Accounting stopped recognising troubled debt restructurings in 2022. The Farm Credit rulebook caught up on Monday

The rule everyone reported under stopped existing in 2022. The regulation that named it did not, until Monday.

The Farm Credit Administration has removed "formally restructured loans," known to anybody who has prepared a loan schedule as troubled debt restructurings or TDRs, from the regulatory high-risk loan performance categories that Farm Credit System institutions report against. The change took effect on 24 August. A notice confirming that date was filed for public inspection on Tuesday morning and publishes on Wednesday.

Why the category was orphaned

Changes to generally accepted accounting principles in 2022 eliminated the accounting guidance for TDRs outright.

The same changes did three things at once, and the agency lists them in that order: they removed the TDR guidance, they enhanced disclosure requirements for certain loan refinancings and restructurings undertaken when a borrower is experiencing financial difficulty, and they altered vintage year disclosure requirements for public business entities. Farm Credit Administration regulations require System institutions to prepare financial statements and reports in accordance with GAAP. So from 2022 the agency was requiring institutions to report against a regulatory category that the accounting standards they were also required to follow no longer defined.

Four years is a long time for a rulebook to disagree with itself.

What did not change

The deletion is narrower than it sounds, and the agency is explicit about the part it did not touch.

Disclosure of loan modifications made to borrowers experiencing financial difficulty has not gone anywhere. It moved from the TDR framework into the enhanced disclosure requirements that replaced it, and the agency determined that no regulatory amendment was necessary to implement those, because its existing regulations already require GAAP-compliant financial reporting. The same reasoning covers the amended vintage year disclosures. Nothing was written to replace what was deleted, on the view that nothing needed to be.

Beyond that, the rule makes conforming technical changes and minor organisational revisions for internal consistency.

The date arrived by counting sessions of Congress

The effective date is the small procedural detail worth keeping, because it explains why a rule published on 24 July took effect on 24 August rather than at a date the agency chose.

Under 12 U.S.C. 2252(c)(1), a Farm Credit Administration regulation becomes effective 30 days after publication in the Federal Register, counting only days during which either or both houses of Congress are in session. The agency has to look at the congressional record afterwards to find out when that thirtieth day fell. This week's filing is that arithmetic being confirmed in public: based on the records of the sessions of Congress, the effective date is 24 August 2026.