Federal Agricultural Mortgage Corporation Funding and Fiscal Affairs; Risk-Based Capital Requirements

Resumo

The Farm Credit Administration (FCA, Agency, or we) adopts a final rule that amends capital regulations governing the Federal Agricultural Mortgage Corporation (Farmer Mac or the Corporation). The final rule updates the Risk-Based Capital Stress Test (RBCST, RBC model, model) in response to recent changes in Farmer Mac's operations that are not addressed in the current version (Version 2.0). The final rule also amends the current model's assumption regarding the carrying costs of nonperforming loans to better reflect Farmer Mac's actual business practices. In addition, the final rule adds a new component to the model to recognize counterparty risk on nonprogram investments through application of discounts or "haircuts" to the yields of those investments and makes technical amendments to the layout of the model's Credit Loss Module. The effect of the rule is to update the model so that it continues to appropriately reflect risk in a manner consistent with statutory requirements for calculating Farmer Mac's regulatory minimum capital level under a risk-based capital stress test.