The Farm Credit Administration (FCA) Board today approved a proposed rule that would amend the FCA regulation (at 12 C.F.R. § 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 FCS banks, to improve the quality of assets in the liquidity reserve, and to bolster the ability of those banks to fund their obligations and continue operations during adverse financial times.

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

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

To provide more information about the proposed rule, the FCA 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 reg-comm@fca.gov, through the Pending Regulations section of FCA’s website or through the federal government Web portal.

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.

Source: FCA