Members of Banks PRA Supporting Statement 2020 (2020-03-23)

“MEMBERS OF THE BANKS”
OMB NUMBER 2590-0003
SUPPORTING STATEMENT

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 the 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. The Banks carry out their public policy
functions primarily by providing low cost loans, known as advances, to their members. With
limited exceptions, an institution may obtain advances and access other products and services
provided by a Bank only if it is a member of that Bank.
The Bank Act limits membership in any Bank to specific types of financial institutions located
within the Bank’s district that meet specific eligibility requirements. Section 4 of the Bank Act
specifies the types of institutions that may be eligible for membership and establishes eligibility
requirements that each type of applicant must meet in order to become a Bank member. 1 That
provision also specifies that (with limited exceptions) an eligible institution may become a
member only of the Bank of the district in which the institution’s “principal place of business” is
located. 2 With respect to the termination of Bank membership, section 6(d) of the Bank Act sets
forth requirements pursuant to which an institution may voluntarily withdraw from membership
or a Bank may terminate an institution’s membership for cause. 3
FHFA’s regulation entitled “Members of the Banks,” located at 12 CFR part 1263, implements
those statutory provisions and otherwise establishes substantive and procedural requirements
relating to the initiation and termination of Bank membership. Many of the provisions in the
membership regulation require that an institution submit information to a Bank or to FHFA, in
most cases to demonstrate compliance with statutory or regulatory requirements or to request
action by the Bank or Agency.
1

See 12 U.S.C. § 1424(a).
See 12 U.S.C. § 1424(b).
3
See 12 U.S.C. § 1426(d).
2

In total, there are four types of information collections that may occur under part 1263. First, the
regulation provides that (with limited exceptions) no institution may become a member of a
Bank unless it has submitted to that Bank an application that documents the applicant’s
compliance with the statutory and regulatory membership eligibility requirements and that
otherwise includes all required information and materials. 4 Second, the regulation provides
applicants that have been denied membership by a Bank the option of appealing the decision to
FHFA. To file such an appeal, an applicant must submit to FHFA a copy of the Bank's decision
resolution denying its membership application and a statement of the basis for the appeal
containing sufficient facts, information, and analysis to support the applicant's position. 5 Third,
the regulation provides that, in order to initiate a voluntary withdrawal from Bank membership, a
member must submit to its Bank a written notice of intent to withdraw. 6 Fourth, under certain
circumstances, the regulation permits a member of one Bank to transfer its membership to a
second Bank “automatically” without either initiating a voluntary withdrawal from the first Bank
or submitting a membership application to the second Bank. Despite the regulatory reference to
such a transfer as being “automatic,” a member meeting the criteria for an automatic transfer
must initiate the transfer process by filing a request with its current Bank, which will then
arrange the details of the transfer with the second Bank. 7
2. Use of data
The Banks use most of the information collected under part 1263 to determine whether an
applicant satisfies the statutory and regulatory requirements for Bank membership and should be
approved as a Bank member. The Banks may use some of the information collected under part
1263 as a means of learning that a member wishes to withdraw or to transfer its membership to a
different Bank so that the Bank can begin to process those requests. In rare cases, FHFA may
use the collected information to determine whether an institution that has been denied
membership by a Bank should be permitted to become a member of that Bank.
3. Use of information technology
The information collection permits the use of automated, electronic, mechanical, or other
technological collection techniques, or other forms of information technology. For example,
respondents can use technologies that calculate the performance ratios required in the
membership application process, to reduce the information collection burden.
4. Efforts to identify duplication
The information collection avoids duplication because it requires the submission of information
that already is available to, or compiled by, respondents for other purposes. For instance, a
respondent can submit information already required for the Federal Deposit Insurance

4

See 12 CFR 1263.2(a), 1263.6-1263.9, 1263.11-1263.18.
See 12 CFR 1263.5.
6
See 12 CFR 1263.26.
7
See 12 CFR 1263.4(b), 1263.18(d), (e).
5

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Corporation Report of Condition and Income, audited financial statements, or the public portion
of its Community Reinvestment Act examination.
5. Impact on small entities
The information collection does not have a significant economic impact on a substantial number
of small entities. The membership regulation implements statutory requirements and is
applicable to all institutions 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
Under part 1263, information is collected on an as-needed basis only. If the information is not
collected at the times specified in part 1263, the Banks would be unable to determine whether
applicants satisfy the statutory and regulatory requirements for Bank membership and would
have no means of learning that a member wishes to withdraw or transfer its membership to
another Bank. In addition, FHFA would be unable to determine on appeal whether an institution
that has been denied membership by a Bank should be permitted to become a member of that
Bank.
7. Circumstances requiring special information collection
There are no special circumstances requiring FHFA to conduct the information collection 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 January 22, 2020. 8
The 60-day comment period closed on March 23, 2020. FHFA received no comments.
FHFA also contacted Paul Friend ([email protected]) of the Federal Home Loan Bank of
New York; Reggie O’Shields ([email protected]) of the Federal Home Loan Bank of
Atlanta and Laura Turnquest ([email protected]) of the Federal Home Loan Bank of
Chicago.
9. Provision of payments or gifts to respondents
No payment or gift will be provided to any respondent.
10. Assurance of confidentiality
The Banks and FHFA maintain the confidentiality of information obtained from respondents as
required by applicable statute, regulation, or agency policy.

8

See 85 FR 3683 (Jan. 22, 2020).

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11. Questions of a sensitive nature
There are no questions of a sensitive nature in the information collection.
12. Estimates of the hour burden of the information collection
FHFA is seeking OMB clearance for four information collections under this control number: (1)
membership applications; (2) appeals of membership denials; (3) notices of intent to withdraw
from membership; and (4) requests for transfer of membership to another Bank district. The
total estimated annualized hour burden imposed upon respondents by these four information
collections is 2,188 hours. The estimated annualized cost associated with this burden estimate is
$195,627, which includes salaries, benefits, and overhead costs. These estimates are based on
the following calculations:
1) Membership Applications
The estimated annualized hour burden associated with the preparation and submission of
applications for Bank membership and supporting materials is 2,160 hours. The estimated
annualized cost associated with this burden estimate is $193,104. These estimates are based on
the following calculations:
Applicant Staff Analyst prepares the membership application.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

9 hours
144
1,296
$76 (includes salary, benefits, and overhead)
$98,496

Outside attorney reviews the application to ensure compliance with statutory and regulatory
requirements.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

2 hours
144
288
$171 (includes salary, benefits, and overhead)
$49,248

Management reviews and then presents the application to the board of directors for approval.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

3 hours
144
432
$105 (includes salary, benefits, and overhead)
$45,360
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Applicant’s board of directors discusses and approves membership application.
•
•
•

Time per application:
Total applications:
Total hours:

1 hour
144
144

There are no charges/expenses for board of director reviews for membership applications as
the review typically occurs at a regularly scheduled board of directors meeting.
2) Appeals of Membership Denials
The estimated annualized hour burden associated with the preparation and submission of
applications for appeal of a membership denial to FHFA is 10 hours. The estimated annualized
cost associated with this burden estimate is $1,050.
Although no applicant for Bank membership has ever submitted an appellate application, FHFA
assumed a theoretical average of 1 appellate application processed by the Agency annually and
then estimated the burden based on the following calculation:
Management of appealing institution prepares and submits an appellate application to FHFA.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

10 hours
1
10
$105 (includes salary, benefits, and overhead)
$1,050

3) Notices of Intent to Withdraw from Membership
The estimated annualized hour burden associated with the preparation and submission of notices
of intent to withdraw from membership is 8 hours. The estimated annualized cost associated
with this burden estimate is $788. These estimates are based on the following calculation:
Management of withdrawing member prepares and submits a notice of intent to withdraw
from membership.
•
•
•
•
•

Time per notice:
Total notices:
Total hours:
Hourly rate:
Total cost:

1.5 hours
5
8 (rounded)
$105 (includes salary, benefits, and overhead)
$788

4) Requests for Transfer of Membership to Another Bank District
The estimated annualized hour burden associated with the preparation and submission of
requests for automatic transfer of membership to another Bank is 10 hours. The estimated
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annualized cost associated with this burden estimate is $685. These estimates are based on the
following calculation:
Management prepares request to transfer membership to another Bank district.
•
•
•
•
•

Time per request:
Total requests:
Total hours:
Hourly rate:
Total cost:

1 hour
5
5
$105 (includes salary, benefits, and overhead)
$525

Administrative assistant prepares and submits to the Bank a request to transfer membership
to another Bank district.
•
•
•
•
•

Time per request:
Total requests:
Total hours:
Hourly rate:
Total cost:

1 hour
5
5
$32 (includes salary, benefits, and overhead)
$160

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 FHFA is $12,033 and 131 hours, calculated as follows:
1) Membership Applications
The estimated annualized hour burden associated with the tracking of applications for Bank
membership and supporting materials is 115 hours. The estimated annualized cost associated
with this burden estimate is $10,253. These estimates are based on the following calculation:
Financial analyst tracks all Bank membership applications and associated docket
number requests and performs general clerical functions.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

0.8 hours
144
115 (rounded)
$89 (includes salary, benefits and overhead)
$10,253

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2) Appeals of Membership Denials
The estimated annualized hour burden associated with the review of, and the making of
determinations on, applications for appeal of a membership denial to FHFA is 12 hours. The
estimated annualized cost associated with this burden estimate is $1,468. These estimates are
based on the following calculations:
Staff attorney reviews appellate application to confirm eligibility with statutory and
regulatory membership eligibility requirements and to ensure the absence of any special
legal issues and drafts recommendation for Agency management.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

8 hours
1
8
$108 (includes salary, benefits, and overhead)
$864

Management reviews appellate application and Bank and FHFA staff recommendations
and makes a determination on the application.
•
•
•
•
•

Time per application:
Total applications:
Total hours:
Hourly rate:
Total cost:

4 hours
1
4
$151 (includes salary, benefits, and overhead)
$604

3) Notices of Intent to Withdraw from Membership
The estimated annualized hour burden associated with the tracking of notices of intent to
withdraw from membership is 3 hours. The estimated annualized cost associated with this
burden estimate is $223. These estimates are based on the following calculation:
Financial analyst tracks Bank membership withdrawals and associated docket number
retirements and performs general clerical functions.
•
•
•
•
•

Time per notice:
Total notices:
Total hours:
Hourly rate:
Total cost:

0.5 hours
5
3 (rounded)
$89 (includes salary, benefits, and overhead)
$223

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4) Requests for Transfer of Membership to Another Bank District
The estimated annualized hour burden associated with the tracking of automatic transfers of
membership to another Bank is 1 hour. The estimated annualized cost associated with this
burden estimate is $89. These estimates are based on the following calculation:
Financial analyst tracks transfers and performs general clerical functions to transfer
membership to another Bank district.
•
•
•
•
•

Time per request:
Total requests:
Total hours:
Hourly rate:
Total cost:

0.2 hours
5
1
$89 (includes salary, benefits, and overhead)
$89

15. Reasons for change in burden
FHFA has decreased the estimated total annual burden hours to 2,188 from the 2,351 that were
shown in the Supporting Statement submitted in connection with the 2017 renewal of this
information collection, due primarily to somewhat lower projections for the average number of
membership applications to be received by the Banks over the next three years.
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 method.

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