Bank, shall include legal representaLives, successors, and assigns thereof. [37 F.R. 18297, Sept. 9, 1972]

DUTIES OF OFFICERS

522.75 In general.

The President shall be the chief administrative officer of the Bank. The President and other officers shall have such powers and duties as are prescribed in the Bank's bylaws and in the regulations in this part.

§ 522.76 President.

The President shall endeavor to ascertain whether each member of the Bank is complying with the provisions of the act and of the regulations in this subchapter relating to such member. If the President finds that a member institution is not conducting its affairs in accordance with the foregoing, he shall request the member so to do. In the event the member does not comply with such request, the President shall report the matter, or cause it to be reported, to the board of directors.

(a) There is hereby established an Office of Finance which shall be located in Washington, D.C., and which shall perform the functions set forth in § 522.81.

(b) The Office of Finance shall be headed by a Director, who shall have responsibility for the performance of the functions of such Office. The Director shall be appointed, and his compensation shall be fixed, by the Board. There may also be one or more Deputy Directors and one or more Assistant Directors, who shall be appointed and whose compensation shall be fixed in the same manner.

(c) Any function of the Office of Finance now or hereafter exercisable by the Director may also be exercised by a Deputy Director or an Assistant Director, in accordance with such limitations, if any, as may be prescribed in writing by the Director.

[37 FR 16864, Aug. 22, 1972, as amended at 39 FR 5626, Feb. 14, 1974]

§ 522.81 Functions of Office of Finance. (a) The Office of Finance shall: (1) Conduct all negotiations relating to the public or private offering and sale of consolidated Federal Home Loan Bank obligations, as may be authorized by the

Board; (2) conduct all negotiations for the purchase and/or sale of any securities on behalf of a Federal Home Loan Bank, as may be requested by such Bank after receiving the approval of the Board in the event such approval is required or as may be requested by the Board; (3) perform such other related duties as may be requested of such Office by a Federal Home Loan Bank or Banks and/or the Board; and (4) perform such functions for the Federal Savings and Loan Insurance Corporation and/or the Federal Home Loan Mortgage Corporation as may be requested of such Office by the Board. In addition to the foregoing, any other function, duty, or authority heretofore vested in or performed by the Fiscal Agent shall be vested in, and may be performed by, the Office of Finance.

(b) The Office of Finance shall maintain in a checking account in a commercial bank approved by the Board an "imprest fund" in such maximum amount as may be approved by the Board. Such bank account shall be subject to withdrawal by check or draft signed by either the Director, or by another person or persons designated by him with the approval of the Board. Each Bank shall from time to time forward to the Office of Finance its check for the amount representing its prorata share of the expenditures made by such Office during a designated period from the funds received from the Banks, promptly upon receipt of statements from such Office of such amounts. All of the foregoing receipts from the Banks are to be deposited by the Office of Finance in the bank account referred to in this section and are to be disbursed as provided in § 522.82.

(Sec. 5B, 47 Stat. 727, as added by sec. 4, 80 Stat. 824, as amended by Pub. L. 91-151, sec. 2(b), 83 Stat. 371; 12 U.S.C. 1425b) [37 FR 16864, Aug. 22, 1972, as amended at 39 FR 5626, Feb. 14, 1974]

§ 522.82 Budget and expenses.

The Office of Finance shall annually submit a budget for the following calendar year containing proposed allotments for the expenses of maintaining and operating such Office to the Board so as to reach it on or before the first day of December. After such budget has been approved by the Board, the Director may make disbursements thereunder from the funds provided for in § 522.81(b). Following approval by the Board, the Direc

tor shall transmit a copy of the budget to each of the Bank Presidents. The Director may, without further authority, make a transfer from an excess allotment, in the budget referred to, to an insufficient allotment. However, transfers to allotments for compensation or rent of office quarters, as well as any proposed changes which would increase the total of the approved budget, shall be submitted for approval in the same manner as the original budget was submitted. In addition the Director shall, upon the direction of the Board, make disbursements from the funds provided for in § 522.81 (b), in payment of such other expenses which will not be covered by the approved budget and which are deemed appropriate.

(Sec. 5B, 47 Stat. 727, as added by sec. 4, 80 Stat. 824, as amended by Pub. L. 91-151, sec. 2(b), 83 Stat. 371; (12 U.S.C. 1425b)) [39 FR 5626, Feb. 14, 1974]

CFR, 1943-1948 Comp., unless otherwise noted.

SOURCE: The provisions of this Part 523 appear at 23 F.R. 9886, Dec. 23, 1958, unless otherwise noted.

APPLICATION FOR MEMBERSHIP

§ 523.1 Application form.

Applications for membership shall be made on forms approved by the Board. Any institution desiring to become a member of a Bank shall obtain application forms from and file the same in duplicate with the Bank of the district in which it is located.

§ 523.2 Examination and review of application.

The officers of the Bank designated by its board of directors shall promptly consider the application for membership and shall endeavor to obtain such supplemental information as they may deem appropriate. They shall report their recommendations thereon to the board of directors or to the executive committee of the Bank, which shall consider the officers' report and, after obtaining any additional information with respect to the application as it may desire, shall then transmit the application to the Board with its recommendation thereon. The board of directors may authorize the said designated officers to transmit applications for membership to the Board with their recommendations thereon, during the periods between meetings of the board of directors or executive committee of the Bank, provided such action is in accordance with the Bank's bylaws. Each such action shall be reported to the next meeting of the board of directors or executive committee, whichever shall first occur.

§ 523.3

Board action on applications.

The Board, after considering the application and the recommendation of the Bank, will inform the Bank of its action thereon. The Bank will inform the applicant of such action, and, if the application is approved, transmit to the applicant the membership certificate received from the Board. § 523.3-1

Automatic Board approval in certain cases.

A member which is removed from membership by operation of law pursuant to section 407(1) of the National Housing Act, as amended, solely because of the termination of its status as an institution

whose accounts are insured under said Act, resulting from its conversion to an institution whose accounts are insured by the Federal Deposit Insurance Corporation, shall be deemed, as of the effective date of such conversion, to be automatically approved by the Board as a member, provided that such institution, acting by its board of directors or board of trustees, has made written request to the Bank of the district in which it is located for such membership and such Bank has approved such request. In case of automatic approval under this section, all loan, deposit, stock, and other relationships existing between such member and such Bank at the time of such conversion may continue without interruption.

[35 F.R. 11616, July 21, 1970]

STOCK SUBSCRIPTION

§ 523.4 Subscription form.

Duly executed subscription for stock shall be made by the applicant at the time of filing application for membership. § 523.5 Minimum stock subscription.

As of the close of each calendar year, the Bank shall ascertain from the report required by § 523.15, or by such other means as may be appropriate, if an additional subscription to capital stock is required of any member, in order to comply with the act, and the Bank shall notify the member of any additional requirement.

[29 F.R. 4993, Apr. 10, 1964]

§ 523.6 Adjustments in stock holdings.

The board of directors of any Bank may increase or decrease the amount of stock or any member from time to time so that the stock held by each member shall conform to the provisions of section 6(c) of the act. In any case in which the amount of stock held by a member is decreased upon proper application of such member, the Bank shall pay for each share of stock, upon its surrender, an amount equal to the value thereof, which value shall be determined as provided in section 6(i) of the act, or, at its election, apply the whole or any part of such payment as a credit upon the indebtedness of the member to the Bank. A Bank may require a member to give 30 days' written notice of its intention to make an application to the Bank for a decrease in the amount of stock held by it. In no case shall there be a reduction in the amount of stock

held by any member to an amount less than that required by section 10(c) of the act. The board of directors of any Bank may, by resolution, designate the duly constituted executive committee or any officer of such Bank to exercise the powers granted by this section. [27 F.R. 5391, June 7, 1962]

§ 523.7

Excess stock subscriptions.

A member, subject to the approval of the Bank, may subscribe to the capital stock of the Bank of which it is a member in such larger amount than the minimum amount specified by the provisions of section 6(c) of the act as it may desire, subject to the provisions of the law under which such member operates.

§ 523.8 Payments on stock subscription.

An applicant may pay for stock subscribed in installments, as provided in section 6(d) of the act. In the event of substantial delay between the time of filing of the application and notification of such applicant's admission to membership provided the applicant has furnished all information required and complied with applicable laws and the regulations of the Board, such applicant may be allowed to make its second payment upon admission and succeeding payments as above provided. All other subscriptions to a Bank's stock shall be paid in full not later than the time the stock certificates therefor are issued. § 523.9 Transfer or hypothecation of stock.

A member desiring to dispose of or transfer its stock shall make application for Board approval through the Bank of which it is a member.

LIQUIDITY

SOURCE: §§ 523.10 through 523.14 appear at 34 F.R. 20413, Dec. 31, 1969, unless otherwise noted.

§ 523.10 Definitions.

For the purposes of this section, §§ 523.11, and 523.12:

(a) The term "cash" means the amount of cash on hand and unpledged demand deposits in a Federal Home Loan Bank, an insured bank, or the Bank for Savings and Loan Associations, Chicago, Ill.

(b) The term "insured bank" means a commercial bank whose deposits are insured by the Federal Deposit Insurance Corporation and which is not under the

control or in the possession of any supervisory authority.

(c) The term "liquidity base" means

(1) Prior to November 1, 1970, the amount of the member's net withdrawable accounts, or in the case of a member insurance company its policy reserve required by State law; and

(2) Beginning on November 1, 1970, the amount of the member's net withdrawable accounts, or in the case of a member insurance company its policy reserve required by State law, plus the member's short-term borrowings.

(d) The term "net withdrawable accounts" means the amount of all withdrawable accounts less the unpaid balance of all loans on the security of such accounts.

(e) The term "short-term borrowings" means the amount of all borrowings which are payable on demand or which are due for payment in 1 year or less.

(f) The term "obligations of the United States" means evidences of indebtedness issued by the United States, or issued by any agency or instrumentality of the United States and fully guaranteed as to principal and interest by the United States.

(g) Prior to January 1, 1972, the term "liquid assets" means the total of cash, accrued interest on unpledged assets which qualify as liquid assets under this paragraph, or would so qualify except for their maturities, and the book value of unpledged assets specified in paragraph (g) (1) through (6) of this section, without regard to the proviso contained in subparagraph (2) of this paragraph. Beginning on January 1, 1972, the term "liquid assets" means the total of cash, accrued interest on unpledged assets which qualify as liquid assets under this paragraph, or would so qualify except for their maturities, and the book value of the following unpledged assets:

(1) Time deposits in a Federal Home Loan Bank or the Bank for Savings and Loan Associations, Chicago, Ill.;

(2) Obligations of the United States (including such obligations held subject to a repurchase agreement): Provided, however, That, except as the Board may otherwise direct in a specific case, the maximum amount of such obligations having a remaining period to maturity of more than 7 years includable in liquid assets shall not exceed an amount equal to one-half of 1 percent of the average daily balance for the preceding calendar month of the member's liquidity base, or

in the case of a member which has made the election provided in paragraph (b) of § 523.11, the member's liquidity base at the end of the preceding calendar month;

(3) Obligations (including such obligations held subject to a repurchase agreement) issued, or fully guaranteed as to principal and interest, by the following agencies or instrumentalities of the United States and having a remaining period to maturity of not more than 5 years:

(i) A Federal Home Loan Bank or Banks,

(ii) The Federal National Mortgage Association,

(iii) The Government National Mortgage Association,

(iv) A Bank or Banks for Cooperatives, including the Central Bank for Cooperatives,

(v) A Federal Land Bank or Banks, (vi) A Federal Intermediate Credit Bank or Banks,

(vii) The Tennessee Valley Authority, (viii) The Export-Import Bank of the United States,

(ix) The Commodity Credit Corporation, or

(x) The Federal Financing Bank.

(4) Time deposits in an insured bank including such time deposits held subject to a repurchase agreement and loans of Federal funds to an insured bank which is a member of the Federal Reserve System, if:

(i) The total of all time deposits, including loans of Federal funds of the same member, in the same bank does not exceed the greater of (a) one-fourth of 1 percent of the total deposits of such bank (calculated on the basis of total deposits of such bank as shown by its last published statement of condition preceding the date each time deposit is made or acquired by a member), or (b) $20,000;

(ii) No consideration, other than discounting to a current market rate of interest, is received by the member from a third party in connection with the making or acquiring of such deposits (excluding loans of Federal funds) by the member and no consideration is received by the member from a third party in connection with loans of Federal funds by the member;

(iii) Except for loans of Federal funds, the remaining periods to maturity of such deposits are not more than 1 year and such deposits are negotiable, or, in the

case of time deposits which may not be withdrawn without notice, the notice periods do not exceed 90 days; and

(iv) The periods to maturity of loans of Federal funds are not more than 6 months;

(5) Bankers' acceptances of an insured bank if:

(i) The total of all such acceptances of the same bank held by the same member does not exceed one-fourth of 1 percent of the total deposits of such bank (calculated on the basis of total deposits of such bank as shown by its last published statement of condition preceding the date each such acceptance is acquired by a member);

(ii) No consideration, other than discounting to a current market rate of interest, is received by the member from a third party in connection with the acquisition of such acceptances; and

(iii) The remaining periods to maturity of such acceptances are not more than 9 months; and

(6) General obligations (including such obligations held subject to a repurchase agreement) of any State, territory, or possession of the United States, or political subdivision of any of the foregoing, if:

(i) Such obligations are rated, at the time acquired by a member, in one of the four highest grades as shown by the most recently published rating made of such obligations by a nationally recognized investment rating service; and

(ii) The remaining periods to maturity of such obligations are not more than 2 years.

(h) The term "short-term liquid assets" means the total of cash, accrued interest on unpledged assets which qualify as liquid assets under paragraph (g) of this section, or would so qualify except for their maturities, and the book value of the following unpledged assets:

(1) Time deposits specified in subparagraph (1) of paragraph (g) of this section;

(2) Obligations of the types specified in subparagraphs (2) and (3) of paragraph (g) of this section having a remaining period to maturity of not more than 18 months;

(3) Time deposits of the types specified in subparagraph (4) of paragraph (g) of this section having a remaining period to maturity of not more than 6 months or a notice period of not more than 90 days; and

(4) Bankers' acceptances specified in subparagraph (5) of paragraph (g) of this section having a remaining period to maturity of not more than 6 months. (Sec. 5A, 47 Stat. 727, as added by sec. 1, 64 Stat. 256, as amended, sec. 17, 47 Stat. 736, as amended; (12 U.S.C. 1425a, 1437)) [34 FR 20413, Dec. 13, 1969, as amended at 36 FR 3462, Feb. 25, 1971; 38 FR 30998, Nov. 9, 1973; 38 FR 32128, Nov. 21, 1973; 39 FR 9929, Mar. 15, 1974; 39 FR 17219, May 14, 1974] § 523.11 Liquidity requirements.

(a) General. For each calendar month, each member, other than a mutual savings bank as to which there is in effect the election provided for in paragraph (e) of this section, shall maintain an average daily balance of liquid assets in an amount not less than 5 percent of the average daily balance of the member's liquidity base during the preceding calendar month, except as otherwise provided in paragraphs (b) and (d) of this section. For each calendar month, each member, other than a mutual savings bank or an insurance company, shall maintain an average daily balance of short-term liquid assets in an amount not less than 1 percent of the average daily balance of the member's liquidity base during the preceding calendar month, except as otherwise provided in paragraphs (b) and (d) of this section.

(b) Exception. In lieu of using the average-daily-balance method prescribed in paragraph (a) of this section to compute its liquidity requirement, a member having less than $25 million in total assets as of the beginning of its current fiscal year may, by resolution of its board of directors, elect to maintain an average daily balance of liquid assets and short-term liquid assets in an amount not less than the applicable percentage (prescribed in paragraph (a) of this section) of its liquidity base as of the end of the preceding calendar month. Such election shall remain in effect, unless sooner revoked by resolution of the member's board of directors, so long as the member continues to meet the above asset requirement.

(c) Calculation of average daily balance. For the purposes of this section, §§ 523.10, and 523.12, the "average daily balance of liquid assets", "average daily balance of short-term liquid assets", and "average daily balance of the member's liquidity base", respectively, shall be calculated by adding the member's liquid