Union Calendar No. 233

104TH CONGRESS

2D SESSION H. R. 2130

[Report No. 104–446, Part I]

A BILL

To amend the Farm Credit Act of 1971 to improve

future.tive supply of mortgage credit now and in theowners will have access to a stable and competiensure that farmers, ranchers, and rural homecultural Mortgage Corporation in order better tothe efficiency and operation of the Federal AgriMARCH 15, 1996

Committee on Banking and Financial Services disprinted House on the State of the Union, and ordered to be charged; committed to the Committee of the Whole
IB

Union Calendar No. 233

104TH CONGRESS

2D SESSION H. R. 2130

[Report No. 104–446, Part I]

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

JANUARY 4, 1996

Reported with an amendment, referred to the Committee on Banking and Financial Services for a period ending not later than March 15, 1996 for

consideration of such provisions of the bill and amendment as fall within

the jurisdiction of that committee pursuant to clause 1(c), rule X

[Strike out all after the enacting clause and insert the part printed in italic]

MARCH 15, 1996

Additional sponsors: Mr. LUCAS of Oklahoma, Mr. DOOLEY of California, and

Mr. JOHNSON of South Dakota

MARCH 15, 1996

Committee on Banking and Financial Services discharged; committed to the

Committee of the Whole House on the State of the Union, and ordered

to be printed

[For text of introduced bill, see copy of bill as introduced on July 27, 1995]
2

•HR 2130 RH

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.

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 ‘‘Farmer Mac Reform

5 Act of 1995’’.

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

7 Except as otherwise expressly provided, wherever in

8 this Act an amendment or repeal is expressed in terms of

9 an amendment to, or repeal of, a section or other provision,

10 the reference shall be considered to be made to a section or

11 other provision of the Farm Credit Act of 1971 (12 U.S.C.

12 2001 et seq.).

13 SEC. 3. DEFINITION OF REAL ESTATE.

14 Section 8.0(1)(B)(ii) (12 U.S.C. 2279aa(1)(B)(ii)) is

15 amended by striking ‘‘with a purchase price’’ and inserting

16 ‘‘, excluding the land to which the dwelling is affixed, with

17 a value’’.

18 SEC. 4. DEFINITION OF CERTIFIED FACILITY.

19 Section 8.0(3) (12 U.S.C. 2279aa(3)) is amended—
3

•HR 2130 RH

1 (1) in subparagraph (A), by striking ‘‘a second2 ary marketing agricultural loan’’ and inserting ‘‘an

3 agricultural mortgage marketing’’; and

4 (2) in subparagraph (B), by striking ‘‘, but

5 only’’ and all that follows through ‘‘(9)(B)’’.

6 SEC. 5. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE

7 CORPORATION.

8 Section 8.1(b) (12 U.S.C. 2279aa–1(b)) is amended—

9 (1) in paragraph (2), by striking ‘‘and’’ at the

10 end;

11 (2) in paragraph (3), by striking the period at

12 the end and inserting ‘‘; and’’; and

13 (3) by adding at the end the following:

14 ‘‘(4) purchase qualified loans and issue securities

15 representing interests in, or obligations backed by, the

16 qualified loans, guaranteed for the timely repayment

17 of principal and interest.’’.

18 SEC. 6. POWERS OF THE CORPORATION.

19 Section 8.3(c) (12 U.S.C. 2279aa–3(c)) is amended—

20 (1) by redesignating paragraphs (13) and (14)

21 as paragraphs (14) and (15), respectively; and

22 (2) by inserting after paragraph (12) the follow23 ing:

24 ‘‘(13) To purchase, hold, sell, or assign a quali25 fied loan, to issue a guaranteed security, representing
4

•HR 2130 RH

1 an interest in, or an obligation backed by, the quali2 fied loan, and to perform all the functions and re3 sponsibilities of an agricultural mortgage marketing

4 facility operating as a certified facility under this

5 title.’’.

6 SEC. 7. FEDERAL RESERVE BANKS AS DEPOSITORIES AND

7 FISCAL AGENTS.

8 Section 8.3 (12 U.S.C. 2279aa–3) is amended—

9 (1) in subsection (d), by striking ‘‘may act as de10 positories for, or’’ and inserting ‘‘shall act as deposi11 tories for, and’’; and

12 (2) in subsection (e), by striking ‘‘Secretary of

13 the Treasury may authorize the Corporation to use’’

14 and inserting ‘‘Corporation shall have access to’’.

15 SEC. 8. CERTIFICATION OF AGRICULTURAL MORTGAGE

16 MARKETING FACILITIES.

17 Section 8.5 (12 U.S.C. 2279aa–5) is amended—

18 (1) in subsection (a)—

19 (A) in paragraph (1), by inserting ‘‘(other

20 than the Corporation)’’ after ‘‘agricultural mort21 gage marketing facilities’’; and

22 (B) in paragraph (2), by inserting ‘‘(other

23 than the Corporation)’’ after ‘‘agricultural mort24 gage marketing facility’’; and
5

•HR 2130 RH

1 (2) in subsection (e)(1), by striking ‘‘(other than

2 the Corporation)’’.

3 SEC. 9. GUARANTEE OF QUALIFIED LOANS.

4 Section 8.6 (12 U.S.C. 2279aa–6) is amended—

5 (1) in subsection (a)(1)—

6 (A) by striking ‘‘Corporation shall guaran7 tee’’ and inserting the following: ‘‘Corporation—

8 ‘‘(A) shall guarantee’’;

9 (B) by striking the period at the end and

10 inserting ‘‘; and’’; and

11 (C) by adding at the end the following:

12 ‘‘(B) may issue a security, guaranteed as to

13 the timely payment of principal and interest,

14 that represents an interest solely in, or an obli15 gation fully backed by, a pool consisting of

16 qualified loans that—

17 ‘‘(i) meet the standards established

18 under section 8.8; and

19 ‘‘(ii) have been purchased and held by

20 the Corporation.’’;

21 (2) in subsection (d)—

22 (A) by striking paragraph (4); and

23 (B) by redesignating paragraphs (5), (6),

24 and (7) as paragraphs (4), (5), and (6), respec25 tively; and
6

•HR 2130 RH

1 (3) in subsection (g)(2), by striking ‘‘section

2 8.0(9)(B))’’ and inserting ‘‘section 8.0(9))’’.

3 SEC. 10. MANDATORY RESERVES AND SUBORDINATED PAR4 TICIPATION INTERESTS ELIMINATED.

5 (a) GUARANTEE OF QUALIFIED LOANS.—Section 8.6

6 (12 U.S.C. 2279aa–6) is amended by striking subsection

7 (b).

8 (b) RESERVES AND SUBORDINATED PARTICIPATION

9 INTERESTS.—Section 8.7 (12 U.S.C. 2279aa–7) is repealed.

10 (c) CONFORMING AMENDMENTS.—

11 (1) Section 8.0(9)(B)(i) (12 U.S.C.

12 2279(9)(B)(i)) is amended by striking ‘‘8.7, 8.8,’’ and

13 inserting ‘‘8.8’’.

14 (2) Section 8.6(a)(2) (12 U.S.C. 2279aa–6(a)(2))

15 is amended by striking ‘‘subject to the provisions of

16 subsection (b)’’.

17 SEC. 11. STANDARDS REQUIRING DIVERSIFIED POOLS.

18 (a) IN GENERAL.—Section 8.6 (12 U.S.C. 2279aa–6),

19 as amended by section 10 of this Act, is amended—

20 (1) by striking subsection (c); and

21 (2) by redesignating subsections (d) through (g)

22 as subsections (b) through (e), respectively.

23 (b) CONFORMING AMENDMENTS.—
7

•HR 2130 RH

1 (1) Section 8.0(9)(B)(i) (12 U.S.C.

2 2279(9)(B)(i)) is amended by striking ‘‘(f)’’ and in3 serting ‘‘(d)’’.

4 (2) Section 8.13(a) (12 U.S.C. 2279aa–13(a)) is

5 amended by striking ‘‘sections 8.6(b) and’’ each place

6 such term appears and inserting ‘‘section’’.

7 (3) Section 8.32(b)(1)(C) (12 U.S.C. 2279bb–

8 1(b)(1)(C)) is amended—

9 (A) by striking ‘‘shall’’ and inserting

10 ‘‘may’’; and

11 (B) by inserting ‘‘(as in effect before the

12 date of the enactment of the Farmer Mac Reform

13 Act of 1995)’’ before the semicolon.

14 (4) Section 8.6(b) (12 U.S.C. 2279aa–6(b)), as so

15 redesignated by subsection (a)(2) of this section, is

16 amended—

17 (A) by striking paragraph (4) (as so redes18 ignated by section 9(2)(B) of this Act); and

19 (B) by redesignating paragraphs (5) and

20 (6) (as so redesignated) as paragraphs (4) and

21 (5), respectively.

22 SEC. 12. SMALL FARMS.

23 Section 8.8(e) (12 U.S.C. 2279aa–8(e)) is amended by

24 adding at the end the following: ‘‘The Board shall promote

25 and encourage the inclusion of qualified loans for small
8

•HR 2130 RH

1 farms and family farmers in the agricultural mortgage sec2 ondary market.’’.

3 SEC. 13. DEFINITION OF AN AFFILIATE.

4 Section 8.11(e) (21 U.S.C. 2279aa–11(e)) is amend5 ed—

6 (1) by striking ‘‘a certified facility or’’; and

7 (2) by striking ‘‘paragraphs (3) and (7), respec8 tively, of section 8.0’’ and inserting ‘‘section 8.0(7)’’.

9 SEC. 14. STATE USURY LAWS SUPERSEDED.

10 Section 8.12 (12 U.S.C. 2279aa–12) is amended by

11 striking subsection (d) and inserting the following:

12 ‘‘(d) STATE USURY LAWS SUPERSEDED.—A provision

13 of the Constitution or law of any State shall not apply to

14 an agricultural loan made by an originator or a certified

15 facility in accordance with this title for sale to the Corpora16 tion or to a certified facility for inclusion in a pool for

17 which the Corporation has provided, or has committed to

18 provide, a guarantee, if the loan, not later than 180 days

19 after the date the loan was made, is sold to the Corporation

20 or included in a pool for which the Corporation has pro21 vided a guarantee, if the provision—

22 ‘‘(1) limits the rate or amount of interest, dis23 count points, finance charges, or other charges that

24 may be charged, taken, received, or reserved by an ag25 ricultural lender or a certified facility; or
9

•HR 2130 RH

1 ‘‘(2) limits or prohibits a prepayment penalty

2 (either fixed or declining), yield maintenance, or

3 make-whole payment that may be charged, taken, or

4 received by an agricultural lender or a certified facil5 ity in connection with the full or partial payment of

6 the principal amount due on a loan by a borrower in

7 advance of the scheduled date for the payment under

8 the terms of the loan, otherwise known as a prepay9 ment of the loan principal.’’.

10 SEC. 15. EXTENSION OF CAPITAL TRANSITION PERIOD.

11 Section 8.32 (12 U.S.C. 2279bb–1) is amended—

12 (1) in the first sentence of subsection (a), by

13 striking ‘‘Not later than the expiration of the 2-year

14 period beginning on December 13, 1991,’’ and insert15 ing ‘‘Not sooner than the expiration of the 3-year pe16 riod beginning on the date of the enactment of the

17 Farmer Mac Reform Act of 1995,’’;

18 (2) in the first sentence of subsection (b)(2), by

19 striking ‘‘5-year’’ and inserting ‘‘8-year’’; and

20 (3) in subsection (d)—

21 (A) in the first sentence—

22 (i) by striking ‘‘The regulations estab23 lishing’’ and inserting the following:

24 ‘‘(1) IN GENERAL.—The regulations establish25 ing’’; and
10

•HR 2130 RH

1 (ii) by striking ‘‘shall contain’’ and in2 serting the following: ‘‘shall—

3 ‘‘(A) be issued by the Director for public

4 comment in the form of a notice of proposed

5 rulemaking, to be first published after the expi6 ration of the period referred to in subsection (a);

7 and

8 ‘‘(B) contain’’; and

9 (B) in the second sentence, by striking ‘‘The

10 regulations shall’’ and inserting the following:

11 ‘‘(2) SPECIFICITY.—The regulations referred to

12 in paragraph (1) shall’’.

13 SEC. 16. MINIMUM CAPITAL LEVEL.

14 Section 8.33 (12 U.S.C. 2279bb–2) is amended to read

15 as follows:

16 ‘‘SEC. 8.33. MINIMUM CAPITAL LEVEL.

17 ‘‘(a) IN GENERAL.—Except as provided in subsection

18 (b), for purposes of this subtitle, the minimum capital level

19 for the Corporation shall be an amount of core capital equal

20 to the sum of—

21 ‘‘(1) 2.75 percent of the aggregate on-balance

22 sheet assets of the Corporation, as determined in ac23 cordance with generally accepted accounting prin24 ciples; and
11

•HR 2130 RH

1 ‘‘(2) 0.75 percent of the Corporation’s aggregate

2 off-balance sheet obligations, which, for the purposes

3 of this subtitle, shall include—

4 ‘‘(A) the unpaid principal balance of out5 standing securities that are guaranteed by the

6 Corporation and backed by pools of qualified

7 loans;

8 ‘‘(B) instruments that are issued or guaran9 teed by the Corporation and are substantially

10 equivalent to instruments described in subpara11 graph (A); and

12 ‘‘(C) other off-balance sheet obligations of

13 the Corporation.

14 ‘‘(b) TRANSITION PERIOD.—

15 ‘‘(1) IN GENERAL.—For purposes of this subtitle,

16 the minimum capital level for the Corporation—

17 ‘‘(A) prior to January 1, 1997, shall be the

18 amount of core capital equal to the sum of—

19 ‘‘(i) 0.45 percent of aggregate off-bal20 ance sheet obligations;

21 ‘‘(ii) 0.45 percent of designated on-bal22 ance sheet assets as determined under para23 graph (2); and

24 ‘‘(iii) 2.50 percent of on-balance sheet

25 assets other than designated assets;
12

•HR 2130 RH

1 ‘‘(B) during the 1-year period ending De2 cember 31, 1997, shall be the amount of core cap3 ital equal to the sum of—

4 ‘‘(i) 0.55 percent of aggregate off-bal5 ance sheet obligations;

6 ‘‘(ii) 1.20 percent of designated on-bal7 ance sheet assets as determined under para8 graph (2); and

9 ‘‘(iii) 2.55 percent of on-balance sheet

10 assets other than designated assets;

11 ‘‘(C) during the 1-year period ending De12 cember 31, 1998, shall be the amount of core cap13 ital equal to—

14 ‘‘(i) the sum of—

15 ‘‘(I) 0.65 percent of aggregate off16 balance sheet obligations;

17 ‘‘(II) 1.95 percent of designated

18 on-balance sheet assets as determined

19 under paragraph (2); and

20 ‘‘(III) 2.65 percent of on-balance

21 sheet assets other than designated as22 sets; or

23 ‘‘(ii) if the Corporation’s core capital

24 is less than $25,000,000 on January 1,
13

•HR 2130 RH

1 1998, the amount determined under sub2 section (a); and

3 ‘‘(D) on and after January 1, 1999, shall be

4 the amount determined under subsection (a).

5 ‘‘(2) DEFINITION OF DESIGNATED ON-BALANCE

6 SHEET ASSETS.—In this subsection, the term ‘des7 ignated on-balance sheet assets’ means the sum of—

8 ‘‘(A) the aggregate on-balance sheet assets of

9 the Corporation acquired under section 8.6(e);

10 and

11 ‘‘(B) the aggregate amount of qualified

12 loans purchased and held by the Corporation

13 under section 8.3(c)(13).’’.

14 SEC. 17. CRITICAL CAPITAL LEVEL.

15 Section 8.34 (12 U.S.C. 2279bb–3) is amended to read

16 as follows:

17 ‘‘SEC. 8.34. CRITICAL CAPITAL LEVEL.

18 ‘‘For purposes of this subtitle, the critical capital level

19 for the Corporation shall be an amount of core capital equal

20 to 50 percent of the total minimum capital amount deter21 mined under section 8.33.’’.

22 SEC. 18. ENFORCEMENT LEVELS.

23 Section 8.35(e) (12 U.S.C. 2279bb–4(e)) is amended by

24 striking ‘‘during the 30-month period beginning on the date

25 of the enactment of this section,’’ and inserting ‘‘during the
14

•HR 2130 RH

1 period beginning on December 13, 1991, and ending on the

2 effective date of the risk-based capital regulation issued by

3 the Director under section 8.32,’’.

4 SEC. 19. RECAPITALIZATION OF THE CORPORATION.

5 Title VIII (12 U.S.C. 2279aa et seq.) is amended by

6 adding at the end the following:

7 ‘‘SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.

8 ‘‘(a) MANDATORY RECAPITALIZATION.—The Corpora9 tion shall increase the core capital of the Corporation to

10 an amount equal to or greater than $25,000,000, not later

11 than the earlier of—

12 ‘‘(1) the date that is 2 years after the date of en13 actment of this section; or

14 ‘‘(2) the date that is 180 days after the end of

15 the first calendar quarter that the aggregate on-bal16 ance sheet assets of the Corporation, plus the out17 standing principal of the off-balance sheet obligations

18 of the Corporation, equal or exceed $2,000,000,000.

19 ‘‘(b) RAISING CORE CAPITAL.—In carrying out this

20 section, the Corporation may issue stock under section 8.4

21 and otherwise employ any recognized and legitimate means

22 of raising core capital in the power of the Corporation

23 under section 8.3.

24 ‘‘(c) LIMITATION ON GROWTH OF TOTAL ASSETS.—

25 During the 2-year period beginning on the date of enact-
15

•HR 2130 RH

1 ment of this section, the aggregate on-balance sheet assets

2 of the Corporation plus the outstanding principal of the off3 balance sheet obligations of the Corporation may not exceed

4 $3,000,000,000 if the core capital of the Corporation is less

5 than $25,000,000.

6 ‘‘(d) ENFORCEMENT.—If the Corporation fails to carry

7 out subsection (a) by the date required under paragraph

8 (1) or (2) of subsection (a), the Corporation may not pur9 chase a new qualified loan, or issue or guarantee a new

10 loan-backed security, until the core capital of the Corpora11 tion is increased to an amount equal to or greater than

12 $25,000,000.’’.

13 SEC. 20. BORROWER STOCK.

14 Section 4.3A (12 U.S.C. 2154a) is amended—

15 (1) by redesignating subsections (f) and (g) as

16 subsections (g) and (h), respectively; and

17 (2) by inserting after subsection (e) the following:

18 ‘‘(f) LOANS DESIGNATED FOR SALE OR SOLD INTO

19 THE SECONDARY MARKET.—

20 ‘‘(1) IN GENERAL.—Subject to paragraph (2)

21 and notwithstanding any other provision of this sec22 tion, the bylaws adopted by a bank or association

23 under subsection (b) may provide—

24 ‘‘(A) in the case of a loan made on or after

25 the date of enactment of this paragraph that is
16

•HR 2130 RH

1 designated, at the time the loan is made, for sale

2 into a secondary market, that no voting stock or

3 participation certificate purchase requirement

4 shall apply to the borrower for the loan; and

5 ‘‘(B) in the case of a loan made before the

6 date of enactment of this paragraph that is sold

7 into a secondary market, that all outstanding

8 voting stock or participation certificates held by

9 the borrower with respect to the loan shall, sub10 ject to subsection (d)(1), be retired.

11 ‘‘(2) APPLICABILITY.—Notwithstanding any

12 other provision of this section, in the case of a loan

13 sold to a secondary market under title VIII, para14 graph (1) shall apply regardless of whether the bank

15 or association retains a subordinated participation

16 interest in a loan or pool of loans or contributes to

17 a cash reserve.

18 ‘‘(3) EXCEPTION.—

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graph (B) and notwithstanding any other provi21 sion of this section, if a loan designated for sale

22 under paragraph (1)(A) is not sold into a sec23 ondary market during the 180-day period that

24 begins on the date of the designation, the voting

25 stock or participation certificate purchase re-
17

•HR 2130 RH

1 quirement that would otherwise apply to the

2 loan in the absence of a bylaw provision de3 scribed in paragraph (1)(A) shall be effective.

4 ‘‘(B) RETIREMENT.—The bylaws adopted by

5 a bank or association under subsection (b) may

6 provide that if a loan described in subparagraph

7 (A) is sold into a secondary market after the end

8 of the 180-day period described in the subpara9 graph, all outstanding voting stock or participa10 tion certificates held by the borrower with respect

11 to the loan shall, subject to subsection (d)(1), be

12 retired.’’.

13 SEC. 21. LIQUIDATION OF THE FEDERAL AGRICULTURAL

14 MORTGAGE CORPORATION.

15 Title VIII (12 U.S.C. 2279aa et seq.), as amended by

16 section 19 of this Act, is amended by adding at the end

17 the following:

18 ‘‘Subtitle C—Receivership;

19 Conservatorship; Liquidation of

20 the Federal Agricultural Mort21 gage Corporation

22 ‘‘SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVER23 SHIP.

24 ‘‘(a) VOLUNTARY LIQUIDATION.—The Corporation

25 may voluntarily liquidate only with the consent of, and in
18

•HR 2130 RH

1 accordance with a plan of liquidation approved by, the

2 Farm Credit Administration Board.

3 ‘‘(b) INVOLUNTARY LIQUIDATION.—The Farm Credit

4 Administration Board may appoint a conservator or re5 ceiver for the Corporation under the circumstances specified

6 in section 4.12(b). The grounds for appointment of a con7 servator for the Corporation shall be in addition to those

8 enumerated in section 8.37. In applying section 4.12(b) to

9 the Corporation—

10 ‘‘(1) the Corporation shall also be considered in11 solvent if the Corporation is unable to pay its debts

12 as they fall due in the ordinary course of business;

13 ‘‘(2) a conservator may also be appointed for the

14 Corporation if the authority of the Corporation to

15 purchase qualified loans or issue or guarantee loan16 backed securities is suspended; and

17 ‘‘(3) a receiver may also be appointed for the

18 Corporation if—

19 ‘‘(A)(i) the authority of the Corporation to

20 purchase qualified loans or issue or guarantee

21 loan-backed securities is suspended; or

22 ‘‘(ii) the Corporation is classified under sec23 tion 8.35 as within level III or IV, and the alter24 native actions available under subtitle B are not

25 satisfactory; and
19

•HR 2130 RH

1 ‘‘(B) the Farm Credit Administration deter2 mines that the appointment of a conservator

3 would not be appropriate.

4 ‘‘(c) APPOINTMENT OF CONSERVATOR OR RECEIVER.—

5 ‘‘(1) QUALIFICATIONS.—Notwithstanding section

6 4.12(b), if a conservator or receiver is appointed for

7 the Corporation, the conservator or receiver shall be—

8 ‘‘(A) the Farm Credit Administration or

9 any other governmental entity or employee, in10 cluding the Farm Credit System Insurance Cor11 poration; or

12 ‘‘(B) any person that—

13 ‘‘(i) has no claim against, or financial

14 interest in, the Corporation or other basis

15 for a conflict of interest as the conservator

16 or receiver; and

17 ‘‘(ii) has the financial and manage18 ment expertise necessary to direct the oper19 ations and affairs of and, if necessary, to

20 liquidate the Corporation.

21 ‘‘(2) COMPENSATION.—A conservator or receiver

22 for the Corporation and professional personnel (other

23 than Federal employees) employed to represent or as24 sist the conservator or receiver may be compensated

25 for activities conducted as, or for, a conservator or re-
20

•HR 2130 RH

1 ceiver. Compensation may not be provided in

2 amounts greater than the compensation paid to em3 ployees of the Federal Government for similar serv4 ices, except that the Farm Credit Administration may

5 provide for compensation at higher rates (but not in

6 excess of rates prevailing in the private sector), if the

7 Farm Credit Administration determines that com8 pensation at higher rates is necessary in order to re9 cruit and retain competent personnel. The conservator

10 or receiver may contract with any governmental en11 tity, including the Farm Credit System Insurance

12 Corporation, to make personnel, services, and facili13 ties of the entity available to the conservator or re14 ceiver upon such terms and compensation arrange15 ments as shall be mutually agreed, and each entity is

16 hereby authorized to provide the same to the conserva17 tor or receiver.

18 ‘‘(3) EXPENSES.—The conservator or receiver

19 shall pay valid claims for expenses of the

20 conservatorship or receivership (including compensa21 tion pursuant to paragraph (2)) and valid claims

22 with respect to any loan made under subsection (f)

23 before paying any other valid claim against the Cor24 poration, and such claims may be secured by a lien

25 on such property of the Corporation as the conserva-
21

•HR 2130 RH

1 tor or receiver may determine, which lien shall have

2 priority over any other lien.

3 ‘‘(4) LIABILITY.—If the conservator or receiver

4 for the Corporation is not a Federal entity, or an offi5 cer or employee of the Federal Government, the con6 servator or receiver shall not be personally liable for

7 damages in tort or otherwise for acts or omissions

8 performed pursuant to and in the course of the

9 conservatorship or receivership, unless such acts or

10 omissions constitute gross negligence or any form of

11 intentional tortious conduct or criminal conduct.

12 ‘‘(5) INDEMNIFICATION.—The Farm Credit Ad13 ministration may indemnify the conservator or re14 ceiver on such terms as the Farm Credit Administra15 tion considers appropriate.

16 ‘‘(d) JUDICIAL REVIEW OF APPOINTMENT.—Notwith17 standing subsection (i)(1), within 30 days after a conserva18 tor or receiver is appointed pursuant to subsection (b), the

19 Corporation may bring an action in the United States Dis20 trict Court for the District of Columbia for an order requir21 ing the Farm Credit Administration Board to remove the

22 conservator or receiver, and the court shall, on the merits,

23 dismiss such action or direct the Farm Credit Administra24 tion Board to remove the conservator or receiver. On the

25 commencement of such an action, any court having juris-
22

•HR 2130 RH

1 diction of any other action or enforcement proceeding au2 thorized under this Act to which the Corporation is a party

3 shall stay such action or proceeding during the pendency

4 of the action for removal of the conservator or receiver.

5 ‘‘(e) GENERAL POWERS OF CONSERVATOR OR RE6 CEIVER.—The conservator or receiver for the Corporation

7 shall have such powers to conduct the conservatorship or

8 receivership as shall be provided pursuant to regulations

9 adopted by the Farm Credit Administration Board. Such

10 powers shall be comparable to the powers available to a con11 servator or receiver appointed pursuant to section 4.12(b).

12 ‘‘(f) BORROWINGS FOR WORKING CAPITAL.—If the

13 conservator or receiver of the Corporation determines it is

14 likely that there will be insufficient funds to pay the ongo15 ing administrative expenses of the conservatorship or receiv16 ership or that there will be insufficient liquidity to fund

17 maturing obligations of the conservatorship or receivership,

18 the conservator or receiver may borrow funds in such

19 amounts, from such sources, and at such rates of interest

20 as the conservator or receiver deems necessary or appro21 priate to meet the administrative expenses or liquidity

22 needs of the conservatorship or receivership. The Farm

23 Credit Banks are hereby authorized to loan funds to the

24 conservator or receiver, and to purchase assets of the Cor25 poration, for such purpose.
23

•HR 2130 RH

1 ‘‘(g) AGREEMENTS AGAINST INTERESTS OF CON2 SERVATOR OR RECEIVER.—No agreement which tends to di3 minish or defeat the right, title, or interest of the conserva4 tor or receiver for the Corporation in any asset acquired

5 by it as conservator or receiver for the Corporation shall

6 be valid against the conservator or receiver unless the agree7 ment—

8 ‘‘(1) is in writing;

9 ‘‘(2) is executed by the Corporation and any per10 son or persons claiming an adverse interest under the

11 agreement, including the obligor, contemporaneously

12 with the acquisition of the asset by the Corporation;

13 ‘‘(3) is approved by the Board or an appropriate

14 committee of the Board, which approval shall be re15 flected in the minutes of the Board or committee; and

16 ‘‘(4) has been, continuously, from the time of its

17 execution, an official record of the Corporation.

18 ‘‘(h) REPORT TO THE CONGRESS.—Upon a determina19 tion by the receiver for the Corporation that there are insuf20 ficient assets of the receivership to pay all valid claims

21 against the receivership, the receiver shall submit to the Sec22 retary of the Treasury, the Committee on Agriculture of the

23 House of Representatives, and the Committee on Agri24 culture, Nutrition, and Forestry of the Senate a report on

25 the financial condition of the receivership.
24

•HR 2130 RH

1 ‘‘(i) TERMINATION OF AUTHORITIES.—

2 ‘‘(1) CORPORATION.—The charter of the Corpora3 tion is canceled, and the authority provided to the

4 Corporation by this title shall terminate, at such date

5 as the Farm Credit Administration Board determines

6 is appropriate, following the placement of the Cor7 poration in receivership but not later than the conclu8 sion of the receivership and discharge of the receiver.

9 ‘‘(2) OVERSIGHT.—The Office of Secondary Mar10 ket Oversight established pursuant to section 8.11 is

11 abolished, and section 8.11(a) and subtitle B shall

12 have no force or effect, at such date as the Farm Cred13 it Administration Board determines is appropriate,

14 following the placement of the Corporation in receiv15 ership but not later than the conclusion of the receiv16 ership and discharge of the receiver.’’.