Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 54307 

duration without the concurrence of 

Rural Development. If the IRP funds 

have been unused to make loans to 

ultimate recipients for 6 months or 

more, those funds will be returned to 

Rural Development unless Rural 

Development provides an exception to 

the intermediary. Any exception would 

be based on evidence satisfactory to 

Rural Development that every effort is 

being made by the intermediary to 

utilize the IRP funding in conformance 

with program objectives. 

CHAPTER XLII—RURAL BUSINESSCOOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4274—DIRECT AND INSURED 

LOANMAKING 

■ 4. The authority citation for part 4274 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932 

note; 7 U.S.C. 1989. 

Subpart D—Intermediary Relending 

Program (IRP) 

■ 5. Section 4274.314 is amended by 

revising paragraph (b)(10)(i) and by 

adding paragraph (b)(15) to read as 

follows: 

§ 4274.314 Loan purposes. 

* * * * * 

(b) * * * 

(10) * * * 

(i) The intermediary is responsible for 

making prudent lending decisions based 

on sound underwriting principles when 

considering the restructuring of an 

ultimate recipient’s debt; and 

* * * * * 

(15) Aquaculture-based rural small 

businesses. 

■ 6. Section 4274.319 is amended by 

revising paragraphs (c) and (d) and by 

adding paragraphs (m) and (n) to read as 

follows: 

§ 4274.319 Ineligible loan purposes. 

* * * * * 

(c) Charitable institutions, that would 

not have revenue from sales, fees, or 

stable revenue to support the operation 

and repay the loan, and fraternal 

organizations. 

(d) Assistance to Federal government 

employees, active duty military 

personnel, employees of the 

intermediary, or any organization for 

which such persons are directors or 

officers or have 20 percent or more 

ownership. 

* * * * * 

(m) For any line of credit. 

(n) For any legitimate business 

activity when more than 10 percent of 

the annual gross revenue is derived 

from legalized gambling activity. 

■ 7. Section 4274.338 is amended by 

adding paragraph (b)(4)(ii)(D) to read as 

follows: 

§ 4274.338 Loan agreements between the 

Agency and the intermediary. 

* * * * * 

(b) * * * 

(4) * * * 

(ii) * * * 

(D) An annual report on the extent to 

which increased employment, income 

and ownership opportunities are 

provided to low-income persons, farm 

families, and displaced farm families for 

each loan made by such intermediary. 

Dated: September 12, 2008. 

Ben Anderson, 

Administrator, Rural Business-Cooperative 

Service. 

[FR Doc. E8–22003 Filed 9–18–08; 8:45 am] 

BILLING CODE 3410–XY–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 223 

[Regulation W; Docket No. R–1330] 

Transactions Between Member Banks 

and Their Affiliates: Exemption for 

Certain Securities Financing 

Transactions Between a Member Bank 

and an Affiliate 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: In light of the continuing 

unusual and exigent circumstances in 

the financial markets, the Board has 

adopted, on an interim final basis, a 

regulatory exemption for member banks 

from certain provisions of section 23A 

of the Federal Reserve Act and the 

Board’s Regulation W. The exemption 

increases the capacity of member banks, 

subject to certain conditions designed to 

help ensure the safety and soundness of 

the banks, to enter into securities 

financing transactions with affiliates. 

DATES: The interim final rule became 

effective on September 14, 2008. 

Comments must be received on or 

before October 31, 2008. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1330, by any 

of the following methods: 

Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

Fax: (202) 452–3819 or (202) 452– 

3102. 

Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. 

Public comments may also be viewed 

electronically or in paper form in Room 

MP–500 of the Board’s Martin Building 

(20th and C Streets, NW.) between 9 

a.m. and 5 p.m. on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Mark E. Van Der Weide, Assistant 

General Counsel, (202) 452–2263, Legal 

Division, or Norah M. Barger, Deputy 

Director, (202) 452–2402, Division of 

Banking Supervision and Regulation, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. For the deaf, hard of hearing, 

and speech impaired only, 

teletypewriter (TTY), (202) 263–4869. 

SUPPLEMENTARY INFORMATION: In light of 

the ongoing dislocations in the financial 

markets, and the potential impact of 

such dislocations on the functioning of 

the U.S. tri-party repurchase agreement 

market, the Board has adopted on an 

interim basis the following exemption 

from section 23A of the Federal Reserve 

Act (12 U.S.C. 371c) and the Board’s 

Regulation W (12 CFR part 223). The 

exemption will facilitate the ability of 

an affiliate of a member bank (such as 

an SEC-registered broker-dealer) to 

obtain financing, if needed, for 

securities or other assets that the 

affiliate ordinarily would have financed 

through the U.S. tri-party repurchase 

agreement market. The exemption is 

subject to several conditions designed to 

protect the safety and soundness of the 

member bank. 

First, the member bank may use the 

exemption to finance only those asset 

types that the affiliate currently finances 

in the U.S. tri-party repurchase 

agreement market. 

Second, the transactions must be 

marked to market daily and subject to 

daily margin maintenance requirements, 


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54308 Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 

and the member bank must be at least 

as over-collateralized in its securities 

financing transactions with the affiliate 

as the affiliate’s clearing bank was in its 

U.S. tri-party repurchase agreement 

transactions with the affiliate on 

September 12, 2008. The Board expects 

the member bank and its affiliate to use 

standard industry documentation for the 

exempt securities financing transactions 

(which would, among other things, 

qualify the transactions as securities 

contracts or repurchase agreements for 

purposes of U.S. bankruptcy law). 

Third, to ensure that member banks 

use the exemption in a manner 

consistent with its purpose—that is, to 

help provide liquidity to the U.S. triparty repurchase agreement market—the 

aggregate risk profile of the exempt 

securities financing transactions must 

be no greater than the aggregate risk 

profile of the affiliate’s U.S. tri-party 

repurchase agreement transactions on 

September 12, 2008. The exemption, 

therefore, permits an affiliate to obtain 

financing from its affiliated member 

bank for securities positions that the 

affiliate did not own or finance in the 

U.S. tri-party repurchase agreement 

market on September 12, 2008, but only 

if the new positions in the aggregate do 

not increase the overall risk profile of 

the affiliate’s portfolio. 

Fourth, the member bank’s top-tier 

holding company must guarantee the 

obligations of the affiliate under the 

securities financing transactions (or 

must provide other security to the bank 

that is acceptable to the Board). Any 

member bank that intends to use a form 

of credit enhancement other than a 

parent company guarantee must consult 

in advance with Board staff. An 

example of the type of other security 

arrangement that may be acceptable to 

the Board would be a pledge by the 

affiliate or parent holding company to 

the member bank of a sufficient amount 

of additional liquid, high-quality 

collateral. 

Fifth, a member bank may use the 

exemption only if the bank has not been 

specifically informed by the Board, after 

consultation with the bank’s appropriate 

Federal banking agency, that the bank 

may not use this exemption. If the Board 

believes, after such consultation, that 

the exempt securities financing 

transactions pose an unacceptable level 

of risk to the bank, the Board may 

withdraw the exemption for the bank or 

may impose supplemental conditions 

on the bank’s use of the exemption. 

Consistent with its purpose to 

ameliorate potential temporary 

dislocations in the U.S. tri-party 

repurchase agreement market, the 

exemption will expire on January 30, 

2009, unless extended by the Board. 

The Board notes that any securities 

financing transactions between the 

member bank and an affiliate are subject 

to the market terms requirement of 

section 23B of the Federal Reserve Act 

(12 U.S.C. 371c–1). Section 23B requires 

that financial transactions between a 

bank and its affiliate be on terms and 

under circumstances (including credit 

standards) that are substantially the 

same, or at least as favorable to the 

bank, as those prevailing at the time for 

comparable transactions with or 

involving nonaffiliates. Among other 

things, section 23B would require the 

member bank to apply collateral 

haircuts to its affiliated securities 

financing transaction counterparty that 

are at least as strict as the bank would 

apply to comparable unaffiliated 

securities financing transaction 

counterparties. 

Administrative Procedure Act 

Pursuant to sections 553(b) and (d) of 

the Administrative Procedure Act (5 

U.S.C. 553(b) and (d)), the Board finds 

that there is good cause for making the 

exemption effective immediately on 

September 14, 2008, and that it is 

impracticable, unnecessary, or contrary 

to the public interest to issue a notice 

of proposed rulemaking and provide an 

opportunity to comment before the 

effective date. The Board has adopted 

the exemption in light of, and to help 

address, the continuing unusual and 

exigent circumstances in the financial 

markets. The exemption will provide 

immediate relief to participants in the 

U.S. tri-party repurchase agreement 

market affected by the current turmoil. 

The Board is soliciting comment on all 

aspects of the exemption and will make 

such changes that it considers to be 

appropriate or necessary after review of 

any comments received. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires an agency that is issuing a final 

rule to prepare and make available a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities. 5 U.S.C. 603(a). The 

Regulatory Flexibility Act provides that 

an agency is not required to prepare and 

publish a regulatory flexibility analysis 

if the agency certifies that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 5 U.S.C. 605(b). 

Pursuant to section 605(b), the Board 

certifies that this interim final rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The rule reduces regulatory 

burden on large and small insured 

depository institutions by granting an 

exemption from the Federal transactions 

with affiliates regime for insured 

depository institutions that engage in 

securities financing transactions with 

affiliates. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (44 U.S.C. 3506; 5 CFR 

1320 Appendix A.1), the Board has 

reviewed the interim final rule under 

authority delegated to the Board by the 

Office of Management and Budget. The 

rule contains no collections of 

information pursuant to the Paperwork 

Reduction Act. 

Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the Board to use 

‘‘plain language’’ in all proposed and 

final rules. In light of this requirement, 

the Board has sought to present the 

interim final rule in a simple and 

straightforward manner. The Board 

invites comment on whether the Board 

could take additional steps to make the 

rule easier to understand. 

List of Subjects in 12 CFR Part 223 

Banks, Banking, Federal Reserve 

System. 

Authority and Issuance 

■ For the reasons set forth in the 

preamble, Chapter II of Title 12 of the 

Code of Federal Regulations is amended 

as follows: 

PART 223—TRANSACTIONS 

BETWEEN MEMBER BANKS AND 

THEIR AFFILIATES (REGULATION W) 

■ 1. The authority citation for part 223 

continues to read as follows: 

Authority: 12 U.S.C. 371c and 371c–1. 

■ 2. In § 223.42, add paragraph (n) to 

read as follows: 

§ 223.42 What covered transactions are 

exempt from the quantitative limits, 

collateral requirements, and low-quality 

asset prohibition? 

* * * * * 

(n) Securities financing transactions. 

(1) From September 15, 2008, until 

January 30, 2009 (unless further 

extended by the Board), securities 

financing transactions with an affiliate, 

if: 

(i) The security or other asset financed 

by the member bank in the transaction 

is of a type that the affiliate financed in 

the U.S. tri-party repurchase agreement 

market at any time during the week of 

September 8–12, 2008; 


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Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 54309 

(ii) The transaction is marked to 

market daily and subject to daily 

margin-maintenance requirements, and 

the member bank is at least as overcollateralized in the transaction as the 

affiliate’s clearing bank was overcollateralized in comparable 

transactions with the affiliate in the U.S. 

tri-party repurchase agreement market 

on September 12, 2008; 

(iii) The aggregate risk profile of the 

securities financing transactions under 

this exemption is no greater than the 

aggregate risk profile of the securities 

financing transactions of the affiliate in 

the U.S. tri-party repurchase agreement 

market on September 12, 2008; 

(iv) The member bank’s top-tier 

holding company guarantees the 

obligations of the affiliate under the 

securities financing transactions (or 

provides other security to the bank that 

is acceptable to the Board); and 

(v) The member bank has not been 

specifically informed by the Board, after 

consultation with the member bank’s 

appropriate Federal banking agency, 

that the member bank may not use this 

exemption. 

(2) For purposes of this exemption: 

(i) Securities financing transaction 

means: 

(A) A purchase by a member bank 

from an affiliate of a security or other 

asset, subject to an agreement by the 

affiliate to repurchase the asset from the 

member bank; 

(B) A borrowing of a security by a 

member bank from an affiliate on a 

collateralized basis; or 

(C) A secured extension of credit by 

a member bank to an affiliate. 

(ii) U.S. tri-party repurchase 

agreement market means the U.S. 

market for securities financing 

transactions in which the counterparties 

use custodial arrangements provided by 

JPMorgan Chase Bank or Bank of New 

York or another financial institution 

approved by the Board. 

By order of the Board of Governors of the 

Federal Reserve System, September 14, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E8–21792 Filed 9–18–08; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1231 

RIN 2590–AA08 

Golden Parachute Payments and 

Indemnification Payments 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Correcting Amendments. 

SUMMARY: This document contains a 

correction to §§ 1231.3 and 1231.4 of the 

interim final regulation concerning 

Golden Parachute Payments and 

Indemnification Payments published in 

the Federal Register on Tuesday, 

September 16, 2008. These sections 

should read ‘‘Reserved.’’ 

DATES: Effective Date: September 19, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Alfred M. Pollard, General Counsel 

(OFHEO), telephone (202) 414–3788 or 

Christopher Curtis, General Counsel 

(FHFB), telephone (202) 408–2802 (not 

toll-free numbers), Federal Housing 

Finance Agency, Fourth Floor, 1700 G 

Street, NW., Washington, DC 20552. The 

telephone number for the 

Telecommunications Device for the Deaf 

is (800) 877–8339. 

Need for Correction 

As published on September 16, 2008, 

the interim final regulation contained 

clerical errors, which these amendments 

correct. 

List of Subjects in 12 CFR Part 1231 

Golden Parachutes, GovernmentSponsored Enterprises, Indemnification. 

■ Accordingly, part 1231 of Title 12 

CFR Chapter XII is corrected by making 

the following correcting amendments: 

PART 1231—GOLDEN PARACHUTE 

PAYMENTS AND INDEMNIFICATION 

PAYMENTS 

■ 1. The authority citation for part 1231 

continues to read as follows: 

Authority: 12 U.S.C. 4518(e). 

§ 1231.3 [Reserved] 

■ 2. Section 1231.3 is removed and 

reserved. 

§ 1231.4 [Reserved] 

■ 3. Section 1231.4 is removed and 

reserved. 

Dated: September 15, 2008. 

James B. Lockhart, III, 

Director, Federal Housing Finance Agency. 

[FR Doc. E8–21903 Filed 9–16–08; 11:15 am] 

BILLING CODE 8070–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Part 12 

[Docket No. USCBP–2008–0076; CBP Dec. 

08–40] 

RIN 1505–AB99 

Extension of Import Restrictions 

Imposed on Archaeological Material 

From Cambodia 

AGENCIES: U.S. Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: This document amends 

Customs and Border Protection (CBP) 

regulations to reflect both continuing 

and new import restrictions on certain 

archaeological material from Cambodia. 

Import restrictions that were previously 

imposed by CBP Decision 03–28 on 

certain stone, metal, and ceramic 

archaeological materials that are due to 

expire on September 19, 2008, are 

extended. The Assistant Secretary for 

Educational and Cultural Affairs, United 

States Department of State, has made 

the requisite determination for the 

extension of import restrictions that 

previously existed and for amending the 

agreement so that it applies also to 

archaeological material of the Bronze 

and Iron Ages. Accordingly, these 

import restrictions will remain in effect 

until September 19, 2013, and title 19 of 

the CBP regulations is being amended to 

reflect this amended bilateral 

agreement. These restrictions are being 

extended pursuant to determinations of 

the United States Department of State 

made under the terms of the 1970 

Convention on Cultural Property 

Implementation Act in accordance with 

the United Nations Educational, 

Scientific and Cultural Organization 

(UNESCO) Convention on the Means of 

Prohibiting and Preventing the Illicit 

Import, Export and Transfer of 

Ownership of Cultural Property. This 

document also contains the amended 

Designated List of Archaeological 

Material that describes the articles to 

which the restrictions apply, including 

the new categories of objects (glass and 

bone) and the additional subcategories 

of stone and metal objects from the 

Bronze and Iron Age. 

DATES: Effective Date: This final rule is 

effective on September 19, 2008. 

FOR FURTHER INFORMATION CONTACT: For 

legal aspects, George F. McCray, Esq., 


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