[Federal Register Volume 75, Number 202 (Wednesday, October 20, 2010)]
[Notices]
[Pages 64727-64728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26434]


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FARM CREDIT ADMINISTRATION

RIN 3052-AC64


Joint and Several Liability Reallocation Agreement

AGENCY: Farm Credit Administration.

ACTION: Notice of approval of the draft joint and several liability 
reallocation agreement.

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SUMMARY: The Farm Credit Administration (FCA or we) is announcing that 
it has given approval of a Joint and Several Liability Reallocation 
Agreement (Agreement) to be entered into by all of the banks (System 
Banks) of the Farm Credit System (Farm Credit or System) and the 
Federal Farm Credit Banks Funding Corporation (Funding Corporation). 
The Agreement is designed to establish a procedure for non-defaulting 
banks to pay maturing System-wide debt on behalf of defaulting banks 
prior to a statutory joint and several call by the FCA.

FOR FURTHER INFORMATION CONTACT: Chris Wilson, Financial Analyst, 
Office of Regulatory Policy, Farm Credit Administration, McLean, VA 
22102-5090, (703) 883-4204, TTY (703) 883-4434, or Rebecca S. Orlich, 
Senior Counsel, Office of General Counsel, Farm Credit Administration, 
McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.

SUPPLEMENTARY INFORMATION: The FCA published the draft Agreement in the 
Federal Register on August 18, 2010 (75 FR 51061) with a request for 
public comment. The draft Agreement had a 30-day comment period that 
ended on September 17, 2010. See 75 FR 51061 for the text of the entire 
Agreement, along with our preamble describing the background of the 
Agreement and providing other information. We received no public 
comments on the Agreement.
    The Agreement is a voluntary agreement by the System Banks and the 
Funding Corporation that uses a debt-based formula to allocate payments 
of non-defaulting banks should a System bank default on a maturing 
insured consolidated or System-wide debt obligation and the amount of 
the default exceeds the amount available in the Farm Credit Insurance 
Fund to pay defaulted insured debt obligations. The parties to the 
draft Agreement submitted it to the FCA for approval under Sec.  
627.2750(h) of our regulations and also requested the Farm Credit 
System Insurance Corporation (FCSIC) to provide an expression of non-
objection to the Agreement. The FCSIC insures consolidated and System-
wide obligations using funds in the Farm Credit Insurance Fund. The 
Agreement will terminate if the FCA withdraws its approval, and the FCA 
retains full authority and responsibility to invoke statutory joint and 
several calls as prescribed under section 4.4(a)(2) and (d) of the Farm 
Credit Act of 1971, as amended (Act).\1\ The FCA and the FCSIC are not 
parties to the Agreement.
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    \1\ 12 U.S.C. 2155(a)(2) and (d).
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    The System Banks and Funding Corporation are also making conforming 
amendments to the Market Access Agreement (MAA) by adding three new 
sections to it. The conforming amendments are merely to ensure that 
provisions in the MAA do not prevent necessary payments under the 
Agreement. The FCA will publish the conforming MAA amendments in a 
separate Federal Register document.
    The FCA believes that holders of System-wide debt obligations are 
unlikely to be harmed by this Agreement. The Agreement could create

[[Page 64728]]

the potential for building more capital at the bank level. After giving 
the public notice with the opportunity to comment and receiving no 
comments, the FCA Board has approved the draft Agreement in accordance 
with Sec.  627.2750(h) of our regulations. The FCA's approval of the 
draft Agreement is conditioned on the board of directors of each bank 
and the Funding Corporation approving the Agreement and the FCSIC 
providing an expression of non-objection to the Agreement. The 
Agreement cannot be modified or amended without our approval.
    Neither the Agreement (upon its effective date) nor our approval of 
it will in any way restrict or qualify the FCA's authority to exercise 
our powers, rights, and duties as a regulator or, as stated above, to 
invoke joint and several liability provisions under the Act. 
Furthermore, the Agreement does not provide any grounds or basis for 
challenging the FCA's or the FCSIC's actions with respect to the 
creation or conduct of conservatorships or receiverships. Finally, the 
FCA retains the right to modify or revoke its approval of the Agreement 
at any time.

    Dated: October 14, 2010.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. 2010-26434 Filed 10-19-10; 8:45 am]
BILLING CODE 6705-01-P