[Federal Register Volume 73, Number 36 (Friday, February 22, 2008)]
[Notices]
[Pages 9804-9805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-821]


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FARM CREDIT ADMINISTRATION

[BM-14-FEB-08-02]


Consideration and Referral of Supervisory Strategies and 
Enforcement Actions

AGENCY: Farm Credit Administration.

ACTION: Policy statement.

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SUMMARY: The Farm Credit Administration (FCA or Agency) Board recently 
adopted a policy statement that identifies conditions that warrant 
referrals to the Agency's Regulatory Enforcement Committee (REC) to 
consider appropriate supervisory strategies and recommend to the FCA 
Board the use of the enforcement authorities conferred on the Agency 
under part C, title V of the Farm Credit Act of 1971, as amended, or 
other statutes.

DATES: Effective Date: February 14, 2008.

FOR FURTHER INFORMATION CONTACT: Roger Paulsen, Office of Examination, 
Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4265, TTY 
(703) 883-4483,
    or
    Jane Virga, Senior Counsel, Office of General Counsel, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4020.

SUPPLEMENTARY INFORMATION: The FCA Board adopted a policy statement 
identifying conditions that require referrals to the Agency's 
Regulatory Enforcement Committee. The policy statement, in its 
entirety, follows:
    Consideration and Referral of Supervisory Strategies and 
Enforcement Actions
    FCA-PS-79 [BM-14-FEB-08-02]
    Effective Date: February 14, 2008.
    Effect on Previous Action: None.
    Source of Authority: Sections 5.19, 5.25-5.35 of the Farm Credit 
Act of 1971, as amended.
    The FCA Board Hereby Adopts the Following Policy Statement:
    The Farm Credit Administration (FCA or Agency) Board provides for 
the regulation and examination of Farm Credit System (System or FCS) 
institutions, which includes the Federal Agricultural Mortgage 
Corporation (Farmer Mac), in accordance with the Farm Credit Act of 
1971, as amended (the ``Act''). This policy addresses conditions that 
warrant referrals to the Agency's Regulatory Enforcement Committee 
(REC) to consider appropriate supervisory strategies and recommend to 
the FCA Board the use of the enforcement authorities conferred on the 
Agency under Part C, Title V of the Act or other statutes. Enforcement 
actions include formal agreements, orders to cease and desist, 
temporary orders to cease and desist, civil money penalties, 
suspensions or removals of directors or officers, and conditions 
imposed in writing to address unsafe or unsound practices or violations 
of law, rule or regulation (Enforcement Document). Taking these 
actions, in an appropriate and timely manner, is critical to 
maintaining shareholder, investor, and public confidence in the 
financial strength and future viability of the System.
    This policy provides only internal FCA guidance. It is not intended 
to create any rights, substantive or procedural, enforceable at law or 
in any administrative proceeding.

Composition of the REC

    The Chairman of the FCA Board will designate 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.
    Due to the statutory independence of the Office of Secondary Market 
Oversight (OSMO), there will be different REC membership when 
considering issues related to Farmer Mac.

Referrals to the REC

    Recommended supervisory strategies or enforcement actions 
concerning an FCS institution or person will be referred to the REC 
when any of the conditions exist, as specified below, or when a 
specified condition does not exist, but consideration of an enforcement 
action or review by the REC is appropriate. The REC will review the 
proposed actions and draft enforcement documents and assess the 
recommendations for pursuing any such actions. The REC may revise the 
recommendations and will document its concurrence or nonconcurrence 
with the supervisory strategy or enforcement action.

Conditions Warranting Referral to the REC

    Any one of the following conditions requires a referral to the REC 
for its consideration of supervisory strategies or enforcement actions.
    1. A ``4'' or ``5'' composite FIRS rating is assigned to an FCS 
institution;
    2. The institution or person is deemed unable or unwilling to 
address a material: (a) Unsafe or unsound condition or practice; or (b) 
violation or ongoing violation of law or regulation;
    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

[[Page 9805]]

regulation that exposes the institution to significant risk;
    4. Conditions meet the statutory criteria for a suspension or 
removal;
    5. Conditions meet the statutory criteria for assessing a civil 
money penalty and the factors to be considered in determining the 
amount of a civil money penalty justify the imposition of the penalty;
    6. Conditions meet the statutory criteria to place an FCS 
institution in conservatorship or receivership;
    7. An institution or person fails to comply with an Enforcement 
Document or is unwilling or unable to address a violation of a 
condition imposed in writing; or
    8. Conditions justify termination or modification of an existing 
Enforcement Document.
    As appropriate, referrals for the REC's consideration also may be 
made for conditions not specified above.

Notification of the REC

    The REC will be notified when any institution is assigned a ``3'' 
composite FIRS rating and informed of the Agency's supervisory 
strategies.

Consultation with the REC

    For institutions under a formal Enforcement Document, or assigned a 
composite FIRS rating of ``4'' or ``5'', requests for prior approvals, 
or other actions, will be referred to the REC for consultation.

Referral to the FCA Board

    The REC will refer to the FCA Board for its consideration all 
recommendations concurred with by the REC for the placement of an 
Enforcement Document on a FCS institution or person. In the unlikely 
instance, when an institution receives a composite ``4'' or ``5'' FIRS 
rating and a formal Enforcement Document is not recommended to the FCA 
Board, the REC will promptly document and report the Agency's 
supervisory strategy to the FCA Board.

Reporting to the FCA Board

    The REC Chairman will report at least quarterly to the FCA Board if 
matters are referred to or reviewed by the REC, but FCA Board action is 
not subsequently requested.

Actions by the REC

    The REC will develop procedures to address the responsibilities 
outlined herein.
    Due to OSMO's statutory independence, the Director of OSMO will 
develop procedures for actions affecting Farmer Mac.
    Dated this 14th day of February, 2008 by order of the Board.

    Dated: February 19, 2008.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. 08-821 Filed 2-21-08; 8:45am]
BILLING CODE 6705-01-P