[Congressional Record Volume 141, Number 204 (Tuesday, December 19, 1995)]
[House]
[Pages H15162-H15166]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            FARM CREDIT SYSTEM REGULATORY RELIEF ACT OF 1995

  Mr. ALLARD. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2029) to amend the Farm Credit Act of 1971 to provide 
regulatory relief, as amended.
  The Clerk read as follows:

                               H.R. 2029

       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.

[[Page H15163]]

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:
     
[[Page H15164]]

       ``(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
     
[[Page H15165]]

       ``(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''.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Colorado [Mr. Allard] will be recognized for 20 minutes, and the 
gentleman from Texas [Mr. de la Garza] will be recognized for 20 
minutes.
  The Chair recognizes the gentleman from Colorado [Mr. Allard].
  Mr. ALLARD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise to support H.R. 2029, the Farm Credit System 
Regulatory Relief Act of 1995. H.R. 2029 provides regulatory relief for 
the Farm Credit System and gives further flexibility for the Farm 
Credit Administration, the regulator of the System. This legislation 
has the bipartisan support of the House Agriculture Committee and was 
reported out of subcommittee and committee on a voice vote. H.R. 2029 
cuts back on paperwork on the System and, according to the FCA, saves 
between $18 and $20 million over the next 5 years by eliminating an 
unnecessary board of directors and eliminating unnecessary regulations. 
I would like to enter into the Record a letter from the FCA outlining 
the savings. The CBO has also scored this and they indicate that 
implementation of H.R. 2029 would not have any pay-go implications.
  This legislation will also provide greater flexibility to the FCA 
should a problem rise at a System bank. It will allow them to review 
management at a trouble bank and make changes in management if 
necessary. It will also allow them to nullify golden parachutes at 
troubled institutions if they are being paid to bank management who are 
responsible for the troubled condition of the bank. None of these 
changes will result in expanded authorities for the System and none of 
these changes will place the safety and soundness of the System at 
risk. These changes only reflect the better financial condition of the 
System in 1995. Thank you, Mr. Speaker.
  Mr. Speaker, I include for the Record the following letter:

                                   Farm Credit Administration,

                                      McLean, VA, August 11, 1995.
     Hon. Pat Roberts,
     Chairman, House Committee on Agriculture, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: Thank you for providing the Farm Credit 
     Administration (FCA) with the opportunity to communicate our 
     support for H.R. 2029, a bill to amend the Farm Credit Act of 
     1971. It was a pleasure for me to testify before Chairman 
     Allard and Members of the Subcommittee on Resource 
     Conservation, Research, and Forestry on this legislation.
       You have asked that FCA provide an estimate of the cost of 
     enacting H.R. 209. After careful review, it has been 
     determined that significant savings could be realized were 
     this bill to be adopted by Congress. Estimated savings of as 
     much as $4 million annually could be achieved under two 
     provisions of H.R. 2029, the 18-month examination schedule 
     extension and retention of the current three member Farm 
     Credit System Insurance Corporation (FCSIC) Board.
     
[[Page H15166]]

       The Agency estimates that adoption of an 18 month 
     examination schedule for many of our institutions, in lieu of 
     the current 12 month examination schedule, could save as much 
     as $2 million annually. This change would further streamline 
     RCA without compromising the safety and soundness of the 
     institutions it regulates.
       If the statutory requirement for establishment of an 
     independent FCSIC Board is repealed, as proposed by H.R. 
     2029, additional costs can be avoided. The implementation of 
     an independent, full time three member Board of Directors 
     would increase FCSIC administrative costs by approximately 
     $2.0 million annually. Under H.R. 2029, FCSIC would continue 
     to benefit from access to FCA professional and administrative 
     resources under the same operating procedures that have been 
     in place since 1990.
       Were H.R. 2029 enacted with the extended examination 
     schedule and the repeal of an independent FCSIC Board, a cost 
     savings of $18 to $20 million could be realized over the next 
     five years.
       Should you have additional questions regarding H.R. 2029, 
     please let me know.
           Sincerely,
                                                    Marsha Martin,
                                                         Chairman.

  Mr. de la GARZA. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mr. de la GARZA asked was given permission to revise and extend his 
remarks.)
  Mr. de la GARZA. Mr. Speaker, I rise in support of H.R. 2029, and a 
statement on behalf of the gentleman from South Dakota [Mr. Johnson] 
will be submitted to appear at the appropriate place in the Record.
  Mr. Speaker, I thank the chairman for moving this bill through the 
Committee on Agriculture in an expeditious manner, and I also would 
like to commend the subcommittee chairman, the gentleman from Colorado 
[Mr. Allard], and the ranking member, the gentleman from South Dakota 
[Mr. Johnson], for their hard work in guiding the regulatory relief 
through their subcommittee.
  Mr. Speaker I rise today in support of H.R. 2029. I would like to 
thank Chairman Roberts for moving this bill through the Committee on 
Agriculture in an expeditious manner. I would also like to commend 
Subcommittee Chairman Allard and the ranking member, Mr. Johnson, for 
their hard work in guiding the regulatory relief bill through their 
subcommittee.
  The bill before the House today reflects the hard work of Members 
from both sides of the aisle. It is the product of a careful review of 
current regulations, and it targets those regulations that have become 
outdated. For example, the legislation removes an outdated 
certification procedure for certain Banks for Cooperatives lending 
activities, without changing eligibility requirements in current law.
  Other changes will give the system more flexibility, and provide 
farmers and ranchers with better loan rates. Section 4 will give the 
Farm Credit Administration more flexibility in carrying out its 
examinations of Farm Credit System institutions. Section 5 of the bill 
authorizes the Insurance Corporation to reduce premiums it receives 
from System banks and to distribute to System Institutions amounts in 
the insurance fund [Fund] that are in excess of the secure base amount. 
Section 10 authorizes associations to jointly form administrative 
service entities, which will reduce operating expenses.
  These changes will result in lower costs to the System and lower 
interest rates for farmers, ranchers, and rural homeowners. I urge my 
colleagues to join me in support of the bill, H.R. 2029, as amended, 
and I look forward to continuing work with Chairman Roberts toward 
enactment of this legislation.
  Mr. JOHNSON of South Dakota. Mr. Speaker, I rise today in support of 
H.R. 2029, the Farm Credit System Regulatory Relief Act of 1995. I was 
pleased to have joined Chairman Allard in the introduction of H.R. 2029 
and to have worked with both he and Chairman Roberts to bring the bill 
to the floor. This legislation would provide flexibility to the 
regulator of the Farm Credit System banks and institutions as well as 
removing some of the rigidity of the Farm Credit Act, which governs the 
activities of the System.
  I am hopeful that our efforts will provide the Farm Credit System 
with the ability to reduce their internal paperwork and bureaucracy, 
and in turn, pass that reduction in costs on to their farm and ranch 
borrowers. As one of the few members of the Agriculture Committee who 
was here in 1987, when we faced a crisis in agricultural credit, I am 
confidant that we have adequate protection and tools in place to ensure 
that the Farm Credit System will be able to weather any downswings in 
the agriculture sector.
  I supported the regulatory relief legislation for the commercial 
banking sector that moved through Congress in the last session and 
hopefully additional legislation that will move yet this year, and I am 
pleased to have been involved in this similar effort for the Farm 
Credit System. I want to assure my colleagues that this bill is not 
about expanded authorities or other contentious issues, but about 
cutting down on unnecessary redtape and ensuring balanced 
competitiveness of the Farm Credit System institutions with commercial 
banks.
  Included in the bill during full committee consideration were several 
provisions which should be of interest to our colleagues, including the 
specific inclusion of Farmer Mac in the section precluding the granting 
of golden parachutes to institutions considered to be troubled. I'm 
also pleased that Chairmen Roberts and Allard included an extension of 
the authority for the interest rate assistance program, so that 
commercial banks and farm credit institutions will have an assurance 
that the program will be available this spring to help farm and ranch 
borrowers receive guaranteed loans. It is also my hope that we will 
have reached a compromise on the issue of Financial Assistance 
Corporation stock purchase that will put the issue to rest.
  As the result of a request during the Resource Conservation 
Subcommittee hearing held on H.R. 2029, we heard from the Farm Credit 
Administration in regard to additional technical changes they would 
like to have changed in their statute. It is my hope that we can 
address these provisions during consideration of the credit title in 
the farm bill in the coming year.
  Thank you, Mr. Speaker, and I urge my colleagues to support this 
legislation for the benefit of their farm and ranch constituents.
  Mr. HEINEMAN. Mr. Speaker, I rise today in support of H.R. 2029, the 
Farm Credit System Regulatory Relief Act of 1995. H.R. 2029 eases 
unnecessary regulatory requirements on the Farm Credit System. These 
burdensome regulatory costs have increased the amount that farmers pay 
for credit.
  Currently, regulators are required to review lenders yearly. Yearly 
review is overly burdensome and costly on the Farm Credit System. Those 
higher costs are then passed on to our Nation's farmers. H.R. 2029 
would allow regulators to review lenders every 18 months and reduces a 
number of other regulatory burdens on the Farm Credit System that have 
become outdated.
  This legislation will give the Farm Credit System and farmers some 
much needed relief. The Farm Credit Administration has estimated that 
this legislation will save an estimated $18 million to $20 million 
dollars over the next 5 years.
  Farm credit institutions are very important to North Carolina's 
farmers. H.R. 2029 will give farm credits more flexibility to provide 
farmers with better service and loan rates. I urge my colleagues to 
support our Nation's farmers, vote for H.R. 2029.

                              {time}  1815

  Mr. de la GARZA. Mr. Speaker, I yield back the balance of my time.
  Mr. ALLARD. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Hastings of Washington). The question is 
on the motion offered by the gentleman from Colorado [Mr. Allard] that 
the House suspend the rules and pass the bill, H.R. 2029, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  The title of the bill was amended so as to read: ``A bill to amend 
the Farm Credit Act of 1971 to provide regulatory relief, and for other 
purposes.''.
  A motion to reconsider was laid on the table.

                          ____________________