SUMMARY: Section 5.17 of the Farm Credit Act of 1971, as amended (Act) provides the Farm Credit Administration (FCA) the authority to establish standards and guidelines appropriate for carrying out the purposes of the Act and to ensure the safety and soundness of the Farm Credit System (FCS) institutions. Pursuant to such authorities, the FCA Board has adopted a Board Policy Statement on Disaster Relief Efforts by Farm Credit Institutions. The FCA Board in its Board Policy Statement recognizes that natural and man-made disasters and their impact on a specific region of the country or specific segment of the agricultural community are occurrences that FCS institutions are required to respond to from time to time. The Board Policy Statement provides the general philosophy of the FCA with regard to disaster relief actions by FCS institutions. The Board Policy Statement also provides general direction on the principal objectives and safety and soundness concerns associated with any disaster relief actions undertaken by FCS institutions.
EFFECTIVE DATE: June 13, 1996.
FOR FURTHER INFORMATION CONTACT:
Dennis K. Carpenter, Senior Policy Analyst, Regulation Development, Office of Examination, Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090, (703) 883-4498;
Rebecca S. Orlich, Senior Attorney, Regulatory Enforcement Division, Office of General Counsel, Farm Credit Administration, 1501 Farm Credit Drive, McLean Virginia 22102- [*37472] 5090, (703) 883-4020, TDD (703) 883-4444.
SUPPLEMENTARY INFORMATION: The text of the Board's policy statement on disaster relief efforts by Farm Credit institutions is set forth below in its entirety:
Farm Credit Administration Board Policy Statement on Disaster Relief Efforts by Farm Credit Institutions
Effective Date: June 13, 1996.
Effect on Previous Action: Supersedes FCA Bookletter 368-OE, September 14, 1993.
Source of Authority: Section 5.17 of the Farm Credit Act of 1971, as amended.
The FCA board hereby adopts the following policy statement:
The Farm Credit Administration (FCA) recognizes that in the aftermath of hurricanes, floods, droughts, or other natural or man-made disasters, specific sections of the country or segments of the agricultural community are declared to be disaster areas. Such disaster area declarations may be made by the President of the United States, the Governor of a State, or a specific Federal or State government agency. When a disaster area includes a rural community where a Farm Credit institution is located or does business, the institution can be affected in two ways: directly, such as by physical damage to the institution itself or incapacitation of employees; or indirectly, such as by damage suffered by individuals and businesses with loans from the institution. In the interest of providing the highest quality and most efficient service to agricultural borrowers, the FCA encourages Farm Credit institutions operating in disaster-affected areas to work within their communities to help alleviate pressures on borrowers under stress.
When conducted in a reasonable and prudent manner, the efforts of Farm Credit institutions to work in the public's interest with borrowers in the disaster areas will be considered consistent with safe and sound business practices. It is the FCA's belief that the institutions have considerable flexibility under the existing regulations to provide appropriate disaster relief. Such relief efforts may include, but would not necessarily be limited to, extending the terms of loan repayment or restructuring a borrower's debt obligations. In addition, a Farm Credit institution may consider easing some loan documentation or credit-extension terms for new loans to certain borrowers or requesting the FCA to grant relief from specific regulatory requirements. It is the FCA's belief that the principal objectives of any disaster assistance program developed by a Farm Credit institution and approved by its board should be to:
1. Provide necessary and timely relief to disaster-affected customers of the institution;
2. Minimize the adverse effects of the disaster on the profitability, financial condition, operating efficiency, and morale of customers, as well as on the institution;
3. Review applicable statutory and regulatory requirements and determine whether requesting the FCA to provide exceptions from regulatory requirements would be appropriate; and
4. Promote, through such consideration and actions, the Farm Credit System's mandate to provide American farmers and ranchers with sound, adequate, and constructive credit and closely related services.
The FCA further believes that proper risk controls and management oversight should be exercised to ensure that such efforts serve the interests of the lending institution as well as those of the community. Any institution providing disaster relief should document such relief actions as well as any significant departures from otherwise applicable institution policies and procedures.
The aforementioned objectives and risk controls are conditions and characteristics on which the FCA will evaluate an institution's relief activities. These objectives and risk controls should be set forth in any request to the FCA for specific regulatory relief.
The FCA also recognizes that conditions related to a disaster may impair an institution's ability to comply in a timely way with regulatory reporting and publishing requirements. Farm Credit institutions should contact their FCA field office when relief from specific regulatory or reporting requirements is needed.
Additionally, the Board of Governors of the Federal Reserve System (Federal Reserve Board) has, from time to time, granted relief from certain Regulation Z requirements to consumers located in declared disaster areas. It is likely that the Federal Reserve Board will continue to promulgate similar temporary exceptions in disaster-affected areas. When this occurs, the FCA will, as a matter of convenience, continue to notify the Farm Credit institutions affected by Regulation Z exceptions.
Adopted this 13th day of June, 1996 by order of the Board.
Dated: July 12, 1996.
Secretary, Farm Credit Administration Board.
[FR Doc. 96-18218 Filed 7-17-96; 8:45 am]
BILLING CODE 6705-01-P