banks to obtain the approval of shareholders owning two thirds of the shares of each affected class as well as OCC approval. The System Comment Letter requested that institutions be able to redeem and revolve equities owned by the estate of a deceased former borrower and equities related to a defaulted or restructured loan without restriction. As discussed below in the section-by-section discussion, we have decided to exempt some of these redemptions and revolvements, as well as redemptions and revolvements ordered by a court, from the minimum holding period requirements in the safe harbor. This means that such cash redemptions and revolvements remain subject to the safe harbor on the amount of cash payments the institution can make. 8. Risk Weighting of Electric Cooperative Assets By FCA Bookletter BL-053, dated February 27, 2007, the FCA permitted System institutions to assign a lower risk weight than would otherwise apply to certain electrical cooperative assets, based on the unique characteristics and lower risk profile of this industry segment. Exposures to certain electrical cooperative assets that satisfy specified conditions receive a 50-percent rather than a 100-percent risk weight. Furthermore, exposures to these assets receive a 20-percent risk weight if the assets have a AAA or AA credit rating. We did not propose this favorable risk weighting for these exposures in this rule, but we sought comment as to whether we should retain this risk weighting. We received comments from approximately 65 electric cooperatives, in the System Comment Letter, and from several individual System institutions, all requesting that we retain a favorable risk weighting for these exposures. The electric cooperatives specifically urged us to retain the 50-percent risk weighting, stating that the rationale in BL-053 regarding the unique characteristics and lower risk profile of the industry segment remains valid today. These commenters also asserted that raising the risk weighting would drive up their borrowing costs and would ultimately hurt rural electric rate payers.
banks to obtain the approval of shareholders owning two thirds of the shares of each affected class as well as OCC approval. The System Comment Letter requested that institutions be able to redeem and revolve equities owned by the estate of a deceased former borrower and equities related to a defaulted or restructured loan without restriction. As discussed below in the section-by-section discussion, we have decided to exempt some of these redemptions and revolvements, as well as redemptions and revolvements ordered by a court, from the minimum holding period requirements in the safe harbor. This means that such cash redemptions and revolvements remain subject to the safe harbor on the amount of cash payments the institution can make. 8. Risk Weighting of Electric Cooperative Assets By FCA Bookletter BL-053, dated February 27, 2007, the FCA permitted System institutions to assign a lower risk weight than would otherwise apply to certain electrical cooperative assets, based on the unique characteristics and lower risk profile of this industry segment. Exposures to certain electrical cooperative assets that satisfy specified conditions receive a 50-percent rather than a 100-percent risk weight. Furthermore, exposures to these assets receive a 20-percent risk weight if the assets have a AAA or AA credit rating. We did not propose this favorable risk weighting for these exposures in this rule, but we sought comment as to whether we should retain this risk weighting. We received comments from approximately 65 electric cooperatives, in the System Comment Letter, and from several individual System institutions, all requesting that we retain a favorable risk weighting for these exposures. The electric cooperatives specifically urged us to retain the 50-percent risk weighting, stating that the rationale in BL-053 regarding the unique characteristics and lower risk profile of the industry segment remains valid today. These commenters also asserted that raising the risk weighting would drive up their borrowing costs and would ultimately hurt rural electric rate payers.
81%20FR%2049720.docx