[Federal Register Volume 60, Number 244 (Wednesday, December 20, 1995)]
[Rules and Regulations]
[Pages 65515-65516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30517]



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FEDERAL HOUSING FINANCE BOARD

12 CFR Part 934

[No. 95-74]


Repeal of the Charitable Contribution Limitation Regulation

AGENCY: Federal Housing Finance Board.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) has 
determined that the making of charitable donations is within the 
corporate power of the Federal Home Loan Banks (FHLBanks) and that 
issues of safety and soundness to which excessive donations might give 
rise can be adequately addressed through the Finance Board's FHLBank 
examination process. Therefore, the Finance Board is repealing the 
regulation that requires that FHLBanks obtain the approval of the Board 
of Directors of the Finance Board before making charitable donations in 
excess of $5,000 to one organization, or $25,000 total, during one 
calendar year. The repeal of this regulation is intended to allow the 
FHLBanks to use their own discretion in making such donations, subject 
only to the Finance Board's power to enforce standards of safety and 
soundness in FHLBank operations. This result is in keeping with the 
Finance Board's continuing effort to devolve corporate governance 
authority to the FHLBanks.

EFFECTIVE DATE: December 20, 1995.

FOR FURTHER INFORMATION CONTACT: Ellen E. Hancock, Assistant Director, 
Office of Policy and Financial Reporting, (202) 408-2906, or Janice A. 
Kaye, Attorney-Advisor, Office of General Counsel, (202) 408-2505, 
Federal Housing Finance Board, 1777 F Street NW., Washington, D.C. 
20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    Section 934.11 of the Finance Board's regulations requires prior 
approval of the Board of Directors of the Finance Board, or its 
designee, for charitable contributions by a FHLBank that exceed $5,000 
to one organization, or $25,000 in total during a calendar year. 12 CFR 
934.11. As a result of an ongoing internal review of its regulations, 
the Finance Board, for the reasons set forth below, has determined that 
this regulation is unnecessary. Accordingly, the Finance Board is 
repealing section 934.11.
    The substance of section 934.11 originally appeared at section 
524.11 of the regulations of the Finance Board's predecessor, the 
Federal Home Loan Bank Board (FHLBB). In 1959, the FHLBB promulgated a 
regulation prohibiting the FHLBanks from making charitable donations. 
See 12 CFR 524.11 (1959) (amended). The FHLBB had determined that a 
FHLBank did not have the legal authority to make charitable donations 
and, further, wanted to prevent FHLBanks from favoring some communities 
in their districts over others.
    In 1975, the FHLBB reconsidered its position and concluded that 
charitable donations, within reasonable limits, would further the 
corporate interests of the FHLBanks. See 40 FR 46302 (Oct. 7, 1975). 
Therefore, the FHLBB amended 

[[Page 65516]]
section 524.11 to permit a FHLBank, with the approval of its board of 
directors, to make charitable donations not exceeding $1,000 to one 
organization, or $5,000 in total in a calendar year. See 12 CFR 524.11 
(1976) (amended). Exceptions to these annual limits required prior 
approval of the FHLBB's Office of District Banks. Id.
    Recognizing the effects of inflation on the dollar limits it had 
set in 1975, the FHLBB in 1987 raised the annual limit on individual 
donations to $5,000 and on aggregate donations to $25,000. See 52 FR 
49381 (Dec. 31, 1987).
    With the dissolution of the FHLBB and the establishment of the 
Finance Board in 1989, see Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, Public Law 101-73, Sec. 401, 103 Stat. 183 
(Aug. 9, 1989) (codified at 12 U.S.C. 1437 note), section 524.11 was 
redesignated as section 934.11 of the Finance Board's regulations. See 
54 FR 36759 (Sept. 5, 1989). In 1990, the Finance Board amended section 
934.11 to require prior approval of the Board of Directors of the 
Finance Board, or its designee, for exceptions to the annual dollar 
limitations on FHLBank charitable donations. See 55 FR 2229 (Jan. 23, 
1990). Since that time, the Finance Board has routinely approved 
requests from the FHLBanks for exceptions to the annual charitable 
donations limitation.

II.-Analysis of the Proposed Rule

    The Finance Board has determined that the general corporate powers 
granted to the FHLBanks pursuant to section 12(a) of the Federal Home 
Loan Bank Act (Bank Act), see 12 U.S.C. 1432(a), include the power to 
make charitable donations. Section 12(a) provides that each FHLBank 
``shall have all such incidental powers, not inconsistent with the 
provisions of this chapter, as are customary and usual in corporations 
generally.'' Id. Under the statutes and common law of most states, 
corporations generally enjoy the power to make donations for 
charitable, scientific, or educational purposes. See 18B Am. Jur. 2d 
Corporations  Section 2902 (1985). Corporations may support charities 
important to the welfare of the communities in which they do business. 
Id. Thus, the FHLBanks have statutory authority to make donations to 
charities in the communities they serve as a ``customary and usual'' 
corporate power. See id.; 12 U.S.C. 1432(a). There is no statutory 
provision that otherwise would require Finance Board approval of such 
donations.
    Because the FHLBanks have authority under the Bank Act to make 
charitable donations and because the Bank Act and the regulations do 
not otherwise address the issue, repeal of section 934.11 of the 
Finance Board's regulations would not prevent the FHLBanks from making 
such donations. In addition, the repeal of section 934.11 would not 
affect Finance Board oversight of FHLBank charitable donations. The 
FHLBank's statutory authority to make charitable donations still would 
be subject to standards of reasonableness and financial safety and 
soundness enforced by the Finance Board, as well as any other 
limitations the Finance Board may decide to impose. See 12 U.S.C. 
1422a(a)(3), 1422b(a)(1), 1432(a).
    The Finance Board and the FHLBanks have been considering ways to 
transfer a variety of governance responsibilities from the Finance 
Board to the FHLBanks since the completion of studies required by the 
Housing and Community Development Act of 1992, Pub. L. No. 102-550, 106 
Stat. 3672 (Oct. 28, 1992), which concluded that the FHLBanks should be 
allowed broad discretion to manage their corporate affairs as long as 
they comply with the Bank Act and Finance Board regulations. Finance 
Board and FHLBank staff have identified approval of all charitable 
donations as one of the governance responsibilities that should be 
devolved from the Finance Board to the FHLBanks. Repeal of section 
934.11 would effect the devolution of this authority.
    Repeal of section 934.11 of the Finance Board's regulations also 
will be consistent with the goal of the Vice President's National 
Performance Review to reduce the total number of regulations of 
executive agencies. See Report of the National Performance Review 32-33 
(Sept. 17, 1993); E.O. 12,861, 58 FR 48255 (Sept. 14, 1993).
    For the foregoing reasons, the Finance Board has determined that 
section 934.11 of its regulations is no longer necessary. Accordingly, 
the Finance Board has decided to repeal section 934.11 of its 
regulations, pursuant to its general rulemaking authority under section 
2B(a)(1) of the Bank Act. See 12 U.S.C. 1422b(a)(1).

III. Administrative Procedure Act

    Because this final rule merely repeals a provision of the Finance 
Board's regulations that is burdensome to the FHLBanks and will have no 
adverse affect on the public, the Finance Board, for good cause, finds 
that the notice and public comment procedure is unnecessary in this 
instance. Therefore, for good cause shown under 5 U.S.C. 553(b)(B), 
this rule is exempt from the notice and comment requirements of the 
Administrative Procedure Act, as well as from the 30-day delay in the 
effective date under 5 U.S.C. 553(d)(3).

IV. Regulatory Flexibility Act

    Because this final rule repeals a restrictive provision of the 
Board's regulations, it will not impose any regulatory requirements on 
small entities. Therefore, in accordance with the provisions of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., the Finance Board 
hereby certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities. Id. section 
605(b).

List of Subjects in 12 CFR Part 934

    Federal home loan banks, securities, surety bonds.
    Accordingly, the Federal Housing Finance Board hereby amends 
Chapter IX, Title 12, Code of Federal Regulations, as set forth below.

PART 934-OPERATIONS OF THE BANKS

    1.-The authority citation for Part 934 is revised to read as 
follows:

    Authority: 12 U.S.C. 1422b, 1442.


Sec. 934.11  [Removed]

    2.Section 934.11 is removed.


Secs. 934.12 through 934.15  [Redesignated as Secs. 934.11 through 
934.14]

    3.Sections 934.12 through 934.15 are redesignated as Secs. 934.11 
through 934.14, respectively.

    Dated: December 8, 1995.

    By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 95-30517 Filed 12-19-95; 8:45 am]
BILLING CODE 6725-01-U