[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1011 Introduced in Senate (IS)]

  1st Session
                                S. 1011

 To help reduce the cost of credit to farmers by providing relief from 
   antiquated and unnecessary regulatory burdens for the Farm Credit 
                    System, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                June 30 (legislative day, June 19), 1995

     Mr. Craig (for himself, Mr. Heflin, Mr. Lugar, and Mr. Leahy) 
introduced the following bill; which was read twice and referred to the 
           Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL


 
 To help reduce the cost of credit to farmers by providing relief from 
   antiquated and unnecessary regulatory burdens for the Farm Credit 
                    System, and for other purposes.
    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 for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. References to the Farm Credit Act of 1971.
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. Conservatorships and receiverships.
Sec. 9. Examinations by the Farm Credit System Insurance Corporation.
Sec. 10. Oversight and regulatory actions by the Farm Credit System 
                            Insurance Corporation.
Sec. 11. Formation of administrative service entities.
Sec. 12. Requirements for loans sold into the secondary market.
Sec. 13. Removal of antiquated and unnecessary paperwork requirements.
Sec. 14. Removal of government certification requirement for certain 
                            private sector financings.
Sec. 15. Reform of regulatory limitations on dividend, members 
                            business, and voting practices of eligible 
                            farmer-owned cooperatives.
SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.

    Whenever 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 (12 U.S.C. 2001 et seq.), 
except to the extent otherwise provided.

SEC. 3. 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 its comprehensive review of regulations 
governing the Farm Credit System to identify and eliminate, consistent 
with statute, 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 in the first 
sentence by striking ``each year'' and inserting ``during each 18-month 
period''.

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'' 
                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 that 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) (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) (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) Allocated Insurance Reserves.--Section 5.55 (12 U.S.C. 2277a-4) 
is amended by adding at the end the following:
    ``(e) Allocated Insurance Reserves.--
            ``(1) Amounts allocated annually.--If at the end of the 
        preceding calendar year the aggregate of amounts in the Farm 
        Credit Insurance Fund exceeded the average secure base amount 
        for the preceding calendar year, as calculated on an average 
        daily balance basis, the Corporation shall allocate to the 
        insured System banks' Allocated Insurance Reserves Accounts 
        within the Farm Credit Insurance Fund, as provided in paragraph 
        (2), additional reserves equal to the amount by which the 
        amount in the Farm Credit Insurance Fund, as of the preceding 
        December 31, exceeded the average secure base amount for the 
        preceding calendar year, less the amount that the Corporation, 
        in the sole discretion of the Corporation, determines to be its 
        estimated expenses (including estimated insurance obligations) 
        for the present calendar year. For purposes of such 
        allocations, an Allocated Insurance Reserves Account shall be 
        established within the Farm Credit Insurance Fund for each 
        insured System bank.
            ``(2) Allocations to banks.--The additional reserves for 
        any calendar year shall be allocated among insured System banks 
        so that each bank's Allocated Insurance Reserves Account 
        receives an amount that bears the same proportion to the total 
        amount to be allocated for the year that the average principal 
        outstanding for the past 3 calendar years on loans made by the 
        bank that are in accrual status bears to the average principal 
        outstanding for the past 3 calendar years 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)).
            ``(3) Use of funds in allocated insurance reserves 
        accounts.--Amounts in the Allocated Insurance Reserves Accounts 
        shall continue to be part of the Farm Credit Insurance Fund. 
        When the Corporation expends amounts from the Farm Credit 
        Insurance Fund other than for annual operating expenses (and 
        insurance obligations estimated in paragraph (1)), amounts in 
        the Allocated Insurance Reserves Accounts shall be used for 
        such expenditures before other moneys in the Fund are used, and 
        each insured System bank's Allocated Insurance Reserves Account 
        shall be reduced by an amount equal to the share of the total 
        amount used from the Allocated Insurance Reserves Accounts that 
        is proportionate to the bank's share of the total amounts in 
        the Allocated Insurance Reserves Accounts.
            ``(4) Further disposition of amounts in accounts.--
                    ``(A) In general.--As soon as practicable during 
                each calendar year beginning more than 5 years after 
                the date on which the aggregate of amounts in the Farm 
                Credit Insurance Fund exceeds the secure base amount, 
                the Corporation shall pay to each insured System bank, 
                in a manner determined by the Corporation, 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.
                    ``(B) Elimination or reduction of payments.--The 
                Corporation may eliminate or reduce payments under 
                subparagraph (A) if the Corporation determines, in the 
                sole discretion of the Corporation, 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 the calendar year 
                to be less than the secure base amount.''.
    (c) Technical Amendments.--Section 5.55(d) (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'' and inserting ``insured System bank''.

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)) 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 the 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 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 
                                banks; 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) (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  pow- ers.--'' 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) is repealed.

SEC. 8. CONSERVATORSHIPS AND RECEIVERSHIPS.

    (a) Definitions.--Section 5.51 (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(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.''.

SEC. 9. EXAMINATIONS BY THE FARM CREDIT SYSTEM INSURANCE CORPORATION.

    Section 5.59(b)(1)(A) (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 exclusive authority to examine the System 
institution in receivership. An examination shall be performed at such 
intervals as the Corporation shall determine.''.

SEC. 10. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT SYSTEM 
              INSURANCE CORPORATION.

    The Act is amended by inserting after section 5.61 the following 
new sections:

``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 
any insured obligations that are 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 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 in 
                that subparagraph; 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 deferred 
                        compensation plan, a supplemental executive 
                        retirement 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 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), which may 
include such factors as the following:
            ``(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.
            ``(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 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 shall be 
construed--
            ``(1) as prohibiting 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) as limiting the powers, functions, or 
        responsibilities of the Farm Credit Administration.''.

SEC. 11. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.

    Part E of title IV (12 U.S.C. 2211 et seq.) 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. 12. 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.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, but subject to paragraph (2) 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 1-year 
                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 1-year 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.''.
    (b) Borrowers' Rights.--
            (1) Definition of loan.--Section 4.14A(a)(5) (12 U.S.C. 
        2202a(a)(5)) is amended--
                    (A) by striking ``(5) Loan.--The'' and inserting 
                the following:
            ``(5) Loan.--
                    ``(A) In general.--Subject to subparagraph (B), 
                the''; and
                    (B) 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 1-year 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 
                                1-year period described in subclause 
                                (I), subclause (I) shall not apply with 
                                respect to the loan beginning on the 
                                date of the sale.''.
            (2) Borrowers' rights for pooled loans.--The first sentence 
        of section 8.9(b) (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. 13. REMOVAL OF ANTIQUATED AND UNNECESSARY PAPERWORK REQUIREMENTS.

    (a) 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,''.
    (b) 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.--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.''.
            (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 (B), (C), and (D)''.
    (c) Removal of Certain Borrower Reporting Requirement.--Section 
1.10(a) (12 U.S.C. 2018(a)) is amended by striking paragraph (5).
    (d) Disclosure Relating to Adjustable Rate Loans.--Section 
4.13(a)(4) (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''.
    (e) Joint Management Agreements.--The first sentence of section 
5.17(a)(2)(A) (12 U.S.C. 2252(a)(2)(A)) is amended by striking ``or 
management agreements''.
    (f) Dissemination of Quarterly Reports.--Section 5.17(a)(8) (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. 14. REMOVAL OF FEDERAL GOVERNMENT CERTIFICATION REQUIREMENT FOR 
              CERTAIN PRIVATE SECTOR FINANCINGS.

    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 (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. 15. REFORM OF REGULATORY LIMITATIONS ON 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 paragraphs (1), (2), (3), and (4) continue to be 
eligible 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 striking ``and (4) of subsection'' and 
inserting ``and (4), or under the last sentence, of subsection''.
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