Title: POLICY STATEMENT--Policy Statement on Regulatory Philosophy [BM-17-FEB-94-02]
Issue Date: 06/22/1994
Federal Register Cite: 59 FR 32189
FARM CREDIT ADMINISTRATION
Policy Statement on Regulatory Philosophy
ACTION: Policy statement.
SUMMARY: The Farm Credit Administration (FCA) Board adopted a "Policy Statement on Regulatory Philosophy" [BM-17-FEB-94-02; FCA-PS-59] on February 17, 1994. This policy statement is in final form; however, pursuant to the "Policy Statement on Rules for Transaction of Business and Operational Responsibilities of the Farm Credit Administration Board" [NV-94-05 (07-FEB-94); FCA-PS-58], Article VII, Section 2(b), this Policy Statement should be reviewed by the FCA Board no later than February 17, 1999.
EFFECTIVE DATE: February 17, 1994.
FOR FURTHER INFORMATION CONTACT: Curtis M. Anderson, Secretary to the Farm Credit Administration Board, Farm Credit Administration, McLean, Virginia 22102-5090, (703) 883-4000, TDD (703) 883-4444.
SUPPLEMENTARY INFORMATION: The text of the Board's policy statement concerning regulatory philosophy is set forth below in its entirety:
Policy Statement on Regulatory Philosophy; BM-17-FEB-94-02; FCA-PS-59
Effective Date: Upon adoption.
Effect on Previous Action: None.
Source of Authority: Farm Credit Act of 1971, as amended; 12 U.S.C. 2001 et seq.
THE FCA BOARD HEREBY ADOPTS THE FOLLOWING POLICY STATEMENT:
The FCA shall develop regulations consistent with its authorities under the Farm Credit Act of 1971 (Act), as amended, and other relevant statutes. It is the FCA Board's philosophy to promulgate regulations that are necessary to implement the law and to promote the safety and soundness of the Farm Credit System (System). In general, the Board's regulatory objective will be to:
Protect the public, the investors, and the customer/shareholders of the System in an effort to create an environment whereby customer/shareholders and investors can take advantage of the System's strength and rely on its future viability with confidence.
The FCA Board believes that safe and sound operations of System institutions will promote: (a) Investor confidence in System debt securities, which works to ensure adequate funds at reasonable rates for lending to customer/shareholders; and, (b) customer/shareholder confidence in each cooperatively owned System institution, which works to ensure customers and capital.
To effectively achieve its objective, the FCA will do the following:
1. The FCA will promulgate regulations only as required by law, as necessary to interpret the law, or as necessary to promote the safe and sound operation of System institutions.
2. The FCA will work to eliminate outdated regulations and ensure that its regulations implement the purposes of the law without unnecessary burden or cost. The FCA Board recognizes that some costs and benefits are difficult to quantify and that some are qualitative, but essential to consider. When there is a significant cost impact, the FCA will consider the risk or problem, as well as the costs associated with a regulatory solution, from the perspective of the customer/shareholder, the System institution, the investor, and the regulator, including when appropriate a numerically-based cost analysis. In choosing among alternatives, the FCA will adopt its regulatory approach based upon a reasoned determination that the benefits of the intended regulations justify their cost.
3. The FCA will strive to ensure that each regulation has a well-defined objective. Regulations will address specific identified risks or problems. The Board will consider these risks from the perspective of the customer/shareholder, the System institution, the investor, and the regulator. Preambles to regulations will explain the FCA Board's rationale for the regulatory solution adopted. Consistent with its statutory authority, the FCA will establish a regulatory environment that grants System institutions the business flexibility to offer a full range of high quality, low cost credit and other services to customer/shareholders.
4. The FCA's regulations shall, to the extent feasible, specify performance criteria and objectives rather than operational methods for achieving its purposes. The FCA recognizes that it does not manage the day-to-day activities of System institutions. Operational constraints that are imposed by regulations should be based on specific statutory requirements or the achievement of regulatory objectives.
5. In setting regulatory priorities, the FCA, to the extent it has discretion, will give high priority to issues that pose the greatest risk within the Farm Credit System.
6. The FCA will carefully consider policy positions of the other financial regulators to determine whether or not consistency facilitates the objectives of the Act. The FCA Board recognizes that differences between the System and non-agricultural lenders will at times warrant different approaches.
7. The FCA will draft its regulations and policy statements to be clear and easy to understand, with the goal of minimizing the potential for ambiguity, uncertainty, and resultant litigation.
8. The FCA will utilize appropriate innovative approaches to seeking the public's perspective regarding regulatory proposals.
The FCA Board will take these principles into consideration as its considers the need for and the content of new regulatory initiatives and as it reviews existing regulations to determine their continuing need and effectiveness. The FCA Board is mindful that most regulatory activities will involve competing considerations and is committed to considering and weighing those competing considerations and arriving at thoughtful regulatory judgments.
Adopted this 17th day of February, 1994, by order of the Board.
Dated: June 16, 1994.
Curtis M. Anderson,
Secretary, Farm Credit Administration Board.