Federal Register: July 13, 2000 (Volume 65, Number 135)
DOCID: FR Doc 00-17153
FEDERAL HOUSING FINANCE BOARD
Treasury Department
CFR Citation: 12 CFR Parts 917, 925, 930, 931, 932, 933, 956, and 960
RIN ID: RIN 3069-AB01
DOCUMENT ID: [No. 2000-23]
NOTICE: Part II
DOCUMENT ACTION: Proposed rule.
SUBJECT CATEGORY:
Capital Requirements for Federal Home Loan Banks
DATES: The Finance Board will accept written comments on the proposed rule that are received on or before October 11, 2000.
DOCUMENT SUMMARY:
The Federal Housing Finance Board (Finance Board) proposes to amend its regulations to implement a new capital structure for the Federal Home Loan Banks (Banks), as is required by the GrammLeach Bliley Act. The proposed rule would establish riskbased, leverage, and operations capital requirements for the Banks. It also addresses the different classes of stock that a Bank may issue, the rights and preferences that may be associated with each class of stock, and the capital plans that each Bank must submit for Finance Board approval.
SUMMARY:
Federal Housing Finance Board,
SUPPLEMENTAL INFORMATION
I. Statutory and Regulatory Background
A. The Bank System
The twelve Banks are instrumentalities of the United States organized under the authority of the Federal Home Loan Bank Act (Bank Act). 12 U.S.C. 1423, 1432(a), as amended. The Banks are a ``government sponsored enterprise'' (GSE), i.e., a federally chartered but privately owned institution created by Congress to serve a public purpose. The purpose of the Bank System is to support the financing of housing and community lending. See 12 U.S.C. 1422a(a)(3)(B)(ii), 1430(i), (j)(10) (1994). As with other GSEs, Congress has granted the Banks certain benefits, including an exemption from registration of their securities under federal securities laws, an exemption from state and local corporate taxation, and an ability to sell debt obligations (at the discretion of the Secretary of the Treasury) to the United States Treasury, that enable them to borrow in the capital markets on favorable terms. Typically, the Banks are able to borrow at a spread that is over the rates on U.S. Treasury securities of comparable maturity but which is less than the rates available to comparably situated private corporate borrowers. The Banks pass along that funding advantage to their membersand ultimately to consumersby providing advances (secured loans) and other financial services at rates that their members generally could not obtain on their own.
The Banks also are cooperatives, meaning that only their members may own the capital stock and share in the profits of the Banks and only their members, and certain eligible associates (such as state housing finance agencies), may borrow from or use the other products and services provided by the Banks. 12 U.S.C. 1426, 1430(a), 1430b, as amended. Each Bank is managed by a board of directors, a majority of whom are elected by its members and the remainder of whom are appointed by the Finance Board. 12 U.S.C. 1427, as amended. An institution that is eligible (typically, an insured depository institution) may become a member of a Bank if it satisfies certain statutory criteria and purchases a specified amount of the Bank's capital stock. 12 U.S.C. 1424, 1426 (1994). Together with the Office of Finance, the twelve Banks comprise the Bank System, which operates under the supervision of the Finance Board, an independent agency in the executive branch of the U.S. government. The primary duty of the Finance Board is to ensure that the Banks operate in a financially safe and sound manner; consistent with that duty the Finance Board is required to supervise the Banks, ensure that they carry out their housing finance mission, and ensure that they remain adequately capitalized and able to raise funds in the capital markets. 12 U.S.C. 1422a(a)(3)(A), (B) (1994). B. Federal Home Loan Capital Structure
Since its enactment in 1932, the Bank Act has provided for a ``subscription'' structure for the capital of the Banks. Under that structure, the amount of capital stock each Bank issued was determined as a percentage of either the total mortgage assets of each member of the Bank or the dollar amount of advances outstanding to each member, whichever was greater. The subscription capital structure was deficient in certain respects, most notably in that the amount of capital each Bank was required to hold bore no relationship to the risks posed by its activities. Moreover, the subscription capital structure caused the Banks to become substantially overcapitalized in relation to the risks they face. The amount of excess capital contributed to an increase in the amount of arbitrage investments made by the Banks, i.e., investments in assets such as money market instruments or mortgage backed securities that do not advance the housing finance and community lending mission of the Banks. The substantial amount of the nonmission investments held by the Banks collectively, though diminishing in recent years as a percentage of their assets, has been the subject of much criticism from the Administration and the Congress, and was one issue that the Congress intended to address by reforming the capital structure and other aspects of the Bank System. The Congress recognized that if it were to eliminate mandatory membership for federal savings associations, and thus remove the only permanent capital from the Bank System, it also would have to create a new capital structure that would include capital elements with more permanence than one based solely on 6month redeemable stock.
C. The GrammLeachBliley Act
On November 12, 1999, the President signed the GrammLeachBliley
Act, Pub. Law No. 106102, 133 Stat. 1338 (Nov. 12, 1999) (GLB Act),
which, among other things, substantially amended the provisions of the
Bank Act that relate to the capital structure of the Banks. 12 U.S.C.
1426, as amended. As a result of those amendments, the existing
subscription capital structure will be replaced over a period of
several years by a more modern capital structure, with riskbased and
leverage capital requirements that are similar to those applicable to
depository institutions and to the other housing GSEs. The GLB Act
provides for a transition period to the new capital structure of up to approximately five
[[Page 43409]]
years from the date of enactment, during which time the prior capital
provisions are to remain in effect. The GLB Act requires the Finance
Board to promulgate uniform capital regulations for the Banks no later
than November 12, 2000. Under the new structure, each Bank will be
required to maintain amounts of total capital and permanent capital
that are sufficient to comply with the minimum leverage and riskbased
capital requirements, respectively, established by the GLB Act.
The GLB Act requires each Bank to maintain a ratio of total capital to total assets of at least 4 percent. Total capital is defined to include a Bank's permanent capital (defined below), plus the amounts paidin by members for Class A stock (which is redeemable on 6 months written notice), any general loss allowance (if consistent with generally accepted accounting principles (GAAP) and not established for specific assets), and other amounts from sources determined by the Finance Board as available to absorb losses. Permanent capital is defined as the amounts paidin by members for the Class B stock (which is redeemable on 5 years written notice), plus the amount of a Bank's retained earnings, as determined in accordance with GAAP. In addition to requiring total capital of 4 percent, the GLB Act requires the Banks to maintain a leverage ratio of 5 percent. In calculating the leverage ratio, the amount paidin for Class B stock and the amount of retained earnings are multiplied by 1.5, while other capital items are counted at face value. The riskbased capital provision requires each Bank to maintain permanent capital in an amount sufficient to meet the credit and market risks to which the Bank is subject, with the market risk being based on a stress test established by the Finance Board that tests for changes in certain specified market variables.
The GLB Act further requires the capital regulations to address a number of other matters, such as the classes of stock that a Bank may issue, the rights, terms, and preferences that may be established for each class, the issuance, transfer, and redemption of Bank stock, and the liquidation of claims against a withdrawing member. The rules must permit each Bank to issue Class A or Class B stock, or both, with the board of directors of each Bank to determine the rights, terms, and preferences for each class. Both Class A and Class B stock may be issued only to and held only by members of the Bank, and the regulations are to provide the manner in which the stock may be sold, transferred, redeemed, or repurchased. The rules also must address the manner in which a Bank is to liquidate any claims against its members.
The GLB Act separately establishes a number of other capital related requirements, which pertain to matters such as the termination of an institution's Bank membership, the ability of a Bank to redeem excess stock held by a member (i.e., stock that is in excess of the amount each member is required to hold), restrictions on the ability of a Bank to redeem stock when its capital is impaired, restrictions on readmission to membership after withdrawing, and the ownership of the retained earnings by the Class B stockholders.
Within 270 days after the publication of the final capital rule, the board of directors of each Bank must submit for Finance Board approval a capital plan that the board determines is bestsuited for the Bank and its members. Any amendments to the plan also must be approved in advance by the Finance Board. The law does not specify a period of time within which the Finance Board must approve the plans, which allows for the possibility that a Bank may be required to revise its plan before obtaining Finance Board approval. The GLB Act requires the plan to include certain provisions, requires that it be consistent with the regulations adopted by the Finance Board, and that when implemented it must provide the Bank with sufficient capital to meet both the leverage and riskbased capital requirements. Each plan also must include certain provisions specified by the GLB Act. Those provisions relate to the minimum investment required of each member in order for the Bank to meet its regulatory capital requirements, the effective date of the plan and the length of its transition period (which may be up to 3 years from the effective date of the plan), the classes of stock to be offered by the Bank and the rights, terms, and preferences associated with each class, the transferability of the Bank stock, the disposition of Bank stock held by institutions that withdraw from membership, and review of the plan by an independent accountant and a credit ratings agency. Those provisions are only the minimum contents required by the GLB Act; the Finance Board may require that other provisions be included in each plan, and the Banks as well may include other provisions in their plans, provided they are consistent with the Bank Act and the regulations of the Finance Board. D. Federal Home Loan Bank Stock
Section 6 of the Bank Act, as in effect prior to the GLB Act, authorized the Banks to issue stock, specified the characteristics of the stock, and addressed the manner in which the stock may be issued, transferred, and redeemed. 12 U.S.C. 1426 (1994). Since the establishment of the Bank System in 1932, each of the Banks has been authorized to issue a single class of stock, which could be issued and redeemed only at its statutory par value of $100 per share. An institution becoming a Bank member was required to subscribe for a certain minimum amount of the Bank's stock, for which it was required to pay in full and in cash at the time of its application.\1\ \1\ A member also was allowed to purchase the stock in installments, under which it would pay onequarter of the full amount at the time of application, and the remainder in three installments over the following 12 months. 12 U.S.C. 1426(c) (1994).
The amount of the initial stock subscription required for
membership was the greater of $500, 1.0 percent of the member's
mortgage assets, or 0.3 percent of the member's total assets.\2\ 12
U.S.C. 1426(b), 1430(e) (1994). If a member were to borrow from its
Bank, the amount of Bank stock it was required to own could not be less
than 5.0 percent of the amount of Bank advances outstanding to the
member. Each Bank was required to adjust the minimum stock investment
required of each member, as of December 31st of each year, so that each
member would own at least the required minimum amount of Bank stock,
based on a percentage of either its assets or advances, whichever
amount was higher. Each Bank had the discretion to retire any
``excess'' stock held by a member, i.e., stock in excess of the [[Page 43410]]
minimum required for that member, upon the application of the member.
\2\ The Bank Act referred to a member's ``aggregate unpaid loan
principal'', which the Finance Board has defined to include a
variety of mortgage assets, such as home mortgage loans, combination
loans, and mortgage passthrough securities. 12 U.S.C. 1426(b)(1)
(1994); 65 Fed. Reg. 8253 (Feb. 18, 2000), to be codified at 12 CFR
925.1. For purposes of applying the 1.0 percent of mortgage assets
test, the Bank Act also established a statutory presumption that
each member had at least 30 percent of its assets in mortgage
related instruments. 12 U.S.C. 1430(e)(3) (1994). The effect of the
presumption was that commercial banks (which typically have a lower
percentage of their assets in mortgage related instruments than do
savings associations) were required to maintain a minimum investment
equal to the greater of 1.0 percent of mortgage assets, 0.3 percent
of total assets, or 5.0 percent of outstanding advances. Separately,
a member that was not a ``qualified thrift lender'' (QTL), i.e., an
institution with less than 65 percent of its assets in certain
mortgage related instruments, was subject to a higher ``percentage
of advances'' requirement, which would vary inversely with its QTL ratio.
Once issued, the stock of a Bank could be transferred only between the member and the Bank or, with the approval of the Finance Board, from one member to another member or to an institution in the process of becoming a member. The Bank Act also required that all stock issued by a Bank share in dividends equally and without preference. The Bank Act also allowed any member, other than a federal savings and loan association, to withdraw from membership by providing six months written notice to the Finance Board. At the end of the sixmonth notice period, and provided that all indebtedness owed by the withdrawing member to the Bank had been liquidated, a Bank could redeem the stock of the withdrawing member, paying cash to the member equal to the par value of the stock. Any such withdrawing member could not rejoin the Bank system for 10 years, with only limited exceptions.
The Bank stock currently outstanding carries only limited voting
rights. The members of each Bank have the right to elect a majority of
its directors, typically eight of fourteen directorships, but do not
vote on any other matters. The number of votes each member may cast in
an election of directors is tied to the amount of Bank stock it is
``required to hold'' under the subscription capital provisions. Section
7 of the Bank Act provides that the number of votes each member may
cast is equal to the number of shares of Bank stock ``required [by
Section 6 of the Bank Act] to be held by [each] member at the end of
the calendar year next preceding the election'' of directors. 12 U.S.C.
1427(b) (1994). As noted above, at the end of each year each member was
required to hold Bank stock equal to the greater of $500, 1.0 percent
of its mortgage assets, 0.3 percent of its total assets, or 5.0 percent
of its outstanding advances. For voting purposes, however, Section 7
limits the number of votes that any member may cast at the average
number of shares of Bank stock ``required to be held'' by the members
located in the same state at the end of the prior calendar year. Thus,
for any members that hold stock in excess of the average for their
state, those excess shares are divested of their voting rights.\3\ As
amended by the GLB Act, all of Section 6 of the Bank Act has been
revised and no longer requires a member to hold a particular amount of
Bank stock as of the end of the calendar year. Similarly, the Bank Act
no longer establishes a required investment for each member. Instead,
Section 6 of the Bank Act now authorizes each Bank to determine the
amount and nature of any investment each member must maintain in the
capital stock of the Bank, and requires each Bank to address the voting
rights for each class of stock in its capital structure plan, subject to the approval of the Finance Board.
\3\ The Bank Act provides generally that each Bank is to have a
board of fourteen directors, eight of whom are elected by the
members and six of whom are appointed by the Finance Board. 12
U.S.C. 1427(a) (1994). The elected directorships for each Bank are
allocated among the states in each Bank district, based on the
amount of stock held by members in the respective states, subject to
certain ``grandfather'' provisions that reserve a specified number
of directorships to particular states (based on relative stock
ownership in 1960) and certain discretionary authority conferred on
the Finance Board to establish a limited number of additional seats in certain Bank districts.
E. The Financial Management and Mission Achievement Proposal
In 1999 the Finance Board proposed to adopt a riskbased capital requirement as part of its ``Financial Management and Mission Achievement'' (FMMA) rulemaking. 64 FR 52163 (Sept. 27, 1999). The capital provisions of the FMMA would have established a ``minimum total capital requirement'' and a ``minimum total riskbased capital requirement'' for each Bank. Under the total riskbased capital requirement a Bank would have been required to maintain ``total risk based capital'' in an amount sufficient to meet the sum of its credit risk, market risk, and operations risk capital requirements, each of which would have been established by the proposed rule. The credit risk aspect of the FMMA would have addressed the credit risks to which each Bank is exposed with respect to both its on and offbalance sheet items, using data from Nationally Recognized Statistical Rating Organizations (NRSRO) to estimate the credit losses likely to be associated with particular classes of items during periods of extreme credit stress. The FMMA would have established the market risk capital requirement based on the market value of a Bank's portfolio at risk from movements in market prices, such as interest rates, foreign exchange rates, commodity prices, or equities prices, that might occur during periods of extreme market stress. The proposal would have allowed for the use of a Bank's internal market risk model, which was to have been approved by the Finance Board. The FMMA would have required each Bank to maintain capital in an amount equal to 30 percent of the sum of its credit risk capital and market risk capital requirements in order to support the operations risks to which the Bank is exposed. The FMMA also would have required the Banks to maintain both a Systemwide and individual Bank credit ratings, at levels specified by the proposed rule, and would have required each Bank to maintain ``contingency liquidity'' in an amount sufficient to enable the Bank to meet its obligations if it were unable to borrow in the capital markets for seven consecutive days. The proposal included provisions limiting the amount of unsecured credit that a Bank could have outstanding to any single counterparty (or to affiliated counterparties) and would have addressed the extent to which the Banks may use hedging instruments. The Finance Board withdrew the FMMA proposal following the enactment of the GLB Act. Board Resolution No. 9956 (Nov. 15, 1999); 64 FR 66115 (Nov. 24, 1999).
With the enactment of the GLB Act, certain aspects of the proposed
FMMA capital rule, such as those pertaining to the types of capital
required for the leverage and riskbased capital requirements, no
longer would be consistent with Section 6 of the Bank Act, as amended.
Other aspects of the capital rules proposed as a part of FMMA, however,
remain generally consistent with the amended statute, particularly as
it relates to the capital required to be held against credit risk and
market risk. The GLB Act requires the Finance Board to adopt a risk
based capital regulation that requires the Banks to maintain sufficient
permanent capital to meet the credit risks to which they are subject,
but does not otherwise provide how the credit risk is to be measured.
Similarly, the GLB Act provides that the market risk element of the
riskbased capital requirement must be based on a stress test developed
by the Finance Board that ``rigorously tests for changes in market
variables, including changes in interest rates, rate volatility, and
changes in the shape of the yield curve.'' The GLB Act does not further
specify the provisions of the stress test, other than to require that
the Finance Board give ``due consideration'' to any riskbased capital
rules promulgated by the Office of Federal Housing Enterprises
Oversight (OFHEO) with respect to Fannie Mae and Freddie Mac. Moreover,
the GLB Act does not preclude the Finance Board from incorporating
other elements into the riskbased capital rules, such as a requirement
to hold some amount of capital to cover the operations risks to which
the Banks are subject. In considering the requirements of the GLB [[Page 43411]]
Act for the credit and market risk elements of the capital rules, the
Finance Board has determined that in many respects the underlying
methodology of the credit and market risk provisions of the capital
rules that were proposed as part of the FMMA are consistent with the
requirements of the GLB Act. Accordingly, the proposed rule builds on
those provisions, as well as on the provisions of the FMMA relating to operating risk.
II. The Proposed Rule
A. Issuance of Bank Stock.
In General. The GLB Act provides that the capital regulations are to permit each Bank to issue ``any one or more'' of Class A or Class B stock. Class A stock is to be redeemable at par on six months written notice to the Bank; Class B stock is to be redeemable at par on five years written notice to the Bank. The board of directors of each Bank is to determine the ``rights, terms, and preferences'' for each class of stock, consistent with Section 6 of the Bank Act, with the regulations of the Finance Board, and with market requirements. The regulations are required to prescribe the manner in which Bank stock may be ``sold, transferred, redeemed, or repurchased.'' The regulations also are required to restrict the issuance and ownership of Bank stock to the members of the Bank, to prohibit the issuance of other classes of stock, and to provide for the liquidation of claims and the redemption of stock upon an institution's withdrawal from membership in its Bank.
Apart from authorizing the issuance of two classes of Bank stock,
the GLB Act eliminated certain key characteristics of the single class
of Bank stock that had been established under prior law. For example,
the Bank Act no longer mandates a statutory par value for all Bank
stock of $100 per share and no longer requires all Bank stock to be
issued at par value.\4\ As a result, the Bank Act now authorizes a Bank
to establish the par value for its Class A and Class B stock (which may
differ), and permits the issuance of stock at a price other than par
value. The proposed rule includes provisions that implement those changes in the law, as described below.
\4\ 12 U.S.C. 1426(a) (1994). The minimum amount of Bank stock
that each member was required to purchase had to be issued at par
value. Any subsequent issuance could be at a price in excess of par
value, but not less than par value. As a matter of practice, the stock of the Banks has been issued at par value.
Classes of Stock. In authorizing the new capital structure for the Banks, the GLB Act provides that the regulations promulgated by the Finance Board ``shall * * * permit each Federal home loan bank to issue * * * any 1 or more of * * * Class A stock * * * and * * * Class B stock.'' 12 U.S.C. 1426(a)(4)(A), as amended. The GLB Act also provides that the capital structure plan for each Bank ``shall afford each member * * * the option of maintaining its required investment in the bank through the purchase of any combination of classes of stock authorized by the board of directors of the bank and approved by the Finance Board.'' Id., 1426(c)(4)(A), as amended. Although the GLB Act gives the members the option to decide how to allocate their required investment if a Bank issues both Class A and Class B stock, that option applies only to whatever ``classes of stock [are] authorized by the board of directors of the bank'' and must be read in light of the other provisions that permit each Bank to issue ``any 1 or more'' classes of stock. The directive that the regulations must allow a Bank to issue ``any 1 or more'' class of stock clearly contemplates that a Bank may issue only a single class of stock. Provided that a Bank's board of directors were to determine that a single class structure would be in the best interest of the Bank and its members, such a stock structure would be legally permissible. Accordingly, the proposed rule would permit each Bank to issue either Class A stock or Class B stock, or to issue both Class A and Class B stock. Whatever classes the board of directors of a Bank authorizes, the capital plan must demonstrate that the classes of stock to be issued will result in the Bank having sufficient amounts of permanent capital (i.e., the amounts paidin for the Class B stock, plus retained earnings) to meet the regulatory risk based capital requirement and sufficient amounts of total capital (i.e., permanent capital plus the amounts paidin for Class A stock, certain loss allowances, and other items capable of absorbing losses) to meet the regulatory total capital requirement. For example, if a Bank were to increase its retained earnings to an amount that would provide sufficient permanent capital to comply with the regulatory riskbased capital requirement it may not need to issue any Class B stock. Alternatively, if a Bank were to have only a minimal amount of retained earnings it may need to issue only Class B stock in order to have sufficient permanent capital to meet the regulatory riskbased capital requirement.
The proposed rule would define the essential characteristics of both Class A and Class B stock. As required by the GLB Act, Class A stock would be redeemable in cash at its par value on sixmonths written notice to the Bank. The Finance Board is proposing to require that the Class A stock have a par value of $100 per share and that it be issued at par value. Because the current capital stock of the Banks has a par value of $100 per share and is issued and redeemed at par, the Finance Board believes that establishing the same characteristics for the Class A stock would facilitate the transition to the new capital structure. The proposed rule also would require each Bank to specify in its capital plan a stated dividend for the Class A stock, which would have a priority over the payment of any dividends paid on Class B stock. The Finance Board anticipates that the stated dividend would be commensurate with the risks of holding an instrument that is putable to the issuer on six months notice. By definition, the Class B stock entails a greater risk to the member because its investment is committed to the Bank for at least five years. The Finance Board believes (and has been so advised by a financial consultant retained by the Banks) that members will demand some form of control over the affairs of the Bank in return for putting their capital at risk for five years. In that event, the members holding Class B stock likely would control the board of directors of the Bank, and thus would be in a position to determine the dividend to be paid on the Class A stock. The Finance Board has included the requirement that the Class A stock pay a stated dividend as a means of ensuring that the Class B stockholders would not be able to reduce or eliminate the dividend for the Class A stock, should they control the board of directors.
Certain of the essential characteristics of Class B stock would
differ from those established for the Class A stock. As with the Class
A stock (and as required by the GLB Act) the proposed rule would
provide that the Class B stock must be redeemable in cash and at par
value on fiveyears written notice to the Bank. The Class B stock would
differ from the Class A stock with regard to its par value and its
issuance price, which could be different from its par value. Allowing
the Banks to set an issuance price above the par value of the Class B
stock should result in a greater degree of permanence for the Class B
stock that would be more in the nature of common stock. The proposed
rule would not require a Bank to issue the Class B stock above par
value, but simply would allow a Bank that option. A Bank could issue
Class B at par if it wished to do so. The proposed rule also would [[Page 43412]]
provide that a fundamental characteristic of the Class B stock is that
it would confer on the member an ownership interest in the retained
earnings of the Bank upon acquisition of the stock. The GLB Act
provides that the holders of the Class B stock shall own the retained
earnings of each Bank, which is consistent with the attributes of permanent equity capital in a corporate setting.
Subclasses of Stock. The GLB Act requires the capital regulations to provide that a Bank may not issue stock other than as authorized by Section 6 of the Bank Act, and that the stock is to have ``such rights, terms, and preferences * * * as the board of directors of that Bank may approve.'' Separately, the GLB Act requires the capital plan for each Bank to establish the ``terms, rights, and preferences, including minimum investment, dividends, voting, and liquidation preferences for each class of stock issued by the bank.'' 12 U.S.C. 1426(a)(4)(A), (c)(4)(B), as amended. The Finance Board construes this language as authorizing a Bank to establish rights, terms, and preferences for Class A stock that differ from those established for the Class B stock. The Finance Board also believes that the authority to establish different rights, terms, or preferences for the stock should apply within a particular class of stock as well as between the two different classes. For example, the repeal of the requirement that all stock must be issued at par would allow a Bank to issue two types of Class B stockone type that was issued at par and another that was issued above par. Although both types of stock would possess the minimum characteristics required for Class B stock, i.e., they would be redeemable on five years written notice to the Bank, they would have been issued on materially different terms. The same rationale would apply if a Bank were to issue one type of Class B stock for which the dividend is to be determined based on the performance of a specific category of Bank assets and other Class B stock for which the dividend would be determined on the general profitability of the Bank. Because the board of directors of a Bank clearly has the authority to establish different rights, terms, and preferences for the Bank stock, the Finance Board believes it would be appropriate to allow a Bank to designate stock of the same class that possesses different rights as separate subclasses of that class.
Issuance of Capital Stock. The proposed rule would allow each Bank to determine whether to issue either Class A or Class B stock, or both Class A and Class B stock, and whether to issue any subclasses of stock. In accordance with the GLB Act, the proposed rule also would provide that a Bank may issue its capital stock only to its members, and may not issue any other types or classes of capital stock. The proposal would require a Bank to act as its own transfer agent, and to issue its capital stock only in bookentry form, which is consistent with the current practice at each of the Banks, and is intended to ensure that the stock is held only by members. The Finance Board is not aware of any business necessity that would require the Banks to issue stock certificates, especially given the limited universe of potential stockholders, and believes that certificates would only increase the possibility that third parties might acquire the stock. The Finance Board requests comments on whether there are any sound reasons why the Banks should be permitted to issue stock certificates to their members, and if so what safeguards would be appropriate.
In order to allow each Bank to determine the method of distribution that is best suited to its business requirements and to the needs of its members, the Finance Board is not proposing to prescribe the manner in which the Banks must conduct the initial issuance of the Class A and Class B stock. Instead, the proposed rule would require each Bank to determine the manner in which to issue its stock, and would require only that the method of distribution be fair and equitable to all eligible purchasers. The proposal would expressly allow the Banks to conduct the initial issuance through an exchange or conversion, but would not mandate either approach. Whatever method a Bank adopts for the initial stock issuance must be included in the Bank's capital plan, as set forth in Sec. 933.2. Additionally, because a fundamental characteristic of Class B stock is that it confers on the member an ownership interest in the retained earnings of the Bank, the Finance Board is proposing to allow a Bank to distribute its thenexisting unrestricted retained earnings as shares of Class B capital stock.
The Finance Board is further proposing to establish concentration limits that would preclude any one member, or group of affiliated members, from controlling the Bank. Thus, the proposed rule would provide that a Bank shall not issue stock to a member or group of affiliated members if it were to result in such member or group of affiliated members owning more than 40 percent of any class or subclass of its outstanding capital stock. Other provisions of the rule would bar a Bank from approving a transfer of stock that would result in a member or group of affiliated members owning more than 40 percent of any class or subclass of its stock. The proposed rule also would allow a Bank to include in its capital plan an ownership cap lower than 40 percent.
The investment by one Bank in the assets of another Bank, such as Acquired Member Assets, has been increasing in recent years. As these ``joint assets'' increase, capital issues under the new structure will exist. One such issue would be whether two or more Banks jointly managing assets through a participation agreement could jointly issue stock. Another issue would be whether two or more Banks jointly managing assets could pool their capital stock in order to meet the regulatory capital requirements. The Finance Board specifically requests comments on whether the Banks should be allowed to issue stock jointly or to pool stock to meet regulatory capital requirements for assets that are being jointly managed by two or more Banks.
B. Voting rights. Section 7 of the Bank Act addresses, among other things, the manner in which the members of each Bank elect directors and the manner in which the Finance Board allocates directorships among the states in each Bank district. The GLB Act did not expressly amend Section 7 as it relates to those issues, but it did include certain amendments to Section 6 that conflict with those provisions of Section 7. In the proposed rule, the Finance Board has attempted to strike a balance between the conflicting provisions of Sections 6 and 7, respectively, by giving full effect to the more recent amendments to Section 6, while preserving as much as possible the provisions of Section 7. The approach taken in the proposed rule represents one means of reconciling the competing provisions of Section 6 and Section 7. The Finance Board recognizes that there may be other approaches to balancing the requirements of these provisions and specifically requests public comment on how else the provisions might be harmonized, and how the proposed rule may affect the cooperative structure of the Bank System. The Finance Board also would like to know whether there are any other restrictions on voting rights or allocation of directorships that should be incorporated into the rule as mandatory requirements, or whether there are other restrictions or requirements that the Finance Board should encourage the Banks to include as part of their capital plans.
[[Page 43413]]
Since 1932, the Banks have been authorized to issue only one class
of stock. Ownership of Bank stock has conferred on a member the right
to participate in the election of directors. In 1961, Congress amended
Section 7 of the Bank Act to provide that the number of votes each
member may cast in an election of directors, and the manner in which
the elected directorships are to be allocated among the states, would
be determined on the basis of the subscription capital provisions of
Section 6. Specifically, Section 7 was amended to provide that ``each
such member may cast * * * a number of votes equal to the number of
shares of stock in [the Bank] required by this Act to be held by such member at the end of the calendar year next preceding the
election''.\5\ At that time, Congress also amended Section 7 to require
that the allocation of elected directorships, like the method for
determining the number of votes, be determined based on the
proportionate amounts of Bank stock ``required to be held'' by the
members in each state as of the end of the preceding calendar year,
subject to a ``grandfather'' provision that reflected the allocation of
directorships as of December 31, 1960. See 12 U.S.C. 1427 (a)(c) (1994).
\5\ Act of September 8, 1961, Pub. Law No. 87211; see, 12
U.S.C. 1427(b) (1994). Although each share of Bank stock carried one
vote, the Bank Act also limited the number of votes any one member
could cast to the average number of shares of Bank stock ``required
to be held'' by each member in that state as of the end of the
preceding calendar year. That provision had the effect of partially
disenfranchising any members that owned Bank stock in excess of the average stockholdings within that state.
The language in Section 7 regarding the amount of Bank stock ``required to be held'' by the members as of the preceding December 31st refers to the subscription capital provisions of Section 6, as in effect prior to the GLB Act. As described previously, the subscription capital provisions required each member to purchase an amount of Bank stock based on a statutory formula (i.e., the greater of $500, 1.0 percent of mortgage assets, 0.3 percent of total assets, or 5.0 percent of advances) that was to be applied to each member as of December 31st of each year. By incorporating into Section 7 a principal component of Section 6i.e., the amount of Bank stock ``required to be held'' by each member as of the end of each yearthe Congress in 1961 effectively linked the process of electing Bank directors to the subscription capital structure. In the GLB Act the Congress removed the subscription capital provisions from Section 6, but made no conforming amendments to Section 7. As a result, Section 7 of the Bank Act continues to require that the allocation of directorships and the determination of member votes be based solely on the subscription capital provisions, which will no longer exist when the new capital plans take effect. The Congress has provided no guidance on how, if at all, it intended the references to the subscription capital provisions within Section 7 to be applied in conjunction with the new riskbased capital provisions of Section 6.
The most apparent conflict between Section 7 and Section 6 (as
amended) pertains to the number of votes each member may cast in an
election of directors. Though Section 7 provides that the number of
votes each member may cast shall equal the number of shares of Bank
stock that the member is required to own, Section 6 expressly
authorizes each Bank to establish voting preferences for its capital
stock. As amended, Section 6 would authorize a Bank to assign voting
rights exclusively to either its Class A or Class B stock, or to the
Class A and Class B stock equally, or to both Class A and Class B but
with a disproportionate weighting. The Finance Board believes that it
is not possible to reconcile these provisions, as a Bank cannot
establish a system of voting preferences (which, by definition, results
in disparate voting rights for each class) while at the same time
adhering to a requirement that all shares of its stock are to have
uniform voting rights (subject only to the cap on members with large
stockholdings). \6\ In order to give effect to the GLB Act capital
amendments that have authorized each Bank to establish voting
preferences, the Finance Board is of the opinion that the provisions of
Section 7(b) of the Bank Act that establish a ``one share, one vote''
structure must be considered to have been impliedly repealed by Section 6(c)(4)(B), as amended by the GLB Act.
\6\ As a technical matter, members with large amounts of Bank
stock cannot vote all of their shares of stock due to the cap based
on the average holdings within each state. For those shares that can be voted, however, all votes count equally.
In a similar fashion, there are conflicts between provisions of Section 7(b), (c), and (e), regarding the designation of directorships among the states, and Section 6, as amended by the GLB Act. The former provisions are premised on the assumption that the Banks are to be capitalized in accordance with a statutory formula, whereas the latter provisions require the Banks to be capitalized in relation to their risks. As described previously, Section 7 continues to require the Finance Board to designate the elected directorships of each Bank among the states in the approximate ratio of the Bank stock required to be held by the members in each state to the total stock outstanding, as of the end of the calendar year. The Finance Board cannot determine those ratios in the manner required by the literal language of Section 7, however, because under the new capital structure the members will no longer be required to maintain an investment in Bank stock in accordance with the statutory formula and as of December 31st of each year. The Finance Board has considered whether it would be feasible to calculate the Section 7 ratios for the allocation of directorships on the basis of Section 6, as it has been amended, but believes that doing so likely would create a host of uncertainties that are not addressed by the Bank Act and which the Finance Board would be required to resolve.
As amended by the GLB Act, Section 6 does refer to a ``minimum investment'' that each member must maintain in the stock of the Bank, but it does not specify what that term means, other than indicating that it may be based on a percentage of a member's assets or a percentage of its advances, or any other provision approved by the Finance Board. The Finance Board could define the term, but there likely are several ways in which to do so, none of which would be compelled by statute. However the term is to be defined, it would have to be correlated in some fashion to the risks to which the Bank is exposed, i.e., it should not result in a Bank having too little or too much capital in relation to its risks. Thus, a bare formulaic definition of the term (as formerly included in the subscription capital provisions) likely would not be appropriate because it would have no relation to the risks to which the Banks are exposed.
As one possibility, the Finance Board could define ``minimum
investment'' to mean an amount of Bank stock required to be held as a
condition of membership in the Bank. That approach, however, would be
complicated by the issuance of the two classes of Bank stock authorized
by the GLB Act. The existence of two classes of stock means that for
every state within a Bank district each member located in that state
would hold a certain percentage of the Bank's Class A stock and a
certain percentage of the Bank's Class B stock. Because the GLB Act
gives each member the option of determining which class of stock to
buy, it is likely that if a Bank issues both Class A and Class B stock
there will be some members that purchase only one class of Bank stock and other members that purchase both
[[Page 43414]]
classes of stock but in varying combinations. As a result, for each
state in a Bank district it is unlikely that the percentage of Class A
stock held by the members located in that state will be identical to
the percentage of Class B stock held by the members in that state.
Indeed, it appears probable that the relative percentages of Class A
and Class B stock held by the members in a particular state will
differ, and may well differ substantially. Thus, it would be possible,
and perhaps probable, that the Class A stock of a Bank may be
concentrated in certain states while the Class B stock would be
concentrated in other states within the Bank district. In that event,
the Finance Board should be able to determine the ratio of Class A
stock held by members in a given state, and separately should be able
to determine the ratio of Class B stock held by the members in that
state. It is not at all clear, however, how the Finance Board could
apply those ratios to allocate the elected directorships in the manner
required by Section 7, especially if there are material differences
among the ratios for the various states in the Bank district. The
possibility of having two different ratios would be further complicated
by the provisions of the GLB Act that allow a Bank to set a lower
minimum investment for the B stock than for the Class A stock. Thus,
even if the Finance Board could readily calculate the ratios for the
Class A and Class B stock, respectively, for each state, the ratio for
the Class B stock most likely would have to be adjusted in some fashion.
As an alternative to viewing the term ``minimum investment'' as an investment required as a condition of membership, it could be defined in terms of the amount of Bank stock required to support the credit, market, and operations risks created for the Bank as a result of entering into business transactions (such as making advances, acquiring mortgage assets, or issuing letters of credit) with a member. Because all Bank assets entail some degree of risk, a member could be required to purchase Class A and Class B stock in whatever amounts are necessary to provide the total capital and permanent capital required to cover the risks associated with the assets created by its business transaction with the Bank. If the Finance Board were to define ``minimum investment'' on the basis of the risk placed on the balance sheet, such an approach would result in most members investing in both Class A and Class B stock. The relative amounts of each class of stock held by a member under such an approach would vary with the degree of risk associated with the underlying assets. Thus, one would expect that a member placing somewhat more risky assets on the balance sheet of the Bank would be required to purchase a correspondingly greater amount of Class B stock than a member creating the same amount of a less risky asset. Because the leverage requirement applies independently of risk, however, an equal amount of assets with different risk characteristics should require the same amount of Class A stock for leverage purposes. Thus, defining ``minimum investment'' in this manner also would be likely to result in the ratio of Class A stock held by the members in a particular state differing from the ratio of Class B stock held by the members in that state, which would present the same difficulties in calculating the individual state ratio described previously. Moreover, it is likely that the term ``minimum investment'' could not be defined solely on the basis of a member's transactions with the Bank because not all members will at all times be engaged in a business transaction with the Bank. For that reason, it is likely that a definition of ``minimum investment'' would have to incorporate both membership and risk aspects. If so, the Finance Board then would be faced with using as many as four different stock ratios for each state if it were to determine the allocation of directorships in accordance with the literal language of Section 7.
Apart from those definitional concerns, the Finance Board has a
more general concern that requiring the allocation of elected
directorships among the states, regardless of how it is done, could
impair the ability of the Banks to sell Class B stock in amounts
sufficient to comply with their riskbased capital requirements. If
that were to occur, the adherence to the statebased allocation formula
clearly would frustrate the intent of Congress in establishing a risk
based capital structure for the Banks. In requiring the Banks to have
sufficient permanent capital to meet their riskbased capital
requirements, the GLB Act has effectively mandated that the Banks,
through sale or conversion, issue a significant amount of Class B
stock.\7\ In tension with this requirement is another provision of the
GLB Act, which requires that each Bank's capital plan allow each member
the option of determining what combination of classes of authorized
Bank stock to purchase. In effect, the GLB Act requires the Banks to
issue Class B stock but does not compel the members to purchase the
Class B stock. The GLB Act does provide that each Bank is to establish
the terms, rights, and preferences for each class of stock that are
``consistent with Finance Board regulations and market requirements.''
That provision recognizes that if the purchase of Class B stock is to
be voluntary, then the Banks must be authorized to establish terms for
the Class B stock, such as voting and dividend preferences, that
provide economic incentives for the members to purchase the Class B stock.
\7\ Although a Bank may include its retained earnings as
permanent capital, no Bank has sufficient retained earnings to
comply with the risk based capital requirements at present or is
likely to have sufficient retained earnings in the near future.
Since the enactment of FIRREA in 1989, the Banks have maintained
only nominal amounts of retained earnings. Moreover, in the six
months since the enactment of the GLB Act, some Banks have paid out
significant portions of their retained earnings to their members. As
of March 31, 2000, the retained earnings of the Bank System were
equal to 0.11 percent of the total assets of the Banks, and the
amounts at the individual Banks ranged from 0.03 percent to 0.20 percent of total assets.
The paramount intent of Congress in revising the capital structure for the Banks was to ensure that the risks to which each Bank are exposed are supported by permanent capital, i.e., Class B stock and retained earnings. Because Class B stock is the only practical source of permanent capital for the immediate future, the intent of the Congress cannot be implemented unless the Banks are able to sell Class B stock. To the extent that other provisions of the Bank Act might impair the ability of the Banks to do so, the application of those provisions would frustrate the intent of Congress in creating the new riskbased permanent capital structure. The Finance Board believes that requiring the allocation of the elected directorships of each Bank exclusively on a statebased formula would make the Class B stock a less attractive economic option for the members because there would be no assurance that the Class B stock would be distributed in the same proportion that the directorships would be allocated among the states.
Because of the difficulties in using a ``minimum investment'' as a
proxy for the amount of stock ``required to be held'' as of each
December 31st, and the likelihood that a statebased allocation of
directorships would make the sale of Class B stock more difficult, the
Finance Board has preliminarily determined that it cannot apply the
provisions of Section 7 regarding the allocation of directorships
without frustrating the intent of Congress to create a workable risk based permanent capital structure
[[Page 43415]]
for the Banks. The Finance Board believes that there is no practical
way to give simultaneous effect to one provision of law that would
require the preservation of the subscription capital structure for the
purpose of allocating directorships and voting rights and another
provision of law that would repeal the subscription capital structure
in its entirety. The Finance Board is proposing to resolve that
conflict by giving precedence to the provisions of Section 6 of the
Bank Act, as amended by the GLB Act, over those provisions of Section
7(b), (c), and (e) relating to voting and the allocation of
directorships.\8\ The Finance Board does not believe that any other
provisions of Section 7 are inconsistent with Section 6, as amended.
Thus, the other provisions of Section 7, such as those regarding the
size of the board of directors (including both elected and appointed
directors), the requirements applicable to individual directors, the
terms of office, term limits, vacancies, compensation, duties, and
indemnification, would not be affected by the application of Section 6, as amended.
\8\ Puerto Rico presents a unique situation of a prior Finance
Board establishment of a directorship, which has been made permanent
by statute. In 1962, Congress amended Section 7(e) to authorize the
Finance Board to establish an additional elected directorship for
the Bank in which the Commonwealth of Puerto Rico was located, which
directorship was required to be designated to Puerto Rico. The
Finance Board exercised that authority, creating an additional
elected directorship for the New York Bank, which it designated as
representing the members located in Puerto Rico. Although the
designation of that seat to Puerto Rico is inconsistent with the
riskbased capital amendments to Section 6, for the same reasons
that the other statebased designations are inconsistent with
Section 6, the preservation of the additional directorship can be
reconciled with Section 6, as amended. Accordingly, the New York
Bank would continue to have an additional elected directorship
pursuant to Section 7(e), and the proposed rule would allow the Bank
to accommodate the representation of members located in Puerto Rico
as part of its capital plan. As provided in Section 7(e), if the
Finance Board ever were to relocate the Commonwealth of Puerto Rico
to another Bank district, the additional elected directorship created by Section 7(e) would cease to exist.
In cases of conflicting statutory provisions, it is an ordinary rule of statutory construction that laterenacted provisions take precedence over older provisions, to the extent that the older provision is inconsistent with the laterenacted provision. See Tennessee Gas Pipeline Co. v. Federal Energy Regulatory Comm'n, 626, F.2d 1020, 1022 (D.C. Cir. 1980); Estate of Flanigan v. Commissioner of Internal Revenue, 743 F.2d 1526, 1532 (11th Cir. 1984). The Finance Board believes, as described above, that the provisions of Section 6 must take precedence over the provisions of Section 7 that relate to the allocation of directorships and voting. The U.S. Supreme Court has made clear, however, that it is also a ``cardinal rule'' of statutory construction that judicial findings of such implied repeals of statutory provisions are not favored. Morton v. Mancari, 417 U.S. 535, 549 (1974); Posadas v. National City Bank, 296 U.S. 497, 503 (1936). The Court has explained that effect should be given to both provisions wherever possible and that absent a ``clear and manifest'' intention on the part of Congress to repeal a statutory provision, the only permissible justification for a repeal by implication is when the earlier and later statutes are ``irreconcilable.'' Morton, 417 U.S. at 55051; see Georgia v. Pennsylvania RR Co., 324 U.S. 439, 45657; FAIC Securities v. United States, 768 F.2d 352, 362 (D.C. Cir. 1985); United Ass'n of Journeymen and Apprentices v. Thornburgh, 768 F. Supp. 375, 37980 (D.D.C. 1991).
In determining whether an ``irreconcilable'' conflict exists between statutory provisions, a court will first look to the plain language of the statutes. See Flanigan, 743 F.2d at 1532 (finding that two provisions of the Internal Revenue Code were, on their face, plainly irreconcilable). Only when the language of two provisions leaves the court in doubt as to whether they represent truly irreconcilable intentions will a court resort to any legislative history that may be pertinent to the issue. See Demby v. Schweiker, 671 F.2d 507, 510 (D.C. Cir. 1981) (wherein the court resorted to the legislative history of the newer act in finding that the provisions in question were not irreconcilable).
An administrative agency charged with the implementation of a particular statute may implement an administrative resolution of two conflicting provisions in that statute through a proper APA noticeand comment rulemaking. Citizens to Save Spencer County v. Environmental Protection Agency, 600 F.2d 844, 87578 (D.C. Cir. 1979). In undertaking such a rulemaking, an agency should determine, based on the plain language of the provisions and, if necessary, on the legislative history of the statutes, that the provisions are irreconcilable. Id. at 86368. The agency should then consider the statute as a whole and the purposes of the provisions in question in order to fashion a solution that avoids unnecessary hardship or surprise to affected parties and remains within the general bounds of the statute in question. Id. at 87071. The Finance Board believes that the provisions of Sections 6 and 7 of the Bank Act described above are in conflict and is proposing through this rulemaking to give precedence to the capital provisions of Section 6. The legislative history of the GLB Act does not address the interrelationship between Section 6 and Section 7, though the language of the statute and the legislative history do suggest strongly that the creation of a sound system of permanent capital was of paramount concern to the Congress in amending Section 6. The proposed rule has been structured to give effect to Section 7 to the greatest degree possible, and would not preclude a Bank from establishing a statebased structure if it believed that approach would be consistent with capitalizing the Bank in the manner required by the GLB Act.
The proposed rule would require that the capital plan for each Bank specify the manner in which the members are to elect directors and the other corporate matters, if any, on which the members will be entitled to vote. The capital plan also must describe the voting preferences, if any, to be assigned to any particular class or subclass of stock, and whether the Bank will permit cumulative voting by its members and, if so, the matters on which members may vote cumulatively.
If a Bank were to issue any Class B stock, the proposed rule would require that the Bank assign some voting rights to the Class B stock. The proposed rule would not specify what voting rights should be assigned to the Class B stock, and thus would allow each Bank to determine whether the Class B stock would have exclusive voting power or shared voting power. If a Bank were to issue Class B stock, the proposed rule would allow the Bank, in its discretion, also to assign some voting rights to the Class A stock, and would allow some voting rights to be assigned to the members generally, i.e., without regard to the amount or class of Bank stock that each member owns. Within each class or subclass of stock, however, the proposed rule would require that all shares have equal voting rights, although a Bank could give preferences to one or more classes. Thus, all Class B stock would vote equally, although a Bank could authorize the Class B members to elect a majority of the elected directors by giving Class B a preference over the Class A stock. As suggested to the Finance Board by an independent consultant retained by the Banks to study the GLB Act capital issues, a Bank may find that such preferences are necessary in order to sell the Class B stock because it bears more of the risks than does the Class A stock.
As a means of preventing undue concentration of voting power within a
[[Page 43416]]
small number of members, the proposed rule would cap the number of
votes any member (including affiliated members) may cast in an election
at 20 percent of the votes eligible to be cast in that election. The
Finance Board recognizes that in some Bank districts a member with less
than 20 percent of the vote may be able to control the Bank and
therefore is proposing to allow any Bank to establish a lower percentage as part of its capital plan.
As noted above, in order to ensure that the new capital structure is workable and the Banks are able to sell the Class B stock, the proposed rule would state expressly that the elected directorships for a Bank need not be allocated among the states on the basis of the amount of stock required to be held under the nowrepealed subscription capital requirements, and that the number of votes for each member also need not be based on the amount of stock each member was required to hold as of the end of the prior year. Notwithstanding that provision the proposed rule would not preclude a Bank from allocating voting rights among its members on a statebystate basis, provided such an allocation were approved as part of the Bank's capital plan. A Bank also could adopt any other reasonable method of electing directors, such as authorizing each class of stock to elect a specified number of directors, or allocating the directors among the members based on the asset size of the members. The proposed rule also would require that each Bank include in its capital plan, to the extent feasible, a provision for the representation of small members that own Class B stock, particularly members that are community financial institutions (CFI), as that term is defined by the GLB Act.
Although the proposed rule includes provisions addressing concentration of stock ownership, limits on voting rights, and representation of CFIs on the boards of directors, the Finance Board is especially interested in receiving comments on these issues and whether there may be other ways to address each of them. The approach taken in the proposed rule regarding voting would allow each Bank to determine the manner in which the members are to elect directors, which recognizes that the board of each Bank may be best suited to determining how to balance the interests of its members against the need to raise the capital required by the GLB Act. Notwithstanding the approach embodied in the proposed rule, the Finance Board requests public comments on whether there might be a need to include some limitations in the rule such that it does not have any untoward consequences for the cooperative structure of the Bank System.
On the issue of board composition, the Finance Board would like to receive comments on whether the rule should include a provision requiring certain types of members, such as CFIs, to be represented on the boards of the Banks. As proposed, the rule would require the Banks to ensure that small members, specifically including CFIs, that own Class B stock be represented on the board, to the extent it is feasible to do so. The Finance Board would like to know whether this type of requirement should be made mandatory on the Banks, such that some number of the elected directorships should be assigned permanently to the CFIs within that district. The Finance Board also would like to receive comments on whether the rule should mandate some form of state based representation on the boards of the Banks. With the removal of barriers to interstate banking, it is less clear what purpose is served by retaining a statebased board of directors, especially when there is no requirement that the members within a particular state hold any Class B stock. The Finance Board requests that any comments advocating a requirement for statebased representation address the details of how that should be accomplished, especially in light of the varying number of states in each Bank district, which range from two to eight, and the cooperative structure of the Bank System. The Finance Board also would like to know whether i
FOR FURTHER INFORMATION CONTACT
James L. Bothwell, Director and Chief Economist, (202) 4082821; Scott L. Smith, Deputy Director, (202) 408 2991; Ellen Hancock, Senior Financial Analyst, (202) 4082906; or Christina Muradian, Senior Financial Analyst, (202) 4082584; or Julie Paller, Senior Financial Analyst, (202) 4082842, Office of Policy, Research and Analysis; or Deborah F. Silberman, General Counsel, (202) 4082570; Neil R. Crowley, Deputy General Counsel, (202) 4082990; or Thomas E. Joseph, AttorneyAdvisor, (202) 4082512, Office of General Counsel, Federal Housing Finance Board, 1777 F Street, N.W., Washington, D.C. 20006.