Federal Home Loan Bank Directors' Compensation and Expenses, 54758-54762 [E9-25577]
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54758
Proposed Rules
Federal Register
Vol. 74, No. 204
Friday, October 23, 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.
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection
Service
7 CFR Part 354
[Docket No. APHIS–2009–0048]
RIN 0579–AC99
User Fees for Agricultural Quarantine
and Inspection Services; Public
Meeting
AGENCY: Animal and Plant Health
Inspection Service, USDA.
ACTION: Notice of public meeting.
We are informing the public
of an upcoming meeting to address
affected stakeholders’ questions and
concerns regarding the agricultural
quarantine and inspection user fee
increases scheduled to go into effect on
November 1, 2009. The meeting is being
organized by the Animal and Plant
Health Inspection Service.
DATES: The meeting will be held on
October 27, 2009, from 9 a.m. to 1 p.m.
Registration will begin at 8:30 a.m.
ADDRESSES: The public meeting will be
held in the USDA Center at Riverside,
4700 River Road, Riverdale, MD.
FOR FURTHER INFORMATION CONTACT: Mr.
William E. Thomas, Director,
Quarantine Policy, Analysis, and
Support, PPQ, APHIS, 4700 River Road,
Unit 131, Riverdale, MD 20737; (301)
734–5214.
SUPPLEMENTARY INFORMATION: In an
interim rule 1 published in the Federal
Register on September 28, 2009 (74 FR
49311–49315, Docket No. APHIS–2009–
0048), we amended the user fee
regulations in 7 CFR part 354 by
adjusting the fees charged for certain
agricultural quarantine and inspection
(AQI) services that are provided in
connection with certain commercial
vessels, commercial trucks, commercial
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SUMMARY:
1 To view and comment upon the interim rule
and its supporting documents, go to https://
www.regulations.gov/fdmspublic/component/
main?main=DocketDetail&d=APHIS-2009-0048.
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railroad cars, commercial aircraft, and
international airline passengers arriving
at ports in the customs territory of the
United States. In the interim rule, we
explained that the recent downturn in
the U.S. economy has negatively
impacted travel volumes, and, as a
result, our user fee collections, which
fund these services, have diminished.
Although the volume of international
travel and trade has decreased,
inspection and related support services
continue to be provided at their existing
levels, so expenses have not decreased.
As a result, our user fee collections have
not been sufficient to enable us to
provide those services and maintain a
reasonable reserve balance. We therefore
found it necessary to increase our AQI
user fees in order to provide adequate
funds for these purposes.
The interim rule was scheduled to
become effective on October 1, 2009.
However, we subsequently published a
document in the Federal Register on
October 2, 2009 (74 FR 50915, Docket
No. APHIS–2009–0048), in which we
delayed the effective date of the user fee
increases until November 1, 2009. This
delay was intended to provide entities
affected by the changes in AQI user fees
additional time to make the necessary
preparations to comply with the new
fees. In conjunction with the delay, we
held a public meeting on October 15,
2009, in Riverdale, MD. Transcripts of
that meeting are available for viewing
on the Regulations.gov Web site.2
APHIS will continue to accept public
comments on the interim rule until
November 27, 2009. In order to gather
additional feedback and to address
questions and concerns that
stakeholders potentially affected by the
AQI user fee increases may have, we
plan to hold a second public meeting.
The public meeting will be held on
Tuesday, October 27, 2009, in the USDA
Center at Riverside, 4700 River Road,
Riverdale, MD. Registration will begin at
8:30 a.m. The public meeting will begin
at 9 a.m. and is scheduled to end at 1
p.m. Additional information regarding
the meeting may be obtained from the
person listed under FOR FURTHER
INFORMATION CONTACT.
Security Procedures
Upon entering the building, visitors
should inform security personnel that
they are attending the AQI user fee
2 See
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public meeting. State-issued photo
identification is required and all bags
will be screened. Security personnel
will direct visitors to the registration
tables located outside of the conference
center on the first floor. Registration
upon arrival is required for all
participants.
Done in Washington, DC, this 20th day of
October 2009.
Kevin Shea,
Acting Administrator, Animal and Plant
Health Inspection Service.
[FR Doc. E9–25548 Filed 10–22–09; 8:45 am]
BILLING CODE 3410–34–P
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 918
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1261
RIN 2590–AA31
Federal Home Loan Bank Directors’
Compensation and Expenses
AGENCY: Federal Housing Finance
Agency.
ACTION: Proposed rule.
SUMMARY: This proposed rule would
implement section 1202 of the Housing
and Economic Recovery Act of 2008
(HERA), which amended section 7(i) of
the Federal Home Loan Bank Act (Bank
Act) by repealing the statutory caps on
the annual compensation that can be
paid to Federal Home Loan Bank (Bank)
directors. The proposed rule would
allow each Bank to pay its directors
reasonable compensation and expenses,
subject to the authority of the Director
(Director) of the Federal Housing
Finance Agency (FHFA) to object to,
and to prohibit prospectively,
compensation and/or expenses that the
Director determines are not reasonable.
DATES: FHFA will accept written
comments on this proposed rule on or
before December 7, 2009.
ADDRESSES: You may submit your
comments on the proposed rule
identified by regulatory information
number (RIN) 2590–AA31 by any one of
the following methods:
• U.S. Mail, United Parcel Post,
Federal Express, or Other Mail Service:
The mailing address for comments is:
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Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Proposed Rules
Alfred M. Pollard, General Counsel,
Attention: Comments/RIN 2590–AA31,
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–AA31, 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 to Alfred M.
Pollard, General Counsel, may be sent
by e-mail to RegComments@fhfa.gov.
Please include ‘‘RIN 2590–AA31’’ in the
subject line of the message.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments. If
you submit your comment to the
Federal eRulemaking Portal, please also
send it by e-mail to FHFA at
RegComments@fhfa.gov to ensure
timely receipt by the agency. Include
the following information in the subject
line of your submission: Federal
Housing Finance Agency. Proposed
Rule: Federal Home Loan Bank
Directors’ Compensation and Expenses,
RIN 2590–AA31.
FOR FURTHER INFORMATION CONTACT:
Daniel E. Coates, Associate Director,
Risk Analysis and Research, (202) 408–
2959, Daniel.Coates@fhfa.gov; Neil R.
Crowley, Deputy General Counsel, (202)
343–1316, Neil.Crowley@fhfa.gov. The
telephone number for the
Telecommunications Device for the Deaf
is 800–877–8339.
SUPPLEMENTARY INFORMATION:
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I. Comments
FHFA invites comments on all aspects
of the proposed rule and will take all
comments into consideration before
issuing the final rule. Copies of all
comments will be posted without
change, including any personal
information you provide, such as your
name and address, on the FHFA 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) 414–3751.
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II. Background
A. Establishment of FHFA
Effective July 30, 2008, Division A of
HERA, Public Law 110–289, 122 Stat.
2654 (2008), titled the Federal Housing
Finance Regulatory Reform Act of 2008,
created FHFA as an independent agency
of the Federal Government.
HERA transferred to FHFA the
supervisory, mission, and oversight
responsibilities over the Federal
National Mortgage Association and the
Federal Home Loan Mortgage
Corporation (the Enterprises), and the
Banks (collectively, regulated entities)
from the U.S. Department of Housing
and Urban Development (HUD),
including the Office of Federal Housing
Enterprise Oversight (OFHEO), and from
the Federal Housing Finance Board
(FHFB). HERA abolished OFHEO and
the FHFB one year after the date of its
enactment.
FHFA is responsible for ensuring that
the Enterprises and the Banks operate in
a safe and sound manner, including
their maintenance of adequate capital,
internal controls, that their operations
and activities foster liquid, efficient,
competitive, and resilient national
housing finance markets, and that they
carry out their public policy missions
through authorized activities. See § 1102
of HERA, amending section 1313 of the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992
(Safety and Soundness Act) (12 U.S.C.
4513). The regulated entities continue to
operate under regulations promulgated
by OFHEO and FHFB until such
regulations are superseded by
regulations promulgated by FHFA. See
id. section 1302 and 1312 of HERA; 122
Stat. 2795, 2798.
B. Statutory and Regulatory Background
Until 1999, section 7(i) of the Bank
Act authorized the Banks to pay
reasonable compensation and expenses
to their directors, subject to the approval
of the FHFB. In 1999, Congress
amended section 7(i) to impose
statutory caps on the amount of annual
compensation that a Bank could pay to
its Chairperson, Vice Chairperson and
other directors. See Public Law 106–
102, 113 Stat. 1338, 1453 (November 12,
1999). As part of HERA, Congress
repealed the statutory caps on director
compensation, the effect of which was
to reinstate the prior statutory structure,
which authorized the Banks to pay
reasonable compensation and expenses
to their directors, subject to the approval
of FHFA. See § 1202 of HERA,
amending section 7(i) of the Bank Act at
12 U.S.C. 1427(i). HERA also enhanced
the authority of the Director to oversee
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the compensation practices of the
regulated entities more generally. See
id. § 1202 of HERA and §§ 1113 and
1114 of HERA (the latter sections amend
section 1318 of the Safety and
Soundness Act, 12 U.S.C. 4518). The
proposed rule would implement the
provisions of section 7(i) of the Bank
Act in a manner that is consistent with
the other authorities that the Director
has over the compensation practices of
the regulated entities.
C. HERA Section 1201
Section 1201 of HERA (section 1313(f)
of the Safety and Soundness Act)
requires the FHFA Director to consider
the differences between the Banks and
the Enterprises in rulemakings that
affect the Banks 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. 12 U.S.C. 4513(f). In preparing
this proposed rule, the Director
considered these factors and determined
that the rule is appropriate, particularly
because the proposed amendments
would implement statutory provisions
of the Bank Act that apply only to the
Banks. Nonetheless, FHFA requests
comments about whether these factors
should result in a revision of the
proposed amendment as it relates to the
Banks.
III. Analysis of Proposed Rule
A. Scope of the Proposed Rule
This proposed rule would relocate the
FHFB regulations relating to director
compensation in their entirety from part
918 of the FHFB regulations to part 1261
of the FHFA regulations. In addition,
the proposed rule would amend certain
provisions of those regulations to reflect
the changes made by HERA. Although
each of the individual amendments to
the FHFB regulations may not be
evident from the regulatory text of the
proposed rule because the provisions
are being relocated in their entirety, any
material substantive revisions are
discussed in this preamble.
B. Definitions—Section 1261.20
For the sake of consistency, the
proposed rule would replace the earlier
rule’s definition of ‘‘compensation’’
with a simplified version of the
definition currently proposed in FHFA’s
executive compensation rule, which is
based on the definition of
‘‘compensation’’ in the Safety and
Soundness Act. The new definition is in
substance the same as the old; it would
encompass any kind of payment or
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Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Proposed Rules
other provision of value for a director’s
services, and would include, but not be
limited to, such things as meeting fees,
incentive payments, and perquisites or
fringe benefits.
C. General—Section 1261.21
The proposed rule would add a new
§ 1261.21, which is intended to
articulate the general standard under
which the Banks may compensate their
directors and to establish reporting
requirements with respect to how Banks
compensate their directors. The general
standard is derived from section 7(i) of
the Bank Act and closely parallels the
statutory provisions, i.e., it authorizes
the Banks to pay reasonable
compensation and expenses to their
directors, but also makes clear that the
director compensation practices of the
Banks remain subject to FHFA oversight
and possible disapproval. The new
reporting requirements are intended to
provide FHFA with a basis to assess the
reasonableness of the compensation and
expenses paid to a Bank’s directors, as
well as to provide FHFA with the
information necessary to prepare its
annual report to Congress regarding the
compensation and expenses paid to
Bank directors, as required by section
1202 of HERA, which amended the
Bank Act at 12 U.S.C. 1427(i)(2). (See
also section 1319B of the Safety and
Soundness Act, 12 U.S.C. 4521, for the
content of the Director’s annual report.)
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D. Directors’ Compensation Policy—
Section 1261.22
Section 1261.22 of the proposed rule
addresses the requirement that each
Bank must adopt annually a written
policy relating to the compensation and
expenses to be paid to its directors. This
provision includes elements from
§ 918.2 and § 918.3 of the FHFB’s
regulations governing this topic, as well
as new provisions relating to the HERA
amendments. In addition, this section
would delete the Gramm-Leach-Bliley
(GLB) salary caps, as required by
HERA’s amendment of section 7(i) of
the Bank Act, and which currently are
codified at § 918.3(a).
Paragraph (a) of this section would
require each Bank’s board of directors
annually to adopt a written policy to
provide for the payment of reasonable
compensation and expenses to the
directors of the Bank. This provision
would also state that such payments
may be based on any factors that the
board of directors determines to be
appropriate, subject to the other
requirements of the regulation. Both of
those requirements exist under the
FHFB regulations and are carried
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forward into the FHFA regulations
without substantive change.
Paragraph (b) of this section would
specify the minimum contents of a
Bank’s director compensation policy,
much of which already is included in
§ 918.2 and § 918.3 of the FHFB
regulations. Specifically, the
compensation policy must: (a) Identify
the activities or functions for which
director attendance or participation is
necessary and which may be
compensated; (b) explain and justify the
methodology used to determine the
amount of compensation to be paid to
the Bank directors; (c) include
provisions requiring that compensation
paid must reflect the amount of time a
director has spent on official business,
and that compensation be reduced, as
necessary, to reflect lesser attendance at
board or committee meetings.
Paragraph (c) of this section prohibits
a Bank from paying compensation to a
director who regularly fails to attend
board or committee meetings, and
prohibits the payment of fees to a
director that do not reflect the director’s
performance of official Bank business
conducted prior to the payment of such
fees (e.g., retainer fees). This provision
largely reiterates similar prohibitions
contained in § 918.3(b) of the FHFB
regulations.
Paragraph (d) of this section is a new
provision that requires each Bank to
submit to the Director a copy of its
directors’ compensation policy, along
with all studies or other supporting
materials upon which the Bank relied in
determining the level of compensation
and expenses to pay its directors. The
Bank must submit the information no
later than 10 business days after
adopting the policy, and no fewer than
30 calendar days prior to the first
payment to directors being made under
the policy. The Director intends to use
this information in assessing the
reasonableness of the compensation and
expenses paid to directors each year, as
well as to develop the provisions for its
annual report to Congress that address
the amount of compensation and
expenses paid by each of the Banks to
its directors.
E. Director Disapproval—Section
1261.23
Section 918.5 of the FHFB regulations
deemed any payments made by the
Banks in accordance with the provisions
of part 918 to be approved by the FHFB
for purposes of section 7(i) of the Bank
Act. The proposed rule includes a new
provision, § 1261.23, which addresses
the Director’s authority to disapprove
compensation arrangements that do not
conform to the reasonableness standard
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imposed by section 7(i) of the Bank Act.
This section provides that the Director
may determine that a Bank’s
compensation arrangements are not
reasonable after reviewing the Bank’s
director compensation policy, the
methodology employed in establishing
the amount of compensation and/or
expenses to be paid, or any other
materials submitted by the Bank in
support of its policy. In such an event,
the Director may order a Bank to refrain
from making any further payments
based upon that compensation policy,
although the proposal also provides that
any such order will be applied
prospectively and will not affect
payments made prior to the Director’s
order.
F. Other Amendments—Sections
1261.24, 1261.25, 1261.26 and 1261.27
The proposed rule includes several
other provisions that are carried over
from the regulations of the FHFB
without material substantive changes.
Sections 1261.24 and 1261.27 of the
proposed rule, which relate to directors’
expenses and the location of board and
committee meetings, respectively, are
identical to the corresponding
provisions within the FHFB regulations.
Section 1261.25, which relates to items
that must be disclosed in a Bank’s
annual report to its members, adds four
elements to those that were required by
the FHFB regulations. The additional
items relate to the amount of
compensation and expenses paid to
each director during the year, the
number of board and committee
meetings held each year, and the
number of board and committee
meetings that each board member
attended during the year.
Section 1261.26 of the proposed rule,
relating to the number of in-person
board meetings each Bank must hold
annually, is much the same as § 918.7 of
the FHFB regulations, except that the
proposal does not include any
references to the statutory compensation
caps and introduces a new provision
requiring the board of directors of each
Bank to hold as many meetings as is
appropriate for the board to carry out its
fiduciary responsibilities to the Bank.
That provision is intended to recognize
that changing circumstances may
require the board of directors of a Bank
to meet more frequently than the
minimum of six in-person meetings
each year, if such additional meetings
are needed to address adverse financial
or supervisory issues, or for other
reasons.
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Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Proposed Rules
IV. Paperwork Reduction Act
The proposed rule does not contain
any information collection requirements
that require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
3501 et seq.).
V. Regulatory Flexibility Act
The proposed rule, if adopted as a
final rule, will apply 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). Therefore, in accordance
with section 605(b) of the RFA, 5 U.S.C.
605(b), the General Counsel of FHFA
hereby certifies that the proposed rule,
if promulgated as a final rule, will not
have a significant economic impact on
a substantial number of small entities.
List of Subjects in 12 CFR Parts 918 and
1261
Banks, Banking, Community
development, Conflicts of interest,
Credit, Elections, Ethical conduct,
Federal home loan banks, Financial
disclosure, Housing, Reporting and
recordkeeping requirements, Wages.
Authority and Issuance
For the reasons stated in the
preamble, under the authority of 12
U.S.C. 1427, 4511, 4526, FHFA proposes
to amend chapters IX and XII, of title 12
of the Code of Federal Regulations as
follows:
CHAPTER IX—FEDERAL HOUSING
FINANCE BOARD
PART 918—[REMOVED]
1. Remove part 918.
CHAPTER XII—FEDERAL HOUSING
FINANCE AGENCY
PART 1261—FEDERAL HOME LOAN
BANK DIRECTORS
2. The authority citation for part 1261
continues to read as follows:
Authority: 12 U.S.C. 1426, 1427, 1432,
4511 and 4526.
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3. Add Subpart B to read as follows:
Subpart B—Federal Home Loan Bank
Directors’ Compensation and Expenses
Sec.
1261.20 Definitions.
1261.21 General.
1261.22 Directors’ compensation policy.
1261.23 Director disapproval.
1261.24 Directors’ expenses.
1261.25 Disclosure.
1261.26 Board meetings.
1261.27 Site of board of directors and
committee meetings.
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Subpart B—Federal Home Loan Bank
Directors’ Compensation and
Expenses
§ 1261.20
Definitions.
As used in this subpart:
Compensation means any payment of
money or the provision of any other
thing of current or potential value in
connection with service as a director.
Compensation includes all direct and
indirect payments of benefits, both cash
and non-cash, granted to or for the
benefit of any director.
§ 1261.21
General.
(a) Standard. Each Bank may pay its
directors reasonable compensation for
the time required of them, and their
necessary expenses, in the performance
of their duties, as determined by a
resolution adopted by the board of
directors of the Bank and subject to the
provisions of this subpart.
(b) Reporting. No later than December
1 of each calendar year, each Bank shall
report to the Director the compensation
anticipated to be paid to its directors for
the following calendar year. By no later
than the tenth business day of each
calendar year, each Bank shall report to
the Director the amount of
compensation and expenses paid to
each director for the immediately
preceding calendar year.
§ 1261.22
Directors’ compensation policy.
(a) General. Each Bank’s board of
directors annually shall adopt a written
compensation policy to provide for the
payment of reasonable compensation
and expenses to the directors for the
time required of them in performing
their duties as directors. Payments
under the directors’ compensation
policy may be based on any factors that
the board of directors determines
reasonably to be appropriate, subject to
the requirements set forth in this
subpart.
(b) Minimum contents. The
compensation policy shall address the
activities or functions for which director
attendance or participation is necessary
and which may be compensated, and
shall explain and justify the
methodology used to determine the
amount of compensation to be paid to
the Bank directors. The compensation
policy shall require that any
compensation paid to a director reflect
the amount of time the director has
spent on official Bank business, and
shall require that compensation be
reduced, as necessary to reflect lesser
attendance or performance at board or
committee meetings during a given year.
(c) Prohibited payments. A Bank shall
not pay a director who regularly fails to
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54761
attend board or committee meetings,
and shall not pay fees to a director that
do not reflect the director’s performance
of official Bank business conducted
prior to the payment of such fees.
(d) Submission requirements. By no
later than the tenth business day after
adopting its annual policy for director
compensation and expenses, and at least
30 days prior to the first payment being
made to its directors, each Bank shall
submit to the Director a copy of the
policy, along with all studies or other
supporting materials upon which the
board relied in determining the level of
compensation and expenses to pay to its
directors.
§ 1261.23
Director disapproval.
The Director may determine, based
upon his or her review of a Bank’s
director compensation policy,
methodology and/or other related
materials, that the compensation and/or
expenses to be paid to the directors are
not reasonable. In such case, the
Director may order the Bank to refrain
from making any further payments
under that compensation policy. Any
such Director determination and order
shall be applied prospectively only and
shall not affect any compensation or
expense payments made prior to the
date of the Director’s determination and
order.
§ 1261.24
Directors’ expenses.
Each Bank may pay its directors for
such necessary and reasonable travel,
subsistence and other related expenses
incurred in connection with the
performance of their official duties as
are payable to senior officers of the Bank
under the Bank’s travel policy, except
that directors may not be paid for gift or
entertainment expenses.
§ 1261.25
Disclosure.
Each Bank shall, in its annual report:
(a) State the sum of the total
compensation paid to its directors in
that year;
(b) State the sum of the total expenses
paid to its directors in that year;
(c) State the total compensation paid
to each director in that year;
(d) State the total expenses paid to
each director in that year;
(e) State the total number of board
meetings and meetings of its designated
committees held in that year;
(f) State the number of board and
designated committee meetings that
each director attended; and
(g) Summarize its policy on director
compensation.
§ 1261.26
Board meetings.
The board of directors of each Bank
shall hold as many meetings as
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necessary and appropriate to carry out
its fiduciary responsibilities with
respect to the effective oversight of the
management of the Bank and such other
duties and obligations as may be
imposed by applicable laws, provided
the board of directors of a Bank shall
hold a minimum of six in-person
meetings in any year.
§ 1261.27 Site of board of directors and
committee meetings.
Meetings of a Bank’s board of
directors and committees thereof
usually should be held within the
district served by the Bank. No meetings
of a Bank’s board of directors and
committees thereof may be held in any
location that is not within the United
States, including its possessions and
territories.
Dated: October 18, 2009.
Edward J. DeMarco,
Acting Director, Federal Housing Finance
Agency.
[FR Doc. E9–25577 Filed 10–22–09; 8:45 am]
BILLING CODE 8070–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. NM417; Notice No. 25–09–12–
SC]
Special Conditions: Model C–27J
Airplane; Class E Cargo Compartment
Lavatory
CPrice-Sewell on DSKGBLS3C1PROD with PROPOSALS
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed special
conditions.
SUMMARY: This action proposes special
conditions for the Alenia Model C–27J
airplane. This airplane has novel or
unusual design features when compared
to the state of technology described in
the airworthiness standards for
transport-category airplanes. These
design features include a lavatory in the
Class E cargo compartment. The
applicable airworthiness regulations do
not contain adequate or appropriate
safety standards for these design
features. These proposed 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 airworthiness standards.
We have issued additional special
conditions for other novel or unusual
design features of the C–27J.
DATES: We must receive your comments
by November 23, 2009.
VerDate Nov<24>2008
13:36 Oct 22, 2009
Jkt 220001
You must mail two copies
of your comments to: Federal Aviation
Administration, Transport Airplane
Directorate, Attn: Rules Docket (ANM–
113), Docket No. NM417, 1601 Lind
Avenue, SW., Renton, Washington
98057–3356. You may deliver two
copies to the Transport Airplane
Directorate at the above address. You
must mark your comments: Docket No.
NM417. You can inspect comments in
the Rules Docket weekdays, except
Federal holidays, between 7:30 a.m. and
4 p.m.
FOR FURTHER INFORMATION CONTACT: Tom
Groves, FAA, International Branch,
ANM–116, Transport Airplane
Directorate, Aircraft Certification
Service, 1601 Lind Avenue, SW.,
Renton, Washington 98057–3356;
telephone (425) 227–1503, facsimile
(425) 227–1149.
SUPPLEMENTARY INFORMATION:
ADDRESSES:
Comments Invited
We invite interested people to take
part in this rulemaking by sending
written comments, data, or views. The
most helpful comments reference a
specific portion of the special
conditions, explain the reason for any
recommended change, and include
supporting data. We ask that you send
us two copies of written comments.
We will file in the docket all
comments we receive, as well as a
report summarizing each substantive
public contact with FAA personnel
concerning these special conditions.
You can inspect the docket before and
after the comment closing date. If you
wish to review the docket in person, go
to the address in the ADDRESSES section
of this preamble between 7:30 a.m. and
4 p.m., Monday through Friday, except
Federal holidays.
We will consider all comments we
receive on or before the closing date for
comments. We will consider comments
filed late if it is possible to do so
without incurring expense or delay. We
may change these special conditions
based on the comments we receive.
If you want the FAA to acknowledge
receipt of your comments on this
proposal, include with your comments
a self-addressed, stamped postcard on
which the docket number appears. We
will stamp the date on the postcard and
mail it back to you.
Background
On March 27, 2006, the European
Aviation Safety Agency (EASA)
forwarded to the FAA an application
from Alenia Aeronautica of Torino,
Italy, for U.S. type certification of a
twin-engine, commercial transport
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
designated as the Model C–27J. The
C–27J is a twin-turbopropeller, cargotransport aircraft with a maximum
takeoff weight of 30,500 kilograms.
Type Certification Basis
Under the provisions of Section 21.17
of Title 14 Code of Federal Regulation
(14 CFR) and the bilateral agreement
between the U.S. and Italy, Alenia
Aeronautica must show that the C–27J
meets the applicable provisions of 14
CFR part 25, as amended by
Amendments 25–1 through 25–87.
Alenia also elects to comply with
Amendment 25–122, effective
September 5, 2007, for 14 CFR 25.1317.
If the Administrator finds that
existing airworthiness regulations do
not adequately or appropriately address
safety standards for the C–27J due to a
novel or unusual design feature, we
prescribe special conditions under
provisions of 14 CFR 21.16.
In addition to the applicable
airworthiness regulations and special
conditions, the C–27J must comply with
the fuel-vent and exhaust-emission
requirements of 14 CFR part 34 and the
noise-certification requirements of 14
CFR part 36, and the FAA must issue a
finding of regulatory adequacy under
§ 611 of Public Law 92–574, the ‘‘Noise
Control Act of 1972.’’
The FAA issues special conditions, as
defined in 14 CFR 11.19, in accordance
with § 11.38, and they become part of
the type-certification basis under
§ 21.17(a)(2).
Special conditions are initially
applicable to the model for which they
are issued. Should the type certificate
for that model be amended later to
include any other model that
incorporates the same or similar novel
or unusual design feature, the special
conditions also apply to the other model
under § 21.101.
Novel or Unusual Design Features
The C–27J incorporates a lavatory into
the Class E cargo compartment, which is
considered a novel or unusual design
feature in a cargo compartment. In
developing the airworthiness
requirements for cargo compartments,
the FAA did not envision that a lavatory
would be installed inside a Class E
cargo compartment. Lavatories,
including the one proposed for the C–
27J, typically contain electrical systems,
which could serve as ignition sources
for a fire, and an oxygen supply system,
which could intensify the growth and
size of a fire. Therefore, consideration
must be given to a means to control the
possibility of the:
E:\FR\FM\23OCP1.SGM
23OCP1
Agencies
[Federal Register Volume 74, Number 204 (Friday, October 23, 2009)]
[Proposed Rules]
[Pages 54758-54762]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25577]
=======================================================================
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 918
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1261
RIN 2590-AA31
Federal Home Loan Bank Directors' Compensation and Expenses
AGENCY: Federal Housing Finance Agency.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would implement section 1202 of the Housing
and Economic Recovery Act of 2008 (HERA), which amended section 7(i) of
the Federal Home Loan Bank Act (Bank Act) by repealing the statutory
caps on the annual compensation that can be paid to Federal Home Loan
Bank (Bank) directors. The proposed rule would allow each Bank to pay
its directors reasonable compensation and expenses, subject to the
authority of the Director (Director) of the Federal Housing Finance
Agency (FHFA) to object to, and to prohibit prospectively, compensation
and/or expenses that the Director determines are not reasonable.
DATES: FHFA will accept written comments on this proposed rule on or
before December 7, 2009.
ADDRESSES: You may submit your comments on the proposed rule identified
by regulatory information number (RIN) 2590-AA31 by any one of the
following methods:
U.S. Mail, United Parcel Post, Federal Express, or Other
Mail Service: The mailing address for comments is:
[[Page 54759]]
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA31,
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-AA31,
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 to Alfred M. Pollard, General Counsel,
may be sent by e-mail to RegComments@fhfa.gov. Please include ``RIN
2590-AA31'' in the subject line of the message.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. If you submit your
comment to the Federal eRulemaking Portal, please also send it by e-
mail to FHFA at RegComments@fhfa.gov to ensure timely receipt by the
agency. Include the following information in the subject line of your
submission: Federal Housing Finance Agency. Proposed Rule: Federal Home
Loan Bank Directors' Compensation and Expenses, RIN 2590-AA31.
FOR FURTHER INFORMATION CONTACT: Daniel E. Coates, Associate Director,
Risk Analysis and Research, (202) 408-2959, Daniel.Coates@fhfa.gov;
Neil R. Crowley, Deputy General Counsel, (202) 343-1316,
Neil.Crowley@fhfa.gov. 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 rule and will
take all comments into consideration before issuing the final rule.
Copies of all comments will be posted without change, including any
personal information you provide, such as your name and address, on the
FHFA 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) 414-3751.
II. Background
A. Establishment of FHFA
Effective July 30, 2008, Division A of HERA, Public Law 110-289,
122 Stat. 2654 (2008), titled the Federal Housing Finance Regulatory
Reform Act of 2008, created FHFA as an independent agency of the
Federal Government.
HERA transferred to FHFA the supervisory, mission, and oversight
responsibilities over the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation (the Enterprises), and the Banks
(collectively, regulated entities) from the U.S. Department of Housing
and Urban Development (HUD), including the Office of Federal Housing
Enterprise Oversight (OFHEO), and from the Federal Housing Finance
Board (FHFB). HERA abolished OFHEO and the FHFB one year after the date
of its enactment.
FHFA is responsible for ensuring that the Enterprises and the Banks
operate in a safe and sound manner, including their maintenance of
adequate capital, internal controls, that their operations and
activities foster liquid, efficient, competitive, and resilient
national housing finance markets, and that they carry out their public
policy missions through authorized activities. See Sec. 1102 of HERA,
amending section 1313 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (Safety and Soundness Act) (12 U.S.C.
4513). The regulated entities continue to operate under regulations
promulgated by OFHEO and FHFB until such regulations are superseded by
regulations promulgated by FHFA. See id. section 1302 and 1312 of HERA;
122 Stat. 2795, 2798.
B. Statutory and Regulatory Background
Until 1999, section 7(i) of the Bank Act authorized the Banks to
pay reasonable compensation and expenses to their directors, subject to
the approval of the FHFB. In 1999, Congress amended section 7(i) to
impose statutory caps on the amount of annual compensation that a Bank
could pay to its Chairperson, Vice Chairperson and other directors. See
Public Law 106-102, 113 Stat. 1338, 1453 (November 12, 1999). As part
of HERA, Congress repealed the statutory caps on director compensation,
the effect of which was to reinstate the prior statutory structure,
which authorized the Banks to pay reasonable compensation and expenses
to their directors, subject to the approval of FHFA. See Sec. 1202 of
HERA, amending section 7(i) of the Bank Act at 12 U.S.C. 1427(i). HERA
also enhanced the authority of the Director to oversee the compensation
practices of the regulated entities more generally. See id. Sec. 1202
of HERA and Sec. Sec. 1113 and 1114 of HERA (the latter sections amend
section 1318 of the Safety and Soundness Act, 12 U.S.C. 4518). The
proposed rule would implement the provisions of section 7(i) of the
Bank Act in a manner that is consistent with the other authorities that
the Director has over the compensation practices of the regulated
entities.
C. HERA Section 1201
Section 1201 of HERA (section 1313(f) of the Safety and Soundness
Act) requires the FHFA Director to consider the differences between the
Banks and the Enterprises in rulemakings that affect the Banks 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.
12 U.S.C. 4513(f). In preparing this proposed rule, the Director
considered these factors and determined that the rule is appropriate,
particularly because the proposed amendments would implement statutory
provisions of the Bank Act that apply only to the Banks. Nonetheless,
FHFA requests comments about whether these factors should result in a
revision of the proposed amendment as it relates to the Banks.
III. Analysis of Proposed Rule
A. Scope of the Proposed Rule
This proposed rule would relocate the FHFB regulations relating to
director compensation in their entirety from part 918 of the FHFB
regulations to part 1261 of the FHFA regulations. In addition, the
proposed rule would amend certain provisions of those regulations to
reflect the changes made by HERA. Although each of the individual
amendments to the FHFB regulations may not be evident from the
regulatory text of the proposed rule because the provisions are being
relocated in their entirety, any material substantive revisions are
discussed in this preamble.
B. Definitions--Section 1261.20
For the sake of consistency, the proposed rule would replace the
earlier rule's definition of ``compensation'' with a simplified version
of the definition currently proposed in FHFA's executive compensation
rule, which is based on the definition of ``compensation'' in the
Safety and Soundness Act. The new definition is in substance the same
as the old; it would encompass any kind of payment or
[[Page 54760]]
other provision of value for a director's services, and would include,
but not be limited to, such things as meeting fees, incentive payments,
and perquisites or fringe benefits.
C. General--Section 1261.21
The proposed rule would add a new Sec. 1261.21, which is intended
to articulate the general standard under which the Banks may compensate
their directors and to establish reporting requirements with respect to
how Banks compensate their directors. The general standard is derived
from section 7(i) of the Bank Act and closely parallels the statutory
provisions, i.e., it authorizes the Banks to pay reasonable
compensation and expenses to their directors, but also makes clear that
the director compensation practices of the Banks remain subject to FHFA
oversight and possible disapproval. The new reporting requirements are
intended to provide FHFA with a basis to assess the reasonableness of
the compensation and expenses paid to a Bank's directors, as well as to
provide FHFA with the information necessary to prepare its annual
report to Congress regarding the compensation and expenses paid to Bank
directors, as required by section 1202 of HERA, which amended the Bank
Act at 12 U.S.C. 1427(i)(2). (See also section 1319B of the Safety and
Soundness Act, 12 U.S.C. 4521, for the content of the Director's annual
report.)
D. Directors' Compensation Policy--Section 1261.22
Section 1261.22 of the proposed rule addresses the requirement that
each Bank must adopt annually a written policy relating to the
compensation and expenses to be paid to its directors. This provision
includes elements from Sec. 918.2 and Sec. 918.3 of the FHFB's
regulations governing this topic, as well as new provisions relating to
the HERA amendments. In addition, this section would delete the Gramm-
Leach-Bliley (GLB) salary caps, as required by HERA's amendment of
section 7(i) of the Bank Act, and which currently are codified at Sec.
918.3(a).
Paragraph (a) of this section would require each Bank's board of
directors annually to adopt a written policy to provide for the payment
of reasonable compensation and expenses to the directors of the Bank.
This provision would also state that such payments may be based on any
factors that the board of directors determines to be appropriate,
subject to the other requirements of the regulation. Both of those
requirements exist under the FHFB regulations and are carried forward
into the FHFA regulations without substantive change.
Paragraph (b) of this section would specify the minimum contents of
a Bank's director compensation policy, much of which already is
included in Sec. 918.2 and Sec. 918.3 of the FHFB regulations.
Specifically, the compensation policy must: (a) Identify the activities
or functions for which director attendance or participation is
necessary and which may be compensated; (b) explain and justify the
methodology used to determine the amount of compensation to be paid to
the Bank directors; (c) include provisions requiring that compensation
paid must reflect the amount of time a director has spent on official
business, and that compensation be reduced, as necessary, to reflect
lesser attendance at board or committee meetings.
Paragraph (c) of this section prohibits a Bank from paying
compensation to a director who regularly fails to attend board or
committee meetings, and prohibits the payment of fees to a director
that do not reflect the director's performance of official Bank
business conducted prior to the payment of such fees (e.g., retainer
fees). This provision largely reiterates similar prohibitions contained
in Sec. 918.3(b) of the FHFB regulations.
Paragraph (d) of this section is a new provision that requires each
Bank to submit to the Director a copy of its directors' compensation
policy, along with all studies or other supporting materials upon which
the Bank relied in determining the level of compensation and expenses
to pay its directors. The Bank must submit the information no later
than 10 business days after adopting the policy, and no fewer than 30
calendar days prior to the first payment to directors being made under
the policy. The Director intends to use this information in assessing
the reasonableness of the compensation and expenses paid to directors
each year, as well as to develop the provisions for its annual report
to Congress that address the amount of compensation and expenses paid
by each of the Banks to its directors.
E. Director Disapproval--Section 1261.23
Section 918.5 of the FHFB regulations deemed any payments made by
the Banks in accordance with the provisions of part 918 to be approved
by the FHFB for purposes of section 7(i) of the Bank Act. The proposed
rule includes a new provision, Sec. 1261.23, which addresses the
Director's authority to disapprove compensation arrangements that do
not conform to the reasonableness standard imposed by section 7(i) of
the Bank Act. This section provides that the Director may determine
that a Bank's compensation arrangements are not reasonable after
reviewing the Bank's director compensation policy, the methodology
employed in establishing the amount of compensation and/or expenses to
be paid, or any other materials submitted by the Bank in support of its
policy. In such an event, the Director may order a Bank to refrain from
making any further payments based upon that compensation policy,
although the proposal also provides that any such order will be applied
prospectively and will not affect payments made prior to the Director's
order.
F. Other Amendments--Sections 1261.24, 1261.25, 1261.26 and 1261.27
The proposed rule includes several other provisions that are
carried over from the regulations of the FHFB without material
substantive changes. Sections 1261.24 and 1261.27 of the proposed rule,
which relate to directors' expenses and the location of board and
committee meetings, respectively, are identical to the corresponding
provisions within the FHFB regulations. Section 1261.25, which relates
to items that must be disclosed in a Bank's annual report to its
members, adds four elements to those that were required by the FHFB
regulations. The additional items relate to the amount of compensation
and expenses paid to each director during the year, the number of board
and committee meetings held each year, and the number of board and
committee meetings that each board member attended during the year.
Section 1261.26 of the proposed rule, relating to the number of in-
person board meetings each Bank must hold annually, is much the same as
Sec. 918.7 of the FHFB regulations, except that the proposal does not
include any references to the statutory compensation caps and
introduces a new provision requiring the board of directors of each
Bank to hold as many meetings as is appropriate for the board to carry
out its fiduciary responsibilities to the Bank. That provision is
intended to recognize that changing circumstances may require the board
of directors of a Bank to meet more frequently than the minimum of six
in-person meetings each year, if such additional meetings are needed to
address adverse financial or supervisory issues, or for other reasons.
[[Page 54761]]
IV. Paperwork Reduction Act
The proposed rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
V. Regulatory Flexibility Act
The proposed rule, if adopted as a final rule, will apply 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). Therefore, in accordance with section 605(b) of the RFA, 5
U.S.C. 605(b), the General Counsel of FHFA hereby certifies that the
proposed rule, if promulgated as a final rule, will not have a
significant economic impact on a substantial number of small entities.
List of Subjects in 12 CFR Parts 918 and 1261
Banks, Banking, Community development, Conflicts of interest,
Credit, Elections, Ethical conduct, Federal home loan banks, Financial
disclosure, Housing, Reporting and recordkeeping requirements, Wages.
Authority and Issuance
For the reasons stated in the preamble, under the authority of 12
U.S.C. 1427, 4511, 4526, FHFA proposes to amend chapters IX and XII, of
title 12 of the Code of Federal Regulations as follows:
CHAPTER IX--FEDERAL HOUSING FINANCE BOARD
PART 918--[REMOVED]
1. Remove part 918.
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
PART 1261--FEDERAL HOME LOAN BANK DIRECTORS
2. The authority citation for part 1261 continues to read as
follows:
Authority: 12 U.S.C. 1426, 1427, 1432, 4511 and 4526.
3. Add Subpart B to read as follows:
Subpart B--Federal Home Loan Bank Directors' Compensation and Expenses
Sec.
1261.20 Definitions.
1261.21 General.
1261.22 Directors' compensation policy.
1261.23 Director disapproval.
1261.24 Directors' expenses.
1261.25 Disclosure.
1261.26 Board meetings.
1261.27 Site of board of directors and committee meetings.
Subpart B--Federal Home Loan Bank Directors' Compensation and
Expenses
Sec. 1261.20 Definitions.
As used in this subpart:
Compensation means any payment of money or the provision of any
other thing of current or potential value in connection with service as
a director. Compensation includes all direct and indirect payments of
benefits, both cash and non-cash, granted to or for the benefit of any
director.
Sec. 1261.21 General.
(a) Standard. Each Bank may pay its directors reasonable
compensation for the time required of them, and their necessary
expenses, in the performance of their duties, as determined by a
resolution adopted by the board of directors of the Bank and subject to
the provisions of this subpart.
(b) Reporting. No later than December 1 of each calendar year, each
Bank shall report to the Director the compensation anticipated to be
paid to its directors for the following calendar year. By no later than
the tenth business day of each calendar year, each Bank shall report to
the Director the amount of compensation and expenses paid to each
director for the immediately preceding calendar year.
Sec. 1261.22 Directors' compensation policy.
(a) General. Each Bank's board of directors annually shall adopt a
written compensation policy to provide for the payment of reasonable
compensation and expenses to the directors for the time required of
them in performing their duties as directors. Payments under the
directors' compensation policy may be based on any factors that the
board of directors determines reasonably to be appropriate, subject to
the requirements set forth in this subpart.
(b) Minimum contents. The compensation policy shall address the
activities or functions for which director attendance or participation
is necessary and which may be compensated, and shall explain and
justify the methodology used to determine the amount of compensation to
be paid to the Bank directors. The compensation policy shall require
that any compensation paid to a director reflect the amount of time the
director has spent on official Bank business, and shall require that
compensation be reduced, as necessary to reflect lesser attendance or
performance at board or committee meetings during a given year.
(c) Prohibited payments. A Bank shall not pay a director who
regularly fails to attend board or committee meetings, and shall not
pay fees to a director that do not reflect the director's performance
of official Bank business conducted prior to the payment of such fees.
(d) Submission requirements. By no later than the tenth business
day after adopting its annual policy for director compensation and
expenses, and at least 30 days prior to the first payment being made to
its directors, each Bank shall submit to the Director a copy of the
policy, along with all studies or other supporting materials upon which
the board relied in determining the level of compensation and expenses
to pay to its directors.
Sec. 1261.23 Director disapproval.
The Director may determine, based upon his or her review of a
Bank's director compensation policy, methodology and/or other related
materials, that the compensation and/or expenses to be paid to the
directors are not reasonable. In such case, the Director may order the
Bank to refrain from making any further payments under that
compensation policy. Any such Director determination and order shall be
applied prospectively only and shall not affect any compensation or
expense payments made prior to the date of the Director's determination
and order.
Sec. 1261.24 Directors' expenses.
Each Bank may pay its directors for such necessary and reasonable
travel, subsistence and other related expenses incurred in connection
with the performance of their official duties as are payable to senior
officers of the Bank under the Bank's travel policy, except that
directors may not be paid for gift or entertainment expenses.
Sec. 1261.25 Disclosure.
Each Bank shall, in its annual report:
(a) State the sum of the total compensation paid to its directors
in that year;
(b) State the sum of the total expenses paid to its directors in
that year;
(c) State the total compensation paid to each director in that
year;
(d) State the total expenses paid to each director in that year;
(e) State the total number of board meetings and meetings of its
designated committees held in that year;
(f) State the number of board and designated committee meetings
that each director attended; and
(g) Summarize its policy on director compensation.
Sec. 1261.26 Board meetings.
The board of directors of each Bank shall hold as many meetings as
[[Page 54762]]
necessary and appropriate to carry out its fiduciary responsibilities
with respect to the effective oversight of the management of the Bank
and such other duties and obligations as may be imposed by applicable
laws, provided the board of directors of a Bank shall hold a minimum of
six in-person meetings in any year.
Sec. 1261.27 Site of board of directors and committee meetings.
Meetings of a Bank's board of directors and committees thereof
usually should be held within the district served by the Bank. No
meetings of a Bank's board of directors and committees thereof may be
held in any location that is not within the United States, including
its possessions and territories.
Dated: October 18, 2009.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. E9-25577 Filed 10-22-09; 8:45 am]
BILLING CODE 8070-01-P