PUBLIC LAW 104-105-FEB. 10, 1996 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, 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 PUBLIC LAW 104-105-FEB. 10, 1996 "(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 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 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 PUBLIC LAW 104-105-FEB. 10, 1996 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 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.— PUBLIC LAW 104-105-FEB. 10, 1996 "(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.". (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 SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE FARM 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. 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 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. 12 USC 2277a-10a. 12 USC 2277a-10b. PUBLIC LAW 104-105-FEB. 10, 1996 "(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. 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; "(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 |