the ASC exercise 
its discretionary authority to initiate a temporary waiver proceeding. 
Such regulated financial institutions and other persons or institutions 
do not need to comply with Sec. 1102.2(g) of this subpart, but are 
strongly encouraged to include meaningful suggestions and 
recommendations for remedying the situation. A copy of the request or

[[Page 155]]

informational submission shall be forwarded promptly to the State 
Appraiser Regulatory Agency. The ASC shall consider these submissions 
and requests in exercising its authority to initiate a temporary waiver 
procedure. When the ASC initiates a temporary waiver proceeding, these 
documents shall correspond to a received request under Sec. 1102.4 of 
this subpart.



Sec. 1102.4  Notice and comment.

    The ASC shall publish promptly in the Federal Register a notice 
respecting:
    (a) The received request; or
    (b) The ASC order initiating a temporary waiver proceeding. The 
notice or initiation order shall contain a concise general statement of 
the nature and basis for the action and shall give interested persons 30 
calendar days from its publication in which to submit written data, 
views and arguments.



Sec. 1102.5  Subcommittee determination.

    Within 45 calendar days of the date of the publication of the notice 
or initiation order in the Federal Register, the ASC, by order, shall 
either grant or deny a waiver in whole, in part, and upon specified 
terms and conditions, including provisions for waiver termination. Such 
order shall respond to comments received from interested members of the 
public and shall provide the reasons for the ASC's finding. The order 
shall be published promptly in the Federal Register, which, in the case 
of an approval order, shall be after Federal Financial Institution 
Examination Council concurrence. Upon the ASC's determination that an 
emergency exists, the ASC may issue an interim approval order 
simultaneously with its action under Sec. 1120.4 of this subpart. Any 
ASC approval order shall be effective only upon Federal Financial 
Institution Examination Council concurrence.



Sec. 1102.6  Waiver extension.

    The ASC may initiate an extension of temporary waiver relief and 
shall follow Sec. Sec. 1102.4, 1102.5 and 1102.7 of this subpart. A 
State Appraiser Regulatory Agency also may request an extension of 
temporary waiver relief by forwarding an additional written request to 
the ASC. A request for an extension from State Appraiser Regulatory 
Agency shall be subject to all the requirements of this subpart.



Sec. 1102.7  Waiver termination.

    The ASC at any time may terminate a waiver order on the finding 
that:
    (a) The significant delays in obtaining the services of certified or 
licensed appraisers no longer exist; or
    (b) The terms and conditions of the waiver order are not being 
satisfied. The ASC shall publish a finding of waiver termination 
promptly in the Federal Register, giving interested persons no less than 
30 calendar days from publication in which to submit written data, views 
and arguments. In the absence of further ASC action to the contrary, the 
finding of waiver termination automatically shall become final 21 
calendar days after the close of the comment period.



               Subpart B_Rules of Practice for Proceedings

    Authority: 12 U.S.C. 3332, 3335, 3347, and 3348(c).

    Source: 57 FR 31650, July 17, 1992, unless otherwise noted.



Sec. 1102.20  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under sections 1103, 1106, 
1118 and 1119(c) of Title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C. 3332, 3335, 
3347, and 3348(c)).
    (b) Purpose and scope. This subpart prescribes rules of practice and 
procedure governing non-recognition proceedings under section 1118 of 
Title XI (12 U.S.C. 3347); and other proceedings necessary to carry out 
the purposes of Title XI under section 1119(c) of Title XI (12 U.S.C. 
3348(c)).

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.21  Definitions.

    As used in this subpart:
    (a) Subcommittee or ASC means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination

[[Page 156]]

Council, as established under section 1011 of Title XI (12 U.S.C. 3310).
    (b) Party means the ASC or a person, agency or other entity named as 
a party, including, when appropriate, persons appearing in the 
proceeding under Sec. 1102.22 of this subpart.
    (c) Respondent means any party other than the ASC.
    (d) Secretary means the Secretary of the ASC under its Rules of 
Operation.



Sec. 1102.22  Appearance and practice before the Subcommittee.

    (a) By attorneys and notice of appearance. Any person who is a 
member in good standing of the bar of the highest court of any State or 
of the District of Columbia, or of any possession, territory, or 
commonwealth of the United States, may represent parties before the ASC 
upon filing with the Secretary a written notice of appearance stating 
that he or she is currently qualified as provided in this paragraph and 
is authorized to represent the particular party on whose behalf he or 
she acts.
    (b) By non-attorneys. An individual may appear on his or her own 
behalf. A member of a partnership may represent the partnership, and an 
officer, director or employee of any government unit, agency, 
institution, corporation or authority may represent that unit, agency, 
institution, corporation or authority. The partner, officer, director or 
employee must file with the Secretary a written statement that he or she 
has been duly authorized by the partnership, government unit, agency, 
institution, corporation or authority to act on its behalf. The ASC may 
require the representative to attach to the statement appropriate 
supporting documentation, such as a corporate resolution.
    (c) Conduct during proceedings. All participants in a proceeding 
shall conduct themselves with dignity and in an orderly and ethical 
manner. The attorney or other representative of a party shall make every 
effort to restrain a client from improper conduct in connection with a 
proceeding. Improper language or conduct, refusal to comply with 
directions, use of dilatory tactics, or refusal to adhere to reasonable 
standards of orderly and ethical conduct constitute grounds for 
immediate exclusion from the proceeding at the direction of the ASC.



Sec. 1102.23  Formal requirements as to papers filed.

    (a) Form. All papers filed under this subpart must be double-spaced 
and printed or typewritten on 8\1/2\x11 paper. All 
copies shall be clear and legible.
    (b) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the ASC and of the filing party, the title 
and/or docket number of the proceeding and the subject of the particular 
paper.
    (c) Party names, signatures, certificates of service. All papers 
filed must set forth the name, address and telephone number of the 
attorney or party making the filing, must be signed by the attorney or 
party, and must be accompanied by a certification setting forth when and 
how service has been made on all other parties.
    (d) Copies. Unless otherwise specifically provided in the notice of 
proceeding or by the ASC during the proceeding, an original and one copy 
of all documents and papers shall be furnished to the Secretary.



Sec. 1102.24  Filing requirements.

    (a) Filing. All papers filed with the ASC in any proceeding shall be 
filed with the Secretary, Appraisal Subcommittee, 2000 K Street, NW., 
Suite 310, Washington, DC 20006.
    (b) Manner of filing. Unless otherwise specified by the ASC, filing 
may be accomplished by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.

[57 FR 31650, July 17, 1992, as amended at 69 FR 2501, Jan. 16, 2004]



Sec. 1102.25  Service.

    (a) Methods; appearing party. A serving party, who has made an 
appearance under Sec. 1102.22 of this subpart, shall use one or more of 
the following methods of service:
    (1) Personal service;

[[Page 157]]

    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery; and
    (3) Mailing the papers by first class, registered, or certified 
mail.
    (b) Methods; non-appearing party. If a party has not appeared in the 
proceeding in accordance with Sec. 1102.22 of this subpart, the ASC or 
any other party shall make service by any of the following methods:
    (1) By personal service;
    (2) By delivery to a person of suitable age and discretion at the 
party's last known address;
    (3) By registered or certified mail addressed to the party's last 
known address; or
    (4) By any other manner reasonably calculated to give actual notice.
    (c) By the Subcommittee. All papers required to be served by the ASC 
shall be served by the Secretary unless some other person shall be 
designated for such purpose by the ASC.
    (d) By the respondent. All papers filed in a proceeding under this 
subpart shall be served by a respondent on the Secretary and each 
party's attorney, or, if any party is not so represented, then upon such 
party. Such service may be made by any of the appropriate methods 
specified in paragraphs (a) and (b) of this section.



Sec. 1102.26  When papers are deemed filed or served.

    (a) Effectiveness. Filing and service are deemed effective:
    (1) For personal service or same-day commercial courier delivery, 
upon actual delivery; and
    (2) For overnight commercial delivery service, U.S. Express Mail 
delivery, or first class, registered, or certified mail, upon deposit 
in, or delivery to, an appropriate point of collection.
    (b) Modification. The effective times for filing and service in 
paragraph (a) of this section may be modified by the ASC in the case of 
filing or by agreement of the parties in the case of service.



Sec. 1102.27  Computing time.

    (a) General rule. In computing any period of time prescribed or 
allowed by this subpart, the date of the act, event or default from 
which the designated period of time begins to run is not included. The 
last day so computed is included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the period runs until the end of the 
next day which is not a Saturday, Sunday or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays shall not be 
included in the computation.
    (b) For service and filing responsive papers. Whenever a time limit 
is measured by a prescribed period from the service of any notice or 
paper, the applicable time periods are calculated as follows:
    (1) If service is made by first class, registered or certified mail, 
add three days to the prescribed period; and
    (2) If service is made by express mail or overnight delivery 
service, add one day to the prescribed period.



Sec. 1102.28  Documents and exhibits in proceedings public.

    Unless and until otherwise ordered by the ASC or unless otherwise 
provided by statute or by ASC regulation, all documents, papers and 
exhibits filed in connection with any proceeding, other than those that 
may be withheld from disclosure under applicable law, shall be placed by 
the Secretary in the proceeding's public file and will be available for 
public inspection and copying at the address set out in Sec. 1102.24 of 
this subpart.



Sec. 1102.29  Conduct of proceedings.

    (a) In general. Unless otherwise provided in the notice of 
proceedings, all proceedings under this subpart shall be conducted as 
hereinafter provided.
    (b) Written submissions. All aspects of the proceeding shall be 
conducted by written submissions only, with the exception of oral 
presentations allowed under Sec. 1102.36 of this subpart.
    (c) Disqualification. A Subcommittee member who deems himself or 
herself disqualified may at any time withdraw. Upon receipt of a timely 
and sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record and 
decision in the case.
    (d) User of ASC staff. Appropriate members of the ASC's staff who 
are not

[[Page 158]]

engaged in the performance of investigative or prosecuting functions in 
the proceeding may advise and assist the ASC in the consideration of the 
case and in the preparation of appropriate documents for its 
disposition.
    (e) Authority of Subcommittee Chairperson. The Chairperson of the 
ASC, in consultation with other members of the ASC whenever appropriate, 
shall have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings in accordance 
with this subpart.
    (f) Conferences. (1) The ASC may on its own initiative or at the 
request of any party, direct all parties or counsel to meet with one or 
more duly authorized ASC members or staff at a specified time and place, 
or to submit to the ASC or its designee, suggestions in writing for the 
purpose of considering any or all of the following:
    (i) Scheduling of matters, including a timetable for the 
information-gathering phase of the proceeding;
    (ii) Simplification and clarification of the issues;
    (iii) Stipulations and admissions of fact and of the content and 
authenticity of documents;
    (iv) Matters of which official notice will be taken; and
    (v) Such other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the names of persons submitting 
affidavits or other documents and exhibits which may be introduced into 
the public file of the proceeding.
    (2) Such conferences will not be recorded, but the Secretary shall 
place in the proceeding's public file a memorandum summarizing the 
results of the conference and shall provide a copy of the memorandum to 
each party. The memorandum shall control the subsequent course of the 
proceedings, unless the ASC for good cause shown by one or more parties 
to the conference, modifies those results and instructs the Secretary to 
place an amendatory memorandum to that effect in the public file.
    (g) Changes or extensions of time and changes of place of 
proceeding. The ASC, in connection with initiating a specific 
proceedings under Sec. 1102.32 of this subpart, may instruct the 
Secretary to publish in the Federal Register time limits different from 
those specified in this subpart, and may, on its own initiative or for 
good cause shown, issue an exemption changing the place of the 
proceeding or extending any time limit prescribed by this subpart, 
including the date for ending the information-gathering phase of the 
proceeding.
    (h) Call for further briefs, memoranda, statements; reopening of 
matters. The ASC may call for the production of further information upon 
any issue, the submission of briefs, memoranda and statements (together 
with written responses), and, upon appropriate notice, may reopen any 
aspect of the proceeding at any time prior to a decision on the matter.

[57 FR 31650, July 17, 1992, as amended at 57 FR 35004, Aug. 7, 1992]



Sec. 1102.30  Rules of evidence.

    (a) In general. (1) Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and other applicable 
law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted under this subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may be deemed or ruled admissible in a proceeding conducted 
under this subpart if such evidence is relevant, material, reliable and 
not unduly repetitive.
    (b) Stipulations. Any party may stipulate in writing as to any 
relevant matters of fact, law, or the authenticity of any relevant 
documents. The Secretary shall place such stipulations in the public 
file, and they shall be binding on the parties.
    (c) Official notice. Every matter officially noticed by the ASC 
shall appear in the public file, unless the ASC determines that the 
matter must be withheld from public disclosure under applicable Federal 
law.

[[Page 159]]



Sec. 1102.31  Burden of proof.

    The ultimate burden of proof shall be on the respondent. The burden 
of going forward with a prima facie case shall be on the ASC.



Sec. 1102.32  Notice of Intention to Commence a Proceeding.

    The ASC shall instruct the Secretary or other designated officer 
acting for the ASC to publish in the Federal Register a Notice of 
Intention To Commence A Proceeding (Notice of Intention). The Notice of 
Intention shall be served upon the party or parties to the proceeding 
and shall commence at the time of service. The Notice of Intention shall 
state the legal authority and jurisdiction under which the proceeding is 
to be held; shall contain, or incorporate by appropriate reference, a 
specific statement of the matters of fact or law constituting the 
grounds for the proceeding; and shall state a date no sooner than 25 
days after service of the Notice of Intention is made for termination of 
the information-gathering phase of the proceeding. The Notice of 
Intention also must contain a bold-faced warning respecting the effect 
of a failure to file a Rebuttal or Notice Not To Contest under Sec. 
1102.33(d) of this subpart. The ASC may amend a Notice of Intention in 
any manner and to the extent consistent with provisions of applicable 
law.



Sec. 1102.33  Rebuttal or Notice Not To Contest.

    (a) When required. A party to the proceeding may file either a 
Rebuttal or a Notice Not to Contest the statements contained in the 
Notice of Intention or any amendment thereto with the Secretary within 
15 days after being served with the Notice of Intention or an amendment 
to such Notice. The Secretary shall place the Rebuttal or the Notice Not 
To Contest in the public file.
    (b) Requirements of Rebuttal; effect of failure to deny. A Rebuttal 
filed under this section shall specifically admit, deny or state that 
the party does not have sufficient information to admit or deny each 
statement in the Notice of Intention. A statement of lack of information 
shall have the effect of a denial. Any statement not denied shall be 
deemed to be admitted. When a party intends to deny only a part or a 
qualification of a statement, the party shall admit so much of it as is 
true and shall deny only the remainder.
    (c) Notice Not To Contest. A party filing a Notice Not To Contest 
the statement of fact set forth in the Notice of Intention shall 
constitute a waiver of the party's opportunity to rebut the facts 
alleged, and together with the Notice of Intention and any referenced 
documents, will provide a record basis on which the ASC shall decide the 
matter. The filing of a Notice Not To Contest shall not constitute a 
waiver of the right of such party to a judicial review of the ASC's 
decision, findings and conclusions.
    (d) Effect of failure to file Rebuttal or Notice Not To Contest. 
Failure of a party to file a response required by this section within 
the time provided shall constitute a waiver of the party's opportunity 
to rebut and to contest the statements in the Notice of Intention and 
shall constitute authorization for the ASC to find the facts to be as 
presented in the Notice of Intention and to file with the Secretary a 
decision containing such findings and appropriate conclusions. The ASC, 
for good cause shown, will permit the filing of a Rebuttal after the 
prescribed time.



Sec. 1102.34  Briefs, memoranda and statements.

    (a) By the parties. Until the end of the information-gathering phase 
of the proceeding, any party may file with the Secretary a written 
brief, memorandum or other statement providing factual data and policy 
and legal arguments regarding the matters set out in the Notice of 
Intention. The filing party shall simultaneously serve other parties to 
the proceeding with a copy of the document. No later than ten days after 
such service, any party may file with the Secretary a written response 
to the document and must simultaneously serve a copy thereof on the 
other parties to the proceeding. The Secretary will receive documents 
and responses and will place them in the public file.
    (b) By interested persons, in non-recognition proceedings. Until the 
end of the information-gathering phase of a

[[Page 160]]

proceeding under section 1118 of FIRREA (12 U.S.C. 3347), any person 
with a demonstrable, direct interest in the outcome of the proceeding 
may file with the Secretary a written brief, memorandum or other 
statement providing factual data and policy and legal arguments 
regarding the matters set out in the Notice of Intention. The ASC's 
Chairperson or his or her designee may not accept any such written 
brief, memorandum or other statement if the submitting person cannot 
demonstrate a direct interest in the outcome of the proceeding. Upon 
acceptance of the written brief, memorandum or other statement, the 
Secretary shall make copies of the document and forward one copy thereof 
to each party to the proceeding. No later than ten days after such 
service, any party may file with the Secretary a written response to the 
document and must simultaneously serve one copy thereof on the other 
parties to the proceeding. The Secretary will place a copy of such 
briefs, memoranda, statements and responses in the public file.



Sec. 1102.35  Opportunity for informal settlement.

    Any party may at any time submit to the Secretary, for consideration 
by the Subcommittee, written offers or proposals for settlement of a 
proceeding, without prejudice to the rights of the parties. No offer or 
proposal shall be included in the proceeding's public file over the 
objection of any party to such proceeding. This paragraph shall not 
preclude settlement of any proceeding by the filing of a Notice Not To 
Contest as provided in Sec. 1102.33(c) or by the submission of the case 
to the ASC on a stipulation of facts.



Sec. 1102.36  Oral presentations.

    (a) In general. A party does not have a right to an oral 
presentation. Under this section, a party's request to make an oral 
presentation may be denied if such a denial is appropriate and 
reasonable under the circumstances. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding.
    (b) Method and time of request. Between the commencement of the 
proceeding and ten days before the end of the information-gathering 
phase, any party to the proceeding may file with the Secretary a letter 
requesting that the Secretary schedule an opportunity for the party to 
give an oral presentation to the ASC. That letter shall include the 
reasons why an oral presentation is necessary.
    (c) ASC processing. The Secretary must promptly forward the letter 
request to the Chairman of the ASC. The Chairman, after informally 
contacting other ASC members and the ASC's senior staff for their views, 
will instruct the Secretary to forward a letter to the party either: 
Scheduling a date and time for the oral presentation and specifying the 
allowable duration of the presentation; or declining the request and 
providing the reasons therefor. The party's letter request and the ASC's 
response will be included in the proceeding's public file.
    (d) Procedure on presentation day. On the appropriate date and time, 
the party or his or her attorney (if any) will make the oral 
presentation before the ASC. Any ASC member may ask the party or the 
attorney, as the case may be, pertinent questions relating to the 
content of the oral presentation. Oral presentations will not be 
recorded or otherwise transcribed. The Secretary must enter promptly 
into the proceeding's public file a memorandum summarizing the subjects 
discussed during the oral presentation.



Sec. 1102.37  Decision of the Subcommittee and judicial review.

    At a reasonable time after the end of the information-gathering 
phase of the proceeding, but not exceeding 35 days, the ASC shall issue 
a final decision, containing specified terms and conditions as it deems 
appropriate, in the matter and shall cause the decision to be published 
promptly in the Federal Register. The final decision shall be effective 
on issuance. The Secretary shall serve the decision upon the parties 
promptly, shall place it in the proceeding's public file and shall 
furnish it to such other persons as the ASC may direct. Pursuant to the 
provisions of chapter 7 of title 5 of the U.S. Code and section 
1118(c)(3) of title XI of FIRREA (12 U.S.C. 3348(c)(3)), a final 
decision of

[[Page 161]]

the ASC is a prerequisite to seeking judicial review.



Sec. 1102.38  Compliance activities.

    (a) Where, from complaints received from members of the public, 
communications from Federal or State agencies, examination of 
information by the ASC, or otherwise, it appears that a person has 
violated, is violating or is about to violate title XI of FIRREA or the 
rules or regulations thereunder, the ASC staff may commence an informal, 
preliminary inquiry into the matter. If, upon such inquiry, it appears 
that one or more allegations relate to possible violations of 
regulations administered by another agency or instrumentality of the 
Federal Government, then the matter shall be referred to that agency or 
instrumentality for appropriate action. The ASC, pursuant to its 
responsibilities under section 1103(a)(2) of title XI (12 U.S.C. 
3332(a)(2)) and section 1119(c) of title XI (12 U.S.C. 3348)), shall 
monitor the matter. If, upon inquiry, it appears that one or more 
allegations are within the ASC's jurisdiction, then the ASC, in its 
discretion, may determine to commence a formal investigation respecting 
the matter and shall instruct the Secretary to create a public file for 
the formal investigation. The Secretary shall place in that file a 
memorandum naming the person or persons subject to the investigation and 
the statutory basis for the investigation.
    (b) Unless otherwise instructed by the ASC or required by law, the 
Secretary shall ensure that all other papers, documents and materials 
gathered or submitted in connection with the investigation are non-
public and for ASC use only.
    (c) Persons who become involved in preliminary inquiries or formal 
investigations may, on their own initiative, submit a written statement 
to the Secretary setting forth their interests, positions or views 
regarding the subject matter of the investigation. Upon request, the 
staff, in its discretion, may advise such persons of the general nature 
of the investigation, including the indicated violations as they pertain 
to them and the amount of time that may be available for preparing and 
submitting such a statement prior to the presentation of a staff 
recommendation to the ASC. Upon the commencement of a formal 
investigation or a proceeding under this subpart, the Secretary shall 
place any such statement in the appropriate public file.
    (d) In instances where the staff has concluded its inquiry of a 
particular matter and has determined that it will not recommend the 
commencement of a formal investigation or a proceeding under this 
subpart against a person, the staff shall advise the person that its 
inquiry has been terminated. Such advice, if given, must in no way be 
construed as indicating that the person has been exonerated or that no 
action may ultimately result from the staff's inquiry into the 
particular matter.



Sec. 1102.39  Duty to cooperate.

    In the course of the investigations and proceedings, the ASC (and 
its staff, with appropriate authorization) must provide parties or 
persons ample opportunity to work out problems by consent, by 
settlement, or in some other manner.



Subpart C_Rules Pertaining to the Privacy of Individuals and Systems of 
            Records Maintained by the Appraisal Subcommittee

    Authority: Privacy Act of 1974, Pub. L. 93-579, 88 Stat. 1896; 12 
U.S.C. 552a, as amended.

    Source: 57 FR 36357, Aug. 13, 1992, unless otherwise noted.



Sec. 1102.100  Authority, purpose and scope.

    (a) This subpart is issued under the Privacy Act of 1974, Public Law 
93-579, 88 Stat. 1896; 12 U.S.C. 552a, as amended.
    (b) The Privacy Act of 1974 is based, in part, on the finding by 
Congress that ``in order to protect the privacy of individuals 
identified in information systems maintained by Federal agencies, it is 
necessary and proper for the Congress to regulate the collection, 
maintenance, use, and dissemination of information by such agencies.'' 
To achieve this objective, the Act generally provides that Federal 
agencies must advise an individual upon request

[[Page 162]]

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 Act further provides that individuals may request amendments to 
records pertaining to them that are maintained by the agency, and that 
the agency shall either grant the requested amendments or set forth 
fully its reasons for refusing to do so.
    (c) The Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC), pursuant to subsection (f) of the Privacy 
Act, adopts the following rules and procedures to implement the 
provisions of the Act summarized above and other provisions of the Act. 
These rules and procedures are applicable to all requests for 
information and access or amendment to records pertaining to an 
individual that are contained in any system of records that is 
maintained by the ASC.



Sec. 1102.101  Definitions.

    The following definitions shall apply for purposes of this subpart:
    (a) The terms individual, maintain, record, system of records, and 
routine use are defined for purposes of these rules as they are defined 
in 5 U.S.C. 552a(a)(2), (a)(3), (a)(4), (a)(5) and (a)(7).
    (b) ASC or Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (c) Privacy Act Officer means the ASC's Associate Director for 
Administration or such other ASC staff officer, other than the Executive 
Director, duly designated by the ASC's Executive Director.



Sec. 1102.102  Times, places and requirements for requests pertaining
to individual records in a record system and for the identification 

of individuals making 
          requests for access to records pertaining to them.

    (a) Place to make request. Any request by an individual to be 
advised whether any system of records maintained by the ASC and named by 
the individual contains a record pertaining to him or her, or any 
request by an individual for access to a record pertaining to him or her 
that is contained in a system of records maintained by the ASC, shall be 
submitted in person at the ASC between 9 a.m. and 4:30 p.m., Monday 
through Friday, which is located at 1401 H Street, NW., Suite 
760,Washington, DC 20005, or by mail addressed to: Privacy Act Officer, 
ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005. All requests 
will be required to be put in writing and signed by the individual 
making the request. In the case of requests for access that are made by 
mail, the envelope should be clearly marked ``Privacy Act Request.''
    (1) Information to be included in requests. Each request by an 
individual concerning whether the ASC maintains in a system of records a 
record that pertains to the individual, or for access to any record 
pertaining to the individual that is maintained by the ASC in a system 
of records, shall include such information as will assist the ASC in 
identifying those records as to which the individual is seeking 
information or access. Where practicable, the individual should identify 
the system of records that is the subject of his or her request by 
reference to the ASC's notices of systems of records, which are 
published in the Federal Register, as required by section (e)(4) of the 
Privacy Act, 5 U.S.C. 552a(e)(4). Where a system of records is compiled 
on the basis of a specific identification scheme, the individual should 
include in his or her request the identification number or other 
identifier assigned to the individual. In the event the individual does 
not know that number or identifier, the individual shall provide other 
information, including his or her full name, address, date of birth and 
subject matter of the record, to aid in processing his or her request. 
If additional information is required before a request can be processed, 
the individual shall be so advised.
    (2) Verification of identity. When the fact of the existence of a 
record is not required to be disclosed under the Freedom of Information 
Act, 5 U.S.C. 552, as amended, or when a record as to which access has 
been requested is not required to be disclosed under that Act, the 
individual seeking the information or requesting access to the record 
shall be required to verify his or her identity

[[Page 163]]

before access will be granted or information given. For this purpose, 
individuals shall appear at the ASC located at 1401 H Street, NW., Suite 
760,Washington, DC 20005, between 9 a.m. to 4:30 p.m., Monday through 
Friday. The ASC's Office is not open on Saturdays, Sundays or Federal 
holidays.
    (3) Methods for verifying identity--appearance in person. For the 
purpose of verifying identity, an individual seeking information 
regarding pertinent records or access to those records shall furnish 
documentation that may reasonably be relied on to establish the 
individual's identity. Such documentation might include a valid birth 
certificate, driver's license, employee or military identification card, 
and medicare card.
    (4) Method for verifying identity--by mail. Where an individual 
cannot appear at the ASC's Office for the purpose of verifying identity, 
the individual shall submit, along with the request for information or 
access, a signed and notarized statement attesting to his or her 
identity. Where access is being sought, the sworn statement shall 
include a representation that the records being sought pertain to the 
individual and a stipulation that the individual is aware that knowingly 
and willfully requesting or obtaining records pertaining to an 
individual from the ASC under false pretenses is a criminal offense.
    (5) Additional procedures for verifying identity. When it appears 
appropriate to the Privacy Act Officer, other arrangements may be made 
for the verification of identity as are reasonable under the 
circumstances and appear to be effective to prevent unauthorized 
disclosure of, or access to, individual records.
    (b) Acknowledgement of requests for information pertaining to 
individual records in a record system or for access to individual 
records. (1) Except where an immediate acknowledgement is given for 
requests made in person, the receipt of a request for information 
pertaining to individual records in a record system will be acknowledged 
within 10 days, excluding Saturdays, Sundays and Federal holidays. 
Requests will be processed as promptly as possible and a response to 
such requests will be given within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) unless, within the 30 day period and for 
cause shown, the individual making the request is notified in writing 
that a longer period is necessary.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.103  Disclosure of requested records.

    (a) Initial review. Requests by individuals for access to records 
pertaining to them will be referred to the ASC's Privacy Act Officer, 
who initially will determine whether access will be granted.
    (b) Grant of request for access. (1) If it is determined that a 
request for access to records pertaining to an individual will be 
granted, the individual will be advised by mail that access will be 
given at the ASC or a copy of the requested record will be provided by 
mail if the individual shall so indicate. Where the individual requests 
that copies of the record be mailed to or her or requests copies of a 
record upon reviewing it at the ASC, the individual shall pay the cost 
of making requested copies, as set forth in Sec. 1102.109 of this 
subpart.
    (2) In granting access to an individual to a record pertaining to 
him or her, the ASC staff shall take steps to prevent the unauthorized 
disclosure of information pertaining to other individuals.
    (c) Denial of request for access. If it is determined that access 
will not be granted, the individual making the request will be notified 
of that fact and given the reasons why access is being denied. The 
individual also will be advised of his or her right to seek review by 
the Executive Director of the initial decision to deny access, in 
accordance with the procedures set forth in Sec. 1102.107 of this 
subpart.
    (d) Time for acting on requests for access. Access to a record 
pertaining to an individual normally will be granted or denied within 30 
days (excluding Saturdays, Sundays, and Federal holidays) after the 
receipt of the request for access, unless the individual making the 
request is notified in writing within the 30 day period that, for good

[[Page 164]]

cause shown, a longer time is required. In such cases, the individual 
making the request shall be informed in writing of the difficulties 
encountered and an indication shall be given as to when it is 
anticipated that access may be granted or denied.
    (e) Authorization to allow designated person to review and discuss 
records pertaining to another individual. An individual, who is granted 
access to records pertaining to him or her and who appears at the ASC 
Office to review the records, may be accompanied by another person of 
his or her choosing. Where the records as to which access has been 
granted are not required to be disclosed under provisions of the Freedom 
of Information Act, 5 U.S.C. 552, as amended, the individual requesting 
the records, before being granted access, shall execute a written 
statement, signed by him or her, specifically authorizing the latter 
individual to review and discuss the records. If such authorization has 
not been given as described, the person who has accompanied the 
individual making the request will be excluded from any review or 
discussion of the records.
    (f) Exclusion for certain records. Nothing contained in these rules 
shall allow an individual access to any information compiled in 
reasonable anticipation of an administrative judicial or civil action or 
proceeding.



Sec. 1102.104  Special procedure: Medical records.

    (a) Statement of physician or mental health professional. When an 
individual requests access to records pertaining to the individual that 
include medical and/or psychological information, the ASC, if it deems 
it necessary under the particular circumstances, may require the 
individual to submit with the request a signed statement by the 
individual's physician or a mental health professional indicating that, 
in his or her opinion, disclosure of the requested records or 
information directly to the individual will not have an adverse effect 
on the individual.
    (b) Designation of physician or mental health professional to 
receive records. If the ASC believes, in good faith, that disclosure of 
medical and/or psychological information, directly to an individual 
could have an adverse effect on that individual, the individual may be 
asked to designate in writing a physician or mental health professional 
to whom the individual would like the records to be disclosed, and 
disclosure that otherwise would be made to the individual will instead 
be made to the designated physician or mental health professional.



Sec. 1102.105  Requests for amendment of records.

    (a) Place to make requests. A request by an individual to amend 
records pertaining to him or her may be made in person during normal 
business hours at the ASC located at 2000 K Street, NW., Suite 310, 
Washington, DC , or by mail addressed to the Privacy Act Officer, ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005.
    (1) Information to be included in requests. Each request to amend an 
ASC record shall reasonably describe the record sought to be amended. 
Such description should include, for example, relevant names, dates and 
subject matter to permit the record to be located among the records 
maintained by the ASC. An individual who has requested that a record 
pertaining to the individual be amended will be advised promptly if the 
record cannot be located on the basis of the description given and that 
further identifying information is necessary before the request can be 
processed. An initial evaluation of a request presented in person will 
be made immediately to ensure that the request is complete and to 
indicate what, if any, additional information will be required. 
Verification of the individual's identity as set forth in Sec. 
1102.102(a) (2), (3), (4) and (5) may also be required.
    (2) Basis for amendment. An individual requesting an amendment to a 
record pertaining to the individual shall specify the substance of the 
amendment and set forth facts and provide such materials that would 
support his or her contention that the record as maintained by the ASC 
is not accurate, timely or complete, or that the record is not necessary 
and relevant to accomplish a statutory purpose of the ASC as authorized 
by law or by Executive Order of the President.

[[Page 165]]

    (b) Acknowledgement of requests for amendment. Receipt of a request 
to amend a record pertaining to an individual normally will be 
acknowledged 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.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.106  Review of requests for amendment.

    (a) Initial review. As in the case of requests for access, requests 
by individuals for amendment to records pertaining to them will be 
referred to the ASC's Privacy Act Officer for an initial determination.
    (b) Standards to be applied in reviewing requests. In reviewing 
requests to amend records, the Privacy Act Officer will be guided by the 
criteria set forth in 5 U.S.C. 552(e) (1) and (5), i.e., that records 
maintained by the ASC shall contain only such information as is 
necessary and relevant to accomplish a statutory purpose of the ASC as 
required by statute or Executive Order of the President and that such 
information also be accurate, timely, relevant and complete. These 
criteria will be applied whether the request is to add material to a 
record or to delete information from a record.
    (c) Time for acting on requests. Initial review of a request by an 
individual to amend a record shall be completed as promptly as is 
reasonably possible and normally within 30 days (excluding Saturdays, 
Sundays, and Federal holidays) from the date the request was received, 
unless unusual circumstances preclude completion of review within that 
time. If the anticipated completion date indicated in the 
acknowledgement cannot be met, the individual requesting the amendment 
will be advised in writing of the delay and the reasons therefor, and 
also advised when action is expected to be completed.
    (d) Grant of requests to amend records. If a request to amend a 
record is granted in whole or in part, the Privacy Act Officer will:
    (1) Advise the individual making the request in writing of the 
extent to which it has been granted;
    (2) Amend the record accordingly; and
    (3) Where an accounting of disclosures of the record has been kept 
pursuant to 5 U.S.C. 552a(c), advise all previous recipients of the 
record of the fact that the record has been amended and the substance of 
the amendment.
    (e) Denial of requests to amend records. If an individual's request 
to amend a record pertaining to him is denied in whole or in part, the 
Privacy Act Officer will:
    (1) Promptly advise the individual making the request in writing of 
the extent to which the request has been denied;
    (2) State the reasons for the denial of the request;
    (3) Describe the procedures established by the ASC to obtain further 
review within the ASC of the request to amend, including the name and 
address of the person to whom the appeal is to be addressed; and
    (4) Inform the individual that the Privacy Act Officer will provide 
information and assistance to the individual in perfecting an appeal of 
the initial decision.



Sec. 1102.107  Appeal of initial adverse agency determination regarding
access or amendment.

    (a) Administrative review. Any person who has been notified pursuant 
to Sec. 1102.103(c) that a request for access to records pertaining to 
him or her has been denied in whole or in part, or pursuant to Sec. 
1102.106(e) of this subpart that a request for amendment has been denied 
in whole or in part, or who has received no response to a request for

[[Page 166]]

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 
Sec. Sec. 1102.103(d) 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.
    (1) The application shall be in writing and shall describe the 
record in issue and set forth the proposed amendment and the reasons 
therefor.
    (2) The application shall be delivered to the ASC, 2000 K Street, 
NW., Suite 310, Washington, DC, or by mail addressed to the Privacy Act 
Officer, ASC, 1401 H Street, NW., Suite 760,Washington, DC 20005.
    (3) The applicant may state such facts and cite such legal or other 
authorities in support of the application.
    (4) The Executive Director will make a determination with respect to 
any appeal within 30 days after the receipt of such appeal (excluding 
Saturdays, Sundays, and Federal holidays), unless for good cause shown, 
the Executive Director shall extend that period. If such an extension is 
made, the individual who is appealing shall be advised in writing of the 
extension, the reasons therefor, and the anticipated date when the 
appeal will be decided.
    (5) In considering an appeal from a denial of a request to amend a 
record, the Executive Director shall apply the same standards as set 
forth in Sec. 1102.106(b).
    (6) If the Executive Director concludes that access should be 
granted, the Executive Director shall issue an order granting access and 
instructing the Privacy Act Officer to comply with Sec. 1102.103(b).
    (7) If the Executive Director concludes that the request to amend 
the record should be granted in whole or in part, the Executive Director 
shall issue an order granting the requested amendment in whole or in 
part and instructing the Privacy Act Officer to comply with the 
requirements of Sec. 1102.106(d) of this subpart, to the extent 
applicable.
    (8) If the Executive Director affirms the initial decision denying 
access, the Executive Director shall issue an order denying access and 
advising the individual seeking access of:
    (i) The order;
    (ii) The reasons for denying access; and
    (iii) The individual's right to obtain judicial review of the 
decision pursuant to 5 U.S.C. 552a(g)(1)(B).
    (9) If the Executive Director determines that the decision of the 
Privacy Act Officer denying a request to amend a record should be 
upheld, the Executive Director shall issue an order denying the request 
and the individual shall be advised of:
    (i) The order refusing to amend the record and the reasons therefor;
    (ii) The individual's right to file a concise statement setting 
forth his or her disagreement with the Executive Director's decision not 
to amend the record;
    (iii) The procedures for filing such a statement of disagreement 
with the Executive Director;
    (iv) The fact that any such statement of disagreement will be made 
available to anyone to whom the record is disclosed, together with, if 
the Executive Director deems it appropriate, a brief statement setting 
forth the Executive Director's reasons for refusing to amend;
    (v) The fact that prior recipients of the record in issue will be 
provided with the statement of disagreement and the Executive Director's 
statement, if any, to the extent that an accounting of such disclosures 
has been maintained pursuant to 5 U.S.C. 552a(c); and
    (vi) The individual's right to seek judicial review of the Executive 
Director's refusal to amend, pursuant to 5 U.S.C. 552a(g)(1)(A).
    (b) Statement of disagreement. As noted in paragraph (a)(9)(ii) of 
this section, an individual may file with the Executive Director a 
statement setting forth his or her disagreement with the Executive 
Director's denial of his or her request to amend a record.
    (1) Such statement of disagreement shall be delivered to the ASC, 
1401 H Street, NW., Suite 760,Washington, DC 20005, within 30 days after 
receipt by

[[Page 167]]

the individual of the Executive Director's order denying the amendment, 
excluding Saturdays, Sundays and Federal holidays. For good cause shown, 
this period can be extended for a reasonable time.
    (2) Such statement of disagreement shall concisely state the basis 
for the individual's disagreement. Unduly lengthy or irrelevant 
materials will be returned to the individual by the Executive Director 
for appropriate revisions before they become a permanent part of the 
individual's record.
    (3) The record about which a statement of disagreement has been 
filed will clearly note which part of the record is disputed and the 
Executive Director will provide copies of the statement of disagreement 
and, if the Executive Director deems it appropriate, provide a concise 
statement of his or her reasons for refusing to amend the record, to 
persons or other agencies to whom the record has been or will be 
disclosed.

[57 FR 36357, Aug. 13, 1992, as amended at 69 FR 2501, Jan. 16, 2004; 75 
FR 36270, June 25, 2010]



Sec. 1102.108  General provisions.

    (a) Extensions of time. Pursuant to Sec. Sec. 1102.103(b), 
1102.104(d), 1102.109(c) and 1102.109(a)(4) of this subpart, the time 
within which a request for information, access or amendment by an 
individual with respect to records maintained by the ASC that pertain to 
him or her normally would be processed may be extended for good cause 
shown or because of unusual circumstances. As used in these rules, good 
cause and unusual circumstances shall include, but only to the extent 
reasonably necessary to the proper processing of a particular request:
    (1) The need to search for and collect the requested records from 
establishments that are separate from the ASC. Some records of the ASC 
may be stored in Federal Records Centers in accordance with law--
including many of the documents that have been on file with the ASC for 
more than 2 years--and cannot be made available promptly. Any person who 
has requested for personal examination a record stored at the Federal 
Records Center will be notified when the record will be made available.
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which may be demanded 
in a single request. While every reasonable effort will be made to 
comply fully with each request as promptly as possible on a first-come, 
first-served basis, work done to search for, collect and appropriately 
examine records in response to a request for a large number of records 
will be contingent upon the availability of processing personnel in 
accordance with an equitable allocation of time to all members of the 
public who have requested or wish to request records.
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or more components within 
the ASC having substantial subject-matter interest herein.
    (b) Effective date of action. Whenever it is provided in this 
subpart that an acknowledgement or response to a request will be given 
by specific times, deposit in the mails of such acknowledgement or 
response by that time, addressed to the person making the request, will 
be deemed full compliance.
    (c) Records in use by a member of the ASC or its staff. Although 
every effort will be made to make a record in use by a member of the ASC 
or its staff available when requested, it may occasionally be necessary 
to delay making such a record available when doing so at the time the 
request is made would seriously interfere with the work of the ASC or 
its staff.
    (d) Missing or lost records. Any person who has requested a record 
or a copy of a record pertaining to him or her will be notified if the 
record sought cannot be found. If the person so requests, he or she will 
be notified if the record subsequently is found.
    (e) Oral requests; misdirected written requests--(1) Telephone and 
other oral requests. Before responding to any request by an individual 
for information concerning whether records maintained by the ASC in a 
system of records pertain to the individual or to any request

[[Page 168]]

for access to records by an individual, such request must be in writing 
and signed by the individual making the request. The Executive Director 
will not entertain any appeal from an alleged denial of failure to 
comply with an oral request. Any person who has made an oral request for 
information or access to records who believes that the request has been 
improperly denied should resubmit the request in appropriate written 
form to obtain proper consideration and, if need be, administrative 
review.
    (2) Misdirected written requests. The ASC cannot assure that a 
timely or satisfactory response will be given to written requests for 
information, access or amendment by an individual with respect to 
records pertaining to him or her that are directed to the ASC other than 
in a manner prescribed in Sec. Sec. 1102.103(a), 1102.106(a), 
1102.108(a)(2), and 1102.110 of this subpart. Any staff member who 
receives a written request for information, access or amendment should 
promptly forward the request to the Privacy Act Officer. Misdirected 
requests for records will be considered to have been received by the ASC 
only when they have been actually received by the Privacy Act Officer in 
cases under Sec. 1102.108(a)(2). The Executive Director will not 
entertain any appeal from an alleged denial or failure to comply with a 
misdirected request, unless it is clearly shown that the request was in 
fact received by the Privacy Act Officer.



Sec. 1102.109  Fees.

    (a) There will be no charge assessed to the individual for the ASC's 
expense involved in searching for or reviewing the record. Copies of the 
ASC's records will be provided by a commercial copier at rates 
established by a contract between the copier and the ASC or by the ASC 
at the rates in Sec. 1101.4(b)(5)(ii) of 12 CFR part 1101.
    (b) Waiver or reduction of fees. Whenever the Executive Director of 
the ASC determines that good cause exists to grant a request for 
reduction or waiver of fees for copying documents, he or she may reduce 
or waive any such fees.



Sec. 1102.110  Penalties.

    Title 18 U.S.C. 1001 makes it a criminal offense, subject to a 
maximum fine of $10,000, or imprisonment for not more than 5 years or 
both, to knowingly and willingly make or cause to be made any false or 
fraudulent statements or representations in any matter within the 
jurisdiction of any agency of the United States. 5 U.S.C. 552a(i) makes 
it a misdemeanor punishable by a fine of not more than $5,000 for any 
person knowingly and willfully to request or obtain any record 
concerning an individual from the ASC under false pretenses. 5 U.S.C. 
552a(i) (1) and (2) provide criminal penalties for certain violations of 
the Privacy Act by officers and employees of the ASC.



     Subpart D_Description of Office, Procedures, Public Information

    Authority: 5 U.S.C. 552, 553(e); and Executive Order 12600, 52 FR 
23781 (3 CFR, 1987 Comp., p. 235).

    Source: 57 FR 60724, Dec. 22, 1992, unless otherwise noted.



Sec. 1102.300  Purpose and scope.

    This part sets forth the basic policies of the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(``ASC'') regarding information it maintains and the procedures for 
obtaining access to such information. This part does not apply to the 
Federal Financial Institutions Examination Council. Section 1102.301 
sets forth definitions applicable to this part 1102, subpart D. Section 
1102.302 describes the ASC's statutory authority and functions. Section 
1102.303 describes the ASC's organization and methods of operation. 
Section 1102.304 describes the types of information and documents 
typically published in the Federal Register. Section 1102.305 explains 
how to access public records maintained on the ASC's World Wide Web site 
and at the ASC's office and describes the categories of records 
generally found there. Section 1102.306 implements the Freedom of 
Information Act (``FOIA'') (5 U.S.C. 552). Section 1102.307 authorizes 
the discretionary disclosure of exempt records under certain limited 
circumstances. Section

[[Page 169]]

1102.308 provides anyone with the right to petition the ASC to issue, 
amend, and repeal rules of general application. Section 1102.309 sets 
out the ASC's confidential treatment procedures. Section 1102.310 
outlines procedures for serving a subpoena or other legal process to 
obtain information maintained by the ASC.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.301  Definitions.

    For purposes of this subpart:
    (a) ASC means the Appraisal Subcommittee of the Federal Financial 
Institutions Examination Council.
    (b) Commercial use request means a request from, or on behalf of, a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the ASC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (c) Direct costs means those expenditures the ASC actually incurs in 
searching for, duplicating, and, in the case of commercial requesters, 
reviewing records in response to a request for records.
    (d) Disclose or disclosure mean to give access to a record, whether 
by producing the written record or by oral discussion of its contents. 
Where the ASC member or employee authorized to release ASC documents 
makes a determination that furnishing copies of the documents is 
necessary, these words include the furnishing of copies of documents or 
records.
    (e) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy, 
microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (f) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (g) Field review includes, but is not limited to, formal and 
informal investigations of potential irregularities occurring at State 
appraiser regulatory agencies involving suspected violations of Federal 
or State civil or criminal laws, as well as such other investigations as 
may conducted pursuant to law.
    (h) Non-commercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (b) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (i) Record includes records, files, documents, reports 
correspondence, books, and accounts, or any portion thereof, in any form 
the ASC regularly maintains them.
    (j) Representative of the news media means any person primarily 
engaged in gathering news for, or a free-lance journalist who can 
demonstrate a reasonable expectation of having his or her work product 
published or broadcast by, an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
general public.
    (k) Review means the process of examining documents located in a 
response to a request that is for a commercial use to determine whether 
any portion of any document located is permitted to be withheld. It also 
includes processing any documents for disclosure, e.g, doing all that is 
necessary to excise them and otherwise prepare them for release. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    (l) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.

[[Page 170]]

    (m) State appraiser regulatory agency includes, but is not limited 
to, any board, commission, individual or other entity that is authorized 
by State law to license, certify, and supervise the activities or 
persons authorized to perform appraisals in connections with federally 
related transactions and real estate related financial transactions that 
require the services of a State licensed or certified appraiser.

[64 FR 72496, Dec. 28, 1999]



Sec. 1102.302  ASC authority and functions.

    (a) Authority. The ASC was established on August 9, 1989, pursuant 
to title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (``FIRREA''), 12 U.S.C. 3331 and 
3310 through 3351. Title XI is intended ``to provide that Federal 
financial and public policy interests in real estate related 
transactions will be protected by requiring that real estate appraisals 
utilized in connection with federally related transactions are performed 
in writing, in accordance with uniform standards, by individuals whose 
competency has been demonstrated and whose professional conduct will be 
subject to effective supervision.'' 12 U.S.C. 3331.
    (b) Functions. The ASC's statutory functions are generally set out 
in 12 U.S.C. 3332. In summary, the ASC must:
    (1) Monitor the requirements established by the States for the 
certification and licensing of individuals who are qualified to perform 
appraisals in connection with federally related transactions, including 
a code of professional responsibility;
    (2) Monitor the requirements of the Federal financial institutions 
regulatory agency and Resolution Trust Corporation with respect to 
appraisal standards for federally related transactions and 
determinations as to which federally related transactions require the 
services of a State certified appraiser and which require the services 
of a State licensed appraiser;
    (3) Monitor and review the practices, procedures, activities and 
organizational structure of the Appraisal Foundation; and
    (4) Maintain a national registry of State certified and licensed 
appraisers eligible to perform appraisals in federally related 
transactions.



Sec. 1102.303  Organization and methods of operation.

    (a) Statutory and other guidelines. Statutory requirements relating 
to the ASC's organization are stated in 12 U.S.C. 3310, 3333 and 3334. 
The ASC has adopted and published Rules of Operation guiding its 
administration, meetings and procedures. These Rules of Operation were 
published at 56 FR 28561 (June 21, 1991) and 56 FR 33451 (July 22, 
1991).
    (b) ASC members and staff. The ASC is composed of six members, each 
being designated by the head of their respective agencies: the Board of 
Governors of the Federal Reserve System, Federal Deposit Insurance 
Corporation, Office of the Comptroller of the Currency, National Credit 
Union Administration, Office of Thrift Supervision, and the Department 
of Housing and Urban Development. Administrative support and substantive 
program, policy, and legal guidance for ASC activities are provided by a 
small, full-time, professional staff supervised by an Executive 
Director.
    (c) FFIEC. Title XI placed the ASC within FFIEC as a separate, 
appropriated agency of the United States Government with specific 
statutory responsibilities under Federal law.
    (d) ASD Address ASC offices are located at 2000 K Street, NW., Suite 
310; Washington, DC 20006.

[57 FR 60724, Dec. 22, 1992, as amended at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.304  Federal Register publication.

    The ASC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Description of its organization and the established places at 
which, the officers from whom, and the methods whereby, the public may 
secure information, make submittals or re nests, or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including

[[Page 171]]

the nature and requirements of all formal and informal procedures 
available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the ASC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rulemaking.

[64 FR 72497, Dec. 28, 1999]



Sec. 1102.305  Publicly available records.

    (a) Records available on the ASCs World Wide Web site--(1) 
Discretionary release of documents. The ASC encourages the public to 
explore the wealth of resources available on the ASC's Internet World 
Wide Web site, located at: http://www.asc.gov. The ASC has elected to 
publish a broad range to materials on its Web site.
    (2) Documents required to be made available via computer 
telecommunications. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available through 
computer telecommunications, may be found on the ASC's Internet World 
Wide Web site located at: http://www.asc.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders, made in the adjudication of cases;
    (B) Statements of policy and interpretations adopted by the ASC that 
are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (D) Copies of all records (regardless of form or format), such as 
correspondence relating to field reviews or other regulatory subjects, 
released to any person under Sec. 1102.306 that, because of the nature 
of their subject matter, the ASC has determined are likely to be the 
subject of subsequent requests;
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the ASC may delete identifying 
details when it makes available or publishes any records. If reduction 
is necessary, the ASC will, to the extent technically feasible, indicate 
the amount of material deleted at the place in the record where such 
deletion is made unless that indication in and of itself will jeopardize 
the purpose for the redaction.
    (b) Types of written communications. The following types of written 
communications shall be subject to paragraph (a) of this section:
    (1) The ASC's annual report to Congress;
    (2) All final opinions and orders made in the adjudication of cases;
    (3) All statements of general policy not published in the Federal 
Register.
    (4) Requests for the ASC or its staff to provide interpretive advice 
with respect to the meaning or application of any statute administered 
by the ASC or any rule or regulation adopted thereunder and any ASC 
responses thereto;
    (5) Requests for a statement that, on the basis of the facts 
presented in such a request, the ASC would not take any enforcement 
action pertaining to the facts as represented and any ASC responses 
thereto: and
    (6) Correspondence between the ASC and a State appraiser regulatory 
agency arising out of the ASC's field review of the State agency's 
appraiser regulatory program.
    (c) Applicable fees. (1) If applicable, fees for furnishing records 
under this section are as set forth in Sec. 1102.306(e).
    (2) Information on the ASC's World Wide Web site is available to the 
public without charge. If, however, information available on the ASC's 
World Wide Web site is provided pursuant to a Freedom of Information Act 
request processed under g 1102.306 then fees apply and will be assessed 
pursuant to Sec. 1102.306(e).

[59 FR 1902, Jan. 13, 1994, as amended at 64 FR 72497, Dec. 28, 1999]

[[Page 172]]



Sec. 1102.306  Procedures for requesting records.

    (a) Making a request for records. (1) The request shall be submitted 
in writing to the Executive Director:
    (i) By facsimile clearly marked ``Freedom of Information Act 
Request'' to (202) 293-6251;
    (ii) By letter to the Executive Director marked ``Freedom of 
Information Act Request''; 2000 K Street, NW., Suite 301; Washington, DC 
20006; or
    (iii) By sending Internet e-mail to the Executive Director marked 
``Freedom of Information Act Request'' at his or her e-mail address 
listed on the ASC's World Wide Web site.
    (2) The request shall contain the following information:
    (i) The name and address of the requester, an electronic mail 
address, if available, and the telephone number at which the requester 
may be reached during normal business hours;
    (ii) Whether the requester is an educational institution, non-
commercial scientific institution, or news media representative;
    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying a maximum fee that is acceptable to the requester, 
or a request for a waiver or reduction of fees that satisfies paragraph 
(e)(1)(x) of this section; and
    (iv) The preferred form and format of any responsive information 
requested, if other than paper copies.
    (3) A request for identifiable records shall reasonably describe the 
records in a way that enables the ASC's staff to identify and produce 
the records with reasonable effort and without unduly burdening or 
significantly interfering with any ASC operations.
    (b) Defective requests. The ASC need not accept or process a request 
that does not reasonably describe the records requested or that does not 
otherwise comply with the requirements of this subpart. The ASC may 
return a defective request, specifying the deficiency. The requester may 
submit a corrected request, which will be treated as a new request.
    (c) Processing requests--(1) Receipt of requests. 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.
    (2) Expedited processing. (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:
    (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
    (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
    (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.
    (ii) The formality of the certification required to obtain expedited 
treatment may be waived by the Executive Director as a matter of 
administrative discretion.
    (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.
    (4) Priority of responses. 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.

[[Page 173]]

    (5) Notification. (i) The time for response to requests will be 
twenty (20) working days except:
    (A) In the case of expedited treatment under paragraph (c)(2) of 
this section;
    (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 charges are likely to exceed $250 as provided for in 
paragraph (e)(1)(iv) of this section;
    (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
    (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.
    (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:
    (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
    (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.
    (iii) Unusual circumstances may arise when:
    (A) The records are in facilities that are not located at the ASC's 
Washington office;
    (B) The records requested are voluminous or are not in close 
proximity to one another; or
    (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.
    (6) Response to request. 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:
    (i) The ASC's determination of the request;
    (ii) The reasons for the determination;
    (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:
    (A) If the denial is in part or in whole;
    (B) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (C) The exemptions relied on for the denial; and
    (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.
    (d) Providing responsive records. (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.
    (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.
    (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.

[[Page 174]]

    (e) Fees--(1) General rules. (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.
    (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.
    (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.
    (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.
    (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.
    (vi) The ASC ordinarily will collect all applicable fees under the 
final invoice before releasing copies of requested records to the 
requester.
    (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.
    (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 Sec. 3717 of title 31 of the 
United States Code and will accrue from the date of the invoice.
    (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.
    (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.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication, and review costs.
    (ii) Educational institutions, noncommercial scientific 
institutions, and news media representatives shall be charged 
duplication costs, except for the first 100 pages.
    (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.
    (3) Fee schedule. 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 
(http://www.asc.gov) and will be effective on the date of publication.

[[Page 175]]

Copies of the fee schedule may be obtained by request at no charge by 
contacting the Executive Director by letter, Internet email or 
facsimile.
    (i) Manual searches for records. 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.
    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the 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.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is $.25.
    (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.
    (iv) Review of records. 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.
    (v) Other services. 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.
    (4) Use of contractors. 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.
    (f) Exempt information. A request for records may be denied if the 
requested record contains information that falls into one or more of the 
following categories. \1\ 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:
---------------------------------------------------------------------------

    \1\ 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.
---------------------------------------------------------------------------

    (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;
    (2) Records related solely to the internal personnel rules and 
practices of the ASC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a

[[Page 176]]

person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters that would not 
be available by law to a private party in litigation with the ASC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trail or an 
impartial adjudication;
    (ii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) 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
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (g) Appeals. (1) Appeals should be addressed to the Executive 
Director; ASC; 2000 K Street, NW., Suite 310; Washington, DC 20006.
    (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.
    (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:
    (i) Whether it is granted or denied in whole or in part;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (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.
    (5) Complete payment of any outstanding fee invoice will be required 
before an appeal is processed.
    (h) Records of another agency. If a requested record is the property 
of another Federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the 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.

[64 FR 72497, Dec. 28, 1999; 65 FR 31960, May 19, 2000, as amended at 69 
FR 2501, Jan. 16, 2004]



Sec. 1102.307  Disclosure of exempt records.

    (a) Disclosure prohibited. 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

[[Page 177]]

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 
exempt records or information without written authorization from the 
Executive Director, after consultation with the ASC General Counsel.
    (b) Disclosure authorized. 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.
    (1) Disclosure by Executive Director. (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.
    (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.
    (2) Authorization for disclosure by the Chairman of the ASC. Except 
where expressly prohibited by law, the Chairman of the ASC may, in his 
or her discretion, authorize the disclosure of any

[[Page 178]]

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.
    (3) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records 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.

[64 FR 72500, Dec. 28, 1999]



Sec. 1102.308  Right to petition for issuance, amendment and repeal 
of rules of general application.

    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.

[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.309  Confidential treatment procedures.

    (a) In general. 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) (i.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.
    (b) Form of request. 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.
    (c) Designation and separation of confidential material. Submitters 
shall clearly designate all information considered confidential and 
shall clearly separate such information from other non-confidential 
information, whenever possible.
    (d) ASC action on request. 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

[[Page 179]]

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. 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.
    (e) Notice of lawsuit. 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.

[59 FR 1902, Jan. 13, 1994. Redesignated at 64 FR 72497, Dec. 28, 1999]



Sec. 1102.310  Service of process.

    (a) Service. 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 Sec. 1102.306(e) prior 
to the release of any records requested pursuant to any subpoena or 
other legal process.
    (b) Notification by person served. 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

[[Page 180]]

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.
    (c) Appearance by person served. 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 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.

[64 FR 72501, Dec. 28, 1999]

[[Page 181]]



               CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY




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

                SUBCHAPTER A--ORGANIZATION AND OPERATIONS
Part                                                                Page
1202            Freedom of Information Act..................         183
1203            Equal Access to Justice Act.................         191
1204            Privacy Act implementation..................         197
1206            Assessments.................................         203
1207            Minority and women inclusion (Eff. Jan. 27, 
                    2011)...................................         206
1208            Debt collection.............................         212
1212            Post-employment restriction for senior 
                    examiners...............................         232
                    SUBCHAPTER B--ENTITY REGULATIONS
1229            Capital classifications and prompt 
                    corrective action.......................         235
1231            Golden parachute payments...................         244
1233            Reporting of fraudulent financial 
                    instruments.............................         246
                        SUBCHAPTER C--ENTERPRISES
1249            Book-Entry procedures.......................         249
1250            Flood insurance.............................         253
1252            Portfolio holdings..........................         254
1253            Prior approval for enterprise products......         254
                  SUBCHAPTER D--FEDERAL HOME LOAN BANKS
1261            Federal Home Loan Bank directors............         269
1263            Members of the Banks........................         282
1264            Federal Home Loan Bank housing associates...         301
1265            Core mission activities.....................         304
1269            Standby letters of credit...................         305
1273            Office of Finance...........................         308
1274            Financial statements of the banks...........         316
                 SUBCHAPTER E--HOUSING GOALS AND MISSION
1281            Federal home loan bank housing goals........         318
1282            Enterprise housing goals and mission........         326
1290            Community support requirements..............         342

[[Page 182]]

1291            Federal Home Loan Banks' Affordable Housing 
                    Program.................................         347

[[Page 183]]



                SUBCHAPTER A_ORGANIZATION AND OPERATIONS





PART 1202_FREEDOM OF INFORMATION ACT--Table of Contents



Sec.
1202.1 Why did FHFA issue this part?
1202.2 What do the terms in this part mean?
1202.3 What information can I obtain through FOIA?
1202.4 What information is exempt from disclosure?
1202.5 How do I request information from FHFA under FOIA?
1202.6 What if my request does not have all the information FHFA 
          requires?
1202.7 How will FHFA respond to my FOIA request?
1202.8 If the records I request contain confidential commercial 
          information, what procedures will FHFA follow?
1202.9 How do I appeal a response denying my FOIA request?
1202.10 Will FHFA expedite my request or appeal?
1202.11 What will it cost to get the records I requested?
1202.12 Is there anything else I need to know about FOIA procedures?

    Authority: 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.

    Source: 74 FR 2342, Jan. 15, 2009, unless otherwise noted.



Sec. 1202.1  Why did FHFA issue this part?

    (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.
    (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.
    (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.
    (d) FHFA may make public information that it routinely publishes or 
discloses when performing its activities without following these 
procedures.



Sec. 1202.2  What do the terms in this part mean?

    Some of the terms you need to understand while reading the 
regulations in this part are--
    Appeals Officer or FOIA Appeals Officer 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.
    Confidential commercial information 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.
    Days, 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.
    Direct costs 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.
    Employee, for the purposes of this part, means any person holding an 
appointment to a position of employment

[[Page 184]]

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.
    FHFA 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.
    FOIA Officer and Chief FOIA Officer 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.
    Readily reproducible 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.
    Record means information or documentary material FHFA maintains in 
any form or format, including electronic, which FHFA--
    (1) Created or received under federal law or in connection with the 
transaction of public business;
    (2) Preserved or determined is appropriate for preservation as 
evidence of FHFA's operations or activities or because of the value of 
the information it contains; and
    (3) Controls at the time it receives a request for disclosure.
    Regulated entities 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.
    Requester means any person seeking access to FHFA records under the 
FOIA.
    Search time 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.
    Submitter 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.
    Unusual circumstances means the need to--
    (1) Search for and collect records from agencies, offices, 
facilities, or locations that are separate from the office processing 
the request;
    (2) Search, review, and duplicate a voluminous amount of separate 
and distinct records in order to process a single request; or
    (3) Consult with another agency or among two or more components of 
FHFA that have a substantial interest in the determination of a request.



Sec. 1202.3  What information can I obtain through FOIA?

    (a) General. 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
    (b) Records. 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.
    (c) Reading rooms. (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 
[email protected] The electronic reading room is part of the FHFA Web site 
at http://www.fhfa.gov.
    (2) Each reading room has the following records created by FHFA or 
its predecessor agencies after November 1,

[[Page 185]]

1996, and current indices to all of the following records created by 
FHFA or its predecessor agencies before or after November 1, 1996:
    (i) Final opinions or orders issued in adjudication;
    (ii) Statements of policy and interpretation that are not published 
in the Federal Register;
    (iii) Administrative staff manuals and instructions to staff that 
affect a member of the public, and are not exempt from disclosure under 
FOIA; and
    (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.

[74 FR 2342, Jan. 15, 2009, as amended at 74 FR 18624, Apr. 24, 2009]



Sec. 1202.4  What information is exempt from disclosure?

    (a) General. 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--
    (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.
    (2) Related solely to FHFA's internal personnel rules and practices.
    (3) Specifically exempted from disclosure by statute (other than 5 
U.S.C. 552b), provided that such statute--
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld.
    (4) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential.
    (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.
    (6) Contained in personnel, medical or similar files (including 
financial files) the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy.
    (7) Compiled for law enforcement purposes, but only to the extent 
that the production of such law enforcement records or information--
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to fair trial or an impartial 
adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority 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;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (8) Contained in or related to examination, operating, or condition 
reports that are prepared by, on behalf of, or for the use of an agency 
responsible for the regulation or supervision of financial institutions.
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (b) Discretion To Apply Exemptions. 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.

[[Page 186]]

    (c) Redacted Portion. 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.
    (d) Exempt and Redacted Material. FHFA is not required to provide an 
itemized index correlating each withheld document (or redacted portion) 
with a specific exemption justification.
    (e) Disclosure to Congress. 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.



Sec. 1202.5  How do I request information from FHFA under FOIA?

    (a) Where To Send Your Request. 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: [email protected] 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, http://www.fhfa.gov, helpful in 
making your request.
    (b) Provide Your Name and Address. 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.
    (c) Request Is Under FOIA. Your request must have a statement 
identifying it as being made under FOIA.
    (d) Your FOIA Status. 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.
    (e) Describing the Records You Request. 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.
    (f) How You Want the Records Produced to You. Your request must tell 
FHFA whether you will inspect the records before duplication or want 
them duplicated and furnished without inspection.
    (g) Agreement To Pay Fees. 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.
    (h) Valid Requests. FHFA will only process valid requests. A valid 
request must meet all the requirements of this section.



Sec. 1202.6  What if my request does not have all the information 
FHFA requires?

    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

[[Page 187]]

days period for FHFA to respond to your request under Sec. 1202.7.
    (a) If you respond with an amended request, FHFA will process the 
amended request as a new request.
    (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.
    (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.



Sec. 1202.7  How will FHFA respond to my FOIA request?

    (a) Authority to Grant or Deny Requests. The FOIA Officer and the 
Chief FOIA Officer are authorized to grant or deny any request for FHFA 
records.
    (b) Multi-Track Request Processing. 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.
    (1) Standard Track. 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.
    (2) Complex Track. 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.
    (c) Referrals to Other Agencies. 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.
    (d) Responses to FOIA Requests. 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.
    (1) Requests That FHFA Grants. 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.
    (2) Requests That FHFA Denies or Grants and Denies in Parts. 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.
    (e) Format and Delivery of Disclosed Records. 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

[[Page 188]]

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.
    (f) Extensions of Time. 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--
    (1) The reason for the extension;
    (2) The date on which the determination in accordance with paragraph 
(b) of this section is expected; and
    (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.



Sec. 1202.8  If the records I request contain confidential commercial 
information, what procedures will FHFA follow?

    (a) General. FHFA will not disclose confidential commercial 
information in response to your FOIA request except as described in this 
section.
    (b) Designation of Confidential Commercial Information. 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.
    (c) Predisclosure Notification. 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--
    (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
    (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.
    (d) Content of Predisclosure Notification. When FHFA sends a 
predisclosure notification to a submitter, it will contain--
    (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
    (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.
    (e) Exceptions to Predisclosure Notification. FHFA is not required 
to send a predisclosure notification if--
    (1) FHFA determines that information should not be disclosed;
    (2) The information lawfully has been published or has been 
officially made available to the public;
    (3) Disclosure of the information is required by law, other than the 
FOIA;
    (4) The information requested is not designated by the submitter as 
confidential commercial information pursuant to this section; or
    (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.
    (f) Submitter's Objection to Disclosure. 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

[[Page 189]]

and correct to the best of the submitter's knowledge. The submitter's 
objection may itself be subject to disclosure under the FOIA.
    (g) Notice of Intent to Disclose Information. 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--
    (1) A statement of the reasons for not sustaining the submitter's 
objections to disclosure;
    (2) A description of the confidential commercial information to be 
disclosed; and
    (3) A specified disclosure date.
    (h) Notice to Requester. FHFA will give a requester whose request 
encompasses confidential commercial information the following notices--
    (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
    (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.
    (i) Notice of FOIA Lawsuit. FHFA will promptly notify the submitter 
whenever a requester files suit seeking to compel disclosure of the 
submitter's confidential commercial information.



Sec. 1202.9  How do I Appeal a Response Denying my FOIA Request?

    (a) Right of Appeal. 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: [email protected] 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.''
    (b) Timing, Form, Content and Receipt of an Appeal. 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.
    (c) Extensions of Time To Appeal. 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.
    (d) Final Action on Appeal. 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--
    (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.
    (2) Reversing the denial of a request in whole or in part, requiring 
the request to be processed promptly in accordance with the 
determination.
    (3) Remanding a request to the FOIA Officer for re-processing, 
stating the time limits for responding to the remanded request.

[[Page 190]]

    (e) Notice of Delayed Determinations on Appeal. 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.
    (f) Judicial Review. 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).



Sec. 1202.10  Will FHFA expedite my request or appeal?

    (a) Applications for Expedited Processing. 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--
    (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;
    (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;
    (3) The loss of substantial due process or rights;
    (4) A matter of widespread and exceptional media interest in which 
there exists possible questions about the government's integrity, 
affecting public confidence; or
    (5) Humanitarian need.
    (b) Certification of Compelling Need. 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.
    (c) Determination on Application. 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.



Sec. 1202.11  What will it cost to get the records I requested?

    (a) Assessment of Fees, Generally. 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.
    (b) Assessment of Fees, Categories of Requesters. The fees that FHFA 
may assess vary depending on the type of request or the type of 
requester you are--
    (1) Commercial Use. 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.
    (2) Educational Institution, Noncommercial Scientific Institution, 
Representative of the News Media. 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.
    (3) Other. 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.
    (c) Fee Schedule. FHFA will maintain a current schedule of fees on 
its Web site at: http://www.fhfa.gov.
    (d) Notice of Anticipated Fees in Excess of $100.00. 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

[[Page 191]]

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.
    (e) Advance Payment of Fees. 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--
    (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
    (2) You previously failed to pay a fee to FHFA in a timely fashion, 
i.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.
    (f) Interest. 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.
    (g) FHFA Assistance To Reduce Costs. 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.



Sec. 1202.12  Is there anything else I need to know about
FOIA procedures?

    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.



PART 1203_EQUAL ACCESS TO JUSTICE ACT--Table of Contents



                      Subpart A_General Provisions

Sec.
1203.1 Purpose and scope.
1203.2 Definitions.
1203.3 Eligible parties.
1203.4 Standards for awards.
1203.5 Allowable fees and expenses.
1203.6 Rulemaking on maximum rate for fees.
1203.7 Awards against other agencies.
1203.8-1203.9 [Reserved]

             Subpart B_Information Required From Applicants

1203.10 Contents of the application for award.
1203.11 Confidentiality of net worth exhibit.
1203.12 Documentation for fees and expenses.
1203.13-1203.19 [Reserved]

Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award

1203.20 Filing and service of the application for award and related 
          papers.
1203.21 Response to the application for award.
1203.22 Reply to the response.
1203.23 Comments by other parties.
1203.24 Settlement.
1203.25 Further proceedings on the application for award.
1203.26 Decision of the adjudicative officer.
1203.27 Review by FHFA.
1203.28 Judicial review.
1203.29 Payment of award.

    Authority: 12 U.S.C. 4526, 5 U.S.C. 504.

    Source: 75 FR 65219, Oct. 22, 2010, unless otherwise noted..

[[Page 192]]



                      Subpart A_General Provisions



Sec. 1203.1  Purpose and scope.

    (a) This part implements the Equal Access to Justice Act, 5 U.S.C. 
504, by establishing procedures for the filing and consideration of 
applications for awards of fees and other expenses to eligible 
individuals and entities who are parties to adversary adjudications 
before FHFA.
    (b) This part applies to the award of fees and other expenses in 
connection with adversary adjudications before FHFA. However, if a court 
reviews the underlying decision of the adversary adjudication, an award 
for fees and other expenses may be made only pursuant to 28 U.S.C. 
2412(d)(3).



Sec. 1203.2  Definitions.

    As used in this part:
    Adjudicative officer means the official who presided at the 
underlying adversary adjudication, without regard to whether the 
official is designated as a hearing examiner, administrative law judge, 
administrative judge, or otherwise.
    Adversary adjudication means an administrative proceeding conducted 
by FHFA under 5 U.S.C. 554 in which the position of FHFA or any other 
agency of the United States is represented by counsel or otherwise, 
including but not limited to an adjudication conducted under the Safety 
and Soundness Act, as amended, and any implementing regulations. Any 
issue as to whether an administrative proceeding is an adversary 
adjudication for purposes of this part will be an issue for resolution 
in the proceeding on the application for award.
    Affiliate means an individual, corporation, or other entity that 
directly or indirectly controls or owns a majority of the voting shares 
or other interests of the party, or any corporation or other entity of 
which the party directly or indirectly owns or controls a majority of 
the voting shares or other interest, unless the adjudicative officer 
determines that it would be unjust and contrary to the purpose of the 
Equal Access to Justice Act in light of the actual relationship between 
the affiliated entities to consider them to be affiliates for purposes 
of this part.
    Agency counsel means the attorney or attorneys designated by the 
General Counsel of FHFA to represent FHFA in an adversary adjudication 
covered by this part.
    Demand of FHFA means the express demand of FHFA that led to the 
adversary adjudication, but does not include a recitation by FHFA of the 
maximum statutory penalty when accompanied by an express demand for a 
lesser amount.
    Director means the Director of the Federal Housing Finance Agency.
    Fees and other expenses means reasonable attorney or agent fees, the 
reasonable expenses of expert witnesses, and the reasonable cost of any 
study, analysis, engineering report, or test, which the agency finds 
necessary for the preparation of the eligible party's case.
    FHFA means the Federal Housing Finance Agency.
    Final disposition date means the date on which a decision or order 
disposing of the merits of the adversary adjudication or any other 
complete resolution of the adversary adjudication, such as a settlement 
or voluntary dismissal, becomes final and unappealable, both within the 
agency and to the courts.
    Party means an individual, partnership, corporation, association, or 
public or private organization that is named or admitted as a party, 
that is admitted as a party for limited purposes, or that is properly 
seeking and entitled as of right to be admitted as a party in an 
adversary adjudication.
    Position of FHFA means the position taken by FHFA in the adversary 
adjudication, including the action or failure to act by FHFA upon which 
the adversary adjudication was based.



Sec. 1203.3  Eligible parties.

    (a) To be eligible for an award of fees and other expenses under the 
Equal Access to Justice Act, the applicant must show that it meets all 
conditions of eligibility set out in this paragraph and has complied 
with all the requirements in Subpart B of this part. The applicant must 
also be a party to the adversary adjudication for which it seeks an 
award.

[[Page 193]]

    (b) To be eligible for an award of fees and other expenses for 
prevailing parties, a party must be one of the following:
    (1) An individual who has a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interest, and not more than 500 employees; however, a party who owns an 
unincorporated business will be considered to be an ``individual'' 
rather than the ``sole owner of an unincorporated business'' if the 
issues on which the party prevails are related primarily to personal 
interests rather than to business interests;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees;
    (5) Any other partnership, corporation, association, unit of local 
government, or organization that has a net worth of not more than $7 
million and not more than 500 employees; or
    (6) For the purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (c) For purposes of eligibility under this section:
    (1) The employees of a party must include all persons who regularly 
perform services for remuneration for the party, under the party's 
direction and control. Part-time employees must be included on a 
proportional basis.
    (2) The net worth and number of employees of the party and its 
affiliates must be aggregated to determine eligibility.
    (3) The net worth and number of employees of a party will be 
determined as of the date the underlying adversary adjudication was 
initiated.
    (4) A party that participates in an adversary adjudication primarily 
on behalf of one or more entities that would be ineligible for an award 
is not itself eligible for an award.



Sec. 1203.4  Standards for awards.

    (a) An eligible party that files an application for award of fees 
and other expenses in accordance with this part will receive an award of 
fees and other expenses related to defending against a demand of FHFA if 
the demand was in excess of the decision in the underlying adversary 
adjudication and was unreasonable when compared with the decision under 
the facts and circumstances of the case, unless the party has committed 
a willful violation of law or otherwise acted in bad faith, or unless 
special circumstances make an award unjust. The burden of proof that the 
demand of FHFA was substantially in excess of the decision and is 
unreasonable when compared with the decision is on the eligible party.
    (b) An eligible party that submits an application for award in 
accordance with this part will receive an award of fees and other 
expenses incurred in connection with an adversary adjudication in which 
it prevailed or in a significant and discrete substantive portion of the 
adversary adjudication in which it prevailed, unless the position of 
FHFA in the adversary adjudication was substantially justified or 
special circumstances make an award unjust. FHFA has the burden of proof 
to show that its position was substantially justified and may do so by 
showing that its position was reasonable in law and in fact.



Sec. 1203.5  Allowable fees and expenses.

    (a) Awards of fees and other expenses will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents, and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the party. However, 
except as provided in Sec. 1203.6, an award for the fee of an attorney 
or agent may not exceed $125 per hour and an award to compensate an 
expert witness may not exceed the highest rate at which FHFA pays expert 
witnesses. However, an award may also include the reasonable expenses of 
the attorney, agent, or expert witness as a separate item if he or she 
ordinarily charges clients separately for such expenses.

[[Page 194]]

    (b) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the adjudicative officer will 
consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fees for similar services; or, if the 
attorney, agent, or expert witness is an employee of the eligible party, 
the fully allocated costs of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the eligible 
party;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the adversary adjudication; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) In determining the reasonable cost of any study, analysis, 
engineering report, test, project, or similar matter prepared on behalf 
of a party, the adjudicative officer will consider the prevailing rate 
for similar services in the community in which the services were 
performed.
    (d) Fees and other expenses incurred before the date on which an 
adversary adjudication was initiated will be awarded only if the 
eligible party can demonstrate that they were reasonably incurred in 
preparation for the adversary adjudication.



Sec. 1203.6  Rulemaking on maximum rate for fees.

    If warranted by an increase in the cost of living or by special 
circumstances, FHFA may adopt regulations providing for an award of 
attorney or agent fees at a rate higher than $125 per hour in adversary 
adjudications covered by this part. Special circumstances include the 
limited availability of attorneys or agents who are qualified to handle 
certain types of adversary adjudications. FHFA will conduct any 
rulemaking proceedings for this purpose under the informal rulemaking 
procedures of the Administrative Procedure Act, 5 U.S.C. 553.



Sec. 1203.7  Awards against other agencies.

    If another agency of the United States participates in an adversary 
adjudication before FHFA and takes a position that was not substantially 
justified, the award or appropriate portion of the award to an eligible 
party that prevailed over that agency will be made against that agency.



Sec. Sec. 1203.8-1203.9  [Reserved]



             Subpart B_Information Required From Applicants



Sec. 1203.10  Contents of the application for award.

    (a) An application for award of fees and other expenses under either 
Sec. 1203.4(a) and Sec. 1203.4(b) must:
    (1) Identify the applicant and the adversary adjudication for which 
an award is sought;
    (2) State the amount of fees and other expenses for which an award 
is sought;
    (3) Provide the statements and documentation required by paragraph 
(b) or (c) of this section and Sec. 1203.12 and any additional 
information required by the adjudicative officer; and
    (4) Be signed by the applicant or an authorized officer or attorney 
of the applicant and contain or be accompanied by a written verification 
under oath or under penalty of perjury that the information provided in 
the application is true and correct.
    (b) An application for award under Sec. 1203.4(a) must show that 
the demand of FHFA was substantially in excess of, and was unreasonable 
when compared to, the decision in the underlying adversary adjudication 
under the facts and circumstances of the case. It must also show that 
the applicant is a small entity as defined in 5 U.S.C. 601.
    (c) An application for award under Sec. 1203.4(b) must:
    (1) Show that the applicant has prevailed in a significant and 
discrete substantive portion of the underlying adversary adjudication 
and identify the position of FHFA in the adversary adjudication that the 
applicant alleges was not substantially justified;
    (2) State the number of employees of the applicant and describe 
briefly the

[[Page 195]]

type and purposes of its organization or business (if the applicant is 
not an individual);
    (3) State that the net worth of the applicant does not exceed $2 
million, if the applicant is an individual; or for all other applicants, 
state that the net worth of the applicant and its affiliates, if any, 
does not exceed $7 million; and
    (4) Include one of the following:
    (i) A detailed exhibit showing the net worth (net worth exhibit) of 
the applicant and its affiliates, if any, when the underlying adversary 
adjudication was initiated. The net worth exhibit may be in any form 
convenient to the applicant as long as the net worth exhibit provides 
full disclosure of the assets and liabilities of the applicant and its 
affiliates, if any, and is sufficient to determine whether the applicant 
qualifies as an eligible party;
    (ii) A copy of a ruling by the Internal Revenue Service that shows 
that the applicant qualifies as an organization described in section 
501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3); or in the 
case of a tax-exempt organization not required to obtain a ruling from 
the Internal Revenue Service on its exempt status, a statement that 
describes the basis for the belief that the applicant qualifies under 
such section; or
    (iii) A statement that the applicant is a cooperative association as 
defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 
1141j(a).



Sec. 1203.11  Confidentiality of net worth exhibit.

    Unless otherwise ordered by the Director, or required by law, the 
statement of net worth will be for the confidential use of the 
adjudicative officer, the Director, and agency counsel.



Sec. 1203.12  Documentation for fees and expenses.

    (a) The application for award must be accompanied by full and 
itemized documentation of the fees and other expenses for which an award 
is sought. The adjudicative officer may require the applicant to provide 
vouchers, receipts, logs, or other documentation for any fees or 
expenses claimed.
    (b) A separate itemized statement must be submitted for each entity 
or individual whose services are covered by the application. Each 
itemized statement must include:
    (1) The hours spent by each entity or individual;
    (2) A description of the specific services performed and the rates 
at which each fee has been computed; and
    (3) Any expenses for which reimbursement is sought, the total amount 
claimed, and the total amount paid or payable by the applicant or by any 
other person or entity.



Sec. Sec. 1203.13-1203.19  [Reserved]



Subpart C_Procedures for Filing and Consideration of the Application for 
                                  Award



Sec. 1203.20  Filing and service of the application for award and
related papers.

    (a) An application for an award of fees and other expenses must be 
filed no later than 30 days after the final disposition of the 
underlying adversary adjudication.
    (b) An application for award and other papers related to the 
proceedings on the application for award must be filed and served on all 
parties in the same manner as papers are filed and served in the 
underlying adversary adjudication, except as otherwise provided in this 
part.
    (c) The computation of time for filing and service of the 
application of award and other papers must be computed in the same 
manner as in the underlying adversary adjudication.



Sec. 1203.21  Response to the application for award.

    (a) Agency counsel must file a response within 30 days after service 
of an application for award of fees and other expenses except as 
provided in paragraphs (b) and (c) of this section. In the response, 
agency counsel must explain any objections to the award requested and 
identify the facts relied upon to support the objections. If any of the 
alleged facts are not already in the record of the underlying adversary

[[Page 196]]

adjudication, agency counsel must include with the response either 
supporting affidavits or a request for further proceedings under Sec. 
1203.25.
    (b) If agency counsel and the applicant believe that the issues in 
the application for award can be settled, they may jointly file a 
statement of their intent to negotiate a settlement. The filing of this 
statement will extend the time for filing a response for an additional 
30 days. Upon request by agency counsel and the applicant, the 
adjudicative officer may grant for good cause further time extensions.
    (c) Agency counsel may request that the adjudicative officer extend 
the time period for filing a response. If agency counsel does not 
respond or otherwise does not contest or settle the application for 
award within the 30-day period or the extended time period, the 
adjudicative officer may make an award of fees and other expenses upon a 
satisfactory showing of entitlement by the applicant.



Sec. 1203.22  Reply to the response.

    Within 15 days after service of a response, the applicant may file a 
reply. If the reply is based on any alleged facts not already in the 
record of the underlying adversary adjudication, the applicant must 
include with the reply either supporting affidavits or a request for 
further proceedings under Sec. 1203.25.



Sec. 1203.23  Comments by other parties.

    Any party to the underlying adversary adjudication other than the 
applicant and agency counsel may file comments on an application for 
award within 30 calendar days after it is served, or on a response 
within 15 calendar days after it is served. A commenting party may not 
participate further in proceedings on the application unless the 
adjudicative officer determines that the public interest requires such 
participation in order to permit full exploration of matters raised in 
the comments.



Sec. 1203.24  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of an award before the final decision on the application for award is 
made, either in connection with a settlement of the underlying adversary 
adjudication or after the underlying adversary adjudication has been 
concluded. If the eligible party and agency counsel agree on a proposed 
settlement of an award before an application for award has been filed, 
the application must be filed with the proposed settlement.



Sec. 1203.25  Further proceedings on the application for award.

    (a) On request of either the applicant or agency counsel, on the 
adjudicative officer's own initiative, or as requested by the Director 
under Sec. 1203.27, the adjudicative officer may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions, or, as to issues other than substantial 
justification (such as the applicant's eligibility or substantiation of 
fees and expenses), pertinent discovery or an evidential hearing. Such 
further proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application for award and will 
be conducted as promptly as possible. The issue as to whether the 
position of FHFA in the underlying adversary adjudication was 
substantially justified will be determined on the basis of the whole 
administrative record that was made in the underlying adversary 
adjudication.
    (b) A request that the adjudicative officer order further 
proceedings under this section must specifically identify the 
information sought on the disputed issues and must explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 1203.26  Decision of the adjudicative officer.

    (a) The adjudicative officer must make the initial decision on the 
basis of the written record, except if further proceedings are ordered 
under Sec. 1203.25.
    (b) The adjudicative officer must issue a written initial decision 
on the application for award within 30 days after completion of 
proceedings on the application. The initial decision will become the 
final decision of FHFA after 30 days from the day it was issued, unless 
review is ordered under Sec. 1203.27.

[[Page 197]]

    (c) In all initial decisions, the adjudicative officer must include 
findings and conclusions with respect to the applicant's eligibility and 
an explanation of the reasons for any difference between the amount 
requested by the applicant and the amount awarded. If the applicant has 
sought an award against more than one agency, the adjudicative officer 
must also include findings and conclusions with respect to the 
allocation of payment of any award made.
    (d) In initial decisions on applications filed pursuant to Sec. 
1203.4(a), the adjudicative officer must include findings and 
conclusions as to whether FHFA made a demand that was substantially in 
excess of the decision in the underlying adversary adjudication and that 
was unreasonable when compared with that decision; and, if at issue, 
whether the applicant has committed a willful violation of the law or 
otherwise acted in bad faith, or whether special circumstances would 
make the award unjust.
    (e) In decisions on applications filed pursuant to Sec. 1203.4(b), 
the adjudicative officer must include written findings and conclusions 
as to whether the applicant is a prevailing party and whether the 
position of FHFA was substantially justified; and, if at issue, whether 
the applicant unduly protracted or delayed the underlying adversary 
adjudication or whether special circumstance make the award unjust.



Sec. 1203.27  Review by FHFA.

    Within 30 days after the adjudicative officer issues an initial 
decision under Sec. 1203.26, either the applicant or agency counsel may 
request the Director to review the initial decision of the adjudicative 
officer. The Director may also decide, at his or her discretion, to 
review the initial decision. If review is ordered, the Director must 
issue a final decision on the application for award or remand the 
application for award to the adjudicative officer for further 
proceedings under Sec. 1203.25.



Sec. 1203.28  Judicial review.

    Any party, other than the United States, that is dissatisfied with 
the final decision on an application for award of fees and expenses 
under this part may seek judicial review as provided in 5 U.S.C. 
504(c)(2).



Sec. 1203.29  Payment of award.

    To receive payment of an award of fees and other expenses granted 
under this part, the applicant must submit a copy of the final decision 
that grants the award and a certification that the applicant will not 
seek review of the decision in the United States courts to the Director, 
Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 
20552. FHFA must pay the amount awarded to the applicant within 60 days 
of receipt of the submission of the copy of the final decision and the 
certification, unless judicial review of the award has been sought by 
any party to the proceedings.



PART 1204_PRIVACY ACT IMPLEMENTATION--Table of Contents



Sec.
1204.1 Why did FHFA issue this part?
1204.2 What do the terms in this part mean?
1204.3 How do I make a Privacy Act request?
1204.4 How will FHFA respond to my Privacy Act request?
1204.5 What if I am dissatisfied with the FHFA response to my Privacy 
          Act request?
1204.6 What does it cost to get records under the Privacy Act?
1204.7 Are there any exemptions from the Privacy Act?
1204.8 How are records secured?
1204.9 Does FHFA collect and use Social Security numbers?
1204.10 What are FHFA employee responsibilities under the Privacy Act?

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

    Source: 74 FR 33908, July 14, 2009, unless otherwise noted.



Sec. 1204.1  Why did FHFA issue this part?

    FHFA issued this part to:
    (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;
    (b) Establish rules that apply to all FHFA maintained systems of 
records

[[Page 198]]

retrieved by an individual's name or other personal identifier;
    (c) Describe procedures through which you may request access to 
records, request amendment or correction of those records, and request 
an accounting of disclosures of those records by FHFA;
    (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
    (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.



Sec. 1204.2  What do the terms in this part mean?

    The following definitions apply to the terms used in this part--
    Access means making a record available to a subject individual.
    Amendment means any correction of, addition to, or deletion from a 
record.
    Court means any entity conducting a legal proceeding.
    FHFA means the Federal Housing Finance Agency.
    FHFB means the Federal Housing Finance Board.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Individual means a natural person who is either a citizen ofhe 
United States of America or an alien lawfully admitted for permanent 
residence.
    Maintain includes collect, use, disseminate, or control.
    OFHEO means the Office of Federal Housing Enterprise Oversight.
    Privacy Act means the Privacy Act of 1974, as amended (5 U.S.C. 
552a).
    Privacy Act Appeals Officer means the FHFA employee who has been 
delegated the authority to determine Privacy Act appeals.
    Privacy Act Officer means the FHFA employee who has primary 
responsibility for privacy and data protection policy and is authorized 
to determine Privacy Act requests.
    Record 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.
    Routine use 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.
    Senior Agency Official for Privacy means the FHFA employee delegated 
the authority and responsibility to oversee and supervise the FHFA 
privacy program and implementation of the Privacy Act.
    System of records 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.



Sec. 1204.3  How do I make a Privacy Act request?

    (a) What is a valid request? In general, a Privacy Act request can 
be made on your own behalf for records or information about you. You can 
make a Privacy Act request on behalf of another individual as the parent 
or guardian of a minor or as the guardian of someone determined by a 
court to be incompetent. You also may request access to another 
individual's record or information if you have that individual's written 
consent, unless other conditions of disclosure apply (5 U.S.C. 
552a(b)(1) through (12)).
    (b) How and where do I make a request? Your request must be in 
writing. You may appear in person to submit your written request to the 
Privacy Act Officer, or send your written request to

[[Page 199]]

the Privacy Act Officer by electronic mail, regular mail, or fax. The 
electronic mail address is: [email protected] The regular mail address 
is: Privacy Act Officer, Federal Housing Finance Agency, 1625 Eye 
Street, NW., Washington, DC 20006. The fax number is: (202) 408-2530. 
For the quickest possible handling, you should mark your electronic 
mail, letter, or fax and the subject line, envelope, or fax cover sheet 
``Privacy Act Request.''
    (c) What must the request include? You must describe the record that 
you want in enough detail to enable the Privacy Act Officer to locate 
the system of records containing it with a reasonable amount of effort. 
Your request should include specific information about each record 
sought, such as the time period in which you believe it was compiled, 
the name or identifying number of each system of records in which you 
believe it is kept, and the date, title or name, author, recipient, and 
subject matter of the record. As a general rule, the more specific you 
are about the record that you want, the more likely FHFA will be able to 
locate it in response to your request.
    (d) How do I request amendment or correction of a record? If you are 
requesting an amendment or correction of any FHFA record, you should 
identify each particular record in question and the systems of records 
in which the record is located, describe the amendment or correction 
that you want, and state why you believe that the record is not 
accurate, relevant, timely, or complete. You may submit any 
documentation that you think would be helpful, including an annotated 
copy of the record.
    (e) How do I request for an accounting of disclosures? If you are 
requesting an accounting of disclosures by FHFA of a record to another 
person, organization, or Federal agency, you should identify each 
particular record in question. An accounting generally includes the 
date, nature, and purpose of each disclosure, as well as the name and 
address of the person, organization, or Federal agency to which the 
disclosure was made.
    (f) Must I verify my identity? When making requests under the 
Privacy Act, your request must verify your identity to protect your 
privacy or the privacy of the individual on whose behalf you are acting. 
If you make a Privacy Act request and you do not follow these identity 
verification procedures, FHFA cannot process your request.
    (1) How do I verify my identity? To verify your identity, you must 
state your full name, current address, and date and place of birth. In 
order to help identify and locate the records you request, you also may, 
at your option, include your Social Security number. If you make your 
request in person and your identity is not known to the Privacy Act 
Officer, you must provide either two forms of identification with 
photographs, or one form of identification with a photograph and a 
properly authenticated birth certificate. If you make your request by 
mail, your signature either must be notarized or submitted under 28 
U.S.C. 1746, a law that permits statements to be made under penalty of 
perjury as a substitute for notarization. You may fulfill this 
requirement by having your signature on your request letter witnessed by 
a notary or by including the following statement just before the 
signature on your request letter: ``I declare under penalty of perjury 
that the foregoing is true and correct. Executed on [date].''
    (2) How do I verify parentage or guardianship? If you make a Privacy 
Act request as the parent or guardian of a minor or as the guardian of 
someone determined by a court to be incompetent, with respect to records 
or information about that individual, you must establish:
    (i) The identity of the individual who is the subject of the record, 
by stating the individual's name, current address, date and place of 
birth, and, at your option, the Social Security number of the 
individual;
    (ii) Your own identity, as required in paragraph (f)(1) of this 
section;
    (iii) That you are the parent or guardian of the individual, which 
you may prove by providing a properly authenticated copy of the 
individual's birth certificate showing your parentage or a properly 
authenticated court order establishing your guardianship; and
    (iv) That you are acting on behalf of the individual in making the 
request.

[[Page 200]]



Sec. 1204.4  How will FHFA respond to my Privacy Act request?

    (a) How will FHFA locate the requested records? FHFA will search to 
determine if requested records exist in the systems of records it owns 
or controls. You can find descriptions of FHFA systems of records on its 
Web site at http://www.fhfa.gov, or by linking to http://www.ofheo.gov 
and http://www.fhfb.gov, as appropriate. You can also find descriptions 
of OFHEO and FHFB systems of records that have not been superseded on 
the FHFA Web site. A description of the systems of records also is 
available in the ``Privacy Act Issuances'' compilation published by the 
Office of the Federal Register of the National Archives and Records 
Administration. You can access the ``Privacy Act Issuances'' compilation 
in most large reference and university libraries or electronically at 
the Government Printing Office Web site at: http://www.gpoaccess.gov/
privacyact/index.html. You also can request a copy of FHFA systems of 
records from the Privacy Act Officer.
    (b) How long does FHFA have to respond? The Privacy Act Officer 
generally will respond to your request in writing within 20 business 
days after receiving it, if it meets the requirements of Sec. 1204.3. 
FHFA may extend the response time in unusual circumstances, such as when 
consultation is needed with another Federal agency (if that agency is 
subject to the Privacy Act) about a record or to retrieve a record 
shipped offsite for storage. If you submit your written request in 
person, the Privacy Act Officer may disclose records or information to 
you directly with a written record made of the grant of the request. If 
you are to be accompanied by another person when accessing your record 
or any information pertaining to you, FHFA may require your written 
authorization before permitting access or discussing the record in the 
presence of the other person.
    (c) What will the FHFA response include? The written response will 
include a determination to grant or deny your request in whole or in 
part, a brief explanation of the reasons for the determination, and the 
amount of the fee charged, if any, under Sec. 1204.6. If you are 
granted a request to access a record, FHFA will make the record 
available to you. If you are granted a request to amend or correct a 
record, the response will describe any amendments or corrections made 
and advise you of your right to obtain a copy of the amended or 
corrected record.
    (d) What is an adverse determination? An adverse determination is a 
determination on a Privacy Act request that:
    (1) Withholds any requested record in whole or in part;
    (2) Denies a request for an amendment or correction of a record in 
whole or in part;
    (3) Declines to provide a requested accounting of disclosures;
    (4) Advises that a requested record does not exist or cannot be 
located;
    (5) Finds what has been requested is not a record subject to the 
Privacy Act; or
    (6) Addresses any disputed fee matter.
    (e) What will be stated in a response that includes an adverse 
determination? If the Privacy Act Officer makes an adverse determination 
with respect to your request, the written response under this section 
will state that the Privacy Act Officer is the person responsible for 
the adverse determination, that the adverse determination is not a final 
action of FHFA, and that you may appeal the adverse determination under 
Sec. 1204.5.



Sec. 1204.5  What if I am dissatisfied with the FHFA response to 
my Privacy Act request?

    (a) May I appeal the response? You may appeal any adverse 
determination made by the Privacy Act Officer in response to your 
Privacy Act request. If you wish to seek review by a court of any 
adverse determination or denial of a request, you first must appeal it 
under this section.
    (b) How do I appeal the response? (1) You may appeal by submitting a 
written appeal stating the reasons you believe the adverse determination 
should be overturned. FHFA must receive your written appeal within 30 
business days of the date of the Privacy Act Officer's determination 
under Sec. 1204.4. Your written appeal may include as

[[Page 201]]

much or as little related information as you wish, as long as it clearly 
identifies the determination (including the request number, if known) 
that you are appealing.
    (2) You should transmit your written appeal addressed to the Privacy 
Act Appeals Officer by electronic mail, regular mail, or fax. The 
electronic mail address is: [email protected] The regular mail address 
is: Privacy Act Appeals Officer, Federal Housing Finance Agency, 1700 G 
Street, NW., Fourth Floor, Washington, DC 20552. The fax number is: 
(202) 414-6504. For the quickest possible handling, you should mark your 
electronic mail, letter, or fax and the subject line, envelope, or fax 
cover sheet ``Privacy Act Appeal.'' FHFA ordinarily will not act on an 
appeal if the Privacy Act request becomes a matter of Privacy Act 
litigation.
    (c) Who has the authority to grant or deny appeals? The Privacy Act 
Appeals Officer is authorized to act on behalf of the Director on all 
appeals under this section.
    (d) When will FHFA respond to my appeal? FHFA generally will respond 
to you in writing within 30 business days of receipt of an appeal that 
meets the requirements of paragraph (b) of this section, unless for good 
cause shown, the Director extends the response time.
    (e) What will the FHFA response include? The written response will 
include the determination of the Privacy Act Appeals Officer; whether to 
grant or deny your appeal in whole or in part, a brief explanation of 
the reasons for the determination, and information about the Privacy Act 
provisions for court review of the determination.
    (1) If your appeal concerns a request for access to records or 
information and the appeal determination grants your access, the records 
or information, if any, will be made available to you.
    (2)(i) If your appeal concerns an amendment or correction of a 
record and the appeal determination grants your request for an amendment 
or correction, the response will describe any amendment or correction 
made to the record and advise you of your right to obtain a copy of the 
amended or corrected record under this part. FHFA will notify all 
persons, organizations, or Federal agencies to which it previously 
disclosed the record, if an accounting of that disclosure was made, that 
the record has been amended or corrected. Whenever the record is 
subsequently disclosed, the record will be disclosed as amended or 
corrected.
    (ii) If the response to your appeal denies your request for an 
amendment or correction to a record, the response will advise you of 
your right to file a Statement of Disagreement under paragraph (f) of 
this section.
    (f) What is a Statement of Disagreement? (1) A Statement of 
Disagreement is a concise written statement in which you clearly 
identify each part of any record that you dispute and explain your 
reason(s) for disagreeing with the Privacy Act Appeals Officer's denial 
in whole or in part of your appeal requesting amendment or correction. 
Your Statement of Disagreement must be received by the Privacy Act 
Officer within 30 business days of the Privacy Act Appeals Officer's 
denial in whole or in part of your appeal concerning amendment or 
correction of a record. FHFA will place your Statement of Disagreement 
in the system(s) of records in which the disputed record is maintained. 
FHFA also may append a concise statement of its reason(s) for denying 
the request for an amendment or correction of the record.
    (2) FHFA will notify all persons, organizations, or Federal agencies 
to which it previously disclosed the disputed record, if an accounting 
of that disclosure was made, that the record is disputed and provide 
your Statement of Disagreement and the FHFA concise statement, if any. 
Whenever the disputed record is subsequently disclosed, a copy of your 
Statement of Disagreement and the FHFA concise statement, if any, will 
also be disclosed.



Sec. 1204.6  What does it cost to get records under the Privacy Act?

    (a) Must I agree to pay fees? Your Privacy Act request is your 
agreement to pay all applicable fees, unless you specify a limit on the 
amount of fees you agree to pay. FHFA will not exceed the specified 
limit without your written agreement.

[[Page 202]]

    (b) How does FHFA calculate fees? FHFA will charge a fee for 
duplication of a record under the Privacy Act in the same way it charges 
for duplication of records under FOIA (5 U.S.C. 552) in 12 CFR 1202.11. 
There are no fees to search for or review records.



Sec. 1204.7  Are there any exemptions from the Privacy Act?

    (a) What is a Privacy Act exemption? The Privacy Act allows the 
Director to exempt records or information in a system of records from 
some of the Privacy Act requirements, if the Director determines that 
the exemption is necessary.
    (b) How do I know if the records or information I want are exempt? 
(1) Each notice of a system of records will advise you if the Director 
has determined records or information in records are exempt from Privacy 
Act requirements. If the Director has claimed an exemption for a system 
of records, the System of Records Notice will identify the exemption and 
the provisions of the Privacy Act from which the system is exempt.
    (2) Until superseded by FHFA Systems of Records, the following OFHEO 
and FHFB Systems of Records are, under 5 U.S.C. 552a(k)(2) or (k)(5), 
exempt from the Privacy Act requirements of 5 U.S.C. 552a(c)(3), (d), 
(e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I), and (f):
    (i) OFHEO-11 Litigation and Enforcement Information System;
    (ii) FHFB-5 Agency Personnel Investigative Records; and
    (iii) FHFB-6 Office of Inspector General Audit and Investigative 
Records.



Sec. 1204.8  How are records secured?

    (a) What controls must FHFA have in place? Each FHFA office must 
establish administrative and physical controls to prevent unauthorized 
access to its systems of records, unauthorized or inadvertent disclosure 
of records, and physical damage to or destruction of records. The 
stringency of these controls should correspond to the sensitivity of the 
records that the controls protect. At a minimum, the administrative and 
physical controls must ensure that:
    (1) Records are protected from public view;
    (2) The area in which records are kept is supervised during business 
hours to prevent unauthorized persons from having access to them;
    (3) Records are inaccessible to unauthorized persons outside of 
business hours; and
    (4) Records are not disclosed to unauthorized persons or under 
unauthorized circumstances in either oral or written form.
    (b) Is access to records restricted? Access to records is restricted 
only to authorized employees who require access in order to perform 
their official duties.



Sec. 1204.9  Does FHFA collect and use Social Security numbers?

    FHFA collects Social Security numbers only when it is necessary and 
authorized. At least annually, the Privacy Act Officer or the Senior 
Agency Official for Privacy will inform employees who are authorized to 
collect information that:
    (a) Individuals may not be denied any right, benefit, or privilege 
as a result of refusing to provide their Social Security numbers, unless 
the collection is authorized either by a statute or by a regulation 
issued prior to 1975; and
    (b) They must inform individuals who are asked to provide their 
Social Security numbers:
    (1) If providing a Social Security number is mandatory or voluntary;
    (2) If any statutory or regulatory authority authorizes collection 
of a Social Security number; and
    (3) The uses that will be made of the Social Security number.



Sec. 1204.10  What are FHFA employee responsibilities under the Privacy Act?

    At least annually, the Privacy Act Officer or the Senior Agency 
Official for Privacy will inform employees about the provisions of the 
Privacy Act, including the Privacy Act's civil liability and criminal 
penalty provisions. Unless otherwise permitted by law, an authorized 
FHFA employee shall:
    (a) Collect from individuals only information that is relevant and 
necessary to discharge FHFA responsibilities;

[[Page 203]]

    (b) Collect information about an individual directly from that 
individual whenever practicable;
    (c) Inform each individual from whom information is collected of:
    (1) The legal authority to collect the information and whether 
providing it is mandatory or voluntary;
    (2) The principal purpose for which FHFA intends to use the 
information;
    (3) The routine uses FHFA may make of the information; and
    (4) The effects on the individual, if any, of not providing the 
information.
    (d) Ensure that the employee's office does not maintain a system of 
records without public notice and notify appropriate officials of the 
existence or development of any system of records that is not the 
subject of a current or planned public notice.
    (e) Maintain all records that are used in making any determination 
about an individual with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to ensure fairness to the 
individual in the determination.
    (f) Except for disclosures made under the FOIA, make reasonable 
efforts, prior to disseminating any record about an individual, to 
ensure that the record is accurate, relevant, timely, and complete.
    (g) When required by the Privacy Act, maintain an accounting in the 
specified form of all disclosures of records by FHFA to persons, 
organizations, or Federal agencies.
    (h) Maintain and use records with care to prevent the unauthorized 
or inadvertent disclosure of a record to anyone.
    (i) Notify the appropriate official of any record that contains 
information that the Privacy Act does not permit FHFA to maintain.



PART 1206_ASSESSMENTS--Table of Contents



Sec.
1206.1 Purpose.
1206.2 Definitions.
1206.3 Annual assessments.
1206.4 Increased costs of regulation.
1206.5 Working capital fund.
1206.6 Notice and review.
1206.7 Delinquent payment.
1206.8 Enforcement of payment.

    Authority: 12 U.S.C. 4516.

    Source: 73 FR 56713, Sept. 30, 2008, unless otherwise noted.



Sec. 1206.1  Purpose.

    This part sets forth the policy and procedures of the FHFA with 
respect to the establishment and collection of the assessments of the 
Regulated Entities under 12 U.S.C. 4516.



Sec. 1206.2  Definitions.

    As used in this part:
    Act means the Federal Housing Finance Regulatory Reform Act of 2008.
    Adequately capitalized means the adequately capitalized capital 
classification under 12 U.S.C. 1364 and related regulations.
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Enterprise means the Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation; and ``Enterprises'' means, 
collectively, the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation.
    Federal Home Loan Bank, or Bank, means a Federal Home Loan Bank 
established under section 12 of the Federal Home Loan Bank Act (12 
U.S.C. 1432).
    FHFA means the Federal Housing Finance Agency.
    Minimum required regulatory capital means the highest amount of 
capital necessary for a Bank to comply with any of the capital 
requirements established by the Director and applicable to it.
    Regulated Entity means the Federal National Mortgage Association, 
the Federal Home Loan Mortgage Corporation, or any of the Federal Home 
Loan Banks.
    Surplus funds means any amounts that are not obligated as of 
September 30 of the fiscal year for which the assessment was made.
    Total exposure means the sum, as of the most recent June quarterly 
minimum capital report of the Enterprise, of the amounts of the 
following assets and off-balance sheet obligations that are used to 
calculate the quarterly minimum capital requirement of the Enterprise 
under 12 CFR part 1750:
    (1) On-balance sheet assets;

[[Page 204]]

    (2) Guaranteed mortgage-backed securities; and
    (3) Other off-balance sheet obligations as determined by the 
Director.
    Working capital fund means an account for amounts collected from the 
Regulated Entities to establish an operating reserve that is intended to 
provide for the payment of large or multiyear capital and operating 
expenditures, as well as unanticipated expenses.



Sec. 1206.3  Annual assessments.

    (a) Establishing assessments. The Director shall establish annual 
assessments on the Regulated Entities in an amount sufficient to 
maintain a working capital fund and provide for the payment of the 
FHFA's costs and expenses, including, but not limited to:
    (1) Expenses of any examinations under 12 U.S.C. 4517 and section 20 
of the Federal Home Loan Bank Act (12 U.S.C. 1440);
    (2) Expenses of obtaining any reviews and credit assessments under 
12 U.S.C. 4519;
    (3) Expenses of any enforcement activities under 12 U.S.C. 3645;
    (4) Expenses of other FHFA litigation under 12 U.S.C. 4513;
    (5) Expenses relating to the maintenance of the FHFA records 
relating to examinations and other reviews of the Regulated Entities;
    (6) Such amounts in excess of actual expenses for any given year 
deemed necessary to maintain a working capital fund;
    (7) Expenses relating to monitoring and ensuring compliance with 
housing goals;
    (8) Expenses relating to conducting reviews of new products;
    (9) Expenses related to affordable housing and community programs;
    (10) Other administrative expenses of the FHFA;
    (11) Expenses related to preparing reports and studies;
    (12) Expenses relating to the collection of data and development of 
systems to calculate the House Price Index (HPI) and the conforming loan 
limit;
    (13) Amounts deemed necessary by the Director to wind up the affairs 
of the Office of Federal Housing Enterprise Oversight and the Federal 
Housing Finance Board; and
    (14) Expenses relating to other responsibilities of the FHFA under 
the Safety and Soundness Act, the Federal Home Loan Bank Act and the 
Act.
    (b) Allocating assessments. The Director shall allocate the annual 
assessments as follows:
    (1) Enterprises. Assessments collected from the Enterprises shall 
not exceed amounts sufficient to provide for payment of the costs and 
expenses relating to the Enterprises as determined by the Director. Each 
Enterprise shall pay a proportional share that bears the same ratio to 
the total portion of the annual assessment allocated to the Enterprises 
that the total exposure of each Enterprise bears to the total exposure 
of both Enterprises.
    (2) Federal Home Loan Banks. Assessments collected from the Banks 
shall not exceed amounts sufficient to provide for payment of the costs 
and expenses relating to the Banks as determined by the Director. Each 
Bank shall pay a pro rata share of the annual assessments based on the 
ratio between its minimum required regulatory capital and the aggregate 
minimum required regulatory capital of every Bank.
    (c) Timing and amount of semiannual payment. Each Regulated Entity 
shall pay on or before October 1 and April 1 an amount equal to one-half 
of its annual assessment.
    (d) Surplus funds. Surplus funds shall be credited to the annual 
assessment by reducing the amount collected in the following semiannual 
period by the amount of the surplus funds. Surplus funds shall be 
allocated to all Regulated Entities in the same proportion in which they 
were collected, except as determined by the Director.



Sec. 1206.4  Increased costs of regulation.

    (a) Increase for inadequate capitalization. The Director may, at his 
or her discretion, increase the amount of a semiannual payment allocated 
to a Regulated Entity that is not classified as adequately capitalized 
to pay additional estimated costs of regulation of that Regulated 
Entity.

[[Page 205]]

    (b) Increase for enforcement activities. The Director may, at his or 
her discretion, adjust the amount of a semiannual payment allocated to a 
Regulated Entity to ensure that the Regulated Entity bears the estimated 
costs of enforcement activities under the Act related to that Regulated 
Entity.
    (c) Additional assessment for deficiencies. At any time, the 
Director may make and collect from any Regulated Entity an assessment, 
payable immediately or through increased semiannual payments, to cover 
the estimated amount of any deficiency for the semiannual period as a 
result of increased costs of regulation of a Regulated Entity due to its 
classification as other than adequately capitalized, or as a result of 
enforcement activities related to that Regulated Entity. Any amount 
remaining from such additional assessment and the semiannual payments at 
the end of any semiannual period during which such an additional 
assessment is made shall be deducted pro rata (based upon the amount of 
the additional assessments) from the assessment for the following 
semiannual period for that Regulated Entity.



Sec. 1206.5  Working capital fund.

    (a) Assessments. The Director shall establish and collect from the 
Regulated Entities such assessments he or she deems necessary to 
maintain a working capital fund.
    (b) Purposes. Assessments collected to maintain the working capital 
fund shall be used to establish an operating reserve and to provide for 
the payment of large or multiyear capital and operating expenditures as 
well as unanticipated expenses.
    (c) Remittance of excess assessed funds. At the end of each year for 
which an assessment under this section is made, the Director shall remit 
to each Regulated Entity any amount of assessed and collected funds in 
excess of the amount the Director deems necessary to maintain a working 
capital fund in the same proportions as paid under the most recent 
annual assessment.



Sec. 1206.6  Notice and review.

    (a) Written notice of budget. The Director shall provide to each 
Regulated Entity written notice of the projected budget for the Agency 
for the upcoming fiscal year. Such notice shall be provided at least 30 
days before the beginning of the applicable fiscal year.
    (b) Written notice of assessments. The Director shall provide each 
Regulated Entity with written notice of assessments as follows:
    (1) Annual assessments. The Director shall provide each Regulated 
Entity with written notice of the annual assessment and the semiannual 
payments to be collected under this part. Notice of the annual 
assessment and semiannual payments shall be provided before the start of 
the new fiscal year.
    (2) Immediate assessments. The Director shall provide each Regulated 
Entity with written notice of any immediate assessments to be collected 
under Sec. 1206.4 of this chapter. Notice of any immediate assessment 
and the required payments shall be provided at such reasonable time as 
determined by the Director.
    (3) Changes to assessments. The Director shall provide each 
Regulated Entity with written notice of any changes in the assessment 
procedures that the Director, in his or her sole discretion, deems 
necessary under the circumstances.
    (c) Request for review. At the written request of a Regulated 
Entity, the Director, in his or her discretion, may review the 
calculation of the proportional share of the annual assessment, the 
semiannual payments, and any partial payments to be collected under this 
part. The determination of the Director upon such review is final. 
Except as provided by the Director, review by the Director does not 
suspend the requirement that the Regulated Entity make the semiannual 
payment or partial payment on or before the date it is due. Any 
adjustments determined appropriate shall be credited or otherwise 
addressed by the following year's assessment for that entity.



Sec. 1206.7  Delinquent payment.

    The Director may assess interest and penalties on any delinquent 
semiannual payment or other payment assessed under this part in 
accordance with 31 U.S.C. 3717 (interest and penalty on claims) and part 
1704 of this title (debt collection).

[[Page 206]]



Sec. 1206.8  Enforcement of payment.

    The Director may enforce the payment of any assessment under 12 
U.S.C. 4631 (cease-and-desist proceedings), 12 U.S.C. 4632 (temporary 
cease-and-desist orders), and 12 U.S.C. 4626 (civil money penalties).



PART 1207_MINORITY AND WOMEN INCLUSION (Eff. Jan. 27, 2011)--
Table of Contents



    Effective Date Note: At 75 FR 81402, Dec. 28, 2010 part 1207 was 
added, effective Jan. 27, 2011.

                            Subpart A_General

Sec.
1207.1 Definitions.
1207.2 Policy, purpose, and scope.
1207.3 Limitations.
1207.4-1207.9 [Reserved]

  Subpart B_Minority and Women Inclusion and Diversity at the Federal 
                         Housing Finance Agency

1207.10-1207.19 [Reserved]

   Subpart C_Minority and Women Inclusion and Diversity at Regulated 
                   Entities and the Office of Finance

1207.20 Office of Minority and Women Inclusion.
1207.21 Equal opportunity in employment and contracting.
1207.22 Regulated entity and Office of Finance Reports.
1207.23 Annual reports--format and contents.
1207.24 Enforcement.

    Authority: 12 U.S.C. 4520 and 4526; 12 U.S.C. 1833e; E.O. 11478.

    Source: 75 FR 81402, Dec. 28, 2010, unless otherwise noted.



                            Subpart A_General



Sec. 1207.1  Definitions.

    The following definitions apply to the terms used in this part:
    Business and activities means operational, commercial, and economic 
endeavors of any kind, whether for profit or not for profit and whether 
regularly or irregularly engaged in by a regulated entity or the Office 
of Finance, and includes, but is not limited to, management of the 
regulated entity or the Office of Finance, employment, procurement, 
insurance, and all types of contracts, including contracts for the 
issuance or guarantee of any debt, equity, or mortgage-related 
securities, the management of mortgage and securities portfolios, the 
making of equity investments, the purchase, sale and servicing of 
single- and multi-family mortgage loans, and the implementation of 
affordable housing or community investment programs and initiatives.
    Director means the Director of FHFA or his or her designee.
    Disability has the same meaning as defined in 29 CFR 1630.2(g) and 
1630.3 and appendix to part 1630--Interpretive Guidance on Title I of 
the Americans with Disabilities Act.
    Disabled-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-
dealers, and providers of legal services--
    (1) Qualified as a Service-Disabled Veteran-Owned Small Business 
Concern as defined in 13 CFR 125.8 through 125.13; or
    (2) More than fifty percent (50%) of the ownership or control of 
which is held by one or more persons with a disability; and
    (3) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more persons with a disability.
    FHFA means the Federal Housing Finance Agency.
    Minority means any Black (or African) American, Native American (or 
American Indian), Hispanic (or Latino) American, or Asian American.
    Minority-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is

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held by one or more minority individuals; and
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more minority individuals.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System.
    Reasonable accommodation has the same meaning as defined in 29 CFR 
1630.2(o) and appendix to part 1630--Interpretive Guidance on Title I of 
the Americans with Disabilities Act.
    Regulated entity means the Federal Home Loan Mortgage Corporation, 
the Federal National Mortgage Association, any Federal Home Loan Bank 
and/or any affiliate thereof that is subject to the regulatory authority 
of FHFA. The term ``regulated entities'' means (collectively) the 
Federal Home Loan Mortgage Corporation, the Federal National Mortgage 
Association, and/or any affiliate Federal Home Loan Bank and/or any 
affiliate thereof that is subject to the regulatory authority of FHFA.
    Women-owned business means a business, and includes financial 
institutions, mortgage banking firms, investment banking firms, 
investment consultants or advisors, financial services entities, asset 
management entities, underwriters, accountants, brokers, brokers-dealers 
and providers of legal services--
    (1) More than fifty percent (50%) of the ownership or control of 
which is held by one or more women;
    (2) More than fifty percent (50%) of the net profit or loss of which 
accrues to one or more women; and
    (3) A significant percentage of senior management positions of which 
are held by women.



Sec. 1207.2  Policy, purpose, and scope.

    (a) General policy. FHFA's policy is to promote non-discrimination, 
diversity and, at a minimum, the inclusion of women, minorities, and 
individuals with disabilities in its own activities and in the business 
and activities of the regulated entities and the Office of Finance.
    (b) Purpose. This part establishes minimum standards and 
requirements for the regulated entities and the Office of Finance to 
promote diversity and 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 at all levels, in 
management and employment, in all business and activities, and in all 
contracts for services of any kind, including services that require the 
services of investment banking, asset management entities, broker-
dealers, financial services entities, underwriters, accountants, 
investment consultants, and providers of legal services.
    (c) Scope. This part applies to each regulated entity's and the 
Office of Finance's implementation of and adherence to diversity, 
inclusion and non-discrimination policies, practices and principles.



Sec. 1207.3  Limitations.

    (a) Except as expressly provided herein for enforcement by FHFA, the 
regulations in this part do not, are not intended to, and should not be 
construed to create any right or benefit, substantive or procedural, 
enforceable at law, in equity, or through administrative proceeding, by 
any party against the United States, its departments, agencies, or 
entities, its officers, employees, or agents, a regulated entity or the 
Office of Finance, their officers, employees or agents, or any other 
person.
    (b) The contract clause required by section 1207.21(b)(6) and the 
itemized data reporting on numbers of contracts and amounts involved 
required under Sec. Sec. 1207.22 and 1207.23(b)(11) through Sec. 
1207.23(b)(13) apply only to contracts for services in any amount and to 
contracts for goods that equal or exceed $10,000 in annual value, 
whether in a single contract, multiple contracts, a series of contracts 
or renewals of contracts, with a single vendor.

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Sec. Sec. 1207.4 through 1207.9  [Reserved]



  Subpart B_Minority and Women Inclusion and Diversity at the Federal 
                         Housing Finance Agency



Sec. 1207.10  through 1207.19 [Reserved]



   Subpart C_Minority and Women Inclusion and Diversity at Regulated 
                   Entities and the Office of Finance



Sec. 1207.20  Office of Minority and Women Inclusion.

    (a) Establishment. Each regulated entity and the Office of Finance 
shall establish and maintain an Office of Minority and Women Inclusion, 
or designate and maintain an office to perform the responsibilities of 
this part, under the direction of an officer of the regulated entity or 
the Office of Finance who reports directly to either the Chief Executive 
Officer or the Chief Operating Officer, or the equivalent. Each 
regulated entity and the Office of Finance shall notify the Director 
within thirty (30) days after any change in the designation of the 
office performing the responsibilities of this part.
    (b) Adequate resources. Each regulated entity and the Office of 
Finance will ensure that its Office of Minority and Women Inclusion, or 
the office designated to perform the responsibilities of this part, is 
provided human, technological, and financial resources sufficient to 
fulfill the requirements of this part.
    (c) Responsibilities. Each Office of Minority and Women Inclusion, 
or the office designated to perform the responsibilities of this part, 
is responsible for fulfilling the requirements of this part, 12 U.S.C. 
1833e(b) and 4520, and such standards and requirements as the Director 
may issue hereunder.



Sec. 1207.21  Equal opportunity in employment and contracting.

    (a) Equal opportunity notice. Each regulated entity and the Office 
of Finance shall publish a statement, endorsed by its Chief Executive 
Officer and approved by its Board of Directors, confirming its 
commitment to the principles of equal opportunity in employment and in 
contracting, at a minimum regardless of color, national origin, sex, 
religion, age, disability status, or genetic information. The notice 
also shall confirm commitment against retaliation or reprisal. 
Publication shall include, at a minimum, conspicuous posting in all 
regulated entity and Office of Finance physical facilities, including 
through alternative media formats, as necessary, and accessible posting 
on the regulated entity's and the Office of Finance's Web site. The 
notice shall be updated and re-published, re-endorsed by the Chief 
Executive Officer and re-approved by the Board of Directors annually.
    (b) Policies and procedures. Each regulated entity and the Office of 
Finance shall develop, implement, and maintain 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. The policies and procedures of each regulated entity and the 
Office of Finance at a minimum shall:
    (1) Confirm its adherence to the principles of equal opportunity and 
non-discrimination in employment and in contracting;
    (2) Describe its policy against discrimination in employment and 
contracting;
    (3) Establish internal procedures to receive and attempt to resolve 
complaints of discrimination in employment and in contracting. 
Publication will include at a minimum making the procedure conspicuously 
accessible to employees and applicants through print, electronic, or 
alternative media formats, as necessary, and through the regulated 
entity's or the Office of Finance's Web site;
    (4) Establish an effective procedure for accepting, reviewing and 
granting

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or denying requests for reasonable accommodations of disabilities from 
employees or applicants for employment;
    (5) 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;
    (6) Except as limited by Sec. 1207.3(b), require that each contract 
it enters contains a material clause committing the contractor to 
practice the principles of equal employment opportunity and non-
discrimination in all its business activities and requiring each such 
contractor to include the clause in each subcontract it enters for 
services or goods provided to the regulated entity or the Office of 
Finance;
    (7) Identify the types of contracts the regulated entity considers 
exempt under Sec. 1207.3(b) and any commercially reasonable thresholds, 
exceptions, and limitations the regulated entity establishes for the 
implementation of Sec. 1207.21(c)(2). The policies and procedures must 
address the rationale and need for implementing the thresholds, 
exceptions, or limitations;
    (8) Be published and accessible to employees, applicants for 
employment, contractors, potential contractors, and members of the 
public through print, electronic, or alternative media formats, as 
necessary, and through the regulated entity's or the Office of Finance's 
Web site; and
    (9) Be reviewed at the direction of the officer immediately 
responsible for directing the Office of Minority and Women Inclusion, or 
other office designated to perform the responsibilities of this part, at 
least annually to assess their effectiveness and to incorporate 
appropriate changes.
    (c) Outreach for contracting. Each regulated entity and the Office 
of Finance shall establish a program for outreach designed to ensure to 
the maximum extent possible the inclusion in contracting opportunities 
of minorities, women, individuals with disabilities, and minority-, 
women-, and disabled-owned businesses. The program at a minimum shall:
    (1) Apply to all contracts entered into by the regulated entity or 
the Office of Finance, including contracts with financial institutions, 
investment banking firms, investment consultants or advisors, financial 
services entities, mortgage banking firms, asset management entities, 
underwriters, accountants, brokers, brokers-dealers, and providers of 
legal services;
    (2) Establish policies, procedures and standards requiring the 
publication of contracting opportunities designed to encourage 
contractors that are minorities, women, individuals with disabilities, 
and minority-, women-, and disabled-owned businesses to submit offers or 
bid for the award of such contracts; and
    (3) Ensure the consideration of the diversity of a contractor when 
the regulated entity or the Office of Finance reviews and evaluates 
offers from contractors.



Sec. 1207.22  Regulated entity and Office of Finance reports.

    (a) General. Each regulated entity and the Office of Finance, 
through its Office of Minority and Women Inclusion, or other office 
designated to perform the responsibilities of this part, shall report in 
writing, in such format as the Director may require, to the Director 
describing its efforts to promote diversity and ensure the inclusion and 
utilization of minorities, women, individuals with disabilities, and 
minority-, women-, and disabled-owned businesses at all levels, in 
management and employment, in all business and activities, and in all 
contracts for services and the results of such efforts.
    (1) Within 180 days after the effective date of this regulation each 
regulated entity and the Office of Finance shall submit to the Director 
or his or her designee a preliminary status report describing actions 
taken, plans for and progress toward implementing the provisions of 12 
U.S.C. 4520 and this part; and including to the extent available the 
data and information required by this part to be included in an annual 
report.
    (2) FHFA intends to use the preliminary status report solely for the 
purpose of examining the submitting regulated entity or the Office of 
Finance

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and reporting to the institution on its operations and the condition of 
its program.
    (b) FHFA use of reports. The data and information reported to FHFA 
under this part (except for the initial report under paragraph (a)(1) of 
this section) are intended to be used for any permissible supervisory 
and regulatory purpose, including examinations, enforcement actions, 
identification of matters requiring attention, and production of FHFA 
examination, operating and condition reports related to one or more of 
the regulated entities and the Office of Finance. FHFA may use the 
information and data submitted to issue aggregate reports and data 
summaries that each regulated entity and the Office of Finance may use 
to assess its own progress and accomplishments, or to the public as it 
deems necessary. FHFA is not requiring, and does not desire, that 
reports under this part contain personally identifiable information.
    (c) Frequency of reports. Each regulated entity and the Office of 
Finance shall submit an annual report on or before March 1 of each year, 
beginning in 2012, reporting on the period of January 1 through December 
31 of the preceding year, and such other reports as the Director may 
require. If the date for submission falls on a Saturday, Sunday, or 
Federal holiday, the report is due no later than the next day that is 
not a Saturday, Sunday, or Federal holiday.
    (d) Annual summary. Each regulated entity and the Office of Finance 
shall include in its annual report to the Director (pursuant to 12 
U.S.C. 1723a(k), 1456(c), or 1440, with respect to the regulated 
entities) a summary of its activities under this part during the 
previous year, including at a minimum, detailed information describing 
the actions taken by the regulated entity or the Office of Finance 
pursuant to 12 U.S.C. 4520 and a statement of the total amounts paid by 
the regulated entity or the Office of Finance to contractors during the 
previous year and the percentage of such amounts paid to contractors 
that are minorities or minority-owned businesses, women or women-owned 
businesses, and individuals with disabilities and disabled-owned 
businesses respectively, as limited by Sec. 1207.3(b).



Sec. 1207.23  Annual reports--format and contents.

    (a) Format. Each annual report shall consist of a detailed summary 
of the regulated entity's or the Office of Finance's activities during 
the reporting year to carry out the requirements of this part, which 
report may also be made a part of the regulated entity's or the Office 
of Finance's annual report to the Director. The report shall contain a 
table of contents and conclude with a certification by the regulated 
entity's or the Office of Finance's officer responsible for the annual 
report that the data and information presented in the report are 
accurate, and are approved for submission.
    (b) Contents. The annual report shall contain the information 
provided in the regulated entity's or the Office of Finance's annual 
summary pursuant to Sec. 1207.22(d) and, in addition to any other 
information or data the Director may require, shall include:
    (1) The EEO-1 Employer Information Report (Form EEO-1 used by the 
Equal Employment Opportunity Commission (EEOC) and the Office of Federal 
Contract Compliance Programs (OFCCP) to collect certain demographic 
information) or similar reports filed by the regulated entity or the 
Office of Finance during the reporting year. If the regulated entity or 
the Office of Finance does not file Form EEO-1 or similar reports, the 
regulated entity or the Office of Finance shall submit to FHFA a 
completed Form EEO-1;
    (2) All other reports or plans the regulated entity or the Office of 
Finance submitted to the EEOC, the Department of Labor, OFCCP or 
Congress (``reports or plans'' is not intended to include separate 
complaints or charges of discrimination or responses thereto) during the 
reporting year;
    (3) Data showing by minority and gender the number of individuals 
applying for employment with the regulated entity or the Office of 
Finance in each occupational or job category identified on the Form EEO-
1 during the reporting year;
    (4) Data showing by minority and gender the number of individuals 
hired

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for employment with the regulated entity or the Office of Finance in 
each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (5) Data showing by minority, gender and disability classification, 
and categorized as voluntary or involuntary, the number of separations 
from employment with the regulated entity or the Office of Finance in 
each occupational or job category identified on the Form EEO-1 during 
the reporting year;
    (6) Data showing the number of requests for reasonable accommodation 
received from employees and applicants for employment, the number of 
requests granted, and the disabilities accommodated and the types of 
accommodation granted during the reporting year;
    (7) Data showing for the reporting year by minority, gender, and 
disability classification the number of individuals applying for 
promotion at the regulated entity or the Office of Finance--
    (i) Within each occupational or job category identified on the Form 
EEO-1; and
    (ii) From one such occupational or job category to another;
    (8) Data showing by minority, gender, and disability classification 
the number of individuals--
    (i) Promoted at the regulated entity or the Office of Finance within 
each occupational or job category identified on the Form EEO-1, after 
applying for such a promotion;
    (ii) Promoted at the regulated entity or the Office of Finance 
within each occupational or job category identified on the Form EEO-1, 
without applying for such a promotion; and
    (iii) Promoted at the regulated entity or the Office of Finance from 
one occupational or job category identified on the Form EEO-1 to another 
such category, after applying for such a promotion;
    (9) A comparison of the data reported under paragraphs (b)(1) 
through (b)(8) of this section to such data as reported in the previous 
year together with a narrative analysis;
    (10) Descriptions of all regulated entity or Office of Finance 
outreach activity during the reporting year to recruit individuals who 
are minorities, women, or persons with disabilities for employment, to 
solicit or advertise for minority or minority-owned, women or women-
owned, and disabled-owned contractors or contractors who are individuals 
with disabilities to offer proposals or bids to enter into business with 
the regulated entity or Office of Finance, or to inform such contractors 
of the regulated entity's or Office of Finance's contracting process, 
including the identification of any partners, organizations, or 
government offices with which the regulated entity or the Office of 
Finance participated in such outreach activity;
    (11) Cumulative data separately showing the number of contracts 
entered with minorities or minority-owned businesses, women or women-
owned businesses and individuals with disabilities or disabled-owned 
businesses during the reporting year;
    (12) Cumulative data separately showing for the reporting year the 
total amount the regulated entity or the Office of Finance paid to 
contractors that are minorities or minority-owned businesses, women or 
women-owned and individuals with disabilities or disabled-owned 
businesses;
    (13) The annual total of amounts paid to contractors and the 
percentage of which was paid separately to minorities or minority-owned 
businesses, women or women-owned businesses and individuals with 
disabilities or disabled-owned businesses during the reporting year;
    (14) Certification of compliance with Sec. Sec. 1207.20 and 
1207.21, together with sufficient documentation to verify compliance;
    (15) Data for the reporting year showing, separately, the number of 
equal opportunity complaints (including administrative agency charges or 
complaints, arbitral or judicial claims) against the regulated entity or 
the Office of Finance that--
    (i) Claim employment discrimination, by basis or kind of the alleged 
discrimination (race, sex, disability, etc.) and by result (settlement, 
favorable, or unfavorable outcome);
    (ii) Claim discrimination in any aspect of the contracting process 
or administration of contracts, by basis of

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the alleged discrimination and by result; and
    (iii) Were resolved through the regulated entity's or the Office of 
Finance's internal processes;
    (16) Data showing for the reporting year amounts paid to claimants 
by the regulated entity or the Office of Finance for settlements or 
judgments on discrimination complaints--
    (i) In employment, by basis of the alleged discrimination; and
    (ii) In any aspect of the contracting process or in the 
administration of contracts, by basis of the alleged discrimination;
    (17) A comparison of the data reported under paragraphs (b)(12) and 
(b)(13) of this section with the same information reported for the 
previous year;
    (18) A narrative identification and analysis of the reporting year's 
activities the regulated entity or the Office of Finance considers 
successful and unsuccessful in achieving the purpose and policy of 
regulations in this part and a description of progress made from the 
previous year; and
    (19) A narrative identification and analysis of business activities, 
levels, and areas in which the regulated entity's or the Office of 
Finance's efforts need to improve with respect to achieving the purpose 
and policy of regulations in this part, together with a description of 
anticipated efforts and results the regulated entity or the Office of 
Finance expects in the succeeding year.



Sec. 1207.24  Enforcement.

    The Director 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. The 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.



PART 1208_DEBT COLLECTION--Table of Contents



                            Subpart A_General

Sec.
1208.1 Authority and scope.
1208.2 Definitions.
1208.3 Referrals to the Department of the Treasury, collection services, 
          and use of credit bureaus.
1208.4 Reporting delinquent debts to credit bureaus.
1208.5-1208.19 [Reserved]

                         Subpart B_Salary Offset

1208.20 Authority and scope.
1208.21 Notice requirements before salary offset where FHFA is the 
          creditor agency.
1208.22 Review of FHFA records related to the debt.
1208.23 Opportunity for a hearing where FHFA is the creditor agency.
1208.24 Certification where FHFA is the creditor agency.
1208.25 Voluntary repayment agreements as alternative to salary offset 
          where FHFA is the creditor agency.
1208.26 Special review where FHFA is the creditor agency.
1208.27 Notice of salary offset where FHFA is the paying agency.
1208.28 Procedures for salary offset where FHFA is the paying agency.
1208.29 Coordinating salary offset with other agencies.
1208.30 Interest, penalties, and administrative costs.
1208.31 Refunds.
1208.32 Request from a creditor agency for the services of a hearing 
          official.
1208.33 Non-waiver of rights by payments.

                     Subpart C_Administrative Offset

1208.40 Authority and scope.
1208.41 Collection.
1208.42 Administrative offset prior to completion of procedures.
1208.43 Procedures.
1208.44 Interest, penalties, and administrative costs.
1208.45 Refunds.
1208.46 No requirement for duplicate notice.
1208.47 Requests for administrative offset to other Federal agencies.
1208.48 Requests for administrative offset from other Federal agencies.
1208.49 Administrative offset against amounts payable from Civil Service 
          Retirement and Disability Fund.

                       Subpart D_Tax Refund Offset

1208.50 Authority and scope.
1208.51 Definitions.

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1208.52 Procedures.
1208.53 No requirement for duplicate notice.
1208.54-1208.59 [Reserved]

                Subpart E_Administrative Wage Garnishment

1208.60 Scope and purpose.
1208.61 Notice.
1208.62 Debtor's rights.
1208.63 Form of hearing.
1208.64 Effect of timely request.
1208.65 Failure to timely request a hearing.
1208.66 Hearing official.
1208.67 Procedure.
1208.68 Format of hearing.
1208.69 Date of decision.
1208.70 Content of decision.
1208.71 Finality of agency action.
1208.72 Failure to appear.
1208.73 Wage garnishment order.
1208.74 Certification by employer.
1208.75 Amounts withheld.
1208.76 Exclusions from garnishment.
1208.77 Financial hardship.
1208.78 Ending garnishment.
1208.79 Prohibited actions by employer.
1208.80 Refunds.
1208.81 Right of action.

    Authority: 5 U.S.C. 5514; 12 U.S.C. 4526; 26 U.S.C. 6402(d); 31 
U.S.C. 3701-3720D; 31 CFR 285.2; 31 CFR Chapter IX.



                            Subpart A_General

    Source: 75 FR 68958, Nov. 10, 2010, unless otherwise noted.



Sec. 1208.1  Authority and scope.

    (a) Authority. FHFA issues this part 1208 under the authority of 5 
U.S.C. 5514 and 31 U.S.C. 3701-3720D, and in conformity with the Federal 
Claims Collection Standards (FCCS) at 31 CFR chapter IX; the regulations 
on salary offset issued by the Office of Personnel Management (OPM) at 5 
CFR part 550, subpart K; the regulations on tax refund offset issued by 
the United States Department of the Treasury (Treasury) at 31 CFR 285.2; 
and the regulations on administrative wage garnishment issued by 
Treasury at 31 CFR 285.11.
    (b) Scope.--(1) This part applies to debts that are owed to the 
Federal Government by Federal employees; other persons, organizations, 
or entities that are indebted to FHFA; and by Federal employees of FHFA 
who are indebted to other agencies, except for those debts listed in 
paragraph (b)(2) of this section.
    (2) Subparts B and C of this part 1208 do not apply to--
    (i) Debts or claims arising under the Internal Revenue Code (26 
U.S.C. 1 et seq.), the Social Security Act (42 U.S.C. 301 et seq.) or 
the tariff laws of the United States;
    (ii) Any case to which the Contract Disputes Act (41 U.S.C. 601 et 
seq.) applies;
    (iii) Any case where collection of a debt is explicitly provided for 
or provided by another statute, e.g. travel advances under 5 U.S.C. 5705 
and employee training expenses under 5 U.S.C. 4108, or, as provided for 
by title 11 of the United States Code, when the claims involve 
bankruptcy;
    (iv) Any debt based in whole or in part on conduct in violation of 
the antitrust laws or involving fraud, the presentation of a false 
claim, or misrepresentation on the part of the debtor or any party 
having an interest in the claim, unless the Department of Justice 
authorizes FHFA to handle the collection; or
    (v) Claims between agencies.
    (3) Nothing in this part precludes the compromise, suspension, or 
termination of collection actions, where appropriate, under standards 
implementing the Debt Collection Improvement Act (DCIA) (31 U.S.C. 3701 
et seq.), the FCCS (31 CFR chapter IX) or the use of alternative dispute 
resolution methods if they are not inconsistent with applicable law and 
regulations.
    (4) Nothing in this part precludes an employee from requesting 
waiver of an erroneous payment under 5 U.S.C. 5584, 10 U.S.C. 2774, or 
32 U.S.C. 716, or from questioning the amount or validity of a debt, in 
the manner set forth in this part.



Sec. 1208.2  Definitions.

    The following terms apply to this part, unless defined otherwise 
elsewhere-
    Administrative offset means an action, pursuant to 31 U.S.C. 3716, 
in which the Federal Government withholds funds payable to, or held by 
the Federal Government for a person, organization, or other entity in 
order to collect a debt from that person, organization, or other entity. 
Such funds include funds

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payable by the Federal Government on behalf of a State Government.
    Agency means an executive department or agency; a military 
department; the United States Postal Service; the Postal Regulatory 
Commission; any nonappropriated fund instrumentality described in 5 
U.S.C. 2105(c); the United States Senate; the United States House of 
Representatives; any court, court administrative office, or 
instrumentality in the judicial or legislative branches of the 
Government; or a Government corporation. If an agency under this 
definition is a component of an agency, the broader definition of agency 
may be used in applying the provisions of 5 U.S.C. 5514(b) (concerning 
the authority to prescribe regulations).
    Centralized administrative offset means the mandatory referral to 
the Secretary of the Treasury by a creditor agency of a past due debt 
which is more than 180 days delinquent, for the purpose of collection 
under the Treasury's centralized offset program.
    Certification means a written statement received by a paying agency 
from a creditor agency that requests the paying agency to institute 
salary offset of an employee, to the Financial Management Service (FMS) 
for offset or to the Secretary of the Treasury for centralized 
administrative offset, and specifies that required procedural 
protections have been afforded the debtor. Where the debtor requests a 
hearing on a claimed debt, the decision by a hearing official or 
administrative law judge constitutes a certification.
    Claim or debt (used interchangeably in this part) means any amount 
of funds or property that has been determined by an agency official to 
be due the Federal Government by a person, organization, or entity, 
except another agency. It also means any amount of money, funds, or 
property owed by a person to a State, the District of Columbia, American 
Samoa, Guam, the United States Virgin Islands, the Commonwealth of the 
Northern Mariana Islands, or the Commonwealth of Puerto Rico. For 
purposes of this part, a debt owed to FHFA constitutes a debt owed to 
the Federal Government. A claim or debt includes:
    (1) Funds owed on account of loans made, insured, or guaranteed by 
the Federal Government, including any deficiency or any difference 
between the price obtained by the Federal Government in the sale of a 
property and the amount owed to the Federal Government on a mortgage on 
the property;
    (2) Unauthorized expenditures of agency funds;
    (3) Overpayments, including payments disallowed by audits performed 
by the Inspector General of the agency administering the program;
    (4) Any amount the Federal Government is authorized by statute to 
collect for the benefit of any person;
    (5) The unpaid share of any non-Federal partner in a program 
involving a Federal payment, and a matching or cost-sharing payment by 
the non-Federal partner;
    (6) Any fine or penalty assessed by an agency; and
    (7) Other amounts of money or property owed to the Federal 
Government.
    Compromise means the settlement or forgiveness of a debt under 31 
U.S.C. 3711, in accordance with standards set forth in the FCCS and 
applicable Federal law.
    Creditor agency means the agency to which the debt is owed, 
including a debt collection center when acting on behalf of a creditor 
agency in matters pertaining to the collection of a debt.
    Debt See the definition of the terms ``Claim or debt'' of this 
section.
    Debt collection center means the Department of the Treasury or any 
other agency or division designated by the Secretary of the Treasury 
with authority to collect debts on behalf of creditor agencies in 
accordance with 31 U.S.C. 3711(g).
    Debtor means the person, organization, or entity owing money to the 
Federal Government.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement) unless other satisfactory payment arrangements have been 
made.
    Director means the Director of FHFA or Director's designee.

[[Page 215]]

    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, or retainer pay (or in the case of an 
employee not entitled to basic pay, other authorized pay) remaining 
after the deduction of any amount required by law to be withheld (other 
than deductions to execute garnishment orders in accordance with 5 CFR 
parts 581 and 582). FHFA will apply the order of precedence contained in 
OPM guidance (PPM-2008-01; Order Of Precedence When Gross Pay Is Not 
Sufficient To Permit All Deductions), as follows--
    (1) Retirement deductions for defined benefit plan (including Civil 
Service Retirement System, Federal Employees Retirement System, or other 
similar defined benefit plan);
    (2) Social security (OASDI) tax;
    (3) Medicare tax;
    (4) Federal income tax;
    (5) Basic health insurance premium (including Federal Employees 
Health Benefits premium, pre-tax or post-tax, or premium for similar 
benefit under another authority but not including amounts deducted for 
supplementary coverage);
    (6) Basic life insurance premium (including Federal Employees' Group 
Life Insurance--FEGLI--Basic premium or premium for similar benefit 
under another authority);
    (7) State income tax;
    (8) Local income tax;
    (9) Collection of debts owed to the U.S. Government (e.g., tax debt, 
salary overpayment, failure to withhold proper amount of deductions, 
advance of salary or travel expenses, etc.; debts which may or may not 
be delinquent; debts which may be collected through the Treasury's 
Financial Management Services Treasury Offset Program, an automated 
centralized debt collection program for collecting Federal debt from 
Federal payments):
    (i) Continuous levy under the Federal Payment Levy Program (tax 
debt); and
    (ii) Salary offsets (whether involuntary under 5 U.S.C. 5514 or 
similar authority or required by a voluntarily signed written agreement; 
if multiple debts are subject to salary offset, the order is based on 
when each offset commenced--with earliest commencing offset at the top 
of the order--unless there are special circumstances, as determined by 
the paying agency).
    (10) Court-Ordered collection/debt:
    (i) Child support (may include attorney and other fees as provided 
for in 5 CFR 581.102(d)). If there are multiple child support orders, 
the priority of orders is governed by 42 U.S.C. 666(b) and implementing 
regulations, as required by 42 U.S.C. 659(d)(2);
    (ii) Alimony (may include attorney and other fees as provided for in 
5 CFR 581.102(d)). If there are multiple alimony orders, they are 
prioritized on a first-come, first-served basis, as required by 42 
U.S.C. 659(d)(3);
    (iii) Bankruptcy; and
    (iv) Commercial garnishments.
    (11) Optional benefits:
    (i) Health care/limited-expense health care flexible spending 
accounts (pre-tax benefit under FedFlex or equivalent cafeteria plan);
    (ii) Dental (pre-tax benefit under FedFlex or equivalent cafeteria 
plan);
    (iii) Vision (pre-tax benefit under FedFlex or equivalent cafeteria 
plan);
    (iv) Health Savings Account (pre-tax benefit under FedFlex or 
equivalent cafeteria plan);
    (v) Optional life insurance premiums (FEGLI optional benefits or 
similar benefits under other authority);
    (vi) Long-term care insurance premiums;
    (vii) Dependent-care flexible spending accounts (pre-tax benefit 
under FedFlex or equivalent cafeteria plan);
    (viii) Thrift Savings Plan (TSP):
    (A) Loan payments;
    (B) Basic contributions; and
    (C) Catch-up contributions; and
    (ix) Other optional benefits.
    (12) Other voluntary deductions/allotments:
    (i) Military service deposits;
    (ii) Professional associations;
    (iii) Union dues;
    (iv) Charities;
    (v) Bonds;
    (vi) Personal account allotments (e.g., to savings or checking 
account); and
    (vii) Additional voluntary deductions (on first-come, first-served 
basis); and
    (13) IRS paper levies.
    Employee means a current employee of FHFA or other agency, including 
a current member of the Armed Forces

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or a Reserve of the Armed Forces of the United States.
    Federal Claims Collection Standards (FCCS) means standards published 
at 31 CFR chapter IX.
    FHFA means the Federal Housing Finance Agency.
    Garnishment means the process of withholding amounts from the 
disposable pay of a person employed outside the Federal Government, and 
the paying of those amounts to a creditor in satisfaction of a 
withholding order.
    Hearing official means an individual who is responsible for 
conducting any hearing with respect to the existence or amount of a debt 
claimed and for rendering a final decision on the basis of such hearing. 
A hearing official may not be under the supervision or control of the 
Director of FHFA when FHFA is the creditor agency but may be an 
administrative law judge.
    Notice of intent means a written notice of a creditor agency to a 
debtor that states that the debtor owes a debt to the creditor agency 
and apprises the debtor of the applicable procedural rights.
    Notice of salary offset means a written notice from the paying 
agency to an employee after a certification has been issued by a 
creditor agency that informs the employee that salary offset will begin 
at the next officially established pay interval.
    Paying agency means an agency of the Federal Government that employs 
the individual who owes a debt to an agency of the Federal Government 
and transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The same agency may be both the creditor agency and the 
paying agency.
    Salary offset means an administrative offset to collect a debt under 
5 U.S.C. 5514 by deductions at one or more officially established pay 
intervals from the current pay account of an employee without his or her 
consent.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee to FHFA or another 
agency as permitted or required by 5 U.S.C. 5584 or 8346(b), 10 U.S.C. 
2774, 32 U.S.C. 716, or any other law.
    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial, or administrative body. For 
purposes of administrative wage garnishment, the terms ``wage 
garnishment order'' and ``garnishment order'' have the same meaning as 
``withholding order.''



Sec. 1208.3  Referrals to the Department of the Treasury, collection
services, and use of credit bureaus.

    (a) Referral of delinquent debts.--(1) FHFA shall transfer to the 
Secretary of the Department of the Treasury any past due, legally 
enforceable nontax debt that has been delinquent for a period of 180 
days or more so that the Secretary may take appropriate action to 
collect the debt or terminate collection action in accordance with 31 
U.S.C. 3716, 5 U.S.C. 5514, 5 CFR 550.1108, 31 CFR part 285, and the 
FCCS.
    (2) FHFA may transfer any past due, legally enforceable nontax debt 
that has been delinquent for less than a period of 180 days to a debt 
collection center for collection in accordance with 31 U.S.C. 3716, 5 
U.S.C. 5514, 5 CFR 550.1108, 31 CFR part 285, and the FCCS.
    (b) Collection Services. Section 13 of the Debt Collection Act (31 
U.S.C. 3718) authorizes agencies to enter into contracts for collection 
services to recover debts owed the Federal Government. The Debt 
Collection Act requires that certain provisions be contained in such 
contracts, including:
    (1) The agency retains the authority to resolve a dispute, including 
the authority to terminate a collection action or refer the matter to 
the Attorney General for civil remedies; and
    (2) The contractor is subject to the Privacy Act of 1974, as it 
applies to private contractors, as well as subject to State and Federal 
laws governing debt collection practices.
    (c) Referrals to collection agencies.--(1) FHFA has authority to 
contract for collection services to recover delinquent debts in 
accordance with 31 U.S.C. 3718(a) and the FCCS (31 CFR 901.5).
    (2) FHFA may use private collection agencies where it determines 
that their use is in the best interest of the Federal Government. Where 
FHFA determines that there is a need to contract

[[Page 217]]

for collection services, the contract will provide that:
    (i) The authority to resolve disputes, compromise claims, suspend or 
terminate collection action, or refer the matter to the Department of 
Justice for litigation or to take any other action under this part will 
be retained by FHFA;
    (ii) Contractors are subject to the Privacy Act of 1974, as amended, 
to the extent specified in 5 U.S.C. 552a(m) and to applicable Federal 
and State laws and regulations pertaining to debt collection practices, 
such as the Fair Debt Collection Practices Act, 15 U.S.C. 1692;
    (iii) The contractor is required to strictly account for all amounts 
collected;
    (iv) The contractor must agree that uncollectible accounts shall be 
returned with appropriate documentation to enable FHFA to determine 
whether to pursue collection through litigation or to terminate 
collection; and
    (v) The contractor must agree to provide any data in its files 
requested by FHFA upon returning the account to FHFA for subsequent 
referral to the Department of Justice for litigation.



Sec. 1208.4  Reporting delinquent debts to credit bureaus.

    (a) FHFA may report delinquent debts to consumer reporting agencies 
(31 U.S.C. 3701(a)(3), 3711). Sixty calendar days prior to release of 
information to a consumer reporting agency, the debtor shall be 
notified, in writing, of the intent to disclose the existence of the 
debt to a consumer reporting agency. Such notice of intent may be a 
separate correspondence or included in correspondence demanding direct 
payment. The notice shall be in conformance with 31 U.S.C. 3711(e) and 
the FCCS. In the notice, FHFA shall provide the debtor with:
    (1) An opportunity to inspect and copy agency records pertaining to 
the debt;
    (2) An opportunity for an administrative review of the legal 
enforceability or past due status of the debt;
    (3) An opportunity to enter into a repayment agreement on terms 
satisfactory to FHFA to prevent FHFA from reporting the debt as overdue 
to consumer reporting agencies, and provide deadlines and method for 
requesting this relief;
    (4) An explanation of the rate of interest that will accrue on the 
debt, that all costs incurred to collect the debt will be charged to the 
debtor, the authority for assessing these costs, and the manner in which 
FHFA will calculate the amount of these costs;
    (5) An explanation that FHFA will report the debt to the consumer 
reporting agencies to the detriment of the debtor's credit rating; and
    (6) A description of the collection actions that the agency may take 
in the future if those presently proposed actions do not result in 
repayment of the debt, including the filing of a lawsuit against the 
borrower by the agency and assignment of the debt for collection by 
offset against Federal income tax refunds or the filing of a lawsuit 
against the debtor by the Federal Government.
    (b) The information that may be disclosed to the consumer reporting 
agency is limited to:
    (1) The debtor's name, address, social security number or taxpayer 
identification number, and any other information necessary to establish 
the identity of the individual;
    (2) The amount, status, and history of the claim; and
    (3) FHFA program or activity under which the claim arose.
    (c) Subsequent reports. FHFA may update its report to the credit 
bureau whenever it has knowledge of events that substantially change the 
status of the amount of liability.
    (d) Subsequent reports of delinquent debts. Pursuant to 31 CFR 
901.4, FHFA will report delinquent debt to the Department of Housing and 
Urban Development's Credit Alert Interactive Voice Response System 
(CAIVRS).
    (e) Privacy Act considerations. A delinquent debt may not be 
reported under this section unless a notice issued pursuant to the 
Privacy Act, 5 U.S.C. 552a(e)(4), authorizes the disclosure of 
information about the debtor to a credit bureau or CAIVRS.

[[Page 218]]



Sec. Sec. 1208.5-1208.19  [Reserved]



                         Subpart B_Salary Offset



Sec. 1208.20  Authority and scope.

    (a) Authority. FHFA may collect debts owed by employees to the 
Federal Government by means of salary offset under the authority of 5 
U.S.C. 5514; 5 CFR part 550, subpart K; and this subpart B.
    (b) Scope.--(1) The procedures set forth in this subpart B apply to 
situations where FHFA is attempting to collect a debt by salary offset 
that is owed to it by an individual employed by FHFA or by another 
agency; or where FHFA employs an individual who owes a debt to another 
agency.
    (2) The procedures set forth in this subpart B do not apply to:
    (i) Any routine intra-agency adjustment of pay that is attributable 
to clerical or administrative error or delay in processing pay documents 
that have occurred within the four pay periods preceding the adjustment, 
or any adjustment to collect a debt amounting to $50 or less. However, 
at the time of any such adjustment, or as soon thereafter as possible, 
FHFA or its designated payroll agent shall provide the employee with a 
written notice of the nature and the amount of the adjustment and a 
point of contact for contesting such adjustment.
    (ii) Any negative adjustment to pay that arises from an employee's 
election of coverage or a change in coverage under a Federal benefits 
program that requires periodic deductions from pay, if the amount to be 
recovered was accumulated over four pay periods or less. However, at the 
time such adjustment is made, FHFA or its payroll agent shall provide in 
the employee's earnings statement a clear and concise statement that 
informs the employee of the previous overpayment.



Sec. 1208.21  Notice requirements before salary offset where FHFA 
is the creditor agency.

    (a) Notice of Intent. Deductions from an employee's salary may not 
be made unless FHFA provides the employee with a Notice of Intent at 
least 30 calendar days before the salary offset is initiated.
    (b) Contents of Notice of Intent. The Notice of Intent shall advise 
the employee of the following:
    (1) That FHFA has reviewed the records relating to the claim and has 
determined that the employee owes the debt;
    (2) That FHFA intends to collect the debt by deductions from the 
employee's current disposable pay account;
    (3) The amount of the debt and the facts giving rise to the debt;
    (4) The frequency and amount of the intended deduction (stated as a 
fixed dollar amount or as a percentage of pay not to exceed 15 percent 
of disposable pay), and the intention to continue the deductions until 
the debt and all accumulated interest are paid in full or otherwise 
resolved;
    (5) The name, address, and telephone number of the person to whom 
the employee may propose a written alternative schedule for voluntary 
repayment, in lieu of salary offset. The employee shall include a 
justification for the alternative schedule in his or her proposal. If 
the terms of the alternative schedule are agreed upon by the employee 
and FHFA, the alternative written schedule shall be signed by both the 
employee and FHFA;
    (6) An explanation of FHFA's policy concerning interest, penalties, 
and administrative costs, the date by which payment should be made to 
avoid such costs, and a statement that such assessments must be made 
unless excused in accordance with the FCCS;
    (7) The employee's right to inspect and copy all records of FHFA 
pertaining to his or her debt that are not exempt from disclosure or to 
receive copies of such records if he or she is unable personally to 
inspect the records as the result of geographical or other constraints;
    (8) The name, address, and telephone number of the FHFA employee to 
whom requests for access to records relating to the debt must be sent;
    (9) The employee's right to a hearing conducted by an impartial 
hearing official with respect to the existence and amount of the debt 
claimed or the repayment schedule i.e., the percentage of disposable pay 
to be deducted each pay period, so long as a request is filed by the 
employee as prescribed in

[[Page 219]]

Sec. 1208.23; the name and address of the office to which the request 
for a hearing should be sent; and the name, address, and telephone 
number of a person whom the employee may contact concerning procedures 
for requesting a hearing;
    (10) The filing of a request for a hearing on or before the 30th 
calendar day following receipt of the Notice of Intent will stay the 
commencement of collection proceedings and a final decision on whether a 
hearing will be held (if a hearing is requested) or will be issued at 
the earliest practical date, but not later than 60 calendar days after 
the request for the hearing;
    (11) FHFA shall initiate certification procedures to implement a 
salary offset unless the employee files a request for a hearing on or 
before the 30th calendar day following receipt of the Notice of Intent;
    (12) Any knowingly false or frivolous statement, representations, or 
evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (ii) Penalties under the False Claims Act, 31 U.S.C. 3729 through 
3731, or under any other applicable statutory authority; or
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, 
or under any other applicable statutory authority;
    (13) That the employee also has the right to request waiver of 
overpayment pursuant to 5 U.S.C. 5584 and may exercise any other rights 
and remedies available to the employee under statutes or regulations 
governing the program for which the collection is being made;
    (14) Unless there are applicable contractual or statutory provisions 
to the contrary, amounts paid on or deducted from debts that are later 
waived or found not to be owed to the Federal Government shall be 
promptly refunded to the employee; and
    (15) Proceedings with respect to the debt are governed by 5 U.S.C. 
5514.



Sec. 1208.22  Review of FHFA records related to the debt.

    (a) Request for review. An employee who desires to inspect or copy 
FHFA records related to a debt owed by the employee to FHFA must send a 
letter to the individual designated in the Notice of Intent requesting 
access to the relevant records. The letter must be received in the 
office of that individual within 15 calendar days after the employee's 
receipt of the Notice of Intent.
    (b) Review location and time. In response to a timely request 
submitted by the employee, the employee shall be notified of the 
location and time when the employee may inspect and copy records related 
to his or her debt that are not exempt from disclosure. If the employee 
is unable personally to inspect such records as the result of 
geographical or other constraints, FHFA shall arrange to send copies of 
such records to the employee. The debtor shall pay copying costs unless 
they are waived by FHFA. Copying costs shall be assessed pursuant to 
FHFA's Freedom of Information Act Regulation, 12 CFR part 1202.



Sec. 1208.23  Opportunity for a hearing where FHFA is the creditor agency.

    (a) Request for a hearing.--(1) Time-period for submission. An 
employee who requests a hearing on the existence or amount of the debt 
held by FHFA or on the salary-offset schedule proposed by FHFA, must 
send a written request to FHFA. The request for a hearing must be 
received by FHFA on or before the 30th calendar day following receipt by 
the employee of the Notice of Intent.
    (2) Failure to submit timely. If the employee files a request for a 
hearing after the expiration of the 30th calendar day, the employee 
shall not be entitled to a hearing. However, FHFA may accept the request 
if the employee can show that the delay was the result of circumstances 
beyond his or her control or that he or she failed to receive actual 
notice of the filing deadline.
    (3) Contents of request. The request for a hearing must be signed by 
the employee and must fully identify and explain with reasonable 
specificity all the facts, evidence, and witnesses, if any, that the 
employee believes support his or her position. The employee

[[Page 220]]

must also specify whether he or she requests an oral hearing. If an oral 
hearing is requested, the employee should explain why a hearing by 
examination of the documents without an oral hearing would not resolve 
the matter.
    (4) Failure to request a hearing. The failure of an employee to 
request a hearing will be considered an admission by the employee that 
the debt exists in the amount specified in the Notice of Intent that was 
provided to the employee under Sec. 1208.21(b).
    (b) Obtaining the services of a hearing official.--(1) Debtor is not 
an FHFA employee. When the debtor is not an FHFA employee and FHFA 
cannot provide a prompt and appropriate hearing before an administrative 
law judge or other hearing official, FHFA may request a hearing official 
from an agent of the paying agency, as designated in 5 CFR part 581, 
appendix A, or as otherwise designated by the paying agency. The paying 
agency must cooperate with FHFA to provide a hearing official, as 
required by the FCCS.
    (2) Debtor is an FHFA employee. When the debtor is an FHFA employee, 
FHFA may contact any agent of another agency, as designated in 5 CFR 
part 581, appendix A, or as otherwise designated by the agency, to 
request a hearing official.
    (c) Procedure.--(1) Notice of hearing. After the employee requests a 
hearing, the hearing official shall notify the employee of the form of 
the hearing to be provided. If the hearing will be oral, the notice 
shall set forth the date, time, and location of the hearing, which must 
occur no more than 30 calendar days after the request is received, 
unless the employee requests that the hearing be delayed. If the hearing 
will be conducted by an examination of documents, the employee shall be 
notified within 30 calendar days that he or she should submit evidence 
and arguments in writing to the hearing official within 30 calendar 
days.
    (2) Oral hearing.--(i) An employee who requests an oral hearing 
shall be provided an oral hearing if the hearing official determines 
that the matter cannot be resolved by an examination of the documents 
alone, as for example, when an issue of credibility or veracity is 
involved. The oral hearing need not be an adversarial adjudication; and 
rules of evidence need not apply. Witnesses who testify in an oral 
hearing shall do so under oath or affirmation.
    (ii) Oral hearings may take the form of, but are not limited to:
    (A) Informal conferences with the hearing official in which the 
employee and agency representative are given full opportunity to present 
evidence, witnesses, and argument;
    (B) Informal meetings in which the hearing examiner interviews the 
employee; or
    (C) Formal written submissions followed by an opportunity for oral 
presentation.
    (3) Hearing by examination of documents. If the hearing official 
determines that an oral hearing is not necessary, he or she shall make 
the determination based upon an examination of the documents.
    (d) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this section.
    (e) Decision. (1) The hearing official shall issue a written opinion 
stating his or her decision, based upon all evidence and information 
developed during the hearing, as soon as practicable after the hearing, 
but not later than 60 calendar days after the date on which the request 
was received by FHFA, unless the hearing was delayed at the request of 
the employee, in which case the 60-day decision period shall be extended 
by the number of days by which the hearing was postponed.
    (2) The decision of the hearing official shall be final and is 
considered to be an official certification regarding the existence and 
the amount of the debt for purposes of executing salary offset under 5 
U.S.C. 5514. If the hearing official determines that a debt may not be 
collected by salary offset, but FHFA finds that the debt is still valid, 
FHFA may seek collection of the debt through other means in accordance 
with applicable law and regulations.
    (f) Content of decision. The written decision shall include:
    (1) A summary of the facts concerning the origin, nature, and amount 
of the debt;
    (2) The hearing official's findings, analysis, and conclusions; and

[[Page 221]]

    (3) The terms of any repayment schedules, if applicable.
    (g) Failure to appear. If, in the absence of good cause shown, such 
as illness, the employee or the representative of FHFA fails to appear, 
the hearing official shall proceed with the hearing as scheduled, and 
make his or her decision based upon the oral testimony presented and the 
documentation submitted by both parties. At the request of both parties, 
the hearing official may schedule a new hearing date. Both parties shall 
be given reasonable notice of the time and place of the new hearing.



Sec. 1208.24  Certification where FHFA is the creditor agency.

    (a) Issuance. FHFA shall issue a certification in all cases where 
the hearing official determines that a debt exists or the employee 
admits the existence and amount of the debt, as for example, by failing 
to request a hearing.
    (b) Contents. The certification must be in writing and state:
    (1) That the employee owes the debt;
    (2) The amount and basis of the debt;
    (3) The date the Federal Government's right to collect the debt 
first accrued;
    (4) The date the employee was notified of the debt, the action(s) 
taken pursuant to FHFA's regulations, and the dates such actions were 
taken;
    (5) If the collection is to be made by lump-sum payment, the amount 
and date such payment will be collected;
    (6) If the collection is to be made in installments through salary 
offset, the amount or percentage of disposable pay to be collected in 
each installment and, if FHFA wishes, the desired commencing date of the 
first installment, if a date other than the next officially established 
pay period; and
    (7) A statement that FHFA's regulation on salary offset has been 
approved by OPM pursuant to 5 CFR part 550, subpart K.



Sec. 1208.25  Voluntary repayment agreements as alternative to salary
offset where FHFA is the creditor agency.

    (a) Proposed repayment schedule. In response to a Notice of Intent, 
an employee may propose to repay the debt voluntarily in lieu of salary 
offset by submitting a written proposed repayment schedule to FHFA. Any 
proposal under this section must be received by FHFA within 30 calendar 
days after receipt of the Notice of Intent.
    (b) Notification of decision. In response to a timely proposal by 
the employee, FHFA shall notify the employee whether the employee's 
proposed repayment schedule is acceptable. FHFA has the discretion to 
accept, reject, or propose to the employee a modification of the 
proposed repayment schedule.
    (1) If FHFA decides that the proposed repayment schedule is 
unacceptable, the employee shall have 30 calendar days from the date he 
or she received notice of the decision in which to file a request for a 
hearing.
    (2) If FHFA decides that the proposed repayment schedule is 
acceptable or the employee agrees to a modification proposed by FHFA, an 
agreement shall be put in writing and signed by both the employee and 
FHFA.



Sec. 1208.26  Special review where FHFA is the creditor agency.

    (a) Request for review.--(1) An employee subject to salary offset or 
a voluntary repayment agreement may, at any time, request a special 
review by FHFA of the amount of the salary offset or voluntary 
repayment, based on materially changed circumstances, including, but not 
limited to, catastrophic illness, divorce, death, or disability.
    (2) The request for special review must include an alternative 
proposed offset or payment schedule and a detailed statement, with 
supporting documents, that shows why the current salary offset or 
payments result in extreme financial hardship to the employee and his or 
her spouse and dependents. The detailed statement must indicate:
    (i) Income from all sources;
    (ii) Assets;
    (iii) Liabilities;
    (iv) Number of dependents;
    (v) Expenses for food, housing, clothing, and transportation;
    (vi) Medical expenses; and
    (vii) Exceptional expenses, if any.
    (b) Evaluation of request. FHFA shall evaluate the statement and 
supporting documents and determine whether the

[[Page 222]]

original offset or repayment schedule imposes extreme financial hardship 
on the employee, for example, by preventing the employee from meeting 
essential subsistence expenses such as food, housing, clothing, 
transportation, and medical care. FHFA shall notify the employee in 
writing within 30 calendar days of such determination, including, if 
appropriate, a revised offset or payment schedule. If the special review 
results in a revised offset or repayment schedule, FHFA shall provide a 
new certification to the paying agency.



Sec. 1208.27  Notice of salary offset where FHFA is the paying agency.

    (a) Notice. Upon issuance of a proper certification by FHFA (for 
debts owed to FHFA) or upon receipt of a proper certification from 
another creditor agency, FHFA shall send the employee a written notice 
of salary offset.
    (b) Content of notice. Such written notice of salary offset shall 
advise the employee of the:
    (1) Certification that has been issued by FHFA or received from 
another creditor agency;
    (2) Amount of the debt and of the deductions to be made; and
    (3) Date and pay period when the salary offset will begin.
    (c) If FHFA is not the creditor agency, FHFA shall provide a copy of 
the notice of salary offset to the creditor agency and advise the 
creditor agency of the dollar amount to be offset and the pay period 
when the offset will begin.



Sec. 1208.28  Procedures for salary offset where FHFA is the paying agency.

    (a) Generally. FHFA shall coordinate salary deductions under this 
section and shall determine the amount of an employee's disposable pay 
and the amount of the salary offset subject to the requirements in this 
section. Deductions shall begin the pay period following the issuance of 
the certification by FHFA or the receipt by FHFA of the certification 
from another agency, or as soon thereafter as possible.
    (b) Upon issuance of a proper certification by FHFA for debts owed 
to FHFA, or upon receipt of a proper certification from a creditor 
agency, FHFA shall send the employee a written notice of salary offset. 
Such notice shall advise the employee:
    (1) That certification has been issued by FHFA or received from 
another creditor agency;
    (2) Of the amount of the debt and of the deductions to be made; and 
provided for in the certification, and
    (3) Of the initiation of salary offset at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (c) Where appropriate, FHFA shall provide a copy of the notice to 
the creditor agency and advise such agency of the dollar amount to be 
offset and the pay period when the offset will begin.
    (d) Types of collection.--(1) Lump-sum payment. If the amount of the 
debt is equal to or less than 15 percent of the employee's disposable 
pay, such debt ordinarily will be collected in one lump-sum payment.
    (2) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted for any pay period will not exceed 15 percent of the 
disposable pay from which the deduction is made unless the employee has 
agreed in writing to the deduction of a greater amount. The installment 
payment should normally be sufficient in size and frequency to liquidate 
the debt in no more than three years. Installment payments of less than 
$50 should be accepted only in the most unusual circumstances.
    (3) Lump-sum deductions from final check. In order to liquidate a 
debt, a lump-sum deduction exceeding 15 percent of disposable pay may be 
made pursuant to 31 U.S.C. 3716 from any final salary payment due a 
former employee, whether the former employee was separated voluntarily 
or involuntarily.
    (4) Lump-sum deductions from other sources. Whenever an employee 
subject to salary offset is separated from FHFA, and the balance of the 
debt cannot be liquidated by offset of the final salary check, FHFA may 
offset any

[[Page 223]]

later payments of any kind to the former employee to collect the balance 
of the debt pursuant to 31 U.S.C. 3716.
    (e) Multiple debts.--(1) Where two or more creditor agencies are 
seeking salary offset, or where two or more debts are owed to a single 
creditor agency, FHFA may, at its discretion, determine whether one or 
more debts should be offset simultaneously within the 15 percent 
limitation.
    (2) In the event that a debt owed FHFA is certified while an 
employee is subject to salary offset to repay another agency, FHFA may, 
at its discretion, determine whether the debt to FHFA should be repaid 
before the debt to the other agency is repaid, repaid simultaneously 
with the other debt, or repaid after the debt to the other agency.
    (3) A levy pursuant to the Internal Revenue Code of 1986 shall take 
precedence over other deductions under this section, as provided in 5 
U.S.C. 5514(d).



Sec. 1208.29  Coordinating salary offset with other agencies.

    (a) Responsibility of FHFA as the creditor agency.--(1) FHFA shall 
be responsible for:
    (i) Arranging for a hearing upon proper request by a Federal 
employee;
    (ii) Preparing the Notice of Intent consistent with the requirements 
of Sec. 1208.21;
    (iii) Obtaining hearing officials from other agencies pursuant to 
Sec. 1208.23(b); and
    (iv) Ensuring that each certification of debt pursuant to Sec. 
1208.24(b) is sent to a paying agency.
    (2) Upon completion of the procedures set forth in Sec. Sec. 
1208.24 through 1208.26, FHFA shall submit to the employee's paying 
agency, if applicable, a certified debt claim and an installment 
agreement or other instruction on the payment schedule.
    (i) If the employee is in the process of separating from the Federal 
Government, FHFA shall submit its debt claim to the employee's paying 
agency for collection by lump-sum deduction from the employee's final 
check. The paying agency shall certify the total amount of its 
collection and furnish a copy of the certification to FHFA and to the 
employee.
    (ii) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, FHFA may, unless 
otherwise prohibited, request that money due and payable to the employee 
from the Federal Government, including payments from the Civil Service 
Retirement and Disability Fund (5 CFR 831.1801) or other similar funds, 
be administratively offset to collect the debt.
    (iii) When an employee transfers to another paying agency, FHFA 
shall not repeat the procedures described in Sec. Sec. 1208.24 through 
1208.26. Upon receiving notice of the employee's transfer, FHFA shall 
review the debt to ensure that collection is resumed by the new paying 
agency.
    (b) Responsibility of FHFA as the paying agency.--(1) Complete 
claim. When FHFA receives a certified claim from a creditor agency, the 
employee shall be given written notice of the certification, the date 
salary offset will begin, and the amount of the periodic deductions. 
Deductions shall be scheduled to begin at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (2) Incomplete claim. When FHFA receives an incomplete certification 
of debt from a creditor agency, FHFA shall return the claim with notice 
that procedures under 5 U.S.C. 5514 and 5 CFR 550.1104 must be followed, 
and that a properly certified claim must be received before FHFA will 
take action to collect the debt from the employee's current pay account.
    (3) Review. FHFA is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (4) Employees who transfer from one paying agency to another agency. 
If, after the creditor agency has submitted the debt claim to FHFA, the 
employee transfers to another agency before the debt is collected in 
full, FHFA must certify the total amount collected on the debt as 
required by 5 CFR 550.1109. One copy of the certification shall be 
furnished to the employee and one copy shall be sent to the creditor 
agency along with notice of the employee's transfer. If FHFA is aware 
that the employee is entitled to

[[Page 224]]

payments from the Civil Service Retirement and Disability Fund or other 
similar payments, it must provide written notification to the agency 
responsible for making such payments that the debtor owes a debt 
(including the amount) and that the requirements set forth herein and in 
5 CFR part 550, subpart K, have been met. FHFA must submit a properly 
certified claim to the new payment agency before a collection can be 
made.



Sec. 1208.30  Interest, penalties, and administrative costs.

    Where FHFA is the creditor agency, FHFA shall assess interest, 
penalties, and administrative costs pursuant to 31 U.S.C. 3717 and the 
FCCS, 31 CFR chapter IX.



Sec. 1208.31  Refunds.

    (a) Where FHFA is the creditor agency, FHFA shall promptly refund 
any amount deducted under the authority of 5 U.S.C. 5514 when:
    (1) FHFA receives notice that the debt has been waived or otherwise 
found not to be owing to the Federal Government; or
    (2) An administrative or judicial order directs FHFA to make a 
refund.
    (b) Unless required by law or contract, refunds under this section 
shall not bear interest.



Sec. 1208.32  Request from a creditor agency for the services 
of a hearing official.

    (a) FHFA may provide qualified personnel to serve as hearing 
officials upon request of a creditor agency when:
    (1) The debtor is employed by FHFA and the creditor agency cannot 
provide a prompt and appropriate hearing before a hearing official 
furnished pursuant to another lawful arrangement; or
    (2) The debtor is employed by the creditor agency and that agency 
cannot arrange for a hearing official.
    (b) Services provided by FHFA to creditor agencies under this 
section shall be provided on a fully reimbursable basis pursuant to 31 
U.S.C. 1535, or other applicable authority.



Sec. 1208.33  Non-waiver of rights by payments.

    A debtor's payment, whether voluntary or involuntary, of all or any 
portion of a debt being collected pursuant to this subpart B shall not 
be construed as a waiver of any rights that the debtor may have under 
any statute, regulation, or contract, except as otherwise provided by 
law or contract.



                     Subpart C_Administrative Offset



Sec. 1208.40  Authority and scope.

    (a) The provisions of this subpart C apply to the collection of 
debts owed to the Federal Government arising from transactions with 
FHFA. Administrative offset is authorized under the Debt Collection 
Improvement Act of 1996 (DCIA). This subpart C is consistent with the 
Federal Claims Collection Standards (FCCS) on administrative offset 
issued by the Department of Justice.
    (b) FHFA may collect a debt owed to the Federal Government from a 
person, organization, or other entity by administrative offset, pursuant 
to 31 U.S.C. 3716, where:
    (1) The debt is certain in amount;
    (2) Administrative offset is feasible, desirable, and not otherwise 
prohibited;
    (3) The applicable statute of limitations has not expired; and
    (4) Administrative offset is in the best interest of the Federal 
Government.



Sec. 1208.41  Collection.

    (a) FHFA may collect a claim from a person, organization, or other 
entity by administrative offset of monies payable by the Federal 
Government only after:
    (1) Providing the debtor with due process required under this part; 
and
    (2) Providing the paying agency with written certification that the 
debtor owes the debt in the amount stated and that FHFA, as creditor 
agency, has complied with this part.
    (b) Prior to initiating collection by administrative offset, FHFA 
should determine that the proposed offset is within the scope of this 
remedy, as set forth in 31 CFR 901.3(a). Administrative

[[Page 225]]

offset under 31 U.S.C. 3716 may not be used to collect debts more than 
10 years after the Federal Government's right to collect the debt first 
accrued, except as otherwise provided by law. In addition, 
administrative offset may not be used when a statute explicitly 
prohibits its use to collect the claim or type of claim involved.
    (c) Unless otherwise provided, debts or payments not subject to 
administrative offset under 31 U.S.C. 3716 may be collected by 
administrative offset under common law, or any other applicable 
statutory authority.



Sec. 1208.42  Administrative offset prior to completion of procedures.

    FHFA shall not be required to follow the procedures described in 
Sec. 1208.43 where:
    (a) Prior to the completion of the procedures described in Sec. 
1208.43, FHFA may effect administrative offset if failure to offset 
would substantially prejudice its ability to collect the debt, and if 
the time before the payment is to be made does not reasonably permit 
completion of the procedures described in Sec. 1208.43. Such prior 
administrative offset shall be followed promptly by the completion of 
the procedures described in Sec. 1208.43. Amounts recovered by 
administrative offset but later found not to be owed to FHFA shall be 
promptly refunded. This section applies only to administrative offset 
pursuant to 31 CFR 901.3(c), and does not apply when debts are referred 
to the Department of the Treasury for mandatory centralized 
administrative offset under 31 CFR 901.3(b)(1).
    (b) The administrative offset is in the nature of a recoupment 
(i.e., FHFA may offset a payment due to the debtor when both the payment 
due to the debtor and the debt owed to FHFA arose from the same 
transaction); or
    (c) In the case of non-centralized administrative offsets, FHFA 
first learns of the existence of a debt due when there would be 
insufficient time to afford the debtor due process under these 
procedures before the paying agency makes payment to the debtor; in such 
cases, the Director shall give the debtor notice and an opportunity for 
review as soon as practical and shall refund any money ultimately found 
not to be due to the Federal Government.



Sec. 1208.43  Procedures.

    Unless the procedures described in Sec. 1208.42 are used, prior to 
collecting any debt by administrative offset or referring such claim to 
another agency for collection through administrative offset, FHFA shall 
provide the debtor with the following:
    (a) Written notification of the nature and amount of the debt, the 
intention of FHFA to collect the debt through administrative offset, and 
a statement of the rights of the debtor under this section;
    (b) An opportunity to inspect and copy the records of FHFA related 
to the debt that are not exempt from disclosure;
    (c) An opportunity for review within FHFA of the determination of 
indebtedness. Any request for review by the debtor shall be in writing 
and shall be submitted to FHFA within 30 calendar days of the date of 
the notice of the offset. FHFA may waive the time limits for requesting 
review for good cause shown by the debtor. FHFA shall provide the debtor 
with a reasonable opportunity for an oral hearing when:
    (1) An applicable statute authorizes or requires FHFA to consider 
waiver of the indebtedness involved, the debtor requests waiver of the 
indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (2) The debtor requests reconsideration of the debt and FHFA 
determines that the question of the indebtedness cannot be resolved by 
review of the documentary evidence, as for example, when the validity of 
the debt turns on an issue of credibility or veracity. Unless otherwise 
required by law, an oral hearing under this subpart C is not required to 
be a formal evidentiary hearing, although FHFA shall document all 
significant matters discussed at the hearing. In those cases where an 
oral hearing is not required by this subpart C, FHFA shall make its 
determination on the request for waiver or reconsideration based upon a 
review of the written record; and
    (d) An opportunity to enter into a written agreement for the 
voluntary

[[Page 226]]

repayment of the amount of the claim at the discretion of FHFA.



Sec. 1208.44  Interest, penalties, and administrative costs.

    FHFA shall assess interest, penalties, and administrative costs on 
debts owed to the Federal Government, in accordance with 31 U.S.C. 3717 
and the FCCS. FHFA may also assess interest and related charges on debts 
that are not subject to 31 U.S.C. 3717 and the FCCS to the extent 
authorized under the common law or other applicable statutory authority.



Sec. 1208.45  Refunds.

    FHFA shall refund promptly those amounts recovered by administrative 
offset but later found not to be owed to the Federal Government. Unless 
required by law or contract, such refunds shall not bear interest.



Sec. 1208.46  No requirement for duplicate notice.

    Where FHFA has previously given a debtor any of the required notice 
and review opportunities with respect to a particular debt, FHFA is not 
required to duplicate such notice and review opportunities prior to 
initiating administrative offset.



Sec. 1208.47  Requests for administrative offset to other Federal agencies.

    (a) FHFA may request that a debt owed to FHFA be collected by 
administrative offset against funds due and payable to a debtor by 
another agency.
    (b) In requesting administrative offset, FHFA, as creditor, shall 
certify in writing to the agency holding funds of the debtor:
    (1) That the debtor owes the debt;
    (2) The amount and basis of the debt; and
    (3) That FHFA has complied with the requirements of its own 
administrative offset regulations and the applicable provisions of the 
FCCS with respect to providing the debtor with due process, unless 
otherwise provided.



Sec. 1208.48  Requests for administrative offset from other Federal agencies.

    (a) Any agency may request that funds due and payable to a debtor by 
FHFA be administratively offset in order to collect a debt owed to such 
agency by the debtor.
    (b) FHFA shall initiate the requested administrative offset only 
upon:
    (1) Receipt of written certification from the creditor agency that:
    (i) The debtor owes the debt, including the amount and basis of the 
debt;
    (ii) The agency has prescribed regulations for the exercise of 
administrative offset; and
    (iii) The agency has complied with its own administrative offset 
regulations and with the applicable provisions of the FCCS, including 
providing any required hearing or review.
    (2) A determination by FHFA that collection by administrative offset 
against funds payable by FHFA would be in the best interest of the 
Federal Government as determined by the facts and circumstances of the 
particular case and that such administrative offset would not otherwise 
be contrary to law.



Sec. 1208.49  Administrative offset against amounts payable from
Civil Service Retirement and Disability Fund.

    (a) Request for administrative offset. Unless otherwise prohibited 
by law, FHFA may request that monies that are due and payable to a 
debtor from the Civil Service Retirement and Disability Fund (Fund) be 
offset administratively in reasonable amounts in order to collect in one 
full payment or in a minimal number of payments debt owed to FHFA by the 
debtor. Such requests shall be made to the appropriate officials of OPM 
in accordance with such regulations as may be prescribed by FHFA or OPM.
    (b) Contents of certification. When making a request for 
administrative offset under paragraph (a) of this section, FHFA shall 
provide OPM with a written certification that:
    (1) The debtor owes FHFA a debt, including the amount of the debt;
    (2) FHFA has complied with the applicable statutes, regulations, and 
procedures of OPM; and
    (3) FHFA has complied with the requirements of the FCCS, including 
any required hearing or review.
    (c) If FHFA decides to request administrative offset under paragraph 
(a) of this section, it shall make the request

[[Page 227]]

as soon as practicable after completion of the applicable procedures. 
This will satisfy any requirement that administrative offset be 
initiated prior to the expiration of the applicable statute of 
limitations. At such time as the debtor makes a claim for payments from 
the Fund, if at least one year has elapsed since the administrative 
offset request was originally made, the debtor shall be permitted to 
offer a satisfactory repayment plan in lieu of administrative offset if 
he or she establishes that changed financial circumstances would render 
the administrative offset unjust.
    (d) If FHFA collects part or all of the debt by other means before 
deductions are made or completed pursuant to paragraph (a) of this 
section, FHFA shall act promptly to modify or terminate its request for 
administrative offset under paragraph (a) of this section.



                       Subpart D_Tax Refund Offset



Sec. 1208.50  Authority and scope.

    The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize 
the Secretary of the Treasury to offset a delinquent debt owed the 
Federal Government from the tax refund due a taxpayer when other 
collection efforts have failed to recover the amount due. In addition, 
FHFA is authorized to collect debts by means of administrative offset 
under 31 U.S.C. 3716 and, as part of the debt collection process, to 
notify the United States Department of Treasury's Financial Management 
Service of the amount of such debt for collection by tax refund offset.



Sec. 1208.51  Definitions.

    The following terms apply to this subpart D--
    Debt or claim means an amount of money, funds or property which has 
been determined by FHFA to be due to the Federal Government from any 
person, organization, or entity, except another Federal agency.
    (1) A debt becomes eligible for tax refund offset procedures if:
    (i) It cannot currently be collected pursuant to the salary offset 
procedures of 5 U.S.C. 5514(a)(1);
    (ii) The debt is ineligible for administrative offset or cannot be 
collected currently by administrative offset; and
    (iii) The requirements of this section are otherwise satisfied.
    (2) All judgment debts are past due for purposes of this subpart D. 
Judgment debts remain past due until paid in full.
    Debtor means a person who owes a debt or a claim. The term 
``person'' includes any individual, organization or entity, except 
another Federal agency.
    Dispute means a written statement supported by documentation or 
other evidence that all or part of an alleged debt is not past due or 
legally enforceable, that the amount is not the amount currently owed, 
that the outstanding debt has been satisfied, or in the case of a debt 
reduced to judgment, that the judgment has been satisfied or stayed.
    Notice means the information sent to the debtor pursuant to Sec. 
1208.53. The date of the notice is that date shown on the notice letter 
as its date of issuance.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed by the payee(s) of a tax 
refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the Internal Revenue 
Service (IRS) makes the appropriate credits.



Sec. 1208.52  Procedures.

    (a) Referral to the Department of the Treasury. (1) FHFA may refer 
any past due, legally enforceable nonjudgment debt of an individual, 
organization, or entity to the Department of the Treasury for tax refund 
offset if FHFA's or the referring agency's rights of action accrued more 
than three months but less than 10 years before the offset is made.
    (2) Debts reduced to judgment may be referred at any time.
    (3) Debts in amounts lower than $25 are not subject to referral.
    (4) In the event that more than one debt is owed, the tax refund 
offset procedures shall be applied in the order in which the debts 
became past due.

[[Page 228]]

    (5) FHFA shall notify the Department of the Treasury of any change 
in the amount due promptly after receipt of payment or notice of other 
reductions.
    (b) Notice. FHFA shall provide the debtor with written notice of its 
intent to offset before initiating the offset. Notice shall be mailed to 
the debtor at the current address of the debtor, as determined from 
information obtained from the Internal Revenue Service pursuant to 26 
U.S.C. 6103(m)(2), (4), (5) or maintained by FHFA. The notice sent to 
the debtor shall state the amount of the debt and inform the debtor 
that:
    (1) The debt is past due;
    (2) FHFA intends to refer the debt to the Department of the Treasury 
for offset from tax refunds that may be due to the taxpayer;
    (3) FHFA intends to provide information concerning the delinquent 
debt exceeding $100 to a consumer reporting bureau unless such debt has 
already been disclosed; and
    (4) Before the debt is reported to a consumer reporting agency, if 
applicable, and referred to the Department of the Treasury for offset 
from tax refunds, the debtor has 65 calendar days from the date of 
notice to request a review under paragraph (d) of this section.
    (c) Report to consumer reporting agency. If the debtor neither pays 
the amount due nor presents evidence that the amount is not past due or 
is satisfied or stayed, FHFA will report the debt to a consumer 
reporting agency at the end of the notice period, if applicable, and 
refer the debt to the Department of the Treasury for offset from the 
taxpayer's Federal tax refund. FHFA shall certify to the Department of 
the Treasury that reasonable efforts have been made by FHFA to obtain 
payment of such debt.
    (d) Request for review. A debtor may request a review by FHFA if he 
or she believes that all or part of the debt is not past due or is not 
legally enforceable, or in the case of a judgment debt, that the debt 
has been stayed or the amount satisfied, as follows:
    (1) The debtor must send a written request for review to FHFA at the 
address provided in the notice.
    (2) The request must state the amount disputed and reasons why the 
debtor believes that the debt is not past due, is not legally 
enforceable, has been satisfied, or if a judgment debt, has been 
satisfied or stayed.
    (3) The request must include any documents that the debtor wishes to 
be considered or state that additional information will be submitted 
within the time permitted.
    (4) If the debtor wishes to inspect records establishing the nature 
and amount of the debt, the debtor must make a written request to FHFA 
for an opportunity for such an inspection. The office holding the 
relevant records not exempt from disclosure shall make them available 
for inspection during normal business hours within one week from the 
date of receipt of the request.
    (5) The request for review and any additional information submitted 
pursuant to the request must be received by FHFA at the address stated 
in the notice within 65 calendar days of the date of issuance of the 
notice.
    (6) In reaching its decision, FHFA shall review the dispute and 
shall consider its records and any documentation and arguments submitted 
by the debtor. FHFA shall send a written notice of its decision to the 
debtor. There is no administrative appeal of this decision.
    (7) If the evidence presented by the debtor is considered by a non-
FHFA agent or other entities or persons acting on behalf of FHFA, the 
debtor shall be accorded at least 30 calendar days from the date the 
agent or other entity or person determines that all or part of the debt 
is past due and legally enforceable to request review by FHFA of any 
unresolved dispute.
    (8) Any debt that previously has been reviewed pursuant to this 
section or any other section of this part, or that has been reduced to a 
judgment, may not be disputed except on the grounds of payments made or 
events occurring subsequent to the previous review or judgment.
    (9) To the extent that a debt owed has not been established by 
judicial or administrative order, a debtor may dispute the existence or 
amount of the debt or the terms of repayment. With

[[Page 229]]

respect to debts established by a judicial or administrative order, FHFA 
review will be limited to issues concerning the payment or other 
discharge of the debt.



Sec. 1208.53  No requirement for duplicate notice.

    Where FHFA has previously given a debtor any of the required notice 
and review opportunities with respect to a particular debt, FHFA is not 
required to duplicate such notice and review opportunities prior to 
initiating tax refund offset.



Sec. 1208.54-1208.59  [Reserved]



                Subpart E_Administrative Wage Garnishment



Sec. 1208.60  Scope and purpose.

    These administrative wage garnishment procedures are issued in 
compliance with 31 U.S.C. 3720D and 31 CFR 285.11(f). This subpart E 
provides procedures for FHFA to collect money from a debtor's disposable 
pay by means of administrative wage garnishment. The receipt of payments 
pursuant to this subpart E does not preclude FHFA from pursuing other 
debt collection remedies, including the offset of Federal payments. FHFA 
may pursue such debt collection remedies separately or in conjunction 
with administrative wage garnishment. This subpart E does not apply to 
the collection of delinquent debts from the wages of Federal employees 
from their Federal employment. Federal pay is subject to the Federal 
salary offset procedures set forth in 5 U.S.C. 5514 and other applicable 
laws.



Sec. 1208.61  Notice.

    At least 30 days before the initiation of garnishment proceedings, 
FHFA will send, by first class mail to the debtor's last known address, 
a written notice informing the debtor of:
    (a) The nature and amount of the debt;
    (b) FHFA's intention to initiate proceedings to collect the debt 
through deductions from the debtor's pay until the debt and all 
accumulated interest penalties and administrative costs are paid in 
full;
    (c) An explanation of the debtor's rights as set forth in Sec. 
1208.62(c); and
    (d) The time frame within which the debtor may exercise these 
rights. FHFA shall retain a stamped copy of the notice indicating the 
date the notice was mailed.



Sec. 1208.62  Debtor's rights.

    FHFA shall afford the debtor the opportunity:
    (a) To inspect and copy records related to the debt;
    (b) To enter into a written repayment agreement with FHFA, under 
terms agreeable to FHFA; and
    (c) To the extent that a debt owed has not been established by 
judicial or administrative order, to request a hearing concerning the 
existence or amount of the debt or the terms of the repayment schedule. 
With respect to debts established by a judicial or administrative order, 
a debtor may request a hearing concerning the payment or other discharge 
of the debt. The debtor is not entitled to a hearing concerning the 
terms of the proposed repayment schedule if these terms have been 
established by written agreement.



Sec. 1208.63  Form of hearing.

    (a) If the debtor submits a timely written request for a hearing as 
provided in Sec. 1208.62(c), FHFA will afford the debtor a hearing, 
which at FHFA's option may be oral or written. FHFA will provide the 
debtor with a reasonable opportunity for an oral hearing when FHFA 
determines that the issues in dispute cannot be resolved by review of 
the documentary evidence, for example, when the validity of the claim 
turns on the issue of credibility or veracity.
    (b) If FHFA determines that an oral hearing is appropriate, the time 
and location of the hearing shall be established by FHFA. An oral 
hearing may, at the debtor's option, be conducted either in person or by 
telephone conference. All travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor. All 
telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (c) In cases when it is determined that an oral hearing is not 
required by

[[Page 230]]

this section, FHFA will accord the debtor a ``paper hearing,'' that is, 
FHFA will decide the issues in dispute based upon a review of the 
written record.



Sec. 1208.64  Effect of timely request.

    If FHFA receives a debtor's written request for a hearing within 15 
business days of the date FHFA mailed its notice of intent to seek 
garnishment, FHFA shall not issue a withholding order until the debtor 
has been provided the requested hearing, and a decision in accordance 
with Sec. 1208.68 and Sec. 1208.69 has been rendered.



Sec. 1208.65  Failure to timely request a hearing.

    If FHFA receives a debtor's written request for a hearing after 15 
business days of the date FHFA mailed its notice of intent to seek 
garnishment, FHFA shall provide a hearing to the debtor. However, FHFA 
will not delay issuance of a withholding order unless it determines that 
the untimely filing of the request was caused by factors over which the 
debtor had no control, or FHFA receives information that FHFA believes 
justifies a delay or cancellation of the withholding order.



Sec. 1208.66  Hearing official.

    A hearing official may be any qualified individual, as determined by 
FHFA, including an administrative law judge.



Sec. 1208.67  Procedure.

    After the debtor requests a hearing, the hearing official shall 
notify the debtor of:
    (a) The date and time of a telephonic hearing;
    (b) The date, time, and location of an in-person oral hearing; or
    (c) The deadline for the submission of evidence for a written 
hearing.



Sec. 1208.68  Format of hearing.

    FHFA will have the burden of proof to establish the existence or 
amount of the debt. Thereafter, if the debtor disputes the existence or 
amount of the debt, the debtor must prove by a preponderance of the 
evidence that no debt exists, or that the amount of the debt is 
incorrect. In addition, the debtor may present evidence that the terms 
of the repayment schedule are unlawful, would cause a financial hardship 
to the debtor, or that collection of the debt may not be pursued due to 
operation of law. The hearing official shall maintain a record of any 
hearing held under this section. Hearings are not required to be formal, 
and evidence may be offered without regard to formal rules of evidence. 
Witnesses who testify in oral hearings shall do so under oath or 
affirmation.



Sec. 1208.69  Date of decision.

    The hearing official shall issue a written opinion stating his or 
her decision as soon as practicable, but not later than 60 days after 
the date on which the request for such hearing was received by FHFA. If 
FHFA is unable to provide the debtor with a hearing and decision within 
60 days after the receipt of the request for such hearing:
    (a) FHFA may not issue a withholding order until the hearing is held 
and a decision rendered; or
    (b) If FHFA had previously issued a withholding order to the 
debtor's employer, the withholding order will be suspended beginning on 
the 61st day after the date FHFA received the hearing request and 
continuing until a hearing is held and a decision is rendered.



Sec. 1208.70  Content of decision.

    The written decision shall include:
    (a) A summary of the facts presented;
    (b) The hearing official's findings, analysis and conclusions; and
    (c) The terms of any repayment schedule, if applicable.



Sec. 1208.71  Finality of agency action.

    A decision by a hearing official shall become the final decision of 
FHFA for the purpose of judicial review under the Administrative 
Procedure Act.



Sec. 1208.72  Failure to appear.

    In the absence of good cause shown, a debtor who fails to appear at 
a scheduled hearing will be deemed as not having timely filed a request 
for a hearing.



Sec. 1208.73  Wage garnishment order.

    (a) Unless FHFA receives information that it believes justifies a 
delay or cancellation of the withholding order,

[[Page 231]]

FHFA will send by first class mail a withholding order to the debtor's 
employer within 30 calendar days after the debtor fails to make a timely 
request for a hearing (i.e., within 15 business days after the mailing 
of the notice of FHFA's intent to seek garnishment) or, if a timely 
request for a hearing is made by the debtor, within 30 calendar days 
after a decision to issue a withholding order becomes final.
    (b) The withholding order sent to the employer will be in the form 
prescribed by the Secretary of the Treasury, on FHFA's letterhead, and 
signed by the head of the agency or delegate. The order will contain all 
information necessary for the employer to comply with the withholding 
order, including the debtor's name, address, and social security number, 
as well as instructions for withholding and information as to where 
payments should be sent.
    (c) FHFA will keep a stamped copy of the order indicating the date 
it was mailed.



Sec. 1208.74  Certification by employer.

    Along with the withholding order, FHFA will send to the employer a 
certification in a form prescribed by the Secretary of the Treasury. The 
employer shall complete and return the certification to FHFA within the 
time frame prescribed in the instructions to the form. The certification 
will address matters such as information about the debtor's employment 
status and disposable pay available for withholding.



Sec. 1208.75  Amounts withheld.

    (a) Upon receipt of the garnishment order issued under this section, 
the employer shall deduct from all disposable pay paid to the debtor 
during each pay period the amount of garnishment described in paragraphs 
(b) through (d) of this section.
    (b) Subject to the provisions of paragraphs (c) and (d) of this 
section, the amount of garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15 percent 
of the debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2). The amount set 
forth at 15 U.S.C. 1673(a)(2) is the amount by which the debtor's 
disposable pay exceeds an amount equivalent to thirty times the minimum 
wage.
    (c) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (1) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (b) of this section and shall have priority over other 
withholding orders which are served later in time. However, withholding 
orders for family support shall have priority over withholding orders 
issued under this section.
    (2) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section; or
    (ii) An amount equal to 25 percent of the debtor's disposable pay 
less the amount(s) withheld under the withholding order(s) with 
priority.
    (3) If a debtor owes more than one debt to FHFA, FHFA may issue 
multiple withholding orders. The total amount garnished from the 
debtor's pay for such orders will not exceed the amount set forth in 
paragraph (b) of this section.
    (d) An amount greater than that set forth in paragraphs (b) and (c) 
of this section may be withheld upon the written consent of the debtor.
    (e) The employer shall promptly pay to FHFA all amounts withheld in 
accordance with the withholding order issued pursuant to this section.
    (f) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (g) Any assignment or allotment by the employee of the employee's 
earnings shall be void to the extent it interferes with or prohibits 
execution of the withholding order under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.

[[Page 232]]

    (h) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from FHFA to discontinue wage withholding. The garnishment 
order shall indicate a reasonable period of time within which the 
employer is required to commence wage withholding.



Sec. 1208.76  Exclusions from garnishment.

    FHFA will not garnish the wages of a debtor it knows has been 
involuntarily separated from employment until the debtor has been re-
employed continuously for at least 12 months. The debtor has the burden 
of informing FHFA of the circumstances surrounding an involuntary 
separation from employment.



Sec. 1208.77  Financial hardship.

    (a) A debtor whose wages are subject to a wage withholding order 
under this section, may, at any time, request a review by FHFA of the 
amount garnished, based on materially changed circumstances such as 
disability, divorce, or catastrophic illness which result in financial 
hardship.
    (b) A debtor requesting a review under this section shall submit the 
basis for claiming that the current amount of garnishment results in a 
financial hardship to the debtor, along with supporting documentation.
    (c) If a financial hardship is found, FHFA will downwardly adjust, 
by an amount and for a period of time agreeable to FHFA, the amount 
garnished to reflect the debtor's financial condition. FHFA will notify 
the employer of any adjustments to the amounts to be withheld.



Sec. 1208.78  Ending garnishment.

    (a) Once FHFA has fully recovered the amounts owed by the debtor, 
including interest, penalties, and administrative costs consistent with 
the Federal Claims Collection Standards, FHFA will send the debtor's 
employer notification to discontinue wage withholding.
    (b) At least annually, FHFA will review its debtors' accounts to 
ensure that garnishment has been terminated for accounts that have been 
paid in full.



Sec. 1208.79  Prohibited actions by employer.

    The Debt Collection Improvement Act of 1996 prohibits an employer 
from discharging, refusing to employ, or taking disciplinary action 
against the debtor due to the issuance of a withholding order under this 
subpart E.



Sec. 1208.80  Refunds.

    (a) If a hearing official determines that a debt is not legally due 
and owing to the United States, FHFA shall promptly refund any amount 
collected by means of administrative wage garnishment.
    (b) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.



Sec. 1208.81  Right of action.

    FHFA may sue any employer for any amount that the employer fails to 
withhold from wages owed and payable to its employee in accordance with 
this subpart E. However, a suit will not be filed before the termination 
of the collection action involving a particular debtor, unless earlier 
filing is necessary to avoid expiration of any applicable statute of 
limitations. For purposes of this subpart E, ``termination of the 
collection action'' occurs when the agency has terminated collection 
action in accordance with the FCCS or other applicable standards. In any 
event, termination of the collection action will have been deemed to 
occur if FHFA has not received any payments to satisfy the debt from the 
particular debtor whose wages were subject to garnishment, in whole or 
in part, for a period of one (1) year.



PART 1212_POST	EMPLOYMENT RESTRICTION FOR SENIOR EXAMINERS--
Table of Contents



Subpart A [Reserved]

       Subpart B_Post	Employment Restriction for Senior Examiners

Sec.
1212.1 Purpose and scope.
1212.2 Definitions.

[[Page 233]]

1212.3 Post-employment restriction for senior examiners.
1212.4 Waiver.
1212.5 Penalties.

    Authority: 12 U.S.C. 4526, 12 U.S.C. 4517(e).

    Source: 74 FR 51075, Oct. 5, 2009, unless otherwise noted.

Subpart A [Reserved]



       Subpart B_Post	Employment Restriction for Senior Examiners



Sec. 1212.1  Purpose and scope.

    This subpart sets forth a one-year post-employment restriction 
applicable to senior examiners of the Federal Housing Finance Agency 
(FHFA). This restriction is in addition to the post-employment 
restriction applicable to employees of FHFA under 12 U.S.C. 4523.



Sec. 1212.2  Definitions.

    For purposes of subpart B of this part, the term:
    Consultant means a person who works directly on matters for, or on 
behalf of, a regulated entity or the Office of Finance.
    Director means the Director of FHFA or his or her designee.
    Employee means an officer or employee of FHFA, including a special 
Government employee.
    Federal Home Loan Bank or Bank means a Bank established under the 
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    Office of Finance means the Office of Finance of the Federal Home 
Loan Bank System, or any successor thereto.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, any Federal Home Loan Bank; the term ``regulated 
entities'' means, collectively, the Federal National Mortgage 
Association and any affiliate thereof, the Federal Home Loan Mortgage 
Corporation and any affiliate thereof, and the Federal Home Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Federal 
Housing Finance Regulatory Reform Act of 2008, Division A of the Housing 
and Economic Recovery Act of 2008, Public Law No. 110-289, 122 Stat. 
2654 (2008).
    Senior examiner means an employee of FHFA who has been:
    (1) Authorized by FHFA to conduct examinations or inspections on 
behalf of FHFA;
    (2) Assigned continuing, broad and lead responsibility for examining 
a regulated entity or the Office of Finance; and
    (3) Assigned responsibilities for examining, inspecting and 
supervising the regulated entity or the Office of Finance that--
    (i) Represents a substantial portion of the employee's assigned 
responsibilities; and
    (ii) Requires the employee to interact routinely with officers or 
employees of the regulated entity or the Office of Finance.



Sec. 1212.3  Post-employment restriction for senior examiners.

    (a) Prohibition. An employee of FHFA who serves as the senior 
examiner of a regulated entity or the Office of Finance for two or more 
months during the last 12 months of his or her employment with FHFA may 
not, within one year after leaving the employment of FHFA, knowingly 
accept compensation as an employee, officer, director, or consultant 
from a regulated entity or the Office of Finance unless the Director 
grants a waiver pursuant to Sec. 1212.4.
    (b) Effective date. The post-employment restriction in paragraph (a) 
of this section shall not apply to any officer or employee of FHFA or 
any former officer or employee of FHFA who ceased to be an officer or 
employee of FHFA before November 4, 2009.



Sec. 1212.4  Waiver.

    At the written request of a senior examiner or former senior 
examiner, the Director may waive the post-employment restriction in 
Sec. 1212.3 if he or she certifies, in writing, and on a case-by-case 
basis, that granting a waiver of

[[Page 234]]

such restriction does not affect the integrity of the supervisory 
program of FHFA.



Sec. 1212.5  Penalties.

    (a) General. A senior examiner who, after leaving the employment of 
FHFA, violates the restriction set forth in Sec. 1212.3 shall be 
subject to one or both of the following penalties--
    (1) An order:
    (i) Removing the individual from office at the regulated entity or 
the Office of Finance or prohibiting the individual from further 
participation in the affairs of the relevant regulated entity or the 
Office of Finance for a period of up to five years; and
    (ii) Prohibiting the individual from participating in the affairs of 
any regulated entity or the Office of Finance for a period of up to five 
years; and/or
    (2) A civil money penalty of not more than $250,000.
    (b) Other penalties. The penalties set forth in paragraph (a) of 
this section are not exclusive, and a senior examiner who violates the 
restrictions in Sec. 1212.3 also may be subject to other 
administrative, civil, or criminal remedies or penalties as provided in 
law.
    (c) Procedural rights. The procedures applicable to actions under 
paragraph (a) of this section are those provided in the Safety and 
Soundness Act under section 1376, in connection with the imposition of a 
civil money penalty; under section 1377, in connection with a removal 
and prohibition order (12 U.S.C. 4636 and 4636a, respectively); and 
under any regulations issued by FHFA implementing such procedures.

[[Page 235]]



                     SUBCHAPTER B_ENTITY REGULATIONS





PART 1229_CAPITAL CLASSIFICATIONS AND PROMPT CORRECTIVE ACTION--
Table of Contents



                    Subpart A_Federal Home Loan Banks

Sec.
1229.1 Definitions.
1229.2 Determination of a Bank's capital classification.
1229.3 Criteria for a Bank's capital classification.
1229.4 Reclassification by the Director.
1229.5 Capital distributions for adequately capitalized Banks.
1229.6 Mandatory actions applicable to undercapitalized Banks.
1229.7 Discretionary actions applicable to undercapitalized Banks.
1229.8 Mandatory actions applicable to significantly undercapitalized 
          Banks.
1229.9 Discretionary actions applicable to significantly 
          undercapitalized Banks.
1229.10 Actions applicable to critically undercapitalized Banks.
1229.11 Capital restoration plans.
1229.12 Procedures related to capital classification and other actions.

    Authority: 12 U.S.C. 1426, 4513, 4526, 4613, 4614, 4615, 4616, 4617, 
4618, 4622, 4623.

    Source: 74 FR 5604, Jan. 30, 2009, unless otherwise noted.



                    Subpart A_Federal Home Loan Banks



Sec. 1229.1  Definitions.

    For purposes of this subpart:
    Bank written in title case, means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Capital distribution means any payment by the Bank, whether in cash 
or stock, of a dividend, any return of capital or retained earnings by 
the Bank to its shareholders, any transaction in which the Bank redeems 
or repurchases capital stock, or any transaction in which the Bank 
redeems, repurchases or retires any other instrument which is included 
in the calculation of its total capital.
    Class A stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(i) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(i)) and related 
regulations.
    Class B stock means capital stock issued by a Bank, including 
subclasses, that has the characteristics specified in section 
6(a)(4)(A)(ii) of the Bank Act (12 U.S.C. 1426(a)(4)(A)(ii)) and related 
regulations.
    Consolidated obligations means any bond, debenture or note on which 
the Banks are jointly and severally liable and which was issued under 
section 11 of the Bank Act (12 U.S.C. 1431) and any implementing 
regulations, whether or not such instrument was originally issued 
jointly by the Banks or by the Federal Housing Finance Board on behalf 
of the Banks.
    Critical capital level for a Bank means an amount equal to 2 percent 
of the Bank's total assets.
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Executive officer means for a Bank any of the following persons, 
provided that the Director may from time to time add or remove persons, 
positions, or functions to or from the list (individually for one or 
more Banks or jointly for all the Banks) by communication to the 
affected Banks:
    (1) Executive officers about whom the Banks must publicly disclose 
detailed compensation information under Regulation S-K, 17 CFR part 229, 
issued by the Securities and Exchange Commission;
    (2) Any other executive who occupies one of the following positions 
or is in charge of one of the following subject areas:
    (i) Overall Bank operations, such as the Chief Operating Officer or 
an equivalent employee;
    (ii) Chief Financial Officer or an equivalent employee;
    (iii) Chief Administrative Officer or an equivalent employee;
    (iv) Chief Risk Officer or an equivalent employee;

[[Page 236]]

    (v) Asset and Liability Management officer, or an equivalent 
employee;
    (vi) Chief Accounting Officer or an equivalent employee;
    (vii) General Counsel or an equivalent employee;
    (viii) Strategic Planning officer or an equivalent employee;
    (ix) Internal Audit officer or an equivalent employee; or
    (x) Chief Information Officer or an equivalent employee; or
    (3) Any other individual, without regard to title:
    (i) Who is in charge of a principal business unit, division or 
function; or
    (ii) Who reports directly to the Bank's chairman of the board of 
directors, vice chairman of the board of directors, president or chief 
operating officer.
    FHFA means the Federal Housing Finance Agency.
    Minimum capital requirement means the leverage and total capital 
requirements established for a Bank under section 6(a)(2) of the Bank 
Act (12 U.S.C. 1426(a)(2)) and related regulations, as such requirements 
may be revised by the Director, or any similar requirement established 
for a Bank by regulation, order, written agreement or other action.
    New business activity means any activity undertaken by a Bank that 
requires approval from the FHFA under part 980 of this title.
    Permanent capital means the retained earnings of a Bank, determined 
in accordance with generally accepted accounting principles in the 
United States (GAAP), plus the amount paid-in for the Bank's Class B 
stock.
    Risk-based capital requirement means any capital requirement 
established for a Bank under section 6(a)(3) of the Bank Act (12 U.S.C. 
1426(a)(3)) and related regulations that ensures a Bank will hold 
sufficient permanent capital and reserves to support the risks that 
arise from its operations.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) as 
amended.
    Tangible equity means, for a Bank, the paid-in value of its 
outstanding capital stock plus its retained earnings calculated in 
accordance with generally accepted accounting principles in the United 
States (GAAP) less the amount of any assets that would be intangible 
assets under GAAP.
    Total capital means the sum of the Bank's permanent capital, the 
amount paid-in for its Class A stock, the amount of any general 
allowances for losses, and the amount of any other instruments 
indentified in a Bank's capital plan that the Director has determined to 
be available to absorb losses incurred by such Bank. For a Bank that has 
issued neither Class A nor Class B stock, the Bank's total capital shall 
be the measure of capital used to determine compliance with its minimum 
capital requirement.



Sec. 1229.2  Determination of a Bank's capital classification.

    (a) Quarterly determination. The Director shall determine the 
capital classification for each Bank no less often than once a quarter 
based on the capital classifications in Sec. 1229.3 of this subpart. 
The Director may make a determination with regard to a capital 
classification for a Bank more often than the minimum required under 
this paragraph or make a determination for one or more Banks without 
making a determination for all the Banks.
    (b) Notification to a Bank. Before finalizing any action to classify 
a Bank under this section, the Director shall provide a Bank written 
notice describing the proposed action and an opportunity to submit 
information that the Bank considers relevant to the proposed action in 
accordance with Sec. 1229.12 of this subpart.
    (c) Notification to the FHFA. A Bank shall provide written 
notification within ten calendar days of any event or development that 
has caused or is likely to cause its permanent or total capital to fall 
below the level necessary to maintain its capital classification at the 
level assigned in the most recent capital classification or 
reclassification determination by the Director or that is contained in 
the most recent notice of a proposed capital classification or 
reclassification provided under Sec. 1229.12(a) of this subpart.

[[Page 237]]



Sec. 1229.3  Criteria for a Bank's capital classification.

    (a) Adequately capitalized. Except where the Director has exercised 
authority to reclassify a Bank, a Bank shall be considered adequately 
capitalized if, at the time of the determination under Sec. 1229.2(a) 
of this subpart, the Bank has sufficient permanent and total capital, as 
applicable, to meet or exceed its risk-based and minimum capital 
requirements.
    (b) Undercapitalized. Except where the Director has exercised 
authority to reclassify a Bank, a Bank shall be considered 
undercapitalized if, at the time of the determination under Sec. 
1229.2(a) of this subpart, the Bank does not have sufficient permanent 
or total capital, as applicable, to meet any one or more of its risk-
based or minimum capital requirements but such deficiency is not of a 
magnitude to classify the Bank as significantly undercapitalized or 
critically undercapitalized.
    (c) Significantly undercapitalized. Except where the Director has 
exercised authority to reclassify a Bank, a Bank shall be considered 
significantly undercapitalized if, at the time of the determination 
under Sec. 1229.2(a) of this subpart, the amount of permanent or total 
capital held by the Bank is less than 75 percent of what is required to 
meet any one of its risk-based or minimum capital requirements but the 
magnitude of the Bank's deficiency in total capital is not sufficient to 
classify it as critically undercapitalized.
    (d) Critically undercapitalized. Except where the Director has 
exercised authority to reclassify a Bank, a Bank shall be considered 
critically undercapitalized if, at the time of the determination under 
Sec. 1229.2(a) of this subpart, the total capital held by the Bank is 
less than or equal to the critical capital level for a Bank as defined 
under Sec. 1229.1 of this subpart.



Sec. 1229.4  Reclassification by the Director.

    (a) Discretionary reclassification. Where the Director determines 
that any of the grounds described in paragraph (b) of this section 
exist, the Director may reclassify a Bank as:
    (1) Undercapitalized, if it is otherwise classified as adequately 
capitalized;
    (2) Significantly undercapitalized, if it is otherwise classified as 
undercapitalized; or
    (3) Critically undercapitalized if it is otherwise classified as 
significantly undercapitalized.
    (b) Grounds for discretionary reclassification. Notwithstanding any 
other provision of this subpart, the Director may at any time reclassify 
a Bank under this section if:
    (1) The Director determines in writing that:
    (i) The Bank is engaging in conduct that could result in the rapid 
depletion of permanent or total capital;
    (ii) The value of collateral pledged to the Bank has decreased 
significantly; or
    (iii) The value of property subject to mortgages owned by the Bank 
has decreased significantly.
    (2) The Director determines, after notice to the Bank and 
opportunity for an informal hearing before the Director, that a Bank is 
in an unsafe and unsound condition; or
    (3) The Director finds, under Sec. 1371(b) of Safety and Soundness 
Act (12 U.S.C. 4631(b)), that the Bank is engaging in an unsafe and 
unsound practice because the Bank's asset quality, management, earnings 
or liquidity were found to be less than satisfactory during the most 
recent examination, and any deficiency has not been corrected.
    (c) Procedures. Before finalizing any action to reclassify a Bank 
under this section, the Director shall provide a Bank written notice 
describing the proposed action and an opportunity to submit information 
that the Bank considers relevant to the Director's proposed action in 
accordance with Sec. 1229.12 of this subpart.
    (d) Duration. Any condition, action or inaction by a Bank that is 
the basis for a decision to reclassify a Bank under this section or 
under any other authority provided the Director may be considered by the 
Director and form the basis of further, subsequent actions to reclassify 
the Bank until such time as the Bank remedies such condition or takes 
necessary action to correct such situation to the satisfaction of the 
Director.

[[Page 238]]

    (e) Reservation of authority. Nothing in this section shall prevent 
the Director from exercising any other authority under the Safety and 
Soundness Act, the Bank Act or any regulation to reclassify a Bank for 
reasons not set forth in paragraph (b) of this section or to take any 
other action against a Bank.



Sec. 1229.5  Capital distributions for adequately capitalized Banks.

    (a) Restriction. An adequately capitalized Bank may not make a 
capital distribution if after doing so the Bank's capital would be 
insufficient to maintain a classification of adequately capitalized. A 
Bank may not make a capital distribution if such distribution would 
violate any restriction on the redemption or repurchase of capital stock 
or the payment of a dividend set forth in section 6 of the Bank Act (12 
U.S.C. 1426) and any other applicable regulation.
    (b) Exception. Notwithstanding the restriction in paragraph (a) of 
this section, the Director may permit a Bank to repurchase or redeem its 
shares of stock if the transaction is made in connection with the 
issuance of additional Bank shares or obligations in at least an 
equivalent amount to the shares that are redeemed or repurchased and 
will reduce the Bank's financial obligations or otherwise improve its 
financial condition. Any transaction under this paragraph also must 
conform with any restriction on the redemption or repurchase of Bank 
stock set forth in section 6 of the Bank Act (12 U.S.C. 1426) and in any 
other applicable regulation.



Sec. 1229.6  Mandatory actions applicable to undercapitalized Banks.

    (a) Mandatory Actions by the Bank. A Bank that is classified as 
undercapitalized shall:
    (1) Submit to the Director for approval a capital restoration plan 
that complies with the the requirements and procedures established by 
Sec. 1229.11 of this part and receive approval from the Director for 
such plan;
    (2) Fulfill all terms, conditions and obligations contained in the 
capital restoration plan as approved by the Director;
    (3) Not make any capital distribution that would result in the Bank 
being reclassified as significantly undercapitalized or critically 
undercapitalized, nor make a capital distribution if such distribution 
would violate any restriction on the redemption or repurchase of capital 
stock or the declaration or payment of a dividend set forth in section 6 
of the Bank Act (12 U.S.C. 1426) or in any other applicable regulation;
    (4) Not permit its average total assets in any calendar quarter to 
exceed its average total assets during the preceding calendar quarter, 
where such average is calculated based on the total amount of assets 
held by the Bank for each day in a quarter, unless:
    (i) The Director has approved the Bank's capital restoration plan; 
and
    (ii) The Director determines that:
    (A) The increase in total assets is consistent with the approved 
capital restoration plan; and
    (B) The ratio of tangible equity to the Bank's total assets is 
increasing at a rate sufficient to enable the Bank to become adequately 
capitalized within a reasonable time and consistent with any schedule 
established in the capital restoration plan; and
    (5) Not acquire, directly or indirectly, an equity interest in any 
operating entity (other than as necessary to enforce a security interest 
granted to the Bank) nor engage in any new business activity unless:
    (i) The Director has approved the Bank's capital restoration plan, 
the Bank is implementing the capital restoration plan and the Director 
determines that proposed acquisition or activity will further 
achievement of the goals set forth in that plan; or
    (ii) The Director determines that the proposed acquisition or 
activity will be consistent with the safe and sound operation of the 
Bank and will further the Bank's compliance with its risk-based and 
minimum capital requirements in a reasonable period of time.
    (b) Mandatory reclassification by the Director. The Director shall 
reclassify an undercapitalized Bank as significantly undercapitalized 
if:
    (1) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of

[[Page 239]]

this subpart and within the time frame required.
    (2) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (3) The Director determines that the Bank has failed in any material 
respect to comply with its approved capital restoration plan or fulfill 
any schedule for action established by that plan.
    (c) Monitoring. The Director shall monitor the condition of any 
undercapitalized Bank and monitor the Bank's compliance with the capital 
restoration plan and any restrictions imposed under this section or 
Sec. 1229.7 of this subpart. As part of this process, the Director 
shall review the capital restoration plan and any restrictions or 
requirements imposed on the undercapitalized Bank to determine whether 
such plan, restrictions or requirements are consistent with the safe and 
sound operation of the Bank and will further the Bank's compliance with 
its risk-based and minimum capital requirements in a reasonable period 
of time.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.7  Discretionary actions applicable to undercapitalized Banks.

    (a) Discretionary safeguards. The Director may take any action with 
regard to an undercapitalized Bank that may be taken with regard to a 
significantly undercapitalized Bank under section 1366 of the Safety and 
Soundness Act (12 U.S.C. 4616) or Sec. 1229.7 or Sec. 1229.8 of this 
subpart if the Director determines that such action is necessary to 
assure the safe and sound operation of the Bank and the Bank's 
compliance with its risk-based and minimum capital requirements in a 
reasonable period of time.
    (b) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such action in 
accordance with Sec. 1229.12 of this subpart.



Sec. 1229.8  Mandatory actions applicable to significantly 
undercapitalized Banks.

    A Bank that is classified as significantly undercapitalized:
    (a) Shall submit to the Director for approval a capital restoration 
plan that complies with the requirements and procedures established by 
Sec. 1229.11 of this part and receive approval from the Director for 
such plan;
    (b) Fulfill all terms, conditions and obligations contained in the 
capital restoration plan once the plan is approved by the Director;
    (c) Shall not make any capital distribution that would result in the 
Bank being reclassified as critically undercapitalized or that would 
violate any restriction on the redemption or repurchase of capital stock 
or the payment of a dividend set forth in section 6 of the Bank Act (12 
U.S.C. 1426) or any applicable regulation;
    (d) Shall not make any capital distribution not otherwise prohibited 
under paragraph (c) of this section absent the prior written approval of 
the Director, provided that the Director may approve such distribution 
only if the Director determines that:
    (1) The capital distribution will enhance the ability of the Bank to 
meet its risk-based and minimum capital requirements promptly;
    (2) The capital distribution will contribute to the long-term 
financial safety and soundness of the Bank; or
    (3) The capital distribution is otherwise in the public interest;
    (e) Shall not without prior written approval of the Director pay a 
bonus to any executive officer, provided that for purposes of this 
paragraph a bonus shall include any amount paid or accruing to an 
executive officer under a profit sharing arrangement;
    (f) Shall not without the prior written approval of the Director 
compensate an executive officer at a rate exceeding the average rate of 
compensation of that officer during the 12 months preceding the calendar 
month in which the Bank became significantly undercapitalized, provided 
however, that for purposes of calculating the executive officer's 
average rate of compensation, such compensation shall not include any 
bonus or profit sharing

[[Page 240]]

paid or accruing to the officer during the 12 month period;
    (g) Comply with Sec. 1229.6(a)(4) and (a)(5) of this subpart; and
    (h) Comply with any on-going restrictions or obligations that were 
imposed on the Bank by the Director under Sec. 1229.7 of this subpart.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.9  Discretionary actions applicable to significantly 
undercapitalized Banks.

    (a) Actions by the Director. The Director shall carry out this 
section by taking, at any time, one or more of the following actions 
with respect to a significantly undercapitalized Bank:
    (1) Limit the increase in any obligations or class of obligations of 
the Bank, including any off-balance sheet obligations. Such limitation 
may be stated in an absolute dollar amount, as a percentage of current 
obligations or in any other form chosen by the Director;
    (2) Reduce the amount of any obligations or class of obligations 
held by the Bank, including any off-balance sheet obligations. Such 
reduction may be stated in an absolute dollar amount, as a percentage of 
current obligations or in any other form chosen by the Director;
    (3) Limit the increase in, or prohibit the growth of any asset or 
class of assets held by the Bank. Such limitation may be stated in an 
absolute dollar amount, as a percentage of current assets or in any 
other form chosen by the Director;
    (4) Reduce the amount of any asset or class of asset held by the 
Bank. Such reduction may be stated in an absolute dollar amount, as a 
percentage of current obligations or in any other form chosen by the 
Director;
    (5) Acquire new capital in the form and amount determined by the 
Director, which specifically may include requiring a Bank to increase 
its level of retained earnings;
    (6) Modify, limit or terminate any activity of the Bank that the 
Director determines creates excessive risk;
    (7) Take steps to improve the management at the Bank by:
    (i) Ordering a new election for the Bank's board of directors in 
accordance with procedures established by the Director;
    (ii) Dismissing particular directors or executive officers, in 
accordance with section 1366(b)(5)(B) of the Safety and Soundness Act 
(12 U.S.C. 4616(b)(5)(B)), who held office for more than 180 days 
immediately prior to the date on which the Bank became undercapitalized, 
provided further that such dismissals shall not be considered removal 
pursuant to an enforcement action under section 1377 of the Safety and 
Soundness Act (12 U.S.C. 4636a) and shall not be subject to the 
requirements necessary to remove an officer or director under that 
section; or
    (iii) Ordering the Bank to hire qualified executive officers, the 
hiring of whom, prior to employment by the Bank and at of the option of 
the Director, may be subject to review and approval by the Director; or
    (8)(i) Reclassify a significantly undercapitalized Bank as 
critically undercapitalized if:
    (A) The Bank does not submit a capital restoration plan that is 
substantially in compliance with Sec. 1229.11 of this part and within 
the time frame required;
    (B) The Director does not approve the capital restoration plan 
submitted by the Bank; or
    (C) The Director determines that the Bank has failed to make 
reasonable, good faith efforts to comply with its approved capital 
restoration plan and fulfill any schedule established by that plan.
    (ii) Subject to paragraph (c) of this section, the Director may 
reclassify a significantly undercapitalized Bank under paragraph 
(a)(8)(i) of this section at any time the grounds for such action exist, 
notwithstanding the fact that such grounds had formed the basis on which 
the Director reclassified a Bank from undercapitalized to significantly 
undercapitalized.
    (b) Additional safeguards. The Director may require a significantly 
undercapitalized Bank to take any other action not specifically listed 
in this section if the Director determines such action will help ensure 
the safe and sound operation of the Bank and the Bank's

[[Page 241]]

compliance with its risk-based and minimum capital requirements in a 
reasonable period of time more than any action specifically authorized 
under paragraph (a) of this section.
    (c) Procedures. Before finalizing any action under this section, the 
Director shall provide a Bank written notice describing the proposed 
action or actions and an opportunity to submit information that the Bank 
considers relevant to the Director's decision to take such action in 
accordance with Sec. 1229.12 of this subpart.



Sec. 1229.10  Actions applicable to critically undercapitalized Banks.

    (a) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank at any time after the 
Director determines that the Bank is, or the Director otherwise 
exercises authority to reclassify the Bank as, critically 
undercapitalized.
    (b) Periodic determination--(1) Determination. Not later than 30 
calendar days after the Director first determines that a Bank is, or the 
Director otherwise exercises authority to reclassify the Bank as, 
critically undercapitalized, and a least once during each succeeding 30-
day calendar period, the Director make a determination in writing as to 
whether:
    (i) The assets of the Bank are, and during the preceding 60 calendar 
days have been, less than its obligations to its creditors and others, 
provided that the Director shall consider as an obligation only that 
amount of outstanding consolidated obligations for which the Bank is 
primary obligor or for which the Bank has been ordered to make payments 
of principal or interest on behalf of another Bank, or is actually 
making payments of principal or interest on behalf of another Bank; or
    (ii) The Bank is not, and during the previous 60 calendar days has 
not been paying its debts on a regular basis as such debts become due, 
provided that this provision does not apply to any unpaid debts that are 
the subject of a bona fide dispute.
    (2) Mandatory receivership. If the Director determines that the 
conditions described in either paragraph (b)(1)(i) or (b)(1)(ii) of this 
section applies to a Bank, the Director shall appoint the FHFA as 
receiver for the Bank. The appointment of the FHFA as receiver under 
this paragraph shall immediately terminate any conservatorship 
established for the Bank.
    (3) Determination not required. A determination under paragraph 
(b)(1) of this section shall not be required during any period in which 
the FHFA serves as receiver for a Bank.
    (c) Judicial review. If the Director appoints the FHFA as 
conservator or receiver of a Bank under paragraph (a) or (b)(2) of this 
section, the Bank may within 30 days of such appointment bring an action 
in the United States district court for the judicial district in which 
the Bank was established pursuant to section 3 of the Bank Act (12 
U.S.C. 1423) or in the United States District Court for the District of 
Columbia, for an order requiring the FHFA to remove itself as 
conservator or receiver.
    (d) Other applicable actions. Until such time as FHFA is appointed 
as conservator or receiver for a critically undercapitalized Bank, a 
critically undercapitalized Bank shall be subject to all mandatory 
restrictions or obligations applicable to a significantly 
undercapitalized Bank under Sec. 1229.8 of this subpart and will remain 
subject to any on-going restrictions or obligations that the Director 
imposed on the Bank under Sec. 1229.7 or Sec. 1229.9 of this subpart, 
or any restrictions or obligations that are applicable to the Bank under 
the terms of an approved capital restoration plan.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.11  Capital restoration plans.

    (a) Contents. Each capital restoration plan submitted by a Bank 
shall set forth a plan to restore its permanent and total capital to 
levels sufficient to fulfill its risk-based and minimum capital 
requirements within a reasonable period of time. Such plan must be 
feasible given general market conditions and the conditions of the Bank 
and, at a minimum, shall:
    (1) Describe the actions the Bank will take, including any changes 
that the

[[Page 242]]

Bank will make to member stock purchase requirements, to assure that it 
will become adequately capitalized within the meaning of Sec. 1229.3(a) 
of this subpart and, if appropriate, to resolve any structural or long 
term causes for the capital deficiency;
    (2) Specify the level of permanent and total capital the Bank will 
achieve and maintain and provide quarterly projections indicating how 
each component of total and permanent capital and the major components 
of income, assets and liabilities are expected to change over the term 
of the plan;
    (3) Specify the types and levels of activities in which the Bank 
will engage during the term of the plan, including any new business 
activities that it intends to begin during such term;
    (4) Describe any other actions the Bank intends to take to comply 
with any other requirements imposed on it under this subpart A of part 
1229;
    (5) Provide a schedule which sets forth dates for meeting specific 
goals and benchmarks and taking other actions described in the proposed 
capital restoration plan, including setting forth a schedule for it to 
restore its permanent and total capital to levels necessary for meeting 
its risk-based and minimum capital requirements; and
    (6) Address such other items that the Director shall provide in 
writing in advance of such submission.
    (b) Deadline for submission. A Bank must submit a proposed capital 
restoration plan no later than 15 business-days after it receives 
written notification that such a plan is required either because the 
notice specifically states that the Director has required the submission 
of a plan or the notice indicates that the Bank's capital classification 
or reclassification is to a category for which a capital restoration 
plan is a mandatory action required of the Bank. The Director may extend 
this deadline if the Director determines that such extension is 
necessary. Any such extension shall be in writing and provide a specific 
date by which the Bank must submit its proposed capital restoration 
plan.
    (c) Review of the plan by the Director. The Director shall have 30 
calendar days from the date the Bank submits a proposed capital 
restoration plan to approve or disapprove the plan. The Director may 
extend the period for consideration of a capital restoration plan for a 
single 30 calendar day period by providing the Bank with written 
notification that the decision deadline has been extended. The Director 
shall provide the Bank with written notification of the decision to 
approve or not approve a proposed capital restoration plan. If the 
Director does not approve the capital restoration plan, the written 
notification of such decision shall provide the reasons for the 
disapproval.
    (d) Resubmission. If the Director does not approve the Bank's 
proposed capital restoration plan, the Bank shall submit a new capital 
restoration plan acceptable to the Director within 30 calendar days of 
the date that the Bank was notified of the disapproval. The Director may 
extend the period for the Bank's submission of a new acceptable capital 
restoration plan upon a determination that such extension is in the 
public interest. The Director shall provide the Bank written notice of 
the extension and include in such notice the date by which the Bank must 
submit an acceptable plan.
    (e) Amendments. The Director, in his or her sole discretion, may 
approve amendments to an approved capital restoration plan if, after 
consideration of changes in conditions of the Bank, changes in market 
conditions and other relevant factors, the Director determines that such 
amendments are consistent with the restoration of the Bank's capital to 
levels necessary to meet its risk-based and minimum capital requirements 
in a reasonable period of time and with the safe and sound operations of 
the Bank.
    (f) Effectiveness of provisions. A Bank is obligated to implement 
and fulfill all provisions of an approved capital restoration plan. 
Unless expressly addressed by the terms of the capital restoration plan, 
a Bank remains bound by each and every obligation and requirement set 
forth in the approved capital restoration plan until such requirement or 
obligation is amended under paragraph (e) of this section or terminated 
in writing by the Director.

[[Page 243]]

    (g) Appointment of conservator or receiver. Notwithstanding any 
other provision of federal or state law, the Director may appoint the 
FHFA as conservator or receiver of any Bank that is classified as 
undercapitalized or significantly undercapitalized if the Bank fails to 
submit a capital restoration plan acceptable to the Director within the 
time frames established by this section or if the Bank materially fails 
to implement any capital restoration plan that has been approved by the 
Director. A Bank may within 30 days of such appointment bring an action 
in the United States district court for the judicial district in which 
the Bank is established pursuant to section 3 of the Bank Act (12 U.S.C. 
1423) or in the United States District Court for the District of 
Columbia, for an order requiring the FHFA to remove itself as 
conservator or receiver.

[74 FR 5604, Jan. 30, 2009, as amended at 74 FR 38513, Aug. 4, 2009]



Sec. 1229.12  Procedures related to capital classification and other actions.

    (a) Classification or reclassification of a Bank. Before finalizing 
any decision to classify a Bank under Sec. 1229.2(a) of this subpart or 
reclassify the Bank under Sec. 1229.4(a) of this subpart, the Director 
shall provide the Bank with written notification of the proposed action 
that states the reasons for the proposed action and describes the 
information on which the proposed action is based. The notice required 
under this paragraph may be combined with the notice of a proposed 
supervisory action required under paragraph (b) of this section. The 
Director also may combine a notice informing the Bank of its capital 
classification and simultaneously informing the Bank that the Director 
intends to reclassify a Bank to a lower capital classification category.
    (b) Notice of a supervisory action. Before finalizing any action or 
actions authorized under Sec. 1229.7 or Sec. 1229.9 of this subpart, 
the Director shall provide the Bank with written notification of the 
proposed action that states the reasons for the proposed action and 
describes the information on which the proposed action is based. The 
notice required under this paragraph may be combined with the notice of 
a proposed action to classify or reclassify the Bank required under 
paragraph (a) of this section.
    (c) Bank response. During the 30 calendar day period beginning on 
the date that the Bank is provided notice under paragraph (a) or (b) of 
this section of a proposed action or actions, a Bank may submit to the 
Director any information that the Bank considers relevant or appropriate 
for the Director to consider in determining whether to finalize the 
proposed action. The Director may, in his or her sole discretion, 
convene an informal hearing with representatives of the Bank to receive 
or discuss any such information. The Director, in his or her sole 
discretion, also may extend the period in which the Bank may respond to 
a notice for an additional 30 calendar days for good cause, or shorten 
such comment period if the Director determines the condition of the Bank 
requires faster action or a shorter comment period or if the Bank 
consents to a shorter comment period. The Director shall inform the Bank 
in writing, which may be provided as part of the notice required under 
paragraphs (a) or (b) of this section, of any decision to extend or 
shorten the comment period. The failure of a Bank to provide information 
during the allotted comment period will waive any right of the Bank to 
comment on the proposed action.
    (d) Final action. At the earlier of the completion of the comment 
period established under paragraph (c) or the receipt of information 
provided by the Bank during such period, the Director shall determine 
whether to take the proposed action or actions that were the subject of 
the notice under paragraphs (a) or (b) of this section, after taking 
into consideration any information provided by the Bank. Such notice 
shall respond to any information submitted by the Bank. Any final order 
that the Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall take effect upon the Bank's receipt of the notice required 
under this paragraph, unless a different effective date is set forth in 
this notice, and shall remain in effect and binding on the Bank until 
terminated in writing by the Director or until any terms and

[[Page 244]]

conditions for termination, as set forth in the notice, have been met.
    (e) Final actions under this section. Any final decision that the 
Bank take action, refrain from action or comply with any other 
requirement that was the subject of a notice under paragraph (b) of this 
section shall constitute an order under the Safety and Soundness Act. 
The Director in his or her discretion may apply to the United States 
District Court for the District of Columbia or to the United States 
district court for the judicial district in which the Bank in question 
is established pursuant to section 3 of the Bank Act (12 U.S.C. 1423) 
for the enforcement of such order, as allowed under Sec. 1375 of the 
Safety and Soundness Act (12 U.S.C. 4635) . In addition, a Bank or any 
executive officer or director of a Bank can be subject to enforcement 
action, including the imposition of civil monetary penalties, under 
Sec. 1371, Sec. 1372 or Sec. 1376 of the Safety and Soundness Act (12 
U.S.C. 4631, 4632, or 4636) for failure to comply with such an order.
    (f) Judicial review. A Bank that is not classified as critically 
undercapitalized may obtain judicial review of any final capital 
classification decision or of any final decision to take supervisory 
action made by the Director under Sec. 1229.2, Sec. 1229.4, Sec. 
1229.7 or Sec. 1229.9 in accordance with the requirements and 
procedures set forth in Sec. 1369D of the Safety and Soundness Act (12 
U.S.C. 4623).



PART 1231_GOLDEN PARACHUTE PAYMENTS--Table of Contents



Sec.
1231.1 Purpose.
1231.2 Definitions.
1231.3-1231.4 [Reserved]
1231.5 Factors to be taken into account.

    Authority: 12 U.S.C. 4518(e).

    Source: 73 FR 53357, Sept. 16, 2008, unless otherwise noted.



Sec. 1231.1  Purpose.

    The purpose of this part is to implement section 1318(e) of the Act 
by setting forth the standards that the Director will take into 
consideration in determining whether to limit or prohibit golden 
parachute payments to entity-affiliated parties.

[73 FR 54673, Sept. 23, 2008]



Sec. 1231.2  Definitions.

    The following definitions apply to the terms used in this part:
    (a) Act means the Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as amended by the 
Federal Housing Finance Regulatory Reform Act of 2008, enacted under 
Division A of the HERA.
    (b) Director means the Director of FHFA or his or her designee.
    (c) Enterprise means the Federal National Mortgage Association and 
the Federal Home Loan Mortgage Corporation (collectively, Enterprises) 
and, except as provided by the Director, any affiliate thereof.
    (d) Entity-affiliated party means--
    (1) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;
    (2) Any shareholder, affiliate, consultant, or joint venture partner 
of a regulated entity, and any other person, as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Bank shall not be deemed to have participated in the affairs of 
that Bank solely by virtue of being a shareholder of, and obtaining 
advances from, that Bank;
    (3) Any independent contractor for a regulated entity (including any 
attorney, appraiser, or accountant), if--
    (i) The independent contractor knowingly or recklessly participates 
in--
    (A) Any violation of any law or regulation;
    (B) Any breach of fiduciary duty; or
    (C) Any unsafe or unsound practice; and
    (ii) Such violation, breach, or practice caused, or is likely to 
cause, more than a minimal financial loss to, or a significant adverse 
effect on, the regulated entity;
    (4) Any not-for-profit corporation that receives its principal 
funding, on an ongoing basis, from any regulated entity; and
    (5) The Office of Finance.

[[Page 245]]

    (e) Federal Home Loan Bank means a bank established under the 
Federal Home Loan Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    (f)(1) Golden parachute payment means any payment (or any agreement 
to make any payment) in the nature of compensation by any regulated 
entity for the benefit of any current entity-affiliated party pursuant 
to an obligation of such regulated entity that--
    (i) Is contingent on, or by its terms is payable on or after, the 
termination of such party's primary employment or affiliation with the 
regulated entity; and
    (ii) Is received on or after the date on which--
    (A) The regulated entity became insolvent;
    (B) Any conservator or receiver is appointed for such regulated 
entity; or
    (C) The Director determines that the regulated entity is in a 
troubled condition.
    (2) The term ``golden parachute payment'' shall not include:
    (i) Any payment made pursuant to a pension or retirement plan which 
is qualified (or is intended within a reasonable period of time to be 
qualified) under section 401 of the Internal Revenue Code of 1986 (26 
U.S.C. 401) or pursuant to a pension or other retirement plan which is 
governed by the laws of any foreign country;
    (ii) Any payment made pursuant to a bona fide deferred compensation 
plan or arrangement which the Director determines, by regulation or 
order, to be permissible; or
    (iii) Any payment made by reason of death or by reason of 
termination caused by the disability of an entity-affiliated party.
    (3) Any payment which would be a golden parachute payment but for 
the fact that such payment was made before the date referred to in 
paragraph (f)(1)(ii) shall be treated as a golden parachute payment if 
the payment was made in contemplation of the occurrence of an event 
described that paragraph.
    (g) FHFA means the Federal Housing Finance Agency.
    (h) HERA means the Housing and Economic Recovery Act of 2008, Public 
Law No. 110-289, 122 Stat. 2654 (July 30, 2008).
    (i) Office of Finance means the Office of Finance of the Federal 
Home Loan Bank System (or any successor thereto).
    (j) Regulated entity means the Federal National Mortgage Association 
and any affiliate thereof; the Federal Home Loan Mortgage Corporation 
and any affiliate thereof; or any Federal Home Loan Bank; the term 
``regulated entities'' means, collectively, the Federal National 
Mortgage Association and any affiliate thereof; the Federal Home Loan 
Mortgage Corporation and any affiliate thereof; and any Federal Home 
Loan Bank.
    (k) Troubled condition means a regulated entity that--
    (1) Is subject to a cease-and-desist order or written agreement 
issued by the FHFA that requires action to improve the financial 
condition of the regulated entity or is subject to a proceeding 
initiated by the Director, which contemplates the issuance of an order 
that requires action to improve the financial condition of the regulated 
entity, unless otherwise informed in writing by the FHFA; or
    (2) Is informed in writing by the Director that it is in a troubled 
condition for purposes of the requirements of this part on the basis of 
the regulated entity's most recent report of examination or other 
information available to the FHFA.
    (l)-(n) [Reserved]



Sec. 1231.3-1231.4  [Reserved]



Sec. 1231.5  Factors to be taken into account.

    In determining whether to prohibit or limit any golden parachute 
payment, the Director shall consider the following factors--
    (a) Whether there is a reasonable basis to believe that the entity-
affiliated party has committed any fraudulent act or omission, breach of 
trust or fiduciary duty, or insider abuse with regard to the regulated 
entity that has had a material effect on the financial condition of the 
regulated entity;
    (b) Whether there is a reasonable basis to believe that the entity-
affiliated party is substantially responsible

[[Page 246]]

for the insolvency of the regulated entity, the appointment of a 
conservator or receiver for the regulated entity, or the troubled 
condition of the regulated entity (as defined in regulations prescribed 
by the Director);
    (c) Whether there is a reasonable basis to believe that the entity-
affiliated party has materially violated any applicable provision of 
Federal or State law or regulation that has had a material effect on the 
financial condition of the regulated entity;
    (d) Whether the entity-affiliated party was in a position of 
managerial or fiduciary responsibility;
    (e) The length of time that the party was affiliated with the 
regulated entity, and the degree to which the payment reasonably 
reflects compensation earned over the period of employment and the 
compensation involved represents a reasonable payment for services 
rendered; and
    (f) Any other factor the Director determines relevant to the facts 
and circumstances surrounding the golden parachute payment, including 
any fraudulent act or omission, breach of fiduciary duty, violation of 
law, rule, regulation, order, or written agreement, and the level of 
willful misconduct, breach of fiduciary duty, and malfeasance on the 
part of an entity-affiliated party.

[73 FR 53357, Sept. 16, 2008, as amended at 73 FR 54673, Sept. 23, 2008; 
74 FR 5102, Jan. 29, 2009]



PART 1233_REPORTING OF FRAUDULENT FINANCIAL INSTRUMENTS--
Table of Contents



Sec.
1233.1 Purpose.
1233.2 Definitions.
1233.3 Reporting.
1233.4 Internal controls, policies, procedures, and training.
1233.5 Protection from liability for reports.
1233.6 Supervisory action.

    Authority: 12 U.S.C. 4511, 4513, 4514, 4526, 4642.

    Source: 75 FR 4258, Jan. 27, 2010, unless otherwise noted.



Sec. 1233.1  Purpose.

    The purpose of this part is to implement the Safety and Soundness 
Act by requiring each regulated entity to report to FHFA upon discovery 
that it has purchased or sold a fraudulent loan or financial instrument, 
or suspects a possible fraud relating to the purchase or sale of any 
loan or financial instrument. In addition, each regulated entity must 
establish and maintain internal controls, policies, procedures, and 
operational training to discover such transactions.



Sec. 1233.2  Definitions.

    The following definitions apply to the terms used in this part:
    Bank or Federal Home Loan Bank means a Bank established under the 
Federal Home Loan Bank Act; the term ``Federal Home Loan Banks'' means, 
collectively, all the Federal Home Loan Banks.
    Director means the Director of FHFA or his or her designee.
    Enterprise means the Federal National Mortgage Association, the 
Federal Home Loan Mortgage Corporation (collectively, Enterprises), and 
any affiliate thereof.
    Entity-affiliated party means--
    (1) Any director, officer, employee, or controlling stockholder of, 
or agent for, a regulated entity;
    (2) Any shareholder, affiliate, consultant, or joint venture partner 
of a regulated entity, and any other person, as determined by the 
Director (by regulation or on a case-by-case basis) that participates in 
the conduct of the affairs of a regulated entity, provided that a member 
of a Federal Home Loan Bank shall not be deemed to have participated in 
the affairs of that Federal Home Loan Bank solely by virtue of being a 
shareholder of, and obtaining advances from, that Federal Home Loan 
Bank;
    (3) Any independent contractor for a regulated entity (including any 
attorney, appraiser, or accountant);
    (4) Any not-for-profit corporation that receives its principal 
funding, on an ongoing basis, from any regulated entity; and
    (5) The Office of Finance.
    Financial instrument means any legally enforceable agreement, 
certificate, or other writing, in hardcopy or electronic form, having 
monetary value including, but not limited to, any agreement, 
certificate, or other writing

[[Page 247]]

evidencing an asset pledged as collateral to a Bank by a member to 
secure an advance by the Bank to that member.
    Fraud means a misstatement, misrepresentation, or omission that 
cannot be corrected and that was relied upon by a regulated entity to 
purchase or sell a loan or financial instrument.
    Possible fraud means that a regulated entity has a reasonable 
belief, based upon a review of information available to the regulated 
entity, that fraud may be occurring or has occurred.
    Purchased or sold or relating to the purchase or sale means any 
transaction involving a financial instrument including, but not limited 
to, any purchase, sale, other acquisition, or creation of a financial 
instrument by the member of a Bank to be pledged as collateral to the 
Bank to secure an advance by the Bank to that member, the pledging by a 
member to a Bank of such financial instrument to secure such an advance, 
the making of a grant by a Bank under its affordable housing program or 
community investment program, and the effecting of a wire transfer or 
other form of electronic payments transaction by the Bank.
    Regulated entity means the Federal National Mortgage Association and 
any affiliate thereof, the Federal Home Loan Mortgage Corporation and 
any affiliate thereof, and any Federal Home Loan Bank; the term 
``regulated entities'' means, collectively, the Federal National 
Mortgage Association and any affiliate thereof, the Federal Home Loan 
Mortgage Corporation and any affiliate thereof, and the Federal Home 
Loan Banks.
    Safety and Soundness Act means the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, as amended by the Federal 
Housing Finance Regulatory Reform Act of 2008, Division A of the Housing 
and Economic Recovery Act of 2008, Public Law 110-289, 122 Stat. 2654 
(2008).



Sec. 1233.3  Reporting.

    (a) Timeframe for reporting. (1) A regulated entity shall submit to 
the Director a timely written report upon discovery by the regulated 
entity that it has purchased or sold a fraudulent loan or financial 
instrument, or suspects a possible fraud relating to the purchase or 
sale of any loan or financial instrument.
    (2) In addition to submitting a report in accordance with paragraph 
(a)(1) of this section, in any situation that would have a significant 
impact on the regulated entity, the regulated entity shall immediately 
report any fraud or possible fraud to the Director by telephone or 
electronic communication.
    (b) Format for reporting. (1) The report shall be in such format and 
shall be filed in accordance with such procedures that the Director may 
prescribe.
    (2) The Director may require a regulated entity to provide such 
additional or continuing information relating to such fraud or possible 
fraud that the Director deems appropriate.
    (3) A regulated entity may satisfy the reporting requirements of 
this section by submitting the required information on a form or in 
another format used by any other regulatory agency, provided it has 
first obtained the prior written approval of the Director.
    (c) Retention of records. A regulated entity or entity-affiliated 
party shall maintain a copy of any report submitted to the Director and 
the original or business record equivalent of any supporting 
documentation for a period of five years from the date of submission.
    (d) Nondisclosure. (1) A regulated entity or entity-affiliated party 
may not disclose to any person that it has submitted a report to the 
Director pursuant to this section, unless it has first obtained the 
prior written approval of the Director.
    (2) The restriction in paragraph (d)(1) of this section does not 
prohibit a regulated entity from--
    (i) Disclosing or reporting such fraud or possible fraud pursuant to 
legal requirements, including reporting to appropriate law enforcement 
or other governmental authorities; or
    (ii) Taking any legal or business action it may deem appropriate, 
including any action involving the party or parties connected with the 
fraud or possible fraud.
    (e) No waiver of privilege. A regulated entity does not waive any 
privilege it may possess under any applicable law

[[Page 248]]

as a consequence of reporting fraud or possible fraud under this part.



Sec. 1233.4  Internal controls, policies, procedures, and training.

    (a) In general. Each regulated entity shall establish and maintain 
adequate and efficient internal controls, policies, procedures, and an 
operational training program to discover and report fraud or possible 
fraud in connection with the purchase or sale of any loan or financial 
instrument.
    (b) Examination. The examination by FHFA of fraud reporting programs 
of each regulated entity includes an evaluation of the effectiveness of 
the internal controls, policies, procedures, and operational training 
program in place to minimize risks from fraud and to report fraud or 
possible fraud to FHFA in accordance with this regulation.



Sec. 1233.5  Protection from liability for reports.

    As provided by section 1379E of the Safety and Soundness Act (12 
U.S.C. 4642(b)), a regulated entity that, in good faith, submits a 
report pursuant to this part, and any entity-affiliated party, that, in 
good faith, submits or requires a person to submit a report pursuant to 
this part, shall not be liable to any person under any provision of law 
or regulation, any constitution, law, or regulation of any State or 
political subdivision of any State, or under any contract or other 
legally enforceable agreement (including any arbitration agreement) for 
such report, or for any failure to provide notice of such report to the 
person who is the subject of such report, or any other persons 
identified in the report.



Sec. 1233.6  Supervisory action.

    Failure by a regulated entity to comply with this part may subject 
the regulated entity or the board members, officers, or employees 
thereof to supervisory action by FHFA, including but not limited to, 
cease-and-desist proceedings and civil money penalties.

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                        SUBCHAPTER C_ENTERPRISES





PART 1249_BOOK	ENTRY PROCEDURES--Table of Contents



Sec.
1249.10 Definitions.
1249.11 Maintenance of Enterprise Securities.
1249.12 Law governing rights and obligations of United States, Federal 
          Reserve Banks, and Enterprises; rights of any person against 
          United States, Federal Reserve Banks, and Enterprises; law 
          governing other interests.
1249.13 Creation of Participant's Security Entitlement; security 
          interests.
1249.14 Obligations of Enterprises; no adverse claims.
1249.15 Authority of Federal Reserve Banks.
1249.16 Withdrawal of Eligible Book-entry Enterprise Securities for 
          conversion to definitive form.
1249.17 Waiver of regulations.
1249.18 Liability of Enterprises and Federal Reserve Banks.
1249.19 Additional provisions.

    Authority: 12 U.S.C. 4501, 4502, 4511, 4513, 4526.

    Source: 75 FR 55928, Sept. 14, 2010, unless otherwise noted.



Sec. 1249.10  Definitions.

    (a) General. Unless the context requires otherwise, terms used in 
this part that are not defined in this part, have the meanings as set 
forth in 31 CFR 357.2 and in 12 CFR 1282.1. Definitions and terms used 
in 31 CFR part 357 should read as though modified to effectuate their 
application to the Enterprises.
    (b) Other terms. As used in this part, the term:
    Book-entry Enterprise Security means an Enterprise Security issued 
or maintained in the Book-entry System. Book-entry Enterprise Security 
also means the separate interest and principal components of a Book-
entry Enterprise Security if such security has been designated by the 
Enterprise as eligible for division into such components and the 
components are maintained separately on the books of one or more Federal 
Reserve Banks.
    Book-entry System means the automated book-entry system operated by 
the Federal Reserve Banks acting as the fiscal agent for the 
Enterprises, on which Book-entry Enterprise Securities are issued, 
recorded, transferred and maintained in book-entry form.
    Definitive Enterprise Security means an Enterprise Security in 
engraved or printed form, or that is otherwise represented by a 
certificate.
    Eligible Book-entry Enterprise Security means a Book-entry 
Enterprise Security issued or maintained in the Book-entry System which 
by the terms of its Securities Documentation is eligible to be converted 
from book-entry form into definitive form.
    Enterprise Security means any security or obligation of Fannie Mae 
or Freddie Mac issued under its respective Charter Act in the form of a 
Definitive Enterprise Security or a Book-entry Enterprise Security.
    Entitlement Holder means a Person or an Enterprise to whose account 
an interest in a Book-entry Enterprise Security is credited on the 
records of a Securities Intermediary.
    Federal Reserve Bank Operating Circular means the publication issued 
by each Federal Reserve Bank that sets forth the terms and conditions 
under which the Reserve Bank maintains Book-entry Securities accounts 
(including Book-entry Enterprise Securities) and transfers Book-entry 
Securities (including Book-entry Enterprise Securities).
    Participant means a Person or Enterprise that maintains a 
Participant's Securities Account with a Federal Reserve Bank.
    Person, as used in this part, 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 the United States, an 
Enterprise, or a Federal Reserve Bank.
    Revised Article 8 has the same meaning as in 31 CFR 357.2.
    Securities Documentation means the applicable statement of terms, 
trust indenture, securities agreement or other documents establishing 
the terms of a Book-entry Enterprise Security.

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    Security means any mortgage participation certificate, note, bond, 
debenture, evidence of indebtedness, collateral-trust certificate, 
transferable share, certificate of deposit for a security, or, in 
general, any interest or instrument commonly known as a ``security''.
    Transfer message means an instruction of a Participant to a Federal 
Reserve Bank to effect a transfer of a Book-entry Security (including a 
Book-entry Enterprise Security) maintained in the Book-entry System, as 
set forth in Federal Reserve Bank Operating Circulars.



Sec. 1249.11  Maintenance of Enterprise Securities.

    An Enterprise Security may be maintained in the form of a Definitive 
Enterprise Security or a Book-entry Enterprise Security. A Book-entry 
Enterprise Security shall be maintained in the Book-entry System.



Sec. 1249.12  Law governing rights and obligations of United States,
Federal Reserve Banks, and Enterprises; rights of any person against

United States, 
          Federal Reserve Banks, and Enterprises; law governing other 
          interests.

    (a) Except as provided in paragraph (b) of this section, the 
following rights and obligations are governed solely by the book-entry 
regulations contained in this part, the Securities Documentation, and 
Federal Reserve Bank Operating Circulars (but not including any choice 
of law provisions in the Securities Documentation to the extent such 
provisions conflict with the Book-entry regulations contained in this 
part):
    (1) The rights and obligations of an Enterprise and the Federal 
Reserve Banks with respect to:
    (i) A Book-entry Enterprise Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to 
Enterprise Securities; and
    (2) The rights of any Person, including a Participant, against an 
Enterprise and the Federal Reserve Banks with respect to:
    (i) A Book-entry Enterprise Security or Security Entitlement; and
    (ii) The operation of the Book-entry System as it applies to 
Enterprise Securities;
    (b) A security interest in a Security Entitlement that is in favor 
of a Federal Reserve Bank from a Participant and that is not recorded on 
the books of a Federal Reserve Bank pursuant to Sec. 1249.13(c)(1), is 
governed by the law (not including the conflict-of-law rules) of the 
jurisdiction where the head office of the Federal Reserve Bank 
maintaining the Participant's Securities Account is located. A security 
interest in a Security Entitlement that is in favor of a Federal Reserve 
Bank from a Person that is not a Participant, and that is not recorded 
on the books of a Federal Reserve Bank pursuant to Sec. 1249.13(c)(1), 
is governed by the law determined in the manner specified in paragraph 
(d) of this section.
    (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 paragraph (b) of this section shall be the law 
of that State as though Revised Article 8 had been adopted by that 
State.
    (d) To the extent not otherwise inconsistent with this part, and 
notwithstanding any provision in the Securities Documentation setting 
forth a choice of law, the provisions set forth in 31 CFR 357.11 
regarding law governing other interests apply and shall be read as 
though modified to effectuate the application of 31 CFR 357.11 to the 
Enterprises.



Sec. 1249.13  Creation of Participant's Security Entitlement; security interests.

    (a) A Participant's Security Entitlement is created when a Federal 
Reserve Bank indicates by book-entry that a Book-entry Enterprise 
Security has been credited to a Participant's Securities Account.
    (b) A security interest in a Security Entitlement of a Participant 
in favor of the United States to secure deposits of public money, 
including without limitation deposits to the Treasury tax and loan 
accounts, or other security interest in favor of the United States that 
is required by Federal statute, regulation, or agreement, and that is

[[Page 251]]

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, an ``authorized representative of the United States'' is the 
official designated in the applicable regulations or agreement to which 
a Federal Reserve Bank is a party, governing the security interest.
    (c)(1) An Enterprise 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 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, an Enterprise, 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.
    (2) In addition to the method provided in paragraph (c)(1) of this 
section, a security interest, including a security interest in favor of 
a Federal Reserve Bank, may be perfected by any method by which a 
security interest may be perfected under applicable law as described in 
Sec. 1249.12(b) or (d). The perfection, effect of perfection or non-
perfection and priority of a security interest are governed by such 
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 such law, including with respect to 
the effect of perfection and priority of such security interest. A 
Federal Reserve Bank Operating Circular shall be treated as a rule 
adopted by a clearing corporation for such purposes.



Sec. 1249.14  Obligations of Enterprises; no adverse claims.

    (a) Except in the case of a security interest in favor of the United 
States or a Federal Reserve Bank or otherwise as provided in Sec. 
1249.13(c)(1), for the purposes of this part, each Enterprise and the 
Federal Reserve Banks shall treat the Participant to whose Securities 
Account an interest in a Book-entry Enterprise Security 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 such 
Security, notwithstanding any information or notice to the contrary. 
Neither the Federal Reserve Banks nor an Enterprise shall be liable to a 
Person asserting or having an adverse claim to a Security Entitlement or 
to a Book-entry Enterprise Security in a Participant's Securities 
Account, including any such claim arising as a result of the transfer or 
disposition of a Book-entry Enterprise Security by a Federal Reserve 
Bank pursuant to a Transfer Message that the Federal Reserve Bank 
reasonably believes to be genuine.
    (b) The obligation of the Enterprise to make payments (including 
payments of interest and principal) with respect to Book-entry 
Enterprise Securities is discharged at the time payment in the 
appropriate amount is made as follows:
    (1) Interest or other payments on Book-entry Enterprise Securities 
is either credited by a Federal Reserve Bank to a Funds Account 
maintained at such Federal Reserve Bank or otherwise paid as directed by 
the Participant.
    (2) Book-entry Enterprise Securities are redeemed in accordance with 
their terms by a Federal Reserve Bank withdrawing the securities from 
the Participant's Securities Account in which

[[Page 252]]

they are maintained and by either crediting the amount of the redemption 
proceeds, including both redemption proceeds, where applicable, to a 
Funds Account at such Federal Reserve Bank or otherwise paying such 
redemption proceeds as directed by the Participant. No action by the 
Participant ordinarily is required in connection with the redemption of 
a Book-entry Enterprise Security.



Sec. 1249.15  Authority of Federal Reserve Banks.

    (a) Each Federal Reserve Bank is hereby authorized as fiscal agent 
of the Enterprises to perform the following functions with respect to 
the issuance of Book-entry Enterprise Securities offered and sold by an 
Enterprise to which this part applies, in accordance with the Securities 
Documentation, Federal Reserve Bank Operating Circulars, this part, and 
any procedures established by the Director consistent with these 
authorities:
    (1) To service and maintain Book-entry Enterprise Securities in 
accounts established for such purposes;
    (2) To make payments with respect to such securities, as directed by 
the Enterprise;
    (3) To effect transfer of Book-entry Enterprise Securities between 
Participants' Securities Accounts as directed by the Participants;
    (4) To effect conversions between Book-entry Enterprise Securities 
and Definitive Enterprise Securities with respect to those securities as 
to which conversion rights are available pursuant to the applicable 
Securities Documentation; and
    (5) To perform such other duties as fiscal agent as may be requested 
by the Enterprise.
    (b) Each Federal Reserve Bank may issue Federal Reserve Bank 
Operating Circulars not inconsistent with this part, governing the 
details of its handling of Book-entry Enterprise Securities, Security 
Entitlements, and the operation of the Book-entry System under this 
part.



Sec. 1249.16  Withdrawal of Eligible Book-entry Enterprise Securities
for conversion to definitive form.

    (a) Eligible Book-entry Enterprise Securities may be withdrawn from 
the Book-entry System by requesting delivery of like Definitive 
Enterprise Securities.
    (b) A Federal Reserve Bank shall, upon receipt of appropriate 
instructions to withdraw Eligible Book-entry Enterprise Securities from 
book-entry in the Book-entry System, convert such securities into 
Definitive Enterprise Securities and deliver them in accordance with 
such instructions. No such conversion shall affect existing interests in 
such Enterprise Securities.
    (c) All requests for withdrawal of Eligible Book-entry Enterprise 
Securities must be made prior to the maturity or date of call of the 
securities.
    (d) Enterprise Securities which are to be delivered upon withdrawal 
may be issued in either registered or bearer form, to the extent 
permitted by the applicable Securities Documentation.



Sec. 1249.17  Waiver of regulations.

    The Director reserves the right, in the Director's discretion, to 
waive any provision(s) of this part in any case or class of cases for 
the convenience of an Enterprise, the United States, or in order to 
relieve any person(s) of unnecessary hardship, if such action is not 
inconsistent with law, does not adversely affect any substantial 
existing rights, and the Director is satisfied that such action will not 
subject an Enterprise or the United States to any substantial expense or 
liability.



Sec. 1249.18  Liability of Enterprises and Federal Reserve Banks.

    An Enterprise and the Federal Reserve Banks may rely on the 
information provided in a Transfer Message, and are not required to 
verify the information. An Enterprise and the Federal Reserve Banks 
shall not be liable for any action taken in accordance with the 
information set out in a Transfer Message, or evidence submitted in 
support thereof.



Sec. 1249.19  Additional provisions.

    (a) Additional requirements. In any case or any class of cases 
arising under

[[Page 253]]

this part, an Enterprise may require such additional evidence and a bond 
of indemnity, with or without surety, as may in the judgment of the 
Enterprise be necessary for the protection of the interests of the 
Enterprise.
    (b) Notice of attachment for Enterprise Securities in Book-entry 
System. 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. These regulations 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.



PART 1250_FLOOD INSURANCE--Table of Contents



Sec.
1250.1 Purpose.
1250.2 Procedural requirements.
1250.3 Civil money penalties.

    Authority: 12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note; 42 
U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and (10).

    Source: 74 FR 2349, Jan. 15, 2009, unless otherwise noted.



Sec. 1250.1  Purpose.

    The purpose of this part is to set forth the responsibilities of the 
Federal National Mortgage Association and the Federal Home Loan Mortgage 
Corporation (collectively, Enterprises) under the Flood Disaster 
Protection Act of 1973 (FDPA), as amended (42 U.S.C. 4002 et seq.) and 
the procedures to be used by the Federal Housing Finance Agency (FHFA) 
in any proceeding to assess civil money penalties against an Enterprise.



Sec. 1250.2  Procedural requirements.

    (a) Procedures. An Enterprise shall implement procedures reasonably 
designed to ensure for any loan that is secured by improved real estate 
or a mobile home located in an area that has been identified, at the 
time of the origination of the loan or at any time during the term of 
the loan, by the Director of the Federal Emergency Management Agency as 
an area having special flood hazards and in which flood insurance is 
available under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 
et seq.), as amended and purchased by the Enterprise, the building or 
mobile home and any personal property securing the loan is covered for 
the term of the loan by flood insurance in an amount at least equal to 
the lesser of the outstanding principal balance of the loan or the 
maximum limit of coverage made available with respect to the particular 
type of property under the National Flood Insurance Act of 1968, as 
amended.
    (b) Applicability. (1) Paragraph (a) of this section shall apply 
only with respect to any loan made, increased, extended, or renewed 
after September 22, 1995.
    (2) Paragraph (a) of this section shall not apply to any loan having 
an original outstanding balance of $5,000 or less and a repayment term 
of one year or less.



Sec. 1250.3  Civil money penalties.

    (a) In general. If an Enterprise is determined by the Director of 
FHFA, or his or her designee, to have a pattern or practice of 
purchasing loans in violation of the procedures established pursuant to 
Sec. 1250.2, the Director of FHFA, or his or her designee, may assess 
civil money penalties against such Enterprise in such amount or amounts 
as deemed to be appropriate under paragraph (c) of this section.
    (b) Notice and hearing. A civil money penalty under this section may 
be assessed only after notice and an opportunity for a hearing on the 
record has been provided to the Enterprise.
    (c) Amount. The maximum civil money penalty amount is $385 for each 
violation that occurs before the effective date of this part, with total 
penalties not to exceed $110,000. For violations that occur on or after 
the effective date of this part, the civil money penalty under this 
section may not exceed $485 for each violation, with total penalties 
assessed under this section against an Enterprise during any calendar 
year not to exceed $140,000.
    (d) Deposit of penalties. Any penalties under this section shall be 
paid into

[[Page 254]]

the National Flood Mitigation Fund in accordance with section 1367 of 
the National Flood Insurance Act of 1968 (42 U.S.C. 4104d.), as amended.
    (e) Additional penalties. Any penalty under this section shall be in 
addition to, and shall not preclude, any civil remedy, or criminal 
penalty otherwise available.
    (f) Statute of limitations. No civil money penalty may be imposed 
under this section after the expiration of the four-year period 
beginning on the date of the occurrence of the violation for which the 
penalty is authorized under this section.



PART 1252_PORTFOLIO HOLDINGS--Table of Contents



Sec.
1252.1 Enterprise portfolio holdings criteria.
1252.2 Effective duration.

    Authority: 12 U.S.C. 4624.

    Source: 74 FR 5618, Jan. 30, 2009, unless otherwise noted.



Sec. 1252.1  Enterprise portfolio holding criteria.

    The Enterprises are required to comply with the portfolio holdings 
criteria set forth in their respective Senior Preferred Stock Purchase 
Agreements with the Department of the Treasury, as they may be amended 
from time to time.



Sec. 1252.2  Effective duration.

    This part shall be in effect for each Enterprise so long as--
    (a) This part has not been superseded through amendment, and
    (b) The Enterprise remains subject to the terms and obligations of 
the respective Senior Preferred Stock Purchase Agreement.



PART 1253_PRIOR APPROVAL FOR ENTERPRISE PRODUCTS--Table of Contents



Sec.
1253.1 Purpose and authority.
1253.2 Definitions.
1253.3 Notice of new activity.
1253.4 New product approval.
1253.5 Confidential information.
1253.6 Certifying and nullifying an approval.
1253.7 Failure to comply.
1253.8 Availability of new product to an Enterprise after it has been 
          approved for the other Enterprise.
1253.9 Preservation of authority.

Appendix to Part 1253--Prior Approval for Enterprise Products: 
          Instructions and Notice of New Activity Form

    Authority: 12 U.S.C. 4526; 12 U.S.C. 4541.

    Source: 74 FR 31604, July 2, 2009, unless otherwise noted.



Sec. 1253.1  Purpose and authority.

    The purpose of this part is to establish policies and procedures 
implementing the prior approval authority for enterprise products, in 
accordance with section 1321 of the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (Safety and Soundness Act) 
(12 U.S.C. 4541), as amended.



Sec. 1253.2  Definitions.

    For purposes of this part:
    Authorizing statute means, in the case of Fannie Mae, the Federal 
National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) and, 
in the case of Freddie Mac, the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1451 et seq.).
    Director means the Director of the Federal Housing Finance Agency or 
his or her designee.
    Enterprise means the Federal National Mortgage Association (Fannie 
Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).
    FHFA means the Federal Housing Finance Agency.
    New activity means with respect to an Enterprise, any business line, 
business practice, or service, including guarantee, financial 
instrument, consulting, or marketing, that is proposed to be undertaken 
by the Enterprise either on a standalone basis or as an incident to 
providing one or more Enterprise products to the market, and which was--
    (a) Not initially engaged in prior to July 30, 2008;
    (b) Commenced by the Enterprise prior to July 30, 2008, but which, 
after July 30, 2008, the Enterprise ceased to engage in, and presently 
intends to resume; or

[[Page 255]]

    (c) Offered or engaged in by the Enterprise after July 30, 2008, at 
a significantly different level, or in a significantly different manner, 
in terms of the activity's effect on public interest or risk to the 
Enterprise or the mortgage finance or financial system.
    The term ``new activity'' does not include--
    (1) Any Enterprise business practice, transactions, or conduct 
performed solely as an incident to the administration of the 
Enterprise's internal affairs to conduct its business; or
    (2) Any business practice or service undertaken by an Enterprise 
that is de minimis in scope, volume, risk, or duration.
    New product means any activity that the Director determines merits 
public notice and comment on matters of compliance with the applicable 
authorizing statute, safety and soundness, or public interest. ``New 
product'' does not include--
    (a) The automated loan underwriting system of an Enterprise in 
existence as of July 30, 2008, including any upgrade to the technology, 
operating system, or software to operate the underwriting system;
    (b) Any modification to the mortgage terms and conditions or 
mortgage underwriting criteria relating to the mortgages that are 
purchased or guaranteed by the Enterprise, provided that such 
modifications do not alter the underlying transaction so as to include 
services or financing, other than residential mortgage financing;
    (c) Any activity that is substantially similar to the activities 
described in paragraphs (a) or (b) of this section;
    (d) Any activity that is substantially similar to an activity or 
product that has been approved in accordance with this part for either 
Enterprise; or
    (e) Any activity that is substantially similar to an activity or 
product continuously undertaken by the other Enterprise since prior to 
July 30, 2008.
    Substantially similar. In considering whether an activity is 
``substantially similar'' to any activity described in section 
1321(e)(1)(A) and (B) of the Safety and Soundness Act, 12 U.S.C. 
4541(e)(1)(A) and in paragraphs (a) or (b) of this section under the 
definition of new product, or to any activity approved in accordance 
with this part, or continuously engaged in by the other Enterprise as 
referenced in paragraphs (d) and (e) of this section under the 
definition of new product, the Director may consider if the activity in 
question--
    (1) Is a product;
    (2) Is authorized under the applicable authorizing statute;
    (3) Represents an upgrade to the way an approved product is 
delivered;
    (4) Poses a significant change in risk to the Enterprise or the 
mortgage finance system from a previously approved product or activity;
    (5) Involves a significant change in terms, conditions, or 
limitations expressly contained in any prior approval granted under this 
part;
    (6) Poses a significant change in its effect on the public interest 
compared to a previously approved product or activity;
    (7) Poses a significant change from a previously approved product or 
activity and if so, does a tradeoff exist in the composite of risk, 
public interest, and safety and soundness elements in the proposed new 
activity;
    (8) Is likely to have significantly more enterprise resources 
dedicated to it;
    (9) Requires approval by regulators other than FHFA, including 
Federal, State, or local regulators;
    (10) Involves new classes or types of borrowers, investors, or 
counterparties;
    (11) Involves new classes or types of collateral; or
    (12) Such other factor as the Director determines to be appropriate.



Sec. 1253.3  Notice of new activity.

    (a) Before commencing a new activity, an Enterprise must submit a 
Notice of New Activity (Notice) to the FHFA, and either receive a 
determination that the new activity is not a new product, await passage 
of the 15 business-day period as described in paragraph (d) of this 
section, or, where FHFA determines the new activity to be a new product, 
await approval of the new product under Sec. 1253.4. In addition, for 
any new activity that an Enterprise seeks to engage in which FHFA had 
previously approved in accordance with this part for the other 
Enterprise, or in

[[Page 256]]

which the other Enterprise had engaged continuously since prior to July 
30, 2008, the Enterprise must submit a Notice to FHFA. In support of its 
Notice, the Enterprise shall submit information sufficient to allow the 
Director to make a determination on the Notice pursuant to section 1321 
of the Safety and Soundness Act (12 U.S.C. 4541), as amended, including 
any information required by FHFA by regulation or otherwise. The 
Enterprise shall provide a thorough, meaningful, complete and specific 
description of the new activity such that the public will be able to 
provide fully informed comment on the new activity if FHFA determines 
the new activity to be a new product. Such information shall include 
that contained in the FHFA Notice Form and the Instructions for the FHFA 
Notice of New Activity Form (Notice Form Instructions) that appear in 
the appendix of this part. The Notice Form and Notice Form Instructions 
may be amended from time to time by written direction of the Director. 
Requests for confidential treatment for any portion of an Enterprise's 
submission must be made consistent with Sec. 1253.5.
    (b) FHFA will evaluate a Notice to establish whether the submission 
contains sufficient information for FHFA to make a determination whether 
the new activity is a new product subject to prior approval. Upon 
establishing that the Notice contains sufficient information, FHFA shall 
deem the submission complete and ``received'' for purposes of section 
1321(e)(2)(B) of the Safety and Soundness Act (12 U.S.C. 4541(e)(2)(B)), 
and shall notify the Enterprise accordingly.
    (c) No later than 15 business-days after the Notice is deemed 
completed and ``received'' for purposes of section 1321(e)(2)(B) of the 
Safety and Soundness Act (12 U.S.C. 4541(e)(2)(B)), the Director will 
make a written determination on the Notice, and shall notify the 
Enterprise accordingly. The Director may also approve the new activity 
subject to such terms, conditions, or limitations on the Enterprise's 
engagement in the new activity as the Director determines to be 
appropriate.
    (d) If the Director fails to make a determination within the 15 
business-day period specified in paragraph (c) of this section, the 
Enterprise may commence the new activity. The Director's failure to make 
a determination within the 15-day period does not limit or restrict the 
Director's safety and soundness authority or the authority of the 
Director to review the new activity to determine whether the activity is 
consistent with the statutory mission of the Enterprise.



Sec. 1253.4  New product approval.

    (a) Public notice. If the Director determines that the new activity 
is a new product, FHFA shall publish a public notice soliciting comments 
on the proposed product for a 30 calendar-day period.
    (1) The public notice will describe the new product and state the 
closing date of the public comment period. The public notice will 
provide instructions for submission of public comment.
    (2) The Director will consider all public comments received by the 
closing date of the comment period.
    (3) In computing the 30 calendar-day public comment period, FHFA 
excludes the day on which the public notice is published in the Federal 
Register, from which the period begins to run, and includes the last day 
of the period, regardless of whether it is a Saturday, Sunday, or legal 
holiday.
    (b) Director's determination. (1) No later than 30 calendar-days 
after the end of the public comment period, the Director will provide 
the Enterprise with a written determination on whether it may proceed 
with the new product. The written determination will specify the grounds 
for the Director's determination.
    (2) The Director will approve the new product if the Director 
determines that the new product complies with the applicable authorizing 
statute, is in the public interest, and is consistent with the safety 
and soundness of the Enterprise and the mortgage finance and financial 
system. The Enterprise may then offer the new product subject to any 
terms, conditions, or limitations as may be established by the Director.
    (3) Among the factors that the Director may consider when 
determining whether a new product is in the public interest are--

[[Page 257]]

    (i) The degree to which the new product might reasonably be expected 
to advance any of the purposes of the Enterprise under the applicable 
authorizing statute;
    (ii) The degree to which the new product serves underserved markets 
as set forth in section 1335 of the Safety and Soundness Act (12 U.S.C. 
4565);
    (iii) The degree to which the new product is being supplied or could 
be supplied by non-government-sponsored-enterprise firms;
    (iv) Other alternatives for providing the new product;
    (v) The degree to which the new product promotes competition in the 
marketplace or, to the contrary, would result in less competition and 
greater concentration of economic activity or risk;
    (vi) The degree to which Enterprise provision of the new product 
overcomes natural market barriers or inefficiencies;
    (vii) The degree to which Enterprise provision of the new product 
might raise or mitigate systemic risks to the mortgage, mortgage finance 
or other financial markets;
    (viii) The degree to which the new product furthers fair housing; 
and
    (ix) Such other factors determined appropriate by the Director.
    (4) The Director will disapprove the new product if the Director 
determines that approval is inconsistent with applicable law, 
regulation, or FHFA policy thereunder, or contrary to public interest or 
the safety and soundness of the Enterprise or the mortgage finance or 
financial system. If the Director disapproves the new product, the 
Enterprise may not offer the new product.
    (5) The Director may establish terms, conditions, or limitations on 
the Enterprise's offering of the new product to ensure that the product 
offering is consistent with applicable statutory and regulatory 
standards, FHFA policies, public interest, or the safety and soundness 
of the Enterprise or the mortgage finance or financial system.
    (6) If the Director fails to make a determination within the 30 
calendar-day period that begins on the day after the end of the public 
comment period, the Enterprise may offer the new product. The Director's 
failure to make a determination within such 30-day period does not limit 
or restrict the Director's safety and soundness authority or the 
authority of the Director to review the new product to determine that 
the product is consistent with the statutory mission of the Enterprise.
    (c) Temporary approval. (1) FHFA may approve a new product without 
first seeking public comments as described in Sec. 1253.4(c) if--
    (i) The Enterprise submits a specific request for Temporary Approval 
that describes the exigent circumstances that make the delay associated 
with the 30-day public comment period contrary to the public interest 
and the Director determines that exigent circumstances exist and that 
delay associated with first seeking public comment would be contrary to 
the public interest; or
    (ii) Notwithstanding the absence of a request by the Enterprise for 
Temporary Approval, the Director determines on his or her own initiative 
that there are exigent circumstances that make the delay associated with 
first seeking public comment contrary to the public interest.
    (2) The Director may impose terms, conditions, or limitations on the 
Temporary Approval to ensure that the new product offering is consistent 
with applicable statutory and regulatory standards, FHFA policies, 
public interest, and the safety and soundness of the Enterprise or the 
mortgage finance system.
    (3) If the Director grants Temporary Approval, the Director will 
notify the Enterprise in writing of the Director's decision, and include 
the period for which it is effective and any terms, conditions or 
limitations. Upon granting of Temporary Approval, FHFA will also publish 
the request for public comment to begin the process for permanent 
approval.
    (4) If the Director denies a request for Temporary Approval, the 
Director will notify the Enterprise in writing of the Director's 
decision, and will evaluate the new product in accordance with 
paragraphs (a) through (c) of this section.

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    (d) Additional information. The Director may request any information 
in addition to that supplied in the completed Notice if, as a result of 
public comment or otherwise in the course of considering the Notice, the 
Director believes that the information is necessary for his or her 
decision. The Director may disapprove a new product if he or she does 
not receive the information requested from the Enterprise in sufficient 
time to permit adequate evaluation of the information within the time 
periods set forth in paragraph (c) of this section.



Sec. 1253.5  Confidential information.

    (a) Information presumed public. FHFA will treat all information an 
Enterprise submits in a Notice as public information, except as provided 
in paragraphs (b) through (d) of this section. FHFA will also treat 
information provided by a commenter, in response to a notice requesting 
comment on an Enterprise new product, as public information, except as 
provided in paragraphs (b) through (d) of this section.
    (b) Confidential treatment request. An Enterprise or commenter may 
designate specific information as confidential and request that it not 
be made publicly available. For any information that an Enterprise or 
commenter seeks confidential treatment, the Enterprise or commenter is 
required to submit a complete copy of the Notice or comment, with a 
specific request for confidential treatment. Simultaneously, the 
Enterprise or commenter is required to submit a copy of the Notice or 
comment containing only those portions for which no request for 
confidential treatment is made, and from which those portions for which 
confidential treatment is requested have been redacted. The Enterprise 
or commenter must specify the bases for designated information not being 
made public as set forth in paragraph (c) of this section.
    (c) Required information. The Enterprise or commenter is required to 
provide the following information in support of its request for 
confidential treatment of the designated information--
    (1) Identification of the specific information for which 
confidential treatment is sought, and the specific Notice for which the 
information is being submitted;
    (2) Explanation of the bases for the proposed confidential treatment 
including, but not limited to, why the information is ``commercial or 
financial information obtained from a person and privileged or 
confidential'' as that phrase is used in Exemption 4 of the Freedom of 
Information Act (FOIA), 5 U.S.C. 552(b)(4), and Sec. 1202.4(a)(4) of 
this chapter;
    (3) Explanation of the relevance and necessity of the information to 
whether the Notice should be approved or denied;
    (4) Explanation of how disclosure of the information would result in 
substantial harm to the competitive position of the Enterprise or 
commenter;
    (5) Explanation of whether the information is available to the 
public and the extent of any previous disclosure to third parties;
    (6) Justification of the time period during which the Enterprise or 
commenter asserts that the material should not be available for public 
disclosure; and
    (7) Any other information that the Enterprise or commenter seeking 
confidential treatment believes may be useful in assessing whether its 
request for confidentiality should be granted.
    (d) FHFA determination. FHFA will determine whether the designated 
information may be withheld from public disclosure and will notify the 
Enterprise or commenter of the determination. In the event that FHFA 
determines the information may not be withheld from public disclosure, 
the Enterprise or commenter may withdraw the information or consent to 
public disclosure. Requests for confidential treatment that do not 
comply with paragraphs (b) and (c) of this section will not be 
considered.



Sec. 1253.6  Certifying and nullifying an approval.

    (a) An Enterprise shall certify, through an executive officer, as 
that term is defined by Sec. 1770.3(g) of this title, that any filing 
or supporting material submitted to FHFA pursuant to regulations in this 
part contains no

[[Page 259]]

material misrepresentations or omissions. FHFA may review and verify any 
information filed in connection with a Notice. If FHFA discovers a 
material misrepresentation or omission after the Director has rendered a 
decision on the filing, FHFA may nullify any approval or modify the 
terms, conditions, and limitations to such approval. For purposes of 
this paragraph, an Enterprise's authority to offer a new product or 
engage in a new activity by reason of the Director's not having made an 
explicit determination within the statutory time period constitutes an 
approval.
    (b) Any person responsible for any material misrepresentation or 
omission in a submission or supporting materials may be subject to 
enforcement action and other penalties, including criminal penalties 
provided in 18 U.S.C. 1001.



Sec. 1253.7  Failure to comply.

    (a) Unless the Director otherwise informs the Enterprise in writing, 
an Enterprise must cease offering a new product or engaging in a new 
activity immediately upon discovering or receiving notice from the 
Director that the Enterprise has--
    (1) Offered a new product or commenced a new activity without 
submitting a Notice;
    (2) Offered a new product or commenced a new activity after 
submitting a Notice but before approval is granted, and before the 
expiration of the time provided for the Director to make a determination 
under Sec. Sec. 1253.3 and 1253.4;
    (3) Offered a new product after the Director disapproved it; or
    (4) Failed to adhere to any terms, conditions or limitations 
established by the Director in his or her approval of a new product or 
activity.
    (b) Within five (5) business-days of the discovery or notice of any 
of the events described in paragraph (a) of this section, the Enterprise 
must provide the Director a written description of the failure or 
failures of controls that resulted in the offering of the new product or 
commencement of the new activity in contravention of this regulation, 
and the steps that the Enterprise has taken or will take to remediate 
the control failures. The Enterprise must provide the board of directors 
of the Enterprise and chief risk officer, internal audit, and compliance 
officer of the Enterprise with a copy of the written description on the 
same date the description is provided to the Director of FHFA.
    (c) In the event that the Enterprise elects to resubmit the Notice 
of a new product or new activity that was undertaken in contravention of 
this regulation, the resubmission must provide sufficient documentation 
of the effectiveness of the remediation efforts described in paragraph 
(b) of this section.
    (d) Failure to comply with paragraphs (a) or (b) of this section 
above may result in FHFA's taking enforcement action, including pursuant 
to 12 U.S.C. 4631 (orders to cease and desist), 12 U.S.C. 4632 
(temporary orders to cease and desist), and 12 U.S.C. 4636 (civil money 
penalties).



Sec. 1253.8  Availability of new product to an Enterprise after it has
been approved for the other Enterprise.

    (a) If the Director approves a new product for one Enterprise or the 
new product is otherwise available to that Enterprise under Sec. 
1253.4, the other Enterprise may also undertake that new product, 
subject to submitting a request to the Director in the form of a Notice 
under Sec. 1253.3 and approval by the Director.
    (b) The Director may require such further information from the 
requesting Enterprise as he or she deems necessary to approve or deny 
the request. Approving the request does not require public notice and 
comment.



Sec. 1253.9  Preservation of authority.

    (a) The Director's exercise of his or her authority pursuant to the 
prior approval authority for products under section 1321 of the Safety 
and Soundness Act (12 U.S.C. 4541), and this regulation and other 
issuances in no way restricts--
    (1) The safety and soundness authority of the Director over all new 
and existing products or activities; or
    (2) The authority of the Director to review all new and existing 
products or activities to determine that such products or activities are 
consistent with the statutory mission of an Enterprise.

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  Sec. Appendix to Part 1253--Prior Approval for Enterprise Products--
              Instructions and Notice of New Activity Form
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                  SUBCHAPTER D_FEDERAL HOME LOAN BANKS





PART 1261_FEDERAL HOME LOAN BANK DIRECTORS--Table of Contents



                          Subpart A_Definitions

1261.1 Definitions.

 Subpart B_Federal Home Loan Bank Boards of Directors: Eligibility and 
                                Elections

Sec.
1261.2 Definitions.
1261.3 General provisions.
1261.4 Designation of member directorships.
1261.5 Director eligibility.
1261.6 Determination of member votes.
1261.7 Nominations for member and independent directorships.
1261.8 Election process.
1261.9 Actions affecting director elections.
1261.10 Independent director conflict of interests.
1261.11 Conflict-of-interests policy for Bank directors.
1261.12 Reporting requirements for Bank directors.
1261.13 Ineligible Bank directors.
1261.14 Vacant Bank directorships.
1261.15 Minimum number of member directorships.
1261.16 [Reserved]

  Subpart C_Federal Home Loan Bank Directors' Compensation and Expenses

1261.20 Definitions.
1261.21 General.
1261.22 Directors' compensation policy.
1261.23 Director disapproval.
1261.24 Board meetings.

Subpart D [Reserved]

    Authority: 12 U.S.C. 1426, 1427, 1432, 4511 and 4526.

    Source: 73 FR 55715, Sept. 26, 2008, unless otherwise noted.



                          Subpart A_Definitions

    Source: 75 FR 17039, May 5, 2010, unless otherwise noted.



Sec. 1261.1  Definitions.

    As used in this part:
    Bank written in title case means a Federal Home Loan Bank 
established under section 12 of the Bank Act (12 U.S.C. 1432).
    Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 
1421 through 1449).
    Director means the Director of the Federal Housing Finance Agency.
    FHFA means Federal Housing Finance Agency.



 Subpart B_Federal Home Loan Bank Boards of Directors: Eligibility and 
                                Elections



Sec. 1261.2  Definitions.

    As used in this Subpart B:
    Bona fide resident of a Bank district means an individual who:
    (1) Maintains a principal residence in the Bank district; or
    (2) If serving as an independent director, owns or leases in his or 
her own name a residence in the Bank district and is employed in a 
voting state in the Bank district.
    FHFA ID number means the number assigned to a member by FHFA and 
used by FHFA and the Banks to identify a particular member.
    Independent directorship means a directorship, as defined by section 
7(a)(4)(A) of the Bank Act, 12 U.S.C. 1427(a)(4)(A), that is filled by a 
plurality vote of the members at large by an individual having the 
qualifications specified by section 7(a)(3)(B)(i) or (ii), 12 U.S.C. 
1427(a)(3)(B)(i) or (ii).
    Member directorship means a directorship, as defined by section 
7(a)(4)(A) of the Bank Act, 12 U.S.C. 1427(a)(4)(A), that is filled by a 
plurality vote of the members located in a particular State by an 
individual who is an officer or director of a member located in that 
State, and includes guaranteed directorships and stock directorships.
    Method of equal proportions means the mathematical formula used by 
FHFA to allocate member directorships among the States in a Bank's 
district based on the relative amounts of Bank stock required to be held 
as of the record date by members located in each State.
    Public interest director means an individual serving in a public 
interest directorship.

[[Page 270]]

    Public interest directorship means an independent directorship 
filled by an individual with more than four years experience 
representing consumer or community interests in banking services, credit 
needs, housing or consumer financial protections.
    Record date means December 31 of the calendar year immediately 
preceding the election year.
    Stock directorship means a member directorship that is designated by 
FHFA as representing the members located in a particular voting State 
based on the amount of Bank stock required to be held by the members in 
that State as of the record date, other than a guaranteed directorship.
    Voting State means the District of Columbia, Puerto Rico, or the 
State of the United States in which a member's principal place of 
business, as determined in accordance with 12 CFR part 1263, or any 
successor provision, is located as of the record date. The voting State 
of a member with a principal place of business located in the U.S. 
Virgin Islands as of the record date is Puerto Rico, and the voting 
State of a member with a principal place of business located in American 
Samoa, Guam, or the Commonwealth of the Northern Mariana Islands as of 
the record date is Hawaii.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010]



Sec. 1261.3  General provisions.

    (a) Board size and composition. Annually, the FHFA Director will 
determine the size of the board of directors for each Bank and will 
designate at least a majority, but no more than 60 percent, of the 
directorships as member directorships and the remainder as independent 
directorships. Annually, the board of directors of each Bank shall 
determine how many, if any, of the independent directorships with terms 
beginning the following January 1 shall be public interest 
directorships, ensuring that at all times the Bank will have at least 
two public interest independent directorships.
    (b) Term of directorships. The term of office of each directorship 
commencing on or after January 1, 2009 shall be four years, except as 
adjusted pursuant to section 7(d) of the Bank Act (12 U.S.C 1427(d)) to 
achieve a staggered board, and shall commence on January 1 of the 
calendar year so designated by FHFA.
    (c) Annual elections. Each Bank annually shall conduct an election 
the purpose of which is to fill all directorships designated by FHFA as 
commencing on January 1 of the calendar year immediately following the 
year in which such election is commenced. Subject to the provisions of 
the Bank Act and in accordance with the requirements of this subpart, 
the disinterested members of the board of directors of each Bank, or a 
committee of disinterested directors, shall administer and conduct the 
annual election of directors. In so doing, the disinterested directors 
may use Bank staff or independent contractors to perform ministerial and 
administrative functions concerning the elections process.
    (d) Location of members. In accordance with section 7(c) of the Bank 
Act (12 U.S.C 1427(c)), for purposes of the election of member 
directors, a member is deemed to be located in its voting state, unless 
otherwise designated by the Director.
    (e) Dates. If any date specified in this part for action by a Bank, 
or specified by a Bank pursuant to this part, falls on a Saturday, 
Sunday, or Federal holiday, the relevant time period is deemed to be 
extended to the next calendar day that is not a Saturday, Sunday, or 
Federal holiday.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. 
Redesignated at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.4  Designation of member directorships.

    (a) Determination of voting stock. (1) On or before April 10 of each 
year, each Bank shall deliver to FHFA a capital stock report that 
indicates, as of the record date, the number of members located in each 
voting State in the Bank's district, the number of shares of Bank stock 
that each member (identified by its FHFA ID number) was required to 
hold, and the number of shares of Bank stock that all members located in 
each voting State were required to hold. If a Bank has issued more than 
one class of stock, it shall

[[Page 271]]

report the total shares of stock of all classes required to be held by 
the members. The Bank shall certify to FHFA that, to the best of its 
knowledge, the information provided in the capital stock report is 
accurate and complete, and that it has notified each member of its 
minimum capital stock holding requirement as of the record date.
    (2) If a Bank's capital plan was not in effect as of the record 
date, the number of shares of Bank stock that any member was required to 
hold as of the record date shall be determined in accordance with 
Sec. Sec. 1263.20 and 1263.22 of this chapter. If a Bank's capital plan 
was in effect as of the record date, the number of shares of Bank stock 
that any member was required to hold as of the record date shall be 
determined in accordance with the minimum investment established by the 
capital plan for that Bank; however, for any member whose Bank stock is 
less than the minimum investment during a transition period, the amount 
of Bank stock to be reported shall be the number of shares of Bank stock 
actually owned by the member as of the record date.
    (b) Designation of member directorships as stock directorships. 
Using the method of equal proportions, the Director annually will 
conduct a designation of member directorships for each Bank based on the 
number of shares of Bank stock required to be held by the members in 
each State as of December 31 of the preceding calendar year. If a Bank 
has issued more than one class of stock, the Director will designate the 
directorships for each State in that Bank district based on the combined 
number of shares required to be held by the members in that State. For 
purposes of conducting the designation, if a Bank's capital plan was not 
in effect on the immediately preceding December 31, the number of shares 
of Bank stock required to be held by members as of that date shall be 
determined in accordance with Sec. Sec. 1263.20 and 1263.22 of this 
chapter. If a Bank's capital plan was in effect on the immediately 
preceding December 31, the number of shares of Bank stock required to be 
held by members as of that date shall be determined in accordance with 
the minimum investment established by such capital plan; however, for 
any members whose Bank stock is less than the minimum investment during 
a transition period, the amount of stock to be used in the designation 
of directorships shall be the number of shares of Bank stock actually 
owned by those members as of that December 31. In all cases, the 
Director will designate the directorships by using the information 
provided by each Bank in its capital stock report required by paragraph 
(a)(1) of this section.
    (c) Allocation of directorships. The member directorships designated 
by the Director will be allocated among the States by the Director in 
accordance with section 7(b) and (c) of the Bank Act.
    (d) Notification. On or before June 1 of each year, FHFA will notify 
each Bank in writing of the total number of directorships established 
for the Bank and the number of member directorships designated as 
representing the members in each voting state in the Bank district.
    (e) Change of state. If the annual designation of member 
directorships results in an existing directorship being redesignated as 
representing members in a different State, that directorship shall be 
deemed to terminate in the previous State as of December 31 of that 
year, and a new directorship to begin in the succeeding State as of 
January 1 of the next year. The new directorship shall be filled by vote 
of the members in the succeeding State and, in order to maintain the 
staggered terms of directorships, shall be adjusted to a term equal to 
the remaining term of the previous directorship if it had not been 
redesignated to another State.

[74 FR 51460, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, 
17040, Apr. 5, 2010]



Sec. 1261.5  Director eligibility.

    (a) Eligibility requirements for member directors. Each member 
director, and each nominee to a member directorship, shall be:
    (1) A citizen of the United States; and
    (2) An officer or director of a member that is located in the 
district in which the Bank is located and that meets all

[[Page 272]]

minimum capital requirements established by its appropriate Federal 
banking agency or appropriate State regulator. In the case of a director 
elected by the members, the institution of which the director is an 
officer or director must have been a member as of the record date. In 
the case of a director elected by a Bank's board of directors to fill a 
vacancy, the institution of which the director is an officer or director 
must be a member at the time the board acts.
    (b) State designation for member directors. Each member director, 
and each nominee to a member directorship, shall be an officer or 
director of a member that is located in the State to which the Director 
has allocated such directorship under Sec. 1261.4(c)..
    (c) Eligibility requirements for independent directors. Each 
independent director, and each nominee to an independent directorship, 
shall be:
    (1) A citizen of the United States; and
    (2) A bona fide resident of the district in which the Bank is 
located.
    (d) Restrictions. (1) A nominee is not eligible if he or she:
    (i) Is an incumbent director, unless:
    (A) The incumbent director's term of office would expire before the 
new term of office would begin; and
    (B) The new term of office would not be barred by the term limit 
provision of section 7(d) of the Bank Act (12 U.S.C. 1427(d)); or
    (ii) Is a former director whose service would be barred by the term 
limit provision of section 7(d) of the Bank Act.
    (2) For purposes of applying the term limit provision of section 
7(d) of the Bank Act (12 U.S.C. 1427(d)):
    (i) A term of office that is adjusted after July 30, 2008 to a 
period of fewer than four years shall not be deemed to be a full term;
    (ii) Any member director's election and service to a directorship 
with a three year term of office prior to July 30, 2008 shall be deemed 
to be a full term;
    (iii) Any three-year term of office that ends immediately before a 
term of office that is adjusted after July 30, 2008 to a period of fewer 
than four years, and any term of office commencing immediately following 
such adjusted term of office, shall constitute consecutive full terms of 
office; and
    (iv) Any period of time served by a director who has been elected by 
the board of directors to fill a vacancy shall not be deemed to 
constitute a full term.
    (e) Loss of eligibility. A director shall become ineligible to 
remain in office if, during his or her term of office, the directorship 
to which he or she has been elected is eliminated. The incumbent 
director shall become ineligible after the close of business on December 
31 of the year in which the directorship is eliminated.
    (2) In the case of a redesignation to another State, the 
redesignated directorship shall be filled by a majority vote of the 
remaining Bank directors, in accordance with Sec. 1261.14(a).

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009; 
75 FR 17039, 17040, Apr. 5, 2010.]



Sec. 1261.6  Determination of member votes.

    (a) In general. Each Bank shall determine, in accordance with this 
section, the number of votes that each member of the Bank may cast for 
each directorship that is to be filled by the vote of the members.
    (b) Number of votes. For each member directorship and each 
independent directorship that is to be filled in an election, each 
member shall be entitled to cast one vote for each share of Bank stock 
that the member was required to hold as of the record date. 
Notwithstanding the preceding sentence, the number of votes that any 
member may cast for any one directorship shall not exceed the average 
number of shares of Bank stock required to be held as of the record date 
by all members located in the same State as of the record date. If a 
Bank has issued more than one class of stock, it shall calculate the 
average number of shares separately for each class of stock, using the 
total number of members in a State as the denominator, and shall apply 
those limits separately in determining the maximum number of votes that 
any member owning that class of stock may cast in the election. If a 
Bank's capital plan was not in effect as of the record date, the number 
of shares of

[[Page 273]]

Bank stock that a member was required to hold as of the record date 
shall be determined in accordance with Sec. Sec. 1263.20 and 1263.22 of 
this chapter. If a Bank's capital plan was in effect as of the record 
date, the number of shares of Bank stock that a member was required to 
hold as of the record date shall be determined in accordance with the 
minimum investment requirement established by the Bank's capital plan; 
however, for any member whose Bank stock is less than the minimum 
investment during a transition period, the amount of Bank stock to be 
used shall be the number of shares of Bank stock actually owned by the 
member as of the record date.
    (c) Voting preferences. If the board of directors of a Bank includes 
any voting preferences as part of its approved capital plan, those 
preferences shall supersede the provisions of paragraph (b) of this 
section that otherwise would allow a member to cast one vote for each 
share of Bank stock it was required to hold as of the record date. If a 
Bank establishes a voting preference for a class of stock, the members 
with voting rights shall remain subject to the provisions of section 
7(b) of the Bank Act (12 U.S.C. 1427(b)) that prohibit any member from 
casting any vote in excess of the average number of shares of stock 
required to be held by all members in its state.

[73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009. 
Redesignated and amended at 75 FR 17039, Apr. 5, 2010]



Sec. 1261.7  Nominations for member and independent directorships.

    (a) Election announcement. (1) Within a reasonable time in advance 
of an election, a Bank shall notify each member in its district of the 
commencement of the election process. Such notice shall include:
    (1) The number of member directorships designated for each voting 
state in the Bank district and the number of independent directorships 
for the Bank;
    (2) The name of each incumbent Bank director, the name and location 
of the member at which each member director serves, and the name and 
location of the organization with which each independent director is 
affiliated, if any, and the expiration date of each Bank director's term 
of office;
    (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. 1261.9 and the Bank has elected to provide the 
results of the assessment to the members;
    (4) An attachment indicating the name, location, and FHFA 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 by such 
members, as determined in accordance with Sec. 1261.6; and
    (5) If a member directorship is to be filled by members in a State, 
a nominating certificate for those members.
    (b) Member directorship nominations. (1) Any member that is entitled 
to vote in the election may nominate an eligible individual to fill each 
available member directorship for its voting state by delivering to its 
Bank, prior to a deadline to be established by the Bank and set forth in 
the notice required in paragraph (a) of this section, a nominating 
certificate duly adopted by the member's governing body or by an 
individual authorized by the member's governing body to act on its 
behalf.
    (2) The nominating certificate shall include the name of the nominee 
and the name, location, and FHFA ID number of the member the nominee 
serves as an officer or director.
    (3) The Bank shall establish a deadline for delivery of nominating 
certificates, which shall be no earlier than 30 calendar days after the 
date on which the Bank delivers the notice required by paragraph (a) of 
this section, and the Bank shall not accept certificates received after 
that deadline. The Bank shall retain all accepted nominating 
certificates for at least two years after the date of the election.
    (c) Accepting member directorship nominations. Promptly after 
receipt of any nominating certificate, a Bank shall notify in writing 
any individual nominated for a member directorship. An individual may 
accept the nomination only by delivering to the Bank, prior to

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a deadline established by the Bank and set forth in its notice, an 
executed director eligibility certification form prescribed by FHFA. A 
Bank shall allow each nominee at least 30 calendar days after the date 
the Bank delivered the notice of nomination within which to deliver the 
executed form. A nominee may decline the nomination by so advising the 
Bank in writing, or by failing to deliver a properly executed director 
eligibility certification form prior to the deadline. Each Bank shall 
retain all information received under this paragraph for at least two 
years after the date of the election.
    (d) Independent directorship nominations. (1) Any individual who 
seeks to be an independent director of the board of directors of a Bank 
may deliver to the Bank, on or before the deadline set by the Bank for 
delivery of nominating certificates, an executed independent director 
application form prescribed by FHFA that demonstrates that the 
individual both is eligible and has either of the following 
qualifications:
    (i) More than four years experience representing consumer or 
community interests in banking services, credit needs, housing, or 
consumer financial protections; or
    (ii) Knowledge of or experience in one or more of the areas set 
forth in paragraph (e) of this section.
    (2) Any other interested party may recommend to the Bank that it 
consider a particular individual as a nominee for an independent 
directorship, but the Bank shall not nominate any individual unless the 
individual has delivered to the Bank, on or before the date the Bank has 
set for delivery of nominating certificates, an executed independent 
director application form prescribed by FHFA. The application form 
prescribed by FHFA will provide a means by which an individual can 
indicate an intent to be considered for a public interest directorship. 
The board of directors of the Bank may consider any individual for any 
independent directorship nomination, provided it has determined that the 
individual is eligible and qualified, but the board shall nominate for a 
public interest directorship only an individual who indicates on the 
application form a desire to be considered for a public interest 
directorship. The board of directors of the Bank shall consult with the 
Bank's Advisory Council before nominating any individual for any 
independent directorship. Each Bank shall include in its bylaws the 
procedures it intends to use for the nomination and election of the 
independent directors, and shall retain all information received under 
this paragraph for at least two years after the date of the election.
    (3) Each Bank shall determine the number of public interest 
directorships to be included among its authorized independent 
directorships, provided that each Bank shall at all times have at least 
two such directorships, and shall announce that number to its members in 
the notice required by paragraph (a) of this section. In submitting 
nominations to its members, each Bank shall nominate at least as many 
individuals as there are independent directorships to be filled in that 
year's election.
    (e) Independent director qualifications. (1) Each independent 
director and each nominee for an independent directorship, other than a 
public interest directorship, shall have experience in, or knowledge of, 
one or more of the following areas: auditing and accounting, 
derivatives, financial management, organizational management, project 
development, risk management practices, and the law. Before nominating 
any individual for an independent directorship, other than a public 
interest directorship, the board of directors of a Bank shall determine 
that such knowledge or experience of the nominee is commensurate with 
that needed to oversee a financial institution with a size and 
complexity that is comparable to that of the Bank.
    (2) Each public interest independent director and each nominee for a 
public interest directorship shall have more than four years experience 
representing consumer or community interests in banking services, credit 
needs, housing or consumer financial protection.
    (f) Eligibil