Fact Sheet Farm Credit Administration

1501 Farm Credit Drive

McLean, Virginia 22102-5090

September 12, 2013 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 Final Rulemaking

The Farm Credit Administration Board adopted a final rule on Sept. 12, 2013, to revise its 

regulations in 12 CFR Part 652 governing capital planning at the Federal Agricultural Mortgage 

Corporation (Farmer Mac). 

FCA first issued these regulations in 2001 and proposed revisions in January 2013. The final

rule requires Farmer Mac to submit annually a capital plan to FCA's Office of Secondary Market 

Oversight (OSMO) and to notify OSMO under certain circumstances before making a capital 

distribution.

The purpose of the rule is to increase FCA’s regulatory focus on the quality and level of Farmer 

Mac’s capital base and to promote best practices for capital adequacy planning and stress 

testing.

Summary of Changes 

§ 652.60 Corporate Business Planning — The final rule requires Farmer Mac to maintain 

enough high-quality capital to meet the goals and objectives established by the Farmer Mac 

board. In addition, Farmer Mac must continue to maintain core and regulatory capital above 

statutory and regulatory minimums.

The rule also requires the Farmer Mac board to set a ratio of Tier 1 capital to risk-weighted 

assets and to include this ratio in its capital adequacy policy goals.

The rule requires Farmer Mac to maintain enough capital to meet its policy goals under both 

expected and stressful scenarios. It also includes new capital planning stress testing 

requirements in § 652.61 to increase Farmer Mac’s long-term resiliency.

Furthermore, the rule adds several new requirements to make Farmer Mac’s annual operational 

and strategic business plan more useful. 

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§ 652.61 Capital Planning — The rule replaces § 652.60(c) on capital adequacy plans with 

expanded guidance. It adds several new definitions focused on high-quality capital 

measurements relative to risk-weighted assets—all aligned with current trends and best 

practices.

The rule requires Farmer Mac to submit its capital plan to OSMO each year by March 1. It 

requires Farmer Mac's board of directors to review the robustness of the process for assessing 

capital adequacy, to correct any deficiencies, and to approve the capital plan. In response to 

comments on the proposed rule, FCA revised two proposed definitions to add clarity.

The final rule requires the capital plan to include the following: 

• A newly defined Tier 1 ratio to project outcomes under both normal and stressful 

scenarios

• A discussion of how the ratio will maintain capital above a board-adopted threshold 

• A description of the process for assessing capital adequacy

• A capital policy

• A discussion of expected changes to the business plan likely to have a material effect on 

capital adequacy or liquidity

The rule also establishes an annual assessment of the capital plan by OSMO. In a revised 

capital plan, Farmer Mac would be required to consider the results of its stress tests and 

OSMO’s assessment of the plan. Farmer Mac must document in writing its actions in response 

to the stress tests and OSMO’s assessment.

§ 652.62 Notice to OSMO of capital distributions — The final rule requires Farmer Mac to

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

distribution or any material changes in capital distributions policy. We provide an exception to 

this notice requirement if there is no change from planned distributions and if OSMO determines 

that any revised capital plan adequately considers OSMO’s assessment of the plan.

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