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’’ 


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reflect that there are two categories of 

member directorships, because section 

7(c) of the Bank Act, 12 U.S.C. 1417(c), 

guarantees that directorships from 

members located in some states will be 

no fewer than the number that existed 

on December 31, 1960, regardless of the 

amount of voting stock located in those 

states. The definition of ‘‘public interest 

directorship’’ reflects the statutory 

criteria that an independent director 

must have in order to receive this 

designation. 

Section 7(c) of the Bank Act, 12 U.S.C. 

1427(c), requires the Director of the 

FHFA to determine the number of 

member directorships based on the 

approximate ratio of required stock held 

by members located in particular states 

in a Bank’s geographic region. The 

method the FHFA uses is defined in this 

section as the ‘‘method of equal 

proportions.’’ 

B. General Provisions: Section 1261.2 

Section 7(a) of the Bank Act, 12 U.S.C. 

1427(a), sets the size of a Bank’s board 

of directors at 13, or such other number 

as the Director may determine, provided 

the member directorships always 

maintain a majority and the 

independent directorships comprise at 

least 40 percent of the entire board. 

Section 1261.2(a) provides that the 

FHFA Director annually will set the 

number of directorships for each Bank, 

and will designate the directorships as 

either member directorships or 

independent directorships. The rule 

does not provide that the Director will 

designate the independent directorships 

as either public interest directorships or 

other independent directorships. If the 

Director does not further designate the 

independent directorships, the board of 

directors of a Bank will have the power, 

through the nomination process, to 

nominate any number of the 

independent directorships as public 

interest directorships, provided it so 

designates at least two of the 

independent directorships. The FHFA 

requests comments on whether the 

boards of the Banks or the FHFA 

Director should establish the number of 

public interest directorships. 

Section 7(c) of the Bank Act, 12 U.S.C. 

1427(c), continues to require that states 

be grandfathered with the number of 

directorships representing members in 

the states on December 31, 1960, 

notwithstanding any other provision in 

section 7. Thus, in applying the 

grandfather provision to the Banks 

based on their current districts, 

notwithstanding the Act’s apparent 

default board size of 13, every Bank 

must have a minimum of 14 

directorships, 8 of which must be 

member directorships. The Act amends 

section 7(d) of the Bank Act, 12 U.S.C. 

1427(d), to require that the term of office 

of directors elected after July 30, 2008 

be four years, except that the FHFA has 

to adjust terms to achieve an 

approximately equal staggering of the 

years for the election of the members of 

the board of directors of a Bank. Section 

1261.2(b) addresses this requirement. 

The Act also amends the Bank Act to 

require that existing directorships that 

do not expire on December 31, 2008 

continue their existing terms, so the 

FHFA has to adjust the terms of new 

directorships beginning January 1, 2009 

in order to achieve staggering. 

Section 1261.2(c) carries forward the 

requirement in section 915.3(a) that the 

Banks are responsible for conducting 

annual elections. Section 1261.2(d) and 

(e) are based on the sections 915.3(d) 

and 915.2, respectively, of the FHFB 

rule. 

C. Designation of Member Directorships: 

Section 1261.3 

Section 1261.3(a) continues the 

requirement in section 915.4 of the 

FHFB rule that each Bank must submit 

a capital report. The FHFA will rely on 

this information to designate stock 

directorships among the voting states in 

a Bank’s district. Each Bank also must 

notify each of its members of its 

minimum required stock holdings. 

Section 1261.3(a)(2) applies only to the 

Chicago Bank, whose capital plan is not 

yet in effect. 

Section 1261.3(b) and (c) of the 

interim final rule carry forward the 

requirements of section 915.3(b) of the 

FHFB regulations. Section 1261.3(b) 

specifies the methodology by which the 

FHFA will make the allocation of 

member directorships, and section 

1261.3(c) provides that the FHFA will 

follow the requirements in sections 7(b) 

and (c) of the Bank Act in designating 

member directorships to the states. 

Annually, the FHFA will use the 

method of equal proportions to 

determine how member directorships 

should be divided among the states in 

a Bank’s district, based on the stock 

holdings of the members located in each 

state in the Bank’s district. The FHFA’s 

annual allocation to each state will be 

sufficient to meet the requirement in 

section 7(c) of the Bank Act that the 

number of member directorships in each 

state be equal to the number of elective 

directorships that it had on December 

31, 1960 (the guaranteed directorships). 

The effect of the so-called 

‘‘grandfather’’ provision is that, based 

on the present geographic districts of 

the Banks, each Bank will have a 

minimum of eight member 

directorships. Section 1261.3(c) 

recognizes that some existing 

directorships at a Bank may cease to 

exist if, resulting from the Director’s 

annual designation, the number of 

directors is set at a number below the 

size of the existing board, the number of 

member directorships increases and the 

number of independent directorships 

decreases, or vice versa, or the 

application of the method of equal 

proportions causes any state to lose a 

directorship to another state. If a state 

loses a directorship through any of these 

events, section 1261.3(c) provides that 

the director sitting in that directorship 

shall be ineligible to serve after 

December 31 of that year. 

Section 1261.3(d) continues the 

notification provision in section 

915.3(e) of the FHFB rule. 

D. Director Eligibility: Section 1261.4 

Section 1261.4(a) carries forward 

section 915.7(b) of the FHFB rule 

regarding the eligibility requirements of 

member directors. Section 1261.4(b) sets 

forth the eligibility requirements of 

independent directors in section 7(a) of 

the Bank Act. 

Section 1261.4(c) describes situations 

in which otherwise eligible individuals 

would not be eligible to serve. The term 

limit provisions of section 7(d) of the 

Bank Act limit service of individuals 

who have served all or part of three 

consecutive full terms. Such individuals 

are ineligible for the two years following 

such service. For terms beginning after 

the effective date of the Act, section 

1261.4(c) deems only four year terms to 

be full terms. The existing directorships 

that do not end on December 31, 2008, 

have three year terms, and those 

directorships’ terms are full terms. If the 

FHFA creates shorter than four year 

terms for directorships that begin on or 

after January 1, 2009, to effectively 

stagger the directorships, those shorter 

terms will not be deemed to be full 

terms. Nonetheless, such shorter terms 

will not be effective for purposes of 

creating a break in service or avoiding 

the three consecutive term count. In 

other words, serving in three 

consecutive three year elective 

directorships ending December 31, 2008 

will render an individual ineligible to 

serve a shortened term beginning 

January 1, 2009, and serving in one or 

two three year elective directorships 

ending December 31, 2008, a shortened 

term beginning January 1, 2009, and one 

or two four year terms immediately 

thereafter, for a total of three full terms, 

will render an individual ineligible to 

again serve for two more years. 

The FHFA seeks comment on its 

application of the consecutive full-term 


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limitation in section 7(d) of the Bank 

Act. If a director serves in a term which 

met the Bank Act’s requirement of a full 

term at the time the director assumed 

that directorship, no matter how long 

the term is, should that term be 

considered a full term? Should the 

current terms and any prior terms 

consecutive thereto of directors elected 

prior to July 30, 2008, be deemed to be 

full terms for purposes of the three 

consecutive term rule in section 7(d) of 

the Bank Act? Should the full terms of 

the directors appointed by the Finance 

Board be treated any differently from 

how the terms of elective directors are 

treated? Should the shorter term that the 

FHFA creates for purposes of staggering 

be considered a break between terms 

before and after other terms of service, 

for purposes of treating the other terms 

as consecutive full terms? 

Section 1261.4(d) deems a sitting 

director to be ineligible on December 31 

of the year in which that person’s 

directorship is eliminated or 

redesignated to another state through 

the annual allocation under the method 

of equal proportions. The FHFA is 

required to do an annual allocation, and 

changes in member stock ownership on 

a state-by-state basis may cause a state 

to lose one or more directorships. 

Although an individual may have to 

give up a directorship due to 

reallocation or elimination, if the 

individual does not complete a full term 

due to such action, that term will not 

count as a full term for purposes of 

eligibility. 

E. Determination of Member Votes: 

Section 1261.5 

Section 1261.5 carries forward section 

915.5 of the FHFB rule, which sets forth 

how the Banks must determine the 

number of votes of each member. For 

those Banks that have more than one 

class of stock, the Banks are required to 

calculate the average number of shares 

separately for each class and allow each 

member to vote its combined average 

number of shares. The average for each 

class is calculated based on the total 

number of members in each state, even 

if a member holds no shares in a class 

of stock. The number of votes allocated 

to a member is the number of votes that 

the member may vote for any 

directorship, whether it is a member 

directorship, independent public 

interest directorship, or other 

independent directorship. 

F. Nominations for Member and 

Independent Directorships: Section 

1261.6 

Section 915.6 of the FHFB regulation 

set forth the requirements for member 

directorship nominations. Section 

1261.6 carries forth these requirements 

with some modifications and sets forth 

how the Banks will nominate 

independent directorship candidates. 

Banks are not required to do so in any 

particular mode of communication, so 

long as they can demonstrate to the 

FHFA their compliance with the 

regulations. 

As required by section 1261.6(a) of 

the interim final rule, the Banks must 

provide to each member a notice of the 

commencement of the election process 

in a reasonable time in advance of the 

elections. As to member directorships, 

the notice and nomination procedures 

do not differ significantly from the 

procedures set forth in the FHFB 

regulation. 

As to independent directorships, 

section 7 of the Bank Act requires each 

Bank to nominate candidates, and the 

election from among the candidates is 

the right of the members of each Bank. 

Under section 1261.6(d) of the interim 

final rule, a Bank must consider anyone 

who applies using an application form 

prescribed by the FHFA and indicates 

on the form that s/he meets the 

eligibility requirements set forth in 

section 1261.4(b), provided the 

application form is delivered to the 

Bank by a deadline set by the Bank and 

the application form contains any of the 

qualifications for independent directors 

set forth in that section. Independent 

directors may meet either the 

requirements of public interest directors 

or the requirements set forth in section 

1261.6(e). 

Section 1261.6(d) also requires that a 

Bank’s board of directors consult with 

the Bank’s Advisory Council before 

nominating independent directors. The 

FHFA requests comment on whether it 

should require the Advisory Council to 

play any specific role in the 

consultation process and whether the 

FHFA should prescribe procedures on 

how the consultation should take place. 

Section 7(a) of the Bank Act and 

section 1261.6(d) of the interim final 

rule require that public interest 

directors have more than four years 

experience in representing consumer or 

community interests in banking 

services, credit needs, housing, or 

consumer financial protections. Prior to 

the Act’s amendments to section 7(a), a 

public interest director had to be from 

an organization that had a history of 

more than two years representing 

consumer or community interests, but 

the individual did not necessarily have 

to have personal experience doing so. 

Although the FHFA will impose the 

Act’s requirements on newly chosen 

independent directors, the FHFA will 

deem existing public interest directors 

who qualified and were designated as 

public interest directors under the Bank 

Act before it was amended to be public 

interest directors for the remainder of 

their existing terms. 

The FHFA requests comments on 

whether it should apply the revised 

experience requirements to existing 

public interest directors and, if so, 

whether it should require any Bank that 

does not have two public interest 

directors who meet the revised 

requirements to nominate candidates 

who do meet those requirements. 

Section 1261.6(d)(3) requires the 

Banks to establish the number of public 

interest directorships from among the 

number of independent directorships 

established by the FHFA Director 

pursuant to section 1261.3(c). It requires 

the Banks to have at least two public 

interest directors, as required by section 

7(a) of the Bank Act. The boards of 

directors of the Banks must nominate at 

least as many individuals for public 

interest directorships as there are 

positions available. Any board may 

nominate more individuals for public 

interest directorship positions than 

there are positions to be filled; however, 

the Bank may fill only those vacant 

positions that the board has designated 

as public interest directorships with 

public interest director nominees. 

The rule permits a board of directors 

to have only enough nominees to fill the 

vacant positions, because the board of 

directors of a Bank might determine that 

the most highly qualified candidates 

may not apply unless they are assured 

of a seat after having been nominated. 

The FHFA requests comment on 

whether the board of directors of a Bank 

should be required to nominate more 

candidates for independent 

directorships than there are positions to 

be filled, if the board has determined 

that there are sufficient applicants who 

are both eligible and qualified. 

Section 7(a) of the Bank Act sets forth 

specific qualifications that independent 

directors, other than public interest 

directors, must have, and it authorizes 

the FHFA Director to establish other 

knowledge or experience that an 

independent director may have in lieu 

of the types of knowledge or experience 

specified in section 7(a). Section 

1261.6(e) provides that independent 

directors may be qualified if they have 

knowledge or experience in the law, in 

addition to the statutorily prescribed 

subjects of auditing or accounting, 

derivatives, financial management, 

organizational management, project 

development or risk management 

practices. In each case, a candidate’s 

knowledge or experience must be 


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commensurate with the knowledge or 

experience needed to oversee a business 

of the size and complexity of the Bank. 

The FHFA solicits comment on whether 

additional areas of expertise should be 

added to the list. 

Pursuant to section 1261.6(f) of the 

interim final rule, Banks must verify the 

eligibility of nominees for directorships 

before placing their names on the 

ballots. The FHFA will prescribe 

eligibility certification forms for 

member directors, and the Banks must 

use information on those forms to verify 

eligibility of nominees for member 

directorships. The FHFA will prescribe 

application forms and eligibility 

certification forms for independent 

directors. For new nominees for 

independent directorships, the Banks 

may use information on the application 

forms. For incumbent nominees for 

independent directorships, the Banks 

may use information on eligibility 

certification forms or on application 

forms. As to independent directorship 

nominees, both incumbent and new 

nominees, the Banks must deliver the 

names and contemporaneously executed 

director application forms of the 

nominees to the FHFA for its review 

and comment before the names of any 

such nominees can be placed on ballots. 

The FHFA intends to review the 

information submitted and, whenever it 

has comments that might aid a Bank, 

make comments to the Bank’s board of 

directors about how any nominee’s 

qualifications might serve the needs of 

the Bank. 

G. Election Process: Section 1261.7 

1. Ballots 

Similar to the current election process 

conducted by the Banks, the interim 

final rule requires each Bank to prepare 

a ballot for each voting state. A Bank 

may not deliver ballots until after the 

FHFA has commented on the 

independent director nominees. 

Independent director nominees are 

elected on a district-wide basis, so all 

states in the district will be voting states 

in each annual election. The FHFA 

contemplates that ballots will differ 

from state to state, because a Bank likely 

will not include on the ballots in one 

state the member director nominees for 

the other states in its district. The 

ballots must include a closing date for 

voting, which may not be sooner than 

30 days after the ballots are delivered. 

The ballots must contain the type of 

minimum information on member 

directorship nominees required in 

section 915.8 of the FHFB rule. As to 

independent directorship nominees, the 

ballots must include information about 

their qualifications for the type of 

directorship for which they are 

nominated. All nominees must be listed 

alphabetically and separately for each 

type of directorship for which the 

election is being held. A Bank may 

include additional information it deems 

appropriate, including a description of 

the skills and experience of the member 

director nominees. If, pursuant to 

section 1261.9, a Bank has conducted an 

assessment of the skills and experience 

it needs on its board of directors and 

included that information in its notice 

required in section 1261.6, or 

subsequently has revised that 

assessment, the Bank may include a 

statement of the most recent version of 

its assessment with the ballots. The 

interim final rule also requires the 

Banks to include on the ballots a 

statement that write-in candidates are 

not permitted and a statement that the 

Bank will not disclose how any member 

votes its ballot. 

2. Lack of Member Directorship 

Nominees 

In those instances where the number 

of member nominees is not greater than 

the number of member directorships to 

be filled, section 1261.7(c) of the interim 

final rule requires a Bank to declare the 

seats filled by the eligible nominees, 

first filling any guaranteed directorships 

and then any remaining stock 

directorships. If any member 

directorship is not filled, or if the failure 

to fill any directorship would cause the 

number of member directors to be fewer 

than a majority of the directors, then 

such directorship will become vacant on 

January 1 of the following year, and the 

Bank’s board of directors at that time 

may elect an individual to fill the 

vacancy. 

3. Voting 

The interim final rule provides that a 

member’s vote for a nominee is deemed 

a vote in the amount of all the stock that 

the member is required to hold as of the 

record date. A member may not vote 

more than the amount of its required 

stock for any one nominee, no matter 

how many directorships are being filled 

by the election. A member may vote for 

as many nominees as there are 

directorships being filled by the 

election, but a member may vote only 

one time for any one nominee. A 

member may vote at any time up until 

the closing date, by which time it must 

have delivered its ballot to the Bank. 

4. Declaring Results 

Section 1261.7(f) of the interim final 

rule provides that the individual 

receiving the highest number of votes is 

declared the winner of a member 

directorship. If other member 

directorships are being filled, the 

individual receiving the next highest 

number of votes also will be declared a 

winner, and so on down the line. The 

same rule applies to each type of 

independent directorship, except that a 

nominee who receives fewer than 20 

percent of the number of votes eligible 

to be cast may not be declared a winner. 

If, for the last available directorship of 

any type, there is a tie vote, and for an 

independent directorship the tie vote is 

at least 20 percent of the eligible votes, 

then the disinterested members of the 

Bank’s board of directors by majority 

vote will determine the winner. At the 

time of declaring winners and at the 

time any director is seated, a Bank may 

not have any reason to know that such 

director is ineligible to serve. 

The FHFA requests comment on 

whether the rule should continue to 

require that independent directors must 

receive at least a minimum percentage 

of votes cast in order to be elected and, 

if so, what that minimum should be. 

The FHFA believes that receiving at 

least a minimum percentage of votes 

affirms that the candidate is the choice 

of the members, even when the number 

of candidates does not exceed the 

number of directorships to be filled. If 

there is a minimum percentage, should 

it be based on the number of shares 

actually voting or on the number of 

shares eligible to vote? 

5. Report of Election 

Section 1261.7(g) of the interim final 

rule requires each Bank to promptly 

report to its members, each nominee, 

and the FHFA on the results of an 

election. The report must contain the 

number of voting members, the number 

of votes cast, and the number of votes 

received by each nominee. As to each 

member director-elect, the Bank must 

provide the same information required 

in section 915.8(e) or the FHFB rule. As 

to each public interest director, the 

Bank must provide the consumer or 

community interest represented and the 

expiration date of the term of office. For 

each other independent director-elect, 

the Bank must provide the individual’s 

qualifications under section 1261.6(e) 

and the expiration date of the term of 

office. 

6. Failing To Fill All Independent 

Directorships 

If any independent directorship is not 

filled for failure to receive 20 percent of 

the eligible votes, section 1261.7(h) of 

the interim final rule requires a Bank to 

conduct another election for such 

directorship, following the same 


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procedures required for the initial 

election. The Bank must continue 

repeated election procedures until the 

directorship is filled by a vote of 20 

percent of the votes eligible to be voted. 

The eligible votes remain the same for 

each such repeat election. 

H. Section 1261.8 Is Reserved for Future 

Use 

I. Action Affecting Director Elections: 

Section 1261.9 

Section 1261.9(a) of the interim final 

rule continues the authorization to a 

Bank’s board of directors to conduct an 

annual assessment of the skills and 

experience needed on a Bank’s board of 

directors, as provided in section 

915.9(a) of the FHFB rule. If such an 

assessment identifies particular skills or 

experience needed on the board, a Bank 

may inform its members of those needs 

in its notice of elections. 

Section 1261.9(b) of the interim final 

rule authorizes a Bank and any of its 

directors, officers, attorneys, employees, 

and agents, including the Bank’s board 

of directors and Advisory Council, to 

support any individual for nomination 

and election to an independent 

directorship. Such individuals, if acting 

in their personal capacity, are not 

prohibited from supporting the 

nomination or election of any 

individual for a member directorship. 

The distinction between member 

directorships and independent 

directorships is that the Bank’s board of 

directors nominates individuals for 

independent directorships, and support 

of the Bank’s nominees could benefit 

the Bank without discriminating against 

any member. 

Except as allowed under section 

1261.9(a) and (b), no director, officer, 

employee, attorney, or agent of a Bank 

may support or oppose the nomination 

or election of any individual for any 

directorship of the Bank, or take any 

other action to influence the voting for 

or against any such individual. 

The FHFA seeks comment on whether 

it is appropriate to distinguish between 

member and independent directors 

when establishing prohibitions on 

actions that might influence others with 

respect to any director. Comment also is 

sought on whether there are other issues 

that the FHFA should address in this 

section. 

J. Independent Director Conflict of 

Interests: Section 1261.10 

Section 7(a) of the Bank Act prohibits 

an independent director from serving as 

an officer of any Bank and from serving 

as a director, officer, or employee of any 

member of the Bank on whose board the 

director sits, or of any recipient of any 

advances from that Bank. Section 

1261.10 of the interim final rule sets 

forth this prohibition and requires any 

nominee for, and incumbent holding, an 

independent directorship to disclose 

such interests. Positions held in a 

holding company that controls any 

member or any recipient of advances, 

are attributed to any member or 

recipient of advances if the assets of all 

members or recipients of advances 

under the control of the holding 

company equal at least 35 percent of the 

assets of the holding company. Positions 

in any other subsidiary or affiliate of the 

holding company are not attributed to 

the member or recipient of advances. 

Positions held by an individual’s spouse 

are attributed to the individual. 

The FHA seeks comment on whether 

the holding company attribution rule 

should be set at a number other than 35 

percent. 

K. Conflict of Interests Policy for Bank 

Directors: Section 1261.11 

Section 1261.11(a) of the interim final 

rule revises and restates the requirement 

in section 915.11 of the FHFB rule that 

Banks adopt a conflicts of interest 

policy to apply to the members of their 

boards of directors. The rule sets forth 

the minimum contents of such a policy. 

One requirement is that the policy must 

require the board of directors to 

administer the affairs of the Bank fairly 

and impartially, without discriminating 

in favor of or against any member. The 

rule does not address nonmember 

borrowers specifically, but the absence 

of any reference to nonmember 

borrowers does not prohibit a Bank from 

addressing conflicts of interests with 

respect to nonmember borrowers. 

Section 1261.11(b) of the interim final 

rule requires any director of a Bank to 

disclose fully to the board of directors 

of the Bank any financial interest that 

the director or any immediate family 

member or business associate has in any 

business matter or proposed business 

matter involving the Bank and to refrain 

from any action in connection with the 

matter. Section 1261.11(c) requires 

directors to maintain the confidentiality 

of confidential information obtained by 

serving as a director and to refrain from 

using that information for personal 

benefit. 

Section 1261.11(d) of the interim final 

rule prohibits the acceptance of gifts to 

influence the director’s actions as a 

member of the board of directors of a 

Bank. A director may not accept a gift, 

no matter the value, if the director 

believes, or would have reason to 

believe, that the gift is given with the 

intent to influence the director’s actions. 

A director may not accept a gift, no 

matter the value, if acceptance would 

have the appearance of the donor’s 

intent to influence the director’s actions. 

Although the prohibition does not 

prohibit other gifts, the absence of a 

specific prohibition does not prohibit a 

Bank from addressing other situations in 

its conflict of interest policy. 

Section 1261.11(e) of the interim final 

rule prohibits a director from accepting 

compensation for service on the board 

of a Bank from any source other than the 

Bank. This prohibition does not prohibit 

any director who is a salaried employee 

from continuing to receive a salary even 

when the time that the director devotes 

to the Bank would otherwise be time 

devoted to the employer. 

L. Reporting Requirements for Bank 

Directors: Section 1261.12 

Pursuant to section 1261.12(a) of the 

interim final rule, each sitting director 

is required to execute an annual 

eligibility certification form applicable 

to the directorship held by the director. 

The form, prescribed by the FHFA for 

the purpose of identifying any changes 

since a prior eligibility review, must be 

executed and delivered to the Bank, and 

the Bank must deliver a copy to the 

FHFA. 

Section 1261.12(b) of the interim final 

rule requires any sitting director of a 

Bank who believes or has reason to 

believe that s/he no longer meets the 

statutory or regulatory eligibility 

requirements to notify promptly both 

the Bank and the FHFA. Likewise, any 

Bank that believes or has reason to 

believe that any of its directors no 

longer meets the eligibility requirements 

must notify the FHFA promptly. 

M. Ineligible Bank Directors: Section 

1261.13 

Section 7(f) of the Bank Act, prior to 

the amendments made by the Act, 

provided that an appointive 

directorship would become vacant 

whenever the director holding that 

directorship failed to meet the eligibility 

requirements set forth in the Bank Act, 

but the director could continue to serve 

until replaced. The amendments to 

section 7(f) now require that all 

directors who fail to meet their statutory 

eligibility requirements immediately 

must vacate their offices. Section 

1261.13 of the interim final rule applies 

these results whenever the FHFA or a 

director’s Bank makes a determination 

that the director has failed to meet any 

eligibility requirement set forth in the 

Bank Act or in part 1261 or has failed 

to comply with the reporting 

requirements in section 1261.12 of the 

interim final rule. Section 1261.13 also 


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requires a Bank to notify the FHFA 

promptly after it has made such a 

determination. 

N. Vacant Bank Directorships: Section 

1261.14 

Section 1261.14(a) of the interim final 

rule implements the requirements in 

section 7(f) of the Bank Act that any 

individual who fills a vacancy on the 

board of a Bank be elected by a majority 

vote of the remaining directors. 

Section 1261.14(b) of the interim final 

rule requires the board of directors of a 

Bank to fill any vacancy with an 

individual who meets the eligibility and 

qualification requirements applicable to 

any individual who was the predecessor 

in that position; however, if a Bank 

continues to have at least two public 

interest directors, the board of directors 

of the Bank may fill the vacant 

directorship with an individual who 

meets the eligibility and qualification 

requirements for any independent 

directorship. The eligibility 

requirements for both member and 

independent directors are set forth in 

section 1261.4 of the interim final rule. 

The eligibility requirements for 

independent public interest directors 

and for other independent directors are 

the same. The qualification 

requirements for independent public 

interest directors and for other 

independent directors are set forth in 

section 1261.6 of the interim final rule. 

The Bank must verify eligibility before 

allowing any director elected by the 

board to assume office, and the Bank 

must deliver the individual’s 

application form to the FHFA for review 

and comment before the individual is 

allowed to assume office. 

Section 1261.14(c) of the interim final 

rule requires a Bank to provide a notice 

to the FHFA and to each member of the 

Bank that includes specified 

information about any individual who 

has been elected by the directors of the 

Bank. 

O. Minimum Number of Member 

Directorships: Section 1261.15 

Section 1261.15 designates the 

grandfathered directorships that apply 

at the present time to the 12 Banks. The 

section also provides that the 

grandfathering of directorships for any 

two or more Banks that merge does not 

apply to those Banks that are a part of 

the merger, as required by an 

amendment to section 7(c) of the Bank 

Act. 

P. 2008 Temporary Schedule for 

Election of Directors: Section 1261.16 

Section 1261.16 of the interim final 

rule requires each Bank to set a 

reasonable schedule for the nomination 

and election of directors in 2008 only. 

This temporary director election 

schedule will cease to be effective after 

December 31, 2008. 

III. Notice and Public Participation 

The notice and comment procedure 

required by the Administrative 

Procedure Act is inapplicable to this 

interim final rule because it is in the 

public interest to implement the 

requirements of the Act as soon as it is 

practicable to do so: The Banks need to 

conduct elections and install directors 

in compliance with the new law by 

January 1, 2009, when a number of 

terms of existing directors expire. See 5 

U.S.C. 553(b)(3)(B). However, because 

the FHFA believes that public 

comments are valuable, it encourages 

comments on this interim final rule, and 

will consider all comments received on 

or before November 25, 2008 in 

promulgating a final rule. 

IV. Effective Date 

For the reasons stated in part III 

above, the FHFA for good cause finds 

that the interim final rule should 

become effective on September 26, 

2008. See 5 U.S.C. 553(d)(3). 

V. Paperwork Reduction Act 

The interim final rule will have no 

substantive effect on any collection of 

information covered by the Paperwork 

Reduction Act of 1995 (PRA). See 44 

U.S.C. 3501 et seq. Therefore, the FHFA 

has not submitted this interim final rule 

to the Office of Management and Budget 

(OMB) for review. The Finance Board 

used application forms to collect 

information on prospective appointive 

directors, and those forms had been 

assigned control number 3069–0002 by 

the OMB. The FHFA will direct the 

Banks to use those forms, which will be 

amended as appropriate but the changes 

to the forms will not materially modify 

the approved information collection. 

Consequently, the FHFA has not 

submitted any information to OMB for 

review under the PRA. 

VI. Regulatory Flexibility Act 

The FHFA is adopting this regulation 

in the form of an interim final rule and 

not as a proposed rule. Therefore, the 

provisions of the Regulatory Flexibility 

Act do not apply. See 5 U.S.C. 601(2) 

and 603(a). 

List of Subjects in 12 CFR Parts 915 and 

1261 

Banks, Banking, Conflicts of interest, 

Elections, Ethical conduct, Federal 

home loan banks, Financial disclosure, 

Reporting and recordkeeping 

requirements. 

■ For the reasons stated in the preamble, 

under the authority of 12 U.S.C. 1319(G) 

and 12 U.S.C. 1426, 1427 and 1432, the 

FHFA proposes to amend chapters IX 

and XII of title 12 of the Code of Federal 

Regulations as follows: 

CHAPTER IX—FEDERAL HOUSING 

FINANCE BOARD 

PART 915—BANK DIRECTOR 

ELIGIBILITY AND ELECTIONS 

■ 1. Remove 12 CFR part 915. 

CHAPTER XII—FEDERAL HOUSING 

FINANCE AGENCY 

■ 2. Add and reserve subchapters A and 

C to 12 CFR Chapter XII. 

■ 3. Add subchapter B to 12 CFR 

chapter XII, and transfer part 1231 to 

subchapter B. 

■ 4. Amend title 12 CFR chapter XII by 

establishing subchapter D to read as 

follows: 

Subchapter D—Federal Home Loan Banks 

■ 5. Add part 1261 to subchapter D to 

read as follows: 

PART 1261—FEDERAL HOME LOAN 

BANK DIRECTOR ELIGIBILITY AND 

ELECTIONS 

Sec. 

1261.1 Definitions. 

1261.2 General provisions. 

1261.3 Designation of member 

directorships. 

1261.4 Director eligibility. 

1261.5 Determination of member votes. 

1261.6 Nominations for member and 

independent directorships. 

1261.7 Election process. 

1261.8 [Reserved]. 

1261.9 Actions affecting director elections. 

1261.10 Independent director conflict of 

interests. 

1261.11 Conflict of interests policy for Bank 

directors. 

1261.12 Reporting requirements for Bank 

directors. 

1261.13 Ineligible Bank directors. 

1261.14 Vacant Bank directorships 

1261.15 Minimum number of member 

directorships. 

1261.16 Temporary rule for 2008 election of 

directors. 

Authority: 12 U.S.C. 1426, 1427, and 1432. 

§ 1261.1 Definitions. 

For purposes of this part: 

Act means the Federal Home Loan 

Bank Act, as amended (12 U.S.C. 1421 

through 1449). 

Bank, written in title case, means a 

Federal Home Loan Bank established 

under section 12 of the Act (12 U.S.C. 

1432). 

Bona fide resident of a Bank district 

means an individual who: 


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(1) Maintains a principal residence in 

the Bank district; or 

(2) If serving as an independent 

director, owns or leases in his or her 

own name a residence in the Bank 

district and is employed in a voting 

state in the Bank district. 

Director means the Director of the 

Federal Housing Finance Agency. 

FHFA means the Federal Housing 

Finance Agency. 

FHFA ID number means the number 

assigned to a member by the FHFA and 

used by the FHFA and the Banks to 

identify a particular member. 

Guaranteed directorship means a 

member directorship that is required by 

section 7(c) of the Act (12 U.S.C 1427(c)) 

to be designated as representing Bank 

members that are located in a particular 

state, other than a stock directorship. 

Independent directorship means a 

directorship, as defined by section 

7(a)(4)(A) of the Act, 12 U.S.C. 

1427(a)(4)(A), that is filled by a plurality 

vote of the members at large by a person 

having the qualifications specified by 

section 7(a)(3)(B)(i) or (ii), 12 U.S.C. 

1427(a)(3)(B)(i) or (ii). 

Member directorship means a 

directorship, as defined by section 

7(a)(4)(A) of the Act, 12 U.S.C. 

1427(a)(4)(A), that is filled by a plurality 

vote of the members located in a 

particular state by a person who is an 

officer or director of a member located 

in that state, and includes guaranteed 

directorships and stock directorships. 

Method of equal proportions means 

the mathematical formula used by the 

FHFA to allocate member directorships 

among the states in a Bank’s district 

based on the relative amounts of Bank 

stock required to be held as of the 

record date by members located in each 

state. 

Public interest director means a 

person serving in a public interest 

directorship. 

Public interest directorship means an 

independent directorship filled by an 

individual with more than four years 

experience representing consumer or 

community interests in banking 

services, credit needs, housing or 

consumer financial protections. 

Record date means December 31 of 

the calendar year immediately 

preceding the election year. 

Stock directorship means a member 

directorship that is designated by the 

FHFA as representing the members 

located in a particular voting state based 

on the amount of Bank stock held 

required to be held by the members in 

that state as of the record date, other 

than a guaranteed directorship. 

Voting state means the District of 

Columbia, Puerto Rico, or the state of 

the United States in which a member’s 

principal place of business, as 

determined in accordance with 12 CFR 

part 925, is located as of the record date. 

The voting state of a member with a 

principal place of business located in 

the U.S. Virgin Islands as of the record 

date is Puerto Rico, and the voting state 

of a member with a principal place of 

business located in American Samoa, 

Guam, or the Commonwealth of the 

Northern Mariana Islands as of the 

record date is Hawaii. 

§ 1261.2 General provisions. 

(a) Board size and composition. 

Annually, the FHFA Director will 

determine the size of the board of 

directors for each Bank and will 

designate at least a majority, but no 

more than 60 percent, of the 

directorships as member directorships 

and the remainder as independent 

directorships. 

(b) Term of directorships. The term of 

office of each directorship commencing 

on or after January 1, 2009 shall be four 

years, except as adjusted pursuant to 

section 7(d) of the Act (12 U.S.C 

1427(d)) to achieve a staggered board, 

and shall commence on January 1 of the 

calendar year so designated by the 

FHFA. 

(c) Annual elections. Each Bank 

annually shall conduct an election the 

purpose of which is to fill all 

directorships designated by the FHFA as 

commencing on January 1 of the 

calendar year immediately following 

such election. Subject to the provisions 

of the Act and in accordance with the 

requirements of this part, the 

disinterested members of the board of 

directors of each Bank, or a committee 

of disinterested directors, shall 

administer and conduct the annual 

election of directors. In so doing, the 

disinterested directors may use Bank 

staff or independent contractors to 

perform ministerial and administrative 

functions concerning the elections 

process. 

(d) Location of members. In 

accordance with section 7(c) of the Act 

(12 U.S.C 1427(c)), for purposes of the 

election of member directors, a member 

is deemed to be located in its voting 

state, unless otherwise designated by 

the Director. 

(e) Dates. If any date specified in this 

part for action by a Bank, or specified 

by a Bank pursuant to this part, falls on 

a Saturday, Sunday, or Federal holiday, 

the relevant time period is deemed to be 

extended to the next calendar day that 

is not a Saturday, Sunday, or Federal 

holiday. 

§ 1261.3 Designation of member 

directorships. 

(a) Determination of voting stock. (1) 

On or before April 10 of each year, each 

Bank shall deliver to the FHFA a capital 

stock report that indicates, as of the 

record date, the number of members 

located in each voting state in the 

Bank’s district, the number of shares of 

Bank stock that each member (identified 

by its FHFA ID number) was required to 

hold, and the number of shares of Bank 

stock that all members located in each 

voting state were required to hold. If a 

Bank has issued more than one class of 

stock, it shall report the total shares of 

stock of all classes required to be held 

by the members. The Bank shall certify 

to the FHFA that, to the best of its 

knowledge, the information provided in 

the capital stock report is accurate and 

complete, and that it has notified each 

member of its minimum capital stock 

holdings. 

(2) If a Bank’s capital plan was not in 

effect as of the record date, the number 

of shares of Bank stock that any member 

is required to hold as of the record date 

shall be determined in accordance with 

12 CFR 925.20 and 925.22. If a Bank’s 

capital plan was in effect as of the 

record date, the number of shares of 

Bank stock that any member was 

required to hold as of that date shall be 

determined in accordance with the 

minimum investment established by the 

capital plan for that Bank; however, for 

any member whose Bank stock is less 

than the minimum investment during a 

transition period, the amount of Bank 

stock to be reported shall be the number 

of shares of Bank stock actually owned 

by the member as of the record date. 

(b) Designation of member 

directorships as stock directorships. The 

Director annually will conduct a 

designation of member directorships for 

each Bank based on the number of 

shares of Bank stock required to be held 

by the members in each state as of 

December 31 of the preceding calendar 

year, using the method of equal 

proportions. If a Bank has issued more 

than one class of stock, the Director will 

designate the directorships for each 

state in that Bank district based on the 

combined number of shares required to 

be held by the members in that state. 

For purposes of conducting the 

designation, if a Bank’s capital plan was 

not in effect on the immediately 

preceding December 31, the number of 

shares of Bank stock required to be held 

by members as of that date shall be 

determined in accordance with 12 CFR 

925.20 and 925.22. If a Bank’s capital 

plan was in effect on the immediately 

preceding December 31, the number of 

shares of Bank stock required to be held 


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by members as of that date shall be 

determined in accordance with the 

minimum investment established by 

such capital plan; however, for any 

members whose Bank stock is less than 

the minimum investment during a 

transition period, the amount of stock to 

be used in the designation of 

directorships shall be the number of 

shares of Bank stock actually owned by 

those members as of that December 31. 

In all cases, the Director will designate 

the directorships by using the 

information provided by each Bank in 

its capital stock report required by 

paragraph (a)(1) of this section. 

(c) Allocation of directorships. (1) The 

member directorships designated by the 

Director will be allocated among the 

states by the Director in accordance 

with sections 7(b) and (c) of the Act. 

(2) If the designation of directorships 

conducted by the Director under 

paragraph (c)(1) of this section 

eliminates any existing directorship, or 

if the allocation of directorships under 

this paragraph (c) designates any 

existing stock directorship to another 

state, the director elected or appointed 

to that existing directorship shall not be 

eligible to serve after the close of 

business on the immediately following 

December 31. 

(d) Notification. On or before June 1 

of each year, the FHFA will notify each 

Bank in writing of the total number of 

directorships established for the Bank 

and the number of member 

directorships designated as representing 

the members in each voting state in the 

Bank district. If the annual designation 

of member directorships results in an 

existing directorship being redesignated 

as representing members in a different 

state, the directorship shall be deemed 

to become vacant as of December 31 of 

that year, and thereafter shall filled by 

the board of directors of the Bank with 

an eligible person who is an officer or 

director of a member located in the 

newly designated state, regardless of 

whether the term for the incumbent 

director would have expired by that 

date. 

§ 1261.4 Director eligibility. 

(a) Eligibility requirements for 

member directors. Each member 

director, and each nominee to a member 

directorship, shall be: 

(1) A citizen of the United States; and 

(2) An officer or director of a member 

that is located in the voting state to be 

represented by the member directorship, 

that was a member of the Bank as of the 

record date, and that meets all 

minimum capital requirements 

established by its appropriate Federal 

banking agency or appropriate state 

regulator. 

(b) Eligibility requirements for 

independent directors. Each 

independent director, and each nominee 

to an independent directorship, shall be: 

(1) A citizen of the United States; and 

(2) A bona fide resident of the district 

in which the Bank is located. 

(c) Restrictions. (1) A nominee is not 

eligible if he or she: 

(i) Is an incumbent director, unless: 

(A) The incumbent director’s term of 

office would expire before the new term 

of office would begin; and 

(B) The new term of office would not 

be barred by the term limit provision of 

section 7(d) of the Act (12 U.S.C. 

1427(d)); or 

(ii) Is a former director whose service 

would be barred by the term limit 

provision of section 7(d) of the Act. 

(2) For purposes of applying the term 

limit provision of section 7(d) of the Act 

(12 U.S.C. 1427(d)): 

(i) A term of office that is adjusted 

after July 30, 2008 to a period of fewer 

than four years shall not be deemed to 

be a full term; 

(ii) Any three year term of office 

ending immediately before a term of 

office that is adjusted after July 30, 2008 

to a period of fewer than four years and 

any term of office commencing 

immediately following such adjusted 

term of office shall constitute 

consecutive full terms of office; and 

(iii) Any member director’s service 

through election to any directorship 

with a three year term of office existing 

on or before July 30, 2008 shall be 

deemed to be service in a full term 

directorship to which the director has 

been elected. 

(d) Loss of eligibility. (1) A director 

shall become ineligible to remain in 

office if, during his or her term of office, 

the directorship to which he or she has 

been elected is eliminated or, with 

respect to a member directorship, is 

redesignated by the FHFA as 

representing members located in 

another state, in accordance with 

§ 1261.3(c)(2). The incumbent director 

shall become ineligible after the close of 

business on December 31 of the year in 

which the directorship is redesignated 

or eliminated. Any directorship ceasing 

through elimination or redesignation 

shall not be deemed to be a full-term 

directorship for purposes of the section. 

(2) In the case of a redesignation to 

another state, the redesignated 

directorship shall be filled by a majority 

vote of the remaining Bank directors, 

sitting as a board, regardless of whether 

the remaining directors constitute a 

quorum of the board. 

§ 1261.5 Determination of member votes. 

(a) In general. Each Bank shall 

determine, in accordance with this 

section, the number of votes that each 

member of the Bank may cast for each 

directorship that is to be filled by the 

vote of the members. 

(b) Number of votes. For each member 

directorship and each independent 

directorship that is to be filled in an 

election, each member shall be entitled 

to cast one vote for each share of Bank 

stock that the member was required to 

hold as of the record date. 

Notwithstanding the preceding 

sentence, the number of votes that any 

member may cast for any one 

directorship shall not exceed the 

average number of shares of Bank stock 

required to be held as of the record date 

by all members located in the same state 

as of the record date. If a Bank has 

issued more than one class of stock, it 

shall calculate the average number of 

shares separately for each class of stock, 

using the total number of members in a 

state as the denominator, and shall 

apply those limits separately in 

determining the maximum number of 

votes that any member owning that class 

of stock may cast in the election. If a 

Bank’s capital plan was not in effect as 

of the record date, the number of shares 

of Bank stock that a member was 

required to hold as of the record date 

shall be determined in accordance with 

12 CFR 925.20 and 925.22. If a Bank’s 

capital plan was in effect as of the 

record date, the number of shares of 

Bank stock that a member was required 

to hold as of the record date shall be 

determined in accordance with the 

minimum investment requirement 

established by the Bank’s capital plan; 

however, for any member whose Bank 

stock is less than the minimum 

investment during a transition period, 

the amount of Bank stock to be used 

shall be the number of shares of Bank 

stock actually owned by the member as 

of the record date. 

(c) Voting preferences. If the board of 

directors of a Bank includes any voting 

preferences as part of its approved 

capital plan, those preferences shall 

supersede the provisions of paragraph 

(b) of this section that otherwise would 

allow a member to cast one vote for each 

share of Bank stock it was required to 

hold as of the record date. If a Bank 

establishes a voting preference for a 

class of stock, the members with voting 

rights shall remain subject to the 

provisions of section 7(b) of the Act (12 

U.S.C. 1427(b)) that prohibit any 

member from casting any vote in excess 

of the average number of shares of stock 


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required to be held by all members in 

its state. 

§ 1261.6 Nominations for member and 

independent directorships. 

(a) Election announcement. Within a 

reasonable time in advance of an 

election, a Bank shall notify each 

member in its district of the 

commencement of the election process. 

Such notice shall include: 

(1) The number of member 

directorships designated for each voting 

state in the Bank district and the 

number of independent directorships 

for the Bank; 

(2) The name of each incumbent Bank 

director, the name and location of the 

member at which each member director 

serves, and the name and location of the 

organization with which each 

independent director is affiliated, if any, 

and the expiration date of each Bank 

director’s term of office; 

(3) A brief statement describing the 

skills and experience the Bank believes 

are most likely to add strength to the 

board of directors, provided that the 

Bank previously has conducted the 

annual assessment permitted by 

§ 1261.9 and the Bank has elected to 

provide the results of the assessment to 

the members; 

(4) An attachment indicating the 

name, location, and FHFA ID number of 

every member in the member’s voting 

state, and the number of votes each such 

member may cast for each directorship 

to be filled by such members, as 

determined in accordance with § 1261.5; 

and 

(5) A nominating certificate. 

(b) Member directorship nominations. 

(1) Any member that is entitled to vote 

in the election may nominate an eligible 

individual to fill each available member 

directorship for its voting state by 

delivering to its Bank, prior to a 

deadline to be established by the Bank 

and set forth in the notice required in 

paragraph (a) of this section, a 

nominating certificate duly adopted by 

the member’s governing body or by an 

individual authorized by the member’s 

governing body to act on its behalf. 

(2) The nominating certificate shall 

include the name of the nominee and 

the name, location, and FHFA ID 

number of the member the nominee 

serves as an officer or director. 

(3) The Bank shall establish a 

deadline for delivery of nominating 

certificates, which shall be no earlier 

than 30 calendar days after the date on 

which the Bank delivers the notice 

required by paragraph (a) of this section, 

and the Bank shall not accept 

certificates received after that deadline. 

The Bank shall retain all accepted 

nominating certificates for at least two 

years after the date of the election. 

(c) Accepting member directorship 

nominations. A Bank shall notify in 

writing any person nominated for a 

member directorship promptly upon 

receipt of the nominating certificate. A 

person may accept the nomination only 

by delivering to the Bank, prior to a 

deadline established by the Bank and 

set forth in its notice, an executed 

director eligibility certification form 

prescribed by the FHFA. A Bank shall 

allow each nominee at least 30 calendar 

days after the date the Bank delivered 

the notice of nomination within which 

to deliver the executed form. A nominee 

may decline the nomination by so 

advising the Bank in writing, or by 

failing to deliver a properly executed 

director eligibility certification form 

prior to the deadline. Each Bank shall 

retain all information received under 

this paragraph for at least two years after 

the date of the election. 

(d) Independent directorship 

nominations. (1) Any individual who 

seeks to be an independent director of 

the board of directors of a Bank may 

deliver to the Bank, on or before the 

deadline set by the Bank for delivery of 

nominating certificates, an executed 

independent director application form 

prescribed by the FHFA that 

demonstrates that the individual both is 

eligible and has either of the following 

qualifications: 

(i) More than four years experience 

representing consumer or community 

interests in banking services, credit 

needs, housing, or consumer financial 

protections; or 

(ii) Knowledge of or experience in one 

or more of the areas set forth in 

paragraph (e) of this section. 

(2) Any other interested party may 

recommend to the Bank that it consider 

a particular individual as a nominee for 

an independent directorship, but the 

Bank shall not nominate any individual 

unless the individual has delivered to 

the Bank, on or before the date the Bank 

has set for delivery of nominating 

certificates, an executed independent 

director application form prescribed by 

the FHFA. The application form 

prescribed by the FHFA will provide a 

means by which an individual can 

indicate an intent to be considered for 

a public interest directorship. Only 

individuals who indicate on the form 

that they wish to be considered for a 

public interest directorship may be 

nominated for such directorships. The 

board of directors of the Bank may 

consider any individual for any 

independent directorship nomination, 

provided it has determined that the 

individual is eligible and qualified. The 

board of directors of the Bank shall 

consult with the Bank’s Advisory 

Council before nominating any 

individual for any independent 

directorship. Each Bank shall include in 

its bylaws the procedures it intends to 

use for the nomination and election of 

the independent directors, and shall 

retain all information received under 

this paragraph for at least two years after 

the date of the election. 

(3) Each Bank shall determine the 

number of public interest directorships 

to be included among its authorized 

independent directorships, provided 

that each Bank shall at all times have at 

least two such directorships, and shall 

announce that number to its members in 

the notice required by paragraph (a) of 

this section. In submitting nominations 

to its members, each Bank shall 

nominate at least as many individuals as 

there are independent directorships to 

be filled in that year’s election. 

(e) Independent director 

qualifications. Any independent 

director or nominee for an independent 

directorship, other than a public interest 

director, shall submit to the Bank an 

independent director application form 

that includes information demonstrating 

how that person satisfies the 

requirement that he or she have 

experience in, or knowledge of, one or 

more of the following areas: Auditing 

and accounting; derivatives; financial 

management; organizational 

management; project development; risk 

management practices; and the law. In 

considering the qualifications of each 

such nominee for an independent 

directorship, the board of directors of a 

Bank shall consider that the nominee’s 

knowledge or experience musts be 

commensurate with that needed to 

oversee a financial institution with a 

size and complexity that is comparable 

to that of the Bank. 

(f) Eligibility verification. Using the 

information provided on the director 

eligibility certification forms and on the 

independent director application forms 

prescribed by the FHFA, a Bank shall 

verify that each nominee for each 

member directorship and independent 

directorship meets all of the eligibility 

requirements for such directorship, as 

set forth in the Act and this part. Before 

announcing any independent director 

nominee, the Bank shall deliver to the 

FHFA a copy of the independent 

director application forms executed by 

the individuals proposed to be 

nominated for independent 

directorships by the board of directors 

of the Bank. 


sroberts on PROD1PC70 with RULES
Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 55719 

§ 1261.7 Election process. 

(a) Ballots. Promptly after verifying 

the eligibility of all nominees in 

accordance with with § 1261.6(f), and if, 

within two weeks of the delivery of 

nominee application forms to the FHFA, 

the FHFA has not informed a Bank of 

any objection to the nomination of any 

independent director nominee, a Bank 

shall prepare and deliver a ballot to all 

members that were members as of the 

record date. The Bank shall include 

with each ballot a closing date for the 

Bank’s receipt of voted ballots, which 

date shall be no earlier than 30 calendar 

days after the date such ballot is 

delivered to the member. 

(1) A ballot shall include at least the 

following provisions: 

(i) For states in which one or more 

member directorships are to be filled in 

the election, an alphabetical listing of 

the names of each nominee for such 

directorship, the name, location, and 

FHFA ID number of the member each 

nominee serves, the nominee’s title or 

position with the member, and the 

number of member directorships to be 

filled by the members in that voting 

state in the election; 

(ii) An alphabetical listing of the 

names of each nominee for a public 

interest directorship and a brief 

description of each nominee’s 

experience representing consumer and 

community interests; 

(iii) An alphabetical listing of the 

names nominee for the other 

independent directorships and a brief 

description of each nominee’s 

qualifications, including his or her 

knowledge or experience in the areas of 

financial management, auditing and 

accounting, risk management practices, 

derivatives, project development, 

organizational management and any 

other area of knowledge or experience 

set forth in § 1261.6(e); 

(iv) A statement that write-in 

candidates are not permitted; and 

(v) A confidentiality statement 

prohibiting the Banks from disclosing 

how a member voted. 

(2) At the election of the Bank, a 

ballot also may include, in the body or 

as an attachment, a brief description of 

the skills and experience of each 

nominee for a member directorship. 

(b) Statement on skills and 

experience. If a Bank has conducted an 

annual assessment permitted by 

§ 1261.9 and has included the results of 

the assessment as part of the notice to 

members required in § 1261.6(a), it may 

include with each ballot a statement of 

the results of that assessment or any 

subsequent assessment. If the statement 

differs from the statement provided 

under § 1261.6(a)(3), the Bank also shall 

include an explanation of why the 

statements differ. 

(c) Lack of member directorship 

nominees. If, for any voting state, the 

number of nominees for the member 

directorships for that state is equal to or 

fewer than the number of such 

directorships to be filled in that year’s 

election, the Bank shall deliver a notice 

to the members in the affected voting 

state (in lieu of providing a ballot) that 

such nominees shall be deemed elected 

without further action, due to a lack of 

nominees. Thereafter, the Bank shall 

declare elected all eligible nominees 

and in doing so may designate 

particular nominees to guaranteed 

directorships or stock directorships, 

respectively, if necessary. The directors 

declared elected shall be included as 

directors-elect in the report of election 

required under paragraph (g) of this 

section. Any member directorship that 

is not filled due to a lack of nominees 

shall be deemed vacant as of January 1 

of the following year and shall be filled 

by the Bank’s board of directors in 

accordance with § 1261.14(a). 

(d) Voting. For each directorship to be 

filled, a member may cast the number of 

votes determined by the Bank pursuant 

to § 1261.5. A member may not split its 

votes among multiple nominees for a 

single directorship, and, where there are 

multiple directorships to be filled, 

either within the member’s voting state 

or at large, in the case of independent 

directorships, a member may not 

cumulatively vote for a single nominee. 

If any member votes, it shall by 

resolution of its governing body either 

authorize the voting for specific 

nominees or delegate to an individual 

the authority to vote for specific 

nominees. To vote, a member shall: 

(1) Mark on the ballot the name of not 

more than one of the nominees for each 

directorship to be filled. Each nominee 

so selected shall receive all of the votes 

that the member is entitled to cast. 

(2) Execute and deliver the ballot to 

the Bank on or before the closing date. 

A Bank shall not allow a member to 

change a ballot after it has been 

delivered to the Bank. 

(e) Counting ballots. A Bank shall not 

review any ballot until after the closing 

date, and shall not include in the 

election results any ballot received after 

the closing date. Promptly after the 

closing date, each Bank shall tabulate 

the votes cast in the election: for the 

member directorships, the Bank shall 

tabulate votes by each voting state; for 

the independent directorships, the Bank 

shall tabulate votes for the district atlarge. Any ballots cast in violation of 

paragraph (d) of this section shall be 

void. 

(f) Declaring results. (1) For a member 

directorship, the Bank shall declare 

elected the nominee receiving the 

highest number of votes. If more than 

one member directorship is to be filled 

for a particular state, the Bank shall 

declare elected each successive nominee 

receiving the next highest number of 

votes until all such open directorships 

are filled. 

(2) For an independent directorship, 

the Bank shall declare elected the 

nominee that has received the highest 

number of votes and has received at 

least 20 per cent of the number of votes 

eligible to be cast in the election. If more 

than one independent directorship is to 

be filled, the Bank shall declare elected 

each successive nominee receiving the 

next highest number of votes for such 

directorship until all such open 

directorships are filled, provided such 

successive nominee has received at least 

20 per cent of the number of votes 

eligible to be cast in the election. 

(3) In the event of a tie for the last 

available directorship, the disinterested 

incumbent members of the board of 

directors of the Bank, by a majority vote, 

shall declare elected one of the 

nominees for whom the number of votes 

cast was tied. 

(4) A Bank shall not declare elected a 

nominee that it has reason to know is 

ineligible to serve, nor shall it seat a 

director-elect that it has reason to know 

is ineligible to serve. 

(5) The Bank shall retain all ballots it 

receives for at least two years after the 

date of the election, and shall not 

disclose how any member voted. 

(g) Report of election. Promptly 

following the election, each Bank shall 

deliver a notice to its members, to each 

nominee, and to the FHFA that contains 

the following information: 

(1) For each member directorship, the 

name of the director-elect, the name and 

location of the member at which he or 

she serves, his or her title or position at 

the member, the voting state 

represented, the expiration date of the 

term of office, and the number of votes 

cast for each nominee; 

(2) For each independent 

directorship, the name of the directorelect, whether the director-elect will fill 

a public interest directorship and, if so, 

the consumer or community interest 

represented by such directorship, any 

qualifications under § 1261.6(e), the 

expiration date of the term of office and 

the number of votes cast for each 

nominee; 

(3) The number of members voting in 

the election and the total number of 

votes cast for each nominee for the 

member directorships, which shall be 

reported by state, and the total number 


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55720 Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 

of votes cast for each nominee for the 

independent directorships, which shall 

be reported for the district at large. 

(h) Failing to fill all independent 

directorships. If any independent 

directorship of a Bank is not filled 

through the initial election process set 

forth in this section, the board of 

directors of the Bank shall identify 

additional nominee and shall conduct 

additional election for the directorship, 

following the election process set forth 

in this section. In any such election a 

nominee shall not be elected unless he 

or she receives at least 20 percent of the 

votes eligible to be cast. 

§ 1261.8 [Reserved]. 

§ 1261.9 Action affecting director 

elections. 

(a) Banks. Each Bank, acting through 

its board of directors, may conduct an 

annual assessment of the skills and 

experience possessed by the members of 

its board of directors as a whole and 

may determine whether the capabilities 

of the board would be enhanced through 

the addition of individuals with 

particular skills and experience. If the 

board of directors determines that the 

Bank could benefit by the addition to 

the board of directors of individuals 

with particular qualifications, such as 

auditing and accounting, derivatives, 

financial management, organizational 

management, project development, risk 

management practices, or the law , it 

may identify those qualifications and so 

inform the members as part of its 

announcement of elections pursuant to 

§ 1261.6(a). 

(b) Support for nomination or 

election. (1) A Bank director, officer, 

attorney, employee, or agent, acting in 

his or her personal capacity, may 

support the nomination or election of 

any individual for a member 

directorship, provided that no such 

director may purport to represent the 

views of the Bank or its board of 

directors in doing so. 

(2) Notwithstanding paragraph (b)(1) 

of this section, a Bank director, officer, 

attorney, employee or agent and the 

board of directors and Advisory Council 

of a Bank may support the candidacy of 

any person nominated by the board of 

directors for election to an independent 

directorship. 

(c) Prohibition. Except as provided in 

paragraphs (a) and (b) of this section, no 

director, officer, attorney, employee, or 

agent of a Bank may: 

(1) Communicate in any manner that 

a director, officer, attorney, employee, 

or agent of a Bank, directly or indirectly, 

supports or opposes the nomination or 

election of a particular individual for a 

directorship; or 

(2) Take any other action to influence 

the voting with respect to any particular 

individual. 

§ 1261.10 Independent director conflict of 

interests. 

(a) Employment interests. During any 

independent director’s term of service, 

such director may not serve as an 

officer, employee, or director of any 

member of the Bank on whose board the 

individual sits, or of any recipient of 

advances from such Bank, and may not 

serve as an officer of any Bank. An 

independent director or nominee for 

any independent directorship shall 

disclose all such interests to the Bank 

on whose board of directors the 

individual serves or which is 

considering the individual for 

nomination to its board of directors. 

(b) Holding companies. Service as an 

officer, employee, or director of a 

holding company that controls one or 

more members of, or one or more 

recipients of advances from, any Bank is 

not deemed to be service as an officer, 

employee or director of a member or 

recipient of advances if the assets of all 

such members or all such recipients of 

advances constitute less than 35 percent 

of the assets of the holding company, on 

a consolidated basis. 

(c) Attribution. For purposes of 

determining compliance with this 

section, a Bank shall attribute to the 

independent director any officer 

position, employee position, or 

directorship of the director’s spouse. 

§ 1261.11 Conflict of interests policy for 

Bank directors. 

(a) Adoption of conflict of interests 

policy. Each Bank shall adopt a written 

conflict of interests policy that applies 

to all members of its board of directors. 

At a minimum, the conflict of interests 

policy of each Bank shall: 

(1) Require the directors to administer 

the affairs of the Bank fairly and 

impartially and without discrimination 

in favor of or against any member; 

(2) Require independent directors to 

comply with § 1261.10(a); 

(3) Prohibit the use of a director’s 

official position for personal gain; 

(4) Require directors to disclose actual 

or apparent conflicts of interest and 

establish procedures for addressing such 

conflicts; 

(5) Provide internal controls to ensure 

that reports are filed and that conflicts 

are disclosed and resolved; and 

(6) Establish procedures to monitor 

compliance with the conflict of interests 

policy. 

(b) Disclosure and recusal. A director 

shall disclose to the Bank’s board of 

directors any financial interests he or 

she has, as well as any financial 

interests known to the director of any 

immediate family member or business 

associate of the director, in any matter 

to be considered by the Bank’s board of 

directors and in any other business 

matter or proposed business matter 

involving the Bank and any other 

person or entity. A director shall 

disclose fully the nature of his or her 

interests in the matter and shall provide 

to the Bank’s board of directors any 

information requested to aid in its 

consideration of the director’s interest. 

A director shall refrain from considering 

or voting on any issue in which the 

director, any immediate family member, 

or any business associate has any 

financial interest. 

(c) Confidential Information. Directors 

shall not disclose or use confidential 

information they receive solely by 

reason of their position with the Bank 

to obtain any benefit for themselves or 

for any other individual or entity. 

(d) Gifts. Directors shall not accept, 

and shall discourage their immediate 

family members from accepting, any gift 

that the director believes or has reason 

to believe is given with the intent to 

influence the director’s actions as a 

member of the Bank’s board of directors, 

or where acceptance of such gift would 

have the appearance of intending to 

influence the director’s actions as a 

member of the board. 

(e) Compensation. Directors shall not 

accept compensation for services 

performed for the Bank from any source 

other than the Bank for which the 

services are performed. 

(f) Definitions. For purposes of this 

section: 

(1) Immediate family member means 

parent, sibling, spouse, child, or 

dependent, or any relative sharing the 

same residence as the director. 

(2) Financial interest means a direct 

or indirect financial interest in any 

activity, transaction, property, or 

relationship that involves receiving or 

providing something of monetary value, 

and includes, but is not limited to any 

right, contractual or otherwise, to the 

payment of money, whether contingent 

or fixed. It does not include a deposit or 

savings account maintained with a 

member, nor does it include a loan or 

extension of credit obtained from a 

member in the normal course of 

business on terms that are available 

generally to the public. 

(3) Business associate means any 

individual or entity with whom a 

director has a business relationship, 

including, but not limited to: 

(i) Any corporation or organization of 

which the director is an officer or 

partner, or in which the director 


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Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 55721 

beneficially owns ten percent or more of 

any class of equity security, including 

subordinated debt; 

(ii) Any other partner, officer, or 

beneficial owner of ten percent or more 

of any class of equity security, including 

subordinated debt, of any such 

corporation or organization; and 

(iii) Any trust or other estate in which 

a director has a substantial beneficial 

interest or as to which the director 

serves as trustee or in a similar fiduciary 

capacity. 

§ 1261.12 Reporting requirements for Bank 

directors. 

(a) Annual reporting. Annually, each 

Bank shall require each of its directors 

to execute and deliver to the Bank the 

appropriate director eligibility 

certification form prescribed by the 

FHFA for the type of directorship held 

by such director. The Bank promptly 

shall deliver to the FHFA a copy of the 

certification form delivered to it by each 

director. 

(b) Report of noncompliance. At any 

time that any director believes or has 

reason to believe that he or she no 

longer meets the eligibility requirements 

set forth in the Act or this part, the 

director promptly shall so notify the 

Bank and the FHFA in writing. At any 

time that a Bank believes or has reason 

to believe that any director no longer 

meets the eligibility requirements set 

forth in the Act or this part, the Bank 

promptly shall notify the FHFA in 

writing. 

§ 1261.13 Ineligible Bank directors. 

Upon a determination by the FHFA or 

a Bank that any director of the Bank no 

longer satisfies the eligibility 

requirements set forth in the Act or this 

part, or has failed to comply with the 

reporting requirements of § 1261.12, the 

directorship shall immediately become 

vacant. Any director that is determined 

to have failed to comply with the 

eligibility or reporting requirements 

shall not continue to serve as a Bank 

director. Whenever a Bank makes such 

a determination, the Bank promptly 

shall notify the Bank director and the 

FHFA in writing. 

§ 1261.14 Vacant Bank directorships. 

(a) Filling unexpired terms. As soon as 

practicable after any vacancy occurs, the 

board of directors of a Bank shall elect, 

by a majority vote of the remaining Bank 

directors sitting as a board, an 

individual to fill the unexpired term of 

office of the vacant directorship, 

regardless of whether the remaining 

Bank directors constitute a quorum of 

the Bank’s board of directors. 

(b) Verifying eligibility. The board of 

directors of a Bank shall elect to a 

vacant directorship an individual who 

satisfies all of the eligibility 

requirements and any of the 

qualification requirements set forth in 

the Act and this part that were 

applicable to his or her predecessor, 

except that if the vacant directorship is 

a public interest directorship and the 

Bank has at least two other public 

interest directorships that are not 

vacant, the board of directors of the 

Bank may elect any individual who is 

eligible and qualified for any 

independent directorship. The Bank 

shall obtain an executed director 

eligibility certification form prescribed 

by the FHFA from the individual filling 

a member directorship. The Bank shall 

obtain an executed independent director 

application form prescribed by the 

FHFA from the individual filling an 

independent directorship. The Bank 

shall verify the individual’s eligibility 

and shall deliver any independent 

director application form to the FHFA 

for its review and comment before 

allowing the individual to assume the 

directorship. The Bank shall retain the 

information it receives in accordance 

with § 1261.6. 

(c) Notification. Promptly after 

allowing the individual to assume the 

directorship, as provided in paragraph 

(b) of this section, a Bank shall notify 

the FHFA and each member located in 

the Bank’s district in writing of the 

following: 

(1) For each member directorship 

filled by the board of a Bank, the name 

of the director, the name, location, and 

FHFA ID number of the member the 

director serves, the director’s title or 

position with the member, the voting 

state that the director represents, and 

the expiration date of the director’s term 

of office; and 

(2) For each independent directorship 

filled by the board of a Bank, the name 

of the director, the name and location of 

the organization with which the director 

is affiliated, if any, the director’s title or 

position with such organization, and the 

expiration date of the director’s term of 

office. 

§ 1261.15 Minimum number of member 

directorships. 

Except with respect to member 

directorships of a Bank resulting from 

the merger of any two or more Banks, 

the number of member directorships 

allocated to each state shall not be less 

than the number of directorships 

allocated to that state on December 31, 

1960. The following list sets forth the 

states whose members held more than 

one directorship on December 31, 1960: 

State 

Number of elective 

directorships on 

December 31, 1960 

California ................... 3 

Colorado ................... 2 

Illinois ........................ 4 

Indiana ...................... 5 

Iowa .......................... 2 

Kansas ...................... 3 

Kentucky ................... 2 

Louisiana .................. 2 

Massachusetts .......... 3 

Michigan ................... 3 

Minnesota ................. 2 

Missouri .................... 2 

New Jersey ............... 4 

New York .................. 4 

Ohio .......................... 4 

Oklahoma ................. 2 

Pennsylvania ............ 6 

Tennessee ................ 2 

Texas ........................ 3 

Wisconsin ................. 4 

§ 1261.16 Temporary rule for 2008 election 

of directors. 

(a) This section applies to the 

scheduling provisions for the election of 

directors of the Banks during calendar 

year 2008. Each Bank shall schedule its 

elections to allow a reasonable time to 

accomplish each act and complete the 

election process by December 31, 2008. 

As described herein, this section 

operates in conjunction with §§ 1261.3, 

1261.6 and 1261.7, which govern 

generally the election of directors. The 

special provisions of this section govern 

the process for the 2008 elections for 

Bank directorships in the case of any 

conflict with the provisions of the other 

sections of this part. 

(b) Each Bank shall notify its members 

of the commencement of the election 

process and shall establish a reasonable 

deadline after delivery of such notice 

within which nominating certificates 

must be received by the Bank, pursuant 

to the requirements of § 1261.6. 

(c) After a Bank has accepted member 

directorship nominations, the Bank 

shall take the actions specified in 

§ 1261.6(c) within a reasonable time. 

(d) No Bank shall accept any 

completed and executed director 

eligibility certification form or any 

independent director application form 

referred to in § 1261.6(c) and (d) beyond 

a reasonable deadline established by the 

Bank. 

(e) Each Bank shall deliver to each of 

its voting members a set of ballot 

materials, pursuant to the requirements 

of § 1261.7(a), and shall establish a 

reasonable period of time for the voting 

of ballots. 

(f) After the closing date established 

by a Bank, the Bank shall commence the 

counting of ballots pursuant to the 

requirements of § 1261.7(e). 


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55722 Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 

(g) Not later than December 31, 2008, 

each Bank shall declare the results of its 

election and report the results, pursuant 

to § 1261.7(f) and (g). 

(h) For any Bank that began a 2008 

elective directorship election process 

after having received the Federal 

Housing Finance Board’s Resolution 

titled 2008 Designation of Federal Home 

Loan Bank Directorships, Resolution 

No. 2008–10 dated May 14, 2008, if the 

number of elective directorships 

designated for election in 2008 in that 

Resolution for any state is the same as, 

or is more than, the number of member 

directorships designated for election in 

the state in 2008 in the Order of the 

FHFA Director dated September 8, 2008, 

then, as to such states to the extent that 

the Bank has completed the election 

process for such directorships in 

accordance with Federal Housing 

Finance Board rules up through and 

including verification of eligibility of 

nominees, the Bank’s election process 

for member directorships shall be 

deemed to be in compliance with 

paragraphs (a), (b), (c) and (d) of this 

section, as applicable. 

(i) This section is effective from 

September 26, 2008 through December 

31, 2008. 

Dated: September 22, 2008. 

James B. Lockhart, III, 

Director, Federal Housing Finance Agency. 

[FR Doc. E8–22659 Filed 9–25–08; 8:45 am] 

BILLING CODE 8070–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 47 

Cape Town Treaty Implementation 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; technical 

amendment. 

SUMMARY: This final rule corrects a 

previously published rule. In the 

original document, an amendment 

inadvertently removed two paragraphs 

relating to the registration of certain 

aircraft. This rule reinstates those two 

paragraphs in their original form. 

DATES: This rule is effective September 

26, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Walter Binkley, Civil Aviation Registry, 

AFS–750, Mike Monroney Aeronautical 

Center, 6500 South MacArthur 

Boulevard, Oklahoma City, OK 73169; 

Telephone (405) 954–3131. 

SUPPLEMENTARY INFORMATION: 

Background 

On January 3, 2005, FAA published a 

final rule revising the regulations 

concerning registering aircraft and 

recording security documents (70 FR 

245). These revisions were required by 

the Cape Town Treaty Implementation 

Act of 2004. The Cape Town Treaty 

established a new International Registry 

for registering interests against certain 

aircraft and aircraft engines. The rule 

also made unrelated technical changes 

to other portions of the regulations. 

One of the technical changes affected 

14 CFR 47.35. The amendment should 

have revised paragraph (a) introductory 

text, in order to revise an outdated 

reference to an Act. However, the entire 

paragraph (a) was inadvertently revised, 

which resulted in the loss of paragraphs 

(a)(1) and (a)(2). The information in 

paragraphs (a)(1) and (a)(2) was still 

necessary and should have remained in 

the section. 

Technical Amendment 

This technical amendment merely 

reinstates paragraphs (a)(1) and (a)(2) to 

14 CFR 47.35. The text of these 

paragraphs remains as it was at the time 

of their inadvertent removal. 

Justification for Immediate Adoption 

Because this action reinstates 

paragraphs that were never intended to 

be removed, the FAA finds that notice 

and public comment under 5 U.S.C. 

553(b) is unnecessary. For the same 

reason, the FAA finds that good cause 

exists under 5 U.S.C. 553(d) for making 

this rule effective upon publication. 

List of Subjects in 14 CFR Part 47 

Aircraft, Reporting and recordkeeping 

requirements. 

The Amendment 

■ In consideration of the foregoing, the 

Federal Aviation Administration 

amends Chapter I of Title 14, Code of 

Federal Regulations, part 47, as follows: 

PART 47–AIRCRAFT REGISTRATION 

■ 1. The authority citation for part 47 

continues to read as follows: 

Authority: 4 U.S.T. 1830; Pub. L. 108–297, 

118 Stat. 1095 (49 U.S.C. 40101 note, 49 

U.S.C. 44101 note); 49 U.S.C. 106(g), 40113– 

40114, 44101–44108, 44110–44113, 44703– 

44704, 44713, 45302, 46104, 46301. 

■ 2. Amend § 47.35 by adding 

paragraphs (a)(1) and (a)(2) to read as 

follows: 

§ 47.35 Aircraft last previously registered 

in the United States. 

(a) * * * 

(1) If the applicant bought the aircraft 

from the last registered owner, the 

conveyance must be from that owner to 

the applicant. 

(2) If the applicant did not buy the 

aircraft from the last registered owner, 

he must submit conveyances or other 

instruments showing consecutive 

transactions from the last registered 

owner through each intervening owner 

to the applicant. 

* * * * * 

Issued in Washington, DC, on September 

22, 2008. 

Pamela Hamilton-Powell, 

Director, Office of Rulemaking. 

[FR Doc. E8–22586 Filed 9–25–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2008–0610; Airspace 

Docket No. 08–ASW–10] 

Establishment of Class E Airspace; 

Pampa, TX 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Direct final rule; confirmation of 

effective date; correction. 

SUMMARY: This action confirms the 

effective date and makes a correction to 

the direct final rule that establishes 

Class E airspace at Pampa, Mesa Vista 

Ranch Airport, TX, published in the 

Federal Register July 7, 2008 (73 FR 

38314) Docket No. FAA–2008–0610. 

This action corrects the final rule by 

adding ‘‘Mesa Vista Ranch Airport’’ to 

more clearly define the airport name in 

the airport description. 

DATES: Effective Date: 0901 UTC 

September 25, 2008. The Director of the 

Federal Register approves this 

incorporation by reference action under 

Title 1, Code of Federal Regulations, 

part 51, subject to the annual revision of 

FAA Order 7400.9 and publication of 

conforming amendments. 

FOR FURTHER INFORMATION CONTACT: Gary 

Mallett, Central Service Center, System 

Support Group, Federal Aviation 

Administration, Southwest Region, 2601 

Meacham Blvd, Fort Worth, TX, 76193– 

0530; telephone (817) 222–4949. 

SUPPLEMENTARY INFORMATION: 

History 

The FAA published a direct final rule 

with request for comments in the 

Federal Register July 7, 2008, (73 FR 

38314), Docket No. FAA–2008–0610. 


sroberts on PROD1PC70 with RULES