[Federal Register Volume 62, Number 137 (Thursday, July 17, 1997)]
[Proposed Rules]
[Pages 38223-38231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18827]
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FARM CREDIT ADMINISTRATION
12 CFR Parts 611, 614, 620, and 630
RIN 3052-AB67
Organization; Loan Policies and Operations; Disclosure to
Shareholders; Disclosure to Investors in Systemwide and Consolidated
Bank Debt Obligations of the Farm Credit System; Other Financing
Institutions
AGENCY: Farm Credit Administration.
ACTION: Proposed rule.
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SUMMARY: The Farm Credit Administration (FCA or Agency), through the
FCA Board (Board), issues a proposed rule to amend its regulations in
subpart P of part 614 that govern the funding and discount relationship
between Farm Credit System (Farm Credit, FCS, or System) banks that
operate under title I of the Farm Credit Act of 1971, as amended (Act),
and non-System other financing institutions (OFIs). The proposed
regulation would substantially expand the opportunities for OFIs, such
as commercial banks, trust companies, agricultural credit corporations,
incorporated livestock loan companies, savings associations, credit
unions, or other financial institutions identified in section
1.7(b)(1)(B) of the Act, to fund or discount loans and leases through a
Farm Credit Bank (FCB) or an agricultural credit bank (ACB). FCBs and
ACBs can offer financing to OFIs for the purpose of funding short- and
intermediate-term loans and leases to parties who are eligible to
borrow from FCS associations under section 2.4(a) of the Act. The FCA's
proposal would eliminate several non-statutory limits on OFI
eligibility. It would also require an FCB or ACB to provide funding and
discount services to any creditworthy OFI that is significantly
involved in agricultural lending and demonstrates a continuing need for
supplementary sources of funds to meet the credit needs of agricultural
borrowers. The proposed rule would expand the opportunity for an OFI to
seek funding, discount and other similar financial assistance from an
FCB or ACB other than the System bank that is chartered to serve its
territory under certain circumstances. The proposed rule also
implements statutory provisions that
[[Page 38224]]
require OFIs to: Invest in the System funding bank; use the funds
obtained from FCS banks only to provide short- and intermediate-term
financing to eligible borrowers for authorized purposes; adhere to
borrower rights on agricultural and aquatic loans; ensure that the FCA
has access to the books and records of the OFI; and limit their
aggregate liabilities to no more than 10 times their paid-in and
unimpaired capital and surplus. Under this proposal, FCBs and ACBs
would be required to lend to OFIs only on a fully secured basis and to
have full recourse to the OFI's capital as protection against default.
The FCA has restructured the regulations in subpart P of part 614 so
they are more concise and easier to understand.
DATES: Written comments should be received on or before September 15,
1997.
ADDRESSES: Comments may be mailed or delivered to Patricia W. DiMuzio,
Director, Regulation Development Division, Office of Policy Development
and Risk Control, Farm Credit Administration, 1501 Farm Credit Drive,
McLean, Virginia 22102-5090 or sent by facsimile transmission to (703)
734-5784. Comments may also be submitted via electronic mail to ``reg-
[email protected].'' Copies of all communications received will be available
for review by interested parties in the Office of Policy Development
and Risk Control, Farm Credit Administration.
FOR FURTHER INFORMATION CONTACT:
Eric Howard, Policy Analyst, Regulation Development Division, Office of
Policy Development and Risk Control, Farm Credit Administration,
McLean, VA 22102-5090, (703) 883-4498,
or
Richard A. Katz, Senior Attorney, Regulatory Enforcement Division,
Office of General Counsel, Farm Credit Administration, McLean, VA
22102-5090, (703) 883-4020, TDD (703) 883-4444.
SUPPLEMENTARY INFORMATION: On May 17, 1996, the FCA published for
public comment an Advance Notice of Proposed Rulemaking (ANPRM)
concerning potential revisions to the regulations in subpart P of part
614 that govern the funding and discount relationship between System
banks that operate under title I of the Act and non-System OFIs. See 61
FR 24907 (May 17, 1996). The comment period expired on July 16, 1996,
but the FCA extended the comment period until August 30, 1996, in order
to allow interested parties additional time to respond. See 61 FR 37230
(July 17, 1996). The FCA received 34 comment letters. Of this total, 18
comments were from commercial banks, 4 from FCS banks, 7 from System
associations, 4 from trade associations, and 1 from a non-depository
OFI. Four trade associations submitted comments on behalf of their
members: American Bankers Association (ABA); the Independent Bankers
Association of America (IBAA); the National Livestock Producers
Association (NLPA); and the Nebraska Bankers Association.
The comment letters reflected a broad diversity of viewpoints about
OFI access to funding and discount services at FCBs and ACBs. Neither
System nor non-System commenters offered uniform positions in response
to ANPRM questions. The FCA addresses the commenters' concerns about
specific substantive issues in those sections of this preamble that
explain various provisions of the proposed rule.
The ABA and IBAA have sought legislation that would provide non-
System financial institutions greater access to funding, discount and
other similar financial assistance at System banks, and most commercial
bank commenters asked the FCA to endorse this proposal. Some commercial
bank commenters requested that the FCA propose new regulations that
advance the joint legislative initiative of the ABA and IBAA. Some FCS
associations opined that new OFI regulations could expose them to
competitive disadvantages and they asked the FCA not to proceed with
this rulemaking until Congress expands the System's lending
authorities. The bank for cooperatives asked the FCA to request new
legislation so title III banks could also extend credit to OFIs.
Other commenters also requested that the FCA propose new
regulations that would exceed current statutory authorities. For
example, many commenters requested that the FCA: (1) Authorize OFIs to
fund or discount their long-term mortgages with FCBs and ACBs; (2)
allow OFIs to elect members to the boards of their System funding
banks; (3) exempt non-System lenders from borrower rights requirements;
and (4) model the new regulations after provisions in the Federal Home
Loan Bank Act, 12 U.S.C. 1421 et seq. The current statute prevents the
FCA from adopting these suggestions.
The proposed regulations grant title I banks and OFIs greater
flexibility to finance agriculture, aquaculture and other specified
rural development needs within the confines of the existing statute.
The FCA has decided to revise these regulations because of significant
changes in the financial and agricultural credit markets since the
existing OFI regulations were adopted in 1981. The regulations in
subpart P of part 614 have been restructured substantially to conform
with the Policy Statement on Regulatory Philosophy of the FCA Board.
See 60 FR 26034 (May 16, 1995). The proposed regulations interpret and
implement the applicable provisions of the statute, and they promote a
safe and sound lending relationship between System funding banks and
their OFIs. The FCA proposes to repeal those regulatory provisions that
prescribe detailed management practices to FCS banks or impose
unnecessary costs and burdens on both System institutions and OFIs. The
FCA believes that these proposed regulations are more concise and
easier to understand.
I. OFI Access to Farm Credit Banks and Agricultural Credit Banks
A. Commenter Concerns
The FCA asked several questions about which OFIs should be allowed
to establish a funding and discount relationship with FCBs and ACBs.
The Agency requested guidance on criteria that determine whether an
OFI: (1) Is ``significantly involved in lending for agricultural or
aquatic purposes''; (2) ``demonstrates a continuing need for
supplementary sources of funds to meet the credit requirements of its
agricultural or aquatic borrowers''; and (3) has ``limited access to
national or regional capital markets.'' Additionally, the ANPRM
solicited comments about how OFI access to the FCS will be affected by
changes to corporate organization and structure and the advent of
interstate banking and branching.
Eleven parties responded to one or more of these ANPRM questions.
Three System institutions opined that the policies of each title I
bank, not FCA regulations, should prescribe specific eligibility
criteria for OFIs, while one FCS association suggested that the new
regulation should only require OFI applicants to demonstrate an ongoing
``material and significant'' commitment to agriculture. The NLPA
recommended that only OFIs that lend exclusively to agriculture should
be allowed to borrow from the FCBs and ACBs. The ABA, IBAA, and the ACB
suggested that new regulations should permit OFIs access to System
funding and discount services if at least 10 percent of their loans are
to agricultural or aquatic borrowers. The ABA and the ACB also
recommended additional standards, such as a minimum absolute dollar
threshold or income level, to measure whether an
[[Page 38225]]
OFI is significantly involved in agricultural lending.
The FCA also received comments from the ABA, IBAA, NLPA, and four
FCS institutions about OFI needs for other sources of funding to meet
the credit requirements of agricultural and aquatic borrowers. The NLPA
and the IBAA commented that proposed regulations should grant their
respective constituencies (non-depository financial institutions and
local community banks) preferential access to FCS funding and discount
services because they lack many of the funding sources that are
available to other agricultural lenders. Two commercial bank trade
associations, an FCB, and a pair of jointly managed System associations
advised the FCA to repeal the 60-percent loan-to-deposit ratio in
Sec. 614.4550(a)(3) because it: (1) Imposes unnecessary regulatory
burdens on both OFIs and their System funding bank; (2) is an asset-
liability management measure that is unrelated to the agricultural
lending activities of OFIs; and (3) does not accurately reflect an
OFI's need for supplemental funds. Two FCBs informed the FCA that the
definitions of ``national'' and ``regional'' money markets in
Sec. 614.4540(f) and (g) should be repealed because they are obsolete.
The IBAA and an FCB commented that the advent of interstate banking and
branching has no bearing on whether non-System lenders need
supplemental sources of funds to meet the credit requirements of
farmers, ranchers, and aquatic producers and harvesters.
These responses indicate that many System and non-System commenters
believe that the existing regulations unduly restrict the ability of
non-System financial institutions to fund and discount their
agricultural or aquatic loans at FCBs and ACBs. Although differences of
opinion exist about various details concerning OFI access to the FCS, a
consensus exists among these commenters that a new regulatory approach
is needed so that title I banks can better fulfill their mission to
finance agriculture, aquaculture, and other specified rural credit
needs. The FCA shares this view and proposes new regulations that are
more closely aligned with the provisions of section 1.7(b) of the Act.
B. New Regulatory Approach for OFI Access
Under existing Secs. 614.4545 and 614.4550, only OFIs that satisfy
certain criteria are permitted to establish funding or discount
relationships with a title I bank. The FCA proposes to repeal these two
regulations because they impose restrictions that are not required by
the Act. Both section 1.7(b)(1) of the Act and its legislative history
indicate that Congress intended that Farm Credit banks act as a funding
and liquidity source primarily for small, local OFIs, but it did not
exclude other agricultural creditors from funding or discounting loans
with title I banks.
The FCA proposes a two-tier approach so that any financial
institution that has one of the charters specified in section
1.7(b)(1)(B) of the Act may establish a funding and discount
relationship with a title I bank, while those OFIs that have at least
15 percent of their loans to agricultural producers and enter into a 2-
year funding agreement with an FCB or ACB are assured access to the FCS
on a preferred basis. From the FCA's perspective, proposed
Sec. 614.4540 more closely reflects the statute.
Proposed Sec. 614.4540(a) permits those OFIs that are not assured
access to borrow from a title I bank so long as the proceeds are used
only to make short-and intermediate-term loans to persons and for
purposes eligible for financing by a production credit association
(PCA) or agricultural credit association (ACA) under sections 1.10(b)
and 2.4 (a) and (b) of the Act. By allowing more financial institutions
to fund or discount their loans with FCBs and ACBs, proposed
Sec. 614.4540(a) ultimately will provide farmers, ranchers, aquatic
producers and harvesters, and other eligible rural residents greater
access to credit.
The proposed rule repeals a provision in existing
Sec. 614.4550(a)(1) that prohibits title I banks from lending to
entities that ``* * * finance the sale of products by its affiliates *
* *'' because this restriction is not required by the Act. Two
commercial bank trade associations and three System institutions have
persuaded the FCA to repeal the loan-to-deposit ratio in existing
Sec. 614.4550(a)(3) because it is not a reliable indicator of an OFI's
commitment to agriculture, or its need for supplementary funds.
Proposed Sec. 614.4540(b) implements section 1.7(b)(4) of the Act,
which assures that the funding, discount and other similar financial
assistance of FCBs and ACBs shall be available on a reasonable basis to
any creditworthy OFI that: (1) Is significantly involved in lending for
agricultural or aquatic purposes; (2) demonstrates a continuing need
for supplementary sources of funds to meet the credit requirements of
its agricultural or aquatic borrowers; (3) has limited access to
national or regional capital markets; and (4) does not use the services
of System banks to extend credit to persons and for purposes that
cannot be financed by a PCA under title II of the Act. Proposed
Sec. 614.4540(b)(1) specifies that an OFI is significantly involved in
agricultural or aquatic lending if it has at least 15 percent of its
loan portfolio at a seasonal peak in credit extensions to farmers,
ranchers, and aquatic producers and harvesters. Although these OFIs are
assured access under proposed Sec. 614.4540(b), the regulation
specifically permits FCBs and ACBs to decline any funding request that
imperils their safety and soundness.
Under this proposal, FCBs and ACBs will not include the loan assets
of the OFI's parent, affiliates, and subsidiaries when determining
whether the OFI applicant meets the 15-percent criterion. By focusing
solely on the applicant, this approach affords more financial
institutions access to the FCS, and therefore, increases the flow of
credit to farmers, ranchers, aquatic producers and harvesters and other
eligible rural residents. Furthermore, the requirement in existing
Sec. 614.4545(c) that a title I bank decide whether an OFI applicant
should be considered by itself or together with its related entities is
not susceptible to consistent and uniform application by the FCS.
Additionally, existing Sec. 614.4545(c) does not facilitate prompt
consideration of OFI funding requests, and the FCA proposes to repeal
it in order to reduce unnecessary regulatory burdens on System funding
banks.
The FCA's approach substantially expands OFI access to the FCS. In
contrast to the existing regulation, proposed Sec. 614.4540 allows OFIs
that have less than 15 percent of their loans in agriculture to borrow
from FCBs and ACBs. In addition, creditworthy OFIs are assured access
to the FCS if at least 15 percent of their loans are made to farmers,
ranchers, and aquatic producers and harvesters. The FCA believes that
this 15-percent threshold reasonably reflects an OFI's commitment to
agricultural lending, and therefore, it does not adopt any of the
alternatives suggested by the commenters.
The NLPA suggested that only OFIs that exclusively finance
agricultural production should qualify for the funding or discount
services of System banks. This suggestion is more restrictive than the
existing regulation, and is incompatible with the mission of title I
banks to provide affordable, dependable, and stable credit to eligible
farmers, ranchers, aquatic producers and harvesters, and other eligible
rural residents through both OFIs and FCS associations. Financial
institutions that
[[Page 38226]]
have non-agricultural loans in their portfolios may still be
``significantly involved in lending for agricultural or aquatic
purposes,'' within the meaning of section 1.7(b)(4)(B)(i) of the Act,
and the legislative history to this provision indicates that Congress
specifically contemplated that FCA regulations would establish a
threshold well below 100 percent.
The FCA has adopted an approach that provides OFIs with greater
access to FCBs and ACBs than the recommendation of the ABA, IBAA, and
the ACB. As noted earlier, the proposed regulation allows any OFI to
fund or discount their short-and intermediate-term agricultural,
aquatic, farm-related business, and non-farm rural home loans with an
FCB or ACB, while it assures any creditworthy OFI that maintains at
least 15 percent of its loan volume in agricultural or aquatic loans
access to the FCS. At this time, the FCA does not believe that this
percentage should be lowered for OFIs that are assured System access
under proposed Sec. 614.4540(b)(1).
Some System commenters suggested that the new regulation authorize
funding banks to establish rules of access for OFI applicants. This
approach is not compatible with section 1.7(b)(4)(A) of the Act, which
requires FCA regulations to establish specific standards that govern
OFI access to System banks. Furthermore, this approach is not
susceptible to uniform application throughout the FCS.
Proposed Sec. 614.4540(b)(2) requires an OFI applicant to
demonstrate a continuing need for supplementary sources of funds by
establishing a financing relationship with an FCB or ACB for at least 2
years. This approach is consistent with existing Sec. 614.4560(b)(5),
and the FCA believes that this 2-year commitment requirement deters
OFIs from making sporadic funding requests to FCBs and ACBs. The FCA
proposes to repeal the provision in existing Sec. 614.4560(b)(5) that
imposes a specific non-use fee on OFIs that fail to maintain an average
daily loan balance of 70 percent of their projected loan volume. The
FCA believes that System banks and OFIs should be free to negotiate
such fees in whatever manner that meets their business needs. Under the
proposed regulation, each FCB and ACB will have the discretion to
establish appropriate interest rates and fees for all OFIs on an
equitable and objective basis.
The proposed regulation does not establish specific criteria for
determining whether OFI applicants have limited access to national or
regional money markets. The FCA observes that virtually all financial
institutions have greater access to regional, national, and even global
money markets today than 16 years ago when the existing regulations
were adopted. The FCA's new regulatory approach enables System banks
that operate under title I of the Act to finance all eligible OFIs,
while it does not disadvantage small, local OFIs or FCS associations.
New provisions are proposed that give additional assurances to small,
local OFIs that significantly and continually lend to agriculture. The
FCA believes that this approach enhances the flow of competitive credit
to farmers, ranchers, and aquatic producers and harvesters by opening
greater access to the credit markets in rural America--a fundamental
public policy purpose of the Farm Credit Act.
C. Denials of OFI Applications
The FCA requested comments about whether the Agency should continue
to review all denials of OFI applications. Two System commenters
thought that FCA review unnecessarily interjects the Agency in the
credit decisions of System banks, while two trade associations believed
that such reviews ensure equitable treatment between OFIs and System
associations and prevent FCBs and ACBs from denying OFI applications
for reasons that are unrelated to safety and soundness.
Proposed Sec. 614.4540(c) requires each FCB and ACB to establish
objective loan underwriting policies and procedures for determining the
creditworthiness of each OFI applicant. The FCA's proposal prevents
FCBs and ACBs from denying the application of any OFI that is assured
access under proposed Sec. 614.4540(b) unless the OFI fails to satisfy
the funding bank's loan underwriting requirements. Proposed
Sec. 614.4540(c) adequately safeguards the interests of OFIs because
denials of credit applications must be based on objective loan
underwriting standards. The FCA will review denials of OFI funding
requests during examinations of FCBs and ACBs. Therefore, the FCA
proposes to repeal existing Sec. 614.4555.
II. Place of Discount
The ANPRM sought guidance about whether the FCA should revise
restrictions in existing Sec. 614.4660 concerning the place of discount
for OFIs. A question in the ANPRM asked under what circumstances an FCB
or ACB should be allowed to extend financing to an OFI that does not
operate in its chartered territory if the designated System bank does
not approve the OFI's application.
Five System institutions, two commercial banks, and four trade
associations responded to ANPRM questions regarding the place of
discount. One System association opposed any revision to Sec. 614.4660.
A PCA advised the FCA not to allow an FCB or ACB to lend to OFIs
located outside of the bank's chartered territory unless FCS
associations could also seek financing from other FCS banks. All other
commenters opined that OFIs should have greater flexibility to fund or
discount loans with FCBs and ACBs that are not chartered to serve the
territory where such OFIs are located. Three commercial bank trade
associations, two commercial banks, and two System institutions
commented that the new regulations should not impose any restriction on
where OFIs can seek FCS funding and discount services. Six of these
commenters advised the FCA that existing Sec. 614.4660 is a significant
impediment to the success of the OFI program because it requires OFIs
to seek funding from FCBs and ACBs that are owned by their competitors.
One System commenter opined that existing Sec. 614.4660 cannot be
reconciled with the primary mission of the FCS to extend credit to
farmers and ranchers. One System bank suggested that the new regulation
authorize FCBs and ACBs to extend financing to OFIs located outside
their chartered territory only after the designated System bank has
denied their applications. The NLPA recommended that the FCA allow OFIs
to seek the funding and discount service of any FCB or ACB, but
prohibit such System banks from soliciting OFIs that are located
outside of their chartered territory.
The FCA proposes to modify the regulatory requirements governing
place of discount to provide OFI applicants with greater flexibility to
obtain System financing. Under proposed Sec. 614.4550(a), each FCB or
ACB would have the first opportunity to provide financing to OFIs
headquartered within its chartered territory. In order to simplify the
rules concerning place of discount, the FCA proposes to repeal a
provision in existing Sec. 614.4660 that requires an OFI to establish a
funding and discount relationship with the title I bank in whose
territory more than 50 percent of the OFI's loan volume is concentrated
if the OFI's headquarters is located in the territory of another FCB or
ACB.
A System bank could provide funding to an OFI whose headquarters is
located outside its territory under two conditions. First, the bank
could obtain the consent of the System bank in whose territory the
OFI's headquarters
[[Page 38227]]
is located. It could also serve an OFI that has unsuccessfully sought
financing from the designated System bank. Thus, proposed
Sec. 614.4550(b) authorizes any FCB or ACB to extend credit to an OFI
if the OFI's designated System bank denies the OFI's application or
otherwise fails to approve the OFI's funding request within 60 days.
The 60-day provision is intended to establish a certain time by which
an OFI is free to seek funding from another System bank. It begins upon
the bank's receipt of a ``completed application'' as defined by
Regulation B of the Board of Governors of the Federal Reserve System,
12 CFR 202.2(f). The FCA notes that Regulation B requires System banks
to notify OFIs of the denial of applications for financing and to
provide reasons for the adverse decision upon request. For this reason,
the FCA believes it is unnecessary for this proposed regulation to
include requirements for notification and disclosure of the reasons for
denial. This new regulatory approach responds to commenter concerns
that FCBs and ACBs might be reluctant to fund OFIs that compete with
the PCAs and ACAs that own the bank. It also simultaneously prevents
unrestrained competition among title I banks for OFI lending.
III. Requirements for OFI Funding Relationships
Proposed Sec. 614.4560 implements several statutory provisions that
govern the funding and discount relationship between OFIs and their
System funding banks. The FCA has consolidated various provisions that
are currently found throughout the regulations in subpart P of part
614, without substantive change. Proposed Sec. 614.4560(a)(1) requires
an OFI to execute a general financing agreement (GFA) with its System
funding bank pursuant to the regulations in subpart C of part 614 as a
condition precedent for obtaining funding, discount and other similar
financial assistance from an FCB or ACB.
Proposed Sec. 614.4560(a)(2) requires each OFI to purchase non-
voting stock in its System funding bank pursuant to the bank's bylaws.
As discussed in greater detail below, proposed Sec. 614.4590 requires
each FCB and ACB to establish appropriate interest rates, fees, and
capitalization requirements that promote equitable treatment between
direct lender associations that operate under title II of the Act and
OFIs. Similarly, the FCB's or ACB's policies and procedures should also
address minimum loan amounts, terms, commitment fees, non-use fees,
prepayment penalties, and other conditions that may apply to OFIs.
Proposed Sec. 614.4560(b) implements provisions in section
1.7(b)(1) and (b)(4)(B)(iv) of the Act that prohibit OFIs from using
the funds that they receive from an FCB or ACB to extend credit to
parties and for purposes and terms that are not authorized by sections
1.10(b) and 2.4(a) and (b) of the Act. The FCA has relocated the
portfolio limitations in existing Sec. 614.4610 on non-farm rural home
loans and certain processing and marketing loans to proposed
Sec. 614.4560(c) without substantive amendment. Proposed
Sec. 614.4560(d) implements section 4.14A(a)(6)(B) of the Act by
subjecting all agricultural and aquatic loans that OFIs fund or
discount through an FCB or ACB to statutory and regulatory borrower
rights requirements.
Proposed Sec. 614.4560(e) implements section 5.21 of the Act, which
enables the FCA to examine non-depository OFIs and obtain examination
reports from the State regulators of commercial banks, trust companies,
and savings associations. Under this regulatory provision, OFIs are
required to execute the applicable consent forms or releases before
they obtain financing from an FCB or ACB. Section 5.22 of the Act
enables the FCA to receive examination reports directly from other
Federal regulatory agencies.
The FCA proposes to repeal existing Sec. 614.4650, which contains
five criteria for a System funding bank to revoke or suspend an OFI's
line of credit. This regulation neither interprets nor implements the
Act, or promotes safety and soundness. The FCA, however, expects each
title I bank to incorporate criteria for revoking or suspending its
funding relationship with an OFI into its loan underwriting policies
and procedures. This issue should be addressed in the GFA between an
OFI and its System funding bank.
IV. Recourse and Security Requirements
These new regulations afford OFIs greater and more flexible access
to the FCS within the confines of safety and soundness. The FCA's
proposal requires FCBs and ACBs to have full recourse to an OFI's
capital and to finance OFIs on a fully secured basis. Proposed
Sec. 614.4570 addresses these two issues.
The proposed Sec. 614.4570(a) requires an OFI to endorse all
obligations that it funds or discounts through an FCB or ACB with full
recourse or its unconditional guarantee. For safety and soundness
reasons, the FCA believes that FCBs and ACBs must have recourse to the
OFI's capital.
Proposed Sec. 614.4570(b)(1) requires that each OFI pledge all
notes, drafts, and other obligations that are funded or discounted with
the FCB or ACB as collateral for the credit extension, and proposed
Sec. 614.4570(b)(2) obligates each FCB or ACB to perfect its security
interest in such obligations and the proceeds thereunder in accordance
with applicable State law. These provisions would prohibit any FCB or
ACB from extending credit to an OFI on an unsecured, or limited or non-
recourse basis.
The ANPRM asked under what circumstances, if any, the new
regulations should require OFIs to pledge cash and readily marketable
securities or other assets as supplemental collateral to their System
funding bank. The FCA received comments on this issue from two trade
associations and three System institutions. The NLPA advised the FCA
that supplemental collateral should be pledged when 1 percent of the
OFI's loans under discount fall below ``Acceptable'' and ``Other Assets
Especially Mentioned'' classifications. The three System commenters
expressed the view that the System funding bank should have the
discretion to determine whether supplemental collateral is needed to
manage the risk posed by each OFI. The IBAA suggested that the FCA
establish supplemental collateral requirements for FCBs and ACBs that
are patterned after a provision in the Federal Home Loan Bank Act, 12
U.S.C. 1430, which allows each Federal Home Loan Bank, in its
discretion, to take residential mortgages and securities that are
issued, insured, or guaranteed by the United States or any of its
agencies as security for advances to its members. The System commenters
and the IBAA have persuaded the FCA that the new regulations should
leave questions about supplemental collateral to the discretion of the
System funding bank as a part of its underwriting policies and
standards. Accordingly, the FCA does not propose a specific
supplemental collateral requirement by regulation. For these reasons,
the FCA proposes to repeal Secs. 614.4570 and 614.4600(b)(3), which
require OFIs to pledge certain liquid collateral to the System funding
bank as a condition for obtaining financing.
The IBAA suggested that the new regulations authorize OFIs to
pledge any rural or agricultural loans as collateral to the System
funding bank. The commenter did not specify whether this suggestion
pertains to pledges of primary or supplemental collateral. FCBs and
ACBs cannot accept long-term
[[Page 38228]]
``rural'' loans as primary collateral because section 1.7(b) of the Act
requires OFIs to use funds from a title I bank only for the purpose of
extending short- and intermediate-term credit to eligible borrowers for
authorized purposes under section 2.4(a) and (b) of the Act. Other
types of loans could be used as supplemental collateral, but the
funding bank must ensure that its funds are used only for loans to
eligible borrowers for authorized purposes.
Proposed Sec. 614.4570(c) would require each FCB and ACB to develop
policies and procedures that establish uniform and objective standards
for determining the need and amount of supplemental collateral or other
credit enhancements that each OFI must pledge to its System funding
bank as a condition for obtaining credit. The amount, type, and quality
of supplemental collateral or other credit enhancements specified by
such policies and procedures must be proportional to the level of risk
that the OFI poses to its System funding bank. Provisions in the GFA or
the security agreement would govern collateral pledged by each OFI to
its System funding bank.
V. Limitation on the Extension of Funding, Discount and Other
Similar Financial Assistance to an OFI
The FCA proposes to redesignate Sec. 614.4560(b)(3) as new
Sec. 614.4580. This regulation derives from section 1.7(b)(3) of the
Act, which prohibits a System funding bank from extending credit to an
OFI if its aggregate liabilities exceed 10 times its paid-in and
unimpaired capital and surplus, or a lesser amount established by the
laws of the jurisdiction creating the OFI. Although the FCA proposes to
omit the last three sentences of existing Sec. 614.4560(b)(3), System
banks may still establish, by policy, a lower liabilities-to-capital
ratio for their OFIs. In this context, the FCA expects that each FCB or
ACB will establish in its underwriting policies and procedures, as
referred to in Sec. 614.4540(c), specific capital standards that
address risks posed by its OFIs. A commercial bank trade association
asked the FCA to adopt a liabilities-to-capital ratio of 20:1 because
this is the standard for members of the Federal Home Loan Bank System.
See 12 U.S.C. 1430(c). The FCA is unable to adopt the commenter's
suggestion because section 1.7(b)(3) of the Act does not provide that
flexibility.
VI. Lending Limit to a Single OFI Borrower
The ANPRM requested comments about how the regulations should
address concentration risk in an OFI's loan portfolio. More
specifically, the FCA asked whether the current 50-percent lending
limit in existing Sec. 614.4565 is appropriate or whether the Agency
should consider alternative approaches. The FCA received responses to
these questions from three trade associations, a commercial bank, an
FCB, and a pair of jointly managed FCS associations. The NLPA and the
FCB suggested that the FCA retain the existing 50-percent lending
limit, while the FCS associations advised the Agency to repeal the
regulatory lending limit so that OFIs and their respective FCS funding
bank could determine the appropriate lending limit when they negotiate
their GFAs. The three commercial bank commenters opined that the OFI
lending limits in existing Sec. 614.4565 are overly restrictive and
should be raised. These commenters claimed that the 50-percent lending
limit enables only OFIs with substantial capital to make loans of a
significant size.
The FCA proposes that it will no longer impose a regulatory lending
limit on extensions of credit that OFIs make to their borrowers with
FCS funds. Some OFIs will remain subject to the lending limits that
their primary regulator imposes under applicable Federal or State law.
The FCA will rely on the OFI's primary Federal or State regulator where
one exists to ensure that an OFI does not lend a disproportionate
amount of its capital and surplus to a single credit risk. However, the
FCA further expects each FCB or ACB to prudently manage its exposure to
risks caused by concentrations in OFI loan portfolios through both its
loan underwriting standards and the GFA. During examinations, the FCA
will review the controls that each FCB or ACB establishes to address
such single-credit risk concentrations in OFI loan portfolios.
The FCA observes that opportunities for FCBs and ACBs to fund OFIs
are substantially increased by this proposal. While considering the
safety and soundness risks associated with such an expansion the Agency
considered alternative approaches for controlling risk exposure to the
FCS. Specifically, the FCA is considering whether the final regulation
should establish a lending limit on the extension of credit from a Farm
Credit bank to each OFI. See Secs. 614.4350 and 614.4352. The FCA
solicits commenters' views as to whether the final rule should contain
a lending limit to an OFI as a percent of the funding bank's capital
base similar to the approach delineated in Sec. 614.4352, and if so, at
what percent should the limit be established. Finally, the FCA welcomes
suggestions for other approaches to manage and control risks
originating through OFI lending relationships.
VII. Equitable Treatment of OFIs and FCS Associations
The FCA requested comments about how the proposed regulations could
ensure that System funding banks accord impartial and equitable
treatment to both OFIs and FCS direct lender associations. Three trade
associations, three FCS banks, three System associations, two
commercial banks, and one non-depository OFI responded to the FCA's
questions. The NLPA and one FCS commenter replied that existing
Sec. 614.4640 is adequate because it ensures that System banks treat
OFIs and FCS direct lender associations equitably. One FCB urged the
FCA to repeal Sec. 614.4640 so that title I banks could negotiate
interest rates and servicing fees with prospective OFIs. The ACB and
the non-depository OFI opined that System funding banks should accord
essentially the same treatment to the their direct lender associations
and OFIs, but disparity in interest rates and fees could be justified
by different levels of risk that such institutions pose to their System
funding bank. Two FCS associations suggested that the proposed
regulation impose the same capital investment requirement on both OFIs
and direct lender associations. One of these associations suggested
that if the FCA permits FCBs and ACBs to establish different capital
requirements for OFIs and direct lender associations, interest rates
should be charged which result in similar levels of overall financial
return to the funding bank from all borrowing entities. One pair of
jointly managed associations commented that the proposed regulations
should require OFIs to contribute to the funding bank's premium to the
Farm Credit System Insurance Corporation (FCSIC). Three commercial bank
commenters suggested that the FCA encourage FCBs and ACBs to pay
dividends to OFIs on their non-voting stock. The IBAA commented that
the proposed regulation should require each FCB and ACB to disclose to
OFI applicants information about its rates, spreads, and dividends for
direct lender associations.
The FCA proposes a new regulatory approach that balances a System
funding bank's obligation to accord equitable treatment to both direct
lender associations and OFIs with its needs for greater business
flexibility to price and structure its credit to all lending
institutions. Whereas existing Sec. 614.4640 specifically requires FCBs
[[Page 38229]]
and ACBs to charge OFIs and direct lender associations the same rates
and fees on the same basis, the proposed regulation would require that
the overall costs of funds to OFIs and associations be comparable,
irrespective of the individual components of credit costs, such as
interest rates and fees. Proposed Sec. 614.4590(a) requires each FCB
and ACB to apply similar objective loan underwriting standards to both
OFIs and direct lender associations, and proposed Sec. 614.4590(b)
states that any variation in the overall amounts that OFIs and direct
lender associations are charged by the funding bank for capitalization
requirements, interest rates, and fees shall be attributed to
differences in credit risk and administrative costs to the bank.
The FCA declines suggestions by a System commenter that the
proposed regulation establish identical capital investment requirements
for both OFIs and direct lender associations. The FCA believes that
FCBs and ACBs should have the flexibility to impose different capital
requirements because risk levels are different and the Act does not
allow OFIs to own voting stock in the FCBs or ACBs. In response to an
association's comment about OFI contributions to the premium that its
funding bank pays to FCSIC, the FCA notes that the proposed regulation
allows the FCB or ACB to take FCSIC premiums into account when they
price OFI loans. The proposed regulation does not require FCBs and ACBs
to pay dividends to OFIs, as commercial bank commenters requested,
because the FCA does not prescribe business practices to FCS
institutions in the absence of compelling safety and soundness reasons.
From the FCA's perspective, an institution's bylaws best prescribe
detailed capitalization requirements, dividend policies, and
cooperative principles. The FCA declines the IBAA's request to compel
FCBs and ACBs to disclose pricing information about their loans to
their affiliated direct lender associations because the regulations can
promote impartial and equitable treatment of OFIs and direct lender
associations without requiring Farm Credit banks to disclose
confidential and proprietary information affecting its other customers.
VIII. Insolvency
The ANPRM inquired how new regulations could safeguard the
interests of an FCB or ACB when an OFI is liquidated. An ACB and the
IBAA responded that a System bank should maintain a senior security
interest in all assets that an OFI pledges as collateral. An FCB and a
pair of jointly managed FCS associations opined that liquidation of an
OFI should be addressed in the GFA, not FCA regulations.
Under proposed Sec. 614.4600, the System funding bank may take over
loans and other assets that the OFI pledged as collateral if the OFI
becomes insolvent, is in process of liquidation, or fails to service
its loans properly. As a result, the FCB or ACB will have the authority
to make additional advances, to grant renewals and extensions, and to
take such other actions as may be necessary to collect and service
loans to the OFI's borrowers. The System funding bank may also
liquidate the OFI's loans and other assets that it has pledged in order
to fully realize repayment from the OFI.
In contrast to existing Sec. 614.4630(a), proposed Sec. 614.4600 no
longer requires an FCB or ACB to obtain FCA approval before it takes
over the loans and other assets of an insolvent OFI. From a safety and
soundness perspective, FCBs and ACBs should be able to exercise
creditor remedies whenever the OFI defaults on the GFA. The prior-
approval requirements in existing Sec. 614.4630(a) were established
before the FCA became an arms-length regulator. This approach is
consistent with the FCA's general policy of repealing Agency approval
requirements that are not imposed by the Act.
The FCA proposes to repeal Sec. 614.4630(b), which prohibits FCBs
and ACBs from assigning obligations handled for an insolvent OFI as
collateral for bonds without FCA prior approval. The applicable
requirements for collateral pledged by FCBs and ACBs for bond
obligations are contained in Sec. 615.5050, and FCA approval for each
issuance is required by Sec. 615.5101(d) of this chapter. The FCA also
proposes to repeal Sec. 614.4630(c), which places restrictions on
interest rates that an FCB or ACB can charge borrowers whose loans were
taken over from a defaulting OFI. The FCA believes the restrictions in
Sec. 614.4630(c) are no longer necessary because the FCA's examinations
will assure sufficient controls and monitoring exist in this area.
List of Subjects
12 CFR Part 611
Agriculture, Banks, banking, Rural areas.
12 CFR Part 614
Agriculture, Banks, banking, Flood insurance, Foreign trade,
Reporting and recordkeeping requirements, Rural areas.
12 CFR Part 620
Accounting, Agriculture, Banks, banking, Reporting and
recordkeeping requirements, Rural areas.
12 CFR Part 630
Accounting, Agriculture, Banks, banking, Credit, Organization and
functions (Government agencies), Reporting and recordkeeping
requirements, Rural areas.
For the reasons stated in the preamble, parts 611, 614, 620, and
630 of chapter VI, title 12 of the Code of Federal Regulations are
proposed to be revised to read as follows:
PART 611--ORGANIZATION
1. The authority citation for part 611 continues to read as
follows:
Authority: Secs. 1.3, 1.13, 2.0, 2.10, 3.0, 3.21, 4.12, 4.15,
4.21, 5.9, 5.10, 5.17, 7.0-7.13, 8.5(e) of the Farm Credit Act (12
U.S.C. 2011, 2021, 2071, 2091, 2121, 2142, 2183, 2203, 2209, 2243,
2244, 2252, 2279a-2279f-1, 2279aa-5(e)); secs. 411 and 412 of Pub.
L. 100-233, 101 Stat. 1568, 1638; secs. 409 and 414 of Pub. L. 100-
399, 102 Stat. 989, 1003, and 1004.
Subpart P--Termination of Farm Credit Status--Associations
2. Section 611.1205 is amended by revising paragraph (c) to read as
follows:
Sec. 611.1205 Definitions.
* * * * *
(c) OFI means an other financing institution that has established a
funding and discount relationship with a Farm Credit Bank or an
agricultural credit bank pursuant to section 1.7(b)(1) of the Act and
the regulations in subpart P of part 614.
* * * * *
PART 614--LOAN POLICIES AND OPERATIONS
3. The authority citation for part 614 continues to read as
follows:
Authority: 42 U.S.C. 4012a, 4014a, 4104b, 4106, and 4128; secs.
1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12,
2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A,
4.13, 4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.18A, 4.19,
4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.7, 7.8, 7.12, 7.13,
8.0, 8.5 of the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015,
2017, 2018, 2019, 2071, 2073, 2074, 2075, 2091, 2093, 2094, 2096,
2121, 2122, 2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199,
2201, 2202, 2202a, 2202c, 2202d, 2202e, 2206, 2206a, 2207, 2219a,
2219b, 2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2279b-1, 2279b-2,
2279f, 2279f-1, 2279aa, 2279aa-5); sec. 413 of Pub. L. 100-233, 101
Stat. 1568, 1639.
[[Page 38230]]
Subpart J--Lending Limits
4. Section 614.4350 is amended by revising paragraph (a) to read as
follows:
Sec. 614.4350 Definitions.
* * * * *
(a) Borrower means an individual, partnership, joint venture,
trust, corporation, or other business entity (except a Farm Credit
System association or other financing institution that complies with
the criteria in section 1.7(b) of the Act and the regulations in
subpart P of this part) to which an institution has made a loan or a
commitment to make a loan either directly or indirectly.
* * * * *
5. Subpart P of part 614 is revised to read as follows:
Subpart P--Farm Credit Bank and Agricultural Credit Bank Financing
of Other Financing Institution
Sec.
614.4540 Other financing institution access to Farm Credit Banks
and agricultural credit banks for funding, discount, and other
similar financial assistance.
614.4550 Place of discount.
614.4560 Requirements for OFI funding relationships.
614.4570 Recourse and security.
614.4580 Limitation on the extension of funding, discount and other
similar financial assistance to an OFI.
614.4590 Equitable treatment of OFIs and Farm Credit System
associations.
614.4600 Insolvency of an OFI.
Sec. 614.4540 Other financing institution access to Farm Credit Banks
and agricultural credit banks for funding, discount, and other similar
financial assistance.
(a) Basic criteria for access. Any national bank, State bank, trust
company, agricultural credit corporation, incorporated livestock loan
company, savings association, credit union, or any association of
agricultural producers engaged in the making of loans to farmers and
ranchers, and any corporation engaged in the making of loans to
producers or harvesters of aquatic products may become an other
financing institution (OFI) that funds, discounts, and obtains other
similar financial assistance from a Farm Credit Bank or agricultural
credit bank in order to extend short-and intermediate-term credit to
eligible borrowers for authorized purposes pursuant to sections 1.10(b)
and 2.4(a) and (b) of the Act. Each OFI shall be duly organized and
qualified to make loans and leases under the laws of each jurisdiction
in which it operates.
(b) Assured access. Except when an OFI's funding request would
adversely affect a Farm Credit bank's ability to achieve and maintain
established or projected capital levels, raise funds in the money
markets, or would otherwise expose the Farm Credit bank to other safety
and soundness risks, each Farm Credit Bank or an agricultural credit
bank shall fund, discount, and provide other similar financial
assistance to any creditworthy OFI that:
(1) Maintains at least 15 percent of its loan volume at a seasonal
peak in loans and leases to farmers, ranchers, aquatic producers and
harvesters. The Farm Credit Bank or agricultural credit bank shall not
include the loan assets of the OFI's parent, affiliates, or
subsidiaries when determining compliance with the requirement of this
paragraph; and
(2) Executes a general financing agreement with the Farm Credit
Bank or agricultural credit bank that establishes a financing or
discount relationship for at least 2 years.
(c) Denial of OFI access. Each Farm Credit Bank and agricultural
credit bank shall establish objective loan underwriting policies and
procedures for determining the creditworthiness of each OFI applicant.
No Farm Credit Bank or agricultural credit bank shall deny access to
any creditworthy OFI that meets the conditions in paragraph (b) of this
section.
Sec. 614.4550 Place of discount.
(a) A Farm Credit Bank or agricultural credit bank may provide
funding, discount, and other similar financial assistance to any OFI
whose headquarters is located within the funding bank's chartered
territory.
(b) A Farm Credit Bank or agricultural bank may provide funding,
discount, and other similar financial assistance to an OFI whose
headquarters is not located in the funding bank's chartered territory
only if the Farm Credit Bank or agricultural credit bank referred to in
paragraph (a) of this section either grants its consent, or denies or
otherwise fails to approve such OFI's funding request within 60 days of
receipt of a ``completed application'' as defined by 12 CFR 202.2(f).
Sec. 614.4560 Requirements for OFI funding relationships.
(a) As a condition for extending funding, discount and other
similar financial assistance to an OFI, each Farm Credit Bank or
agricultural credit bank shall require every OFI to:
(1) Execute a general financing agreement pursuant to the
regulations in subpart C of part 614; and
(2) Purchase non-voting stock in its Farm Credit Bank or
agricultural credit bank pursuant to the bank's bylaws.
(b) A Farm Credit Bank or agricultural credit bank shall extend
funding, discount and other similar financial assistance to an OFI only
for purposes and terms authorized under sections 1.10(b) and 2.4(a) and
(b) of the Act.
(c) Rural home loans to borrowers who are not bona fide farmers,
ranchers, and aquatic producers and harvesters are subject to the
restrictions in Sec. 613.3030 of this chapter. Loans that an OFI makes
to processing and marketing operators who supply less than 20 percent
of the throughput shall be included in the calculation that
Sec. 613.3010(b)(1) of this chapter establishes for Farm Credit Banks
and agricultural credit banks.
(d) The borrower rights requirements in part C of title IV of the
Act, and section 4.36 of the Act, and the regulations in subparts K, L,
and N of part 614 shall apply to all loans that an OFI funds or
discounts through a Farm Credit Bank or agricultural credit bank,
unless such loans are subject to the Truth-in-Lending Act, 15 U.S.C.
1601 et seq.
(e) As a condition for obtaining funding, discount and other
similar financial assistance of a Farm Credit Bank or agricultural
credit bank, all State banks, trust companies, or State-chartered
savings associations shall execute a written consent that authorizes
their State regulators to furnish examination reports to the Farm
Credit Administration upon its request. Any OFI that is not a
depository institution shall consent in writing to examination by the
Farm Credit Administration as a condition precedent for obtaining
funding, discount and other similar financial assistance from a Farm
Credit Bank or agricultural credit bank, and file such consent with its
Farm Credit funding bank.
Sec. 614.4570 Recourse and security.
(a) Full recourse and guarantee. All obligations that are funded or
discounted through a Farm Credit Bank or agricultural credit bank shall
be endorsed with the full recourse or unconditional guarantee of the
OFI.
(b) General collateral. (1) Each Farm Credit Bank and agricultural
credit bank shall take as collateral all notes, drafts, and other
obligations that it funds or discounts for each OFI; and
(2) Each Farm Credit Bank and agricultural credit bank shall
perfect, in accordance with State law, a senior security interest in
any and all obligations and the proceeds thereunder that the OFI
pledges as collateral.
(c) Supplemental collateral. (1) Each Farm Credit Bank and
agricultural credit bank shall develop underwriting
[[Page 38231]]
policies and procedures that establish uniform and objective standards
to determine the need and amount of supplemental collateral or other
credit enhancements that each OFI shall provide as a condition for
obtaining funding, discount and other similar financial assistance from
such Farm Credit bank.
(2) The amount, type, and quality of supplemental collateral or
other credit enhancements required for each OFI shall be established in
the general financing agreement and shall be proportional to the level
of risk that the OFI poses to the Farm Credit Bank or agricultural
credit bank.
Sec. 614.4580 Limitation on the extension of funding, discount and
other similar financial assistance to an OFI.
(a) No obligation shall be purchased from or discounted for and no
loan shall be made or other similar financial assistance extended by a
Farm Credit Bank or agricultural credit bank to an OFI if the amount of
such obligation added to the aggregate liabilities of such OFI, whether
direct or contingent (other than bona fide deposit liabilities),
exceeds 10 times the paid-in and unimpaired capital and surplus of such
OFI or the amount of such liabilities permitted under the laws of the
jurisdiction creating such OFI, whichever is less.
(b) It shall be unlawful for any national bank that is indebted to
any Farm Credit Bank or agricultural credit bank, on paper discounted
or purchased, to incur any additional indebtedness, if by virtue of
such additional indebtedness its aggregate liabilities, direct or
contingent, will exceed the limitation described in paragraph (a) of
this section.
Sec. 614.4590 Equitable treatment of OFIs and Farm Credit System
associations.
(a) Each Farm Credit Bank and agricultural credit bank shall apply
similar objective credit underwriting standards to both OFIs and Farm
Credit System direct lender associations.
(b) The total charges that a Farm Credit Bank or agricultural
credit bank assesses an OFI through capitalization requirements,
interest rates, and fees shall be comparable to the charges that the
same Farm Credit bank imposes on its direct lender associations. Any
variation between the overall funding costs that OFIs and direct lender
associations are charged by the same funding bank shall result from
differences in credit risk and administrative costs to the Farm Credit
Bank or agricultural credit bank.
Sec. 614.4600 Insolvency of an OFI.
If an OFI that is indebted to a Farm Credit Bank or agricultural
credit bank becomes insolvent, is in process of liquidation, or fails
to service its loans properly, the Farm Credit Bank or agricultural
credit bank may take over such loans and other assets that the OFI
pledged as collateral. Once the Farm Credit Bank or agricultural credit
bank exercises its remedies, it shall have the authority to make
additional advances, to grant renewals and extensions, and to take such
other actions as may be necessary to collect and service loans to the
OFI's borrower. The funding Farm Credit bank may also liquidate the
OFI's loans and other assets in order to achieve repayment of the debt.
PART 620--DISCLOSURE TO SHAREHOLDERS
6. The authority citation for part 620 continues to read as
follows:
Authority: Secs. 5.17, 5.19, 8.11 of the Farm Credit Act (12
U.S.C. 2252, 2254, 2279aa-11); sec. 424 of Pub. L. 100-233, 101
Stat. 1568, 1656.
Subpart B--Annual Report to Shareholders
Sec. 620.5 [Amended]
7. Section 620.5 is amended by removing the words ``, as defined in
Sec. 614.4540(e) of this chapter,'' and by removing the word
``financial'' and adding in its place the word ``financing'' in
paragraph (a)(8).
PART 630--DISCLOSURE TO INVESTORS IN SYSTEMWIDE AND CONSOLIDATED
BANK DEBT OBLIGATIONS OF THE FARM CREDIT SYSTEM
8. The authority citation for part 630 continues to read as
follows:
Authority: Secs. 5.17, 5.19 of the Farm Credit Act (12 U.S.C.
2252, 2254).
Subpart B--Annual Report to Investors
Sec. 630.20 [Amended]
9. Section 630.20 is amended by removing the words ``, as defined
in Sec. 614.4540(e) of this chapter,'' in paragraph (a)(1)(v).
Dated: July 14, 1997.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
[FR Doc. 97-18827 Filed 7-16-97; 8:45 am]
BILLING CODE 6705-01-P