RURAL TELEPHONE BANK INTEREST RATES AND LOAN PREPAYMENTS.

SEC. 1411. RURAL TELEPHONE BANK INTEREST RATES AND LOAN PREPAYMENTS. (a) Findings.— Congress finds that— (1) overcharging of Rural Telephone Bank borrowers has resulted in $179,000,000 in excess profits and has imperiled borrowers by raising costs to ratepayers; (2) borrowers will be able to seek redress under section 408(b)(3)(G) of the Rural Electrification Act of 1936, as added by subsection (c), or may leave the Rural Telephone Bank, but in no case may the Governor of the Bank issue regulations requiring any penalty from borrowers seeking to retire debt prior to maturity; and (3) any reduction in Federal Government44Copy read “government”. expenditures in the operation of the Rural Telephone Bank, from borrowers’ conduct resulting from the implementation of the amendments made by subsections (b) and (c), should be included in all calculations of the budget of the United States Government, authorized under the4a4aCopy read “under of the”. Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987. (b) Rural Telephone Bank Loan Prepayments.—55Copy read “Prepayments.”. (1) Prepayments authorized.— Section 408(b) of the Rural Electrification Act of 1936 (7 U.S.C. 9480))) is amended by adding at the end the following new paragraph: “(8) A borrower with a loan from the Rural Telephone Bank may prepay such loan (or any part thereof) by paying the face amount thereof without being required to pay the prepayment101 STAT. 1330–23 penalty set forth in the note covering such loan, if such prepayment is not made later than September 30, 1988.”. (2) Prepayment regulations.— The Governor of the Rural Telephone Bank shall issue regulations to carry out the amendment made by paragraph (1) within 30 days after the date of enactment of this Act. Such regulations shall implement the amendment made by paragraph (1) without the addition of any restrictions not set forth in such amendment. (c) Determination of Interest Rates on Rural Telephone Bank Loans Paragraph (3) of section 4080t)) of the Rural Electrification Act of 1936 (7 U.S.C. 948(b)(3)) is amended— (1) by inserting “(A)” after the paragraph designation; and (2) by adding at the end thereof the following new subparagraphs: “(B) On and after the date of the enactment of this paragraph, advances made on or after such date of enactment under loan commitments made on or after October 1, 1987, shall bear interest at the rate determined under subparagraph (C), but in no event at a rate that is less than 5 percent per annum. “(C) The rate determined under this subparagraph shall be— “(i) for the period beginning on the date the advance is made and ending at the close of the fiscal year in which the advance is made, the average yield (on the date of the advance) on outstanding marketable obligations of the United States having a final maturity comparable to the final maturity of the advance; and “(ii) after the fiscal year in which the advance is made, the cost of money rate for such fiscal year, as determined under subparagraph (D). “(D) Within 30 days after the end of each fiscal year, the Governor shall determine to the nearest 0.01 percent the cost of money rate for the fiscal year, by calculating the sum of the results of the following calculations: “(i) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class A stock, multiplied by the rate of return payable by the telephone bank during the fiscal year, as specified in section 406(c), to holders of class A stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. “(ii) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class B stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, as specified in section 406(d), to holders of class B stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. “(iii) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class C stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, under section 406(e), to holders of class C stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. “(iv) (I) The sum of the results of the calculations described in subclause (II). 101 STAT. 1330–24 “(II) The amounts received by the telephone bank during the fiscal year from each issue of telephone debentures and other obligations of the telephone bank, multiplied, respectively, by the rates at which interest is payable during the fiscal year by the telephone bank to holders of each issue, each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the fiscal year. “(v) (I) The amount by which the aggregate of the amounts advanced by the telephone bank during the fiscal year exceeds the aggregate of the amounts received by the telephone bank from the issuance of class A stock, class B stock, class C stock, and telephone debentures and other obligations of the telephone bank during the fiscal year, multiplied by the historic cost of money rate as of the close of the fiscal year immediately preceding the fiscal year, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. “(II) For purposes of this clause, the term ‘historic cost of money rate’, with respect to the close of a preceding fiscal year, means the sum of the results of the following calculations: The amounts advanced by the telephone bank in each fiscal year during the period beginning with fiscal year 1974 and ending with the preceding fiscal year, multiplied, respectively, by the cost of money rate for the fiscal year (as set forth in the table in subparagraph (E)) for fiscal years 1974 through 1987, and as determined by the Governor under this subparagraph for fiscal years after fiscal year 1987), each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the period. “(E) For purposes of subparagraph (D)(II), the cost of money rate for the fiscal years in which each advance was made shall be as set forth in the following table: “For advances made in— The cost of money rate shall be— Fiscal year 1974 ......................... 5.01 percent Fiscal year 1975 ......................... 5.85 percent Fiscal year 1976 ......................... 5.33 percent Fiscal year 1977 ......................... 5.00 percent Fiscal year 1978 ......................... 5.87 percent Fiscal year 1979 ......................... 5.93 percent Fiscal year 1980 ......................... 8.10 percent Fiscal year 1981 ......................... 9.46 percent Fiscal year 1982 ......................... 8.39 percent Fiscal year 1983 ......................... 6.99 percent Fiscal year 1984 ......................... 6.55 percent Fiscal year 1985 ......................... 5.00 percent Fiscal year 1986 ......................... 5.00 percent Fiscal year 1987 ......................... 5.00 percent. For purposes of this subparagraph, the term ‘fiscal year’ means the 12-month period ending on September 30 of the designated year. “(F) (i) Notwithstanding subparagraph (B), if a borrower holds a commitment for a loan under this section made on or after October 1, 1987, and before the date of the enactment of this paragraph, part or all of the proceeds of which have not been advanced as of such date of enactment, the borrower may, until the later of the date the next advance under the loan commit-101 STAT. 1330–25ment is made or 90 days after such date of enactment, elect to have the interest rate specified in the loan commitment apply to the unadvanced portion of the loan in lieu of the rate which (but for this clause) would apply to the unadvanced portion under this paragraph. If any borrower makes an election under this clause with respect to a loan, the Governor shall adjust the interest rate which applies to the unadvanced portion of the loan accordingly. “(ii) (I) If the telephone bank, pursuant to section 407(b), issues telephone debentures on any date to refinance telephone debentures or other obligations of the telephone bank, the telephone bank shall, in addition to any interest rate reduction required by any other provision of this paragraph, for the period applicable to the advance, reduce the interest rate charged on each advance made under this section during the fiscal year in which the refinanced debentures or other obligations were originally issued by the amount applicable to the advance. “(II) For purposes of subclause (I), the term ‘the period applicable to the advance’ means the period beginning on the issue date described in subclause (I) and ending on the earlier of the date the advance matures or is completely prepaid. “(III) For purposes of subclause (I), the term ‘the amount applicable to the advance’ means an amount which fully reflects that percentage of the funds saved by the telephone bank as a result of the refinancing which is equal to the percentage representation of the advance in all advances described in subclause (I). “(IV) Within 60 days after any issue date described in subclause (I), the Governor shall amend the loan documentation for each advance described in subclause (I), as necessary, to reflect any interest rate reduction applicable to the advance by reason of this clause, and shall notify each affected borrower of the reduction. “(G) Within 30 days after the publication of any determination made under subparagraph (D), any affected borrower may obtain review of the determination, or any other equitable relief as may be determined appropriate, by the United States court of appeals for the judicial circuit in which the borrower does business by filing a written petition requesting the court to set aside or modify such determination. On receipt of such a petition, the clerk of the court shall transmit a copy of the petition to the Governor. On receipt of a copy of such a petition from the clerk of the court, the Governor shall file with the court the record on which the determination is based. The court shall have jurisdiction to affirm, set aside, or modify the determination. “(H) Within 5 days after determining the cost of money rate for a fiscal year, the Governor shall— “(i) cause the determination to be published in the Federal Register in accordance with section 552 of title 5, United States Code; and “(ii) furnish a copy of the determination to the Comptroller General of the United States. “(I) The Comptroller General shall review, on an expedited basis, each determination a copy of which is received from the Governor and, within 15 days after the date of such receipt, furnish Congress a report on the accuracy of the determination. 101 STAT. 1330–26 (J) The telephone bank shall not sell or otherwise dispose of any loan made under this section, except as provided in this paragraph.”.