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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2029 Engrossed in House (EH)]

  1st Session

                               H. R. 2029

_______________________________________________________________________

                                 AN ACT

 To amend the Farm Credit Act of 1971 to provide regulatory relief, and 
                          for other purposes.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
104th CONGRESS
  1st Session
                                H. R. 2029

_______________________________________________________________________

                                 AN ACT

 
 To amend the Farm Credit Act of 1971 to provide regulatory relief, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Farm Credit System 
Regulatory Relief Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. Regulatory review.
Sec. 4. Examination of Farm Credit System institutions.
Sec. 5. Farm Credit Insurance Fund operations.
Sec. 6. Powers with respect to troubled insured System banks.
Sec. 7. Farm Credit System Insurance Corporation board of directors.
Sec. 8. Conservatorship and receiverships.
Sec. 9. Oversight and regulatory actions by the Farm Credit System 
                            Insurance Corporation.
Sec. 10. Formation of administrative service entities.
Sec. 11. Requirements for loans sold into the secondary market.
Sec. 12. Removal of antiquated and unnecessary paperwork requirements.
Sec. 13. Removal of government certification requirement for certain 
                            private sector financing.
Sec. 14. Reform of regulatory limitations on the dividend, member 
                            business, and voting practices of eligible 
                            farmer-owned cooperatives.
Sec. 15. Extension of interest rate reduction program for 5 years.

SEC. 2. REFERENCES.

    Except as otherwise expressly provided, wherever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Farm Credit Act of 1971.

SEC. 3. REGULATORY REVIEW.

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

SEC. 4. EXAMINATION OF FARM CREDIT SYSTEM INSTITUTIONS.

    Section 5.19(a) (12 U.S.C. 2254(a)) is amended by striking ``each 
year'' in the first sentence and inserting ``every 18 months''.

SEC. 5. FARM CREDIT INSURANCE FUND OPERATIONS.

    (a) Adjustment of Premiums.--
            (1) In general.--Section 5.55(a) (12 U.S.C. 2277a-4(a)) is 
        amended--
                    (A) in paragraph (1), by striking ``Until the 
                aggregate of amounts in the Farm Credit Insurance Fund 
                exceeds the secure base amount, the annual premium due 
                from any insured System bank for any calendar year 
                shall'' and inserting ``If, at the end of any calendar 
                year, the aggregate of the amounts in the Farm Credit 
                Insurance Fund does not exceed the secure base amount, 
                the annual premium due from any insured System bank for 
                that calendar year shall, subject to paragraph (2),''; 
                and
                    (B) by redesignating paragraph (2) as paragraph (3) 
                and inserting after paragraph (1) the following:
            ``(2) Reduced premiums.--The Corporation, in its sole 
        discretion, may reduce, by a percentage uniformly applied to 
        all insured System banks, the annual premium due from each 
        insured System bank during any calendar year, as determined 
        under paragraph (1).''.
            (2) Conforming amendments.--
                    (A) Section 5.55(b).--Section 5.55(b) (12 U.S.C. 
                2277a-4(b)) is amended--
                            (i) by striking ``Insurance Fund'' each 
                        place such term appears and inserting ``Farm 
                        Credit Insurance Fund'';
                            (ii) by striking ``for the following 
                        calendar year''; and
                            (iii) by striking ``subsection (a)'' and 
                        inserting ``subsection (a)(1)''.
                    (B) Section 5.56(a).--Section 5.56(a) (12 U.S.C. 
                2277a-5(a)) is amended in each of paragraphs (2) and 
                (3) by striking ``section 5.55(a)(2)'' and inserting 
                ``section 5.55(a)(3)''.
                    (C) Section 1.12(b).--Section 1.12(b) (12 U.S.C. 
                2020(b)) is amended--
                            (i) in paragraph (1), by inserting ``(as 
                        defined in section 5.55(a)(3))'' after 
                        ``government-guaranteed loans''; and
                            (ii) in paragraph (3), by inserting ``(as 
                        so defined)'' after ``government-guaranteed 
                        loans'' each place such term appears.
    (b) Technical Amendment.--Section 5.55(d) (12 U.S.C. 2277a-4(d)) is 
amended--
            (1) in the matter preceding paragraph (1)--
                    (A) by striking ``and (c)'' and inserting ``, (c), 
                and (e)''; and
                    (B) by striking ``a Farm Credit Bank'' and 
                inserting ``an insured System bank''; and
            (2) by striking ``Farm Credit Bank'' each subsequent place 
        such term appears and inserting ``insured System bank''.
    (c) Allocation to Insured System Banks and Other System 
Institutions of Excess Amounts in the Farm Credit Insurance Fund.--
Section 5.55 (12 U.S.C. 2277a-4) is amended by adding at the end the 
following:
    ``(e) Allocation to System Institutions of Excess Reserves.--
            ``(1) Establishment of allocated insurance reserves 
        accounts.--There is hereby established within the Farm Credit 
        Insurance Fund--
                    ``(A) for each insured System bank; and
                    ``(B) subject to paragraph (5)(C), for all holders, 
                in the aggregate, of Financial Assistance Corporation 
                stock,
        an Allocated Insurance Reserves Account. Amounts in any 
        Allocated Insurance Reserves Account shall be considered to be 
        part of the Farm Credit Insurance Fund.
            ``(2) Annual allocations.--If, at the end of any calendar 
        year, the aggregate of the amounts in the Farm Credit Insurance 
        Fund exceeds the average secure base amount for the calendar 
        year (as calculated on an average daily balance basis), the 
        Corporation shall allocate to the Allocated Insurance Reserves 
        Accounts such excess amount less the amount that the 
        Corporation, in its sole discretion, determines to be the sum 
        of the estimated operating expenses and estimated insurance 
        obligations of the Corporation for the immediately succeeding 
        calendar year.
            ``(3) Allocation formula.--From the total amount required 
        to be allocated at the end of a calendar year pursuant to 
        paragraph (2)--
                    ``(A) 10 percent of such total amount shall be 
                credited to the Allocated Insurance Reserves Account 
                established under paragraph (1)(B), subject to 
                paragraph (5)(C); and
                    ``(B) there shall be credited to the Allocated 
                Insurance Reserves Account of each insured System bank 
                an amount that bears the same ratio to such total 
                amount (less any reduction under subparagraph (A)) as 
                the average principal outstanding for the 3-year period 
                ending with the end of such calendar year on loans made 
                by the bank that are in accrual status bears to the 
                average principal outstanding for such 3-year period on 
                loans made by all insured System banks that are in 
                accrual status (excluding, in each case, the guaranteed 
                portions of government-guaranteed loans described in 
                subsection (a)(1)(C)).
            ``(4) Use of funds in allocated insurance reserves 
        accounts.--To the extent that the sum of the operating expenses 
        of the Corporation and the insurance obligations of the 
        Corporation for a calendar year exceeds the estimated sum 
        described in paragraph (2) for the calendar year, the 
        Corporation shall cover such expenses and obligations by 
        reducing each Allocated Insurance Reserves Account by the same 
        proportion and expending the amounts so obtained, before 
        expending other monies in the Fund.
            ``(5) Other disposition of account funds.--
                    ``(A) In general.--Beginning in calendar year 2003, 
                if the aggregate of the amounts in the Farm Credit 
                Insurance Fund exceeds the secure base amount, the 
                Corporation may--
                            ``(i) subject to subparagraph (D), pay to 
                        each insured System bank, in a manner 
                        determined by the Corporation, an amount equal 
                        to the lesser of--
                                    ``(I) 20 percent of the balance in 
                                the bank's Allocated Insurance Reserves 
                                Account as of the preceding December 
                                31; or
                                    ``(II) 20 percent of the balance in 
                                the bank's Allocated Insurance Reserves 
                                Account on the date of payment; and
                            ``(ii) subject to subparagraphs (C) and 
                        (E), pay to each System bank and association 
                        holding Financial Assistance Corporation stock 
                        its proportionate share, determined by dividing 
                        the number of shares of Financial Assistance 
                        Corporation stock held by such institution by 
                        the total number of shares of Financial 
                        Assistance Corporation stock outstanding, of 
                        the lesser of--
                                    ``(I) 20 percent of the balance in 
                                the Allocated Insurance Reserves 
                                Account established under paragraph 
                                (1)(B) as of the preceding December 31; 
                                or
                                    ``(II) 20 percent of the balance in 
                                the Allocated Insurance Reserves 
                                Account established under paragraph 
                                (1)(B) on the date of the payment.
                    ``(B) Authority to eliminate or reduce payments.--
                The Corporation may eliminate or reduce payments under 
                subparagraph (A) if the Corporation determines, in its 
                sole discretion, that such payments, or other 
                circumstances that might require use of the Farm Credit 
                Insurance Fund, could cause the amount in the Farm 
                Credit Insurance Fund during that calendar year to be 
                less than the secure base amount.
                    ``(C) Reimbursement for financial assistance 
                corporation stock.--
                            ``(i) Sufficient funding.--Notwithstanding 
                        paragraph (3)(A), upon provision by the 
                        Corporation for the accumulation in the account 
                        established under paragraph (1)(B) of funds in 
                        an amount equal to $56 million, the Corporation 
                        shall not allocate any further funds to such 
                        account except to replenish such account in the 
                        event that funds are diminished below such 
                        amount by the Corporation pursuant to paragraph 
                        (4).
                            ``(ii) Wind down and termination.--
                                    ``(I) Final disbursements.--Upon 
                                disbursement of a total of $53 million 
                                from such Allocated Insurance Reserves 
                                Account, the Corporation shall disburse 
                                the remaining amounts in such account, 
                                as determined under paragraph 
                                (5)(A)(ii), without regard to the 
                                percentage limitation in subclauses (I) 
                                and (II) thereof.
                                    ``(II) Termination of account.--
                                Upon disbursement of a total of $56 
                                million from such Allocated Insurance 
                                Reserves Account established under 
                                paragraph (1)(B), the Corporation shall 
                                close the Allocated Insurance Reserves 
                                Account established under paragraph 
                                (1)(B) and transfer any remaining funds 
                                in such Account to the remaining 
                                Allocated Insurance Reserves Accounts 
                                in accordance with the formula in 
                                paragraph (3)(B) for the calendar year 
                                in which the transfer occurs.
                    ``(D) Distribution of payments received.--Within 60 
                days after receipt of a payment made under subparagraph 
                (5)(A)(i), each insured System bank, in consultation 
                with its affiliated associations, and taking into 
                account the direct or indirect payment of insurance 
                premiums by such associations, shall develop and 
                implement an equitable plan to distribute payments 
                received pursuant to subparagraph (5)(A)(i) among the 
                bank and its associations.
                    ``(E) Exception for previously reimbursed 
                associations.--For purposes of subparagraph (5)(A)(ii), 
                in any Farm Credit District in which the funding bank 
                has reimbursed one or more of its affiliated 
                associations for the previously unreimbursed portion of 
                the Financial Assistance stock held by such 
                associations, the funding bank shall be deemed to be 
                the holder of the shares of Financial Assistance 
                Corporation stock for which it has provided such 
                reimbursement.''.

SEC. 6. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM BANKS.

    (a) Least-Cost Resolution.--Section 5.61(a)(3) (12 U.S.C. 2277a-
10(a)(3)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (F); 
        and
            (2) by striking subparagraph (A) and inserting the 
        following:
                    ``(A) Least-cost resolution.--Assistance may not be 
                provided to an insured System bank under this 
                subsection unless the total amount of such assistance 
                is the least costly to the Farm Credit Insurance Fund 
                of all possible alternatives available to the 
                Corporation, including liquidation of the bank 
                (including paying the insured obligations issued on 
                behalf of the bank). Before making a least-cost 
                determination under this subparagraph, the Corporation 
                shall accord such other insured System banks as the 
                Corporation determines appropriate the opportunity to 
                submit information relating to such determination.
                    ``(B) Procedural rules.--In determining the least 
                costly alternative under subparagraph (A), the 
                Corporation shall--
                            ``(i) evaluate alternatives on a present-
                        value basis, using a reasonable discount rate;
                            ``(ii) document that evaluation and the 
                        assumptions on which the evaluation is based; 
                        and
                            ``(iii) retain the documentation for not 
                        less than 5 years.
                    ``(C) Time of determination.--
                            ``(i) Cost of assistance.--For purposes of 
                        this subsection, the determination of the costs 
                        of providing any assistance under any provision 
                        of this section with respect to any insured 
                        System bank shall be made as of the date on 
                        which the Corporation makes the determination 
                        to provide such assistance to the institution 
                        under this section.
                            ``(ii) Cost of liquidation.--For purposes 
                        of this subsection, the determination of the 
                        costs of liquidation of any insured System bank 
                        shall be made as of the earliest of--
                                    ``(I) the date on which a 
                                conservator is appointed for the bank;
                                    ``(II) the date on which a receiver 
                                is appointed for the bank; or
                                    ``(III) the date on which the 
                                Corporation makes any determination to 
                                provide any assistance under this 
                                section with respect to the bank.
                    ``(D) Evaluation of management.--Before providing 
                any assistance under paragraph (1), the Corporation 
                shall evaluate the adequacy of the managerial resources 
                of the bank. The continued service of any director or 
                senior ranking officer who serves in a policymaking 
                role for the assisted bank, as determined by the 
                Corporation, shall be subject to approval by the 
                Corporation as a condition of such assistance.
                    ``(E) Discretionary determination.--Any 
                determination that the Corporation makes under this 
                paragraph shall be in the sole discretion of the 
                Corporation.''.
    (b) Conforming Amendments.--Section 5.61(a) (12 U.S.C. 2277a-10(a)) 
is amended--
            (1) in paragraph (1), by striking ``In general'' and 
        inserting ``Stand-alone assistance''; and
            (2) in paragraph (2)--
                    (A) by striking ``Enumerated powers'' and inserting 
                ``Facilitation of mergers or consolidation''; and
                    (B) in subparagraph (A), by striking ``Facilitation 
                of mergers or consolidation'' and inserting ``In 
                general''.

SEC. 7. FARM CREDIT SYSTEM INSURANCE CORPORATION BOARD OF DIRECTORS.

    Section 201 of the Farm Credit Banks and Associations Safety and 
Soundness Act of 1992 (106 Stat. 4104-4105) is repealed.

SEC. 8. CONSERVATORSHIP AND RECEIVERSHIPS.

    (a) Inclusion Among General Corporate Powers.--Section 5.58(9) (12 
U.S.C. 2277a-7(9)) is amended to read as follows:
            ``(9) Conservator or receiver.--The Corporation may act as 
        conservator or receiver.''.
    (b) Conforming Amendments.--Section 5.51 (12 U.S.C. 2277a) is 
amended by striking paragraph (5) and redesignating paragraph (6) as 
paragraph (5).

SEC. 9. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT SYSTEM 
              INSURANCE CORPORATION.

    Part E of title V of the Farm Credit Act of 1971 (12 U.S.C. 2277-
2277a-14) is amended by inserting after section 5.61 the following:

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

    ``(a) In General.--The Corporation may prohibit or limit, by 
regulation or order, any golden parachute payment or indemnification 
payment by a Farm Credit System institution (including the Federal 
Agricultural Mortgage Corporation and any conservator or receiver for 
the Federal Agricultural Mortgage Corporation) in troubled condition 
(as defined in regulations issued by the Corporation).
    ``(b) Factors To Be Taken Into Account.--The Corporation shall 
prescribe, by regulation, the factors to be considered by the 
Corporation in taking any action under subsection (a), which may 
include the following:
            ``(1) Whether there is a reasonable basis to believe that 
        the institution-related party has committed any fraudulent act 
        or omission, breach of trust or fiduciary duty, or insider 
        abuse with regard to the Farm Credit System institution 
        involved that has had a material effect on the financial 
        condition of the institution.
            ``(2) Whether there is a reasonable basis to believe that 
        the institution-related party is substantially responsible for 
        the insolvency of the Farm Credit System institution, the 
        appointment of a conservator or receiver for the institution, 
        or the institution's troubled condition (as defined in 
        regulations prescribed by the Corporation).
            ``(3) Whether there is a reasonable basis to believe that 
        the institution-related party has materially violated any 
        applicable law or regulation that has had a material effect on 
        the financial condition of the institution.
            ``(4) Whether there is a reasonable basis to believe that 
        the institution-related party has violated or conspired to 
        violate--
                    ``(A) section 215, 657, 1006, 1014, or 1344 of 
                title 18, United States Code; or
                    ``(B) section 1341 or 1343 of title 18, United 
                States Code, affecting a Farm Credit System 
                institution.
            ``(5) Whether the institution-related party was in a 
        position of managerial or fiduciary responsibility.
            ``(6) The length of time that the party was related with 
        the Farm Credit System institution and the degree to which--
                    ``(A) the payment reasonably reflects compensation 
                earned over the period of employment; and
                    ``(B) the compensation involved represents a 
                reasonable payment for services rendered.
    ``(c) Certain Payments Prohibited.--No Farm Credit System 
institution may prepay the salary or any liability or legal expense of 
any institution-related party if such payment--
            ``(1) is made in contemplation of the insolvency of such 
        institution or after the commission of an act of insolvency; 
        and
            ``(2) is made with a view to, or has the result of--
                    ``(A) preventing the proper application of the 
                assets of the institution to creditors; or
                    ``(B) preferring one creditor over another.
    ``(d) Golden Parachute Payment Defined.--As used in this section:
            ``(1) In general.--The term `golden parachute payment' 
        means any payment (or any agreement to make any payment) in the 
        nature of compensation by any Farm Credit System institution 
        for the benefit of any institution-related party under an 
        obligation of the institution that--
                    ``(A) is contingent on the termination of the 
                party's relationship with the institution; and
                    ``(B) is received on or after the date on which--
                            ``(i) the institution is insolvent;
                            ``(ii) any conservator or receiver is 
                        appointed for the institution;
                            ``(iii) the Farm Credit Administration has 
                        assigned the institution a composite CAMEL 
                        rating of 4 or 5 under the Farm Credit 
                        Administration Rating System, or an equivalent 
                        rating; or
                            ``(iv) the Corporation otherwise determines 
                        that the institution is in a troubled condition 
                        (as defined in regulations issued by the 
                        Corporation).
            ``(2) Certain payments in contemplation of an event.--Any 
        payment that would be a golden parachute payment but for the 
        fact that the payment was made before the date referred to in 
        paragraph (1)(B) shall be treated as a golden parachute payment 
        if the payment was made in contemplation of the occurrence of 
        an event described in any clause of such paragraph.
            ``(3) Certain payments not included.--The term `golden 
        parachute payment' shall not include--
                    ``(A) any payment made under a retirement plan that 
                is qualified (or is intended to be qualified) under 
                section 401 of the Internal Revenue Code of 1986 or 
                other nondiscriminatory benefit plan;
                    ``(B) any payment made under a bona fide deferred 
                compensation plan or arrangement that the Corporation 
                determines, by regulation or order, to be permissible; 
                or
                    ``(C) any payment made by reason of the death or 
                disability of an institution-related party.
    ``(e) Other Definitions.--As used in this section:
            ``(1) Indemnification payment.--The term `indemnification 
        payment' means any payment (or any agreement to make any 
        payment) by any Farm Credit System institution for the benefit 
        of any person who is or was an institution-related party, to 
        pay or reimburse the person for any liability or legal expense 
        with regard to any administrative proceeding or civil action 
        instituted by the Farm Credit Administration that results in a 
        final order under which the person--
                    ``(A) is assessed a civil money penalty; or
                    ``(B) is removed or prohibited from participating 
                in the conduct of the affairs of the institution.
            ``(2) Liability or legal expense.--The term `liability or 
        legal expense' means--
                    ``(A) any legal or other professional expense 
                incurred in connection with any claim, proceeding, or 
                action;
                    ``(B) the amount of, and any cost incurred in 
                connection with, any settlement of any claim, 
                proceeding, or action; and
                    ``(C) the amount of, and any cost incurred in 
                connection with, any judgment or penalty imposed with 
                respect to any claim, proceeding, or action.
            ``(3) Payment.--The term `payment' means--
                    ``(A) any direct or indirect transfer of any funds 
                or any asset; and
                    ``(B) any segregation of any funds or assets for 
                the purpose of making, or under an agreement to make, 
                any payment after the date on which such funds or 
                assets are segregated, without regard to whether the 
                obligation to make such payment is contingent on--
                            ``(i) the determination, after such date, 
                        of the liability for the payment of such 
                        amount; or
                            ``(ii) the liquidation, after such date, of 
                        the amount of such payment.
            ``(4) Institution-related party.--The term `institution-
        related party' means--
                    ``(A) any director, officer, employee, or agent for 
                a Farm Credit System institution;
                    ``(B) any stockholder (other than another Farm 
                Credit System institution), consultant, joint venture 
                partner, or any other person determined by the Farm 
                Credit Administration to be a participant in the 
                conduct of the affairs of a Farm Credit System 
                institution;
                    ``(C) any independent contractor (including any 
                attorney, appraiser, or accountant) who knowingly or 
                recklessly participates in any violation of any law or 
                regulation, any breach of fiduciary duty, or any unsafe 
                or unsound practice that caused or is likely to cause 
                more than a minimal financial loss to, or a significant 
                adverse effect on, the Farm Credit System institution; 
                or
                    ``(D) any receiver or conservator of a Farm Credit 
                System institution.
    ``(f) Special Rule.--No provision of this section may be construed 
as prohibiting any Farm Credit System institution from purchasing any 
commercial insurance policy or fidelity bond, except that such 
insurance policy or bond shall not cover any legal or liability expense 
of the institution that is described in subsection (e)(1).
    ``(g) Special Rule Regarding the Farm Credit Administration.--No 
provision of this section may be construed as limiting the powers, 
functions, or responsibilities of the Farm Credit Administration.''.

SEC. 10. FORMATION OF ADMINISTRATIVE SERVICE ENTITIES.

    Part E of title IV (12 U.S.C. 2211-2214) is amended by adding at 
the end the following:

``SEC. 4.28A. DEFINITION OF BANK.

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

SEC. 11. REQUIREMENTS FOR LOANS SOLD INTO THE SECONDARY MARKET.

    (a) Borrower Stock.--Section 4.3A (12 U.S.C. 2154a) is amended--
            (1) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively; and
            (2) by inserting after subsection (e) the following:
    ``(f) Loans Designated for Sale or Sold Into the Secondary 
Market.--Notwithstanding any other provision of this section:
            ``(1) General rule.--Subject to paragraph (2), the bylaws 
        adopted by any bank or association under subsection (b) may 
        provide--
                    ``(A) for any loan made on or after the date of the 
                enactment of this subsection that is designated, at the 
                time the loan is made, for sale into a secondary market 
                under title VIII or otherwise, that no voting stock or 
                participation certificate purchase requirement shall 
                apply to the borrower of the loan; and
                    ``(B) for any loan made before the date of the 
                enactment of this subsection that is sold into a 
                secondary market under title VIII or otherwise, that 
                all outstanding voting stock or participation 
                certificates held by the borrower with respect to the 
                loan shall, subject to subsection (d)(1), be retired.
            ``(2) Exception.--If a loan designated for sale as 
        described in paragraph (1)(A) is not sold into a secondary 
        market within 180 days after the designation, the voting stock 
        or participation certificate purchase requirement that would 
        otherwise apply to the loan in the absence of bylaw provisions 
        adopted under paragraph (1)(A) shall be effective, except that 
        the bylaws may provide that if such a loan is thereafter sold 
        into a secondary market, all outstanding voting stock or 
        participation certificates held by the borrower with respect to 
        such loan shall, subject to subsection (d)(1), be retired.''.
    (b) Borrower Rights.--
            (1) In general.--Section 4.14A(a)(5) (12 U.S.C. 
        2202a(a)(5)) is amended to read as follows:
            ``(5) Loan.--
                    ``(A) In general.--The term `loan' means a loan 
                made to a farmer, rancher, or producer or harvester of 
                aquatic products, for any agricultural or aquatic 
                purpose and other credit needs of the borrower, 
                including financing for basic processing and marketing 
                directly related to the borrower's operations and those 
                of other eligible farmers, ranchers, and producers or 
                harvesters of aquatic products.
                    ``(B) Exclusion of loans designated for sale into a 
                secondary market.--The term `loan' does not include a 
                loan made on or after the date of enactment of this 
                subparagraph that, at the time the loan is made, is 
                designated for sale into a secondary market under title 
                VIII or otherwise, except as provided in subparagraph 
                (C).
                    ``(C) Special rule.--If a loan designated for sale 
                into a secondary market is not sold into a secondary 
                market within 180 days after such designation, the 
                provisions of sections 4.14, 4.14A, 4.14B, 4.14C, 
                4.14D, and 4.36 that would apply to the loan in the 
                absence of subparagraph (B) shall apply to the loan 
                until the loan is so sold.''.
            (2) Conforming amendment.--Section 8.9(b) (12 U.S.C. 
        2279aa-9(b)) is amended by inserting ``(as defined in section 
        4.14A(a)(5))'' after ``At the time of application for a loan''.

SEC. 12. REMOVAL OF ANTIQUATED AND UNNECESSARY PAPERWORK REQUIREMENTS.

    (a) Disclosure on Adjustable Rate Loans.--Section 4.13(a)(4) (12 
U.S.C. 2199(a)(4)) is amended by inserting ``, except that any 
regulation of the Farm Credit Administration implementing this 
paragraph shall include a provision permitting notice to a borrower of 
a change in the interest rate applicable to the borrower's loan to be 
made within a reasonable time after the effective date of the change'' 
before the semicolon.
    (b) Compensation of Association Personnel.--Section 1.5(13) (12 
U.S.C. 2013(13)) is amended by striking ``and the appointment and 
compensation of the chief executive officer thereof,''.
    (c) Joint Management Agreements.--Section 5.17(a)(2)(A) (12 U.S.C. 
2252(a)(2)(A)) is amended in the 1st sentence by striking ``or 
management agreements''.
    (d) Removal of Certain Borrower Reporting Requirements.--Section 
1.10(a) (12 U.S.C. 2018(a)) is amended by striking paragraph (5).
    (e) Use of Private Mortgage Insurance.--
            (1) In general.--Section 1.10(a)(1) (12 U.S.C. 2018(a)(1)) 
        is amended by adding at the end the following:
                    ``(D) Private mortgage insurance.--Loans on which 
                private mortgage insurance is obtained may exceed 85 
                percent of the appraised value of the real estate 
                security to the extent that the loan amount in excess 
                of such 85 percent is covered by the insurance.''.
            (2) Conforming amendment.--Section 1.10(a)(1)(A) (12 U.S.C. 
        2018(a)(1)(A)) is amended by striking ``paragraphs (2) and 
        (3)'' and inserting ``subparagraphs (C) and (D)''.
    (f) Dissemination of Quarterly Reports.--Section 5.17(a)(8) (12 
U.S.C. 2252(a)(8)) is amended by inserting ``the requirements of the 
Farm Credit Administration governing the dissemination to stockholders 
of quarterly reports of System institutions may not be more burdensome 
or costly than the requirements applicable to national banks, and'' 
after ``except that''.

SEC. 13. REMOVAL OF GOVERNMENT CERTIFICATION REQUIREMENT FOR CERTAIN 
              PRIVATE SECTOR FINANCING.

    Section 3.8(b)(1)(A) (12 U.S.C. 2129(b)(1)(A)) is amended--
            (1) by striking ``have been certified by the Administrator 
        of the Rural Electrification Administration to be eligible for 
        such'' and inserting ``are eligible under the Rural 
        Electrification Act of 1936 for''; and
            (2) by striking ``loan guarantee, and'' and inserting 
        ``loan guarantee from such agencies (or their successors), 
        and''.

SEC. 14. REFORM OF REGULATORY LIMITATIONS ON THE DIVIDEND, MEMBER 
              BUSINESS, AND VOTING PRACTICES OF ELIGIBLE FARMER-OWNED 
              COOPERATIVES.

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

SEC. 15. EXTENSION OF INTEREST RATE REDUCTION PROGRAM FOR 5 YEARS.

    Section 1320 of the Food Security Act of 1985 (7 U.S.C. 1999 note) 
is amended by striking ``1995'' and inserting ``2000''.

            Passed the House of Representatives December 19, 1995.

            Attest:

                                                                 Clerk.
```