Title: INTERIM RULE; REQUEST FOR COMMENT--Personnel Administration; Loan Policies and Operations; Funding and Fiscal Affairs, Loan Policies and Operations, and Funding Operations; General Provisions--12 CFR Parts 612, 614, 615 and 618
Issue Date: 01/12/1989
Agency: FCA
Federal Register Cite: 54 FR 1149
___________________________________________________________________________
FARM CREDIT ADMINISTRATION

12 CFR Parts 612, 614, 615 and 618

Personnel Administration; Loan Policies and Operations; Funding and Fiscal Affairs, Loan Policies and Operations, and Funding Operations; General Provisions


ACTION: Interim rule; request for comments.

SUMMARY: In accordance with various Farm Credit Administration (FCA) regulations, Farm Credit institutions (institutions) are currently required to submit certain proposed policies, procedures, programs, and activities to FCA for its approval prior to the institution implementing such policies, procedures, programs and activities. These submissions by the institutions to FCA are referred to collectively herein as "prior approvals". The FCA Board has determined that certain prior approvals are unnecessary in light of recent amendments to the Farm Credit Act of 1971 and Congressional intent, and are inconsistent with FCA's role as an arm's length regulator. The FCA adopts an interim rule eliminating the prior approval portions of the regulations set forth below. Thus, effective immediately, institutions are no longer required to submit to the FCA certain prior approvals as more specifically discussed below. Elimination of these prior approvals does not relieve the institutions of their responsibility to develop and implement such policies, procedures, programs and activities and to operate in a safe and sound manner and in accordance with all applicable laws, rules and regulations. The institutions and such policies, procedures, programs, and activities continue to be subject to examination by the FCA. The FCA solicits comments on the amendments to the regulations.

DATE: This regulation is effective January 6, 1989. Written comments must be submitted on or before March 6, 1989.

ADDRESS: Submit any comments in writing (in triplicate) to Anne E. Dewey, General Counsel, Farm Credit Administration, McLean, Virginia 22102-5090. Copies of all communications received will be available for examination by interested parties in the Office of General Counsel, Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT: John C. Moore, Deputy Chief, Financial Analysis and Standards Division, Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. (703) 883-4402 TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION: The FCA Board has determined that certain prior approvals are unnecessary in light of recent amendments to the Farm Credit Act of 1971 and Congressional intent, and are inconsistent with FCA's role as an arm's length regulator. Accordingly, the FCA adopts an interim rule amending certain regulations by eliminating prior approval language from the regulations. The effect of the amendments to the regulations listed below is that institutions are no longer required to submit the relevant proposed policies, procedures, programs, and activities to the FCA for its prior approval. The prior approvals are deleted to conform the regulations to amendments to the Act and to comply with Congressional intent as evidenced by such amendments. Accordingly, it is the judgment of the FCA Board that the language concerning the prior approvals which is delineated below should be eliminated from the relevant regulations effective immediately.

The Agricultural Credit Act of 1987 (1987 Amendments) which amended the Act specifically eliminated the following prior approvals from the statute: (1) Loss-sharing agreements between and among banks for cooperatives (BCs) and between and among Farm Credit banks (FCBs); (2) the making of "other investments" by FCBs and of certain specific investments by BCs; (3) foreign investments by BCs; and (4) BC deposits for international trade. Public Law 100-233, section 802. Accordingly, the prior approval language in 12 CFR 614.4340(a); 615.5135(b); 615.5143; and 615.5190(b) is eliminated to conform the regulations to the 1987 Amendments. Since the 1987 Amendments eliminated the loss-sharing prior approvals for FCBs and BCs which are the subject matter of 12 CFR 614.4340(a), the FCA Board has interpreted Congressional intent to require eliminating these prior approval for associations as well.

The Farm Credit Amendments Act of 1985 and the Farm Credit Act Amendments of 1986 (1985 and 1986 Amendments) eliminated the following prior approvals from the Act: (1) Bank interest rates and policies; and (2) production credit association (PCA) loans that bear interest rates as determined by the relevant FICB board. Public Law 99-509, section 1033 and Pub. L. 99-205, section 205(b). Since the 1985 and 1986 Amendments specifically eliminated these prior approvals, the FCA has interpreted Congressional intent to require that prior approvals of bank and PCA interest rate programs be eliminated as well. Accordingly, the prior approval language in 12 CFR 614.4280; 614.4320; and 614.4321 is eliminated to conform the regulations to the 1985 and 1986 Amendments.

Consistent with FCA's interpretation of the intent of Congress as evidenced by the deletion of the specific prior approvals discussed above, FCA eliminates from the following regulations the prior approval language which is not specifically required by statute or necessary at this time to ensure FCA's role as an arm's length regulator: 12 CFR 612.2150(a); 612.2150(c); 612.2160(a); 614.4345; 614.4460; 614.4511; 615.5040; 615.5104; and 618.8060.

The FCA Board has determined that it is necessary to implement these amendments to the regulations as quickly as possible to conform the regulations to statutory changes and to Congressional intent. In addition, by eliminating these prior approvals immediately, FCA is emphasizing that institutions are clearly responsible for developing and implementing the relevant policies, procedures, programs and activities, while FCA will continue to examine such matters. Thus, immediate implementation assists FCA in further establishing and fulfilling its role as an arm's length regulator. Furthermore, since these regulations relieve restrictions, the FCA Board finds that notice and public comment prior to the effective date of this rule are impracticable, unnecessary, and contrary to the public interest in this instance. See 5 U.S.C. 553(b)(B). For the reasons stated immediately above, the FCA Board, pursuant to 5 U.S.C. 553(d)(1) and 12 U.S.C. 2252(c)(2), finds good cause to make this regulation effective in less than 30 days.

List of Subjects in 12 CFR Parts 612, 614, 615 and 618

Accounting, Agriculture, Archives and records, Banks, Banking, Conflict of Interest, Credit, Foreign trade, Government securities, Insurance, Investments, Reporting and recordkeeping requirements, Rural areas, Technical assistance.

As stated in the preamble, Parts 612, 614, 615 and 618 of Chapter VI, Title 12, Code of Federal Regulations, is amended as follows:

PART 612 -- PERSONNEL ADMINISTRATION

1. The authority citation for Part 612 continues to read as follows:

Authority: Secs. 5.9 and 5.17; 12 U.S.C. 2243 and 2252.

Subpart B -- Standards of Conduct for Directors, Officers, and Employees

612.2150 Employees -- prohibited acts.

2. Section 612.2150 is amended by removing the words "and approved by the Farm Credit Administration" in the last sentence of paragraph (a); and in the introductory text of paragraph (c) by removing the words "which have been approved by the Farm Credit Administration".

612.2160 Bank and service organization policies and procedures.

3. Section 612.2160 is amended by removing the words "and shall submit the policies, guidelines, and procedures to the Farm Credit Administration for approval" in the last sentence of paragraph (a).

PART 614 -- LOAN POLICIES AND OPERATIONS

4. The authority citation for Part 614 continues to read as follows:

Authority: Secs. 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13, 4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.19, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.7, 7.8, 7.12, 7.13, 8.0, 8.5; 12 U.S.C. 2011, 2013, 2014, 2015, 2017, 2018, 2071, 2073, 2074, 2075, 2091, 2093, 2094, 2096, 2121, 2122, 2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, 2201, 2202, 2202a, 2202c, 2202d, 2202e, 2206, 2207, 2219a, 2219b, 2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2279b-1, 2279b-2, 2279f, 2279f-1, 2279aa, 2279aa-5; sec. 413 of Pub. L. 100-233.

Subpart G -- Interest Rates and Charges

614.4280 Interest rates.

5. Section 614.4280 is amended by removing the designation for paragraph (a); by removing the words "with the approval of the Farm Credit Administration" in the first sentence of paragraph (a); and by removing paragraph (b).

614.4320 Production credit associations.

6. Section 614.4320 is amended by removing the words "and approved by the Farm Credit Administration" in the first sentence.

614.4321 Interest rate programs.

7. Section 614.4321 is amended by removing the last sentence of the introductory paragraph.

Subpart I -- Loss-Sharing Agreement

614.4340 General.

8. Section 614.4340 is amended by removing the words "and with the prior written approval of the Farm Credit Administration," in the first sentence of paragraph (a).

614.4345 Guaranty Agreements.

9. Section 614.4345 is amended by removing the words "with approval of the Farm Credit Administration," and capitalizing the word "Guaranty".

Subpart M -- Loan Approval Requirements

614.4460 Loan approval responsibility.

10. Section 614.4460 is amended by removing the words "establishment of a policy under which such loans are to be submitted to the Farm Credit Administration for prior approval," in the second sentence of the introductory text; by removing the words "and the Farm Credit Administration" in the third sentence of the introductory text and also, at the end of the third sentence of the introductory text by removing the words "with a copy to the Farm Credit Administration for post review"; and in paragraphs (f)(1) and (f)(3) by removing the words "and approved by the Farm Credit Administration".

Subpart N -- Loan Servicing Requirements

614.4511 Federal land bank association compensation.

11. Section 614.4511 is amended by removing the words "and the Farm Credit Administration" in the first sentence.

PART 615 -- FUNDING AND FISCAL AFFAIRS, LOAN POLICIES AND OPERATIONS, AND FUNDING OPERATIONS

12. The authority citation for Part 615 continues to read as follows:

Authority: Secs. 1.5, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.9, 4.14B, 4.25, 5.9, 5.17, 6.20, 6.26; 12 U.S.C. 2013, 2019, 2020, 2073, 2074, 2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2160, 2202b, 2211, 2243, 2252, 2278b, 2278b-6; sec. 301(a) of Pub. L. 100-233.

Subpart A -- Funding

615.5040 Borrowings from financial institutions other than commercial banks.

13. Section 615.5040 is amended by removing the words "only with the approval of the Farm Credit Administration".

Subpart C -- Issuance of Bonds, Notes, Debentures and Similar Obligations

615.5104 Debt policy.

14. Section 615.5104 is amended by removing the words "subject to approval by the Farm Credit Administration,".

Subpart D -- Other Funding

615.5135 Investment policy.

15. Section 615.5135 is amended by removing the words "subject to the approval of the Farm Credit Administration," in the first sentence of the introductory text of paragraph (b).

Subpart E -- Investments

615.5143 Banks for cooperatives.

16. Section 615.5143 is amended by removing the words "and approved by the Farm Credit Administration" in the first sentence.

Subpart G -- Deposit of Funds

615.5190 General.

17. Section 615.5190 is amended by removing the words "and approved by the Farm Credit Administration" in the first sentence of paragraph (b).

PART 618 -- GENERAL PROVISIONS

18. The authority citation for Part 618 continues to read as follows:

Authority: Secs. 1.5, 1.11, 1.12, 2.2, 2.4, 2.5, 2.12, 3.1, 3.7, 4.12, 4.13A, 4.25, 4.29, 5.9, 5.10, 5.17; 12 U.S.C. 2013, 2019, 2020, 2073, 2075, 2076, 2093, 2122, 2128, 2183, 2200, 2211, 2218, 2243, 2244, 2252.

Subpart C -- Leasing

618.8060 Leasing limitations.

19. Section 618.8060 is amended by removing the words "and the Farm Credit Administration".

Date: January 6, 1989.

David A. Hill,

Secretary, Farm Credit Administration Board.

[FR Doc. 89-780 Filed 1-11-89; 8:45 am]
BILLING CODE 6705-01-M