IIA
104TH CONGRESS
1ST SESSION
H. R. 2029
IN THE SENATE OF THE UNITED STATES
DECEMBER 19, 1995
Received; read twice and referred to the Committee on Agriculture, Nutrition,
and Forestry
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 Representa-
tives 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’’.
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(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 provi-
sion, 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 reg-
ulatory burden on Farm Credit System institutions;
(2) the efforts of the Farm Credit Administra-
tion in this regard have resulted in cost savings for
Farm Credit System institutions; and
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(3) such cost savings ultimately benefit the Na-
tion’s farmers, ranchers, agricultural cooperatives,
and rural residents.
(b) REQUIREMENT FOR CONTINUED REVIEW.—The
Farm Credit Administration shall continue its comprehen-
sive review of regulations governing the Farm Credit Sys-
tem in order to further identify and eliminate, consistent
with safety and soundness, all regulations that are unnec-
essary, unduly burdensome or costly, or not based on
statute.
SEC. 4. EXAMINATION OF FARM CREDIT SYSTEM INSTITU-
TIONS.
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 in-
sured System bank for any calendar year shall’’
and inserting ‘‘If, at the end of any calendar
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year, the aggregate of the amounts in the Farm
Credit Insurance Fund does not exceed the se-
cure base amount, the annual premium due
from any insured System bank for that cal-
endar 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 para-
graph (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 cal-
endar year’’; and
(iii) by striking ‘‘subsection (a)’’ and
inserting ‘‘subsection (a)(1)’’.
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(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 ‘‘gov-
ernment-guaranteed loans’’; and
(ii) in paragraph (3), by inserting
‘‘(as so defined)’’ after ‘‘government-guar-
anteed loans’’ each place such term ap-
pears.
(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 sub-
sequent place such term appears and inserting ‘‘in-
sured System bank’’.
(c) ALLOCATION TO INSURED SYSTEM BANKS AND
OTHER SYSTEM INSTITUTIONS OF EXCESS AMOUNTS IN
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THE FARM CREDIT INSURANCE FUND.—Section 5.55 (12
U.S.C. 2277a–4) is amended by adding at the end the fol-
lowing:
‘‘(e) ALLOCATION TO SYSTEM INSTITUTIONS OF EX-
CESS RESERVES.—
‘‘(1) ESTABLISHMENT OF ALLOCATED INSUR-
ANCE RESERVES ACCOUNTS.—There is hereby estab-
lished 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 Assist-
ance Corporation stock,
an Allocated Insurance Reserves Account. Amounts
in any Allocated Insurance Reserves Account shall
be considered to be part of the Farm Credit Insur-
ance 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 aver-
age 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
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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 cal-
endar 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 Allo-
cated Insurance Reserves Account of each in-
sured System bank an amount that bears the
same ratio to such total amount (less any re-
duction under subparagraph (A)) as the aver-
age 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 sta-
tus bears to the average principal outstanding
for such 3-year period on loans made by all in-
sured System banks that are in accrual status
(excluding, in each case, the guaranteed por-
tions of government-guaranteed loans described
in subsection (a)(1)(C)).
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‘‘(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 cal-
endar year exceeds the estimated sum described in
paragraph (2) for the calendar year, the Corporation
shall cover such expenses and obligations by reduc-
ing 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 Re-
serves Account as of the preceding
December 31; or
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‘‘(II) 20 percent of the balance in
the bank’s Allocated Insurance Re-
serves Account on the date of pay-
ment; and
‘‘(ii) subject to subparagraphs (C)
and (E), pay to each System bank and as-
sociation holding Financial Assistance Cor-
poration stock its proportionate share, de-
termined by dividing the number of shares
of Financial Assistance Corporation stock
held by such institution by the total num-
ber of shares of Financial Assistance Cor-
poration stock outstanding, of the lesser
of—
‘‘(I) 20 percent of the balance in
the Allocated Insurance Reserves Ac-
count established under paragraph
(1)(B) as of the preceding December
31; or
‘‘(II) 20 percent of the balance in
the Allocated Insurance Reserves Ac-
count established under paragraph
(1)(B) on the date of the payment.
‘‘(B) AUTHORITY TO ELIMINATE OR RE-
DUCE PAYMENTS.—The Corporation may elimi-
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nate or reduce payments under subparagraph
(A) if the Corporation determines, in its sole
discretion, that such payments, or other cir-
cumstances 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 AS-
SISTANCE CORPORATION STOCK.—
‘‘(i) SUFFICIENT FUNDING.—Notwith-
standing 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
TERMI-
NATION.—
‘‘(I) FINAL
DISBURSEMENTS.—
Upon disbursement of a total of $53
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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
AC-
COUNT.—Upon disbursement of a
total of $56 million from such Allo-
cated Insurance Reserves Account es-
tablished under paragraph (1)(B), the
Corporation shall close the Allocated
Insurance Reserves Account estab-
lished under paragraph (1)(B) and
transfer any remaining funds in such
Account to the remaining Allocated
Insurance Reserves Accounts in ac-
cordance with the formula in para-
graph (3)(B) for the calendar year in
which the transfer occurs.
‘‘(D) DISTRIBUTION
OF
PAYMENTS
RE-
CEIVED.—Within 60 days after receipt of a
payment made under subparagraph (5)(A)(i),
each insured System bank, in consultation with
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its affiliated associations, and taking into ac-
count the direct or indirect payment of insur-
ance premiums by such associations, shall de-
velop and implement an equitable plan to dis-
tribute payments received pursuant to subpara-
graph (5)(A)(i) among the bank and its associa-
tions.
‘‘(E) EXCEPTION FOR PREVIOUSLY REIM-
BURSED ASSOCIATIONS.—For purposes of sub-
paragraph (5)(A)(ii), in any Farm Credit Dis-
trict in which the funding bank has reimbursed
one or more of its affiliated associations for the
previously unreimbursed portion of the Finan-
cial 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 sub-
paragraph (F); and
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(2) by striking subparagraph (A) and inserting
the following:
‘‘(A) LEAST-COST
RESOLUTION.—Assist-
ance 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, includ-
ing liquidation of the bank (including paying
the insured obligations issued on behalf of the
bank). Before making a least-cost determina-
tion 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 determin-
ing the least costly alternative under subpara-
graph (A), the Corporation shall—
‘‘(i) 
evaluate 
alternatives 
on 
a
present-value basis, using a reasonable dis-
count rate;
‘‘(ii) document that evaluation and
the assumptions on which the evaluation is
based; and
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‘‘(iii) retain the documentation for not
less than 5 years.
‘‘(C) TIME OF DETERMINATION.—
‘‘(i) COST OF ASSISTANCE.—For pur-
poses of this subsection, the determination
of the costs of providing any assistance
under any provision of this section with re-
spect to any insured System bank shall be
made as of the date on which the Corpora-
tion makes the determination to provide
such assistance to the institution under
this section.
‘‘(ii) COST
OF
LIQUIDATION.—For
purposes of this subsection, the determina-
tion of the costs of liquidation of any in-
sured System bank shall be made as of the
earliest of—
‘‘(I) the date on which a con-
servator is appointed for the bank;
‘‘(II) the date on which a receiver
is appointed for the bank; or
‘‘(III) the date on which the Cor-
poration makes any determination to
provide any assistance under this sec-
tion with respect to the bank.
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‘‘(D) EVALUATION OF MANAGEMENT.—Be-
fore 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 rank-
ing officer who serves in a policymaking role for
the assisted bank, as determined by the Cor-
poration, 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 discre-
tion 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
GEN-
ERAL’’ 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 ‘‘FA-
CILITATION OF MERGERS OR CONSOLIDATION’’
and inserting ‘‘IN GENERAL’’.
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SEC. 7. FARM CREDIT SYSTEM INSURANCE CORPORATION
BOARD OF DIRECTORS.
Section 201 of the Farm Credit Banks and Associa-
tions Safety and Soundness Act of 1992 (106 Stat. 4104–
4105) is repealed.
SEC. 8. CONSERVATORSHIP AND RECEIVERSHIPS.
(a) INCLUSION AMONG GENERAL CORPORATE POW-
ERS.—Section 5.58(9) (12 U.S.C. 2277a–7(9)) is amend-
ed to read as follows:
‘‘(9) CONSERVATOR OR RECEIVER.—The Cor-
poration 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 
COR-
PORATION.
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 PARA-
CHUTE AND INDEMNIFICATION PAYMENTS.
‘‘(a) IN GENERAL.—The Corporation may prohibit or
limit, by regulation or order, any golden parachute pay-
ment or indemnification payment by a Farm Credit Sys-
tem institution (including the Federal Agricultural Mort-
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gage Corporation and any conservator or receiver for the
Federal Agricultural Mortgage Corporation) in troubled
condition (as defined in regulations issued by the Corpora-
tion).
‘‘(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 be-
lieve that the institution-related party has committed
any fraudulent act or omission, breach of trust or fi-
duciary 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 be-
lieve that the institution-related party is substan-
tially responsible for the insolvency of the Farm
Credit System institution, the appointment of a con-
servator or receiver for the institution, or the insti-
tution’s troubled condition (as defined in regulations
prescribed by the Corporation).
‘‘(3) Whether there is a reasonable basis to be-
lieve that the institution-related party has materially
violated any applicable law or regulation that has
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‘‘(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 para-
chute payment’ means any payment (or any agree-
ment to make any payment) in the nature of com-
pensation 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 ap-
pointed for the institution;
‘‘(iii) the Farm Credit Administration
has assigned the institution a composite
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CAMEL rating of 4 or 5 under the Farm
Credit Administration Rating System, or
an equivalent rating; or
‘‘(iv) the Corporation otherwise deter-
mines 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 gold-
en parachute payment but for the fact that the pay-
ment was made before the date referred to in para-
graph (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 retire-
ment plan that is qualified (or is intended to be
qualified) under section 401 of the Internal
Revenue Code of 1986 or other nondiscrim-
inatory benefit plan;
‘‘(B) any payment made under a bona fide
deferred compensation plan or arrangement
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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 per-
son 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 proceed-
ing or civil action instituted by the Farm Credit Ad-
ministration that results in a final order under
which the person—
‘‘(A) is assessed a civil money penalty; or
‘‘(B) is removed or prohibited from partici-
pating in the conduct of the affairs of the insti-
tution.
‘‘(2) LIABILITY
OR
LEGAL
EXPENSE.—The
term ‘liability or legal expense’ means—
‘‘(A) any legal or other professional ex-
pense incurred in connection with any claim,
proceeding, or action;
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‘‘(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 im-
posed 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 as-
sets 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;
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‘‘(B) any stockholder (other than another
Farm Credit System institution), consultant,
joint venture partner, or any other person de-
termined 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 vio-
lation of any law or regulation, any breach of
fiduciary duty, or any unsafe or unsound prac-
tice that caused or is likely to cause more than
a minimal financial loss to, or a significant ad-
verse effect on, the Farm Credit System institu-
tion; 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 pol-
icy 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
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construed as limiting the powers, functions, or responsibil-
ities of the Farm Credit Administration.’’.
SEC. 10. FORMATION OF ADMINISTRATIVE SERVICE ENTI-
TIES.
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 SEC-
ONDARY 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 follow-
ing:
‘‘(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
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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 oth-
erwise, that all outstanding voting stock or par-
ticipation 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 designa-
tion, the voting stock or participation certificate pur-
chase 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 out-
standing 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.—
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(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 financ-
ing for basic processing and marketing directly
related to the borrower’s operations and those
of other eligible farmers, ranchers, and produc-
ers 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 subpara-
graph that, at the time the loan is made, is des-
ignated 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
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would apply to the loan in the absence of sub-
paragraph (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 PA-
PERWORK 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 agree-
ments’’.
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(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 ap-
praised 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.—Sec-
tion 5.17(a)(8) (12 U.S.C. 2252(a)(8)) is amended by in-
serting ‘‘the requirements of the Farm Credit Administra-
tion governing the dissemination to stockholders of quar-
terly reports of System institutions may not be more bur-
densome or costly than the requirements applicable to na-
tional banks, and’’ after ‘‘except that’’.
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SEC. 13. REMOVAL OF GOVERNMENT CERTIFICATION RE-
QUIREMENT 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 Ad-
ministrator of the Rural Electrification Administra-
tion to be eligible for such’’ and inserting ‘‘are eligi-
ble under the Rural Electrification Act of 1936 for’’;
and
(2) by striking ‘‘loan guarantee, and’’ and in-
serting ‘‘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 require-
ments of the preceding sentence, continue to be so eligible
for so long as more than 50 percent (or such higher per-
centage as is established by the bank board) of the voting
control of the association is held by farmers, producers
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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 in-
serting ‘‘, or under the last sentence,’’ after ‘‘(4)’’.
SEC. 15. EXTENSION OF INTEREST RATE REDUCTION PRO-
GRAM FOR 5 YEARS.
Section 1320 of the Food Security Act of 1985 (7
U.S.C. 1999 note) is amended by striking ‘‘1995’’ and in-
serting ‘‘2000’’.
Passed the House of Representatives December 19,
1995.
Attest:
ROBIN H. CARLE,
Clerk.
By LINDA NAVE,
Deputy Clerk.
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