41560 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

1Finance Board Resolution No. 99–65 (Dec. 14,

1999).

investments that comport with the

standards the OCC has adopted in its

published precedents.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA)

(5 U.S.C. 601–612) does not apply to a

rulemaking where a general notice of

proposed rulemaking is not required. 5

U.S.C. 603 and 604. As noted

previously, the OCC has determined

that it is not necessary to publish a

notice of proposed rulemaking for this

final rule. Accordingly, the RFA’s

requirements relating to an initial and

final regulatory flexibility analysis are

not applicable. In any event, however,

since this final rule merely adds one

additional element to the notice that the

rule permits a national bank to file, this

final rule does not have a significant

economic impact on a substantial

number of small entities.

Executive Order 12866

The Comptroller of the Currency has

determined that this final rule is not a

significant regulatory action for

purposes of Executive Order 12866.

Unfunded Mandates Reform Act of

1995

The Unfunded Mandates Reform Act

of 1995, Public Law 104–4, 109 Stat. 48

(UMA), applies only when an agency is

required to issue a general notice of

proposed rulemaking or a final rule for

which the agency published a general

notice of proposed rulemaking (2 U.S.C.

1532). As noted previously, the OCC has

determined, for good cause, that notice

and comment is unnecessary.

Accordingly, the UMA does not require

a budgetary impact analysis.

Nevertheless, the OCC has determined

that this final rule will not result in

expenditures by State, local, and tribal

governments, or by the private sector, of

$100 million or more in any one year.

Accordingly, the OCC has not prepared

a budgetary impact statement or

specifically addressed the regulatory

activities considered.

List of Subjects in 12 CFR Part 5

Administrative practice and

procedure, National banks, Reporting

and recordkeeping requirements,

Securities.

Authority and Issuance

For the reasons set forth in the

preamble, the OCC amends chapter I of

title 12 of the Code of Federal

Regulations as follows:

PART 5—RULES, POLICIES, AND

PROCEDURES FOR CORPORATE

ACTIVITIES

1. The authority citation for part 5

continues to read as follows:

Authority: 12 U.S.C. 1 et seq., 93a; and

section 5136A of the Revised Statutes, (12

U.S.C. 24a).

2. Section 5.36 is amended by:

A. Redesignating paragraph (e)(7) as

(e)(8);

B. Removing ‘‘and’’ from the end of

paragraph (e)(6); and

C. Adding a new paragraph (e)(7) to

read as follows:

§ 5.36 Other equity investments.

* * * * *

(e) * * *

(7) Certify that the bank’s loss

exposure is limited, as a legal and

accounting matter, and the bank does

not have open-ended liability for the

obligations of the enterprise; and

* * * * *

Dated: June 27, 2000

John D. Hawke, Jr.,

Comptroller of the Currency.

[FR Doc. 00–17008 Filed 7–5–00; 8:45 am]

BILLING CODE 4810–33–P

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 915

[No. 2000–31]

RIN 3069–AB00

Election of Federal Home Loan Bank

Directors

AGENCY: Federal Housing Finance

Board.

ACTION: Final rule.

SUMMARY: The Federal Housing Finance

Board (Finance Board) is amending its

regulations to address the status of the

1999 and 2000 elections of directors at

each Federal Home Loan Bank (Bank),

and to provide standards regarding the

manner in which the Banks must stagger

their boards. The final rule also

addresses the consequences to an

incumbent director whose directorship

is eliminated or is redesignated as

representing Bank members located in a

different state before the end of his or

her term.

EFFECTIVE DATE: The final rule is

effective on August 7, 2000.

FOR FURTHER INFORMATION CONTACT: Neil

R. Crowley, Deputy General Counsel,

(202) 408–2990, Federal Housing

Finance Board, 1777 F Street, N.W.,

Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Background

On February 23, 2000, the Finance

Board approved a proposed rule to

implement provisions of the GrammLeach-Bliley Act, Public Law 106–102,

133 Stat. 1338, 1453 (Nov. 12, 1999)

(GLB Act) regarding the term of office of

Bank directors. 65 FR 17458 (April 3,

2000). The GLB Act amended Section

7(d) of the Federal Home Loan Bank Act

(Bank Act) to establish uniform threeyear terms for the appointed and elected

directors of the Banks and required that

the terms of those directors first elected

or appointed after enactment of the GLB

Act be adjusted as necessary to stagger

the board of each Bank into three classes

of approximately equal size. 12 U.S.C.

1427(d), as amended. Under prior law

the appointed directors had served for

four-year terms and the elected directors

had served for two-year terms. Because

the GLB Act amendments took effect

upon enactment, they had the effect of

extending the terms of all incumbent

elected directors by one year. As a result

of the extension of the terms of office by

the GLB Act, on January 1, 2000, when

the two-year terms of the elected

directors otherwise would have expired,

there were no open elected

directorships at any of the Banks.

During 1999, each Bank had conducted

elections in which the members voted to

elect approximately one-half of the

elected directors of the Bank, but the

candidates elected could not assume

office on January 1, 2000 as a

consequence of the GLB Act

amendments. In previously addressing

the effect of the GLB Act on the terms

of Bank directorships, the Finance

Board expressed its intent to authorize

the board of directors of each Bank to

decide whether to conduct new

elections in 2000 or to adopt the

tabulation of votes cast in the 1999

elections for use in the 2000 elections.1

The Finance Board indicated that it

would establish the criteria by which

the board of each Bank could make that

decision, which was one issue that the

Finance Board had addressed in the

proposed rulemaking. The proposed

rule also addressed the manner in

which the terms of the directors

assuming office after November 12, 1999

were to be adjusted in order to achieve

the one-third staggering required by the

GLB Act. The final rule addresses both

of those issues, substantially as

proposed.

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41561

II. The Proposed Rule

The GLB Act imposed the staggering

requirement without amending existing

law, under which the elected

directorships of the Banks are allocated

among the states based in part on the

amount of Bank stock required to be

held by the members located in each

state as of the end of the prior year, and

in part on the number of directorships

designated to each state in 1960. Under

the existing provisions, it is possible for

an elected directorship to be

redesignated mid-term to represent the

members located in another state. It is

also possible that the annual

designation of directorships might

reduce the number of elected

directorships allocated to a particular

state, thus causing a directorship to

disappear altogether. The proposed rule

included provisions intended to

maintain a staggered board

notwithstanding the possibility that

over time one or more directorships

might be eliminated. The proposed rule

also addressed the consequences to an

incumbent director if, in mid-term, his

or her seat were eliminated or

redesignated to represent members

located in another state.

The proposed rule described in detail

the provisions of Section 7(b) and (c) of

the Bank Act relating to the designation

of directorships among the states within

each Bank district and the possible

scenarios in which an elected

directorship may, from time to time, be

redesignated to another state or

eliminated altogether, as a result of

shifts in the stock ownership of the

members in the respective states. The

proposed rule also described the

manner in which the Finance Board

may create additional elected or

appointed directorships in certain Bank

districts and how those ‘‘discretionary’’

directorships may be eliminated.

Because of the possibility that certain

elected and appointed directorships

may be eliminated or, in the case of

elected directorships, redesignated to

other states, the proposed rule described

in some detail the resulting difficulties

in establishing a staggered board of

directors and maintaining that

staggering in future years as the

composition of the board may change.

Rather than repeat that entire discussion

here, the Finance Board is incorporating

into this rule by reference the preamble

discussion of the background of the

proposed rule and of the state-based

directorships.

III. Public Comments

The Finance Board received nine

comment letters on matters addressed

by the proposed rule. Five Banks

submitted comment letters, as did two

state banking trade associations, one

member, and one trade association for

community banking institutions. Most

of the comments letters were supportive

of the proposed rule, though each of the

Banks requested that the final rule

include certain revisions or

clarifications, as noted below.

The member, and one Bank, suggested

that the staggering provisions of the

final rule not require that certain

directorships be assigned one-year

terms, as one year is too short a period

to be productive for the director or for

the Bank. The Finance Board

appreciates the concern about a oneyear term, but is not changing that

aspect of the rule. In establishing the

matrices for the Banks, which

implement the staggering of the boards

required by the GLB Act, the Finance

Board was guided by the provisions of

the GLB Act that require terms to be

adjusted only as necessary to achieve a

board that consists of three

approximately equal classes. In order to

avoid the possibility of any directors

having a one-year term, the Finance

Board could increase to two years the

terms of the 21 directorships throughout

the Bank System that otherwise would

receive a one-year term under the final

rule. In order to achieve the

appropriately staggered board, however,

the Finance Board likely would have to

decrease to two years the terms of up to

21 directorships that otherwise would

have a three-year term under the final

rule. The Finance Board believes that if

it can obtain the same staggering result

by adjusting the terms of 21

directorships as it can by adjusting up

to 42 directorships, then it is more

consistent with the GLB Act to adjust

the fewest number of terms necessary,

even if some are for one-year. Thus, the

final rule retains one-year terms as the

initial term for some of the directorships

at most of the Banks. Moreover,

although the final rule requires 21

directorships System-wide be assigned a

one-year term, 14 of those directorships

are ‘‘non-guaranteed’’ directorships,

which means that neither the director

nor the Bank would be assured that the

person holding that directorship would

be able to serve for more than one year

even if the Finance Board were to assign

the directorship a two-year term. As

noted below, any individuals that are

assigned a one-year term will not be

considered to have served a ‘‘full term’’

for that year, and thus could seek office

for as many as three additional threeyear terms, which the Finance Board

believes offers some offsetting benefit to

both the individual and the Bank.

One Bank asked that the Finance

Board clarify whether a one-year term

would constitute a ‘‘full term’’ for

purposes of the term limits provision in

Section 7(d) of the Bank Act, which

applies to any person who ‘‘has been

elected to each of three consecutive full

terms as an elective director.’’ The

current regulations do not address what

constitutes a ‘‘full term’’. The Finance

Board believes that a ‘‘full term’’ for

these purposes is a three-year term, as

authorized by the GLB Act, and that any

shorter term that has been adjusted in

order to comply with the GLB Act

should not count as one of the ‘‘three

full consecutive terms’’ for purposes of

Section 7(d). To address the concern

raised by this comment, the Finance

Board has included in the final rule an

amendment to § 915.7(c) stating

expressly that for purposes of the

statutory term limits a term of office that

is adjusted as a result of the GLB Act

does not constitute a ‘‘full term’’.

Two of the Banks requested that the

final rule include a ‘‘safe harbor’’

provision that would allow the

interested elected directors to

participate in board decisions as to

which directorships are to be assigned

reduced terms. The final rule includes

such a safe harbor provision, which will

apply to both the assignment of reduced

terms and the possible ratification of the

1999 election results.

One state trade association opposed

the rule, apparently because it believes

that a Bank would be able to declare

elected a nominee who had received

fewer votes in the 1999 election than

would have been required to be elected,

had the results not been rendered moot

by the GLB Act. The only way in which

the nominee who received the most

votes in the 1999 election could not be

seated, should the board of the Bank opt

to ratify the 1999 election results, would

be if that person were no longer eligible

to serve as a Bank director, such as

through death or by no longer being an

officer or director of a member. The

treatment under the proposed rule of a

candidate for a Bank directorship who

becomes ineligible during the course of

the election process was consistent with

past practice. In the past, if a person

were ineligible to serve as a Bank

director the Finance Board has not

allowed that person to be included on

the ballot or to be included in the

tabulation of votes. If an individual

nominee became ineligible prior to the

distribution of the ballots, it had been

the practice of the Finance Board to

exclude that person from the ballots

distributed to the members in that state.

41562 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

If a nominee became ineligible after the

distribution of the ballots but before the

close of the election, it had been the

practice of the Finance Board to notify

the members of the loss of eligibility,

distribute a revised ballot to any

members who already had cast votes for

the ineligible nominee (thus allowing

them to vote for an eligible nominee),

and, in the case of members that

declined to submit a revised ballot, void

any votes cast for the ineligible

nominee.

The final rule does not alter that

practice. The Finance Board believes

that the Banks have no authority under

the Bank Act to seat an individual that

is not eligible to serve as a Bank

director. Indeed, the Bank Act expressly

states that if an elected director were to

cease to be eligible to be a Bank director

the office would immediately become

vacant and the individual could no

longer serve as a Bank director. 12

U.S.C. 1427(f)(3). Moreover, the current

regulations expressly preclude a Bank

from placing the name of an ineligible

person on the ballot. 12 CFR 915.7(a).

The final rule clarifies this issue by

adding to § 915.7(a) a provision that a

Bank shall not declare elected any

nominee it has reason to know is

ineligible to serve, nor seat a directorelect that it has reason to know is

ineligible to serve. Thus, if a loss of

eligibility were to occur before an

election of directors had closed, the

ineligible candidate could not be

declared elected. Instead, the Bank

should declare elected the eligible

nominee who received the most votes.

If the loss of eligibility were to occur

after the election had closed, i.e., after

the Bank had declared elected the

nominees with the most votes, then the

Finance Board believes that the

situation would be the same as if a

sitting director had lost his or her

eligibility. In that case, the seat would

become vacant, in accordance with

Section 7(f)(3) of the Bank Act, and the

board of the Bank would be required to

fill the vacancy by selecting a person

who was eligible to serve. Although the

GLB Act has created a unique situation

with regard to the 1999 election of

directors, causing an extended delay

between the voting and the declaration

of the directors-elect, the Finance Board

sees no benefit in establishing a rule

that would require the Banks to set

aside an election any time that the

person receiving the most votes dies or

otherwise loses his or her eligibility to

serve. Instead, the Finance Board

believes that the most appropriate

means of addressing a loss of eligibility

that occurs before the election closes is

for the Bank to declare elected, from

among those nominees who remain

eligible to serve, the person or persons

receiving the most votes, which is

consistent with the past practice of the

Finance Board and with the provisions

of existing law and regulation.

The trade association for community

banks contended that the Finance Board

has the legal authority to allocate

elected directorships based on the type

of charters held by members of each

Bank, and that the Finance Board could

authorize the use of outstanding

advances as the basis for allocating

directorships. Neither of those methods

of allocating directorships was

addressed by the proposed rule, and

neither method is expressly authorized

by the Bank Act. As this comment letter

noted, however, the Finance Board will

have to address the allocation of

directorships in the rules implementing

the capital provisions of the GLB Act. In

fact, the Finance Board recently has

approved a proposed capital rule that

would grant the Banks substantial

latitude in establishing a voting

structure under the new capital regime,

which, if adopted as proposed, would

be broad enough to accommodate the

allocation methods suggested by this

commenter. That matter, however, is

more appropriately addressed as part of

the capital rule and has not been

included in this rule.

The commenter also objected to the

proposed method for staggering the

directorships to comply with the GLB

Act as unnecessarily complicated and

too difficult for the Banks and the

members to implement, though it did

not offer alternatives or suggestions for

simplifying the methodology. The

Finance Board believes that the rule is

as straightforward as is possible, given

the language of the statute. Although the

rule is rather detailed, it is not unduly

complicated. To the extent that the

proposed rule might be considered

complicated, it is only because the

Congress was persuaded by this very

commenter to add an additional level of

complexity to an already multi-layered

statutory scheme. Moreover, the

member and Bank commenters raised

no similar objections. Indeed the only

member to address the complexity of

the rule characterized it as a reasonable

approach, given the complex statutory

constraints under which the Banks must

conduct the elections. Similarly, the

only Bank to address the issue stated

that any complexity results from the

approach to staggering the terms of the

directorships mandated by the GLB Act,

and that the proposed rule provided a

fair and equitable method for dealing

with a difficult situation. The other state

trade association raised similar

comments, but on this issue, the

Finance Board is inclined to accord

greater weight to the view of those

entities, i.e., the Banks and the

members, that are most knowledgeable

about the process of electing Bank

directors and who will have to

implement the provisions.

Two of the Banks raised a number of

specific questions on issues such as

eligibility, the assignment of guaranteed

and non-guaranteed seats, the

assignment of non-guaranteed

directorships in subsequent years, and

the assignment of directorships between

a non-guaranteed directorship with a

three-year term and a guaranteed

directorship with a two-year term.

Those issues are addressed below in the

discussion of the specific provisions of

the final rule.

IV. Description of the Final Rule

A. The 2000 Election

Before a Bank may decide whether to

conduct new elections or to ratify the

1999 election results, it must determine

which states within its district are to be

assigned directorships with reduced

terms, as required to implement the

staggering provisions of the GLB Act

and this rule. In order to create the third

class of directorships required by the

GLB Act, certain directorships must be

assigned shortened terms in connection

with the next two elections. Because the

number of states within each Bank

district varies, in some instances the

adjusted terms will be assigned among

directorships representing the same

state, but for certain Banks the adjusted

terms will have to be assigned among

directorships representing different

states. For certain Banks, the number of

states within the district and the

distribution of seats among the states are

such that those Banks will not need to

assign reduced terms to particular

states. Where the board of directors of

a Bank is required to choose among

several different states in assigning the

shortened term, the final rule requires

that the board make that determination

before considering how to proceed with

the 2000 election of directors.

For example, the Atlanta Bank has

one class of four elected directorships

with terms commencing on January 1,

2001, in which each directorship

represents a different state. It also has a

second class of five elected

directorships with terms commencing

on January 1, 2002, in which four of the

directorships represent different states.

For each class, the board of the Atlanta

Bank must assign to one state a term of

less than three years, and the final rule

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41563

2Finance Board Resolutons No. 2000–21 (May 17

2000); No. 99–35 (June 2, 1999).

requires the board to make that

assignment for both classes before

determining how to conduct the 2000

election. The Finance Board believes

that requiring the Banks to make this

determination at the outset is most

appropriate, as it will allow individuals

running for the directorship from the

affected states to know beforehand

which directorships will be for less than

a full three-year term.

After a Bank has made any necessary

assignments of adjusted terms among

the states, it must determine the manner

in which to elect the directors whose

terms are to commence on January 1,

2001. The rule generally allows the

board of directors of each Bank either:

(i) To conduct new elections during the

year 2000 for all states in which an

elected directorship is to commence on

that date; or (ii) to adopt the results of

the 1999 elections for all states that

qualify under this rule, and to conduct

new elections only in any state for

which the rule requires a new election

to be held. In either case, the

designation of directorships conducted

by the Finance Board in 2000 is to

control. The Finance Board has

completed the 2000 designation of

directorships for each Bank, pursuant to

§ 915.3(b), which is nearly identical to

the designation of directorships

conducted in 1999, and has provided

that information to the Banks. In each

case, the Finance Board designated 114

elected directors throughout the Bank

System.2

In only two states, Oklahoma and

Nebraska, does the number of

directorships designated in 2000 differ

from the number designated to those

states in 1999. In 1999, Oklahoma and

Nebraska had three and two elected

directorships, respectively, designated

as representing the members located in

those states. In 2000, the designations

were reversed, with Oklahoma and

Nebraska having two and three elected

directorships, respectively. In effect, the

constituency of the non-guaranteed

stock directorship that formerly had

been designated to Oklahoma

‘‘migrated’’ to Nebraska over the past

year, as a consequence of an increase in

the relative amount of Bank stock held

by members located in Nebraska. As a

result, the incumbent Oklahoma

director holding the non-guaranteed

directorship will become ineligible to

hold that seat once the designation to

Nebraska takes effect, on January 1,

2001. Because both non-guaranteed

directorships for the Topeka Bank are in

the class of directors with terms

expiring on December 31, 2001, the

2000 elections cannot be used to

determine which of the two Oklahoma

directors in that class is to become

ineligible at the end of the year. The

issue of how to assign a non-guaranteed

directorship between directors from the

same state in the absence of an election

was not directly addressed by the

proposed rule. The final rule includes

an amendment to § 915.3(e) that

requires the board of the Bank to use the

most recent election to determine which

of the two incumbent Oklahoma

directors with terms expiring on

December 31, 2001 is to be assigned to

the non-guaranteed directorship that is

to be affected by the redesignation.

Because neither of the non-guaranteed

directorships for the Topeka Bank is up

for election in 2000, the change in the

designation from Oklahoma to Nebraska

will have no effect on the 2000 elections

in either state. Similarly, in Connecticut

the composition of the one nonguaranteed directorship has changed in

the 2000 designation (i.e., from a stock

seat to a discretionary seat) but the total

allocated to the state remains the same,

and thus there is no effect on the 2000

elections for Connecticut even though

both of the two Connecticut seats are

open in the 2000 election. The Finance

Board intends to provide each Bank

with additional guidance (such as

through a regulatory interpretation)

about how the designation of

directorships will be applied at each

Bank in conjunction with adjustment of

the terms to be required by this rule.

Although the final rule generally vests

the decision regarding the method of

electing directors with the board of

directors of each Bank, it requires the

Banks to conduct new elections in one

case. If the 2000 designation of

directorships were to result in a state

being allocated a number of

directorships with terms commencing

on January 1, 2001, that is greater than

the number of nominees from that state

in the 1999 election who remain eligible

to serve as a Bank director, the Bank

must conduct an election in that state

for all directorships with terms

commencing on that date. As described

above, the 2000 designation of

directorships is, for purposes of the

2000 election, unchanged from the 1999

designation of directorships, and thus

the 2000 designation alone cannot

trigger the requirement for a new

election in any state. It remains

possible, however, that the number of

nominees from the 1999 election who

remain eligible to serve as a Bank

director for a particular state may have

decreased since the enactment of the

GLB Act to below the number of

directorships designated to that state

that are to be filled this year, which

would require the Bank to hold a new

election for that state. If a new election

is required, the Bank must do so only

for the affected state; the rule does not

require the Bank to conduct a new

election in any other states.

Even if the rule does not require a

Bank to conduct a new election for a

particular state, it grants to the board of

directors of the Bank the discretion to

do so. If the board were to determine

that the Bank should conduct new

elections in 2000, the Bank must

conduct elections for every state for

which a directorship is to commence on

January 1, 2001, in accordance with the

2000 designation of directorships. If the

board of directors of a Bank were to

require new elections, the Bank would

follow the normal procedures for

conducting an election, in accordance

with Part 915 of the Finance Board

regulations, and the 1999 election

results would be given no effect.

If a Bank is not required to conduct

new elections and its board of directors

does not opt to do so, the rule allows the

board to adopt the votes cast by the

members in 1999 as the basis for

electing the directors who are to

commence their terms on January 1,

2001. The rule requires that the use of

the 1999 elections results be consistent

with the 2000 designation of

directorships and that there be sufficient

eligible nominees remaining from the

1999 elections available to fill the

designated seats. The board of each

Bank is required to confirm, on a stateby-state basis, that the use of the 1999

election results is permissible, i.e., that

this rule does not require that a new

election be held for a particular state,

and that the nominees remain eligible to

serve as Bank directors. As a practical

matter, because the 2000 designation of

directorships is unchanged from 1999,

as applied to the 2000 election, the

board of directors of each Bank may

ratify the results of the 1999 election,

subject only to confirming the eligibility

of the directors-elect (or other

nominees) to serve.

If the board of directors ratifies the

1999 election results, it must notify the

Finance Board, the directors-elect, and

each member in the affected state. The

notice also must indicate which, if any,

terms have been adjusted in order to

achieve the staggering required by the

GLB Act. This requirement applies to

any directorship with a reduced term.

Any such term adjustments must

comply with § 915.17 of the proposed

rule, described below, which addresses

staggering the board of directors.

41564 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

B. Staggering the Terms of Office

The GLB Act imposed what appears

to be a straightforward requirement that

the board of directors of each Bank be

staggered into three approximately

equal classes, i.e., it requires a ‘‘classbased’’ directorship structure for the

Banks. Implementing that requirement,

however, is not quite so straightforward

because the GLB Act also retained the

provisions of current law that require a

‘‘state-based’’ directorship structure. To

some degree, a ‘‘class-based’’ structure

and a ‘‘state-based’’ structure are in

conflict. For example, the Banks cannot

have and maintain a pure ‘‘class-based’’

staggered directorship structure if other

provisions of the Bank Act allow for the

possibility that a certain number of

directorships may disappear from a

given class as a result of shifting stock

ownership or at the discretion of the

Finance Board. Similarly, the Banks

cannot maintain a viable ‘‘state-based’’

directorship structure if the creation,

elimination, and redesignation of

directorships that are necessary

consequences of a system that assigns

directorships based on relative stock

ownership among the states are

constrained by other provisions of the

Bank Act that require the maintenance

of a strict class structure. The final rule

attempts to strike a balance between the

two directorship structures by focusing

on each Bank’s core of ‘‘guaranteed’’

directorships, i.e., those that are

allocated to a particular state by statute,

and ensuring that they remain staggered

even if a certain number of the ‘‘nonguaranteed’’ directorships are

eliminated in the future. The Finance

Board recently has approved a proposed

capital rule under which the Banks

would be authorized to establish

different directorship and voting

structures as part of the capital structure

plans required by the GLB Act. That

proposal describes the conflict between

certain provisions of Section 7 of the

Bank Act, regarding Bank directorships,

and certain provisions of Section 6 of

the Bank Act, regarding capital, and

how the Finance Board has proposed to

reconcile those conflicts. The manner in

which those conflicts are reconciled

will be addressed exclusively in the

final rule on the capital structure of the

Banks, which the GLB Act requires to be

adopted no later than November 12,

2000. The provisions of this final

elections rule, as they relate to the

directorship structure of the Banks,

should not be viewed as indicating how

the Finance Board ultimately will

reconcile the above provisions in the

final capital rule.

Guaranteed Directorships. Section 7

of the Bank Act guarantees that the

members in each state are to be

allocated a certain minimum number of

Bank directorships. For most states, the

Bank Act guarantees each state one

directorship. Under a grandfather

provision, however, 20 states are

guaranteed a minimum number of seats

that ranges from two to six

directorships. See 12 U.S.C. 1427(c); 12

CFR 915.15. Those directorships cannot

be eliminated as a result of shifting

stock ownership among the members,

nor can they be redesignated as

representing members in another state.

The final rule defines a core group of

directorships that must be allocated to

each state as ‘‘guaranteed

directorships.’’ Ten of the Banks have

eight guaranteed directorships each; the

other Banks, New York and San

Francisco, have nine and five

guaranteed directorships, respectively.

Non-guaranteed directorships. The

Bank Act also contemplates that certain

states may be allocated directorships

beyond the minimum number

guaranteed by the Bank Act. The

additional directorships result either

from the amount of Bank stock held by

the members located in a particular state

or from the Finance Board’s exercise of

its authority to create discretionary

directorships pursuant to Section 7(a) of

the Bank Act. Those seats are not

permanently allocated to a particular

state and may be redesignated from year

to year as representing members in

another state; they also may be

eliminated entirely. Most of the Banks

have such directorships allocated to one

or more states within their districts,

which the final rule defines as ‘‘nonguaranteed directorships.’’ The final

rule also defines two distinct sub-groups

of non-guaranteed directorships: (1)

‘‘discretionary directorships,’’ i.e., an

elected or appointed directorship

created by the Finance Board pursuant

to Section 7(a) in districts with five or

more states; and (2) ‘‘stock

directorships,’’ i.e., an elected

directorship allocated to a state based

on the amount of Bank stock held by the

members located in that state, in

addition to the minimum number of

guaranteed directorships allocated to

that state.

Staggering Process. The GLB Act

requires that the board of each Bank be

staggered into three approximately

equal classes. Based on that directive,

the rule first divides the guaranteed

directorships at each Bank into three

groups that are as nearly equal as

possible. For each of the ten Banks that

has eight guaranteed directorships, the

result is three classes of two directors,

three directors, and three directors,

respectively. For the New York Bank,

with nine guaranteed directorships, the

result is three classes of three directors;

for the San Francisco Bank, with five

guaranteed directorships, there are three

classes of one, two, and two directors,

respectively. Accordingly, for eleven of

the Banks the maximum number of

guaranteed directorships that may be

grouped into a single ‘‘class,’’ i.e., a

group of directorships with terms

expiring on the same date, is three; for

the San Francisco Bank, the maximum

number is two.

The Finance Board considered

attempting to establish a staggering

methodology that could apply to the

entire board of both appointed and

elected directors, rather than the

proposed method that focuses on the

guaranteed directorships. No

commenters suggested any alternative

methodology for accomplishing the

staggering required by the GLB Act.

Because of the differences between the

two types of directors, i.e., the different

manner of selection, the different

interests represented, and the statebased restrictions that apply only to the

elected directors, the Finance Board

determined that the better approach is

to build the staggered board on the

foundation of guaranteed directorships,

with non-guaranteed directorships and

appointed directorships being assigned

adjusted terms, as necessary to result in

the approximate one-third staggering

required by the GLB Act.

With regard to both the nonguaranteed and the appointed

directorships, the terms are to be

adjusted only as necessary to achieve

the appropriately staggered board. For

those appointed directorships with

terms expiring on the enactment of the

GLB Act or on December 31, 1999, the

Finance Board has adjusted the terms of

the successor directorships, i.e., the first

post-GLB Act appointments, only as

necessary to ensure that no more than

one third of a class of appointed

directorships will expire at the same

time. For the remaining appointed

directorships that will expire at the end

of each of the next two years, i.e., the

remainder of the first post-GLB Act

appointments, the Finance Board

intends to adjust the terms of the

successor directorships only to the

extent necessary to group the appointed

directorships at each Bank into three

approximately equal classes. Seven of

the Banks have six appointed

directorships each, and the Finance

Board intends ultimately that each of

those Banks will have three classes of

two appointed directorships each. With

regard to the other five Banks (three of

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41565

which have eight appointed

directorships and two of which have

seven), the Finance Board intends to

adjust the terms of those additional

appointed directorships as necessary to

cause the entire board to be

appropriately staggered.

Based initially on the maximum

number of guaranteed directorships that

may be included in a single class, the

Finance Board has created a matrix for

each Bank that indicates how the

existing classes of elected directorships

will be divided in order to create three

classes of directorships of

approximately equal size. The final rule

requires the board of directors of each

Bank to adjust the terms of directorships

that commence on January 1, 2001 and

January 1, 2002 in accordance with the

matrix for that Bank, as described

below. Each matrix groups the

directorships based on their current

status, i.e., one group whose terms will

commence on January 1, 2001, and a

second group whose terms will

commence on January 1, 2002. Within

those two groups, the matrices indicate

the states to which each directorship

will be designated, the length of the

term assigned to each directorship

(commencing on January 1, 2001 or

January 1, 2002, respectively), and

whether the seat is ‘‘non-guaranteed,’’

i.e., either a discretionary directorship

or a stock directorship. The matrices are

based on the designation of

directorships conducted in 2000, which

is the most recent designation available.

The Finance Board also intends to

provide updated matrices next year, in

conjunction with the then-current

designation of directorships.

With regard to the directorships

commencing on January 1, 2001, each

matrix assigns, or requires the board of

directors of the Bank to assign, a threeyear term to three of the guaranteed

directorships (two directorships, in the

case of San Francisco), which is the

maximum number of guaranteed

directorships allowed for any one class

of directors. Each of the remaining

guaranteed directorships with terms

commencing on January 1, 2001 is

assigned a two-year term; those

directorships will establish, at least in

part, the third class of directorships

required by the GLB Act. The matrix

applies the same methodology to the

class of guaranteed directorships with

terms commencing on January 1, 2002,

except that the shortened terms will be

for one year, rather than for two years.

The Finance Board believes that

assigning the three-year terms to the

maximum number of guaranteed

directorships possible in any one class

is consistent with the GLB Act, which

authorizes the adjustment of the term of

a directorship only as necessary to

achieve the required one-third

staggering of the board.

For example, the Pittsburgh Bank has

four guaranteed directorships with

terms commencing on January 1, 2001.

The matrix indicates that three of those

seats—the maximum number of

guaranteed directorships in any one

class—have a full three-year term and

the one remaining directorship has a

two-year term. The Pittsburgh Bank has

four other guaranteed directorship with

terms commencing on January 1, 2002.

Again, the matrix indicates that three of

those seats—the maximum number of

guaranteed directorships per class—

receive a full three-year term, with the

fourth directorship receiving a one year

term. As a result, the Bank will achieve

the required ‘‘2–3–3’’ staggering of its

guaranteed directorships by adjusting

the terms of only two of the eight

guaranteed directorships. Thus, the

Bank will have one class of two

directorships with terms expiring on

December 31, 2002, one class of three

directorships with terms expiring on

December 31, 2003, and one class of

three directorships with terms expiring

on December 31, 2004. Though not

indicated on the matrix, the Finance

Board will adjust the terms of the

appointed directorships for the

Pittsburgh Bank as necessary to create

three classes of two directors each,

which will result in the entire board

being grouped into classes of ‘‘4–5–5’’,

which is the closest to the one-third

staggering that can be achieved with a

fourteen director board.

The matrix for the Pittsburgh Bank

also illustrates the different methods by

which a directorship is to be assigned a

shortened term, one of which is based

on the votes cast by the members and

the other of which is based on the

number of states with directorships at

issue. In the case of the four

directorships commencing on January 1,

2001, each directorship is designated as

representing the members located in

Pennsylvania. In such a case, i.e., where

a reduced term must be assigned to one

of several directorships from the same

state, the rule requires that the

assignment be based on the number of

votes each director-elect receives in the

most recent election. Thus, in the class

of directorships commencing on January

1, 2001, the director-elect from

Pennsylvania who receives the fourth

most votes (using either the results of

the 1999 election or the results of a new

election, as determined by the board of

directors) will be assigned the two-year

term. The same methodology generally

will apply whenever the Bank must

make a choice between two or more

directorships from the same state,

whether the issue is which seat is to

receive a reduced term or which seat is

to be designated as a ‘‘non-guaranteed’’

directorship. The one exception, noted

below, is where the matrix assigns a

guaranteed directorship a shorter term

than it assigns to a non-guaranteed

directorship, which occurs only with

regard to New York state. In that case,

the final rule provides that the

candidate receiving the greater number

of votes is assigned to the guaranteed

seat and the candidate with the lesser

number of votes is assigned the nonguaranteed seat.

In certain cases, it also is possible for

directors to be elected without a vote,

such as where the number of nominees

from a state is equal to or less than the

number of directorships to be filled

from that state. In that case, a short term

or a non-guaranteed directorship could

not be assigned on the basis of the

number of votes received. This occurred

in the 1999 election for directors

representing members in Indiana, three

of whom were declared elected without

a vote. In that case, one of the three

directorships must be assigned a 2-year

term, but the proposed rule did not

address how the assignment should be

made in such a case. The final rule

addresses that issue by providing that if

a shortened term must be assigned

among directors who have been elected

without a vote, the board of the Bank

must assign the terms on the basis of the

most recent election.

The final rule also includes a

conforming amendment to § 915.8(b),

the provision authorizing directors to be

elected without a vote, to allow such

elections to occur only if the term and

the status, i.e., whether the

directorships are guaranteed or nonguaranteed, are all the same. Thus, if

there are three directorships from the

same state at issue in an election and

there are only three nominees for those

directorships, but one directorship is

non-guaranteed or is for a reduced term,

the Bank still must hold an election to

determine how those directorships are

to be assigned. One Bank questioned

how the proposed rule would apply if

the matrix were to assign to a particular

state in the same year one guaranteed

directorship with a two-year term and

one non-guaranteed directorship with a

three year term, suggesting that it was

not clear from the proposed rule how a

Bank would allocate such directorships.

The final rule addresses this question in

§ 915.17(b)(2) by providing that if a

matrix assigns a guaranteed directorship

a shorter term than it assigns to a nonguaranteed directorship for the same

41566 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

state in the same year, the Bank shall

assign the guaranteed directorship to the

candidate receiving the most votes in

the election. Because it is possible for a

non-guaranteed directorship to be

eliminated after one year (or to be

redesignated to another state, which for

the incumbent would have the same

effect as being eliminated), the Finance

Board believes that a guaranteed

directorship, even if for an initial

reduced term, is the more valued

directorship and thus should be

awarded to the candidate receiving the

greater number of votes in the election.

Another Bank raised a question

concerning the assignment of individual

directors from the same state to the two

seats that are allocated to the state,

where there is one guaranteed

directorship and one non-guaranteed

discretionary directorship. In that case,

the matrix for that Bank would allow

the board of the Bank to assign each

directorship from that state to an

identical term or to different terms. The

Bank was uncertain whether the

Finance Board or the board of directors

of the Bank would decide which of the

two directorships would be guaranteed.

The intent of the Finance Board is that

the board of the Bank must make that

determination in accordance with the

matrix for that Bank. Thus, if the board

of the Bank places the two directorships

into the same class, i.e., it assigns them

to the same term, in the first election for

that state the Bank would assign the

guaranteed directorship to the candidate

receiving the most votes, and the nonguaranteed seat to the candidate

receiving the second most votes. In each

subsequent election, (and assuming that

the non-guaranteed directorship, which

in this case is a discretionary

directorship, remained designated to

that state) the candidate receiving the

most votes in that election would be

assigned to the guaranteed directorship

and the candidate receiving the second

most votes would be assigned to the

non-guaranteed seat. Thus, it would be

possible in future elections that the

individual receiving the most votes in

one election would receive the second

most votes in the next election, in

which case the individual would switch

from the guaranteed directorship to the

non-guaranteed directorship for that

state. The reference in the rule that a

non-guaranteed directorship is to retain

that designation for as long as it remains

in existence refers only to the

directorship itself, and not necessarily

to the individual who holds the nonguaranteed directorship at any

particular time. If, however, the Bank

were to assign different terms to each of

those two directorships at the outset,

then there would be no issue because

the guaranteed directorship and the

non-guaranteed directorship would be

filled in different years, and any persons

running for either directorship would

know whether it was guaranteed or nonguaranteed.

The same commenter raised three

procedural questions concerning the

treatment of those two directorships

(i.e., one guaranteed and one nonguaranteed, and both with the same

initial term) in subsequent elections. In

that case, for each election the Bank

would inform its members in that state

that two seats are open, that one is

guaranteed and the other is nonguaranteed, and that the eligible

candidate receiving the most votes will

be awarded the guaranteed seat. In the

event that no candidates were to be

nominated for either seat in a

subsequent election, the directorships

would become vacant as of the end of

the calendar year and the board of

directors would select two eligible

individuals to fill those vacancies in

accordance with the existing provisions

for filling vacant elected directorships.

See 12 CFR 915.8(b). In doing so, the

board of the Bank would designate one

individual to fill the guaranteed

directorship and one individual to fill

the non-guaranteed directorship. In the

event that only one person were

nominated from that state, that person

would fill the guaranteed directorship

and the board of the Bank would select

another person under the vacancy

provisions to fill the non-guaranteed

directorship.

With regard to the directorships at the

Pittsburgh Bank that have terms

commencing on January 1, 2002, the

methodology differs somewhat from that

used for the prior class. In this case,

three of the four guaranteed

directorships at issue are from different

states: West Virginia, Delaware, and

Pennsylvania (which has two

guaranteed directorships in this class).

Here, again, no more than three of the

guaranteed directorships may be

assigned a full three-year term, and one

must receive a reduced term, which in

this case will be for one year. Where the

number of states is the same as the

number of full-term directorships

available, as is the case here, the matrix

assigns one full term to each state. The

matrices reflect a determination by the

Finance Board that to the extent

possible each state should be treated

equally in the assignment of three-year

terms. For that reason, the matrix does

not allow both Pennsylvania

directorships to receive a full term, as

that could not occur unless one of the

remaining states—Delaware or West

Virginia—were to receive the one-year

term. With regard to the two

Pennsylvania directorships in this class,

the board of directors of the Bank must

assign the three-year term to the

director-elect from Pennsylvania who

receives the highest number of votes,

with the one-year term going to the

director-elect with the second most

votes.

For certain other Banks, the methods

used for the Pittsburgh Bank will not

work because the number of states with

guaranteed directorships is greater than

the number of three-year terms

available. In that case, the rule requires

the board of directors of the Bank to

assign the full three-year terms and the

reduced terms among the guaranteed

directorships from the different states;

i.e., the three full three-year terms are to

be allocated among four or five states.

Where several states are involved, each

directorship has a different constituency

and thus the number of votes received

by each candidate cannot be used to

rank them. Also, because the number of

states with guaranteed directorships is

greater than the number of three-year

terms available, not all of the states can

be treated equally, as was the case with

the Pittsburgh Bank. Where equal

treatment for all states is not possible,

the Finance Board believes that it is

most appropriate, as well as consistent

with the GLB Act, for the board of

directors of each Bank to make the

determination as to which states are

assigned the reduced term. The matrices

reflect that provision, noting that the

board of the Bank is required to select

one (and in some cases, two) states to

receive a reduced term. (As noted

earlier, the boards must make this

decision before determining the effect to

be given to the 1999 election results.)

For example, the Atlanta Bank has

four guaranteed directorships with

terms commencing on January 1, 2001,

representing the members in the District

of Columbia, Alabama, Virginia, and

South Carolina, respectively. Only three

of those seats may receive a full threeyear term; the remaining directorship

must receive a two-year term in order to

comply with the staggering requirement.

In this case, the matrix indicates that the

board of the Atlanta Bank must decide

which of those four directorships is to

be assigned a two-year term. The rule

provides that the manner in which the

board of directors assigns the reduced

term to a particular state is entirely

within its discretion, so long as the

method is reasonable and is used

consistently. Thus, the rule allows the

board to adopt some objective basis for

making the determination or to assign

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41567

the terms randomly, such as through a

lottery among the affected states.

The Finance Board recognizes that

certain directors may have an interest in

which state’s directorship is to be

assigned a reduced term and requested

comment on whether it should require

such determinations to be made only by

the disinterested directors, or whether it

should include a ‘‘safe harbor’’

provision in the final rule that would

allow an interested director, i.e., a

director whose directorship may be at

risk of being assigned a reduced term, to

participate in the decision without

being deemed to violate the conflict of

interest regulations or the conflict

policies of the Bank. The only

commenters to address that issue

endorsed the concept of a safe harbor

provision and the Finance Board has

included one in the final rule, which

applies to both the decision on

ratification of the 1999 election results

and the assignment of reduced terms

among the states.

For some Banks none of the above

scenarios will apply because the

guaranteed directorships will consist in

part of directorships representing

different states and in part of multiple

directorships from the same state; i.e.,

there are two or more states with

guaranteed directorships at issue, and

one or more of those states has more

than one directorship open. For

example, the Boston Bank has five

guaranteed directorships with terms

commencing on January 1, 2001: two are

designated to Massachusetts, and one

each is designated to Connecticut,

Rhode Island, and Maine. There also is

one non-guaranteed directorship open,

which is a discretionary seat allocated

to Connecticut. Because there are three

three-year terms to be allocated among

four states, the board of directors of the

Bank first must determine which one of

the four states is to receive the two-year

term, as described above with regard to

the Atlanta Bank. After doing so, the

board then would make any necessary

distinctions between directorships from

the same state on the basis of the votes

received, as in the case of the Pittsburgh

Bank. Thus, assuming that the board

had assigned one of the three-year terms

to one of the two Massachusetts

directorships, the board would assign

the Massachusetts director-elect who

received the most votes (either in the

1999 election or in elections conducted

in 2000, as determined by the board of

the Bank) to the three-year term. The

other guaranteed directorship from

Massachusetts would be assigned to the

director-elect who received the second

highest number of votes. Similarly, the

matrix indicates that one of the

Connecticut directorships is to be a

‘‘non-guaranteed’’ discretionary

directorship, while the other is to be a

‘‘guaranteed’’ directorship. The rule

requires the board of the Boston Bank to

assign the non-guaranteed directorship

to the Connecticut director-elect who

receives the second highest number of

votes in the election; the Connecticut

director-elect who receives the most

votes is to be assigned to the

‘‘guaranteed’’ directorship.

With regard to the non-guaranteed

directorships, the rule also provides that

once a directorship is designated as

non-guaranteed it retains that status in

all subsequent elections unless it is

eliminated by the Finance Board (in the

case of a discretionary directorship) or

as a consequence of a shift in the

relative amounts of Bank stock held by

members in different states. If, in

connection with a subsequent annual

designation of directorships, a

directorship allocated to a particular

state were to be eliminated or

redesignated as representing the

members in another state, the nonguaranteed directorship from that state

would be eliminated or redesignated. As

noted above, the ‘‘non-guaranteed’’

designation runs to the directorship

itself and not to the individual director,

and in any state in which both a

guaranteed and non-guaranteed

directorship are to be filled in the same

election, the guaranteed directorship

will be awarded to the candidate

receiving the most votes. The final rule

provides expressly that in all elections

subsequent to 2001 the non-guaranteed

directorships are to be assigned based

on the number of votes received, with

the directors receiving the fewest

number of votes receiving the nonguaranteed directorships.

With regard to the non-guaranteed

directorships, the matrices have

assigned terms to those directorships in

a manner that is consistent with the

one-third staggering requirement of the

GLB Act, as noted previously. For

example, the two non-guaranteed

directorships at the Boston Bank have

been assigned a two- and one-year term,

respectively, which both places them

into the same class of directors and

results in a ‘‘4–3–3’’ class structure,

which is consistent with the GLB Act.

In the event that one or both of those

directorships were to be eliminated, the

elected directorships would be grouped

either into a ‘‘3–3–3’’ class structure or

the ‘‘2–3–3’’ structure of the guaranteed

directorships, thus maintaining the onethird staggering of the board.

Eligibility of Directors. The rule also

amends provisions regarding the

eligibility of directors to remain in office

if the directorship to which they have

been elected is redesignated as

representing members in another state

or is eliminated. As noted above, it is

possible that shifting stock ownership

among the members in different states

could cause the designation of a

directorship to change during the course

of an incumbent’s term of office, or for

the seat to disappear. The rule provides

that an elected director becomes

ineligible to remain in office if the

directorship is designated to another

state during that director’s term of

office, or if the directorship is

eliminated, and that the loss of

eligibility takes effect on December 31 of

the year in which the directorship is

redesignated or eliminated. In the case

of an eliminated directorship, the

directorship simply disappears at the

end of the year, and there is no seat for

the incumbent director to fill. In the

case of the redesignation of a

directorship to another state, the

directorship continues after the end of

the year, but it becomes vacant as of

December 31st (because the incumbent

no longer is an officer or director of a

member represented by the

directorship) and the board of directors

of the Bank fills the vacancy for the

remainder of the unexpired term, in

accordance with Section 7(f) of the Bank

Act, with an officer or director of a

member located in the newly-designated

state. The rule makes a similar change

to the provisions regarding appointed

directors, providing that any appointed

directorship that has been created in

conjunction with the creation of

additional elected directorships (in

accordance with Section 7(a) of the

Bank Act) is to terminate on December

31 of the year in which the associated

elected directorship is terminated.

Certain commenters raised questions

about the loss of eligibility of a person

who otherwise would have been elected

to the board of a Bank in the 1999

elections. One Bank asked how it

should deal with a situation in which

the nominee receiving the most votes in

the 1999 election is now ineligible to

serve, but the nominee receiving the

second most votes in that election

remains eligible. Another Bank asked a

similar question, about how it should

deal with the loss of eligibility by a

director-elect that occurs after the Bank

has declared the results of the 1999

election. As noted previously, the

Finance Board believes that a person

must be eligible to serve as a Bank

director at several points in the election

process, such as when nominated, when

elected, and when commencing service

on the board of the Bank. If a person

41568 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

ceases to be eligible to serve after being

nominated but before the ballots are

distributed, the Finance Board expects

that the Bank would exclude that person

from the ballot. If the loss of eligibility

were to occur after the ballots were

distributed but before the Bank had

tabulated the results of the election, the

Finance Board expects that the Bank

would not declare that person to have

been elected, even if that person

received the most votes, but should

instead declare elected the eligible

nominee who received the most votes.

If, after the Bank had declared elected

those eligible nominees with the most

votes, a director-elect were to become

ineligible to serve, the Finance Board

believes that the director-elect could not

be seated as a member of the Bank’s

board, which would create a vacancy on

the board as of the next January 1st, and

that the board would fill the vacancy in

accordance with Section 7(f) of the Bank

Act. The final rule includes a provision

providing that a Bank shall not declare

elected a nominee that it has reason to

know is ineligible to serve, nor shall it

seat a director-elect that it has reason to

know is ineligible to serve.

Conforming Amendments. The

proposed rule included a number of

conforming amendments to other

provisions of the regulations to remove

references that no longer are accurate in

light of the GLB Act and to be consistent

with the other elements of the proposed

rule. One such amendment addressed

the term ‘‘bona fide resident’’ of a Bank

district, as used in the definitions

included at 12 CFR 915.1. The GLB Act

amended Section 7(a) of the Bank Act to

provide that a director of a Bank must

be either a bona fide resident of the

Bank district or an officer or director of

a member located in the district.

Previously, that provision had simply

required that a Bank director be, among

other things, a bona fide resident of the

district. The proposed rule would have

revised the definition of ‘‘bona fide

resident of a Bank district’’ to include

an officer or director of a member

located in that Bank district. As a

technical matter, the Bank Act

establishes these as alternatives, i.e., an

elected Bank director must be either an

officer or director of a member located

in the Bank district or must be a bona

fide resident of the district. As such, the

proposed rule should not have treated

the ‘‘officer or director’’ requirement as

though it were a subset of the term

‘‘bona fide resident.’’ The final rule

corrects this provision by eliminating

from the definition of ‘‘bona fide

resident’’ the reference to an individual

being an ‘‘officer or director of a

member’’ located within that district.

The final rule retains the existing

provisions of the term ‘‘bona fide

resident’’ as applied to appointed

directors. Thus, an appointed director

will continue to be considered a bona

fide resident of the district if he or she

maintains a principal residence within

the district or owns or leases a residence

in his or her own name within the

district and also is employed within the

district. The statutory change made by

the GLB Act with regard to elected

directors is more expansive than the

prior regulatory definition of bona fide

resident as applied to elected directors.

Thus, the final rule removes from the

definition of bona fide resident the

provision allowing an elected director to

qualify by owning or leasing a residence

(other than a principal residence) within

the district so long as he or she was an

officer or director of a member in a state

within the district. Because the terms

‘‘officer’’ and ‘‘director’’ of a member are

well understood, the Finance Board is

not including a separate definition of

those terms in the final rule. The final

rule includes a conforming amendment

to § 915.7, which clarifies that an

elected director need not be a bona fide

resident of the district if he or she is an

officer or director of a member located

in the district, which reflects the

amendments made by the GLB Act. In

the event that questions may arise about

whether a particular individual is either

an officer or director of a member, the

Finance Board anticipates that such

matters could be addressed on a case by

case basis, such as through staff

interpretations.

V. Regulatory Flexibility Act

The final rule applies only to the

Finance Board and to the Federal Home

Loan Banks, which do not come within

the meaning of small entities as defined

in the Regulatory Flexibility Act (RFA).

See 5 U.S.C. 601(6). Thus, in accordance

with section 605(b) of the RFA, 5 U.S.C.

605(b), the Finance Board hereby

certifies that the final rule will not have

a significant impact on a substantial

number of small entities.

VI. Paperwork Reduction Act

The final rule does not contain any

collections of information pursuant to

the Paperwork Reduction Act of 1995.

See 33 U.S.C. et seq. Therefore, the

Finance Board has not submitted any

information to the Office of

Management and Budget for review.

List of Subjects in 12 CFR Part 915

Banks, banking, Conflict of interests,

Elections, Ethical conduct, Federal

home loan banks, Financial disclosure,

Reporting and recordkeeping

requirements.

Accordingly, the Federal Housing

Finance Board hereby amends title 12,

chapter IX, part 915 of the Code of

Federal Regulations, as follows:

PART 915—DIRECTORS, OFFICERS,

AND EMPLOYEES OF THE BANKS

1. The authority citation for part 915

continues to read as follows:

Authority: 12 U.S.C. 1422a(a)(3), 1422b(a),

1426, 1427, and 1432.

2. Amend § 915.1 by removing the

paragraph (2) of the definition of ‘‘bona

fide resident of a Bank district’’ and

redesignating paragraph (3) as paragraph

(2), and by adding in alphabetical order

definitions of ‘‘discretionary

directorship’’, ‘‘guaranteed

directorship’’, ‘‘non-guaranteed

directorship’’, and ‘‘stock directorship’’

to read as follows:

§ 915.1 Definitions.

* * * * *

Discretionary directorship means an

elective or appointive directorship

created by the Finance Board pursuant

to Section 7(a) of the Act for districts

that include five or more states.

Guaranteed directorship means an

elective directorship that is required by

Section 7(b) of the Act and § 915.15 to

be designated as representing Bank

members that are located in a particular

state.

Non-guaranteed directorship means

an elective directorship that is either a

discretionary directorship or a stock

directorship.

* * * * *

Stock directorship means an elective

directorship that is designated by the

Finance Board as representing the

members located in a particular state

based on the amount of Bank stock held

by the members in that state, and which

is in excess of the number of guaranteed

directorships allocated to that state.

* * * * *

3. Amend § 915.3 by:

a. Revising the fourth sentence of

paragraph (a);

b. Adding two new sentences at the

end of paragraph (b)(5);

c. Revising the second sentence in

paragraph (c); and

d. Revising paragraph (e) to read as

follows:

§ 915.3 Director elections.

(a) * * * The term of office of each

elective director shall be three years,

except as adjusted pursuant to Section

7(d) of the Act and § 915.17 of this

chapter to achieve a staggered board,

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41569

and shall commence on January 1 of the

calendar year immediately following the

year in which the election is

held.***

(b) * * *

(5) * * * The annual designation of

directorships shall indicate the number

of discretionary directorships, if any, to

be authorized for the succeeding year. If

the Finance Board eliminates an

existing discretionary directorship, or

designates such a directorship to

another state, the term of any appointive

or elective director affected by that

action shall terminate after the close of

business on the immediately following

December 31.

(c) * * * If the annual designation of

elective directorships results in an

existing stock directorship being

redesignated as representing members

in a different state, the notice also shall

state that the directorship must be filled

by an officer or director of a member

located in the newly designated state as

of January 1 of the immediately

following year, regardless of whether

the term for the incumbent director

would have expired by that date.

* * * * *

(e) 2000 designation. For any stock

directorship with a term ending

December 31, 2001 that is redesignated

from one state to another state by the

2000 designation of directorships, the

board of directors of the Bank shall

determine which incumbent director

from the former state shall become

ineligible to serve as a result of the

redesignation on the basis of the most

recent election.

4. Amend § 915.7 by:

a. Adding a new sentence at the end

of paragraph (a);

b. Removing paragraph (b)(2);

c. Revising paragraph (b)(3) and

redesignating it as paragraph (b)(2);

d. Adding a new paragraph (c)(4); and

e. Adding a new paragraph (d), to read

as follows:

§ 915.7 Eligibility requirements for elective

directors.

(a) Eligibility verification. * * * A

Bank shall not declare elected a

nominee that it has reason to know is

ineligible to serve, nor shall it seat a

director-elect that it has reason to know

is ineligible to serve.

(b) Eligibility requirements. ***

(2) A bona fide resident of the Bank

district or an officer or director of a

member that is located in the voting

state to be represented by the elective

directorship, that was a member of the

Bank as of the record date, and that

meets all minimum capital requirements

established by its appropriate federal

regulator or appropriate state regulator.

(c) Restrictions. ***

(4) For purposes of applying the term

limit provision of Section 7(d) of the

Act, a term of office that has been

adjusted to a period of less than three

years in accordance with § 915.17(a)(2)

shall not be deemed to be a full term.

(d) Loss of eligibility. (1) An elective

director shall become ineligible to

remain in office if, during his or her

term of office, the stock directorship to

which he or she has been elected is

eliminated or is redesignated by the

Finance Board as representing members

located in another state, in accordance

with § 915.3(b). The incumbent director

shall become ineligible after the close of

business on December 31 of the year in

which the directorship is redesignated

or eliminated.

(2) In the case of a redesignation to

another state, the stock directorship

shall become vacant after the close of

business on December 31 of the year in

which the directorship is redesignated

and the resulting vacancy shall be filled

by the board of directors of the Bank for

the remainder of the unexpired term

with a person who is an officer or

director of a member located in the

newly designated state, pursuant to

Section 7(f) of the Bank Act.

5. Amend § 915.8, by revising the first

sentence of paragraph (b) to read as

follows:

§ 915.8 Election process.

* * * * *

(b) Lack of nominees. If, for any voting

state, all directorships to be filled in an

election are the same with regard to

their respective terms and status as

guaranteed or non-guaranteed

directorships, and the number of

nominees from that state is equal to or

less than the number of such

directorships, the Bank shall notify the

members in the affected voting state in

writing (in lieu of providing a ballot)

that the directorships are to be filled

without an election due to a lack of

nominees. * * *

* * * * *

6. Amend § 915.10, by revising

paragraph (b), to read as follows:

§ 915.10 Selection of appointive directors.

* * * * *

(b) Term of office. The term of office

of each appointive directorship shall be

three years, except as adjusted pursuant

to Section 7(d) of the Act to achieve a

staggered board, and shall commence on

January 1. In appointing directors for

the terms commencing on January 1,

2001 and 2002, respectively, the

Finance Board shall adjust the terms of

any appointive directorships as

necessary to achieve the one-third

staggering of the board of directors

required by Section 7(d) of the Act, in

accordance with the requirements of

this Part and the applicable matrix from

the Appendix to this Part. In the case of

a discretionary appointive directorship

that is terminated pursuant to

§ 915.3(b)(5), the term of office of the

directorship shall end after the close of

business on December 31 of that year.

7. Add new § 915.16 to read as

follows:

§ 915.16 1999 and 2000 Election of

Directors.

(a) In general. The annual designation

of Bank directorships conducted by the

Finance Board in 2000 pursuant to

§ 915.3(b) shall control with respect to

the number of elective directorships to

be allocated to each state with terms

commencing on January 1, 2001.

(b) Conduct of 2000 elections. After

assigning any adjusted terms that may

be required by § 915.17(a)(3), the board

of directors of each Bank shall

determine either:

(1) To conduct new elections for every

state in the district for which an elective

directorship is to commence on January

1, 2001, or

(2) To conduct new elections only in

those states for which this section

requires a new election to be held and,

for all other states within the district, to

use the results of the 1999 elections for

the purpose of electing directors whose

terms are to commence on January 1,

2001.

(c) 1999 election results. If the number

of nominees from any state for the 1999

election of directors who remain eligible

to serve as a Bank director equals or

exceeds the number of directorships

designated to that state with terms

commencing on January 1, 2001, the

board of directors of the Bank may

declare elected the nominee receiving

the most votes in the 1999 election and,

if more than one directorship is to be

filled for that state, shall also declare

elected each successive nominee

receiving the next greatest number of

votes, until all directorships designated

for that state are filled. Before declaring

elected any such nominee, the board of

directors of the Bank shall confirm that

the nominee is eligible to serve as a

director from that state.

(d) 2000 elections. If the number of

directorships designated to any state

with terms commencing on January 1,

2001, exceeds the number of nominees

from that state in the 1999 election who

remain eligible to serve as a Bank

director, then the board of directors of

the Bank shall conduct a new election

for that state for all of the directorships

41570 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

with terms commencing on January 1,

2001.

(e) Report of election. If the board of

directors of a Bank adopts the 1999

election results for any state, it shall

provide written notice of its decision to

the Finance Board, the directors-elect,

and to each member in the affected

state. The notice shall indicate the date

on which the term of office of each

director-elect shall expire, and shall

indicate which terms have been

adjusted in order to stagger the board of

directors as required by Section 7(d) of

the Bank Act. Any such adjustments

shall be made in compliance with

§ 915.17. Such notice shall be deemed to

constitute the report of election for the

2000 election required by § 915.8(e).

(f) Safe harbor. In determining

whether to ratify the 1999 election

results or to hold new elections in 2000,

an individual director that would be

affected by the decision of the board

shall not be deemed to have violated

any regulation or Bank policy pertaining

to conflicts of interest solely by virtue

of having participated in the

deliberations or by having voted on the

matter.

8. Add new § 915.17 to read as

follows:

§ 915.17 Staggered directorships in the

2000 and 2001 elections.

(a) In general. (1) In conjunction with

the annual designations of directorships

for elected directors with terms

commencing on January 1, 2001 and

January 1, 2002, the Finance Board

shall, in addition to allocating

directorships among the states, indicate

the term of each elective directorship

and which directorships are to be

designated as non-guaranteed

directorships. A non-guaranteed

directorship shall retain that

designation in all subsequent elections,

unless the directorship is eliminated by

the Finance Board pursuant to Section

7(a) of the Bank Act or as a consequence

of a change in the amount of Bank stock

held by members located in that state.

In such subsequent elections, any nonguaranteed directorships shall be

assigned on the basis of votes received,

with the directors-elect who received

the fewest votes being assigned the nonguaranteed directorships.

(2) The board of directors of each

Bank shall adjust the terms of any

directorships that are to commence on

January 1, 2001 or January 1, 2002, in

accordance with this section and the

matrix for that Bank set forth in the

appendix to this part, and shall inform

the Finance Board which directorships

have been assigned adjusted terms.

(3) Where the matrix for a Bank

indicates that two or more guaranteed

directorships are to be filled by persons

elected from different states in the same

year, and which are to have different

terms, the board of directors of the Bank

shall assign the shorter terms among the

states on any reasonable basis, as

determined by Bank’s board, provided

that:

(i) It uses the same methodology in

making all such adjustments; and

(ii) It assigns the terms to the

respective states before determining

whether to adopt the 1999 election

results, in accordance with § 915.16(b).

(b) Adjustment of terms. (1) Where the

matrix for a Bank indicates that two or

more guaranteed directorships are to be

filled from the same state in the same

year, but which are to have different

terms, the board of directors of the Bank

shall assign the terms among the eligible

nominees who have received a

sufficient number of votes to be elected,

such that the nominees receiving the

greater number of votes are assigned the

longer terms and those nominees

receiving the lesser number of votes are

assigned the shorter terms. If the

directors from any state have been

declared elected without a vote, in

accordance with § 915.8(b) because the

number of nominees from that state was

less than or equal to the number of

directorships to be filled, then the board

of directors of Bank shall assign the

terms on the basis of the most recent

election.

(2) In the elections occurring in 2000

and 2001, if the matrix for any Bank

indicates that both guaranteed and nonguaranteed directorships are to be filled

from the same state in the same year, the

board of directors shall assign

directorships among the eligible

nominees who have received a

sufficient number of votes to be elected,

such that the nominees receiving the

greatest number of votes are assigned

the guaranteed directorships and those

nominees receiving the fewest votes are

assigned the non-guaranteed

directorships. In the event that the

matrix for a Bank assigns a guaranteed

directorship for a particular state a

shorter term than it assigns to a nonguaranteed directorship for the same

state for that year, the board of directors

shall assign the guaranteed directorship

to the nominee receiving the greatest

number of votes.

(c) Safe harbor. In determining which

directorships shall be assigned a

reduced term, an individual director

that could be affected by the decision of

the board shall not be deemed to have

violated any regulation or Bank policy

pertaining to conflicts of interest solely

by virtue of having participated in the

deliberations or by having voted on the

matter.

(d) Other adjustments. The board of

directors of the Bank may not adjust the

term of any director other than as

provided in this section.

9. Add a new appendix A to part 915

to read as follows:

Appendix A to Part 915 [Added]

Appendix A to Part 915—Staggering For FHLBank Boards of Directors

TABLE 1

Boston FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

6 Seats to be filled in 2000 Election:

* Board must allocate 1 Seat to a

2-year term.

Mass. Seat ............................... 3/2 Years*.

Conn. Seat ............................... 3/2 Years*.

Maine Seat ............................... 3/2 Years*.

R. I. Seat .................................. 3/2 Years*.

Mass. Seat ............................... 2 Years.

Conn. Seat ............................... 2 Years ......................................... Not Guaranteed (Discretionary

Seat).

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41571

TABLE 1—Continued

Boston FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

4 Seats to be filled in 2001 Election:

Mass. Seat ............................... 3 Years.

N.H. Seat ................................. 3 Years.

Vermont Seat ........................... 3 Years.

Mass. Seat ............................... 1 Year ........................................... Not Guaranteed (Discretionary

Seat).

Class with Terms Expiring Dec. 31, 2002 (4 seats):

Mass./Conn./Maine/Rhode Island Seat (board to pick 1 of 4)

Mass. Seat

Conn. Seat (not guaranteed by statute)

Mass. Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Mass./Conn./Maine/Rhode Island Seat (board to pick 3 of 4)

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Mass. Seat

N.H. Seat

Vermont Seat

TABLE 2

N.Y. FHLBank

(11 Seats: 9 Guaranteed by Statute

and 2 Not Guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 3–3–3

Total staggering: 3–4–4

7 Seats to be filled in 2000 election:

New York Seat ......................... 3 Years.

New Jersey Seat ...................... 3 Years.

Puerto Rico Seat ...................... 3 Years.

New York Seat ......................... 3 Years ......................................... Not Guaranteed (Stock Seat).

New York Seat ......................... 2 Years.

New York Seat ......................... 2 Years.

New Jersey Seat ...................... 2 Years.

4 Seats to be filled in 2001 election:

New York Seat ......................... 3 Years.

New York Seat ......................... 3 Years ......................................... Not Guaranteed (Stock Seat).

New Jersey Seat ...................... 3 Years.

New Jersey Seat ...................... 3 Years.

Class with Terms Expiring Dec. 31, 2002 (3 seats):

New York Seat

New York Seat

New Jersey Seat

Class with Terms Expiring Dec. 31, 2003 (4 seats):

New York Seat

New York Seat (not guaranteed by statute)

New Jersey Seat

Puerto Rico Seat

Class with Terms Expiring Dec. 31, 2004 (4 seats):

New York Seat

New York Seat (not guaranteed by statute)

New Jersey Seat

New Jersey Seat

TABLE 3

Pitts. FHLBank

(8 seats: all guaranteed by statute) Term Non-guaranteed seats Guaranteed staggering: 2–3–3Total staggering: 2–3–3

4 Seats to be filled in 2000 Election:

Penn. Seat ............................... 3 Years.

Penn. Seat ............................... 3 Years.

Penn. Seat ............................... 3 Years.

Penn. Seat ............................... 2 Years.

4 Seats to be filled in 2001 Election

West Va. Seat .......................... 3 Years.

Delaware Seat ......................... 3 Years.

Penn. Seat ............................... 3 Years.

Penn. Seat ............................... 1 Year.

41572 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

TABLE 3—Continued

Pitts. FHLBank

(8 seats: all guaranteed by statute) Term Non-guaranteed seats Guaranteed staggering: 2–3–3Total staggering: 2–3–3

Class with Terms Expiring Dec. 31, 2002 (2 seats):

Penn. Seat

Penn Seat

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Penn. Seat

Penn. Seat

Penn. Seat

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Penn. Seat

Delaware Seat

West Va. Seat

TABLE 4

Atlanta FHLBank

(9 Seats: 8 guaranteed by statute

and 1 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 3–3–3

4 Seats to be filled in 2000 Election:

* Board must allocate 1 Seat to a

2-year term.

D.C. Seat ................................. 3/2 Years*.

Alabama Seat .......................... 3/2 Years*.

Virginia Seat ............................. 3/2 Years*.

S. Carolina Seat ....................... 3/2 Years*.

5 Seats to be filled in 2001 Election:

* Board must allocate 1 Seat to a

1-year term

N. Carolina Seat ...................... 3/1 Years*.

Georgia Seat ............................ 3/1 Years*.

Maryland Seat .......................... 3/1 Years*.

Florida Seat .............................. 3/1 Years*.

N. Carolina Seat ...................... 1 Year*. ........................................ Not Guaranteed (Discretionary

Seat).

Class with Terms Expiring Dec. 31, 2002 (3 seats):

North Carolina Seat (not guaranteed by statute)

D.C./Alabama/Virginia/So. Carolina Seat (board to pick 1 of 4)

No. Carolina/Georgia/Maryland/Florida Seat (board to pick 1 of 4)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

D.C./Alabama/Virginia/So. Carolina Seat (board to pick 3 of 4)

Class with Terms Expiring Dec. 31, 2004 (3 seats):

No. Carolina/Georgia/Maryland/Florida Seat (board to pick 3 of 4)

TABLE 5

Cincinnati FHLBank

(9 seats: 8 guaranteed by statute

and 1 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 3–3–3

4 Seats to be filled in 2000 Election:

* Board must allocate 1 Seat to a

2-year term.

Kentucky Seat .......................... 3 Years.

Ohio Seat ................................. 3 Years.

Kentucky Seat .......................... 3/2 Years *.

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41573

TABLE 5—Continued

Cincinnati FHLBank

(9 seats: 8 guaranteed by statute

and 1 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 3–3–3

Ohio Seat ................................. 3/2 Years *.

5 Seats to be filled in 2001 Election:

* Board must allocate 1 Seat to a

1-year term.

Ohio Seat ................................. 3 Years.

Tennessee Seat ....................... 3 Years.

Tennessee Seat ....................... 3/1 Years *.

Ohio Seat ................................. 3/1 Years *.

Ohio Seat ................................. 1 Year ........................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (3 seats):

Kentucky or Ohio Seat (board to decide)

Ohio Seat (not guaranteed by statute)

Tennessee or Ohio Seat (board to decide)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Kentucky Seat

Ohio Seat

Kentucky or Ohio Seat (board to decide)

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Ohio Seat

Tennessee Seat

Tennessee or Ohio Seat (board to decide)

TABLE 6

Indianapolis FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

4 Seats to be filled in 2000 Election:

Indiana Seat ............................. 3 Years.

Indiana Seat ............................. 3 Years.

Michigan Seat .......................... 3 Years.

Indiana Seat ............................. 2 Years.

6 Seats to be filled in 2001 Election:

* Board must allocate 1 Seat to a

1-year term.

Michigan Seat .......................... 3 Years.

Indiana Seat ............................. 3 Years.

Michigan Seat .......................... 3/1 Years *.

Indiana Seat ............................. 3/1 Years *.

Michigan Seat .......................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Michigan Seat .......................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (4 seats):

Indiana Seat.

Michigan or Indiana Seat (board to decide).

Michigan Seat (not guaranteed by statute).

Michigan Seat (not guaranteed by statute).

Class with Terms Expiring Dec. 31, 2003 (3 seats).

Indiana Seat.

Indiana Seat.

Michigan Seat.

Class with Terms Expiring Dec. 31, 2004 (3 seats).

Michigan Seat.

Indiana Seat.

Michigan or Indiana Seat (board to decide).

TABLE 7

Chicago FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

4 Seats to be filled in 2000 Election:

Illinois Seat ............................... 3 Years.

41574 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

TABLE 7—Continued

Chicago FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

Wisconsin Seat ........................ 3 Years.

Wisconsin Seat ........................ 3 Years.

Wisconsin Seat ........................ 2 Years.

6 Seats to be filled in 2001 Election:

Wisconsin Seat ........................ 3 Years.

Illinois Seat ............................... 3 Years.

Illinois Seat ............................... 3 Years.

Illinois Seat ............................... 1 Year.

Illinois Seat ............................... 1 Year. .......................................... Not Guaranteed (Stock Seat).

Illinois Seat ............................... 1 Year. .......................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (4 seats)

Wisconsin Seat

Illinois Seat

Illinois Seat (not guaranteed by statute)

Illinois Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats)

Illinois Seat

Wisconsin Seat

Wisconsin Seat

Class with Terms Expiring Dec. 31, 2004 (3 seats)

Wisconsin Seat

Illinois Seat

Illinois Seat

TABLE 8

Des Moines Bank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

6 Seats to be filled in 2000 Election:

* Board must allocate 1 Seat to a

2-year term

Missouri Seat ........................... 3/2 Years*.

South Dakota Seat ................... 3/2 Years*.

Iowa Seat ................................. 3/2 Years*.

Minnesota Seat ........................ 3/2 Years*.

Iowa Seat ................................. 2 Years.

Minnesota Seat ........................ 2 Years ......................................... Not Guaranteed (Stock Seat).

4 Seats to be filled in 2001 Election:

Missouri Seat ........................... 3 Years.

Minnesota Seat ........................ 3 Years.

North Dakota Seat ................... 3 Years.

Missouri Seat ........................... 1 Year ........................................... Not Guaranteed (Discretionary

Seat).

Class with Terms Expiring Dec. 31, 2002 (4 seats):

Iowa Seat

Missouri/So.Dakota/Iowa/Minnesota Seat (board to pick 1 of 4)

Minnesota Seat (not guaranteed by statute)

Missouri Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Missouri/So. Dakota/Iowa/Minnesota Seat (board to pick 3 of 4)

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Missouri Seat

Minnesota Seat

North Dakota Seat

TABLE 9

Dallas FHLBank

(9 seats: 8 guaranteed by statute

and 1 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 3–3–3

4 Seats to be filled in 2000 Election:

Texas Seat ............................... 3 Years.

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations 41575

TABLE 9—Continued

Dallas FHLBank

(9 seats: 8 guaranteed by statute

and 1 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 3–3–3

Louisiana Seat ......................... 3 Years.

Arkansas Seat .......................... 3 Years.

Louisiana Seat ......................... 2 Years.

5 Seats to be filled in 2001 Election:

Texas Seat ............................... 3 Years.

Mississippi Seat ....................... 3 Years.

New Mexico Seat ..................... 3 Years.

Texas Seat ............................... 1 Year.

Texas Seat ............................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (3 seats):

Louisiana Seat

Texas Seat

Texas Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Texas Seat

Louisiana Seat

Arkansas Seat

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Texas Seat

Mississippi Seat

New Mexico Seat

TABLE 10

Topeka FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-Guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

5 Seats to be filled in 2000 Election:

Colorado Seat .......................... 3 Years.

Oklahoma Seat ........................ 3 Years.

Kansas Seat ............................. 3 Years.

Colorado Seat .......................... 2 Years.

Kansas Seat ............................. 2 Years.

5 Seats to be filled in 2001 Election:

Kansas Seat ............................. 3 Years.

Oklahoma Seat ........................ 3 Years.

Nebraska Seat ......................... 3 Years.

Nebraska Seat ......................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Nebraska Seat ......................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (4 seats):

Colorado Seat

Kansas Seat

Nebraska Seat (not guaranteed by statute)

Nebraska Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Colorado Seat

Oklahoma Seat

Kansas Seat

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Kansas Seat

Oklahoma Seat

Nebraska Seat

TABLE 11

San Francisco FHLBank

(8 seats: 5 guaranteed by statute

and 3 not guaranteed)

Terms Non-guaranteed seats Guaranteed staggering: 1–2–2

Total staggering: 2–3–3

4 Seats to be filled in 2000 Election:

California Seat ......................... 3 Years.

California Seat ......................... 3 Years.

California Seat ......................... 3 Years ......................................... Not Guaranteed (Stock Seat).

California Seat ......................... 2 Years ......................................... Not Guaranteed (Stock Seat).

41576 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Rules and Regulations

TABLE 11—Continued

San Francisco FHLBank

(8 seats: 5 guaranteed by statute

and 3 not guaranteed)

Terms Non-guaranteed seats Guaranteed staggering: 1–2–2

Total staggering: 2–3–3

4 Seats to be filled in 2001 Election:

*Board must allocate 1 seat to a

1-year term

California Seat ......................... 3/1 Years*.

Nevada Seat ............................ 3/1 Years*.

Arizona Seat ............................ 3/1 Years*.

California Seat ......................... 1 Year ........................................... Not Guaranteed (Stock Seat).

Class with Terms Expiring Dec. 31, 2002 (3 seats):

California/Nevada/Arizona Seat (board to pick 1 of 3)

California Seat (not guaranteed by statute)

California Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

California Seat

California Seat

California Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2004 (2 seats):

California/Nevada/Arizona Seat (board to pick 2 of 3)

TABLE 12

Seattle FHLBank

(10 seats: 8 guaranteed by statute

and 2 not guaranteed)

Term Non-guaranteed seats Guaranteed staggering: 2–3–3

Total staggering: 4–3–3

5 Seats to be filled in 2000 Election:

Hawaii Seat .............................. 3 Years.

Utah Seat ................................. 3 Years.

Alaska Seat .............................. 3 Years.

Washington Seat ...................... 2 Years ......................................... Not Guaranteed (Discretionary

Seat).

Washington Seat ...................... 2 Years ......................................... Not Guaranteed (Discretionary

Seat).

5 Seats to be filled in 2001 Election:

* Board must allocate 2 seats to

1-year terms

Montana Seat ........................... 3/1 Years*.

Oregon Seat ............................. 3/1 Years*.

Washington Seat ...................... 3/1 Years*.

Idaho Seat ................................ 3/1 Years*.

Wyoming Seat .......................... 3/1 Years*.

Class with Terms Expiring Dec. 31, 2002 (4 seats):

Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 2 of 5)

Washington Seat (not guaranteed by statute)

Washington Seat (not guaranteed by statute)

Class with Terms Expiring Dec. 31, 2003 (3 seats):

Hawaii Seat

Utah Seat

Alaska Seat

Class with Terms Expiring Dec. 31, 2004 (3 seats):

Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 3 of 5)

Dated: June 23, 2000.

By the Board of Directors of the Federal

Housing Finance Board.

Bruce A. Morrison,

Chairman.

[FR Doc. 00–16964 Filed 7–5–00; 8:45 am]

BILLING CODE 6725–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Airspace Docket No. 99–AGL–57]

Realignment of Federal Airways; MI

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This action realigns five

Federal airways in the Marquette, MI,

area. This action will realign the

affected Federal airways from the

Marquette Very High Frequency

Omnidirectional Range/Distance

Measuring Equipment (VOR/DME) to

the Sawyer VOR/DME (previously

named Gwinn in the notice). The FAA

is taking this action due to the