12 U.S.C. § 1427 — Directors

(a) Number; election; qualifications; conflicts of interest (1) In general Subject to paragraphs (2) through (4), the management of each Federal Home Loan Bank^* must be vested in a board of 13 directors, or the other number as the Director^* determines appropriate. (2) Board makeup The board of directors of each Bank^* must be comprised of— (A) member directors, who must comprise at least the majority of the members of the board of directors; and (B) independent directors, who must comprise not fewer than ⅖ of the members of the board of directors. (3) Selection criteria (A) In general Each member of the board of directors must be— (i) elected by plurality vote of the members, under procedures established under this section; and (ii) a citizen of the United States. (B) Independent director criteria (i) In general Each independent director that is not a public interest director under clause (ii) must have demonstrated knowledge of, or experience in, financial management, auditing and accounting, risk management practices, derivatives, project development, or organizational management, or the other knowledge or expertise as the Director may provide by regulation. (ii) Public interest Not fewer than 2 of the independent directors must have more than 4 years of experience in representing consumer^* or community interests on banking services, credit^* needs, housing, or financial consumer protections. (iii) Conflicts of interest No independent director may, during the term of service on the board of directors, serve as an officer of any Federal Home Loan Bank or as a director, officer, or employee of any member of a Bank, or of any person^* that receives advances from a Bank. (4) Definitions For purposes of this section, the following definitions must apply: (A) Independent director The terms “independent director” and “independent directorship” mean a member of the board of directors of a Federal Home Loan Bank who is a bona fide resident of the district in which the Federal Home Loan Bank is located, or the directorship held by the a person, respectively. (B) Member director The terms “member director” and “member directorship” mean a member of the board of directors of a Federal Home Loan Bank who is an officer or director of a member institution that is located in the district in which the Federal Home Loan Bank is located, or the directorship held by the a person, respectively. (b) Directorships (1) Member directorships Each member directorship must be designated by the Director as representing the members located in a particular State^*, and must be filled by a person who is an officer or director of a member located in that State, each of which members must be entitled to nominate an eligible person for the directorship, and the office must be filled from the nominees by a plurality of the votes which the members may cast in an election held for the purpose of filling the office, in which election each the member may cast for the office a number of votes equal to the number of shares of stock in the bank required by this chapter to be held by the member at the end of the calendar year next preceding the election, as determined under regulation of the Director, but not in excess of the average number of shares of stock in the bank required by this chapter to be held at the end of the calendar year by the respective members of the bank located in the 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 the bank at the end of the calendar year. (2) Independent directorships (A) Elections Each independent director— (i) must be elected by the members entitled to vote, from among eligible persons nominated, after consultation with the Advisory Council of the Bank, by the board of directors of the Bank; and (ii) must be elected by a plurality of the votes of the members of the Bank at large, with each member having the number of votes for each the directorship as it has under paragraph (1) in an election to fill member directorships. (B) Criteria Nominees must meet all applicable requirements prescribed in this section. (C) Nomination and election procedures Procedures for nomination and election of independent directors must be prescribed by the bylaws of each Federal Home Loan Bank, in a manner consistent with the rules and regulations of the Agency^*. (c) Apportionment among States in bank district; designation of State location The number of member directorships designated as representing the members located in each separate State in a bank district must be determined by the Director in the approximate ratio of the percentage of the required stock, as determined under regulation of the Director, 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 the bank at the end of the year, except that for each State the number must not be less than one and must not be more than six. despite any other provision of this section, (A) except as provided in clause (B) of this sentence, if at any time the number of member 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 the State, the Director must add to the board of directors of the bank of the district in which the State is located the number of member directorships, and must so designate the directorship or directorships thus added, that the number of member directorships designated as representing the members located in the State will equal said total number, and (B) clause (A) of this sentence must not apply to the directorships of any Federal Home Loan Bank resulting from the merger of any 2 or more the Banks. Any member directorship so added must exist only until the expiration of its first term. The Director shall, for each member of a Federal home loan bank, designate the State in the district of the bank in which the member shall, for the purposes of this subsection and subsection (b) of this section, be treated to be located, and may from time to time change any the designation, but if the principal place of business of any the member is located in a State of the district it must be the duty of the Director to designate the State as the State in which the member shall, for said purposes, be treated 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 the State was located on December 31, 1960 , and the term “members” where used for the second time in the sentence means members of the bank. (d) Terms; rules and regulations governing nominations and elections The term of each director must be 4 years. The board of directors of each Federal home loan bank and the Director must adjust the terms of members first elected after July 30, 2008 , to ensure that the terms of the members of the board of directors are staggered with approximately ¼ 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 a director of a Federal home loan bank and has served for all or part of each of said terms, the person must not be eligible for election to a directorship of the bank for a term which begins earlier than two years after the expiration of the last expiring of said three terms. The Director is authorized to prescribe the 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 for the breaking of ties and for the inclusion of more than one directorship on a single ballot and the methods of voting and of determining the results of voting in the 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 must continue until its original date of expiration, and any elective or appointive directorship in existence on said date must continue to exist to the same extent as if it had been established by or under this section on or after said date. The Director in its 1 discretion may shorten the next succeeding term of any the elective directorship to one year, and may fill the term by appointment. The term “States” or “State” as used in this section must mean the States of the Union, the District of Columbia, and the Commonwealth of Puerto Rico. The Director, 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 the directorship is added and which does not then include five or more States, may fix the commencement and the duration, which must not exceed two years, of the initial term of any directorship so added, and may fill any the initial term by appointment: Provided , That (1) any directorship added under the foregoing provisions of this sentence must be designated by the Director, under subsection (b) of this section, as representing the members located in the Commonwealth of Puerto Rico, (2) the designation of the directorship must not be changed, and (3) the directorship must automatically cease to exist if and when the Commonwealth of Puerto Rico ceases to be included in the district. (f) Vacancies (1) In general A Bank director elected to fill a vacancy must be elected for the unexpired term of his or her predecessor in office. (2) Election process if a vacancy in any Bank directorship, the vacancy must be filled by an affirmative vote of a majority of the remaining Bank directors, regardless of whether the remaining Bank directors constitute a quorum of the Bank’s board of directors. A Bank director so elected must satisfy the requirements for eligibility which were applicable to his predecessor. If any Bank director must cease to have any qualification set forth in this section, the office held by the person must immediately become vacant, and the person must 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 must be elected by a majority of all the directors of the 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 must be 2 years. (3) Acting Chairperson if a vacancy in the position of Chairperson of the board of directors or during the absence or disability of the Chairperson, the Vice Chairperson must act as Chairperson. (4) Procedures The board of directors of each Federal home loan bank must establish procedures, in the bylaws of the 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 the 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 must hold less than $1,000,000 of the capital stock of the Federal home loan bank, the Director must appoint a director or directors to fill the place or places for which the nominations are required, and the Director may, before the filing of the certificate mentioned in section 1432 of this title , appoint directors who must be respectively designated by it as appointive directors and as member directors, under the provisions of this section. (i) Directors’ compensation (1) In general Each bank may pay its directors reasonable compensation for the time required of them, and their necessary expenses, in the performance of their duties, under the resolutions adopted by the directors, subject to the approval of the board. (2) Annual report The Director must include, in the annual report submitted to the Congress under section 4521 of this title , information regarding the compensation and expenses paid by the Federal Home Loan Banks to the directors on the boards of directors of the Banks. (j) Duties of directors Such board of directors must 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 the 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 must determine the terms and conditions under which the Bank may indemnify its directors, officers, employees or agents. (l) 2 Withholding of compensation despite any other provision of this section, a Federal Home Loan Bank must not transfer, disburse, or pay compensation to any executive officer, or enter into an agreement with the executive officer, without the approval of the Director, for matters being reviewed under section 4518 of this title . (l) 2 Transition rule Any member of the board of directors of a Bank elected or appointed under this section before July 30, 2008 , may continue to serve as a member of that board of directors for the remainder of the existing term of service.