This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

38559 

Vol. 74, No. 148 

Tuesday, August 4, 2009 

1See Division A, titled the ‘‘Federal Housing 

Finance Regulatory Reform Act of 2008,’’ Title I, 

section 1101 of HERA. 

2 12 CFR 985.4 and 985.7. 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 914 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1235 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

Office of Federal Housing Enterprise 

Oversight 

12 CFR Part 1732 

RIN 2590–AA10 

Record Retention 

AGENCIES: Federal Housing Finance 

Board; Federal Housing Finance 

Agency; Office of Federal Housing 

Enterprise Oversight. 

ACTION: Notice of proposed rulemaking; 

request for comments. 

SUMMARY: The Federal Housing Finance 

Agency (FHFA) is proposing a Record 

Retention regulation. The proposed 

regulation would set forth record 

retention requirements with respect to 

the record management programs of the 

Federal National Mortgage Association, 

the Federal Home Loan Mortgage 

Corporation, the Federal Home Loan 

Banks, and the Office of Finance 

consistent with the safety and 

soundness authority of FHFA under the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992, as 

amended. 

DATES: Comments on the proposed 

regulation must be received in writing 

on or before October 5, 2009. For 

additional information, see 

SUPPLEMENTARY INFORMATION. 

ADDRESSES: You may submit your 

comments on the proposed regulation, 

identified by regulatory information 

number (RIN) 2590–AA10, by any one 

of the following methods: 

• U.S. Mail, United Parcel Service, 

Federal Express, or Other Mail Service: 

The mailing address for comments is: 

Alfred M. Pollard, General Counsel, 

Attention: Comments/RIN 2590–AA10, 

Federal Housing Finance Agency, 

Fourth Floor, 1700 G Street, NW., 

Washington, DC 20552. 

• Hand Delivered/Courier: The hand 

delivery address is: Alfred M. Pollard, 

General Counsel, Attention: Comments/ 

RIN 2590–AA10, Federal Housing 

Finance Agency, Fourth Floor, 1700 G 

Street, NW., Washington, DC 20552. The 

package should be logged at the Guard 

Desk, First Floor, on business days 

between 9 a.m. and 5 p.m. 

• E-mail: Comments may be sent by 

e-mail to RegComments@fhfa.gov. 

Please include ‘‘RIN 2590–AA10’’ in the 

subject line of the message. 

• Federal eRulemaking: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. If 

you submit your comment to the 

Federal eRulemaking Portal, please also 

send it by e-mail to FHFA at 

RegComments@fhfa.gov to ensure 

timely receipt by the Agency. Please 

include ‘‘RIN 2590–AA10’’ in the 

subject line of the message. 

FOR FURTHER INFORMATION CONTACT: 

Andra Grossman, Senior Counsel, 

telephone (202) 343–1313 (not a toll-free 

number); Federal Housing Finance 

Agency, Fourth Floor, 1700 G Street, 

NW., Washington, DC 20552. The 

telephone number for the 

Telecommunications Device for the Deaf 

is (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Comments 

FHFA invites comments on all aspects 

of the proposed regulation, and will take 

all comments into consideration before 

issuing the final regulation. Copies of all 

comments will be posted without 

change, including any personal 

information you provide, such as your 

name and address, on the FHFA Web 

site at http://www.fhfa.gov. 

In addition, copies of all comments 

received will be available for 

examination by the public on business 

days between the hours of 10 a.m. and 

3 p.m., at the Federal Housing Finance 

Agency, Fourth Floor, 1700 G Street, 

NW., Washington, DC 20552. To make 

an appointment to inspect comments, 

please call the Office of General Counsel 

at (202) 414–6924. 

II. Background 

A. Establishment of the Federal Housing 

Finance Agency 

The Housing and Economic Recovery 

Act of 2008 (HERA), Public Law No. 

110–289, 122 Stat. 2654, amended the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 

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

Soundness Act), and the Federal Home 

Loan Bank Act (12 U.S.C. 1421–1449) to 

establish FHFA as an independent 

agency of the Federal government.1

FHFA was established to oversee the 

prudential operations of the Federal 

National Mortgage Association, the 

Federal Home Loan Mortgage 

Corporation (collectively, Enterprises), 

and the Federal Home Loan Banks 

(Banks) (collectively, regulated entities) 

to ensure that they operate in a safe and 

sound manner including being 

capitalized adequately; foster liquid, 

efficient, competitive and resilient 

national housing finance markets; 

comply with the Safety and Soundness 

Act and rules, regulations, guidelines 

and orders issued by the Director of 

FHFA (Director), and the respective 

authorizing statutes of the regulated 

entities; and carry out their missions 

through activities authorized and 

consistent with the Safety and 

Soundness Act and their authorizing 

statutes; and, that the activities and 

operations of the regulated entities are 

consistent with the public interest. 

FHFA also has regulatory authority over 

the Office of Finance under section 

1311(b)(2) of the Safety and Soundness 

Act (12 U.S.C. 4511). 

The Office of Finance is a joint office 

of the Banks that was established by a 

predecessor to FHFA. The Office of 

Finance is governed by a three-person 

board of directors consisting of two 

Bank presidents and one independent 

member. Under the regulations of the 

Federal Housing Finance Board (FHFB), 

the Office of Finance is subject to the 

same regulatory oversight authority and 

enforcement powers as are the Banks 

and their respective directors, officers, 

and employees.2 The Office of Finance 

also is subject to the cease-and-desist 

authority of FHFA and its directors, 

officers and management are subject to 


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3 12 U.S.C.4631(a) and 4636a(a). 

4See sections 1302 and 1312 of HERA. 

5 12 U.S.C. 4513b(a)(10) and (11). 

6 12 U.S.C. 4511(b), 4513(a). 

7See, e.g., 12 U.S.C. 1829b, and the Guidelines 

and Interagency Standards for Safety and 

Soundness at 12 CFR part 30, Appendix A, II, B. 

8Public Law 107–204, 116 Stat. 745 (2002). 

9 17 CFR part 210. 

the removal and prohibition authority of 

FHFA.3 Although the Office of Finance 

is not directly covered by the Safety and 

Soundness Act, it is subject to the 

Director’s ‘‘general regulatory authority’’ 

under section 1311(b)(2) of the Safety 

and Soundness Act (12 U.S.C. 

4511(b)(2)), as amended by HERA. The 

Director is required to exercise that 

authority as necessary to ensure that the 

purposes of the Safety and Soundness 

Act, the authorizing statutes, and other 

applicable law are carried out. Based on 

its general regulatory authority over the 

Office of Finance, FHFA is proposing 

that this regulation apply to the Office 

of Finance. 

The Office of Federal Housing 

Enterprise Oversight (OFHEO) and the 

FHFB will be abolished one year after 

enactment of the HERA. However, the 

regulated entities and the Office of 

Finance continue to operate under 

regulations promulgated by OFHEO and 

FHFB; and such regulations are 

enforceable by the Director of FHFA 

until such regulations are modified, 

terminated, set aside, or superseded by 

the Director of FHFA.4

B. Record Retention and Prudential 

Management and Operation Standards 

The Safety and Soundness Act 

provides that the Director is to establish 

standards for each regulated entity and 

the Office of Finance to maintain 

adequate records, in accordance with 

consistent accounting policies and 

practices that enable the Director to 

evaluate the financial condition of each 

regulated entity and the Office of 

Finance and such other operational and 

management standards as the Director 

determines to be appropriate.5 The 

Safety and Soundness Act further 

provides the Director with general 

supervisory and regulatory authority 

over the regulated entities and the 

Office of Finance, and requires the 

Director to ensure that they operate in 

a safe and sound manner.6 Accordingly, 

this proposed regulation would address 

the record retention requirements of 

each regulated entity and the Office of 

Finance. The proposed regulation, when 

published in its final form, would 

supersede 12 CFR 914.3 (FHFB Access 

to Books and Records) and 12 CFR part 

1732 (OFHEO Record Retention). 

The proposed regulation would 

require the regulated entities and the 

Office of Finance to establish and 

maintain a record retention program to 

ensure that records are readily 

accessible for examination and other 

supervisory purposes. FHFA recognizes 

that the effectiveness of the examination 

process is dependent upon the prompt 

production of complete and accurate 

records. FHFA, through the supervisory 

process, must have access to the records 

of a regulated entity and the Office of 

Finance that are necessary to determine 

the financial condition of the regulated 

entity and the Office of Finance or the 

details or the purpose of any transaction 

that may have a material effect on the 

financial condition of the regulated 

entity and the Office of Finance. 

Retention of such records not only 

facilitates the examination process, but 

also allows a regulated entity and the 

Office of Finance to manage more 

effectively its business and detect 

improper behavior that might cause 

financial damage. Additionally, such 

records serve as documentation for a 

regulated entity and the Office of 

Finance in any controversy over its 

business activities or transactions. 

The importance of sound record 

retention policies and procedures by 

regulated institutions also has been 

recognized by Congress and other 

federal regulators. Adequate record 

retention by the institutions has been 

determined to have a high degree of 

usefulness in criminal, tax, and 

regulatory investigations or proceedings, 

and has been identified as a requisite 

component of an institution’s operation 

and management on a safety and 

soundness basis.7

In addition to facilitating the 

oversight and enforcement of federal 

banking laws, adequate record retention 

has been recognized by Congress as 

being essential to the oversight and 

enforcement of the federal securities 

laws. For example, as mandated by 

section 802 of the Sarbanes-Oxley Act,8

the U.S. Securities and Exchange 

Commission adopted rules requiring 

accounting firms to retain for seven 

years certain records relevant to their 

audits and reviews of issuers’ financial 

statements. Records to be retained 

include an accounting firm’s 

workpapers and certain other 

documents that contain conclusions, 

opinions, analyses, or financial data 

related to the audit or review.9 The 

proposed requirements would have no 

effect on the policies, rules, or guidance 

of other federal agencies that may 

require record retention terms or 

practices different from those set forth 

in the proposal. 

Section 1313(f) of the Safety and 

Soundness Act, as amended by section 

1201 of HERA, requires the Director, 

when promulgating regulations relating 

to the Banks, to consider the differences 

between the Banks and the enterprises 

with respect to the Banks’ cooperative 

ownership structure, mission of 

providing liquidity to members, 

affordable housing and community 

development mission, capital structure, 

and joint and several liability. The 

Director may also consider any other 

differences that are deemed appropriate. 

In preparing the proposed regulation, 

the Director considered the differences 

between the Banks and the Enterprises 

as they relate to the above factors. The 

Director requests comments from the 

public about whether differences related 

to these factors should result in a 

revision of the proposed amendment as 

it relates to the Banks. 

III. Section-by-Section Analysis 

Section 1235.1 Purpose and Scope 

This proposed section provides the 

purpose of the regulation is to set forth 

minimum requirements in connection 

with the record retention program of 

each regulated entity and the Office of 

Finance. Such requirements would be 

intended to ensure that complete and 

accurate records of each regulated entity 

and the Office of Finance are readily 

accessible by FHFA for examination and 

other supervisory purposes. 

Section 1235.2 Definitions 

This proposed section would provide 

definitions for the terms contained in 

the proposed regulation. 

Active record would be defined as a 

record that is necessary to conduct the 

current business of an office or business 

unit of a regulated entity or the Office 

of Finance, and therefore, readily 

available for consultation and reference. 

Director would be defined as the 

Director of FHFA, or his or her designee. 

Electronic record would be defined as 

a record created, generated, 

communicated, or stored by electronic 

means. 

E-mail would be defined as electronic 

mail, which is a method of 

communication in which— 

(1) Usually, text is transmitted (but 

sometimes also graphics and/or audio 

information); 

(2) Operations include sending, 

storing, processing, and receiving 

information; 

(3) Users are allowed to communicate 

under specified conditions; and 

(4) Messages are held in storage until 

called for by the addressee, including 


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any attachment of separate electronic 

files. 

Employee would be defined as any 

officer or employee of a regulated entity 

and the Office of Finance or any 

conservator appointed by FHFA. 

Federal Home Loan Bank or Bank 

would be defined as a Bank established 

under the Federal Home Loan Bank Act; 

the term ‘‘Federal Home Loan Banks’’ or 

‘‘Banks’’ would be defined to mean, 

collectively, all the Federal Home Loan 

Banks. 

FHFA would be defined as the 

Federal Housing Finance Agency. 

Financing Corporation (FICO) would 

mean the entity established by the 

Competitive Equality Banking Act of 

1987, as a mixed-ownership government 

corporation whose purpose is to 

function as a financing vehicle for the 

Federal Savings & Loan Insurance 

Corporation. FICO has a board of 

directors consisting of the managing 

director of the Office of Finance and two 

Bank presidents. 

Inactive record would be defined as a 

record that is seldom used but must be 

retained by a regulated entity and the 

Office of Finance for fiscal, legal, 

historical, or vital records purposes. 

Office of Finance would be defined as 

the Office of Finance of the Federal 

Home Loan Bank System. 

Record would be defined as any 

information, whether generated 

internally or received from outside 

sources by a regulated entity or the 

Office of Finance or employee, 

maintained in connection with a 

regulated entity or Office of Finance 

business (which business, in the case of 

the Office of Finance, shall include any 

functions performed with respect to the 

FICO), regardless of the following— 

(1) Form or format, including hard 

copy documents (e.g., files, logs, and 

reports) and electronic documents (e.g., 

e-mail, databases, spreadsheets, 

PowerPoint presentations, electronic 

reporting systems, electronic tapes and 

back-up tapes, optical discs, CD–ROMS, 

and DVDs), and voicemail records; 

(2) Where the information is stored or 

located, including network servers, 

desktop or laptop computers and 

handheld computers, other wireless 

devices with text messaging capabilities, 

and on-site or off-site at a storage 

facility; 

(3) Whether the information is 

maintained or used on regulated entityowned or Office of Finance equipment, 

or personal or home computer systems 

of an employee; or 

(4) Whether the information is active 

or inactive. 

Record hold would be defined as a 

requirement, an order, or a directive 

from a regulated entity, the Office of 

Finance or FHFA that the regulated 

entity or the Office of Finance is to 

retain records relating to a particular 

issue in connection with an actual or a 

potential FHFA examination, 

investigation, enforcement proceeding, 

or litigation of which the regulated 

entity and the Office of Finance has 

received notice from FHFA. 

Record retention schedule would be 

defined as a schedule that details the 

categories of records a regulated entity 

or the Office of Finance is required to 

retain and the corresponding retention 

periods. The record retention schedule 

includes all media, such as microfilm 

and machine-readable computer 

records, for each record category. 

Reproductions are also included for 

each record category if the original of 

the official record is not available. 

Regulated entity would be defined as 

the Federal National Mortgage 

Association and any affiliate thereof, the 

Federal Home Loan Mortgage 

Corporation and any affiliate thereof, or 

any Federal Home Loan Bank; the term 

‘‘regulated entities’’ would be defined to 

mean, collectively, the Federal National 

Mortgage Association and any affiliate 

thereof, the Federal Home Loan 

Mortgage Corporation and any affiliate 

thereof, and the Federal Home Loan 

Banks. 

Retention period would be defined as 

the length of time that records must be 

kept before they are destroyed. Records 

not authorized for destruction have a 

retention period of ‘‘permanent.’’ 

Safety and Soundness Act would be 

defined as the Federal Housing 

Enterprises Financial Safety and 

Soundness Act of 1992 (12 U.S.C. 4501 

et seq.), as amended by the Housing and 

Economic Recovery Act of 2008, Public 

Law No. 110–289, 122 Stat. 2654 (2008). 

Vital records would be defined as 

records that are needed to meet 

operational responsibilities of a 

regulated entity or the Office of Finance 

under emergency or disaster conditions 

(emergency operating records) or to 

protect the legal and financial rights of 

a regulated entity or the Office of 

Finance. Emergency operating records 

are the type of vital records essential to 

the continued functioning or 

reconstitution of a regulated entity or 

the Office of Finance during and after an 

emergency. A vital record may be both 

an emergency operating record and a 

legal and financial rights record. 

Section 1235.3 Establishment and 

Evaluation of Record Retention Program 

This proposed section would require 

each regulated entity and the Office of 

Finance to establish and maintain a 

written record retention program and 

provide a copy of such program to the 

Deputy Director of the Division of 

Enterprise Regulation and the Deputy 

Director of the Division of Federal Home 

Loan Bank Regulation, or his or her 

designee (Deputy Director), as 

appropriate, within 120 days of the 

effective date of this part, and annually 

thereafter, and whenever a significant 

revision to the program has been made. 

It would also require management of 

the regulated entity and the Office of 

Finance to evaluate in writing the 

adequacy and effectiveness of the record 

retention program at least every three 

years and provide a copy of the 

evaluation to the board of directors and 

the appropriate Deputy Director. 

Section 1235.4 Minimum 

Requirements of Record Retention 

Program 

This proposed section would provide 

the minimum requirements for the 

record retention program of each 

regulated entity and the Office of 

Finance, including requirements 

relating to a record retention schedule. 

Section 1235.5 Record Hold 

This proposed section would address 

record retention methods, record access 

and retrieval policies, and notification 

procedures for employees. Moreover, 

the section would require a regulated 

entity’s or the Office of Finance’s 

employee who is aware of a potential 

FHFA investigation, enforcement 

proceeding, or litigation involving the 

regulated entity or the Office of Finance 

or an employee to notify immediately 

the legal department of the regulated 

entity or the Office of Finance and 

retain any records that may be relevant 

to such investigation, enforcement 

proceeding, or litigation. 

Section 1235.6 Access to Records 

This proposed section would set forth 

the requirement that records must be 

readily available for inspection within a 

reasonable period upon request by 

FHFA, at a location acceptable to FHFA. 

For requests made during the course of 

an onsite examination and pursuant to 

an examination’s scope, a reasonable 

period is no longer than one business 

day and for requests for documents 

made outside of an onsite examination, 

a reasonable period is presumed to be 

three business days. 

Section 1235.7 Supervisory Action 

This proposed section would provide 

that failure by a regulated entity or the 

Office of Finance to comply with the 

requirements of the proposed regulation 

may subject the regulated entity or the 


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38562 Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Proposed Rules 

Office of Finance, or its board members, 

officers, or employees to supervisory 

action by FHFA. The section also would 

provide that the proposed regulation 

does not limit the authority of FHFA 

under its safety and soundness mandate 

to take other actions such as conducting 

examinations, requiring reports and 

disclosures, and enforcing compliance 

with applicable laws, rules and 

regulations. 

Regulatory Impact 

Paperwork Reduction Act 

Because the proposed regulation 

pertains to the regulated entities and the 

Office of Finance, it does not contain 

any information collection requirement 

that requires the approval of the Office 

of Management and Budget under the 

Paperwork Reduction Act (44 U.S.C. 

3501 et seq.). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires that a 

regulation that has a significant 

economic impact on a substantial 

number of small entities, small 

businesses, or small organizations must 

include an initial regulatory flexibility 

analysis describing the regulation’s 

impact on small entities. Such an 

analysis need not be undertaken if the 

agency has certified that the regulation 

will not have a significant economic 

impact on a substantial number of small 

entities. 5 U.S.C. 605(b). FHFA has 

considered the impact of the proposed 

regulation under the Regulatory 

Flexibility Act. FHFA certifies that the 

proposed regulation, if adopted, is not 

likely to have a significant economic 

impact on a substantial number of small 

business entities because the regulation 

is applicable only to the regulated 

entities and the Office of Finance, 

which are not small entities for 

purposes of the Regulatory Flexibility 

Act. 

List of Subjects 

12 CFR Part 914 

Federal home loan banks, Reporting 

and recordkeeping requirements. 

12 CFR Part 1235 

Federal home loan banks, 

Government-sponsored enterprises, 

Records, Reporting and recordkeeping 

requirements. 

12 CFR Part 1732 

Government-sponsored enterprises, 

Records, Reporting and recordkeeping 

requirements. 

Authority and Issuance 

Accordingly, for the reasons stated in 

the preamble, under the authority of 12 

U.S.C. 4513b, FHFA proposes to amend 

Chapters IX, XII and XVII of title 12 of 

the Code of Federal Regulations, as set 

forth below: 

CHAPTER IX—FEDERAL HOUSING 

FINANCE BOARD 

PART 914—DATA AVAILABILITY AND 

REPORTING 

1. The authority citation for part 914 

is revised to read as follows: 

Authority: 12 U.S.C. 1440 and 4526. 

§ 914.3 [Removed and reserved] 

2. Remove and reserve § 914.3. 

CHAPTER XII—FEDERAL HOUSING 

FINANCE AGENCY 

SUBCHAPTER B—ENTITY REGULATIONS 

3. Add part 1235 to subchapter B to 

read as follows: 

PART 1235—RECORD RETENTION 

Sec. 

1235.1 Purpose and scope. 

1235.2 Definitions. 

1235.3 Establishment and evaluation of 

record retention program. 

1235.4 Minimum requirements of record 

retention program. 

1235.5 Record hold. 

1235.6 Access to records. 

1235.7 Supervisory action. 

Authority: 12 U.S.C. 4511(b), 4513(a), 

4513b(a)(10) and (11), 4526. 

§ 1235.1 Purpose and scope. 

The purpose of this part is to set forth 

minimum requirements in connection 

with the record retention program of 

each regulated entity and the Office of 

Finance. The requirements are intended 

to ensure that complete and accurate 

records of each regulated entity and the 

Office of Finance are readily accessible 

by FHFA for examination and other 

supervisory purposes. 

§ 1235.2 Definitions. 

For purposes of this part, the termƒ 

Active record means a record that is 

necessary to conduct the current 

business of an office or business unit of 

a regulated entity and the Office of 

Finance, and therefore, is readily 

available for consultation and reference. 

Director means the Director of FHFA, 

or his or her designee. 

Electronic record means a record 

created, generated, communicated, or 

stored by electronic means. 

E-mail means electronic mail, which 

is a method of communication in 

which— 

(1) Usually, text is transmitted (but 

sometimes also graphics and/or audio 

information); 

(2) Operations include sending, 

storing, processing, and receiving 

information; 

(3) Users are allowed to communicate 

under specified conditions; and 

(4) Messages are held in storage until 

called for by the addressee, including 

any attachment of separate electronic 

files. 

Employee means any officer or 

employee of a regulated entity or the 

Office of Finance or of any conservator 

appointed by FHFA. 

Federal Home Loan Bank or Bank 

means a Bank established under the 

Federal Home Loan Bank Act; the term 

Federal Home Loan Banks or Banks 

means, collectively, all the Federal 

Home Loan Banks. 

FHFA means the Federal Housing 

Finance Agency. 

Financing Corporation (FICO) means 

the entity established by the 

Competitive Equality Banking Act of 

1987, as a mixed-ownership government 

corporation whose purpose is to 

function as a financing vehicle for the 

Federal Savings & Loan Insurance 

Corporation. FICO has a board of 

directors consisting of the managing 

director of the Office of Finance and two 

Bank presidents. 

Inactive record means a record that is 

seldom used but must be retained by a 

regulated entity or the Office of Finance 

for fiscal, legal, historical, or vital 

records purposes. 

Office of Finance means the Office of 

Finance of the Federal Home Loan Bank 

System. 

Record means any information, 

whether generated internally or received 

from outside sources by a regulated 

entity or the Office of Finance or 

employee, maintained in connection 

with a regulated entity or Office of 

Finance business (which business, in 

the case of the Office of Finance, shall 

include any functions performed with 

respect to the Financing Corporation), 

regardless of the following— 

(1) Form or format, including hard 

copy documents (e.g., files, logs, and 

reports) and electronic documents (e.g., 

e-mail, databases, spreadsheets, 

PowerPoint presentations, electronic 

reporting systems, electronic tapes and 

back-up tapes, optical discs, CD–ROMS, 

and DVDs), and voicemail records; 

(2) Where the information is stored or 

located, including network servers, 

desktop or laptop computers and 

handheld computers, other wireless 

devices with text messaging capabilities, 

and on-site or off-site at a storage 

facility; 


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(3) Whether the information is 

maintained or used on regulated entityowned or Office of Finance equipment, 

or personal or home computer systems 

of an employee; or 

(4) Whether the information is active 

or inactive. 

Record hold means a requirement, an 

order, or a directive from a regulated 

entity, the Office of Finance, or FHFA 

that the regulated entity or the Office of 

Finance is to retain records relating to 

a particular issue in connection with an 

actual or a potential FHFA examination, 

investigation, enforcement proceeding, 

or litigation of which the regulated 

entity or the Office of Finance has 

received notice from FHFA. 

Record retention schedule means a 

schedule that details the categories of 

records a regulated entity or the Office 

of Finance is required to retain and the 

corresponding retention periods. The 

record retention schedule includes all 

media, such as microfilm and machinereadable computer records, for each 

record category. Reproductions are also 

included for each record category if the 

original of the official record is not 

available. 

Regulated entity means the Federal 

National Mortgage Association and any 

affiliate thereof, the Federal Home Loan 

Mortgage Corporation and any affiliate 

thereof, or any Federal Home Loan 

Bank; the term ‘‘regulated entities’’ 

means, collectively, the Federal 

National Mortgage Association and any 

affiliate thereof, the Federal Home Loan 

Mortgage Corporation and any affiliate 

thereof, and the Federal Home Loan 

Banks. 

Retention period means the length of 

time that records must be kept before 

they are destroyed. Records not 

authorized for destruction have a 

retention period of ‘‘permanent.’’ 

Safety and Soundness Act means the 

Federal Housing Enterprises Financial 

Safety and Soundness Act of 1992 (12 

U.S.C. 4501 et seq.), as amended. 

Vital records means records that are 

needed to meet operational 

responsibilities of a regulated entity or 

the Office of Finance under emergency 

or disaster conditions (emergency 

operating records) or to protect the legal 

and financial rights of a regulated entity 

or the Office of Finance. Emergency 

operating records are the type of vital 

records essential to the continued 

functioning or reconstitution of a 

regulated entity or the Office of Finance 

during and after an emergency. A vital 

record may be both an emergency 

operating record and a legal and 

financial rights record. 

§ 1235.3 Establishment and evaluation of 

record retention program. 

(a) Establishment. Each regulated 

entity and the Office of Finance shall 

establish and maintain a written record 

retention program and provide a copy of 

such program to the Deputy Director of 

the Division of Enterprise Regulation, or 

his or her designee, or the Deputy 

Director of the Division of Federal Home 

Loan Bank Regulation, or his or her 

designee (Deputy Director), as 

appropriate, within 120 days of the 

effective date of this part, and annually 

thereafter, and whenever a significant 

revision to the program has been made. 

(b) Evaluation. Management of each 

regulated entity and the Office of 

Finance shall evaluate in writing the 

adequacy and effectiveness of the record 

retention program at least every three 

years and provide a copy of the 

evaluation to the board of directors and 

the appropriate Deputy Director. 

§ 1235.4 Minimum requirements of record 

retention program. 

(a) Requirements. The record 

retention program established and 

maintained by each regulated entity and 

the Office of Finance under § 1235.3 

shall: 

(1) Be reasonably designed to assure 

that retained records are complete and 

accurate; 

(2) Be reasonably designed to assure 

that the format of retained records and 

the retention period— 

(i) Are adequate to support litigation 

and the administrative, business, 

external and internal audit functions of 

the regulated entity or the Office of 

Finance; 

(ii) Comply with requirements of 

applicable laws and regulations; and 

(iii) Permit ready access by the 

regulated entity or the Office of Finance 

and, upon request, by the examination 

and other staff of FHFA by reasonable 

means, consistent with the nature and 

availability of the records and existing 

information technology. 

(3) Assign in writing the authorities 

and responsibilities for record retention 

activities; 

(4) Include policies and procedures 

concerning record holds, consistent 

with § 1235.5; 

(5) Include an accurate, current, and 

comprehensive record retention 

schedule that lists records by major 

categories, subcategories, record type, 

and retention period, which retention 

period is appropriate to the specific 

record and consistent with applicable 

legal, regulatory, fiscal, and operational 

and business requirements; 

(6) Include adequate security and 

internal controls to protect records from 

unauthorized access and data alteration; 

and 

(7) Provide for adequate back-up and 

recovery of electronic records. 

(b) Training. The record retention 

program shall provide for training of 

and notice to all employees on a 

periodic basis on their record retention 

responsibilities, including instruction 

regarding penalties provided by law for 

the unlawful removal or destruction of 

records. The record retention program 

also shall provide for training for the 

agents or independent contractors of a 

regulated entity or the Office of Finance, 

as appropriate, consistent with their 

respective roles and responsibilities to 

the regulated entity or the Office of 

Finance. 

§ 1235.5 Record hold. 

(a) Notification by a regulated entity 

or the Office of Finance. The record 

retention program of a regulated entity 

and the Office of Finance shallƒ 

(1) Address how employees and, as 

appropriate, how agents or independent 

contractors consistent with their 

respective roles and responsibilities to 

the regulated entity or the Office of 

Finance, will receive prompt 

notification of a record hold; 

(2) Designate an individual to 

communicate specific requirements and 

instructions, including, when necessary, 

the instruction to cease immediately any 

otherwise permissible destruction of 

records; and 

(3) Provide that any employee and, as 

appropriate, any agent or independent 

contractor consistent with his or her 

respective role and responsibility to the 

regulated entity, who has received 

notice of a potential investigation, 

enforcement proceeding, or litigation by 

FHFA involving the regulated entity or 

the Office of Finance or an employee, or 

otherwise has actual knowledge that an 

issue is subject to such an investigation, 

enforcement proceeding or litigation, 

shall notify immediately the legal 

department of the regulated entity or the 

Office of Finance and shall retain any 

records that may be relevant in any way 

to such investigation, enforcement 

proceeding, or litigation. 

(b) Method of record retention. The 

record retention program of each 

regulated entity and the Office of 

Finance shall address the method by 

which the regulated entity or the Office 

of Finance will retain records during a 

record hold. Specifically, the program 

shall describe the method for the 

continued preservation of electronic 

records, including e-mails, and the 

conversion of records from paper to 

electronic format as well as any 

alternative storage method. 


rmajette on DSK29S0YB1PROD with PROPOSALS
38564 Federal Register / Vol. 74, No. 148 / Tuesday, August 4, 2009 / Proposed Rules 

(c) Access to and retrieval of records 

during a record hold. The record 

retention program of each regulated 

entity or the Office of Finance shall 

ensure access to and retrieval of records 

by the regulated entity or the Office of 

Finance and access, upon request, by 

FHFA, during a record hold. Such 

access shall be by reasonable means, 

consistent with the nature and 

availability of the records and existing 

information technology. 

§ 1235.6 Access to records. 

(a) Access to records. Each regulated 

entity or the Office of Finance shall 

make its records readily available for 

inspection and other supervisory 

purposes within a reasonable period 

upon request by FHFA, at a location 

acceptable to FHFA and by reasonable 

means, consistent with the nature and 

availability of the records and existing 

information technology. 

(b) Reasonable period. For requests 

for documents made during the course 

of an on-site examination and pursuant 

to the examination’s scope, a reasonable 

period is presumed to be no longer than 

one business day. For requests for 

documents made outside of an on-site 

examination, a reasonable period is 

presumed to be three business days. 

§ 1235.7 Supervisory action. 

(a) Supervisory action. Failure by a 

regulated entity or the Office of Finance 

to comply with this part may subject the 

regulated entity or the Office of Finance 

or the board members, officers, or 

employees thereof to supervisory action 

by FHFA under the Safety and 

Soundness Act, including but not 

limited to cease-and-desist proceedings, 

temporary cease-and-desist proceedings, 

and civil money penalties. 

(b) No limitation of authority. This 

part does not limit or restrict the 

authority of FHFA to act under its safety 

and soundness mandate, in accordance 

with the Safety and Soundness Act. 

Such authority includes, but is not 

limited to, conducting examinations, 

requiring reports and disclosures, and 

enforcing compliance with applicable 

laws, rules, and regulations. 

CHAPTER XVII—OFFICE OF FEDERAL 

HOUSING ENTERPRISE OVERSIGHT, 

DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT 

PART 1732—[REMOVED] 

4. Remove part 1732. 

Dated: July 28, 2009. 

James B. Lockhart III, 

Director, Federal Housing Finance Agency. 

[FR Doc. E9–18489 Filed 8–3–09; 8:45 am] 

BILLING CODE P 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Parts 985, 989 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Parts 1273, 1274 

RIN 2590–AA30 

Board of Directors of Federal Home 

Loan Bank System Office of Finance 

AGENCY: Federal Housing Finance 

Agency; Federal Housing Finance 

Board. 

ACTION: Notice of proposed rulemaking; 

request for comment. 

SUMMARY: Governed by the Federal 

Housing Finance Agency’s (FHFA) 

regulations, the Federal Home Loan 

Bank System’s (System) Office of 

Finance, issues debt (‘‘consolidated 

obligations’’) on which the Federal 

Home Loan Banks (Banks) are jointly 

and severally liable and publishes 

combined financial reports on the Banks 

so that investors in the consolidated 

obligations can assess the strength of the 

System that stands behind them. The 

Office of Finance (OF) is governed by a 

board of directors, the composition and 

functions of which are determined by 

FHFA’s regulations. The FHFA’s 

experience with the System and with 

the OF’s combined financial reports 

during the recent period of market stress 

suggests that the OF and the System 

could benefit from a reconstituted and 

strengthened board. This proposed 

regulation is intended to achieve that. 

DATES: Comments on the proposed 

regulation must be received on or before 

October 5, 2009. For additional 

information, see SUPPLEMENTARY

INFORMATION. 

ADDRESSES: You may submit your 

comments on the proposed regulation, 

identified by regulatory information 

number (RIN) 2590–AA30 by any of the 

following methods: 

• U.S. Mail, United Parcel Service, 

Federal Express, or Other Mail Service: 

The mailing address for comments is: 

Alfred M. Pollard, General Counsel, 

Attention: Comments/RIN 2590–AA30, 

Federal Housing Finance Agency, 

Fourth Floor, 1700 G Street, NW., 

Washington, DC 20552. 

• Hand Delivery/Courier: The hand 

delivery address is: Alfred M. Pollard, 

General Counsel, Attention: Comments/ 

RIN 2590–AA30, Federal Housing 

Finance Agency, Fourth Floor, 1700 G 

Street, NW., Washington, DC 20552. The 

package should be logged at the Guard 

Desk, First Floor, on business days 

between 9 a.m. and 5 p.m. 

• E-mail: Comments to Alfred M. 

Pollard, General Counsel may be sent by 

e-mail at RegComments@FHFA.gov. 

Please include ‘‘RIN 2590–AA30’’ in the 

subject line of the message. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

FOR FURTHER INFORMATION CONTACT: 

Joseph A. McKenzie, 202–408–2845, 

Division of Federal Home Loan Bank 

Regulation, Federal Housing Finance 

Agency, 1625 Eye Street, NW., 

Washington, DC 20006; or Neil Crowley, 

Deputy General Counsel, 202–343–1316, 

or Thomas E. Joseph, Senior AttorneyAdvisor, 202–414–3095, Office of 

General Counsel, Federal Housing 

Finance Agency, Fourth Floor, 1700 G 

Street, NW., Washington, DC 20552. The 

telephone number for the 

Telecommunications Device for the Deaf 

is (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Comments 

The FHFA invites comments on all 

aspects of the proposed regulation, and 

will adopt a final regulation with 

appropriate changes after taking all 

comments into consideration. Copies of 

all comments will be posted on the 

Internet Web site at https:// 

www.fhfa.gov. In addition, copies of all 

comments received will be available for 

examination by the public on business 

days between the hours of 10 a.m. and 

3 p.m., at the Federal Housing Finance 

Agency, Fourth Floor, 1700 G Street, 

NW., Washington, DC 20552. To make 

an appointment to inspect comments, 

please call the Office of General Counsel 

at (202) 414–6924. 

II. Background 

A. Creation of the Federal Housing 

Finance Agency and Recent Legislation 

Effective July 30, 2008, the Housing 

and Economic Recovery Act of 2008 

(HERA), Public Law 110–289, 122 Stat. 

2654, transferred the supervisory and 

oversight responsibilities of the Office of 

Federal Housing Enterprise Oversight 

(OFHEO) over the Federal National 

Mortgage Association (Fannie Mae), and 

the Federal Home Loan Mortgage 

Corporation (Freddie Mac) (collectively, 

the Enterprises), the oversight 

responsibilities of the Federal Housing 

Finance Board (FHFB or Finance Board) 

over the Banks and the Office of Finance 

(OF) (which acts as the Banks’ fiscal 

agent) and certain functions of the 

Department of Housing and Urban 

Development to a new independent 

executive branch agency, the FHFA. See 

id. at § 1101, 122 Stat. 2661–62 

(amending 12 U.S.C. 4511). The FHFA 


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