[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2029 Engrossed Amendment Senate (EAS)]
In the Senate of the United States,
December 21, 1995.
Resolved, That the bill from the House of Representatives (H.R.
2029) entitled ``An Act to to amend the Farm Credit Act of 1971 to
provide regulatory relief, and for other purposes'', do pass with the
following
AMENDMENTS:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Farm Credit System
Reform Act of 1996''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET
Sec. 101. Definition of real estate.
Sec. 102. Definition of certified facility.
Sec. 103. Duties of Federal Agricultural Mortgage Corporation.
Sec. 104. Powers of the Corporation.
Sec. 105. Federal reserve banks as depositaries and fiscal agents.
Sec. 106. Certification of agricultural mortgage marketing facilities.
Sec. 107. Guarantee of qualified loans.
Sec. 108. Mandatory reserves and subordinated participation interests
eliminated.
Sec. 109. Standards requiring diversified pools.
Sec. 110. Small farms.
Sec. 111. Definition of an affiliate.
Sec. 112. State usury laws superseded.
Sec. 113. Extension of capital transition period.
Sec. 114. Minimum capital level.
Sec. 115. Critical capital level.
Sec. 116. Enforcement levels.
Sec. 117. Recapitalization of the Corporation.
Sec. 118. Liquidation of the Federal Agricultural Mortgage Corporation.
TITLE II--REGULATORY RELIEF
Sec. 201. Compensation of association personnel.
Sec. 202. Use of private mortgage insurance.
Sec. 203. Removal of certain borrower reporting requirement.
Sec. 204. Reform of regulatory limitations on dividend, member
business, and voting practices of eligible
farmer-owned cooperatives.
Sec. 205. Removal of Federal Government certification requirement for
certain private sector financings.
Sec. 206. Borrower stock.
Sec. 207. Disclosure relating to adjustable rate loans.
Sec. 208. Borrowers' rights.
Sec. 209. Formation of administrative service entities.
Sec. 210. Joint management agreements.
Sec. 211. Dissemination of quarterly reports.
Sec. 212. Regulatory review.
Sec. 213. Examination of farm credit system institutions.
Sec. 214. Conservatorships and receiverships.
Sec. 215. Farm Credit Insurance Fund operations.
Sec. 216. Examinations by the Farm Credit System Insurance Corporation.
Sec. 217. Powers with respect to troubled insured system banks.
Sec. 218. Oversight and regulatory actions by the Farm Credit System
Insurance Corporation.
Sec. 219. Farm Credit System Insurance Corporation Board of Directors.
Sec. 220. Interest rate reduction program.
Sec. 221. Liability for making criminal referrals.
TITLE III--NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION
Sec. 301. Short title.
Sec. 302. Definitions.
Sec. 303. National Natural Resources Conservation Foundation.
Sec. 304. Composition and operation.
Sec. 305. Officers and employees.
Sec. 306. Corporate powers and obligations of the Foundation.
Sec. 307. Administrative services and support.
Sec. 308. Audits and petition of Attorney General for equitable relief.
Sec. 309. Release from liability.
Sec. 310. Authorization of appropriations.
TITLE IV--IMPLEMENTATION AND EFFECTIVE DATE
Sec. 401. Implementation.
Sec. 302. Effective Date.
TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET
SEC. 101. DEFINITION OF REAL ESTATE.
Section 8.0(1)(B)(ii) of the Farm Credit Act of 1971 (12 U.S.C.
2279aa(1)(B)(ii)) is amended by striking ``with a purchase price'' and
inserting ``, excluding the land to which the dwelling is affixed, with
a value''.
SEC. 102. DEFINITION OF CERTIFIED FACILITY.
Section 8.0(3) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa(3))
is amended--
(1) in subparagraph (A), by striking ``a secondary
marketing agricultural loan'' and inserting ``an agricultural
mortgage marketing''; and
(2) in subparagraph (B), by striking ``, but only'' and all
that follows through ``(9)(B)''.
SEC. 103. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE CORPORATION.
Section 8.1(b) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-
1(b)) is amended--
(1) in paragraph (2), by striking ``and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(4) purchase qualified loans and issue securities
representing interests in, or obligations backed by, the
qualified loans, guaranteed for the timely repayment of
principal and interest.''.
SEC. 104. POWERS OF THE CORPORATION.
Section 8.3(c) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-
3(c)) is amended--
(1) by redesignating paragraphs (13) and (14) as paragraphs
(14) and (15), respectively; and
(2) by inserting after paragraph (12) the following:
``(13) To purchase, hold, sell, or assign a qualified loan,
to issue a guaranteed security, representing an interest in, or
an obligation backed by, the qualified loan, and to perform all
the functions and responsibilities of an agricultural mortgage
marketing facility operating as a certified facility under this
title.''.
SEC. 105. FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL AGENTS.
Section 8.3 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-3) is
amended--
(1) in subsection (d), by striking ``may act as
depositories for, or'' and inserting ``shall act as
depositories for, and''; and
(2) in subsection (e), by striking ``Secretary of the
Treasury may authorize the Corporation to use'' and inserting
``Corporation shall have access to''.
SEC. 106. CERTIFICATION OF AGRICULTURAL MORTGAGE MARKETING FACILITIES.
Section 8.5 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-5) is
amended--
(1) in subsection (a)--
(A) in paragraph (1), by inserting ``(other than
the Corporation)'' after ``agricultural mortgage
marketing facilities''; and
(B) in paragraph (2), by inserting ``(other than
the Corporation)'' after ``agricultural mortgage
marketing facility''; and
(2) in subsection (e)(1), by striking ``(other than the
Corporation)''.
SEC. 107. GUARANTEE OF QUALIFIED LOANS.
Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6) is
amended--
(1) in subsection (a)(1)--
(A) by striking ``Corporation shall guarantee'' and
inserting the following: ``Corporation--
``(A) shall guarantee'';
(B) by striking the period at the end and inserting
``; and''; and
(C) by adding at the end the following:
``(B) may issue a security, guaranteed as to the
timely payment of principal and interest, that
represents an interest solely in, or an obligation
fully backed by, a pool consisting of qualified loans
that--
``(i) meet the standards established under
section 8.8; and
``(ii) have been purchased and held by the
Corporation.'';
(2) in subsection (d)--
(A) by striking paragraph (4); and
(B) by redesignating paragraphs (5), (6), and (7)
as paragraphs (4), (5), and (6), respectively; and
(3) in subsection (g)(2), by striking ``section
8.0(9)(B))'' and inserting ``section 8.0(9))''.
SEC. 108. MANDATORY RESERVES AND SUBORDINATED PARTICIPATION INTERESTS
ELIMINATED.
(a) Guarantee of Qualified Loans.--Section 8.6 of the Farm Credit
Act of 1971 (12 U.S.C. 2279aa-6) is amended by striking subsection (b).
(b) Reserves and Subordinated Participation Interests.--Section 8.7
of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-7) is repealed.
(c) Conforming Amendments.--
(1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa(9)(B)(i)) is amended by striking ``8.7, 8.8,''
and inserting ``8.8''.
(2) Section 8.6(a)(2) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa-6(a)(2)) is amended by striking ``subject to the
provisions of subsection (b)''.
SEC. 109. STANDARDS REQUIRING DIVERSIFIED POOLS.
(a) In General.--Section 8.6 of the Farm Credit Act of 1971 (12
U.S.C. 2279aa-6) (as amended by section 108) is amended--
(1) by striking subsection (c); and
(2) by redesignating subsections (d) through (g) as
subsections (b) through (e), respectively.
(b) Conforming Amendments.--
(1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa(9)(B)(i)) is amended by striking ``(f)'' and
inserting ``(d)''.
(2) Section 8.13(a) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa-13(a)) is amended by striking ``sections 8.6(b)
and'' in each place it appears and inserting ``section''.
(3) Section 8.32(b)(1)(C) of the Farm Credit Act of 1971
(12 U.S.C. 2279bb-1(b)(1)(C)) is amended by striking ``under
section 8.6(b)(2)''.
(4) Section 8.6(b) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa-6(b)) (as redesignated by subsection (a)(2)) is
amended--
(A) by striking paragraph (4) (as redesignated by
section 107(2)(B)); and
(B) by redesignating paragraphs (5) and (6) (as
redesignated by section 107(2)(B)) as paragraphs (4)
and (5), respectively.
SEC. 110. SMALL FARMS.
Section 8.8(e) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-
8(e)) is amended by adding at the end the following: ``The Board shall
promote and encourage the inclusion of qualified loans for small farms
and family farmers in the agricultural mortgage secondary market.''.
SEC. 111. DEFINITION OF AN AFFILIATE.
Section 8.11(e) of the Farm Credit Act of 1971 (21 U.S.C. 2279aa-
11(e)) is amended--
(1) by striking ``a certified facility or''; and
(2) by striking ``paragraphs (3) and (7), respectively, of
section 8.0'' and inserting ``section 8.0(7)''.
SEC. 112. STATE USURY LAWS SUPERSEDED.
Section 8.12 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-12)
is amended by striking subsection (d) and inserting the following:
``(d) State Usury Laws Superseded.--A provision of the Constitution
or law of any State shall not apply to an agricultural loan made by an
originator or a certified facility in accordance with this title for
sale to the Corporation or to a certified facility for inclusion in a
pool for which the Corporation has provided, or has committed to
provide, a guarantee, if the loan, not later than 180 days after the
date the loan was made, is sold to the Corporation or included in a
pool for which the Corporation has provided a guarantee, if the
provision--
``(1) limits the rate or amount of interest, discount
points, finance charges, or other charges that may be charged,
taken, received, or reserved by an agricultural lender or a
certified facility; or
``(2) limits or prohibits a prepayment penalty (either
fixed or declining), yield maintenance, or make-whole payment
that may be charged, taken, or received by an agricultural
lender or a certified facility in connection with the full or
partial payment of the principal amount due on a loan by a
borrower in advance of the scheduled date for the payment under
the terms of the loan, otherwise known as a prepayment of the
loan principal.''.
SEC. 113. EXTENSION OF CAPITAL TRANSITION PERIOD.
Section 8.32 of the Farm Credit Act of 1971 (12 U.S.C. 2279bb-1) is
amended--
(1) in the first sentence of subsection (a), by striking
``Not later than the expiration of the 2-year period beginning
on December 13, 1991,'' and inserting ``Not sooner than the
expiration of the 3-year period beginning on the date of
enactment of the Farm Credit System Reform Act of 1996,'';
(2) in the first sentence of subsection (b)(2), by striking
``5-year'' and inserting ``8-year''; and
(3) in subsection (d)--
(A) in the first sentence--
(i) by striking ``The regulations
establishing'' and inserting the following:
``(1) In general.--The regulations establishing''; and
(ii) by striking ``shall contain'' and
inserting the following: ``shall--
``(A) be issued by the Director for public comment
in the form of a notice of proposed rulemaking, to be
first published after the expiration of the period
referred to in subsection (a); and
``(B) contain''; and
(B) in the second sentence, by striking ``The
regulations shall'' and inserting the following:
``(2) Specificity.--The regulations referred to in
paragraph (1) shall''.
SEC. 114. MINIMUM CAPITAL LEVEL.
Section 8.33 of the Farm Credit Act of 1971 (12 U.S.C. 2279bb-2) is
amended to read as follows:
``SEC. 8.33. MINIMUM CAPITAL LEVEL.
``(a) In General.--Except as provided in subsection (b), for
purposes of this subtitle, the minimum capital level for the
Corporation shall be an amount of core capital equal to the sum of--
``(1) 2.75 percent of the aggregate on-balance sheet assets
of the Corporation, as determined in accordance with generally
accepted accounting principles; and
``(2) 0.75 percent of the aggregate off-balance sheet
obligations of the Corporation, which, for the purposes of this
subtitle, shall include--
``(A) the unpaid principal balance of outstanding
securities that are guaranteed by the Corporation and
backed by pools of qualified loans;
``(B) instruments that are issued or guaranteed by
the Corporation and are substantially equivalent to
instruments described in subparagraph (A); and
``(C) other off-balance sheet obligations of the
Corporation.
``(b) Transition Period.--
``(1) In general.--For purposes of this subtitle, the
minimum capital level for the Corporation--
``(A) prior to January 1, 1997, shall be the amount
of core capital equal to the sum of--
``(i) 0.45 percent of aggregate off-balance
sheet obligations of the Corporation;
``(ii) 0.45 percent of designated on-
balance sheet assets of the Corporation, as
determined under paragraph (2); and
``(iii) 2.50 percent of on-balance sheet
assets of the Corporation other than assets
designated under paragraph (2);
``(B) during the 1-year period ending December 31,
1997, shall be the amount of core capital equal to the
sum of--
``(i) 0.55 percent of aggregate off-balance
sheet obligations of the Corporation;
``(ii) 1.20 percent of designated on-
balance sheet assets of the Corporation, as
determined under paragraph (2); and
``(iii) 2.55 percent of on-balance sheet
assets of the Corporation other than assets
designated under paragraph (2);
``(C) during the 1-year period ending December 31,
1998, shall be the amount of core capital equal to--
``(i) if the Corporation's core capital is
not less than $25,000,000 on January 1, 1998,
the sum of--
``(I) 0.65 percent of aggregate
off-balance sheet obligations of the
Corporation;
``(II) 1.95 percent of designated
on-balance sheet assets of the
Corporation, as determined under
paragraph (2); and
``(III) 2.65 percent of on-balance
sheet assets of the Corporation other
than assets designated under paragraph
(2); or
``(ii) if the Corporation's core capital is
less than $25,000,000 on January 1, 1998, the
amount determined under subsection (a); and
``(D) on and after January 1, 1999, shall be the
amount determined under subsection (a).
``(2) Designated on-balance sheet assets.--For purposes of
this subsection, the designated on-balance sheet assets of the
Corporation shall be--
``(A) the aggregate on-balance sheet assets of the
Corporation acquired under section 8.6(e); and
``(B) the aggregate amount of qualified loans
purchased and held by the Corporation under section
8.3(c)(13).''.
SEC. 115. CRITICAL CAPITAL LEVEL.
Section 8.34 of the Farm Credit Act of 1971 (12 U.S.C. 2279bb-3) is
amended to read as follows:
``SEC. 8.34. CRITICAL CAPITAL LEVEL.
``For purposes of this subtitle, the critical capital level for the
Corporation shall be an amount of core capital equal to 50 percent of
the total minimum capital amount determined under section 8.33.''.
SEC. 116. ENFORCEMENT LEVELS.
Section 8.35(e) of the Farm Credit Act of 1971 (12 U.S.C. 2279bb-
4(e)) is amended by striking ``during the 30-month period beginning on
the date of enactment of this section,'' and inserting ``during the
period beginning on December 13, 1991, and ending on the effective date
of the risk based capital regulation issued by the Director under
section 8.32,''.
SEC. 117. RECAPITALIZATION OF THE CORPORATION.
Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa et
seq.) is amended by adding at the end the following:
``SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.
``(a) Mandatory Recapitalization.--The Corporation shall increase
the core capital of the Corporation to an amount equal to or greater
than $25,000,000, not later than the earlier of--
``(1) the date that is 2 years after the date of enactment
of this section; or
``(2) the date that is 180 days after the end of the first
calendar quarter that the aggregate on-balance sheet assets of
the Corporation, plus the outstanding principal of the off-
balance sheet obligations of the Corporation, equal or exceed
$2,000,000,000.
``(b) Raising Core Capital.--In carrying out this section, the
Corporation may issue stock under section 8.4 and otherwise employ any
recognized and legitimate means of raising core capital in the power of
the Corporation under section 8.3.
``(c) Limitation on Growth of Total Assets.--During the 2-year
period beginning on the date of enactment of this section, the
aggregate on-balance sheet assets of the Corporation plus the
outstanding principal of the off-balance sheet obligations of the
Corporation may not exceed $3,000,000,000 if the core capital of the
Corporation is less than $25,000,000.
``(d) Enforcement.--If the Corporation fails to carry out
subsection (a) by the date required under paragraph (1) or (2) of
subsection (a), the Corporation may not purchase a new qualified loan
or issue or guarantee a new loan-backed security until the core capital
of the Corporation is increased to an amount equal to or greater than
$25,000,000.''.
SEC. 118. LIQUIDATION OF THE FEDERAL AGRICULTURAL MORTGAGE CORPORATION.
Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa et
seq.) (as amended by section 117) is amended by adding at the end the
following:
``Subtitle C--Receivership, Conservatorship, and Liquidation of the
Federal Agricultural Mortgage Corporation
``SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVERSHIP.
``(a) Voluntary Liquidation.--The Corporation may voluntarily
liquidate only with the consent of, and in accordance with a plan of
liquidation approved by, the Farm Credit Administration Board.
``(b) Involuntary Liquidation.--
``(1) In general.--The Farm Credit Administration Board may
appoint a conservator or receiver for the Corporation under the
circumstances specified in section 4.12(b).
``(2) Application.--In applying section 4.12(b) to the
Corporation under paragraph (1)--
``(A) the Corporation shall also be considered
insolvent if the Corporation is unable to pay its debts
as they fall due in the ordinary course of business;
``(B) a conservator may also be appointed for the
Corporation if the authority of the Corporation to
purchase qualified loans or issue or guarantee loan-
backed securities is suspended; and
``(C) a receiver may also be appointed for the
Corporation if--
``(i)(I) the authority of the Corporation
to purchase qualified loans or issue or
guarantee loan-backed securities is suspended;
or
``(II) the Corporation is classified under
section 8.35 as within level III or IV and the
alternative actions available under subtitle B
are not satisfactory; and
``(ii) the Farm Credit Administration
determines that the appointment of a
conservator would not be appropriate.
``(3) No effect on supervisory actions.--The grounds for
appointment of a conservator for the Corporation under this
subsection shall be in addition to those in section 8.37.
``(c) Appointment of Conservator or Receiver.--
``(1) Qualifications.--Notwithstanding section 4.12(b), if
a conservator or receiver is appointed for the Corporation, the
conservator or receiver shall be--
``(A) the Farm Credit Administration or any other
governmental entity or employee, including the Farm
Credit System Insurance Corporation; or
``(B) any person that--
``(i) has no claim against, or financial
interest in, the Corporation or other basis for
a conflict of interest as the conservator or
receiver; and
``(ii) has the financial and management
expertise necessary to direct the operations
and affairs of the Corporation and, if
necessary, to liquidate the Corporation.
``(2) Compensation.--
``(A) In general.--A conservator or receiver for
the Corporation and professional personnel (other than
a Federal employee) employed to represent or assist the
conservator or receiver may be compensated for
activities conducted as, or for, a conservator or
receiver.
``(B) Limit on compensation.--Compensation may not
be provided in amounts greater than the compensation
paid to employees of the Federal Government for similar
services, except that the Farm Credit Administration
may provide for compensation at higher rates that are
not in excess of rates prevailing in the private sector
if the Farm Credit Administration determines that
compensation at higher rates is necessary in order to
recruit and retain competent personnel.
``(C) Contractual arrangements.--The conservator or
receiver may contract with any governmental entity,
including the Farm Credit System Insurance Corporation,
to make personnel, services, and facilities of the
entity available to the conservator or receiver on such
terms and compensation arrangements as shall be
mutually agreed, and each entity may provide the same
to the conservator or receiver.
``(3) Expenses.--A valid claim for expenses of the
conservatorship or receivership (including compensation under
paragraph (2)) and a valid claim with respect to a loan made
under subsection (f) shall--
``(A) be paid by the conservator or receiver from
funds of the Corporation before any other valid claim
against the Corporation; and
``(B) may be secured by a lien, on such property of
the Corporation as the conservator or receiver may
determine, that shall have priority over any other
lien.
``(4) Liability.--If the conservator or receiver for the
Corporation is not a Federal entity, or an officer or employee
of the Federal Government, the conservator or receiver shall
not be personally liable for damages in tort or otherwise for
an act or omission performed pursuant to and in the course of
the conservatorship or receivership, unless the act or omission
constitutes gross negligence or any form of intentional
tortious conduct or criminal conduct.
``(5) Indemnification.--The Farm Credit Administration may
allow indemnification of the conservator or receiver from the
assets of the conservatorship or receivership on such terms as
the Farm Credit Administration considers appropriate.
``(d) Judicial Review of Appointment.--
``(1) In general.--Notwithstanding subsection (i)(1), not
later than 30 days after a conservator or receiver is appointed
under subsection (b), the Corporation may bring an action in
the United States District Court for the District of Columbia
for an order requiring the Farm Credit Administration Board to
remove the conservator or receiver. The court shall, on the
merits, dismiss the action or direct the Farm Credit
Administration Board to remove the conservator or receiver.
``(2) Stay of other actions.--On the commencement of an
action under paragraph (1), any court having jurisdiction of
any other action or enforcement proceeding authorized under
this subtitle to which the Corporation is a party shall stay
the action or proceeding during the pendency of the action for
removal of the conservator or receiver.
``(e) General Powers of Conservator or Receiver.--The conservator
or receiver for the Corporation shall have powers comparable to the
powers available to a conservator or receiver appointed pursuant to
section 4.12(b).
``(f) Borrowings for Working Capital.--
``(1) In general.--If the conservator or receiver of the
Corporation determines that it is likely that there will be
insufficient funds to pay the ongoing administrative expenses
of the conservatorship or receivership or that there will be
insufficient liquidity to fund maturing obligations of the
conservatorship or receivership, the conservator or receiver
may borrow funds in such amounts, from such sources, and at
such rates of interest as the conservator or receiver considers
necessary or appropriate to meet the administrative expenses or
liquidity needs of the conservatorship or receivership.
``(2) Working capital from farm credit banks.--A Farm
Credit bank may loan funds to the conservator or receiver for a
loan authorized under paragraph (1) or, in the event of
receivership, a Farm Credit bank may purchase assets of the
Corporation.
``(g) Agreements Against Interests of Conservator or Receiver.--No
agreement that tends to diminish or defeat the right, title, or
interest of the conservator or receiver for the Corporation in any
asset acquired by the conservator or receiver as conservator or
receiver for the Corporation shall be valid against the conservator or
receiver unless the agreement--
``(1) is in writing;
``(2) is executed by the Corporation and any person
claiming an adverse interest under the agreement, including the
obligor, contemporaneously with the acquisition of the asset by
the Corporation;
``(3) is approved by the Board or an appropriate committee
of the Board, which approval shall be reflected in the minutes
of the Board or committee; and
``(4) has been, continuously, from the time of the
agreement's execution, an official record of the Corporation.
``(h) Report to the Congress.--On a determination by the receiver
for the Corporation that there are insufficient assets of the
receivership to pay all valid claims against the receivership, the
receiver shall submit to the Secretary of the Treasury, the Committee
on Agriculture of the House of Representatives, and the Committee on
Agriculture, Nutrition, and Forestry of the Senate a report on the
financial condition of the receivership.
``(i) Termination of Authorities.--
``(1) Corporation.--The charter of the Corporation shall be
canceled, and the authority provided to the Corporation by this
title shall terminate, on such date as the Farm Credit
Administration Board determines is appropriate following the
placement of the Corporation in receivership, but not later
than the conclusion of the receivership and discharge of the
receiver.
``(2) Oversight.--The Office of Secondary Market Oversight
established under section 8.11 shall be abolished, and section
8.11(a) and subtitle B shall have no force or effect, on such
date as the Farm Credit Administration Board determines is
appropriate following the placement of the Corporation in
receivership, but not later than the conclusion of the
receivership and discharge of the receiver.''.
TITLE II--REGULATORY RELIEF
SEC. 201. COMPENSATION OF ASSOCIATION PERSONNEL.
Section 1.5(13) of the Farm Credit Act of 1971 (12 U.S.C. 2013(13))
is amended by striking ``, and the appointment and compensation of the
chief executive officer thereof,''.
SEC. 202. USE OF PRIVATE MORTGAGE INSURANCE.
(a) In General.--Section 1.10(a)(1) of the Farm Credit Act of 1971
(12 U.S.C. 2018(a)(1)) is amended by adding at the end the following:
``(D) Private mortgage insurance.--A loan on which
private mortgage insurance is obtained may exceed 85
percent of the appraised value of the real estate
security to the extent that the loan amount in excess
of 85 percent is covered by the insurance.''.
(b) Conforming Amendment.--Section 1.10(a)(1)(A) of the Farm Credit
Act of 1971 (12 U.S.C. 2018(a)(1)(A)) is amended by striking
``paragraphs (2) and (3)'' and inserting ``subparagraphs (B), (C), and
(D)''.
SEC. 203. REMOVAL OF CERTAIN BORROWER REPORTING REQUIREMENT.
Section 1.10(a) of the Farm Credit Act of 1971 (12 U.S.C. 2018(a))
is amended by striking paragraph (5).
SEC. 204. REFORM OF REGULATORY LIMITATIONS ON DIVIDEND, MEMBER
BUSINESS, AND VOTING PRACTICES OF ELIGIBLE FARMER-OWNED
COOPERATIVES.
(a) In General.--Section 3.8(a) of the Farm Credit Act of 1971 (12
U.S.C. 2129(a)) is amended by adding at the end the following: ``Any
such association that has received a loan from a bank for cooperatives
shall, without regard to the requirements of paragraphs (1) through
(4), continue to be eligible for so long as more than 50 percent (or
such higher percentage as is established by the bank board) of the
voting control of the association is held by farmers, producers or
harvesters of aquatic products, or eligible cooperative
associations.''.
(b) Conforming Amendment.--Section 3.8(b)(1)(D) of the Farm Credit
Act of 1971 (12 U.S.C. 2129(b)(1)(D)) is amended by striking ``and (4)
of subsection (a)'' and inserting ``and (4), or under the last
sentence, of subsection (a)''.
SEC. 205. REMOVAL OF FEDERAL GOVERNMENT CERTIFICATION REQUIREMENT FOR
CERTAIN PRIVATE SECTOR FINANCINGS.
Section 3.8(b)(1)(A) of the Farm Credit Act of 1971 (12 U.S.C.
2129(b)(1)(A)) is amended--
(1) by striking ``have been certified by the Administrator
of the Rural Electrification Administration to be eligible for
such'' and inserting ``are eligible under the Rural
Electrification Act of 1936 (7 U.S.C. 901 et seq.) for''; and
(2) by striking ``loan guarantee, and'' and inserting
``loan guarantee from the Administration or the Bank (or a
successor of the Administration or the Bank), and''.
SEC. 206. BORROWER STOCK.
Section 4.3A of the Farm Credit Act of 1971 (12 U.S.C. 2154a) is
amended--
(1) by redesignating subsections (f) and (g) as subsections
(g) and (h), respectively; and
(2) by inserting after subsection (e) the following:
``(f) Loans Designated for Sale or Sold Into the Secondary
Market.--
``(1) In general.--Subject to paragraph (2) and
notwithstanding any other provision of this section, the bylaws
adopted by a bank or association under subsection (b) may
provide--
``(A) in the case of a loan made on or after the
date of enactment of this paragraph that is designated,
at the time the loan is made, for sale into a secondary
market, that no voting stock or participation
certificate purchase requirement shall apply to the
borrower for the loan; and
``(B) in the case of a loan made before the date of
enactment of this paragraph that is sold into a
secondary market, that all outstanding voting stock or
participation certificates held by the borrower with
respect to the loan shall, subject to subsection
(d)(1), be retired.
``(2) Applicability.--Notwithstanding any other provision
of this section, in the case of a loan sold to a secondary
market under title VIII, paragraph (1) shall apply regardless
of whether the bank or association retains a subordinated
participation interest in a loan or pool of loans or
contributes to a cash reserve.
``(3) Exception.--
``(A) In general.--Subject to subparagraph (B) and
notwithstanding any other provision of this section, if
a loan designated for sale under paragraph (1)(A) is
not sold into a secondary market during the 180-day
period that begins on the date of the designation, the
voting stock or participation certificate purchase
requirement that would otherwise apply to the loan in
the absence of a bylaw provision described in paragraph
(1)(A) shall be effective.
``(B) Retirement.--The bylaws adopted by a bank or
association under subsection (b) may provide that if a
loan described in subparagraph (A) is sold into a
secondary market after the end of the 180-day period
described in the subparagraph, all outstanding voting
stock or participation certificates held by the
borrower with respect to the loan shall, subject to
subsection (d)(1), be retired.''.
SEC. 207. DISCLOSURE RELATING TO ADJUSTABLE RATE LOANS.
Section 4.13(a)(4) of the Farm Credit Act of 1971 (12 U.S.C.
2199(a)(4)) is amended by inserting before the semicolon at the end the
following: ``, and notice to the borrower of a change in the interest
rate applicable to the loan of the borrower may be made within a
reasonable time after the effective date of an increase or decrease in
the interest rate''.
SEC. 208. BORROWERS' RIGHTS.
(a) Definition of Loan.--Section 4.14A(a)(5) of the Farm Credit Act
of 1971 (12 U.S.C. 2202a(a)(5)) is amended--
(1) by striking ``(5) Loan.--The'' and inserting the
following:
``(5) Loan.--
``(A) In general.--Subject to subparagraph (B),
the''; and
(2) by adding at the end the following:
``(B) Exclusion for loans designated for sale into
secondary market.--
``(i) In general.--Except as provided in
clause (ii), the term `loan' does not include a
loan made on or after the date of enactment of
this subparagraph that is designated, at the
time the loan is made, for sale into a
secondary market.
``(ii) Unsold loans.--
``(I) In general.--Except as
provided in subclause (II), if a loan
designated for sale under clause (i) is
not sold into a secondary market during
the 180-day period that begins on the
date of the designation, the provisions
of this section and sections 4.14,
4.14B, 4.14C, 4.14D, and 4.36 that
would otherwise apply to the loan in
the absence of the exclusion described
in clause (i) shall become effective
with respect to the loan.
``(II) Later sale.--If a loan
described in subclause (I) is sold into
a secondary market after the end of the
180-day period described in subclause
(I), subclause (I) shall not apply with
respect to the loan beginning on the
date of the sale.''.
(b) Borrowers' Rights for Pooled Loans.--The first sentence of
section 8.9(b) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-9(b))
is amended by inserting ``(as defined in section 4.14A(a)(5))'' after
``application for a loan''.
SEC. 209. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.
Part E of title IV of the Farm Credit Act of 1971 is amended by
inserting after section 4.28 (12 U.S.C. 2214) the following:
``SEC. 4.28A. DEFINITION OF BANK.
``In this part, the term `bank' includes each association operating
under title II.''.
SEC. 210. JOINT MANAGEMENT AGREEMENTS.
The first sentence of section 5.17(a)(2)(A) of the Farm Credit Act
of 1971 (12 U.S.C. 2252(a)(2)(A)) is amended by striking ``or
management agreements''.
SEC. 211. DISSEMINATION OF QUARTERLY REPORTS.
Section 5.17(a)(8) of the Farm Credit Act of 1971 (12 U.S.C.
2252(a)(8)) is amended by inserting after ``except that'' the
following: ``the requirements of the Farm Credit Administration
governing the dissemination to stockholders of quarterly reports of
System institutions may not be more burdensome or costly than the
requirements applicable to national banks, and''.
SEC. 212. REGULATORY REVIEW.
(a) Findings.--Congress finds that--
(1) the Farm Credit Administration, in the role of the
Administration as an arms-length safety and soundness
regulator, has made considerable progress in reducing the
regulatory burden on Farm Credit System institutions;
(2) the efforts of the Farm Credit Administration described
in paragraph (1) have resulted in cost savings for Farm Credit
System institutions; and
(3) the cost savings described in paragraph (2) ultimately
benefit the farmers, ranchers, agricultural cooperatives, and
rural residents of the United States.
(b) Continuation of Regulatory Review.--The Farm Credit
Administration shall continue the comprehensive review of regulations
governing the Farm Credit System to identify and eliminate, consistent
with law, safety, and soundness, all regulations that are unnecessary,
unduly burdensome or costly, or not based on law.
SEC. 213. EXAMINATION OF FARM CREDIT SYSTEM INSTITUTIONS.
The first sentence of section 5.19(a) of the Farm Credit Act of
1971 (12 U.S.C. 2254(a)) is amended by striking ``each year'' and
inserting ``during each 18-month period''.
SEC. 214. CONSERVATORSHIPS AND RECEIVERSHIPS.
(a) Definitions.--Section 5.51 of the Farm Credit Act of 1971 (12
U.S.C. 2277a) is amended--
(1) by striking paragraph (5); and
(2) by redesignating paragraph (6) as paragraph (5).
(b) General Corporate Powers.--Section 5.58 of the Farm Credit Act
of 1971 (12 U.S.C. 2277a-7) is amended by striking paragraph (9) and
inserting the following:
``(9) Conservator or receiver.--The Corporation may act as
a conservator or receiver.''.
SEC. 215. FARM CREDIT INSURANCE FUND OPERATIONS.
(a) Adjustment of Premiums.--
(1) In general.--Section 5.55(a) of the Farm Credit Act of
1971 (12 U.S.C. 2277a-4(a)) is amended--
(A) in paragraph (1), by striking ``Until the
aggregate of amounts in the Farm Credit Insurance Fund
exceeds the secure base amount, the annual premium due
from any insured System bank for any calendar year''
and inserting the following: ``If at the end of any
calendar year the aggregate of amounts in the Farm
Credit Insurance Fund does not exceed the secure base
amount, subject to paragraph (2), the annual premium
due from any insured System bank for the calendar
year'';
(B) by redesignating paragraph (2) as paragraph
(3); and
(C) by inserting after paragraph (1) the following:
``(2) Reduced premiums.--The Corporation, in the sole
discretion of the Corporation, may reduce by a percentage
uniformly applied to all insured System banks the annual
premium due from each insured System bank during any calendar
year, as determined under paragraph (1).''.
(2) Conforming amendments.--
(A) Section 5.55(b) of the Farm Credit Act of 1971
(12 U.S.C. 2277a-4(b)) is amended--
(i) by striking ``Insurance Fund'' each
place it appears and inserting ``Farm Credit
Insurance Fund'';
(ii) by striking ``for the following
calendar year''; and
(iii) by striking ``subsection (a)'' and
inserting ``subsection (a)(1)''.
(B) Section 5.56(a) of the Farm Credit Act of 1971
(12 U.S.C. 2277a-5(a)) is amended by striking ``section
5.55(a)(2)'' each place it appears in paragraphs (2)
and (3) and inserting ``section 5.55(a)(3)''.
(b) Allocation to Insured System Banks and Other System
Institutions of Excess Amounts in the Farm Credit Insurance Fund.--
Section 5.55 of the Farm Credit Act of 1971 (12 U.S.C. 2277a-4) is
amended by adding at the end the following:
``(e) Allocation to System Institutions of Excess Reserves.--
``(1) Establishment of allocated insurance reserves
accounts.--The Corporation shall establish an Allocated
Insurance Reserves Account in the Farm Credit Insurance Fund--
``(A) for each insured System bank; and
``(B) subject to paragraph (6)(C), for all holders,
in the aggregate, of Financial Assistance Corporation
stock.
``(2) Treatment.--Amounts in any Allocated Insurance
Reserves Account shall be considered to be part of the Farm
Credit Insurance Fund.
``(3) Annual allocations.--If, at the end of any calendar
year, the aggregate of the amounts in the Farm Credit Insurance
Fund exceeds the average secure base amount for the calendar
year (as calculated on an average daily balance basis), the
Corporation shall allocate to the Allocated Insurance Reserves
Accounts the excess amount less the amount that the
Corporation, in its sole discretion, determines to be the sum
of the estimated operating expenses and estimated insurance
obligations of the Corporation for the immediately succeeding
calendar year.
``(4) Allocation formula.--From the total amount required
to be allocated at the end of a calendar year under paragraph
(3)--
``(A) 10 percent of the total amount shall be
credited to the Allocated Insurance Reserves Account
established under paragraph (1)(B), subject to
paragraph (6)(C); and
``(B) there shall be credited to the Allocated
Insurance Reserves Account of each insured System bank
an amount that bears the same ratio to the total amount
(less any amount credited under subparagraph (A)) as
the average principal outstanding for the 3-year period
ending on the end of the calendar year on loans made by
the bank that are in accrual status bears to the
average principal outstanding for the 3-year period
ending on the end of the calendar year on loans made by
all insured System banks that are in accrual status
(excluding, in each case, the guaranteed portions of
government-guaranteed loans described in subsection
(a)(1)(C)).
``(5) Use of funds in allocated insurance reserves
accounts.--To the extent that the sum of the operating expenses
of the Corporation and the insurance obligations of the
Corporation for a calendar year exceeds the sum of operating
expenses and insurance obligations determined under paragraph
(3) for the calendar year, the Corporation shall cover the
expenses and obligations by--
``(A) reducing each Allocated Insurance Reserves
Account by the same proportion; and
``(B) expending the amounts obtained under
subparagraph (A) before expending other amounts in the
Fund.
``(6) Other disposition of account funds.--
``(A) In general.--As soon as practicable during
each calendar year beginning more than 8 years after
the date on which the aggregate of the amounts in the
Farm Credit Insurance Fund exceeds the secure base
amount, but not earlier than January 1, 2005, the
Corporation may--
``(i) subject to subparagraphs (D) and (F),
pay to each insured System bank, in a manner
determined by the Corporation, an amount equal
to the lesser of--
``(I) 20 percent of the balance in
the insured System bank's Allocated
Insurance Reserves Account as of the
preceding December 31; or
``(II) 20 percent of the balance in
the bank's Allocated Insurance Reserves
Account on the date of the payment; and
``(ii) subject to subparagraphs (C), (E),
and (F), pay to each System bank and
association holding Financial Assistance
Corporation stock a proportionate share,
determined by dividing the number of shares of
Financial Assistance Corporation stock held by
the institution by the total number of shares
of Financial Assistance Corporation stock
outstanding, of the lesser of--
``(I) 20 percent of the balance in
the Allocated Insurance Reserves
Account established under paragraph
(1)(B) as of the preceding December 31;
or
``(II) 20 percent of the balance in
the Allocated Insurance Reserves
Account established under paragraph
(1)(B) on the date of the payment.
``(B) Authority to eliminate or reduce payments.--
The Corporation may eliminate or reduce payments during
a calendar year under subparagraph (A) if the
Corporation determines, in its sole discretion, that
the payments, or other circumstances that might require
use of the Farm Credit Insurance Fund, could cause the
amount in the Farm Credit Insurance Fund during the
calendar year to be less than the secure base amount.
``(C) Reimbursement for financial assistance
corporation stock.--
``(i) Sufficient funding.--Notwithstanding
paragraph (4)(A), on provision by the
Corporation for the accumulation in the Account
established under paragraph (1)(B) of funds in
an amount equal to $56,000,000 (in addition to
the amounts described in subparagraph (F)(ii)),
the Corporation shall not allocate any further
funds to the Account except to replenish the
Account if funds are diminished below
$56,000,000 by the Corporation under paragraph
(5).
``(ii) Wind down and termination.--
``(I) Final disbursements.--On
disbursement of $53,000,000 (in
addition to the amounts described in
subparagraph (F)(ii)) from the
Allocated Insurance Reserves Account,
the Corporation shall disburse the
remaining amounts in the Account, as
determined under subparagraph (A)(ii),
without regard to the percentage
limitations in subclauses (I) and (II)
of subparagraph (A)(ii).
``(II) Termination of account.--On
disbursement of $56,000,000 (in
addition to the amounts described in
subparagraph (F)(ii)) from the
Allocated Insurance Reserves Account,
the Corporation shall close the Account
established under paragraph (1)(B) and
transfer any remaining funds in the
Account to the remaining Allocated
Insurance Reserves Accounts in
accordance with paragraph (4)(B) for
the calendar year in which the transfer
occurs.
``(D) Distribution of payments received.--Not later
than 60 days after receipt of a payment made under
subparagraph (A)(i), each insured System bank, in
consultation with affiliated associations of the
insured System bank, and taking into account the direct
or indirect payment of insurance premiums by the
associations, shall develop and implement an equitable
plan to distribute payments received under subparagraph
(A)(i) among the bank and associations of the bank.
``(E) Exception for previously reimbursed
associations.--For purposes of subparagraph (A)(ii), in
any Farm Credit district in which the funding bank has
reimbursed 1 or more affiliated associations of the
bank for the previously unreimbursed portion of the
Financial Assistance Corporation stock held by the
associations, the funding bank shall be deemed to be
the holder of the shares of Financial Assistance
Corporation stock for which the funding bank has
provided the reimbursement.
``(F) Initial payment.--Notwithstanding
subparagraph (A), the initial payment made to each
payee under subparagraph (A) shall be in such amount
determined by the Corporation to be equal to the sum
of--
``(i) the total of the amounts that would
have been paid if payments under subparagraph
(A) had been authorized to begin, under the
same terms and conditions, in the first
calendar year beginning more than 5 years after
the date on which the aggregate of the amounts
in the Farm Credit Insurance Fund exceeds the
secure base amount and to continue through the
2 immediately subsequent years;
``(ii) interest earned on any amounts that
would have been paid as described in clause (i)
from the date on which the payments would have
been paid as described in clause (i); and
``(iii) the payment to be made in the
initial year described in subparagraph (A),
based on the amount in each Account after
subtracting the amounts to be paid under
clauses (i) and (ii).''.
(c) Technical Amendments.--Section 5.55(d) of the Farm Credit Act
of 1971 (12 U.S.C. 2277a-4(d)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``subsections (a) and (c)'' and
inserting ``subsections (a), (c), and (e)''; and
(B) by striking ``a Farm Credit Bank'' and
inserting ``an insured System bank''; and
(2) in paragraphs (1), (2), and (3), by striking ``Farm
Credit Bank'' each place it appears and inserting ``insured
System bank''.
SEC. 216. EXAMINATIONS BY THE FARM CREDIT SYSTEM INSURANCE CORPORATION.
Section 5.59(b)(1)(A) of the Farm Credit Act of 1971 (12 U.S.C.
2277a-8(b)(1)(A)) is amended by adding at the end the following:
``Notwithstanding any other provision of this Act, on cancellation of
the charter of a System institution, the Corporation shall have
authority to examine the system institution in receivership. An
examination shall be performed at such intervals as the Corporation
shall determine.''.
SEC. 217. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM BANKS.
(a) Least-Cost Resolution.--Section 5.61(a)(3) of the Farm Credit
Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (F);
and
(2) by striking subparagraph (A) and inserting the
following:
``(A) Least-cost resolution.--Assistance may not be
provided to an insured System bank under this
subsection unless the means of providing the assistance
is the least costly means of providing the assistance
by the Farm Credit Insurance Fund of all possible
alternatives available to the Corporation, including
liquidation of the bank (including paying the insured
obligations issued on behalf of the bank). Before
making a least-cost determination under this
subparagraph, the Corporation shall accord such other
insured System banks as the Corporation determines to
be appropriate the opportunity to submit information
relating to the determination.
``(B) Determining least costly approach.--In
determining the least costly alternative under
subparagraph (A), the Corporation shall--
``(i) evaluate alternatives on a present-
value basis, using a realistic discount rate;
``(ii) document the evaluation and the
assumptions on which the evaluation is based,
including any assumptions with regard to
interest rates, asset recovery rates, asset
holding costs, and payment of contingent
liabilities; and
``(iii) retain the documentation for not
less than 5 years.
``(C) Time of determination.--
``(i) General rule.--For purposes of this
subsection, the determination of the costs of
providing any assistance under any provision of
this section with respect to any insured System
bank shall be made as of the date on which the
Corporation makes the determination to provide
the assistance to the institution under this
section.
``(ii) Rule for liquidations.--For purposes
of this subsection, the determination of the
costs of liquidation of any insured System bank
shall be made as of the earliest of--
``(I) the date on which a
conservator is appointed for the
insured System bank;
``(II) the date on which a receiver
is appointed for the insured System
bank; or
``(III) the date on which the
Corporation makes any determination to
provide any assistance under this
section with respect to the insured
System bank.
``(D) Rule for stand-alone assistance.--Before
providing any assistance under paragraph (1), the
Corporation shall evaluate the adequacy of managerial
resources of the insured System bank. The continued
service of any director or senior ranking officer who
serves in a policymaking role for the assisted insured
System bank, as determined by the Corporation, shall be
subject to approval by the Corporation as a condition
of assistance.
``(E) Discretionary determinations.--Any
determination that the Corporation makes under this
paragraph shall be in the sole discretion of the
Corporation.''.
(b) Conforming Amendments.--Section 5.61(a) of the Farm Credit Act
of 1971 (12 U.S.C. 2277a-10(a)) is amended--
(1) in paragraph (1) by striking ``In general.--'' and
inserting ``Stand-alone assistance.--''; and
(2) in paragraph (2)--
(A) by striking ``Enumerated powers.--'' and
inserting ``Facilitation of mergers or consolidation.--
''; and
(B) in subparagraph (A) by striking ``Facilitation
of mergers or consolidation.--'' and inserting ``In
general.--''.
SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT SYSTEM
INSURANCE CORPORATION.
The Farm Credit Act of 1971 is amended by inserting after section
5.61 (12 U.S.C. 2279a-10) the following:
``SEC. 5.61A. OVERSIGHT ACTIONS BY THE CORPORATION.
``(a) Definitions.--In this section, the term `institution' means--
``(1) an insured System bank; and
``(2) a production credit association or other association
making loans under section 7.6 with a direct loan payable to
the funding bank of the association that comprises 20 percent
or more of the funding bank's total loan volume net of
nonaccrual loans.
``(b) Consultation Regarding Participation of Undercapitalized
Banks in Issuance of Insured Obligations.--The Farm Credit
Administration shall consult with the Corporation prior to approving an
insured obligation that is to be issued by or on behalf of, or
participated in by, any insured System bank that fails to meet the
minimum level for any capital requirement established by the Farm
Credit Administration for the bank.
``(c) Consultation Regarding Applications for Mergers and
Restructurings.--
``(1) Corporation to receive copy of transaction
applications.--On receiving an application for a merger or
restructuring of an institution, the Farm Credit Administration
shall forward a copy of the application to the Corporation.
``(2) Consultation required.--If the proposed merger or
restructuring involves an institution that fails to meet the
minimum level for any capital requirement established by the
Farm Credit Administration applicable to the institution, the
Farm Credit Administration shall allow 30 days within which the
Corporation may submit the views and recommendations of the
Corporation, including any conditions for approval. In
determining whether to approve or disapprove any proposed
merger or restructuring, the Farm Credit Administration shall
give due consideration to the views and recommendations of the
Corporation.
``SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN PARACHUTE AND
INDEMNIFICATION PAYMENTS.
``(a) Definitions.--In this section:
``(1) Golden parachute payment.--The term `golden parachute
payment'--
``(A) means a payment (or any agreement to make a
payment) in the nature of compensation by any Farm
Credit System institution (including the Federal
Agricultural Mortgage Corporation and any conservator
or receiver for the Federal Agricultural Mortgage
Corporation) for the benefit of any institution-related
party under an obligation of the institution that--
``(i) is contingent on the termination of
the party's relationship with the institution;
and
``(ii) is received on or after the date on
which--
``(I) the institution is insolvent;
``(II) a conservator or receiver is
appointed for the institution;
``(III) the institution has been
assigned by the Farm Credit
Administration a composite CAMEL rating
of 4 or 5 under the Farm Credit
Administration Rating System, or an
equivalent rating; or
``(IV) the Corporation otherwise
determines that the institution is in a
troubled condition (as defined in
regulations issued by the Corporation);
and
``(B) includes a payment that would be a golden
parachute payment but for the fact that the payment was
made before the date referred to in subparagraph
(A)(ii) if the payment was made in contemplation of the
occurrence of an event described in any subclause of
subparagraph (A); but
``(C) does not include--
``(i) a payment made under a retirement
plan that is qualified (or is intended to be
qualified) under section 401 of the Internal
Revenue Code of 1986 or other nondiscriminatory
benefit plan;
``(ii) a payment made under a bona fide
supplemental executive retirement plan,
deferred compensation plan, or other
arrangement that the Corporation determines, by
regulation or order, to be permissible; or
``(iii) a payment made by reason of the
death or disability of an institution-related
party.
``(2) Indemnification payment.--The term `indemnification
payment' means a payment (or any agreement to make a payment)
by any Farm Credit System institution for the benefit of any
person who is or was an institution-related party, to pay or
reimburse the person for any liability or legal expense with
regard to any administrative proceeding or civil action
instituted by the Farm Credit Administration that results in a
final order under which the person--
``(A) is assessed a civil money penalty; or
``(B) is removed or prohibited from participating
in the conduct of the affairs of the institution.
``(3) Institution-related party.--The term `institution-
related party' means--
``(A) a director, officer, employee, or agent for a
Farm Credit System institution;
``(B) a stockholder (other than another Farm Credit
System institution), consultant, joint venture partner,
or any other person determined by the Farm Credit
Administration to be a participant in the conduct of
the affairs of a Farm Credit System institution; and
``(C) an independent contractor (including any
attorney, appraiser, or accountant) that knowingly or
recklessly participates in any violation of any law or
regulation, any breach of fiduciary duty, or any unsafe
or unsound practice that caused or is likely to cause
more than a minimal financial loss to, or a significant
adverse effect on, the Farm Credit System institution.
``(4) Liability or legal expense.--The term `liability or
legal expense' means--
``(A) a legal or other professional expense
incurred in connection with any claim, proceeding, or
action;
``(B) the amount of, and any cost incurred in
connection with, any settlement of any claim,
proceeding, or action; and
``(C) the amount of, and any cost incurred in
connection with, any judgment or penalty imposed with
respect to any claim, proceeding, or action.
``(5) Payment.--The term `payment' means--
``(A) a direct or indirect transfer of any funds or
any asset; and
``(B) any segregation of any funds or assets for
the purpose of making, or under an agreement to make,
any payment after the date on which the funds or assets
are segregated, without regard to whether the
obligation to make the payment is contingent on--
``(i) the determination, after that date,
of the liability for the payment of the amount;
or
``(ii) the liquidation, after that date, of
the amount of the payment.
``(b) Prohibition.--The Corporation may prohibit or limit, by
regulation or order, any golden parachute payment or indemnification
payment by a Farm Credit System institution (including the Federal
Agricultural Mortgage Corporation) in troubled condition (as defined in
regulations issued by the Corporation).
``(c) Factors To Be Taken into Account.--The Corporation shall
prescribe, by regulation, the factors to be considered by the
Corporation in taking any action under subsection (b). The factors may
include--
``(1) whether there is a reasonable basis to believe that
an institution-related party has committed any fraudulent act
or omission, breach of trust or fiduciary duty, or insider
abuse with regard to the Farm Credit System institution
involved that has had a material effect on the financial
condition of the institution;
``(2) whether there is a reasonable basis to believe that
the institution-related party is substantially responsible for
the insolvency of the Farm Credit System institution, the
appointment of a conservator or receiver for the institution,
or the institution's troubled condition (as defined in
regulations prescribed by the Corporation);
``(3) whether there is a reasonable basis to believe that
the institution-related party has materially violated any
applicable law or regulation that has had a material effect on
the financial condition of the institution;
``(4) whether there is a reasonable basis to believe that
the institution-related party has violated or conspired to
violate--
``(A) section 215, 657, 1006, 1014, or 1344 of
title 18, United States Code; or
``(B) section 1341 or 1343 of title 18, United
States Code, affecting a Farm Credit System
institution;
``(5) whether the institution-related party was in a
position of managerial or fiduciary responsibility; and
``(6) the length of time that the party was related to the
Farm Credit System institution and the degree to which--
``(A) the payment reasonably reflects compensation
earned over the period of employment; and
``(B) the compensation represents a reasonable
payment for services rendered.
``(d) Certain Payments Prohibited.--No Farm Credit System
institution may prepay the salary or any liability or legal expense of
any institution-related party if the payment is made--
``(1) in contemplation of the insolvency of the institution
or after the commission of an act of insolvency; and
``(2) with a view to, or with the result of--
``(A) preventing the proper application of the
assets of the institution to creditors; or
``(B) preferring 1 creditor over another creditor.
``(e) Rule of Construction.--Nothing in this section--
``(1) prohibits any Farm Credit System institution from
purchasing any commercial insurance policy or fidelity bond, so
long as the insurance policy or bond does not cover any legal
or liability expense of an institution described in subsection
(a)(2); or
``(2) limits the powers, functions, or responsibilities of
the Farm Credit Administration.''.
SEC. 219. FARM CREDIT SYSTEM INSURANCE CORPORATION BOARD OF DIRECTORS.
Section 201 of the Farm Credit Banks and Associations Safety and
Soundness Act of 1992 (106 Stat. 4104) is repealed.
SEC. 220. INTEREST RATE REDUCTION PROGRAM.
Section 351(a) of the Consolidated Farm and Rural Development Act
(7 U.S.C. 1999) is amended--
(A) by striking ``Sec. 351. (a) The'' and inserting
the following:
``SEC. 351. INTEREST RATE REDUCTION PROGRAM.
``(a) Establishment of Program.--
``(1) In general.--The''; and
(B) by adding at the end the following:
``(2) Termination of authority.--The authority provided by
this subsection shall terminate on September 30, 2002.''.
SEC. 221. LIABILITY FOR MAKING CRIMINAL REFERRALS.
(a) In General.--Any institution of the Farm Credit System, or any
director, officer, employee, or agent of a Farm Credit System
institution, that discloses to a Government authority information
proffered in good faith that may be relevant to a possible violation of
any law or regulation shall not be liable to any person under any law
of the United States or any State--
(1) for the disclosure; or
(2) for any failure to notify the person involved in the
possible violation.
(b) No Prohibition on Disclosure.--Any institution of the Farm
Credit System, or any director, officer, employee, or agent of a Farm
Credit System institution, may disclose information to a Government
authority that may be relevant to a possible violation of any law or
regulation.
TITLE III--NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION
SEC. 301. SHORT TITLE.
This title may be cited as the ``National Natural Resources
Conservation Foundation Act''.
SEC. 302. DEFINITIONS.
In this title (unless the context otherwise requires):
(1) Board.--The term ``Board'' means the Board of Trustees
established under section 304.
(2) Department.--The term ``Department'' means the United
States Department of Agriculture.
(3) Foundation.--The term ``Foundation'' means the National
Natural Resources Conservation Foundation established by
section 303(a).
(4) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
SEC. 303. NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION.
(a) Establishment.--A National Natural Resources Conservation
Foundation is established as a charitable and nonprofit corporation for
charitable, scientific, and educational purposes specified in
subsection (b). The Foundation is not an agency or instrumentality of
the United States.
(b) Purposes.--The purposes of the Foundation are to--
(1) promote innovative solutions to the problems associated
with the conservation of natural resources on private lands,
particularly with respect to agriculture and soil and water
conservation;
(2) promote voluntary partnerships between government and
private interests in the conservation of natural resources;
(3) conduct research and undertake educational activities,
conduct and support demonstration projects, and make grants to
State and local -- agencies and nonprofit organizations;
(4) provide such other leadership and support as may be
necessary to address conservation challenges, such as the
prevention of excessive soil erosion, enhancement of soil and
water quality, and the protection of wetlands, wildlife
habitat, and strategically important -- farmland subject to
urban conversion and fragmentation;
(5) encourage, accept, and administer private gifts of
money and real and personal property for the benefit of, or in
connection with, the --- conservation and related activities
and services of the Department, particularly the Natural
Resources Conservation Service;
(6) undertake, conduct, and encourage educational,
technical, and other assistance, and other activities, that
support the conservation and -- related programs administered
by the Department (other than activities carried out on
National Forest System lands), particularly the Natural
Resources Conservation Service, except that the Foundation may
not enforce or administer a regulation of the Department; and
(7) raise private funds to promote the purposes of the
Foundation.
(c) Limitations and Conflicts of Interests.--
(1) Political activities.--The Foundation shall not
participate or intervene in a political campaign on behalf of
any candidate for public office.
(2) Conflicts of interest.--No director, officer, or
employee of the Foundation shall participate, directly or
indirectly, in the consideration or determination of any
question before the Foundation affecting--
(A) the financial interests of the director,
officer, or employee; or
(B) the interests of any corporation, partnership,
entity, organization, or other person in which the
director, officer, or employee--
(i) is an officer, director, or trustee; or
(ii) has any direct or indirect financial
interest.
(3) Legislation or government action or policy.--No funds
of the Foundation may be used in any manner for the purpose of
influencing legislation or government action or policy.
(4) Litigation.--No funds of the Foundation may be used to
bring or join an action against the United States.
(d) Tax Exempt Status.--
(1) 1996 taxable year.--In the case of the 1996 taxable
year, the Foundation shall be treated as organized and operated
exclusively for charitable purposes for purposes of section
501(c)(3) of the Internal Revenue Code of 1986.
(2) 1997 and subsequent taxable years.--In the case of the
1997 and subsequent taxable years, the Foundation shall be
required to maintain the tax exempt status of the Foundation in
the manner prescribed by the Secretary of the Treasury for
similar tax exempt organizations.
SEC. 304. COMPOSITION AND OPERATION.
(a) Composition.--The Foundation shall be administered by a Board
of Trustees that shall consist of 9 voting members, each of whom shall
be a United States citizen and not a Federal officer. The Board shall
be composed of--
(1) individuals with expertise in agricultural conservation
policy matters;
(2) a representative of private sector organizations with a
demonstrable interest in natural resources conservation;
(3) a representative of statewide conservation
organizations;
(4) a representative of soil and water conservation
districts;
(5) a representative of organizations outside the Federal -
Government that are dedicated to natural resources conservation
education; and
(6) a farmer or rancher.
(b) Nongovernmental Employees.--Service as a member of the Board
shall not constitute employment by, or the holding of, an office of the
United States for the purposes of any Federal law.
(c) Membership.--
(1) Initial members.--The Secretary shall appoint 9 persons
who meet the criteria established under subsection (a) as the
initial members of the Board and designate 1 of the members as
the initial chairperson for a 2-year term.
(2) Terms of office.--
(A) In general.--A member of the Board shall serve
for a term of 3 years, except that the members
appointed to the initial Board shall serve,
proportionately, for terms of 1, 2, and 3 years, as
determined by the Secretary.
(B) Limitation on terms.--No individual may serve
more than 2 consecutive 3-year terms as a member.
(3) Subsequent members.--The initial members of the Board
shall adopt procedures in the constitution of the Foundation
for the nomination and selection of subsequent members of the
Board. The procedures shall require that each member, at a
minimum, meets the criteria established under subsection (a)
and shall provide for the selection of an individual, who is
not a Federal officer or a member of the Board, to be provided
with the power to select subsequent members of the Board.
(d) Chairperson.--After the appointment of an initial chairperson
under subsection (c)(1), each succeeding chairperson of the Board shall
be elected by the members of the Board for a 2-year term.
(e) Vacancies.--A vacancy on the Board shall be filled by the Board
not later than 60 days after the occurrence of the vacancy.
(f) Compensation.--A member of the Board shall receive no
compensation from the Foundation for the service of the member on the
Board.
(g) Travel Expenses.--While away from the home or regular place of
business of a member of the Board in the performance of services for
the Board, the member shall be allowed travel expenses paid by the
Foundation, including per diem in lieu of subsistence, at the same rate
as a person employed intermittently in the Government service would be
allowed under section 5703 of title 5, United States Code.
SEC. 305. OFFICERS AND EMPLOYEES.
(a) In General.--The Board may--
(1) appoint, hire, and discharge the officers and employees
of the Foundation, other than the appointment of the initial
Executive Director of the Foundation;
(2) adopt a constitution and bylaws for the Foundation that
are consistent with the purposes of the Foundation and this
title; and
(3) undertake any other activities that may be necessary to
carry out this title.
(b) Officers and Employees.--
(1) Appointment and hiring.--An officer or employee of the
Foundation--
(A) shall not, by virtue of the appointment or
employment of the officer or employee, be considered a
Federal employee for any purpose, including the
provisions of title 5, United States Code, governing
appointments in the competitive service, except that
such an individual may participate in the Federal
employee retirement system as if the individual were a
Federal employee; and
(B) may not be paid by the Foundation a salary in
excess of $125,000 per year.
(2) Executive director.--
(A) Initial director.--The Secretary shall appoint
an individual to serve as the initial Executive
Director of the Foundation who shall serve, at the
direction of the Board, as the chief operating officer
of the Foundation.
(B) Subsequent directors.--The Board shall appoint
each subsequent Executive Director of the Foundation
who shall serve, at the direction of the Board, as the
chief operating officer of the Foundation.
(C) Qualifications.--The Executive Director shall
be knowledgeable and experienced in matters relating to
natural resources conservation.
SEC. 306. CORPORATE POWERS AND OBLIGATIONS OF THE FOUNDATION.
(a) In General.--The Foundation--
(1) may conduct business throughout the United States and
the territories and possessions of the United States; and
(2) shall at all times maintain a designated agent who is
authorized to accept service of process for the Foundation, so
that the serving of notice to, or service of process on, the
agent, or mailed to the business address of the agent, shall be
considered as service on or notice to the Foundation.
(b) Seal.--The Foundation shall have an official seal selected by
the Board that shall be judicially noticed.
(c) Powers.--To carry out the purposes of the Foundation under
section 303(b), the Foundation shall have, in addition to the powers
otherwise provided under this title, the usual powers of a corporation,
including the power--
(1) to accept, receive, solicit, hold, administer, and use
any gift, devise, or bequest, either absolutely or in trust, of
real or personal -- property or any income from, or other
interest in, the gift, devise, or bequest;
(2) to acquire by purchase or exchange any real or personal
property or interest in property;
(3) unless otherwise required by instrument of transfer, to
sell, donate, lease, invest, reinvest, retain, or otherwise
dispose of any -- property or income from property;
(4) to borrow money from private sources and issue bonds,
debentures, or other debt instruments, subject to section 309,
except that the aggregate amount of the borrowing and debt
instruments outstanding at any time may not exceed $1,000,000;
(5) to sue and be sued, and complain and defend itself, in
any court of competent jurisdiction, except that a member of
the Board shall not be personally liable for an action in the
performance of services for the Board, except for gross
negligence;
(6) to enter into a contract or other agreement with an
agency of State or local government, educational institution,
or other private -- organization or person and to make such
payments as may be necessary to carry out the functions of the
Foundation; and
(7) to do any and all acts that are necessary to carry out
the purposes of the Foundation.
(d) Interest in Property.--
(1) In general.--The Foundation may acquire, hold, and
dispose of lands, waters, or other interests in real property
by donation, gift, devise, purchase, or exchange.
(2) Interests in real property.--For purposes of this
title, an interest in real property shall be treated, among
other things, as including an easement or other right for the
preservation, conservation, protection, or enhancement of
agricultural, natural, scenic, historic, scientific,
educational, inspirational, or recreational resources.
(3) Gifts.--A gift, devise, or bequest may be accepted by
the Foundation even though the gift, devise, or bequest is
encumbered, restricted, or subject to a beneficial interest of
a private person if any current or future interest in the gift,
devise, or bequest is for the benefit of the Foundation.
SEC. 307. ADMINISTRATIVE SERVICES AND SUPPORT.
The Secretary may provide, without reimbursement, personnel,
facilities, and other administrative services of the Department to the
Foundation.
SEC. 308. AUDITS AND PETITION OF ATTORNEY GENERAL FOR EQUITABLE RELIEF.
(a) Audits.--
(1) In general.--The accounts of the Foundation shall be
audited in accordance with Public Law 88-504 (36 U.S.C. 1101 et
seq.), including an audit of lobbying and litigation activities
carried out by the Foundation.
(2) Conforming amendment.--The first section of Public Law
88-504 (36 U.S.C. 1101) is amended by adding at the end the
following:
``(77) The National Natural Resources Conservation
Foundation.''.
(b) Relief with Respect to Certain Foundation Acts or Failure to
Act.--The Attorney General may petition in the United States District
Court for the District of Columbia for such equitable relief as may be
necessary or appropriate, if the Foundation--
(1) engages in, or threatens to engage in, any act,
practice, or policy that is inconsistent with this title; or
(2) refuses, fails, neglects, or threatens to refuse, fail,
or neglect, to discharge the obligations of the Foundation
under this title.
SEC. 309. RELEASE FROM LIABILITY.
(a) In General.--The United States shall not be liable for any
debt, default, act, or omission of the Foundation. The full faith and
credit of the United States shall not extend to the Foundation.
(b) Statement.--An obligation issued by the Foundation, and a
document offering an obligation, shall include a prominent statement
that the obligation is not directly or indirectly guaranteed, in whole
or in part, by the United States (or an agency or instrumentality of
the United States).
SEC. 310. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Department to be
made available to the Foundation such sums as are necessary for each of
fiscal years 1997 through 1999 to initially establish and carry out
activities of the Foundation.
TITLE IV--IMPLEMENTATION AND EFFECTIVE DATE
SEC. 401. IMPLEMENTATION.
The Secretary of Agriculture and the Farm Credit Administration
shall promulgate regulations and take other required actions to
implement the provisions of this Act not later than 90 days after the
effective date of this Act.
SEC. 402. EFFECTIVE DATE.
Except as otherwise provided in this Act, this Act and the
amendments made by this Act shall become effective on the date of
enactment.
Amend the title so as to read: ``An Act to amend the Farm
Credit Act of 1971 to provide regulatory relief, and for other
purposes.''.
Attest:
Secretary.
104th CONGRESS
1st Session
H. R. 2029
_______________________________________________________________________
AMENDMENTS
HR 2029 EAS----2
HR 2029 EAS----3
HR 2029 EAS----4
HR 2029 EAS----5