[Federal Register Volume 62, Number 185 (Wednesday, September 24, 1997)]
[Proposed Rules]
[Pages 49943-49945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25304]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 62, No. 185 / Wednesday, September 24, 1997 / 
Proposed Rules

[[Page 49943]]


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FEDERAL HOUSING FINANCE BOARD

12 CFR Parts 900, 932 and 933

[No. 97-61]
RIN 3069-AA41


Membership Eligibility

AGENCY: Federal Housing Finance Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) is proposing 
to amend the definition of the term ``State'' in its Membership 
Regulation to include the U.S. Territory of American Samoa (American 
Samoa) and the U.S. Commonwealth of the Northern Mariana Islands (the 
Northern Mariana Islands). Institutions organized under the laws of 
American Samoa and the Northern Mariana Islands, therefore, will be 
eligible to apply for Federal Home Loan Bank (Bank) membership. In 
accordance with these changes, the Finance Board also is proposing to 
clarify in its regulations that the Seattle Bank District includes 
American Samoa and the Northern Mariana Islands. In addition, the 
Finance Board is proposing to designate Hawaii as the State in which 
members with a principal place of business in American Samoa, the 
Northern Mariana Islands, or Guam, shall be deemed to be located for 
purposes of election of Bank directors.

DATES: Comments on this proposed rule must be received in writing on or 
before October 24, 1997.

ADDRESSES: Comments should be mailed to: Elaine L. Baker, Secretary to 
the Board, Federal Housing Finance Board, 1777 F Street NW., 
Washington, DC 20006. Comments will be available for public inspection 
at this address.

FOR FURTHER INFORMATION CONTACT: Sharon B. Like, Senior Attorney-
Adviser, (202) 408-2930, Office of General Counsel, Federal Housing 
Finance Board, 1777 F Street NW., Washington, DC 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

A. Membership Eligibility Requirement--Definition of State

    Under the Federal Home Loan Bank Act (Act), the Finance Board is 
responsible for the supervision and regulation of the 12 Banks, which 
provide advances and other financial services to their member 
institutions. See 12 U.S.C. 1422a(a). Institutions may become members 
of a Bank if they meet certain membership eligibility and minimum stock 
purchase criteria set forth in the Act and the Finance Board's 
implementing Membership Regulation. See id. Secs. 1424, 1426, 
1430(e)(3); 12 CFR part 933.
    Specifically, under the Act and the Membership Regulation, 
applicants for Bank membership must satisfy, among other requirements, 
the requirement that they are ``duly organized under the laws of any 
State or of the United States.'' See 12 U.S.C. 1424(a)(1)(A); 12 CFR 
933.6(a)(1), 933.7. Section 2(3) of the Act defines the term ``State'' 
as follows:
    The term State includes the District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands of the United States.
    See 12 U.S.C. 1422(3). Guam and the U.S. Virgin Islands are U.S. 
Territories, while Puerto Rico is a U.S. Commonwealth.
    Section 933.1(cc) of the Finance Board's Membership Regulation 
implements the statutory definition by defining the term State as 
follows:
    State means a State, the District of Columbia, Guam, Puerto Rico, 
and the Virgin Islands of the United States.
    See 12 CFR 933.1(cc). The regulatory definition does not 
specifically include any other U.S. Territories, Commonwealths or 
Dependencies within the meaning of State. Therefore, financial 
institutions organized under the laws of such other jurisdictions 
currently are not eligible for Bank membership, unless other specific 
laws or agreements executed by the United States and these 
jurisdictions make the Act applicable to such jurisdictions.
    The Finance Board believes that the term State under the Membership 
Regulation should be defined comprehensively to include all other U.S. 
Territories, Commonwealths and Dependencies that share a political 
status similar to that of the specified entities in the statute, i.e., 
Guam, the U.S. Virgin Islands, and Puerto Rico. In addition, if any 
specific laws or agreements executed by the United States and 
particular jurisdictions make the Act applicable to such jurisdictions, 
then the regulatory definition of the term State should be amended to 
include those jurisdictions, consistent with the laws or agreements.
    Accordingly, the Finance Board undertook a broad analysis of 
existing and former U.S. Territories, Commonwealths and Dependencies to 
determine whether any of the jurisdictions satisfy the above 
requirements. The research revealed that only American Samoa and the 
Northern Mariana Islands meet the requirements, as further discussed 
below. Therefore, the Finance Board is proposing to amend 
Sec. 933.1(cc) of the Membership Regulation to include American Samoa 
and the Northern Mariana Islands in the definition of State. In order 
to ensure that all eligible jurisdictions are included in the revised 
definition of State for membership purposes, the Finance Board requests 
commenters to identify any other jurisdictions not included in proposed 
Sec. 933.1(cc) that have U.S. Territory, Commonwealth, or Dependency 
status, or that have laws or agreements with the United States that 
make the Act applicable to such jurisdictions.

B. Designation of Member's State Location for Purposes of Election of 
Bank Directors

    The Act sets forth specific procedures for the election of 
directors by the members to the boards of the Banks. See 12 U.S.C. 
1427; 12 CFR 932. Each elective directorship is designated by the 
Finance Board as representing the members located in a particular 
State. See 12 U.S.C. 1427(b). If the principal place of business of a 
member is located in a State as defined in section 7(e) of the Act, the 
Finance Board must designate such State as the State in which the 
member is located for director election purposes. See id. Sec. 1427(c). 
Section 7(e) defines State, for purposes of section 7, as ``the States 
of the Union, the District of Columbia, and the Commonwealth of Puerto 
Rico.'' See id. Sec. 1427(e). For members whose principal place of 
business is not located in a State as defined in section 7(e), the 
Finance Board is required to designate a State in which such

[[Page 49944]]

members shall be deemed to be located for director election purposes. 
See id. Sec. 1427(c).
    American Samoa and the Northern Mariana Islands are not included in 
the section 7(e) definition of State. Accordingly, the Finance Board is 
required to designate a State where members with a principal place of 
business located in American Samoa or the Northern Mariana Islands 
shall be deemed to be located. The Finance Board is proposing to amend 
Sec. 932.11(b) of its regulations to designate Hawaii as that State.

II. Analysis of Proposed Rule

A. American Samoa--Sec. 933.1(cc)

    American Samoa is a Territory of the United States that is 
administered by the U.S. Department of Interior, and which has enacted 
its own banking laws. See 48 U.S.C. 1661; Executive Order No. 10264, 16 
FR 6419 (June 29, 1951); Title 28, American Samoa Code Ann. (Book 
1988). As a U.S. Territory, American Samoa has a political status 
similar to that of the U.S. Territories of Guam and the U.S. Virgin 
Islands, which are included as States under the Act and the current 
Membership Regulation. See 12 U.S.C. 1422(3); 12 CFR 933.1(cc).\1\ 
Moreover, the Finance Board recently has been urged by a number of 
parties to expand the definition of State in the Membership Regulation 
to include American Samoa, so that financial institutions organized 
under the laws of American Samoa would be eligible for Bank membership. 
In particular, an American Samoan bank, whose deposits are insured by 
the Federal Deposit Insurance Corporation, has expressed interest in 
becoming a member of the Seattle Bank. In addition, bills currently are 
being considered in Congress that would achieve this same result 
legislatively. Accordingly, the Finance Board is proposing to amend 
Sec. 933.1(cc) of the Membership Regulation to include American Samoa 
in the definition of State.
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    \1\ There do not appear to be any laws or contractual provisions 
in the cession agreements executed by the United States and American 
Samoa making the Act applicable to American Samoa.
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B. The Northern Mariana Islands--Sec. 933.1(cc)

    The Northern Mariana Islands is a former U.S.-administered Trust 
Territory that is now a Commonwealth of the United States. As a U.S. 
Commonwealth, the Northern Mariana Islands has a political status 
similar to that of the Commonwealth of Puerto Rico, which is included 
as a State under the Act and the current Membership Regulation. See id. 
Moreover, specific provisions of the Covenant Agreement executed by the 
United States and the Northern Mariana Islands already make the Act 
applicable to the Northern Mariana Islands. See ``Covenant To Establish 
A Commonwealth Of The Northern Mariana Islands In Political Union With 
The United States Of America,'' Secs. 502(a)(1), 502(a)(2) (1986); 
``The Second Interim Report of the Northern Mariana Islands Commission 
on Federal Laws to the Congress of the United States,'' at 278-79 (Aug. 
1985); Presidential Proclamation No. 5207, 49 FR 24365 (June 7, 1984) 
(set forth at 48 U.S.C. 1681 note). Accordingly, the Finance Board is 
proposing to amend Sec. 933.1(cc) of the Membership Regulation to 
include the Northern Mariana Islands in the definition of State.

C. Other Pacific Islands

    The Federated States of Micronesia, the Republic of the Marshall 
Islands, and the Republic of Palau were once U.S.-administered Trust 
Territories in the Pacific, but now have the status of independent, 
self-governing foreign nations. Nor do there appear to be any laws or 
contractual provisions in the Compacts of Free Association executed by 
the United States and these nations, respectively, that make the Act 
applicable to these nations. Accordingly, these nations are not 
included in proposed Sec. 933.1(cc).
    Other existing U.S. Pacific Island Territories generally are either 
uninhabited or contain tiny, nonpermanent military populations closed 
to the public. Thus, the Act would not be applicable to such 
Territories.

D. Inclusion of American Samoa and the Northern Mariana Islands in the 
Seattle Bank District--Appendix to Subpart A of Part 900

    The Appendix to Subpart A of Part 900 of the Finance Board's 
regulations lists the States which comprise each of the 12 Bank 
Districts, with a reference to ``Pacific Islands'' included under 
Federal Home Loan Bank District 12 (the Seattle Bank District). See 
Appendix to Subpart A of Part 900--Federal Home Loan Banks. Consistent 
with the proposed amendments discussed above, the Finance Board is 
proposing to amend the Appendix by replacing the reference to the 
``Pacific Islands'' under the Seattle Bank District with specific 
references to American Samoa and the Northern Mariana Islands.

E. Designation of State Location for Members With Principal Place of 
Business in American Samoa, the Northern Mariana Islands, or Guam--
Sec. 932.11(b)

    For the reasons discussed above, the Finance Board is proposing to 
amend Sec. 932.11(b) of its regulations to provide that members with a 
principal place of business located in American Samoa or the Northern 
Mariana Islands shall be deemed to be located in Hawaii for purposes of 
election of Bank directors. The proposed rule also codifies the Finance 
Board's existing designation of Hawaii as the State where members with 
a principal place of business in Guam are deemed to be located for 
director election purposes.

III. Regulatory Flexibility Act

    The proposed rule implements statutory requirements binding on all 
Banks and on all applicants for Bank membership, regardless of their 
size. The Finance Board is not at liberty to make adjustments to those 
requirements to accommodate small entities. The proposed rule does not 
impose any additional regulatory requirements that will have a 
disproportionate impact on small entities. Therefore, in accordance 
with section 605(b) of the Regulatory Flexibility Act, see 5 U.S.C. 
605(b), the Finance Board hereby certifies that this proposed rule, if 
promulgated as a final rule, will not have a significant economic 
impact on a substantial number of small entities.

IV. Paperwork Reduction Act

    The proposed rule does not contain any collections of information 
pursuant to the Paperwork Reduction Act of 1995. See 44 U.S.C. 3501 et 
seq. Consequently, the Finance Board has not submitted any information 
to the Office of Management and Budget for review.

List of Subjects

12 CFR Part 900

    Organizations and functions (Government agencies).

12 CFR Part 932

    Conflict of interests, Federal home loan banks.

12 CFR Part 933

    Credit, Federal home loan banks, Reporting and recordkeeping 
requirements.

    Accordingly, the Finance Board hereby proposes to amend title 12, 
chapter IX, parts 900, 932 and 933, Code of Federal Regulations, as 
follows:

[[Page 49945]]

PART 900--DESCRIPTION OF ORGANIZATION AND FUNCTIONS

    1. The authority citation for part 900 is revised to read as 
follows:

    Authority: 5 U.S.C. 552; 12 U.S.C. 1422b(a), 1423.

    2. The appendix to subpart A of part 900 is designated as appendix 
A to subpart A of part 900, the appendix heading is revised, and the 
parenthetical under FEDERAL HOME LOAN BANK DISTRICT 12 is revised to 
read as follows:

Appendix A to Subpart A of Part 900--Federal Home Loan Banks

* * * * *

Federal Home Loan Bank District 12

(Alaska, American Samoa, the Commonwealth of the Northern Mariana 
Islands, Guam, Hawaii, Idaho, Montana, Oregon, Utah, Washington, 
Wyoming)
* * * * *

PART 932--ORGANIZATION OF THE BANKS

    3. The authority citation for part 932 is revised to read as 
follows:

    Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1426, 1427, 1432; 
42 U.S.C. 8101 et seq.

    4. Section 932.11 is amended by revising paragraph (b) to read as 
follows:


Sec. 932.11  Location of member.

* * * * *
    (b) For purposes of this part, members with a principal place of 
business located in the Virgin Islands of the United States shall be 
deemed to be located in Puerto Rico, and members with a principal place 
of business located in American Samoa, the Commonwealth of the Northern 
Mariana Islands, or Guam, shall be deemed to be located in Hawaii.

PART 933--MEMBERS OF THE BANKS

    5. The authority citation for part 933 is revised to read as 
follows:

    Authority: 12 U.S.C. 1422, 1422a, 1422b, 1423, 1424, 1426, 1430, 
1442.

    6. Section 933.1 is amended by revising paragraph (cc) to read as 
follows:


Sec. 933.1  Definitions.

* * * * *
    (cc) State includes a State of the United States, American Samoa, 
the Commonwealth of the Northern Mariana Islands, the District of 
Columbia, Guam, Puerto Rico, or the Virgin Islands of the United 
States.

    Dated: September 15, 1997.

* * * * *
    By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 97-25304 Filed 9-23-97; 8:45 am]
BILLING CODE 6725-01-P