[Congressional Record Volume 142, Number 1 (Wednesday, January 3, 1996)]
[House]
[Pages H33-H48]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 FARM CREDIT SYSTEM REFORM ACT OF 1996

  Mr. EMERSON. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the bill (H.R. 2029) to amend the Farm Credit Act of 
1971 to provide regulatory relief, and for other purposes, with Senate 
amendments thereto, and concur in the Senate amendment to the title of 
the bill and concur in the Senate amendment to the text of the bill 
with an amendment.
  The SPEAKER pro tempore. Is this a unanimous-consent request that has 
been cleared?
  Mr. EMERSON. Mr. Speaker, this is a unanimous-consent request that 
has been cleared by both leaders and by the committee chairmen and 
ranking member on each side.

[[Page H34]]

  The SPEAKER pro tempore. The Clerk will report the title of the bill 
and the proposed amendments.
  The Clerk read the title of the bill.
  The Clerk read the Senate amendments and the House amendment to the 
Senate amendments as follows:
       Senate Amendments:
       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Farm 
     Credit System Reform Act of 1996''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

            TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET

Sec. 101. Definition of real estate.
Sec. 102. Definition of certified facility.
Sec. 103. Duties of Federal Agricultural Mortgage Corporation.
Sec. 104. Powers of the Corporation.
Sec. 105. Federal reserve banks as depositaries and fiscal agents.
Sec. 106. Certification of agricultural mortgage marketing facilities.
Sec. 107. Guarantee of qualified loans.
Sec. 108. Mandatory reserves and subordinated participation interests 
              eliminated.
Sec. 109. Standards requiring diversified pools.
Sec. 110. Small farms.
Sec. 111. Definition of an affiliate.
Sec. 112. State usury laws superseded.
Sec. 113. Extension of capital transition period.
Sec. 114. Minimum capital level.
Sec. 115. Critical capital level.
Sec. 116. Enforcement levels.
Sec. 117. Recapitalization of the Corporation.
Sec. 118. Liquidation of the Federal Agricultural Mortgage Corporation.

                      TITLE II--REGULATORY RELIEF

Sec. 201. Compensation of association personnel.
Sec. 202. Use of private mortgage insurance.
Sec. 203. Removal of certain borrower reporting requirement.
Sec. 204. Reform of regulatory limitations on dividend, member 
              business, and voting practices of eligible farmer-owned 
              cooperatives.
Sec. 205. Removal of Federal Government certification requirement for 
              certain private sector financings.
Sec. 206. Borrower stock.
Sec. 207. Disclosure relating to adjustable rate loans.
Sec. 208. Borrowers' rights.
Sec. 209. Formation of administrative service entities.
Sec. 210. Joint management agreements.
Sec. 211. Dissemination of quarterly reports.
Sec. 212. Regulatory review.
Sec. 213. Examination of farm credit system institutions.
Sec. 214. Conservatorships and receiverships.
Sec. 215. Farm Credit Insurance Fund operations.
Sec. 216. Examinations by the Farm Credit System Insurance Corporation.
Sec. 217. Powers with respect to troubled insured system banks.
Sec. 218. Oversight and regulatory actions by the Farm Credit System 
              Insurance Corporation.
Sec. 219. Farm Credit System Insurance Corporation Board of Directors.
Sec. 220. Interest rate reduction program.
Sec. 221. Liability for making criminal referrals.

     TITLE III--NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION

Sec. 301. Short title.
Sec. 302. Definitions.
Sec. 303. National Natural Resources Conservation Foundation.
Sec. 304. Composition and operation.
Sec. 305. Officers and employees.
Sec. 306. Corporate powers and obligations of the Foundation.
Sec. 307. Administrative services and support.
Sec. 308. Audits and petition of Attorney General for equitable relief.
Sec. 309. Release from liability.
Sec. 310. Authorization of appropriations.

              TITLE IV--IMPLEMENTATION AND EFFECTIVE DATE

Sec. 401. Implementation.
Sec. 302. Effective Date.
            TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET

     SEC. 101. DEFINITION OF REAL ESTATE.

       Section 8.0(1)(B)(ii) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(1)(B)(ii)) is amended by striking ``with a 
     purchase price'' and inserting ``, excluding the land to 
     which the dwelling is affixed, with a value''.

     SEC. 102. DEFINITION OF CERTIFIED FACILITY.

       Section 8.0(3) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa(3)) is amended--
       (1) in subparagraph (A), by striking ``a secondary 
     marketing agricultural loan'' and inserting ``an agricultural 
     mortgage marketing''; and
       (2) in subparagraph (B), by striking ``, but only'' and all 
     that follows through ``(9)(B)''.

     SEC. 103. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE 
                   CORPORATION.

       Section 8.1(b) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-1(b)) is amended--
       (1) in paragraph (2), by striking ``and'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(4) purchase qualified loans and issue securities 
     representing interests in, or obligations backed by, the 
     qualified loans, guaranteed for the timely repayment of 
     principal and interest.''.

     SEC. 104. POWERS OF THE CORPORATION.

       Section 8.3(c) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-3(c)) is amended--
       (1) by redesignating paragraphs (13) and (14) as paragraphs 
     (14) and (15), respectively; and
       (2) by inserting after paragraph (12) the following:
       ``(13) To purchase, hold, sell, or assign a qualified loan, 
     to issue a guaranteed security, representing an interest in, 
     or an obligation backed by, the qualified loan, and to 
     perform all the functions and responsibilities of an 
     agricultural mortgage marketing facility operating as a 
     certified facility under this title.''.

     SEC. 105. FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL 
                   AGENTS.

       Section 8.3 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-3) is amended--
       (1) in subsection (d), by striking ``may act as 
     depositories for, or'' and inserting ``shall act as 
     depositories for, and''; and
       (2) in subsection (e), by striking ``Secretary of the 
     Treasury may authorize the Corporation to use'' and inserting 
     ``Corporation shall have access to''.

     SEC. 106. CERTIFICATION OF AGRICULTURAL MORTGAGE MARKETING 
                   FACILITIES.

       Section 8.5 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-5) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by inserting ``(other than the 
     Corporation)'' after ``agricultural mortgage marketing 
     facilities''; and
       (B) in paragraph (2), by inserting ``(other than the 
     Corporation)'' after ``agricultural mortgage marketing 
     facility''; and
       (2) in subsection (e)(1), by striking ``(other than the 
     Corporation)''.

     SEC. 107. GUARANTEE OF QUALIFIED LOANS.

       Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-6) is amended--
       (1) in subsection (a)(1)--
       (A) by striking ``Corporation shall guarantee'' and 
     inserting the following: ``Corporation--
       ``(A) shall guarantee'';
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(B) may issue a security, guaranteed as to the timely 
     payment of principal and interest, that represents an 
     interest solely in, or an obligation fully backed by, a pool 
     consisting of qualified loans that--
       ``(i) meet the standards established under section 8.8; and
       ``(ii) have been purchased and held by the Corporation.'';
       (2) in subsection (d)--
       (A) by striking paragraph (4); and
       (B) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively; and
       (3) in subsection (g)(2), by striking ``section 
     8.0(9)(B))'' and inserting ``section 8.0(9))''.

     SEC. 108. MANDATORY RESERVES AND SUBORDINATED PARTICIPATION 
                   INTERESTS ELIMINATED.

       (a) Guarantee of Qualified Loans.--Section 8.6 of the Farm 
     Credit Act of 1971 (12 U.S.C. 2279aa-6) is amended by 
     striking subsection (b).
       (b) Reserves and Subordinated Participation Interests.--
     Section 8.7 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-
     7) is repealed.
       (c) Conforming Amendments.--
       (1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(9)(B)(i)) is amended by striking ``8.7, 8.8,'' 
     and inserting ``8.8''.
       (2) Section 8.6(a)(2) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-6(a)(2)) is amended by striking ``subject to 
     the provisions of subsection (b)''.

     SEC. 109. STANDARDS REQUIRING DIVERSIFIED POOLS.

       (a) In General.--Section 8.6 of the Farm Credit Act of 1971 
     (12 U.S.C. 2279aa-6) (as amended by section 108) is amended--
       (1) by striking subsection (c); and
       (2) by redesignating subsections (d) through (g) as 
     subsections (b) through (e), respectively.
       (b) Conforming Amendments.--
       (1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(9)(B)(i)) is amended by striking ``(f)'' and 
     inserting ``(d)''.
       (2) Section 8.13(a) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-13(a)) is amended by striking ``sections 8.6(b) 
     and'' in each place it appears and inserting ``section''.
       (3) Section 8.32(b)(1)(C) of the Farm Credit Act of 1971 
     (12 U.S.C. 2279bb-1(b)(1)(C)) is amended by striking ``under 
     section 8.6(b)(2)''.
       (4) Section 8.6(b) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-6(b)) (as redesignated by subsection (a)(2)) is 
     amended--
       (A) by striking paragraph (4) (as redesignated by section 
     107(2)(B)); and
       (B) by redesignating paragraphs (5) and (6) (as 
     redesignated by section 107(2)(B)) as paragraphs (4) and (5), 
     respectively.

     SEC. 110. SMALL FARMS.

       Section 8.8(e) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-8(e)) is amended by adding at the end the following: 
     ``The Board shall promote and encourage the inclusion of 
     qualified loans for small farms and family farmers in the 
     agricultural mortgage secondary market.''.

     SEC. 111. DEFINITION OF AN AFFILIATE.

       Section 8.11(e) of the Farm Credit Act of 1971 (21 U.S.C. 
     2279aa-11(e)) is amended--
       (1) by striking ``a certified facility or''; and
       (2) by striking ``paragraphs (3) and (7), respectively, of 
     section 8.0'' and inserting ``section 8.0(7)''.

     SEC. 112. STATE USURY LAWS SUPERSEDED.

       Section 8.12 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-12) is amended by striking subsection (d) and 
     inserting the following:
       ``(d) State Usury Laws Superseded.--A provision of the 
     Constitution or law of any State shall not apply to an 
     agricultural loan made by 

[[Page H35]]
     an originator or a certified facility in accordance with this title for 
     sale to the Corporation or to a certified facility for 
     inclusion in a pool for which the Corporation has provided, 
     or has committed to provide, a guarantee, if the loan, not 
     later than 180 days after the date the loan was made, is sold 
     to the Corporation or included in a pool for which the 
     Corporation has provided a guarantee, if the provision--
       ``(1) limits the rate or amount of interest, discount 
     points, finance charges, or other charges that may be 
     charged, taken, received, or reserved by an agricultural 
     lender or a certified facility; or
       ``(2) limits or prohibits a prepayment penalty (either 
     fixed or declining), yield maintenance, or make-whole payment 
     that may be charged, taken, or received by an agricultural 
     lender or a certified facility in connection with the full or 
     partial payment of the principal amount due on a loan by a 
     borrower in advance of the scheduled date for the payment 
     under the terms of the loan, otherwise known as a prepayment 
     of the loan principal.''.

     SEC. 113. EXTENSION OF CAPITAL TRANSITION PERIOD.

       Section 8.32 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-1) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``Not later than the expiration of the 2-year period 
     beginning on December 13, 1991,'' and inserting ``Not sooner 
     than the expiration of the 3-year period beginning on the 
     date of enactment of the Farm Credit System Reform Act of 
     1996,'';
       (2) in the first sentence of subsection (b)(2), by striking 
     ``5-year'' and inserting ``8-year''; and
       (3) in subsection (d)--
       (A) in the first sentence--
       (i) by striking ``The regulations establishing'' and 
     inserting the following:
       ``(1) In general.--The regulations establishing''; and
       (ii) by striking ``shall contain'' and inserting the 
     following: ``shall--
       ``(A) be issued by the Director for public comment in the 
     form of a notice of proposed rulemaking, to be first 
     published after the expiration of the period referred to in 
     subsection (a); and
       ``(B) contain''; and
       (B) in the second sentence, by striking ``The regulations 
     shall'' and inserting the following:
       ``(2) Specificity.--The regulations referred to in 
     paragraph (1) shall''.

     SEC. 114. MINIMUM CAPITAL LEVEL.

       Section 8.33 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-2) is amended to read as follows:

     ``SEC. 8.33. MINIMUM CAPITAL LEVEL.

       ``(a) In General.--Except as provided in subsection (b), 
     for purposes of this subtitle, the minimum capital level for 
     the Corporation shall be an amount of core capital equal to 
     the sum of--
       ``(1) 2.75 percent of the aggregate on-balance sheet assets 
     of the Corporation, as determined in accordance with 
     generally accepted accounting principles; and
       ``(2) 0.75 percent of the aggregate off-balance sheet 
     obligations of the Corporation, which, for the purposes of 
     this subtitle, shall include--
       ``(A) the unpaid principal balance of outstanding 
     securities that are guaranteed by the Corporation and backed 
     by pools of qualified loans;
       ``(B) instruments that are issued or guaranteed by the 
     Corporation and are substantially equivalent to instruments 
     described in subparagraph (A); and
       ``(C) other off-balance sheet obligations of the 
     Corporation.
       ``(b) Transition Period.--
       ``(1) In general.--For purposes of this subtitle, the 
     minimum capital level for the Corporation--
       ``(A) prior to January 1, 1997, shall be the amount of core 
     capital equal to the sum of--
       ``(i) 0.45 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(ii) 0.45 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(iii) 2.50 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2);
       ``(B) during the 1-year period ending December 31, 1997, 
     shall be the amount of core capital equal to the sum of--
       ``(i) 0.55 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(ii) 1.20 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(iii) 2.55 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2);
       ``(C) during the 1-year period ending December 31, 1998, 
     shall be the amount of core capital equal to--
       ``(i) if the Corporation's core capital is not less than 
     $25,000,000 on January 1, 1998, the sum of--

       ``(I) 0.65 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(II) 1.95 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(III) 2.65 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2); 
     or

       ``(ii) if the Corporation's core capital is less than 
     $25,000,000 on January 1, 1998, the amount determined under 
     subsection (a); and
       ``(D) on and after January 1, 1999, shall be the amount 
     determined under subsection (a).
       ``(2) Designated on-balance sheet assets.--For purposes of 
     this subsection, the designated on-balance sheet assets of 
     the Corporation shall be--
       ``(A) the aggregate on-balance sheet assets of the 
     Corporation acquired under section 8.6(e); and
       ``(B) the aggregate amount of qualified loans purchased and 
     held by the Corporation under section 8.3(c)(13).''.

     SEC. 115. CRITICAL CAPITAL LEVEL.

       Section 8.34 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-3) is amended to read as follows:

     ``SEC. 8.34. CRITICAL CAPITAL LEVEL.

       ``For purposes of this subtitle, the critical capital level 
     for the Corporation shall be an amount of core capital equal 
     to 50 percent of the total minimum capital amount determined 
     under section 8.33.''.

     SEC. 116. ENFORCEMENT LEVELS.

       Section 8.35(e) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-4(e)) is amended by striking ``during the 30-month 
     period beginning on the date of enactment of this section,'' 
     and inserting ``during the period beginning on December 13, 
     1991, and ending on the effective date of the risk based 
     capital regulation issued by the Director under section 
     8.32,''.

     SEC. 117. RECAPITALIZATION OF THE CORPORATION.

       Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa 
     et seq.) is amended by adding at the end the following:

     ``SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.

       ``(a) Mandatory Recapitalization.--The Corporation shall 
     increase the core capital of the Corporation to an amount 
     equal to or greater than $25,000,000, not later than the 
     earlier of--
       ``(1) the date that is 2 years after the date of enactment 
     of this section; or
       ``(2) the date that is 180 days after the end of the first 
     calendar quarter that the aggregate on-balance sheet assets 
     of the Corporation, plus the outstanding principal of the 
     off-balance sheet obligations of the Corporation, equal or 
     exceed $2,000,000,000.
       ``(b) Raising Core Capital.--In carrying out this section, 
     the Corporation may issue stock under section 8.4 and 
     otherwise employ any recognized and legitimate means of 
     raising core capital in the power of the Corporation under 
     section 8.3.
       ``(c) Limitation on Growth of Total Assets.--During the 2-
     year period beginning on the date of enactment of this 
     section, the aggregate on-balance sheet assets of the 
     Corporation plus the outstanding principal of the off-balance 
     sheet obligations of the Corporation may not exceed 
     $3,000,000,000 if the core capital of the Corporation is less 
     than $25,000,000.
       ``(d) Enforcement.--If the Corporation fails to carry out 
     subsection (a) by the date required under paragraph (1) or 
     (2) of subsection (a), the Corporation may not purchase a new 
     qualified loan or issue or guarantee a new loan-backed 
     security until the core capital of the Corporation is 
     increased to an amount equal to or greater than 
     $25,000,000.''.

     SEC. 118. LIQUIDATION OF THE FEDERAL AGRICULTURAL MORTGAGE 
                   CORPORATION.

       Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa 
     et seq.) (as amended by section 117) is amended by adding at 
     the end the following:
  ``Subtitle C--Receivership, Conservatorship, and Liquidation of the 
               Federal Agricultural Mortgage Corporation

     ``SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVERSHIP.

       ``(a) Voluntary Liquidation.--The Corporation may 
     voluntarily liquidate only with the consent of, and in 
     accordance with a plan of liquidation approved by, the Farm 
     Credit Administration Board.
       ``(b) Involuntary Liquidation.--
       ``(1) In general.--The Farm Credit Administration Board may 
     appoint a conservator or receiver for the Corporation under 
     the circumstances specified in section 4.12(b).
       ``(2) Application.--In applying section 4.12(b) to the 
     Corporation under paragraph (1)--
       ``(A) the Corporation shall also be considered insolvent if 
     the Corporation is unable to pay its debts as they fall due 
     in the ordinary course of business;
       ``(B) a conservator may also be appointed for the 
     Corporation if the authority of the Corporation to purchase 
     qualified loans or issue or guarantee loan-backed securities 
     is suspended; and
       ``(C) a receiver may also be appointed for the Corporation 
     if--
       ``(i)(I) the authority of the Corporation to purchase 
     qualified loans or issue or guarantee loan-backed securities 
     is suspended; or
       ``(II) the Corporation is classified under section 8.35 as 
     within level III or IV and the alternative actions available 
     under subtitle B are not satisfactory; and
       ``(ii) the Farm Credit Administration determines that the 
     appointment of a conservator would not be appropriate.
       ``(3) No effect on supervisory actions.--The grounds for 
     appointment of a conservator for the Corporation under this 
     subsection shall be in addition to those in section 8.37.
       ``(c) Appointment of Conservator or Receiver.--
       ``(1) Qualifications.--Notwithstanding section 4.12(b), if 
     a conservator or receiver is appointed for the Corporation, 
     the conservator or receiver shall be--
       ``(A) the Farm Credit Administration or any other 
     governmental entity or employee, including the Farm Credit 
     System Insurance Corporation; or
       ``(B) any person that--
       ``(i) has no claim against, or financial interest in, the 
     Corporation or other basis for a conflict of interest as the 
     conservator or receiver; and
       ``(ii) has the financial and management expertise necessary 
     to direct the operations and affairs of the Corporation and, 
     if necessary, to liquidate the Corporation.
       ``(2) Compensation.--
     
[[Page H36]]

       ``(A) In general.--A conservator or receiver for the 
     Corporation and professional personnel (other than a Federal 
     employee) employed to represent or assist the conservator or 
     receiver may be compensated for activities conducted as, or 
     for, a conservator or receiver.
       ``(B) Limit on compensation.--Compensation may not be 
     provided in amounts greater than the compensation paid to 
     employees of the Federal Government for similar services, 
     except that the Farm Credit Administration may provide for 
     compensation at higher rates that are not in excess of rates 
     prevailing in the private sector if the Farm Credit 
     Administration determines that compensation at higher rates 
     is necessary in order to recruit and retain competent 
     personnel.
       ``(C) Contractual arrangements.--The conservator or 
     receiver may contract with any governmental entity, including 
     the Farm Credit System Insurance Corporation, to make 
     personnel, services, and facilities of the entity available 
     to the conservator or receiver on such terms and compensation 
     arrangements as shall be mutually agreed, and each entity may 
     provide the same to the conservator or receiver.
       ``(3) Expenses.--A valid claim for expenses of the 
     conservatorship or receivership (including compensation under 
     paragraph (2)) and a valid claim with respect to a loan made 
     under subsection (f) shall--
       ``(A) be paid by the conservator or receiver from funds of 
     the Corporation before any other valid claim against the 
     Corporation; and
       ``(B) may be secured by a lien, on such property of the 
     Corporation as the conservator or receiver may determine, 
     that shall have priority over any other lien.
       ``(4) Liability.--If the conservator or receiver for the 
     Corporation is not a Federal entity, or an officer or 
     employee of the Federal Government, the conservator or 
     receiver shall not be personally liable for damages in tort 
     or otherwise for an act or omission performed pursuant to and 
     in the course of the conservatorship or receivership, unless 
     the act or omission constitutes gross negligence or any form 
     of intentional tortious conduct or criminal conduct.
       ``(5) Indemnification.--The Farm Credit Administration may 
     allow indemnification of the conservator or receiver from the 
     assets of the conservatorship or receivership on such terms 
     as the Farm Credit Administration considers appropriate.
       ``(d) Judicial Review of Appointment.--
       ``(1) In general.--Notwithstanding subsection (i)(1), not 
     later than 30 days after a conservator or receiver is 
     appointed under subsection (b), the Corporation may bring an 
     action in the United States District Court for the District 
     of Columbia for an order requiring the Farm Credit 
     Administration Board to remove the conservator or receiver. 
     The court shall, on the merits, dismiss the action or direct 
     the Farm Credit Administration Board to remove the 
     conservator or receiver.
       ``(2) Stay of other actions.--On the commencement of an 
     action under paragraph (1), any court having jurisdiction of 
     any other action or enforcement proceeding authorized under 
     this subtitle to which the Corporation is a party shall stay 
     the action or proceeding during the pendency of the action 
     for removal of the conservator or receiver.
       ``(e) General Powers of Conservator or Receiver.--The 
     conservator or receiver for the Corporation shall have powers 
     comparable to the powers available to a conservator or 
     receiver appointed pursuant to section 4.12(b).
       ``(f) Borrowings for Working Capital.--
       ``(1) In general.--If the conservator or receiver of the 
     Corporation determines that it is likely that there will be 
     insufficient funds to pay the ongoing administrative expenses 
     of the conservatorship or receivership or that there will be 
     insufficient liquidity to fund maturing obligations of the 
     conservatorship or receivership, the conservator or receiver 
     may borrow funds in such amounts, from such sources, and at 
     such rates of interest as the conservator or receiver 
     considers necessary or appropriate to meet the administrative 
     expenses or liquidity needs of the conservatorship or 
     receivership.
       ``(2) Working capital from farm credit banks.--A Farm 
     Credit bank may loan funds to the conservator or receiver for 
     a loan authorized under paragraph (1) or, in the event of 
     receivership, a Farm Credit bank may purchase assets of the 
     Corporation.
       ``(g) Agreements Against Interests of Conservator or 
     Receiver.--No agreement that tends to diminish or defeat the 
     right, title, or interest of the conservator or receiver for 
     the Corporation in any asset acquired by the conservator or 
     receiver as conservator or receiver for the Corporation shall 
     be valid against the conservator or receiver unless the 
     agreement--
       ``(1) is in writing;
       ``(2) is executed by the Corporation and any person 
     claiming an adverse interest under the agreement, including 
     the obligor, contemporaneously with the acquisition of the 
     asset by the Corporation;
       ``(3) is approved by the Board or an appropriate committee 
     of the Board, which approval shall be reflected in the 
     minutes of the Board or committee; and
       ``(4) has been, continuously, from the time of the 
     agreement's execution, an official record of the Corporation.
       ``(h) Report to the Congress.--On a determination by the 
     receiver for the Corporation that there are insufficient 
     assets of the receivership to pay all valid claims against 
     the receivership, the receiver shall submit to the Secretary 
     of the Treasury, the Committee on Agriculture of the House of 
     Representatives, and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a report on the financial 
     condition of the receivership.
       ``(i) Termination of Authorities.--
       ``(1) Corporation.--The charter of the Corporation shall be 
     canceled, and the authority provided to the Corporation by 
     this title shall terminate, on such date as the Farm Credit 
     Administration Board determines is appropriate following the 
     placement of the Corporation in receivership, but not later 
     than the conclusion of the receivership and discharge of the 
     receiver.
       ``(2) Oversight.--The Office of Secondary Market Oversight 
     established under section 8.11 shall be abolished, and 
     section 8.11(a) and subtitle B shall have no force or effect, 
     on such date as the Farm Credit Administration Board 
     determines is appropriate following the placement of the 
     Corporation in receivership, but not later than the 
     conclusion of the receivership and discharge of the 
     receiver.''.
                      TITLE II--REGULATORY RELIEF

     SEC. 201. COMPENSATION OF ASSOCIATION PERSONNEL.

       Section 1.5(13) of the Farm Credit Act of 1971 (12 U.S.C. 
     2013(13)) is amended by striking ``, and the appointment and 
     compensation of the chief executive officer thereof,''.

     SEC. 202. USE OF PRIVATE MORTGAGE INSURANCE.

       (a) In General.--Section 1.10(a)(1) of the Farm Credit Act 
     of 1971 (12 U.S.C. 2018(a)(1)) is amended by adding at the 
     end the following:
       ``(D) Private mortgage insurance.--A loan on which private 
     mortgage insurance is obtained may exceed 85 percent of the 
     appraised value of the real estate security to the extent 
     that the loan amount in excess of 85 percent is covered by 
     the insurance.''.
       (b) Conforming Amendment.--Section 1.10(a)(1)(A) of the 
     Farm Credit Act of 1971 (12 U.S.C. 2018(a)(1)(A)) is amended 
     by striking ``paragraphs (2) and (3)'' and inserting 
     ``subparagraphs (B), (C), and (D)''.

     SEC. 203. REMOVAL OF CERTAIN BORROWER REPORTING REQUIREMENT.

       Section 1.10(a) of the Farm Credit Act of 1971 (12 U.S.C. 
     2018(a)) is amended by striking paragraph (5).

     SEC. 204. REFORM OF REGULATORY LIMITATIONS ON DIVIDEND, 
                   MEMBER BUSINESS, AND VOTING PRACTICES OF 
                   ELIGIBLE FARMER-OWNED COOPERATIVES.

       (a) In General.--Section 3.8(a) of the Farm Credit Act of 
     1971 (12 U.S.C. 2129(a)) is amended by adding at the end the 
     following: ``Any such association that has received a loan 
     from a bank for cooperatives shall, without regard to the 
     requirements of paragraphs (1) through (4), continue to be 
     eligible for so long as more than 50 percent (or such higher 
     percentage as is established by the bank board) of the voting 
     control of the association is held by farmers, producers or 
     harvesters of aquatic products, or eligible cooperative 
     associations.''.
       (b) Conforming Amendment.--Section 3.8(b)(1)(D) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2129(b)(1)(D)) is amended by 
     striking ``and (4) of subsection (a)'' and inserting ``and 
     (4), or under the last sentence, of subsection (a)''.

     SEC. 205. REMOVAL OF FEDERAL GOVERNMENT CERTIFICATION 
                   REQUIREMENT FOR CERTAIN PRIVATE SECTOR 
                   FINANCINGS.

       Section 3.8(b)(1)(A) of the Farm Credit Act of 1971 (12 
     U.S.C. 2129(b)(1)(A)) is amended--
       (1) by striking ``have been certified by the Administrator 
     of the Rural Electrification Administration to be eligible 
     for such'' and inserting ``are eligible under the Rural 
     Electrification Act of 1936 (7 U.S.C. 901 et seq.) for''; and
       (2) by striking ``loan guarantee, and'' and inserting 
     ``loan guarantee from the Administration or the Bank (or a 
     successor of the Administration or the Bank), and''.

     SEC. 206. BORROWER STOCK.

       Section 4.3A of the Farm Credit Act of 1971 (12 U.S.C. 
     2154a) is amended--
       (1) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively; and
       (2) by inserting after subsection (e) the following:
       ``(f) Loans Designated for Sale or Sold Into the Secondary 
     Market.--
       ``(1) In general.--Subject to paragraph (2) and 
     notwithstanding any other provision of this section, the 
     bylaws adopted by a bank or association under subsection (b) 
     may provide--
       ``(A) in the case of a loan made on or after the date of 
     enactment of this paragraph that is designated, at the time 
     the loan is made, for sale into a secondary market, that no 
     voting stock or participation certificate purchase 
     requirement shall apply to the borrower for the loan; and
       ``(B) in the case of a loan made before the date of 
     enactment of this paragraph that is sold into a secondary 
     market, that all outstanding voting stock or participation 
     certificates held by the borrower with respect to the loan 
     shall, subject to subsection (d)(1), be retired.
       ``(2) Applicability.--Notwithstanding any other provision 
     of this section, in the case of a loan sold to a secondary 
     market under title VIII, paragraph (1) shall apply regardless 
     of whether the bank or association retains a subordinated 
     participation interest in a loan or pool of loans or 
     contributes to a cash reserve.
       ``(3) Exception.--
       ``(A) In general.--Subject to subparagraph (B) and 
     notwithstanding any other provision of this section, if a 
     loan designated for sale under paragraph (1)(A) is not sold 
     into a secondary market during the 180-day period that begins 
     on the date of the designation, the voting stock or 
     participation certificate purchase requirement that would 
     otherwise apply to the loan in the absence of a bylaw 
     provision described in paragraph (1)(A) shall be effective.
       ``(B) Retirement.--The bylaws adopted by a bank or 
     association under subsection (b) may provide that if a loan 
     described in subparagraph (A) is sold into a secondary market 
     after the end of the 180-day period described in the 
     subparagraph, all outstanding voting stock or participation 
     certificates held by the borrower with respect to the loan 
     shall, subject to subsection (d)(1), be retired.''.
     
[[Page H37]]


     SEC. 207. DISCLOSURE RELATING TO ADJUSTABLE RATE LOANS.

       Section 4.13(a)(4) of the Farm Credit Act of 1971 (12 
     U.S.C. 2199(a)(4)) is amended by inserting before the 
     semicolon at the end the following: ``, and notice to the 
     borrower of a change in the interest rate applicable to the 
     loan of the borrower may be made within a reasonable time 
     after the effective date of an increase or decrease in the 
     interest rate''.

     SEC. 208. BORROWERS' RIGHTS.

       (a) Definition of Loan.--Section 4.14A(a)(5) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2202a(a)(5)) is amended--
       (1) by striking ``(5) Loan.--The'' and inserting the 
     following:
       ``(5) Loan.--
       ``(A) In general.--Subject to subparagraph (B), the''; and
       (2) by adding at the end the following:
       ``(B) Exclusion for loans designated for sale into 
     secondary market.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `loan' does not include a loan made on or after the date 
     of enactment of this subparagraph that is designated, at the 
     time the loan is made, for sale into a secondary market.
       ``(ii) Unsold loans.--

       ``(I) In general.--Except as provided in subclause (II), if 
     a loan designated for sale under clause (i) is not sold into 
     a secondary market during the 180-day period that begins on 
     the date of the designation, the provisions of this section 
     and sections 4.14, 4.14B, 4.14C, 4.14D, and 4.36 that would 
     otherwise apply to the loan in the absence of the exclusion 
     described in clause (i) shall become effective with respect 
     to the loan.
       ``(II) Later sale.--If a loan described in subclause (I) is 
     sold into a secondary market after the end of the 180-day 
     period described in subclause (I), subclause (I) shall not 
     apply with respect to the loan beginning on the date of the 
     sale.''.

       (b) Borrowers' Rights for Pooled Loans.--The first sentence 
     of section 8.9(b) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-9(b)) is amended by inserting ``(as defined in section 
     4.14A(a)(5))'' after ``application for a loan''.

     SEC. 209. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.

       Part E of title IV of the Farm Credit Act of 1971 is 
     amended by inserting after section 4.28 (12 U.S.C. 2214) the 
     following:

     ``SEC. 4.28A. DEFINITION OF BANK.

       ``In this part, the term `bank' includes each association 
     operating under title II.''.

     SEC. 210. JOINT MANAGEMENT AGREEMENTS.

       The first sentence of section 5.17(a)(2)(A) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2252(a)(2)(A)) is amended by 
     striking ``or management agreements''.

     SEC. 211. DISSEMINATION OF QUARTERLY REPORTS.

       Section 5.17(a)(8) of the Farm Credit Act of 1971 (12 
     U.S.C. 2252(a)(8)) is amended by inserting after ``except 
     that'' the following: ``the requirements of the Farm Credit 
     Administration governing the dissemination to stockholders of 
     quarterly reports of System institutions may not be more 
     burdensome or costly than the requirements applicable to 
     national banks, and''.

     SEC. 212. REGULATORY REVIEW.

       (a) Findings.--Congress finds that--
       (1) the Farm Credit Administration, in the role of the 
     Administration as an arms-length safety and soundness 
     regulator, has made considerable progress in reducing the 
     regulatory burden on Farm Credit System institutions;
       (2) the efforts of the Farm Credit Administration described 
     in paragraph (1) have resulted in cost savings for Farm 
     Credit System institutions; and
       (3) the cost savings described in paragraph (2) ultimately 
     benefit the farmers, ranchers, agricultural cooperatives, and 
     rural residents of the United States.
       (b) Continuation of Regulatory Review.--The Farm Credit 
     Administration shall continue the comprehensive review of 
     regulations governing the Farm Credit System to identify and 
     eliminate, consistent with law, safety, and soundness, all 
     regulations that are unnecessary, unduly burdensome or 
     costly, or not based on law.

     SEC. 213. EXAMINATION OF FARM CREDIT SYSTEM INSTITUTIONS.

       The first sentence of section 5.19(a) of the Farm Credit 
     Act of 1971 (12 U.S.C. 2254(a)) is amended by striking ``each 
     year'' and inserting ``during each 18-month period''.

     SEC. 214. CONSERVATORSHIPS AND RECEIVERSHIPS.

       (a) Definitions.--Section 5.51 of the Farm Credit Act of 
     1971 (12 U.S.C. 2277a) is amended--
       (1) by striking paragraph (5); and
       (2) by redesignating paragraph (6) as paragraph (5).
       (b) General Corporate Powers.--Section 5.58 of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-7) is amended by striking 
     paragraph (9) and inserting the following:
       ``(9) Conservator or receiver.--The Corporation may act as 
     a conservator or receiver.''.

     SEC. 215. FARM CREDIT INSURANCE FUND OPERATIONS.

       (a) Adjustment of Premiums.--
       (1) In general.--Section 5.55(a) of the Farm Credit Act of 
     1971 (12 U.S.C. 2277a-4(a)) is amended--
       (A) in paragraph (1), by striking ``Until the aggregate of 
     amounts in the Farm Credit Insurance Fund exceeds the secure 
     base amount, the annual premium due from any insured System 
     bank for any calendar year'' and inserting the following: 
     ``If at the end of any calendar year the aggregate of amounts 
     in the Farm Credit Insurance Fund does not exceed the secure 
     base amount, subject to paragraph (2), the annual premium due 
     from any insured System bank for the calendar year'';
       (B) by redesignating paragraph (2) as paragraph (3); and
       (C) by inserting after paragraph (1) the following:
       ``(2) Reduced premiums.--The Corporation, in the sole 
     discretion of the Corporation, may reduce by a percentage 
     uniformly applied to all insured System banks the annual 
     premium due from each insured System bank during any calendar 
     year, as determined under paragraph (1).''.
       (2) Conforming amendments.--
       (A) Section 5.55(b) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-4(b)) is amended--
       (i) by striking ``Insurance Fund'' each place it appears 
     and inserting ``Farm Credit Insurance Fund'';
       (ii) by striking ``for the following calendar year''; and
       (iii) by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)''.
       (B) Section 5.56(a) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-5(a)) is amended by striking ``section 
     5.55(a)(2)'' each place it appears in paragraphs (2) and (3) 
     and inserting ``section 5.55(a)(3)''.
       (b) Allocation to Insured System Banks and Other System 
     Institutions of Excess Amounts in the Farm Credit Insurance 
     Fund.--Section 5.55 of the Farm Credit Act of 1971 (12 U.S.C. 
     2277a-4) is amended by adding at the end the following:
       ``(e) Allocation to System Institutions of Excess 
     Reserves.--
       ``(1) Establishment of allocated insurance reserves 
     accounts.--The Corporation shall establish an Allocated 
     Insurance Reserves Account in the Farm Credit Insurance 
     Fund--
       ``(A) for each insured System bank; and
       ``(B) subject to paragraph (6)(C), for all holders, in the 
     aggregate, of Financial Assistance Corporation stock.
       ``(2) Treatment.--Amounts in any Allocated Insurance 
     Reserves Account shall be considered to be part of the Farm 
     Credit Insurance Fund.
       ``(3) Annual allocations.--If, at the end of any calendar 
     year, the aggregate of the amounts in the Farm Credit 
     Insurance Fund exceeds the average secure base amount for the 
     calendar year (as calculated on an average daily balance 
     basis), the Corporation shall allocate to the Allocated 
     Insurance Reserves Accounts the excess amount less the amount 
     that the Corporation, in its sole discretion, determines to 
     be the sum of the estimated operating expenses and estimated 
     insurance obligations of the Corporation for the immediately 
     succeeding calendar year.
       ``(4) Allocation formula.--From the total amount required 
     to be allocated at the end of a calendar year under paragraph 
     (3)--
       ``(A) 10 percent of the total amount shall be credited to 
     the Allocated Insurance Reserves Account established under 
     paragraph (1)(B), subject to paragraph (6)(C); and
       ``(B) there shall be credited to the Allocated Insurance 
     Reserves Account of each insured System bank an amount that 
     bears the same ratio to the total amount (less any amount 
     credited under subparagraph (A)) as the average principal 
     outstanding for the 3-year period ending on the end of the 
     calendar year on loans made by the bank that are in accrual 
     status bears to the average principal outstanding for the 3-
     year period ending on the end of the calendar year on loans 
     made by all insured System banks that are in accrual status 
     (excluding, in each case, the guaranteed portions of 
     government-guaranteed loans described in subsection 
     (a)(1)(C)).
       ``(5) Use of funds in allocated insurance reserves 
     accounts.--To the extent that the sum of the operating 
     expenses of the Corporation and the insurance obligations of 
     the Corporation for a calendar year exceeds the sum of 
     operating expenses and insurance obligations determined under 
     paragraph (3) for the calendar year, the Corporation shall 
     cover the expenses and obligations by--
       ``(A) reducing each Allocated Insurance Reserves Account by 
     the same proportion; and
       ``(B) expending the amounts obtained under subparagraph (A) 
     before expending other amounts in the Fund.
       ``(6) Other disposition of account funds.--
       ``(A) In general.--As soon as practicable during each 
     calendar year beginning more than 8 years after the date on 
     which the aggregate of the amounts in the Farm Credit 
     Insurance Fund exceeds the secure base amount, but not 
     earlier than January 1, 2005, the Corporation may--
       ``(i) subject to subparagraphs (D) and (F), pay to each 
     insured System bank, in a manner determined by the 
     Corporation, an amount equal to the lesser of--

       ``(I) 20 percent of the balance in the insured System 
     bank's Allocated Insurance Reserves Account as of the 
     preceding December 31; or
       ``(II) 20 percent of the balance in the bank's Allocated 
     Insurance Reserves Account on the date of the payment; and

       ``(ii) subject to subparagraphs (C), (E), and (F), pay to 
     each System bank and association holding Financial Assistance 
     Corporation stock a proportionate share, determined by 
     dividing the number of shares of Financial Assistance 
     Corporation stock held by the institution by the total number 
     of shares of Financial Assistance Corporation stock 
     outstanding, of the lesser of--

       ``(I) 20 percent of the balance in the Allocated Insurance 
     Reserves Account established under paragraph (1)(B) as of the 
     preceding December 31; or
       ``(II) 20 percent of the balance in the Allocated Insurance 
     Reserves Account established under paragraph (1)(B) on the 
     date of the payment.

       ``(B) Authority to eliminate or reduce payments.--The 
     Corporation may eliminate or reduce payments during a 
     calendar year under subparagraph (A) if the Corporation 
     determines, in its sole discretion, that the payments, or 
     other circumstances that might require use of 

[[Page H38]]
     the Farm Credit Insurance Fund, could cause the amount in the Farm 
     Credit Insurance Fund during the calendar year to be less 
     than the secure base amount.
       ``(C) Reimbursement for financial assistance corporation 
     stock.--
       ``(i) Sufficient funding.--Notwithstanding paragraph 
     (4)(A), on provision by the Corporation for the accumulation 
     in the Account established under paragraph (1)(B) of funds in 
     an amount equal to $56,000,000 (in addition to the amounts 
     described in subparagraph (F)(ii)), the Corporation shall not 
     allocate any further funds to the Account except to replenish 
     the Account if funds are diminished below $56,000,000 by the 
     Corporation under paragraph (5).
       ``(ii) Wind down and termination.--

       ``(I) Final disbursements.--On disbursement of $53,000,000 
     (in addition to the amounts described in subparagraph 
     (F)(ii)) from the Allocated Insurance Reserves Account, the 
     Corporation shall disburse the remaining amounts in the 
     Account, as determined under subparagraph (A)(ii), without 
     regard to the percentage limitations in subclauses (I) and 
     (II) of subparagraph (A)(ii).
       ``(II) Termination of account.--On disbursement of 
     $56,000,000 (in addition to the amounts described in 
     subparagraph (F)(ii)) from the Allocated Insurance Reserves 
     Account, the Corporation shall close the Account established 
     under paragraph (1)(B) and transfer any remaining funds in 
     the Account to the remaining Allocated Insurance Reserves 
     Accounts in accordance with paragraph (4)(B) for the calendar 
     year in which the transfer occurs.

       ``(D) Distribution of payments received.--Not later than 60 
     days after receipt of a payment made under subparagraph 
     (A)(i), each insured System bank, in consultation with 
     affiliated associations of the insured System bank, and 
     taking into account the direct or indirect payment of 
     insurance premiums by the associations, shall develop and 
     implement an equitable plan to distribute payments received 
     under subparagraph (A)(i) among the bank and associations of 
     the bank.
       ``(E) Exception for previously reimbursed associations.--
     For purposes of subparagraph (A)(ii), in any Farm Credit 
     district in which the funding bank has reimbursed 1 or more 
     affiliated associations of the bank for the previously 
     unreimbursed portion of the Financial Assistance Corporation 
     stock held by the associations, the funding bank shall be 
     deemed to be the holder of the shares of Financial Assistance 
     Corporation stock for which the funding bank has provided the 
     reimbursement.
       ``(F) Initial payment.--Notwithstanding subparagraph (A), 
     the initial payment made to each payee under subparagraph (A) 
     shall be in such amount determined by the Corporation to be 
     equal to the sum of--
       ``(i) the total of the amounts that would have been paid if 
     payments under subparagraph (A) had been authorized to begin, 
     under the same terms and conditions, in the first calendar 
     year beginning more than 5 years after the date on which the 
     aggregate of the amounts in the Farm Credit Insurance Fund 
     exceeds the secure base amount and to continue through the 2 
     immediately subsequent years;
       ``(ii) interest earned on any amounts that would have been 
     paid as described in clause (i) from the date on which the 
     payments would have been paid as described in clause (i); and
       ``(iii) the payment to be made in the initial year 
     described in subparagraph (A), based on the amount in each 
     Account after subtracting the amounts to be paid under 
     clauses (i) and (ii).''.
       (c) Technical Amendments.--Section 5.55(d) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-4(d)) is amended--
       (1) in the matter preceding paragraph (1)--
       (A) by striking ``subsections (a) and (c)'' and inserting 
     ``subsections (a), (c), and (e)''; and
       (B) by striking ``a Farm Credit Bank'' and inserting ``an 
     insured System bank''; and
       (2) in paragraphs (1), (2), and (3), by striking ``Farm 
     Credit Bank'' each place it appears and inserting ``insured 
     System bank''.

     SEC. 216. EXAMINATIONS BY THE FARM CREDIT SYSTEM INSURANCE 
                   CORPORATION.

       Section 5.59(b)(1)(A) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-8(b)(1)(A)) is amended by adding at the end the 
     following: ``Notwithstanding any other provision of this Act, 
     on cancellation of the charter of a System institution, the 
     Corporation shall have authority to examine the system 
     institution in receivership. An examination shall be 
     performed at such intervals as the Corporation shall 
     determine.''.

     SEC. 217. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM 
                   BANKS.

       (a) Least-Cost Resolution.--Section 5.61(a)(3) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (F); 
     and
       (2) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Least-cost resolution.--Assistance may not be 
     provided to an insured System bank under this subsection 
     unless the means of providing the assistance is the least 
     costly means of providing the assistance by the Farm Credit 
     Insurance Fund of all possible alternatives available to the 
     Corporation, including liquidation of the bank (including 
     paying the insured obligations issued on behalf of the bank). 
     Before making a least-cost determination under this 
     subparagraph, the Corporation shall accord such other insured 
     System banks as the Corporation determines to be appropriate 
     the opportunity to submit information relating to the 
     determination.
       ``(B) Determining least costly approach.--In determining 
     the least costly alternative under subparagraph (A), the 
     Corporation shall--
       ``(i) evaluate alternatives on a present-value basis, using 
     a realistic discount rate;
       ``(ii) document the evaluation and the assumptions on which 
     the evaluation is based, including any assumptions with 
     regard to interest rates, asset recovery rates, asset holding 
     costs, and payment of contingent liabilities; and
       ``(iii) retain the documentation for not less than 5 years.
       ``(C) Time of determination.--
       ``(i) General rule.--For purposes of this subsection, the 
     determination of the costs of providing any assistance under 
     any provision of this section with respect to any insured 
     System bank shall be made as of the date on which the 
     Corporation makes the determination to provide the assistance 
     to the institution under this section.
       ``(ii) Rule for liquidations.--For purposes of this 
     subsection, the determination of the costs of liquidation of 
     any insured System bank shall be made as of the earliest of--

       ``(I) the date on which a conservator is appointed for the 
     insured System bank;
       ``(II) the date on which a receiver is appointed for the 
     insured System bank; or
       ``(III) the date on which the Corporation makes any 
     determination to provide any assistance under this section 
     with respect to the insured System bank.

       ``(D) Rule for stand-alone assistance.--Before providing 
     any assistance under paragraph (1), the Corporation shall 
     evaluate the adequacy of managerial resources of the insured 
     System bank. The continued service of any director or senior 
     ranking officer who serves in a policymaking role for the 
     assisted insured System bank, as determined by the 
     Corporation, shall be subject to approval by the Corporation 
     as a condition of assistance.
       ``(E) Discretionary determinations.--Any determination that 
     the Corporation makes under this paragraph shall be in the 
     sole discretion of the Corporation.''.
       (b) Conforming Amendments.--Section 5.61(a) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
       (1) in paragraph (1) by striking ``In general.--'' and 
     inserting ``Stand-alone assistance.--''; and
       (2) in paragraph (2)--
       (A) by striking ``Enumerated powers.--'' and inserting 
     ``Facilitation of mergers or consolidation.--''; and
       (B) in subparagraph (A) by striking ``Facilitation of 
     mergers or consolidation.--'' and inserting ``In general.--
     ''.

     SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT 
                   SYSTEM INSURANCE CORPORATION.

       The Farm Credit Act of 1971 is amended by inserting after 
     section 5.61 (12 U.S.C. 2279a-10) the following:

     ``SEC. 5.61A. OVERSIGHT ACTIONS BY THE CORPORATION.

       ``(a) Definitions.--In this section, the term `institution' 
     means--
       ``(1) an insured System bank; and
       ``(2) a production credit association or other association 
     making loans under section 7.6 with a direct loan payable to 
     the funding bank of the association that comprises 20 percent 
     or more of the funding bank's total loan volume net of 
     nonaccrual loans.
       ``(b) Consultation Regarding Participation of 
     Undercapitalized Banks in Issuance of Insured Obligations.--
     The Farm Credit Administration shall consult with the 
     Corporation prior to approving an insured obligation that is 
     to be issued by or on behalf of, or participated in by, any 
     insured System bank that fails to meet the minimum level for 
     any capital requirement established by the Farm Credit 
     Administration for the bank.
       ``(c) Consultation Regarding Applications for Mergers and 
     Restructurings.--
       ``(1) Corporation to receive copy of transaction 
     applications.--On receiving an application for a merger or 
     restructuring of an institution, the Farm Credit 
     Administration shall forward a copy of the application to the 
     Corporation.
       ``(2) Consultation required.--If the proposed merger or 
     restructuring involves an institution that fails to meet the 
     minimum level for any capital requirement established by the 
     Farm Credit Administration applicable to the institution, the 
     Farm Credit Administration shall allow 30 days within which 
     the Corporation may submit the views and recommendations of 
     the Corporation, including any conditions for approval. In 
     determining whether to approve or disapprove any proposed 
     merger or restructuring, the Farm Credit Administration shall 
     give due consideration to the views and recommendations of 
     the Corporation.

     ``SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN PARACHUTE AND 
                   INDEMNIFICATION PAYMENTS.

       ``(a) Definitions.--In this section:
       ``(1) Golden parachute payment.--The term `golden parachute 
     payment'--
       ``(A) means a payment (or any agreement to make a payment) 
     in the nature of compensation by any Farm Credit System 
     institution (including the Federal Agricultural Mortgage 
     Corporation and any conservator or receiver for the Federal 
     Agricultural Mortgage Corporation) for the benefit of any 
     institution-related party under an obligation of the 
     institution that--
       ``(i) is contingent on the termination of the party's 
     relationship with the institution; and
       ``(ii) is received on or after the date on which--

       ``(I) the institution is insolvent;
       ``(II) a conservator or receiver is appointed for the 
     institution;
       ``(III) the institution has been assigned by the Farm 
     Credit Administration a composite CAMEL rating of 4 or 5 
     under the Farm Credit Administration Rating System, or an 
     equivalent rating; or
       ``(IV) the Corporation otherwise determines that the 
     institution is in a troubled condition (as defined in 
     regulations issued by the Corporation); and
     
[[Page H39]]


       ``(B) includes a payment that would be a golden parachute 
     payment but for the fact that the payment was made before the 
     date referred to in subparagraph (A)(ii) if the payment was 
     made in contemplation of the occurrence of an event described 
     in any subclause of subparagraph (A); but
       ``(C) does not include--
       ``(i) a payment made under a retirement plan that is 
     qualified (or is intended to be qualified) under section 401 
     of the Internal Revenue Code of 1986 or other 
     nondiscriminatory benefit plan;
       ``(ii) a payment made under a bona fide supplemental 
     executive retirement plan, deferred compensation plan, or 
     other arrangement that the Corporation determines, by 
     regulation or order, to be permissible; or
       ``(iii) a payment made by reason of the death or disability 
     of an institution-related party.
       ``(2) Indemnification payment.--The term `indemnification 
     payment' means a payment (or any agreement to make a payment) 
     by any Farm Credit System institution for the benefit of any 
     person who is or was an institution-related party, to pay or 
     reimburse the person for any liability or legal expense with 
     regard to any administrative proceeding or civil action 
     instituted by the Farm Credit Administration that results in 
     a final order under which the person--
       ``(A) is assessed a civil money penalty; or
       ``(B) is removed or prohibited from participating in the 
     conduct of the affairs of the institution.
       ``(3) Institution-related party.--The term `institution-
     related party' means--
       ``(A) a director, officer, employee, or agent for a Farm 
     Credit System institution;
       ``(B) a stockholder (other than another Farm Credit System 
     institution), consultant, joint venture partner, or any other 
     person determined by the Farm Credit Administration to be a 
     participant in the conduct of the affairs of a Farm Credit 
     System institution; and
       ``(C) an independent contractor (including any attorney, 
     appraiser, or accountant) that knowingly or recklessly 
     participates in any violation of any law or regulation, any 
     breach of fiduciary duty, or any unsafe or unsound practice 
     that caused or is likely to cause more than a minimal 
     financial loss to, or a significant adverse effect on, the 
     Farm Credit System institution.
       ``(4) Liability or legal expense.--The term `liability or 
     legal expense' means--
       ``(A) a legal or other professional expense incurred in 
     connection with any claim, proceeding, or action;
       ``(B) the amount of, and any cost incurred in connection 
     with, any settlement of any claim, proceeding, or action; and
       ``(C) the amount of, and any cost incurred in connection 
     with, any judgment or penalty imposed with respect to any 
     claim, proceeding, or action.
       ``(5) Payment.--The term `payment' means--
       ``(A) a direct or indirect transfer of any funds or any 
     asset; and
       ``(B) any segregation of any funds or assets for the 
     purpose of making, or under an agreement to make, any payment 
     after the date on which the funds or assets are segregated, 
     without regard to whether the obligation to make the payment 
     is contingent on--
       ``(i) the determination, after that date, of the liability 
     for the payment of the amount; or
       ``(ii) the liquidation, after that date, of the amount of 
     the payment.
       ``(b) Prohibition.--The Corporation may prohibit or limit, 
     by regulation or order, any golden parachute payment or 
     indemnification payment by a Farm Credit System institution 
     (including the Federal Agricultural Mortgage Corporation) in 
     troubled condition (as defined in regulations issued by the 
     Corporation).
       ``(c) Factors To Be Taken into Account.--The Corporation 
     shall prescribe, by regulation, the factors to be considered 
     by the Corporation in taking any action under subsection (b). 
     The factors may include--
       ``(1) whether there is a reasonable basis to believe that 
     an institution-related party has committed any fraudulent act 
     or omission, breach of trust or fiduciary duty, or insider 
     abuse with regard to the Farm Credit System institution 
     involved that has had a material effect on the financial 
     condition of the institution;
       ``(2) whether there is a reasonable basis to believe that 
     the institution-related party is substantially responsible 
     for the insolvency of the Farm Credit System institution, the 
     appointment of a conservator or receiver for the institution, 
     or the institution's troubled condition (as defined in 
     regulations prescribed by the Corporation);
       ``(3) whether there is a reasonable basis to believe that 
     the institution-related party has materially violated any 
     applicable law or regulation that has had a material effect 
     on the financial condition of the institution;
       ``(4) whether there is a reasonable basis to believe that 
     the institution-related party has violated or conspired to 
     violate--
       ``(A) section 215, 657, 1006, 1014, or 1344 of title 18, 
     United States Code; or
       ``(B) section 1341 or 1343 of title 18, United States Code, 
     affecting a Farm Credit System institution;
       ``(5) whether the institution-related party was in a 
     position of managerial or fiduciary responsibility; and
       ``(6) the length of time that the party was related to the 
     Farm Credit System institution and the degree to which--
       ``(A) the payment reasonably reflects compensation earned 
     over the period of employment; and
       ``(B) the compensation represents a reasonable payment for 
     services rendered.
       ``(d) Certain Payments Prohibited.--No Farm Credit System 
     institution may prepay the salary or any liability or legal 
     expense of any institution-related party if the payment is 
     made--
       ``(1) in contemplation of the insolvency of the institution 
     or after the commission of an act of insolvency; and
       ``(2) with a view to, or with the result of--
       ``(A) preventing the proper application of the assets of 
     the institution to creditors; or
       ``(B) preferring 1 creditor over another creditor.
       ``(e) Rule of Construction.--Nothing in this section--
       ``(1) prohibits any Farm Credit System institution from 
     purchasing any commercial insurance policy or fidelity bond, 
     so long as the insurance policy or bond does not cover any 
     legal or liability expense of an institution described in 
     subsection (a)(2); or
       ``(2) limits the powers, functions, or responsibilities of 
     the Farm Credit Administration.''.

     SEC. 219. FARM CREDIT SYSTEM INSURANCE CORPORATION BOARD OF 
                   DIRECTORS.

       Section 201 of the Farm Credit Banks and Associations 
     Safety and Soundness Act of 1992 (106 Stat. 4104) is 
     repealed.

     SEC. 220. INTEREST RATE REDUCTION PROGRAM.

       Section 351(a) of the Consolidated Farm and Rural 
     Development Act (7 U.S.C. 1999) is amended--
       (A) by striking ``Sec. 351. (a) The'' and inserting the 
     following:

     ``SEC. 351. INTEREST RATE REDUCTION PROGRAM.

       ``(a) Establishment of Program.--
       ``(1) In general.--The''; and
       (B) by adding at the end the following:
       ``(2) Termination of authority.--The authority provided by 
     this subsection shall terminate on September 30, 2002.''.

     SEC. 221. LIABILITY FOR MAKING CRIMINAL REFERRALS.

       (a) In General.--Any institution of the Farm Credit System, 
     or any director, officer, employee, or agent of a Farm Credit 
     System institution, that discloses to a Government authority 
     information proffered in good faith that may be relevant to a 
     possible violation of any law or regulation shall not be 
     liable to any person under any law of the United States or 
     any State--
       (1) for the disclosure; or
       (2) for any failure to notify the person involved in the 
     possible violation.
       (b) No Prohibition on Disclosure.--Any institution of the 
     Farm Credit System, or any director, officer, employee, or 
     agent of a Farm Credit System institution, may disclose 
     information to a Government authority that may be relevant to 
     a possible violation of any law or regulation.
     TITLE III--NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``National Natural Resources 
     Conservation Foundation Act''.

     SEC. 302. DEFINITIONS.

       In this title (unless the context otherwise requires):
       (1) Board.--The term ``Board'' means the Board of Trustees 
     established under section 304.
       (2) Department.--The term ``Department'' means the United 
     States Department of Agriculture.
       (3) Foundation.--The term ``Foundation'' means the National 
     Natural Resources Conservation Foundation established by 
     section 303(a).
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Agriculture.

     SEC. 303. NATIONAL NATURAL RESOURCES CONSERVATION FOUNDATION.

       (a) Establishment.--A National Natural Resources 
     Conservation Foundation is established as a charitable and 
     nonprofit corporation for charitable, scientific, and 
     educational purposes specified in subsection (b). The 
     Foundation is not an agency or instrumentality of the United 
     States.
       (b) Purposes.--The purposes of the Foundation are to--
       (1) promote innovative solutions to the problems associated 
     with the conservation of natural resources on private lands, 
     particularly with respect to agriculture and soil and water 
     conservation;
       (2) promote voluntary partnerships between government and 
     private interests in the conservation of natural resources;
       (3) conduct research and undertake educational activities, 
     conduct and support demonstration projects, and make grants 
     to State and local agencies and nonprofit organizations;
       (4) provide such other leadership and support as may be 
     necessary to address conservation challenges, such as the 
     prevention of excessive soil erosion, enhancement of soil and 
     water quality, and the protection of wetlands, wildlife 
     habitat, and strategically important farmland subject to 
     urban conversion and fragmentation;
       (5) encourage, accept, and administer private gifts of 
     money and real and personal property for the benefit of, or 
     in connection with, the conservation and related activities 
     and services of the Department, particularly the Natural 
     Resources Conservation Service;
       (6) undertake, conduct, and encourage educational, 
     technical, and other assistance, and other activities, that 
     support the conservation and related programs administered by 
     the Department (other than activities carried out on National 
     Forest System lands), particularly the Natural Resources 
     Conservation Service, except that the Foundation may not 
     enforce or administer a regulation of the Department; and
       (7) raise private funds to promote the purposes of the 
     Foundation.
       (c) Limitations and Conflicts of Interests.--
       (1) Political activities.--The Foundation shall not 
     participate or intervene in a political campaign on behalf of 
     any candidate for public office.
     
[[Page H40]]

       (2) Conflicts of interest.--No director, officer, or 
     employee of the Foundation shall participate, directly or 
     indirectly, in the consideration or determination of any 
     question before the Foundation affecting--
       (A) the financial interests of the director, officer, or 
     employee; or
       (B) the interests of any corporation, partnership, entity, 
     organization, or other person in which the director, officer, 
     or employee--
       (i) is an officer, director, or trustee; or
       (ii) has any direct or indirect financial interest.
       (3) Legislation or government action or policy.--No funds 
     of the Foundation may be used in any manner for the purpose 
     of influencing legislation or government action or policy.
       (4) Litigation.--No funds of the Foundation may be used to 
     bring or join an action against the United States.
       (d) Tax Exempt Status.--
       (1) 1996 taxable year.--In the case of the 1996 taxable 
     year, the Foundation shall be treated as organized and 
     operated exclusively for charitable purposes for purposes of 
     section 501(c)(3) of the Internal Revenue Code of 1986.
       (2) 1997 and subsequent taxable years.--In the case of the 
     1997 and subsequent taxable years, the Foundation shall be 
     required to maintain the tax exempt status of the Foundation 
     in the manner prescribed by the Secretary of the Treasury for 
     similar tax exempt organizations.

     SEC. 304. COMPOSITION AND OPERATION.

       (a) Composition.--The Foundation shall be administered by a 
     Board of Trustees that shall consist of 9 voting members, 
     each of whom shall be a United States citizen and not a 
     Federal officer. The Board shall be composed of--
       (1) individuals with expertise in agricultural conservation 
     policy matters;
       (2) a representative of private sector organizations with a 
     demonstrable interest in natural resources conservation;
       (3) a representative of statewide conservation 
     organizations;
       (4) a representative of soil and water conservation 
     districts;
       (5) a representative of organizations outside the Federal 
     Government that are dedicated to natural resources 
     conservation education; and
       (6) a farmer or rancher.
       (b) Nongovernmental Employees.--Service as a member of the 
     Board shall not constitute employment by, or the holding of, 
     an office of the United States for the purposes of any 
     Federal law.
       (c) Membership.--
       (1) Initial members.--The Secretary shall appoint 9 persons 
     who meet the criteria established under subsection (a) as the 
     initial members of the Board and designate 1 of the members 
     as the initial chairperson for a 2-year term.
       (2) Terms of office.--
       (A) In general.--A member of the Board shall serve for a 
     term of 3 years, except that the members appointed to the 
     initial Board shall serve, proportionately, for terms of 1, 
     2, and 3 years, as determined by the Secretary.
       (B) Limitation on terms.--No individual may serve more than 
     2 consecutive 3-year terms as a member.
       (3) Subsequent members.--The initial members of the Board 
     shall adopt procedures in the constitution of the Foundation 
     for the nomination and selection of subsequent members of the 
     Board. The procedures shall require that each member, at a 
     minimum, meets the criteria established under subsection (a) 
     and shall provide for the selection of an individual, who is 
     not a Federal officer or a member of the Board, to be 
     provided with the power to select subsequent members of the 
     Board.
       (d) Chairperson.--After the appointment of an initial 
     chairperson under subsection (c)(1), each succeeding 
     chairperson of the Board shall be elected by the members of 
     the Board for a 2-year term.
       (e) Vacancies.--A vacancy on the Board shall be filled by 
     the Board not later than 60 days after the occurrence of the 
     vacancy.
       (f) Compensation.--A member of the Board shall receive no 
     compensation from the Foundation for the service of the 
     member on the Board.
       (g) Travel Expenses.--While away from the home or regular 
     place of business of a member of the Board in the performance 
     of services for the Board, the member shall be allowed travel 
     expenses paid by the Foundation, including per diem in lieu 
     of subsistence, at the same rate as a person employed 
     intermittently in the Government service would be allowed 
     under section 5703 of title 5, United States Code.

     SEC. 305. OFFICERS AND EMPLOYEES.

       (a) In General.--The Board may--
       (1) appoint, hire, and discharge the officers and employees 
     of the Foundation, other than the appointment of the initial 
     Executive Director of the Foundation;
       (2) adopt a constitution and bylaws for the Foundation that 
     are consistent with the purposes of the Foundation and this 
     title; and
       (3) undertake any other activities that may be necessary to 
     carry out this title.
       (b) Officers and Employees.--
       (1) Appointment and hiring.--An officer or employee of the 
     Foundation--
       (A) shall not, by virtue of the appointment or employment 
     of the officer or employee, be considered a Federal employee 
     for any purpose, including the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service, except that such an individual may participate in 
     the Federal employee retirement system as if the individual 
     were a Federal employee; and
       (B) may not be paid by the Foundation a salary in excess of 
     $125,000 per year.
       (2) Executive director.--
       (A) Initial director.--The Secretary shall appoint an 
     individual to serve as the initial Executive Director of the 
     Foundation who shall serve, at the direction of the Board, as 
     the chief operating officer of the Foundation.
       (B) Subsequent directors.--The Board shall appoint each 
     subsequent Executive Director of the Foundation who shall 
     serve, at the direction of the Board, as the chief operating 
     officer of the Foundation.
       (C) Qualifications.--The Executive Director shall be 
     knowledgeable and experienced in matters relating to natural 
     resources conservation.

     SEC. 306. CORPORATE POWERS AND OBLIGATIONS OF THE FOUNDATION.

       (a) In General.--The Foundation--
       (1) may conduct business throughout the United States and 
     the territories and possessions of the United States; and
       (2) shall at all times maintain a designated agent who is 
     authorized to accept service of process for the Foundation, 
     so that the serving of notice to, or service of process on, 
     the agent, or mailed to the business address of the agent, 
     shall be considered as service on or notice to the 
     Foundation.
       (b) Seal.--The Foundation shall have an official seal 
     selected by the Board that shall be judicially noticed.
       (c) Powers.--To carry out the purposes of the Foundation 
     under section 303(b), the Foundation shall have, in addition 
     to the powers otherwise provided under this title, the usual 
     powers of a corporation, including the power--
       (1) to accept, receive, solicit, hold, administer, and use 
     any gift, devise, or bequest, either absolutely or in trust, 
     of real or personal property or any income from, or other 
     interest in, the gift, devise, or bequest;
       (2) to acquire by purchase or exchange any real or personal 
     property or interest in property;
       (3) unless otherwise required by instrument of transfer, to 
     sell, donate, lease, invest, reinvest, retain, or otherwise 
     dispose of any property or income from property;
       (4) to borrow money from private sources and issue bonds, 
     debentures, or other debt instruments, subject to section 
     309, except that the aggregate amount of the borrowing and 
     debt instruments outstanding at any time may not exceed 
     $1,000,000;
       (5) to sue and be sued, and complain and defend itself, in 
     any court of competent jurisdiction, except that a member of 
     the Board shall not be personally liable for an action in the 
     performance of services for the Board, except for gross 
     negligence;
       (6) to enter into a contract or other agreement with an 
     agency of State or local government, educational institution, 
     or other private organization or person and to make such 
     payments as may be necessary to carry out the functions of 
     the Foundation; and
       (7) to do any and all acts that are necessary to carry out 
     the purposes of the Foundation.
       (d) Interest in Property.--
       (1) In general.--The Foundation may acquire, hold, and 
     dispose of lands, waters, or other interests in real property 
     by donation, gift, devise, purchase, or exchange.
       (2) Interests in real property.--For purposes of this 
     title, an interest in real property shall be treated, among 
     other things, as including an easement or other right for the 
     preservation, conservation, protection, or enhancement of 
     agricultural, natural, scenic, historic, scientific, 
     educational, inspirational, or recreational resources.
       (3) Gifts.--A gift, devise, or bequest may be accepted by 
     the Foundation even though the gift, devise, or bequest is 
     encumbered, restricted, or subject to a beneficial interest 
     of a private person if any current or future interest in the 
     gift, devise, or bequest is for the benefit of the 
     Foundation.

     SEC. 307. ADMINISTRATIVE SERVICES AND SUPPORT.

       The Secretary may provide, without reimbursement, 
     personnel, facilities, and other administrative services of 
     the Department to the Foundation.

     SEC. 308. AUDITS AND PETITION OF ATTORNEY GENERAL FOR 
                   EQUITABLE RELIEF.

       (a) Audits.--
       (1) In general.--The accounts of the Foundation shall be 
     audited in accordance with Public Law 88-504 (36 U.S.C. 1101 
     et seq.), including an audit of lobbying and litigation 
     activities carried out by the Foundation.
       (2) Conforming amendment.--The first section of Public Law 
     88-504 (36 U.S.C. 1101) is amended by adding at the end the 
     following:
       ``(77) The National Natural Resources Conservation 
     Foundation.''.
       (b) Relief with Respect to Certain Foundation Acts or 
     Failure to Act.--The Attorney General may petition in the 
     United States District Court for the District of Columbia for 
     such equitable relief as may be necessary or appropriate, if 
     the Foundation--
       (1) engages in, or threatens to engage in, any act, 
     practice, or policy that is inconsistent with this title; or
       (2) refuses, fails, neglects, or threatens to refuse, fail, 
     or neglect, to discharge the obligations of the Foundation 
     under this title.

     SEC. 309. RELEASE FROM LIABILITY.

       (a) In General.--The United States shall not be liable for 
     any debt, default, act, or omission of the Foundation. The 
     full faith and credit of the United States shall not extend 
     to the Foundation.
       (b) Statement.--An obligation issued by the Foundation, and 
     a document offering an obligation, shall include a prominent 
     statement that the obligation is not directly or indirectly 
     guaranteed, in whole or in part, by the United States (or an 
     agency or instrumentality of the United States).

     SEC. 310. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the Department 
     to be made available to the Foundation such sums as are 
     necessary for each of fiscal years 1997 through 1999 to 
     initially establish and carry out activities of the 
     Foundation.
     
[[Page H41]]

              TITLE IV--IMPLEMENTATION AND EFFECTIVE DATE

     SEC. 401. IMPLEMENTATION.

       The Secretary of Agriculture and the Farm Credit 
     Administration shall promulgate regulations and take other 
     required actions to implement the provisions of this Act not 
     later than 90 days after the effective date of this Act.

     SEC. 402. EFFECTIVE DATE.

       Except as otherwise provided in this Act, this Act and the 
     amendments made by this Act shall become effective on the 
     date of enactment.

         Amend the title so as to read: ``An Act to amend the Farm 
     Credit Act of 1971 to provide regulatory relief, and for 
     other purposes.''.

       House Amendment to Senate Amendments:
       In lieu of the matter inserted by the Senate amendment to 
     the text of the bill, insert the following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Farm 
     Credit System Reform Act of 1996''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

            TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET

Sec. 101. Definition of real estate.
Sec. 102. Definition of certified facility.
Sec. 103. Duties of Federal Agricultural Mortgage Corporation.
Sec. 104. Powers of the Corporation.
Sec. 105. Federal reserve banks as depositaries and fiscal agents.
Sec. 106. Certification of agricultural mortgage marketing facilities.
Sec. 107. Guarantee of qualified loans.
Sec. 108. Mandatory reserves and subordinated participation interests 
              eliminated.
Sec. 109. Standards requiring diversified pools.
Sec. 110. Small farms.
Sec. 111. Definition of an affiliate.
Sec. 112. State usury laws superseded.
Sec. 113. Extension of capital transition period.
Sec. 114. Minimum capital level.
Sec. 115. Critical capital level.
Sec. 116. Enforcement levels.
Sec. 117. Recapitalization of the Corporation.
Sec. 118. Liquidation of the Federal Agricultural Mortgage Corporation.

                      TITLE II--REGULATORY RELIEF

Sec. 201. Compensation of association personnel.
Sec. 202. Use of private mortgage insurance.
Sec. 203. Removal of certain borrower reporting requirement.
Sec. 204. Reform of regulatory limitations on dividend, member 
              business, and voting practices of eligible farmer-owned 
              cooperatives.
Sec. 205. Removal of Federal Government certification requirement for 
              certain private sector financings.
Sec. 206. Borrower stock.
Sec. 207. Disclosure relating to adjustable rate loans.
Sec. 208. Borrowers' rights.
Sec. 209. Formation of administrative service entities.
Sec. 210. Joint management agreements.
Sec. 211. Dissemination of quarterly reports.
Sec. 212. Regulatory review.
Sec. 213. Examination of farm credit system institutions.
Sec. 214. Conservatorships and receiverships.
Sec. 215. Farm Credit Insurance Fund operations.
Sec. 216. Examinations by the Farm Credit System Insurance Corporation.
Sec. 217. Powers with respect to troubled insured System banks.
Sec. 218. Oversight and regulatory actions by the Farm Credit System 
              Insurance Corporation.
Sec. 219. Farm Credit System Insurance Corporation board of directors.
Sec. 220. Interest rate reduction program.
Sec. 221. Liability for making criminal referrals.

              TITLE III--IMPLEMENTATION AND EFFECTIVE DATE

Sec. 301. Implementation.
Sec. 302. Effective date.
            TITLE I--AGRICULTURAL MORTGAGE SECONDARY MARKET

     SEC. 101. DEFINITION OF REAL ESTATE.

       Section 8.0(1)(B)(ii) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(1)(B)(ii)) is amended by striking ``with a 
     purchase price'' and inserting ``, excluding the land to 
     which the dwelling is affixed, with a value''.

     SEC. 102. DEFINITION OF CERTIFIED FACILITY.

       Section 8.0(3) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa(3)) is amended--
       (1) in subparagraph (A), by striking ``a secondary 
     marketing agricultural loan'' and inserting ``an agricultural 
     mortgage marketing''; and
       (2) in subparagraph (B), by striking ``, but only'' and all 
     that follows through ``(9)(B)''.

     SEC. 103. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE 
                   CORPORATION.

       Section 8.1(b) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-1(b)) is amended--
       (1) in paragraph (2), by striking ``and'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(4) purchase qualified loans and issue securities 
     representing interests in, or obligations backed by, the 
     qualified loans, guaranteed for the timely repayment of 
     principal and interest.''.

     SEC. 104. POWERS OF THE CORPORATION.

       Section 8.3(c) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-3(c)) is amended--
       (1) by redesignating paragraphs (13) and (14) as paragraphs 
     (14) and (15), respectively; and
       (2) by inserting after paragraph (12) the following:
       ``(13) To purchase, hold, sell, or assign a qualified loan, 
     to issue a guaranteed security, representing an interest in, 
     or an obligation backed by, the qualified loan, and to 
     perform all the functions and responsibilities of an 
     agricultural mortgage marketing facility operating as a 
     certified facility under this title.''.

     SEC. 105. FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL 
                   AGENTS.

       Section 8.3 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-3) is amended--
       (1) in subsection (d), by striking ``may act as 
     depositories for, or'' and inserting ``shall act as 
     depositories for, and''; and
       (2) in subsection (e), by striking ``Secretary of the 
     Treasury may authorize the Corporation to use'' and inserting 
     ``Corporation shall have access to''.

     SEC. 106. CERTIFICATION OF AGRICULTURAL MORTGAGE MARKETING 
                   FACILITIES.

       Section 8.5 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-5) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by inserting ``(other than the 
     Corporation)'' after ``agricultural mortgage marketing 
     facilities''; and
       (B) in paragraph (2), by inserting ``(other than the 
     Corporation)'' after ``agricultural mortgage marketing 
     facility''; and
       (2) in subsection (e)(1), by striking ``(other than the 
     Corporation)''.

     SEC. 107. GUARANTEE OF QUALIFIED LOANS.

       Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-6) is amended--
       (1) in subsection (a)(1)--
       (A) by striking ``Corporation shall guarantee'' and 
     inserting the following: ``Corporation--
       ``(A) shall guarantee'';
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(B) may issue a security, guaranteed as to the timely 
     payment of principal and interest, that represents an 
     interest solely in, or an obligation fully backed by, a pool 
     consisting of qualified loans that--
       ``(i) meet the standards established under section 8.8; and
       ``(ii) have been purchased and held by the Corporation.'';
       (2) in subsection (d)--
       (A) by striking paragraph (4); and
       (B) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively; and
       (3) in subsection (g)(2), by striking ``section 
     8.0(9)(B))'' and inserting ``section 8.0(9))''.

     SEC. 108. MANDATORY RESERVES AND SUBORDINATED PARTICIPATION 
                   INTERESTS ELIMINATED.

       (a) Guarantee of Qualified Loans.--Section 8.6 of the Farm 
     Credit Act of 1971 (12 U.S.C. 2279aa-6) is amended by 
     striking subsection (b).
       (b) Reserves and Subordinated Participation Interests.--
     Section 8.7 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-
     7) is repealed.
       (c) Conforming Amendments.--
       (1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(9)(B)(i)) is amended by striking ``8.7, 8.8,'' 
     and inserting ``8.8''.
       (2) Section 8.6(a)(2) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-6(a)(2)) is amended by striking ``subject to 
     the provisions of subsection (b)''.

     SEC. 109. STANDARDS REQUIRING DIVERSIFIED POOLS.

       (a) In General.--Section 8.6 of the Farm Credit Act of 1971 
     (12 U.S.C. 2279aa-6) (as amended by section 108) is amended--
       (1) by striking subsection (c); and
       (2) by redesignating subsections (d) through (g) as 
     subsections (b) through (e), respectively.
       (b) Conforming Amendments.--
       (1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa(9)(B)(i)) is amended by striking ``(f)'' and 
     inserting ``(d)''.
       (2) Section 8.13(a) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-13(a)) is amended by striking ``sections 8.6(b) 
     and'' in each place it appears and inserting ``section''.
       (3) Section 8.32(b)(1)(C) of the Farm Credit Act of 1971 
     (12 U.S.C. 2279bb-1(b)(1)(C)) is amended--
       (A) by striking ``shall'' and inserting ``may''; and
       (B) by inserting ``(as in effect before the date of the 
     enactment of the Farm Credit System Reform Act of 1996)'' 
     before the semicolon.
       (4) Section 8.6(b) of the Farm Credit Act of 1971 (12 
     U.S.C. 2279aa-6(b)) (as redesignated by subsection (a)(2)) is 
     amended--
       (A) by striking paragraph (4) (as redesignated by section 
     107(2)(B)); and
       (B) by redesignating paragraphs (5) and (6) (as 
     redesignated by section 107(2)(B)) as paragraphs (4) and (5), 
     respectively.

     SEC. 110. SMALL FARMS.

       Section 8.8(e) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-8(e)) is amended by adding at the end the following: 
     ``The Board shall promote and encourage the inclusion of 
     qualified loans for small farms and family farmers in the 
     agricultural mortgage secondary market.''.
     
[[Page H42]]


     SEC. 111. DEFINITION OF AN AFFILIATE.

       Section 8.11(e) of the Farm Credit Act of 1971 (21 U.S.C. 
     2279aa-11(e)) is amended--
       (1) by striking ``a certified facility or''; and
       (2) by striking ``paragraphs (3) and (7), respectively, of 
     section 8.0'' and inserting ``section 8.0(7)''.

     SEC. 112. STATE USURY LAWS SUPERSEDED.

       Section 8.12 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-12) is amended by striking subsection (d) and 
     inserting the following:
       ``(d) State Usury Laws Superseded.--A provision of the 
     Constitution or law of any State shall not apply to an 
     agricultural loan made by an originator or a certified 
     facility in accordance with this title for sale to the 
     Corporation or to a certified facility for inclusion in a 
     pool for which the Corporation has provided, or has committed 
     to provide, a guarantee, if the loan, not later than 180 days 
     after the date the loan was made, is sold to the Corporation 
     or included in a pool for which the Corporation has provided 
     a guarantee, if the provision--
       ``(1) limits the rate or amount of interest, discount 
     points, finance charges, or other charges that may be 
     charged, taken, received, or reserved by an agricultural 
     lender or a certified facility; or
       ``(2) limits or prohibits a prepayment penalty (either 
     fixed or declining), yield maintenance, or make-whole payment 
     that may be charged, taken, or received by an agricultural 
     lender or a certified facility in connection with the full or 
     partial payment of the principal amount due on a loan by a 
     borrower in advance of the scheduled date for the payment 
     under the terms of the loan, otherwise known as a prepayment 
     of the loan principal.''.

     SEC. 113. EXTENSION OF CAPITAL TRANSITION PERIOD.

       Section 8.32 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-1) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``Not later than the expiration of the 2-year period 
     beginning on December 13, 1991,'' and inserting ``Not sooner 
     than the expiration of the 3-year period beginning on the 
     date of enactment of the Farm Credit System Reform Act of 
     1996,'';
       (2) in the first sentence of subsection (b)(2), by striking 
     ``5-year'' and inserting ``8-year''; and
       (3) in subsection (d)--
       (A) in the first sentence--
       (i) by striking ``The regulations establishing'' and 
     inserting the following:
       ``(1) In general.--The regulations establishing''; and
       (ii) by striking ``shall contain'' and inserting the 
     following: ``shall--
       ``(A) be issued by the Director for public comment in the 
     form of a notice of proposed rulemaking, to be first 
     published after the expiration of the period referred to in 
     subsection (a); and
       ``(B) contain''; and
       (B) in the second sentence, by striking ``The regulations 
     shall'' and inserting the following:
       ``(2) Specificity.--The regulations referred to in 
     paragraph (1) shall''.

     SEC. 114. MINIMUM CAPITAL LEVEL.

       Section 8.33 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-2) is amended to read as follows:

     ``SEC. 8.33. MINIMUM CAPITAL LEVEL.

       ``(a) In General.--Except as provided in subsection (b), 
     for purposes of this subtitle, the minimum capital level for 
     the Corporation shall be an amount of core capital equal to 
     the sum of--
       ``(1) 2.75 percent of the aggregate on-balance sheet assets 
     of the Corporation, as determined in accordance with 
     generally accepted accounting principles; and
       ``(2) 0.75 percent of the aggregate off-balance sheet 
     obligations of the Corporation, which, for the purposes of 
     this subtitle, shall include--
       ``(A) the unpaid principal balance of outstanding 
     securities that are guaranteed by the Corporation and backed 
     by pools of qualified loans;
       ``(B) instruments that are issued or guaranteed by the 
     Corporation and are substantially equivalent to instruments 
     described in subparagraph (A); and
       ``(C) other off-balance sheet obligations of the 
     Corporation.
       ``(b) Transition Period.--
       ``(1) In general.--For purposes of this subtitle, the 
     minimum capital level for the Corporation--
       ``(A) prior to January 1, 1997, shall be the amount of core 
     capital equal to the sum of--
       ``(i) 0.45 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(ii) 0.45 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(iii) 2.50 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2);
       ``(B) during the 1-year period ending December 31, 1997, 
     shall be the amount of core capital equal to the sum of--
       ``(i) 0.55 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(ii) 1.20 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(iii) 2.55 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2);
       ``(C) during the 1-year period ending December 31, 1998, 
     shall be the amount of core capital equal to--
       ``(i) if the Corporation's core capital is not less than 
     $25,000,000 on January 1, 1998, the sum of--

       ``(I) 0.65 percent of aggregate off-balance sheet 
     obligations of the Corporation;
       ``(II) 1.95 percent of designated on-balance sheet assets 
     of the Corporation, as determined under paragraph (2); and
       ``(III) 2.65 percent of on-balance sheet assets of the 
     Corporation other than assets designated under paragraph (2); 
     or

       ``(ii) if the Corporation's core capital is less than 
     $25,000,000 on January 1, 1998, the amount determined under 
     subsection (a); and
       ``(D) on and after January 1, 1999, shall be the amount 
     determined under subsection (a).
       ``(2) Designated on-balance sheet assets.--For purposes of 
     this subsection, the designated on-balance sheet assets of 
     the Corporation shall be--
       ``(A) the aggregate on-balance sheet assets of the 
     Corporation acquired under section 8.6(e); and
       ``(B) the aggregate amount of qualified loans purchased and 
     held by the Corporation under section 8.3(c)(13).''.

     SEC. 115. CRITICAL CAPITAL LEVEL.

       Section 8.34 of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-3) is amended to read as follows:

     ``SEC. 8.34. CRITICAL CAPITAL LEVEL.

       ``For purposes of this subtitle, the critical capital level 
     for the Corporation shall be an amount of core capital equal 
     to 50 percent of the total minimum capital amount determined 
     under section 8.33.''.

     SEC. 116. ENFORCEMENT LEVELS.

       Section 8.35(e) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279bb-4(e)) is amended by striking ``during the 30-month 
     period beginning on the date of the enactment of this 
     section,'' and inserting ``during the period beginning on 
     December 13, 1991, and ending on the effective date of the 
     risk based capital regulation issued by the Director under 
     section 8.32,''.

     SEC. 117. RECAPITALIZATION OF THE CORPORATION.

       Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa 
     et seq.) is amended by adding at the end the following:

     ``SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.

       ``(a) Mandatory Recapitalization.--The Corporation shall 
     increase the core capital of the Corporation to an amount 
     equal to or greater than $25,000,000, not later than the 
     earlier of--
       ``(1) the date that is 2 years after the date of enactment 
     of this section; or
       ``(2) the date that is 180 days after the end of the first 
     calendar quarter that the aggregate on-balance sheet assets 
     of the Corporation, plus the outstanding principal of the 
     off-balance sheet obligations of the Corporation, equal or 
     exceed $2,000,000,000.
       ``(b) Raising Core Capital.--In carrying out this section, 
     the Corporation may issue stock under section 8.4 and 
     otherwise employ any recognized and legitimate means of 
     raising core capital in the power of the Corporation under 
     section 8.3.
       ``(c) Limitation on Growth of Total Assets.--During the 2-
     year period beginning on the date of enactment of this 
     section, the aggregate on-balance sheet assets of the 
     Corporation plus the outstanding principal of the off-balance 
     sheet obligations of the Corporation may not exceed 
     $3,000,000,000 if the core capital of the Corporation is less 
     than $25,000,000.
       ``(d) Enforcement.--If the Corporation fails to carry out 
     subsection (a) by the date required under paragraph (1) or 
     (2) of subsection (a), the Corporation may not purchase a new 
     qualified loan or issue or guarantee a new loan-backed 
     security until the core capital of the Corporation is 
     increased to an amount equal to or greater than 
     $25,000,000.''.

     SEC. 118. LIQUIDATION OF THE FEDERAL AGRICULTURAL MORTGAGE 
                   CORPORATION.

       Title VIII of the Farm Credit Act of 1971 (12 U.S.C. 2279aa 
     et seq.) (as amended by section 117) is amended by adding at 
     the end the following:
  ``Subtitle C--Receivership, Conservatorship, and Liquidation of the 
               Federal Agricultural Mortgage Corporation

     ``SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVERSHIP.

       ``(a) Voluntary Liquidation.--The Corporation may 
     voluntarily liquidate only with the consent of, and in 
     accordance with a plan of liquidation approved by, the Farm 
     Credit Administration Board.
       ``(b) Involuntary Liquidation.--
       ``(1) In general.--The Farm Credit Administration Board may 
     appoint a conservator or receiver for the Corporation under 
     the circumstances specified in section 4.12(b).
       ``(2) Application.--In applying section 4.12(b) to the 
     Corporation under paragraph (1)--
       ``(A) the Corporation shall also be considered insolvent if 
     the Corporation is unable to pay its debts as they fall due 
     in the ordinary course of business;
       ``(B) a conservator may also be appointed for the 
     Corporation if the authority of the Corporation to purchase 
     qualified loans or issue or guarantee loan-backed securities 
     is suspended; and
       ``(C) a receiver may also be appointed for the Corporation 
     if--
       ``(i)(I) the authority of the Corporation to purchase 
     qualified loans or issue or guarantee loan-backed securities 
     is suspended; or
       ``(II) the Corporation is classified under section 8.35 as 
     within level III or IV and the alternative actions available 
     under subtitle B are not satisfactory; and
     
[[Page H43]]

       ``(ii) the Farm Credit Administration determines that the 
     appointment of a conservator would not be appropriate.
       ``(3) No effect on supervisory actions.--The grounds for 
     appointment of a conservator for the Corporation under this 
     subsection shall be in addition to those in section 8.37.
       ``(c) Appointment of Conservator or Receiver.--
       ``(1) Qualifications.--Notwithstanding section 4.12(b), if 
     a conservator or receiver is appointed for the Corporation, 
     the conservator or receiver shall be--
       ``(A) the Farm Credit Administration or any other 
     governmental entity or employee, including the Farm Credit 
     System Insurance Corporation; or
       ``(B) any person that--
       ``(i) has no claim against, or financial interest in, the 
     Corporation or other basis for a conflict of interest as the 
     conservator or receiver; and
       ``(ii) has the financial and management expertise necessary 
     to direct the operations and affairs of the Corporation and, 
     if necessary, to liquidate the Corporation.
       ``(2) Compensation.--
       ``(A) In general.--A conservator or receiver for the 
     Corporation and professional personnel (other than a Federal 
     employee) employed to represent or assist the conservator or 
     receiver may be compensated for activities conducted as, or 
     for, a conservator or receiver.
       ``(B) Limit on compensation.--Compensation may not be 
     provided in amounts greater than the compensation paid to 
     employees of the Federal Government for similar services, 
     except that the Farm Credit Administration may provide for 
     compensation at higher rates that are not in excess of rates 
     prevailing in the private sector if the Farm Credit 
     Administration determines that compensation at higher rates 
     is necessary in order to recruit and retain competent 
     personnel.
       ``(C) Contractual arrangements.--The conservator or 
     receiver may contract with any governmental entity, including 
     the Farm Credit System Insurance Corporation, to make 
     personnel, services, and facilities of the entity available 
     to the conservator or receiver on such terms and compensation 
     arrangements as shall be mutually agreed, and each entity may 
     provide the same to the conservator or receiver.
       ``(3) Expenses.--A valid claim for expenses of the 
     conservatorship or receivership (including compensation under 
     paragraph (2)) and a valid claim with respect to a loan made 
     under subsection (f) shall--
       ``(A) be paid by the conservator or receiver from funds of 
     the Corporation before any other valid claim against the 
     Corporation; and
       ``(B) may be secured by a lien, on such property of the 
     Corporation as the conservator or receiver may determine, 
     that shall have priority over any other lien.
       ``(4) Liability.--If the conservator or receiver for the 
     Corporation is not a Federal entity, or an officer or 
     employee of the Federal Government, the conservator or 
     receiver shall not be personally liable for damages in tort 
     or otherwise for an act or omission performed pursuant to and 
     in the course of the conservatorship or receivership, unless 
     the act or omission constitutes gross negligence or any form 
     of intentional tortious conduct or criminal conduct.
       ``(5) Indemnification.--The Farm Credit Administration may 
     allow indemnification of the conservator or receiver from the 
     assets of the conservatorship or receivership on such terms 
     as the Farm Credit Administration considers appropriate.
       ``(d) Judicial Review of Appointment.--
       ``(1) In general.--Notwithstanding subsection (i)(1), not 
     later than 30 days after a conservator or receiver is 
     appointed under subsection (b), the Corporation may bring an 
     action in the United States District Court for the District 
     of Columbia for an order requiring the Farm Credit 
     Administration Board to remove the conservator or receiver. 
     The court shall, on the merits, dismiss the action or direct 
     the Farm Credit Administration Board to remove the 
     conservator or receiver.
       ``(2) Stay of other actions.--On the commencement of an 
     action under paragraph (1), any court having jurisdiction of 
     any other action or enforcement proceeding authorized under 
     this Act to which the Corporation is a party shall stay the 
     action or proceeding during the pendency of the action for 
     removal of the conservator or receiver.
       ``(e) General Powers of Conservator or Receiver.--The 
     conservator or receiver for the Corporation shall have such 
     powers to conduct the conservatorship or receivership as 
     shall be provided pursuant to regulations adopted by the Farm 
     Credit Administration Board. Such powers shall be comparable 
     to the powers available to a conservator or receiver 
     appointed pursuant to section 4.12(b).
       ``(f) Borrowings for Working Capital.--
       ``(1) In general.--If the conservator or receiver of the 
     Corporation determines that it is likely that there will be 
     insufficient funds to pay the ongoing administrative expenses 
     of the conservatorship or receivership or that there will be 
     insufficient liquidity to fund maturing obligations of the 
     conservatorship or receivership, the conservator or receiver 
     may borrow funds in such amounts, from such sources, and at 
     such rates of interest as the conservator or receiver 
     considers necessary or appropriate to meet the administrative 
     expenses or liquidity needs of the conservatorship or 
     receivership.
       ``(2) Working capital from farm credit banks.--A Farm 
     Credit bank may loan funds to the conservator or receiver for 
     a loan authorized under paragraph (1) or, in the event of 
     receivership, a Farm Credit bank may purchase assets of the 
     Corporation.
       ``(g) Agreements Against Interests of Conservator or 
     Receiver.--No agreement that tends to diminish or defeat the 
     right, title, or interest of the conservator or receiver for 
     the Corporation in any asset acquired by the conservator or 
     receiver as conservator or receiver for the Corporation shall 
     be valid against the conservator or receiver unless the 
     agreement--
       ``(1) is in writing;
       ``(2) is executed by the Corporation and any person 
     claiming an adverse interest under the agreement, including 
     the obligor, contemporaneously with the acquisition of the 
     asset by the Corporation;
       ``(3) is approved by the Board or an appropriate committee 
     of the Board, which approval shall be reflected in the 
     minutes of the Board or committee; and
       ``(4) has been, continuously, from the time of the 
     agreement's execution, an official record of the Corporation.
       ``(h) Report to the Congress.--On a determination by the 
     receiver for the Corporation that there are insufficient 
     assets of the receivership to pay all valid claims against 
     the receivership, the receiver shall submit to the Secretary 
     of the Treasury, the Committee on Agriculture of the House of 
     Representatives, and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a report on the financial 
     condition of the receivership.
       ``(i) Termination of Authorities.--
       ``(1) Corporation.--The charter of the Corporation shall be 
     canceled, and the authority provided to the Corporation by 
     this title shall terminate, on such date as the Farm Credit 
     Administration Board determines is appropriate following the 
     placement of the Corporation in receivership, but not later 
     than the conclusion of the receivership and discharge of the 
     receiver.
       ``(2) Oversight.--The Office of Secondary Market Oversight 
     established under section 8.11 shall be abolished, and 
     section 8.11(a) and subtitle B shall have no force or effect, 
     on such date as the Farm Credit Administration Board 
     determines is appropriate following the placement of the 
     Corporation in receivership, but not later than the 
     conclusion of the receivership and discharge of the 
     receiver.''.
                      TITLE II--REGULATORY RELIEF

     SEC. 201. COMPENSATION OF ASSOCIATION PERSONNEL.

       Section 1.5(13) of the Farm Credit Act of 1971 (12 U.S.C. 
     2013(13)) is amended by striking ``, and the appointment and 
     compensation of the chief executive officer thereof,''.

     SEC. 202. USE OF PRIVATE MORTGAGE INSURANCE.

       (a) In General.--Section 1.10(a)(1) of the Farm Credit Act 
     of 1971 (12 U.S.C. 2018(a)(1)) is amended by adding at the 
     end the following:
       ``(D) Private mortgage insurance.--A loan on which private 
     mortgage insurance is obtained may exceed 85 percent of the 
     appraised value of the real estate security to the extent 
     that the loan amount in excess of such 85 percent is covered 
     by the insurance.''.
       (b) Conforming Amendment.--Section 1.10(a)(1)(A) of the 
     Farm Credit Act of 1971 (12 U.S.C. 2018(a)(1)(A)) is amended 
     by striking ``paragraphs (2) and (3)'' and inserting 
     ``subparagraphs (C) and (D)''.

     SEC. 203. REMOVAL OF CERTAIN BORROWER REPORTING REQUIREMENT.

       Section 1.10(a) of the Farm Credit Act of 1971 (12 U.S.C. 
     2018(a)) is amended by striking paragraph (5).

     SEC. 204. REFORM OF REGULATORY LIMITATIONS ON DIVIDEND, 
                   MEMBER BUSINESS, AND VOTING PRACTICES OF 
                   ELIGIBLE FARMER-OWNED COOPERATIVES.

       (a) In General.--Section 3.8(a) of the Farm Credit Act of 
     1971 (12 U.S.C. 2129(a)) is amended by adding at the end the 
     following: ``Any such association that has received a loan 
     from a bank for cooperatives shall, without regard to the 
     requirements of paragraphs (1) through (4), continue to be 
     eligible for so long as more than 50 percent (or such higher 
     percentage as is established by the bank board) of the voting 
     control of the association is held by farmers, producers or 
     harvesters of aquatic products, or eligible cooperative 
     associations.''.
       (b) Conforming Amendment.--Section 3.8(b)(1)(D) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2129(b)(1)(D)) is amended by 
     striking ``and (4) of subsection (a)'' and inserting ``and 
     (4), or under the last sentence, of subsection (a)''.

     SEC. 205. REMOVAL OF FEDERAL GOVERNMENT CERTIFICATION 
                   REQUIREMENT FOR CERTAIN PRIVATE SECTOR 
                   FINANCINGS.

       Section 3.8(b)(1)(A) of the Farm Credit Act of 1971 (12 
     U.S.C. 2129(b)(1)(A)) is amended--
       (1) by striking ``have been certified by the Administrator 
     of the Rural Electrification Administration to be eligible 
     for such'' and inserting ``are eligible under the Rural 
     Electrification Act of 1936 (7 U.S.C. 901 et seq.) for''; and
       (2) by striking ``loan guarantee, and'' and inserting 
     ``loan guarantee from the Administration or the Bank (or a 
     successor of the Administration or the Bank), and''.

     SEC. 206. BORROWER STOCK.

       Section 4.3A of the Farm Credit Act of 1971 (12 U.S.C. 
     2154a) is amended--
       (1) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively; and
     
[[Page H44]]

       (2) by inserting after subsection (e) the following:
       ``(f) Loans Designated for Sale or Sold Into the Secondary 
     Market.--
       ``(1) In general.--Subject to paragraph (2) and 
     notwithstanding any other provision of this section, the 
     bylaws adopted by a bank or association under subsection (b) 
     may provide--
       ``(A) in the case of a loan made on or after the date of 
     enactment of this paragraph that is designated, at the time 
     the loan is made, for sale into a secondary market, that no 
     voting stock or participation certificate purchase 
     requirement shall apply to the borrower for the loan; and
       ``(B) in the case of a loan made before the date of 
     enactment of this paragraph that is sold into a secondary 
     market, that all outstanding voting stock or participation 
     certificates held by the borrower with respect to the loan 
     shall, subject to subsection (d)(1), be retired.
       ``(2) Applicability.--Notwithstanding any other provision 
     of this section, in the case of a loan sold to a secondary 
     market under title VIII, paragraph (1) shall apply regardless 
     of whether the bank or association retains a subordinated 
     participation interest in a loan or pool of loans or 
     contributes to a cash reserve.
       ``(3) Exception.--
       ``(A) In general.--Subject to subparagraph (B) and 
     notwithstanding any other provision of this section, if a 
     loan designated for sale under paragraph (1)(A) is not sold 
     into a secondary market during the 180-day period that begins 
     on the date of the designation, the voting stock or 
     participation certificate purchase requirement that would 
     otherwise apply to the loan in the absence of a bylaw 
     provision described in paragraph (1)(A) shall be effective.
       ``(B) Retirement.--The bylaws adopted by a bank or 
     association under subsection (b) may provide that if a loan 
     described in subparagraph (A) is sold into a secondary market 
     after the end of the 180-day period described in the 
     subparagraph, all outstanding voting stock or participation 
     certificates held by the borrower with respect to the loan 
     shall, subject to subsection (d)(1), be retired.''.

     SEC. 207. DISCLOSURE RELATING TO ADJUSTABLE RATE LOANS.

       Section 4.13(a)(4) of the Farm Credit Act of 1971 (12 
     U.S.C. 2199(a)(4)) is amended by inserting before the 
     semicolon at the end the following: ``, and notice to the 
     borrower of a change in the interest rate applicable to the 
     loan of the borrower may be made within a reasonable time 
     after the effective date of an increase or decrease in the 
     interest rate''.

     SEC. 208. BORROWERS' RIGHTS.

       (a) Definition of Loan.--Section 4.14A(a)(5) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2202a(a)(5)) is amended--
       (1) by striking ``(5) Loan.--The'' and inserting the 
     following:
       ``(5) Loan.--
       ``(A) In general.--Subject to subparagraph (B), the''; and
       (2) by adding at the end the following:
       ``(B) Exclusion for loans designated for sale into 
     secondary market.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `loan' does not include a loan made on or after the date 
     of enactment of this subparagraph that is designated, at the 
     time the loan is made, for sale into a secondary market.
       ``(ii) Unsold loans.--

       ``(I) In general.--Except as provided in subclause (II), if 
     a loan designated for sale under clause (i) is not sold into 
     a secondary market during the 180-day period that begins on 
     the date of the designation, the provisions of this section 
     and sections 4.14, 4.14B, 4.14C, 4.14D, and 4.36 that would 
     otherwise apply to the loan in the absence of the exclusion 
     described in clause (i) shall become effective with respect 
     to the loan.
       ``(II) Later sale.--If a loan described in subclause (I) is 
     sold into a secondary market after the end of the 180-day 
     period described in subclause (I), subclause (I) shall not 
     apply with respect to the loan beginning on the date of the 
     sale.''.

       (b) Borrowers' Rights for Pooled Loans.--The first sentence 
     of section 8.9(b) of the Farm Credit Act of 1971 (12 U.S.C. 
     2279aa-9(b)) is amended by inserting ``(as defined in section 
     4.14A(a)(5))'' after ``application for a loan''.

     SEC. 209. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.

       Part E of title IV of the Farm Credit Act of 1971 is 
     amended by inserting after section 4.28 (12 U.S.C. 2214) the 
     following:

     ``SEC. 4.28A. DEFINITION OF BANK.

       ``In this part, the term `bank' includes each association 
     operating under title II.''.

     SEC. 210. JOINT MANAGEMENT AGREEMENTS.

       The first sentence of section 5.17(a)(2)(A) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2252(a)(2)(A)) is amended by 
     striking ``or management agreements''.

     SEC. 211. DISSEMINATION OF QUARTERLY REPORTS.

       Section 5.17(a)(8) of the Farm Credit Act of 1971 (12 
     U.S.C. 2252(a)(8)) is amended by inserting after ``except 
     that'' the following: ``the requirements of the Farm Credit 
     Administration governing the dissemination to stockholders of 
     quarterly reports of System institutions may not be more 
     burdensome or costly than the requirements applicable to 
     national banks, and''.

     SEC. 212. REGULATORY REVIEW.

       (a) Findings.--Congress finds that--
       (1) the Farm Credit Administration, in the role of the 
     Administration as an arms-length safety and soundness 
     regulator, has made considerable progress in reducing the 
     regulatory burden on Farm Credit System institutions;
       (2) the efforts of the Farm Credit Administration described 
     in paragraph (1) have resulted in cost savings for Farm 
     Credit System institutions; and
       (3) the cost savings described in paragraph (2) ultimately 
     benefit the farmers, ranchers, agricultural cooperatives, and 
     rural residents of the United States.
       (b) Continuation of Regulatory Review.--The Farm Credit 
     Administration shall continue the comprehensive review of 
     regulations governing the Farm Credit System to identify and 
     eliminate, consistent with law, safety, and soundness, all 
     regulations that are unnecessary, unduly burdensome or 
     costly, or not based on law.

     SEC. 213. EXAMINATION OF FARM CREDIT SYSTEM INSTITUTIONS.

       The first sentence of section 5.19(a) of the Farm Credit 
     Act of 1971 (12 U.S.C. 2254(a)) is amended by striking ``each 
     year'' and inserting ``during each 18-month period''.

     SEC. 214. CONSERVATORSHIPS AND RECEIVERSHIPS.

       (a) Definitions.--Section 5.51 of the Farm Credit Act of 
     1971 (12 U.S.C. 2277a) is amended--
       (1) by striking paragraph (5); and
       (2) by redesignating paragraph (6) as paragraph (5).
       (b) General Corporate Powers.--Section 5.58 of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-7) is amended by striking 
     paragraph (9) and inserting the following:
       ``(9) Conservator or receiver.--The Corporation may act as 
     a conservator or receiver.''.

     SEC. 215. FARM CREDIT INSURANCE FUND OPERATIONS.

       (a) Adjustment of Premiums.--
       (1) In general.--Section 5.55(a) of the Farm Credit Act of 
     1971 (12 U.S.C. 2277a-4(a)) is amended--
       (A) in paragraph (1), by striking ``Until the aggregate of 
     amounts in the Farm Credit Insurance Fund exceeds the secure 
     base amount, the annual premium due from any insured System 
     bank for any calendar year'' and inserting the following: 
     ``If at the end of any calendar year the aggregate of amounts 
     in the Farm Credit Insurance Fund does not exceed the secure 
     base amount, subject to paragraph (2), the annual premium due 
     from any insured System bank for the calendar year'';
       (B) by redesignating paragraph (2) as paragraph (3); and
       (C) by inserting after paragraph (1) the following:
       ``(2) Reduced premiums.--The Corporation, in the sole 
     discretion of the Corporation, may reduce by a percentage 
     uniformly applied to all insured System banks the annual 
     premium due from each insured System bank during any calendar 
     year, as determined under paragraph (1).''.
       (2) Conforming amendments.--
       (A) Section 5.55(b) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-4(b)) is amended--
       (i) by striking ``Insurance Fund'' each place it appears 
     and inserting ``Farm Credit Insurance Fund'';
       (ii) by striking ``for the following calendar year''; and
       (iii) by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)''.
       (B) Section 5.56(a) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-5(a)) is amended by striking ``section 
     5.55(a)(2)'' each place it appears in paragraphs (2) and (3) 
     and inserting ``section 5.55(a)(3)''.
       (C) 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) Allocation to Insured System Banks and Other System 
     Institutions of Excess Amounts in the Farm Credit Insurance 
     Fund.--Section 5.55 of the Farm Credit Act of 1971 (12 U.S.C. 
     2277a-4) is amended by adding at the end the following:
       ``(e) Allocation to System Institutions of Excess 
     Reserves.--
       ``(1) Establishment of allocated insurance reserves 
     accounts.--There is hereby established in the Farm Credit 
     Insurance Fund an Allocated Insurance Reserves Account--
       ``(A) for each insured System bank; and
       ``(B) subject to paragraph (6)(C), for all holders, in the 
     aggregate, of Financial Assistance Corporation stock.
       ``(2) Treatment.--Amounts in any Allocated Insurance 
     Reserves Account shall be considered to be part of the Farm 
     Credit Insurance Fund.
       ``(3) Annual allocations.--If, at the end of any calendar 
     year, the aggregate of the amounts in the Farm Credit 
     Insurance Fund exceeds the average secure base amount for the 
     calendar year (as calculated on an average daily balance 
     basis), the Corporation shall allocate to the Allocated 
     Insurance Reserves Accounts the excess amount less the amount 
     that the Corporation, in its sole discretion, determines to 
     be the sum of the estimated operating expenses and estimated 
     insurance obligations of the Corporation for the immediately 
     succeeding calendar year.
     
[[Page H45]]

       ``(4) Allocation formula.--From the total amount required 
     to be allocated at the end of a calendar year under paragraph 
     (3)--
       ``(A) 10 percent of the total amount shall be credited to 
     the Allocated Insurance Reserves Account established under 
     paragraph (1)(B), subject to paragraph (6)(C); and
       ``(B) there shall be credited to the Allocated Insurance 
     Reserves Account of each insured System bank an amount that 
     bears the same ratio to the total amount (less any amount 
     credited under subparagraph (A)) as the average principal 
     outstanding for the 3-year period ending on the end of the 
     calendar year on loans made by the bank that are in accrual 
     status bears to the average principal outstanding for the 3-
     year period ending on the end of the calendar year on loans 
     made by all insured System banks that are in accrual status 
     (excluding, in each case, the guaranteed portions of 
     government-guaranteed loans described in subsection 
     (a)(1)(C)).
       ``(5) Use of funds in allocated insurance reserves 
     accounts.--To the extent that the sum of the operating 
     expenses of the Corporation and the insurance obligations of 
     the Corporation for a calendar year exceeds the sum of 
     operating expenses and insurance obligations determined under 
     paragraph (3) for the calendar year, the Corporation shall 
     cover the expenses and obligations by--
       ``(A) reducing each Allocated Insurance Reserves Account by 
     the same proportion; and
       ``(B) expending the amounts obtained under subparagraph (A) 
     before expending other amounts in the Fund.
       ``(6) Other disposition of account funds.--
       ``(A) In general.--As soon as practicable during each 
     calendar year beginning more than 8 years after the date on 
     which the aggregate of the amounts in the Farm Credit 
     Insurance Fund exceeds the secure base amount, but not 
     earlier than January 1, 2005, the Corporation may--
       ``(i) subject to subparagraphs (D) and (F), pay to each 
     insured System bank, in a manner determined by the 
     Corporation, an amount equal to the lesser of--

       ``(I) 20 percent of the balance in the insured System 
     bank's Allocated Insurance Reserves Account as of the 
     preceding December 31; or
       ``(II) 20 percent of the balance in the bank's Allocated 
     Insurance Reserves Account on the date of the payment; and

       ``(ii) subject to subparagraphs (C), (E), and (F), pay to 
     each System bank and association holding Financial Assistance 
     Corporation stock a proportionate share, determined by 
     dividing the number of shares of Financial Assistance 
     Corporation stock held by the institution by the total number 
     of shares of Financial Assistance Corporation stock 
     outstanding, of the lesser of--

       ``(I) 20 percent of the balance in the Allocated Insurance 
     Reserves Account established under paragraph (1)(B) as of the 
     preceding December 31; or
       ``(II) 20 percent of the balance in the Allocated Insurance 
     Reserves Account established under paragraph (1)(B) on the 
     date of the payment.

       ``(B) Authority to eliminate or reduce payments.--The 
     Corporation may eliminate or reduce payments during a 
     calendar year under subparagraph (A) if the Corporation 
     determines, in its sole discretion, that the payments, or 
     other circumstances that might require use of the Farm Credit 
     Insurance Fund, could cause the amount in the Farm Credit 
     Insurance Fund during the calendar year to be less than the 
     secure base amount.
       ``(C) Reimbursement for financial assistance corporation 
     stock.--
       ``(i) Sufficient funding.--Notwithstanding paragraph 
     (4)(A), on provision by the Corporation for the accumulation 
     in the Account established under paragraph (1)(B) of funds in 
     an amount equal to $56,000,000 (in addition to the amounts 
     described in subparagraph (F)(ii)), the Corporation shall not 
     allocate any further funds to the Account except to replenish 
     the Account if funds are diminished below $56,000,000 by the 
     Corporation under paragraph (5).
       ``(ii) Wind down and termination.--

       ``(I) Final disbursements.--On disbursement of $53,000,000 
     (in addition to the amounts described in subparagraph 
     (F)(ii)) from the Allocated Insurance Reserves Account, the 
     Corporation shall disburse the remaining amounts in the 
     Account, as determined under subparagraph (A)(ii), without 
     regard to the percentage limitations in subclauses (I) and 
     (II) of subparagraph (A)(ii).
       ``(II) Termination of account.--On disbursement of 
     $56,000,000 (in addition to the amounts described in 
     subparagraph (F)(ii)) from the Allocated Insurance Reserves 
     Account, the Corporation shall close the Account established 
     under paragraph (1)(B) and transfer any remaining funds in 
     the Account to the remaining Allocated Insurance Reserves 
     Accounts in accordance with paragraph (4)(B) for the calendar 
     year in which the transfer occurs.

       ``(D) Distribution of payments received.--Not later than 60 
     days after receipt of a payment made under subparagraph 
     (A)(i), each insured System bank, in consultation with 
     affiliated associations of the insured System bank, and 
     taking into account the direct or indirect payment of 
     insurance premiums by the associations, shall develop and 
     implement an equitable plan to distribute payments received 
     under subparagraph (A)(i) among the bank and associations of 
     the bank.
       ``(E) Exception for previously reimbursed associations.--
     For purposes of subparagraph (A)(ii), in any Farm Credit 
     district in which the funding bank has reimbursed 1 or more 
     affiliated associations of the bank for the previously 
     unreimbursed portion of the Financial Assistance Corporation 
     stock held by the associations, the funding bank shall be 
     deemed to be the holder of the shares of Financial Assistance 
     Corporation stock for which the funding bank has provided the 
     reimbursement.
       ``(F) Initial payment.--Notwithstanding subparagraph (A), 
     the initial payment made to each payee under subparagraph (A) 
     shall be in such amount determined by the Corporation to be 
     equal to the sum of--
       ``(i) the total of the amounts that would have been paid if 
     payments under subparagraph (A) had been authorized to begin, 
     under the same terms and conditions, in the first calendar 
     year beginning more than 5 years after the date on which the 
     aggregate of the amounts in the Farm Credit Insurance Fund 
     exceeds the secure base amount, and to continue through the 2 
     immediately subsequent years;
       ``(ii) interest earned on any amounts that would have been 
     paid as described in clause (i) from the date on which the 
     payments would have been paid as described in clause (i); and
       ``(iii) the payment to be made in the initial year 
     described in subparagraph (A), based on the amount in each 
     Account after subtracting the amounts to be paid under 
     clauses (i) and (ii).''
       (c) Technical Amendments.--Section 5.55(d) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-4(d)) is amended--
       (1) in the matter preceding paragraph (1)--
       (A) by striking ``subsections (a) and (c)'' and inserting 
     ``subsections (a), (c), and (e)''; and
       (B) by striking ``a Farm Credit Bank'' and inserting ``an 
     insured System bank''; and
       (2) in paragraphs (1), (2), and (3), by striking ``Farm 
     Credit Bank'' each place it appears and inserting ``insured 
     System bank''.

     SEC. 216. EXAMINATIONS BY THE FARM CREDIT SYSTEM INSURANCE 
                   CORPORATION.

       Section 5.59(b)(1)(A) of the Farm Credit Act of 1971 (12 
     U.S.C. 2277a-8(b)(1)(A)) is amended by adding at the end the 
     following: ``Notwithstanding any other provision of this Act, 
     on cancellation of the charter of a System institution, the 
     Corporation shall have authority to examine the system 
     institution in receivership. An examination shall be 
     performed at such intervals as the Corporation shall 
     determine.''.

     SEC. 217. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM 
                   BANKS.

       (a) Least-Cost Resolution.--Section 5.61(a)(3) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (F); 
     and
       (2) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Least-cost resolution.--Assistance may not be 
     provided to an insured System bank under this subsection 
     unless the means of providing the assistance is the least 
     costly means of providing the assistance by the Farm Credit 
     Insurance Fund of all possible alternatives available to the 
     Corporation, including liquidation of the bank (including 
     paying the insured obligations issued on behalf of the bank). 
     Before making a least-cost determination under this 
     subparagraph, the Corporation shall accord such other insured 
     System banks as the Corporation determines to be appropriate 
     the opportunity to submit information relating to the 
     determination.
       ``(B) Determining least costly approach.--In determining 
     the least costly alternative under subparagraph (A), the 
     Corporation shall--
       ``(i) evaluate alternatives on a present-value basis, using 
     a reasonable discount rate;
       ``(ii) document the 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) General rule.--For purposes of this subsection, the 
     determination of the costs of providing any assistance under 
     any provision of this section with respect to any insured 
     System bank shall be made as of the date on which the 
     Corporation makes the determination to provide the assistance 
     to the institution under this section.
       ``(ii) Rule for liquidations.--For purposes of this 
     subsection, the determination of the costs of liquidation of 
     any insured System bank shall be made as of the earliest of--

       ``(I) the date on which a conservator is appointed for the 
     insured System bank;
       ``(II) the date on which a receiver is appointed for the 
     insured System bank; or
       ``(III) the date on which the Corporation makes any 
     determination to provide any assistance under this section 
     with respect to the insured System bank.

       ``(D) Rule for stand-alone assistance.--Before providing 
     any assistance under paragraph (1), the Corporation shall 
     evaluate the adequacy of managerial resources of the insured 
     System bank. The continued service of any director or senior 
     ranking officer who serves in a policymaking role for the 
     assisted insured System bank, as determined by the 
     Corporation, shall be subject to approval by the Corporation 
     as a condition of assistance.
       ``(E) Discretionary determinations.--Any determination that 
     the Corporation makes under this paragraph shall be in the 
     sole discretion of the Corporation.''.
       (b) Conforming Amendments.--Section 5.61(a) of the Farm 
     Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
     
[[Page H46]]

       (1) in paragraph (1) by striking ``In general.--'' and 
     inserting ``Stand-alone assistance.--''; and
       (2) in paragraph (2)--
       (A) by striking ``Enumerated powers.--'' and inserting 
     ``Facilitation of mergers or consolidation.--''; and
       (B) in subparagraph (A) by striking ``Facilitation of 
     mergers or consolidation.--'' and inserting ``In general.--
     ''.

     SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT 
                   SYSTEM INSURANCE CORPORATION.

       The Farm Credit Act of 1971 is amended by inserting after 
     section 5.61 (12 U.S.C. 2279a-10) the following:

     ``SEC. 5.61A. OVERSIGHT ACTIONS BY THE CORPORATION.

       ``(a) Definitions.--In this section, the term `institution' 
     means--
       ``(1) an insured System bank; and
       ``(2) a production credit association or other association 
     making loans under section 7.6 with a direct loan payable to 
     the funding bank of the association that comprises 20 percent 
     or more of the funding bank's total loan volume net of 
     nonaccrual loans.
       ``(b) Consultation Regarding Participation of 
     Undercapitalized Banks in Issuance of Insured Obligations.--
     The Farm Credit Administration shall consult with the 
     Corporation prior to approving an insured obligation that is 
     to be issued by or on behalf of, or participated in by, any 
     insured System bank that fails to meet the minimum level for 
     any capital requirement established by the Farm Credit 
     Administration for the bank.
       ``(c) Consultation Regarding Applications for Mergers and 
     Restructurings.--
       ``(1) Corporation to receive copy of transaction 
     applications.--On receiving an application for a merger or 
     restructuring of an institution, the Farm Credit 
     Administration shall forward a copy of the application to the 
     Corporation.
       ``(2) Consultation required.--If the proposed merger or 
     restructuring involves an institution that fails to meet the 
     minimum level for any capital requirement established by the 
     Farm Credit Administration applicable to the institution, the 
     Farm Credit Administration shall allow 30 days within which 
     the Corporation may submit the views and recommendations of 
     the Corporation, including any conditions for approval. In 
     determining whether to approve or disapprove any proposed 
     merger or restructuring, the Farm Credit Administration shall 
     give due consideration to the views and recommendations of 
     the Corporation.

     ``SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN PARACHUTE AND 
                   INDEMNIFICATION PAYMENTS.

       ``(a) Definitions.--In this section:
       ``(1) Golden parachute payment.--The term `golden parachute 
     payment'--
       ``(A) means a payment (or any agreement to make a payment) 
     in the nature of compensation for the benefit of any 
     institution-related party under an obligation of any Farm 
     Credit System institution that--
       ``(i) is contingent on the termination of the party's 
     relationship with the institution; and
       ``(ii) is received on or after the date on which--

       ``(I) the institution is insolvent;
       ``(II) a conservator or receiver is appointed for the 
     institution;
       ``(III) the institution has been assigned by the Farm 
     Credit Administration a composite CAMEL rating of 4 or 5 
     under the Farm Credit Administration Rating System, or an 
     equivalent rating; or
       ``(IV) the Corporation otherwise determines that the 
     institution is in a troubled condition (as defined in 
     regulations issued by the Corporation); and

       ``(B) includes a payment that would be a golden parachute 
     payment but for the fact that the payment was made before the 
     date referred to in subparagraph (A)(ii) if the payment was 
     made in contemplation of the occurrence of an event described 
     in any subclause of subparagraph (A); but
       ``(C) does not include--
       ``(i) a payment made under a retirement plan that is 
     qualified (or is intended to be qualified) under section 401 
     of the Internal Revenue Code of 1986 or other 
     nondiscriminatory benefit plan;
       ``(ii) a payment made under a bona fide supplemental 
     executive retirement plan, deferred compensation plan, or 
     other arrangement that the Corporation determines, by 
     regulation or order, to be permissible; or
       ``(iii) a payment made by reason of the death or disability 
     of an institution-related party.
       ``(2) Indemnification payment.--The term `indemnification 
     payment' means a payment (or any agreement to make a payment) 
     by any Farm Credit System institution for the benefit of any 
     person who is or was an institution-related party, to pay or 
     reimburse the person for any liability or legal expense with 
     regard to any administrative proceeding or civil action 
     instituted by the Farm Credit Administration that results in 
     a final order under which the person--
       ``(A) is assessed a civil money penalty; or
       ``(B) is removed or prohibited from participating in the 
     conduct of the affairs of the institution.
       ``(3) Institution-related party.--The term `institution-
     related party' means--
       ``(A) a director, officer, employee, or agent for a Farm 
     Credit System institution or any conservator or receiver of 
     such an institution;
       ``(B) a stockholder (other than another Farm Credit System 
     institution), consultant, joint venture partner, or any other 
     person determined by the Farm Credit Administration to be a 
     participant in the conduct of the affairs of a Farm Credit 
     System institution; and
       ``(C) an independent contractor (including any attorney, 
     appraiser, or accountant) that knowingly or recklessly 
     participates in any violation of any law or regulation, any 
     breach of fiduciary duty, or any unsafe or unsound practice 
     that caused or is likely to cause more than a minimal 
     financial loss to, or a significant adverse effect on, the 
     Farm Credit System institution.
       ``(4) Liability or legal expense.--The term `liability or 
     legal expense' means--
       ``(A) a legal or other professional expense incurred in 
     connection with any claim, proceeding, or action;
       ``(B) the amount of, and any cost incurred in connection 
     with, any settlement of any claim, proceeding, or action; and
       ``(C) the amount of, and any cost incurred in connection 
     with, any judgment or penalty imposed with respect to any 
     claim, proceeding, or action.
       ``(5) Payment.--The term `payment' means--
       ``(A) a direct or indirect transfer of any funds or any 
     asset; and
       ``(B) any segregation of any funds or assets for the 
     purpose of making, or under an agreement to make, any payment 
     after the date on which the funds or assets are segregated, 
     without regard to whether the obligation to make the payment 
     is contingent on--
       ``(i) the determination, after that date, of the liability 
     for the payment of the amount; or
       ``(ii) the liquidation, after that date, of the amount of 
     the payment.
       ``(b) Prohibition.--The Corporation may prohibit or limit, 
     by regulation or order, any golden parachute payment or 
     indemnification payment by a Farm Credit System institution 
     (including any conservator or receiver of the Federal 
     Agricultural Mortgage Corporation) in troubled condition (as 
     defined in regulations issued by the Corporation).
       ``(c) Factors To Be Taken into Account.--The Corporation 
     shall prescribe, by regulation, the factors to be considered 
     by the Corporation in taking any action under subsection (b). 
     The factors may include--
       ``(1) whether there is a reasonable basis to believe that 
     an institution-related party has committed any fraudulent act 
     or omission, breach of trust or fiduciary duty, or insider 
     abuse with regard to the Farm Credit System institution 
     involved that has had a material effect on the financial 
     condition of the institution;
       ``(2) whether there is a reasonable basis to believe that 
     the institution-related party is substantially responsible 
     for the insolvency of the Farm Credit System institution, the 
     appointment of a conservator or receiver for the institution, 
     or the institution's troubled condition (as defined in 
     regulations prescribed by the Corporation);
       ``(3) whether there is a reasonable basis to believe that 
     the institution-related party has materially violated any 
     applicable law or regulation that has had a material effect 
     on the financial condition of the institution;
       ``(4) whether there is a reasonable basis to believe that 
     the institution-related party has violated or conspired to 
     violate--
       ``(A) section 215, 657, 1006, 1014, or 1344 of title 18, 
     United States Code; or
       ``(B) section 1341 or 1343 of title 18, United States Code, 
     affecting a Farm Credit System institution;
       ``(5) whether the institution-related party was in a 
     position of managerial or fiduciary responsibility; and
       ``(6) the length of time that the party was related to the 
     Farm Credit System institution and the degree to which--
       ``(A) the payment reasonably reflects compensation earned 
     over the period of employment; and
       ``(B) the compensation represents a reasonable payment for 
     services rendered.
       ``(d) Certain Payments Prohibited.--No Farm Credit System 
     institution may prepay the salary or any liability or legal 
     expense of any institution-related party if the payment is 
     made--
       ``(1) in contemplation of the insolvency of the institution 
     or after the commission of an act of insolvency; and
       ``(2) with a view to, or with the result of--
       ``(A) preventing the proper application of the assets of 
     the institution to creditors; or
       ``(B) preferring 1 creditor over another creditor.
       ``(e) Rule of Construction.--Nothing in this section--
       ``(1) prohibits any Farm Credit System institution from 
     purchasing any commercial insurance policy or fidelity bond, 
     so long as the insurance policy or bond does not cover any 
     legal or liability expense of an institution described in 
     subsection (a)(2); or
       ``(2) limits the powers, functions, or responsibilities of 
     the Farm Credit Administration.''.

     SEC. 219. FARM CREDIT SYSTEM INSURANCE CORPORATION BOARD OF 
                   DIRECTORS.

       (a) In General.--Section 5.53 of the Farm Credit Act of 
     1971 (12 U.S.C. 2277a-2) is amended to read as follows:

     ``SEC. 5.53. BOARD OF DIRECTORS.

       ``(a) Establishment.--The Corporation shall be managed by a 
     Board of Directors that shall consist of the members of the 
     Farm Credit Administration Board.
       ``(b) Chairman.--The Board of Directors shall be chaired by 
     any Board member other 

[[Page H47]]
     than the Chairman of the Farm Credit Administration Board.''.
       (b) Conforming Amendments.--
       (1) Section 5314 of title 5, United States Code, is amended 
     by striking ``Chairperson, Board of Directors of the Farm 
     Credit System Insurance Corporation.''.
       (2) Section 5315 of title 5, United States Code, is amended 
     by striking ``Members, Board of Directors of the Farm Credit 
     System Insurance Corporation.''.

     SEC. 220. INTEREST RATE REDUCTION PROGRAM.

       Section 351(a) of the Consolidated Farm and Rural 
     Development Act (7 U.S.C. 1999) is amended--
       (A) by striking ``Sec. 351. (a) The'' and inserting the 
     following:

     ``SEC. 351. INTEREST RATE REDUCTION PROGRAM.

       ``(a) Establishment of Program.--
       ``(1) In general.--The''; and
       (B) by adding at the end the following:
       ``(2) Termination of authority.--The authority provided by 
     this subsection shall terminate on September 30, 2002.''.

     SEC. 221. LIABILITY FOR MAKING CRIMINAL REFERRALS.

       (a) In General.--Any institution of the Farm Credit System, 
     or any director, officer, employee, or agent of a Farm Credit 
     System institution, that discloses to a Government authority 
     information proffered in good faith that may be relevant to a 
     possible violation of any law or regulation shall not be 
     liable to any person under any law of the United States or 
     any State--
       (1) for the disclosure; or
       (2) for any failure to notify the person involved in the 
     possible violation.
       (b) No Prohibition on Disclosure.--Any institution of the 
     Farm Credit System, or any director, officer, employee, or 
     agent of a Farm Credit System institution, may disclose 
     information to a Government authority that may be relevant to 
     a possible violation of any law or regulation.
              TITLE III--IMPLEMENTATION AND EFFECTIVE DATE

     SEC. 301. IMPLEMENTATION.

       The Secretary of Agriculture and the Farm Credit 
     Administration shall promulgate regulations and take other 
     required actions to implement the provisions of this Act not 
     later than 90 days after the effective date of this Act.

     SEC. 302. EFFECTIVE DATE.

       Except as otherwise provided in this Act, this Act and the 
     amendments made by this Act shall become effective on the 
     date of enactment.

                              {time}  1730

  Mr. EMERSON (during the reading). Mr. Speaker, I ask unanimous 
consent that the amendments be considered as read and printed in the 
Record.
  The SPEAKER pro tempore (Mr. Walker). Is there objection to the 
request of the gentleman from Missouri?
  Mr. WOLF. Reserving the right to object, Mr. Speaker, and I will not 
object, but I just wanted to have some clarification. I would ask the 
gentleman, does this resolution that we are bringing up tonight have 
anything to do with the resolution that was just passed in the 
Committee on Rules, which gives the Speaker or the Chair the ability to 
recess subject to the call until January 23? Because if it does, I want 
to make sure that my objection is heard loud and clear, and Members 
ought to know that this might have something to do with that.
  Does this have anything to do with the resolution that was passed in 
the Committee on Rules today that deals with giving the Speaker the 
right to recess subject to the call of the Chair until January 23, 
which would be a very bad thing to do?
  Mr. EMERSON. Mr. Speaker, will the gentleman yield under his 
reservation of objection?
  Mr. WOLF. I yield to the gentleman from Missouri.
  Mr. EMERSON. Mr. Speaker, I would like to give him absolute assurance 
that it has absolutely nothing to do with the subject raised by the 
gentleman from Virginia.
  Mr. WOLF. I will not object, Mr. Speaker. I just wanted to be sure, 
because when the resolution comes up on the floor, if it ever comes up 
in this House to vote on the issue of whether or not we adjourn or 
recess, I not only will vote against it, I will speak against it, and I 
will work against it.
  Since this does not deal with that, Mr. Speaker, I withdraw my 
reservation of objection.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  The SPEAKER pro tempore. Is there objection to the original request 
of the gentleman from Missouri?
  Mr. de la GARZA. Reserving the right to object, Mr. Speaker, on the 
bill and amendments thereto, I yield to my distinguished colleague, the 
gentleman from Missouri [Mr. Emerson], for an explanation.
  (Mr. EMERSON asked and was given permission to revise and extend his 
remarks.)
  Mr. EMERSON. Mr. Speaker, I thank the distinguished member of the 
Committee on Agriculture for yielding to me to explain the bill.
  Mr. Speaker, today the House is considering legislation that will 
allow an important segment of the agricultural finance industry to 
continue providing low-cost, long-term real estate and rural housing 
loans to American farmers, ranchers and rural residents, as well as 
reduce the regulatory burden on the Farm Credit System [FCS].
  As sent to us from the other body, H.R. 2029, the Farm Credit System 
Reform Act of 1996, contains two major legislative amendments to the 
Farm Credit Act of 1971. First, the bill provides major reforms to the 
Federal Agricultural Mortgage Corporation, better known as Farmer Mac, 
that will create an efficient and cost-effective secondary market for 
agricultural real estate and rural housing loans. Second, the 
legislation provides needed regulatory relief for FCS institutions, 
including amending an unnecessary provision of law that would establish 
an independent board of directors for the Farm Credit System Insurance 
Corporation [FCSIC].
  The original H.R. 2029 was reported from the Committee on Agriculture 
December 13, 1995, and entitled the Farm Credit System Regulatory 
Relief Act of 1995. H.R. 2029 was adopted by the House under suspension 
of the rules December 19, 1995. The companion piece included as title 
I--Agricultural Mortgage Secondary Market, the Farmer Mac amendments, 
in the bill the House is considering today also was reported by the 
Agriculture committee December 13, 1995. The House has not acted on 
that legislation separately. In the meantime, the other body acted on 
H.R. 2029, placing both the FCS regulatory relief package and the 
Farmer Mac reforms in the bill, and returning it to the House.
  Today, the House considers both pieces of legislation with some minor 
revisions. First, as adopted by the House Committee on Agriculture, the 
bill requires Farmer Mac to meet certain new minimum capital standards 
as Farmer Mac proceeds to recapitalize its core capital. Again, as 
contained in the House committee reported bill, this legislation 
provides the Farm Credit Administration's (CFA) Office of Secondary 
Market Oversight with authority to place Farmer Mac into receivership 
and wind down its operations should that become necessary.
  Second, title II of H.R. 2029 before us today contains two amendments 
different from the bill the House passed December 19, 1995.
  Mr. Speaker, it is necessary to clarify the intent of a time-
sensitive provision of the legislation and pass a House amendment to 
the Senate amendment H.R. 2029. Section 219 is revised in the House 
amendment so as to amend section 5.53 of the Farm Credit Act of 1971 to 
provide that FCSIC shall be managed by a board of directors of the FCA 
board of directors, except that the chairman of the latter board may 
not serve as chairman of the FCSIC board.
  As demonstrated by earlier passage of the repeal of section 201 of 
the Farm Credit Banks and Associations Safety and Soundness Act of 1992 
(106 Stat. 4104) by both the House and Senate, there is no need to 
create a new bureaucratic structure to establish an independent board 
for FCSIC that section 261 would have created effective January 1, 
1996.
  Therefore, it should be noted that this provision is also intended to 
restore the former FCSIC Board, in existence before January 1,1996, 
which consists of members of the FCA Board of Directors. This should 
clarify the legislative history on this matter.
  One other provision contained in this bill different from the 
legislation the House passed earlier deals with how payments are made 
under a system of new reserve accounts established within the insurance 
fund. Under the provisions of this bill, reserve accounts may be 
disbursed during each calendar year beginning more than 8 years after 
the date the insurance fund reaches its secure base amount but not 
later than January 1, 2005. FCSIC estimates the insurance fund should 
reach its statutorily-set secure base amount in early 1997.
  This provision is designed to provide the FCSIC with the flexibility 
to adjust, at its sole discretion, the premiums charged to FCS 
institutions to capitalize the insurance fund. This discretionary 
authority would allow FCSIC to lower insurance premiums in advance of 
reaching the insurance fund's secure base amount, if, in FCSIC's 
opinion, events warrant 

[[Page H48]]
such a premium reduction. Within these provisions in an important 
legislative compromise that provides for the orderly redemption of 
Financial Assistance Corporation stock held by FCS institutions.
  Mr. Speaker, this is sound legislation the House should adopt today 
and send back to the other body for consideration. I urge its immediate 
passage.
  (Mr. de la GARZA asked and was given permission to revise and extend 
his remarks.)
  Mr. de la GARZA. Mr. Speaker, continuing to reserve the right to 
object, I rise in support of the legislation.
  Mr. Speaker, I urge my colleagues to support H.R. 2029 because it 
will provide mechanisms for ensuring affordable credit in rural 
America. Our farmers and ranchers have been and will continue to 
experience in the next several years, great uncertainty with roller 
coaster market prices and impending changes in Federal agricultural 
policy. It will be more important than ever that there be reliable 
credit sources available to them.
  Passage into law of regulatory relief for the Farm Credit System will 
hopefully provide for a reduction in operating costs that can be passed 
on to System borrowers. The legislative changes that are being proposed 
to Farmer Mac will provide both commercial banks and Farm Credit System 
institutions with the means to lower the cost of borrowing money as 
well.
  Previous reforms of Farmer Mac have not been as successful as we had 
hoped, which is why additional authority is currently needed. Lending 
is inherently risky, however, I am hopeful that these reforms will 
allow Farmer Mac to become a viable entity and to develop a secondary 
market for long-term agricultural real estate loans. It is as balanced 
an approach as could be achieved.
  Again, I support this legislation and look forward to prompt action 
by the other body.
  Mr. BARRETT of Nebraska. Mr. Speaker, I rise today in support of H.R. 
2130, the Farmer Mac reform bill.
  Farmer Mac was established to provide a reliable source of long-term 
agricultural loans. Its goal was greater competition in loan rates for 
farmers and ranchers. Unfortunately, Farmer Mac's enabling legislation 
was too restrictive and a secondary market for agriculture never fully 
developed.
  H.R. 2130 seeks to address these impediments. I believe the reforms 
contained in H.R. 2130 would allow Farmer Mac to prove the viability of 
the agricultural secondary market. My constituents are encouraged by 
the opportunity that a reformed Farmer Mac could bring to rural 
borrowers.
  I'm encouraged that the House is acting on Farmer Mac today. I urge 
my colleagues to support H.R. 2130.
  Mr. Speaker, I withdraw my reservation of objection.
  The SPEAKER pro tempore. Is there objection to the initial request of 
the gentleman from Missouri?
  Mr. HOYER. Reserving the right to object, Mr. Speaker, as I 
understand this legislation, it is necessary. If we do not pass it, 
many in this House on both sides of the aisle will have many 
constituents who will be hurt. America, in my opinion, will be hurt if 
we do not allow this to pass at this time.
  However, we have a selective sense of responsibility. We did not want 
to hurt veterans, we did not want to hurt those who go to national 
parks, we did not want to hurt those who got Social Security checks, 
and I did not want to hurt any of those, either. So what we continue to 
do is ask people to come to work, as a responsible employee, but guess 
what, we are not going to pay you, and we lock out others who cannot 
serve their constituencies. People are at risk because apparently some 
Members of this House are not feeling it.
  The leadership is about to suggest that this House, like Pontius 
Pilate, wring its hands and say that we will go home until January 23; 
no responsibility for the pain that is being caused, no responsibility 
for the services that are being denied; like Pontius Pilate, it must be 
somebody else.
  Mr. Speaker, as I said at the outset, I will not object to this 
particular piece of legislation, because unlike some in this House, I 
believe we ought to be responsible. People sent us here to ensure that 
their lives would be, to the extent we could affect them, be better. To 
object to this would not affect that end, but some in this body believe 
that if their end is appropriate, any means they utilize to attain it 
are justified. That is wrong.
  Mr. Speaker, I withdraw my reservation of objection.
  The SPEAKER pro tempore. Is there objection to the initial request of 
the gentleman from Missouri?
  There was no objection.
  A motion to reconsider was laid on the table.

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