[Federal Register Volume 70, Number 248 (Wednesday, December 28, 2005)]
[Notices]
[Pages 76849-76850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-7890]


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FEDERAL HOUSING FINANCE BOARD

[No. 2005-N-09]


Notice of Annual Adjustment of the Cap on Average Total Assets 
That Defines Community Financial Institutions, the Limits on Annual 
Compensation for Federal Home Loan Bank Directors, and the Maximum 
Dollar Limits on Certain Allocations by a Federal Home Loan Bank of Its 
Annual Required Affordable Housing Program Contributions

AGENCY: Federal Housing Finance Board.

ACTION: Notice.

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SUMMARY: 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), the Federal Housing Finance Board (Finance Board) has 
adjusted the cap on average total assets that defines a ``Community 
Financial Institution'', the limits on annual compensation for Federal 
Home Loan Bank (Bank) directors, and the maximum dollar limits on 
certain allocations by a Bank of its annual required Affordable Housing 
Program (AHP) contributions. These changes will become effective on 
January 1, 2006.

FOR FURTHER INFORMATION CONTACT: Scott L. Smith, Associate Director, 
Research, Office of Supervision, by telephone at 202-408-2991, by 
electronic mail at [email protected], or by regular mail at the Federal 
Housing Finance Board, 1625 Eye Street NW., Washington DC 20006.

SUPPLEMENTARY INFORMATION: 

A. Statutory and Regulatory Background

    Section 2(13) of the Federal Home Loan Bank Act (Bank Act) and 
Sec.  925.1 of the Finance Board regulations define a member that is a 
``Community Financial Institution'' (CFI) by the member's total asset 
size. See 12 U.S.C. 1422(13)(A) and 12 CFR 925.1. The Bank Act requires 
the Finance Board annually to adjust the CFI asset cap to reflect any 
percentage increase in the

[[Page 76850]]

preceding year's CPI-U, as published by the DOL. See 12 U.S.C. 
1422(13)(B).
    Section 7(i)(2)(B) of the Bank Act and Sec.  918.3(a)(1) of the 
Finance Board regulations require the Finance Board to make similar 
annual adjustments to the annual compensation limits for members of the 
boards of directors of the Banks. See 12 U.S.C. 1427(i)(2) and 12 CFR 
918.3(a).
    Under the AHP regulation, the Finance Board must make three similar 
annual adjustments that may affect how a Bank allocates its yearly 
required AHP contributions. See 12 CFR 951.3(a)(1)-(2). The first 
annual adjustment sets the maximum dollar limit a Bank may set aside 
annually for the current year and the subsequent year towards 
homeownership set-aside programs. The second adjustment sets the 
maximum dollar limit a Bank may set aside annually for the current year 
and the subsequent year towards an additional first-time homebuyer set-
aside program. The third adjustment sets the maximum dollar limit a 
Bank may allocate from its annual required AHP contribution for the 
subsequent year to the current year's competitive application program.

B. Calculating the Annual Adjustments

    All of these annual adjustments--to the CFI asset cap, annual Bank 
director compensation limits, and maximum dollar limits on Bank 
allocations from annual required AHP contributions--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 that will become effective on January 1, 2006, are based on 
the percentage increase in the CPI-U from November 2004 to November 
2005. The Finance Board uses November data to ensure publication of the 
changes to the annual limits before the January 1st effective date. 
This practice is consistent with that of other federal agencies.
    The DOL encourages 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 5 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.
    The unadjusted CPI-U increased 3.5 percent between November 2004 
and November 2005. Based on this change, and effective on January 1, 
2006, the Finance Board has made the following adjustments:
    CFI Asset Cap: The CFI Asset Cap, which was $567 million for 2005, 
will be $587 million in 2006. The Finance Board arrived at the adjusted 
limit of $587 million by rounding to the nearest million.
    Annual compensation limits: The annual compensation limits for 
members of the Bank boards of directors will be as follows in 2006: For 
a Chairperson--$29,357; for a Vice-Chairperson--$23,486; for any other 
member of a Bank's board of directors--$17,614. The Finance Board 
arrived at the adjusted annual compensation limits by rounding to the 
nearest dollar.
    Dollar limits on Bank allocations from annual required AHP 
contributions. The maximum dollar limit on the amount a Bank may set 
aside from its annual required AHP contributions, for the current year 
and the subsequent year, toward homeownership set-aside programs, which 
was $3.2 million in 2005, will be $3.3 million in 2006.
    The maximum dollar limit on the amount a Bank may set aside from 
its annual required AHP contributions towards an additional first-time 
homebuyer set-aside program, for the current year and subsequent year, 
which was $1.6 million in 2005, will be $1.7 million in 2006.
    The maximum dollar limit on the amount a Bank may allocate from its 
annual required AHP contribution, for the subsequent year to the 
current year's competitive application program, which was $3.2 million 
in 2005, will be $3.3 million in 2006.
    The Finance Board arrived at the adjusted AHP limits by rounding to 
the nearest $100,000.\1\
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    \1\ While all adjusted limits in this Notice have been rounded 
to some dollar level, 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.

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    Dated: December 21, 2005.

    By the Federal Housing Finance Board.
Ronald A. Rosenfeld,
Chairman.
[FR Doc. E5-7890 Filed 12-27-05; 8:45 am]
BILLING CODE 6725-01-P