[Federal Register Volume 64, Number 226 (Wednesday, November 24, 1999)]
[Proposed Rules]
[Pages 66115-66116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30552]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Parts 917, 925, 930, 940, 950, 954, 955, 958, 965, 966, and
980
[No. 99-57]
RIN 3069-AA84
Federal Home Loan Bank Financial Management and Mission
Achievement; Withdrawal of Proposed Rule; Notice of Cancellation of
Public Hearing
AGENCY: Federal Housing Finance Board.
ACTION: Withdrawal of proposed rule; Notice of cancellation of public
hearing.
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SUMMARY: The Federal Housing Finance Board (Finance Board) is
withdrawing its recently-proposed Financial Management and Mission
Achievement (FMMA) regulation in light of the enactment of the Federal
Home Loan Bank System Modernization Act of 1999 (Bank System
Modernization Act). Although the Finance Board is withdrawing the
proposed FMMA regulation, it intends to re-propose certain sections of
the FMMA regulation in one or more separate rulemakings. However, the
Finance Board will take no action to promulgate proposed or final
regulations limiting Federal Home Loan Bank (Bank) assets or advances
beyond those currently in effect, except to the extent necessary to
protect the safety and soundness of the Banks, until the Finance Board
has promulgated final capital regulations pursuant to the requirements
of the Bank System Modernization Act and the statutory period for
submission of capital plans by the Banks to the Finance Board has
expired.
The Finance Board also hereby is canceling the public hearing on
the proposed FMMA regulation scheduled for November 29 and 30, 1999.
FOR FURTHER INFORMATION CONTACT: James L. Bothwell, Director and Chief
Economist, (202) 408-2821; or Scott L. Smith, Deputy Director, (202)
408-2991, Office of Policy, Research and Analysis, Federal Housing
Finance Board, 1777 F Street, NW, Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Background
The Finance Board proposed a regulation in the Federal Register of
September 27, 1999 to adopt new financial management and mission
achievement rules, and amend certain existing regulations, for the
Banks. See 64 FR 52163 (Sept. 27, 1999). The preamble to the proposed
FMMA regulation contains a detailed discussion of the background and
reasons for the proposed FMMA regulation. Generally, the proposed FMMA
regulation would have modernized policies governing the business
activities of the Banks and, for the first time, would have established
regulatory standards for mission achievement by the Banks and a
definition of mission assets. The proposal would have enabled the Banks
to help their members be more effective competitors in the housing
finance and community lending marketplace, which in turn would have
assured that benefits accrued to consumers.
The proposal would have imposed a risk-based capital requirement,
pursuant to which each Bank would have been required to maintain
capital based on the credit, market, and operations risks to which it
is exposed. The risk-based capital regime was designed to build upon
the regulatory framework used by other financial institution and
government-sponsored enterprise (GSE) regulators.
The mission achievement requirement in the proposal would have:
codified the authority of the Banks to hold mortgage assets, including
mortgage-backed securities; allowed mortgage assets
[[Page 66116]]
meeting certain regulatory requirements to be counted as mission
assets; and eliminated the use of the Banks' GSE advantages in issuing
debt to fund arbitrage investments.
The proposal also would have specified the responsibilities of the
boards of directors and senior management of the Banks, as a means of
ensuring that they fulfill their duties in operating the Banks in a
safe and sound manner and in furtherance of their mission.
In a separate rulemaking, the Finance Board proposed to reorganize
its regulations to implement a more logical and efficient presentation
of the rules governing the Banks and the Bank System, as well as to
prepare for the anticipated incorporation of the revisions to be made
by the FMMA proposal. See 64 FR 52148 (Sept. 27, 1999). In view of the
technical, housekeeping nature of the proposed reorganization
provisions, the Finance Board is not withdrawing the proposed
reorganization regulation, which the Finance Board intends to finalize,
with any necessary amendments, at the earliest practicable date. The
comment period for the proposed reorganization regulation closes
December 27, 1999.
II. Reasons for Withdrawal of the Proposed FMMA Regulation
In light of the enactment of the Bank System Modernization Act, the
Finance Board is withdrawing the proposed FMMA regulation. The Finance
Board intends to re-propose certain sections of the proposed regulation
in one or more separate rulemakings, and to propose capital
requirements for the Banks in accordance with the Bank System
Modernization Act. However, the Finance Board will take no action to
promulgate proposed or final regulations limiting Bank assets or
advances beyond those currently in effect, except to the extent
necessary to protect the safety and soundness of the Banks, until the
Finance Board has promulgated final capital regulations pursuant to the
requirements of the Bank System Modernization Act and the statutory
period for submission of capital plans by the Banks to the Finance
Board has expired. The Finance Board will consult with the House and
Senate Banking Committees regarding the content of both the capital
regulations and any financial management or mission related regulations
prior to issuing them in proposed form.
III. Cancellation of Public Hearing
In the SUPPLEMENTARY INFORMATION to the proposed FMMA regulation,
the Finance Board announced that it would hold a public hearing on its
proposed FMMA regulation. See 64 FR 52165. The hearing was scheduled to
be held on November 29-30, 1999. As a result of the Finance Board's
action herein to withdraw the proposed FMMA regulation, the public
hearing is no longer necessary and is cancelled.
List of Subjects in 12 CFR Parts 917, 925, 930, 940, 950, 954, 955,
958, 965, 966 and 980
Community development, Credit, Housing and Federal home loan banks.
Dated: November 17, 1999.
By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 99-30552 Filed 11-23-99; 8:45 am]
BILLING CODE 6725-01-P