This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

19397 

Vol. 87, No. 64 

Monday, April 4, 2022 

1Public Law 115–334, 132 Stat. 4490 (Dec. 20, 

2018). 

2Section 4.12 of the Act governs both the 

voluntary and involuntary dissolution of System 

institutions. Subpart D of part 627 addresses the 

voluntary liquidation of System banks, associations, 

service corporations, and the Funding Corporation. 

However, the voluntary liquidation of these System 

institutions is outside the scope of this rulemaking. 

3 In contrast to all other FCS institutions, section 

8.41(c)(1)(A) of the Act allows, but does not require, 

FCA to appoint FCSIC as the conservator or receiver 

of the Federal Agricultural Mortgage Corporation 

(Farmer Mac). Section 8.41 of the Act and the 

regulations in part 650, subpart B, govern the 

conservatorship or receivership of Farmer Mac. 

Accordingly, this rulemaking does not apply to the 

conservatorship or receivership of Farmer Mac. 

4More specifically, section 4.12(b) of the Act 

authorizes the FCA Board to appoint FCSIC as the 

conservator or receiver of a System institution once 

it determines that one or more of the following 

conditions exists or is occurring at the institution: 

(1) Insolvency, in that the assets of the institutions 

are less than its obligations to its creditors and 

others, including its members; (2) substantial 

dissipation of assets or earnings due to any 

violation of law, rules, or regulations, or to any 

unsafe or unsound practice; (3)an unsafe or 

unsound condition to transact business; (4) willful 

violation of a cease and desist order that has 

become final; (5) concealment of books, papers, 

records, or assets of the institution, or refusal to 

Continued 

FARM CREDIT ADMINISTRATION 

12 CFR Parts 619 and 627 

RIN 3052–AD48 

Conservators and Receivers 

AGENCY: Farm Credit Administration. 

ACTION: Proposed rule. 

SUMMARY: The Farm Credit 

Administration (FCA, we, our) proposes 

a rule to update, restructure and 

reorganize our regulations that govern 

the appointment of the Farm Credit 

System Insurance Corporation (FCSIC) 

as the conservator or receiver of Farm 

Credit System (FCS or System) banks, 

associations, service corporations, and 

the Federal Farm Credit Banks Funding 

Corporation (Funding Corporation). 

This proposed rule also ensures that 

FCA conservatorship and receivership 

regulations are consistent with section 

5412 of the Agricultural Improvement 

Act of 2018 (2018 Farm Bill), which 

strengthens, updates, and clarifies 

FCSIC’s powers as the conservator or 

receiver of these FCS institutions. 

Additionally, we propose consolidating 

and reorganizing our conservatorship 

and receivership regulations so they are 

easier to understand and use. The 

proposed rule makes conforming 

amendments to definitional regulations 

to clarify that bridge System banks are 

not subject to FCA regulations that 

apply to other System institutions, 

pursuant to new section 5.61C(h) of the 

Act, which expressly exempts bridge 

banks from certain legal requirements. 

DATES: Comments on this proposed rule 

must be submitted on or before June 3, 

2022. 

ADDRESSES: We offer a variety of 

methods for you to submit comments. 

For accuracy and efficiency reasons, 

commenters are encouraged to submit 

comments by email or through the 

FCA’s website. As facsimiles (fax) are 

difficult for us to process and achieve 

compliance with section 508 of the 

Rehabilitation Act, we do not accept 

comments submitted by fax. Regardless 

of the method you use, please do not 

submit your comment multiple times 

via different methods. You may submit 

comments by any of the following 

methods: 

• Email: Send us an email at regcomm@fca.gov. 

• FCA website: https://www.fca.gov. 

Click inside the ‘‘I want to . . .’’ field 

near the top of the page; select 

‘‘comment on a pending regulation’’ 

from the dropdown menu; and click 

‘‘Go.’’ This takes you to an electronic 

public comment form. 

• Mail: Autumn R. Agans, Deputy 

Director, Office of Regulatory Policy, 

Farm Credit Administration, 1501 Farm 

Credit Drive, McLean, VA 22102–5090. 

You may review copies of all 

comments we receive at our office in 

McLean, Virginia, or on our website at 

https://www.fca.gov. Once you are in 

the website, click inside the ‘‘I want to 

. . .’’ field near the top of the page; 

select ‘‘find comments on a pending 

regulation’’ from the dropdown menu; 

and click ‘‘Go.’’ This will take you to the 

Comment Letters page where you can 

select the regulation for which you 

would like to read the public comments. 

We will show your comments as 

submitted, but for technical reasons we 

may omit some items such as logos and 

special characters. Identifying 

information that you provide, such as 

phone numbers and addresses, will be 

publicly available. However, we will 

attempt to remove email addresses to 

help reduce internet spam. 

FOR FURTHER INFORMATION CONTACT: 

Technical information: Jason Moore, 

Senior Accountant, Office of Regulatory 

Policy, Farm Credit Administration, 

McLean, VA 22102–5090, (703) 883– 

4414, TTY (703) 883–4056. 

Legal information: Richard A. Katz, 

Senior Counsel, Office of General 

Counsel, Farm Credit Administration, 

McLean, VA 22102–5090, (703) 883– 

4020, TTY (703) 883–4056. 

SUPPLEMENTARY INFORMATION: 

I. Objectives 

The objectives of this proposed rule 

are to: 

• Consolidate, reorganize, and update 

our regulations governing FCA’s 

appointment of FCSIC as the 

conservator or receiver of any System 

bank, association, service corporation, 

or the Funding Corporation. 

• Ensure that our conservatorship and 

receivership regulations in part 627 are 

consistent with section 5412 of the 2018 

Farm Bill, which added section 5.61C to 

the Farm Credit Act of 1971, as 

amended (Act).1

• Restructure and reorganize part 627 

so it is easier for FCA examiners, FCS 

institutions and other interested parties 

to understand and use, and to make 

conforming or technical revisions to 

other FCA regulations. 

• Make conforming changes to two 

definitions in part 619 to implement 

various provisions in section 5.61C(h) of 

the Act that create specific exceptions 

so that bridge System banks are not 

subject to certain provisions of laws, 

including FCA regulations, that apply to 

FCS banks, associations, and service 

corporations. 

II. Background 

Section 4.12 of the Act governs the 

dissolution of System institutions 

through voluntary and involuntary 

liquidations, mergers, and 

conservatorships or receiverships.2 The 

FCA has ‘‘exclusive power and 

jurisdiction’’ under section 4.12(b) of 

the Act to appoint FCSIC as the 

conservator or receiver for any FCS 

institution 3 that meets one or more of 

six specific statutory criteria for 

determining whether it is insolvent or 

unviable.4 Since 1992, FCA regulations 


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submit books, papers, records, or other material 

relating to the affairs of the instituton for inspection 

to any examiner or to any lawful agent of the Farm 

Credit Administration; (6) the institution is unable 

to timely pay principal or interest on any insured 

obligation (as defined in section 5.51(3)) issued by 

the institution. 

5Conf. Report No. 115–1072, 115th Cong., 2nd 

Sess., (Dec. 10, 2018) p. 648. 

6According to section 5.61C(h)(2)(A) of the Act, 

FCA may charter a bridge System bank only if it 

determines that: (1) The amount which is 

reasonably necessary to operate the bridge System 

bank will not exceed the amount which is reasonbly 

necessary to save the cost of liquidating 1 or more 

System banks in default or danger of default; (2) 

chartering a bridge System bank is essential to 

continue providing adequate farm credit services in 

communities where such System bank(s) in default 

or danger of default provides such farm credit 

services; or (3) the continued operation of such 

System bank(s) in default or danger of default with 

respect to which the bridge System bank is 

chartered is in the best interest of the FCS or the 

public. 

7More specifically, section 5.61C(h) of the Act 

addresses several aspects of a bridge System bank 

from cradle to grave, such as: (1) Organization; (2) 

chartering; (3) transfer of the assets and liabilities 

of failing or failed System banks to the bridge 

System bank; (4) the powers of bridge System banks 

under FCSIC management and control; (5) capital; 

(6) employee status; (7) FCSIC assistance to the 

bridge System bank; (8) duration of the bridge 

System bank; and (9) termination and dissolution 

of a bridge System bank. 

8See 86 FR 15081 (Mar. 22, 2021). The rule 

became effective on May 13, 2021. See 86 FR 27510 

(May 21, 2021). 

9Under sections 1.3 and 3.0 of the Act, Farm 

Credit banks established pursuant to provisions of 

previous Farm Credit statutes continue as 

Federally-chartered instrumentalities of the United 

States. Although sections 7.0 and 7.12 of the Act 

allow existing Farm Credit banks operating under 

the same or different titles of the Act to merge, FCA 

had no statutory authority, prior to the 2018 Farm 

Bill, to charter an entirely new System bank that 

did not exist before. New section 5.61C(h)(10)(B) of 

the Act grants FCA authority to convert the charter 

of a bridge System bank into the charter of a 

successor System bank. 

in part 627 have implemented section 

4.12 of the Act. 

As noted earlier, the 2018 Farm Bill 

added a new section to the Act, 5.61C, 

which strengthens, clarifies, and 

updates the powers and duties of FCSIC 

after FCA appoints it as the conservator 

or receiver of any FCS institution. 

Additionally, section 5.61C of the Act 

enhances FCSIC’s authority to handle 

claims by various parties against a 

System institution in conservatorship or 

receivership. FCSIC’s new statutory 

conservatorship and receivership 

authorities are comparable to those of 

the Federal Deposit Insurance 

Corporation (FDIC), National Credit 

Union Administration (NCUA), and 

Federal Housing Finance Agency 

(FHFA), and the legislative history 

further reveals that Congress intended 

FCSIC’s authorities ‘‘to be functionally 

equivalent to the parallel authorities of 

the [FDIC].’’ 5

Bridge System banks are one of the 

new tools that the 2018 Farm Bill gave 

FCSIC, in its capacity as receiver, for the 

resolution or liquidation of failing or 

failed System banks. Section 5.61C(h) of 

the Act authorizes FCA to charter bridge 

System banks at FCSIC’s request and 

dissolve them once a failing or failed 

Farm Credit bank is resolved.6 The 

statutory provisions governing the 

creation, operation, capitalization, and 

termination and dissolution of bridge 

System banks are comprehensive, 

unambiguous, and prescriptive.7

This is our second rulemaking within 

the last year to update our 

conservatorship and receivership 

regulations to address changes that 

section 5412 of the 2018 Farm Bill made 

to the Act. In March of 2021, we issued 

a direct final rule that rescinded ten 

regulations in part 627 that section 5412 

of the 2018 Farm Bill superseded and 

rendered obsolete.8 The preamble to the 

direct final rule indicated that future 

rulemakings could revise our 

conservatorship and receivership 

regulations in part 627 to make them 

consistent with new section 5.61C of the 

Act. 

In this phase of the rulemaking, FCA 

proposes to update, restructure, and 

consolidate its regulations governing the 

appointment and role of FCSIC as the 

conservator or receiver of an FCS 

institution, other than Farmer Mac. 

More specifically, the proposed rule 

combines the four remaining 

conservatorship regulations into a single 

regulation, while the three receivership 

regulations that we retained are also 

consolidated together. We believe that 

consolidating and restructuring the 

conservatorship and receivership 

regulations in part 627 will make it 

easier for both FCA examiners and FCS 

institutions to understand and follow 

them. We explain these revisions in 

greater detail in the section-by-section 

analysis below. 

As explained above, section 5.61C(h) 

of the Act establishes unambiguous, 

comprehensive, and prescriptive 

requirements concerning FCA’s 

authority over bridge System banks. For 

this reason, new regulations are not 

necessary to implement FCA’s statutory 

authority regarding bridge System 

banks, and we are not proposing any in 

this rulemaking. Instead, FCA relies on 

its chartering and supervisory powers, 

as well as coordination with FCSIC, to 

fulfill its responsibilities and obligations 

under the Act concerning bridge System 

banks. Other Federal regulators of 

financial institutions, such as the 

Comptroller of the Currency, the NCUA, 

and the FHFA have not enacted 

regulations to implement similar 

statutory provisions. Additionally, 

section 5.61C of the Act grants FCSIC 

authority to organize, control, manage, 

and operate bridge System banks. 

Under this new statutory framework, 

the successor to the bridge System bank 

is created by a: (1) Merger or 

consolidation with an existing System 

institution, (2) sale of the bridge System 

bank’s capital stock and converting its 

charter to that of the new institution, or 

(3) purchase or assumption transaction 

by the replacement institution. At the 

end of this process, FCA cancels the 

bridge System bank’s charter. As noted 

earlier, bridge System banks are a new 

instrument for resolving a failing or 

failed FCS bank. Replacing the bridge 

System bank with a successor FCS 

institution raises novel issues of first 

impression for both FCA and FCSIC.9

Both agencies are exploring and 

consulting about this matter. FCA may 

propose new regulations in the future to 

implement sections 5.61C(h)(9) and 

(h)(10) concerning the processes and 

procedures for replacing a bridge 

System bank with a solvent and viable 

FCS bank. 

Although we are not proposing 

substantive regulations governing the 

chartering, operations, activities, and 

termination of bridge System banks, we 

are introducing the concept into FCA 

regulations for the first time. As 

discussed below, we are adding two 

new regulations that exclude bridge 

System banks, chartered pursuant to 

section 5.61C(h) of the Act, from the 

definitions of FCS institutions and 

System banks. The first place that this 

proposed amendment appears is in 

subpart A of the conservatorship and 

receivership regulations in part 627. We 

also propose to exclude bridge System 

banks from the definitions of ‘‘Farm 

Credit bank’’ and ‘‘Farm Credit 

institutions’’ in part 619, which apply to 

all FCA regulations in chapter VI of the 

Code of Federal Regulations, unless 

specific regulations provide a specific 

and specialized definition of these 

terms. These two amendments are 

consistent with section 5.61C(h)(4) of 

the Act, which states that bridge System 

banks have all corporate powers, and 

are subject to the same provisions of 

law, as any System bank, except for 

specific exceptions enumerated in 

various provisions of section 5.61C(h). 

III. Section-by-Section Analysis 

We discuss the specifics of our 

proposal for part 627 in the same 

chronological order they appear in the 

regulations. Conforming changes to part 


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Federal Register / Vol. 87, No. 64 / Monday, April 4, 2022 / Proposed Rules 19399 

10Section 5411(39) of the 2018 Farm Bill repealed 

title VI of the Act. Subpart B of former title VI of 

the Act established the Farm Credit System 

Financial Assistance Corporation. See Public Law 

115–334, supra at 4683. 

619 appear last in this section-bysection analysis. 

A. Organization 

FCA proposes to restructure, 

redesignate, and renumber the 

regulations in part 627. As noted earlier, 

section 5412 of the 2018 Farm Bill 

strengthened, clarified, and updated 

FCSIC’s conservatorship and 

receivership authorities. As a result, 

new section 5.61C of the Act superseded 

several regulations in part 627 and 

rendered them obsolete. For this reason, 

our recent direct final rule repealed ten 

regulations that were no longer 

consistent with FCSIC’s new statutory 

authorities to administer 

conservatorships and receiverships of 

System institutions. The 2018 Farm Bill 

also realigned and clarified the roles of 

FCA and FCSIC pertaining to the 

conservatorship and receivership of 

failing and failed FCS institutions. 

Accordingly, we are restructuring and 

reorganizing our regulations in part 627 

so they focus on the implementation of 

FCA’s specific conservatorship and 

receivership authorities under section 

4.12(b) and 5.61C of the Act, while 

deferring to FCSIC about how to carry 

out its own statutory authorities. 

Additionally, we propose to 

restructure, reorganize, redesignate, 

renumber, and revise the style and 

language of our regulations in part 627 

to improve their clarity and readability. 

Our intent is to make it easier for FCA 

examiners, System institutions and 

borrowers, and other members of the 

public who may be affected by the 

conservatorship or receivership of an 

FCS institution, to understand, use, and 

rely on these regulations. We do not 

intend to change the substantive 

meaning of the affected regulatory 

provisions unless the preamble 

discussion of a specific provision 

explicitly states otherwise. 

Reorganizing and restructuring the 

conservatorship and receivership 

regulations in part 627 are intended to 

consolidate similar provisions, 

eliminate redundancies, and improve 

their clarity. More specifically, we 

propose to consolidate the four 

remaining conservatorship regulations 

in existing subpart C, §§ 627.2770, 

627.2775, 627.2785, and 627.2790, in a 

single regulation: New § 627.10. 

Similarly, the proposed rule also 

combines the three remaining 

receivership regulations, §§ 627.2720, 

627.2735, and 627.2765 in current 

subpart B, into new § 627.20. As 

explained in greater detail below, both 

proposed §§ 627.10 and 627.20 

implement provisions in sections 

4.12(b) and 5.61C pertaining to FCA’s 

powers and responsibilities when it 

places a System institution into 

conservatorship or receivership. Ten 

separate regulations in part 627 were 

superseded by the 2018 Farm Bill and 

repealed by FCA because authority over 

the priority of claims and other aspects 

relating to the administration and 

management of conservatorships and 

receiverships are now among FCSIC’s 

enhanced powers. For all these reasons, 

consolidating and reorganizing the 

remaining regulations achieves FCA’s 

goal of simplifying, clarifying, and 

making them more user-friendly. 

The proposed rule also reverses the 

chronological order of the existing 

regulations by presenting the 

conservatorship regulation first and the 

receivership regulation second. This 

change is logical from FCA’s perspective 

because: (1) It follows the order and 

flow of section 4.12 of the Act, and (2) 

an institution in conservatorship can be 

placed into receivership if its condition 

worsens. FCA is also simplifying the 

numbering system for the regulations in 

part 627. As a result, these regulations 

will have no more than a two-digit 

number after the decimal point, which 

is consistent with the way FCA has 

numbered regulations in recent years. 

B. Subpart A—General Provisions 

The proposed rule changes the title of 

subpart A from ‘‘General’’ to ‘‘General 

Provisions.’’ Existing §§ 627.2700, 

627.2705, 627.2710, and 627.2715 are 

redesignated as §§ 627.1, 627.2, 627.3, 

and 627.4, respectively. All of the 

amendments are stylistic and nonsubstantive. 

1. Applicability—§ 627.1 

Proposed § 627.1 states that the 

‘‘provisions in this part apply to 

conservatorships, receiverships, and 

voluntary liquidations of System 

institutions chartered under titles I, II, 

III, IV, and VII of the Act.’’ This 

provision is similar, but not identical, to 

existing § 627.2700. The only 

substantive difference is that we 

propose to add specific references to 

System institutions chartered under 

titles I, II, III, IV, and VII of the Act. This 

proposed amendment clarifies that the 

regulations in part 627 do not apply to 

Farmer Mac. Instead, as mentioned 

earlier, the regulations in subpart B of 

part 650 govern the conservatorship, 

receivership, or voluntary liquidation of 

Farmer Mac. 

Separately, we propose two minor 

amendments to redesignated § 627.1, 

which do not substantively change the 

regulation’s meaning. First, the 

proposed rule omits the word ‘‘General’’ 

and the hyphen after it from the title. 

Second, we are making a grammatical 

correction in the first sentence so the 

verb ‘‘apply’’ appears in the present, not 

future, tense. 

2. Definitions—§ 627.2 

The definitions that apply to part 627 

are located in proposed and 

redesignated § 627.2. We propose to 

remove the paragraph designations for 

the definitions in existing § 627.2705 

and instead list these definitions 

alphabetically, which is the practice 

that FCA has followed in recent 

rulemakings. Under this proposal, the 

regulations in part 627 refer to the Farm 

Credit System Insurance Corporation as 

‘‘FCSIC’’ instead of the ‘‘Insurance 

Corporation’’ as they do now. As a 

result, references to FCSIC are the same 

throughout all FCA regulations. We also 

propose to amend the definition of 

‘‘Farm Credit institution(s) or 

institution(s)’’ by: (1) Removing the 

reference to the now-defunct Farm 

Credit System Financial Assistance 

Corporation; 10 and (2) adding a final 

sentence to this provision stating that 

these terms do not include bridge 

System banks chartered by FCA, in 

accordance with section 5.61C(h)(2) of 

the Act. Finally, we propose to improve 

the clarity of the regulatory definitions 

of ‘‘conservator’’ and ‘‘receiver’’ in 

redesignated § 627.2 by adding the 

words ‘‘of a Farm Credit institution’’ at 

the end of each. 

3. Grounds for Appointing FCSIC as 

Conservator or Receiver—§ 627.3 

The proposed rule redesignates 

§ 627.2710 as § 627.3 and amend this 

regulation, which specifies the grounds 

for FCA appointing FCSIC as the 

conservator or receiver of a System 

institution pursuant to sections 4.12(b) 

and 5.61C(l) of the Act. We propose to 

delete outdated provisions in 

redesignated § 627.3 and streamline its 

language so it is concise and clear. 

These proposed amendments are 

technical and stylistic, rather than 

substantive. 

As amended, proposed § 627.3(a) 

provides that FCA may, in its discretion, 

appoint a conservator or receiver of a 

Farm Credit institution if it determines 

that one or more of the conditions in 

§ 627.3(b) exists. FCA must also appoint 

FCSIC as conservator or receiver of a 

Farm Credit institution. We are deleting 

obsolete language in this regulation 

from 1992 that states that FCSIC is the 

‘‘sole entity’’ that FCA can appoint as 


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11We note that section 5.61C(l) of the Act 

establishes a reciprocal requirement on FCSIC. 

According to section 5.61C(l)(2) of the Act, FCSIC 

‘‘acting in the capacity of the Corporation as a 

conservator or receiver, shall consult with the 

[FCA] prior to taking any significant action 

impacting System institutions or service to System 

borrowers.’’ 

conservator or receiver after January 5, 

1993. Proposed § 627.2 identifies which 

FCS institutions are subject to these 

conservatorship and receivership 

regulations. For this reason, we propose 

to remove the reference to ‘‘any bank, 

association, or other institution of the 

System’’ from this provision. Finally, 

we add a new sentence at the end of 

proposed § 627.3(a) to implement new 

section 5.61C(l)(1) of the Act, which 

requires FCA, to the extent practicable, 

to consult with FCSIC before taking a 

pre-resolution action that could result in 

a conservatorship or receivership for a 

distressed FCS institution.11

As before, paragraph (b) of this 

regulation identifies six grounds for 

FCA appointing FCSIC as the 

conservator or receiver of a System 

institution, which derives from section 

4.12(b) of the Act. We are proposing the 

following revisions to redesignated 

§ 627.3, which will bring it into 

conformity with more recent 

amendments to other FCA regulations, 

or make technical, grammatical, or 

language corrections that will improve 

its clarity and readability: 

• In the first sentence of paragraph 

(b)(1), ‘‘in that the assets of the 

institution’’ changes to ‘‘because the 

value of its assets.’’ The reason for this 

revision is that referring to the values of 

the institution’s assets and liabilities 

improves the technical accuracy of this 

provision. Replacing ‘‘in that’’ with 

‘‘because’’ is a plain language and a 

grammatical correction. 

• In the second sentence of paragraph 

(b)(1), which excludes borrower stock 

and allocated equities from the phrase 

‘‘obligations to members,’’ we change 

‘‘shall not’’ to ‘‘does not’’ to improve 

this provision’s clarity by expressing it 

in the present, rather than future tense. 

• In paragraph (b)(2), we replace ‘‘the 

conduct of an unsafe or unsound 

practice’’ with ‘‘one or more unsafe or 

unsound practice(s)’’ which is more 

technically accurate and grammatically 

correct. 

• In the introductory paragraph of 

paragraph (b)(3), we change ‘‘this 

regulation’’ to ‘‘this part’’ because it 

applies to all conservatorship and 

receivership regulations in part 627. 

• Existing paragraph (b)(3)(ii) is 

redesignated as paragraph (b)(3)(i), 

which was previously reserved. Existing 

paragraph (b)(3)(iii) is redesignated as 

paragraph (b)(3)(ii). 

• In redesignated paragraph (b)(3)(i), 

‘‘funding bank’’ replaces ‘‘affiliated 

bank’’ to improve the accuracy and 

clarity of this provision. 

• Existing paragraph (b)(3)(iv) is 

redesignated as paragraph (b)(3)(iii), 

with no other changes. Existing 

paragraph (b)(3)(iv) was previously 

reserved. 

FCA proposes no changes to the 

grounds for appointing FCSIC as the 

conservator or receiver of FCS 

institutions in redesignated § 627.3(b)(4) 

and (5). However, we propose to 

substitute ‘‘A Farm Credit bank’’ for 

‘‘The institution’’ in redesignated 

§ 627.3(b)(6) because only FCS banks 

have authority to issue debt obligations 

insured by FCSIC to fund System loans 

and other assets. 

4. Action for the Removal of the 

Conservator or Receiver—§ 627.4 

The proposed rule redesignates 

§ 627.2715 as § 627.4. This regulation 

implements provisions in section 

4.12(b) of the Act that allows an FCS 

institution, within 30 days after FCA 

appoints FCSIC as its conservator or 

receiver, to bring an action in certain 

United States district courts to remove 

the conservator or receiver. Only the 

board of directors of the institution has 

authority under this regulation to 

initiate an action to remove the 

conservator or receiver. As discussed 

later in greater detail, once an 

institution is placed in conservatorship 

or receivership, all of the powers, rights, 

and privileges of its board, management, 

and employees are transferred to FCSIC, 

and the charter of an institution in 

receivership is canceled. Redesignated 

§ 627.4 carves out an exception so the 

institution’s board subsequent to the 

appointment of FCSIC as conservator or 

receiver can bring this legal action. 

We propose two revisions to 

redesignated § 627.4. First, we 

streamlined the language in the first 

sentence of this regulation and rewrote 

it in the active voice. Second, we 

deleted language that stated that the 

institution’s board is empowered to 

bring an action to remove the 

conservator or receiver in Federal court 

‘‘notwithstanding any other provision in 

subparts B or C of this part.’’ Instead, we 

propose to cross-reference this 

regulation in §§ 627.10 and 627.20. 

C. Subpart B—Conservator and 

Conservatorships 

As discussed above, the proposed rule 

relocates our conservator and 

conservatorship regulations from 

subpart C to subpart B of part 627, and 

it combines the four remaining 

applicable regulations into a single 

regulation. As proposed, redesignated 

§ 627.10 is not substantively different 

from the four regulations it replaces, 

which are existing §§ 627.2770, 

627.2775, 627.2785, and 627.2790. This 

is because the current regulations 

effectively carry out FCA’s statutory 

powers and responsibilities concerning 

the conservatorship of FCS institutions. 

A conservator continues the ongoing 

operations of the financial institution 

while taking measures to preserve its 

assets and restore its financial viability 

so it can resume its normal business 

activities when it emerges from 

conservatorship. The purpose of a 

conservatorship is to resuscitate a 

troubled institution, not to liquidate it. 

In this context, our conservatorship 

regulations implement FCA’s authority 

to: (1) Appoint FCSIC as the conservator 

of a System institution; (2) turn the dayto-day operations of the institution over 

to FCSIC; (3) examine the institution in 

conservatorship; (4) require audits and 

published financial reports of such 

institutions; (5) terminate the 

conservatorship and discharge FCSIC as 

conservator. 

Proposed § 627.10(a) replaces existing 

§ 627.2775 as the regulation governing 

the appointment of the conservator. 

According to proposed § 627.10(a)(1), 

the FCA Board may exercise its 

authority under section 4.12(b) of the 

Act and § 627.3 to appoint FCSIC as the 

conservator of a System institution once 

it finds that one or more of the grounds 

in § 627.3(b) exists. This provision also 

allows FCA to appoint FCSIC as the 

conservator of a System institution ex 

parte and without notice. Proposed 

§ 627.10(a)(1) is substantively the same 

as existing § 627.2775(a). However, we 

propose to change the order and flow of 

this regulatory provision. As rewritten, 

the redesignated rule recognizes that we 

must first find that legal grounds exist 

for appointing the conservator before we 

decide to do so ex parte and without 

notice. This revision makes the 

regulation more logical and easier to 

read and understand. 

Proposed § 627.10(a)(2) is virtually 

the same as the first sentence of existing 

§ 627.2775(b). Upon the appointment of 

the conservator, this regulation requires 

the FCA Chairman to immediately 

notify the affected institution, and if it 

is an association, its funding bank. This 

regulation also requires FCA to publish 

notice in the Federal Register whenever 

it appoints FCSIC as the conservator of 

a System institution. The proposed rule 

makes two non-substantive, stylistic 

changes to this regulation. First, we 

propose to change ‘‘district bank’’ to 


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‘‘funding bank.’’ Second, the provision 

about publishing the notice in the 

Federal Register becomes a separate 

sentence in proposed § 627.10(a)(2). We 

propose to delete the rest of existing 

§ 627.2775(b), which requires FCSIC to 

notify all holders of the institution’s 

voting stock and participation 

certificates, by first class mail, about the 

establishment of the conservatorship, 

and its effects on the: (1) Institution’s 

operations, and (2) borrowers’ loans and 

equity holdings. Section 5.61C 

strengthened FCSIC’s powers as the 

conservator of FCS institutions, and 

under the circumstances, FCA 

regulations should not instruct FCSIC 

how to administer conservatorships 

unless a specific statutory provision 

explicitly requires us to do so. Providing 

notice and information to the 

shareholders of System institutions 

about how a conservatorship will affect 

them is now within FCSIC’s 

jurisdiction. 

Proposed § 627.10(b) addresses FCA’s 

responsibilities, powers, and 

prerogatives once it places an FCS 

institution into conservatorship. It 

incorporates many of the provisions that 

are currently scattered throughout 

existing §§ 627.2775 and 627.2785. 

We propose to redesignate existing 

§ 627.2775(c) as § 627.10(b)(1). 

According to this regulation, once the 

FCA Board issues an order placing an 

FCS institution into conservatorship, all 

rights, privileges, and powers of its 

members, board of directors, and 

employees are transferred to and vested 

exclusively in FCSIC as conservator. 

Except for a few insignificant word 

changes, both versions of this regulation 

are identical in substance and meaning. 

The proposed rule, however, adds a 

passage at the end of redesignated 

§ 627.10(b)(1) that states ‘‘the board of 

directors of the institution retains 

authority to initiate an action in Federal 

court to remove the conservator 

pursuant to proposed § 627.4.’’ As 

explained in the preamble to § 627.4, 

this provision replaces the more 

ambiguous ‘‘notwithstanding’’ passage 

in existing § 627.2715. 

FCA proposes to transfer all but one 

of the provisions in existing § 627.2785 

to the next four paragraphs of 

redesignated § 627.10(b). The existing 

regulation establishes requirements 

concerning the inventory, examination, 

auditing, and financial reporting of a 

System institution in conservatorship. 

First, we propose to repeal 

§ 627.2785(a), which requires the 

conservator to take an inventory of the 

assets and liabilities of the institution 

from the date that FCA places it into 

conservatorship. This regulatory 

provision also requires the conservator 

to file one copy of the inventory with 

FCA. Conducting an inventory of the 

assets and liabilities of a System 

institution in conservatorship falls 

within FCSIC’s new powers and duties 

under section 5.61C(b) of the Act. 

Indeed, it is routine practice for 

conservators to conduct inventories of 

the assets and liabilities of the financial 

institution immediately after 

appointment. FCA has the right to 

obtain a copy of the inventory because 

a System institution in conservatorship 

is still chartered as an ongoing FCS 

institution and remains subject to FCA 

examination, supervision, and 

regulation. Yet, FCA regulations apply 

to FCS institutions, including those in 

conservatorship, but not to FCSIC. FCA 

still has authority under the 2018 Farm 

Bill to receive a copy of the 

conservator’s inventory of the 

institution’s assets and liabilities. 

However, in light of the new legislation, 

a regulation is no longer necessary to 

require FCSIC, as conservator, to 

conduct the inventory and share a copy 

of it with us. 

The proposed rule redesignates 

existing § 627.2785(b), which confirms 

FCA’s authority to examine an 

institution in conservatorship pursuant 

to section 5.19 of the Act, as 

§ 627.10(b)(2). Similarly, the 

requirement in § 627.2785(b) that a 

certified public accountant audit a 

System institution in conservatorship 

pursuant to part 621 becomes a separate 

regulatory provision, which we 

redesignate as § 627.10(b)(3). We also 

rewrote these two provisions in the 

active voice. Although these revisions 

improve the clarity and readability of 

these provisions, they do not change the 

substantive meaning or scope of these 

regulatory requirements. 

The proposed rule also redesignates 

existing § 627.2785(c) and (d) as 

§ 627.10(b)(4) and (5), respectively. 

Proposed and redesignated 

§ 627.10(b)(4) continues to require each 

System institution in conservatorship to 

file the financial reports required by 

part 621. Under § 621.14, each System 

institution must certify that its financial 

reports have been prepared in 

accordance with applicable regulations 

and instructions, and they are a true and 

accurate representation of the 

institution’s financial condition and 

performance. Additionally, § 621.14 also 

requires an officer of the institution to 

certify these financial reports. Since 

FCSIC replaces the management of an 

FCS institution in conservatorship, 

FCSIC is required by both existing 

§ 627.2785(c) and redesignated 

§ 627.10(b)(4) to certify the reports of 

financial conditions that the institution 

submits to FCA. The proposed rule 

condenses the two sentences in existing 

§ 627.2785(c) into a single, shorter 

sentence, without changing its meaning. 

Existing § 627.2785(d) requires System 

institutions in conservatorship to 

prepare and publish financial reports for 

their shareholders in accordance with 

part 620. Under this regulation, the 

conservator must sign and certify the 

disclosures that the institution’s former 

board of directors or management 

previously provided to shareholders 

pursuant to § 620.3. The substance and 

meaning of redesignated § 627.10(b)(5) 

is the same as the existing regulation. 

However, we shortened the passage 

requiring FCSIC, as conservator, to sign 

and certify the disclosure to the 

institution’s shareholders. 

Proposed § 627.10(c) addresses the 

termination of the conservatorship. 

Essentially, a conservatorship ends in 

one of two ways. In the first scenario, 

the conservatorship corrects and 

resolves the problems and conditions 

that beleaguered the institution, and 

FCA determines that it is ready to 

resume normal operations under new 

management. In the alternative, the 

institution’s conditions continue to 

deteriorate, and FCA decides to place it 

into receivership. In this scenario, FCA 

appoints FCSIC as the receiver, and 

FCSIC determines the best course of 

action for liquidating and resolving the 

institution, as we will discuss in greater 

detail below. 

Proposed § 627.10(c) is a restatement 

of the last two sentences of existing 

§ 627.2770(a). Under proposed 

§ 627.10(c)(1), the FCA Board may 

terminate the conservatorship by 

determining that the institution is in a 

position to resume normal operations. 

In this situation, our Board will instruct 

FCSIC to turn the institution’s 

operations over to management that we 

designate. Once new management is in 

place, the conservatorship terminates 

and FCA discharges FCSIC as 

conservator. In the alternative, the 

conservatorship will end when the FCA 

places the institution in receivership 

and appoints FCSIC as receiver 

pursuant to § 627.10(c)(2). The proposed 

rule makes minor wording changes to 

the current regulatory provisions but 

does not change their meaning. 

We propose to rescind the 

requirement in existing § 627.2790 that 

FCSIC submit a report to FCA on its 

conservatorship activities before its 

discharge as the institution’s 

conservator. Filing a report is not a 

statutory requirement for terminating a 

conservatorship. FCA and FCSIC will 

jointly determine what documentation 


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12This commenter expressed concerns that 

canceling the charter at the same time that FCA 

appoints the receiver ‘‘clouds’’ the issue of whether 

the institution had standing to challenge the 

receivership. FCA rejected this claim because 

section 4.12(b) of the Act expressly authorizes the 

institutions’ board to challenge the receivership in 

Federal court and seek removal of the receiver 

within 30 days after appointment. See 57 FR 46482 

(Oct. 9, 1992). 

13 Id. 

14 Id. 15Section 4.37 of the Act requires that money of 

a borrower held in an uninsured voluntary or 

involuntary account at a System institution must be 

immediately applied as payment against the 

borrower’s outstanding loans if the institution is 

placed in liquidation. This statutory provision also 

requires FCA to enact regulations that: (1) Define 

the term ‘‘uninsured voluntary or involuntary 

account’’; and (2) effectively carry out section 4.37 

of the Act. 

is appropriate to share at the end of the 

conservatorship. 

D. Subpart C—Receiver and 

Receiverships 

FCA proposes to consolidate its 

remaining receivership regulations into 

a single regulation, § 627.20, and 

transfer it from subpart B to subpart C 

of part 627. To a large extent, proposed 

and redesignated § 627.20 follows the 

same format and structure as the revised 

conservatorship regulation, § 627.20. 

However, a receivership is 

fundamentally different from a 

conservatorship. A receivership 

liquidates and resolves a failing 

institution rather than correcting its 

problems. For this reason, there are 

some key distinctions between these 

two regulations, and many of the 

amendments that we propose to the 

receivership regulation are more 

substantive than those for the 

conservatorship regulation. 

Proposed § 627.20(a) addresses FCA’s 

appointment of FCSIC as the receiver of 

an FCS institution. Paragraph (a)(1) of 

proposed § 627.20(a) states that the FCA 

Board ‘‘may exercise its authority under 

section 4.12(b) of the Act and § 627.3 to 

appoint FCSIC as the receiver of an FCS 

institution upon finding that one or 

more of the grounds identified in 

§ 627.3(b) exists.’’ Under proposed 

§ 627.20(a)(1), the FCA Board may 

appoint FCSIC as the receiver of any 

System institution ex parte and without 

notice. 

In this context, § 627.20(a)(1) is 

virtually identical to § 627.10(a)(1), 

which is the corresponding provision in 

the proposed conservatorship regulation 

above. The proposed rule also makes the 

same technical and stylistic changes to 

the existing receivership regulation, 

§ 627.20(a), as it does to the current 

conservatorship regulation. We 

explained the reasons for these changes 

in the preamble to § 627.10(a)(1), which 

discusses the appointment of a 

conservator, and the same rationale 

applies to the appointment of receiver 

under proposed § 627.20(a)(1). 

Upon the appointment of FCSIC as 

receiver, proposed § 627.20(a)(2) 

requires FCA’s Chairman to 

immediately notify the affected 

institution and its funding bank if it is 

an association. This regulation also 

requires FCA to publish a notice in the 

Federal Register whenever it appoints 

FCSIC as the conservator of a System 

institution. Again, the technical changes 

we propose for this provision mirror our 

proposed changes to redesignated 

§ 627.10(a)(2), which is the companion 

provision in the conservatorship 

regulations. The explanation and 

rationale for these changes in the 

applicable preamble passage for the 

conservatorship regulations above apply 

to this receivership regulation as well. 

The proposed rule redesignates 

existing § 627.2720(d) as § 627.20(b). 

This regulation continues to require the 

funding bank, in the event of a 

voluntary or involuntary liquidation of 

an affiliated association, to institute 

appropriate measures to minimize the 

adverse effect of liquidation on those 

borrowers whose loans are purchased or 

otherwise transferred to another 

institution. At this time, we propose 

only two minor word changes to this 

provision. As noted earlier, FCA does 

not propose substantive amendments to 

its voluntary liquidation regulations in 

this rulemaking. For this reason, 

redesignated § 627.20(b) continues to 

apply to both voluntary liquidations and 

receiverships for the time being. 

The proposed rule, which 

redesignates existing § 627.2720(e) as 

§ 627.20(c), continues to state that ‘‘all 

rights, privileges, and powers of its 

members, the board of directors, 

officers, and employees are transferred 

to and vested exclusively in FCSIC’’ 

once the FCA Board issues the order 

that places it into receivership. The 

proposed rule adds a provision at the 

end § 627.20(c)(1) that carves out an 

exception that enables the board of 

directors of the institution to initiate an 

action in Federal court to remove the 

receiver pursuant to § 627.4. The 

reasons for these changes have already 

been explained twice above. 

Proposed § 627.20(c)(2) revises the 

last sentence of existing § 627.2720(e). 

This provision pertains to the 

cancelation of a System institution’s 

charter when the FCA appoints FCSIC 

as its receiver. Under the existing 

regulation, FCA may cancel the charter 

either simultaneously or at any time 

thereafter. Research reveals that in 1992 

we added the provision to the final rule 

that allows us to cancel the charter at a 

later time in response to a comment 

from a System trade association.12 FCA 

decided that the final rule should 

provide flexibility so it could consider 

the merits about when to cancel the 

charter on a case-by-case basis.13

However, the preamble expressed FCA’s 

expectation that it would ordinarily 

cancel the charter when it appointed 

FCSIC as the receiver of a System 

institution.14

We propose to amend this provision 

to require cancelation of the charter 

when FCSIC is appointed as the 

institution’s receiver. Canceling the 

charter means that the institution is out 

of business and undergoing liquidation 

and resolution. A ‘‘live’’ corporate 

charter is inconsistent with the rights, 

powers, and duties of the receiver in 

section 5.61C of the Act, as added by 

Congress in 2018. As long as the charter 

is active, the institution is not defunct 

as a matter of law, and FCSIC’s 

authority and ability to resolve the 

estate by disposing of its assets and 

liabilities can more easily be challenged 

by creditors, shareholder-members, and 

other parties, contrary to Congressional 

intent to provide for an orderly 

liquidation process comparable to that 

of other federally chartered financial 

institutions. Federal statutes comparable 

to section 4.12(b) of the Act permit 

commercial banks, credit unions, and 

Federal Home Loan Banks to challenge, 

in Federal court, decisions by the three 

Federal banking regulatory agencies, the 

NCUA, and FHFA to appoint receivers 

and seek their removal. These agencies 

cancel the charters of institutions they 

supervise at the time they place them 

into receivership to ensure an orderly 

liquidation and resolution. 

Redesignated and amended 

§ 627.20(d) implements section 4.37 of 

the Act,15 which addresses the 

treatment of uninsured voluntary and 

involuntary accounts of a System 

institution that is in receivership. As 

revised, this regulation provides that 

once the FCA Board has placed an 

institution into receivership, FCSIC, in 

accordance with section 4.37 of the Act, 

will, as soon as practicable, notify every 

borrower who holds an uninsured 

voluntary or involuntary account, as 

described in § 614.4175, at the 

institution that: (1) [s]uch accounts 

ceased earning interest from the date 

that the FCA Board placed the 

institution into receivership; and (2) 

FCSIC, as receiver, will immediately 

apply the funds in a borrower’s 

account(s) as payment against the 

outstanding balance of the borrower’s 

loan(s). The only substantive 


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amendment we propose to this 

regulation is to delete the provision in 

existing § 627.2735(a) that allows the 

borrower, within 15 days of receiving 

the notice, to direct FCSIC to apply the 

funds in the account for some other 

purpose specified in the loan 

documents. We propose to delete this 

provision because these accounts are 

uninsured and unsecured, and section 

4.37 of the Act explicitly states that 

these funds must be applied to reduce 

the outstanding balance of the 

borrower’s loans. All other proposed 

changes to this regulation are designed 

to improve its readability and clarity. 

Section 4.37 requires FCA to enact 

regulations about how uninsured 

voluntary and involuntary accounts at 

System institutions in receivership are 

to be resolved by FCSIC, as receiver. For 

this reason, redesignated § 627.20(d) 

specifies how FCSIC will address the 

resolution of these specific liabilities of 

an FCS institution in receivership. 

FCA proposes to repeal existing 

§ 627.2735(b), which requires FCSIC to 

provide certain notices to the 

stockholders of FCS institutions in 

liquidation. Existing § 627.2735(b) is not 

needed to implement statutory 

provisions that protect the rights of 

borrowers. Section 4.9A(c) of the Act, 

which requires FCSIC to retire borrower 

stock at par at a System institution in 

receivership, provides clear and 

unambiguous guidance to FCSIC. 

Finally, redesignated § 627.20(e) is a 

restatement of existing § 627.2765, 

which addresses the final discharge and 

release of the receiver. According to this 

regulation, a receivership terminates 

once FCSIC makes a final distribution of 

the assets of the liquidated institution. 

At that time, the regulation specifies 

that FCA’s Board will cancel the charter 

if it has not done so earlier, and it 

completely and finally releases and 

discharges the receiver. The proposed 

rule removes a provision in the existing 

regulation that states that FCA will 

cancel the charter if it has not done so 

previously because, as discussed earlier, 

proposed § 627.20(c)(2) requires FCA to 

cancel the charter when the FCA Board 

places the institution in receivership. 

E. Conforming Amendments 

We propose conforming amendments 

to other regulations in parts 619 and 

627. 

1. Definitions in Part 619 

Our regulations in part 619 define 

terms that apply to all FCA regulations 

unless a part, subpart, or section states 

a different definition applies. We 

propose to amend the definitions of 

‘‘Farm Credit bank’’ in § 619.9140 and 

‘‘Farm Credit institutions’’ in 

§ 619.9146, so both terms explicitly 

exclude bridge System banks that FCA 

charters at FCSIC’s request under 

section 5.61C(h)(2) of the Act. As 

discussed in great detail above, bridge 

System banks are vehicles to resolve 

FCS banks. These conforming 

amendments to §§ 619.9140 and 

619.9146 explicitly exempt bridge 

System banks from FCA regulations that 

govern the activities and operations of 

ongoing FCS institutions. Thus, FCA 

regulations governing the organization 

and governance, capitalization, funding, 

and other activities of other System 

institutions do not apply to bridge 

System banks unless we enact a 

regulation in part 627 or elsewhere that 

explicitly states otherwise. 

Separately, we propose to delete the 

explicit reference to the Funding 

Corporation from the definition of the 

‘‘Farm Credit institution’’ in § 619.9146. 

The reason for this revision is that 

section 5411(2) of the 2018 Farm Bill 

amended section 1.2(a) of the Act to 

expressly identify the Funding 

Corporation as a System institution. 

2. B. Voluntary Liquidation Regulations 

in Subpart D of Part 627 

We noted earlier that FCA does not 

propose to revise its voluntary 

liquidation regulations in subpart D of 

part 627. However, we propose nonsubstantive conforming amendments, so 

these regulations are consistent with 

other changes to conservatorship and 

receivership regulations in part 627. 

First, we propose to renumber the two 

regulations in subpart D so they 

conform to numbering changes we are 

making to subparts A, B, and C of part 

627. As a result, this proposed rule 

redesignates § 627.2795 as § 627.40 and 

§ 627.2797 as § 627.41. Second, the 

proposed rule changes the reference to 

‘‘subpart B’’ in redesignated § 627.40(a) 

to ‘‘subpart C’’ because we propose to 

relocate our receivership regulations to 

subpart C. Finally, we propose to 

remove the passage at the end of the 

final sentence in existing § 627.2797(a), 

which states, ‘‘except that if the Farm 

Credit institution is placed in 

receivership, the provisions of 

§ 627.2730(a) shall govern further 

disposition of the equities of the Farm 

Credit institution.’’ We are deleting this 

passage because the direct final rule that 

FCA enacted in 2021 repealed 

§ 627.2730. 

IV. Regulatory Flexibility Act and 

Congressional Review Act Conclusions 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), FCA hereby certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the Farm Credit System, 

considered together with its affiliated 

associations, has assets and annual 

income in excess of the amounts that 

would qualify them as small entities. 

Therefore, Farm Credit System 

institutions are not ‘‘small entities’’ as 

defined in the Regulatory Flexibility 

Act. 

List of Subjects 

12 CFR Part 619 

Agriculture, Banks, banking, Rural 

areas. 

12 CFR Part 627 

Agriculture, Banks, banking, Claims, 

Rural areas. 

For the reasons stated in the 

preamble, parts 619 and 627 of chapter 

VI, title 12 of the Code of Federal 

Regulations are proposed to be amended 

as follows: 

PART 619—DEFINITIONS 

■ 1. The authority citation for part 619 

is revised to read as follows: 

Authority: Secs. 1.4, 1.5, 1.7, 2.1, 2.2, 2.4, 

2.11, 2.12, 3.1, 3.2, 4.9, 5.9, 5.17, 5.19, 5.61C, 

7.0, 7.1, 7.6, 7.8 and 7.12 of the Farm Credit 

Act (12 U.S.C. 2012, 2013, 2015, 2072, 2073, 

2075, 2092, 2093, 2122, 2123, 2160, 2243, 

2252, 2254, 2279a, 2279a–1, 2279b, 2279c–1, 

2279f); sec. 514, Pub. L. 102–552, 106 Stat. 

4102. 

■ 2. Revise § 619.9140 to read as 

follows: 

§ 619.9140 Farm Credit bank(s). 

Except as otherwise defined, the term 

Farm Credit bank(s) includes Farm 

Credit Banks, agricultural credit banks, 

and banks for cooperatives, but excludes 

bridge System banks chartered by the 

Farm Credit Administration Board 

pursuant to section 5.61C(h)(2) of the 

Act. 

■ 3. Revise § 619.9146 to read as 

follows: 

§ 619.9146 Farm Credit institutions. 

Except as otherwise defined, the term 

Farm Credit institutions refers to all 

institutions that are identified in section 

1.2 of the Act and are chartered and 

regulated by the Farm Credit 

Administration, but it excludes bridge 

System banks chartered by the Farm 

Credit Administration Board pursuant 

to section 5.61C(h)(2) of the Act. 


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PART 627—TITLE IV CONSERVATORS, 

RECEIVERS, AND VOLUNTARY 

LIQUIDATIONS 

■ 4. The authority citation for part 627 

is revised to read as follows: 

Authority: Secs. 4.2, 5.9, 5.10, 5.17, 5.51, 

5.58, 5.61, 5.61C of the Farm Credit Act (12 

U.S.C. 2183, 2243, 2244, 2252, 2277a, 2277a– 

7, 2277a–10, 2277a–10c). 

■ 5. Subparts A, B, and C are revised to 

read as follows: 

Subpart A—General Provisions 

Sec. 

627.1 Applicability. 

627.2 Definitions. 

627.3 Grounds for appointing FCSIC as 

conservator or receiver. 

627.4 Action for the removal of the 

conservator or receiver. 

Subpart B—Conservator and 

Conservatorships 

627.10 FCSIC as conservator. 

Subpart C—Receiver and 

Receiverships 

627.20 FCSIC as receiver. 

* * * * * 

Subpart A—General Provisions 

§ 627.1 Applicability. 

The provisions of this part apply to 

conservatorships, receiverships, and 

voluntary liquidations of System 

institutions chartered under titles I, II, 

III, IV, and VII of the Act. 

§ 627.2 Definitions. 

For the purposes of this part, the 

following definitions apply: 

Act means the Farm Credit Act of 

1971, as amended. 

Conservator means the Farm Credit 

System Insurance Corporation acting in 

its capacity as the conservator of a Farm 

Credit institution. 

Farm Credit institution(s) or 

institution(s) means all Farm Credit 

banks, associations, service corporations 

chartered under title IV of the Act, and 

the Federal Farm Credit Banks Funding 

Corporation. These two terms do not 

include any bridge System bank 

chartered by the Farm Credit 

Administration (FCA), in accordance 

with section 5.61C(h)(2) of the Act. 

FCSIC means the Farm Credit System 

Insurance Corporation. 

Receiver means FCSIC acting in its 

capacity as the receiver of a Farm Credit 

institution. 

§ 627.3 Grounds for appointing FCSIC as 

conservator or receiver. 

(a) FCA may, in its discretion, appoint 

a conservator or receiver of a Farm 

Credit institution if it determines that 

one or more of the grounds in paragraph 

(b) of this section exists. FCA must 

appoint FCSIC as conservator or 

receiver of a Farm Credit institution. To 

the extent practicable, FCA will consult 

with FCSIC before taking a preresolution action that may result in a 

conservatorship or receivership of a 

Farm Credit institution. 

(b) The grounds for appointing FCSIC 

as a conservator or receiver of a System 

institution are: 

(1) The institution is insolvent 

because the value of its assets is less 

than its obligations to creditors and 

others, including its members. For the 

purpose of determining insolvency, 

‘‘obligations to members’’ does not 

include stock or allocated equites held 

by current or former borrowers. 

(2) There has been a substantial 

dissipation of assets or earnings of the 

institution due to the violation of any 

law, rule, or regulation, or one or more 

unsafe or unsound practice(s). 

(3) The institution is in an unsafe or 

unsound condition to transact business, 

including having insufficient capital 

levels or otherwise. For the purpose of 

this part, ‘‘unsafe or unsound 

condition’’ includes, but is not limited 

to, the following conditions: 

(i) For associations, a default by the 

association of one or more terms of its 

general financing agreement with its 

funding bank that the Farm Credit 

Administration determines to be a 

material default; 

(ii) For all institutions, permanent 

capital of less than one-half the 

minimum required level for the 

institution; or 

(iii) For associations, stock 

impairment. 

(4) The institution has committed a 

willful violation of a final cease and 

desist order issued by the Farm Credit 

Administration Board. 

(5) The institution is concealing its 

books, papers, records, or assets, or is 

refusing to submit its books, papers, 

records, assets, or other material relating 

to the affairs of the institution for 

inspection to any examiner or to any 

lawful agent of the Farm Credit 

Administration Board. 

(6) A Farm Credit bank is unable to 

make a timely payment of principal or 

interest on any insured obligation(s) 

defined in section 5.51(3) of the Act 

issued by the bank individually, or on 

which it is primarily liable. 

§ 627.4 Action for the removal of the 

conservator or receiver. 

Within 30 days after the Farm Credit 

Administration Board appoints FCSIC 

as the conservator or receiver of a Farm 

Credit institution pursuant to § 627.3, 

the institution may bring an action in 

the United States District Court for the 

judicial district in which its home office 

is located, or the United States District 

Court for the District of Columbia, for an 

order requiring the Farm Credit 

Administration Board to remove such 

conservator or receiver and, if the 

charter has been canceled, to rescind the 

cancellation of the charter. The 

institution’s board of directors is 

empowered to meet subsequent to the 

appointment of a conservator or receiver 

and authorize the filing of an action in 

Federal court to remove the conservator 

or receiver. Only the institution’s board 

of directors has the power to authorize 

an action to remove the conservator or 

receiver. 

Subpart B—Conservator and 

Conservatorships 

§ 627.10 FCSIC as conservator. 

(a) Appointment. (1) The Farm Credit 

Administration Board may exercise its 

authority under section 4.12(b) of the 

Act and § 627.3 to appoint FCSIC as the 

conservator of a Farm Credit institution 

upon finding that one or more of the 

grounds identified in § 627.3(b) exists. 

The Farm Credit Administration Board 

may appoint, ex parte and without 

notice, FCSIC as conservator for any 

Farm Credit institution. 

(2) Upon appointing FCSIC as the 

conservator of an institution, the 

Chairman of the Farm Credit 

Administration shall immediately notify 

such institution and, in the case of an 

association, its funding bank. The Farm 

Credit Administration will immediately 

publish notice of the appointment of the 

conservator in the Federal Register. 

(b) Conservatorship. (1) Once the 

Farm Credit Administration Board 

issues the order placing a Farm Credit 

institution in conservatorship, all rights, 

privileges, and powers of its members, 

board of directors, officers, and 

employees, are transferred to and vested 

exclusively in FCSIC as conservator, 

except that the board of directors of the 

institution retains authority to initiate 

an action in a Federal district court to 

remove the conservator pursuant to 

§ 627.4. 

(2) The Farm Credit Administration 

will continue to examine Farm Credit 

institutions in conservatorship in 

accordance with section 5.19 of the Act. 

(3) A qualified public accountant 

must audit a Farm Credit institution in 

conservatorship in accordance with part 

621 of this chapter. 

(4) Pursuant to the requirements of 

part 621 of this chapter, each institution 

in conservatorship must prepare and file 


khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 87, No. 64 / Monday, April 4, 2022 / Proposed Rules 19405 

with the Farm Credit Administration 

financial reports, certified by FCSIC, as 

required by § 621.14. 

(5) Each institution in conservatorship 

must prepare and issue published 

financial reports in accordance with the 

requirements of part 620 of this chapter. 

FCSIC, as the conservator of the 

institution, will provide the signatures 

and certifications required by § 620.3. 

(c) Termination of the 

conservatorship. (1) Whenever the Farm 

Credit Administration Board determines 

that the problem(s) or condition(s) that 

led to the conservatorship have been 

corrected and resolved, and the 

institution is in a position to resume 

normal operations, it may terminate the 

conservatorship and direct FCSIC to 

turn over the institution’s operations to 

such management that FCA designates. 

Once new management is in place, the 

conservatorship terminates and FCA 

discharges FCSIC as conservator; or 

(2) Whenever the Farm Credit 

Administration Board determines that 

the institution should be placed in 

receivership, the Farm Credit 

Administration Board will appoint 

FCSIC as the receiver of such 

institution. 

Subpart C—Receiver and 

Receiverships 

§ 627.20 FCSIC as receiver. 

(a) Appointment. (1) The Farm Credit 

Administration Board may exercise its 

authority under section 4.12(b) of the 

Act and § 627.3 to appoint FCSIC as the 

receiver of a Farm Credit institution 

upon finding that one or more of the 

grounds identified in § 627.3(b) exists. 

The Farm Credit Administration Board 

may appoint, ex parte and without 

notice, FCSIC as receiver for any Farm 

Credit institution. 

(2) Upon appointing FCSIC as the 

receiver of an institution, the Chairman 

of the Farm Credit Administration shall 

immediately notify such institution and, 

in the case of an association, its funding 

bank. The Farm Credit Administration 

will immediately publish notice of the 

appointment of the receiver in the 

Federal Register. 

(b) Funding bank role for association 

in liquidation. In the event of the 

voluntary or involuntary liquidation of 

an association, the funding bank must 

institute appropriate measures to 

minimize the adverse effect of the 

liquidation on those borrowers whose 

loans are purchased by, or otherwise 

transferred to another System 

institution. 

(c) Receivership. (1) Once the Farm 

Credit Administration Board issues the 

order placing a Farm Credit institution 

in receivership, all rights, privileges, 

and powers of its members, the board of 

directors, officers, and employees, are 

transferred to and vested exclusively in 

FCSIC as receiver, except that the 

institution’s board of directors retains 

authority to initiate an action in a 

Federal district court to remove the 

receiver pursuant to § 627.4. 

(2) The Farm Credit Administration 

Board simultaneously will cancel the 

charter of the institution when it 

appoints FCSIC as receiver. 

(d) Uninsured accounts. Once the 

Farm Credit Administration Board has 

placed an institution into receivership, 

FCSIC, in accordance with section 4.37 

of the Act, will, as soon as practicable, 

notify every borrower who holds an 

uninsured voluntary or involuntary 

account, as described in § 614.4175 of 

this chapter, at the institution that: 

(1) Such accounts ceased earning 

interest from the date that the Farm 

Credit Administration Board placed the 

institution into receivership; and 

(2) FCSIC, as receiver, will 

immediately apply the funds in a 

borrower’s uninsured account(s) as 

payment against the outstanding 

balance of the borrower’s loan(s). 

(e) Final discharge and release of the 

receiver. The receivership terminates 

after FCSIC makes a final distribution of 

the assets of the liquidated institution. 

Then, the Farm Credit Administration 

Board will completely and finally 

release and discharge the receiver. 

§ 627.2795 [Redesignated as § 627.40] 

■ 6. Redesignate § 627.2795 as § 627.40. 

§ 627.40 [Amended] 

■ 7. In newly redesignated § 627.40(a), 

remove ‘‘subpart B’’ and add ‘‘subpart 

C’’ in its place. 

§ 627.2797 [Redesignated as § 627.41] 

■ 8. Redesignate § 627.2797 as § 627.41. 

§ 627.41 [Amended] 

■ 9. In newly redesignated § 627.41, 

revise the last sentence in paragraph (a) 

to read as follows: 

§ 627.41 Preservation of equity. 

(a) * * * In the event the resolution 

to liquidate is approved by the 

stockholders of the Farm Credit 

institution and the liquidation plan is 

approved by the Farm Credit 

Administration Board, the liquidation 

plan shall govern disposition of the 

equities of the Farm Credit institution. 

* * * * * 

Dated: March 17, 2022. 

Ashley Waldron, 

Secretary, Farm Credit Administration Board. 

[FR Doc. 2022–05999 Filed 4–1–22; 8:45 am] 

BILLING CODE 6705–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2022–0384; Project 

Identifier AD–2022–00027–E] 

RIN 2120–AA64 

Airworthiness Directives; Pratt & 

Whitney Turbofan Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to 

supersede Airworthiness Directive (AD) 

2021–14–06, which applies to all Pratt 

& Whitney (PW) PW1519G, PW1521G, 

PW1521G–3, PW1521GA, PW1524G, 

PW1524G–3, PW1525G, PW1525G–3, 

PW1919G, PW1921G, PW1922G, 

PW1923G, and PW1923G–A model 

turbofan engines. AD 2021–14–06 

requires repetitive borescope 

inspections (BSI) of certain low-pressure 

compressor (LPC) rotor 1 (R1) until 

replacement of electronic engine control 

(EEC) full authority digital electronic 

control (FADEC) software with updated 

software. AD 2021–14–06 also requires 

a BSI after installation of the updated 

EEC FADEC software if certain Onboard 

Maintenance Message fault codes are 

displayed and meet specified criteria. 

AD 2021–14–06 also requires, 

depending on the results of the BSI, 

replacement of the LPC R1. Since the 

FAA issued AD 2021–14–06, the 

manufacturer redesigned the 

compressor intermediate case (CIC) 

assembly to incorporate a shortened 

bleed duct configuration and updated 

the EEC FADEC software. This proposed 

AD would continue to require repetitive 

BSI of certain LPC R1s until 

replacement of EEC FADEC software 

with updated software and also a BSI 

after installation of the updated EEC 

FADEC software if certain Onboard 

Maintenance Message fault codes are 

displayed and meet specified criteria. 

This proposed AD would continue to 

require, depending on the results of the 

BSI, replacement of the LPC R1. This 

proposed AD would also require 

removal and replacement of the existing 

CIC assembly with a CIC assembly 

eligible for installation. The FAA is 


khammond on DSKJM1Z7X2PROD with PROPOSALS