Document headings vary by document type but may contain
                    the following: the agency or agencies that issued and signed a document
the number of the CFR title and the number of each part
                      the document amends, proposes to amend, or is directly
                      related to
the agency docket number / agency internal file number
the RIN which identifies each regulatory action listed in
                      the Unified Agenda of Federal Regulatory and Deregulatory
                      Actions See the
                    Document Drafting Handbook
                    for more details.
 Department of Agriculture Rural Telephone Bank
 AGENCY: Rural Telephone Bank, USDA.
 ACTION: Notice of 2005 fiscal year interest rates determination.
 SUMMARY: In accordance with 7 CFR 1610.10, the Rural Telephone Bank (Bank) fiscal year 2005 cost of money rates have been established as follows: 6.18% and 5.00% for advances from the liquidating account and financing account, respectively (fiscal year is the period beginning October 1 and ending September 30). All loan advances made during fiscal year 2005 under Bank loans approved in fiscal years 1988 through 1991 shall bear interest at the rate of 6.18% (the liquidating account rate). All loan advances made during fiscal year 2005 under Bank loans approved during or after fiscal year 1992 shall bear interest at the rate of 5.00% (the financing account rate). The calculation of the Bank's cost of money rates for fiscal year 2005 for the liquidating account and the financing account are provided in Tables 1 and 2. Since the calculated rates are greater than or equal to the minimum rate (5.00%) allowed under 7 U.S.C. 938(b)(3)(A), the cost of money rates for the liquidating account and financing account are set at 6.18% and 5.00%, respectively. The methodology required to calculate the cost of money rates is established in 7 CFR 1610.10(c).
 FOR FURTHER INFORMATION CONTACT: Jonathan P. Claffey, Deputy Assistant Governor, Rural Telephone Bank, STOP 1590—Room 5151, 1400 Independence Avenue, SW., Washington, DC 20250-1590. Telephone: (202) 720-9556.


SUPPLEMENTARY INFORMATION: The Federal Credit Reform Act of 1990 (2 
                    ( print page 47166)
                    U.S.C. 661a, 
                    *et seq*.) implemented a system to reform the budgetary accounting and management of Federal credit programs. Bank loans approved on or after October 1, 1991, are accounted for in a different manner than Bank loans approved prior to fiscal year 1992. As a result, the Bank must calculate two cost of money rates: (1) The cost of money rate for advances made from the liquidating account (advances made during fiscal year 2005 on loans approved prior to October 1, 1991) and (2) the cost of money rate for advances made from the financing account (advances made during fiscal year 2005 on loans approved on or after October 1, 1991). The cost of money rate methodology is the same for both accounts. It develops a weighted average rate for the Bank's cost of money considering total fiscal year loan advances; the excess of fiscal year loan advances over amounts received in the fiscal year from the issuance of Class A, B, and C stock, debentures and other obligations; and the costs to the Bank of obtaining funds. During fiscal year 2005, the Bank was authorized to pay the following dividends: The dividend on Class A stock as 2.00% as established in 7 U.S.C. 946(c); no dividends were payable on Class B stock in accordance with 7 U.S.C. 946(d); and the dividend on Class C stock was established by the Bank at 5.74%. Dissolution of the Bank At its quarterly meeting on August 4, 2005, the Board of Directors (the “Board”) approved a resolution to dissolve the Bank. On November 10, 2005, the liquidation and dissolution process was initiated with the signing of the 2006 Agriculture Appropriations bill by President Bush, which contained a provision lifting the restriction on the retirement of more than 5 percent of the Class A stock held by the Government. In accordance with the Board's resolution and the terms of the Loan Transfer Agreement between the Bank and the Government, dated August 4, 2005, the Bank's liquidating account loan portfolio was transferred to the Government on October 1, 2005. As a result of that transfer, there will be no more advances of liquidating account loan funds. Therefore, this is the last notice that will report an interest rate for liquidating account loan advances. The dissolution of the Bank will not affect future advances of financing account loan funds. Requests for financing account advances will continue to be processed by employees of USDA Rural Development's Telecommunications Program, just as they were while the Bank remained in operation. The terms and conditions of the financing account loans will not change, nor will the method for determining the interest rates, including the determination of the cost of money rates after  the end of the fiscal year. The only significant change to the financing account advances is that effective October 1, 2005, no Class B stock in the Bank will be purchased with a financing account loan advance. Sources and Costs of Funds—Liquidating Account In accordance with 7 U.S.C. 946(a), the Bank did not issue Class A stock in fiscal year 2005. There were no net issuances of Class B stock because the rescissions of loan funds advanced for Class B stock exceeded the amount of issuances. The amount received by the Bank in fiscal year 2005 from the issuance of Class C stock was $8,048. The Bank did not issue debentures or any other obligations related to the liquidating account in fiscal year 2005. Consequently, no cost was incurred related to the issuance of debentures subject to 7 U.S.C. 948(b)(3)(D). The excess of fiscal year 2005 loan advances from the liquidating account over amounts received from issuance of stocks, debentures, and other obligations amounted to $794,953. The cost associated with this excess is the historic cost of money rate as defined in 7 U.S.C. 948(b)(3)(D)(v). The calculation of the Bank's historic cost of money rate for advances from the liquidating account is also provided in Table 1. The methodology required to perform this calculation is described in 7 CFR 1610.10(c). The cost of the money rates for fiscal years 1974 through 1987 are defined in 7 U.S.C. 948(b) and are listed in 7 CFR 1610.10(c) and Table 1 herein. Sources and Costs of Funds—Financing Account In accordance with 7 U.S.C. 946(a), the Bank did not issue Class A stock in fiscal year 2005. Advances for the purchase of Class B stock and cash purchases for Class B stock were $4,570,841. There were rescissions of loan funds advanced for Class B stock in the amount of $8,967; therefore, the amount received by the Bank from the issuance of Class B stock, per 7 CFR 1610.10(c), was $4,561,874. The Bank did not receive any amounts in fiscal year 2005 from the issuance of Class C Stock. During fiscal year 2005, issuance of debentures or any other obligations related to advances from the financing account were $91,416,689 at an interest rate of 5.250%. The excess of fiscal year 2005 loan advances from the financing account over amounts received from issuance of stocks, debentures, and other obligations amounted to $8,967. The cost associated with this excess is the historic cost of money rate as defined in 7 U.S.C. 948(b)(3)(D)(v). The Bank's cost of money rate for advances from the financial account is provided in Table 2. The methodology required to perform this calculation is described in 7 CFR 1610.10(c). Dated: August 11, 2006. James M. Andrew, Governor, Rural Telephone Bank.
 Rural Telephone Bank Cost of Money Rate—Liqudating Account
FY 2005
                             source of bank funds
*(a)* Amount  
                             ($)
*(b)* Cost  
                             (%)
*(c)* (a)×(b)  
                             ($)
(c)/Advances 
                             (%)Issuance of Class A Stock

2.00

0.0000Issuance of Class B Stock

0.00

0.0000Issuance of Class C Stock
8,048
5.74
462
0.0575Issuance of Debentures and Other Obligations

0.00

0.0000Excess of Total Advances Over Issuances
794,953
6.19
49,194
6.1263Total FY 2005 Advances
803,001Calculated cost of money rate =



6.18Minimum rate allowable =



5.00
 
 
 Rural Telephone Bank Historical Cost of Money Rate—Liquidating Account
Fiscal year
*(a)* Cost of money  
                             (%)
*(b)* advances  
                             ($)
*(c)* (a)×(b)  
                             ($)
(c)/Total
                             Advances  
                             (%)FY 1974
5.01
111,022,574
5,562,231
0.231FY 1975
5.85
130,663,197
7,643,797
0.318FY 1976
5.33
99,915,066
5,325,473
0.221FY 1977
5.00
80,907,425
4,045,371
0.168FY 1978
5.87
142,297,190
8,352,845
0.347FY 1979
5.93
130,540,067
7,741,026
0.322FY 1980
8.10
199,944,235
16,195,483
0.673FY 1981
9.46
148,599,372
14,057,501
0.584FY 1982
8.39
112,232,127
9,416,275
0.391FY 1983
6.99
93,402,836
6,528,858
0.271FY 1984
6.55
90,450,549
5,924,511
0.246FY 1985
5.00
72,583,394
3,629,170
0.151FY 1986
5.00
71,582,383
3,579,119
0.149FY 1987
5.00
51,974,938
2,598,747
0.108FY 1988
5.00
119,488,367
5,974,418
0.248FY 1989
5.00
97,046,947
4,852,347
0.202FY 1990
5.00
107,694,991
5,384,750
0.224FY 1991
5.43
163,143,075
3,858,669
0.368FY 1992
6.14
84,940,822
5,215,366
0.217FY 1993
6.05
84,605,366
5,118,625
0.213FY 1994
6.15
54,530,897
3,353,650
0.139FY 1995
6.04
35,967,133
2,172,415
0.090FY 1996
6.05
30,965,187
1,873,394
0.078FY 1997
5.98
32,602,587
1,949,635
0.081FY 1998
5.96
20,673,798
1,232,158
0.051FY 1999
6.01
17,796,518
1,069,571
0.044FY 2000
6.01
10,436,622
627,241
0.026FY 2001
5.95
6,638,107
394,967
0.016FY 2002
6.51
1,864,500
121,379
0.005FY 2003
6.05
604,800
36,590
0.002FY 2004
6.18
880,504
54,415
0.002Total advances

2,405,995,574Cost of money



6.19
 Rural Telephone Bank Cost of Money Rate—Financing Account
FY 2005
                             source of bank funds
*(a)* Amount  
                             ($)
*(b)* Cost  
                             (%)
*(c)* (a)×(b)  
                             ($)
(c)/Advances 
                             (%)Issuance of Class A Stock

2.00

0.0000Issuance of Class B Stock
4,561,874
0.00

0.0000Issuance of Class C Stock

5.740

0.0000Issuance of Debentures and Other Obligations*
91,416,689
5.250
4,799,659
5.0003Excess of Total Advances Over Issuances
8,967
5.956
534
0.0006Total FY 2005 Advances
945,987,530Calculated cost of money rate =



5.00Minimum rate allowable =



5.00* RTB borrowed $99,306,000 from the financing account in FY 2005; the remaining funds will be used to cover other obligations of the fund.
 Rural Telephone Bank Historical Cost of Money Rate—Financing Account
Fiscal year
*(a)* Cost of money  
                             (%)
*(b)* Advances  
                             ($)
*(c)* (a)×(b)  
                             ($)
(c)/Total
                             Advances (%)FY 1992
7.38
4,056,250
299,351
0.055FY 1993
6.35
23,839,200
1,513,789
0.278FY 1994
6.40
56,838,902
3,637,690
0.669FY 1995
6.88
37,161,517
2,556,712
0.470FY 1996
6.42
44,536,621
2,859,251
0.526FY 1997
6.54
34,368,726
2,247,715
0.413FY 1998
5.71
34,446,458
1,966,893
0.362FY 1999
5.54
38,685,732
2,143,190
0.394( print page 47168)FY 2000
6.05
31,401,867
1,899,813
0.349FY 2001
5.17
55,405,896
2,864,485
0.527FY 2002
6.05
60,232,919
3,644,092
0.670FY 2003
5.67
55,835,695
3,165,884
0.582FY 2004
5.36
67,074,751
3,595,207
0.661Total advances

543,884,534Cost of money



5.96


[FR Doc. 06-6970 Filed 8-15-06; 8:45 am] BILLING CODE 3410-15-M