[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Rules and Regulations]
[Pages 50247-50250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25305]


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FEDERAL HOUSING FINANCE BOARD

12 CFR Part 950

[No. 97-57]
RIN 3069-AA57


Revision of Financing Corporation Operations Regulation

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

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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, eliminate provisions that have been 
rendered obsolete by statutory changes, and clarify the practices and 
procedures of the Finance Board and FICO. The final rule is consistent 
with the goals of the

[[Page 50248]]

Regulatory Reinvention Initiative of the National Performance Review.

EFFECTIVE DATE: The final rule will become effective October 27, 1997.

FOR FURTHER INFORMATION CONTACT: Joseph A. McKenzie, Associate 
Director, Financial Analysis and Reporting Division, Office of Policy, 
202/408-2845, 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. Regulatory Background and Analysis of the Final Rule

    In November 1996, the Finance Board approved an interim final rule 
amending its FICO operations regulation, 12 CFR part 950, to comply 
with new statutory requirements, eliminate provisions that were 
rendered obsolete by statutory changes, and clarify the practices and 
procedures of the Finance Board and FICO. See 61 FR 59311 (Nov. 22, 
1996). The 30-day public comment period for the interim final rule, 
which became effective upon publication in the Federal Register, closed 
on December 23, 1996. See id. The Finance Board received no public 
comments. Therefore, with the exception noted below, and for the 
reasons set forth in detail in the interim final rulemaking, the 
Finance Board is adopting the interim final rule as published.
    In order to accommodate the terms of a memorandum of understanding 
(MOU) signed by FICO and the Federal Deposit Insurance Corporation 
(FDIC) after publication of the interim final rule in the Federal 
Register, the Finance Board has amended Sec. 950.8(b)(2)(i) of the 
interim final rule to require FICO to determine an assessment rate 
formula rather than the actual assessment rate. Under the MOU, the FDIC 
will handle administrative tasks, such as computing each insured 
depository institution's assessment, issuing invoices notifying insured 
depository institutions of the amount to be paid and the date of 
payment, and arranging for the collection of the assessment through the 
payments system. See FICO-FDIC MOU (Jan. 23, 1997). Among other things, 
the MOU provides that the FDIC will compute the assessment rate in 
accordance with an assessment rate formula adopted by FICO. See id. 
para. 3. Section 950.8(b)(2)(i) of the interim final rule required FICO 
to determine the assessment rate by considering historical data 
regarding assessment collections and current information concerning the 
Savings Association Insurance Fund and Bank Insurance Fund deposit 
bases and the location of insured depository institutions that is 
available only to the FDIC. For consistency with the terms of the MOU, 
Sec. 950.8(b)(2)(i) of the final rule requires FICO to establish a 
formula the FDIC will use to determine at least semiannually the rate 
of the assessment FICO will assess against insured depository 
institutions in order to pay its non-administrative expenses.

II. Paperwork Reduction Act

    This rule does not contain any collections of information pursuant 
to the Paperwork Reduction Act of 1995. 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.

III. Regulatory Flexibility Act

    The Finance Board adopted 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 did not apply. See 5 
U.S.C. 601(2), 603(a).

List of Subjects in Part 950

    Federal home loan banks, Securities.

    Accordingly, the Federal Housing Finance Board hereby adopts the 
interim final rule adding 12 CFR part 950 that was published at 61 FR 
59311 on November 22, 1996, as a final rule and revises part 950 to 
read as follows:

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.

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    (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 
terms ``Federal Home Loan Bank(s),'' ``Federal Home Loan Bank 
security(ies),'' or ``Book-entry Federal Home Loan Bank security(ies)'' 
appear in part 912, 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.


Sec. 950.5  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. 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 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 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 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 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

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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 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 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. 97-25305 Filed 9-24-97; 8:45 am]
BILLING CODE 6725-01-U