103D CONGRESS

2D SESSION H. R. 4379

AN ACT

To amend the Farm Credit Act of 1971 to enhance the

ability of the banks for cooperatives to finance agricultural 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 ‘partici6 pate’ or ‘participation’ refers to multilender transactions,

7 including syndications, assignments, loan participations,

8 subparticipations, or other forms of the purchase, sale, or

9 transfer of interests in loans, other extensions of credit,

10 or other technical and financial assistance.’’.

11 SEC. 3. AGRICULTURAL EXPORT FINANCING.

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

13 U.S.C. 2128(b)) is amended—

14 (A) in paragraph (1)—

15 (i) by striking ‘‘assistance to (A)’’ and in16 serting ‘‘assistance to’’;

17 (ii) by striking ‘‘the export or’’ and insert18 ing ‘‘the’’; and

19 (iii) by striking ‘‘and (B)’’ and all that fol20 lows through ‘‘subparagraph (A): Provided,

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

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

23 following new paragraph:

24 ‘‘(2)(A) A bank for cooperatives may make or partici25 pate in loans and commitments to, and extend other tech26 nical and financial assistance to—
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1 ‘‘(i) any domestic or foreign party for the ex2 port, including (where applicable) the cost of freight,

3 of agricultural commodities or products thereof,

4 farm supplies, or aquatic products from the United

5 States under policies and procedures established by

6 the bank to ensure that the commodities, products,

7 or supplies are originally sourced, where reasonably

8 available, from one or more eligible cooperative asso9 ciations described in section 3.8(a) on a priority

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

11 outstanding on loans made by a bank under this

12 clause that—

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

14 commodities, products, or supplies that are not

15 originally sourced from a cooperative, and

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

17 amount equal to at least 95 percent of the

18 amount loaned, by a department, agency, bu19 reau, board, commission, or establishment of

20 the United States or a corporation wholly21 owned directly or indirectly by the United

22 States,

23 exceeds an amount that is equal to 50 percent of the

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

25 shall be sold by the bank for cooperatives to com-
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1 mercial banks and other non-System lenders to re2 duce the total amount of such outstanding balances

3 to an amount not greater than an amount equal to

4 50 percent of the bank’s capital; and

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

6 any domestic or foreign party in which an eligible

7 cooperative association described in section 3.8(a)

8 (including, for the purpose of facilitating its domes9 tic business operations only, a cooperative or other

10 entity described in section 3.8(b)(1)(A)) has an own11 ership interest, for the purpose of facilitating the do12 mestic or foreign business operations of the associa13 tion, except that if the ownership interest by an eli14 gible cooperative association, or associations, is less

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

16 percentage held in the party by the association or

17 associations.

18 ‘‘(B) A bank for cooperatives shall not use the au19 thority provided in subparagraph (A)(ii) to provide finan20 cial assistance to a party for the purpose of financing the

21 relocation of a plant or facility from the United States

22 to another country.’’.

23 SEC. 4 CONFORMING AMENDMENT.

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

25 U.S.C. 2129(b)(1)) is amended—
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1 (A) by striking subparagraph (B);

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

3 and (E) as subparagraphs (B), (C), and (D), respec4 tively; and

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

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

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

8 SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM

9 CREDIT BANKS AND DIRECT LENDER ASSO10 CIATIONS.

11 (A) IN GENERAL.—Title IV of the Farm Credit Act

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

13 after section 4.18 (12 U.S.C. 2206) the following new sec14 tion:

15 ‘‘SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DI16 RECT LENDER ASSOCIATIONS TO PARTICI17 PATE IN LOANS TO SIMILAR ENTITIES FOR

18 RISK MANAGEMENT PURPOSES.

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

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

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

22 meaning provided in section 3.1(11)(B)(iv).

23 ‘‘(2) SIMILAR ENTITY.—The term ‘similar en24 tity’ means a person that—
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1 ‘‘(A) is not eligible for a loan from the

2 Farm Credit Bank or association; and

3 ‘‘(B) has operations that are functionally

4 similar to a person that is eligible for a loan

5 from the Farm Credit Bank or association in

6 that the person derives a majority of the income

7 of the person from, or has a majority of the as8 sets of the person invested in, the conduct of

9 activities that are functionally similar to the ac10 tivities that are conducted by an eligible person.

11 ‘‘(b) LOAN PARTICIPATION AUTHORITY—Notwith12 standing any other provision of this Act, any Farm Credit

13 Bank or direct lender association chartered under this Act

14 may participate in any loan of a type otherwise authorized

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

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

17 Credit Bank or direct lender association may not partici18 pate in a loan under this section if—

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

20 amount of all participations by the Farm Credit

21 Bank or association under this section involving a

22 single credit risk to exceed 10 percent (or the appli23 cable higher lending limit authorized under regula24 tions issued by the Farm Credit Administration if

25 the stockholders of the respective Farm Credit Bank
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1 or association so approve) of the total capital of the

2 Farm Credit Bank or association;

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

4 or association would equal or exceed 50 percent of

5 the principal of the loan or, when taken together

6 with participations in the loan by other Farm Credit

7 System institutions, would cause the cumulative

8 amount of the participations by all Farm Credit Sys9 tem institutions in the loan to equal or exceed 50

10 percent of the principal of the loan;

11 ‘‘(3) the participation would cause the cumu12 lative amount of participations that the Farm Credit

13 Bank or association has outstanding under this sec14 tion to exceed 15 percent of the total assets of the

15 Farm Credit Bank or association; or

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

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

18 ‘‘(c) PRIOR APPROVAL REQUIRED.—

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

20 entity that is eligible to borrow from a bank for co21 operatives under title III, the authority of a Farm

22 Credit Bank or association to participate in a loan

23 to the entity under this section shall be subject to

24 the prior approval of the bank for cooperatives hav25 ing, at the time the loan is made, the greatest loan
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1 volume in the State in which the headquarters office

2 of the similar entity is located.

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

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

5 basis and under such terms and conditions as may

6 be agreed on between the Farm Credit Bank or as7 sociation, as the case may be, and the bank for co8 operatives granting the approval.

9 ‘‘(3) APPROVAL BY SUPERVISING FARM CREDIT

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

11 to a similar entity under this section without the ap12 proval of the supervising Farm Credit Bank of the

13 association.’’.

14 SEC. 6. CONFORMING AMENDMENTS.

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

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

17 (A) by striking ‘‘the other banks for coopera18 tives under this subparagraph’’ and inserting ‘‘other

19 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:

Clerk.
103D CONGRESS

2D SESSION H. R. 4379

AN ACT

To amend the Farm Credit Act of 1971 to enhance

poses.nance agricultural exports, and for other purthe ability of the banks for cooperatives to fi-