12 USC 2279bb-1 - Risk-based capital levels

U.S Code last checked for updates: May 05, 2024

§ 2279bb–1.

Risk-based capital levels

(a)

Risk-based capital test

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

(A)

In general

(B)

Rural utility loans

(2)

Interest rate risk

(b)

Considerations

(1)

Establishment of test

In establishing the risk-based capital test under subsection (a)—

(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

(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

(2)

Management and operations risk

(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); 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

(e)

Availability of model

(Pub. L. 92–181, title VIII, § 8.32, as added Pub. L. 102–237, title V, § 503(b)(2), Dec. 13, 1991, 105 Stat. 1871; amended Pub. L. 102–552, title III, § 308(b)(3), Oct. 28, 1992, 106 Stat. 4116; Pub. L. 104–105, title I, §§ 109(b)(3), 113, Feb. 10, 1996, 110 Stat. 165, 166; Pub. L. 110–234, title V, § 5406(d), May 22, 2008, 122 Stat. 1159; Pub. L. 110–246, § 4(a), title V, § 5406(d), June 18, 2008, 122 Stat. 1664, 1920; Pub. L. 115–334, title V, § 5411(48), Dec. 20, 2018, 132 Stat. 4685.)

cite as: 12 USC 2279bb-1