§ 615.5143 - Management of ineligible investments and reservation of authority to require divestiture.

§ 615.5143 Management of ineligible investments and reservation of authority to require divestiture.

Cross Reference

Link to an amendment published at 83 FR 27503, June 12, 2018.

Cross Reference

Link to a correction published at 83 FR 30833, July 2, 2018.

(a) Investments ineligible when purchased. Investments that do not satisfy the eligibility criteria set forth in § 615.5140(a) or (b) or investments FCA had not approved under § 615.5140(e), as applicable, at the time of purchase are ineligible. You System institutions must not purchase ineligible investments. If you determine that you have the institution determines that it has purchased an ineligible investment, you it must notify us FCA within 15 calendar days after the determination. You The institution must divest of the investment no later than 60 calendar days after you determine determining that the investment is ineligible unless we approveFCA approves, in writing, a plan that authorizes you the institution to divest the investment over a longer period of time. Until you divest the institution divests of the ineligible investment:

(1) It A Farm Credit bank must not be used use the ineligible investment to satisfy your its liquidity requirement(s) under § 615.5134;

(2) It must continue to be included in the The institution must include the ineligible investment in the portfolio limit calculation defined in § 615.5132 investment portfolio limit calculation or § 615.5140(b)(4), as applicable; and

(3) It must be excluded A Farm Credit bank must exclude the ineligible investment as collateral under § 615.5050.

(b) Investments that no longer satisfy investment eligibility criteria. If you determine the institution determines that an investment (that satisfied the eligibility criteria set forth in § 615.5140(a) or (b), as applicable, when purchased) no longer satisfies the eligibility criteria, you or that an investment that FCA approved pursuant to § 615.5140(e), no longer satisfies the conditions of approval, the institution may continue to hold itthe investment, subject to the following requirements:

(1) You The institution must notify us FCA within 15 calendar days after such determination;

(2) You A Farm Credit bank must not use the ineligible investment to satisfy your its liquidity requirement(s) under § 615.5134;

(3) You The institution must continue to include the ineligible investment in the portfolio limit calculation defined in § 615.5132 investment portfolio limit calculation or § 615.5140(b)(4), as applicable;

(4) You A Farm Credit bank may continue to hold include the investment as collateral under § 615.5050 at the lower of cost or market value; and

(5) You The institution must develop a plan to reduce the investment's risk to youthe institution.

(c) Reservation of authority. FCA retains the authority to require you the institution to divest of any investment at any time for failure to comply with § 615.5132(a) or § 615.5142 or 5140(a), (b), or (e), or for safety and soundness reasons. The timeframe set by FCA will consider the expected loss on the transaction (or transactions) and the effect on your the institution's financial condition and performance.

[77 83 FR 66374, Nov. 5, 2012, as amended at 81 FR 49773, July 28, 201627503, June 12, 2018; 83 FR 30833, July 2, 2018]