[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Rules and Regulations]
[Pages 82238-82246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25652]


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FARM CREDIT ADMINISTRATION

12 CFR Parts 619 and 627

RIN 3052-AD48


Conservators and Receivers

AGENCY: Farm Credit Administration.

ACTION: Final rule.

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SUMMARY: The Farm Credit Administration (FCA, we, our) is adopting a 
final rule that updates, restructures, and reorganizes our regulations 
that govern the appointment of the Farm Credit System Insurance 
Corporation (FCSIC) as the conservator or receiver of Farm Credit 
System (FCS or System) banks, associations, service corporations, and 
the Federal Farm Credit Banks Funding Corporation (Funding 
Corporation). The final rule also ensures FCA conservatorship and 
receivership regulations are consistent with the Agricultural 
Improvement Act of 2018 (2018 Farm Bill), which strengthens, updates, 
and clarifies FCSIC's powers as the conservator or receiver of these 
FCS institutions. Additionally, the final rule consolidates and 
reorganizes our conservatorship and receivership regulations, so they 
are easier to understand and use. We also made conforming amendments to 
definitional regulations to clarify that bridge System banks, while 
subject to FCA supervision and oversight, are not subject to FCA 
regulations that apply to other System institutions. We revised these 
definitions because several provisions of the Farm Credit Act expressly 
exempt bridge banks from certain legal requirements that apply to 
viable and solvent System banks.

DATES: This final rule will be effective 30 days after publication in 
the Federal Register during which either or both Houses of Congress are 
in session. We will publish a document announcing the effective date in 
the Federal Register.

FOR FURTHER INFORMATION CONTACT: 
    Technical information: Jason Moore, Associate Director, Office of 
Regulatory Policy, Farm Credit Administration, McLean, VA 22102-5090, 
(703) 883-4414, TTY (703) 883-4056; or
    Legal Information: Karen Hunter, Attorney Advisor, or Richard A. 
Katz, Senior Counsel, Office of General Counsel, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-
4056.

SUPPLEMENTARY INFORMATION: 

I. Objectives

    The objectives of this final rule are to:
     Consolidate, reorganize, and update our regulations 
governing FCA's

[[Page 82239]]

appointment of FCSIC as the conservator or receiver of any System bank, 
association, service corporation, or the Funding Corporation.
     Ensure our conservatorship and receivership regulations in 
part 627 are consistent with section 5412 of the 2018 Farm Bill,\1\ 
which added section 5.61C to the Farm Credit Act of 1971, as amended 
(Act).
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    \1\ Public Law 115-334, 132 Stat. 4490 (Dec. 20, 2018).
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     Restructure and reorganize part 627 so it is easier for 
FCA examiners, FCS institutions and other interested parties to 
understand and use, and to make conforming or technical revisions to 
other FCA regulations.
     Make conforming amendments to two definitions in part 619 
to exempt bridge System banks, which are created pursuant to section 
5.61C(h) of the Act, from FCA regulations and other laws that apply to 
healthy and ongoing FCS banks, associations, and service corporations.

II. Background

    Section 4.12 of the Act governs the dissolution of Farm Credit 
institutions through voluntary and involuntary liquidation, mergers, 
and receiverships or conservatorships.\2\ Pursuant to section 4.12(b), 
FCA has the ``exclusive power and jurisdiction'' to appoint a 
conservator or receiver for any System institution \3\ when any of six 
specific conditions exist that indicates an institution is insolvent or 
unviable.\4\ Over the last thirty years, FCA's regulations in Part 627 
regarding conservators, receivers, and voluntary liquidations have 
implemented the provisions in section 4.12 of the Act.
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    \2\ Section 4.12 of the Act governs both the voluntary and 
involuntary dissolution of System institutions. Subpart D of part 
627 addresses the voluntary liquidation of System banks, 
associations, service corporations, and the Funding Corporation. 
However, the voluntary liquidation of these System institutions is 
outside the scope of this rulemaking.
    \3\ In contrast to all other FCS institutions, section 8.41 
governs the conservatorship, liquidation, and receivership of Farmer 
Mac. Under section 8.41(c)(1)(A) of the Act, FCA is allowed, but not 
required, to appoint FCSIC as the conservator or receiver of Farmer 
Mac. Regulations in part 650, subpart B, govern the conservatorship 
or receivership of Farmer Mac. For these reasons, this rulemaking 
does not apply to the conservatorship or receivership of Farmer Mac.
    \4\ These conditions include: (1) insolvency, in that the assets 
of the institution are less than its obligations to its creditors 
and others, including its members; (2) substantial dissipation of 
assets or earnings due to any violation of law, rules, or 
regulations, or to any unsafe or unsound practice; (3) an unsafe or 
unsound condition to transact business; (4) willful violation of a 
cease and desist order that has become final; (5) concealment of 
books, papers, records, or assets of the institution or refusal to 
submit books, papers, records or other material relating to the 
affairs of the institution for inspection to any examiner or to any 
lawful agent of FCA; (6) the institution in unable to timely pay 
principal or interest on any insured obligation issued by the 
institution.
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    The main reason for this rulemaking is the 2018 Farm Bill added a 
new section 5.61C to the Act, which strengthens, clarifies, and updates 
the powers and duties of FCSIC in its capacity as the appointed 
conservator or receiver of any FCS institution. Section 5.61C enhances 
FCSIC's authority to: (1) operate any FCS institution in 
conservatorship or receivership and perform all its functions; (2) 
handle all claims by various parties against such institution; and (3) 
enforce contracts on the institution's behalf. This enhanced statutory 
conservatorship and receivership authority is comparable to the 
authority of the Federal Deposit Insurance Corporation (FDIC), National 
Credit Union Administration (NCUA), and Federal Housing Finance Agency 
(FHFA) regarding the institutions they oversee.\5\
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    \5\ Additionally, the legislative history to the 2018 Farm Bill 
further reveals Congress intended FCSIC's authorities ``to be 
functionally equivalent to the parallel authorities of the [FDIC].'' 
See Conf. Report No. 115-1072, 115th Cong., 2nd Sess., (Dec. 10, 
2018) p. 648.
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    The Farm Bill also introduced the concept of bridge System banks as 
a means for FCSIC to resolve or liquidate failing or failed System 
banks. Section 5.61C(h) authorizes FCA to charter bridge System banks 
at FCSIC's request for one or more distressed System banks and dissolve 
them once such failing or failed banks are resolved.\6\ The statutory 
provisions governing all aspects of bridge System banks from their 
creation to their termination and dissolution are comprehensive, clear, 
and prescriptive.\7\
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    \6\ According to section 5.61C(h)(2)(A) of the Act, FCA may 
charter a bridge System bank only if it determines that: (1) the 
amount which is reasonably necessary to operate the bridge System 
bank will not exceed the amount which is reasonably necessary to 
save the cost of liquidating 1 or more System banks in default or 
danger of default; (2) chartering a bridge System bank is essential 
to continue providing adequate farm credit services in communities 
where such System bank(s) in default or danger of default provides 
such farm credit services; or (3) the continued operation of such 
System bank(s) in default or danger of default with respect to which 
the bridge System bank is chartered is in the best interest of the 
FCS or the public.
    \7\ Section 5.61(h) of the Act lists all the aspects of bridge 
System banks from cradle to grave. See also footnote 7 of the 
proposed conservators and receivers' rule at 87 FR 19398 (Apr. 4, 
2022).
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    This final rule completes our second rulemaking since 2021 to 
revise our regulations in part 627 to implement changes section 5412 of 
the 2018 Farm Bill made to the Act. In March 2021, we issued a direct 
final rule that rescinded ten regulations in Part 627 that the 2018 
Farm Bill superseded and rendered obsolete because they were no longer 
consistent with FCSIC's new statutory authority over the priority of 
claims and other aspects relating to the administration and management 
of conservatorships and receiverships.\8\
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    \8\ See 86 FR 15081 (Mar. 22, 2021). The rule became effective 
on May 13, 2021. See FR 27510 (May 21, 2021).
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    In this most recent phase of this rulemaking, we published a 
proposed rule on April 4, 2022 \9\ that would update, restructure, and 
consolidate FCA regulations at part 627 governing the appointment and 
role of FCSIC as the conservator or receiver of an FCS institution, 
other than Farmer Mac. More specifically, we proposed combining the 
four remaining conservatorship regulations into a single regulation and 
consolidating the three receivership regulations we retained into a 
separate regulation.
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    \9\ See 87 FR 19397 (Apr. 4, 2022).
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    FCA also proposed to reverse the chronological order of the 
existing regulations by presenting the conservatorship regulation first 
and the receivership regulation second.\10\ FCA also proposed to 
simplify the numbering system for the regulations in part 627 such that 
they will have no more than a two-digit number after the decimal point, 
which is consistent with the way FCA has numbered regulations in recent 
years. The proposed rule also: (1) reorganized the definitions in 
alphabetical order, (2) deleted references to the defunct Farm Credit 
System Financial Assistance Corporation, and (3) updated the reference 
to FCSIC in our conservatorship and receivership regulations to be 
consistent with all other FCA regulations. We also proposed conforming 
changes to other FCA regulations to be consistent with the changes made 
to part 627.
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    \10\ As explained in the preamble to the proposed rule, this is 
a logical change because (1) it follows the order of section 4.12 of 
the Act and (2) an institution in a conservatorship can be placed 
into receivership if its condition worsens. See 87 FR 19399 (Apr. 4, 
2022).
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    In response to the proposed rule, we received one substantive 
comment from an individual who supported the proposed rule.

III. Final Rule

    After careful consideration, FCA is finalizing the proposed rule 
without material change.\11\ We received no

[[Page 82240]]

comments that opposed the proposed rule or asked us to change it. As 
noted earlier, the purpose of this rulemaking is to update, clarify, 
restructure, and reorganize our conservators and receivers regulations 
to be consistent with changes the 2018 Farm Bill made to the Act. More 
specifically, the 2018 Farm Bill realigned and clarified the roles of 
FCA and FCSIC pertaining to the conservatorship and receivership of 
failing and failed FCS institutions, and it gave FCSIC enhanced powers 
as the conservator or receiver of System institutions. Accordingly, we 
restructured and reorganized our regulations in part 627 to implement 
FCA's specific statutory authorities governing conservatorships and 
receiverships while deferring to FCSIC as to how it will carry out its 
own authorities.\12\
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    \11\ However, we made a few minor, non-substantive revisions to 
the text of specific regulatory provisions to improve their clarity, 
flow, and readability. We removed ``that are'' before ``identified 
in section 1.2 of the Act, and ``it'' before ``excludes bridge 
System banks'' in Sec.  619.9146 because these words are superfluous 
and unnecessary. In Sec.  627.3(a), we substituted ``FCA'' for 
``it'' immediately after the word ``if.'' This revision clarifies an 
ambiguity in the text of the proposed rule by clearly identifying 
FCA as the party that determines if one or more of the grounds in 
627.3(b) exists for placing a System institution in conservatorship 
or receivership. We omitted the word ``that'' in three out of four 
places it appeared in Sec. Sec.  627.10(c)(1) and (c)(2), and 
627.20(d)(1) because this term is not needed to support the 
grammatical structure of these respective sentences.
    \12\ See 87 FR 19397, supra at 19399.
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    The final rule also achieves FCA's goal of making these regulations 
more user-friendly. Restructuring, consolidating, renumbering, 
eliminating redundancies, and simplifying the wording of these 
regulations improves their clarity and readability. As a result, FCA 
examiners, System institutions and borrowers, and other members of the 
public who may be affected by the conservatorship or receivership of an 
FCS institution will find it easier to understand, use, and rely on 
these regulations.
    We now discuss the specific provisions of the final rule and how 
they alter many of the regulations in part 627 that were previously in 
effect. This analytical discussion primarily focuses on substantive 
changes to these regulations. We have already explained minor, non-
substantive regulatory revisions (such as a simplified numbering 
system, and stylistic wording changes) both above and in the preamble 
to the proposed rule and, therefore, we do not describe them in great 
detail here.
    We discuss the specific provisions of the final rule in the same 
chronological order they appear in the regulations in part 627. 
Conforming amendments to certain definitions in part 619 appear last in 
this analysis.

A. Subpart A--General Provisions

    As before, subpart A continues to house the general regulatory 
provisions that apply to the other subparts of part 627. The final rule 
retains the four regulations in subpart A but renumbered them for the 
reasons discussed above.
1. Applicability--Sec.  627.1
    Final and redesignated Sec.  627.1 states the ``provisions in this 
part apply to conservatorships, receiverships, and voluntary 
liquidations of System institutions chartered under titles I, II, III, 
IV, and VII of the Act.'' The only substantive difference between final 
Sec.  627.1 and its predecessor, former Sec.  627.2700, is the addition 
of specific references to other titles of the Act. This change 
clarifies that the regulations in part 627 do not apply to Farmer Mac. 
Instead, as noted earlier, the regulations in Subpart B of part 650 
govern the conservatorship, receivership, or voluntary liquidation of 
Farmer Mac.
2. Definitions--Sec.  627.2
    The definitions that apply to part 627 are located in final and 
redesignated Sec.  627.2. Final Sec.  627.2 lists the definitions 
alphabetically, without paragraph designations, which is consistent 
with FCA's recent practice in rulemakings. The most significant changes 
in final and redesignated Sec.  627.2 are to the definition of ``Farm 
Credit institution(s) or institution(s).'' First, we removed the 
reference to the now-defunct Farm Credit System Financial Assistance 
Corporation from this definition.\13\ Second, we added a final sentence 
to the provision specifically stating these terms do not include bridge 
System banks chartered by FCA in accordance with section 5.61C(h)(2) of 
the Act.
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    \13\ Section 5411(39) of the 2018 Farm Bill repealed title VI of 
the Act. Subpart B of former title VI of the Act established the 
Farm Credit System Financial Assistance Corporation. See Public Law 
115-334, supra at 4683.
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3. Grounds for Appointing FCSIC as Conservator or Receiver
    Final and redesignated Sec.  627.3 specifies the grounds for FCA 
appointing FCSIC as conservator or receiver of a System institution 
pursuant to sections 4.12(b) and 5.61C(l) of the Act. Essentially, 
final Sec.  627.3(a) allows FCA, in its discretion, to appoint FCSIC as 
the conservator or receiver of an FCS institution if FCA determines 
that one or more of the grounds in the Sec.  627.3(b) exist. As before, 
paragraph (b) of this regulation identifies six grounds for FCA to 
appoint FCSIC as the conservator or receiver of a System institution, 
which derive from section 4.12(b) of the Act. The most substantive 
change we made to this regulation is an added sentence at the end of 
final and redesignated Sec.  627.3(a) that implements new section 
5.61C(l)(1) of the Act, which requires FCA, to the extent practicable, 
to consult with FCSIC before taking a pre-resolution action that could 
result in a conservatorship or receivership of a distressed FCS 
institution.\14\ As explained in detail in the preamble to the proposed 
rule, the other changes to this regulation are non-substantive, 
technical, grammatical, and stylistic revisions that improve its 
clarity and readability.\15\
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    \14\ Section 5.61C(l) of the Act establishes a reciprocal 
requirement on FCSIC. According to section 5.61C(l)(2) of the Act, 
FCSIC ``acting in the capacity of the Corporation as a conservator 
or receiver, shall consult with the [FCA] prior to taking any 
significant action impacting System institutions or service to 
System borrowers.''
    \15\ Id at 19399-400.
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4. Action for the Removal of the Conservator or Receiver--Sec.  627.4
    Final and redesignated Sec.  627.4, which replaces former Sec.  
627.2715, allows an FCS institution placed into conservatorship or 
receivership to initiate an action for removal of the conservator or 
receiver. This regulation implements provisions in section 4.12(b) of 
the Act that authorizes an FCS institution, within 30 days after FCA 
appoints FCSIC as its conservator or receiver, to bring an action in 
certain United States district courts to remove the conservator or 
receiver. Once an institution is placed in conservatorship or 
receivership, all powers, rights, and privileges of its board of 
directors, management, and employees transfer to FCSIC and the charter 
of an institution in receivership is cancelled.
    Final and redesignated Sec.  627.4 creates an exception for an 
institution's board of directors to meet after the appointment of a 
conservator or receiver and initiate an action for removal. Under this 
regulation, only an institution's board of directors has the power to 
authorize an action to remove the conservator or receiver.
    The revisions to this regulation are non-substantive. We improved 
its clarity by rewriting it in the active voice, and by adding cross-
references to this regulation in Sec.  627.10 and Sec.  627.20.

B. Subpart B--Conservator and Conservatorships

    As revised, subpart B of part 627 addresses FCA's authority under 
section 4.12(b) of the Act to appoint FCSIC as the conservator of 
distressed FCS

[[Page 82241]]

institutions. As discussed above, we relocated our conservatorship 
regulations from subpart C to subpart B and combined the four remaining 
regulations into a single conservatorship regulation. Yet, final Sec.  
627.10 is not substantively different from the four regulations it 
replaces because both the former and new regulations effectively carry 
out FCA's statutory powers and responsibilities concerning the 
conservatorship of FCS institutions.
    The role of a conservator is to continue the ongoing operations of 
an institution while taking measures to preserve its assets and restore 
its financial viability so it can resume its normal business activities 
when it emerges from conservatorship. The purpose of a conservatorship 
is to resuscitate a trouble institution, not to liquidate it. In this 
context, our revised conservatorship regulation continues to implement 
FCA's authority to: (1) appoint FCSIC as the conservator of a System 
institution; (2) transfer the day-to-day operations of the institution 
to FCSIC, in its capacity as the conservator, (3) examine the 
institution in conservatorship; (4) require audits and published 
financial reports for any FCS institution in conservatorship, and 
(5)terminate the conservatorship by either discharging FCSIC as 
conservator or by placing the institution into receivership.
    Final and redesignated Sec.  627.10(a), which replaces former Sec.  
627.2775, governs FCA's appointment of FCSIC as conservator of a 
failing FCS institution. According to new Sec.  627.10(a)(1), the FCA 
Board may exercise its authority under 4.12(b) of the Act and Sec.  
627.3 to appoint FCSIC as conservator of an FCS institution once it 
finds one or more grounds identified in Sec.  627.3(b) exist. This 
provision also authorizes the FCA Board to appoint FCSIC as the 
conservator of a System institution ex parte and without notice. The 
substance of final Sec.  627.10(a)(1) is the same as its predecessor, 
Sec.  627.2775(a). However, we changed the order and flow of this 
regulatory provision. As rewritten, the rule now requires us to first 
find legal grounds exist for appointing the conservator before we can 
do so ex parte and without notice. This revision makes the regulation 
more logical and easier to read and understand.
    Final and redesignated Sec.  627.10(a)(2) requires the FCA 
Chairman, upon the appointment of the conservator, to immediately 
notify the affected institution and if it is an association, its 
funding bank. It also requires FCA to publish a notice in the Federal 
Register whenever it appoints FCSIC as the conservator of a System 
institution. The only substantive change to this provision is that we 
deleted the provision in former Sec.  627.2775(b) that required FCSIC 
to notify all holders of the institution's voting stock and 
participation certificates, by First-Class mail about the establishment 
of the conservatorship, and its effects on the: (1) institution's 
operations, and (2) borrowers' loans and equity holdings. As explained 
earlier, new section 5.61C of the Act strengthened FCSIC's powers as 
the conservator of FCS institutions and, therefore, FCA regulations 
will not instruct FCSIC how to administer conservatorships unless a 
specific statutory provision explicitly requires us to do so. 
Notification to shareholders of System institutions about how a 
conservatorship will affect them is now within FCSIC's jurisdiction. 
Final Sec.  627.10(a)(2) also incorporates two non-substantive, 
stylistic changes we proposed to update the language and improve the 
readability of this provision.\16\
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    \16\ First, we changed ``district bank'' to ``funding bank.'' 
Second, the provision about publishing the notice in the Federal 
Register became a separate sentence. Id. at 19400-401.
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    Final and redesignated Sec.  627.10(b)addresses FCA's role, 
responsibilities, powers, and prerogatives once it places an FCS 
institution into conservatorship. It incorporates various provisions in 
its predecessor regulations, Sec. Sec.  627.2775 and 627.2785.
    Final Sec.  627.10(b)(1), which is a restatement of former Sec.  
627.2775(c), reaffirms that once the FCA Board issues an order placing 
an FCS institution into conservatorship, all rights, privileges, and 
powers of its members, board of directors, and employees are 
transferred to and vested exclusively in FCSIC as conservator. The FCA 
added a passage at the end of Sec.  627.10(b)(1) that states, ``the 
board of directors of the institution retains authority to initiate an 
action in Federal court to remove the conservator pursuant to Sec.  
627.4.'' This new passage adds a cross-reference to Sec.  627.4, which 
replaces the more ambiguous ``notwithstanding'' clause in former Sec.  
627.2715.
    The next four paragraphs of final Sec.  627.10(b) derive from 
various provisions of former Sec.  627.2785. It establishes 
requirements for the examination, auditing, and financial reporting of 
a System institution in conservatorship. Final Sec.  627.10(b)(2), 
which restates the first sentence of former Sec.  627.2785(b), affirms 
FCA's authority to examine FCS institutions in conservatorship in 
accordance with section 5.19 of the Act. The second sentence of former 
Sec.  627.2785(b), which requires a certified public accountant audit a 
System institution in conservatorship pursuant to part 621, now becomes 
a separate regulatory provision, and is redesignated as final Sec.  
627.10(b)(3). Final Sec. Sec.  627.10(b)(4) and (b)(5) govern financial 
reporting by a System institution in conservatorship to FCA and its 
shareholders, respectively. Former Sec.  627.2785(c), which this 
rulemaking redesignates as Sec.  627.10(b)(4), requires each System 
institution in conservatorship to file financial reports required by 
part 621. More specifically Sec.  621.14 requires each System 
institution to certify that: (1) its financial reports have been 
prepared in accordance with applicable regulations and instructions, 
and (2) its financial reports are a true and accurate representation of 
the institution's financial condition and performance. Also, Sec.  
621.14 requires an officer of the institution to certify these 
financial reports. Since FCSIC replaces the management of a System 
institution in conservatorship, FCSIC is required by both the former 
and new regulation to certify the reports of financial condition the 
institution submits to FCA. Similarly, final Sec.  627.10(b)(5), which 
replaces former Sec.  627.2785(d), requires System institutions in 
conservatorship to prepare and publish financial reports for their 
shareholders in accordance with part 620. Under this regulation, FCSIC, 
as conservator, must sign and certify such disclosures to the 
institution's shareholders. As explained in the preamble to the 
proposed rule, several stylistic revisions to redesignated Sec. Sec.  
627.10(b)(2) through (b)(5) shortened these four provisions, simplified 
their language, and improved their readability and clarity without 
altering their substantive meaning.\17\
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    \17\ Id. at 19401.
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    The final rule repeals the provision in former Sec.  627.2785(a) 
that required the conservator to: (1) take an inventory of the assets 
and liabilities of the institution from the date FCA placed it into 
conservatorship; and (2) file a copy of the inventory with FCA. 
Conducting an inventory of the assets and liabilities of an FCS 
institution in conservatorship falls within FCSIC's new powers and 
duties under section 5.61C(b) of the Act. As explained in the proposed 
rule, FCA continues to have the right to obtain a copy of the inventory 
because a System institution in conservatorship is still chartered as 
an ongoing FCS institution, and it remains subject to FCA examination, 
supervision, and regulation. FCA has authority under the

[[Page 82242]]

2018 Farm Bill to receive a copy of the conservator's inventory of the 
institution's assets and liabilities. However, requiring FCSIC, by 
regulation, to conduct the inventory and share a copy of it with us is 
not necessary under the new legislation.
    Final and redesignated Sec.  627.10(c) governs the termination of a 
conservatorship. A conservatorship ends in one of two ways. In the 
first situation, the conservatorship corrects and resolves the problems 
or conditions that led to the conservatorship of the institution, and 
FCA determines the institution is able to resume normal operations 
under new management. Alternatively, the institution's conditions 
continue to deteriorate, and FCA decides to place it into receivership. 
In this situation, FCA will appoint FCSIC as the institution's 
receiver, and FCSIC will determine the best course of action for 
liquidating and resolving the institution.
    These two scenarios are set forth in final Sec.  627.10(c)(1) and 
Sec.  627.10(c)(2), respectively. More specifically, the FCA Board may 
terminate the conservatorship under final Sec.  627.10(c)(1) by 
determining the institution is in a position to resume normal 
management. In this situation, our Board will instruct FCSIC to turn 
the institution's operations over to new management FCA designates. 
Once new management is in place, FCA discharges FCSIC as conservator. 
In the alternative, the conservatorship will end when FCA places the 
institution in receivership and appoints FCSIC as receiver under Sec.  
627.10(c)(2). Both provisions of final Sec.  627.10(c) are a 
restatement of the last two sentences of former Sec.  627.2770(a).
    The final rule rescinds former Sec.  627.2790, which previously 
required FCSIC to submit a report to FCA on its conservatorship 
activities before its discharge as conservator of an institution. 
Filing a report with the FCA is not a statutory requirement for 
terminating a conservatorship. FCA and FCSIC will jointly determine 
what documentation is appropriate to share when conservatorship 
terminates.

C. Subpart C--Receivers and Receiverships

    The final rule also consolidates the three remaining receivership 
regulations, former Sec. Sec.  627.2720, 627.2735, and 627.2765 into a 
single regulation, which we redesignated as Sec.  627.20. As noted 
above, we reorganized part 627 by transferring our receivership 
regulations from subpart B to subpart C, where it now follows our 
conservatorship regulations. To a large extent, final and redesignated 
Sec.  627.20 follows the same format and structure as the revised 
conservatorship regulation. Yet, a receivership is fundamentally 
different from a conservatorship because it liquidates and resolves a 
failing institution rather than correcting its problems. For this 
reason, there are some key distinctions between our conservatorship and 
receivership regulations. As a result, the changes to our receivership 
regulations are more extensive and substantive than those to our 
conservatorship regulations.
    Final Sec.  627.20(a) addresses FCA's appointment of FCSIC as the 
receiver of an FCS institution. More specifically, Sec.  627.20(a)(1) 
states the FCA Board ``may exercise its authority under section 4.12(b) 
of the Act and Sec.  627.3 to appoint FCSIC as the receiver of an FCS 
institution upon finding that one or more of the grounds identified in 
Sec.  627.3(b) exist.'' This regulatory provision also authorizes the 
FCA Board to appoint FCSIC as the receiver of any System institution ex 
parte and without notice.
    In this context, final Sec.  627.20(a)(1) has the same substantive 
requirements as its predecessor, former Sec.  627.2720(a). 
Additionally, Sec.  627.20(a)(1) is virtually identical to the 
corresponding provision in the final conservatorship regulation, Sec.  
627.10(a)(1). We made the same technical and stylistic changes to both 
provisions because the same reasoning applies to the appointment of 
both conservators and receivers. As explained above in the preamble 
discussion to the final conservatorship regulation, legal grounds must 
exist for FCA to appoint FCSIC as the conservator or receiver of an FCS 
institution before we can do so ex parte and without notice.
    Upon appointment of FCSIC as receiver, final Sec.  627.20(a)(2) 
requires the FCA Chairman to immediately notify the affected 
institution and its funding bank if it is an association. It also 
requires FCA to publish a notice in the Federal Register whenever it 
appoints FCSIC as the receiver of a System institution. Again, the 
technical changes to final Sec.  627.20(a)(2) mirror changes to the 
corresponding provision of the conservatorship regulation. The same 
explanation and rationale provided in this preamble explaining these 
changes to the conservatorship regulation apply to the receivership 
rule, as well.
    Final and redesignated Sec.  627.20(b), which replaces former Sec.  
627.2720(d), continues to require the funding bank, in the event of the 
voluntary or involuntary liquidation of an affiliated association, to 
take appropriate measures to minimize the adverse effect of the 
liquidation on borrowers whose loans are purchased by, or otherwise 
transferred to another System institution. The only revisions to this 
provision are a few minor word changes. As explained earlier, our 
current rulemaking does not substantively amend our voluntary 
liquidation regulations in subpart D of part 627. For this reason, 
final Sec.  627.20(b) continues to apply to both voluntary liquidations 
and receiverships for the time being.
    Former Sec.  627.2720(e), which the final rule redesignates as 
Sec.  627.20(c), addresses how receivership changes the status of a 
failed System institution. Final Sec.  627.20(c)(1) continues to state 
that once the FCA Board issues an order placing an FCS institution into 
receivership, ``all rights, privileges, and powers of its members, 
board of directors, and employees are transferred to and vested 
exclusively in FCSIC as receiver.'' We have added a new provision at 
the end of Sec.  627.20(c)(1) that carves out an exception that enables 
the institution's board to initiate an action in Federal court to 
remove the receiver pursuant to Sec.  627.4. We have already explained 
the reasons for these changes twice above.
    Final and redesignated Sec.  627.20(c)(2) revises the last sentence 
of former Sec.  627.2729(e). This provision governs the cancelation of 
a System institution's charter when FCA appoints FCSIC as its receiver. 
Under the former rule, FCA could cancel a System institution's charter 
either when it appoints FCSIC as receiver, or at any time 
thereafter.\18\ In contrast to former Sec.  627.2720(e), final Sec.  
627.20(c)(2) requires cancelation of the charter when FCSIC is 
appointed as the receiver of a System institution. Canceling the 
charter means an institution is out of business and undergoing 
liquidation and resolution. A `live' corporate charter is inconsistent 
with FCSIC's rights, powers, and duties as receiver under section 5.61C 
of the Act, as added by Congress in 2018. As long as the charter 
remains in effect, the institution is not defunct as a matter of law, 
and FCSIC's authority and ability to resolve the estate by disposing of 
its assets and liabilities can more easily be challenged by creditors, 
shareholder-members, and other parties, contrary to Congressional 
intent to provide for an

[[Page 82243]]

orderly liquidation process comparable to that of other federally 
chartered financial institutions.\19\
---------------------------------------------------------------------------

    \18\ In 1992, we added the provision to former Sec.  627.2720(e) 
that allowed us to cancel the charter at a later time in response to 
a comment from a System trade association. At that time, FCA opted 
for the flexibility to consider when to cancel an institution's 
charter on a case-by-case basis, although the preamble to the former 
regulation expressed FCA's expectation that it would ordinarily 
cancel the charter when it appointed FCSIC as the institution's 
receiver. See 57 FR 46482 (Oct. 9, 1992).
    \19\ Federal statutes comparable to section 4.12(b) of the Act 
permit commercial banks, credit unions, and Federal Home Loan Banks 
to challenge in Federal court, decisions by the three Federal 
banking regulatory agencies, the NCUA, and FHFA to appoint receivers 
and seek their removal. These agencies cancel the charters of 
institutions they supervise at the time they place them into 
receivership to ensure an orderly liquidation and resolution.
---------------------------------------------------------------------------

    Final and redesignated Sec.  627.20(d) implements section 4.37 of 
the Act, which addresses the treatment of uninsured voluntary and 
involuntary accounts of a System institution in receivership.\20\ This 
regulation provides that once the FCA Board has placed a System 
institution into receivership, FCSIC, in accordance with section 4.37 
of the Act, will, as soon as practicable, notify every borrower who 
holds an uninsured voluntary or involuntary account, as described in 
Sec.  624.4175, at such institution that: (1) such accounts ceased 
earning interest from the date the receivership commenced; and (2) 
FCSIC, as receiver, will immediately apply the funds in a borrower's 
account(s) as payment against the outstanding balance of the borrower's 
loan(s). The final rule rescinds a provision in the former regulation, 
Sec.  627.2735(e), that allowed a borrower, within 15 days of receiving 
this notice, to direct FCSIC to apply the funds in the account for some 
other purpose specified in the loan documents. We are repealing this 
provision because these accounts are uninsured and unsecured, and 
section 4.37 of the Act explicitly states these funds must be applied 
to reduce the outstanding balance of the borrower's loans.\21\ All 
other changes to this regulation are not substantive, and they are 
designed to improve its readability and clarity.
---------------------------------------------------------------------------

    \20\ Section 4.37 of the Act requires money of a borrower held 
in an uninsured voluntary or involuntary account at a System 
institution must be immediately applied as payment against the 
borrower's outstanding loans if the institution is placed in 
liquidation. This statutory provision also requires FCA to enact 
regulations that: (1) define the term ``uninsured voluntary or 
involuntary account''; and (2) effectively carry out section 4.37 of 
the Act.
    \21\ Section 4.37 of the Act requires FCA to enact regulations 
about how uninsured voluntary and involuntary accounts at System 
institutions are to be resolved by FCSIC. For this reason, final 
Sec.  627.20(d) specifies how FCSIC will address the resolution of 
these specific liabilities of a System institution in receivership.
---------------------------------------------------------------------------

    The final rule also rescinds former Sec.  627.2735(b), which 
requires FCSIC to provide notice to stockholders of an FCS institution 
in receivership regarding the value they will receive for their stock 
upon its liquidations. No regulation is needed to implement statutory 
provisions that protect borrower stock at System institutions in 
liquidation. Section 4.9A(c) of the Act, which requires FCSIC to retire 
borrower stock at par at a System institution in receivership, provides 
clear and unambiguous guidance to FCSIC.
    Finally, redesignated Sec.  627.20(e) amends and restates former 
Sec.  627.2765, which governs the final discharge and release of the 
receiver. According to this regulation, the receivership terminates 
once FCSIC makes a final distribution of the liquidated institution's 
assets. At that time, final Sec.  627.20(e) specifies the FCA Board 
will completely and finally release and discharge the receiver. This 
rulemaking repealed a provision in former Sec.  627.2765 that required 
our Board to cancel the institution's charter at this time if it had 
not done so previously. We rescinded this provision because, as 
discussed earlier, Sec.  627.20(c)(2) requires FCA to cancel the 
charter when the FCA Board places the institution in receivership.

D. Conforming Amendments

    The final rule makes conforming amendments to other regulations in 
parts 619 and 627.
1. Definitions in Part 619
    Our regulations in part 619 define terms that apply to all 
regulations unless a provision in a part, subpart, or section 
specifically states a different definition applies. This final rule 
amends the definition of ``Farm Credit bank'' in Sec.  619.9240 and 
``Farm Credit institutions'' in Sec.  619.9146, so both terms 
explicitly exclude bridge System banks FCA charters at FCSIC's request 
under section 5.61C(h)(2) of the Act. Bridge System banks are vehicles 
to resolve System institutions in liquidation. These conforming 
amendments to Sec. Sec.  619.9140 and 619.9146 exempt bridge System 
banks from FCA regulations that govern the activities and operations of 
healthy, ongoing FCS institutions. Thus, FCA regulations governing the 
organization and governance, capitalization, funding, and other 
activities of other System institutions would not apply to bridge 
System banks unless we enact a regulation that states otherwise.
    Additionally, we deleted the reference to the Funding Corporation 
from the definition of ``Farm Credit institution'' in Sec.  619.9146. 
The reason for this revision is section 5411(2) of the 2018 Farm Bill 
amended section 1.2(a)of the Act to expressly identify the Funding 
Corporation as a System institution. As a result, referencing the 
Funding Corporation in this regulation is now duplicative and 
unnecessary.
2. Voluntary Liquidation Regulation in Subpart D of Part 627
    As noted earlier, FCA is not revising its voluntary liquidation 
regulations in Subpart D at this time. However, the final rule made 
non-substantive conforming changes we proposed to ensure these 
regulations in subpart D are consistent with amendments to the 
conservatorship and receivership regulations in part 627. First, we 
redesignated the two regulations in subpart D, Sec. Sec.  627.2795 and 
627.2797 as Sec. Sec.  627.40 and 627.41 respectively, so they conform 
to the numbering changes we made to subparts A, B, and C of part 627. 
Second, we changed the reference to ``subpart B'' in redesignated Sec.  
627.40(a) to subpart C because, as discussed above, the final rule 
relocates our new receivership regulation to subpart C. Finally, we 
deleted the passage at the end of the final sentence in former Sec.  
627.2797(a), which states, ``except that if the Farm Credit institution 
is placed in receivership, the provisions of Sec.  627.2730 shall 
govern further disposition of the equities of the Farm Credit 
institution.'' We deleted this passage because the direct final rule we 
enacted in 2021 repealed Sec.  627.2730.

IV. Bridge System Banks and Voluntary Liquidations

A. Bridge System Banks

    Bridge System banks are one of the new tools the 2018 Farm Bill 
gave FCSIC, in its capacity as receiver, for resolving or liquidating 
failing or failed System banks. Section 5.61C(h) of the Act authorizes 
FCA to charter bridge System banks at FCSIC's request and dissolve them 
once a failing or failed Farm Credit bank is resolved.\22\
---------------------------------------------------------------------------

    \22\ See supra note 6. See also 87 FR supra at 19398, footnote 
6.
---------------------------------------------------------------------------

    The statutory provisions governing the creation, operation, 
capitalization, and termination and dissolution of bridge System banks 
are comprehensive, unambiguous, and prescriptive.\23\ For that reason, 
new regulations are not necessary to implement FCA's statutory 
authority pertaining to bridge System banks. To date, FCA has not 
proposed regulations for bridge System banks and instead will rely on 
its chartering and supervisory powers, as well as coordination with 
FCSIC, to fulfill FCA's responsibilities and obligations under section 
5.61C(h) of the Act. We note section 5.61C(h) grants FCSIC authority to 
organize, control, manage, and operate bridge System banks. Other

[[Page 82244]]

Federal regulators of financial institutions, including the Comptroller 
of the Currency, the NCUA, and the FHFA, have not enacted regulations 
to implement similar statutory provisions.
---------------------------------------------------------------------------

    \23\ See supra note 7. Detailed information concerning bridge 
System banks for cradle to grave is in available in the preamble to 
the proposed rule. Id. at footnote 7.
---------------------------------------------------------------------------

    Section 5.61C(h) of the Act also establishes the statutory 
framework for creating a healthy and viable successor bank to a bridge 
System bank once the receivership ends.\24\ However, replacing the 
bridge System bank with successor FCS banks raises novel issues of 
first impression for both FCA and FCSIC. As noted in the preamble to 
the proposed rule, both agencies are exploring and consulting about 
this issue. FCA may propose new regulations in the future to implement 
section 5.61C(h)(9) and (h)(10) concerning the processes and procedures 
for replacing a bridge System bank with a solvent, and viable Farm 
Credit bank.
---------------------------------------------------------------------------

    \24\ Id. at 10398.
---------------------------------------------------------------------------

B. Voluntary Liquidations

    As discussed above, the FCA has not substantively amended its 
regulations in subpart D of part 627 governing the voluntary 
liquidation of System institutions other than Farmer Mac. These 
regulations have been in effect since 1998, and FCA is reviewing them 
to determine whether revisions are needed.\25\
---------------------------------------------------------------------------

    \25\ See 63 FR 5726 (Feb. 4, 1998).
---------------------------------------------------------------------------

IV. Regulatory Analysis

A. Regulatory Flexibility Act and Major Rule Conclusion

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), FCA hereby certifies the final rule will not have 
a significant economic impact on a substantial number of small 
entities. Each of the banks in the Farm Credit System, considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that would qualify them as small entities. 
Therefore, Farm Credit System institutions are not ``small entities'' 
as defined in the Regulatory Flexibility Act.

B. Congressional Review Act

    [To be determined.]

List of Subjects

12 CFR Part 619

    Agriculture, Banks, Banking, and Rural areas.

12 CFR Part 627

    Agriculture, Banks, Banking, Claims, Rural areas.

    For the reasons stated in the preamble, parts 619 and 627 of 
chapter VI, title 12 of the Code of Federal Regulations are amended as 
follows:

PART 619--DEFINITIONS

0
1. The authority citation for part 619 is revised to read as follows:

    Authority:  Secs. 1.4, 1.5, 1.7, 2.1, 2.2, 2.4, 2.11, 2.12, 3.1, 
3.2, 4.9, 5.9, 5.17, 5.19, 5.61C, 7.0, 7.1, 7.6, 7.8 and 7.12 of the 
Farm Credit Act (12 U.S.C. 2012, 2013, 2015, 2072, 2073, 2075, 2092, 
2093, 2122, 2123, 2160, 2243, 2252, 2254, 2279a, 2279a-1, 2279b, 
2279c-1, 2279f); sec 514 of Pub. L. 102-552. 106 Stat. 4102.

0
2. Revise Sec.  619.9140 to read as follows:


Sec.  619.9140  Farm Credit bank(s).

    Except as otherwise defined, the term Farm Credit bank(s) includes 
Farm Credit Banks, agricultural credit banks, and banks for 
cooperatives, but excludes bridge System banks chartered by the Farm 
Credit Administration Board pursuant to section 5.61C(h)(2) of the Act.

0
3. Revise Sec.  619.9146 to read as follows:


Sec.  619.9146  Farm Credit institutions.

    Except as otherwise defined, the term Farm Credit institutions 
refers to all institutions identified in section 1.2 of the Act and are 
chartered and regulated by the Farm Credit Administration but excludes 
bridge System banks chartered by the Farm Credit Administration Board 
pursuant to section 5.61C(h)(2) of the Act.

PART 627--TITLE IV CONSERVATORS, RECEIVERS, BRIDGE SYSTEM BANKS, 
AND VOLUNTARY LIQUIDATIONS

0
4. The authority citation for part 627 is revised to read as follows:

    Authority:  Secs. 4.2, 5.9, 5.10, 5.17, 5.51, 5.58, 5.61, 5.61C 
of the Farm Credit Act (12 U.S.C. 2183, 2243, 2244, 2252, 2277a, 
2277a-7.

0
5. The heading for part 627 is revised to read as set forth above. 
2277a-10, 2277a-10c.).

0
6. Subparts A, B, and C are revised to read as follows:
Subpart A--General Provisions
Sec.
627.1 Applicability.
627.2 Definitions.
627.3 Grounds for appointing a conservator or receiver.
627.4 Action for removal of a conservator or receiver.
Subpart B--Conservator and Conservatorships
627.10 FCSIC as conservator.
Subpart C--Receiver and Receiverships
627.20 FCSIC as receiver.

Subpart A--General Provisions


Sec.  627.1  Applicability.

    The provisions of this part apply to conservatorships, 
receiverships, and voluntary liquidations of System institutions 
chartered under titles I, II, III, IV, and VII of the Act.


Sec.  627.2  Definitions.

    For the purposes of this part, the following definitions apply:
    Act means the Farm Credit Act of 1971, as amended.
    Conservator means the Farm Credit System Insurance Corporation 
acting in its capacity as the conservator of a Farm Credit institution.
    Farm Credit institution(s) or institution(s) means all Farm Credit 
banks, associations, service corporations chartered under title IV of 
the Act, and the Federal Farm Credit Banks Funding Corporation. These 
two terms do not include any bridge System bank chartered by FCA, in 
accordance with section 5.61C(h)(2) of the Act.
    FCSIC means the Farm Credit System Insurance Corporation.
    Receiver means FCSIC acting in its capacity as the receiver of a 
Farm Credit institution.


Sec.  627.3  Grounds for appointing FCSIC as conservator or receiver.

    (a) FCA may, in its discretion, appoint a conservator or receiver 
of a Farm Credit institution if FCA determines that one or more of the 
grounds in paragraph (b) of this section exists. FCA must appoint FCSIC 
as conservator or receiver of a Farm Credit institution. To the extent 
practicable, FCA will consult with FCSIC before taking a pre-resolution 
action that may result in a conservatorship or receivership of a Farm 
Credit institution.
    (b) The grounds for appointing FCSIC as a conservator or receiver 
of a System institution are:
    (1) The institution is insolvent because the value of its assets is 
less than its obligations to creditors and others, including its 
members. For the purpose of determining insolvency, ``obligations to 
members'' does not include stock or allocated equites held by current 
or former borrowers.
    (2) There has been a substantial dissipation of assets or earnings 
of the institution due to the violation of any law, rule, or 
regulation, or one or more unsafe or unsound practice(s).

[[Page 82245]]

    (3) The institution is in an unsafe or unsound condition to 
transact business, including having insufficient capital levels or 
otherwise. For the purpose of this part, ``unsafe or unsound 
condition'' includes, but is not limited to, the following conditions:
    (i) For associations, a default by the association of one or more 
terms of its general financing agreement with its funding bank that the 
Farm Credit Administration determines to be a material default;
    (ii) For all institutions, permanent capital of less than one-half 
the minimum required level for the institution; or
    (iii) For associations, stock impairment.
    (4) The institution has committed a willful violation of a final 
cease and desist order issued by the Farm Credit Administration Board.
    (5) The institution is concealing its books, papers, records, or 
assets, or is refusing to submit its books, papers, records, assets, or 
other material relating to the affairs of the institution for 
inspection to any examiner or to any lawful agent of the Farm Credit 
Administration Board.
    (6) A Farm Credit bank is unable to make a timely payment of 
principal or interest on any insured obligation(s) defined in section 
5.51(3) of the Act issued by the bank individually, or on which it is 
primarily liable.


Sec.  627.4  Action for the removal of the conservator or receiver.

    Within 30 days after the Farm Credit Administration Board appoints 
FCSIC as the conservator or receiver of a Farm Credit institution, 
pursuant to Sec.  627.3, the institution may bring an action in the 
United States District Court for the judicial district in which its 
home office is located, or the United States District Court for the 
District of Columbia, for an order requiring the Farm Credit 
Administration Board to remove such conservator or receiver and, if the 
charter has been canceled, to rescind the cancellation of the charter. 
The institution's board of directors is empowered to meet subsequent to 
the appointment of a conservator or receiver and authorize the filing 
of an action in Federal court to remove the conservator or receiver. 
Only the institution's board of directors has the power to authorize an 
action to remove the conservator or receiver.

Subpart B--Conservator and Conservatorships


Sec.  627.10  FCSIC as Conservator.

    (a) Appointment. (1) The Farm Credit Administration Board may 
exercise its authority under section 4.12(b) of the Act and Sec.  627.3 
to appoint FCSIC as the conservator of a Farm Credit institution upon 
finding that one or more of the grounds identified in Sec.  627.3(b) 
exists. The Farm Credit Administration Board may appoint, ex parte and 
without notice, FCSIC as conservator for any Farm Credit institution.
    (2) Upon appointing FCSIC as the conservator of an institution, the 
Chairman of the Farm Credit Administration shall immediately notify 
such institution and, in the case of an association, its funding bank. 
The Farm Credit Administration will immediately publish notice of the 
appointment of the conservator in the Federal Register.
    (b) Conservatorship. (1) Once the Farm Credit Administration Board 
issues the order placing a Farm Credit institution in conservatorship, 
all rights, privileges, and powers of its members, board of directors, 
officers, and employees, are transferred to and vested exclusively in 
FCSIC as conservator, except that the board of directors of the 
institution retains authority to initiate an action in a Federal 
district court to remove the conservator pursuant to Sec.  627.4.
    (2) The Farm Credit Administration will continue to examine Farm 
Credit institutions in conservatorship in accordance with section 5.19 
of the Act.
    (3) A qualified public accountant must audit a Farm Credit 
institution in conservatorship in accordance with part 621 of this 
chapter.
    (4) Pursuant to the requirements of part 621 of this chapter, each 
institution in conservatorship must prepare and file with the Farm 
Credit Administration financial reports, certified by FCSIC, as 
required by Sec.  621.14.
    (5) Each institution in conservatorship must prepare and issue 
published financial reports in accordance with the requirements of part 
620 of this chapter. FCSIC, as the conservator of the institution, will 
provide the signatures and certifications required by Sec.  620.3.
    (c) Termination of the conservatorship. (1) Whenever the Farm 
Credit Administration Board determines the problem(s) or condition(s) 
that led to the conservatorship have been corrected and resolved, and 
the institution is in a position to resume normal operations, it may 
terminate the conservatorship and direct FCSIC to turn over the 
institution's operations to such management that FCA designates. Once 
new management is in place, the conservatorship terminates and FCA 
discharges FCSIC as conservator; or
    (2) Whenever the Farm Credit Administration Board determines the 
institution should be placed in receivership, the Farm Credit 
Administration Board will appoint FCSIC as the receiver of such 
institution.

Subpart C--Receiver and Receiverships


Sec.  627.20  FCSIC as receiver.

    (a) Appointment. (1) The Farm Credit Administration Board may 
exercise its authority under section 4.12(b) of the Act and Sec.  627.3 
to appoint FCSIC as the receiver of a Farm Credit institution upon 
finding that one or more of the grounds identified in Sec.  627.3(b) 
exists. The Farm Credit Administration Board may appoint, ex parte and 
without notice, FCSIC as receiver for any Farm Credit institution.
    (2) Upon appointing FCSIC as the receiver of an institution, the 
Chairman of the Farm Credit Administration shall immediately notify 
such institution and, in the case of an association, its funding bank. 
The Farm Credit Administration will immediately publish notice of the 
appointment of the receiver in the Federal Register.
    (b) Funding bank role for association in liquidation. In the event 
of the voluntary or involuntary liquidation of an association, the 
funding bank must institute appropriate measures to minimize the 
adverse effect of the liquidation on those borrowers whose loans are 
purchased by, or otherwise transferred to another System institution.
    (c) Receivership. (1) Once the Farm Credit Administration Board 
issues the order placing a Farm Credit institution in receivership, all 
rights, privileges, and powers of its members, the board of directors, 
officers, and employees, are transferred to and vested exclusively in 
FCSIC as receiver, except that the institution's board of directors 
retains authority to initiate an action in a Federal district court to 
remove the receiver pursuant to Sec.  627.4.
    (2) The Farm Credit Administration Board simultaneously will cancel 
the charter of the institution when it appoints FCSIC as receiver.
    (d) Uninsured accounts. Once the Farm Credit Administration Board 
has placed an institution into receivership, FCSIC, in accordance with 
section 4.37 of the Act will, as soon as practicable, notify every 
borrower who holds an uninsured voluntary or involuntary account, as 
described in Sec.  614.4175 of this subchapter, at the institution 
that:
    (1) Such accounts ceased earning interest from the date the Farm 
Credit Administration Board placed the institution into receivership; 
and

[[Page 82246]]

    (2) FCSIC, as receiver, will immediately apply the funds in a 
borrower's uninsured account(s) as payment against the outstanding 
balance of the borrower's loan(s).
    (e) Final discharge and release of the receiver. The receivership 
terminates after FCSIC makes a final distribution of the assets of the 
liquidated institution. Then, the Farm Credit Administration Board will 
completely and finally release and discharge the receiver.

Subpart D--Voluntary Liquidation


Sec.  627.2795  [Redesignated as Sec.  627.40]

0
7. Redesignate Sec.  627.2795 as Sec.  627.40.


Sec.  627.40  [Amended]

0
8. In newly redesignated Sec.  627.40, in paragraph (a), remove 
``subpart B'' and add ``subpart C'' in its place.


Sec.  627.2797  [Redesignated as Sec.  627.41]

0
9. Redesignate Sec.  627.2797 as Sec.  627.41.

0
10. In newly redesignated Sec.  627.41, revise the last sentence in 
paragraph (a) to read as follows:


Sec.  627.41  Preservation of equity.

    (a) * * * In the event the resolution to liquidate is approved by 
the stockholders of the Farm Credit institution and the liquidation 
plan is approved by the Farm Credit Administration Board, the 
liquidation plan shall govern disposition of the equities of the Farm 
Credit institution.
* * * * *

    Dated: November 15, 2023.
Ashley Waldron,
Secretary, Farm Credit Administration Board.
[FR Doc. 2023-25652 Filed 11-22-23; 8:45 am]
BILLING CODE 6705-01-P