Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
For Immediate Release
Contact: Martha Schober or Christine Quinn, 703-883-4056
Web site: www.fca.gov
FCA Board Approves Proposed Rules on Regulatory Burden, Disclosure and Reporting
McLEAN, Va., February 9, 2006 — The Farm Credit Administration (FCA or Agency) Board today approved two proposed rules designed to amend and clarify existing regulations pertaining to Farm Credit System (FCS or System) institutions. The first proposed rule would modify the disclosure and reporting requirements of FCS institutions; the other would amend or delete several burdensome or duplicative Agency regulations.
The proposed rule on disclosure and reporting requirements for FCS institutions is designed to improve the transparency of public disclosures, strengthen board and management accountability and auditor independence, and increase shareholder and investor confidence in the System.
The rule would provide “real time” disclosures to shareholders, investors, and the public by setting accelerated deadlines for System institutions to file annual and quarterly reports, strengthen the independence of external financial audits, tighten financial reporting certification requirements for all FCS institutions, and require that the Federal Farm Credit Banks Funding Corporation (Funding Corporation) and System institutions with assets over $500 million review and report on the effectiveness of internal controls over the preparation of financial reports. The proposed rule would also require that the Funding Corporation maintain policies and procedures for issuing interim reports on significant financial events in the System and include an external auditor attestation of System-wide financial information.
The proposed changes reflect the cooperative nature and unique structure of the System, while incorporating the best industry practices of public companies and recent changes in the reporting requirements of other Federal banking regulatory agencies, provisions in the Sarbanes-Oxley Act of 2002, and Securities and Exchange Commission regulations.
The proposed rule will be published in the Federal Register for a 90-day comment period.
The FCA Board also approved a proposed rule intended to reduce the regulatory burden on System institutions by repealing, clarifying or updating several current regulations. The action is part of the Agency’s continuing effort to streamline the regulatory process so the System can more efficiently fulfill its mission to provide a dependable source of credit to America’s farmers, ranchers, aquatic producers, cooperatives and rural residents.
The proposed rule would clarify the requirements for stock ownership of FCS service corporations; revise deadlines for new employees to file reports under standards of conduct rules; revise certain dividend limits in determining the eligibility of a cooperative to borrow from a System lender; modify the technical requirements for a real estate appraisal for certain business loans between $250,000 and $1 million; and repeal an obsolete regulation on bankers’ acceptance financing.
The proposed changes reflect comments received after the Agency published a notice in May 2003 requesting public input on the necessity and effectiveness of the Agency’s regulations. In addition to the proposed rule, FCA will also publish a Federal Register notice that outlines changes to regulations that the Agency has implemented since its May 2003 request for comments and issues that FCA currently has under review.
The proposed rule will be published in the Federal Register for a 60-day comment period.
Comments for both proposed rules may be submitted by electronic mail to email@example.com, through the Pending Regulations section of FCA’s Web site at www.fca.gov, or through the Federal government Web portal at www.regulations.gov.
Comments also may be sent by mail to Gary K. Van Meter, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090, or by fax to 703-734-5784. Comments received may be reviewed at the FCA office in McLean, Virginia, or through FCA’s Web site at www.fca.gov.
Since the January 6 FCA Board meeting, two notational votes have occurred. Notational votes are actions taken by the FCA Board between Board meetings.
The FCA Board approved an extension of the comment period on the proposed rule on revisions to the Risk-based Capital Stress Test for the Federal Agricultural Mortgage Corporation (Farmer Mac) to April 17, 2006.
The Board also voted to modify the capital treatment of assets related to the Tobacco Transition Payment Program (Tobacco Buyout). The changes will more closely align FCA’s risk-weighting of assets related to the Tobacco Buyout with recent changes made by other financial regulators.
The Farm Credit Administration is the safety and soundness regulator of the cooperative Farm Credit System. FCA charters, regulates, and examines the 109 banks, associations, and service corporations of the System. System institutions make loans to agricultural producers and their cooperatives nationwide. Members of the FCA Board are Nancy C. Pellett, Chairman and CEO, Douglas L. “Doug” Flory, and Dallas P. Tonsager.
Note: FCA news releases are available on the Internet. Access the FCA Home Page at www.fca.gov.