Members of Banks PRA Supporting Statement (2016-12-21)

“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 October 7, 2016. 8
The 60-day comment period closed on December 6, 2016. FHFA received no comments.
FHFA also contacted: Susan Krzus of the Federal Home Loan Bank of Chicago, (312) 5655374, SKrzus@fhlbc.com; Andrea Whitlock of the Federal Home Loan Bank of Des Moines,
(515) 281-1088, AWhitlock@fhlbdm.com; and Deanna Copeland of the Federal Home Loan
Bank of Pittsburgh, (412) 288-3484, Deanna.Copeland@fhlb-pgh.com. As discussed under Item
#15, these consultations led the Agency to change a number of the burden estimates reflected in
the 60-day notice.
9. Provision of payments or gifts to respondents
No payment or gift will be provided to any respondent.

8

See 81 FR 69820 (Oct. 7, 2016).

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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.
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: (I)
membership applications; (II) appeals of membership denials; (III) notices of intent to withdraw
from membership; and (IV) requests for transfer of membership to another Bank district. The
total estimated annualized hour burden imposed upon respondents by these four information
collections is 2,351 hours. The estimated annualized cost associated with this burden estimate is
$197,416, which includes salaries, benefits, and overhead costs. These estimates are based on
the following calculations:
I. Membership Applications
The estimated annualized hour burden associated with the preparation and submission of
applications for Bank membership and supporting materials is 2,265 hours. The estimated
annualized cost associated with this burden estimate is $191,317. 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
151
1,359
$72 (includes salary, benefits, and overhead)
$97,848

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
151
302
$161 (includes salary, benefits, and overhead)
$48,622

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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
151
453
$99 (includes salary, benefits, and overhead)
$44,847

Applicant’s board of directors discusses and approves membership application.
•
•
•

Time per application:
Total applications:
Total hours:

1 hour
151
151

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.
II. 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 $990.
FHFA based these estimates upon a theoretical average of 1 appellate application processed by
FHFA annually. 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
$99 (includes salary, benefits, and overhead)
$990

III. 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 6 hours. The estimated annualized cost associated
with this burden estimate is $594. These estimates are based on the following calculation:
Management of withdrawing member prepares and submits a notice of intent to withdraw
from membership.

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•
•
•
•
•

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

1.5 hours
4
6
$99 (includes salary, benefits, and overhead)
$594

IV. 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 70 hours. The estimated
annualized cost associated with this burden estimate is $4,515. 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
35
35
$99 (includes salary, benefits, and overhead)
$3,465

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
35
35
$30 (includes salary, benefits, and overhead)
$1,050

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 $12,304 and 142 hours, calculated as follows:
I. Membership Applications
The estimated annualized hour burden associated with the tracking of applications for Bank
membership and supporting materials is 121 hours. The estimated annualized cost associated
with this burden estimate is $10,164. These estimates are based on the following calculation:

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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
151
121
$84 (includes salary, benefits and overhead)
$10,164

II. 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 $1,384. 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
$102 (includes salary, benefits, and overhead)
$816

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
$142 (includes salary, benefits, and overhead)
$568

III. 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 2 hours. The estimated annualized cost associated with this
burden estimate is $168. These estimates are based on the following calculation:
Financial analyst tracks Bank membership withdrawals and associated docket number
retirements and performs general clerical functions.

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•
•
•
•
•

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

0.5 hours
4
2
$84 (includes salary, benefits, and overhead)
$168

IV. Requests for Automatic Transfer of Membership
The estimated annualized hour burden associated with the tracking of automatic transfers of
membership to another Bank is 7 hours. The estimated annualized cost associated with this
burden estimate is $588. 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
35
7
$84 (includes salary, benefits, and overhead)
$588

15. Reasons for change in burden
FHFA has increased the estimated total annual burden hours to 2,351 from the 2,262 that were
shown in the Supporting Statement submitted in connection with the 2013 renewal of this
information collection. Despite the estimated number of membership applications per year
dropping slightly from 157 to 151, the overall burden estimate for IC (I) increased from 1,837
hours to 2,265 hours due to a higher estimated processing time per application. FHFA adopted a
higher per-application estimate because a greater number of institutions applying for Bank
membership are insurance companies, the applications for which take a longer time to prepare
than those for depository institutions due to slightly different eligibility and application
requirements. In addition, the burden estimate for IC (IV) increased from 1.5 hours to 70 hours
due to a greater estimated number of membership transfers (which, in part, are due to a higher
number of existing Bank members merging with members of other Banks or with non-members).
Counterbalancing these increases was a decrease from 413 hours to 6 hours in the overall burden
estimate for IC (III). This was due to a dramatic decrease in the estimated number of members
requesting to withdraw from Bank membership—from 276 to 4. FHFA made this adjustment
after a more in-depth review of the data indicated that, of those Bank members whose
membership has been terminated in recent years, the vast majority were merged out of
existence—a process that does not involve the preparation of a notice of intent to withdraw.
The estimated burden on FHFA under Item #14 decreased from 481 hours to 142 hours. This
decrease is due primarily to the fact that the updating of FHFA’s electronic membership database
system has enabled staff to track membership application approvals and other Bank membership
activity much more efficiently.
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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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