§ 1427. — Directors.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1427]
TITLE 12--BANKS AND BANKING
CHAPTER 11--FEDERAL HOME LOAN BANKS
Sec. 1427. Directors
(a) Number; appointment and election; qualifications; conflicts of
interest
The management of each Federal home loan bank shall be vested in a
board of fourteen directors, eight of whom shall be elected by the
members as hereinafter provided in this section and six of whom shall be
appointed by the Board referred to in section 1422a of this title, all
of whom shall be citizens of the United States, 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: Provided, That in any district which includes five or
more States the Board may by regulation increase the elective directors
to a number not exceeding thirteen and may increase the appointive
directors to a number not exceeding three-fourths the number of elective
directors: Provided further, That if at any time the number of elective
directors in the case of any district is not at least equal to the
number of States in such district the Board shall exercise the authority
conferred by the next preceding proviso so as to increase such elective
directors to a number at least equal to the number of States in such
district. At least 2 of the Federal Home Loan Bank directors who are
appointed by the Board shall be representatives chosen from
organizations with more than a 2-year history of representing consumer
or community interests on banking services, credit needs, housing, or
financial consumer protections. No Federal Home Loan Bank director who
is appointed pursuant to this subsection may, during such Bank
director's term of office, serve as an officer of any Federal Home Loan
Bank or a director or officer of any member of a Bank, or hold shares,
or any other financial interest in, any member of a Bank.
(b) Elective directorships; qualifications; nominations and election
Each elective directorship shall be designated by the Board 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
Board, 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.
(c) Apportionment among States in bank district; designation of State
location
The number of elective directorships designated as representing the
members located in each separate State in a bank district shall be
determined by the Board in the approximate ratio of the percentage of
the required stock, as determined pursuant to regulation of the Board,
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, if at any time the number of elective 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 Board shall
add to the board of directors of the bank of the district in which such
State is located such number of elective directorships, and shall so
designate the directorship or directorships thus added, that the number
of elective directorships designated as representing the members located
in such State will equal said total number. Any elective directorship so
added shall exist only until the expiration of its first term. The Board
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 Board 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 on December 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, 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 November 12, 1999, to ensure that the terms of the
members of the board of directors are staggered with approximately \1/3\
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 an elective director of a
Federal home loan bank in any elective directorship or elective
directorships and has served for all or part of each of said terms, such
person shall not be eligible for election to an elective 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 Board 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 Board in its discretion may shorten the next
succeeding term of any such elective directorship to one year, and may
fill such term by appointment. The term ``States'' or ``State'' as used
in this section shall mean the States of the Union, the District of
Columbia, and the Commonwealth of Puerto Rico. The Board, by regulation
or otherwise, may add an additional elective directorship to the board
of directors of the bank of any district in which the Commonwealth of
Puerto Rico is included at the time such directorship is added and which
does not then include five or more States, may fix the commencement and
the duration, which shall not exceed two years, of the initial term of
any directorship so added, and may fill any such initial term by
appointment: Provided, That (1) any directorship added pursuant to the
foregoing provisions of this sentence shall be designated by the Board,
pursuant to subsection (b) of this section, as representing the members
located in the Commonwealth of Puerto Rico, (2) such designation of such
directorship shall not be changed, and (3) such directorship shall
automatically cease to exist if and when the Commonwealth of Puerto Rico
ceases to be included in such district.
(f) Vacancies
(1) In general
A Bank director appointed or elected to fill a vacancy shall be
appointed or elected for the unexpired term of his or her
predecessor in office.
(2) Appointed Bank directors
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.
(3) Elected Bank directors
In the event of a vacancy in any elective Bank directorship,
such vacancy shall be filled by an affirmative vote of a majority of
the remaining Bank directors, regardless of whether such remaining
Bank directors constitute a quorum of the Bank's board of directors.
A Bank director so elected shall satisfy the requirements for
eligibility which were applicable to his predecessor. If any
elective Bank director shall cease to have any qualification set
forth in this section, the office held by such person shall
immediately become vacant, and such person shall not continue to act
as a Bank director.
(g) Chairperson and Vice Chairperson
(1) Election
The Chairperson and Vice Chairperson of the board of directors
of each Federal home loan bank shall be elected by a majority of all
the directors of such bank from among the directors of the bank.
(2) Terms
The term of office of the Chairperson and the Vice Chairperson
of the board of directors of a Federal home loan bank shall be 2
years.
(3) Acting Chairperson
In the event of a vacancy in the position of Chairperson of the
board of directors or during the absence or disability of the
Chairperson, the Vice Chairperson shall act as Chairperson.
(4) Procedures
The board of directors of each Federal home loan bank shall
establish procedures, in the bylaws of such board, for designating
an acting chairperson for any period during which the Chairperson
and the Vice Chairperson are not available to carry out the
requirements of that position for any reason and removing any person
from any such position for good cause.
(h) Appointment where members hold less than $1,000,000 of capital stock
If at any time when nominations are required members shall hold less
than $1,000,000 of the capital stock of the Federal home loan bank, the
Board shall appoint a director or directors to fill the place or places
for which such nominations are required, and the Board may, prior to the
filing of the certificate mentioned in section 1432 of this title,
appoint directors who shall be respectively designated by it as
appointive directors and as elective directors, in accordance with the
provisions of this section.
(i) Directors' compensation
(1) In general
Subject to paragraph (2), each bank may pay its directors
reasonable compensation for the time required of them, and their
necessary expenses, in the performance of their duties, in
accordance with the resolutions adopted by such directors, subject
to the approval of the board.
(2) Limitation
(A) In general
The annual salary of each of the following members of the
board of directors of a Federal home loan bank may not exceed
the amount specified:
In the case of the-- The annual compensation
may not exceed--
Chairperson......................... $25,000
Vice Chairperson.................... $20,000
All other members................... $15,000.
(B) Adjustment
Beginning January 1, 2001, each dollar amount referred to in
the table in subparagraph (A) shall be adjusted annually by the
Finance Board, based on the annual percentage increase, if any,
in the Consumer Price Index for all urban consumers, as
published by the Department of Labor.
(C) Expenses
Subparagraph (A) shall not be construed as prohibiting the
reimbursement of expenses incurred by members of the board of
directors of any Federal home loan bank in connection with
service on the board of directors.
(j) Duties of directors
Such board of directors shall administer the affairs of the bank
fairly and impartially and without discrimination in favor of or against
any member, and shall, subject to the provisions hereof, extend to each
institution authorized to secure advances such advances as may be made
safely and reasonably with due regard for the claims and demands of
other institutions, and with due regard to the maintenance of adequate
credit standing for the Federal Home Loan Bank and its obligations.
(k) Indemnification of directors, officers, and employees
The board of directors of each Bank shall determine the terms and
conditions under which such Bank may indemnify its directors, officers,
employees or agents.
(July 22, 1932, ch. 522, Sec. 7, 47 Stat. 730; May 28, 1935, ch. 150,
Sec. 3, 49 Stat. 294; Aug. 11, 1955, ch. 783, title I, Sec. 109(a)(2),
69 Stat. 640; Pub. L. 86-349, Secs. 1, 2, Sept. 22, 1959, 73 Stat. 625;
Pub. L. 87-211, Sec. 1, Sept. 8, 1961, 75 Stat. 486; Pub. L. 87-676,
Sept. 19, 1962, 76 Stat. 559; Pub. L. 93-541, Sec. 3, Dec. 26, 1974, 88
Stat. 1739; Pub. L. 101-73, title VII, Secs. 707, 710(b)(4), Aug. 9,
1989, 103 Stat. 417, 418; Pub. L. 106-102, title VI, Sec. 606(a), (b),
Nov. 12, 1999, 113 Stat. 1452, 1453.)
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.
Amendments
1999--Subsec. (a). Pub. L. 106-102, Sec. 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, Sec. 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
November 12, 1999, to ensure that the terms of the members of the board
of directors are staggered with approximately \1/3\ of the terms
expiring each year.'' for ``The term of each elective directorship shall
be two years and the term of each appointive directorship shall be four
years.''
Subsec. (g). Pub. L. 106-102, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 710(b)(4), struck out ``or
nonmember borrower'' after ``against any member''.
Subsec. (k). Pub. L. 101-73, Sec. 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 Dec. 31, 1960, to add such
number of elective directorships so that their number will equal such
total number, provided that an elective directorship so added shall
exist only until expiration of its first term, authorized designation of
State location of each member, defined terms ``total number of elective
directorships'' and ``members'', and struck out provisions which related
to election of two directors from each of classes A, B, and C and
limited their term of office to two years. See subsec. (d) of this
section.
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, Sec. 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, Sec. 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 Aug. 11, 1955, authorized an increase in
number of elective directors of any Federal Home Loan Bank having a
district which includes five or more States.
1935--Act May 28, 1935, amended subsecs. (a) to (c) generally, added
subsec. (d), and redesignated former subsecs. (d) to (i) as (e) to (j).
Effective Date of 1961 Amendment
Section 2 of Pub. L. 87-211 provided that: ``The amendment made by
this Act [amending this section] shall take effect on the second day of
the first calendar year which begins after the date of enactment of this
Act [Sept. 8, 1961].''
Effective Date of 1935 Amendment
Section 3 of act May 28, 1935, provided that the amendment made by
that section is effective Jan. 1, 1936.
