Title 12, Banks and BankingRelease 119-73not60

§2279bb–6 Supervisory Actions Applicable to Level Iii

Title 12 › Chapter 23— FARM CREDIT SYSTEM › Subchapter VIII— AGRICULTURAL MORTGAGE SECONDARY MARKET › Part B— Regulation of Financial Safety and Soundness of Federal Agricultural Mortgage Corporation › § 2279bb–6

Last updated Apr 3, 2026|Official source

Summary

If the Corporation is placed in level III, it must, within the time the Director sets, give the Director a plan to restore its capital, get that plan approved, and follow it. It may not pay any dividend that would push it into level IV. Any other dividend needs the Director’s approval before it’s paid. The Director may approve a dividend only if it will quickly help the Corporation meet its risk-based and minimum capital levels, improve its long-term safety, or serve the public interest. If the Corporation fails to submit an approved plan or fails to make reasonable, good-faith efforts to follow the approved schedule, the Director must immediately reclassify it to level IV. While the Corporation is in level III, the Director may at any time limit or cut the Corporation’s obligations (including off-balance-sheet obligations), limit or shrink its assets, ban dividends, require new capital to reach level II, force the Corporation to stop or reduce risky activities, or appoint a conservator. These rules took effect on January 1, 1992.

Full Legal Text

Title 12, §2279bb–6

Banks and Banking, Source: USLM XML via OLRC

(a)(1)If the Corporation is classified as within level III, the Corporation shall, within the time period determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.

(2)(A)If the Corporation is classified as within level III, the Corporation—

(i)may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and

(ii)may make any other payment of dividends only if the Director approves the payment before the payment.

(B)If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.

(3)The Director shall immediately reclassify the Corporation as within level IV if—

(A)the Corporation is classified as within level III; and

(B)(i)the Corporation does not submit a capital restoration plan that is approved by the Director; or

(ii)the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.

(b)In addition to any other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:

(1)Limit any increase in, or order the reduction of, any obligations of the Corporation, including off-balance sheet obligations.

(2)Limit or prohibit the growth of the assets of the Corporation or require contraction of the assets of the Corporation.

(3)Prohibit the Corporation from making any payment of dividends.

(4)Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as within level II.

(5)Require the Corporation to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the Corporation.

(6)Appoint a conservator for the Corporation consistent with this chapter.

(c)This section shall take effect on January 1, 1992.

Reference

Citations & Metadata

Citation

12 U.S.C. § 2279bb–6

Title 12, Banks and Banking

Last Updated

Apr 3, 2026

Release point: 119-73not60