[Congressional Record Volume 141, Number 113 (Thursday, July 13, 1995)]
[Extensions of Remarks]
[Page E1429]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E 1429]]


  INTRODUCTION OF THE FARM CREDIT SYSTEM REGULATORY RELIEF ACT OF 1995

                                 ______


                           HON. WAYNE ALLARD

                              of colorado

                    in the house of representatives

                        Thursday, July 13, 1995
  Mr. ALLARD. Mr. Speaker, I am joined today by the gentleman from 
South Dakota [Mr. Johnson] in introducing a bill to provide regulatory 
relief to institutions of the Farm Credit System, the cooperative 
lender to America's farmers, ranchers, and member-owned service and 
supply cooperatives.
  I should point out that the Farm Credit Administration [FCA], the 
System's regulator, has acted diligently in reducing, as safety and 
soundness considerations allow, the regulatory and cost burdens on 
System institutions. This legislation in no way reflects on FCA's 
ability or willingness to carry out the Farm Credit Act efficiently 
with an eye on the costs and benefits of its regulatory program.
  Since assuming the chairmanship of the conservation subcommittee, I 
have made it a priority to reduce wherever possible the regulatory 
burden on farmers and ranchers. While the subcommittee, as well as the 
full Committee on Agriculture, has been looking more at the burdens of 
environmental regulations, we also must examine, within the full range 
of our legislative responsibilities, the provision of credit services 
to agricultural producers.
  This bill requires FCA to continue its comprehensive review of 
regulations in order to identify and eliminate, consistent with safety 
and soundness, all regulations that are unnecessary, unduly burdensome 
or costly, or not based on statute.
  The bill contains 14 sections, including the bill title and a section 
of findings and regulatory review requirements.
  Section 4 amends the act to provide for institution examinations, 
except for Federal land bank associations, at least every 18 months. 
Current law requires examinations at least once a year, which is unduly 
burdensome. Under the amendment, FCA retains authority to examine 
institutions more frequently than 18 months should that be necessary.
  Section 5 deals with the operations of the Farm Credit System 
Insurance Corporation [FCSIC]. The section authorizes FCSIC to allocate 
to System banks excess earnings of the insurance fund. Current law 
requires FCSIC to assess premiums until such time as the aggregate 
amount in the insurance fund equals the secure base amount. That number 
is equal to 2 percent of the insured liabilities of System institutions 
or such other amount FCSIC determines is actuarially sound. FCSIC 
assumes the secure base amount to be reached in early 1997, but current 
law provides no authority to deal with interest earnings once the 
secure base amount is attained.
  This section provides for the rebate of excess interest earnings as 
well as authorizing the reduction of insurance premiums as the 
insurance fund approaches the secure base amount.
  Section 6 of the legislation requires FCSIC to use the least costly 
approach should a System institution need assistance instead of the 
current requirement that any assistance provided must be less costly 
than liquidation.
  Section 7 repeals provisions of the 1992 Safety and Soundness Act 
that require a new, full-time board to govern FCSIC. This is an 
unnecessary and costly requirement. The amendment would retain the 
status quo with the FCA board, a full-time, presidentially appointed 
panel, responsible for insurance fund activities.
  Section 8 authorizes FCSIC to act as either a conservator or 
receiver.
  Section 9 empowers FCSIC to prohibit or limit any golden parachute or 
indemnification payment by a System institution in troubled condition. 
This legislative language conforms to similar provisions contained in 
the Federal Deposit Insurance Act.
  Section 10 extends authorizations currently enjoyed by System banks 
to other System institutions. These authorities would provide for the 
formation of administrative service entities but does not extend to the 
offer or sale of credit or insurance services to System institution 
borrowers.
  Section 11 removes borrower stock requirements for any loan 
originated for sale into the secondary market. Current law requires 
System institution borrowers to purchase and maintain stock or 
participation certificates in the institution which originated a loan 
even though the loan was intended to be sold into the secondary market.
  Section 12 removes or changes paperwork requirements currently in 
place, including disclosure requirements, compensation of certain 
System institutions' personnel and procedures for the approval of joint 
management agreements, as well as allowing for a borrower to finance 
more than 85 percent of the value of real estate if the borrower 
obtains private mortgage insurance.
  Section 13 removes the certification requirement by the Rural 
Utilities Service [RUS] administrator for the private sector financing 
of loans or loan guarantees to borrowers who otherwise would be 
eligible to borrow from the RUS.
  Finally, Section 14 provides the flexibility for evolving cooperative 
structures, including dealing with such issues as dividend, member 
business and voting practices. Current law requires rigid procedures to 
maintain borrowing eligibility from a System bank for cooperatives. The 
language would allow coops to adapt their operations, with the 
continued traditional farm relationships, so they may continue as a 
borrower of banks for cooperatives.
  Mr. Speaker, the cooperative Farm Credit System has made great 
strides since the 1987 Agricultural Credit Act brought the System back 
to its feet. Institutions have provided for the repayment of the 
assistance received from the 1987 act. System institutions have 
consolidated and reformed their operations much as the 1987 act 
contemplated. The System is to be congratulated for these improvements 
and their diligence in fulfilling the agreements they made with the 
Congress and each other. FCA has provided sound and efficient 
regulation; FCSIC will assure the System continues to move forward into 
the next century. This bill will assist the System institutions in 
moving forward, and I would hope the House could adopt this bill at its 
earliest opportunity. Thank you, Mr. Speaker.


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