ROCIS_ 2014 Renwal FHLB Directors Supporting Statement

"FEDERAL HOME LOAN BANK DIRECTORS"
OMB NUMBER 2590-0006
SUPPORTING STATEMENT

A. JUSTIFICATION
1. Circumstances necessitating the collection of information
Section 7 of the Federal Home Loan Bank Act (Bank Act) vests the management of each Federal
Home Loan Bank (Bank) in its board of directors. 1 As required by section 7, each Bank’s board
comprises two types of directors: (1) member directors, who are drawn from the officers and
directors of member institutions located in the Bank’s district and who are elected every four
years to represent members in a particular state in that district; and (2) independent directors,
who are unaffiliated with any of the Bank’s member institutions, but who reside in the Bank’s
district and are elected every four years on an at-large basis. 2 Section 7 and FHFA’s
implementing regulation, codified at 12 CFR part 1261, establish the eligibility requirements for
both types of Bank directors and the qualifications for independent directors, and set forth the
procedures for their election.
Under part 1261 of the regulations, each Bank must determine the eligibility of nominees to
serve as member and independent directors on its board and administer the annual director
election process. As part of this process, a Bank must require each candidate for either type of
directorship, including any incumbent that may be a candidate for reelection, to complete and
return to the Bank a form that solicits information about the candidate’s statutory eligibility to
serve and, in the case of independent director candidates, about his or her professional
qualifications for the directorship being sought. 3 Specifically, member director candidates are
required to complete the Federal Home Loan Bank Member Director Eligibility Certification
Form (Member Director Eligibility Certification Form), while independent director candidates
must complete the Federal Home Loan Bank Independent Director Application Form
(Independent Director Application Form).
Each Bank must also require all of its incumbent directors to certify annually that they continue
to meet all eligibility requirements. 4 Member directors do this by completing the Member
Director Eligibility Certification Form again every year, while independent directors complete
the abbreviated Federal Home Loan Bank Independent Director Annual Certification Form
(Independent Director Annual Certification Form) to certify their ongoing eligibility.

1

See 12 U.S.C. § 1427(a)(1).
See 12 U.S.C. §§ 1427(b) and (d).
3
See 12 CFR 1261.7(c) and (f); 12 CFR 1261.14(b).
4
See 12 CFR 1261.12.
2

FEDERAL HOME LOAN BANK DIRECTORS: OMB NUMBER 2590-0006
SUPPORTING STATEMENT

2. Use of Data
The Banks use the information collection contained in the Independent Director Application
Form and part 1261 to determine whether individuals who wish to stand for election or reelection as independent directors satisfy the statutory eligibility requirements and possess the
professional qualifications required under the statute and regulations. Only individuals meeting
those requirements and qualifications may serve as an independent director. 5 On an annual
basis, the Banks use the information collection contained in the Independent Director Annual
Certification Form and part 1261 to determine whether its incumbent independent directors
continue to meet the statutory eligibility requirements.
The Banks use the information collection contained in the Member Director Eligibility
Certification Form and part 1261 to determine whether individuals who wish to stand for
election or re-election as member directors satisfy the statutory eligibility requirements. Only
individuals meeting these requirements may serve as a member director. 6 On an annual basis,
the Banks also use the information collection contained in the Member Director Eligibility
Certification Form and part 1261 to determine whether its incumbent member directors continue
to meet the statutory eligibility requirements.
In practice, the Banks provide FHFA with copies of all completed forms, which the agency uses
to monitor the Bank director election processes and to obtain information on the composition of
the Banks’ boards of directors and of the pool of individuals from which the directors are drawn.
However, under the part 1261, the Banks are required to submit only the Independent Director
Application Forms to FHFA. Once these forms are submitted, agency has two weeks to provide
the Banks with any desired commentary relating to an independent director candidate. 7

3. Use of Information Technology
Individuals have the option of completing each of the forms online in electronic form, although
there currently is no mechanism for providing an electronic signature or for electronic
submission of the form. Forms that are completed online must be printed out and submitted to
the Bank in paper form with original signatures.

4. Efforts to Identify Duplication
The Banks are required by statute to collect the information requested on all three forms and this
information is not available from any other source.
5

See 12 U.S.C. § 1427(a)(3).
See 12 U.S.C. § 1427(a)(3) and (b)(1).
7
See 12 CFR 1261.7(f).
6

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SUPPORTING STATEMENT

5. Impact on Small Entities
The information collection does not have a significant economic impact on a substantial number
of small entities. Respondents are individuals.

6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
If the information requested in the forms were not collected at the times specified in part 1261,
the Banks would be unable to determine, and FHFA would be unable to monitor, whether
prospective and incumbent Bank directors satisfy the statutory eligibility requirements and
whether independent director candidates possess the professional qualifications required by
statute.

7. Circumstances Requiring Special Information Collection
There are no special circumstances that would require FHFA to conduct the information
collection in a manner inconsistent with the guidelines provided in Question 7.

8. Solicitation of Comments on Information Collection
In accordance with the requirements of 5 CFR § 1320.8(d), FHFA published a request for public
comments regarding this information collection in the Federal Register on August 11, 2014. See
79 FR 46801 (Aug. 11, 2014). The 60-day comment period closed on October 10, 2014. FHFA
received one comment letter, signed jointly by two Members of Congress, that suggested several
revisions to the forms and questioned the accuracy of FHFA’s burden estimate pertaining to
completion of the Independent Director Application Form. For the reasons stated below, the
agency has decided against making any of the suggested revisions or changing the burden
estimate.
Citing the importance of diversity among Bank directors, the commenters suggested that FHFA
revise the forms to include questions regarding the gender, race, ethnicity, and geographic
location of the respondent. With respect to a respondent’s geographic location, the application
forms already address that issue by requiring respondents to provide their home and business
addresses. With respect to the other three elements, FHFA anticipates obtaining that information
through a separate rulemaking. In June 2014 FHFA issued a proposed rule to amend its
regulations on Minority and Women Inclusion (MWI), located at 12 CFR part 1207. That
proposal would require each Bank annually to request that each member of its board of directors
voluntarily provide the Bank with information about his or her minority and gender
classification. The Banks would then provide that information, on an aggregate basis and
without including personally identifiable information, to FHFA as part of their annual MWI

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SUPPORTING STATEMENT

reports to the agency. 8 The comment period for that rulemaking ended on August 25, 2014, and
FHFA is in the process of reviewing the comments received and developing a final rule.
Because FHFA anticipates having in place another avenue for receiving information about the
diversity of Bank boards of directors, it does not believe that it is necessary to collect that same
information through the director application forms.
The Bank Act requires that at least two of each Bank’s independent directors qualify as “public
interest” directors—i.e., that they have more than four years of experience representing
consumer or community interests on banking services, credit needs, housing, or consumer
financial protections. 9 The commenters’ second suggested revision relates to question 3 in the
“Statutory Eligibility Requirements” section of the Independent Director Application Form,
which asks respondents who are interested in serving as a “public interest” director to “provide
information on how you have represented such consumer or community interests for more than
four years.” The commenters suggest that FHFA revise this question to require that each such
respondent also be required to specify the “leadership role” that the individual has held in a
“mission-driven organization.”
The agency has declined to make this revision for several reasons. First, the principal purpose of
the form is to determine whether the respondent satisfies the statutory and regulatory eligibility
requirements for being a public interest director. While it has been FHFA’s experience that
most, if not all, of the Banks’ “public interest” director candidates have in fact served in a
leadership position with a “mission-driven” organization, the Bank Act does not require that an
individual fulfill the “public interest” requirement in this particular manner in order to be
eligible. If the question were to be revised as suggested, it would then imply that serving in such
a position is a necessary means of fulfilling the eligibility requirements and would likely cause
confusion among potential applicants about the actual eligibility requirements. Second, FHFA,
which reviews the completed form for every individual a Bank proposes to nominate for an
independent directorship, is unaware of any instance in recent years in which an applicant
responding to question 3 has failed to specify the position or positions he or she held with any
organization mentioned therein. In most cases, respondents have provided additional detail as to
the duties undertaken while holding those positions. Both the Banks and FHFA review the
information provided in order to confirm that the persons actually satisfy the statutory eligibility
requirements for the public interest directorships. If an applicant for a “public interest”
independent directorship did not include such information, it is likely that the Bank, or FHFA,
would require the respondent to provide such information before he or she could be considered
for the directorship. Finally, question 1 in the “Selection Criteria” section of the Independent
Director Application Form already requests that applicants provide detailed information about
their leadership experience, and their responses to that question should provide the Banks and
FHFA with information about the leadership roles they have had with any consumer- or
community interest-focused organizations.

8
9

See 79 FR 35960 (June 25, 2014). The proposed rule would also apply to the Bank System’s Office of Finance.
See 12 U.S.C. § 1427(a)(3)(B)(ii).

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SUPPORTING STATEMENT

The commenters’ third suggested revision relates to question 2(G) in the “Selection Criteria”
section of the Independent Director Application Form, which is intended to elicit information on
experience that the respondent may have that is related to “the mission of the Banks.” The
question characterizes the Banks’ mission as being “to support the housing finance activities of
their members, which includes residential mortgage finance and community and economic
development lending activities.” Noting that “Congress has consistently defined the [Banks’]
mission as serving both housing and community economic development needs of people and
their communities,” the commenters suggest that FHFA revise question 2(G) so that it instead
describes the mission of the Banks as being to support the “housing and community economic
development activities of its members.” There is no specific definition of the Banks’ mission.
Nonetheless, since its inception in 1932, the principal activity of the Banks has been to support
their members’ residential housing finance business by providing loans to their members (known
as “advances”) that are secured by the members’ assets, most typically other residential mortgage
loans. In 1989, Congress further required the Banks to establish Affordable Housing Programs,
through which members can support access to housing for persons with lower or moderate
incomes, and to support their members’ community and economic development activities.
Thereafter, the Federal Housing Finance Board, FHFA’s predecessor agency as regulator of the
Banks, construed the “housing finance mission” of the Banks broadly, and to include two
elements: providing support for their members’ residential mortgage lending, and providing
support for their members’ community and economic development activities. FHFA has
embraced the view that support for the members’ community and economic development
activities is a core aspect of the Banks’ housing finance mission and believes that the existing
language of the form, which explicitly refers to “community and economic development
activities,” is consistent with that view and need not be changed.
Finally, the commenters assert that FHFA’s estimate that it will take a respondent an average of
3 hours to complete the Independent Director Application Form is too high and suggest that an
estimate of one hour would be more accurate. The commenters argue that the types of
individuals being considered for a Bank directorship would be likely to have already prepared
similar information for other purposes, which could be drawn upon to reduce the time needed to
complete the form. In deciding upon a burden estimate of 3 hours per form, FHFA considered
the amount of time it would take an individual completing the form for the first time to: (1) read
through the questions and background information to understand the statutory requirements and
the reasoning behind the questions; (2) gather the information requested on the form and any
additional materials he or she wishes to provide; (3) prepare narrative answers of sufficient detail
to demonstrate his or her eligibility and qualifications to serve; and (4) sign the form and
transmit it to the Bank. Undoubtedly, many respondents will have materials at hand containing
relevant information that can be readily incorporated into the electronic version of the form,
which may reduce the amount of time it will take them to complete the form. It may also be true
that an incumbent seeking reelection may require less time to update a previously completed
version of the form. Those situations will not necessarily be the case for all respondents,
however, because FHFA has observed that a number of applicants still complete the eligibility
forms by hand, which takes longer to do. Moreover, in developing its burden estimates for
collections of information, it has been the agency’s practice to err on the high side and not to
assume that all respondents will use the most efficient methods for completing the forms.

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FEDERAL HOME LOAN BANK DIRECTORS: OMB NUMBER 2590-0006
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Because there is no way of knowing what time-saving resources a respondent may be able to
draw upon in completing the form, the agency has decided to retain the existing estimate of 3
hours.

9. Provision of Payments to Respondents
No payment or gift will be provided to any respondent.

10. Assurance of Confidentiality
FHFA and the Banks maintain the confidentiality of information obtained from respondents as
required by applicable statute, regulation or agency policy.

11. Justification of Sensitive Questions
There are no questions of a sensitive nature in the information collection.

12. Estimated Burden of Information Collection
The estimated annualized hour burden imposed upon respondents by the information collection
is 145 hours. The estimated annualized cost associated with this burden is $38,280, which
includes salaries, benefits, and overhead costs associated with review and completion of the
forms. These estimates are based on the following calculations:

I.

Member Director Eligibility Certification Form

The estimated annualized hour burden for all prospective and incumbent member directors
associated with completion of the Member Director Eligibility Certification Form is 37 hours.
The estimated annualized cost is $9,768. These estimates are based on the following
calculations:
Candidates for member directorships complete form in year of election to verify they are eligible
to serve:
•
•
•
•
•

Review/completion time per form: .25 hours
Total forms/respondents: 68
Total hours: 17
Hourly rate: $264 (includes salary, benefits, and overhead)
Total cost: $4,488

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FEDERAL HOME LOAN BANK DIRECTORS: OMB NUMBER 2590-0006
SUPPORTING STATEMENT

Incumbent member directors complete form annually to verify they remain eligible to serve:
•
•
•
•
•

II.

Review/completion time per form: .25 hours
Total forms/respondents: 80
Total hours: 20
Hourly rate: $264 (includes salary, benefits and overhead)
Total cost: $5,280

Independent Director Application Form

The estimated annualized hour burden for all prospective and incumbent member directors
associated with completion of the Independent Director Application Form is 75 hours. The
estimated annualized cost is $19,800. These estimates are based on the following calculations:
Candidates for independent directorships complete form in year of election to verify they are
eligible to serve and possess the required professional qualifications:
•
•
•
•
•

III.

Review/completion time per form: 3 hours
Total forms/respondents: 25
Total hours: 75
Hourly rate: $264 (includes salary, benefits, and overhead)
Total cost: $19,800

Independent Director Annual Certification Form

The estimated annualized hour burden for all prospective and incumbent member directors
associated with completion of the Independent Director Annual Certification Form is 33 hours.
The estimated annualized cost is $8,712. These estimates are based on the following
calculations:
Incumbent independent directors complete form annually to verify they remain eligible to serve:
•
•
•
•
•

Review/completion time per form: .5 hours
Total forms/respondents: 66
Total hours: 33
Hourly rate: $264 (includes salary, benefits, and overhead)
Total cost: $8,712

13. Estimated Total Annual Cost Burden to Respondents
There are no additional costs associated with completion of the forms.

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14. Estimated Cost to the Federal Government
The estimated annualized hour burden imposed upon the federal government by the information
collection is 82 hours. The estimated annualized cost to the federal government associated with
this burden is $7,708, which includes salaries, benefits, and overhead costs associated with
review and completion of the forms. These estimates are based on the following calculations:

I.

Member Director Eligibility Certification Form

FHFA conducts no formal review of these forms.

II.

Independent Director Application Form

FHFA staff reviews each form to ensure each independent director candidate is eligible to serve
and possess the required professional qualifications:
•
•
•
•
•

III.

Review/Processing time: 3 hours
Total forms: 25
Total hours: 75
Hourly rate: $94 (includes salary, benefits, and overhead)
Total cost: $7,050

Independent Director Annual Certification Form

FHFA staff reviews each form to ensure each incumbent independent director remains eligible to
serve:
•
•
•
•
•

Review time: .1 hours
Total Forms: 66
Total hours: 7
Hourly rate: $94 (includes salary, benefits, and overhead)
Total cost: $658

15. Reasons for Change in Burden
FHFA has decreased the total estimated annualized hour burden imposed upon respondents by
this information collection from 278 hours in its 2011 submission to 145 hours in this
submission. It has also decreased the estimated annualized cost associated with this burden from
$68,944 in its 2011 submission to $38,280 in this submission.

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FEDERAL HOME LOAN BANK DIRECTORS: OMB NUMBER 2590-0006
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FHFA reduced the burden estimate for the Member Director Eligibility Certification Form from
70 hours in its 2011 submission to 37 hours in this submission. This reduction is due to two
factors. First, the agency decreased the estimated annual number of member director nominees
completing the form in the year of their candidacy from 100 to 68, based upon the actual average
number member directorship candidates between 2011 and 2013. Second, the agency reduced
the per form estimate for member directorship candidates from 0.5 to 0.25 to match its estimate
for the amount of time it takes an incumbent director to complete the form. This is because it is
the same form and requests minimal information.
FHFA reduced the burden estimate for the Independent Director Application Form from 180
hours in its 2011 submission to 75 hours in this submission. This reduction is due entirely to a
reduction in the estimated annual number of independent director nominees completing the form
from 60 to 25, based upon the actual average number independent directorship candidates
between 2011 and 2013. The agency increased the burden estimate for the Independent Director
Annual Certification Form from 28 hours in its 2011 submission to 33 hours in this submission
to reflect an increase in the estimated annual number of incumbent independent directors
completing the form from 55 to 66, based upon the actual average number incumbent
independent directors between 2011 and 2013.
The agency has revised the associated cost estimates for respondents to reflect the changes in the
burden estimates. It also increased the estimated hourly rates for respondents by 6.5 percent to
reflect the increase in the Consumer Price Index for All Urban Consumers (CPI-U) between
November 2010 and November 2013.
FHFA has increased the total estimated annualized hour burden imposed upon the Federal
government by this information collection from 73 hours in its 2011 submission to 82 hours in
this submission. It has also increased the estimated annualized cost associated with this burden
from $6,862 in its 2011 submission to $7,708 in this submission. This increase is due entirely to
an increase in the estimated review/processing time for the Independent Director Application
Form from 1.5 hours to 3 hours to reflect actual experience over the last three years. This
increase was offset somewhat by the lower estimate for the number of such forms received
annually (discussed above) and by a decrease in the estimated review/processing time for the
Independent Annual Certification Form from 0.5 hours to 0.1 hours to reflect actual experience.
In order to reflect the recent general lack of increase in Federal salaries, the agency did not
change the estimated hourly rate for these components.

16. Plans for Tabulation, Statistical Analysis and Publication
FHFA will not publish the results of this information collection.

17. If Seeking Approval to Not Display the Expiration Date for OMB Approval of the
Information Collection, Explain the Reasons Whey Display Would Be Inappropriate

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FEDERAL HOME LOAN BANK DIRECTORS: OMB NUMBER 2590-0006
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FHFA plans to display the expiration date for OMB approval.

18. Explain Each Exception to the Topics of the Certification Statement Identified in
“Certification for Paperwork Reduction Act Submission.”
There are no exceptions to the certification statement identified in Item 18.

B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
The information collection does not employ statistical methods.

Attachments (Forms)

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