Notwithstanding any other provision of §§ 522.20-522.25, any director of a Bank, appointive or elective, duly serving under the provisions of section 7 of the act as in effect prior to January 2, 1962, shall continue his term of office until the original date of expiration of such term. The Board may, in its discretion, shorten the next succeeding term of any such elective directorship to one year, and may fill such term by appointment.

[27 F.R. 3916, Apr. 25, 1962]

§ 522.27 Definition of "State".

As used with respect to the election of directors for the Federal Home Loan Banks, the term "States" or "State" shall mean the States of the Union, the District of Columbia, and the Commonwealth of Puerto Rico.

[27 F.R. 10092, Oct. 13, 1962]

§ 522.28 General.

SELECTION AND COMPENSATION OF
OFFICERS AND EMPLOYEES

§ 522.70 Selection.

The election or appointment of the officers, legal counsel and employees of a Bank shall be in accordance with the bylaws of such Bank. No full-time officer or employee of any Bank shall act in any capacity for any member or institution which is insured by the Federal Savings and Loan Insurance Corporation under any understanding providing for continuous or repeated services nor act in any capacity for any institution in connection with any petition, application, or matter in which any action is required by the Bank or any of its officers, whether the Bank or such person will be acting for the Bank or as agent of the Board, or Federal Savings and Loan Insurance Corporation, except when employed by, or with the consent of, the Federal Savings and Loan Insurance Corporation in cases involving payment of insurance, loans, purchases of assets or contributions by said Corporation under section 405 or 406 of the National Housing Act, as amended. The prohibitions as to employment set forth in the preceding sentence shall apply to the counsel and attorneys of any Bank, whether employed on a salary, fee, retainer or other basis, except that, with the prior consent of the Board, and to the extent of such consent, any such person may act as counsel or attorney for any institution in connection with any matters covered by such prohibitions. The Board disapproves the practice of nepotism in the selection of personnel.

employees within the limits set forth in its approved budget. No bonus shall be paid by any Bank to any director, officer, employee or other person.

(b) In the event of the establishment of a new bank, the second sentence of paragraph (a) of this section and the language "to be effective during the next calendar year" in the first sentence thereof shall not be applicable to resolutions showing the contemplated compensation of officers and legal counsel for the calendar year in which such bank is established.

(Secs. 3, 7, 12, 26, 47 Stat. 726, 730, 735, 740, as amended; 12 U.S.C. 1423, 1427, 1432, 1446) [29 F.R. 312, Jan. 14, 1964 and 31 F.R. 6905, May 11, 1966] § 522.72

Indemnification.

Federal Home Loan Bank which has duly adopted a bylaw so providing shall indemnify or reimburse each present and future director, officer or employee of the bank, and his heirs, executors and administrators) against all reasonable expenses (subject to approval by the Board as to the reasonableness thereof), and against all liabilities to third persons, incurred by him in connection with or arising out of any action, suit or proceeding brought against him by reason of any act or omission in the performance of his official duties as such director, officer or employee of the bank (whether or not he continues to be a director, officer or employee at the time of incurring such expenses or liabilities). Such expenses and liabilities shall include, but not be limited to, court costs and attorney's fees, judgments, and the costs of reasonable settlements. The bank shall not, however, indemnify such director, officer or employee against either expenses or liabilities with respect to matters as to which he shall be finally adjudged in any such action, suit or proceeding to be liable for negligence or willful misconduct in the performance of his official duties as such director, officer or employee, or shall be finally adjudged or shall agree by way of settlement to be liable to the bank for any reason. Indemnification in the event of a settlement or compromise shall be subject to prior approval by the Board and shall be had only where it is determined that such director, officer or employee is not liable for negligence or willful misconduct in the performance of his

§ 522.80 Fiscal Agent and Deputy Fiscal Agent.

There shall be a Fiscal Agent and theremay be a Deputy Fiscal Agent of the Banks who shall be appointed by and whose compensation shall be established by the Presidents of the Banks, subject. to the approval of the Board. Any function or authority now or hereafter vested in or exercisable by the Fiscal Agent may be exercised also by a Deputy Fiscal Agent.

[24 F.R. 4830, June 13, 1959] § 522.81 Duties.

(a) The Fiscal Agent shall (1) con+ duct all negotiations relating to the pub lic 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 in 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 re

quired or as may be requested by the Board; and (3) perform such other related duties as may be requested of him by a Federal Home Loan Bank or Banks and/or the Board.

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

§ 522.82 Compensation and expenses.

Ths Bank Presidents shall appoint a budget committee consisting of three Bank Presidents. The Fiscal Agent shall annually submit to such committee a budget for the following calendar

year containing proposed allotments for the expenses of maintaining and operating his office. After such budget has been approved by at least two members of the committee and by a majority of the Presidents of the Banks, it shall be forwarded to the Board so as to reach it on or before the first day of December. The action of a President concerning such proposed budget shall be reported by him to the next scheduled meeting of the Bank's Board of Directors. After such budget has been approved by the Board, the Fiscal Agent may make disbursements thereunder from the funds provided for in § 522.81 (b). The Fiscal Agent 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 banking quarters, as well as any proposed changes which would increase the total of the approved budget, shall be submitted by the Fiscal Agent for approval in the same manner as the original budget was submitted. In addition the Fiscal Agent 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.

523.31 523.32

Cancellation of withdrawal notice.
Procedure for removal.

AUTHORITY: The provisions of this Part 523 issued under sec. 17, 47 Stat. 736, as amended; 12 U.S.C. 1437, Reorg. Plan No. 3 of 1947; 3 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.

tee 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.

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 of 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]

§ 523.8 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.

HOLDINGS OF CASH AND OBLIGATIONS OF THE UNITED STATES

§ 523.12 Holdings of cash and obligations of the United States by members.

No member insurance company shall make or purchase any loan, other than loans on the company's insurance policies, at any time when the aggregate of its cash and obligations of the United States is not at least equal to 7 percent of its policy reserve required by state law, and no other member shall make or purchase any loan, other than advances on the sole security of its withdrawable accounts, at any time when its cash and obligations of the United States are not at least equal to 7 percent of the obligation of the member on withdrawable accounts: Provided, That, until November 1, 1966, the foregoing figure of 7 percent may be reduced, but not below 6 percent, by the percentage that the maximum amount of net cash withdrawals from the opening of business on June 27, 1966, to the date of calculation is of the obligations of the member on withdrawable accounts at the opening of business on June 27, 1966. For the purposes of this section:

(a) A loan shall be deemed to have been made as of the date of the note or bond evidencing the same, and a loan shall be deemed to have been purchased as of the date of payment therefor;

(b) The term "cash" means cash on hand, unpledged deposits in a Federal Home Loan Bank or State bank performing similar reserve functions, and unpledged demand deposits in domestic banks, not under the control or in the possession of appropriate supervisory authority.

(c) The term "obligations of the United States" shall mean all unpledged evidences of indebtedness issued by the United States and all unpledged evidences of indebtedness issued by any agency or instrumentality of the United States which are by statute fully guaranteed as to principal and interest by the United States.

[31 F.R. 8771, June 24, 1966]