[Federal Register Volume 60, Number 244 (Wednesday, December 20, 1995)]
[Rules and Regulations]
[Pages 65515-65516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30517]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 934
[No. 95-74]
Repeal of the Charitable Contribution Limitation Regulation
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) has
determined that the making of charitable donations is within the
corporate power of the Federal Home Loan Banks (FHLBanks) and that
issues of safety and soundness to which excessive donations might give
rise can be adequately addressed through the Finance Board's FHLBank
examination process. Therefore, the Finance Board is repealing the
regulation that requires that FHLBanks obtain the approval of the Board
of Directors of the Finance Board before making charitable donations in
excess of $5,000 to one organization, or $25,000 total, during one
calendar year. The repeal of this regulation is intended to allow the
FHLBanks to use their own discretion in making such donations, subject
only to the Finance Board's power to enforce standards of safety and
soundness in FHLBank operations. This result is in keeping with the
Finance Board's continuing effort to devolve corporate governance
authority to the FHLBanks.
EFFECTIVE DATE: December 20, 1995.
FOR FURTHER INFORMATION CONTACT: Ellen E. Hancock, Assistant Director,
Office of Policy and Financial Reporting, (202) 408-2906, or Janice A.
Kaye, Attorney-Advisor, Office of General Counsel, (202) 408-2505,
Federal Housing Finance Board, 1777 F Street NW., Washington, D.C.
20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Section 934.11 of the Finance Board's regulations requires prior
approval of the Board of Directors of the Finance Board, or its
designee, for charitable contributions by a FHLBank that exceed $5,000
to one organization, or $25,000 in total during a calendar year. 12 CFR
934.11. As a result of an ongoing internal review of its regulations,
the Finance Board, for the reasons set forth below, has determined that
this regulation is unnecessary. Accordingly, the Finance Board is
repealing section 934.11.
The substance of section 934.11 originally appeared at section
524.11 of the regulations of the Finance Board's predecessor, the
Federal Home Loan Bank Board (FHLBB). In 1959, the FHLBB promulgated a
regulation prohibiting the FHLBanks from making charitable donations.
See 12 CFR 524.11 (1959) (amended). The FHLBB had determined that a
FHLBank did not have the legal authority to make charitable donations
and, further, wanted to prevent FHLBanks from favoring some communities
in their districts over others.
In 1975, the FHLBB reconsidered its position and concluded that
charitable donations, within reasonable limits, would further the
corporate interests of the FHLBanks. See 40 FR 46302 (Oct. 7, 1975).
Therefore, the FHLBB amended
[[Page 65516]]
section 524.11 to permit a FHLBank, with the approval of its board of
directors, to make charitable donations not exceeding $1,000 to one
organization, or $5,000 in total in a calendar year. See 12 CFR 524.11
(1976) (amended). Exceptions to these annual limits required prior
approval of the FHLBB's Office of District Banks. Id.
Recognizing the effects of inflation on the dollar limits it had
set in 1975, the FHLBB in 1987 raised the annual limit on individual
donations to $5,000 and on aggregate donations to $25,000. See 52 FR
49381 (Dec. 31, 1987).
With the dissolution of the FHLBB and the establishment of the
Finance Board in 1989, see Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, Public Law 101-73, Sec. 401, 103 Stat. 183
(Aug. 9, 1989) (codified at 12 U.S.C. 1437 note), section 524.11 was
redesignated as section 934.11 of the Finance Board's regulations. See
54 FR 36759 (Sept. 5, 1989). In 1990, the Finance Board amended section
934.11 to require prior approval of the Board of Directors of the
Finance Board, or its designee, for exceptions to the annual dollar
limitations on FHLBank charitable donations. See 55 FR 2229 (Jan. 23,
1990). Since that time, the Finance Board has routinely approved
requests from the FHLBanks for exceptions to the annual charitable
donations limitation.
II.-Analysis of the Proposed Rule
The Finance Board has determined that the general corporate powers
granted to the FHLBanks pursuant to section 12(a) of the Federal Home
Loan Bank Act (Bank Act), see 12 U.S.C. 1432(a), include the power to
make charitable donations. Section 12(a) provides that each FHLBank
``shall have all such incidental powers, not inconsistent with the
provisions of this chapter, as are customary and usual in corporations
generally.'' Id. Under the statutes and common law of most states,
corporations generally enjoy the power to make donations for
charitable, scientific, or educational purposes. See 18B Am. Jur. 2d
Corporations Section 2902 (1985). Corporations may support charities
important to the welfare of the communities in which they do business.
Id. Thus, the FHLBanks have statutory authority to make donations to
charities in the communities they serve as a ``customary and usual''
corporate power. See id.; 12 U.S.C. 1432(a). There is no statutory
provision that otherwise would require Finance Board approval of such
donations.
Because the FHLBanks have authority under the Bank Act to make
charitable donations and because the Bank Act and the regulations do
not otherwise address the issue, repeal of section 934.11 of the
Finance Board's regulations would not prevent the FHLBanks from making
such donations. In addition, the repeal of section 934.11 would not
affect Finance Board oversight of FHLBank charitable donations. The
FHLBank's statutory authority to make charitable donations still would
be subject to standards of reasonableness and financial safety and
soundness enforced by the Finance Board, as well as any other
limitations the Finance Board may decide to impose. See 12 U.S.C.
1422a(a)(3), 1422b(a)(1), 1432(a).
The Finance Board and the FHLBanks have been considering ways to
transfer a variety of governance responsibilities from the Finance
Board to the FHLBanks since the completion of studies required by the
Housing and Community Development Act of 1992, Pub. L. No. 102-550, 106
Stat. 3672 (Oct. 28, 1992), which concluded that the FHLBanks should be
allowed broad discretion to manage their corporate affairs as long as
they comply with the Bank Act and Finance Board regulations. Finance
Board and FHLBank staff have identified approval of all charitable
donations as one of the governance responsibilities that should be
devolved from the Finance Board to the FHLBanks. Repeal of section
934.11 would effect the devolution of this authority.
Repeal of section 934.11 of the Finance Board's regulations also
will be consistent with the goal of the Vice President's National
Performance Review to reduce the total number of regulations of
executive agencies. See Report of the National Performance Review 32-33
(Sept. 17, 1993); E.O. 12,861, 58 FR 48255 (Sept. 14, 1993).
For the foregoing reasons, the Finance Board has determined that
section 934.11 of its regulations is no longer necessary. Accordingly,
the Finance Board has decided to repeal section 934.11 of its
regulations, pursuant to its general rulemaking authority under section
2B(a)(1) of the Bank Act. See 12 U.S.C. 1422b(a)(1).
III. Administrative Procedure Act
Because this final rule merely repeals a provision of the Finance
Board's regulations that is burdensome to the FHLBanks and will have no
adverse affect on the public, the Finance Board, for good cause, finds
that the notice and public comment procedure is unnecessary in this
instance. Therefore, for good cause shown under 5 U.S.C. 553(b)(B),
this rule is exempt from the notice and comment requirements of the
Administrative Procedure Act, as well as from the 30-day delay in the
effective date under 5 U.S.C. 553(d)(3).
IV. Regulatory Flexibility Act
Because this final rule repeals a restrictive provision of the
Board's regulations, it will not impose any regulatory requirements on
small entities. Therefore, in accordance with the provisions of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., the Finance Board
hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Id. section
605(b).
List of Subjects in 12 CFR Part 934
Federal home loan banks, securities, surety bonds.
Accordingly, the Federal Housing Finance Board hereby amends
Chapter IX, Title 12, Code of Federal Regulations, as set forth below.
PART 934-OPERATIONS OF THE BANKS
1.-The authority citation for Part 934 is revised to read as
follows:
Authority: 12 U.S.C. 1422b, 1442.
Sec. 934.11 [Removed]
2.Section 934.11 is removed.
Secs. 934.12 through 934.15 [Redesignated as Secs. 934.11 through
934.14]
3.Sections 934.12 through 934.15 are redesignated as Secs. 934.11
through 934.14, respectively.
Dated: December 8, 1995.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 95-30517 Filed 12-19-95; 8:45 am]
BILLING CODE 6725-01-U