[Federal Register Volume 66, Number 129 (Thursday, July 5, 2001)]
[Notices]
[Pages 35428-35430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16799]


=======================================================================
-----------------------------------------------------------------------

FARM CREDIT ADMINISTRATION


Public Meeting on Other Financing Institutions and Alternative 
Funding Mechanisms

ACTION: Notice of meeting.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit Administration (FCA) announces a forthcoming 
public meeting relating to the funding and discount relationship 
between other financing institutions' (OFIs) and Farm Credit System 
(FCS or System) banks.\1\ Through this meeting, we are seeking the 
public's view on what changes should be considered to the current 
regulatory framework, and seek your suggestions for other types of 
partnering relationships between System and non-System lending 
institutions that would increase the availability of funds to 
agriculture and rural America. This meeting will provide an opportunity 
for existing and potential OFIs, FCS banks and associations, commercial 
banks, other lending institutions, and other interested parties to 
express their views and offer constructive suggestions.
---------------------------------------------------------------------------

    \1\ The terms ``Farm Credit, FCS, or System'' banks include the 
Farm Credit Banks (FCBs) and an agricultural credit bank (ACB).

DATES: The public meeting will begin at 8:30 a.m. local time on August 
3, 2001, in Des Moines, Iowa. Interested parties wishing to present 
their testimony in person may notify us prior to the scheduled meeting 
date, or may register to speak on the day of the meeting. Interested 
parties wishing to provide oral testimony as part of a panel 
presentation should notify us of their request by July 27, 2001. 
Requests to provide testimony in person will be honored in order of 
receipt. Requests for sign language interpretation or other auxiliary 
aids should be received by FCA's Office of Congressional and Public 
---------------------------------------------------------------------------
Affairs at (703) 883-4056 (TDD (703) 883-4444) by July 27, 2001.

ADDRESSES: The public meeting will be held in Des Moines, Iowa. We will 
publish the name and address of the meeting facility on our Web site 
and in the Federal Register at least 15 days prior to the date of the 
public meeting. You may submit requests to appear and present testimony 
for the public meeting by electronic mail to [email protected]

[[Page 35429]]

or through the Pending Regulations section of our Web site at 
``www.fca.gov.'' You may also submit your request in writing to Thomas 
G. McKenzie, Director, Regulation and Policy Division, Office of Policy 
and Analysis, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090, or by facsimile transmission to (703) 734-5785.

FOR FURTHER INFORMATION CONTACT:
    Dennis Carpenter, Senior Policy Analyst, Office of Policy and 
Analysis, Farm Credit Administration, 1501 Farm Credit Drive, McLean, 
Virginia 22102-5090, (703) 883-4498, TDD (703) 883-4444, or Richard A. 
Katz, Senior Attorney, Office of General Counsel, Farm Credit 
Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090, 
(703) 883-4020, TDD (703) 883-4444.


SUPPLEMENTARY INFORMATION: This public notice announces our intention 
to hold a public meeting that would explore ways to increase the 
availability of funds to agriculture and rural America through: (1) The 
funding and discount relationships between System banks and OFIs, and 
(2) other partnering relationships between FCS banks and associations 
and non-System financial institutions through alternative funding 
means. The purpose of this meeting will be to allow us to hear your 
views on our OFI regulations, existing and potential OFI credit 
relationships with Farm Credit banks, and other methods for the System 
and non-System financial institutions to work together to deliver 
funding to agriculture and rural America. Your suggestions will help us 
revise our regulations governing the funding and discount relationship 
between System banks and OFIs. We also welcome your ideas about how we 
can encourage the FCS and non-System financial institutions to form 
other partnering relationships that increase the flow of funds to 
farmers, ranchers, cooperatives, farm-related businesses, and rural 
utilities through loan participations, Farmers' notes, Aggie bonds, and 
other similar programs.
    This public meeting is another step in the OFI rulemaking process 
we began with an advance notice of proposed rulemaking (ANPRM) that was 
published in the Federal Register on April 20, 2000, (65 FR 21121). The 
meeting will allow us to continue to explore regulatory approaches that 
will enable FCS institutions to form alliances with commercial banks 
and other agricultural lenders. Such delivery mechanisms can include 
funding of OFIs, loan participations, investments in Farmers' notes,\2\ 
and other similar programs.
---------------------------------------------------------------------------

    \2\ Investments in Farmers' notes are authorized by 
Sec. 615.5172 of our regulations.
---------------------------------------------------------------------------

I. Objective

    This public meeting is another step in supporting the FCA Board's 
commitment to give farmers and ranchers greater access to credit. We 
hope to identify solutions that would increase the availability of 
funds through OFI relationships as well as other funding alternatives. 
This meeting aims to identify new methods and tools that would help 
meet the financing needs of agriculture and rural America in the 21st 
century. Specifically, we expect to identify any regulatory barriers 
that may impede access to funds through the FCS.

II. Background

    The comment period for our ANPRM ended on July 19, 2000. We 
received 37 comment letters from FCS institutions, commercial banks, 
existing OFIs, and other interested parties. Given the nature of the 
comments received and the broad spectrum of suggestions offered, we 
have decided to hold a public meeting in order to seek additional input 
about various approaches that could be available for FCS institutions 
to increase the availability of funding to non-System lenders that 
serve agriculture and rural America. We are also asking additional 
questions and seeking additional information from OFIs, System 
institutions, non-System financial institutions, and other interested 
parties on ways to improve the delivery of credit to agriculture 
through OFI funding relationships. Additionally, we are seeking 
information on other alternative funding programs, such as loan 
participations, investments in Farmers' notes, and similar programs.
    Section 1.7(b) of the Farm Credit Act of 1971, as amended (Act), 
authorizes the Farm Credit banks to fund and discount short- and 
intermediate-term loans for OFIs, which are non-System lenders. Under 
section 1.7(b) of the Act, OFIs include:
     National and State banks;
     Trust companies;
     Agricultural credit corporations;
     Incorporated livestock loan companies;
     Savings institutions;
     Credit unions;
     Any association of agricultural producers making loans to 
farmers and ranchers; and
     Any corporation making loans to producers or harvesters of 
aquatic products.
    Section 1.7(b) of the Act enables OFIs to obtain funding from Farm 
Credit banks for any loan that a production credit association (PCA) 
could make under section 2.4 of the 1971 Act. PCAs are authorized to 
make short- and intermediate-term loans with maturities ranging up to 
10 years (15 years to producers or harvesters of aquatic products). An 
OFI can fund or discount through FCS banks only those loans it makes to 
farmers, ranchers, aquatic producers and harvesters, processing and 
marketing operators, farm-related businesses, and rural homeowners, who 
are eligible to borrow under our regulations in subpart A of part 613.
    The OFI discount and funding authorities of System banks help to 
fulfill their mission of financing agriculture, aquaculture, and other 
specified rural needs. Legislative history shows that Congress 
originally granted OFIs discount privileges at System banks because 
operating credit for farmers and ranchers was scarce. Since then, 
Congress has updated the authorities of System banks to fund and aid 
both System and non-System lenders to increase the flow of credit to 
underserved sectors of agriculture and the rural economy. We continue 
to explore ways of making competitive credit available through more 
avenues to farmers, ranchers, and other eligible borrowers.
    In the early 1980s, both the number of OFIs and the volume of 
business they did with System banks peaked, then subsequently declined. 
As of March 31, 2001, twenty-six (26) OFIs have funding relationships 
for approximately $297 million with FCS banks. In 1998, we sought to 
expand OFI access to System funding and discounting by amending our 
regulations to remove many OFI eligibility limits not required by the 
1971 Act.\3\ We also required a System bank's assessment of total 
charges for an OFI loan to be comparable to the charges the bank 
imposes on its direct lender System associations. In addition, to 
improve safety and soundness, those amendments also required all OFI 
loans to be full recourse loans.
---------------------------------------------------------------------------

    \3\ See 63 FR 36541 (July 7, 1998).
---------------------------------------------------------------------------

    However, despite these regulatory changes, the program continues to 
be underused. We are now considering a new rulemaking with the intent 
of improving non-System agricultural lenders' access to FCS funding as 
a means of improving the availability of credit to agriculture and 
rural America through the OFIs, loan participations, the existing 
investment in Farmers' notes program, or other investment vehicles, 
such as Aggie bonds.

[[Page 35430]]

    We continue to believe that the FCS institutions can more fully 
serve the credit needs of agriculture and other eligible borrowers, as 
Congress intended, if they work cooperatively and enhance relationships 
with other rural credit providers. The OFI relationship is one method 
that helps FCS banks achieve their objective. For this reason, we 
continue to look for ways to improve OFIs' access to System funding. We 
wish to consider whether revising regulatory requirements will spur 
development of more OFI relationships. We also invite your comments on 
other funding avenues and partnerships between FCS institutions and 
non-System lenders that would increase the availability of credit to 
underserved sectors of the agricultural and rural economy.

III. Questions

    In this public meeting, we seek additional information from all 
interested parties to aid us in developing proposed regulations that 
increase opportunities for all types of agricultural lenders to access 
funds through the FCS to the extent allowed by the Act and within 
appropriate safety and soundness boundaries. Specifically, we seek 
input on the following questions.
    1. What problems/impediments, if any, do you believe exist with the 
current regulatory requirements relating to OFIs? Please address:
    a. Structural impediments (e.g., What type of corporate structure 
or ownership structure works best for OFI borrowers?)
    b. Operational impediments (e.g., cost of establishing an OFI, loan 
pricing, collateral requirements, capital required, etc.)
    c. Geographical impediments (e.g., Where may an OFI establish a 
funding relationship?); and,
    d. Other impediments?
    2. What other regulatory changes, if any, are needed to improve the 
availability and efficiency of OFI relationships?
    3. In addition to OFIs, how can we amend our regulations to 
encourage greater cooperation and partnering between FCS institutions 
and non-System lenders in increasing credit availability to eligible 
farmers, ranchers, aquatic producers and harvesters, their 
cooperatives, rural utilities, and farm-related businesses?
    4. What other types of market-based solutions and financial 
arrangements (e.g., loan participation programs, investments in 
Farmers' notes, other similar types of programs) could be used to 
improve the availability of funds to non-System lenders through the 
FCS?
    5. How can such alternative funding arrangements be used to improve 
the efficiency and availability of funding to agriculture and related 
rural businesses, including rural utilities and rural housing? Under 
what conditions should these arrangements be provided?
    6. If lending institutions are granted greater flexibility to 
access FCS funding through OFI relationships, other partnering 
arrangements, or alternative funding mechanisms (e.g., loan 
participations, investments in Farmers' notes, Aggie bonds, and other 
similar programs and activities), what measures should be instituted to 
ensure the safety and soundness of the FCS institutions?

IV. Request To Present Testimony

    In addition to comments on the preceding topics, the FCA invites 
testimony on all issues relating to existing OFI regulations contained 
in 12 CFR part 614, subpart P. We anticipate a significant number of 
presenters and as such, oral testimony at the meeting will be limited 
to 5 minutes per person and 10 minutes for follow-up questions.
    Any interested party wishing to present testimony at the meeting 
may submit a request to the FCA at one of the addresses we listed at 
the outset of this notice. You may also identify yourself and your 
intent to speak the day of the public meeting. In order to provide the 
most opportunity for interested parties to present their views, we 
encourage interested parties to provide their testimony in a panel 
format. However, as time permits we will also accept individual 
testimony. A request to speak should provide the name, address and 
telephone number of the person wishing to testify and the general 
nature of the testimony. Requests will be honored in order of receipt.
    We intend to include all comments in our official public record and 
as such we ask that you provide us with written statements or detailed 
summaries of the text of your testimony. Such written comments should 
be presented to us by the close of the public meeting. If time permits, 
at the end of the public meeting, additional parties who were not 
scheduled to speak may be invited to provide their thoughts and 
comments on the questions posed in this notice. For those parties that 
wish to provide testimony on the day of the meeting, but are not able 
or do not desire to present testimony in person in front of the meeting 
panel, we intend to make available additional means of recording such 
testimony.
    In the event that more people wish to testify than time permits, 
the FCA will accept their written statements for the record. Written 
copies of the testimony along with a recorded transcript of the 
proceedings will be included in our rulemaking files. The FCA Board 
will accept written comments, in support of or in rebuttal to testimony 
presented at the public meeting or comments submitted for the record. 
The comment period for such additional comments will end 30 days 
following the date of this public meeting.
    The comments, as well as all documents and testimony received by 
the FCA as part of the public meeting process, will be available for 
public inspection at the FCA's Office of Policy and Analysis in McLean, 
Virginia.

V. Special Accommodations

    This meeting is physically accessible to people with disabilities. 
Requests for sign language interpretation or other auxiliary aids 
should be received by FCA's Office of Congressional and Public Affairs 
at (703) 883-4056 (TDD (703) 883-4444) by July 27, 2001.

    Dated: June 28, 2001.
Jeanette C. Brinkley,
Acting Secretary, Farm Credit Administration Board.
[FR Doc. 01-16799 Filed 7-3-01; 8:45 am]
BILLING CODE 6705-01-P