55708 Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 

Appendix B to Part 208—Capital 

Adequacy Guidelines for State Member 

Banks: Tier 1 Leverage Measure 

* * * * * 

II. * * * 

h. Notwithstanding anything in this 

appendix to the contrary, a bank may deduct 

from its average total consolidated assets the 

amount of any asset-backed commercial 

paper (i) purchased by the bank between 

September 19, 2008, and January 30, 2009 

(unless extended by the Board), from an SECregistered open-end investment company 

that holds itself out as a money market 

mutual fund under SEC Rule 2a–7 (17 CFR 

270.2a–7) and (ii) pledged by the bank to a 

Federal Reserve Bank to secure financing 

from the ABCP lending facility established by 

the Board on September 19, 2008. 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 1. The authority citation for part 225 

continues to read as follows: 

Authority: 12 U.S.C. 1817(j)(13), 1818, 

1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b), 

1972(1), 3106, 3108, 3310, 3331–3351, 3907, 

and 3909; 15 U.S.C. 6801 and 6805. 

■ 2. In Appendix A to part 225, amend 

section III.C.1. by adding a new third 

paragraph to read as follows: 

Appendix A to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure 

* * * * * 

III. * * * 

C. * * * 

1. * * * 

* * * * * 

This category also includes ABCP (i) 

purchased by a bank holding company 

between September 19, 2008, and January 30, 

2009 (unless extended by the Board), from an 

SEC-registered open-end investment 

company that holds itself out as a money 

market mutual fund under SEC Rule 2a–7 (17 

CFR 270.2a–7) and (ii) pledged by the bank 

holding company to a Federal Reserve Bank 

to secure financing from the ABCP lending 

facility established by the Board on 

September 19, 2008. 

* * * * * 

■ 3. In Appendix D to part 225, amend 

section II by adding new paragraph d to 

read as follows: 

Appendix D to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Tier 1 Leverage Measure 

* * * * * 

II. * * * 

d. Notwithstanding anything in this 

appendix to the contrary, a bank holding 

company may deduct from its average total 

consolidated assets the amount of any assetbacked commercial paper (i) purchased by 

the bank holding company between 

September 19, 2008, and January 30, 2009 

(unless extended by the Board), from an SECregistered open-end investment company 

that holds itself out as a money market 

mutual fund under SEC Rule 2a–7 (17 CFR 

270.2a–7) and (ii) pledged by the bank 

holding company to a Federal Reserve Bank 

to secure financing from the ABCP lending 

facility established by the Board on 

September 19, 2008. 

By order of the Board of Governors of the 

Federal Reserve System, September 19, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E8–22702 Filed 9–25–08; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 223 

[Regulation W; Docket No. R–1331] 

Transactions Between Member Banks 

and Their Affiliates: Exemption for 

Certain Purchases of Asset-Backed 

Commercial Paper by a Member Bank 

From an Affiliate 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: To reduce liquidity and other 

strains being experienced by money 

market mutual funds, the Federal 

Reserve System adopted on September 

19, 2008, a special lending facility that 

enables depository institutions and bank 

holding companies to borrow from the 

Federal Reserve Bank of Boston on a 

non-recourse basis if they use the 

proceeds of the loan to purchase certain 

types of asset-backed commercial paper 

(ABCP) from money market mutual 

funds (ABCP Lending Facility). To 

facilitate use of the ABCP Lending 

Facility by member banks, the Board of 

Governors of the Federal Reserve 

System (Board) also has adopted, on an 

interim final basis, regulatory 

exemptions for member banks from 

certain provisions of sections 23A and 

23B of the Federal Reserve Act and the 

Board’s Regulation W. The exemptions 

would increase the capacity of a 

member bank to purchase ABCP from 

affiliated money market mutual funds in 

connection with the ABCP Lending 

Facility. 

DATES: The exemption became effective 

on September 19, 2008. Comments must 

be received on or before October 31, 

2008. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1331, 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 

Street, 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, or 

Andrea R. Tokheim, Counsel, (202) 452– 

2300, Legal Division; or Norah M. 

Barger, Deputy Director, (202) 452– 

2402, Division of Banking Supervision 

and Regulation. For the hearing 

impaired only, Telecommunication 

Device for the Deaf (TDD), (202) 263– 

4869. 

SUPPLEMENTARY INFORMATION: In light of 

the ongoing dislocations in the financial 

markets, and the impact of such 

dislocations on the functioning of the 

ABCP markets and on the operations of 

money market mutual funds, the Board 

adopted the ABCP Lending Facility on 

September 19, 2008. Under the facility, 

depository institutions and bank 

holding companies (banking 

organizations) are able to borrow from 

the Federal Reserve Bank of Boston on 

a non-recourse basis on condition that 

the organizations use the proceeds of 

the Federal Reserve credit to purchase, 

at amortized cost, certain highly rated 

U.S. dollar-denominated ABCP from 

money market mutual funds. The ABCP 

purchased must be used to secure the 

borrowing from the Reserve Bank. The 

purpose of the ABCP Lending Facility is 

to assist money market mutual funds to 

obtain liquidity by enabling them to sell 

some of their high-credit-quality 

secured assets at amortized cost. The 


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Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 55709 

ABCP Lending Facility will expire on 

January 30, 2009 (unless extended by 

the Board). 

To facilitate usage of the ABCP 

Lending Facility, the Board has adopted 

on an interim basis exemptions from 

sections 23A and 23B of the Federal 

Reserve Act (12 U.S.C. 371c, 371c-1) 

and the Board’s Regulation W (12 CFR 

part 223). The exemptions increase the 

capacity of a member bank to purchase 

ABCP from an affiliated money market 

mutual fund in connection with the 

ABCP Lending Facility. In addition, a 

member bank may use the exemptions 

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 these exemptions. If the 

Board believes, after such consultation, 

that use of the exemptions would not be 

appropriate for the member bank, the 

Board may withdraw the exemptions for 

the bank or may impose supplemental 

conditions on the bank’s use of the 

exemptions. 

The Board has determined that these 

exemptions are in the public interest 

and consistent with the purposes of 

sections 23A and 23B. The substantial 

protections provided to intermediaries 

by the Federal Reserve in connection 

with the ABCP Lending Facility largely 

mitigate the safety-and-soundness 

concerns that sections 23A and 23B 

were designed to address. Because 

Federal Reserve extensions of credit to 

a member bank under the ABCP 

Lending Facility are on a non-recourse 

basis, the bank should bear no risk of 

loss from purchases of ABCP under the 

facility. Therefore, the Board believes 

that it is appropriate to exempt a 

member bank that serves as an 

intermediary in the ABCP Lending 

Facility from the requirements of 

sections 23A and 23B and Regulation 

W. 

Consistent with its purpose to 

mitigate temporary stresses faced by 

money market mutual funds, the interim 

final rule will expire on January 30, 

2009, unless extended by the Board. 

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 

rule effective immediately on September 

19, 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 rule in light 

of, and to help address, the continuing 

unusual and exigent circumstances in 

the financial markets. The rule will 

provide immediate relief to depository 

institutions that elect to participate in 

the ABCP Lending Facility. The Board 

is soliciting comment on all aspects of 

the rule and will make any changes that 

it considers 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 

exemptions from the Federal 

transactions with affiliates regime for 

insured depository institutions that 

purchase ABCP from affiliated money 

market mutual funds pursuant to the 

ABCP Lending Facility. 

Paperwork Reduction Act 

In accordance with the Paperwork 

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

Part 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 it 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, the Board amends Chapter II 

of Title 12 of the Code of Federal 

Regulations 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 (o) to 

read as follows: 

§ 223.42 What covered transactions are 

exempt from the quantitative limits, 

collateral requirements, and low-quality 

asset prohibition? 

* * * * * 

(o) Purchases of certain asset-backed 

commercial paper. Purchases of assetbacked commercial paper from an 

affiliated SEC-registered open-end 

investment company that holds itself 

out as a money market mutual fund 

under SEC Rule 2a–7 (17 CFR 270.2a– 

7), if the member bank: 

(1) Purchases the asset-backed 

commercial paper between September 

19, 2008, and January 30, 2009 (unless 

extended by the Board), pursuant to the 

asset-backed commercial paper lending 

facility established by the Board on 

September 19, 2008; and 

(2) 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. 

■ 3. Add a new § 223.56 to subpart F to 

read as follows: 

§ 223.56 What transactions are exempt 

from the market-terms requirement of 

section 23B? 

The following transactions are exempt 

from the market-terms requirement of 

§ 223.51. 

(a) Purchases of certain asset-backed 

commercial paper. Purchases of assetbacked commercial paper from an 

affiliated SEC-registered open-end 

investment company that holds itself 

out as a money market mutual fund 

under SEC Rule 2a–7 (17 CFR 270.2a– 

7), if the member bank: 

(1) Purchases the asset-backed 

commercial paper between September 

19, 2008, and January 30, 2009 (unless 

extended by the Board), pursuant to the 

asset-backed commercial paper lending 

facility established by the Board on 

September 19, 2008; and 

(2) 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. 

(b) [Reserved] 


sroberts on PROD1PC70 with RULES
55710 Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 

By order of the Board of Governors of the 

Federal Reserve System, September 19, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. E8–22701 Filed 9–25–08; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 915 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1261 

RIN 2590–AA03 

Federal Home Loan Bank Boards of 

Directors: Eligibility and Elections 

AGENCIES: Federal Housing Finance 

Board; Federal Housing Finance 

Agency. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: The Federal Housing Finance 

Agency (FHFA) is issuing and seeking 

comment on an interim final regulation 

to implement section 1202 of the 

Housing and Economic Recovery Act of 

2008, which revises section 7 of the 

Federal Home Loan Bank Act (Bank 

Act). Section 7 governs the eligibility 

and election of individuals to serve on 

the boards of directors of the 12 Federal 

Home Loan Banks (Banks). 

DATES: This interim final rule is 

effective on September 26, 2008. The 

FHFA will accept written comments on 

the interim final rule on or before 

November 25, 2008. 

ADDRESSES: Submit comments to the 

FHFA using any one of the following 

methods: 

E-mail: comments@fhfb.gov. Please 

include RIN 2590–AA03 in the subject 

line of the message. 

Fax: 202–408–2580. 

Mail/Hand Delivery: Federal Housing 

Finance Board, 1625 Eye Street, NW., 

Washington DC 20006, Attention: Public 

Comments/RIN 2590–AA03. 

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 FHFA at 

comments@fhfb.gov to ensure timely 

receipt by the FHFA. Include the 

following information in the subject line 

of your submission: Federal Housing 

Finance Agency. Interim Final Rule: 

Federal Home Loan Bank Boards of 

Directors: Eligibility and Elections. RIN 

Number 2590–AA03. 

We will post all public comments we 

receive without change, including any 

personal information you provide, such 

as your name and address, on the FHFA 

Web site at http://www.fhfb.gov/ 

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

FOR FURTHER INFORMATION CONTACT: 

Thomas P. Jennings, Senior Attorney 

Advisor (FHFB), jenningst@fhfb.gov, 

(202) 408–2553; or Patricia L. Sweeney, 

Management Analyst (FHFB), 

sweeneyp@fhfb.gov or (202) 408–2872. 

You can send regular mail to the Federal 

Housing Finance Board, 1625 Eye 

Street, NW., Washington DC 20006. 

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background 

Effective July 30, 2008, the Federal 

Housing Finance Regulatory Reform Act 

of 2008 (Act), Division A of the Housing 

and Economic Recovery Act of 2008, 

Public Law No. 110–289, 122 Stat. 2654 

(2008), transferred the supervisory and 

oversight responsibilities of the Office of 

Federal Housing Enterprise Oversight 

and the Federal Housing Finance Board 

over the Federal National Mortgage 

Association (Fannie Mae), Federal 

Home Loan Mortgage Corporation 

(Freddie Mac) (collectively, 

Enterprises), and the Banks to a new 

independent executive branch agency 

known as the Federal Housing Finance 

Agency (FHFA). The FHFA is 

responsible for ensuring that the 

Enterprises and the Banks operate in a 

safe and sound manner, including being 

capitalized adequately, and carry out 

their public policy missions, including 

fostering liquid, efficient, competitive, 

and resilient national housing finance 

markets. The Enterprises and the Banks 

continue to operate under regulations 

promulgated by OFHEO and the FHFB 

until the FHFA issues its own 

regulations. 

Section 1101 of the Act revised 

section 7 of the Bank Act. 12 U.S.C. 

1427. The FHFB regulation 

implementing section 7 is codified at 12 

CFR part 915. Part 915 governed the 

nomination and election only of those 

directors who are chosen from among 

the officers and directors of members of 

the Banks, which this interim final rule 

refers to as member directors. The Act 

amended section 7(b) of the Bank Act, 

12 U.S.C. 1427(b), to give the members 

the right to also elect all of the other 

directors on the boards of directors of 

the Banks, which other directors are 

referred to in this interim final rule as 

independent directors. The FHFA has 

kept the basic process of elections that 

exists in part 915 as it applies to 

member directorships, making changes 

as necessary to comply with the 

amendments to section 7 of the Bank 

Act. The FHFA has added provisions to 

govern the process for nominating 

individuals for independent 

directorships and for conducting the 

election of independent directors in 

conjunction with the election of 

member directors. The organizational 

structure of part 915 also has been 

revised. 

Section 1201 of the Act (codified at 12 

U.S.C. 4513(f)) requires the Director of 

the FHFA to consider the differences 

between the Banks and the Enterprises 

in rulemakings that affect the Banks 

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. In 

preparing the interim final rule, the 

Director considered these factors and 

determined that the rule is appropriate, 

particularly because this interim final 

rule implements a statutory provision of 

the Bank Act that applies only to the 

Banks. See 12 U.S.C. 1427. 

II. Description of the Interim Final Rule 

The interim final regulation removes 

part 915 of the FHFB regulations and 

establishes part 1261 of the FHFA 

regulations, which will contain the rules 

governing the eligibility and election of 

Bank directors. The name of new part 

1261 will read ‘‘Federal Home Loan 

Bank Director Eligibility and Elections.’’ 

A. Definitions: Section 1261.1 

The FHFA has made technical 

changes to the definitions of ‘‘bona fide 

resident,’’ ‘‘guaranteed directorship,’’ 

‘‘stock directorship,’’ and ‘‘voting state,’’ 

but their meanings remain the same as 

they were in part 915. The meaning of 

‘‘record date’’ has not changed. The 

identification number for the Banks is 

the same, except that it is now the 

number assigned by the FHFA. 

The Act’s amendments to section 7 of 

the Bank Act, 12 U.S.C. 1427, divide the 

directorships of the Banks into two 

categories—member directorships and 

independent directorships. Both types 

of directorships are filled by a vote of 

the members; however, elections for 

member directors are held on a state-bystate basis, whereas independent 

directors are elected at large by all the 

members of a Bank without regard to 

whether the members located in a 

particular voting state may be voting on 

member directors in any particular year. 

The definitions of ‘‘independent 

directorship’’ and ‘‘member 

directorship’’ reflect that difference. 

The definitions of ‘‘guaranteed 

directorship’’ and ‘‘stock directorship’’ 


sroberts on PROD1PC70 with RULES