[Federal Register Volume 84, Number 94 (Wednesday, May 15, 2019)]
[Rules and Regulations]
[Pages 21693-21698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09960]
[[Page 21693]]
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FARM CREDIT ADMINISTRATION
12 CFR Chapter VI
RIN 3052-AD24
Statement on Regulatory Burden
AGENCY: Farm Credit Administration.
ACTION: Final notice of intent.
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SUMMARY: This document is part of the Farm Credit Administration's
(FCA, our, or we) initiative to consider the appropriateness of the
requirements we impose on Farm Credit System (FCS or System)
institutions, including the Federal Agricultural Mortgage Corporation
(Farmer Mac). On May 18, 2017, we requested public comments, and this
document responds to those comments.
DATES: May 15, 2019.
FOR FURTHER INFORMATION CONTACT: Gaylon J. Dykstra, Senior Policy
Analyst, Office of Regulatory Policy, Farm Credit Administration,
McLean, VA 22102-5090, (703) 883-4322, TTY (703) 883-4056; or Mary
Alice Donner, Senior Counsel, Office of General Counsel, Farm Credit
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4056.
SUPPLEMENTARY INFORMATION:
I. Objective
The objective of this final notice is to inform the public of our
response to the comments submitted to us regarding our request to
identify regulations that they considered burdensome, ineffective,
duplicative, or not based on law.
II. Background
On May 18, 2017, we published a document in the Federal Register
inviting the public to comment on our regulations that may duplicate
other requirements, are ineffective, are not based on law, or impose
burdens that are greater than the benefits received.\1\ We received
letters from Farm Credit East, ACA; Capital Farm Credit, ACA; CoBank,
ACB; the Farm Credit Council; and the Institute for Policy Integrity at
the New York University School of Law. The letters commented on
regulations concerning: Governance, lending, capital, investments,
borrower rights and other FCA regulations and guidance. In addition,
the Institute for Policy Integrity encouraged FCA to stay focused on
its mandate to identify outdated, unnecessary, ineffective, or net
costly regulations for repeal, replacement, or modification and not to
instead prioritize recently promulgated and overwhelmingly cost-benefit
justified rules identified by industry commenters.
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\1\ See 82 FR 22762.
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This document discusses the comments raised about FCA regulations
and FCA activities. Many of the comments concern changes that we cannot
implement because they are inconsistent with the Farm Credit Act of
1971, as amended (Act), safety and soundness, and/or other FCA guidance
or position. Some comments raise issues that are the subject of
existing regulatory projects scheduled for consideration by FCA as set
forth in our 2019 Regulatory Projects Plan, which is available on the
FCA website, and those issues will be addressed in the planned
regulatory projects. In other cases, commenters identify issues that
need further evaluation before we can consider whether changes are
appropriate.
III. Comments That Did Not Result in Regulatory Changes
A. Examinations
Comment: Given the strong financial performance and credit quality
of many institutions, the agency should consider lengthening the time
between exams for highly rated institutions. This would not only reduce
costs at the institution level, but also allow FCA to better leverage
its own resources as well as reduce its own costs.
FCA Response: We cannot make the recommended change because it
conflicts with statute. Section 5.19 of the Act requires that ``except
for Federal land bank associations, each institution of the System
shall be examined by Farm Credit Administration examiners at such times
as the Board may determine, but in no event less than once during each
18-month period.'' Therefore, we cannot extend the time between
examinations to longer than 18 months. However, we would like to note
that despite the mandated examination cycle, we very much do leverage
our resources, as suggested in the comment. We do this through our
risk-based examination approach, wherein resources are allocated based
on an institution's risk profile, and our use of off-site, electronic
data throughout the examination process.
B. E-Sign Notifications
Comment: We encourage the agency to reconsider the exceptions to
``E-Sign'' notifications, and in particular those in Subpart D of part
617. We note that E-Sign notifications of adverse credit decisions are
permitted under ECOA regulations.
FCA Response: The FCA E-Sign Regulations comply with Public Law
106-229--Electronic Signatures in Global and National Commerce Act.
This law has not changed since we published the FCA's E-Sign
Regulations; therefore, we are unable to make any revisions.
C. Outside Director
Comment: Section 611.220(a)(1) currently precludes an ``outside''
director from serving on the board of an FCA chartered Service
Corporation. We believe this provision is more restrictive than is
required by the Act (which, as you know, only requires a bank or
association to have one outside director). As long as the prospective
bank or association director candidate is not a director of another
institution at the time of his selection, the Act's requirement is
satisfied.
Additionally, the arbitrary prohibition on outside directors
serving on service corporations is contrary to the spirit of the Act
(creating a ``second class'' of directors), and counterproductive in
terms of keeping qualified directors from serving on service
corporation boards.
FCA Response: The comment is seeking to allow an outside director
to simultaneously serve on two boards of directors--a System
institution and a service corporation. We cannot make the recommended
change because it conflicts with statute. Section 1.4 of the Act
requires that ``at least one member shall be elected by the other
directors, which member shall not be a director, officer, employee, or
stockholder of a System institution.'' Section 4.27 of the Act provides
that a service organization chartered by FCA is a Farm Credit System
institution. We also believe that independence of the outside director
is critical. We note that some service corporations are jointly owned
by several System institutions, and service on the service corporation
board could impair the independence of the outside director of the bank
or association.
D. Unincorporated Business Entities (UBE)
Comment: Eliminate the regulatory approval process for formation of
UBEs pursuant to Sec. 611.1155 and address compliance through the
examination process.
FCA Response: We are not persuaded by the comment that a change is
needed. The UBE rule includes a notice-only provision in Sec. 611.1154
to simplify the process and avoid unnecessary administrative burdens
and costs when investing in UBEs whose activities we have experience in
overseeing. For investments in any other UBEs, we continue to believe
that it is prudent to
[[Page 21694]]
have System institutions get our pre-approval to avoid the burden and
cost associated with reversing investments that we later deem to be
inappropriate, unsafe or unsound, or contrary to law through the
examination process. FCA will, however, consider whether additional
categories of UBE investments could be included in the notice-only
provisions to reduce burden on System institutions.
E. Aquatic Related Businesses Industry
Comment: Farm Credit may currently finance ``farm related
businesses'' as eligible entities in the agriculture sector, and should
also be permitted to finance related businesses which support the
commercial fishing industry. Commercial fishing is the economic
backbone of many rural communities in some parts of the nation, and
producers and harvesters of seafood are themselves very dependent on
many types of infrastructure for their long-term viability. FCA
regulations that address ``related businesses'' should be modified to
match overall lending authorities (for Farmers, Ranchers and Aquatic
Producers and Harvesters) so that financing for ``fishing related
businesses'' is specifically permitted.
FCA Response: We responded to this comment in past Regulatory
Burden Notices. Our latest response was ``[w]ith respect to aquatic-
related services, sections 1.9(2), 1.11(c)(1), and 2.4(a)(3) of the Act
authorize title I and II System lenders to extend credit to businesses
that furnish farm-related services to farmers and ranchers directly
related to their on-farm operation needs. The Act does not reference
financing businesses that furnish aquatic-related services to aquatic
producers and harvesters. We are closely following this topic.'' \2\
Although our position on this issue remains unchanged, we continue to
follow any interest or developments on this topic.
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\2\ See 79 FR 42238 (July 21, 2014).
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F. Other Financing Institutions (OFI)
Comment: Modify Sec. 614.4120 to allow System banks and individual
OFI customers to develop financing agreements that are independent of
the Agricultural Credit Association financing structure and allows them
to have a general financing agreement that meets the unique needs and
varying organizational structures of OFIs. Additionally, Sec.
614.4130(b) should be modified to allow for the delivery to the FCA of
all documents related to the GFA within 30 days of execution.
FCA Response: We are not persuaded by the comment that a change is
needed. FCA regulation 614.4120 requires the board of directors of each
System bank to adopt policies and procedures governing the making of
direct loans for direct lender associations and OFIs. While the term
general financing agreement is the same term used for both direct
lending associations and OFIs, the regulations do not require that they
be the same or similar, only that the adopted policies and procedures
prescribe lending policies and loan underwriting standards that are
consistent with sound financial and credit practices.
The request in the comment to increase the document delivery
deadline to 30 days lacks any justification or support. The deadline in
Sec. 614.4130(b) currently is 10 business days after execution of the
documents. The need for the requested change is not readily apparent,
especially given that the documents could easily be submitted to FCA
electronically. Nonetheless, while we are not making any change at this
time, we may consider the request as part of a future regulatory
project.
G. Updated Financial Information
Comment: Section 614.4150 does not specifically direct institutions
to annually request updated financial information from customers.
However, anecdotal evidence suggests that this is a requirement from
the Office of Examination. This issue dates back to the credit crisis
of the 1980s. Hopefully, we are past the time when this requirement is
appropriate on any kind of an ``across the board'' basis.
FCA Response: We agree with the comment that an ``across the
board'' basis for updating financial information is not appropriate. In
fact, we took this position in 1997 when we removed the requirement for
annual updating of financial information from the regulations. Instead,
current regulations require that System institution boards and
management adopt written policies and procedures that set the standards
for updating borrower financial information. These standards, along
with their implementation, are then the basis for evaluating how well
the board and management is managing the institution.
We further address this issue in an Informational Memorandum dated,
March 29, 2011, Loan Underwriting Standards--Borrower Financial
Information. In this memorandum, we convey our expectations regarding
the collection of borrower financial information and the impact of this
information on loan underwriting standards. This Informational
Memorandum is available on our website, www.fca.gov, under the `Laws
and regulations' heading.
H. Loan Participation
Comment: The requirements for evidencing an independent credit
judgement by a purchaser of a loan participation from another System
institution are unduly burdensome. Of course, each institution needs to
be accountable for the loans, including purchases of participations, in
their portfolio. Some form of simplified credit summary, or other
analysis by a credit officer of the purchasing institution should be
adequate to satisfy the requirements for an independent decision.
FCA Response: This issue was thoroughly studied when we finalized
this regulation, and our analysis has not changed.\3\ In fact, one of
the points we made in the preamble was that ``Section 614.4325(e) does
not require the participating institution to prepare a lengthy analysis
or to compile separate documentation from the originating or lead
lender. However, Sec. 614.4325(e) requires the purchasing institution
to perform an objective, independent, and thorough analysis when it
makes a loan decision.'' An institution cannot delegate its independent
credit decision. However, we continue to believe that this regulation
provides flexibility for an institution to streamline the decision-
making process and documentation of the decision, while ensuring that
it fulfills its duty to protect institution assets.
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\3\ See 57 FR 38237 (Aug. 24, 1992).
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I. Purchase of Whole Loans
Comment: We again urge FCA to reconsider its prohibition on the
purchase of whole loans by System institutions. Several years ago, FCA
took the step to recognize the purchase of 100% participations in
loans. Allowing System institutions to purchase whole loans would be of
real benefit to farmers and ranchers in their financial planning,
without increasing the credit exposure to the System over that created
by the purchase of participations.
FCA Response: We plan to address this issue in part through a
notice of proposed rulemaking regarding those portions of commercial
bank loans with unconditional guarantees by the U.S. Department of
Agriculture. Depending upon the outcome of that regulatory project,
those transactions may be considered investments due to the way in
which they are offered for sale and resale.
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For whole loans that cannot be considered investments, we are not
considering a change. Section 614.4325(b) prohibits a FCS institution
from purchasing any interest in a loan from an institution that is not
a FCS institution except to pool or securitize loans, purchase a
participation interest under its lending authority and purchase loans
from the FDIC.
J. Public Disclosure About OFIs
Comment: FCA Regulation Sec. 614.4595 requires the banks to
receive written approval from the OFI before publicly disclosing its
name, address, and internet address. It also requires a bank to adopt
and maintain policies and procedures relating to OFI public
disclosures. This requirement is unnecessary, excessively prescriptive,
not required in law and burdens banks to maintain a policy that
detracts from meaningful board oversight. Disclosure of name, address
and internet address is not a regulatory matter and it is better left
to the banks and OFIs to decide within the lending relationship.
FCA Response: We are not persuaded by the comment that a change is
needed. The regulation provides that a Farm Credit Bank or agricultural
credit bank may disclose to members of the public the name, address,
telephone number, and internet website of an OFI only if the OFI
consents in writing. We continue to believe the regulation is necessary
to deal with this issue and is not unduly burdensome. In addition, we
continue to believe that the OFI, and not the FCS bank, should be the
party to decide whether its information is made public as designed in
the regulation.
K. Special Collateral Requirements
Comment: The Special Collateral Requirements for post-closing
certification, after the issuance of a standard title insurance policy
and compliance with customary loan closing procedures, are duplicative
and unnecessary. With this requirement, the System institution is being
asked to effectively ``re-certify'' the work that the title insurance
company has been paid to perform. The title insurance company has
agreed to insure the risks that this regulation is designed to
mitigate, which makes this requirement burdensome.
FCA Response: We are not persuaded by the comment that a change is
needed. The Act requires that long-term mortgage loans be secured by
first liens on real estate as may be prescribed by regulations of the
FCA. Section 615.5060 provides institutions one of two methods to
validate the institution's first lien position: Attorney lien
certification or title insurance policy. Choosing to use a title
insurance policy creates obvious additional fiduciary responsibilities
for the institution such as: Ensuring that the title insurance company
is licensed, ensuring that the final policy meets the institution's
specifications, and ensuring that the insured amount at least equals
the outstanding loan balance. We do not view verifying that a policy is
valid, adequate, and proper as ``re-certifying'' the work of the title
insurance company, but simply good business practice to ensure
compliance with the first lien requirement of the Act.
L. Public-Private Partnership Investments
Comment: The approval process for public-private partnership
investments, such as community health care facilities, would better
serve rural America if it were streamlined. The current case-by-case
approval process significantly hinders the development of critical
projects in rural communities. The commenters recommend that FCA
streamline the approval process for investments in public-private
partnerships that benefit rural communities and modify the regulation
to specifically allow the purchase of community facility bonds as
mission-related investments.
FCA Response: FCA has developed a process to expedite and
streamline case-by-case requests that meet certain criteria. Many
requests for community health care facilities are handled on an
expedited basis. We continue to consider other ways to streamline the
process for FCA consideration of case-by-case investment requests.
M. Interest Rate Disclosures
Comment: The regulations require System Institutions to disclose
rate changes when the rates are tied to a widely published external
index (i.e., prime rate or LIBOR); however, the intent of permitting
such interest rates is transparency. Borrowers can determine their rate
by numerous published sources. To require notification by System
institutions of rate changes as outlined by the regulation is
unnecessary and burdensome.
FCA Response: We cannot make the recommended change because it
conflicts with statute. Section 4.13(a)(4) of the Act requires
qualified lenders to provide borrowers, for all loans not subject to
the Truth in Lending Act (15 U.S.C. 1601 et seq.), ``meaningful and
timely disclosure'' of any change in the interest rate applicable to
the borrower's loan within a ``reasonable time after the effective
date'' of a change. Given that notification of a change in interest
rate is a statutory requirement, removing the regulation is not an
option. Nevertheless, we believe the regulation provides for
significant flexibility by allowing for notifications to be made ``as
part of the borrower's first regularly scheduled billing statement
affected by the rate change.'' In other words, only the billing
statements need to reflect the rate changes that occurred during the
billing period and a separate notice is not required. Further, the
status of LIBOR continuing as an index for loans is uncertain, and
loans may need to be indexed to a replacement. Given uncertainty over
the replacement, including whether it will be as widely published and
available as LIBOR, we do not believe that this would be an appropriate
time to consider any lessening of disclosure requirements for indexed
loans.
N. Purchase of Insurance
Comment: Section 4.29 of the Act requires a written notice to
customers that the purchase of insurance (when required as condition to
obtain the loan) through the lender is optional. Section 618.8040(b)
should be revised to eliminate the requirement for a separate, written
statement.
FCA Response: We are not persuaded by the comment that a change is
needed. We continue to believe that a written notice that is separately
signed by the member or borrower is necessary to carry out
Congressional intent. We also continue to believe that our position
outlined in the preamble to the existing regulation continues to be
appropriate: ``provide documentation to refute any potential
allegations that borrowers were coerced into purchasing insurance
offered by banks or associations.''
O. Human Capital and Marketing Plans
Comment: The requirements of Sec. Sec. 618.8440(b)(7) and (b)(8)
pertaining to human capital and marketing plans are excessively
prescriptive and detailed without any corresponding benefit to the
institutions or mission achievement. Specifically, the regulations
required significant detail in both the human capital and marketing
plans that goes beyond what is appropriate for inclusion, even at a
summary level, in a business plan. To reduce burden and requirements
that are duplicative in nature, the FCA should generalize the human
capital and marketing plan requirements.
FCA Response: We are not persuaded by the comment that a change is
needed. These two regulatory sections were specifically written to
minimize any
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regulatory burden and require the minimum strategies and actions needed
to develop these sections of the business plan. We do not believe that
these requirements rise to the level of ``significant detail'' and that
they go ``beyond what is appropriate for inclusion in a business
plan.''
We continue to believe that these human capital and marketing
planning regulatory requirements are critical to institution
operations. Human capital and marketing plans are opportunities to lay
out the institution's demographics and address strategies to make
progress in diversity and inclusion as a vital component of its
corporate culture and being more responsive to the credit needs of all
eligible and creditworthy agricultural producers and other eligible
persons.
P. Syndications and Participations Study
Comment: The reporting requirements for the syndication and
participations study are burdensome and manually intensive, time
consuming, and do not augment internal management's tools. FCA should
evaluate the data gathered to date for the syndication and
participations study and determine the usefulness of gathering
additional data in the future.
FCA Response: We agree that less reporting is now adequate compared
to what we originally required. Consequently, we reduced the reporting
from quarterly to annually beginning in 2018. We are also evaluating
more streamlined ways in which the annual data could be provided to
FCA. However, we continue to believe that collecting the data is
necessary for the analysis of the complex issues being considered
through the loan syndication study.
Q. Voting Requirements
Comment: Proxy voting requirements should be removed when using
mail ballots. The use of digital processes are more efficient, and the
proxy method required is cumbersome to stockholders, which encourages
them not to vote.
FCA Response: A proxy authorizes someone to attend a meeting
instead of the voting stockholder and take actions, including casting a
vote if there will be in-person voting, with the same authority as the
stockholder granting the proxy. Our existing regulations in part 609
and 611 allow proxies to be delivered electronically to those
individual shareholders who have consented to e-commerce for voting
events. However, electronic communications in voting events, including
proxies, must satisfy the same confidentiality and security
requirements when paper, and not electronics, are used.
R. Floor Nominations
Comment: Section 611.326 specifies the procedures to use for
allowing floor nominations at association annual meetings. The System
recognizes that floor nominations are required in accord with the Farm
Credit Act. However, the current procedures are unwieldy, cumbersome,
time-consuming and costly. Moreover, they actually undermine the
existing nomination committee process, and FCA guidance and can impede
the ability of stockholders to make an informed voting decision. They
make compliance with disclosure requirements difficult for both the
institution and the nominee. Associations should have increased
flexibility to adopt procedures that maintain the ability for floor
nominations, while facilitating compliance with disclosure and voting
procedures.
FCA Response: We are not persuaded by the comment that a change is
needed. This issue was thoroughly studied when we finalized this
regulation, and our analysis has not changed.\4\ We believe that the
procedures outlined in the rule are consistent with the statutory
requirement and that the comment raises issues that we considered in
the rulemaking.
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\4\ See 75 FR 18726 (Apr. 12, 2010).
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IV. Comments That We Will Address in Existing Regulatory Projects
A. E-Commerce
Comment: FCA should revise its E-commerce definition to be
consistent with the definition used generally in the marketplace. The
current application of the FCA regulatory definition is overly broad
and results in an expansive application by examiners, application
beyond what is required by E-commerce laws, and creates an unnecessary
burden on FCS institutions.
FCA Response: Our Cybersecurity Workgroup is reviewing the E-
commerce regulations, including whether the term ``E-Commerce'' is
outdated. The Workgroup is considering whether the terminology of ``E-
Commerce'' should be removed from FCA Regulations and replaced with the
word ``Information Technology''.
B. Criminal Referral Form
Comment: FCA requires reports of known or suspicious criminal
activity through the use of FCA's Criminal Referral Form (CRF). This
referral form is unique to FCA and not integrated with FinCEN's
Suspicious Activity Reporting (SAR) system that is used by law
enforcement and Federal prosecutors to fight financial crimes. CoBank
voluntarily complies with SAR filing requirements. As a result, FCA's
requirement to use an FCA CRF is burdensome and confusing to criminal
enforcement authorities in those situations when CoBank files a SAR and
is required by FCA to also file an FCA CRF. Importantly, the SAR form
provides effectively and efficiently the same information contained in
the FCA CRF for use by law enforcement. FCA should eliminate this
burden and accept the SAR form instead of the FCA CRF in those
instances where reporting is provided under FinCEN filing requirements.
FCA Response: Our Criminal Referral Workgroup is considering
whether FCA should issue guidance to provide clarification on this
issue.
C. Criminal Referral Form Threshold
Comment: FCA requires the reporting of ``Any known or suspected
criminal activity involving a financial transaction in which the
institution was used as a conduit for such criminal activity (such as
money laundering/structuring schemes)'' without any threshold or test
for substance. To provide consistency in requirements applicable to
commercial banks for the filing of SARs, the FCA should implement a
$5,000 threshold for filing an FCA CFR when the suspect is known and
$25,000 when the suspect is unknown.
FCA Response: Our Criminal Referral Workgroup is considering
whether we should provide guidance to clarify this issue.
D. Amortization Limits
Comment: Production credit association and agricultural credit
association loan authorities should be updated to reflect current
System structure. There is no statutory basis to maintain restrictions
on production credit association real estate lending, or that loans
amortize within a period of 15 years, or whether the customer already
owns the land or is purchasing it. Amortization and repayment should be
a matter of appropriate credit administration, not regulation.
FCA Response: We plan to address this comment in conjunction with
the amortization limits project that is listed on our Regulatory
Projects Plan and Unified Agenda. The project will address the
amortization limits for loans made under the production credit
association authority.
[[Page 21697]]
E. Liquidity Reserves
Comment: Section 615.5134(d) describes specific, extensive
requirements for each System bank to maintain its liquidity reserve.
All System banks maintain liquidity reserves well in excess of
regulatory requirements. The imposition of an additional
``marketability study'' for each bank is unduly burdensome and ignores
the facts and circumstances of each bank's portfolio. FCA should look
at both the quantity and quality of the bank's liquidity reserve, as
well as its actual experience with execution of transactions to decide
whether a study is necessary, rather than imposing an arbitrary
requirement to conduct a study that is both costly and of little, if
any, value.
FCA Response: We incorporated this comment into our study of the
Liquidity Coverage Ratio.
F. Borrower Rights
Comment: The requirements for adverse action should be amended to
use the same terminology as that used in Regulation B.
FCA Response: We plan to address this comment in conjunction with
the borrower rights project that is listed on our Regulatory Projects
Plan and Unified Agenda. As part of this project, we will study the
similarities and differences between the Regulation B requirements and
our adverse action regulations.
V. Comments That Need Further Evaluation
As noted above, some of the regulatory burden issues raised need
further evaluation before we can consider whether changes are
appropriate.
A. Scope of Lending
Comment: The Agency has not updated the Scope of Lending
regulation, Sec. 613.3005, since 1997. Farming and who is considered a
full-time farmer have continued to evolve over this time. Many farmers,
regardless of the size of the farming operation, have multiple sources
of off-farm income, but still devote a significant amount of time to
farming. This is particularly true with the Young, Beginning and Small
Farmer segment, which the System is directed to serve. FCA guidance in
regard to financing of legal entities with 100% ownership by eligible
farmers needs to be updated to reflect the variety of modern legal
structures used in agricultural production.
FCA Response: The comment correctly points out that the FCA has not
recently updated this regulation. However, further evaluation is needed
before we can consider whether the recommended changes are appropriate.
We will consider this recommendation in any future review of this
regulation.
B. Release of Borrower Names and Addresses
Comment: Section 618.8310 should be omitted. With security and
privacy of borrower information heightened, releasing borrowers' names
and addresses conflicts with current practices and standards.
FCA Response: Section 4.12A of the Act requires a System bank or
association to provide to a stockholder of the bank or association a
current list of stockholders of the bank or association not later than
7 calendar days after the date on which the bank or association
receives a written request for the stockholder list from the
stockholder. This provision has been slightly revised in the most
recent Farm Bill, and although we are not currently reviewing this
regulation, we may consider reviewing this provision in the future.
C. Electric and Telecommunication Lending
Comment: Make changes to Sec. 613.3100(c)(2) to reflect changes to
the Rural Electrification Act, as amended (REA), since CoBank's lending
authorities for electric and telecommunication borrowers are derived
from the REA.
FCA Response: Changes to FCA regulations in this area are not
necessary for CoBank to implement the 2018 Farm Bill. Further
evaluation is needed before we can consider whether regulatory changes
are appropriate. We will consider this recommendation in any future
review of this regulation.
D. Multiple Title Insurance Policy Ratio Amounts
Comment: FCA regulation Sec. 615.5060(a)(2)(iii) establishing
multiple title policy ratio amounts should be deleted. It has no legal
validity, it does not always represent the risk profile of collateral
and title issuers have different opinions/requirements.
FCA Response: Further evaluation is needed before we can consider
whether the recommended change is appropriate. We will consider this
recommendation in any future review.
E. Annual Report to Shareholders
Comment: Eliminate the requirement for distribution of the annual
report in accordance with Sec. 620.4. Electronic access should be
adequate. There is no need to mail copies of the annual report.
Comment: The requirements of Sec. 620.6, in particular the
provisions relating to retirement account information and travel
reimbursement policies, are unduly burdensome and also confusing or
even misleading to stockholders. We believe this is an area where the
quality of the disclosures can be improved, while reducing paperwork
and costs.
FCA Response: Further evaluation is needed before we can consider
whether the recommended changes are appropriate. We will consider this
recommendation in any future review.
F. Disclosure Requirements for Sale of Borrower Stock
Comment: Delivering a copy of the quarterly report along with
annual report is burdensome and produces minimal value to stockholder.
The same could be achieved by referencing location of both reports on
website.
FCA Response: As outlined in Sec. 615.5250, a System institution
must provide a prospective borrower with several documents related to
borrower stock in conjunction with obtaining a loan. We believe that
including the annual report and most recent quarterly report in with
the other documents is not a burden and that the benefit in helping to
attract a prospective borrower outweighs any burden that may exist.
Nonetheless, there may be room for modifications, but further
evaluation is needed before we can consider whether the recommended
change is appropriate. We will consider this recommendation in any
future review.
G. Loan Data Reporting
Comment: FCA has increased the amount of loan data required to be
submitted to the agency. There is a material administrative cost to
System institutions to update and maintain the systems to collect and
report that information. FCA should consider the costs and benefits of
those requirements on an institution specific basis.
FCA Response: Further evaluation is needed before we can consider
whether the recommended change is appropriate. We will consider this
recommendation in any future review.
V. Future Efforts To Reduce Regulatory Burden on System Institutions
For over 25 years, we have been making a concerted effort to remove
regulatory burden whenever possible and will continue to do so into the
future. However, we will maintain those regulations that are necessary
to implement the Act and are critical for
[[Page 21698]]
the safety and soundness of the System. Our approach is intended to
enable the System to continue to provide credit to America's farmers,
ranchers, aquatic producers, their cooperatives and other rural
residents.
Dated: May 9, 2019.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2019-09960 Filed 5-14-19; 8:45 am]
BILLING CODE 6705-01-P