ROCIS 3yrApprvl_BankCapitalRequires2590-0002SuppStatmnt

“CAPITAL REQUIREMENTS FOR THE FEDERAL HOME LOAN BANKS”

OMB NUMBER 2590-0002
SUPPORTING STATEMENT

A.

JUSTIFICATION

1. Circumstances necessitating the collection of information
Each of the twelve regional Federal Home Loan Banks (Banks) is structured as a member-owned
cooperative. 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. 1 With few exceptions, only an institution that is a member of a
Bank may obtain access to secured loans, known as advances, or other products provided by that
Bank.
Section 6 of the Federal Home Loan Bank Act (Bank Act) establishes the capital structure for the
Banks and requires FHFA to issue regulations prescribing uniform capital standards applicable to
all of the Banks. 2 These implementing regulations are set forth in 12 CFR parts 930, 931, 932,
and 933: part 930 contains definitions applicable to the capital regulations; part 931 establishes
the requirements for the Banks’ capital stock; part 932 establishes risk-based and total capital
requirements for the Banks; and part 933 sets forth the requirements for the Banks’ “capital
structure plans” under which each Bank establishes its own capital structure within the
parameters of the statute and FHFA’s implementing regulations.
Both the Bank Act and FHFA’s regulations state that a Bank’s capital structure plan must require
its members to maintain a minimum investment in the Bank’s capital stock, which is to be
determined for each member in a manner prescribed by the board of directors of the Bank and
reflected in the Bank’s capital structure plan. 3 Although each Bank’s capital structure 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”).
Although the required information and the precise method through which it is collected differ
from Bank to Bank, there are for each Bank typically two components to this information
collection. 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 a
quarterly or annual report on the amount and types of assets held by that institution. Second, at
1

See 12 U.S.C. 1426(c)(1); 12 CFR 931.3, 1263.20
See 12 U.S.C. 1426.
3
See 12 U.S.C. 1426(c)(1); 12 CFR 933.2(a).
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“Capital Requirements for the Federal Home Loan Banks”
OMB Number 2590-0002: Supporting Statement
the time it engages in a business transaction with a member, each 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.

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
structure 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.

5. Impact on small entities
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. 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 related to satisfaction of the membership stock purchase requirement and the
activity-based stock purchase requirement were not collected at the times specified, the Bank
would be unable to monitor effectively its members’ compliance with statutory and regulatory
capital stock requirements.

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“Capital Requirements for the Federal Home Loan Banks”
OMB Number 2590-0002: Supporting Statement
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 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 July 1, 2013. See 78
FR 39292 (July 1, 2013). The 60-day comment period closed on August 30, 2013. FHFA
received no public comments. In addition, FHFA contacted: Suzanne Sellers of the Federal
Home Loan Bank of Atlanta, (404) 888-8135, ssellers@fhlbatl.com; Kelly Richmond of the
Federal Home Loan Bank of Dallas, (214) 441-8525, Kelly.richmond@fhlb.com; Michael
Desiderio of the Federal Home Loan Bank of New York, (212) 4416603, Michael.Desiderio@fhlbny.com; and Karen Mefford of the Federal Home Loan Bank of
Seattle, (206) 340-2348, Kmeffo@fhlbsea.com.

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.

12. Estimates of the hour burden of the information collection
FHFA has analyzed the cost and hour burden for the two facets of this information collection: (I)
membership stock purchase requirement; and (II) activity-based stock purchase requirement.
The aggregate total annual cost to members and daily borrowers is $2,247,551. The estimated
total annual hour burden is 34,574 hours. The estimated total annual number of submissions is
111,536. The method FHFA used to determine the annual cost and hour burden for each facet of
the information collection is explained in detail below.

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“Capital Requirements for the Federal Home Loan Banks”
OMB Number 2590-0002: Supporting Statement

I.

Membership Stock Purchase Requirement

The estimated annualized cost to Bank members is $1,390,924. The estimated annualized hour
burden is 21,595 hours. These estimates are based on the following calculations:
Bank member’s Accounting/Finance staff compiles information, and reviews and analyzes
documents for submission to and from the Bank.
•
•
•
•
•

Review Time: 0.43 hours per report
Total Reports: 30,416 (7,604 members x 4 reports per member)
Total Hours: 13,079
Hourly Rate: $52 (includes salary, benefits, and overhead)
Total Cost:
$680,102

Bank member’s staff attorney reviews and analyzes documents for submission to and from the
Bank.
•
•
•
•
•

Review Time: 0.19 hours per report
Total Reports: 30,416 (7,604 members x 4 reports per member)
Total Hours: 5,779
Hourly Rate: $78 (includes salary, benefits, and overhead)
Total Cost:
$450,765

Bank member’s management reviews and analyzes documents for submission to and from the
Bank.
•
•
•
•
•

Review Time: 0.09 hours per report
Total Reports: 30,416 (7,604 members x 4 reports per member)
Total Hours: 2,737
Hourly Rate: $95 (includes salary, benefits, and overhead)
Total Cost:
$260,057

II.

Activity-Based Stock Purchase Requirement

FHFA based the calculations upon a daily average of 312 member borrowers submitting 1
response for each of the 260 business days during the year.
The estimated annualized cost to the members is $856,627. The estimated annualized hour
burden is 12,979 hours. These estimates are based on the following calculations:
Bank member initiates advance or mortgage sale and discusses capital stock support and
document requirements with its Bank.

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“Capital Requirements for the Federal Home Loan Banks”
OMB Number 2590-0002: Supporting Statement
•
•
•
•
•

Review Time: 0.16 hours per report
Total Reports: 81,120 (312 daily borrowers x 260 working days x 1 report)
Total Hours: 12,979 hours
Hourly Rate: $66 (includes salary, benefits, and overhead)
Total Cost:
$856,627

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 last requested review of this information collection in 2010. The Supporting Statement
submitted at that time showed 3,023 burden hours and a total cost of $123,943 imposed upon
Bank members by this collection. In contrast, item #12 of this Supporting Statement shows
34,574 burden hours and a total cost of $2,247,551 imposed upon members.
The primary reason for the increase in both burden hours and cost is that, because of a
mathematical error in the calculations underlying the burden estimates for Bank members in the
2010 Supporting Statement, those burden estimates were reported at one-tenth of the amounts
that should have been reported. Thus, the 2010 Supporting Statement should have reflected
burden hours of 30,230 and a total cost of $1,239,430 imposed upon Bank members by this
collection. FHFA did not discover this error until it reviewed those calculations as part of the
preparation for this submission.
In addition, FHFA canvassed several of the Banks in order to update its burden estimates. These
Banks, in turn, each contacted several member institutions to request their input on the hour
burden and cost estimates. As a result of the information received from this outreach, FHFA has
revised both the “per item” review time and the “per hour” personnel cost for several of the
components of this collection. In some cases, the estimated review time was reduced and in
others, it was increased (from the figures that should have appeared in the 2010 submission). In
most cases, the hourly personnel cost increased modestly.
For the membership stock purchase requirement, the newly-received information indicated that
Bank members typically undertook legal and management reviews of the quarterly stock reports.
These levels of review were not reflected in the 2010 materials, but have been added here.
Overall, the total “per report” burden for this aspect of the collection rose from (what should

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“Capital Requirements for the Federal Home Loan Banks”
OMB Number 2590-0002: Supporting Statement
have been reported as) 0.5 hours in 2010 to 0.71 hours in 2013. This, combined with a
decrease—from 8,093 to 7,604—in the total number of Bank members filing reports annually
resulted in an increase in reported burden hours from (what should have been reported as) 16,190
hours in 2010 to 21,595 in 2013. Because of the addition of the legal and management reviews
to the calculation, with their relatively higher per-hour personnel costs, the total estimated cost
for that aspect of the collection rose from (what should have been reported as) $663,790 in 2010
to $1,390,924 in 2013.
For the activity-based stock purchase requirement, the estimated “per transaction” burden fell
from (what should have been reported as) 0.5 hours in 2010 to 0.16 hours in 2013, based on the
new information received from the Banks and their members. However, the average number of
daily borrowers from the Banks rose from 108 in 2010 to 312 in 2013, causing the total
estimated annual number of activity-based stock reports to rise from 28,080 to 81,120. The net
result was a slight reduction in the estimated burden from (what should have been reported as)
14,040 hours to 12,979 hours.
FHFA has not included in the burden estimates time spent by the Banks in connection with this
information collection as was mistakenly included in the 2010 Supporting Statement. The Banks
are instrumentalities of the United States and, thus, are not subject to the information collection
requirements of the Paperwork Reduction Act. See 44 U.S.C. § 3502(3)(A)(i).

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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