Federal Register, Volume 76 Issue 118 (Monday, June 20, 2011)

[Federal Register Volume 76, Number 118 (Monday, June 20, 2011)]
[Rules and Regulations]
[Pages 35724-35736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-15098]

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FEDERAL HOUSING FINANCE AGENCY

12 CFR Parts 1229 and 1237

RIN 2590-AA23

Conservatorship and Receivership

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing a final
rule to establish a framework for conservatorship and receivership
operations for the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, and the Federal Home Loan Banks, as
contemplated by the Housing and Economic Recovery Act of 2008 (HERA).
HERA amended the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (Safety and Soundness Act) by adding, among other
provisions, section 1367, Authority Over Critically Undercapitalized
Regulated Entities. The rule will implement this provision, and will
ensure that these operations advance FHFA's critical safety and
soundness and mission requirements. The rule seeks to protect the
public interest in the transparency of conservatorship and receivership
operations for the Federal National Mortgage Association (Fannie Mae),
the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively,
the Enterprises), and the Federal Home Loan Banks (Banks)
(collectively, the regulated entities).

DATES: Effective Date: This rule is effective July 20, 2011.

FOR FURTHER INFORMATION CONTACT: Frank Wright, Senior Counsel, Federal
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington,
DC 20552, (202) 414-6439 (not a toll-free number); or Mark D. Laponsky,
Deputy General Counsel, Federal Housing Finance Agency, Fourth Floor,
1700 G Street, NW., Washington, DC 20552, (202) 414-3832 (not a toll-
free number). The telephone number for the Telecommunications Device
for the Hearing Impaired is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

The Housing and Economic Recovery Act of 2008 (HERA), Public Law
110-289, 122 Stat. 2654, amended the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.)
(Safety and Soundness Act), and the Federal Home Loan Bank Act (12
U.S.C. 1421-1449) (Bank Act) to establish FHFA as an independent agency
of the Federal government.\1\ FHFA was established as an independent
agency of the Federal Government with all of the authorities necessary
to oversee vital components of our country's secondary mortgage
markets--the regulated entities and the Office of Finance of the
Federal Home Loan Bank System.
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\1\ See Division A, titled the ``Federal Housing Finance
Regulatory Reform Act of 2008,'' Title I, section 1101 of HERA.
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The Safety and Soundness Act provides that FHFA is headed by a
Director with general supervisory and regulatory authority over the
regulated entities and over the Office of Finance,\2\ expressly to
ensure that the regulated entities operate in a safe and sound manner,
including maintaining adequate capital and internal controls; foster
liquid, efficient, competitive, and resilient national housing finance
markets; comply with the Safety and Soundness Act and rules,
regulations, guidelines, and orders issued under the Safety and
Soundness Act and the authorizing statutes (i.e., the charter acts of
the Enterprises and the Bank Act); and carry out their respective
missions through activities and operations that are authorized and
consistent with the Safety and Soundness Act, their respective
authorizing statutes, and the public interest.\3\
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\2\ See sections 1101 and 1102 of HERA, amending sections 1311
and 1312 of the Safety and Soundness Act, codified at 12 U.S.C.
4511and 4512.
\3\ See 12 U.S.C. 4513(a)(1)(B).
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In addition, this law combined the staffs of the now abolished
Office of Federal Housing Enterprise Oversight (OFHEO), the now
abolished Federal Housing Finance Board (Finance Board), and the
Government-Sponsored Enterprise (GSE) mission office at the Department
of Housing and Urban Development (HUD). By pooling the expertise of the
staffs of OFHEO, the Finance Board, and the GSE mission staff at HUD,
Congress intended to strengthen the regulatory and supervisory
oversight of the 14 housing-related GSEs.
The Enterprises, combined, own or guarantee more than $5 trillion
of residential mortgages in the United States (U.S.), and play a key
role in housing finance and the U.S. economy. The Banks, with combined
assets of nearly $850 billion, support the housing market by making
advances (i.e., loans secured by acceptable collateral) to their member
commercial banks, thrifts, and credit unions, assuring a ready flow of
mortgage funding.
Because FHFA's mission is to promote housing and a strong national
housing finance system by ensuring the safety and soundness of the
Enterprises and the Banks, HERA amended the Safety and Soundness Act to
make explicit FHFA's general regulatory and supervisory authority. To
this end, section 1311(b)(1) of the Safety and Soundness Act expressly
makes each regulated entity ``subject to the supervision and regulation
of the Agency,'' thus amplifying the broad supervisory authority of the
Director. See 12 U.S.C. 4511(b)(1). Moreover, the Safety and Soundness
Act underscores the breadth of this authority by

[[Page 35725]]

expressly conveying ``general regulatory authority'' over the regulated
entities to the Director. See 12 U.S.C. 4511(b)(2); see also 12 U.S.C.
4513(a)(1)(B).\4\ In addition, the Safety and Soundness Act, as amended
by HERA, provides that ``[t]he Agency may prescribe such regulations as
the Agency determines to be appropriate regarding the conduct of
conservatorships or receiverships.'' 12 U.S.C. 4617(b)(1).
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\4\ Other provisions in the Safety and Soundness Act recognize
the independence and general regulatory authority of the Director.
Section 1311(c) of the Safety and Soundness Act provides that the
authority of the Director ``to take actions under subtitles B and C
[of Title I of HERA] shall not in any way limit the general
supervisory and regulatory authority granted to the Director under
subsection (b).'' See 12 U.S.C. 4511(c). Similarly, section 1319G(a)
of the Safety and Soundness Act provides ample, independent
authority for the issuance of ``any regulations, guidelines, or
orders necessary to carry out the duties of the Director under this
title or the authorizing statutes, and to ensure that the purposes
of this title and the authorizing statutes are accomplished.'' See
12 U.S.C. 4519G(a).
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The Enterprises are currently in conservatorship. FHFA as
Conservator has been responsible for the conduct and administration of
all aspects of the operations, business, and affairs of both
Enterprises since September 6, 2008, the date on which the Director
placed Fannie Mae and Freddie Mac in conservatorship. As Conservator,
FHFA is authorized to take such action as may be ``necessary to put the
regulated entity in a sound and solvent condition'' and ``appropriate
to carry on the business of the regulated entity and preserve and
conserve the assets and property of the regulated entity.'' 12 U.S.C.
4617(b)(2)(D). Similarly, FHFA, as Conservator, may ``transfer or sell
any asset or liability of the regulated entity in default, and may do
so without any approval, assignment, or consent with respect to such
transfer or sale.'' Id. 4617(b)(2)(G).
The United States Department of the Treasury (``Treasury'')
facilitated FHFA's decision to utilize its statutory conservatorship
powers in an effort to restore the Enterprises' financial health by
agreeing to make funding available to the Enterprises pursuant to
Senior Preferred Stock Purchase Agreements (``Treasury
Agreements'').\5\ Pursuant to these Agreements, as subsequently
amended, Treasury has made available, through the Conservator, capital
(``Treasury Commitments'') to each of the Enterprises in return for
senior preferred stock carrying a preference with regard to dividends
and the distribution of assets of the Enterprise in liquidation. As
Conservator, FHFA has already drawn on the Treasury Commitments several
times to prevent a negative net worth position that would trigger
mandatory receivership of each Enterprise.
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\5\ The Treasury Agreements and their amendments are available
to the public for review at http://www.fhfa.gov/webfiles/1099/conservatorship21709.pdf and http://www.financialstability.gov/roadtostability/homeowner.html.
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Congress authorized the Treasury Agreements in section 1117 of
HERA, which amended each of the Enterprises' authorizing statutes
(Fannie Mae, 12 U.S.C. 1716 et seq.; Freddie Mac, 12 U.S.C. 1451 et
seq.) to empower Treasury to purchase securities of the Enterprises
subject to certain conditions. These conditions include that Treasury
``protect the taxpayers'' by taking into consideration, among other
things, ``[t]he need for preferences or priorities regarding payments
to the Government'' and ``[r]estrictions on the use of corporate
resources.'' Pursuant to this statutory mandate, the Treasury
Agreements imposed several such preferences, priorities, and
restrictions. For instance, while the Treasury Agreements authorize the
Conservator to draw on the Treasury Commitment for funds equal to the
amount by which an Enterprise's liabilities exceed its assets, excluded
from this calculation are liabilities that the Conservator determines
shall be subordinated, including ``a claim against [an Enterprise]
arising from rescission of a purchase or sale of a security issued by
[an Enterprise] * * * or for damages arising from the purchase, sale,
or retention of such a security.'' Treasury Agreements Sec. 1,
definition of ``Deficiency Amount,'' subparagraph (iii). In other
words, the Conservator may determine to subordinate such a liability,
with the effect that funds could not be drawn under the Treasury
Agreements to satisfy it. The Treasury Agreements also contain
restrictions on the declaration or payment of dividends or other
distributions with respect to the Enterprises' equity interests;
redeeming, purchasing, retiring, or otherwise acquiring for value any
of the Enterprises' equity interests; or selling, transferring, or
otherwise disposing of all or any portion of the Enterprises' assets
other than in the ordinary course of business or under other limited
exceptions. Treasury Agreements Sec. Sec. 5.1 and 5.4. In promulgating
these regulations, FHFA is required to ``ensure that the purposes of *
* * the authorizing statutes,'' including the authorizing statutes'
provisions for stock purchases by Treasury and the preferences,
priorities, and restrictions attendant to such purchases, ``are
accomplished.'' 12 U.S.C. 4526(a).
At the time FHFA established the conservatorships, and on several
occasions since, FHFA has noted that the conservatorships, combined
with the Treasury Senior Preferred Stock Agreements described above,
provide an opportunity for Congress to direct the ultimate resolution
of the Enterprises.

II. Final Rule

This final regulation describes, codifies, and implements the
changes to the statutory regime enacted by HERA, the authorities
granted to FHFA, and eliminates ambiguities regarding those changes.
The final rule does not, and the proposed rule, published in the
Federal Register at 75 FR 39462 (July 9, 2010), did not, recite all
provisions of law relevant to the regulated entities in conservatorship
or receivership. It sets out the basic and general framework for
conservatorships and receiverships, supplementing statutory provisions
that FHFA believed needed elaboration or explanation. The rule cannot
be read or applied in isolation, but must be read while also consulting
the enabling statutes of FHFA and the regulated entities. The
regulation is part of FHFA's implementation of the powers provided by
HERA, and does not seek to anticipate or predict future
conservatorships or receiverships.
The final rule includes provisions that describe the basic
authorities of FHFA when acting as conservator or receiver, including
the enforcement and repudiation of contracts. Reflecting the approach
in HERA, the rule parallels many of the provisions in the Federal
Deposit Insurance Corporation (FDIC) receivership and conservatorship
regulations. The rule necessarily differs in some respects, however,
from the FDIC regulations, because not all of the regulated entities
are depository institutions, none is a Federally insured depository
institution, and their important public missions, reflected in
congressional charters, differ from those of banks and thrifts.
The final rule establishes procedures for conservatorship and
receivership and priorities of claims for contract parties and other
claimants. These priorities set forth the order in which various
classes of claimants will be paid, partially or in full, in the event
that a regulated entity is unable to pay all valid claims.
The final rule contains several provisions that address whether and
to what extent claims against the regulated entities by current or
former holders of their equity interests for rescission or damages
arising from the purchase, sale, or retention of such equity interests
will be paid while those entities are in

[[Page 35726]]

conservatorship or receivership. The potential impact of such claims
may be significant and may jeopardize FHFA's ability to fulfill its
statutory mission to restore soundness and solvency to insolvent
regulated entities and to preserve and conserve their assets and
property.
The rule clarifies that for purposes of priority determinations,
claims arising from rescission of a purchase or sale of an equity
security of a regulated entity, or for damages arising from the
purchase, sale, or retention of such a security, will be treated as
would the underlying security that establishes the right to the claim.
The rule also classifies a payment of these types of claims as a
capital distribution, which is prohibited during conservatorship,
absent the express approval of the Director. Moreover, the rule
provides that payment of securities litigation claims will be held in
abeyance during a conservatorship, except as otherwise ordered by the
Director. In the event of receivership, such claims will be treated
according to the process established by statute and by regulations in
this part.

A. Comments

FHFA has considered all of the comments in developing the final
rule. FHFA accepted some of the commenters' recommendations and has
made changes in the final rule, although the basic approach adopted in
the proposed rule remains the same. The changes made in the final rule
improve upon the basic approach proposed by FHFA by clarifying certain
provisions and by improving the structure of the rule. Specific
comments, FHFA's responses, and changes adopted in the final rule are
described in greater detail below in the sections describing the
relevant rule provisions.
FHFA received comments from a variety of sources, including
shareholders for the Enterprises in conservatorship, counsel for
shareholder litigants, members of Congress, and the Federal Home Loan
Banks.

B. Final Rule Provisions

1. Comments Relating to Shareholder Claims
Some of the fiercest objections to the proposed rule were made
against the provisions that would address the status of shareholder
claims in conservatorship and receivership. FHFA received several
comments from Enterprise shareholders, attorneys for shareholders
engaged in litigation against the Enterprises, and several members of
Congress, who raised the following concerns:
Redress for victims of securities fraud.
Shareholders urged FHFA not to adopt the proposed rule because the
rule would deny victims of securities fraud any avenue for meaningful
redress. These commenters also argued that the proposed rule would
insulate Fannie Mae and Freddie Mac and their management from
accountability for fraud.
After full consideration of these comments, FHFA has determined
their concerns to be unfounded. The reality in any insolvency is that
there are not enough assets to satisfy everyone with a claim on those
assets. The priority provisions of 12 U.S.C. 4617(c) and regulations in
this part simply recognize that reality. In light of the different risk
profiles that investors and creditors accept when dealing with a
business entity, subordination is the rule in corporate bankruptcies.
The comments offer no sound reasons why the public policies supporting
the rule in bankruptcy are not equally applicable in the context of the
entities regulated by FHFA. If anything, the policy justifications for
subordination of shareholder claims relative to the Enterprises
currently in conservatorship is even greater because of the unique
arrangements by which the Enterprises are being kept solvent through
infusions of Treasury funds. If securities litigation claimants were
treated as ordinary creditors, payment of such a claim against the
Enterprises would represent a wealth transfer from the taxpayers of the
United States to certain current and former shareholders of Fannie Mae
and Freddie Mac. This was not the intent of the Treasury Agreements,
and subordination avoids this unintended and unfair result.
FHFA does not intend to allow anyone under its jurisdiction to
escape accountability for fraud. The rule, however, deals with a
different issue: The priority of competing claims against a limited
estate. In the conservatorships of Fannie Mae and Freddie Mac, FHFA
immediately replaced the management that was in charge of Fannie Mae
and Freddie Mac at the time plaintiffs in the pending securities cases
allege the fraud occurred. As set forth in FHFA's 2008 Report to
Congress, FHFA fundamentally changed Enterprise management and
governance practices by appointing new CEOs, nonexecutive chairmen, and
boards of directors to both Enterprises, and by working with both
Enterprises to establish a new board committee structure with key
changes in charters and responsibilities.\6\ Therefore, whether
shareholder plaintiffs can collect on claims or judgments against
Fannie Mae or Freddie Mac has no connection to and does not further any
interest plaintiffs may have in holding accountable the alleged
perpetrators of any fraud. Given the financial situations of the
Enterprises, the burden of payments on private claims would fall on the
U.S. taxpayers, who through the Treasury Agreements provide infusions
of cash to make up any quarterly net worth deficits, not on individuals
alleged to be responsible for fraud.
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\6\ FHFA Report to Congress--2008 (May 18, 2009), at 80,
available at http://www.fhfa.gov/webfiles/2335/FHFA_ReportToCongress2008508rev.pdf.
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Treatment and subordination of securities fraud claims.
Shareholder counsel objected to Sec. 1237.9 of the proposed rule,
which would address, among other things, the priority of securities
litigation claims in receivership. The proposal reflected a balancing
of interests based on the sources of claims. Securities fraud claims in
litigation would not exist but for ownership of the underlying
security. Therefore, the proposal called for subordinating such claims
and, as a matter of fundamental fairness, treating them just as any
other claim based on ownership of the security.
By permitting recovery by equity-holders only after creditors have
been paid in full, this rule reflects the longstanding ``general rule
of equity'' that ``stockholders take last in the estate of a bankrupt
corporation.'' Gaff v. FDIC, 919 F.2d 384, 392 (6th Cir. 1990); see
also In re Stirling Homex Corp. (Jezarian v. Raichle), 579 F.2d 206,
211 (2d Cir. 1978) (``[A]fter all creditors have been paid, provision
may be made for stockholders. When the debtor is insolvent, the
stockholders, as such, receive nothing.''). The rationale underlying
this rule is that ``[b]ecause, unlike creditors and depositors,
stockholders stand to gain a share of corporate profits, stockholders
should take the primary risk of the enterprise failing.'' Gaff, 919
F.2d at 392. Moreover, creditors deal with a corporation ``in reliance
upon the protection and security provided by the money invested by the
corporation's stockholders--the so-called `equity cushion.' '' Stirling
Homex, 579 F.2d at 214.
The provisions of Sec. 1237.9, confirming that a securities
litigation claim has the same priority in receivership as the
underlying security out of which it arises, would harmonize aspects of
receiverships under the Safety and Soundness Act with the

[[Page 35727]]

bankruptcy regime that applies to most publicly traded corporations. In
aligning the priority of securities litigation Claims in receivership
with their treatment in bankruptcy, FHFA follows in the path of a
number of Federal circuit courts that have looked to the U.S.
Bankruptcy Code for guidance on relative priorities of shareholder
claims as well as other issues arising in receiverships of financial
institutions. See, e.g., Gaff, 919 F.2d at 393-96; Office and
Professional Employees Int'l Union v. FDIC, 962 F.2d 63, 68 (D.C. Cir.
1992) (Ruth Bader Ginsburg, J.); First Empire Bank-New York v. FDIC,
572 F.2d 1361, 1368 (9th Cir. 1978).
The shareholder counsel contend that the Supreme Court's decision
in Oppenheimer v. Harriman National Bank & Trust Co. et al., 301 U.S.
206 (1937), mandates that securities fraud claims be treated as
creditor claims unless the statute includes specific language akin to
section 510(b) of the Bankruptcy Code. They assert that the majority of
courts have rejected subordination of securities litigation claims in
financial institution receiverships, and that the legislative history
of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989, from which much of the structure of HERA's conservatorship and
receivership regime was drawn, contradicts FHFA's proposed
interpretation of HERA, citing cases such as FDIC v. Jenkins et al.,
888 F.2d 1537 (11th Cir. 1989), Howard v. Haddad, 916 F.2d 170 (4th
Cir. 1990), and Hayes v. Gross, 982 F.2d 104 (3d Cir. 1992).
FHFA disagrees. Oppenheimer is not controlling, fundamentally
because it involved a receivership under a different statute.
Furthermore, it did not hold that subordination of shareholder claims
is inappropriate in all receiverships, or that a statute must use
``magic words'' to provide or allow for subordination. As one court has
explained, Oppenheimer's holding was heavily dependent on the fact that
the rescinding shareholder previously satisfied his statutory
obligation to creditors under then-existing ``double liability'' laws.
Northwest Racquet Swim & Health Clubs, Inc. v. Resolution Trust Corp.
(RTC), 927 F.2d 355, 361 n.17 (8th Cir. 1991) (rejecting attempt by
holder of failed thrift's subordinated debt to rescind for alleged
fraud and thereby recover on par with general creditors).
The courts' decisions in Jenkins, Howard, and Hayes do not address
subordination of securities litigation claims in relation to competing
creditors of an institution. They address the priority of FDIC claims
against a failed bank's officers and directors relative to the claims
private plaintiffs have against those same defendants. The proposed
rule and final rule do not address the priority that FHFA's claims
against officers and directors of the Enterprises have versus private
plaintiff claims. This rule confirms and clarifies the priority among
competing claims against the Enterprises themselves. The Jenkins,
Howard, and Hayes decisions do not reach that issue or contradict the
proposed rule. For example, in Jenkins the court observed that section
510(b) of the Bankruptcy Code provides for subordination of shareholder
``claims against the debtor or an affiliate of the debtor,'' but noted
that ``[i]n the present case, however, the shareholders are not
attempting to collect on assets of the failed bank. Rather, they are
proceeding against solvent third-parties in non-derivative shareholder
suits,'' a different situation than is addressed by section 510(b). 888
F.2d at 1545.
Prohibiting capital distributions and payment of securities
litigation judgments.
Shareholder counsel also asserts that HERA does not grant FHFA as
conservator the authority to prohibit capital distributions or payment
of securities litigation claims. In one of their comments, shareholder
counsel argued that the agency could not assert the authority to define
securities litigation claims as capital distributions and to prohibit
such distributions absent an express statutory grant of such authority.
FHFA rejects this argument, as it ignores the fact that the Safety
and Soundness Act and HERA grant FHFA broad authority as Conservator to
manage the conservatorship estate, including the authority to restrict
capital distributions that would cause a regulated entity to become
undercapitalized. As one of the primary objectives of conservatorship
of a regulated entity would be restoring that regulated entity to a
sound and solvent condition, allowing capital distributions to deplete
the entity's conservatorship assets would be inconsistent with the
agency's statutory goals, as they would result in removing capital at a
time when the Conservator is charged with rehabilitating the regulated
entity. Under the Safety and Soundness Act and HERA, FHFA has a
statutory charge to work to restore a regulated entity in
conservatorship to a sound and solvent condition, and to take any
action authorized by this section, which FHFA determines to be in the
best interests of the regulated entity or FHFA. This express statutory
grant of authority grants FHFA as Conservator authority to address
capital distribution and other claims against the conservatorship
estate in the manner that it deems appropriate.
Shareholder counsel also asserts that HERA does not authorize the
Conservator to defy or disregard a Federal court judgment. They suggest
that this alleged lack of authority for proposed Sec. Sec. 1237.12 and
1237.13 is underscored by the fact that 12 U.S.C. 4617(b)(11)(C), which
forbids attachment or execution of receivership assets, does not apply
during conservatorship, which means a judgment creditor could seize an
Enterprise's assets during conservatorship using conventional execution
remedies.
FHFA believes that this comment misperceives both the nature of a
money judgment and the role of a conservator. In Federal court, ``[a]
money judgment `is not an order to the defendant; it is an adjudication
of his rights or liabilities.' '' 12 Wright & Miller, Federal Practice
& Procedure, Sec. 3011 at 94 (2d ed. 2010) (quoting D. Dobbs, Handbook
of the Law of Remedies (1971)). ``[W]hen a party fails to satisfy a
court-imposed money judgment, the appropriate remedy is a writ of
execution, not a finding of contempt.'' Combs v. Ryan's Coal Co. Inc.,
785 F.2d 970, 980 (11th Cir. 1986); accord Shuffler v. Heritage Bank,
720 F.2d 1141, 1147-48 (9th Cir. 1983). Thus, not voluntarily writing a
check to cover a money judgment out of a limited estate does not
constitute ``defiance'' or ``disregard'' of that judgment. Moreover,
because the essential function of a conservator is to preserve and
conserve the institution's assets, courts are loath to require a
conservator to make any particular expenditure out of the
conservatorship estate. See, e.g., Rosa v. RTC, 938 F.2d 383, 398 (3d
Cir. 1991) (reversing injunction requiring bank in conservatorship to
make pension contributions required by the Employee Retirement Income
Security Act because ``implementation of the injunctive provisions
would clearly require the distribution of the assets of City Savings
and thereby encroach on the power of the conservator (now receiver) to
preserve and dispose of those assets within its control. * * * [and]
could result in forcing City Savings to accord the [pension] trustee,
and therefore the beneficiaries of the plan, a preference over other
creditors'').
Validity of final rules issued by FHFA.
Counsel for shareholder litigants raised a further objection to the
proposed rule, arguing that any final rule issued by FHFA would be
fundamentally flawed and invalid

[[Page 35728]]

because FHFA's head is not a validly appointed officer. They contend
that the absence of a Senate-confirmed Director for FHFA means that the
Appointments Clause of the U.S. Constitution \7\ has not been met
satisfied which makes it impossible for FHFA to issue binding
regulations. FHFA's statute provides for a presidentially designated
and Acting Director, without Senate confirmation. FHFA is led by such
an Acting Director designated by the President in September 2009.
Nonetheless, shareholder counsel argues that the Appointments Clause
only permits such acting officials to serve temporarily, and not for an
extended or indefinite period of time. They also assert that the
designation and appointment of FHFA's Acting Director is invalid unless
the appointee succeeds a Senate-confirmed Director because HERA only
allows the Acting Director to carry out the duties of a Director.
Shareholders' counsel argues that the Acting Director's authority is
only derivative of the preceding FHFA Director, a Senate-confirmed
Director of a predecessor agency who served as Director of FHFA as
provided by statute rather than by a Senate-confirmed appointment to
the position. Therefore, according to shareholders' counsel, the Acting
Director has no authority because his predecessor had no authority
without a Senate confirmation.
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\7\ U.S. Const. Art. II, Sec. 2, cl. 2.
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The argument is without foundation. FHFA's Acting Director, was
properly designated by the President as Acting Director pursuant to 12
U.S.C. 4512(f), which does not require Senate confirmation. Nor does
the U.S. Constitution require Senate confirmation for an official
designated to serve in an acting capacity. The former Director was the
incumbent Director of OFHEO and properly took office pursuant to HERA's
transitional provision, 12 U.S.C. 4512(b)(5), when OFHEO's functions
were transferred to FHFA as its successor agency. Any alleged question
about the validity of the former Director's service would not, in any
event, impair the President's subsequent designation of FHFA's Acting
Director. Finally, neither the U.S. Constitution nor the statute limits
the time period for which FHFA's Acting Director may serve.
Accordingly, the Acting Director is properly serving as Acting Director
and FHFA has the power to issue this final rule.
2. Joint Comment by the Federal Home Loan Banks
The twelve Federal Home Loan Banks (Banks) submitted a joint
comment in response to the proposed rule that introduced a number of
concerns about the proposed rule.
Differences between the Banks and the Enterprises.
The Banks commented that the proposed rule did not address the
unique differences between the Banks and the Enterprises, as required
by section 1201 of HERA.\8\ They assert that the final rule should
apply only to the Enterprises and that FHFA should issue a separate
proposed rule specific to the Banks.
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\8\ 12 U.S.C. 4513, as amended.
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According to the Banks, the proposed rule failed to account for
their banking activities, including the rights of depositors and the
treatment of assets held in safekeeping arrangements, trust or
custodial accounts, and other third-party assets. The Banks assert that
this failure is highlighted by a few words in the proposed rule's
Supplementary Information stating that the ``GSEs are not depository
institutions,'' \9\ noting that the statement is untrue with respect to
the Banks. While the Banks do take deposits from members, they are not
insured depository institutions and such deposits are not a significant
funding source for them. Consolidated obligations (``COs'') are their
principal funding source. FHFA continues to believe, after
consideration of the statutory factors, that the regulations in this
part are appropriate to both the Enterprises and the Banks. The joint
comment also notes that the proposed rule does not include provisions
contained in FDIC conservatorship and receivership regulations, such as
provisions addressing qualified financial contracts, treatment of
financial assets transferred in connection with a securitization or
participation, post-insolvency interest, or various policy statements
issued by the FDIC with respect to conservatorship and receiverships.
The joint comment suggests that these provisions provide certainty for
parties seeking to do business with depository institutions regulated
by the FDIC, and suggests that FHFA consider whether these issues
should be addressed in connection with the proposed rule.
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\9\ 75 FR 39462, 39464. The entire sentence in Supplementary
Information to the proposed rule reads: ``The proposed regulation
necessarily differs in some respects, however, from the FDIC
regulations, because the GSEs are not depository institutions, and
their important public missions differ from those of banks and
thrifts.''
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FHFA believes that the proposed rule adequately accounts for the
unique differences between the Banks and the Enterprises and does not
require special provisions relating to one or the other. Section 1145
of HERA amended section 1367 of the Safety and Soundness Act to
establish a comprehensive and overarching conservatorship and
receivership process for both the Enterprises and the Banks. The
proposed rule was not, and the final rule is not, intended to codify in
regulations the entirety of the statutory conservatorship and
receivership regime. The final rule must be read in its context as
elaborating on, not substituting for or replacing, statutory text.
Moreover, while the proposed rule sought to develop and expand a
regulatory framework that parallels the FDIC approach to
conservatorships and receiverships, the goal of the proposed rule was
never to create a regulatory framework that precisely mirrored the FDIC
regulatory regime. This is partly due to differences between the
enabling statutes of FHFA and the FDIC, and to the important
differences between the regulated entities and the depository
institutions insured by the FDIC. The agency has elected to address
these issues, to the extent it may become necessary to do so, through
policy statements, policy guidances, and decisions by the agency, the
conservator or the receiver.
The statutory provisions for conservatorship and receivership, as
explained below, provide the guidance necessary for matters that the
Banks contend were ignored in the proposed rule. The Banks' comment
boils down to an objection that the proposed rule does not recite the
statute or does not seek to embellish clear statutory language that
applies to them, but might not apply to the Enterprises.
The statutory provisions for conservatorship and receivership
provide that ``[t]he rights of the conservator or receiver appointed
under this section shall be subject to the limitations on the powers of
a receiver under sections 402 through 407 of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA).\10\ Section 402
of the FDICIA defines ``depository institution,'' ``net entitlement,''
``net obligation,'' and ``netting contract,'' as they apply to banking
transactions. 12 U.S.C. 4402(6), (12), (13) and (14). Section 403 of
the FDICIA (``Enforceability of security agreements'') requires:
---------------------------------------------------------------------------

\10\ 12 U.S.C. 4402-4407.

The provisions of any security agreement or arrangement or other
credit enhancement related to one or more netting contracts between
any 2 financial institutions shall be enforceable in accordance with
their terms (except as provided in section 561(b)(2) of Title 11)
[relating to bankruptcy], and shall

[[Page 35729]]

not be stayed, avoided, or otherwise limited by any State or Federal
law (other than section 1821(e) of this title [relating to the
FDIC's authority to affirm a conservator's and receiver's authority
with respect to certain types of contracts], section 1787(c) of this
---------------------------------------------------------------------------
title, and section 78eee(b)(2) of Title 15).

12 U.S.C. 4403(f) (emphasis added).

Section 1367(b)(5)(D) of the Safety and Soundness Act (``Authority
to Disallow Claims'') covers the receiver's authority to disallow any
portion of any claim by a creditor or claim of security, preference, or
priority that is not proven to the satisfaction of the receiver.
Section 1367(b) also limits the scope of a receiver's authority to
disallow claims with respect to ``(I) any extension of credit from any
Federal Reserve Bank, Federal Home Loan Bank, or the United States
Treasury; or (II) any security interest in the assets of the regulated
entity securing any such extension of credit.'' 12 U.S.C.
4617(b)(5)(D)(iii) (emphasis added).
Consolidated obligations and joint and several liability.
The Banks argued that the proposed rule did not adequately address
the joint and several liability of the Banks for COs that they issue.
FHFA does not believe that COs require separate treatment in the rule,
as opposed to policy statements or discretionary decisions in the
context of specific conservatorships and receiverships.
The Banks note that, under 12 CFR 966.9(a), each Bank, individually
and collectively, has an obligation to make full and timely payment of
all principal and interest on COs when due. Based upon this joint and
several liability structure, the Banks contend that if a Bank were
placed in conservatorship or receivership and could not make required
payments on its COs, this would trigger the requirement that one or
more other Banks make the principal and interest payments on the COs on
a continuing basis. They noted that this obligation is subject to a
right of reimbursement by the non-paying Bank. According to the Banks,
the proposed rule's infirmity is its failure to explain how this
reimbursement right, including the right to receive interest, would be
treated by the conservator or receiver. However, they offered no
explanation for why the rule should address these obligations as
distinct from any others.
FHFA does not believe that specific provisions are needed in this
regulation to address COs and the Banks' joint and several liability on
them. Unpaid COs of a defaulted Bank would be general-creditor
obligations of that Bank's receivership. In such a case, the Director
might well direct other Banks to make payments on those COs to ensure
that investors in them received timely payment and market confidence in
the Bank System was maintained. The Director has authority to do that
under current regulation,\11\ which regulations in this part do not
affect. Under that regulation, the Banks that paid COs on which a
defaulted Bank was primarily liable would have a claim for
reimbursement against the defaulted Bank,\12\ and that claim would be a
general-creditor obligation of the defaulted Bank. None of these
outcomes require special provision in this rule. As a practical matter,
a troubled Bank might be resolved without creating receivership claims
based on COs. In the case of a Bank placed in conservatorship, the Bank
would likely continue to pay on its COs as the payments came due.
Similarly, if a Bank were closed and the COs transferred to a limited-
life regulated entity (LLRE), that LLRE would likely also continue to
pay on those COs as the payments came due. In addition, in the case of
a Bank that was closed and its assets and liabilities transferred to
one or more acquiring Banks, those transactions would plausibly include
assignment and apportionment of the failed Bank's COs to and among the
acquiring Banks, which would continue to pay on those COs as the
payments came due. Therefore, the priority of receivership claims
relating to COs would be relevant only in a case of a Bank placed in a
liquidating receivership. As stated above, FHFA believes that the
situation can be addressed by regulations in this part without making
specific provision for COs.
---------------------------------------------------------------------------

\11\ 12 CFR 966.9(d)(1).
\12\ 12 CFR 966.9(d)(2).
---------------------------------------------------------------------------

The Banks argued that their joint and several liability for COs
could result in a troubled Bank being merged with another Bank under
section 26 of the Bank Act, as amended by section 1209 of HERA. 12
U.S.C. 1446.\13\ They urged FHFA to delay issuing a conservatorship and
receivership rule that covers the Banks until it first publishes
proposed rules on Bank voluntary mergers. FHFA does not make any
speculation on whether such mergers might result from the Banks' joint
and several liability on COs, and does not consider either this rule on
conservatorship and receivership or a rule on voluntary mergers of the
Banks as dependent on each other. In any event, the rule on voluntary
mergers has already been proposed,\14\ and work is proceeding on the
final rule.
---------------------------------------------------------------------------

\13\ Section 1209 of HERA (``Voluntary Mergers Authorized'')
amended section 26 of the Bank Act, and provides, in part, that any
Bank may, with the approval of the Director of FHFA and the boards
of directors of the Banks involved, merge with another Bank.
\14\ 75 FR 72751 (Nov. 26, 2010).
---------------------------------------------------------------------------

Administrative expenses.
The Banks raised an issue about claims for administrative expenses
that receive heightened priority in a resolution. They argued that, in
the event a Bank were in a troubled condition, or in default or in
danger of default, one or more other Banks could voluntarily provide
(or be required to provide by court order, or by FHFA direction or
otherwise) some form of managerial, financial, or other assistance to
the Bank. They asserted that, because of the Banks' joint and several
liability for COs issued by any of the Banks, the final rule should
address the priority of a Bank's claim for repayment from another Bank,
when the latter Bank is placed into conservatorship or receivership.
The determination of whether an expense incurred, either before or
during receivership, is entitled to priority as an administrative
expense of the receiver, is vested in the discretion of the receiver.
FHFA does not believe that the statute requires, or that prudence
counsels in favor of, advance prescriptive determination that certain
specific types of claims, even those based on providing financial
support for a troubled institution, always will be administrative
expenses.
The Banks observe that the FDIC has a regulation stating that
``administrative expenses of the receiver * * * shall include both pre-
failure and post-failure obligations that the receiver determines are
necessary and appropriate to facilitate the smooth and orderly
liquidation or other resolution of the institution.'' \15\ FHFA does
not believe that further elaboration of that type is needed in FHFA's
regulation, because section 1367(c)(3) of the Safety and Soundness Act
already defines ``administrative expenses'' to include ``any
obligations that the receiver determines are necessary and appropriate
to facilitate the smooth and orderly liquidation or other resolution of
the regulated entity.'' 12 U.S.C. 4617(c)(3).
---------------------------------------------------------------------------

\15\ 12 CFR 360.4.
---------------------------------------------------------------------------

Priority of expenses and unsecured claims.
The Banks suggested FHFA add clarifying language to Sec. 1237.9 of
the proposed rule, which states that the lowest priority of claim is
accorded to ``[a]ny obligation to current or former shareholders or
members arising as a result of their current or former status as
shareholders or members, including without limitation, any Securities

[[Page 35730]]

Litigation Claim.'' They argue that members, or former members, of a
Bank may have a wide range of transactions and relationships with a
failed Bank that could result in obligations that constitute creditor
rather than equity holder claims against the receivership. They
asserted that members can maintain deposits with a Bank, or enter into
transactions under which they are otherwise treated as a creditor of a
Bank. These obligations, transactions and relationships arise, because
of the nature of the Bank System, from the shareholder status of the
member or former member. But, the Banks maintain these types of member
transactions and relationships are distinct from a member's, or former
member's, ownership of capital stock. They urged FHFA to exempt from
Sec. 1237.9(a)(4) of the proposed rule obligations of a failed Bank to
members or former members arising from transactions or relationships
other than the ownership of capital stock in that Bank, so that those
obligations would be treated the same as similar claims by nonmembers.
FHFA is persuaded that the organizational uniqueness of the Bank
System requires a clarification to Sec. 1237.9(a)(4) of the final
rule. The final rule clarifies that, with respect to members of a
failed Bank, the lowest priority position does not apply to claims
arising from transactions or relationships distinct from the claimant's
past or present ownership, purchase, sale or retention of an equity
security of the Bank.
The Banks also commented that eleven of the twelve Banks operate
under capital plans adopted under 12 U.S.C. 1426, and approved by the
Finance Board. They stated that these capital plans, in accordance with
the Bank Act and implementing regulations, may provide for different
priorities among holders of various forms of capital stock of a Bank
and recommend that FHFA further amend Sec. 1237.9(a)(4) of the
proposed rule to address this issue of competing priorities. FHFA
agrees that when a regulated entity has issued multiple classes of
capital stock, priority as between holders of those different classes
should be determined by the capital plans or other underlying corporate
instruments, even though all are within Sec. 1237.9(a)(4). Thus, there
may be multiple subpriorities within Sec. 1237.9(a)(4). The Safety and
Soundness Act establishes the general priorities, including claims of
capital stock owners. 12 U.S.C. 4617(c). Within the fourth priority of
claims, the priority inhabited by stockholders' claims, FHFA intends to
recognize the different stock priorities that may exist among classes
and categories of stock, including preferred and common stockholders,
and has added language to this effect to Sec. 1237.9(a)(4).
Perfected security interests, safekeeping, and other trust
holdings.
The Banks contend that perfected security interests (including
exceptions for preferences and fraudulent conveyances), safekeeping,
and other trust holdings should be addressed specifically in the final
rule to ensure that the interests and legitimate legal rights of third-
parties are recognized.
FHFA considered the comment and concludes that no revision of the
proposed rule is necessary to address the concerns the Banks have
raised. Protection of security interests, with appropriate exceptions
for preferential and fraudulent transfers, is provided in 12 U.S.C.
4617(d)(12). The avoidance of fraudulent transfers also is covered in
12 U.S.C. 4617(b)(15). Property held in trust and in custodial
arrangements generally is not considered a part of a receivership
estate available to satisfy general creditor claims. To the extent
appropriate, FHFA expects to follow FDIC and bankruptcy practice in
giving effect to this concept in a receivership of a regulated entity.
Period for contract repudiation.
The Banks objected to the provision of the proposed rule that would
create an 18-month period for the conservator or receiver to determine
whether to repudiate burdensome contracts of a troubled regulated
entity. In their joint comment, the Banks suggested that FHFA instead
adopt a six-month period for repudiation determinations, or address
such matters on a case-by-case basis. While maximizing the discretion
of a conservator or receiver by remaining silent as to the reasonable
time for repudiation may have some appeal, FHFA does not believe that
either a six-month or an open-ended period is appropriate.
FHFA has considered whether to revise that provision of the
proposed rule, and has determined that the 18-month period should
remain in the final rule. In the proposed rule, FHFA explained that
FHFA's experiences as conservator for Fannie Mae and Freddie Mac have
shown that it could take at least 18 months for a conservator or
receiver to obtain the facts needed to make accurate determinations
about its rights of repudiation. Due to the complexity of the contracts
and commercial relationships of the regulated entities, FHFA believes
that an 18-month period adequately and appropriately balances the need
to fully assess the state of a troubled institution, the need for
repudiation and the interests of contractual counterparties.
Subsequently, experiences as Conservator have given FHFA no reason to
change that decision. Moreover, the interests of contractual
counterparties are protected by provisions such as 12 U.S.C.
4617(d)(7)(B), which mandates that payments to a counterparty for
performance that a conservator or receiver accepts under a pre-
conservatorship or -receivership contract for services before making a
determination to repudiate the contract shall be treated as an
administrative expense of the conservatorship or receivership.
Distinctions between FHFA as conservator and FHFA as receiver.
The Banks' joint comment suggests that Sec. 1237.3 of the proposed
rule failed to properly distinguish between actions FHFA is authorized
or directed to take in its capacity as conservator from those that the
agency is authorized or directed to take as receiver. Specifically, the
joint comment notes that Sec. 1237.3 of the proposed rule would
provide FHFA as receiver with the authority to continue the missions of
the regulated entity; ensure that the operations and activities of each
regulated entity foster liquid, efficient, competitive and resilient
national housing markets; and ensure that each regulated entity
operates in a safe and sound manner. The Banks contend that this
authority is limited exclusively to the actions of FHFA as conservator,
because FHFA is required to liquidate a regulated entity in
receivership.
The ultimate responsibility of FHFA as receiver is to resolve and
liquidate the existing entity. A conservator's goal is to continue the
operations of a regulated entity, rehabilitate it and return it to a
safe, sound and solvent condition. While operating an entity in
conservatorship, continuation of the mission of the institution and
fostering liquid, efficient, competitive and resilient national housing
markets may be in the regulated entity's best interest, and are
consistent with the Safety and Soundness Act's provisions governing
operating entities. These activities of a conservator may not be
aligned with the ultimate duty of a receiver, although in the process
of finally resolving a regulated entity FHFA will need to strike the
proper balance between continuing certain operations pending
liquidation and terminating other operations. This balance may include
temporarily operating in support of the failed institution's mission.
FHFA agrees with the Banks that some activities appropriate in
conservatorship are less consistent with a receivership. Section 1237.3
of the final rule has been

[[Page 35731]]

revised to recognize the receiver's responsibility to liquidate an
entity in receivership.
Treatment of certain types of contracts and commercial agreements.
The Banks' joint comment raises questions about the possible
treatment of several types of contracts and commercial agreements in
conservatorship and receivership, including the treatment of completed
sales of certain assets and liabilities between individual Banks and
third-parties, standby letters of credit issued on behalf of Bank
members and housing associates, subsidies provided under a Bank's
Affordable Housing Program, or contracts for services provided to one
or more other Banks. The Banks suggest that the treatment of these
various contracts and agreements be addressed in the rule, and ask that
FHFA state that it will not use its powers of repudiation as
conservator or receiver to set aside or repudiate these obligations and
transactions.
FHFA has considered whether to make a declaration about the status
of those and other contracts in this rule, and has determined that this
rulemaking is not the appropriate vehicle for such an announcement.
This rule is not designed and FHFA has declined to limit the discretion
of the agency as a future conservator or receiver. The circumstances of
any future conservatorship and receivership can vary greatly, and it is
necessary for FHFA to preserve the flexibility for the agency as
conservator or receiver to make decisions based upon the specific
issues facing that troubled regulated entity.
Expedited determination of claims.
The Banks observed that Sec. 1237.7 of the proposed rule provides
that FHFA, as receiver, will determine whether or not to allow a claim
within 180 days from the date the claim is filed. They contend,
however, that the Safety and Soundness Act requires FHFA to establish a
separate procedure for expedited relief and claim determination within
90 days after the date of filing for certain claimants. The Banks
suggest that the rule should establish the expedited claims process.
Although section 1367(b)(8) of the Safety and Soundness Act
requires FHFA to ``establish a procedure for expedited relief outside
of the routine claims process * * * [in section 1367(b)(5)]'' and a 90-
day determination period for certain claims, the statute does not
require a regulation establishing the expedited procedures. In fact,
the statutory text is so explicit that codifying regulatory procedures
for expedited claims is more likely to confuse than clarify processing.
FHFA believes that implementing these specific provisions is best left
to internal operating procedures that can be adjusted quickly as needed
to provide consistent notice to claimants and set up internal processes
for handling expedited claims separately from routine claims. The
purpose of the rule is not to recite the statute, and in this instance
the statute is sufficient.
Alternate resolution procedures.
Section 1237.8 of the proposed rule provides that claimants seeking
``a review of the determination of claims may seek alternative dispute
resolution [(``ADR'')] from [FHFA] as receiver in lieu of a judicial
determination.'' The Banks asserted that Congress intended ADR to be an
alternative to the normal process established under 12 U.S.C.
4617(b)(5) for the receiver to make the initial determination on a
claim. Therefore, referring to 12 U.S.C. 4617(b)(7)(A)(i), they contend
that FHFA is limited to offering claimants a choice of both non-binding
ADR that does not bar subsequent judicial review or binding ADR that
precludes judicial review.
FHFA believes that the Banks' interpretation of the statute is
excessively narrow and ignores the broad authority and command to the
agency. Section 1367(b)(7) of the Safety and Soundness Act provides
that ``[t]he Agency shall establish such alternative dispute resolution
processes as may be appropriate for the resolution of claims filed
under paragraph (5)(A)(i) [i.e., the routine claims allowance/
disallowance provision].'' 12 U.S.C. 4617(b)(7)(A)(i). This language
unambiguously leaves to FHFA the determination of appropriateness. The
statute is expressly optional with respect to whether binding or non-
binding ADR should be used and that the choice to participate in ADR
cannot be forced by one party. 12 U.S.C. 4617(b)(7)(A)(iii). FHFA has
determined that ADR is appropriate if all parties agree to it and
accept that a condition of ADR is that it is in lieu of seeking
judicial relief. Specific procedures and processes are left to
development ``by order, policy statement, or directive,'' as provided
in Sec. 1237.8 of the proposed rule. No change in the proposal is
required or warranted.
Limited-Life Regulated Entities.
The Banks raised numerous issues regarding proposed rule Sec. Sec.
1237.10 and 1237.11 with respect to the establishment and operation of
a LLRE. They objected that the proposed rule failed to identify or
address the wide range of issues that could arise in the context of an
LLRE, including the impact of such an entity on members of the Bank in
receivership, holders of Bank COs, and other creditors and
counterparties of the Bank in receivership. The Banks asked whether a
``LLRE Bank'' would be considered a new Bank that would cover the same
district, and have the same membership, that was served by the Bank in
receivership or whether a new permanent Bank would be established to
serve that district contemporaneously with the LLRE; whether the LLRE
Bank would assume some or all of the primary obligations on COs of the
Bank in receivership or on the contracts of the failed Bank; whether it
could fund its operations by becoming a primary obligor on new Bank
System COs (and, if so, how would such primary obligations be treated
upon the termination of the LLRE Bank); and how the existence of the
LLRE Bank would impact the Securities and Exchange Commission
disclosure obligations of the related Bank for FHFA reporting purposes.
FHFA responds that there is no requirement for the establishment of
an LLRE in the case of a failed Bank, unlike in the case of a failed
Enterprise. Further, reasons for and details of the operation and
establishment of an LLRE are likely to vary based on the specific
reasons for failure, the nature of the failed institution's assets and
liabilities, and the resolution methodology selected by the receiver.
The specificity the Banks suggested, if contained in regulatory text,
could restrict the receiver's ability to structure the resolution of a
failed institution and leverage its assets and liabilities for the best
interests of the Bank System. To the extent that statutory language
does not provide answers to the Banks questions, FHFA does not believe
it appropriate to limit the resolution tools available to it through a
regulation.
Such flexibility is consistent with the statutory framework. For
example, section 1367(i)(1)(B)(i) of the Safety and Soundness Act
provides that a LLRE may ``assume such liabilities of the regulated
entity that is in default or in danger of default as the Agency may, in
its discretion, determine to be appropriate. * * *'' 12 U.S.C.
4617(i)(1)(B)(i). Subparagraph (B)(ii) authorizes the LLRE to
``purchase such assets of the regulated entity that is in default, or
in danger of default, as the Agency may, in its discretion determine to
be appropriate.'' Subparagraph (B)(iii) authorizes the LLRE to
``perform any other temporary function which the Agency may, in its
discretion, prescribe in accordance with this section.'' The statutory
discretion vested in the agency

[[Page 35732]]

is significant and necessary. FHFA declines to restrict the discretion
Congress vested in it to unnecessarily tie its hands when resolving
failed institutions in the future.
The Banks also suggest that the language in Sec. 1237.13(b) of the
proposed rule, stating that no shareholder or creditor of a regulated
entity shall have any right or claim against the charter of that
regulated entity once FHFA has been appointed receiver for the
regulated entity and a limited-life regulated entity has succeeded to
the charter, does not appear to apply to a Bank in receivership, since
12 U.S.C. 4617(i)(1)(A)(i) provides for FHFA to grant a temporary
charter to a limited-life regulated entity for a Bank in receivership.
FHFA does not agree with this comment. The charters are not
entities in receivership against which claims can be asserted, nor are
the charters assets of a receivership estate from which claims can be
paid.
3. Comments From Other Sources
In addition to the comments received from shareholders for the
Enterprises in conservatorship, counsel for shareholder litigants,
members of Congress, and Banks, FHFA received comments from various
other parties, who raised the following concerns:
The conservatorships of Fannie Mae and Freddie Mac.
The Mortgage Bankers Association (MBA) commented that the proposal
was too theoretical, preferring a rule that more specifically addressed
the issues associated with the current conservatorships of Fannie Mae
and Freddie Mac. The MBA suggested that a rule should answer questions
such as the specific treatment of subordinated and senior debtholders,
and could identify the operations and departments of the Enterprises
that are likely to be retained in receivership.
The MBA suggested that FHFA should have used the rulemaking process
to explain to the public the criteria that FHFA might use in deciding
whether to place the Enterprises into receivership. In their view,
announcing in advance the factors or milestones that would trigger
receivership would prevent that determination from appearing arbitrary.
Finally, the MBA suggested that FHFA could use the rule to set forth
the agency's goals in a receivership. They argued that this would give
FHFA a chance to explain how several of the possible roles for
receivership--a least-cost resolution of the Enterprises, maintaining
ongoing support of the housing market by protecting the infrastructure
of the Enterprises, or using the assets of the Enterprises to lay the
foundation for a new secondary housing market structure--would be
applied by FHFA as receiver.
Bank of America also recommended that any final rule issued by FHFA
clearly, narrowly, and carefully define the goals of conservatorship or
receivership, and other commenters also noted that the proposed rule
did not provide a specific model for Fannie Mae and Freddie Mac after
the end of the conservatorships and the absence of a detailed
restructuring plan for the Enterprises. Other commenters also argued
that the proposed rule failed to address the treatment of Fannie Mae or
Freddie Mac preferred shareholders in an Enterprise receivership or the
potential for harm to shareholders by diminishing or extinguishing the
value of their equity interests.
The rule is designed to implement and expand the general framework
for conservatorship and receivership operations for the regulated
entities. This rule and rulemaking generally are not appropriate
vehicles through which to predict the specific resolution of
hypothetical future events. It would be too limiting on agency
authority to use the rule to explain to the public the criteria that
FHFA might use in deciding whether to place the Enterprises into
receivership. The criteria for establishing receiverships are
enumerated in the Safety and Soundness Act.\16\ Congress left
considerable decision-making discretion to the agency, and FHFA sees no
reason to limit that discretion through a final rule when future
circumstances are unknown.
---------------------------------------------------------------------------

\16\ 12 U.S.C. 4617(a).
---------------------------------------------------------------------------

It would be inappropriate to use the rule to explain how several of
the asserted possible roles for receivership--a least-cost resolution
of the Enterprises, maintaining ongoing support of the housing market
by protecting the infrastructure of the Enterprises, or using the
assets of the Enterprises to lay the foundation for a new secondary
housing market structure--would be applied by the agency as receiver.
By leaving such strategic decisions about receivership for the future,
the rule retains necessary discretion for the agency to deal with
events as they unfold and not artificially limiting a future receiver's
choices.
Moreover, this rule is not intended to address discretionary
decisions about the treatment of assets in the conservatorship estate,
as general policies on that subject are more appropriately handled in
FHFA policy guidances and other agency policy statements. More specific
discretionary decisions are better addressed by the Conservator on a
case-by-case basis. In either case, neither type of decisions is
appropriate for a rule that would address conservatorship and
receivership operations for all the regulated entities. This rule seeks
to avoid limiting the discretion of FHFA as Conservator or Receiver in
future insolvencies. The circumstances of each conservatorship or
receivership are unique to the issues facing that particular troubled
regulated entity. For that reason FHFA has decided to preserve the
discretionary authority of the agency as conservator or receiver in
addressing those issues, instead of attempting to craft one set of
policies that would govern every circumstance.
Notice and hearing before transfer or sale of any asset or
liability.
Bank of America has also suggested modifying Sec. 1237.3(c) to
provide that the transfer or sale of any asset or liability of an
Enterprise in conservatorship or receivership occur only after
provision of notice to affected parties and an opportunity for a
hearing, unless such transfer or sale is part of the Enterprise's
ordinary course of business. FHFA rejects this suggestion. Implementing
such a proposal would unnecessarily restrict the ability of FHFA as
conservator or receiver to act quickly and decisively in preserving and
conserving the assets of a regulated entity. The commenter did not
describe any precedent for such a potentially cumbersome process in the
conservatorship and receivership practices and procedures of other
financial regulators.
Language clarifications for Sec. 1237.9 of the rule.
Bank of America also suggested making Sec. 1237.9 of the proposed
rule clearer by substituting the word ``claimants'' for ``creditors''
in paragraph (b), and substituting the term ``claim of'' for
``obligation to'' in paragraph (a)(4). In response to these
suggestions, ``creditors'' has been changed to ``claimants'' in Sec.
1237.9(b), and ``obligation to'' has been changed to ``claim by'' in
Sec. 1237.9(a)(4), and conforming changes have been made to the rule.
Payment of dividends to shareholders during conservatorship.
Some commenters suggested that the rule should address the payment
of dividends to shareholders during conservatorship. While FHFA as
conservator may restrict dividends for safety and soundness reasons
under the Safety and Soundness Act and the Bank Act, a regulated entity
may generally

[[Page 35733]]

pay dividends to shareholders only when it is adequately capitalized.
It is unlikely that a regulated entity in conservatorship would be
permitted to pay dividends while it is unable to meet its capital
requirements. This rulemaking is not the appropriate vehicle for
establishing a policy for the payment of dividends by a regulated
entity in conservatorship, as this rule was not intended to address
specific discretionary decisions about the treatment of assets from the
conservatorship estate, and was not designed to limit the discretion of
FHFA as conservator in future conservatorships.
Definitional changes.
The proposed definition of ``Executive officer'' required
adjustment to identify the different sources for the definition with
respect to the Enterprises and the Banks. The term is clarified in this
final rule. A technical correction is made to the definition of
``Authorizing statutes.'' The proposed definition of ``Capital
distribution'' was located in part 1229, the FHFA rule on capital
classifications and prompt corrective action, as more appropriate than
amending an OFHEO rule that predated the enactment of HERA.
The definition of ``Capital distribution'' to include payments of
securities litigation claims applies only to the Enterprises. 12 U.S.C.
4513(f) requires FHFA, prior to promulgating regulations relating to
the Banks, to consider the differences between the Banks and
Enterprises, relating to, among other things, the Banks' cooperative
ownership structure and capital structure. There is no established
marketplace for capital stock of the Banks and it is not publicly
traded. Although the Banks are registered with the Securities and
Exchange Commission, the capital stock of the Banks is purchased by
members, and redeemed by the applicable Bank, at stated par value
rather than any market price. As a result, the Banks face less exposure
to securities litigation claims than the Enterprises, whose equity
securities are publicly traded with fluctuating market prices. For the
Banks, ``capital distribution'' during conservatorship and receivership
shall retain the meaning assigned in Subpart A of FHFA's rule on
capital classifications and prompt corrective action, at Sec. 1229.1.

III. Regulatory Impacts

Paperwork Reduction Act

The final regulation does not contain any information collection
requirement that requires the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
requires that a regulation 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). FHFA has considered the impact of this
final regulation under the RFA. FHFA certifies that the final
regulation is not likely to have a significant economic impact on a
substantial number of small business entities because the regulation is
applicable only to the regulated entities, which are not small entities
for purposes of the RFA.

List of Subjects

12 CFR Part 1229

Capital, Federal home loan banks, Government-sponsored enterprises,
Reporting and recordkeeping requirements.

12 CFR Part 1237

Capital, Conservator, Federal home loan banks, Government-sponsored
enterprises, Receiver.

Accordingly, for the reasons stated in the Supplementary
Information, under the authority of 12 U.S.C. 4513b, 4526, and 4617 the
Federal Housing Finance Agency amends chapter XII of Title 12, Code of
Federal Regulations, as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

Subchapter B--Entity Regulations

PART 1229--CAPITAL CLASSIFICATIONS AND PROMPT CORRECTIVE ACTION

0
1. Amend part 1229 of subchapter B by adding new subpart B to read as
follows:
Subpart B--Enterprises
Sec.
1229.13 Definitions.

Authority: 12 U.S.C. 4513b, 4526, 4613, 4614, 4615, 4616, 4617.

Subpart B--Enterprises

Sec. 1229.13 Definitions.

For purposes of this subpart:
Capital distribution means--
(1) Any dividend or other distribution in cash or in kind made with
respect to any shares of, or other ownership interest in, an
Enterprise, except a dividend consisting only of shares of the
Enterprise;
(2) Any payment made by an Enterprise to repurchase, redeem,
retire, or otherwise acquire any of its shares or other ownership
interests, including any extension of credit made to finance an
acquisition by the Enterprise of such shares or other ownership
interests, except to the extent the Enterprise makes a payment to
repurchase its shares for the purpose of fulfilling an obligation of
the Enterprise under an employee stock ownership plan that is qualified
under the Internal Revenue Code of 1986 (26 U.S.C. 401 et seq.) or any
substantially equivalent plan as determined by the Director of FHFA in
writing in advance; and
(3) Any payment of any claim, whether or not reduced to judgment,
liquidated or unliquidated, fixed, contingent, matured or unmatured,
disputed or undisputed, legal, equitable, secured or unsecured, arising
from rescission of a purchase or sale of an equity security of an
Enterprise or for damages arising from the purchase, sale, or retention
of such a security.

0
2. Add part 1237 to subchapter B to read as follows:

PART 1237--CONSERVATORSHIP AND RECEIVERSHIP

Sec.
1237.1 Purpose and applicability.
1237.2 Definitions.
Subpart A--Powers
1237.3 Powers of the Agency as conservator or receiver.
1237.4 Receivership following conservatorship; administrative
expenses.
1237.5 Contracts entered into before appointment of a conservator or
receiver.
1237.6 Authority to enforce contracts.
Subpart B--Claims
1237.7 Period for determination of claims.
1237.8 Alternate procedures for determination of claims.
1237.9 Priority of expenses and unsecured claims.
Subpart C--Limited-Life Regulated Entities
1237.10 Limited-life regulated entities.
1237.11 Authority of limited-life regulated entities to obtain
credit.
Subpart D--Other
1237.12 Capital distributions while in conservatorship.
1237.13 Payment of Securities Litigation Claims while in
conservatorship.
1237.14 Golden parachute payments [Reserved].

Authority: 12 U.S.C. 4513b, 4526, 4617.

[[Page 35734]]

Sec. 1237.1 Purpose and applicability.

The provisions of this part shall apply to the appointment and
operations of the Federal Housing Finance Agency (``Agency'') as
conservator or receiver of a regulated entity. These provisions
implement and supplement the procedures and process set forth in the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992,
as amended, by the Housing and Economic Recovery Act of 2008 (HERA),
Public Law 110-289 for conduct of a conservatorship or receivership of
such entity.

Sec. 1237.2 Definitions.

For the purposes of this part the following definitions shall
apply:
Agency means the Federal Housing Finance Agency (``FHFA'')
established under 12 U.S.C. 4511, as amended.
Authorizing statutes mean--
(1) The Federal National Mortgage Association Charter Act,
(2) The Federal Home Loan Mortgage Corporation Act, and
(3) The Federal Home Loan Bank Act.
Capital distribution has, with respect to a Bank, the definition
stated in Sec. 1229.1 of this chapter, and with respect to an
Enterprise, the definition stated in Sec. 1229.13 of this chapter.
Compensation means any payment of money or the provision of any
other thing of current or potential value in connection with
employment.
Conservator means the Agency as appointed by the Director as
conservator for a regulated entity.
Default; in danger of default:
(1) Default means, with respect to a regulated entity, any official
determination by the Director, pursuant to which a conservator or
receiver is appointed for a regulated entity.
(2) In danger of default means, with respect to a regulated entity,
the definition under section 1303(8)(B) of the Safety and Soundness Act
or applicable FHFA regulations.
Director means the Director of the Federal Housing Finance Agency.
Enterprise means the Federal National Mortgage Association and any
affiliate thereof or the Federal Home Loan Mortgage Corporation and any
affiliate thereof.
Entity-affiliated party means any party meeting the definition of
an entity-affiliated party under section 1303(11) of the Safety and
Soundness Act or applicable FHFA regulations.
Equity security of any person shall mean any and all shares,
interests, rights to purchase or otherwise acquire, warrants, options,
participations or other equivalents of or interests (however
designated) in equity, ownership or profits of such person, including
any preferred stock, any limited or general partnership interest and
any limited liability company membership interest, and any securities
or other rights or interests convertible into or exchangeable for any
of the foregoing.
Executive officer means, with respect to an Enterprise, any person
meeting the definition of executive officer under section 1303(12) of
the Safety and Soundness Act and applicable FHFA regulations under that
section, and, with respect to a Bank, an executive officer as defined
in applicable FHFA regulations.
Golden parachute payment means, with respect to a regulated entity,
the definition under 12 CFR part 1231 or other applicable FHFA
regulations.
Limited-life regulated entity means an entity established by the
Agency under section 1367(i) of the Safety and Soundness Act with
respect to a Federal Home Loan Bank in default or in danger of default,
or with respect to an Enterprise in default or in danger of default.
Receiver means the Agency as appointed by the Director to act as
receiver for a regulated entity.
Regulated entity means:
(1) The Federal National Mortgage Association and any affiliate
thereof;
(2) The Federal Home Loan Mortgage Corporation and any affiliate
thereof; and
(3) Any Federal Home Loan Bank.
Securities litigation claim means any claim, whether or not reduced
to judgment, liquidated or unliquidated, fixed, contingent, matured or
unmatured, disputed or undisputed, legal, equitable, secured or
unsecured, arising from rescission of a purchase or sale of an equity
security of a regulated entity or for damages arising from the
purchase, sale, or retention of such a security.
Transfer means every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or parting with
property or with an interest in property, including retention of title
as a security interest and foreclosure of the equity of redemption of
the regulated entity.

Subpart A--Powers

Sec. 1237.3 Powers of the Agency as conservator or receiver.

(a) Operation of the regulated entity. The Agency, as it determines
appropriate to its operations as either conservator or receiver, may:
(1) Take over the assets of and operate the regulated entity with
all the powers of the shareholders (including the authority to vote
shares of any and all classes of voting stock), the directors, and the
officers of the regulated entity and conduct all business of the
regulated entity;
(2) Continue the missions of the regulated entity;
(3) Ensure that the operations and activities of each regulated
entity foster liquid, efficient, competitive, and resilient national
housing finance markets;
(4) Ensure that each regulated entity operates in a safe and sound
manner;
(5) Collect all obligations and money due the regulated entity;
(6) Perform all functions of the regulated entity in the name of
the regulated entity that are consistent with the appointment as
conservator or receiver;
(7) Preserve and conserve the assets and property of the regulated
entity (including the exclusive authority to investigate and prosecute
claims of any type on behalf of the regulated entity, or to delegate to
management of the regulated entity the authority to investigate and
prosecute claims); and
(8) Provide by contract for assistance in fulfilling any function,
activity, action, or duty of the Agency as conservator or receiver.
(b) Agency as receiver. The Agency, as receiver, shall place the
regulated entity in liquidation, employing the additional powers
expressed in 12 U.S.C. 4617(b)(2)(E).
(c) Powers as conservator or receiver. The Agency, as conservator
or receiver, shall have all powers and authorities specifically
provided by section 1367 of the Safety and Soundness Act and paragraph
(a) of this section, including incidental powers, which include the
authority to suspend capital classifications under section 1364(e)(1)
of the Safety and Soundness Act during the duration of the
conservatorship or receivership of that regulated entity.
(d) Transfer or sale of assets and liabilities. The Agency may, as
conservator or receiver, transfer or sell any asset or liability of the
regulated entity in default, and may do so without any approval,
assignment, or consent with respect to such transfer or sale. Exercise
of this authority by the Agency as conservator will nullify any
restraints on sales or transfers in any agreement not entered into by
the Agency as conservator. Exercise of this authority by the Agency as
receiver will nullify any restraints on sales or transfers in any
agreement not entered into by the Agency as receiver.

[[Page 35735]]

Sec. 1237.4 Receivership following conservatorship; administrative
expenses.

If a receivership immediately succeeds a conservatorship, the
administrative expenses of the conservatorship shall also be deemed to
be administrative expenses of the subsequent receivership.

Sec. 1237.5 Contracts entered into before appointment of a
conservator or receiver.

(a) The conservator or receiver for any regulated entity may
disaffirm or repudiate any contract or lease to which such regulated
entity is a party pursuant to section 1367(d) of the Safety and
Soundness Act.
(b) For purposes of section 1367(d)(2) of the Safety and Soundness
Act, a reasonable period shall be defined as a period of 18 months
following the appointment of a conservator or receiver.

Sec. 1237.6 Authority to enforce contracts.

The conservator or receiver may enforce any contract entered into
by the regulated entity pursuant to the provisions and subject to the
restrictions of section 1367(d)(13) of the Safety and Soundness Act.

Subpart B--Claims

Sec. 1237.7 Period for determination of claims.

Before the end of the 180-day period beginning on the date on which
any claim against a regulated entity is filed with the Agency as
receiver, the Agency shall determine whether to allow or disallow the
claim and shall notify the claimant of any determination with respect
to such claim. This period may be extended by a written agreement
between the claimant and the Agency as receiver, which may include an
agreement to toll any applicable statute of limitations.

Sec. 1237.8 Alternate procedures for determination of claims.

Claimants seeking a review of the determination of claims may seek
alternative dispute resolution from the Agency as receiver in lieu of a
judicial determination. The Director may by order, policy statement, or
directive establish alternative dispute resolution procedures for this
purpose.

Sec. 1237.9 Priority of expenses and unsecured claims.

(a) General. The receiver will grant priority to unsecured claims
against a regulated entity or the receiver for that regulated entity
that are proven to the satisfaction of the receiver in the following
order:
(1) Administrative expenses of the receiver (or an immediately
preceding conservator).
(2) Any other general or senior liability of the regulated entity
(that is not a liability described under paragraph (a)(3) or (a)(4) of
this section).
(3) Any obligation subordinated to general creditors (that is not
an obligation described under paragraph (a)(4) of this section).
(4) Any claim by current or former shareholders or members arising
as a result of their current or former status as shareholders or
members, including, without limitation, any securities litigation
claim. Within this priority level, the receiver shall recognize the
priorities of shareholder claims inter se, such as that preferred
shareholder claims are prior to common shareholder claims. This
subparagraph (a)(4) shall not apply to any claim by a current or former
member of a Federal Home Loan Bank that arises from transactions or
relationships distinct from the current or former member's ownership,
purchase, sale, or retention of an equity security of the Federal Home
Loan Bank.
(b) Similarly situated creditors. All claimants that are similarly
situated shall be treated in a similar manner, except that the receiver
may take any action (including making payments) that does not comply
with this section, if:
(1) The Director determines that such action is necessary to
maximize the value of the assets of the regulated entity, to maximize
the present value return from the sale or other disposition of the
assets of the regulated entity, or to minimize the amount of any loss
realized upon the sale or other disposition of the assets of the
regulated entity; and
(2) All claimants that are similarly situated under paragraph (a)
of this section receive not less than the amount such claimants would
have received if the receiver liquidated the assets and liabilities of
the regulated entity in receivership and such action had not been
taken.
(c) Priority determined at default. The receiver will determine
priority based on a claim's status at the time of default, such default
having occurred at the time of entry into the receivership, or if a
conservatorship immediately preceded the receivership, at the time of
entry into the conservatorship provided the claim then existed.

Subpart C--Limited-Life Regulated Entities

Sec. 1237.10 Limited-life regulated entities.

(a) Status. The United States Government shall be considered a
person for purposes of section 1367(i)(6)(C)(i) of the Safety and
Soundness Act.
(b) Investment authority. The requirements of section 1367(i)(4)
shall apply only to the liquidity portfolio of a limited-life regulated
entity.
(c) Policies and procedures. The Agency may draft such policies and
procedures with respect to limited-life regulated entities as it
determines to be necessary and appropriate, including policies and
procedures regarding the timing of the creation of limited-life
regulated entities.

Sec. 1237.11 Authority of limited-life regulated entities to obtain
credit.

(a) Ability to obtain credit. A limited-life regulated entity may
obtain unsecured credit and issue unsecured debt.
(b) Inability to obtain credit. If a limited-life regulated entity
is unable to obtain unsecured credit or issue unsecured debt, the
Director may authorize the obtaining of credit or the issuance of debt
by the limited-life regulated entity with priority over any and all of
the obligations of the limited-life regulated entity, secured by a lien
on property of the limited-life regulated entity that is not otherwise
subject to a lien, or secured by a junior lien on property of the
limited-life regulated entity that is subject to a lien.
(c) Limitations. The Director, after notice and a hearing, may
authorize a limited-life regulated entity to obtain credit or issue
debt that is secured by a senior or equal lien on property of the
limited-life regulated entity that is already subject to a lien (other
than mortgages that collateralize the mortgage-backed securities issued
or guaranteed by an Enterprise) only if the limited-life regulated
entity is unable to obtain such credit or issue such debt otherwise on
commercially reasonable terms and there is adequate protection of the
interest of the holder of the earlier lien on the property with respect
to which such senior or equal lien is proposed to be granted.
(d) Adequate protection. The adequate protection referred to in
paragraph (c) of this section may be provided by:
(1) Requiring the limited-life regulated entity to make a cash
payment or periodic cash payments to the holder of the earlier lien, to
the extent that there is likely to be a decrease in the

[[Page 35736]]

value of such holder's interest in the property subject to the lien;
(2) Providing to the holder of the earlier lien an additional or
replacement lien to the extent that there is likely to be a decrease in
the value of such holder's interest in the property subject to the
lien; or
(3) Granting the holder of the earlier lien such other relief,
other than entitling such holder to compensation allowable as an
administrative expense under section 1367(c) of the Safety and
Soundness Act, as will result in the realization by such holder of the
equivalent of such holder's interest in such property.

Subpart D--Other

Sec. 1237.12 Capital distributions while in conservatorship.

(a) Except as provided in paragraph (b) of this section, a
regulated entity shall make no capital distribution while in
conservatorship.
(b) The Director may authorize, or may delegate the authority to
authorize, a capital distribution that would otherwise be prohibited by
paragraph (a) of this section if he or she determines that such capital
distribution:
(1) Will enhance the ability of the regulated entity to meet the
risk-based capital level and the minimum capital level for the
regulated entity;
(2) Will contribute to the long-term financial safety and soundness
of the regulated entity;
(3) Is otherwise in the interest of the regulated entity; or
(4) Is otherwise in the public interest.
(c) This section is intended to supplement and shall not replace or
affect any other restriction on capital distributions imposed by
statute or regulation.

Sec. 1237.13 Payment of Securities Litigation Claims while in
conservatorship.

(a) Payment of Securities Litigation Claims while in
conservatorship. The Agency, as conservator, will not pay a Securities
Litigation Claim against a regulated entity, except to the extent the
Director determines is in the interest of the conservatorship.
(b) Claims against limited-life regulated entities. A limited-life
regulated entity shall not assume, acquire, or succeed to any
obligation that a regulated entity for which a receiver has been
appointed may have to any shareholder of the regulated entity that
arises as a result of the status of that person as a shareholder of the
regulated entity, including any Securities Litigation Claim. No
creditor of the regulated entity shall have a claim against a limited-
life regulated entity unless the receiver has transferred that
liability to the limited-life regulated entity. The charter of the
regulated entity, or of the limited-life regulated entity, is not an
asset against which any claim can be made by any creditor or
shareholder of the regulated entity.

Sec. 1237.14 Golden parachute payments [Reserved]

Dated: June 14, 2011.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2011-15098 Filed 6-17-11; 8:45 am]
BILLING CODE 8070-01-P