[Federal Register Volume 65, Number 64 (Monday, April 3, 2000)]
[Rules and Regulations]
[Pages 17435-17439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8116]



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  Federal Register / Vol. 65, No. 64 / Monday, April 3, 2000 / Rules 
and Regulations  

[[Page 17435]]



FEDERAL HOUSING FINANCE BOARD

12 CFR Parts 951 and 997

[No. 2000-15]
RIN 3069-AA92


Determination of Appropriate Present-Value Factors Associated 
With Payments Made by the Federal Home Loan Banks to the Resolution 
Funding Corporation

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) is amending 
its regulations to implement provisions of the Gramm-Leach-Bliley Act 
(Gramm-Leach-Bliley) that changed the methodology for determining the 
amount of the payments to be made by the Federal Home Loan Banks 
(Banks) to the Resolution Funding Corporation (REFCORP). These payments 
are used to pay a portion of the interest owed on bonds issued by 
REFCORP. Gramm-Leach-Bliley requires each Bank to pay 20 percent of its 
net earnings each year to REFCORP and requires the Finance Board to 
adjust the final payment date so that the value of the payments made 
under the new methodology equals those that were to have been made 
under prior law. The Finance Board proposed to discount the Banks' 
payments using appropriate present-value factors selected by the 
Finance Board in consultation with the Secretary of the Treasury. After 
carefully considering the comments received on its proposal, the 
Finance Board has decided to adopt the proposed rule with the technical 
changes discussed below.

EFFECTIVE DATES: This final rule is effective on April 3, 2000.

FOR FURTHER INFORMATION CONTACT: Joseph A. McKenzie, Deputy Chief 
Economist, Office of Policy, Research, and Analysis, (202) 408-2845, 
[email protected]; Austin J. Kelly, Senior Financial Economist, Office 
of Policy, Research, and Analysis, (202) 408-2541, [email protected]; or 
Thomas E. Joseph, Attorney-Advisor, (202) 408-2512, [email protected]. 
Staff also can be reached by regular mail at the Federal Housing 
Finance Board, 1777 F Street, NW, Washington, DC 20006. A 
telecommunication device for deaf persons (TDD) is available at (202) 
408-2579.

SUPPLEMENTARY INFORMATION:

I. Background Information

    As discussed more completely in the proposed rule,\1\ the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 
Pub. L. 101-73, 103 Stat. 183 (Aug. 9, 1989), established REFCORP to 
provide funds for the Resolution Trust Corporation (RTC). 12 U.S.C. 
1441b. To this end, as of September 20, 1999, REFCORP had issued and 
had outstanding $29.9 billion in non-callable bonds with maturities 
ranging from October 15, 2019, to April 15, 2030. FIRREA also amended 
the Federal Home Loan Bank Act (Bank Act) to require the Banks to pay 
$300 million annually toward the interest on those bonds. To the extent 
amounts available from the other statutorily specified sources and the 
Banks' $300 million are insufficient to pay the annual interest on the 
REFCORP bonds, the Bank Act directs the United States Department of the 
Treasury (Treasury) to pay to REFCORP the additional amounts needed to 
pay the interest. 12 U.S.C. 1441b(f)(2)(E). Treasury has paid more than 
three-quarters of the annual interest owed on REFCORP bonds.
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    \1\ The proposed rule was published in the Federal Register at 
65 FR 5447 (Feb. 4, 2000). In that proposal the Finance Board 
described in some detail the analysis underlying the proposed 
methodology for adjusting the date of the Banks' final REFCORP 
payment. As the final rule largely adopts the proposed methodology, 
the description is not repeated here. Interested parties should read 
the proposed rule for more complete background information on and 
the analysis underlying this final rule.
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    Gramm-Leach-Bliley changed the Banks' REFCORP assessment from a 
fixed-dollar $300 million annual payment to an annual payment of 20 
percent of each Bank's net earnings. See 12 U.S.C. 1441b(f)(2)(C)). 
Gramm-Leach-Bliley also contains provisions intended to assure that the 
change in the method of assessing the Banks' REFCORP obligation does 
not increase or decrease the burden of paying interest on the REFCORP 
bonds either for the Banks or the Treasury. To implement these 
provisions of Gramm-Leach-Bliley, the Finance Board proposed a 
methodology for adjusting the date of the final REFCORP payment due 
from the Banks. The methodology entails the simulated purchase or sale 
each quarter of zero-coupon Treasury bonds.\2\ As discussed below, 
after considering the comments received on its proposal, the Finance 
Board has decided to adopt the methodology for adjusting the final 
REFCORP payment due from the Banks substantially as proposed. The 
Finance Board is also adopting the technical amendment to Sec. 951.1 of 
its regulations, 12 CFR 951.1, as proposed.\3\
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    \2\ Under the terms of this rule, the Finance Board will obtain 
from the Treasury's Office of Market Finance interest rates based on 
estimated market yields on zero-coupon Treasury bonds whose 
maturities coincide with and bracket the date of the last non-
defeased $75 million quarterly payment and apply these rates to 
Banks' excess or deficit quarterly payments as required by 
Sec. 997.2 and Sec. 997.3. Because Treasury does not issue 
marketable zero coupon bonds, the interest rate provided by the 
Treasury's Office of Market Finance will be based on the current 
market yield on marketable STRIPS (the principal or interest 
component of Treasury Separate Trading of Registered Interest and 
Principal of Securities program). As the yields on marketable STRIPS 
are quoted on a semiannually compounding basis, the Office of Market 
Finance will convert the semi-annual yields to their quarterly 
equivalents when necessary. The Treasury's Office of Market Finance 
will certify these rates to the Finance Board, as it does for 
different interest rates for a number of other agencies.
    \3\ The Finance Board recently renumbered and reorganized its 
regulations, effective February 18, 2000. See 65 FR 8253 (Feb. 18, 
2000). Prior to the effective date of this change, Sec. 951.1 of the 
Finance Board's regulations was designated as Sec. 960.1, 12 CFR 
960.1.
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II. Comparison of Proposed and Final Rules

A. Comments Received

    The Finance Board received five comment letters on its proposed 
methodology: four from Banks, and one from a national trade association 
of community banks. All the comments were generally supportive of the 
Finance Board's proposed methodology. Each of the four Banks, however, 
proposed that the Finance Board use a zero-coupon bond rate other than 
that for Treasury instruments in performing the present value 
calculations. The trade

[[Page 17436]]

association requested that the Finance Board publish the results of its 
quarterly determination. No comments were received on the proposed 
technical amendment to Sec. 951.1 of the Finance Board regulations.
    Each of the four Banks suggested that the Finance Board modify the 
calculation set forth in Sec. 997.2 and Sec. 997.3 by replacing the 
referenced Treasury zero-coupon interest rate with a different, and 
higher, interest rate. The use of a higher interest rate would have the 
effect of reducing the present value of the Banks' total REFCORP 
obligation whenever the Banks' actual quarterly REFCORP payments exceed 
$75 million.\4\ The suggested alternative interest rates were: the rate 
on REFCORP bonds, the Bank System's cost of funds, and an average of 
Treasury and agency zero-coupon bond rates. The various arguments made 
by the Banks to support the requested change can be generally 
summarized as follows: (1) The alternative rates better reflect the 
Banks' cost of funds or are more appropriate for discounting the Banks' 
obligation to pay on the REFCORP bonds; (2) use of the Treasury rate 
would raise the burden of the REFCORP payment if the Banks' aggregate 
annual REFCORP payments were to exceed $300 million, as is expected at 
least in the near future; and (3) the expected reduction in Treasury's 
issuance of government debt and the recently announced plans by 
Treasury to retire outstanding government debt will result in 
artificially low Treasury rates, relative to other rates, or will make 
it difficult to find accurate Treasury rates to use as the referenced 
zero-coupon rate for the purposes of making the calculations set forth 
in this rule.
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    \4\ By contrast, use of one of the higher, alternative interest 
rates rather than the Treasury rate would increase the present value 
of Treasury's share of the interest payments paid on REFCORP bonds, 
if the Banks total quarterly REFCORP payments were to exceed $75 
million.
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    The Finance Board has considered the arguments made by the 
commenters but continues to believe that the zero-coupon Treasury rate 
remains the most appropriate rate for the use in the calculation set 
forth in Sec. 997.2 or Sec. 997.3. Although the Banks have paid $300 
million annually to REFCORP in the past, and are likely to pay well in 
excess of $400 million in 2000, the total annual interest obligation to 
REFCORP bondholders exceeds $2.5 billion, of which the Treasury pays in 
excess of $2.0 billion. Therefore, the effect of an excess or deficit 
quarterly payment by the Banks, as those terms are defined in 
Sec. 977.1, will be to decrease, in the case of an excess quarterly 
payment, or increase, in the case of a deficit quarterly payment, the 
payment due from Treasury in the current quarter, but to have the 
opposite effect on payments made by Treasury in future quarters. For 
example, an excess quarterly payment can be viewed, in effect, as the 
Banks ``lending'' to Treasury to reduce Treasury's current expenditures 
for interest on REFCORP bonds, and as Treasury ``paying back'' the 
Banks by paying amounts that would have been due from the Banks for 
interest on the REFCORP bonds in the future. Similarly, a deficit 
quarterly payment can be viewed, in effect, as the Banks ``borrowing'' 
from Treasury to meet current REFCORP obligations and then ``paying 
back'' Treasury in the future by extending the term of the REFCORP 
obligation.\5\ Given the overall effects of excess or deficit quarterly 
payments on Treasury's residual obligation to REFCORP, the Finance 
Board believes that the Treasury rates are the most appropriate 
discount rates to use in the calculations set forth in Sec. 997.2 and 
Sec. 997.3.
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    \5\ As discussed in the preamble to the proposed rule, the use 
of zero-coupon Treasury bonds is consistent with Office of 
Management and Budget (OMB) Circular A-11, which implements the 
Federal Credit Reform Act of 1990 (FCRA). Under the FCRA, cash flows 
stemming form direct government loans and government loan guarantees 
are discounted by the interest rate on zero-coupon Treasury 
securities with the same maturity as each quarter's projected cash 
flow. Thus, the approach adopted by this rule is consistent with the 
budgetary treatment of government loan activities. Finance Board 
staff have informally discussed this methodology with staff from OMB 
and the Treasury, and they generally supported the overall approach.
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    Several of the comment letters raised technical issues about the 
use of Treasury interest rates, indicating that certain factors in the 
bond market may cause the yield on a particular Treasury issue to be 
temporarily or ``artificially'' high or low. For example, ``on-the-
run'' issues (i.e., the most recently auctioned bond of a particular 
standard maturity such as the 10-year or 30-year Treasury bond) can 
trade at a rate significantly lower rate than an adjacent issue, as one 
Bank noted occurred recently in the 30-year Treasury market.
    In response to this comment, there are three observations. First, 
temporary technical factors may either increase of decrease the 
interest rates on Treasury issues, and it is impossible to predict the 
net effect these technical factors will have over the life of the 
REFCORP obligation. Second, technical factors that have an effect on 
the Treasury bond market are likely to have a larger effect on non-
Treasury bonds because such instruments are far less liquid and 
potentially subject to widening and narrowing credit spreads. Third, 
``on-the-run'' Treasury issues, the rates of which may be artificially 
low, will seldom be used in the calculations set forth in this rule. 
For example, if the benchmark quarterly payment to be ``defeased'' and 
the maturity date for the applicable zero-coupon Treasury bond used for 
that purpose are exactly thirty years from the date of the Banks' 
actual quarterly payment date, an ``on-the-run'' Treasury bond would be 
used in the calculation. However, the interest rate used to discount 
the next outstanding benchmark quarterly payment would necessarily be 
for a Treasury bond with a term of less than 30 years, and therefore 
would not be an ``on-the-run'' issue. The next ``on-the-run issue'' is 
the 10-year Treasury bond, which will not be the appropriate benchmark 
to use in the calculations set forth in this rule for some time.
    Several comments raise the issue about the potential refunding of 
the United States government debt. Specifically, commenters expressed 
concern that if the United States budget surpluses occur as projected, 
the publicly held debt would disappear around 2015, and there would be 
no Treasury bonds to use as a benchmark. The Finance Board does not 
believe that this argument requires it to use a different interest 
rate, as even under somewhat conservative assumptions, the Banks' 
REFCORP obligation would be fully satisfied between 2013 and 2015, 
which roughly coincides with the projected date of the elimination of 
the publicly held debt.
    Furthermore, the use of Treasury zero-coupon rates is not unique to 
the REFCORP calculation. There are other programs and agencies that use 
these rates. If the Treasury retires publicly held debt, then the 
Finance Board along with these other agencies and programs would have 
to determine successor discount factors. Gramm-Leach-Bliley provides 
the Finance Board with sufficient authority to determine successor 
discounting factors in consultation with the Secretary of the Treasury. 
Thus, the Finance Board could reconsider the use of the zero-coupon 
Treasury rate, if and when it appears imminent that a benchmark 
Treasury rate would not be available, or would not provide an accurate 
reference interest rate for the REFCORP calculations.
    More generally, the Finance Board believes that the actual effects 
of the planned reduction of outstanding government debt on the Treasury 
bond market remain uncertain at this time. In addition, although 
reduced issuance by

[[Page 17437]]

Treasury of government debt may result in declining yields on Treasury 
bonds, these rates remain market rates and are not ``artificial.'' The 
fact that some commenters believe that the rates on Treasury bonds may 
be declining does not alter the Finance Board's underlying economic 
rationale for viewing the Treasury zero-coupon bond rate as the most 
appropriate present value factor to use for the purposes of this rule. 
Moreover, Treasury staff has generally endorsed the Finance Board's use 
of the zero-coupon Treasury bond rate for these calculations.
    The trade association requested that the Finance Board regularly 
publish the results of the calculation and its determination of the new 
termination date for the REFCORP obligation. The issue of publishing 
the determination made pursuant to the Gramm-Leach-Bliley requirements 
was not directly addressed in the proposed rule. However, the Finance 
Board expects that, after it has reviewed the results of the 
calculations made in accordance with Sec. 997.4, it will publish its 
determination as to the new termination date for the Banks' REFCORP 
obligation in the quarterly and annual combined financial report of the 
Bank System.\6\
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    \6\ On January 4, 2000, the Finance Board published a proposed 
rule for comment that would assign certain functions now performed 
by the Finance Board, including preparation of the Bank system's 
annual and quarterly financial reports, to the Office of Finance. 
See 65 FR 324,335 (Jan. 4, 2000) (proposed Sec. 941.2(c)).
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B. Consultations With Treasury

    Gramm-Leach-Bliley provides that the Finance Board shall select 
appropriate present-value factors for making the statutorily required 
determination in ``consultation with the Secretary of the Treasury.'' 
12 U.S.C. 1441b(f)(2)(C)(ii). Before proposing this rule, Finance Board 
staff met with staff from OMB and Treasury. The Finance Board also 
provided a copy of the proposed rule to the Secretary of the Treasury. 
In response, staff from Treasury has informally suggested 
clarifications to certain aspects of the Finance Board's proposed rule. 
Primarily, Treasury staff wished to make clear its general approach to 
estimating the rates that it will provide to the Finance Board, see n. 
2, supra., and also asked that the final rule clarify the nature of the 
REFCORP's role in performing the calculations described in Sec. 997.2 
and Sec. 997.3. On this latter point, the Finance Board reiterates that 
REFCORP has agreed to conduct the ministerial task of performing the 
calculations specifically described in Sec. 997.2 and Sec. 997.3, which 
will form the basis of the quarterly present value determination. The 
Finance Board will make the actual quarterly present value 
determination, after reviewing the results of REFCORP's calculation, as 
required by Sec. 997.2 and Sec. 997.3. See 65 FR at 5451.
    In addition, the Finance Board has made a slight change to the 
wording of Sec. 997.4(c) concerning the maintenance of the official 
record of the quarterly present value determinations, because the 
proposed wording could be read to imply that REFCORP would make the 
present value determination required by Gramm-Leach-Bliley. As 
proposed, the provisions stated that the Finance Board will keep the 
official records of all quarterly present value determinations ``made 
under this part by either the REFCORP or the Finance Board.'' To avoid 
any confusion, the Finance Board has deleted the phrase ``by either the 
REFCORP or the Finance Board'' from the final version of Sec. 997.4(c). 
This change does not alter the purpose of the provision, which is to 
make clear that the Finance Board will maintain the official record 
relating to the quarterly present value determinations. See id.
    Treasury staff also commented that the maturity date for zero-
coupon bonds maturing after 2006 will not always correspond to the date 
of the benchmark quarterly payment. In such a situation, the Finance 
Board expects that Treasury will provide an estimated interest rate on 
a zero-coupon bond with a maturity date that is closest to that of the 
benchmark quarterly payment. The effect of this change on the present 
value calculation should be minimal. The Finance Board has also added a 
definition of ``estimated interest rate'' to Sec. 997.1 that makes 
clear that the estimated interest rate will be for a zero-coupon 
Treasury bond that matures on the date of the quarterly benchmark 
payment that is being defeased or, if there is no zero-coupon Treasury 
bond that matures on that date, then on the date that is closest to the 
date of the quarterly benchmark payment being defeased. In addition, 
after adding this definition, the repetitive descriptions of the 
estimated interest rate that had appeared elsewhere in the rule, 
especially in Sec. 997.2 and Sec. 997.3, are no longer necessary and 
have been deleted.

C. Effective Date

    This rule is effective immediately on publication so that the new 
methodology may be applied without delay to the first REFCORP payment 
that will be made by the Banks under the new Gramm-Leach-Bliley 
provisions on April 17, 2000. Moreover, the implementation of this 
final rule requires no action or change in activity on the part of the 
Banks or other parties. The rule merely sets forth a methodology that 
will be used by the Finance Board in determining the new end date of 
the Banks' REFCORP obligation as required by Gramm-Leach-Bliley. Thus, 
the Finance Board finds that it has good cause to adopt this rule with 
an effective date that is immediate upon publication in the Federal 
Register. See 5 U.S.C. 553(d).
    After considering all the comments that it received, and for the 
reasons discussed above and in the preamble to the proposed rule, the 
Finance Board has decided to adopt new Part 997, with the changes 
discussed above, and the amendment to Sec. 951.1 of the Finance Board's 
regulations as proposed.

III. Regulatory Flexibility Act

    The final rule applies only to the Finance Board and to the Banks, 
which do not come within the meaning of small entities as defined in 
the Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, 
in accordance with section 605(b) of the RFA, 5 U.S.C. 605(b), the 
Finance Board hereby certifies that this final rule will not have a 
significant economic effect 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. Therefore, the Finance Board has not submitted any information to 
the Office of Management and Budget for review.

List of Subjects

12 CFR Part 951

    Credit, Federal home loan banks, Housing, Reporting and 
recordkeeping requirements.

12 CFR Part 997

    Federal home loan banks, Resolution funding corporation.

    For the reasons set forth in the preamble, the Finance Board hereby 
amends 12 CFR part 951 and adds 12 CFR part 997 to read as follows:

PART 951--AFFORDABLE HOUSING PROGRAM

    1. The authority citation for part 951 continues to read as 
follows:

    Authority: 12 U.S.C. 1430(j)


    2. Amend Sec. 951.1 by removing the words ``pro rata share of the'' 
from the definition of the term ``net earnings of a Bank''.
    3. Add part 997 to subchapter L to read as follows:

[[Page 17438]]

PART 997--RESOLUTION FUNDING CORPORATION OBLIGATIONS OF THE BANKS

Sec.
997.1   Definitions.
997.2   Reduction of the payment term.
997.3   Extension of the payment term.
997.4   Calculation of the quarterly present-value determination.
997.5   Termination of the obligation.

    Authority: 12 U.S.C. 1422b(a) and 1441b(f).


Sec. 997.1  Definitions.

    As used in this part:
    Actual quarterly payment means the quarterly amount paid by the 
Banks to fulfill the Banks' obligation to pay toward interest owed on 
bonds issued by the REFCORP. The amount will equal the aggregate of 20 
percent of the quarterly net earnings of each Bank, or such other 
amount assessed in accordance with the Act and the regulations adopted 
thereunder.
    Benchmark quarterly payment means $75 million, or such amount that 
may result from adjustments required by calculations made in accordance 
with Secs. 997.2 and 997.3.
    Current benchmark quarterly payment means the benchmark quarterly 
payment that corresponds to the date of the actual quarterly payment.
    Deficit quarterly payment means the amount by which the actual 
quarterly payment falls short of the current benchmark quarterly 
payment.
    Estimated interest rate means the interest rate provided to the 
Finance Board by the Department of the Treasury on a zero-coupon 
Treasury bond, the maturity of which is the same as the date of the 
benchmark quarterly payment that is being defeased, or if no bond 
matures on that date, then is the date closest to the date of the 
payment being defeased.
    Excess quarterly payment means the amount by which the actual 
quarterly payment exceeds the current benchmark quarterly payment.
    Quarterly present-value determination means the quarterly 
calculation that will determine the extent to which an excess quarterly 
payment or deficit quarterly payment alters the term of the Banks' 
obligation to the REFCORP. This determination will fulfill the 
requirements of 12 U.S.C 1441b(f)(2)(C)(ii), as amended by Pub. L. 106-
102, sec. 607, 113 Stat.1456-57.
    REFCORP means the Resolution Funding Corporation established in 12 
U.S.C. 1441b.


Sec. 997.2  Reduction of the payment term.

    (a) Generally. The Finance Board shall shorten the term of the 
obligation of the Banks to make payments toward the interest owed on 
bonds issued by the REFCORP for each quarter in which there is an 
excess quarterly payment.
    (b) Excess quarterly payment. Where there is an excess quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the excess quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be subtracted from the amount of the last non-defeased quarterly 
benchmark payment.
    (3) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is greater than zero, then the last non-defeased 
quarterly benchmark payment is reduced by the future value of the 
excess quarterly payment.
    (4) If the difference resulting from the calculation in paragraph 
(b)(2) of this section is less than zero, then the last non-defeased 
quarterly benchmark payment shall be defeased and the payment term 
shall be shortened.
    (5) The amount of the excess quarterly payment that has not already 
been applied to defeasing the payment under paragraph (b)(4) of this 
section shall be applied toward defeasing the last non-defeased 
quarterly benchmark payment using the applicable estimated interest 
rate.


Sec. 997.3  Extension of the payment term.

    (a) Generally. The Finance Board will extend the term of the 
obligation of the Banks to make payments toward interest owed on bonds 
issued by the REFCORP for each calendar quarter in which there is a 
deficit quarterly payment.
    (b) Deficit quarterly payment. Where there is a deficit quarterly 
payment, the quarterly present-value determination shall be as follows:
    (1) The future value of the deficit quarterly payment shall be 
calculated using the estimated interest rate corresponding to the last 
non-defeased benchmark quarterly payment, or to the first quarter 
thereafter if the last non-defeased benchmark quarterly payment already 
equals $75 million.
    (2) The future value calculated in paragraph (b)(1) of this section 
shall be added to the amount of the last non-defeased quarterly 
benchmark payment if that sum is $75 million or less.
    (3) If the sum calculated in paragraph (b)(2) of this section 
exceeds $75 million, the last non-defeased quarterly benchmark payment 
will become $75 million, and the quarterly benchmark payment term will 
be extended.
    (4) The extended payment will equal the future value of the amount 
of the deficit quarterly payment that has not already been applied to 
raising the quarterly benchmark payment to $75 million under paragraph 
(b)(3) of this section, using the estimated interest rate corresponding 
to the date of the extended benchmark quarterly payment.
    (c) Term beyond maturity. The benchmark quarterly payment term may 
be extended beyond April 15, 2030, if such extension is necessary to 
ensure that the value of the aggregate amounts paid by the Banks 
exactly equals the present value of an annuity of $300 million per year 
that commences on the date on which the first obligation of the REFCORP 
was issued and ends on April 15, 2030.


Sec. 997.4  Calculation of the quarterly present-value determination.

    (a) Applicable interest rates. The Finance Board shall obtain from 
the Department of the Treasury the applicable estimated interest rates 
and provide those rates to the REFCORP so that the REFCORP can perform 
the calculations required under Secs. 997.2 and 997.3.
    (b) Calculation by the Finance Board. If Sec. 997.3 requires that 
the term for the Banks' actual quarterly payments extend beyond April 
15, 2030 or if, for any reason, the REFCORP is unable to perform the 
calculations or to provide the Finance Board with the results of the 
calculations, the Finance Board shall make all calculations required 
under this part.
    (c) Records. The Finance Board will maintain the official record of 
the results of all quarterly present-value determinations made under 
this part.


Sec. 997.5  Termination of the obligation.

    (a) Generally. The Banks' obligation to the REFCORP, or to the 
Department of the Treasury if the term of that obligation extends 
beyond April 15, 2030, will terminate when the aggregate actual 
quarterly payments made by the Banks exactly equal the present value of 
an annuity that commences on the date on which the first obligation of 
the REFCORP was issued and ends on April 15, 2030.
    (b) Date of the final payment. The aggregate actual quarterly 
payments made by the Banks exactly equal the present value of the 
annuity described in paragraph (a) of this section when the value of 
any remaining benchmark quarterly payment(s), after the benchmark 
quarterly payments have been adjusted as required by Secs. 997.2 and 
997.3, exactly equals the actual quarterly payment.


[[Page 17439]]


    Dated: March 22, 2000.
    By the Board of Directors of the Federal Housing Finance Board:
Bruce A. Morrison,
Chairman.
[FR Doc. 00-8116 Filed 3-31-00; 8:45 am]
BILLING CODE 6725-01-P