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Notice

Notice of Annual Adjustment of the Cap on Average Total Assets That Defines Community Financial Institutions; Notice of Annual Adjustment of the Limits on Annual Compensation for Federal Home Loan Bank Directors

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AGENCY:

Federal Housing Finance Board.

ACTION:

Notice.

SUMMARY:

The Federal Housing Finance Board (Finance Board) has adjusted the cap on average total assets that defines a “Community Financial Institution” and the limits on annual compensation for Federal Home Loan Bank (Bank) directors based on the annual percentage increase in the Consumer Price Index for all urban consumers (CPI-U) as published by the Department of Labor (DOL). These changes took effect on January 1, 2007.

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FOR FURTHER INFORMATION CONTACT:

Patricia L. Sweeney, Office of Supervision, by telephone at 202-408-2872, by electronic mail at sweeneyp@fhfb.gov, or by regular mail at the Federal Housing Finance Board, 1625 Eye Street, NW., Washington DC 20006-4001.

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SUPPLEMENTARY INFORMATION:

A. Statutory and Regulatory Background

Section 2(13) of the Federal Home Loan Bank Act (Bank Act) and § 925.1 of the Finance Board regulations define a member that is a “Community Financial Institution” (CFI) by the member's total asset size. See 12 U.S.C. 1422(13)(A) and 12 CFR 925.1. The Bank Act requires the Finance Board annually to adjust the CFI asset cap to reflect any percentage increase in the preceding year's CPI-U as published by the DOL. See 12 U.S.C. 1422(13)(B).

Section 7(i)(2)(B) of the Bank Act and § 918.3(a)(1) of the Finance Board regulations require the Finance Board to make similar annual adjustments to the annual compensation limits for members of the boards of directors of the Banks. See 12 U.S.C. 1427(i)(2) and 12 CFR 918.3(a).

Effective January 1, 2007, the CPI adjustment provisions in the Affordable Housing Program (AHP) regulation were removed. See 71 FR 59262 (Oct. 6, 2006) (12 CFR 951.3(a)(1)(iii) and 951.3(a)(2) (removed)). The revised provisions of the AHP regulation are located at 12 CFR 951.2(b)(2)(i) and (b)(3). As a result, this notice does not include any CPI adjustments under the AHP regulation.

B. Calculating the Annual Adjustments

The annual adjustments to the CFI asset cap and Bank director compensation limits reflect the percentage by which the CPI-U published for November of the preceding calendar year exceeds the CPI-U published for November of the year before the preceding calendar year (if at all). Thus, the adjustments that took effect on January 1, 2007, were based on the percentage increase in the CPI-U from November 2005 to November 2006. The Finance Board uses November data to provide notice of the changes to the annual limits before the January 1st effective date. This practice is consistent with that of other federal agencies.

The DOL encourages use of CPI-U data that has not been seasonally adjusted in “escalation agreements” because seasonal factors are updated annually and seasonally adjusted data are subject to revision for up to 5 years following the original release. Start Printed Page 1516Unadjusted data are not routinely subject to revision, and previously published unadjusted data are only corrected when significant calculation errors are discovered. Accordingly, the Finance Board is using data that has not been seasonally adjusted.

The unadjusted CPI-U increased 2 percent between November 2005 and November 2006. Based on this change, the Finance Board made the following adjustments, which took effect on January 1, 2007:

CFI Asset Cap: The CFI Asset Cap, which was $587 million for 2006, is $599 million in 2007. The Finance Board arrived at the adjusted limit of $599 million by rounding to the nearest million.

Annual Compensation Limits: The annual compensation limits for members of the Bank boards of directors is as follows in 2007: for a Chairperson—$29,944; for a Vice-Chairperson—$23,955; for any other member of a Bank's board of directors—$17,967. The Finance Board arrived at the adjusted annual compensation limits by rounding to the nearest dollar.

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Date: January 9, 2007.

By the Federal Housing Finance Board.

Ronald A. Rosenfeld,

Chairman.

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[FR Doc. E7-369 Filed 1-11-07; 8:45 am]

BILLING CODE 6725-01-P