Procedure For Imposing Assessments on the FHLBanks

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 902

[No. 97-42]

RIN 3069-AA51

Procedure For Imposing Assessments on the FHLBanks

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

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

SUMMARY: The Federal Housing Finance Board (Finance Board) is amending

its procedure for imposing semiannual assessments on the Federal Home

Loan Banks (FHLBanks) as part of the conversion of Finance Board

operations from the calendar year to the federal fiscal year.

EFFECTIVE DATE: The final rule will become effective August 4, 1997.

FOR FURTHER INFORMATION CONTACT: John C. Waters, Associate Director,

Office of Resource Management, 202/408-2860, or Janice A. Kaye,

Attorney-Advisor, Office of General Counsel, 202/408-2505, Federal

Housing Finance Board, 1777 F Street, N.W., Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

Under section 18(b)(1) of the Federal Home Loan Bank Act (Bank

Act), the Finance Board has the authority to impose a semiannual

assessment on the FHLBanks in an amount sufficient to provide for the

payment of the Finance Board's estimated expenses for the period

covered by the assessment. See 12 U.S.C. 1438(b)(1). Section 18(b)(3)

of the Bank Act requires the Finance Board to offset the amount of the

current semiannual assessment by any amount it determines is remaining

from a previous assessment. See id. 1438(b)(2).

In 1993, The Finance Board by regulation implemented its authority

to assess the FHLBanks. See 58 FR 19195 (Apr. 13, 1993), codified at 12

CFR 902.2. The current rule requires the Finance Board to adopt an

annual budget of expenses for each calendar year and authorizes the

Finance Board to impose two semiannual assessments on the FHLBanks in

each calendar year to pay its approved expenses. See 12 CFR 902.2. The

current rule also establishes the procedure the Finance Board follows

when imposing an assessment on the FHLBanks. See id.

Effective October 1, 1997, the Finance Board will transfer

responsibility for operational support of its accounting and personnel

systems from the Office of Thrift Supervision (OTS) to the

[[Page 35949]]

Department of Agriculture's National Finance Center (NFC). Unlike the

OTS, the NFC operates according to the federal fiscal year, which spans

a 12-month period beginning October 1 and ending September 30. Thus,

the Finance Board must convert its operations from a calendar to a

federal fiscal year basis. One of the changes necessary to complete the

Finance Board's conversion from a calendar to a federal fiscal year is

an amendment to the Finance Board regulation concerning FHLBank

assessments to reflect a fiscal year cycle. The Finance Board is also

amending the regulation to clarify the procedures it will follow when

making an assessment on the FHLBanks.

II. Analysis of the Final Rule

In accordance with section 18(b)(1) of the Bank Act, Sec. 902.2(a)

of the final rule authorizes the Finance Board to impose assessments on

the FHLBanks to pay its expenses. See 12 U.S.C. 1438(b)(1); 12 CFR

902.2(a). More specifically, Sec. 902.2(a) of the final rule authorizes

the Finance Board to impose a semiannual assessment on the FHLBanks in

an aggregate amount it determines to be sufficient to pay its estimated

expenses for the period covered by the assessment.

Section 902.2(b) of the final rule establishes the procedure for

imposing assessments on the FHLBanks. In order to effect the changeover

from a calendar to a federal fiscal year, paragraph (b)(1) of the final

rule requires the Finance Board, at or near the end of each fiscal

year, to approve an annual budget of Finance Board expenses for the

following fiscal year and to provide promptly a copy of the approved

budget to each Bank president. Under the current rule, the Finance

Board must approve its budget of expenses near the end of, and for the

next, calendar year. See 12 CFR 902.2(b).

Paragraph (b)(2) of the final rule combines provisions that appear

currently in Secs. 902.2(c), (d), and (f). See id. Secs. 902.2(c), (d),

(f). Like Sec. 902.2(c) of the current rule, paragraph (b)(2) requires

the Finance Board to assess the FHLBanks semiannually in an aggregate

amount sufficient to meet the Finance Board's administrative and

operating expenses. See id. Sec. 902.2(c). As under Sec. 902.2(d) of

the current rule, the final rule requires the Finance Board to offset a

current semiannual assessment by any amount the Finance Board

determines is remaining from a previous assessment. See id.

Sec. 902.2(d). Since the source of revenue is irrelevant in determining

whether any amount remains from a previous assessment, the Finance

Board has eliminated the provision concerning revenues received from

subleasing portions of its office building. See id. Sec. 902.2(d)(1).

Similar to Sec. 902.2(f) of the current rule, paragraph (b)(2) of the

final rule requires the Finance Board to notify promptly each FHLBank

president in writing of the amount of any assessment. See id.

Sec. 902.2(f).

Paragraph (b)(3) of the final rule combines provisions that appear

currently in Secs. 902.2(e) and (g). See id. Secs. 902.2(e), (g). Like

Sec. 902.2(e) of the current rule, paragraph (b)(3) of the final rule

requires each FHLBank to pay a pro rata share of any assessment imposed

by the Finance Board. See id. Sec. 902.2(e). Both the current and final

rules require the Finance Board to calculate each FHLBank's pro rata

share based on the ratio between the total paid-in value of that

FHLBank's capital stock relative to the aggregate total paid-in value

of the capital stock of every FHLBank. See id. Similar to Sec. 902.2(g)

of the current rule, the final rule requires the Finance Board to

notify promptly each Bank in writing of the amount of its pro rata

share of any assessment. See id. Sec. 902.2(g).

Although every FHLBank remits its pro rata share of each assessment

to the Finance Board in equal monthly installments, under Sec. 902.2(h)

of the current rule, a monthly payment schedule is not mandatory. See

id. Sec. 902.2(h). To reflect current practice, paragraph (b)(4) of the

final rule requires each FHLBank to pay its pro rata share in equal

monthly installments during the semiannual period covered by the

assessment unless otherwise instructed in writing by the Finance Board.

III. Notice and Public Participation

The notice and comment procedure required by the Administrative

Procedure Act is inapplicable to this final rule because it is a rule

of agency procedure. See 5 U.S.C. 553(b)(3)(A).

IV. Regulatory Flexibility Act

The Finance Board is adopting this technical amendment in the form

of a final rule and not as a proposed rule. Therefore, the provisions

of the Regulatory Flexibility Act do not apply. See id. 601(2), 603(a).

V. Paperwork Reduction Act

This final rule does not contain any collections of information

pursuant to the Paperwork Reduction Act of 1995. See 44 U.S.C. 3501 et

seq. Consequently, the Finance Board has not submitted any information

to the Office of Management and Budget for review.

List of Subjects in 12 CFR Part 902

Administrative practice and procedure, Assessments, Federal home

loan banks, Government contracts, Minority businesses, Mortgages,

Reporting and recordkeeping requirements.

Accordingly, the Federal Housing Finance Board hereby amends title

12, chapter IX, part 902 of the Code of Federal Regulations as follows:

PART 902--OPERATIONS

1. Revise the authority citation for part 902 to read as follows:

Authority: 12 U.S.C. 1422b and 1438(b).

2. Revise Sec. 902.2 to read as follows:

Sec. 902.2 Assessments on the Banks.

(a) Assessment authority. The Finance Board may impose a semiannual

assessment on the Banks in an aggregate amount the Finance Board

determines is sufficient to provide for the payment of its estimated

expenses for the period for which it makes such assessment.

(b) Assessment procedure. (1) At or near the end of each fiscal

year, the Finance Board shall approve an annual budget of Finance Board

expenses for the next fiscal year. The Finance Board shall promptly

provide a copy of the approved budget to each Bank president.

(2) The Finance Board shall assess the Banks semiannually in an

aggregate amount it determines is sufficient to pay the expenses

approved under paragraph (b)(1) of this section. The Finance Board

shall offset the amount of the semiannual assessments it imposes on the

Banks by any amount it determines is remaining from previous semiannual

assessments. The Finance Board shall promptly notify each Bank

president in writing of the amount of any assessment.

(3) Each Bank shall pay a pro rata share of the semiannual

assessments imposed under paragraph (b)(2) of this section. The Finance

Board shall calculate each Bank's pro rata share based on the ratio

between the total paid-in value of the Bank's capital stock and the

aggregate total paid-in value of the capital stock of every Bank. The

Finance Board shall promptly notify each Bank in writing of the amount

of its pro rata share of any semiannual assessment.

(4) Unless otherwise instructed in writing by the Finance Board,

each Bank shall pay to the Finance Board its pro rata share of an

assessment in equal monthly installments during the semiannual period

covered by the assessment.

[[Page 35950]]

By the Board of Directors of the Federal Housing Finance Board.

Bruce A. Morrison,

Chairperson.

[FR Doc. 97-17446 Filed 7-2-97; 8:45 am]

BILLING CODE 6725-01-U