
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2279bb-1]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
         SUBCHAPTER VIII--AGRICULTURAL MORTGAGE SECONDARY MARKET
 
    Part B--Regulation of Financial Safety and Soundness of Federal 
                    Agricultural Mortgage Corporation
 
Sec. 2279bb-1. Risk-based capital levels


(a) Risk-based capital test

    Not sooner than the expiration of the 3-year period beginning on 
February 10, 1996, the Director of the Office of Secondary Market 
Oversight shall, by regulation, establish a risk-based capital test 
under this section for the Corporation. When applied to the Corporation, 
the risk-based capital test shall determine the amount of regulatory 
capital for the Corporation that is sufficient for the Corporation to 
maintain positive capital during a 10-year period in which both of the 
following circumstances occur:

                           (1) Credit risk

        With respect to securities representing an interest in, or 
    obligations backed by, a pool of qualified loans owned or guaranteed 
    by the Corporation and other obligations of the Corporation, losses 
    on the underlying qualified loans occur throughout the United States 
    at a rate of default and severity (based on any measurements of 
    default reasonably related to prevailing industry practice in 
    determining capital adequacy) reasonably related to the rate and 
    severity that occurred in contiguous areas of the United States 
    containing an aggregate of not less than 5 percent of the total 
    population of the United States that, for a period of not less than 
    2 years (as established by the Director), experienced the highest 
    rates of default and severity of agricultural mortgage losses, in 
    comparison with such rates of default and severity of agricultural 
    mortgage losses in other such areas for any period of such duration, 
    as determined by the Director.

                       (2) Interest rate risk

        Interest rates on Treasury obligations of varying terms increase 
    or decrease over the first 12 months of such 10-year period by not 
    more than the lesser of (A) 50 percent (with respect to the average 
    interest rates on such obligations during the 12-month period 
    preceding the 10-year period), or (B) 600 basis points, and remain 
    at such level for the remainder of the period. This paragraph may 
    not be construed to require the Director to determine interest rate 
    risk under this paragraph based on the interest rates for various 
    long-term and short-term obligations all increasing or all 
    decreasing concurrently.

(b) Considerations

                      (1) Establishment of test

        In establishing the risk-based capital test under subsection (a) 
    of this section--
            (A) the Director shall take into account appropriate 
        distinctions based on various types of agricultural mortgage 
        products, varying terms of Treasury obligations, and any other 
        factors the Director considers appropriate;
            (B) the Director shall conform loan data used in determining 
        credit risk to the minimum geographic and commodity 
        diversification standards applicable to pools of qualified loans 
        eligible for guarantee;
            (C) the Director may take into account retained subordinated 
        participating interests under section 2279aa-6(b)(2) of this 
        title (as in effect before February 10, 1996);
            (D) the Director may take into account other methods or 
        tests to determine credit risk developed by the Corporation 
        before December 13, 1991; and
            (E) the Director shall consider any other information 
        submitted by the Corporation in writing during the 180-day 
        period beginning on December 13, 1991.

                          (2) Revising test

        Upon the expiration of the 8-year period beginning on December 
    13, 1991, the Director shall examine the risk-based capital test 
    under subsection (a) of this section and may revise the test. In 
    making examinations and revisions under this paragraph, the Director 
    shall take into account that, before December 13, 1991, the 
    Corporation has not issued guarantees for pools of qualified loans. 
    To the extent that the revision of the risk-based capital test 
    causes a change in the classification of the Corporation within the 
    enforcement levels established under section 2279bb-4 of this title, 
    the Director shall waive the applicability of any additional 
    enforcement actions available because of such change for a 
    reasonable period of time, to permit the Corporation to increase the 
    amount of regulatory capital of the Corporation accordingly.

(c) Risk-based capital level

    For purposes of this part, the risk-based capital level for the 
Corporation shall be equal to the sum of the following amounts:

                  (1) Credit and interest rate risk

        The amount of regulatory capital determined by applying the 
    risk-based capital test under subsection (a) of this section to the 
    Corporation, adjusted to account for foreign exchange risk.

                 (2) Management and operations risk

        To provide for management and operations risk, 30 percent of the 
    amount of regulatory capital determined by applying the risk-based 
    capital test under subsection (a) of this section to the 
    Corporation.

(d) Specified contents

                           (1) In general

        The regulations establishing the risk-based capital test under 
    this section shall--
            (A) be issued by the Director for public comment in the form 
        of a notice of proposed rulemaking, to be first published after 
        the expiration of the period referred to in subsection (a) of 
        this section; and
            (B) contain specific requirements, definitions, methods, 
        variables, and parameters used under the risk-based capital test 
        and in implementing the test (such as loan loss severity, float 
        income, loan-to-value ratios, taxes, yield curve slopes, default 
        experience, prepayment rates, and performance of pools of 
        qualified loans).

                           (2) Specificity

        The regulations referred to in paragraph (1) shall be 
    sufficiently specific to permit an individual other than the 
    Director to apply the test in the same manner as the Director.

(e) Availability of model

    The Director shall make copies of the statistical model or models 
used to implement the risk-based capital test under this section 
available for public acquisition and may charge a reasonable fee for 
such copies.

(Pub. L. 92-181, title VIII, Sec. 8.32, as added Pub. L. 102-237, title 
V, Sec. 503(b)(2), Dec. 13, 1991, 105 Stat. 1871; amended Pub. L. 102-
552, title III, Sec. 308(b)(3), Oct. 28, 1992, 106 Stat. 4116; Pub. L. 
104-105, title I, Secs. 109(b)(3), 113, Feb. 10, 1996, 110 Stat. 165, 
166.)


                               Amendments

    1996--Subsec. (a). Pub. L. 104-105, Sec. 113(1), in first sentence, 
substituted ``Not sooner than the expiration of the 3-year period 
beginning on February 10, 1996,'' for ``Not later than the expiration of 
the 2-year period beginning on December 13, 1991,''.
    Subsec. (b)(1)(C). Pub. L. 104-105, Sec. 109(b)(3), substituted 
``Director may'' for ``Director shall'' and inserted before semicolon at 
end ``(as in effect before February 10, 1996)''.
    Subsec. (b)(2). Pub. L. 104-105, Sec. 113(2), substituted ``8-year'' 
for ``5-year'' in first sentence.
    Subsec. (d). Pub. L. 104-105, Sec. 113(3), designated first sentence 
of existing provisions as par. (1), inserted heading, added subpar. (A), 
and designated part of first sentence as subpar. (B), designated second 
sentence of existing provisions as par. (2), inserted heading, and 
substituted ``The regulations referred to in paragraph (1) shall'' for 
``The regulations shall''.
    1992--Subsecs. (a), (b)(1)(D). Pub. L. 102-552, Sec. 308(b)(3)(A), 
substituted ``December 13, 1991'' for ``the date of the enactment of 
this section''.
    Subsec. (b)(1)(E). Pub. L. 102-552, Sec. 308(b)(3)(B), substituted 
``December 13, 1991'' for ``the date of the enactment of such Act''.
    Subsec. (b)(2). Pub. L. 102-552, Sec. 308(b)(3)(A), substituted 
``December 13, 1991'' for ``the date of the enactment of this section'' 
in two places.

                  Section Referred to in Other Sections

    This section is referred to in section 2279bb-4 of this title.
