The Farm Credit Act and other statutes governing the Farm Credit System and the Farm Credit Administration

The Farm Credit Act

and other statutes governing

the Farm Credit System and the Farm Credit Administration

Contents

Farm Credit Act of 1971, as amended .............................................................................................................................. 1

Int

roduction .................................................................................................................................................................. 2

Title I—Farm Credit Banks ......................................................................................................................................... 3

Sec. 1.1. Policy and Objectives.— .................................................................................................................... 3

Sec. 1.2. The Farm Credit System.— ............................................................................................................... 3

Sec. 1.3. Establishment, Charters, Titles, Branches. ......................................................................................... 4

Sec. 1.4. Board of Directors. ............................................................................................................................. 4

Sec. 1.5. General Corporate Powers. ................................................................................................................ 4

Sec. 1.6. Farm Credit Bank Capitalization. ....................................................................................................... 6

Sec. 1.7. Lending Authority. ............................................................................................................................. 6

Sec. 1.8. Interest rates and Other Charges. ....................................................................................................... 8

Sec. 1.9. Eligibility.9

Sec. 1.10. Security; Terms. ............................................................................................................................... 9

Sec. 1.11. Purposes for Extensions of Credit. ................................................................................................. 10

Sec. 1.12. Related Services. ............................................................................................................................ 11

Sec. 1.13. Loans through Associations or Agents. .......................................................................................... 11

Sec. 1.14. Liens on Stock. ............................................................................................................................... 11

Sec. 1.15. Taxation.11

Title II—Farm Credit Associations ............................................................................................................................ 12

Subtitle A—Production Credit Associations .......................................................................................................... 12

Sec. 2.0. Organization and Charters. ............................................................................................................... 12

Sec. 2.1. Board of Directors. ........................................................................................................................... 13

Sec. 2.2. General Corporate Powers. .............................................................................................................. 13

Sec. 2.3. Production Credit Association Capitalization. ................................................................................. 15

Sec. 2.4. Short- and Intermediate-Term Loans; Participation; Other Financial Assistance; Terms;

Conditions; Interest; Security.......................................................................................................................... 15

Sec. 2.5. Other Services. ................................................................................................................................. 17

Sec. 2.6. Liens on Stock. ................................................................................................................................. 17

Sec

. 2.7. Taxation.17

Subtitle B—Federal Land Bank Associations ......................................................................................................... 17

Sec. 2.10. Organizations; Articles; Charters; Powers of the Farm Credit Administration. ............................. 17

Sec. 2.11. Board of Directors. ......................................................................................................................... 18

Sec. 2.12. General Corporate Powers.............................................................................................................. 18

Sec. 2.13. Federal Land Bank Association Capitalization. ............................................................................. 20

Sec. 2.14. Agreements for Sharing Gains or Losses. ...................................................................................... 20

Sec. 2.15. Liens on Stock. ............................................................................................................................... 21

Sec. 2.16. Taxation.21

Title III—Banks for Cooperatives ............................................................................................................................. 22

Part A—Banks for Cooperatives............................................................................................................................. 22

c. 3.0. Establishment; Titles; Branches. ...................................................................................................... 22

Sec. 3.1. Corporate Existence; General Corporate Powers. ............................................................................ 22

Sec. 3.2. Board of Directors. ........................................................................................................................... 25

Sec. 3.3. Bank for Coopertives Stock; Value; Classes of Stock; Voting; Exchange. ...................................... 25

Sec. 3.4. Dividends.26

Sec. 3.5. Retirement of Stock. ......................................................................................................................... 26

Sec. 3.6. Guaranty Fund Subscriptions In Lieu of Stock. ............................................................................... 26

Sec. 3.7. Lending Power. ................................................................................................................................ 26

Sec. 3.8. Eligibility.29

Sec. 3.9. Ownership of Stock by Borrowers. .................................................................................................. 31

Sec. 3.10. Interest Rates; Security; Lien; Cancellation; and Application on Indebtedness. ............................ 31

Sec. 3.11. Earnings and Reserves; Application of Savings. ............................................................................ 32

Sec. 3.12. Distribution of Assets on Liquidation or Dissolution. .................................................................... 32

Sec. 3.13. Taxation.33

Part B—National Banks for Cooperatives .............................................................................................................. 33

Sec. 3.20. Charter, Powers, and Operation. .................................................................................................... 33

Sec. 3.21. [Repealed] ...................................................................................................................................... 33

Sec. 3.22. Credit Delivery Office. ................................................................................................................... 33

Sec. 3.23. Consolidation of Functions. ........................................................................................................... 34

Sec. 3.24. Exchange of Ownership Interests. .................................................................................................. 34

Sec. 3.25. Capitalization. ................................................................................................................................ 34

Sec. 3.26. Patronage Pools. ............................................................................................................................. 34

Sec. 3.27. Transactions to Accomplish Merger. ............................................................................................. 34

Sec. 3.28. Lending Limits. .............................................................................................................................. 34

Sec. 3.29. [Repealed] ...................................................................................................................................... 35

Title IV—Provisions Applicable to Two or More Classes of Institutions of the System .......................................... 36

Introduction ............................................................................................................................................................. 36

Part A. Funding ....................................................................................................................................................... 36

Sec. 4.1. [Repealed]36

Sec. 4.2. Power to Borrow; Issuance of Notes, Bonds, Debentures, and Other Obligations. ......................... 36

Sec. 4.3. Capital Adequacy of Banks and Associations. ................................................................................. 37

Sec. 4.3A. Capitalization of System Institutions. ............................................................................................ 38

Sec. 4

.4. Liability of Banks; United States Not Liable. .................................................................................. 41

Sec. 4.5. [Repealed]42

Sec. 4.6. Bonds as Investments. ...................................................................................................................... 42

Sec. 4.7. Purchase and Sale by Federal Reserve System. ............................................................................... 42

Sec. 4.8. Purchase and Sale of Obligations. .................................................................................................... 42

Sec. 4.9. Federal Farm Credit Banks Funding Corporation. ........................................................................... 42

iii

Sec. 4.9A. Protection of Borrower Stock. ....................................................................................................... 44

rt B—Dissolution ................................................................................................................................................ 46

ec. 4.12. Dissolution; Voluntary or Involuntary Liquidation; Mergers; Receiverships or Conservators. ..... 46

ec. 4.12A. Communications with Stockholders. ........................................................................................... 47

rt C—Rights of Borrowers; Loan Restructuring ................................................................................................. 47

ec. 4.13. Disclosure. ...................................................................................................................................... 47

ec. 4.13A. Access to Documents and Information. ....................................................................................... 48

Sec. 4.13B. Notice of Action on Application. ................................................................................................. 48

ec. 4.14. Reconsideration of Actions. ........................................................................................................... 49

ec. 4.14A. Restructuring Distressed Loans. .................................................................................................. 50

ec. 4.14B. Effect of Restructuring on Borrower Stock. ................................................................................ 54

ec. 4.14C. [Repealed].................................................................................................................................... 55

epealed by section 5411(23) of the Agriculture Improvement Act of 2018. ................................................ 55

ec. 4.14D. Protection of Borrowers who Meet All Loan Obligations. .......................................................... 55

Sec. 4.14E. Waiver of Mediation Rights by Borrowers. ................................................................................. 55

rt D—Activities of Institutions of the System ..................................................................................................... 56

ec. 4.15. Nomination of Association Directors; Representative Selection of Nominees. ............................. 56

ec. 4.16. [Repealed] ...................................................................................................................................... 56

ec. 4.17. Interest Rates. ................................................................................................................................. 56

ec. 4.18. Participation Loans. ........................................................................................................................ 56

ec. 4.18A. Authority of Farm Credit Banks and Direct Lender Associations to Participate in Loans to

Similar Entities for Risk Management Purposes............................................................................................. 57

Sec. 4.19. Young, Beginning, and Small Farmers and Ranchers. ................................................................... 57

ec. 4.20. Prohibition Against Use of Signed Ballots. .................................................................................... 58

ec. 4.21. Compensation of Bank Directors. .................................................................................................. 58

rt E—Service Organizations ............................................................................................................................... 58

ec. 4.25. Establishment. ................................................................................................................................ 58

Sec. 4.26. Powers of the Farm Credit Administration. ................................................................................... 59

ec. 4.27. Regulation and Examination. ......................................................................................................... 59

Sec. 4.28. State Laws. ..................................................................................................................................... 59

ec. 4.28A. Definition of Bank. ...................................................................................................................... 59

rt F—Sale of Insurance ....................................................................................................................................... 59

ec. 4.29. Lines of Insurance. ......................................................................................................................... 59

rt G—Miscellaneous ........................................................................................................................................... 61

ec. 4.35. Limitation on Separate Sale. .......................................................................................................... 61

ec. 4.36. Right of First Refusal. .................................................................................................................... 61

ec. 4.37. Application of Uninsured Accounts. .............................................................................................. 64

ec. 4.38. Affirmative Action. ........................................................................................................................ 64

Sec. 4.39. Encouragement of Conservation Practices. .................................................................................... 64

itle V—Farm Credit Administration Organization .................................................................................................. 65

Part B—Farm Credit Administration Organization ................................................................................................ 65

ec. 5.7. The Farm Credit Administration. ..................................................................................................... 65

ec. 5.8. The Farm Credit Administration Board; Appointment; Terms of Office; Organization and

Compensation.65

ec. 5.9. Powers of the Board. ........................................................................................................................ 66

ec. 5.10. Chairman; Responsibilities; Governing Standards. ........................................................................ 66

Sec. 5.11. Organization of the Farm Credit Administration. .......................................................................... 67

ec. 5.12. Advisory Committees. .................................................................................................................... 68

Sec. 5.13. Seal.68

ec. 5.14. Administrative Expenses. ............................................................................................................... 68

ec. 5.15. Farm Credit Administration Operating Expenses Fund. ................................................................ 69

ec. 5.16. Quarters and Facilities for the Farm Credit Administration. .......................................................... 70

ec. 5.17. Enumerated Powers. ....................................................................................................................... 71

Sec. 5.18. [Repealed] ...................................................................................................................................... 75

ec. 5.19. Examinations. ................................................................................................................................. 75

Sec. 5.20. Conditions of Other Banks and Lending Institutions. .................................................................... 76

ec 5.21. Consent to the Availability of Reports and to Examinations. ......................................................... 77

ec. 5.22. Reports on Conditions of Institutions Receiving Loans or Deposits. ............................................. 77

ec. 5.22A. Uniform Financial Reporting Instructions. .................................................................................. 77

ec. 5.23. Jurisdiction. .................................................................................................................................... 78

Sec. 5.24. State Legislation. ............................................................................................................................ 78

rt C—Enforcement Powers of Farm Credit Administration ............................................................................... 78

Sec. 5.25. Cease and Desist Proceedings. ....................................................................................................... 78

ec. 5.26. Temporary Cease and Desist Orders .............................................................................................. 79

ec. 5.27. Enforcement of Temporary Cease and Desist Orders. ................................................................... 80

ec. 5.28. Suspension or Removal of Director or Officer. .............................................................................. 80

ec. 5.29. Suspension or Removal of Director or Officer Charged with Felony. ........................................... 82

Sec. 5.29A. Removal and Prohibition Authority; Industrywide Prohibition. .................................................. 83

ec. 5.30. Hearings and Judicial Review. ....................................................................................................... 84

Sec. 5.31. Jurisdiction and Enforcement. ........................................................................................................ 85

ec. 5.31A. Jurisdiction Over Institution -Affiliated Parties. ......................................................................... 86

ec. 5.32. Penalty.86

ec. 5.33. Further Penalties. ............................................................................................................................ 87

ec. 5.34. Replacement of Suspended or Removed Directors. ....................................................................... 88

ec. 5.35. Definitions. ..................................................................................................................................... 88

ec. 5.36. Notice of Service. ........................................................................................................................... 89

ec. 5.37. Ancillary Provisions; Subpena Power, etc. .................................................................................... 89

ec. 5.38. Power to Remove Directors and Officers. ...................................................................................... 90

rt D—Miscellaneous ........................................................................................................................................... 90

ec. 5.40. Repeal.90

Sec. 5.41. Amendments to Other Laws. .......................................................................................................... 91

ec. 5.42. Separability.91

ec. 5.43. Reserve Right to Amend or Repeal. ............................................................................................... 91

ec. 5.44. [Repealed] ...................................................................................................................................... 91

ec. 5.45. Transition Rules Relating to Amendment of Certain FCA Approval Authorities. ......................... 91

rt E—Farm Credit System Insurance Corporation .............................................................................................. 92

ec. 5.51. Definitions.92

Sec. 5.52. Establishment of Farm Credit System Insurance Corporation. ...................................................... 92

ec. 5.53. Board of Directors. ......................................................................................................................... 92

ec. 5.54. Commencement of Insurance. ........................................................................................................ 92

ec. 5.55. Premiums.93

Sec. 5.56. Certification of Premiums. ............................................................................................................. 97

ec. 5.57. Overpayment and Underpayment of Premiums; Remedies. ........................................................... 98

ec. 5.58. General Corporate Powers.............................................................................................................. 99

Sec. 5.59. Conduct of Corporate Affairs; Examination of System Institutions. ............................................ 101

ec. 5.60. Insurance Fund. ............................................................................................................................ 102

ec. 5.61. Powers of Corporation with Respect to Troubled Insured System Banks. ................................... 102

ec. 5.61A. Oversight Actions by the Corporation. ...................................................................................... 105

ec. 5.61B. Authority to Regulate Golden Parachute and Indemnification Payments.................................. 106

ec. 5.61C. Corporation as Conservator or Receiver; Certain Other Powers. .............................................. 109

ec. 5.62. Investment of Funds. .................................................................................................................... 148

Sec. 5.63. Exemption from Taxation. ........................................................................................................... 148

ec. 5.64. Reports.149

Sec. 5.65. Prohibitions.149

Title VI—Assistance to Farm Credit System ........................................................................................................... 151

itle VII—Restructuring of System Institutions ...................................................................................................... 151

Subtitle A—Merger of Banks Within a District ................................................................................................... 151

ec. 7.0. Power to Merge. ............................................................................................................................. 151

Sec. 7.1. Board of Directors. ......................................................................................................................... 151

Sec

. 7.2. Powers of Merged Banks. .............................................................................................................. 151

ec. 7.3. Capitalization.151

Subtitle B—Mergers, Transfers of Assets, and Powers of Associations Within a District ................................... 152

hapter 1—Transfers by Federal Land Banks to Federal Land Bank Associations ..................................... 152

Sec. 7.6. Transfer of Lending Authority. ...................................................................................................... 152

ec. 7.7. Equalization of Loan-Making Powers of Certain District Associations. ........................................ 152

Chapter 2—Merger of Like and Unlike Associations ................................................................................... 153

ec. 7.8. Merger of Associations. ................................................................................................................. 153

hapter 3—Reconsideration ......................................................................................................................... 154

ec. 7.9. Reconsideration. ............................................................................................................................. 154

Chapter 4—Termination and Dissolution of Institutions .............................................................................. 155

ec. 7.10. Termination of System Institution Status. .................................................................................... 155

ubtitle C—Approval of Disclosure Information and Issuance of Charters by the FCA Board ........................... 156

ec. 7.11. Approval of Disclosure Information and Issuance of Charters. ................................................... 156

ubtitle D—Mergers of Like Entities ................................................................................................................... 157

ec. 7.12. Merger of Similar Banks. ............................................................................................................. 157

ec. 7.13. Merger of Similar Associations. ................................................................................................... 158

Subtitle E—Taxation of Merger Transactions ...................................................................................................... 158

ec. 7.14. Transactions to Accomplish Mergers Exempt from Certain State Taxes. .................................... 158

itle VIII—Agricultural Mortgage Secondary Market ............................................................................................ 159

ec. 8.0. Definitions.159

ubtitle A—Establishment and Activities of Federal Agricultural Mortgage Corporation .................................. 160

ec. 8.1. Federal Agricultural Mortgage Corporation. .................................................................................. 160

ec. 8.2. Board of Directors. ......................................................................................................................... 161

Sec. 8.3. Powers and Duties of Corporation and Board. ............................................................................... 163

ec. 8.4. Stock Issuance.164

Sec. 8.5. Certification of Agricultural Mortgage Marketing Facilities. ........................................................ 167

ec. 8.6. Guarantee of Qualified Loans. ....................................................................................................... 168

ec. 8.7. [Repealed]170

Sec. 8.8. Standards for Qualified Loans. ....................................................................................................... 170

ec. 8.9. Exemption from Restructuring and Borrowers Rights Provisions for Pooled Loans. .................... 172

Sec. 8.10. Funding for Guarantee; Reserves of Corporation. ........................................................................ 172

ec. 8.11. Supervision, Examination, and Report of Condition. ................................................................... 173

ec. 8.12. Securities in Credit Enhanced Pools. ........................................................................................... 174

ec. 8.13. Authority to Issue Obligations to Cover Guarantee Losses of Corporation. ................................ 176

ec. 8.14. Federal Jurisdiction. ..................................................................................................................... 177

Subtitle B—Regulation of Financial Safety and Soundness of Federal Agricultural Mortgage Corporation ....... 178

ec. 8.31. Definitions.178

Sec. 8.32. Risk-Based Capital Levels. .......................................................................................................... 179

ec. 8.33. Minimum Capital Level. .............................................................................................................. 181

ec. 8.34. Critical Capital Level. .................................................................................................................. 182

ec. 8.35. Enforcement Levels...................................................................................................................... 182

ec. 8.36. Mandatory Actions Applicable to Level II. .................................................................................. 184

Sec. 8.37. Supervisory Actions Applicable to Level III. ............................................................................... 184

ec. 8.38. [Repealed} .................................................................................................................................... 185

Subtitle C—Receivership, Conservatorship, and Liquidation of the Farmer Mac ................................................ 185

ec. 8.41. Conservatorship; Liquidation; Receivership. ............................................................................... 185

itle 12—United States Code ....................................................................................................................................... 190

nks and Banking .................................................................................................................................................. 190

vii

Sec. 1786. Termination of Insured Credit Union Status; Cease and Desist Orders; Removal or Suspension

from Office; Procedure. ................................................................................................................................ 190

ec. 1818. Termination of Status as Insured Bank. ...................................................................................... 192

ec. 1821. Insurance Funds. ......................................................................................................................... 193

ec. 2276. Access to and Examination by Comptroller General of Books, Documents, etc. of Farm Credit

System Banks and Institutions. ..................................................................................................................... 194

ec. 3025. Examination and Audit. ............................................................................................................... 194

Public Law 101-220 ..................................................................................................................................................... 196

ec. 7. Purchases of Financial Assistance Corporation Stock by Farm Credit System Institutions. ............. 196

Terrorism Risk Insurance Program Reauthorization Act of 2015 ................................................................................ 198

itle III—Business Risk Mitigation and Price Stabilization .................................................................................... 198

ec. 301. Short Title...................................................................................................................................... 198

ec. 302. Margin Requirements. ................................................................................................................... 198

Sec

. 303. Implementation. ............................................................................................................................ 198

Agricultural Act of 2014 .............................................................................................................................................. 200

itle V—Credit ........................................................................................................................................................ 200

ubtitle E—Miscellaneous.................................................................................................................................... 200

ec. 5404. Compensation Disclosure by Farm Credit System Institutions. .................................................. 200

odd-Frank Wall Street Reform and Consumer Protection Act .................................................................................. 201

rt I ......................................................................................................................................................................... 201

itle I—Financial Stability ................................................................................................................................... 201

Sec. 102. Definitions. .................................................................................................................................... 201

itle II—Orderly Liquidation Authority ............................................................................................................... 201

ec. 201. Definitions. .................................................................................................................................... 201

itle VI—Improvements to Regulation of Bank and Savings Association Holding Companies and Depository

Institutions ............................................................................................................................................................ 202

ec. 619. Prohibitions on Proprietary Trading and Certain Relationships with Hedge Funds and Private

Equity Funds.202

Part II—Regulation of Swap Markets ...................................................................................................................... 203

itle VII—Wall Street Transparency and Accountability .................................................................................... 203

Sec. 721. Definitions. .................................................................................................................................... 203

ec. 723. Clearing. ........................................................................................................................................ 203

ec. 731. Registration and Regulation of Swap Dealers and Major Swap Participants. ............................... 204

ec. 742. Retail Commodity Transactions. ................................................................................................... 206

ec. 761. Definitions Under the Securities Exchange Act of 1934. .............................................................. 209

ec. 763. Amendments to the Securities Exchange Act of 1934. ................................................................. 209

ec. 764. Registration and Regulation of Security-Based Swap Dealers and Major Security-Based Swap

Participants.................................................................................................................................................... 210

Title IX—Investor Protections and Improvements to the Regulation of Securities .............................................. 213

ec. 901. Short Title...................................................................................................................................... 213

Sec. 939A. Review of Reliance on Ratings. ................................................................................................. 213

viii

Sec. 941. Regulation of Credit Risk Retention. ............................................................................................ 214

ec. 951. Shareholder Vote on Executive Compensation Disclosures. ........................................................ 216

ec. 953. Executive Compensation Disclosures. .......................................................................................... 217

ec. 954. Recovery of Erroneously Awarded Compensation. ...................................................................... 218

itle X—Bureau of Consumer Financial Protection ............................................................................................. 219

ec. 1001. Short Title.219

ec. 1024. Supervision of Nondepository Covered Persons. ........................................................................ 219

Sec. 1027. Limitations on Authorities of the Bureau; Preservation of Authorities. ...................................... 219

ec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008............ 220

ec. 1100A. Amendments to the Truth in Lending Act. ............................................................................... 221

ood, Conservation, and Energy Act of 2008 .............................................................................................................. 222

itle V—Credit ........................................................................................................................................................ 222

ubtitle E—Farm Credit ....................................................................................................................................... 222

ec. 5407. Equalization of Loan-Making Powers of Certain District Associations. ..................................... 222

Housing and Economic Recovery Act of 2008 ............................................................................................................ 223

itle V—S.A.F.E. Mortgage Licensing Act ............................................................................................................. 223

ec. 1501. Short Title.223

Sec. 1502. Purposes and Methods for Establishing a Mortgage Licensing System and Registry. ................ 223

ec. 1503. Definitions. .................................................................................................................................. 223

ec. 1504. License or Registration Required. ............................................................................................... 226

ec. 1507. System of Registration Administration by Federal Agencies. ..................................................... 227

Sec. 1510. Fees.228

Farm Security and Rural Investment Act of 2002 ........................................................................................................ 229

itle VI—Rural Development .................................................................................................................................. 229

ec. 384J. Financial Institution Investments. ................................................................................................ 229

mnibus Consolidated Appropriations Act, 1997 ........................................................................................................ 230

Title II—Economic Growth and Regulatory Paperwork Reduction ........................................................................ 230

ubtitle F—Miscellaneous .................................................................................................................................... 230

Sec. 2615. Prohibitions on Certain Depository Institution Associations with Government-Sponsored

Enterprises. ................................................................................................................................................... 230

(e) PROHIBITION ON CERTAIN ASSOCIATIONS.— .......................................................................... 230

) PROHIBITION ON CERTAIN AFFILIATIONS.— ............................................................................. 230

Farm Credit System Reform Act of 1996 ..................................................................................................................... 232

itle II—Regulatory Relief ...................................................................................................................................... 232

Sec. 219. Farm Credit System Insurance Corporation Board of Directors. .................................................. 232

ec. 221. Liability for Making Criminal Referrals. ...................................................................................... 232

ec. 212. Regulatory Review. ....................................................................................................................... 232

arm Credit Banks and Associations Safety and Soundness Act of 1992 .................................................................... 234

itle II—Farm Credit System Insurance Corporation .............................................................................................. 234

Sec. 204. GAO Reports on Risk-Based Insurance Premiums, Access to Association Capital, Supplemental

Premiums, and Consolidation. ...................................................................................................................... 234

itle IV—Clarification of Certain Authorities ......................................................................................................... 235

ec. 401. Clarification of the Status and Powers of Certain Institutions of the Farm Credit System. .......... 235

itle V—Miscellaneous ........................................................................................................................................... 236

ec. 514. Financial Disclosure and Conflict of Interest Reporting by Directors, Officers, and Employees of

Farm Credit System Institutions. .................................................................................................................. 236

Food, Agriculture, Conservation, and Trade Act of 1990 ............................................................................................ 238

itle XVIII—Credit ................................................................................................................................................. 238

Subtitle B—Farm Credit System .......................................................................................................................... 238

Sec

. 1838. Termination of System Institution Status of California Livestock Production Credit Assoc. ..... 238

ec. 1842. GAO Study of Rural Credit Cost and Availability. ..................................................................... 238

mnibus Budget Reconciliation Act of 1990 ............................................................................................................... 240

itle XIII—Budget Enforcement ............................................................................................................................. 240

PART II—Related Amendments .......................................................................................................................... 240

ubtitle E—Government-Sponsored Enterprises .......................................................................................... 240

ec. 13501. Financial Safety and Soundness of Government-Sponsored Enterprises. ................................. 240

inancial Institutions Reform, Recovery, and Enforcement Act of 1989 ..................................................................... 242

itle X—Studies of Federal Deposit Insurance, Banking Services, and the Safety and Soundness of Government-

Sponsored Enterprises .............................................................................................................................................. 242

ec. 1004. Study Regarding Capital Requirements for Government-Sponsored Enterprises. ...................... 242

itle XIV—Tax Provisions ...................................................................................................................................... 244

12 U.S.C. 1811 note Sec. 1404. Studies of Relationship Between Public Debt and Activities of

Government-Sponsored Enterprises. ............................................................................................................ 244

gricultural Credit Act of 1987 ................................................................................................................................... 246

o Title .................................................................................................................................................................... 246

ec. 102. Restructuring Distressed Loans. .................................................................................................... 246

ec. 206. Financial Report.— ....................................................................................................................... 246

Title III—Capitalization of System Institutions ....................................................................................................... 246

ec. 301. Capitalization of System Institutions............................................................................................. 246

Title IV—Restructuring of the Farm Credit System ................................................................................................ 247

ubtitle B—Merger of System Institutions ........................................................................................................... 247

ec. 410. Mandatory Merger......................................................................................................................... 247

ec. 411. Merger of Production Credit Associations and Federal Land Bank Associations. ........................ 261

ec. 412. Consolidation of District Farm Credit Banks. .............................................................................. 261

ec. 413. Voluntary Merger of the Banks for Cooperatives. ........................................................................ 262

ec. 414. Bank for Cooperatives Board of Directors. ................................................................................... 265

ec. 422. Sales of Insurance by System Institutions. .................................................................................... 265

Sec. 424. Limitation on FCA Authority to Require Disclosure of Information. ........................................... 265

ec. 433. Reassignment of Associations to Adjoining Districts. .................................................................. 266

Title V—State Mediation Programs ......................................................................................................................... 266

ec. 503. Participation of Federal Agencies. ................................................................................................ 266

ec. 504. Regulations. ................................................................................................................................... 267

itle VII—Agricultural Mortgage Secondary Markets ............................................................................................ 267

ubtitle A—The Federal Agricultural Mortgage Corporation .............................................................................. 267

ec. 701. Statement of Purpose. .................................................................................................................... 267

ec. 703. GAO Audit of Federal Agricultural Mortgage Corporation. ......................................................... 267

Sec. 704. GAO Studies.268

onsolidated Appropriation Act, 2016 ......................................................................................................................... 269

ivision O ................................................................................................................................................................ 269

itle VII—Financial Services ............................................................................................................................... 269

ec. 705. Treatment of Affiliate Transactions. ............................................................................................. 269

griculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2015 . 273

itle VI—Related Agencies and Food and Drug Administration ............................................................................ 273

Independent Agencies ........................................................................................................................................... 273

arm Credit Administration Limitation on Administrative Expenses ........................................................... 273

onsolidated Appropriations Act, 2014 ....................................................................................................................... 274

itle IV – Related Agencies and Food and Drug Administration ............................................................................ 274

arm Credit Administration Limitation on Administrative Expenses ........................................................... 274

griculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2013 . 275

itle VI—Related Agencies and Food and Drug Administration ............................................................................ 275

Independent Agencies ........................................................................................................................................... 275

arm Credit Administration Limitation on Administrative Expenses ........................................................... 275

griculture, Rural Development, FDA, and Related Agencies Appropriations Act, 2012 .......................................... 276

itle VI—Related Agencies and Food and Drug Administration ............................................................................ 276

ndependent Agencies ........................................................................................................................................... 276

Farm Credit Administration Limitation on Administrative Expenses ........................................................... 276

griculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2011 . 277

Title VI—Related Agencies and Food and Drug Administration ............................................................................ 277

ndependent Agencies ........................................................................................................................................... 277

arm Credit Administration Limitation on Administrative Expenses .......................................................... 277

griculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1996 . 278

itle VI—Related Agencies and Food and Drug Administration ............................................................................ 278

ndependent Agencies ........................................................................................................................................... 278

arm Credit Administration Administrative Provision ................................................................................. 278

Farm Credit Act of 1971, as amended

Public Law 92–181, 85 Stat. 583

92d Congress, S. 1483, December 10, 1971

amended by

Public Law 94–184, 89 Stat. 1060

94th Congress, H.R. 7862, December 31, 1975

Public Law 95–443, 92 Stat. 1066

95th Congress, S. 3045, October 10, 1978

Public Law 96–592, 94 Stat. 3437

96th Congress, S. 1465, December 24, 1980

Public Law 99–190, 99 Stat. 1185

99th Congress, H.J. Res. 465, December 19, 1985

Public Law 99–198, 99 Stat. 1354

99th Congress, H.R. 2100, December 23, 1985

Public Law 99–205, 99 Stat. 1678

99th Congress, S. 1884, December 23, 1985

Public Law 99–509, 100 Stat. 1874

99th Congress, H.R. 5300, October 21, 1986

Public Law 100–233, 101 Stat. 1568

100th Congress, H.R. 3030, January 6, 1988

Public Law 100–399, 102 Stat. 989

100th Congress, H.R. 3980, August 17, 1988

Public Law 100–460, 102 Stat. 2229

100th Congress, H.R. 4784, October 1, 1988

Public Law 101–73, 103 Stat. 183

101st Congress, H.R. 1278, August 9, 1989

Public Law 101–220, 103 Stat. 1876

101st Congress, S. 1793, December 12, 1989

Public Law 101–624, 104 Stat. 3359

101st Congress, S. 2830, November 28, 1990

Public Law 102–237, 105 Stat. 1818

102d Congress, H.R. 3029, December 13, 1991

Public Law 102–552, 106 Stat. 4102

102d Congress, H.R. 6125, October 28, 1992

Public Law 103–376, 108 Stat. 3497

103d Congress, H.R. 4379, October 19, 1994

Public Law 104–105, 110 Stat. 162

104th Congress, H.R. 2029, February 10, 1996

Public Law 104-316, 110 Stat. 3831

104th Congress, H.R. 3864, October 19, 1996

Public Law 107-171, 116 Stat. 134

107th Congress, H.R. 2646, May 13, 2002

Public Law 110-246, 122 Stat. 1651

110th Congress, H.R. 6124, June 18, 2008

Public Law 115-334, 132 Stat. 4490

115

Congress, H.R. 2, December 20, 2018

Introduction

AN ACT

To further provide for the farmer-owned cooperative system of making credit available to farmers

and ranchers and their cooperatives, for rural residences, and to associations and other entities upon

which farming operations are dependent, to provide for an adequate and flexible flow of money into

rural areas, and to modernize and consolidate existing farm credit law to meet current and future

rural credit needs, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in

Congress assembled, That this Act may be cited as the "Farm Credit Act of 1971."

Title I—Farm Credit Banks

12 U.S.C. 2001 Sec. 1.1. Policy and Objectives.—

(a) It is declared to be the policy of the Congress, recognizing that a

prosperous, productive agriculture is essential to a free nation and recognizing

the growing need for credit in rural areas, that the farmer-owned cooperative

Farm Credit System be designed to accomplish the objective of improving the

income and well-being of American farmers and ranchers by furnishing

sound, adequate, and constructive credit and closely related services to them,

their cooperatives, and to selected farm-related businesses necessary for

efficient farm operations.

(b) It is the objective of this Act to continue to encourage farmer- and

rancher-borrowers participation in the management, control, and ownership of

a permanent system of credit for agriculture which will be responsive to the

credit needs of all types of agricultural producers having a basis for credit, and

to modernize and improve the authorizations and means for furnishing such

credit and credit for housing in rural areas made available through the

institutions constituting the Farm Credit System as herein provided.

farmers, ranchers, and their cooperatives are best served if the institutions of

the Farm Credit System provide equitable and competitive interest rates to

eligible borrowers, taking into consideration the creditworthiness and access

to alternative sources of credit for borrowers, the cost of funds, the operating

costs of the institution, including the costs of any loan loss amortization under

section 5.19(b), the cost of servicing loans, the need to retain earnings to

protect borrowers' stock, and the volume of net new borrowing. Further, it is

declared to be the policy of Congress that Farm Credit System institutions

take action in accordance with the Farm Credit Act Amendments of 1986 in

such manner that borrowers from the institutions derive the greatest benefit

practicable from that Act: Provided, That in no case is any borrower to be

charged a rate of interest that is below competitive market rates for similar

loans made by private lenders to borrowers of equivalent creditworthiness and

access to alternative credit.

12 U.S.C. 2002 Sec. 1.2. The Farm Credit System.—

(a) COMPOSITION.—The Farm Credit System shall include the

Farm Credit Banks, the bank for cooperatives, Agricultural Credit Banks, the

Federal Land Bank Associations, the Federal Land Credit Associations, the

Production Credit Associations, the agricultural credit associations, the

Federal Farm Credit Banks Funding Corporation, the Federal Agricultural

Mortgage Corporation, service corporations established pursuant to section

4.25, and such other institutions as may be made a part of the Farm Credit

System, all of which shall be chartered by and subject to regulation by the

Farm Credit Administration.

(b) FARM CREDIT DISTRICTS.—There shall be not more than

twelve farm credit districts in the United States, which may be designated by

number, one of which districts shall include the Commonwealth of Puerto

Rico and one of which districts may, if authorized by the Farm Credit

Administration, include the Virgin Islands of the United States: Provided,

That the extension of credit and other services authorized by this Act in the

Virgin Islands of the United States shall be undertaken only if determined to

be feasible under regulations of the Farm Credit Administration. The

boundaries of the twelve farm credit districts existing on the date of enactment

of this Act may be readjusted from time to time by the Farm Credit

Administration, with the concurrence of the boards of the banks in each

district involved. Two or more districts may be merged as provided in section

5.17(a)(2).

12 U.S.C. 2011 Sec. 1.3. Establishment, Charters, Titles, Branches.

(a) ESTABLISHMENT. The banks established pursuant to the

merger of each District Federal Intermediate Credit Bank and Federal Land

Bank (hereinafter referred to in this title as "Farm Credit Banks"), as provided

in section 410 of the Agricultural Credit Act of 1987, shall be Federally

chartered instrumentalities of the United States.

(b) CHARTERS. The Farm Credit Administration shall, consistent

with this Act, issue charters for, and approve amendments to charters of, the

Farm Credit Banks.

of the city in which it is located or other geographical designation.

(d) BRANCHES. Each Farm Credit Bank may establish such

branches or other offices as may be appropriate for the effective operation of

its business.

12 U.S.C. 2012 Sec. 1.4. Board of Directors.

Each Farm Credit Bank shall elect a board of directors of such number,

for such term, in such manner, and with such qualifications, as may be

required in its bylaws, except that, at least one member shall be elected by the

other directors, which member shall not be a director, officer, employee, or

stockholder of a System institution.

12 U.S.C. 2013 Sec. 1.5. General Corporate Powers.

Each Farm Credit Bank shall be a body corporate and, subject to

regulation by the Farm Credit Administration, shall have power to—

(1) adopt and use a corporate seal;

(2) have succession until dissolved under the provisions of this

Act or other Act of Congress;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all the usual

incidents of ownership of real and personal property necessary or

convenient to its business;

(6) make, participate in, and discount loans, make commitments

for credit, accept advance payments, and provide services as authorized

in this Act, and charge fees for such;

(7) operate under the direction of its board of directors;

(8) provide by its board of directors for a president, one or more

vice presidents, a secretary, a treasurer, and provide for such other

officers, employees, and agents as may be necessary, as provided in this

Act, define their duties, and require surety bonds or make other

provision against losses occasioned by employees;

(9) prescribe, by its board of directors, its bylaws that shall be

consistent with law, and that shall provide for—

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred and retired; and

(B) the manner in which it is to—

(ⅰ) select officers, employees, and agents;

(ⅱ) acquire, hold, and transfer property;

(ⅲ) make loans and discounts;

(ⅳ) conduct general business; and

(ⅴ) exercise and enjoy the privileges granted to it by

law;

(10) borrow money and issue notes, bonds, debentures, or other

obligations individually, or in concert with one or more other banks of

the System, of such character, terms, conditions, and rates of interest as

may be determined as provided for in this Act;

(11) purchase nonvoting stock in, or pay in surplus to, and accept

deposits of securities or funds from associations in its district, and pay

interest on such funds;

(12) participate with—

(A) one or more other Farm Credit Banks in loans under

this title on such terms as may be agreed on among such banks;

(B) one or more other Farm Credit System institutions in

loans made under this title or other titles on the basis prescribed in

section 4.18; and

loans that the bank is authorized to make under this title;

(13) approve the salary scale of the officers and employees of the

associations in its district and supervise the exercise by such associations

of the functions vested in or delegated to them;

(14) deposit the securities and current funds of the bank with any

member bank of the Federal Reserve System or any insured State

nonmember bank (within the meaning of section 3 of the Federal

Deposit Insurance Act (12 U.S.C. 1813)) and pay fees and receive

interest on such as may be agreed, and when designated for that purpose

by the Secretary of the Treasury, such bank—

(A) shall be a depository of public money, except receipts

from customs, under such regulations as may be prescribed by the

Secretary;

(B) may be employed as a fiscal agent of the Government;

and

of public money or financial agent of the Government as may be

required of such bank;

except that no Government funds deposited under the provisions of this

paragraph shall be invested in loans or bonds or other obligations of the bank;

(15) buy and sell obligations of, or insured by, the United States

or any agency thereof, or securities backed by the full faith and credit of

any such agency, and make other investments as may be authorized

under regulations issued by the Farm Credit Administration;

(16) sell to lenders that are not Farm Credit System institutions

interests in loans, and buy from and sell to Farm Credit System

institutions interests in loans and other extensions of credit, and

nonvoting stock as may be authorized under regulations issued by the

Farm Credit Administration;

(17) conduct studies and make and adopt standards for lending;

(18) delegate to associations such functions as the bank

determines appropriate;

(19) amend and modify loan contracts, documents, and payment

schedules, and release, subordinate, or substitute security for any of such

items;

(20) for loans made by the bank, require associations to endorse

notes and other obligations of borrowers from the bank;

(21) exercise through the board of directors or authorized officers,

employees, or agents of the bank, all such incidental powers as may be

necessary or expedient to carry on the business of the bank;

(22) accept contributions to the capital of the bank from

associations and account for such in accordance with generally accepted

accounting principles, except as may be authorized by the Farm Credit

Administration;

(23) as may be authorized by the board of directors of the bank,

agree with other Farm Credit System institutions to share loan and other

losses, whether to protect against capital impairment or for any other

purpose; and

(24) operate as an originator and become certified as a certified

facility under title VIII.

12 U.S.C. 2014 Sec. 1.6. Farm Credit Bank Capitalization.

In accordance with section 4.3A, the Farm Credit Banks shall provide,

through bylaws and subject to Farm Credit Administration regulations, for the

capitalization of the bank and the manner in which bank stock shall be issued,

held, transferred, and retired and bank earnings distributed.

12 U.S.C. 2015 Sec. 1.7. Lending Authority.

(a) REAL ESTATE LOANS AND RELATED ASSISTANCE.

(1) REAL ESTATE LOANS. The Farm Credit Banks may make

or participate with other lenders in long-term real estate mortgage loans

in rural areas, as defined by the Farm Credit Administration, or to

producers or harvesters of aquatic products, and make continuing

commitments to make such loans under specified circumstances, for a

term of not less than 5 nor more than 40 years.

(2) FINANCIAL ASSISTANCE. The Farm Credit Banks may

provide and extend financial assistance to, and discount for, or purchase

from, a Federal land bank association any note, draft, or other obligation

with the endorsement or guarantee of the association, the proceeds of

which have been advanced to persons eligible and for purposes of

financing by the association, as authorized under section 7.6(a).

(b) INTERMEDIATE CREDIT.

(1) IN GENERAL. The Farm Credit Banks are authorized to

make loans and extend other similar financial assistance to and to

discount for or purchase from—

(A) any production credit association, or

(B) any national bank, State bank, trust company,

agricultural credit corporation, incorporated livestock loan

company, savings institution, credit union, or any association of

agricultural producers engaged in the making of loans to farmers

and ranchers, and any corporation engaged in the making of loans

to producers or harvesters of aquatic products,

any note, draft, or other obligation with the institution's

endorsement or guarantee, the proceeds of which note, draft, or

other obligation have been advanced to persons and for purposes

eligible for financing by production credit associations as

authorized by this Act.

(2) PARTICIPATION WITH OTHER ENTITIES. The Farm

Credit Banks may participate with one or more production credit

associations or other Farm Credit Banks in the making of loans to

eligible borrowers and may participate with one or more other Farm

Credit System institutions in loans made under this title or other titles of

this Act on the basis prescribed in section 4.18 of this Act.

(3) LIMITATIONS ON EXTENSION OF FINANCIAL

SERVICES.

(A) GENERAL RULE. No paper shall be purchased from

or discounted for, and no loans shall be made or other similar

financial assistance extended by a Farm Credit Bank to any entity

identified in paragraph (1)(B) of this subsection if the amount of

such paper added to the aggregate liabilities of such entity, whether

direct or contingent (other than bona fide deposit liabilities),

exceeds ten times the paid-in and unimpaired capital and surplus of

such entity or the amount of such liabilities permitted under the

laws of the jurisdiction creating such institution, whichever is the

lesser.

(B) LIMITATION ON NATIONAL BANK. It shall be

unlawful for any national bank which is indebted to any Farm

Credit Bank, on paper discounted or purchased under paragraph

(1), to incur any additional indebtedness, if by virtue of such

additional indebtedness its aggregate liabilities direct or

contingent, will exceed the limitation described in subparagraph

(A).

(4) FCA REGULATIONS.

(A) IN GENERAL. All of the loans, financial assistance,

discounts and purchases authorized by this subsection shall be

subject to regulations of the Farm Credit Administration and shall

be secured by collateral, if any, as may be required in such

regulations.

(B) REQUIREMENT OF REGULATIONS. The

regulations shall assure that such loans, financial assistance,

discounts, and purchases are available on a reasonable basis to any

financing institution authorized to receive such services under

paragraph (1)(B) of this subsection, and that—

(ⅰ) is significantly involved in lending for agricultural

or aquatic purposes;

(ⅱ) demonstrates a continuing need for supplementary

sources of funds to meet the credit requirements of its

agricultural or aquatic borrowers;

(ⅲ) has limited access to national or regional capital

markets; and

(ⅳ) does not use such services to expand its financing

activities to persons and for purposes other than those

authorized under title II.

Bank to charge reasonable fees for any commitment to extend

service under this section to such a financing institution.

(D) SUBSIDIARIES AND AFFILIATES. For purposes of

this subsection, a financing institution together with the

subsidiaries and affiliates of such may be considered as one, but

such determination to consider such institution together with the

subsidiaries and affiliates of such as one shall be made in the first

instance by the bank and in the event of a denial by the bank of its

services to a financial institution, then by the Farm Credit

Administration on a case-by-case basis with due regard to the total

relationship of the financing institution, its subsidiaries, and

affiliates.

(5) EFFECTIVE DATE. Nothing in this section shall require

termination of discount relationships in existence on the effective date of

the Farm Credit Act Amendments of 1980.

12 U.S.C. 2016 Sec. 1.8. Interest rates and Other Charges.

(a) IN GENERAL. Loans and discounts made by a Farm Credit Bank

shall bear such rate or rates of interest or discount, and be on such terms and

conditions, as may be determined by the board of directors of the bank from

time to time.

(b) SETTING RATES AND CHARGES. In setting rates and charges,

it shall be the objective to provide the types of credit needed by eligible

borrowers at the lowest reasonable costs on a sound business basis taking into

consideration the cost of money to the bank, necessary reserve and expenses

of the bank and associations, and providing services to members. The loan

documents or discounting and financing agreements, may provide for the

interest rate or rates to vary from time to time during the repayment period of

the loan or agreement.

12 U.S.C. 2017 Sec. 1.9. Eligibility.

The credit and financial services authorized in this title may be made

available to persons who are or become stockholders or members of the bank

or associations in the district, and who are—

(1) bona fide farmers, ranchers, or producers or harvesters of

aquatic products;

(2) persons furnishing to farmers and ranchers farm-related

services directly related to their on-farm operating needs; or

(3) owners of rural homes.

12 U.S.C. 2018 Sec. 1.10. Security; Terms.

(a) REAL ESTATE LOANS.

(1) MAXIMUM LEVEL OF LOANS.

(A) IN GENERAL. Real estate mortgage loans originated

by a Farm Credit Bank, or in which a Farm Credit Bank

participates in with a lender that is not a System institution, shall

not exceed 85 percent of the appraised value of the real estate

security, except as provided for in subparagraphs (C) and (D).

(B) REGULATION. The Farm Credit Administration may,

by regulation, require that loans not exceed 75 percent of the

appraised value of the real estate security.

Federal, State, or other governmental agencies, the loan may not

exceed 97 percent of the appraised value of the real estate security,

as may be authorized under regulations of the Farm Credit

Administration.

(D) PRIVATE MORTGAGE INSURANCE. A loan on

which private mortgage insurance is obtained may exceed 85

percent of the appraised value of the real estate security to the

extent that the loan amount in excess of such 85 percent is covered

by the insurance.

(2) SECURITY. All loans originated or participated in by a

bank under this section shall be secured by first liens on interests in real

estate of such classes as may be prescribed by regulations of the Farm

Credit Administration.

(3) VALUE OF SECURITY. To adequately secure the loan, the

value of security shall be determined by appraisal under standards

prescribed by the bank in accordance with regulations of the Farm

Credit Administration.

(4) ADDITIONAL SECURITY. Additional security for any

loan may be required by the bank to supplement real estate security.

Credit factors, other than the ratio between the amount of the loan and

the security value, shall be given due consideration.

(b) INTERMEDIATE CREDIT. Loans, other than real estate loans,

and discounts made under the provisions of this title shall be repayable in not

more than 7 years (15 years if made to producers or harvesters of aquatic

products) from the time that such are made or discounted by the Farm Credit

Bank, except that the Board of Directors, under regulations of the Farm Credit

Administration, may approve policies permitting loans, advances, or discounts

(other than those made to producers or harvesters of aquatic products) to be

repayable in not more than 10 years from the time that such are made or

discounted by such bank.

12 U.S.C. 2019 Sec. 1.11. Purposes for Extensions of Credit.

(a) AGRICULTURAL OR AQUATIC PURPOSES.

(1) IN GENERAL. Loans made by a Farm Credit Bank to

farmers, ranchers, and producers or harvesters of aquatic products may

be for any agricultural or aquatic purpose and other credit needs of the

applicant, including financing for basic processing and marketing

directly related to the applicant's operations and those of other eligible

farmers, ranchers, and producers or harvesters of aquatic products,

except that the operations of the applicant shall supply some portion of

the total processing or marketing for which financing is extended.

(2) LIMITATION ON LOANS FOR BASIC PROCESSING

AND MARKETING OPERATIONS. The aggregate of the financing

provided by any Farm Credit Bank for basic processing and marketing

directly related to the operations of farmers, ranchers, and producers or

harvesters of aquatic products, if the operations of the applicant supply

less than 20 percent of the total processing or marketing for which

financing is extended, shall not exceed 15 percent of the total of all

outstanding loans of such bank.

(b) RURAL HOUSING FINANCING.

(1) IN GENERAL. Loans and discounts may be made to rural

residents for rural housing financing under regulations of the Farm

Credit Administration.

(2) LIMITATIONS. Rural housing financed under this title shall

be for single-family, moderate-priced dwellings and their appurtenances

not inconsistent with the general quality and standards of housing

existing in, or planned or recommended for, the rural area where it is

located, except that a Farm Credit Bank may not at any one time have a

total amount of loans outstanding for such rural housing to persons other

than farmers or ranchers in amounts exceeding 15 percent of the total of

all loans outstanding in such bank.

(3) RURAL AREAS. For rural housing purposes under this

section the term "rural areas" shall not be defined to include any city or

village having a population in excess of 2,500 inhabitants.

(1) IN GENERAL. Loans to persons furnishing farm-related

services to farmers and ranchers directly related to their on-farm

operating needs may be made for the necessary capital structures and

equipment and initial working capital for such services.

(2) FACILITIES. The banks may own and lease, or lease with

option to purchase, to persons eligible for credit under this title or title

II, equipment or facilities needed in the operations of such persons.

12 U.S.C. 2020 Sec. 1.12. Related Services.

(a) IN GENERAL. The Farm Credit Banks may provide technical

assistance to borrowers, members, and applicants from the bank and

associations in the district, including persons obligated on paper discounted by

the bank, and may make available to them at their option such financial

related services appropriate to their on-farm and aquatic operations as

determined to be feasible by the board of directors of the bank, under

regulations of the Farm Credit Administration.

(b) AUTHORITY TO PASS ALONG COST OF INSURANCE

PREMIUMS.

(1) IN GENERAL.—Each Farm Credit Bank may assess each

production credit association, other association making direct loans

under the authority provided under section 7.6, and other financing

institution described in section 1.7(b)(1)(B) in the district in which the

bank is located to cover the costs of making premium payments under

part E of title V.

(2) COMPUTATION.—The assessment on any association or

other financing institution described in paragraph (1) for any period shall

be computed in an equitable manner, as determined by the Corporation.

12 U.S.C. 2021 Sec. 1.13. Loans through Associations or Agents.

(a) IN GENERAL. The Farm Credit Banks shall, except as otherwise

herein provided, make loans of the type authorized under section 1.7(a)

through a Federal land bank association chartered to serve the territory in

which the real estate of the borrower is located.

(b) NO ACTIVE ASSOCIATION. If there is no active association

chartered to serve territory where the real estate is located, the bank may make

the loan directly or through such bank or trust company or savings or other

financial institution as such bank may designate.

made through a Federal land bank association, the applicant shall purchase

stock in the bank in accordance with the capitalization requirements provided

for in the bylaws of the bank.

12 U.S.C. 2022 Sec. 1.14. Liens on Stock.

The Farm Credit Banks shall have a first lien on the stock or

participation certificates it issues for the payment of any liability of the

stockholders to the bank.

12 U.S.C. 2023 Sec. 1.15. Taxation.

The Farm Credit Banks and the capital, reserves, and surplus thereof,

and the income derived therefrom, shall be exempt from Federal, State,

municipal, and local taxation, except taxes on real estate held by a Farm

Credit Bank to the same extent, according to its value, as other similar

property held by other persons is taxed. The mortgages held by the Farm

Credit Banks and the notes, bonds, debentures, and other obligations issued by

the banks shall be considered and held to be instrumentalities of the United

States and, as such, they and the income therefrom shall be exempt from all

Federal, State, municipal, and local taxation, other than Federal income tax

liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C.

3124).

Title II—Farm Credit Associations

Subtitle A—Production Credit Associations

12 U.S.C. 2071 Sec. 2.0. Organization and Charters.

(a) CHARTER. Each production credit association shall continue as a

Federally chartered instrumentality of the United States.

(b) ORGANIZATION.

(1) IN GENERAL. Production credit associations may be

organized by 10 or more farmers or ranchers or producers or harvesters

of aquatic products desiring to borrow money under the provisions of

this subtitle.

(2) ARTICLES OF ASSOCIATION. The proposed articles of

association shall be forwarded to the Farm Credit Bank for the district

accompanied by an agreement to subscribe on behalf of the association

for stock in the bank in such amounts as may be required by the bank.

(3) CONTENTS OF ARTICLES. The articles shall specify in

general terms the—

(A) objects for which the association is formed;

(B) powers to be exercised by the association in carrying

out the functions authorized by this subtitle; and

(4) SIGNATURES. The articles shall be signed by persons

desiring to form such an association and shall be accompanied by a

statement signed by each such person establishing eligibility to borrow

from the association in which such person will become a stockholder.

(5) COPY TO FCA. A copy of the articles of association shall

be forwarded to the Farm Credit Administration with the

recommendations of the bank concerning the need for such an

association in order to adequately serve the credit needs of eligible

persons in the proposed territory and whether that territory includes any

area described in the charter of another production credit association.

(6) DENIAL OF CHARTER. The Farm Credit Administration

for good cause shown may deny the charter.

(7) APPROVAL OF ARTICLES. On approval of the proposed

articles by the Farm Credit Administration, and on the issuance of a

charter, the association shall become as of such date a federally

chartered body corporate and an instrumentality of the United States.

(8) POWERS OF FCA. The Farm Credit Administration shall

have the power, under rules and regulations prescribed by the Farm

Credit Administration or by prescribing in the terms of the charter, to—

(A) provide for the organization of the association;

(B) provide for the initial amount of stock of the

association;

operations may be carried on; and

(D) approve amendments to the charter of the association.

12 U.S.C. 2072 Sec. 2.1. Board of Directors.

Each production credit association shall elect from the voting members

of such association, a board of directors of such number, for such terms, with

such qualifications, and in such manner as may be required by the bylaws of

the association, except that at least one member shall be elected by the other

directors, which member shall not be a director, officer, employee,

stockholder, or agent of a System institution.

12 U.S.C. 2073 Sec. 2.2. General Corporate Powers.

Each production credit association shall be a body corporate and, subject

to supervision by the Farm Credit Bank for the district and regulation by the

Farm Credit Administration, shall have the power to—

(1) have succession until terminated in accordance with this Act

or any other Act of Congress;

(2) adopt and use a corporate seal;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all of the usual

incidents of ownership of real and personal property necessary or

convenient to the business of the association;

(6) operate under the direction of the board of directors of the

association in accordance with the provisions of this Act;

(7) subscribe to stock of the bank;

(8) purchase stock of the bank held by other production credit

associations and stock of other production credit associations;

(9) contribute to the capital of the bank or other production credit

associations;

(10) invest funds of the association as may be approved by the

Farm Credit Bank under regulations of the Farm Credit Administration

and deposit the current funds and securities of such with the Farm Credit

Bank, a member bank of the Federal Reserve System, or any bank

insured under the Federal Deposit Insurance Corporation, and may pay

fees therefor and receive interest thereon as may be agreed;

(11) buy and sell obligations of or insured by the United States or

of any agency thereof or of any banks of the Farm Credit System and

buy from and sell to such banks, interests in loans and in other financial

assistance extended and nonvoting stock, as may be authorized by the

Farm Credit Bank in accordance with regulations of the Farm Credit

Administration;

(12) borrow money from the Farm Credit Bank, and with the

approval of such bank, borrow from and issue notes or other obligations

to any commercial bank or other financial institution;

(13) make and participate in loans, accept advance payments, and

provide services and other assistance as authorized in this subtitle and

charge fees therefor, and when authorized by the bank participate with

one or more other Farm Credit System institutions in loans made under

this title or other titles of this Act on the basis prescribed in section 4.18

of this Act;

(14) endorse and become liable on loans discounted or pledged to

the Farm Credit Bank;

(15) as may be authorized by the Farm Credit Bank in accordance

with regulations of the Farm Credit Administration, agree with other

Farm Credit System institutions to share loan or other losses, whether to

protect against capital impairment or for any other purpose;

(16) prescribe, by its board of directors, its bylaws that shall be

consistent with law, and that shall provide for—

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred, and retired; and

(B) the manner in which it is to—

(ⅰ) select officers and employees;

(ⅱ) acquire, hold, and transfer property;

(ⅲ) conduct general business; and

(ⅳ) exercise and enjoy the privileges granted to it by

law;

(17) provide by its board of directors for a manager or other chief

executive officer, and provide for such other officers or employees as

may be necessary, including joint employees as provided in this Act,

define their duties, and require surety bonds or make other provisions

against losses occasioned by employees, but no director shall, within one

year after the date when such director ceases to be a member of the

board, serve as a salaried employee of the association on the board of

which he served;

(18) elect by the board of directors of the association a loan

committee with power to approve applications for membership in the

association and loans or participations or, with the approval of the bank,

delegate the approval of applications for membership and loans or

participations within specified limits to other committees or to

authorized officers and employees of the association;

(19) perform any functions delegated to the association by the

bank;

(20) exercise by the board of directors or authorized officers or

employees of the association, all such incidental powers as may be

necessary or expedient to carry on the business of the association; and

(21) operate as an originator and become certified as a certified

facility under title VIII.

12 U.S.C. 2074 Sec. 2.3. Production Credit Association Capitalization.

(a) IN GENERAL. In accordance with section 4.3A, each production

credit association shall provide, through its bylaws and subject to Farm Credit

Administration regulations, for its capitalization and the manner in which its

stock shall be issued, held, transferred, and retired and, except as provided in

subsection (b), its earnings distributed.

(b) APPLICATION OF EARNINGS. At the end of each fiscal year,

each production credit association shall apply the amount of the earnings of

the association for the fiscal year in excess of the operating expenses of the

association (including provision for valuation reserves against loan assets in

accordance with generally accepted accounting principles)—

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

and

(2) second, to the establishment and maintenance of the surplus

accounts, the minimum aggregate amount of which shall be prescribed

by the Farm Credit Bank.

subject to the general directions of the Farm Credit Administration, available

net earnings at the end of any fiscal year may be distributed on a patronage

basis in stock, participation certificates, or in cash. Any part of the earnings

of the fiscal year in excess of the operating expenses for such year held in the

surplus account may be allocated to patrons on a patronage basis.

12 U.S.C. 2075 Sec. 2.4. Short- and Intermediate-Term Loans; Participation;

Other Financial Assistance; Terms; Conditions; Interest; Security.

(a) SHORT- AND INTERMEDIATE-TERM LOANS. Each

production credit association, under standards prescribed by the board of

directors of the Farm Credit Bank of the district, may make, guarantee, or

participate with other lenders in short- and intermediate-term loans and other

similar financial assistance to—

(1) bona fide farmers and ranchers and the producers or

harvesters of aquatic products, for agricultural or aquatic purposes and

other requirements of such borrowers, including financing for basic

processing and marketing directly related to the operations of the

borrower and those of other eligible farmers, ranchers, and producers or

harvesters of aquatic products, except that the operations of the borrower

shall supply some portion of the total processing or marketing for which

financing is extended, except that the aggregate of the financing

provided by any association for basic processing and marketing directly

related to the operations of farmers, ranchers, and producers or

harvesters of aquatic products, if the operations of the applicant supply

less than 20 percent of the total processing or marketing for which

financing is extended, shall not exceed 15 percent of the total of all

outstanding loans of all associations in the district at the end of its

preceding fiscal year;

(2) rural residents for housing financing in rural areas, under

regulations of the Farm Credit Administration; and

(3) persons furnishing to farmers and ranchers farm-related

services directly related to their on-farm operating needs.

(b) RURAL HOUSING.

(1) IN GENERAL. Rural housing financed under this subtitle

shall be for single-family, moderate-priced dwellings and the

appurtenances of such not inconsistent with the general quality and

standards of housing existing in, or planned or recommended for, the

rural area where it is located.

(2) LIMITATION. The aggregate of such housing loans in an

association to persons other than farmers or ranchers shall not exceed 15

percent of the outstanding loans at the end of its preceding fiscal year

except on prior approval by the Farm Credit Bank of the district. The

aggregate of such housing loans in any farm credit district shall not

exceed 15 percent of the outstanding loans of all associations in the

district at the end of the preceding fiscal year.

(3) RURAL AREAS. For rural housing purposes under this

section the term "rural areas" shall not be defined to include any city or

village having a population in excess of 2,500 inhabitants.

(4) EQUIPMENT. Each association may own and lease, or lease

with option to purchase, to stockholders of the association equipment

needed in the operations of the stockholder.

(1) IN GENERAL. Loans authorized in subsection (a) hereof

shall bear such rate or rates of interest as are determined under standards

prescribed by the board of the bank subject to the provisions of section

4.17 of this Act, and shall be made upon such terms, conditions, and

upon such security, if any, as shall be authorized in such standards.

(2) SETTING OF RATES. In setting rates and charges, it shall

be the objective to provide the types of credit needed by eligible

borrowers, at the lowest reasonable cost on a sound business basis,

taking into account the cost of money to the association, necessary

reserves and expenses of the association, and services provided to

borrowers and members.

(3) VARYING RATES. The loan documents may provide for

the interest rate or rates to vary from time to time during the repayment

period of the loan in accordance with the rate or rates currently being

charged by the association.

(4) PRIOR APPROVAL. Such standards may require prior

approval of the bank on certain classes of loans, and may authorize a

continuing commitment to a borrower of a line of credit.

12 U.S.C. 2076 Sec. 2.5. Other Services.

Each production credit association may provide technical assistance to

borrowers, applicants, and members and may make available to them at their

option such financial related services appropriate to their on-farm and aquatic

operations as is determined feasible by the board of directors of each Farm

Credit Bank, under regulations prescribed by the Farm Credit Administration.

12 U.S.C. 2076a Sec. 2.6. Liens on Stock.

Except with regard to stock or participation certificates held by other

Farm Credit System institutions, each production credit association shall have

a first lien on stock and participation certificates the association issues, on

allocated surplus, and on investments in equity reserve, for any indebtedness

of the holder of the capital investments and, in the case of equity reserves, for

charges for association losses in excess of reserves and surpluses.

12 U.S.C. 2077 Sec. 2.7. Taxation.

Each production credit association and its obligations are

instrumentalities of the United States and as such any and all notes,

debentures, and other obligations issued by such associations shall be exempt,

both as to principal and interest, from all taxation (except surtaxes, estate,

inheritance, and gift taxes) now or hereafter imposed by the United States or

any State, territorial, or local taxing authority, except that interest on such

obligations shall be subject to Federal income taxation in the hands of the

holder.

Subtitle B—Federal Land Bank Associations

12 U.S.C. 2091 Sec. 2.10. Organizations; Articles; Charters; Powers of the Farm

Credit Administration.

(a) CHARTER. Each Federal land bank association shall continue as

a federally chartered instrumentality of the United States.

(b) ORGANIZATION.

(1) IN GENERAL. A Federal land bank association may be

organized by any group of 10 or more persons desiring to borrow money

from a Farm Credit Bank under section 1.7(a), including persons to

whom the Farm Credit Bank has made a loan directly or through an

agent and has taken as security real estate located in the territory

proposed to be served by the association.

(2) ARTICLES OF ASSOCIATION.

(A) DESCRIPTION OF TERRITORY. The articles of

association shall describe the territory within which the association

proposes to carry on its operations.

(B) SUBMISSION TO FCB. Proposed articles shall be

forwarded to the Farm Credit Bank for the district, accompanied

by an agreement to subscribe on behalf of the association for stock

in accordance with the bylaws of the Farm Credit Bank.

for by surrendering for cancellation stock in the bank held by a

borrower and the issuance of an equivalent amount of stock to such

borrower in the association.

(D) STATEMENT. The articles shall be accompanied by a

statement signed by each of the members of the proposed

association establishing—

(ⅰ) the individual's eligibility and request for a Farm

Credit Bank loan;

(ⅱ) that the real estate with respect to which the

individual desires the loan for is not being served by another

Federal land bank association; and

(ⅲ) that the individual is or will become a stockholder

in the proposed association.

(E) SUBMISSION TO FCA. A copy of the articles of

association shall be forwarded to the Farm Credit Administration

with the recommendations of the bank concerning the need for the

proposed association in order to adequately serve the credit needs

of eligible persons in the proposed territory and a statement as to

whether or not the territory includes any territory described in the

charter of another Federal land bank association.

(3) DENIALS OF CHARTERS. The Farm Credit

Administration for good cause shown may deny the charter applied for.

(4) APPROVAL OF ARTICLES. On the approval of the

proposed articles by the Farm Credit Administration and the issuance of

such charter, the association shall become as of such date a federally

chartered body corporate and an instrumentality of the United States.

Administration shall have power, in the terms of the charter, under rules and

regulations prescribed by the Farm Credit Administration—

(1) to provide for the organization of the association;

(2) to provide for the initial amount of stock of the association;

(3) to provide for the territory within which the association may

carry on its operations; and

(4) to approve amendments to the charter of such association.

12 U.S.C. 2092 Sec. 2.11. Board of Directors.

Each Federal land bank association shall elect from its voting

shareholders a board of directors of such number, for such terms, in such

manner, and with such qualifications as may be required by its bylaws except

that, at least one member shall be elected by the other directors, which

member shall not be a director, officer, employee, stockholder, or agent of a

System institution.

12 U.S.C. 2093 Sec. 2.12. General Corporate Powers.

Each Federal land bank association shall be a body corporate and,

subject to supervision of the Farm Credit Bank for the district and the

regulation of the Farm Credit Administration, shall have the power to—

(1) adopt and use a corporate seal;

(2) have succession until dissolved under the provisions of this

Act or other Act of Congress;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all of the usual

incidents of ownership of real estate and personal property necessary or

convenient to the business of the association;

(6) operate under the direction of the board of directors of the

association in accordance with this Act;

(7) provide by its board of directors for a manager or other chief

executive officer, and provide for such other officers or employees as

may be necessary, including joint employees as provided in this Act,

define the duties of such, and require surety bonds or make other

provision against losses occasioned by employees, except that no

director shall, within one year after the date when such director ceases to

be a member of the board, serve as a salaried employee of the

association on the board of which such director served;

(8) prescribe, by its board of directors, its bylaws that shall be

consistent with law, and that shall provide for—

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred, and retired; and

(B) the manner in which it is to—

(ⅰ) select officers and employees;

(ⅱ) acquire, hold, and transfer property;

(ⅲ) conduct general business; and

(ⅳ) exercise and enjoy the privileges granted to it by

law;

(9) accept applications for Farm Credit Bank loans and receive

from such bank and disburse to the borrowers the proceeds of such

loans;

(10) subscribe to stock of the Farm Credit Bank of the district;

(11) elect by its board of directors a loan committee with power to

elect applicants for membership in the association and recommend loans

to the Farm Credit Bank, or with the approval of the Farm Credit Bank,

delegate the election of applicants for membership and the approval of

loans within specified limits to other committees or to authorized

employees of the association;

(12) on agreement with the bank, take such additional actions with

respect to applications and loans and perform such functions as are

vested by law in the Farm Credit Banks as may be agreed to by the

association;

(13) endorse and become liable to the bank on loans it makes to

association members;

(14) receive such compensation and deduct such sums from loan

proceeds with respect to each loan as may be agreed between the

association and the bank and make such other charges for services as

may be approved by the bank;

(15) provide technical assistance to members, borrowers

applicants, and other eligible persons and make available to them, at

their option, such financial related services appropriate to their

operations as it determines, with Farm Credit Bank approval, are

feasible, under regulations of the Farm Credit Administration;

(16) borrow money from the bank and, with the approval of such

bank, borrow from and issue association notes or other obligations to

any commercial bank or other financial institution;

(17) buy and sell obligations of or insured by the United States or

any agency thereof or any banks of the Farm Credit System;

(18) invest association funds in such obligations as may be

authorized in regulations of the Farm Credit Administration and

approved by the bank and deposit securities and current funds of the

association with any member bank of the Federal Reserve System, with

the Farm Credit Bank, or with any bank insured by the Federal Deposit

Insurance Corporation, and pay fees therefor and receive interest thereon

as may be agreed;

(19) perform such other function delegated to the association by

the Farm Credit Bank of the district;

(20) exercise by its board of directors or authorized officers or

agents all such incidental powers as may be necessary or expedient in

the conduct of its business;

(21) contribute to the capital of the bank; and

(22) operate as an originator and become certified as a certified

facility under title VIII.

12 U.S.C. 2094 Sec. 2.13. Federal Land Bank Association Capitalization.

In accordance with section 4.3A, the Federal land bank association shall

provide, through its bylaws and subject to Farm Credit Administration

regulations, for its capitalization and the manner in which its stock shall be

issued, held, transferred, and retired and its earnings distributed.

12 U.S.C. 2096 Sec. 2.14. Agreements for Sharing Gains or Losses.

Each Farm Credit Bank may enter into agreements with Federal land

bank associations in its district for sharing the gain or losses on loans or on

security held therefor or acquired in liquidation thereof, and associations are

authorized to enter into any such agreements and also, subject to bank

approval, agreements with other associations in the district for sharing the risk

of loss on loans endorsed by each such association. As may be authorized by

the bank in accordance with regulations of the Farm Credit Administration,

associations also may enter into agreements with other Farm Credit System

institutions to share loan and other losses, whether to protect against capital

impairment or for any other purpose.

12 U.S.C. 2097 Sec. 2.15. Liens on Stock.

Each Federal land bank association shall have a first lien on the stock

and participation certificates it issues, except on stock or participation

certificates held by other Farm Credit System institutions, for the payment of

any liability of the stockholder to the association or to the bank, or to both of

them.

12 U.S.C. 2098 Sec. 2.16. Taxation.

Each Federal land bank association and the capital, reserves, and surplus

thereof, and the income derived therefrom, shall be exempt from Federal,

State, municipal, and local taxation, except taxes on real estate held by a

Federal land bank association to the same extent, according to its value, as

other similar property held by other persons is taxed. The mortgages held by

the Federal land bank associations and the notes, bonds, debentures, and other

obligations issued by the associations shall be considered and held to be

instrumentalities of the United States and, as such, they and the income

therefrom shall be exempt from all Federal, State, municipal, and local

taxation, other than Federal income tax liability of the holder thereof under the

Public Debt Act of 1941 (31 U.S.C. 3124).

Title III—Banks for Cooperatives

Part A—Banks for Cooperatives

12 U.S.C. 2121 Sec. 3.0. Establishment; Titles; Branches.

The banks for cooperatives established pursuant to sections 2 and 30 of

the Farm Credit Act of 1933, as amended, shall continue as federally chartered

instrumentalities of the United States. The Farm Credit Administration shall

approve amendments consistent with this Act to charters and organizational

certificates of banks for cooperatives. Unless an existing bank for

cooperatives is merged with another bank, there shall be a bank for

cooperatives in each farm credit district. A bank for cooperatives may include

in its title the name of the city in which it is located or other geographical

designation. When authorized by the Farm Credit Administration each bank

for cooperatives may establish such branches or other offices as may be

appropriate for the effective operation of its business.

12 U.S.C. 2122 Sec. 3.1. Corporate Existence; General Corporate Powers.

Each bank for cooperatives shall be a body corporate and, subject to

regulation by the Farm Credit Administration, shall have power to—

(1) Adopt and use a corporate seal.

(2) Have succession until dissolved under the provisions of this

Act or other Act of Congress.

(3) Make contracts.

(4) Sue and be sued.

(5) Acquire, hold, dispose, and otherwise exercise all of the

usual incidents of ownership of real and personal property necessary or

convenient to its business.

(6) Make loans and commitments for credit, provide services and

other assistance as authorized in this Act, and charge fees therefor.

(7) Operate under the direction of its board of directors.

(8) Elect by its board of directors a president, any vice

presidents, a secretary, a treasurer, and provide for such other officers,

employees, and agents as may be necessary, including joint employees

as provided in this Act, define their duties and require surety bonds or

make other provisions against losses occasioned by employees.

(9) Prescribe by its board of directors its bylaws not inconsistent

with law providing for the classes of its stock and the manner in which

its stock shall be issued, transferred, and retired; its officers, employees,

or agents elected or provided for; its property acquired, held, and

transferred; its loans made; its general business conducted; and the

privileges granted it by law exercised and enjoyed.

(10) Borrow money and issue notes, bonds, debentures, or other

obligations individually or in concert with one or more other banks of

the System, of such character, and such terms, conditions, and rates of

interest as may be determined.

(11)(A) Participate in loans under this title with one or more other

banks for cooperatives and with commercial banks and other financial

institutions upon such terms as may be agreed among them and

participate with one or more other Farm Credit System institutions in

loans made under this title or other titles of this Act on the basis

prescribed in section 4.18 of this Act.

(B)(ⅰ) Participate in any loan of a type otherwise authorized

under this title that is made to a similar entity by any institution in

the business of extending credit, including purchases of

participations in loans to finance international trade transactions

involving the sale of agricultural commodities or the products

thereof, except that—

(Ⅰ) a bank for cooperatives may not participate in a

loan—

(aa) if the participation would cause

the total amount of all loan participations by the

bank under this subparagraph involving a single

credit risk to exceed 10 percent of the bank's total

capital; or

(bb) if the participation by the bank

will itself equal or exceed 50 percent of the

principal of the loan or, when taken together with

participations in the loan by other Farm Credit

System institutions, will cause the cumulative

amount of the participations by all Farm Credit

System institutions in the loan to equal or exceed

50 percent of the principal of the loan;

(Ⅱ) a bank for cooperatives may not

participate in a loan to a similar entity under this

subparagraph if the similar entity has a loan or loan

commitment outstanding with a Farm Credit Bank or an

association chartered under this Act, unless agreed to

by the Bank or association; and

(Ⅲ) the cumulative amount of participations

that a bank for cooperatives may have outstanding

under this subparagraph at any time may not exceed 15

percent of the bank's total assets.

(ⅱ) As used in this subparagraph, the term "similar

entity" means an entity that, while not eligible for a loan

under section 3.8, is functionally similar to an entity eligible

for a loan under section 3.8 in that it derives a majority of its

income from, or has a majority of its assets invested in, the

conduct of activities functionally similar to those conducted

by the entity.

(ⅲ) As used in this subparagraph, the term

"participate" or "participation" refers to multilender

transactions, including syndications, assignments, loan

participations, subparticipations, or other forms of the

purchase, sale, or transfer of interests in loans, other

extensions of credit, or other technical and financial

assistance.

(12) Deposit its securities and its current funds with any member

bank of the Federal Reserve System or any insured State nonmember

bank (within the meaning of section 3 of the Federal Deposit Insurance

Act (12 U.S.C. 1813)) or, to the extent necessary to facilitate

transactions which may be financed under section 3.7(b) of this Act, any

other financial organization, domestic or foreign, as may be authorized

by its board of directors, and pay fees therefor and receive interest

thereon as may be agreed. When designated for that purpose by the

Secretary of the Treasury, it shall be a depository of public money,

except receipts from customs, under such regulations as may be

prescribed by the Secretary; may be employed as a fiscal agent of the

Government, and shall perform all such reasonable duties as a

depository of public money or financial agent of the Government as may

be required of it. No Government funds deposited under the provisions

of this subsection shall be invested in loans or bonds or other obligations

of the bank.

(13)(A) Buy and sell obligations of or insured by the United States

or of any agency thereof, or securities backed by the full faith and credit

of any such agency and make such other investments as may be

authorized under regulations issued by the Farm Credit Administration.

(B) As may be authorized by its board of directors, buy

from and sell to Farm Credit System institutions interests in loans

and in other financial assistance extended and nonvoting stock.

solely for the purposes of obtaining credit information and other

services needed to facilitate transactions which may be financed

under section 3.7(b) of this Act, invest in ownership interests in

foreign business entities that are principally engaged in providing

credit information to and performing such servicing functions for

their members in connection with the members’ international

activities.

(14) Conduct studies and adopt standards for lending.

(15) Amend and modify loan contracts, documents, and payment

schedules, and release, subordinate, or substitute security for any of

them.

(16) Exercise by its board of directors or authorized officers,

employees, or agents all such incidental powers as may be necessary or

expedient to carry on the business of the bank.

(17) As may be authorized by the board of directors, maintain

credit balances and pay or receive fees or interest thereon, for the

purpose of assisting in the transfer of funds to or from parties to

transactions that may be financed under section 3.7(b) of this Act:

Provided, however, That nothing herein shall authorize the banks for

cooperatives to engage in the business of accepting domestic deposits.

(18) As may be authorized by its board of directors, agree with

other Farm Credit System institutions to share loan or other losses,

whether to protect against capital impairment or for any other purpose.

12 U.S.C. 2123 Sec. 3.2. Board of Directors.

(a) In General.- Each bank for cooperatives shall elect a board of

directors of such number, for such term, in such manner, and with such

qualifications as may be required in its bylaws, except that at least one

member shall be elected by the other directors, which member shall not be a

director, officer, employee, or stockholder of a System institution.

(b) Nomination and Election.-

(1) In General.- If approved by the stockholders through a bylaw

amendment, the nomination and election of one member from a bank for

cooperatives shall be carried out with each voting stockholder of a bank

for cooperatives having one vote, plus a number of votes (or fractional

part thereof) equal to—

(A) the number of stockholders eligible to vote; multiplied

by—

(B) the percentage (or fractional part thereof) of the total

equity interest (including allocated, but not unallocated, surplus

and reserves) in the bank of all stockholders held by the individual

voting stockholder at the close of the immediately preceding fiscal

year of the bank.

(2) Number of Votes.-The total number of votes under this

subsection shall be the number of voting stockholders of a bank for

cooperatives multiplied by two.

12 U.S.C. 2124Sec. 3.3. Bank for Coopertives Stock; Value; Classes of Stock; Voting;

Exchange.

(a) The capital stock of each bank for cooperatives shall be in such

amount as its board determines is required for the purpose of providing

adequate capital to permit the bank to meet the credit needs of borrowers from

the bank and such amounts may be increased or decreased from time to time

in accordance with such needs.

(b) The capital stock of each bank shall be divided into shares of par

value of $100 each and may be of such classes as the board may determine.

Such stock may be issued in fractional shares.

cooperative associations eligible to borrow from the banks (ⅱ) other categories

of persons and entities described in sections 3.7 and 3.8 eligible to borrow

from the bank, as determined by the bank's board of directors; and (ⅲ) other

banks for cooperatives, and shall not be otherwise transferred, pledged, or

hypothecated except as consented to by the issuing bank under regulations of

the Farm Credit Administration.

(d) Each holder of one or more shares of voting stock which is eligible

to borrow from a bank for cooperatives shall be entitled only to one vote and

only in the affairs of the bank in the district in which its principal office is

located unless otherwise authorized under regulations issued by the Farm

Credit Administration, except that if such holder has not been a borrower from

the bank in which it holds such stock within a period of two years next

preceding the date fixed by the Farm Credit Administration prior to the

commencement of voting, it shall not be entitled to vote.

(e) Nonvoting investment stock may be issued in such series and in

such amounts as may be determined by the board and may be exchanged for

voting stock or sold or transferred to any person subject to the approval of the

issuing bank.

(f) Participation certificates may be issued to parties to whom voting

stock may not be issued.

12 U.S.C. 2125 Sec. 3.4. Dividends.

Dividends may be payable only on nonvoting investment stock, if

declared by the board of directors of the bank, subject to the general direction

of the Farm Credit Administration.

12 U.S.C. 2126 Sec. 3.5. Retirement of Stock.

Nonvoting investment stock and participation certificates may be called

for retirement at par. With the approval of the issuing bank, the holder may

elect not to have the called stock or participation certificates retired in

response to a call, reserving the right to have such stock or participation

certificates included in the next call for retirement. Voting stock may also be

retired at par, on call or on such revolving basis as the board may determine

with due regard for its total capital needs: Provided, however, That all

equities in the banks issued or allocated with respect to the year of the

enactment of this Act and prior years shall be retired on a revolving basis

according to the year of issue with the oldest outstanding equities being first

retired. Equities issued for subsequent years shall not be called or retired until

equities described in the preceding sentence of this proviso have been retired.

12 U.S.C. 2127 Sec. 3.6. Guaranty Fund Subscriptions In Lieu of Stock.

If any cooperative association is not authorized under the laws of the

State in which it is organized to take and hold stock in a bank for

cooperatives, the bank shall, in lieu of any requirement for stock purchase,

require the association to pay into or have on deposit in a guaranty fund, or the

bank may retain out of the amount of the loan and credit to the guaranty fund

account of the borrower, a sum equal to the amount of stock which the

association would otherwise be required to own. Each reference to stock of

the banks for cooperatives in this Act shall include such guaranty fund

equivalents. The holder of the guaranty fund equivalent and the bank shall

each be entitled to the same rights and obligations with respect thereto as the

rights and obligations associated with the class or classes of stock involved.

12 U.S.C. 2128 Sec. 3.7. Lending Power.

(a) The banks for cooperatives are authorized to make loans and

commitments to eligible cooperative associations and to extend to them other

technical and financial assistance at any time (whether or not they have a loan

from the bank outstanding), including but not limited to discounting notes and

other obligations, guarantees, currency exchange necessary to service

individual transactions that may be financed under subsection (b) of this

section, collateral custody, or participation with other banks for cooperatives

and commercial banks or other financial institutions in loans to eligible

cooperatives, under such terms and conditions as may be determined to be

feasible by the board of directors of each bank for cooperatives under

regulations of the Farm Credit Administration. Each bank may own and lease,

or lease with option to purchase, to stockholders eligible to borrow from the

bank equipment needed in the operations of the stockholder and may make or

participate in loans or commitments and extend other technical and financial

assistance to other domestic parties for the acquisition of equipment and

facilities to be leased to such stockholders for use in their operations in the

United States.

(b)(1) A bank for cooperatives is authorized to make or participate in

loans and commitments to, and to extend other technical and financial

assistance to a domestic or foreign party with respect to its transactions with

an association that is a voting stockholder of the bank for the import of

agricultural commodities or products thereof, agricultural supplies, or aquatic

products through purchases, sales or exchanges, if the bank for cooperatives

determines, under regulations of the Farm Credit Administration, that the

voting stockholder will benefit substantially as a result of such loan,

commitment, or assistance.

(2)(A) A bank for cooperatives may make or participate in loans and

commitments to, and extend other technical and financial assistance to—

(ⅰ) any domestic or foreign party for the export,

including (where applicable) the cost of freight, of

agricultural commodities or products thereof, agricultural

supplies, or aquatic products from the United States under

policies and procedures established by the bank to ensure that

the commodities, products, or supplies are originally sourced,

where reasonably available, from one or more eligible

cooperative associations described in section 3.8(a) on a

priority basis, except that if the total amount of the balances

outstanding on loans made by a bank under this clause that—

(Ⅰ) are made to finance the export of commodities,

products, or supplies that are not originally sourced

from a cooperative, and

(Ⅱ) are not guaranteed or insured, in an

amount equal to at least 95 percent of the amount

loaned, by a department, agency, bureau, board,

commission, or establishment of the United States or a

corporation wholly-owned directly or indirectly by the

United States, exceeds an amount that is equal to 50

percent of the bank’s capital, then a sufficient interest in

the loans shall be sold by the bank for cooperatives to

commercial banks and other non-System lenders to

reduce the total amount of such outstanding balances to

an amount not greater than an amount equal to 50

percent of the bank’s capital; and

(ⅱ) except as provided in subparagraph (B), any

domestic or foreign party in which an eligible cooperative

association described in section 3.8(a) (including, for the

purpose of facilitating its domestic business operations only,

a cooperative or other entity described in section

3.8(b)(1)(A)) has an ownership interest, for the purpose of

facilitating the domestic or foreign business operations of the

association, except that if the ownership interest by an

eligible cooperative association, or associations, is less than

50 percent, the financing shall be limited to the percentage

held in the party by the association or associations.

(B) A bank for cooperatives shall not use the authority

provided in subparagraph (A)(ⅱ) to provide financial assistance to

a party for the purpose of financing the relocation of a plant or

facility from the United States to another country.

(3) A bank for cooperatives is authorized to provide such

services as may be customary and normal in maintaining relationships

with domestic or foreign entities to facilitate the activities specified in

paragraphs (1) and (2), consistent with this Act.

(4) DEFINITION OF AGRICULTURAL SUPPLY.—In this

subsection, the term "agricultural supply" includes—

(A) a farm supply; and

(B)(ⅰ) agriculture-related processing equipment;

(ⅱ) agriculture-related machinery; and

(ⅲ) other capital goods related to the storage or

handling of agricultural commodities or products.

of this section shall be extended in accordance with policies adopted by the

board of directors of the bank under regulations of the Farm Credit

Administration.

(d) The regulations of the Farm Credit Administration implementing

subsection (b) of this section and the other provisions of this title relating to

the authority under subsection (b) of this section may not confer upon the

banks for cooperatives powers and authorities greater than those specified in

this title. The Farm Credit Administration shall, during the formulation of

such regulations, closely consult on a continuing basis with the Board of

Governors of the Federal Reserve System to ensure that such regulations

conform to national banking policies, objectives, and limitations.

(e) Notwithstanding any other provision of this title, the banks for

cooperatives shall not make or participate in loans or commitments for the

purpose of financing speculative futures transactions by eligible borrowers in

foreign currencies.

(f) The banks for cooperatives may, for the purpose of installing,

maintaining, expanding, improving, or operating water and waste disposal

facilities in rural areas, make and participate in loans and commitments and

extending other technical and financial assistance to—

(1) cooperatives formed specifically for the purpose of

establishing or operating such facilities; and

(2) public and quasi-public agencies and bodies, and other public

and private entities that, under authority of State or local law, establish

or operate such facilities.

For purposes of this subsection, the term "rural area" means all territory

of a State that is not within the outer boundary of any city or town having a

population of more than 20,000 based on the latest decennial census of the

United States.

12 U.S.C. 2129 Sec. 3.8. Eligibility.

(a) Any association of farmers, producers or harvesters of aquatic

products, or any federation of such associations, which is operated on a

cooperative basis, and has the powers for processing, preparing for market,

handling, or marketing farm or aquatic products; or for purchasing, testing,

grading, processing, distributing, or furnishing farm or aquatic supplies or

furnishing farm or aquatic business services or services to eligible

cooperatives and conforms to either of the two following requirements:

(1) no member of the association is allowed more than one vote

because of the amount of stock or membership capital he may own

therein; or

(2) does not pay dividends on stock or membership capital in

excess of such per centum per annum as may be approved under

regulations of the Farm Credit Administration; and in any case

(3) does not deal in farm products or aquatic products, or

products processed therefrom, farm or aquatic supplies, farm or aquatic

business services, or services to eligible cooperatives with or for

nonmembers in an amount greater in value than the total amount of such

business transacted by it with or for members, excluding from the total

of member and nonmember business transactions with the United States

or any agency or instrumentality thereof or services or supplies

furnished as a public utility; and

(4) a percentage of the voting control of the association not less

than 80 per centum (60 per centum (A) in the case of rural electric,

telephone, public utility, and service cooperatives; (B) in the case of

local farm supply cooperatives that have historically served needs of the

community that would not adequately be served by other suppliers and

have experienced a reduction in the percentage of farmer membership

due to changed circumstances beyond their control such as, but not

limited to, urbanization of the community; and (C) in the case of local

farm supply cooperatives that provide or will provide needed services to

a community and that are or will be in competition with a cooperative

specified in paragraph (B)) or, with respect to any type of association or

cooperative, such higher percentage as established by the bank board, is

held by farmers, producers or harvesters of aquatic products, or eligible

cooperative associations as defined herein; shall be eligible to borrow

from a bank for cooperatives. Any such association that has received a

loan from a bank for cooperatives shall, without regard to the

requirements of paragraphs (1) through (4), continue to be eligible for so

long as more than 50 percent (or such higher percentage as is established

by the bank board) of the voting control of the association is held by

farmers, producers or harvesters of aquatic products, or eligible

cooperative associations.

(b) Notwithstanding any other provision of this section:

(1) The following entities shall also be eligible to borrow from a

bank for cooperatives:

(A) Cooperatives and other entities that have received a

loan, loan commitment, or loan guarantee from the Rural

Electrification Administration (or successor agency), or that are

eligible under the Rural Electrification Act of 1936 (7 U.S.C. 901

et seq.) for a loan, loan commitment, or loan guarantee from the

Administration or the Bank (or a successor of the Administration

or the Bank), and subsidiaries of such cooperatives or other

entities.

(B) Any legal entity that (ⅰ) holds more than 50 percent of

the voting control of an association or other entity that is eligible to

borrow from a bank for cooperatives under subsection (a) or

subparagraph (A) of this paragraph, and (ⅱ) borrows for the

purpose of making funds available to that association or entity, and

makes funds available to that association or entity under the same

terms and conditions that the funds are borrowed from a bank for

cooperatives.

(b) or (f) of section 3.7.

(D) Any creditworthy private entity that satisfies the

requirements for a service cooperative under paragraphs (1), (2),

and (4), or under the last sentence, 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.

(2) Notwithstanding the provisions of section 3.9, the board of

directors of a bank for cooperatives may determine that, with respect to

a loan to any borrower eligible to borrow from a bank under paragraph

(1)(A) that is fully guaranteed by the United States, no stock purchase

requirement shall apply, other than the requirement that a borrower

eligible to own voting stock shall purchase one share of such stock.

(3) Each association and other entity eligible to borrow from a

bank for cooperatives under this subsection, for purposes of section

3.7(a), shall be treated as an eligible cooperative association and a

stockholder eligible to borrow from the bank.

(4) Nothing in this subsection shall be construed to adversely

affect the eligibility as it existed on the date of the enactment of this

subsection, of cooperatives and other entities for any other credit

assistance under Federal law.

NOTE: This subsection was enacted on January 6, 1988, by

section 421 of the Agricultural Credit Act of 1987.

12 U.S.C. 2130 Sec. 3.9. Ownership of Stock by Borrowers.

(a) Each borrower entitled to hold voting stock shall, at the time a loan

is made by a bank for cooperatives, own at least one share of voting stock and

shall be required by the bank to invest in additional voting stock or nonvoting

investment stock at that time, or from time to time, as the lending bank may

determine, but the requirement for investment in stock at the time the loan is

closed shall not exceed an amount equal to 10 per centum of the face amount

of the loan. Such additional ownership requirements may be based on the face

amount of the loan, the outstanding loan balance or on a percentage of the

interest payable by the borrower during any year or during any quarter

thereof, or upon such other basis as the bank determines will provide adequate

capital for the operation of the bank and equitable ownership thereof among

borrowers.

(b) Notwithstanding the provisions of subsection (a) of this section,

the purchase of stock need not be required with respect to that part of any loan

made by a bank for cooperatives which it sells to or makes in participation

with financial institutions other than any of the banks for cooperatives. In

such cases the distribution of earnings of the bank for cooperatives shall be on

the basis of the interest in the loan retained by such bank.

12 U.S.C. 2131 Sec. 3.10. Interest Rates; Security; Lien; Cancellation; and

Application on Indebtedness.

(a) Loans made by a bank for cooperatives shall bear interest at a rate

or rates determined by the board of directors of the bank from time to time. In

setting rates and charges, it shall be the objective to provide the types of credit

needed by eligible borrowers at the lowest reasonable cost on a sound

business basis, taking into account the net cost of money to the bank,

necessary reserves and expenses of the bank, and services provided. The loan

documents may provide for the interest rate or rates to vary from time to time

during the repayment period of the loan, in accordance with the rate or rates

currently being charged by the bank.

(b) Loans shall be made upon such terms, conditions, and security, if

any, as may be determined by the bank in accordance with regulations of the

Farm Credit Administration.

other equities in the bank as collateral for the payment of any indebtedness of

the owner thereof to the bank.

(d) In any case where the debt of a borrower is in default, or in any

case of liquidation or dissolution of a present or former borrower from a bank

for cooperatives, the bank may, but shall not be required to, retire and cancel

all or part of the stock, allocated surplus or contingency reserves, or any other

equity in the bank owned by or allocated to such borrower, at the fair market

value thereof not exceeding par, and, to the extent required in such cases,

corresponding shares and allocations and other equity interests held by a bank

in another bank for cooperatives (or any successor bank) on account of such

indebtedness, shall be retired or equitably adjusted. In no event shall the

banks equities be retired or canceled if the retirement or cancellation would

adversely affect the banks capital structure, as determined by the Farm Credit

Administration.

12 U.S.C. 2132 Sec. 3.11. Earnings and Reserves; Application of Savings.

(a) At the end of each fiscal year, the net savings shall, under

regulations prescribed by the Farm Credit Administration, continue to be

applied on a cooperative basis with provision for sound, adequate

capitalization to meet the changing financing needs of eligible cooperative

borrowers and prudent corporate fiscal management, to the end that current

year's patrons carry their fair share of the capitalization, ultimate expenses,

and reserves related to the year's operations and the remaining net savings

shall be distributed as patronage refunds as provided in subsection (b). Such

regulations may provide for application of net savings to the restoration or

maintenance of an allocated surplus account, reasonable additions to

unallocated surplus, or to unallocated reserves after payment of operating

expenses, and provide for allocations to patrons not qualified under the

Internal Revenue Code, or payment of such per centum of patronage refunds

in cash, as the board may determine.

(b) The net savings of each bank for cooperatives, after the earnings

for the fiscal year have been applied in accordance with subsection (a) of this

section shall be paid in stock, participation certificates, or cash, or in any of

them, as determined by its board, as patronage refunds to borrowers to whom

such refunds are payable who are borrowers of the fiscal year for which such

patronage refunds are distributed. All patronage refunds shall be paid in

proportion that the amount of interest and service fees on the loans to each

borrower during the year bears to the interest and service fees on the loans of

all borrowers during the year or on such other proportionate patronage basis as

may be approved by the board of directors.

operating expenses (including reasonable valuation reserves and losses in

excess of any applicable reserves), such loss may be carried forward or carried

back, if appropriate, or otherwise shall be absorbed by charges to unallocated

reserve or surplus accounts established after the date of enactment of this Act;

charges to allocated contingency reserve account; charges to allocated surplus

accounts; charges to other contingency reserve and surplus accounts; the

impairment of voting stock; or the impairment of all other stock.

(d) Notwithstanding any other provisions of this section any costs or

expenses attributable to a prior year or years but not recognized in

determining the net savings for such year or years may be charged to reserves

or surplus of the bank or to patronage allocations for such years, as may be

determined by the board of directors.

(e) A bank for cooperatives may pay in cash such portion of its

patronage refunds as will permit its taxable income to be determined without

taking into account savings applied as allocated surplus, allocated contingency

reserves, and patronage refunds under subsection (a) of this section.

12 U.S.C. 2133 Sec. 3.12. Distribution of Assets on Liquidation or Dissolution.

In the case of liquidation or dissolution of any bank for cooperatives,

after payment or retirement, first, of all liabilities; second, of all capital stock

issued before January 1, 1956, at par, and all nonvoting stock at par; and third,

all voting stock at par; any surplus and reserves existing on January 1, 1956,

shall be paid to the holders of stock issued before that date, and voting stock

pro rata; and any remaining allocated surplus and reserves shall be distributed

to those entities to which they are allocated on the books of the bank, and any

other remaining surplus shall be paid to the holders of outstanding voting

stock. If it should become necessary to use any surplus or reserves to pay any

liabilities or to retire any capital stock, unallocated reserves or surplus,

allocated reserves and surplus shall be exhausted in accordance with rules

prescribed by the Farm Credit Administration.

12 U.S.C. 2134 Sec. 3.13. Taxation.

Each bank for cooperatives and its obligations are instrumentalities of

the United States and as such any and all notes, debentures, and other

obligations issued by such bank shall be exempt, both as to principal and

interest from all taxation (except surtaxes, estate, inheritance, and gift taxes)

now or hereafter imposed by the United States or any State, territorial, or local

taxing authority, except that interest on such obligations shall be subject to

Federal income taxation in the hands of the holder.

Part B—National Banks for Cooperatives

12 U.S.C. 2141 Sec. 3.20. Charter, Powers, and Operation.

(a) CHARTER. The National Bank for Cooperatives (hereinafter in this

part referred to as the "consolidated bank"), established under section 413 of

the Agricultural Credit Act of 1987, shall be a federally chartered

instrumentality of the United States and an institution of the Farm Credit

System.

(b) POWERS. The consolidated bank and the board of directors of such

bank shall have all of the powers, rights, responsibilities, and obligations of

the constituent banks described in section 413(b) of the Agricultural Credit

Act of 1987 (12 U.S.C. 2121 note; Public Law 100-233) and the boards of

directors of such banks except as otherwise provided for in this Act.

operated on a cooperative basis.

Sec. 3.21. [Repealed]

Repealed in section 5411(14) of the Agriculture Improvement Act of 2018

12 U.S.C. 2143 Sec. 3.22. Credit Delivery Office.

On a determination by the board of directors of the consolidated bank

that the bank’s loan portfolio is concentrated in any one district or districts

(according to the district boundaries in effect immediately prior to the

effective date of the establishment of the bank under section 413 of the

Agricultural Credit Act of 1987), the bank may consider the creation of

regional service centers to accommodate such loan concentrations.

12 U.S.C. 2144 Sec. 3.23. Consolidation of Functions.

Subject to section 3.22, to the greatest extent practicable, the functions

of the consolidated bank shall be consolidated in the central office of the bank.

12 U.S.C. 2145 Sec. 3.24. Exchange of Ownership Interests.

On the establishment of the consolidated bank, ownership interests of

the stockholders and subscribers to the guaranty funds of the constituent

district banks for cooperatives (including stock, participation certificates, and

allocated equities) shall be exchanged for like ownership interests in the

consolidated bank on a book value basis.

12 U.S.C. 2146 Sec. 3.25. Capitalization.

In accordance with section 4.3A, each consolidated bank shall provide,

through bylaws and subject to Farm Credit Administration regulations, for the

capitalization of the bank and the manner in which bank stock shall be issued,

held, transferred, and retired and bank earnings distributed.

12 U.S.C. 2147 Sec. 3.26. Patronage Pools.

Under such terms and conditions as may be determined by its board of

directors, the consolidated bank may—

(1) for a period of at least 3 years following the date of the

enactment of this section, establish separate patronage pools consisting

of loans to eligible borrowers located in each constituent farm credit

district (as such district existed on the date of the enactment of this

section); and

(2) allocate revenues, expenses, and net savings among such

pools on an equitable basis.

12 U.S.C. 2148 Sec. 3.27. Transactions to Accomplish Merger.

The receipt of assets or assumption of liabilities by the consolidated

bank, the exchange of stock, equities, or other ownership interests, and any

other transaction carried out in accomplishing the merger of the banks for

cooperatives shall not be treated as a taxable event under the laws of the

United States or of any State or political subdivision thereof. The preceding

sentence shall also apply to the receipt of assets and liabilities by a

cooperative to the extent that the net amount of the distribution is immediately

reinvested in stock of a consolidated bank (and in such case the basis of such

stock shall be appropriately reduced by the amount of gain not recognized by

reason of this sentence).

12 U.S.C. 2149 Sec. 3.28. Lending Limits.

The Farm Credit Administration may not establish lending limits for the

consolidated bank with respect to any loans or borrowers that are more

restrictive than the combined lending limits that were previously established

by the Farm Credit Administration for the constituent banks described in

section 413(b) of the Agricultural Credit Act of 1987 (12 U.S.C. 2121 note;

Public Law 100-233) with respect to such loans or borrowers.

Sec. 3.29. [Repealed]

Repealed by section 5411(16) of the Agriculture Improvement Act of

2018.

Title IV—Provisions Applicable to Two or More Classes of Institutions

of the System

Introduction

Repealed by section 5411(17) of the Agriculture Improvement Act of 2018

Part A. Funding

12 U.S.C. 2152 Sec. 4.1. [Repealed]

12 U.S.C. 2153 Sec. 4.2. Power to Borrow; Issuance of Notes, Bonds,

Debentures, and Other Obligations.

Each of the banks of the System, in order to obtain funds for its

authorized purposes, shall have power, subject to regulation by the Farm

Credit Administration, and subject to the limitations of paragraph (e) of this

section, to:

(a) Borrow money from or loan to any other institution of the System,

borrow from any commercial bank or other lending institution, issue its notes

or other evidence of debt on its own individual responsibility and full faith

and credit, and invest its excess funds in such sums, at such times, and on such

terms and conditions as it may determine.

(b) Issue its own notes, bonds, debentures, or other similar obligations

fully collateralized as provided in section 4.3(c) by the notes, mortgages, and

security instruments it holds in the performance of its functions under this Act

in such sums, maturities, rates of interest, and terms and conditions of each

issue as it may determine with approval of the Farm Credit Administration.

title of this Act in borrowing or in issuance of consolidated notes, bonds,

debentures, or other obligations as may be agreed with approval of the Farm

Credit Administration.

(d) Join with other banks of the System in issuance of Systemwide

notes, bonds, debentures, and other obligations in the manner, form, amounts,

and on such terms and conditions as may be agreed upon with approval of the

Farm Credit Administration. Such System-wide issue by the participating

banks and such participations by each bank shall not exceed the limits to

which each such bank is subject in the issuance of its individual or

consolidated obligations and each such issue shall be subject to approval of

the Farm Credit Administration: Provided, however, There shall be no issues

of System-wide obligations without the concurrence of the boards of directors

of each bank and the approval of the Farm Credit Administration for such

issues shall be conditioned on and be evidence of the compliance with this

provision.

(e) No bank or banks shall issue notes, bonds, debentures, or other

obligations individually or in concert with one or more banks of the System

other than through the Federal Farm Credit Banks Funding Corporation under

any provision of this Act except under subsection (a) of this section:

Provided, That any bank or banks may issue investment bonds or like

obligations other than through the Federal Farm Credit Banks Funding

Corporation if the interest rate is not in excess of the interest allowable on

savings deposits of commercial banks of comparable amounts and maturities

under Federal Reserve regulation on its member banks.

12 U.S.C. 2154 Sec. 4.3. Capital Adequacy of Banks and Associations.

(a) The Farm Credit Administration shall cause System institutions to

achieve and maintain adequate capital by establishing minimum levels of

capital for such System institutions and by using such other methods as the

Farm Credit Administration deems appropriate. The Farm Credit

Administration may establish such minimum level of capital for a System

institution as the Farm Credit Administration, in its discretion, deems to be

necessary or appropriate in light of the particular circumstances of the System

institution.

(b)(1) Failure of a System institution to maintain capital at or above its

minimum level as established under subsection (a) may be deemed by the

Farm Credit Administration, in its discretion, to constitute an unsafe and

unsound practice within the meaning of this Act.

(2) In addition to, or in lieu of, any other action authorized by

law, including paragraph (1), the Farm Credit Administration may issue

a directive to a System institution that fails to maintain capital at or

above its required level as established under subsection (a). Such

directive may require the System institution to submit and adhere to a

plan acceptable to the Farm Credit Administration describing the means

and timing by which the System institution shall achieve its required

capital level, but may not require merger or consolidation without a

majority vote of the voting stockholders or the contributors to the

guaranty fund of the institution.

(3) The Farm Credit Administration may consider such System

institution’s progress in adhering to any plan required under paragraph

(2) whenever such System institution, or an affiliate thereof, seeks the

requisite approval of the Farm Credit Administration for any proposal

that would divert earnings, diminish capital, or otherwise impede such

System institution’s progress in achieving its minimum capital level.

The Farm Credit Administration may deny such approval where it

determines that such proposal would adversely affect the ability of the

System institution to comply with such plan.

bond, debenture, or other similar obligation and at all times thereafter

maintain, free from any lien or other pledge, notes and other obligations

representing loans made under this Act or real or personal property acquired

in connection with loans made under this Act, obligations of the United States

or any agency thereof direct or fully guaranteed, other bank assets (including

marketable securities) approved by the Farm Credit Administration, or cash,

in an aggregate value equal to the total amount of notes, bonds, debentures, or

other similar obligations outstanding for which the bank is primarily liable.

12 U.S.C. 2154a Sec. 4.3A. Capitalization of System Institutions.

(a) DEFINITIONS. As used in this section:

(1) PERMANENT CAPITAL. The term "permanent capital"

means—

(A) current year retained earnings;

(B) allocated and unallocated earnings (which, in the case

of earnings allocated in any form by a System bank to any

association or other recipient and retained by the bank, shall be

considered, in whole or in part, permanent capital of the bank or of

any such association or other recipient as provided under an

agreement between the bank and each such association or other

recipient);

(D) stock issued by a System institution, except—

(ⅰ) stock that may be retired by the holder of the

stock on repayment of the holder's loan, or otherwise at the

option or request of the holder; or

(ⅱ) stock that is protected under section 4.9A or is

otherwise not at risk; and

(E) any other debt or equity instruments or other accounts

that the Farm Credit Administration determines appropriate to be

considered permanent capital.

(2) STOCK. The term "stock" means voting and nonvoting

stock (including preferred stock), equivalent contributions to a guaranty

fund, participation certificates, allocated equities, and other forms and

types of equities.

(b) ADOPTION OF BYLAWS. Subject to approval by shareholders

under subsection (c)(2), each bank and association shall adopt bylaws,

developed by its board of directors, that provide for the capitalization of the

institution in accordance with subsection (c)(1).

(1) IN GENERAL. Notwithstanding any other provision of this

Act, the bylaws adopted under subsection (b)—

(A) shall provide for such classes, par value, and amounts

of the stock of the institution, the manner in which such stock shall

be issued, transferred, and retired, and the payment of dividends

and patronage refunds, as determined appropriate by the Board of

Directors, subject to this section;

(B) may provide for the charging of loan origination fees as

determined appropriate by the Board of Directors;

standards established under the regulations issued under section

4.3(a);

(D) shall provide for the issuance of voting stock, which

may only be held by—

(ⅰ) borrowers who are farmers, ranchers, or producers

or harvesters of aquatic products, and cooperative

associations eligible to borrow from System institutions

under this Act;

(ⅱ) persons and entities eligible to borrow from the

banks for cooperatives, as described in section 3.3(c)(ⅱ);

(ⅲ) in the case of a Central Bank for Cooperatives,

other banks for cooperatives; and

(ⅳ) in the case of banks other than banks for

cooperatives, System associations;

(E) shall require that—

(ⅰ) as a condition of borrowing from or through the

institution, any borrower who is entitled to hold voting stock

or participation certificates shall, at the time a loan is made,

acquire voting stock or participation certificates in an amount

not less than $1,000 or 2 percent of the amount of the loan,

whichever is less; and

(ⅱ) within 2 years after the loan of a borrower is

repaid in full, any voting stock held by the borrower be

converted to nonvoting stock;

(F) may provide that persons who are not borrowers from

the institution may hold nonvoting stock of the institution;

(G) shall require that any holder of voting stock issued

before the adoption of bylaws under this section exchange a

portion of such stock for new voting stock;

(H) do not need to provide for maximum or minimum

standards of borrower stock ownership based on a percentage of

the loan of the borrower, except as otherwise provided in this

section;

(I) shall permit the retirement of stock at the discretion of

the institution if the institution meets the capital adequacy

standards established under section 4.3(a); and

(J) shall permit stock to be transferable.

(2) EFFECTIVE DATE. The bylaws adopted by the board of

directors of a System institution under subsection (b) shall take effect

only on approval of a majority of the stockholders of such institution

present and voting, or voting by written proxy, at a duly authorized

stockholders’ meeting.

(d) REDUCTION OF CAPITAL.

(1) GENERAL RULE. Except as provided in paragraph (2), the

board of directors of a System institution may not reduce the permanent

capital of the institution through the payment of patronage refunds or

dividends, or the retirement of stock if, after or due to such action, the

permanent capital of the institution would thereafter fail to meet the

minimum capital adequacy standards established under section 4.3(a).

(2) EXCEPTIONS. Paragraph (1) shall not apply to the payment

of noncash patronage refunds by any institution exempt from Federal

income tax if the entire refund paid qualifies as permanent capital.

Notwithstanding paragraph (1), any System institution subject to Federal

income tax may pay patronage refunds partially in cash as long as the

cash portion of the refund is the minimum amount required to qualify

the refund as a deductible patronage distribution for Federal income tax

purposes and the remaining portion of the refund paid qualifies as

permanent capital.

(e) COMPLIANCE. The Farm Credit Administration may issue a

directive that requires compliance with subsection (d), to the board of

directors of any System institution that fails to comply therewith.

(f) LOANS DESIGNATED FOR SALE OR SOLD INTO THE

SECONDARY MARKET.

(1) IN GENERAL. Subject to paragraph (2) and

notwithstanding any other provision of this section, the bylaws adopted

by a bank or association under subsection (b) may provide—

(A) in the case of a loan made on or after the date of

enactment of this paragraph that is designated, at the time the loan

is made, for sale into a secondary market, that no voting stock or

participation certificate purchase requirement shall apply to the

borrower for the loan; and

(B) in the case of a loan made before the date of enactment

of this paragraph that is sold into a secondary market, that all

outstanding voting stock or participation certificates held by the

borrower with respect to the loan shall, subject to subsection

(d)(1), be retired.

(2) APPLICABILITY. Notwithstanding any other provision of

this section, in the case of a loan sold to a secondary market under title

VIII, paragraph (1) shall apply regardless of whether the bank or

association retains a subordinated participation interest in a loan or pool

of loans or contributes to a cash reserve.

(3) EXCEPTION.

(A) IN GENERAL. Subject to subparagraph (B) and

notwithstanding any other provision of this section, if a loan

designated for sale under paragraph (1)(A) is not sold into a

secondary market during the 180-day period that begins on the date

of the designation, the voting stock or participation certificate

purchase requirement that would otherwise apply to the loan in the

absence of a bylaw provision described in paragraph (1)(A) shall

be effective.

(B) RETIREMENT. The bylaws adopted by a bank or

association under subsection (b) may provide that if a loan

described in subparagraph (A) is sold into a secondary market after

the end of the 180-day period described in the subparagraph, all

outstanding voting stock or participation certificates held by the

borrower with respect to the loan shall, subject to subsection

(d)(1), be retired.

(g) CONSTRUCTION. This section shall not be construed to affect

the provisions of this Act that confer on System institutions a lien on borrower

stock or other equities and the privilege to retire or cancel such stock or other

equities for application against the indebtedness on a defaulted or restructured

loan.

(h) CONTROLLING AUTHORITY. To the extent that any provision

of this section is inconsistent with any other provision of this Act (other than

section 4.9A), the provision of this section shall control.

12 U.S.C. 2155 Sec. 4.4. Liability of Banks; United States Not Liable.

(a)(1) Each bank of the System shall be fully liable on notes, bonds,

debentures, or other obligations issued by it individually, and shall be liable

for the interest payments on long-term notes, bonds, debentures, or other

obligations issued by other banks operating under the same title of this Act.

(2)(A) Each bank shall also be primarily liable for the portion of

any issue of consolidated or System-wide obligations made on its behalf

and be jointly and severally liable for the payment of any additional

sums as called upon by the Farm Credit Administration in order to make

payments of interest or principal which any bank primarily liable

therefor shall be unable to make.

(B) Such calls first shall be made on all nondefaulting

banks in proportion to each such bank’s proportionate share of the

aggregate available collateral held by all such banks.

collateral" means the amount (determined at the close of the last

calendar quarter ending before such call) by which a bank's

collateral as described in section 4.3 exceeds the collateral required

to support the bank's outstanding notes, bonds, debentures, and

other similar obligations.

(D) If the Farm Credit Administration makes any such call

and the available collateral of all such banks does not fully satisfy

the liability necessitating such calls, such calls shall be made on all

nondefaulting banks in proportion to each such bank’s remaining

assets.

(E) Any System bank that, pursuant to a call by the Farm

Credit Administration, makes a payment of principal or interest to

the holder of any consolidated or System-wide obligation issued on

behalf of another System bank shall be subrogated to all rights of

the holder against such other bank to the extent of such payment.

(F) On making such a call with respect to obligations

issued on behalf of a System bank, the Farm Credit Administration

shall appoint a receiver for the bank, which shall expeditiously

liquidate or otherwise wind up the affairs of the bank.

(b) Each bank participating in an issue shall by appropriate resolution

undertake such responsibility as provided in subsection (a), and in the case of

consolidated or System-wide obligations shall authorize the execution of such

long-term notes, bonds, debentures, or other obligations on its behalf. When a

consolidated or System-wide issue is approved, the notes, bonds, debentures,

or other obligations shall be executed and the banks shall be liable thereon as

provided herein.

directly or indirectly thereon.

(d) Beginning 5 years after the date of the enactment of this

subsection, the Farm Credit Administration shall not call on any System

institution to satisfy the liability of the institution on any joint, consolidated,

or System-wide obligation participated in by the institution or with respect to

which the institution is primarily, or jointly and severally, liable, before the

Farm Credit Insurance Fund is exhausted, even if the Fund is only able to

make a partial payment because of insufficient amounts in the Fund.

12 U.S.C. 2156 Sec. 4.5. [Repealed]

12 U.S.C. 2157 Sec. 4.6. Bonds as Investments.

The bonds, debentures, and other similar obligations issued under the

authority of this Act shall be lawful investments for all fiduciary and trust

funds and may be accepted as security for all public deposits.

12 U.S.C. 2158 Sec. 4.7. Purchase and Sale by Federal Reserve System.

Any member of the Federal Reserve System may buy and sell bonds,

debentures, or other similar obligations issued under the authority of this Act

and any Federal Reserve bank may buy and sell such obligations to the same

extent and subject to the same limitations placed upon the purchase and sale

by said banks of State, county, district, and municipal bonds under section 355

of title 12, United States Code.

12 U.S.C. 2159 Sec. 4.8. Purchase and Sale of Obligations.

Each bank of the System may purchase its own obligations and the

obligations of other banks of the System and may provide for the sale of

obligations issued by it, consolidated obligations, or System-wide obligations

through a fiscal agent or agents, by negotiation, offer, bid, syndicate sale, and

to deliver such obligations by book entry, wire transfer, or such other means

as may be appropriate.

12 U.S.C. 2160 Sec. 4.9. Federal Farm Credit Banks Funding Corporation.

(a) ESTABLISHMENT. There is hereby established the Federal Farm

Credit Banks Funding Corporation (hereinafter in this section referred to as

the "Corporation"), which shall be an institution of the Farm Credit System.

(b) DUTIES. The Corporation—

(1) shall issue, market, and handle the obligations of the banks of

the Farm Credit System, and interbank or intersystem flow of funds as

may from time to time be required;

(2) acting for the banks of the Farm Credit System, subject to

approval of the Farm Credit Administration, shall determine the amount,

maturities, rates of interest, terms, and conditions of participation by the

several banks in each issue of joint, consolidated, or System-wide

obligations; and

(3) shall exercise such other powers as were provided to the

predecessor Federal Farm Credit Banks Funding Corporation in

accordance with its charter issued under section 4.25, in effect

immediately before the date of the enactment of the Agricultural Credit

Act of 1987.

(1) DESIGNATION. The board of directors may designate such

officers and committees for such terms and such purposes as may be

agreed on by the board.

(2) ISSUANCE OF OBLIGATIONS. When appropriate to the

board’s functions under this section, a committee of the board of

directors of the Corporation, or representatives thereof, may act on

behalf of the board in connection with the issuance of joint,

consolidated, and System-wide obligations.

(d) BOARD OF DIRECTORS.

(1) COMPOSITION. The board of directors shall be composed

of nine voting members and one nonvoting member, as follows:

(A) Four voting members shall be current or former

directors of the System banks elected by the shareholders of the

Corporation.

(B) Three voting members shall be chief executive officers

or presidents of System banks elected by the shareholders of the

Corporation.

members elected under subparagraphs (A) and (B) after the elected

members have received recommendations for such appointments

from, and consulted with, the Secretary of the Treasury and the

Chairman of the Board of Governors of the Federal Reserve

System. The appointed members shall be selected from United

States citizens—

(ⅰ) who are not borrowers from, shareholders in, or

employees or agents of any System institution, who are not

affiliated with the Farm Credit Administration, and who are

not actively engaged with a bank or investment organization

that is a member of the Corporation’s selling group for

System-wide securities; and

(ⅱ) who are experienced or knowledgeable in

corporate and public finance, agricultural economics, and

financial reporting and disclosure.

(D) The president of the Corporation shall serve as a

nonvoting member of the board.

(2) CONSIDERATIONS. In selecting candidates under

subparagraphs (A) and (B) of paragraph (1), due consideration shall be

given to choosing individuals knowledgeable in agricultural economics,

public and corporate finance, and financial reporting and disclosure.

(3) REPRESENTATION OF BOARD. The Farm Credit System

Insurance Corporation shall not have representation on the board of

directors of the Corporation.

(e) SUCCESSION.

(1) ASSETS AND LIABILITIES. The Corporation shall, by

operation of law and without any further action by the Farm Credit

Administration, the predecessor Federal Farm Credit Banks Funding

Corporation (hereinafter referred to in this subsection as "the

predecessor corporation") chartered under this Act, or any court, succeed

to the assets of and assume all debts, obligations, contracts, and other

liabilities of the predecessor corporation, matured or unmatured,

accrued, absolute, contingent or otherwise, and whether or not reflected

or reserved against on balance sheets, books of account, or records of the

predecessor corporation.

(2) CONTRACTS. The existing contractual obligations, security

instruments, and title instruments of the predecessor corporation shall,

by operation of law and without any further action by the Farm Credit

Administration, the predecessor corporation, or any court, become and

be converted into obligations, entitlements, and instruments of the

Corporation.

(3) STOCK. The stock of the predecessor corporation issued

before the date of the enactment of this section shall, by operation of law

and without any further action by the Farm Credit Administration, the

predecessor corporation, or any court, become and be converted into

stock of the Corporation established by this section.

(4) TAXATION. The succession to assets, assumption of

liabilities, conversion of obligations, instruments, and stock, and

effectuation of any other transaction by the Corporation to carry out this

subsection shall not be treated as a taxable event under the laws of any

State or political subdivision thereof.

12 U.S.C. 2162 Sec. 4.9A. Protection of Borrower Stock.

(a) RETIREMENT OF STOCK. Notwithstanding any other section of

this Act, each institution of the Farm Credit System, when retiring eligible

borrower stock in accordance with this Act, shall retire such stock at par

value.

(b) CERTAIN POWERS NOT AFFECTED. This section does not

affect the authority of any institution of the Farm Credit System—

(1) to retire or cancel borrower stock at par value for

application against a loan in default;

(2) to cancel borrower stock at par value under section

4.14B; or

(3) to apply, against any outstanding indebtedness to a

System association arising out of or in connection with a

liquidation referred to in subsection (d)(2), the par value of

borrower stock frozen in such liquidation.

(1) IN GENERAL. -If an institution is unable to retire eligible

borrower stock at par value due to the liquidation of the institution, the

Farm Credit System Insurance Corporation, acting as receiver, shall

retire such stock at par value as would have been retired in the ordinary

course of business of the institution.

(2) FUNDING.-The Farm Credit System Insurance Corporation

shall use such funds from the Farm Credit Insurance Fund as are

sufficient to carry out this section.

(d) DEFINITIONS. For purposes of this section:

(1) BORROWER STOCK. The term "borrower stock" means

voting and nonvoting stock, equivalent contributions to a guaranty fund,

participation certificates, allocated equities, and other similar equities

that are subject to retirement under a revolving cycle issued by any

System institution and held by any person other than any System

institution.

(2) ELIGIBLE BORROWER STOCK. The term "eligible

borrower stock" means borrower stock that—

(A) is outstanding on the date of the enactment of this

section;

(B) is issued or allocated after the date of the enactment of

this section, but prior to the earlier of—

(ⅰ) in the case of each bank and association, the date

of approval, by the stockholders of such bank or association,

of the capitalization requirements of the institution in

accordance with section 4.3A; or

(ⅱ) the date that is 9 months after the date of the

enactment of this section;

enactment of this section, frozen by an institution that was placed

in liquidation; or

(D) was retired at less than par value by an institution that

was placed in liquidation after January 1, 1983, but before the date

of the enactment of this section.

(3) INSTITUTION. The term "institution" means a bank or

association chartered under this Act.

(4) PAR VALUE. The term "par value" means—

(A) in the case of stock, par value;

(B) in the case of participation certificates and other

equities and interests not described in subparagraph (C), face or

equivalent value; or

equities subject to retirement under a revolving cycle but that a

System institution elects to retire out of order for application

against a loan in default or otherwise as provided in this Act, par or

face value discounted, at a rate determined by the institution, to

reflect the present value of the equity or interest as of the date of

such retirement.

Part B—Dissolution

12 U.S.C. 2183 Sec. 4.12. Dissolution; Voluntary or Involuntary Liquidation;

Mergers; Receiverships or Conservators.

(a) No institution of the System shall go into voluntary liquidation

without the consent of the Farm Credit Administration and with such consent

may liquidate only in accordance with regulations prescribed by the Farm

Credit Administration. In the case of a voluntary liquidation of an association,

such regulations, among other things, shall direct the supervising bank to

institute such measures as it deems appropriate to minimize the adverse effect

of the liquidation on those borrowers whose loans are purchased by or

otherwise transferred to another System institution. The Farm Credit

Administration Board may require an association to merge with another

association whenever it determines, with the concurrence of the board of the

supervising bank, that an association has failed to meet its outstanding

obligations or failed to conduct its operations in accordance with this Act.

(b) The Farm Credit Administration Board may appoint a conservator

or receiver for any System institution on the determination by the Farm Credit

Administration Board that one or more of the following exists, or is occurring,

with respect to the institution: (1) insolvency, in that the assets of the

institution are less than its obligations to its creditors and others, including its

members; (2) substantial dissipation of assets or earnings due to any violation

of law, rules, or regulations, or to any unsafe or unsound practice; (3) an

unsafe or unsound condition to transact business; (4) willful violation of a

cease and desist order that has become final; (5) concealment of books,

papers, records, or assets of the institution or refusal to submit books, papers,

records, or other material relating to the affairs of the institution for inspection

to any examiner or to any lawful agent of the Farm Credit Administration; (6)

the institution is unable to timely pay principal or interest on any insured

obligation (as defined in section 5.51(3)) issued by the institution. The Farm

Credit Administration Board shall have exclusive power and jurisdiction to

appoint a conservator or receiver, and such receiver or conservator, after the

5-year period beginning on the date of the enactment of the Agricultural

Credit Act of 1987, shall be the Farm Credit System Insurance Corporation.

If the Farm Credit Administration Board determines that a ground for the

appointment of a conservator or receiver as herein provided exists, the Farm

Credit Administration Board may appoint ex parte and without notice a

conservator or receiver for the institution. In the event of such appointment,

the institution, within thirty days thereafter, may bring an action in the United

States district court for the judicial district in which the home office of such

institution is located, or in the United States District Court for the District of

Columbia, for an order requiring the Farm Credit Administration Board to

remove such conservator or receiver, and the court shall, on the merits,

dismiss such action or direct the Farm Credit Administration Board to remove

such conservator or receiver. On the commencement of such an action, the

court having jurisdiction of any other action or enforcement proceeding

authorized under this Act to which the institution is a party shall stay such

action or proceeding during the pendency of the action for removal of the

conservator or receiver.

regulations of the Farm Credit Administration, among other things, shall

direct the supervising bank to institute such measures as it deems appropriate

to minimize the adverse effect of the liquidation on those borrowers whose

loans are purchased by or otherwise transferred to another System institution.

12 U.S.C. 2184 Sec. 4.12A. Communications with Stockholders.

(a) PROVISION OF STOCKHOLDER LISTS.

(1) IN GENERAL. A Farm Credit System bank or association

shall provide to a stockholder of the bank or association a current list of

stockholders of the bank or association not later than 7 calendar days

after the date on which the bank or association receives a written request

for the stockholder list from the stockholder.

(2) CONDITIONS. As a condition of providing a stockholder

list under paragraph (1), the bank or association may require that the

stockholder agree and certify in writing that the stockholder will—

(A) use the list exclusively for communicating with

stockholders for permissible purposes; and

(B) not make the list available to any person, other than the

stockholder's attorney or accountant, without first obtaining the

written consent of the institution.

(b) ALTERNATIVE COMMUNICATIONS.

(1) REQUEST TO ISSUE. As an alternative to receiving a list

of stockholders, a stockholder may request the institution to mail or

otherwise furnish to each stockholder a communication for a permissible

purpose on behalf of the requesting stockholder.

(2) WHEN PERMISSIBLE. Alternative communications may

be used, at the discretion of the requesting stockholder, if the requester

agrees to defray the reasonable costs of the communication. If the

requester decides to exercise this option, the institution shall provide the

requester with a written estimate of the costs of handling and mailing the

communication as soon as is practicable after receipt of the

stockholder’s request to furnish the communication.

Part C—Rights of Borrowers; Loan Restructuring

12 U.S.C. 2199 Sec. 4.13. Disclosure.

(a) IN GENERAL. In accordance with regulations of the Farm Credit

Administration, qualified lenders shall provide to borrowers, for all loans that

are not subject to the Truth in Lending Act (15 U.S.C. 1601 et seq.),

meaningful and timely disclosure not later than the time of the loan closing,

of—

(1) the current rate of interest on the loan;

(2) in the case of an adjustable or variable rate loan, the amount

and frequency by which the interest rate can be increased during the

term of the loan or, if there are no such limitations, a statement to that

effect, and the factors (including the cost of funds, operating expenses,

and provision for loan losses) that will be taken into account by the

qualified lender in determining adjustments to the interest rate;

(3) the effect, as shown by a representative example or examples,

of any loan origination charges or purchases of stock or participation

certificates on the effective rate of interest;

(4) any change in the interest rate applicable to the borrower's

loan, and notice to the borrower of a change in the interest rate

applicable to the loan of the borrower may be made within a reasonable

time after the effective date of an increase or decrease in the interest

rate;

(5) except with respect to stock guaranteed under section 4.9A, a

statement indicating that stock that is purchased is at risk; and

(6) a statement indicating the various types of loan options

available to borrowers, with an explanation of the terms and borrowers'

rights that apply to each type of loan.

(b) DIFFERENTIAL INTEREST RATES. A qualified lender offering

more than one rate of interest to borrowers shall, at the request of a borrower

of a loan—

(1) provide a review of the loan to determine if the proper

interest rate has been established;

(2) explain to the borrower in writing the basis for the interest

rate charged; and

(3) explain to the borrower in writing how the credit status of the

borrower may be improved to receive a lower interest rate on the loan.

12 U.S.C. 2200 Sec. 4.13A. Access to Documents and Information.

In accordance with regulations of the Farm Credit Administration,

qualified lenders shall provide their borrowers, at the time of execution of

loans, copies of all documents signed by the borrower and at any time

thereafter, on a borrower's request, copies of all documents signed or

delivered by the borrower and at any time, on request, a copy of the

institution's articles of incorporation or charter and bylaws and copies of each

appraisal of the borrower's assets made or used by the qualified lender.

12 U.S.C. 2201 Sec. 4.13B. Notice of Action on Application.

(a) LOAN APPLICATIONS. Each qualified lender to which a person

has applied for a loan shall provide the person with prompt written notice of—

(1) the action on the application;

(2) if the loan applied for is reduced or denied, the reasons for

such action; and

(3) the applicant's right to review under section 4.14.

(b) DISTRESSED LOANS. Each qualified lender that has a

distressed loan outstanding that is subject to restructuring requirements under

this Act shall provide, in accordance with regulations prescribed by the Farm

Credit Administration, the borrower with prompt written notice of—

(1) any action taken with respect to restructuring the loan under

section 4.14A;

(2) if restructuring is denied, the reasons for such action; and

(3) the borrower's right to review under section 4.14.

12 U.S.C. 2202 Sec. 4.14. Reconsideration of Actions.

(a) CREDIT REVIEW COMMITTEES.

(1) IN GENERAL. The board of directors of each qualified

lender shall establish one or more credit review committees, which shall

include farmer board representation.

(2) MEMBERSHIP. In no case shall a loan officer involved in

the initial decision on a loan serve on the credit review committee when

the committee reviews such loan.

(b) REVIEW OF DECISIONS.

(1) DENIALS OR REDUCTIONS. Any applicant for a loan

from a qualified lender that has received a written notice issued under

section 4.13B of a decision to deny or reduce the loan applied for may

submit a written request, not later than 30 days after receiving a notice

denying or reducing the amount of the loan application, to obtain a

review of the decision before the credit review committee.

(2) DENIALS OF RESTRUCTURING. A borrower of a loan

from a qualified lender that has received notice, under section 4.13B, of

a decision to deny loan restructuring with respect to a loan made to the

borrower, if the borrower so requests in writing within 7 days after

receiving such notice, may obtain a review of such decision in person

before the credit review committee.

restructuring, who is entitled to and has requested a review under this section,

may appear in person before the credit review committee, and may be

accompanied by counsel or by any other representative of such person's

choice, to seek a reversal of the decision on the application under review.

(d) INDEPENDENT APPRAISAL.

(1) IN GENERAL. An appeal filed with a credit review

committee under this section may include, as a part of the request for a

review of the decision filed under subsection (b)(1) or (2), a request for

an independent appraisal, by an accredited appraiser, of any interests in

property securing the loan (other than the stock or participation

certificates of the qualified lender held by the borrower).

(2) ARRANGEMENT AND COST. Within 30 days after a

request for an appraisal under paragraph (1), the credit review

committee shall present the borrower with a list of three appraisers

approved by the appropriate qualified lender from which the borrower

shall select an appraiser to conduct the appraisal the cost of which shall

be borne by the borrower, and shall consider the results of such appraisal

in any final determination with respect to the loan.

(3) COPY TO BORROWER. A copy of any appraisal made

under this subsection shall be provided to the borrower.

(4) ADDITIONAL COLLATERAL. An independent appraisal

shall be permitted if additional collateral for a loan is demanded by the

qualified lender when determining whether to restructure the loan.

(e) NOTIFICATION OF APPLICANT. Promptly after a review by

the credit review committee, the committee shall notify the applicant or

borrower, as the case may be, in writing of the decision of the committee and

the reasons for the decision.

12 U.S.C. 2202a Sec. 4.14A. Restructuring Distressed Loans.

(a) DEFINITIONS. As used in this part and section 4.36:

(1) APPLICATION FOR RESTRUCTURING. The term

"application for restructuring" means a written request—

(A) from a borrower for the restructuring of a distressed

loan in accordance with a preliminary restructuring plan proposed

by the borrower as a part of the application;

(B) submitted on the appropriate forms prescribed by the

qualified lender; and

repayment projections, where appropriate, as required by the

qualified lender to support a sound credit decision.

(2) COST OF FORECLOSURE. The term "cost of foreclosure"

includes—

(A) the difference between the outstanding balance due on a

loan made by a qualified lender and the liquidation value of the

loan, taking into consideration the borrower's repayment capacity

and the liquidation value of the collateral used to secure the loan;

(B) the estimated cost of maintaining a loan as a

nonperforming asset;

necessary to foreclose a loan and dispose of property acquired as

the result of the foreclosure, including attorneys' fees and court

costs;

(D) the estimated cost of changes in the value of collateral

used to secure a loan during the period beginning on the date of the

initiation of an action to foreclose or liquidate the loan and ending

on the date of the disposition of the collateral; and

(E) all other costs incurred as the result of the foreclosure

or liquidation of a loan.

(3) DISTRESSED LOAN. The term "distressed loan"

means a loan that the borrower does not have the financial capacity

to pay according to its terms and that exhibits one or more of the

following characteristics:

(A) The borrower is demonstrating adverse financial and

repayment trends.

(B) The loan is delinquent or past due under the terms of

the loan contract.

and (B), together with inadequate collateralization, present a high

probability of loss to the lender.

(4) FORECLOSURE PROCEEDING. The term "foreclosure

proceeding" means—

(A) a foreclosure or similar legal proceeding to enforce a

lien on property, whether real or personal, that secures a

nonaccrual or distressed loan; or

(B) the seizing of and realizing on nonreal property

collateral, other than collateral subject to a statutory lien arising

under title I or II, to effect collection of a nonaccrual or distressed

loan.

(5) LOAN.

(A) IN GENERAL. Subject to subparagraph (B), the term

"loan" means a loan made to a farmer, rancher, or producer or

harvester of aquatic products, for any agricultural or aquatic

purpose and other credit needs of the borrower, including financing

for basic processing and marketing directly related to the

borrower's operations and those of other eligible farmers, ranchers,

and producers or harvesters of aquatic products.

(B) EXCLUSION FOR LOANS DESIGNATED FOR

SALE INTO SECONDARY MARKET.

(ⅰ) IN GENERAL. Except as provided in clause (ⅱ),

the term "loan" does not include a loan made on or after the

date of enactment of this subparagraph that is designated, at

the time the loan is made, for sale into a secondary market.

(ⅱ) UNSOLD LOANS.

(Ⅰ) IN GENERAL. Except as provided in

subclause (Ⅱ), if a loan designated for sale under clause

(ⅰ) is not sold into a secondary market during the 180-

day period that begins on the date of the designation,

the provisions of this section and sections 4.14, 4.14B,

4.14D, and 4.36 that would otherwise apply to the loan

in the absence of the exclusion described in clause (ⅰ)

shall become effective with respect to the loan.

(Ⅱ) LATER SALE. If a loan described in

subclause (Ⅰ) is sold into a secondary market after the

end of the 180-day period described in subclause (Ⅰ),

subclause (Ⅰ) shall not apply with respect to the loan

beginning on the date of the sale.

(6) QUALIFIED LENDER. The term "qualified lender"

means—

(A) a System institution that makes loans (as defined in

paragraph (5)) except a bank for cooperatives; and

(B) each bank, institution, corporation, company, union,

and association described in section 1.7(b)(1)(B) but only with

respect to loans discounted or pledged under section 1.7(b)(1).

(7) RESTRUCTURE AND RESTRUCTURING. The terms

"restructure" and "restructuring" include rescheduling, reamortization,

renewal, deferral of principal or interest, monetary concessions, and the

taking of any other action to modify the terms of, or forbear on, a loan in

any way that will make it probable that the operations of the borrower

will become financially viable.

(b) NOTICE.

(1) IN GENERAL. On a determination by a qualified lender that

a loan made by the lender is or has become a distressed loan, the lender

shall provide written notice to the borrower that the loan may be suitable

for restructuring, and include with such notice—

(A) a copy of the policy of the lender established under

subsection (g) that governs the treatment of distressed loans; and

(B) all materials necessary to enable the borrower to submit

an application for restructuring on the loan.

(2) NOTICE BEFORE FORECLOSURE. Not later than 45 days

before any qualified lender begins foreclosure proceedings with respect

to a loan outstanding to any borrower, the lender shall notify the

borrower that the loan may be suitable for restructuring and that the

lender will review any such suitable loan for restructuring, and shall

include with such notice a copy of the policy and the materials described

in paragraph (1).

(3) LIMITATION ON FORECLOSURE. No qualified lender

may foreclose or continue any foreclosure proceeding with respect to

any distressed loan before the lender has completed any pending

consideration of the loan for restructuring under this section.

made by the lender is or has become a distressed loan, the lender shall provide

a reasonable opportunity for the borrower thereof to personally meet with a

representative of the lender—

(1) to review the status of the loan, the financial condition of the

borrower, and the suitability of the loan for restructuring; and

(2) with respect to a loan that is in nonaccrual status, to develop

a plan for restructuring the loan if the loan is suitable for restructuring.

(d) CONSIDERATION OF APPLICATIONS.

(1) IN GENERAL. When a qualified lender receives an

application for restructuring from a borrower, the qualified lender shall

determine whether or not to restructure the loan, taking into

consideration:

(A) whether the cost to the lender of restructuring the loan

is equal to or less than the cost of foreclosure;

(B) whether the borrower is applying all income over and

above necessary and reasonable living and operating expenses to

the payment of primary obligations;

management skills to protect the collateral from diversion,

dissipation, or deterioration;

(D) whether the borrower is capable of working out existing

financial difficulties, reestablishing a viable operation, and

repaying the loan on a rescheduled basis; and

(E) in the case of a distressed loan that is not delinquent,

whether restructuring consistent with sound lending practices may

be taken to reasonably ensure that the loan will not become a loan

that it is necessary to place in nonaccrual status.

(2) APPLICATIONS NOT REQUIRED FOR

RESTRUCTURING PLANS. This section shall not prevent a qualified

lender from proposing a restructuring plan for an individual borrower in

the absence of an application for restructuring from the borrower.

(e) RESTRUCTURING.

(1) IN GENERAL. If a qualified lender determines that the

potential cost to such qualified lender of restructuring the loan in

accordance with a proposed restructuring plan is less than or equal to the

potential cost of foreclosure, the qualified lender shall restructure the

loan in accordance with the plan.

(2) COMPUTATION OF COST OF RESTRUCTURING. In

determining whether the potential cost to the qualified lender of

restructuring a distressed loan is less than or equal to the potential cost

of foreclosure, a qualified lender shall consider all relevant factors,

including-

(A) the present value of interest income and principal

forgone by the lender in carrying out the restructuring plan;

(B) reasonable and necessary administrative expenses

involved in working with the borrower to finalize and implement

the restructuring plan;

restructuring plan and cash-flow analysis taking into account

income from all sources to be applied to the debt and all assets to

be pledged, showing a reasonable probability that orderly debt

retirement will occur as a result of the proposed restructuring; and

(D) whether the borrower has furnished or is willing to

furnish complete and current financial statements in a form

acceptable to the institution.

(f) LEAST COST ALTERNATIVE. If two or more restructuring

alternatives are available to a qualified lender under this section with respect

to a distressed loan, the lender shall restructure the loan in conformity with the

alternative that results in the least cost to the lender.

(g) RESTRUCTURING POLICY.

(1) ESTABLISHMENT. Each bank board of directors shall

develop a policy within 60 days after the date of the enactment of this

section, that is consistent with this section, to govern the restructuring of

distressed loans. Such policy shall constitute the restructuring policy of

each qualified lender within the district.

(2) CONTENTS OF POLICY. The policy established under

paragraph (1) shall include an explanation of—

(A) the procedure for submitting an application for

restructuring; and

(B) the right of borrowers with distressed loans to seek

review by a credit review committee in accordance with section

4.14 of a denial of an application for restructuring.

(3) SUBMISSION OF POLICY TO FCA. Each bank board

shall submit the policy of the district governing the treatment of

distressed loans under this section to the Farm Credit Administration.

Notwithstanding the duty imposed by the preceding sentence, the other

duties imposed by this section shall take effect on the date of the

enactment of this section.

(h) COMPLIANCE. The Farm Credit Administration may issue a

directive requiring compliance with any provision of this section to any

qualified lender that fails to comply with such provision.

(ⅰ) PERMITTED FORECLOSURES. This section shall not be

construed to prevent any qualified lender from enforcing any contractual

provision that allows the lender to foreclose a loan or from taking such other

lawful action as the lender deems appropriate, if the lender has reasonable

grounds to believe that the loan collateral will be destroyed, dissipated,

consumed, concealed, or permanently removed from the State in which the

collateral is located.

(j) APPLICATION OF SECTION. The time limitation prescribed in

subsection (b)(2), and the requirements of subsection (c), shall not apply to a

loan that became a distressed loan before the date of the enactment of this

section, if the borrower and lender of the loan are in the process of negotiating

loan restructuring with respect to the loan.

(k) ASSISTANCE IN RESTRUCTURING. Each Farm Credit Bank,

on request of any association, may assist the association in restructuring loans

under this section.

12 U.S.C. 2202b Sec. 4.14B. Effect of Restructuring on Borrower Stock.

(a) FARM CREDIT BANK. If a Farm Credit Bank forgives and

writes off, under section 4.14A, any of the principal outstanding on a loan

made to any borrower, the Federal land bank association of which the

borrower is a member and stockholder shall cancel the same dollar amount of

borrower stock held by the borrower in respect of the loan, up to the total

amount of such stock, and, to the extent provided for in the bylaws of the bank

relating to its capitalization, the bank shall retire an equal amount of stock

owned by the Federal land bank association.

(b) PRODUCTION CREDIT ASSOCIATION. If a production credit

association forgives and writes off, under section 4.14A, any of the principal

outstanding on a loan made to any borrower, the association shall cancel the

same dollar amount of borrower stock held by the borrower in respect of the

loan, up to the total amount of such stock.

(b), the borrower shall be entitled to retain at least one share of stock to

maintain the borrower’s membership and voting interest in the association.

Sec. 4.14C. [Repealed]

Repealed by section 5411(23) of the Agriculture Improvement Act of

2018.

12 U.S.C. 2202d Sec. 4.14D. Protection of Borrowers who Meet All Loan

Obligations.

(a) FORECLOSURE PROHIBITED. A qualified lender may not

foreclose on any loan because of the failure of the borrower thereof to post

additional collateral, if the borrower has made all accrued payments of

principal, interest, and penalties with respect to the loan.

(b) PROHIBITION AGAINST REQUIRED PRINCIPAL

REDUCTION. A qualified lender may not require any borrower to reduce the

outstanding principal balance of any loan made to the borrower by any

amount that exceeds the regularly scheduled principal installment payment

(when due and payable), unless—

(1) the borrower sells or otherwise disposes of part or all of the

collateral; or

(2) the parties agree otherwise in a written agreement entered

into by the parties.

payments of principal, interest, and penalties with respect to a loan made by a

qualified lender, the lender shall not enforce acceleration of the borrower's

repayment schedule due to the borrower having not timely made one or more

principal or interest payments.

(d) PLACING LOANS IN NONACCRUAL STATUS.

(1) NOTIFICATION. If a qualified lender places any loan in

nonaccrual status, the lender shall document such change of status and

promptly notify the borrower thereof in writing of such action and the

reasons therefor.

(2) REVIEW OF DENIAL. If the borrower was not delinquent

in any principal or interest payment under the loan at the time of such

action and the borrower’s request to have the loan placed back into

accrual status is denied, the borrower may obtain a review of such denial

before the appropriate credit review committee under section 4.14.

(3) APPLICATION. This subsection shall only apply if a loan

being placed in nonaccrual status results in an adverse action being

taken against the borrower.

12 U.S.C. 2202e Sec. 4.14E. Waiver of Mediation Rights by Borrowers.

No System institution may make a loan secured by a mortgage or lien on

agricultural property to a borrower on the condition that the borrower waive

any right under the mediation program of any State.

Part D—Activities of Institutions of the System

12 U.S.C. 2203 Sec. 4.15. Nomination of Association Directors; Representative

Selection of Nominees.

Each production credit association and each Federal land bank

association shall elect a nominating committee by vote of the stockholders at

the annual meeting to serve for the following year. Each nominating

committee shall review lists of farmers from the association territory,

determine their willingness to serve, and submit for election a slate of eligible

candidates which shall include at least two nominees for each elective office

to be filled. In doing so, the committee shall endeavor to assure

representation to all sections of the association territory and as nearly as

possible to all types of agriculture practiced within the area. Employees of the

association shall not be eligible to be nominated, elected, or serve as a

member of the board. Nominations shall also be accepted from the floor.

Members of the board are not eligible to serve on the nominating committee.

Regulations of the Farm Credit Administration governing the election of bank

directors shall similarly assure a choice of two nominees for each elective

office to be filled and that the bank board represent as nearly as possible all

types of agriculture in the district.

12 U.S.C. 2204 Sec. 4.16. [Repealed]

12 U.S.C. 2205 Sec. 4.17. Interest Rates.

Interest rates on loans from institutions of the Farm Credit System shall

not be subject to any interest rate limitation imposed by any State constitution

or statute or other laws. Such limitation is preempted for purposes of this Act.

Interest rates on loans made by agricultural credit corporations organized in

conjunction with cooperative associations for the purpose of financing the

ordinary crop operations of the members of such associations or other

producers and eligible to discount with the Farm Credit Banks shall be exempt

from any interest rate limitation imposed by any State constitution or statute

or other laws which are hereby preempted for purposes of this Act.

12 U.S.C. 2206 Sec. 4.18. Participation Loans.

Notwithstanding any other provisions of this Act, the terms of any loan

participated in by two or more Farm Credit System institutions operating

under different titles of this Act, including provisions for capitalization of the

portion of the loan participated in by each institution, shall be as may be

agreed upon among such institutions and authorized under regulations issued

by the Farm Credit Administration, except that for purposes of determining

borrower eligibility, membership, term, amount, loan security, and purchase

of stock or participation certificates by the borrower, the provisions of law

applicable to the loan shall be the provisions in the title under which the

institution that originates the loan operates.

12 U.S.C. 2206a Sec. 4.18A. Authority of Farm Credit Banks and Direct Lender

Associations to Participate in Loans to Similar Entities for Risk

Management Purposes.

(a) DEFINITIONS. As used in this section:

(1) PARTICIPATE AND PARTICIPATION. The terms

"participate" and "participation" shall have the meaning provided in

section 3.1(11)(B)(ⅲ).

(2) SIMILAR ENTITY. The term "similar entity" means a

person that—

(A) is not eligible for a loan from the Farm Credit Bank or

association; and

(B) has operations that are functionally similar to a person

that is eligible for a loan from the Farm Credit Bank or association

in that the person derives a majority of the income of the person

from, or has a majority of the assets of the person invested in, the

conduct of activities that are functionally similar to the activities

that are conducted by an eligible person.

(b) LOAN PARTICIPATION AUTHORITY. Notwithstanding any

other provision of this Act, any Farm Credit Bank or direct lender association

chartered under this Act may participate in any loan of a type otherwise

authorized under title I or II made to a similar entity by any person in the

business of extending credit, except that a Farm Credit Bank or direct lender

association may not participate in a loan under this section if—

(1) the participation would cause the total amount of all

participations by the Farm Credit Bank or association under this section

involving a single credit risk to exceed 10 percent (or the applicable

higher lending limit authorized under regulations issued by the Farm

Credit Administration if the stockholders of the respective Farm Credit

Bank or association so approve) of the total capital of the Farm Credit

Bank or association;

(2) the participation by the Farm Credit Bank or association

would equal or exceed 50 percent of the principal of the loan or, when

taken together with participations in the loan by other Farm Credit

System institutions, would cause the cumulative amount of the

participations by all Farm Credit System institutions in the loan to equal

or exceed 50 percent of the principal of the loan;

(3) the participation would cause the cumulative amount of

participations that the Farm Credit Bank or association has outstanding

under this section to exceed 15 percent of the total assets of the Farm

Credit Bank or association; or

(4) the loan is of the type authorized under section 1.11(b) or

2.4(a)(2).

12 U.S.C. 2207 Sec. 4.19. Young, Beginning, and Small Farmers and Ranchers.

(a) Under policies of the Farm Credit Bank board, each association

shall prepare a program for furnishing sound and constructive credit and

related services to young, beginning, and small farmers and ranchers. Such

programs shall assure that such credit and services are available in

coordination with other institutions of the Farm Credit System serving the

territory and with other governmental and private sources of credit. Each

program shall be subject to review and approval by the supervising bank.

(b) The Farm Credit Bank for each district shall annually obtain from

associations under its supervision reports of activities under programs

developed pursuant to subsection (a) and progress toward program objectives.

On the basis of such reports, the bank shall provide to the Farm Credit

Administration an annual report summarizing the operations and

achievements in its district under such programs.

12 U.S.C. 2208 Sec. 4.20. Prohibition Against Use of Signed Ballots.

In any election or merger vote, or other proceeding subject to a vote of

the stockholders (or subscribers to the guaranty fund of a bank for

cooperatives), conducted by a lending institution of the Farm Credit System,

the institution—

(1) may not use signed ballots; and

(2) shall implement measures to safeguard the voting process for

the protection of the right of stockholders (or subscribers) to a secret

ballot.

12 U.S.C. 2209 Sec. 4.21. Compensation of Bank Directors.

This section was repealed by section 5403 of the Agriculture

Improvement Act of 2018 (2018 Act).

Part E—Service Organizations

12 U.S.C. 2211 Sec. 4.25. Establishment.

Any bank of the Farm Credit System, or two or more of such banks

acting together, may organize a corporation or corporations for the purpose of

performing functions and services for or on behalf of the organizing bank or

banks that the bank or banks may perform pursuant to this Act: Provided,

That a corporation so organized shall have no authority either to extend credit

or provide insurance services for borrowers from Farm Credit System

institutions, nor shall it have any greater authority with respect to functions

and services than the organizing bank or banks possess under this Act. The

organizing bank or banks shall apply for a Federal charter for the corporation

by forwarding to the Farm Credit Administration a statement of the need for

the corporation and proposed articles specifying in general terms the

objectives for which the corporation is formed, the powers to be exercised by

it in carrying out the functions and services, and the territory it is to serve.

The Farm Credit Administration for good cause may deny the charter applied

for. Upon the approval of articles by the Farm Credit Administration and the

issuance of a charter, the corporation shall become as of such date a federally

chartered body corporate and an instrumentality of the United States.

12 U.S.C. 2212 Sec. 4.26. Powers of the Farm Credit Administration.

The Farm Credit Administration shall have power, under rules and

regulations prescribed by the Farm Credit Administration, to provide for the

organization of any corporation chartered under this part and the territory

within which its operations may be carried on, and to approve amendments

consistent with this Act to charters or articles of service corporations.

12 U.S.C. 2213 Sec. 4.27. Regulation and Examination.

The corporations organized under this part shall be institutions of the

Farm Credit System and shall be subject to the same regulation and

examination by the Farm Credit Administration as are the organizing bank or

banks under this Act.

12 U.S.C. 2214 Sec. 4.28. State Laws.

State and other laws shall apply to corporations organized pursuant to

this part to the same extent such laws would apply to the organizing banks

engaged in the same activity in the same jurisdiction: Provided, however,

That to the extent that sections 1.15, 2.16, and 3.13 of this Act may exempt

banks or associations of the Farm Credit System from taxation, such

exemptions, other than with respect to franchise taxes, shall not extend to

corporations organized pursuant to this part.

12 U.S.C. 2214a Sec. 4.28A. Definition of Bank.

In this part, the term "bank" includes each association operating under

title II.

Part F—Sale of Insurance

12 U.S.C. 2218 Sec. 4.29. Lines of Insurance.

(a)(1) The regulations of the Farm Credit Administration governing

financially related services that the banks and associations of the Farm Credit

System may provide under titles I and II may authorize the sale to any

member of or borrower from any such bank or association, on an optional

basis, of credit or term life and credit disability insurance appropriate to

protect the loan commitment in the event of death or disability of the debtors

and other insurance necessary to protect the member's farm or aquatic unit,

but limited to, hail and multiple-peril crop insurance, title insurance, and

insurance to protect the facilities and equipment of aquatic borrowers. A

member or borrower shall have the option, without coercion from the bank or

association of such member or borrower, to accept or reject such insurance.

(2) In making insurance available through private insurers, the

banks shall approve the programs of more than two insurers for each

type of insurance offered in the district, if more than two insurers for

each type of insurance have proposed programs to a bank that will, in all

likelihood, have long-term viability and meet the requirements of

subsection (b)(2)(D). The banks may provide comparative information

relating to costs and quality of approved programs and the financial

conditions of approved companies. Associations shall offer at least two

insurers for each program from among those approved by the Farm

Credit Banks, if at least two insurers have been approved in accordance

with this paragraph.

(b) Such regulations shall provide that—

(1) in any case in which insurance is required as a condition for a

loan or other financial assistance from a bank or association, notice be

given that it is not necessary to purchase the insurance from the bank or

association and that the borrower has the option of obtaining the

insurance elsewhere;

(2) such insurance services may be offered only if—

(A) the bank or association has the capacity to render

insurance service under this Act in an effective and efficient

manner;

(B) there exists the probability that any insurance program

under this Act will generate sufficient revenue to cover all costs;

effect on the bank's or association's credit or other operations;

(D) the insurance program has been approved by the bank

or association from among specific programs made available to it

by insurers—

(ⅰ) meeting reasonable financial and quality of

service standards; and

(ⅱ) licensed under State law to do business in the

State; and

(E) in making insurance available through approved

insurers, the board of directors of the association or bank selects

and offers at least two approved insurers for each type of insurance

made available to the members and borrowers, if at least two

insurers have been approved in accordance with subsection (a)(2);

and

(3) no bank or association shall directly or indirectly

discriminate in any manner against any agent, broker, or insurer that is

not affiliated with such bank or association, or against any party who

purchases insurance through any such nonaffiliated insurance agent,

broker, or insurer.

bank or association that on the date of enactment of the Farm Credit Act

Amendments of 1980, is offering insurance coverages not authorized by this

section may continue to sell such coverages for a period of not more than one

year from such date of enactment and may continue to service such coverages

until their expiration.

Note: See section 422(b) of the Agricultural Credit Act of 1987 for a

provision relating to insurance programs in effect prior to the date of

enactment of such act.

Part G—Miscellaneous

12 U.S.C. 2219 Sec. 4.35. Limitation on Separate Sale.

If real property is acquired by any institution of the Farm Credit System

through foreclosure, no institution of the Farm Credit System shall sell the

surface rights to that real property to any person unless the institution also

sells all mineral rights to that real property to that person.

12 U.S.C. 2219a Sec. 4.36. Right of First Refusal.

(a) GENERAL RULE. Agricultural real estate that is acquired by an

institution of the System as a result of a loan foreclosure or a voluntary

conveyance by a borrower (hereinafter in this section referred to as the

"previous owner") who, as determined by the institution, does not have the

financial resources to avoid foreclosure (hereinafter in this section referred to

as "acquired real estate") shall be subject to the right of first refusal of the

previous owner to repurchase or lease the property, as provided in this section.

(b) APPLICATION OF RIGHT OF FIRST REFUSAL TO SALE OF

PROPERTY.

(1) ELECTION TO SELL AND NOTIFICATION. Within 15

days after an institution of the System first elects to sell acquired real

estate, or any portion of such real estate, the institution shall notify the

previous owner by certified mail of the owner's right—

(A) to purchase the property at the appraised fair market

value of the property, as established by an accredited appraiser; or

(B) to offer to purchase the property at a price less than the

appraised value.

(2) ELIGIBILITY TO PURCHASE. To be eligible to purchase

the property under paragraph (1), the previous owner must, within 30

days after receiving the notice required by such paragraph, submit an

offer to purchase the property.

(3) MANDATORY SALE. An institution of the System

receiving an offer from the previous owner to purchase the property at

the appraised value shall, within 15 days after the receipt of such offer,

accept such offer and sell the property to the previous owner.

(4) PERMISSIVE SALE. An institution of the System receiving

an offer from the previous owner to purchase the property at a price less

than the appraised value may accept such offer and sell the property to

the previous owner. Notice shall be provided to the previous owner of

the acceptance or rejection of such offer within 15 days after the receipt

of such offer.

(5) REJECTION OF OFFER OF PREVIOUS OWNER.

(A) DUTIES OF INSTITUTION. An institution of the

System that rejects an offer from the previous owner to purchase

the property at a price less than the appraised value may not sell

the property to any other person—

(ⅰ) at a price equal to, or less than, that offered by the

previous owner; or

(ⅱ) on different terms and conditions than those that

were extended to the previous owner, without first affording

the previous owner an opportunity to purchase the property at

such price or under such terms and conditions.

(B) NOTICE. Notice of the opportunity in subparagraph

(A) shall be provided to the previous owner by certified mail, and

the previous owner shall have 15 days in which to submit an offer

to purchase the property at such price or under such terms and

conditions.

OF PROPERTY.

(1) ELECTION TO LEASE AND NOTIFICATION. Within 15

days after an institution of the System first elects to lease acquired real

estate, or any portion of such real estate, the institution shall notify the

previous owner by certified mail of the owner's right—

(A) to lease the property at a rate equivalent to the

appraised rental value of the property, as established by an

accredited appraiser; or

(B) to offer to lease the property at a rate that is less than

the appraised rental value of the property.

(2) ELIGIBILITY TO LEASE. To be eligible to lease the

property under paragraph (1), the previous owner must, within 15 days

after receiving the notice required by such paragraph, submit an offer to

lease the property.

(3) MANDATORY LEASE. An institution of the System

receiving an offer from the previous owner to lease the property at a rate

equivalent to the appraised rental value of the property shall, within 15

days after the receipt of such offer, accept such offer and lease the

property to the previous owner unless the institution determines that the

previous owner—

(A) does not have the resources available to conduct a

successful farming or ranching operation; or

(B) cannot meet all of the payments, terms, and conditions

of such lease.

(4) PERMISSIVE LEASE. An institution of the System

receiving an offer from the previous owner to lease the property at a rate

that is less than the appraised rental value of the property may accept

such offer and lease the property to the previous owner.

(5) NOTICE TO PREVIOUS OWNER. An institution of the

System receiving an offer from the previous owner to lease the property

at a rate less than the appraised rental value of the property shall notify

the previous owner of its acceptance or rejection of the offer within 15

days after the receipt of such offer.

(6) REJECTION OF OFFER OF PREVIOUS OWNER.

(A) DUTIES OF INSTITUTION. An institution of the

System rejecting an offer from the previous owner to lease the

property at a rate less than the appraised rental value of the

property may not lease the property to any other person—

(ⅰ) at a rate equal to or less than that offered by the

previous owner; or

(ⅱ) on different terms and conditions than those that

were extended to the previous owner, without first affording

the previous owner an opportunity to lease the property at

such rate or under such terms and conditions.

(B) NOTICE. Notice of the opportunity described in

subparagraph (A) shall be given to the previous owner by certified

mail, and the previous owner shall have 15 days after the receipt of

such notice in which to agree to lease the property at such rate or

under such terms and conditions.

(d) PUBLIC OFFERINGS.

(1) NOTIFICATION OF PREVIOUS OWNER. If an institution

of the System elects to sell or lease acquired property or a portion

thereof through a public auction, competitive bidding process, or other

similar public offering, the institution shall notify the previous owner, by

certified mail, of the availability of the property. Such notice shall

contain the minimum amount, if any, required to qualify a bid as

acceptable to the institution and any terms and conditions to which such

sale or lease will be subject.

(2) PRIORITY. If two or more qualified bids in the same

amount are received by the institution under paragraph (1), such bids are

the highest received, and one of the qualified bids is offered by the

previous owner, the institution shall accept the offer by the previous

owner.

(3) NONDISCRIMINATION. No institution of the System may

discriminate against a previous owner in any public auction, competitive

bidding process, or other similar public offering of property acquired by

the institution from such person.

(e) TERM OR CONDITION. For the purposes of this section,

financing by a System institution shall not be considered to be a term or

condition of a sale of acquired real estate.

(f) FINANCING. Notwithstanding any other provision of this

section, a System institution shall not be required to provide financing to the

previous owner in connection with the sale of acquired real estate.

(g) MAILING OF NOTICE. Notwithstanding any other provision of

this section, each certified mail notice requirement in this section shall be

fully satisfied by mailing one certified mail notice to the last known address of

the previous owner.

(h) STATE LAWS. The rights provided in this section shall not

diminish any such right of first refusal under the law of the State in which the

property is located.

(ⅰ) APPLICABILITY. This section shall not apply to a bank for

cooperatives.

12 U.S.C. 2219b Sec. 4.37. Application of Uninsured Accounts.

(a) IN GENERAL. Money of a borrower held by a Farm Credit

System institution in an uninsured voluntary or involuntary account as

authorized under regulations issued by the Farm Credit Administration (as in

effect immediately before the date of the enactment of this section), including

all such other accounts known as "advanced payment accounts" or "future

prepayment accounts" shall, in the event the institution is placed in

liquidation, be immediately applied as payment against the indebtedness of

any outstanding loans of such borrower.

(b) REGULATIONS. The Farm Credit Administration shall

promulgate regulations—

(1) that define the term "uninsured voluntary or involuntary

account"; and

(2) to otherwise effectively carry out this section.

12 U.S.C. 2219c Sec. 4.38. Affirmative Action.

All institutions of the Farm Credit System with more than 20 employees

shall establish and maintain an affirmative action program plan that applies

the affirmative action standards otherwise applied to contractors of the Federal

Government.

12 U.S.C. 2219d Sec. 4.39. Encouragement of Conservation Practices.

At the time a System institution or an agricultural mortgage loan

originator (as defined in section 8.0) approves a loan made to a borrower that,

in the opinion of the institution or originator, would be ineligible for a loan

made, insured, or guaranteed under the Consolidated Farm and Rural

Development Act (7 U.S.C. 1921 et seq.) by reason of subtitle B or C of title

XII of the Food Security Act of 1985 (16 U.S.C. 3811 et seq.), the institution

or originator as the case may be, shall encourage the borrower to contact the

Department of Agriculture Soil Conservation Service to obtain information

about soil conservation methods and practices.

Title V—Farm Credit Administration Organization

Part B—Farm Credit Administration Organization

12 U.S.C. 2241 Sec. 5.7. The Farm Credit Administration.

The Farm Credit Administration shall be an independent agency in the

executive branch of the Government. It shall be composed of the Farm Credit

Administration Board and such other personnel as are employed in carrying

out the functions, powers, and duties vested in the Farm Credit Administration

by this Act.

12 U.S.C. 2242 Sec. 5.8. The Farm Credit Administration Board; Appointment;

Terms of Office; Organization and Compensation.

(a) The management of the Farm Credit Administration shall be

vested in a Farm Credit Administration Board (referred to in this part as "the

Board"). The Board shall consist of three members, who shall be citizens of

the United States and broadly representative of the public interest. Members

of the Board shall be appointed by the President, by and with the advice and

consent of the Senate. Not more than two members of the Board shall be

members of the same political party. Of the persons thus appointed, one shall

be designated by the President to serve as Chairman of the Board for the

duration of the member's term. The members of the Board shall be ineligible

during the time they are in office and for two years thereafter to hold any

office, position, or employment in any institution of the Farm Credit System.

(b) The term of office of each member of the Board shall be six years,

except that the terms of the two members, other than the Chairman, first

appointed under subsection (a) shall expire, one on the expiration of two years

after the date of appointment, and one on the expiration of four years after the

date of appointment. Members of the Board shall not be appointed to succeed

themselves, except that the members first appointed under subsection (a) for a

term of less than six years may be reappointed for a full six-year term and

members appointed to fill unexpired terms of three years or less may be

reappointed for a full six-year term. Any vacancy shall be filled for the

unexpired term on like appointment. Any member of the Board shall continue

to serve as such after the expiration of the member's term until a successor has

been appointed and qualified.

appointment, shall subscribe to the oath of office. The Board may transact

business if a vacancy exists, provided a quorum is present. A quorum shall

consist of two members of the Board. The Board shall hold at least one

meeting each month and such additional meetings at such times and places as

it may fix and determine. Such meetings shall be held on the call of the

Chairman or any two Board members. The Board shall adopt such rules as it

deems appropriate for the transaction of business by the Board, and shall keep

permanent and accurate records and minutes of the actions and proceedings of

the Board.

(d) The members of the Board shall devote their full time and attention

to the business of the Board. The Chairman of the Board shall receive

compensation at the rate prescribed for level III of the Executive Schedule

under section 5314 of title 5 of the United States Code. Each of the other

members of the Board shall receive compensation at the rate prescribed for

level IV of the Executive Schedule under section 5315 of title 5 of the United

States Code. Each member of the Board shall be reimbursed for necessary

travel, subsistence, and other expenses in the discharge of the member's

official duties without regard to other laws with respect to allowance for travel

and subsistence of officers and employees of the United States. This

subsection shall be subject to the provisions of section 5.11 of this Act.

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

(1) are experienced or knowledgeable in agricultural economics

and financial reporting and disclosure;

(2) are experienced or knowledgeable in the regulation of

financial entities; or

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

12 U.S.C. 2243 Sec. 5.9. Powers of the Board.

The Board shall manage and administer, and establish policies for, the

Farm Credit Administration. It—

(1) shall approve the rules and regulations for the

implementation of this Act not inconsistent with its provisions;

(2) shall provide for the examination of the condition of, and

general regulation of the performance of the powers, functions, and

duties vested in, each institution of the Farm Credit System;

(3) shall provide for the performance of all the powers and duties

vested in the Farm Credit Administration; and

(4) may require such reports as it deems necessary from the

institutions of the Farm Credit System.

12 U.S.C. 2244 Sec. 5.10. Chairman; Responsibilities; Governing Standards.

(a)(1) The Chairman of the Board shall be the chief executive officer of

the Farm Credit Administration.

(2) In carrying out the responsibilities of the chief executive

officer, the Chairman shall be responsible for directing the

implementation of policies and regulations adopted by the Board and,

after consultation with the Board, the execution of the administrative

functions and duties of the Farm Credit Administration.

(3) In carrying out policies as directed by the Board, the

Chairman shall act as spokesperson for the Board and represent the

Board and the Farm Credit Administration in their official relations

within the Federal Government.

(4) Under policies adopted by the Board, the Chairman shall

consult on a regular basis with—

(A) the Secretary of the Treasury concerning the exercise,

by the System, of the powers conferred under section 4.2;

(B) the Board of Governors of the Federal Reserve System

concerning the effect of System lending activities on national

monetary policy; and

System policies on farmers, ranchers, and the agricultural

economy.

(b) In carrying out responsibilities under this Act, the Chairman of the

Board shall be governed by general policies adopted by the Board and by such

regulatory decisions, findings, and determinations as the Board may by law be

authorized to make and, as to third persons, all acts of the Chairman of the

Board shall be conclusively presumed to be in compliance with such general

policies and regulatory decisions, findings, and determinations.

orders of the Board. Except as provided in section 518 of title 28 of the

United States Code, relating to litigation before the Supreme Court, attorneys

designated by the Chairman shall represent the Farm Credit Administration in

any civil proceeding or civil action brought in connection with the

administration of conservatorships and receiverships. Attorneys designated

by the Chairman may represent the Farm Credit Administration in any other

civil proceedings or civil action when so authorized by the Attorney General

under provisions of title 28.

12 U.S.C. 2245 Sec. 5.11. Organization of the Farm Credit Administration.

(a) POLICIES OF THE BOARD. The Chairman of the Farm Credit

Administration Board, in carrying out the powers and duties vested in the

Chairman by this Act, and Acts supplementary thereto, shall be governed by

policies of the Board and by such regulatory decisions, findings, and

determinations as the Board may by law be authorized to make.

(b) APPOINTMENTS. The Chairman of the Board shall appoint such

personnel as may be necessary to carry out the functions of the Farm Credit

Administration. The appointment by the Chairman of the heads of major

administrative divisions under the Board shall be subject to the approval of the

Board.

(1) APPOINTMENTS BY BOARD MEMBERS. Personnel

employed regularly and full-time in the immediate offices of Board

members shall be appointed by each such Board member.

(2) OFFICERS AND EMPLOYEES.

(A) APPOINTMENT, COMPENSATION, AND

BENEFITS. The Chairman shall fix the compensation and number

of, and appoint and direct, employees of the Administration. The

Chairman may set and adjust the rates of basic pay for employees

of the Administration without regard to the provisions of chapter

51, or subchapter III of chapter 53, of title 5, United States Code.

The Chairman may provide such additional compensation and

benefits to employees of the Administration as is necessary to

maintain comparability with the total amount of compensation and

benefits provided by other Federal bank regulatory agencies. In

setting and adjusting the total amount of compensation and

benefits for employees of the Administration, the Chairman shall

consult with, and seek to maintain comparability with, other

Federal bank regulatory agencies.

(B) OTHER FEDERAL BANK REGULATORY

AGENCIES DEFINED. For purposes of this subsection, the term

"other Federal bank regulatory agencies" has the same meaning

given to the term "appropriate Federal banking agency" in section

3(q) of the Federal Deposit Insurance Act.

employees of the agency shall be—

(ⅰ) subject to the Ethics in Government Act of 1978;

and

(ⅱ) considered officers or employees of the United

States for the purposes of sections 201 through 203, and

sections 205 through 209, of title 18, United States Code.

(3) DELEGATION. The powers of the Chairman as chief

executive officer necessary for day to day management may be

exercised and performed by the Chairman through such other officers

and employees of the Administration as the Chairman shall designate,

except that the Chairman may not delegate powers specifically reserved

to the Chairman by this Act without Board approval.

(d) FUNDING. The operations of the Farm Credit Administration,

and the salaries of members of the Board and employees of the

Administration, shall be funded and paid for from the fund created under

section 5.15.

12 U.S.C. 2246 Sec. 5.12. Advisory Committees.

The Chairman of the Board, subject to the approval of the Board, may

establish one or more advisory committees in accordance with the Federal

Advisory Committee Act and may appoint to such committee or committees

individuals who are members of the Federal Farm Credit Board when such

Board is terminated by the Farm Credit Amendments Act of 1985.

12 U.S.C. 2248 Sec. 5.13. Seal.

The Farm Credit Administration shall have a seal, as adopted by the

Board, which shall be judicially noted.

12 U.S.C. 2249 Sec. 5.14. Administrative Expenses.

The Farm Credit Administration may, within the limits of funds

available therefor, make necessary expenditures for personnel services and

rent at the seat of Government and elsewhere; contract stenographic reporting

services; purchase and exchange lawbooks, books of reference, periodicals,

newspapers, expenses of attendance at meetings and conferences; purchase,

operation, and maintenance at the seat of Government and elsewhere of

motor-propelled passenger-carrying vehicles and other vehicles; printing and

binding; and for such other facilities and services, including temporary

employment by contract or otherwise, as it may from time to time find

necessary for the proper administration of this Act. The Farm Credit

Administration may dispose of property so acquired and any amounts

collected from the disposition of such property shall be deposited in the

special fund provided for in section 5.15(b) of this Act and shall be available

to the Administration in the same manner and for the same purposes as the

funds collected under section 5.15(a) of this Act.

12 U.S.C. 2250 Sec. 5.15. Farm Credit Administration Operating Expenses

Fund.

(a) DETERMINATIONS REQUIRED.

(1) GENERALLY. Prior to the first day of each fiscal year, the

Farm Credit Administration shall determine—

(A) the cost of administering this Act for the subsequent

fiscal year, including expenses for official functions;

(B) the amount of assessments that will be required to pay

such administrative expenses, taking into consideration the funds

contained in the Administrative Expense Account, and maintain a

necessary reserve; and

the costs of supervising and examining the Mortgage Corporation

established under title VIII.

(2) APPORTIONMENTS. On the basis of the determinations

made under paragraph (1), the Farm Credit Administration shall —

(A) apportion the amount of the assessment described in

paragraph (1)(B) among the System institutions on a basis that is

determined to be equitable by the Farm Credit Administration;

(B) assess and collect such apportioned amounts from time

to time during the fiscal year as determined necessary by the Farm

Credit Administration; and

time to time during the fiscal year, the amount described in

paragraph (1)(C).

(b) DEPOSITS INTO FUND.

(1) TREASURY FUND. The amounts collected under

subsection (a) shall be deposited in the Farm Credit Administration

Administrative Expense Account. The Expense Account shall be

maintained in the Treasury of the United States and shall be available,

without regard, for purposes of sequestration, to the Balanced Budget

and Emergency Deficit Control Act of 1985 (2 U.S.C. 901 note), to pay

the expenses of the Farm Credit Administration.

(2) NONGOVERNMENT FUNDS. The funds contained in the

Expense Account shall not be construed to be Federal Government funds

or appropriated moneys.

(3) INVESTMENT.

(A) AUTHORITY. On request of the Farm Credit

Administration, the Secretary of the Treasury shall invest and

reinvest such amounts contained in the Expense Account as, in the

determination of the Farm Credit Administration, are in excess of

the amounts necessary for current expenses of the Farm Credit

Administration.

(B) RETURNS. All income earned from such investments

and reinvestments shall be deposited in the Expense Account.

securities with maturities suitable to the needs of the Expense

Account, as determined by the Farm Credit Administration, and

bearing interest at rates determined by the Secretary of the

Treasury, taking into consideration current market yields on

outstanding marketable obligations of the United States of

comparable maturities.

12 U.S.C. 2251 Sec. 5.16. Quarters and Facilities for the Farm Credit

Administration.

(a) The Farm Credit Administration shall maintain its principal office

within the Washington D.C.-Maryland-Virginia standard metropolitan

statistical area, and such other offices within the United States as in its

judgment are necessary.

(b) As an alternate to the rental of quarters under section 5.14, and

without regard to any other provision of law, the banks of the System, with the

concurrence of two-thirds of the bank boards, are hereby authorized—

(1) To lease or acquire real property in the District of Columbia

or elsewhere for quarters of the Farm Credit Administration.

(2) To construct, develop, furnish, and equip such building

thereon and such facilities appurtenant thereto as in their judgment may

be appropriate to provide, to the extent the Board may deem advisable,

suitable, and adequate quarters and facilities for the Farm Credit

Administration.

(3) To enlarge, remodel, or reconstruct the same.

(4) To make or enter into contracts for any of the foregoing.

(5) To sell or otherwise dispose of any interest in property leased

or acquired under the foregoing if authorized by the Board.

(1) IN GENERAL. -The Board may require of the respective banks

of the System, and they shall make to the Farm Credit Administration,

such advances of funds for the purposes set out in this section as in the

sole judgment of the Board may from time to time be advisable for the

purposes of this section.

(2) ADVANCES.- The advances of funds described in paragraph

(1) shall be in addition to and kept in a separate fund from the

assessments authorized in section 5.15 and shall be apportioned by the

Board among the banks in proportion to the total assets of the respective

banks, and determined in such manner and at such times as the Board

may prescribe.

(3) POWERS OF BANKS. - The powers of the banks of the

System and purposes for which obligations may be issued by such banks

are hereby enlarged to include the purpose of obtaining funds to permit

the making of advances required by this section.

(4) APPROVAL OF BOARD. -The plans and decisions for such

building and facilities and for the enlargement, remodeling, or

reconstruction thereof shall be such as is approved in the sole discretion

of the Board.

(5) AGENT FOR BANKS. -In actions undertaken by the banks

pursuant to this section, the Farm Credit Administration may act as

agent for the banks.

12 U.S.C. 2252 Sec. 5.17. Enumerated Powers.

(a) The Farm Credit Administration shall have the following powers,

functions, and responsibilities in connection with the institutions of the Farm

Credit System and the administration of this Act:

(1) Modify the boundaries of farm credit districts, with due

regard for the farm credit needs of the country, as approved by the

Board, with the concurrence of the district banks involved.

(2) Where necessary or appropriate to carry out the policy and

objectives of this Act, issue and approve amendments to Federal charters

of institutions of the System; approve change in names of banks

operating under this Act; approve the merger of districts when agreed to

by the district bank boards involved and by a majority vote of the voting

stockholders and contributors to the guaranty funds of each bank for

each of such districts, voting in the same manner as is provided in

section 7.0 of this Act; approve mergers and any related activities as

provided for in title VII; and approve the consolidation or division of the

territories of institutions when agreed to by a majority vote of the voting

stockholders or contributors to the guaranty fund of each of the

institutions involved; and approve consolidations of boards of directors

when agreed to by a majority vote of the voting stockholders or

contributors to the guaranty fund of each of the institutions involved.

The Farm Credit Administration Board, after consultation with the

respective boards of directors of the affected banks, may require two or

more banks operating under the same or different titles to merge if the

Board determines that one of such banks has failed to meet its

outstanding obligations.

(3) Make annual reports directly to Congress on the condition of

the System and its institutions, based on the examinations carried out

under section 5.19 of this Act, and on the manner and extent to which

the purposes and objectives of this Act are being carried out and, from

time to time, recommend directly legislative changes. The annual

reports shall include a summary and analysis of the reports submitted to

the Farm Credit Administration by the Farm Credit Banks under section

4.19(b) of this Act relating to programs for serving young, beginning,

and small farmers and ranchers.

(4) Approve the issuance of obligations of the System under

subsections (c) and (d) of section 4.2 of this Act for the purpose of

funding the authorized operations of the institutions of the System, and

prescribe collateral therefor.

(5) Grant approvals provided for under this Act either on a case-

by-case basis or through regulations that confer approval on actions of

Farm Credit System institutions.

(6) Establish standards for the System institutions with respect to

loan security requirements and regulate the borrowing, repayment, and

transfer of funds and equities between institutions of the System.

(7) Conduct loan and collateral security review.

(8) Regulate the preparation by System institutions and the

dissemination to stockholders and investors of information on the

financial condition and operations of such institutions, except that the

requirements of the Farm Credit Administration governing the

dissemination to stockholders of quarterly reports of System institutions

may not be more burdensome or costly than the requirements applicable

to national banks, and the Farm Credit Administration may not require

any System institution to disclose in any report to stockholders

information concerning the condition or classification of a loan—

(A) to a director of the institution—

(ⅰ) who has resigned before the time for filing the

applicable report with the Farm Credit Administration; or

(ⅱ) whose term of office will expire no later than the

date of the meeting of stockholders to which the report

relates; or

(B) to a member of the immediate family of a director of

the institution unless—

(ⅰ) the family member resides in the same household

as the director; or

(ⅱ) the director has a material financial or legal

interest in the loan or business operation of the family

member.

(9) Prescribe rules and regulations necessary or appropriate for

carrying out this Act.

(10) Exercise the powers conferred on it under part C of this title

for the purpose of ensuring the safety and soundness of System

institutions.

(11) Exercise such incidental powers as may be necessary or

appropriate to fulfill its duties and carry out the purposes of this Act.

(12) Require surety bonds or other provisions for protection of the

assets of the institutions of the System against losses occasioned by

employees.

(13)(A) Subject to subparagraph (B), the Farm Credit

Administration may approve an amendment to the charter of any

institution of the Farm Credit System operating under title I or II, which

would authorize the institution to exercise lending authority in any

territory—

(ⅰ) in the geographic area served by an association

that was reassigned pursuant to section 433 of the

Agricultural Credit Act of 1987 (12 U.S.C. 2071 note)

(where the geographic area was a part of the association's

territory as of the date of the reassignment); and

(ⅱ) in which the charter of an institution that is not

seeking the charter amendment authorizes the institution to

exercise the type of lending authority that is the subject of the

charter request.

(B) The Farm Credit Administration may approve a charter

amendment under subparagraph (A) only on the approval of—

(ⅰ) the respective boards of directors of the

associations that, if the charter request is approved, would

exercise like lending authority in any of the territory that is

the subject of the charter request;

(ⅱ) a majority of the stockholders of each association

described in clause (ⅰ) voting, in person or by proxy, at a duly

authorized stockholders’ meeting; and

(ⅲ) the respective boards of directors of the Farm

Credit Banks that, if the charter request is approved, would

exercise, either directly or through associations, like lending

authority in any of the territory described in subparagraph

(A)(ⅰ).

(14)(A) Subject to subparagraph (B), the Farm Credit

Administration may approve a request to charter an association of the

Farm Credit System to operate under title II where the proposed

charter—

(ⅰ) will include any of the geographic area included

in the territory served by an association that was reassigned

pursuant to section 433 of the Agricultural Credit Act of

1987 (12 U.S.C. 2071 note) (where the geographic area was a

part of the association's territory as of the date of the

reassignment); and

(ⅱ) will authorize the association to exercise lending

authority in any territory in the geographic area in which the

charter of an association that is not requesting the charter

authorizes the association to exercise the type of lending

authority that is the subject of the charter request.

(B) The Farm Credit Administration may approve a charter

request under subparagraph (A) only on the approval of—

(ⅰ) the respective boards of directors of the

associations that, if the charter request is approved, would

exercise like lending authority in any of the territory that is

the subject of the charter request;

(ⅱ) a majority vote of the stockholders (if any) of

each association described in clause (ⅰ) voting, in person or

by proxy, at a duly authorized stockholder's meeting; and

(ⅲ) the respective boards of directors of the Farm

Credit Banks that, if the charter request is approved, would

exercise, either directly or through associations, like lending

authority in any of the territory described in subparagraph

(A)(ⅰ).

(15)(A) Approve amendments to the charters of institutions of the

Farm Credit System to implement the equalization of loan-making

powers of a Farm Credit System association under section 7.7.

(B) Amendments described in subparagraph (A) to the

charters of an association and the related Farm Credit Bank shall

be approved by the Farm Credit Administration, subject to any

conditions of approval imposed, by not later than 30 days after the

date on which the Farm Credit Administration receives all

approvals required by section 7.7(a)(2).

(b) The Farm Credit Administration shall not have authority, either

direct or indirect, to approve bylaws, or any amendments or modifications or

changes to bylaws, of System institutions.

(c)(1) At least thirty days prior to publishing any proposed regulation in

the Federal Register, the Farm Credit Administration shall transmit a copy of

the regulation to the Committee on Agriculture of the House of

Representatives and the Committee on Agriculture, Nutrition, and Forestry of

the Senate. The Farm Credit Administration shall also transmit to such

committees a copy of any final regulation prior to its publication in the

Federal Register. Except as provided in paragraph (2) of this subsection, no

final regulation of the Farm Credit Administration shall become effective

prior to the expiration of thirty calendar days after it is published in the

Federal Register during which either or both Houses of the Congress are in

session.

(2) In the case of an emergency, a final regulation of the Farm

Credit Administration may become effective without regard to the last

sentence of paragraph (1) of this subsection if the Farm Credit

Administration notifies in writing the Committee on Agriculture of the

House of Representatives and the Committee on Agriculture, Nutrition,

and Forestry of the Senate setting forth the reasons why it is necessary to

make the regulation effective prior to the expiration of the thirty-day

period.

(d)(1) If there are any unresolved differences between the Farm Credit

Administration and the Board of Governors of the Federal Reserve System as

to whether any regulation implementing section 3.7(b) or the other provisions

of title III relating to the authority under section 3.7(b) conforms to national

banking policies, objectives, and limitations, simultaneously with

promulgation of any such regulation under this Act and simultaneously with

promulgation of any regulation implementing section 1.7(b), the Farm Credit

Administration shall transmit a copy thereof to the Secretary of the Senate and

the Clerk of the House of Representatives. Except as provided in paragraph

(2), the regulation shall not become effective if, within ninety calendar days of

continuous session of Congress after the date of promulgation, both Houses of

Congress adopt a concurrent resolution, the matter after the resolving clause

of which is as follows: "That Congress disapproves the regulations

promulgated by the Farm Credit Administration dealing with the matter

of , which regulation was transmitted to Congress on ", the blank

spaces therein being appropriately filled.

(2) If at the end of sixty calendar days of continuous session of

Congress after the date of promulgation of a regulation, no committee of

either House of Congress has reported or been discharged from further

consideration of a concurrent resolution disapproving the regulation, and

neither House has adopted such a resolution, the regulation may go into

effect immediately. If, within such sixty calendar days, such a

committee has reported or been discharged from further consideration of

such a resolution, or either House has adopted such a resolution, the

regulation may go into effect not sooner than ninety calendar days of

continuous session of Congress after its promulgation unless

disapproved as provided in paragraph (1).

(3) For the purposes of paragraphs (1) and (2) of this

subsection—

(ⅰ) continuity of session is broken only by an

adjournment of Congress sine die; and

(ⅱ) the days on which either House is not in session

because of an adjournment of more than three days to a day

certain are excluded in the computation of sixty and ninety

calendar days of continuous session of Congress.

(4) Congressional inaction on or rejection of a resolution of

disapproval shall not be deemed an expression of approval of such

regulation.

NOTE: The amendments made by section 5407 of Public Law 110-246

became effective on January 1, 2010.

Sec. 5.18. [Repealed]

Repealed by section 5411(30) of the Agriculture Improvement Act of

2018.

12 U.S.C. 2254 Sec. 5.19. Examinations.

(a) Each institution of the System shall be examined by Farm Credit

Administration examiners at such times as the Board may determine, but in no

event less than once during each 18-month period. Such examinations may

include, if appropriate, but are not limited to, an analysis of credit and

collateral quality and capitalization of the institution, and appraisals of the

effectiveness of the institution’s management and application of policies

governing the carrying out of this Act and regulations of the Farm Credit

Administration and servicing all eligible borrowers. Examination of banks

shall include an analysis of the compensation paid to the chief executive

officer and the salary scales of the employees of the bank. At the direction of

the Board, Farm Credit Administration examiners also shall make

examinations of the condition of any organization, other than federally

regulated financial institutions, to, for, or with which any institution of the

System contemplates making a loan or discounting paper. For the purposes of

this Act, examiners of the Farm Credit Administration shall be subject to the

same requirements, responsibilities, and penalties as are applicable to

examiners under the National Bank Act, the Federal Reserve Act, and Federal

Deposit Insurance Act, and other provisions of law and shall have the same

powers and privileges as are vested in such examiners by law.

(b) Each institution of the System shall make and publish an annual

report of condition as prescribed by the Farm Credit Administration. Each

such report shall contain financial statements prepared in accordance with

generally accepted accounting principles, and contain such additional

information as the Farm Credit Administration by regulation may require.

Such financial statements of System institutions shall be audited by an

independent public accountant.

examination of any System institution that does not, before the end of the

120th day after the date of notification of the recommendations and

suggestions of the Farm Credit Administration, based on such examination,

comply with such recommendations and suggestions to the satisfaction of the

Farm Credit Administration. The Farm Credit Administration shall give

notice of intention to publish in the event of such noncompliance at least 90

days before such publication. Such notice of intention may be given any time

after such notification of recommendations and suggestions.

(d) On receipt of a request made under section 5.59(b)(1)(B) with

respect to a System institution, the Farm Credit Administration shall

(1) furnish for the confidential use of the Farm Credit System

Insurance Corporation reports of examination of the institution and other

reports or information on the institution; and

(2)(A) examine, or obtain other information on, the institution and

furnish for the confidential use of the Farm Credit System Insurance

Corporation the report of the examination and such other information; or

(B) if the Farm Credit Administration Board determines

that compliance with the request would substantially impair the

ability of the Farm Credit Administration to carry out the other

duties and responsibilities of the Farm Credit Administration under

this Act, notify the Board of Directors of the Farm Credit System

Insurance Corporation that the Farm Credit Administration will be

unable to comply with the request.

(e) SHARING OF PRIVILEGED AND CONFIDENTIAL

INFORMATION.—A System institution shall not be considered to have

waived the confidentiality of a privileged communication with an attorney or

an accountant if the System institution provides the content of the

communication to the Farm Credit Administration pursuant to the supervisory

or regulatory authorities of the Farm Credit Administration.

12 U.S.C. 2255 Sec. 5.20. Conditions of Other Banks and Lending Institutions.

The Comptroller of the Currency is authorized and directed, upon

request of the Farm Credit Administration to furnish for confidential use of an

institution of the System such reports, records, and other information as he

may have available relating to the financial condition of national banks

through, for, or with which such institution of the System has made or

contemplates making discounts or loans and to make such further

examination, as may be agreed, of organizations through, for, or with which

such institution of the Farm Credit System has made or contemplates making

discounts or loans.

12 U.S.C. 2256 Sec 5.21. Consent to the Availability of Reports and to

Examinations.

Any organization other than State banks, trust companies, and savings

associations shall, as a condition precedent to securing discount privileges

with a bank of the Farm Credit System, file with such bank its written consent

to examination by farm credit examiners as may be directed by the Farm

Credit Administration; and State banks, trust companies, and savings

associations may be required in like manner to file a written consent that

reports of their examination by constituted State authorities may be furnished

by such authorities upon the request of the Farm Credit Administration.

12 U.S.C. 2257 Sec. 5.22. Reports on Conditions of Institutions Receiving

Loans or Deposits.

The executive departments, boards, commissions, and independent

establishments of the Government of the United States, the Federal Deposit

Insurance Corporation, the Comptroller of the Currency, the Board of

Governors of the Federal Reserve System, and the Federal Reserve banks are

severally authorized under such conditions as they may prescribe, upon

request of the Farm Credit Administration, to make available to it or to any

institution of the System in confidence all reports, records, or other

information relating to the condition of any organization to which such

institution of the System has made or contemplates making loan or for which

it has or contemplates discounting paper, or which it is using or contemplates

using as a custodian of securities or other credit instruments, or a depository.

The Federal Reserve banks in their capacity as depositories, agents, and

custodians for bonds, debentures, and other obligations issued by the banks of

the System or book entries thereof are also authorized and directed, upon

request of the Farm Credit Administration, to make available for audit by farm

credit examiners all appropriate books, accounts, financial records, files, and

other papers.

12 U.S.C. 2257a Sec. 5.22A. Uniform Financial Reporting Instructions.

(a) IN GENERAL. Each System institution shall comply with

uniform financial reporting instructions required by the Farm Credit

Administration, to standardize and facilitate the reporting of System data.

(b) COMPUTERIZED SYSTEM. If the financial reports are

maintained by a computer system, each System institution may develop an

internal computer system or it may contract out to a vendor under open

competitive bidding any or all aspects of the computerized system.

the enactment of this section, each System institution shall submit to the Farm

Credit Administration a report on the plan of that institution to bring the

operations of the institution into compliance with the uniform financial

reporting instructions required by the Farm Credit Administration.

12 U.S.C. 2258 Sec. 5.23. Jurisdiction.

Each institution of the System shall for the purposes of jurisdiction be

deemed to be a citizen of the State, commonwealth, or District of Columbia in

which its principal office is located.

12 U.S.C. 2259 Sec. 5.24. State Legislation.

Whenever it is determined by the Farm Credit Administration, or by

judicial decision, that a State law is applicable to the obligations and securities

authorized to be held by the institutions of the System under this Act, which

law would provide insufficient protection, or inadequate safeguards against

loss in the event of default, the Farm Credit Administration may declare such

obligations or securities to be ineligible as collateral for the issuance of new

notes, bonds, debentures, and other obligations under this Act.

Part C—Enforcement Powers of Farm Credit Administration

12 U.S.C. 2261 Sec. 5.25. Cease and Desist Proceedings.

(a) If, in the opinion of the Farm Credit Administration, any institution

in the Farm Credit System, or any director, officer, employee, agent, or other

person participating in the conduct of the affairs of such an institution is

engaging or has engaged, or the Farm Credit Administration has reasonable

cause to believe that the institution or any director, officer, employee, agent,

or other person participating in the conduct of the affairs of such institution is

about to engage, in an unsafe or unsound practice in conducting the business

of such institution, or is violating or has violated, or the Farm Credit

Administration has reasonable cause to believe that the institution or any

director, officer, employee, agent, or other person participating in the conduct

of the affairs of such institution is about to violate, a law, rule, or regulation,

or any condition imposed in writing by the Farm Credit Administration in

connection with the granting of any application or other request by the

institution or any written agreement entered into with the Farm Credit

Administration, the Farm Credit Administration may issue and serve upon the

institution or such director, officer, employee, agent, or other person a notice

of charges in respect thereof. The notice shall contain a statement of the facts

constituting the alleged violation or violations or the unsafe or unsound

practice or practices, and shall fix a time and place at which a hearing will be

held to determine whether an order to cease and desist therefrom should issue

against the institution or the director, officer, employee, agent, or other person

participating in the conduct of the affairs of such institution. Such hearing

shall be fixed for a date not earlier than thirty days nor later than sixty days

after service of such notice unless an earlier or a later date is set by the Farm

Credit Administration at the request of any party so served. Unless the party

or parties so served shall appear at the hearing personally or by a duly

authorized representative, they shall be deemed to have consented to the

issuance of the cease and desist order. In the event of such consent, or if upon

the record made at any such hearing, the Farm Credit Administration shall

find that any violation or unsafe or unsound practice specified in the notice of

charges has been established, the Farm Credit Administration may issue and

serve upon the institution or the director, officer, employee, agent, or other

person participating in the conduct of the affairs of such institution an order to

cease and desist from any such violation or practice. Such order may, by

provisions that may be mandatory or otherwise, require the institution or its

directors, officers, employees, agents, and other persons participating in the

conduct of the affairs of such institution to cease and desist from the same,

and, further, to take affirmative action to correct the conditions resulting from

any such violation or practice.

(b) A cease and desist order shall become effective at the expiration of

thirty days after the service of such order upon the institution or other person

concerned (except in the case of a cease and desist order issued upon consent,

which shall become effective at the time specified therein), and shall remain

effective and enforceable as provided therein except to such extent as it is

stayed, modified, terminated, or set aside by action of the Farm Credit

Administration or a reviewing court.

12 U.S.C. 2262 Sec. 5.26. Temporary Cease and Desist Orders

(a) Whenever the Farm Credit Administration shall determine that the

violation or threatened violation or the unsafe or unsound practice or

practices, specified in the notice of charges served upon the institution or any

director, officer, employee, agent, or other person participating in the conduct

of the affairs of such institution under section 5.25, or the continuation

thereof, is likely to cause insolvency or substantial dissipation of assets or

earnings of the institution, or is likely to seriously weaken the condition of the

institution or otherwise seriously prejudice the interests of the investors in

Farm Credit System obligations or shareholders in the institution prior to the

completion of the proceedings conducted under section 5.25, the Farm Credit

Administration may issue a temporary order requiring the institution or such

director, officer, employee, agent, or other person to cease and desist from any

such violation or practice and to take affirmative action to prevent such

insolvency, dissipation, condition, or prejudice pending completion of such

proceedings. Such order shall become effective upon service upon the

institution or such director, officer, employee, agent, or other person

participating in the conduct of the affairs of such institution and, unless set

aside, limited, or suspended by a court in proceedings authorized by

subsection (b), shall remain effective and enforceable pending the completion

of the administrative proceedings pursuant to such notice and until such time

as the Farm Credit Administration shall dismiss the charges specified in such

notice, or if a cease and desist order is issued against the institution or such

director, officer, employee, agent, or other person, until effective date of such

order.

(b) Within ten days after the institution concerned or any director,

officer, employee, agent, or other person participating in the conduct of the

affairs of such institution has been served with a temporary cease and desist

order, the institution or such director, officer, employee, agent, or other person

may apply to the United States district court for the judicial district in which

the home office of the institution is located, or the United States district court

for the District of Columbia, for an injunction setting aside, limiting, or

suspending the enforcement, operation, or effectiveness of such order pending

the completion of the administrative proceedings pursuant to the notice of

charges served upon the institution or such director, officer, employee, agent,

or other person under section 5.25, and such court shall have jurisdiction to

issue such injunction.

12 U.S.C. 2263 Sec. 5.27. Enforcement of Temporary Cease and Desist Orders.

In the case of violation or threatened violation of, or failure to obey, a

temporary cease and desist order issued under section 5.26, the Farm Credit

Administration may apply to the United States district court, or the United

States court of any territory, within the jurisdiction of which the home office

of the institution is located, for an injunction to enforce such order, and, if the

court shall determine that there has been such violation or threatened violation

or failure to obey, it shall be the duty of the court to issue such injunction.

12 U.S.C. 2264 Sec. 5.28. Suspension or Removal of Director or Officer.

(a) Whenever, in the opinion of the Farm Credit Administration, any

director or officer of any institution in the Farm Credit System has committed

any violation of law, rule, or regulation or of a cease and desist order that has

become final, or has engaged or participated in any unsafe or unsound practice

in connection with the institution, or has committed or engaged in any act,

omission, or practice which constitutes a breach of a fiduciary duty as such

director or officer, and the Farm Credit Administration determines that the

institution has suffered or will probably suffer substantial financial loss or

other damage or that the interests of its shareholders or investors in Farm

Credit System obligations could be seriously prejudiced by reason of such

violation or practice or breach of fiduciary duty, or that the director or officer

has received financial gain by reason of such violation or practice or breach of

fiduciary duty, and that such violation or practice or breach of fiduciary duty

is one involving personal dishonesty on the part of such director or officer, or

one that demonstrates a willful or continuing disregard for the safety or

soundness of the System institution, the Farm Credit Administration may

serve upon such director or officer a written notice of its intention to remove

him from office.

(b) Whenever, in the opinion of the Farm Credit Administration, any

director or officer of an institution in the Farm Credit System, by conduct or

practice with respect to another institution in the Farm Credit System or other

business institution that resulted in substantial financial loss or other damage,

has evidenced either his personal dishonesty or a willful or continuing

disregard for its safety and soundness and, in addition, has evidenced his

unfitness to continue as a director or officer, and whenever, in the opinion of

the Farm Credit Administration, any other person participating in the conduct

of the affairs of an institution in the Farm Credit System, by the conduct or

practice with respect to such institution or other institution in the Farm Credit

System or other business institution that resulted in substantial financial loss

or other damage, has evidenced either personal dishonesty or a willful or

continuing disregard for its safety and soundness and, in addition, has

evidenced his unfitness to participate in the conduct of the affairs of such

institution, the Farm Credit Administration may serve upon such director,

officer, or other person a written notice of its intention to remove that director,

officer, or other person from office or to prohibit his further participation in

any manner in the conduct of the affairs of the institution.

Credit System or any other person referred to in subsection (a) or (b) of this

section, the Farm Credit Administration may, if it deems it necessary for the

protection of the institution or the interests of its shareholders and the

investors in the Farm Credit System obligations, by written notice to such

effect served upon such director, officer, or other person, suspend such

director, officer, or other person from office or prohibit such director, officer,

or other person from further participation in any manner in the conduct of the

affairs of the institution. Such suspension or prohibition shall become

effective upon service of such notice and, unless stayed by a court in

proceedings authorized by subsection (e) of this section, shall remain in effect

pending the completion of the administrative proceedings pursuant to the

notice served under subsection (a) or (b) and until such time as the Farm

Credit Administration shall dismiss the charges specified in such notice, or, if

an order of removal or prohibition is issued against the director or officer or

other person, until the effective date of any such order. Copies of any such

notice shall also be served upon the institution of which the person is a

director or officer or in the conduct of whose affairs the person has

participated.

(d) A notice of intention to remove a director, officer, or other person

from office or to prohibit such director's, officer's, or other person's

participation in the conduct of the affairs of an institution in the Farm Credit

System, shall contain a statement of the facts constituting grounds therefor,

and shall fix a time and place at which a hearing will be held thereon. Such

hearing shall be fixed for a date not earlier than thirty days nor later than sixty

days after the date of service of such notice, unless an earlier or a later date is

set by the Farm Credit Administration at the request of (1) such director or

officer or other person, and for good cause shown, or (2) the Attorney General

of the United States. Unless such director, officer, or other person shall

appear at the hearing in person or by a duly authorized representative, such

director, officer, or other person shall be deemed to have consented to the

issuance of an order of such removal or prohibition. In the event of such

consent, or if upon the record made at any such hearing the Farm Credit

Administration shall find that any of the grounds specified in such notice have

been established, the Farm Credit Administration may issue such orders of

suspension or removal from office, or prohibition from participation in the

conduct of the affairs of the institution, as it may deem appropriate. A copy of

an order issued under this subsection shall be served upon the institution

concerned. Any such order shall become effective at the expiration of thirty

days after service upon such institution and the director, officer, or other

person concerned (except in the case of an order issued upon consent, which

shall become effective at the time specified therein). Such order shall remain

effective and enforceable except to such extent as it is stayed, modified,

terminated, or set aside by action of the agency or a reviewing court.

(e) Within ten days after any director, officer, or other person has been

suspended from office or prohibited from participation in the conduct of the

affairs of a System institution under subsection (c) of this section, such

director, officer, or other person may apply to the United States district court

for the judicial district in which the home office of the institution is located, or

the United States district court for the District of Columbia, for a stay of either

such suspension or prohibition, or both, pending the completion of the

administrative proceedings pursuant to the notice served upon such director,

officer, or other person under subsection (a) or (b), and such court shall have

jurisdiction to stay either such suspension or prohibition, or both.

12 U.S.C. 2265 Sec. 5.29. Suspension or Removal of Director or Officer

Charged with Felony.

(a) Whenever any director or officer of an institution in the Farm

Credit System, or other person participating in the conduct of the affairs of

such institution, is charged in any information, indictment, or complaint

authorized by a United States attorney, with the commission of or

participation in a crime involving dishonesty or breach of trust that is

punishable by imprisonment for a term exceeding one year under State or

Federal law, the Farm Credit Administration may, if continued service or

participation by the individual may pose a threat to the interests of the

institution's shareholders or investors in Farm Credit System obligations or

may threaten to impair public confidence in the institution or the Farm Credit

System, by written notice served upon such director, officer, or other person,

suspend such director, officer, or other person from office or prohibit such

director, officer, or other person from further participation in any manner in

the conduct of the affairs of the institution. A copy of such notice shall also

be served upon the institution. Such suspension or prohibition shall remain in

effect until such information, indictment, or complaint is finally disposed of or

until terminated by the Farm Credit Administration. In the event that a

judgment of conviction with respect to such crime is entered against such

director, officer, or other person, and at such time as such judgment is not

subject to further appellate review, the Farm Credit Administration may, if

continued service or participation by the individual may pose a threat to the

interests of the institution's shareholders or the investors in Farm Credit

System obligations or may threaten to impair public confidence in the

institution or the Farm Credit System, issue and serve upon such director,

officer, or other person an order removing such director, officer, or other

person from office or prohibiting such director, officer, or other person from

further participation in any manner in the conduct of the affairs of the

institution except with the consent of the Farm Credit Administration. A copy

of such order shall also be served upon such institution, whereupon such

director or officer shall cease to be a director or officer of such institution. A

finding of not guilty or other disposition of the charge shall not preclude the

Farm Credit Administration from thereafter instituting proceedings to remove

such director, officer, or other person from office or to prohibit further

participation in Farm Credit System affairs under section 5.28. Any notice of

suspension or order of removal issued under this paragraph shall remain

effective and outstanding until the completion of any hearing or appeal

authorized under subsection (b) unless terminated by the Farm Credit

Administration.

(b) Within thirty days from service of any notice of suspension or

order of removal issued under subsection (a), the director, officer, or other

person concerned may request in writing an opportunity to appear before the

Farm Credit Administration to show that the continued service to or

participation in the conduct of the affairs of the institution by such individual

does not, or is not likely to, pose a threat to the interest of the institution's

shareholders or the investors in Farm Credit System obligations or threaten to

impair public confidence in the institution or the Farm Credit System. Upon

receipt of any such request, the Farm Credit Administration shall fix a time

(not more than thirty days after receipt of such request, unless extended at the

request of the concerned director, officer, or other person) and place at which

the director, officer, or other person may appear, personally or through

counsel, before the Chairman of the Farm Credit Administration or designated

employees of the Farm Credit Administration to submit written materials (or,

at the discretion of the Farm Credit Administration oral testimony) and oral

argument. Within sixty days of such hearing, the Farm Credit Administration

shall notify the director, officer, or other person whether the suspension or

prohibition from participation in any manner in the conduct of the affairs of

the institution will be continued, terminated, or otherwise modified, or

whether the order removing such director, officer, or other person from office

or prohibiting such individual from further participation in any manner in the

conduct of the affairs of the institution will be rescinded or otherwise

modified. Such notification shall contain a statement of the basis for the Farm

Credit Administration’s decision, if adverse to the director, officer or other

person. The Farm Credit Administration may prescribe such rules as may be

necessary to effectuate the purposes of this subsection.

12 U.S.C. 2265a Sec. 5.29A. Removal and Prohibition Authority; Industrywide

Prohibition.

(a) DEFINITION OF PERSON.—In this section, the term “person”

means—

(1) an individual; and

(2) in the case of a specific determination by the Farm Credit

Administration, a legal entity.

(b) INDUSTRY-WIDE PROHIBITION.—Except as provided in

subsection (c), any person who, pursuant to an order issued under section 5.28

or 5.29, has been removed or suspended from office at a System institution or

prohibited from participating in the conduct of the affairs of a System

institution shall not, during the period of effectiveness of the order, continue

or commence to hold any office in, or participate in any manner in the conduct

of the affairs of—

(1) any insured depository institution subject to section

8(e)(7)(A)(ⅰ) of the Federal Deposit Insurance Act (12 U.S.C.

1818(e)(7)(A)(ⅰ));

(2) any institution subject to section 8(e)(7)(A)(ⅱ) of the Federal

Deposit Insurance Act (12 U.S.C. 1818(e)(7)(A)(ⅱ));

(3) any insured credit union under the Federal Credit Union Act

(12 U.S.C. 1751 et seq.);

(4) any Federal home loan bank;

(5) any institution chartered under this Act;

(6) any appropriate Federal financial institutions regulatory agency

(as defined in section 8(e)(7)(D) of the Federal Deposit Insurance Act

(12 U.S.C. 1818(e)(7)(D)));

(7) the Federal Housing Finance Agency; or

(8) the Farm Credit Administration.

RECEIVES WRITTEN CONSENT.—

(1) IN GENERAL.—

(A) AFFILIATED PARTIES.—If, on or after the date on

which an order described in subsection (b) is issued that removes

or suspends an institution-affiliated party from office at a System

institution or prohibits an institution-affiliated party from

participating in the conduct of the affairs of a System institution,

that party receives written consent described in subparagraph (B),

subsection (b) shall not apply to that party—

(ⅰ) to the extent provided in the written consent

received;

and

(ⅱ) with respect to the institution described in each

written consent.

(B) WRITTEN CONSENT DESCRIBED.—The written

consent referred to in subparagraph (A) is written consent received

from—

(ⅰ) the Farm Credit Administration; and

(ⅱ) each appropriate Federal financial institutions

regulatory agency (as defined in section 8(e)(7)(D) of the

Federal Deposit Insurance Act (12 U.S.C. 1818(e)(7)(D))) of

the applicable institution described in any of paragraphs (1),

(2), (3), or (4) of subsection (b) with respect to which the party

proposes to be become an affiliated party.

(2) DISCLOSURE.—Any agency described in clause (ⅰ) or (ⅱ) of

paragraph (1)(B) that provides a written consent under that paragraph

shall—

(A) report the action to the Farm Credit Administration; and

(B) publicly disclose the action.

(3) CONSULTATION BETWEEN AGENCIES.—The agencies

described in clauses (ⅰ) and (ⅱ) of paragraph (1)(B) shall consult with

each other before providing any written consent under that paragraph.

(d) VIOLATIONS.—A violation of subsection (b) by any person who is

subject to an order described in that subsection shall be treated as violation of

that order.

12 U.S.C. 2266 Sec. 5.30. Hearings and Judicial Review.

(a) Any hearing provided for in this part (other than the hearing

provided for in section 5.29) shall be held in the Federal judicial district or in

the territory in which the home office of the institution is located unless the

party afforded the hearing consents to another place, and shall be conducted in

accordance with the provisions of chapter 5 of title 5 of the United States

Code. Such hearing shall be private, unless the Farm Credit Administration,

in its discretion, after fully considering the views of the party afforded the

hearing, determines that a public hearing is necessary to protect the public

interest. After such hearing, and within ninety days after the Farm Credit

Administration has notified the parties that the case has been submitted to it

for final decision, it shall render its decision (which shall include findings of

fact upon which its decision is predicated) and shall issue and serve upon each

party to the proceeding an order or orders consistent with the provisions of

this part. Judicial review of any such order shall be exclusively as provided in

this section. Unless a petition for review is timely filed in a court of appeals

of the United States, as hereinafter provided in subsection (b), and thereafter

until the record in the proceeding has been filed as so provided, the Farm

Credit Administration may at any time, upon such notice and in such manner

as it shall deem proper, modify, terminate, or set aside any such order. Upon

such filing of the record, the Farm Credit Administration may modify,

terminate, or set aside any such order with permission of the court.

(b) Any party to the proceeding, or any person required by an order

issued under this part to cease and desist from any of the violations or

practices stated therein, may obtain a review of any order served under

subsection (a) (other than an order issued with the consent of the System

institution or the director or officer or other person concerned, or an order

issued under section 5.29) by the filing in the court of appeals of the United

States for the circuit in which the home office of the institution is located, or

in the United States Court of Appeals for the District of Columbia Circuit,

within thirty days after the date of service of such order, a written petition

praying that the order of the Farm Credit Administration be modified,

terminated, or set aside. A copy of such petition shall be forthwith transmitted

by the clerk of the court to the Farm Credit Administration, and thereupon the

Farm Credit Administration shall file in the court the record in the proceeding,

as provided in section 2112 of title 28 of the United States Code. Upon the

filing of such petition, such court shall have jurisdiction, which upon the filing

of the record shall except as provided in the last sentence of subsection (a) be

exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the

order of the Farm Credit Administration. Review of such proceedings shall be

had as provided in chapter 7 of title 5 of the United States Code. The

judgment and decree of the court shall be final, except that the same shall be

subject to review by the Supreme Court upon certiorari, as provided in section

1254 of title 28 of the United States Code.

subsection (b) shall not, unless specifically ordered by the court, operate as a

stay of any order issued by the Farm Credit Administration.

12 U.S.C. 2267 Sec. 5.31. Jurisdiction and Enforcement.

The Farm Credit Administration may in its discretion apply to the

United States district court, or the United States court of any territory, within

the jurisdiction of which the home office of the institution is located, for the

enforcement of any effective and outstanding notice or order issued under this

part, and such courts shall have jurisdiction and power to order and require

compliance herewith; but except as otherwise provided in this part no court

shall have jurisdiction to affect by injunction or otherwise the issuance or

enforcement of any notice or order under this part, or to review, modify,

suspend, terminate, or set aside any such notice or order. For purposes of this

section, any directive issued under section 4.3(b)(2), 4.3A(e), or 4.14A(h)

shall be treated as an effective and outstanding order issued under section 5.25

that has become final.

12 U.S.C. 2267a Sec. 5.31A. Jurisdiction Over Institution -Affiliated Parties.

(a) IN GENERAL.—For purposes of sections 5.25, 5.26, and 5.32, the

jurisdiction of the Farm Credit Administration over parties, and the authority

of the Farm Credit Administration to initiate actions, shall include

enforcement authority over institution-affiliated parties.

(b) EFFECT OF SEPARATION ON JURISDICTION AND

AUTHORITY.—Subject to subsection (c), the resignation, termination of

employment or participation, or separation of an institution-affiliated party

(including a separation caused by the merger, consolidation, conservatorship,

or receivership of a Farm Credit System institution) shall not affect the

jurisdiction and authority of the Farm Credit Administration to issue any

notice or order and proceed under this part against that party.

the notice or order described in that subsection shall be served not later than 6

years after the date on which the party ceased to be an institution-affiliated

party with respect to the applicable Farm Credit System institution.

(d) APPLICABILITY.—The date on which a party ceases to be an

institution-affiliated party described in subsection (c) may occur before, on, or

after the date of enactment of this section.

12 U.S.C. 2268 Sec. 5.32. Penalty.

(a) Any institution in the System that violates or any officer, director,

employee, agent, or other person participating in the conduct of the affairs of

such an institution who violates the terms of any order that has become final

and was issued under section 5.25 or 5.26 of this Act, shall forfeit and pay a

civil penalty of not more than $1,000 per day for each day during which such

violation continues. Any such institution or person who violates any

provision of this Act or any regulation issued under this Act shall forfeit and

pay a civil penalty of not more than $500 per day for each day during which

such violation continues. Notwithstanding the preceding sentences, the Farm

Credit Administration may, in its discretion, compromise, modify, or remit

any civil money penalty that is subject to imposition or has been imposed

under such authority. The penalty may be assessed and collected by the Farm

Credit Administration by written notice.

(b) Before determining whether to assess a civil money penalty and

determining the amount of such penalty, the Farm Credit Administration shall

notify the institution or person to be assessed of the violation or violations

alleged to have occurred or to be occurring, and shall solicit the views of the

institution or person regarding the imposition of such penalty. In determining

the amount of the penalty, the Farm Credit Administration shall take into

account the appropriateness of the penalty with respect to the size of financial

resources and good faith of the System institution or person charged, the

gravity of the violation, the history of previous violations, and such other

matters as justice may require.

opportunity for a hearing by the Farm Credit Administration, upon request

made within ten days after issuance of the notice of assessment. In such

hearing all issues shall be determined on the record pursuant to section 554 of

title 5 of the United States Code. The Farm Credit Administration

determination shall be made by final order which may be reviewed only as

provided in subsection (d). If no hearing is requested as herein provided, the

assessment shall constitute a final and unappealable order.

(d) Any System institution or person against whom an order imposing

a civil money penalty has been entered after a Farm Credit Administration

hearing under this section may obtain review by the United States court of

appeals for the circuit in which the home office of the System institution is

located, or the United States Court of Appeals for the District of Columbia

Circuit, by filing a notice of appeal in such court within twenty days after the

service of such order, and simultaneously sending a copy of such notice by

registered or certified mail to the Farm Credit Administration. The Farm

Credit Administration shall promptly certify and file in such Court the record

upon which the penalty was imposed, as provided in section 2112 of title 28

of the United States Code. Final orders of the Farm Credit Administration

issued under subsection (c) shall be reviewable under chapter 7 of title 5,

United States Code.

(e) If any System institution or person fails to pay an assessment after

it has become a final and unappealable order, or after the court of appeals has

entered final judgment in favor of the Farm Credit Administration, the Farm

Credit Administration shall refer the matter to the Attorney General, who shall

recover the amount assessed by action in the appropriate United States district

court. In such action, the validity and appropriateness of the final order

imposing the penalty shall not be subject to review.

(f) The Farm Credit Administration shall promulgate regulations

establishing procedures necessary to implement section 5.31 and this section.

(g) All penalties collected under authority of this section shall be

covered into the Treasury of the United States.

(h) For purposes of this section, any directive issued under section

4.3(b)(2), 4.3A(e), or 4.14A(h) shall be treated as an order that has become

final and was issued under section 5.25.

12 U.S.C. 2269 Sec. 5.33. Further Penalties.

Any director or officer, or former director or officer of a System

institution, or any other person, against whom there is outstanding and

effective any notice or order (which is an order which has become final)

served upon such director, officer, or other person under section 5.28 or 5.29

of this Act, and who (1) participates in any manner in the conduct of the

affairs of the institution involved, or directly or indirectly solicits or procures,

or transfers or attempts to transfer, or votes or attempts to vote, any proxies,

consents, or authorizations in respect of any voting rights in such institution,

or (2) without the prior written approval of the Farm Credit Administration,

votes for a director, serves or acts as a director, officer, or employee of any

System institution, shall upon conviction be fined not more than $5,000 or

imprisoned for not more than one year, or both.

12 U.S.C. 2270 Sec. 5.34. Replacement of Suspended or Removed Directors.

If at any time, because of the suspension or removal of one or more

directors pursuant to section 5.28 or 5.29 of this Act, there shall be on the

board of directors of a System institution less than a quorum of directors not

so suspended, the Chairman shall appoint persons to serve temporarily as

directors in their place and stead so as to establish a quorum until such time as

those who have been removed are reinstated or their respective successors are

duly elected and take office.

12 U.S.C. 2271 Sec. 5.35. Definitions.

As used in this part—

(1) the terms "cease and desist order that has become final" and

"order which has become final" mean a cease and desist order, or an

order, issued by the Farm Credit Administration with the consent of the

System institution or the director or officer or other person concerned, or

with respect to which no petition for review of the action of the Farm

Credit Administration has been filed and perfected in a court of appeals

as specified in section 5.30(b) of this Act, or with respect to which the

action of the court in which such petition is so filed is not subject to

further review by the Supreme Court of the United States in proceedings

provided for in section 5.30(b) of this Act, or an order issued under

section 5.29 of this Act;

(2) the term "violation" includes without limitation any action

(alone or with another or others) for or toward causing, bringing about,

participating in, counseling, or aiding or abetting a violation;

(3) the terms "institution in the System", "System institution",

and "institution" mean all institutions enumerated in section 1.2 of this

Act, any service organization chartered under part E of title IV of this

Act, and the Financial Assistance Corporation;

(4) the term institution-affiliated party means—

(A) a director, officer, employee, shareholder, or agent of a

System institution;

(B) an independent contractor (including an attorney,

appraiser, or accountant) who knowingly or recklessly participates

in—

(ⅰ) a violation of law (including regulations) that is

associated with the operations and activities of 1 or more

System institutions;

(ⅱ) a breach of fiduciary duty; or

(ⅲ) an unsafe practice that causes or is likely to cause

more than a minimum financial loss to, or a significant

adverse effect on, a System institution; and

Administration (by regulation or on a case-by-case basis) who

participates in the conduct of the affairs of a System institution;

and

(5) the term "unsafe or unsound practice" shall—

(A) have the meaning given to it by the Farm Credit

Administration by regulation, rule, or order; and

(B) mean any significant noncompliance by a System

institution (as determined by the Farm Credit Administration, in

consultation with the Farm Credit System Insurance Corporation)

with any term or condition imposed on the institution by the Farm

Credit System Insurance Corporation under section 5.61.

12 U.S.C. 2272 Sec. 5.36. Notice of Service.

Any service required or authorized to be made by the Farm Credit

Administration under this section may be made by registered mail, or in such

other manner reasonably calculated to give actual notice as the Farm Credit

Administration may by regulation or otherwise provide. Any such service by

mail is complete upon mailing. Copies of any notice or order served by the

Farm Credit Administration on any association or any director or officer

thereof or other person participating in the conduct of its affairs, under the

provisions of this part, shall also be sent to the supervisory bank.

12 U.S.C. 2273 Sec. 5.37. Ancillary Provisions; Subpena Power, etc.

In the course of or in connection with any proceeding under this part or

any examination or investigation under this Act, the Farm Credit

Administration or any designated representative thereof, including any person

designated to conduct any hearing under this part, shall have the power to

administer oaths and affirmations, to take or cause to be taken depositions,

and to issue, revoke, quash, or modify subpenas and subpenas duces tecum;

and the Farm Credit Administration is empowered to make rules and

regulations with respect to any such proceedings, examinations, or

investigations. The attendance of witnesses and the production of documents

provided for in this section may be required from any place in any State or in

any territory or other place subject to the jurisdiction of the United States at

any designated place where such proceeding is being conducted. The Farm

Credit Administration or any party to proceedings under this part may apply to

the United States District Court for the District of Columbia, or the United

States district court for the judicial district or the United States court in any

territory in which such proceeding is being conducted, or where the witness

resides or carries on business, for enforcement of any subpena or subpena

duces tecum issued pursuant to this part, and such courts shall have

jurisdiction and power to order and require compliance therewith. Witnesses

subpenaed under this section shall be paid the same fees and mileage that are

paid witnesses in the district courts of the United States. Any court having

jurisdiction of any proceeding instituted under this part by a System institution

or a director or officer thereof, may allow to any such party such reasonable

expenses and attorneys' fees as it deems just and proper; and such expenses

and fees shall be paid by the System institution or from its assets. Any person

who willfully shall fail or refuse to attend or testify or to answer any lawful

inquiry or to produce books, papers, correspondence, memoranda, contracts,

agreements, or other records, if in such person's power so to do, in obedience

to the subpena of the Farm Credit Administration, shall be guilty of a

misdemeanor and, upon conviction, shall be subject to a fine of not more than

$1,000 or to imprisonment for a term of not more than one year or both.

12 U.S.C. 2274 Sec. 5.38. Power to Remove Directors and Officers.

Notwithstanding any other provision of this Act, a Farm Credit Bank

board, officer, or employee shall not remove any director or officer of any

association.

Part D—Miscellaneous

12 U.S.C. 2001 Sec. 5.40. Repeal.

Note (a) The Federal Farm Loan Act, as amended; section 2 of the Act

of March 10, 1924 (Public Numbered 35, Sixty-eighth Congress, 43 Stat. 17),

as amended; section 6 of the Act of January 23, 1932 (Public Numbered 3,

Seventy-second Congress, 47 Stat. 14), as amended; the Farm Credit Act of

1933, as amended; sections 29 and 40 of the Emergency Farm Mortgage Act

of 1933; Act of June 18, 1934 (Public Numbered 381, Seventy-third Congress,

48 Stat. 983); Act of June 4, 1936 (Public Numbered 644, Seventy-fourth

Congress, 49 Stat. 1461), as amended; sections 5, 6, 20, 25(b) and 39 of the

Farm Credit Act of 1937, as amended; sections 601 and 602 of the Act of

September 21, 1944 (Public Law 425, Seventy-eighth Congress, 58 Stat. 740,

741), as amended; sections 1, 2, 3, 4, 5, 6, 7, 8, 16, and 17(b) of the Farm

Credit Act of 1953, as amended; sections 2, 101, and 201(b) of the Farm

Credit Act of 1956 are hereby repealed. All references in other legislation,

State or Federal, rules and regulations of any agency, stock, contracts, deeds,

security instruments, bonds, debentures, notes, mortgages and other

documents of the institutions of the System, to the Acts repealed hereby shall

be deemed to refer to comparable provisions of this Act.

(b) All regulations of the Farm Credit Administration or the

institutions of the System and all charters, bylaws, resolutions, stock

classifications, and policy directives issued or approved by the Farm Credit

Administration, and all elections held and appointments made under the Acts

repealed by subsection (a) of this section shall be continuing and remain valid

until superseded, modified, or replaced under the authority of this Act. All

stock, notes, bonds, debentures, and other obligations issued under the

repealed acts shall be valid and enforceable upon the terms and conditions

under which they were issued, including the pledge of collateral against which

they were issued, and all loans made and security or collateral therefor held

by, and all contracts entered into by, institutions of the System shall remain

enforceable according to their terms unless and until modified in accordance

with the provisions of this Act; it being the purpose of this subsection to avoid

disruption in the effective operation of the System by reason of said repeals.

12 U.S.C. 2001 note Sec. 5.41. Amendments to Other Laws.

* * * * *

(b) The third paragraph of section 15 of the Federal Reserve Act (12

U.S.C. 393) is amended to read as follows:

"The Federal Reserve banks are authorized to act as depositaries for and

fiscal agents of any Federal land bank, Federal intermediate credit bank, bank

for cooperatives, or other institutions of the Farm Credit System."

12 U.S.C. 2001 note Sec. 5.42. Separability.

If any provision of this Act, or the application thereof to any persons or

in any circumstances, is held invalid, the remainder of this Act and the

application of such provision to other persons or in other circumstances shall

not be affected thereby.

12 U.S.C. 2001 note Sec. 5.43. Reserve Right to Amend or Repeal.

The right to alter, amend, or repeal any provision or all of this Act is

expressly reserved.

Sec. 5.44. [Repealed]

Repealed by section 5411(36) of the Agriculture Improvement Act of 2018.

12 U.S.C. 2275a Sec. 5.45. Transition Rules Relating to Amendment of Certain

FCA Approval Authorities.

(a) IN GENERAL. Any approvals granted by the Farm Credit

Administration before the date of the enactment of this section shall remain in

effect on and after such date.

(b) AUTHORITY TO ISSUE REGULATIONS.

(1) IN GENERAL. Any approval authority of the Farm Credit

Administration that, under the amendments made by section 802 of the

Agricultural Credit Act of 1987, became an authority to issue

regulations may be exercised only until the earlier of the date the Farm

Credit Administration issues final regulations under such authority, or 1

year after the date of the enactment of this section.

(2) ENFORCEMENT ACTIONS. At the close of the 1-year

period referred to in paragraph (1), the Farm Credit Administration shall

not take any enforcement action against any System institution with

respect to any provision so amended, until the Farm Credit

Administration issues final regulations under such provision.

of the Farm Credit Administration to exercise any other approval authority

either on a case-by-case basis or through regulation, as provided in section

5.17(a)(5).

NOTE: This section was enacted on January 6, 1988.

Part E—Farm Credit System Insurance Corporation

12 U.S.C. 2277a Sec. 5.51. Definitions.

As used in this part:

(1) BOARD OF DIRECTORS. The term "Board of Directors"

means the Board of Directors of the Corporation.

(2) CORPORATION. The term "Corporation" means the Farm

Credit System Insurance Corporation established in section 5.52.

(3) INSURED OBLIGATION. The term "insured obligation"

means any note, bond, debenture, or other obligation issued under

subsection (c) or (d) of section 4.2—

(A) on or before January 5, 1989, on behalf of any System

bank; and

(B) after such date, which, when issued, is issued on behalf

of any insured System bank.

(4) INSURED SYSTEM BANK. The term "insured System

bank" means any System bank whose participation in notes, bonds,

debentures, and other obligations issued under subsection (c) or (d) of

section 4.2 is insured under this part.

(5) STATE. The term "State" means any of the 50 States, the

District of Columbia, any Territory of the United States, Puerto Rico,

Guam, American Samoa, the Trust Territory of the Pacific Islands, or

the Virgin Islands.

12 U.S.C. 2277a-1 Sec. 5.52. Establishment of Farm Credit System Insurance

Corporation.

There is hereby established the Farm Credit System Insurance

Corporation which shall insure, in accordance with this part, the timely

payment of principal and interest on notes, bonds, debentures, and other

obligations issued under subsection (c) or (d) of section 4.2 on behalf of one

or more System banks all of which are entitled to the benefits of insurance

under this part.

12 U.S.C. 2277a-2 Sec. 5.53. Board of Directors.

(a) ESTABLISHMENT. The Corporation shall be managed by a

Board of Directors that shall consist of the members of the Farm Credit

Administration Board.

(b) CHAIRMAN. The Board of Directors shall be chaired by any

Board member other than the Chairman of the Farm Credit Administration

Board.

12 U.S.C. 2277a-3 Sec. 5.54. Commencement of Insurance.

Effective beginning on January 1, 1989, or 12 months after the date of

the enactment of this part, whichever is later, each System bank shall be an

insured System bank and shall be subject to this part. Each System bank that

is authorized to commence or resume operations under a title of this Act shall

be an insured System bank from the time of such authorization. A bank

resulting from the merger or consolidation of insured System banks shall be

an insured System bank.

12 U.S.C. 2277a-4 Sec. 5.55. Premiums.

(a) AMOUNT IN FUND NOT EXCEEDING SECURE BASE

AMOUNT.

(1) IN GENERAL. If at the end of any calendar year the

aggregate of amounts in the Farm Credit Insurance Fund does not

exceed the secure base amount, subject to paragraph (3), the premium

due from any insured System bank for the calendar year shall be equal to

the sum of—

(A) the average outstanding insured obligations issued by

the bank for the calendar year, after deducting from the obligations

the percentages of the guaranteed portions of loans and

investments described in paragraph (2), multiplied by 0.0020; and

(B) the product obtained by multiplying—

(ⅰ) the sum of—

(Ⅰ) the average principal outstanding for the

calendar year on loans made by the bank that are in

nonaccrual status; and

(Ⅱ) the average amount outstanding for the

calendar year of other-than-temporarily impaired

investments made by the bank; by

(ⅱ) 0.0010.

(2) DEDUCTIONS FROM AVERAGE OUTSTANDING

INSURED OBLIGATIONS.—The average outstanding insured

obligations issued by the bank for the calendar year referred to in

paragraph (1)(A) shall be reduced by deducting from the obligations the

sum of (as determined by the Corporation)—

(A) 90 percent of each of—

(ⅰ) the average principal outstanding for the calendar

year on the guaranteed portions of Federal government-

guaranteed loans made by the bank that are in accrual status;

and

(ⅱ) the average amount outstanding for the calendar

year of the guaranteed portions of Federal government-

guaranteed investments made by the bank that are not

permanently impaired; and

(B) 80 percent of each of—

(ⅰ) the average principal outstanding for the calendar

year on the guaranteed portions of State government-

guaranteed loans made by the bank that are in accrual status;

and

(ⅱ) the average amount outstanding for the calendar

year of the guaranteed portions of State government-

guaranteed investments made by the bank that are not

permanently impaired.

(3) REDUCED PREMIUMS. The Corporation, in the sole

discretion of the Corporation, may reduce by a percentage uniformly

applied to all insured System banks the premium due from each insured

System bank during any calendar year, as determined under paragraph

(1).

(4) DEFINITION OF GOVERNMENT-GUARANTEED

LOANS OR INVESTMENTS. In this section, the term "government-

guaranteed", when applied to a loan or an investment, means a loan,

credit, or investment, or portion of a loan, credit, or investment, that is

guaranteed—

(A) by the full faith and credit of the United States

Government or any State government;

(B) by an agency or other entity of the United States

Government whose obligations are explicitly guaranteed by the

United States Government; or

whose obligations are explicitly guaranteed by such State

government.

(b) AMOUNT IN FUND EXCEEDING SECURE BASE AMOUNT.

At any time the aggregate of amounts in the Farm Credit Insurance Fund

exceeds the secure base amount, the Corporation shall reduce the premium

due from each insured System bank, as determined under subsection (a)(1), by

a percentage determined by the Corporation so that the aggregate of the

premiums payable by all System banks is sufficient to ensure that the

aggregate of amounts in the Farm Credit Insurance Fund after such premiums

are paid is not less than the secure base amount at such time.

(1) IN GENERAL.—For purposes of this part, the term "secure

base amount" means, with respect to any point in time, 2 percent of the

aggregate outstanding insured obligations of all insured System banks at

such time (as adjusted under paragraph (2)), or such other percentage of

the aggregate amount as the Corporation in its sole discretion determines

is actuarially sound to maintain in the Insurance Fund taking into

account the risk of insuring outstanding insured obligations.

(2) ADJUSTMENT.—The aggregate outstanding insured

obligations of all insured System banks under paragraph (1) shall be

adjusted downward to exclude an amount equal to the sum of (as

determined by the corporation)—

(A) 90 percent of each of—

(ⅰ) the guaranteed portions of principal outstanding

on Federal government-guaranteed loans in accrual status

made by the banks; and

(ⅱ) the guaranteed portions of the amount of Federal

government-guaranteed investments made by the banks that

are not permanently impaired; and

(B) 80 percent of each of—

(ⅰ) the guaranteed portions of principal outstanding

on State government-guaranteed loans in accrual status made

by the banks; and

(ⅱ) the guaranteed portions of the amount of State

government-guaranteed investments made by the banks that

are not permanently impaired.

(d) DETERMINATION OF LOAN AND INVESTMENT

AMOUNTS. For the purpose of subsections (a) and (c), the principal

outstanding on all loans made by an insured System bank, and the amount

outstanding on all investments made by an insured System bank, shall be

determined based on—

(1) all loans or investments made by any production credit

association, or any other association making direct loans under authority

provided under section 7.6, that is able to make such loans or

investments because such association is receiving, or has received, funds

provided through the insured System bank;

(2) all loans or investments made by any bank, company,

institution, corporation, union, or association described in section

1.7(b)(1)(B), that is able to make such loans or investments because

such entity is receiving, or has received, funds provided through the

insured System bank; and

(3) all loans or investments made by such insured System bank

(other than loans made to any party described in paragraph (1) or (2)).

(e) ALLOCATION TO SYSTEM INSTITUTIONS OF EXCESS

RESERVES.

(1) ESTABLISHMENT OF ALLOCATED INSURANCE

RESERVES ACCOUNTS. There is hereby established in the Farm

Credit Insurance Fund an Allocated Insurance Reserves Account—

(A) for each insured System bank; and

(B) subject to paragraph (6)(C), for all holders, in the

aggregate, of Financial Assistance Corporation stock.

(2) TREATMENT. Amounts in any Allocated Insurance

Reserves Account shall be considered to be part of the Farm Credit

Insurance Fund.

(3) ANNUAL ALLOCATIONS. If, at the end of any calendar

year, the aggregate of the amounts in the Farm Credit Insurance Fund

exceeds the secure base amount, the Corporation shall allocate to the

Allocated Insurance Reserves Accounts the excess amount less the

amount that the Corporation, in its sole discretion, determines to be the

sum of the estimated operating expenses and estimated insurance

obligations of the Corporation for the immediately succeeding calendar

year.

(4) ALLOCATION FORMULA. From the total amount

required to be allocated at the end of a calendar year under paragraph

(3)—

(A) 10 percent of the total amount shall be credited to the

Allocated Insurance Reserves Account established under paragraph

(1)(B), subject to paragraph (6)(C); and

(B) there shall be credited to the allocated insurance

reserves account of each insured system bank an amount that bears

the same ratio to the total amount (less any amount credited under

subparagraph (A)) as—

(ⅰ) the average principal outstanding for the calendar

year on insured obligations issued by the bank (after

deducting from the principal the percentages of the

guaranteed portions of loans and investments described in

subsection (a)(2)); bears to

(ⅱ) the average principal outstanding for the calendar

year on insured obligations issued by all insured System

banks (after deducting from the principal the percentages of

the guaranteed portions of loans and investments described in

subsection (a)(2)).

(5) USE OF FUNDS IN ALLOCATED INSURANCE

RESERVES ACCOUNTS. To the extent that the sum of the operating

expenses of the Corporation and the insurance obligations of the

Corporation for a calendar year exceeds the sum of operating expenses

and insurance obligations determined under paragraph (3) for the

calendar year, the Corporation shall cover the expenses and obligations

by—

(A) reducing each Allocated Insurance Reserves Account

by the same proportion; and

(B) expending the amounts obtained under subparagraph

(A) before expending other amounts in the Fund.

(6) OTHER DISPOSITION OF ACCOUNT FUNDS.

(A) IN GENERAL. As soon as practicable during each

calendar year, the Corporation may—

(ⅰ) subject to subparagraph (D), pay to each insured

System bank, in a manner determined by the Corporation, an

amount equal to the balance in the Allocated Insurance

Reserves Account of the System bank; and

(ⅱ) subject to subparagraphs (C) and (E), pay to each

System bank and association holding Financial Assistance

Corporation stock a proportionate share, determined by

dividing the number of shares of Financial Assistance

Corporation stock held by the institution by the total number

of shares of Financial Assistance Corporation stock

outstanding at the time of the termination of the Financial

Assistance Corporation, of the balance in the Allocated

Insurance Reserves Account established under paragraph

(1)(B).

(B) AUTHORITY TO ELIMINATE OR REDUCE

PAYMENTS. The Corporation may eliminate or reduce payments

during a calendar year under subparagraph (A) if the Corporation

determines, in its sole discretion, that the payments, or other

circumstances that might require use of the Farm Credit Insurance

Fund, could cause the amount in the Farm Credit Insurance Fund

during the calendar year to be less than the secure base amount.

ASSISTANCE CORPORATION STOCK.

(ⅰ) SUFFICIENT FUNDING. Notwithstanding

paragraph (4)(A), on provision by the Corporation for the

accumulation in the Account established under paragraph

(1)(B) of funds in an amount equal to $56,000,000, the

Corporation shall not allocate any further funds to the

Account except to replenish the Account if funds are

diminished below $56,000,000 by the Corporation under

paragraph (5).

(ⅱ) TERMINATION OF ACCOUNT.—On

disbursement of an amount equal to $56,000,000, the

Corporation shall—

(Ⅰ) close the account established under paragraph

(1)(B); and

(Ⅱ) transfer any remaining funds in the

Account to the remaining Allocated Insurance Reserves

Accounts in accordance with paragraph (4)(B) for the

calendar year in which the transfer occurs.

(D) DISTRIBUTION OF PAYMENTS RECEIVED. Not

later than 60 days after receipt of a payment made under

subparagraph (A)(ⅰ), each insured System bank, in consultation

with affiliated associations of the insured System bank, and taking

into account the direct or indirect payment of insurance premiums

by the associations, shall develop and implement an equitable plan

to distribute payments received under subparagraph (A)(ⅰ) among

the bank and associations of the bank.

(E) EXCEPTION FOR PREVIOUSLY REIMBURSED

ASSOCIATIONS. For purposes of subparagraph (A)(ⅱ), in any

Farm Credit district in which the funding bank has reimbursed 1 or

more affiliated associations of the bank for the previously

unreimbursed portion of the Financial Assistance Corporation

stock held by the associations, the funding bank shall be deemed to

be the holder of the shares of Financial Assistance Corporation

stock for which the funding bank has provided the reimbursement.

12 U.S.C. 2277a-5 Sec. 5.56. Certification of Premiums.

(a) FILING CERTIFIED STATEMENT. On a date to be determined

in the sole discretion of the Board of Directors of the Corporation, each

insured System bank that became insured before the beginning of the period

for which premiums are being assessed (referred to in this section as the

"period") shall file with the Corporation a certified statement showing—

(1) the average outstanding insured obligations for the period

issued by the bank;

(2)(A) the average principal outstanding for the period on the

guaranteed portion of Federal government-guaranteed loans that are in

accrual status; and

(B) the average amount outstanding for the period of

Federal government-guaranteed investments that are not

permanently impaired (as defined in section 5.55(a)(4));

(3)(A) the average principal outstanding for the period on State

government-guaranteed loans that are in accrual status; and

(B) the average amount outstanding for the period of State

government-guaranteed investments that are not permanently

impaired (as defined in section 5.55(a)(4));

(4)(A) the average principal outstanding for the period on loans

that are in nonaccrual status; and

(B) the average amount outstanding for the period of other-

than-temporarily impaired investments; and

(5) the amount of the premium due the Corporation from the

bank for the period.

(b) CONTENTS AND FORM OF STATEMENT. The certified

statement required to be filed with the Corporation under subsection (a) shall

be in such form and set forth such supporting information as the Board of

Directors shall prescribe, and shall be certified by the president of the bank or

any other officer designated by its board of directors that to the best of the

person’s knowledge and belief the statement is true, correct, complete, and has

been prepared in accordance with this part and all regulations issued

thereunder.

(1) IN GENERAL.—Except as provided in paragraph (2), each

insured System bank shall pay to the Corporation the premium payments

required under subsection (a), not more frequently than once in each

calendar quarter, in such manner and at such 1 or more times as the

Board of Directors shall prescribe.

(2) PREMIUM AMOUNT.—The amount of the premium shall

be established not later than 60 days after filing the certified statement

specifying the amount of the premium.

(d) REGULATIONS. The Board of Directors shall prescribe all rules

and regulations necessary for the enforcement of this section. The Board of

Directors may limit the retroactive effect, if any, of any of its rules or

regulations.

NOTE: The amendments made by section 5403 of Public Law 107-171

shall apply with respect to determinations of premiums for calendar year

2002 and for any succeeding calendar year, and to certified statements

with respect to such premiums.

12 U.S.C. 2277a-6 Sec. 5.57. Overpayment and Underpayment of Premiums;

Remedies.

(a) OVERPAYMENTS. The Corporation may refund to any insured

System bank any premium payment made by the bank exceeding the amount

due the Corporation.

(b) UNDERPAYMENTS.

(1) RECOVERY. The Corporation, in a suit brought at law or in

equity in any court of competent jurisdiction, may recover from any

insured System bank the amount of any unpaid premium lawfully

payable by the bank to the Corporation, whether or not the bank has

filed any certified statement under section 5.56, and whether or not suit

has been brought to compel the bank to file any such statement.

(2) LIMITATION. Any action or proceeding for the recovery of

any premium due the Corporation under paragraph (1), or for the

recovery of any amount paid to the Corporation exceeding the amount

due the Corporation, shall be brought within 5 years after the right

accrued for which the claim is made. If an insured System bank has

filed with the Corporation a false or fraudulent certified statement with

the intent to evade, in whole or in part, the payment of a premium, the

claim shall not be deemed to have accrued until the Corporation

discovers that the certified statement is false or fraudulent.

(1) FORFEITURE OF RIGHTS. If any insured System bank

fails to file any certified statement required to be filed by such bank

under section 5.56 or fails to pay any premium required to be paid by

such bank under any provision of this part, and if the bank does not

correct such failure within 30 days after the Corporation gives written

notice to an officer of the bank, citing this subsection and stating that the

bank has failed to so file or pay as required by law, all the rights,

privileges, and franchises of the bank granted to it under this Act shall

be thereby forfeited.

(2) ENFORCEMENT. The Corporation may bring an action to

enforce this subsection against any such bank in any court of competent

jurisdiction for the judicial district in which the bank is located.

(3) LIABILITY OF DIRECTORS. Every director who

participated in or assented to a failure (described in paragraph (1)) shall

be held personally liable for all consequential damages.

(d) EFFECT ON OTHER REMEDIES. The remedies provided in

subsections (b) and (c) shall not be construed as limiting any other remedies

against any insured System bank, but shall be in addition thereto.

12 U.S.C. 2277a-7 Sec. 5.58. General Corporate Powers.

On the date of the enactment of this part, the Corporation shall become a

body corporate and as such shall have the following powers:

(1) SEAL. The Corporation may adopt and use a corporate seal.

(2) SUCCESSION. The Corporation may have succession until

dissolved by an Act of Congress.

(3) CONTRACTS. The Corporation may make contracts.

(4) LEGAL ACTIONS.

(A) IN GENERAL. The Corporation may sue and be sued,

complain and defend, in any court of law or equity, State or

Federal.

100

(B) JURISDICTION. All suits of a civil nature at common

law or in equity to which the Corporation shall be a party shall be

deemed to arise under the laws of the United States, and the United

States district courts shall have original jurisdiction thereof,

without regard to the amount in controversy, and the Corporation,

in any capacity, without bond or security, may remove any such

action, suit, or proceeding from a State court to the United States

district court for the district or division embracing the place where

the same is pending by following any procedure for removal then

in effect.

or execution may be issued against the Corporation or its property

before final judgment in any suit, action, or proceeding in any

State, county, municipal, or United States court.

(D) AGENT FOR SERVICE OF PROCESS. The Board of

Directors shall designate an agent on whom service of process may

be made in any State or jurisdiction in which any insured System

bank is located.

(5) OFFICERS AND EMPLOYEES.

(A) IN GENERAL. The Corporation may appoint by its

Board of Directors such officers and employees as are not

otherwise provided for in this part, define their duties, fix their

compensation, and require bonds of them and fix the penalty

thereof, and dismiss at pleasure such officers or employees.

(B) EMPLOYEES OF THE UNITED STATES. Nothing

in this or any other Act shall be construed to prevent the

appointment and compensation, as an officer or employee of the

Corporation, of any officer or employee of the United States in any

board, commission, independent establishment, or executive

department thereof.

(6) BYLAWS. The Corporation may prescribe, by its Board of

Directors, bylaws not inconsistent with law, regulating the manner in

which its general business may be conducted, and the privileges granted

to it by law may be exercised and enjoyed.

(7) INCIDENTAL POWERS. The Corporation may exercise by

its Board of Directors, or duly authorized officers or agents, all powers

specifically granted by the provisions of this part, and such incidental

powers as shall be necessary to carry out the powers so granted.

(8) INFORMATION. The Corporation may, when necessary,

make examinations of, and require information and reports from, System

institutions, as provided in this part.

(9) CONSERVATOR OR RECEIVER. The Corporation may

act as a conservator or receiver.

(10) RULES AND REGULATIONS. The Corporation may

prescribe by its Board of Directors such rules and regulations as it

considers necessary to carry out this part and section 1.12(b) (except to

the extent that authority to issue such rules and regulations has been

expressly and exclusively granted to any other regulatory agency).

101

12 U.S.C. 2277a-8 Sec. 5.59. Conduct of Corporate Affairs; Examination of System

Institutions.

(a) CONDUCT OF CORPORATE AFFAIRS.

(1) FAIR ADMINISTRATION. The Board of Directors shall

administer the affairs of the Corporation fairly and impartially and

without discrimination.

(2) OBLIGATIONS AND EXPENSES. The Board of Directors

shall determine and prescribe the manner in which the obligations of the

Corporation may be incurred and the expenses of the Corporation may

be allowed and paid.

(3) USE OF MAILS. The Corporation may use the United

States mails in the same manner and under the same conditions as the

executive departments of the Federal Government.

(4) USE OF INFORMATION. The Corporation, with the

consent of any board, commission, independent establishment, or

executive department of the Federal Government, including any field

service thereof, may avail itself of the use of information, services, and

facilities thereof in carrying out this part.

(5) USE OF FARM CREDIT ADMINISTRATION

PERSONNEL. To the extent practicable, the Corporation shall use the

personnel and resources of the Farm Credit Administration to minimize

duplication of effort and to reduce costs.

(b) EXAMINATION OF SYSTEM INSTITUTIONS.

(1) EXAMINATION AUTHORITY.

(A) IN GENERAL. If the Board of Directors considers it

necessary to examine an insured System bank, a production credit

association, an association making direct loans under the authority

provided under section 7.6, or any System institution in

receivership, the Board may, using Farm Credit Administration

examiners, conduct the examination using reports and other

information on the System institution prepared or held by the Farm

Credit Administration. Notwithstanding any other provision of

this Act, on cancellation of the charter of a System institution, the

Corporation shall have authority to examine the system institution

in receivership. An examination shall be performed at such

intervals as the Corporation shall determine.

(B) REQUEST FOR ADDITIONAL EXAMINATION OR

OTHER INFORMATION. If the Board determines that such

reports or information are not adequate to enable the Corporation

to carry out the duties of the Corporation under this subsection, the

Board shall request the Farm Credit Administration to examine or

to obtain other information from or about the System institution

and provide to the Corporation the resulting examination report or

such other information.

(2) APPOINTMENT OF EXAMINERS. If the Farm Credit

Administration informs the Corporation that the Farm Credit

Administration is unable to comply with a request made under paragraph

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(1)(B) with respect to a System institution, the Board may appoint

examiners to examine the institution.

(3) POWERS AND REPORT. Each examiner appointed under

paragraph (2) shall make such examination of the affairs of the System

institution as the Board may direct, and shall make a full and detailed

report of the examination to the Corporation.

(4) APPOINTMENT OF CLAIM AGENTS. The Board of

Directors of the Corporation shall appoint claim agents who may

investigate and examine all claims for insured obligations.

with examinations under this section, the Corporation or its designated

representatives may administer oaths and affirmations, and may examine,

take, and preserve testimony under oath, as to any matter with respect to the

affairs of any such institution.

(d) COOPERATION WITH FCA EXAMINERS. The examiners

appointed by the Board of Directors shall cooperate to the maximum extent

possible with examiners of the Farm Credit Administration to minimize

duplication of effort and minimize costs.

12 U.S.C. 2277a-9 Sec. 5.60. Insurance Fund.

(a) ESTABLISHMENT. There is hereby established a Farm Credit

Insurance Fund (hereinafter referred to in this section as the "Insurance Fund")

for insuring the timely payment of principal and interest on insured

obligations. The assets in the Fund shall be held by the Corporation for the

uses and purposes of the Corporation.

(b) AMOUNTS IN FUND.- The Corporation shall deposit in the

Insurance Fund all premium payments received by the Corporation under this

part.

(1) MANDATORY USE. Beginning January 1, 1993, the

Corporation shall expend amounts in the Insurance Fund to the extent

necessary to insure the timely payment of interest and principal on

insured obligations.

(2) OTHER MANDATORY USES. Beginning January 1, 1993,

the Corporation shall use amounts in the Insurance Fund to ensure the

retirement of eligible borrower stock at par value under section 4.9A.

(3) PERMISSIVE USES. The Corporation may expend amounts

in the Insurance Fund to carry out section 5.61 and to cover the

operating costs of the Corporation.

(4) CORPORATE PAYMENT OR REFUNDS. The

Corporation shall make all payments and refunds required to be made by

the Corporation under this part from amounts in the Insurance Fund.

12 U.S.C. 2277a-10 Sec. 5.61. Powers of Corporation with Respect to Troubled

Insured System Banks.

(a) AUTHORITY TO PROVIDE ASSISTANCE.

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(1) STAND-ALONE ASSISTANCE. The Corporation, in its

sole discretion and on such terms and conditions as the Board of

Directors may prescribe, may make loans to, purchase the assets or

securities of, assume the liabilities of, or make contributions to, any

insured System bank if such action is taken—

(A) to prevent the placing of the bank in receivership;

(B) to restore the bank to normal operation; or

when severe financial conditions threaten the stability of a

significant number of insured System banks or of insured System

banks possessing significant financial resources.

(2) FACILITATION OF MERGERS OR CONSOLIDATION.

(A) IN GENERAL. To facilitate a merger or consolidation

of a qualifying insured System bank, the sale of assets of such

insured System bank to another insured System bank, the

assumption of such insured System bank's liabilities by such other

insured System bank, or the acquisition of the stock of such

insured System bank by such other insured System bank, the

Corporation, in its sole discretion and on such terms and conditions

as the Board of Directors may prescribe, may—

(ⅰ) purchase any such assets or assume any such

liabilities;

(ⅱ) make loans or contributions to, or purchase debt

securities of, such other insured System bank;

(ⅲ) guarantee such other insured System bank against

loss by reason of such other insured System bank's merging

or consolidating with, or assuming the liabilities and

purchasing the assets of, such insured System bank; or

(ⅳ) take any combination of the actions referred to in

the preceding clauses.

(B) QUALIFYING INSURED SYSTEM BANK. For

purposes of subparagraph (A), the term "qualifying insured System

bank" means any insured System bank that—

(ⅰ) is in receivership;

(ⅱ) is, in the judgment of the Board of Directors, in

danger of being placed in receivership; or

(ⅲ) is, in the sole discretion of the Corporation, an

insured System bank that, when severe financial conditions

exist that threaten the stability of a significant number of

insured System banks or of insured System banks possessing

significant financial resources, requires assistance under

subparagraph (A) to lessen the risk to the Corporation posed

by such insured System bank under such threat of instability.

(3) LIMITATION.

(A) LEAST-COST RESOLUTION. Assistance may not be

provided to an insured System bank under this subsection unless

the means of providing the assistance is the least costly means of

providing the assistance by the Farm Credit Insurance Fund of all

104

possible alternatives available to the Corporation, including

liquidation of the bank (including paying the insured obligations

issued on behalf of the bank). Before making a least-cost

determination under this subparagraph, the Corporation shall

accord such other insured System banks as the Corporation

determines to be appropriate the opportunity to submit information

relating to the determination.

(B) DETERMINING LEAST COSTLY APPROACH. In

determining the least costly alternative under subparagraph (A),

the Corporation shall—

(ⅰ) evaluate alternatives on a present-value basis,

using a reasonable discount rate;

(ⅱ) document the evaluation and the assumptions on

which the evaluation is based; and

(ⅲ) retain the documentation for not less than 5 years.

(ⅰ) GENERAL RULE. For purposes of this

subsection, the determination of the costs of providing any

assistance under any provision of this section with respect to

any insured System bank shall be made as of the date on

which the Corporation makes the determination to provide

the assistance to the institution under this section.

(ⅱ) RULE FOR LIQUIDATIONS. For purposes of

this subsection, the determination of the costs of liquidation

of any insured System bank shall be made as of the earliest

of—

(Ⅰ) the date on which a conservator is appointed for

the insured System bank;

(Ⅱ) the date on which a receiver is appointed

for the insured System bank; or

(Ⅲ) the date on which the Corporation makes

any determination to provide any assistance under this

section with respect to the insured System bank.

(D) RULE FOR STAND-ALONE ASSISTANCE. Before

providing any assistance under paragraph (1), the Corporation shall

evaluate the adequacy of managerial resources of the insured

System bank. The continued service of any director or senior

ranking officer who serves in a policymaking role for the assisted

insured System bank, as determined by the Corporation, shall be

subject to approval by the Corporation as a condition of assistance.

(E) DISCRETIONARY DETERMINATIONS. Any

determination that the Corporation makes under this paragraph

shall be in the sole discretion of the Corporation.

(F) PURCHASE OF STOCK. The Corporation may not

use its authority under this subsection to purchase any stock of an

insured System bank. The preceding sentence shall not be

construed to limit the ability of the Corporation to enter into and

enforce covenants and agreements that it determines to be

necessary to protect the financial interests of the Corporation.

105

(4) SUBORDINATION. Any assistance provided under this

subsection may be in subordination to the rights of owners of obligations

and other creditors.

(5) REPORTS. The Corporation, in its annual report to

Congress, shall report the total amount saved, or it estimates to be saved,

by the Corporation exercising the authority provided to the Corporation

in this subsection.

(b) AUTHORITY TO PLEDGE OR SELL ASSETS. The

Corporation, in its discretion, may make loans on the security of, or may

purchase, and liquidate or sell, any part of the assets of, any insured System

bank that is placed in receivership because of the inability of the bank to pay

principal or interest on any of its notes, bonds, debentures, or other obligations

in a timely manner.

(1) IN GENERAL. On the payment to an owner of an insured

obligation issued on behalf of an insured System bank in receivership,

the Corporation shall be subrogated to all rights of the owner against the

bank to the extent of the payment.

(2) RECEIPT OF DIVIDENDS. Subrogation under paragraph

(1) shall include the right on the part of the Corporation to receive the

same dividends from the proceeds of the assets of the bank as would

have been payable to the owner on a claim for the insured obligation.

(d) RIGHT TO ASSETS. Any agreement that shall diminish or defeat

the right, title, or interest of the Corporation in any asset acquired by such

Corporation under this section, either as security for a loan or by purchase,

shall not be valid against the Corporation unless the agreement—

(1) is in writing;

(2) is executed by the bank and the person or persons claiming

an adverse interest thereunder, including the obligor, contemporaneously

with the acquisition of the asset by the bank;

(3) has been approved by the board of directors of the bank or its

loan committee, which approval shall be reflected in the minutes of the

board or committee; and

(4) has been, continuously, from the time of its execution, an

official record of the bank.

(e) INSURED SYSTEM BANK. As used in this section, the terms

"insured System bank" and "bank" include each production credit association

and other association making direct loans under the authority provided under

section 7.6.

(f) EFFECTIVE DATE. The Corporation shall not exercise any

authority under this section during the 5-year period prior to January 1, 1993.

12 U.S.C. 2277a-10a Sec. 5.61A. Oversight Actions by the Corporation.

(a) DEFINITIONS. In this section, the term "institution" means—

(1) an insured System bank; and

(2) a production credit association or other association making

loans under section 7.6 with a direct loan payable to the funding bank of

106

the association that comprises 20 percent or more of the funding bank's

total loan volume net of nonaccrual loans.

(b) CONSULTATION REGARDING PARTICIPATION OF

UNDERCAPITALIZED BANKS IN ISSUANCE OF INSURED

OBLIGATIONS. The Farm Credit Administration shall consult with the

Corporation prior to approving an insured obligation that is to be issued by or

on behalf of, or participated in by, any insured System bank that fails to meet

the minimum level for any capital requirement established by the Farm Credit

Administration for the bank.

MERGERS AND RESTRUCTURINGS.

(1) CORPORATION TO RECEIVE COPY OF

TRANSACTION APPLICATIONS. On receiving an application for a

merger or restructuring of an institution, the Farm Credit Administration

shall forward a copy of the application to the Corporation.

(2) CONSULTATION REQUIRED. If the proposed merger or

restructuring involves an institution that fails to meet the minimum level

for any capital requirement established by the Farm Credit

Administration applicable to the institution, the Farm Credit

Administration shall allow 30 days within which the Corporation may

submit the views and recommendations of the Corporation, including

any conditions for approval. In determining whether to approve or

disapprove any proposed merger or restructuring, the Farm Credit

Administration shall give due consideration to the views and

recommendations of the Corporation.

12 U.S.C. 2277a-10b Sec. 5.61B. Authority to Regulate Golden Parachute and

Indemnification Payments.

(a) DEFINITIONS. In this section:

(1) GOLDEN PARACHUTE PAYMENT. The term "golden

parachute payment"—

(A) means a payment (or any agreement to make a

payment) in the nature of compensation for the benefit of any

institution-related party under an obligation of any Farm Credit

System institution that—

(ⅰ) is contingent on the termination of the party's

relationship with the institution; and

(ⅱ) is received on or after the date on which—

(Ⅰ) the institution is insolvent;

(Ⅱ) a conservator or receiver is appointed for

the institution;

(Ⅲ) the institution has been assigned by the

Farm Credit Administration a composite CAMEL

rating of 4 or 5 under the Farm Credit Administration

Rating System, or an equivalent rating; or

(Ⅳ) the Corporation otherwise determines

that the institution is in a troubled condition (as defined

in regulations issued by the Corporation); and

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(B) includes a payment that would be a golden parachute

payment but for the fact that the payment was made before the date

referred to in subparagraph (A)(ⅱ) if the payment was made in

contemplation of the occurrence of an event described in any

subclause of subparagraph (A); but

(ⅰ) a payment made under a retirement plan that is

qualified (or is intended to be qualified) under section 401 of

the Internal Revenue Code of 1986 or other

nondiscriminatory benefit plan;

(ⅱ) a payment made under a bona fide supplemental

executive retirement plan, deferred compensation plan, or

other arrangement that the Corporation determines, by

regulation or order, to be permissible; or

(ⅲ) a payment made by reason of the death or

disability of an institution-related party.

(2) INDEMNIFICATION PAYMENT. The term

"indemnification payment" means a payment (or any agreement to make

a payment) by any Farm Credit System institution for the benefit of any

person who is or was an institution-related party, to pay or reimburse the

person for any liability or legal expense with regard to any

administrative proceeding or civil action instituted by the Farm Credit

Administration that results in a final order under which the person—

(A) is assessed a civil money penalty; or

(B) is removed or prohibited from participating in the

conduct of the affairs of the institution.

(3) INSTITUTION-RELATED PARTY. The term "institution-

related party" means—

(A) a director, officer, employee, or agent for a Farm Credit

System institution or any conservator or receiver of such an

institution;

(B) a stockholder (other than another Farm Credit System

institution), consultant, joint venture partner, or any other person

determined by the Farm Credit Administration to be a participant

in the conduct of the affairs of a Farm Credit System institution;

and

appraiser, or accountant) that knowingly or recklessly participates

in any violation of any law or regulation, any breach of fiduciary

duty, or any unsafe or unsound practice that caused or is likely to

cause more than a minimal financial loss to, or a significant

adverse effect on, the Farm Credit System institution.

(4) LIABILITY OR LEGAL EXPENSE. The term "liability or

legal expense" means—

(A) a legal or other professional expense incurred in

connection with any claim, proceeding, or action;

(B) the amount of, and any cost incurred in connection

with, any settlement of any claim, proceeding, or action; and

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with, any judgment or penalty imposed with respect to any claim,

proceeding, or action.

(5) PAYMENT. The term "payment" means—

(A) a direct or indirect transfer of any funds or any asset;

and

(B) any segregation of any funds or assets for the purpose

of making, or under an agreement to make, any payment after the

date on which the funds or assets are segregated, without regard to

whether the obligation to make the payment is contingent on—

(ⅰ) the determination, after that date, of the liability

for the payment of the amount; or

(ⅱ) the liquidation, after that date, of the amount of

the payment.

(b) PROHIBITION. The Corporation may prohibit or limit, by

regulation or order, any golden parachute payment or indemnification

payment by a Farm Credit System institution (including any conservator or

receiver of the Federal Agricultural Mortgage Corporation) in troubled

condition (as defined in regulations issued by the Corporation).

shall prescribe, by regulation, the factors to be considered by the Corporation

in taking any action under subsection (b). The factors may include—

(1) whether there is a reasonable basis to believe that an

institution-related party has committed any fraudulent act or omission,

breach of trust or fiduciary duty, or insider abuse with regard to the

Farm Credit System institution involved that has had a material effect on

the financial condition of the institution;

(2) whether there is a reasonable basis to believe that the

institution-related party is substantially responsible for the insolvency of

the Farm Credit System institution, the appointment of a conservator or

receiver for the institution, or the institution's troubled condition (as

defined in regulations prescribed by the Corporation);

(3) whether there is a reasonable basis to believe that the

institution-related party has materially violated any applicable law or

regulation that has had a material effect on the financial condition of the

institution;

(4) whether there is a reasonable basis to believe that the

institution-related party has violated or conspired to violate—

(A) section 215, 657, 1006, 1014, or 1344 of title 18,

United States Code; or

(B) section 1341 or 1343 of title 18, United States Code,

affecting a Farm Credit System institution;

(5) whether the institution-related party was in a position of

managerial or fiduciary responsibility; and

(6) the length of time that the party was related to the Farm

Credit System institution and the degree to which—

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(A) the payment reasonably reflects compensation earned

over the period of employment; and

(B) the compensation represents a reasonable payment for

services rendered.

(d) CERTAIN PAYMENTS PROHIBITED. No Farm Credit System

institution may prepay the salary or any liability or legal expense of any

institution-related party if the payment is made—

(1) in contemplation of the insolvency of the institution or after

the commission of an act of insolvency; and

(2) with a view to, or with the result of—

(A) preventing the proper application of the assets of the

institution to creditors; or

(B) preferring 1 creditor over another creditor.

(e) RULE OF CONSTRUCTION. Nothing in this section—

(1) prohibits any Farm Credit System institution from purchasing

any commercial insurance policy or fidelity bond, so long as the

insurance policy or bond does not cover any legal or liability expense of

an institution described in subsection (a)(2); or

(2) limits the powers, functions, or responsibilities of the Farm

Credit Administration.

12 U.S.C. 2277a-10c Sec. 5.61C. Corporation as Conservator or Receiver; Certain

Other Powers.

(a) DEFINITION OF INSTITUTION.—In this section, the term

“institution” includes any System institution for which the Corporation has

been appointed as conservator or receiver.

(b) CERTAIN POWERS AND DUTIES OF CORPORATION AS

CONSERVATOR OR RECEIVER.—In addition to the powers inherent in the

express grant of corporate authority under section 5.58(9), and other powers

exercised by the Corporation under this part, the Corporation shall have the

following express powers to act as a conservator or receiver:

(1) RULEMAKING AUTHORITY OF CORPORATION.—The

Corporation may prescribe such regulations as the Corporation

determines to be appropriate regarding the conduct of conservatorships

or receiverships.

(2) GENERAL POWERS.—

(A) SUCCESSOR TO SYSTEM INSTITUTION.—The

Corporation shall, as conservator or receiver, and by operation of

law, succeed to—

(ⅰ) all rights, titles, powers, and privileges of the

System institution, and of any stockholder, member, officer,

or director of such System institution with respect to the

System institution and the assets of the System institution;

and

(ⅱ) title to the books, records, and assets of any

previous conservator or other legal custodian of such System

institution.

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(B) OPERATE THE SYSTEM INSTITUTION.—The

Corporation may, as conservator or receiver—

(ⅰ) take over the assets of and operate the System

institution with all the powers of the stockholders or

members, the directors, and the officers of the System

institution and conduct all business of the System institution;

(ⅱ) collect all obligations and money due the System

institution;

(ⅲ) perform all functions of the System institution in

the name of the System institution which are consistent with

the appointment as conservator or receiver;

(ⅳ) preserve and conserve the assets and property of

such System institution; and

(ⅴ) provide by contract for assistance in fulfilling

any function, activity, action, or duty of the Corporation as

conservator or receiver.

OFFICERS, DIRECTORS, MEMBERS, AND

STOCKHOLDERS.—The Corporation may, by regulation or

order, provide for the exercise of any function by any stockholder,

member, director, or officer of any System institution for which the

Corporation has been appointed conservator or receiver.

(D) POWERS AS CONSERVATOR.—Subject to any

Farm Credit Administration approvals required under this Act, the

Corporation may, as conservator, take such action as may be—

(ⅰ) necessary to put the System institution in a sound

and solvent condition; and

(ⅱ) appropriate to carry on the business of the System

institution and preserve and conserve the assets and property

of the System institution.

(E) ADDITIONAL POWERS AS RECEIVER.—The

Corporation may, as receiver, liquidate the System institution and

proceed to realize upon the assets of the System institution, in such

manner as the Corporation determines to be appropriate.

(F) ORGANIZATION OF NEW SYSTEM BANK.—The

Corporation may, as receiver with respect to any System bank,

organize a bridge System bank under subsection (h).

(G) MERGER; TRANSFER OF ASSETS AND

LIABILITIES.—

(ⅰ) IN GENERAL.—Subject to clause (ⅱ), the

Corporation may, as conservator or receiver—

(Ⅰ) merge the System institution with another

System institution; and

(Ⅱ) transfer or sell any asset or liability of the

System institution in default without any approval,

assignment, or consent with respect to such transfer.

(ⅱ) APPROVAL.—No merger or transfer under

clause (ⅰ) may be made to another System institution (other

111

than a bridge System bank under subsection (h)) without the

approval of the Farm Credit Administration.

(H) PAYMENT OF VALID OBLIGATIONS.—The

Corporation, as conservator or receiver, shall, to the extent that

proceeds are realized from the performance of contracts or the sale

of the assets of a System institution, pay all valid obligations of the

System institution in accordance with the prescriptions and

limitations of this section.

(I) INCIDENTAL POWERS.—

(ⅰ) IN GENERAL.—The Corporation may, as

conservator or receiver—

(Ⅰ) exercise all powers and authorities

specifically granted to conservators or receivers,

respectively, under this section and such incidental

powers as shall be necessary to carry out such powers;

and

(Ⅱ) take any action authorized by this section,

which the Corporation determines is in the best interests

of—

(aa) the System institution in receivership

or conservatorship;

(bb) System institutions;

(cc) System institution stockholders or

investors; or

(dd) the Corporation.

(ⅱ) TERMINATION OF RIGHTS AND CLAIMS.—

(Ⅰ) IN GENERAL.—Except as provided in

subclause (Ⅱ), notwithstanding any other provision of

law, the appointment of the Corporation as receiver for

a System institution and the succession of the

Corporation, by operation of law, to the rights, titles,

powers, and privileges described in subparagraph (A)

shall terminate all rights and claims that the

stockholders and creditors of the System institution

may have, arising as a result of their status as

stockholders or creditors, against the assets or charter of

the System institution or the Corporation.

(Ⅱ) EXCEPTIONS.—Subclause (Ⅰ) shall not

terminate the right to payment, resolution, or other

satisfaction of the claims of stockholders and creditors

described in that subclause, as permitted under

paragraphs (10) and (11) and subsection (d).

(ⅲ) CHARTER.—Notwithstanding any other

provision of law, for purposes of this section, the charter of a

System institution shall not be considered to be an asset of

the System institution.

(J) UTILIZATION OF PRIVATE SECTOR.—In carrying

out its responsibilities in the management and disposition of assets

from System institutions, as conservator, receiver, or in its

112

corporate capacity, the Corporation may utilize the services of

private persons, including real estate and loan portfolio asset

management, property management, auction marketing, legal, and

brokerage services, if the Corporation determines utilization of

such services is practicable, efficient, and cost effective.

(3) AUTHORITY OF RECEIVER TO DETERMINE

CLAIMS.—

(A) IN GENERAL.—The Corporation may, as receiver,

determine claims in accordance with the requirements of this

subsection and regulations prescribed under paragraph (4).

(B) NOTICE REQUIREMENTS.—The receiver, in any

case involving the liquidation or winding up of the affairs of a

closed System institution, shall—

(ⅰ) promptly publish a notice to the System

institution’s creditors to present their claims, together with

proof, to the receiver by a date specified in the notice which

shall be not less than 90 days after the publication of such

notice; and

(ⅱ) republish such notice approximately 1 month and

2 months, respectively, after the publication under clause (ⅰ).

notice similar to the notice published under subparagraph (B)(ⅰ) at

the time of such publication to any creditor shown on the System

institution’s books—

(ⅰ) at the creditor’s last address appearing in such

books; or

(ⅱ) upon discovery of the name and address of a

claimant not appearing on the System institution’s books

within 30 days after the discovery of such name and address.

(4) RULEMAKING AUTHORITY RELATING TO

DETERMINATION OF CLAIMS.—The Corporation may prescribe

regulations regarding the allowance or disallowance of claims by the

receiver and providing for administrative determination of claims and

review of such determination.

(5) PROCEDURES FOR DETERMINATION OF CLAIMS.—

(A) DETERMINATION PERIOD.—

(ⅰ) IN GENERAL.—Before the end of the 180-day

period beginning on the date any claim against a System

institution is filed with the Corporation as receiver, the

Corporation shall determine whether to allow or disallow the

claim and shall notify the claimant of any determination with

respect to such claim.

(ⅱ) EXTENSION OF TIME.—The period described

in clause (ⅰ) may be extended by a written agreement

between the claimant and the Corporation.

(ⅲ) MAILING OF NOTICE SUFFICIENT.—The

requirements of clause (ⅰ) shall be deemed to be satisfied if

the notice of any determination with respect to any claim is

mailed to the last address of the claimant which appears—

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(Ⅰ) on the System institution’s books;

(Ⅱ) in the claim filed by the claimant; or

(Ⅲ) in documents submitted in proof of the claim.

(ⅳ) CONTENTS OF NOTICE OF

DISALLOWANCE.—If any claim filed under clause (ⅰ) is

disallowed, the notice to the claimant shall contain—

(Ⅰ) a statement of each reason for the

disallowance; and

(Ⅱ) the procedures available for obtaining

agency review of the determination to disallow the

claim or judicial determination of the claim.

(B) ALLOWANCE OF PROVEN CLAIMS.—The

receiver shall allow any claim received on or before the date

specified in the notice published under paragraph (3)(B)(ⅰ) by the

receiver from any claimant which is proved to the satisfaction of

the receiver.

END OF FILING PERIOD.—

(ⅰ) IN GENERAL.—Except as provided in clause

(ⅱ), claims filed after the date specified in the notice

published under paragraph (3)(B)(ⅰ) shall be disallowed and

such disallowance shall be final.

(ⅱ) CERTAIN EXCEPTIONS.—Clause (ⅰ) shall not

apply with respect to any claim filed by any claimant after

the date specified in the notice published under paragraph

(3)(B)(ⅰ) and such claim may be considered by the receiver

if—

(Ⅰ) the claimant did not receive notice of the

appointment of the receiver in time to file such claim

before such date; and

(Ⅱ) such claim is filed in time to permit payment

of such claim.

(D) AUTHORITY TO DISALLOW CLAIMS.—

(ⅰ) IN GENERAL.—The receiver may disallow any

portion of any claim by a creditor or claim of security,

preference, or priority which is not proved to the satisfaction

of the receiver.

(ⅱ) PAYMENTS TO LESS THAN FULLY

SECURED CREDITORS.—In the case of a claim of a

creditor against a System institution which is secured by any

property or other asset of such System institution, any

receiver appointed for any System institution—

(Ⅰ) may treat the portion of such claim which

exceeds an amount equal to the fair market value of

such property or other asset as an unsecured claim

against the System institution; and

(Ⅱ) may not make any payment with respect to

such unsecured portion of the claim other than in

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connection with the disposition of all claims of

unsecured creditors of the System institution.

(ⅲ) EXCEPTIONS.—No provision of this paragraph

shall apply with respect to—

(Ⅰ) any extension of credit from any Federal

Reserve bank or the United States Treasury to any

System institution; or

(Ⅱ) any security interest in the assets of the

System institution securing any such extension of

credit.

(E) NO JUDICIAL REVIEW OF DETERMINATION

PURSUANT TO SUBPARAGRAPH (D).—No court may review

the Corporation’s determination pursuant to subparagraph (D) to

disallow a claim.

(F) LEGAL EFFECT OF FILING.—

(ⅰ) STATUTE OF LIMITATION TOLLED.—For

purposes of any applicable statute of limitations, the filing of

a claim with the receiver shall constitute a commencement of

an action.

(ⅱ) NO PREJUDICE TO OTHER ACTIONS.—

Subject to paragraph (12) and the determination of claims by

a receiver, the filing of a claim with the receiver shall not

prejudice any right of the claimant to continue any action

which was filed before the appointment of the receiver.

(6) PROVISION FOR JUDICIAL DETERMINATION OF

CLAIMS.—

(A) IN GENERAL.—Before the end of the 60-day period

beginning on the earlier of—

(ⅰ) the end of the period described in paragraph

(5)(A)(ⅰ) with respect to any claim against a System

institution for which the Corporation is receiver; or

(ⅱ) the date of any notice of disallowance of such

claim pursuant to paragraph (5)(A)(ⅰ), the claimant may

request administrative review of the claim in accordance with

paragraph (7) or file suit on such claim (or continue an action

commenced before the appointment of the receiver) in the

district or territorial court of the United States for the district

within which the System institution’s principal place of

business is located or the United States District Court for the

District of Columbia (and such court shall have jurisdiction

to hear such claim).

(B) STATUTE OF LIMITATIONS.—If any claimant fails

to file suit on such claim (or continue an action commenced before

the appointment of the receiver), before the end of the 60-day

period described in subparagraph (A), the claim shall be deemed to

be disallowed (other than any portion of such claim which was

allowed by the receiver) as of the end of such period, such

disallowance shall be final, and the claimant shall have no further

rights or remedies with respect to such claim.

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(7) REVIEW OF CLAIMS; ADMINISTRATIVE

HEARING.— If any claimant requests review under this paragraph in

lieu of filing or continuing any action under paragraph (6) and the

Corporation agrees to such request, the Corporation shall consider the

claim after opportunity for a hearing on the record. The final

determination of the Corporation with respect to such claim shall be

subject to judicial review under chapter 7 of title 5, United States Code.

(8) EXPEDITED DETERMINATION OF CLAIMS.—

(A) ESTABLISHMENT REQUIRED.—The Corporation

shall establish a procedure for expedited relief outside of the

routine claims process established under paragraph (5) for

claimants who—

(ⅰ) allege the existence of legally valid and

enforceable or perfected security interests in assets of any

System institution for which the Corporation has been

appointed receiver; and

(ⅱ) allege that irreparable injury will occur if the

routine claims procedure is followed.

(B) DETERMINATION PERIOD.—Before the end of the

90-day period beginning on the date any claim is filed in

accordance with the procedures established pursuant to

subparagraph (A), the Corporation shall—

(ⅰ) determine—

(Ⅰ) whether to allow or disallow such claim; or

(Ⅱ) whether such claim should be determined

pursuant to the procedures established pursuant to

paragraph (5); and

(ⅱ) notify the claimant of the determination, and if

the claim is disallowed, provide a statement of each reason

for the disallowance and the procedure for obtaining agency

review or judicial determination.

claimant who files a request for expedited relief shall be permitted

to file a suit, or to continue a suit filed before the appointment of

the receiver, seeking a determination of the claimant’s rights with

respect to such security interest after the earlier of—

(ⅰ) the end of the 90-day period beginning on the date

of the filing of a request for expedited relief; or

(ⅱ) the date the Corporation denies the claim.

(D) STATUTE OF LIMITATIONS.—If an action

described in subparagraph (C) is not filed, or the motion to renew a

previously filed suit is not made, before the end of the 30-day

period beginning on the date on which such action or motion may

be filed in accordance with subparagraph (B), the claim shall be

deemed to be disallowed as of the end of such period (other than

any portion of such claim which was allowed by the receiver), such

disallowance shall be final, and the claimant shall have no further

rights or remedies with respect to such claim.

(E) LEGAL EFFECT OF FILING.—

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(ⅰ) STATUTE OF LIMITATION TOLLED.—For

purposes of any applicable statute of limitations, the filing of

a claim with the receiver shall constitute a commencement of

an action.

(ⅱ) NO PREJUDICE TO OTHER ACTIONS.—

Subject to paragraph (12), the filing of a claim with the

receiver shall not prejudice any right of the claimant to

continue any action which was filed before the appointment

of the receiver.

(9) AGREEMENT AS BASIS OF CLAIM.—

(A) REQUIREMENTS.—Except as provided in

subparagraph (B), any agreement which does not meet the

requirements set forth in section 5.61(d) shall not form the basis of,

or substantially comprise, a claim against the receiver or the

Corporation.

(B) EXCEPTION TO CONTEMPORANEOUS

EXECUTION REQUIREMENT.—Notwithstanding section

5.61(d), any agreement relating to an extension of credit between a

Federal Reserve bank or the United States Treasury and any

System institution which was executed before such extension of

credit to such System institution shall be treated as having been

executed contemporaneously with such extension of credit for

purposes of subparagraph (A).

(10) PAYMENT OF CLAIMS.—

(A) IN GENERAL.—The receiver may, in the receiver’s

discretion and to the extent funds are available from the assets of

the System institution, pay creditor claims which are allowed by

the receiver, approved by the Corporation pursuant to a final

determination pursuant to paragraph (7) or (8), or determined by

the final judgment of any court of competent jurisdiction in such

manner and amounts as are authorized under this Act.

(B) LIQUIDATION PAYMENTS.—The receiver may, in

the receiver’s sole discretion, pay from the assets of the System

institution portions of proved claims at any time, and no liability

shall attach to the Corporation (in such Corporation’s corporate

capacity or as receiver), by reason of any such payment, for failure

to make payments to a claimant whose claim is not proved at the

time of any such payment.

CORPORATION.—The Corporation may prescribe such rules,

including definitions of terms, as it deems appropriate to establish

a single uniform interest rate for or to make payments of post

insolvency interest to creditors holding proven claims against the

receivership estates of System institutions following satisfaction by

the receiver of the principal amount of all creditor claims.

(11) PRIORITY OF EXPENSES AND CLAIMS.—

(A) IN GENERAL.—Amounts realized from the

liquidation or other resolution of any System institution by any

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receiver appointed for such System institution shall be distributed

to pay claims (other than secured claims to the extent of any such

security) in the following order of priority:

(ⅰ) Administrative expenses of the receiver.

(ⅱ) If authorized by the Corporation, wages, salaries,

or commissions, including vacation, severance, and sick

leave pay earned by an individual—

(Ⅰ) in an amount that is not more than $11,725

for each individual (as indexed for inflation, by

regulation of the Corporation); and

(Ⅱ) that is earned 180 days or fewer before the

date of appointment of the Corporation as receiver.

(ⅲ) In the case of the resolution of a System bank, all

claims of holders of consolidated and System-wide bonds

and all claims of the other System banks arising from the

payments of the System banks pursuant to—

(Ⅰ) section 4.4 on consolidated and Systemwide

bonds issued under subsection (c) or (d) of section 4.2;

(Ⅱ) an agreement, in writing and approved by the

Farm Credit Administration, among the System banks

to reallocate the payments.

(ⅳ) In the case of the resolution of a production

credit association or other association making direct loans

under section 7.6, all claims of a System bank based on the

financing agreement between the association and the System

bank—

(Ⅰ) including interest accrued before and after

the appointment of the receiver; and

(Ⅱ) not including any setoff for stock or other

equity of that System bank owned by the association,

on that condition that, prior to making that setoff, that

System bank shall obtain the approval of the Farm

Credit Administration Board for the retirement of that

stock or equity.

(ⅴ) Any general or senior liability of the System

institution (which is not a liability described in clause (ⅵ) or

(ⅶ)).

(ⅵ) Any obligation subordinated to general creditors

(which is not an obligation described in clause (ⅶ)).

(ⅶ) Any obligation to stockholders or members

arising as a result of their status as stockholders or members.

(B) PAYMENT OF CLAIMS.—

(ⅰ) IN GENERAL.—

(Ⅰ) PAYMENT.—All claims of each priority

described in clauses (ⅰ) through (ⅶ) of subparagraph

(A) shall be paid in full, or provisions shall be made for

that payment, prior to the payment of any claim of a

lesser priority.

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(Ⅱ) INSUFFICIENT FUNDS.—If there are

insufficient funds to pay in full all claims in any priority

described clauses (ⅰ) through (ⅶ) of subparagraph (A),

distribution on that priority of claims shall be made on a

pro rata basis.

(ⅱ) DISTRIBUTION OF REMAINING ASSETS.—

Following the payment of all claims in accordance with

subparagraph (A), the receiver shall distribute the remainder

of the assets of the System institution to the owners of stock,

participation certificates, and other equities in accordance

with the priorities for impairment under the bylaws of the

System institution.

(ⅲ) ELIGIBLE BORROWER STOCK.—

Notwithstanding subparagraph (C) or any other provision of

this section, eligible borrower stock shall be retired in

accordance with section 4.9A.

(ⅰ) IN GENERAL.—The provisions of subparagraph

(A) shall not supersede the law of any State except to the

extent such law is inconsistent with the provisions of such

subparagraph, and then only to the extent of the

inconsistency.

(ⅱ) PROCEDURE FOR DETERMINATION OF

INCONSISTENCY.—Upon the Corporation’s own motion

or upon the request of any person with a claim described in

subparagraph (A) or any State which is submitted to the

Corporation in accordance with procedures which the

Corporation shall prescribe, the Corporation shall determine

whether any provision of the law of any State is inconsistent

with any provision of subparagraph (A) and the extent of any

such inconsistency.

(ⅲ) JUDICIAL REVIEW.—The final determination

of the Corporation under clause (ⅱ) shall be subject to

judicial review under chapter 7 of title 5, United States Code.

(D) ACCOUNTING REPORT.—Any distribution by the

Corporation in connection with any claim described in

subparagraph (A)(ⅶ) shall be accompanied by the accounting

report required under paragraph (15)(B).

(12) SUSPENSION OF LEGAL ACTIONS.—

(A) IN GENERAL.—After the appointment of a

conservator or receiver for a System institution, the conservator or

receiver may request a stay for a period not to exceed—

(ⅰ) 45 days, in the case of any conservator; and

(ⅱ) 90 days, in the case of any receiver, in any judicial

action or proceeding to which such System institution is or

becomes a party.

(B) GRANT OF STAY BY ALL COURTS

REQUIRED.—Upon receipt of a request by any conservator or

receiver pursuant to subparagraph (A) for a stay of any judicial

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action or proceeding in any court with jurisdiction of such action

or proceeding, the court shall grant such stay as to all parties.

(13) ADDITIONAL RIGHTS AND DUTIES.—

(A) PRIOR FINAL ADJUDICATION.—The Corporation

shall abide by any final unappealable judgment of any court of

competent jurisdiction which was rendered before the appointment

of the Corporation as conservator or receiver.

(B) RIGHTS AND REMEDIES OF CONSERVATOR OR

RECEIVER.— In the event of any appealable judgment, the

Corporation as conservator or receiver shall—

(ⅰ) have all the rights and remedies available to the

System institution (before the appointment of such

conservator or receiver) and the Corporation in its corporate

capacity, including removal to Federal court and all appellate

rights; and

(ⅱ) not be required to post any bond in order to

pursue such remedies.

attachment or execution may issue by any court on—

(ⅰ) assets in the possession of the receiver; or

(ⅱ) the charter of a System institution for which the

Corporation has been appointed receiver.

(D) LIMITATION ON JUDICIAL REVIEW.—Except as

otherwise provided in this subsection, no court shall have

jurisdiction over—

(ⅰ) any claim or action for payment from, or any

action seeking a determination of rights with respect to, the

assets of any System institution for which the Corporation

has been appointed receiver, including assets which the

Corporation may acquire from itself as such receiver; or

(ⅱ) any claim relating to any act or omission of such

System institution or the Corporation as receiver.

(E) DISPOSITION OF ASSETS.—In exercising any right,

power, privilege, or authority as receiver in connection with any

sale or disposition of assets of any System institution for which the

Corporation is acting as receiver, the December 20, 2018

Corporation shall, to the maximum extent practicable, conduct its

operations in a manner which—

(ⅰ) maximizes the net present value return from the

sale or disposition of such assets;

(ⅱ) minimizes the amount of any loss realized in the

resolution of cases;

(ⅲ) ensures adequate competition and fair and

consistent treatment of offerors;

(ⅳ) prohibits discrimination on the basis of race, sex,

or ethnic groups in the solicitation and consideration of

offers; and

(ⅴ) mitigates the potential for serious adverse effects

to the rest of the System.

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(14) STATUTE OF LIMITATIONS FOR ACTIONS

BROUGHT BY CONSERVATOR OR RECEIVER.—

(A) IN GENERAL.—Notwithstanding any provision of

any contract, the applicable statute of limitations with regard to

any action brought by the Corporation as conservator or receiver

shall be—

(ⅰ) in the case of any contract claim, the longer of—

(Ⅰ) the 6-year period beginning on the date the

claim accrues; or

(Ⅱ) the period applicable under State law; and

(ⅱ) in the case of any tort claim, the longer of—

(Ⅰ) the 3-year period beginning on the date the

claim accrues; or

(Ⅱ) the period applicable under State law.

(B) DETERMINATION OF THE DATE ON WHICH A

CLAIM ACCRUES.—For purposes of subparagraph (A), the date

on which the statute of limitations begins to run on any claim

described in such subparagraph shall be the later of—

(ⅰ) the date of the appointment of the Corporation as

conservator or receiver; or

(ⅱ) the date on which the cause of action accrues.

ACTION.—

(ⅰ) IN GENERAL.—In the case of any tort claim

described in clause (ⅱ) for which the statute of limitation

applicable under State law with respect to such claim has

expired not more than 5 years before the appointment of the

Corporation as conservator or receiver, the Corporation may

bring an action as conservator or receiver on such claim

without regard to the expiration of the statute of limitation

applicable under State law.

(ⅱ) CLAIMS DESCRIBED.—A tort claim referred

to in clause (ⅰ) is a claim arising from fraud, intentional

misconduct resulting in unjust enrichment, or intentional

misconduct resulting in substantial loss to the System

institution.

(15) ACCOUNTING AND RECORDKEEPING

REQUIREMENTS.—

(A) IN GENERAL.—The Corporation as conservator or

receiver shall, consistent with the accounting and reporting

practices and procedures established by the Corporation, maintain

a full accounting of each conservatorship and receivership or other

disposition of System institutions in default.

(B) ANNUAL ACCOUNTING OR REPORT.—With

respect to each conservatorship or receivership to which the

Corporation was appointed, the Corporation shall make an annual

accounting or report, as appropriate, available to the Farm Credit

Administration Board.

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prepared pursuant to subparagraph (B) shall be made available by

the Corporation upon request to any stockholder of the System

institution for which the Corporation was appointed conservator or

receiver or any other member of the public.

(D) RECORDKEEPING REQUIREMENT.—

(ⅰ) IN GENERAL.—Except as provided in clause

(ⅱ), after the end of the 6-year period beginning on the date

the Corporation is appointed as receiver of a System

institution, the Corporation may destroy any records of such

System institution which the Corporation, in the

Corporation’s discretion, determines to be unnecessary unless

directed not to do so by a court of competent jurisdiction or

governmental agency, or prohibited by law.

(ⅱ) OLD RECORDS.—Notwithstanding clause (ⅰ),

the Corporation may destroy records of a System institution

which are at least 10 years old as of the date on which the

Corporation is appointed as the receiver of such System

institution in accordance with clause (ⅰ) at any time after such

appointment is final, without regard to the 6-year period of

limitation contained in clause (ⅰ).

(16) FRAUDULENT TRANSFERS.—

(A) IN GENERAL.—The Corporation, as conservator or

receiver for any System institution, may avoid a transfer of any

interest of a System institution- affiliated party, or any person who

the Corporation determines is a debtor of the System institution, in

property, or any obligation incurred by such party or person, that

was made within 5 years of the date on which the Corporation was

appointed conservator or receiver if such party or person

voluntarily or involuntarily made such transfer or incurred such

liability with the intent to hinder, delay, or defraud the System

institution, the Farm Credit Administration, or the Corporation.

(B) RIGHT OF RECOVERY.—To the extent a transfer is

avoided under subparagraph (A), the Corporation may recover, for

the benefit of the System institution, the property transferred, or, if

a court so orders, the value of such property (at the time of such

transfer) from—

(ⅰ) the initial transferee of such transfer or the System

institution-affiliated party or person for whose benefit such

transfer was made; or

(ⅱ) any immediate or mediate transferee of any such

initial transferee.

Corporation may not recover under subparagraph (B) from—

(ⅰ) any transferee that takes for value, including

satisfaction or securing of a present or antecedent debt, in

good faith; or

(ⅱ) any immediate or mediate good faith transferee of

such transferee.

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(D) RIGHTS UNDER THIS PARAGRAPH.—The rights

under this paragraph of the Corporation shall be superior to any

rights of a trustee or any other party (other than any party which is

a Federal agency) under title 11, United States Code.

(17) ATTACHMENT OF ASSETS AND OTHER

INJUNCTIVE RELIEF.—Subject to paragraph (18), any court of

competent jurisdiction may, at the request of the Corporation (in the

Corporation’s capacity as conservator or receiver for any System

institution or in the Corporation’s corporate capacity with respect to any

asset acquired or liability assumed by the Corporation under section

5.61), issue an order in accordance with Rule 65 of the Federal Rules of

Civil Procedure, including an order placing the assets of any person

designated by the Corporation under the control of the court and

appointing a trustee to hold such assets.

(18) STANDARDS.—

(A) SHOWING.—Rule 65 of the Federal Rules of Civil

Procedure shall apply with respect to any proceeding under

paragraph (17) without regard to the requirement of such rule that

the applicant show that the injury, loss, or damage is irreparable

and immediate.

(B) STATE PROCEEDING.—If, in the case of any

proceeding in a State court, the court determines that rules of civil

procedure available under the laws of such State provide

substantially similar protections to such party’s right to due

process as Rule 65 (as modified with respect to such proceeding by

subparagraph (A)), the relief sought by the Corporation pursuant

to paragraph (17) may be requested under the laws of such State.

(19) TREATMENT OF CLAIMS ARISING FROM BREACH

OF CONTRACTS EXECUTED BY THE RECEIVER OR

CONSERVATOR.—Notwithstanding any other provision of this

subsection, any final and unappealable judgment for monetary damages

entered against a receiver or conservator for a System institution for the

breach of an agreement executed or approved by such receiver or

conservator after the date of its appointment shall be paid as an

administrative expense of the receiver or conservator. Nothing in this

paragraph shall be construed to limit the power of a receiver or

conservator to exercise any rights under contract or law, including

terminating, breaching, canceling, or otherwise discontinuing such

agreement.

BEFORE APPOINTMENT OF CONSERVATOR OR RECEIVER.—

(1) AUTHORITY TO REPUDIATE CONTRACTS.—In

addition to any other rights a conservator or receiver may have, the

conservator or receiver for a System institution may disaffirm or

repudiate any contract or lease—

(A) to which such System institution is a party;

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(B) the performance of which the conservator or receiver,

in the conservator’s or receiver’s discretion, determines to be

burdensome; and

conservator or receiver determines, in the conservator’s or

receiver’s discretion, will promote the orderly administration of the

System institution’s affairs.

(2) TIMING OF REPUDIATION.—The Corporation as

conservator or receiver for any System institution shall determine

whether or not to exercise the rights of repudiation under this subsection

within a reasonable period following such appointment.

(3) CLAIMS FOR DAMAGES FOR REPUDIATION.—

(A) IN GENERAL.—Except as otherwise provided in

subparagraph (C) and paragraphs (4), (5), and (6), the liability of

the conservator or receiver for the disaffirmance or repudiation of

any contract pursuant to paragraph (1) shall be—

(ⅰ) limited to actual direct compensatory damages;

and

(ⅱ) determined as of—

(Ⅰ) the date of the appointment of the

conservator or receiver; or

(Ⅱ) in the case of any contract or agreement

referred to in paragraph (8), the date of the

disaffirmance or repudiation of such contract or

agreement.

(B) NO LIABILITY FOR OTHER DAMAGES.—For

purposes of subparagraph (A), the term actual direct compensatory

damages does not include—

(ⅰ) punitive or exemplary damages;

(ⅱ) damages for lost profits or opportunity; or

(ⅲ) damages for pain and suffering.

OF FINANCIAL CONTRACTS.—In the case of any qualified

financial contract or agreement to which paragraph (8) applies,

compensatory damages shall be—

(ⅰ) deemed to include normal and reasonable costs of

cover or other reasonable measures of damages utilized in the

industries for such contract and agreement claims; and

(ⅱ) paid in accordance with this subsection and

subsection (j), except as otherwise specifically provided in

this section.

(4) LEASES UNDER WHICH THE SYSTEM INSTITUTION

IS THE LESSEE.—

(A) IN GENERAL.—If the conservator or receiver

disaffirms or repudiates a lease under which the System institution

was the lessee, the conservator or receiver shall not be liable for

any damages (other than damages determined pursuant to

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subparagraph (B)) for the disaffirmance or repudiation of such

lease.

(B) PAYMENTS OF RENT.—Notwithstanding

subparagraph (A), the lessor under a lease to which such

subparagraph applies shall—

(ⅰ) be entitled to the contractual rent accruing before

the later of the date—

(Ⅰ) the notice of disaffirmance or repudiation is

mailed; or

(Ⅱ) the disaffirmance or repudiation becomes

effective, unless the lessor is in default or breach of the

terms of the lease; and

(ⅱ) have no claim for damages under any acceleration

clause or other penalty provision in the lease; and

(ⅲ) have a claim for any unpaid rent, subject to all

appropriate offsets and defenses, due as of the date of the

appointment, which shall be paid in accordance with this

subsection and subsection (j).

(5) LEASES UNDER WHICH THE SYSTEM INSTITUTION

IS THE LESSOR.—

(A) IN GENERAL.—If the conservator or receiver

repudiates an unexpired written lease of real property of the

System institution under which the System institution is the lessor

and the lessee is not, as of the date of such repudiation, in default,

the lessee under such lease may either—

(ⅰ) treat the lease as terminated by such repudiation;

(ⅱ) remain in possession of the leasehold interest for

the balance of the term of the lease, unless the lessee defaults

under the terms of the lease after the date of such repudiation.

(B) PROVISIONS APPLICABLE TO LESSEE

REMAINING IN POSSESSION.—If any lessee under a lease

described in subparagraph (A) remains in possession of a leasehold

interest pursuant to clause (ⅱ) of such subparagraph—

(ⅰ) the lessee—

(Ⅰ) shall continue to pay the contractual rent

pursuant to the terms of the lease after the date of the

repudiation of such lease; and

(Ⅱ) may offset against any rent payment which

accrues after the date of the repudiation of the lease,

any damages which accrue after such date due to the

nonperformance of any obligation of the System

institution under the lease after such date; and

(ⅱ) the conservator or receiver shall not be liable to

the lessee for any damages arising after such date as a result

of the repudiation, other than the amount of any offset

allowed under clause (ⅰ)(Ⅱ).

(6) CONTRACTS FOR THE SALE OF REAL PROPERTY.—

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(A) IN GENERAL.—If the conservator or receiver

repudiates any contract that meets the requirements of paragraphs

(1) through (4) of section 5.61(d) for the sale of real property, and

the purchaser of such real property under such contract is in

possession and is not, as of the date of such repudiation, in default,

such purchaser may either—

(ⅰ) treat the contract as terminated by such

repudiation; or

(ⅱ) remain in possession of such real property.

(B) PROVISIONS APPLICABLE TO PURCHASER

REMAINING IN POSSESSION.—If any purchaser of real

property under any contract described in subparagraph (A) remains

in possession of such property pursuant to clause (ⅱ) of such

subparagraph—

(ⅰ) the purchaser—

(Ⅰ) shall continue to make all payments due

under the contract after the date of the repudiation of

the contract; and

(Ⅱ) may offset against any such payments any

damages which accrue after such date due to the

nonperformance (after such date) of any obligation of

the System institution under the contract; and

(ⅱ) the conservator or receiver shall—

(Ⅰ) not be liable to the purchaser for any

damages arising after that date as a result of the

repudiation, other than the amount of any offset

allowed under clause (ⅰ)(Ⅱ);

(Ⅱ) deliver title to the purchaser in accordance

with the contract; and

(Ⅲ) have no obligation under the contract, other

than the performance required under subclause (Ⅱ).

(ⅰ) IN GENERAL.—No provision of this paragraph

shall be construed as limiting the right of the conservator or

receiver to assign the contract described in subparagraph (A)

and sell the property subject to the contract and this

paragraph.

(ⅱ) NO LIABILITY AFTER ASSIGNMENT AND

SALE.—If an assignment and sale described in clause (ⅰ) is

consummated, the Corporation, acting as conservator or

receiver, shall have no further liability under the applicable

contract described in subparagraph (A) or with respect to the

real property which was the subject of such contract.

(7) PROVISIONS APPLICABLE TO SERVICE

CONTRACTS.—

(A) SERVICES PERFORMED BEFORE

APPOINTMENT.—In the case of any contract for services

between any person and any System institution for which the

Corporation has been appointed conservator or receiver, any claim

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of such person for services performed before the appointment of

the conservator or the receiver shall be—

(ⅰ) a claim to be paid in accordance with subsections

(b) and (d); and

(ⅱ) deemed to have arisen as of the date the

conservator or receiver was appointed.

(B) SERVICES PERFORMED AFTER APPOINTMENT

AND PRIOR TO REPUDIATION.—If, in the case of any contract

for services described in subparagraph (A), the conservator or

receiver accepts performance by the other person before the

conservator or receiver makes any determination to exercise the

right of repudiation of such contract under this section—

(ⅰ) the other party shall be paid under the terms of the

contract for the services performed; and

(ⅱ) the amount of such payment shall be treated as an

administrative expense of the conservatorship or

receivership.

SUBSEQUENT REPUDIATION.—The acceptance by any

conservator or receiver of services referred to in subparagraph (B)

in connection with a contract described in such subparagraph shall

not affect the right of the conservator or receiver, to repudiate such

contract under this section at any time after such performance.

(8) CERTAIN QUALIFIED FINANCIAL CONTRACTS.—

(A) DEFINITIONS.—In this paragraph:

(ⅰ) COMMODITY CONTRACT.—The term

commodity contract means—

(Ⅰ) with respect to a futures commission

merchant, a contract for the purchase or sale of a

commodity for future delivery on, or subject to the rules

of, a contract market or board of trade;

(Ⅱ) with respect to a foreign futures commission

merchant, a foreign future;

(Ⅲ) with respect to a leverage transaction

merchant, a leverage transaction;

(Ⅳ) with respect to a clearing organization, a

contract for the purchase or sale of a commodity for

future delivery on, or subject to the rules of, a contract

market or board of trade that is cleared by such clearing

organization, or commodity option traded on, or subject

to the rules of, a contract market or board of trade that

is cleared by such clearing organization;

(Ⅴ) with respect to a commodity options dealer,

a commodity option;

(Ⅵ) any other agreement or transaction that is

similar to any agreement or transaction referred to in

this clause;

(Ⅶ) any combination of the agreements or

transactions referred to in this clause;

127

(Ⅷ) any option to enter into any agreement or

transaction referred to in this clause;

(Ⅸ) a master agreement that provides for an

agreement or transaction referred to in any of

subclauses (Ⅰ) through (Ⅷ), together with all

supplements to any such master agreement, without

regard to whether the master agreement provides for an

agreement or transaction that is not a commodity

contract under this clause, except that the master

agreement shall be considered to be a commodity

contract under this clause only with respect to each

agreement or transaction under the master agreement

that is referred to in subclause (Ⅰ), (Ⅱ), (Ⅲ), (Ⅳ), (Ⅴ),

(Ⅵ), (Ⅶ), or (Ⅷ); or

(Ⅹ) any security agreement or arrangement

or other credit enhancement related to any

agreement or transaction referred to in this clause,

including any guarantee or reimbursement

obligation in connection with any agreement or

transaction referred to in this clause.

(ⅱ) FORWARD CONTRACT.—The term forward

contract means—

(Ⅰ) a contract (other than a commodity contract)

for the purchase, sale, or transfer of a commodity or any

similar good, article, service, right, or interest which is

presently or in the future becomes the subject of dealing

in the forward contract trade, or product or byproduct

thereof, with a maturity date more than 2 days after the

date the contract is entered into, including a repurchase

or reverse repurchase transaction (whether or not such

repurchase or reverse repurchase transaction is a

repurchase agreement), consignment, lease, swap,

hedge transaction, deposit, loan, option, allocated

transaction, unallocated transaction, or any other similar

agreement;

(Ⅱ) any combination of agreements or

transactions referred to in subclauses (Ⅰ) and (Ⅲ);

(Ⅲ) any option to enter into any agreement or

transaction referred to in subclause (Ⅰ) or (Ⅱ);

(Ⅳ) a master agreement that provides for an

agreement or transaction referred to in subclauses (Ⅰ)

through (Ⅲ), together with all supplements to any such

master agreement, without regard to whether the master

agreement provides for an agreement or transaction that

is not a forward contract under this clause, except that

the master agreement shall be considered to be a

forward contract under this clause only with respect to

each agreement or transaction under the master

agreement that is referred to in subclause (Ⅰ), (Ⅱ), or

(Ⅲ); or

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(Ⅴ) any security agreement or arrangement or

other credit enhancement related to any agreement or

transaction referred to in subclause (Ⅰ), (Ⅱ), (Ⅲ), or

(Ⅳ), including any guarantee or reimbursement

obligation in connection with any agreement or

transaction referred to in any such subclause.

(ⅲ) PERSON.—The term person—

(Ⅰ) has the meaning given the term in section 1

of title 1, United States Code; and

(Ⅱ) includes any governmental entity.

(ⅳ) QUALIFIED FINANCIAL CONTRACT.—The

term qualified financial contract means any securities

contract, commodity contract, forward contract, repurchase

agreement, swap agreement, and any similar agreement that

the Corporation determines by regulation, resolution, or order

to be a qualified financial contract for purposes of this

paragraph.

(ⅴ) REPURCHASE AGREEMENT.—

(Ⅰ) IN GENERAL.—The term repurchase

agreement (including with respect to a reverse

repurchase agreement)—

(aa) means—

(AA) an agreement, including

related terms, which provides for the

transfer of one or more certificates of

deposit, mortgage-related securities (as such

term is defined in section 3(a) of the

Securities Exchange Act of 1934 (15 U.S.C.

78c(a))), mortgage loans, interests in

mortgage-related securities or mortgage

loans, eligible bankers’ acceptances,

qualified foreign government securities or

securities that are direct obligations of, or

that are fully guaranteed by, the United

States or any agency of the United States

against the transfer of funds by the

transferee of such certificates of deposit,

eligible bankers’ acceptances, securities,

mortgage loans, or interests with a

simultaneous agreement by such transferee

to transfer to the transferor thereof

certificates of deposit, eligible bankers’

acceptances, securities, mortgage loans, or

interests as described above, at a date certain

not later than 1 year after such transfers or

on demand, against the transfer of funds, or

any other similar agreement;

(BB) any combination of agreements

or transactions referred to in subitems (AA)

and (CC);

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(CC) any option to enter into any

agreement or transaction referred to in

subitem (AA) or (BB);

(DD) a master agreement that

provides for an agreement or transaction

referred to in subitem (AA), (BB), or (CC),

together with all supplements to any such

master agreement, without regard to whether

the master agreement provides for an

agreement or transaction that is not a

repurchase agreement under this item,

except that the master agreement shall be

considered to be a repurchase agreement

under this item only with respect to each

agreement or transaction under the master

agreement that is referred to in subitem

(AA), (BB), or (CC); and

(EE) any security agreement or

arrangement or other credit enhancement

related to any agreement or transaction

referred to in any of subitems (AA) through

(DD), including any guarantee or

reimbursement obligation in connection with

any agreement or transaction referred to in

any such subitem; and

(bb) does not include any repurchase

obligation under a participation in a commercial

mortgage, loan unless the Corporation determines

by regulation, resolution, or order to include any

such participation within the meaning of such term.

(Ⅱ) RELATED DEFINITION.—For purposes of

subclause (Ⅰ)(aa), the term qualified foreign government

security means a security that is a direct obligation of,

or that is fully guaranteed by, the central government of

a member of the Organization for Economic

Cooperation and Development (as determined by

regulation or order adopted by the appropriate Federal

banking authority).

(ⅵ) SECURITIES CONTRACT.—The term

securities contract—

(Ⅰ) means—

(aa) a contract for the purchase, sale, or

loan of a security, a certificate of deposit, a

mortgage loan, any interest in a mortgage loan, a

group or index of securities, certificates of deposit,

or mortgage loans or interests therein (including

any interest therein or based on the value thereof)

or any option on any of the foregoing, including

any option to purchase or sell any such security,

certificate of deposit, mortgage loan, interest,

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group or index, or option, and including any

repurchase or reverse repurchase transaction on

any such security, certificate of deposit, mortgage

loan, interest, group or index, or option (whether or

not the repurchase or reverse repurchase

transaction is a repurchase agreement);

(bb) any option entered into on a national

securities exchange relating to foreign currencies;

(cc) the guarantee (including by novation)

by or to any securities clearing agency of any

settlement of cash, securities, certificates of

deposit, mortgage loans or interests therein, group

or index of securities, certificates of deposit, or

mortgage loans or interests therein (including any

interest therein or based on the value thereof) or

option on any of the foregoing, including any

option to purchase or sell any such security,

certificate of deposit, mortgage loan, interest,

group or index, or option (whether or not the

settlement is in connection with any agreement or

transaction referred to in any of items (aa), (bb),

and (dd) through (kk));

(dd) any margin loan;

(ee) any extension of credit for the

clearance or settlement of securities transactions;

(ff) any loan transaction coupled with a

securities collar transaction, any prepaid securities

forward transaction, or any total return swap

transaction coupled with a securities sale

transaction;

(gg) any other agreement or transaction

that is similar to any agreement or transaction

referred to in this subclause;

(hh) any combination of the agreements or

transactions referred to in this subclause;

(ⅱ) any option to enter into any

agreement or transaction referred to in this

subclause;

(jj) a master agreement that provides for

an agreement or transaction referred to in any of

items (aa) through (ⅱ), together with all

supplements to any such master agreement,

without regard to whether the master agreement

provides for an agreement or transaction that is not

a securities contract under this subclause, except

that the master agreement shall be considered to be

a securities contract under this subclause only with

respect to each agreement or transaction under the

master agreement that is referred to in item (aa),

(bb), (cc), (dd), (ee), (ff), (gg), (hh), or (ⅱ); and

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(kk) any security agreement or

arrangement or other credit enhancement related to

any agreement or transaction referred to in this

subclause, including any guarantee or

reimbursement obligation in connection with any

agreement or transaction referred to in this

subclause; and

(Ⅱ) does not include any purchase, sale, or

repurchase obligation under a participation in a

commercial mortgage loan unless the Corporation

determines by regulation, resolution, or order to include

any such agreement within the meaning of such term.

(ⅶ) SWAP AGREEMENT.—The term swap

agreement means—

(Ⅰ) any agreement, including the terms and

conditions incorporated by reference in any such

agreement, that is—

(aa) an interest rate swap, option, future, or

forward agreement, including a rate floor, rate cap,

rate collar, cross-currency rate swap, and basis

swap;

(bb) a spot, same day-tomorrow,

tomorrow-next, forward, or other foreign exchange

precious metals or other commodity agreement;

(cc) a currency swap, option, future, or

forward agreement;

(dd) an equity index or equity swap,

option, future, or forward agreement;

(ee) a debt index or debt swap, option,

future, or forward agreement;

(ff) a total return, credit spread or credit

swap, option, future, or forward agreement;

(gg) a commodity index or commodity

swap, option, future, or forward agreement;

(hh) a weather swap, option, future, or

forward agreement;

(ⅱ) an emissions swap, option, future, or

forward agreement; or

(jj) an inflation swap, option, future, or

forward agreement;

(Ⅱ) any agreement or transaction that is similar

to any other agreement or transaction referred to in this

clause and that is of a type that has been, is presently, or

in the future becomes, the subject of recurrent dealings

in the swap or other derivatives markets (including

terms and conditions incorporated by reference in such

agreement) and that is a forward, swap, future, option

or spot transaction on one or more rates, currencies,

commodities, equity securities or other equity

instruments, debt securities or other debt instruments,

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quantitative measures associated with an occurrence,

extent of an occurrence, or contingency associated with

a financial, commercial, or economic consequence, or

economic or financial indices or measures of economic

or financial risk or value;

(Ⅲ) any combination of agreements or

transactions referred to in this clause;

(Ⅳ) any option to enter into any agreement or

transaction referred to in this clause;

(Ⅴ) a master agreement that provides for an

agreement or transaction referred to in any of

subclauses (Ⅰ) through (Ⅳ), together with all

supplements to any such master agreement, without

regard to whether the master agreement contains an

agreement or transaction that is not a swap agreement

under this clause, except that the master agreement

shall be considered to be a swap agreement under this

clause only with respect to each agreement or

transaction under the master agreement that is referred

to in subclause (Ⅰ), (Ⅱ), (Ⅲ), or (Ⅳ); and

(Ⅵ) any security agreement or arrangement or

other credit enhancement related to any agreements or

transactions referred to in any of subclauses (Ⅰ) through

(Ⅴ), including any guarantee or reimbursement

obligation in connection with any agreement or

transaction referred to in any such subclause.

(ⅷ) TRANSFER.—The term transfer means every

mode, direct or indirect, absolute or conditional, voluntary or

involuntary, of disposing of or parting with property or with

an interest in property, including retention of title as a

security interest and foreclosure of the equity of redemption

of a System institution.

(ⅸ) TREATMENT OF MASTER AGREEMENT

AS 1 AGREEMENT.—For purposes of this subparagraph—

(Ⅰ) any master agreement for any contract or

agreement described in this subparagraph (or any

master agreement for such a master agreement or

agreements), together with all supplements to the

master agreement, shall be treated as a single agreement

and a single qualified financial contact; and

(Ⅱ) if a master agreement contains provisions

relating to agreements or transactions that are not

qualified financial contracts, the master agreement shall

be deemed to be a qualified financial contract only with

respect to those transactions that are themselves

qualified financial contracts.

(B) RIGHTS OF PARTIES TO CONTRACTS.— Subject

to paragraphs (9) and (10), and notwithstanding any other

provision of this Act (other than subsection (b)(9) and section

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5.61(d)) or any other Federal or State law, no person shall be

stayed or prohibited from exercising—

(ⅰ) any right such person has to cause the termination,

liquidation, or acceleration of any qualified financial contract

with a System institution which arises upon the appointment

of the Corporation as receiver for such System institution at

any time after such appointment;

(ⅱ) any right under any security agreement or

arrangement or other credit enhancement related to one or

more qualified financial contracts described in clause (ⅰ); or

(ⅲ) any right to offset or net out any termination value,

payment amount, or other transfer obligation arising under,

or in connection with, 1 or more contracts and agreements

described in clause (ⅰ), including any master agreement for

such contracts or agreements.

Subsection (b)(12) shall apply in the case of any judicial action or

proceeding brought against any receiver referred to in

subparagraph (A), or the System institution for which such receiver

was appointed, by any party to a contract or agreement described

in subparagraph (B)(ⅰ) with such System institution.

(D) CERTAIN TRANSFERS NOT AVOIDABLE.—

(ⅰ) IN GENERAL.—Notwithstanding paragraph (11)

or any other Federal or State law relating to the avoidance of

preferential or fraudulent transfers, the Corporation, whether

acting as such or as conservator or receiver of a System

institution, may not avoid any transfer of money or other

property in connection with any qualified financial contract

with a System institution.

(ⅱ) EXCEPTION FOR CERTAIN TRANSFERS.—

Clause (ⅰ) shall not apply to any transfer of money or other

property in connection with any qualified financial contract

with a System institution if the Corporation determines that

the transferee had actual intent to hinder, delay, or defraud

such System institution, the creditors of such System

institution, or any conservator or receiver appointed for such

System institution.

(E) CERTAIN PROTECTIONS IN EVENT OF

APPOINTMENT OF CONSERVATOR.—Notwithstanding any

other provision of this Act (other than subparagraph (G), paragraph

(10), subsection (b)(9), and section 5.61(d)) or any other Federal or

State law, no person shall be stayed or prohibited from

exercising—

(ⅰ) any right such person has to cause the termination,

liquidation, or acceleration of any qualified financial contract

with a System institution in a conservatorship based upon a

default under such financial contract which is enforceable

under applicable noninsolvency law;

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(ⅱ) any right under any security agreement or

arrangement or other credit enhancement related to one or

more qualified financial contracts described in clause (ⅰ); and

(ⅲ) any right to offset or net out any termination

values, payment amounts, or other transfer obligations arising

under or in connection with such qualified financial

contracts.

(F) CLARIFICATION.—No provision of law shall be

construed as limiting the right or power of the Corporation, or

authorizing any court or agency to limit or delay, in any manner,

the right or power of the Corporation to transfer any qualified

financial contract in accordance with paragraphs (9) and (10) or to

disaffirm or repudiate any such contract in accordance with

paragraph (1).

(G) WALKAWAY CLAUSES NOT EFFECTIVE.—

(ⅰ) DEFINITION OF WALKAWAY CLAUSE.—In

this subparagraph, the term walkaway clause means any

provision in a qualified financial contract that suspends,

conditions, or extinguishes a payment obligation of a party,

in whole or in part, or does not create a payment obligation of

a party that would otherwise exist—

(Ⅰ) solely because of—

(aa) the status of the party as a

nondefaulting party in connection with the

insolvency of a System institution that is a party to

the contract; or

(bb) the appointment of, or the exercise of

rights or powers by, the Corporation as a

conservator or receiver of the System institution;

and

(Ⅱ) not as a result of the exercise by a party of

any right to offset, setoff, or net obligations that exist

under—

(aa) the contract;

(bb) any other contract between those

parties; or

(cc) applicable law.

(ⅱ) TREATMENT.—Notwithstanding the provisions

of subparagraphs (B) and (E), no walkaway clause shall be

enforceable in a qualified financial contract of a System

institution in default.

(ⅲ) LIMITED SUSPENSION OF CERTAIN

OBLIGATIONS.—In the case of a qualified financial

contract referred to in clause (ⅱ), any payment or delivery

obligations otherwise due from a party pursuant to the

qualified financial contract shall be suspended from the time

the receiver is appointed until the earlier of—

(Ⅰ) the time such party receives notice that such

contract has been transferred pursuant to subparagraph

(B); or

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(Ⅱ) 5:00 p.m. (eastern time) on the business day

following the date of the appointment of the receiver.

(H) RECORDKEEPING REQUIREMENTS.—The

Corporation, in consultation with the Farm Credit Administration,

may prescribe regulations requiring more detailed recordkeeping

by any System institution with respect to qualified financial

contracts (including market valuations), only if such System

institution is subject to subclause (Ⅰ), (Ⅲ), or (Ⅳ) of section

5.61B(a)(1)(A)(ⅱ).

(9) TRANSFER OF QUALIFIED FINANCIAL

CONTRACTS.—

(A) DEFINITIONS.—In this paragraph:

(ⅰ) CLEARING ORGANIZATION.—The term

clearing organization has the meaning given the term in

section 402 of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (12 U.S.C. 4402).

(ⅱ) FINANCIAL INSTITUTION.—The term

financial institution means a System institution, a broker or

dealer, a depository institution, a futures commission

merchant, or any other institution, as determined by the

Corporation by regulation to be a financial institution.

(B) REQUIREMENT.—In making any transfer of assets

or liabilities of a System institution in default which includes any

qualified financial contract, the conservator or receiver for such

System institution shall either—

(ⅰ) transfer to one financial institution, other than a

financial institution for which a conservator, receiver, trustee

in bankruptcy, or other legal custodian has been appointed, or

that is otherwise the subject of a bankruptcy or insolvency

proceeding—

(Ⅰ) all qualified financial contracts between any

person or any affiliate of such person and the System

institution in default;

(Ⅱ) all claims of such person or any affiliate of

such person against such System institution under any

such contract (other than any claim which, under the

terms of any such contract, is subordinated to the claims

of general unsecured creditors of such System

institution);

(Ⅲ) all claims of such System institution against

such person or any affiliate of such person under any

such contract; and

(Ⅳ) all property securing or any other credit

enhancement for any contract described in subclause (Ⅰ)

or any claim described in subclause (Ⅱ) or (Ⅲ) under

any such contract; or

(ⅱ) transfer none of the qualified financial contracts,

claims, property or other credit enhancement referred to in

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clause (ⅰ) (with respect to such person and any affiliate of

such person).

FINANCIAL INSTITUTION, OR BRANCH OR AGENCY OF A

FOREIGN BANK OR FINANCIAL INSTITUTION.—In

transferring any qualified financial contracts and related claims and

property under subparagraph (B)(ⅰ), the conservator or receiver for

the System institution shall not make such transfer to a foreign

bank, financial institution organized under the laws of a foreign

country, or a branch or agency of a foreign bank or financial

institution unless, under the law applicable to such bank, financial

institution, branch or agency, to the qualified financial contracts,

and to any netting contract, any security agreement or arrangement

or other credit enhancement related to one or more qualified

financial contracts, the contractual rights of the parties to such

qualified financial contracts, netting contracts, security agreements

or arrangements, or other credit enhancements are enforceable

substantially to the same extent as permitted under this section.

(D) TRANSFER OF CONTRACTS SUBJECT TO THE

RULES OF A CLEARING ORGANIZATION.—In the event that

a conservator or receiver transfers any qualified financial contract

and related claims, property, and credit enhancements pursuant to

subparagraph (B)(ⅰ) and such contract is cleared by or subject to

the rules of a clearing organization, the clearing organization shall

not be required to accept the transferee as a member by virtue of

the transfer.

(10) NOTIFICATION OF TRANSFER.—

(A) DEFINITION OF BUSINESS DAY.—In this

paragraph, the term business day means any day other than any

Saturday, Sunday, or any day on which either the New York Stock

Exchange or the Federal Reserve Bank of New York is closed.

(B) NOTIFICATION.—If—

(ⅰ) the conservator or receiver for a System institution

in default makes any transfer of the assets and liabilities of

such System institution; and

(ⅱ) the transfer includes any qualified financial

contract, the conservator or receiver shall notify any person

who is a party to any such contract of such transfer by 5:00

p.m. (eastern time) on the business day following the date of

the appointment of the receiver in the case of a receivership,

or the business day following such transfer in the case of a

conservatorship.

(ⅰ) RECEIVERSHIP.—A person who is a party to a

qualified financial contract with a System institution may not

exercise any right that such person has to terminate, liquidate,

or net such contract under paragraph (8)(B) of this

subsection, solely by reason of or incidental to the

appointment of a receiver for the System institution (or the

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insolvency or financial condition of the System institution for

which the receiver has been appointed)—

(Ⅰ) until 5:00 p.m. (eastern time) on the business

day following the date of the appointment of the

receiver; or

(Ⅱ) after the person has received notice that the

contract has been transferred pursuant to paragraph

(9)(B).

(ⅱ) CONSERVATORSHIP.—A person who is a

party to a qualified financial contract with a System

institution may not exercise any right that such person has to

terminate, liquidate, or net such contract under paragraph

(8)(E) of this subsection, solely by reason of or incidental to

the appointment of a conservator for the System institution

(or the insolvency or financial condition of the System

institution for which the conservator has been appointed).

(ⅲ) NOTICE.—For purposes of this paragraph, the

Corporation as receiver or conservator of a System

institution shall be deemed to have notified a person who is a

party to a qualified financial contract with such System

institution if the Corporation has taken steps reasonably

calculated to provide notice to such person by the time

specified in subparagraph (B).

(D) TREATMENT OF BRIDGE SYSTEM

INSTITUTIONS.—The following System institutions shall not be

considered to be a financial institution for which a conservator,

receiver, trustee in bankruptcy, or other legal custodian has been

appointed or which is otherwise the subject of a bankruptcy or

insolvency proceeding for purposes of paragraph (9):

(ⅰ) A bridge System bank.

(ⅱ) A System institution organized by the Corporation

or the Farm Credit Administration, for which a conservator is

appointed either—

(Ⅰ) immediately upon the organization of the

System institution; or

(Ⅱ) at the time of a purchase and assumption

transaction between the System institution and the

Corporation as receiver for a System institution in

default.

(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED

FINANCIAL CONTRACTS.—In exercising the rights of disaffirmance

or repudiation of a conservator or receiver with respect to any qualified

financial contract to which a System institution is a party, the

conservator or receiver for such System institution shall either—

(A) disaffirm or repudiate all qualified financial contracts

between—

(ⅰ) any person or any affiliate of such person; and

(ⅱ) the System institution in default; or

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(B) disaffirm or repudiate none of the qualified financial

contracts referred to in subparagraph (A) (with respect to such

person or any affiliate of such person).

(12) CERTAIN SECURITY INTERESTS NOT

AVOIDABLE.—No provision of this subsection shall be construed as

permitting the avoidance of any legally enforceable or perfected security

interest in any of the assets of any System institution except where such

an interest is taken in contemplation of the System institution’s

insolvency or with the intent to hinder, delay, or defraud the System

institution or the creditors of such System institution.

(13) AUTHORITY TO ENFORCE CONTRACTS.—

(A) IN GENERAL.—The conservator or receiver may

enforce any contract, other than a director’s or officer’s liability

insurance contract or a System institution bond, entered into by the

System institution notwithstanding any provision of the contract

providing for termination, default, acceleration, or exercise of

rights upon, or solely by reason of, insolvency or the appointment

of or the exercise of rights or powers by a conservator or receiver.

(B) CERTAIN RIGHTS NOT AFFECTED.—No provision

of this paragraph may be construed as impairing or affecting any

right of the conservator or receiver to enforce or recover under a

director’s or officer’s liability insurance contract or institution

bond under other applicable law.

(ⅰ) IN GENERAL.—Except as otherwise provided

by this section, no person may exercise any right or power to

terminate, accelerate, or declare a default under any contract

to which the System institution is a party, or to obtain

possession of or exercise control over any property of the

System institution or affect any contractual rights of the

System institution, without the consent of the conservator or

receiver, as appropriate, during the 45-day period beginning

on the date of the appointment of the conservator, or during

the 90-day period beginning on the date of the appointment

of the receiver, as applicable.

(ⅱ) CERTAIN EXCEPTIONS.—No provision of this

subparagraph shall apply to a director or officer liability

insurance contract or an institution bond, to the rights of

parties to certain qualified financial contracts pursuant to

paragraph (8), or shall be construed as permitting the

conservator or receiver to fail to comply with otherwise

enforceable provisions of such contract.

(14) EXCEPTION FOR FEDERAL RESERVE AND THE

UNITED STATES TREASURY.—No provision of this subsection shall

apply with respect to—

(A) any extension of credit from any Federal Reserve bank

or the United States Treasury to any System institution; or

139

(B) any security interest in the assets of the System

institution securing any such extension of credit.

(15) SAVINGS CLAUSE.—The meanings of terms used in this

subsection—

(A) are applicable for purposes of this subsection only; and

(B) shall not be construed or applied so as to challenge or

affect the characterization, definition, or treatment of any similar

terms under any other law, regulation, or rule, including—

(ⅰ) the Gramm-Leach-Bliley Act (12 U.S.C. 1811

note; Public Law 106–102);

(ⅱ) the Legal Certainty for Bank Products Act of 2000

(7 U.S.C. 27 et seq.);

(ⅲ) the securities laws (as that term is defined in

section 3(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78c(a))); and

(ⅳ) the Commodity Exchange Act (7 U.S.C. 1 et seq.).

(d) VALUATION OF CLAIMS IN DEFAULT.—

(1) IN GENERAL.—Notwithstanding any other provision of

Federal law or the law of any State and regardless of the method which

the Corporation determines to utilize with respect to a System institution

in default or in danger of default, including transactions authorized

under subsection (h) and section 5.61(a), this subsection shall govern the

rights of the creditors of such System institution.

(2) MAXIMUM LIABILITY.—The maximum liability of the

Corporation, acting as receiver or in any other capacity, to any person

having a claim against the receiver or the System institution for which

such receiver is appointed shall equal the amount such claimant would

have received if the Corporation had liquidated the assets and liabilities

of such System institution without exercising the Corporation’s authority

under subsection (h) or section 5.61(a).

(3) ADDITIONAL PAYMENTS AUTHORIZED.—

(A) IN GENERAL.—The Corporation may, in its

discretion and in the interests of minimizing its losses, use its own

resources to make additional payments or credit additional

amounts to or with respect to or for the account of any claimant or

category of claimants. Notwithstanding any other provision of

Federal or State law, or the constitution of any State, the

Corporation shall not be obligated, as a result of having made any

such payment or credited any such amount to or with respect to or

for the account of any claimant or category of claimants, to make

payments to any other claimant or category of claimants.

(B) MANNER OF PAYMENT.—The Corporation may

make the payments or credit the amounts specified in subparagraph

(A) directly to the claimants or may make such payments or credit

such amounts to an open System institution to induce such System

institution to accept liability for such claims.

(e) LIMITATION ON COURT ACTION.—Except as provided in

this section, no court may take any action, except at the written request of the

140

Board of Directors, to restrain or affect the exercise of powers or functions of

the Corporation as a conservator or a receiver.

(f) LIABILITY OF DIRECTORS AND OFFICERS.—

(1) IN GENERAL.—A director or officer of a System

institution may be held personally liable for monetary damages in any

civil action—

(A) brought by, on behalf of, or at the request or direction

of the Corporation;

(B) prosecuted wholly or partially for the benefit of the

Corporation—

(ⅰ) acting as conservator or receiver of that System

institution;

(ⅱ) acting based on a suit, claim, or cause of action

purchased from, assigned by, or otherwise conveyed by that

receiver or conservator; or

(ⅲ) acting based on a suit, claim, or cause of action

purchased from, assigned by, or otherwise conveyed in whole

or in part by a System institution or an affiliate of a System

institution in connection with assistance provided under

section 5.61(a); and

(ⅰ) gross negligence; or

(ⅱ) any similar conduct, including conduct that

demonstrates a greater disregard of a duty of care than gross

negligence, such as intentional tortious conduct.

(2) EFFECT.—Nothing in paragraph (1) impairs or affects any

right of the Corporation under any other applicable law.

(g) DAMAGES.—In any proceeding related to any claim against a

System institution’s director, officer, employee, agent, attorney, accountant,

appraiser, or any other party employed by or providing services to a System

institution, recoverable damages determined to result from the improvident or

otherwise improper use or investment of any System institution’s assets shall

include principal losses and appropriate interest.

(h) BRIDGE FARM CREDIT SYSTEM BANKS.—

(1) ORGANIZATION.—

(A) PURPOSE.—

(ⅰ) IN GENERAL.—When 1 or more System banks

are in default, or when the Corporation anticipates that 1 or

more System banks may become in default, the Corporation

may, in its discretion, organize, and the Farm Credit

Administration may, in its discretion, charter, 1 or more

System banks, with the powers and attributes of System

banks, subject to the provisions of this subsection, to be

referred to as bridge System banks.

(ⅱ) INTENT OF CONGRESS.—It is the intent of the

Congress that, in order to prevent unnecessary hardship or

losses to the customers of any System bank in default with

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respect to which a bridge System bank is chartered, the

Corporation should—

(Ⅰ) continue to honor commitments made by the

System bank in default to creditworthy customers; and

(Ⅱ) not interrupt or terminate adequately secured

loans which are transferred under this subsection and

are being repaid by the debtor in accordance with the

terms of the loan instrument.

(B) AUTHORITIES.—Once chartered by the Farm Credit

Administration, the bridge System bank may—

(ⅰ) assume such liabilities of the System bank or

banks in default or in danger of default as the Corporation

may, in its discretion, determine to be appropriate;

(ⅱ) purchase such assets of the System bank or banks

in default or in danger of default as the Corporation may, in

its discretion, determine to be appropriate; and

(ⅲ) perform any other temporary function which the

Corporation may, in its discretion, prescribe in accordance

with this Act.

association and organization certificate of a bridge System bank as

approved by the Corporation shall be executed by 3 representatives

designated by the Corporation.

(D) INTERIM DIRECTORS.—A bridge System bank shall

have an interim board of directors consisting of not fewer than 5

nor more than 10 members appointed by the Corporation.

(2) CHARTERING.—

(A) CONDITIONS.—The Farm Credit Administration

may charter a bridge System bank only if the Board of Directors

determines that—

(ⅰ) the amount which is reasonably necessary to

operate such bridge System bank will not exceed the amount

which is reasonably necessary to save the cost of liquidating

1 or more System banks in default or in danger of default

with respect to which the bridge System bank is chartered;

(ⅱ) the continued operation of such System bank or

banks in default or in danger of default with respect to which

the bridge System bank is chartered is essential to provide

adequate farm credit services in the 1 or more communities

where each such System bank in default or in danger of

default is or was providing those farm credit services; or

(ⅲ) the continued operation of such System bank or

banks in default or in danger of default with respect to which

the bridge System bank is chartered is in the best interest of

the Farm Credit System or the public.

(B) BRIDGE SYSTEM BANK TREATED AS BEING IN

DEFAULT FOR CERTAIN PURPOSES.—A bridge System bank

shall be treated as being in default at such times and for such

purposes as the Corporation may, in its discretion, determine.

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granting of its charter, shall be under the management of a board of

directors consisting of not fewer than 5 nor more than 10 members

appointed by the Corporation, in consultation with the Farm Credit

Administration.

(D) BYLAWS.—The board of directors of a bridge

System bank shall adopt such bylaws as may be approved by the

Corporation.

(3) TRANSFER OF ASSETS AND LIABILITIES.—

(A) TRANSFER UPON GRANT OF CHARTER.—Upon

the granting of a charter to a bridge System bank pursuant to this

subsection, the Corporation, as receiver, may transfer any assets

and liabilities of the System bank to the bridge System bank in

accordance with paragraph (1).

(B) SUBSEQUENT TRANSFERS.—At any time after a

charter is granted to a bridge System bank, the Corporation, as

receiver, may transfer any assets and liabilities of such System

bank in default as the Corporation may, in its discretion, determine

to be appropriate in accordance with paragraph (1).

of any assets or liabilities of a System bank in default or danger of

default transferred to a bridge System bank shall be effective

without any further approval under Federal or State law,

assignment, or consent with respect thereto.

(4) POWERS OF BRIDGE SYSTEM BANKS.—Each bridge

System bank chartered under this subsection shall, to the extent

described in the charter of the System bank in default with respect to

which the bridge System bank is chartered, have all corporate powers of,

and be subject to the same provisions of law as, any System bank,

except that—

(A) the Corporation may—

(ⅰ) remove the interim directors and directors of a

bridge System bank;

(ⅱ) fix the compensation of members of the interim

board of directors and the board of directors and senior

management, as determined by the Corporation in its

discretion, of a bridge System bank; and

(ⅲ) waive any requirement established under Federal

or State law which would otherwise be applicable with

respect to directors of a bridge System bank, on the condition

that the waiver of any requirement established by the Farm

Credit Administration shall require the concurrence of the

Farm Credit Administration;

(B) the Corporation may indemnify the representatives for

purposes of paragraph (1)(B) and the interim directors, directors,

officers, employees, and agents of a bridge System bank on such

terms as the Corporation determines to be appropriate;

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the capital of a System institution shall apply with respect to a

bridge System bank;

(D) the Farm Credit Administration Board may establish a

limitation on the extent to which any person may become indebted

to a bridge System bank without regard to the amount of the bridge

System bank’s capital or surplus;

(E)(ⅰ) the board of directors of a bridge System bank shall

elect a chairperson who may also serve in the position of chief

executive officer, except that such person shall not serve either as

chairperson or as chief executive officer without the prior approval

of the Corporation; and

(ⅱ) the board of directors of a bridge System bank

may appoint a chief executive officer who is not also the

chairperson, except that such person shall not serve as chief

executive officer without the prior approval of the

Corporation;

(F) the Farm Credit Administration may waive any

requirement for a fidelity bond with respect to a bridge System

bank at the request of the Corporation;

(G) any judicial action to which a bridge System bank

becomes a party by virtue of its acquisition of any assets or

assumption of any liabilities of a System bank in default shall be

stayed from further proceedings for a period of up to 45 days at the

request of the bridge System bank;

(H) no agreement which tends to diminish or defeat the

right, title or interest of a bridge System bank in any asset of a

System bank in default acquired by it shall be valid against the

bridge System bank unless such agreement—

(ⅰ) is in writing;

(ⅱ) was executed by such System bank in default and

the person or persons claiming an adverse interest thereunder,

including the obligor, contemporaneously with the

acquisition of the asset by such System bank in default;

(ⅲ) was approved by the board of directors of such

System bank in default or its loan committee, which approval

shall be reflected in the minutes of said board or committee;

and

(ⅳ) has been, continuously from the time of its

execution, an official record of such System bank in default;

(I) notwithstanding subsection 5.61(d)(2), any agreement

relating to an extension of credit between a System bank, Federal

Reserve bank, or the United States Treasury and any System

institution which was executed before the extension of credit by

such lender to such System institution shall be treated as having

been executed contemporaneously with such extension of credit for

purposes of subparagraph (H); and

(J) except with the prior approval of the Corporation and

the concurrence of the Farm Credit Administration, a bridge

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System bank may not, in any transaction or series of transactions,

issue capital stock or be a party to any merger, consolidation,

disposition of substantially all of the assets or liabilities of the

bridge System bank, sale or exchange of capital stock, or similar

transaction, or change its charter.

(5) CAPITAL.—

(A) NO CAPITAL REQUIRED.—The Corporation shall

not be required to—

(ⅰ) issue any capital stock on behalf of a bridge

System bank chartered under this subsection; or

(ⅱ) purchase any capital stock of a bridge System

bank, except that notwithstanding any other provision of

Federal or State law, the Corporation may purchase and

retain capital stock of a bridge System bank in such amounts

and on such terms as the Corporation, in its discretion,

determines to be appropriate.

(B) OPERATING FUNDS IN LIEU OF CAPITAL.—

Upon the organization of a bridge System bank, and thereafter, as

the Corporation may, in its discretion, determine to be necessary or

advisable, the Corporation may make available to the bridge

System bank, upon such terms and conditions and in such form and

amounts as the Corporation may in its discretion determine, funds

for the operation of the bridge System bank in lieu of capital.

Whenever the Farm Credit Administration Board determines it is

advisable to do so, the Corporation shall cause capital stock of a

bridge System bank to be issued and offered for sale in such

amounts and on such terms and conditions as the Corporation may,

in its discretion, determine.

(6) EMPLOYEE STATUS.—Representatives for purposes of

paragraph (1)(C), interim directors, directors, officers, employees, or

agents of a bridge System bank are not, solely by virtue of service in any

such capacity, officers or employees of the United States. Any employee

of the Corporation, the Farm Credit Administration, or any Federal

instrumentality who serves at the request of the Corporation as a

representative for purposes of paragraph (1)(C), interim director,

director, officer, employee, or agent of a bridge System bank shall not—

(A) solely by virtue of service in any such capacity lose

any existing status as an officer or employee of the United States

for purposes of any provision of law; or

(B) receive any salary or benefits for service in any such

capacity with respect to a bridge System bank in addition to such

salary or benefits as are obtained through employment with the

Corporation or such Federal instrumentality.

(7) ASSISTANCE AUTHORIZED.—The Corporation may, in

its discretion, provide assistance under section 5.61(a) to facilitate any

merger or consolidation of a bridge System bank in the same manner

and to the same extent as such assistance may be provided to a

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qualifying insured System bank (as defined in section 5.61(a)(2)(B)) or

to facilitate a bridge System bank’s acquisition of any assets or the

assumption of any liabilities of a System bank in default or in danger of

default.

(8) DURATION OF BRIDGE SYSTEM BANKS.—Subject to

paragraphs (10) and (11), the status of a bridge System bank as such

shall terminate at the end of the 2-year period following the date it was

granted a charter. The Farm Credit Administration Board may, in its

discretion, extend the status of the bridge System bank as such for 3

additional 1-year periods.

(9) TERMINATION OF BRIDGE SYSTEM BANKS

STATUS.—The status of any bridge System bank as such shall

terminate upon the earliest of—

(A) the merger or consolidation of the bridge System bank

with a System institution that is not a bridge System bank, on the

condition that the merger or consolidation shall be subject to the

approval of the Farm Credit Administration;

(B) at the election of the Corporation and with the

approval of the Farm Credit Administration, the sale of a majority

or all of the capital stock of the bridge System bank to a System

institution or another bridge System bank;

approval of the Farm Credit Administration, either the assumption

of all or substantially all of the liabilities of the bridge System

bank, or the acquisition of all or substantially all of the assets of

the bridge System bank, by a System institution that is not a bridge

System bank or other entity as permitted under applicable law; and

(D) the expiration of the period provided in paragraph (8),

or the earlier dissolution of the bridge System bank as provided in

paragraph (11).

(10) EFFECT OF TERMINATION EVENTS.—

(A) MERGER OR CONSOLIDATION.—A bridge

System bank that participates in a merger or consolidation as

provided in paragraph (9)(A) shall be for all purposes a System

institution, with all the rights, powers, and privileges thereof, and

such merger or consolidation shall be conducted in accordance

with, and shall have the effect provided in, the provisions of

applicable law.

(B) CHARTER CONVERSION.—Following the sale of a

majority or all of the capital stock of the bridge System bank as

provided in paragraph (9)(B), the Farm Credit Administration

Board may amend the charter of the bridge System bank to reflect

the termination of the status of the bridge System bank as such,

whereupon the System bank shall remain a System bank, with all

of the rights, powers, and privileges thereof, subject to all laws and

regulations applicable thereto.

ASSETS.—Following the assumption of all or substantially all of

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the liabilities of the bridge System bank, or the sale of all or

substantially all of the assets of the bridge System bank, as

provided in paragraph (9)(C), at the election of the Corporation,

the bridge System bank may retain its status as such for the period

provided in paragraph (8).

(D) AMENDMENTS TO CHARTER.—Following the

consummation of a transaction described in subparagraph (A), (B),

or (C) of paragraph (9), the charter of the resulting System

institution shall be amended by the Farm Credit Administration to

reflect the termination of bridge System bank status, if appropriate.

(11) DISSOLUTION OF BRIDGE SYSTEM BANK.—

(A) IN GENERAL.—Notwithstanding any other provision

of State or Federal law, if the bridge System bank’s status as such

has not previously been terminated by the occurrence of an event

specified in subparagraph (A), (B), or (C) of paragraph (9)—

(ⅰ) the Corporation, after consultation with the Farm

Credit Administration, may, in its discretion, dissolve a

bridge System bank in accordance with this paragraph at any

time; and

(ⅱ) the Corporation, after consultation with the Farm

Credit Administration, shall promptly commence dissolution

proceedings in accordance with this paragraph upon the

expiration of the 2-year period following the date the bridge

System bank was chartered, or any extension thereof, as

provided in paragraph (8).

(B) PROCEDURES.—The Farm Credit Administration

Board shall appoint the Corporation as receiver for a bridge

System bank upon determining to dissolve the bridge System bank.

The Corporation as such receiver shall wind up the affairs of the

bridge System bank in conformity with the provisions of law

relating to the liquidation of closed System banks. With respect to

any such bridge System bank, the Corporation as such receiver

shall have all the rights, powers, and privileges and shall perform

the duties related to the exercise of such rights, powers, or

privileges granted by law to a receiver of any insured System bank

and, notwithstanding any other provision of law in the exercise of

such rights, powers, and privileges, the Corporation shall not be

subject to the direction or supervision of any State agency or other

Federal agency.

(12) MULTIPLE BRIDGE SYSTEM BANKS.—The

Corporation may, in the Corporation’s discretion, organize, and the

Farm Credit Administration may, in its discretion, charter, 2 or more

bridge System banks under this subsection to assume any liabilities and

purchase any assets of a single System institution in default.

(ⅰ) CERTAIN SALES OF ASSETS PROHIBITED.—

(1) PERSONS WHO ENGAGED IN IMPROPER CONDUCT

WITH, OR CAUSED LOSSES TO, SYSTEM INSTITUTIONS.—The

Corporation shall prescribe regulations which, at a minimum, shall

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prohibit the sale of assets of a failed System institution by the

Corporation to—

(A) any person who—

(ⅰ) has defaulted, or was a member of a partnership or

an officer or director of a corporation that has defaulted, on 1

or more obligations the aggregate amount of which exceed

$1,000,000, to such failed System institution;

(ⅱ) has been found to have engaged in fraudulent

activity in connection with any obligation referred to in

clause (ⅰ); and

(ⅲ) proposes to purchase any such asset in whole or in

part through the use of the proceeds of a loan or advance of

credit from the Corporation or from any System institution

for which the Corporation has been appointed as conservator

or receiver;

(B) any person who participated, as an officer or director

of such failed System institution or of any affiliate of such System

institution, in a material way in transactions that resulted in a

substantial loss to such failed System institution;

from participating in the affairs of, such failed System institution

pursuant to any final enforcement action by the Farm Credit

Administration;

(D) any person who has demonstrated a pattern or practice

of defalcation regarding obligations to such failed System

institution; or

(E) any person who is in default on any loan or other

extension of credit from such failed System institution which, if

not paid, will cause substantial loss to the System institution or the

Corporation.

(2) DEFAULTED DEBTORS.—Except as provided in

paragraph (3), any person who is in default on any loan or other

extension of credit from the System institution, which, if not paid, will

cause substantial loss to the System institution or the Corporation, may

not purchase any asset from the conservator or receiver.

(3) SETTLEMENT OF CLAIMS.—Paragraph (1) shall not

apply to the sale or transfer by the Corporation of any asset of any

System institution to any person if the sale or transfer of the asset

resolves or settles, or is part of the resolution or settlement, of—

(A) 1 or more claims that have been, or could have been,

asserted by the Corporation against the person; or

(B) obligations owed by the person to any System

institution, or the Corporation.

(4) DEFINITION OF DEFAULT.—For purposes of this

subsection, the term default means a failure to comply with the terms of

a loan or other obligation to such an extent that the property securing the

obligation is foreclosed upon.

(j) EXPEDITED PROCEDURES FOR CERTAIN CLAIMS.—

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(1) TIME FOR FILING NOTICE OF APPEAL.—The notice of

appeal of any order, whether interlocutory or final, entered in any case

brought by the Corporation against a System institution’s director,

officer, employee, agent, attorney, accountant, or appraiser or any other

person employed by or providing services to a System institution shall

be filed not later than 30 days after the date of entry of the order. The

hearing of the appeal shall be held not later than 120 days after the date

of the notice of appeal. The appeal shall be decided not later than 180

days after the date of the notice of appeal.

(2) SCHEDULING.—A court of the United States shall

expedite the consideration of any case brought by the Corporation

against a System institution’s director, officer, employee, agent,

attorney, accountant, or appraiser or any other person employed by or

providing services to a System institution. As far as practicable the court

shall give such case priority on its docket.

(3) JUDICIAL DISCRETION.—The court may modify the

schedule and limitations stated in paragraphs (1) and (2) in a particular

case, based on a specific finding that the ends of justice that would be

served by making such a modification would outweigh the best interest

of the public in having the case resolved expeditiously.

(k) BOND NOT REQUIRED; AGENTS; FEE.—The Corporation as

conservator or receiver of a System institution shall not be required to furnish

bond and may appoint an agent or agents to assist in its duties as such

conservator or receiver. All fees, compensation, and expenses of liquidation

and administration shall be fixed by the Corporation and may be paid by it out

of funds coming into its possession as such conservator or receiver.

(l) CONSULTATION REGARDING CONSERVATORSHIPS AND

RECEIVERSHIPS.—To the extent practicable—

(1) the Farm Credit Administration shall consult with the

Corporation prior to taking a preresolution action concerning a System

institution that may result in a conservatorship or receivership; and

(2) the Corporation, acting in the capacity of the Corporation as

a conservator or receiver, shall consult with the Farm Credit

Administration prior to taking any significant action impacting System

institutions or service to System borrowers.

(m) APPLICABILITY.—This section shall become applicable with

respect to the power of the Corporation to act as a conservator or receiver on

the date on which the Farm Credit Administration appoints the Corporation as

a conservator or receiver under section 4.12 or 8.41.

12 U.S.C. 2277a-11 Sec. 5.62. Investment of Funds.

Money of the Corporation not otherwise employed shall be invested in

obligations of the United States or in obligations guaranteed as to principal

and interest by the United States.

12 U.S.C. 2277a-12 Sec. 5.63. Exemption from Taxation.

Notwithstanding any other provision of law, the Corporation, including

its franchise, and its capital, reserves, surplus, and income, shall be exempt

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from all taxation imposed by the United States, or by any State, county,

municipality, or local taxing authority, except that any real property of the

Corporation shall be subject to State, county, municipal, and local taxation to

the same extent according to its value as other real property is taxed.

12 U.S.C. 2277a-13 Sec. 5.64. Reports.

(a) IN GENERAL. The Corporation annually shall prepare and

submit to Congress a report of the operations of the Corporation, as soon as

practicable after the first day of January in each calendar year.

(b) CONTENTS. Reports submitted under subsection (a) shall include

information concerning the—

(1) aggregate amount in the Insurance Fund at the close of the

preceding calendar year;

(2) projections of the costs to be incurred by the Corporation

during the calendar year; and

(3) estimates of the aggregate amount to be collected as

premiums during the calendar year.

12 U.S.C. 2277a-14 Sec. 5.65. Prohibitions.

(a) CORPORATE NAME.

(1) USE OF CORPORATE NAME. It shall be unlawful for any

person or entity to use the words "Farm Credit System Insurance

Corporation" or any combination of such words that would have the

effect of leading the public to believe that there is any connection

between such person or entity and the Corporation, by virtue of the

name under which such person or entity does business.

(2) FALSE REPRESENTATION.

(A) BY OUTSIDE PERSON OR ENTITIES. It shall be

unlawful for any person or entity to falsely represent by any

device, that the notes, bonds, debentures, or other obligations of

the person or entity are insured or in any way guaranteed by the

Corporation.

(B) SYSTEM BANKS. It shall be unlawful for any insured

System bank or person that markets insured obligations to falsely

represent the extent to which or the manner in which such

obligations are insured by the Corporation.

(3) PENALTY. Any person or entity that willfully violates any

provision of this subsection shall be fined not more than $1,000,

imprisoned for not more than 1 year, or both.

(b) PAYMENTS OR DISTRIBUTIONS WHILE IN DEFAULT.

(1) IN GENERAL. It shall be unlawful for any insured System

bank to pay any dividends on bank stock or participation certificates or

interest on the capital notes or debentures of such bank (if such interest

is required to be paid only out of net profits) or distribute any of the

capital assets of such bank while the bank remains in default in the

payment of any premium due to the Corporation.

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(2) LIABILITY OF DIRECTORS. Each director or officer of

any insured System bank who willfully participates in the declaration or

payment of any dividend or interest or in any distribution in violation of

this subsection shall be fined not more than $1,000, imprisoned not more

than 1 year, or both.

(3) APPLICABILITY. This subsection shall not apply to any

default that is due to a dispute between the insured System bank and the

Corporation over the amount of such premium if such bank deposits

security satisfactory to the Corporation for payment on final

determination of the issue.

(1) IN GENERAL. Any insured System bank that willfully fails

or refuses to file any certified statement or pay any premium required

under this part shall be subject to a penalty of not more than $100 for

each day that such violations continue, which penalty the Corporation

may recover for its use.

(2) APPLICABILITY. This subsection shall not apply to

conduct with respect to any default that is due to a dispute between the

insured System bank and the Corporation over the amount of such

premium if such bank deposits security satisfactory to the Corporation

for payment on final determination of the issue.

(d) EMPLOYMENT OF PERSONS CONVICTED OF CRIMINAL

OFFENSES.

(1) IN GENERAL. Except with the prior written consent of the

Farm Credit Administration, it shall be unlawful for any person

convicted of any criminal offense involving dishonesty or a breach of

trust to serve as a director, officer, or employee of any System

institution.

(2) PENALTY. For each willful violation of paragraph (1), the

institution involved shall be subject to a penalty of not more than $100

for each day during which the violation continues, which the

Corporation may recover for its use.

(e) PROHIBITION ON USES OF FUNDS RELATED TO FEDERAL

AGRICULTURAL MORTGAGE CORPORATION.—No funds from

administrative accounts or from the Farm Credit System Insurance Fund may

be used by the Corporation to provide assistance to the Federal Agricultural

Mortgage Corporation or to support any activities related to the Federal

Agricultural Mortgage Corporation.

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Title VI—Assistance to Farm Credit System

The entire title was repealed by section 5411(39) of the Agriculture Improvement Act of 2018.

Title VII—Restructuring of System Institutions

Subtitle A—Merger of Banks Within a District

12 U.S.C. 2279a Sec. 7.0. Power to Merge.

The banks within a district may merge into a single entity (hereinafter in

this title referred to as a "merged bank") if the plan of merger is approved

by—

(1) the Farm Credit Administration Board;

(2) the respective boards of directors of the banks involved;

(3) a majority of the stockholders of each bank voting, in person

or by proxy, at a duly authorized stockholders' meeting with each

association entitled to cast a number of votes equal to the number of its

voting stockholders; and

(4) in the case of a bank for cooperatives, a majority of the total

equity interests in such merging bank for cooperatives (including

allocated, but not unallocated, surplus and reserves) held by those

stockholders or subscribers to the guaranty fund of the bank voting.

12 U.S.C. 2279a-1 Sec. 7.1. Board of Directors.

Each merged bank shall elect a board of directors of such number, for

such term, in such manner, and with such qualifications, as may be required in

its bylaws, except that at least one member shall be elected by the other

directors, which member shall not be a director, officer, employee, or

stockholder of a System institution.

12 U.S.C. 2279a-2 Sec. 7.2. Powers of Merged Banks.

(a) IN GENERAL. Except as otherwise provided in this title, a

merged bank shall have all of the powers granted to, and shall be subject to all

of the obligations imposed on, any of the constituent entities of the merged

bank.

(b) REGULATIONS. The Farm Credit Administration shall issue

regulations that establish the manner in which the powers and obligations of

the banks that form the merged bank are consolidated, and to the extent

necessary, reconciled in the merged bank.

12 U.S.C. 2279a-3 Sec. 7.3. Capitalization.

In accordance with section 4.3A, each merged bank shall provide,

through bylaws and subject to Farm Credit Administration regulations, for the

capitalization of the bank and the manner in which bank stock shall be issued,

held, transferred, and retired and bank earnings distributed.

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Subtitle B—Mergers, Transfers of Assets, and Powers of Associations Within a

District

Chapter 1—Transfers by Federal Land Banks to Federal Land Bank Associations

12 U.S.C. 2279b Sec. 7.6. Transfer of Lending Authority.

(a) VOLUNTARY TRANSFERS. A Federal land bank or a merged

bank having a Federal land bank as one of its constituents, may transfer to a

Federal land bank association, and the association may assume, the authority

of the transferring bank in the territorial area served by the association, to

make and participate in long-term real estate mortgage loans under this Act if

the transfer is approved by—

(1) the Farm Credit Administration Board;

(2) the Board of Directors of both institutions; and

(3) a majority of the stockholders of the bank and of the

association, in accordance with the voting provisions of sections 7.0 and

7.8, respectively.

(b) DIRECT LOANS AND FINANCIAL ASSISTANCE. After a

transfer described in subsection (a) or (d)—

(1) the Federal land bank association shall possess all of the

direct long-term real estate mortgage loan authority, formerly possessed

by the transferring bank, in the territory served by the association; and

(2) the bank may provide and extend financial assistance to, and

discount for, or purchase from, the transferee Federal land bank

association any note, draft, or other obligation with the endorsement or

guarantee of the association, the proceeds of which have been advanced

to persons eligible and for purposes of financing by the association

under subsection (a).

regulations that establish the manner in which the powers and obligations of

the banks that make transfers are consolidated and, to the extent necessary,

reconciled in the association referred to in subsection (a).

(d) MANDATORY TRANSFER. On the merger of one or more

production credit associations with one or more Federal land bank

associations, the bank supervising the Federal land bank association shall

transfer all of the direct lending authority of the bank in the territory served by

such Federal land bank association to such merged association.

12 U.S.C. 2279cSec. 7.7. Equalization of Loan-Making Powers of Certain District

Associations.

(a) EQUALIZATION OF LOAN-MAKING POWERS.—

(1) IN GENERAL.—

(A) FEDERAL LAND BANK ASSOCIATIONS.—Subject

to paragraph (2), any association that owns a Federal land bank

association authorized as of January 1, 2007, to make long-term

loans under title I in its chartered territory within the geographic

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area described in subsection (b) may make short- and intermediate-

term loans and otherwise operate as a production credit association

under title II within that same chartered territory.

(B) PRODUCTION CREDIT ASSOCIATIONS.—Subject

to paragraph (2), any association that under its charter has title I

lending authority and that owns a production credit association

authorized as of January 1, 2007, to make short- and intermediate-

term loans under title II in the geographic area described in

subsection (b) may make long-term loans and otherwise operate,

directly or through a subsidiary association, as a Federal land bank

association or Federal land credit association under title I in the

geographic area.

5.17(a), the Farm Credit Bank with which any association had a

written financing agreement as of January 1, 2007, may make

loans and extend other comparable financial assistance with

respect to, and may purchase, any loans made under the new

authority provided under subparagraph (A) or (B) by an

association exercising such authority.

(2) REQUIRED APPROVALS.—An association may exercise

the additional authority provided for in paragraph (1) only after the

exercise of the authority is approved by—

(A) the board of directors of the association; and

(B) a majority of the voting stockholders of the association

(or, if the association is a subsidiary of another association, the

voting stockholders of the parent association) voting, in person or

by proxy, at a duly authorized meeting of stockholders in

accordance with the process described in section 7.11.

(b) APPLICABILITY.—This section applies only to associations the

chartered territory of which was within the geographic area served by the

Federal intermediate credit bank immediately prior to its merger with a Farm

Credit Bank under section 410(e)(1) of the Agricultural Credit Act of 1987

(12 U.S.C. 2011 note; Public Law 100-233).

NOTE: The amendments made by section 5407 of Public Law 110-246

became effective on January 1, 2010.

Chapter 2—Merger of Like and Unlike Associations

12 U.S.C. 2279c-1 Sec. 7.8. Merger of Associations.

(a) IN GENERAL. Two or more associations within the same district,

whether or not organized under the same title of this Act, may merge into a

single entity (hereinafter in this title referred to as a "merged association") if

the plan of merger is approved by—

(1) the Farm Credit Administration Board;

(2) the boards of directors of the associations;

(3) a majority of the shareholders of each association voting, in

person or by proxy, at a duly authorized stockholders' meeting; and

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(4) the Farm Credit Bank.

(b) POWERS, OBLIGATIONS, AND CONSOLIDATION.

(1) POWERS AND OBLIGATIONS. Except as otherwise

provided by this title, a merged association shall—

(A) possess all powers granted under this Act to the

associations forming the merged association; and

(B) be subject to all of the obligations imposed under this

Act on the associations forming the merged association.

(2) CONSOLIDATION. The Farm Credit Administration shall

issue regulations that establish the manner in which the powers and

obligations of the associations that form the merged association are

consolidated and, to the extent necessary, reconciled in the merged

association.

(1) PLAN OF MERGER. Subject to section 4.3A, the number of

shares of capital stock issued by a merged association to the

stockholders of any association forming such merged association, and

the rights and privileges of such shares (including voting power,

preferences on liquidation, and the right to dividends), shall be

determined by the plan of merger adopted by the merged associations.

(2) CAPITALIZATION. In accordance with section 4.3A, each

merged association shall provide, through bylaws and subject to Farm

Credit Administration regulations, for the capitalization of the

association and the manner in which association stock shall be issued,

held, transferred, and retired, and association earnings shall be

distributed.

Chapter 3—Reconsideration

12 U.S.C. 2279c-2Sec. 7.9. Reconsideration.

(a) PERIOD. A stockholder vote in favor of—

(1) the merger of districts under this Act;

(2) the merger of banks within a district under section 7.0;

(3) the transfer of the lending authority of a Federal land bank or

a merged bank having a Federal land bank as one of its constituents,

under section 7.6;

(4) the merger of two or more associations under section 7.8 or

7.13;

(5) the termination of the status of an institution as a System

institution under section 7.10; or

(6) the merger of similar banks under section 7.12;

shall not take effect except in accordance with subsection (b).

(b) RECONSIDERATION.

(1) NOTICE. Not later than 30 days after a stockholder vote in

favor of any of the actions described in subsection (a), the officer or

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employee that records such vote shall ensure that all stockholders of the

voting entity receive notice of the final results of the vote.

(2) EFFECTIVE DATE. A voluntary merger, transfer, or

termination that is approved by a vote of the stockholders of two or

more banks or associations shall not take effect until the expiration of 30

days after the date on which the stockholders of such banks or

associations are notified of the final result of the vote in accordance with

paragraph (1).

(3) PETITION FILED. If a petition for reconsideration of a

merger, transfer, or termination vote, signed by at least 15 percent of the

stockholders of one or more of the affected banks or associations, is

presented to the Farm Credit Administration within 30 days after the

date of the notification required under paragraph (1)—

(A) a voluntary merger, transfer, or termination shall not

take effect until the expiration of 60 days after the date on which

the stockholders were notified of the final result of the vote; and

(B) a special meeting of the stockholders of the affected

banks or associations shall be held during the period referred to in

subparagraph (A) to reconsider the vote.

(4) VOTE ON RECONSIDERATION. If a majority of

stockholders of any one of the affected banks or associations voting, in

person or by written proxy, at a duly authorized stockholders' meeting,

vote against the proposed merger, transfer, or termination, such action

shall not take place.

(5) FAILURE TO FILE PETITION. If a petition for

reconsideration of such vote is either not filed prior to the 60th day after

the vote or, if timely filed, is not signed by at least 15 percent of the

stockholders, the merger, transfer, or termination shall become effective

in accordance with the plan of merger, transfer, or termination.

Chapter 4—Termination and Dissolution of Institutions

12 U.S.C. 2279d Sec. 7.10. Termination of System Institution Status.

(a) CONDITIONS. A System institution may terminate the status of

the institution as a System institution if—

(1) the institution provides written notice to the Farm Credit

Administration Board not later than 90 days prior to the proposed

termination date;

(2) the termination is approved by the Farm Credit

Administration Board;

(3) the appropriate Federal or State authority grants approval to

charter the institution as a bank, savings and loan association, or other

financial institution;

(4) the institution pays to the Farm Credit Insurance Fund the

amount by which the total capital of the institution exceeds, 6 percent of

the assets;

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(5) the institution pays or makes adequate provision for payment

of all outstanding debt obligations of the institution;

(6) the termination is approved by a majority of the stockholders

of the institution voting, in person or by written proxy, at a duly

authorized stockholders' meeting, held prior to giving notice to the Farm

Credit Administration Board; and

(7) the institution meets such other conditions as the Farm Credit

Administration Board by regulation considers appropriate.

(b) EFFECT. On termination of its status as a System institution—

(1) the Farm Credit Administration Board shall revoke the

charter of the institution; and

(2) the institution shall no longer be an instrumentality of the

United States under this Act.

Subtitle C—Approval of Disclosure Information and Issuance of Charters by

the Farm Credit Administration Board

12 U.S.C. 2279e Sec. 7.11. Approval of Disclosure Information and Issuance of

Charters.

(a) DISCLOSURE OF INFORMATION.

(1) APPROVAL OF PLAN. With respect to any plan of merger,

transfer of lending authority, dissolution, or termination, prior to

submission to the voters (voting stockholders and, where required,

contributors to guaranty funds) of the institutions involved, such plan

shall be submitted to the Farm Credit Administration Board, together

with all information that is to be distributed to the voters with respect to

the contemplated action, including an enumerated statement of the

anticipated benefits and potential disadvantages of such action.

(2) NOTICE OF APPROVAL. On notification that the Farm

Credit Administration Board has approved such plan for submission to

the stockholders, or after 60 days of no action on the plan by the Board,

the submitting institutions may submit the plan, together with the

disclosure information, to the voters for the prescribed vote.

(b) NOTICE OF REASONS FOR DISAPPROVAL. If the Farm

Credit Administration Board disapproves the plan for submission to the

stockholders, notification to the submitting institutions shall specify the

reasons for the determination by the Board. If such plan is determined to be

inadequate, it shall not be submitted to the voters for a vote.

lending authority may include a proposed new or revised Federal charter for

the merged or transferee entity. The Farm Credit Administration Board shall

issue such charter on the approval of the plan, as prescribed in this title, unless

the Board determines that the charter submitted is not consistent with this Act.

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Subtitle D—Mergers of Like Entities

12 U.S.C. 2279f Sec. 7.12. Merger of Similar Banks.

(a) IN GENERAL. Banks organized or operating under this Act may

merge with banks in other districts operating under the same title if the plan of

merger is approved by—

(1) the Farm Credit Administration Board;

(2) the respective Boards of Directors of the banks involved;

(3) a majority vote of the stockholders of each bank voting, in

person or by proxy, at a duly authorized stockholders' meeting, with

each association having a number of votes equal to the number of such

association's voting stockholders; and

(4) in the case of a bank for cooperatives, a majority of the total

equity interests in such merging bank for cooperatives (including

allocated, but not unallocated, surplus and reserves) held by those

stockholders or subscribers to the guaranty fund of the bank voting.

(b) POWERS AND CAPITALIZATION. Sections 7.2 and 7.3 shall

apply to banks merged under this section.

(1) IN GENERAL. After a merger under subsection (a), a board

of directors shall be created for the resulting bank.

(2) COMPOSITION. The board shall be composed of—

(A) two directors elected by each of the bank boards, with

at least one such director from each bank being elected by the

eligible stockholders of, or subscribers to, the guaranty fund of the

merging banks; and

(B) one outside director elected by the directors elected

under subparagraph (A).

(3) OUTSIDE DIRECTOR.

(A) QUALIFICATIONS. The outside director elected

under paragraph (2)(B) shall be experienced in financial services

and credit, and within the 2-year period prior to such election, shall

not have been a borrower from, shareholder in, or director, officer,

employee, or agent of any institution of the Farm Credit System.

(B) FAILURE TO ELECT. If the other members of the

board fail to elect an outside director, the Farm Credit

Administration Board shall appoint a qualified person to serve on

the board of directors until such member is so elected.

(4) BYLAWS. Notwithstanding paragraph (2), the bylaws of the

merged bank may, with the approval of the Farm Credit Administration,

provide for a different number of directors to be selected in a different

manner, except that the bylaws shall provide for at least one outside

director.

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12 U.S.C. 2279f-1 Sec. 7.13. Merger of Similar Associations.

(a) IN GENERAL. Associations may voluntarily merge with other

like associations if the plan of merger is approved by—

(1) the Farm Credit Administration Board;

(2) the respective Boards of Directors of the associations

involved;

(3) a majority vote of the stockholders of each association

voting, in person or by proxy, at a duly authorized stockholders'

meeting; and

(4) the Farm Credit Banks involved.

(b) PROCEDURES. The provisions of subsections (b) and (c) of

section 7.8 shall apply to associations merged under this section.

Subtitle E—Taxation of Merger Transactions

12 U.S.C. 2279g Sec. 7.14. Transactions to Accomplish Mergers Exempt from

Certain State Taxes.

No State or political subdivision thereof may treat the merger or

consolidation of two or more institutions of the Farm Credit System under this

title or title IV of the Agricultural Credit Act of 1987 as resulting in a change

of ownership of any property owned by any of such merging or consolidating

institutions, for purposes of any law of such State or political subdivision

providing for reassessment of property on the occurrence of a change of

ownership or imposing a tax on the ownership or transfer of property.

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Title VIII—Agricultural Mortgage Secondary Market

12 U.S.C. 2279aa Sec. 8.0. Definitions.

For purposes of this title:

(1) AGRICULTURAL REAL ESTATE. The term "agricultural

real estate" means—

(A) a parcel or parcels of land, or a building or structure

affixed to the parcel or parcels, that—

(ⅰ) is used for the production of one or more

agricultural commodities or products; and

(ⅱ) consists of a minimum acreage or is used in

producing minimum annual receipts, as determined by the

Corporation; or

(B) a principal residence that is a single family, moderate-

priced residential dwelling located in a rural area, excluding—

(ⅰ) any community having a population in excess of

2,500 inhabitants; and

(ⅱ) any dwelling, excluding the land to which the

dwelling is affixed, with a value exceeding $100,000 (as

adjusted for inflation).

(2) BOARD. The term "Board" means the board of directors

established in section 8.2.

(3) CERTIFIED FACILITY. The term "certified facility"

means:

(A) an agricultural mortgage marketing facility that is

certified under section 8.5; or

(B) the Corporation and any affiliate thereof.

(4) CORPORATION. The term "Corporation" means the

Federal Agricultural Mortgage Corporation established in section 8.1.

(5) GUARANTEE. The term "guarantee" means the guarantee

of timely payment of the principal and interest on securities representing

interests in, or obligations backed by, pools of qualified loans, in

accordance with this title.

(6) ORIGINATOR. The term "originator" means any Farm

Credit System institution, bank, insurance company, business and

industrial development company, savings and loan association,

association of agricultural producers, agricultural cooperative,

commercial finance company, trust company, credit union, or other

entity that originates and services agricultural mortgage loans.

(7) QUALIFIED LOAN. The term "qualified loan" means an

obligation—

(A)(ⅰ) that is secured by a fee-simple or leasehold mortgage

with status as a first lien, on agricultural real estate located in the

United States that is not subject to any legal or equitable claims

deriving from a preceding fee-simple or leasehold mortgage;

(ⅱ) of—

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(Ⅰ) a citizen or national of the United States or an

alien lawfully admitted for permanent residence in the

United States; or

(Ⅱ) a private corporation or partnership

whose members, stockholders, or partners holding a

majority interest in the corporation or partnership are

individuals described in subclause (Ⅰ); and

(ⅲ) of a person, corporation, or partnership that has

training or farming experience that, under criteria established

by the Corporation, is sufficient to ensure a reasonable

likelihood that the loan will be repaid according to its terms;

(B) that is the portion of a loan guaranteed by the Secretary

of Agriculture pursuant to the Consolidated Farm and Rural

Development Act (7 U.S.C. 1921 et seq.), except that—

(ⅰ) subsections (b) and (c) of section 8.6, and sections

8.8 and 8.9, shall not apply to the portion of a loan

guaranteed by the Secretary or to an obligation, pool, or

security representing an interest in or obligation backed by a

pool of obligations relating to the portion of a loan

guaranteed by the Secretary; and

(ⅱ) the portion of a loan guaranteed by the Secretary

shall be considered to meet all standards for qualified loans

for all purposes under this Act; or

telephone facility by a cooperative lender to a borrower that has

received, or is eligible to receive, a loan under the Rural

Electrification Act of 1936 (7 U.S.C. 901 et seq.).

(8) STATE. The term "State" has the meaning given such term

in section 5.51.

Subtitle A—Establishment and Activities of Federal Agricultural Mortgage

Corporation

12 U.S.C. 2279aa-1 Sec. 8.1. Federal Agricultural Mortgage Corporation.

(a) ESTABLISHMENT.

(1) IN GENERAL. There is hereby established a corporation to

be known as the Federal Agricultural Mortgage Corporation, which shall

be a federally chartered instrumentality of the United States.

(2) INSTITUTION WITHIN FARM CREDIT SYSTEM. The

Corporation shall be an institution of the Farm Credit System.

(3) LIABILITY.

(A) CORPORATION. The Corporation shall not be liable

for any debt or obligation of any other institution of the Farm

Credit System.

(B) SYSTEM INSTITUTIONS. The Farm Credit System

and System institutions (other than the Corporation) shall not be

liable for any debt or obligation of the Corporation.

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(b) DUTIES. The Corporation shall—

(1) in consultation with originators, develop uniform

underwriting, security appraisal, and repayment standards for qualified

loans;

(2) determine the eligibility of agricultural mortgage marketing

facilities to contract with the Corporation for the provision of guarantees

for specific mortgage pools;

(3) provide guarantees for the timely repayment of principal and

interest on securities representing interests in, or obligations backed by,

pools of qualified loans; and

(4) purchase qualified loans and issue securities representing

interests in, or obligations backed by, the qualified loans, guaranteed for

the timely repayment of principal and interest.

12 U.S.C. 2279aa-2 Sec. 8.2. Board of Directors.

(a) IN GENERAL.-

(1) ESTABLISHMENT.- The Corporation shall be under the

management of the board of directors.

(2) COMPOSITION.- The Board shall consist of 15 members, of

which—

(A) 5 members shall be elected by holders of common stock

that are insurance companies, banks, or other financial institutions

or entities;

(B) 5 members shall be elected by holders of common stock

that are Farm Credit System institutions; and

with the advice and consent of the Senate

(ⅰ) which members shall not be, or have been,

officers or directors of any financial institutions or entities;

(ⅱ) which members shall be representatives of the

general public;

(ⅲ) of which members not more than 3 shall be

members of the same political party; and

(ⅳ) of which members at least 2 shall be experienced

in farming or ranching.

(3) VACANCY.

(A) ELECTED MEMBERS. Subject to paragraph (5), a

vacancy among the members elected to the Board in the manner

described in subparagraph (A) or (B) of paragraph (2) shall be

filled by the Board from among persons eligible for election to the

position for which the vacancy exists.

(B) APPOINTED MEMBERS. A vacancy among the

members appointed to the Board under paragraph (2)(C) shall be

filled in the manner in which the original appointment was made.

(4) CONTINUATION OF MEMBERSHIP. If—

(A) any member of the Board who was appointed or elected

to the Board from among persons who are representatives of

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banks, other financial institutions or entities, insurance companies,

or Farm Credit System institutions ceases to be such a

representative; or

(B) any member who was appointed from persons who are

not or have not been directors or officers of any financial

institution or entity becomes a director or an officer of any

financial institution or entity; such member may continue as a

member for not longer than the 45-day period beginning on the

date such member ceases to be such a representative, officer, or

employee or becomes such a director or officer, as the case may

be.

(5) TERMS.

(A) APPOINTED MEMBERS. The members appointed by

the President shall serve at the pleasure of the President.

(B) ELECTED MEMBERS. The members elected under

subparagraphs (A) and (B) of subsection (b)(2) shall each be

elected annually for a term ending on the date of the next annual

meeting of the common stockholders of the Corporation and shall

serve until their successors are elected and qualified. Any seat on

the Board that becomes vacant after the annual election of the

directors shall be filled by the members of the Board from the

same category of directors, but only for the unexpired portion of

the term.

to fill a vacancy occurring before the expiration of the term for

which the predecessor of the member was appointed shall be

appointed only for the remainder of such term.

(D) SERVICE AFTER EXPIRATION OF TERM. A

member may serve after the expiration of the term of the member

until the successor of the member has taken office.

(6) QUORUM. 8 members of the Board shall constitute a

quorum.

(7) NO ADDITIONAL PAY FOR FEDERAL OFFICERS OR

EMPLOYEES. Members of the Board who are fulltime officers or

employees of the United States shall receive no additional pay by reason

of service on the Board.

(8) CHAIRPERSON. The President shall designate 1 of the

members of the Board who are appointed by the President as the

chairperson of the Board.

(9) MEETINGS. The Board shall meet at the call of the

chairperson or a majority of its members.

(b) OFFICERS AND STAFF. The Board may appoint, employ, fix

the pay of, and provide other allowances and benefits for such officers and

employees of the Corporation as the Board determines to be appropriate.

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12 U.S.C. 2279aa-3 Sec. 8.3. Powers and Duties of Corporation and Board.

(a) GUARANTEES. After the Board has been duly constituted,

subject to the other provisions of this title and other commitments and

requirements established pursuant to law, the Corporation may provide

guarantees on terms and conditions determined by the Corporation of

securities issued on the security of, or in participation in, pooled interests in

qualified loans.

(b) DUTIES OF THE BOARD.

(1) IN GENERAL. The Board shall—

(A) determine the general policies that shall govern the

operations of the Corporation;

(B) select, appoint, and determine the compensation of

qualified persons to fill such offices as may be provided for in the

bylaws of the Corporation; and

powers, and duties as may be prescribed by the bylaws of the

Corporation or by the Board.

(2) EXECUTIVE OFFICERS AND FUNCTIONS. The persons

elected or appointed under paragraph (1)(B) shall be the executive

officers of the Corporation and shall discharge the executive functions,

powers, and duties of the Corporation.

body corporate and shall have the following powers:

(1) To operate under the direction of its Board.

(2) To issue stock in the manner provided in section 8.4.

(3) To adopt, alter, and use a corporate seal, which shall be

judicially noted.

(4) To provide for a president, 1 or more vice presidents,

secretary, treasurer, and such other officers, employees, and agents, as

may be necessary, define their duties and compensation levels, all

without regard to title 5, United States Code, and require surety bonds or

make other provisions against losses occasioned by acts of such persons.

(5) To provide guarantees in the manner provided under section

8.6.

(6) To have succession until dissolved by a law enacted by the

Congress.

(7) To prescribe bylaws, through the Board, not inconsistent with

law, that shall provide for—

(A) the classes of the stock of the Corporation; and

(B) the manner in which—

(ⅰ) the stock shall be issued, transferred, and retired;

(ⅱ) the officers, employees, and agents of the

Corporation are selected;

(ⅲ) the property of the Corporation is acquired, held,

and transferred;

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(ⅳ) the commitments and other financial assistance of

the Corporation are made;

(ⅴ) the general business of the Corporation is

conducted; and

(ⅵ) the privileges granted by law to the Corporation

are exercised and enjoyed;

(8) To prescribe such standards as may be necessary to carry out

this title.

(9) To enter into contracts and make payments with respect to

the contracts.

(10) To sue and be sued in its corporate capacity and to complain

and defend in any action brought by or against the Corporation in any

State or Federal court of competent jurisdiction.

(11) To make and perform contracts, agreements, and

commitments with persons and entities both inside and outside of the

Farm Credit System.

(12) To acquire, hold, lease, mortgage or dispose of, at public or

private sale, real and personal property, purchase or sell any securities or

obligations, and otherwise exercise all the usual incidents of ownership

of property necessary and convenient to the business of the Corporation.

(13) To purchase, hold, sell, or assign a qualified loan, to issue a

guaranteed security, representing an interest in, or an obligation backed

by, the qualified loan, and to perform all the functions and

responsibilities of an agricultural mortgage marketing facility operating

as a certified facility under this title.

(14) To establish, acquire, and maintain affiliates (as such term is

defined in section 8.11(e)) under applicable State laws to carry out any

activities that otherwise would be performed directly by the Corporation

under this title.

(15) To exercise such other incidental powers as are necessary to

carry out the powers, duties, and functions of the Corporation in

accordance with this title.

(d) FEDERAL RESERVE BANKS AS DEPOSITORIES AND

FISCAL AGENTS. The Federal Reserve banks may act as depositories for,

or as fiscal agents or custodians of, the Corporation.

(e) ACCESS TO BOOK-ENTRY SYSTEM. The Corporation shall

have access to the book-entry system of the Federal Reserve System.

12 U.S.C. 2279aa-4 Sec. 8.4. Stock Issuance.

(a) VOTING COMMON STOCK.

(1) ISSUE.-

(A) IN GENERAL.-The Corporation shall issue voting

common stock having such par value as may be fixed by the Board

from time to time.

Section 105(1) of the Farm Credit System Reform Act of 1996 (P.L. 104–105) attempted to amend section 8.3(d) by striking may act as depositories for, or and

inserting shall act as depositories for, and. The amendment was not executed because the phrase intended to be stricken does not appear.

165

(B) NUMBER OF VOTES.-Each share of voting common

stock shall be entitled to one vote with rights of cumulative voting

at all elections of directors.

(ⅰ) IN GENERAL.-The Board shall offer the voting

common stock to banks, other financial institutions,

insurance companies, and System institutions under such

terms and conditions as the Board may adopt.

(ⅱ) REQUIREMENTS.-The voting common stock

shall be fairly and broadly offered to ensure that-

(Ⅰ) no institution or institutions acquire a

disproportionate share of the total quantity of the voting

common stock outstanding of a class of stock; and

(Ⅱ) capital contributions and issuances of voting

common stock for the contributions are fairly

distributed between entities eligible to hold class A

stock and class B stock.

(D) CLASSES OF STOCK. –

(ⅰ) IN GENERAL.-The stock shall be divided into

two classes with the same par value per share.

(ⅱ) CLASS A STOCK.-Class A stock may be held

only by entities that are not Farm Credit System institutions

and that are entitled to vote for directors specified in section

8.2(a)(2)(A), including national banking associations (which

shall be allowed to purchase and hold such stock).

(ⅲ) CLASS B STOCK.-Class B stock may be held

only by Farm Credit System institutions that are entitled to

vote for directors specified in section 8.2(a)(2)(B).

(2) LIMITATION ON ISSUE. After the date the permanent

board first meets with a quorum of its members present, voting common

stock of the Corporation may be issued only to originators and certified

facilities.

(3) AUTHORITY OF BOARD TO ESTABLISH TERMS AND

PROCEDURES. The Board shall adopt such terms, conditions, and

procedures with regard to the issue of stock under this section as may be

necessary, including the establishment of a maximum amount limitation

on the number of shares of voting common stock that may be

outstanding at any time.

(4) TRANSFERABILITY. Subject to such limitations as the

Board may impose, any share of any class of voting common stock

issued under this section shall be transferable among the institutions or

entities to which shares of such class of common stock may be offered

under paragraph (1), except that, as to the Corporation, such shares shall

be transferable only on the books of the Corporation.

(5) MAXIMUM NUMBER OF SHARES. No stockholder,

other than a holder of class B stock, may own, directly or indirectly,

more than 33 percent of the outstanding shares of such class of the

voting common stock of the Corporation.

(b) REQUIRED CAPITAL CONTRIBUTIONS.

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(1) IN GENERAL. The Corporation may require each originator

and each certified facility to make, or commit to make, such

nonrefundable capital contributions to the Corporation as are reasonable

and necessary to meet the administrative expenses of the Corporation.

(2) STOCK ISSUED AS CONSIDERATION FOR

CONTRIBUTION. The Corporation, from time to time, shall issue to

each originator or certified facility voting common stock evidencing any

capital contributions made pursuant to this subsection.

(1) IN GENERAL. Such dividends as may be declared by the

Board, in the discretion of the Board, shall be paid by the Corporation to

the holders of the voting common stock of the Corporation pro rata

based on the total number of shares of both classes of stock outstanding.

(2) RESERVES REQUIREMENT. No dividend may be

declared or paid by the Board under this section unless the Board

determines that adequate provision has been made for the reserve

required under section 8.10(c)(1).

(3) DIVIDENDS PROHIBITED WHILE OBLIGATIONS ARE

OUTSTANDING. No dividend may be declared or paid by the Board

under this section while any obligation issued by the Corporation to the

Secretary of the Treasury under section 8.13 remains outstanding.

(d) NONVOTING COMMON STOCK. The Corporation is

authorized to issue nonvoting common stock having such par value as may be

fixed by the Board from time to time. Such nonvoting common stock shall be

freely transferable, except that, as to the Corporation, such stock shall be

transferable only on the books of the Corporation. Such dividends as may be

declared by the Board, in the discretion of the Board, may be paid by the

Corporation to the holders of the nonvoting common stock of the Corporation,

subject to paragraphs (2) and (3) of subsection (c).

(e) PREFERRED STOCK.

(1) AUTHORITY OF BOARD. The Corporation is authorized

to issue nonvoting preferred stock having such par value as may be fixed

by the Board from time to time. Such preferred stock issued shall be

freely transferable, except that, as to the Corporation, such stock shall be

transferred only on the books of the Corporation.

(2) RIGHTS OF PREFERRED STOCK. Subject to paragraphs

(2) and (3) of subsection (c), the holders of the preferred stock shall be

entitled to such rate of cumulative dividends, and such holders shall be

subject to such redemption or other conversion provisions, as may be

provided for at the time of issuance. No dividends shall be payable on

any share of common stock at any time when any dividend is due on any

share of preferred stock and has not been paid.

(3) PREFERENCE OF TERMINATION OF BUSINESS. In the

event of any liquidation, dissolution, or winding up of the business of

the Corporation, the holders of the preferred shares of stock shall be paid

in full at the par value thereof, plus all accrued dividends, before the

holders of the common shares receive any payment.

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12 U.S.C. 2279aa-5 Sec. 8.5. Certification of Agricultural Mortgage Marketing

Facilities.

(a) ELIGIBILITY STANDARDS.

(1) ESTABLISHMENT REQUIRED. Within 120 days after the

date on which the permanent board first meets with a quorum present,

the Corporation shall issue standards for the certification of agricultural

mortgage marketing facilities (other than the Corporation), including

eligibility standards in accordance with paragraph (2).

(2) MINIMUM REQUIREMENTS. To be eligible to be

certified under the standards referred to in paragraph (1), an agricultural

mortgage marketing facility (other than the Corporation) shall—

(A) be an institution of the Farm Credit System or a

corporation, association, or trust organized under the laws of the

United States or of any State;

(B) meet or exceed capital standards established by the

Board;

resale of securities representing interests in, or obligations backed

by, pools of qualified loans that have been provided guarantees by

the Corporation;

(D) demonstrate managerial ability with respect to

agricultural mortgage loan underwriting, servicing, and marketing

that is acceptable to the Corporation;

(E) adopt appropriate agricultural mortgage loan

underwriting, appraisal, and servicing standards and procedures

that meet or exceed the standards established by the Board;

(F) for purposes of enabling the Corporation to examine the

facility, agree to allow officers or employees of the Corporation to

have access to all books, accounts, financial records, reports, files,

and all other papers, things, or property, of any type whatsoever,

belonging to or used by the Corporation that are necessary to

facilitate an examination of the operations of the facility in

connection with securities, and the pools of qualified loans that

back securities, for which the Corporation has provided

guarantees; and

(G) adopt appropriate minimum standards and procedures

relating to loan administration and disclosure to borrowers

concerning the terms and rights applicable to loans for which

guarantee is provided, in conformity with uniform standards

established by the Corporation.

(3) NONDISCRIMINATION REQUIREMENT. The standards

established under this subsection shall not discriminate between or

against Farm Credit System and non-Farm Credit System applicants.

(b) CERTIFICATION BY CORPORATION. Within 60 days after

receiving an application for certification under this section, the Corporation

shall certify the facility if the facility meets the standards established by the

Corporation under subsection (a)(1).

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certification by the Corporation of an agricultural mortgage marketing facility

shall be effective for a period determined by the Corporation of not to exceed

5 years.

(d) REVOCATION.

(1) IN GENERAL. After notice and an opportunity for a

hearing, the Corporation may revoke the certification of an agricultural

mortgage marketing facility if the Corporation determines that the

facility no longer meets the standards referred to in subsection (a).

(2) EFFECT OF REVOCATION. Revocation of a certification

shall not affect any pool guarantee that has been issued by the

Corporation.

(e) AFFILIATION OF FCS INSTITUTIONS WITH FACILITY.

(1) ESTABLISHMENT OF AFFILIATE AUTHORIZED.

Notwithstanding any other provision of this Act, any Farm Credit

System institution, acting for such institution alone or in conjunction

with one or more other such institutions, may establish and operate, as

an affiliate, an agricultural mortgage marketing facility if, within a

reasonable time after such establishment, such facility obtains and

thereafter retains certification under subsection (b) as a certified facility.

(2) EXCLUSIVE AGENCY AGREEMENT AUTHORIZED.

Any number of Farm Credit System institutions (other than the

Corporation) may enter into an agreement with any certified facility

(including an affiliate established under paragraph (1)) to sell the

qualified loans of such institutions exclusively to or through the facility.

12 U.S.C. 2279aa-6 Sec. 8.6. Guarantee of Qualified Loans.

(a) GUARANTEE AUTHORIZED FOR CERTIFIED FACILITIES.

(1) IN GENERAL. Subject to the requirements of this section

and on such other terms and conditions as the Corporation shall consider

appropriate, the Corporation—

(A) shall guarantee the timely payment of principal and

interest on the securities issued by a certified facility that

represents interests solely in, or obligations fully backed by, any

pool consisting solely of qualified loans which meet the applicable

standards established under section 8.8 and which are held by such

facility; and

(B) may issue a security, guaranteed as to the timely

payment of principal and interest, that represents an interest solely

in, or an obligation fully backed by, a pool consisting of qualified

loans that—

(ⅰ) meet the applicable standards established under

section 8.8; and

(ⅱ) have been purchased and held by the Corporation.

(2) INABILITY OF FACILITY TO PAY. If the facility is

unable to make any payment of principal or interest on any security for

which a guarantee has been provided by the Corporation under

paragraph (1), the Corporation shall make such payment as and when

169

due in cash, and on such payment shall be subrogated fully to the rights

satisfied by such payment.

(3) POWER OF CORPORATION. Notwithstanding any other

provision of law, the Corporation is empowered, in connection with any

guarantee under this subsection, whether before or after any default, to

provide by contract with the facility for the extinguishment, on default

by the facility, of any redemption, equitable, legal, or other right, title, or

interest of the facility in any mortgage or mortgages constituting the

pool against which the guaranteed securities are issued. With respect to

any issue of guaranteed securities, in the event of default and pursuant

otherwise to the terms of the contract, the mortgages that constitute such

pool shall become the absolute property of the Corporation subject only

to the unsatisfied rights of the holders of the securities based on and

backed by such pool.

(b) OTHER RESPONSIBILITIES OF AND LIMITATIONS ON

CERTIFIED FACILITIES. As a condition for providing any guarantees

under this section for securities issued by a certified facility that represent

interests in, or obligations backed by, any pool of qualified loans, the

Corporation shall require such facility to agree to comply with the following

requirements:

(1) LOAN DEFAULT RESOLUTION. The facility shall act in

accordance with the standards of a prudent institutional lender to resolve

loan defaults.

(2) SUBROGATION OF UNITED STATES AND

CORPORATION TO INTERESTS OF FACILITY. The proceeds of

any collateral, judgments, settlements, or guarantees received by the

facility with respect to any loan in such pool, shall be applied, after

payment of costs of collection—

(A) first, to reduce the amount of any principal outstanding

on any obligation of the Corporation that was purchased by the

Secretary of the Treasury under section 8.13 to the extent the

proceeds of such obligation were used to make guarantees in

connection with such securities; and

(B) second, to reimburse the Corporation for any such

guarantee payments.

(3) LOAN SERVICING. The originator of any loan in such pool

shall be permitted to retain the right to service the loan.

(4) MINORITY PARTICIPATION IN PUBLIC OFFERINGS.

The facility shall take such steps as may be necessary to ensure that

minority owned or controlled investment banking firms, underwriters,

and bond counsels throughout the United States have an opportunity to

participate to a significant degree in any public offering of securities.

(5) NO DISCRIMINATION AGAINST STATES WITH

BORROWERS RIGHTS. The facility may not refuse to purchase

qualified loans originating in States that have established borrowers

rights laws either by statute or under the constitution of such States,

except that the facility may require discounts or charge fees reasonably

170

related to costs and expenses arising from such statutes or constitutional

provisions.

liquidity of securities for which guarantees have been provided under this

section, the Board shall adopt appropriate standards regarding—

(1) the characteristics of any pool of qualified loans serving as

collateral for such securities; and

(2) transfer requirements.

(d) PURCHASE OF GUARANTEED SECURITIES.

(1) PURCHASE AUTHORITY. The Corporation (and

affiliates) may purchase, hold, and sell any securities guaranteed under

this section by the Corporation that represent interests in, or obligations

backed by, pools of qualified loans. Securities issued under this section

shall have maturities and bear rates of interest as determined by the

Corporation.

(2) ISSUANCE OF DEBT OBLIGATIONS. The Corporation

(and affiliates) may issue debt obligations solely for the purpose of

obtaining amounts for the purchase of any securities under paragraph

(1), for the purchase of qualified loans (as defined in section 8.0), and

for maintaining reasonable amounts for business operations (including

adequate liquidity) relating to activities under this subsection.

(3) TERMS AND LIMITATIONS.

(A) TERMS. The obligations issued under this subsection

shall have maturities and bear rates of interest as determined by the

Corporation, and may be redeemable at the option of the

Corporation before maturity in the manner stipulated in the

obligations.

(B) REQUIREMENT. Each obligation shall clearly

indicate that the obligation is not an obligation of, and is not

guaranteed as to principal and interest by, the Farm Credit

Administration, the United States, or any other agency or

instrumentality of the United States (other than the Corporation).

obligations pursuant to paragraph (2) under this subsection while

any obligation issued by the Corporation under section 8.13(a)

remains outstanding.

12 U.S.C. 2279aa-7 Sec. 8.7. [Repealed]

12 U.S.C. 2279aa-8 Sec. 8.8. Standards for Qualified Loans.

(a) STANDARDS.

(1) IN GENERAL.—The Corporation shall establish

underwriting, security appraisal, and repayment standards for qualified

loans taking into account the nature, risk profile, and other differences

between different categories of qualified loans.

171

(2) SUPERVISION, EXAMINATION, AND REPORT OF

CONDITION.—The standards shall be subject to the authorities of the

Farm Credit Administration under section 8.11.

(3) MORTGAGE LOANS.—In establishing standards for

qualified loans, the Corporation shall confine corporate operations, so

far as practicable, to mortgage loans that are deemed by the Board to be

of such quality so as to meet, substantially and generally, the purchase

standards imposed by private institutional mortgage investors.

(b) MINIMUM CRITERIA. To further the purpose of this title to

provide a new source of long-term fixed rate financing to assist farmers and

ranchers to purchase agricultural real estate, the standards established by the

Board pursuant to subsection (a) with respect to loans secured by agricultural

real estate shall, at a minimum—

(1) provide that no agricultural mortgage loan with a loan-to-

value ratio in excess of 80 percent may be treated as a qualified loan;

(2) require each borrower to demonstrate sufficient cash-flow to

adequately service the agricultural mortgage loan;

(3) contain sufficient documentation standards;

(4) contain adequate standards to protect the integrity of the

appraisal process with respect to any agricultural mortgage loans;

(5) contain adequate standards to ensure that the farmer or

rancher is or will be actively engaged in agricultural production, and

require the borrower to certify to the originator that the borrower intends

to continue agricultural production on the farm or ranch involved;

(6) minimize speculation in agricultural real estate for

nonagricultural purposes; and

(7) in establishing the value of agricultural real estate, consider

the purpose for which the real estate is taxed.

(1) IN GENERAL. A loan secured by agricultural real estate

may not be treated as a qualified loan if the principal amount of such

loan exceeds $2,500,000, adjusted for inflation, except as provided in

paragraph (2).

(2) ACREAGE EXCEPTION. Paragraph (1) shall not apply

with respect to any agricultural mortgage loan described in such

paragraph if such loan is secured by agricultural real estate that, in the

aggregate, comprises not more than 2,000 acres.

(d) NONDISCRIMINATION REQUIREMENT. The standards

established under subsection (a) shall not discriminate against small

originators or small agricultural mortgage loans that are at least $50,000. The

Section 5410(b) of the Agriculture Improvement Act of 2018 provided the following:

(b) EFFECTIVE DATE.—The amendment made by subsection (a) [striking “1,000” and inserting

“2,000” in section 8.8(c)(2) of the Farm Credit Act of 1971] shall take effect 1 year after the date a

report submitted in accordance with section 5414 of this Act indicates that it is feasible to increase

the acreage limitation in section 8.8(c)(2) of the Farm Credit Act of 1971 to 2,000 acres.

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Board shall promote and encourage the inclusion of qualified loans for small

farms and family farmers in the agricultural mortgage secondary market.

12 U.S.C. 2279aa-9 Sec. 8.9. Exemption from Restructuring and Borrowers Rights

Provisions for Pooled Loans.

(a) RESTRUCTURING. Notwithstanding any other provision of law,

sections 4.14, 4.14A, 4.14B, 4.14D, and 4.36 shall not apply to any loan

included in a pool of qualified loans backing securities or obligations for

which the Corporation provides guarantee. The loan servicing standards

established by the Corporation shall be patterned after similar standards

adopted by other federally sponsored secondary market facilities.

(b) BORROWERS RIGHTS. At the time of application for a loan (as

defined in section 4.14A(a)(5)), originators that are Farm Credit System

institutions shall give written notice to each applicant of the terms and

conditions of the loan, setting forth separately terms and conditions for pooled

loans and loans that are not pooled. This notice shall include a statement, if

applicable, that the loan may be pooled and that, if pooled, sections 4.14,

4.14A, 4.14B, 4.14D, and 4.36 shall not apply. This notice also shall inform

the applicant that he or she has the right not to have the loan pooled. Within 3

days from the time of commitment, an applicant has the right to refuse to

allow the loan to be pooled, thereby retaining rights under sections 4.14,

4.14A, 4.14B, 4.14D, and 4.36, if applicable.

12 U.S.C. 2279aa-10 Sec. 8.10. Funding for Guarantee; Reserves of Corporation.

(a) GUARANTEE. The Corporation shall provide guarantees for

securities representing interests in, or obligations backed by, pools of qualified

loans through commitments issued by the Corporation providing for

guarantees.

(b) GUARANTEE FEES.

(1) INITIAL FEE. At the time a guarantee is issued by the

Corporation, the Corporation shall assess the certified facility a fee of

not more than 1/2 of 1 percent of the initial principal amount of each

pool of qualified loans.

(2) ANNUAL FEES. Beginning in the second year after the date

the guarantee is issued under paragraph (1), the Corporation may, at the

end of each year, assess the certified facility an annual fee of not more

than 1/2 of 1 percent of the principal amount of the loans then

constituting the pool.

(3) DETERMINATION OF AMOUNT. The Corporation shall

establish such fees on the amount of risk incurred by the Corporation in

providing the guarantees with respect to which such fee is assessed, as

determined by the Corporation. Fees assessed under paragraphs (1) and

(2) shall be established on an actuarially sound basis.

(4) REVIEW BY GAO. The Comptroller General of the United

States may review, and submit to the Congress a report regarding, the

actuarial soundness and reasonableness of the fees established by the

Corporation under this subsection.

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LOSSES REQUIRED.

(1) IN GENERAL. So much of the fees assessed under this

section as the Board determines to be necessary shall be set aside by the

Corporation in a segregated account as a reserve against losses arising

out of the guarantee activities of the Corporation.

(2) EXHAUSTION OF RESERVE REQUIRED. The

Corporation may not issue obligations to the Secretary of the Treasury

under section 8.13 in order to meet the obligations of the Corporation

with respect to any guarantees provided under this title until the reserve

established under paragraph (1) has been exhausted.

(d) FEES TO COVER ADMINISTRATIVE COSTS AUTHORIZED.

The Corporation may impose charges or fees in reasonable amounts in

connection with the administration of its activities under this title to recover

its costs for performing such administration.

12 U.S.C. 2279aa-11 Sec. 8.11. Supervision, Examination, and Report of Condition.

(a) REGULATION.

(1) AUTHORITY. Notwithstanding any other provision of this

Act, the Farm Credit Administration shall have the authority to provide,

acting through the Office of Secondary Market Oversight—

(A) for the examination of the Corporation and its affiliates;

and

(B) for the general supervision of the safe and sound

performance of the powers, functions, and duties vested in the

Corporation and its affiliates by this title, including through the use

of the authorities granted to the Farm Credit Administration

under—

(ⅰ) part C of title V; and

(ⅱ) beginning 6 months after December 13, 1991,

section 5.17(a)(9).

(2) CONSIDERATIONS. In exercising its authority pursuant to

this section, the Farm Credit Administration shall consider—

(A) the purposes for which the Corporation was created;

(B) the practices appropriate to the conduct of secondary

markets in agricultural loans; and

structured secondary market transactions.

(3) OFFICE OF SECONDARY MARKET OVERSIGHT.

(A) Not later than 180 days after the date of enactment of

this paragraph, the Farm Credit Administration Board shall

establish within the Farm Credit Administration the Office of

Secondary Market Oversight.

(B) The Farm Credit Administration Board shall carry out

the authority set forth in this section through the Office of

Secondary Market Oversight.

174

managed by a full-time Director who shall be selected by and

report to the Farm Credit Administration Board.

(b) EXAMINATIONS AND AUDITS.

(1) IN GENERAL. The financial transactions of the Corporation

shall be examined by examiners of the Farm Credit Administration in

accordance with the principles and procedures applicable to commercial

corporate transactions under such rules and regulations as may be

prescribed by the Administration.

(2) FREQUENCY. The examinations shall occur at such times

as the Farm Credit Administration Board may determine, but in no event

less than once each year.

(3) ACCESS. The examiners shall—

(A) have access to all books, accounts, financial records,

reports, files, and all other papers, things, or property belonging to

or in use by the Corporation and necessary to facilitate the audit;

and

(B) be afforded full access for verifying transactions with

certified facilities and other entities with whom the Corporation

conducts transactions.

make and publish an annual report of condition as prescribed by the Farm

Credit Administration. Each report shall contain financial statements prepared

in accordance with generally accepted accounting principles and contain such

additional information as the Farm Credit Administration may by regulation

prescribe. The financial statements of the Corporation shall be audited by an

independent public accountant.

(d) FCA ASSESSMENTS TO COVER COSTS. The Farm Credit

Administration shall assess the Corporation for the cost to the Administration

of any regulatory activities conducted under this section, including the cost of

any examination.

(e) DEFINITION OF AFFILIATE. As used in this title, the term

"affiliate" shall mean an entity effectively controlled or owned by the

Corporation, except that such term shall not include an originator (as defined

in section 8.0).

(f) The Farm Credit Administration Board shall ensure that

(1) the Office of Secondary Market Oversight has access to a

sufficient number of qualified and trained employees to adequately

supervise the secondary market activities of the Corporation; and

(2) the supervision of the powers, functions, and duties of the

Corporation is performed, to the extent practicable, by personnel who

are not responsible for the supervision of the banks and associations of

the Farm Credit System.

12 U.S.C. 2279aa-12 Sec. 8.12. Securities in Credit Enhanced Pools.

(a) FEDERAL LAWS.

175

(1) APPLICABILITY OF CERTAIN FEDERAL SECURITIES

LAWS. For purposes of section 3(a)(2) of the Securities Act of 1933, no

security representing an interest in, or obligations backed by, a pool of

qualified loans for which guarantees have been provided by the

Corporation shall be deemed to be a security issued or guaranteed by a

person controlled or supervised by, or acting as an instrumentality of,

the Government of the United States. No such security shall be deemed

to be a "government security" for purposes of the Securities Exchange

Act of 1934 or for purposes of the Investment Company Act of 1940.

(2) NO FULL FAITH AND CREDIT OF THE UNITED

STATES. Each security for which credit enhancement has been

provided by the Corporation shall clearly indicate that the security is not

an obligation of, and is not guaranteed as to principal or interest by, the

Farm Credit Administration, the United States, or any other agency or

instrumentality of the United States (other than the Corporation).

(b) STATE SECURITIES LAWS.

(1) GENERAL EXEMPTION. Any security or obligation that

has been provided a guarantee by the Corporation shall be exempt from

any law of any State with respect to or requiring registration or

qualification of securities or real estate to the same extent as any

obligation issued by, or guaranteed as to principal and interest by, the

United States or any agency or instrumentality of the United States.

(2) STATE OVERRIDE. The provisions of paragraph (1) shall

not be applicable to any State that, during the 8-year period beginning

on the date of the enactment of this title, enacts a law that—

(A) specifically refers to this subsection; and

(B) expressly provides that paragraph (1) shall not apply to

the State.

(1) IN GENERAL. Securities representing an interest in, or

obligations backed by, pools of qualified loans with respect to which the

Corporation has provided a guarantee shall be authorized investments of

any person, trust, corporation, partnership, association, business trust, or

business entity created pursuant to or existing under the laws of the

United States or any State to the same extent that the person, trust,

corporation, partnership, association, business trust, or business entity is

authorized under any applicable law to purchase, hold, or invest in

obligations issued by or guaranteed as to principal and interest by the

United States or any agency or instrumentality of the United States.

Such securities or obligations may be accepted as security for all

fiduciary, trust, and public funds, the investment or deposits of which

shall be under the authority and control of the United States or any State

or any officers of either.

(2) STATE LIMITATIONS ON PURCHASE, HOLDING, OR

INVESTMENT. If State law limits the purchase, holding, or investment

in obligations issued by the United States by the person, trust,

corporation, partnership, association, business trust, or business entity,

securities or obligations of a certified facility issued on which the

176

Corporation has provided a guarantee shall be considered to be

obligations issued by the United States for purposes of the limitation.

(3) NONAPPLICABILITY OF PROVISIONS.

(A) SUBSEQUENT STATE LAW. Paragraphs (1) and (2)

shall not apply with respect to a particular person, trust,

corporation, partnership, association, business trust, or business

entity, or class thereof, in any State that, prior to the expiration of

the 8-year period beginning on the date of the enactment of this

title, enacts a law that specifically refers to this section and either

prohibits or provides for a more limited authority to purchase,

hold, or invest in the securities by any person, trust, corporation,

partnership, association, business trust, or business entity, or class

thereof, than is provided in paragraphs (1) and (2).

(B) EFFECT OF SUBSEQUENT STATE LAW. The

enactment by any State of a law of the type described in

subparagraph (A) shall not affect the validity of any contractual

commitment to purchase, hold, or invest that was made prior to the

effective date of the law and shall not require the sale or other

disposition of any securities acquired prior to the effective date of

the law.

(d) STATE USURY LAWS SUPERSEDED. A provision of the

Constitution or law of any State shall not apply to an agricultural loan made

by an originator or a certified facility in accordance with this title for sale to

the Corporation or to a certified facility for inclusion in a pool for which the

Corporation has provided, or has committed to provide, a guarantee, if the

loan, not later than 180 days after the date the loan was made, is sold to the

Corporation or included in a pool for which the Corporation has provided a

guarantee, if the provision—

(1) limits the rate or amount of interest, discount points, finance

charges, or other charges that may be charged, taken, received, or

reserved by an agricultural lender or a certified facility; or

(2) limits or prohibits a prepayment penalty (either fixed or

declining), yield maintenance, or make-whole payment that may be

charged, taken, or received by an agricultural lender or a certified

facility in connection with the full or partial payment of the principal

amount due on a loan by a borrower in advance of the scheduled date for

the payment under the terms of the loan, otherwise known as a

prepayment of the loan principal.

12 U.S.C. 2279aa-13 Sec. 8.13. Authority to Issue Obligations to Cover Guarantee

Losses of Corporation.

(a) SALE OF OBLIGATIONS TO TREASURY.

(1) IN GENERAL. Subject to the limitations contained in

section 8.10(c) and the requirement of paragraph (2), the Corporation

may issue obligations to the Secretary of the Treasury the proceeds of

which may be used by the Corporation solely for the purpose of

fulfilling the obligations of the Corporation under any guarantee

provided by the Corporation under this title.

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(2) CERTIFICATION. The Secretary of the Treasury may

purchase obligations of the Corporation under paragraph (1) only if the

Corporation certifies to the Secretary that—

(A) the requirements of section 8.10(c) have been fulfilled;

and

(B) the proceeds of the sale of such obligations are needed

to fulfill the obligations of the Corporation under any guarantee

provided by the Corporation under this title.

(b) EXPEDITIOUS TRANSACTION REQUIRED. Not later than 10

business days after receipt by the Secretary of the Treasury of any certification

by the Corporation under subsection (a)(2), the Secretary of the Treasury shall

purchase obligations issued by the Corporation in an amount determined by

the Corporation to be sufficient to meet the guarantee liabilities of the

Corporation.

OBLIGATIONS. The aggregate amount of obligations issued by the

Corporation under subsection (a)(1) which may be held by the Secretary of the

Treasury at any time (as determined by the Secretary) shall not exceed

$1,500,000,000.

(d) TERMS OF OBLIGATION.

(1) INTEREST. Each obligation purchased by the Secretary of

the Treasury shall bear interest at a rate determined by the Secretary,

taking into consideration the average rate on outstanding marketable

obligations of the United States as of the last day of the last calendar

month ending before the date of the purchase of such obligation.

(2) REDEMPTION. The Secretary of the Treasury shall require

that such obligations be repurchased by the Corporation within a

reasonable time.

(e) COORDINATION WITH TITLE 31, UNITED STATES CODE.

(1) AUTHORITY TO USE PROCEEDS FROM SALE OF

TREASURY SECURITIES. For the purpose of purchasing obligations

of the Corporation, the Secretary of the Treasury may use as a public

debt transaction the proceeds from the sale by the Secretary of any

securities issued under chapter 31 of title 31, United States Code, and

the purposes for which securities may be issued under such chapter are

extended to include such purchases.

(2) TREATMENT OF TRANSACTIONS. All purchases and

sales by the Secretary of the Treasury of obligations issued by the

Corporation under this section shall be treated as public debt

transactions of the United States.

(f) AUTHORIZATION OF APPROPRIATIONS. There is authorized

to be appropriated to the Secretary of the Treasury $1,500,000,000, without

fiscal year limitation, to carry out the purposes of this title.

12 U.S.C. 2279aa-14 Sec. 8.14. Federal Jurisdiction.

Notwithstanding section 1349 of title 28, United States Code, or any

other provision of law:

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(1) The Corporation shall be considered an agency under

sections 1345 and 1442 of such title.

(2) All civil actions to which the Corporation is a party shall be

deemed to arise under the laws of the United States and, to the extent

applicable, shall be deemed to be governed by Federal common law.

The district courts of the United States shall have original jurisdiction of

all such actions, without regard to amount of value.

(3) Any civil or other action, case, or controversy in a court of a

State or any court, other than a district court of the United States, to

which the Corporation is a party may at any time before trial be removed

by the Corporation, without the giving of any bond or security—

(A) to the District Court of the United States for the district

and division embracing the place where the same is pending; or

(B) if there is no such district court, to the District Court of

the United States for the district in which the principal office of the

Corporation is located; by following any procedure for removal for

causes in effect at the time of such removal.

(4) No attachment or execution shall be issued against the

Corporation or any of the property of the Corporation before final

judgment in any Federal, State, or other court.

Subtitle B—Regulation of Financial Safety and Soundness of Federal

Agricultural Mortgage Corporation

12 U.S.C. 2279bb Sec. 8.31. Definitions.

For purposes of this subtitle:

(1) COMPENSATION. The term "compensation" means any

payment of money or the provision of any other thing of current or

potential value in connection with employment.

(2) CORE CAPITAL. The term "core capital" means, with

respect to the Corporation, the sum of the following (as determined in

accordance with generally accepted accounting principles):

(A) The par value of outstanding common stock.

(B) The par value of outstanding preferred stock.

(D) Retained earnings.

(3) DIRECTOR. The term "Director" means the Director of the

Office of Secondary Market Oversight of the Farm Credit

Administration, selected under section 8.11(a)(3).

(4) OFFICE. The term "Office" means the Office of Secondary

Market Oversight of the Farm Credit Administration, established in

section 8.11(a).

(5) REGULATORY CAPITAL. The term "regulatory capital"

means, with respect to the Corporation, the core capital of the

Corporation plus an allowance for losses and guarantee claims, as

determined in accordance with generally accepted accounting principles.

179

(6) STATE. The term "State" means the States of the United

States, the District of Columbia, the Commonwealth of Puerto Rico, the

Commonwealth of the Northern Mariana Islands, Guam, the Virgin

Islands, American Samoa, the Trust Territory of the Pacific Islands, and

any other territory or possession of the United States.

12 U.S.C. 2279bb-1 Sec. 8.32. Risk-Based Capital Levels.

(a) RISK-BASED CAPITAL TEST. The Director of the Office of

Secondary Market Oversight shall, by regulation, establish a risk-based capital

test under this section for the Corporation. When applied to the Corporation,

the risk-based capital test shall determine the amount of regulatory capital for

the Corporation that is sufficient for the Corporation to maintain positive

capital during a 10-year period in which both of the following circumstances

occur:

(1) CREDIT RISK.

(A) IN GENERAL.—With respect to securities

representing an interest in, or obligations backed by, a pool of

qualified loans owned or guaranteed by the Corporation and other

obligations of the Corporation, losses on the underlying qualified

loans occur throughout the United States at a rate of default and

severity (based on any measurements of default reasonably related

to prevailing industry practice in determining capital adequacy)

reasonably related to the rate and severity that occurred in

contiguous areas of the United States containing an aggregate of

not less than 5 percent of the total population of the United States

that, for a period of not less than 2 years (as established by the

Director), experienced the highest rates of default and severity of

agricultural mortgage losses, in comparison with such rates of

default and severity of agricultural mortgage losses in other such

areas for any period of such duration, as determined by the

Director.

(B) RURAL UTILITY LOANS.—With respect to

securities representing an interest in, or obligation backed by, a

pool of qualified loans described in section 8.0(7)(C) owned or

guaranteed by the Corporation, losses occur at a rate of default and

severity reasonably related to risks in electric and telephone

facility loans (as applicable), as determined by the Director.

(2) INTEREST RATE RISK. Interest rates on Treasury

obligations of varying terms increase or decrease over the first 12

months of such 10-year period by not more than the lesser of (A) 50

percent (with respect to the average interest rates on such obligations

during the 12-month period preceding the 10-year period), or (B) 600

basis points, and remain at such level for the remainder of the period.

This paragraph may not be construed to require the Director to

determine interest rate risk under this paragraph based on the interest

rates for various long-term and short-term obligations all increasing or

all decreasing concurrently.

(b) CONSIDERATIONS.

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(1) ESTABLISHMENT OF TEST. In establishing the risk-

based capital test under subsection (a)—

(A) the Director shall take into account appropriate

distinctions based on various types of agricultural mortgage

products, varying terms of Treasury obligations, and any other

factors the Director considers appropriate;

(B) the Director shall conform loan data used in

determining credit risk to the minimum geographic and commodity

diversification standards applicable to pools of qualified loans

eligible for guarantee;

subordinated participating interests under section 8.6(b)(2) (as in

effect before the date of the enactment of the Farm Credit System

Reform Act of 1996);

(D) the Director may take into account other methods or

tests to determine credit risk developed by the Corporation before

December 13, 1991; and

(E) the Director shall consider any other information

submitted by the Corporation in writing during the 180-day period

beginning on December 13, 1991.

(2) REVISING TEST. Upon the expiration of the 8-year period

beginning on December 13, 1991, the Director shall examine the risk-

based capital test under subsection (a) and may revise the test. In

making examinations and revisions under this paragraph, the Director

shall take into account that, before December 13, 1991, the Corporation

has not issued guarantees for pools of qualified loans. To the extent that

the revision of the risk-based capital test causes a change in the

classification of the Corporation within the enforcement levels

established under section 8.35, the Director shall waive the applicability

of any additional enforcement actions available because of such change

for a reasonable period of time, to permit the Corporation to increase the

amount of regulatory capital of the Corporation accordingly.

the risk-based capital level for the Corporation shall be equal to the sum of the

following amounts:

(1) CREDIT AND INTEREST RATE RISK. The amount of

regulatory capital determined by applying the risk-based capital test

under subsection (a) to the Corporation, adjusted to account for foreign

exchange risk.

(2) MANAGEMENT AND OPERATIONS RISK. To provide

for management and operations risk, 30 percent of the amount of

regulatory capital determined by applying the risk-based capital test

under subsection (a) to the Corporation.

(d) SPECIFIED CONTENTS.

(1) IN GENERAL. The regulations establishing the risk-based

capital test under this section shall—

181

(A) be issued by the Director for public comment in the

form of a notice of proposed rulemaking, to be first published after

the expiration of the period referred to in subsection (a); and

(B) contain specific requirements, definitions, methods,

variables, and parameters used under the risk-based capital test and

in implementing the test (such as loan loss severity, float income,

loan-to-value ratios, taxes, yield curve slopes, default experience,

prepayment rates, and performance of pools of qualified loans).

(2) SPECIFICITY. The regulations referred to in paragraph (1)

shall be sufficiently specific to permit an individual other than the

Director to apply the test in the same manner as the Director.

(e) AVAILABILITY OF MODEL. The Director shall make copies of

the statistical model or models used to implement the risk-based capital test

under this section available for public acquisition and may charge a

reasonable fee for such copies.

12 U.S.C. 2279bb-2 Sec. 8.33. Minimum Capital Level.

(a) IN GENERAL. Except as provided in subsection (b), for purposes

of this subtitle, the minimum capital level for the Corporation shall be an

amount of core capital equal to the sum of—

(1) 2.75 percent of the aggregate on-balance sheet assets of the

Corporation, as determined in accordance with generally accepted

accounting principles; and

(2) 0.75 percent of the aggregate off-balance sheet obligations of

the Corporation, which, for the purposes of this subtitle, shall include—

(A) the unpaid principal balance of outstanding securities

that are guaranteed by the Corporation and backed by pools of

qualified loans;

(B) instruments that are issued or guaranteed by the

Corporation and are substantially equivalent to instruments

described in subparagraph (A); and

(b) TRANSITION PERIOD.

(1) IN GENERAL. For purposes of this subtitle, the minimum

capital level for the Corporation—

(A) prior to January 1, 1997, shall be the amount of core

capital equal to the sum of—

(ⅰ) 0.45 percent of aggregate off-balance sheet

obligations of the Corporation;

(ⅱ) 0.45 percent of designated on-balance sheet assets

of the Corporation, as determined under paragraph (2); and

(ⅲ) 2.50 percent of on-balance sheet assets of the

Corporation other than assets designated under paragraph (2);

(B) during the 1-year period ending December 31, 1997,

shall be the amount of core capital equal to the sum of—

(ⅰ) 0.55 percent of aggregate off-balance sheet

obligations of the Corporation;

182

(ⅱ) 1.20 percent of designated on-balance sheet assets

of the Corporation, as determined under paragraph (2); and

(ⅲ) 2.55 percent of on-balance sheet assets of the

Corporation other than assets designated under paragraph (2);

shall be the amount of core capital equal to—

(ⅰ) if the Corporation's core capital is not less than

$25,000,000 on January 1, 1998, the sum of—

(Ⅰ) 0.65 percent of aggregate off-balance sheet

obligations of the Corporation;

(Ⅱ) 1.95 percent of designated on-balance

sheet assets of the Corporation, as determined under

paragraph (2); and

(Ⅲ) 2.65 percent of on-balance sheet assets

of the Corporation other than assets designated under

paragraph (2); or

(ⅱ) if the Corporation's core capital is less than

$25,000,000 on January 1, 1998, the amount determined

under subsection (a); and

(D) on and after January 1, 1999, shall be the amount

determined under subsection (a).

(2) DESIGNATED ON-BALANCE SHEET ASSETS. For

purposes of this subsection, the designated on-balance sheet assets of the

Corporation shall be—

(A) the aggregate on-balance sheet assets of the

Corporation acquired under section 8.6(d); and

(B) the aggregate amount of qualified loans purchased and

held by the Corporation under section 8.3(c)(13).

12 U.S.C. 2279bb-3 Sec. 8.34. Critical Capital Level.

For purposes of this subtitle, the critical capital level for the Corporation

shall be an amount of core capital equal to 50 percent of the total minimum

capital amount determined under section 8.33.

12 U.S.C. 2279bb-4 Sec. 8.35. Enforcement Levels.

(a) IN GENERAL. The Director shall classify the Corporation, for

purposes of this subtitle, according to the following enforcement levels:

(1) LEVEL I. The Corporation shall be classified as within level

I if the Corporation—

(A) maintains an amount of regulatory capital that is equal

to or exceeds the risk-based capital level established under section

8.32; and

(B) equals or exceeds the minimum capital level established

under section 8.33.

(2) LEVEL II. The Corporation shall be classified as within

level II if—

(A) the Corporation—

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(ⅰ) maintains an amount of regulatory capital that is

less than the risk-based capital level; and

(ⅱ) equals or exceeds the minimum capital level; or

(B) the Corporation is otherwise classified as within level II

under subsection (b) of this section.

(3) LEVEL III. The Corporation shall be classified as within

level III if—

(A) the Corporation—

(ⅰ) does not equal or exceed the minimum capital

level; and

(ⅱ) equals or exceeds the critical capital level

established under section 8.34; or

(B) the Corporation is otherwise classified as within level

III under subsection (b) of this section.

(4) LEVEL IV. The Corporation shall be classified as within

level IV if the Corporation—

(A) does not equal or exceed the critical capital level; or

(B) is otherwise classified as within level IV under

subsection (b) of this section.

(b) DISCRETIONARY CLASSIFICATION. If at any time the

Director determines in writing (and provides written notification to the

Corporation and the Farm Credit Administration) that the Corporation is

taking any action not approved by the Director that could result in a rapid

depletion of core capital or that the value of the property subject to mortgages

securitized by the Corporation or property underlying securities guaranteed by

the Corporation, has decreased significantly, the Director may classify the

Corporation—

(1) as within level II, if the Corporation is otherwise within level

(2) as within level III, if the Corporation is otherwise within

level II; or

(3) as within level IV, if the Corporation is otherwise within

level III.

the classification of the Corporation for purposes of this subtitle on not less

than a quarterly basis (and as appropriate under subsection (b)). The first such

determination shall be made for the quarter ending March 31, 1992.

(d) NOTICE. Upon determining under subsection (b) or (c) that the

Corporation is within level II or III, the Director shall provide written notice

to the Congress and to the Corporation—

(1) that the Corporation is within such level;

(2) that the Corporation is subject to the provisions of section

8.36 or 8.37, as applicable; and

(3) stating the reasons for the classification of the Corporation

within such level.

184

12 U.S.C. 2279bb-5 Sec. 8.36. Mandatory Actions Applicable to Level II.

(a) CAPITAL RESTORATION PLAN. If the Corporation is

classified as within level II, the Corporation shall, within the time period

determined by the Director, submit to the Director a capital restoration plan

and, after approval, carry out the plan.

(b) RESTRICTION ON DIVIDENDS. If the Corporation is classified

as within level II, the Corporation may not make any payment of dividends

that would result in the Corporation being reclassified as within level III or

IV.

Director shall immediately reclassify the Corporation as within level III (and

the Corporation shall be subject to the provisions of section 8.37), if—

(1) the Corporation is within level II; and

(2)(A) the Corporation does not submit a capital restoration plan

that is approved by the Director; or

(B) the Director determines that the Corporation has failed

to make, in good faith, reasonable efforts necessary to comply with

such a capital restoration plan and fulfill the schedule for the plan

approved by the Director.

(d) EFFECTIVE DATE. This section shall take effect upon the

expiration of the 30-month period beginning on the date of the enactment of

this section.

12 U.S.C. 2279bb-6 Sec. 8.37. Supervisory Actions Applicable to Level III.

(a) MANDATORY SUPERVISORY ACTIONS.

(1) CAPITAL RESTORATION PLAN. If the Corporation is

classified as within level III, the Corporation shall, within the time

period determined by the Director, submit to the Director a capital

restoration plan and, after approval, carry out the plan.

(2) RESTRICTIONS ON DIVIDENDS.

(A) PRIOR APPROVAL. If the Corporation is classified as

within level III, the Corporation—

(ⅰ) may not make any payment of dividends that

would result in the Corporation being reclassified as within

level IV; and

(ⅱ) may make any other payment of dividends only if

the Director approves the payment before the payment.

(B) STANDARD FOR APPROVAL. If the Corporation is

classified as within level III, the Director may approve a payment

of dividends by the Corporation only if the Director determines

that the payment (ⅰ) will enhance the ability of the Corporation to

meet the risk-based capital level and the minimum capital level

promptly, (ⅱ) will contribute to the long-term safety and soundness

of the Corporation, or (ⅲ) is otherwise in the public interest.

(3) RECLASSIFICATION FROM LEVEL III TO LEVEL IV.

The Director shall immediately reclassify the Corporation as within

level IV if—

185

(A) the Corporation is classified as within level III; and

(B)(ⅰ) the Corporation does not submit a capital restoration

plan that is approved by the Director; or

(ⅱ) the Director determines that the Corporation has

failed to make, in good faith, reasonable efforts necessary to

comply with such a capital restoration plan and fulfill the

schedule for the plan approved by the Director.

(b) DISCRETIONARY SUPERVISORY ACTIONS. In addition to

any other actions taken by the Director (including actions under subsection

(a)), the Director may, at any time, take any of the following actions if the

Corporation is classified as within level III:

(1) LIMITATION ON INCREASE IN OBLIGATIONS. Limit

any increase in, or order the reduction of, any obligations of the

Corporation, including off-balance sheet obligations.

(2) LIMITATION ON GROWTH. Limit or prohibit the growth

of the assets of the Corporation or require contraction of the assets of the

Corporation.

(3) PROHIBITION ON DIVIDENDS. Prohibit the Corporation

from making any payment of dividends.

(4) ACQUISITION OF NEW CAPITAL. Require the

Corporation to acquire new capital in any form and in any amount

sufficient to provide for the reclassification of the Corporation as within

level II.

(5) RESTRICTION OF ACTIVITIES. Require the Corporation

to terminate, reduce, or modify any activity that the Director determines

creates excessive risk to the Corporation.

(6) CONSERVATORSHIP. Appoint a conservator for the

Corporation consistent with this Act.

1992.

Sec. 8.38. [Repealed}

Repealed by section 5411(51) of the Agriculture Improvement Act of 2018.

Subtitle C—Receivership, Conservatorship, and Liquidation of the Federal

Agricultural Mortgage Corporation

12 U.S.C. 2279cc Sec. 8.41. Conservatorship; Liquidation; Receivership.

(a) VOLUNTARY LIQUIDATION. The Corporation may

voluntarily liquidate only with the consent of, and in accordance with a plan

of liquidation approved by, the Farm Credit Administration Board.

(b) INVOLUNTARY LIQUIDATION.

(1) IN GENERAL. The Farm Credit Administration Board may

appoint a conservator or receiver for the Corporation under the

circumstances specified in section 4.12(b).

186

(2) APPLICATION. In applying section 4.12(b) to the

Corporation under paragraph (1)—

(A) the Corporation shall also be considered insolvent if the

Corporation is unable to pay its debts as they fall due in the

ordinary course of business;

(B) a conservator may also be appointed for the

Corporation if the authority of the Corporation to purchase

qualified loans or issue or guarantee loan-backed securities is

suspended; and

(ⅰ)(Ⅰ) the authority of the Corporation to purchase

qualified loans or issue or guarantee loan-backed securities is

suspended; or

(Ⅱ) the Corporation is classified under

section 8.35 as within level III or IV and the alternative

actions available under subtitle B are not satisfactory;

and

(ⅱ) the Farm Credit Administration determines that

the appointment of a conservator would not be appropriate.

(3) NO EFFECT ON SUPERVISORY ACTIONS. The grounds

for appointment of a conservator for the Corporation under this

subsection shall be in addition to those in section 8.37.

(1) QUALIFICATIONS. Notwithstanding section 4.12(b), if a

conservator or receiver is appointed for the Corporation, the conservator

or receiver shall be—

(A) the Farm Credit Administration or any other

governmental entity or employee, including the Farm Credit

System Insurance Corporation; or

(B) any person that—

(ⅰ) has no claim against, or financial interest in, the

Corporation or other basis for a conflict of interest as the

conservator or receiver; and

(ⅱ) has the financial and management expertise

necessary to direct the operations and affairs of the

Corporation and, if necessary, to liquidate the Corporation.

(2) COMPENSATION.

(A) IN GENERAL. A conservator or receiver for the

Corporation and professional personnel (other than a Federal

employee) employed to represent or assist the conservator or

receiver may be compensated for activities conducted as, or for, a

conservator or receiver.

(B) LIMIT ON COMPENSATION. Compensation may

not be provided in amounts greater than the compensation paid to

employees of the Federal Government for similar services, except

that the Farm Credit Administration may provide for compensation

at higher rates that are not in excess of rates prevailing in the

private sector if the Farm Credit Administration determines that

187

compensation at higher rates is necessary in order to recruit and

retain competent personnel.

conservator or receiver may contract with any governmental entity,

including the Farm Credit System Insurance Corporation, to make

personnel, services, and facilities of the entity available to the

conservator or receiver on such terms and compensation

arrangements as shall be mutually agreed, and each entity may

provide the same to the conservator or receiver.

(3) EXPENSES. A valid claim for expenses of the

conservatorship or receivership (including compensation under

paragraph (2)) and a valid claim with respect to a loan made under

subsection (f) shall—

(A) be paid by the conservator or receiver from funds of the

Corporation before any other valid claim against the Corporation;

and

(B) may be secured by a lien, on such property of the

Corporation as the conservator or receiver may determine, that

shall have priority over any other lien.

(4) LIABILITY. If the conservator or receiver for the

Corporation is not a Federal entity, or an officer or employee of the

Federal Government, the conservator or receiver shall not be personally

liable for damages in tort or otherwise for an act or omission performed

pursuant to and in the course of the conservatorship or receivership,

unless the act or omission constitutes gross negligence or any form of

intentional tortious conduct or criminal conduct.

(5) INDEMNIFICATION. The Farm Credit Administration may

allow indemnification of the conservator or receiver from the assets of

the conservatorship or receivership on such terms as the Farm Credit

Administration considers appropriate.

(d) JUDICIAL REVIEW OF APPOINTMENT.

(1) IN GENERAL. Notwithstanding subsection (ⅰ)(1), not later

than 30 days after a conservator or receiver is appointed under

subsection (b), the Corporation may bring an action in the United States

District Court for the District of Columbia for an order requiring the

Farm Credit Administration Board to remove the conservator or

receiver. The court shall, on the merits, dismiss the action or direct the

Farm Credit Administration Board to remove the conservator or

receiver.

(2) STAY OF OTHER ACTIONS. On the commencement of an

action under paragraph (1), any court having jurisdiction of any other

action or enforcement proceeding authorized under this Act to which the

Corporation is a party shall stay the action or proceeding during the

pendency of the action for removal of the conservator or receiver.

(e) GENERAL POWERS OF CONSERVATOR OR RECEIVER.

The conservator or receiver for the Corporation shall have such powers to

conduct the conservatorship or receivership as shall be provided pursuant to

regulations adopted by the Farm Credit Administration Board. Such powers

188

shall be comparable to the powers available to a conservator or receiver

appointed pursuant to section 4.12(b).

(f) BORROWINGS FOR WORKING CAPITAL.

(1) IN GENERAL. If the conservator or receiver of the

Corporation determines that it is likely that there will be insufficient

funds to pay the ongoing administrative expenses of the conservatorship

or receivership or that there will be insufficient liquidity to fund

maturing obligations of the conservatorship or receivership, the

conservator or receiver may borrow funds in such amounts, from such

sources, and at such rates of interest as the conservator or receiver

considers necessary or appropriate to meet the administrative expenses

or liquidity needs of the conservatorship or receivership.

(2) WORKING CAPITAL FROM FARM CREDIT BANKS. A

Farm Credit bank may loan funds to the conservator or receiver for a

loan authorized under paragraph (1) or, in the event of receivership, a

Farm Credit bank may purchase assets of the Corporation.

(g) AGREEMENTS AGAINST INTERESTS OF CONSERVATOR

OR RECEIVER. No agreement that tends to diminish or defeat the right, title,

or interest of the conservator or receiver for the Corporation in any asset

acquired by the conservator or receiver as conservator or receiver for the

Corporation shall be valid against the conservator or receiver unless the

agreement—

(1) is in writing;

(2) is executed by the Corporation and any person claiming an

adverse interest under the agreement, including the obligor,

contemporaneously with the acquisition of the asset by the Corporation;

(3) is approved by the Board or an appropriate committee of the

Board, which approval shall be reflected in the minutes of the Board or

committee; and

(4) has been, continuously, from the time of the agreement's

execution, an official record of the Corporation.

(h) REPORT TO THE CONGRESS. On a determination by the

receiver for the Corporation that there are insufficient assets of the

receivership to pay all valid claims against the receivership, the receiver shall

submit to the Secretary of the Treasury, the Committee on Agriculture of the

House of Representatives, and the Committee on Agriculture, Nutrition, and

Forestry of the Senate a report on the financial condition of the receivership.

(ⅰ) TERMINATION OF AUTHORITIES.

(1) CORPORATION. The charter of the Corporation shall be

canceled, and the authority provided to the Corporation by this title shall

terminate, on such date as the Farm Credit Administration Board

determines is appropriate following the placement of the Corporation in

receivership, but not later than the conclusion of the receivership and

discharge of the receiver.

(2) OVERSIGHT. The Office of Secondary Market Oversight

established under section 8.11 shall be abolished, and section 8.11(a)

and subtitle B shall have no force or effect, on such date as the Farm

Credit Administration Board determines is appropriate following the

189

placement of the Corporation in receivership, but not later than the

conclusion of the receivership and discharge of the receiver.

190

Title 12—United States Code

Banks and Banking

* * * * *

Sec. 1786. Termination of Insured Credit Union Status; Cease and

Desist Orders; Removal or Suspension from Office; Procedure.

* * * * *

(g) REMOVAL AND PROHIBITION AUTHORITY.

* * * * *

(7) INDUSTRYWIDE PROHIBITION.

(A) IN GENERAL. Except as provided in subparagraph

(B), any person who, pursuant to an order issued under this

subsection or subsection (ⅰ), has been removed or suspended from

office in an insured credit union or prohibited from participating in

the conduct of the affairs of an insured credit union may not, while

such order is in effect, continue or commence to hold any office in,

or participate in any manner in the conduct of the affairs of—

(ⅰ) any insured depository institution;

(ⅱ) any institution treated as an insured bank under

paragraph (3) or (4) of section 8(b) of the Federal Deposit

Insurance Act, or as a savings association under section

8(b)(8) of such Act;

(ⅲ) any insured credit union;

(ⅳ) any institution chartered under the Farm Credit

Act of 1971;

(ⅴ) any appropriate Federal depository institution

regulatory agency; and

(ⅵ) the Federal Housing Finance Board and any

Federal home loan bank.

(B) EXCEPTION IF AGENCY PROVIDES WRITTEN

CONSENT. If, on or after the date an order is issued under this

subsection which removes or suspends from office any institution-

affiliated party or prohibits such party from participating in the

conduct of the affairs of an insured credit union, such party

receives the written consent of—

(ⅰ) the Board; and

(ⅱ) the appropriate Federal financial institutions

regulatory agency of the institution described in any clause of

subparagraph (A) with respect to which such party proposes

to become an institution-affiliated party, subparagraph (A)

shall, to the extent of such consent, cease to apply to such

party with respect to the institution described in each written

consent. If any person receives such a written consent from

191

the Board, the Board shall publicly disclose such consent. If

the agency referred to in clause (ⅱ) grants such a written

consent, such agency shall report such action to the Board

and publicly disclose such consent.

VIOLATION OF ORDER. Any violation of subparagraph (A) by

any person who is subject to an order described in such

subparagraph shall be treated as a violation of the order.

(D) APPROPRIATE FEDERAL FINANCIAL

INSTITUTIONS REGULATORY AGENCY DEFINED. For

purposes of this paragraph, the term "appropriate Federal financial

institutions regulatory agency" means—

(ⅰ) the appropriate Federal banking agency, as

provided in section 3(q) of the Federal Deposit Insurance

Act;

(ⅱ) the Farm Credit Administration, in the case of an

institution chartered under the Farm Credit Act of 1971;

(ⅲ) the National Credit Union Administration Board,

in the case of an insured credit union (as defined in section

101(7) of the Federal Credit Union Act); and

(ⅳ) the Secretary of the Treasury, in the case of the

Federal Housing Finance Board and any Federal home loan

bank.

(E) CONSULTATION BETWEEN AGENCIES. The

agencies referred to in clauses (ⅰ) and (ⅱ) of subparagraph (B) shall

consult with each other before providing any written consent

described in subparagraph (B).

(F) APPLICABILITY. This paragraph shall only apply to

a person who is an individual, unless the Board specifically finds

that it should apply to a corporation, firm, or other business

enterprise.

* * * * *

(l) CRIMINAL PENALTY FOR VIOLATION OF CERTAIN

ORDERS.

Whoever—

(1) under this Act, is suspended or removed from, or prohibited

from participating in the affairs of any credit union described in

subsection (g)(5); and

(2) knowingly participates, directly or indirectly, in any manner

(including by engaging in an activity specifically prohibited in such an

order or in subsection (g)(5)) in the conduct of the affairs of such a

credit union; shall be fined not more than $1,000,000, imprisoned for not

more than 5 years, or both.

* * * * *

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Sec. 1818. Termination of Status as Insured Bank.

* * * * *

(e) REMOVAL AND PROHIBITION AUTHORITY.

* * * * *

(7) INDUSTRYWIDE PROHIBITION.

(A) IN GENERAL. Except as provided in subparagraph

(B), any person who, pursuant to an order issued under this

subsection or subsection (g), has been removed or suspended from

office in an insured depository institution or prohibited from

participating in the conduct of the affairs of an insured depository

institution may not, while such order is in effect, continue or

commence to hold any office in, or participate in any manner in the

conduct of the affairs of—

(ⅰ) any insured depository institution;

(ⅱ) any institution treated as an insured bank under

subsection (b)(3) or (b)(4), or as a savings association under

subsection (b)(8);

(ⅲ) any insured credit union under the Federal Credit

Union Act;

(ⅳ) any institution chartered under the Farm Credit

Act of 1971;

(ⅴ) any appropriate Federal depository institution

regulatory agency; and

(ⅵ) the Federal Housing Finance Board and any

Federal home loan bank.

(B) EXCEPTION IF AGENCY PROVIDES WRITTEN

CONSENT. If, on or after the date an order is issued under this

subsection which removes or suspends from office any institution-

affiliated party or prohibits such party from participating in the

conduct of the affairs of an insured depository institution, such

party receives the written consent of—

(ⅰ) the agency that issued such order; and

(ⅱ) the appropriate Federal financial institutions

regulatory agency of the institution described in any clause of

subparagraph (A) with respect to which such party proposes

to become an institution-affiliated party, subparagraph (A)

shall, to the extent of such consent, cease to apply to such

party with respect to the institution described in each written

consent. Any agency that grants such a written consent shall

report such action to the Corporation and publicly disclose

such consent.

VIOLATION OF ORDER. Any violation of subparagraph (A) by

193

any person who is subject to an order described in such

subparagraph shall be treated as a violation of the order.

(D) APPROPRIATE FEDERAL FINANCIAL

INSTITUTIONS REGULATORY AGENCY DEFINED. For

purposes of this paragraph and subsection (j), the term "appropriate

Federal financial institutions regulatory agency" means—

(ⅰ) the appropriate Federal banking agency, in the

case of an insured depository institution;

(ⅱ) the Farm Credit Administration, in the case of an

institution chartered under the Farm Credit Act of 1971;

(ⅲ) the National Credit Union Administration Board,

in the case of an insured credit union (as defined in section

101(7) of the Federal Credit Union Act); and

(ⅳ) the Secretary of the Treasury, in the case of the

Federal Housing Finance Board and any Federal home loan

bank.

(E) CONSULTATION BETWEEN AGENCIES. The

agencies referred to in clauses (ⅰ) and (ⅱ) of subparagraph (B) shall

consult with each other before providing any written consent

described in subparagraph (B).

(F) APPLICABILITY. This paragraph shall only apply to

a person who is an individual, unless the appropriate Federal

banking agency specifically finds that it should apply to a

corporation, firm, or other business enterprise.

* * * * *

(j) CRIMINAL PENALTY. Whoever, being subject to an order in

effect under subsection (e) or (g), without the prior written approval of the

appropriate Federal financial institutions regulatory agency, knowingly

participates, directly or indirectly, in any manner (including by engaging in an

activity specifically prohibited in such an order or in subsection (e)(6) in the

conduct of the affairs of—

(1) any insured depository institution;

(2) any institution treated as an insured bank under subsection

(b)(3) or (b)(4);

(3) any insured credit union (as defined in section 101(7) of the

Federal Credit Union Act); or

(4) any institution chartered under the Farm Credit Act of 1971,

shall be fined not more than $1,000,000, imprisoned for not more than 5

years, or both.

* * * * *

Sec. 1821. Insurance Funds.

* * * * *

194

(t) AGENCIES MAY SHARE INFORMATION WITHOUT

WAIVING PRIVILEGE.

(1) IN GENERAL. A covered agency shall not be deemed to

have waived any privilege applicable to any information by transferring

that information to or permitting that information to be used by—

(A) any other covered agency, in any capacity; or

(B) any other agency of the Federal Government (as defined

in section 6 of title 18).

(2) DEFINITIONS.—

For purposes of this subsection:

(A) COVERED AGENCY.—

The term covered agency means any of the following:

(ⅰ) Any appropriate Federal banking agency.

(ⅱ) The Farm Credit Administration.

(ⅲ) The Farm Credit System Insurance Corporation.

(ⅳ) The National Credit Union Administration.

(ⅴ) The Government Accountability Office.

(ⅵ) The Bureau of Consumer Financial Protection.

(ⅶ) Federal Housing Finance Agency.

(B) PRIVILEGE.—

The term privilege includes any work-product, attorney-client, or

other privilege recognized under Federal or State law.

(3) RULE OF CONSTRUCTION.—

Paragraph (1) shall not be construed as implying that any person waives

any privilege applicable to any information because paragraph (1) does

not apply to the transfer or use of that information.

* * * * *

Sec. 2276. Access to and Examination by Comptroller General of

Books, Documents, etc. of Farm Credit System Banks and

Institutions.

On and after December 19, 1985, the Comptroller General or his duly

authorized representatives shall have access to and the right to examine all

books, documents, papers, records, or other recorded information within the

possession or control of the Federal land banks and Federal land bank

associations, Federal intermediate credit banks and production credit

associations and banks for cooperatives. [This section was added by the

Furthering Continuing Appropriations, 1985, P.L. 99-190, Title I, § 107, Dec.

19, 1985, 99 Stat. 1316.]

* * * * *

Sec. 3025. Examination and Audit.

The Farm Credit Administration and the Government Accountability

Office are hereby authorized and directed to examine and audit the Bank.

Reports regarding such examinations and audits shall be promptly forwarded

to both Houses of the Congress. The Bank shall reimburse the Farm Credit

195

Administration for the costs of any examination or audit conducted by the

Farm Credit Administration. (Pub. L. 95-351, Title I, § 115, Aug. 20, 1978,

92 Stat. 511; Pub. L. 97-35, Title III, § 394(a)(1), Aug. 13, 1981, 95 Stat.

436.)

* * * * *

196

Public Law 101-220

* * * * *

Sec. 7. Purchases of Financial Assistance Corporation Stock by

Farm Credit System Institutions.

* * * * *

(b) PAYMENTS.

(1) FOUR ANNUAL PAYMENTS. Notwithstanding any other

provision of law, the Financial Assistance Corporation shall pay, out of

the Financial Assistance Corporation Trust Fund (hereinafter in this

section referred to as the "Trust Fund") established under section 6.25(b)

of the Farm Credit Act of 1971 (12 U.S.C. 2278b5(b)), to each of the

institutions of the Farm Credit System that purchased stock in the

Financial Assistance Corporation under section 6.29 of the Farm Credit

Act of 1971, four annual payments as provided in this section.

(2) TIMING OF PAYMENTS. The annual payments provided

for by this subsection shall be made available as soon as practicable after

October 1 of each of the calendar years 1989 through 1992.

(3) CALCULATION OF FIRST PAYMENT. The first annual

payment made available under this subsection shall be in an amount

equal to—

(A) a percentage equal to 1.5 times the average rate of

interest received by the Financial Assistance Corporation on assets

of the Trust Fund from March 30, 1988, through September 30,

1989; times

(B) the difference between $177,000,000 and 4.4 percent of

the cumulative amount of the bonds issued by the Financial

Assistance Corporation through September 30, 1989.

(4) CALCULATION OF REMAINING PAYMENTS. The

second, third, and fourth annual payments made available under this

subsection shall be in the amount equal to—

(A) a percentage equal to the average rate of interest

received by the Financial Assistance Corporation on assets of the

Trust Fund during each of the fiscal years 1990 through 1992;

times

(B) the difference between $177,000,000 and 4.4 percent of

the cumulative amount of the bonds issued by the Financial

Assistance Corporation through September 30 of each of such

fiscal years.

(5) DISTRIBUTION OF ANNUAL PAYMENTS. Annual

payments due under this subsection shall be made available to each

institution described in paragraph (1) in an amount equal to the total

197

amount of annual payments to be made available times the ratio of the

amount of stock each institution purchased divided by $177,000,000.

Note: Pub. L. 101-239, section 1006, December 19, 1989, contains a

statutory provision that is identical to this section 7(b) of Pub. L. 101-220.

198

Terrorism Risk Insurance Program Reauthorization Act of 2015

* * * * *

Title III—Business Risk Mitigation and Price Stabilization

* * * * *

Sec. 301. Short Title.

This title may be cited as the Business Risk Mitigation and Price

Stabilization Act of 2015.

Sec. 302. Margin Requirements.

(a) COMMODITY EXCHANGE ACT AMENDMENT.—Section 4s(e)

of the Commodity Exchange Act (7 U.S.C. 6s(e)), as added by section 731 of

the Dodd-Frank Wall Street Reform and Consumer Protection Act, is

amended by adding at the end the following new paragraph:

(4) APPLICABILITY WITH RESPECT TO

COUNTERPARTIES.—The requirements of paragraphs (2)(A)(ⅱ) and

(2)(B)(ⅱ), including the initial and variation margin requirements

imposed by rules adopted pursuant to paragraphs (2)(A)(ⅱ) and

(2)(B)(ⅱ), shall not apply to a swap in which a counterparty qualifies for

an exception under section 2(h)(7)(A), or an exemption issued under

section 4(c)(1) from the requirements of section 2(h)(1)(A) for

cooperative entities as defined in such exemption, or satisfies the criteria

in section 2(h)(7)(D)..

(b) SECURITIES EXCHANGE ACT AMENDMENT.—Section 15F(e)

of the Securities Exchange Act of 1934 (15 U.S.C. 78o–10(e)), as

added by section 764(a) of the Dodd-Frank Wall Street Reform

and Consumer Protection Act, is amended by adding at the end

the following new paragraph:

(4) APPLICABILITY WITH RESPECT TO

COUNTERPARTIES.—The requirements of paragraphs (2)(A)(ⅱ) and

(2)(B)(ⅱ) shall not apply to a security-based swap in which a

counterparty qualifies for an exception under section 3C(g)(1) or

satisfies

the criteria in section 3C(g)(4)..

Sec. 303. Implementation.

The amendments made by this title to the Commodity Exchange

Act shall be implemented—

(1) without regard to—

(A) chapter 35 of title 44, United States Code; and

(B) the notice and comment provisions of section 553 of title

5, United States Code;

(2) through the promulgation of an interim final rule, pursuant to

which public comment will be sought before a final rule is issued; and

199

(3) such that paragraph (1) shall apply solely to changes to rules

and regulations, or proposed rules and regulations, that are limited to

and directly a consequence of such amendments.

200

Agricultural Act of 2014

* * * * *

Title V—Credit

* * * * *

Subtitle E—Miscellaneous

* * * * *

12 USC 2252 note Sec. 5404. Compensation Disclosure by Farm Credit System

Institutions.

(a) FINDINGS.—Congress finds that —

(1) the reasonable disclosure to stockholders by Farm Credit

System institutions regarding the compensation of Farm Credit System

institution senior officers is beneficial to stockholders’ understanding of

the operation of their institutions;

(2) transparency regarding compensation practices reinforces the

cooperative nature of Farm Credit System institutions;

(3) the unique cooperative structure of the Farm Credit System

should be considered when promulgating rules;

(4) the participation of stockholders in the election of the boards of

directors of Farm Credit System institutions provides stockholders the

opportunity to participate in the management of their institutions;

(5) as representatives of stockholders, the boards of directors of

Farm Credit System institutions importantly establish and oversee the

compensation practices of Farm Credit System institutions to ensure the

safe and sound operation of those institutions; and

(6) any regulation should strengthen and not hinder the ability of

Farm Credit System boards of directors to oversee compensation

practices.

(b) IMPLEMENTATION.—Not later than 60 days after the date of

enactment of this Act, the Farm Credit Administration shall review its rules to

reflect Congressional intent that a primary responsibility of the boards of

directors of Farm Credit System institutions, as elected representatives of their

stockholders, is to oversee compensation practices.

Note: Section 5404 of the Agricultural Credit Act of 2014 modifies section 514 of the Farm

Credit Banks and Association Safety and Soundness Act of 1992, Pub. L. 102-552, § 514, 106

Stat 4102, 4134 (Oct. 28, 1992).

201

Dodd-Frank Wall Street Reform and Consumer Protection Act

Part I

Title I—Financial Stability

12 U.S.C. 5311 Sec. 102. Definitions.

(a) IN GENERAL.—For purposes of this title, unless the context

otherwise requires, the following definitions shall apply:

* * * * *

(4) NONBANK FINANCIAL COMPANY DEFINITIONS.

* * * * *

(B) U.S. NONBANK FINANCIAL COMPANY.—The term

U.S. nonbank financial company means a company (other than a

bank holding company, a Farm Credit System institution chartered

and subject to the provisions of the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.), or a national securities exchange (or parent

thereof), clearing agency (or parent thereof, unless the parent is a

bank holding company), security-based swap execution facility, or

security-based swap data repository registered with the

Commission, or a board of trade designated as a contract market

(or parent thereof), or a derivatives clearing organization (or parent

thereof, unless the parent is a bank holding company), swap

execution facility or a swap data repository registered with the

Commodity Futures Trading Commission), that is—

(ⅰ) incorporated or organized under the laws of the

United States or any State; and

(ⅱ) predominantly engaged in financial activities, as

defined in paragraph (6).

* * * * *

Title II—Orderly Liquidation Authority

12 U.S.C. 5381 Sec. 201. Definitions.

* * * * *

(a) IN GENERAL.—In this title, the following definitions shall apply:

* * * * *

(11) FINANCIAL COMPANY.—The term financial company

means any company that—

202

(A) is incorporated or organized under any provision of

Federal law or the laws of any State;

* * * * *

and subject to the provisions of the Farm Credit Act of 1971, as

amended (12 U.S.C. 2001 et seq.), a governmental entity, or a

regulated entity, as defined under section 1303(20) of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992

(12 U.S.C. 4502(20)).

* * * * *

Title VI—Improvements to Regulation of Bank and Savings Association

Holding Companies and Depository Institutions

* * * * *

12 U.S.C. 1851 Sec. 619. Prohibitions on Proprietary Trading and Certain

Relationships with Hedge Funds and Private Equity Funds.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is

amended by adding at the end the following:

SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND

CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE

EQUITY FUNDS. * * * * *

(d) PERMITTED ACTIVITIES.—‘

(1) IN GENERAL.—Notwithstanding the restrictions under

subsection (a), to the extent permitted by any other provision of Federal

or State law, and subject to the limitations under paragraph (2) and any

restrictions or limitations that the appropriate Federal banking agencies,

the Securities and Exchange Commission, and the Commodity Futures

Trading Commission, may determine, the following activities (in this

section referred to as ‘permitted activities’) are permitted:

(A) The purchase, sale, acquisition, or disposition of

obligations of the United States or any agency thereof, obligations,

participations, or other instruments of or issued by the Government

National Mortgage Association, the Federal National Mortgage

Association, the Federal Home Loan Mortgage Corporation, a

Federal Home Loan Bank, the Federal Agricultural Mortgage

Corporation, or a Farm Credit System institution chartered under

and subject to the provisions of the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.), and obligations of any State or of any

political subdivision thereof.

* * * * *

203

Part II—Regulation of Swap Markets

Title VII—Wall Street Transparency and Accountability

7 U.S.C. 1a Sec. 721. Definitions.

(a) IN GENERAL.—Section 1a of the Commodity Exchange Act (7

U.S.C. 1a) is amended—

* * * * *

(2) by inserting after paragraph (1) the following:

(2) APPROPRIATE FEDERAL BANKING AGENCY.—The

term ‘appropriate Federal banking agency’—

(A) has the meaning given the term in section 3 of the

Federal Deposit Insurance Act (12 U.S.C. 1813);

(B) means the Board in the case of a noninsured State bank;

and

institutions.

* * * * *

(39) PRUDENTIAL REGULATOR.—The term ‘prudential

regulator’ means—

* * * * *

(D) the Farm Credit Administration, in the case of a swap

dealer, major swap participant, security-based swap dealer, or

major security-based swap participant that is an institution

chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et

seq.);

* * * * *

7 U.S.C. 2 Sec. 723. Clearing.

* * * * *

(h) CLEARING REQUIREMENT.—

(1) IN GENERAL.—

(A) STANDARD FOR CLEARING.—It shall be unlawful

for any person to engage in a swap unless that person submits such

swap for clearing to a derivatives clearing organization that is

registered under this Act or a derivatives clearing organization that

is exempt from registration under this Act if the swap is required to

be cleared.

204

* * * * *

(7) EXCEPTIONS.—

(A) IN GENERAL.—The requirements of paragraph (1)(A)

shall not apply to a swap if 1 of the counterparties to the swap—

(ⅰ) is not a financial entity;

(ⅱ) is using swaps to hedge or mitigate commercial

risk; and

(ⅲ) notifies the Commission, in a manner set forth by

the Commission, how it generally meets its financial

obligations associated with entering into noncleared

swaps.

(B) OPTION TO CLEAR.—The application of the clearing

exception in subparagraph (A) is solely at the discretion

of the counterparty to the swap that meets the conditions of

clauses (ⅰ) through (ⅲ) of subparagraph (A).

(ⅰ) IN GENERAL.—For the purposes of this paragraph,

the term ‘financial entity’ means—

* * * * *

(Ⅷ) a person predominantly engaged in

activities that are in the business of banking, or in

activities that are financial in nature, as defined in

section 4(k) of the Bank Holding Company Act of

1956.

(ⅱ) EXCLUSION.—The Commission shall consider

whether to exempt small banks, savings associations, farm

credit system institutions, and credit unions, including—

(Ⅰ) depository institutions with total assets of

$10,000,000,000 or less;

(Ⅱ) farm credit system institutions with total assets

of $10,000,000,000 or less; or

(Ⅲ) credit unions with total assets of

$10,000,000,000 or less.

7 U.S.C. 6s Sec. 731. Registration and Regulation of Swap Dealers and

Major Swap Participants.

* * * * *

Sec. 4s. Registration and Regulation of Swap Dealers and Major

Swap Participants.

* * * * *

(d) RULEMAKINGS.—

(1) IN GENERAL.—The Commission shall adopt rules for

persons that are registered as swap dealers or major swap participants

under this section.

205

(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.—

(A) IN GENERAL.—The Commission may not prescribe

rules imposing prudential requirements on swap dealers or major

swap participants for which there is a prudential regulator.

* * * * *

(e) CAPITAL AND MARGIN REQUIREMENTS.—

(1) IN GENERAL.—

(A) SWAP DEALERS AND MAJOR SWAP

PARTICIPANTS THAT ARE BANKS.—Each registered swap

dealer and major swap participant for which there is a prudential

regulator shall meet such minimum capital requirements and

minimum initial and variation margin requirements as the

prudential regulator shall by rule or regulation prescribe under

paragraph (2)(A).

(B) SWAP DEALERS AND MAJOR SWAP

PARTICIPANTS THAT ARE NOT BANKS.—Each registered

swap dealer and major swap participant for which there is not a

prudential regulator shall meet such minimum capital requirements

and minimum initial and variation margin requirements as the

Commission shall by rule or regulation prescribe under paragraph

(2)(B).

(2) RULES.—

(A) SWAP DEALERS AND MAJOR SWAP

PARTICIPANTS THAT ARE BANKS.—The prudential

regulators, in consultation with the Commission and the Securities

and Exchange Commission, shall jointly adopt rules for swap

dealers and major swap participants, with respect to their activities

as a swap dealer or major swap participant, for which there is a

prudential regulator imposing—

(ⅰ) capital requirements; and

(ⅱ) both initial and variation margin requirements on all

swaps that are not cleared by a registered derivatives

clearing organization.

(B) SWAP DEALERS AND MAJOR SWAP

PARTICIPANTS THAT ARE NOT BANKS.—The Commission

shall adopt rules for swap dealers and major swap participants,

with respect to their activities as a swap dealer or major swap

participant, for which there is not a prudential regulator

imposing—

(ⅰ) capital requirements; and

(ⅱ) both initial and variation margin requirements on all

swaps that are not cleared by a registered derivatives clearing

organization.

that is designated as a swap dealer or a major swap participant for

a single type or single class or category of swap or activities, the

prudential regulator and the Commission shall take into account

206

the risks associated with other types of swaps or classes of swaps

or categories of swaps engaged in and the other activities

conducted by that person that are not otherwise subject to

regulation applicable to that person by virtue of the status of the

person as a swap dealer or a major swap participant.

(3) STANDARDS FOR CAPITAL AND MARGIN.—

(A) IN GENERAL.—To offset the greater risk to the swap

dealer or major swap participant and the financial system arising

from the use of swaps that are not cleared, the requirements

imposed under paragraph (2) shall—

(ⅰ) help ensure the safety and soundness of the swap

dealer or major swap participant; and

(ⅱ) be appropriate for the risk associated with the non-

cleared swaps held as a swap dealer or major swap

participant.

* * * * *

requirements under this subsection, the prudential regulator with

respect to swap dealers and major swap participants for which it is

the prudential regulator and the Commission with respect to swap

dealers and major swap participants for which there is no

prudential regulator shall permit the use of noncash collateral, as

the regulator or the Commission determines to be consistent

with—

(ⅰ) preserving the financial integrity of markets trading

swaps; and

(ⅱ) preserving the stability of the United States

financial system.

(D) COMPARABILITY OF CAPITAL AND MARGIN

REQUIREMENTS.—

(ⅰ) IN GENERAL.—The prudential regulators, the

Commission, and the Securities and Exchange Commission

shall periodically (but not less frequently than annually)

consult on minimum capital requirements and minimum

initial and variation margin requirements.

(ⅱ) COMPARABILITY.—The entities described in

clause (ⅰ) shall, to the maximum extent practicable, establish

and maintain comparable minimum capital requirements and

minimum initial and variation margin requirements,

including the use of non cash collateral, for—

(Ⅰ) swap dealers; and

(Ⅱ) major swap participants.

* * * * *

Sec. 742. Retail Commodity Transactions.

(a) IN GENERAL.—Section 2(c) of the Commodity Exchange Act (7

U.S.C. 2(c)) is amended—

207

(1) in paragraph (1), by striking 5a (to the extent provided in

section 5a(g)), 5b, 5d, or 12(e)(2)(B)) and inserting , 5b, or 12(e)(2)(B));

and

(2) in paragraph (2), by adding at the end the following:

(D) RETAIL COMMODITY TRANSACTIONS.—

(ⅰ) APPLICABILITY.—Except as provided in clause

(ⅱ), this subparagraph shall apply to any agreement, contract,

or transaction in any commodity that is—

(Ⅰ) entered into with, or offered to (even if not

entered into with), a person that is not an eligible

contract participant or eligible commercial entity; and

(Ⅱ) entered into, or offered (even if not entered

into), on a leveraged or margined basis, or financed by

the offeror, the counterparty, or a person acting in

concert with the offeror or counterparty on a similar

basis.

(ⅱ) EXCEPTIONS.—This subparagraph shall not apply

to—

(Ⅰ) an agreement, contract, or transaction described

in paragraph (1) or subparagraphs (A), (B), or (C),

including any agreement, contract, or transaction

specifically excluded from subparagraph (A), (B), or

(C);

(Ⅱ) any security;

(Ⅲ) a contract of sale that—

(aa) results in actual delivery within 28 days

or such other longer period as the Commission

may determine by rule or regulation based upon

the typical commercial practice in cash or spot

markets for the commodity involved; or

(bb) creates an enforceable obligation to

deliver between a seller and a buyer that have the

ability to deliver and accept delivery, respectively,

in connection with the line of business of the seller

and buyer; or

(Ⅳ) an agreement, contract, or transaction that is

listed on a national securities exchange registered under

section 6(a) of the Securities Exchange Act of 1934 (15

U.S.C. 78f(a)); or

(Ⅴ) an identified banking product, as defined in

section 402(b) of the Legal Certainty for Bank Products

Act of 2000 (7 U.S.C.27(b)).

(ⅲ) ENFORCEMENT.—Sections 4(a), 4(b), and 4b

apply to any agreement, contract, or transaction described in

clause (ⅰ), as if the agreement, contract, or transaction was a

contract of sale of a commodity for future delivery.

(ⅳ) ELIGIBLE COMMERCIAL ENTITY.—For

purposes of this subparagraph, an agricultural producer,

packer, or handler shall be considered to be an eligible

commercial entity for any agreement, contract, or transaction

208

for a commodity in connection with the line of business of

the agricultural producer, packer, or handler..

* * * * *

FOREIGN EXCHANGE TRANSACTIONS.—

(1) Section 2(c)(2)(B)(ⅰ)(Ⅱ) of the Commodity Exchange Act (7

U.S.C. 2(c)(2)(B)(ⅰ)(Ⅱ)) is amended—

(A) in item (aa), by inserting United States before financial

institution;

(B) by striking items (dd) and (ff);

(ff), respectively; and

(D) in item (dd) (as so redesignated), by striking the

semicolon and inserting ; or.

(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C.

2(c)(2)) (as amended by subsection (a)(2)) is amended by adding at the

end the following:

(E) PROHIBITION.—

(ⅰ) DEFINITION OF FEDERAL REGULATORY

AGENCY.—In this subparagraph, the term ‘Federal

regulatory agency’ means—

(Ⅰ) the Commission;

(Ⅱ) the Securities and Exchange Commission;

(Ⅲ) an appropriate Federal banking agency;

(Ⅳ) the National Credit Union Association; and

(Ⅴ) the Farm Credit Administration.

(ⅱ) PROHIBITION.—

(Ⅰ) IN GENERAL.—Except as provided in

subclause (Ⅱ), a person described in subparagraph

(B)(ⅰ)(Ⅱ) for which there is a Federal regulatory agency

shall not offer to, or enter into with, a person that is not

an eligible contract participant, any agreement,

contract, or transaction in foreign currency described in

subparagraph (B)(ⅰ)(Ⅰ) except pursuant to a rule or

regulation of a Federal regulatory agency allowing the

agreement, contract, or transaction under such terms

and conditions as the Federal regulatory agency shall

prescribe. described in subparagraph (B)(ⅰ)(Ⅱ) for

which a Federal regulatory agency has issued a

proposed rule concerning agreements, contracts, or

transactions in foreign currency described in

subparagraph (B)(ⅰ)(Ⅰ) prior to the date of enactment of

this subclause, subclause (Ⅰ) shall take effect 90 days

after the date of enactment of this subclause.

(ⅲ) REQUIREMENTS OF RULES AND

REGULATIONS.—

209

(Ⅰ) IN GENERAL.—The rules and regulations

described in clause (ⅱ) shall prescribe appropriate

requirements with respect to—

(aa) disclosure;

(bb) recordkeeping;

(cc) capital and margin;

(dd) reporting;

(ee) business conduct;

(ff) documentation; and

(gg) such other standards or requirements as

the Federal regulatory agency shall determine to be

necessary.

(Ⅱ) TREATMENT.—The rules or regulations

described in clause (ⅱ) shall treat all agreements,

contracts, and transactions in foreign currency

described in subparagraph (B)(ⅰ)(Ⅰ), and all agreements,

contracts, and transactions in foreign currency that are

functionally or economically similar to agreements,

contracts, or transactions described in subparagraph

(B)(ⅰ)(Ⅰ), similarly..

* * * * *

Sec. 761. Definitions Under the Securities Exchange Act of 1934.

(a) DEFINITIONS.—Section 3(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78c(a)) is amended—

* * * * *

(74) PRUDENTIAL REGULATOR.—The term ‘prudential

regulator’ has the same meaning as in section 1a of the Commodity

Exchange Act (7 U.S.C. 1a).

* * * * *

15 U.S.C. 78c-3 Sec. 763. Amendments to the Securities Exchange Act of 1934.

(a) CLEARING FOR SECURITY-BASED SWAPS.—The Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after

section 3B (as added by section 717 of this Act):

Sec. 3C. Clearing for Security-Based Swaps.

(a) IN GENERAL.—

(1) STANDARD FOR CLEARING.—It shall be unlawful for any

person to engage in a security-based swap unless that person submits

such security-based swap for clearing to a clearing agency that is

registered under this Act or a clearing agency that is exempt from

registration under this Act if the security-based swap is required to be

cleared.

210

* * * * *

(g) EXCEPTIONS.—

(1) IN GENERAL.—The requirements of subsection (a)(1) shall

not apply to a security-based swap if 1 of the counterparties to the

security-based swap—

(A) is not a financial entity;

(B) is using security-based swaps to hedge or mitigate

commercial risk; and

Commission, how it generally meets its financial obligations

associated with entering into non-cleared security-based swaps.

(2) OPTION TO CLEAR.—The application of the clearing

exception in paragraph (1) is solely at the discretion of the counterparty

to the security-based swap that meets the conditions of subparagraphs

(A) through (C) of paragraph (1).

(3) FINANCIAL ENTITY DEFINITION.—

(A) IN GENERAL.—For the purposes of this subsection, the

term ‘financial entity’ means—

* * * * *

(ⅷ) a person predominantly engaged in activities that

are in the business of banking or financial in nature, as

defined in section 4(k) of the Bank Holding Company Act of

1956.

(B) EXCLUSION.—The Commission shall consider whether

to exempt small banks, savings associations, farm credit system

institutions, and credit unions, including—

(ⅰ) depository institutions with total assets of

$10,000,000,000 or less;

(ⅱ) farm credit system institutions with total assets of

$10,000,000,000 or less; or

(ⅲ) credit unions with total assets of $10,000,000,000

or less.

* * * * *

Sec. 764. Registration and Regulation of Security-Based Swap

Dealers and Major Security-Based Swap Participants.

* * * * *

(d) RULEMAKING.—

(1) IN GENERAL.—The Commission shall adopt rules for

persons that are registered as security-based swap dealers or

211

major security-based swap participants under this section.

(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.—

(A) IN GENERAL.—The Commission may not prescribe

rules imposing prudential requirements on security-based swap

dealers or major security-based swap participants for which there

is a prudential regulator.

* * * * *

(e) CAPITAL AND MARGIN REQUIREMENTS.—

(1) IN GENERAL.—

(A) SECURITY-BASED SWAP DEALERS AND MAJOR

SECURITY-BASED SWAP PARTICIPANTS THAT ARE

BANKS.—Each registered security-based swap dealer and major

security-based swap participant for which there is not a prudential

regulator shall meet such minimum capital requirements and

minimum initial and variation margin requirements as the

prudential regulator shall by rule or regulation prescribe under

paragraph (2)(A).

(B) SECURITY-BASED SWAP DEALERS AND MAJOR

SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT

BANKS.—Each registered security-based swap dealer and major

security-based swap participant for which there is not a prudential

regulator shall meet such minimum capital requirements and

minimum initial and variation margin requirements as the

Commission shall by rule or regulation prescribe

under paragraph (2)(B).

(2) RULES.—

(A) SECURITY-BASED SWAP DEALERS AND MAJOR

SECURITY-BASED SWAP PARTICIPANTS THAT ARE

BANKS.—The prudential regulators, in consultation with the

Commission and the Commodity Futures Trading Commission,

shall adopt rules for security-based swap dealers and major

security-based swap participants, with respect to their activities as

a swap dealer or major swap participant, for which there is a

prudential regulator imposing—

(ⅰ) capital requirements; and

(ⅱ) both initial and variation margin requirements on all

security-based swaps that are not cleared by a registered

clearing agency.

(B) SECURITY-BASED SWAP DEALERS AND MAJOR

SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT

BANKS.—The Commission shall adopt rules for security-based

swap dealers and major security-based swap participants, with

respect to their activities as a swap dealer or major swap

participant, for which there is not a prudential regulator

imposing—

(ⅰ) capital requirements; and

212

(ⅱ) both initial and variation margin requirements on all

swaps that are not cleared by a registered clearing agency.

that is designated as a security-based swap dealer or a major

security-based swap participant for a single type or single class or

category of security-based swap or activities, the prudential

regulator and the Commission shall take into account the risks

associated with other types of security-based swaps or classes of

security-based swaps or categories of security-based swaps

engaged in and the other activities conducted by that person that

are not otherwise subject to regulation applicable to that person by

virtue of the status of the person.

(3) STANDARDS FOR CAPITAL AND MARGIN.—

(A) IN GENERAL.—To offset the greater risk to the

security-based swap dealer or major security-based swap

participant and the financial system arising from the use of

security-based swaps that are not cleared, the requirements

imposed under paragraph (2) shall —

(ⅰ) help ensure the safety and soundness of the security-

based swap dealer or major security-based swap participant;

and

(ⅱ) be appropriate for the risk associated with the non-

cleared security-based swaps held as a security-based swap

dealer or major security-based swap participant.

* * * * *

requirements under this subsection, the prudential regulator with

respect to security-based swap dealers and major security-based

swap participants that are depository institutions, and the

Commission with respect to security-based swap dealers and major

security-based swap participants that are not depository institutions

shall permit the use of noncash collateral, as the regulator or the

Commission determines to be consistent with—

(ⅰ) preserving the financial integrity of markets trading

security-based swaps; and

(ⅱ) preserving the stability of the United States

financial system.

(D) COMPARABILITY OF CAPITAL AND MARGIN

REQUIREMENTS.—

(ⅰ) IN GENERAL.—The prudential regulators, the

Commission, and the Securities and Exchange Commission

shall periodically (but not less frequently than annually)

consult on minimum capital requirements and minimum

initial and variation margin requirements.

(ⅱ) COMPARABILITY.—The entities described in

clause (ⅰ) shall, to the maximum extent practicable, establish

and maintain comparable minimum capital requirements and

213

minimum initial and variation margin requirements,

including the use of noncash collateral, for—

(Ⅰ) security-based swap dealers; and

(Ⅱ) major security-based swap participants.

* * * * *

Title IX—Investor Protections and Improvements to the Regulation of

Securities

Sec. 901. Short Title.

This title may be cited as the Investor Protection and Securities Reform Act of 2010.

* * * * *

12 U.S.C. 78o-7 note Sec. 939A. Review of Reliance on Ratings.

(a) AGENCY REVIEW.—Not later than 1 year after the date of the

enactment of this subtitle, each Federal agency shall, to

the extent applicable, review—

(1) any regulation issued by such agency that requires the use of an

assessment of the credit-worthiness of a security or money market

instrument; and

(2) any references to or requirements in such regulations regarding

credit ratings.

(b) MODIFICATIONS REQUIRED.—Each such agency shall modify

any such regulations identified by the review conducted under subsection (a)

to remove any reference to or requirement of reliance on credit ratings and to

substitute in such regulations such standard of credit-worthiness as each

respective agency shall determine as appropriate for such regulations. In

making such determination, such agencies shall seek to establish, to the extent

feasible, uniform standards of credit-worthiness for use by each such agency,

taking into account the entities regulated by each such agency and the

purposes for which such entities would rely on such standards of credit-

worthiness.

subsection (a), each Federal agency shall transmit a report to Congress

containing a description of any modification of any regulation such agency

made pursuant to subsection (b).

* * * * *

Note: Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act adds a

new provision to the Securities Exchange Act of 1934. United States Code cite is a note after the

statutory provision.

* * * * *

214

Sec. 941. Regulation of Credit Risk Retention.

(a) DEFINITION OF ASSET-BACKED SECURITY.—Section 3(a) of

the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding

at the end the following:

(77) ASSET-BACKED SECURITY.—The term ‘asset-backed

security’—

(A) means a fixed-income or other security

collateralized by any type of self-liquidating financial

asset (including a loan, a lease, a mortgage, or a secured

or unsecured receivable) that allows the holder of the

security to receive payments that depend primarily on

cash flow from the asset, including—

(ⅰ) a collateralized mortgage obligation;

(ⅱ) a collateralized debt obligation;

(ⅲ) a collateralized bond obligation;

(ⅳ) a collateralized debt obligation of asset-backed

securities;

(ⅴ) a collateralized debt obligation of collateralized debt

obligations; and

(ⅵ) a security that the Commission, by rule, determines

to be an asset-backed security for purposes of this section;

* * * * *

(b) CREDIT RISK RETENTION.—The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is

amended by inserting after section 15F, as added by this Act, the following:

15 U.S.C. 78o–11 Sec. 15G. Credit Risk Retention.

* * * * *

(b) REGULATIONS REQUIRED.—

(1) IN GENERAL.—Not later than 270 days after the date of

enactment of this section, the Federal banking agencies and the

Commission shall jointly prescribe regulations to require any securitizer

to retain an economic interest in a portion of the credit risk for any asset

that the securitizer, through the issuance of an asset-backed security,

transfers, sells, or conveys to a third party.

(2) RESIDENTIAL MORTGAGES.—Not later than 270 days

after the date of the enactment of this section, the Federal banking

agencies, the Commission, the Secretary of Housing and Urban

Development, and the Federal Housing Finance Agency, shall jointly

prescribe regulations to require any securitizer to retain an economic

interest in a portion of the credit risk for any residential mortgage asset

that the securitizer, through the issuance of an asset-backed security,

transfers, sells, or conveys to a third party.

215

(1) STANDARDS.—The regulations prescribed under subsection

(b) shall—

(A) prohibit a securitizer from directly or indirectly hedging

or otherwise transferring the credit risk that the securitizer is

required to retain with respect to an asset;

(B) require a securitizer to retain—

(ⅰ) not less than 5 percent of the credit risk for any

asset—

(Ⅰ) that is not a qualified residential mortgage that

is transferred, sold, or conveyed through the issuance of

an asset-backed security by the securitizer; or

(Ⅱ) that is a qualified residential mortgage that is

transferred, sold, or conveyed through the issuance of

an asset-backed security by the securitizer, if 1 or more

of the assets that collateralize the asset-backed security

are not qualified residential mortgages; or

(ⅱ) less than 5 percent of the credit risk for an asset that

is not a qualified residential mortgage that is transferred,

sold, or conveyed through the issuance of an asset-backed

security by the securitizer, if the originator of the asset meets

the underwriting standards prescribed under paragraph

(2)(B);

(ⅰ) the permissible forms of risk retention for purposes

of this section;

(ⅱ) the minimum duration of the risk retention required

under this section; and

(ⅲ) that a securitizer is not required to retain any part

of the credit risk for an asset that is transferred, sold or

conveyed through the issuance of an asset-backed security by

the securitizer, if all of the assets that collateralize the asset-

backed security are qualified residential mortgages;

* * * * *

(e) EXEMPTIONS, EXCEPTIONS, AND ADJUSTMENTS.—

* * * * *

(3) CERTAIN INSTITUTIONS AND PROGRAMS EXEMPT.—

(A) FARM CREDIT SYSTEM INSTITUTIONS.—

Notwithstanding any other provision of this section, the

requirements of this section shall not apply to any loan or other

financial asset made, insured, guaranteed, or purchased by any

institution that is subject to the supervision of the Farm Credit

Administration, including the Federal Agricultural Mortgage

Corporation.

* * * * *

216

Note: Bills have been introduced in Congress to substantially revise the Dodd-Frank Act.

Accordingly, any portion of the Dodd-Frank Act may be modified or repealed in the next 4-

years (2017-21).

* * * * *

Sec. 951. Shareholder Vote on Executive Compensation

Disclosures.

The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended

by inserting after section 14 (15 U.S.C. 78n) the following:

15 U.S.C. 78n–1 Sec. 14A. Shareholder Approval of Executive Compensation.

(a) SEPARATE RESOLUTION REQUIRED.—

(1) IN GENERAL.—Not less frequently than once every 3 years, a

proxy or consent or authorization for an annual or other meeting of the

shareholders for which the proxy solicitation rules of the Commission

require compensation disclosure shall include a separate resolution

subject to shareholder vote to approve the compensation of executives,

as disclosed pursuant to section 229.402 of title 17, Code of Federal

Regulations, or any successor thereto.

(2) FREQUENCY OF VOTE.—Not less frequently than once

every 6 years, a proxy or consent or authorization for an annual or other

meeting of the shareholders for which the proxy solicitation rules of the

Commission require compensation disclosure shall include a separate

resolution subject to shareholder vote to determine whether votes on the

resolutions required under paragraph (1) will occur every 1, 2, or 3

years.

(3) EFFECTIVE DATE.—The proxy or consent or authorization

for the first annual or other meeting of the shareholders occurring after

the end of the 6-month period beginning on the date of enactment of this

section shall include—

(A) the resolution described in paragraph (1); and

(B) a separate resolution subject to shareholder vote to

determine whether votes on the resolutions required under

paragraph (1) will occur every 1, 2, or 3 years.

(b) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE

COMPENSATION.—

(1) DISCLOSURE.—In any proxy or consent solicitation material

(the solicitation of which is subject to the rules of the Commission

pursuant to subsection (a)) for a meeting of the shareholders occurring

after the end of the 6-month period beginning on the date of enactment

of this section, at which shareholders are asked to approve an

acquisition, merger, consolidation, or proposed sale or other disposition

of all or substantially all the assets of an issuer, the person making such

solicitation shall disclose in the proxy or consent solicitation material, in

a clear and simple form in accordance with regulations to be

promulgated by the Commission, any agreements or understandings that

such person has with any named executive officers of such issuer (or of

217

the acquiring issuer, if such issuer is not the acquiring issuer) concerning

any type of compensation (whether present, deferred, or contingent) that

is based on or otherwise relates to the acquisition, merger, consolidation,

sale, or other disposition of all or substantially all of the assets of the

issuer and the aggregate total of all such compensation that may (and the

conditions upon which it may) be paid or become payable to or on

behalf of such executive officer.

(2) SHAREHOLDER APPROVAL.—Any proxy or consent or

authorization relating to the proxy or consent solicitation material

containing the disclosure required by paragraph (1) shall include a

separate resolution subject to shareholder vote to approve such

agreements or understandings and compensation as disclosed, unless

such agreements or understandings have been subject to a shareholder

vote under subsection (a).

subsections (a) and (b) shall not be binding on the issuer

or the board of directors of an issuer, and may not be construed—

(1) as overruling a decision by such issuer or board of

directors;

(2) to create or imply any change to the fiduciary duties of such

issuer or board of directors;

(3) to create or imply any additional fiduciary duties for such

issuer or board of directors; or

(4) to restrict or limit the ability of shareholders to make proposals

for inclusion in proxy materials related to executive compensation.

(d) DISCLOSURE OF VOTES.—Every institutional investment

manager subject to section 13(f) shall report at least annually how it voted on

any shareholder vote pursuant to subsections (a) and (b), unless such vote is

otherwise required to be reported publicly by rule or regulation of the

Commission.

(e) EXEMPTION.—The Commission may, by rule or order, exempt an

issuer or class of issuers from the requirement under subsection (a) or (b). In

determining whether to make an exemption under this subsection, the

Commission shall take into account, among other considerations, whether the

requirements under subsections (a) and (b) disproportionately burdens small

issuers..

* * * * *

Note: This provision only affects companies whose stock is publicly traded and, therefore, it

applies to Farmer Mac, but not other Farm Credit System institutions.

* * * * *

15 USC 78l note Sec. 953. Executive Compensation Disclosures.

(a) DISCLOSURE OF PAY VERSUS PERFORMANCE.—Section 14

of the Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended by this

title, is amended by adding at the end the following:

218

(ⅰ) DISCLOSURE OF PAY VERSUS

PERFORMANCE.—The Commission shall, by rule, require

each issuer to disclose in any proxy or consent solicitation

material for an annual meeting of the shareholders of the

issuer a clear description of any compensation required to be

disclosed by the issuer under section 229.402 of title 17,

Code of Federal Regulations (or any successor thereto),

including information that shows the relationship between

executive compensation actually paid and the financial

performance of the issuer, taking into account any change in

the value of the shares of stock and dividends of the issuer

and any distributions. The disclosure under this subsection

may include a graphic representation of the information

required to be disclosed..

(b) ADDITIONAL DISCLOSURE REQUIREMENTS.—

(1) IN GENERAL.—The Commission shall amend section

229.402 of title 17, Code of Federal Regulations, to require each issuer

to disclose in any filing of the issuer described in section 229.10(a) of

title 17, Code of Federal Regulations (or any successor thereto)—

(A) the median of the annual total compensation of all

employees of the issuer, except the chief executive officer (or any

equivalent position) of the issuer;

(B) the annual total compensation of the chief executive

officer (or any equivalent position) of the issuer; and

the amount described in subparagraph (B).

(2) TOTAL COMPENSATION.—For purposes of this subsection,

the total compensation of an employee of an issuer shall be determined

in accordance with section 229.402(c)(2)(ⅹ) of title 17, Code of Federal

Regulations, as in effect on the day before the date of enactment of this

Act.

Note: This provision only affects companies whose stock is publicly traded and, therefore, it

applies to Farmer Mac, but not other Farm Credit System institutions.

* * * * *

Sec. 954. Recovery of Erroneously Awarded Compensation.

The Securities Exchange Act of 1934 is amended by inserting after

section 10C, as added by section 952, the following:

15 U.S.C. 78j–4 Sec. 10D. Recovery of Erroneously Awarded Compensation

Policy.

(a) LISTING STANDARDS.—The Commission shall, by rule, direct

the national securities exchanges and national securities associations to

prohibit the listing of any security of an issuer that does not comply with the

requirements of this section.

219

(b) RECOVERY OF FUNDS.—The rules of the Commission under

subsection (a) shall require each issuer to develop and implement a policy

providing—

(1) for disclosure of the policy of the issuer on incentive-based

compensation that is based on financial information required to be

reported under the securities laws; and

(2) that, in the event that the issuer is required to prepare an

accounting restatement due to the material noncompliance of the issuer

with any financial reporting requirement under the securities laws, the

issuer will recover from any current or former executive officer of the

issuer who received incentive-based compensation (including stock

options awarded as compensation) during the 3-year period preceding

the date on which the issuer is required to prepare an accounting

restatement, based on the erroneous data, in excess of what would have

been paid to the executive officer under the accounting restatement..

Note: This provision only affects companies whose stock is publicly traded and, therefore, it

applies to Farmer Mac, but not other Farm Credit System institutions.

* * * * *

Title X—Bureau of Consumer Financial Protection

12 U.S.C. 5301 note Sec. 1001. Short Title.

This title may be cited as the Consumer Financial Protection Act of

2010.

* * * * *

12 U.S.C. 5514 Sec. 1024. Supervision of Nondepository Covered Persons.

* * * * *

(f) PRESERVATION OF FARM CREDIT ADMINISTRATION

AUTHORITY.—No provision of this title may be construed as

modifying, limiting, or otherwise affecting the authority of the Farm Credit

Administration.

* * * * *

12 U.S.C. 5517 Sec. 1027. Limitations on Authorities of the Bureau;

Preservation of Authorities.

* * * * *

220

(k) EXCLUSION FOR PERSONS REGULATED BY THE FARM

CREDIT ADMINISTRATION.—

(1) IN GENERAL.—No provision of this title shall be construed

as altering, amending, or affecting the authority of the Farm Credit

Administration to adopt rules, initiate enforcement proceedings, or take

any other action with respect to a person regulated by the Farm Credit

Administration. The Bureau shall have no authority to exercise any

power to enforce this title with respect to a person regulated by the Farm

Credit Administration.

(2) DEFINITION.—For purposes of this subsection, the term

person regulated by the Farm Credit Administration means any Farm

Credit System institution that is chartered and subject to the provisions

of the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.).

* * * * *

Sec. 1100. Amendments to the Secure and Fair Enforcement for

Mortgage Licensing Act of 2008.

The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.)

is amended—

* * * * *

(5) in section 1507 (12 U.S.C. 5106)—(A) in subsection (a)—

(ⅰ) by striking paragraph (1) and inserting the following:

(1) IN GENERAL.—The Bureau shall develop and maintain a

system for registering employees of a depository institution, employees

of a subsidiary that is owned and controlled by a depository institution

and regulated by a Federal banking agency, or employees of an

institution regulated by the Farm Credit Administration, as registered

loan originators with the Nationwide Mortgage Licensing System and

Registry. The system shall be implemented before the end of the 1-year

period beginning on the date of enactment of the Consumer Financial

Protection Act of 2010.; and

(ⅱ) in paragraph (2)—

(Ⅰ) by striking appropriate Federal banking agency

and the Farm Credit Administration and inserting

Bureau; and

* * * * *

(B) in subsection (b), by striking through the Financial

Institutions Examination Council, and the Farm Credit

Administration, and inserting and the Bureau of Consumer

Financial Protection;

* * * * *

221

(7) by striking section 1510 (12 U.S.C. 5109) and inserting the

following:

12 U.S.C. 5109 SEC. 1510. Fees.

The Bureau, the Farm Credit Administration, and the Nationwide

Mortgage Licensing System and Registry may charge reasonable fees to cover

the costs of maintaining and providing access to information from the

Nationwide Mortgage Licensing System and Registry, to the extent that such

fees are not charged to consumers for access to such system and registry.;

* * * * *

Sec. 1100A. Amendments to the Truth in Lending Act.

The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended—

* * * * *

(8) in section 108 (15 U.S.C. 1604), by adding at the end the

following:

(A) by striking subsection (a) and inserting the following:

(a) ENFORCING AGENCIES.—Subject to subtitle B of the Consumer

Financial Protection Act of 2010, compliance with the requirements imposed

under this title shall be enforced under—

* * * * *

(5) the Farm Credit Act of 1971, by the Farm Credit

Administration with respect to any Federal land bank, Federal land bank

association, Federal intermediate credit bank, or production credit

association;

222

Food, Conservation, and Energy Act of 2008

* * * * *

Title V—Credit

* * * * *

Subtitle E—Farm Credit

* * * * *

12 U.S.C. 2252 note Sec. 5407. Equalization of Loan-Making Powers of Certain District

Associations.

* * * * *

(d) EFFECTIVE DATE.—The amendments made by this section take

effective on January 1, 2010.

* * * * *

NOTE: Section 5407 added a new section 7.7 and amended

sections 5.17 of the Farm Credit Act of 1971, 401 of the Farm

Credit Banks and Associations Safety and Soundness Act of 1992,

and 410 of the Agricultural Credit Act of 1987.

223

Housing and Economic Recovery Act of 2008

Title V—S.A.F.E. Mortgage Licensing Act

12 U.S.C. 5101 note Sec. 1501. Short Title.

This title may be cited as the Secure and Fair Enforcement for Mortgage

Licensing Act of 2008 or S.A.F.E. Mortgage Licensing Act of 2008.

12 U.S.C. 5101 Sec. 1502. Purposes and Methods for Establishing a Mortgage

Licensing System and Registry.

In order to increase uniformity, reduce regulatory burden, enhance

consumer protection, and reduce fraud, the States, through the Conference of

State Bank Supervisors and the American Association of Residential

Mortgage Regulators, are hereby encouraged to establish a Nationwide

Mortgage Licensing System and Registry for the residential mortgage industry

that accomplishes all of the following objectives:

(1) Provides uniform license applications and reporting

requirements for State-licensed loan originators.

(2) Provides a comprehensive licensing and supervisory database.

(3) Aggregates and improves the flow of information to and

between regulators.

(4) Provides increased accountability and tracking of loan

originators.

(5) Streamlines the licensing process and reduces the regulatory

burden.

(6) Enhances consumer protections and supports anti-fraud

measures.

(7) Provides consumers with easily accessible information, offered

at no charge, utilizing electronic media, including the Internet, regarding

the employment history of, and publicly adjudicated disciplinary and

enforcement actions against, loan originators.

(8) Establishes a means by which residential mortgage loan

originators would, to the greatest extent possible, be required to act in

the best interests of the consumer.

(9) Facilitates responsible behavior in the subprime mortgage

market place and provides comprehensive training and examination

requirements related to subprime mortgage lending.

(10) Facilitates the collection and disbursement of consumer

complaints on behalf of State and Federal mortgage regulators.

12 U.S.C. 5102 Sec. 1503. Definitions.

For purposes of this title, the following definitions shall apply:

* * * * *

224

(4) LOAN ORIGINATOR.—

(A) IN GENERAL.—The term loan originator—

(ⅰ) means an individual who—

(Ⅰ) takes a residential mortgage loan application;

and

(Ⅱ) offers or negotiates terms of a residential

mortgage loan for compensation or gain;

(ⅱ) does not include any individual who is not

otherwise described in clause (ⅰ) and who performs purely

administrative or clerical tasks on behalf of a person who is

described in any such clause;

(ⅲ) does not include a person or entity that only

performs real estate brokerage activities and is licensed or

registered in accordance with applicable State law, unless the

person or entity is compensated by a lender, a mortgage

broker, or other loan originator or by any agent of such

lender, mortgage broker, or other loan originator; and

(ⅳ) does not include a person or entity solely involved

in extensions of credit relating to timeshare plans, as that

term is defined in section 101(53D) of title 11, United States

Code.

(B) OTHER DEFINITIONS RELATING TO LOAN

ORIGINATOR.—For purposes of this subsection, an individual

assists a consumer in obtaining or applying to obtain a residential

mortgage loan by, among other things, advising on loan terms

(including rates, fees, other costs), preparing loan packages, or

collecting information on behalf of the consumer with regard to a

residential mortgage loan.

term administrative or clerical tasks means the receipt, collection,

and distribution of information common for the processing or

underwriting of a loan in the mortgage industry and

communication with a consumer to obtain information necessary

for the processing or underwriting of a residential mortgage loan.

(D) REAL ESTATE BROKERAGE ACTIVITY

DEFINED.—The term real estate brokerage activity means any

activity that involves offering or providing real estate brokerage

services to the public, including—

(ⅰ) acting as a real estate agent or real estate broker for a

buyer, seller, lessor, or lessee of real property;

(ⅱ) bringing together parties interested in the sale,

purchase, lease, rental, or exchange of real property;

(ⅲ) negotiating, on behalf of any party, any portion of a

contract relating to the sale, purchase, lease, rental, or

exchange of real property (other than in connection with

providing financing with respect to any such transaction);

(ⅳ) engaging in any activity for which a person

engaged in the activity is required to be registered or licensed

225

as a real estate agent or real estate broker under any

applicable law; and

(ⅴ) offering to engage in any activity, or act in any

capacity, described in clause (ⅰ), (ⅱ), (ⅲ), or (ⅳ).

(5) LOAN PROCESSOR OR UNDERWRITER.—

(A) IN GENERAL.—The term loan processor or underwriter

means an individual who performs clerical or support duties at the

direction of and subject to the supervision and instruction of—

(ⅰ) a State-licensed loan originator; or

(ⅱ) a registered loan originator.

(B) CLERICAL OR SUPPORT DUTIES.—For purposes of

subparagraph (A), the term clerical or support duties may

include—

(ⅰ) the receipt, collection, distribution, and analysis of

information common for the processing or underwriting of a

residential mortgage loan; and

(ⅱ) communicating with a consumer to obtain the

information necessary for the processing or underwriting of a

loan, to the extent that such communication does not include

offering or negotiating loan rates or terms, or counseling

consumers about residential mortgage loan rates or terms.

(6) NATIONWIDE MORTGAGE LICENSING SYSTEM AND

REGISTRY.—The term Nationwide Mortgage Licensing System and

Registry means a mortgage licensing system developed and maintained

by the Conference of State Bank Supervisors and the American

Association of Residential Mortgage Regulators for the State licensing

and registration of State-licensed loan originators and the registration of

registered loan originators or any system established by the Secretary

under section 1509.

(7) NONTRADITIONAL MORTGAGE PRODUCT.—The term

nontraditional mortgage product means any mortgage product other than

a 30-year fixed rate mortgage.

(8) REGISTERED LOAN ORIGINATOR.—The term registered

loan originator means any individual who—

(A) meets the definition of loan originator and is an

employee of—

(ⅰ) a depository institution;

(ⅱ) a subsidiary that is—

(Ⅰ) owned and controlled by a depository

institution; and

(Ⅱ) regulated by a Federal banking agency; or

(ⅲ) an institution regulated by the Farm Credit

Administration; and

(B) is registered with, and maintains a unique identifier

through, the Nationwide Mortgage Licensing System and Registry.

(9) RESIDENTIAL MORTGAGE LOAN.—The term residential

mortgage loan means any loan primarily for personal, family, or

household use that is secured by a mortgage, deed of trust, or other

226

equivalent consensual security interest on a dwelling (as defined in

section 103(ⅴ) of the Truth in Lending Act) or residential real estate

upon which is constructed or intended to be constructed a dwelling (as

so defined).

* * * * *

(12) STATE-LICENSED LOAN ORIGINATOR.—The term

State-licensed loan originator means any individual who—

(A) is a loan originator;

(B) is not an employee of—

(ⅰ) a depository institution;

(ⅱ) a subsidiary that is—

(Ⅰ) owned and controlled by a depository

institution; and

(Ⅱ) regulated by a Federal banking agency; or

(ⅲ) an institution regulated by the Farm Credit

Administration; and

1508 and registered as a loan originator with, and maintains a

unique identifier through, the Nationwide Mortgage Licensing

System and Registry.

(13) UNIQUE IDENTIFIER.—

(A) IN GENERAL.—The term unique identifier means a

number or other identifier that—

(ⅰ) permanently identifies a loan originator;

(ⅱ) is assigned by protocols established by the

Nationwide Mortgage Licensing System and Registry and the

Federal banking agencies to facilitate electronic tracking of

loan originators and uniform identification of, and public

access to, the employment history of and the publicly

adjudicated disciplinary and enforcement actions against loan

originators; and

(ⅲ) shall not be used for purposes other than those set

forth under this title.

12 U.S.C. 5103 Sec. 1504. License or Registration Required.

(a) IN GENERAL.—Subject to the existence of a licensing or

registration regime, as the case may be, an individual may not engage in the

business of a loan originator without first—

(1) obtaining, and maintaining annually—

(A) a registration as a registered loan originator; or

(B) a license and registration as a State-licensed loan

originator; and

(2) obtaining a unique identifier.

(b) LOAN PROCESSORS AND UNDERWRITERS.—

(1) SUPERVISED LOAN PROCESSORS AND

UNDERWRITERS.—A loan processor or underwriter who does not

227

represent to the public, through advertising or other means of

communicating or providing information (including the use of business

cards, stationery, brochures, signs, rate lists, or other promotional items),

that such individual can or will perform any of the activities of a loan

originator shall not be required to be a State-licensed loan originator.

(2) INDEPENDENT CONTRACTORS.—An independent

contractor may not engage in residential mortgage loan origination

activities as a loan processor or underwriter unless such independent

contractor is a State-licensed loan originator.

12 U.S.C. 5106 Sec. 1507. System of Registration Administration by Federal

Agencies.

(a) DEVELOPMENT.—

(1) IN GENERAL.—The Bureau shall develop and maintain a

system for registering employees of a depository institution, employees

of a subsidiary that is owned and controlled by a depository institution

and regulated by a Federal banking agency, or employees of an

institution regulated by the Farm Credit Administration, as registered

loan originators with the Nationwide Mortgage Licensing System and

Registry. The system shall be implemented before the end of the 1-year

period beginning on the date of enactment of this title.

(2) REGISTRATION REQUIREMENTS.—In connection with the

registration of any loan originator under this subsection, the Bureau

shall, at a minimum, furnish or cause to be furnished to the Nationwide

Mortgage Licensing System and Registry information concerning the

employees’ identity, including—

(A) fingerprints for submission to the Federal Bureau of

Investigation, and any governmental agency or entity authorized to

receive such information for a State and national criminal history

background check; and

(B) personal history and experience, including authorization

for the Nationwide Mortgage Licensing System and Registry to

obtain information related to any administrative, civil or criminal

findings by any governmental jurisdiction.

(b) COORDINATION.—

(1) UNIQUE IDENTIFIER.—The Bureau, and the Bureau of

Consumer Financial Protection shall coordinate with the Nationwide

Mortgage Licensing System and Registry to establish protocols for

assigning a unique identifier to each registered loan originator that will

facilitate electronic tracking and uniform identification of, and public

access to, the employment history of and publicly adjudicated

disciplinary and enforcement actions against loan originators.

(2) NATIONWIDE MORTGAGE LICENSING SYSTEM AND

REGISTRY DEVELOPMENT.—To facilitate the transfer of

information required by subsection (a)(2), the Nationwide Mortgage

Licensing System and Registry shall coordinate with the Bureau and the

Bureau of Consumer Financial Protection concerning the development

228

and operation, by such System and Registry, of the registration

functionality and data requirements for loan originators.

establishing the registration procedures under subsection (a) and the protocols

for assigning a unique identifier to a registered loan originator, the Bureau

shall make such de minimis exceptions as may be appropriate to paragraphs

(1)(A) and (2) of section 1504(a), shall make reasonable efforts to utilize

existing information to minimize the burden of registering loan originators,

and shall consider methods for automating the process to the greatest extent

practicable consistent with the purposes of this title.

12 U.S.C. 5109 Sec. 1510. Fees.

The Bureau, the Farm Credit Administration, and the Nationwide

Mortgage Licensing System and Registry may charge reasonable fees to cover

the costs of maintaining and providing access to information from the

Nationwide Mortgage Licensing System and Registry, to the extent that such

fees are not charged to consumers for access to such system and registry.

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Farm Security and Rural Investment Act of 2002

Title VI—Rural Development

7 U.S.C. 2009cc-9 Sec. 384J. Financial Institution Investments.

(a) IN GENERAL.—Except as otherwise provided in this section and

notwithstanding any other provision of law, the following banks, associations,

and institutions are eligible both to establish and invest in any rural business

investment company or in any entity established to invest solely in rural

business investment companies:

(1) Any bank or savings association the deposits of which are

insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et

seq.), including an investment pool created entirely by such bank or

savings association.

(2) Any Farm Credit System institution described in section

1.2(a) of the Farm Credit Act of 1971 (12 U.S.C. 2002(a)).

(b) LIMITATION.—No bank, association, or institution described in

subsection (a) may make investments described in subsection (a) that are

greater than 5 percent of the capital and surplus of the bank, association, or

institution.

COMPANIES CONTROLLED BY FARM CREDIT SYSTEM

INSTITUTIONS.—If a Farm Credit System institution described in section

1.2(a) of the Farm Credit Act of 1971 (12 U.S.C. 2002(a)) holds more than 50

percent of the shares of a rural business investment company, either alone or

in conjunction with other System institutions (or affiliates), the rural business

investment company shall not provide equity investments in, or provide other

financial assistance to, entities that are not otherwise eligible to receive

financing from the Farm Credit System under that Act (12 U.S.C. 2001 et

seq.).

* * * * *

NOTE: Section 6029 of the Farm Security and Rural Investment

Act of 2002, Public Law 107-171, added a new subtitle H to the

Consolidated Farm and Rural Development Act. This subtitle

establishes a new "Rural Business Investment Program." Section

384J, reproduced here, discusses Farm Credit System institutions'

investment in rural business investment companies.

230

Omnibus Consolidated Appropriations Act, 1997

Public Law 104-208, September 30, 1996

Title II—Economic Growth and Regulatory Paperwork Reduction

Subtitle F—Miscellaneous

Sec. 2615. Prohibitions on Certain Depository Institution

Associations with Government-Sponsored Enterprises.

Amends section 201 of the Federal Credit Union Act by addition

subsection (e) as follows:

* * * * *

12 U.S.C. 1781 (e)–PROHIBITION ON CERTAIN ASSOCIATIONS.—

(1) IN GENERAL.—No insured credit union may be sponsored

by or accept financial support, directly or indirectly, from any

Government-sponsored enterprise, if the credit union includes the

customers of the Government-sponsored enterprise in the field of

membership of the credit union.

(2) ROUTINE BUSINESS FINANCING.—Paragraph (1) shall

not apply with respect to advances or other forms of financial assistance

generally provided by a Government-sponsored enterprise in the

ordinary course of business of the enterprise.

(3) GOVERNMENT-SPONSORED ENTERPRISE DEFINED.—

For purposes of this subsection, the term "Government-sponsored

enterprise" has the meaning given to such term in section 1404(e)(1)(A)

of the Financial Institutions Reform, Recovery, and Enforcement Act of

1989.

(4) EMPLOYEE CREDIT UNION.—No provision of this

subsection shall be construed as prohibiting any employee of a

Government-sponsored enterprise from becoming a member of a credit

union whose field of membership is the employees of such enterprise.

* * * * *

Amends section 18 of the Federal Credit Union Act of the Federal Deposit

Insurance Act by addition subsection (s) as follows:

12 U.S.C. 1828 (s) PROHIBITION ON CERTAIN AFFILIATIONS.—

(1) IN GENERAL.—No depository institution may be an affiliate of, be

sponsored by, or accept financial support, directly or indirectly, from any

Government-sponsored enterprise.

(2) EXCEPTION FOR MEMBERS OF A FEDERAL HOME LOAN

BANK.—Paragraph (1) shall not apply with respect to the membership of a

depository institution in a Federal home loan bank.

231

(3) ROUTINE BUSINESS FINANCING.—Paragraph (1) shall not

apply with respect to advances or other forms of financial assistance provided

by a Government-sponsored enterprise pursuant to the statutes governing such

enterprise.

* * * * *

(5) GOVERNMENT-SPONSORED ENTERPRISE DEFINED.—For

purposes of this subsection, the term "Government-sponsored enterprise" has

the meaning given to such term in section 1404(e)(1)(A) of the Financial

Institutions Reform, Recovery, and Enforcement Act of 1989.

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Farm Credit System Reform Act of 1996

Title II—Regulatory Relief

Sec. 219. Farm Credit System Insurance Corporation Board of

Directors.

* * * * *

(b) CONFORMING AMENDMENTS.

(1) Section 5314 of title 5, United States Code, is amended by

striking "Chairperson, Board of Directors of the Farm Credit System

Insurance Corporation.".

(2) Section 5315 of title 5, United States Code, is amended by

striking "Members, Board of Directors of the Farm Credit System

Insurance Corporation.".

* * * * *

12 U.S.C. 2219e Sec. 221. Liability for Making Criminal Referrals.

(a) IN GENERAL. Any institution of the Farm Credit System, or any

director, officer, employee, or agent of a Farm Credit System institution, that

discloses to a Government authority information proffered in good faith that

may be relevant to a possible violation of any law or regulation shall not be

liable to any person under any law of the United States of any State—

(1) for the disclosure;

(2) for any failure to notify the person involved in the possible

violation.

(b) NO PROHIBITION ON DISCLOSURE. Any institution of the

Farm Credit System, or any director, officer, employee, or agent of a Farm

Credit System institution, may disclose information to a Government authority

that may be relevant to a possible violation of any law or regulation.

* * * * *

12 U.S.C. 2252 Sec. 212. Regulatory Review.

Note (a) FINDINGS. Congress finds that—

(1) the Farm Credit Administration, in the role of the

Administration as an arms-length safety and soundness regulator, has

made considerable progress in reducing the regulatory burden on Farm

Credit System institutions;

(2) the efforts of the Farm Credit Administration described in

paragraph (1) have resulted in cost savings for Farm Credit System

institutions; and

(3) the cost savings described in paragraph (2) ultimately benefit

the farmers, ranchers, agricultural cooperatives, and rural residents of

the United States.

233

(b) CONTINUATION OF REGULATORY REVIEW. The Farm

Credit Administration shall continue the comprehensive review of regulations

governing the Farm Credit System to identify and eliminate, consistent with

law, safety, and soundness, all regulations that are unnecessary, unduly

burdensome or costly, or not based on law.

234

Farm Credit Banks and Associations Safety and Soundness Act of

1992

* * * * *

Title II—Farm Credit System Insurance Corporation

* * * * *

Sec. 204. GAO Reports on Risk-Based Insurance Premiums,

Access to Association Capital, Supplemental Premiums, and

Consolidation.

(a) IN GENERAL. The Comptroller General of the United States may

investigate, review, and evaluate the feasibility and appropriateness, and

report to the Committee on Agriculture of the House of Representatives and

the Committee on Agriculture, Nutrition, and Forestry of the Senate, on the

advantages and disadvantages of providing the Farm Credit System Insurance

Corporation with—

(1) the authority to directly or indirectly assess associations to

ensure that all System capital is available to prevent losses to investors,

including a study of—

(A) the effects of direct assessments by the Insurance

Corporation on associations, including interest rate charges to

borrowers;

(B) the effects of requiring that banks pass along the cost of

insurance premiums to owner associations and other financing

institutions having a discount relationship with the bank;

stock in the district bank, if needed, to prevent a bank from having

to return to the Insurance Corporation for financial assistance once

the assistance has been given;

(D) the effects of the purchase of stock from funds of the

association (through funds obtained from other than the district

bank) or allowing the bank to increase the direct line of credit to

the association in order to fund the purchase; and

(E) the effect that authorizing the Insurance Corporation to

assess the association could have on the association's incentives for

building capital;

(2) the authority to collect supplemental insurance premiums

under certain circumstances, including a study of—

(A) the possibility of the Insurance Fund being depleted

more rapidly than it could be replenished under the current

premium structure;

(B) the effects of the depletion under alternate economic

scenarios and the probability of the occurrence of each of those

scenarios;

235

levying a supplemental premium; and

(D) limitations on any authority to levy supplemental

premiums and the underlying basis for the limitations; and

(3) the authority to establish an insurance premium rate structure

that would take into account, on an institution-by-institution basis, asset

quality risk, interest rate risk, earnings, and capital.

(b) REPORT ON CONSOLIDATION.

(1) IN GENERAL. The Comptroller General of the United

States shall evaluate and report to the Committee on Agriculture of the

House of Representatives and the Committee on Agriculture, Nutrition,

and Forestry of the Senate on whether there are likely to be benefits to

farmer and rancher borrowers of the Farm Credit System institutions of

merging the 10 district Farm Credit Banks (and the Federal Intermediate

Credit Bank of Jackson) into fewer regional Farm Credit Banks.

(2) FACTORS. In preparing the report, the Comptroller General

shall consider—

(A) the potential reduction in services to farmers and

ranchers;

(B) the potential benefits of jointly providing services to

farmers and ranchers among these proposed regional districts;

basis;

(D) the potential impact on the cooperative nature of the

Farm Credit System;

(E) the potential impact on bank and association

relationships; and

(F) the potential impact on Systemwide bond issuances.

States shall evaluate and report to the appropriate committees of Congress on

the potential savings to the Farm Credit System and its shareholders that

might occur if System institutions and the Farm Credit Administration were

required to comply with General Services Administration standards for office

space, furniture, and equipment.

(d) DEADLINE. The reports required under this section shall be

provided to Congress not later than 12 months after the date of enactment of

this Act.

* * * * *

Title IV—Clarification of Certain Authorities

Sec. 401. Clarification of the Status and Powers of Certain

Institutions of the Farm Credit System.

NOTE: See section 410(e) of the Agricultural Credit Act of 1987 added

by subsection (a) of this section.

236

* * * * *

12 U.S.C. 2011 note

(b) LONG-TERM LENDING AUTHORITY OF THE FARM

CREDIT BANK OF TEXAS WITH RESPECT TO THE STATES OF

ALABAMA, LOUISIANA, AND MISSISSIPPI.

(1) IN GENERAL. Notwithstanding any other provision of law

(except section 7.7 of the Farm Credit Act of 1971), the Farm Credit

Bank of Texas may act in accordance with the exclusive charter of the

bank, as amended by the Farm Credit Administration on February 7,

1989, and effective February 9, 1989 (except to the extent that the

charter may be further amended by the Farm Credit Administration in

accordance with its general authorities under the Farm Credit Act of

1971 (12 U.S.C. 2001 et seq.).

(2) EFFECTIVE DATE. Paragraph (1) shall take effect as if

such paragraph had become law on February 7, 1989.

* * * * *

NOTE: The amendments made by section 5407 of Public Law 110-246

take effect on January 1, 2010.

Title V—Miscellaneous

* * * * *

Sec. 514. Financial Disclosure and Conflict of Interest

Reporting by Directors, Officers, and Employees of Farm Credit

System Institutions.

(a) FINDINGS. Congress finds that—

(1) the disclosure of the compensation paid to, loans made to,

and transactions made with a Farm Credit System institution by,

directors and senior officers of the institution provides the stockholders

of the institutions with information necessary to better manage the

institutions, provides the Farm Credit Administration with information

necessary to efficiently and effectively regulate the institutions, and

enhances the financial integrity of the Farm Credit System by making

the information available to potential investors;

(2) the reporting of potential conflicts of interest by directors,

officers, and employees of institutions of the Farm Credit System

benefits the stockholders of the institutions, helps to ensure the financial

viability of the institutions, provides information valuable to the Farm

Credit Administration in periodic examinations of the institutions, and

therefore enhances the safety and soundness of the Farm Credit System;

and

237

(3) the directors, officers, or employees of some Farm Credit

System institutions may not be subject to the regulations of the Farm

Credit Administration requiring the disclosure of the financial

information and the reporting of the potential conflicts of interest.

(b) PURPOSE. It is the purpose of this section to ensure that the

information reported by the directors, officers, and employees of Farm Credit

System institutions under regulations of the Farm Credit Administration

requiring the disclosure of financial information and the reporting of potential

conflicts of interest—

(1) provides the stockholders of all Farm Credit System

institutions with information to assist the stockholders in making

informed decisions regarding the operation of the institutions;

(2) provides investors and potential investors with information

necessary to assist them in making investment decisions regarding Farm

Credit System obligations or institutions; and

(3) provides the Farm Credit Administration with information

necessary to allow the Farm Credit Administration to effectively and

efficiently examine and regulate all Farm Credit System institutions and

thus enhance the safety and soundness of the Farm Credit System.

this Act, the Farm Credit Administration shall complete a review of the

current regulations of the Farm Credit Administration regarding the disclosure

of financial information and the reporting of potential conflicts of interest by

the directors, officers, and employees of Farm Credit System institutions.

Consistent with the purpose of this section as provided in subsection (b), the

review shall address whether the regulations—

(1) are adequate to fulfill the purpose of this section and such

other purposes as the Farm Credit Administration determines to be

consistent with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.),

and other applicable law, and to be otherwise necessary or appropriate;

(2) currently require the disclosure of financial information and

the reporting of potential conflicts of interest by the directors, officers,

and employees of all Farm Credit System institutions; and

(3) currently require the disclosure or reporting of the

information by all of the appropriate directors, officers, or employees of

Farm Credit System institutions.

(d) IMPLEMENTATION. Not later than 360 days after the date of

enactment of this Act, the Farm Credit Administration shall amend its current

financial disclosure and conflict of interest regulations as the Administration

determines necessary to carry out the purpose of this section and to address

any deficiencies in the regulations that the Farm Credit Administration

determines necessary pursuant to the review conducted under subsection (c).

238

Food, Agriculture, Conservation, and Trade Act of 1990

* * * * *

Title XVIII—Credit

* * * * *

Subtitle B—Farm Credit System

* * * * *

Sec. 1838. Termination of System Institution Status of

California Livestock Production Credit Association.

(a) AUTHORITY TO TERMINATE. Notwithstanding any other

provision of law, effective on the date of enactment of this Act, the California

Livestock Production Credit Association may terminate the status of the

Association as a Farm Credit System institution.

(b) REQUIREMENTS. Notwithstanding section 7.10(a)(4) of the Farm

Credit Act of 1971 (12 U.S.C. 2279(a)(4)), the California Livestock

Production Credit Association shall not (on termination) be—

(1) required to pay any part of the last $1,000,000 of its capital; or

(2) restricted from transferring any part of the $1,000,000 to its

successor institution.

* * * * *

12 U.S.C. 2001 note Sec. 1842. GAO Study of Rural Credit Cost and Availability.

(a) STUDY. The Comptroller General of the United States shall

conduct a study of certain matters related to the cost and availability of credit

in rural America, including a study of—

(1) the relationship of the role and lending volume of the Farm

Credit System to the ability of the System to repay the assistance

provided under the Agricultural Credit Act of 1987 (Public Law 100-

233) and amendments made by such Act;

(2) the ability of Farm Credit System institutions to be

competitive taking into consideration the costs of rebuilding capital,

repaying assistance, and capitalizing the Farm Credit Insurance Fund

established under section 5.60 of the Farm Credit Act of 1971 (12

U.S.C. 2277a-9);

(3) the rates Farm Credit Banks charge for credit and the rates

prevailing in the market for credit of comparable risk and maturity;

(4) the potential for credit pricing practices of rural lending

institutions to adversely affect the financial soundness of other lending

institutions that provide agricultural credit;

239

(5) the pricing practices of commercial lending and insurance

institutions and whether the practices adequately address the level of risk

in agricultural lending;

(6) whether the assistance authorized under the Agricultural

Credit Act of 1987 and the amendments made by such Act, is being

utilized in accordance with the purposes intended by Congress;

(7) the availability and adequacy of credit in rural America for

the purpose of financing agricultural production, infrastructure

development (including development of roads, bridges, and water

systems), and rural development;

(8) the prudence and desirability for commercial lenders and

Farm Credit System institutions who serve primarily agriculture to

broaden lending activity to provide diversity in their portfolios;

(9) the level of competitiveness among the major sector lenders

in agriculture, whether competition among such lenders has increased or

decreased in the last 5 years, and whether American producers have

benefited from the competitive situation; and

(10) the level of farm lending activity, in relation to the total asset

level, of agricultural lending institutions in rural America and the level

of investment by the institutions outside of the rural community or area

in which the lending institutions are located.

(b) REPORT. Not later than 2 years after the date of enactment of this

Act, the Comptroller General shall submit a report on the study conducted

under subsection (a) (including any related recommendations) to the

Committee on Agriculture of the House of Representatives and the Committee

on Agriculture, Nutrition, and Forestry of the Senate.

* * * * *

240

Omnibus Budget Reconciliation Act of 1990

* * * * *

Title XIII—Budget Enforcement

* * * * *

PART II—Related Amendments

* * * * *

Subtitle E—Government-Sponsored Enterprises

2 U.S.C. 621 note Sec. 13501. Financial Safety and Soundness of Government-