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United States Code (Last Updated: May 24, 2014) |
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Title 12. BANKS AND BANKING |
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Chapter 11. FEDERAL HOME LOAN BANKS |
§ 1427. Directors
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(a) Number; election; qualifications; conflicts of interest (1) In general Subject to paragraphs (2) through (4), the management of each Federal Home Loan Bank shall be vested in a board of 13 directors, or such other number as the Director determines appropriate.
(2) Board makeup The board of directors of each Bank shall be comprised of— (A) member directors, who shall comprise at least the majority of the members of the board of directors; and (B) independent directors, who shall comprise not fewer than ⅖ of the members of the board of directors. (3) Selection criteria (A) In general Each member of the board of directors shall be— (i) elected by plurality vote of the members, in accordance with procedures established under this section; and (ii) a citizen of the United States. (B) Independent director criteria (i) In general Each independent director that is not a public interest director under clause (ii) shall have demonstrated knowledge of, or experience in, financial management, auditing and accounting, risk management practices, derivatives, project development, or organizational management, or such other knowledge or expertise as the Director may provide by regulation.
(ii) Public interest Not fewer than 2 of the independent directors shall have more than 4 years of experience in representing consumer or community interests on banking services, credit needs, housing, or financial consumer protections.
(iii) Conflicts of interest No independent director may, during the term of service on the board of directors, serve as an officer of any Federal Home Loan Bank or as a director, officer, or employee of any member of a Bank, or of any person that receives advances from a Bank.
(4) Definitions For purposes of this section, the following definitions shall apply: (A) Independent director The terms “independent director” and “independent directorship” mean a member of the board of directors of a Federal Home Loan Bank who is a bona fide resident of the district in which the Federal Home Loan Bank is located, or the directorship held by such a person, respectively.
(B) Member director The terms “member director” and “member directorship” mean a member of the board of directors of a Federal Home Loan Bank who is an officer or director of a member institution that is located in the district in which the Federal Home Loan Bank is located, or the directorship held by such a person, respectively.
(b) Directorships (1) Member directorships Each member directorship shall be designated by the Director as representing the members located in a particular State, and shall be filled by a person who is an officer or director of a member located in that State, each of which members shall be entitled to nominate an eligible person for such directorship, and such office shall be filled from such nominees by a plurality of the votes which such members may cast in an election held for the purpose of filling such office, in which election each such member may cast for such office a number of votes equal to the number of shares of stock in such bank required by this chapter to be held by such member at the end of the calendar year next preceding the election, as determined pursuant to regulation of the Director, but not in excess of the average number of shares of stock in such bank required by this chapter to be held at the end of such calendar year by the respective members of such bank located in such State, as so determined. No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director. As used in this subsection and in subsection (c) of this section, the term “member” means a member of a Federal home loan bank which was a member of such bank at the end of such calendar year.
(2) Independent directorships (A) Elections Each independent director— (i) shall be elected by the members entitled to vote, from among eligible persons nominated, after consultation with the Advisory Council of the Bank, by the board of directors of the Bank; and (ii) shall be elected by a plurality of the votes of the members of the Bank at large, with each member having the number of votes for each such directorship as it has under paragraph (1) in an election to fill member directorships. (B) Criteria Nominees shall meet all applicable requirements prescribed in this section.
(C) Nomination and election procedures Procedures for nomination and election of independent directors shall be prescribed by the bylaws of each Federal Home Loan Bank, in a manner consistent with the rules and regulations of the Agency.
(c) Apportionment among States in bank district; designation of State location The number of member directorships designated as representing the members located in each separate State in a bank district shall be determined by the Director in the approximate ratio of the percentage of the required stock, as determined pursuant to regulation of the Director, of the members located in that State at the end of the calendar year next preceding the date of the election to the total required stock, as so determined, of all members of such bank at the end of such year, except that in the case of each State such number shall not be less than one and shall not be more than six. Notwithstanding any other provision of this section, (A) except as provided in clause (B) of this sentence, if at any time the number of member directorships so designated as representing the members located in any State would not be at least equal to the total number of elective directorships which, on
December 31, 1960 , were filled by officers or directors of members whose principal places of business were located in such State, the Director shall add to the board of directors of the bank of the district in which such State is located such number of member directorships, and shall so designate the directorship or directorships thus added, that the number of member directorships designated as representing the members located in such State will equal said total number, and (B) clause (A) of this sentence shall not apply to the directorships of any Federal Home Loan Bank resulting from the merger of any 2 or more such Banks. Any member directorship so added shall exist only until the expiration of its first term. The Director shall, with respect to each member of a Federal home loan bank, designate the State in the district of such bank in which such member shall, for the purposes of this subsection and subsection (b) of this section, be deemed to be located, and may from time to time change any such designation, but if the principal place of business of any such member is located in a State of such district it shall be the duty of the Director to designate such State as the State in which such member shall, for said purposes, be deemed to be located. As used in the second sentence of this subsection, the term “total number of elective directorships” means the total number of elective directorships on the board of directors of the bank of the district in which such State was located onDecember 31, 1960 , and the term “members” where used for the second time in such sentence means members of such bank.(d) Terms; rules and regulations governing nominations and elections The term of each director shall be 4 years. The board of directors of each Federal home loan bank and the Director shall adjust the terms of members first elected after
July 30, 2008 , to ensure that the terms of the members of the board of directors are staggered with approximately ¼ of the terms expiring each year. If any person, before or after, or partly before and partly after,September 8, 1961 , has been elected to each of three consecutive full terms as a director of a Federal home loan bank and has served for all or part of each of said terms, such person shall not be eligible for election to a directorship of such bank for a term which begins earlier than two years after the expiration of the last expiring of said three terms. The Director is authorized to prescribe such rules and regulations as it may deem necessary or appropriate for the nomination and election of directors of Federal home loan banks, including, without limitation on the generality of the foregoing, rules and regulations with respect to the breaking of ties and with respect to the inclusion of more than one directorship on a single ballot and the methods of voting and of determining the results of voting in such cases.(e) Continuation of existing terms; directorship for the Commonwealth of Puerto Rico Each term, outstanding on the effective date of the amendment to this section abolishing the division of elective directors into classes, of an elective or appointive directorship then existing shall continue until its original date of expiration, and any elective or appointive directorship in existence on said date shall continue to exist to the same extent as if it had been established by or under this section on or after said date. The Director in its Withholding of compensation
Notwithstanding any other provision of this section, a Federal Home Loan Bank shall not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section 4518 of this title.
(l) 2 Transition rule Any member of the board of directors of a Bank elected or appointed in accordance with this section prior to
July 30, 2008 , may continue to serve as a member of that board of directors for the remainder of the existing term of service.
References In Text
The effective date of the amendment to this section, referred to in subsec. (e), probably means the effective date of Pub. L. 87–211. See Effective Date of 1961 Amendment note below.
Codification
Section 1202(2) of Pub. L. 110–289, which directed amendment of this section by substituting “member” for “elective” wherever appearing other than in subsecs. (d), (e), and (f), was executed by making the substitution in subsec. (h) but not in subsecs. (b) and (c) to reflect the probable intent of Congress and subsequent amendment by Pub. L. 110–289, § 1202(3)(A), (4)(A). See 2008 Amendment notes below.
Amendments
2008—Subsec. (a). Pub. L. 110–289, § 1202(1), added subsec. (a) and struck out former subsec. (a) which related to number, appointment and election, qualifications, and conflicts of interest of Federal Home Loan Bank directors.
Subsec. (b). Pub. L. 110–289, § 1202(3), designated existing provisions as par. (1), inserted subsec. (b) and par. (1) headings, substituted “Each member directorship” for “Each elective directorship”, and added par. (2).
Pub. L. 110–289, § 1202(2), which directed substitution of “member” for “elective” wherever appearing, was not executed in subsec. (b) because of subsequent amendment by Pub. L. 110–289, § 1202(3)(A). See Amendment and Codification notes above.
Subsec. (b)(1). Pub. L. 110–289, § 1204(8), substituted “the Director” for “the Board” in two places.
Subsec. (c). Pub. L. 110–289, § 1204(8), (9), substituted “the Director” for “the Board” wherever appearing and “The Director” for “The Board”.
Pub. L. 110–289, § 1202(4)(B), in second sentence, inserted “(A) except as provided in clause (B) of this sentence,” before “if at any time” and “, and (B) clause (A) of this sentence shall not apply to the directorships of any Federal Home Loan Bank resulting from the merger of any 2 or more such Banks” before period at end.
Pub. L. 110–289, § 1202(4)(A), substituted “member” for “elective” wherever appearing before “directorship” or “directorships”, except second place appearing in second sentence and each place appearing in fifth sentence.
Pub. L. 110–289, § 1202(2), which directed substitution of “member” for “elective” wherever appearing, was not executed in subsec. (c) because of subsequent amendment by Pub. L. 110–289, § 1202(4)(A). See Amendment and Codification notes above.
Subsec. (d). Pub. L. 110–289, § 1204(9), (10), substituted “the Director” for “the Finance Board” and “The Director” for “The Board’.
Pub. L. 110–289, § 1202(5), in first sentence, struck out “, whether elected or appointed,” after “each director” and substituted “4 years” for “3 years”, in second sentence, struck out “or appointed” after “first elected” and substituted “
Subsec. (e). Pub. L. 110–289, § 1204(8), (9), substituted “The Director” for “The Board” in two places and “the Director” for “the Board”.
Subsec. (f)(1). Pub. L. 110–289, § 1202(6)(B), struck out “appointed or” before “elected” in two places.
Subsec. (f)(2), (3). Pub. L. 110–289, § 1202(6)(A), (C), redesignated par. (3) as (2), substituted “Election process” for “Elected bank directors” in heading, struck out “elective” after “in any” and after “If any” in text, and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: “In the event of a vacancy in any appointive Bank directorship, such vacancy shall be filled through appointment by the Board for the unexpired term. If any appointive Bank director shall cease to have the qualifications set forth in subsection (a) of this section, the office held by such person shall immediately become vacant, but such person may continue to act as a Bank director until his or her successor assumes the vacated office or the term of such office expires, whichever occurs first.”
Subsec. (h). Pub. L. 110–290, § 1204(8), substituted “the Director” for “the Board” in two places.
Pub. L. 110–289, § 1202(2), substituted “member” for “elective”.
Subsec. (i). Pub. L. 110–289, § 1202(7), substituted “Each” for “Subject to paragraph (2), each” in par. (1), added par. (2), and struck out former par. (2) which related to limitations on compensation of members of the board of directors of a Federal home loan bank.
Subsec. (l). Pub. L. 110–289, § 1202(8), added subsec. (l) relating to transition rule.
Pub. L. 110–289, § 1113(b), added subsec. (l) relating to withholding of compensation.
1999—Subsec. (a). Pub. L. 106–102, § 606(a)(1), substituted “, and each of whom shall be either a bona fide resident of the district in which such bank is located or an officer or director of a member of such bank located in that district” for “and bona fide residents of the district in which such bank is located”.
Subsec. (d). Pub. L. 106–102, § 606(a)(2), substituted “The term of each director, whether elected or appointed, shall be 3 years. The board of directors of each Federal home loan bank and the Finance Board shall adjust the terms of members first elected or appointed after
Subsec. (g). Pub. L. 106–102, § 606(a)(3), added subsec. (g) and struck out former subsec. (g) which read as follows: “The Board shall designate one of the directors of each bank to be chairman, and one to be vice chairman, of the board of directors of such bank.”
Subsec. (i). Pub. L. 106–102, § 606(b), inserted heading, designated existing provisions as par. (1), inserted heading, substituted “Subject to paragraph (2), each bank may pay its directors” for “Each bank may pay its directors”, and added par. (2).
1989—Subsec. (a). Pub. L. 101–73, § 707(1), inserted provisions relating to requirements for at least 2 of the directors and provisions respecting conflicts of interests, and substituted provisions relating to appointment under section 1422a of this title for provisions relating to appointment under section 1437(b) of this title.
Subsec. (b). Pub. L. 101–73, § 707(2), inserted after first sentence “No person who is an officer or director of a member that fails to meet any applicable capital requirement is eligible to hold the office of Federal Home Loan Bank director.”
Subsec. (f). Pub. L. 101–73, § 707(3), amended subsec. (f) generally. Prior to amendment, subsec. (f) read as follows: “In the event of a vacancy in any appointive or elective directorship, such vacancy shall be filled through appointment by the Board for the unexpired term: Provided, That if any director shall cease to have the qualifications set forth in subsection (a) of this section, or if any elective director shall cease to have any qualification set forth in this section, the office held by such director shall immediately become vacant, but such director may continue to act as such director until his successor assumes the vacated office or the term of such office expires, whichever shall first occur.”
Subsec. (j). Pub. L. 101–73, § 710(b)(4), struck out “or nonmember borrower” after “against any member”.
Subsec. (k). Pub. L. 101–73, § 707(4), added subsec. (k).
1974—Subsec. (a). Pub. L. 93–541 increased number of directors from twelve to fourteen, increased number of appointive directors from four to six, and in proviso relating to districts including five or more States, substituted provisions authorizing increase of appointive directors to a number not exceeding three-fourths the number of elective directors for provisions authorizing increase of appointive directors to a number not exceeding one-half the number of elective directors.
1962—Subsec. (e). Pub. L. 87–676 included Commonwealth of Puerto Rico within term “States” or “State”, and authorized Board to add an additional elective directorship to board of bank of any district in which Commonwealth of Puerto Rico is included at time such directorship is added and which doesn’t include five or more States, and to fill such initial term by appointment, provided, that any such added directorship shall be designated as representing members in Commonwealth of Puerto Rico, that such designation shall not be changed, and that such directorship shall cease to exist if and when Commonwealth of Puerto Rico ceases to be included in such district.
1961—Subsec. (a). Pub. L. 87–211 authorized Board to increase appointive directors in any district which includes five or more States to a number not exceeding one-half number of elective directors, directed Board to exercise its authority to increase the elective directors to a number at least equal to number of States in a district whenever number of elective directors in district is not at least equal to number of States in district, and struck out provisions which related to apportionment of additional elective directors, required at least one but not more than three elective directors from any of the States in any district in which number of elective directors is increased, limited number of elective directors in any one district to not more than eleven, and defined term “States”. See subsec. (c) of this section.
Subsec. (b). Pub. L. 87–211 amended subsection generally, substituting provisions relating to designation of elective directorships, nominations for such office, manner of election, and voting power of each member, for provisions which required four directors to be appointed by Board, limited their term of office to four years, and which authorized Board to increase total number of appointive directors to not more than one-half total number of elective directors in cases where number of elective directors has been increased. See subsec. (a) of this section.
Subsec. (c). Pub. L. 87–211 required number of elective directorships designated as representing members located in each separate State in a bank district to be determined by Board in approximate ratio of percentage of required stock of members located in that State at end of calendar year next preceding date of election to total required stock of all members of such bank at end of such year, except that in case of each State such number shall not be less than one and not more than six, directed Board, in cases where number of elective directorships in any State would not be at least equal to total number of elective directorships in such State on
Subsec. (d). Pub. L. 87–211 established term of each elective directorship at two years and of each appointive directorship at four years, restricted eligibility for election of persons elected to each of three consecutive full terms and who have served for all or part of each of said terms, empowered Board to prescribe rules and regulations for nomination and election of directors, and struck out provisions which required two directors to be elected by members of bank without regard to classes and limited their term of office to two years.
Subsec. (e). Pub. L. 87–211 amended subsection generally, substituting provisions permitting continuation of terms of elective and appointive directorships, empowering Board to shorten next succeeding term of any elective directorship to one year and to fill such term by appointment, defining terms “States” and “State”, for provisions which required the Board to divide members of each bank into either group A, B, or C, permitted each member to nominate persons for election as directors of class corresponding to group to which member belongs, and limited each member to one vote for each director in its class.
Subsec. (f). Pub. L. 87–211 substituted “In the event of a vacancy in any appointive or elective directorship, such vacancy shall be filled through appointment by the Board for the unexpired term” for “Any director appointed or elected as provided in this section to fill a vacancy shall hold office only until the expiration of the term of his predecessor”, and inserted proviso stating that if any director ceases to have the qualifications set forth in this section his office shall immediately become vacant but permits him to act as such director until his successor assumes the vacated office or the term of his office expires, whichever first occurs.
Subsec. (g). Pub. L. 87–211 reenacted subsec. (g) without change.
Subsec. (h). Pub. L. 87–211 authorized Board, prior to filing of the certificate mentioned in section 1432 of this title, to appoint directors and required Board to designate appointees as either appointive or elective directors, and struck out provisions which permitted directors appointed under this subsection to serve until expiration of the calendar year during which they took office.
1959—Subsec. (a). Pub. L. 86–349, § 1, authorized increase of up to 13 in number of elective directors of bank having district which includes five or more States.
Subsec. (b). Pub. L. 86–349, § 2, authorized increase in number of appointive directors of up to one-half number of elective directors in district in which number of elective directors were increased pursuant to subsec. (a), and provided for expiration of term of initial incumbent of any office so established.
1955—Subsec. (a). Act
1935—Act
Effective Date Of Amendment
Pub. L. 87–211, § 2,
Act May 28, 1935, ch. 150, § 3, 49 Stat. 294, provided that the amendment made by that section is effective