Agricultural Credit Act of 1987

Summary

Agricultural Credit Act of 1987 - Title I: Provisions to Assist Borrowers of, and Improve the Administration of, the Farm Credit Act of 1971 - Amends the Farm Credit Act of 1971 to provide a five-year guarantee for the value of Farm Credit System (FCS) borrower-held stock. Requires a FCS lender to restructure a financially-stressed loan if such loan's restructured value would exceed its liquidated value. Requires lenders to: (1) develop a written loan restructuring policy for Farm Credit Administration (FCA) approval; (2) review all nonaccrual and high-risk loans for restructuring possibilities; and (3) submit quarterly restructuring reports to FCA. Requires each farm credit district board to: (1) appoint a restructuring supervisory officer; and (2) monitor restructured loans. Authorizes FCS associations to establish special credit units to implement loan restructuring. Establishes a five-year federally-chartered Farm Credit System Temporary Assistance Corporation (Corporation) to replace the Farm Credit System Capital Corporation in providing financial (including stock guarantees) and technical assistance to financially troubled FCS institutions. Funds the Corporation through Treasury purchases of Corporation stock or obligations. Requires FCS repayment to the Treasury to begin five years after enactment of this Act through specified annual institution payments. Requires each institution, within 90 days of enactment of this Act, to submit a business plan (with annual updates) to the Corporation for approval as a condition for financial assistance. Stipulates that for the first 120 days after enactment of this Act, the Corporation may provide emergency assistance to a failing institution without plan approval. Sets forth FCS borrower rights, including: (1) access to documents; (2) review of adverse loan decisions and opportunity to meet with institution representatives before foreclosure; (3) protection from having to post additional collateral if all other loan obligations have been met; and (4) homestead protection and right of first refusal to repurchase foreclosed property. Establishes the Farm Credit System Insurance Corporation (Insurance Corporation) to insure securities issued by FCS institutions through the Federal Farm Credit Banks Funding Corporation (created by this Act). States that every FCS bank will be an insured bank upon enactment of this Act. Requires such banks to: (1) make reports of their condition to the Insurance Corporation, and provides penalties for failure to do so; and (2) pay specified annual funding premiums. Provides for a minimum insurance fund base of two percent of the value of outstanding FCS obligations. Requires FCS institutions to file annual premium certifications with the Insurance Corporation. Subjects an institution to forfeiture of FCS rights and privileges for failure to file or to pay the premiums, and makes a director who participated in such failure personally liable for consequential damages. Establishes the Farm Credit Insurance Fund to insure the timely payment of principal and interest on insured obligations. Transfers current revolving fund amounts to such Fund. Authorizes the Insurance Corporation to: (1) make loans to, purchase the assets or securities of, assume the liabilities of, or make contributions to a financially troubled insured institution; and (2) take specified steps to facilitate institution mergers or consolidations. Prohibits assistance to an institution if such amounts would exceed liquidation costs, unless the continued operation of the institution is essential to provide local agricultural credit services. Requires the Insurance Corporation to report annually to the Congress. Requires FCA, within 180 days of enactment of this Act, to prescribe regulations regarding the merger and reorganization of unlike FCS institutions operating in the same district. States that, in the case of a merger, the authority of the district board shall be transferred to and among specified district banks. Authorizes: (1) a Federal land bank resulting from a merger to make short term loans; and (2) a Federal intermediate credit bank or a production credit association resulting from a merger to make real estate loans. Sets forth provisions regarding merged institutions' boards of directors. Directs FCA, within 120 days after enactment of this Act, to issue regulations regarding minimum permanent capital adequacy standards for FCS institutions (to be phased in over a five-year period). Requires such standards to include fixed capital-to-asset ratios. Directs FCA to: (1) conduct a study of whether FCS institutions should implement capitalization plans that involve capitalization through methods other than the issuance of borrower stock or equities in loan-based amounts; and (2) submit such report to the Congress within two years of enactment of this Act. Provides for the appointment of two additional district board members who are not FCS borrowers, shareholders, or employees. Authorizes elections for separate boards for each bank in any farm credit district. Expands FCS rural loan authority by increasing from 15 percent to 25 percent the number of permitted nonfarmer loans and increasing the "rural area" population designation from 2,500 to 20,000. Revises provisions regarding the eligibility of specified entities to borrow from a bank for cooperatives.

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Documents

3 official files

• Public Law (PDF)

  Public Law · EN · 7 January 1988

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• Conference report filed in House

  summary · EN · 18 December 1987

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• Introduced in House

  summary · EN · 28 July 1987

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