CAPITAL PRESERVATION.

SEC. 301. CAPITAL PRESERVATION. Section 6.9(e)(3) (12 U.S.C. 2278a-9(e)(3)) is amended— 106 STAT. 4108 (1) by striking subparagraph (C) and inserting the following new subparagraph: “(C) Payment of principal.— “(i) In general.— After the end of the 15-year period beginning on the date of the issuance of any obligation issued to carry out this subsection, the banks operating under this Act shall pay to the Financial Assistance Corporation, on demand, an amount equal to the outstanding principal of the obligation. Each bank shall pay a proportion of the principal equal to— “(I) the average accruing loan volume of the bank for the preceding 15 years; divided by “(II) the average accruing loan volume of all banks of the System for the same period. “(ii) Banks leaving system.— Any bank leaving the Farm Credit System pursuant to section 7.10 shaft be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of the payment required under this subparagraph had the bank remained in the System. “(iii) Banks undergoing liquidation.— With respect to any bank undergoing liquidation under this Act, a liability to the Financial Assistance Corporation in the amount of the payment required under this subparagraph (calculated as if the bank had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of the bank. “(iv) Obligations of other banks.—The obligations of other banks shaft not be reduced in anticipation of any recoveries under this subparagraph from banks leaving the System or in liquidation, but the Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.”; (2) by redesignating subparagraph (D) as subparagraph (E); (3) by inserting after subparagraph (C) the following new subparagraph: “(D) Annual payments.— “(i) In general.—In order to provide for the orderly funding and discharge over time of the obligation of each System bank to the Financial Assistance Corporation under subparagraph (C), each System bank shall enter into or continue in effect an agreement with the Financial Assistance Corporation under which the bank will make annual annuity-type payments to the Financial Assistance Corporation, beginning no later than December 31, 1992 (except for any bank that did not meet its interim capital requirement on December 31, 1990, in which case the bank shall begin 106 STAT. 4109making the payments no later than December 31, 1993) in amounts designed to accumulate, in total, including earnings on the amounts, to 90 percent of the bank’s ultimate obligation. The Financial Assistance Corporation shall partially discharge the bank from its obligation under subparagraph (C) to the extent of each such payment and the earnings on the payment as earned. “(ii) Capital requirements.—The agreement shall not require payments to be made to the extent that making a particular payment or part of a payment would cause the bank to fail to satisfy applicable regulatory permanent capital requirements, but shall provide for recalculation of subsequent payments accordingly. “(iii) Investment; availability.—The funds received by the Financial Assistance Corporation pursuant to the agreements shall be invested in eligible investments as defined in section 6.25(a)(1). The funds and the earnings on the funds shall be available only for the payment of the principal of the bonds issued by the Financial Assistance Corporation under this subsection.”; and (4) in subparagraph (E) (as redesignated by paragraph (2)), by inserting before the period at the end the following: “, nor shall the obligation to make future annuity payments to the Financial Assistance Corporation under subparagraph (D) be considered a liability of any System bank”.