[Federal Register Volume 75, Number 202 (Wednesday, October 20, 2010)]
[Notices]
[Pages 64727-64728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26434]
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FARM CREDIT ADMINISTRATION
RIN 3052-AC64
Joint and Several Liability Reallocation Agreement
AGENCY: Farm Credit Administration.
ACTION: Notice of approval of the draft joint and several liability
reallocation agreement.
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SUMMARY: The Farm Credit Administration (FCA or we) is announcing that
it has given approval of a Joint and Several Liability Reallocation
Agreement (Agreement) to be entered into by all of the banks (System
Banks) of the Farm Credit System (Farm Credit or System) and the
Federal Farm Credit Banks Funding Corporation (Funding Corporation).
The Agreement is designed to establish a procedure for non-defaulting
banks to pay maturing System-wide debt on behalf of defaulting banks
prior to a statutory joint and several call by the FCA.
FOR FURTHER INFORMATION CONTACT: Chris Wilson, Financial Analyst,
Office of Regulatory Policy, Farm Credit Administration, McLean, VA
22102-5090, (703) 883-4204, TTY (703) 883-4434, or Rebecca S. Orlich,
Senior Counsel, Office of General Counsel, Farm Credit Administration,
McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.
SUPPLEMENTARY INFORMATION: The FCA published the draft Agreement in the
Federal Register on August 18, 2010 (75 FR 51061) with a request for
public comment. The draft Agreement had a 30-day comment period that
ended on September 17, 2010. See 75 FR 51061 for the text of the entire
Agreement, along with our preamble describing the background of the
Agreement and providing other information. We received no public
comments on the Agreement.
The Agreement is a voluntary agreement by the System Banks and the
Funding Corporation that uses a debt-based formula to allocate payments
of non-defaulting banks should a System bank default on a maturing
insured consolidated or System-wide debt obligation and the amount of
the default exceeds the amount available in the Farm Credit Insurance
Fund to pay defaulted insured debt obligations. The parties to the
draft Agreement submitted it to the FCA for approval under Sec.
627.2750(h) of our regulations and also requested the Farm Credit
System Insurance Corporation (FCSIC) to provide an expression of non-
objection to the Agreement. The FCSIC insures consolidated and System-
wide obligations using funds in the Farm Credit Insurance Fund. The
Agreement will terminate if the FCA withdraws its approval, and the FCA
retains full authority and responsibility to invoke statutory joint and
several calls as prescribed under section 4.4(a)(2) and (d) of the Farm
Credit Act of 1971, as amended (Act).\1\ The FCA and the FCSIC are not
parties to the Agreement.
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\1\ 12 U.S.C. 2155(a)(2) and (d).
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The System Banks and Funding Corporation are also making conforming
amendments to the Market Access Agreement (MAA) by adding three new
sections to it. The conforming amendments are merely to ensure that
provisions in the MAA do not prevent necessary payments under the
Agreement. The FCA will publish the conforming MAA amendments in a
separate Federal Register document.
The FCA believes that holders of System-wide debt obligations are
unlikely to be harmed by this Agreement. The Agreement could create
[[Page 64728]]
the potential for building more capital at the bank level. After giving
the public notice with the opportunity to comment and receiving no
comments, the FCA Board has approved the draft Agreement in accordance
with Sec. 627.2750(h) of our regulations. The FCA's approval of the
draft Agreement is conditioned on the board of directors of each bank
and the Funding Corporation approving the Agreement and the FCSIC
providing an expression of non-objection to the Agreement. The
Agreement cannot be modified or amended without our approval.
Neither the Agreement (upon its effective date) nor our approval of
it will in any way restrict or qualify the FCA's authority to exercise
our powers, rights, and duties as a regulator or, as stated above, to
invoke joint and several liability provisions under the Act.
Furthermore, the Agreement does not provide any grounds or basis for
challenging the FCA's or the FCSIC's actions with respect to the
creation or conduct of conservatorships or receiverships. Finally, the
FCA retains the right to modify or revoke its approval of the Agreement
at any time.
Dated: October 14, 2010.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. 2010-26434 Filed 10-19-10; 8:45 am]
BILLING CODE 6705-01-P