[Federal Register Volume 63, Number 15 (Friday, January 23, 1998)]
[Rules and Regulations]
[Pages 3453-3455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1639]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Parts 900, 932 and 933
[No. 97-83]
RIN 3069-AA66
Membership Eligibility
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending
the definition of the term ``State'' in its Membership Regulation to
include the U.S. Territory of American Samoa (American Samoa) and the
U.S. Commonwealth of the Northern Mariana Islands (the Northern Mariana
Islands). Institutions organized under the laws of American Samoa and
the Northern Mariana Islands, therefore, will be eligible to apply for
Federal Home Loan Bank (Bank) membership. In accordance with these
changes, the Finance Board also is clarifying in its regulations that
the Seattle Bank District includes American Samoa and the Northern
Mariana Islands. In addition, the Finance Board is designating Hawaii
as the State in which members with a principal place of business in
American Samoa, the Northern Mariana Islands, or Guam, shall be deemed
to be located for purposes of election of Bank directors.
DATES: The final rule is effective on February 23, 1998.
FOR FURTHER INFORMATION CONTACT: Sharon B. Like, Senior Attorney-
Adviser, (202) 408-2930, Office of General Counsel, Federal Housing
Finance Board, 1777 F Street, N.W., Washington, D.C. 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
A. Membership Eligibility Requirement--Definition of ``State''
Under the Federal Home Loan Bank Act (Act), the Finance Board is
responsible for the supervision and regulation of the 12 Banks, which
provide advances and other financial services to their member
institutions. See 12 U.S.C. 1422a(a). Institutions may become members
of a Bank if they meet certain membership eligibility and minimum stock
purchase criteria set forth in the Act and the Finance Board's
implementing Membership Regulation. See id. sections 1424, 1426,
1430(e)(3); 12 CFR part 933.
Specifically, under the Act and the Membership Regulation,
applicants for Bank membership must satisfy, among other requirements,
the requirement that they are ``duly organized under the laws of any
State or of the United States.'' See 12 U.S.C. 1424(a)(1)(A); 12 CFR
933.6(a)(1), 933.7. Section 2(3) of the Act defines the term ``State''
as follows:
The term ``State'' includes the District of Columbia, Guam, Puerto
Rico, and the Virgin Islands of the United States.
See 12 U.S.C. 1422(3). Guam and the U.S. Virgin Islands are U.S.
Territories, while Puerto Rico is a U.S. Commonwealth.
Section 933.1(cc) of the Finance Board's Membership Regulation
implements the statutory definition by defining the term ``State'' as
follows:
State means a State, the District of Columbia, Guam, Puerto Rico,
and the Virgin Islands of the United States.
See 12 CFR 933.1(cc). The regulatory definition does not
specifically include any other U.S. Territories, Commonwealths or
Dependencies within the meaning of ``State.'' Therefore, financial
institutions organized under the laws of such other jurisdictions
currently are not eligible for Bank membership under the regulation,
unless other specific laws or agreements executed by the United States
and these jurisdictions make the Act applicable to such jurisdictions.
On September 24, 1997, the Finance Board published a proposed rule
to amend the definition of the term ``State'' in Sec. 933.1(c) of the
Membership Regulation to include American Samoa and the Northern
Mariana Islands. See 62 FR 49943 (Sept. 24, 1997). The Finance Board
received six comment letters on the proposed rule. Commenters included:
one Bank; a representative of a Guamanian housing counseling/advocacy
organization who serves on the Bank's Advisory Council; the
Congressional representative for American Samoa; the Governor of
American Samoa; an American Samoan commercial bank that is a member of
the Federal Reserve System with deposits insured by the Federal Deposit
Insurance Corporation; and a Northern Mariana Islands public housing
corporation.
In the proposed rule, the Finance Board stated that it believes
that the term ``State'' under the Membership Regulation should be
defined comprehensively to include all other U.S. Territories,
Commonwealths and Dependencies that share a political status similar to
that of the specified entities in the statute, i.e., Guam, the U.S.
Virgin Islands, and Puerto Rico. In addition, if any specific laws or
agreements executed by the United States and particular jurisdictions
make the Act applicable to such jurisdictions, then the regulatory
definition of the term ``State'' should be amended to include those
jurisdictions, consistent with the laws or agreements.
Accordingly, as described in the proposed rule, the Finance Board
undertook a broad analysis of existing and former U.S. Territories,
Commonwealths and Dependencies to determine whether any of the
jurisdictions satisfy the above requirements. The research revealed
that only American Samoa and the Northern Mariana Islands meet the
requirements, as further discussed below. In order to ensure that all
eligible jurisdictions were included in the
[[Page 3454]]
revised definition of ``State'' for membership purposes, the Finance
Board requested commenters to identify any other jurisdictions not
included in proposed Sec. 933.1(cc) that have U.S. Territory,
Commonwealth, or Dependency status, or that have laws or agreements
with the United States that make the Act applicable to such
jurisdictions. No other jurisdictions were identified by the commenters
as meeting any of these criteria.
B. Designation of Member's State Location for Purposes of Election of
Bank Directors
The Act sets forth specific procedures for the election of
directors by the members to the boards of the Banks. See 12 U.S.C.
1427; 12 CFR 932. Each elective directorship is designated by the
Finance Board as representing the members located in a particular
State. See 12 U.S.C. 1427(b). If the principal place of business of a
member is located in a ``State'' as defined in section 7(e) of the Act,
the Finance Board must designate such State as the State in which the
member is located for director election purposes. See id. section
1427(c). Section 7(e) defines ``State,'' for purposes of section 7, as
``the States of the Union, the District of Columbia, and the
Commonwealth of Puerto Rico.'' See id. section 1427(e). For members
whose principal place of business is not located in a ``State'' as
defined in section 7(e), the Finance Board is required to designate a
State in which such members shall be deemed to be located for director
election purposes. See id. section 1427(c).
American Samoa and the Northern Mariana Islands are not included in
the section 7(e) definition of ``State.'' Accordingly, the Finance
Board is required to designate a ``State'' where members with a
principal place of business located in American Samoa or the Northern
Mariana Islands shall be deemed to be located. The proposed rule
amended Sec. 932.11(b) of the Finance Board's regulations to designate
Hawaii as that State.
II. Analysis of the Final Rule
A. American Samoa--Section 933.1(cc)
American Samoa is a Territory of the United States that is
administered by the U.S. Department of Interior, and which has enacted
its own banking laws. See 48 U.S.C. 1661; Executive Order No. 10264, 16
FR 6419 (June 29, 1951); Title 28, American Samoa Code Ann. (Book
1988). As a U.S. Territory, American Samoa has a political status
similar to that of the U.S. Territories of Guam and the U.S. Virgin
Islands, which are included as ``States'' under the Act and the current
Membership Regulation. See 12 U.S.C. 1422(3); 12 CFR
933.1(cc).1
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\1\ There do not appear to be any laws or contractual provisions
in the cession agreements executed by the United States and American
Samoa making the Act applicable to American Samoa.
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Five commenters specifically supported the proposed amendment of
the term ``State'' in Sec. 933.1(c) to include American Samoa. One
commenter noted that the condition of much of the private housing in
American Samoa is deplorable, household incomes are extremely low, and
very little new construction or rehabilitation of housing is occurring.
The commenter stated that there is a need for home loans at affordable
interest rates in this remote, rural area, and that the Bank System was
intended to address such problems. Another commenter stated that by
becoming a member of the Seattle Bank, the commenter would gain access
to a wide array of competitively priced wholesale funding, as well as
community lending programs designed to help meet the low- and moderate-
income housing and economic development needs of American Samoa.
For the reasons discussed above, the final rule adopts the proposed
amendment without change.
B. The Northern Mariana Islands--Section 933.1(cc)
The Northern Mariana Islands is a former U.S.-administered Trust
Territory that is now a Commonwealth of the United States. As a U.S.
Commonwealth, the Northern Mariana Islands has a political status
similar to that of the Commonwealth of Puerto Rico, which is included
as a ``State'' under the Act and the current Membership Regulation. See
id. Moreover, specific provisions of the Covenant Agreement executed by
the United States and the Northern Mariana Islands make the Act
applicable to the Northern Mariana Islands. See ``Covenant To Establish
A Commonwealth Of The Northern Mariana Islands In Political Union With
The United States Of America,'' sections 502(a)(1), 502(a)(2) (1986);
``The Second Interim Report of the Northern Mariana Islands Commission
on Federal Laws to the Congress of the United States,'' at 278-79 (Aug.
1985); Presidential Proclamation No. 5207, 49 FR 24365 (June 7, 1984)
(set forth at 48 U.S.C. 1681 note).
Four commenters specifically supported the proposed amendment of
the term ``State'' in Sec. 933.1(cc) to include the Northern Mariana
Islands. One commenter noted that the Northern Mariana Islands
Government and financial institutions operating in the Northern Mariana
Islands have limited financial resources available for affordable
housing and community development projects. The commenter stated that
the proposed amendment would expand opportunities for access to funding
assistance for such projects in the Northern Mariana Islands.
For the reasons discussed above, the final rule adopts the proposed
amendment without change.
C. Other Pacific Islands
As discussed in the SUPPLEMENTARY INFORMATION section of the
proposed rule, the Federated States of Micronesia, the Republic of the
Marshall Islands, and the Republic of Palau were once U.S.-administered
Trust Territories in the Pacific, but now have the status of
independent, self-governing foreign nations. Nor do there appear to be
any laws or contractual provisions in the Compacts of Free Association
executed by the United States and these nations, respectively, that
make the Act applicable to these nations. Other existing U.S. Pacific
Island Territories generally are either uninhabited or contain tiny,
nonpermanent military populations closed to the public. No other
jurisdictions were identified by the commenters as having U.S.
Territory, Commonwealth, or Dependency status, or having laws or
agreements with the United States making the Act applicable to such
jurisdictions. Accordingly, the Act would not be applicable to the
nations and Territories discussed above, and these jurisdictions are
not included in Sec. 933.1(cc) of the final rule.
D. Inclusion of American Samoa and the Northern Mariana Islands in the
Seattle Bank District--Appendix to Subpart A of Part 900
The Appendix to Subpart A of Part 900 of the Finance Board's
regulations lists the States which comprise each of the 12 Bank
Districts, with a reference to ``Pacific Islands'' included under
Federal Home Loan Bank District 12 (the Seattle Bank District). See
Appendix to Subpart A of Part 900--Federal Home Loan Banks. Consistent
with the amendments discussed above, the final rule amends the Appendix
by replacing the reference to the ``Pacific Islands'' under the Seattle
Bank District with specific references to American Samoa and the
Northern Mariana Islands.
[[Page 3455]]
E. Designation of State Location for Members With Principal Place of
Business in American Samoa, the Northern Mariana Islands, or Guam--
Section 932.11(b)
For the reasons discussed above, the proposed amendment of
Sec. 932.11(b) provided that members with a principal place of business
located in American Samoa or the Northern Mariana Islands shall be
deemed to be located in Hawaii for purposes of election of Bank
directors. One commenter specifically supported this designation. The
final rule adopts the proposed amendment without change. The final rule
also adopts, without change, the proposed amendment codifying the
Finance Board's existing designation of Hawaii as the State where
members with a principal place of business in Guam are deemed to be
located for director election purposes.
III. Regulatory Flexibility Act
The final rule implements statutory requirements binding on all
Banks and on all applicants for Bank membership, regardless of their
size. The Finance Board is not at liberty to make adjustments to those
requirements to accommodate small entities. The final rule does not
impose any additional regulatory requirements that will have a
disproportionate impact on small entities. Therefore, in accordance
with section 605(b) of the Regulatory Flexibility Act, see 5 U.S.C.
605(b), the Finance Board hereby certifies that this final rule will
not have a significant economic impact on a substantial number of small
entities.
IV. Paperwork Reduction Act
The final 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.
List of Subjects
12 CFR Part 900
Organizations and functions (Government agencies).
12 CFR Part 932
Conflicts of interest, Federal home loan banks.
12 CFR Part 933
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
Accordingly, the Finance Board hereby amends title 12, chapter IX,
parts 900, 932 and 933, Code of Federal Regulations, as follows:
PART 900--DESCRIPTION OF ORGANIZATION AND FUNCTIONS
1. The authority citation for part 900 is revised to read as
follows:
Authority: 5 U.S.C. 552; 12 U.S.C. 1422b(a), 1423.
2. The appendix to subpart A of part 900 is designated as appendix
A to subpart A of part 900, the appendix heading is revised, and the
parenthetical under Federal Home Loan Bank District 12 is revised to
read as follows:
Appendix A to Subpart A of Part 900--Federal Home Loan Banks
* * * * *
FEDERAL HOME LOAN BANK DISTRICT 12
(Alaska, American Samoa, the Commonwealth of the Northern Mariana
Islands, Guam, Hawaii, Idaho, Montana, Oregon, Utah, Washington,
Wyoming)
* * * * *
PART 932--ORGANIZATION OF THE BANKS
3. The authority citation for part 932 is revised to read as
follows:
Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1426, 1427, 1432;
42 U.S.C. 8101 et seq.
4. Section 932.11 is amended by revising paragraph (b) to read as
follows:
Sec. 932.11 Location of member.
* * * * *
(b) For purposes of this part, members with a principal place of
business located in the Virgin Islands of the United States shall be
deemed to be located in Puerto Rico, and members with a principal place
of business located in American Samoa, the Commonwealth of the Northern
Mariana Islands, or Guam, shall be deemed to be located in Hawaii.
PART 933--MEMBERS OF THE BANKS
5. The authority citation for part 933 is revised to read as
follows:
Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430,
1442.
6. Section 933.1 is amended by revising paragraph (cc) to read as
follows:
Sec. 933.1 Definitions.
* * * * *
(cc) State includes a State of the United States, American Samoa,
the Commonwealth of the Northern Mariana Islands, the District of
Columbia, Guam, Puerto Rico, or the Virgin Islands of the United
States.
* * * * *
By the Board of Directors of the Federal Housing Finance Board.
Dated: December 17, 1997.
Bruce A. Morrison,
Chairman.
[FR Doc. 98-1639 Filed 1-22-98; 8:45 am]
BILLING CODE 6725-01-U