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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 2298 Introduced in Senate (IS)]

103d CONGRESS
  2d Session
                                S. 2298

  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.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                July 19 (legislative day, July 11), 1994

 Mr. Leahy (for himself and Mr. Lugar) introduced the following bill; 
  which was read twice and referred to the Committee on Agriculture, 
                        Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL

 
  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.

    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 ``Farm Credit System Agricultural 
Export and Risk Management Act''.

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

    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.), 
except to the extent otherwise specifically provided.

SEC. 3. PARTICIPATION DEFINED.

    Section 3.1(11)(B) (12 U.S.C. 2122(11)(B)) is amended by adding at 
the end the following new clause:
    ``(iv) As used in this subparagraph, the term `participate' or 
`participation' refers to multilender transactions, including 
syndications, assignments, loan participations, subparticipations, or 
other forms of the purchase, sale, or transfer of interests in loans, 
other extensions of credit, or other technical and financial 
assistance.''.

SEC. 4. AGRICULTURAL EXPORT FINANCING.

    Section 3.7(b) (12 U.S.C. 2128(b)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``assistance to (A)'' and inserting 
                ``assistance to'';
                    (B) by striking ``the export or'' and inserting 
                ``the''; and
                    (C) by striking ``and (B)'' and all that follows 
                through ``subparagraph (A): Provided, That a'' and 
                inserting ``if the''; and
            (2) by striking paragraph (2) and inserting the following 
        new paragraph:
    ``(2)(A) A bank for cooperatives is authorized to make or 
participate in loans and commitments to, and to extend other technical 
and financial assistance to--
            ``(i) any domestic or foreign party for the export, 
        including (where applicable) the cost of freight, of 
        agricultural commodities or products thereof, farm supplies, or 
        aquatic products from the United States under policies and 
        procedures established by the bank for cooperatives to ensure 
        that the commodities, products, or supplies are originally 
        sourced, where reasonably available, from 1 or more eligible 
        cooperative associations described in section 3.8(a) on a 
        priority basis; and
            ``(ii) except as provided in subparagraph (B), any domestic 
        or foreign party in which an eligible cooperative association 
        described in section 3.8(a) (including, for the purpose of 
        facilitating its domestic business operations only, a 
        cooperative or other entity described in section 3.8(b)(1)(A)) 
        has an ownership interest, for the purpose of facilitating the 
        domestic or foreign business operations of the association, 
        except that if the ownership interest by an eligible 
        cooperative association, or associations, is less than 50 
        percent, the financing shall be limited to the percentage held 
        in the party by the association or associations.
    ``(B) A bank for cooperatives shall not use the authority provided 
in subparagraph (A)(ii) to provide financial assistance to a party for 
the purpose of financing the relocation of a plant or facility from the 
United States to another country.''.

SEC. 5. CONFORMING AMENDMENT.

    Section 3.8(b)(1) (12 U.S.C. 2129(b)(1)) is amended--
            (1) by striking subparagraph (B);
            (2) by redesignating subparagraphs (C), (D), and (E) as 
        subparagraphs (B), (C), and (D), respectively; and
            (3) by aligning the margin of subparagraph (D) (as so 
        redesignated) so as to align with the margin of subparagraph 
        (C) (as so redesignated).

SEC. 6. LOAN PARTICIPATION AUTHORITY FOR FARM CREDIT BANKS AND DIRECT 
              LENDER ASSOCIATIONS.

    (a) In General.--Title IV (12 U.S.C. 2151 et seq.) is amended by 
inserting after section 4.18 (12 U.S.C. 2206) the following new 
section:

``SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DIRECT LENDER 
              ASSOCIATIONS TO PARTICIPATE IN LOANS TO SIMILAR ENTITIES 
              FOR RISK MANAGEMENT PURPOSES.

    ``(a) Definitions.--As used in this section:
            ``(1) Participate and participation.--The terms 
        `participate' and `participation' have the meaning provided in 
        section 3.1(11)(B)(iv).
            ``(2) Similar entity.--The term `similar entity' means a 
        person that--
                    ``(A) is not eligible for a loan from the Farm 
                Credit Bank or association; and
                    ``(B) has operations that are functionally similar 
                to a person that is eligible for a loan from the Farm 
                Credit Bank or association in that the person derives a 
                majority of the income of the person from, or has a 
                majority of the assets of the person invested in, the 
                conduct of activities that are functionally similar to 
                the activities that are conducted by an eligible 
                person.
    ``(b) Loan Participation Authority.--Notwithstanding any other 
provision of this Act, any Farm Credit Bank or direct lender 
association chartered under this Act is authorized to participate in 
any loan of a type otherwise authorized under title I or II made to a 
similar entity by any person in the business of extending credit, 
except that a Farm Credit Bank or direct lender association may not 
participate in a loan under this section if--
            ``(1) the participation would cause the total amount of all 
        participations by the Farm Credit Bank or association under 
        this section involving a single credit risk to exceed 10 
        percent (or the applicable higher lending limit authorized 
        under regulations issued by the Farm Credit Administration if 
        the stockholders of the respective Farm Credit Bank or 
        association so approve) of the total capital of the Farm Credit 
        Bank or association;
            ``(2) the participation by the Farm Credit Bank or 
        association would equal or exceed 50 percent of the principal 
        of the loan or, when taken together with participations in the 
        loan by other Farm Credit System institutions, would cause the 
        cumulative amount of the participations by all Farm Credit 
        System institutions in the loan to equal or exceed 50 percent 
        of the principal of the loan;
            ``(3) the participation would cause the cumulative amount 
        of participations that the Farm Credit Bank or association has 
        outstanding under this section to exceed 15 percent of the 
        total assets of the Farm Credit Bank or association; or
            ``(4) the loan is of the type authorized under section 
        1.11(b) or 2.4(a)(2).
    ``(c) Prior Approval Required.--
            ``(1) In general.--With respect to a similar entity that is 
        eligible to borrow from a bank for cooperatives under title 
        III, the authority of a Farm Credit Bank or association to 
        participate in a loan to the entity under this section shall be 
        subject to the prior approval of the bank for cooperatives 
        having, at the time the loan is made, the greatest loan volume 
        in the State in which the headquarters office of the similar 
        entity is located.
            ``(2) Terms and conditions.--Approval under paragraph (1) 
        may be granted on an annual basis and under such terms and 
        conditions as may be agreed on between the Farm Credit Bank or 
        association, as the case may be, and the bank for cooperatives 
        granting the approval.
            ``(3) Approval by supervising farm credit bank.--An 
        association may not participate in a loan to a similar entity 
        under this section without the approval of the supervising Farm 
        Credit Bank of the association.''.
    (b) Conforming Amendments.--Section 3.1(11)(B)(i)(I)(bb) (12 U.S.C. 
2122(11)(B)(i)(I)(bb)) is amended--
            (1) by striking ``the other banks for cooperatives under 
        this subparagraph'' and inserting ``other Farm Credit System 
        institutions''; and
            (2) by striking ``all banks for cooperatives'' and 
        inserting ``all Farm Credit System institutions''.

                                 <all>
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