Responsibilities of Boards of Directors, Corporate Practices, and Corporate Governance, 14781-14785 [2018-07044]
Download as PDF
<![CDATA[
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed Rules
from the assessments required under
§ 1206.42.
(b) A first handler or importer
desiring an exemption shall apply to the
Board, on a form provided by the Board,
for a certificate of exemption. A first
handler must certify that it will receive
less than 500,000 pounds of domestic
fresh mangos during the fiscal period for
which the exemption is claimed. An
importer must certify that it will import
less than 500,000 pounds of fresh
mangos or less than 200,000 pounds of
frozen mangos for the fiscal period for
which the exemption is claimed.
*
*
*
*
*
■ 14. Revise § 1206.78 to read as
follows:
§ 1206.78
OMB control number.
The control numbers assigned to the
information collection requirements of
this part by the Office of Management
and Budget pursuant to the Paperwork
Reduction Act of 1995, 44 U.S.C.
Chapter 35, are OMB control number
0505–0001 and OMB control number
0581–0093.
■ 15. In § 1206.101, revise paragraphs
(c), (d) and (e) to read as follows:
§ 1206.101
Definitions.
daltland on DSKBBV9HB2PROD with PROPOSALS
*
*
*
*
*
(c) Eligible first handler means any
person, (excluding a common or
contract carrier), receiving 500,000 or
more pounds of fresh mangos from
producers in a calendar year and who as
owner, agent, or otherwise ships or
causes mangos to be shipped as
specified in this Order. This definition
includes those engaged in the business
of buying, selling and/or offering for
sale; receiving; packing; grading;
marketing; or distributing mangos in
commercial quantities. The term first
handler includes a producer who
handles or markets mangos of the
producer’s own production.
(d) Eligible importer means any
person importing 500,000 or more
pounds of fresh mangos or 200,000 or
more pounds of frozen mango into the
United States in a calendar year as a
principal or as an agent, broker, or
consignee of any person who produces
or handles mangos outside of the United
States for sale in the United States, and
who is listed as the importer of record
for such mangos that are identified in
the Harmonized Tariff Schedule of the
United States by the numbers
0804.50.4045, 0804.50.4055,
0804.50.6045, 0804.50.6055, and
0811.90.5200, during the representative
period. Importation occurs when
mangos originating outside of the
United States are released from custody
by Customs and introduced into the
VerDate Sep<11>2014
20:58 Apr 05, 2018
Jkt 244001
stream of commerce in the United
States. Included are persons who hold
title to foreign-produced mangos
immediately upon release by Customs,
as well as any persons who act on behalf
of others, as agents or brokers, to secure
the release of mangos from Customs
when such mangos are entered or
withdrawn for consumption in the
United States.
(e) Mangos means the fruit of
Mangifera indica L. of the family
Anacardiaceae. The term mangos
includes:
(1) Fresh mangos, which means in
their fresh form; and
(2) Frozen mangos, which means
mangos that are uncooked or cooked by
steaming or boiling in water, and then
frozen, whether or not containing added
sugar or other sweetening agent.
*
*
*
*
*
Dated: April 2, 2018.
Bruce Summers,
Acting Administrator.
[FR Doc. 2018–06968 Filed 4–5–18; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Parts 1239 and 1273
RIN 2590–AA90
Responsibilities of Boards of
Directors, Corporate Practices, and
Corporate Governance
Federal Housing Finance
Agency.
ACTION: Proposed rule.
AGENCY:
The Federal Housing Finance
Agency (FHFA) is proposing to amend
its regulation on the Responsibilities of
Boards of Directors, Corporate Practices,
and Corporate Governance for its
regulated entities. The proposed rule
would amend the existing regulation
pertaining to Federal Home Loan Bank
strategic business plans so that it would
apply as well to the Enterprises, and
would make a number of adjustments
and conforming changes to the existing
regulation. As amended, the regulation
would require that the board of directors
of each regulated entity have in effect at
all times a strategic business plan that
describes how the regulated entity’s
business activities will achieve its
statutory purposes. The proposed rule
would retain the provision that requires
each regulated entity’s board of
directors to review the strategic business
plan at least annually, re-adopt it at
least once every three years, and
establish reporting requirements for and
SUMMARY:
PO 00000
Frm 00016
Fmt 4702
Sfmt 4702
14781
monitor implementation of the strategic
business plan. The proposed rule would
add a new provision regarding current
and emerging business risks, repeal two
outdated provisions of the existing
regulation, and make a conforming
change to the Office of Finance Board of
Directors regulation.
DATES: Written comments on the
proposed rule must be received on or
before June 5, 2018.
ADDRESSES: You may submit your
comments on the proposed rule,
identified by regulatory information
number (RIN) 2590–AA90, by any of the
following methods:
• Agency Website: www.fhfa.gov/
open-for-comment-or-input.
• 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 email to FHFA at
RegComments@fhfa.gov to ensure
timely receipt by the FHFA. Please
include ‘‘Comments/RIN 2590–AA90’’
in the subject line of the submission.
• Courier/Hand Delivery: The hand
delivery address is: Alfred M. Pollard,
General Counsel, Attention: Comments/
RIN 2590–AA90, Federal Housing
Finance Agency, 400 Seventh Street
SW, Eighth Floor, Washington, DC
20219. Deliver the package to the
Seventh Street entrance Guard Desk,
First Floor, on business days between 9
a.m. and 5 p.m.
• 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–AA90,
Federal Housing Finance Agency, 400
Seventh Street SW, Eighth Floor,
Washington, DC 20219.
FOR FURTHER INFORMATION CONTACT:
Daniel Callis, Principal Risk Analyst,
Office of the Chief Accountant, at
Daniel.Callis@fhfa.gov or (202) 649–
3448, or Ming-Yuen Meyer-Fong, Office
of General Counsel, at MingYuen.Meyer-Fong@fhfa.gov or (202)
649–3078 (these are not toll-free
numbers), Federal Housing Finance
Agency, Constitution Center, 400
Seventh Street SW, Washington, DC
20219. The telephone number for the
Telecommunications Device for the
Hearing Impaired is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. Request for Comments
FHFA invites comments on all aspects
of this proposed rule. After considering
all comments, FHFA intends to issue a
final rule. FHFA will post on the FHFA
website at https://www.fhfa.gov all
E:\FR\FM\06APP1.SGM
06APP1
14782
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed Rules
daltland on DSKBBV9HB2PROD with PROPOSALS
public comments it receives without
change, including any personal
information you provide, such as your
name, address, email address, and
telephone number. In addition, copies
of all comments received will be
available for examination by the public
through the electronic rulemaking
docket for this proposed rule also
located on the FHFA website.
II. Background and Summary
FHFA previously consolidated and
relocated the regulations of its
predecessor agencies, the Federal
Housing Finance Board (Finance Board)
and the Office of Federal Housing
Enterprise Oversight, that pertained to
the responsibilities of boards of
directors, corporate practices, and
corporate governance matters into a new
regulation at 12 CFR part 1239. 80 FR
72327 (November 19, 2015). The FHFA
regulation is organized such that some
parts apply to all of FHFA’s regulated
entities and other parts, because of
differences in their corporate structure
or business models, apply only to the
Federal Home Loan Banks (Banks), or
only to Fannie Mae and Freddie Mac
(Enterprises).
The current regulation requires each
Bank’s board of directors to have in
effect at all times a strategic business
plan that describes how the business
activities of the Bank will achieve the
mission of the Bank, consistent with the
Federal Home Loan Bank Act (Bank
Act), 12 U.S.C. 1421 et seq. The current
regulation also requires a Bank’s board
of directors periodically to review and
re-adopt the Bank’s strategic business
plan, establish management reporting
requirements, and monitor
implementation of the strategic business
plan. 12 CFR 1239.31.
FHFA proposes to adopt a similar
requirement for the Enterprises.
Strategic planning is an organization’s
process of defining its direction and
making decisions on allocating its
resources to pursue this direction. The
result of this process is the
organization’s strategy—a guiding vision
of what the organization intends to
accomplish and key initiatives or action
plans for achieving the vision. It is
necessarily forward-looking, actionable,
and measurable, and it should be
updated periodically to reflect, among
other things, changing risks, business
environments, and corporate direction.
A strategic plan is adopted by an
organization’s board of directors and
executed by its senior management on
behalf of its stakeholders.
The proposed rule would replace the
existing Bank-only strategic business
plan provision currently at 12 CFR
VerDate Sep<11>2014
20:58 Apr 05, 2018
Jkt 244001
1239.31 with a new provision, to be
located at 12 CFR 1239.14. The new
provision would adapt the current
Bank-only strategic business plan
requirements to cover the Enterprises,
and make adjustments and conforming
changes as needed to reflect the
requirements of the Banks and the
Enterprises. The most significant change
would be to bring the Enterprises within
the scope of the strategic business plan
requirement currently required only of
the board of directors at each Bank. The
proposed rule would also include a new
requirement for each regulated entity to
identify current and emerging risks in
its strategic business plan. Apart from
that provision, the proposed rule would
not impose any new requirements on
the Banks’ strategic business plans. The
proposed rule would also repeal an
existing provision relating to
quantitative performance goals for Bank
products related to multifamily housing
and to community financial institution
collateral, and a related existing
reporting provision.
III. The Proposed Rule
A. Analysis of the Proposed Rule
The proposed rule would require the
board of directors at each regulated
entity to adopt and have in effect at all
times a strategic business plan for the
regulated entity. The regulated entity’s
strategic business plan adopted by the
board of directors must meet certain
minimum requirements pertaining to
operating goals, credit needs and market
opportunities, new activities,
supporting analyses, and current and
emerging risks. As noted above, all of
these requirements, except for the
current and emerging risks, already
apply to the Banks. The proposed rule
would also require the board of
directors at each regulated entity to
review the regulated entity’s strategic
business plan at least annually, to readopt the strategic business plan for the
regulated entity at least every three
years, to establish management
reporting requirements, and to monitor
implementation of the strategic business
plan, as set forth in proposed
§ 1239.14(b).
The Enterprises are congressionally
chartered entities established to advance
certain statutory purposes. These
statutory purposes include providing
stability in the secondary market for
residential mortgages, responding
appropriately to the private capital
market, providing ongoing assistance
(by facilitating liquidity and distribution
of investment capital) to the secondary
market for residential mortgages
(including activities relating to
PO 00000
Frm 00017
Fmt 4702
Sfmt 4702
mortgages on housing for low- and
moderate-income families), and
promoting access to mortgage credit
throughout the nation. 12 U.S.C. 1716 et
seq. (Fannie Mae); 12 U.S.C. 1451 note
(Freddie Mac). Their public purposes
also include other, more-specific
statutory or regulatory obligations
including, for example, an Enterprise’s
obligations to meet its affordable
housing goals, and its duty to serve
specified underserved markets. See
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992
(Safety and Soundness Act), 12 U.S.C.
4501 et seq.
Similarly, the Banks are entities
established under federal law to serve a
housing finance and community lending
mission. 12 U.S.C. 1430 and 1430b. For
example, in addition to advances, Bank
core mission activities include debt or
equity investments that primarily
benefit households having a targeted
income level or living in areas targeted
for redevelopment, by supporting
housing, economic development,
community services, permanent jobs, or
area revitalization or stabilization. 12
CFR 1265.3(e). Like the Enterprises, the
Banks have affordable housing goals,
but only to the extent that they purchase
mortgages from their members. 12
U.S.C. 1430c.
Paragraph 1239.14(a)(1)(i) of the
proposed rule would replace the
requirement to enumerate operating
goals and objectives with a requirement
to articulate measurable operating goals
and objectives. The change is intended
to clarify that goals and objectives are to
be described, rather than simply listed,
in a manner to allow the board of
directors to monitor and hold
management accountable for successful
execution of the strategic business plan.
A regulated entity’s board could
articulate measurable goals and
objectives by specifying quantitative
requirements or qualitative
requirements. The proposed rule does
not prescribe the specific ways in which
operating goals and objectives must be
articulated, so long as such operating
goals and objectives are articulated in a
measurable manner necessary to
support a regulated entity’s board of
director’s review and monitoring
responsibilities under proposed
§ 1239.14(b), and to allow the board of
directors to evaluate and hold
management accountable for successful
implementation of the strategic business
plan.
Proposed § 1239.14(a)(1)(i) would
require each Bank’s strategic business
plan to articulate measurable operating
goals and objectives for each significant
business activity and all authorized new
E:\FR\FM\06APP1.SGM
06APP1
daltland on DSKBBV9HB2PROD with PROPOSALS
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed Rules
business activities, which must include
plans for maximizing activities that
further the Bank’s housing finance and
community lending mission. This
provision is much the same as the
existing regulation, but includes several
proposed changes to coordinate with the
Enterprise requirement, including the
reference to ‘‘significant business
activity,’’ a proposed change from the
existing reference to ‘‘major business
activity.’’
The proposed rule would also require
a Bank’s strategic business plan to
articulate measurable operating goals
and objectives for all ‘‘authorized new
business activities.’’ FHFA regulations
currently provide for agency review and
action on a Bank’s ‘‘new business
activity’’ before a Bank may commence
with the new business activity. 12 CFR
part 1272. That regulation authorizes a
Bank to commence a new business
activity absent affirmative approval if
FHFA does not take action within the
timeframes established under 12 CFR
part 1272. The proposed requirement to
articulate operating goals and objectives
would not apply to new business
activities that are denied, are pending
FHFA action, or are not yet submitted
to FHFA, but only to those new business
activities that have been authorized
under the new business activities
regulation.
The proposed rule would retain the
existing requirement that a Bank’s
strategic plan ‘‘include plans for
maximizing activities that further the
Bank’s housing finance and community
lending mission, consistent with part
1265 of this chapter.’’ Retaining this
clause would reiterate the priority the
Banks should continue to place on their
core mission activities to further their
housing finance and community lending
mission, consistent with 12 CFR part
1265.
For the Enterprises, proposed
§ 1239.14(a)(1)(ii) would similarly
require each Enterprise’s strategic
business plan to ‘‘articulate measurable
operating goals and objectives for each
significant existing activity and all
authorized new activities.’’ The
Enterprises do not have a core mission
activity regulation comparable to that of
the Banks, so, a requirement analogous
to that for the Banks described above is
not included in the Enterprise
provisions. However, proposed
§ 1239.14(a)(1)(ii) would achieve an
outcome for the Enterprises similar to
that for the Banks under
§ 1239.14(a)(1)(i). It does so by generally
requiring the strategic business plan to
describe ‘‘how the [Enterprise’s]
business activities . . . will achieve [its]
mission and public purposes,’’
VerDate Sep<11>2014
20:58 Apr 05, 2018
Jkt 244001
consistent with its charter act and the
Safety and Soundness Act. It also does
so by requiring the Enterprise’s strategic
business plan to articulate ‘‘measurable
operating goals and objectives’’ in
achieving the Enterprise’s statutory
purposes. Describing how the
Enterprise’s business activities will
achieve its mission and public
purposes, and articulating measurable
goals and objectives for significant
existing activities, would help to enable
an Enterprise’s board of directors to
monitor, review, and hold management
accountable for successful execution of
the strategic business plan.
Proposed § 1239.14(a)(1)(ii) would
reference ‘‘authorized new activities’’ in
its ‘‘measurable operating goals and
objectives’’ requirement. FHFA
regulations currently provide for agency
review and action on an Enterprise’s
‘‘new activity’’ before the Enterprise
may commence with the new activity.
12 CFR part 1253. The term ‘‘authorized
new activities’’ is used because the
current regulation for considering new
activities authorizes an Enterprise to
engage in a new activity absent
affirmative approval. This could occur
where FHFA does not take action within
15 days from receipt of a complete new
activity notice. 12 CFR 1253.3(d). As a
result, § 1239.14(a)(1)(ii) requires
articulation of measurable operating
goals and objectives for all ‘‘authorized
new activities,’’ which could include
both new activities that were
affirmatively approved by FHFA and
those authorized by passage of time.
Proposed § 1239.14(a)(1)(ii) would not
require a strategic business plan to
articulate measurable goals and
objectives for new activities that are
denied, pending FHFA action, or not yet
submitted to FHFA.
Proposed § 1239.14(a)(2) would
require each regulated entity’s strategic
business plan to discuss how the
regulated entity will address credit
needs and market opportunities
identified through ongoing market
research and stakeholder consultations.
In the case of the Banks, stakeholders
would include members, housing
associates, and public and private
organizations. In the case of the
Enterprises, stakeholders would include
mortgage market participants and public
and private organizations, including
those that advocate for access to credit.
The purpose of § 1239.14(a)(2) is similar
to that currently in effect for the Banks,
that is, to require regulated entity board
engagement with market research and
stakeholder consultations to identify
areas of credit needs and market
opportunities to further the regulated
entity’s public purposes.
PO 00000
Frm 00018
Fmt 4702
Sfmt 4702
14783
Proposed § 1239.14(a)(3) would
require a regulated entity’s strategic
business plan to describe ‘‘significant
activities in which the regulated entity
is planning to be engaged,’’ including
any changes to business strategy or
approach that the regulated entity is
planning to undertake, and discuss how
such activities further the regulated
entity’s public purposes. FHFA
considered whether to retain the
existing language in 12 CFR
1239.31(a)(4), which requires a
regulated entity’s strategic business plan
to describe any ‘‘proposed new business
activities or enhancements of existing
activities.’’ However, the language of the
existing requirement is unclear as to
whether activities in various stages of
development are covered.
Specifically, the existing regulatory
language referring to ‘‘proposed new
business activities or enhancements of
existing activities’’ in § 1239.31(a)(4)
may be ambiguous in that it could be
interpreted to include those activities
that are in the planning or development
process within a Bank, but not yet
submitted as a new business activity.
Alternatively, it could be interpreted to
refer to only those new business
activities submitted to and pending
approval with FHFA. Rather than
referring to proposed new business
activities and enhancements of existing
activities, FHFA proposes to modify the
existing language for the Banks and
apply the same requirement to the
Enterprises.
Proposed § 1239.14(a)(3) would
eliminate the need, in the context of the
strategic business plan requirement, to
determine whether an activity is a new
business activity in the case of a Bank,
or a new activity in the case of an
Enterprise, for purposes of the
respective regulation, and whether it
has been submitted or approved as such.
The focus of the requirement would be
on significant activities in which the
regulated entity is planning to be
engaged and how these planned
activities would further the regulated
entity’s public purposes. To the extent
the significant activities described
would affect the future financial
condition or risk profile of the regulated
entity, the strategic business plan
should address such risks.
For the Banks, proposed
§ 1239.14(a)(3) would clarify the
existing regulatory language in 12 CFR
1239.31(a)(4) for each Bank’s strategic
business plan to describe any ‘‘proposed
new business activities or
enhancements of existing activities.’’
Instead, the proposed change would
require the plan to describe any
‘‘significant activities in which the
E:\FR\FM\06APP1.SGM
06APP1
14784
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed Rules
daltland on DSKBBV9HB2PROD with PROPOSALS
regulated entity is planning to be
engaged.’’
Proposed § 1239.14(a)(4)(i) would
continue to require a Bank strategic
business plan to be supported by
appropriate and timely research and
analysis of relevant market
developments and member and housing
associate demand for Bank products and
services. This is the same as the existing
requirement for the Banks. In addition,
the existing reference to ‘‘associate’’
would be revised to ‘‘housing
associate.’’
Similarly, § 1239.14(a)(4)(ii) would
require an Enterprise’s strategic
business plan to be supported by
appropriate and timely research and
analysis of relevant market
developments. This Enterprise
requirement is consistent with the
existing requirement for the Banks, and
does not include the Bank-specific
reference to member and housing
associate demand for Bank products and
services.
Proposed § 1239.14(a)(5) would
require a regulated entity’s strategic
business plan to identify current and
emerging risks, including such current
and emerging risks associated with the
regulated entity’s existing activities or
new activities, and discuss how the
regulated entity plans to further its
public purposes and mission in a safe
and sound manner.
Emerging risks are risks that are
potentially significant but which may
not be fully known or understood, and
could be associated with new or existing
activities. This requirement would be a
new requirement for the Banks.
Proposed § 1239.14(b) would require
each regulated entity’s board of
directors to review the strategic business
plan at least annually, re-adopt the plan
at least every three years, and to
establish reporting requirements and
monitor implementation of the strategic
business plan. The substance of this
provision is identical to that of the
existing Bank strategic business plan
provision.
B. Provisions to be Repealed
The proposed rule would repeal the
provision from the existing regulation at
12 CFR 1239.31(a)(3) that requires the
Banks to include in their strategic
business plans quantitative performance
goals for Bank products related to
multifamily housing and to community
financial institution (CFI) collateral. The
Finance Board added this requirement
to the strategic business plan regulation
shortly after Congress first authorized
the Banks to accept CFI collateral. When
doing so, the Finance Board explained
that it wanted to make clear that
VerDate Sep<11>2014
20:58 Apr 05, 2018
Jkt 244001
providing financing for multifamily
lending and for advances secured by the
newly authorized CFI collateral is a part
of the Banks’ mission. In the 17 years
that have passed since the Finance
Board adopted this requirement, FHFA
has monitored the Banks’ acceptance of
CFI collateral and has determined that
this is very much a member-driven
practice. There is considerable variation
among the Banks as to the extent to
which the Banks’ members pledge CFI
collateral, which FHFA believes is
driven by the different types of loans
made by the members in different Bank
districts. Some Banks have significant
numbers of members that make loans for
small farm, small agribusiness, small
business, or community development
purposes, while other Banks have fewer
members engaged in making those types
of loans. Moreover, CFI collateral is no
longer new, and decisions about what
type of collateral to pledge are
ultimately made by the individual
members, based on their particular
business needs. FHFA does not require
Banks to set quantitative goals for the
other types of collateral that members
may pledge. In light of all of those
factors, FHFA believes that there is no
longer any need for the strategic
business plans to address these
categories of collateral. The proposed
rule would repeal this provision, as well
as a separate provision at 12 CFR
1239.31(c) that requires the Banks to
report annually on their progress
towards meeting those goals.
The proposed rule would also make a
conforming change to a reference
contained in § 1273.8(d)(2) relating to
the Office of Finance board of directors’
duty to approve a strategic business
plan, to reference the proposed new
provision at § 1239.14.
C. Corporate Governance Requirements
and Conservatorship
As FHFA noted when it most recently
adopted its corporate governance
regulation, the regulation is not
intended to address conservatorship
matters. 80 FR at 72328. Instead, the
corporate governance regulation is
intended to address matters of corporate
practice and governance at the regulated
entities. FHFA, as conservator, currently
possesses ultimate authority over all
operations of the Enterprises. Pursuant
to its conservatorship authority, FHFA
has provided for Enterprise boards to
exercise the functions of management
oversight that exist under applicable
law and regulation, including FHFA’s
corporate governance regulation, while
reserving for itself decision making
authority to establish conservatorship
direction.
PO 00000
Frm 00019
Fmt 4702
Sfmt 4702
Accordingly, under the proposed rule,
as part of their corporate governance
requirements, the board of directors at
each Enterprise would be required to
adopt a strategic business plan. Each
Enterprise’s strategic business plan
should describe, at a minimum, how the
business activities of the Enterprise will
achieve its public purposes as set forth
under its respective statutory charter
and the Safety and Soundness Act.
Although the Enterprises remain in
conservatorship, their boards of
directors have been operating under
FHFA regulations, including the
standards set forth in FHFA’s corporate
governance regulation at 12 CFR part
1239, that govern board members
outside of conservatorship, except as
modified by the conservator. Such
duties include establishing strategic
objectives that incorporate the priorities
of the conservator while achieving the
Enterprise’s statutory purposes in a safe
and sound manner.
D. Consideration of Differences Between
the Banks and the Enterprises
When promulgating regulations that
relate to the Banks, section 1313(f) of
the Safety and Soundness Act requires
FHFA 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. 12 U.S.C.
4513(f). In developing the proposed
rule, FHFA has considered these areas
of differences between the Banks and
the Enterprises, and has determined that
the proposed rule is unlikely to
adversely affect the Banks in these areas
of differences. FHFA is requesting
public comment on whether differences
related to these factors should result in
a revision of the proposed rule as it
relates to the Banks.
IV. Paperwork Reduction Act
The proposed rule does not contain
any collections of information under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). Therefore, FHFA
has not submitted any information to
the Office of Management and Budget
for review.
V. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires an agency to
analyze a regulation’s impact on small
entities if the regulation is expected to
have a significant economic impact on
a substantial number of small entities. 5
U.S.C. 605(b). FHFA has considered the
impact of this proposed rule and the
E:\FR\FM\06APP1.SGM
06APP1
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed Rules
General Counsel of FHFA certifies that
the proposed rule, if adopted as a final
rule, is not likely to have a significant
economic impact on a substantial
number of small entities because it
applies only to the regulated entities
and the Office of Finance, which are not
small entities for purposes of the
Regulatory Flexibility Act. Therefore, an
initial regulatory flexibility analysis is
not required.
List of Subjects
12 CFR Part 1239
Administrative practice and
procedure, Federal home loan banks,
Government-sponsored enterprises,
Reporting and recordkeeping
requirements.
12 CFR Part 1273
Federal home loan banks, Securities.
Accordingly, for reasons stated in the
Supplementary Information, FHFA
hereby proposes to amend 12 CFR parts
1239 and 1273 as follows:
Subchapter B—Regulated Entities
PART 1239—[AMENDED]
1. The authority citation for part 1239
continues to read as follows:
■
Authority: 12 U.S.C. 1426, 1427, 1432(a),
1436(a), 1440, 4511(b), 4513(a), 4513(b), and
4526.
2. Add new § 1239.14 to subpart C to
read as follows:
■
daltland on DSKBBV9HB2PROD with PROPOSALS
§ 1239.14
Strategic business plan.
(a) Adoption of strategic business
plan. Each board of directors shall adopt
and have in effect at all times a strategic
business plan for the regulated entity
that describes, at a minimum, how the
business activities of the regulated
entity will achieve its mission and
public purposes consistent with its
authorizing statute, the Safety and
Soundness Act, and, in the case of a
Bank, part 1265 of this chapter.
Specifically, each regulated entity’s
strategic business plan shall at a
minimum:
(1)(i) In the case of a Bank, articulate
measurable operating goals and
objectives for each significant business
activity and for all authorized new
business activities, which must include
plans for maximizing activities that
further the Bank’s housing finance and
community lending mission, consistent
with part 1265 of this chapter;
(ii) In the case of an Enterprise,
articulate measurable operating goals
and objectives for each significant
existing activity and for all authorized
new activities;
VerDate Sep<11>2014
20:58 Apr 05, 2018
Jkt 244001
(2) Discuss how the regulated entity
will address credit needs and market
opportunities identified through
ongoing market research and
stakeholder consultations;
(3) Describe any significant activities
in which the regulated entity is
planning to be engaged, including any
changes to business strategy or approach
that the regulated entity is planning to
undertake, and discuss how such
activities would further the regulated
entity’s mission and public purposes;
(4)(i) In the case of a Bank, be
supported by appropriate and timely
research and analysis of relevant market
developments and member and housing
associate demand for Bank products and
services;
(ii) In the case of an Enterprise, be
supported by appropriate and timely
research and analysis of relevant market
developments; and
(5) Identify current and emerging
risks, including those associated with
the regulated entity’s existing activities
or new activities, and discuss how the
regulated entity plans to address
emerging risks while furthering its
public purposes and mission in a safe
and sound manner.
(b) Review and monitoring. Each
board of directors shall:
(1) Review the regulated entity’s
strategic business plan at least annually;
(2) Re-adopt the strategic business
plan for the regulated entity at least
every three years; and
(3) Establish management reporting
requirements and monitor
implementation of the strategic business
plan and the operating goals and
objectives contained therein.
§ 1239.31
■
[Removed and reserved]
3. Remove and reserve § 1239.31.
Subchapter D—Federal Home Loan Banks
PART 1273—[AMENDED]
4. The authority citation for part 1273
continues to read as follows:
■
Authority: 12 U.S.C. 1431, 1440, 4511(b),
4513, 4514(a), 4526(a).
§ 1273.8
[Amended]
5. Section 1273.8(d)(2) is amended by
removing the reference to ‘‘§ 1239.31’’
and adding in its place ‘‘§ 1239.14.’’
■
Dated: April 2, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018–07044 Filed 4–5–18; 8:45 am]
BILLING CODE 8070–01–P
PO 00000
Frm 00020
Fmt 4702
Sfmt 4702
14785
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2018–0094; Airspace
Docket No. 18–ASW–4]
RIN 2120–AA66
Proposed Amendment of Class D
Airspace; Tulsa, OK
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
This action proposes to
modify the Class D airspace designated
as an extension at Tulsa Lloyd Jones Jr.
Airport, Tulsa, OK. The FAA is
proposing this action as a result of an
airspace review caused by the
decommissioning of the Glenpool VHF
omnidirectional range (VOR)
navigational aid as part of the VOR
Minimum Operational Network (MON)
Program and the cancellation of the
associated instrument procedures. The
geographic coordinates also would be
amended, and an editorial change
would be made removing the airport
name in the airspace designation, and
removing the city name from the airport
designation. Another editorial change
would be made to the legal description
replacing ‘‘Airport/Facility Directory’’
with ‘‘Chart Supplement’’.
DATES: Comments must be received on
or before May 21, 2018.
ADDRESSES: Send comments on this
proposal to the U.S. Department of
Transportation, Docket Operations,
West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590; telephone (202)
366–9826, or (800) 647–5527. You must
identify FAA Docket No. FAA–2018–
0094; Airspace Docket No. 18–ASW–4,
at the beginning of your comments. You
may also submit comments through the
internet at https://www.regulations.gov.
You may review the public docket
containing the proposal, any comments
received, and any final disposition in
person in the Dockets Office between
9:00 a.m. and 5:00 p.m., Monday
through Friday, except Federal holidays.
FAA Order 7400.11B, Airspace
Designations and Reporting Points, and
subsequent amendments can be viewed
online at https://www.faa.gov/air_traffic/
publications/. For further information,
you can contact the Airspace Policy
Group, Federal Aviation
Administration, 800 Independence
Avenue SW, Washington, DC 20591;
telephone: (202) 267–8783. The Order is
SUMMARY:
E:\FR\FM\06APP1.SGM
06APP1
]]>Agencies
[Federal Register Volume 83, Number 67 (Friday, April 6, 2018)]
[Proposed Rules]
[Pages 14781-14785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07044]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE AGENCY
12 CFR Parts 1239 and 1273
RIN 2590-AA90
Responsibilities of Boards of Directors, Corporate Practices, and
Corporate Governance
AGENCY: Federal Housing Finance Agency.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Housing Finance Agency (FHFA) is proposing to
amend its regulation on the Responsibilities of Boards of Directors,
Corporate Practices, and Corporate Governance for its regulated
entities. The proposed rule would amend the existing regulation
pertaining to Federal Home Loan Bank strategic business plans so that
it would apply as well to the Enterprises, and would make a number of
adjustments and conforming changes to the existing regulation. As
amended, the regulation would require that the board of directors of
each regulated entity have in effect at all times a strategic business
plan that describes how the regulated entity's business activities will
achieve its statutory purposes. The proposed rule would retain the
provision that requires each regulated entity's board of directors to
review the strategic business plan at least annually, re-adopt it at
least once every three years, and establish reporting requirements for
and monitor implementation of the strategic business plan. The proposed
rule would add a new provision regarding current and emerging business
risks, repeal two outdated provisions of the existing regulation, and
make a conforming change to the Office of Finance Board of Directors
regulation.
DATES: Written comments on the proposed rule must be received on or
before June 5, 2018.
ADDRESSES: You may submit your comments on the proposed rule,
identified by regulatory information number (RIN) 2590-AA90, by any of
the following methods:
Agency Website: www.fhfa.gov/open-for-comment-or-input.
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 email
to FHFA at [email protected] to ensure timely receipt by the FHFA.
Please include ``Comments/RIN 2590-AA90'' in the subject line of the
submission.
Courier/Hand Delivery: The hand delivery address is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA90,
Federal Housing Finance Agency, 400 Seventh Street SW, Eighth Floor,
Washington, DC 20219. Deliver the package to the Seventh Street
entrance Guard Desk, First Floor, on business days between 9 a.m. and 5
p.m.
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-AA90, Federal
Housing Finance Agency, 400 Seventh Street SW, Eighth Floor,
Washington, DC 20219.
FOR FURTHER INFORMATION CONTACT: Daniel Callis, Principal Risk Analyst,
Office of the Chief Accountant, at [email protected] or (202) 649-
3448, or Ming-Yuen Meyer-Fong, Office of General Counsel, at [email protected] or (202) 649-3078 (these are not toll-free
numbers), Federal Housing Finance Agency, Constitution Center, 400
Seventh Street SW, Washington, DC 20219. The telephone number for the
Telecommunications Device for the Hearing Impaired is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Request for Comments
FHFA invites comments on all aspects of this proposed rule. After
considering all comments, FHFA intends to issue a final rule. FHFA will
post on the FHFA website at https://www.fhfa.gov all
[[Page 14782]]
public comments it receives without change, including any personal
information you provide, such as your name, address, email address, and
telephone number. In addition, copies of all comments received will be
available for examination by the public through the electronic
rulemaking docket for this proposed rule also located on the FHFA
website.
II. Background and Summary
FHFA previously consolidated and relocated the regulations of its
predecessor agencies, the Federal Housing Finance Board (Finance Board)
and the Office of Federal Housing Enterprise Oversight, that pertained
to the responsibilities of boards of directors, corporate practices,
and corporate governance matters into a new regulation at 12 CFR part
1239. 80 FR 72327 (November 19, 2015). The FHFA regulation is organized
such that some parts apply to all of FHFA's regulated entities and
other parts, because of differences in their corporate structure or
business models, apply only to the Federal Home Loan Banks (Banks), or
only to Fannie Mae and Freddie Mac (Enterprises).
The current regulation requires each Bank's board of directors to
have in effect at all times a strategic business plan that describes
how the business activities of the Bank will achieve the mission of the
Bank, consistent with the Federal Home Loan Bank Act (Bank Act), 12
U.S.C. 1421 et seq. The current regulation also requires a Bank's board
of directors periodically to review and re-adopt the Bank's strategic
business plan, establish management reporting requirements, and monitor
implementation of the strategic business plan. 12 CFR 1239.31.
FHFA proposes to adopt a similar requirement for the Enterprises.
Strategic planning is an organization's process of defining its
direction and making decisions on allocating its resources to pursue
this direction. The result of this process is the organization's
strategy--a guiding vision of what the organization intends to
accomplish and key initiatives or action plans for achieving the
vision. It is necessarily forward-looking, actionable, and measurable,
and it should be updated periodically to reflect, among other things,
changing risks, business environments, and corporate direction. A
strategic plan is adopted by an organization's board of directors and
executed by its senior management on behalf of its stakeholders.
The proposed rule would replace the existing Bank-only strategic
business plan provision currently at 12 CFR 1239.31 with a new
provision, to be located at 12 CFR 1239.14. The new provision would
adapt the current Bank-only strategic business plan requirements to
cover the Enterprises, and make adjustments and conforming changes as
needed to reflect the requirements of the Banks and the Enterprises.
The most significant change would be to bring the Enterprises within
the scope of the strategic business plan requirement currently required
only of the board of directors at each Bank. The proposed rule would
also include a new requirement for each regulated entity to identify
current and emerging risks in its strategic business plan. Apart from
that provision, the proposed rule would not impose any new requirements
on the Banks' strategic business plans. The proposed rule would also
repeal an existing provision relating to quantitative performance goals
for Bank products related to multifamily housing and to community
financial institution collateral, and a related existing reporting
provision.
III. The Proposed Rule
A. Analysis of the Proposed Rule
The proposed rule would require the board of directors at each
regulated entity to adopt and have in effect at all times a strategic
business plan for the regulated entity. The regulated entity's
strategic business plan adopted by the board of directors must meet
certain minimum requirements pertaining to operating goals, credit
needs and market opportunities, new activities, supporting analyses,
and current and emerging risks. As noted above, all of these
requirements, except for the current and emerging risks, already apply
to the Banks. The proposed rule would also require the board of
directors at each regulated entity to review the regulated entity's
strategic business plan at least annually, to re-adopt the strategic
business plan for the regulated entity at least every three years, to
establish management reporting requirements, and to monitor
implementation of the strategic business plan, as set forth in proposed
Sec. 1239.14(b).
The Enterprises are congressionally chartered entities established
to advance certain statutory purposes. These statutory purposes include
providing stability in the secondary market for residential mortgages,
responding appropriately to the private capital market, providing
ongoing assistance (by facilitating liquidity and distribution of
investment capital) to the secondary market for residential mortgages
(including activities relating to mortgages on housing for low- and
moderate-income families), and promoting access to mortgage credit
throughout the nation. 12 U.S.C. 1716 et seq. (Fannie Mae); 12 U.S.C.
1451 note (Freddie Mac). Their public purposes also include other,
more-specific statutory or regulatory obligations including, for
example, an Enterprise's obligations to meet its affordable housing
goals, and its duty to serve specified underserved markets. See Federal
Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety
and Soundness Act), 12 U.S.C. 4501 et seq.
Similarly, the Banks are entities established under federal law to
serve a housing finance and community lending mission. 12 U.S.C. 1430
and 1430b. For example, in addition to advances, Bank core mission
activities include debt or equity investments that primarily benefit
households having a targeted income level or living in areas targeted
for redevelopment, by supporting housing, economic development,
community services, permanent jobs, or area revitalization or
stabilization. 12 CFR 1265.3(e). Like the Enterprises, the Banks have
affordable housing goals, but only to the extent that they purchase
mortgages from their members. 12 U.S.C. 1430c.
Paragraph 1239.14(a)(1)(i) of the proposed rule would replace the
requirement to enumerate operating goals and objectives with a
requirement to articulate measurable operating goals and objectives.
The change is intended to clarify that goals and objectives are to be
described, rather than simply listed, in a manner to allow the board of
directors to monitor and hold management accountable for successful
execution of the strategic business plan. A regulated entity's board
could articulate measurable goals and objectives by specifying
quantitative requirements or qualitative requirements. The proposed
rule does not prescribe the specific ways in which operating goals and
objectives must be articulated, so long as such operating goals and
objectives are articulated in a measurable manner necessary to support
a regulated entity's board of director's review and monitoring
responsibilities under proposed Sec. 1239.14(b), and to allow the
board of directors to evaluate and hold management accountable for
successful implementation of the strategic business plan.
Proposed Sec. 1239.14(a)(1)(i) would require each Bank's strategic
business plan to articulate measurable operating goals and objectives
for each significant business activity and all authorized new
[[Page 14783]]
business activities, which must include plans for maximizing activities
that further the Bank's housing finance and community lending mission.
This provision is much the same as the existing regulation, but
includes several proposed changes to coordinate with the Enterprise
requirement, including the reference to ``significant business
activity,'' a proposed change from the existing reference to ``major
business activity.''
The proposed rule would also require a Bank's strategic business
plan to articulate measurable operating goals and objectives for all
``authorized new business activities.'' FHFA regulations currently
provide for agency review and action on a Bank's ``new business
activity'' before a Bank may commence with the new business activity.
12 CFR part 1272. That regulation authorizes a Bank to commence a new
business activity absent affirmative approval if FHFA does not take
action within the timeframes established under 12 CFR part 1272. The
proposed requirement to articulate operating goals and objectives would
not apply to new business activities that are denied, are pending FHFA
action, or are not yet submitted to FHFA, but only to those new
business activities that have been authorized under the new business
activities regulation.
The proposed rule would retain the existing requirement that a
Bank's strategic plan ``include plans for maximizing activities that
further the Bank's housing finance and community lending mission,
consistent with part 1265 of this chapter.'' Retaining this clause
would reiterate the priority the Banks should continue to place on
their core mission activities to further their housing finance and
community lending mission, consistent with 12 CFR part 1265.
For the Enterprises, proposed Sec. 1239.14(a)(1)(ii) would
similarly require each Enterprise's strategic business plan to
``articulate measurable operating goals and objectives for each
significant existing activity and all authorized new activities.'' The
Enterprises do not have a core mission activity regulation comparable
to that of the Banks, so, a requirement analogous to that for the Banks
described above is not included in the Enterprise provisions. However,
proposed Sec. 1239.14(a)(1)(ii) would achieve an outcome for the
Enterprises similar to that for the Banks under Sec. 1239.14(a)(1)(i).
It does so by generally requiring the strategic business plan to
describe ``how the [Enterprise's] business activities . . . will
achieve [its] mission and public purposes,'' consistent with its
charter act and the Safety and Soundness Act. It also does so by
requiring the Enterprise's strategic business plan to articulate
``measurable operating goals and objectives'' in achieving the
Enterprise's statutory purposes. Describing how the Enterprise's
business activities will achieve its mission and public purposes, and
articulating measurable goals and objectives for significant existing
activities, would help to enable an Enterprise's board of directors to
monitor, review, and hold management accountable for successful
execution of the strategic business plan.
Proposed Sec. 1239.14(a)(1)(ii) would reference ``authorized new
activities'' in its ``measurable operating goals and objectives''
requirement. FHFA regulations currently provide for agency review and
action on an Enterprise's ``new activity'' before the Enterprise may
commence with the new activity. 12 CFR part 1253. The term ``authorized
new activities'' is used because the current regulation for considering
new activities authorizes an Enterprise to engage in a new activity
absent affirmative approval. This could occur where FHFA does not take
action within 15 days from receipt of a complete new activity notice.
12 CFR 1253.3(d). As a result, Sec. 1239.14(a)(1)(ii) requires
articulation of measurable operating goals and objectives for all
``authorized new activities,'' which could include both new activities
that were affirmatively approved by FHFA and those authorized by
passage of time. Proposed Sec. 1239.14(a)(1)(ii) would not require a
strategic business plan to articulate measurable goals and objectives
for new activities that are denied, pending FHFA action, or not yet
submitted to FHFA.
Proposed Sec. 1239.14(a)(2) would require each regulated entity's
strategic business plan to discuss how the regulated entity will
address credit needs and market opportunities identified through
ongoing market research and stakeholder consultations. In the case of
the Banks, stakeholders would include members, housing associates, and
public and private organizations. In the case of the Enterprises,
stakeholders would include mortgage market participants and public and
private organizations, including those that advocate for access to
credit. The purpose of Sec. 1239.14(a)(2) is similar to that currently
in effect for the Banks, that is, to require regulated entity board
engagement with market research and stakeholder consultations to
identify areas of credit needs and market opportunities to further the
regulated entity's public purposes.
Proposed Sec. 1239.14(a)(3) would require a regulated entity's
strategic business plan to describe ``significant activities in which
the regulated entity is planning to be engaged,'' including any changes
to business strategy or approach that the regulated entity is planning
to undertake, and discuss how such activities further the regulated
entity's public purposes. FHFA considered whether to retain the
existing language in 12 CFR 1239.31(a)(4), which requires a regulated
entity's strategic business plan to describe any ``proposed new
business activities or enhancements of existing activities.'' However,
the language of the existing requirement is unclear as to whether
activities in various stages of development are covered.
Specifically, the existing regulatory language referring to
``proposed new business activities or enhancements of existing
activities'' in Sec. 1239.31(a)(4) may be ambiguous in that it could
be interpreted to include those activities that are in the planning or
development process within a Bank, but not yet submitted as a new
business activity. Alternatively, it could be interpreted to refer to
only those new business activities submitted to and pending approval
with FHFA. Rather than referring to proposed new business activities
and enhancements of existing activities, FHFA proposes to modify the
existing language for the Banks and apply the same requirement to the
Enterprises.
Proposed Sec. 1239.14(a)(3) would eliminate the need, in the
context of the strategic business plan requirement, to determine
whether an activity is a new business activity in the case of a Bank,
or a new activity in the case of an Enterprise, for purposes of the
respective regulation, and whether it has been submitted or approved as
such. The focus of the requirement would be on significant activities
in which the regulated entity is planning to be engaged and how these
planned activities would further the regulated entity's public
purposes. To the extent the significant activities described would
affect the future financial condition or risk profile of the regulated
entity, the strategic business plan should address such risks.
For the Banks, proposed Sec. 1239.14(a)(3) would clarify the
existing regulatory language in 12 CFR 1239.31(a)(4) for each Bank's
strategic business plan to describe any ``proposed new business
activities or enhancements of existing activities.'' Instead, the
proposed change would require the plan to describe any ``significant
activities in which the
[[Page 14784]]
regulated entity is planning to be engaged.''
Proposed Sec. 1239.14(a)(4)(i) would continue to require a Bank
strategic business plan to be supported by appropriate and timely
research and analysis of relevant market developments and member and
housing associate demand for Bank products and services. This is the
same as the existing requirement for the Banks. In addition, the
existing reference to ``associate'' would be revised to ``housing
associate.''
Similarly, Sec. 1239.14(a)(4)(ii) would require an Enterprise's
strategic business plan to be supported by appropriate and timely
research and analysis of relevant market developments. This Enterprise
requirement is consistent with the existing requirement for the Banks,
and does not include the Bank-specific reference to member and housing
associate demand for Bank products and services.
Proposed Sec. 1239.14(a)(5) would require a regulated entity's
strategic business plan to identify current and emerging risks,
including such current and emerging risks associated with the regulated
entity's existing activities or new activities, and discuss how the
regulated entity plans to further its public purposes and mission in a
safe and sound manner.
Emerging risks are risks that are potentially significant but which
may not be fully known or understood, and could be associated with new
or existing activities. This requirement would be a new requirement for
the Banks.
Proposed Sec. 1239.14(b) would require each regulated entity's
board of directors to review the strategic business plan at least
annually, re-adopt the plan at least every three years, and to
establish reporting requirements and monitor implementation of the
strategic business plan. The substance of this provision is identical
to that of the existing Bank strategic business plan provision.
B. Provisions to be Repealed
The proposed rule would repeal the provision from the existing
regulation at 12 CFR 1239.31(a)(3) that requires the Banks to include
in their strategic business plans quantitative performance goals for
Bank products related to multifamily housing and to community financial
institution (CFI) collateral. The Finance Board added this requirement
to the strategic business plan regulation shortly after Congress first
authorized the Banks to accept CFI collateral. When doing so, the
Finance Board explained that it wanted to make clear that providing
financing for multifamily lending and for advances secured by the newly
authorized CFI collateral is a part of the Banks' mission. In the 17
years that have passed since the Finance Board adopted this
requirement, FHFA has monitored the Banks' acceptance of CFI collateral
and has determined that this is very much a member-driven practice.
There is considerable variation among the Banks as to the extent to
which the Banks' members pledge CFI collateral, which FHFA believes is
driven by the different types of loans made by the members in different
Bank districts. Some Banks have significant numbers of members that
make loans for small farm, small agribusiness, small business, or
community development purposes, while other Banks have fewer members
engaged in making those types of loans. Moreover, CFI collateral is no
longer new, and decisions about what type of collateral to pledge are
ultimately made by the individual members, based on their particular
business needs. FHFA does not require Banks to set quantitative goals
for the other types of collateral that members may pledge. In light of
all of those factors, FHFA believes that there is no longer any need
for the strategic business plans to address these categories of
collateral. The proposed rule would repeal this provision, as well as a
separate provision at 12 CFR 1239.31(c) that requires the Banks to
report annually on their progress towards meeting those goals.
The proposed rule would also make a conforming change to a
reference contained in Sec. 1273.8(d)(2) relating to the Office of
Finance board of directors' duty to approve a strategic business plan,
to reference the proposed new provision at Sec. 1239.14.
C. Corporate Governance Requirements and Conservatorship
As FHFA noted when it most recently adopted its corporate
governance regulation, the regulation is not intended to address
conservatorship matters. 80 FR at 72328. Instead, the corporate
governance regulation is intended to address matters of corporate
practice and governance at the regulated entities. FHFA, as
conservator, currently possesses ultimate authority over all operations
of the Enterprises. Pursuant to its conservatorship authority, FHFA has
provided for Enterprise boards to exercise the functions of management
oversight that exist under applicable law and regulation, including
FHFA's corporate governance regulation, while reserving for itself
decision making authority to establish conservatorship direction.
Accordingly, under the proposed rule, as part of their corporate
governance requirements, the board of directors at each Enterprise
would be required to adopt a strategic business plan. Each Enterprise's
strategic business plan should describe, at a minimum, how the business
activities of the Enterprise will achieve its public purposes as set
forth under its respective statutory charter and the Safety and
Soundness Act. Although the Enterprises remain in conservatorship,
their boards of directors have been operating under FHFA regulations,
including the standards set forth in FHFA's corporate governance
regulation at 12 CFR part 1239, that govern board members outside of
conservatorship, except as modified by the conservator. Such duties
include establishing strategic objectives that incorporate the
priorities of the conservator while achieving the Enterprise's
statutory purposes in a safe and sound manner.
D. Consideration of Differences Between the Banks and the Enterprises
When promulgating regulations that relate to the Banks, section
1313(f) of the Safety and Soundness Act requires FHFA 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. 12 U.S.C. 4513(f).
In developing the proposed rule, FHFA has considered these areas of
differences between the Banks and the Enterprises, and has determined
that the proposed rule is unlikely to adversely affect the Banks in
these areas of differences. FHFA is requesting public comment on
whether differences related to these factors should result in a
revision of the proposed rule as it relates to the Banks.
IV. Paperwork Reduction Act
The proposed rule does not contain any collections of information
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
Therefore, FHFA has not submitted any information to the Office of
Management and Budget for review.
V. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to analyze a regulation's impact on small entities if the
regulation is expected to have a significant economic impact on a
substantial number of small entities. 5 U.S.C. 605(b). FHFA has
considered the impact of this proposed rule and the
[[Page 14785]]
General Counsel of FHFA certifies that the proposed rule, if adopted as
a final rule, is not likely to have a significant economic impact on a
substantial number of small entities because it applies only to the
regulated entities and the Office of Finance, which are not small
entities for purposes of the Regulatory Flexibility Act. Therefore, an
initial regulatory flexibility analysis is not required.
List of Subjects
12 CFR Part 1239
Administrative practice and procedure, Federal home loan banks,
Government-sponsored enterprises, Reporting and recordkeeping
requirements.
12 CFR Part 1273
Federal home loan banks, Securities.
Accordingly, for reasons stated in the Supplementary Information,
FHFA hereby proposes to amend 12 CFR parts 1239 and 1273 as follows:
Subchapter B--Regulated Entities
PART 1239--[AMENDED]
0
1. The authority citation for part 1239 continues to read as follows:
Authority: 12 U.S.C. 1426, 1427, 1432(a), 1436(a), 1440,
4511(b), 4513(a), 4513(b), and 4526.
0
2. Add new Sec. 1239.14 to subpart C to read as follows:
Sec. 1239.14 Strategic business plan.
(a) Adoption of strategic business plan. Each board of directors
shall adopt and have in effect at all times a strategic business plan
for the regulated entity that describes, at a minimum, how the business
activities of the regulated entity will achieve its mission and public
purposes consistent with its authorizing statute, the Safety and
Soundness Act, and, in the case of a Bank, part 1265 of this chapter.
Specifically, each regulated entity's strategic business plan shall at
a minimum:
(1)(i) In the case of a Bank, articulate measurable operating goals
and objectives for each significant business activity and for all
authorized new business activities, which must include plans for
maximizing activities that further the Bank's housing finance and
community lending mission, consistent with part 1265 of this chapter;
(ii) In the case of an Enterprise, articulate measurable operating
goals and objectives for each significant existing activity and for all
authorized new activities;
(2) Discuss how the regulated entity will address credit needs and
market opportunities identified through ongoing market research and
stakeholder consultations;
(3) Describe any significant activities in which the regulated
entity is planning to be engaged, including any changes to business
strategy or approach that the regulated entity is planning to
undertake, and discuss how such activities would further the regulated
entity's mission and public purposes;
(4)(i) In the case of a Bank, be supported by appropriate and
timely research and analysis of relevant market developments and member
and housing associate demand for Bank products and services;
(ii) In the case of an Enterprise, be supported by appropriate and
timely research and analysis of relevant market developments; and
(5) Identify current and emerging risks, including those associated
with the regulated entity's existing activities or new activities, and
discuss how the regulated entity plans to address emerging risks while
furthering its public purposes and mission in a safe and sound manner.
(b) Review and monitoring. Each board of directors shall:
(1) Review the regulated entity's strategic business plan at least
annually;
(2) Re-adopt the strategic business plan for the regulated entity
at least every three years; and
(3) Establish management reporting requirements and monitor
implementation of the strategic business plan and the operating goals
and objectives contained therein.
Sec. 1239.31 [Removed and reserved]
0
3. Remove and reserve Sec. 1239.31.
Subchapter D--Federal Home Loan Banks
PART 1273--[AMENDED]
0
4. The authority citation for part 1273 continues to read as follows:
Authority: 12 U.S.C. 1431, 1440, 4511(b), 4513, 4514(a),
4526(a).
Sec. 1273.8 [Amended]
0
5. Section 1273.8(d)(2) is amended by removing the reference to ``Sec.
1239.31'' and adding in its place ``Sec. 1239.14.''
Dated: April 2, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018-07044 Filed 4-5-18; 8:45 am]
BILLING CODE 8070-01-P
