H.R. 6125 (102nd): Farm Credit Banks and Associations Safety and Soundness Act of 1992

102nd Congress, 1991–1992. Text as of Oct 28, 1992 (Passed Congress/Enrolled Bill).

Status & Summary | PDF | Source: GPOStatutes at Large

106 STAT. 4102                   PUBLIC LAW 102-552—OCT. 28, 1992

                   Public Law 102-552
                   102d Congress
                                                       An Act
   Oct. 28, 1992   To enhance the financial safety and soundness of the banks and associations of
   [H.R. 6125]                     the Farm Credit System, and for other purposes.
                       Be it enacted by the Senate and House of Representatives of
  Farm Credit      the United States of America in Congress assembled,
  Banks and
  Associations     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
  Safety and
  Soundness Act       (a) SHORT TITLE.—This Act mav be cited   as the "Farm Credit
  of 1992.         Banks and Associations Safety and Soundness Act of 1992".
  12 u s e 2001         (b) TABLE OF CONTENTS.—The table of contents of this Act
(S note.           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 cap-
                              ital, supplemental premiums, and consolidation.
                     TITLE III—REPAYMENT OF FARM CREDIT SYSTEM DEBT OBLIGATIONS
                   Sec. 301. Capital preservation.
                   Sec. 302. Preferred stock.                                             -^
                   Sec. 303. Systemwide repajnnaent 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. Techniccu 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 mani^ment participation authority.
                   Sec. 503. Eqmty 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 indebt-
                              edness.
                   Sec. 509. Compensation of bank directors.
                   Sec. 510. Clarification of treatment of Farm Credit Administration operating ex-
                              penses.
                   Sec. 511. Approval of competitive charters.
                   Sec. 512. Examinations.
                   Sec. 513. Authority to examine System institutions.

PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4103 Sec. 514. Financial disclosiire and conflict of interest reporting by directors, offi- cers, 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 SOUND- NESS SEC. 101. DEFINITION OF PERMANENT CAPITAL. Paragraph (1) of section 4.3A(a) (12 U.S.C. 2154a(aXl)) 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 otifier 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 other- wise 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 instnunents 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— President. "(1) are experienced or knowledgeable in agricultural economics and financial reporting and dieclosure; "(2) are experienced or knowledgeable in the regulation of financial entities; or 'X3) have a strong financial, legal, or regulatory back- groimd.".
106 STAT. 4104 PUBLIC LAW 102-552—OCT. 28, 1992 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: *«EC. SJ». 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 'Bosird'). 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 mem- bers, who shall be citizens of the United States and broadly President. 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. President. «(3) CHAIRPERSON.—Of the persons appointed to the Board, one shall be designated by the President to serve as Chair- person 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 emplojonent in any institution of the Farm Credit System, "(b) TERM OF OFFICE.— "(1) IN GENERAL.—^The term of ofiice 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 imexpired terms of 3 years or less may be reappointed for a full 6-year term. "(S) 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.
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4105 "(4) RULES; RECORDS.—The Board shall adopt such rules as the Board considers appropriate for the transaction of busi- ness 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 fall 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.— 12 use 2277a-2 (1) IN GENERAL.—^The amendments made by this section note. 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 sub- section (a) of this section) shall continue in existence and con- tinue 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 AGREE- BfENTS. (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 Sys- tem Assistance Board and System institutions certifying the institu- tions 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.".
106 STAT. 4106 PUBLIC LAW 102-552—OCT. 28, 1992 (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 ena 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 I : or condition imposed on the institution by the Farm Credit System Assistance Board imder section 6.6 or by the Farm Credit System Insursince 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 per- sonnel and resources of the Farm Credit Administration to minimize duplication of effort and to reduce costs.". 12 u s e 2277a-4 SEC. 204. GAO REPORTS ON RISK-BASED INSURANCE PREMIUMS, note. ACCESS TO ASSOCIATION CAPITAL, SUPPLEMENTAL PRE- MIUMS, AND CONSOLIDATION. (a) IN GENERAL.—The Comptroller CJeneral of the United States shall investigate, review, and evaluate the feasibility and appro- priateness, and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutri- tion, and Forestry of the Senate, on the advantages and disadvan- tages 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 pur- chase stock in the district bank, if needed, to prevent a bank from having to retiun 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 nmds 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 Corpora- tion to assess the association could have on the association's incentives for building capital; (2) the authority to collect supplemental insurance pre- miums under certain circimistances, including a study of—
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4107 ^ . (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 eco- nomic scenarios and the probabiUty of the occurrence of each of those scenarios; (C) the effects on capital accumulation and interest rates of levering a supplemental premium; and (D) limitations on any authority to levy supplemental premiums and the underlying basis for the umitations; and (3) the authority to establish an insurance premium rate structure that would take into account, on an mstitution-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 Agri- culture 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 Intermedi- ate 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 Cfredit Svstem; (E) the potential impact on bank and association rela- tionships; 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 commit- tees 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 Gen- eral 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(eX3) (12 U.S.C. 2278a-9(eX3)) is amended—
106 STAT. 4108 PUBLIC LAW 102-552—OCT. 28, 1992 (1) by striking subparagraph (C) and inserting the following new subparagraph: "(C) PAYMENT OF PRINCIPAL.— "(i) I N 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 shaU be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Cor- poration the estimated present value of the payment required under this subparagraph had the bank remained in the System. "(iii) BANKS UNDERGOING UQUIDATION.—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 estete of the bank. "(iv) OBUGATIONS OF OTHER BANKS.—The obliga- tions 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 aft^er the other banks have met their entire pa3m(ient obligation, shaU 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.— Contracts. «(i) IN GENERAL.—In order to provide for the orderly funding and discharge over time of the obliga- tion 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 tiie Financial Assistance Corporation under which the bank will make annual annmty-type pa3rments to the Financial Assistance Con>oration, beginning no later than December 31, 1992 (except for any bank that did not meet its interim capital reauirement on December 31,1990, in which case the bank shall begin
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4109 making the payments no later than December 31,1993) in amounts designed to accumulate, in total, including earnings on the amoimts, to 90 percent of the bank's ultimate obligation. The Financial Assistance Corpora- tion shall partially discharge the bank from its obliga- tion under subparagraph (C) to the extent of each such pajrment and the earnings on the pajrment 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 piirsuant to the agreements shall be invested in eligible investments as defined in section 6.25(aXl). 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 Finsuicial Assistance Corporation under subparagraph (D) be considered a liability of any System bank". SEC. 302. PREFERRED STOCK. Subparagraph (B) of section 6.26(dXl) (12 U.S.C. 2278b- 6(d)(lXB)) is amended to read as follows: "(B) PAYMENTS BY INSTITUTIONS.— "(i) IN GENERAL.—^Except as provided in subpara- graph (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 amoimt 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 pre- ferred 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 amoiint as the institution may ^ be required to appropriate imder any assist- ance agreement the institution has with the Farm Credit System Assistance Board or the
106 STAT. 4110 PUBLIC LAW 102-552—OCT. 28, 1992 Farm Credit System Insurance Corporation; or "(bb) the amount that, if appropriated to the accoimt in equal amounts m 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 "(11) any amount that had been appropriated to the account in a previous year but had there- after 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) m that year or to the extent that the appropriation would cause the institution's preferred stock to be impaired. "(iv) USE.—^The amoimt 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 com- mon stock for purposes of the application of operating losses. "(v) PREFERRED STOCK.—^The appropriations of sur- plus by an institution shall not anect the treatment of its preferred stock (and of the appropriated unallocated surplus) as equity for purposes of regu- latory permanent capital requirements.". SEC. 303. SYSTEMWIDE REPAYMENT OBLIGATION. Subparagraph (C) of section 6.26(dXl) (12 U.S.C. 2278b- 6(dX IXC;)) 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 Corpora- tion 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 Cforporation, 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 "(ID 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 obUgation of each bank
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4111 to the Financial Assistance Corporation under this subparagraph shall be recorded each year as an expense item, in accordance with generally accepted accoimting 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 lo£ui pricing or otherwise) all or part of the amount necessaiy to satisfy the payment requirement to its afiEiliated direct lender associations based on proportionate average accruing retail loan volimies for the preceding 15 years, except that the bank shall remain primarily Uable for the amoimt. "(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 Cor- poration 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 amoimt (calculated as if the bank had left the System on the date it was placed in Uquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of any bank imdergoing liquidation. Tne obligations of other banks shall not be reduced in anticipation of an^ such recoveries from banks leav- ing 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' pajmoient 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 Sys- tem, of the present value of the future payment obliga- tion 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 under- going liquidation.". SEC. 304. REPAYMENT OF TREASURY-PAID INTEREST. (a) IN GENERAL.—Paragraph (5) of section 6.26(c) (12 U.S.C. 2278b-6(cX5)) 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
106 STAT. 4112 PUBLIC LAW 102-552—OCT. 28, 1992 Financial Assistance Corporation shall repay to the Sec- retary 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 oe 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 Secretaiy of the Treasunr, 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 pa3anent 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 ac^justment, as appro- priate, by the Financial Assistence Corporation during each of the last 5 years prior to the date the Financial Assistance Corporation is obligated to make the repay- ment, in order to ensure that the Financial Assistance Corporation vdll have the amount of funds needed to make the repajnnent 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 repa3naient 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(aXl). The funds and the earnings on the funds shall be available only for the repayment to the Secretory of the Treasury provided for in subparagraph (A). "(D) PASS THROUGH.—A bank may (and, to the extent necessary to satisfy its obligations, snail) pass on (either directly, or indirectly through loan pricing or otherwise) all or part of the assessments to ite affiliated direct lender associations based on proportionate average accruing retail loan volumes for the preceding year, but the bank shall remain primarily Uable for the amounts. "(E) LIABILITY.— "(i) BANKS TERMINATING SYSTEM STATUS OR IN UQ- UIDATION.—^Any bank terminating System stotus >ursuant to section 7.10 shall be required, under regu- {ations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated : I, present value of all future such assessmente 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4113 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 subparajgraph 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 LiQinDATlON.—Any association terminating System status pursuant to section 7.10 shall be required, under regula- tions 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 afiiliated 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 (caicidated as if the association had left the System on the date it was placed in Uquidation) 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 assess- ments paid by banks to the Financial Assistance Cor- poration 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 Svstem bank or association, shall nonetheless be included in the capital of the bank or association for purposes of determining its compliance with regu- latory capital requirements. **(ii) DURING THE FINAL 5 YEARS PRIOR TO REPAY- MENT.—^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 piirsuant to subpara- graph (A), 60 percent; "(11) 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 subpara- graph (A), 30 percent; and "(III) period beginning 3 years prior to the date on which the Financial Assistance Corpora-
106 STAT. 4114 PUBLIC LAW 102-552—OCT. 28, 1992 tion is required to repay the Secretary of the Treas- ury piirsuant 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 assess- ments to the Financial Assistance Corporation under subparagraph (B) that is recognized as an expense on the IK>OKS of any System bank or association, shsdl nonetheless be included in the capital of the bank or association for purposes of determining its compli- ance with regulatory capital requirements. . (b) CONFORMING AMENDMENT.—Section 6.28 (12 U.S.C. 2278b- 8) is amended by striking subsection (b) and redesignating sub- section (c) as subsection (b). SEC. 306. TRANSFER OF OBUGATIONS 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 (2XB), /- by striking "INSTITUTIONS** and insertmg "BANKS"; (B) by striking "institutions'* each place it appears in paragraphs (2XB), (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 me 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 vear.**; (2)insuDsection(d)(l)— (A) by striking subparagraph (D); and (B) by redesignating subparagraph (E) as subpara- graph (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 UQUIDATION.—^For purposes of this section and section 6.9, the term 'beuik* 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—
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4115 (1) in paragraph (3)— (A) in subparagraph (A)— (i) by striking the heading and inserting the fol- lowing: "CERTAIN PRINCIPAL AND INTEREST OBUGA- TIONS.—"; (ii) in clause (i)— (I) l ^ inserting after "subsection (a)," the fol- lowing: on the payment of principal or interest due under subparagraphs (B) and (C) of section 6.9(eX3), on the payment of principal due under paragraph (IXC), or on the pajrment of an assess- ment due imder subsection (cXSXB),"; (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 hea^ng and inserting the following new heading: "PRIN- CIPAL 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 amoimts"; and (2) in paragraph (4)— (A) in subparagraph (A), by inserting "or section 6.9(eX3XA)" 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 OBUGATIONS.—"; (II) by inserting after "subsection (c)," the fol- lowing: "on the payment of principal or interest due under subparagraphs (B) and (C) of section 6.9(eX3), on the payment of principal due under paragraph (IXC), or on the payment of an assess- ment due under subsection (cX5XB),"; 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
106 STAT. 4116 PUBLIC LAW 102-552—CK!T. 28, 1992 OF BONDS ISSUED TO FUND PURCHASE OF PREFERRED STOCK.—". SEC. 307. AUTHORmr OF FINANCIAL ASSISTANCE CORPORATION. (a) PURPOSE.—Section 6.21 (12 U.S.C. 2278b-l) is amended by inserting before the period at the end tiie following: "and to assist, pursuant to section 6.9(e) and subsections (c) through (g) of section 6.26, in the repa^ent by System institutions to those persons who provided funds m connection with the program". (b) TERMINATION.—Section 6.31(a) (12 U.S.C. 2278b-ll(a)) is amended by striking *i;erminate on" and inserting the following: '^rminate on the complete discharge by the Financial Assistance Corporation of its responsibilities under section 6.9(e) and sub- sections (c) through (g) of section 6.26 with regard to repa3rments by System institutions, but in no event later than 2 years following". SEC. 308. TECHNICAL AMENDMENTS. (a) TECHNICAL AMENDMENT TO THE FOOD, AGRICULTURE, CON- SERVATION, 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(1XD) (16 U.S.C. 3821(1XD))" and insertmg "in section 1221(aXlXD) (16 U.S.C. 3821(aXlXD))". (b) TECHNICAL AMENDMENTS TO THE FARM CREDIT ACT OF 1971.— (1) Section 8.3(cX13) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-3(cX13)) is amended by striking "8.11(g)" and inserting "8.11(e)". (2) Section 8.11(aXlXBXii) of such Act (12 U.S.C. 2279aa- ll(aXlXBXii)) 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-l) is amended— (A) in each of subsections (a), (bXlXD), and (bX2), by striking "the date of the enactment of this section" each place the term appears and inserting "December 13, 1991**; and (B) in subsection (bXlXE), 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 FED- ERAL 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 FED- ERAL 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4117 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 (BXiiXIIXbb)) merges in its entirety with a Farm Credit Bank. "(iii) LIMITED LENDING AUTHORITY.—Notwithstand- ing any provision of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), the Farm Credit Bank result- ing 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(aX2) of such Act (12 U.S.C. 2252(aX2)). "(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 Effective date, 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 imder this subsection, or July 1, 1994, whichever is sooner. "(ii) LIMITATION ON OPERATING AUTHORITY.— "(I) IN GENERAL.—^Notwithstanding clause (i) and subparagraph (AXii), the authority of the Fed- eral Intermediate Credit Bank of Jackson to oper- ate 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.—Not- withstanding clause (i), the authority of the Fed- eral Intermediate Credit Bank of Jackson shall not include the authority for the Bank to modify, nor shall the Farm Cre(ht Administration approve such a modification to, the boundaries of the Fifth Farm Credit District to reafliliate any portion of the District with another Farm Credit Bank, except—
106 STAT. 4118 PUBLIC LAW 102-552—OCT. 28, 1992 "(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 regula- tions under such Act. "(iii) LIMITATION ON AUTHORrry 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 sub- section, or July 1,1994, whichever is sooner. "(ID BANK INTEGMTY.—Notwithstanding clause (i), the authority of the Federal Intermedi- ,,; , > ate 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 sub- section to include the territory in the States of Alabama, Louisiana, and Mississippi, except as provided in clause (iiXIIXbb)) as a whole entity such that the entire chartered territory of the Fed- eral Intermediate Credit Bank of Jackson is merged with the Farm Credit Bank. "(Ill) LIMITATION.—Beginning on the date of an order issued by the Farm Credit Administration under subparagraph (D), the authority of the Fed- eral 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, Uie Federal Intermediate Credit Bank of Jackson delivers to the Farm Credit Administration a letter of intent to merge with a Farm Credit Bank, summariz- ing the terms and conditions of the merger (including, but not limited to, board composition, capital structure, exchange, or transfer of equities, and termination) smned Dy 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, tiie Farm Credit Administration shall, on its deter- mination that the letter of intent represents a bona fidci good faith agreement in principle between the two banks to merge, and that there is at least a reason- able 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,
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4119 of the requirement under subparagraph (A). Any exten- sion provided under this subparagraph may be condi- tioned on such terms and conoitions 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 Administra- tion grants an extension under clause (i), it shall issue an order under subparagraph (D) immecUatel^ if— "(1) the Federal Intermediate Credit Bank of Jackson, or the Farm Credit Bank that is a si^na- tor^ to the letter of intent under clause (i), provides written notification to the Farm Credit Adminis- tration that the bank does not intend to complete the merger described in the letter of intent; "(11) the Farm Credit Administration deter- mines that the Federal Intermediate Credit Bank of Jackson is not compljring with any term or condi- tion on which an extension under clause (i) was conditioned: or "(III) the Farm Credit Administration deter- mines 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 require- ments of subparagraph (A). "(D) FAILURE TO MERGE; ISSUANCE OF ORDER.—If the Federal Intermediate Credit Bank of Jackson fails to com- ply, or notifies ithe 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 ajfter the date specified in subparagraph (A), or such other date specified by the Farm Credit Administration under subparagraph (C), issue, notwith- standing 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 afl^r the issuance of an order by the Farm Credit Administration under paragraph (IXD), an arbitrator (or panel of arbitra- tors) shall be named by the American Arbitration Associa- tion in accordance with the Commercial Arbitration Rules of the American Arbitration Association to serve as the arbitrator refen'ed to in Uiis paragraph. "(B) DUTIES.—^The arbitrator shall determine the terms and conditions of the merger required under an order issued under paragraph (IXD), 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 59-194 O—93 16:QL3(Pt. 5)
106 STAT. 4120 PUBLIC LAW 102-552—OCT. 28, 1992 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. 2278h-5). "(D) DEVELOPMENT OF MERGER PLANS.— "(i) I N GENERAL.—Not later than 100 days after the issuance of an order by the Farm Credit Adminis- tration under paragraph (1)(D), the arbitrator shall develop and submit for certification to the Farm Credit Administration a plan specifying the terms and condi- tions 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 eiffected and interested parties in submissions under clause (ii). "(II) Valuation of assets fairly, equitably, and / consistently for all parties involved. "(Ill) Establishment of capitalization and fund- ing terms in a manner that treats farmer-borrow- ers and stockholders in the two involved farm credit districts equitably and takes accoiint of risk. "(IV) Ensure the viability of the resulting Farm Credit Bank and associations of the bank and the abilitv of the resulting bank and associa- tions 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 arbitra- tor, regarding the terms and conditions of an appro- priate 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 tne 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4121 written request of the bank and at the bank's expense. The arbitrator shall provide both banks with a reason- able opportunity to review and respond to any submis- sion 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. "(Ill) 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 Mis- sissippi as the arbitrator determines necessaiy 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 agri- cultural 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 ouier 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 Clredit 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 mat- ters: "(I) A proposal for the establishment of an agricultural credit association in each of the geographic areas specified in subparagraph (FXiii) (the charters of which, if validly issued under
106 STAT. 4122 PUBLIC LAW 102-552—OCT. 28, 1992 subparagraph (GXi) pursiiant to approval in the referendum under subparagraph (F), shall be sub- ject to change thereaiter m accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations). ''(II) Tne initial composition, if the proposal for the establishment of agricultural credit associa- tions 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). "(Ill) The valuation, for purposes of the pro- posed merger of the production credit association and the Federal land bank association in each of the geo^aphic areas specified in subpara- graph (FXiii), 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 imder 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 Mis- sissippi 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 thereafl^er in accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable regulations). "(VII) Ally other terms and conditions or other matters that the arbitrator considers necessary, "(v) CONSULTATION WITH INSURANCE CORPORA- TION.—^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.
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4123 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 revi- sions 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 Adminis- tration under paragraph (IXD), the American Arbitra- tion 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 associa- tions in the States of Alabama, Louisiana, and Mis- sissippi, in accordance with the Election Rules of the American Arbitration Association, to determine whether the farmer-borrowers of each association in the geographic aresis 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 agricultiural credit association as proposed in the plan; and "(II) in the case of Federal land bank associa- tion 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 Bai^ of Jackson, the Farm Credit Bank of Texas, and their affiliated associations shall cooperate in the conduct of the referendum, as deter- mined necessary by the Arbitrator. "(ii) DISCLOSURE.—The arbitrator shall send to farmer-borrowers eligible to vote under this subpara- graph, 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 rel- evant to the choice between credit delivery through the ciurent 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.
106 STAT. 4124 PUBLIC LAW 102-552—OCT. 28, 1992 "(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. "(Ill) The area served bv 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. Public "(iv) PUBLICATION OF RESULTS.—The results of the information. vote under this subparagraph, as tabulated by the American Arbitration Association, shall be made promptly available to the public in a manner deter- minea 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 amend- ments and take such other regulatory actions as may be necessary to implement the merger or mergers as provided for under the certified plan. In tms regard, the Farm Credit Administration shall— "(i) issue a charter or charter amendment and take any such other regulatory actions as may be nec- essary to provide for the establishment of an agricul- tural credit association in each of the geographic areas described in subparagraph (FXiii) where a msgority of the farmer-borrowers of both the production credit association and the Federal land bank association voted under subparagraph (FXi) 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 associa- tion in any of the geographic areas described in subparagraph (FXiii) where less than a majority of the farmer-borrowers of the production credit associa- tion or the Federal land bank association voted in the referendum under subparagraph (FXi) that they
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4125 preferred to have credit delivered through an agricultiiral credit association (provided that the char- ter 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 imder paragraph (IXD), the Farm Credit System Insur- ance Corporation shall expend amounts from the Farm Credit Insurance Fiuid to the extent necessary to facili- tate the merger prescribed in the plan. "(ii) MAINTENANCE OP BOOK VALUE.—Assistance provided by the Corporation imder this subparagraph shall be in amounts not to exceed that required to maintain book value per share of stockholders' eauity at the same value reflected on the most recent audited financial statements of the Federal Intermediate Credit Bank of Jackson £md 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 litiga- tion 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 imme- diately 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 teims and conditions as the Corporation deems appropriate to faciUtate 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 Intermedi- ate Credit Bank of Jackson is being operated in an unsafe or unsoimd manner (as determined in accord- ance 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 Fed- eral Intermediate Credit Bank of Jackson to merge with a Farm Credit Bank, subject to such terms and conditions as the Farm Credit Administration may pre- scribe. The Farm Credit System Insurance Corporation shall expend amounts in the Farm Credit Insurance
106 STAT. 4126 PUBLIC LAW 102-552—OCT. 28, 1992 Fund to the extent necessary to facilitate the merger prescribed under this subpciragraph, including the provision of assistance as provided in section 5.61(aX2)(AXiii) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-10(aX2)(A)(iii)), on such terms and condi- tions as the Corporation deems appropriate. "(ii) ARBITRATED MERGER.—If at any time after the Farm Credit Administration issues an order under paragraph (IXD), 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 imsafe 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 Inter- mediate 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 ASSOCIA- TIONS.—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 sub- mit 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 associa- tion resulting from the implementation of the plan under this paragraph shall be deemed to be, an associa- tion 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-bor- rower* means a borrower from a Farm Credit System association in the State of Alabama, Louisiana, or Mis- sissippi 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 piu*suant to this sub- section shall not be subject to judicial review except as provided in this paragraph, nor shall they be subject to
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4127 the requirements of subchapter II of chapter 5 or chapter 7 of title 5, United States Code. "(B) AGENCY DETERMINATIONS.— "(i) I N 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 coiirt 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 Appel- late 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) I N GENERAL.—Except as otherwise provided in this paragraph, any petition for review of a deter- mination 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 evidenc- ing a transaction in commerce between the Federal
106 STAT. 4128 PUBLIC LAW 102-552—OCT. 28, 1992 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 sudi Act shall have exclusive jurisdiction to determine the proceeding in accordance with the applicable proce- dtures under such Act, as supplemented by procedures hereinafter provided, and no other district court shall have jurisdiction over any such challenge in any such )roceeding. Notwithstanding any other provision of I aw, 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 pos- sible in accordance with the United States Arbitration Act (9 U.S.C. 1 et sea.), or not later than 30 days fi*om the date the challenge is brought, whichever is sooner, luiless the court determines that a longer period of time is required to satisfy the requirements of the Constitution.". 12 use 2011 (b) LONG-TERM LENDING AUTHORITY OF THE FARM CREDIT BANK note. 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 fiirther 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 cnarters 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(aX2) (12 U.S.C. 2252(aX2)) is amended— (1) by inserting "(A)" afl»r "(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 autiiority, 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4129 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 msgority 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 "(11) a mcgority of the board of directors of the Farm Credit Bank with which the affected associations are affiUated; or "(ii) in a case affecting the charter of one or more banks— "(I) a mcgority of the shareholders (present and voting or voting by proxy) of the affiliated associations of each of the b a i ^ tiiat would have like lending authority in any of that territory if the charter action were taken; "(11) a msgority of the shareholders (present and voting or voting by proxy) of each of the bcuiks that would have like lending authority in any of that terri- tory if the charter action were taken; and "(III) a mcgority vote of the boards of directors of each of the banks that woiild 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 41(Ka) of the Agricul- tural 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 intermedi- ate credit bank is chartered to provide long-term credit, in the same geographic territory.". TITLE V—MISCELLANEOUS SEC. 501. VALUATION RESERVES OF PRODUCTION CREDIT ASSOCIA- TIONS. Subsection (b) of section 2.3 (12 U.S.C. 2074(b)) is amended to read as follows: "(b) APPUCATION OP EARNINGS.—At the end of each fiscal year, each production credit association shall apply the amount of t^e earnings of the association for the fiscal year in excess of the operating expenses of the association (inclucung provision for valu- ation reserves agsdnst 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 accoimts, the minimum aggregate amoimt of which shall be prescribed by the Farm Credit Bank.".
106 STAT. 4130 PUBLIC LAW 102-552—OCT. 28, 1992 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: "(BXi) Participate in any loan of a type otherwise autiiorized under this title that is made to a similar entity by any institution in the business of extending credit, including purchases of participa- tions in loans to finance international trade transactions involvmg 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 amoimt of all loan participations by the bank under this subpara- graph involving a single credit risk to exceed 10 percent of the bank's total capitial; or "(bb) if the participation by the bank will itself eaual or exceed 50 percent of the principal of the loan or, wnen t£iken together with participations in the loan by the other banks for cooperatives under this subparagraph, will cause the cumulative amoimt 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 imder this Act, unless agreed to bv the Bank or association; and "(III) the cumulative amount of participations that a bank for cooperatives may have outstanding imder this subparagraph at any time may not exceed 15 percent of the bsuik'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 territoiy 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. EQUmr 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: "(2XA) If approved by the stockholders through a bvlaw amend- ment, 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4131 cooperatives having one vote, plus a number of votes (or fractional part thereof) equal t o ^ "(i) the number of stockholders eligible to vote; multiplied by "(ii) the percentage (or fractional part thereof) of the total equity interest (incluoing allocated, but not unallocated, suiplus and reserves) in the bank of all stockholders held by the individ- ual 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 amend- ed by inserting "at any time (whether or not they have a loan from the bank outstanding)" £ifter "technical and financial assist- ance". 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, improv- ing, or operating^; and (2) by striking "to extend" and inserting "extending". SEC. 506. EUGmiLITY TO BORROW FROM A BANK FOR COOPERA- TIVES. Section 3.8(bXl) (12 U.S.C. 2129(bXl)) 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(dX2)) 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 Assist- ance Board under subparagraph (A) may attend and participate in all deliberations of the board of directors of the Corooration. "(C) TERMINATION OF ASSISTANCE BOARD.—After termi- nation 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.".
106 STAT. 4132 PUBLIC LAW 102-552—OCT. 28, 1992 SEC. 508. REPEAL OF PROHIBinON AGAINST GUARANTEE OF CER* TAIN INSTRUMENTS OF INDEBTEDNESS. Section 4.16 (12 U.S.C. 2204) is repealed. SEC. 509. COMPENSATION OF BANK DIRECTORa Section 4.21 (12 U.S.C. 2209) is amended to read as follows: •^EC. 4.21. COMPENSATION OF BANK DIRECTORS. "(a) IN GENERAL.—^The Farm Credit Administration shall mon- itor the compensation of members of the board of directors of a System bank received as compensation for serving as a director of tne bank to ensure that the amount of the compensation does not exceed a level of $20,000 per ye£ir, as a4justed to reflect changes in the Consumer Price Index for all urban consumers published by the Bureau of Labor Statistics, imless the Farm Credit Adminis- tration determines that such level adversely affects the safety and soundness of the bank. "(b) WAIVER.—^The Farm Credit Administration may waive the Hmitation prescribed in subsection (a) imder exceptional cir- cumstances, as determined in accordance with regulations promul- gated by the Farm Credit Administration.". SEC. 510. CLARIFICATION OF TREATMENT OF FARM CREDIT ADMINIS- TRATION OPERATING EXPENSES. Section 5.15(bXl) (12 U.S.C. 2250(bXl)) is amended— (1) by inserting ", for purposes of sequestration," after "regard"; and (2) by striking "or any other law". SEC. 51L 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: "(13XA) 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 1 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 Agricul- tural 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 institu- tion to exercise the type of lending authority that is the subject of the charter request. "(B) The Farm Credit Administration may approve a char- ter amendment imder 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
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4133 exercise, either directly or through associations, like lend- ing authority in any of the territory described in subpara- graph (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 char- ter 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 lend- ing authority in any of the territory described in subpara- graph (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 CORPORA- TION.—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 produc- tion credit association, an association making direct loans imder 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.
106 STAT. 4134 PUBLIC LAW 102-552—OCT. 28, 1992 "(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 tne Corporation imder this sub- section, the Board shall request the Farm Credit Adminis- tration to examine or to obtain other information from or about the System institution and provide to the Corpora- tion 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 (IXB) 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 Direc- tors 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 imder section 5.59(bXlXB) with respect to a System institution, the Farm Credit Administra- tion shall— Confidentiality. "(1) fumish for the Confidential use of the Farm Credit Reports. System Insuranct 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 institu- tion and fumish 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. 614. FINANCIAL DISCLOSURE AND CONFUCT OF INTEREST REPORTING BY DIRECTORS, OFFICERS, AND EMPLOYEES O F 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 institu- tion by, directors and senior officers of the institution provides the stockholders of the institutions with information necessaiy to better manage the institutions, provides the Farm Credit Administration with information necessary to efficiently and effectively regulate the institutions, and enhances the financial
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4135 integrity of the Farm Credit System by making the information available to potential investors; (2) the reporting of potential conflicts of interest by direc- tors, 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 soimdness 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 informa- tion 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 informa- tion necessary to assist them in making investment decisions regarding Farm Credit System obligations or institutions; and (3) provides the Farm Credit Administration with informa- tion necessarv 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 enact- ment of this Act, the Farm Credit Administration shall complete a review of the current regulations of the Farm Credit Administra- tion regarding the disclosure of financial information and the report- ing 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 deter- mines to be consistent with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), and other applicable law, and to be other- wise necessary or appropriate; (2) currently require the disclosure of financial information and the reporting of potential conflicts of interest by the direc- tors, officers, andf employees of all Farm Credit System institu- tions; 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) IMPLEME^^^ATION,—Not later than 360 days after the date Regulations. of enactment of this Act, the Farm Credit Administration shall amend its ciurent financial disclosure and conflict of interest regula- tions as the Administration determines necessary to carry out the purpose of this section and to address any deflciencies in the regula-
106 STAT. 4136 PUBLIC LAW 102-552—OCT. 28, 1992 tions that the Farm Credit Administration determines necessary pursuant to the review conducted under subsection (c). SEC. 515. ONE-TIME EFAP ASSISTANCE. (a) U S E OF ACCOUNT.—^The Secretary of Agriculture shall use the account in which fimds appropriated imder 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 accoimt established for the use of the Secretary of Agriculture, for the purpose of purchasing, processing and (ustributing additional commodities for the emergency food assistance program established under such Act (7 U.S.C. 612c note) as required by this section. (b) U S E OF RECEIPTS.— (1) IN GENERAL.—Not later than 10 days after the date of enactment of this Act, the Director of the Office of Manage- ment and Budget shall— (A) calculate the estimated present value of the future receipts available to the Federal Government, under proce- dures 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 enact- ment 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) hjr the Secretary of the Treasury. (c) REQUIRED PURCHASE OF (JOMMODITIES BY THE SECRETARY OF AGRICULTURE.— (1) IN GENERAL.—^The Secretary of A^culture shall— (A) use all of the funds provided to the Secretary imder subsection (a) to purchase, process, and distribute additional commodities for the emergency food assistance program; and (B) allot the additional commodities to States in accord- ance with the application of the allocation formula estab- lished 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 imder procedures established by the Secretary of Agnculture 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. T E C H N I C A L CORRECTIONS. (a) CORRECTION OF REFERENCE TO SECTION 1236 OF THE FOOD SECURITY ACT OF 1985.—^The matter under the heading "CONSTRUC-
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4137 HON 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 'iitle 16 16 use 3832. U.S.C. section 3832(aX6r and inserting "section 1232(aX6) of the Food Security Act of 1985 (16 U.S.C. 3832(aX6)r. (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 throurfi G". (2) EFFECTIVE DATE.—The amendment made by paragraph 16 use 3845 (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(aX6XB) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT.— (1) CORRECTION.—Section 307(aX6XB) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(aX6XB)) is amended by striking clause (ii), and by redesignating clauses (iii) througn (viii) as clauses (ii) through (vii), respectively. (2) EFFECTIVE DATE.—The amendments made by paragraph ^ use 1927 (1) of this subsection shall take effect at the same time as "°^- the amendments made by section 501(a) of the Food, Agri- culture, 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 'Ibusiness enter- >rises or the creation, expansion, and operation of rural distance fearning networks or rural learning programs that provide edu- cational 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(dXl)" and inserting •'304(aXl)". (2) EFFECTIVE DATE.—The amendment made by paragraph 7 use 1934 (1) of this subsection shall take effect at the same time as ^°*^- the amendments made by section 501(a) of the Food, Agri- culture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1865) took effect. (f) SECTION 312(a) OF THE CONSOUDATED 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 ^ use 1942. 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 peri^ at the end.". (B) EFFECTIVE DATE.—The amendment made by 7 use 1942 subparagraph (A) shall take effect as if included in the "°^
106 STAT. 4138 PUBLIC LAW 102-552—OCT. 28, 1992 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 AMEND- MENTS OF 1991.—Subsection (b) of section 501 of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 7 use 1942 (Public Law 102-237; 105 Stat. 1866) is repealed. The Consoli- andnote. ^g^^^ Yarm 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 33 IE 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 V and Emergency Assistance Act (42 U.S.C. 5121 et seq.)"; and (B) in subsection (b), by inserting "Robert T. Stafford" before "Disaster Relief^. 7 use I98ie (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)(l)(A)(i) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT.— (1) CORRECTIONS TO AMENDMENT MADE BY THE FOOD, AGRI- CULTURE, 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; 7 use 1985. 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 subpara- graph (F))" and inserting "the borrower-owner (as defined in subparagraph (F))". 7 use 1985 (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 redesignat- ing the second paragraph (4) as paragraph (5). (j) SECTION 352(b)(2) O F 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(bX2)) is amended by striking "borrower's" and inserting "borrower- owner's". 7 u s e 2000 (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, Agri- culture, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1867) took effect.
PUBLIC LAW 102-552—OCT. 28, 1992 106 STAT. 4139 (k) SECTION 702(hX2) OF THE FOOD, AGRICULTURE, CONSERVA- TION, AND TRADE ACT AMENDMENTS OF 1991.—Section 702(hX2) of the Food, Agricultiire, Conservation, and Trade Act Amendments of 1991 (Public Law 102-237; 105 Stat. 1881) is amended by insert- 7 use 1991 ing "section" before'*2388(hX3r. "°*^ (1) SECTION 306C(bXl) OF THE CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT.—Section 306C(bXl) of the ConsoUdated Farm and Rural Development Act (7 U.S.C. 1926c(bXl)) is amended by striking "or connecting such systems to the residences of such individuals" and inserting ", connecting the systems to the resi- dences of the individuals, or installing plumbing and fixtures within tiie 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 ConsoHdated 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.". Approved October 28, 1992. LEGISLATIVE HISTORY—H.R. 6125: CONGRESSIONAL RECORD, Vol. 138 (1992): Oct. 4, considered and passed House. Oct. 7, considered and passed Senate.