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Appealing to the FedCir is not guaranteed, you have to present a issue which the FedCir has jurisdiction over. This is important because a large number of appeal are denied because they have not been presented so that the FedCir can address the issues. Part of the confusion may be from the fact that the FedCir does address issues that appear to be facts of the case, but this occurs only after they have stated that the main issue raised was within their jurisdiction.
Bottom line, pro se vets needs to make sure that the main issue you raise is within the jurisidiction of the FedCir. This is not easy to do, we do encourage vets to try very hard to obtain an attorney to represent your interest.
This claim is informative as the FedCir also sets forth the three conditions that must be satisfied in order to grant a writ of mandamus.
A court may issue a writ of mandamus only if three conditions are satisfied: (1) the party seeking issuance of the writ must have no other adequate means to obtain the relief he desires; (2) the petitioner must demonstrate a clear and indisputable right to the writ; and (3) the court, in its discretion, must be convinced that the circumstances warrant issuance of the writ. See Cheney v. U.S. Dist. Court for the Dist. of Columbia, 542 U.S. 367, 380-81 (2004); Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 403 (1976).
NOTE: This disposition is nonprecedential.
Jose G. Apollo, Sr., of Washington, DC, pro se.
Austin M. Fulk, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for respondent-appellee. With him on the brief were Gregory G. Katsas, Assistant Attorney General, Jeanne E. Davidson, Director, Martin F. Hockey, Jr., Assistant Director. Of counsel was Phyllis Jo Baunach, Trial Attorney.
in 08-1029, Judge Mary J. Schoelen.
Before RADER, FRIEDMAN and BRYSON, Circuit Judges.
Jose G. Apollo, Sr., appeals from an order of the United States Court of Appeals for Veterans Claims (“Veterans Court”) denying his petition for a writ of mandamus. We affirm.
Mr. Apollo served in the United States Marine Corps and Navy from 1976 to 1982. In 1983, the Department of Veterans Affairs (“DVA”) granted Mr. Apollo a disability rating for service-connected hypertension. Mr. Apollo subsequently applied for vocational rehabilitation. He was placed in a vocational training program from 1992 to 1994, when his training was interrupted because of his poor academic progress. Mr. Apollo subsequently reapplied for vocational rehabilitation. In April 1995, the DVA regional office issued a decision terminating Mr. Apollo’s rehabilitation benefits because of his failure to cooperate with a program psychologist and because the 12-year time limit on benefits had expired. Mr. Apollo again reapplied for benefits in 2000, and the regional office again denied his request.
In 2002, Mr. Apollo appealed the 1995 and 2000 regional office decisions to the Board of Veterans’ Appeals. The Board found that the regional office’s 1995 denial of benefits became final because Mr. Apollo failed to file a timely appeal from the decision, and it therefore refused to address his arguments regarding that denial. Mr. Apollo took an appeal from the Board’s decision to the Veterans Court. On appeal, the Veterans Court held in a July 15, 2005, order that the regional office’s 1995 decision did not become final because the regional office failed to issue the required Statement of the Case. The Veterans Court therefore vacated the Board’s decision and remanded for issuance of an appropriate Statement of the Case.
awarded Mr. Apollo entitlement to vocational rehabilitation benefits retroactive to June 1995. Accordingly, in a February 14, 2008, decision, the Board dismissed as moot Mr. Apollo’s appeal challenging the termination of his benefits. The Board further explained that any disagreement as to the amount of his reimbursement would represent a separate issue that Mr. Apollo could raise with the regional office and appeal to the Board.
On April 2, 2008, Mr. Apollo filed a petition with the Veterans Court seeking extraordinary relief in the nature of a writ of mandamus. He sought an order from the court granting him additional reimbursement for vocational rehabilitation expenses that he had incurred since June 1995. Specifically, he claimed that the $21,000 in rehabilitation expenses that he received from the DVA was $59,000 less than the amount to which he was entitled. On May 30, 2008, the Veterans Court denied Mr. Apollo’s mandamus petition because he had failed to demonstrate that he lacked other adequate means to obtain the relief he desired. Mr. Apollo then petitioned for review by this court.
Mr. Apollo contends that the Veterans Court erred in denying his petition for a writ of mandamus. We review the denial of a petition for a writ of mandamus by the Veterans Court for abuse of discretion. Lamb v. Principi, 284 F.3d 1378, 1384 (Fed. Cir. 2002). We find no abuse of discretion in this case.
the writ; and (3) the court, in its discretion, must be convinced that the circumstances warrant issuance of the writ. See Cheney v. U.S. Dist. Court for the Dist. of Columbia, 542 U.S. 367, 380-81 (2004); Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 403 (1976).
In its order denying Mr. Apollo’s mandamus petition, the Veterans Court explained that any dispute as to the amount of reimbursement must be taken up with the regional office in the first instance. The court explained that Mr. Apollo had failed to show that he raised the issue of the amount of reimbursement with the regional office or that he appealed the issue to the Board. The court further noted that if Mr. Apollo believes that in its February 2008 decision the Board should have awarded him additional reimbursement, he can make that argument in his pending appeal to the Veterans Court. Thus, the court concluded that Mr. Apollo did not establish that he lacked alternative means to obtain the relief he sought, and it therefore denied his petition for a writ of mandamus. The writ of mandamus is not intended to be used as a “substitute for the regular appeals process,” Cheney, 542 U.S. at 381, which is what the court found Mr. Apollo was attempting to do. We agree with the court’s legal analysis and therefore uphold its denial of the petition as within its discretion.
violation of 18 U.S.C. § 4. However, Mr. Apollo did not make any forgery claims in his mandamus petition, and he does not provide any evidence that the Veterans Court was even aware of—much less intentionally concealed—any alleged falsification by the DVA. Moreover, the asserted violation of a criminal statute ordinarily does not confer a private right of action on a private plaintiff merely upon a claim that he was affected by the violation. See Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 190 (1994); Cort v. Ash, 422 U.S. 66, 79 (1975). We are aware of no authority for the proposition that an alleged violation of the federal misprision of felony statute gives rise to a private right of action. Mr. Apollo’s argument that the Veterans Court improperly disregarded his claim to relief under 18 U.S.C. § 4 is therefore without merit. Mr. Apollo also apparently suggests that inconsistencies surrounding his termination date render the Veterans Court’s July 2005 order invalid. Mr. Apollo did not raise that issue below, however, and he cannot present that argument for the first time on appeal.
petition violated the Constitution. We do not have jurisdiction to hear such an unsupported assertion of a constitutional violation. The thrust of Mr. Apollo’s claim is that the Veterans Court’s decision was incorrect, and a simple error in a court decision does not ipso facto constitute a constitutional violation. Second, Mr. Apollo argues that the Veterans Court failed to address constitutional claims that he raised in his mandamus petition below. We have jurisdiction to decide constitutional issues decided by or presented to the Veterans Court. However, Mr. Apollo made no explicit constitutional claim in his petition for a writ of mandamus, and the Veterans Court did not decide any constitutional issues when it denied the petition. Rather, the court concluded that Mr. Apollo failed to satisfy the requirements for the issuance of a writ, and that conclusion was well founded.
To the extent that Mr. Apollo contends that he was unconstitutionally denied vocational rehabilitation benefits without the benefit of due process procedures, his argument is without merit. Although the DVA initially terminated Mr. Apollo’s benefits, it subsequently awarded him rehabilitation services retroactively. Mr. Apollo disputes the amount of reimbursement that he received, but he has been afforded the opportunity to contest the reimbursement level before the regional office and the Board in the case currently pending on appeal before the Veterans Court. He has thus not been deprived of due process by being denied an opportunity to have his claim addressed administratively and judicially. See Mansfield v. Peake, 525 F.3d 1312, 1319 (Fed. Cir. 2008).
For these reasons, we affirm the Veterans Court’s denial of Mr. Apollo’s petition for a writ of mandamus.

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Kentucky Coal Producers Self-Insurance Fund, an association organized pursuant to KRS 342.350 as a workers' compensation joint self-insurer, filed a petition for relief under chapter 11 of the Bankruptcy Code in this court on January 9, 1995.
The association was formed in 1981 for the purpose of qualifying to act as a group self-insurer under Kentucky law. Pursuant to 803 KAR 25:025 § 2(1) each member of a self-insurance group is jointly and severally liable for payment of workers' compensation claims covered by the group. Pursuant to 803 KAR 25:025 § 4(2), a group self-insurer that withdraws from its self-insurance program must make satisfactory arrangements for the continued payment and servicing of all outstanding claims. The Commissioner of the Department of Workers' Claims of the Labor Cabinet, Commonwealth of Kentucky, is responsible for ensuring compliance with the self-insurance provisions of the Kentucky Workers' Compensation Act. K.R.S. 342.228.
The debtor remained qualified and in good standing as a group self-insurer from 1982 until November 30, 1991 when it discontinued accepting new members and decided to wind up its affairs. At that point in time the trustees of the association became liquidating trustees. However, the association continues to transact business relating to claims incurred by employees of members prior to November 30, 1991. It settles/liquidates/pays workers' compensation claims incurred prior to November 30, 1991, collects premiums from its members who are jointly responsible for payment of such claims, and manages the Fund's assets from which such claims are paid. In this respect the association continues to transact business in much the same manner as it did prior to withdrawing from its self-insurance program. It must continue to so function until claims of employees of members that arose prior to November 30, 1991 are resolved. By continuing to function the association may protect members and former members from a multiplicity of suits for the collection of such claims.
When it sought relief under the Bankruptcy Code, Kentucky Coal Producers Self-Insurance Fund was a party to two civil actions pending in the United States District Court for this district. These civil actions, styled as indicated above, had been consolidated by the district court for pretrial purposes. These proceedings have been referred to this court because they are related to Kentucky Coal Producers' chapter 11 bankruptcy case. See Rule 20, Joint Local Rules for the United States District Courts of the Eastern and Western Districts of Kentucky. These consolidated proceedings are now denominated Adversary Proceeding 95-5018.
In U.S. District Court civil action no. 92-14 the plaintiff, General Reinsurance Corporation, a Delaware Corporation with its principal place of business at Stamford, Connecticut, seeks a declaration of rights as to the extent of its monetary liability on an "Excess Insurance Policy for Self-Insurer of Workers Compensation and Employers Liability" it issued to the defendant, Kentucky Coal Producers Self-Insurance Fund.
U.S. District Court civil action no. 92-166 was commenced in the local state circuit court and subsequently removed to the U.S. District Court. The plaintiffs in the action are Jay Barlow, Bill Terry, Robert Chadwell, Darius Sullivan, and Earl Cornett, in their capacity as Liquidating Trustees of Kentucky Coal Producers Self-Insurance Fund, as representatives of the Fund and its members, and as members of the Fund for themselves and on behalf of members. McCoy Coal Company, a member of the Fund, joined as a plaintiff for itself and in the name of and on behalf of the Fund and its members. Named defendants in the action are General Reinsurance Corporation and Genesis Underwriting Management Company. The plaintiffs seek a judgment reforming the insurance policy issued to Kentucky Coal Producers Self-Insurance Fund by General Reinsurance Corporation as well as compensatory, restitutory, and punitive damages on several grounds.
The multiplicity of plaintiffs in the latter action, which was removed from state court, is dictated by a state rule of law that an unincorporated association cannot sue or be sued solely in its own name. This rule of law can be circumvented and an unincorporated association can be made a party plaintiff or defendant in an action structured as a class action. A.M. Collectors Exchange v. Kentucky State Democratic Central Executive Committee, 566 S.W.2d 759 (Ky. Ct. App. 1978).
In U.S. District Court civil action no. 92-14 in which the plaintiff General Reinsurance Corporation had named Kentucky Coal Producers Self-Insurance Fund as sole defendant, the association asserted the defense that it lacked the capacity to be sued solely in its own name. The association also moved to dismiss the complaint on the ground it could be sued only by naming all of the members of the association as defendants, and one of its members, Coal Corporation of America, is a Delaware corporation, as is the plaintiff General Reinsurance Corporation, with the result there was a lack of diversity jurisdiction.
In response to the motion to dismiss its complaint, General Reinsurance Corporation moved for leave to file a tendered amended complaint to conform to Rule 23.2 of the Federal Rules of Civil Procedure governing class actions. The tendered amended complaint, which the district court permitted to be filed, names as the defendant McCoy Coal Company, as class representative of the members of Kentucky Coal Producers Self-Insurance Fund.
Based on the amended complaint of General Reinsurance Corporation and its order consolidating civil actions no. 92-14 and 92-166 for pretrial purposes, the district court overruled the motions of Kentucky Coal Producers Self-Insurance Fund to dismiss the complaint for lack of diversity jurisdiction, or in the alternative, to remand civil action no. 92-166, the removed action, to state court.
Subsequent to the commencement of Kentucky Coal Producers Self-Insurance Fund's bankruptcy case, the United States Trustee appointed a Committee of Employer/Members of the debtor to represent the interests of members of the association. 11 U.S.C. § 1102. This committee is a committee of codebtors in that members and former members of the debtor are subject to assessment for payment of workers' compensation claims that accrued prior to November 30, 1991.
The members of the Employer/Members Committee appointed by the United States Trustee are: Diamond May Coal Company, Beech Fork Processing, Inc. & Companies, Jericoal Mining, Inc., Canada Coal Company, Inc., Sandy Fork Mining Co., Inc. and Miller Brothers Construction, Inc.
On February 20, 1996, four of the members of the Employer/Members Committee, Beech Fork Processing, Inc., Diamond May Coal Company, Jericoal Mining, Inc. and Miller Brothers Construction, Inc., for themselves and on behalf of the committee, and on behalf of all similarly situated Fund members, commenced an action against several former officers, employees and trustees of the Fund, against Willis Carroon Corporation and Willis Carroon Administrative Services Corporation, third party claims administrator and exclusive insurance broker for the Fund, against Arthur Andersen, LLP, the accounting firm employed by the Fund, and against General Reinsurance Corporation. Adversary Proceeding No. 96-5019.
Three of the present Liquidating Trustees of the Fund who are named as defendants in this new adversary proceeding are plaintiffs in the civil action commenced by the Fund in state court against General Reinsurance Corporation and Genesis Underwriting Company, which was subsequently removed to the U.S. District Court and is now before this court. The three Liquidating Trustees who are plaintiffs in the removed action and who are defendants in the new adversary proceeding are Jay Barlow, Darius Sullivan and Earl Cornett. Earl Cornett is the President of McCoy Coal Company, which also is a plaintiff in the removed civil action no. 92-166 and is the named defendant class representative of Kentucky Coal Producers Self-Insurance Fund in General Reinsurance Corporation's amended complaint in civil action no. 92-14.
This matter is presently before the court on the motion of General Reinsurance Corporation to decertify the class and to dismiss the complaint in civil action no. 92-166 on the ground that the plaintiffs therein are no longer representative of the class of members of the Kentucky Coal Producers Self-Insurance Fund. General Reinsurance Corporation alleges this is so because three of the plaintiffs have now been sued for alleged fraud, breach of fiduciary duty, etc. by the Committee of Employer/Members appointed by the United States Trustee. General Reinsurance Corporation also seeks leave to file a Second Amended Complaint for Declaration of Rights in civil action no. 92-14 to name as defendants the members of the Official Committee of Employer/Members appointed by the United States Trustee as the new class representatives of Kentucky Coal Producers Self-Insurance Fund. General Reinsurance Corporation further moves the court to consolidate the new adversary proceeding against it commenced by the Committee of Employer/Members with the proceedings previously consolidated for pretrial purposes by the United States district court.
The Kentucky Coal Producers Self-Insurance Fund, an unincorporated association, is a "person" eligible for relief under the Bankruptcy Code. 11 U.S.C. §§ 101(9), 101(41), 109(b) and (d). Highway & City Freight Drivers v. Gordon, 576 F.2d 1285 (8th Cir. 1978), cert. denied 439 U.S. 1002 (1978); In re Cooper Properties Liquidating Trust, 61 B.R. 531 (Bankr. W.D. Tenn. 1986); In re Tru Block Concrete Products, Inc. Liquidating Trust, 27 B.R. 486 (Bankr. S.D. Cal. 1983); In re Lane County Sheriff's Officers Assn., 16 B.R. 190 (Bankr. D. Ore. 1981); see also In re Professional Air Traffic Controllers Orgn., 699 F.2d 539 (D.C. Cir. 1983).
Upon the filing of its petition for relief under chapter 11 of the Bankruptcy Code, Kentucky Coal Producers Self-Insurance Fund became a debtor in possession, 11 U.S.C. § 1101(1), with all the rights and powers of a trustee, 11 U.S.C. § 1107(a), including the right to sue and be sued. 11 U.S.C. § 323(b).
Also, upon the commencement of Kentucky Coal Producers Self-Insurance Fund's bankruptcy case, the United States District Court acquired jurisdiction of the case, and an additional ground of jurisdiction of the related civil actions now before the court. 28 U.S.C. § 1334(a) and (b).
Jurisdiction of these civil actions by and against the debtor Kentucky Coal Producers Self-Insurance Fund is no longer grounded solely on diversity of citizenship. Kentucky law governing the capacity of the debtor unincorporated association to sue and be sued is no longer relevant. The Bankruptcy Code which recognizes the right of the debtor upon becoming a debtor in possession to sue and be sued solely in its own name is now controlling. U.S. Const. art. VI. Consequently, it is not now necessary to continue to process civil actions no. 92-14 or 92-166, now consolidated as adversary proceeding no. 95-5018, as class actions.
General Reinsurance Corporation's Motion to File a Second Amended Complaint for Declaration of Rights in civil action no. 92-14 shall be overruled. The complaint may be amended to name the debtor in possession as sole defendant.
General Reinsurance Corporation's motion to decertify the class in civil action no. 92-166 is sustained. However, the motion to dismiss the complaint therein is overruled. Upon approval of a majority of the Liquidating Trustees the complaint may be amended to name Kentucky Coal Producers Self-Insurance Fund, debtor in possession, as the sole plaintiff in the action.
The complaint in adversary proceeding no. 96-5019, by certain members of the U.S. Trustee-appointed Committee of Employer/Members of the Debtor against former officers, present and former trustees of the debtor, and others, including General Reinsurance Corporation, does not purport to be an action in behalf of the debtor, although the allegations in the complaint appear to replicate some of the claims of the debtor against General Reinsurance Corporation. The complaint appears to be primarily an action for indemnity and contribution in behalf of members of the Kentucky Coal Producers Self-Insurance Fund, in the event the debtor's action against General Reinsurance Corporation and Genesis Underwriting is unsuccessful. The plaintiffs are and purport to represent codebtors of the debtor who are jointly liable with the debtor for payment of workers compensation claimants. 11 U.S.C. § 509.
To the extent the plaintiffs in adversary proceeding no. 96-5019 assert claims for damages for injuries to the debtor which in turn caused injury to them, the plaintiffs may not have standing to pursue such claims. Warren v. Manufacturers Nat'l. Bank of Detroit, 759 F.2d 542 (6th Cir. 1985). The plaintiffs may have standing to assert that they were fraudulently induced by some of the third party defendants to become or remain members of Kentucky Coal Producers Self-Insurance Fund.
In any event, the court finds the motion of the plaintiffs to hold adversary proceeding no. 96-5019 in abeyance pending the outcome of the consolidated civil actions of General Reinsurance Corporation against the Fund and the Fund against General Reinsurance Corporation, et al. should be sustained. The court also shall overrule the motion of General Reinsurance Corporation to consolidate adversary proceeding no. 96-5019 with adversary proceeding no. 95-5018. The court believes the success or failure of the Fund/debtor in possession in adversary proceeding no. 95-5018 will be binding on members of the debtor association in most respects.
Joseph M. Scott, Jr., Esq.
1. The motion of General Reinsurance Corporation to file a second amended complaint for declaration of rights in civil action no. 92-14 is overruled. General Reinsurance Corporation may amend its complaint to name the debtor in possession as sole defendant in that action.
2. The motion of General Reinsurance Corporation to decertify the class in civil action no. 92-166 is sustained. However, the motion of General Reinsurance Corporation to dismiss the complaint in that action is overruled. The complaint in that action may be prosecuted as an action solely in the name of the debtor in possession, Kentucky Coal Producers Self-Insurance Fund.
3. The motion of the plaintiffs in adversary proceeding no. 96-5019 to hold that action in abeyance pending the outcome of the actions consolidated as adversary proceeding no. 95-5018 is sustained.
4. The motion of General Reinsurance Corporation to consolidate adversary proceeding no. 96-5019 with adversary proceeding no. 95-5018 is overruled.
Randy Shaw, Esq.	J. Key Schoen, Esq.
Raymond G. Smith, Esq.	Walter M. Jones, Esq.
Bruce D. Atherton, Esq.	Caroline Boeh Baesler, Esq.
Joseph M. Scott, Jr., Esq.	Robert J. Brown, Esq.
Laura Day DelCotto, Esq.	James R. Adams, Esq.
General Reinsurance Corporation shall have through June 3, 1996 to file a response to the debtor's motion for partial summary judgment in adversary no. 95-5018. In the event that General Reinsurance Corporation does not file a cross-motion, the debtor shall have through June 18, 1996 to file its reply memorandum. In the event General Reinsurance Corporation does file a cross-motion for summary judgment in adversary no. 95-5018, the debtor's response and reply memorandum shall be due on July 13, 1996 and General Reinsurance shall have until July 22, 1996 in which to file its reply memorandum.


(1) An order that discharges, vacates or modifies a provisional remedy.
(2) An order that grants, continues, modifies, refuses or dissolves an injunction, or an order that grants or refuses relief in the form of mandamus, quo warranto or habeas corpus.
(3) An order that appoints a receiver or refuses to wind up a receivership or to take steps to accomplish the purposes thereof, such as directing sales or other disposal of property, or an order involving the tax or revenue laws, the title to real estate, the constitution of this state or the constitution, laws or treaties of the United States.
(4) A final decision in any action, except in an action where a direct appeal to the supreme court is required by law. In any appeal or cross appeal from a final decision, any act or ruling from the beginning of the proceedings shall be reviewable.
(1) A preliminary or final decision in which a statute of this state has been held unconstitutional as a violation of Article 6 of the constitution of the state of Kansas pursuant to K.S.A. 2017 Supp. 72-64b03, and amendments thereto. Any appeal filed pursuant to this subsection (b)(1) shall be filed within 30 days of the date the preliminary or final decision is filed.
(2) A final decision of the district court in any action challenging the constitutionality of or arising out of any provision of the Kansas expanded lottery act, any lottery gaming facility management contract or any racetrack gaming facility management contract entered into pursuant to the Kansas expanded lottery act.
(c) Other appeals. When a district judge, or a district magistrate judge who is regularly admitted to practice law in Kansas, in making in a civil action an order not otherwise appealable under this section, is of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, the judge shall so state in writing in such order. The court of appeals may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within 14 days after the entry of the order under such terms and conditions as the supreme court fixes by rule. Application for an appeal pursuant to this subsection shall not stay proceedings in the district court unless the judge of the district court or an appellate court or a judge thereof so orders.
History: L. 1963, ch. 303, 60-2102; L. 1963, ch. 304, § 1; L. 1975, ch. 178, § 28; L. 1976, ch. 251, § 30; L. 1986, ch. 115, § 93; L. 2004, ch. 3, § 1; L. 2005, ch. 194, § 24; L. 2007, ch. 110, § 59; L. 2010, ch. 135, § 179; L. 2014, ch. 71, § 7; July 1.
Section was amended twice in the 2007 session, see also 60-2102a.


Federal Housing Finance Agency; Federal Housing Finance Board.
Notice of proposed rulemaking; request for comment.
Governed by the Federal Housing Finance Agency's (FHFA) regulations, the Federal Home Loan Bank System's (System) Office of Finance, issues debt ("consolidated obligations") on which the Federal Home Loan Banks (Banks) are jointly and severally liable and publishes combined financial reports on the Banks so that investors in the consolidated obligations can assess the strength of the System that stands behind them. The Office of Finance (OF) is governed by a board of directors, the composition and functions of which are determined by FHFA's regulations. The FHFA's experience with the System and with the OF's combined financial reports during the recent period of market stress suggests that the OF and the System could benefit from a reconstituted and strengthened board. This proposed regulation is intended to achieve that.
Comments on the proposed regulation must be received on or before October 5, 2009. For additional information, see SUPPLEMENTARY INFORMATION.
• U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA30, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552.
• Hand Delivery/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA30, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The package should be logged at the Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m.
• E-mail: Comments to Alfred M. Pollard, General Counsel may be sent by e-mail at RegComments@FHFA.gov. Please include "RIN 2590-AA30" in the subject line of the message.
Joseph A. McKenzie, 202-408-2845, Division of Federal Home Loan Bank Regulation, Federal Housing Finance Agency, 1625 Eye Street, NW., Washington, DC 20006; or Neil Crowley, Deputy General Counsel, 202-343-1316, or Thomas E. Joseph, Senior Attorney-Advisor, 202-414-3095, Office of General Counsel, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The telephone number for the Telecommunications Device for the Deaf is (800) 877-8339.
The FHFA invites comments on all aspects of the proposed regulation, and will adopt a final regulation with appropriate changes after taking all comments into consideration. Copies of all comments will be posted on the Internet Web site at https://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel at (202) 414-6924.
Effective July 30, 2008, the Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654, transferred the supervisory and oversight responsibilities of the Office of Federal Housing Enterprise Oversight (OFHEO) over the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises), the oversight responsibilities of the Federal Housing Finance Board (FHFB or Finance Board) over the Banks and the Office of Finance (OF) (which acts as the Banks' fiscal agent) and certain functions of the Department of Housing and Urban Development to a new independent executive branch agency, the FHFA. See id. at § 1101, 122 Stat. 2661-62 ( amending 12 U.S.C. 4511). The FHFA is responsible for ensuring that the Enterprises and the Banks operate in a safe and sound manner, including that they maintain adequate capital and internal controls, that their activities foster liquid, efficient, competitive and resilient national housing finance markets, and that they carry out their public policy missions through authorized activities. See id. at § 1102, 122 Stat. 2663-64. The Enterprises, the Banks, and the OF continue to operate under regulations promulgated by OFHEO and the FHFB until the FHFA issues its own regulations. See id. at §§ 1302, 1313, 122 Stat. 2795, 2798.
The twelve Banks are instrumentalities of the United States organized under the Federal Home Loan Bank Act (Bank Act).1 See 12 U.S.C. 1423, 1432(a). The Banks are cooperatives; only members of a Bank may purchase the capital stock of a Bank, and only members or certain eligible housing associates (such as State housing finance agencies) may obtain access to secured loans, known as advances or other products provided by a Bank. See 12 U.S.C. 1426(a)(4), 1430(a), 1430b. Each Bank is managed by its own board of directors and serves the public interest by enhancing the availability of residential mortgage and community lending credit through its member institutions. See 12 U.S.C. 1427. Any eligible institution (generally a Federally insured depository institution or State-regulated insurance company) may become a member of a Bank if it satisfies certain criteria and purchases a specified amount of the Bank's capital stock. See 12 U.S.C. 1424; 12 CFR part 925.
1 Each Bank is generally referred to by the name of the city in which it is located. The twelve Banks are located in: Boston, New York, Pittsburgh, Atlanta, Cincinnati, Indianapolis, Chicago, Des Moines, Dallas, Topeka, San Francisco, and Seattle.
As government-sponsored enterprises (GSEs), the Banks are granted certain privileges under Federal law. In light of those privileges and their status as GSEs, the Banks typically can borrow funds at spreads over the rates on U.S. Treasury securities of comparable maturity lower than most other entities. The Banks pass along a portion of their GSE funding advantage to their members-and ultimately to consumers-by providing advances and other financial services at rates that would not otherwise be available to their members. Consolidated obligations (COs), consisting of bonds and discount notes, are the principal funding source for the Banks. The OF issues all COs on behalf of the twelve Banks. Although each Bank is primarily liable for the portion of consolidated obligations corresponding to the proceeds received by that Bank, each Bank is also jointly and severally liable with the other eleven Banks for the payment of principal and interest on all COs. See 12 CFR 966.9.
The OF was one of a number of joint Bank offices established by regulation by the former Federal Home Loan Bank Board (FHLBB), a predecessor agency to the FHFA. See 65 FR 324, 326 (Jan. 4, 2000). The OF was originally formed from two other joint Bank Offices, the Office of System Finance and the Office of Fiscal Agent. Among other things, OF was assigned the duties previously vested in the Fiscal Agent which included facilitating the issuance of COs. Id.
In 1989, as part of the amendments made to the Bank Act by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA),2all joint offices of the Bank System other than the OF were abolished. The FHLBB was also abolished and its regulatory authority over the Bank System, including OF, was transferred to the Finance Board. The FHLBB's regulations were also transferred to the Finance Board. Id. In 1992, the Finance Board reorganized the OF as fiscal agent of the Finance Board for issuing COs under section 11(c) of the Bank Act, and set forth other duties for OF.3 See 57 FR 11429 (Apr. 3, 1992) ( adopting 12 CFR part 941). The regulation also instituted a three-member board of directors for the oversight and management of the OF, made up of two Bank presidents and a private United States citizen with demonstrated expertise in financial markets. Id.
2 Public Law 101-73, 103 Stat. 183 (Aug. 9, 1989).
3 As it existed in 1992, section 11(c) of the Bank Act provided the Finance Board authority to issue the debt on which the Banks were jointly and severally liable. 12 U.S.C. 1431(c)(1992). HERA recently amended this provision and removed authority from the regulator to issue such debt on behalf of the Banks and provided the OF as agent for the Banks with authority to issue the COs. See § 1204(3)(B), Public Law 110-289, 122 Stat. 2786.
In January 2000, the Finance Board proposed changes to its regulations to alter how COs were issued under section 11of the Bank Act, reorganize the OF and its board of directors, and expand the duties of the OF, including assigning OF the duty to prepare the Bank System combined annual and quarterly financial reports. See 65 FR 324. As proposed, the January 2000 regulation transferred authority for issuance of the Bank COs from the Finance Board, which had been issuing debt pursuant to then-existing authority under section 11(c) of the Bank Act, to the Banks themselves pursuant to authority under section 11(a) of the Bank Act and subject to the requirement, among other things, that all such debt issued by the Banks be the joint and several obligations of all twelve Banks and be issued through OF as their agent. Id. Under the proposed regulation, the Finance Board retained the option to issue COs itself under section 11(c) of the Bank Act at any point in the future.
The Finance Board also believed that "[a]s a natural and necessary adjunct to the issuance of COs, the Banks also should be responsible for the preparation of the disclosure documents that facilitate CO issuance and for the periodic combined financial statements for the Bank System." Id. at 325. The Finance Board therefore proposed that OF, as the only joint Bank System office and existing agent for CO issuance, be assigned the duty of preparing the Bank System's combined financial reports. Id. The Finance Board also proposed to codify disclosure standards in the regulation, many of which had been set forth in a Finance Board policy statement. Other duties related to debt issuance and management were also proposed to be assigned to OF.
In light of the expanded duties assigned to OF as well as amendments to the Bank Act that had recently been made by the Gramm-Leach-Bliley Act (GLB Act),4the Finance Board also thought it was appropriate to alter both the size and composition of the OF board. Id. at 326. The Finance Board had two main goals in proposing its changes. First, it wanted to build on the governance structure in the Bank Act by which the Banks should be provided greater autonomy to manage their affairs. Second, it wanted to assure each Bank had representation on the OF board to help achieve operational goals and wanted to assure that the OF board itself had directors with experience and qualification to help OF meet the evolving needs of the Bank System.
4 Public Law 106-102, 113 Stat. 1338 (Nov. 12, 1999).
Under the 2000 proposal, the OF board of directors would have been expanded to 24 members, 12 of whom would have been appointed by the Banks, 6 of whom would have been elected by Bank members and 6 of whom would have been appointed by the Finance Board. The Finance Board also proposed that the chair and vice chair of the board be appointed by the Finance Board. The proposal would have required the OF board of directors to establish an audit committee with duties similar to those established under the regulations for the Banks' audit committees, an executive committee, and a committee to coordinate the issuance and servicing of COs.
After consideration of the comments on the proposed regulation, the Finance Board adopted many of the changes including those authorizing the Banks to issue COs under section 11(a) of the Bank Act and assigning to OF the function of preparing the Bank System's combined financial reports, along with additional duties. See 65 FR 36290 (June 7, 2000) ( adopting among other parts 12 CFR parts 966 and 985). The Finance Board did not, however, adopt the proposed changes to the OF board structure or composition. Instead, the new regulation incorporated the prior three-person board structure. The Finance Board also specified some additional duties for the OF board consistent with the additional functions that had been assigned to OF over the years. Since the 2000 rulemaking, no significant changes to the regulations governing the OF have been proposed.
Section 1201 of HERA requires the Director, when promulgating regulations relating to the Banks, to consider the following differences between the Banks and the Enterprises: Cooperative ownership structure; Mission of providing liquidity to members; Affordable housing and community development mission; capital structure; and Joint and several liability. See § 1201 Public Law 110-289, 122 Stat. 2782-83 ( amending 12 U.S.C. 4513). The Director also may consider any other differences that are deemed appropriate. In preparing this proposed regulation, the FHFA considered the differences between the Banks and the Enterprises as they relate to the above factors. The FHFA requests comments from the public about whether differences related to these factors should result in any revisions to the proposal.
As discussed in detail below, the FHFA is proposing a number of changes to the size and structure of the OF board of directors and how the OF board exercises oversight over the process for preparing the Bank System's combined financial reports. The FHFA believes that these changes will assist the Banks in coordinating among themselves the process of providing OF the necessary information to prepare the System combined financial reports, and that these changes will facilitate accurate and meaningful disclosure in the combined reports and, thereby, garner market confidence.
Because the Bank System's main source of funding is COs on which the Banks are jointly and severely liable, the combined financial reports prepared by OF remain an important source of information about the financial state of the Bank System as a whole and are an important tool in marketing System debt and in assuring the Banks' access to domestic and international financial markets. For these purposes, the combined financial reports provide a single source of information about the Bank System. Assuring that this information is consistent and can readily be compared across all Banks is important to market acceptance of Bank debt and hence to the continued financial health of the Banks.
The proposed regulation would achieve these purposes with two principal elements: first, by expanding the OF's board to include all of the Federal Home Loan Bank presidents plus an audit committee comprising three to five independent directors; and second; by empowering the audit committee to ensure that the combined financial reports are compiled using common accounting policies and procedures across the twelve Banks. The FHFA's authority to adopt this regulation is grounded in its general supervisory authority over the OF and the Banks, 12 U.S.C. 1311(b)(2), 1313(a)(1), 1319G, 1431.
The proposed regulation would re-adopt many of the provisions in current 12 CFR part 985, which established the OF and governs the duties and function of OF and its board of directors, and in 12 CFR part 989, which address audit requirements and financial statements for the Banks. It would, however, make a number of amendments to the current regulations, most significantly with regard to the structure and duties of both the OF board of directors and its audit committee. The proposed regulation also would make some changes with regard to the standards governing the Bank System's combined financial reports and would amend some of the current part 985 provisions to conform the regulatory language to statutory changes made by HERA. Under the proposed regulation, the regulations that had been set forth in the parts 985 and 989 of the former Finance Board regulations, would be removed and adopted by the FHFA, respectively, as 12 CFR parts 1273 and 1274.
Proposed part 1273 would provide regulations which re-establish the OF and set forth its duties, and functions. Under part 1273 as proposed, the specification of the OF's authority and functions would remain substantially unchanged, although the language in the regulations would be altered to reflect the fact that the FHFA is no longer authorized to issue debt on behalf of the Banks and the OF would thus be acting only as a agent for the Banks with respect to its debt issuance duties. See n.3 supra. The Banks would also remain responsible for jointly funding the OF, and the process and requirements for providing such funding would not change to any great degree. Under proposed § 1273.5, however, the formula for calculating each Bank's pro rata share of the reimbursement owed the OF would no longer be based on a formula set forth in the regulation. Instead, the OF board of directors would be allowed to establish any reasonable formula, subject to the right of the FHFA to review such formula and require changes to it.
The debt management functions and duties assigned to OF also would also remain much the same under the proposed regulation as currently, although, as discussed more fully below, the FHFA is proposing some changes to the standards governing the preparation of the combined financial reports. Under the proposed regulation, the OF would also still be required to monitor the unsecured credit exposure of the Banks and would be required to compile relevant data on such exposures.
As proposed, the specific requirements now set forth in 12 CFR part 989 would be readopted in part 12 CFR part 1274 almost in their entirety. The proposed regulation would make some conforming changes in § 1274.2 to reflect the fact that the FHFA is proposing an audit committee to be established for OF which would have a composition that is different from that of the OF board of directors as a whole. In addition, current section 989.4 of this title, which relates to voluntary Bank disclosure of financials, would not be re-adopted as part of the proposed part 1274 regulations. This particular provision pre-dated the Banks' registration of their stock with the Securities and Exchange Commission (SEC). Given that an individual Bank's disclosure of financial information is now subject to the SEC's regulations and oversight, the FHFA does not see a need to maintain this provision going forward.
The new structure being proposed for the OF board of directors is set forth in proposed § 1273.7. Under this provision, the OF board of directors would be composed of 15 to17 part-time members-the twelve Bank presidents and three to five independent directors. The independent directors would be required to be citizens of the United States and none could be an officer, employee, or director of any Bank or Bank System member, nor could the independent director have any substantial financial interest in a Bank System member. Persons affiliated with or having substantial financial interests in any CO seller or dealer group member under contract with OF would not qualify to be an independent director. The proposed regulation would also require the independent directors, as a group, to have substantial experience in financial and accounting matters.
Under the proposed regulation, the FHFA would appoint the first independent directors that serve on the board after the effective date of the regulation from candidates nominated by the Banks. Thereafter, the independent directors would be elected by majority vote of the OF board of directors. If the FHFA objected to the election of any individual independent director, the FHFA would retain the ability to appoint a more qualified director. As a practical matter, the FHFA would expect the OF board of directors to provide the names of, and background information on, nominees for board positions in sufficient time for the FHFA to raise any concerns prior to the actual election.
Terms for independent directors would be set at five years, although the proposal would require staggering of the seats to assure that no more than one seat would be scheduled to become vacant in any one year, so the initial terms could range from one to five years. If an independent director's seat became vacant for any reason before the end of a scheduled term, the proposed regulation would allow that seat to be filled by majority vote of the OF board, but only for the remainder of the original term.
The proposed regulation would also allow the FHFA to appoint the initial chair and vice chair of the OF board. The chair would be one of the independent directors while the vice chair could be appointed from among any of the directors. After the term of the initial chair or vice chair expired or became vacant for any other reason, the proposal would allow subsequent chairs and vice chairs to be elected by majority vote of the OF board. The chair would be elected from among the independent directors while the vice chair could be elected from among any of the directors. Under the proposal, the FHFA would retain the authority to object to the election of any chair or vice chair by providing the OF board of directors written notice within 20 calendar-days, upon FHFA receipt of notification of the election, and the board of OF would then be required to promptly elect a new chair or vice chair as appropriate.
The OF board of directors would be authorized to create committees, such as an executive committee, and to delegate authority to such committees, although the regulation would specifically require that an audit committee be established and would specify the duties of that committee. The functions and duties of any committee (including the scope of any delegation) would be specified in the board's bylaws or in specific committee charters. The bylaws and charters would be subject to review and approval by the FHFA. The OF board, or any committee thereof including the audit committee, would be authorized to hire outside counsel, independent accountants, or other outside experts at the expense of the OF to help it carry out its duties.
As under the current regulations, the proposed regulation would specify that Bank presidents would serve without additional compensation. The compensation for the independent directors would be set in accordance with 12 CFR part 918, which currently governs compensation for directors and chairs of the Banks' boards of directors. The current indemnification provision would also be carried over to the new regulation as now proposed.
The proposed duties of the OF board of directors are set forth in proposed § 1273.8. These duties closely correspond to those in the current regulations. Duties and functions related to the preparation of the combined financial reports and oversight of the internal and external audit function for OF and the combined reports, which are currently among the duties of the OF board of directors, would be specifically transferred to the audit committee, as is discussed in the next section.
Under the proposed regulation, the audit committee, constituted as described above, would assume the board's responsibilities for overseeing the audit function of the OF and the OF's preparation of accurate combined financial reports, including selection and appointment of the OF's internal and external auditors. As part of its responsibilities, the audit committee would be specifically authorized to ensure that the Banks adopt consistent accounting policies and procedures so that the combined financial reports will continue to be accurate and meaningful. If the Banks are not able to agree on such consistent accounting policies and procedures, the audit committee, in consultation with the FHFA, may prescribe them.
Consistent with the responsibility of the audit committee to ensure consistency of accounting policies and procedures across the Bank System, the regulations governing the content of the combined financial reports would be amended to include a requirement that information about the Banks be presented using consistent accounting policies and procedures (proposed § 1273.6(b)(2)). In addition, in acknowledgement of the increasingly national business models of major holding companies who can access multiple Banks through subsidiaries in different Bank districts, the regulations would be amended to include requirements that the combined financial reports include lists of the top ten holders of advances and of stock in the Bank System by holding company (proposed Part 1273 Appendix A, paragraphs A and G).
The proposed regulation does not contain any collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Therefore, the FHFA has not submitted any information to the Office of Management and Budget for review.
The proposed regulation applies only to the Banks, which do not come within the meaning of small entities as defined in the Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore in accordance with section 605(b) of the RFA, the FHFA certifies that this proposed regulation, if promulgated as a final regulation, will not have significant economic impact on a substantial number of small entities.
Federal home loan bank, Securities.
Accounting, Federal home loan banks, financial disclosure.
Federal home loan banks, securities.
1. Remove 12 CFR part 985.
2. Remove 12 CFR part 989.
12 U.S.C. 1431(a) and (c), 1440, 4511(b), 4513, 4514(a), 4526(a).
Audit Committee means the OF Independent Directors acting as the committee established in accordance with § 1273.9 of this part.
Bank written in title case, means a Federal Home Loan Bank established under section 12 of the Bank Act (12 U.S.C. 1432).
Bank Act means the Federal Home Loan Bank Act, as amended (12 U.S.C. 1421 through 1449).
Bank System means the Federal Home Loan Bank System, consisting of the twelve Banks and the Office of Finance.
Chair means the chairperson of the board of directors of the Office of Finance.
Chief Executive Officer or CEO means the chief executive officer of the Office of Finance.
Consolidated obligations means any bond, debenture or note on which the Banks are jointly and severally liable and which was issued under section 11 of the Bank Act (12 U.S.C. 1431) and any implementing regulations, whether or not such instrument was originally issued jointly by the Banks or by the Federal Housing Finance Board on behalf of the Banks.
Financing Corporation or FICO means the Financing Corporation established and supervised by the FHFA under section 21 of the Bank Act (12 U.S.C. 1441).
Independent Director means a member of the OF board of directors who meets the qualifications set forth in § 1273.7(a)(2) of this part.
NRSRO means a credit rating organization registered as a Nationally Recognized Statistical Rating Organization with the Securities and Exchange Commission.
Office of Finance or OF means the Office of Finance, a joint office of the Banks established under this part 1273 and referenced in the Bank Act and the Safety and Soundness Act.
Safety and Soundness Act means the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq. ), as amended.
§ 1273.2 Authority of the OF.
(a) General. The OF shall enjoy such incidental powers under section 12(a) of the Bank Act (12 U.S.C. 1432(a)), as are necessary, convenient and proper to accomplish the efficient execution of its duties and functions pursuant to this part, including the authority to contract with a Bank or Banks for the use of Bank facilities or personnel in order to perform its functions or duties.
(b) Agent. The OF, in the performance of its duties, shall have the power to act on behalf of the Banks in issuing consolidated obligations and in paying principal and interest due on the consolidated obligations, or other obligations of the Banks.
(c) Assessments. The OF shall have authority to assess the Banks for the funding of its operations in accordance with § 1273.5 of this part.
§ 1273.3 Functions of the OF.
(a) Joint debt issuance. Subject to parts 965 and 966 of this title, and this part, the OF as agent shall offer, issue and service (including making timely payments on principal and interest due) consolidated obligations.
(b) Preparation of combined financial reports. The OF shall prepare and issue the combined annual and quarterly financial reports for the Bank System in accordance with the requirements of § 1273.6(b) and Appendix A of this part, using consistent accounting policies and procedures as established under § 1273.9 of this part.
(c) Fiscal agent. The OF shall function as the fiscal agent of the Banks.
(d) Financing Corporation and Resolution Funding Corporation. The OF shall perform such duties and responsibilities for FICO as may be required under part 995 of this title, or for REFCORP as may be required under part 996 of this title or authorized by the FHFA pursuant to section 21B(c)(6)(B) of the Bank Act (12 U.S.C. 1441b(c)(6)(B)).
(a) Oversight and enforcement actions. The FHFA shall have the same regulatory oversight authority over the OF, the OF board of directors, the officers, employees, agents, attorneys, accountants, or other OF staff, as it has over a Bank and its respective directors, officers, employees, agents, attorneys, accountants, or other staff.
(b) Examinations. Pursuant to section 20 of the Bank Act (12 U.S.C. 1440), the FHFA shall examine the OF, all funds and accounts that may be established pursuant to this part 1273, and the operations and activities of the OF, as provided for in the Bank Act, the Safety and Soundness Act, or any regulations promulgated pursuant thereto.
(c) Combined financial reports. The FHFA shall determine whether a combined Bank System annual or quarterly financial report complies with the standards of this part.
§ 1273.5 Funding of the OF.
(a) Generally. The Banks are responsible for jointly funding all the expenses of the Office of Finance, including the costs of indemnifying the members of the OF board of directors, the Chief Executive Officer, and other officers and employees of the OF, as provided for in this part.
(ii) Subject to withdrawal by check, wire transfer or draft signed by the Chief Executive Officer or other persons designated by the OF board of directors.
(2) Each Bank's respective pro rata share of the reimbursement described in paragraph (b)(1) of this section shall be based on a reasonable formula approved by the OF board of directors. Such formula shall be subject to the review of the FHFA, and the OF board of directors shall make any changes to the formula as may be ordered by the FHFA from time to time.
(c) Alternative funding method. With the prior approval of the FHFA, the OF board of directors may, by contract with a Bank or Banks, choose to be reimbursed through a fee structure, in lieu of or in addition to assessment, for services provided to the Bank or Banks.
(d) Prompt reimbursement. Each Bank from time to time shall promptly forward funds to the OF in an amount representing its share of the reimbursement described in paragraph (b) of this section when directed to do so by the Chief Executive Officer pursuant to the procedures of the OF board of directors.
(e) Indemnification expenses. All expenses incident to indemnification of the members of the OF board of directors, the Chief Executive Officer, and other officers and employees of the OF shall be treated as an expense of the OF to be reimbursed by the Banks under the provisions of this part.
(f) Operating funds segregated. Any funds received by the OF from the Banks pursuant to this section for OF operating expenses promptly shall be deposited into one or more accounts and shall not be commingled with any proceeds from the sale of consolidated obligations in any manner.
§ 1273.6 Debt management duties of the OF.
(a) Issuing and servicing of consolidated obligations. The OF shall issue and service (including making timely payments on principal and interest due, subject to §§ 966.8 and 966.9 of this title) consolidated obligations pursuant to and in accordance with the policies and procedures established by the OF board of directors under this part.
(1) The scope, form and content of the disclosure generally shall be consistent with the requirements of the Securities and Exchange Commission Regulations S-K and S-X (17 CFR parts 229 and 210).
(2) Information about each Bank shall be presented as a segment of the Bank System as if generally accepted accounting principles regarding business segment disclosure applied to the combined annual and quarterly financial reports of the Bank System, and shall be presented using consistent accounting policies and procedures.
(3) The standards set forth in paragraphs (b)(1) and (b)(2) of this section are subject to the exceptions set forth in Appendix A to this part.
(4) The combined Bank System annual financial reports shall be filed with the FHFA and distributed to each Bank and Bank member within 90 days after the end of the fiscal year. The combined Bank System quarterly financial reports shall be filed with the FHFA and distributed to each Bank and Bank member within 45 days after the end of the of the first three fiscal quarters of each year.
(5) The Audit Committee shall ensure that the combined Bank System annual or quarterly financial reports comply with the standards of this part.
(6) The OF and the OF board of directors, including the Audit Committee, shall comply promptly with any directive of the FHFA regarding the preparation, filing, amendment, or distribution of the combined Bank System annual or quarterly financial reports.
(7) Nothing in this section shall create or be deemed to create any rights in any third party.
(c) Capital markets data. The OF shall provide capital markets information concerning debt to the Banks.
(d) NRSROs. The OF shall manage the relationships with NRSROs in connection with their rating of consolidated obligations.
(e) Research. The OF shall conduct research reasonably related to the issuance or servicing of consolidated obligations.
(f) Monitor Banks' credit exposure. The OF shall timely monitor, and compile relevant data on, each Bank's and the Bank System's unsecured credit exposure to individual counterparties.
§ 1273.7 Structure of the OF board of directors.
(B) 0.01% of the market capitalization of the member or dealer.
(ii) For purposes of this paragraph (a)(2), a holding company of a member of a Bank or a dealer group member shall be deemed to be a member if the assets of the holding company's member subsidiaries constitute 35% or more of the consolidated assets of the holding company.
(b) Terms. (1) Except as provided in paragraphs (b)(2) and (c)(1) of this section, each Independent Director shall serve for five-year terms (which shall be staggered so that no more than one Independent Director seat would be scheduled to become vacant in any one year), and shall be subject to removal or suspension or other enforcement action in accordance with § 1273.4(a) of this section. An Independent Director may not serve more than two full, consecutive terms. Time served by a private citizen member of the OF Board pursuant to an appointment made prior to the effective date of this part shall not count as a term for purposes of this restriction.
(2) The OF board of directors shall fill any vacancy among the Independent Directors occurring prior to the scheduled end of a term by majority vote, subject to the FHFA's review of, and non-objection to, the new Independent Director. The OF board of directors shall provide the FHFA with relevant biographic and background information, including information demonstrating that the new Independent Director meets the requirements of paragraph (a)(2) of this section, at least 20 business days before the person assumes any duties as a member of the OF board of directors. A person elected under this paragraph to fill a vacancy on the OF board of directors shall serve only for the remainder of the term associated with the vacant directorship.
(c) Initial selection of Independent Directors. (1) As soon as practicable after the effective date of this regulation, the FHFA shall fill the initial Independent Director positions by appointment. The Independent Directors shall be appointed for such periods of time, not to exceed five years, to assure the terms are staggered in accordance with paragraph (b)(1) of this section.
(2) Each Bank shall have the right to nominate one person for consideration for appointment as an Independent Director by the FHFA under this paragraph (c). The nominations will be made according to any procedures established by the FHFA. The FHFA may appoint persons nominated by the Banks, or other persons meeting the requirements of paragraph (a)(2) of this section, or some combination.
(d) Election of Independent Directors after the initial terms. Once the terms of the Independent Directors initially appointed by the FHFA expire or the positions otherwise become vacant, the Independent Directors subsequently shall elected by majority vote of the OF board of directors, subject to FHFA's review of, and non-objection to, each new Independent Director. The OF board of directors shall provide the FHFA with relevant biographic and background information, including information demonstrating that the new Independent Director meets the requirements of paragraph (a)(2) of this section, at least 20 business days before the person assumes any duties as a member of the OF board of directors. If the OF board of directors, in the FHFA's judgment, fails to elect a suitably qualified person, the FHFA may appoint some other person who meets the requirements of paragraph (a)(2) of this section.
(e) Initial Selection of Chair and Vice Chair. The first Chair and Vice Chair of the OF board of directors after the effective date of this regulation shall be appointed by the FHFA. The Chair shall be selected from among the Independent Directors appointed under paragraph (c)(1) of this section. The Vice-chair shall be selected from among all OF board directors.
(2) Subsequent Vice Chairs shall be elected by majority vote of the OF board of directors from among all directors.
(3) The OF board of directors shall promptly inform the FHFA of the election of a Chair or Vice Chair. If the FHFA objects to any Chair or Vice Chair elected by the OF board of directors, the FHFA shall provide written notice of its objection within 20 business days of the date that the FHFA first receives the notice of the election of the Chair and or Vice Chair, and the OF board of directors must then promptly elect a new Chair or Vice Chair, as appropriate.
(g) Committees. In addition to the Audit Committee required under § 1273.9 of this part, the OF board of directors may establish other committees, including an Executive Committee. The duties and powers of such committee, including any powers delegated by the OF board of directors, shall be specified in the by-laws of the board of directors or the charter of the committee, which shall be subject to review and approval by the FHFA.
(h) Compensation. (1) The Bank presidents shall not receive any additional compensation or reimbursement as a result of their service as a director of the OF board.
(2) The OF shall pay compensation and expenses to the Independent Directors in accordance with the requirements for payment of compensation and expenses to Bank chairs and directors as set forth in part 918 of this title.
(i) Indemnification. The OF shall indemnify its directors, the CEO, and other officers and employees of the OF under such terms and conditions as shall be determined by the OF board of directors, provided that such terms and conditions are consistent with the terms and conditions of indemnification of directors, officers, and employees of the Bank System generally.
(j) Delegation. In addition to any delegation to a committee allowed under paragraph (g) of this section, the OF board of directors may delegate any of its authority or duties to any employee of the OF in order to enable OF to carry out its functions, provided that such delegation remains subject to the review of the FHFA, and the FHFA reserves the right in its sole discretion to require the OF board of directors to withdraw or change the scope of the delegation.
(k) Outside staff and consultants. In carrying out its duties and responsibilities, the OF board of directors, or any committee thereof, shall have authority to retain staff and outside counsel, independent accountants, or other outside consultants at the expense of the OF.
§ 1273.8 General duties of the OF board of directors.
(a) General. (1) Conduct of business. Each director shall have the duties described in § 917.2(b) of this title, as appropriate.
(2) Bylaws. The OF board of directors shall adopt bylaws in accordance with the provisions of § 917.10 of this title.
(b) Meetings and quorum. The OF board of directors shall conduct its business by majority vote of its members at meetings convened in accordance with its bylaws, and shall hold no fewer than six in-person meetings annually. Due notice shall be given to the FHFA by the Chair prior to each meeting. A quorum, for purposes of meetings of the OF board of directors, shall not be less than ten members.
(iii) Positioning the issuance of debt to take advantage of current and future capital market opportunities.
(iii) Serve as a member of the Directorate of the REFCORP, pursuant to section 21B(c)(1)(A) of the Bank Act (12 U.S.C. 1441b(c)(1)(A)).
(6) Assume any other responsibilities that may from time to time be assigned to it by the FHFA.
(e) No rights created. Nothing in this part shall create or be deemed to create any rights in any third party.
(a) Composition. The Independent Directors shall serve as the Audit Committee.
(b) Responsibilities. (1) The Audit Committee shall be responsible for overseeing the audit function of the OF and the preparation and accuracy of the Bank System's combined financial reports.
(2) For purposes of the combined financial reports, the Audit Committee shall ensure that the Banks adopt consistent accounting policies and procedures such that the information submitted by the Banks to OF may be combined to create accurate and meaningful combined financial reports.
(3) The Audit Committee, in consultation with the FHFA, may establish common accounting policies and procedures for the information submitted by the Banks to the OF for the combined financial reports where the Committee determines such information provided by the several Banks is inconsistent and that consistent policies and procedures regarding that information are necessary to create accurate and meaningful combined financial reports.
(ii) The requirements pertaining to audit committee reports set forth in Item 306 of Regulation S-K promulgated by the Securities and Exchange Commission.
(5) The Audit Committee shall oversee internal audit activities, including the selection, evaluation, compensation and, where appropriate, replacement of the internal auditor. The internal auditor shall report directly to the Audit Committee and administratively to executive management.
(6) The Audit Committee shall have the exclusive authority to employ and contract for the services of an independent, external auditor for the Banks' annual and quarterly combined financial statements.
(c) No delegation. The Audit Committee may not delegate the responsibilities assigned to it under this section to any person, or to any other committee or sub-committee of the OF board of directors.
A. Related-party transactions. Item 404 of Regulation S-K, 17 CFR 229.404, requires the disclosure of certain relationships and related party transactions. In light of the cooperative nature of the Bank System, related-party transactions are to be expected, and a disclosure of all related-party transactions that meet the threshold would not be meaningful. Instead, the combined annual report will disclose the percent of advances to members an officer of which serves as a Bank director, and list the top ten holders of advances in the Bank System and the top five holders of advances by Bank, with a further disclosure indicating which of these members had an officer that served as a Bank director. The combined financial report will also disclose the top ten holders of advances in the Bank System by holding company, where the advances of all affiliates within a holding company are aggregated.
B. Biographical information. The biographical information required by Items 401 and 405 of Regulation S-K, 17 CFR 229.401 and 405, will be provided only for members of the OF board of directors, including the Bank presidents, the chair and vice chair of the board of directors of each Bank, and the Chief Executive Officer of OF.
C. Compensation. The information on compensation required by Item 402 of Regulation S-K, 17 CFR 229.402, will be provided only for Bank presidents and the CEO of the OF. Since stock in each Bank trades at par, the OF will not include the performance graph specified in Item 402(1) of Regulation S-K, 17 CFR 229.402(1).
D. Submission of matters to a vote of stockholders. No information will be presented on matters submitted to shareholders for a vote, as otherwise required by Item 4 of the SEC's form 10-K, 17 CFR 249.310. The only item shareholders vote upon is the annual election of directors.
E. Exhibits. The exhibits required by Item 601 of Regulation S-K, 17 CFR 229.601, are not applicable and will not be provided.
F. Per share information. The statement of financial information required by Items 301 and 302 of Rule S-K, 17 CFR 229.301 and 302, is inapplicable because the shares of the Banks are subscription capital that trades at par, and the shares expand or contract with changes in member assets or advance levels.
G. Beneficial ownership. Item 403 of Rule S-K, 17 CFR 229.403, requires the disclosure of security ownership of certain beneficial owners and management. The combined financial report will provide a listing of the ten largest holders of capital stock in the Bank System and a listing of the five largest holders of capital stock by Bank. This listing will also indicate which members had an officer that served as a director of a Bank. The combined financial report will also disclose the top ten holders of Bank stock in the Bank System by holding company, where the Bank stock of all affiliates within a holding company is aggregated.
Sec. 1274.1 Definitions.1274.2 Audit requirements.1274.3 Requirements to provide financial and other information to the FHFA and the OF.
12 U.S.C. 1426, 1431, 4511(b), 4513, 4526(a).
Office of Finance or OF has the same meaning as set forth in § 1273.1 of this chapter.
(a) Each Bank, the OF and the FICO shall obtain annually an independent external audit of and an audit report on its individual financial statement.
(b) The OF audit committee shall obtain an audit and an audit report on the combined annual financial statements for the Bank System.
(c) All audits must be conducted in accordance with generally accepted auditing standards and in accordance with the most current government auditing standards issued by the Office of the Comptroller General of the United States.
(d) An independent, external auditor must meet at least twice each year with the audit committee of each Bank, the audit committee of OF, and the FICO Directorate.
(e) FHFA examiners shall have unrestricted access to all auditors' work papers and to the auditors to address substantive accounting issues that may arise during the course of any audit.
§ 1274.3 Requirement to provide financial and other information to the FHFA and the OF.
In order to facilitate the preparation by the OF of combined Bank System annual and quarterly reports, each Bank shall provide to the OF in such form and within such timeframes as the FHFA or the OF shall specify, all financial and other information and assistance that the OF shall request for that purpose. Nothing in this section shall contravene or be deemed to circumscribe in any manner the authority of the FHFA to obtain any information from any Bank related to the preparation or review of any financial report.