[Federal Register Volume 75, Number 236 (Thursday, December 9, 2010)]
[Notices]
[Pages 76729-76731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30930]
=======================================================================
-----------------------------------------------------------------------
FARM CREDIT ADMINISTRATION
Market Access Agreement
AGENCY: Farm Credit Administration.
ACTION: Notice of approval of the draft amendment to the amended and
restated market access agreement.
-----------------------------------------------------------------------
SUMMARY: The Farm Credit Administration (FCA or we) announces its
approval of the draft amendment to the Amended and Restated Market
Access Agreement (MAA) proposed to be entered into by all of the banks
of the Farm Credit System (System) and the Federal Farm Credit Banks
Funding Corporation (Funding Corporation). The MAA sets forth the
rights and responsibilities of each of the parties when the condition
of a bank falls below pre-established financial performance thresholds.
The draft amendment (MAA Amendment) is intended to conform the MAA to
the Joint and Several Liability Reallocation Agreement (Reallocation
Agreement).
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: On August 18, 2010, the FCA published for
comment a proposed Reallocation Agreement to be entered into by all of
the banks of the System and the Funding Corporation (75 FR 51061). The
Reallocation 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. We received no comments on the proposal and approved it without
modifications. The FCA's approval was published in the Federal Register
on October 20, 2010 (75 FR 64727).
In the supplementary information we provided when we published the
proposal for public comment, the FCA stated that the System banks and
the Funding Corporation intended also to make conforming changes to the
MAA to ensure that the MAA provisions did not impede operation of the
Reallocation Agreement. The FCA stated further that, should the Agency
approve the Reallocation Agreement, it expected also to approve the
conforming MAA Amendment and would publish it in the Federal Register.
The FCA published the current MAA in its entirety in the Federal
Register on January 15, 2003 (68 FR 2037). The current MAA establishes
certain financial thresholds at which conditions are placed on the
activities of a bank or a bank's access to participation in System-wide
and consolidated obligations is restricted. The MAA establishes three
categories, which are based on each bank's net collateral ratio,
permanent capital ratio, and scores under the Contractual Inter-bank
Performance Agreement, which is an agreement among the System banks and
the Funding Corporation that establishes certain financial performance
criteria.
Under the MAA, as a bank's financial condition declines, the bank
moves into Category I, then Category II, and finally Category III. When
a bank reaches Category I, it is required to provide certain additional
information, including information as to how it will improve its
financial condition, to the Monitoring and Advisory Committee, a
committee of bank and Funding Corporation representatives established
under the MAA. When a bank reaches Category II, in addition to being
required to provide additional information, the bank is limited to
joining in the issuance of System-wide and consolidated obligations
only in those amounts necessary for the bank to be able to roll over
its maturing debt. When the bank reaches Category III, the bank is
precluded from joining in the issuance of System-wide and consolidated
obligations.
The MAA includes provisions that enable a bank in Category II or
III to request the opportunity to continue its access to the market.
The MAA also provides that the FCA may override a decision to impose
Category III prohibitions on access to the market for a period of 60
days, which may be renewed for an additional 60-day period.
The MAA Amendment adds new sections 4.05, 5.05, and 7.23 to the
MAA. The MAA Amendment provides that, in a circumstance where the joint
[[Page 76730]]
and several payment provisions of the Reallocation Agreement have been
triggered, all non-defaulting System banks will be able to issue
System-wide obligations to fund payments under the Reallocation
Agreement. This means that even banks in Category II and III could
participate in such issuances. The MAA Amendment also provides that the
MAA and the Reallocation Agreement are separate agreements, and
invalidation of one does not affect the other.
The FCA now approves the MAA Amendment as set forth below. The
FCA's approval is conditioned on the board of directors of each bank
and the Funding Corporation approving the MAA Amendment. Neither the
MAA Amendment, when it becomes effective, nor FCA approval of it shall
in any way restrict or qualify the authority of the FCA or the Farm
Credit System Insurance Corporation (FCSIC) to exercise any of the
powers, rights, or duties granted by law to the FCA or the FCSIC.
Finally, the FCA retains the right to modify or revoke its approval of
the MAA, including the MAA Amendment, at any time.
The MAA Amendment, together with the recitals to the amendment, is
as follows:
Amendment to the Amended and Restated Market Access Agreement
This amendment to the amended and restated market access agreement
(the ``Amendment'') is made as of the [----] day of [--------------]
(the ``Effective Date''), by and among AgFirst Farm Credit Bank;
AgriBank, FCB; CoBank, ACB; the Farm Credit Bank of Texas; and the U.S.
AgBank, FCB (as successor to the Farm Credit Bank of Wichita and the
Western Farm Credit Bank under Section 7.12 of the Market Access
Agreement) (each, a ``Bank,'' and collectively, the ``Banks''), and the
Federal Farm Credit Banks Funding Corporation (the ``Funding
Corporation'').
Whereas, the Banks and the Funding Corporation desire to adopt a
contractual reallocation of each Bank's joint and several liability
obligations as an alternative to Section 4.4(a)(2) of the Farm Credit
Act of 1971, as amended (the ``Joint and Several Liability Reallocation
Agreement'');
Whereas, the Banks and the Funding Corporation desire to amend the
Amended and Restated Market Access Agreement dated July 1, 2003 (the
``Market Access Agreement'') in order to effectuate the intended
purpose of the Joint and Several Liability Reallocation Agreement;
Whereas, the boards of directors of the Banks and the Funding
Corporation gave approval to the Amendment subject to certain
conditions;
Whereas, the Amendment was submitted to the Farm Credit
Administration (the ``FCA'') for approval and to the Farm Credit System
Insurance Corporation (the ``Insurance Corporation'') for an expression
of no objection;
Whereas, the FCA published a description of this Amendment in
connection with the publication of the Joint and Several Liability
Reallocation Agreement in the Federal Register on August 18, 2010 and
sought comments thereon;
Whereas, after receiving comments on the Joint and Several
Liability Reallocation Agreement,[\1\] the FCA, pursuant to the letter
dated ----, approved this Amendment subject to modifications, if any,
that are acceptable to the Banks and the Funding Corporation and a
notice of such approval was published in the Federal Register on [----
------------];
---------------------------------------------------------------------------
\1\ We note that, although this paragraph states that the FCA
received comments on the Reallocation Agreement, we did not receive
comments on it.
---------------------------------------------------------------------------
Whereas, the Insurance Corporation, pursuant to the letter dated
[------], from the Insurance Corporation to the Banks and the Funding
Corporation, expressed no objection to this Amendment;
Now therefore, in consideration of the foregoing, the Banks and the
Funding Corporation, intending to be legally bound hereby, agree to
further amend the Market Access Agreement as follows:
Section 1.01 After current Section 4.04 of the Market Access
Agreement, add new Section 4.05, which reads as follows:
``Section 4.05. Relationship to the Joint and Several Liability
Reallocation Agreement. A Category II Bank shall not be subject to
the Final Restrictions and Category II Interim Restrictions, to the
extent that the Final Restrictions and Category II Interim
Restrictions would prohibit such Category II Bank from issuing debt
required to fund such Category II Bank's liabilities and obligations
under the Joint and Several Liability Reallocation Agreement.''
Section 1.02 After current Section 5.04 of the Market Access
Agreement, add new Section 5.05, which reads as follows:
``Section 5.05. Relationship to the Joint and Several Liability
Reallocation Agreement. A Category III Bank shall not be subject to
the Final Prohibition or Category III Interim Restrictions, to the
extent that the Final Prohibition or Category III Interim
Restrictions would prohibit such Category III Bank from issuing debt
required to fund such Category III Bank's liabilities and
obligations under the Joint and Several Liability Reallocation
Agreement.''
Section 1.03 After current Section 7.22 of the Market Access
Agreement, add new Section 7.23, which reads as follows:
``Section 7.23. Relationship to the Joint and Several Liability
Reallocation Agreement. This Restated MAA and the Joint and Several
Liability Reallocation Agreement are separate agreements, and
invalidation of one does not affect the other.''
Section 1.04 Continuation of Market Access Agreement. Except as
expressly provided in this Amendment, the Market Access Agreement shall
remain in full force and effect in accordance with its terms.
Section 1.05 Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute a single document.
In witness whereof, each party hereto has caused this Amendment to
be executed by its duly authorized officers or representatives, all as
of the date written below.
AGFIRST FARM CREDIT BANK
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
AGRIBANK, FCB
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
COBANK, ACB
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Farm Credit Bank of Texas
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
U.S. AGBANK, FCB
By:
-----------------------------------------------------------------------
[[Page 76731]]
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Federal Farm Credit Banks Funding Corporation
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Dated: December 3, 2010.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. 2010-30930 Filed 12-8-10; 8:45 am]
BILLING CODE 6705-01-P