Farm Credit Amendments Act of 1985
PL 99-205 (S.1884), enacted 12/23/1985

99 STAT. 1678 
PUBLIC LAW 99-205—DEC. 23, 1985 
Public Law 99-205 
99th Congress 
An Act 
Dec. 23, 1985 
[S. 1884] 
Farm Credit 
Amendments 
Act of 1985. 
Banks and 
banking. 
Loans. 
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note. 
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note. 
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To amend the Farm Credit Act of 1971, to restructure and reform the Farm Credit 
System, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act may 
be cited as the "Farm Credit Amendments Act of 1985". 
TITLE I—PROVISIONS TO STRENGTHEN THE OPERATION OF 
FARM CREDIT SYSTEM LENDING INSTITUTIONS 
CAPITAL AND FINANCING 
SEC 101. Part A of title IV of the Farm Credit Act of 1971 is 
amended by— 
(1) amending section 4.0 to read as follows: 
"SEC 4.0. REVOLVING FUNDS; INVESTMENTS.—The revolving fund 
established by Public Law 87-343, 75 Stat. 758, as amended, and the 
revolving fund established by Public Law 87-494, 76 Stat. 109, as 
amended, and continued by Public Law 96-592, shall be merged and 
shall be available to the Farm Credit Administration for the pur-
chase, on behalf of the United States, of capital stock of the Capital 
Corporation. The Farm Credit Administration may make such pur-
chases of stock as the Farm Credit Administration determines, in its 
discretion, are necessary to achieve the purposes of this Act."; 
(2) striking out section 4.1; 
(3) in section 4.3— 
(A) redesignating subsection (b) as subsection (c); and 
(B) by striking out the matter preceding subsection (b) 
and inserting in lieu thereof the following: 
"SEC 4.3. CAPITAL ADEQUACY OF BANKS AND ASSOCIATIONS.—(a) 
The Farm Credit Administration shall cause System institutions to 
achieve and maintain adequate capital by establishing minimum 
levels of capital for such System institutions and by using such other 
methods as the Farm Credit Administration deems appropriate. The 
Farm Credit Administration may establish such minimum level of 
capital for a System institution as the Farm Credit Administration, 
in its discretion, deems to be necessary or appropriate in light of the 
particular circumstances of the System institution. 
"(bXl) Failure of a System institution to maintain capital at or 
above its minimum level as established under subsection (a) may be 
deemed by the Farm Credit Administration, in its discretion, to 
constitute an unsafe and unsound practice within the meaning of 
this Act. 
"(2XA) In addition to, or in lieu of, any other action authorized by 
law, including paragraph (1), the Farm Credit Administration may 
issue a directive to a System institution that fails to maintain 
capital at or above its required level as established under subsection 
(a). Such directive may require the System institution to submit and 
adhere to a plan acceptable to the Farm Credit Administration 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1679 
describing the means and timing by which the System institution 
shall achieve its required capital level, but may not require merger 
or consolidation without a majority vote of the voting stockholders 
or the contributors to the guaranty fund of the institution. 
"(B) Any directive issued under this paragraph, including plans 
submitted pursuant thereto, shall be enforceable under the provi-
sions of section 5.31 of this Act to the same extent as an effective 
Post, p. 1700. 
and outstanding order issued under section 5.25 of this Act that has 
Post, p. 1694. 
become final. 
"(3) The Farm Credit Administration may consider such System 
institution's progress in adhering to any plan required under para-
graph (2) whenever such System institution, or an affiliate thereof, 
seeks the requisite approval of the Farm Credit Administration for 
any proposal that would divert earnings, diminish capital, or other-
wise impede such System institution's progress in achieving its 
minimum capital level. The Farm Credit Administration may deny 
such approval where it determines that such proposal would ad-
versely affect the ability of the System institution to comply with 
such plan."; and 
(4) in section 4.4— 
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(A) redesignating subsection (c) as subsection (d); and 
(B) inserting, after subsection (b), the following: 
"(c) For purposes of this part, the term 'bank' shall include the 
Capital Corporation.". 
APPOINTMENT OF CONSERVATOR OR RECEIVER 
SEC. 102. Section 4.12 of the Farm Credit Act of 1971 is amended 
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by striking out subsection (b) and inserting in lieu thereof the 
following: 
"(b) The Farm Credit Administration may appoint a conservator 
or receiver for any System institution on the determination by the 
Farm Credit Administration that one or more of the following 
exists, or is occurring, with respect to the institution: (1) insolvency, 
in that the assets of the institution are less than its obligations to its 
creditors and others, including its members; (2) substantial dissipa-
tion of assets or earnings due to any violation of law, rules, or 
regulations, or to any unsafe or unsound practice; (3) an unsafe or 
unsound condition to transact business; (4) willful violation of a 
cease and desist order that has become final; (5) concealment of 
books, papers, records, or assets of the institution or refusal to 
submit books, papers, records, or other material relating to the 
affairs of the institution for inspection to any examiner or to any 
lawful agent of the Farm Credit Administration. The Farm Credit 
Administration shall have exclusive power and jurisdiction to ap-
point a conservator or receiver. If the Farm Credit Administration 
determines that a ground for the appointment of a conservator or 
receiver as herein provided exists, the Farm Credit Administration 
may appoint ex parte and without notice a conservator or receiver 
for the institution. In the event of such appointment, the institution, 
within thirty days thereafter, may bring an action in the United 
States district court for the judicial district in which the home office 
of such institution is located, or in the United States District Court 
for the District of Columbia, for an order requiring the Farm Credit 
Administration to remove such conservator or receiver, and the 
court, shall on the merits, dismiss such action or direct the Farm 
Credit Administration to remove such conservator or receiver. On 
99 STAT. 1680 
PUBLIC LAW 99-205—DEC. 23, 1985 
the commencement of such an action, the court having jurisdiction 
of any other action or enforcement proceeding authorized under this 
Act to which the institution is a party shall stay such action or 
proceeding during the pendency of the action for removal of the 
conservator or receiver.'. 
FARM CREDIT SYSTEM CAPITAL CORPORATION 
SEC. 103. Title IV of the Farm Credit Act of 1971 is amended by 
inserting, after section 4.28, the following: 
"PART D1—FARM CREDIT SYSTEM CAPITAL CORPORATION 
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"SEC. 4.28A. EXISTENCE OF CORPORATION.—The Farm Credit 
Administration, not later than 60 days after enactment of the Farm 
Ante, p. 1678. 
Credit Amendments Act of 1985, shall (1) charter the Farm Credit 
System Capital Corporation (referred to in this Act as 'the Capital 
Corporation'), which, subject to the provisions of this part and the 
regulations of the Farm Credit Administration, shall be a federally 
chartered instrumentality of the United States and an institution of 
the Farm Credit System, and (2) revoke the charter for the Farm 
12 use 2211. 
Credit System Capital Corporation issued under part D of this title. 
The charter issued to the Farm Credit System Capital Corporation 
pursuant to this paragraph shall be reviewed on December 31,1987. 
Report. 
The Farm Credit Administration Board shall submit to Congress by 
December 31, 1987, a report and analysis of the Capital Corporation 
together with any recommendations for legislation to extend the 
charter of the Farm Credit System Capital Corporation. 
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"SEC. 4.28B. PURPOSES.—For the sole purpose of carrying out a 
program of financial and technical assistance to institutions within 
the Farm Credit System (and their borrowers) which are experienc-
ing financial difficulties, the Capital Corporation shall, in accord-
ance with this part— 
"(1) carry out a program of financial sissistance among institu-
tions of the Farm Credit System; 
"(2) acquire from other Farm Credit System institutions and 
participate with such institutions in nonperforming assets of 
such institutions; 
"(3) hold, restructure, collect, and otherwise administer 
nonperforming assets acquired from or participated in with 
other Farm Credit System institutions, and guarantee per-
forming and nonperforming assets held by other Farm Credit 
institutions; 
"(4) provide technical assistance and related services to other 
Farm Credit System institutions in connection with the 
administration of their loan portfolios; 
"(5) provide assistance and related services to Farm Credit 
System institutions to assist them in restructuring or refinanc-
ing loans of their member-borrowers; and 
(6) receive and administer financial assistance for Farm 
Credit System institutions that originates outside of the Farm 
Credit System. 
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"SEC. 4.28C. BOARD OF DIRECTORS OF THE CAPITAL CORPORATION.— 
(aXD The Board of Directors of the Capital Corporation shall consist 
of five members, of which— 
"(AXi) three members shall be elected by the farm credit 
banks that own the voting stock in the Corporation, with— 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1681 
"(I) one such member being elected from an institution 
and a district that, at the time of such election, is or is 
projected to be a net contributor of capital to the 
Corporation; 
"(II) one such member being elected from an institution 
and a district that, at the time of such election, is or is 
projected to be a net recipient of capital (other than 
through the sale of loans or other assets at fair market 
value) from the Corporation; and 
"(III) one such member being elected without regard to 
the restrictions in clause (i) and (ii). 
"(ii) Each such bank shall have the right to cast one vote to 
fill each such vacancy without regard to the number of voting 
shares owned by such bank. 
"(B) two members shall be appointed by the Chairman of the 
Farm Credit Administration Board. 
"(2) Members appointed by the Chairman under paragraph dXB) 
shall be selected from United States citizens— 
"(A) who are not borrowers from, shareholders in, or employ-
ees or agents of any institution of the Farm Credit System; and 
"(B) who are experienced in financial services and credit. 
"(3) The Farm Credit Administration Board shall, in its sole 
discretion and for purposes of the election of directors to the Capital 
Corporation only, project whether— 
"(A) institutions within a district are or will be a net contribu-
tor of capital to the Corporation, or 
"(B) the institutions within a district are or are expected to 
become net recipients of capital from the Corporation. 
"(4) The Farm Credit Administration Board shall issue regula- Regulations. 
tions providing for fair and equitable representation of all public 
and private interests on the Board of Directors of the Capital 
Corporation. The bylaws of the Corporation shall prescribe the 
procedures, established pursuant to regulations issued by the Board, 
under which directors of the Corporation will be nominated and 
elected. 
"(5) Notwithstanding paragraph (1), in the event the Secretary of 
the Treasury purchases any obligation of the Farm Credit System 
Capital Corporation under section 4.28J, and for so long as such Post, p. 1686. 
obligation remains outstanding, the Board of Directors of the Cap-
ital Corporation shall be expanded by two members, of which— 
"(A) one member shall be appointed by the Secretary of 
Agriculture; and 
"(B) one member shall be selected by the other members of 
the Board of the Capital Corporation, including the appointee of 
the Secretary of Agriculture, which member shall not be a— 
"(i) borrower from, shareholder in, or employee or agent 
of any institution of the Farm Credit System; or 
"(ii) a government employee. 
"(b) Members of the Board of Directors shall serve two-year terms, 
except that, of the members first elected or appointed to the Board 
of Directors, one elected member and one appointed member shall 
serve initial terms of one year. 
"(c) The Board of Directors shall elect, on an annual basis, a 
Chairman from among the members of the Board. 
"(dXD Members of the Board may succeed themselves and may 
serve until their successors are duly seated. 
99 STAT. 1682 
PUBLIC LAW 99-205—DEC. 23, 1985 
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Records. 
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Securities. 
eontracts. 
eontracts. 
Real property. 
Gifts and 
property. 
Securities. 
Insurance. 
Contracts. 
"(2) Vacancies on the Board shall be filled in the same manner as 
the vacant position was previously filled. 
"SEC. 4.28D. COMPENSATION OF BOARD MEMBERS.—Members of the 
board of directors of the Capital Corporation shall receive compensa-
tion, including reasonable allowances for necessary expenses, in 
attending meetings of the board. The compensation shall not be in 
excess of the level set by the Farm Credit Administration. 
"SEC. 4.28E. BOARD PROCEDURES.—The board of directors of the 
Capital Corporation shall adopt such rules as it may deem appro-
priate for the transaction of its business and shall keep permanent 
and accurate records and minutes of its acts and proceedings. 
"SEC. 4.28F. CHIEF EXECUTIVE OFFICER OF THE CORPORATION.—The 
chief executive officer of the Capital Corporation shall be selected by 
the board of directors of the Capital Corporation, subject to the 
approval of the Farm Credit Administration, and shall serve at the 
pleasure of the board. 
"SEC. 4.28G. GENERAL CORPORATE POWERS.—(a) The Capital Cor-
poration shall be a body corporate and, subject to regulation by the 
Farm Credit Administration, shall have the power to— 
"(1) operate under the direction of its board of directors; 
"(2) adopt, alter, and use a corporate seal, which shall be 
judicially noted; 
"(3) provide for one or more vice presidents, a secretary, a 
treasurer, and such other officers, employees, and agents, as 
may be necessary, define their duties, and require surety bonds 
or make other provisions against losses occasioned by acts of 
such persons; 
"(4) prescribe by its board of directors its bylaws, not 
inconsistent with law, which shall provide for the classes of its 
stock and the manner in which its stock shall be issued, trans-
ferred, and retired; the manner in which its officers, employees, 
and agents are selected; its property is acquired, held, and 
transferred; its loans, commitments, and other financial assist-
ance are made; its general business is conducted; and the privi-
leges granted by law are exercised and enjoyed; 
"(5) enter into contracts and make advance, progress, or other 
payments with respect to such contracts; 
"(6) contract with System institutions for local administra-
tion, servicing, and restructuring of loan and loan-related assets 
and management of acquired properties of the Corporation; 
"(7) sue and be sued in its corporate name and complain and 
defend, in any court of competent jurisdiction, State or Federal; 
"(8) acquire, hold, lease, mortgage, or dispose of, at public or 
private sale, real and personal property, and guarantee, sell, or 
exchange any securities or obligations, and otherwise exercise 
all the usual incidents of ownership of property necessary and 
convenient to its business; 
"(9) authorize, through its board of directors, the issuance and 
sale of obligations, including notes, bonds, debentures, capital 
notes, and voting or nonvoting securities, to the Secretary of the 
Treasury or the Farm Credit Administration, under such terms 
and conditions as shall be determined; 
"(10) obtain insurance against loss; 
"(11) modify or consent to modification with respect to the 
rate of interest, time of payment of any installment of principal 
or interest, security, or any other term of any contract or 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1683 
agreement to which it is a party or in which it has an interest 
under this Act; 
"(12) borrow from any commercial bank on its own individual 
responsibility on such terms and conditions as it may determine 
with the approval of the Farm Credit Administration; 
"(13) join with Farm Credit System banks in the issuance of Securities. 
System-wide notes, bonds, debentures, and other similar obliga-
tions under section 4.2(d) of this Act, or assume liability with 
1
2 U
S
C 2153. 
respect to outstanding System-wide obligations. If it satisfies the 
requirements applicable to banks under section 4.3(c) of this ^nte, p. 1678. 
Act, it shall be jointly and severally liable with the System Securities. 
banks for the payment of principal and interest on such obliga-
tions, and pay on such obligations any sums as may be called on 
by the Farm Credit Administration to make payments of prin-
cipal or interest that any bank or banks primarily liable there-
for are unable to make; 
"(14) require other institutions of the Farm Credit System, Securities. 
through purchase of stock in, or obligations of, the (Capital 
Corporation, to make funds available to the Capital Corporation 
to enable it to make financial assistance available to institu-
tions of the Farm Credit System as provided in paragraph (15). 
The Capital Corporation may also assess at such times and 
under such circumstances as it deems appropriate, System 
Institutions for the purpose of covering its operating expenses 
not to include interest costs. The guidelines to be used by the 
Capital Corporation in obtaining funds from other institutions 
of the Farm Credit System for the purpose of aggregating 
resources to assist System institutions, to the extent practicable, 
shall give priority to obtaining funds through the use of trans-
actions that require the Capital Corporation, on reasonable 
terms, to repay the contributed funds from surpluses accu-
mulated by the Capital Corporation, and otherwise shall be in 
conformity with regulations issued by the Farm Credit 
Administration; 
"(15) administer financial assistance under regulations of the Regulations. 
Farm Credit Administration which shall— 
"(A) include standards to ensure that, consistent with Securities. 
sound business practices and subject to the criteria estab-
lished under subparagraph (B) of this paragraph, the 
available capital and reserves of System institutions are 
committed to providing financial assistance to those institu-
tions of the Farm Credit System eligible therefor. The term 
'available capital and reserves', as used in this subpara-
graph, shall not include capital stock, participation certifi-
cates and allocated equities held by borrowers that are not 
associations chartered under this Act; 
"(B) establish criteria pursuant to which the Capital Securities. 
Corporation shall require other institutions of the Farm 
Credit System, through the purchase of stock in, or obliga-
tions of, the Capital Corporation to make funds available to 
the Capital Corporation under paragraph (14). Such criteria 
shall— 
"(i) provide for an equitable sharing of the burden of 
such assessments or purchsises, taking into account (I) 
the relative financial strength and ability to pay of the 
contributing institutions; (II) the effect, including the 
effect on loan interest rates, on current borrowers and 
99 STAT. 1684 
PUBLIC LAW 99-205—DEC. 23, 1985 
members of each System institution; and (III) the effect 
on lending rates of financial assistance already pro-
vided to other System institutions; and 
"(ii) be designed to ensure that (I) the capital 
strength, earning capacity, loanable funds and overall 
financial viability of each System institution providing 
funds to the Capital Corporation are maintained at 
such a level that credit shall continue to be available to 
eligible borrowers on reasonable and 
competitive 
terms, (II) each bank shall continue to have access to 
funds in the public financial markets, and (III) each 
bank is able to maintain adequate financial resources 
to satisfy its liability on its own obligations and on that 
portion of systemwide notes, bonds, debentures, or 
other obligations for which it is primarily liable; and 
"(C) establish criteria to be used in determining eligibility 
of System institutions for financial assistance from the 
Capital Corporation and the types and amounts of financial 
assistance that can be obtained from the Corporation. Such 
regulations shall provide that an institution shall be eli-
gible to receive financial assistance when its 
financial 
condition has deteriorated to a point where its continued 
operation is jeopardized and the provision of such financial 
assistance is necessary to ensure that farm credit services 
will continue to be available to borrowers in the institu-
tion's territory; 
"(16) purchase at fair market value from any other System 
institution, on the request of such institution, loans (or interests 
in loans) that have been placed in nonaccrual status and assets 
(or interests in assets) in the account for acquired properties; 
"(17) require System institutions to sell to the Capital Cor-
poration loans, assets, and interests described in paragraph (16) 
as a condition to receiving financial assistance from the Capital 
Corporation; 
"(18) exercise all the rights and privileges of any System 
institution with respect to any loan which it has acquired or in 
which it has participated, including the adjustment of interest 
rates, compromise of indebtedness, waiver of default, and other 
such rights and privileges; 
"(19) assume debt or other liabilities from System institutions 
in connection with the acquisition of loans or interests therein 
or other assets from such institutions; 
"(20) refinance, reamortize, guarantee, or compromise indebt-
edness, and otherwise provide debt adjustment assistance, with 
respect to any loan to a borrower of a System institution 
purchased under paragraph (16) or participated in by the Cap-
ital Corporation, and, after a determination by the Capital 
Corporation that the borrower could not reasonably be antici-
pated 
to 
meet 
loan 
servicing 
charges 
under 
a 
refinanced, reamortized, or otherwise restructured loan under 
reasonable terms and conditions acceptable to the Capital Cor-
poration, liquidate any such loan; 
"(21) purchase from associations undergoing liquidation all 
assets which are performing loans not voluntarily purchased by 
other associations; 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1685 
"(22) adopt a salary scale for officers and employees of the 
Capital Corporation, in accordance with the directives of the 
board of directors; and 
"(23) deposit its securities and its current funds with any 
Securities, 
member of the Federal Reserve System or any insured State 
nonmember bank as defined in section 2 of the Federal Deposit 
Insurance Act and pay fees therefor and receive interest 
12 use 1813. 
thereon as may be agreed. 
The Capital Corporation shall have such other incidental powers as 
are necessary to carry out its powers, duties, and functions in 
accordance with this Act. 
"(b) The powers of the Capital Corporation set forth in subsection 
(a) of this section, to the extent they authorize the financial assist-
ance of any type to borrowers and System institutions, shall be 
limited after December 31, 1990, as provided in this subsection. The 
Termination, 
powers of the Capital Corporation to directly or indirectly increase 
the level of such financial assistance to a borrower or institution or 
to provide directly or indirectly any such financial assistance to a 
borrower or institution not receiving such assistance on December 
31, 1990, shall terminate on that date. All other powers, including 
those necessary for management and orderly liquidation of commit-
ments made and obligations incurred in providing such assistance to 
borrowers and institutions on or before December 31, 1990, shall 
remain in effect thereafter. 
"(c) Officers or employees of the Capital Corporation, like other 
Farm Credit System employees, shall not be considered officers or 
employees of the Federal Government. Funds held by the Capital 
Corporation shall not be construed to be Government funds or 
appropriated moneys. 
"SEC. 4.28H. SUCCESSION OF THE CORPORATION.—On the issuance 
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by the Farm Credit Administration of the new charter for the 
Capital Corporation under this part, the Capital Corporation shall 
succeed to the assets of and be liable for and assume all debts, 
obligations, contracts, and other liabilities of the Farm Credit 
System Capital Corporation chartered under part D of this title 
12 use 2211. 
(referred to in this section as 'the predecessor corporation'), matured 
or unmatured, accrued, absolute, contingent or otherwise, and 
whether or not reflected or reserved against on balance sheets, 
books of account, or records of the predecessor corporation. The Securities, 
stock of the predecessor corporation shall be converted into stock of 
the Capital Corporation. The existing contractual obligations, secu-
rity instruments, and title instruments of the predecessor corpora-
tion shall, by operation of law and without any further action by the 
Farm Credit Administration, the predecessor corporation, or any 
court, become and be converted into obligations, entitlements, and 
instruments of the Capital Corporation chartered under this part. 
To the extent that, on the extinguishing of liabilities assumed by the Contracts. 
Capital Corporation under this section, and full performance or 
other final disposition of contract obligations under contracts as-
sumed by the Capital Corporation under this section, there remain 
surplus funds attributable to such obligations or contracts, the 
Capital Corporation shall distribute such surplus funds among the 
System institutions that contributed funds to the predecessor cor-
poration on the basis of the relative amount of funds so contributed 
by each institution. 
"SEC. 4.281. LIMITATION OF POWERS.—(a) The powers of the Capital 
12 use 22i6h. 
Corporation under this part shall be exercised only for the purposes 
99 STAT. 1686 
PUBLIC LAW 99-205—DEC. 23, 1985 
specified in this part and shall not be exercised in a manner that 
would result in the Capital Corporation supplanting the Farm 
Credit System institutions operating under titles I through III of 
Ante, p. 1678; 
this Act as the primary providers of credit and other 
financial 
post, p. 1707. 
services to farmers, ranchers, and their cooperatives. 
Real property. 
"(b) Sales by the Capital Corporation of real property formerly 
securing a liquidated loan shall be conducted pursuant to guidelines 
adopted by the Capital Corporation that are compatible with the 
following criteria: 
"(1) Notice of pending sales shall be made public. 
"(2) Previous owners shall be advised of the pending sale and 
shall not be precluded from purchasing their former property. 
"(3) The sale of real property acquired by the Corporation in 
large tracts shall be discouraged. 
Securities. 
" S E C . 4.28J. AUTHORITY OF THE SECRETARY OP THE TREASURY.—(a) 
12 use 22i6i. 
On certification by the Farm Credit Administration that (1) the 
Farm Credit System is in need of financial assistance to address 
financial stress of System institutions, (2) the System has committed 
its available capital surplus and reserves to address such financieil 
stress of System institutions, (3) the salaries and benefits of the 
senior executive officers of System institutions (except associations) 
will be frozen, such freeze to remain in effect until the earlier of five 
years after the freeze begins or such time as the Secretary no longer 
holds any obligations issued by the Capital Corporation, and (4) the 
System has used such capital surplus and reserves to the extent that 
further contributions from, or losses incurred by, System institu-
tions likely will preclude such institutions from making credit 
available to eligible borrowers on reasonable terms, the Secretary of 
the Treasury, in the Secretary's discretion, may purchase any 
obligations issued by the Capital Corporation under this part, as 
heretofore, now, or hereafter in force; and for such purpose the 
Secretary of the Treasury may use as a public-debt transaction the 
proceeds of the sale of any securities hereafter issued under the 
31 use 774. 
Second Liberty Bond Act, as now or hereafter in force, and the 
purposes for which securities may be issued under the Second 
Liberty Bond Act, as now or hereafter in force, are extended to 
include such purchases. The authorities provided to the Secretary of 
the Treasury by the preceding sentence shall be effective for any 
fiuscal year only to such extent or in such amounts as provided in 
advance in appropriation Acts. The Secretary of the Treasury, at 
any time, may sell, on such terms and conditions and at such price 
or prices as the Secretary shall determine, any of the obligations 
acquired by the Secretary under this section. All redemptions, 
purchases, and sales by the Secretary of the Treasury of such 
obligations under this section shall be treated as public-debt trans-
actions of the United States, Each purchase of obligations by the 
Secretary of the Treasury under this subsection shall be on terms 
and conditions as shall be determined by the Secretary of the 
Treasury, taking into consideration the objectives that System 
institutions retain the ability to make credit available to eligible 
borrowers on reasonable terms and that banks of the System con-
tinue to have access to funds in the public financial markets. 
"(b) The Farm Credit Administration promptly shall submit a 
copy of any certification made under subsection (a) to Congress, and 
the Secretary of the Treasury shall, not later than forty-five days 
after such certification is made, make known to the C!ongress and 
the Farm Credit Administration the Secretary's decision as to 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1687 
exercising the authority under subsection (a) and the reasons and 
documentation therefor, if that decision is not to purchase obhga-
tions of the Capital Corporation. 
"SEC. 4.28K. INITIAL CAPITAUZATION.—The Farm Credit Adminis-
tration shall provide for the initial capitalization of the Capital 
Corporation by requiring, in accordance with section 4.28G, institu-
tions of the System to contribute capital to the Capital Corporation 
in such amounts and under such terms and conditions as the Farm 
Credit Administration, in consultation with System institutions, 
may prescribe. 
"SEC. 4.28L, TAX STATUS OF CONSOLIDATED OBLIGATIONS.—Consoli-
dated notes, bonds, debentures, or other obligations, the issuance of 
which is joined in by the Capital Corporation pursuant to paragraph 
(13) of section 4.28G, shall have the same tax status as provided by 
this Act with respect to such obligations issued by the banks.". 
12 use 2216J. 
Ante, p. 1682. 
Securities. 
12 use 2216k. 
CONFORMING AMENDMENT 
SEC. 104. Title IV of the Farm Credit Act of 1971 is further 
amended by inserting before section 4.2 the following: 
"SEC. 4.1. REQUIREMENTS TO PURCHASE STOCK AND PAY ASSESS-
MENTS AND CONTRIBUTE CAPITAL TO CAPITAL CORPORATION.—The 
Federal land banks, the Federal intermediate credit banks, the 
banks for cooperatives, the Federal land bank associations, and the 
production credit associations shall purchase stock in, or obligations 
of, the Capital Corporation, pay assessments, make capital contribu-
tions, and take such other related actions as required by the Capital 
Corporation in the exercise of its powers under this Act. Any 
pajrment for retirement of stock so purchased, or repayment of 
obligations so purchased, by the Capital Corporation shall be distrib-
uted among all holders of such stock or obligations on the basis of 
the book value of the stock or obligations held by each such holder 
at the time of the distribution.". 
12 use 2152. 
CENTRAL RESERVE 
SEC. 105. Part A of title IV of the Farm Credit Act of 1971 (12 
U.S.C. 2151 et seq.) is amended by inserting after section 4.9 the 
following: 
"SEC. 4.9A. CENTRAL RESERVE FOR FARM CREDIT SYSTEM.—(a) The 
Farm Credit Administration may, effective January 1, 1991, estab-
lish and maintain a central reserve for the Farm Credit System. 
"(b) Such central reserve shall be held in the form of Treasury 
securities and demand deposits. 
"(c) The Farm Credit Administration may use the reserve to make 
temporary deposits and temporary investments in financially trou-
bled banks or associations of the Farm Credit System. 
"(dXD The Farm Credit Administration may order payments into 
such central reserve of one-tenth of 1 percent of the proceeds of each 
individual, consolidated, or System-wide note, bond, debenture, or 
other obligation issued by the Farm Credit System, or any part 
thereof, under this Act. 
"(2) Such pajmients under paragraph (1) may be ordered during 
any period when such central reserve contains the unobligated sum 
the Farm Credit Administration deems inadequate to achieve the 
purposes of such central reserve, but not more than a sum equal to 3 
percent of the total of loans outstanding on December 31 of the last 
Effective date. 
Securities. 
12 use 2161. 
99 STAT. 1688 
PUBLIC LAW 99-205—DEC. 23, 1985 
preceding calendar year from institutions in the Farm Credit 
System to persons other than other such institutions. 
"(e) The Farm Credit Administration shall require a bank or 
association to repay in whole or in part a temporary deposit or retire 
in whole or in part a temporary investment, made in such bank or 
association under this section, at such time as in the opinion of the 
Farm Credit Administration such bank or association has resources 
available therefor and the need for such temporary deposit or 
temporary investment is reduced or no longer exists. 
"(f) The Farm Credit Administration shall issue rules and regula-
tions implementing this section.". 
TITLE II—REGULATION OF THE FARM CREDIT SYSTEM 
RESTRUCTURE OF THE FARM CREDIT ADMINISTRATION 
SEC. 201. Part B of title V of the Farm Credit Act of 1971 is 
amended by— 
(1) amending sections 5.7 through 5.12 to read as follows: 
12 use 2241. 
"SEC. 5.7. THE FARM CREDIT ADMINISTRATION.—The Farm Credit 
Administration shall be an independent agency in the executive 
branch of the Government. It shall be composed of the Farm Credit 
Administration Board and such other personnel as are employed in 
canying out the functions, powers, and duties vested in the Farm 
Credit Administration by this Act. 
12 use 2242. 
"SEC. 5.8. THE FARM CREDIT ADMINISTRATION BOARD; APPOINT-
MENT; TERM OF OFFICE; ORGANIZATION AND COMPENSATION.—(a) The 
management of the Farm Credit Administration shall be vested in a 
Farm Credit Administration Board (referred to in this part as 'the 
Board'). The Board shall consist of three members, who shall be 
citizens of the United States and broadly representative of the 
public interest. Members of the Board shall be appointed by the 
President, by and with the advice and consent of the Senate. Not 
more than two members of the Board shall be members of the same 
political party. Of the persons thus appointed, one shall be des-
ignated by the President to serve as Chairman of the Board for the 
duration of the member's term. The members of the Board shall be 
ineligible during the time they are in office and for two years 
thereafter to hold any office, position, or emplojonent in any institu-
tion of the Farm Credit System. 
"(b) The term of office of each member of the Board shall be six 
years, except that the terms of the two members, other than the 
Chairman, first appointed under subsection (a) shall expire, one on 
the expiration of two years after the date of appointment, and one 
on the expiration of four years after the date of appointment. 
Members of the Board shall not be appointed to succeed themselves, 
except that the members first appointed under subsection (a) for a 
term of less than six years may be reappointed for a full six-year 
term and members appointed to fill unexpired terms of three years 
or less may be reappointed for a full six-year term. Any vacancy 
shall be filled for the unexpired term on like appointment. Any 
member of the Board shall continue to serve as such after the 
expiration of the member's term until a successor has been 
appointed and qualified. 
"(c) Each member of the Board, within fifteen days after notice of 
appointment, shall subscribe to the oath of office. The Board may 
transact business if a vacancy exists, provided a quorum is present. 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1689 
A quorum shall consist of two members of the Board. The Board 
shall hold at least one meeting each month and such additional 
meetings at such times and places as it may fix and determine. Such 
meetings shall be held on the call of the Chairman or any two Board 
members. The Board shall adopt such rules as it deems appropriate 
Records. 
for the transaction of its business and shall keep permanent and 
accurate records and minutes of its acts and proceedings. 
"(d) The members of the Board shall devote their full time and 
attention to the business of the Board. The Chairman of the Board 
shall receive compensation at the rate prescribed for level III of the 
Executive Schedule under section 5314 of title 5 of the United States 
Code. Each of the other members of the Board shall receive com-
pensation at the rate prescribed for level IV of the Executive 
Schedule under section 5315 of title 5 of the United States Code. 
Each member of the Board shall be reimbursed for necessary travel, 
subsistence, and other expenses in the discharge of the member's 
official duties without regard to other laws with respect to allowance 
for travel and subsistence of officers and employees of the United 
States. This subsection shall be subject to the provisions of section 
5.11 of this Act. 
Post, p. 1690. 
"SEC. 5.9. POWERS OF THE BOARD; CIVIL PROCEEDINGS.—The Board 
12 use 2243. 
shall manage and administer, and establish policies for, the Farm 
Credit Administration. It— 
"(1) shall approve the 
rules and 
regulations for 
the 
implementation of this Act not inconsistent with its provisions; 
"(2) shall provide for the examination of the condition of, and 
general regulation of the performance of the powers, functions, 
and duties vested in, each institution of the Farm Credit 
System; 
"(3) shall provide for the performance of all the powers and 
duties vested in the Farm Credit Administration; and 
"(4) may require such reports as it deems necessary from the 
institutions of the Farm Credit System. 
"SEC. 5.10. 
CHAIRMAN; RESPONSIBIUTIES; 
GOVERNING STAND- 
12 use 2244. 
ARDS.—(a) The Chairman of the Board shall be the executive officer 
of the Board and the chief executive officer of the Farm Credit 
Administration. The Chairman shall be responsible for directing the 
implementation of the policies and regulations adopted by the Board 
and the execution of all of the administrative functions and duties of 
the Farm Credit Administration. The Chairman shall be the spokes-
man for the Board and the Farm Credit Administration and shall 
represent the Board and the Farm Credit Administration in their 
official relations within the Government. Under policies adopted by 
the Board, the Chairman shall consult on a regular basis with the 
Secretary of the Treasury in connection with the exercise by the 
System of the powers conferred under section 4.2 of this Act, with 
12 use 2153. 
the Board of Governors of the Federal Reserve System in connection 
with the effect of System lending activities on national monetary 
policy, and with the Secretary of Agriculture in connection with the 
effect of System policies on farmers and the agricultural economy. 
"(b) In carrying out responsibilities under this Act, the Chairman 
of the Board shall be governed by general policies adopted by the 
Board and by such regulatory decisions, findings, and determina-
tions as the Board may by law be authorized to make and, as to 
third persons, all acts of the Chairman of the Board shall be 
conclusively presumed to be in compliance with such general poli-
cies and regulatory decisions, findings, and determinations. 
99 STAT. 1690 
PUBLIC LAW 99-205—DEC. 23, 1985 
"(c) The Chairman of the Board shall enforce the rules, regula-
tions, and orders of the Board. Except as provided in section 518 of 
title 28 of the United States Code, relating to litigation before the 
Supreme Court, attorneys designated by the Chairman shall rep-
resent the Farm Credit Administration in any civil proceeding or 
civil action brought in connection with the administration of 
conservatorships and receiverships. Attorneys designated by the 
Chairman may represent the Farm Credit Administration in any 
other civil proceedings or civil action when so authorized by the 
Attorney General under provisions of title 28. 
1
2 use 2245. 
"SEC. 5.11. ORGANIZATION OF THE FARM CREDIT ADMINISTRATION.— 
The Chairman of the Board, in carrying out the powers and duties 
now or hereafter vested in the Chairman by this Act and acts 
supplementary thereto, may establish and fix the powers and the 
duties of such divisions or other units as the Chairman may deem 
necessary to the efficient functioning of the Farm Credit Adminis-
tration and the successful execution of the powers and duties vested 
in the Board and the Farm Credit Administration. The Chairman of 
the Board shall appoint such personnel as may be necessary to carry 
out the functions of the Farm Credit Administration. Officers and 
employees of the Farm Credit Administration shall be subject to the 
2 use 701 note. Ethics in Government Act of 1978 and shall be considered officers or 
employees of the United States for the purposes of sections 201 
through 203, and sections 205 through 209, of title 18 of the United 
States Code. Officers and employees of the Farm Credit Administra-
tion shall be subject to section 5373 of title 5 of the United States 
Code. The powers of the Chairman as chief executive officer of the 
Farm Credit Administration may be exercised and performed by the 
Chairman through such other officers and employees of the Farm 
Credit Administration as the Chairman shall designate. The oper-
ations of the Farm Credit Administration, and the salaries of mem-
bers of the Board and employees of the Administration, shall be 
Infra. 
funded and paid for from the fimd created under section 5.15 of this 
Act. 
1
2 use 2246. 
"SEC. 5.12. ADVISORY COMMITTEES.—^The Chairman of the Board 
may establish one or more advisory committees in accordance with 
the Federal Advisory Committee Act and may appoint to such 
committee or committees individuals who are members of the Fed-
eral Farm Credit Board when such Board is terminated by the Farm 
Credit Amendments Act of 1985."; 
1
2 use 2247. 
(2) striking out section 5.13; 
1
2 use 2248. 
(3) redesignating section 5.14 as section 5.13, and, in section 
5.13, as so redesignated, striking out "Governor" and inserting 
in lieu thereof "Board"; 
1
2 use 2249. 
(4) redesignating section 5.15 as section 5.14, and, in the 
second sentence of section 5.14, as so redesignated, striking out 
"section 5.160>)" and "section 5.16(a)" and inserting in lieu 
thereof "section 5.15(b)" and "section 5.15(a)", respectively; 
1
2 use 2250. 
(5) redesignating section 5.16 as section 5.15; 
1
2 use 2251. 
(6) redesignating section 5.17 as section 5.16, and, in section 
5.16, as so redesignated— 
(A) striking out "section 5.15" in the first sentence and 
inserting in lieu thereof "section 5.14"; 
(B) striking out "Federal Farm Credit" in paragraph (2) of 
the first sentence; and 
(C) striking out "section 5.16" and inserting in lieu 
thereof "section 5.15"; and 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1691 
(7) redesignating section 5.18 as section 5.17 and amending 
12 use 2252. 
subsection (a) thereof to read as follows: 
"(a) The Farm Credit Administration shall have the following 
powers, functions, and responsibilities in connection with the 
institutions of the Farm Credit System and the administration of 
this Act: 
"(1) Modify the boundaries of farm credit districts, with due 
regard for the farm credit needs of the country, as approved by 
the Board, with the concurrence of the district boards involved. 
"(2) Where necessary or appropriate to carry out the policy 
Discrimination, 
and objectives of this Act, issue and amend or modify Federal 
prohibition, 
charters of institutions of the System; approve change in names 
of banks operating under this Act; approve the merger of 
districts when agreed to by the boards of the districts involved 
and by a majority vote of the voting stockholders and contribu-
tors to the guaranty funds of each bank for each of such 
districts, voting in the same manner as is provided in section 
4.10 of this Act; approve mergers of banks operating under the 
12 use 2181. 
same title of this Act, merger of Federal land bank associations, 
merger of production credit associations, and the consolidation 
or division of the territories that they serve when agreed to by a 
majority vote of the voting stockholders or contributors to the 
guaranty fund of each of the institutions involved; and approve 
consolidations of boards of directors or management agreements 
when agreed to by a majority vote of the voting stockholders or 
contributors to the guaranty fund of each of the institutions 
involved. In issuing charters and certificates of territory for 
district-wide mergers of associations where stockholders of one 
or more associations did not approve the merger, the charter of 
the new or merged association shall not include the territory of 
the disagreeing association or associations; charters issued 
during calendar year 1985 for district-wide new or merged 
associations which included the territory of a disagreeing 
association shall be revoked and reissued to exclude such terri- 
, , 
tory, unless subsequently agreed to by the board of directors of 
such association or associations; and the Farm Credit Adminis-
tration shall ensure that the board of directors of district banks 
does not discriminate against the disapproving associations in 
exercising its supervisory authorities. Such associations shall 
not be (i) charged any assessment under this Act at a rate 
higher than that charged other like associations in the district 
or (ii) discriminated against in the provision of any financial 
service and assistance (including, but not limited to, access to 
credit and rates of interest on loans and discounts) by a district 
Farm Credit bank to the association and its member-borrowers. 
The Chairman of the Farm Credit Administration Board, after 
consultation with the respective district board or boards and the 
board of directors of the Capital Corporation may require two or 
more banks of the Farm Credit System (other than Central 
Banks for Cooperatives) operating under the same title to merge 
if the Chairman determines that one of such banks has failed to 
meet outstanding obligations of such bank. 
"(3) Make annual reports directly to Congress on the condi- Reports, 
tion of the System and its institutions, based on the examina-
tions carried out under section 5.19 of this Act, and on the Post, p. 1693. 
manner and extent to which the purposes and objectives of this 
Act are being carried out and, from time to time, recommend 
99 STAT. 1692 
PUBLIC LAW 99-205—DEC. 23, 1985 
Reports. 
directly legislative changes. The annual reports shall include a 
summary and analysis of the reports submitted to the Farm 
Credit Administration by the Federal land banks and Federal 
1
2 use 2207. 
intermediate credit banks under section 4.19(b) of this Act 
relating to programs for serving young, beginning, and small 
farmers and ranchers. 
"(4) Approve the issuance of obligations of the System under 
1
2 use 2153. 
subsections (c) and (d) of section 4.2 of this Act for the purpose of 
funding the authorized operations of the institutions of the 
System, and prescribe collateral therefor. 
Regulations. 
"(5) Grant approvals provided for under this Act either on a 
case-by-case basis or through regulations that confer approval 
on actions of Farm Credit System institutions that meet stand-
ards and criteria established by the Farm Credit Administra-
tion, including standards and criteria with respect to (A) 
interest rates on obligations of Farm Credit System institutions 
and on loans made or discounted by such institutions, and (B) 
the payment of dividends or patronage refunds by Farm Credit 
System institutions. 
"(6) Establish standards for the System institutions with 
respect to loan security requirements and regulate the borrow-
ing, repayment, and transfer of funds and equities between 
institutions of the System, 
"(7) Conduct loan and collateral security review. 
Securities. 
"(8) Make investments in stock of the Capital Corporation out 
Ante, p. 1678. 
of the revolving fund referred to in section 4.0, £uid require the 
retirement of such stock. 
"(9) Regulate the preparation by System institutions and the 
dissemination to stockholders and investors of information on 
the financial condition and operations of such institutions. 
"(10) Prescribe rules and regulations necessary or appropriate 
for canying out this Act. 
Safety. 
"(11) Exercise the powers conferred on it under part C of this 
Post, p. 1694. 
title for the purpose of ensuring the safety and soundness of 
Sjrstem institutions. 
"(12) Exercise such incidental powers as may be necessary or 
appropriate to fulfill its duties and carry out the purposes of 
this Act. 
"(13) Sue and be sued, complain and defend in any court of 
law or equity, State or Federal. All suits of a civil nature at 
common law or in equity to which the Farm Credit Administra-
tion shall be a party shall be deemed to arise under the laws of 
the United States, and the United States district courts shall 
have original jurisdiction thereof, without regard to the amount 
of the controversy; and the Farm Credit Administration may, 
without bond or security, remove any such action, suit, or 
proceeding from a State court to the United States district court 
for the district or division embracing the place where the same 
is pending by following any procedure for removal now or 
hereafter in effect. Service of process on the Farm Credit 
Administration shall be in accordance with provisions of title 28 
of the United States Code and rules adopted under title 28 for 
suits in which an agency of the United States is a party. The 
Farm Credit Administration shall designate an agent at its 
principal office to accept service of process. 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1693 
"(14) Require surety bonds or other provisions for protection 
of the assets of the institutions of the System against losses 
occasioned by employees. 
"(15) Except for associations, approve the salary scale for 
employees of the institutions of the System, and approve the 
compensation of the chief executive officer of such institutions: 
Provided, That no salary scale or rate of compensation shall be 
approved under this provision unless determined to be fair and 
reasonable.". 
DELEGATIONS 
SEC. 202. (a) Section 5.19 of the Farm Credit Act of 1971 is 
(b) Part B of title V of the Farm Credit Act of 1971 is further 
amended by inserting, after section 5.17, as so redesignated by 
section 201 of this title, the following: 
"SEC. 5.18. PRIOR DELEGATIONS.—Any delegations by the Farm 
Credit Administration and redelegations thereof made in accord-
ance with section 5.19 of the Farm Credit Act of 1971 as in effect 
prior to the effective date of the Farm Credit Amendments Act of 
1985 may continue in full force and effect, at the discretion of the 
Farm Credit Administration, for the period ending twelve months 
after the date of enactment of such Act.". 
Bonds. 
Repeal. 
12 u s e 2253. 
Ante, p. 1690. 
Effective date. 
12 u s e 2253. 
FARM CREDIT ADMINISTRATION EXAMINATIONS; CONFORMING 
AMENDMENT 
SEC. 203. (a) Section 5.20 of the Farm Credit Act of 1971 is 
redesignated as section 5.19 and amended to read as follows: 
"SEC. 5.19. EXAMINATIONS.—(a) Each institution of the System 
shall be examined by Farm Credit Administration examiners at 
such times as the Chairman of the Board may determine, but in no 
event less than once each year. Such examinations shall include, but 
are not limited to, an analysis of credit and collateral quality and 
capitalization of the institution, and appraisals of the effectiveness 
of the institution's management and application of policies govern-
ing the carrying out of this Act and regulations of the Farm Credit 
Administration and servicing all eligible borrowers. At the direction 
of the Chairman of the Board, Farm Credit Administration examin-
ers also shall make examinations of the condition of any organiza-
tion, other than federally regulated financial institutions, to, for, or 
with which any institution of the System contemplates making a 
loan or discounting paper. For the purposes of this Act, examiners of 
the Farm Credit Administration shall be subject to the same 
requirements, responsibilities, and penalties as are applicable to 
examiners under the National Bank Act, the Federal Reserve Act, 
and Federal Deposit Insurance Act, and other provisions of law and 
shall have the same powers and privileges as are vested in such 
examiners by law. 
"(b) Each institution of the System shall make and publish an 
annual report of condition as prescribed by the Farm Credit 
Administration. Each such report shall contain financial statements 
prepared in accordance with generally accepted accounting prin-
ciples and contain such additional information as the Farm Credit 
Administration by regulation may require. Such financial state-
ments of System institutions shall be audited by an independent 
public accountant. 
12 u s e 2254. 
12 u s e 38 and 
note, 226 and 
note. 
12 u s e 1811 
note. 
Report. 
99 STAT. 1694 
PUBLIC LAW 99-205—DEC. 23, 1985 
Report. 
"(c) The Farm Credit Administration may publish the report of 
examination of any System institution that does not, before the end 
of the 120th day after the date of notification of the recommenda-
tions and suggestions of the Farm Credit Administration, based on 
such examination, comply with such recommendations and sugges-
tions to the satisfaction of the Farm Credit Administration. The 
Farm Credit Administration shall give notice of intention to publish 
in the event of such noncompliance at least 90 days before such 
publication. Such notice of intention may be given any time after 
such notification of recommendations and suggestions.", 
(b) Sections 5.21, 5.22, 5.23, 5.24, and 5.25 of the Farm Credit Act of 
12 use 
1971 are redesignated as sections 5.20, 5.21, 5.22, 5.23, and 5.24, 
2255-2259. 
respectively. 
ENFORCEMENT POWERS 
SEC. 204. Title V of the Farm Credit Act of 1971 is amended by 
Supra. 
inserting after section 5.24, as so redesignated by section 203(b), the 
following: 
"PART C—ENFORCEMENT POWERS OF FARM CREDIT ADMINISTRATION 
12 use 2261. 
"SEC. 5.25. CEASE AND DESIST PROCEEDINGS.—(a) If, in the opinion 
of the Farm Credit Administration, any institution in the Farm 
Credit System, or any director, officer, employee, agent, or other 
person participating in the conduct of the affairs of such an institu-
tion is engaging or has engaged, or the Farm Credit Administration 
has reasonable cause to believe that the institution or any director, 
officer, employee, agent, or other person participating in the conduct 
of the affairs of such institution is about to engage, in an unsafe or 
unsound practice in conducting the business of such institution, or is 
violating or has violated, or the Farm Credit Administration has 
reasonable cause to believe that the institution or any director, 
officer, employee, agent, or other person participating in the conduct 
of the affairs of such institution is about to violate, a law, rule, or 
regulation, or any condition imposed in writing by the Farm Credit 
Administration in connection with the granting of any application 
or other request by the institution or any written agreement entered 
into with the Farm Credit Administration, the Farm Credit 
Administration may issue and serve upon the institution or such 
director, officer, employee, agent, or other person a notice of charges 
in respect thereof. The notice shall contain a statement of the facts 
constituting the alleged violation or violations or the unsafe or 
unsound practice or practices, and shall fix a time and place at 
which a hearing will be held to determine whether an order to cease 
and desist therefrom should issue against the institution or the 
director, officer, employee, agent, or other person participating in 
the conduct of the affairs of such institution. Such hearing shall be 
fixed for a date not earlier than thirty days nor later than sixty days 
after service of such notice unless an earlier or a later date is set by 
the Farm Credit Administration at the request of any party so 
served. Unless the party or parties so served shall appear at the 
hearing personally or by a duly authorized representative, they 
shall be deemed to have consented to the issuance of the cease and 
desist order. In the event of such consent, or if upon the record made 
at any such hearing, the Farm Credit Administration shall find that 
any violation or unsafe or unsound practice specified in the notice of 
charges has been established, the Farm Credit Administration may 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1695 
issue and serve upon the institution or the director, officer, em-
ployee, agent, or other person participating in the conduct of the 
affairs of such institution an order to cease and desist from any such 
violation or practice. Such order may, by provisions that may be 
mandatory or otherwise, require the institution or its directors, 
officers, employees, agents, and other persons participating in the 
conduct of the affairs of such institution to cease and desist from the 
same, and, further, to take affirmative action to correct the condi-
tions resulting from any such violation or practice. 
"(b) A cease and desist order shall become effective at the expira- 
Effective date. 
tion of thirty days after the service of such order upon the institu-
tion or other person concerned (except in the case of a cease and 
desist order issued upon consent, which shall become effective at the 
time specified therein), and shall remain effective and enforceable 
as provided therein except to such extent as it is stayed, modified, 
terminated, or set aside by action of the Farm Credit Administration 
or a reviewing court. 
"SEC. 5.26. TEMPORARY CEASE AND DESIST ORDERS.—(a) Whenever 
12 use 2262. 
the Farm Credit Administration shall determine that the violation 
or threatened violation or the unsafe or unsound practice or prac-
tices, specified in the notice of charges served upon the institution or 
any director, officer, employee, agent, or other person participating 
in the conduct of the affairs of such institution under section 5.25, or 
Ante, p. 1694. 
the continuation thereof, is likely to cause insolvency or substantial 
dissipation of assets or earnings of the institution, or is likely to 
seriously weaken the condition of the institution or otherwise seri-
ously prejudice the interests of the investors in Farm Credit System 
obligations or shareholders in the institution prior to the completion 
of the proceedings conducted under section 5.25, the Farm Credit 
Administration may issue a temporary order requiring the institu-
tion or such director, officer, employee, agent, or other person to 
cease and desist from any such violation or practice and to take 
affirmative action to prevent such insolvency, dissipation, condition, 
or prejudice pending completion of such proceedings. Such order 
shall become effective upon service upon the institution or such 
director, officer, employee, agent, or other person participating in 
the conduct of the affairs of such institution and, unless set aside, 
limited, or suspended by a court in proceedings authorized by 
subsection (b), shall remain effective and enforceable pending the 
completion of the administrative proceedings pursuant to such 
notice and until such time as the Farm Credit Administration shall 
dismiss the charges specified in such notice, or if a cease and desist 
order is issued against the institution or such director, officer, 
employee, ajgent, or other person, until effective date of such order. 
"(b) Within ten days after the institution concerned or any direc-
tor, officer, employee, agent, or other person participating in the 
conduct of the affairs of such institution has been served with a 
temporary cease and desist order, the institution or such director, 
officer, employee, agent, or other person may apply to the United 
States district court for the judicial district in which the home office 
of the institution is located, or the United States district court for 
the District of Columbia, for an injunction setting aside, limiting, or 
suspending the enforcement, operation, or effectiveness of such 
order pending the completion of the administrative proceedings 
pursuant to the notice of charges served upon the institution or such 
director, officer, employee, agent, or other person under section 5.25, 
and such court shall have jurisdiction to issue such injunction. 
99 STAT. 1696 
PUBLIC LAW 99-205—DEC. 23, 1985 
12 use 2263. 
"SEC. 5.27. ENFORCEMENT OF TEMPORARY CEASE AND DESIST 
ORDERS.—In the case of violation or threatei^ed violation of, or 
failure to obey, a temporary cease and desist order issued under 
Ante, p. 1695. 
section 5.26, the Farm Credit Administration may apply to the 
United States district court, or the United States court of any 
territory, within the jurisdiction of which the home office of the 
institution is located, for an injunction to enforce such order, and, if 
the court shall determine that there has been such violation or 
threatened violation or failure to obey, it shall be the duty of the 
court to issue such injunction. 
Crimes and 
"SEC. 5.28. SUSPENSION OR REMOVAL OF DIRECTOR OR OFFICER.— 
"^i^demeanors. 
Whenever, in the opinion of the Farm Credit Administration, any 
12 use 2264. 
director or officer of any institution in the Farm Credit System has 
committed any violation of law, rule, or regulation or of a cease and 
desist order that has become final, or has engaged or participated in 
any unsafe or unsound practice in connection with the institution, 
or has committed or engaged in any act, omission, or practice which 
constitutes a breach of a fiduciary duty as such director or officer, 
and the Farm Credit Administration determines that the institution 
has suffered or will probably suffer substantial financial loss or 
other damage or that the interests of its shareholders or investors in 
Farm Credit System obligations could be seriously prejudiced by 
reason of such violation or practice or breach of fiduciary duty, or 
that the director or officer has received financial gain by reason of 
such violation or practice or breach of fiduciary duty, and that such 
violation or practice or breach of fiduciary duty is one involving 
personal dishonesty on the part of such director or officer, or one 
that demonstrates a willful or continuing disregard for the safety or 
soundness of the System institution, the Farm Credit Administra-
tion may serve upon such director or officer a written notice of its 
intention to remove him from office. 
"(b) Whenever, in the opinion of the Farm Credit Administration, 
any director or officer of an institution in the Farm Credit System, 
by conduct or practice with respect to another institution in the 
Farm Credit System or other business institution that resulted in 
substantial financial loss or other damage, has evidenced either his 
personal dishonesty or a willful or continuing disregard for its safety 
and soundness and, in addition, has evidenced his unfitness to 
continue as a director or officer, and whenever, in the opinion of the 
Farm Credit Administration, any other person participating in the 
conduct of the affairs of an institution in the Farm Credit System, 
by the conduct or practice with respect to such institution or other 
institution in the Farm Credit System or other business institution 
that resulted in substantial financial loss or other damage, has 
evidenced either personal dishonesty or a willful or continuing 
disregard for its safety and soundness and, in addition, has evi-
denced his unfitness to participate in the conduct of the affairs of 
such institution, the Farm Credit Administration may serve upon 
such director, officer, or other person a written notice of its in-
tention to remove that director, officer, or other person from office 
or to prohibit his further participation in any manner in the conduct 
of the affairs of the institution. 
"(c) In respect to any director or officer of an institution in the 
Farm Credit System or any other person referred to in subsection (a) 
or (b) of this section, the Farm Credit Administration may, if it 
deems it necessary for the protection of the institution or the 
interests of its shareholders and the investors in the Farm Credit 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1697 
System obligations, by written notice to such effect served upon such 
director, officer, or other person, suspend such director, officer, or 
other person from office or prohibit such director, officer, or other 
person from further participation in any manner in the conduct of 
the affairs of the institution. Such suspension or prohibition shall 
become effective upon service of such notice and, unless stayed by a 
court in proceedings authorized by subsection (e) of this section, 
shall remain in effect pending the completion of the administrative 
proceedings pursuant to the notice served under subsection (a) or (b) 
and until such time as the Farm Credit Administration shall dismiss 
the charges specified in such notice, or, if an order of removal or 
prohibition is issued against the director or officer or other person, 
until the effective date of any such order. Copies of any such notice 
shall also be served upon the institution of which the person is a 
director or officer or in the conduct of whose affairs the person has 
participated. 
"(d) A notice of intention to remove a director, officer, or other 
person from office or to prohibit such director's, officer's, or other 
person's participation in the conduct of the affairs of an institution 
in the Farm Credit System, shall contain a statement of the facts 
constituting grounds therefor, and shall fix a time and place at 
which a hearing will be held thereon. Such hearing shall be fixed for 
a date not earlier than thirty days nor later than sixty days after 
the date of service of such notice, unless an earlier or a later date is 
set by the Farm Credit Administration at the request of (1) such 
director or officer or other person, and for good cause shown, or (2) 
the Attorney General of the United States. Unless such director, 
officer, or other person shall appear at the hearing in person or by a 
duly authorized representative, such director, officer, or other 
person shall be deemed to have consented to the issuance of an order 
of such removal or prohibition. In the event of such consent, or if 
upon the record made at any such hearing the Farm Credit 
Administration shall find that any of the grounds specified in such 
notice have been established, the Farm Credit Administration may 
issue such orders of suspension or removal from office, or prohibi-
tion fi-om participation in the conduct of the affairs of the institu-
tion, as it may deem appropriate. A copy of an order issued under 
this subsection shall be served upon the institution concerned. Any 
such order shall become effective at the expiration of thirty days 
after service upon such institution and the director, officer, or other 
person concerned (except in the case of an order issued upon con-
sent, which shall become effective at the time specified therein). 
Such order shall remain effective and enforceable except to such 
extent as it is stayed, modified, terminated, or set aside by action of 
the agency or a reviewing court. 
"(e) Within ten days after any director, officer, or other person has 
been suspended from office or prohibited from participation in the 
conduct of the affairs of a System institution under subsection (dX3) 
of this section, such director, officer, or other person may apply to 
the United States district court for the judicial district in which the 
home office of the institution is located, or the United States district 
court for the District of Columbia, for a stay of either such suspen-
sion or prohibition, or both, pending the completion of the adminis-
trative proceedings pursuant to the notice served upon such direc-
tor, officer, or other person under subsection (a) or (b), and such 
court shall have jurisdiction to stay either such suspension or 
prohibition, or both. 
99 STAT. 1698 
PUBLIC LAW 99-205—DEC. 23, 1985 
12 use 2265. 
"SEC. 5.29. SUSPENSION OR REMOVAL OF DIRECTOR OR OFFICER 
CHARGED WITH FELONY.—(a) Whenever any director or officer of an 
institution in the Farm Credit System, or other person participating 
in the conduct of the affairs of such institution, is charged in any 
information, indictment, or complaint authorized by a United States 
attorney, with the commission of or participation in a crime involv-
ing dishonesty or breach of trust that is punishable by imprison-
ment for a term exceeding one year under State or Federal law, the 
Farm Credit Administration may, if continued service or participa-
tion by the individual may pose a threat to the interest of the 
institution's shareholders or the investors in the Farm Credit 
System obligations or may threaten to impair public confidence in 
the institution or Farm Credit System, by written notice served 
upon such director, officer, or other person, suspend such director, 
officer, or other person from office or prohibit such director, officer, 
or other person from further participation in any manner in the 
conduct of the affairs of the institution. A copy of such notice shall 
also be served upon the institution. Such suspension or prohibition 
shall remain in effect until such information, indictment, or com-
plaint is finally disposed of or until terminated by the Farm Credit 
Administration. In the event that a judgment of conviction with 
respect to such crime is entered against such director, officer, or 
other person, and at such time as such judgment is not subject to 
further appellate review, the Farm Credit Administration may, if 
continued service or participation by the individual may pose a 
threat to the interests of the institution's shareholders or the inves-
tors in Farm Credit System obligations or may threaten to impair 
public confidence in the institution or the Farm Credit System, issue 
and serve upon such director, officer, or other person an order 
removing such director, officer, or other person from office or 
prohibiting such director, officer, or other person from further 
participation in any manner in the conduct of the affairs of the 
institution except with the consent of the Farm Credit Administra-
tion. A copy of such order shall also be served upon such institution, 
whereupon such director or officer shall cease to be a director or 
officer of such institution. A finding of not guilty or other disposition 
of the charge shall not preclude the Farm Credit Administration 
from thereafter instituting proceedings to remove such director, 
officer, or other person from office or to prohibit further participa-
Ante, p. 1696. 
tion in Farm Credit System affairs under section 5.28. Any notice of 
suspension or order of removal issued under this paragraph shall 
remain effective and outstanding until the completion of any hear-
ing or appeal authorized under subsection (b) unless terminated by 
the Farm Credit Administration. 
"(b) Within thirty days from service of any notice of suspension or 
order of removal issued under subsection (a), the director, officer, or 
other person concerned may request in writing an opportunity to 
appear before the Farm Credit Administration to show that the 
continued service to or participation in the conduct of the affairs of 
the institution by such individual does not, or is not likely to, pose a 
threat to the interest in Farm Credit System obligations. Upon 
receipt of any such request, the Farm Credit Administration shall 
fix a time (not more than thirty days after receipt of such request, 
unless extended at the request of the concerned director, officer, or 
other person) and place at which the director, officer, or other 
person may appear, personally or through counsel, before the Chair-
man of the Farm Credit Administration or designated employees of 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1699 
the Farm Credit Administration to submit written materials (or, at 
the discretion of the Farm Credit Administration, oral testimony) 
and oral argument. Within sixty days of such hearing, the Farm 
Credit Administration shall notify the director, officer, or other 
person whether the suspension or prohibition from participation in 
any manner in the conduct of the affairs of the institution will be 
continued, terminated, or otherwise modified, or whether the order 
removing such director, officer, or other person from office or 
prohibiting such individual from further participation in any 
manner in the conduct of the affairs of the institution will be 
rescinded or otherwise modified. Such notification shall contain a 
statement of the basis for the Farm Credit Administration's deci-
sion, if adverse to the director, officer, or other person. The Farm 
Credit Administration may prescribe such rules as may be necessary 
to effectuate the purposes of this subsection. 
"SEC. 5.30. HEARINGS AND JUDICIAL REVIEW.—(a) Any hearing 
12 use 2266. 
provided for in this part (other than the hearing provided for in 
section 5.29) shall be held in the Federal judicial district or in the Ante, p. 1698. 
territory in which the home office of the institution is located unless 
the party afforded the hearing consents to another place, and shall 
be conducted in accordance with the provisions of chapter 5 of title 5 
of the United States Code. Such hearing shall be private, unless the 5 use 500 et seq. 
Farm Credit Administration, in its discretion, after fully considering 
the views of the party afforded the hearing, determines that a public 
hearing is necessary to protect the public interest. After such hear-
ing, and within ninety days after the Farm Credit Administration 
has notified the parties that the case has been submitted to it for 
final decision, it shall render its decision (which shall include find-
ings of fact upon which its decision is predicated) and shall issue and 
serve upon each party to the proceeding an order or orders consist-
ent with the provisions of this part. Judicial review of any such 
order shall be exclusively as provided in this subsection (g). Unless a 
petition for review is timely filed in a court of appeals of the United 
States, as hereinafter provided in subsection (b), and thereafter until 
the record in the proceeding has been filed as so provided, the Farm 
Credit Administration may at any time, upon such notice and in 
such manner as it shall deem proper, modify, terminate, or set aside 
any such order. Upon such filing of the record, the Farm Credit 
Administration may modify, terminate, or set aside any such order 
with permission of the court. 
"Ot)) Any party to the proceeding, or any person required by an 
order issued under this part to cease and desist from any of the 
violations or practices stated therein, may obtain a review of any 
order served under subsection (a) (other than an order issued with 
the consent of the System institution or the director or officer or 
other person concerned, or an order issued under section 5.29) by the 
filing in the court of appeals of the United States for the circuit in 
which the home office of the institution is located, or in the United 
States Court of Appeals for the District of Columbia Circuit, within 
thirty days after the date of service of such order, a written petition 
praying that the order of the Farm Credit Administration be modi-
fied, terminated, or set aside. A copy of such petition shall be Record, 
forthwith transmitted by the clerk of the court to the Farm Credit 
Administration, and thereupon the Farm Credit Administration 
shall file in the court the record in the proceeding, as provided in 
section 2112 of title 28 of the United States Code. Upon the filing of 
such petition, such court shall have jurisdiction, which upon the 
99 STAT. 1700 
PUBLIC LAW 99-205—DEC. 23, 1985 
Prohibition. 
12 use 2267. 
filing of the record shall except as provided in the last sentence of 
subsection (a) be exclusive, to affirm, modify, terminate, or set aside, 
in whole or in part, the order of the Farm Credit Administration. 
Review of such proceedings shall be had as provided in chapter 7 of 
5 use 701 et seq. title 5 of the United States Code. The judgment and decree of the 
court shall be final, except that the same shall be subject to review 
by the Supreme Court upon certiorari, as provided in section 1254 of 
title 28 of the United States Code. 
"(c) The commencement of proceedings for judicial review under 
subsection (b) shall not, unless specifically ordered by the court, 
operate as a stay of any order issued by the Farm Credit Adminis-
tration. 
"SEC. 5.31. JURISDICTION AND ENFORCEMENT.—The Farm Credit 
Administration may in its discretion apply to the United States 
district court, or the United States court of any territory, within the 
jurisdiction of which the home office of the institution is located, for 
the enforcement of any effective and outstanding notice or order 
issued under this part, and such courts shall have jurisdiction and 
power to order and require compliance herewith; but except as 
otherwise provided in this part no court shall have jurisdiction to 
affect by injunction or otherwise the issuance or enforcement of any 
notice or order under this part, or to review, modify, suspend, 
terminate, or set aside any such notice or order. 
"SEC. 5.32. PENALTY.—(a) Any institution in the System that 
violates or any officer, director, employee, agent, or other person 
participating in the conduct of the affairs of such an institution who 
violates the terms of any order that has become final and was issued 
under section 5.25 or 5.26 of this Act, shall forfeit and pay a civil 
penalty of not more than $1,000 per day for each day during which 
such violation continues, but the Farm Credit Administration may, 
in its discretion, compromise, modify, or remit any civil money 
penalty that is subject to imposition or has been imposed under such 
authority. The penalty may be assessed and collected by the Farm 
Credit Administration by written notice. 
"(b) In determining the amount of the penalty, the Farm Credit 
Administration shall take into account the appropriateness of the 
penalty with respect to the size of financial resources and good faith 
of the System institution or person charged, the gravity of the 
violation, the history of previous violations, and such other matters 
as justice may require. 
"(c) The System institution or person assessed shall be afforded an 
opportunity for a hearing by the Farm Credit Administration, upon 
request made within ten days after issuance of the notice of assess-
ment. In such hearing all issues shall be determined on the record 
pursuant to section 554 of title 5 of the United States Code. The 
Farm Credit Administration determination shall be made by final 
order which may be reviewed only as provided in subsection (d). If 
no hearing is requested as herein provided, the assessment shall 
constitute a final and unappealable order. 
"(d) Any System institution or person against whom an order 
imposing a civil money penalty has been entered after a Farm 
Credit Administration hearing under this section may obtain review 
by the United States court of appeals for the circuit in which the 
home office of the System institution is located, or the United States 
Court of Appeals for the District of Columbia Circuit, by filing a 
notice of appeal in such court within twenty days after the service of 
such order, and simultaneously sending a copy of such notice by 
Prohibition. 
12 use 2268. 
Ante, pp. 1694, 
1695. 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1701 
registered or certified mail to the Farm Credit Administration. The 
Farm Credit Administration shall promptly certify and file in such 
Court the record upon which the penalty was imposed, as provided 
in section 2112 of title 28 of the United States Code. The findings of 
the Farm Credit Administration shall be set aside if found to be 
unsupported by substantial evidence as provided by section 706(2)(E) 
of title 5 of the United States Code. 
"(e) If any System institution or person fails to pay an assessment 
[ 
after it has become a final and unappealable order, or after the 
court of appeals has entered final judgment in favor of the Farm 
Credit Administration, the Farm Credit Administration shall refer 
the matter to the Attorney General, who shall recover the amount 
assessed by action in the appropriate United States district court. In 
such action, the validity and appropriateness of the final order 
imposing the penalty shall not be subject to review. 
"(f) The Farm Credit Administration shall promulgate regulations Regulations, 
establishing procedures necessary to implement sections 5.31 and 
5.32. 
Ante, p. 1700. 
"(g) All penalties collected under authority of this section shall be 
covered into the Treasury of the United States. 
"SEC. 
5.33. FURTHER PENALTIES.—Any director or officer, or 12 use 2269. 
former director or officer of a System institution, or any other 
person, against whom there is outstanding and effective any notice 
or order (which is an order which has become final) served upon 
such director, officer, or other person undei* section 5.28 or 5.29 of 
this Act, and who (1) participates in any manner in the conduct of Ante, pp. 1696, 
the affairs of the institution involved, or directly or indirectly 1698. 
solicits or procures, or transfers or attempts to transfer, or votes or 
attempts to vote, any proxies, consents, or authorizations in respect 
of any voting rights in such institution, or (2) without the prior 
written approval of the Farm Credit Administration, votes for a 
director, serves or acts as a director, officer, or employee of any 
System institution, shall upon conviction be fined not more than 
$5,000 or imprisoned for not more than one year, or both. 
"SEC. 5.34. REPLACEMENT OF SUSPENDED OR REMOVED DIRECTORS.— 12 use 2270. 
If at any time, because of the suspension or removal of one or more 
directors pursuant to section 5.28 or 5.29 of this Act, there shall be 
on the board of directors of a System institution less than a quorum 
of directors not so suspended, the Chairman shall appoint persons to 
serve temporarily as directors in their place and stead so as to 
establish a quorum until such time as those who have been removed 
are reinstated or their respective successors are duly elected and 
take office. 
"SEC. 5.35. DEFINITIONS.—As used in this part— 
12 use 2271. 
"(1) the terms 'cease and desist order that has become final' 
and 'order which has become final' mean a cease and desist 
order, or an order, issued by the Farm Credit Administration 
with the consent of the System institution or the director or 
officer or other person concerned, or with respect to which no 
petition for review of the action of the Farm Credit Administra-
tion has been filed and perfected in a court of appeals as 
specified in section 5.300t)) of this Act, or with respect to which Ante, p. 1699. 
the action of the court in which such petition is so filed is not 
subject to further review by the Supreme Court of the United 
States in proceedings provided for in section 5.30(b) of this Act, 
or an order issued under section 5.29 of this Act; 
99 STAT. 1702 
PUBLIC LAW 99-205—DEC. 23, 1985 
"(2) the term 'violation' includes without limitation any 
action (alone or with another or others) for or toward causing, 
bringing about, participating in, counseling, or aiding or abet-
ting a violation; 
"(3) the terms 'institution in the System', 'System institution', 
and 'institution' mean all institutions enumerated in section 1.2 
Post, p. 1703. 
of this Act, any service organization chartered under part D of 
12 use 2211. 
title IV of this Act, and the Capital Corporation; and 
"(4) the term 'unsafe or unsound practice' shall have the 
meaning given to it by the Farm Credit Administration by 
regulations, rule, or order. 
12 use 2272. 
"SEC. 5.36. NOTICE OF SERVICE.—Any service required or au-
thorized to be made by the Farm Credit Administration under this 
section may be made by registered mail, or in such other manner 
reasonably calculated to give actual notice as the Farm Credit 
Administration may by regulation or otherwise provide. Any such 
service by mail is complete upon mailing. Copies of any notice or 
order served by the Farm Credit Administration on any association 
or any director or officer thereof or other person participating in the 
conduct of its affairs, under the provisions of this part, shall also be 
sent to the supervisory bank. 
erimes and 
"SEC. 5.37. ANCILLARY PROVISIONS; SuBPENA POWER; ETC.—In the 
™^^demeanors. 
course of or in connection with any proceeding under this part or 
12 use 2273. 
g^jy examination or investigation under this Act, the Farm Credit 
Administration or any designated representative thereof, including 
any person designated to conduct any hearing under this part, shall 
have the power to administer oaths and affirmations, to take or 
cause to be taken depositions, and to issue, revoke, quash, or modify 
subpenas and subpenas duces tecum; and the Farm Credit Adminis-
tration is empowered to make rules and regulations with respect to 
any such proceedings, claims, examinations, or investigations. The 
attendance of witnesses and the production of documents provided 
for in this section may be required from any place in any State or in 
any territory or other place subject to the jurisdiction of the United 
States at any designated place where such proceeding is being 
conducted. The Farm Credit Administration or any party to proceed-
ings under this part may apply to the United States District Court 
for the District of Columbia, or the United States district court for 
the judicial district or the United States court in any territory in 
which such proceeding is being conducted, or where the witness 
resides or carries on business, for enforcement of any subpena or 
subpena duces tecum issued pursuant to this part, and such courts 
shall have jurisdiction and power to order and require compliance 
therewith. Witnesses subpenaed under this section shall be paid the 
same fees and mileage that are paid witnesses in the district courts 
of the United States. Any court having jurisdiction of any proceed-
ing instituted under this part by a System institution or a director 
or officer thereof, may aJlow to any such party such reasonable 
expenses and attorneys' fees as it deems just and proper; and such 
expenses and fees shall be paid by the System institution or from its 
assets. Any person who willfully shall fail or refuse to attend or 
testify or to answer any lawful inquiry or to produce books, papers, 
correspondence, memoranda, contracts, agreements, or 
other 
records, if in such person's power so to do, in obedience to the 
subpena of the Farm Credit Administration, shall be guilty of a 
misdemeanor and, upon conviction, shall be subject to a fine of not 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1703 
more than $1,000 or to imprisonment for a term of not more than 
one year or both.**. 
TECHNICAL AND CONFORMING AMENDMENTS 
SEC. 205. (aXD Title V of the Farm Credit Act of 1971 is further 
amended by inserting after section 5.37, as added by section 204, the 
Ante, p. 1702. 
following heading: 
"PART D—MISCELLANEOUS". 
(2) Sections 5.26, 5.27, 5.28, 5.29, and 5.30 of the Farm Credit Act of 
5 USC 5314, 
1971 are redesignated as sections 5.40, 5.41, 5.42, 5.43, and 5.44, 
?^\^/c.^or^o «««, 
resi)ectively. 
' 
(b) Section 2.15 of the Farm Credit Act of 1971 is amended by— 
12 use 2096. 
(1) in the first sentence of subsection (a)— 
(A) striking out "rules and regulations" and inserting in 
lieu thereof "standards"; and 
; ; 
(B) striking out "and approved by the Farm Credit 
Administration"; 
(2) in the first sentence of subsection (b)— 
(A) striking out "regulations" and inserting in lieu 
thereof "standards"; and 
(B) striking out "with the approval of the Farm Credit 
Administration as provided in" and inserting in lieu thereof 
"subject to the provisions of"; and 
(3) in the last sentence of subsection O
t
>
)
— 
(A) striking out "regulations" and inserting in lieu 
thereof "standards"; and 
(B) striking out "or of Farm Credit Administration". 
(c) Section 1.2 of the Farm Credit Act of 1971 is amended by 
12 use 2002. 
striking out "supervision of" and inserting "regulation by" in lieu 
thereof 
(d) Title I of the Farm Credit Act of 1971 is amended b y -
C
D in section 1.4— 
12 use 2012. 
(A) striking out "supervision" in the matter preceding 
paragraph (1) and inserting in lieu thereof "regulation'; 
^. )< 
(B) in paragraph (17), striking out "vested in or delegated 
to the bank"; 
(C) striking out paragraph (19); and 
(D) redesignating paragraphs (20), (21), (22), and (23) as 
paragraphs (19), (20), (21), and (22), respectively; 
(2) in section 1.5(d), striking out "to the Governor of the Farm 
12 use 2013. 
Credit Administration,"; 
(3) in section 1.5(e)— 
(A) striking out the first sentence; and 
^ 
j 
(B) striking out "other" in the second sentence; 
(4) in section 1.13— 
12 use 2031. 
(A) striking out "GOVERNOR" in the section heading and 
inserting in lieu thereof "FARM CREDIT ADMINISTRATION"; 
(B) striking out "the Governor of" in the seventh sen-
tence; 
(C) striking out "Governor" each place that word appears 
in the eighth, ninth, and tenth sentences and inserting in 
lieu thereof "Farm Credit Administration"; and 
(D) striking out "him" and "he" in the tenth sentence 
and inserting in lieu thereof, in both instances, "the Farm 
Credit Administration"; 
99 STAT. 1704 
PUBLIC LAW 99-205—DEC. 23, 1985 
1
2 use 2033. 
(5) in section 1.15— 
(A) inserting "the regulation" before "of the Farm Credit 
Administration" in the matter preceding paragraph (1); and 
(B) striking out "or delegated to" in paragraph (12); 
1
2 use 2051. 
(6) in section 1.17(b)— 
(A) striking out paragraph (2); and 
(B) redesignating paragraph (3) as paragraph (2); and 
1
2 use 2054. 
(7) in section 1.20, striking out "the Governor of the Farm 
Credit Administration", 
(e) Title II of the Farm Credit Act of 1971 is amended by— 
1
2 use 2072. 
(1) in section 2.1— 
(A) striking out "supervision of " in the matter preceding 
paragraph (1) and inserting in lieu thereof "regulation by"; 
(B) striking out "vested in or delegated to the intermedi-
ate credit bank" in paragraph (14); and 
(C) striking out paragraph (21); 
1
2 use 2073. 
(2) in the first sentence of section 2.2(d), striking out "the 
Governor of the Farm Credit Administration, and may"; 
(3) in section 2.2(f)— 
(A) striking out "Dividends" and all that follows through 
"noncumulative" and inserting "Noncumulative" in lieu 
thereof in the first sentence; and 
(B) striking out ", when the Governor of the Farm Credit 
Administration holds no stock in the bank," in the second 
sentence; 
(4) in section 2.2(g), striking out "After all stock held" and all 
that follows through "other stock" and inserting in lieu thereof 
"The bank may retire stock"; 
(5) in section 2.2(h), striking out "Governor" and inserting in 
lieu thereof "Farm Credit Administration"; 
1
2 use 2074. 
(6) in the first sentence of section 2.3(c)— 
(A) striking out "(aXl) and (2)" and inserting in lieu 
thereof "(aX2)"; and 
(B) striking out "(in the case of financing institutions 
under subsection (aX2) of this section)"; 
1
2 use 2077. 
(7) striking out subsections (a) and (b) of section 2.6; 
(8) in section 2.6(c), by striking out "If, at" and all that follows 
through "the net earnings of such bank" and inserting in lieu 
thereof "At the end of each fiscal year, the net earnings of each 
Federal intermediate credit bank"; 
12 use 2078. 
(9) in the first sentence of section 2.7, striking out ", of all the 
stock held bv the Grovemor of the Farm Credit Administration 
at par; third ; 
12 use 2091. 
(10) in section 2.10— 
(A) striking out "the Governor of in the sixth sentence; 
(B) striking out "Governor" in the seventh sentence and 
inserting in lieu thereof "Farm Credit Administration"; 
(C) striking out "Governor" in the eighth sentence and 
inserting in lieu thereof "Farm Credit Administration"; 
and 
(D) in the ninth sentence— 
(i) striking out "Governor" and inserting in lieu 
thereof "Farm Credit Administration"; and 
(ii) striking out "him" and "he" and inserting in lieu 
thereof in both places "Farm Credit Administration"; 
1
2 use 2093. 
(11) in section 2.12— 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1705 
(A) in the matter preceding paragraph (1), inserting 
"regulation by" before "the Farm Credit Administration ; 
and 
(B) striking out "or the Farm Credit Administration" in 
paragraph (19); 
(12) in section 2.13(c), striking out "the Governor of the Farm 
12 use 2094. 
Credit Administration and"; 
(13) in section 2.13(d)— 
(A) striking out "to the Governor and"; and 
(B) striking out ", except that all" and all that follows 
through "voting hereunder". 
(14) in section 2.13(j), striking out "the Governor or"; 
(15) in section 2.14(b), striking out ", except that when the 
12 use 2095. 
Governor" and all that follows through "Administration"; and 
(16) striking out the last two sentences of section 2.17. 
12 use 2098. 
(e) Title III of the Farm Credit Act of 1971 is amended by— 
(1) in section 3.1— 
12 use 2122. 
(A) in the matter preceding paragraph (1), striking out 
"supervision" and inserting in lieu thereof "regulation"; 
(B) in paragraph (13)(A), inserting "under regulations 
issued" after "authorized"; 
(C) striking out paragraph (16); and 
'—''' "^' 
(D) redesignating paragraphs (17), (18), and (19) as para-
graphs (16), (17), and (18), respectively; 
(2) in section 3.2(a), striking out "Governor with the advice 
12 use 2123. 
and consent of the Federal Farm Credit Board"; and inserting 
in lieu thereof "Farm Credit Administration"; 
(3) in section 3.3(d), inserting "under regulations issued by" 
12 use 2124. 
after "authorized"; 
(4) in section 3.3(e), striking out ", except for stock held by the 
Governor,". 
(5) in section 3.4, striking out "the Governor of; 
12 use 2125. 
(6) in section 3.5— 
12 use 2126. 
(A) striking out the first sentence and all that follows 
through "nonvoting" in the second sentence and inserting 
"Nonvoting" in lieu thereof; and 
(B) in the fourth sentence, striking out "When the 
requirements of section 4.0(b) have been met, voting" Ante, p. 1678. 
inserting in lieu thereof "Voting"; 
(7) striking out subsection (a) of section 3.11; 
12 use 2132. 
(8) in section 3.11— 
(A) in subsection (b), striking out "Whenever" and all 
that follows through "Administration, the net" and insert-
ing in lieu thereof "At the end of each fiscal year, the net"; 
and 
(BXi) in subsection (c), striking out "subsection (a) or (b)" 
and inserting "subsection (b)" in lieu thereof; and 
(ii) in subsection (d), striking out "subsection (a) or (b)" 
and inserting "subsection (b)" in lieu thereof; 
(9) in section 3.12— 
12 use 2133. 
(A) striking out ", any stock held by the Governor of the 
Farm Credit Administration at par"; and 
(B) striking out "stock held by the Governor of the Farm 
Credit Administration,"; and 
(10) striking out the last two sentences of section 3.13. 
12 use 2134. 
(f) Title IV of the Farm Credit Act of 1971 is further amended by— 
(1) in section 4.2— 
12 use 2153. 
99 STAT. 1706 
PUBLIC LAW 99-205—DEC. 23, 1985 
(A) in the matter preceding subsection (a), striking out 
"supervision o f and inserting in lieu thereof "regulation 
by"; 
(B) in subsection (b)— 
(i) striking out "4.3(b)" and inserting in lieu thereof 
"4.3(c)"; and 
(ii) striking out "Governor" and inserting in lieu 
thereof "Farm Credit Administration"; 
(C) in subsection (c), striking out "Governor" and insert-
ing in lieu thereof "Farm Credit Administration"; and 
(D) in subsection (d)— 
(i) striking out "Governor" in the first sentence and 
inserting in lieu thereof "Farm Credit Administra-
tion"; and 
(ii) in the second sentence, striking out "Governor" 
each place it appears and inserting in lieu thereof 
"Farm Credit Administration"; 
Ante, p. 1679. 
(2) in section 4.4(b)— 
(A) striking out "Governor to execute" in the first sen-
tence and inserting in lieu thereof "execution of; and 
(B) striking out "by the Governor" in the second sentence; 
12 use 2156. 
(3) in section 4.5, striking out "Governor" in the fourth 
sentence 
and 
inserting 
in 
lieu 
thereof 
"Farm 
Credit 
Administration"; 
12 use 2182. 
(4) in the second sentence of section 4.11, striking out 
"Governor with the advice and consent of the Federal Farm 
Credit Board" and inserting in lieu thereof "Farm Credit 
Administration''; 
12 use 2183. 
(5) in section 4.12(a), striking out "Federal Farm Credit 
Board" in the third sentence and inserting in lieu thereof 
"Farm Credit Administration"; 
12 use 2205. 
(6) in the first sentence of section 4.17, inserting ", as provided 
in section 5.17(a)(5) of this Act," after "with the approval of; 
12 use 2206. 
(7) in section 4.18, inserting "under regulations issued" after 
"authorized"; 
12 use 2211. 
(8) in section 4.25— 
(A) striking out "the Governor o f in the second sentence; 
(B) striking out "Governor" in the third sentence and 
inserting in lieu thereof "Farm Credit Administration"; 
and 
(C) striking out "Governor" in the fourth sentence and 
inserting in lieu thereof "Farm Credit Administration"; 
12 use 2212. 
(9) in section 4.26— 
(A) striking out "GOVERNOR" in the section heading and 
inserting in lieu thereof "FARM CREDIT ADMINISTRATION"; 
(B) striking out "Governor" wherever that word appears 
in the text and inserting in lieu thereof "Farm Credit 
Administration"; 
(C) striking out "he" in the first sentence and inserting in 
lieu thereof "the Farm Credit Administration"; and 
12 use 2213. 
(10) in section 4.27, striking out "supervision" and inserting in 
lieu thereof "regulation", 
(g) Title V of the Farm Credit Act of 1971 is further amended by— 
12 use 2221. 
(1) in section 5.0— 
(A) striking out "Federal Farm Credit Board" in the first 
and second sentences and inserting in lieu thereof "Farm 
Credit Administration"; and 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1707 
(B) striking out "5.18(2)" in the third sentence and insert-
ing in lieu thereof "5.17(2)"; 
(2) in section 5.1(b), striking out "Federal Farm Credit Board" 
12 USC 2222. 
and inserting in lieu thereof "Farm Credit Administration 
Board"; 
(3) in section 5.2(a), striking out "Governor with the advice 
12 USC 2223. 
and consent of the Federal Farm Credit Board" and inserting in 
lieu thereof "Farm Credit Administration Board"; 
(4) in section 5.2(d), striking out "sections 5.1 and 5.2" and 
inserting in lieu thereof "section 5.1 and this section"; 
(5) in section 5.6(a), striking out "supervision o f in paragraph 
12 USC 2227. 
(5) and inserting in lieu thereof "regulation by"; and 
(6) in section 5.15(b), as so redesignated bv section 201(5)— 
Ante, p. 1690. 
(A) striking out "said Administration both places that 
12 USC 2250. 
phrase appears in the first sentence and inserting in lieu 
thereof "the Farm Credit Administration"; and 
(B) striking out "the Administration" and "such Adminis-
tration" in the second sentence and inserting in lieu thereof 
; r 
"the Farm Credit Administration". 
TITLE m—PROTECTION FOR FARMERS AND OTHER FARM 
CREDIT SYSTEM BORROWERS 
DISCLOSURE AND ACCESS TO INFORMATION 
SEC. 301. (a) Section 4.13 of the Farm Credit Act of 1971 is 
12 use 2201. 
redesignated as section 4.13B. 
(b) The Farm Credit Act of 1971 is amended by inserting before 
12 USC 2001 
section 4.13B, as so redesignated by subsection (a), the following: 
note. 
"SEC. 4.13. DiscLOSURE.-;-(a) In accordance with r^ulations of the 
12 use 2199. 
Farm Credit Administration, System institutions shall provide to 
their borrowers, for all loans that are not subject to the Truth in 
Lending Act (15 US.C. 1601 et seq.), meaningful and timely disclo-
sure of the following: 
"(1) the current rate of interest on the loan; 
"(2) in the case of an adjustable or variable rate loan, the 
amount and frequency by which the interest rate can be in-
creased during the term of the loan or, if there are no such 
limitations, a statement to that effect, and the factors (includ-
ing, but not limited to, the cost of funds, operating expenses, 
and provision for loan losses) that will be taken into account by 
the lending institution in determining adjustments to the in-
terest rate; 
"(3) the effect, as shown by a representative example or 
examples, of the required purchase of stock or participation 
certificates in the institution on the effective rate of interest; 
and 
"(4) any change in the interest rate applicable to the bor-
rower's loan. 
"(b) In accordance with r^ulations of the Farm Credit Adminis-
tration, System institutions shall develop a policy governing forbear-
ance. Each System institution shall provide borrowers with a copy of 
the institution's policy r^arding forbearance at such time or times 
as the Farm Credit Administration shall prescribe in such 
regulations. 
"SEC. 4.13A. ACCESS TO DOCUMENTS AND INFORMATION.—In accord- 
12 use 2200 
ance with r^ulations of the Farm Credit Administration, System 
ftii 
99 STAT. 1708 
PUBLIC LAW 99-205—DEC. 23, 1985 
institutions shall provide their borrowers, at the time of execution of 
loans, copies of all documents signed by the borrower and at any 
time thereafter, on a borrower's request, copies of all documents 
signed or delivered by the borrower and at any time, on request, a 
copy of the institution's articles of incorporation or charter and 
bylaws." 
NOTICE ON APPLICATIONS 
Ante, p. 1707. 
SEC. 302. Section 4.13B of the Farm Credit Act of 1971, as so 
redesignated by section 301(a), is amended by (1) inserting "written" 
before "notice" and (2) inserting, before the period at the end 
thereof, the following: ", and of the applicant's right to review under 
Infra. 
section 4.14" 
RECONSIDERATION 
SEC. 303. Section 4.14 of the Farm Credit Act of 1971 is amended to 
read as follows: 
12 use 2202. 
"SEC. 4.14. RECONSIDERATION OF ACTION ON LOAN APPLICATION.— 
The board of directors of each Farm Credit System institution shall 
establish one or more credit review committee(s), which shall in-
clude farmer board respresentation. Any loan applicant who has 
Ante, p. 1707. 
received written notice, under section 4.13, of a decision to deny or 
reduce the loan applied for, if the applicant so requests in writing 
within thirty days after receiving such notice, may obtain a review 
of such decision in person before the credit review committee. When 
a loan applicant requests review of an adverse credit decision, a 
majority of persons serving on such reviews committee must be 
persons who were not involved in making the adverse decision. 
Promptly after any such review, the applicant shall be notified in 
writing of the credit review committee's decision and the reasons 
therefor." 
NOTICE WITH RESPECT TO STOCKHOLDERS ON LOAN DEFAULT 
SEC. 304. (a) The sixth sentence of section 1.16(a) of the Farm 
12 use 2034. 
Credit Act of 1971 is amended by inserting, before the period at the 
end thereof, the following: "and on 
written 
notice to 
the 
stockholder" 
12 use 2094. 
(b) Section 2.13(k) of the Farm Credit Act of 1971 is amended by 
inserting, before the period at the end thereof, the following: ", on 
written notice to the borrower and approval by the bank of such 
retirement" 
MINIMIZING THE ADVERSE EFFECT ON BORROWERS OF SYSTEM 
INSTITUTION INSOLVENCY 
Regulations. 
SEC. 305. (a) Section 4.12(a) of the Farm Credit Act of 1971 is 
Ante, p. 1679. 
amended by inserting, immediately after the first sentence, the 
following: "In the case of a voluntary liquidation of an association, 
such regulations, among other things, shall direct the supervising 
bank to institute such measures as it deems appropriate to minimize 
the adverse effect of the liquidation on those borrowers whose loans 
are purchased by or otherwise transferred to another System 
institution." 
(b) Section 4.12 of the Farm Credit Act of 1971 is amended by 
inserting after the subsection (b) added by section 102, the following: 
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1709 
"(c) In the case of an involuntary liquidation of an association, 
regulations of the Farm Credit Administration, among other things, 
shall direct the supervising bank to institute such measures as it 
deems appropriate to minimize the adverse effect of the liquidation 
on those borrowers whose loans are purchased by or otherwise 
transferred to another S3rstem institution.". 
MINERAL RIGHTS UMITATION 
SEC. 306. The Farm Credit Act of 1971 is amended by adding at the 
end of title IV the following: 
"PART F—MISCELLANEOUS 
"SEC. 4.35. LIMIFATION ON SEPARATE SALE.—If real property is 
acquired by any institution of the Farm Credit System through 
foreclosure, no institution of the Farm Credit System shall sell the 
surface rights to that real property to any person unless the institu-
tion also sells all mineral rights to that real property to that person. 
"SEC. 4.36. LIMITATION ON SALE OF TRACTS OF REAL ESTATE.—NO 
institution of the Farm Credit System shall sell any real property 
that previously served as security for a loan in a tract larger than a 
normal family size farm in the vicinity of the property for less than 
the amount it can receive from the Capital Corporation.". 
LOAN REVIEW 
SEC. 307. Each local lending institution of the Farm Credit System 
established under the Farm Credit Act of 1971 (12 U.S.C. 2001 et 
seq.) shall— 
(1) review each loan that has been placed in non-accrual 
status by such institution to determine whether such loan may 
be restructured based on changes in the circumstances of such 
institution as the result of this Act and the amendments made 
by this Act; and 
(2) notify in writing the borrower of each such loan of the 
provisions of this section. 
TITLE IV—IMPLEMENTATION PROCEDURES 
Regulations. 
Real property. 
Prohibitions. 
12 use 2219. 
12 u s e 2219a. 
12 use 2001 
note. 
EFFECTIVE DATE 
SEC. 401. The provisions of titles I, II, III, and VI of this Act shall 
become efTective thirty days after enactment. 
INTERIM IMPLEMENTATION 
Ante, pp. 1678, 
1688, 1707; 
post, p. 1711. 
12 use 2001 
note. 
12 use 2241 
note. 
SEC. 402. (a) Until the Chairman of the Farm Credit Administra-
tion Board provided for under the amendment made by section 
201(1) of this Act is appointed by the President and confirmed by the Ante, p. 1688 
Senate, the Governor of the Farm Credit Administration, under the 
Farm Credit Act of 1971 as in effect on the day before the date of 12 use 2001 
enactment of this Act, shall perform the functions of the Chairman ^ote. 
prescribed for the Chairman by this Act. 
(bXD Except as provided in paragraph (2), until at least two 
members of the Farm Credit Administration Board provided under 
the amendment made by section 201(1) of this Act are appointed by 
the President and confirmed by the Senate, the Governor of the 
99 STAT. 1710 
PUBLIC LAW 99-205—DEC. 23, 1985 
12 u s e 2001 
note. 
Regulations. 
Farm Credit Administration, under the Farm Credit Act of 1971 as 
in effect on the day before the date of enactment of this Act, shall 
perform the functions of the Farm Credit Administration Board 
prescribed for such Board by this Act. 
(2) When the Chairman of such Board is so appointed and con-
firmed, the Chairman shall assume any responsibilities and powers 
of the Board being exercised by the Governor under this subsection. 
(c) In carrying out the duties and functions specified in subsec-
tions (a) and (b), the Governor of the Farm Credit Administration 
shall serve at the pleasure of the President. 
(d) All regulations of the Farm Credit Administration or the 
institutions of the System, and all charters, bylaws, resolutions, 
stock classifications, and pwlicy directives issued or approved by the 
Farm Credit Administration, and all elections held and appoint-
ments made under the Farm Credit Act of 1971, before the date of 
enactment of this Act, shall be continuing and remain valid until 
superseded, modified, or replaced under the authority of this Act. 
Ante, p. 1709. 
President of U.S. 
12 u s e 2001 
note. 
study. 
Report. 
SENSE OF CONGRESS 
SEC. 403. It is the sense of Congress that the pressing needs of the 
Farm Credit System and the United States agricultural industry 
require the implementation of this Act as soon as practicable, and 
that the President should ensure that the members of the Farm 
Credit Administration Board constituted under section 201(1) are 
appointed not later thsm thirty days after enactment of this Act. 
TITLE V—NATIONAL COMMISSION ON AGRICULTURAL 
FINANCE 
SEC. 501. (a) The President shall appoint a National Commission 
on Agricultural Finance. Such Commission shall be comprised of 15 
members, of whom 7 shall be appointed by the President and 4 each 
by the Speaker of the House of Representatives and the President 
pro tempore of the Senate. The Commission shall consist of rep-
resentatives of the financial community, the agricultural sector, and 
government. 
(b) The National Commission on Agricultural Finance shall con-
duct a study of methods to ensure the availability of adequate credit 
to agricultural producers and agribusiness, taking into account the 
long-term financing needs of the agricultural economy; the roles of 
the commercial bsmks, the Farm Credit System, and the Farmers 
Home Administration in meeting those financial needs. 
(c) In conducting such study, the National Commission on Agricul-
tural Finance shall— 
(1) evaluate the financial circumstances relative to both lend-
ers and borrowers of farm credit; 
(2) evaluate the structure, performance, and conduct of pri-
vate lenders—commercial bankers and the Farm Credit 
Sjrstem—and public lenders; 
(3) explore the need for long-term assistance in stabilizing the 
value of agricultural assets; and 
(4) evaluate the effect on suppliers, producers, processors, and 
local communities when financial institutions fail. 
(d) Not later than one year after the date of enactment of this Act, 
the Commission shall submit a report containing the results of the 
study required by this section, together with conunents and rec-
PUBLIC LAW 99-205—DEC. 23, 1985 
99 STAT. 1711 
ommendations for legislation providing for a sound, reasonable, and 
primarily self-supporting credit program for farmers and ranchers 
as the Commission considers appropriate, to Congress. 
(e) The Commission shall be comprised of volunteers and no 
Federal funds shall be expended by the Commission. 
TITLE VI—MISCELLANEOUS AMENDMENTS 
SEC. 601. Section 1.5 of the Farm Credit Act of 1971 is amended by 1
2 use 2013. 
adding at the end the following: 
"(h) Nothing in this section limits the power of the Farm Credit 
Administration to provide general direction to Federal land banks 
with regard to the payment of dividends and patronage refunds.". 
SEC. 602. Subsection (a) of section 1.17 of the Farm Credit Act of 
1971 is amended to read as follows: 
1
2 use 2051. 
"(a) Federal land banks shall be required to carry a reserve 
account. Such reserve account shall be kept in accordance with 
standards set by the Farm Credit Administration.". 
SEC. 603. Section 1.18 of the Farm Credit Act of 1971 is amended 
1
2 use 2052. 
b y -
(1) amending subsection (a) to read as follows: 
"(a) Federal land bank associations shall be required to carry a 
reserve account. Such reserve account shall be kept in accordance 
with standards set by the Farm Credit Administration."; and 
(2) adding at the end of subsection (b) the following: "Nothing 
in this subsection limits the power of the Farm Credit Adminis-
tration to provide general direction to Federal land bank 
associations with regard to the payment of dividends and 
patronage refunds.". 
SEC. 604. Subsection (f) of section 2.2 of the Farm Credit Act of 
1971 is amended by adding at the end thereof the following: "Fed- 
Ante, p. 1704. 
eral intermediate credit banks shall be subject to the general direc- 
1
2 use 2073. 
tion of the Farm Credit Administration with regard to the payment 
dividends.". 
SEC. 605. Section 2.14 of the Farm Credit Act of 1971 is amended 
Ante, p. 1705. 
by— 
12 use 2095. 
(1) striking out the parenthetical matter in subsection (a) and 
inserting in lieu thereof the following: "(including provision for 
valuation reserves against loan assets in an amount equal to 
one-half of 1 percent of the loans outstanding at the end of the 
fiscal year to the extent that such earnings in such year in 
excess of other operating expenses permit, or in such greater 
amounts as are deemed necessary under generally accepted 
accounting principles, until such reserves equal or exceed 3 ¥2 
percent of the loans outstanding at the end of the fiscal year, 
beyond which SV2 percent further additions to such reserves 
may be made, if deemed necessary under generally accepted 
accounting principles)"; 
(2)(A) in the first sentence of subsection (b), striking out "so 
provide," and inserting in lieu thereof "so provide and subject to 
the general directions of the Farm Credit Administration, ; and 
(B) in the second sentence of subsection Ot)), striking out 
"Any" and inserting in lieu thereof "In accordance with the 
foregoing, any". 
SEC. 606. Section 3.4 of the Farm Credit Act of 1971 is amended by Ante, p. 1705. 
adding before the period at the end thereof the following: ", subject 
1
2 use 2125. 
to the general direction of the Farm Credit Administration". 
99 STAT. 1712 
PUBLIC LAW 99-205—DEC. 23, 1985 
SEC. 607. Section 5.2 of the Farm Credit Act of 1971 (12 U.S.C. 
Ante, p. 1707. 
2223) Is amended— 
(1) by striking out"; APPOINTMENT" in the caption; 
(2) in subsection (a)— 
(A) by designating the first and second sentences as 
paragraphs (1) and (2), respectively; and 
(B) by amending paragraph (2) (as so designated) to read 
as follows: 
"(2XA) The seventh member shall be elected by the borrowers 
at large in a district. 
"(B) For purposes of this section, the term 'borrowers at large 
in a district* means— 
"(i) a voting shareholder of a Federal land bank associa-
tion and a direct borrower, and a borrower through an 
agency, from a Federal land bank; 
"(ii) a voting shareholder of a production credit associa-
tion; and 
"(iii) a voting shareholder or subscriber to the guaranty 
fund of a bank for cooperatives."; 
(3) in the second sentence of subsection (b)— 
(A) by striking out "and" before "in the case"; and 
(B) by inserting before the period at the end thereof the 
following: "; and in the case of an election by the borrowers 
at large, such notice shall be sent to all borrowers at large 
in the district"; and 
(4) by inserting after the fifth sentence of subsection (c) the 
following new sentence: "Each borrower at large shall be 
entitled to cast one vote.". 
Approved December 23, 1985. 
LEGISLATIVE HISTORY—S. 1884 (H.R. 3792): 
CONGRESSIONAL RECORD, Vol. 131 (1985): 
Dec. 3, considered and passed Senate. 
Dec. 10, considered and passed House, amended. 
Dec. 17, Senate concurred in House amendment with amendments. 
Dec. 18, House concurred in Senate amendments. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 21, No. 52 (1985): 
Dec. 23, Presidential statement.