< Back to H.R. 6125 (102nd Congress, 1991–1992)

Text of the Farm Credit Banks and Associations Safety and Soundness Act of 1992

This bill was enacted after being signed by the President on October 28, 1992. The text of the bill below is as of Oct 28, 1992 (Passed Congress/Enrolled Bill).

Source: GPO

H.R.6125

One Hundred Second Congress of the United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Friday, the third day of January,

one thousand nine hundred and ninety-two

An Act

To enhance the financial safety and soundness of the banks and associations of

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,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Farm Credit Banks and Associations Safety and Soundness Act of 1992’.

    (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

      Sec. 2. References to the Farm Credit Act of 1971.

TITLE I--IMPROVEMENTS TO FARM CREDIT SYSTEM SAFETY AND SOUNDNESS

      Sec. 101. Definition of permanent capital.

      Sec. 102. Qualifications of Farm Credit Administration Board members.

TITLE II--FARM CREDIT SYSTEM INSURANCE CORPORATION

      Sec. 201. Farm Credit System Insurance Corporation.

      Sec. 202. Statutory successor to Assistance Board agreements.

      Sec. 203. Use of Farm Credit Administration personnel.

      Sec. 204. GAO reports on risk-based insurance premiums, access to association capital, supplemental premiums, and consolidation.

TITLE III--REPAYMENT OF FARM CREDIT SYSTEM DEBT OBLIGATIONS

      Sec. 301. Capital preservation.

      Sec. 302. Preferred stock.

      Sec. 303. Systemwide repayment obligation.

      Sec. 304. Repayment of Treasury-paid interest.

      Sec. 305. Transfer of obligations from associations to banks; other matters.

      Sec. 306. Defaults.

      Sec. 307. Authority of Financial Assistance Corporation.

      Sec. 308. Technical amendments.

TITLE IV--CLARIFICATION OF CERTAIN AUTHORITIES

      Sec. 401. Clarification of the status and powers of certain institutions of the Farm Credit System.

TITLE V--MISCELLANEOUS

      Sec. 501. Valuation reserves of production credit associations.

      Sec. 502. Risk management participation authority.

      Sec. 503. Equity voting for one director of each bank for cooperatives.

      Sec. 504. Technical amendment.

      Sec. 505. Expansion of water and sewer lending authority of banks for cooperatives.

      Sec. 506. Eligibility to borrow from a bank for cooperatives.

      Sec. 507. Non-voting representative on board of Funding Corporation.

      Sec. 508. Repeal of prohibition against guarantee of certain instruments of indebtedness.

      Sec. 509. Compensation of bank directors.

      Sec. 510. Clarification of treatment of Farm Credit Administration operating expenses.

      Sec. 511. Approval of competitive charters.

      Sec. 512. Examinations.

      Sec. 513. Authority to examine System institutions.

      Sec. 514. Financial disclosure and conflict of interest reporting by directors, officers, and employees of Farm Credit System institutions.

      Sec. 515. One-time EFAP assistance.

      Sec. 516. Technical corrections.

SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.

    Whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), except to the extent otherwise provided.

TITLE I--IMPROVEMENTS TO FARM CREDIT SYSTEM SAFETY AND SOUNDNESS

SEC. 101. DEFINITION OF PERMANENT CAPITAL.

    Paragraph (1) of section 4.3A(a) (12 U.S.C. 2154a(a)(1)) is amended to read as follows:

      ‘(1) PERMANENT CAPITAL- The term ‘permanent capital’ means--

        ‘(A) current year retained earnings;

        ‘(B) allocated and unallocated earnings (which, in the case of earnings allocated in any form by a System bank to any association or other recipient and retained by the bank, shall be considered, in whole or in part, permanent capital of the bank or of any such association or other recipient as provided under an agreement between the bank and each such association or other recipient);

        ‘(C) all surplus (less allowances for losses);

        ‘(D) stock issued by a System institution, except--

          ‘(i) stock that may be retired by the holder of the stock on repayment of the holder’s loan, or otherwise at the option or request of the holder; or

          ‘(ii) stock that is protected under section 4.9A or is otherwise not at risk; and

        ‘(E) any other debt or equity instruments or other accounts that the Farm Credit Administration determines appropriate to be considered permanent capital.’.

SEC. 102. QUALIFICATIONS OF FARM CREDIT ADMINISTRATION BOARD MEMBERS.

    Section 5.8 (12 U.S.C. 2242) is amended by adding at the end the following new subsection:

    ‘(e) The President shall appoint members of the Board who--

      ‘(1) are experienced or knowledgeable in agricultural economics and financial reporting and disclosure;

      ‘(2) are experienced or knowledgeable in the regulation of financial entities; or

      ‘(3) have a strong financial, legal, or regulatory background.’.

TITLE II--FARM CREDIT SYSTEM INSURANCE CORPORATION

SEC. 201. FARM CREDIT SYSTEM INSURANCE CORPORATION.

    (a) IN GENERAL- Section 5.53 (12 U.S.C. 2277a-2) is amended to read as follows:

‘SEC. 5.53. BOARD OF DIRECTORS.

    ‘(a) IN GENERAL-

      ‘(1) ESTABLISHMENT- The management of the Corporation shall be vested in a Board of Directors (referred to in this section as the ‘Board’). The Board shall establish policies for the Corporation. The Board shall provide for the performance of all the powers and duties vested in the Corporation.

      ‘(2) APPOINTMENT- 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.

      ‘(3) CHAIRPERSON- Of the persons appointed to the Board, one shall be designated by the President to serve as Chairperson of the Board for the duration of the term of the member.

      ‘(4) POSTEMPLOYMENT PROHIBITION- A member of the Board shall be ineligible during the time the member is in office and for 2 years thereafter to hold any office, position, or employment in any institution of the Farm Credit System.

    ‘(b) TERM OF OFFICE-

      ‘(1) IN GENERAL- The term of office of each member of the Board shall be 6 years, except that the terms of the two members, other than the Chairperson, first appointed under subsection (a) shall expire, one on the expiration of 2 years after the date of appointment, and one on the expiration of 4 years after the date of appointment.

      ‘(2) SUCCESSION- 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 6 years may be reappointed for a full 6-year term and members appointed to fill unexpired terms of 3 years or less may be reappointed for a full 6-year term.

      ‘(3) VACANCIES- Any vacancy shall be filled for the unexpired term on like appointment. Any member of the Board shall continue to serve as a member after the expiration of the term of the member until a successor has been appointed and qualified.

    ‘(c) ORGANIZATION-

      ‘(1) OATH- Each member of the Board, within 15 days after notice of appointment, shall subscribe to the oath of office.

      ‘(2) QUORUM- The Board may transact business if a vacancy exists, if a quorum is present. A quorum shall consist of two members of the Board.

      ‘(3) MEETING- The Board shall hold meetings at such times and places as the Board may fix and determine. The meetings shall be held on the call of the Chairperson or any two Board members.

      ‘(4) RULES; RECORDS- The Board shall adopt such rules as the Board considers appropriate for the transaction of business by the Board, and shall keep permanent and accurate records and minutes of the actions and proceedings of the Board.

    ‘(d) COMPENSATION-

      ‘(1) IN GENERAL- The members of the Board shall devote their full time and attention to the business of the Board.

      ‘(2) CHAIRPERSON- The Chairperson of the Board shall receive compensation at the rate prescribed for level III of the Executive Schedule under section 5314 of title 5, United States Code.

      ‘(3) OTHER MEMBERS- Each of the other members of the Board shall receive compensation at the rate prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code.

      ‘(4) EXPENSES- Each member of the Board shall be reimbursed for necessary travel, subsistence, and other expenses in the discharge of the official duties of the member without regard to other laws with respect to allowance for travel and subsistence of officers and employees of the United States.’.

    (b) CONFORMING AMENDMENTS-

      (1) CHAIRPERSON- Section 5314 of title 5, United States Code, is amended by adding at the end the following new item:

      ‘Chairperson, Board of Directors of the Farm Credit System Insurance Corporation.’.

      (2) MEMBERS- Section 5315 of such title is amended by adding at the end the following new item:

      ‘Members, Board of Directors of the Farm Credit System Insurance Corporation.’.

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall become effective on January 1, 1996.

      (2) TRANSITIONAL PROVISION- The Board of Directors of the Farm Credit System Insurance Corporation as established by section 5.53 of the Farm Credit Act of 1971 (12 U.S.C. 2277a-2) (as it existed before the amendments made by subsection (a) of this section) shall continue in existence and continue to manage the Farm Credit System Insurance Corporation until at least two members are appointed by the President, by and with the advice and consent of the Senate, to the new Board established by section 5.53 of such Act (as amended by subsection (a) of this section).

SEC. 202. STATUTORY SUCCESSOR TO ASSISTANCE BOARD AGREEMENTS.

    (a) IN GENERAL- Section 5.58(2) (12 U.S.C. 2277a-7(2)) is amended by adding at the end the following new sentence: ‘The Corporation shall succeed to the rights of the Farm Credit System Assistance Board under agreements between the Farm Credit System Assistance Board and System institutions certifying the institutions as eligible to issue preferred stock pursuant to title VI on the termination of the Assistance Board on the date provided in section 6.12.’.

    (b) CONFORMING AMENDMENTS- Section 5.35(4) (12 U.S.C. 2271(4)) is amended--

      (1) by striking ‘and’ at the end of subparagraph (A);

      (2) by striking the period at the end of subparagraph (B) and inserting ‘; and’; and

      (3) by adding at the end the following new subparagraph:

        ‘(C) after December 31, 1992, mean any significant noncompliance by a System institution (as determined by the Farm Credit Administration, in consultation with the Farm Credit System Insurance Corporation) with any term or condition imposed on the institution by the Farm Credit System Assistance Board under section 6.6 or by the Farm Credit System Insurance Corporation under section 5.61.’.

SEC. 203. USE OF FARM CREDIT ADMINISTRATION PERSONNEL.

    Section 5.59(a) (12 U.S.C. 2277a-8(a)) is amended by adding at the end the following new paragraph:

      ‘(5) USE OF FARM CREDIT ADMINISTRATION PERSONNEL- To the extent practicable, the Corporation shall use the personnel and resources of the Farm Credit Administration to minimize duplication of effort and to reduce costs.’.

SEC. 204. GAO REPORTS ON RISK-BASED INSURANCE PREMIUMS, ACCESS TO ASSOCIATION CAPITAL, SUPPLEMENTAL PREMIUMS, AND CONSOLIDATION.

    (a) IN GENERAL- The Comptroller General of the United States shall investigate, review, and evaluate the feasibility and appropriateness, and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, on the advantages and disadvantages of providing the Farm Credit System Insurance Corporation with--

      (1) the authority to directly or indirectly assess associations to ensure that all System capital is available to prevent losses to investors, including a study of--

        (A) the effects of direct assessments by the Insurance Corporation on associations, including interest rate charges to borrowers;

        (B) the effects of requiring that banks pass along the cost of insurance premiums to owner associations and other financing institutions having a discount relationship with the bank;

        (C) the effects of requiring owner associations to purchase stock in the district bank, if needed, to prevent a bank from having to return to the Insurance Corporation for financial assistance once the assistance has been given;

        (D) the effects of the purchase of stock from funds of the association (through funds obtained from other than the district bank) or allowing the bank to increase the direct line of credit to the association in order to fund the purchase; and

        (E) the effect that authorizing the Insurance Corporation to assess the association could have on the association’s incentives for building capital;

      (2) the authority to collect supplemental insurance premiums under certain circumstances, including a study of--

        (A) the possibility of the Insurance Fund being depleted more rapidly than it could be replenished under the current premium structure;

        (B) the effects of the depletion under alternate economic scenarios and the probability of the occurrence of each of those scenarios;

        (C) the effects on capital accumulation and interest rates of levying a supplemental premium; and

        (D) limitations on any authority to levy supplemental premiums and the underlying basis for the limitations; and

      (3) the authority to establish an insurance premium rate structure that would take into account, on an institution-by-institution basis, asset quality risk, interest rate risk, earnings, and capital.

    (b) REPORT ON CONSOLIDATION-

      (1) IN GENERAL- The Comptroller General of the United States shall evaluate and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate on whether there are likely to be benefits to farmer and rancher borrowers of the Farm Credit System institutions of merging the 10 district Farm Credit Banks (and the Federal Intermediate Credit Bank of Jackson) into fewer regional Farm Credit Banks.

      (2) FACTORS- In preparing the report, the Comptroller General shall consider--

        (A) the potential reduction in services to farmers and ranchers;

        (B) the potential benefits of jointly providing services to farmers and ranchers among these proposed regional districts;

        (C) any economy of scale effects on a district-by-district basis;

        (D) the potential impact on the cooperative nature of the Farm Credit System;

        (E) the potential impact on bank and association relationships; and

        (F) the potential impact on System-wide bond issuances.

    (c) POTENTIAL SAVINGS- The Comptroller General of the United States shall evaluate and report to the appropriate committees of Congress on the potential savings to the Farm Credit System and its shareholders that might occur if System institutions and the Farm Credit Administration were required to comply with General Services Administration standards for office space, furniture, and equipment.

    (d) DEADLINE- The reports required under this section shall be provided to Congress not later than 12 months after the date of enactment of this Act.

TITLE III--REPAYMENT OF FARM CREDIT SYSTEM DEBT OBLIGATIONS

SEC. 301. CAPITAL PRESERVATION.

    Section 6.9(e)(3) (12 U.S.C. 2278a-9(e)(3)) is amended--

      (1) by striking subparagraph (C) and inserting the following new subparagraph:

        ‘(C) PAYMENT OF PRINCIPAL-

          ‘(i) IN GENERAL- After the end of the 15-year period beginning on the date of the issuance of any obligation issued to carry out this subsection, the banks operating under this Act shall pay to the Financial Assistance Corporation, on demand, an amount equal to the outstanding principal of the obligation. Each bank shall pay a proportion of the principal equal to--

            ‘(I) the average accruing loan volume of the bank for the preceding 15 years; divided by

            ‘(II) the average accruing loan volume of all banks of the System for the same period.

          ‘(ii) BANKS LEAVING SYSTEM- Any bank leaving the Farm Credit System pursuant to section 7.10 shall be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of the payment required under this subparagraph had the bank remained in the System.

          ‘(iii) BANKS UNDERGOING LIQUIDATION- With respect to any bank undergoing liquidation under this Act, a liability to the Financial Assistance Corporation in the amount of the payment required under this subparagraph (calculated as if the bank had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of the bank.

          ‘(iv) OBLIGATIONS OF OTHER BANKS- The obligations of other banks shall not be reduced in anticipation of any recoveries under this subparagraph from banks leaving the System or in liquidation, but the Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.’;

      (2) by redesignating subparagraph (D) as subparagraph (E);

      (3) by inserting after subparagraph (C) the following new subparagraph:

        ‘(D) ANNUAL PAYMENTS-

          ‘(i) IN GENERAL- In order to provide for the orderly funding and discharge over time of the obligation of each System bank to the Financial Assistance Corporation under subparagraph (C), each System bank shall enter into or continue in effect an agreement with the Financial Assistance Corporation under which the bank will make annual annuity-type payments to the Financial Assistance Corporation, beginning no later than December 31, 1992 (except for any bank that did not meet its interim capital requirement on December 31, 1990, in which case the bank shall begin making the payments no later than December 31, 1993) in amounts designed to accumulate, in total, including earnings on the amounts, to 90 percent of the bank’s ultimate obligation. The Financial Assistance Corporation shall partially discharge the bank from its obligation under subparagraph (C) to the extent of each such payment and the earnings on the payment as earned.

          ‘(ii) CAPITAL REQUIREMENTS- The agreement shall not require payments to be made to the extent that making a particular payment or part of a payment would cause the bank to fail to satisfy applicable regulatory permanent capital requirements, but shall provide for recalculation of subsequent payments accordingly.

          ‘(iii) INVESTMENT; AVAILABILITY- The funds received by the Financial Assistance Corporation pursuant to the agreements shall be invested in eligible investments as defined in section 6.25(a)(1). The funds and the earnings on the funds shall be available only for the payment of the principal of the bonds issued by the Financial Assistance Corporation under this subsection.’; and

      (4) in subparagraph (E) (as redesignated by paragraph (2)), by inserting before the period at the end the following: ‘, nor shall the obligation to make future annuity payments to the Financial Assistance Corporation under subparagraph (D) be considered a liability of any System bank’.

SEC. 302. PREFERRED STOCK.

    Subparagraph (B) of section 6.26(d)(1) (12 U.S.C. 2278b-6(d)(1)(B)) is amended to read as follows:

        ‘(B) PAYMENTS BY INSTITUTIONS-

          ‘(i) IN GENERAL- Except as provided in subparagraph (C), in order to enable the Financial Assistance Corporation to repay the obligation referred to in subparagraph (A), each institution that issued preferred stock under section 6.27(a) with respect to the obligation (or the successor to the institution) shall pay to the Financial Assistance Corporation, before the maturity date of the obligation, an amount equal to the par value of the stock outstanding for the institution.

          ‘(ii) ANNUAL APPROPRIATION- Except as provided in clause (iii), each year beginning in 1992, as soon as practicable following the end of the prior year, each such institution (except institutions in receivership and institutions that have previously redeemed their preferred stock) shall appropriate from its earnings in the prior year to an appropriated unallocated surplus account with respect to preferred stock, the sum of--

            ‘(I) the greater of--

‘(aa) such amount as the institution may be required to appropriate under any assistance agreement the institution has with the Farm Credit System Assistance Board or the Farm Credit System Insurance Corporation; or

‘(bb) the amount that, if appropriated to the account in equal amounts in each year thereafter until the maturity of the obligation referred to in subparagraph (A), would cause the amount in the account to equal the par value of the preferred stock issued by the institution with respect to the obligation; plus

            ‘(II) any amount that had been appropriated to the account in a previous year but had thereafter been offset by losses.

          ‘(iii) LIMITATION- An annual appropriation shall not be made to the extent that the appropriation would exceed the institution’s net income (as determined pursuant to generally accepted accounting principles) in that year or to the extent that the appropriation would cause the institution’s preferred stock to be impaired.

          ‘(iv) USE- The amount in the appropriated unallocated surplus account shall be unavailable to pay dividends or other allocations or distributions to shareholders or holders of participation certificates. The account shall be senior to all other unallocated surplus accounts but junior to all preferred and common stock for purposes of the application of operating losses.

          ‘(v) PREFERRED STOCK- The appropriations of surplus by an institution shall not affect the treatment of its preferred stock (and of the appropriated unallocated surplus) as equity for purposes of regulatory permanent capital requirements.’.

SEC. 303. SYSTEMWIDE REPAYMENT OBLIGATION.

    Subparagraph (C) of section 6.26(d)(1) (12 U.S.C. 2278b-6(d)(1)(C)) is amended to read as follows:

        ‘(C) SYSTEMWIDE REPAYMENT-

          ‘(i) IN GENERAL- In order to enable the Financial Assistance Corporation to repay the obligations issued to provide assistance under subsections (c) and (e) of section 410 of the Agricultural Credit Act of 1987 (12 U.S.C. 2011 note) and section 4.9A(c) of this Act, or issued to provide funds to cover the expenses of the Assistance Board or the Financial Assistance Corporation under sections 6.7(a) and 6.24, respectively, of this Act, each System bank shall pay to the Financial Assistance Corporation a proportion, as calculated by the Financial Assistance Corporation, of the obligation equal to--

            ‘(I) the average accruing retail loan volume of the bank and its affiliated associations for the preceding 15 years; divided by

            ‘(II) the average accruing retail loan volume of all such banks and their affiliated associations for the same period.

          ‘(ii) EXPENSE ITEM- The annual increase in the present value of the estimated obligation of each bank to the Financial Assistance Corporation under this subparagraph shall be recorded each year as an expense item, in accordance with generally accepted accounting principles, on the books of the bank.

          ‘(iii) PASS THROUGH- A bank may (and, to the extent necessary to satisfy its obligations, shall) pass on (either directly, or indirectly through loan pricing or otherwise) all or part of the amount necessary to satisfy the payment requirement to its affiliated direct lender associations based on proportionate average accruing retail loan volumes for the preceding 15 years, except that the bank shall remain primarily liable for the amount.

          ‘(iv) BANKS LEAVING SYSTEM- Any bank leaving the Farm Credit System pursuant to section 7.10 shall be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of the payment required under this subparagraph had the bank remained in the System. A liability to the Financial Assistance Corporation in this amount (calculated as if the bank had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of any bank undergoing liquidation. The obligations of other banks shall not be reduced in anticipation of any such recoveries from banks leaving the System or in liquidation, but the Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.

          ‘(v) ASSOCIATIONS TERMINATING SYSTEM STATUS OR IN LIQUIDATION- Any association leaving the Farm Credit System pursuant to section 7.10 shall be required, under regulations of the Farm Credit Administration, to pay to its supervising bank a share, based on the association’s retail loan volume relative to the retail loan volume of the bank and its affiliated associations had the association remained in the System, of the present value of the future payment obligation of its supervising bank. A liability to the bank in this amount (calculated as if the association had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the bank against the estate of any association undergoing liquidation.’.

SEC. 304. REPAYMENT OF TREASURY-PAID INTEREST.

    (a) IN GENERAL- Paragraph (5) of section 6.26(c) (12 U.S.C. 2278b-6(c)(5)) is amended to read as follows:

      ‘(5) Repayment of treasury-paid interest-

        ‘(A) IN GENERAL- On the maturity date of the last-maturing debt obligation issued under subsection (a), the Financial Assistance Corporation shall repay to the Secretary of the Treasury the total amount of any annual interest charges on the debt obligations that Farm Credit System institutions (other than the Financial Assistance Corporation) have not previously paid, and the Financial Assistance Corporation shall not be required to pay any additional interest charges on the payments.

        ‘(B) ASSESSMENT- In order to provide for the orderly funding by the banks of the System of the repayment by the Financial Assistance Corporation to the Secretary of the Treasury, the Financial Assistance Corporation shall assess each System bank, on or about December 31 of each year beginning in 1992, and each System bank shall promptly pay to the Financial Assistance Corporation, an annual annuity type payment in an amount designed to accumulate, in total, including earnings thereon, the amount of the bank’s ultimate obligation (as determined by the Corporation on a fair and equitable basis), and no greater than .0006 nor less than .0004 times the bank’s and its affiliated associations’ average accruing retail loan volume for the preceding year, subject to--

          ‘(i) upward or downward adjustment, as appropriate, by the Financial Assistance Corporation during each of the last 5 years prior to the date the Financial Assistance Corporation is obligated to make the repayment, in order to ensure that the Financial Assistance Corporation will have the amount of funds needed to make the repayment on the due date; and

          ‘(ii) reduction or termination in any year when the funds paid to the Financial Assistance Corporation, including any anticipated future earnings on the funds, are sufficient to make the repayment on the due date.

        ‘(C) INVESTMENT OF FUNDS- The Financial Assistance Corporation shall invest funds derived from the investment in eligible investments as defined in section 6.25(a)(1). The funds and the earnings on the funds shall be available only for the repayment to the Secretary of the Treasury provided for in subparagraph (A).

        ‘(D) PASS THROUGH- A bank may (and, to the extent necessary to satisfy its obligations, shall) pass on (either directly, or indirectly through loan pricing or otherwise) all or part of the assessments to its affiliated direct lender associations based on proportionate average accruing retail loan volumes for the preceding year, but the bank shall remain primarily liable for the amounts.

        ‘(E) LIABILITY-

          ‘(i) BANKS TERMINATING SYSTEM STATUS OR IN LIQUIDATION- Any bank terminating System status pursuant to section 7.10 shall be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of all future such assessments against the bank had the bank remained in the System. A liability to the Financial Assistance Corporation in this amount (calculated as if the bank had left the System on the date the bank was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of any bank undergoing liquidation.

          ‘(ii) NO ANTICIPATORY REDUCTIONS IN OTHER OBLIGATIONS- The obligations of other banks shall not be reduced in anticipation of any recoveries under this subparagraph from banks leaving the System or in liquidation.

          ‘(iii) REFUND OF RECOVERIES- The Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.

        ‘(F) ASSOCIATIONS TERMINATING SYSTEM STATUS OR IN LIQUIDATION- Any association terminating System status pursuant to section 7.10 shall be required, under regulations of the Farm Credit Administration, to pay to its supervising bank a share, based on the association’s retail loan volume relative to the retail loan volume of the bank and its affiliated associations had the association remained in the System, of the estimated present value of all future such assessments against the bank. A liability to the bank in this amount (calculated as if the association had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the bank against the estate of any association undergoing liquidation.

        ‘(G) CAPITAL REQUIREMENTS-

          ‘(i) IN GENERAL- Until the date that is 5 years prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), all assessments paid by banks to the Financial Assistance Corporation pursuant to subparagraph (B), and any part of the obligation to pay future assessments to the Financial Assistance Corporation under subparagraph (B) that is recognized as an expense on the books of any System bank or association, shall nonetheless be included in the capital of the bank or association for purposes of determining its compliance with regulatory capital requirements.

          ‘(ii) DURING THE FINAL 5 YEARS PRIOR TO REPAYMENT- During the--

            ‘(I) period beginning 5 years, and ending 4 years, prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 60 percent;

            ‘(II) period beginning 4 years, and ending 3 years, prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 30 percent; and

            ‘(III) period beginning 3 years prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 0 percent,

          of all assessments paid by banks to the Financial Assistance Corporation pursuant to subparagraph (B), and of any part of the obligation to pay future assessments to the Financial Assistance Corporation under subparagraph (B) that is recognized as an expense on the books of any System bank or association, shall nonetheless be included in the capital of the bank or association for purposes of determining its compliance with regulatory capital requirements.’.

    (b) CONFORMING AMENDMENT- Section 6.28 (12 U.S.C. 2278b-8) is amended by striking subsection (b) and redesignating subsection (c) as subsection (b).

SEC. 305. TRANSFER OF OBLIGATIONS FROM ASSOCIATIONS TO BANKS; OTHER MATTERS.

    Section 6.26 (12 U.S.C. 2278b-6) is amended--

      (1) in subsection (c)--

        (A) in the subparagraph heading of paragraph (2)(B), by striking ‘INSTITUTIONS’ and inserting ‘BANKS’;

        (B) by striking ‘institutions’ each place it appears in paragraphs (2)(B), (3), and (4) and inserting ‘banks’; and

        (C) in paragraph (2), by striking subparagraphs (C) and (D) and inserting the following new subparagraph:

        ‘(C) ALLOCATION- During each year of the second 5-year period, each System bank shall pay to the Financial Assistance Corporation a proportion, as calculated by the Financial Assistance Corporation, of the interest due from System banks under this paragraph equal to--

          ‘(i) the amount of the average accruing retail loan volume of the bank and its affiliated associations for the preceding year; divided by

          ‘(ii) the total average accruing retail loan volume of all such banks and their affiliated associations for the preceding year.’;

      (2) in subsection (d)(1)--

        (A) by striking subparagraph (D); and

        (B) by redesignating subparagraph (E) as subparagraph (D); and

      (3) by adding at the end the following new subsection:

    ‘(e) ADMINISTRATION-

      ‘(1) DEFINITION OF RETAIL LOAN VOLUME- As used in this section, the term ‘retail loan volume’ means all loans (as defined in accordance with generally accepted accounting principles) by a System bank or association, excluding loans by such a bank or association to another System institution.

      ‘(2) CALCULATION OF AVERAGE ANNUAL LOAN VOLUMES- For purposes of this section and section 6.9, average annual loan volumes shall be calculated using month-end balances.

      ‘(3) EXCLUSION OF BANKS UNDERGOING LIQUIDATION- For purposes of this section and section 6.9, the term ‘bank’ shall not include a bank that had entered liquidation prior to the date of enactment of this subsection.’.

SEC. 306. DEFAULTS.

    Section 6.26(d) (12 U.S.C. 2278b-6(d)) is amended--

      (1) in paragraph (3)--

        (A) in subparagraph (A)--

          (i) by striking the heading and inserting the following: ‘CERTAIN PRINCIPAL AND INTEREST OBLIGATIONS- ’;

          (ii) in clause (i)--

            (I) by inserting after ‘subsection (a),’ the following: ‘on the payment of principal or interest due under subparagraphs (B) and (C) of section 6.9(e)(3), on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B),’;

            (II) by striking ‘of the interest’ both places it appears; and

            (III) by striking ‘institution’ each place it appears and inserting ‘bank’;

          (iii) in clause (ii)--

            (I) by striking ‘of interest’;

            (II) by striking ‘institution’ and inserting ‘bank’; and

            (III) by striking ‘such uncollected interest’ and inserting ‘any uncollected amount’; and

          (iv) in clause (iii), by striking ‘added’ and all that follows through the period at the end and inserting ‘allocated to other System banks in accordance with the allocation mechanism applicable under this Act to the particular defaulted obligation.’;

        (B) in subparagraph (B), by striking the subparagraph heading and inserting the following new heading: ‘PRINCIPAL OF BONDS ISSUED TO FUND PURCHASE OF PREFERRED STOCK- ’; and

        (C) in subparagraph (C)--

          (i) in the heading, by striking ‘INSTITUTIONS’ and inserting ‘BANKS’;

          (ii) by striking ‘institution’ and inserting ‘bank’;

          (iii) by striking ‘institutions’ both places it appears and inserting ‘banks’; and

          (iv) by striking ‘the amount of any interest’ and inserting ‘any amounts’; and

      (2) in paragraph (4)--

        (A) in subparagraph (A), by inserting ‘or section 6.9(e)(3)(A)’ after ‘subsection (a)’;

        (B) in subparagraph (B)--

          (i) in clause (i)--

            (I) by striking the clause heading and inserting the following new heading: ‘CERTAIN PRINCIPAL AND INTEREST OBLIGATIONS- ’;

            (II) by inserting after ‘subsection (c),’ the following: ‘on the payment of principal or interest due under subparagraphs (B) and (C) of section 6.9(e)(3), on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B),’; and

            (III) by striking ‘institution’ each place it appears and inserting ‘bank’; and

          (ii) in clause (ii), by striking the clause heading and inserting the following new heading: ‘PRINCIPAL OF BONDS ISSUED TO FUND PURCHASE OF PREFERRED STOCK- ’.

SEC. 307. AUTHORITY OF FINANCIAL ASSISTANCE CORPORATION.

    (a) PURPOSE- Section 6.21 (12 U.S.C. 2278b-1) is amended by inserting before the period at the end the following: ‘and to assist, pursuant to section 6.9(e) and subsections (c) through (g) of section 6.26, in the repayment by System institutions to those persons who provided funds in connection with the program’.

    (b) TERMINATION- Section 6.31(a) (12 U.S.C. 2278b-11(a)) is amended by striking ‘terminate on’ and inserting the following: ‘terminate on the complete discharge by the Financial Assistance Corporation of its responsibilities under section 6.9(e) and subsections (c) through (g) of section 6.26 with regard to repayments by System institutions, but in no event later than 2 years following’.

SEC. 308. TECHNICAL AMENDMENTS.

    (a) TECHNICAL AMENDMENT TO THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT AMENDMENTS OF 1991- Section 204(3) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1855) is amended by striking ‘in section 1221(1)(D) (16 U.S.C. 3821(1)(D))’ and inserting ‘in section 1221(a)(1)(D) (16 U.S.C. 3821(a)(1)(D))’.

    (b) TECHNICAL AMENDMENTS TO THE FARM CREDIT ACT OF 1971-

      (1) Section 8.3(c)(13) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-3(c)(13)) is amended by striking ‘8.11(g)’ and inserting ‘8.11(e)’.

      (2) Section 8.11(a)(1)(B)(ii) of such Act (12 U.S.C. 2279aa-11(a)(1)(B)(ii)) is amended by striking ‘the date of enactment of this section’ and inserting ‘December 13, 1991’.

      (3) Section 8.32 of such Act (12 U.S.C. 2279bb-1) is amended--

        (A) in each of subsections (a), (b)(1)(D), and (b)(2), by striking ‘the date of the enactment of this section’ each place the term appears and inserting ‘December 13, 1991’; and

        (B) in subsection (b)(1)(E), by striking ‘the date of the enactment of such Act’ and inserting ‘December 13, 1991’.

TITLE IV--CLARIFICATION OF CERTAIN AUTHORITIES

SEC. 401. CLARIFICATION OF THE STATUS AND POWERS OF CERTAIN INSTITUTIONS OF THE FARM CREDIT SYSTEM.

    (a) CLARIFICATION OF AUTHORITY REGARDING REMAINING FEDERAL INTERMEDIATE CREDIT BANK- Section 410 of the Agricultural Credit Act of 1987 (12 U.S.C. 2011 note) is amended by adding at the end the following new subsection:

    ‘(e) CLARIFICATION OF AUTHORITY REGARDING REMAINING FEDERAL INTERMEDIATE CREDIT BANK-

      ‘(1) NEGOTIATED MERGER-

        ‘(A) REQUIREMENT-

          ‘(i) IN GENERAL- Not later than June 30, 1993, except as provided in subparagraph (C), the Federal Intermediate Credit Bank of Jackson (as chartered on the date of enactment of this subsection) shall merge with a Farm Credit Bank pursuant to the procedures prescribed by section 7.12 of the Farm Credit Act of 1971 (12 U.S.C. 2279f).

          ‘(ii) MERGER OF ENTIRE BANK- Notwithstanding subparagraph (B), or any other provision of law, the Farm Credit Administration shall approve a merger of the Federal Intermediate Credit Bank of Jackson only if the Bank (as chartered on the date of enactment of this subsection, except as provided in subparagraph (B)(ii)(II)(bb)) merges in its entirety with a Farm Credit Bank.

          ‘(iii) LIMITED LENDING AUTHORITY- Notwithstanding any provision of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), the Farm Credit Bank resulting from a merger under this subsection shall have only the lending authorities in the States of Alabama, Louisiana, and Mississippi that the constituent banks exercised in such States immediately prior to the merger, except as may be provided in section 5.17(a)(2) of such Act (12 U.S.C. 2252(a)(2)).

        ‘(B) OPERATING AND MERGER AUTHORITY-

          ‘(i) IN GENERAL- Except as provided in clause (ii), the Federal Intermediate Credit Bank of Jackson may operate subject to such provisions of part A of title II of the Farm Credit Act of 1971 (as in effect immediately before the amendment made by section 401 took effect) and such provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) (as in effect after the amendment), as the Farm Credit Administration deems appropriate to carry out the purposes of this subsection and such Act. This subparagraph shall take effect as if it had become law at the same time as the amendment made by section 401 and shall remain in effect until the Bank’s merger with a Farm Credit Bank under this subsection, or July 1, 1994, whichever is sooner.

          ‘(ii) LIMITATION ON OPERATING AUTHORITY-

            ‘(I) IN GENERAL- Notwithstanding clause (i) and subparagraph (A)(ii), the authority of the Federal Intermediate Credit Bank of Jackson to operate as provided under clause (i) shall expire, and the Farm Credit Administration shall revoke the Bank’s charter, immediately on the Bank’s merger with a Farm Credit Bank under this subsection, or July 1, 1994, whichever is sooner.

            ‘(II) DISTRICT BOUNDARY MODIFICATION- Notwithstanding clause (i), the authority of the Federal Intermediate Credit Bank of Jackson shall not include the authority for the Bank to modify, nor shall the Farm Credit Administration approve such a modification to, the boundaries of the Fifth Farm Credit District to reaffiliate any portion of the District with another Farm Credit Bank, except--

‘(aa) in the case of the merger of the entire Bank as an entity with a Farm Credit Bank such that the entire chartered territory of the Federal Intermediate Credit Bank of Jackson (except as provided in item (bb)) is merged with the Farm Credit Bank; and

‘(bb) in the case of the reaffiliation of the Northwest Louisiana Production Credit Association with another farm credit district pursuant to the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations under such Act.

          ‘(iii) LIMITATION ON AUTHORITY TO MERGE-

            ‘(I) IN GENERAL- Notwithstanding clause (i), the authority of the Federal Intermediate Credit Bank of Jackson to merge with a Farm Credit Bank as provided under clause (i) shall expire, and the Farm Credit Administration shall revoke the Bank’s charter, immediately on the Bank’s merger with a Farm Credit Bank under this subsection, or July 1, 1994, whichever is sooner.

            ‘(II) BANK INTEGRITY- Notwithstanding clause (i), the authority of the Federal Intermediate Credit Bank of Jackson to merge with a Farm Credit Bank shall be limited to a merger of the Federal Intermediate Credit Bank of Jackson (as chartered on the date of enactment of this subsection to include the territory in the States of Alabama, Louisiana, and Mississippi, except as provided in clause (ii)(II)(bb)) as a whole entity such that the entire chartered territory of the Federal Intermediate Credit Bank of Jackson is merged with the Farm Credit Bank.

            ‘(III) LIMITATION- Beginning on the date of an order issued by the Farm Credit Administration under subparagraph (D), the authority of the Federal Intermediate Credit Bank of Jackson to merge with a Farm Credit Bank shall be limited to the arbitrated merger provided for in paragraph (2).

        ‘(C) EXTENSION-

          ‘(i) LETTER OF INTENT- If no later than June 30, 1993, the Federal Intermediate Credit Bank of Jackson delivers to the Farm Credit Administration a letter of intent to merge with a Farm Credit Bank, summarizing the terms and conditions of the merger (including, but not limited to, board composition, capital structure, exchange, or transfer of equities, and termination) signed by the chief executive officer and the members of the boards of directors of the Federal Intermediate Credit Bank of Jackson and the Farm Credit Bank, the Farm Credit Administration shall, on its determination that the letter of intent represents a bona fide good faith agreement in principle between the two banks to merge, and that there is at least a reasonable prospect that the merger will be completed in an expeditious manner, grant a one-time extension, until a date certain not later than October 31, 1993, of the requirement under subparagraph (A). Any extension provided under this subparagraph may be conditioned on such terms and conditions as the Farm Credit Administration determines necessary to ensure that the merger described in the letter of intent is completed by the closing date of the extension.

          ‘(ii) COMPLIANCE- If the Farm Credit Administration grants an extension under clause (i), it shall issue an order under subparagraph (D) immediately if--

            ‘(I) the Federal Intermediate Credit Bank of Jackson, or the Farm Credit Bank that is a signatory to the letter of intent under clause (i), provides written notification to the Farm Credit Administration that the bank does not intend to complete the merger described in the letter of intent;

            ‘(II) the Farm Credit Administration determines that the Federal Intermediate Credit Bank of Jackson is not complying with any term or condition on which an extension under clause (i) was conditioned; or

            ‘(III) the Farm Credit Administration determines that the Federal Intermediate Credit Bank of Jackson is not pursuing in good faith the merger provided for in the letter of intent.

          If the Farm Credit Administration issues an order under subparagraph (D) pursuant to this clause, the Federal Intermediate Credit Bank of Jackson shall be deemed to have failed to comply with the requirements of subparagraph (A).

        ‘(D) FAILURE TO MERGE; ISSUANCE OF ORDER- If the Federal Intermediate Credit Bank of Jackson fails to comply, or notifies the Farm Credit Administration in writing that it does not intend to comply, with the requirements of subparagraph (A), the Farm Credit Administration shall, within 5 days after the date specified in subparagraph (A), or such other date specified by the Farm Credit Administration under subparagraph (C), issue, notwithstanding any other provision of law, an order requiring the Federal Intermediate Credit Bank of Jackson to merge with the Farm Credit Bank of Texas in accordance with paragraph (2).

      ‘(2) ARBITRATED MERGER-

        ‘(A) IN GENERAL- Not later than 30 days after the issuance of an order by the Farm Credit Administration under paragraph (1)(D), an arbitrator (or panel of arbitrators) shall be named by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association to serve as the arbitrator referred to in this paragraph.

        ‘(B) DUTIES- The arbitrator shall determine the terms and conditions of the merger required under an order issued under paragraph (1)(D), such that the terms and conditions are fair and equitable to the two banks, their affiliated associations, the stockholders and borrowers of the associations, and the other institutions of the Farm Credit System, and are designed to protect or enhance the safety and soundness of the Farm Credit System. The arbitrator shall have the authority to hire staff and secure the services of consultants as necessary to discharge the duties of the arbitrator under this paragraph.

        ‘(C) EXPENSES- Notwithstanding any other provision of law, the compensation and expenses of the arbitrator, the fees and expenses of the American Arbitration Association, and any expenses associated with the referendum required under subparagraph (F) shall be paid from the Farm Credit Assistance Fund established under section 6.25 of the Farm Credit Act of 1971 (12 U.S.C. 2278b-5).

        ‘(D) DEVELOPMENT OF MERGER PLANS-

          ‘(i) IN GENERAL- Not later than 100 days after the issuance of an order by the Farm Credit Administration under paragraph (1)(D), the arbitrator shall develop and submit for certification to the Farm Credit Administration a plan specifying the terms and conditions of the merger of the two banks required under this paragraph, such that the terms and conditions are fair and equitable to the two banks, their affiliated associations, the stockholders or farmer-borrowers of the associations, and the other institutions of the Farm Credit System, and are designed to protect or enhance the safety and soundness of the Farm Credit System. In devising the plan, the arbitrator shall, to the extent practicable, achieve the following objectives:

            ‘(I) Implementation of the preferences expressed by the affected and interested parties in submissions under clause (ii).

            ‘(II) Valuation of assets fairly, equitably, and consistently for all parties involved.

            ‘(III) Establishment of capitalization and funding terms in a manner that treats farmer-borrowers and stockholders in the two involved farm credit districts equitably and takes account of risk.

            ‘(IV) Ensure the viability of the resulting Farm Credit Bank and associations of the bank and the ability of the resulting bank and associations of the bank to lend to eligible borrowers at reasonable and competitive rates of interest.

          ‘(ii) SUBMISSION OF VIEWS AND INFORMATION- The arbitrator shall receive from affected and interested parties written submissions, in accordance with fair and reasonable procedures established by the arbitrator, regarding the terms and conditions of an appropriate plan for the merger of the two banks required under this paragraph. The Federal Intermediate Credit Bank of Jackson, the Farm Credit Bank of Texas, and their affiliated associations shall make available all books, records, financial information, and other material that the arbitrator determines is necessary to the development of the plan or the fulfillment of any other requirement under this paragraph. A copy of any submission or information provided to the arbitrator by any party under this paragraph shall be furnished to the Federal Intermediate Credit Bank of Jackson or the Farm Credit Bank of Texas on the written request of the bank and at the bank’s expense. The arbitrator shall provide both banks with a reasonable opportunity to review and respond to any submission or information provided by any party.

          ‘(iii) CONTENT OF PLAN; FARM CREDIT BANK- The plan developed and submitted under clause (i) shall include provisions regarding the following matters:

            ‘(I) The initial composition, following the merger, of the board of directors of the resulting Farm Credit Bank (which shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(II) The valuation, for purposes of the merger, of the assets and liabilities of the merging banks.

            ‘(III) The terms and conditions on which the shares of capital stock of the Federal Intermediate Credit Bank of Jackson and, if necessary, the Farm Credit Bank of Texas, will be converted into shares of the resulting Farm Credit Bank.

            ‘(IV) The capital structure and capitalization levels of the resulting Farm Credit Bank and the affiliated associations of the Farm Credit Bank in the States of Alabama, Louisiana, and Mississippi as the arbitrator determines necessary to carry out the purposes of this paragraph (which shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(V) The terms of financing agreements between any production credit associations or agricultural credit associations described in clause (iv), and the resulting Farm Credit Bank (which shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(VI) Any other terms and conditions or other matters that the arbitrator considers necessary.

          ‘(iv) CONTENT OF PLAN; AGRICULTURAL CREDIT ASSOCIATIONS- If the arbitrator determines that the chartering of agricultural credit associations in the States of Alabama, Louisiana, and Mississippi will be in the best interests of the farmers, ranchers, and aquatic producers eligible to borrow from Farm Credit System associations, the plan required under this subparagraph shall also include, based on submissions from the Federal Intermediate Credit Bank of Jackson and the Farm Credit Bank of Texas, provisions for the establishment of agricultural credit associations to operate in the States, subject to approval in the referendum under subparagraph (F). Such provisions shall include provisions regarding the following matters:

            ‘(I) A proposal for the establishment of an agricultural credit association in each of the geographic areas specified in subparagraph (F)(iii) (the charters of which, if validly issued under subparagraph (G)(i) pursuant to approval in the referendum under subparagraph (F), shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(II) The initial composition, if the proposal for the establishment of agricultural credit associations is approved, of the board of directors of each such agricultural credit association (which shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(III) The valuation, for purposes of the proposed merger of the production credit association and the Federal land bank association in each of the geographic areas specified in subparagraph (F)(iii), of the assets and liabilities of the associations.

            ‘(IV) The terms and conditions on which the shares of capital stock of any associations that may merge under the plan to form agricultural credit associations will be converted into shares of the resulting agricultural credit associations.

            ‘(V) The capital structure and capitalization levels of the resulting Farm Credit Bank and such affiliated associations of the Farm Credit Bank in the States of Alabama, Louisiana, and Mississippi as the arbitrator determines necessary to carry out the purposes of this paragraph (which capital structure and capitalization levels shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(VI) The terms of financing agreements between any agricultural credit associations and the resulting Farm Credit Bank (which shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

            ‘(VII) Any other terms and conditions or other matters that the arbitrator considers necessary.

          ‘(v) CONSULTATION WITH INSURANCE CORPORATION- The arbitrator shall consult with the Farm Credit System Insurance Corporation regarding the valuation of the assets and liabilities under the plan of merger, the capitalization of the Farm Credit System institutions resulting under the plan, and any other matters relevant to the assistance to be provided by the Insurance Corporation to facilitate the merger under subparagraph (H).

        ‘(E) CERTIFICATION OF PLAN- Not later than 30 days after the receipt of the plan developed by the arbitrator, the Farm Credit Administration shall--

          ‘(i) certify; or

          ‘(ii) recommend to the arbitrator revisions to the plan that, if incorporated into the plan, will allow the Farm Credit Administration to certify,

        that the resulting bank and any resulting associations are proposed to be organized in such a fashion that they will, on implementation of the plan, operate in compliance with applicable laws and regulations. The arbitrator and the Farm Credit Administration shall work cooperatively to ensure the expeditious issuance of the certification. If the Farm Credit Administration recommends to the arbitrator revisions to the plan that, if incorporated into the plan, will allow the Farm Credit Administration to certify the plan, the arbitrator shall, not later than 15 days after receipt of the recommended revisions, incorporate the revisions into the plan as the arbitrator deems appropriate to secure the certification.

        ‘(F) REFERENDUM ON ASSOCIATION STRUCTURE-

          ‘(i) IN GENERAL- Not later than 170 days after the issuance of an order by the Farm Credit Administration under paragraph (1)(D), the American Arbitration Association shall conduct, and compile and forward to the Farm Credit Administration the results of, a vote of current farmer-borrowers of the production credit associations and the Federal land bank associations in the States of Alabama, Louisiana, and Mississippi, in accordance with the Election Rules of the American Arbitration Association, to determine whether the farmer-borrowers of each association in the geographic areas described in clause (iii) prefer to have credit delivered--

            ‘(I) in the case of production credit association farmer-borrowers, through a production credit association or through an agricultural credit association as proposed in the plan; and

            ‘(II) in the case of Federal land bank association farmer-borrowers, through a Federal land bank association or through an agricultural credit association as proposed in the plan.

          Each farmer-borrower shall be entitled to one vote. The arbitrator shall establish record dates and other procedures for conducting the referendum. The Federal Intermediate Credit Bank of Jackson, the Farm Credit Bank of Texas, and their affiliated associations shall cooperate in the conduct of the referendum, as determined necessary by the Arbitrator.

          ‘(ii) DISCLOSURE- The arbitrator shall send to farmer-borrowers eligible to vote under this subparagraph, with their ballot, a statement describing the potential consequences to the farmer-borrowers, and to the associations from which they borrow, of voting to charter an agricultural credit association and setting forth factors that farmer-borrowers should consider relevant to the choice between credit delivery through the current association structure and the chartering of an agricultural credit association. The arbitrator shall develop the disclosure materials in cooperation with the Farm Credit Administration and ensure that the materials are not inconsistent with applicable laws and regulations.

          ‘(iii) TABULATION OF RESULTS- The results of the vote under this subparagraph shall be compiled separately for production credit association farmer-borrowers and Federal land bank association farmer-borrowers in each of the following seven geographic areas:

            ‘(I) The area served by the Federal Land Bank Association of South Mississippi.

            ‘(II) The area served by the Federal Land Bank Association of North Mississippi.

            ‘(III) The area served by the Federal Land Bank Association of South Alabama.

            ‘(IV) The area served by the Federal Land Bank Association of North Alabama.

            ‘(V) The area served by the Federal Land Bank Association of South Louisiana.

            ‘(VI) The area served by both the Federal Land Bank Association of North Louisiana and the First South Production Credit Association.

            ‘(VII) The area served by both the Federal Land Bank Association of North Louisiana and the Northwest Louisiana Production Credit Association.

          ‘(iv) PUBLICATION OF RESULTS- The results of the vote under this subparagraph, as tabulated by the American Arbitration Association, shall be made promptly available to the public in a manner determined appropriate by the Farm Credit Administration.

        ‘(G) IMPLEMENTATION- Not later than 10 days after the date of the receipt of the results of the referendum conducted under subparagraph (F), the Farm Credit Administration shall issue such charters or charter amendments and take such other regulatory actions as may be necessary to implement the merger or mergers as provided for under the certified plan. In this regard, the Farm Credit Administration shall--

          ‘(i) issue a charter or charter amendment and take any such other regulatory actions as may be necessary to provide for the establishment of an agricultural credit association in each of the geographic areas described in subparagraph (F)(iii) where a majority of the farmer-borrowers of both the production credit association and the Federal land bank association voted under subparagraph (F)(i) that they preferred to have credit delivered through an agricultural credit association (which charter shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations); and

          ‘(ii) not issue a charter or charter amendment or take any such other regulatory action to provide for the establishment of an agricultural credit association in any of the geographic areas described in subparagraph (F)(iii) where less than a majority of the farmer-borrowers of the production credit association or the Federal land bank association voted in the referendum under subparagraph (F)(i) that they preferred to have credit delivered through an agricultural credit association (provided that the charter of any remaining association in such geographic area shall be subject to change thereafter in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations).

        ‘(H) FACILITATION-

          ‘(i) IN GENERAL- Beginning on the date of the issuance of an order by the Farm Credit Administration under paragraph (1)(D), the Farm Credit System Insurance Corporation shall expend amounts from the Farm Credit Insurance Fund to the extent necessary to facilitate the merger prescribed in the plan.

          ‘(ii) MAINTENANCE OF BOOK VALUE- Assistance provided by the Corporation under this subparagraph shall be in amounts not to exceed that required to maintain book value per share of stockholders’ equity at the same value reflected on the most recent audited financial statements of the Federal Intermediate Credit Bank of Jackson and the Farm Credit Bank of Texas prior to or effective with the date of the merger.

          ‘(iii) OTHER ASSISTANCE- Until the expiration of 5 years from the effective date of a merger authorized by this subsection, or the final resolution of any litigation against the Federal Intermediate Credit Bank of Jackson or any of its stockholders pending on the date of the enactment of this subsection, whichever is later, the Corporation shall guarantee prompt payment of any loss experienced by the merged bank, which loss is caused by the failure of any association-stockholder of the merged bank that was a stockholder of the Federal Intermediate Credit Bank of Jackson immediately prior to the merger, or any successor to the association, to pay when due any obligation of principal or interest owed by the association or its successor to the resulting bank.

          ‘(iv) TERMS AND CONDITIONS- Assistance provided by the Corporation under this subparagraph shall be on such terms and conditions as the Corporation deems appropriate to facilitate the merger.

        ‘(I) SAFETY AND SOUNDNESS-

          ‘(i) IN GENERAL- Except as provided in clause (ii), if at any time prior to the completion of the merger required under this subsection the Farm Credit Administration determines that the Federal Intermediate Credit Bank of Jackson is being operated in an unsafe or unsound manner (as determined in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.)), the Farm Credit Administration, after consultation with the respective boards of directors of the affected banks and taking into consideration the purposes of this subsection, may require the Federal Intermediate Credit Bank of Jackson to merge with a Farm Credit Bank, subject to such terms and conditions as the Farm Credit Administration may prescribe. The Farm Credit System Insurance Corporation shall expend amounts in the Farm Credit Insurance Fund to the extent necessary to facilitate the merger prescribed under this subparagraph, including the provision of assistance as provided in section 5.61(a)(2)(A)(iii) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-10(a)(2)(A)(iii)), on such terms and conditions as the Corporation deems appropriate.

          ‘(ii) ARBITRATED MERGER- If at any time after the Farm Credit Administration issues an order under paragraph (1)(D), but prior to the completion of the merger required under this subsection, the Farm Credit Administration determines that the Federal Intermediate Credit Bank of Jackson is being operated in an unsafe or unsound manner (as determined in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.)), the Farm Credit Administration shall, after consultation with the boards of directors of the Federal Intermediate Credit Bank of Jackson and the Farm Credit Bank of Texas, take such action as it deems necessary pursuant to the authorities provided under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) to return the operation of the Federal Intermediate Credit Bank of Jackson to a safe and sound condition, pending the completion of the merger under paragraph (2).

        ‘(J) MERGER PLAN FOR AGRICULTURAL CREDIT ASSOCIATIONS- In any of the States of Alabama, Louisiana, or Mississippi where all of the associations are chartered as agricultural credit associations, the boards of directors of each such association in each State are encouraged to submit to the farmer-borrowers of each such association for their approval a plan for merging the associations into one statewide agricultural credit association, in accordance with the applicable provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.).

        ‘(K) DEFINITIONS- As used in this paragraph:

          ‘(i) AGRICULTURAL CREDIT ASSOCIATION- The term ‘agricultural credit association’ means an association having the same authorities, attributes, and obligations as, and for all purposes an agricultural credit association resulting from the implementation of the plan under this paragraph shall be deemed to be, an association resulting from the merger of a production credit association and a Federal land bank association under section 7.8 of the Farm Credit Act of 1971 (12 U.S.C. 2279c-1).

          ‘(ii) FARMER-BORROWER- The term ‘farmer-borrower’ means a borrower from a Farm Credit System association in the State of Alabama, Louisiana, or Mississippi who holds voting stock, or is eligible to hold voting stock, in the association or a stockholder in any such association.

      ‘(3) REVIEW-

        ‘(A) IN GENERAL- Actions and determinations of the arbitrator, the Farm Credit Administration, or the Farm Credit System Insurance Corporation pursuant to this subsection shall not be subject to judicial review except as provided in this paragraph, nor shall they be subject to the requirements of subchapter II of chapter 5 or chapter 7 of title 5, United States Code.

        ‘(B) AGENCY DETERMINATIONS-

          ‘(i) IN GENERAL- Any petition for review of a determination or other action of the Farm Credit Administration or the Farm Credit System Insurance Corporation under this subsection shall be filed in the United States Court of Appeals for the District of Columbia Circuit not later than 10 days after the determination, or the petition shall be barred. The court shall have exclusive jurisdiction to determine the proceeding in accordance with standard procedures as supplemented by procedures hereinafter provided and no other district court or court of appeals of the United States shall have jurisdiction over any such challenge in any proceeding instituted prior to, on, or after the date of enactment of this subsection. The review of any determination or action of the Farm Credit Administration or the Farm Credit System Insurance Corporation under this subsection shall be based on the examination of all of the information before the Farm Credit Administration or the Farm Credit System Insurance Corporation, as the case may be, at the time the determination was made. The court reviewing the determination or action shall not enter a stay or order of mandamus unless the court has determined, after notice and a hearing before a panel of the court, that the agency action complained of was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

          ‘(ii) PROCEDURES- Notwithstanding any other provision of law, the court may set rules governing the procedures of any such proceeding that set page limits on briefs and time limits for filing briefs and motions and other actions that are shorter than the limits specified in the Federal Rules of Civil or Appellate Procedure.

          ‘(iii) EXPEDITED REVIEW- Any such proceeding before the court shall be assigned for hearing and completed at the earliest possible date, and shall be expedited in every way. The court shall render its final decision relative to any challenge not later than 50 days from the date the challenge is brought unless the court determines that a longer period of time is required to satisfy the requirements of the Constitution.

        ‘(C) ARBITRATOR DETERMINATIONS-

          ‘(i) IN GENERAL- Except as otherwise provided in this paragraph, any petition for review of a determination or other action of the arbitrator named under paragraph (2) shall be filed in accordance with the United States Arbitration Act (9 U.S.C. 1 et seq.). Such Act shall apply to the arbitration conducted pursuant to paragraph (2) to the same extent as if the arbitration were established in a contract evidencing a transaction in commerce between the Federal Intermediate Credit Bank of Jackson and the Farm Credit Bank of Texas.

          ‘(ii) PROCEDURES- Notwithstanding the United States Arbitration Act (9 U.S.C. 1 et seq.), any petition for review of a determination or other action of the arbitrator under this subsection shall be filed not later than 10 days after the determination, or the petition shall be barred. The court specified under such Act shall have exclusive jurisdiction to determine the proceeding in accordance with the applicable procedures under such Act, as supplemented by procedures hereinafter provided, and no other district court shall have jurisdiction over any such challenge in any such proceeding. Notwithstanding any other provision of law, the court may set rules governing the procedures of any such proceeding that set page limits on briefs and time limits for filing briefs and motions and other actions that are shorter than the limits specified in the United States Arbitration Act or the Federal Rules of Civil or Appellate Procedure.

          ‘(iii) EXPEDITED REVIEW- Any such proceeding before the court shall be assigned for hearing and completed at the earliest possible date, and shall be expedited in every way. The court shall render its final decision relative to any challenge as soon as possible in accordance with the United States Arbitration Act (9 U.S.C. 1 et seq.), or not later than 30 days from the date the challenge is brought, whichever is sooner, unless the court determines that a longer period of time is required to satisfy the requirements of the Constitution.’.

    (b) LONG-TERM LENDING AUTHORITY OF THE FARM CREDIT BANK OF TEXAS WITH RESPECT TO THE STATES OF ALABAMA, LOUISIANA, AND MISSISSIPPI-

      (1) IN GENERAL- Notwithstanding any other provision of law, the Farm Credit Bank of Texas may act in accordance with the exclusive charter of the bank, as amended by the Farm Credit Administration on February 7, 1989, and effective February 9, 1989 (except to the extent that the charter may be further amended by the Farm Credit Administration in accordance with its general authorities under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), subject to such limitations on the issuance of competitive charters as may be provided in section 5.17 of such Act (12 U.S.C. 2252)).

      (2) EFFECTIVE DATE- Paragraph (1) shall take effect as if such paragraph had become law on February 7, 1989.

    (c) DENIAL OF COMPETITIVE CHARTERS- Section 5.17(a)(2) (12 U.S.C. 2252(a)(2)) is amended--

      (1) by inserting ‘(A)’ after ‘(2)’; and

      (2) by adding at the end the following new subparagraphs:

      ‘(B) The Farm Credit Administration shall not issue a charter to, or approve an amendment to the charter of, any institution of the Farm Credit System to operate under title I or II that would authorize the institution to exercise lending authority, whether directly or indirectly as an agent of a Farm Credit Bank, in a territory in which the charter of another such institution authorizes the other institution to exercise like authority, whether directly or indirectly as an agent of a Farm Credit Bank, except with the approval of--

        ‘(i) in a case affecting only the charter of one or more associations--

          ‘(I) a majority of the shareholders (present and voting or voting by proxy) of each of the associations that would have like lending authority (whether directly or indirectly as an agent of a Farm Credit Bank) in any of that territory if the charter action were taken; and

          ‘(II) a majority of the board of directors of the Farm Credit Bank with which the affected associations are affiliated; or

        ‘(ii) in a case affecting the charter of one or more banks--

          ‘(I) a majority of the shareholders (present and voting or voting by proxy) of the affiliated associations of each of the banks that would have like lending authority in any of that territory if the charter action were taken;

          ‘(II) a majority of the shareholders (present and voting or voting by proxy) of each of the banks that would have like lending authority in any of that territory if the charter action were taken; and

          ‘(III) a majority vote of the boards of directors of each of the banks that would have like lending authority in any of that territory if the charter action were taken.

      ‘(C) Subparagraph (B) shall apply only in those geographic areas where, due to the failure of a Federal intermediate credit bank to merge in accordance with section 410(a) of the Agricultural Credit Act of 1987 (12 U.S.C. 2011 note), the Federal intermediate credit bank or its successor is chartered to provide short- and intermediate-term credit, and a neighboring Farm Credit Bank that is not the successor to the Federal intermediate credit bank is chartered to provide long-term credit, in the same geographic territory.’.

TITLE V--MISCELLANEOUS

SEC. 501. VALUATION RESERVES OF PRODUCTION CREDIT ASSOCIATIONS.

    Subsection (b) of section 2.3 (12 U.S.C. 2074(b)) is amended to read as follows:

    ‘(b) APPLICATION OF EARNINGS- At the end of each fiscal year, each production credit association shall apply the amount of the earnings of the association for the fiscal year in excess of the operating expenses of the association (including provision for valuation reserves against loan assets in accordance with generally accepted accounting principles)--

      ‘(1) first, to the restoration of the impairment (if any) of capital; and

      ‘(2) second, to the establishment and maintenance of the surplus accounts, the minimum aggregate amount of which shall be prescribed by the Farm Credit Bank.’.

SEC. 502. RISK MANAGEMENT PARTICIPATION AUTHORITY.

    Section 3.1(11) (12 U.S.C. 2122(11)) is amended--

      (1) by inserting ‘(A)’ after ‘(11)’; and

      (2) by adding at the end the following new subparagraph:

    ‘(B)(i) Participate in any loan of a type otherwise authorized under this title that is made to a similar entity by any institution in the business of extending credit, including purchases of participations in loans to finance international trade transactions involving the sale of agricultural commodities or the products thereof, except that--

      ‘(I) a bank for cooperatives may not participate in a loan--

        ‘(aa) if the participation would cause the total amount of all loan participations by the bank under this subparagraph involving a single credit risk to exceed 10 percent of the bank’s total capital; or

        ‘(bb) if the participation by the bank will itself equal or exceed 50 percent of the principal of the loan or, when taken together with participations in the loan by the other banks for cooperatives under this subparagraph, will cause the cumulative amount of the participations by all banks for cooperatives in the loan to equal or exceed 50 percent of the principal of the loan;

      ‘(II) a bank for cooperatives may not participate in a loan to a similar entity under this subparagraph if the similar entity has a loan or loan commitment outstanding with a Farm Credit Bank or an association chartered under this Act, unless agreed to by the Bank or association; and

      ‘(III) the cumulative amount of participations that a bank for cooperatives may have outstanding under this subparagraph at any time may not exceed 15 percent of the bank’s total assets.

    ‘(ii) As used in this subparagraph, the term ‘similar entity’ means an entity that, while not eligible for a loan under section 3.8, is functionally similar to an entity eligible for a loan under section 3.8 in that it derives a majority of its income from, or has a majority of its assets invested in, the conduct of activities functionally similar to those conducted by the entity.

    ‘(iii) With respect to similar entities that are eligible to borrow from a Farm Credit Bank or association under title I or II, the authority of a bank for cooperatives to participate in loans to the entities under this subparagraph shall be subject to the prior approval of the Farm Credit Bank or Banks in whose chartered territory the entity is eligible to borrow. The approval may be granted on an annual basis and under such terms and conditions as may be agreed on between the bank for cooperatives and the Farm Credit Bank or Banks that serve the territory.’.

SEC. 503. EQUITY VOTING FOR ONE DIRECTOR OF EACH BANK FOR COOPERATIVES.

    Section 3.2(a) of the Farm Credit Act of 1971 (12 U.S.C. 2123(a)) is amended--

      (1) by inserting ‘(1)’ after ‘(a)’; and

      (2) by adding at the end the following new paragraph:

    ‘(2)(A) If approved by the stockholders through a bylaw amendment, the nomination and election of one member from a bank for cooperatives (other than the National Bank for Cooperatives) shall be carried out with each voting stockholder of a bank for cooperatives having one vote, plus a number of votes (or fractional part thereof) equal to--

      ‘(i) the number of stockholders eligible to vote; multiplied by

      ‘(ii) the percentage (or fractional part thereof) of the total equity interest (including allocated, but not unallocated, surplus and reserves) in the bank of all stockholders held by the individual voting stockholder at the close of the immediately preceding fiscal year of the bank.

    ‘(B) The total number of votes under this paragraph shall be the number of voting stockholders of a bank for cooperatives multiplied by two.’.

SEC. 504. TECHNICAL AMENDMENT.

    The first sentence of section 3.7(a) (12 U.S.C. 2128(a)) is amended by inserting ‘at any time (whether or not they have a loan from the bank outstanding)’ after ‘technical and financial assistance’.

SEC. 505. EXPANSION OF WATER AND SEWER LENDING AUTHORITY OF BANKS FOR COOPERATIVES.

    Section 3.7(f) (12 U.S.C. 2128(f)) is amended--

      (1) by striking ‘the installation, expansion, or improvement of’ and inserting ‘installing, maintaining, expanding, improving, or operating’; and

      (2) by striking ‘to extend’ and inserting ‘extending’.

SEC. 506. ELIGIBILITY TO BORROW FROM A BANK FOR COOPERATIVES.

    Section 3.8(b)(1) (12 U.S.C. 2129(b)(1)) is amended by adding at the end the following new subparagraph:

      ‘(E) Any creditworthy private entity that satisfies the requirements for a service cooperative under paragraphs (1), (2), and (4) of subsection (a) and subsidiaries of the entity, if the entity is organized to benefit agriculture in furtherance of the welfare of its farmer-members and is operated on a not-for-profit basis.’.

SEC. 507. NON-VOTING REPRESENTATIVE ON BOARD OF FUNDING CORPORATION.

    Paragraph (2) of section 4.9(d) (12 U.S.C. 2160(d)(2)) is amended to read as follows:

      ‘(2) NON-VOTING REPRESENTATIVES-

        ‘(A) ASSISTANCE BOARD- During the period in which the Assistance Board is in existence, the board of directors of the Assistance Board shall designate one of its directors to serve as a non-voting representative to the board of directors of the Corporation.

        ‘(B) MEETINGS- The person designated by the Assistance Board under subparagraph (A) may attend and participate in all deliberations of the board of directors of the Corporation.

        ‘(C) TERMINATION OF ASSISTANCE BOARD- After termination of the Assistance Board, neither the Assistance Board nor its successor, the Farm Credit System Insurance Corporation, shall have any representation on the board of directors of the Corporation.’.

SEC. 508. REPEAL OF PROHIBITION AGAINST GUARANTEE OF CERTAIN INSTRUMENTS OF INDEBTEDNESS.

    Section 4.16 (12 U.S.C. 2204) is repealed.

SEC. 509. COMPENSATION OF BANK DIRECTORS.

    Section 4.21 (12 U.S.C. 2209) is amended to read as follows:

‘SEC. 4.21. COMPENSATION OF BANK DIRECTORS.

    ‘(a) IN GENERAL- The Farm Credit Administration shall monitor the compensation of members of the board of directors of a System bank received as compensation for serving as a director of the bank to ensure that the amount of the compensation does not exceed a level of $20,000 per year, as adjusted to reflect changes in the Consumer Price Index for all urban consumers published by the Bureau of Labor Statistics, unless the Farm Credit Administration determines that such level adversely affects the safety and soundness of the bank.

    ‘(b) WAIVER- The Farm Credit Administration may waive the limitation prescribed in subsection (a) under exceptional circumstances, as determined in accordance with regulations promulgated by the Farm Credit Administration.’.

SEC. 510. CLARIFICATION OF TREATMENT OF FARM CREDIT ADMINISTRATION OPERATING EXPENSES.

    Section 5.15(b)(1) (12 U.S.C. 2250(b)(1)) is amended--

      (1) by inserting ‘, for purposes of sequestration,’ after ‘regard’; and

      (2) by striking ‘or any other law’.

SEC. 511. APPROVAL OF COMPETITIVE CHARTERS.

    Section 5.17(a) (12 U.S.C. 2252(a)) is amended by adding at the end the following new paragraphs:

      ‘(13)(A) Subject to subparagraph (B), the Farm Credit Administration may approve an amendment to the charter of any institution of the Farm Credit System operating under title I or II, which would authorize the institution to exercise lending authority in any territory--

        ‘(i) in the geographic area served by an association that was reassigned pursuant to section 433 of the Agricultural Credit Act of 1987 (12 U.S.C. 2071 note) (where the geographic area was a part of the association’s territory as of the date of the reassignment); and

        ‘(ii) in which the charter of an institution that is not seeking the charter amendment authorizes the institution to exercise the type of lending authority that is the subject of the charter request.

      ‘(B) The Farm Credit Administration may approve a charter amendment under subparagraph (A) only on the approval of--

        ‘(i) the respective boards of directors of the associations that, if the charter request is approved, would exercise like lending authority in any of the territory that is the subject of the charter request;

        ‘(ii) a majority of the stockholders of each association described in clause (i) voting, in person or by proxy, at a duly authorized stockholders’ meeting; and

        ‘(iii) the respective boards of directors of the Farm Credit Banks that, if the charter request is approved, would exercise, either directly or through associations, like lending authority in any of the territory described in subparagraph (A)(i).

      ‘(14)(A) Subject to subparagraph (B), the Farm Credit Administration may approve a request to charter an association of the Farm Credit System to operate under title II where the proposed charter--

        ‘(i) will include any of the geographic area included in the territory served by an association that was reassigned pursuant to section 433 of the Agricultural Credit Act of 1987 (12 U.S.C. 2071 note) (where the geographic area was a part of the association’s territory as of the date of the reassignment); and

        ‘(ii) will authorize the association to exercise lending authority in any territory in the geographic area in which the charter of an association that is not requesting the charter authorizes the association to exercise the type of lending authority that is the subject of the charter request.

      ‘(B) The Farm Credit Administration may approve a charter request under subparagraph (A) only on the approval of--

        ‘(i) the respective boards of directors of the associations that, if the charter request is approved, would exercise like lending authority in any of the territory that is the subject of the charter request;

        ‘(ii) a majority vote of the stockholders (if any) of each association described in clause (i) voting, in person or by proxy, at a duly authorized stockholder’s meeting; and

        ‘(iii) the respective boards of directors of the Farm Credit Banks that, if the charter request is approved, would exercise, either directly or through associations, like lending authority in any of the territory described in subparagraph (A)(i).’.

SEC. 512. EXAMINATIONS.

    The third sentence of section 5.19(a) (12 U.S.C. 2254(a)) is amended by striking ‘shall include’ and inserting ‘may include, if appropriate’.

SEC. 513. AUTHORITY TO EXAMINE SYSTEM INSTITUTIONS.

    (a) AUTHORITY OF FARM CREDIT SYSTEM INSURANCE CORPORATION- Section 5.59 (12 U.S.C. 2277a-8) is amended--

      (1) in the section heading, by striking ‘insured system banks’ and inserting ‘system institutions’; and

      (2) by striking subsection (b) and inserting the following new subsection:

    ‘(b) EXAMINATION OF SYSTEM INSTITUTIONS-

      ‘(1) EXAMINATION AUTHORITY-

        ‘(A) IN GENERAL- If the Board of Directors considers it necessary to examine an insured System bank, a production credit association, an association making direct loans under the authority provided under section 7.6, or any System institution in receivership, the Board may, using Farm Credit Administration examiners, conduct the examination using reports and other information on the System institution prepared or held by the Farm Credit Administration.

        ‘(B) REQUEST FOR ADDITIONAL EXAMINATION OR OTHER INFORMATION- If the Board determines that such reports or information are not adequate to enable the Corporation to carry out the duties of the Corporation under this subsection, the Board shall request the Farm Credit Administration to examine or to obtain other information from or about the System institution and provide to the Corporation the resulting examination report or such other information.

      ‘(2) APPOINTMENT OF EXAMINERS- If the Farm Credit Administration informs the Corporation that the Farm Credit Administration is unable to comply with a request made under paragraph (1)(B) with respect to a System institution, the Board may appoint examiners to examine the institution.

      ‘(3) POWERS AND REPORT- Each examiner appointed under paragraph (2) shall make such examination of the affairs of the System institution as the Board may direct, and shall make a full and detailed report of the examination to the Corporation.

      ‘(4) APPOINTMENT OF CLAIM AGENTS- The Board of Directors of the Corporation shall appoint claim agents who may investigate and examine all claims for insured obligations.’.

    (b) DUTIES OF THE FARM CREDIT ADMINISTRATION- Section 5.19 (12 U.S.C. 2254) is amended by adding at the end the following new subsection:

    ‘(d) On receipt of a request made under section 5.59(b)(1)(B) with respect to a System institution, the Farm Credit Administration shall--

      ‘(1) furnish for the confidential use of the Farm Credit System Insurance Corporation reports of examination of the institution and other reports or information on the institution; and

      ‘(2)(A) examine, or obtain other information on, the institution and furnish for the confidential use of the Farm Credit System Insurance Corporation the report of the examination and such other information; or

      ‘(B) if the Farm Credit Administration Board determines that compliance with the request would substantially impair the ability of the Farm Credit Administration to carry out the other duties and responsibilities of the Farm Credit Administration under this Act, notify the Board of Directors of the Farm Credit System Insurance Corporation that the Farm Credit Administration will be unable to comply with the request.’.

SEC. 514. FINANCIAL DISCLOSURE AND CONFLICT OF INTEREST REPORTING BY DIRECTORS, OFFICERS, AND EMPLOYEES OF FARM CREDIT SYSTEM INSTITUTIONS.

    (a) FINDINGS- Congress finds that--

      (1) the disclosure of the compensation paid to, loans made to, and transactions made with a Farm Credit System institution by, directors and senior officers of the institution provides the stockholders of the institutions with information necessary to better manage the institutions, provides the Farm Credit Administration with information necessary to efficiently and effectively regulate the institutions, and enhances the financial integrity of the Farm Credit System by making the information available to potential investors;

      (2) the reporting of potential conflicts of interest by directors, officers, and employees of institutions of the Farm Credit System benefits the stockholders of the institutions, helps to ensure the financial viability of the institutions, provides information valuable to the Farm Credit Administration in periodic examinations of the institutions, and therefore enhances the safety and soundness of the Farm Credit System; and

      (3) the directors, officers, or employees of some Farm Credit System institutions may not be subject to the regulations of the Farm Credit Administration requiring the disclosure of the financial information and the reporting of the potential conflicts of interest.

    (b) PURPOSE- It is the purpose of this section to ensure that the information reported by the directors, officers, and employees of Farm Credit System institutions under regulations of the Farm Credit Administration requiring the disclosure of financial information and the reporting of potential conflicts of interest--

      (1) provides the stockholders of all Farm Credit System institutions with information to assist the stockholders in making informed decisions regarding the operation of the institutions;

      (2) provides investors and potential investors with information necessary to assist them in making investment decisions regarding Farm Credit System obligations or institutions; and

      (3) provides the Farm Credit Administration with information necessary to allow the Farm Credit Administration to effectively and efficiently examine and regulate all Farm Credit System institutions and thus enhance the safety and soundness of the Farm Credit System.

    (c) REVIEW- Not later than 120 days after the date of enactment of this Act, the Farm Credit Administration shall complete a review of the current regulations of the Farm Credit Administration regarding the disclosure of financial information and the reporting of potential conflicts of interest by the directors, officers, and employees of Farm Credit System institutions. Consistent with the purpose of this section as provided in subsection (b), the review shall address whether the regulations--

      (1) are adequate to fulfill the purpose of this section and such other purposes as the Farm Credit Administration determines to be consistent with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), and other applicable law, and to be otherwise necessary or appropriate;

      (2) currently require the disclosure of financial information and the reporting of potential conflicts of interest by the directors, officers, and employees of all Farm Credit System institutions; and

      (3) currently require the disclosure or reporting of the information by all of the appropriate directors, officers, or employees of Farm Credit System institutions.

    (d) IMPLEMENTATION- Not later than 360 days after the date of enactment of this Act, the Farm Credit Administration shall amend its current financial disclosure and conflict of interest regulations as the Administration determines necessary to carry out the purpose of this section and to address any deficiencies in the regulations that the Farm Credit Administration determines necessary pursuant to the review conducted under subsection (c).

SEC. 515. ONE-TIME EFAP ASSISTANCE.

    (a) USE OF ACCOUNT- The Secretary of Agriculture shall use the account in which funds appropriated under section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note) are credited or deposited, or another account established for the use of the Secretary of Agriculture, for the purpose of purchasing, processing and distributing additional commodities for the emergency food assistance program established under such Act (7 U.S.C. 612c note) as required by this section.

    (b) USE OF RECEIPTS-

      (1) IN GENERAL- Not later than 10 days after the date of enactment of this Act, the Director of the Office of Management and Budget shall--

        (A) calculate the estimated present value of the future receipts available to the Federal Government, under procedures or definitions established in the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), as a result of enactment of this Act and the amendments made by this Act; and

        (B) advise the Secretary of Agriculture, the Committee on Agriculture of the House of Representatives, and the Committee on Agriculture, Nutrition, and Forestry of the Senate of the dollar amount of that value.

      (2) CREDIT- Not later than 20 days after the date of enactment of this Act, an amount equal to the dollar amount of that value shall be credited to, or deposited in, the account referred to in subsection (a) by the Secretary of the Treasury.

    (c) REQUIRED PURCHASE OF COMMODITIES BY THE SECRETARY OF AGRICULTURE-

      (1) IN GENERAL- The Secretary of Agriculture shall--

        (A) use all of the funds provided to the Secretary under subsection (a) to purchase, process, and distribute additional commodities for the emergency food assistance program; and

        (B) allot the additional commodities to States in accordance with the application of the allocation formula established in section 214(f) of the Emergency Food Assistance Act of 1983 (Public Law 98-8; 7 U.S.C. 612c note) to the total value of the additional commodities.

      (2) TYPES AND VARIETIES- The additional commodities shall be of the types and varieties required under section 214(d) of such Act.

      (3) REALLOCATION- The additional commodities may be reallocated under procedures established by the Secretary of Agriculture in accordance with section 214(g) of such Act.

    (d) ENTITLEMENT TO RECEIVE COMMODITIES- Each State shall be entitled to receive during fiscal year 1993 its allotment of the additional commodities purchased by the Secretary of Agriculture under this section.

    (e) TERMINATION OF AUTHORITY- The authority provided to carry out this section shall terminate on September 30, 1993.

SEC. 516. TECHNICAL CORRECTIONS.

    (a) CORRECTION OF REFERENCE TO SECTION 1236 OF THE FOOD SECURITY ACT OF 1985- The matter under the heading ‘CONSTRUCTION AND ANADROMOUS FISH’ of title I of the Department of the Interior and Related Agencies Appropriations Act, 1991 (Public Law 101-512; 104 Stat. 1918) is amended by striking ‘title 16 U.S.C. section 3832(a)(6)’ and inserting ‘section 1232(a)(6) of the Food Security Act of 1985 (16 U.S.C. 3832(a)(6))’.

    (b) SECTION 1245(b) OF THE FOOD SECURITY ACT OF 1985-

      (1) CORRECTION- Section 1245(b) of the Food Security Act of 1985 (16 U.S.C. 3845(b)) is amended by striking ‘(A) through (G)’ and inserting ‘A through G’.

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall take effect immediately after section 1443 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101-624; 104 Stat. 3602) took effect.

    (c) SECTION 307(a)(6)(B) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) CORRECTION- Section 307(a)(6)(B) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(a)(6)(B)) is amended by striking clause (ii), and by redesignating clauses (iii) through (viii) as clauses (ii) through (vii), respectively.

      (2) EFFECTIVE DATE- The amendments made by paragraph (1) of this subsection shall take effect at the same time as the amendments made by section 501(a) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1865) took effect.

    (d) SECTION 310B(c) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT- Section 310B(c) (7 U.S.C. 1932(c)) is amended by striking ‘business enterprises,’ and inserting ‘business enterprises or the creation, expansion, and operation of rural distance learning networks or rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancement to adult students,’.

    (e) SECTION 310D(a) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) CORRECTION- Section 310D(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1934(a)) is amended by striking ‘304(d)(1)’ and inserting ‘304(a)(1)’.

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) of this subsection shall take effect at the same time as the amendments made by section 501(a) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1865) took effect.

    (f) SECTION 312(a) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) REPLACEMENT OF UNEXECUTABLE AMENDMENT MADE BY THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT OF 1990-

        (A) CORRECTION- Subsection (b) of section 1818 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101-624; 104 Stat. 3830) is amended to read as follows:

    ‘(b) OPERATING LOAN PURPOSES- The first sentence of section 312(a) (7 U.S.C. 1942(a)) is amended--

      ‘(1) by striking ‘and’ at the end of clause (11); and

      ‘(2) by inserting ‘, and (13) borrower training under section 359’ before the period at the end.’.

        (B) EFFECTIVE DATE- The amendment made by subparagraph (A) shall take effect as if included in the Food, Agriculture, Conservation, and Trade Act of 1990 at the time such Act became law.

      (2) REPEAL OF UNEXECUTABLE AMENDMENT MADE BY THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT AMENDMENTS OF 1991- Subsection (b) of section 501 of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1866) is repealed. The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) shall be applied and administered as if such subsection had never become law.

    (g) AMENDMENTS TO SECTION 331E OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) CORRECTION- Section 331E of the Consolidated Farm and Rural Development Act (7 U.S.C. 1981e) is amended--

        (A) in subsection (a), by striking ‘Disaster Relief Act of 1974’ and inserting ‘Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.)’; and

        (B) in subsection (b), by inserting ‘Robert T. Stafford’ before ‘Disaster Relief’.

      (2) EFFECTIVE DATE- The amendments made by paragraph (1) of this subsection shall take effect immediately after section 501(d) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1866) took effect.

    (h) SECTION 335(e)(1)(A)(i) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) CORRECTIONS TO AMENDMENT MADE BY THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT AMENDMENTS OF 1991- Section 501(f)(1) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1867) is amended--

        (A) by inserting ‘the first place such term appears’ before ‘and all that follows’; and

        (B) by striking ‘borrower-owner (as defined in subparagraph (F))’ and inserting ‘the borrower-owner (as defined in subparagraph (F))’.

      (2) EFFECTIVE DATE- The amendments made by paragraph (1) of this subsection shall take effect immediately after section 501(f) of the Food, Agriculture, Conservation, and Trade Act of 1990 took effect.

    (i) SECTION 352(a) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT- Section 352(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 2000(a)) is amended by redesignating the second paragraph (4) as paragraph (5).

    (j) SECTION 352(b)(2) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT-

      (1) CORRECTION- Section 352(b)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 2000(b)(2)) is amended by striking ‘borrower’s’ and inserting ‘borrower-owner’s’.

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) of this subsection shall take effect at the same time as the amendments made by section 501(f) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1867) took effect.

    (k) SECTION 702(h)(2) OF THE FOOD, AGRICULTURE, CONSERVATION, AND TRADE ACT AMENDMENTS OF 1991- Section 702(h)(2) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1881) is amended by inserting ‘section’ before ‘2388(h)(3)’.

    (l) SECTION 306C(b)(1) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT- Section 306C(b)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926c(b)(1)) is amended by striking ‘or connecting such systems to the residences of such individuals’ and inserting ‘, connecting the systems to the residences of the individuals, or installing plumbing and fixtures within the residences of the individuals to facilitate the use of the water supply and waste disposal systems’.

    (m) SECTION 306C OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT- Section 306C of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926c) is amended by adding at the end the following new subsection:

    ‘(f) REGULATIONS- Not later than 30 days after the date of enactment of this subsection, the Secretary shall issue interim final regulations, with a request for public comments, implementing this section.’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.