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determined under paragraph (1).''.
(2) Conforming amendments.--
(A) Section 5.55(b) of the Farm Credit Act of 1971
(12 U.S.C. 2277a-4(b)) is amended--
(i) by striking ``Insurance Fund'' each place
it appears and inserting ``Farm Credit Insurance
Fund'';
[[Page 110 STAT. 176]]
(ii) by striking ``for the following calendar
year''; and
(iii) by striking ``subsection (a)'' and
inserting ``subsection (a)(1)''.
(B) Section 5.56(a) of the Farm Credit Act of 1971
(12 U.S.C. 2277a-5(a)) is amended by striking ``section
5.55(a)(2)'' each place it appears in paragraphs (2) and
(3) and inserting ``section 5.55(a)(3)''.
(C) Section 1.12(b) (12 U.S.C. 2020(b)) is amended--
(i) in paragraph (1), by inserting ``(as
defined in section 5.55(a)(3))'' after
``government-guaranteed loans''; and
(ii) in paragraph (3), by inserting ``(as so
defined)'' after ``government-guaranteed loans''
each place such term appears.
(b) Allocation to Insured System Banks and Other System Institutions
of Excess Amounts in the Farm Credit Insurance Fund.--Section 5.55 of
the Farm Credit Act of 1971 (12 U.S.C. 2277a-4) is amended by adding at
the end the following:
``(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 average secure base amount for the calendar
year (as calculated on an average daily balance basis), 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 the
average principal outstanding for the 3-year period
ending on the end of the calendar year on loans made by
the bank that are in accrual status bears to the average
principal outstanding for the 3-year period ending on
the end of the calendar year on loans made by all
insured System banks that are in accrual status
(excluding, in each case,
[[Page 110 STAT. 177]]
the guaranteed portions of government-guaranteed loans
described in subsection (a)(1)(C)).
``(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 beginning more than 8 years after the
date on which the aggregate of the amounts in the Farm
Credit Insurance Fund exceeds the secure base amount,
but not earlier than January 1, 2005, the Corporation
may--
``(i) subject to subparagraphs (D) and (F),
pay to each insured System bank, in a manner
determined by the Corporation, an amount equal to
the lesser of--
``(I) 20 percent of the balance in
the insured System bank's Allocated
Insurance Reserves Account as of the
preceding December 31; or
``(II) 20 percent of the balance in
the bank's Allocated Insurance Reserves
Account on the date of the payment; and
``(ii) subject to subparagraphs (C), (E), and
(F), 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, of the lesser of--
``(I) 20 percent of the balance in
the Allocated Insurance Reserves Account
established under paragraph (1)(B) as of
the preceding December 31; or
``(II) 20 percent of the balance in
the Allocated Insurance Reserves Account
established under paragraph (1)(B) on
the date of the payment.
``(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.
``(C) Reimbursement for financial assistance
corporation stock.--
``(i) Sufficient funding.--Notwithstanding
paragraph (4)(A), on provision by the Corporation
for the accumulation in the Account established
under para
[[Page 110 STAT. 178]]
graph (1)(B) of funds in an amount equal to
$56,000,000 (in addition to the amounts described
in subparagraph (F)(ii)), 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) Wind down and termination.--
``(I) Final disbursements.--On
disbursement of $53,000,000 (in addition
to the amounts described in subparagraph
(F)(ii)) from the Allocated Insurance
Reserves Account, the Corporation shall
disburse the remaining amounts in the
Account, as determined under
subparagraph (A)(ii), without regard to
the percentage limitations in subclauses
(I) and (II) of subparagraph (A)(ii).
``(II) Termination of account.--On
disbursement of $56,000,000 (in addition
to the amounts described in subparagraph
(F)(ii)) from the Allocated Insurance
Reserves Account, the Corporation shall
close the Account established under
paragraph (1)(B) and 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.
``(F) Initial payment.--Notwithstanding subparagraph
(A), the initial payment made to each payee under
subparagraph (A) shall be in such amount determined by
the Corporation to be equal to the sum of--
``(i) the total of the amounts that would have
been paid if payments under subparagraph (A) had
been authorized to begin, under the same terms and
conditions, in the first calendar year beginning
more than 5 years after the date on which the
aggregate of the amounts in the Farm Credit
Insurance Fund exceeds the secure base amount, and
to continue through the 2 immediately subsequent
years;
``(ii) interest earned on any amounts that
would have been paid as described in clause (i)
from the
[[Page 110 STAT. 179]]
date on which the payments would have been paid as
described in clause (i); and
``(iii) the payment to be made in the initial
year described in subparagraph (A), based on the
amount in each Account after subtracting the
amounts to be paid under clauses (i) and (ii).''.
(c) Technical Amendments.--Section 5.55(d) of the Farm Credit Act of
1971 (12 U.S.C. 2277a-4(d)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``subsections (a) and (c)'' and
inserting ``subsections (a), (c), and (e)''; and
(B) by striking ``a Farm Credit Bank'' and inserting
``an insured System bank''; and
(2) in paragraphs (1), (2), and (3), by striking ``Farm
Credit Bank'' each place it appears and inserting ``insured
System bank''.
SEC. 216. EXAMINATIONS BY THE FARM CREDIT SYSTEM INSURANCE CORPORATION.
Section 5.59(b)(1)(A) of the Farm Credit Act of 1971 (12 U.S.C.
2277a-8(b)(1)(A)) is amended by adding at the end the following:
``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.''.
SEC. 217. POWERS WITH RESPECT TO TROUBLED INSURED SYSTEM BANKS.
(a) Least-Cost Resolution.--Section 5.61(a)(3) of the Farm Credit
Act of 1971 (12 U.S.C. 2277a-10(a)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (F);
and
(2) by striking subparagraph (A) and inserting the
following:
``(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 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.
``(C) Time of determination.--
[[Page 110 STAT. 180]]
``(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.''.
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