`[Federal Register Volume 65, Number 130 (Thursday, July 6, 2000)]
[Rules and Regulations]
[Pages 41560-41576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16964]


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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.

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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 Gramm-Leach-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 three-year 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.
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    \1\ Finance Board Resolution No. 99-65 (Dec. 14, 1999).

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[[Page 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 one-year 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 three-year 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 Sec. 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.

[[Page 41562]]

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 Sec. 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 director-elect 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

[[Page 41563]]

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 Sec. 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\
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    \2\ Finance Board Resolutons No. 2000-21 (May 17 2000); No. 99-
35 (June 2, 1999).
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    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 Sec. 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 non-guaranteed 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 state-by-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 Sec. 915.17 of the 
proposed rule, described below, which addresses staggering the board of 
directors.

[[Page 41564]]

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 ``class-based'' 
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 ``non-guaranteed'' 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 ``non-guaranteed 
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 state-based 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 non-guaranteed 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

[[Page 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 three-year 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 non-guaranteed 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 
Sec. 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 non-
guaranteed, 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 Sec. 915.17(b)(2) by providing that if 
a matrix assigns a guaranteed directorship a shorter term than it 
assigns to a non-guaranteed directorship for the same

[[Page 41566]]

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 non-
guaranteed 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 non-guaranteed 
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 non-guaranteed.
    The same commenter raised three procedural questions concerning the 
treatment of those two directorships (i.e., one guaranteed and one non-
guaranteed, 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 non-guaranteed, 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 three-year 
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

[[Page 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 non-guaranteed 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 non-guaranteed 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 one-third 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

[[Page 41568]]

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 Sec. 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 Sec. 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:


Sec. 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 Sec. 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 Sec. 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:


Sec. 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 
Sec. 915.17 of this chapter to achieve a staggered board,

[[Page 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 Sec. 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:


Sec. 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 Sec. 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 Sec. 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 Sec. 915.8, by revising the first sentence of paragraph 
(b) to read as follows:


Sec. 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 Sec. 915.10, by revising paragraph (b), to read as 
follows:


Sec. 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 Sec. 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 Sec. 915.16 to read as follows:


Sec. 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 Sec. 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 Sec. 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

[[Page 41570]]

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 Sec. 915.17. Such 
notice shall be deemed to constitute the report of election for the 
2000 election required by Sec. 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 Sec. 915.17 to read as follows:


Sec. 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 non-guaranteed directorships shall be assigned on the 
basis of votes received, with the directors-elect who received the 
fewest votes being assigned the non-guaranteed 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 Sec. 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 
Sec. 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 non-guaranteed 
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 non-guaranteed 
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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   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).

[[Page 41571]]

 
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                Term                         Non-guaranteed seats               Guaranteed staggering: 3-3-3  Total
             Guaranteed)                                                                                                   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 staggering: 2-3-3  Total
       guaranteed by statute)                     Term                         Non-guaranteed seats                        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.                       .........................................  .........................................

[[Page 41572]]

 
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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   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                Term                         Non-guaranteed seats                Guaranteed staggering: 2-3-3 Total
             guaranteed)                                                                                                   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 *.

[[Page 41573]]

 
    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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   staggering: 4-3-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Illinois Seat...................  3 Years.

[[Page 41574]]

 
    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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   staggering: 3-3-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 Seats to be filled in 2000
 Election:
    Texas Seat......................  3 Years.

[[Page 41575]]

 
    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                Term                         Non-Guaranteed seats                Guaranteed staggering: 2-3-3 Total
             guaranteed)                                                                                                   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                Terms                        Non-guaranteed seats               Guaranteed staggering: 1-2-2  Total
             guaranteed)                                                                                                   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).               .........................................

[[Page 41576]]

 
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                Term                         Non-guaranteed seats               Guaranteed staggering: 2-3-3  Total
             guaranteed)                                                                                                   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`