PREFERRED STOCK.

SEC. 302. PREFERRED STOCK. Subparagraph (B) of section 6.26(d)(1) (12 U.S.C. 2278b–6(d)(1)(B)) is amended to read as follows: “(B) Payments by institutions.— “(i) In general.— 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 the obligation (or the successor to the institution) shall pay to the Financial Assistance Corporation, before the maturity date of the obligation, an amount equal to the par value of the stock outstanding for the institution. “(ii) Annual appropriation.— Except as provided in clause (iii), each year beginning in 1992, as soon as practicable following the end of the prior year, each such institution (except institutions in receivership and institutions that have previously redeemed their preferred stock) shall appropriate from its earnings in the prior year to an appropriated unallocated surplus account with respect to preferred stock, the sum of— “(I) the greater of— “(aa) such amount as the institution may be required to appropriate under any assistance agreement the institution has with the Farm Credit System Assistance Board or the 106 STAT. 4110Farm Credit System Insurance Corporation; or “(bb) the amount that, if appropriated to the account in equal amounts m each year thereafter until the maturity of the obligation referred to in subparagraph (A), would cause the amount in the account to equal the par value of the preferred stock issued by the institution with respect to the obligation; plus “(II) any amount that had been appropriated to the account in a previous year but had thereafter been offset by losses. “(iii) Limitation.— An annual appropriation shall not be made to the extent that the appropriation would exceed the institution’s net income (as determined pursuant to generally accepted accounting principles) in that year or to the extent that the appropriation would cause the institution’s preferred stock to be impaired. “(iv) Use.— The amount in the appropriated unallocated surplus account shall be unavailable to pay dividends or other allocations or distributions to shareholders or holders of participation certificates. The account shall be senior to all other unallocated surplus accounts but junior to all preferred and common stock for purposes of the application of operating losses. “(v) Preferred stock.— The appropriations of surplus by an institution shall not affect the treatment of its preferred stock (and of the appropriated unallocated surplus) as equity for purposes of regulatory permanent capital requirements.”.