11668 Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Rules and Regulations 

1 12 U.S.C. 4513. 

2Sections 1302 and 1312 of HERA. 

3Each Bank is generally referred to by the name 

of the city in which it is located. The twelve Banks 

are located in: Boston, New York, Pittsburgh, 

Atlanta, Cincinnati, Indianapolis, Chicago, Des 

Moines, Dallas, Topeka, San Francisco, and Seattle. 

mandates, the President’s priorities or 

principles set forth in the Executive 

Order. 

USDA certifies that this final rule will 

not have a significant economic impact 

on a substantial number of small entities 

as defined in the Regulatory Flexibility 

Act, Public Law 96–534, as amended 

(5 U.S.C. 601 et seq.). 

USDA has determined that the 

provisions of the Paperwork Reduction 

Act, as amended, (44 U.S.C. 3501 et 

seq.), do not apply to any collections of 

information contained in this final rule 

because any such collections of 

information are made during the 

conduct of administrative action 

involving an agency against specific 

individuals or entities. 5 CFR 

1320.4(a)(2). 

List of Subjects in 7 CFR Part 1 

Administrative practice and 

procedure. 

Accordingly, Title 7 of the Code of 

Federal Regulations is amended as 

follows: 

PART 1—ADMINISTRATIVE 

REGULATIONS 

■ 1. The authority for part 1 continues 

to read as follows: 

Authority: 5 U.S.C. 301, unless otherwise 

noted. 

Subpart J—Procedures Relating to 

Awards Under the Equal Access to 

Justice Act in Proceedings Before the 

Department 

■ 2. Amend § 1.186 by revising 

paragraph (b) to read as follows: 

§ 1.186 Allowable fees and expenses. 

* * * * * 

(b) In proceedings commenced on or 

after the effective date of this paragraph, 

no award for the fee of an attorney or 

agent under the rules in this subpart 

may exceed $150 per hour. No award to 

compensate an expert witness may 

exceed the highest rate at which the 

Department pays expert witnesses, 

which is set out at § 1.150 of this part. 

However, an award also may include 

the reasonable expenses of the attorney, 

agent, or witness as a separate item, if 

the attorney, agent, or witness ordinarily 

charges clients separately for such 

expenses. 

* * * * * 

■ 3. Amend § 1.187 by revising 

paragraph (a) to read as follows: 

§ 1.187 Rulemaking on maximum rates for 

attorney fees. 

(a) If warranted by an increase in the 

cost of living or by special 

circumstances (such as limited 

availability of attorneys qualified to 

handle certain types of proceedings), the 

Department may adopt regulations 

providing that attorney fees may be 

awarded at a rate higher than $150 per 

hour in some or all of the types of 

proceedings covered by this part. The 

Department will conduct any 

rulemaking proceedings for this purpose 

under the informal rulemaking 

procedures of the Administrative 

Procedure Act. 

* * * * * 

Thomas J. Vilsack, 

Secretary of Agriculture. 

[FR Doc. 2011–4423 Filed 3–2–11; 8:45 am] 

BILLING CODE 3410–90–P 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 932 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1225 

RIN 2590–AA01 

Minimum Capital 

AGENCY: Federal Housing Finance Board 

and Federal Housing Finance Agency. 

ACTION: Final rule. 

SUMMARY: The Federal Housing Finance 

Agency (FHFA) is issuing a final rule to 

implement a provision of the Federal 

Housing Enterprises Financial Safety 

and Soundness Act, as amended, that 

provides for a temporary increase in the 

minimum capital level for the entities 

regulated by FHFA—the Federal 

National Mortgage Association, the 

Federal Home Loan Mortgage 

Corporation and the Federal Home Loan 

Banks. The final rule establishes 

standards for imposing a temporary 

increase and for rescinding such an 

increase, and a time frame for review of 

such an increase. 

DATES: This rule is effective April 4, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Christopher T. Curtis, Senior Deputy 

General Counsel, 

Christopher.Curtis@fhfa.gov, (202) 414– 

8947, or Jamie Schwing, Associate 

General Counsel, 

Jamie.Schwing@fhfa.gov, (202) 414– 

3787, (not toll-free numbers), Federal 

Housing Finance Agency, Fourth Floor, 

1700 G Street, NW., Washington, DC 

20552. The telephone number for the 

Telecommunications Device for the Deaf 

is (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Establishment of the Federal Housing 

Finance Agency 

The Housing and Economic Recovery 

Act of 2008 (HERA), Public Law 110– 

289, 122 Stat. 2654, amended the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 

U.S.C. 4501 et seq.) (Safety and 

Soundness Act) to establish FHFA as an 

independent agency of the Federal 

Government. FHFA was established to 

oversee the operations of the Federal 

National Mortgage Association, the 

Federal Home Loan Mortgage 

Corporation (collectively, Enterprises), 

and the Federal Home Loan Banks 

(Banks) (collectively, regulated entities). 

FHFA is to ensure that the regulated 

entities operate in a safe and sound 

manner including being capitalized 

adequately; that their operations foster 

liquid, efficient, competitive and 

resilient national housing finance 

markets; that they comply with the 

Safety and Soundness Act and their 

authorizing statutes, and with rules, 

regulations, guidelines and orders 

issued under those statutes; that they 

carry out their missions through 

activities authorized and consistent 

with the Safety and Soundness Act and 

their authorizing statutes; and that the 

activities and operations of the entities 

are consistent with the public interest.1

The regulated entities continue to 

operate under regulations promulgated 

by the Office of Federal Housing 

Enterprise Oversight and the Federal 

Housing Finance Board, and the 

relevant regulations of the Department 

of Housing and Urban Development, 

until such time as the existing 

regulations are supplanted by 

regulations promulgated by FHFA.2

B. The Bank System Generally 

The twelve Banks are 

instrumentalities of the United States 

organized under the Federal Home Loan 

Bank Act (Bank Act).3 See 12 U.S.C. 

1423, 1432(a). The Banks are 

cooperatives: Only members of a Bank 

may purchase the capital stock of a 

Bank, and only members or certain 

eligible housing associates (such as state 

housing finance agencies) may obtain 

access to secured loans, known as 

advances, or other products provided by 


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Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Rules and Regulations 11669 

4The Bank Act’s current minimum capital 

requirements apply to the eleven banks that have 

converted to the capital structure provided in the 

Bank Act as amended by the Gramm-Leach-Bliley 

Act of 1999, see Bank Act section 6(a)(2), 12 U.S.C. 

1426(a)(2), but do not apply to the Federal Home 

Loan Bank of Chicago. The Federal Home Loan 

Bank of Chicago is subject to capital requirements 

as set forth in a 2007 Cease and Desist Order, as 

amended. See 74 FR 5597 (January 30, 2009). As a 

result, the definition of ‘‘minimum capital level’’ as 

set forth in the proposed regulation is structured to 

take into account the current supervisory status of 

the Federal Home Loan Bank of Chicago. 

5 12 U.S.C. 4612(c). 

6 Id. at (e). 

7 Id. at (f). 

8 Id. at (d)(1). 

9 Id. at (d)(2). 

10 Id. at (d)(3). 

a Bank. See 12 U.S.C. 1426(a)(4), 

1430(a), 1430(b). Each Bank is managed 

by its own board of directors and serves 

the public interest by enhancing the 

availability of residential credit through 

its member institutions. See 12 U.S.C. 

1427. Any eligible institution (generally 

a federally insured depository 

institution or state-regulated insurance 

company) may become a member of a 

Bank if it satisfies certain criteria and 

purchases a specified amount of the 

Bank’s capital stock. See 12 U.S.C. 1424; 

12 CFR part 1263. 

As government-sponsored enterprises, 

the Banks are granted certain privileges 

under federal law. In light of those 

privileges, the Banks typically can 

borrow funds at spreads over the rates 

on U.S. Treasury securities of 

comparable maturity lower than most 

other entities. The Banks pass along a 

portion of their funding advantage to 

their members—and ultimately to 

consumers—by providing advances and 

other financial services at rates that 

would not otherwise be available to 

their members. Consolidated obligations 

(COs), consisting of bonds and discount 

notes, are the principal funding source 

for the Banks. The Office of Finance 

issues all COs on behalf of the twelve 

Banks. Although each Bank is primarily 

liable for the portion of consolidated 

obligations corresponding to the 

proceeds received by that Bank, each 

Bank is also jointly and severally liable 

with the other eleven Banks for the 

payment of principal and interest on all 

COs. 12 CFR 966.9. 

C. The Enterprises Generally 

The Enterprises are chartered by 

Congress for the purpose of establishing 

secondary market facilities for 

residential mortgages. See 12 U.S.C. 

1716 et seq.; 12 U.S.C. 1451 et seq. 

Congress established the Enterprises to 

provide stability in the secondary 

mortgage market for residential 

mortgages, to respond appropriately to 

the private capital market, to provide 

ongoing assistance to the secondary 

market for residential mortgages, and to 

promote access to mortgage credit 

throughout the nation. Id. 

On September 6, 2008, the Director of 

FHFA appointed FHFA as conservator 

of the Enterprises in accordance with 

the Safety and Soundness Act, as 

amended by HERA. The Enterprises 

remain under conservatorship at this 

time. Although the Enterprises’ 

substantial market presence has been 

important to restoring market stability, 

neither company would be capable of 

serving the mortgage market today 

without the ongoing financial support 

provided by the United States 

Department of Treasury. While reliance 

on the Treasury Department’s backing 

will continue until legislation produces 

a final resolution to the Enterprises’ 

future, FHFA is monitoring the 

activities of the Enterprises to: (a) Limit 

their risk and exposure by avoiding new 

lines of business; (b) ensure profitability 

in their new books of business without 

deterring market participation or 

hindering market recovery; and (c) 

minimize losses on the mortgages 

already on their books. 

D. The Proposed Rule 

On February 8, 2010, FHFA published 

in the Federal Register a proposed rule 

that set forth standards and procedures 

FHFA would employ to determine 

whether to require or rescind a 

temporary increase in the minimum 

capital levels of a regulated entity or 

entities pursuant to 12 U.S.C. 4612(d). 

The 60-day comment period closed on 

April 9, 2010. See Federal Register 75 

FR 6151 (February 8, 2010). 

Section 1111 of HERA amended 

section 1362 of the Safety and 

Soundness Act to provide additional 

authorities for FHFA regarding 

minimum capital requirements. Section 

1362(a) establishes a minimum capital 

level for the Enterprises, while section 

1362(b) incorporates the minimum 

capital level for the Federal Home Loan 

Banks established by the Federal Home 

Loan Bank Act (Bank Act).4 The section 

explicitly authorizes the Director, by 

regulation, to provide for capital levels 

higher than the minimum levels 

specified for the Enterprises or the 

Banks to promote safe and sound 

operations.5 Also, section 1362(e) 

provides for additional capital and 

reserve requirements to be issued by 

order or regulation with respect to a 

product or activity.6 Section 1362(f) 

provides for a periodic review of core 

capital maintained by an Enterprise, the 

amount of capital retained by the Banks 

and the minimum capital levels set forth 

for the regulated entities required under 

this section.7

In addition, section 1362(d) provides 

that the Director, by order, may 

temporarily increase an established 

minimum capital level, when the 

Director determines ‘‘that such an 

increase is necessary and consistent 

with the prudential regulation and the 

safe and sound operations of a regulated 

entity.’’ 8 The section also provides that 

the Director shall rescind the temporary 

minimum capital level when the 

Director determines circumstances no 

longer justify the temporary level.9 To 

implement section 1362(d), the Director 

must issue regulations setting forth 

standards for the imposition of a 

temporary increase, standards and 

procedures that will be used to make the 

determination regarding rescission, and 

a time frame for periodic review of any 

temporary increase in the minimum 

capital level to make a determination 

regarding rescission.10

Section 1362(d) recognized the need 

for the Director to be able to respond 

when necessary to conditions affecting 

a regulated entity by imposing an 

appropriately higher capital 

requirement in an expeditious manner. 

The proposed rule also sets forth 

procedures and standards as required in 

the Safety and Soundness Act for a 

temporary increase in the minimum 

capital levels of the Enterprises or the 

Banks, including a determination to 

order an increase, to rescind all or part 

of the increase, and the time for periodic 

review of an increase as provided in 

section 1362(d). 

E. Consideration of Differences Between 

the Banks and the Enterprises 

Section 1201 of HERA (codified at 12 

U.S.C. 4513(f)) requires the Director, 

when promulgating regulations relating 

to the Banks, to consider the following 

differences between the Banks and the 

Enterprises: Cooperative ownership 

structure; mission of providing liquidity 

to members; affordable housing and 

community development mission; 

capital structure; and joint and several 

liability. The Director also may consider 

any other differences that are deemed 

appropriate. In preparing this final rule, 

FHFA considered the differences 

between the Banks and the Enterprises 

as they relate to the above factors, and 

determined that the rule is appropriate. 

In particular, FHFA has evaluated the 

relevance of the factors that are part of 

the standard for determining that a 

change in the minimum capital standard 

is appropriate, and added a factor that 

is unique to the Banks: The ratio of a 


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11670 Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Rules and Regulations 

11 Joint Bank Letter, section I., at 1–2; Boston 

Bank Letter, section I., at 1; and Dallas Bank Letter, 

section I., at 2. 

12San Francisco Bank, section I., at 1. 13San Francisco Bank, section I., at 1–2. See also 

Dallas Bank, section II., at 3, stating that ‘‘the final 

rule should clarify whether the effective date for a 

temporary minimum capital requirement refers to 

the date on which [a Bank] is required to issue 

additional capital stock to its members or the date 

on which the [Bank] must implement the steps 

under its capital plan that are required to impose 

a change in the minimum stock requirement of that 

[Bank’s] members * * *. The Dallas Bank suggests 

that the notice period in the final rule take into 

account that the [Banks] are bound to operate in 

compliance with the terms of their capital plans 

with respect to increases in their members’ 

minimum stock purchase requirement and that a 

temporary increase in the minimum stock purchase 

requirement may require an amendment to [a 

Bank’s] capital plan.’’ 

14Sections 1361–1369(D) of the Safety and 

Soundness Act (12 U.S.C. 4611–4623). 

Bank’s market value of equity to the par 

value of its capital stock. FHFA also 

considered the Banks’ circumstances 

when crafting the procedural elements 

of the rule, including the relevance of 

the Banks’ capital structure plans, and 

concluded that the statutory 

requirement that the Banks operate 

under capital structure plans does not 

require that a different rule be crafted 

specifically for them, although a Bank’s 

capital structure plan will undoubtedly 

be relevant to the steps a Bank would 

take to meet a new, increased minimum 

capital level. As a tool supportive of 

safety and soundness, the capital 

authority conferred by the statute and 

implemented in this regulation will, 

overall, be supportive of the Banks’ 

unique structure and mission. 

II. Final Rule 

A. Comments 

In the proposed rule, FHFA provided 

for notice of a temporary increase in a 

regulated entity’s minimum capital 

requirement; standards for imposing a 

temporary increase in minimum capital; 

standards for rescission of a temporary 

increase; timeframe for review of 

temporary increase for the purpose of 

rescission; requirements for written 

plans to augment capital; and 

promulgation of future guidance. FHFA 

received a total of five comment letters 

on the proposed rule. Comments were 

received from the Federal Home Loan 

Bank of Boston (Boston Bank); the 

Federal Home Loan Bank of Dallas 

(Dallas Bank); the Federal Home Loan 

Bank of San Francisco (San Francisco 

Bank); a joint letter from the Federal 

Home Loan Banks of Atlanta, Chicago, 

Des Moines, Indianapolis, Pittsburgh, 

Seattle and Topeka (Joint Bank Letter); 

and a letter from a private citizen 

(consisting of a one sentence statement 

regarding ‘‘limitations on seller 

financing’’ that was not germane to the 

rulemaking). 

FHFA has considered all of the 

comments in developing the final rule. 

FHFA accepted some of the 

commenters’ recommendations and has 

made changes in the final rule, although 

the basic approach adopted in the 

proposed rule remains the same. The 

changes made in the final rule improve 

upon the basic approach proposed by 

FHFA by clarifying certain provisions 

and by improving the structure of the 

rule. Specific comments, FHFA’s 

responses, and changes adopted in the 

final rule are described in greater detail 

below in the sections describing the 

relevant rule provisions. 

B. Final Rule Provisions 

1. General Comment 

Three Bank letters offered similar 

comments regarding the application of 

section 1201 of the Housing and 

Economic Recovery Act of 2008 (HERA) 

requiring the Director to consider the 

differences between the Banks and the 

Enterprises before promulgating 

regulations, or taking formal or informal 

actions of general applicability relating 

to the Banks. The commenters noted 

that the proposed rule does not indicate 

whether the Director conducted the 

review required under section 1201, and 

lacks a statement to that effect, which 

typically has been included in most 

agency actions promulgated by FHFA.11

FHFA agrees with the commenters that 

this rule is subject to HERA section 

1201. As noted above, FHFA has 

reviewed the rule in the context of the 

differences enumerated in section 1201 

and has determined that it is 

appropriate. 

The three Bank letters also suggest 

that FHFA should consider separating 

the requirements for temporary 

increases for the Banks and the 

Enterprises into separate rules. FHFA 

did not agree with the commenters’ 

suggestion, as the rule has been crafted 

taking into account the differences 

between the regulated entities. As the 

rule is structured, there is sufficient 

regulatory flexibility to evaluate and 

respond to the unique circumstances 

that may impact one or more regulated 

entities causing the Director to impose, 

or rescind, a temporary increase. 

Separating the proposed rule into two 

rulemakings would not enhance FHFA’s 

ability to respond to unique or 

institution-specific circumstances. 

2. Section 1225.2—Definitions 

FHFA has adopted the definitions as 

proposed. FHFA did not receive any 

comments that addressed the proposed 

definitions. 

3. Section 1225.3—Procedures 

All of the Banks commented on 

proposed § 1225.3, which sets forth the 

requirements for notice of a temporary 

increase in the minimum capital 

requirement. As a general matter, the 

Banks objected to the length of the time 

period for the notice of a temporary 

increase in the minimum capital 

requirement and the potential impact 

the provision could have on existing 

timelines built into each Bank’s capital 

plan. The San Francisco Bank 

commented that ‘‘these time periods for 

response and compliance with respect 

to something so fundamentally critical 

to a Bank as its capital level are 

unrealistically short in light of the 

possible strategic financial management 

changes and other actions [a Bank] may 

need to take in order to meet the 

increased requirement * * * for 

purposes of the Final Rule, a notice 

period of at least 60 days, with at least 

30 days to respond, is more 

appropriate.’’ 12 The San Francisco Bank 

also stated that the final rule should 

indicate that the effective date of any 

required increase should take into 

account a Bank’s compliance with the 

terms of its capital plan, including 

applicable notice requirements, and that 

the order should be subject to a more 

formal procedure, including an 

opportunity for a hearing under 12 CFR 

Part 907.13

FHFA considered the comment and 

did not make the requested changes. 

The statutory provision is designed to 

elicit an immediate response, if 

necessary, by the subject institution to 

an unusual condition. A Bank would be 

able to address capital-plan issues in its 

response to a temporary capital increase 

notice; however, the terms of a capital 

plan do not limit the Director’s power 

under this statutory provision. A 

hearing requirement would not be 

consistent with the need for rapid 

action, and is not provided in other 

capital contexts, such as the prompt 

corrective action (PCA) framework.14

Two of the Banks suggested that the 

final rule cross-reference 12 CFR 

1229.11 for requiring Banks to 

temporarily increase minimum capital. 

The Joint Bank Letter states: ‘‘In 

promulgating 12 CFR Part 1229, the 

FHFA recognized that the [Banks] are 

limited in their ability to quickly raise 

additional capital because of the 

[Bank’s] cooperative capital stock 

structure and capital plans. In light of 

these limitations, the FHFA requires 


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15 Joint Bank Letter, section II., at 3. See also 

Boston Bank, section II., at 2. 

16 Dallas Bank, section III.A., at 3. 

17 Id. See also San Francisco Bank, section II.A., 

at 2; and Joint Bank Letter, section III.A., at 4. 

According to the Joint Comment Letter, the current 

provision ‘‘could be pro-cyclical and lead to longlasting declines in membership and business 

volume, further weakening the affected [Bank]. The 

FHFA should consider clarifying the nature and 

magnitude of the decline in the value of assets that 

would warrant an order to temporarily increase 

minimum capital levels.’’ 

18Boston Bank, section III.A., at 3. 

19 Id. 

20Boston Bank, section III.B., at 3. See also Dallas 

Bank, section III.B., at 3–4; Joint Bank Letter, 

section III.B., at 4; and San Francisco Bank, section 

II.B., at 2. 

undercapitalized and significantly 

undercapitalized [Banks] to submit a 

capital restoration plan * * *. We 

believe that it would be helpful to apply 

the same capital restoration plan 

requirements to [a Bank] in the event 

the FHFA temporarily increases the 

minimum capital requirement, 

particularly given the close interaction 

of these two provisions of the 

regulations.’’ 15

FHFA considered the comments and 

determined that it would retain the 

provision as proposed. FHFA 

determined that the differences between 

the PCA regulation and the proposed 

rule reflect differences in the respective 

statutory provisions. The PCA statute 

sets out defined time periods for capital 

restoration plans; section 1362(d) does 

not, giving the Director discretion 

regarding timing of increasing the 

minimum capital requirement. The rule 

seeks to retain that flexibility. However, 

in response to the commenters’ more 

general objection that the practicalities 

of capital-raising by Federal Home Loan 

Banks require a longer time period than 

the notice and reply periods prescribed 

in the rule, FHFA notes that the concept 

of those periods is not necessarily that 

the regulated entity be able to come into 

compliance with the new requirement 

within 30 days after notification by the 

Director, but rather that the regulated 

entity have an opportunity to respond to 

the agency on the appropriateness of the 

temporary increased capital level within 

that period. Depending upon a 

particular Federal Home Loan Bank’s 

circumstances, there may be a period 

between the setting of the new capital 

level and the regulated entity’s 

compliance with it during which the 

regulated entity would be 

undercapitalized and subject to the 

statute’s restrictions on activities by 

undercapitalized entities, notably 

capital distributions. Similarly, if that 

same entity is also determined to be 

undercapitalized under the PCA capital 

classification process—which also 

proceeds on a 30-day notice (Safety and 

Soundness Act section 1368(c))—it 

would be subject to those restrictions 

until its capital restoration plan is 

approved and implemented. It is 

appropriate that those restrictions apply 

to an entity whose capital level is not 

adequate to the risks to which it is 

subject. 

4. Section 1225.4(a)(1)—Current or 

Anticipated Declines in the Value of 

Assets Held 

The Dallas Bank commented that 

FHFA should clarify the ‘‘nature and 

magnitude of the decline in the value of 

assets that would warrant an order to 

temporarily increase minimum capital 

levels.’’ 16 According to the Dallas Bank, 

current or anticipated declines in asset 

values may not accurately reflect the 

underlying economic value of the asset. 

The Dallas Bank commented that a 

temporary increase in minimum capital 

in ‘‘instances of temporary illiquidity or 

market volatility with respect to a 

regulated entity’s assets could prove to 

be harmful to the [Bank] and to its 

membership given member sensitivity 

and concerns regarding additional 

capital calls.’’ 17

FHFA considered the comment and 

did not make the requested change. 

FHFA concluded that amending the 

provision in the suggested manner 

would not be feasible, as the provision 

is meant to be applied on a case-by-case 

basis. FHFA also notes that, with 

respect to instances involving ‘‘illiquid 

or volatile’’ markets, concerns regarding 

potential harm caused by a proposed 

capital increase could be addressed by 

a regulated entity in its response to the 

notice of a temporary increase in the 

minimum capital requirement. 

The Boston Bank also commented that 

‘‘the concept of basing a temporary 

increase in the minimum capital 

requirements of [a Bank] on 

‘anticipated’ declines is hard for us to 

understand as it is generally recognized 

that it is not possible to predict market 

movements and future prices.’’ 18 The 

Boston Bank suggested that FHFA 

should limit the standard to current 

‘‘decline[s] in the [market] value of 

assets that would warrant an order to 

temporarily increase minimum capital 

levels.’’ 19

FHFA considered the comment and 

concluded that since capital often acts 

as a lagging indicator, delaying action 

until a decline is recognized may be 

inconsistent with the need for prompt 

action. The proposed regulation would 

provide FHFA with an additional 

regulatory tool to address potential 

problems that may arise as the result of 

relying solely on a lagging indicator 

such as capital. Certain assets on an 

entity’s balance sheet are valued based 

on historical cost and may not reflect all 

available information as to the assets’ 

actual values. Therefore, FHFA has not 

made the requested change. 

Although FHFA did not adopt the 

proposed comments, it ultimately 

determined that it was appropriate to 

remove the phrase ‘‘the amounts of a 

regulated entity’s mortgage-backed 

securities’’ to avoid singling out any 

particular category of assets in the 

provision. 

5. Section 1225.4(a)(2)—Credit 

(including Counterparty), Market, 

Operational and Other Risks Facing a 

Regulated Entity 

FHFA did not receive comments on 

this provision. However, the phrase ‘‘a 

depreciation in the value of its capital 

or assets, a decline in liquidity, or’’ was 

removed from the provision. FHFA 

determined that the language was 

redundant, as declines in capital and 

assets and concerns about liquidity are 

addressed in § 1225.4(a)(1) and 

§ 1225.4(a)(3), respectively. 

6. Section 1225.4(a)(4)—Compliance 

With Regulations, Written Orders or 

Agreement 

The Boston Bank commented that the 

standard should apply only to ‘‘material 

non-compliance with regulations, 

written orders or agreements that 

negatively impact [a Bank’s] financial 

health or that are indicative of its 

potential risk of failure.’’ The comment 

further states that ‘‘Without clarification, 

it would appear that any violation of 

any regulation, order or agreement 

could permit the FHFA to order [a Bank] 

to increase temporary minimum capital 

levels.’’ 20

FHFA considered the comment and 

agreed that the standard should apply 

only to material non-compliance with a 

regulation, order, or agreement. FHFA 

did not intend the provision to require 

a capital increase in response to an 

immaterial infraction. FHFA did not 

agree with the Boston Bank comment 

that the factor relate only to material 

non-compliance with some regulations, 

orders or agreements, those asserted to 

negatively impact financial health, 

because all material violations could 

potentially have a negative impact on 

financial health, if only because of the 

remediation that might be required. 


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21San Francisco Bank, section II.C., at 2–3. See 

also Joint Bank Letter, section III.C., at 4; and Dallas 

Bank, section III.C., at 4. 

22 Dallas Bank, section III.D., at 4. See also San 

Francisco Bank, section II.D., at 3. 

23San Francisco Bank, section II.D., at 3. 

24 Dallas Bank, section III.E., at 4. See also Joint 

Bank Letter III.D., at 4. 

25 Dallas Bank, section III.E., at 4. 

26 Id. See also Joint Bank Letter, section III.D., at 

4 stating ‘‘[w]ithout analytically supported 

guidance, it is difficult to judge fully the 

appropriateness of using MVE/PVCS as a factor in 

determining [a Bank’s] minimum capital 

requirement.’’ 

27 Dallas Bank, section III.E., at 5. 

28 Joint Bank Letter, section III.D., at 5. 

29 Id. 

30 Id. 

31 Id. at 6. 

32Boston Bank, section III.C., at 3. 

7. Section 1225.4(a)(5)—Unsafe or 

Unsound Operations or Practices, or 

Circumstances That Reflect Unsafe and 

Unsound Conduct by a Regulated Entity 

FHFA removed this provision from 

the final rule, as the remaining 

standards address specific conditions 

and practices. As well, to the extent that 

an unsafe or unsound condition is 

identified by the Director, FHFA 

determined that § 1225.4(a)(9), Other 

Conditions as Detailed by the Director, 

would be a more appropriate vehicle for 

responding to such a contingency. 

8. Section 1225.4(a)(6)—Housing 

Finance Market Conditions 

The San Francisco Bank suggested 

that the factor be deleted from the final 

rule because it believes it to be vague 

and that ‘‘the relevance of this factor to 

a Regulated Entity’s capital level is 

unclear, except to the extent that 

housing finance market conditions 

result in a decline in the value of 

housing-related assets held by the 

[Banks].’’ The comment also states that 

this matter is already covered by Section 

1225.4(a)(1).21

FHFA considered the comment and 

decided to retain the provision as 

proposed. Housing market conditions 

other than asset values, such as market 

volatility and prepayment risk, may 

pose risks to a regulated entity that 

could warrant holding additional 

capital. 

9. Section 1225.4(a)(7)—Level of 

Reserves or Retained Earnings 

The Dallas Bank commented that 

FHFA should focus on ‘‘the aggregate 

capital levels of the [Bank]’’ as a more 

accurate gauge of a Bank’s financial 

health instead of focusing on specific 

types of capital.22 The San Francisco 

Bank suggested that the standard ‘‘be 

expanded to ensure that, in addition to 

considering reserves and retained 

earnings in determining a Regulated 

Entity’s financial health, the Finance 

Agency is recognizing the Regulated 

Entity’s demonstrated commitment and 

actions toward building retained 

earnings, and also is taking into 

consideration the aggregate capital 

levels of the Regulated Entity, which 

provides a more accurate indication of 

a Regulated Entity’s health or risk of 

failure.’’ 23

FHFA did not agree with the 

comment and will retain the provision 

as proposed. Specific elements of 

capital can have independent 

significance. For example, retained 

earnings are relevant to a Bank’s ability 

to maintain the par value of its capital 

stock, which is important to the 

financial stability of a Federal Home 

Loan Bank and of the System. Further, 

while this provision is a factor, among 

possible others, that may be used by the 

Director to make a determination 

regarding capital, it does not set a 

specific requirement. Finally, with 

respect to recognition of a Bank’s 

commitment to build retained earnings, 

such activity would most appropriately 

be evaluated on a case-by-case basis and 

could be addressed in the Bank’s 

response to a notice of capital increase. 

10. Section 1225.4(a)(8)—Initiatives, 

Operations, Products, or Practices That 

Entail Heightened Risk 

FHFA did not receive comment 

regarding this provision. The provision 

will be adopted as proposed. 

11. Section 1225.4(a)(9)—The Ratio of 

the Market Value of Equity to the Par 

Value of Capital Stock 

The Dallas Bank questioned the 

inclusion of the MVE/PVCS ratio in the 

proposed rule, stating: ‘‘In the final 

capital classification rule issued just 

eight months ago, the FHFA indicated it 

would ‘continue to weigh whether it 

would be appropriate to propose a 

separate target for retained earnings 

and/or MVE/PVCS, either as a standalone regulation or as part of any riskbased capital proposal. * * * We are 

unaware of any subsequent FHFA 

rulemaking, guidance, analysis or 

pronouncements concerning the utility 

and applicability of MVE/PVCS.’’ 24 The 

Dallas Bank also noted that ‘‘neither the 

[Banks], their member institutions nor 

other stakeholders would be able to 

determine ahead of time with any 

certainty—perhaps not until after a 

temporary order has been issued—how 

the FHFA applies this factor on an 

ongoing basis.’’ 25 The Bank also 

requests that in the final rule, FHFA 

‘‘detail its thinking, including the results 

of any studies or analysis it has 

conducted, on how this factor should be 

defined and applied’’ or ‘‘use the release 

of the final rule to provide clear 

definitions and explanations of how this 

factor may be applied.’’ 26

The Dallas Bank also expressed 

concern with the MVE/PVCS ratio for 

two reasons: (i) ‘‘The proposed rule does 

not define ‘[the] market value of equity’’’ 

and (ii) ‘‘the rule places no parameters 

or standards for the FHFA to use in 

applying this ratio.’’ 27 The Joint 

Comment Letter requested additional 

information in the final rule regarding 

FHFA’s ‘‘thinking, including the results 

of any studies or analysis it has 

conducted, on how this factor should be 

defined and applied.’’ 28 The Joint Bank 

Letter also indicated that FHFA should 

‘‘define MVE (including during periods 

of severe market illiquidity)’’ and 

indicate ‘‘why it is appropriate to use 

the MVE/PVCS ratio to determine 

whether a [Bank’s] minimum capital 

should be increased.’’ 29

The Joint Bank Letter asked FHFA to 

address two specific questions: 

(1) ‘‘Is MVE for purposes of the 

temporary minimum capital regulation 

defined as set forth in 12 CFR 932.5 

* * * as the market value of total 

capital (defined as Class A stock, 

general allowance for losses, Class B 

stock and retained earnings) or 

otherwise?’’ and 

(2) ‘‘Will MVE be defined in 

accordance with the liquidation value, 

or the going-concern value, of the 

[Bank]?’’ 30

The Joint Bank Letter concludes with 

an expression of general concern 

regarding the use of MVE/PVCS as a 

factor related to a temporary increase in 

minimum capital without considering 

the existing risk-based capital regime, 

and the letter urges FHFA to consider 

this standard in a separate rulemaking.31

The Boston Bank commented that 

FHFA should ‘‘clarify the definition of 

the market value of equity (MVE) by 

reference to 12 CFR 932.5.’’ The Bank 

also commented that it remained 

‘‘generally concerned with using MVE/ 

PVCS as a factor for imposing a 

temporary minimum capital increase 

without consideration of the existing 

risk-based capital regulatory framework 

that already takes this relationship into 

consideration to some extent in 

establishing [a Bank’s] risk-based capital 

requirements.’’ 32

The San Francisco Bank commented 

that using an MVE/PVCS ratio could 

result in a ‘‘double charging’’ effect on a 

Bank. According to the San Francisco 

Bank ‘‘the existing risk-based regulation 


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33San Francisco Bank, section II.E., at 3. 

34 Id. 

35 Id. 

36 Joint Bank Letter, section III.E., at 6. See also 

Dallas Bank, section III.F., at 5; and San Francisco 

Bank, section II.F., at 4. 

37 Joint Bank Letter, section III.F., at 6. See also 

Boston Bank, section III.D., at 4; and Dallas Bank, 

section III.G., at 5. 

38San Francisco Bank, section II.E., at 3. 

39 Joint Bank Letter, section IV., at 6; San 

Francisco Bank, section III., at 4; and Dallas Bank, 

section IV., at 6. 

40 Dallas Bank, section IV., at 6–7; and Joint Bank 

Letter, section IV., at 7. 

already imposes an additional riskbased capital charge on any [Bank] that 

has a market value of total capital less 

than 85% of the book value of its total 

capital, so that using an MVE/PVCS 

ratio to impose an additional increase in 

[a Bank’s] minimum capital requirement 

would have the effect of ‘double 

charging’ that [Bank] on the basis of the 

same criteria.’’ 33 The San Francisco 

Bank also stated that the proposed rule 

does not define ‘‘market value of 

equity.’’ The letter notes that ‘‘If the 

Agency determines MVE with reference 

to liquidation value, then we do not 

believe that such a measure provides a 

sound basis for increasing [a Bank’s] 

minimum capital level. * * * Instead, 

we encourage the Finance Agency to 

develop an MVE model that reflects 

certain going concern assumptions and 

makes MVE determinations in the 

context of other factors, including 

market conditions.’’ 34 The San 

Francisco Bank concluded with a 

recommendation to establish 

‘‘parameters or standards’’ surrounding 

the use of the MVE/PVCS ratio. 

According to the San Francisco Bank, 

‘‘[t]here’s no indication * * * at what 

level(s) the Director would consider it 

appropriate to increase [a Bank’s] 

minimum capital requirement based on 

this ratio.’’ 35

FHFA considered and did not adopt 

the Dallas Bank’s comment to provide 

additional detail regarding the 

application of the MVE/PVCS ratio. 

FHFA concluded that the factor would 

be applied on a case-by-case basis, 

considering the specific circumstances 

of a particular Bank. In instances where 

a Bank has a low MVE/PVCS ratio, this 

rule would serve as one reason, among 

many, for a Bank to address the issue. 

FHFA also considered the questions 

posed by the Dallas Bank. FHFA 

concluded that use of the MVE/PVCS 

ratio is an important element in 

assessing the financial health of an 

institution. The use of the MVE/PVCS 

ratio also provides a useful indicator of 

capital strength in addition to capital 

ratios that are based on generally 

accepted accounting principles. 

However, it is only one factor among a 

number enumerated in the rule that the 

Director may consider in assessing 

whether a Bank should hold more 

capital. That assessment is sufficiently 

case-specific such that it is not feasible 

to provide general rules or parameters 

around the use of any particular factor. 

With respect to the comment offered 

in the Joint Bank Letter, FHFA does 

intend that, for purposes of this factor, 

the Director would look to market value 

of equity as calculated by a Bank using 

a method approved by the agency under 

12 CFR 932.5. The issue of goingconcern versus liquidation value, 

however, is an accounting issue that is 

not applicable to the calculation of that 

ratio. However, MVE/PVCS ratio is only 

one factor among a number enumerated 

in the rule that the Director may 

consider in assessing whether a Bank 

should hold more capital. That 

assessment is sufficiently case-specific 

that it is not feasible to provide general 

rules or parameters around the use of 

any particular factor. The Joint Bank 

Letter also asked for a separate 

rulemaking for the provision. FHFA did 

not agree with the comment. FHFA 

believes that a separate rulemaking to 

address the existing risk-based capital 

regime, including the role of MVE in it, 

may be appropriate, but such a 

rulemaking, unlike this rule, would not 

address the need to address temporary 

or unusual circumstances. 

FHFA also considered the comment 

offered by the Boston Bank regarding its 

general concern regarding use of the 

MVE/PVCS ratio as a factor for imposing 

an increase. FHFA notes that any 

decision to impose a temporary increase 

in the minimum capital requirement 

would consider the existing minimum 

capital requirements. The MVE would 

be used as one factor in evaluating the 

financial condition of a Bank in the 

event that a Bank’s existing capital 

position is determined to be 

insufficient. 

Finally, FHFA considered the San 

Francisco Bank’s comment regarding 

establishment of standards and 

parameters for the provision. FHFA 

does not agree that standards or 

parameters should be set around the use 

of the MVE/PVCS ratio. It is not 

necessary or appropriate to determine in 

advance the significance of a shortfall of 

this ratio in consideration of the other 

factors identified in this rule. FHFA did 

not adopt the Bank’s recommendation. 

12. Section 1225.4(a)(10)—Other 

Conditions as Detailed by the Director 

The Joint Bank Letter suggested that 

FHFA provide guidance on ‘‘what other 

conditions might be relevant in 

determining whether to impose 

temporary increases in minimum capital 

levels * * * and provide the [Banks] a 

chance to comment on any new 

proposed standards.’’ 36 FHFA 

considered the comment and retained 

the provision as proposed. The purpose 

of the provision is to address factors that 

are unforeseeable under current 

circumstances but that turn out to be 

relevant at a later date. FHFA has 

determined that a provision that allows 

the agency to respond to unforeseen 

circumstances without substantial delay 

is prudent, reasonable, and necessary. 

13. Section 1225.4(a)(11)—Written Plan 

To Augment Capital 

The Joint Bank Letter noted that the 

requirement to submit a written plan to 

augment capital is a procedural 

requirement and not a standard or 

factor. The Joint Bank Letter suggested 

that the requirement be moved to a 

different section of the rule.37 FHFA 

agreed with the comment and the final 

rule incorporates the provision in 

§ 1225.3, regarding procedures. 

14. Section 1225.4—Standards and 

Factors 

The San Francisco Bank commented 

that standards regarding rescission of an 

increase are not addressed. The letter 

recommends reducing uncertainty in 

the area by ‘‘addressing in the Proposed 

Rule such critical issues as the size of 

a fluctuation that would weigh 

significantly in favor of the issuance or 

rescission of a temporary order.’’ 38

FHFA considered the comment and 

revised the section to add clarity to the 

standards regarding rescission of an 

increase. In addition, although FHFA 

did not receive specific comment 

regarding proposed § 1225.4(c), FHFA 

determined that the provision clearly 

addresses a procedural as opposed to 

substantive matter. FHFA has 

redesignated the provision as 

§ 1225.3(e). 

15. Section 1225.4(d)—Promulgation of 

Future Guidance 

Three Banks expressed concern 

regarding proposed § 1255.4(d) detailing 

the Director’s authority to issue 

guidance regarding the regulation.39

Two Banks suggested that FHFA remove 

§ 1225.4(d) from the regulation based on 

concerns regarding application of the 

Administrative Procedure Act.40 In the 

alternative, the three Bank commenters 

suggested that ‘‘to the extent that 

guidance expands or adds substantive 

detail to the existing regulation, it 


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41See e.g., San Francisco Bank, section III., at 4. 

would be better for the guidance to be 

issued as a formal rulemaking and 

subject to the requirements of the 

Administrative Procedure Act, with 

advance notice and an opportunity to 

comment by the [Banks] and their 

members.’’ 41 FHFA considered the 

comment, but included the proposed 

provision in the final rule. FHFA will 

review each issue as it arises and take 

appropriate action, including notice and 

comment rulemaking, and promulgation 

of guidance with or without comment, 

depending on the nature of the issue. 

FHFA has also redesignated this 

provision as new § 1225.5 of the final 

rule. 

16. Sections 932.2 and § 932.3 

FHFA is also amending the Banks’ 

capital regulations to remove § 932.2(b) 

and § 932.3(b) which allowed the 

regulator to raise the Banks’ capital 

requirements for reasons of safety and 

soundness. These specific regulations 

were adopted pursuant to the Finance 

Board’s general safety and soundness 

authority under old section 2A(a)(3)(A) 

of the Bank Act, a section which was 

removed by HERA. Final Rule: Capital 

Requirements for the Federal Home 

Loan Banks, 66 FR 8262, 8282–83 

(January 30, 2001). Given that FHFA is 

adopting new part 1225 of its 

regulations and the fact that the Safety 

and Soundness Act as amended by 

HERA provides specific authority under 

which the Director may raise the Banks’ 

minimum capital requirements, FHFA 

no longer views § 932.2(b) and 

§ 932.3(b) as controlling and is removing 

these provisions. 

III. Paperwork Reduction Act 

The final rule does not contain any 

collections of information pursuant to 

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. 

IV. Regulatory Flexibility Act 

The final rule applies only to the 

Banks and the Enterprises, which do not 

come within the meaning of small 

entities as defined in the Regulatory 

Flexibility Act (RFA). See 5. U.S.C. 

650(b), FHFA certifies that this final 

rule will not have significant economic 

impact on a substantial number of small 

entities. 

List of Subjects 

12 CFR Part 932 

Credit, Federal Home Loan Banks, 

Reporting and recordkeeping 

requirements. 

12 CFR Part 1225 

Federal Home Loan Banks, Federal 

National Mortgage Association, Federal 

Home Loan Mortgage Corporation, 

Capital, Filings, Minimum capital, 

Procedures, Standards. 

Accordingly, for the reasons stated in 

the Supplementary Information, under 

the authority of 12 U.S.C. 4513, 4526 

and 4612, the Federal Housing Finance 

Agency amends Chapters IX and XII of 

Title 12 of the Code of Federal 

Regulations as follows: 

Chapter IX—Federal Housing Finance 

Board 

PART 932—FEDERAL HOME LOAN 

BANK CAPITAL REQUIREMENTS 

■ 1. Revise the authority citation for part 

932 to read as follows: 

Authority: 12 U.S.C. 1426, 1440, 1443, 

1446, 4513, 4526. 

■ 2. Revise § 932.2 to read as follows: 

§ 932.2 Total capital requirement. 

Each Bank shall maintain at all times: 

(a) Total capital in an amount at least 

equal to 4.0 percent of the Bank’s total 

assets; and 

(b) A leverage ratio of total capital to 

total assets of at least 5.0 percent of the 

Bank’s total assets. For purposes of 

determining the leverage ratio, total 

capital shall be computed by 

multiplying the Bank’s permanent 

capital by 1.5 and adding to this product 

all other components of total capital. 

■ 3. Revise § 932.3 to read as follows: 

§ 932.3 Risk-based capital requirement. 

Each Bank shall maintain at all times 

permanent capital in an amount at least 

equal to the sum of its credit risk capital 

requirement, its market risk capital 

requirement, and its operations risk 

capital requirement, calculated in 

accordance with §§ 932.4, 932.5 and 

932.6, respectively. 

Chapter XII—Federal Housing Finance 

Agency 

Subchapter B—Entity Regulations 

■ 4. Add part 1225 to subchapter B to 

read as follows: 

PART 1225—MINIMUM CAPITAL— 

TEMPORARY INCREASE 

Sec. 

1225.1 Purpose. 

1225.2 Definitions. 

1225.3 Procedures. 

1225.4 Standards and factors. 

1225.5 Guidances. 

Authority: 12 U.S.C. 4513, 4526 and 4612. 

§ 1225.1 Purpose. 

FHFA is responsible for ensuring the 

safe and sound operation of regulated 

entities. In furtherance of that 

responsibility, this part sets forth 

standards and procedures FHFA will 

employ to determine whether to require 

or rescind a temporary increase in the 

minimum capital levels for a regulated 

entity or entities pursuant to 12 U.S.C. 

4612(d). 

§ 1225.2 Definitions. 

For purposes of this part, the term: 

Enterprise means the Federal National 

Mortgage Association or the Federal 

Home Loan Mortgage Corporation; and 

the term Enterprises means, collectively, 

the Federal National Mortgage 

Association and the Federal Home Loan 

Mortgage Corporation. 

Minimum capital level means the 

lowest amount of capital meeting any 

regulation or orders issued pursuant to 

12 U.S.C. 1426(a)(2) and 12 U.S.C. 4612, 

or any similar requirement established 

for a Federal Home Loan Bank by 

regulation, order or other action. 

Regulated entity means— 

(1) The Federal National Mortgage 

Association and any affiliate thereof; 

(2) The Federal Home Loan Mortgage 

Corporation and any affiliate thereof; 

and 

(3) Any Federal Home Loan Bank. 

Rescission means a removal in whole 

or in part of an increase in the 

temporary minimum capital level. 

§ 1225.3 Procedures. 

(a) Information—(1) Information to 

the regulated entity or entities. If the 

Director determines, based on standards 

enunciated in this part, that a temporary 

increase in the minimum capital level is 

necessary, the Director will provide 

notice to the affected regulated entity or 

entities 30 days in advance of the date 

that the temporary minimum capital 

requirement becomes effective, unless 

the Director determines that an exigency 

exists that does not permit such notice 

or the Director determines a longer time 

period would be appropriate. 

(2) Information to the Government. 

The Director shall inform the Secretary 

of the Treasury, the Secretary of 

Housing and Urban Development, and 

the Chairman of the Securities and 

Exchange Commission of a temporary 

increase in the minimum capital level 

contemporaneously with informing the 

affected regulated entity or entities. 

(b) Comments. The affected regulated 

entity or entities may provide comments 


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Federal Register / Vol. 76, No. 42 / Thursday, March 3, 2011 / Rules and Regulations 11675 

regarding or objections to the temporary 

increase to FHFA within 15 days or 

such other period as the Director 

determines appropriate under the 

circumstances. The Director may 

determine to modify, delay, or rescind 

the announced temporary increase in 

response to such comments or objection, 

but no further notice is required for the 

temporary increase to become effective 

upon the date originally determined by 

the Director. 

(c) Communication. The Director shall 

transmit notice of a temporary increase 

or rescission of a temporary increase in 

the minimum capital level in writing, 

using electronic or such other means as 

appropriate. Such communication shall 

set forth, at a minimum, the bases for 

the Director’s determination, the 

amount of increase or decrease in the 

minimum capital level, the anticipated 

duration of such increase, and a 

description of the procedures for 

requesting a rescission of the temporary 

increase in the minimum capital level. 

(d) Written plan. In making a finding 

under this part, the Director may require 

a written plan to augment capital to be 

submitted on a timely basis to address 

the methods by which such temporary 

increase may be attained and the time 

period for reaching the new temporary 

minimum capital level. 

(e) Time frame for review of 

temporary increase for purpose of 

rescission.—(1) Absent an earlier 

determination to rescind in whole or in 

part a temporary increase in the 

minimum capital level for a regulated 

entity or entities, the Director shall no 

less than every 12 months, consider the 

need to maintain, modify, or rescind 

such increase. 

(2) A regulated entity or regulated 

entities may at any time request in 

writing such review by the Director. 

§ 1225.4 Standards and factors. 

(a) Standard for imposing a temporary 

increase. In making a determination to 

increase temporarily a minimum capital 

requirement for a regulated entity or 

entities, the Director will consider the 

necessity and consistency of such an 

increase with the prudential regulation 

and the safe and sound operations of a 

regulated entity. The Director may 

impose a temporary minimum-capital 

increase if consideration of one or more 

of the following factors leads the 

Director to the judgment that the current 

minimum capital requirement for a 

regulated entity is insufficient to 

address the entity’s risks: 

(1) Current or anticipated declines in 

the value of assets held by a regulated 

entity; the amounts of mortgage-backed 

securities issued or guaranteed by the 

regulated entity; and, its ability to 

access liquidity and funding; 

(2) Credit (including counterparty), 

market, operational and other risks 

facing a regulated entity, especially 

where an increase in risks is foreseeable 

and consequential; 

(3) Current or projected declines in 

the capital held by a regulated entity; 

(4) A regulated entity’s material noncompliance with regulations, written 

orders, or agreements; 

(5) Housing finance market 

conditions; 

(6) Level of reserves or retained 

earnings; 

(7) Initiatives, operations, products, or 

practices that entail heightened risk; 

(8) With respect to a Bank, the ratio 

of the market value of its equity to par 

value of its capital stock where the 

market value of equity is the value 

calculated and reported by the Bank as 

‘‘market value of total capital’’ under 12 

CFR 932.5(a)(1)(ii)(A); or 

(9) Other conditions as detailed by the 

Director in the notice provided under 

§ 1225.3. 

(b) Standard for rescission of a 

temporary increase. In making a 

determination to rescind a temporary 

increase in the minimum capital level 

for a regulated entity or entities, 

whether in full or in part, the Director 

will consider the consistency of such a 

rescission with the prudential 

regulation and safe and sound 

operations of a regulated entity. The 

Director will rescind, in full or in part, 

a temporary minimum capital increase 

if consideration of one or more of the 

following factors leads the Director to 

the judgment that rescission of a 

temporary minimum-capital increase for 

a regulated entity is appropriate 

considering the entity’s risks: 

(1) Changes to the circumstances or 

facts that led to the imposition of a 

temporary increase in the minimum 

capital levels; 

(2) The meeting of targets set for a 

regulated entity in advance of any 

capital or capital-related plan agreed to 

by the Director; 

(3) Changed circumstances or facts 

based on new developments occurring 

since the imposition of the temporary 

increase in the minimum capital level, 

particularly where the original problems 

or concerns have been successfully 

addressed or alleviated in whole or in 

part; or 

(4) Such other standard as the 

Director may consider as detailed by the 

Director in the notice provided under 

§ 1225.3. 

§ 1225.5 Guidances. 

The Director may determine, from 

time to time, issue guidance to 

elaborate, to refine or to provide new 

information regarding standards or 

procedures contained herein. 

Dated: February 22, 2011. 

Edward J. DeMarco, 

Acting Director, Federal Housing Finance 

Agency. 

[FR Doc. 2011–4413 Filed 3–2–11; 8:45 am] 

BILLING CODE 8070–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 95 

[Docket No. 30769; Amdt. No. 492] 

IFR Altitudes; Miscellaneous 

Amendments 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This amendment adopts 

miscellaneous amendments to the 

required IFR (instrument flight rules) 

altitudes and changeover points for 

certain Federal airways, jet routes, or 

direct routes for which a minimum or 

maximum en route authorized IFR 

altitude is prescribed. This regulatory 

action is needed because of changes 

occurring in the National Airspace 

System. These changes are designed to 

provide for the safe and efficient use of 

the navigable airspace under instrument 

conditions in the affected areas. 

DATES: Effective Date: 0901 UTC, March 

10, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Harry Hodges, Flight Procedure 

Standards Branch (AMCAFS–420), 

Flight Technologies and Programs 

Division, Flight Standards Service, 

Federal Aviation Administration, Mike 

Monroney Aeronautical Center, 6500 

South MacArthur Blvd., Oklahoma City, 

OK 73169 (Mail Address: P.O. Box 

25082, Oklahoma City, OK 73125) 

telephone: (405) 954–4164. 

SUPPLEMENTARY INFORMATION: This 

amendment to part 95 of the Federal 

Aviation Regulations (14 CFR part 95) 

amends, suspends, or revokes IFR 

altitudes governing the operation of all 

aircraft in flight over a specified route 

or any portion of that route, as well as 

the changeover points (COPs) for 

Federal airways, jet routes, or direct 

routes as prescribed in part 95. 

The Rule 

The specified IFR altitudes, when 

used in conjunction with the prescribed 

changeover points for those routes, 

ensure navigation aid coverage that is 


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