[Federal Register Volume 62, Number 56 (Monday, March 24, 1997)]
[Proposed Rules]
[Pages 13842-13846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7355]


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FARM CREDIT ADMINISTRATION

12 CFR Parts 614 and 627

RIN 3502-AB09


Loan Policies and Operations; Title IV Conservators, Receivers, 
and Voluntary Liquidation

AGENCY: Farm Credit Administration.

ACTION: Proposed rule.

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SUMMARY: The Farm Credit Administration (FCA) through the Farm Credit 
Administration Board (Board) proposes to amend the current regulation 
in part 614 that governs the funding relationship between a Farm Credit 
Bank (FCB) or agricultural credit bank (ACB) and a direct lender 
association or other financing institution (OFI). This proposal would 
repeal the existing requirement for FCA prior approval of the General 
Financing Agreement (GFA) between an FCB or ACB and a direct lender 
association or OFI and eliminate a specific regulatory direct loan 
limitation. The proposed rule would also amend part 627 to authorize 
the voluntary liquidation of Farm Credit institutions by means of an 
FCA-approved liquidation plan.

DATES: Comments should be received on or before May 23, 1997.

ADDRESSES: Comments may be mailed or delivered to Patricia W. DiMuzio, 
Director, Regulation Development Division, Office of Policy Development 
and Risk Control, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090 or by facsimile at (703) 734-5784. Comments may 
also be submitted via electronic mail to <a href="/cdn-cgi/l/email-protection#f29292809795df919d9f9fb2949193dc959d84">``<span class="__cf_email__" data-cfemail="cbb9aeace6a8a4a6a68bada8aae5aca4bd">[email protected]</span></a>.'' Copies 
of all communications received will be available for review by 
interested parties in the Office of Policy Development and Risk 
Control, Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT:

S. Robert Coleman, Policy Analyst, Regulation Development Division, 
Office of Policy Development and Risk Control, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4498,

      or

James M. Morris, Senior Attorney, Legal Counsel Division, Office of 
General Counsel, Farm Credit Administration,

[[Page 13843]]

McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION:

I. Background

    The FCA proposes to amend the regulation in subpart C of part 614 
that governs the funding relationship between FCBs and ACBs that 
operate under title I of the Farm Credit Act of 1971, as amended, (Act) 
and direct lender associations. The amendment of this regulation is a 
part of FCA's continuing effort to streamline its regulations. The GFA 
establishes the lending relationship between an FCB or ACB and a direct 
lender association or OFI. The GFAs were initially developed in the 
late 1960s and early 1970s when Federal intermediate credit banks 
(FICBs) and production credit associations (PCAs) converted their 
lending relationship from individual loan discounting to the direct 
loan method for funding short- and intermediate-term credit.
    The GFAs developed in the 1970s gave FICBs extensive authority over 
most aspects of PCA operations. The Farm Credit Amendments Act of 1985 
<SUP>1 changed the FCA's role to that of an arms-length regulator and 
provisions of the Agricultural Credit Act of 1987 <SUP>2 changed the 
structure of Farm Credit banks and direct lender associations and 
modified their relationship. The FCA believes that regulatory 
modifications are appropriate because direct lender associations now 
are more directly responsible for their own activities.
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    \1\ Pub. L. No. 99-205, 99 Stat. 1678, (Dec. 23, 1985).
    \2\ Pub. L. No. 100-233, 101 Stat. 1568, (January 6, 1988).
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II. Repealing the Prior Approval Requirement

    The proposed rule would repeal the requirement in existing 
Sec. 614.4130(b) for FCA prior approval of all GFAs between FCBs or 
ACBs and direct lender associations or OFIs. During the past decade, 
the Farm Credit System (FCS) has been recapitalized and its risk 
management and loan underwriting practices have improved. Additionally, 
new methods of peer discipline such as the Market Access Agreement and 
Contractual Interbank Performance Agreement have been put into place. 
In contrast to the standardized GFA format of the past, the GFAs that 
govern the lending relationships between FCBs or ACBs and direct lender 
associations or OFIs are now more similar to commercial lending 
agreements. In light of the changes that have occurred, FCA prior 
approval is no longer deemed necessary to control risk. The FCA also 
believes and imposing minimum regulatory requirements is more efficient 
and allows greater flexibility to address specific issues.
    Although the proposed rule outlines minimum regulatory criteria for 
GFAs, the FCA will continue to rely on its ongoing examination process 
and enforcement powers to ensure that GFAs properly preserve the 
interests of the parties and do not pose safety and soundness risks. In 
order to facilitate the monitoring process, the amended regulation 
would require all FCBs and ACBs to deliver a copy of the executed GFA, 
and all related documentation, such as a promissory note or security 
agreement, and all amendments of any of these documents, to the Chief 
Examiner in the Office of Examination, or to such other FCA office as 
the Chief Examiner designates.

III. Basic Objectives for the Proposed Regulation

    The proposed regulation provides FCBs, ACBs, direct lender 
associations, and OFIs broad flexibility to address issues that pertain 
to their funding relationship. Issues such as loan pricing, dispute 
resolution, performance standards, and other terms of the GFA and 
related documentation are ultimately business decisions that the 
parties should address when they negotiate the terms and conditions of 
their GFA. It is the FCA's intent to allow the funding or discount 
relationship to be governed by objective performance standards 
negotiated between the parties. Accordingly, this proposed regulation 
does not prescribe specific regulatory guidelines to address these 
issues, but instead encourages the parties to incorporate objective 
standards in the GFAs that are measurable and clear in their meaning. 
The proposed regulation requires FCBs and ACBs to adopt policies that 
govern the extension of direct loans to, and the discounting of loans 
for, direct lender associations and OFIs. These policies would require 
an evaluation of the direct lender association's creditworthiness on 
the basis of credit factors or lending policies and loan underwriting 
standards <SUP>3 set forth in part 614, subpart D, prior to any credit 
extension from the FCB or ACB. The proposal would require FCBs and ACBs 
to adhere to sound credit practices to ensure that each direct lender 
association and OFI repays the bank. This will help to ensure that the 
FCS will continue to have access to favorable interest rates in the 
capital markets, that the Farm Credit Insurance Fund will remain 
solvent, and that joint and several liability will not be triggered. 
The FCBs and ACBs must apply these performance standards equitably to 
direct lender associations and must not use them to place limitations 
in areas that do not affect the funding relationship. While the 
proposed regulation addresses requirements concerning GFAs used by 
OFIs, other issues concerning OFIs will be addressed in a separate 
rulemaking.
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    \3\ FCA published a proposed revision to its loan underwriting 
standards at 61 FR 16403 (April 15, 1996).
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    Preserving flexibility in the regulation enables the checks and 
balances that the Act creates between the FCBs or ACBs and direct 
lender associations to function. Although direct lender associations 
may be viewed as being at a competitive disadvantage in negotiations 
with an FCB or ACB because they have virtually no other source of 
funds,<SUP>4 direct lender associations are stockholders in the FCBs or 
ACBs and elect the bank's board of directors. The FCA invites comments 
on what specific regulations, if any, are needed to protect the 
interests of FCS institutions when the terms and conditions of the GFA 
are negotiated.
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    \4\ Approval of the Farm Credit Bank or agricultural credit bank 
is required for a direct lender association to borrow from any other 
source.
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IV. GFA Content

    Under the proposed regulation, the GFA would focus on the funding 
and discount relationships between the FCBs or ACBs and the direct 
lender associations. The proposed regulation would prohibit advancing 
funds to, or discounting loans for, any direct lender association or 
OFI except pursuant to a GFA. The proposed regulation would also 
establish a maximum term limit of 35 years for all GFAs. While the 
proposed regulation could permit unsecured lending from an FCB or ACB 
to a direct lender association, the FCA is proposing a maximum term of 
1 year for any GFA that provides for unsecured lending. The FCA 
specifically seeks comments concerning the circumstances under which 
unsecured lending may be appropriate and what additional limitations or 
restrictions, if any, should be placed on such lending activity. The 
proposed regulation requires sound credit practices to preserve 
investor confidence in Systemwide obligations. At a minimum, it is 
imperative that FCBs and ACBs consider the risks involved with any 
unsecured lending when developing their lending policies and loan 
underwriting standards.

[[Page 13844]]

    Although an FCB or ACB has a legitimate need to include provisions 
in the GFA bearing on its ability to protect itself as a creditor, it 
must also be recognized that a direct lender association has the right 
to exercise its statutory authorities. To prevent an FCB or ACB from 
restricting a direct lender association from exercising its statutory 
authorities under the Act, FCA regulations, other Federal laws, or 
State laws, the proposed regulation would limit the contents of the GFA 
to topics that are reasonably related to the debtor/creditor 
relationship. In order to be reasonably related to the debtor/creditor 
relationship, the provisions of the GFA must be designed to protect the 
FCB's or ACB's rights as a creditor.

V. Maximum Credit Limit

    The FCA proposes to eliminate the direct loan limitation formula 
outlined in existing Sec. 614.4130(a). The existing direct loan formula 
is used to determine the maximum amount of funding that an FCB or ACB 
can extend to a direct lender association based on certain performance 
criteria. This regulation enabled the FCA to control the quality of an 
FCB's or ACB's bond collateral and to supervise the bank's 
administration of its direct loan to an association.
    The proposed regulation would replace the direct loan formula with 
minimum criteria that the FCA deems necessary to control risks. These 
minimum criteria would require the FCB or ACB to set a maximum credit 
limit consistent with the creditworthiness of the institution, as 
determined by the FCB's or ACB's analysis of capital, asset quality, 
management, earnings, and liquidity, or other similar factors. To 
ensure the availability of all the FCBs' and ACBs' bond collateral, the 
proposed regulation would limit the amount that a direct lender 
association could borrow to the value of the direct lender 
association's assets that are free from any lien or other pledge as 
described in section 4.3(c) of the Act. This more flexible approach 
will allow an FCB or ACB to establish a direct lender association's 
credit limit in accordance with the bank's lending policies and loan 
underwriting standards.

VI. Default Remedies

    Pursuant to section 4.12 of the Act, the FCA has the sole authority 
to approve a voluntary or involuntary liquidation of a Farm Credit 
institution. In order to ensure that this authority is preserved, the 
proposed regulation states that an FCB or ACB must obtain the prior 
written consent of the FCA before it takes any action that leads to or 
could lead to the liquidation of a direct lender association. In 
certain circumstances, accelerating repayment of the debt, canceling 
existing loan commitments, or foreclosing upon collateral might lead to 
the liquidation of the direct lender association. In that event, the 
FCA's prior written consent would be required. Although this provision 
may result in delays before a bank can exercise its ultimate rights as 
a creditor, the FCA believes it is necessary to ensure that a receiver 
can be appointed to protect the rights of all parties.
    The proposed regulation would require that an FCB or ACB provide 
written notice to the FCA and the Farm Credit System Insurance 
Corporation (FCSIC) at the same time that it provides notice to a 
direct lender association that the direct lender association is in 
material default of any covenant, term, or condition of the GFA, 
promissory note, security agreement, or other related documents. This 
notification requirement would include, but is not limited to, notice 
from the FCB or ACB about the imposition of any monetary penalties on 
the direct lender association, including penalty interest, additional 
fees, or other service charges imposed based on a default by the direct 
lender association. The proposed regulation would also require the 
direct lender association to notify the FCA and FCSIC by facsimile, 
express mail, or certified mail no later than the following business 
day after receiving a notice that a material default has occurred in 
any covenant, term, or condition of the GFA, loan agreement, promissory 
note, security agreement, or other related documents from an FCB, ACB, 
or non-Farm Credit institution. This separate notification provides a 
reporting mechanism for notices of default received from non-Farm 
Credit institution creditors, as well as a secondary method of 
notification for notices received from FCBs or ACBs.

VII. Voluntary Liquidation

    Section 4.12(a) of the Act prohibits the voluntary liquidation of 
any Farm Credit institution without the FCA's consent and permits 
voluntary liquidation with such consent only in accordance with FCA 
regulations. Section 4.12(b) of the Act grants the FCA ``exclusive 
power and jurisdiction'' to place a Farm Credit institution in 
conservatorship or receivership. Unlike section 4.12(b) of the Act, 
which governs involuntary liquidations, section 4.12(a) of the Act does 
not require the appointment of a receiver for a voluntary liquidation. 
Therefore, the proposed regulation would allow any Farm Credit 
institution, as defined in Sec. 627.2705(b), including service 
corporations chartered under title IV of the Act, to voluntarily 
liquidate with the consent of, and in accordance with a plan approved 
by the FCA.
    Upon adoption of a resolution to liquidate, the proposed regulation 
would require the Farm Credit institution to submit the resolution to 
liquidate and proposed voluntary liquidation plan to the FCA. The 
proposed voluntary liquidation plan must receive preliminary approval 
from the FCA. If the FCA gives preliminary approval of the liquidation 
plan, the board of directors of the Farm Credit institution would 
submit the resolution to liquidate to the stockholders for approval. 
The resolution to liquidate and the liquidation plan would require the 
approval of the stockholders by at least a majority of the voting 
stockholders of the institution voting, in person or by written proxy, 
at a duly authorized stockholders' meeting. Following an affirmative 
stockholder vote, the FCA would consider final approval of the 
liquidation plan. Any subsequent amendments, modifications, revisions, 
or adjustments to the liquidation plan would also require the approval 
of the FCA.
    The FCA also proposes conforming changes to the regulation in part 
627 concerning the voluntary liquidation of a Farm Credit institution 
by means of an FCA-approved liquidation plan. The FCA also reserves the 
right to terminate or modify the liquidation plan at any time, and if 
necessary, may appoint a receiver pursuant section 4.12 of the Act at 
any time.

List of Subjects

12 CFR Part 614

    Agriculture, Banks, banking, Flood insurance, Foreign trade, 
Reporting and recordkeeping requirements, Rural areas.

12 CFR Part 627

    Agriculture, Banks, banking, Claims, Rural areas.

    For the reasons stated in the preamble, parts 614 and 627 of 
chapter VI, title 12 of the Code of Federal Regulations are proposed to 
be amended to read as follows:

PART 614--LOAN POLICIES AND OPERATIONS

    1. The authority citation for part 614 continues to read as 
follows:

    Authority: 42 U.S.C. 4012a, 4014a, 4104b, 4106, and 4128; secs. 
1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 
2.13,

[[Page 13845]]

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, 4.18A, 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 
of the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017, 
2018, 2019, 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, 2206a, 2207, 2219a, 2219b, 
2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2219b-1, 2279b-2, 2279f, 
2279f-1, 2279aa, 2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat. 
1568, 1639.

Subpart C--Bank/Association Lending Relationship

    2. Section 614.4120 is revised to read as follows:


Sec. 614.4120  Policies governing extensions of credit to direct lender 
associations and other financing institutions.

    The board of directors of each Farm Credit Bank and agricultural 
credit bank shall adopt policies and procedures governing the making of 
direct loans to, and the discounting of loans for, direct lender 
associations and other financing institutions. The policies and 
procedures shall prescribe lending policies and loan underwriting 
standards that are consistent with sound financial and credit 
practices. The policies shall require an evaluation of the 
creditworthiness of the direct lender associations on the basis of 
credit factors or lending policies and loan underwriting standards set 
forth in part 614, subpart D, and may permit lending to such 
institutions on an unsecured basis only if the overall condition of the 
institutions warrant. The term of a general financing agreement shall 
not exceed 35 years. The term of any general financing agreement that 
provides for unsecured lending to direct lender associations shall not 
exceed 1 year.
    3. Section 614.4125 is added as follows:


Sec. 614.4125  Funding and discount relationships between Farm Credit 
Banks or agricultural credit banks and direct lender associations.

    (a) A Farm Credit Bank or agricultural credit bank shall not 
advance funds to, or discount loans for, any direct lender association 
except pursuant to a general financing agreement.
    (b) The Farm Credit Bank or agricultural credit bank shall deliver 
a copy of the executed general financing agreement and all related 
documents, such as a promissory note or security agreement, and all 
amendments of any of these documents, within 105 business days after 
any such document or amendment is executed, to the Chief Examiner, Farm 
Credit Administration, or to such other Farm Credit Administration 
office as the Chief Examiner designates.
    (c) The general financing agreement shall address only those 
matters that are reasonably related to the debtor/creditor relationship 
between the Farm Credit Bank or agricultural credit bank and the direct 
lender association.
    (d) The total credit extended to a direct lender association, 
through direct loan or discounts, shall be consistent with the Farm 
Credit Bank's or agricultural credit bank's lending policies and loan 
underwriting standards and the creditworthiness of the direct lender 
association. The general financing agreement or promissory note shall 
establish a maximum credit limit determined by objective standards as 
established by the Farm Credit Bank or agricultural credit bank. In no 
case shall the direct lender association's maximum credit limit exceed 
the value of the direct lender association's assets available to the 
Farm Credit Bank or agricultural credit bank to support outstanding 
obligations under section 4.3(c) of the Farm Credit Act of 1971, as 
amended.
    (e) A Farm Credit Bank or agricultural credit bank that provides 
notice to a direct lender association that it is in material default of 
any covenant, term, or condition of the general financing agreement, 
promissory note, security agreement, or other related documents 
simultaneously shall provide written notification to the Farm Credit 
Administration and the Farm Credit System Insurance Corporation.
    (f) A direct lender association shall provide written notification 
to the Farm Credit Administration and the Farm Credit System Insurance 
Corporation immediately upon receipt of a notice that it is in material 
default under any general financing agreement, loan agreement, 
promissory note, security agreement, or other related documents with a 
Farm Credit Bank, agricultural credit bank or non-Farm Credit 
institution.
    (g) A Farm Credit Bank or agricultural credit bank shall obtain 
prior written consent of the Farm Credit Administration before it takes 
any action that leads to or could lead to the liquidation of a direct 
lender association.
    (h) No direct lender association shall obtain a loan from any party 
unless the parties agree to the requirements of this paragraph. No Farm 
Credit Bank, agricultural credit bank, or other party shall petition 
any Federal or State court to appoint a conservator, receiver, 
liquidation agent, or other administrator to manage the affairs of or 
liquidate a direct lender association.
    4. Section 614.4130 is revised to read as follows:


Sec. 614.4130  Funding and discount relationships between Farm Credit 
Banks or agricultural credit banks and other financing institutions.

    (a) A Farm Credit Bank or agricultural credit bank shall not 
advance funds to, or discount loans for, an other financing 
institution, as defined in Sec. 614.4540(e), except pursuant to a 
general financing agreement.
    (b) The Farm Credit Bank or agricultural credit bank shall deliver 
a copy of the executed general financing agreement and all related 
documents, such as a promissory note or security agreement, and all 
amendments of any of these documents, within 10 business days after any 
such document or amendment is executed, to the Chief Examiner, Farm 
Credit Administration, or to such other Farm Credit Administration 
office as the Chief Examiner designates.
    (c) The total credit extended to the other financing institution, 
through direct loan or discounts, shall be consistent with the Farm 
Credit Bank's or agricultural credit bank's lending policies and loan 
underwriting standards and the creditworthiness of the other financing 
institution. The general financing agreement or promissory note shall 
establish a maximum credit limit determined by objective standards as 
established by the Farm Credit Bank or agricultural credit bank. In no 
case shall the other financing institution's maximum credit limit 
exceed the value of the other financing institution's underlying assets 
available to the Farm Credit Bank or agricultural credit bank to 
support outstanding obligations under section 4.3(c) of the Farm Credit 
Act of 1971, as amended.
    5. The heading for part 627 is revised to read as follows:

PART 627--TITLE IV CONSERVATORS, RECEIVERS, AND VOLUNTARY 
LIQUIDATIONS

    6. 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 of the Farm 
Credit Act (12 U.S.C. 2183, 2243, 2244, 2252, 2277a, 2277a-7).

    7. Section 627.2700 is revised to read as follows:

Subpart A--General


Sec. 627.2700  General--applicability.

    The provisions of this part shall apply to conservatorships, 
receiverships, and voluntary liquidations.

[[Page 13846]]

Subpart B--Receivers and Receiverships

    8. Section 627.2720 is amended by removing paragraph (a); 
redesignating paragraphs (b), (c), (d), (e), and (f) as new paragraphs 
(a), (b), (c), (d), and (e); and revising newly designated paragraph 
(b) to read as follows:


Sec. 627.2720  Appointment of receiver.

* * * * *
    (b) The receiver appointed for a Farm Credit institution shall be 
the Insurance Corporation.
* * * * *
    9. Section 627.2730 is amended by removing paragraph (b); 
redesignating paragraph (c) as new paragraph (b); and revising newly 
designated paragraph (b) to read as follows:


Sec. 627.2730  Preservation of equity.

* * * * *
    (b) Notwithstanding paragraph (a) of this section, eligible 
borrower stock shall be retired in accordance with section 4.9A of the 
Act.
* * * * *
    10. Part 627 is amended by adding a new subpart D to read as 
follows:

Subpart D--Voluntary Liquidation


Sec. 627.2795  Voluntary liquidation.

    (a) A Farm Credit institution may voluntarily liquidate by a 
resolution of its board of directors, but only with the consent of, and 
in accordance with a plan of liquidation approved by, the Farm Credit 
Administration Board. Upon adoption of such resolution to liquidate, 
the Farm Credit institution shall submit the proposed voluntary 
liquidation plan to the Farm Credit Administration for preliminary 
approval. The Farm Credit Administration Board, in its discretion, may 
appoint a receiver as part of an approved liquidation plan. If a 
receiver is appointed for the Farm Credit institution as part of a 
voluntary liquidation, the receivership shall be conducted pursuant to 
subpart B of this part, except to the extent that an approved plan of 
liquidation provides otherwise.
    (b) If the Farm Credit Administration Board gives preliminary 
approval to the liquidation plan, the board of directors of the Farm 
Credit institution shall submit the resolution to liquidate and the 
liquidation plan to the stockholders for approval.
    (c) The resolution to liquidate and the liquidation plan shall be 
approved by the stockholders if agreed to by at least a majority of the 
voting stockholders of the institution voting, in person or by written 
proxy, at a duly authorized stockholders' meeting.
    (d) The Farm Credit Administration Board will consider final 
approval of the liquidation plan after an affirmative stockholder vote 
on the resolution to liquidate.
    (e) Any subsequent amendments, modifications, revisions, or 
adjustments to the liquidation plan shall require Farm Credit 
Administration Board approval.
    (f) The Farm Credit Administration Board, in its discretion, 
reserves the right to terminate or modify the liquidation plan at any 
time.


Sec. 627.2797  Preservation of equity.

    (a) Immediately upon the adoption of a resolution by its board of 
directors to voluntarily liquidate a Farm Credit institution, the 
capital stock, participation certificates, equity reserves, and 
allocated equities of the Farm Credit institution shall not be issued, 
allocated, retired, sold, distributed, transferred, assigned, or 
applied against any indebtedness of the owners of such equities. Such 
activities could resume if the stockholders of the Farm Credit 
institution disapprove the resolution to liquidate or the Farm Credit 
Administration Board disapproves the liquidation plan. 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, except that 
if the Farm Credit institution is placed in receivership, the 
provisions of Sec. 627.2730(a) shall govern further disposition of the 
equities of the Farm Credit institution.
    (b) Notwithstanding paragraph (a) of this section, eligible 
borrower stock shall be retired in accordance with section 4.9A of the 
Act.

    Dated: March 19, 1997.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
[FR Doc. 97-7355 Filed 3-21-97; 8:45 am]
BILLING CODE 6705-01-P


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