Fact Sheet Farm Credit Administration

1501 Farm Credit Drive

McLean, Virginia 22102-5090

December 13, 2012 Contact: Michael Stokke or Christine Quinn,

703-883-4056

E-mail: info-line@fca.gov

Website: www.fca.gov

Fact Sheet on Farmer Mac Capital Planning: Notice of Proposed Rulemaking

The Farm Credit Administration (FCA) Board adopted a proposed rule on December 13, 2012, 

to revise its regulations governing capital planning at the Federal Agricultural Mortgage 

Corporation (Farmer Mac). We first issued these regulations in 2001. 

The proposed rule would require Farmer Mac to submit a capital plan to our Office of Secondary 

Market Oversight (OSMO) on an annual basis and to notify OSMO under certain circumstances 

before making a capital distribution. The proposed rule would revise the current capital 

adequacy planning requirements to increase our regulatory focus on the quality and level of 

Farmer Mac’s capital base. The rule would promote best practices for capital adequacy planning 

and stress testing.

Below is a summary of the proposed changes and a listing of the questions on which we seek 

comment. 

Summary of Proposed Changes 

§ 652.60 Corporate Business Planning — We propose to require Farmer Mac’s board of 

directors to establish goals and objectives for maintaining capital. Such goals would include a 

ratio of Tier 1 capital to risk-weighted assets. The ratio would be selected by Farmer Mac’s

board of directors for use in capital planning under both expected and stressful scenarios. The 

rule would continue to require Farmer Mac to maintain capital levels above existing statutory 

and regulatory minimums. We also propose to add several required components to Farmer 

Mac’s annual operational and strategic business plan.

§ 652.61 Capital Planning — We propose to replace existing § 652.60(c) on capital adequacy 

plans with expanded requirements in this new section. We propose several new definitions 

focused on high-quality capital measurements relative to risk-weighted assets—all aligned with 

current trends and best practices in this area. We propose to require Farmer Mac to submit its 

capital plan to OSMO each year by March 1. Farmer Mac’s board of directors would be required 

to review the robustness of its process for assessing capital adequacy, to ensure that 

deficiencies are remedied, and to approve the capital plan.

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We propose to include several mandatory elements of the capital plan, including the following:

• Calculation of a new Tier 1 ratio over the planning horizon under both normal and 

stressful scenarios and a discussion of how the ratio will maintain capital above a boardadopted threshold

• A description of the process for assessing capital adequacy

• A capital policy

• A discussion of expected changes to the business plan that are likely to have a material 

impact on capital adequacy or liquidity

Also in this section, we propose to establish an annual assessment of the capital plan by FCA. 

Farmer Mac would be required to consider issues raised by FCA in its revised capital plan.

§ 652.62 Notice to OSMO of Capital Distributions — We propose to require Farmer Mac to

provide us with an advance notice of 15 calendar days before its board considers a capital 

distribution or any material changes in capital distribution policies. However, notice would not be 

required if there is no change from the previous quarterly dividend rates paid on common and 

preferred stock.

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