[Federal Register Volume 68, Number 105 (Monday, June 2, 2003)]
[Rules and Regulations]
[Pages 32627-32629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13281]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1700

RIN 2550-AA27


Organization and Functions

AGENCY: Office of Federal Housing Enterprise Oversight, HUD.

ACTION: Final rule.

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SUMMARY: The Office of Federal Housing Enterprise Oversight (OFHEO) is 
revising its regulation that describes the Agency's organization and 
functions. Specifically, OFHEO is revising sections in the regulation 
that describe and display the Agency's official seal and logo. The logo 
is the official symbol representing OFHEO and is displayed on 
correspondence, selected documents, and signage of the Agency.
    In promulgating this rule, OFHEO finds that notice and public 
comment are not necessary. Section 553(b)(3)(A) of title 5, United 
States Code, provides that when regulations involve matters of agency 
organization, procedure or practice, the Agency may publish regulations 
in final form. In addition, OFHEO finds, in accordance with 5 U.S.C. 
553(d), that a delayed effective date is unnecessary. Accordingly, 
these regulations are effective upon publication.

EFFECTIVE DATE: The final rule is effective June 2, 2003.

FOR FURTHER INFORMATION CONTACT: Christine C. Dion, Associate General 
Counsel, telephone (202) 414-3838 (not a toll-free number), Office of 
Federal Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW., 
Washington, DC 20552. The telephone number for the Telecommunications 
Device for the Deaf is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

Discussion of the Final Regulation

    This final rule informs the public about changes to the official 
symbol of OFHEO.

Background on OFHEO

    OFHEO was established as an independent entity within the 
Department of Housing and Urban Development by the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (1992 Act) 
(title XIII of Pub. L. 102-550, 12 U.S.C. 4501 et seq.). OFHEO's 
primary mission is ensuring the capital adequacy and financial safety 
and soundness of Fannie Mae and Freddie Mac (collectively, the 
Enterprises).
    OFHEO began operating when its first employee, the first director, 
took office on June 1, 1993. The Agency was built from the ground up. 
It had to acquire staff and address hundreds of administrative issues 
involved in establishing an agency infrastructure. OFHEO needed to 
procure office space, equipment, computers, telecommunications, and 
other logistical support for the lawyers, economists, examiners and 
administrative personnel who would carry out the duties of the Agency.
    In its early years, OFHEO's experienced staff worked to develop an 
in-depth understanding of the operations of the Enterprises. OFHEO grew 
from a one-person agency into a strong and well-rounded regulator, 
fully capable of meeting its regulatory responsibilities.
    While the Agency was being built, it was still obligated to fulfill 
its mission of regulating two extremely large and enormously complex 
financial institutions. OFHEO now has all the key elements of a strong, 
thorough oversight program in place: Capital Standards, Examinations, 
and Research.
    As required by the 1992 Act, OFHEO established minimum and risk-
based capital standards as part of its role as a safety and soundness 
regulator. These capital requirements are intended to ensure that both 
Enterprises continue to operate and perform their crucial roles in the 
secondary mortgage market, keeping constant the flow of funds to 
mortgage lenders and prospective American homeowners.
    In addition to its quarterly release with respect to the minimum 
capital requirement, OFHEO has adopted a risk-based capital standard 
that is unique among financial regulators. Unlike ratio-based capital 
rules, OFHEO's standard is based on a 10-year stress test. A stress 
test measures risk in the context of a company's overall portfolio, 
including the company's risk management activities. While companies 
often use stress tests for internal risk management, and rating 
agencies use stress tests to rate companies and securities, OFHEO is 
among the first of the financial institutions regulators to use a 
comprehensive stress test to determine capital adequacy.
    In addition to developing a strong, rigorous risk-based capital 
standard, OFHEO has an annual risk-based examination program that is an 
integral part of a system designed to ensure the ongoing safety and 
soundness of the Enterprises. OFHEO's comprehensive risk-based 
examinations apply a consistent set of standards to assess and evaluate 
each Enterprise's financial condition, business operations, and 
internal controls. These standards remain consistent from year-to-year 
and are appropriately updated to reflect enhancements in regulatory 
best practice, developments in risk management or market practices, and 
innovations at either Enterprise.

[[Page 32628]]

OFHEO's examination program contributes to OFHEO's capital adequacy 
framework by further informing the Director's evaluation about the 
appropriateness of the balance of risk and capital at each Enterprise. 
OFHEO has implemented a plan to enhance its examination program and 
double the size of the examination staff.
    Complementing its Capital and Examination regulatory elements, 
OFHEO has developed a Research element to ensure that ongoing research 
and analysis is conducted on a variety of topics to understand how 
changes in the market impact the Enterprises and, conversely, how 
changes in the Enterprises' operations impact the market. A recent 
example of the Agency's research and analysis is a February 4, 2003, 
report released by OFHEO's Director, which is entitled: ``Systemic 
Risk: Fannie Mae, Freddie Mac and the Role of OFHEO.'' The report 
analyzes how the Enterprises operate in the housing finance system and 
the financial sector, how their activities affect economic activity and 
how they can affect systemic risk in different circumstances.
    In addition to its research and analysis, OFHEO presents symposiums 
on issues relating to the Enterprises and the mortgage markets, e.g., 
the March 10, 2003, symposium on ``House Prices in the U.S. Economy.'' 
Moreover, OFHEO advises the public and market participants on housing 
activities through issuance of periodic reports, such as the Agency's 
quarterly report analyzing housing appreciation trends, i.e., OFHEO's 
House Price Index (HPI) report.
    In support of its regulatory infrastructure based on Capital, 
Examination, and Research, OFHEO has adopted guidelines, policy 
guidances, and regulations, which are accessible on the Agency's 
website. The guidelines relate to risk-based capital and information 
quality. The policy guidance includes guidance on Non-Mortgage 
Liquidity Investments, and Safety and Soundness Standards for 
Information. OFHEO's rulemaking ranges from administrative regulations, 
e.g., rules of practice and procedure, to regulatory oversight 
regulations, e.g., a regulation that requires public disclosure by the 
Enterprises of their securities and financial information, and a 
regulation addressing corporate governance, which enhances the 
transparency of regulatory standards for the executives and boards of 
directors of the Enterprises.
    The preceding background was provided to summarize OFHEO's first 10 
years as a Federal financial regulatory agency. The public is 
encouraged to visit OFHEO's Web site for a fuller understanding about 
the Agency and its accomplishments to date.
    Over the past 10 years, OFHEO has met and continues to meet its 
mandate to ensure that the Enterprises are well-capitalized and 
operating in a safe and sound manner. Accordingly, on the occasion of 
OFHEO's successful completion of a range of regulatory duties and its 
10 year anniversary, the Agency has determined to update its logo. The 
triangle representing the roof has been properly centered. In a sense, 
the roof in the logo, like OFHEO, has been strengthened and put in good 
working order. OFHEO looks forward to continued success.

Changes to the Official Symbol of OFHEO

    OFHEO is revising sections of this regulation that describe and 
display the official seal and logo representing the Agency. Under the 
revisions, the seal and logo are combined to be the sole official 
symbol of OFHEO that will be displayed on correspondence, selected 
documents, and signage. The logo, as restructured, also will serve as 
the official seal to authenticate official documents of the Agency.
    Specifically, the logo is a disc consisting of two concentric 
circles enclosing the words ``Office of Federal Housing Enterprise 
Oversight'' and the Agency's inaugural year, 1993. In the center of the 
disc is a stylized image of a structure consisting of a solid two-
tiered pedestal base topped by a solid triangular shape. The structure 
represents a house or home, symbolic of the role of OFHEO in promoting 
a stable and efficient housing finance system. The triangular top of 
the symbol represents the roof of the structure. The base represents 
the foundation. The two tiers of the foundation represent the safety 
and soundness oversight of OFHEO. The Agency's role with respect to the 
Enterprises is emphasized by placement of the acronym of the Agency 
(OFHEO) between the base and top of the symbol.
    It is noted that the official symbol of OFHEO, as revised by this 
final regulation, is effective on June 2, 2003. However, for purposes 
of cost efficiency, OFHEO will continue to use and recognize its 
original seal and logo until such time as supplies containing them are 
exhausted and signage displaying them is replaced.
    This final rule is not classified as a significant rule under 
Executive Order 12866 because it will not result in (1) an annual 
effect on the economy of $100 million or more; (2) a major increase in 
costs or prices for consumers, individual industries, Federal, State, 
or local government agencies, or geographic regions; or (3) significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic or foreign markets. 
Accordingly, no regulatory impact assessment is required and this final 
rule has not been submitted to the Office of Management and Budget for 
review.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a rule that has a significant economic impact on a substantial number 
of small entities, small businesses, or small organizations must 
include an initial regulatory flexibility analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the Agency has certified that the regulation will not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). OFHEO has considered the impact of this 
final rule under the Regulatory Flexibility Act. The General Counsel 
certifies that this final rule will not have a significant economic 
impact on a substantial number of small business entities.

Paperwork Reduction Act

    This final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

Unfunded Mandates Reform Act of 1995

    This final rule does not require the preparation of an assessment 
statement in accordance with the Unfunded Mandates Reform Act of 1995, 
2 U.S.C. 1531. Assessment statements are not required for regulations 
that incorporate requirements specifically set forth in law. As 
explained in the preamble, this rule implements specific statutory 
requirements. In addition, this rule does not include a Federal mandate 
that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year.

List of Subjects in 12 CFR Part 1700

    Organization and functions (government agencies).

[[Page 32629]]


0
For the reasons stated in the preamble, OFHEO is amending 12 CFR part 
1700 as follows:

PART 1700--ORGANIZATION AND FUNCTIONS

0
1. The authority citation for part 1700 continues to read as follows:

    Authority: 5 U.S.C. 552; 12 U.S.C. 4513 and 4526.

0
2. Revise Sec.  1700.3 to read as follows:


Sec.  1700.3  Official logo and seal.

    The section describes and displays the logo adopted by the Director 
as the official symbol representing the Office of Federal Housing 
Enterprise Oversight. It is displayed on correspondence, selected 
documents, and signage. The logo serves as the official seal to 
authenticate official documents of the Agency.
    (a) Description. The logo is a disc consisting of two concentric 
circles enclosing the words ``Office of Federal Housing Enterprise 
Oversight'' and the inaugural year, 1993. In the center of the disc is 
a stylized image of a structure consisting of a solid two-tiered 
pedestal base topped by a solid triangular shape, which represents the 
roof of the structure. Placed between the base and the top are the 
letters ``OFHEO.'' These letters spell out the acronym of the Office of 
Federal Housing Enterprise Oversight and act as a visual link between 
the top and bottom of the structure.
    (b) Display. The Office of Federal Housing Enterprise Oversight's 
official logo and seal appears below:
[GRAPHIC] [TIFF OMITTED] TR02JN03.002

Sec.  1700.4  [Removed]

0
3. Remove Sec.  1700.4.

    Dated: May 22, 2003.
Armando Falcon, Jr.,
Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 03-13281 Filed 5-30-03; 8:45 am]
BILLING CODE 4220-01-P