The 12 Federal Home Loan banks will be allowed to set the salaries of their directors, under a rule adopted Thursday by the system's regulator.

The Federal Housing Finance Board, which has had approval of compensation plans for the banks' boards, handed over that power as part of a broader effort to farm out day-to-day management to the district banks.

The agency kept intact its $28,000 cap on the average director salary. The rule, which takes effect Jan. 1, also requires that directors' salaries be published in each bank's annual report. Currently, the salaries are only available through Freedom of Information Act requests.

Also Thursday, the finance board proposed to let the district banks' boards approve their own budgets. The finance board now has this authority. Under the proposal, the banks would still have to send budget copies to the finance board, and the agency could order changes.

The budget proposal is expected to appear in the Federal Register within two weeks and will be open for comment for 30 days.

Finally, the finance board reduced its cap on bonuses to be paid this year to the presidents of Home Loan banks making advances for community development projects. The cap was cut to 31.25% of a president's salary, from 37.5% for 1995.

The finance board is expected to request public comment on a further reduction in the cap next year.

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