[Federal Register Volume 91, Number 132 (Monday, July 13, 2026)]
[Proposed Rules]
[Pages 42884-42887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-14035]
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1272
RIN 2590-AB52
Federal Home Loan Bank New Business Activities
AGENCY: Federal Housing Finance Agency.
ACTION: Notice of Proposed Rulemaking; repeal of 12 CFR part 1272.
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SUMMARY: The Federal Housing Finance Agency (``FHFA'' or the
``Agency'') is requesting comment on this notice of proposed rulemaking
repealing the New Business Activities regulation.
DATES: FHFA will accept written comments on the proposed rule on or
before August 12, 2026.
ADDRESSES: You may submit your comments on the proposed rule,
identified by regulatory information number (RIN) 2590-AB52, by any one
of the following methods:
Agency Website: https://www.fhfa.gov/regulation/federal-register?comments=open.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. If you submit your
comment to the Federal eRulemaking Portal, please also send it by email
to FHFA at [email protected] to ensure timely receipt by FHFA.
Include the following information in the subject line of your
submission: Comments/RIN 2590-AB52.
Hand Delivered/Courier: The hand delivery address is:
Clinton Jones, General Counsel, Attention: Comments/RIN 2590-AB52,
Federal Housing Finance Agency, 400 Seventh Street SW, Washington, DC
20219. Deliver the package at the Seventh Street entrance Guard Desk,
First Floor, on business days between 9 a.m. and 5 p.m.
U.S. Mail, United Parcel Service, Federal Express, or
Other Mail Service: The mailing address for comments is: Clinton Jones,
General Counsel, Attention: Comments/RIN 2590-AB52, Federal Housing
Finance Agency, 400 Seventh Street SW, Washington, DC
[[Page 42885]]
20219. Please note that all mail sent to FHFA via U.S. Mail is routed
through a national irradiation facility, a process that may delay
delivery by approximately two weeks.
FOR FURTHER INFORMATION CONTACT: For general questions, please contact
[email protected]. For technical questions, please contact
Lindsay Spadoni, Associate General Counsel, Office of General Counsel,
(202) 649-3634, [email protected]. This is not a toll-free
number. For TTY/TRS users with hearing and speech disabilities, dial
711 and ask to be connected to the contact number above.
SUPPLEMENTARY INFORMATION:
I. Request for Comments
FHFA invites comments on all aspects of the proposed rule and will
take all comments into consideration before issuing a final rule.
Comments, including any personally identifiable information such as
name and contact information, will be posted to the electronic
rulemaking docket on the FHFA public website at https://www.fhfa.gov,
except as described below. Commenters should submit only information
that the commenter wishes to make available publicly. FHFA will not
redact personally identifiable information once it is submitted.
Commenters who do not wish to be identified by their comments may
submit their comments anonymously. FHFA may post only a single
representative example of identical or substantially identical
comments, and in such cases will generally identify the number of
identical or substantially identical comments represented by the posted
example. FHFA may, in its discretion, redact or refrain from posting
all or any portion of any comment that contains content that is
obscene, vulgar, profane, or threatens harm. All comments, including
those that are redacted or not posted, will be retained in their
original form in FHFA's internal rulemaking file and will be considered
as required by all applicable laws. Commenters who would like FHFA to
consider any portion of their comment exempt from disclosure on the
basis that it contains trade secrets, or financial, confidential or
proprietary data or information, should follow the procedures in
section IV.D. of FHFA's Policy on Communications with Outside Parties
in Connection with FHFA Rulemakings, see https://www.fhfa.gov/sites/default/files/documents/Ex-Parte-Communications-Public-Policy_3-5-19.pdf. FHFA cannot guarantee that such data or information will remain
confidential if disclosure is sought pursuant to an applicable statute
or regulation. See 12 CFR 1202.8, 12 CFR 1214.2, and FHFA's FOIA
Reference Guide at https://www.fhfa.gov/about/foia-reference-guide for
additional information.
II. Purpose of Proposed Rule Repealing 12 CFR Part 1272
Pursuant to Executive Order (Executive Order or E.O.) 14219, FHFA
reviewed its regulations for consistency with law and Administration
policy.\1\ FHFA also reviewed existing FHFA regulations with a goal of
alleviating unnecessary regulatory burdens, and improving prudence and
financial responsibility in the expenditure of funds, from both public
and private sources. In furtherance of these goals and because FHFA has
identified part 1272 as potentially disincentivizing innovation that
could advance the Banks' mission without a sufficiently offsetting
safety and soundness effect, FHFA proposes to repeal 12 CFR part 1272.
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\1\ 90 FR 10583 (Feb. 25, 2025).
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III. Agency Authority To Repeal 12 CFR Part 1272
The Federal Housing Enterprise Safety and Soundness Act of 1992
(Safety and Soundness Act) authorizes FHFA to exercise general
regulatory authority over its regulated entities to ensure that the
purposes of the Safety and Soundness Act, the Federal Home Loan Bank
Act, and any other applicable law are carried out.\2\ The Safety and
Soundness Act also authorizes FHFA to issue, following notice and
comment requirements under the Administrative Procedure Act (APA), any
regulation necessary to carry out its duties with respect to the Banks
and to ensure that the purposes of the Safety and Soundness Act, and
the Federal Home Loan Bank Act are accomplished.\3\ FHFA's rulemaking
authority extends to amendment or repeal of a regulation, including
regulations that impose unnecessary regulatory burdens.\4\
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\2\ 12 U.S.C. 4511(b).
\3\ 12 U.S.C. 4526(a) and (b) (requiring regulations to be
issued after notice and opportunity for comment pursuant to 5 U.S.C.
553).
\4\ The APA defines ``rule making'' as the ``agency process for
formulating, amending, or repealing a rule.'' 5 U.S.C. 551(5).
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IV. Regulatory Background
Part 1272 sets forth the requirements pertaining to the submission
and approval of notices for a Bank to commence a new business activity
(NBA). In 2000, the Federal Housing Finance Board (Finance Board), a
predecessor regulator of the Banks to FHFA, adopted a regulation
implementing certain statutory amendments made by the Bank System
Modernization Act of 1999 (Modernization Act).\5\ Because the statutory
amendments had expanded the types of collateral the Banks may accept,
the Finance Board established a prior review process through which the
Finance Board could assess the risks to the Banks of accepting the new
types of collateral. The Finance Board codified this review process at
12 CFR part 980 and titled it an NBA notice (NBAN) submission and
review. Part 980 also required the Banks to obtain Finance Board
approval prior to undertaking any other NBAs that presented risks the
Banks had not previously managed.\6\
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\5\ See 65 FR 44414 (July 18, 2000). The Bank System
Modernization Act of 1999 is Title VI of the Gramm-Leach-Bliley Act,
Public Law 106-102, 113 Stat. 1338 (Nov. 12, 1999).
\6\ See 65 FR 44414, 44420 (July 18, 2000).
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In 2010, FHFA re-designated 12 CFR part 980 as 12 CFR part 1272 of
its regulations without modification.\7\ In December 2016, FHFA issued
a final rule that reduced the scope of activities requiring submission
of an NBAN, modified the submission requirements, and established new
timelines for agency review and approval of such notices.\8\ This
proposed rule, if finalized as proposed, would repeal the NBA rule
codified at 12 CFR part 1272, consisting of Sec. Sec. 1272.1 through
1272.7. Part 1272 would be reserved.
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\7\ 75 FR 76617, 76622 (Dec. 9, 2010).
\8\ 81 FR 91690, 91694 (Dec. 19, 2016).
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V. Grounds for Repeal
A. Standard of Review for Regulatory Repeal
The APA requires a reviewing court to set aside agency action that
is, among other things, ``arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law'' or ``in excess of
statutory jurisdiction, authority, or limitations, or short of
statutory right.'' \9\ Agency action subject to a court's review
includes repeal of a regulation.\10\ FHFA's authority extends to
amendment or repeal of a regulation.\11\ FHFA proposes to repeal 12 CFR
part 1272 to align with Administration policy by alleviating
unnecessary regulatory burdens, and improving prudence and financial
responsibility in the expenditure of funds, from both public and
private sources. FHFA's
[[Page 42886]]
rulemaking authority extends to amendment or repeal of a
regulation.\12\
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\9\ See 5 U.S.C. 706(2)(A) and (C).
\10\ See 5 U.S.C. Sec. Sec. 551(4), 701(b)(2).
\11\ The APA defines ``rule making'' as the ``agency process for
formulating, amending, or repealing a rule.'' 5 U.S.C. 551(5).
\12\ 81 FR 91690 (Dec. 19, 2016).
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B. FHFA Alignment With Administration Policy
The Administration has made the reduction of regulatory burden,
efficiency, and fiscal accountability clear priorities.\13\ On February
19, 2025, the President issued Executive Order 14219 under which
federal agencies are required to review all regulations subject to
their jurisdiction and repeal, as appropriate, regulations inconsistent
with law or policy.\14\ Administration policy includes that federal
agencies be ``prudent and financially responsible in the expenditure of
funds, from both public and private sources, and to alleviate
unnecessary regulatory burdens.'' \15\ Administrative priorities
include lowering the cost of housing and expanding housing supply.\16\
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\13\ See e.g. E.O. 14222 ``Implementing the President's
`Department of Government Efficiency' Cost Efficiency Initiative''
(February 26, 2025); E.O. 14219 ``Ensuring Lawful Governance and
Implementing the President's `Department of Government Efficiency'
Deregulatory Initiative'' (February 19, 2025); and E.O. 14192
``Unleashing Prosperity Through Deregulation'' (January 31, 2025).
\14\ E.O. 14219 (February 19, 2025), section 2, at 90 FR 10583
(Feb. 25, 2025).
\15\ E.O. 14192 (January 31, 2025), section 2, at 90 FR 9065
(Feb. 6, 2025).
\16\ Presidential Memorandum, ``Delivering Emergency Price
Relief for American Families and Defeating the Cost-of-Living
Crisis'' (January 20, 2025), at 90 FR 8245 (January 28, 2025).
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Rescinding part 1272 would align with Administration policy by
recognizing that part 1272 has had a minimal effect on the Banks'
deployment of new products and services to their members over the last
decade. Very few of the new business activities in which the Banks are
statutorily authorized to engage rise to the risk level that would
trigger an NBAN submission. NBAN submissions are required only to the
extent a new business activity entails material risks not previously
managed by the Bank.\17\
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\17\ 12 CFR 1272.1.
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In the last five years, the Banks have submitted only two NBANs,
and in both cases FHFA determined the respective Bank to be capable of
managing the risks presented by the proposed activity. In the past
decade, FHFA has rejected no NBAN for unmanageable risk to the
submitting Bank. While there are only two prior NBANs against which to
measure costs of compliance, the Banks have raised the concern that
compliance with part 1272 would be burdensome and would raise the cost
of implementing NBAs. For these reasons, FHFA has determined that part
1272 has potentially become irrelevant and counterproductive to the
Banks' mission.
C. Reduce Unnecessary Regulatory Burdens
FHFA has reviewed the NBA regulation and has concluded that it
creates unnecessary burdens on the Banks. Part 1272 was first
promulgated over 25 years ago for safety and soundness reasons because
of changes introduced by the Modernization Act. NBA requirements in
part 1272 helped their regulator ensure that the Banks could
successfully accept these new types of collateral. Since the
promulgation of part 1272, most of the Banks have developed significant
experience managing the risks associated with collateral types
introduced by the Modernization Act and other statutory changes, as
well as with other types of Bank products. For these reasons, part 1272
is no longer necessary to protect against the risks for which it was
originally intended.
FHFA, in its 2016 final rule amending part 1272, eliminated the
need to file an NBAN prior to a Bank accepting new types of collateral,
and revised the definition of ``new business activity'' so that it
encompassed only a business activity ``that entails material risks not
previously managed by the Bank.'' \18\ In doing so, FHFA acknowledged
that the risks to the Banks that prompted the promulgation of part 1272
had been reduced and that the regulation should apply only to new
material risks not previously managed by the Banks. The changes also
were intended to reduce the regulatory burden on the Banks such that
they would not be required to submit NBANs for products or services
already deemed within their acceptable scope of risk.\19\
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\18\ 81 FR 91690, 91692 (Dec. 19, 2016).
\19\ For example, offering products previously approved for
other Banks or products that are similar in risk, although not
necessarily in structure, to those already offered by the Bank.
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The Banks are subject to ongoing prudential supervision through
FHFA's examination function, which includes the development of NBAs.
When FHFA updated part 1272 in 2016, it considered how its supervisory
authority would mitigate any potential issues with NBAs and determined
that FHFA will assess the risks associated with activities that do not
present material risks as part of its regular supervisory process.\20\
When developing a new product or service, Banks typically brief FHFA
early in the NBA concept development process to ensure that Bank
resources are not wasted developing an activity FHFA might deem
problematic.\21\ Any legal, policy, and supervisory issues relating to
safety and soundness concerns are raised through this engagement during
product development, ensuring that FHFA has an active role in
overseeing the development of NBAs. If a Bank fails to engage FHFA
early in the NBA development process, FHFA examination staff would
become aware of such activity through examination activities and
ongoing monitoring and would ensure that associated risks are
appropriately mitigated. Thus, requiring submission of an NBAN in
accordance with part 1272 functionally duplicates oversight performed
during the NBA development process and ongoing supervision.
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\20\ 81 FR 91690, 91693 (Dec. 19, 2016).
\21\ 12 U.S.C. 4511(b)(2); 12 U.S.C. 4513(a)(1)(B)(i).
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D. Reduce Costs and Enhance Efficiency
The Administration has made efficiency and fiscal accountability
clear priorities.\22\ Rescinding part 1272 would align with these
priorities by reducing costs for both the Banks and FHFA. For the
reasons described above, NBAN preparation constitutes a regulatory cost
to the Bank.
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\22\ See e.g. E.O. 14222 ``Implementing the President's
`Department of Government Efficiency' Cost Efficiency Initiative''
(February 26, 2025); E.O. 14219 ``Ensuring Lawful Governance and
Implementing the President's `Department of Government Efficiency'
Deregulatory Initiative'' (February 19, 2025); and E.O. 14192
``Unleashing Prosperity Through Deregulation'' (January 31, 2025).
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FHFA also expends staff resources when reviewing NBANs in
accordance with part 1272.\23\ Part 1272 requires a prescriptive,
uniform review process for all qualifying NBANs, regardless of their
complexity. As a result, FHFA staff are sometimes required to engage in
a duplicative paperwork review to ensure compliance with the
regulation. This review process is time consuming, and typically adds
little value to the NBA development process as most of the substantive
work has already been completed prior to the formal NBAN submission.
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\23\ 12 CFR 1272.4.
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When a Bank begins work on an NBA that would trigger an NBAN
submission, it typically involves FHFA in the development process long
before formally submitting an NBAN pursuant to part 1272. Most NBAs
that involve a material new risk to a Bank also require substantial
resources to develop. As the Banks are responsible to their members to
efficiently allocate resources, by involving FHFA early in the process
of developing a new product or business activity the Bank ensures that
it will not waste resources on developing a product FHFA would later
determine to
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be unsafe, unsound, or unauthorized under the Bank Act. Thus, the Banks
have a compelling economic incentive to include FHFA when developing
any NBA, rendering part 1272 redundant.
If part 1272 is rescinded, FHFA expects the Banks to continue to
create new activities that further their missions. FHFA requests
comment on whether the repeal of the regulation will impact the Banks
and specifically on what economic costs or benefits repeal would entail
for the Banks. FHFA also requests comment on whether the repeal of part
1272 could lead to the Banks creating innovative programs addressing
housing and community development issues, as well as any considerations
for how the repeal could impact the safety and soundness of the Banks.
VI. Considerations of Differences Between the Banks and the Enterprises
Section 1313(f) of the Safety and Soundness Act requires the
Director of FHFA, when promulgating regulations relating to the Banks,
to consider the differences between the Banks and the Enterprises
(Fannie Mae and Freddie Mac) as they relate to: the Banks' cooperative
ownership structure; the mission of providing liquidity to members; the
affordable housing and community development mission; their capital
structure; and their joint and several liability on consolidated
obligations.\24\ The Director also may consider any other differences
that are deemed appropriate. In preparing this proposed rule, the
Director considered the differences between the Banks and the
Enterprises as they relate to the above factors, and determined that
the rule is appropriate.
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\24\ 12 U.S.C. 4513(f).
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VII. Regulatory Impacts
A. Paperwork Reduction Act
The proposed rule to repeal part 1272 does not contain any
information collection requirements that would require the approval of
the Office of Management and Budget (OMB) under the Paperwork Reduction
Act.\25\ Therefore, FHFA has not submitted any information to OMB for
review.
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\25\ 44 U.S.C. 3501 et seq.
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act \26\ (RFA) 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.\27\ FHFA has considered the impact of the proposed rule under
the RFA. FHFA certifies that the proposed rule, if adopted as a final
rule, would not have a significant economic impact on a substantial
number of small entities because the proposed rule applies only to the
Banks and OF, which are not small entities for purposes of the RFA.
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\26\ 5 U.S.C. 601 et seq.
\27\ See 5 U.S.C. 605(b).
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C. Executive Order 12866, Regulatory Planning and Review
Executive Order 14215 (Independent Agency Accountability) amends
Executive Order 12866 (Regulatory Planning and Review) to include in
its definition of ``agency,'' those agencies under 44 U.S.C. 3502(1)
including any ``independent regulatory agency.'' Accordingly, pursuant
to Executive Order 12866 as amended, FHFA must determine whether its
regulatory action proposing repeal is ``significant'' and subject to
review by the Office of Information and Regulatory Affairs (OIRA).
Executive Order 12866 section 3(f) defines a ``significant regulatory
action'' as one that is likely to result in a rule that may: (1) Have
an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities; (2)
create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) materially alter the budgetary
impact of entitlements, grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raise novel legal
or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order. FHFA
has determined the proposed rule not to be a ``significant regulatory
action'' for purposes of Executive Order 12866. OIRA has concurred in
this determination, and therefore, the proposed rule is not subject to
review under Executive Order 12866.
D. Executive Order 13563, Improving Regulation and Regulatory Review
Executive Order 13563 directs agencies to analyze regulations that
are ``outmoded, ineffective, insufficient, or excessively burdensome,
and to modify, streamline, expand, or repeal them in accordance with
what has been learned.'' Executive Order 13563 also directs that, where
relevant, feasible, and consistent with regulatory objectives, and to
the extent permitted by law, agencies are to identify and consider
regulatory approaches that reduce burdens and maintain flexibility and
freedom of choice for the public. FHFA has developed this proposed rule
in a manner consistent with these requirements.
E. Executive Order 14192: Unleashing Prosperity Through Deregulation
Executive Order 14192 requires that an agency, unless prohibited by
law, identify at least 10 existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero.
Executive Order 14192 further requires that new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
ten prior regulations. This proposed rule is expected to be an
Executive Order 14192 deregulatory action.
VIII. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website under section 206(d) of the E-Government Act of 2002
(44 U.S.C. 3501 note) (commonly known as Regulations.gov). FHFA's
proposal and the required summary can be found at https://www.regulations.gov.
List of Subjects in 12 CFR Part 1272
Federal home loan banks, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, under the authority of 12
U.S.C. 4511, 4513, and 4526, FHFA proposes to remove and reserve 12 CFR
part 1272.
PART 1272--[REMOVED AND RESERVED]
0
1. Remove and reserve part 1272, consisting of Sec. Sec. 1272.1
through 1272.7.
Clinton Jones,
General Counsel, Federal Housing Finance Agency.
[FR Doc. 2026-14035 Filed 7-10-26; 8:45 am]
BILLING CODE 8070-01-P