[Federal Register Volume 65, Number 140 (Thursday, July 20, 2000)]
[Notices]
[Pages 45066-45078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18283]


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FARM CREDIT ADMINISTRATION

National Charters Booklet


Notice and Request for Comment

AGENCY: Farm Credit Administration.
SUMMARY: The Farm Credit Administration (FCA or Agency) is seeking 
comment on its May 3, 2000, publication entitled National Charters 
(Booklet). This Booklet, which the FCA sent to all Farm Credit System 
(System or FCS) institutions, provides guidance on the national charter 
application process and the national charter territory. Specifically, 
the Booklet explains how a direct lender association can apply for a 
national charter; what the territory of a national charter will be; and 
what conditions the FCA will impose in connection with granting a 
national charter. As explained in the Booklet, the FCA began accepting 
applications from System institutions on July 1, 2000. The FCA has 
received several requests from interested parties to publish the 
Booklet for public comment. Additionally, several interested parties 
have raised safety and soundness issues concerning national charters. 
While it is not subject to a notice and comment requirement, the 
Booklet has been on our Web site and available to the public since May 
3, 2000. We agree that publishing the Booklet in the Federal Register 
and providing an additional opportunity for interested parties to 
comment will assist the FCA Board as it makes future chartering 
decisions.

DATES: Please send your comments to us on or before August 31, 2000.

ADDRESSES: You may send comments by electronic mail to ``[email protected]'' or through the Pending Regulations section of our Web 
site at ``www.fca.gov.'' You may also mail or deliver written comments 
to Patricia W. DiMuzio, Director, Regulation and Policy Division, 
Office of Policy and Analysis, Farm Credit Administration, 1501 Farm 
Credit Drive, McLean, Virginia 22102-5090 or send them by facsimile 
transmission to (703) 734-5784. You may review copies of all comments 
we receive in the Office of Policy and Analysis, Farm Credit 
Administration.

FOR FURTHER INFORMATION CONTACT:  
S. Robert Coleman, Senior Policy Analyst, Office of Policy and 
Analysis, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-
4498, TDD (703) 883-4444,
    or

Jennifer A. Cohn, Senior Attorney, Office of General Counsel, Farm 
Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TDD (703) 
883-4444.

SUPPLEMENTARY INFORMATION:

I. Objectives

    Our objectives are to:
     Provide guidance for System institutions to apply for a 
national charter;
     Provide an additional opportunity for the public to 
comment on this guidance; and
     Address any safety and soundness concerns regarding 
national charters.

II. General Information

    In July 1998, the FCA Board issued a philosophy statement that, 
among other things, announced the FCA's support for removing regulatory 
geographic barriers imposed on FCS institutions. Initially, the FCA 
approached this objective with a proposed rulemaking. On November 9, 
1998, we published a proposed rule that would have eliminated 
geographic restrictions on direct lending, related services, and 
certain loan participations by amending or repealing several 
regulations in parts 611, 614, and 618. See 63 FR 60219 (Nov. 9, 1998). 
Although the 90-day comment period was scheduled to expire on February 
9, 1999, we extended it until May 10, 1999, at the request of several 
commenters. See 63 FR 69220 (Dec. 16, 1998).
    The FCA received considerable comments and insight during the 6-
month public comment period on the proposed rule. On April 25, 2000, we 
published a final rule that deleted the requirements for a System 
institution to provide notice to or seek consent from other System 
institutions when it buys participation interests in loans originated 
outside its chartered territory. See 65 FR 24101 (Apr. 25, 2000). This 
final rule became effective on May 25, 2000. See 65 FR 33743 (May 25, 
2000). Other parts of our original proposal--those that would have 
removed restrictions on direct lending and related services outside an 
institution's designated territory--remain pending.

III. National Charters

    Through an Informational Memorandum dated March 8, 2000, issued to 
all FCS institutions, the FCA Board announced plans to remove the 
restrictions on direct lending and related services through the 
chartering process. The FCA exercises its powers to issue or amend 
charters under sections 2.0, 2.10 and 5.17 of the Farm Credit Act of 
1971, as amended.
    Through a second Informational Memorandum to all FCS institutions 
dated May 3, 2000, the FCA Board provided guidance on national charters 
by publishing a booklet entitled National Charters. The Booklet 
explains (1) how a direct lender association can apply for a national 
charter; (2) what the territory of a national charter will be;

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and (3) that the FCA will impose certain conditions in connection with 
granting a national charter. The FCA published this Booklet after 
gathering information on removing regulatory geographic restrictions 
during the listening sessions at the Agency's annual Information 
Exchange meetings between the FCS institutions and the FCA Board held 
in March and April 2000.
    The FCA believes removing unnecessary geographic restrictions 
through national charters is in the best economic interest of rural 
America. National charters will help level the playing field for all 
participants and provide benefits to farmers, ranchers and rural 
America.
    National charters can improve safety and soundness risk by diluting 
the geographic risk in a System institution's loan portfolio. The FCA 
believes associations that hold national charters will be more 
geographically diverse and financially stronger than if we continue to 
restrict institutions to limited geographic areas, which can be prone 
to isolated weather and economic adversities.
    As the safety and soundness regulator of the Farm Credit System, we 
are sensitive to any risk affecting System institutions. In order to 
correct any safety and soundness problems in the Farm Credit System, 
the FCA will continue to use its examination and enforcement powers to 
correct problems in FCS institutions.
    National charters further support our July 1998 philosophy 
statement by removing existing geographic constraints on System 
entities. Removing these artificially imposed constraints will promote 
greater efficiency, improve customer service, and enhance the System's 
ability to meet the current and future needs of rural America. 
Furthermore, this action will allow FCS institutions to better 
structure their businesses as market forces and customer demands 
change. The FCA believes national charters will provide farmers, 
ranchers, and other eligible rural residents with more choices, which 
we believe will improve the availability, price, and quality of 
agricultural credit. Finally, national charters benefit rural 
communities as artificial regulatory territorial boundaries are 
removed. System institutions may elect to form new partnerships and 
alliances with each other and other commercial firms, which will 
benefit all of agriculture and rural America over time.
    National charters will enable direct lender associations in the 
System to provide seamless credit to agricultural producers that do 
business across the United States without the burdensome and 
unnecessary notice and consent requirements currently in place. 
Removing these geographic constraints also will allow System 
institutions to better manage their credit risks by diversifying the 
geographic risk in their loan portfolios.
    The Booklet imposes no requirements on System institutions or 
others. Rather, it is an announcement of our intended position on 
future chartering actions. Accordingly, it is not subject to a notice 
and comment requirement. Nevertheless, we are providing this notice and 
additional opportunity to comment to allow input from all interested 
parties as the FCA Board considers its future chartering decisions. We 
are taking this action in response to several requests from interested 
parties.

IV. National Charter Applications

    The Booklet states that we will process all national charter 
applications we receive between July 1, 2000, and September 30, 2000, 
so that, if the FCA Board approves them, they will all be effective on 
January 1, 2001. By this notice, we seek additional comments on the 
Booklet and on the issues that national chartering raises. The Booklet 
is set forth below in its entirety. If you prefer to download the 
Booklet from our Web site, it has been posted there since May 3, 2000. 
The FCA Board will consider all comments as it makes future chartering 
decisions.

    Dated: July 14, 2000.
Kelly Mikel Williams,
Secretary, Farm Credit Administration Board.

BILLING CODE 6705-01-P

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[FR Doc. 00-18283 Filed 7-19-00; 8:45 am]
BILLING CODE 6705-01-C