|News Release||Farm Credit Administration|
1501 Farm Credit Drive
McLean, Virginia 22102-5090
For Immediate Release
NR 08-18 (11-13-08)
Contact: Martha Schober or Christine Quinn, 703-883-4056
Web site: www.fca.gov
FCA Board Adopts Market Emergency Standby Resolution
McLEAN, Va., November 13, 2008 —The Farm Credit Administration (FCA or Agency) Board today adopted the Market Emergency Standby Resolution. The resolution authorizes a waiver of the liquidity reserve requirement in 12 C.F.R. 615.5134 whenever a financial, economic, agricultural, or national defense emergency is deemed to exist under 12 C.F.R. 615.5136.
This resolution would go into effect only in the event of a serious market disruption, and it would temporarily allow Farm Credit System (FCS) banks to fund their assets with short-term liabilities known as discount notes even if doing so would cause the liquidity reserve of one or more FCS banks to drop below the minimum in 12 C.F.R. 615.5134.
The Market Emergency Standby Resolution grants FCS banks a temporary waiver of the liquidity reserve requirement for no more than 14 calendar days. The resolution contains a number of conditions so that the waiver of the liquidity reserve requirement is implemented only when absolutely necessary. It also contemplates that any affected System bank would develop a plan for quickly restoring its liquidity reserve to the minimum regulatory level.
“We believe that this resolution will give System banks the flexibility they need in an emergency to continue to provide the funding that farmers, ranchers, cooperatives, and other eligible borrowers rely on while at the same time ensuring that System banks address any resulting shortfalls in their liquidity reserve,” said Chairman Leland A. Strom.
In other business, the Board received a quarterly report from the Office of Management Services (OMS). In addition to discussing the Agency’s budget status and upcoming technology initiatives, OMS staff reported that FCA’s FY 2008 financial statements had received an unqualified opinion from an independent auditor. In addition, the results of the Agency’s 2008 Federal Information Security Management Act evaluation did not identify any significant deficiencies in the Agency’s information technology security management program.
Since the FCA Board meeting on October 9, two notational votes have occurred. Notational votes are actions taken by the FCA Board between Board meetings.
On October 16, the FCA Board granted preliminary approval to consolidate Land Bank South, FLCA (Federal Land Credit Association), with a new Production Credit Association (PCA) called Southern AgCredit, PCA, to form Southern AgCredit, ACA (Agricultural Credit Association), which will operate with an FLCA subsidiary and a PCA subsidiary. If a majority of the voting stockholders (voting in person or by proxy) of Land Bank South, FLCA, affirm the consolidation and FCA grants final approval, the effective date for the new entities will be January 1, 2009.
On November 4, the FCA Board granted preliminary approval to merge Valley Farm Credit, ACA, and its subsidiaries with and into MidAtlantic Farm Credit, ACA, and its subsidiaries. If the merger is approved by a majority of the voting stockholders and receives final approval from FCA, the effective date for the merger will be December 31, 2008, but in no event later than June 30, 2009. The continuing ACA and its respective subsidiaries will retain the name of MidAtlantic Farm Credit.
The Farm Credit Administration is the safety and soundness regulator of the cooperative Farm Credit System (System) and the Federal Agricultural Mortgage Corporation (Farmer Mac). FCA charters, regulates, and examines the 104 banks, associations, and service corporations of the System and Farmer Mac. System institutions make loans to agricultural producers and their cooperatives nationwide. Farmer Mac provides a secondary market for agricultural real estate and rural housing mortgage loans. Members of the FCA Board are Leland A. Strom, Chairman and CEO; Nancy C. Pellett; and Dallas P. Tonsager.
Note: FCA news releases are available on the Web at www.fca.gov.