I
104TH CONGRESS
1ST SESSION
H. R. 2130
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 Ag-
riculture
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.
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 ‘‘Farmer Mac Reform
Act of 1995’’.
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SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.
Except as otherwise expressly provided, whenever 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
(12 U.S.C. 2001 et seq.).
SEC. 3. DEFINITION OF REAL ESTATE.
Section 8.0(1)(B)(ii) (12 U.S.C. 2279aa—(1)(B)(ii)
is amended by striking ‘‘with a purchase price’’ and insert-
ing ‘‘, excluding the land to which the dwelling is affixed,
with a value’’.
SEC. 4. DEFINITION OF CERTIFIED FACILITY.
Section 8.0(3) (12 U.S.C. 2279aa—(3)) is amend-
ed—
(1) in subparagraph (A), by striking ‘‘a second-
ary marketing agricultural loan’’ and inserting ‘‘an
agricultural mortgage marketing’’; and
(2) in subparagraph (B), by striking ‘‘, but
only’’ and all that follows through ‘‘(9)(B)’’.
SEC. 5. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE
CORPORATION.
Section 8.1(b) (12 U.S.C. 2279aa—1(b)) is amend-
ed—
(1) in paragraph (2), by striking ‘‘and’’ at the
end;
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(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following;
‘‘(4) purchase qualified loans and issue securi-
ties representing interests in, or obligations backed
by, the qualified loans, guaranteed for the timely re-
payment of principal and interest.’’.
SEC. 6. POWERS OF THE CORPORATION.
Section 8.3(c) (12 U.S.C. 2279aa—3(c)) is amend-
ed—
(1) by redesignating paragraphs (13) and (14)
as paragraphs (14) and (15), respectively; and
(2) by inserting after paragraph (12) the fol-
lowing:
‘‘(13) To purchase, hold, sell, or assign a quali-
fied loan, to issue a guaranteed security, represent-
ing an interest in, or an obligation backed by, the
qualified loan, and otherwise to perform all the func-
tions and responsibilities of an agricultural mortgage
marketing facility operating as a certified facility
under this title.’’.
SEC. 7. FEDERAL RESERVE BANKS AS DEPOSITARIES AND
FISCAL AGENTS.
Section 8.3 (12 U.S.C. 2279aa—3) is amended—
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(1) in subsection (d), by striking ‘‘may act as
depositories for, or’’ and inserting ‘‘shall act as de-
positories for, and’’; and
(2) in subsection (e), by striking ‘‘Secretary of
the Treasury may authorize the Corporation to use’’
and inserting ‘‘Corporation shall have access to’’.
SEC. 8. CERTIFICATION OF AGRICULTURAL MORTGAGE
MARKETING FACILITIES.
Section 8.5 (12 U.S.C. 2279aa—5) is amended—
(1) in subsection (a)—
(A) in paragraph (1), by inserting ‘‘(other
than the Corporation)’’ after ‘‘agricultural
mortgage marketing facilities’’; and
(B) in paragraph (2), by inserting ‘‘(other
than the Corporation)’’ after ‘‘agricultural
mortgage marketing facility’’; and
(2) in subsection (e)(1), by striking ‘‘(other
than the Corporation)’’.
SEC. 9. GUARANTEE OF QUALIFIED LOANS.
Section 8.6 (12 U.S.C. 2279aa—6) is amended—
(1) in subsection (a)(1)—
(A) by striking ‘‘Corporation shall guaran-
tee’’ and inserting the following: ‘‘Corpora-
tion—
‘‘(A) shall guarantee’’;
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(B) by striking the period at the end and
inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(B) may issue a security, guaranteed as
to the timely payment of principal and interest,
that represents an interest solely in, or an obli-
gation fully backed by, a pool consisting of
qualified loans that—
‘‘(i) meet the standards established
under section 8.8; and
‘‘(ii) have been purchased and held by
the Corporation.’’;
(2) in subsection (d)—
(A) by striking paragraph (4); and
(B) by redesignating paragraphs (5), (6),
and (7) as paragraphs (4), (5), and (6), respec-
tively; and
(3) in subsection (g)(2), by striking ‘‘section
8.0(9)(B))’’ and inserting ‘‘section 8.0(9))’’.
SEC. 10. MANDATORY RESERVES AND SUBORDINATED PAR-
TICIPATION INTERESTS ELIMINATED.
(a) GUARANTEE OF QUALIFIED LOANS.—Section 8.6
(12 U.S.C. 2279aa—6) is amended by striking subsection
(b).
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(b) RESERVES AND SUBORDINATED PARTICIPATION
INTERESTS.—Section 8.7 (12 U.S.C. 2279aa—7) is re-
pealed.
SEC. 11. STANDARDS REQUIRING DIVERSIFIED POOLS.
Section 8.6 (12 U.S.C. 2279aa—6) (as amended by
section 218) is further amended—
(1) by striking subsection (c); and
(2) by redesignating subsections (d) through (g)
as subsections (b) through (e), respectively.
SEC. 12. SMALL FARMS.
Section 8.8(e) (12 U.S.C. 2279aa—8(e)) is amended
by adding at the end the following: ‘‘The Board shall pro-
mote and encourage the inclusion of qualified loans for
small farms and family farmers in the agricultural mort-
gage secondary market.’’.
SEC. 13. DEFINITION OF AN AFFILIATE.
Section 8.11(e) (21 U.S.C. 2279aa—11(e)) is amend-
ed—
(1) by striking ‘‘a certified facility or’’; and
(2) by striking ‘‘paragraphs (3) and (7), respec-
tively, of section 8.0’’ and inserting ‘‘section 8.0(7)’’.
SEC. 14. STATE USURY LAWS SUPERSEDED.
Section 8.12 (12 U.S.C. 2279aa–12) is amended by
striking subsection (d) and inserting the following:
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‘‘(d) STATE USURY LAWS SUPERSEDED.—A provi-
sion of the Constitution or law of any State shall not apply
to an agricultural loan made by an originator or a certified
facility in accordance with this title for sale to the Cor-
poration or to a certified facility for inclusion in a pool
for which the Corporation has provided, or has committed
to provide, a guarantee, if the loan, not later than 180
days after the date the loan was made, is sold to the Cor-
poration or included in a pool for which the Corporation
has provided a guarantee, if the provision—
‘‘(1) limits the rate or amount of interest, dis-
count points, finance charges, or other charges that
may be charged, taken, received, or reserved by an
agricultural lender or a certified facility; or
‘‘(2) limits or prohibits a prepayment penalty
(either fixed or declining), yield maintenance, or
make-whole payment that may be charged, taken, or
received by an agricultural lender or a certified facil-
ity in connection with the full or partial payment of
the principal amount due on a loan by a borrower
in advance of the scheduled date for the payment
under the terms of the loan, otherwise known as a
prepayment of the loan principal.’’.
SEC. 15. EXTENSION OF CAPITAL TRANSITION PERIOD.
Section 8.32 (12 U.S.C. 2279bb–1) is amended—
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(1) in the first sentence of subsection (a), by
striking ‘‘Not later than the expiration of the 2-year
period beginning on December 13, 1991,’’ and in-
serting ‘‘Not sooner than the expiration of the 3-
year period beginning on the date of enactment of
the Farm Credit Improvements Act of 1995,’’;
(2) in the first sentence of subsection (b)(2), by
striking ‘‘5-year’’ and inserting ‘‘8-year’’; and
(3) in subsection (d)—
(A) in the first sentence—
(i) by striking ‘‘The regulations estab-
lishing’’ and inserting the following:
‘‘(1) IN GENERAL.—The regulations establish-
ing’’; and
(ii) by striking ‘‘shall contain’’ and in-
serting the following: ‘‘shall—
‘‘(A) be issued by the Director for public
comment in the form of a notice of proposed
rulemaking, to be first published after the expi-
ration of the period referred to in subsection
(a); and
‘‘(B) contain’’; and
(B) in the second sentence, by striking
‘‘The regulations shall’’ and inserting the fol-
lowing:
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‘‘(2) SPECIFICITY.—The regulations referred to
in paragraph (1) shall’’.
SEC. 16. MINIMUM CAPITALIZATION LEVEL.
Section 8.33 (12 U.S.C. 2279bb–2) is amended—
(1) in subsection (a), by striking paragraph (3)
and inserting the following:
‘‘(3) the percentage, determined under sub-
section (c), of the aggregate assets of the Corpora-
tion acquired under the linked portfolio option under
section 8.6(e), plus the aggregate amount of quali-
fied loans purchased and held by the Corporation
under the pooling option under section 8.3(c)(13).’’;
and
(2) in subsection (c)—
(A) by striking ‘‘Linked Portfolio Assets’’
and inserting ‘‘Designated Assets’’;
(B) by striking ‘‘section 8.6(g)’’ and all
that follows through ‘‘8.34(3)(A))’’ and insert-
ing ‘‘section 8.6(e), plus the aggregate amount
of qualified loans purchased and held by the
Corporation under the pooling option under sec-
tion 8.3(c)(13)’’; and
(C) by striking ‘‘5-year’’ each place it ap-
pears and inserting ‘‘8-year’’.
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SEC. 17. CRITICAL CAPITAL LEVEL.
Section 8.34(3) (12 U.S.C. 2279bb–3(3)) is amend-
ed—
(1) by striking ‘‘section 8.6(g),’’ and inserting
‘‘section 8.6(e),’’; and
(2) by striking ‘‘5-year’’ each place it appears
and inserting ‘‘8-year’’.
SEC. 18. ENFORCEMENT LEVELS.
Section 8.35(e) (12 U.S.C. 2279bb–4(e)) is amended
by striking ‘‘during the 30-month period beginning on the
date of enactment of this section,’’ and inserting ‘‘during
the period beginning on December 13, 1991, and ending
on the effective date of the risk-based capital regulation
issued by the Director under section 8.32,’’.
SEC. 19. RECAPITALIZATION OF THE CORPORATION.
Title VIII (12 U.S.C. 2279aa et seq.) is amended by
adding at the end the following:
‘‘SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.
‘‘(a) MANDATORY
RECAPITALIZATION.—The Cor-
poration shall increase the core capital of the Corporation
to an amount equal to or greater than $25,000,000, not
later than the earlier of—
‘‘(1) the date that is 3 years after the date of
enactment of this section; or
‘‘(2) the date that is 180 days after the end of
the first calendar quarter that the aggregate on-bal-
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ance sheet assets of the Corporation, plus the out-
standing principal of the off-balance sheet obliga-
tions 
of 
the 
Corporation, 
equal 
or 
exceed
$2,000,000,000.
‘‘(b) RAISING CORE CAPITAL.—In carrying out this
section, the Corporation may issue stock under section 8.4
and otherwise employ any recognized and legitimate
means of raising core capital in the power of the Corpora-
tion under section 8.3.
‘‘(c) LIMITATION ON GROWTH OF TOTAL ASSETS.—
During the 3-year period beginning on the date of enact-
ment of this section, the aggregate on-balance sheet assets
of the Corporation plus the outstanding principal of the
off-balance sheet obligations of the Corporation may not
exceed $3,000,000,000 if the core capital of the Corpora-
tion is less than $25,000,000.
‘‘(d) ENFORCEMENT.—If the Corporation fails to
carry out subsection (a) by the date required under para-
graph (1) or (2) of subsection (a), the Corporation may
not purchase a new qualified loan, or issue or guarantee
a new loan-backed security, until the core capital of the
Corporation is increased to an amount equal to or greater
than $25,000,000.’’.
SEC. 20. BORROWER STOCK.
Section 4.3A (12 U.S.C. 2154A) is amended—