Market Access Agreement, 76729-76731 [2010-30930]

Agencies

• Farm Credit Administration

[Federal Register Volume 75, Number 236 (Thursday, December 9, 2010)]
[Notices]
[Pages 76729-76731]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30930]


=======================================================================
-----------------------------------------------------------------------

FARM CREDIT ADMINISTRATION


Market Access Agreement

AGENCY: Farm Credit Administration.

ACTION: Notice of approval of the draft amendment to the amended and 
restated market access agreement.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit Administration (FCA or we) announces its 
approval of the draft amendment to the Amended and Restated Market 
Access Agreement (MAA) proposed to be entered into by all of the banks 
of the Farm Credit System (System) and the Federal Farm Credit Banks 
Funding Corporation (Funding Corporation). The MAA sets forth the 
rights and responsibilities of each of the parties when the condition 
of a bank falls below pre-established financial performance thresholds. 
The draft amendment (MAA Amendment) is intended to conform the MAA to 
the Joint and Several Liability Reallocation Agreement (Reallocation 
Agreement).

FOR FURTHER INFORMATION CONTACT: Chris Wilson, Financial Analyst, 
Office of Regulatory Policy, Farm Credit Administration, McLean, VA 
22102-5090, (703) 883-4204, TTY (703) 883-4434, or Rebecca S. Orlich, 
Senior Counsel, Office of General Counsel, Farm Credit Administration, 
McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.

SUPPLEMENTARY INFORMATION: On August 18, 2010, the FCA published for 
comment a proposed Reallocation Agreement to be entered into by all of 
the banks of the System and the Funding Corporation (75 FR 51061). The 
Reallocation Agreement is designed to establish a procedure for non-
defaulting banks to pay maturing System-wide debt on behalf of 
defaulting banks prior to a statutory joint and several call by the 
FCA. We received no comments on the proposal and approved it without 
modifications. The FCA's approval was published in the Federal Register 
on October 20, 2010 (75 FR 64727).
    In the supplementary information we provided when we published the 
proposal for public comment, the FCA stated that the System banks and 
the Funding Corporation intended also to make conforming changes to the 
MAA to ensure that the MAA provisions did not impede operation of the 
Reallocation Agreement. The FCA stated further that, should the Agency 
approve the Reallocation Agreement, it expected also to approve the 
conforming MAA Amendment and would publish it in the Federal Register.
    The FCA published the current MAA in its entirety in the Federal 
Register on January 15, 2003 (68 FR 2037). The current MAA establishes 
certain financial thresholds at which conditions are placed on the 
activities of a bank or a bank's access to participation in System-wide 
and consolidated obligations is restricted. The MAA establishes three 
categories, which are based on each bank's net collateral ratio, 
permanent capital ratio, and scores under the Contractual Inter-bank 
Performance Agreement, which is an agreement among the System banks and 
the Funding Corporation that establishes certain financial performance 
criteria.
    Under the MAA, as a bank's financial condition declines, the bank 
moves into Category I, then Category II, and finally Category III. When 
a bank reaches Category I, it is required to provide certain additional 
information, including information as to how it will improve its 
financial condition, to the Monitoring and Advisory Committee, a 
committee of bank and Funding Corporation representatives established 
under the MAA. When a bank reaches Category II, in addition to being 
required to provide additional information, the bank is limited to 
joining in the issuance of System-wide and consolidated obligations 
only in those amounts necessary for the bank to be able to roll over 
its maturing debt. When the bank reaches Category III, the bank is 
precluded from joining in the issuance of System-wide and consolidated 
obligations.
    The MAA includes provisions that enable a bank in Category II or 
III to request the opportunity to continue its access to the market. 
The MAA also provides that the FCA may override a decision to impose 
Category III prohibitions on access to the market for a period of 60 
days, which may be renewed for an additional 60-day period.
    The MAA Amendment adds new sections 4.05, 5.05, and 7.23 to the 
MAA. The MAA Amendment provides that, in a circumstance where the joint

[[Page 76730]]

and several payment provisions of the Reallocation Agreement have been 
triggered, all non-defaulting System banks will be able to issue 
System-wide obligations to fund payments under the Reallocation 
Agreement. This means that even banks in Category II and III could 
participate in such issuances. The MAA Amendment also provides that the 
MAA and the Reallocation Agreement are separate agreements, and 
invalidation of one does not affect the other.
    The FCA now approves the MAA Amendment as set forth below. The 
FCA's approval is conditioned on the board of directors of each bank 
and the Funding Corporation approving the MAA Amendment. Neither the 
MAA Amendment, when it becomes effective, nor FCA approval of it shall 
in any way restrict or qualify the authority of the FCA or the Farm 
Credit System Insurance Corporation (FCSIC) to exercise any of the 
powers, rights, or duties granted by law to the FCA or the FCSIC. 
Finally, the FCA retains the right to modify or revoke its approval of 
the MAA, including the MAA Amendment, at any time.
    The MAA Amendment, together with the recitals to the amendment, is 
as follows:

Amendment to the Amended and Restated Market Access Agreement

    This amendment to the amended and restated market access agreement 
(the ``Amendment'') is made as of the [----] day of [--------------] 
(the ``Effective Date''), by and among AgFirst Farm Credit Bank; 
AgriBank, FCB; CoBank, ACB; the Farm Credit Bank of Texas; and the U.S. 
AgBank, FCB (as successor to the Farm Credit Bank of Wichita and the 
Western Farm Credit Bank under Section 7.12 of the Market Access 
Agreement) (each, a ``Bank,'' and collectively, the ``Banks''), and the 
Federal Farm Credit Banks Funding Corporation (the ``Funding 
Corporation'').
    Whereas, the Banks and the Funding Corporation desire to adopt a 
contractual reallocation of each Bank's joint and several liability 
obligations as an alternative to Section 4.4(a)(2) of the Farm Credit 
Act of 1971, as amended (the ``Joint and Several Liability Reallocation 
Agreement'');
    Whereas, the Banks and the Funding Corporation desire to amend the 
Amended and Restated Market Access Agreement dated July 1, 2003 (the 
``Market Access Agreement'') in order to effectuate the intended 
purpose of the Joint and Several Liability Reallocation Agreement;
    Whereas, the boards of directors of the Banks and the Funding 
Corporation gave approval to the Amendment subject to certain 
conditions;
    Whereas, the Amendment was submitted to the Farm Credit 
Administration (the ``FCA'') for approval and to the Farm Credit System 
Insurance Corporation (the ``Insurance Corporation'') for an expression 
of no objection;
    Whereas, the FCA published a description of this Amendment in 
connection with the publication of the Joint and Several Liability 
Reallocation Agreement in the Federal Register on August 18, 2010 and 
sought comments thereon;
    Whereas, after receiving comments on the Joint and Several 
Liability Reallocation Agreement,[\1\] the FCA, pursuant to the letter 
dated ----, approved this Amendment subject to modifications, if any, 
that are acceptable to the Banks and the Funding Corporation and a 
notice of such approval was published in the Federal Register on [----
------------];
---------------------------------------------------------------------------

    \1\ We note that, although this paragraph states that the FCA 
received comments on the Reallocation Agreement, we did not receive 
comments on it.
---------------------------------------------------------------------------

    Whereas, the Insurance Corporation, pursuant to the letter dated 
[------], from the Insurance Corporation to the Banks and the Funding 
Corporation, expressed no objection to this Amendment;
    Now therefore, in consideration of the foregoing, the Banks and the 
Funding Corporation, intending to be legally bound hereby, agree to 
further amend the Market Access Agreement as follows:
    Section 1.01 After current Section 4.04 of the Market Access 
Agreement, add new Section 4.05, which reads as follows:

    ``Section 4.05. Relationship to the Joint and Several Liability 
Reallocation Agreement. A Category II Bank shall not be subject to 
the Final Restrictions and Category II Interim Restrictions, to the 
extent that the Final Restrictions and Category II Interim 
Restrictions would prohibit such Category II Bank from issuing debt 
required to fund such Category II Bank's liabilities and obligations 
under the Joint and Several Liability Reallocation Agreement.''

    Section 1.02 After current Section 5.04 of the Market Access 
Agreement, add new Section 5.05, which reads as follows:

    ``Section 5.05. Relationship to the Joint and Several Liability 
Reallocation Agreement. A Category III Bank shall not be subject to 
the Final Prohibition or Category III Interim Restrictions, to the 
extent that the Final Prohibition or Category III Interim 
Restrictions would prohibit such Category III Bank from issuing debt 
required to fund such Category III Bank's liabilities and 
obligations under the Joint and Several Liability Reallocation 
Agreement.''

    Section 1.03 After current Section 7.22 of the Market Access 
Agreement, add new Section 7.23, which reads as follows:

    ``Section 7.23. Relationship to the Joint and Several Liability 
Reallocation Agreement. This Restated MAA and the Joint and Several 
Liability Reallocation Agreement are separate agreements, and 
invalidation of one does not affect the other.''

    Section 1.04 Continuation of Market Access Agreement. Except as 
expressly provided in this Amendment, the Market Access Agreement shall 
remain in full force and effect in accordance with its terms.
    Section 1.05 Counterparts. This Amendment may be executed in two or 
more counterparts, each of which shall be deemed to be an original, but 
all of which together shall constitute a single document.
    In witness whereof, each party hereto has caused this Amendment to 
be executed by its duly authorized officers or representatives, all as 
of the date written below.
AGFIRST FARM CREDIT BANK
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
AGRIBANK, FCB
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
COBANK, ACB
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Farm Credit Bank of Texas
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
U.S. AGBANK, FCB
By:
-----------------------------------------------------------------------

[[Page 76731]]

Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Federal Farm Credit Banks Funding Corporation
By:
-----------------------------------------------------------------------
Name:
-----------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------

    Dated: December 3, 2010.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. 2010-30930 Filed 12-8-10; 8:45 am]
BILLING CODE 6705-01-P