§2277a–4. Premiums

(a) Amount in Fund not exceeding secure base amount

(1) In general

Until the aggregate of amounts in the Farm Credit Insurance Fund exceeds the secure base amount, the annual premium due from any insured System bank for any calendar year shall be equal to the sum of-

(A) the annual average principal outstanding for such year on loans made by the bank that are in accrual status, excluding the guaranteed portions of government-guaranteed loans provided for in subparagraph (C), multiplied by 0.0015;

(B) the annual average principal outstanding for such year on loans made by the bank that are in nonaccrual status, multiplied by 0.0025; and

(C)(i) the annual average principal outstanding for such year on the guaranteed portions of Federal Government-guaranteed loans made by the bank that are in accrual status, multiplied by 0.00015; and

(ii) the annual average principal outstanding for such year on the guaranteed portions of State government-guaranteed loans made by the bank that are in accrual status, multiplied by 0.0003.

(2) "Government-guaranteed loans" defined

As used in this section and section 2020(b) of this title, the term "government-guaranteed loans" means loans or credits, or portions of loans or credits, that are guaranteed-

(A) by the full faith and credit of the United States Government or any State government;

(B) by an agency or other entity of the United States Government whose obligations are explicitly guaranteed by the United States Government; or

(C) by an agency or other entity of a State government whose obligations are explicitly guaranteed by such State government.

(b) Amount in Fund exceeding secure base amount

At any time the aggregate of amounts in the Insurance Fund exceeds the secure base amount, the Corporation shall reduce the annual premium due from each insured System bank for the following calendar year, as determined under subsection (a) of this section, by a percentage determined by the Corporation so that the aggregate of the premiums payable by all System banks is sufficient to ensure that the aggregate of amounts in the Insurance Fund after such premiums are paid is not less than the secure base amount at such time.

(c) Secure base amount

For purposes of this part, the term "secure base amount" means, with respect to any point in time, 2 percent of the aggregate outstanding insured obligations of all insured System banks at such time (adjusted downward to exclude an amount equal to the sum of (1) 90 percent of the guaranteed portions of principal outstanding on Federal Government-guaranteed loans in accrual status made by such banks and (2) 80 percent of the guaranteed portions of principal outstanding on State government-guaranteed loans in accrual status made by such banks, as determined by the Corporation), or such other percentage of the aggregate amount as the Corporation in its sole discretion determines is actuarially sound to maintain in the Insurance Fund taking into account the risk of insuring outstanding insured obligations.

(d) Determination of principal outstanding

For the purpose of subsections (a) and (c) of this section, the principal outstanding on all loans made by a Farm Credit Bank shall be determined based on all loans made-

(1) by any production credit association, or any other association making direct loans under authority provided under section 2279b of this title, that is able to make such loans because such association is receiving, or has received, funds provided through the Farm Credit Bank;

(2) by any bank, company, institution, corporation, union, or association described in section 2015(b)(1)(B) of this title, that is able to make such loans because such entity is receiving, or has received, funds provided through the Farm Credit Bank; and

(3) by such Farm Credit Bank (other than loans made to any party described in paragraph (1) or (2)).

(Pub. L. 92–181, title V, §5.55, as added Pub. L. 100–233, title III, §302, Jan. 6, 1988, 101 Stat. 1612 ; amended Pub. L. 100–399, title III, §302(c)–(e), Aug. 17, 1988, 102 Stat. 994 ; Pub. L. 101–220, §6(a), Dec. 12, 1989, 103 Stat. 1879 .)

Amendments

1989-Subsec. (a). Pub. L. 101–220, §6(a)(1), added subsec. (a) and struck out former subsec. (a) which read as follows: "Until the aggregate of amounts in the Farm Credit Insurance Fund exceeds the secure base amount, the annual premium due from any insured System bank for any calendar year shall be equal to the sum of-

"(1) the annual average principal outstanding for such year on loans made by the bank that are in accrual status, multiplied by 0.0015; and

"(2) the annual average principal outstanding for such year on loans made by the bank that are in nonaccrual status, multiplied by 0.0025."

Subsec. (b). Pub. L. 101–220, §6(a)(2), inserted ", as determined under subsection (a) of this section," after "calendar year".

Subsec. (c). Pub. L. 101–220, §6(a)(3), inserted "(adjusted downward to exclude an amount equal to the sum of (1) 90 percent of the guaranteed portions of principal outstanding on Federal Government-guaranteed loans in accrual status made by such banks and (2) 80 percent of the guaranteed portions of principal outstanding on State government-guaranteed loans in accrual status made by such banks, as determined by the Corporation)" after "such time".

Subsec. (d). Pub. L. 101–220, §6(a)(4), in introductory provisions, substituted "subsections (a) and (c) of this section" for "subsection (a) of this section" and struck out "intermediate term" after "outstanding on all", inserted par. (1), and struck out former par. (1) which read as follows: "by the production credit associations in the district in which such bank is located;".

1988-Subsec. (d). Pub. L. 100–399, §302(c), substituted in introductory provisions "intermediate term loans made by a Farm Credit Bank" for "loans made by a Federal intermediate credit bank".

Subsec. (d)(2). Pub. L. 100–399, §302(d), (e), substituted "section 2015(b)(1)(B) of this title" for "section 2074(a)(2) of this title" and "Farm Credit Bank" for "Federal intermediate credit bank".

Subsec. (d)(3). Pub. L. 100–399, §302(e), substituted "Farm Credit Bank" for "Federal intermediate credit bank".

Effective Date of 1989 Amendment

Amendment by Pub. L. 101–220 effective for insurance premiums due to the Farm Credit System Insurance Corporation under this chapter on or after Jan. 1, 1990, based on the loan volume of each bank for each calendar year beginning with calendar year 1989, and effective for the calculation of the initial premium payment required under section 2277a–5(c) of this title, see section 6(c) of Pub. L. 101–220, set out as a note under section 2020 of this title.

Effective Date of 1988 Amendment

Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see section 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title.

GAO Reports on Risk-Based Insurance Premiums, Access to Association Capital, Supplemental Premiums, and Consolidation

Pub. L. 102–552, title II, §204, Oct. 28, 1992, 106 Stat. 4106 , provided that:

"(a) In General.-The Comptroller General of the United States shall investigate, review, and evaluate the feasibility and appropriateness, and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, on the advantages and disadvantages of providing the Farm Credit System Insurance Corporation with-

"(1) the authority to directly or indirectly assess associations to ensure that all System capital is available to prevent losses to investors, including a study of-

"(A) the effects of direct assessments by the Insurance Corporation on associations, including interest rate charges to borrowers;

"(B) the effects of requiring that banks pass along the cost of insurance premiums to owner associations and other financing institutions having a discount relationship with the bank;

"(C) the effects of requiring owner associations to purchase stock in the district bank, if needed, to prevent a bank from having to return to the Insurance Corporation for financial assistance once the assistance has been given;

"(D) the effects of the purchase of stock from funds of the association (through funds obtained from other than the district bank) or allowing the bank to increase the direct line of credit to the association in order to fund the purchase; and

"(E) the effect that authorizing the Insurance Corporation to assess the association could have on the association's incentives for building capital;

"(2) the authority to collect supplemental insurance premiums under certain circumstances, including a study of-

"(A) the possibility of the Insurance Fund being depleted more rapidly than it could be replenished under the current premium structure;

"(B) the effects of the depletion under alternate economic scenarios and the probability of the occurrence of each of those scenarios;

"(C) the effects on capital accumulation and interest rates of levying a supplemental premium; and

"(D) limitations on any authority to levy supplemental premiums and the underlying basis for the limitations; and

"(3) the authority to establish an insurance premium rate structure that would take into account, on an institution-by-institution basis, asset quality risk, interest rate risk, earnings, and capital.

"(b) Report on Consolidation.-

"(1) In general.-The Comptroller General of the United States shall evaluate and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate on whether there are likely to be benefits to farmer and rancher borrowers of the Farm Credit System institutions of merging the 10 district Farm Credit Banks (and the Federal Intermediate Credit Bank of Jackson) into fewer regional Farm Credit Banks.

"(2) Factors.-In preparing the report, the Comptroller General shall consider-

"(A) the potential reduction in services to farmers and ranchers;

"(B) the potential benefits of jointly providing services to farmers and ranchers among these proposed regional districts;

"(C) any economy of scale effects on a district-by-district basis;

"(D) the potential impact on the cooperative nature of the Farm Credit System;

"(E) the potential impact on bank and association relationships; and

"(F) the potential impact on System-wide bond issuances.

"(c) Potential Savings.-The Comptroller General of the United States shall evaluate and report to the appropriate committees of Congress on the potential savings to the Farm Credit System and its shareholders that might occur if System institutions and the Farm Credit Administration were required to comply with General Services Administration standards for office space, furniture, and equipment.

"(d) Deadline.-The reports required under this section shall be provided to Congress not later than 12 months after the date of enactment of this Act [Oct. 28, 1992]."

Section Referred to in Other Sections

This section is referred to in section 2277a–5 of this title.