3028 Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Rules and Regulations 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 915 

[No. 2007–01] 

RIN 3069–AB–33 

Federal Home Loan Bank Appointive 

Directors 

AGENCY: Federal Housing Finance 

Board. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: The Federal Housing Finance 

Board (Finance Board) is adopting 

procedures for the selection of Federal 

Home Loan Bank (Bank) appointive 

directors. The procedures require the 

boards of directors of the Banks to 

submit to the Finance Board a list of 

individuals that includes information 

regarding each individual’s eligibility 

and qualifications to serve as a Bank 

director. The Finance Board will use the 

lists provided by each Bank to select 

well-qualified individuals to serve on 

the Bank’s board of directors. 

DATES: This interim final rule is 

effective on January 24, 2007. The 

Finance Board will accept written 

comments on the interim final rule on 

or before February 23, 2007. 

Comments: Submit comments to the 

Finance Board using any one of the 

following methods: 

E-mail: comments@fhfb.gov. 

Fax: 202–408–2580. 

Mail/Hand Delivery: Federal Housing 

Finance Board, 1625 Eye Street NW., 

Washington, DC 20006, ATTENTION: 

Public Comments. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. If 

you submit your comment to the 

Federal eRulemaking Portal, please also 

send it by e-mail to the Finance Board 

at comments@fhfb.gov to ensure timely 

receipt by the agency. Include the 

following information in the subject line 

of your submission: Federal Housing 

Finance Board. Interim Final Rule: 

Federal Home Loan Bank Appointive 

Directors. RIN Number 3069–AB–33. 

Docket Number 2007–01. 

We will post all public comments we 

receive without change, including any 

personal information you provide, such 

as your name and address, on the 

Finance Board Web site at http:// 

www.fhfb.gov/ 

Default.aspx?Page=93&Top=93. 

FOR FURTHER INFORMATION CONTACT: Neil 

R. Crowley, Deputy General Counsel, 

202–408–2990, crowleyn@fhfb.gov; or 

Thomas P. Jennings, Senior Attorney 

Advisor, Office of General Counsel, 

202–408–2553, jenningst@fhfb.gov. You 

can send regular mail to the Federal 

Housing Finance Board, 1625 Eye Street 

NW., Washington, DC 20006. 

SUPPLEMENTARY INFORMATION:

I. Background 

Section 7(a) of the Federal Home Loan 

Bank Act (Bank Act) (12 U.S.C. 1427(a)), 

authorizes the Finance Board to appoint 

directors to the board of each Bank. 

Section 7(f)(2) (12 U.S.C. 1427(f)(2)) 

authorizes the Finance Board to fill any 

vacancy in an appointive directorship 

for the remainder of the unexpired term. 

The current rule implementing this 

statutory authority provides only for the 

selection of appointive directors in the 

sole discretion of the Finance Board, but 

lacks any procedures for accomplishing 

this. See 12 CFR 915.10(a). The Finance 

Board has determined that adopting 

procedures for the selection of 

appointive directors will enhance its 

ability to identify and appoint wellqualified individuals to serve as Bank 

directors. Accordingly, the Finance 

Board is amending § 915.10 to adopt 

procedures under which the board of 

directors of each Bank will submit to the 

Finance Board a list of individuals that 

includes information regarding each 

individual’s eligibility and 

qualifications to serve as a Bank 

director. The Finance Board will use the 

lists provided by each Bank to select 

well-qualified individuals to serve on 

the Bank’s board of directors. 

II. Analysis of the Interim Final Rule 

A. Bank Responsibilities 

An effective board of directors is an 

important element in maintaining the 

safety and soundness of a Bank and 

ensuring that it serves its housing and 

community finance mission. The Banks 

and other interested parties with 

knowledge of the district likely will be 

familiar with individuals who have the 

background and skills necessary to serve 

on the board of a large financial 

institution such as a Bank. The Finance 

Board believes that the appointment 

process will be enhanced by allowing 

those most familiar with the resources 

in a Bank’s district to play a greater role 

in identifying a pool of well-qualified 

individuals from which the Finance 

Board can appoint Bank directors. 

Accordingly, the rule seeks to utilize the 

local and regional knowledge of the 

Bank, as well as of any other interested 

parties, in seeking out or otherwise 

identifying individuals who have the 

background and skills necessary to serve 

as an effective Bank director. 

Under the rule, the Banks are 

responsible at the initial stages of the 

selection process for identifying 

potential appointive directors, assessing 

their eligibility and qualifications, and 

nominating them to the Finance Board. 

In doing so, the Finance Board expects 

each Bank to assess the appropriate 

experience and abilities its board must 

possess in order to operate effectively. 

When the Bank’s board identifies 

potential appointive directors, it will 

perform a preliminary assessment of 

their qualifications prior to sending a 

list of nominations to the Finance 

Board. The board’s preliminary 

assessment should include, but is not 

limited to, a review of the individuals’

executed eligibility form and their 

community reputation. In the case of an 

individual seeking to be designated as a 

community interest director, the 

Finance Board expects that each Bank 

will assess the individual’s prior 

experience in serving the consumer and 

community interests specified in the 

Bank Act. As noted below, in order to 

allow for a well-diversified applicant 

pool, the rule permits any interested 

party to submit to the Banks the names 

of prospective directors, which the 

Banks will evaluate based on each 

individual’s qualifications. 

Section 915.10(a)(1) requires the 

board of directors of each Bank 

annually, on or before October 1st, to 

submit to the Finance Board a list of 

nominees who meet the statutory 

eligibility requirements and are 

otherwise well-qualified for the 

appointive directorships that will 

become vacant at the end of that 

calendar year. Determining who to 

include on the list is left to the boards 

of directors of the Banks, which may 

exercise discretion in determining how 

to identify and present individuals to 

the Finance Board. The board should 

consider each individual in light of his 

or her background and experience as it 

relates to being a director of a Bank, and 

should select nominees based on the 

totality of their qualifications. Section 

915.10(a)(3) of the rule further requires 

that the list of individuals a Bank 

submits include 2 times the number of 

appointive directorships that are to be 

filled that year. Under § 915.15(b), the 

Finance Board has the discretion to 

require a Bank to provide information 

about additional eligible and wellqualified individuals. 

Along with the list of eligible and 

qualified individuals, the Bank must 

provide the original executed 

appointive director application form on 

which each individual describes in 

detail the business, financial, housing, 

community and economic development, 

or other leadership experiences that 

qualify him or her to serve on the board 


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of the Bank. A copy of the form is 

attached as an exhibit. 

Section 915.10(a)(2) extends this 

procedure to filling vacancies that arise 

before the completion of a full term, by 

requiring the board of directors of the 

Bank to submit a list of 2 individuals for 

any appointive directorship that 

becomes vacant prior to the end of its 

term. The rule requires a Bank to act 

promptly to provide the list to fill the 

remaining term of a vacant appointive 

directorship. 

B. Finance Board Selection 

Section 915.10(b) provides that the 

Finance Board has sole discretion to 

appoint individuals to the boards of the 

Banks. In exercising this discretion, the 

Finance Board intends to look 

principally to the qualifications of the 

nominees, and will appoint only those 

individuals who have demonstrated that 

they possess the experience necessary to 

serve effectively on the board of a large 

and sophisticated financial institution 

with an important housing finance and 

economic development mission, such as 

a Bank. By relying on the demonstrated 

qualifications of the nominees, the 

Finance Board expects that any 

individuals it appoints will possess the 

experience and skills necessary to serve 

as the independent voices on the board 

of directors, a role that can best be 

played by the appointive directors of the 

Banks. 

The rule also makes clear that the 

Finance Board may decline, in its sole 

discretion, to appoint any of the 

individuals on the initial list submitted 

by the Bank. If this occurs, the Finance 

Board can direct a Bank to submit the 

names of additional eligible and wellqualified individuals for the Finance 

Board’s consideration. 

C. Prospective Appointive Directors 

To ensure a diverse pool of 

prospective directors, § 915.10(c) allows 

any individual who is interested in 

being appointed to the board of a Bank 

to submit to the Bank an executed 

appointive director application form. 

The rule also allows any interested 

party to make recommendations to a 

Bank regarding individuals who are 

well-qualified to serve on the board of 

the Bank, but requires any such 

individual to submit to the Bank the 

same application form before the Bank 

may consider that person for inclusion 

in the list it submits to the Finance 

Board. The rule does not provide for any 

individuals to submit applications 

directly to the Finance Board. The board 

of the Bank has discretion to determine 

which individuals it submits to the 

Finance Board for consideration, 

although the Finance Board expects that 

the Bank’s board will give due 

consideration to all persons seeking to 

be nominated to the board. 

D. Term of Office 

Section 915.10(d) is substantially 

similar to § 915.10(b) of the current rule. 

It has been revised to delete outdated 

language that addressed how the 

Finance Board would stagger the terms 

of appointive directors with terms 

commencing in 2001 and 2002, to 

achieve a one-third staggering of the 

boards of directors, as required by 

section 7(d) of the Bank Act (12 U.S.C. 

1427(d)). Because the Finance Board has 

adjusted the terms of office for those 

directorships and has established 3 

approximately equal classes of directors 

at each of the Banks that language is no 

longer necessary and is deleted. 

E. Appointive Directorship Vacancies 

Existing on January 1, 2007 

Section 915.10(e) is a temporary 

provision for filling appointive 

directorships that are vacant on January 

1, 2007. The rule requires the boards of 

directors of the Banks to submit the list 

of eligible and qualified individuals to 

the Finance Board on or before March 

31, 2007, instead of October 1, 2007. In 

all other respects, the changes made by 

the interim final rule will apply. For 

these directorships the Finance Board 

intends to consider nominations as they 

are received, and the rule thus does not 

require a Bank to submit nominations 

for all vacancies at one time. 

III. Notice and Public Participation 

The notice and comment procedure 

required by the Administrative 

Procedure Act is inapplicable to this 

interim final rule because it is a rule of 

agency procedure. See 5 U.S.C. 

553(b)(3)(A). In addition, it is in the 

public interest to fill appointive 

directorships at the Banks with well 

qualified individuals as soon as it is 

practicable to do so. See 5 U.S.C. 

553(b)(3)(B). However, because the 

Finance Board believes that public 

comments are valuable, it encourages 

comments on this interim final rule, and 

will consider all comments received on 

or before February 23, 2007 in 

promulgating a final rule. 

IV. Effective Date 

For the reasons stated in part III 

above, the Finance Board for good cause 

finds that the interim final rule should 

become effective on January 24, 2007. 

See 5 U.S.C. 553(d)(3). 

V. Paperwork Reduction Act 

The appointive director application 

form is part of the information 

collection entitled ‘‘Federal Home Loan 

Bank Directors.’’ Under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.), the Office of Management and 

Budget (OMB) has assigned control 

number 3069–0002, which is due to 

expire on November 30, 2007. The 

Finance Board and the Banks use the 

information contained in the 

application form to determine whether 

prospective appointive Bank directors 

satisfy the statutory and regulatory 

eligibility requirements and are well 

qualified to serve as a Bank director. 

Only individuals meeting these 

requirements may serve as Bank 

directors. See 12 U.S.C. 1427. The 

interim final rule does not make 

substantive or material modifications to 

the ‘‘Federal Home Loan Bank 

Directors’’ information collection. 

Consequently, the Finance Board has 

not submitted any information to OMB 

for review. 

VI. Regulatory Flexibility Act 

The Finance Board is adopting this 

procedural amendment in the form of an 

interim final rule and not as a proposed 

rule. Therefore, the provisions of the 

Regulatory Flexibility Act do not apply. 

See 5 U.S.C. 601(2) and 603(a). 

List of Subjects in 12 CFR Part 915 

Conflicts of interest, Elections, 

Federal home loan banks, Reporting and 

recordkeeping requirements. 

■ For the reasons stated in the preamble, 

the Finance Board amends 12 CFR part 

915 as follows: 

PART 915—BANK DIRECTOR 

ELIGIBILITY, APPOINTMENT, AND 

ELECTIONS 

■ 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. Revise § 915.10 to read as follows: 

§ 915.10 Selection of appointive directors. 

(a) Bank responsibilities. (1) On or 

before October 1st of each year, the 

board of directors of each Bank shall 

submit to the Finance Board a list of 

eligible nominees who are wellqualified to fill the appointive 

directorships that will expire on 

December 31st of that year, along with 

the original Finance Board-prescribed 

appointive director application form 

executed by each individual on the list. 

(2) If an appointive directorship 

becomes vacant prior to the expiration 


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of its term, the board of directors of the 

Bank shall submit to the Finance Board 

a list of eligible nominees who are wellqualified to fill that directorship, along 

with each individual’s executed 

appointive director application form, 

promptly after the vacancy arises. 

(3) The number of nominees on any 

list submitted by a Bank’s board of 

directors pursuant to paragraphs (a)(1) 

or (2) of this section shall equal 2 times 

the number of appointive directorships 

to be filled. 

(b) Finance Board selection. As 

provided by the Act, the Finance Board 

has the sole responsibility for 

appointing individuals to the boards of 

directors of the Banks. In exercising that 

responsibility, the Finance Board shall 

select from among the nominees on the 

list submitted by the Bank pursuant to 

paragraph (a) of this section, provided, 

however, that if the Finance Board does 

not fill all of the appointive 

directorships from the list initially 

submitted by the Bank, it may require 

the Bank to submit a supplemental list 

of nominees for its consideration. 

(c) Prospective applicants. Any 

individual who seeks to be appointed to 

the board of directors of a Bank may 

submit to the Bank an executed 

appointive director application form 

that demonstrates that the individual 

both is eligible and has business, 

financial, housing, community and 

economic development, and/or 

leadership experience. Any other 

interested party may recommend to the 

Bank that it consider a particular 

individual as a nominee for an 

appointive directorship, but the Bank 

may not do so until the individual has 

provided the Bank with an executed 

appointive director application form. 

The board of directors of the Bank may 

consider any individual for inclusion on 

the list it submits to the Finance Board 

provided it has determined that the 

individual is eligible and well-qualified 

for an appointive directorship at the 

Bank. 

(d) Term of office. The term of office 

of each appointive directorship is 3 

years, except as adjusted pursuant to 

section 7(d) of the Act (12 U.S.C. 

1427(d)) to achieve a staggered board, 

and shall commence on January 1st. In 

the case of a discretionary appointive 

directorship that is terminated pursuant 

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

directorship shall end after the close of 

business on December 31st of that year. 

(e) Appointive directorship vacancies 

existing on January 1, 2007. For 

appointive directorships that are vacant 

on January 1, 2007, the board of 

directors of each Bank shall submit the 

information required by paragraph (a) of 

this section on or before March 31, 

2007. 

Dated: January 18, 2007. 

By the Board of Directors of the Federal 

Housing Finance Board. 

Ronald A. Rosenfeld, 

Chairman. 

Editorial Note: The following forms will 

not appear in the Code of Federal 

Regulations. 

BILLING CODE 6725–01–P 


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[FR Doc. 07–271 Filed 1–23–07; 8:45 am] 

BILLING CODE 6725–01–C 


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