[Federal Register Volume 61, Number 227 (Friday, November 22, 1996)]
[Rules and Regulations]
[Pages 59311-59315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29748]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 950
[No. 96-80]
Revision of Financing Corporation Operations Regulation
AGENCY: Federal Housing Finance Board.
ACTION: Interim final rule with request for comments.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
its regulation on Financing Corporation (FICO) operations to comply
with new statutory requirements and to eliminate provisions that have
been rendered obsolete by statutory changes. The interim final rule is
consistent with the goals of the Regulatory Reinvention Initiative of
the National Performance Review.
DATES: The interim final rule will become effective on November 22,
1996. The Finance Board will accept comments on the interim final rule
in writing on or before December 23, 1996.
ADDRESSES: Mail comments to Elaine L. Baker, Executive Secretary,
Federal Housing Finance Board, 1777 F Street, N.W., Washington, D.C.
20006. Comments will be available for public inspection at this
address.
FOR FURTHER INFORMATION CONTACT: Christine M. Freidel, Assistant
Director, Financial Management Division, Office of Policy, 202/408-
2976, or Janice A. Kaye, Attorney-Advisor, Office of General Counsel,
202/408-2505, Federal Housing Finance Board, 1777 F Street, N.W.,
Washington, D.C. 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
A. FICO Obligations
The Federal Savings and Loan Insurance Corporation (FSLIC)
Recapitalization Act of 1987 amended the Federal Home Loan Bank Act
(Bank Act) by adding a new section 21 directing the establishment of
FICO. See Public Law 100-86, Title III, section 302, 101 Stat. 585
(Aug. 10, 1987), codified at 12 U.S.C. 1441. On August 28, 1987, the
Finance Board's predecessor, the former Federal Home Loan Bank Board
(FHLBB), chartered FICO to recapitalize the former FSLIC. To raise
funds for that purpose, Congress authorized FICO to issue up to $10.825
billion in public debt. See 12 U.S.C. 1441(e)(1) (1987) (superseded).
From 1987 to 1989, FICO issued $8.17 billion in 30-year obligations,
the proceeds of which were used to resolve failed savings associations.
Congress terminated FICO's debt issuance authority in 1991, effectively
capping FICO's borrowings at the then outstanding $8.17 billion in
obligations.\1\
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\1\ See Pub. L. 102-233, Title I, section 104, 105 Stat. 1762
(Dec. 12, 1991), codified at 12 U.S.C. 1441(e)(2). Fifteen percent
of the outstanding FICO bond principal matures in the year 2017, 57
percent matures in 2018, and the remaining 28 percent matures in
2019. See General Accounting Office, Deposit Insurance Funds Report,
11 n.5 (Mar. 1995).
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To assure repayment of the $8.17 billion principal amount of the
FICO obligations, section 21(g)(2) of the Bank Act requires FICO to
invest in, and hold in a segregated account, certain enumerated
securities that will have a principal amount payable at maturity
approximately equal to the aggregate amount of principal on the FICO
obligations. See 12 U.S.C. 1441(g)(2). Accordingly, the principal on
FICO bonds was defeased by using Federal Home Loan Bank (FHLBank)
retained earnings to purchase 30-year zero coupon United States
Treasury securities that have a face value sufficient to retire the
FICO bonds at maturity. These securities currently are held in a
segregated account at the Federal Reserve Bank of New York.
B. FICO Expenses
Pursuant to section 21 of the Bank Act, FICO may incur two
categories of expenses: (1) administrative expenses, which include
general office and operating expenses, and (2) non-administrative
expenses, which include the almost $800 million in interest due each
year until maturity of the last FICO obligation, issuance costs, and
custodian fees. See id. 1441(b)(7), (f)(2), (g)(5). The FHLBanks pay
FICO's administrative expenses in accordance with a statutory formula
based on the percentage of FICO stock held by each FHLBank. See id.
1441(b)(7).
There are four statutory sources of funds to pay FICO's non-
administrative expenses. Under section 21(f)(1) of the Bank Act, FICO
has authority to use assessments previously assessed against insured
institutions (i.e., FSLIC-insured thrifts) under the special assessment
provisions that were in effect prior to enactment of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). See
id. 1441(f)(1), 1441(f) (1987 superseded); Public Law 101-73, Title V,
section 512(13), 103 Stat. 406 (Aug. 9, 1989). Funds from this source
have been exhausted and are no longer available.
To the extent pre-FIRREA assessments are insufficient to cover
FICO's non-administrative expenses, under section 21(f)(2) of the Bank
Act, FICO has first priority to impose and collect assessments against
each Savings Association Insurance Fund (SAIF) member that is a savings
association. See 12 U.S.C. 1441(f)(2) (1996). FICO's assessment
authority is subject to the approval of the Board of Directors of the
Federal Deposit Insurance Corporation (FDIC), and must be made in the
same manner as assessments are made by the FDIC. Id. To date, FICO's
assessments on SAIF member savings associations have been the major or
sole source of revenue to pay FICO's non-administrative expenses, i.e.,
FICO's interest, issuance, and custodial costs.
Effective January 1, 1997, the Deposit Insurance Funds Act of 1996
(Funds Act) amends FICO's assessment authority under section 21(f)(2)
of the Bank Act. See Public Law 104-208, Title II, Subtitle G, 110
Stat. 3009 (Sept. 30, 1996). Section 2702 of the Funds Act eliminates
the provision granting FICO first priority to make assessments and
changes FICO's assessment base from all SAIF member savings
associations to all depository institutions insured by the FDIC. See 12
U.S.C. 1441(f)(2) (1997). Beginning with the first assessment in 1997,
FICO has authority, with the approval of the Board of Directors of the
FDIC, to assess all insured depository institutions to cover the
interest payments due on FICO obligations and FICO's issuance costs and
custodian fees. Id. However, until the earlier of
[[Page 59312]]
December 31, 1999 or the date on which the last savings association
ceases to exist, the assessment rate FICO imposes on an insured
depository institution with respect to any BIF-assessable deposits must
be 1/5 of the assessment rate FICO imposes on an insured depository
institution with respect to any SAIF-assessable deposits. Id.
1441(f)(2)(A). For purposes of the FICO assessment, the term ``BIF-
assessable deposit'' means a deposit that is subject to assessment for
purposes of the Bank Insurance Fund (BIF) under the Federal Deposit
Insurance Act (FDI Act), including a deposit that is treated as a BIF-
insured deposit under section 5(d)(3) of the FDI Act, and the term
``SAIF-assessable deposit'' means a deposit that is subject to
assessment for purposes of the SAIF under the FDI Act, including a
deposit that is treated as a SAIF-insured deposit under section 5(d)(3)
of the FDI Act.\2\ Absent statutory changes or unforeseen fluctuations
in the assessment base, FICO anticipates that assessments on insured
depository institutions will provide sufficient funds to pay its non-
administrative expenses.
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\2\ See id. 1441(f)(4); Funds Act section 2710. Section 5(d)(3)
of the FDI Act attributes to BIF or SAIF the deposits of an insured
depository institution that has undergone a conversion transaction
by which it switched deposit insurance funds. See 12 U.S.C.
1815(d)(3).
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However, if funds available from pre-FIRREA assessments and
assessments on all insured depository institutions are insufficient to
cover FICO's non-administrative expenses, section 21(f)(3) of the Bank
Act authorizes FICO to use FSLIC Resolution Fund (FRF) receivership
proceeds that are not required by the Resolution Funding Corporation to
fund its principal fund. Id. 1441(f)(3). If the funds available
pursuant to the three sources provided by section 21(f) of the Bank Act
are insufficient to pay FICO's interest expenses, section 5(d)(2) of
the FDI Act provides that the Secretary of the Treasury may order the
transfer to FICO of exit fees assessed against insured depository
institutions that participated in transactions by which they switched
deposit insurance funds. See id. 1815(d)(2)(E), (F).
C. FICO Regulations
The operating authority for FICO initially appeared in part 592 of
the FHLBB's regulations. When Congress abolished the FHLBB in 1989, it
transferred regulatory and supervisory authority over FICO to the
Finance Board. See FIRREA, section 401, 103 Stat. 183, codified at 12
U.S.C. 1437 note; FIRREA, Title V. The Finance Board derives its
authority over FICO from the provisions of section 21 of the Bank Act.
See 12 U.S.C. 1441. Under sections 21 (b)(8) and (c), the FICO
Directorate \3\ and FICO's exercise of its statutory powers are subject
to such regulations, orders, and directions as the Finance Board may
prescribe. Id. 1441(b)(8), (c). In addition, under section 21(j), the
Finance Board has authority to prescribe any regulations necessary to
carry out the provisions of section 21, including regulations defining
terms used in section 21. Id. 1441(j). In September 1989, pursuant to
the authority granted by section 21 of the Bank Act, the Finance Board
deleted part 592 of the FHLBB's regulations and promulgated the current
rules regarding FICO's operating authority at part 950 of its
regulations. See 54 FR 38589, 38592-38598 (Sept. 19, 1989), codified at
12 CFR part 950.
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\3\ The FICO Directorate is the managing body of FICO. See id.
1441(b)(1).
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The statutory changes made by the Funds Act require that
corresponding amendments be made to the provisions of the FICO
operations regulation that concern FICO's assessment authority. In
addition, the changes made by the Funds Act, as well as prior statutory
changes that terminated FICO's debt issuance authority, see supra, have
rendered obsolete many of the existing provisions of part 950.
Accordingly, the Finance Board is amending part 950 to comply with new
statutory requirements, eliminate provisions that have been rendered
obsolete, and clarify the practices and procedures of the Finance Board
and FICO.
II. Analysis of the Interim Final Rule
A. Elimination of Obsolete Provisions
The Finance Board has determined that the following provisions of
part 950, which relate to or concern issuance of FICO debt obligations,
are no longer required and therefore should be eliminated in their
entirety: Sec. 950.4 Authority to issue obligations; Sec. 950.6
Minority participation in public offerings; Sec. 950.10 Capital
assessments of Federal loan banks [sic]; Sec. 950.11 Establishment,
maintenance and funding of reserve account; and in Sec. 950.1,
definitions of the terms ``deficient bank,'' ``excess amount,'' ``FSLIC
Resolution Fund,'' ``Funding Corporation,'' ``net earnings,'' and
``remaining bank.'' Streamlining part 950 by repealing these provisions
is consistent with the goals of the Regulatory Reinvention Initiative
of the National Performance Review.
B. Implementation of New Statutory Requirements
Section 950.8(a) of the interim final rule continues the current
requirement that FICO determine the anticipated interest expenses on
its obligations at least semiannually.
In Sec. 950.8(b), the Finance Board has implemented the provisions
of the Funds Act that authorize FICO to assess all insured depository
institutions, rather than just SAIF members, to cover FICO's non-
administrative expenses. See supra part I(B). The term ``insured
depository institution,'' which replaces the definition of ``SAIF
member'' in Sec. 950.1, has the same meaning as in section 3 of the FDI
Act, namely, ``any bank or savings association the deposits of which
are insured by the [FDIC] * * *'' See 12 U.S.C. 1813(c)(2). For
purposes of part 950, the term ``non-administrative expenses'' means
custodian fees, issuance costs, and interest on Financing Corporation
obligations. Custodian fees include any fees or expenses FICO incurs in
connection with the establishment or maintenance of, or the transfer of
any security to, or maintenance of any security in, the segregated
account established to safeguard the securities that defease the
principal amount of the FICO obligations. See supra part I(A). This is
the same meaning given to the term ``custodian fees'' in section
21(g)(5)(B) of the Bank Act. See 12 U.S.C. 1441(g)(5)(B). Issuance
costs include fees and commissions FICO incurs in connection with the
issuance or servicing of its obligations. The regulation provides an
illustrative list that includes costs the Finance Board has to date
determined to be issuance costs.
Section 950.8(b)(1) authorizes FICO, with the approval of the Board
of Directors of the FDIC, to impose against and collect from each
insured depository institution an assessment sufficient to pay its non-
administrative expenses. FICO must make the assessment in the same
manner as the FDIC makes assessments under section 7 of the FDI Act.
See 12 U.S.C. 1817.
Subject to the statutory limits on assessment rates with respect to
BIF- and SAIF-assessable deposits, see supra part I(B),
Sec. 950.8(b)(2) requires FICO to determine at least semiannually and
to advise the FDIC and any collection agent of the rate(s) of the
assessment it will assess against insured depository institutions in
order to pay its non-administrative expenses. In determining the
assessment rate(s), FICO must consider historical data regarding
assessment collections and current
[[Page 59313]]
information concerning the SAIF and BIF deposit base and the location
of insured depository institutions that is available only to the FDIC.
Accordingly, the FDIC will provide such accurate, complete, and timely
information as FICO may require to carry out its statutory
responsibilities to pay its non-administrative expenses by setting the
assessment rate(s) and imposing an assessment against all insured
depository institutions.
To facilitate collection of the FICO assessment,
Sec. 950.8(b)(3)(i) requires FICO to collect assessments in accordance
with section 21(f)(2) of the Act and the provisions of this regulation,
and permits assessment collection through a collection agent.
Currently, the FDIC collects and processes FICO's assessment pursuant
to a memorandum of understanding between FICO and the FDIC. The FDIC
handles administrative tasks, such as computing each institution's
assessment, issuing invoices notifying institutions of the amount to be
paid and the date of payment, and arranging for the collection of the
assessment through the payments system. The Finance Board expects the
assessment process to continue to operate in a similar fashion.
Further, Sec. 950.8(a)(3)(ii) authorizes each FHLBank to establish and
maintain a demand deposit account for any insured depository
institution located in the FHLBank's district regardless of whether the
institution is a FHLBank member.
Sections 950.8 (c) and (d) of the interim final rule, which concern
FICO's authority to receive FRF receivership proceeds and exit fees,
see supra part I(B), restate without substantive change the provisions
found currently in Secs. 950.12 (b)(2) and (b)(3), respectively.
C. Clarifying Current Regulatory Requirements
The remainder of the interim final rule clarifies and reorganizes
provisions that appear in the current FICO operations regulation. The
following provisions of the interim final rule restate provisions of
the current rule without substantive change: In Sec. 950.1, definitions
of the terms ``Act,'' ``Bank or Banks,'' ``Directorate,'' ``FDIC,'' and
``Office of Finance;'' Sec. 950.2 FICO's general operating authority;
Sec. 950.3 FICO Directorate's authority to establish investment
policies and procedures; Sec. 950.4 book-entry procedure for FICO
obligations; and Sec. 950.5 FICO's authority to use the services of
FHLBank or Office of Finance officers, employees, or agents to carry
out its functions.
Section 950.6 of the interim final rule, which concerns FICO's
budget and expenses, is a revision of Sec. 950.8 of the current rule.
To provide increased flexibility, paragraphs (a) and (b) require FICO
to submit to the FICO Directorate, and the FICO Directorate to submit
in turn to the Finance Board, FICO's budget of proposed expenditures
for approval annually rather than by a date certain each year. Since
the Finance Board disseminates FICO's approved annual budget to the
FHLBanks, the requirement that FICO transmit a copy of its budget to
the FHLBanks is deleted. Paragraphs (c) and (d) make clear that FICO
may not incur expenditures unless they have been approved by either the
Finance Board or the FICO Directorate within limits set by the Finance
Board.
Consistent with current practice, Sec. 950.7 of the interim final
rule requires the FHLBanks to pay FICO's administrative expenses. FICO
determines the amount of administrative expenses each FHLBank must pay
in the manner provided by section 21(b)(7)(B) of the Bank Act. See 12
U.S.C. 1441(b)(7)(B). The definition of the term ``administrative
expenses'' in Sec. 950.1 is revised to reflect more closely the format
of the financial documents provided by FICO to the Finance Board and to
make clear that issuance costs are not administrative expenses. See 12
U.S.C. 1441(b)(7)(C). Consistent with current practice, the interim
final rule replaces the requirement that FICO bill each FHLBank at
least semiannually with a requirement that FICO bill the FHLBanks
periodically. Paragraph (c) makes clear that FICO must adjust the
amount of administrative expenses the FHLBanks must pay in any calendar
year, if, in the prior year, administrative expenses have been approved
by the Finance Board, paid by the FHLBanks, but not actually incurred
by FICO.
Section 950.9 concerns reports FICO must make to the Finance Board.
To reduce the regulatory reporting burden on FICO and to provide
increased flexibility, the requirement that FICO submit reports on a
quarterly basis, which appears in Sec. 950.14 of the current rule, is
deleted. To ensure the current relevance and utility of the information
provided in the reports FICO submits to the Finance Board, the laundry
list of required information in the current rule is replaced with a
requirement that FICO file reports containing such information as the
Finance Board may direct.
To ensure compliance with the Bank Act and Finance Board
regulations, Sec. 950.10 of the interim final rule requires the Finance
Board to examine FICO's operations at least annually.
III. Notice and Public Participation
The Finance Board finds that the notice and comment procedure
required by the Administrative Procedure Act is unnecessary,
impracticable, and contrary to the public interest in this instance.
See 5 U.S.C. 553(b)(3)(B). The Funds Act directs FICO to impose an
assessment on all insured depository institutions on January 1, 1997.
See Funds Act section 2702. In order to timely impose this assessment,
the FDIC, acting as FICO's collection agent, must promptly undertake a
number of administrative tasks, such as computing each institution's
assessment, issuing invoices that notify the institution of the amount
to be paid and the date of payment, and arranging for the collection of
the assessment through the payments system. This rule provides the
authority for FICO to proceed with the assessment process. It would not
be possible for FICO to carry out its statutory responsibilities if the
rule is subject to the notice and comment process. Nevertheless,
because the Finance Board believes public comments aid in effective
rulemaking, it will accept written comments on the interim final rule
on or before December 23, 1996.
IV. Effective Date
For the reasons stated in part III above, the Finance Board for
good cause finds that the interim final rule should become effective on
November 22, 1996. See 5 U.S.C. 553(d)(3).
V. Paperwork Reduction Act
No collections of information pursuant to the Paperwork Reduction
Act of 1995 are contained in this interim final rule. See 44 U.S.C.
3501, et seq. Consequently, the Finance Board has not submitted any
information to the Office of Management and Budget for review.
VI. Regulatory Flexibility Act
The Finance Board is adopting the changes to part 950 in the form
of an interim final rule and not as a proposed rule. Therefore, the
provisions of the Regulatory Flexibility Act do not apply. See 5 U.S.C.
601(2), 603(a).
List of Subjects in 12 CFR Part 950
Federal home loan banks, Securities.
Accordingly, the Federal Housing Finance Board hereby revises title
12, chapter IX, subchapter C, part 950 of the Code of Federal
Regulations, to read as follows:
[[Page 59314]]
PART 950--OPERATIONS
Sec.
950.1 Definitions.
950.2 General authority.
950.3 Authority to establish investment policies and procedures.
950.4 Book-entry procedure for Financing Corporation obligations.
950.5 Bank and Office of Finance employees.
950.6 Budget and expenses.
950.7 Administrative expenses.
950.8 Non-administrative expenses; assessments.
950.9 Reports to the Finance Board.
950.10 Review of books and records.
Authority: 12 U.S.C. 1441(b)(8), (c), and (j).
Sec. 950.1 Definitions.
For purposes of this part:
(a) Act means the Federal Home Loan Bank Act, as amended (12 U.S.C.
1421, et seq.).
(b) 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.
(c) Bank or Banks means a Federal Home Loan Bank or the Federal
Home Loan Banks.
(d) 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.
(e) 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, and any other expense incurred by
the Financing Corporation in connection with the establishment or
maintenance of such account.
(f) Directorate means the board established under section 21(b) of
the Act to manage the Financing Corporation.
(g) Exit fees means the amounts paid under sections 5(d)(2) (E) and
(F) of the Federal Deposit Insurance Act, and regulations promulgated
thereunder (12 CFR part 312).
(h) FDIC means the agency established as the Federal Deposit
Insurance Corporation.
(i) Finance Board means the agency established as the Federal
Housing Finance Board.
(j) Insured depository institution has the same meaning as in
section 3 of the Federal Deposit Insurance Act.
(k) 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.
(l) Non-administrative expenses means custodian fees, issuance
costs, and interest on Financing Corporation obligations.
(m) Obligations means debentures, bonds, and similar debt
securities issued by the Financing Corporation under sections 21 (c)(3)
and (e) of the Act.
(n) Office of Finance means the joint office of the Banks
established under part 941 of this chapter.
(o) 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 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.
(p) SAIF-assessable deposit means a deposit that is subject to
assessment for 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.
Sec. 950.2 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. 950.3 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. The Directorate
shall promptly notify the Finance Board in writing of any changes to
the investment policies and procedures.
Sec. 950.4 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 securities, codified at part 912 of this chapter. Wherever the
term ``Federal Home Loan Bank security(ies)'' appears in part 912, the
term shall be construed also to mean ``Financing Corporation
obligation(s),'' if appropriate to accomplish the purposes of this
section.
Sec. 950.5 Bank and Office of Finance employees.
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. 950.6 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
[[Page 59315]]
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. 950.7 Administrative expenses.
(a) Payment by Banks. The Banks shall pay all administrative
expenses of the Financing Corporation approved pursuant to Sec. 950.6.
(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. 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.
Sec. 950.8 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. 950.6, 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 determine the rate or rates of the
assessment it will assess against insured depository institutions
pursuant to section 21(f)(2) of the Act 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 its determination 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 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 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. 950.6, 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.
(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. 950.6.
(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.
(2) Procedure. The Directorate shall request in writing that the
Secretary of the Treasury order that exit fees be transferred to the
Financing Corporation. Such request shall specify the estimated amount
of funds required to pay the interest due on Financing Corporation
obligations.
Sec. 950.9 Reports to the Finance Board.
The Financing Corporation shall file such reports as the Finance
Board shall direct.
Sec. 950.10 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 and this part.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairperson.
[FR Doc. 96-29748 Filed 11-21-96; 8:45 am]
BILLING CODE 6725-01-U