FCA Board Proposes Rule Amending Liquidity Management Regulation

FCA Board Proposes Rule Amending Liquidity Management Regulation

Comments sought on whether the liquidity reserves of System banks should cover unfunded commitments and other contingent obligations.

The Farm Credit Administration Board Wednesday approved a proposed rule that would amend FCA regulation at 12 C.F.R. ยง 615.5134, which addresses the liquidity reserve requirements for Farm Credit System banks.

The purpose of the proposed rule is to strengthen liquidity risk management at System banks, to improve the quality of assets in the liquidity reserve, and to bolster the ability of System banks to fund their obligations and continue their operations during adverse financial times.

FCA invites public comment on the proposed rule. In particular, it seeks comment on whether the liquidity reserves of System banks should cover unfunded commitments and other contingent obligations.

The agency also invites comment on the best way to measure the creditworthiness of liquid investments purchased by System banks. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires agencies to adopt regulations that use standards of creditworthiness other than credit ratings issued by Nationally Recognized Statistical Rating Organizations.

To provide more information about the proposed rule, the Agency will soon issue a fact sheet. A link to the fact sheet will be available at www.fca.gov on the Rulemaking Fact Sheets page under the News & Events tab.

Following a 30-day period for congressional review, the proposed rule will be published in the Federal Register for a 60-day comment period. The public may submit comments by electronic mail to [email protected], through the Pending Regulations section of FCA's website at www.fca.gov, or through the federal government Web portal at www.regulations.gov.

The public may also submit comments by mail to Gary K. Van Meter, Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. The public may read submitted comments at the FCA office in McLean, Va., or on FCA's website at www.fca.gov.

The Board also heard a quarterly report by the Office of Management Services. The OMS report discussed the agency's budget status through Sept. 30, 2011, and the results of the recent financial audit. It also discussed the agency's examiner commissioning program and the agency's human capital needs. Finally, the report discussed how FCA's technology infrastructure supports the agency's strategic needs.

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