Data Reporting Requirements for the Federal Home Loan Banks, 35495-35500 [E6-9756]
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Federal Register / Vol. 71, No. 119 / Wednesday, June 21, 2006 / Rules and Regulations
include $800,700 for marketing
development, $290,421 for
administration, and $210,000 for
research. Budgeted expenses for these
items in 2005 were $680,000, $337,014,
and $200,000, respectively.
Assessable olive receipts for the
2005–06 crop year were 114,761 tons,
compared to 85,862 tons for the 2004–
05 crop year. The increased production
of assessable olives will yield increased
assessment funds, even at the lower
rate. These funds, along with unused
assessments from the 2005 fiscal year
that have been carried into 2006, and
interest income, are adequate to cover
the increased expenditures.
The committee reviewed and
unanimously recommended 2006
expenditures of $1,301,121. This reflects
increases in the committee’s research
and market development budgets and a
decrease in the administrative budget
compared to the previous year’s budget.
The committee recommended a larger
research budget intended to further the
study of olive fly management and
development of a mechanical olive
harvesting method. The 2006 marketing
program recommendation includes
participation in media activities in
conjunction with the release of a new
diet plan book; translation of some of
the committee’s education and nutrition
materials into Spanish; and
continuation of several outreach
activities including cookbook
contributions, Web site development,
and educational programs for school
children. Recommended decreases in
the administrative budget are due
mainly to personnel changes in the
committee’s staff.
Prior to arriving at this budget, the
committee considered information from
various sources, such as the committee’s
Executive, Market Development, and
Research Subcommittees. Alternate
spending levels were discussed by these
groups, based upon the relative value of
various research and marketing projects
to the olive industry and the anticipated
olive production. The assessment rate of
$11.03 per ton of assessable olives was
derived by considering anticipated
expenses, the volume of assessable
olives, and additional pertinent factors.
A review of historical and preliminary
information pertaining to the upcoming
fiscal year indicates that the grower
price for the 2005–06 crop year is
estimated to be approximately $714 per
ton for canning fruit and $314 per ton
for limited-use sizes, leaving the balance
as unusable cull fruit. Approximately 76
percent of a ton of olives are canning
fruit sizes and 17 percent are limited
use sizes, leaving the balance as
unusable cull fruit. Total grower
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revenue on 114,761 tons would then be
$73,485,966, given the percentage of
canning and limited-use sizes and
current grower prices for those sizes.
Therefore, with an assessment rate
decreased from $15.68 to $11.03, the
estimated assessment revenue is
expected to be approximately 1.72
percent of grower revenue.
This action continues in effect the
action that decreased the assessment
obligation imposed on handlers.
Assessments are applied uniformly on
all handlers, and some of the costs may
be passed on to producers. However,
decreasing the assessment rate reduces
the burden on handlers, and may reduce
the burden on producers. In addition,
the committee’s meeting was widely
publicized throughout the California
olive industry and all interested persons
were invited to attend the meeting and
participate in committee deliberations
on all issues. Like all committee
meetings, the December 13, 2005,
meeting was a public meeting and all
entities, both large and small, were able
to express views on this issue.
This action imposes no additional
reporting or recordkeeping requirements
on either small or large California olive
handlers. As with all Federal marketing
order programs, reports and forms are
periodically reviewed to reduce
information requirements and
duplication by industry and public
sector agencies.
AMS is committed to compliance
with the Government Paperwork
Elimination Act (GPEA), which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
USDA has not identified any relevant
Federal rules that duplicate, overlap, or
conflict with this rule.
An interim final rule concerning this
action was published in the Federal
Register on March 13, 2006 (71 FR
12614). Copies of the rule were faxed to
both olive handlers. Finally, the interim
rule was made available through the
Internet by USDA and the Office of the
Federal Register. A 60-day comment
period was provided for interested
persons to respond to the interim final
rule. The comment period ended on
May 12, 2006, and no comments were
received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: https://www.ams.usda.gov/
fv/moab/html. Any questions about the
compliance guide should be sent to Jay
Guerber at the previously mentioned
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35495
address in the FOR FURTHER INFORMATION
CONTACT section.
After consideration of all relevant
material presented, including the
information and recommendation
submitted by the committee and other
available information, it is herby found
that this rule, as hereinafter set forth,
will tend to effectuate the declared
policy of the Act.
List of Subjects in 7 CFR Part 932
Marketing agreements, Olives,
Reporting and recordkeeping
requirements.
PART 932—OLIVES GROWN IN
CALIFORNIA
Accordingly, the interim final rule
amending 7 CFR part 932 that was
published at 71 FR 12614 on March 13,
2006, is adopted as a final rule without
change.
I
Dated: June 15, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E6–9724 Filed 6–20–06; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL HOUSING FINANCE BOARD
12 CFR Parts 900, 914, 915, 925, 950,
and 955
[No. 2006–10]
RIN 3069–AB28
Data Reporting Requirements for the
Federal Home Loan Banks
AGENCY:
Federal Housing Finance
Board.
ACTION:
Final rule.
SUMMARY: The Federal Housing Finance
Board (Finance Board) is reorganizing
the way it imposes certain reporting
requirements on the Federal Home Loan
Banks (Banks) by removing the
requirements from its regulations and
issuing them in the Data Reporting
Manual (DRM), which is an enforceable
order issued pursuant to the Finance
Board’s investigatory powers. The
Finance Board also is adding a new part
914, which addresses a Bank’s
obligation with respect to reporting
requirements and making its books and
records available to the Finance Board.
DATES: Effective Date: This final rule is
effective on July 21, 2006.
FOR FURTHER INFORMATION CONTACT:
Thomas Hearn, Senior Attorney
Advisor, Office of General Counsel, by
electronic mail at hearnt@fhfb.gov or by
telephone at 202–408–2976; Scott L.
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Smith, Associate Director, Office of
Supervision, by electronic mail at
smiths@fhfb.gov or by telephone at 202–
408–2991; or Gary Ternullo, Associate
Director, Office of Supervision, by
electronic mail at ternullog@fhfb.gov or
by telephone at 202–408–2904. You can
send regular mail to the Federal
Housing Finance Board, 1625 Eye
Street, NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
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A. The Federal Home Loan Bank System
(Bank System)
The Bank System consists of 12 Banks
and the Office of Finance (OF). The
Banks are instrumentalities of the
United States organized under the
authority of the Federal Home Loan
Bank Act (Bank Act). 12 U.S.C. 1421 et
seq. The Banks also are ‘‘government
sponsored enterprises’’ (GSEs), i.e.,
federally chartered but privately owned
institutions created by Congress to
support the financing of housing and
community lending by their members.
See 12 U.S.C. 1422a(a)(3)(B)(ii), 1430(i),
and 1430(j). By virtue of their GSE
status, the Banks are able to borrow in
the capital markets at favorable rates.
The Banks are then able to pass along
that funding advantage to their
members—and ultimately to
consumers—by providing advances
(secured loans) and other financial
services to their members (principally,
depository institutions) at rates that the
members generally could not obtain
elsewhere.
The Banks, along with the OF, operate
under the supervision of the Finance
Board. The primary duty of the Finance
Board is to ensure that the Banks
operate in a financially safe and sound
manner. Consistent with that duty, the
Finance Board is required to supervise
the Banks, ensure that they carry out
their housing finance mission, and
ensure that they remain adequately
capitalized and able to raise funds in the
capital markets. 12 U.S.C. 1422a(a)(3)(A)
and (B).
B. Finance Board Investigatory Powers
Congress has delegated to the Finance
Board broad authority to fulfill its
statutory mandates. Section 2B of the
Bank Act states that the Finance Board
has the power ‘‘[t]o supervise the
Federal Home Loan Banks and to
promulgate and enforce such
regulations and orders as are necessary
from time to time to carry out the
provisions of this chapter [i.e., Chapter
11 of Title 12, codified at 12 U.S.C.
1421–1449].’’ 12 U.S.C. 1422b(a)(1).
Section 20 of the Bank Act provides the
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Finance Board with the authority to
require, ‘‘from time to time, [but] at least
annually,’’ examinations and reports of
condition of all the Banks in such form
as the Finance Board prescribes. 12
U.S.C. 1440. Section 20 also vests in
Finance Board examiners ‘‘the same
powers and privileges as are vested in’’
examiners under the National Bank Act
and the Federal Reserve Act. These
Acts, in turn, provide examiners with
sweeping powers, including the power
to ‘‘make a thorough examination of all
the affairs of the bank.’’ 12 U.S.C. 481.
Thus, the Finance Board and its
examiners have been vested with broad
access to the books, records, and
information of the Banks in order to
fulfill the statutory mission of the
Finance Board.
The United States Supreme Court has
recognized the importance of this broad
access to the ability of financial
institution regulators to perform their
supervisory functions. In United States
v. Philadelphia National Bank, 374 U.S.
321 (1963), the Court stated:
[P]erhaps the most effective weapon of
federal regulation of banking is the broad
visitorial power of federal bank examiners.
Whenever the agencies deem it necessary,
they may order ‘a thorough examination of
all the affairs of the bank’ * * * [citation
omitted]. Such examinations are frequent
and intensive. In addition, the banks are
required to furnish detailed periodic reports
of their operations to the supervisory
agencies [citation omitted]. In this way the
agencies maintain virtually a day-to-day
surveillance of the American banking system.
And should they discover unsound banking
practices, they are equipped with a
formidable array of sanctions * * *. As a
result of this panoply of sanctions,
recommendations by the agencies concerning
banking practices tend to be followed by
bankers without the necessity of formal
compliance proceedings. 1 Davis,
Administrative Law (1958), s. 4.04.
374 U.S. at 329 (emphasis added). An
agency’s authority to require
informational reports stems from its
investigatory power, which generally is
distinct from, and in addition to, its
authority exercised under the
Administrative Procedures Act (APA) to
engage in rulemaking or to issue
adjudicative orders. A principal
legislative sponsor of the APA described
investigative activity during floor debate
in the House of Representatives as
follows:
This third type of administrative
compulsory power may be incidental to
either legislative or judicial powers of
administrative agencies, or it may be entirely
independent of either. I refer to the
compulsory action of administrative agencies
when they issue subpoenas, require records
or reports, or undertake mandatory
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inspections. These functions are
investigatory in nature.
92 Cong. Rec. 5648 (1948), cited in
Appeal of FTC Line of Business Report
Litigation, 595 F.2d 685, 695–696 (DC
Cir.) (per curiam), cert. denied sub nom.
Milliken and Co. v. FTC, 439 U.S. 958
(1978).
C. Reorganization of Reporting
Requirements
Historically, the Finance Board has
imposed reporting requirements in a
variety of ways. Some requirements,
such as those related to the call report,
have been imposed by informal
directives issued by staff. For other
requirements, the Finance Board has
used its rulemaking authority. 12 U.S.C.
1422b(a)(1).
On February 9, 2005, the Board of
Directors approved for publication a
proposed rule that would reorganize the
way the Finance Board imposes
reporting requirements by creating a
Data Reporting Manual (DRM) that
would contain certain reporting
requirements currently in regulations or
issued by Finance Board staff. See
Resolution Number 2005–04 (Feb. 9,
2005), published at 770 FR 9551 (Feb.
28, 2005).1 For each subject matter, the
DRM includes instructions addressing
data definitions as well as requirements
concerning data elements, reporting
format, reporting method, e.g.,
electronic or paper, record retention,
timeliness, reporting frequency, and
certification. Going forward, changes to
the reporting requirements will be made
by amendments to the DRM.
The proposed rule included
substantive regulatory changes that
would add a new part 914, which
addresses a Bank’s obligation with
respect to reporting requirements and
making its books and records available
to the Finance Board. It also would add
a new section to part 917, which
imposes on each Bank’s board of
directors the obligation to establish
policies and procedures with respect to
regulatory reporting. In July 2005, the
Board of Directors created the DRM and
located in it reporting requirements for
the Call Report System. See Resolution
Number 2005–14 (July 13, 2005). In
August 2005, the Finance Board added
to the DRM reporting requirements
related to Bank members. See
Resolution Number 2005–15 (Aug. 10,
2005). The Finance Board is continuing
this effort by relocating from regulations
to the DRM data reporting requirements
1 Resolutions are available electronically in the
FOIA Reading Room of the Finance Board Web site
at: https://www.fhfb.gov/
Default.aspx?Page=59&Top=4.
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concerning: Purchases of Bank stock by
member banks (12 CFR 925.20(e));
advances and commitments outstanding
to each Bank member (12 CFR 950.4(e));
Acquired Member Assets (AMA) (12
CFR 955.4); and forms related to Bank
director eligibility (12 CFR 915.7 and
915.12(a)).
In the proposed rule, the Finance
Board considered placing in the DRM
reporting requirements for a Bank’s
strategic business plan (12 CFR
917.5(c)); Advisory Councils (12 CFR
951.4(f)(3)); the Affordable Housing
Reserve Fund (12 CFR 951.3(d) and
951.15(b)); and Community Investment
Cash Advance (CICA) Programs (12 CFR
952.6(a)). Because these requirements
do not involve the periodic reporting of
empirical data, we have determined that
these requirements are better left in
Finance Board regulations.
The DRM represents an enforceable
order issued pursuant to the Finance
Board’s investigatory powers. The
reorganization of reporting requirements
and the amendments to Finance Board
regulations will allow the Finance
Board to address problems it has
experienced with the timeliness,
accuracy, and completeness of data
reporting by the Banks. The Bank Act
gives the Finance Board enforcement
authority to redress, among other things,
violations of the Bank Act, or any law,
order, rule, or regulation. 12 U.S.C.
1422b(a)(5). The Finance Board will
deem data reporting problems as
violations of an investigatory order and,
where applicable, violations of the
regulations being added today in 12 CFR
part 914.
Reporting requirements imposed
pursuant to the Finance Board’s
investigatory powers are not subject to
the notice and comment provisions of
the APA. See Appeal of FTC Line of
Business Report Litigation, 595 F.2d at
695–696. Nevertheless, the Finance
Board recognizes that changes to
reporting requirements can impose
regulatory burden. The Finance Board
also recognizes the utility of input from
the Banks and the public in determining
what information is appropriate to
collect. Thus, where practicable,
Finance Board staff will consult with
the Banks and the public with respect
to significant changes in the DRM before
changes are made. Moreover,
information collections that are subject
to the Paperwork Reduction Act (PRA),
such as those related to the AMA rule,
will continue to be published in the
Federal Register for comment in
accordance with the PRA.
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II. Analysis of the Final Rule
A. Part 914
The Finance Board is adding a new
part 914 to its regulations that addresses
a Bank’s obligation with respect to
reporting requirements and makes its
books and records available to the
Finance Board. Section 914.1 contains a
number of provisions directed at how a
Bank reports data to the Finance Board
and makes its books and records
available to Finance Board examiners.
Section 914.1(a) defines the term
Regulatory Report to mean any report of
raw or summary data required to
evaluate the safe and sound condition
and operations of a Bank or to
determine compliance with any: (1)
Provision in the Bank Act, or any law,
order, rule, or regulation; (2) condition
imposed in writing by the Finance
Board in connection with the granting of
any application or other request by a
Bank; or (3) written agreement entered
into by the Finance Board and a Bank.
Section 914.1(b) provides examples of a
Regulatory Report, including the call
report and reports of instrument-level
data submitted for risk assessment
purposes. The term Regulatory Report
also includes reports related to a Bank’s
housing mission achievement, such as
reports related to AMA, a Bank’s
Affordable Housing Program (AHP),
Community Investment Program (CIP),
and other CICA programs.
Section 914.2 requires each Bank to
file Regulatory Reports with the Finance
Board pursuant to the Finance Board’s
forms and instructions for the reports.
These reports must be filed no later than
the deadline established by the Finance
Board. In some cases, this will involve
reporting at regular intervals; in other
cases, it will involve responding to
Finance Board requests for information
that are in addition to the information
submitted at regular intervals.
Section 914.3 requires each Bank to
make its books and records available
upon request by the Finance Board
within a reasonable period at a location
acceptable to the Finance Board. Section
914.3 establishes presumptions about
what the Finance Board considers a
reasonable period of time to respond to
requests that occur during and outside
of an ongoing examination as well as
those that occur at other times.
C. Parts 915, 925, 950, and 955
The Finance Board is revising various
reporting requirements set forth in parts
915, 925, 950, and 955 to refer the
reader to forms and instructions issued
pursuant to the DRM.
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III. Comments on the Proposed Rule
In response to the February 2005
proposed rule, the Finance Board
received four comments—three from
Banks and one from a law firm
representing a fourth Bank. These
comments covered the following areas.
Opportunity for Notice and Comment
on Reporting Changes
The four commenters expressed
concern that reporting requirements
could be imposed in the future without
giving the Banks or the public an
opportunity to comment. One
commenter requested that the final rule
provide procedures by which the
Finance Board will determine if an
amendment would impose regulatory
burden or would constitute a significant
change that merits input from the Banks
and public through the comment
process.
As discussed in the proposed rule,
reporting requirements imposed
pursuant to the Finance Board’s
investigatory powers are not subject to
the notice and comment provisions of
the APA.2 In some cases, new reporting
requirements or revisions to existing
requirements trigger the notice and
comment requirements of the PRA.
Other reporting requirements, such as
those related to call reports, are not
covered by the PRA.
The Finance Board recognizes that
changes to reporting requirements can
impose regulatory burden. The Finance
Board also recognizes the utility of
input from the Banks and the public in
determining what information is
appropriate to collect and what is the
most efficient way to collect needed
information. Thus, as was indicated in
the proposed rule, the Finance Board
intends, where practicable, to consult
with the Banks and the public with
respect to substantial changes to
reporting requirements, regardless of
whether the APA or PRA apply.
Reporting Violation as Basis for
Enforcement Action
Three of the four commenters
expressed concern that a violation of a
reporting requirement could be the basis
for sanctions against a Bank without any
additional due process. One commenter
indicated that it believes that noncompliance with a reporting
requirement alone would not suffice to
cause an immediate violation resulting
in sanctions. Rather, the commenter
believes that non-compliance would
2 The banking agencies have taken the position
that changes to reporting requirements for the call
report are not covered by the APA. 69 FR 3995,
3998 (Jan. 27, 2004).
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have to go to a judicial forum to
determine whether the agency was
entitled to the information it was
seeking.
The Bank Act authorizes the Finance
Board to bring an enforcement action in
the face of conduct that violates any
order imposed in writing by the Finance
Board. 12 U.S.C. 1422b(a)(5). The
Finance Board also may bring an
enforcement action if a Bank engages in
an unsafe or unsound banking practice,
and courts have held that frustrating a
regulator’s gathering of information
constitutes an unsafe or unsound
banking practice. See Seidman v. Office
of Thrift Supervision, 37 F.3d 911, 936–
937 (3rd Cir. 1994).
In any formal enforcement action by
the Finance Board related to a data
reporting violation, the process will
guarantee all constitutional and
statutory rights, including a review in a
judicial forum before the enforcement
action becomes final. Under Finance
Board regulations, the Finance Board
would initiate an enforcement action by
issuing a notice of charges. 12 CFR
908.40. If the Bank, director, or
executive officer disputed the charges, a
presiding officer would hold a hearing
and issue a recommendation to the
Finance Board. 12 CFR 908.60 and
908.63. If, after receiving the presiding
officer’s recommendation, the Finance
Board’s board of directors found that the
charges were sustained and issued a
cease and desist order or imposed civil
money penalties, the affected party
would have the option of appealing the
action to the United States Court of
Appeals for the District of Columbia
Circuit. 12 CFR 908.10.
Banking Agencies’ Treatment of
Reporting Violations
Two Banks commented that
establishing the DRM as an enforceable
order is inconsistent with the approach
taken by other federal bank regulators
with respect to information gathering.
One Bank cited the Office of the
Comptroller of the Currency (OCC)
Handbook on Bank Supervisory
Processes to demonstrate that, in the
event of disagreements between
examiners and a bank, it is the OCC’s
policy to resolve the dispute fairly and
expeditiously in an informal, amicable
manner. The Bank also made reference
to similar publication by the Office of
Thrift Supervision.
The examples cited by the
commenters appear to relate to
disagreements that arise during an
examination or inquiry of a specific
institution. For reporting requirements
directed at all institutions within a
banking agencies’ purview, such as
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those related to the call report, the
banking agencies impose reporting
requirements in a manner closely
similar to the way the Finance Board
has exercised such powers here. For
example, call report requirements for
insured depository institutions and
changes to such requirements are
imposed by amending the forms and
instructions for the call report. See 12
CFR part 304. These forms and
instructions, like the DRM discussed
above, represent enforceable orders
issued as a proper exercise of an
agency’s investigatory powers. When a
depository institution fails to comply
with a reporting requirement, its
primary banking regulator routinely
imposes penalties for reporting
violations including violations that
might seem de minimis.
Another Bank commented that other
federal banking regulators do not view
the various manuals they promulgate as
definitive statements carrying the force
of law. Instead, the commenter claimed,
the manuals of other federal banking
regulators are not intended to be strictly
binding on either the regulator or the
regulated institution. The commenter
appears to be confusing a basic
principal of administrative law that staff
policy guidance, such as those put in
manuals at some agencies, ordinarily
does not carry the force of law. Here, the
data reporting requirements are being
issued by the Finance Board’s Board of
Directors pursuant to statutory authority
to require reports. Compiling the
reporting requirements in the DRM is
solely a matter of convenience and in no
way diminishes the legal authority with
which they were adopted and the force
of law.
One Bank commented that orders
usually arise in adjudicatory or
investigative proceeding that is specific
to a particular entity. The Bank wrote
that it is doubtful that the law allows the
Finance Board, as part of its regulatory
process, to grant itself the power to
issue an enforceable order preemptively
and with application to all of the Banks
particularly in view of the fact that the
Banks have the right to challenge a
request for privileged or confidential
legal advice. Another Bank and the law
firm commenter also expressed
concerns that the Finance Board might
include privileged or confidential
material among the information it
sought from all Banks or from one
particular Bank. As discussed in the
proposed rule, case law has long
recognized Congress’ authority to give a
regulatory agency investigatory powers
that include the power to require
informational reports. There is no
dispute that section 20 gives the
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Finance Board investigatory power to
obtain information reports about the
Banks.
Where Congress, as here, has given an
agency investigatory powers, an
agency’s exercise of that power will be
upheld if the request for information is
‘‘reasonably relevant.’’ FTC v. Invention
Submission Corp., 965 F.2d 1086, 1089
(D.C. Cir. 1992). Courts have said that an
agency’s own appraisal of relevancy
must be accepted as long as it is not
‘‘obviously wrong.’’ Id. In exercising its
authority to create reporting
requirements, the Finance Board
intends to observe all applicable
privileges.
Potential for Confusion Between
Reporting Requirements and Other
Guidance
One commenter noted that the
Finance Board already has established a
process for clarifying regulatory
reporting requirements through
Advisory Bulletins and other
supervisory guidance. The commenter
claimed that nothing in the proposed
rule stated that the Finance Board
would stop issuing Advisory Bulletins
or other supervisory letters apart from
the DRM. This omission creates the
potential, the commenter claimed, for
discrepancies between the DRM and
other supervisory guidance. The
commenter recommended that the
Finance Board revise the proposed rule
to ensure that no such discrepancies or
ambiguities are created in the reporting
requirements. Another commenter made
a similar comment.
A commenter noted that not all data
reporting requirements will be
contained in the DRM. The Bank
suggested that the DRM include an
appendix clearly describing which
reporting requirements are not in the
DRM and where such reporting
requirements are located. Without
guidance as to when the DRM applies
and when to consult the regulations, the
commenter argued, the data reporting
requirements may, in practice, become
more confusing for the Banks. Another
commenter expressed a similar point.
For reporting requirements that
currently are in the Finance Board
regulations, the Finance Board will
leave a reference that directs a reader to
the DRM. The Finance Board will adopt
the recommendation of including an
appendix to the DRM that lists reporting
requirements by topic and indicates
where they may be found.
Proposed Part 914
Two commenters opposed adopting a
presumption in § 914.3 of 1 business
day and 3 business days for a reasonable
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period for complying with an
examiner’s request for documents.
These commenters recommended that,
when considering whether a Bank
complied with an examiner’s request in
a reasonable period of time, the Finance
Board should consider: (a) Whether the
data are available and finalized; (b)
whether there are any information
technology issues affecting the ability to
respond or analyze the response (on
either the Finance Board’s or a Bank’s
part); (c) whether the applicable
business units are able to concentrate on
these requests exclusively; (d) whether
the applicable committees are available
to review and approve the responses;
and (e) whether any of the information
is privileged.
The Finance Board believes that the
time periods set out in the proposed
rule are reasonable. Because they are
only presumptions, a Bank may cite the
factors listed by the commenters, or
other factors, to demonstrate that in a
particular instance, a reasonable period
to comply with an examiner’s request is
longer than the time periods set out in
the regulation.
Proposed Addition to Part 917
sroberts on PROD1PC70 with RULES
One commenter wrote that it believes
that the proposal to amend part 917 to
require the board of directors of a Bank
to establish policies and procedures
with respect to regulatory reporting was
redundant given other requirements that
require a Bank’s board of directors to
ensure compliance generally with the
regulatory requirements mandated by
the Finance Board.
The Finance Board acknowledges that
the commenter has raised a valid
concern. A Bank’s obligation to provide
the Finance Board with information that
is accurate, timely, and complete
derives from the chapters that have been
added to the DRM and in the new part
914 that is recommended for the final
rule. Finance Board regulations already
make clear that a Bank’s board of
directors retains ultimate responsibility
for a Bank’s management (12 CFR
917.2(a)). Upon further reflection, the
Finance Board believes that adding the
proposed part 917 amendment may
cause a Bank’s board to focus on a
Bank’s processes for regulatory
reporting at the expense of focusing on
outcomes of whether such reporting is
timely, accurate, and complete. Thus,
the final rule does not include the
proposed § 917.11.
IV. Paperwork Reduction Act
Final Rule
The final rule will have no
substantive effect on any collection of
VerDate Aug<31>2005
16:35 Jun 20, 2006
Jkt 208001
35499
information covered by the PRA. See 44
U.S.C. 3501 et seq. Therefore, the
Finance Board did not submit the
proposed regulation to the Office of
Management and Budget (OMB) for
review.
12 CFR Part 925
AMA Reporting Requirements
Credit, Federal home loan banks,
Housing, Reporting and recordkeeping
requirements.
As part of the reorganization of
reporting requirements, the Board of
Directors added the AMA reporting
requirements to the DRM. See
Resolution Number 2006–11 (June 14,
2006). The AMA reporting
requirements, which are being moved
from 12 CFR part 955 (specifically,
§ 955.4 and Appendices A and B) to the
DRM as a result of this final rule, are
contained an information collection
entitled ‘‘Federal Home Loan Bank
Acquired Member Assets, Core Mission
Activities, Investments and Advances.’’
The OMB control number for this
information collection is 3069–0058,
and it is due to expire on March 31,
2007. In November 2005, the Finance
Board published a PRA notice soliciting
comments on the changes to the AMA
reporting requirements. See 70 FR
66413 (Nov. 2, 2005). Elsewhere in this
issue of the Federal Register, the
Finance Board is publishing the second
PRA notice with respect to the AMA
reporting requirements and also is
submitting the entire information
collection, with the AMA reporting
changes, to OMB for review and
approval of a 3 year extension of the
control number.
V. Regulatory Flexibility Act
The final rule applies only to the
Banks, which do not come within the
meaning of ‘‘small entities’’ as defined
in the Regulatory Flexibility Act (RFA).
See 5 U.S.C. 601(6). Thus, in accordance
with section 605(b) of the RFA, 5 U.S.C.
605(b), the Finance Board hereby
certifies that the final rule will not have
a significant economic impact on a
substantial number of small entities.
List of Subjects
Federal home loan banks.
12 CFR Part 914
Federal home loan banks, Reporting
and recordkeeping requirements.
12 CFR Part 915
Banks, Banking, Conflicts of interest,
Elections, Ethical conduct, Federal
home loan banks, Financial disclosure,
Reporting and recordkeeping
requirements.
Frm 00009
Fmt 4700
12 CFR Part 950
12 CFR Part 955
Credit, Federal home loan banks,
Reporting and recordkeeping
requirements.
For the reasons stated in the preamble,
the Finance Board revises 12 CFR,
chapter IX to read as follows:
I
PART 900—GENERAL DEFINITIONS
APPLYING TO ALL FINANCE BOARD
REGULATIONS
1. The authority for part 900
continues to read as follows:
I
Authority: 12 U.S.C. 1422b(a).
2. Amend § 900.2 by adding in
alphabetical order the definition for
‘‘Data Reporting Manual or DRM’’ to
read as follows:
I
§ 900.2 Terms relating to Bank operations,
mission and supervision.
*
*
*
*
*
Data Reporting Manual or DRM
means a manual issued by the Finance
Board and amended from time to time
containing reporting requirements for
the Banks.
*
*
*
*
*
I 3. Add a new part 914 to title 12,
chapter IX, Subchapter C, to read as
follows:
PART 914—DATA AVAILABILITY AND
REPORTING
Sec.
914.1
914.2
914.3
Regulatory Report defined.
Filing Regulatory Reports.
Access to books and records.
Authority: 12 U.S.C. 1422a(a)(3),
1422b(a)(1), and 1440.
§ 914.1
12 CFR Part 900
PO 00000
Credit, Federal home loan banks,
Reporting and recordkeeping
requirements.
Sfmt 4700
Regulatory Report defined.
(a) Definition. Regulatory Report
means any report of raw or summary
data needed to evaluate the safe and
sound condition and operations of a
Bank or to determine compliance with
any:
(1) Provision in the Act or other law,
order, rule, or regulation;
(2) Condition imposed in writing by
the Finance Board in connection with
the granting of any application or other
request by a Bank; or
(3) Written agreement entered into
between the Finance Board and a Bank.
E:\FR\FM\21JNR1.SGM
21JNR1
35500
Federal Register / Vol. 71, No. 119 / Wednesday, June 21, 2006 / Rules and Regulations
(b) Examples. Regulatory Report
includes:
(1) Call reports and reports of
instrument-level risk modeling data;
(2) Reports related to a Bank’s housing
mission achievement, such as reports
related to AMA, AHP, CIP, and other
CICA programs; and
(3) Reports submitted in response to
requests to one or more Banks for
information on a nonrecurring basis.
§ 914.2
Filing Regulatory Reports.
Each Bank shall file Regulatory
Reports with the Finance Board in
accordance with the forms, instructions,
and schedules issued by the Finance
Board from time to time. If no regularly
scheduled reporting dates are
established, Regulatory Reports shall be
filed as requested by the Finance Board.
§ 914.3
Access to books and records.
Each Bank shall make its books and
records readily available for inspection
and other supervisory purposes within
a reasonable period upon request by the
Finance Board, at a location acceptable
to the Finance Board. For requests for
documents made during the course of
an onsite examination and pursuant to
the examination’s scope, a reasonable
period is presumed to be no longer than
1 business day. For requests for
documents made outside of an onsite
examination, a reasonable period is
presumed to be 3 business days.
PART 915—BANK DIRECTOR
ELIGIBILITY, APPOINTMENT, AND
ELECTIONS
§ 915.12 Reporting requirements for Bank
directors.
I
(a) Annual reporting. Each director
shall submit to his or her Bank the
appropriate executed director eligibility
certification, as prescribed in the Data
Reporting Manual issued by the Finance
Board, as amended from time to time.
The Bank shall promptly forward to the
Finance Board a copy of the certification
filed by each appointive director.
*
*
*
*
*
§ 955.4 Reporting requirement for
acquired member assets.
PART 925—MEMBERS OF THE BANKS
7. The authority citation for part 925
continues to read as follows:
I
Authority: 12 U.S.C. 1422, 1422a, 1422b,
1423, 1424, 1426, 1430, and 1442.
8. Revise § 925.20(e) to read as
follows:
I
§ 925.20
*
*
*
*
(e) Reports. The Bank shall make
reports to the Finance Board setting
forth purchases by institutions approved
for membership of their minimum stock
requirement pursuant to this section in
accordance with the instructions
provided in the Data Reporting Manual
issued by the Finance Board, as
amended from time to time.
PART 950—ADVANCES
9. The authority citation for part 950
continues to read as follows:
I
Authority: 12 U.S.C. 1422a(a)(3),
1422b(a)(1), 1426, 1429, 1430, 1430b, and
1431.
4. The authority citation for part 915
continues to read as follows:
I
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a),
1426, 1427, and 1432.
§ 950.4
I
10. Revise § 950.4(e) to read as
follows:
5. Revise § 915.7(a) to read as follows:
sroberts on PROD1PC70 with RULES
§ 915.7 Eligibility requirements for elective
directors.
(a) Eligibility verification. Based on
the information provided on the director
eligibility certification form prescribed
in the Data Reporting Manual issued by
the Finance Board, as amended from
time to time, a Bank shall verify that
each nominee meets all of the eligibility
requirements for elective directors set
forth in the Act and this part before
placing that nominee on the ballot
prepared by the Bank under § 915.8(a).
A Bank shall not declare elected a
nominee that it has reason to know is
ineligible to serve, nor shall it seat a
director-elect that it has reason to know
is ineligible to serve.
*
*
*
*
*
I 6. Revise § 915.12(a) to read as
follows:
VerDate Aug<31>2005
18:03 Jun 20, 2006
Jkt 208001
Limitations on access to advances.
*
*
*
*
*
(e) Reporting. (1) Each Bank shall
provide the Finance Board with a report
of the advances and commitments
outstanding to each of its members in
accordance with the instructions
provided in the Data Reporting Manual
issued by the Finance Board, as
amended from time to time.
(2) Each Bank shall, upon written
request from a member’s appropriate
federal banking agency or insurer,
provide to such entity information on
advances and commitments outstanding
to the member.
*
*
*
*
*
PART 955—ACQUIRED MEMBER
ASSETS
11. The authority citation for part 955
continues to read as follows:
I
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a),
1430, 1430b, and 1431.
PO 00000
Each Bank shall report information
related to AMA in accordance with the
instructions provided in the Data
Reporting Manual issued by the Finance
Board, as amended from time to time.
Appendices A and B to Part 955
[Removed]
13. Remove Appendices A and B to
part 955.
I
Dated: June 14, 2006.
By the Board of Directors of the Federal
Housing Finance Board.
Ronald A. Rosenfeld,
Chairman.
[FR Doc. E6–9756 Filed 6–20–06; 8:45 am]
BILLING CODE 6725–01–P
Stock purchase.
*
I
12. Revise § 955.4 to read as follows:
Frm 00010
Fmt 4700
Sfmt 4700
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 23
[Docket No. CE251, Special Condition 23–
191–SC]
Special Conditions; Rickenbacker
Avionics, EFS–50 EFIS Installation in
Rockwell Twin Commander Model
690B; Protection of Systems From
High Intensity Radiated Fields (HIRF)
Federal Aviation
Administration (FAA), DOT.
ACTION: Final special conditions; request
for comments.
AGENCY:
SUMMARY: These special conditions are
issued to Rickenbacker Avionics, 2820
Bobmeyer Road, Hangar C–6, Hamilton,
OH 45015, for a Supplemental Type
Certificate for the Rockwell Twin
Commander Model 690B airplane. This
airplane will have novel and unusual
design features when compared to the
state of technology envisaged in the
applicable airworthiness standards. This
novel and unusual design feature will
include the installation of a two-tube
Bendix/King EFS–50 Electronic Flight
Instrument System (EFIS). The
installation also includes components
associated with this display system. The
applicable regulations do not contain
adequate or appropriate airworthiness
standards for the protection of these
systems from the effects of high
intensity radiated fields (HIRF). These
special conditions contain the
additional safety standards that the
Administrator considers necessary to
establish a level of safety equivalent to
that established by the existing the
E:\FR\FM\21JNR1.SGM
21JNR1
]]>Agencies
[Federal Register Volume 71, Number 119 (Wednesday, June 21, 2006)]
[Rules and Regulations]
[Pages 35495-35500]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-9756]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE BOARD
12 CFR Parts 900, 914, 915, 925, 950, and 955
[No. 2006-10]
RIN 3069-AB28
Data Reporting Requirements for the Federal Home Loan Banks
AGENCY: Federal Housing Finance Board.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Board (Finance Board) is
reorganizing the way it imposes certain reporting requirements on the
Federal Home Loan Banks (Banks) by removing the requirements from its
regulations and issuing them in the Data Reporting Manual (DRM), which
is an enforceable order issued pursuant to the Finance Board's
investigatory powers. The Finance Board also is adding a new part 914,
which addresses a Bank's obligation with respect to reporting
requirements and making its books and records available to the Finance
Board.
DATES: Effective Date: This final rule is effective on July 21, 2006.
FOR FURTHER INFORMATION CONTACT: Thomas Hearn, Senior Attorney Advisor,
Office of General Counsel, by electronic mail at hearnt@fhfb.gov or by
telephone at 202-408-2976; Scott L.
[[Page 35496]]
Smith, Associate Director, Office of Supervision, by electronic mail at
smiths@fhfb.gov or by telephone at 202-408-2991; or Gary Ternullo,
Associate Director, Office of Supervision, by electronic mail at
ternullog@fhfb.gov or by telephone at 202-408-2904. You can send
regular mail to the Federal Housing Finance Board, 1625 Eye Street,
NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
A. The Federal Home Loan Bank System (Bank System)
The Bank System consists of 12 Banks and the Office of Finance
(OF). The Banks are instrumentalities of the United States organized
under the authority of the Federal Home Loan Bank Act (Bank Act). 12
U.S.C. 1421 et seq. The Banks also are ``government sponsored
enterprises'' (GSEs), i.e., federally chartered but privately owned
institutions created by Congress to support the financing of housing
and community lending by their members. See 12 U.S.C.
1422a(a)(3)(B)(ii), 1430(i), and 1430(j). By virtue of their GSE
status, the Banks are able to borrow in the capital markets at
favorable rates. The Banks are then able to pass along that funding
advantage to their members--and ultimately to consumers--by providing
advances (secured loans) and other financial services to their members
(principally, depository institutions) at rates that the members
generally could not obtain elsewhere.
The Banks, along with the OF, operate under the supervision of the
Finance Board. The primary duty of the Finance Board is to ensure that
the Banks operate in a financially safe and sound manner. Consistent
with that duty, the Finance Board is required to supervise the Banks,
ensure that they carry out their housing finance mission, and ensure
that they remain adequately capitalized and able to raise funds in the
capital markets. 12 U.S.C. 1422a(a)(3)(A) and (B).
B. Finance Board Investigatory Powers
Congress has delegated to the Finance Board broad authority to
fulfill its statutory mandates. Section 2B of the Bank Act states that
the Finance Board has the power ``[t]o supervise the Federal Home Loan
Banks and to promulgate and enforce such regulations and orders as are
necessary from time to time to carry out the provisions of this chapter
[i.e., Chapter 11 of Title 12, codified at 12 U.S.C. 1421-1449].'' 12
U.S.C. 1422b(a)(1). Section 20 of the Bank Act provides the Finance
Board with the authority to require, ``from time to time, [but] at
least annually,'' examinations and reports of condition of all the
Banks in such form as the Finance Board prescribes. 12 U.S.C. 1440.
Section 20 also vests in Finance Board examiners ``the same powers and
privileges as are vested in'' examiners under the National Bank Act and
the Federal Reserve Act. These Acts, in turn, provide examiners with
sweeping powers, including the power to ``make a thorough examination
of all the affairs of the bank.'' 12 U.S.C. 481. Thus, the Finance
Board and its examiners have been vested with broad access to the
books, records, and information of the Banks in order to fulfill the
statutory mission of the Finance Board.
The United States Supreme Court has recognized the importance of
this broad access to the ability of financial institution regulators to
perform their supervisory functions. In United States v. Philadelphia
National Bank, 374 U.S. 321 (1963), the Court stated:
[P]erhaps the most effective weapon of federal regulation of
banking is the broad visitorial power of federal bank examiners.
Whenever the agencies deem it necessary, they may order `a thorough
examination of all the affairs of the bank' * * * [citation
omitted]. Such examinations are frequent and intensive. In addition,
the banks are required to furnish detailed periodic reports of their
operations to the supervisory agencies [citation omitted]. In this
way the agencies maintain virtually a day-to-day surveillance of the
American banking system. And should they discover unsound banking
practices, they are equipped with a formidable array of sanctions *
* *. As a result of this panoply of sanctions, recommendations by
the agencies concerning banking practices tend to be followed by
bankers without the necessity of formal compliance proceedings. 1
Davis, Administrative Law (1958), s. 4.04.
374 U.S. at 329 (emphasis added). An agency's authority to require
informational reports stems from its investigatory power, which
generally is distinct from, and in addition to, its authority exercised
under the Administrative Procedures Act (APA) to engage in rulemaking
or to issue adjudicative orders. A principal legislative sponsor of the
APA described investigative activity during floor debate in the House
of Representatives as follows:
This third type of administrative compulsory power may be
incidental to either legislative or judicial powers of
administrative agencies, or it may be entirely independent of
either. I refer to the compulsory action of administrative agencies
when they issue subpoenas, require records or reports, or undertake
mandatory inspections. These functions are investigatory in nature.
92 Cong. Rec. 5648 (1948), cited in Appeal of FTC Line of Business
Report Litigation, 595 F.2d 685, 695-696 (DC Cir.) (per curiam), cert.
denied sub nom. Milliken and Co. v. FTC, 439 U.S. 958 (1978).
C. Reorganization of Reporting Requirements
Historically, the Finance Board has imposed reporting requirements
in a variety of ways. Some requirements, such as those related to the
call report, have been imposed by informal directives issued by staff.
For other requirements, the Finance Board has used its rulemaking
authority. 12 U.S.C. 1422b(a)(1).
On February 9, 2005, the Board of Directors approved for
publication a proposed rule that would reorganize the way the Finance
Board imposes reporting requirements by creating a Data Reporting
Manual (DRM) that would contain certain reporting requirements
currently in regulations or issued by Finance Board staff. See
Resolution Number 2005-04 (Feb. 9, 2005), published at 770 FR 9551
(Feb. 28, 2005).\1\ For each subject matter, the DRM includes
instructions addressing data definitions as well as requirements
concerning data elements, reporting format, reporting method, e.g.,
electronic or paper, record retention, timeliness, reporting frequency,
and certification. Going forward, changes to the reporting requirements
will be made by amendments to the DRM.
---------------------------------------------------------------------------
\1\ Resolutions are available electronically in the FOIA Reading
Room of the Finance Board Web site at: https://www.fhfb.gov/
Default.aspx?Page=59&Top=4.
---------------------------------------------------------------------------
The proposed rule included substantive regulatory changes that
would add a new part 914, which addresses a Bank's obligation with
respect to reporting requirements and making its books and records
available to the Finance Board. It also would add a new section to part
917, which imposes on each Bank's board of directors the obligation to
establish policies and procedures with respect to regulatory reporting.
In July 2005, the Board of Directors created the DRM and located in it
reporting requirements for the Call Report System. See Resolution
Number 2005-14 (July 13, 2005). In August 2005, the Finance Board added
to the DRM reporting requirements related to Bank members. See
Resolution Number 2005-15 (Aug. 10, 2005). The Finance Board is
continuing this effort by relocating from regulations to the DRM data
reporting requirements
[[Page 35497]]
concerning: Purchases of Bank stock by member banks (12 CFR 925.20(e));
advances and commitments outstanding to each Bank member (12 CFR
950.4(e)); Acquired Member Assets (AMA) (12 CFR 955.4); and forms
related to Bank director eligibility (12 CFR 915.7 and 915.12(a)).
In the proposed rule, the Finance Board considered placing in the
DRM reporting requirements for a Bank's strategic business plan (12 CFR
917.5(c)); Advisory Councils (12 CFR 951.4(f)(3)); the Affordable
Housing Reserve Fund (12 CFR 951.3(d) and 951.15(b)); and Community
Investment Cash Advance (CICA) Programs (12 CFR 952.6(a)). Because
these requirements do not involve the periodic reporting of empirical
data, we have determined that these requirements are better left in
Finance Board regulations.
The DRM represents an enforceable order issued pursuant to the
Finance Board's investigatory powers. The reorganization of reporting
requirements and the amendments to Finance Board regulations will allow
the Finance Board to address problems it has experienced with the
timeliness, accuracy, and completeness of data reporting by the Banks.
The Bank Act gives the Finance Board enforcement authority to redress,
among other things, violations of the Bank Act, or any law, order,
rule, or regulation. 12 U.S.C. 1422b(a)(5). The Finance Board will deem
data reporting problems as violations of an investigatory order and,
where applicable, violations of the regulations being added today in 12
CFR part 914.
Reporting requirements imposed pursuant to the Finance Board's
investigatory powers are not subject to the notice and comment
provisions of the APA. See Appeal of FTC Line of Business Report
Litigation, 595 F.2d at 695-696. Nevertheless, the Finance Board
recognizes that changes to reporting requirements can impose regulatory
burden. The Finance Board also recognizes the utility of input from the
Banks and the public in determining what information is appropriate to
collect. Thus, where practicable, Finance Board staff will consult with
the Banks and the public with respect to significant changes in the DRM
before changes are made. Moreover, information collections that are
subject to the Paperwork Reduction Act (PRA), such as those related to
the AMA rule, will continue to be published in the Federal Register for
comment in accordance with the PRA.
II. Analysis of the Final Rule
A. Part 914
The Finance Board is adding a new part 914 to its regulations that
addresses a Bank's obligation with respect to reporting requirements
and makes its books and records available to the Finance Board. Section
914.1 contains a number of provisions directed at how a Bank reports
data to the Finance Board and makes its books and records available to
Finance Board examiners. Section 914.1(a) defines the term Regulatory
Report to mean any report of raw or summary data required to evaluate
the safe and sound condition and operations of a Bank or to determine
compliance with any: (1) Provision in the Bank Act, or any law, order,
rule, or regulation; (2) condition imposed in writing by the Finance
Board in connection with the granting of any application or other
request by a Bank; or (3) written agreement entered into by the Finance
Board and a Bank. Section 914.1(b) provides examples of a Regulatory
Report, including the call report and reports of instrument-level data
submitted for risk assessment purposes. The term Regulatory Report also
includes reports related to a Bank's housing mission achievement, such
as reports related to AMA, a Bank's Affordable Housing Program (AHP),
Community Investment Program (CIP), and other CICA programs.
Section 914.2 requires each Bank to file Regulatory Reports with
the Finance Board pursuant to the Finance Board's forms and
instructions for the reports. These reports must be filed no later than
the deadline established by the Finance Board. In some cases, this will
involve reporting at regular intervals; in other cases, it will involve
responding to Finance Board requests for information that are in
addition to the information submitted at regular intervals.
Section 914.3 requires each Bank to make its books and records
available upon request by the Finance Board within a reasonable period
at a location acceptable to the Finance Board. Section 914.3
establishes presumptions about what the Finance Board considers a
reasonable period of time to respond to requests that occur during and
outside of an ongoing examination as well as those that occur at other
times.
C. Parts 915, 925, 950, and 955
The Finance Board is revising various reporting requirements set
forth in parts 915, 925, 950, and 955 to refer the reader to forms and
instructions issued pursuant to the DRM.
III. Comments on the Proposed Rule
In response to the February 2005 proposed rule, the Finance Board
received four comments--three from Banks and one from a law firm
representing a fourth Bank. These comments covered the following areas.
Opportunity for Notice and Comment on Reporting Changes
The four commenters expressed concern that reporting requirements
could be imposed in the future without giving the Banks or the public
an opportunity to comment. One commenter requested that the final rule
provide procedures by which the Finance Board will determine if an
amendment would impose regulatory burden or would constitute a
significant change that merits input from the Banks and public through
the comment process.
As discussed in the proposed rule, reporting requirements imposed
pursuant to the Finance Board's investigatory powers are not subject to
the notice and comment provisions of the APA.\2\ In some cases, new
reporting requirements or revisions to existing requirements trigger
the notice and comment requirements of the PRA. Other reporting
requirements, such as those related to call reports, are not covered by
the PRA.
---------------------------------------------------------------------------
\2\ The banking agencies have taken the position that changes to
reporting requirements for the call report are not covered by the
APA. 69 FR 3995, 3998 (Jan. 27, 2004).
---------------------------------------------------------------------------
The Finance Board recognizes that changes to reporting requirements
can impose regulatory burden. The Finance Board also recognizes the
utility of input from the Banks and the public in determining what
information is appropriate to collect and what is the most efficient
way to collect needed information. Thus, as was indicated in the
proposed rule, the Finance Board intends, where practicable, to consult
with the Banks and the public with respect to substantial changes to
reporting requirements, regardless of whether the APA or PRA apply.
Reporting Violation as Basis for Enforcement Action
Three of the four commenters expressed concern that a violation of
a reporting requirement could be the basis for sanctions against a Bank
without any additional due process. One commenter indicated that it
believes that non-compliance with a reporting requirement alone would
not suffice to cause an immediate violation resulting in sanctions.
Rather, the commenter believes that non-compliance would
[[Page 35498]]
have to go to a judicial forum to determine whether the agency was
entitled to the information it was seeking.
The Bank Act authorizes the Finance Board to bring an enforcement
action in the face of conduct that violates any order imposed in
writing by the Finance Board. 12 U.S.C. 1422b(a)(5). The Finance Board
also may bring an enforcement action if a Bank engages in an unsafe or
unsound banking practice, and courts have held that frustrating a
regulator's gathering of information constitutes an unsafe or unsound
banking practice. See Seidman v. Office of Thrift Supervision, 37 F.3d
911, 936-937 (3rd Cir. 1994).
In any formal enforcement action by the Finance Board related to a
data reporting violation, the process will guarantee all constitutional
and statutory rights, including a review in a judicial forum before the
enforcement action becomes final. Under Finance Board regulations, the
Finance Board would initiate an enforcement action by issuing a notice
of charges. 12 CFR 908.40. If the Bank, director, or executive officer
disputed the charges, a presiding officer would hold a hearing and
issue a recommendation to the Finance Board. 12 CFR 908.60 and 908.63.
If, after receiving the presiding officer's recommendation, the Finance
Board's board of directors found that the charges were sustained and
issued a cease and desist order or imposed civil money penalties, the
affected party would have the option of appealing the action to the
United States Court of Appeals for the District of Columbia Circuit. 12
CFR 908.10.
Banking Agencies' Treatment of Reporting Violations
Two Banks commented that establishing the DRM as an enforceable
order is inconsistent with the approach taken by other federal bank
regulators with respect to information gathering. One Bank cited the
Office of the Comptroller of the Currency (OCC) Handbook on Bank
Supervisory Processes to demonstrate that, in the event of
disagreements between examiners and a bank, it is the OCC's policy to
resolve the dispute fairly and expeditiously in an informal, amicable
manner. The Bank also made reference to similar publication by the
Office of Thrift Supervision.
The examples cited by the commenters appear to relate to
disagreements that arise during an examination or inquiry of a specific
institution. For reporting requirements directed at all institutions
within a banking agencies' purview, such as those related to the call
report, the banking agencies impose reporting requirements in a manner
closely similar to the way the Finance Board has exercised such powers
here. For example, call report requirements for insured depository
institutions and changes to such requirements are imposed by amending
the forms and instructions for the call report. See 12 CFR part 304.
These forms and instructions, like the DRM discussed above, represent
enforceable orders issued as a proper exercise of an agency's
investigatory powers. When a depository institution fails to comply
with a reporting requirement, its primary banking regulator routinely
imposes penalties for reporting violations including violations that
might seem de minimis.
Another Bank commented that other federal banking regulators do not
view the various manuals they promulgate as definitive statements
carrying the force of law. Instead, the commenter claimed, the manuals
of other federal banking regulators are not intended to be strictly
binding on either the regulator or the regulated institution. The
commenter appears to be confusing a basic principal of administrative
law that staff policy guidance, such as those put in manuals at some
agencies, ordinarily does not carry the force of law. Here, the data
reporting requirements are being issued by the Finance Board's Board of
Directors pursuant to statutory authority to require reports. Compiling
the reporting requirements in the DRM is solely a matter of convenience
and in no way diminishes the legal authority with which they were
adopted and the force of law.
One Bank commented that orders usually arise in adjudicatory or
investigative proceeding that is specific to a particular entity. The
Bank wrote that it is doubtful that the law allows the Finance Board,
as part of its regulatory process, to grant itself the power to issue
an enforceable order preemptively and with application to all of the
Banks particularly in view of the fact that the Banks have the right to
challenge a request for privileged or confidential legal advice.
Another Bank and the law firm commenter also expressed concerns that
the Finance Board might include privileged or confidential material
among the information it sought from all Banks or from one particular
Bank. As discussed in the proposed rule, case law has long recognized
Congress' authority to give a regulatory agency investigatory powers
that include the power to require informational reports. There is no
dispute that section 20 gives the Finance Board investigatory power to
obtain information reports about the Banks.
Where Congress, as here, has given an agency investigatory powers,
an agency's exercise of that power will be upheld if the request for
information is ``reasonably relevant.'' FTC v. Invention Submission
Corp., 965 F.2d 1086, 1089 (D.C. Cir. 1992). Courts have said that an
agency's own appraisal of relevancy must be accepted as long as it is
not ``obviously wrong.'' Id. In exercising its authority to create
reporting requirements, the Finance Board intends to observe all
applicable privileges.
Potential for Confusion Between Reporting Requirements and Other
Guidance
One commenter noted that the Finance Board already has established
a process for clarifying regulatory reporting requirements through
Advisory Bulletins and other supervisory guidance. The commenter
claimed that nothing in the proposed rule stated that the Finance Board
would stop issuing Advisory Bulletins or other supervisory letters
apart from the DRM. This omission creates the potential, the commenter
claimed, for discrepancies between the DRM and other supervisory
guidance. The commenter recommended that the Finance Board revise the
proposed rule to ensure that no such discrepancies or ambiguities are
created in the reporting requirements. Another commenter made a similar
comment.
A commenter noted that not all data reporting requirements will be
contained in the DRM. The Bank suggested that the DRM include an
appendix clearly describing which reporting requirements are not in the
DRM and where such reporting requirements are located. Without guidance
as to when the DRM applies and when to consult the regulations, the
commenter argued, the data reporting requirements may, in practice,
become more confusing for the Banks. Another commenter expressed a
similar point. For reporting requirements that currently are in the
Finance Board regulations, the Finance Board will leave a reference
that directs a reader to the DRM. The Finance Board will adopt the
recommendation of including an appendix to the DRM that lists reporting
requirements by topic and indicates where they may be found.
Proposed Part 914
Two commenters opposed adopting a presumption in Sec. 914.3 of 1
business day and 3 business days for a reasonable
[[Page 35499]]
period for complying with an examiner's request for documents. These
commenters recommended that, when considering whether a Bank complied
with an examiner's request in a reasonable period of time, the Finance
Board should consider: (a) Whether the data are available and
finalized; (b) whether there are any information technology issues
affecting the ability to respond or analyze the response (on either the
Finance Board's or a Bank's part); (c) whether the applicable business
units are able to concentrate on these requests exclusively; (d)
whether the applicable committees are available to review and approve
the responses; and (e) whether any of the information is privileged.
The Finance Board believes that the time periods set out in the
proposed rule are reasonable. Because they are only presumptions, a
Bank may cite the factors listed by the commenters, or other factors,
to demonstrate that in a particular instance, a reasonable period to
comply with an examiner's request is longer than the time periods set
out in the regulation.
Proposed Addition to Part 917
One commenter wrote that it believes that the proposal to amend
part 917 to require the board of directors of a Bank to establish
policies and procedures with respect to regulatory reporting was
redundant given other requirements that require a Bank's board of
directors to ensure compliance generally with the regulatory
requirements mandated by the Finance Board.
The Finance Board acknowledges that the commenter has raised a
valid concern. A Bank's obligation to provide the Finance Board with
information that is accurate, timely, and complete derives from the
chapters that have been added to the DRM and in the new part 914 that
is recommended for the final rule. Finance Board regulations already
make clear that a Bank's board of directors retains ultimate
responsibility for a Bank's management (12 CFR 917.2(a)). Upon further
reflection, the Finance Board believes that adding the proposed part
917 amendment may cause a Bank's board to focus on a Bank's processes
for regulatory reporting at the expense of focusing on outcomes of
whether such reporting is timely, accurate, and complete. Thus, the
final rule does not include the proposed Sec. 917.11.
IV. Paperwork Reduction Act
Final Rule
The final rule will have no substantive effect on any collection of
information covered by the PRA. See 44 U.S.C. 3501 et seq. Therefore,
the Finance Board did not submit the proposed regulation to the Office
of Management and Budget (OMB) for review.
AMA Reporting Requirements
As part of the reorganization of reporting requirements, the Board
of Directors added the AMA reporting requirements to the DRM. See
Resolution Number 2006-11 (June 14, 2006). The AMA reporting
requirements, which are being moved from 12 CFR part 955 (specifically,
Sec. 955.4 and Appendices A and B) to the DRM as a result of this
final rule, are contained an information collection entitled ``Federal
Home Loan Bank Acquired Member Assets, Core Mission Activities,
Investments and Advances.'' The OMB control number for this information
collection is 3069-0058, and it is due to expire on March 31, 2007. In
November 2005, the Finance Board published a PRA notice soliciting
comments on the changes to the AMA reporting requirements. See 70 FR
66413 (Nov. 2, 2005). Elsewhere in this issue of the Federal Register,
the Finance Board is publishing the second PRA notice with respect to
the AMA reporting requirements and also is submitting the entire
information collection, with the AMA reporting changes, to OMB for
review and approval of a 3 year extension of the control number.
V. Regulatory Flexibility Act
The final rule applies only to the Banks, which do not come within
the meaning of ``small entities'' as defined in the Regulatory
Flexibility Act (RFA). See 5 U.S.C. 601(6). Thus, in accordance with
section 605(b) of the RFA, 5 U.S.C. 605(b), the Finance Board hereby
certifies that the final rule will not have a significant economic
impact on a substantial number of small entities.
List of Subjects
12 CFR Part 900
Federal home loan banks.
12 CFR Part 914
Federal home loan banks, Reporting and recordkeeping requirements.
12 CFR Part 915
Banks, Banking, Conflicts of interest, Elections, Ethical conduct,
Federal home loan banks, Financial disclosure, Reporting and
recordkeeping requirements.
12 CFR Part 925
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
12 CFR Part 950
Credit, Federal home loan banks, Housing, Reporting and
recordkeeping requirements.
12 CFR Part 955
Credit, Federal home loan banks, Reporting and recordkeeping
requirements.
0
For the reasons stated in the preamble, the Finance Board revises 12
CFR, chapter IX to read as follows:
PART 900--GENERAL DEFINITIONS APPLYING TO ALL FINANCE BOARD
REGULATIONS
0
1. The authority for part 900 continues to read as follows:
Authority: 12 U.S.C. 1422b(a).
0
2. Amend Sec. 900.2 by adding in alphabetical order the definition for
``Data Reporting Manual or DRM'' to read as follows:
Sec. 900.2 Terms relating to Bank operations, mission and
supervision.
* * * * *
Data Reporting Manual or DRM means a manual issued by the Finance
Board and amended from time to time containing reporting requirements
for the Banks.
* * * * *
0
3. Add a new part 914 to title 12, chapter IX, Subchapter C, to read as
follows:
PART 914--DATA AVAILABILITY AND REPORTING
Sec.
914.1 Regulatory Report defined.
914.2 Filing Regulatory Reports.
914.3 Access to books and records.
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), and 1440.
Sec. 914.1 Regulatory Report defined.
(a) Definition. Regulatory Report means any report of raw or
summary data needed to evaluate the safe and sound condition and
operations of a Bank or to determine compliance with any:
(1) Provision in the Act or other law, order, rule, or regulation;
(2) Condition imposed in writing by the Finance Board in connection
with the granting of any application or other request by a Bank; or
(3) Written agreement entered into between the Finance Board and a
Bank.
[[Page 35500]]
(b) Examples. Regulatory Report includes:
(1) Call reports and reports of instrument-level risk modeling
data;
(2) Reports related to a Bank's housing mission achievement, such
as reports related to AMA, AHP, CIP, and other CICA programs; and
(3) Reports submitted in response to requests to one or more Banks
for information on a nonrecurring basis.
Sec. 914.2 Filing Regulatory Reports.
Each Bank shall file Regulatory Reports with the Finance Board in
accordance with the forms, instructions, and schedules issued by the
Finance Board from time to time. If no regularly scheduled reporting
dates are established, Regulatory Reports shall be filed as requested
by the Finance Board.
Sec. 914.3 Access to books and records.
Each Bank shall make its books and records readily available for
inspection and other supervisory purposes within a reasonable period
upon request by the Finance Board, at a location acceptable to the
Finance Board. For requests for documents made during the course of an
onsite examination and pursuant to the examination's scope, a
reasonable period is presumed to be no longer than 1 business day. For
requests for documents made outside of an onsite examination, a
reasonable period is presumed to be 3 business days.
PART 915--BANK DIRECTOR ELIGIBILITY, APPOINTMENT, AND ELECTIONS
0
4. The authority citation for part 915 continues to read as follows:
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1427, and
1432.
0
5. Revise Sec. 915.7(a) to read as follows:
Sec. 915.7 Eligibility requirements for elective directors.
(a) Eligibility verification. Based on the information provided on
the director eligibility certification form prescribed in the Data
Reporting Manual issued by the Finance Board, as amended from time to
time, a Bank shall verify that each nominee meets all of the
eligibility requirements for elective directors set forth in the Act
and this part before placing that nominee on the ballot prepared by the
Bank under Sec. 915.8(a). A Bank shall not declare elected a nominee
that it has reason to know is ineligible to serve, nor shall it seat a
director-elect that it has reason to know is ineligible to serve.
* * * * *
0
6. Revise Sec. 915.12(a) to read as follows:
Sec. 915.12 Reporting requirements for Bank directors.
(a) Annual reporting. Each director shall submit to his or her Bank
the appropriate executed director eligibility certification, as
prescribed in the Data Reporting Manual issued by the Finance Board, as
amended from time to time. The Bank shall promptly forward to the
Finance Board a copy of the certification filed by each appointive
director.
* * * * *
PART 925--MEMBERS OF THE BANKS
0
7. The authority citation for part 925 continues to read as follows:
Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430,
and 1442.
0
8. Revise Sec. 925.20(e) to read as follows:
Sec. 925.20 Stock purchase.
* * * * *
(e) Reports. The Bank shall make reports to the Finance Board
setting forth purchases by institutions approved for membership of
their minimum stock requirement pursuant to this section in accordance
with the instructions provided in the Data Reporting Manual issued by
the Finance Board, as amended from time to time.
PART 950--ADVANCES
0
9. The authority citation for part 950 continues to read as follows:
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a)(1), 1426, 1429, 1430,
1430b, and 1431.
0
10. Revise Sec. 950.4(e) to read as follows:
Sec. 950.4 Limitations on access to advances.
* * * * *
(e) Reporting. (1) Each Bank shall provide the Finance Board with a
report of the advances and commitments outstanding to each of its
members in accordance with the instructions provided in the Data
Reporting Manual issued by the Finance Board, as amended from time to
time.
(2) Each Bank shall, upon written request from a member's
appropriate federal banking agency or insurer, provide to such entity
information on advances and commitments outstanding to the member.
* * * * *
PART 955--ACQUIRED MEMBER ASSETS
0
11. The authority citation for part 955 continues to read as follows:
Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1430, 1430b, and
1431.
0
12. Revise Sec. 955.4 to read as follows:
Sec. 955.4 Reporting requirement for acquired member assets.
Each Bank shall report information related to AMA in accordance
with the instructions provided in the Data Reporting Manual issued by
the Finance Board, as amended from time to time.
Appendices A and B to Part 955 [Removed]
0
13. Remove Appendices A and B to part 955.
Dated: June 14, 2006.
By the Board of Directors of the Federal Housing Finance Board.
Ronald A. Rosenfeld,
Chairman.
[FR Doc. E6-9756 Filed 6-20-06; 8:45 am]
BILLING CODE 6725-01-P
