[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2029 Reported in House (RH)]
Union Calendar No. 207
104th CONGRESS
1st Session
H. R. 2029
[Report No. 104-421]
_______________________________________________________________________
A BILL
To amend the Farm Credit Act of 1971 to provide regulatory relief.
_______________________________________________________________________
December 18 (legislative day, December 15), 1995
Reported with amendments, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
Union Calendar No. 207
104th CONGRESS
1st Session
H. R. 2029
[Report No. 104-421]
To amend the Farm Credit Act of 1971 to provide regulatory relief.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 13, 1995
Mr. Allard (for himself, Mr. Johnson of South Dakota, and Mr. Rahall),
introduced the following bill; which was referred to the Committee on
Agriculture
December 18 (legislative day, December 15), 1995
Additional sponsors: Mr. Holden, Mr. Baldacci, Mrs. Chenoweth, Mr.
Pomeroy, Mr. Ewing, Mr. Minge, Mr. Cooley, Mr. LaHood, Mr. Bliley, Mr.
Stenholm, Mr. Lucas, Mr. Crapo, Mr. Lewis of Kentucky, Mr. Whitfield,
Mr. McHugh, Mr. Bonior, Ms. McKinney, Mr. Chambliss, Mr. Taylor of
North Carolina, Mr. Boehlert, Mr. Condit, Mr. Kingston, Mr. Spratt, Mr.
Pombo, Mr. Walsh, Mr. Neal of Massachusetts, Mr. Hinchey, Mr. Herger,
and Mr. Olver
December 18 (legislative day, December 15), 1995
Reported with amendments, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on July
13, 1995]
_______________________________________________________________________
A BILL
To amend the Farm Credit Act of 1971 to provide regulatory relief.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Farm Credit System
Regulatory Relief Act of 1995''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. Regulatory review.
Sec. 4. Examination of Farm Credit System institutions.
Sec. 5. Farm Credit Insurance Fund operations.
Sec. 6. Powers with respect to troubled insured System banks.
Sec. 7. Farm Credit System Insurance Corporation board of directors.
Sec. 8. Conservatorship and receiverships.
Sec. 9. Oversight and regulatory actions by the Farm Credit System
Insurance Corporation.
Sec. 10. Formation of administrative service entities.
Sec. 11. Requirements for loans sold into the secondary market.
Sec. 12. Removal of antiquated and unnecessary paperwork requirements.
Sec. 13. Removal of government certification requirement for certain
private sector financing.
Sec. 14. Reform of regulatory limitations on the dividend, member
business, and voting practices of eligible
farmer-owned cooperatives.
Sec. 15. Extension of interest rate reduction program for 5 years.
SEC. 2. REFERENCES.
Except as otherwise expressly provided, wherever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Farm Credit Act of 1971.
SEC. 3. REGULATORY REVIEW.
(a) Findings.--The Congress finds that--
(1) the Farm Credit Administration, in its role 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 in this
regard have resulted in cost savings for Farm Credit System
institutions; and
(3) such cost savings ultimately benefit the Nation's
farmers, ranchers, agricultural cooperatives, and rural
residents.
(b) Requirement for Continued Review.--The Farm Credit
Administration shall continue its comprehensive review of regulations
governing the Farm Credit System in order to further identify and
eliminate, consistent with safety and soundness, all regulations that
are unnecessary, unduly burdensome or costly, or not based on statute.
SEC. 4. EXAMINATION OF FARM CREDIT SYSTEM INSTITUTIONS.
Section 5.19(a) (12 U.S.C. 2254(a)) is amended by striking ``each
year'' in the first sentence and inserting ``every 18 months''.
SEC. 5. FARM CREDIT INSURANCE FUND OPERATIONS.
(a) Adjustment of Premiums.--
(1) In general.--Section 5.55(a) (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
shall'' and inserting ``If, at the end of any calendar
year, the aggregate of the amounts in the Farm Credit
Insurance Fund does not exceed the secure base amount,
the annual premium due from any insured System bank for
that calendar year shall, subject to paragraph (2),'';
and
(B) by redesignating paragraph (2) as paragraph (3)
and inserting after paragraph (1) the following:
``(2) Reduced premiums.--The Corporation, in its sole
discretion, 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).--Section 5.55(b) (12 U.S.C.
2277a-4(b)) is amended--
(i) by striking ``Insurance Fund'' each
place such term 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).--Section 5.56(a) (12 U.S.C.
2277a-5(a)) is amended in each of paragraphs (2) and
(3) by striking ``section 5.55(a)(2)'' and inserting
``section 5.55(a)(3)''.
(C) Section 1.12(b).--Section 1.12(b) (12 U.S.C.
2020(b)) is amended--
(i) in paragraph (1), by inserting ``(as
defined in section 5.55(a)(3))'' after
``government-guaranteed loans''; and
(ii) in paragraph (3), by inserting ``(as
so defined)'' after ``government-guaranteed
loans'' each place such term appears.
(b) Technical Amendment.--Section 5.55(d) (12 U.S.C. 2277a-4(d)) is
amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``and (c)'' and inserting ``, (c),
and (e)''; and
(B) by striking ``a Farm Credit Bank'' and
inserting ``an insured System bank''; and
(2) by striking ``Farm Credit Bank'' each subsequent place
such term appears and inserting ``insured System bank''.
(c) Allocation to Insured System Banks and Other System
Institutions of Excess Amounts in the Farm Credit Insurance Fund.--
Section 5.55 (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.--There is hereby established within the Farm Credit
Insurance Fund--
``(A) for each insured System bank; and
``(B) subject to paragraph (5)(C), for all holders,
in the aggregate, of Financial Assistance Corporation
stock,
an Allocated Insurance Reserves Account. Amounts in any
Allocated Insurance Reserves Account shall be considered to be
part of the Farm Credit Insurance Fund.
``(2) 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 such 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.
``(3) Allocation formula.--From the total amount required
to be allocated at the end of a calendar year pursuant to
paragraph (2)--
``(A) 10 percent of such total amount shall be
credited to the Allocated Insurance Reserves Account
established under paragraph (1)(B), subject to
paragraph (5)(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 such total
amount (less any reduction under subparagraph (A)) as
the average principal outstanding for the 3-year period
ending with the end of such calendar year on loans made
by the bank that are in accrual status bears to the
average principal outstanding for such 3-year period 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)).
``(4) 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 estimated sum
described in paragraph (2) for the calendar year, the
Corporation shall cover such expenses and obligations by
reducing each Allocated Insurance Reserves Account by the same
proportion and expending the amounts so obtained, before
expending other monies in the Fund.
``(5) Other disposition of account funds.--
``(A) In general.--Beginning in calendar year 2003,
if the aggregate of the amounts in the Farm Credit
Insurance Fund exceeds the secure base amount, the
Corporation may--
``(i) subject to subparagraph (D), 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 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 payment; and
``(ii) subject to subparagraphs (C) and
(E), pay to each System bank and association
holding Financial Assistance Corporation stock
its proportionate share, determined by dividing
the number of shares of Financial Assistance
Corporation stock held by such 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 under
subparagraph (A) if the Corporation determines, in its
sole discretion, that such 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 that calendar year to be
less than the secure base amount.
``(C) Reimbursement for financial assistance
corporation stock.--
``(i) Sufficient funding.--Notwithstanding
paragraph (3)(A), upon provision by the
Corporation for the accumulation in the account
established under paragraph (1)(B) of funds in
an amount equal to $56 million, the Corporation
shall not allocate any further funds to such
account except to replenish such account in the
event that funds are diminished below such
amount by the Corporation pursuant to paragraph
(4).
``(ii) Wind down and termination.--
``(I) Final disbursements.--Upon
disbursement of a total of $53 million
from such Allocated Insurance Reserves
Account, the Corporation shall disburse
the remaining amounts in such account,
as determined under paragraph
(5)(A)(ii), without regard to the
percentage limitation in subclauses (I)
and (II) thereof.
``(II) Termination of account.--
Upon disbursement of a total of $56
million from such Allocated Insurance
Reserves Account established under
paragraph (1)(B), the Corporation shall
close the Allocated Insurance Reserves
Account established under paragraph
(1)(B) and transfer any remaining funds
in such Account to the remaining
Allocated Insurance Reserves Accounts
in accordance with the formula in
paragraph (3)(B) for the calendar year
in which the transfer occurs.
``(D) Distribution of payments received.--Within 60
days after receipt of a payment made under subparagraph
(5)(A)(i), each insured System bank, in consultation
with its affiliated associations, and taking into
account the direct or indirect payment of insurance
premiums by such associations, shall develop and
implement an equitable plan to distribute payments
received pursuant to subparagraph (5)(A)(i) among the
bank and its associations.
``(E) Exception for previously reimbursed
associations.--For purposes of subparagraph (5)(A)(ii),
in any Farm Credit District in which the funding bank
has reimbursed one or more of its affiliated
associations for the previously unreimbursed portion of
the Financial Assistance stock held by such
associations, the funding bank shall be deemed to be
the holder of the shares of Financial Assistance
Corporation stock for which it has provided such
reimbursement.''.
SEC. 6. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM BANKS.
(a) Least-Cost Resolution.--Section 5.61(a)(3) (12 U.S.C. 2277a-
10(a)(3)) 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 total amount of such assistance
is the least costly to 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 appropriate the opportunity to
submit information relating to such determination.
``(B) Procedural rules.--In determining the least
costly alternative under subparagraph (A), the
Corporation shall--
``(i) evaluate alternatives on a present-
value basis, using a reasonable discount rate;
``(ii) document that evaluation and the
assumptions on which the evaluation is based;
and
``(iii) retain the documentation for not
less than 5 years.
``(C) Time of determination.--
``(i) Cost of assistance.--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 such assistance to the institution
under this section.
``(ii) Cost of liquidation.--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 bank;
``(II) the date on which a receiver
is appointed for the bank; or
``(III) the date on which the
Corporation makes any determination to
provide any assistance under this
section with respect to the bank.
``(D) Evaluation of management.--Before providing
any assistance under paragraph (1), the Corporation
shall evaluate the adequacy of the managerial resources
of the bank. The continued service of any director or
senior ranking officer who serves in a policymaking
role for the assisted bank, as determined by the
Corporation, shall be subject to approval by the
Corporation as a condition of such assistance.
``(E) Discretionary determination.--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) (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. 7. 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. 4104-4105) is repealed.
SEC. 8. CONSERVATORSHIP AND RECEIVERSHIPS.
(a) Inclusion Among General Corporate Powers.--Section 5.58(9) (12
U.S.C. 2277a-7(9)) is amended to read as follows:
``(9) Conservator or receiver.--The Corporation may act as
conservator or receiver.''.
(b) Conforming Amendments.--Section 5.51 (12 U.S.C. 2277a) is
amended by striking paragraph (5) and redesignating paragraph (6) as
paragraph (5).
SEC. 9. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT SYSTEM
INSURANCE CORPORATION.
Part E of title V of the Farm Credit Act of 1971 (12 U.S.C. 2277-
2277a-14) is amended by inserting after section 5.61 the following:
``SEC. 5.61A. AUTHORITY TO REGULATE GOLDEN PARACHUTE AND
INDEMNIFICATION PAYMENTS.
``(a) In General.--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 and any conservator or receiver for
the Federal Agricultural Mortgage Corporation) in troubled condition
(as defined in regulations issued by the Corporation).
``(b) 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 (a), which may
include the following:
``(1) Whether there is a reasonable basis to believe that
the 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.
``(6) The length of time that the party was related with
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 involved represents a
reasonable payment for services rendered.
``(c) Certain Payments Prohibited.--No Farm Credit System
institution may prepay the salary or any liability or legal expense of
any institution-related party if such payment--
``(1) is made in contemplation of the insolvency of such
institution or after the commission of an act of insolvency;
and
``(2) is made with a view to, or has the result of--
``(A) preventing the proper application of the
assets of the institution to creditors; or
``(B) preferring one creditor over another.
``(d) Golden Parachute Payment Defined.--As used in this section:
``(1) In general.--The term `golden parachute payment'
means any payment (or any agreement to make any payment) in the
nature of compensation by any Farm Credit System institution
for the benefit of any institution-related party under an obligation of
the institution that--
``(A) is contingent on the termination of the
party's relationship with the institution; and
``(B) is received on or after the date on which--
``(i) the institution is insolvent;
``(ii) any conservator or receiver is
appointed for the institution;
``(iii) the Farm Credit Administration has
assigned the institution 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).
``(2) Certain payments in contemplation of an event.--Any
payment that would be a golden parachute payment but for the
fact that the payment was made before the date referred to in
paragraph (1)(B) shall be treated as a golden parachute payment
if the payment was made in contemplation of the occurrence of
an event described in any clause of such paragraph.
``(3) Certain payments not included.--The term `golden
parachute payment' shall not include--
``(A) any 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;
``(B) any payment made under a bona fide deferred
compensation plan or arrangement that the Corporation
determines, by regulation or order, to be permissible;
or
``(C) any payment made by reason of the death or
disability of an institution-related party.
``(e) Other Definitions.--As used in this section:
``(1) Indemnification payment.--The term `indemnification
payment' means any payment (or any agreement to make any
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.
``(2) Liability or legal expense.--The term `liability or
legal expense' means--
``(A) any 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.
``(3) Payment.--The term `payment' means--
``(A) any 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 such funds or
assets are segregated, without regard to whether the
obligation to make such payment is contingent on--
``(i) the determination, after such date,
of the liability for the payment of such
amount; or
``(ii) the liquidation, after such date, of
the amount of such payment.
``(4) Institution-related party.--The term `institution-
related party' means--
``(A) any director, officer, employee, or agent for
a Farm Credit System institution;
``(B) any 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;
``(C) any independent contractor (including any
attorney, appraiser, or accountant) who 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;
or
``(D) any receiver or conservator of a Farm Credit
System institution.
``(f) Special Rule.--No provision of this section may be construed
as prohibiting any Farm Credit System institution from purchasing any
commercial insurance policy or fidelity bond, except that such
insurance policy or bond shall not cover any legal or liability expense
of the institution that is described in subsection (e)(1).
``(g) Special Rule Regarding the Farm Credit Administration.--No
provision of this section may be construed as limiting the powers,
functions, or responsibilities of the Farm Credit Administration.''.
SEC. 10. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.
Part E of title IV (12 U.S.C. 2211-2214) is amended by adding at
the end the following:
``SEC. 4.28A. DEFINITION OF BANK.
``As used in this part, the term `bank' includes each association
operating under title II.''.
SEC. 11. REQUIREMENTS FOR LOANS SOLD INTO THE SECONDARY MARKET.
(a) Borrower Stock.--Section 4.3A (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.--Notwithstanding any other provision of this section:
``(1) General rule.--Subject to paragraph (2), the bylaws
adopted by any bank or association under subsection (b) may
provide--
``(A) for any loan made on or after the date of the
enactment of this subsection that is designated, at the
time the loan is made, for sale into a secondary market
under title VIII or otherwise, that no voting stock or
participation certificate purchase requirement shall
apply to the borrower of the loan; and
``(B) for any loan made before the date of the
enactment of this subsection that is sold into a
secondary market under title VIII or otherwise, 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) Exception.--If a loan designated for sale as
described in paragraph (1)(A) is not sold into a secondary
market within 180 days after the designation, the voting stock
or participation certificate purchase requirement that would
otherwise apply to the loan in the absence of bylaw provisions
adopted under paragraph (1)(A) shall be effective, except that
the bylaws may provide that if such a loan is thereafter sold
into a secondary market, all outstanding voting stock or
participation certificates held by the borrower with respect to
such loan shall, subject to subsection (d)(1), be retired.''.
(b) Borrower Rights.--
(1) In general.--Section 4.14A(a)(5) (12 U.S.C.
2202a(a)(5)) is amended to read as follows:
``(5) Loan.--
``(A) In general.--The term `loan' means a loan
made to a farmer, rancher, or producer or harvester of
aquatic products, for any agricultural or aquatic
purpose and other credit needs of the borrower,
including financing for basic processing and marketing
directly related to the borrower's operations and those
of other eligible farmers, ranchers, and producers or
harvesters of aquatic products.
``(B) Exclusion of loans designated for sale into a
secondary market.--The term `loan' does not include a
loan made on or after the date of enactment of this
subparagraph that, at the time the loan is made, is
designated for sale into a secondary market under title
VIII or otherwise, except as provided in subparagraph
(C).
``(C) Special rule.--If a loan designated for sale
into a secondary market is not sold into a secondary
market within 180 days after such designation, the
provisions of sections 4.14, 4.14A, 4.14B, 4.14C,
4.14D, and 4.36 that would apply to the loan in the
absence of subparagraph (B) shall apply to the loan
until the loan is so sold.''.
(2) Conforming amendment.--Section 8.9(b) (12 U.S.C.
2279aa-9(b)) is amended by inserting ``(as defined in section
4.14A(a)(5))'' after ``At the time of application for a loan''.
SEC. 12. REMOVAL OF ANTIQUATED AND UNNECESSARY PAPERWORK REQUIREMENTS.
(a) Disclosure on Adjustable Rate Loans.--Section 4.13(a)(4) (12
U.S.C. 2199(a)(4)) is amended by inserting ``, except that any
regulation of the Farm Credit Administration implementing this
paragraph shall include a provision permitting notice to a borrower of
a change in the interest rate applicable to the borrower's loan to be
made within a reasonable time after the effective date of the change''
before the semicolon.
(b) Compensation of Association Personnel.--Section 1.5(13) (12
U.S.C. 2013(13)) is amended by striking ``and the appointment and
compensation of the chief executive officer thereof,''.
(c) Joint Management Agreements.--Section 5.17(a)(2)(A) (12 U.S.C.
2252(a)(2)(A)) is amended in the 1st sentence by striking ``or
management agreements''.
(d) Removal of Certain Borrower Reporting Requirements.--Section
1.10(a) (12 U.S.C. 2018(a)) is amended by striking paragraph (5).
(e) Use of Private Mortgage Insurance.--
(1) In general.--Section 1.10(a)(1) (12 U.S.C. 2018(a)(1))
is amended by adding at the end the following:
``(D) Private mortgage insurance.--Loans 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 such 85 percent is covered by the insurance.''.
(2) Conforming amendment.--Section 1.10(a)(1)(A) (12 U.S.C.
2018(a)(1)(A)) is amended by striking ``paragraphs (2) and
(3)'' and inserting ``subparagraphs (C) and (D)''.
(f) Dissemination of Quarterly Reports.--Section 5.17(a)(8) (12
U.S.C. 2252(a)(8)) is amended by inserting ``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''
after ``except that''.
SEC. 13. REMOVAL OF GOVERNMENT CERTIFICATION REQUIREMENT FOR CERTAIN
PRIVATE SECTOR FINANCING.
Section 3.8(b)(1)(A) (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 for''; and
(2) by striking ``loan guarantee, and'' and inserting
``loan guarantee from such agencies (or their successors),
and''.
SEC. 14. REFORM OF REGULATORY LIMITATIONS ON THE DIVIDEND, MEMBER
BUSINESS, AND VOTING PRACTICES OF ELIGIBLE FARMER-OWNED
COOPERATIVES.
(a) In General.--Section 3.8(a) (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 the preceding sentence, continue to be so 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) (12 U.S.C.
2129(b)(1)(D)) is amended by inserting ``, or under the last
sentence,'' after ``(4)''.
SEC. 15. EXTENSION OF INTEREST RATE REDUCTION PROGRAM FOR 5 YEARS.
Section 1320 of the Food Security Act of 1985 (7 U.S.C. 1999 note)
is amended by striking ``1995'' and inserting ``2000''.
Amend the title so as to read: ``A bill to amend the Farm
Credit Act of 1971 to provide regulatory relief, and for other
purposes.''.
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