This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

12753 

Vol. 80, No. 47 

Wednesday, March 11, 2015 

1Public Law 110–289, 122 Stat. 2654. 

2See 12 U.S.C. 4511. 

3See 12 U.S.C. 4511, note. 

4See 12 U.S.C. 1423 and 1432(a). The twelve 

Banks are located in: Boston, New York, Pittsburgh, 

Atlanta, Cincinnati, Indianapolis, Chicago, Des 

Moines, Dallas, Topeka, San Francisco, and Seattle. 

5See 12 U.S.C. 1426(a)(4), 1430(a), and 1430b. 

6See 12 U.S.C. 1427. 

7Public Law 106–102, 113 Stat. 1338 (Nov. 12, 

1999). 

8See 12 U.S.C. 1426, and 12 CFR parts 931 and 

933. 

9 Id. 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Parts 931 and 933 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1277 

RIN 2590–AA71 

Federal Home Loan Bank Capital Stock 

and Capital Plans 

AGENCY: Federal Housing Finance 

Board, Federal Housing Finance 

Agency. 

ACTION: Final rule. 

SUMMARY: On October 8, 2014, the 

Federal Housing Finance Agency 

(FHFA) published a notice of proposed 

rulemaking in the Federal Register to 

transfer existing parts of the Federal 

Housing Finance Board (Finance Board) 

regulations to the FHFA regulations. 

These rules address Federal Home Loan 

Bank (Bank) capital stock and capital 

plans. FHFA did not propose to make 

any substantive changes to these 

requirements, but proposed to delete 

certain provisions that applied only to 

the one-time conversion of Bank stock 

to the new capital structure required by 

the Gramm-Leach-Bliley Act (GLB Act) 

and to make certain other clarifying 

changes. FHFA is now adopting the 

proposed rule as a final rule without 

change. 

DATES: This final rule will become 

effective on April 10, 2015. 

FOR FURTHER INFORMATION CONTACT: Julie 

Paller, Senior Financial Analyst, 

Julie.Paller@FHFA.gov, 202–649–3201, 

Division of Federal Home Loan Bank 

Regulation; or Thomas E. Joseph, 

Associate General Counsel, 

Thomas.Joseph@FHFA.gov, 202–649– 

3076 (these are not toll-free numbers), 

Office of General Counsel (OGC), 

Federal Housing Finance Agency, 

Constitution Center, 400 Seventh Street 

SW., Washington, DC 20024. The 

telephone number for the 

Telecommunications Device for the 

Hearing Impaired is 800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Creation of the Federal Housing 

Finance Agency 

Effective July 30, 2008, the Housing 

and Economic Recovery Act of 2008 

(HERA) 1 created FHFA as a new 

independent agency of the Federal 

Government, and transferred to FHFA 

the supervisory and oversight 

responsibilities of the Office of Federal 

Housing Enterprise Oversight (OFHEO) 

over the Federal National Mortgage 

Association and the Federal Home Loan 

Mortgage Corporation (collectively, the 

Enterprises), the oversight 

responsibilities of the Finance Board 

over the Banks and the Office of Finance 

(OF) (which acts as the Banks’ fiscal 

agent) and certain functions of the 

Department of Housing and Urban 

Development.2 Under the legislation, 

the Enterprises, the Banks, and the OF 

continue to operate under regulations 

promulgated by OFHEO and the 

Finance Board until such regulations are 

superseded by regulations issued by 

FHFA.3 While FHFA has amended or readopted and transferred most of the 

former Finance Board regulations, 

certain Finance Board regulations, 

including those which address Bank 

capital, have not yet been transferred by 

FHFA, although they continue to apply 

to the Banks. 

B. Bank Capital Stock and Capital Plans 

The twelve Banks are 

instrumentalities of the United States 

organized under the Federal Home Loan 

Bank Act (Bank Act).4 The Banks are 

cooperatives; only members of a Bank 

may purchase the capital stock of a 

Bank, and only members or certain 

eligible housing associates (such as state 

housing finance agencies) may obtain 

access to secured loans, known as 

advances, or other products provided by 

a Bank.5 Each Bank is managed by its 

own board of directors and serves the 

public interest by enhancing the 

availability of residential mortgage and 

community lending credit through its 

member institutions.6

In 1999, the GLB Act 7 amended the 

Bank Act to replace the capital structure 

of the Bank System. Under the GLB Act, 

the Banks became subject to risk-based 

and leverage capital requirements 

similar to those applicable to depository 

institutions and other housing GSEs. 

The GLB Act also directed the Finance 

Board to adopt regulations prescribing 

uniform capital standards applicable to 

each Bank. It also required the Banks to 

replace their existing capital stock with 

new classes of capital stock that would 

have different terms from the stock then 

held by Bank System members. 

Specifically, the GLB Act authorized the 

Banks to issue new Class A stock, which 

the GLB Act defined as redeemable six 

months after filing of a notice by a 

member, and Class B stock, defined as 

redeemable five years after filing of a 

notice by a member. The GLB Act 

allowed Banks to issue Class A and 

Class B stock in any combination and to 

establish terms and preferences for each 

class or subclass of stock issued, 

consistent with Finance Board 

regulations and the Bank Act.8

As part of the process for converting 

the ‘‘old’’ capital stock to the new GLB 

Act Class A and Class B stock, the GLB 

Act required each Bank to adopt and 

maintain a capital plan that established 

the rights, terms and preferences of each 

class or subclass of capital stock that it 

would issue.9 The GLB Act also 

required that each Bank’s capital plan 

establish the minimum investment in 

capital stock required for its members to 

maintain membership and to conduct 

business with the Bank. Such minimum 

investment requirements needed to be 

sufficient for the Bank to meet its new 

minimum regulatory capital 

requirements. The GLB Act provided 

each Bank’s board of directors the 

discretion to develop and implement a 

capital plan that it determined was best 

suited for the conditions and operations 


Rmajette on DSK2VPTVN1PROD with RULES
12754 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Rules and Regulations 

10See 12 U.S.C. 1426(b)(1). 

11See Final Rule: Capital Requirements for 

Federal Home Loan Banks, 66 FR 8262 (Jan. 30, 

2001); and Final Rule: Capital Requirements for 

Federal Home Loan Banks, 66 FR 54097 (Oct. 26, 

2001) (amending capital requirements). 

12See 12 U.S.C. 4513 (as amended by section 

1201 Public Law 110–289, 122 Stat. 2782–83). 

13Proposed Rule: Federal Home Loan Bank 

capital Stock and Capital Plans, 79 FR 60783 (Oct. 

8, 2014). 

14As part of a separate and future rulemaking, 

FHFA intends to amend and transfer the existing 

Bank capital regulations from part 932 of the 

Finance Board regulations to subpart B of new part 

1277. 

15Specifically, FHFA proposed not to reissue 12 

CFR 933.2(d), (e), and (h), 933.3, 933.4, and 933.5. 

16See 12 U.S.C. 1426(b)(2). 

17 Instead, the comment urged FHFA to 

recapitalize the Enterprises. 

of the Bank and the interests of the 

Bank’s members.10 It also required 

Finance Board approval of each Bank’s 

capital plan prior to it taking effect. 

Under the Finance Board regulations, 

each Bank had discretion as to when it 

would convert to the new capital 

structure. The Finance Board 

regulations also addressed in detail the 

process for the one-time conversion to 

the new capital structure, including 

requirements for disclosure to be given 

to members prior to the conversion. 

Since the Finance Board originally 

adopted these regulations in 2001, all 

Banks have converted to the GLB Act 

capital structure. The original Finance 

Board regulations were never amended, 

however, to remove provisions that 

applied only to the initial conversion 

process.11

C. Considerations of Differences 

Between the Banks and the Enterprises 

When promulgating regulations 

relating to the Banks, section 1313(f) of 

the Federal Housing Enterprises 

Financial Safety and Soundness Act of 

1992 (Safety and Soundness Act) 

requires the Director of FHFA (Director) 

to consider the differences between the 

Banks and the Enterprises with respect 

to the Banks’ cooperative ownership 

structure; mission of providing liquidity 

to members; affordable housing and 

community development mission; 

capital structure; and joint and several 

liability.12 This requirement does not 

apply to regulations of the Finance 

Board that the Director reissues. 

The changes to the Bank capital stock 

and capital plan regulations proposed 

by FHFA in October 2014 were 

clarifying and conforming in nature and 

applied exclusively to the Banks. The 

proposed amendments did not alter the 

substance of the existing Finance Board 

regulations. Accordingly, the proposed 

rule did not trigger this statutory 

requirement. Nonetheless, FHFA, in 

preparing the proposed rule, considered 

the differences between the Banks and 

the Enterprises as they related to the 

above factors and specifically requested 

comments from the public about 

whether these differences should have 

resulted in any revisions to the 

proposed rule. FHFA received no 

comments in response to this request. 

II. Analysis of the Final Rule 

The Proposed Rule 

FHFA published a proposed rule on 

Bank capital stock and capital plans in 

the Federal Register on October 8, 2014, 

with a 60-day comment period.13 The 

proposed rule would have transferred 

the Finance Board Bank capital stock 

regulations from 12 CFR part 931 and 

the Bank capital plan regulations from 

12 CFR part 933 to subparts C and D of 

new part 1277 of FHFA regulations, 

respectively. Relevant definitions for 

parts 931 and 933 also would have been 

transferred to subpart A of new part 

1277.14 FHFA also proposed to make 

certain non-substantive, clarifying and 

conforming changes to these provisions 

and to remove requirements which 

applied only to the Banks’ initial 

conversion to the GLB Act capital 

structure. 

Among other changes, FHFA 

proposed to replace definitions for 

‘‘regulatory risk-based capital 

requirement’’ and ‘‘regulatory total 

capital requirement’’ with a new single 

definition for ‘‘regulatory capital 

requirements.’’ It also proposed to 

define the term ‘‘former member’’ and to 

add relevant references to ‘‘former 

member’’ in the regulatory text to clarify 

that under the Bank Act and existing 

regulations, such institutions could be 

required to hold Bank stock in certain 

situations after termination of their 

Bank membership. 

With regard to existing capital stock 

provisions, FHFA proposed to transfer 

current 12 CFR part 931 to new subpart 

C of part 1277. Most of these provisions 

were to be transferred without change, 

beyond necessary conforming changes. 

FHFA, however, proposed to delete 

current § 931.9 which addresses various 

transition requirements related to the 

Banks’ conversion to the GLB Act 

capital structure. Given that all Banks 

have successfully completed this 

process, § 931.9 has no future 

applicability. 

FHFA also proposed to add clarifying 

language to § 1277.24 that any provision 

in a Bank’s capital plan related to 

stockholder rights in a liquidation, 

merger, or consolidation of the Bank 

cannot limit FHFA’s authority under the 

Bank Act or the Safety and Soundness 

Act to issue a regulation or order or to 

take any other action that may affect or 

otherwise alter the rights or privileges of 

stock holders in these situations. FHFA 

noted that it believed that the proposed 

change was consistent with existing 

provisions in each Bank’s approved 

capital plan. 

FHFA proposed to relocate relevant 

provisions in current part 933 to subpart 

D of new part 1277. As part of this 

process, it proposed to remove those 

provisions that related only to the 

Banks’ initial conversion to the GLB Act 

capital structure, given that the 

provisions had no continuing 

applicability.15

FHFA also proposed not to reissue 

duplicative provisions related to the 

calculation and application of a 

member’s, or former member’s, 

minimum investment requirements, and 

instead, incorporated into proposed 

§ 1277.28(a) the requirements governing 

the calculation and maintenance of the 

minimum investment set forth in 

proposed § 1277.22 by reference. FHFA 

noted that this change was not intended 

to alter the current capital plan 

requirements in any substantive 

manner. 

FHFA also proposed to add to subpart 

D of new § 1277.29 to address the 

process for amending a Bank’s approved 

capital plan. The Finance Board rules 

did not specifically address the process 

for submitting capital plan amendments 

for approval, although the Bank Act 

allows Banks to amend their capital 

plans with FHFA approval.16 The 

amendments proposed in this new 

section reflected long-standing guidance 

first provided to the Banks in 2003 

governing the submission of capital plan 

amendments for approval. FHFA also 

proposed to carry over in § 1277.29(c), 

current language from § 933.1(c) stating 

that the Director can approve an 

amendment to a capital plan subject to 

specific conditions. 

Finally, as discussed more fully in the 

SUPPLEMENTARY INFORMATION section of 

the proposed rule, FHFA also proposed 

other conforming or clarifying changes 

to the existing Finance Board 

regulations on Bank capital stock and 

capital plans. 

Final Rule 

FHFA received one comment on the 

proposed rule, but the comment did not 

address issues relevant to this 

rulemaking.17 As a result and for the 

reasons discussed above and in the 

notice of proposed rulemaking, FHFA is 


Rmajette on DSK2VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Rules and Regulations 12755 

adopting the proposed rule as a final 

rule without change. 

III. Paperwork Reduction Act 

The information collection, entitled 

‘‘Capital Requirements for the Federal 

Home Loan Banks,’’ contained in the 12 

CFR parts 931 and 933 of the regulations 

that are being relocated to 12 CFR part 

1277 by this final rule, has been 

assigned control number 2590–0002 by 

the Office of Management and Budget 

(OMB). The final rule does not 

substantively or materially modify the 

current, approved information 

collection. OMB has approved the 

relocation of this information collection 

to part 1277 as a non-substantive change 

under the Paperwork Reduction Act of 

1995, 44 U.S.C. 3501, et seq. 

IV. Regulatory Flexibility Act 

The final rule applies only to the 

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). Therefore, in 

accordance with section 605(b) of the 

RFA, FHFA certifies that this final rule 

does not have a significant economic 

impact on a substantial number of small 

entities. 

List of Subjects 

12 CFR Parts 931 and 933 

Capital, Credit, Federal home loan 

banks, Investments, Reporting and 

recordkeeping requirements. 

12 CFR Part 1277 

Capital, Credit, Federal home loan 

banks, Investments, Reporting and 

recordkeeping requirements. 

Accordingly, for reasons stated in the 

SUPPLEMENTARY INFORMATION and under 

the authority of 12 U.S.C. 1426, 1436, 

1440, 1443, 1446, 4511, 4513, 4526, 

FHFA hereby amends subchapter E of 

chapter IX and subchapter D of chapter 

XII of title 12 of the Code of Federal 

Regulations as follows: 

CHAPTER IX—FEDERAL HOUSING 

FINANCE BOARD 

Subchapter E—Federal Home Loan Bank 

Risk Management and Capital Standards 

PART 931—[REMOVED] 

■ 1. Remove part 931. 

PART 933—[REMOVED] 

■ 2. Remove part 933. 

CHAPTER XII—FEDERAL HOUSING 

FINANCE AGENCY 

Subchapter D—Federal Home Loan Banks 

■ 3. Part 1277 is added to read as 

follows: 

PART 1277—FEDERAL HOME LOAN 

BANK CAPITAL REQUIREMENTS, 

CAPITAL STOCK AND CAPITAL 

PLANS 

Subpart A—Definitions 

Sec. 

1277.1 Definitions. 

Subpart B—[Reserved] 

Subpart C—Bank Capital Stock 

1277.20 Classes of capital stock. 

1277.21 Issuance of capital stock. 

1277.22 Minimum investment in capital 

stock. 

1277.23 Dividends. 

1277.24 Liquidation, merger, or 

consolidation. 

1277.25 Transfer of capital stock. 

1277.26 Redemption and repurchase of 

capital stock. 

1277.27 Other restrictions on the 

repurchase or redemption of Bank stock. 

Subpart D—Bank Capital Plans 

1277.28 Bank capital plans. 

1277.29 Amendments to a Bank’s capital 

plan. 

Authority: 12 U.S.C. 1426, 1436(a), 1440, 

1443, 1446, 4511, 4513, 4514, 4526, 4612. 

Subpart A—Definitions 

§ 1277.1 Definitions. 

As used in this part: 

Class A stock means capital stock 

issued by a Bank, including subclasses, 

that has the characteristics specified by 

§ 1277.20(a). 

Class B stock means capital stock 

issued by a Bank, including subclasses, 

that has the characteristics specified by 

§ 1277.20(b). 

Former member means an institution 

for which the membership in a Bank has 

been terminated but which continues to 

hold stock in the Bank as required by 

the Bank’s capital plan, and includes 

any successor to such institution that 

continues to hold the stock in the Bank 

that had been issued to the acquired 

institution. 

General allowance for losses means an 

allowance established by the Bank in 

accordance with GAAP for losses, but 

which does not include any amounts 

held against specific assets of the Bank. 

Minimum investment means the 

minimum amount of stock that an 

institution is required to own in order 

to be a member of a Bank and in order 

to obtain advances and to engage in 

other business activities with the Bank 

in accordance with § 1277.22. 

Permanent capital means the retained 

earnings of a Bank, determined in 

accordance with GAAP, plus the 

amount paid-in for the Bank’s Class B 

stock. 

Redeem or Redemption means the 

acquisition by a Bank of its outstanding 

Class A or Class B stock at par value 

following the expiration of the sixmonth or five-year statutory redemption 

period, respectively, for the stock. 

Regulatory capital requirements 

means the minimum amounts of 

permanent and total capital that a Bank 

is required to maintain under section 

6(a) of the Bank Act (12 U.S.C. 1426(a)) 

and any related regulations, as such 

requirements may be modified by the 

Director, or any similar requirement 

established for a Bank by regulation, 

order, written agreement or other action. 

Repurchase means the acquisition by 

a Bank of excess stock prior to the 

expiration of the six-month or five-year 

statutory redemption period for the 

stock. 

Total capital of a Bank means the sum 

of permanent capital, the amounts paidin for Class A stock, the amount of any 

general allowance for losses, and the 

amount of other instruments identified 

in a Bank’s capital plan that the Director 

has determined to be available to absorb 

losses incurred by such Bank. 

Subpart B—[Reserved] 

Subpart C—Bank Capital Stock 

§ 1277.20 Classes of capital stock. 

The authorized capital stock of a Bank 

shall consist of the following 

instruments: 

(a) Class A stock, which shall: 

(1) Have a par value as determined by 

the board of directors of the Bank and 

stated in the Bank’s capital plan; 

(2) Be issued, redeemed, and 

repurchased only at its stated par value; 

and 

(3) Be redeemable in cash only on sixmonths written notice to the Bank. 

(b) Class B stock, which shall: 

(1) Have a par value as determined by 

the board of directors of the Bank and 

stated in the Bank’s capital plan; 

(2) Be issued, redeemed, and 

repurchased only at its stated par value; 

(3) Be redeemable in cash only on 

five-years written notice to the Bank; 

and 

(4) Confer an ownership interest in 

the retained earnings, surplus, 

undivided profits, and equity reserves of 

the Bank. 

(c) Any one or more subclasses of 

Class A or Class B stock, each of which 

may have different rights, terms, 

conditions, or preferences as may be 

authorized in the Bank’s capital plan, 

provided, however, that each subclass of 

stock shall have all of the characteristics 

of its respective class, as specified in 

paragraph (a) or (b) of this section. 


Rmajette on DSK2VPTVN1PROD with RULES
12756 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Rules and Regulations 

§ 1277.21 Issuance of capital stock. 

A Bank may issue either one or both 

classes of its capital stock (including 

subclasses), as authorized by § 1277.20, 

and shall not issue any other class of 

capital stock. A Bank shall issue its 

stock only to its members, or to former 

members to the extent those institutions 

are required to maintain a minimum 

stock investment for existing activities 

under the capital plan, and only in 

book-entry form. The Bank shall act as 

its own transfer agent. All capital stock 

shall be issued in accordance with the 

Bank’s capital plan. 

§ 1277.22 Minimum investment in capital 

stock. 

(a) A Bank shall require each member 

to maintain a minimum investment in 

the capital stock of the Bank, both as a 

condition to becoming and remaining a 

member of the Bank and as a condition 

to transacting business with the Bank or 

obtaining advances and other services 

from the Bank. The amount of the 

required minimum investment shall be 

determined in accordance with the 

Bank’s capital plan and shall be 

sufficient to ensure that the Bank 

remains in compliance with its 

regulatory capital requirements. A Bank 

shall require each member to maintain 

its minimum investment for as long as 

the institution remains a member of the 

Bank and shall require each member 

and former member to maintain its 

minimum investment for as long as the 

institution engages in any activity with 

the Bank for which the capital plan 

requires the institution to maintain 

capital stock. 

(b) A Bank may establish the 

minimum investment as a percentage of 

the total assets of an institution, as a 

percentage of the advances outstanding 

to that institution, as a percentage of any 

other business activity conducted with 

the institution, on any other basis that 

is approved by the Director, or any 

combination thereof. 

(c) A Bank may require that the 

minimum investment requirement be 

satisfied through the purchase of either 

Class A or Class B stock, or through the 

purchase of one or more combinations 

of Class A and Class B stock that have 

been authorized by the board of 

directors of the Bank in its capital plan. 

A Bank, in its discretion, may establish 

a lower minimum investment to the 

extent the requirement is met through 

investment in Class B stock than if the 

requirement is met through investment 

in Class A stock, provided that such 

reduced investment provides sufficient 

capital for the Bank to remain in 

compliance with its regulatory capital 

requirements. 

(d) Each member, or if applicable, 

former member, of a Bank shall at all 

times maintain an investment in the 

capital stock of the Bank in an amount 

that is sufficient to satisfy the minimum 

investment required under the Bank’s 

capital plan. 

§ 1277.23 Dividends. 

(a) In general. A Bank may pay 

dividends on Class A or Class B stock, 

including any subclasses of such stock, 

only out of previously retained earnings 

or current net earnings, and shall 

declare and pay dividends only as 

provided by its capital plan. The capital 

plan may establish different dividend 

rates or preferences for each class or 

subclass of stock, which may include a 

dividend that tracks the economic 

performance of certain Bank assets, such 

as Acquired Member Assets. A member, 

including a member that has provided 

the Bank with a notice of intent to 

withdraw from membership, or a former 

member shall be entitled to receive any 

dividends that a Bank declares on its 

capital stock while such institution 

owns the stock. 

(b) Limitation on payment of 

dividends. In no event shall a Bank 

declare or pay any dividend on its 

capital stock if after doing so the Bank 

would fail to meet any of its regulatory 

capital requirements, nor shall a Bank 

that is not in compliance with any of its 

regulatory capital requirements declare 

or pay any dividend on its capital stock. 

§ 1277.24 Liquidation, merger, or 

consolidation. 

The respective rights of the Class A 

and Class B stockholders, in the event 

that the Bank is liquidated, merged, or 

otherwise consolidated with another 

Bank, shall be determined in accordance 

with the capital plan of the Bank, 

provided, however, that nothing in the 

capital plan shall be construed to limit 

any rights or authority granted FHFA 

under the Bank Act or the Safety and 

Soundness Act to issue any regulation 

or order or to take any other action that 

may affect or otherwise alter the rights 

or privileges of stock holders in a 

liquidation, merger, or consolidation of 

a Bank. 

§ 1277.25 Transfer of capital stock. 

A Bank in its capital plan may allow 

a member or former member to transfer 

any excess stock to a member of that 

Bank or to an institution that has been 

approved for membership in that Bank 

and that has satisfied all conditions for 

becoming a member, other than the 

purchase of the minimum amount of 

Bank stock that it is required to hold as 

a condition of membership. Any such 

stock transfers shall be at par value and 

shall be effective upon being recorded 

on the appropriate books and records of 

the Bank. The Bank may, in its capital 

plan, require that the transfer be 

approved by the Bank before such 

transfer can occur. 

§ 1277.26 Redemption and repurchase of 

capital stock. 

(a) Redemption. (1) A member or 

former member may have its stock in a 

Bank redeemed by providing written 

notice to the Bank in accordance with 

this section. A member or former 

member shall provide six-months 

written notice for Class A stock and 

five-years written notice for Class B 

stock. The notice shall indicate the 

number of shares of Bank stock that are 

to be redeemed. No more than one 

notice of redemption may be 

outstanding at one time for the same 

shares of Bank stock. At the expiration 

of the applicable notice period, the Bank 

shall pay to the member or other 

institution holding the stock the stated 

par value of that stock in cash. 

(2) A member may cancel a notice of 

redemption by so informing the Bank in 

writing, and the Bank may impose a fee 

(to be specified in its capital plan) with 

respect to any cancellation of a pending 

notice of redemption. A request by a 

member (whose membership has not 

been terminated) to redeem specific 

shares of stock shall automatically be 

cancelled if the Bank is prevented from 

redeeming the member’s stock by 

paragraph (c) of this section within five 

business days from the end of the 

expiration of the applicable redemption 

notice period because the member 

would fail to maintain its minimum 

investment in the stock of the Bank after 

such redemption. The automatic 

cancellation of a member’s redemption 

request shall have the same effect as if 

the member had cancelled its notice to 

redeem stock prior to the end of the 

redemption notice period, and a Bank 

may impose a fee (to be specified in its 

capital plan) for automatic cancellation 

of a redemption request. 

(3) A Bank shall not be obligated to 

redeem its capital stock other than in 

accordance with this paragraph. 

(b) Repurchase. A Bank, in its 

discretion and without regard to the 

applicable redemption periods, may 

repurchase excess stock in accordance 

with the capital plan of that Bank. A 

Bank undertaking such a stock 

repurchase at its own initiative shall 

provide reasonable notice prior to 

repurchasing any excess stock, with the 

period of such notice to be specified in 

the Bank’s capital plan, and shall pay 

the stated par value of that stock in 


Rmajette on DSK2VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Rules and Regulations 12757 

cash. A member’s submission of a notice 

of intent to withdraw from membership, 

or its termination of membership in any 

other manner, shall not, in and of itself, 

cause any Bank stock to be deemed 

excess stock for purposes of this section. 

(c) Limitation. In no event may a Bank 

redeem or repurchase any stock if, 

following the redemption or repurchase, 

the Bank would fail to meet its 

regulatory capital requirements, or if the 

member or former member would fail to 

maintain its minimum investment in the 

stock of the Bank, as required by 

§ 1277.22. 

§ 1277.27 Other restrictions on the 

repurchase or redemption of Bank stock. 

(a) Capital impairment. A Bank may 

not redeem or repurchase any capital 

stock without the prior written approval 

of the Director if the Director or the 

board of directors of the Bank has 

determined that the Bank has incurred 

or is likely to incur losses that result in 

or are likely to result in charges against 

the capital of the Bank. This prohibition 

shall apply even if a Bank is currently 

in compliance with its regulatory capital 

requirements, and shall remain in effect 

for however long the Bank continues to 

incur such charges or until the Director 

determines that such charges are not 

expected to continue. 

(b) Bank discretion to suspend 

redemption. A Bank, upon the approval 

of its board of directors, or of a 

subcommittee thereof, may suspend 

redemption of stock if the Bank 

reasonably believes that continued 

redemption of stock would cause the 

Bank to fail to meet its regulatory capital 

requirements, would prevent the Bank 

from maintaining adequate capital 

against a potential risk that may not be 

adequately reflected in its regulatory 

capital requirements, or would 

otherwise prevent the Bank from 

operating in a safe and sound manner. 

A Bank shall notify the Director in 

writing within two business days of the 

date of the decision to suspend the 

redemption of stock, providing the 

reasons for the suspension and the 

Bank’s strategies and time frames for 

addressing the conditions that led to the 

suspension. The Director may require 

the Bank to re-institute the redemption 

of stock. A Bank shall not repurchase 

any stock without the written 

permission of the Director during any 

period in which the Bank has 

suspended redemption of stock under 

this paragraph. 

Subpart D—Bank Capital Plans 

§ 1277.28 Bank capital plans. 

Each Bank shall have in place a 

capital plan approved by the Bank’s 

board of directors and the Director. The 

capital plan shall include, at a 

minimum, provisions addressing the 

following matters: 

(a) Minimum investment. (1) The 

capital plan shall require each member, 

and if applicable each former member, 

to purchase and maintain a minimum 

investment in the capital stock of the 

Bank and prescribe the manner for 

calculating the minimum investment, in 

accordance with § 1277.22. 

(2) The capital plan shall specify the 

amount and class (or classes) of Bank 

stock that an institution is required to 

own in order to become and remain a 

member of the Bank, and to obtain 

advances from, or to engage in other 

business transactions with, the Bank. If 

a Bank requires that the minimum 

investment be satisfied through the 

purchase of one or more combinations 

of Class A and Class B stock, the 

authorized combinations of stock shall 

be specified in the capital plan, which 

shall afford the option of satisfying the 

minimum investment through the 

purchase of any such combination of 

stock. 

(3) The capital plan shall require the 

board of directors of the Bank to 

monitor and, as necessary, to adjust, the 

minimum investment to ensure that 

outstanding stock remains sufficient for 

the Bank to comply with its regulatory 

capital requirements. The plan shall 

require each member or, where required 

by the plan, former member, to comply 

promptly with any adjusted minimum 

investment established by the board of 

directors of the Bank, but may allow a 

reasonable time to do so and may allow 

a reduction in outstanding business 

with the Bank as an alternative to 

purchasing additional stock. 

(b) Classes of capital stock. The 

capital plan shall specify the class or 

classes of stock (including subclasses, if 

any) that the Bank will issue, and shall 

establish the par value, rights, terms, 

and preferences associated with each 

class (or subclass) of stock. A Bank may 

establish preferences relating to, but not 

limited to, the dividend, voting, or 

liquidation rights for each class or 

subclass of Bank stock. Any voting 

preferences established by the Bank 

pursuant to § 1261.6 of this chapter 

shall expressly state the voting rights of 

each class of stock with regard to the 

election of Bank directors. The capital 

plan shall provide that the owners of the 

Class B stock own the retained earnings, 

surplus, undivided profits, and equity 

reserves of the Bank, but shall have no 

right to receive any portion of those 

items, except through declaration of a 

dividend or capital distribution 

approved by the board of directors or 

through the liquidation of the Bank. 

(c) Dividends. The capital plan shall 

establish the manner in which the Bank 

will pay dividends, if any, on each class 

or subclass of stock, and shall provide 

that the Bank may not declare or pay 

any dividends if it is not in compliance 

with any regulatory capital requirement 

or if after paying the dividend it would 

not be in compliance with any 

regulatory capital requirement. 

(d) Stock transactions. The capital 

plan shall establish the criteria for the 

issuance, redemption, repurchase, 

transfer, and retirement of stock issued 

by the Bank. The capital plan also: 

(1) Shall provide that the Bank may 

not issue stock other than in accordance 

with § 1277.21; 

(2) Shall provide that the stock of the 

Bank may be issued only to and held 

only by the members of that Bank, and 

by former members to the extent 

necessary to meet requirements set forth 

in a capital plan; 

(3) Shall specify whether the stock of 

the Bank may be transferred, as allowed 

under § 1277.25, and, if such transfer is 

allowed, shall specify the procedures to 

effect such transfer, and provide that the 

transfer shall be undertaken only in 

accordance with § 1277.25; 

(4) Shall specify that the stock of the 

Bank may be traded only among the 

Bank and its members, and former 

members; 

(5) May provide for a minimum 

investment based on investment in 

Class B stock that is lower than a 

minimum investment based on 

investment in Class A stock, provided 

that the level of investment is sufficient 

for the Bank to comply with its 

regulatory capital requirements; 

(6) Shall specify the fee, if any, to be 

imposed upon cancellation of a request 

to redeem Bank stock or upon 

cancellation of a request to withdraw 

from membership; and 

(7) Shall specify the period of notice 

that the Bank will provide before the 

Bank, on its own initiative, determines 

to repurchase any excess Bank stock. 

(e) Termination of membership. The 

capital plan shall address the manner in 

which the Bank will provide for the 

disposition of its capital stock that is 

held by institutions that terminate their 

membership, and the manner in which 

the Bank will liquidate claims against 

such institutions, including claims 

resulting from prepayment of advances 

prior to their stated maturity. 


Rmajette on DSK2VPTVN1PROD with RULES
12758 Federal Register / Vol. 80, No. 47 / Wednesday, March 11, 2015 / Rules and Regulations 

1 18 CFR 389.101 (2014). 

2 44 U.S.C. 3501–3521 (1980). 

3 5 CFR part 1320. 

4Regulations Implementing the National 

Environmental Policy Act, Order No. 486, 52 FR 

47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 

(1987). 

5 18 CFR 380.4(1). 

6 5 U.S.C. 601–12. 

§ 1277.29 Amendments to a Bank’s capital 

plan. 

(a) In general. A Bank’s board of 

directors shall approve any amendments 

to the Bank’s capital plan and submit 

such amendment to the Director for 

approval. No such amendment may take 

effect until it has been approved by the 

Director. 

(b) Submission of amendments for 

approval. Any request for approval of 

capital plan amendments should be 

submitted to the Deputy Director for the 

Division of Federal Home Loan Bank 

Regulation and should include the 

following: 

(1) The name of the Bank making the 

request and the name, title, and contact 

information of the official filing the 

request; 

(2) The name, title and contact 

information of the staff member(s) 

whom FHFA may contact for additional 

information; 

(3) A certification by an executive 

officer of the Bank with knowledge of 

the facts that the representations made 

in the request are accurate and 

complete. The following form of 

certification may be used: ‘‘I hereby 

certify that the statements contained in 

the submission are true and complete to 

the best of my knowledge. [Name and 

Title]’’; 

(4) A written, narrative description of 

the proposed amendments to the Bank’s 

capital plan and a discussion of the 

Bank’s reasons for the proposed 

changes; 

(5) The amended capital plan as 

approved by the Bank’s board of 

directors; 

(6) A version of the Bank’s capital 

plan showing all proposed changes to 

its previously approved capital plan; 

(7) Resolutions of the Bank’s board of 

directors: 

(i) Approving the proposed capital 

plan amendments; and 

(ii) Authorizing the filing of the 

application for approval of the 

amendments and concurring in 

substance with the supporting 

documentation provided; 

(8) An opinion of counsel 

demonstrating that the proposed 

amendments comply with the Bank Act, 

FHFA regulations and any other 

applicable law or regulation. If the 

amendments would be identical in 

substance to provisions approved for 

other Banks’ capital plans, a Bank’s 

legal analysis may reference the other 

capital plans that contain the provisions 

in question; 

(9) An analysis of the effect of the 

proposed amendments, if any, on the 

Bank’s capital levels and the Bank’s 

ability to meet its regulatory capital 

requirements; 

(10) Pro forma financial statements 

from the end of the quarter immediately 

prior to the date of submission of the 

request for approval through at least the 

end of the next two years, showing the 

impact of the proposed changes, if any, 

on capital levels; and 

(11) A discussion of and an 

explanation for changes to the Bank’s 

strategic plan, if any, which may be 

related to the capital plan amendments. 

(c) FHFA consideration of the 

amendment. The Director may approve 

any amendment to a Bank’s capital plan 

as submitted or may condition approval 

on the Bank’s compliance with certain 

stated conditions. 

Dated: March 2, 2015. 

Melvin L. Watt, 

Director, Federal Housing Finance Agency. 

[FR Doc. 2015–05268 Filed 3–10–15; 8:45 am] 

BILLING CODE 8070–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 389 

[Docket No. RM15–10–000; Order No. 805] 

Display of OMB Control Numbers 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Final rule. 

SUMMARY: The Commission is revising 

and updating its regulations related to 

the display of Office of Management and 

Budget (OMB) control numbers under 

the Paperwork Reduction Act. The Final 

Rule updates the existing table and 

revises the regulations to explain that an 

updated table displaying OMB control 

numbers is available on www.ferc.gov. 

DATES: This rule will become effective 

March 11, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Ellen Brown (Technical Information), 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426, (202) 502–8663, DataClearance@

ferc.gov. 

Christopher MacFarlane (Legal 

Information), Federal Energy Regulatory 

Commission, 888 First Street NE., 

Washington, DC 20426, (202) 502–6761, 

christopher.macfarlane@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Discussion 

1. The Commission is revising and 

updating Part 389 of its regulations 

related to the display of Office of 

Management and Budget (OMB) control 

numbers,1 by updating the existing table 

and revising the regulations to explain 

that an updated table displaying OMB 

control numbers is available on 

www.ferc.gov. 

2. Part 389 aids in fulfilling the 

requirements of the Paperwork 

Reduction Act 2 to display current OMB 

control numbers for information 

collections. The Commission also 

displays OMB control numbers on its 

Web site at www.ferc.gov under 

‘‘Documents and Filings’’ and then 

‘‘Information Collections’’ or directly at 

http://www.ferc.gov/docs-filing/infocollections.asp. The Web site is updated 

regularly. For the most up-to-date 

information, interested persons are 

urged to consult the Commission’s Web 

site. 

II. Information Collection Statement 

3. OMB’s regulations require that it 

approve certain information collection 

requirements imposed by agency rule.3

This Final Rule does not contain new or 

revised information collection 

requirements and thus does not require 

OMB approval. 

III. Environmental Analysis 

4. The Commission is required to 

prepare an Environmental Assessment 

or Environmental Impact Statement for 

any action that may have a significant 

adverse effect on the quality of the 

human environment.4 Part 380 of the 

Commission’s regulations provides 

exemptions to the requirement to 

prepare an Environmental Assessment 

or Environmental Impact Statement. 

Included is an exemption for 

procedural, ministerial or internal 

administrative actions and 

management.5 This Final Rule falls 

within that exemption; consequently, no 

environmental analysis is required. 

IV. Regulatory Flexibility Act 

5. The Regulatory Flexibility Act of 

1980 (RFA) 6 generally requires a 

description and analysis of final rules 

that will have significant economic 

impact on a substantial number of small 

entities. This Final Rule, which revises 

and updates regulations on the display 

of OMB control numbers, will not have 

a significant economic impact on a 

substantial number of small entities. 


Rmajette on DSK2VPTVN1PROD with RULES