[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 State usury laws superseded.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.
____________________