[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