[Federal Register Volume 69, Number 1 (Friday, January 2, 2004)]
[Notices]
[Pages 77-79]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-32309]


-----------------------------------------------------------------------

FEDERAL HOUSING FINANCE BOARD

[No. 2003-N-11]


Notice of Annual Adjustment

AGENCY: Federal Housing Finance Board.

ACTION: Notice.

-----------------------------------------------------------------------

    Notice of annual adjustment of the cap on average total assets that 
defines community financial institutions under section 2(13)(B) of the 
Federal Home Loan Bank Act and Sec.  900.1 of the

[[Page 78]]

Federal Housing Finance Board's regulations;
    Notice of annual adjustment of the limits on annual compensation 
for Federal home loan bank directors under section 7(i)(2)(B) of the 
Federal Home Loan Bank Act and Sec.  918.3(a)(1) of the Federal Housing 
Finance Board's regulations;
    Notice of annual adjustment of the maximum dollar limits on certain 
allocations by a bank of its annual required affordable housing program 
contributions under Sec.  951.3(a)(1)(iii) and 951.3(a)(2) of the 
Federal Housing Finance Board's regulations.
SUMMARY: Notice is hereby given that the Federal Housing Finance Board 
(Finance Board) has adjusted the cap on average total assets that 
defines a ``Community Financial Institution'' (CFI) based on the annual 
percentage increase in the Consumer Price Index for all urban consumers 
(CPI-U), as published by the Department of Labor (DOL), pursuant to the 
requirements of the Federal Home Loan Bank Act (Bank Act) and the 
Finance Board's regulations. Notice is hereby given that the Finance 
Board has made similar adjustments to the limits on annual compensation 
for the Federal Home Loan Bank (Bank) directors, based on the CPI-U, as 
published by the DOL, pursuant to the requirements of the Bank Act and 
the Finance Board's regulations. In addition, notice is hereby given 
that the Finance Board has made similar adjustments to the maximum 
dollar limits on certain allocations by a Bank of its annual required 
Affordable Housing Program (AHP) contributions, pursuant to the 
requirements of the Finance Board's regulations.

FOR FURTHER INFORMATION CONTACT: Scott L. Smith, Associate Director, 
Regulations and Research, Office of Supervision, (202) 408-2991, or 
Mark Edward Stover, Regulations and Research, Office of Supervision, 
(202) 408-2828. Staff also can be reached by regular mail at the 
Federal Housing Finance Board, 1777 F Street, NW., Washington, DC 
20006.

SUPPLEMENTARY INFORMATION: Section 2(13)(B) of the Bank Act (12 U.S.C. 
1422(13)(B)), and Sec.  925.1 of the Finance Board's regulations (12 
CFR 900.1) require the Finance Board, beginning in 2001, to adjust 
annually the cap on average total assets (CFI Asset Cap) set forth in 
section 2(13)(A)(ii) of the Bank Act (12 U.S.C. 1422(13)(A)(ii)) and 
Sec.  925.1 of the Finance Board's regulations that defines a CFI, 
based on the annual percentage increase, if any, in the CPI-U, as 
published by the DOL.
    Section 7(i)(2)(B) of the Bank Act (12 U.S.C. 1427(i)(2)(B)) and 
Sec.  918.3(a)(1) of the Finance Board's regulations (12 CFR 
918.3(a)(1)), require the Finance Board, beginning January 1, 2001, to 
make similar annual adjustments to the annual compensation limits set 
forth in section 7(i)(2)(A) of the Bank Act (12 U.S.C. 1427(i)(2)(A)) 
and Sec.  918.3(a)(1), for members of the boards of directors of the 
Banks.
    Section 951.3(a)(1)(iii) of the Finance Board's regulations (12 CFR 
951.3(a)(1)(iii)) requires the Finance Board, beginning in 2003, to 
make similar annual adjustments to the maximum dollar limits set forth 
in Sec.  951.3(a)(1)(i), on the amounts that a Bank may set aside 
annually from its annual required AHP contributions for the current 
year and the subsequent year, towards homeownership set-aside programs. 
In addition, Sec.  951.3(a)(1)(iii) of the Finance Board's regulations 
(12 CFR 951.3(a)(1)(iii)) requires the Finance Board, beginning in 
2003, to make similar annual adjustments to the maximum dollar limits 
set forth in Sec.  951.3(a)(1)(ii), on the amounts that a Bank may set 
aside annually from its annual required AHP contributions for the 
current year and the subsequent year, towards an additional first-time 
homebuyer set-aside program.
    Section 951.3(a)(2) of the Finance Board's regulations (12 CFR 
951.3(a)(2)), requires the Finance Board, beginning in 2002, to make a 
similar annual adjustment to the maximum dollar limit set forth in 
Sec.  951.3(a)(2), on the amount that a Bank may allocate from its 
annual required AHP contribution for the subsequent year to the current 
year's competitive application program.
    For purposes of the CFI Asset Cap, the Finance Board is required to 
publish notice by Federal Register of the CPI-U-adjusted Cap. See 12 
CFR 925.1. For purposes of the Banks' board of directors annual 
compensation limits, the Finance Board is required to publish notice, 
by Federal Register, distribution of a memorandum or otherwise, of the 
CPI-U-adjusted limits on such compensation. See 12 CFR 918.3(a)(1). For 
purposes of the maximum dollar limits on Banks' allocations from annual 
required AHP contributions, the Finance Board is required to publish 
notice, by Federal Register, distribution of a memorandum or otherwise, 
of the CPI-U-adjusted maximum dollar limits.
    The annual adjustments of the existing CFI Asset Cap, annual Bank 
director compensation limits and maximum dollar limits on Bank 
allocations from annual required AHP contributions, effective January 1 
of a particular calendar year, reflect the percentage by which the CPI-
U published for November of the preceding calendar year exceeds the 
CPI-U published for November of the year before the preceding calendar 
year (if at all). For example, the adjustments of the limits effective 
January 1, 2004 are based on the percentage increase in the CPI-U from 
November 2002 to November 2003. The CFI Asset Cap is rounded to the 
nearest million dollars, the annual compensation limits are rounded to 
the nearest dollar and the limits on allocations from AHP contributions 
are rounded to the nearest $100,000.\1\
---------------------------------------------------------------------------

    \1\ All adjusted limits referred to in this notice have been 
rounded to some dollar level. However, the calculations of new 
limits are based on cumulative CPI-U changes applied to the limits 
as they first appeared in finance Board regulations, and hence are 
not distorted over time by rounding.
---------------------------------------------------------------------------

    The Finance Board has determined that it is appropriate to use data 
from November rather than waiting for the December data to become 
available so that the Banks can be notified of the adjusted CFI Asset 
Cap, annual Bank director compensation limits and AHP maximum dollar 
allocation limits as close to the January 1 effective date as possible. 
Other Federal agencies do not rely on December data, which is published 
in mid-January, when calculating annual inflation adjustments and, as a 
result, are able to announce their adjustments prior to the effective 
date of January 1.
    The DOL encourages the use of CPI-U data that has not been 
seasonally adjusted in ``escalation agreements'' because seasonal 
factors are updated annually and seasonally adjusted data are subject 
to revision for up to five years following the original release. 
Unadjusted data are not routinely subject to revision, and previously 
published unadjusted data are only corrected when significant 
calculation errors are discovered. Accordingly, the Finance Board is 
using data that has not been seasonally adjusted to calculate the new 
CFI Asset Cap, annual Bank director compensation limits and AHP maximum 
dollar allocation limits.
    The unadjusted CPI-U increased 1.8 percent between November of 2002 
and November of 2003. Based on this data, pursuant to the requirements 
of Sec.  925.1, the Finance Board has adjusted the CFI Asset Cap from 
the 2003 limit of $538 million to $548 million, effective January 1, 
2004. The Finance Board arrived at the adjusted limit of $548 million 
by rounding to the nearest million.
    Pursuant to Sec.  918.3(a)(1), based on the 1.8 percent increase in 
the unadjusted CPI-U, the Finance Board has adjusted

[[Page 79]]

the annual compensation limits for the members of the boards of 
directors of the Banks as follows, effective January 1, 2004: For a 
Chairperson--$27,405; for a Vice-Chairperson--$21,924; for any other 
member of a Bank's board of directors--$16,443. The Finance Board 
arrived at the adjusted annual compensation limits by rounding to the 
nearest dollar.
    Pursuant to Sec.  951.3(a)(1)(iii), the Finance Board applied the 
1.8 percent increase in the unadjusted CPI-U to the maximum dollar 
limits on the amounts that a Bank may set aside from its annual 
required AHP contributions for the current year and the subsequent 
year, toward homeownership set-aside programs. Rounding the result to 
the nearest $100,000, the maximum dollar limit remains at the 2003 
level of $3.1 million, effective January 1, 2004.
    Pursuant to Sec.  951.3(a)(1)(iii), based on the 1.8 percent 
increase in the unadjusted CPI-U, the Finance Board has adjusted the 
maximum dollar limit on the amount that a Bank may set aside from its 
annual required AHP contributions, for the current year and the 
subsequent year, towards an additional first-time homebuyer set-aside 
program, from the 2002 limit of $1.5 million to $1.6 million, effective 
January 1, 2004. The Finance Board arrived at the adjusted limit of 
$1.6 million by rounding to the nearest $100,000.
    In addition, pursuant to Sec.  951.3(a)(2), the Finance Board 
applied the 1.8 percent increase in the unadjusted CPI-U, to the 
maximum dollar limit on the amount that a Bank may allocate from its 
annual required AHP contribution for the subsequent year to the current 
year's competitive application program. Rounding the result to the 
nearest $100,000, the maximum dollar limit remains at the 2003 level of 
$3.1 million, effective January 1, 2004.

    Dated: December 22, 2003.

    By the Federal Housing Finance Board.
John T. Korsmo,
Chairman.
[FR Doc. 03-32309 Filed 12-31-03; 8:45 am]
BILLING CODE 6725-01-P