Record Retention, 38559-38564 [E9-18489]
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38559
Proposed Rules
Federal Register
Vol. 74, No. 148
Tuesday, August 4, 2009
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 914
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1235
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
Office of Federal Housing Enterprise
Oversight
12 CFR Part 1732
RIN 2590–AA10
Record Retention
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AGENCIES: Federal Housing Finance
Board; Federal Housing Finance
Agency; Office of Federal Housing
Enterprise Oversight.
ACTION: Notice of proposed rulemaking;
request for comments.
SUMMARY: The Federal Housing Finance
Agency (FHFA) is proposing a Record
Retention regulation. The proposed
regulation would set forth record
retention requirements with respect to
the record management programs of the
Federal National Mortgage Association,
the Federal Home Loan Mortgage
Corporation, the Federal Home Loan
Banks, and the Office of Finance
consistent with the safety and
soundness authority of FHFA under the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992, as
amended.
DATES: Comments on the proposed
regulation must be received in writing
on or before October 5, 2009. For
additional information, see
SUPPLEMENTARY INFORMATION.
ADDRESSES: You may submit your
comments on the proposed regulation,
identified by regulatory information
number (RIN) 2590–AA10, by any one
of the following methods:
• U.S. Mail, United Parcel Service,
Federal Express, or Other Mail Service:
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The mailing address for comments is:
Alfred M. Pollard, General Counsel,
Attention: Comments/RIN 2590–AA10,
Federal Housing Finance Agency,
Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552.
• Hand Delivered/Courier: The hand
delivery address is: Alfred M. Pollard,
General Counsel, Attention: Comments/
RIN 2590–AA10, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
package should be logged at the Guard
Desk, First Floor, on business days
between 9 a.m. and 5 p.m.
• E-mail: Comments may be sent by
e-mail to RegComments@fhfa.gov.
Please include ‘‘RIN 2590–AA10’’ in the
subject line of the message.
• Federal eRulemaking: https://
www.regulations.gov. Follow the
instructions for submitting comments. If
you submit your comment to the
Federal eRulemaking Portal, please also
send it by e-mail to FHFA at
RegComments@fhfa.gov to ensure
timely receipt by the Agency. Please
include ‘‘RIN 2590–AA10’’ in the
subject line of the message.
FOR FURTHER INFORMATION CONTACT:
Andra Grossman, Senior Counsel,
telephone (202) 343–1313 (not a toll-free
number); Federal Housing Finance
Agency, Fourth Floor, 1700 G Street,
NW., Washington, DC 20552. The
telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. Comments
FHFA invites comments on all aspects
of the proposed regulation, and will take
all comments into consideration before
issuing the final regulation. Copies of all
comments will be posted without
change, including any personal
information you provide, such as your
name and address, on the FHFA Web
site at https://www.fhfa.gov.
In addition, copies of all comments
received will be available for
examination by the public on business
days between the hours of 10 a.m. and
3 p.m., at the Federal Housing Finance
Agency, Fourth Floor, 1700 G Street,
NW., Washington, DC 20552. To make
an appointment to inspect comments,
please call the Office of General Counsel
at (202) 414–6924.
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II. Background
A. Establishment of the Federal Housing
Finance Agency
The Housing and Economic Recovery
Act of 2008 (HERA), Public Law No.
110–289, 122 Stat. 2654, amended the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.) (Safety and
Soundness Act), and the Federal Home
Loan Bank Act (12 U.S.C. 1421–1449) to
establish FHFA as an independent
agency of the Federal government.1
FHFA was established to oversee the
prudential operations of the Federal
National Mortgage Association, the
Federal Home Loan Mortgage
Corporation (collectively, Enterprises),
and the Federal Home Loan Banks
(Banks) (collectively, regulated entities)
to ensure that they operate in a safe and
sound manner including being
capitalized adequately; foster liquid,
efficient, competitive and resilient
national housing finance markets;
comply with the Safety and Soundness
Act and rules, regulations, guidelines
and orders issued by the Director of
FHFA (Director), and the respective
authorizing statutes of the regulated
entities; and carry out their missions
through activities authorized and
consistent with the Safety and
Soundness Act and their authorizing
statutes; and, that the activities and
operations of the regulated entities are
consistent with the public interest.
FHFA also has regulatory authority over
the Office of Finance under section
1311(b)(2) of the Safety and Soundness
Act (12 U.S.C. 4511).
The Office of Finance is a joint office
of the Banks that was established by a
predecessor to FHFA. The Office of
Finance is governed by a three-person
board of directors consisting of two
Bank presidents and one independent
member. Under the regulations of the
Federal Housing Finance Board (FHFB),
the Office of Finance is subject to the
same regulatory oversight authority and
enforcement powers as are the Banks
and their respective directors, officers,
and employees.2 The Office of Finance
also is subject to the cease-and-desist
authority of FHFA and its directors,
officers and management are subject to
1 See Division A, titled the ‘‘Federal Housing
Finance Regulatory Reform Act of 2008,’’ Title I,
section 1101 of HERA.
2 12 CFR 985.4 and 985.7.
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the removal and prohibition authority of
FHFA.3 Although the Office of Finance
is not directly covered by the Safety and
Soundness Act, it is subject to the
Director’s ‘‘general regulatory authority’’
under section 1311(b)(2) of the Safety
and Soundness Act (12 U.S.C.
4511(b)(2)), as amended by HERA. The
Director is required to exercise that
authority as necessary to ensure that the
purposes of the Safety and Soundness
Act, the authorizing statutes, and other
applicable law are carried out. Based on
its general regulatory authority over the
Office of Finance, FHFA is proposing
that this regulation apply to the Office
of Finance.
The Office of Federal Housing
Enterprise Oversight (OFHEO) and the
FHFB will be abolished one year after
enactment of the HERA. However, the
regulated entities and the Office of
Finance continue to operate under
regulations promulgated by OFHEO and
FHFB; and such regulations are
enforceable by the Director of FHFA
until such regulations are modified,
terminated, set aside, or superseded by
the Director of FHFA.4
B. Record Retention and Prudential
Management and Operation Standards
The Safety and Soundness Act
provides that the Director is to establish
standards for each regulated entity and
the Office of Finance to maintain
adequate records, in accordance with
consistent accounting policies and
practices that enable the Director to
evaluate the financial condition of each
regulated entity and the Office of
Finance and such other operational and
management standards as the Director
determines to be appropriate.5 The
Safety and Soundness Act further
provides the Director with general
supervisory and regulatory authority
over the regulated entities and the
Office of Finance, and requires the
Director to ensure that they operate in
a safe and sound manner.6 Accordingly,
this proposed regulation would address
the record retention requirements of
each regulated entity and the Office of
Finance. The proposed regulation, when
published in its final form, would
supersede 12 CFR 914.3 (FHFB Access
to Books and Records) and 12 CFR part
1732 (OFHEO Record Retention).
The proposed regulation would
require the regulated entities and the
Office of Finance to establish and
maintain a record retention program to
ensure that records are readily
3 12
U.S.C.4631(a) and 4636a(a).
4 See sections 1302 and 1312 of HERA.
5 12 U.S.C. 4513b(a)(10) and (11).
6 12 U.S.C. 4511(b), 4513(a).
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accessible for examination and other
supervisory purposes. FHFA recognizes
that the effectiveness of the examination
process is dependent upon the prompt
production of complete and accurate
records. FHFA, through the supervisory
process, must have access to the records
of a regulated entity and the Office of
Finance that are necessary to determine
the financial condition of the regulated
entity and the Office of Finance or the
details or the purpose of any transaction
that may have a material effect on the
financial condition of the regulated
entity and the Office of Finance.
Retention of such records not only
facilitates the examination process, but
also allows a regulated entity and the
Office of Finance to manage more
effectively its business and detect
improper behavior that might cause
financial damage. Additionally, such
records serve as documentation for a
regulated entity and the Office of
Finance in any controversy over its
business activities or transactions.
The importance of sound record
retention policies and procedures by
regulated institutions also has been
recognized by Congress and other
federal regulators. Adequate record
retention by the institutions has been
determined to have a high degree of
usefulness in criminal, tax, and
regulatory investigations or proceedings,
and has been identified as a requisite
component of an institution’s operation
and management on a safety and
soundness basis.7
In addition to facilitating the
oversight and enforcement of federal
banking laws, adequate record retention
has been recognized by Congress as
being essential to the oversight and
enforcement of the federal securities
laws. For example, as mandated by
section 802 of the Sarbanes-Oxley Act,8
the U.S. Securities and Exchange
Commission adopted rules requiring
accounting firms to retain for seven
years certain records relevant to their
audits and reviews of issuers’ financial
statements. Records to be retained
include an accounting firm’s
workpapers and certain other
documents that contain conclusions,
opinions, analyses, or financial data
related to the audit or review.9 The
proposed requirements would have no
effect on the policies, rules, or guidance
of other federal agencies that may
require record retention terms or
7 See, e.g., 12 U.S.C. 1829b, and the Guidelines
and Interagency Standards for Safety and
Soundness at 12 CFR part 30, Appendix A, II, B.
8 Public Law 107–204, 116 Stat. 745 (2002).
9 17 CFR part 210.
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practices different from those set forth
in the proposal.
Section 1313(f) of the Safety and
Soundness Act, as amended by section
1201 of HERA, requires the Director,
when promulgating regulations relating
to the Banks, to consider the differences
between the Banks and the enterprises
with respect to the Banks’ cooperative
ownership structure, mission of
providing liquidity to members,
affordable housing and community
development mission, capital structure,
and joint and several liability. The
Director may also consider any other
differences that are deemed appropriate.
In preparing the proposed regulation,
the Director considered the differences
between the Banks and the Enterprises
as they relate to the above factors. The
Director requests comments from the
public about whether differences related
to these factors should result in a
revision of the proposed amendment as
it relates to the Banks.
III. Section-by-Section Analysis
Section 1235.1 Purpose and Scope
This proposed section provides the
purpose of the regulation is to set forth
minimum requirements in connection
with the record retention program of
each regulated entity and the Office of
Finance. Such requirements would be
intended to ensure that complete and
accurate records of each regulated entity
and the Office of Finance are readily
accessible by FHFA for examination and
other supervisory purposes.
Section 1235.2 Definitions
This proposed section would provide
definitions for the terms contained in
the proposed regulation.
Active record would be defined as a
record that is necessary to conduct the
current business of an office or business
unit of a regulated entity or the Office
of Finance, and therefore, readily
available for consultation and reference.
Director would be defined as the
Director of FHFA, or his or her designee.
Electronic record would be defined as
a record created, generated,
communicated, or stored by electronic
means.
E-mail would be defined as electronic
mail, which is a method of
communication in which—
(1) Usually, text is transmitted (but
sometimes also graphics and/or audio
information);
(2) Operations include sending,
storing, processing, and receiving
information;
(3) Users are allowed to communicate
under specified conditions; and
(4) Messages are held in storage until
called for by the addressee, including
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any attachment of separate electronic
files.
Employee would be defined as any
officer or employee of a regulated entity
and the Office of Finance or any
conservator appointed by FHFA.
Federal Home Loan Bank or Bank
would be defined as a Bank established
under the Federal Home Loan Bank Act;
the term ‘‘Federal Home Loan Banks’’ or
‘‘Banks’’ would be defined to mean,
collectively, all the Federal Home Loan
Banks.
FHFA would be defined as the
Federal Housing Finance Agency.
Financing Corporation (FICO) would
mean the entity established by the
Competitive Equality Banking Act of
1987, as a mixed-ownership government
corporation whose purpose is to
function as a financing vehicle for the
Federal Savings & Loan Insurance
Corporation. FICO has a board of
directors consisting of the managing
director of the Office of Finance and two
Bank presidents.
Inactive record would be defined as a
record that is seldom used but must be
retained by a regulated entity and the
Office of Finance for fiscal, legal,
historical, or vital records purposes.
Office of Finance would be defined as
the Office of Finance of the Federal
Home Loan Bank System.
Record would be defined as any
information, whether generated
internally or received from outside
sources by a regulated entity or the
Office of Finance or employee,
maintained in connection with a
regulated entity or Office of Finance
business (which business, in the case of
the Office of Finance, shall include any
functions performed with respect to the
FICO), regardless of the following—
(1) Form or format, including hard
copy documents (e.g., files, logs, and
reports) and electronic documents (e.g.,
e-mail, databases, spreadsheets,
PowerPoint presentations, electronic
reporting systems, electronic tapes and
back-up tapes, optical discs, CD–ROMS,
and DVDs), and voicemail records;
(2) Where the information is stored or
located, including network servers,
desktop or laptop computers and
handheld computers, other wireless
devices with text messaging capabilities,
and on-site or off-site at a storage
facility;
(3) Whether the information is
maintained or used on regulated entityowned or Office of Finance equipment,
or personal or home computer systems
of an employee; or
(4) Whether the information is active
or inactive.
Record hold would be defined as a
requirement, an order, or a directive
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from a regulated entity, the Office of
Finance or FHFA that the regulated
entity or the Office of Finance is to
retain records relating to a particular
issue in connection with an actual or a
potential FHFA examination,
investigation, enforcement proceeding,
or litigation of which the regulated
entity and the Office of Finance has
received notice from FHFA.
Record retention schedule would be
defined as a schedule that details the
categories of records a regulated entity
or the Office of Finance is required to
retain and the corresponding retention
periods. The record retention schedule
includes all media, such as microfilm
and machine-readable computer
records, for each record category.
Reproductions are also included for
each record category if the original of
the official record is not available.
Regulated entity would be defined as
the Federal National Mortgage
Association and any affiliate thereof, the
Federal Home Loan Mortgage
Corporation and any affiliate thereof, or
any Federal Home Loan Bank; the term
‘‘regulated entities’’ would be defined to
mean, collectively, the Federal National
Mortgage Association and any affiliate
thereof, the Federal Home Loan
Mortgage Corporation and any affiliate
thereof, and the Federal Home Loan
Banks.
Retention period would be defined as
the length of time that records must be
kept before they are destroyed. Records
not authorized for destruction have a
retention period of ‘‘permanent.’’
Safety and Soundness Act would be
defined as the Federal Housing
Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4501
et seq.), as amended by the Housing and
Economic Recovery Act of 2008, Public
Law No. 110–289, 122 Stat. 2654 (2008).
Vital records would be defined as
records that are needed to meet
operational responsibilities of a
regulated entity or the Office of Finance
under emergency or disaster conditions
(emergency operating records) or to
protect the legal and financial rights of
a regulated entity or the Office of
Finance. Emergency operating records
are the type of vital records essential to
the continued functioning or
reconstitution of a regulated entity or
the Office of Finance during and after an
emergency. A vital record may be both
an emergency operating record and a
legal and financial rights record.
Section 1235.3 Establishment and
Evaluation of Record Retention Program
This proposed section would require
each regulated entity and the Office of
Finance to establish and maintain a
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written record retention program and
provide a copy of such program to the
Deputy Director of the Division of
Enterprise Regulation and the Deputy
Director of the Division of Federal Home
Loan Bank Regulation, or his or her
designee (Deputy Director), as
appropriate, within 120 days of the
effective date of this part, and annually
thereafter, and whenever a significant
revision to the program has been made.
It would also require management of
the regulated entity and the Office of
Finance to evaluate in writing the
adequacy and effectiveness of the record
retention program at least every three
years and provide a copy of the
evaluation to the board of directors and
the appropriate Deputy Director.
Section 1235.4 Minimum
Requirements of Record Retention
Program
This proposed section would provide
the minimum requirements for the
record retention program of each
regulated entity and the Office of
Finance, including requirements
relating to a record retention schedule.
Section 1235.5 Record Hold
This proposed section would address
record retention methods, record access
and retrieval policies, and notification
procedures for employees. Moreover,
the section would require a regulated
entity’s or the Office of Finance’s
employee who is aware of a potential
FHFA investigation, enforcement
proceeding, or litigation involving the
regulated entity or the Office of Finance
or an employee to notify immediately
the legal department of the regulated
entity or the Office of Finance and
retain any records that may be relevant
to such investigation, enforcement
proceeding, or litigation.
Section 1235.6 Access to Records
This proposed section would set forth
the requirement that records must be
readily available for inspection within a
reasonable period upon request by
FHFA, at a location acceptable to FHFA.
For requests made during the course of
an onsite examination and pursuant to
an examination’s scope, a reasonable
period is no longer than one business
day and for requests for documents
made outside of an onsite examination,
a reasonable period is presumed to be
three business days.
Section 1235.7 Supervisory Action
This proposed section would provide
that failure by a regulated entity or the
Office of Finance to comply with the
requirements of the proposed regulation
may subject the regulated entity or the
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Office of Finance, or its board members,
officers, or employees to supervisory
action by FHFA. The section also would
provide that the proposed regulation
does not limit the authority of FHFA
under its safety and soundness mandate
to take other actions such as conducting
examinations, requiring reports and
disclosures, and enforcing compliance
with applicable laws, rules and
regulations.
Regulatory Impact
Paperwork Reduction Act
Because the proposed regulation
pertains to the regulated entities and the
Office of Finance, it does not contain
any information collection requirement
that requires the approval of the Office
of Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
3501 et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities, small
businesses, or small organizations must
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has
considered the impact of the proposed
regulation under the Regulatory
Flexibility Act. FHFA certifies that the
proposed regulation, if adopted, is not
likely to have a significant economic
impact on a substantial number of small
business entities because the regulation
is applicable only to the regulated
entities and the Office of Finance,
which are not small entities for
purposes of the Regulatory Flexibility
Act.
Authority and Issuance
Accordingly, for the reasons stated in
the preamble, under the authority of 12
U.S.C. 4513b, FHFA proposes to amend
Chapters IX, XII and XVII of title 12 of
the Code of Federal Regulations, as set
forth below:
CHAPTER IX—FEDERAL HOUSING
FINANCE BOARD
PART 914—DATA AVAILABILITY AND
REPORTING
1. The authority citation for part 914
is revised to read as follows:
Authority: 12 U.S.C. 1440 and 4526.
§ 914.3
[Removed and reserved]
2. Remove and reserve § 914.3.
CHAPTER XII—FEDERAL HOUSING
FINANCE AGENCY
SUBCHAPTER B—ENTITY REGULATIONS
3. Add part 1235 to subchapter B to
read as follows:
PART 1235—RECORD RETENTION
Sec.
1235.1 Purpose and scope.
1235.2 Definitions.
1235.3 Establishment and evaluation of
record retention program.
1235.4 Minimum requirements of record
retention program.
1235.5 Record hold.
1235.6 Access to records.
1235.7 Supervisory action.
Authority: 12 U.S.C. 4511(b), 4513(a),
4513b(a)(10) and (11), 4526.
§ 1235.1
Purpose and scope.
The purpose of this part is to set forth
minimum requirements in connection
with the record retention program of
each regulated entity and the Office of
Finance. The requirements are intended
to ensure that complete and accurate
records of each regulated entity and the
Office of Finance are readily accessible
by FHFA for examination and other
supervisory purposes.
List of Subjects
§ 1235.2
12 CFR Part 914
For purposes of this part, the termƒ
Active record means a record that is
necessary to conduct the current
business of an office or business unit of
a regulated entity and the Office of
Finance, and therefore, is readily
available for consultation and reference.
Director means the Director of FHFA,
or his or her designee.
Electronic record means a record
created, generated, communicated, or
stored by electronic means.
E-mail means electronic mail, which
is a method of communication in
which—
Federal home loan banks, Reporting
and recordkeeping requirements.
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12 CFR Part 1235
Federal home loan banks,
Government-sponsored enterprises,
Records, Reporting and recordkeeping
requirements.
12 CFR Part 1732
Government-sponsored enterprises,
Records, Reporting and recordkeeping
requirements.
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Definitions.
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(1) Usually, text is transmitted (but
sometimes also graphics and/or audio
information);
(2) Operations include sending,
storing, processing, and receiving
information;
(3) Users are allowed to communicate
under specified conditions; and
(4) Messages are held in storage until
called for by the addressee, including
any attachment of separate electronic
files.
Employee means any officer or
employee of a regulated entity or the
Office of Finance or of any conservator
appointed by FHFA.
Federal Home Loan Bank or Bank
means a Bank established under the
Federal Home Loan Bank Act; the term
Federal Home Loan Banks or Banks
means, collectively, all the Federal
Home Loan Banks.
FHFA means the Federal Housing
Finance Agency.
Financing Corporation (FICO) means
the entity established by the
Competitive Equality Banking Act of
1987, as a mixed-ownership government
corporation whose purpose is to
function as a financing vehicle for the
Federal Savings & Loan Insurance
Corporation. FICO has a board of
directors consisting of the managing
director of the Office of Finance and two
Bank presidents.
Inactive record means a record that is
seldom used but must be retained by a
regulated entity or the Office of Finance
for fiscal, legal, historical, or vital
records purposes.
Office of Finance means the Office of
Finance of the Federal Home Loan Bank
System.
Record means any information,
whether generated internally or received
from outside sources by a regulated
entity or the Office of Finance or
employee, maintained in connection
with a regulated entity or Office of
Finance business (which business, in
the case of the Office of Finance, shall
include any functions performed with
respect to the Financing Corporation),
regardless of the following—
(1) Form or format, including hard
copy documents (e.g., files, logs, and
reports) and electronic documents (e.g.,
e-mail, databases, spreadsheets,
PowerPoint presentations, electronic
reporting systems, electronic tapes and
back-up tapes, optical discs, CD–ROMS,
and DVDs), and voicemail records;
(2) Where the information is stored or
located, including network servers,
desktop or laptop computers and
handheld computers, other wireless
devices with text messaging capabilities,
and on-site or off-site at a storage
facility;
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(3) Whether the information is
maintained or used on regulated entityowned or Office of Finance equipment,
or personal or home computer systems
of an employee; or
(4) Whether the information is active
or inactive.
Record hold means a requirement, an
order, or a directive from a regulated
entity, the Office of Finance, or FHFA
that the regulated entity or the Office of
Finance is to retain records relating to
a particular issue in connection with an
actual or a potential FHFA examination,
investigation, enforcement proceeding,
or litigation of which the regulated
entity or the Office of Finance has
received notice from FHFA.
Record retention schedule means a
schedule that details the categories of
records a regulated entity or the Office
of Finance is required to retain and the
corresponding retention periods. The
record retention schedule includes all
media, such as microfilm and machinereadable computer records, for each
record category. Reproductions are also
included for each record category if the
original of the official record is not
available.
Regulated entity means the Federal
National Mortgage Association and any
affiliate thereof, the Federal Home Loan
Mortgage Corporation and any affiliate
thereof, or any Federal Home Loan
Bank; the term ‘‘regulated entities’’
means, collectively, the Federal
National Mortgage Association and any
affiliate thereof, the Federal Home Loan
Mortgage Corporation and any affiliate
thereof, and the Federal Home Loan
Banks.
Retention period means the length of
time that records must be kept before
they are destroyed. Records not
authorized for destruction have a
retention period of ‘‘permanent.’’
Safety and Soundness Act means the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12
U.S.C. 4501 et seq.), as amended.
Vital records means records that are
needed to meet operational
responsibilities of a regulated entity or
the Office of Finance under emergency
or disaster conditions (emergency
operating records) or to protect the legal
and financial rights of a regulated entity
or the Office of Finance. Emergency
operating records are the type of vital
records essential to the continued
functioning or reconstitution of a
regulated entity or the Office of Finance
during and after an emergency. A vital
record may be both an emergency
operating record and a legal and
financial rights record.
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§ 1235.3 Establishment and evaluation of
record retention program.
(a) Establishment. Each regulated
entity and the Office of Finance shall
establish and maintain a written record
retention program and provide a copy of
such program to the Deputy Director of
the Division of Enterprise Regulation, or
his or her designee, or the Deputy
Director of the Division of Federal Home
Loan Bank Regulation, or his or her
designee (Deputy Director), as
appropriate, within 120 days of the
effective date of this part, and annually
thereafter, and whenever a significant
revision to the program has been made.
(b) Evaluation. Management of each
regulated entity and the Office of
Finance shall evaluate in writing the
adequacy and effectiveness of the record
retention program at least every three
years and provide a copy of the
evaluation to the board of directors and
the appropriate Deputy Director.
§ 1235.4 Minimum requirements of record
retention program.
(a) Requirements. The record
retention program established and
maintained by each regulated entity and
the Office of Finance under § 1235.3
shall:
(1) Be reasonably designed to assure
that retained records are complete and
accurate;
(2) Be reasonably designed to assure
that the format of retained records and
the retention period—
(i) Are adequate to support litigation
and the administrative, business,
external and internal audit functions of
the regulated entity or the Office of
Finance;
(ii) Comply with requirements of
applicable laws and regulations; and
(iii) Permit ready access by the
regulated entity or the Office of Finance
and, upon request, by the examination
and other staff of FHFA by reasonable
means, consistent with the nature and
availability of the records and existing
information technology.
(3) Assign in writing the authorities
and responsibilities for record retention
activities;
(4) Include policies and procedures
concerning record holds, consistent
with § 1235.5;
(5) Include an accurate, current, and
comprehensive record retention
schedule that lists records by major
categories, subcategories, record type,
and retention period, which retention
period is appropriate to the specific
record and consistent with applicable
legal, regulatory, fiscal, and operational
and business requirements;
(6) Include adequate security and
internal controls to protect records from
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Sfmt 4702
38563
unauthorized access and data alteration;
and
(7) Provide for adequate back-up and
recovery of electronic records.
(b) Training. The record retention
program shall provide for training of
and notice to all employees on a
periodic basis on their record retention
responsibilities, including instruction
regarding penalties provided by law for
the unlawful removal or destruction of
records. The record retention program
also shall provide for training for the
agents or independent contractors of a
regulated entity or the Office of Finance,
as appropriate, consistent with their
respective roles and responsibilities to
the regulated entity or the Office of
Finance.
§ 1235.5
Record hold.
(a) Notification by a regulated entity
or the Office of Finance. The record
retention program of a regulated entity
and the Office of Finance shallƒ
(1) Address how employees and, as
appropriate, how agents or independent
contractors consistent with their
respective roles and responsibilities to
the regulated entity or the Office of
Finance, will receive prompt
notification of a record hold;
(2) Designate an individual to
communicate specific requirements and
instructions, including, when necessary,
the instruction to cease immediately any
otherwise permissible destruction of
records; and
(3) Provide that any employee and, as
appropriate, any agent or independent
contractor consistent with his or her
respective role and responsibility to the
regulated entity, who has received
notice of a potential investigation,
enforcement proceeding, or litigation by
FHFA involving the regulated entity or
the Office of Finance or an employee, or
otherwise has actual knowledge that an
issue is subject to such an investigation,
enforcement proceeding or litigation,
shall notify immediately the legal
department of the regulated entity or the
Office of Finance and shall retain any
records that may be relevant in any way
to such investigation, enforcement
proceeding, or litigation.
(b) Method of record retention. The
record retention program of each
regulated entity and the Office of
Finance shall address the method by
which the regulated entity or the Office
of Finance will retain records during a
record hold. Specifically, the program
shall describe the method for the
continued preservation of electronic
records, including e-mails, and the
conversion of records from paper to
electronic format as well as any
alternative storage method.
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Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Proposed Rules
(c) Access to and retrieval of records
during a record hold. The record
retention program of each regulated
entity or the Office of Finance shall
ensure access to and retrieval of records
by the regulated entity or the Office of
Finance and access, upon request, by
FHFA, during a record hold. Such
access shall be by reasonable means,
consistent with the nature and
availability of the records and existing
information technology.
FEDERAL HOUSING FINANCE BOARD
§ 1235.6
AGENCY: Federal Housing Finance
Agency; Federal Housing Finance
Board.
ACTION: Notice of proposed rulemaking;
request for comment.
Access to records.
(a) Access to records. Each regulated
entity or the Office of Finance shall
make its records readily available for
inspection and other supervisory
purposes within a reasonable period
upon request by FHFA, at a location
acceptable to FHFA and by reasonable
means, consistent with the nature and
availability of the records and existing
information technology.
(b) Reasonable period. For requests
for documents made during the course
of an on-site examination and pursuant
to the examination’s scope, a reasonable
period is presumed to be no longer than
one business day. For requests for
documents made outside of an on-site
examination, a reasonable period is
presumed to be three business days.
§ 1235.7
Supervisory action.
(a) Supervisory action. Failure by a
regulated entity or the Office of Finance
to comply with this part may subject the
regulated entity or the Office of Finance
or the board members, officers, or
employees thereof to supervisory action
by FHFA under the Safety and
Soundness Act, including but not
limited to cease-and-desist proceedings,
temporary cease-and-desist proceedings,
and civil money penalties.
(b) No limitation of authority. This
part does not limit or restrict the
authority of FHFA to act under its safety
and soundness mandate, in accordance
with the Safety and Soundness Act.
Such authority includes, but is not
limited to, conducting examinations,
requiring reports and disclosures, and
enforcing compliance with applicable
laws, rules, and regulations.
rmajette on DSK29S0YB1PROD with PROPOSALS
CHAPTER XVII—OFFICE OF FEDERAL
HOUSING ENTERPRISE OVERSIGHT,
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
PART 1732—[REMOVED]
4. Remove part 1732.
Dated: July 28, 2009.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E9–18489 Filed 8–3–09; 8:45 am]
BILLING CODE P
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17:32 Aug 03, 2009
Jkt 217001
12 CFR Parts 985, 989
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Parts 1273, 1274
RIN 2590–AA30
Board of Directors of Federal Home
Loan Bank System Office of Finance
SUMMARY: Governed by the Federal
Housing Finance Agency’s (FHFA)
regulations, the Federal Home Loan
Bank System’s (System) Office of
Finance, issues debt (‘‘consolidated
obligations’’) on which the Federal
Home Loan Banks (Banks) are jointly
and severally liable and publishes
combined financial reports on the Banks
so that investors in the consolidated
obligations can assess the strength of the
System that stands behind them. The
Office of Finance (OF) is governed by a
board of directors, the composition and
functions of which are determined by
FHFA’s regulations. The FHFA’s
experience with the System and with
the OF’s combined financial reports
during the recent period of market stress
suggests that the OF and the System
could benefit from a reconstituted and
strengthened board. This proposed
regulation is intended to achieve that.
DATES: Comments on the proposed
regulation must be received on or before
October 5, 2009. For additional
information, see SUPPLEMENTARY
INFORMATION.
ADDRESSES: You may submit your
comments on the proposed regulation,
identified by regulatory information
number (RIN) 2590–AA30 by any of the
following methods:
• U.S. Mail, United Parcel Service,
Federal Express, or Other Mail Service:
The mailing address for comments is:
Alfred M. Pollard, General Counsel,
Attention: Comments/RIN 2590–AA30,
Federal Housing Finance Agency,
Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552.
• Hand Delivery/Courier: The hand
delivery address is: Alfred M. Pollard,
General Counsel, Attention: Comments/
RIN 2590–AA30, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
package should be logged at the Guard
Desk, First Floor, on business days
between 9 a.m. and 5 p.m.
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• E-mail: Comments to Alfred M.
Pollard, General Counsel may be sent by
e-mail at RegComments@FHFA.gov.
Please include ‘‘RIN 2590–AA30’’ in the
subject line of the message.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
FOR FURTHER INFORMATION CONTACT:
Joseph A. McKenzie, 202–408–2845,
Division of Federal Home Loan Bank
Regulation, Federal Housing Finance
Agency, 1625 Eye Street, NW.,
Washington, DC 20006; or Neil Crowley,
Deputy General Counsel, 202–343–1316,
or Thomas E. Joseph, Senior AttorneyAdvisor, 202–414–3095, Office of
General Counsel, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. Comments
The FHFA invites comments on all
aspects of the proposed regulation, and
will adopt a final regulation with
appropriate changes after taking all
comments into consideration. Copies of
all comments will be posted on the
Internet Web site at https://
www.fhfa.gov. In addition, copies of all
comments received will be available for
examination by the public on business
days between the hours of 10 a.m. and
3 p.m., at the Federal Housing Finance
Agency, Fourth Floor, 1700 G Street,
NW., Washington, DC 20552. To make
an appointment to inspect comments,
please call the Office of General Counsel
at (202) 414–6924.
II. Background
A. Creation of the Federal Housing
Finance Agency and Recent Legislation
Effective July 30, 2008, the Housing
and Economic Recovery Act of 2008
(HERA), Public Law 110–289, 122 Stat.
2654, transferred the supervisory and
oversight responsibilities of the Office of
Federal Housing Enterprise Oversight
(OFHEO) over the Federal National
Mortgage Association (Fannie Mae), and
the Federal Home Loan Mortgage
Corporation (Freddie Mac) (collectively,
the Enterprises), the oversight
responsibilities of the Federal Housing
Finance Board (FHFB or Finance Board)
over the Banks and the Office of Finance
(OF) (which acts as the Banks’ fiscal
agent) and certain functions of the
Department of Housing and Urban
Development to a new independent
executive branch agency, the FHFA. See
id. at § 1101, 122 Stat. 2661–62
(amending 12 U.S.C. 4511). The FHFA
E:\FR\FM\04AUP1.SGM
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[Federal Register Volume 74, Number 148 (Tuesday, August 4, 2009)]
[Proposed Rules]
[Pages 38559-38564]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18489]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 /
Proposed Rules
[[Page 38559]]
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 914
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1235
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1732
RIN 2590-AA10
Record Retention
AGENCIES: Federal Housing Finance Board; Federal Housing Finance
Agency; Office of Federal Housing Enterprise Oversight.
ACTION: Notice of proposed rulemaking; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing a
Record Retention regulation. The proposed regulation would set forth
record retention requirements with respect to the record management
programs of the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the Federal Home Loan Banks, and the Office
of Finance consistent with the safety and soundness authority of FHFA
under the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992, as amended.
DATES: Comments on the proposed regulation must be received in writing
on or before October 5, 2009. For additional information, see
SUPPLEMENTARY INFORMATION.
ADDRESSES: You may submit your comments on the proposed regulation,
identified by regulatory information number (RIN) 2590-AA10, by any one
of the following methods:
U.S. Mail, United Parcel Service, Federal Express, or
Other Mail Service: The mailing address for comments is: Alfred M.
Pollard, General Counsel, Attention: Comments/RIN 2590-AA10, Federal
Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington,
DC 20552.
Hand Delivered/Courier: The hand delivery address is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA10,
Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. The package should be logged at the Guard Desk,
First Floor, on business days between 9 a.m. and 5 p.m.
E-mail: Comments may be sent by e-mail to
RegComments@fhfa.gov. Please include ``RIN 2590-AA10'' in the subject
line of the message.
Federal eRulemaking: https://www.regulations.gov. Follow
the instructions for submitting comments. If you submit your comment to
the Federal eRulemaking Portal, please also send it by e-mail to FHFA
at RegComments@fhfa.gov to ensure timely receipt by the Agency. Please
include ``RIN 2590-AA10'' in the subject line of the message.
FOR FURTHER INFORMATION CONTACT: Andra Grossman, Senior Counsel,
telephone (202) 343-1313 (not a toll-free number); Federal Housing
Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552.
The telephone number for the Telecommunications Device for the Deaf is
(800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Comments
FHFA invites comments on all aspects of the proposed regulation,
and will take all comments into consideration before issuing the final
regulation. Copies of all comments will be posted without change,
including any personal information you provide, such as your name and
address, on the FHFA Web site at https://www.fhfa.gov.
In addition, copies of all comments received will be available for
examination by the public on business days between the hours of 10 a.m.
and 3 p.m., at the Federal Housing Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. To make an appointment to inspect
comments, please call the Office of General Counsel at (202) 414-6924.
II. Background
A. Establishment of the Federal Housing Finance Agency
The Housing and Economic Recovery Act of 2008 (HERA), Public Law
No. 110-289, 122 Stat. 2654, amended the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.)
(Safety and Soundness Act), and the Federal Home Loan Bank Act (12
U.S.C. 1421-1449) to establish FHFA as an independent agency of the
Federal government.\1\ FHFA was established to oversee the prudential
operations of the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation (collectively, Enterprises), and the
Federal Home Loan Banks (Banks) (collectively, regulated entities) to
ensure that they operate in a safe and sound manner including being
capitalized adequately; foster liquid, efficient, competitive and
resilient national housing finance markets; comply with the Safety and
Soundness Act and rules, regulations, guidelines and orders issued by
the Director of FHFA (Director), and the respective authorizing
statutes of the regulated entities; and carry out their missions
through activities authorized and consistent with the Safety and
Soundness Act and their authorizing statutes; and, that the activities
and operations of the regulated entities are consistent with the public
interest. FHFA also has regulatory authority over the Office of Finance
under section 1311(b)(2) of the Safety and Soundness Act (12 U.S.C.
4511).
---------------------------------------------------------------------------
\1\ See Division A, titled the ``Federal Housing Finance
Regulatory Reform Act of 2008,'' Title I, section 1101 of HERA.
---------------------------------------------------------------------------
The Office of Finance is a joint office of the Banks that was
established by a predecessor to FHFA. The Office of Finance is governed
by a three-person board of directors consisting of two Bank presidents
and one independent member. Under the regulations of the Federal
Housing Finance Board (FHFB), the Office of Finance is subject to the
same regulatory oversight authority and enforcement powers as are the
Banks and their respective directors, officers, and employees.\2\ The
Office of Finance also is subject to the cease-and-desist authority of
FHFA and its directors, officers and management are subject to
[[Page 38560]]
the removal and prohibition authority of FHFA.\3\ Although the Office
of Finance is not directly covered by the Safety and Soundness Act, it
is subject to the Director's ``general regulatory authority'' under
section 1311(b)(2) of the Safety and Soundness Act (12 U.S.C.
4511(b)(2)), as amended by HERA. The Director is required to exercise
that authority as necessary to ensure that the purposes of the Safety
and Soundness Act, the authorizing statutes, and other applicable law
are carried out. Based on its general regulatory authority over the
Office of Finance, FHFA is proposing that this regulation apply to the
Office of Finance.
---------------------------------------------------------------------------
\2\ 12 CFR 985.4 and 985.7.
\3\ 12 U.S.C.4631(a) and 4636a(a).
---------------------------------------------------------------------------
The Office of Federal Housing Enterprise Oversight (OFHEO) and the
FHFB will be abolished one year after enactment of the HERA. However,
the regulated entities and the Office of Finance continue to operate
under regulations promulgated by OFHEO and FHFB; and such regulations
are enforceable by the Director of FHFA until such regulations are
modified, terminated, set aside, or superseded by the Director of
FHFA.\4\
---------------------------------------------------------------------------
\4\ See sections 1302 and 1312 of HERA.
---------------------------------------------------------------------------
B. Record Retention and Prudential Management and Operation Standards
The Safety and Soundness Act provides that the Director is to
establish standards for each regulated entity and the Office of Finance
to maintain adequate records, in accordance with consistent accounting
policies and practices that enable the Director to evaluate the
financial condition of each regulated entity and the Office of Finance
and such other operational and management standards as the Director
determines to be appropriate.\5\ The Safety and Soundness Act further
provides the Director with general supervisory and regulatory authority
over the regulated entities and the Office of Finance, and requires the
Director to ensure that they operate in a safe and sound manner.\6\
Accordingly, this proposed regulation would address the record
retention requirements of each regulated entity and the Office of
Finance. The proposed regulation, when published in its final form,
would supersede 12 CFR 914.3 (FHFB Access to Books and Records) and 12
CFR part 1732 (OFHEO Record Retention).
---------------------------------------------------------------------------
\5\ 12 U.S.C. 4513b(a)(10) and (11).
\6\ 12 U.S.C. 4511(b), 4513(a).
---------------------------------------------------------------------------
The proposed regulation would require the regulated entities and
the Office of Finance to establish and maintain a record retention
program to ensure that records are readily accessible for examination
and other supervisory purposes. FHFA recognizes that the effectiveness
of the examination process is dependent upon the prompt production of
complete and accurate records. FHFA, through the supervisory process,
must have access to the records of a regulated entity and the Office of
Finance that are necessary to determine the financial condition of the
regulated entity and the Office of Finance or the details or the
purpose of any transaction that may have a material effect on the
financial condition of the regulated entity and the Office of Finance.
Retention of such records not only facilitates the examination
process, but also allows a regulated entity and the Office of Finance
to manage more effectively its business and detect improper behavior
that might cause financial damage. Additionally, such records serve as
documentation for a regulated entity and the Office of Finance in any
controversy over its business activities or transactions.
The importance of sound record retention policies and procedures by
regulated institutions also has been recognized by Congress and other
federal regulators. Adequate record retention by the institutions has
been determined to have a high degree of usefulness in criminal, tax,
and regulatory investigations or proceedings, and has been identified
as a requisite component of an institution's operation and management
on a safety and soundness basis.\7\
---------------------------------------------------------------------------
\7\ See, e.g., 12 U.S.C. 1829b, and the Guidelines and
Interagency Standards for Safety and Soundness at 12 CFR part 30,
Appendix A, II, B.
---------------------------------------------------------------------------
In addition to facilitating the oversight and enforcement of
federal banking laws, adequate record retention has been recognized by
Congress as being essential to the oversight and enforcement of the
federal securities laws. For example, as mandated by section 802 of the
Sarbanes-Oxley Act,\8\ the U.S. Securities and Exchange Commission
adopted rules requiring accounting firms to retain for seven years
certain records relevant to their audits and reviews of issuers'
financial statements. Records to be retained include an accounting
firm's workpapers and certain other documents that contain conclusions,
opinions, analyses, or financial data related to the audit or
review.\9\ The proposed requirements would have no effect on the
policies, rules, or guidance of other federal agencies that may require
record retention terms or practices different from those set forth in
the proposal.
---------------------------------------------------------------------------
\8\ Public Law 107-204, 116 Stat. 745 (2002).
\9\ 17 CFR part 210.
---------------------------------------------------------------------------
Section 1313(f) of the Safety and Soundness Act, as amended by
section 1201 of HERA, requires the Director, when promulgating
regulations relating to the Banks, to consider the differences between
the Banks and the enterprises with respect to the Banks' cooperative
ownership structure, mission of providing liquidity to members,
affordable housing and community development mission, capital
structure, and joint and several liability. The Director may also
consider any other differences that are deemed appropriate. In
preparing the proposed regulation, the Director considered the
differences between the Banks and the Enterprises as they relate to the
above factors. The Director requests comments from the public about
whether differences related to these factors should result in a
revision of the proposed amendment as it relates to the Banks.
III. Section-by-Section Analysis
Section 1235.1 Purpose and Scope
This proposed section provides the purpose of the regulation is to
set forth minimum requirements in connection with the record retention
program of each regulated entity and the Office of Finance. Such
requirements would be intended to ensure that complete and accurate
records of each regulated entity and the Office of Finance are readily
accessible by FHFA for examination and other supervisory purposes.
Section 1235.2 Definitions
This proposed section would provide definitions for the terms
contained in the proposed regulation.
Active record would be defined as a record that is necessary to
conduct the current business of an office or business unit of a
regulated entity or the Office of Finance, and therefore, readily
available for consultation and reference.
Director would be defined as the Director of FHFA, or his or her
designee.
Electronic record would be defined as a record created, generated,
communicated, or stored by electronic means.
E-mail would be defined as electronic mail, which is a method of
communication in which--
(1) Usually, text is transmitted (but sometimes also graphics and/
or audio information);
(2) Operations include sending, storing, processing, and receiving
information;
(3) Users are allowed to communicate under specified conditions;
and
(4) Messages are held in storage until called for by the addressee,
including
[[Page 38561]]
any attachment of separate electronic files.
Employee would be defined as any officer or employee of a regulated
entity and the Office of Finance or any conservator appointed by FHFA.
Federal Home Loan Bank or Bank would be defined as a Bank
established under the Federal Home Loan Bank Act; the term ``Federal
Home Loan Banks'' or ``Banks'' would be defined to mean, collectively,
all the Federal Home Loan Banks.
FHFA would be defined as the Federal Housing Finance Agency.
Financing Corporation (FICO) would mean the entity established by
the Competitive Equality Banking Act of 1987, as a mixed-ownership
government corporation whose purpose is to function as a financing
vehicle for the Federal Savings & Loan Insurance Corporation. FICO has
a board of directors consisting of the managing director of the Office
of Finance and two Bank presidents.
Inactive record would be defined as a record that is seldom used
but must be retained by a regulated entity and the Office of Finance
for fiscal, legal, historical, or vital records purposes.
Office of Finance would be defined as the Office of Finance of the
Federal Home Loan Bank System.
Record would be defined as any information, whether generated
internally or received from outside sources by a regulated entity or
the Office of Finance or employee, maintained in connection with a
regulated entity or Office of Finance business (which business, in the
case of the Office of Finance, shall include any functions performed
with respect to the FICO), regardless of the following--
(1) Form or format, including hard copy documents (e.g., files,
logs, and reports) and electronic documents (e.g., e-mail, databases,
spreadsheets, PowerPoint presentations, electronic reporting systems,
electronic tapes and back-up tapes, optical discs, CD-ROMS, and DVDs),
and voicemail records;
(2) Where the information is stored or located, including network
servers, desktop or laptop computers and handheld computers, other
wireless devices with text messaging capabilities, and on-site or off-
site at a storage facility;
(3) Whether the information is maintained or used on regulated
entity-owned or Office of Finance equipment, or personal or home
computer systems of an employee; or
(4) Whether the information is active or inactive.
Record hold would be defined as a requirement, an order, or a
directive from a regulated entity, the Office of Finance or FHFA that
the regulated entity or the Office of Finance is to retain records
relating to a particular issue in connection with an actual or a
potential FHFA examination, investigation, enforcement proceeding, or
litigation of which the regulated entity and the Office of Finance has
received notice from FHFA.
Record retention schedule would be defined as a schedule that
details the categories of records a regulated entity or the Office of
Finance is required to retain and the corresponding retention periods.
The record retention schedule includes all media, such as microfilm and
machine-readable computer records, for each record category.
Reproductions are also included for each record category if the
original of the official record is not available.
Regulated entity would be defined as the Federal National Mortgage
Association and any affiliate thereof, the Federal Home Loan Mortgage
Corporation and any affiliate thereof, or any Federal Home Loan Bank;
the term ``regulated entities'' would be defined to mean, collectively,
the Federal National Mortgage Association and any affiliate thereof,
the Federal Home Loan Mortgage Corporation and any affiliate thereof,
and the Federal Home Loan Banks.
Retention period would be defined as the length of time that
records must be kept before they are destroyed. Records not authorized
for destruction have a retention period of ``permanent.''
Safety and Soundness Act would be defined as the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501
et seq.), as amended by the Housing and Economic Recovery Act of 2008,
Public Law No. 110-289, 122 Stat. 2654 (2008).
Vital records would be defined as records that are needed to meet
operational responsibilities of a regulated entity or the Office of
Finance under emergency or disaster conditions (emergency operating
records) or to protect the legal and financial rights of a regulated
entity or the Office of Finance. Emergency operating records are the
type of vital records essential to the continued functioning or
reconstitution of a regulated entity or the Office of Finance during
and after an emergency. A vital record may be both an emergency
operating record and a legal and financial rights record.
Section 1235.3 Establishment and Evaluation of Record Retention Program
This proposed section would require each regulated entity and the
Office of Finance to establish and maintain a written record retention
program and provide a copy of such program to the Deputy Director of
the Division of Enterprise Regulation and the Deputy Director of the
Division of Federal Home Loan Bank Regulation, or his or her designee
(Deputy Director), as appropriate, within 120 days of the effective
date of this part, and annually thereafter, and whenever a significant
revision to the program has been made.
It would also require management of the regulated entity and the
Office of Finance to evaluate in writing the adequacy and effectiveness
of the record retention program at least every three years and provide
a copy of the evaluation to the board of directors and the appropriate
Deputy Director.
Section 1235.4 Minimum Requirements of Record Retention Program
This proposed section would provide the minimum requirements for
the record retention program of each regulated entity and the Office of
Finance, including requirements relating to a record retention
schedule.
Section 1235.5 Record Hold
This proposed section would address record retention methods,
record access and retrieval policies, and notification procedures for
employees. Moreover, the section would require a regulated entity's or
the Office of Finance's employee who is aware of a potential FHFA
investigation, enforcement proceeding, or litigation involving the
regulated entity or the Office of Finance or an employee to notify
immediately the legal department of the regulated entity or the Office
of Finance and retain any records that may be relevant to such
investigation, enforcement proceeding, or litigation.
Section 1235.6 Access to Records
This proposed section would set forth the requirement that records
must be readily available for inspection within a reasonable period
upon request by FHFA, at a location acceptable to FHFA. For requests
made during the course of an onsite examination and pursuant to an
examination's scope, a reasonable period is no longer than one business
day and for requests for documents made outside of an onsite
examination, a reasonable period is presumed to be three business days.
Section 1235.7 Supervisory Action
This proposed section would provide that failure by a regulated
entity or the Office of Finance to comply with the requirements of the
proposed regulation may subject the regulated entity or the
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Office of Finance, or its board members, officers, or employees to
supervisory action by FHFA. The section also would provide that the
proposed regulation does not limit the authority of FHFA under its
safety and soundness mandate to take other actions such as conducting
examinations, requiring reports and disclosures, and enforcing
compliance with applicable laws, rules and regulations.
Regulatory Impact
Paperwork Reduction Act
Because the proposed regulation pertains to the regulated entities
and the Office of Finance, it does not contain any information
collection requirement that requires the approval of the Office of
Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501
et seq.).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has considered the impact of the
proposed regulation under the Regulatory Flexibility Act. FHFA
certifies that the proposed regulation, if adopted, is not likely to
have a significant economic impact on a substantial number of small
business entities because the regulation is applicable only to the
regulated entities and the Office of Finance, which are not small
entities for purposes of the Regulatory Flexibility Act.
List of Subjects
12 CFR Part 914
Federal home loan banks, Reporting and recordkeeping requirements.
12 CFR Part 1235
Federal home loan banks, Government-sponsored enterprises, Records,
Reporting and recordkeeping requirements.
12 CFR Part 1732
Government-sponsored enterprises, Records, Reporting and
recordkeeping requirements.
Authority and Issuance
Accordingly, for the reasons stated in the preamble, under the
authority of 12 U.S.C. 4513b, FHFA proposes to amend Chapters IX, XII
and XVII of title 12 of the Code of Federal Regulations, as set forth
below:
CHAPTER IX--FEDERAL HOUSING FINANCE BOARD
PART 914--DATA AVAILABILITY AND REPORTING
1. The authority citation for part 914 is revised to read as
follows:
Authority: 12 U.S.C. 1440 and 4526.
Sec. 914.3 [Removed and reserved]
2. Remove and reserve Sec. 914.3.
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
SUBCHAPTER B--ENTITY REGULATIONS
3. Add part 1235 to subchapter B to read as follows:
PART 1235--RECORD RETENTION
Sec.
1235.1 Purpose and scope.
1235.2 Definitions.
1235.3 Establishment and evaluation of record retention program.
1235.4 Minimum requirements of record retention program.
1235.5 Record hold.
1235.6 Access to records.
1235.7 Supervisory action.
Authority: 12 U.S.C. 4511(b), 4513(a), 4513b(a)(10) and (11),
4526.
Sec. 1235.1 Purpose and scope.
The purpose of this part is to set forth minimum requirements in
connection with the record retention program of each regulated entity
and the Office of Finance. The requirements are intended to ensure that
complete and accurate records of each regulated entity and the Office
of Finance are readily accessible by FHFA for examination and other
supervisory purposes.
Sec. 1235.2 Definitions.
For purposes of this part, the term[boxh]
Active record means a record that is necessary to conduct the
current business of an office or business unit of a regulated entity
and the Office of Finance, and therefore, is readily available for
consultation and reference.
Director means the Director of FHFA, or his or her designee.
Electronic record means a record created, generated, communicated,
or stored by electronic means.
E-mail means electronic mail, which is a method of communication in
which--
(1) Usually, text is transmitted (but sometimes also graphics and/
or audio information);
(2) Operations include sending, storing, processing, and receiving
information;
(3) Users are allowed to communicate under specified conditions;
and
(4) Messages are held in storage until called for by the addressee,
including any attachment of separate electronic files.
Employee means any officer or employee of a regulated entity or the
Office of Finance or of any conservator appointed by FHFA.
Federal Home Loan Bank or Bank means a Bank established under the
Federal Home Loan Bank Act; the term Federal Home Loan Banks or Banks
means, collectively, all the Federal Home Loan Banks.
FHFA means the Federal Housing Finance Agency.
Financing Corporation (FICO) means the entity established by the
Competitive Equality Banking Act of 1987, as a mixed-ownership
government corporation whose purpose is to function as a financing
vehicle for the Federal Savings & Loan Insurance Corporation. FICO has
a board of directors consisting of the managing director of the Office
of Finance and two Bank presidents.
Inactive record means a record that is seldom used but must be
retained by a regulated entity or the Office of Finance for fiscal,
legal, historical, or vital records purposes.
Office of Finance means the Office of Finance of the Federal Home
Loan Bank System.
Record means any information, whether generated internally or
received from outside sources by a regulated entity or the Office of
Finance or employee, maintained in connection with a regulated entity
or Office of Finance business (which business, in the case of the
Office of Finance, shall include any functions performed with respect
to the Financing Corporation), regardless of the following--
(1) Form or format, including hard copy documents (e.g., files,
logs, and reports) and electronic documents (e.g., e-mail, databases,
spreadsheets, PowerPoint presentations, electronic reporting systems,
electronic tapes and back-up tapes, optical discs, CD-ROMS, and DVDs),
and voicemail records;
(2) Where the information is stored or located, including network
servers, desktop or laptop computers and handheld computers, other
wireless devices with text messaging capabilities, and on-site or off-
site at a storage facility;
[[Page 38563]]
(3) Whether the information is maintained or used on regulated
entity-owned or Office of Finance equipment, or personal or home
computer systems of an employee; or
(4) Whether the information is active or inactive.
Record hold means a requirement, an order, or a directive from a
regulated entity, the Office of Finance, or FHFA that the regulated
entity or the Office of Finance is to retain records relating to a
particular issue in connection with an actual or a potential FHFA
examination, investigation, enforcement proceeding, or litigation of
which the regulated entity or the Office of Finance has received notice
from FHFA.
Record retention schedule means a schedule that details the
categories of records a regulated entity or the Office of Finance is
required to retain and the corresponding retention periods. The record
retention schedule includes all media, such as microfilm and machine-
readable computer records, for each record category. Reproductions are
also included for each record category if the original of the official
record is not available.
Regulated entity means the Federal National Mortgage Association
and any affiliate thereof, the Federal Home Loan Mortgage Corporation
and any affiliate thereof, or any Federal Home Loan Bank; the term
``regulated entities'' means, collectively, the Federal National
Mortgage Association and any affiliate thereof, the Federal Home Loan
Mortgage Corporation and any affiliate thereof, and the Federal Home
Loan Banks.
Retention period means the length of time that records must be kept
before they are destroyed. Records not authorized for destruction have
a retention period of ``permanent.''
Safety and Soundness Act means the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.), as
amended.
Vital records means records that are needed to meet operational
responsibilities of a regulated entity or the Office of Finance under
emergency or disaster conditions (emergency operating records) or to
protect the legal and financial rights of a regulated entity or the
Office of Finance. Emergency operating records are the type of vital
records essential to the continued functioning or reconstitution of a
regulated entity or the Office of Finance during and after an
emergency. A vital record may be both an emergency operating record and
a legal and financial rights record.
Sec. 1235.3 Establishment and evaluation of record retention program.
(a) Establishment. Each regulated entity and the Office of Finance
shall establish and maintain a written record retention program and
provide a copy of such program to the Deputy Director of the Division
of Enterprise Regulation, or his or her designee, or the Deputy
Director of the Division of Federal Home Loan Bank Regulation, or his
or her designee (Deputy Director), as appropriate, within 120 days of
the effective date of this part, and annually thereafter, and whenever
a significant revision to the program has been made.
(b) Evaluation. Management of each regulated entity and the Office
of Finance shall evaluate in writing the adequacy and effectiveness of
the record retention program at least every three years and provide a
copy of the evaluation to the board of directors and the appropriate
Deputy Director.
Sec. 1235.4 Minimum requirements of record retention program.
(a) Requirements. The record retention program established and
maintained by each regulated entity and the Office of Finance under
Sec. 1235.3 shall:
(1) Be reasonably designed to assure that retained records are
complete and accurate;
(2) Be reasonably designed to assure that the format of retained
records and the retention period--
(i) Are adequate to support litigation and the administrative,
business, external and internal audit functions of the regulated entity
or the Office of Finance;
(ii) Comply with requirements of applicable laws and regulations;
and
(iii) Permit ready access by the regulated entity or the Office of
Finance and, upon request, by the examination and other staff of FHFA
by reasonable means, consistent with the nature and availability of the
records and existing information technology.
(3) Assign in writing the authorities and responsibilities for
record retention activities;
(4) Include policies and procedures concerning record holds,
consistent with Sec. 1235.5;
(5) Include an accurate, current, and comprehensive record
retention schedule that lists records by major categories,
subcategories, record type, and retention period, which retention
period is appropriate to the specific record and consistent with
applicable legal, regulatory, fiscal, and operational and business
requirements;
(6) Include adequate security and internal controls to protect
records from unauthorized access and data alteration; and
(7) Provide for adequate back-up and recovery of electronic
records.
(b) Training. The record retention program shall provide for
training of and notice to all employees on a periodic basis on their
record retention responsibilities, including instruction regarding
penalties provided by law for the unlawful removal or destruction of
records. The record retention program also shall provide for training
for the agents or independent contractors of a regulated entity or the
Office of Finance, as appropriate, consistent with their respective
roles and responsibilities to the regulated entity or the Office of
Finance.
Sec. 1235.5 Record hold.
(a) Notification by a regulated entity or the Office of Finance.
The record retention program of a regulated entity and the Office of
Finance shall[boxh]
(1) Address how employees and, as appropriate, how agents or
independent contractors consistent with their respective roles and
responsibilities to the regulated entity or the Office of Finance, will
receive prompt notification of a record hold;
(2) Designate an individual to communicate specific requirements
and instructions, including, when necessary, the instruction to cease
immediately any otherwise permissible destruction of records; and
(3) Provide that any employee and, as appropriate, any agent or
independent contractor consistent with his or her respective role and
responsibility to the regulated entity, who has received notice of a
potential investigation, enforcement proceeding, or litigation by FHFA
involving the regulated entity or the Office of Finance or an employee,
or otherwise has actual knowledge that an issue is subject to such an
investigation, enforcement proceeding or litigation, shall notify
immediately the legal department of the regulated entity or the Office
of Finance and shall retain any records that may be relevant in any way
to such investigation, enforcement proceeding, or litigation.
(b) Method of record retention. The record retention program of
each regulated entity and the Office of Finance shall address the
method by which the regulated entity or the Office of Finance will
retain records during a record hold. Specifically, the program shall
describe the method for the continued preservation of electronic
records, including e-mails, and the conversion of records from paper to
electronic format as well as any alternative storage method.
[[Page 38564]]
(c) Access to and retrieval of records during a record hold. The
record retention program of each regulated entity or the Office of
Finance shall ensure access to and retrieval of records by the
regulated entity or the Office of Finance and access, upon request, by
FHFA, during a record hold. Such access shall be by reasonable means,
consistent with the nature and availability of the records and existing
information technology.
Sec. 1235.6 Access to records.
(a) Access to records. Each regulated entity or the Office of
Finance shall make its records readily available for inspection and
other supervisory purposes within a reasonable period upon request by
FHFA, at a location acceptable to FHFA and by reasonable means,
consistent with the nature and availability of the records and existing
information technology.
(b) Reasonable period. For requests for documents made during the
course of an on-site examination and pursuant to the examination's
scope, a reasonable period is presumed to be no longer than one
business day. For requests for documents made outside of an on-site
examination, a reasonable period is presumed to be three business days.
Sec. 1235.7 Supervisory action.
(a) Supervisory action. Failure by a regulated entity or the Office
of Finance to comply with this part may subject the regulated entity or
the Office of Finance or the board members, officers, or employees
thereof to supervisory action by FHFA under the Safety and Soundness
Act, including but not limited to cease-and-desist proceedings,
temporary cease-and-desist proceedings, and civil money penalties.
(b) No limitation of authority. This part does not limit or
restrict the authority of FHFA to act under its safety and soundness
mandate, in accordance with the Safety and Soundness Act. Such
authority includes, but is not limited to, conducting examinations,
requiring reports and disclosures, and enforcing compliance with
applicable laws, rules, and regulations.
CHAPTER XVII--OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
PART 1732--[REMOVED]
4. Remove part 1732.
Dated: July 28, 2009.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E9-18489 Filed 8-3-09; 8:45 am]
BILLING CODE P
