103D CONGRESS
2D SESSION
H. R. 4379
AN ACT
To amend the Farm Credit Act of 1971 to enhance the
ability of the banks for cooperatives to finance agricul-
tural exports, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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’’.
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SEC. 2. PARTICIPATION DEFINED.
Section 3.1(11)(B) of the Farm Credit Act of 1971
(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 ‘partici-
pate’ 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. 3. AGRICULTURAL EXPORT FINANCING.
Section 3.7(b) of the Farm Credit Act of 1971 (12
U.S.C. 2128(b)) is amended—
(A) in paragraph (1)—
(i) by striking ‘‘assistance to (A)’’ and in-
serting ‘‘assistance to’’;
(ii) by striking ‘‘the export or’’ and insert-
ing ‘‘the’’; and
(iii) by striking ‘‘and (B)’’ and all that fol-
lows through ‘‘subparagraph (A): Provided,
That a’’ and inserting ‘‘if the’’; and
(B) by striking paragraph (2) and inserting the
following new paragraph:
‘‘(2)(A) A bank for cooperatives may make or partici-
pate in loans and commitments to, and extend other tech-
nical and financial assistance to—
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‘‘(i) any domestic or foreign party for the ex-
port, 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 to ensure that the commodities, products,
or supplies are originally sourced, where reasonably
available, from one or more eligible cooperative asso-
ciations described in section 3.8(a) on a priority
basis, except that if the total amount of the balances
outstanding on loans made by a bank under this
clause that—
‘‘(I) are made to finance the export of
commodities, products, or supplies that are not
originally sourced from a cooperative, and
‘‘(II) are not guaranteed or insured, in an
amount equal to at least 95 percent of the
amount loaned, by a department, agency, bu-
reau, board, commission, or establishment of
the United States or a corporation wholly-
owned directly or indirectly by the United
States,
exceeds an amount that is equal to 50 percent of the
bank’s capital, then a sufficient interest in the loans
shall be sold by the bank for cooperatives to com-
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mercial banks and other non-System lenders to re-
duce the total amount of such outstanding balances
to an amount not greater than an amount equal to
50 percent of the bank’s capital; 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 domes-
tic business operations only, a cooperative or other
entity described in section 3.8(b)(1)(A)) has an own-
ership interest, for the purpose of facilitating the do-
mestic or foreign business operations of the associa-
tion, except that if the ownership interest by an eli-
gible 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 au-
thority provided in subparagraph (A)(ii) to provide finan-
cial assistance to a party for the purpose of financing the
relocation of a plant or facility from the United States
to another country.’’.
SEC. 4 CONFORMING AMENDMENT.
Section 3.8(b)(1) of the Farm Credit Act of 1971 (12
U.S.C. 2129(b)(1)) is amended—
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(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D),
and (E) as subparagraphs (B), (C), and (D), respec-
tively; and
(C) by aligning the margin of subparagraph (D)
(as so redesignated) so as to align with the margin
of subparagraph (C) (as so redesignated).
SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM
CREDIT BANKS AND DIRECT LENDER ASSO-
CIATIONS.
(A) IN GENERAL.—Title IV of the Farm Credit Act
of 1971 (12 U.S.C. 2151 et seq.) is amended by inserting
after section 4.18 (12 U.S.C. 2206) the following new sec-
tion:
‘‘SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DI-
RECT LENDER ASSOCIATIONS TO PARTICI-
PATE 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’ shall have the
meaning provided in section 3.1(11)(B)(iv).
‘‘(2) SIMILAR ENTITY.—The term ‘similar en-
tity’ means a person that—
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‘‘(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 as-
sets of the person invested in, the conduct of
activities that are functionally similar to the ac-
tivities that are conducted by an eligible person.
‘‘(b) LOAN PARTICIPATION AUTHORITY—Notwith-
standing any other provision of this Act, any Farm Credit
Bank or direct lender association chartered under this Act
may 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 partici-
pate 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 appli-
cable higher lending limit authorized under regula-
tions issued by the Farm Credit Administration if
the stockholders of the respective Farm Credit Bank
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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 Sys-
tem institutions in the loan to equal or exceed 50
percent of the principal of the loan;
‘‘(3) the participation would cause the cumu-
lative amount of participations that the Farm Credit
Bank or association has outstanding under this sec-
tion 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 co-
operatives 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 hav-
ing, at the time the loan is made, the greatest loan
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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 as-
sociation, as the case may be, and the bank for co-
operatives 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 ap-
proval of the supervising Farm Credit Bank of the
association.’’.
SEC. 6. CONFORMING AMENDMENTS.
Section 3.1(11)(B)(i)(I)(bb) of the Farm Credit Act
of 1971 (12 U.S.C. 2122(11)(B)(i)(I)(bb)) is amended—
(A) by striking ‘‘the other banks for coopera-
tives under this subparagraph’’ and inserting ‘‘other
Farm Credit System institutions’’; and
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(B) by striking ‘‘all banks for cooperatives’’ and
inserting ‘‘all Farm Credit System institutions’’.
Passed the House of Representatives September 29,
1994.
Attest:
Clerk.