(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).
(b) RESERVES
AND SUBORDINATED PARTICIPATION
INTERESTS.—Section 8.7 (12 U.S.C. 2279aa–7) is repealed.
(c) CONFORMING AMENDMENTS.—
(1) 
Section 
8.0(9)(B)(i) 
(12 
U.S.C.
2279(9)(B)(i)) is amended by striking ‘‘8.7, 8.8,’’ and
inserting ‘‘8.8’’.
(2) Section 8.6(a)(2) (12 U.S.C. 2279aa–6(a)(2))
is amended by striking ‘‘subject to the provisions of
subsection (b)’’.
SEC. 11. STANDARDS REQUIRING DIVERSIFIED POOLS.
(a) IN GENERAL.—Section 8.6 (12 U.S.C. 2279aa–6),
as amended by section 10 of this Act, is amended—
(1) by striking subsection (c); and
(2) by redesignating subsections (d) through (g)
as subsections (b) through (e), respectively.
(b) CONFORMING AMENDMENTS.—
(1) 
Section 
8.0(9)(B)(i) 
(12 
U.S.C.
2279(9)(B)(i)) is amended by striking ‘‘(f)’’ and in-
serting ‘‘(d)’’.
(2) Section 8.13(a) (12 U.S.C. 2279aa–13(a)) is
amended by striking ‘‘sections 8.6(b) and’’ each place
such term appears and inserting ‘‘section’’.
(3) Section 8.32(b)(1)(C) (12 U.S.C. 2279bb–
1(b)(1)(C)) is amended—
(A) by striking ‘‘shall’’ and inserting
‘‘may’’; and
(B) by inserting ‘‘(as in effect before the
date of the enactment of the Farmer Mac Reform
Act of 1995)’’ before the semicolon.
(4) Section 8.6(b) (12 U.S.C. 2279aa–6(b)), as so
redesignated by subsection (a)(2) of this section, is
amended—
(A) by striking paragraph (4) (as so redes-
ignated by section 9(2)(B) of this Act); and
(B) by redesignating paragraphs (5) and
(6) (as so redesignated) as paragraphs (4) and
(5), 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 promote
and encourage the inclusion of qualified loans for small
farms and family farmers in the agricultural mortgage sec-
ondary 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 STATE USURY LAWS SUPERSEDED.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:
‘‘(d) STATE USURY LAWS SUPERSEDED.—A provision
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 Corpora-
tion 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 Corporation
or included in a pool for which the Corporation has pro-
vided 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 ag-
ricultural 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 prepay-
ment of the loan principal.’’.
SEC. 15. EXTENSION OF CAPITAL TRANSITION PERIOD.
Section 8.32 (12 U.S.C. 2279bb–1) is amended—
(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 insert-
ing ‘‘Not sooner than the expiration of the 3-year pe-
riod beginning on the date of the enactment of the
Farmer Mac Reform 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 following:
‘‘(2) SPECIFICITY.—The regulations referred to
in paragraph (1) shall’’.
SEC. 16. MINIMUM CAPITAL LEVEL.
Section 8.33 (12 U.S.C. 2279bb–2) is amended to read
as follows:
‘‘SEC. 8.33. MINIMUM CAPITAL LEVEL.
‘‘(a) IN GENERAL.—Except as provided in subsection
(b), for purposes of this subtitle, the minimum capital level
for the Corporation shall be an amount of core capital equal
to the sum of—
‘‘(1) 2.75 percent of the aggregate on-balance
sheet assets of the Corporation, as determined in ac-
cordance with generally accepted accounting prin-
ciples; and
‘‘(2) 0.75 percent of the Corporation’s aggregate
off-balance sheet obligations, which, for the purposes
of this subtitle, shall include—
‘‘(A) the unpaid principal balance of out-
standing securities that are guaranteed by the
Corporation and backed by pools of qualified
loans;
‘‘(B) instruments that are issued or guaran-
teed by the Corporation and are substantially
equivalent to instruments described in subpara-
graph (A); and
‘‘(C) other off-balance sheet obligations of
the Corporation.
‘‘(b) TRANSITION PERIOD.—
‘‘(1) IN GENERAL.—For purposes of this subtitle,
the minimum capital level for the Corporation—
‘‘(A) prior to January 1, 1997, shall be the
amount of core capital equal to the sum of—
‘‘(i) 0.45 percent of aggregate off-bal-
ance sheet obligations;
‘‘(ii) 0.45 percent of designated on-bal-
ance sheet assets as determined under para-
graph (2); and
‘‘(iii) 2.50 percent of on-balance sheet
assets other than designated assets;
‘‘(B) during the 1-year period ending De-
cember 31, 1997, shall be the amount of core cap-
ital equal to the sum of—
‘‘(i) 0.55 percent of aggregate off-bal-
ance sheet obligations;
‘‘(ii) 1.20 percent of designated on-bal-
ance sheet assets as determined under para-
graph (2); and
‘‘(iii) 2.55 percent of on-balance sheet
assets other than designated assets;
‘‘(C) during the 1-year period ending De-
cember 31, 1998, shall be the amount of core cap-
ital equal to—
‘‘(i) the sum of—
‘‘(I) 0.65 percent of aggregate off-
balance sheet obligations;
‘‘(II) 1.95 percent of designated
on-balance sheet assets as determined
under paragraph (2); and
‘‘(III) 2.65 percent of on-balance
sheet assets other than designated as-
sets; or
‘‘(ii) if the Corporation’s core capital
is less than $25,000,000 on January 1,
1998, the amount determined under sub-
section (a); and
‘‘(D) on and after January 1, 1999, shall be
the amount determined under subsection (a).
‘‘(2) DEFINITION OF DESIGNATED ON-BALANCE
SHEET ASSETS.—In this subsection, the term ‘des-
ignated on-balance sheet assets’ means the sum of—
‘‘(A) the aggregate on-balance sheet assets of
the Corporation acquired under section 8.6(e);
and
‘‘(B) the aggregate amount of qualified
loans purchased and held by the Corporation
under section 8.3(c)(13).’’.
SEC. 17. CRITICAL CAPITAL LEVEL.
Section 8.34 (12 U.S.C. 2279bb–3) is amended to read
as follows:
‘‘SEC. 8.34. CRITICAL CAPITAL LEVEL.
‘‘For purposes of this subtitle, the critical capital level
for the Corporation shall be an amount of core capital equal
to 50 percent of the total minimum capital amount deter-
mined under section 8.33.’’.
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 the 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 Corpora-
tion 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 2 years after the date of en-
actment of this section; or
‘‘(2) the date that is 180 days after the end of
the first calendar quarter that the aggregate on-bal-
ance sheet assets of the Corporation, plus the out-
standing principal of the off-balance sheet obligations
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 Corporation
under section 8.3.
‘‘(c) LIMITATION ON GROWTH OF TOTAL ASSETS.—
During the 2-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 Corporation is less
than $25,000,000.
‘‘(d) ENFORCEMENT.—If the Corporation fails to carry
out subsection (a) by the date required under paragraph
(1) or (2) of subsection (a), the Corporation may not pur-
chase a new qualified loan, or issue or guarantee a new
loan-backed security, until the core capital of the Corpora-
tion 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—
(1) by redesignating subsections (f) and (g) as
subsections (g) and (h), respectively; and
(2) by inserting after subsection (e) the following:
‘‘(f) LOANS DESIGNATED FOR SALE OR SOLD INTO
THE SECONDARY MARKET.—
‘‘(1) IN
GENERAL.—Subject to paragraph (2)
and notwithstanding any other provision of this sec-
tion, the bylaws adopted by a bank or association
under subsection (b) may provide—
‘‘(A) in the case of a loan made on or after
the date of enactment of this paragraph that is
designated, at the time the loan is made, for sale
into a secondary market, that no voting stock or
participation certificate purchase requirement
shall apply to the borrower for the loan; and
‘‘(B) in the case of a loan made before the
date of enactment of this paragraph that is sold
into a secondary market, that all outstanding
voting stock or participation certificates held by
the borrower with respect to the loan shall, sub-
ject to subsection (d)(1), be retired.
‘‘(2) 
APPLICABILITY.—Notwithstanding 
any
other provision of this section, in the case of a loan
sold to a secondary market under title VIII, para-
graph (1) shall apply regardless of whether the bank
or association retains a subordinated participation
interest in a loan or pool of loans or contributes to
a cash reserve.
‘‘(3) EXCEPTION.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B) and notwithstanding any other provi-
sion of this section, if a loan designated for sale
under paragraph (1)(A) is not sold into a sec-
ondary market during the 180-day period that
begins on the date of the designation, the voting
stock or participation certificate purchase re-
quirement that would otherwise apply to the
loan in the absence of a bylaw provision de-
scribed in paragraph (1)(A) shall be effective.
‘‘(B) RETIREMENT.—The bylaws adopted by
a bank or association under subsection (b) may
provide that if a loan described in subparagraph
(A) is sold into a secondary market after the end
of the 180-day period described in the subpara-
graph, all outstanding voting stock or participa-
tion certificates held by the borrower with respect
to the loan shall, subject to subsection (d)(1), be
retired.’’.
SEC. 21. LIQUIDATION OF THE FEDERAL AGRICULTURAL
MORTGAGE CORPORATION.
Title VIII (12 U.S.C. 2279aa et seq.), as amended by
section 19 of this Act, is amended by adding at the end
the following:
‘‘Subtitle 
C—Receivership;
Conservatorship; Liquidation of
the Federal Agricultural Mort-
gage Corporation
‘‘SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVER-
SHIP.
‘‘(a) VOLUNTARY
LIQUIDATION.—The Corporation
may voluntarily liquidate only with the consent of, and in
accordance with a plan of liquidation approved by, the
Farm Credit Administration Board.
‘‘(b) INVOLUNTARY LIQUIDATION.—The Farm Credit
Administration Board may appoint a conservator or re-
ceiver for the Corporation under the circumstances specified
in section 4.12(b). The grounds for appointment of a con-
servator for the Corporation shall be in addition to those
enumerated in section 8.37. In applying section 4.12(b) to
the Corporation—
‘‘(1) the Corporation shall also be considered in-
solvent if the Corporation is unable to pay its debts
as they fall due in the ordinary course of business;
‘‘(2) a conservator may also be appointed for the
Corporation if the authority of the Corporation to
purchase qualified loans or issue or guarantee loan-
backed securities is suspended; and
‘‘(3) a receiver may also be appointed for the
Corporation if—
‘‘(A)(i) the authority of the Corporation to
purchase qualified loans or issue or guarantee
loan-backed securities is suspended; or
‘‘(ii) the Corporation is classified under sec-
tion 8.35 as within level III or IV, and the alter-
native actions available under subtitle B are not
satisfactory; and
‘‘(B) the Farm Credit Administration deter-
mines that the appointment of a conservator
would not be appropriate.
‘‘(c) APPOINTMENT OF CONSERVATOR OR RECEIVER.—
‘‘(1) QUALIFICATIONS.—Notwithstanding section
4.12(b), if a conservator or receiver is appointed for
the Corporation, the conservator or receiver shall be—
‘‘(A) the Farm Credit Administration or
any other governmental entity or employee, in-
cluding the Farm Credit System Insurance Cor-
poration; or
‘‘(B) any person that—
‘‘(i) has no claim against, or financial
interest in, the Corporation or other basis
for a conflict of interest as the conservator
or receiver; and
‘‘(ii) has the financial and manage-
ment expertise necessary to direct the oper-
ations and affairs of and, if necessary, to
liquidate the Corporation.
‘‘(2) COMPENSATION.—A conservator or receiver
for the Corporation and professional personnel (other
than Federal employees) employed to represent or as-
sist the conservator or receiver may be compensated
for activities conducted as, or for, a conservator or re-
ceiver. Compensation may not be provided in
amounts greater than the compensation paid to em-
ployees of the Federal Government for similar serv-
ices, except that the Farm Credit Administration may
provide for compensation at higher rates (but not in
excess of rates prevailing in the private sector), if the
Farm Credit Administration determines that com-
pensation at higher rates is necessary in order to re-
cruit and retain competent personnel. The conservator
or receiver may contract with any governmental en-
tity, including the Farm Credit System Insurance
Corporation, to make personnel, services, and facili-
ties of the entity available to the conservator or re-
ceiver upon such terms and compensation arrange-
ments as shall be mutually agreed, and each entity is
hereby authorized to provide the same to the conserva-
tor or receiver.
‘‘(3) EXPENSES.—The conservator or receiver
shall 
pay 
valid 
claims 
for 
expenses 
of 
the
conservatorship or receivership (including compensa-
tion pursuant to paragraph (2)) and valid claims
with respect to any loan made under subsection (f)
before paying any other valid claim against the Cor-
poration, and such claims may be secured by a lien
on such property of the Corporation as the conserva-
tor or receiver may determine, which lien shall have
priority over any other lien.
‘‘(4) LIABILITY.—If the conservator or receiver
for the Corporation is not a Federal entity, or an offi-
cer or employee of the Federal Government, the con-
servator or receiver shall not be personally liable for
damages in tort or otherwise for acts or omissions
performed pursuant to and in the course of the
conservatorship or receivership, unless such acts or
omissions constitute gross negligence or any form of
intentional tortious conduct or criminal conduct.
‘‘(5) INDEMNIFICATION.—The Farm Credit Ad-
ministration may indemnify the conservator or re-
ceiver on such terms as the Farm Credit Administra-
tion considers appropriate.
‘‘(d) JUDICIAL REVIEW OF APPOINTMENT.—Notwith-
standing subsection (i)(1), within 30 days after a conserva-
tor or receiver is appointed pursuant to subsection (b), the
Corporation may bring an action in the United States Dis-
trict Court for the District of Columbia for an order requir-
ing the Farm Credit Administration Board to remove the
conservator or receiver, and the court shall, on the merits,
dismiss such action or direct the Farm Credit Administra-
tion Board to remove the conservator or receiver. On the
commencement of such an action, any court having juris-
diction of any other action or enforcement proceeding au-
thorized under this Act to which the Corporation is a party
shall stay such action or proceeding during the pendency
of the action for removal of the conservator or receiver.
‘‘(e) GENERAL POWERS
OF CONSERVATOR
OR RE-
CEIVER.—The conservator or receiver for the Corporation
shall have such powers to conduct the conservatorship or
receivership as shall be provided pursuant to regulations
adopted by the Farm Credit Administration Board. Such
powers shall be comparable to the powers available to a con-
servator or receiver appointed pursuant to section 4.12(b).
‘‘(f) BORROWINGS
FOR WORKING CAPITAL.—If the
conservator or receiver of the Corporation determines it is
likely that there will be insufficient funds to pay the ongo-
ing administrative expenses of the conservatorship or receiv-
ership or that there will be insufficient liquidity to fund
maturing obligations of the conservatorship or receivership,
the conservator or receiver may borrow funds in such
amounts, from such sources, and at such rates of interest
as the conservator or receiver deems necessary or appro-
priate to meet the administrative expenses or liquidity
needs of the conservatorship or receivership. The Farm
Credit Banks are hereby authorized to loan funds to the
conservator or receiver, and to purchase assets of the Cor-
poration, for such purpose.
‘‘(g) AGREEMENTS AGAINST INTERESTS
OF CON-
SERVATOR OR RECEIVER.—No agreement which tends to di-
minish or defeat the right, title, or interest of the conserva-
tor or receiver for the Corporation in any asset acquired
by it as conservator or receiver for the Corporation shall
be valid against the conservator or receiver unless the agree-
ment—
‘‘(1) is in writing;
‘‘(2) is executed by the Corporation and any per-
son or persons claiming an adverse interest under the
agreement, including the obligor, contemporaneously
with the acquisition of the asset by the Corporation;
‘‘(3) is approved by the Board or an appropriate
committee of the Board, which approval shall be re-
flected in the minutes of the Board or committee; and
‘‘(4) has been, continuously, from the time of its
execution, an official record of the Corporation.
‘‘(h) REPORT TO THE CONGRESS.—Upon a determina-
tion by the receiver for the Corporation that there are insuf-
ficient assets of the receivership to pay all valid claims
against the receivership, the receiver shall submit to the Sec-
retary of the Treasury, the Committee on Agriculture of the
House of Representatives, and the Committee on Agri-
culture, Nutrition, and Forestry of the Senate a report on
the financial condition of the receivership.
‘‘(i) TERMINATION OF AUTHORITIES.—
‘‘(1) CORPORATION.—The charter of the Corpora-
tion is canceled, and the authority provided to the
Corporation by this title shall terminate, at such date
as the Farm Credit Administration Board determines
is appropriate, following the placement of the Cor-
poration in receivership but not later than the conclu-
sion of the receivership and discharge of the receiver.
‘‘(2) OVERSIGHT.—The Office of Secondary Mar-
ket Oversight established pursuant to section 8.11 is
abolished, and section 8.11(a) and subtitle B shall
have no force or effect, at such date as the Farm Cred-
it Administration Board determines is appropriate,
following the placement of the Corporation in receiv-
ership but not later than the conclusion of the receiv-
ership and discharge of the receiver.’’.