2024 Bank Director Forms Supporting Statement

“Federal Home Loan Bank Directors”

OMB Number 2590-0006

Supporting Statement

A. JUSTIFICATION

1. Circumstances necessitating the collection of information

Section 7 of the Federal Home Loan Bank Act (Bank Act) vests the management of each Federal Home Loan Bank (Bank) in its board of directors.¹ As required by section 7, each Bank’s board comprises two types of directors: (1) member directors, who are drawn from the officers and directors of member institutions located in the Bank’s district and who are elected to represent members in a particular state in that district; and (2) independent directors, who are unaffiliated with any of the Bank’s member institutions, but who reside in the Bank’s district and are elected on an at-large basis.² Both types of directors serve four-year terms, which are staggered so that approximately one-quarter of a Bank’s total directorships are up for election every year.³ Section 7 and the implementing regulation of the Federal Housing Finance Agency (FHFA or the Agency), codified at 12 CFR part 1261, establish the eligibility requirements for both types of Bank directors and the professional qualifications for independent directors, and set forth the procedures for their election.

Part 1261 requires that each Bank administer its own annual director election process. As part of this process, a Bank must require each nominee for both types of directorship, including any incumbent that may be a candidate for re-election, to complete and return to the Bank a form that solicits information about the candidate’s statutory eligibility to serve and, in the case of independent director candidates, about his or her professional qualifications for the directorship being sought.⁴ Specifically, member director candidates are required to complete the Federal Home Loan Bank Member Director Eligibility Certification Form (Member Director Eligibility Certification Form), while independent director candidates must complete the Federal Home Loan Bank Independent Director Application Form (Independent Director Application Form).

Each Bank must also require all of its incumbent directors to certify annually that they continue to meet all eligibility requirements.⁵ Member directors do this by completing the Member Director Eligibility Certification Form again every year, while independent directors complete the abbreviated Federal Home Loan Bank Independent Director Annual Certification Form (Independent Director Annual Certification Form) to certify their ongoing eligibility.

2. Use of Data

The Banks use the information collection contained in the Independent Director Application Form and part 1261 to determine whether individuals who wish to stand for election or re-election as independent directors satisfy the statutory eligibility requirements and possess the professional qualifications required under the statute and regulations. Only individuals meeting those eligibility requirements and qualifications may serve as an independent director.⁶ On an annual basis, the Banks use the information collection contained in the Independent Director Annual Certification Form and part 1261 to determine whether their incumbent independent directors continue to meet the statutory eligibility requirements.

The Banks use the information collection contained in the Member Director Eligibility Certification Form and part 1261 to determine whether individuals who wish to stand for election or re-election as member directors satisfy the statutory eligibility requirements. Only individuals meeting these requirements may serve as a member director.⁷ On an annual basis, the Banks also use the information collection contained in the Member Director Eligibility Certification Form and part 1261 to determine whether their incumbent member directors continue to meet the statutory eligibility requirements.

Part 1261 requires each Bank to submit to FHFA completed Independent Director Application Forms for all individuals that its board of directors intends to nominate as candidates for election to independent directorships before those individuals may be officially nominated.⁸ The Agency has two weeks within which to furnish the Banks with any desired commentary relating to the fitness of the proposed nominees to serve as independent directors of the Bank. The regulations also require that the Banks provide FHFA with copies of all completed Independent Director Annual Certification Forms and all Member Director Eligibility Certification Forms that have been completed for purposes of annual certification.⁹ Generally, the Agency uses the information on all completed forms to monitor the Bank director election processes and to obtain information on the composition of the Banks’ boards of directors and of the pool of individuals from which the directors are drawn.

3. Use of Information Technology

Individuals have the option of completing each of the forms in electronic form (PDF). To ensure submitted PDF documents are accessible to individuals with disabilities, as required by Section 508 of the Rehabilitation Act of 1973, as amended, FHFA adhered to standards required under that statute.¹⁰ Additionally, several Banks plan to implement the use of online portals to collect the information that would otherwise be collected through the PDF forms.

4. Efforts to Identify Duplication

The Banks are required by statute to verify the eligibility of each candidate for a directorship and for incumbent directors annually. The Banks must also verify that nominees for independent directorships have the professional qualifications that independent directors are required by statute to possess. The three forms are designed to collect the information necessary to make those verifications, and this information is not available from any other source.

5. Impact on Small Entities

The information collection does not have a significant economic impact on a substantial number of small entities. Respondents are individuals.

6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction

If the information requested in the forms were not collected at the times specified in part 1261, the Banks would be unable to determine, and FHFA would be unable to monitor, whether prospective and incumbent Bank directors satisfy the statutory eligibility requirements and whether independent director candidates possess the professional qualifications required by statute.

7. Circumstances Requiring Special Information Collection

There are no special circumstances that would require FHFA to conduct the information collection 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 an initial notice and request for public comments regarding this information collection in the Federal Register on June 7, 2024.¹¹ The 60-day comment period closed on August 6, 2024. No comments were received.

9. Provision of Payments to Respondents

No payment or gift will be provided to any respondent.

10. Assurance of Confidentiality

FHFA and the Banks maintain the confidentiality of information obtained from respondents as required by applicable statute, regulation, and Agency policy.

11. Justification of Sensitive Questions

There are no questions of a sensitive nature in the information collection.

12. Estimated Burden of Information Collection

The estimated annualized hour burden imposed upon respondents by the information collection is 269 hours. The estimated annualized cost associated with this burden is $62,139, which includes salaries, benefits, and overhead costs associated with review and completion of the forms. These estimates are based on the following calculations:

1. Member Director Eligibility Certification Form

The estimated annualized hour burden for all prospective and incumbent member directors associated with completion of the Member Director Eligibility Certification Form is 39 hours. The estimated annualized cost is $9,009. These estimates are based on the following calculations:

Nominees for member directorships complete form in year of election to verify they are eligible to serve:

• Time per form: 0.25 hours

• Total forms: 72

• Total hours: 18

• Hourly rate: $231¹²

• Total cost: $4,158

Incumbent member directors complete form annually to verify they remain eligible to serve:

• Time per form: 0.25 hours

• Total forms: 84

• Total hours: 21

• Hourly rate: $231

• Total cost: $4,851

2. Independent Director Application Form

The estimated annualized hour burden for all prospective and incumbent member directors associated with completion of the Independent Director Application Form is 200 hours. The estimated annualized cost is $46,200. These estimates are based on the following calculations:

Potential nominees for independent directorships complete form in year of election to verify they are eligible to serve and possess the required professional qualifications:

• Time per form: 2.0 hours

• Total forms: 100

• Total hours: 200

• Hourly rate: $231 (includes salary, benefits, and overhead)

• Total cost: $46,200

3. Independent Director Annual Certification Form

The estimated annualized hour burden for all incumbent independent directors associated with completion of the Independent Director Annual Certification Form is 30 hours. The estimated annualized cost is $6,930. These estimates are based on the following calculations:

Incumbent independent directors complete form annually to verify they remain eligible to serve:

• Time per form: 0.5 hours

• Total forms: 60

• Total hours: 30

• Hourly rate: $231 (includes salary, benefits, and overhead)

• Total cost: $6,930

13. Estimated Total Annual Cost Burden to Respondents

There are no additional costs associated with completion of the forms.

14. Estimated Cost to the Federal Government

The estimated annualized hour burden imposed upon the federal government by the information collection is 64 hours. The estimated annualized cost to the federal government associated with this burden is $5,152, which includes salaries, benefits, and overhead costs associated with review and completion of the forms. These estimates are based on the following calculations:

1. Member Director Eligibility Certification Form

FHFA staff reviews each form completed for purposes of annual certification to ensure each incumbent member director remains eligible to serve:

• Time per form: 0.1 hours

• Total forms: 84

• Total hours: 8.4

• Hourly rate: $80

• Total cost: $672

2. Independent Director Application Form

FHFA staff reviews each form to ensure each independent director candidate is eligible to serve and possess the required professional qualifications:

• Time per form: 2.0 hours

• Total forms: 25

• Total hours: 50

• Hourly rate: $80

• Total cost: $4,000

3. Independent Director Annual Certification Form

FHFA staff reviews each form to ensure each incumbent independent director remains eligible to serve:

• Time per form: 0.1 hours

• Total forms: 60

• Total hours: 6

• Hourly rate: $80

• Total cost: $480

15. Reasons for Change in Burden

The total hourly burden estimate has increased by 150 hours, from 119 hours to 269 hours. This increase is due to a revised analysis of the number of Independent Director Application Forms submitted to the Banks annually, which was increased from 25 forms to 100. The increased estimate reflects the fact that, while the Banks nominate a total of approximately 25 individuals for independent directorship seats annually, they typically receive forms from several potential nominees for each open independent directorship. The estimated number of Independent Director Application Forms reflected under Item #14 remains at 25, because the Banks only forward to FHFA for review the forms for those individuals that they actually nominate for an independent directorship seat.

The total estimated costs associated with the hourly burdens has increased from $20,349 to $62,139. This is due to an increase in the estimated number of Independent Director Application Forms being submitted, as well as an increase in hourly rates across all categories due to inflation.

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 Whey 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 Item 18.

B. Collection of Information Employing Statistical Methods

The information collection does not employ statistical methods.

1 See 12 U.S.C. § 1427(a)(1).

2 See 12 U.S.C. §§ 1427(a)(4), (b), and (d).

3 See 12 U.S.C. § 1427(d).

4 See 12 CFR 1261.7(c) and (f); 12 CFR 1261.14(b).

5 See 12 CFR 1261.12.

6 See 12 U.S.C. § 1427(a)(3).

7 See 12 U.S.C. § 1427(a)(3) and (b)(1).

8 See 12 CFR 1261.7(f).

9 See 12 CFR 1261.12(a).

10 See 29 U.S.C. § 794d.

11 See 89 FR 48612 (June 7, 2024).

12 According to the Bureau of Labor Statistics’ Occupational Employment Statistics data for May 2023 (the most recent data available), the national mean hourly wage for Chief Executives in the Finance and Insurance Sector (which would comprise a vast majority of Bank directors and directorship nominees) was $153.93. See Sector 52 - Finance and Insurance - May 2023 OEWS Industry-Specific Occupational Employment and Wage Estimates (bls.gov). FHFA rounded this figure up to $154 and added 50 percent ($77) for benefits and overhead costs to reach a total estimated cost of $231 per hour.