[The Regulatory Plan and Unified Agenda of Federal Regulations]
[Federal Housing Finance Board Regulatory Plan]
[From the U.S. Government Printing Office, www.gpo.gov]


FEDERAL HOUSING FINANCE BOARD (FHFB)

Statement of Regulatory Priorities
The Federal Housing Finance Board (Finance Board) is an independent 
agency that is statutorily charged with regulating the Federal Home 
Loan Bank (FHLBank) System. The FHLBank System is a Government-
sponsored enterprise consisting of 12 regional ``wholesale'' FHLBanks 
that provide advances (loans) to member financial institutions for the 
purpose of housing finance. The Finance Board is required to prepare 
the following Regulatory Plan pursuant to section 4 of Executive Order 
12866.
In June 1995 the Finance Board achieved a quorum for the first time in 
17 months, thereby enabling it to begin moving forward on several 
pending and planned regulatory initiatives. The Finance Board's three 
major regulatory priorities for 1996 are: to ensure that the FHLBanks 
operate in a financially safe and sound manner; to ensure that they 
carry our their housing finance mission; and to reduce the regulatory 
burden on the FHLBanks by determining those governance authorities 
currently exercised by the Finance Board that may be more appropriately 
exercised by the FHLBanks. Within these major priorities, the Finance 
Board has a number of 1995-96 priority projects, three of which are 
expected to result in significant regulatory actions (as defined in 
E.O.12866) in 1996.
FHLBank Safety And Soundness Priority
The Finance Board's highest priority is to continue to ensure the 
safety and soundness of the FHLBank System. This priority entails the 
ongoing examination and supervision of the 12 FHLBanks and the FHLBank 
System's funding agent, the Office of Finance, and all matters relating 
to safety and soundness. While none of the projects within this 
priority is expected to result in a significant regulatory action in 
1996, the following interrelated matters are the most important 
components of this top priority for the agency:
1. The execution of the Finance Board-adopted annual strategic plan for 
onsite examination of the 12 FHLBanks, the Office of Finance, and the 
Financing Corporation;
2. The development and adoption by the Finance Board of the agency's 
examination manual, which will articulate the policies and procedures 
to be followed by examiners in conducting examinations; and
3. A comprehensive review of the Financial Management Policy governing 
investments and other nonadvance financial activities of the FHLBank 
System.
FHLBank Housing Finance Mission Priority
The second major Finance Board regulatory priority is to continue to 
ensure that the FHLBanks carry out their housing finance mission. There 
are two significant regulatory actions through which the Finance Board 
intends to further this priority in fiscal year 1996: (a) the amendment 
of the Finance Board's existing Affordable Housing Program (AHP) 
regulation and (b) the possible adoption of a new regulation or 
guidelines governing the FHLBanks' Community Investment Program (CIP). 
These two initiatives are described below (RINs 3069-AA28 and 3069-
AA05).
The Finance Board also intends to implement this priority by amending 
its existing Community Support Requirements (Community Support) 
regulation to establish specific community support standards applicable 
to credit union and insurance company members. The Federal Home Loan 
Bank Act (Bank Act) requires the Finance Board to adopt a regulation 
establishing standards of ``community investment or service'' that 
member institutions must meet in order to maintain continued access to 
long-term advances.
Under the existing Community Support regulation, the primary standard 
for evaluating the adequacy of a member's community support activities 
is the evaluation of the member's compliance with the Community 
Reinvestment Act of 1977 (CRA), as evidenced by the CRA rating assigned 
to the member by its Federal banking regulator. However, since the CRA 
does not apply to credit unions and insurance companies, these 
institutions do not receive CRA ratings. The amendment to the Community 
Support regulation is intended to address this issue. The Finance Board 
does not expect the amendment of the Community Support regulation to 
constitute a significant regulatory action.
FHLBank Corporate Governance Priority
The Finance Board's third major priority for fiscal year1996 is to 
devolve to the FHLBanks, to the extent permitted by current law, 
decisionmaking authority regarding corporate governance and business 
oversight issues, thereby reducing regulatory burden on the FHLBanks 
and permitting the Finance Board to focus upon its core safety and 
soundness, regulatory, and supervisory functions.
Throughout the remainder of 1995 and in 1996, the Finance Board will 
address a number of specific governance and oversight issues and 
implement those changes it believes are appropriate and that can be 
carried out without statutory change. Primary among these efforts will 
be the promulgation of a proposed and, eventually, a final rule 
amending the Finance Board's regulation on members of the FHLBanks 
System. This initiative is discussed below (RIN 3069-AA41). The Finance 
Board also intends to promulgate a proposed and, eventually, a final 
rule amending its regulation on the organization of the FHLBanks to 
transfer from the Finance Board to the boards of directors of the 
FHLBanks final authority to establish rates of pay for FHLBank officers 
and employees. This anticipated regulatory change will not amount to a 
significant regulatory action.
In addition to its regulatory and policy actions, the Finance Board 
will be cooperating with Congress as it attempts to develop 
comprehensive FHLBank System reform legislation aimed largely at 
further devolving corporate governance authority to the FHLBanks beyond 
what is possible under the current statutory scheme.
The Finance Board's corporate governance priority promotes the goals of 
the President's National Performance Review in two ways. First, it will 
``cut red tape'' by reducing the number and extent of regulations that 
control the FHLBanks' business decisions. Second, it will ``put 
customers first'' by allowing the FHLBanks more flexibility in carrying 
out the purpose for which they were created: to channel money from Wall 
Street to individual housing lenders all across America.
_______________________________________________________________________
FHFB

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                          PROPOSED RULE STAGE

                              -----------

157. AFFORDABLE HOUSING PROGRAM
Priority:


Economically Significant


Reinventing Government:


This rulemaking is part of the Reinventing Government effort. It will 
revise text in the CFR to reduce burden or duplication, or streamline 
requirements.


Legal Authority:


 12 USC 1422b(a)(1); 12 USC 1430(j)


CFR Citation:


 12 CFR 960


Legal Deadline:


None


Abstract:


The Federal Housing Finance Board (Finance Board) issued a proposed 
rule revising its regulation governing the Affordable Housing Program 
(AHP) in order to simplify and clarify the AHP's requirements for the 
Federal Home Loan Banks (FHLBanks) and their members.


Statement of Need:


The Finance Board is revising its AHP Regulation in order to address 
operational issues that have arisen during the 5 years the program has 
been in existence. The proposed AHP amendments will help enhance the 
AHP's compatibility with various State and Federal housing programs 
that provide funds in conjunction with AHP funds. In addition, the 
amendments would make the AHP more responsive to local low-income 
housing needs in each of the 12 FHLBank districts and increase 
efficiency in administration of the program.


Summary of the Legal Basis:


Section 10(j) of the Federal Home Loan Bank Act requires the Finance 
Board to promulgate regulations governing the AHP. See 12 U.S.C. 
1430(j).


Alternatives:


During the development of the proposed AHP amendments, the Finance 
Board considered various alternative approaches to dealing with the 
operational issues that have arisen over the 5 years of the AHP's 
existence. In addition, the Finance Board will consider all 
alternatives suggested by the public during the notice-and-comment 
process. The Finance Board expects to address these alternatives in its 
final AHP regulation.


Anticipated Costs and Benefits:


At this time, it is not possible to quantify the expected costs and 
benefits of the revised AHP regulation. In general, the Finance Board 
expects the revised AHP regulation to reduce the FHLBanks' 
administrative costs of operating the AHP.


Risks:


The revised AHP regulation does not address issues of financial risk to 
the FHLBanks. The advances made by the FHLBanks through the AHP, like 
all FHLBank advances, are governed by the Finance Board's Advances 
regulation, which addresses the safety and soundness issues involved in 
making advances. Since advances made through the AHP are 
overcollateralized, there is a low magnitude of risk of loss to the 
FHLBanks in making such advances.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            59 FR 1323                                     01/10/94
NPRM Comment Per59 FR 1323                                     03/11/94
Second NPRM                                                    03/00/96
Second NPRM Comment Period End                                 05/00/96
Final Action                                                   07/00/96
Final Action Effective                                         08/00/96
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Diane E. Dorius
Deputy Director, Office of Housing Finance
Federal Housing Finance Board
1777 F Street NW.
Washington, DC 20006
Phone: 202 408-2576
RIN: 3069-AA28
_______________________________________________________________________
FHFB
158.  MEMBERS OF THE FEDERAL HOME LOAN BANKS
Priority:


Other Significant


Reinventing Government:


This rulemaking is part of the Reinventing Government effort. It will 
revise text in the CFR to reduce burden or duplication, or streamline 
requirements.


Legal Authority:


 12 USC 1422a; 12 USC 1422b; 12 USC 1424; 12 USC 1426; 12 USC 1442


CFR Citation:


 12 CFR 933


Legal Deadline:


None


Abstract:


The Finance Board proposes to amend its regulation on members of the 
Banks to allow the 12 Federal Home Loan Banks, rather than the Finance 
Board, to approve applications for Bank membership.


Statement of Need:


The proposed rule would permit the FHLBanks, rather than the Finance 
Board, to approve applications for FHLBank membership. It would require 
the FHLBanks to apply most of the tests and criteria for membership 
currently used by the Finance Board in approving applications. The 
regulation, as amended, would further the Finance Board's policy to 
devolve to the FHLBanks as many functions of corporate governance as 
are practicable under the current statutory scheme.


Summary of the Legal Basis:


Section 4 of the Bank Act sets forth eligibility criteria for 
membership in FHLBanks, but does not require expressly that the Finance 
Board approve individual applications for membership. (See 12 USC 
1424.) Section 2B(a)(1) of the Bank Act authorizes the Finance Board to 
promulgate regulations necessary to carry out the provisions of the 
Bank Act (see 1422b(a)(1)), including those necessary to fulfill the 
Finance Board's duties to ensure the safety and soundness of the 
FHLBank system (see 1424a(3)(A)), and to ensure that the FHLBanks carry 
out their housing finance mission (see 1422a(3)(B)(i)). Therefore, the 
Finance Board has the statutory power both to devolve to the FHLBanks 
approval authority regarding membership applications and to establish 
regulatory guidelines to govern the FHLBanks' exercise of such 
authority.


Alternatives:


In deciding whether to amend its regulation on members of the FHLBanks, 
the Finance Board considered the possibility of retaining final 
approval authority over FHLBank membership applications. However, the 
Finance Board determined that such a course would continue to cause 
unnecessary delay in the processing of membership applications and 
would maintain a layer of bureaucracy in the application process that 
is not necessary to ensure the safety and soundness of the FHLBank 
System or to ensure that the FHLBanks are carrying out their housing 
finance mission.


Anticipated Costs and Benefits:


The regulation on members of the FHLBanks, as amended, would not impose 
any additional costs on either the Finance Board, the FHLBanks, or 
potential FHLBank members and would render benefits to each. Applicants 
for membership would continue to submit application materials, but 
would do so pursuant to streamlined procedures. FHLBanks would continue 
to review membership applications, as they do currently, but would not 
need to prepare the materials for Finance Board review. With the 
elimination of the membership application review function, Finance 
Board staffing levels could be reduced, or staff time could be devoted 
to other priorities. Ultimately, this would benefit the FHLBanks, which 
fund Finance Board operations through the payment of annual 
assessments.


Risks:


The only risk to which the amendment of the regulation on members of 
the FHLBank System applies is the financial risk assumed by FHLBanks in 
accepting financial institutions as members. The amended regulation 
would minimize this risk by requiring that the FHLBanks apply the same 
safety and soundness guidelines in assessing membership applications 
that are applied now by the Finance Board.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM                                                           10/00/95
NPRM Comment Period End                                        12/00/95
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Amy R. Maxwell
Associate Director
District Banks Secretariat
Federal Housing Finance Board
1777 F Street NW.
Washington, DC 20006
Phone: 202 408-2882
RIN: 3069-AA41
_______________________________________________________________________
FHFB

                              -----------

                            FINAL RULE STAGE

                              -----------

159. COMMUNITY INVESTMENT PROGRAM
Priority:


Economically Significant


Legal Authority:


 12 USC 1422a; 12 USC 1422b; 12 USC 1430(i)


CFR Citation:


 12 CFR 961


Legal Deadline:


None


Abstract:


Section 10(i) of the Bank Act requires the FHLBanks to establish a 
community investment program (CIP) to make advances to FHLBank members 
to finance community-oriented mortgage lending. The Finance Board is 
contemplating proposing a regulation or developing guidelines that 
would address operational aspects of the CIP.


Statement of Need:


The CIP has operated for 5 years without any clarifying regulations. 
During this time, operational issues have arisen. A regulation or 
guidelines may be necessary to address these issues in order to 
establish a more specific framework for the operation of the CIP.


Summary of the Legal Basis:


Section 2B(a)(1) of the Bank Act authorizes the Federal Housing Finance 
Board (Finance Board) to promulgate regulations necessary to carry out 
the provisions of the Act.(See 12 U.S.C. 1422b(a)(1).) Section 10(i) of 
the Bank Act requires the FHLBanks to establish a CIP, pursuant to the 
general statutory criteria set forth in section 10(i).


Alternatives:


Because consideration of additional CIP guidance is in a very 
preliminary stage, including the issue of whether such guidance will be 
established by regulation or by guidelines, the Finance Board has not 
yet analyzed the alternative approaches to the issues expected to be 
addressed in this initiative.


Anticipated Costs and Benefits:


Because the Finance Board has not yet analyzed the alternative 
approaches to the issues expected to be addressed in the CIP regulation 
or guidelines, the Finance Board is not yet able to identify the 
expected costs and benefits of any such CIP regulation or guidelines.


Risks:


The CIP regulation or guidelines will not address issues of financial 
risk to the FHLBanks. The advances made by the FHLBanks through the 
CIP, like all FHLBank advances, are governed by the Finance Board's 
Advances regulation, which addresses the safety and soundness issues 
involved in making advances. Since advances made through the CIP are 
overcollateralized, there is a low magnitude of risk of loss to the 
FHLBanks in making such advances.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
Final Action                                                   09/00/96
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Sylvia Martinez
Director
Office of Housing Finance
Federal Housing Finance Board
1777 F Street NW.
Washington, DC 20006
Phone: 202 408-2825
RIN: 3069-AA05
BILLING CODE 6725-01-F