Date: 1987-12-18
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. I rise in support of the conference report on H.R. 3030. Your committee on Banking. Finance and Urban Affairs was represented on the conference committee for the consideration of the establishment of the secondary market for agricultural loans. As the Members know. H.R. 3030 was sequentially referred to the Banking Committee as a result of amendments to the original text of H.R. 3030. Our committee worked with the Agriculture and Energy and Commerce Committees to develop an amendment offered by Chairman DE LA GARZA to substantially improve the legislation. I am pleased to report to the House that your conferees have upheld the House position. We have brought back a conference report which includes provisions which were of the greatest concern for our Members and which has broad based bipartisan support. Mr. Speaker. I want to briefly describe the major provisions of the conference report. The conference report retains the safeguards and underwriting standards of the House bill. The conference report requiresAn 80percent loantovalue ratio. Sufficient cash flow for the borrower to service the debt. That the borrower be actively engaged in farming. and That there be regulations to prevent speculative uses of these loans. The conference report maintains the concern. evident in the House bill. that a major purpose of this entity be to provide longterm fixedrate credit to small and family farms. Toaccomplish this we have placed a $2.5 million cap on any loan. required that no loan exceed 3.5 percent of the entire pool and that each pool must have at least 50 loans. The conference report requires that -the pools consist of loans which vary widely in terms of geographic location. size of the loan and commodity produced. We have also strengthened the provision in the Senates bill which requires that private sector poolers pay an annual fee to the secondary market based upon the risk represented in these pools. By requiring these risk based fees. a reserve of at least 10 percent and the restriction on dividend payments. I feel confident that sound management of the corporation will preclude drawing upon the $1.5 billion line of credit. Mr. Chairman. I want to commend the chairman and members of the other committees in this Congress. I realize how significant this bill is for them. The Banking Committee made every effort humanly possible to complete this conference report today. Without the cooperative effort between our committees. I fear this legislation would have been held over until next year. I wish to emphasize that nothing in this legislation isintended to authorize the preemptioi of Stategranted borrowers rights provisions. Such rights. be they granted pursuant to State statute or State constitutional provision. shall remain in effect regardless of a loans placement in secondary market pools. subject only to other provisions of State law. For example. where.State law permits waiver of these borrowers rights. a borrower may waive such rights and obtain those benefits perceived to accrue to loans without borrowers rights attached. that is lower interest rates. However. where State law prohibits the waiver of these rights. a borrower may not contractually waiver such rights and will therefore retain these borrower protections provided under State law. . The conferees understand that in some cases a facility or originator may require reasonable fees or discounts for loans secured by agricultural real estate in States with bor-