Source: https://www.federalregister.gov/documents/2011/09/01/2011-22203/board-policy-statements
Timestamp: 2017-10-17 17:30:54
Document Index: 509020370

Matched Legal Cases: ['art 1', 'art 2', '§\u20095', '§\u20095', '§\u20094', '§\u20095', 'art 627', '§\u20095', 'art 1', 'art 2', '§\u20097', 'art 618']

A Rule by the Farm Credit Administration on 09/01/2011
54637-54656 (20 pages)
Part 1—Mass Communications That Do Not Require Review by the FCA Board Prior to Distribution to Farm Credit System Institutions
Part 2—Mass Communications That Contain the Following Matters Require Review by the FCA Board Prior to Distribution to Farm Credit System Institutions
https://www.federalregister.gov/d/2011-22203 https://www.federalregister.gov/d/2011-22203
Start Preamble Start Printed Page 54638
The Farm Credit Administration (FCA) Board recently undertook its 5-year review of FCA Board policy statements. This review resulted in revisions to 14 policy statements that are mostly technical, grammatical, or syntactical. However, a few of the revisions add clarity to the policy statements and other revisions incorporate changes required either by new laws or by changes in the functional statement of operations for some FCA offices.
A list of the 14 revised FCA Board policy statements and the text of each are set forth below in their entirety. All FCA Board policy statements may be viewed on FCA's Web site. Please go to http://www.fca.gov. Then select “Laws & Regulations,” then select “FCA Handbook,” then select “FCA Board Policy Statements.”
Source of Authority: Administrative Dispute Resolution Act of 1996, Public Law 104-320, 110 Stat. 3870 (1996), and codified at 5 U.S.C. 571 et seq. The Administrative Dispute Resolution Act of 1996 (Act), addresses the concern that traditional methods of dispute resolution, such as litigation and administrative adjudication, have become increasingly time-consuming and expensive. The Act authorizes and encourages greater use of alternative means of dispute resolution (ADR), requiring each Federal agency to adopt a policy addressing the use of ADR. ADR consists of informal, voluntary procedures used by parties who seek to resolve their disputes by consent. Such procedures include, but are not limited to, mediation, conciliation, facilitation, fact-finding, arbitration, and mini-trials, or any combination thereof. By emphasizing the common goals of the parties and fostering an atmosphere of cooperation, ADR can offer a less contentious and more expeditious alternative to traditional methods of dispute resolution such as litigation and administrative adjudication. The use of ADR in appropriate circumstances is consistent with the Farm Credit Administration's (FCA or Agency) mission as an agency. To promote a safe and sound, competitive Farm Credit System, the FCA always strives to effectively and efficiently manage its resources. By expediting the resolution of certain disputes, ADR can reduce the FCA's transaction costs, increase the FCA's productivity, and help the FCA accomplish its goals.
Effect on Previous Actions: Originally adopted 13-JUN-91; amended 12-NOV-92; amended by NV-11-15 (8-JUL-11).
Members of the Farm Credit Administration (FCA or Agency) Board are not subject to the same requirements regarding allowances for travel and subsistence that generally apply to officers and employees of the United States (§ 5.8 of the Farm Credit Act of 1971, as amended). Nevertheless, it is the general policy of the FCA Board (Board) that Board members will travel on official business in the most economical fashion reasonable under the circumstances.
FCA Board members are subject to Federal laws, rules, and Executive Orders relating to conflicts of interest that may result from accepting gifts, including travel related expenses, from outside sources. Generally, Board members may not accept anything of value from:
The gift rule under the standards of ethical conduct and the Agency's gift acceptance authority at 31 U.S.C. 1353 outline the limited circumstances in which government officials may accept gifts and the payment of travel expenses from outside sources. Unless an exception applies, ethics rules prevent Board members from accepting gifts offered because of their official positions. Under no circumstances may Board members accept anything of value in return for being influenced in the performance of an official act. The aim of these rules is to prevent an actual conflict of interest or the appearance of a conflict and to uphold public confidence in the integrity of the Government and the Agency.
Except as noted above, third parties may not pay for official Agency expenditures. Because the Agency is responsible for the cost of conducting official business, Board members will ensure that the Agency is billed directly for travel expenses whenever possible (for example, by using a Government issued credit card for travel expenses). On those occasions when direct Agency payment is impossible or impractical (for example, a large group business dinner arranged and paid for in advance by the organizer), Board members will promptly notify the Agency of the obligation and ensure that the payer is promptly reimbursed. Board Members Start Printed Page 54640recognize that it is important not to create the impression that a third party, particularly a prohibited source, is paying for their expenses.
1. A Board member must use first-class accommodations because no other space accommodations are reasonably available or where other practical considerations exist (such as to accommodate a disability or other special need);
4. A Board member receives first-class travel benefits on an unsolicited basis from a carrier (such as free first-class coupons) and the benefit cannot be used by the Agency either in the present or the future, cannot be redeemed for cash value, and does not require the redemption of official miles. Under these circumstances, Board members can use the first-class benefit for either official or personal travel.
Board members will use a commercial charter flight at Agency expense only when no commercially scheduled flights are available in time to meet the requirements of the travel or when the charter flight would be more economical than a commercial flight. Board members will avoid the use of private aircraft whenever possible and use them only where commercial or charter flights are not reasonably available or would impose undue hardships. When reporting travel expenses, Board members must adequately justify the use of a commercial charter flight, private aircraft, or first-class accommodations.
The Agency will not ordinarily reimburse Board members for lodging in the metropolitan Washington, DC, area. However, lodging may be necessary to take full advantage of a conference.
The FCA will reimburse Board members for the usual and reasonable expenses incurred as a consequence of official activities in the Washington, DC, metropolitan area and in other locations. The Agency will allow the repayment of expenses for:
Board members will arrange for official travel using the Agency's travel management system whenever possible. Although Board members may use cash to pay for official travel expenses and seek repayment from the Agency afterwards, whenever possible, the preferred method of payment will be the use of the Government-issued credit card for all official travel expenses.
The FCA Board provides for the examination and supervision of each System institution in accordance with the Farm Credit Act of 1971, as amended (the “Act”). The Board fulfills this responsibility primarily through the Office of Examination (OE). The FCA fulfills its supervision and examination responsibilities for Farmer Mac, a separate government-sponsored enterprise, through its Office of Secondary Market Oversight. OE develops oversight plans, conducts examinations, monitors the System's condition, current and emerging risks, Start Printed Page 54641and develops supervisory strategies to ensure that the System operates in a safe and sound manner and fulfills its public policy purpose. The Act also provides that the Farm Credit System Insurance Corporation (FCSIC) Board of Directors should utilize FCA examiners to conduct examinations of System institutions, to the extent practicable.
The FCA Board directs the maintenance of a “risk-based” approach to oversight and examination for System institutions, which maximizes OE's effectiveness and strategically addresses the System's safety and soundness and compliance with laws and regulations. The amount of examination resources devoted to a System institution and the scope of an examination will depend on an institution's ability to identify and manage its risks. Accordingly, oversight and examination efforts will be heightened and accompanied by appropriate preventive, corrective, or enforcement actions when institutions are unable or unwilling to address material unsafe and unsound practices or comply with law and regulations. This risk-based approach is critical to maintaining shareholder, investor, and public confidence in the financial strength and future viability of the System.
The risk-based approach must promote effective communications with System institutions. Examiners are an essential communication link with System institutions through ongoing institution oversight, on-site examinations, meetings with boards and management, and written reports and correspondence. The examination program shall therefore maintain adequately trained examiners who understand the unique risks and opportunities of agriculture, maintain an appropriate level of regulatory and financial industry experience and skills, and communicate and work effectively with System institutions to ensure they remain safe and sound and able to fulfill their public policy purpose.
Semi-annually, the Director of the Office of Regulatory Policy (ORP) will provide the Board a proposed Unified Agenda for approval. The Unified Agenda will describe the regulatory projects the Agency plans to work on during the next 12 month period and apply the principles and strategies reflected in this policy. Quarterly, the ORP Director will report to the Board on the status of, and proposed adjustments to, regulatory projects scheduled on the Unified Agenda.
The Chairman and Chief Executive Officer (CEO) is ultimately responsible for developing and carrying out all EEOD requirements and initiatives in accordance with laws and regulations to fulfill diversity initiatives in approved program plans.Start Printed Page 54643
Section 1. Purpose and Scope. These Rules adopted under § 5.8(c) of the Farm Credit Act of 1971, as amended (Act), concerning the transaction of business of the Farm Credit Administration (FCA) Board (Board) supplement the statutes and regulations that govern the procedures and practice of the Board (including, without limitation, the Act, the Sunshine Act, and FCA regulations, 12 CFR 600 et seq.). Unless otherwise provided in these Rules, or relevant statutes or regulations, this Board will transact its business in accordance with Robert's Rules of Order (Newly Revised) (most recent edition).
“Chairman” means the Board Member designated by the President to serve as Chairman of the Board. The Chairman also serves as the Agency's Head and Chief Executive Officer (CEO). After consultation with the other Board Members, the Chairman appraises the performance of the Secretary, Equal Employment Opportunity Director, Designated Agency Ethics Official, Chief Operating Officer, and all Office Directors reporting directly to him or her.
“Designated Agency Ethics Official” (DAEO) means an employee of the FCA designated by the Head of the Agency to administer the provisions of Title I of the Ethics in Government Act of 1978, to coordinate and manage the Agency's ethics program, and to provide liaison with the Office of Government Ethics on all aspects of FCA's ethics program. The DAEO reports directly to the Chairman on the Agency's ethics program.
“General Counsel” (GC) means an employee of the FCA who serves as the chief legal officer of the Board. The GC reports to the Chairman concerning administrative matters and to the FCA Board on matters of Agency policy. By the nature of the position the GC, as appropriate and necessary, maintains special advisory relationships in confidence with the individual Board Members. The GC must also keep the FCA Board fully informed of all litigation in which the Agency is involved.
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Section 1. Sunshine Act. All FCA Board meetings will be announced and conducted in conformance with the Government in the Sunshine Act.
Section 2. Presiding Officer. The Chairman will preside at each meeting. In the event the Chairman is unavailable, the other Board Member from the Chairman's political party will preside. If there is no other Board Member from the Chairman's political party, the Board Member serving the longest on the Board will preside.
(a) Regular Meeting. The Secretary, at the direction of the Chairman, issues a call for items for the agenda to the other Board Members and the Office Directors of FCA. The Secretary provides to the Chairman a list of all the items submitted, including a list of outstanding notational votes and matters voted “not appropriate for notational vote.” The Chairman then establishes the agenda to be posted on the Agency's public notice board or on its public Web site at least 1 week before the meeting. The agenda will also be published in the Federal Register at least 3 calendar days before the meeting date. At each meeting, the Board votes to approve or amend the agenda established by the Chairman. The Board may amend the agenda to add items that the Board Members believe need to be considered at that meeting.
(a) Format. The format of minutes of the Board meetings, unless otherwise stated in these rules or relevant statutes or regulations, will comply with the most recent edition of Robert's Rules of Order and the Sunshine Act. The minutes will clearly identify the date, time, and place of the meeting, the type of meeting held, whether the meeting was open or closed, the identity of Board Members present and, where applicable, that they participated by telephone, and the identity of the Secretary and the GC in attendance, or, in their absence, the names of the persons who substituted for them. The minutes will contain a separate paragraph for each subject matter and will note all main motions or motions to bring a main motion before the Board, except any that were withdrawn. The minutes will not contain any reference to statements made unless a request is specifically made that a statement be made a part of the minutes, or if required by the Sunshine Act. The minutes of meetings will indicate the substance and disposition of any notational votes completed since the last meeting. Except in the case of a voice vote, the Secretary will record the vote of each Board Member on a question or will note a unanimous consent. The Chairman and the Secretary will sign the minutes of the Board meeting, indicating the date of approval by the Board.
(b) Circulation. The Chairman and GC will review draft minutes. The Secretary will circulate draft minutes to all Board Members at least one week before their consideration at a Board Meeting. The Secretary will place in all Board Meeting Books copies of the minutes of the meetings of the Board to be voted on at a Board Meeting.
(b) The Board may use notational voting procedures to decide any matter Start Printed Page 54645that may come before it. Any Board Member may submit a motion to the Secretary for distribution as a notational vote. However, in view of the public policy of openness reflected in the Sunshine Act and the desire to allow any Board Member to present viewpoints to the other Board Members, any Board Member can veto the use of the notational voting procedure for the consideration of any particular matter by voting “not appropriate for notational vote.”
(c) Upon submission of an item for notational vote, the Secretary will provide each Board Member a complete package of all relevant information and a notational vote ballot specifying the Board Member making the motion, the motion itself, and the deadline for return of the ballot. Within ten business days of receipt, or earlier if the motion requires, each Board Member will act on the matter by returning the ballot to the Secretary. Each Board Member is to indicate his/her position in writing on the ballot in the following manner: (1) Approve, (2) disapprove, (3) abstain, or (4) not appropriate for notational vote.
(d) No partial concurrences or amendments are permitted; however, a Board Member may suggest a revision to the proponent of the motion, subject to compliance with the Sunshine Act, and the proponent may withdraw his or her motion at any time before receipt by the Secretary of all the ballots of all Board Members or the end of the time period provided for on the ballot.
Section 4. Board Records. The Secretary will maintain the records of the Board including, without limitation, the minutes of the Board meetings and notational votes.
(b) If there is no other Board Member from the Chairman's political party, the Board Member serving the longest on the Board;
The Chairman, in carrying out policies as directed by the Board, acts as spokesperson for the Board and represents the Board and the FCA in official relations within the Federal Start Printed Page 54646Government. Under policies adopted by the Board, the Chairman must consult on a regular basis with the Secretary of the Treasury concerning the exercise of the System's powers under § 4.2 of the Act; the Board of Governors of the Federal Reserve System concerning the effect of System lending activities on national monetary policy; and the Secretary of Agriculture concerning the effect of System policies on farmer, ranchers, and the agricultural economy. As to third persons, all acts of the Chairman will be conclusively presumed to be in compliance with general policies and regulatory decisions, findings, and determinations of the Board.
Section 4. CEO Authorities. The Chairman of the FCA Board is also the Agency's CEO. The CEO, in carrying out his or her responsibilities, directs the implementation of policies and regulations adopted by the Board and, after consultation with the Board, executes the administrative functions and duties of the FCA.
The Chairman as CEO runs the day-to-day operations of the Agency. This includes the power to implement the policies and regulations adopted by the Board, appoint personnel as necessary to carry out Agency functions, set staff pay and benefits and direct staff. As provided in § 5.11(b) of the Act, the Chairman/CEO appoints heads of major administrative divisions subject to the approval of the Board. In accordance with the IG Act, the IG is appointed by the FCA Board.
Subject to the approval of the Board, the Chairman/CEO appoints and removes the “heads of major administrative divisions.” The Board defines the “heads of major administrative divisions” as all Office Directors who are career appointees. The Board must approve the conversion of an existing career position to a non-career (political) position. In accordance with the IG Act, a removal of the IG may only be made upon the written concurrence of a 2/3 majority of the FCA Board.
(a) Budget Approval. The Chairman, consistent with the provisions of the Act, other law and regulations, and applicable policy, oversees the development of budget proposals and causes the expenditure of funds within approved budgets to meet the Agency's mission and objectives. The Board approves an object class budget for the Agency as a whole and a budget for each office. Any reallocation of funds in excess of $100,000 requires FCA Board approval. Reallocation of funds of $100,000 or less requires the Chairman's approval (or that of the Chairman's designee). The Chief Financial Officer (CFO) will provide a monthly report to the Board on all budgetary reallocations that occur after the FCA Board approves a fiscal year budget. The CFO will also provide a quarterly budget report to the Board that discusses actual performance of the budgeted items. The quarterly Start Printed Page 54647report may be presented during regular Board meetings or during a Board briefing.
The IG, in accordance with the IG Act, transmits a budget estimate specifying an aggregate amount for OIG operations, OIG training needs, and amounts for support of the Council of the Inspectors General on Integrity and Efficiency.
(b) Litigation. The Chairman has authority to undertake litigation to defend the Agency, consistent with established Board policy. The Board will approve litigation where the Agency is plaintiff, will approve recommendations to the Justice Department to pursue an appeal, and will approve positions advanced in litigation that conflict with existing Board policy or establish a significant new policy. The Chairman's authority to settle certain claims against the Agency have been delegated to the GC provided the GC consults with the Chairman.
(3) Correspondence. The Chairman approves and signs routine correspondence (that is, correspondence in the ordinary course of business), to members of Congress, correspondence responding to White House referrals, or other correspondence on behalf of the Board or the Agency. The Chairman may delegate approval and signature authority for such correspondence to the Chief Operating Officer or FCA Office Director when the subject matter involves congressional or White House case work. When the subject matter involves the presentation of an Agency position or policy relative to regulations, legislation, or any other significant matter, the Chairman may not delegate authority, and the correspondence must be approved by the Board, except that the Board need not approve a previously approved response or a restatement of previously adopted Board policy. Board approval does not apply when the Chairman is speaking only for him- or herself and includes the appropriate disclaimer. Likewise, on similar matters, Board Members should include appropriate disclaimers. The Chairman or the Chairman's designee has authority to sign acknowledgments or interim responses without Board approval, provided such responses contain no policy statements or only previously approved statements.
Appointment, qualification, and continuance in office of any officer or employee of the FCA, or any conservator or receiver acting in accordance with the FCA receivership regulations at 12 CFR part 627 on the basis of the records of the FCA.
Section 1. Pre-confirmation Travel. Travel expenses incurred by an FCA Board nominee that are solely for the purpose of attending his or her Senate confirmation hearings will be considered the personal expense of the nominee and will not be reimbursed by FCA. However, consistent with existing Government Accountability Office interpretations, the FCA will pay for a nominee's travel expenses to the Washington, DC metropolitan area (including lodging and subsistence), if payment is approved, in advance whenever practicable, by the Chairman based on a determination that the nominee's travel is related to official business that will result in a substantial benefit to the FCA. That determination will be made on a case-by-case basis and is within the sole discretion of the Chairman. The same standards and policies that apply to the reimbursement of Board Members' travel expenses will apply to the reimbursement of nominee's expenses. As part of the documentation for the approval process, the Chairman must execute a written finding that a nominee's travel would substantially benefit the FCA.
Travel that may result in substantial benefit to the FCA could include meetings, briefings, conferences, or other similar encounters between the nominee and FCA Board Members, office directors, the Chief Operating Officer, or other senior congressional Start Printed Page 54648and executive branch officials, for the purpose of developing substantive knowledge about the FCA, its role, its interaction with other Government entities, or the institutions that it regulates. Meetings or briefings of this nature may enable a nominee to more quickly and effectively assume leadership at the Agency after confirmation by the Senate and could thus substantially benefit the Agency.
Section 2. Board Member Relocation. Notwithstanding the provisions of § 5.8(d) of the Act, Board Members will be reimbursed by FCA for travel and transportation expenses incurred in connection with relocation to their first official duty station in accordance with the provisions of the Federal Travel Regulations (FTR). Board Members will be issued a specific prior written authorization by the Chief Human Capital Officer detailing the expenses that may be reimbursed under the current FTR.
Section 3. Representation and Reception Fund. Section 5.15(a) of the Act allows the payment of FCA funds for official representation and reception expenses. Expenses incurred from official functions may be paid for with funds from the Representation and Reception (R&R) Fund only under this policy statement and decisions from the Department of Justice or guidance from the Comptroller General of the United States (Comptroller General).
“Official functions” include meetings and other contacts with the public to explain or further the Agency's mission and typically are activities of the FCA Board, individual Board Members, or other FCA officials acting for the Board. For example, while extending official courtesies to the public on occasions associated with the mission of the Agency, FCA staff may use the R&R Fund to cover catering services, rental of facilities, receptions, coffee, snacks, refreshments, supplies, services and tips.
1. Issuances or revisions to:
2. Requests for information on:
3. Information that is being provided on:
4. Documents that have been issued by other Federal agencies including regulations, official staff commentary on regulations, and forms;
5. FCA Handbook updates;
6. Annual Report of Assessments and Expenses under 12 CFR 607.11;
7. Office of Inspector General mailings for official purposes;
8. Vacancy Announcements;
9. PPM mailings.
1. Agency policy;
2. Agency legal interpretations;
3. Substantive Agency positions on examination, corporate or accounting;
4. No-action positions;
5. Any communication listed in part 1 containing any of the matters listed in part 2 would also require review by the FCA Board prior to distribution.
a. Sign letters notifying the Chairman of the Boards of Farm Credit System institutions of final approval for any approved corporate application, after all conditions for final approval have been met and in accordance with applicable procedures;
2. The FCA Board delegates to the Chairman the authority to approve (preliminary and final) corporate applications from associations requesting to merge or consolidate provided the applications are deemed noncomplex, noncontroversial, and low risk. Applications for mergers or consolidations approved under authority of § 7.8 of the Act will be considered noncomplex, noncontroversial, and low risk if they meet all of the following criteria:
a. The applicant association(s) has a current FIRS rating of 1, 2, or 3 (with no 3-rated association having a formal enforcement action);
c. The application(s) is consistent with the Act and regulations governing its approval, and
3. The FCA Board delegates to the Chairman the authority to approve, execute, and issue under the seal of the FCA, amendments to charters requested by Farm Credit associations, limited to name changes and/or headquarters Start Printed Page 54649relocations. The Chairman may redelegate this authority to other FCA officers or employees. However, all official charters or charter amendments must be signed by the Chairman and the Secretary and may not be delegated to other staff.
Objectives: The FCA facilitates the competitive delivery of financial services to agriculture while protecting the public, the taxpayer, and the investor. Consistent with that mission, the FCA endeavors to provide information to System institutions and to the public. Call Reports and other nonexempt CRS reports contain information of value to the Agency, the System, and the public that enables an evaluation of the financial condition of a System institution in comparison to its peers. This information will provide institutions with a succinct assessment of performance, in addition to that provided in the examination process. The FCA believes that implementation of this policy statement will enhance the FCA's information management activities in an efficient, effective, and economical manner consistent with OMB Circular A-130.
The FCA often receives special requests for new reports containing nonexempt CRS information not produced from the CRS. Consistent with the Freedom of Information Act, the FCA will grant such special requests when the record is readily reproducible with reasonable efforts. We will assess fees to recover the direct costs of complying with the request, including the cost of collecting, processing, and disseminating the information. The FCA may grant a request for a fee waiver to an educational institution, a researcher, a governmental agency, a newspaper, and others, when the benefit derived from releasing the information exceeds the waived fee. Requests should be directed to the Office of Management Services.
Chairman's Responsibilities. The Chairman shall be responsible for Start Printed Page 54650coordinating the FCA Board's involvement in, and responsibilities for, the operation of the FCSBA, including: (1) Developing performance standards and pay scales for the President of the FCSBA and appraising the President's performance with the concurrence of other FCA Board Members, (2) reviewing periodic financial and operating reports, (3) providing procedures as necessary concerning the FCA staff's relationship with the FCSBA, and (4) reviewing such other matters as the Chairman may deem advisable for the purpose of bringing such matters to the attention of the FCA Board. The Chairman may delegate these responsibilities to one or more FCA staff, as he or she deems advisable, except those responsibilities related to pay and performance.
Duties. The FCA Chief Executive Officer appoints the Liaison to the FCS Building Association. The FCA Liaison facilitates and coordinates the FCA's needs with the FCSBA in such areas as office renovations, internal moves, telecommunications services, field office support, and matters concerning building security and Emergency Preparedness. The FCA Liaison provides an internal control function through the countersigning of certain categories of checks as designated by the FCA Board. Additionally, the FCA Liaison reviews FCSBA proposals that come before the FCA Board, and provides counsel regarding issues on which the FCA Board must decide or provide direction. The FCA Liaison is also responsible for assuring that FCA operations, as appropriate, comply with FCSBA policies and practices as well as FCA guidance relating to the FCSBA. Finally, the FCA Liaison shall review monthly cash reconciliation reports as provided by the FCSBA President and report irregularities, as appropriate.
Budget Philosophy. It is FCA Board policy to ensure that every effort is made to minimize operating expenses without jeopardizing the banks' investment in the assets that are managed. Approved budgets are planned and implemented in consideration of a series of policy Start Printed Page 54651objectives as outlined in this statement and always in an effort to balance income and expenses.
Operating Revenues. The FCSBA receives annual operating revenues from (1) bank assessments, (2) office rental income from private commercial tenants, (3) other income from operating balances, and (4) reserve account transfers as necessary.
FCA Field Office Rent,
Taxes and Contract Services,
Component Reserve Account. To reserve for capital replacement items and repairs to the McLean facility, the FCSBA shall maintain a component reserve account which is separate from operating funds and reserves. The funding for this account shall be initially based on the Capital Reserve Study of June 1, 2005, which is then to be updated every 10 years by an independent engineering assessment. The policy objective is to ensure adequate funding, on a net present value basis, to cover up to a 10-year capital repair and replacement program to be updated, as necessary, with each approved budget.
Adjustments to assessments can occur subject to FCA Board approval when total year end “cash and cash equivalents” exceed or are below operating and component reserve requirements. Adjustments are normally considered for third quarter assessments and are based upon the previous year's audited financial statements. Earnings, if any, are distributed through this process in lieu of direct payment.
Investments. The FCSBA invests its funds in an effort to achieve maximum yield consistent with liquidity needs and investment safety. For short-term accessibility, operating reserves and other operating “cash on hand” may be invested in short-term money market accounts, certificates of deposits of Federally insured institutions, and short-term instruments of the U.S. Government or commercial paper rated P-1 or A-1 by Moody's and Standard and Poor's, respectively. Operating reserves investment decisions are made by the FCSBA President consistent with this policy.
Approval Authorization. The FCSBA President is authorized to approve contracts consistent with these guidelines and the FCSBA SOP. The Start Printed Page 54652FCSBA President may re-delegate up to $50,000 of contracting authority to the building property manager.
Assessments for Examination. The FCSBA will be charged annually for assessments consistent with FCA regulation found in 12 CFR 607.4, “Assessment of other System entities.”
The FCA further believes that proper risk controls and management oversight Start Printed Page 54653should be exercised to ensure that such efforts serve the interests of the lending institution as well as those of the community. Any institution providing disaster relief should document such relief actions as well as any significant departures from otherwise applicable institution policies and procedures.
Capital—A System institution is expected to maintain capital and capital management practices commensurate with the nature and extent of risks to the institution and the ability of management to identify, measure, monitor, and control these risks. The capital component is based on an evaluation of an institution's capacity to absorb losses and provide for future growth. An evaluation of capital relies on many factors such as regulatory capital requirements, trends, portfolio and institutional risk, growth, adequacy of risk funds, management capability, and other factors as appropriate.
Assets—This component is based on an assessment of both the quality of the current portfolio and the quality of the associated risk management processes that substantially impact the quality of assets. An assessment of assets relies on many factors such as loan portfolio management, investment portfolio management, loan portfolio trends, risk identification processes, credit administration, allowance for loan losses, and other factors that affect the quality, performance, income producing capacity, and stability of assets.
Liquidity—The liquidity component is based on an evaluation of an institution's capacity to promptly meet the demand for payment of its obligations, fund its loan portfolio, and readily meet the reasonable credit needs of the territory served. An evaluation of liquidity also considers continued access to funding, the existence of secondary sources of liquidity, and other factors as deemed appropriate. Start Printed Page 54654
The Farm Credit Administration Board believes that each Farm Credit System institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers' nonpublic personal information. Since 1972, FCA regulations have required that borrower information be held in strict confidence by Farm Credit institutions, their directors, officers and employees. Our regulations at 12 CFR part 618, subpart G specifically restrict Farm Credit institution directors and employees from disclosing information not normally contained in published reports or press releases about the institution or its borrowers or members. These regulations also provide Farm Credit institutions clear guidelines for protecting their borrowers' nonpublic personal information. Particularly since Farm Credit institutions are owned and directed by the farmers, ranchers and cooperatives who borrow from them, the privacy and security of customer information is vital to the System's continued dependability and long-term success. Therefore, the FCA Board strongly encourages each System institution to regularly inform their customers of the institution's obligation to protect nonpublic personal information.
Additionally, rapid technological advances have made unauthorized and/or inadvertent disclosure of personal financial information more common and more difficult to protect against. Therefore, in addition to monitoring compliance with our regulations on disclosure, FCA will examine each System institution's internal controls on a regular basis to ensure that adequate safeguards are in place to protect the confidentiality of customer nonpublic personal information.
Misleading names are those that a reasonable person might find confusing. For example, we would not issue a charter to an institution requesting a name that is the same as or similar to that of an existing institution because the public might find this confusing. Merely avoiding identical names is not enough; to minimize confusion, a proposed name must sufficiently distinguish an institution from other institutions. If the Agency had approved a charter for an institution using MyTown, ACA, as its official name, it would not issue a charter for an institution proposing ACA of MyTown or MyTown Farm Credit Services, ACA, as its official name. Nor would we issue Start Printed Page 54655a charter with the phrase “farm credit association” as part of the official name, because the inevitable use of the acronym “FCA” would be confused with the name of the Agency. Also, we would not approve a name for an institution that could cause the public to confuse that institution's authorities and services with those of a commercial bank, thrift institution, or credit union. For example, we would not issue a charter to a System institution requesting the term “national bank” in its official name because this could cause confusion regarding the services the institution may offer.
The Chairman of the FCA Board will designate the Chief Operating Officer and the office directors of the Office of Examination, Office of General Counsel, and Office of Regulatory Policy, or the directors of successor offices, as voting members of the REC. A representative from the Farm Credit System Insurance Corporation will be invited to participate in REC activities as a non-voting member. The Chairman of the FCA Board will also designate one of the voting REC members as Chairman of the REC.
3. The institution or person is about to engage in a material unsafe or unsound practice or is about to commit a willful or material violation of law or regulation that exposes the institution to significant risk;
The REC will be notified when any institution is assigned a “3” composite FIRS rating and informed of the Agency's supervisory strategies.Start Printed Page 54656
[FR Doc. 2011-22203 Filed 8-31-11; 8:45 am]