(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
‘‘(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.
‘‘(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’’.
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-
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
had a material effect on the financial condition of
the institution.
‘‘(4) Whether there is a reasonable basis to be-
lieve that the institution-related party has violated
or conspired to violate—
‘‘(A) section 215, 657, 1006, 1014, or
1344 of title 18, United States Code; or
‘‘(B) section 1341 or 1343 of title 18,
United States Code, affecting a Farm Credit
System institution.
‘‘(5) Whether the institution-related party was
in a position of managerial or fiduciary responsibil-
ity.
‘‘(6) The length of time that the party was re-
lated with the Farm Credit System institution and
the degree to which—
‘‘(A) the payment reasonably reflects com-
pensation earned over the period of employ-
ment; and
‘‘(B) the compensation involved represents
a reasonable payment for services rendered.
‘‘(c) CERTAIN PAYMENTS PROHIBITED.—No Farm
Credit System institution may prepay the salary or any
liability or legal expense of any institution-related party
if such payment—
‘‘(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
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
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;
‘‘(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;
‘‘(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
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
(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
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’’.
(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’’.
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
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:
Clerk.