H. R. 4379
One Hundred Third Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four
An Act
To amend the Farm Credit Act of 1971 to enhance the ability of the banks for
cooperatives to finance agricultural exports, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Farm Credit System Agricultural
Export and Risk Management Act’’.
SEC. 2. PARTICIPATION DEFINED.
Section 3.1(11)(B) of the Farm Credit Act of 1971 (12 U.S.C.
2122(11)(B)) is amended by adding at the end the following new
clause:
‘‘(iv) As used in this subparagraph, the term ‘participate’ or
‘participation’ refers to multilender transactions, including syndica-
tions, assignments, loan participations, subparticipations, or other
forms of the purchase, sale, or transfer of interests in loans, other
extensions of credit, or other technical and financial assistance.’’.
SEC. 3. AGRICULTURAL EXPORT FINANCING.
Section 3.7(b) of the Farm Credit Act of 1971 (12 U.S.C. 2128(b))
is amended—
(A) in paragraph (1)—
(i) by striking ‘‘assistance to (A)’’ and inserting ‘‘assist-
ance to’’;
(ii) by striking ‘‘the export or’’ and inserting ‘‘the’’;
and
(iii) by striking ‘‘and (B)’’ and all that follows through
‘‘subparagraph (A): Provided, That a’’ and inserting ‘‘if the’’;
and
(B) by striking paragraph (2) and inserting the following
new paragraph:
‘‘(2)(A) A bank for cooperatives may make or participate in
loans and commitments to, and extend other technical and financial
assistance to—
‘‘(i) any domestic or foreign party for the export, including
(where applicable) the cost of freight, of agricultural commod-
ities or products thereof, farm supplies, or aquatic products
from the United States under policies and procedures estab-
lished by the bank to ensure that the commodities, products,
or supplies are originally sourced, where reasonably available,
from one or more eligible cooperative associations described
in section 3.8(a) on a priority basis, except that if the total
H. R. 4379—2
amount of the balances outstanding on loans made by a bank
under this clause that—
‘‘(I) are made to finance the export of commodities,
products, or supplies that are not originally sourced from
a cooperative, and
‘‘(II) are not guaranteed or insured, in an amount
equal to at least 95 percent of the amount loaned, by
a department, agency, bureau, board, commission, or
establishment of the United States or a corporation wholly-
owned directly or indirectly by the United States,
exceeds an amount that is equal to 50 percent of the bank’s
capital, then a sufficient interest in the loans shall be sold
by the bank for cooperatives to commercial banks and other
non-System lenders to reduce the total amount of such
outstanding balances to an amount not greater than an amount
equal to 50 percent of the bank’s capital; and
‘‘(ii) except as provided in subparagraph (B), any domestic
or foreign party in which an eligible cooperative association
described in section 3.8(a) (including, for the purpose of facilitat-
ing its domestic business operations only, a cooperative or
other entity described in section 3.8(b)(1)(A)) has an ownership
interest, for the purpose of facilitating the domestic or foreign
business operations of the association, except that if the owner-
ship interest by an eligible cooperative association, or associa-
tions, is less than 50 percent, the financing shall be limited
to the percentage held in the party by the association or associa-
tions.
‘‘(B) A bank for cooperatives shall not use the authority provided
in subparagraph (A)(ii) to provide financial assistance to a party
for the purpose of financing the relocation of a plant or facility
from the United States to another country.’’.
SEC. 4. CONFORMING AMENDMENT.
Section 3.8(b)(1) of the Farm Credit Act of 1971 (12 U.S.C.
2129(b)(1)) is amended—
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (B), (C), and (D), respectively; and
(C) by aligning the margin of subparagraph (D) (as so
redesignated) so as to align with the margin of subparagraph
(C) (as so redesignated).
SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM CREDIT BANKS
AND DIRECT LENDER ASSOCIATIONS.
IN GENERAL.—Title IV of the Farm Credit Act of 1971 (12
U.S.C. 2151 et seq.) is amended by inserting after section 4.18
(12 U.S.C. 2206) the following new section:
‘‘SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DIRECT LENDER
ASSOCIATIONS TO PARTICIPATE IN LOANS TO SIMILAR
ENTITIES FOR RISK MANAGEMENT PURPOSES.
‘‘(a) DEFINITIONS.—As used in this section:
‘‘(1) PARTICIPATE AND PARTICIPATION.—The terms ‘partici-
pate’ and ‘participation’ shall have the meaning provided in
section 3.1(11)(B)(iv).
‘‘(2) SIMILAR ENTITY.—The term ‘similar entity’ means a
person that—
H. R. 4379—3
‘‘(A) is not eligible for a loan from the Farm Credit
Bank or association; and
‘‘(B) has operations that are functionally similar to
a person that is eligible for a loan from the Farm Credit
Bank or association in that the person derives a majority
of the income of the person from, or has a majority of
the assets of the person invested in, the conduct of activities
that are functionally similar to the activities that are con-
ducted by an eligible person.
‘‘(b) LOAN PARTICIPATION AUTHORITY—Notwithstanding any
other provision of this Act, any Farm Credit Bank or direct lender
association chartered under this Act may participate in any loan
of a type otherwise authorized under title I or II made to a similar
entity by any person in the business of extending credit, except
that a Farm Credit Bank or direct lender association may not
participate in a loan under this section if—
‘‘(1) the participation would cause the total amount of all
participations by the Farm Credit Bank or association under
this section involving a single credit risk to exceed 10 percent
(or the applicable higher lending limit authorized under regula-
tions issued by the Farm Credit Administration if the stockhold-
ers of the respective Farm Credit Bank or association so
approve) of the total capital of the Farm Credit Bank or associa-
tion;
‘‘(2) the participation by the Farm Credit Bank or associa-
tion would equal or exceed 50 percent of the principal of the
loan or, when taken together with participations in the loan
by other Farm Credit System institutions, would cause the
cumulative amount of the participations by all Farm Credit
System institutions in the loan to equal or exceed 50 percent
of the principal of the loan;
‘‘(3) the participation would cause the cumulative amount
of participations that the Farm Credit Bank or association
has outstanding under this section to exceed 15 percent of
the total assets of the Farm Credit Bank or association; or
‘‘(4) the loan is of the type authorized under section 1.11(b)
or 2.4(a)(2).
‘‘(c) PRIOR APPROVAL REQUIRED.—
‘‘(1) IN GENERAL.—With respect to a similar entity that
is eligible to borrow from a bank for cooperatives under title
III, the authority of a Farm Credit Bank or association to
participate in a loan to the entity under this section shall
be subject to the prior approval of the bank for cooperatives
having, at the time the loan is made, the greatest loan volume
in the State in which the headquarters office of the similar
entity is located.
‘‘(2) TERMS AND CONDITIONS.—Approval under paragraph
(1) may be granted on an annual basis and under such terms
and conditions as may be agreed on between the Farm Credit
Bank or association, as the case may be, and the bank for
cooperatives granting the approval.
‘‘(3) APPROVAL
BY
SUPERVISING
FARM
CREDIT
BANK.—An
association may not participate in a loan to a similar entity
under this section without the approval of the supervising
Farm Credit Bank of the association.’’.
H. R. 4379—4
SEC. 6. CONFORMING AMENDMENTS.
Section 3.1(11)(B)(i)(I)(bb) of the Farm Credit Act of 1971 (12
U.S.C. 2122(11)(B)(i)(I)(bb)) is amended—
(A) by striking ‘‘the other banks for cooperatives under
this subparagraph’’ and inserting ‘‘other Farm Credit System
institutions’’; and
(B) by striking ‘‘all banks for cooperatives’’ and inserting
‘‘all Farm Credit System institutions’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.