‘‘(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 assets
for the purpose of making, or under an agree-
ment to make, any payment after the date on
which such funds or assets are segregated, with-
out 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 deter-
mined 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 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-
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 insti-
tution from purchasing any commercial insurance policy
or fidelity bond, except that such insurance policy or bond
shall not cover any legal or liability expense of the institu-
tion that is described in subsection (e)(1).
‘‘(g) SPECIAL RULE REGARDING THE FARM CREDIT
ADMINISTRATION.—No provision of this section may be con-
strued as limiting the powers, functions, or responsibilities
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 following:
‘‘(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 des-
ignated, at the time the loan is made, for sale
into a secondary market under title VIII or oth-
erwise, that no voting stock or participation cer-
tificate 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 otherwise,
that 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.
‘‘(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 by-
laws may provide that if such a loan is thereafter sold
into a secondary market, all outstanding 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.—
(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 agricul-
tural or aquatic purpose and other credit needs
of the borrower, including financing for basic
processing and marketing directly related to the
borrower’s operations and those of other eligible
farmers, ranchers, and producers 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 subparagraph
that, at the time the loan is made, is designated
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 subparagraph
(B) shall apply to the loan until the loan is so
sold.’’.
(1) IN GENERAL.—Section 1.10(a)(1) (12 U.S.C.
2018(a)(1)) is amended by adding at the end the fol-
lowing:
‘‘(D) PRIVATE
MORTGAGE
INSURANCE.—
Loans on which private mortgage insurance is
obtained may exceed 85 percent of the appraised
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 eligible
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 CO-
OPERATIVES.
(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 co-
operatives shall, without regard to the requirements of the
preceding sentence, continue to be so eligible for so long as
more than 50 percent (or such higher percentage as is estab-
lished by the bank board) of the voting control of the asso-
ciation is held by farmers, producers or harvesters of aquat-
ic 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 inserting ‘‘, 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’’.
Amend the title so as to read: ‘‘A bill to amend the
Farm Credit Act of 1971 to provide regulatory relief, and
for other purposes.’’.
HR 2029 RH——2
HR 2029 RH——3