supporting statement 2007

"CAPITAL REQUIREMENTS FOR THE FEDERAL HOME LOAN BANKS"
OMB NUMBER 3069-0059
SUPPORTING STATEMENT

A.

Justification

1. Section 6 of the Federal Home Loan Bank Act (Bank Act) establishes the capital structure for
the Federal Home Loan Banks (Banks) and requires the Federal Housing Finance Board
(Finance Board) to issue regulations prescribing uniform capital standards applicable to each
Bank. 12 U.S.C. § 1426. To implement the statutory capital structure for the Banks, the Finance
Board added parts 930, 931, 932, and 933 to its regulations. 12 C.F.R. parts 930, 931, 932, and
933. Part 930 establishes definitions applicable to risk management and the capital regulations;
part 931 concerns Bank capital stock; part 932 establishes Bank capital requirements; and part
933 sets forth the requirements for Bank capital structure plans. The implementing regulations
also include conforming changes to parts 917, 925, and 956, which concern, respectively, the
powers and responsibilities of Bank boards of directors and senior management, Bank members,
and Bank investments. 12 C.F.R. parts 917, 925, and 956.
The Banks use the information collection contained in the rules implementing section 6 to
determine the amount of capital stock a member must purchase to maintain membership in and
to obtain services from a Bank. More specifically, sections 931.3 and 933.2(a) of the Finance
Board rules authorize a Bank to offer its members several options to satisfy required investments
in capital stock as activity-based and /or membership stock purchase requirements. 12 C.F.R.
§§ 931.3 and 933.2(a). The information collection is necessary to provide the Banks with the
flexibility to meet the statutory and regulatory capital structure requirements while allowing
Bank members to choose the option best suited to their business requirements.
2. The Banks use the information collection to implement and maintain their statutory capital
stock structure.
3. Approximately 98% of the information collection is collected through electronic or other
technological collection techniques.
4. The information collection avoids duplication by using data members already file on periodic
call reports with their primary regulator.
5. The 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. The Finance Board does not have the authority to make
adjustments to the statutory requirements to accommodate small entities.

"Capital Requirements for the Federal Home Loan Banks"
OMB Number 3069-0059: Supporting Statement

6. If the information related to satisfaction of a membership investment in capital stock
requirement and an activity-based stock purchase requirement were not collected at the times
specified, the members’ options in purchasing capital stock could be limited and the Bank and
member would not be in compliance with statutory and regulatory requirements.
7. There are no special circumstances requiring the information collection to be conducted in a
manner inconsistent with the guidelines provided in Question 7.
8. In accordance with the requirements of 5 C.F.R. § 1320.8(d), the Finance Board published a
request for public comments regarding this information collection in the Federal Register on
January 26, 2007. See 72 Fed. Reg. 3848 (Jan. 26, 2007). The 60-day comment period closed
on March 27, 2007. The Finance Board received no public comments. In addition, the Finance
Board contacted Michael Wilson of the Federal Home Loan Bank of Des Moines, 515-281-1012,
mwilson@fhlbdm.com, Julia Burghart of the Federal Home Loan Bank of Topeka, 785-4386144, Julia.Burghart@fhlbTopeka.com, and Carolyn Lesko of the Federal Home Loan Bank of
San Francisco, 415-616-2722, leskov@fhlbsf.com.
9. No payment or gift will be provided to any respondent.
10. The Banks will maintain the confidentiality of information obtained from their members as
required by applicable statute, regulation, or Finance Board policy.
11. There are no questions of a sensitive nature in the proposed information collection.
12. The Finance Board has analyzed the cost and hour burden for the two facets of the
information collection – membership stock purchase requirements and activity-based stock
purchase requirements. The aggregate total annual cost and hour burden for the information
collection is as follows:

Cost:
Hours:

Banks
$644,359
15,578

Members
$367,073
8,953

TOTAL
$1,011,432
24,531

The method the Finance Board used to determine the annual cost and hour burden is explained in
detail below.
I.

Membership Stock Purchase Requirements

The Finance Board based the calculations upon an annual average of 8,105 members submitting
4 reports per year. The aggregate total annual cost and hour burden is as follows:

Cost:
Hours:

Banks
$134,971
2,862

Members
$66,461
1,621

TOTAL
$201,432
4,483

2

"Capital Requirements for the Federal Home Loan Banks"
OMB Number 3069-0059: Supporting Statement

A.

Banks’ Annualized Burden – Membership Stock Purchase Requirements

The estimated annualized cost to the Banks is $134,971. The estimated annualized hour burden
is 2,862 hours. These estimates are based on the following calculations:
Computer/Program analyst collects and downloads member financial information, tests and
validates data for capital stock calculation purposes, and prepares reports.
•
•
•
•
•

Review Time:
Total Reports:
Total Hours:
Hourly Rate:
Total Cost:

.02038 hours per report
32,420 (8,105 members x 4 reports per member)
661
$33 (includes salary, benefits, and overhead)
$21,813

Financial Analyst reviews member stock investment reports in detail to ensure compliance with
applicable requirements.
•
•
•
•
•

Review Time:
Total Reports:
Total Hours:
Hourly Rate:
Total Cost:

0.0679 hours per report
32,420 (8,105 members x 4 reports per member)
2,201
$33 (includes salary, benefits, and overhead)
$72,633

Miscellaneous expenses related to report processing.
•
•
•

B.

Average cost:
Total Reports:
Total Cost:

$1.25 per report
32,420 (8,105 members x 4 reports per member)
$40,525

Members’ Annualized Burden – Membership Stock Purchase Requirements

The estimated annualized cost to the members is $66,461. The estimated annualized hour burden
is 1,621 hours. These estimates are based on the following calculations:
Accounting/Finance staff compiles information, and reviews and analyzes documents for
submission to and from the Bank.
•
•
•
•
•

Review Time:
Total Reports:
Total Hours:
Hourly Rate:
Total Cost:

0.05 hours per report
32,420 (8,105 members x 4 reports per member)
1,621
$41 (includes salary, benefits, and overhead)
$66,461

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"Capital Requirements for the Federal Home Loan Banks"
OMB Number 3069-0059: Supporting Statement

II.

Activity Based Stock Purchase Requirements

The Finance Board based the calculations upon an annual average of 5,754 borrowing members
and a daily average of 564 member respondents, submitting 1 response for each of the 251
business days during the year. The aggregate total annual cost and hour burden is as follows:

Cost:
Hours:
A.

Banks
$509,388
12,716

Members
$300,612
7,332

TOTAL
$810,000
20,048

Banks’ Annualized Burden – Activity Based Stock Purchase Requirements

The estimated annualized cost to the Banks is $509,388. The estimated annualized hour burden
is 12,132 hours. These estimates are based on the following calculations:
Credit Analyst/Financial Analyst receives credit/mortgage sale request from member and
compiles, inputs, and reviews member stock investment reports in detail to ensure compliance
with applicable requirements.
•
•

Review Time:
Total Reports:

•
•
•

Total Hours:
Hourly Rate:
Total Cost:

0.0025 hours per report
1,496,040 (5,754 borrowing members x 260 working days x 1
report)
3,740
$33 (includes salary, benefits, and overhead)
$123,420

Accounting Officer reviews reports and staff recommendations regarding activity-based stock
purchase requirements.
•
•

Review Time:
Total Reports:

•
•
•

Total Hours:
Hourly Rate:
Total Cost:

0.006 hours per report
1,496,040 (5,754 borrowing members x 260 working days x 1
report)
8,976
$43 (includes salary, benefits, and overhead)
$385,968

4

"Capital Requirements for the Federal Home Loan Banks"
OMB Number 3069-0059: Supporting Statement

B.

Members’ Annualized Burden – Activity Based Stock Purchase Requirements

The estimated annualized cost to the members is $300,612. The estimated annualized hour
burden is 7,332 hours. These estimates are based on the following calculations:
Member initiates advance/mortgage sale and discusses financial and document requirements with
their Bank.
•
•
•
•
•

Review Time:
Total Reports:
Total Hours:
Hourly Rate:
Total Cost:

0.05 hours per report
146,640 (564 daily borrowers x 260 working days x 1 report)
7,332
$41 (includes salary, benefits, and overhead)
$300,612

13. The Finance Board has not identified any costs other than those discussed under Question 12.
14. The estimated annual cost burden to the Federal government is $0.
15. The Finance Board reports adjustments in Items 13 and 14 of OMB Form 83-I as a result of
better estimates based upon the actual experience of the Banks and Bank members in
implementing the information collection and an increase in the number of Bank members. While
the number of members has increased, the burden has decreased significantly as the Banks now
access most of the data required by the information collection electronically from regulatory call
reports that the members already must file with their primary regulator.
16. The Finance Board will not publish the results of this information collection.
17. The Finance Board plans to display the expiration date for OMB approval.
18. There are no exceptions to the certification statement identified in Item 19.
B.

Collection of Information Employing Statistical Methods

The information collection does not employ statistical methods.

5