12 U.S.C. § 1441 : US Code - Section 1441: Financing Corporation

Search 12 U.S.C. § 1441 : US Code - Section 1441: Financing Corporation

(a) Establishment
Notwithstanding any other provision of law, the Federal Housing
Finance Board shall charter a corporation to be known as the
Financing Corporation.
(b) Management of Financing Corporation
(1) Directorate
The Financing Corporation shall be under the management of a
directorate composed of 3 members as follows:
(A) The Director of the Office of Finance of the Federal Home
Loan Banks (or the head of any successor to such office).
(B) 2 members selected by the Federal Housing Finance Board
from among the presidents of the Federal Home Loan Banks.
(2) Terms
Each member appointed under paragraph (1)(B) shall be appointed
for a term of 1 year.
(3) Vacancy
If any member leaves the office in which such member was
serving when appointed to the Directorate -
(A) such member's service on the Directorate shall terminate
on the date such member leaves such office; and
(B) the successor to the office of such member shall serve
the remainder of such member's term.
(4) Equal representation of banks
No president of a Federal Home Loan Bank may be appointed to
serve an additional term on the Directorate until such time as
the presidents of each of the other Federal Home Loan Banks have
served as many terms on the Directorate as the president of such
bank (before the appointment of such president to such additional
term).
(5) Chairperson
The Chairperson of the Federal Housing Finance Board shall
select the chairperson of the Directorate from among the 3
members of the Directorate.
(6) Staff
(A) No paid employees
The Financing Corporation shall have no paid employees.
(B) Powers
The Directorate may, with the approval of the Federal Housing
Finance Board, authorize the officers, employees, or agents of
the Federal Home Loan Banks to act for and on behalf of the
Financing Corporation in such manner as may be necessary to
carry out the functions of the Financing Corporation.
(7) Administrative expenses
(A) In general
All administrative expenses of the Financing Corporation
shall be paid by the Federal Home Loan Banks.
(B) Pro rata distribution
The amount each Federal Home Loan Bank shall pay shall be
determined by the Federal Housing Finance Board by multiplying
the total administrative expenses for any period by the
percentage arrived at by dividing -
(i) the aggregate amount the Federal Housing Finance Board
required such bank to invest in the Financing Corporation (as
of the time of such determination) under paragraphs (4) and
(5) of subsection (d) of this section (as computed without
regard to paragraph (3) or (6) of such subsection); by
(ii) the aggregate amount the Federal Housing Finance Board
required all Federal Home Loan Banks to invest (as of the
time of such determination) under such paragraphs.
(C) Administrative expenses defined
For purposes of this paragraph, the term "administrative
expenses" does not include -
(i) issuance costs (as such term is defined in subsection
(g)(5)(A) of this section);
(ii) any interest on (and any redemption premium with
respect to) any obligation of the Financing Corporation; or
(iii) custodian fees (as such term is defined in subsection
(g)(5)(B) of this section).
(8) Regulation by Federal Housing Finance Board
The Directorate shall be subject to such regulations, orders,
and directions as the Federal Housing Finance Board may
prescribe.
(9) No compensation from Financing Corporation
Members of the Directorate shall receive no pay, allowances, or
benefits from the Financing Corporation by reason of their
service on the Directorate.
(c) Powers of Financing Corporation
The Financing Corporation shall have only the following powers,
subject to the other provisions of this section and such
regulations, orders, and directions as the Federal Housing Finance
Board may prescribe:
(1) To issue nonvoting capital stock to the Federal Home Loan
Banks.
(2) To invest in any security issued by the Federal Savings and
Loan Insurance Corporation under section 1725(b) of this title
prior to August 9, 1989, and thereafter to transfer the proceeds
of any obligation issued by the Financing Corporation to the
FSLIC Resolution Fund.
(3) To issue debentures, bonds, or other obligations and to
borrow, to give security for any amount borrowed, and to pay
interest on (and any redemption premium with respect to) any such
obligation or amount.
(4) To impose assessments in accordance with subsection (f) of
this section.
(5) To adopt, alter, and use a corporate seal.
(6) To have succession until dissolved.
(7) To enter into contracts.
(8) To sue and be sued in its corporate capacity, and to
complain and defend in any action brought by or against the
Financing Corporation in any State or Federal court of competent
jurisdiction.
(9) To exercise such incidental powers not inconsistent with
the provisions of this section as are necessary or appropriate to
carry out the provisions of this section.
(d) Capitalization of Financing Corporation
(1) Purchase of capital stock by Federal Home Loan Banks
(A) In general
Each Federal Home Loan Bank shall invest in nonvoting capital
stock of the Financing Corporation at such times and in such
amounts as the Federal Housing Finance Board may prescribe
under this subsection.
(B) Par value; transferability
Each share of stock issued by the Financing Corporation to a
Federal Home Loan Bank shall have par value in an amount
determined by the Federal Housing Finance Board and shall be
transferable only among the Federal Home Loan Banks in the
manner and to the extent prescribed by the Federal Housing
Finance Board at not less than par value.
(2) Aggregate dollar amount limitation on all investments
The aggregate amount of funds invested by all Federal Home Loan
Banks in nonvoting capital stock of the Financing Corporation
shall not exceed $3,000,000,000.
(3) Maximum investment amount limitation for each Federal Home
Loan Bank
The cumulative amount of funds invested in nonvoting capital
stock of the Financing Corporation by each Federal Home Loan Bank
shall not exceed the aggregate amount of -
(A) the sum of -
(i) the reserves maintained by such bank on December 31,
1985, pursuant to the requirement contained in the first 2
sentences of section 1436 of this title; and
(ii) the undivided profits (as defined in paragraph (7)) of
such bank on such date; and
(B) the sum of -
(i) the amounts added to reserves after December 31, 1985,
pursuant to the requirement contained in the first 2
sentences of section 1436 of this title; and
(ii) the undivided profits of such bank accruing after such
date.
(4) Pro rata distribution of 1st $1,000,000,000 invested in
Financing Corporation by Home Loan Banks
Of the first $1,000,000,000 in the aggregate which the Thrift
Depositor Protection Oversight Board pursuant to section 1441b of
this title or the Federal Housing Finance Board under this
section (as the case may be) may require the Federal Home Loan
Banks collectively to invest in the stock of the Funding
Corporation or invest in the capital stock of the Financing
Corporation, respectively, the amount which each Federal Home
Loan Bank (or any successor to such Bank) shall invest shall be
determined by the Thrift Depositor Protection Oversight Board or
the Federal Housing Finance Board (as the case may be) by
multiplying the aggregate amount of such payment or investment by
all Banks by the percentage appearing in the following table for
each such Bank:
Bank Percentage
Federal Home Loan Bank of Boston 1.8629
Federal Home Loan Bank of New York 9.1006
Federal Home Loan Bank of Pittsburgh 4.2702
Federal Home Loan Bank of Atlanta 14.4007
Federal Home Loan Bank of Cincinnati 8.2653
Federal Home Loan Bank of Indianapolis 5.2863
Federal Home Loan Bank of Chicago 9.6886
Federal Home Loan Bank of Des Moines 6.9301
Federal Home Loan Bank of Dallas 8.8181
Federal Home Loan Bank of Topeka 5.2706
Federal Home Loan Bank of San Francisco 19.9644
Federal Home Loan Bank of Seattle 6.1422
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(5) Pro rata distribution of amounts required to be invested in
excess of $1,000,000,000
With respect to any amount in excess of the $1,000,000,000
amount referred to in paragraph (4) which the Federal Housing
Finance Board may require the Federal Home Loan Banks to invest
in capital stock of the Financing Corporation under this
subsection, the amount which each Federal Home Loan Bank (or any
successor to such bank) shall invest shall be determined by the
Federal Housing Finance Board by multiplying such excess amount
by the percentage arrived at by dividing -
(A) the sum of the total assets (as of the most recent
December 31) held by all Savings Association Insurance Fund
members which are members of such bank; by
(B) the sum of the total assets (as of such date) held by all
Savings Association Insurance Fund members which are members of
any Federal Home Loan Bank.
(6) Special provisions relating to maximum amount limitations
(A) In general
If the amount any Federal Home Loan Bank is required to
invest in capital stock of the Financing Corporation pursuant
to a determination by the Federal Housing Finance Board under
paragraph (5) (or under subparagraph (B) of this paragraph)
exceeds the maximum investment amount applicable with respect
to such bank under paragraph (3) at the time of such
determination (hereinafter in this paragraph referred to as the
"excess amount") -
(i) the Federal Housing Finance Board shall require each
remaining Federal Home Loan Bank to invest (in addition to
the amount determined under paragraph (5) for such remaining
bank and subject to the maximum investment amount applicable
with respect to such remaining bank under paragraph (3) at
the time of such determination) in such capital stock on
behalf of the bank in the amount determined under
subparagraph (B);
(ii) the Federal Housing Finance Board shall require the
bank to subsequently purchase the excess amount of capital
stock from the remaining banks in the manner described in
subparagraph (C); and
(iii) the requirements contained in subparagraphs (D) and
(E) relating to the use of net earnings shall apply to such
bank until the bank has purchased all of the excess amount of
capital stock.
(B) Allocation of excess amount among remaining Home Loan Banks
The amount each remaining Federal Home Loan Bank shall be
required to invest under subparagraph (A)(i) is the amount
determined by the Federal Housing Finance Board by multiplying
the excess amount by the percentage arrived at by dividing -
(i) the amount of capital stock of the Financing
Corporation held by such remaining bank at the time of such
determination; by
(ii) the aggregate amount of such stock held by all
remaining banks at such time.
(C) Purchase procedure
The bank on whose behalf an investment in capital stock is
made under subparagraph (A)(i) shall purchase, annually and at
the issuance price, from each remaining bank an amount of such
stock determined by the Federal Housing Finance Board by
multiplying the amount available for such purchases (at the
time of such determination) by the percentage determined under
subparagraph (B) with respect to such remaining bank until the
aggregate amount of such capital stock has been purchased by
the bank.
(D) Limitation on dividends
The amount of dividends which may be paid for any year by a
bank on whose behalf an investment is made under subparagraph
(A)(i) shall not exceed an amount equal to 1/2 of the net
earnings of the bank for the year.
(E) Transfer to account for purchase of stock required
Of the net earnings for any year of a bank on whose behalf an
investment is made under subparagraph (A)(i), such amount as is
necessary to make the purchases of stock required under
subparagraph (A)(ii) shall be placed in a reserve account
(established in such manner as the Federal Housing Finance
Board shall prescribe by regulations) the balance in which
shall be available only for such purchases.
(7) Undivided profits defined
For purposes of paragraph (3), the term "undivided profits"
means retained earnings minus the sum of -
(A) that portion required to be added to reserves maintained
pursuant to the first two sentences of section 1436 of this
title; and
(B) the dollar amounts held by the respective Federal Home
Loan Banks in special dividend stabilization reserves on
December 31, 1985, as determined under the following table:
Bank Dollar amount
Federal Home Loan Bank of Boston $3.2 million
Federal Home Loan Bank of New York 7.7 million
Federal Home Loan Bank of Pittsburgh 5.2 million
Federal Home Loan Bank of Atlanta 12.3 million
Federal Home Loan Bank of Cincinnati 5.9 million
Federal Home Loan Bank of Indianapolis 37.4 million
Federal Home Loan Bank of Chicago 6.0 million
Federal Home Loan Bank of Des Moines 32.7 million
Federal Home Loan Bank of Dallas 45.0 million
Federal Home Loan Bank of Topeka 13.7 million
Federal Home Loan Bank of San Francisco 21.9 million
Federal Home Loan Bank of Seattle 33.6 million
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(e) Obligations of Financing Corporation
(1) Limitation on amount of outstanding obligations
The aggregate amount of obligations of the Financing
Corporation which may be outstanding at any time (as determined
by the Federal Housing Finance Board) shall not exceed the lesser
of -
(A) an amount equal to the greater of -
(i) 5 times the amount of the nonvoting capital stock of
the Financing Corporation which is outstanding at such time;
or
(ii) the sum of the face amounts (the amount of principal
payable at maturity) of securities described in subsection
(g)(2) of this section which are held at such time in the
segregated account established pursuant to such subsection;
or
(B) $10,825,000,000.
(2) Termination of borrowing authority
No obligation of the Financing Corporation shall be issued
after December 12, 1991.
(3) Limitation on term of obligations
No obligation of the Financing Corporation may be issued which
matures -
(A) more than 30 years after the date of issue; or
(B) after December 31, 2026.
(4) Investment of United States funds in obligations
Obligations issued under this section by the Financing
Corporation with the approval of the Federal Housing Finance
Board shall be lawful investments, and may be accepted as
security, for all fiduciary, trust, and public funds the
investment or deposit of which shall be under the authority or
control of the United States or any officer of the United States.
(5) Market for obligations
All persons having the power to invest in, sell, underwrite,
purchase for their own accounts, accept as security, or otherwise
deal in obligations of the Federal Home Loan Banks shall also
have the power to do so with respect to obligations of the
Financing Corporation.
(6) No full faith and credit of the United States
Obligations of the Financing Corporation and the interest
payable on such obligations shall not be obligations of, or
guaranteed as to principal or interest by, the Federal Home Loan
Banks, the United States, or the FSLIC Resolution Fund and the
obligations shall so plainly state.
(7) Tax exempt status
(A) In general
Except as provided in subparagraph (B), obligations of the
Financing Corporation shall be exempt from tax both as to
principal and interest to the same extent as any obligation of
a Federal Home Loan Bank is exempt from tax under section 1433
of this title.
(B) Exception
The Financing Corporation, like the Federal Home Loan Banks,
shall be treated as an agency of the United States for purposes
of the first sentence of section 3124(b) of title 31 (relating
to determination of tax status of interest on obligations).
(8) Obligations are exempt securities
Notwithstanding paragraph (7),(!1) obligations of the Financing
Corporation shall be deemed to be exempt securities (within the
meaning of laws administered by the Securities and Exchange
Commission) to the same extent as securities which are direct
obligations of the United States or are guaranteed as to
principal or interest by the United States.
(9) Minority participation in public offerings
The Chairperson of the Federal Housing Finance Board and the
Directorate shall ensure that minority owned or controlled
commercial banks, investment banking firms, underwriters, and
bond counsels throughout the United States have an opportunity to
participate to a significant degree in any public offering of
obligations issued under this section.
(f) Sources of funds for interest payments; Financing Corporation
assessment authority
The Financing Corporation shall obtain funds for anticipated
interest payments, issuance costs, and custodial fees on
obligations issued hereunder from the following sources:
(1) Preenactment assessments
The Financing Corporation assessments which were assessed on
insured institutions pursuant to this section as in effect prior
to August 9, 1989.
(2) New assessment authority
In addition to the amounts obtained pursuant to paragraph (1),
the Financing Corporation, with the approval of the Board of
Directors of the Federal Deposit Insurance Corporation, shall
assess against each insured depository institution an assessment
(in the same manner as assessments are assessed against such
institutions by the Federal Deposit Insurance Corporation under
section 1817 of this title).
(3) Receivership proceeds
To the extent the amounts available pursuant to paragraphs (1)
and (2) are insufficient to cover the amount of interest
payments, issuance costs, and custodial fees, and if the funds
are not required by the Resolution Funding Corporation to provide
funds for the Funding Corporation Principal Fund under section
1441b of this title, the Federal Deposit Insurance Corporation
shall transfer to the Financing Corporation, from the liquidating
dividends and payments made on claims received by the FSLIC
Resolution Fund (established under section 1821a of this title)
from receiverships, the remaining amount of funds necessary for
the Financing Corporation to make interest payments.
(g) Use and disposition of assets of Financing Corporation not
invested in FSLIC
(1) In general
Subject to such regulations, restrictions, and limitations as
may be prescribed by the Federal Housing Finance Board, assets of
the Financing Corporation, which are not invested in capital
certificates or capital stock issued by the Federal Savings and
Loan Insurance Corporation under section 1725(b)(1)(A) of this
title before August 9, 1989, and after August 9, 1989, in capital
certificates issued by the FSLIC Resolution Fund, shall be
invested in -
(A) direct obligations of the United States;
(B) obligations, participations, or other instruments of, or
issued by, the Federal National Mortgage Association or the
Government National Mortgage Association;
(C) mortgages, obligations, or other securities for sale by,
or which have been disposed of by, the Federal Home Loan
Mortgage Corporation under section 1454 or 1455 of this title;
or
(D) any other security in which it is lawful for fiduciary
and trust funds to be invested under the laws of any State.
(2) Segregated account for zero coupon instruments held to assure
payment of principal
The Financing Corporation shall invest in, and hold in a
segregated account, noninterest bearing instruments -
(A) which are securities described in paragraph (1); and
(B) the total of the face amounts (the amount of principal
payable at maturity) of which is approximately equal to the
aggregate amount of principal on the obligations of the
Financing Corporation,
to assure the repayment of principal on obligations of the
Financing Corporation. For purposes of the foregoing, the
Financing Corporation shall be deemed to hold noninterest bearing
instruments that it lends temporarily to primary United States
Treasury dealers in order to enhance market liquidity and
facilitate deliveries, provided that United States Treasury
securities of equal or greater value have been delivered as
collateral.
(3) Dollar amount limitation on investment in zero coupon
instruments for segregated account
The aggregate amount invested by the Financing Corporation
under paragraph (2) shall not exceed $2,200,000,000 (as
determined on the basis of the purchase price).
(4) Exception for payment of issuance costs, interest, and
custodian fees
Notwithstanding the requirements of paragraph (1), the assets
of the Financing Corporation referred to in paragraph (1) which
are not invested under paragraph (2) may be used to pay -
(A) issuance costs;
(B) any interest on (and any redemption premium with respect
to) any obligation of the Financing Corporation; and
(C) custodian fees.
(5) Definitions
For purposes of this subsection -
(A) Issuance costs
The term "issuance costs" -
(i) means issuance fees and commissions incurred by the
Financing Corporation in connection with the issuance or
servicing of any obligation of the Financing Corporation; and
(ii) includes legal and accounting expenses, trustee and
fiscal and paying agent charges, costs incurred in connection
with preparing and printing offering materials, and
advertising expenses, to the extent that any such cost or
expense is incurred by the Financing Corporation in
connection with issuing any obligation.
(B) Custodian fees
The term "custodian fee" means -
(i) any fee incurred by the Financing Corporation in
connection with the transfer of any security to, or the
maintenance of any security in, the segregated account
established under paragraph (2); and
(ii) any other expense incurred by the Financing
Corporation in connection with the establishment or
maintenance of such account.
(h) Miscellaneous provisions relating to Financing Corporation
(1) Treatment for certain purposes
Except as provided in subsection (e)(8)(B) of this section, the
Financing Corporation shall be treated as a Federal Home Loan
Bank for purposes of sections 1433 and 1443 of this title.
(2) Federal Reserve banks as depositaries and fiscal agents
The Federal Reserve banks are authorized to act as depositaries
for or fiscal agents or custodians of the Financing Corporation.
(3) Applicability of certain provisions relating to Government
corporation
Notwithstanding the fact that no Government funds may be
invested in the Financing Corporation, the Financing Corporation
shall be treated, for purposes of sections 9105,(!2) 9107, and
9108 of title 31, as a mixed-ownership Government corporation
which has capital of the Government.
(i) Termination of Financing Corporation
(1) In general
The Financing Corporation shall be dissolved, as soon as
practicable, after the earlier of -
(A) the maturity and full payment of all obligations issued
by the Financing Corporation pursuant to this section; or
(B) December 31, 2026.
(2) Federal Housing Finance Board authority to conclude the
affairs of Financing Corporation
Effective on the date of the dissolution of the Financing
Corporation under paragraph (1), the Federal Housing Finance
Board may exercise, on behalf of the Financing Corporation, any
power of the Financing Corporation which the Federal Housing
Finance Board determines to be necessary to settle and conclude
the affairs of the Financing Corporation.
(j) Regulations
The Federal Housing Finance Board may prescribe such regulations
as may be necessary to carry out the provisions of this section,
including regulations defining terms used in this section.
(k) Definitions
For purposes of this section, the following definitions shall
apply:
(1) Directorate
The term "Directorate" means the directorate established in the
manner provided in subsection (b)(1) of this section to manage
the Financing Corporation.
(2) Net earnings
The term "net earnings" means net earnings without reduction
for any chargeoffs or expenses incurred by a Bank in connection
with the purchase of capital stock of the Financing Corporation
or the purchase of stock of the Funding Corporation required by
the Thrift Depositor Protection Oversight Board under subsections
(e) and (f) of section 1441b of this title.
(3) Insured depository institution
The term "insured depository institution" has the same meaning
as in section 1813 of this title (!3)