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Federal Register / Vol. 86, No. 53 / Monday, March 22, 2021 / Rules and Regulations
of General Counsel, Farm Credit Administration, McLean, VA 22102
5090, 703 8834020, TTY 703 883
4056.
SUPPLEMENTARY INFORMATION:
Table of Contents I. Objective II. Background III. Repeal of Regulations Superseded by Statutory Amendments IV. Direct Final Rule V. Regulatory Flexibility Act Analysis and Major Rule Conclusion
I. Objective The objective of this direct final rule is to repeal regulatory provisions in part 627 that have been superseded by section 5412 of the 2018 Farm Bill.

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II. Background On December 20, 2018, President Trump signed the 2018 Farm Bill into law.1 Section 5142 of the 2018 Farm Bill added a new section 5.61C to the Farm Credit Act of 1971, as amended Act.2
This new statutory provision strengthens, clarifies, and updates the powers and duties of FCSIC after FCA
has appointed it as the conservator or receiver of a FCS institution.3
Additionally, section 5.61C of the Act enhances FCSICs authority to handle claims by various parties against a System institution in conservatorship or receivership. FCSICs new statutory conservatorship and receivership authorities are comparable to those of the Federal Deposit Insurance Corporation, National Credit Union Administration, and Federal Housing Finance Agency.4
FCA is revising its regulations in part 627 so they are consistent with section 5412 of the 2018 Farm Bill. FCA is issuing this direct final rule that repeals several regulations in part 627 that are now inconsistent with provisions in section 5.61C of the Act pertaining to FCSICs authority to administer conservatorships and receiverships of FCS institutions. FCA may address the following issues in subsequent rulemakings: 1 Voluntary liquidation of System institutions under section 1 Public Law 115334, 132 Stat. 4490, Dec. 20, 2018.
2 Section 5.61C of the Act is codified at 12 U.S.C.
2277a10c. The Act is available at www.fca.gov under Laws and regulations, and Statutes.
3 Section 4.12b of the Act requires FCA to appoint FCSIC as the conservator or receiver of an FCS bank, association, service corporation, or the Federal Farm Credit Banks Funding Corporation.
Section 8.41c1A allows, but does not require, FCA to appoint FCSIC as the conservator or receiver of the Federal Agricultural Mortgage Corporation Farmer Mac.
4 See Conf. Report No. 1151072, 115th Cong., 2nd Sess., Dec. 10, 2018 p. 648.

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4.12a of the Act; 2 FCA appointment of conservators and receivers pursuant to section 4.12b of the Act; and 3
chartering and dissolving bridge banks in accordance with section 5.61Ch of the Act.
III. Repeal of Regulations Superseded by Statutory Amendments FCA is rescinding, in their entirety, nine 9 regulations in subpart B and one regulation in subpart C of part 627
pertaining to the receivership or conservatorship of System institutions.
New section 5.61C of the Act has strengthened, clarified, and updated FCSICs conservatorship and receivership authorities, thereby superseding and rendering these ten 10 regulations obsolete. More specifically, this direct rule rescinds:
12 CFR 627.2725 Powers and duties of the receiversets forth the powers and duties of the receiver of a System institution.
12 CFR 627.2726 Treatment by the conservator or receiver of financial assets transferred in connection with a securitization or participationdefines beneficial interests, financial assets, participation, securitization, and special purpose entity. It describes the treatment of financial assets transferred in connection with a securitization or participation in a conservator or receiver.
12 CFR 627.2730 Preservation of equityprovides that no capital stock, participation certificates, equity reserves, or other allocated equities of an institution in receivership will be issued, allocated, retired, sold, distributed, transferred, assigned, or applied against any indebtedness of the owners of such equities. This regulation confirms that borrower stock must be retired in accordance with section 4.9A
of the Act.
12 CFR 627.2740 Creditors claimsdescribes the requirements to provide notice to creditors, the allowance and disallowance of claims, and the procedures for handling certain claims.
12 CFR 627.2745 Priority of claimsassociationsdescribes the priority of claims for the distribution of the assets of an association in liquidation.
12 CFR 627.2750 Priority of claims-banksdescribes the priority of claims for the distribution of the assets of a bank in liquidation.
12 CFR 627.2752 Priority of claimsother Farm Credit institutionsdescribes the priority of claims for the distribution of the assets of a System institution other than an association or bank.

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12 CFR 627.2755 Payment of claimsdescribes the payment of claims and if there are insufficient funds to pay any class of claims in full, distribution for that class of claims will be handled on a pro rata basis.
12 CFR 627.2760 Inventory, audit, and reportsdescribes inventory, audit, and reporting requirements for the receiver upon possession, annually, and upon final liquidation.
12 CFR 627.2780 Powers and duties of conservatorsdescribes the powers and duties of the conservator to conduct its operations for the benefit of the creditors and stockholders of the institution.
As noted earlier, section 5412 of the 2018 Farm Bill, which added section 5.61C to the Act, enhanced, clarified, and updated FCSICs powers to conduct conservatorships and receiverships of System institutions. More specifically, various provisions in section 5.61Cb2
of the Act include authorization for FCSIC to: 1 Operate any System institution in conservatorship or receivership, 2 function as the institutions board of directors, officers, members, and stockholders, 3 use proceeds collected from the performance of contracts and sale of assets to pay valid claims, and 4
receive, determine, and settle claims, and set the priority of claims in accordance with the statute.
Furthermore, sections 5.61Cb1, b4, and b10C of the Act expressly authorize FCSIC to prescribe regulations regarding the conduct of conservatorships and receiverships, and the allowance, disallowance, and resolution of claims in receivership.
Section 5.61Cb15B of the Act states that FCSIC shall make an annual accounting or report about each conservatorship or receivership available to the FCA Board. Providing an annual accounting or report to FCA
is currently required by 627.2760, which is among the regulations that we are rescinding. Pursuant to the Act, FCA
is able to obtain necessary annual accounting or reports from FCSIC.
This direct final rule is not rescinding subpart A, 627.2720, 627.2735, or 627.2765 in subpart B, or 627.2770, 627.2775, 627.2785, or 627.2790 in subpart C of part 627 because these regulations implement section 4.12b of the Act which authorizes FCA to appoint FCSIC as the receiver or conservator of System institutions.
Similarly, we are not repealing subpart D of part 627 which governs our authority to supervise and regulate the voluntary liquidation of a System institution without a receiver. FCA may revise or update these regulations in a
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