II

103D CONGRESS

2D SESSION H. R. 4379

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 30 (legislative day, SEPTEMBER 12), 1994

Received

AN ACT

To amend the Farm Credit Act of 1971 to enhance the

ability of the banks for cooperatives to finance agriculture exports, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Farm Credit System

5 Agricultural Export and Risk Management Act’’.
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1 SEC. 2. PARTICIPATION DEFINED.

2 Section 3.1(11)(B) of the Farm Credit Act of 1971

3 (12 U.S.C. 2122(11)(B)) is amended by adding at the end

4 the following new clause:

5 ‘‘(iv) As used in this subparagraph, the term

6 ‘participate’ or ‘participation’ refers to multilender

7 transactions, including syndications, assignments,

8 loan participations, subparticipations, or other forms

9 of the purchase, sale, or transfer of interests in

10 loans, other extensions of credit, or other technical

11 and financial assistance.’’.

12 SEC. 3. AGRICULTURAL EXPORT FINANCING.

13 Section 3.7(b) of the Farm Credit Act of 1971 (12

14 U.S.C. 2128(b)) is amended—

15 (A) in paragraph (1)—

16 (i) by striking ‘‘assistance to (A)’’ and in17 serting ‘‘assistance to’’;

18 (ii) by striking ‘‘the export or’’ and insert19 ing ‘‘the’’; and

20 (iii) by striking ‘‘and (B)’’ and all that fol21 lows through ‘‘subparagraph (A): Provided,

22 That a’’ and inserting ‘‘if the’’; and

23 (B) by striking paragraph (2) and inserting the

24 following new paragraph:
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1 ‘‘(2)(A) A bank for cooperatives may make or partici2 pate in loans and commitments to, and extend other tech3 nical and financial assistance to—

4 ‘‘(i) any domestic or foreign party for the ex5 port, including (where applicable) the cost of freight,

6 of agricultural commodities or products thereof,

7 farm supplies, or aquatic products from the United

8 States under policies and procedures established by

9 the bank to ensure that the commodities, products,

10 or supplies are originally sourced, where reasonably

11 available, from one or more eligible cooperative asso12 ciations described in section 3.8(a) on a priority

13 basis, except that if the total amount of the balances

14 outstanding on loans made by a bank under this

15 clause that—

16 ‘‘(I) are made to finance the export of

17 commodities, products, or supplies that are not

18 originally sourced from a cooperative, and

19 ‘‘(II) are not guaranteed or insured, in an

20 amount equal to at least 95 percent of the

21 amount loaned, by a department, agency, bu22 reau, board, commission, or establishment of

23 the United States or a corporation wholly24 owned directly or indirectly by the United

25 States,
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1 exceeds an amount that is equal to 50 percent of the

2 bank’s capital, then a sufficient interest in the loans

3 shall be sold by the bank for cooperatives to com4 mercial banks and other non-System lenders to re5 duce the total amount of such outstanding balances

6 to an amount not greater than an amount equal to

7 50 percent of the bank’s capital; and

8 ‘‘(ii) except as provided in subparagraph (B),

9 any domestic or foreign party in which an eligible

10 cooperative association described in section 3.8(a)

11 (including, for the purpose of facilitating its domes12 tic business operations only, a cooperative or other

13 entity described in section 3.8(b)(1)(A)) has an own14 ership interest, for the purpose of facilitating the do15 mestic or foreign business operations of the associa16 tion, except that if the ownership interest by an eli17 gible cooperative association, or associations, is less

18 than 50 percent, the financing shall be limited to the

19 percentage held in the party by the association or

20 associations.

21 ‘‘(B) A bank for cooperatives shall not use the au22 thority provided in subparagraph (A)(ii) to provide finan23 cial assistance to a party for the purpose of financing the

24 relocation of a plant or facility from the United States

25 to another country.’’.
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1 SEC. 4. CONFORMING AMENDMENT.

2 Section 3.8(b)(1) of the Farm Credit Act of 1971 (12

3 U.S.C. 2129(b)(1)) is amended—

4 (A) by striking subparagraph (B);

5 (B) by redesignating subparagraphs (C), (D),

6 and (E) as subparagraphs (B), (C), and (D), respec7 tively; and

8 (C) by aligning the margin of subparagraph (D)

9 (as so redesignated) so as to align with the margin

10 of subparagraph (C) (as so redesignated).

11 SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM

12 CREDIT BANKS AND DIRECT LENDER ASSO13 CIATIONS.

14 (a) IN GENERAL.—Title IV of the Farm Credit Act

15 of 1971 (12 U.S.C. 2151 et seq.) is amended by inserting

16 after section 4.18 (12 U.S.C. 2206) the following new sec17 tion:

18 ‘‘SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DI19 RECT LENDER ASSOCIATIONS TO PARTICI20 PATE IN LOANS TO SIMILAR ENTITIES FOR

21 RISK MANAGEMENT PURPOSES.

22 ‘‘(a) DEFINITIONS.—As used in this section:

23 ‘‘(1) PARTICIPATE AND PARTICIPATION.—The

24 terms ‘participate’ and ‘participation’ shall have the

25 meaning provided in section 3.1(11)(B)(iv).
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1 ‘‘(2) SIMILAR ENTITY.—The term ‘similar en2 tity’ means a person that—

3 ‘‘(A) is not eligible for a loan from the

4 Farm Credit Bank or association; and

5 ‘‘(B) has operations that are functionally

6 similar to a person that is eligible for a loan

7 from the Farm Credit Bank or association in

8 that the person derives a majority of the income

9 of the person from, or has a majority of the as10 sets of the person invested in, the conduct of

11 activities that are functionally similar to the ac12 tivities that are conducted by an eligible person.

13 ‘‘(b) LOAN PARTICIPATION AUTHORITY.—Notwith14 standing any other provision of this Act, any Farm Credit

15 Bank or direct lender association chartered under this Act

16 may participate in any loan of a type otherwise authorized

17 under title I or II made to a similar entity by any person

18 in the business of extending credit, except that a Farm

19 Credit Bank or direct lender association may not partici20 pate in a loan under this section if—

21 ‘‘(1) the participation would cause the total

22 amount of all participations by the Farm Credit

23 Bank or association under this section involving a

24 single credit risk to exceed 10 percent (or the appli25 cable higher lending limit authorized under regula-
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1 tions issued by the Farm Credit Administration if

2 the stockholders of the respective Farm Credit Bank

3 or association so approve) of the total capital of the

4 Farm Credit Bank or association;

5 ‘‘(2) the participation by the Farm Credit Bank

6 or association would equal or exceed 50 percent of

7 the principal of the loan or, when taken together

8 with participations in the loan by other Farm Credit

9 System institutions, would cause the cumulative

10 amount of the participations by all Farm Credit Sys11 tem institutions in the loan to equal or exceed 50

12 percent of the principal of the loan;

13 ‘‘(3) the participation would cause the cumu14 lative amount of participations that the Farm Credit

15 Bank or association has outstanding under this sec16 tion to exceed 15 percent of the total assets of the

17 Farm Credit Bank or association; or

18 ‘‘(4) the loan is of the type authorized under

19 section 1.11(b) or 2.4(a)(2).

20 ‘‘(c) PRIOR APPROVAL REQUIRED.—

21 ‘‘(1) IN GENERAL.—With respect to a similar

22 entity that is eligible to borrow from a bank for co23 operatives under title III, the authority of a Farm

24 Credit Bank or association to participate in a loan

25 to the entity under this section shall be subject to
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1 the prior approval of the bank for cooperatives hav2 ing, at the time the loan is made, the greatest loan

3 volume in the State in which the headquarters office

4 of the similar entity is located.

5 ‘‘(2) TERMS AND CONDITIONS.—Approval

6 under paragraph (1) may be granted on an annual

7 basis and under such terms and conditions as may

8 be agreed on between the Farm Credit Bank or as9 sociation, as the case may be, and the bank for co10 operatives granting the approval.

11 ‘‘(3) APPROVAL BY SUPERVISING FARM CREDIT

12 BANK.—An association may not participate in a loan

13 to a similar entity under this section without the ap14 proval of the supervising Farm Credit Bank or the

15 association.’’.

16 SEC. 6. CONFORMING AMENDMENTS.

17 Section 3.1(11)(B)(i)(I)(bb) of the Farm Credit Act

18 of 1971 (12 U.S.C. 2122(11)(B)(i)(I)(bb)) is amended—

19 (A) by striking ‘‘the other banks for coopera20 tives under this subparagraph’’ and inserting ‘‘other

21 Farm Credit System institutions’’; and
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1 (B) by striking ‘‘all banks for cooperatives’’ and

2 inserting ‘‘all Farm Credit System institutions’’.

Passed the House of Representatives September 29,

1994.

Attest: DONNALD K. ANDERSON,

Clerk.