Re: Notice of Intent; Request for Comment on the topic of regulatory burden dated July 20, 2022
Dear Ms. Agans:
As the Board of Directors of Idaho AgCredit we appreciate the opportunity to comment on the regulatory
burden that the Farm Credit Administration imposes on our small Association. Below you will find bullet points
that we would like you to consider as you strive to provide regulatory relief so that more of our resources can be
used to serve the farmers and ranchers in our territory rather than meeting regulation that is not consistent
with our size, complexity and risk to the Farm Credit system.
Audit planning, audit depth and an extensive risk assessment exhaust significant resources at our
Association, District Bank and FCA. Imposing a one size fits all Audit expectation uses substantial
resources that is unnecessary. Proportionate focus for audit activities should be applied.
Standard Exam and Horizontal Exams exhaust our staff members with the lengthy time commitment and
depth of the review. Exam scope based on size, complexity and historical exams should be applied.
Horizontal exams should be integrated into the standard exam.
Exam manual is too extensive for a small institution with very little discretion allowed by supervisors of
the exam teams.
The recent approach FCA has conducted on Enterprise Risk Management, Model Risk Management, etc.
are examples of regulatory burden on a small Association. Very little of the content of the exam manual
in these areas allows for considerations to be made for a small institution.
The current proposal on YBS oversight is full of regulatory burden. A rating system would be
Our Board meetings have become so full of regulatory review and checking boxes for FCA examiner’s
“best business practices” that we have to extend meetings to assist with the actual business part of our
Association. We recommend a limited hands on approach for low risk institutions.
FCA examiners have been highly critical of our top ten loans based on a percentage rather than being
willing to look at actual credit quality and associated risk in those top ten loans as the exam manual
directs. The FCA examiners stance of selling and purchasing loans to keep the top ten percentage down
is not necessarily always a good business practice and frequently adds risk to our portfolio. Additional
risks are associated with participations purchased along with increased expenses to service these loans.
Many considerations have not been, but should be, applied in the oversight of our top ten portfolio. This
has been regulatory burden for some time and has impacted the net income and capital retention for
our small association.
We believe there is regulatory burden in the System as it relates to FCA’s examination of the Farm Credit
Funding Corp and the District Bank that trickles down to our Association. Many inefficiencies exist that
need to be addressed so that so many resources are not used up resulting in higher allocation of FCA
expenses to our institution along with the expense of oversight affecting all of us.
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During the past several years we have seen an increase in the amount of time our staff has spent
meeting the demands of the Agency while at the same time our institution has been managed well and
successful. Our institution provides a limited amount of risk to the Farm Credit System. Please help the
FCA staff understand the Farm Credit mission and how they play a role in helping a small institution
provide efficient and quality services to its shareholders. Regulatory burden exists at our Association and
may jeopardize its long-term viability due to the taxing imposition it has on our human capital resources.
We are grateful for the recent attention that FCA has given the items outlined by the Small Association Group.
Thanks again for this opportunity to provide input.