[Federal Register Volume 63, Number 121 (Wednesday, June 24, 1998)]
[Rules and Regulations]
[Pages 34267-34268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16809]
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FARM CREDIT ADMINISTRATION
12 CFR Part 607
RIN 3052-AB83
Assessment and Apportionment of Administrative Expenses;
Technical Change
AGENCY: Farm Credit Administration.
ACTION: Direct final rule with opportunity for comment.
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SUMMARY: The Farm Credit Administration (FCA or Agency), through the
FCA Board (Board), issues a direct final rule that makes technical
amendments to its assessment regulations in order to conform to the
recently adopted FCA Board policy statement on its financial
institution rating system. The Financial Institution Rating System
(FIRS) is the rating system used by FCA examiners for evaluating and
categorizing the safety and soundness of Farm Credit System (System)
institutions on an ongoing, uniform, and comprehensive basis. The FIRS
modified the FCA Rating System (which had been referred to as the CAMEL
rating system) by adding a separate rating factor for sensitivity to
market risk. In accordance with the FIRS policy statement, these
technical amendments replace the reference to ``composite CAMEL
rating'' (the acronym CAMEL referred to the following five rating
components: capital, asset quality, management, earnings, and
liquidity), with ``composite Financial Institution Rating System (FIRS)
rating'' and replace references to ``CAMEL'' with ``FIRS.'' The
technical amendments do not substantively change the FCA assessment
process or adversely affect System institutions.
DATES: If no significant adverse comment is received on or before July
24, 1998, these regulations shall be effective upon the expiration of
30 days after publication in the Federal Register during which either
or both Houses of Congress are in session. Notice of the effective date
will be published in the Federal Register. If significant adverse
comment is received, the FCA will publish a timely notice of withdrawal
of the regulations and indicate how the Agency expects to proceed with
further rulemaking.
ADDRESSES: Comments may be submitted via electronic mail to ``reg-
[email protected]'' or facsimile transmission to (703) 734-5784. Comments
also may be mailed or delivered to Patricia W. DiMuzio, Director,
Regulation and Policy Division, Office of Policy and Analysis, Farm
Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-
5090. Copies of all communications received will be available for
review by interested parties in the Office of Policy and Analysis, Farm
Credit Administration.
FOR FURTHER INFORMATION CONTACT:
Andrew D. Jacob, Senior Financial Analyst, Office of Policy and
Analysis, Farm Credit Administration, McLean, Virginia 22102-5090,
(703) 883-4498, TDD (703) 883-4444
or
Wendy R. Laguarda, Senior Attorney, Office of General Counsel, Farm
Credit Administration, McLean, Virginia 22102-5090, (703) 883-4020, TDD
(703) 883-4444.
SUPPLEMENTARY INFORMATION:
I. Background
The Board is making technical amendments to its assessment
regulations to replace the reference to ``composite CAMEL rating'' with
``composite Financial Institution Rating System (FIRS) rating'' and to
replace references to ``CAMEL'' with ``FIRS.'' The technical amendments
reflect the Board's adoption, at its April 9, 1998 Board meeting, of a
policy statement on the FIRS. The policy statement establishes six
rating factor components and a composite rating that reflect the
condition and overall safety and soundness of a System institution. The
FIRS policy statement differs from the previous CAMEL rating system by
the addition of a sixth rating component--the ``S'' component for
sensitivity to market risk. Hence, the six rating factor components of
the FIRS are capital, assets, management, earnings, liquidity, and
sensitivity (``S'' component). The policy statement also sets forth the
responsibility of the Chief Examiner to implement, maintain, and
recommend to the FCA Board changes to the rating system and to
establish appropriate evaluative criteria for determining FIRS
composite and component ratings.
The FIRS is an internal rating system used by the FCA for
evaluating the safety and soundness of System institutions on a uniform
basis and for identifying those System institutions requiring special
supervisory attention or concern. In addition, the FIRS also provides
the Agency with valuable information for assessing risk and allocating
resources based on the safety and soundness of regulated institutions.
The FIRS is similar to the system known as the Uniform Financial
Institutions Rating System (UFIRS), which is used by Federal and state
supervisory
[[Page 34268]]
banking agencies for rating commerical banks and savings associations.
The FIRS policy statement was published in the Federal Register at
63 FR 19918, April 22, 1998. In addition, the evaluative criteria for
determining FIRS composite and component ratings is set forth in the
FCA Examination Manual at section EM 135. The examination manual is a
public document and available for a fee upon request from the FCA or
through the FCA's Internet Home Page (http://www.fca.gov).
II. Direct Final Rulemaking
The FCA is using a ``direct final'' procedure for this rulemaking.
In a direct final rulemaking, an agency gives notice that a rule will
become final at a specified future date unless the agency receives
significant adverse comment on the rule during the comment period
established in the rulemaking notice. Direct final rulemaking is
justified under section 553(b)(B) of the Administrative Procedure Act,
5 U.S.C. 551-59, et seq. (APA). Section 553(b)(B) is the APA's ``good
cause'' exemption for omitting notice and comment on a rule where an
agency finds ``that notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.''
However, rather than eliminating public comment altogether, as would be
permissible under section 553(b)(B), in a direct final rule, the FCA
gives the public adequate opportunity to comment on or object to a
rule. For a full explanation of direct final rulemaking, see 62 FR
63644 (December 3, 1997).
The FCA believes that the technical amendments to the assessment
regulations fit the category of rules appropriate for direct final
rulemaking. These changes merely conform the regulations to the FCA
Board's policy statement on FIRS. The changes amend current regulatory
references to ``composite CAMEL rating'' with an updated reference to
``composite FIRS rating.'' As such, the changes are straightforward and
noncontroversial.
This rule has a 30-day comment period. If, during that period, the
FCA receives a significant adverse comment on the rule, the FCA will
withdraw the rule and may either issue another direct final rule or
promulgate the rule in proposed form. A significant adverse comment is
defined as one where the commenter explains why the rule would be
inappropriate, including challenges to the rule's underlying premise or
approach, or would be ineffective or unacceptable without a change. In
general, a significant adverse comment would raise an issue serious
enough to warrant a substantive response from the FCA in a notice-and-
comment proceeding.
If no significant adverse comment is received, the FCA will publish
its customary notice of the effective date of the rule following the
required Congressional waiting period under section 5.17(c)(1) of the
Farm Credit Act of 1971, as amended.
List of Subjects in 12 CFR Part 607
Accounting, Agriculture, Banks, Banking, Reporting and
recordkeeping requirements, Rural areas.
As stated in the preamble, part 607 of chapter VI, title 12 of the
Code of Federal Regulations is amended as follows:
PART 607--ASSESSMENT AND APPORTIONMENT OF ADMINISTRATIVE EXPENSES
1. The authority citation for part 607 is revised to read as
follows:
Authority: Secs. 5.15, 5.17 of the Farm Credit Act (12 U.S.C.
2250, 2252) and 12 U.S.C. 3025.
2. Section 607.2 is amended by revising paragraph (c) to read as
follows:
Sec. 607.2 Definitions.
* * * * *
(c) Composite Financial Institution Rating System (FIRS) rating
means the composite numerical assessment of the financial condition of
an institution assigned to the institution by the FCA based on its most
recent examination of the institution. The FIRS factors are generally
considered to be important indicators of an institution's financial
health. Institutions are rated on each of the factors during an
examination. The composite FIRS rating ranges from 1 to 5, with a lower
number indicating a better financial condition than a higher number.
* * * * *
Sec. 607.3 [Amended]
3. Section 607.3 is amended by removing the acronym ``CAMEL'' and
adding in its place ``FIRS'' each place it appears in paragraph (b)(2).
Dated: June 19, 1998.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
[FR Doc. 98-16809 Filed 6-23-98; 8:45 am]
BILLING CODE 6705-01-P