ASSISTANCE TO FARM CREDIT SYSTEM.

SEC. 201. ASSISTANCE TO FARM CREDIT SYSTEM. The Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) is amended by adding at the end thereof the following new title: “TITLE VI— ASSISTANCE TO FARM CREDIT SYSTEM “Subtitle A— Assistance Board “SEC. 6.0. ESTABLISHMENT OF BOARD. “(a) Charters.— On the date which is 15 days after the date of the enactment of this title, the Farm Credit Administration shall revoke the charter of the Farm Credit System Capital Corporation (hereinafter referred to in this title as the ‘Capital Corporation’) and shall charter the Farm Credit System Assistance Board (hereinafter referred to in this Act as the ‘Assistance Board’) that, subject to this subtitle, shall be a Federally chartered instrumentality of the United States. “(b) Use of Capital Corporation Staff.— During the 90-day period beginning on the date of the revocation of the charter of the Capital Corporation, the Assistance Board may temporarily employ, by contract or otherwise under reasonable and necessary terms and conditions, such staff of the Capital Corporation as is necessary to facilitate and effectuate an orderly transition to, and commencement of, the Assistance Board, and the termination of the affairs of the Capital Corporation. “SEC. 6.1. PURPOSES. “The purposes of the Assistance Board shall be to carry out a program to provide assistance to, and protect the stock of borrowers 101 STAT. 1586of, the institutions of the Farm Credit System, and to assist in restoring System institutions to economic viability and permitting such institutions to continue to provide credit to farmers, ranchers, and the cooperatives of such, at reasonable and competitive rates. “SEC. 6.2. BOARD OF DIRECTORS. “(a) Membership.— The Board of Directors of the Assistance Board (hereinafter referred to in this subtitle as the ‘Board of Directors’) shall consist of three members— “(1) one of which shall be the Secretary of the Treasury; “(2) one of which shall be the Secretary of Agriculture; and “(3) one of which shall be an agricultural producer experienced in financial matters, and appointed by the President, by and with the advice and consent of the Senate. “(b) Chairman.— The Board of Directors shall elect annually a Chairman from among the members of the Board. “(c) Terms of Office, Succession, and Vacancies.— “(1) Terms of office and succession.— The term of each member of the Board of Directors shall expire when the Assistance Board is terminated. “(2) Vacancies.— Vacancies on the Board of Directors shall be filled in the same manner as the vacant position was previously filled. “(d) Compensation of Board Members.— Members of the Board of Directors— “(1) appointed under paragraphs (1) and (2) of subsection (a) shall receive reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Assistance Board, as set forth in the bylaws issued by the Board of Directors, except that such level shall not exceed the maximum fixed by subchapter 1 of chapter 57 of title 5, United States Code, for officers and employees of the United States; and “(2) appointed under paragraph (3) of subsection (a) shall receive compensation for the time devoted to meetings and other activities at a daily rate not to exceed the daily rate of compensation prescribed for Level III of the Executive Schedule under section 5314 of title 5, United States Code, and reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Assistance Board, as set forth in the bylaws issued by the Board of Directors, except that such level shall not exceed the maximum fixed by subchapter 1 of chapter 57 of title 5, United States Code, for officers and employees of the United States. “(e) Rules and Records.— The Board of Directors of the Assistance Board shall adopt such rules as it may deem appropriate for the transaction of the business of the Assistance Board, and shall keep permanent and accurate records and minutes of its acts and proceedings. “(f) Quorum Required.— A quorum shall consist of two members of the Board of Directors. All decisions of the Board shall require an affirmative vote of at least a majority of the members voting. “(g) Chief Executive Officer.— A chief executive officer of the Assistance Board shall be selected by the Board of Directors of the Assistance Board and shall serve at the pleasure of the Board. 101 STAT. 1587 “SEC. 6.3. CORPORATE POWERS. “(a) In General.— The Assistance Board shall be a body corporate that shall have the power to— “(1) operate under the direction of its Board of Directors; “(2) adopt, alter, and use a corporate seal, which shall be judicially noted; “(3) provide for one or more vice presidents, a secretary, a treasurer, and such other officers, employees, and agents, as may be necessary, define their duties, and require surety bonds or make other provisions against losses occasioned by acts of such persons; “(4) hire, promote, compensate, and discharge officers and employees of the Assistance Board, without regard to title 5, United States Code, except that no such officer or employee shall receive an annual rate of basic pay in excess of the rate prescribed for Level III of the Executive Schedule under section 5314 of title 5, United States Code; “(5) prescribe by its Board of Directors its bylaws, that shall be consistent with law, and that shall provide for the manner in which— “(A) its officers, employees, and agents are selected; “(B) its property is acquired, held, and transferred; “(C) its general operations are to be conducted; and “(D) the privileges granted by law are exercised and enjoyed; “(6) with the consent of any executive department or independent agency, use the information, services, staff, and facilities of such in carrying out this title; “(7) enter into contracts and make advance, progress, or other payments with respect to such contracts; “(8) sue and be sued in its corporate name, and complain and defend in courts of competent jurisdiction; “(9) acquire, hold, lease, mortgage, or dispose of, at public or private sale, real and personal property, and otherwise exercise all the usual incidents of ownership of property necessary and convenient to its operations; “(10) obtain insurance against loss; “(11) modify or consent to the modification of any contract or agreement to which it is a party or in which it has an interest under this title; “(12) deposit its securities and its current funds with any member bank of the Federal Reserve System or any insured State nonmember bank (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)) and pay fees therefor and receive interest thereon as may be agreed; and “(13) exercise other powers as set forth in this title, and such other incidental powers as are necessary to carry out its powers, duties, and functions in accordance with this title. “(b) Power to Remove; Jurisdiction.— Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Assistance Board is a party shall be deemed to arise under the laws of the United States, and the United States District Court for the District of Columbia shall have original jurisdiction over such. The Assistance Board may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States District Court for the District of Columbia. 101 STAT. 1588 “SEC. 6.4. CERTIFICATION OF ELIGIBILITY TO ISSUE PREFERRED STOCK. “(a) Book Value Less Than Par Value of Stock and Equities.— If the book value of the stock, participation certificates, and other similar equities of a System institution, based on generally accepted accounting principles, is less than the par value of the stock or the face value of the certificates or equities— “(1) the Farm Credit Administration shall notify the Assistance Board of such impairment; “(2) the Assistance Board shall monitor the financial condition, business plans, and operations of the institution; and “(3) the institution may request the Assistance Board to grant certification to issue preferred stock under section 6.27(a). “(b) Book Value Less Than 75 Percent of Par Value of Stock and Equities.— If the book value of the stock, participation certificates, and other similar equities of a System institution, based on generally accepted accounting principles, is less than 75 percent of the par value of the stock or the face value of the certificates or equities, the institution shall request the Assistance Board to grant certification to issue preferred stock under section 6.27(a). “(c) Mandatory Determination of Eligibility.— “(1) In general.— The Assistance Board shall determine whether to certify a System institution as eligible to issue preferred stock under section 6.27, if— “(A) the institution requests such certification; “(B) the book value of the stock, participation certificates, and other similar equities of the institution, based on generally accepted accounting principles, has declined to 75 percent of the par value of the stock or the face value of the certificates or equities; and “(C) the institution agrees to meet the terms and conditions specified by the Assistance Board pursuant to section 6.6. “(2) Effective date of certification.— If the determination of the Assistance Board is to certify the institution under paragraph (1), such certification shall be effective at the time of such determination. “(c) Implementation.— As soon as practicable after the date of the enactment of this title, the Assistance Board shall take such actions as are necessary to carry out this section. “(d) Definition.— Except where otherwise provided in this Act, the term ‘other similar equities’ includes allocated equities. “SEC. 6.5. ASSISTANCE. “(a) In General.— The Assistance Board shall assist an institution that has been certified under section 6.4 by— “(1) authorizing the institution to issue preferred stock under the appropriate provision of section 6.27, in amounts necessary to maintain the book value of stock, participation certificates, and other similar equities of the institution, at the level provided for in subsection (c); “(2) in the case of high-cost debt for which the institution is primarily liable, authorizing the institution to issue preferred stock under the appropriate provision of section 6.27, in an amount equal to the premium that would be required by the holder of the debt for the institution to retire the debt at the then current market value; 101 STAT. 1589 “(3) on a request by the institution, authorizing the issuance of preferred stock under the appropriate provision of section 6.27 to facilitate the merger of the requesting institution with one or more other System institutions; or “(4) providing assistance by such other methods as the Assistance Board determines appropriate. “(b) Definition of High-Cost Debt.— For purposes of subsection (a)(2), the term ‘high-cost debt’ means securities or similar obligations issued before January 1, 1986, that mature on or after December 31, 1987, and bear a rate of interest in excess of the then current market rate for similar securities or obligations. “(c) Minimum Equity Value.— The Assistance Board shall authorize a certified institution to issue amounts of preferred stock under the appropriate provision of section 6.27 sufficient to— “(1) maintain the value of stock, participation certificates and other similar equities at no less than 75 percent of the par value of the stock or the face value of the certificates or equities, as determined under generally accepted accounting principles; and “(2) strengthen the institution to a point where it is economically viable, and capable of delivering credit at reasonable and competitive rates. “(d) Limitation.— No assistance shall be provided in connection with a merger until the stockholders and the institutions involved have approved the merger and the Farm Credit Administration has given final approval to the merger plan. “SEC. 6.6. SPECIAL POWERS. “(a) In General.— In the case of a System institution that requests certification under section 6.4, the Assistance Board may— “(1) require the institution to obtain approval from the Assistance Board before implementing business, operating, and investment plans and policies; “(2) if one or more of the conditions described in section 4.12(b) are met, as determined by the Farm Credit Administration, direct the Farm Credit Administration Board to appoint a conservator for the institution, in accordance with such section, and to instruct the conservator to evaluate the operations of the institution and report to the Farm Credit Administration Board and the Assistance Board on the possibility of restoring the institution to sound financial condition; “(3) request that the Farm Credit Administration Board or the Farm Credit Administration, as appropriate— “(A) approve or require a merger or consolidation of the institution to the extent authorized under this Act; “(B) initiate action to appoint a receiver under section 4.12(b); or “(C) exercise any enforcement power authorized under this Act; “(4) require the institution to obtain approval from the Assistance Board before setting the terms and conditions of any debt issuances of the institution; “(5) require the institution to obtain approval from the Assistance Board before setting the policy on credit standards to be used, and the policy on rates of interest to be charged on loans, by the institution, including requiring that— “(A) the institution set interest rates at levels necessary to ensure that the cost of money to the institution reflects 101 STAT. 1590the marginal cost to the institution of borrowing an additional amount of money at the time a new loan is made; and “(B) loans primarily secured by real estate mortgages not exceed 85 percent of the appraised agricultural value of the real estate security, or 75 percent of the then current market value of the real estate security, whichever is greater; “(6) require the institution to obtain approval from the Assistance Board for the design of management information and accounting systems at the institution, and of the continued use by the institution of regulatory accounting practices in accordance with sections 4.8(b) and 5.19(b); “(7) require that the plans and policies of the institution resulting from the merger of System banks reduce the overhead costs of such institution, to the maximum extent practicable, with respect to the delivery of services to, and performance of duties for, System associations in the district; “(8) require the institution to obtain approval from the Assistance Board of— “(A) the hiring policies of the institution; “(B) the compensation and retirement benefits of the chief executive officer, other managers, and directors of the institution notwithstanding the authority of the Farm Credit Administration to approve such matters under sections 5.5 and 5.17(a)(15); “(C) any change in the management of the institution; and “(D) policy decisions regarding continued employment and promotion of the officials referred to in subparagraph (B); “(9) may suspend for any period of time, or terminate, any certification granted to an institution under section 6.4 if the Farm Credit Administration notifies the Assistance Board that the institution has substantially deviated from the institution’s business plan or has failed to comply with a term or condition governing the use of any financial assistance provided to the institution under this title; and “(10) take such other action as the Assistance Board determines may be necessary to establish prudent operating practices at the institution and to return the institution to a sound financial condition. “(b) Suspension of Assistance.— “(1) Notification.— The Assistance Board shall promptly notify the Farm Credit Administration of any action taken by the Assistance Board under subsection (a)(8). “(2) Enforcement.— The Farm Credit Administration may use any of its enforcement powers, with respect to any institution to which the Assistance Board has provided assistance or has certified the institution to issue preferred stock under the appropriate provision of section 6.27, to obtain the compliance of the institution with the terms or conditions governing the use of financial assistance provided under this title. “(c) Undated Letters of Resignation.— The Assistance Board shall not, for any reason, request or require any member of the board of directors of any System institution to submit to the Assistance Board an undated letter of resignation. Immediately after the 101 STAT. 1591date of the enactment of this title, the Assistance Board shall destroy all such letters over which it has control. “(d) Reports.— During the 5-year period beginning on the date of the enactment of this title, the Assistance Board, in coordination with the Financial Assistance Corporation, shall report annually to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate on the extent to which System institutions translate the savings in the cost of the operations of such institutions due to the Federal assistance provided to the System under this title into lower interest rates charged to System borrowers or enhanced financial solvency of such institutions. “SEC. 6.7. ADMINISTRATION. “(a) Expenses.— The Financial Assistance Corporation shall pay the necessary and reasonable administrative expenses of the Assistance Board from funds in the Assistance Fund established in section 6.25. “(b) Interim Funding.— Before the availability of funding from the Assistance Fund, the Assistance Board may use the revolving fund established under section 4.0. Such amounts used shall be repaid to the revolving fund out of the Assistance Fund within the same fiscal year that such funds were received by the Assistance Board. “(c) Assistance Operations.— The Farm Credit Administration shall provide such personnel and facilities to the Assistance Board as the Farm Credit Administration considers are necessary to avoid unnecessary duplication and waste. “(d) Access to FCA Documents.— The Assistance Board shall have access to all reports of examination and supervisory documents of the Farm Credit Administration, and relevant supporting material for the purpose of carrying out the special powers of the Assistance Board under section 6.6, under terms and conditions that are acceptable to the Farm Credit Administration Board, as are necessary and appropriate to protect the confidentiality of the documents and materials. “SEC. 6.8. LIMITATION OF POWERS. “(a) Purposes.— The powers of the Assistance Board under this title shall be exercised only for the purposes specified in this title and shall not be exercised in a manner that would result in the Assistance Board supplanting the Farm Credit System lending institutions as the primary providers of credit and other financial services to farmers, ranchers, and the cooperatives of such. “(b) Prohibition.— The powers of the Assistance Board under this title shall not include the management, administration, or disposition of any loans or other assets owned by other System institutions, or the providing of technical assistance or other related services to other System institutions in connection with the administration of loans owned by such other institutions. “SEC. 6.9. SUCCESSION. “(a) Liabilities.— On the issuance by the Farm Credit Administration of the charter for the Assistance Board under this subtitle, the Assistance Board shall succeed to the assets of and assume all debts, obligations, contracts, and other liabilities of the Capital Corporation, matured or unmatured, accrued, absolute, contingent or other-101 STAT. 1592wise, and whether or not reflected or reserved against on balance sheets, books of account, or records of the Capital Corporation. “(b) Contracts.— The existing contractual obligations, security instruments, and title instruments of the Capital Corporation shall, by operation of law and without any further action by the Farm Credit Administration, the Capital Corporation, or any court, become and be converted into obligations, entitlements, and instruments of the Assistance Board chartered under this subtitle. “(c) Adjustment of Assessments.— Not later than 15 days after the issuance of the charter of the Assistance Board, the Board shall retire all debt and equity obligations issued to any System institution under section 4.28G(a)(14) or 4.28H (as in effect immediately before the date of the enactment of this title) at the book value of such obligations (determined as of such date of enactment) and shall pay such amounts to the holders of such debt and equity obligations. “(d) Surplus Funds.— To the extent that, on the extinguishing of liabilities assumed by the Assistance Board under this section, and on full performance or other final disposition of contract obligations of the Assistance Board, there remain surplus funds attributable to such obligations or contracts, the Assistance Board shall distribute such surplus funds among the System institutions that contributed funds to the Capital Corporation on the basis of the relative amount of funds so contributed by each institution. “(e) Preservation Agreements.— “(1) Transfer of obligations.— Notwithstanding any other provision of this Act or the terms and conditions of the Thirty-Seven Banks Capital Preservation Agreement, the Federal Land Banks Capital Preservation Agreement, the Federal Intermediate Credit Banks Capital Preservation Agreement, and the Banks for Cooperatives Loss Sharing Agreement— “(A) at the time the receiving bank receives funds from the Financial Assistance Corporation in an equal and equivalent amount in accordance with this subsection, any amounts received by, or that remain accrued to, any System bank in accordance with the activation of any such agreement for the calendar quarter ending on September 30, 1986, shall be— “(i) repaid to the contributing bank by the bank that received such payments; or “(ii) cancelled; “(B) on the date the Financial Assistance Corporation is chartered, the accounts payable of each contributing bank under such agreements for the calendar quarter ending on September 30, 1986, shall, by operation of law and without any further action by such contributing bank, any other bank, or any court, become and be converted into accounts payable of the Financial Assistance Corporation to each receiving bank under such agreement for such calendar quarter in the same amounts as previously carried on the books of each such receiving bank; and “(C) on the date the Financial Assistance Corporation is chartered, the accounts receivable of each receiving bank under such agreements for the calendar quarter ending September 30, 1986, shall, by operation of law and without any further action by such receiving bank or any other bank, or any court, become and be converted into accounts receivable to such receiving bank from the Financial Assist-101 STAT. 1593ance Corporation, in the same amount as previously carried on the books of such receiving bank and such receivables shall, for all financial reporting purposes, be accounted for as an asset on the books of such receiving bank in accordance with generally accepted accounting practices. “(2) (A) Not later than 30 days after the first issuance of obligations by the Financial Assistance Corporation in accordance with section 6.26, the Corporation shall pay to each receiving bank such sums as are necessary to permit each receiving bank to repay, in accordance with paragraph (1), the amounts each such receiving bank received under any such agreement. “(B) The accruals shall be paid by the Corporation to each receiving bank for the actual net loan charge-offs recorded on the books of each such bank before January 1, 1993, not previously paid by the contributing banks. “(3) Debt obligations.— “(A) Issuance.— For the purpose of obtaining funds to carry out this subsection, the Financial Assistance Corporation shall issue debt obligations under section 6.26. Such obligations shall be subject to the terms and conditions of such section, except as provided for in this paragraph. “(B) Payment of interest.— During each year of the 15-year period of such obligation issued pursuant to subparagraph (A), the banks operating under this Act shall pay to the Financial Assistance Corporation, at such times as the Corporation shall determine, an amount equal to the entire amount of interest due on such obligation. Each bank shall pay a proportion of such interest equal to— “(i) the average accruing loan volume of the bank during the year preceding the year of such payment; divided by “(ii) the average accruing loan volume of all of the banks of the System for the same period. “(C) Payment of principal.— After the end of the 15-year period beginning on the date of the issuance of any obligation issued to carry out this subsection, the banks operating under this Act shall pay to the Financial Assistance Corporation, on demand, an amount equal to the outstanding principal of such obligation. Each bank shall pay a proportion of such principal equal to— “(i) the average accruing loan volume of the bank for the preceding 15 years; divided by “(ii) the average accruing loan volume of all banks of the System for the same period. “(D) Until each obligation issued in accordance with this subsection reaches maturity, for all financial reporting purposes, such obligation shall be considered to be the sole obligation of the Financial Assistance Corporation and shall not be considered a liability of any System bank. “(4) Funds not considered financial assistance.— The funds made available to each bank, whether through the issuance of stock or otherwise, by the Financial Assistance Corporation to meet obligations under any agreement referred to in paragraph (1) or to meet any obligations of the contributing banks under any such agreement, as required by this subsection, shall not be considered financial assistance under this Act. 101 STAT. 1594 “(5) Suspension of preservation agreements.— During the 5-year period beginning on the date of enactment of this subsection and thereafter whenever funds from the Farm Credit System Insurance Fund are available for use in assisting System institutions to meet their obligations on their debt instruments, the Thirty-Seven Banks Capital Preservation Agreement, the Federal Land Banks Capital Preservation Agreement, the Federal Intermediate Credit Banks Capital Preservation Agreement, and the Banks for Cooperatives Loss Sharing Agreement shall be suspended, in exchange for the benefits flowing to the signatories to such agreements under the Agricultural Credit Act of 1987.”. “SEC. 6.10. EFFECT OF REGULATIONS; AUDITS. “(a) Issuance.— The Assistance Board may issue such regulations, policies, procedures, guidelines, or statements as the Board considers necessary or appropriate to carry out this title, all of which shall be promulgated and enforced without regard to subchapter II of chapter 5 of title 5, United States Code. “(b) Regulation by Farm Credit Administration.— The Assistance Board shall not be subject to regulation by the Farm Credit Administration. “(c) Audits.— The Assistance Board shall not require an audit or examination of a System institution that would be duplicative of an audit or examination that is conducted under other provisions of law. “SEC. 6.11. EXEMPTION FROM TAXATION. “The Assistance Board, 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 the Assistance Board to the same extent, according to its value, as other similar property held by other persons is taxed. “SEC. 6.12. TERMINATION. “The Assistance Board and the authority provided by this subtitle shall terminate on December 31, 1992. “SEC. 6.13. TRANSITIONAL PROVISIONS. “(a) Exercise of Powers.— The powers of the Assistance Board under this title shall be exercised by the Farm Credit Administration Board until the issuance of the charter of the Assistance Board, or such later date not to exceed 30 days thereafter, as may be requested by the Assistance Board. “(b) Limitation on Assistance.— Any assistance provided to System institutions by the Farm Credit Administration in accordance with this section shall be provided from, and shall not exceed, the amounts contained in the revolving fund established under section 4.0. “(c) Issuance of Stock.— Each institution that receives assistance from the Farm Credit Administration during the interim period specified in subsection (a), in consideration thereof, shall issue preferred stock to the Financial Assistance Corporation in an amount equal to the amount of such assistance. Payments by the Financial Assistance Corporation under subsection (d) shall be considered to be payments to each such institution for such stock. 101 STAT. 1595 “(d) Repayment.— The Financial Assistance Corporation shall pay to the Farm Credit Administration the full amount of all financial assistance provided by the Farm Credit Administration in accordance with this section, from the proceeds from the sale of the first issue of obligations by the Financial Assistance Corporation in accordance with section 6.26. “Subtitle B— Financial Assistance Corporation “SEC. 6.20. ESTABLISHMENT OF CORPORATION. “Not later than 5 days after the date of the enactment of this title, the Farm Credit Administration shall charter the Farm Credit System Financial Assistance Corporation (hereinafter referred to in this Act as the ‘Financial Assistance Corporation’) which shall be— “(1) an institution of the Farm Credit System; and “(2) a Federally chartered instrumentality of the United States. “SEC. 6.21. PURPOSE. “The purpose of the Financial Assistance Corporation shall be to carry out a program to provide capital to institutions of the Farm Credit System that are experiencing financial difficulty. “SEC. 6.22. BOARD OF DIRECTORS. “(a) Board of Directors.— “(1) Composition.— The Board of Directors of the Financial Assistance Corporation (hereinafter referred to in this Act as the ‘Board of Directors’) shall consist of the Board of Directors of the Federal Farm Credit Banks Funding Corporation. “(2) Chairman.— The Board of Directors shall elect annually a Chairman from among the members of the Board. “(3) Compensation.— The members of the Board of Directors shall receive compensation for the time devoted to meetings and other activities of the Board and reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Board of Directors in amounts not exceeding levels set by the Farm Credit Administration Board. “(b) Rules and Records.— The Board of Directors shall adopt such rules as it may deem appropriate for the transaction of its business and shall keep permanent and accurate records and minutes of its acts and proceedings. “(c) Quorum Required.— No business may be conducted at a meeting of the Board of Directors unless a quorum of the members of the Board is present, and a vote to approve an action requires a majority vote of the members voting. “(d) Chief Executive Officer.— A chief executive officer of the Financial Assistance Corporation shall be selected by the Board of Directors and shall serve at the pleasure of the Board. “SEC. 6.23. STOCK. “The Financial Assistance Corporation shall issue stock with a par value of $5 to System institutions, as provided for in this subtitle, and such stock shall not be transferable. 101 STAT. 1596 “SEC. 6.24. CORPORATE POWERS. “(a) In General.— The Financial Assistance Corporation shall have the power to— “(1) operate under the direction of its Board of Directors; “(2) adopt, alter, and use a corporate seal, which shall be judicially noted; “(3) provide for such officers, employees, and agents, including joint employees with the Funding Corporation, as may be necessary, define their duties, and require surety bonds or make other provisions against losses occasioned by acts of such persons; “(4) adopt a salary scale for officers and employees of the Financial Assistance Corporation, in accordance with the directives of the Board of Directors; “(5) prescribe by its Board of Directors bylaws, that are not inconsistent with law, and that shall provide for the manner in which— “(A) its officers, employees, and agents are selected; “(B) its property is acquired, held, and transferred; “(C) its general business is conducted; and “(D) the privileges granted by law are exercised and enjoyed; “(6) enter into contracts and make advance, progress, or other payments with respect to such contracts; “(7) sue and be sued in its corporate name and complain and defend in courts of competent jurisdiction; “(8) acquire, hold, lease, mortgage, or dispose of, at public or private sale, real and personal property, and otherwise exercise all the usual incidents of ownership of property necessary and convenient to its business; “(9) obtain insurance against loss; “(10) modify or consent to the modification of any contract or agreement to which it is a party or in which it has an interest under this subtitle; “(11) borrow from any commercial bank on its own individual responsibility and on such terms and conditions as it may determine with the approval of the Farm Credit Administration; “(12) deposit its securities and its current funds with any member bank of the Federal Reserve System or any insured State nonmember bank (as defined in section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)) and pay fees therefor and receive interest thereon as may be agreed; and “(13) exercise such other incidental powers as are necessary to carry out its powers, duties, and functions in accordance with its charter and this subtitle. “(b) Power to Remove, and Jurisdiction.— Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Financial Assistance Corporation is a party shall be deemed to arise under the laws of the United States, and the United States District Court for the District of Columbia shall have original jurisdiction over such. The Financial Assistance Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States District Court for the District of Columbia. 101 STAT. 1597 “SEC. 6.25. ACCOUNTS. “(a) Farm Credit Assistance Fund.— “(1) Establishment.— The Financial Assistance Corporation shall establish an account called the Farm Credit Assistance Fund (referred to in this Act as the ‘Assistance Fund’) which shall be available to the Financial Assistance Corporation as a revolving fund to carry out this subtitle. The moneys of such Assistance Fund shall be invested in direct obligations of the United States or obligations guaranteed by the United States or an agency thereof. “(2) Funding.— The Assistance Fund shall be funded through the issuance of debt obligations and payments, as provided in section 6.26, and payments, as provided in section 6.28. “(b) Financial Assistance Corporation Trust Fund.— The Financial Assistance Corporation shall establish an account called the Financial Assistance Corporation Trust Fund (hereinafter referred to in this Act as the ‘Trust Fund’) that shall consist of securities of the United States Treasury purchased by the Financial Assistance Corporation with the funds received from the purchase of stock by System institutions from the Financial Assistance Corporation under section 6.29. “SEC. 6.26. DEBT OBLIGATIONS. “(a) Issuance.— During the period beginning 61 days after the date of the enactment of this title and ending September 30, 1992, the Financial Assistance Corporation, subject to the approval of the Assistance Board, may issue uncollateralized bonds, notes, debentures, and similar obligations, guaranteed as to the timely payment of principal and interest by the Secretary of the Treasury as set forth in subsection (d), with semiannual interest coupon payments and a maturity period of 15 years— “(1) in an aggregate amount not to exceed $2,800,000,000; and “(2) beginning January 1, 1989, in an additional amount, not to exceed $1,200,000,000, if— “(A) debt obligations have been issued by the Corporation to the full extent authorized under paragraph (1); “(B) the Assistance Board determines that such additional funds are needed to carry out this title; and “(C) at least 90 days before the issuance of any debt obligations under this paragraph, the Assistance Board submits a report to Congress that sets forth the determination of the Assistance Board that such additional debt obligations should be issued, and that contains a detailed evaluation supporting the determination. “(b) Conditions.— The debt obligations shall be in such forms and denominations, bear such rates of interest, be subject to such conditions, be issued in such manner, and be sold at such prices as may be prescribed by the Financial Assistance Corporation. “(c) Interest Payments.— “(1) Payment of interest during first 5-year period.— During each year of the first 5-year period of the 10-year period beginning on the date of issuance of each obligation under subsection (a), the Financial Assistance Corporation shall pay, without recourse to System institutions, other than that described in paragraph (5), all of the interest due on such obligation. “(2) Payment of interest during second 5-year period.— 101 STAT. 1598 “(A) In general.— During each year of the second 5-year period of the 10-year period beginning on the date of issuance of each obligation under subsection (a), the Financial Assistance Corporation shall pay all of the interest due on such obligation. “(B) Payment by system institutions to financial assistance corporation.— During each year of the second 5-year period, System institutions shall pay to the Financial Assistance Corporation 50 percent of the interest due on the obligations, except that System institutions shall pay an additional 10 percent of the interest expense for each 1 percent that the unallocated retained earnings of the System (as determined under generally accepted accounting principles) exceed 5 percent of net assets (total assets less allowance for loan losses) based on a year-end financial statement for the preceding year. “(C) Allocation.— During each year of the second 5-year period, each System institution shall pay to the Financial Assistance Corporation a proportion of the interest due from System institutions under this paragraph equal to— “(i) the amount of the performing loan volume of the institution (based on the average loan volume for the preceding year); divided by “(ii) the total performing loan volume of the System for the preceding year. “(D) Special rule.— For purposes of determining the average loan volume of Federal intermediate credit banks, loan volume shall consist of loans made by such banks with the exception of loans made to production credit associations. “(3) Payments by treasury.— The Secretary of the Treasury, in accordance with section 6.28, shall pay to the Financial Assistance Corporation, in a timely manner, the balance of each interest payment not made by the System institutions. “(4) Payment of interest after first 10-year period.— During each year of the third 5-year period of the 15-year period beginning on the date of the issuance of each obligation under subsection (a), the Financial Assistance Corporation shall pay all of the interest due on such obligation. During each year of such 5-year period, System institutions shall pay the entire amount of interest due on the obligation allocated in the same manner as under paragraph (2)(C). Such payments shall be made to the Financial Assistance Corporation at such times as the Financial Assistance Corporation shall determine. “(5) Repayment by system institutions.— “(A) In general.— Subject to the other provisions of this paragraph, the institutions of the Farm Credit System shall, on a fair and equitable basis, repay to the Secretary of the Treasury the total amount of any annual interest charges on debt obligations issued under subsection (a) that such institutions have not previously paid, and such institutions shall not be required to pay any additional interest charges on such payments. “(B) Time of payment.— The institutions of the Farm Credit System shall begin making interest payments when the Farm Credit Administration, in consultation with the Secretary of the Treasury, determines that such institu-101 STAT. 1599tions possess the financial viability to make such payments, except that such institutions shall not be required to begin making such payments until the obligations issued under subsection (d)(1)(C) have been fully repaid. “(C) Terms of payments.— “(i) In general.— The institutions of the Farm Credit System shall make interest payments at such levels, and on such dates, as the Farm Credit Administration determines appropriate, except that the Farm Credit Administration shall not set payment levels or dates that would jeopardize the financial viability of any such institution. “(ii) Limitations.— The institutions of the Farm Credit System shall not be required to make such repayments in a manner that— “(I) impairs the stock of such institution; or “(II) jeopardizes the minimum capital requirements of the institution. “(iii) Uncollateralized obligation.— Obligations to make repayments under this paragraph shall not be required to be collateralized. “(d) Refinancing and Payment of Principal.— “(1) In general.— “(A) Time of repayment.— On maturity of an obligation issued under subsection (a), the obligation shall be repaid by the Financial Assistance Corporation. “(B) Payments by institutions.— Except as provided in subparagraph (C), in order to enable the Financial Assistance Corporation to repay the obligation referred to in subparagraph (A), each institution that issued preferred stock under section 6.27(a) with respect to such obligation (or the successor thereto) shall pay to the Financial Assistance Corporation, before the maturity date of such obligation, an amount equal to the par value of such stock outstanding for such institution. “(C) Systemwide repayment.— In order to enable the Financial Assistance Corporation to repay the obligations referred to in section 410(c) of the Agricultural Credit Act of 1987, each System institution shall pay to the Financial Assistance Corporation a proportion of such principal equal “(i) the average performing loan volume of the bank for the preceding 15 years; divided by “(ii) the average performing loan volume of all of the System banks for the same period. “(D) Special rule.— For purposes of determining the average loan volume of Federal intermediate credit banks, loan volume shall consist of loans made by such banks with the exception of loans made to production credit associations. “(E) Funds for payments.— Payments under subparagraph (B) shall be made by each such institution from the funds of the institution or from funds raised by the institution through the issuance of debt obligations, which may be issued without a collateral requirement and without any guarantee by the Secretary of the Treasury. 101 STAT. 1600 “(2) Refinanced obligations.— The refinanced obligations issued under paragraph (1) shall be solely the obligations of the institutions refinancing such, and sections 4.3 and 4.4 shall not apply to such obligations. “(3) Defaults.— “(A) Interest.— “(i) Payment by corporation.— If a System institution defaults on the payment of interest due under this subsection during the first 15 years after an obligation is issued under subsection (a), the Financial Assistance Corporation shall pay the amount of the interest due by the System institution out of the Trust Fund, and shall recover the amount of the interest due from the defaulting System institution, and such amount shall be paid to the Trust Fund. “(ii) Payment by insurance fund.— If the Financial Assistance Corporation has not recovered the full amount of interest due from a defaulting institution by the end of the 12-month period beginning on the date of default, such uncollected interest shall be paid to the Trust Fund from the Insurance Fund established under section 5.60, to the full extent of funds available in the Insurance Fund as of the date the Financial Assistance Corporation notified the Farm Credit System Insurance Corporation of amounts due under this section. “(iii) Payment by remaining institutions.— To the extent that the payment from the Insurance Fund is insufficient to reimburse the Trust Fund, the remaining balance shall be added to the amount of interest due from remaining System institutions, under this subsection, and each remaining System institution, subject to the special rule provided in subsection (c)(2)(D), shall pay to the Trust Fund a proportion of the uncollected interest equal to— “(I) the amount of the performing loan volume of the institution (based on the average loan volume for the preceding year); divided by “(II) the total performing loan volume of the System. “(B) Principal.— “(i) Evaluation.— Not later than 90 days before the maturity of any obligation issued under subsection (a), the Farm Credit Administration shall complete an evaluation of the general financial condition of each System institution that issued preferred stock under section 6.27(a) with respect to such obligation to determine whether such System institution will be able to redeem such stock at par value on the maturity of the obligation, and remain a viable institution capable of providing credit to eligible borrowers at equitable and competitive interest rates. “(ii) Availability of evaluation.— A copy of the evaluation required under clause (i) shall be furnished to the Secretary of the Treasury and the appropriate committees of Congress. “(iii) Redemption by institution; purchase by secretary of the treasury.— If the Farm Credit Adminis-101 STAT. 1601tration determines, in consultation with the Secretary of the Treasury, on the basis of the evaluation required under clause (i), that the redemption of such stock at par value would impair the other stock or equities of such institution or render such institution incapable of meeting its capital adequacy standards, the institution shall be prohibited from redeeming the preferred stock it issued under section 6.27 with respect to the maturing obligation. If the Farm Credit Administration determines, in consultation with the Secretary of the Treasury, on the basis of the evaluation required under clause (i), that such institution will be able to redeem, in a timely manner and at par value, the preferred stock it issued under section 6.27 with respect to the maturing obligation, and remain a viable and competitive institution, such institution shall have the option of redeeming or not redeeming such stock. If such institution elects not to redeem such stock, the Financial Assistance Corporation shall withdraw funds from the Trust Fund in an amount equal to the par value of the preferred stock issued by such institution under section 6.27 so as to enable the Financial Assistance Corporation to pay the principal of the maturing obligation. Simultaneously with such withdrawal of funds from the Trust Fund, the Financial Assistance Corporation shall transfer to the Insurance Fund an equal amount, at par value, of preferred stock of such institution. To the extent that the Trust Fund is insufficient to enable the Financial Assistance Corporation to pay the full principal of the maturing obligation, the Insurance Fund snail be used by the Farm Credit System Insurance Corporation to purchase, at par value, the preferred stock issued by such institution under section 6.27(a) to enable the Financial Assistance Coiporation to pay the principal of the maturing obligation. To the extent that the Insurance Fund is insufficient to enable the Financial Assistance Corporation to pay the full principal of the maturing obligation, the Secretary of the Treasury shall purchase, at par value, the remaining quantity of the preferred stock issued by such institution to enable the Financial Assistance Corporation to make such full payment. For that purpose, the Secretary of the Treasury may use, as a public debt transaction, the proceeds from the sale of any securities issued under chapter 31 of title 31, United States Code. The purposes for which such securities may be issued under such chapter are extended to include such purchases of stock. Any preferred stock transferred to, or purchased by, the Farm Credit System Insurance Corporation under this clause shall be retired by the issuing institution at such times and under such terms and conditions as are agreed to between the Insurance Corporation and such institution. “(C) Recourse by other system institutions.— A defaulting institution shall be liable to the remaining System institutions for the amount of any interest paid by the remaining institutions under this paragraph. 101 STAT. 1602 “(4) Payment by united states.— “(A) Inability to pay.— Notwithstanding any other provision of this Act, if the Financial Assistance Corporation is unable to pay the principal or interest of any obligation issued under subsection (a), the Secretary of the Treasury shall pay to the Financial Assistance Corporation the amount due which shall be used by the Financial Assistance Corporation to pay the obligation. “(B) Recovery.— “(i) Interest payments.— In each instance in which the Secretary of the Treasury is required to make a payment under subparagraph (A) to the Financial Assistance Corporation as a result of a default made by a System institution on interest due from such System institution under subsection (c), the Secretary of the Treasury shall recover the amount of the payments the Secretary made, with respect to each defaulting institution, from such defaulting institution. If the Secretary has not recovered the full amount due from the defaulting institution by the end of the 12-month period beginning on the date of payment by the Secretary, the uncollected amount shall be paid to the Secretary from the Insurance Fund established under section 5.60. “(ii) Principal payments.— In each instance in which the Secretary of the Treasury is required under paragraph (3)(B)(iii) to purchase preferred stock issued by a System institution under section 6.27(a), the Farm Credit System Insurance Corporation shall use funds deposited in the Insurance Fund to repurchase, at par value, from the Secretary of the Treasury such stock required to be purchased under paragraph (3)(B)(iii) as funds become available for such repurchase. “(iii) Priority.— Notwithstanding any other provision of this Act except for section 5.60, during any year in which payments are due to the Secretary of the Treasury from the Insurance Fund under clause (i), or preferred stock held by the Secretary is due to be repurchased by the Insurance Fund under clause (ii), the funds in such Fund, and all funds deposited in such Fund during such year, shall be used first for the purposes specified in clauses (i) and (ii). “SEC. 6.27. PREFERRED STOCK. “(a) Issuance.— “(1) In general.— Each System institution that is certified under section 6.4 (a) or (b) may issue a special class of preferred stock only in an amount, and subject to such terms and conditions, as authorized by the Assistance Board. “(2) Dividends.— “(A) In general.— Except as provided in subparagraph (B), dividends shall not be payable on stock issued under this section. “(B) Exception.— Stock issued under this section shall be issued under such terms and conditions as to enable the Secretary of the Treasury, with respect to any of such stock the Secretary purchases under section 6.26(a)(3)(B)(iii), and the Reserve Account Board, with respect to any of such 101 STAT. 1603stock that the Board purchases or otherwise acquires under section 6.26(d)(3)(B)(iii) or section 6.26(d)(4)(B)(ii), to establish for such stock a stated dividend rate equal to the current market yield on outstanding, marketable obligations of the United States with maturities of 30 years, plus a premium to reflect the cost of capital for institutions in financial distress. “(3) Voting rights.— A holder of stock issued under this subsection shall have no voting rights with respect to the stock. “(b) Purchase.— The Financial Assistance Corporation shall purchase shares of stock issued by certified System institutions under subsections (a) and (b) to the extent that the issuance of such stock is approved by the Assistance Board. “SEC. 6.28. PAYMENTS. “(a) In General.— Beginning in fiscal year 1989, the Secretary of the Treasury shall reimburse the Financial Assistance Corporation for any amounts such Corporation pays in interest charges under section 6.26(c) during fiscal year 1988, and thereafter the Secretary shall pay the Financial Assistance Corporation any amounts due from the Secretary to such Corporation under section 6.26(c). “(b) Repayment of Interest Paid by Secretary of Treasury.— “(1) In general.— Any amounts paid into the Assistance Fund by the Secretary of the Treasury pursuant to subsection (a) exceeding $2,000,000,000 shall be repaid by System institutions in accordance with a schedule to be established by the Farm Credit Administration Board. “(2) Allocation.— Until such repayment is completed, each System institution shall pay a proportionate share of the amount due under this paragraph to— “(A) the amount of the performing loan volume of the institution, determined in accordance with subsection (c)(1)(D) (based on the average loan volume for the preceding year); divided by “(B) the total performing loan volume of the System for the preceding year. “(c) Authorization of Appropriations.— There is authorized to be appropriated to the Secretary of the Treasury such sums on an annual basis as may be necessary to carry out this subtitle. “SEC. 6.29. ONE-TIME STOCK PURCHASE. “(a) Amount of Stock Purchase.— “(1) In general.— Except as provided in paragraph (2), for the purpose of obtaining funds for the Trust Fund, each System institution shall purchase from the Financial Assistance Corporation stock issued in accordance with section 6.23 in an amount equal to the amount by which the unallocated retained earnings of the institution (after taking into account any funds received by the institution under section 6.9(c)) exceeds— “(A) in the case of a System bank, 5 percent of assets; or “(B) in the case of a production credit association or a Federal land bank association, 13 percent of assets. “(2) Reallocation.— The district board of a district, subject to the unanimous consent of the bank and associations in the district that would be affected by the reallocation, may reallocate the amount of stock required to be purchased by banks and associations in the district under paragraph (1) to equitably 101 STAT. 1604reflect the ability of the banks and associations to pay, except that— “(A) the total amount of stock purchased by banks and associations in the district under this paragraph shall equal the total amount of stock required to be purchased by the banks and associations under paragraph (1); and “(B) the board may not impair the stock of an association in carrying out this paragraph; and “(C) a district board’s authority to reallocate stock purchases under this paragraph shall be limited to reallocation among like associations of the amount of stock required to be purchased by such associations; reallocation of the amount of stock required to be purchased by production credit associations among such associations and the district Federal intermediate credit bank; and reallocation of the amount of stock required to be purchased by Federal land bank associations among such associations and the district Federal land bank. Other reallocations than those enumerated above shall not be permitted. “(b) Computations.— For purposes of subsection (a), the unallocated retained earnings and assets of a System institution shall be computed in accordance with generally accepted accounting principles on the basis of the financial statement of the institution on December 31, 1986. “(c) Notice.— Within 15 days after the retirement of the obligations of the Capital Corporation under section 6.9— “(1) the Financial Assistance Corporation shall notify each System institution of the amount of stock such institution is required to purchase under subsection (a); or “(2) in the case of a district in which the district board has reallocated the stock purchase requirement in accordance with subsection (a)(2), the district board shall notify each System institution in the district of the amount of stock such institution is required to purchase under subsection (a). “(d) Institution Requirements After Notice.— Within 15 days after a System institution is notified of the amounts due under subsection (c), the institution shall purchase from the Financial Assistance Corporation the amount of stock required to be purchased by the institution under this section. No further stock purchases, obligations, or assessments shall be required beyond that provided in section 6.26 and this section. “(e) Jurisdiction Over Actions.— Notwithstanding any other provision of law, the United States district court for the District of Columbia shall have exclusive jurisdiction over any action brought under or arising out of this section. No suit or proceeding shall be maintained for the recovery of any amount of stock alleged to have been erroneously or illegally purchased, and no suit or proceeding shall be maintained to enjoin or otherwise prevent or impede the giving of notice or the purchase of stock required under this section, unless the amount of stock required to be purchased under this section has been purchased and paid for in full. “SEC. 6.30. EXEMPTION FROM TAXATION. “(a) Assets.— The Financial Assistance Corporation, 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 the Financial Assist-101 STAT. 1605ance Corporation to the same extent, according to its value, as other similar property held by other persons is taxed. “(b) Obligations.— The notes, bonds, debentures, and other obligations issued by the Financial Assistance Corporation shall be accorded the same tax treatment as System-wide obligations. “SEC. 6.31. TERMINATION. “(a) Financial Assistance Corporation.— The Financial Assistance Corporation and the authority provided to such Corporation by this subtitle shall terminate on the maturity and full payment of all debt obligations issued under section 6.26(a). “(b) Accounts.— Simultaneously with the termination of the Financial Assistance Corporation as provided in subsection (a), any funds in the accounts established under section 6.25 shall be transferred to the Insurance Fund established under section 5.60.”.