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(b) Conforming Amendments.--Section 5.61(a) of the Farm Credit Act
of 1971 (12 U.S.C. 2277a-10(a)) is amended--
(1) in paragraph (1) by striking ``In general.--'' and
inserting ``Stand-alone assistance.--''; and
(2) in paragraph (2)--
(A) by striking ``Enumerated powers.--'' and
inserting ``Facilitation of mergers or consolidation.--
''; and
(B) in subparagraph (A) by striking ``Facilitation
of mergers or consolidation.--'' and inserting ``In
general.--''.
SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM CREDIT SYSTEM
INSURANCE CORPORATION.
The Farm Credit Act of 1971 is amended by inserting after section
5.61 (12 U.S.C. 2279a-10) the following:
``SEC. 5.61A. <<NOTE: 12 USC 2277a-10a.>> OVERSIGHT ACTIONS BY THE
CORPORATION.
``(a) Definitions.--In this section, the term `institution' means--
``(1) an insured System bank; and
``(2) a production credit association or other association
making loans under section 7.6 with a direct loan payable to the
funding bank of the association that comprises 20 percent or
more of the funding bank's total loan volume net of nonaccrual
loans.
``(b) Consultation Regarding Participation of Undercapitalized Banks
in Issuance of Insured Obligations.--The Farm Credit Administration
shall consult with the Corporation
[[Page 110 STAT. 181]]
prior to approving an insured obligation that is to be issued by or on
behalf of, or participated in by, any insured System bank that fails to
meet the minimum level for any capital requirement established by the
Farm Credit Administration for the bank.
``(c) Consultation Regarding Applications for Mergers and
Restructurings.--
``(1) Corporation to receive copy of transaction
applications.--On receiving an application for a merger or
restructuring of an institution, the Farm Credit Administration
shall forward a copy of the application to the Corporation.
``(2) Consultation required.--If the proposed merger or
restructuring involves an institution that fails to meet the
minimum level for any capital requirement established by the
Farm Credit Administration applicable to the institution, the
Farm Credit Administration shall allow 30 days within which the
Corporation may submit the views and recommendations of the
Corporation, including any conditions for approval. In
determining whether to approve or disapprove any proposed merger
or restructuring, the Farm Credit Administration shall give due
consideration to the views and recommendations of the
Corporation.
``SEC. 5.61B. <<NOTE: 12 USC 2277a-10b.>> AUTHORITY TO REGULATE GOLDEN
PARACHUTE AND INDEMNIFICATION PAYMENTS.
``(a) Definitions.--In this section:
``(1) Golden parachute payment.--The term `golden parachute
payment'--
``(A) means a payment (or any agreement to make a
payment) in the nature of compensation for the benefit
of any institution-related party under an obligation of
any Farm Credit System institution that--
``(i) is contingent on the termination of the
party's relationship with the institution; and
``(ii) is received on or after the date on
which--
``(I) the institution is insolvent;
``(II) a conservator or receiver is
appointed for the institution;
``(III) the institution has been
assigned by the Farm Credit
Administration a composite CAMEL rating
of 4 or 5 under the Farm Credit
Administration Rating System, or an
equivalent rating; or
``(IV) the Corporation otherwise
determines that the institution is in a
troubled condition (as defined in
regulations issued by the Corporation);
and
``(B) includes a payment that would be a golden
parachute payment but for the fact that the payment was
made before the date referred to in subparagraph (A)(ii)
if the payment was made in contemplation of the
occurrence of an event described in any subclause of
subparagraph (A); but
``(C) does not include--
``(i) a payment made under a retirement plan
that is qualified (or is intended to be qualified)
under section 401 of the Internal Revenue Code of
1986 or other nondiscriminatory benefit plan;
[[Page 110 STAT. 182]]
``(ii) a payment made under a bona fide
supplemental executive retirement plan, deferred
compensation plan, or other arrangement that the
Corporation determines, by regulation or order, to
be permissible; or
``(iii) a payment made by reason of the death
or disability of an institution-related party.
``(2) Indemnification payment.--The term `indemnification
payment' means a payment (or any agreement to make a payment) by
any Farm Credit System institution for the benefit of any person
who is or was an institution-related party, to pay or reimburse
the person for any liability or legal expense with regard to any
administrative proceeding or civil action instituted by the Farm
Credit Administration that results in a final order under which
the person--
``(A) is assessed a civil money penalty; or
``(B) is removed or prohibited from participating in
the conduct of the affairs of the institution.
``(3) Institution-related party.--The term `institution-
related party' means--
``(A) a director, officer, employee, or agent for a
Farm Credit System institution or any conservator or
receiver of such an institution;
``(B) a stockholder (other than another Farm Credit
System institution), consultant, joint venture partner,
or any other person determined by the Farm Credit
Administration to be a participant in the conduct of the
affairs of a Farm Credit System institution; and
``(C) an independent contractor (including any
attorney, appraiser, or accountant) that knowingly or
recklessly participates in any violation of any law or
regulation, any breach of fiduciary duty, or any unsafe
or unsound practice that caused or is likely to cause
more than a minimal financial loss to, or a significant
adverse effect on, the Farm Credit System institution.
``(4) Liability or legal expense.--The term `liability or
legal expense' means--
``(A) a legal or other professional expense incurred
in connection with any claim, proceeding, or action;
``(B) the amount of, and any cost incurred in
connection with, any settlement of any claim,
proceeding, or action; and
``(C) the amount of, and any cost incurred in
connection with, any judgment or penalty imposed with
respect to any claim, proceeding, or action.
``(5) Payment.--The term `payment' means--
``(A) a direct or indirect transfer of any funds or
any asset; and
``(B) any segregation of any funds or assets for the
purpose of making, or under an agreement to make, any
payment after the date on which the funds or assets are
segregated, without regard to whether the obligation to
make the payment is contingent on--
``(i) the determination, after that date, of
the liability for the payment of the amount; or
``(ii) the liquidation, after that date, of
the amount of the payment.
[[Page 110 STAT. 183]]
``(b) Prohibition.--The Corporation may prohibit or limit, by
regulation or order, any golden parachute payment or indemnification
payment by a Farm Credit System institution (including any conservator
or receiver of the Federal Agricultural Mortgage Corporation) in
troubled condition (as defined in regulations issued by the
Corporation).
``(c) Factors To Be Taken into Account.--The Corporation shall
prescribe, by regulation, the factors to be considered by the
Corporation in taking any action under subsection (b). The factors may
include--
``(1) whether there is a reasonable basis to believe that an
institution-related party has committed any fraudulent act or
omission, breach of trust or fiduciary duty, or insider abuse
with regard to the Farm Credit System institution involved that
has had a material effect on the financial condition of the
institution;
``(2) whether there is a reasonable basis to believe that
the institution-related party is substantially responsible for
the insolvency of the Farm Credit System institution, the
appointment of a conservator or receiver for the institution, or
the institution's troubled condition (as defined in regulations
prescribed by the Corporation);
``(3) whether there is a reasonable basis to believe that
the institution-related party has materially violated any
applicable law or regulation that has had a material effect on
the financial condition of the institution;
``(4) whether there is a reasonable basis to believe that
the institution-related party has violated or conspired to
violate--
``(A) section 215, 657, 1006, 1014, or 1344 of title
18, United States Code; or
``(B) section 1341 or 1343 of title 18, United
States Code, affecting a Farm Credit System institution;
``(5) whether the institution-related party was in a
position of managerial or fiduciary responsibility; and
``(6) the length of time that the party was related to the
Farm Credit System institution and the degree to which--
``(A) the payment reasonably reflects compensation
earned over the period of employment; and
``(B) the compensation represents a reasonable
payment for services rendered.
``(d) Certain Payments Prohibited.--No Farm Credit System
institution may prepay the salary or any liability or legal expense of
any institution-related party if the payment is made--
``(1) in contemplation of the insolvency of the institution
or after the commission of an act of insolvency; and
``(2) with a view to, or with the result of--
``(A) preventing the proper application of the
assets of the institution to creditors; or
``(B) preferring 1 creditor over another creditor.
``(e) Rule of Construction.--Nothing in this section--
``(1) prohibits any Farm Credit System institution from
purchasing any commercial insurance policy or fidelity bond, so
long as the insurance policy or bond does not cover any legal or
liability expense of an institution described in subsection
(a)(2); or
[[Page 110 STAT. 184]]
``(2) limits the powers, functions, or responsibilities of
the Farm Credit Administration.''.
SEC. 219. FARM CREDIT SYSTEM INSURANCE CORPORATION BOARD OF DIRECTORS.
(a) In General.--Section 5.53 of the Farm Credit Act of 1971 (12
U.S.C. 2277a-2) is amended to read as follows:
``SEC. 5.53. BOARD OF DIRECTORS.
``(a) Establishment.--The Corporation shall be managed by a Board of
Directors that shall consist of the members of the Farm Credit
Administration Board.
``(b) Chairman.--The Board of Directors shall be chaired by any
Board member other than the Chairman of the Farm Credit Administration
Board.''.
(b) Conforming Amendments.--
(1) Section 5314 of title 5, United States Code, is amended
by striking ``Chairperson, Board of Directors of the Farm Credit
System Insurance Corporation.''.
(2) Section 5315 of title 5, United States Code, is amended
by striking ``Members, Board of Directors of the Farm Credit
System Insurance Corporation.''.
SEC. 220. INTEREST RATE REDUCTION PROGRAM.
Section 351(a) of the Consolidated Farm and Rural Development Act (7
U.S.C. 1999) is amended--
(a) by striking ``Sec. 351. (a) The'' and inserting the following:
``SEC. 351. INTEREST RATE REDUCTION PROGRAM.
``(a) Establishment of Program.--
``(1) In general.--The''; and
(b) by adding at the end the following:
``(2) Termination of authority.--The authority provided by
this subsection shall terminate on September 30, 2002.''.
SEC. 221. <<NOTE: 12 USC 2219e.>> LIABILITY FOR MAKING CRIMINAL
REFERRALS.
(a) In General.--Any institution of the Farm Credit System, or any
director, officer, employee, or agent of a Farm Credit System
institution, that discloses to a Government authority information
proffered in good faith that may be relevant to a possible violation of
any law or regulation shall not be liable to any person under any law of
the United States or any State--
(1) for the disclosure; or
(2) for any failure to notify the person involved in the
possible violation.
(b) No Prohibition on Disclosure.--Any institution of the Farm
Credit System, or any director, officer, employee, or agent of a Farm
Credit System institution, may disclose information to a Government
authority that may be relevant to a possible violation of any law or
regulation.
[[Page 110 STAT. 185]]
TITLE III--IMPLEMENTATION AND EFFECTIVE DATE
SEC. 301. <<NOTE: Regulations. 12 USC 2001 note.>> IMPLEMENTATION.
The Secretary of Agriculture and the Farm Credit Administration
shall promulgate regulations and take other required actions to
implement the provisions of this Act not later than 90 days after the
effective date of this Act.
SEC. 302. <<NOTE: 12 USC 2013 note.>> EFFECTIVE DATE.
Except as otherwise provided in this Act, this Act and the
amendments made by this Act shall become effective on the date of
enactment.
Approved February 10, 1996.
LEGISLATIVE HISTORY--H.R. 2029:
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