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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2130 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                H. R. 2130

  To amend the Farm Credit Act of 1971 to improve the efficiency and 
  operation of the Federal Agricultural Mortgage Corporation in order 
better to ensure that farmers, ranchers and rural home owners will have 
access to a stable and competitive supply of mortgage credit now and in 
                              the future.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 27, 1995

 Mr. Emerson (for himself, Mr. Barrett of Nebraska, and Mr. Bereuter) 
 introduced the following bill; which was referred to the Committee on 
                              Agriculture

_______________________________________________________________________

                                 A BILL

 
  To amend the Farm Credit Act of 1971 to improve the efficiency and 
  operation of the Federal Agricultural Mortgage Corporation in order 
better to ensure that farmers, ranchers and rural home owners will have 
access to a stable and competitive supply of mortgage credit now and in 
                              the future.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farmer Mac Reform Act of 1995''.

SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.

    Except as otherwise expressly provided, whenever 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 
(12 U.S.C. 2001 et seq.).

SEC. 3. DEFINITION OF REAL ESTATE.

    Section 8.0(1)(B)(ii) (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. 4. DEFINITION OF CERTIFIED FACILITY.

    Section 8.0(3) (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. 5. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE CORPORATION.

    Section 8.1(b) (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. 6. POWERS OF THE CORPORATION.

    Section 8.3(c) (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 otherwise to 
        perform all the functions and responsibilities of an 
        agricultural mortgage marketing facility operating as a 
        certified facility under this title.''.

SEC. 7. FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL AGENTS.

    Section 8.3 (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. 8. CERTIFICATION OF AGRICULTURAL MORTGAGE MARKETING FACILITIES.

    Section 8.5 (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. 9. GUARANTEE OF QUALIFIED LOANS.

    Section 8.6 (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. 10. MANDATORY RESERVES AND SUBORDINATED PARTICIPATION INTERESTS 
              ELIMINATED.

    (a) Guarantee of Qualified Loans.--Section 8.6 (12 U.S.C. 2279aa--
6) is amended by striking subsection (b).
    (b) Reserves and Subordinated Participation Interests.--Section 8.7 
(12 U.S.C. 2279aa--7) is repealed.

SEC. 11. STANDARDS REQUIRING DIVERSIFIED POOLS.

    Section 8.6 (12 U.S.C. 2279aa--6) (as amended by section 218) is 
further amended--
            (1) by striking subsection (c); and
            (2) by redesignating subsections (d) through (g) as 
        subsections (b) through (e), respectively.

SEC. 12. SMALL FARMS.

    Section 8.8(e) (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. 13. DEFINITION OF AN AFFILIATE.

    Section 8.11(e) (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. 14. STATE USURY LAWS SUPERSEDED.

    Section 8.12 (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. 15. EXTENSION OF CAPITAL TRANSITION PERIOD.

    Section 8.32 (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 Improvements Act of 1995,'';
            (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. 16. MINIMUM CAPITALIZATION LEVEL.

    Section 8.33 (12 U.S.C. 2279bb-2) is amended--
            (1) in subsection (a), by striking paragraph (3) and 
        inserting the following:
            ``(3) the percentage, determined under subsection (c), of 
        the aggregate assets of the Corporation acquired under the 
        linked portfolio option under section 8.6(e), plus the 
        aggregate amount of qualified loans purchased and held by the 
        Corporation under the pooling option under section 
        8.3(c)(13).''; and
            (2) in subsection (c)--
                    (A) by striking ``Linked Portfolio Assets'' and 
                inserting ``Designated Assets'';
                    (B) by striking ``section 8.6(g)'' and all that 
                follows through ``8.34(3)(A))'' and inserting ``section 
                8.6(e), plus the aggregate amount of qualified loans 
                purchased and held by the Corporation under the pooling 
                option under section 8.3(c)(13)''; and
                    (C) by striking ``5-year'' each place it appears 
                and inserting ``8-year''.

SEC. 17. CRITICAL CAPITAL LEVEL.

    Section 8.34(3) (12 U.S.C. 2279bb-3(3)) is amended--
            (1) by striking ``section 8.6(g),'' and inserting ``section 
        8.6(e),''; and
            (2) by striking ``5-year'' each place it appears and 
        inserting ``8-year''.

SEC. 18. ENFORCEMENT LEVELS.

    Section 8.35(e) (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. 19. RECAPITALIZATION OF THE CORPORATION.

    Title VIII (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 3 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 3-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. 20. 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.--
            ``(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.--Notwithstandng 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.''.
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