(B) in subparagraph (A) by striking ‘‘FA-
CILITATION OF MERGERS OR CONSOLIDATION.—’’
and inserting ‘‘IN GENERAL.—’’.
SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE
FARM CREDIT SYSTEM INSURANCE CORPORA-
TION.
The Farm Credit Act of 1971 is amended by inserting
after section 5.61 (12 U.S.C. 2279a–10) the following:
‘‘SEC. 5.61A. OVERSIGHT ACTIONS BY THE CORPORATION.
‘‘(a) DEFINITIONS.—In this section, the term ‘institu-
tion’ means—
‘‘(1) an insured System bank; and
‘‘(2) a production credit association or other as-
sociation making loans under section 7.6 with a di-
rect loan payable to the funding bank of the associa-
tion that comprises 20 percent or more of the funding
bank’s total loan volume net of nonaccrual loans.
‘‘(b) CONSULTATION REGARDING PARTICIPATION OF
UNDERCAPITALIZED BANKS IN ISSUANCE OF INSURED OB-
LIGATIONS.—The Farm Credit Administration shall consult
with the Corporation prior to approving an insured obliga-
tion that is to be issued by or on behalf of, or participated
in by, any insured System bank that fails to meet the mini-
mum level for any capital requirement established by the
Farm Credit Administration for the bank.
‘‘(c) CONSULTATION REGARDING APPLICATIONS FOR
MERGERS AND RESTRUCTURINGS.—
‘‘(1) CORPORATION TO RECEIVE COPY OF TRANS-
ACTION APPLICATIONS.—On receiving an application
for a merger or restructuring of an institution, the
Farm Credit Administration shall forward a copy of
the application to the Corporation.
‘‘(2) CONSULTATION REQUIRED.—If the proposed
merger or restructuring involves an institution that
fails to meet the minimum level for any capital re-
quirement established by the Farm Credit Adminis-
tration applicable to the institution, the Farm Credit
Administration shall allow 30 days within which the
Corporation may submit the views and recommenda-
tions of the Corporation, including any conditions for
approval. In determining whether to approve or dis-
approve any proposed merger or restructuring, the
Farm Credit Administration shall give due consider-
ation to the views and recommendations of the Cor-
poration.
‘‘SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN PARA-
CHUTE AND INDEMNIFICATION PAYMENTS.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) GOLDEN PARACHUTE PAYMENT.—The term
‘golden parachute payment’—
‘‘(A) means a payment (or any agreement
to make a payment) in the nature of compensa-
tion for the benefit of any institution-related
party under an obligation of any Farm Credit
System institution that—
‘‘(i) is contingent on the termination of
the party’s relationship with the institution;
and
‘‘(ii) is received on or after the date on
which—
‘‘(I) the institution is insolvent;
‘‘(II) a conservator or receiver is
appointed for the institution;
‘‘(III) the institution has been as-
signed by the Farm Credit Adminis-
tration a composite CAMEL rating of
4 or 5 under the Farm Credit Admin-
istration Rating System, or an equiva-
lent rating; or
‘‘(IV) the Corporation otherwise
determines that the institution is in a
troubled condition (as defined in regu-
lations issued by the Corporation); and
‘‘(B) includes a payment that would be a
golden parachute payment but for the fact that
the payment was made before the date referred to
in subparagraph (A)(ii) if the payment was
made in contemplation of the occurrence of an
event described in any subclause of subparagraph
(A); but
‘‘(C) does not include—
‘‘(i) a payment made under a retire-
ment plan that is qualified (or is intended
to be qualified) under section 401 of the In-
ternal Revenue Code of 1986 or other non-
discriminatory benefit plan;
‘‘(ii) a payment made under a bona
fide supplemental executive retirement plan,
deferred compensation plan, or other ar-
rangement that the Corporation determines,
by regulation or order, to be permissible; or
‘‘(iii) a payment made by reason of the
death or disability of an institution-related
party.
‘‘(2) INDEMNIFICATION PAYMENT.—The term ‘in-
demnification payment’ means a payment (or any
agreement to make a payment) by any Farm Credit
System institution for the benefit of any person who
is or was an institution-related party, to pay or re-
imburse the person for any liability or legal expense
with regard to any administrative proceeding or civil
action instituted by the Farm Credit Administration
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.
‘‘(3) INSTITUTION-RELATED
PARTY.—The term
‘institution-related party’ means—
‘‘(A) a director, officer, employee, or agent
for a Farm Credit System institution or any
conservator or receiver of such an institution;
‘‘(B) a stockholder (other than another
Farm Credit System institution), consultant,
joint venture partner, or any other person deter-
mined by the Farm Credit Administration to be
a participant in the conduct of the affairs of a
Farm Credit System institution; and
‘‘(C) an independent contractor (including
any attorney, appraiser, or accountant) that
knowingly or recklessly participates in any vio-
lation of any law or regulation, any breach of fi-
duciary duty, or any unsafe or unsound practice
that caused or is likely to cause more than a
minimal financial loss to, or a significant ad-