Capital Requirements 2016 Supporting Statement (2016-12-21)_Final

“FEDERAL HOME LOAN BANK CAPITAL STOCK"
OMB NUMBER 2590-0002
SUPPORTING STATEMENT
This information collection was previously known as “Capital Requirements for the Federal Home
Loan Banks.” The Federal Housing Finance Agency (FHFA or the Agency) is changing the name
of the information collection to "Federal Home Loan Bank Capital Stock” to more accurately
reflect the nature of the information collected.

A.

JUSTIFICATION

1. Circumstances necessitating the collection of information
The Federal Home Loan Bank System consists of eleven regional Federal Home Loan Banks
(Banks) and the Office of Finance (a joint office that issues and services the Banks’ debt
securities). The Banks are wholesale financial institutions, organized under authority of the
Federal Home Loan Bank Act (Bank Act) to serve the public interest by enhancing the availability
of residential housing finance and community lending credit through their member institutions and,
to a limited extent, through certain eligible nonmembers. Each Bank is structured as a regional
cooperative that is owned and controlled by member institutions located within its district, which
are also its primary customers. An institution that is eligible for membership in a particular Bank
must purchase and hold a prescribed minimum amount of the Bank’s capital stock in order to
become and remain a member of that Bank. With limited exceptions, only an institution that is a
member of a Bank may obtain access to low cost secured loans, known as advances, or other
products provided by that Bank.
Section 6 of the Bank Act establishes capital requirements for the Banks and requires the Federal
Housing Finance Agency (FHFA) to issue regulations prescribing uniform capital standards
applicable to all of the Banks. 1 Section 6 also establishes parameters relating to the Banks’ capital
structures and requires that each Bank adopt a “capital structure plan” (capital plan) to establish,
within those statutory parameters, its own capital structure and to establish requirements for, and
govern transactions in, the Bank’s capital stock. 2 FHFA has designated 12 CFR part 1277 as the
location for its regulations on Bank Capital Requirements, Capital Stock, and Capital Plans. Part
1277 currently includes regulations establishing requirements for the Banks’ capital stock (Subpart
C; §§ 1277.20-.27) and for the Banks’ capital plans (Subpart D; §§ 1277.28-.29). Regulations
governing the Banks’ capital requirements are currently located at 12 CFR parts 930 and 932 (in
1
2

See 12 U.S.C. 1426(a).
See 12 U.S.C. 1426(b), (c).

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the regulations of the former Federal Housing Finance Board), but will be moved into part 1277 in
the near future.
Both the Bank Act and FHFA’s regulations state that a Bank’s capital plan must require its
members to maintain a minimum investment in the Bank’s capital stock, but both permit each Bank
to determine for itself what that minimum investment is and how each member’s required
minimum investment is to be calculated. 3 Although each Bank’s capital plan establishes a slightly
different method for calculating the required minimum stock investment for its members, each
Bank’s method is tied to some degree to both the level of assets held by the member institution
(typically referred to as a “membership stock purchase requirement”) and the amount of advances
or other business engaged in between the member and the Bank (typically referred to as an
“activity-based stock purchase requirement”).
A Bank must collect information from its members to determine the minimum capital stock
investment each member is required to maintain at any point in time. Although the information
needed to calculate a member’s required minimum investment and the precise method through
which it is collected differ somewhat from Bank to Bank, the Banks typically collect two types of
information. First, in order to calculate and monitor compliance with its membership stock
purchase requirement, a Bank typically requires each member to provide and/or confirm an annual
report on the amount and types of assets held by that institution. Second, each the time a Bank
engages in a business transaction with a member, the Bank typically confirms with the member the
amount of additional Bank capital stock, if any, the member must acquire in order to satisfy the
Bank’s activity-based stock purchase requirement and the method through which the member will
acquire that stock.
The OMB number for the information collection is 2590-0002, which is due to expire on December
31, 2016. The likely respondents include current and former Bank members and institutions
applying for Bank membership.
2. Use of data
The Banks use this information collection to determine the amount of capital stock a member must
purchase to maintain membership in and to obtain services from the Bank under its capital plan,
and to confirm that its members are complying with the Bank’s stock purchase requirements.
3. Use of information technology
Approximately 98% of the information collection is collected through electronic or other
technological collection techniques.
4. Efforts to identify duplication
The information collection avoids duplication by using data members already file on periodic call
reports with their primary regulator.
3

See 12 U.S.C. 1426(c)(1); 12 CFR 1277.22, 1277.28(a).

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5. Impact on small entities
This information collection does not have a significant economic impact on a substantial number of
small entities. The statutory requirements are applicable to all Banks and Bank members
regardless of their size. FHFA does not have the authority to make adjustments to the statutory
requirements to accommodate small entities.
6. Consequences of less frequent collection and obstacles to burden reduction
If the information required to calculate an institution’s membership and activity-based stock
purchase requirements were not collected at the times specified, the Bank would be unable to
monitor its members’ ongoing compliance with the capital stock requirements established by the
Bank Act, FHFA regulations, and the Bank’s capital plan.
7. Circumstances requiring special information collection
There are no special circumstances requiring the information collection to be conducted in a
manner inconsistent with the guidelines provided in this Item #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 October 7, 2016. 4 The
60-day comment period closed on December 6, 2016. FHFA received no public comments. In
addition, FHFA contacted: Andy Locker of the Federal Home Loan Bank of Atlanta, (404) 8885314, [email protected]; Frank Haas of the Federal Home Loan Bank of Cincinnati, (513)
852-5705, [email protected]; Kelly Richmond of the Federal Home Loan Bank of Dallas,
(214) 441-8525, [email protected]; and Gant Wellborn of the Federal Home Loan Bank
of Topeka, (785) 438.6123, [email protected] .
9. Provision of payments or gifts to respondents
No payment or gift will be provided to any respondent.
10. Assurance of confidentiality
The Banks will maintain the confidentiality of information obtained from their members as
required by applicable statute, regulation, or FHFA policy.
11. Questions of a sensitive nature
There are no questions of a sensitive nature in the proposed information collection.
4

See 81 FR 69819 (Oct. 7, 2016).

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12. Estimates of the hour burden of the information collection
FHFA is seeking OMB clearance for two information collections under this control number: (I) the
reporting of information needed to calculate a Bank member’s membership stock purchase
requirement; and (II) the reporting of information needed to calculate a Bank member’s activitybased stock purchase requirement. The total estimated annualized hour burden imposed upon
respondents by these two information collections is 15,230 hours. The estimated annualized cost
associated with this burden estimate is $1,319,520, which includes salaries, benefits, and overhead
costs. These estimates are based on the following calculations:
I. Membership Stock Purchase Requirement Submissions
The estimated annualized hour burden associated with the reporting to the Banks of information
needed to calculate members’ membership stock purchase requirements is 3,660 hours. The
estimated annualized cost associated with this burden estimate is $312,930.
Based on current Bank membership numbers, FHFA estimated that the average annual number of
current and former members and applicants for membership that will be required to report
information needed to calculate those institutions’ membership stock purchase requirements will be
7,320, and that each institution will submit one report per year. FHFA then calculated the burden
and cost estimates as follows:
Institution’s Accounting/Finance staff compiles financial information and prepares and submits
annual report to the Bank.
•
•
•
•
•

Time per report:
Total reports:
Total hours:
Hourly rate:
Total cost:

0.15 hours
7,320
1,098
$54 (includes salary, benefits, and overhead)
$59,292

Institution’s management reviews report and approves for submission to the Bank.
•
•
•
•
•

Time per report:
Total reports:
Total hours:
Hourly rate:
Total cost:

0.35 hours
7,320
2,562
$99 (includes salary, benefits, and overhead)
$253,638

II. Activity-Based Stock Purchase Requirement Submissions
The estimated annualized hour burden associated with the reporting to the Banks of information
needed to calculate members’ activity-based stock purchase requirements is 11,570 hours. The
estimated annualized cost associated with this burden estimate is $1,006,601.
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FHFA estimated that the average number of daily transactions between Banks and members that
will require the exchange of information to confirm the member’s activity-based stock purchase
requirement will be 341, and that there will be an average of 261 working days per year, resulting
in an estimated 89,001 submissions annually. FHFA then calculated the burden and cost estimates
as follows:
Employee of Bank member initiates advance or mortgage sale and discusses capital stock
support and document requirements with its Bank.
•
•
•
•
•

Time per report:
Total reports:
Total hours:
Hourly rate:
Total cost:

0.04 hours
89,001 (341 average daily borrowers x 261 working days)
3,560
$60 (includes salary, benefits, and overhead)
$213,602

Institution’s Credit Officer/VP reviews financial information provided by Bank and verifies
report to the Bank.
•
•
•
•
•

Time per report:
Total reports:
Total hours:
Hourly rate:
Total cost:

0.09 hours
89,001 (341 average daily borrowers x 261 working days)
8,010
$99 (includes salary, benefits, and overhead)
$792,999

13. Estimated total annualized cost burden to respondents
FHFA has not identified any costs to respondents other than the hourly personnel costs detailed
under Item #12.
14. Estimated cost to the federal government
The estimated annual cost burden to the Federal government is $0.
15. Reasons for change in burden
FHFA has decreased the estimated total annual burden hours to 15,230 from the 34,574 that were
shown in the Supporting Statement submitted in connection with the 2013 renewal of this
information collection. This decrease is due primarily to the fact that, while the prior Supporting
Statement assumed that each Bank member would submit four quarterly reports per year to enable
the Bank to calculate the member’s membership stock purchase requirement, consultation with
Banks’ staff revealed that most Bank members are required to submit such reports only on an
annual basis—that is, one per year. The estimates for IC (I) were therefore adjusted accordingly.

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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 why display would be inappropriate
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 “Certification for Paperwork
Reduction Act Submissions.”

B. Collection of Information Employing Statistical Methods
The information collection does not employ statistical methods.

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