Farm credit system: Farm management and agricultural trust; comment request,

[Federal Register: August 19, 2003 (Volume 68, Number 160)]

[Notices]

[Page 49773-49774]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr19au03-49]

FARM CREDIT ADMINISTRATION

Proposed Related Services; Farm Management and Agricultural Trust

AGENCY: Farm Credit Administration.

ACTION: Notice; Request for public comment.

SUMMARY: The Farm Credit Administration (FCA or we) requests public comment on an inquiry by a Farm Credit System (System or FCS) institution for approval to offer farm management and agricultural trust services as authorized ``Related Services.'' The requested services are being published for a 60-day public comment period prior to the FCA acting on the request to offer such services.

DATES: Please send your comments to the FCA by October 20, 2003.

ADDRESSES: You may send comments by electronic mail to reg- comm@fca.gov, through the Pending Regulations section of the FCA's interactive Web site at www.fca.gov, or through the government-wide www.regulations.gov portal. You may also send written comments to Robert Coleman, Director, Regulation and Policy Division, Office of Policy and Analysis, Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090 or by facsimile to (703) 734-5784. Copies of all comments we receive can be reviewed at FCA's office in McLean, Virginia.

FOR FURTHER INFORMATION CONTACT:

Lori Markowitz, Policy Analyst, Office of Policy and Analysis, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4498, TTY (703) 883-4434; or Joy Strickland, Senior Counsel, Regulatory Enforcement Division, Office of General Counsel, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.

SUPPLEMENTARY INFORMATION:

1. Objective

   Consistent with law and safety and soundness principles, the objective of this notice is to request public comment on a request from a FCS institution to offer farm management and agricultural trust services as authorized ``Related Services.''

2. Background

   Related services, as defined in 12 CFR 618.8000(b) means ``any service or type of activity provided by a System bank or association that is appropriate to the recipient's on-farm, aquatic, or cooperative operations, including control of related financial matters.'' Any new service not previously authorized and placed on the Related Services List in 12 CFR part 618 requires a prior determination that the service is legally authorized. The FCA also must evaluate whether the service presents excessive risk to the requesting institution or the System as a whole, including whether the service could result in significant conflicts of interest or expose the institution or the System as a whole to significant liability.

3. Proposed Related Services

   Under the proposal, the following services would be provided to persons eligible to receive such services from Farm Credit institutions under 12 CFR 618.8005.

   1. Farm Management Services: Professionals familiar with the market would provide management of agricultural properties for real estate owners in the service area. Farm management includes defining ownership goals, identifying problems, analyzing alternatives, and making recommendations for achieving business goals. Farm managers would present the customer with a full spectrum of lease or custom farming alternatives and help the owner decide how to ultimately get the best return on assets. Key factors of the service would include developing a comprehensive farm operating plan, securing operators and negotiating leases, providing property reporting, including annual budgets and projections, analyzing government programs, formulating and implementing capital improvements and repairs, and handling commodity sales.

   2. Agricultural Trust Services: The applicant would assist customers in creating a trust and managing the assets of the trust. As the trustee, the applicant would handle the responsibilities involved in settling the estate, including record keeping, asset management, asset disposition, tax filings, and income distributions.

4. Requesting Comments

   In its evaluation of the proposed services, the FCA will focus on systemic issues rather than on institution or program-specific factors. If we authorize the above related services, any System bank or association may develop a program and subsequently offer the same related service(s) to eligible recipients, subject to any special conditions or limitations imposed by the FCA. We may, at the time of approval, impose such special conditions or limitations on any approved service to ensure safety and soundness or compliance with law or regulation. These programs would be subject to review during the examination process.

   Because of the complex nature of these proposed services, the FCA solicits public comment prior to acting on the request, in accordance with 12 CFR 618.8010(b)(3). We believe that evaluation of the proposal will be aided by public comment. Specifically, we request comments on the risks inherent in offering these services, such as the

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   potential for conflicts of interest and liability or environmental concerns, particularly in regard to providing such services to borrowers who may be having financial difficulty or who may be missing loan payments. We request commenters propose how they believe these identified risks might be mitigated, keeping in mind that some of the risks could be addressed by licensing requirements, requiring pertinent disclosure for certain services, and adopting internal controls. We also request comments on the potential benefits to farmers, the impact of such services on the lending function, and any other pertinent issues. In addition, we request comments on what Systemwide issues might be raised by a decision to authorize such services.

   Dated: August 13, 2003. Jeanette C. Brinkley, Secretary, Farm Credit Administration Board.

   [FR Doc. 03-21112 Filed 8-18-03; 8:45 am]

   BILLING CODE 6705-01-P