The Farm Credit System Insurance Corporation (Corporation) is a Federal government-controlled corporation established by the Agricultural Credit Act of 1987 (1987 Act). Congress created the Insurance Corporation to enhance the financial integrity of the Farm Credit System (System). The Corporation insures the timely payment of principal and interest on certain System notes, bonds, and other obligations issued to investors and is administered by a board of directors who serve concurrently as the Farm Credit Administration (FCA) Board. The Chairperson of the Corporation's Board is elected by the other members and must not be the same person as the FCA Chairman.

The Corporation administers the Farm Credit Insurance Fund (the Fund) and collects annual insurance premiums from System banks. Congress directed the Insurance Corporation to build the Fund to a "secure base amount." The secure base amount is defined as 2 percent of the aggregate of outstanding insured obligations of all insured banks, adjusted downward by a certain percentage of government guaranteed loans and investments (see chart).

The Corporation's Board has the authority, in its sole discretion, to reduce insurance premiums from the statutory rates before the fund reaches the secure base amount. For current information about the Insurance Fund secure base and insurance premium rates, please see the Corporation's annual and other reports.

In addition to building and maintaining the Fund, the Corporation has other mandatory and discretionary responsibilities. The Corporation is to ensure the retirement of eligible borrower stock at par value.  Also, the Corporation, in its discretion, is empowered to provide assistance to System banks and direct lender associations suffering financial difficulties by providing loans or contributions, purchasing assets and debt securities, assuming liabilities, and facilitating consolidations and mergers. The statute imposes a cost-test limitation for financial assistance whereby the total cost of assistance may not exceed the alternative cost of liquidating the institution. The Corporation shall also serve as conservator or receiver of any System bank or association placed into conservatorship or receivership by the FCA Board and may serve as conservator or receiver, when appropriate, for other organizations regulated by the FCA.

The charts below shows the Farm Credit System structure

This summary is intended for general information only.  For additional information, please see the applicable law and regulations available on the Laws and Regulations page.