[CHAPTER 4-1ST SESSION]

[S. 375]

AN ACT

To provide for the effective administration of certain lending agencies of the Federal Government.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Federal Loan Agency, created by section 402 of the President's Reorganization Plan Numbered I under authority of the Reorganization Act of 1939, shall continue as an independent establishment of the Federal Government and shall continue to be administered under the direction and supervision of the Federal Loan Administrator in the same manner and to the same extent as if Executive Order 9071, dated February 24, 1942, transferring the functions of the Federal Loan Agency to the Department of Commerce, had not been issued.

SEC. 2. All powers, functions, and duties of the Department of Commerce and of the Secretary of Commerce which relate to the Federal Loan Agency (together with the respective personnel, records, and property, including office equipment, relating to the exercise of such functions, powers, and duties) are hereby transferred to the Federal Loan Agency to be administered under the direction and supervision of the Federal Loan Administrator.

SEC. 3. The unexpended balance of the funds made available to the Secretary of Commerce by Public Law 365, Seventy-eighth Congress, approved June 28, 1944, for administrative expenses of supervising loan agencies, shall be transferred to the Federal Loan Agency to be used for the administrative expenses of that Agency.

SEC. 4. No functions, powers, or duties shall be transferred from the Federal Loan Agency under the provisions of title I of the First War Powers Act, 1941, or any other law unless the Congress shall otherwise by law provide.

SEC. 5. (a) The financial transactions of all Government corporations shall be audited by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions and under such rules and regulations as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where the accounts of the respective corporations are normally kept. The representatives of the General Accounting Office shall have access to all books, accounts, financial records, reports, files, and all other papers, things, or property belonging to or in use by the respective corporations and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians. The audit shall begin with the current fiscal year.

(b) A report of each such audit for each fiscal year ending on June 30 shall be made by the Comptroller General to the Congress

not later than January 15 following the close of the fiscal year for which such audit is made. The report shall set forth the scope of the audit of each corporation and shall include a statement (showing intercorporate relations) of assets and liabilities, capital and surplus, or deficit; a statement of surplus or deficit analysis; a statement of income and expense; and such comments and information as may be deemed necessary to keep Congress informed of the operations and financial condition of the several corporations, together with such recommendations with respect thereto as the Comptroller General may deem advisable, including a report of any impairment of capital noted in the audit and recommendations for the return of such Government capital or the payment of such dividends as, in his judgment, should be accomplished. The report shall also show specifically every program, expenditure, or other financial transaction or undertaking, which, in the opinion of the Comptroller General, has been carried on or made without authority of law. A copy of each report shall be furnished to the President and to the corporation concerned at the time submitted to the Congress.

(c) The expenses of auditing the financial transactions of all Government corporations as provided in section 5 (a) of this Act may be paid out of appropriations to the General Accounting Office and appropriations in such sums as may be necessary are hereby authorized for the purpose: Provided, That by agreement between the General Accounting Office and said corporation the expenses of said audit may be paid from funds of such corporation.

Approved February 24, 1945.

[CHAPTER 204-1ST SESSION]

[H. R. 2113]

AN ACT

To amend the Federal Farm Loan Act, the Emergency Farm Mortgage Act of 1933, the Federal Farm Mortgage Corporation Act, the Servicemen's Readjustment Act of 1944, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the second paragraph of section 7 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 712), is further amended by inserting between the words "three" and "members" in the last sentence thereof the words "or more", and by adding at the end thereof three new sentences as follows: "The secretary-treasurer shall be eligible for membership on the loan committee. The board of directors may empower (a) the loan committee to elect applicants to membership and (b) any three members of said committee to act as the loan committee in approving loans on behalf of the association and in electing applicants to membership in the association. No action by the loan committee shall be valid where the full committee is acting unless unanimously approved by all members or where any three of its members are acting as herein provided unless approved by all such members."

(b) The first sentence of the fifth paragraph of section 9 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 745), is further amended by inserting after the words "by a majority vote of the directors" the following: ", or by the loan committee where said committee has been empowered to elect applicants to membership, and".

SEC. 2. The first, second, and third paragraphs of section 10 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 751, 752, and 753), are further amended to read as follows:

"Whenever an application for a mortgage loan is made to a national farm-loan association, the loan committee provided for in section 7 of this Act shall forthwith make, or cause to be made, such investigation as it may deem necessary as to the character and solvency of the applicant, and the sufficiency of the security offered. The committee may request a report on the value of the security by a land bank appraiser appointed under the authority of section 3 of this Act, in which event such an appraiser shall investigate and make a written report to the association upon the security offered. The committee shall cause written report to be made of the results of such investigation or investigations as it has required to be made and shall, if it concurs in such report, approve the same in writing. No loan shall be made unless the report of the committee is favorable. After the investigation required in this paragraph has been made, the association has requested and received a report upon the value of the security by a land bank appraiser, and the loan committee has reached

an agreement as to the amount and terms of the loan which may be offered to the applicant, if such amount is not in excess of 65 per centum of the normal value of the security offered as determined by said appraiser the secretary-treasurer may notify the applicant of the amount and terms of the loan approved by the loan committee: Provided, That any such notice shall contain a statement that the amount and terms of the loan offered to the applicant are subject to and conditioned upon subsequent approval or disapproval by the Federal land bank.

"The written report required in the preceding paragraph, together with any report made by a land bank appraiser, shall be submitted to the Federal land bank with the application for the loan, and the land bank shall examine said written report when it passes on the loan application which it accompanies, but it shall not be bound by the value placed upon the property by the loan committee.

"Before any mortgage loan is made by any Federal land bank, or joint-stock land bank, it shall refer the application to one or more of the land bank appraisers appointed under the authority of section 3 of this Act, and such appraiser or appraisers shall investigate and make a written report on the security offered for said loan: Provided, That if a land bank appraiser has made a report on said security to the national farm-loan association, the Federal land bank need not request an additional report. No such loan shall be made by said land bank unless the written report of the land bank appraiser is favorable."

SEC. 3. The last sentence of the first paragraph of section 4 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 672), is further amended to read as follows:

"Loans made by each such branch bank shall be subject to the restrictions and provisions of this Act, except that each such branch bank may loan direct to borrowers, and, subject to such regulations as the Farm Credit Administration may prescribe, the rate charged borrowers may be 12 per centum in excess of the rate borne by the last preceding issue of farm loan bonds of the Federal land bank with which such branch bank is connected: Provided, That no loan shall be made in Puerto Rico or Alaska by such branch bank for a longer term than twenty years.'

SEC. 4. Section 12 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 771), is further amended as follows:

(a) Paragraph "Second" thereof is amended by inserting immediately after the second colon the following: "And provided further, That under the rules and regulations of the Farm Credit Administration any land bank may agree, at the time a loan is made or thereafter, that the mortgagor may make such payments or portions of payments in advance or pay the entire principal of such loan during the first five years the loan is in effect:".

(b) Subparagraph (d) of paragraph "Fourth" thereof is amended by striking out "incurred prior to January 1, 1937" and inserting in lieu thereof "incurred at least two years prior to the date of the application for the loan".

(c) The first paragraph of subparagraph "Fifth" thereof is amended to read as follows:

"No such loan shall exceed 65 per centum of the normal value of the farm mortgaged, said value to be ascertained by appraisal, as provided in section 10 of this Act. In making said appraisal the value of the farm for agricultural purposes shall be the basis of appraisal and the normal earning power of said farm shall be a principal factor."

(d) Paragraph "Ninth" thereof is amended by striking out "the rate of 8 per centum per annum" in the first and second sentences of said paragraph and inserting in lieu thereof "a rate not exceeding 6 per centum per annum".

SEC. 5. Paragraph "Seventh" of section 13 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 781), is further amended to read as follows:

"To borrow money severally, or jointly and severally with one or more other Federal land banks, to give security therefor, and to pay interest thereon."

SEC. 6. Paragraph "Eighth" of section 13 of the Federal Farm Loan Act, as amended (title 12, U. S. C. 781), is amended to read as follows:

"To buy and sell United States Government obligations direct or fully guaranteed; and to purchase and acquire from the Federal Farm Mortgage Corporation notes and mortgages representing loans made by the Land Bank Commissioner pursuant to section 32 of the Emergency Farm Mortgage Act of 1933, as amended (title 12, U. S. C. 1016), upon farm property situated in the farm credit district in which said bank is located, and purchase money mortgages and contracts for the sale of farms held by the Federal Farm Mortgage Corporation in connection with the sale of farm property situated in such district: Provided, That no such note and mortgage, purchase-money mortgage, or contract shall be purchased pursuant hereto unless (1) the unpaid balance of the indebtedness represented or secured thereby, together with any indebtedness to the Federal land bank secured by a prior mortgage on the property, does not exceed 65 per centum of the normal value of the farm as determined upon appraisal made pursuant to the Federal Farm Loan Act; (2) the borrower acquires such stock in a national farm loan association, in addition to any available stock which he may already own, as may be necessary to constitute an amount equal to one share of stock for each $100 of the unpaid balance of the indebtedness represented or secured by the note and mortgage, purchase-money mortgage, or contract being purchased and acquired, together with the indebtedness secured by any prior lien on the property in favor of the Federal land bank; (3) the national farm loan association in which such stock is held elects the borrower to membership, if not already a member, and agrees to be liable for the indebtedness secured by the note and mortgage, purchase-money mortgage, or contract being purchased and acquired; and (4) the land bank takes such action, if any, as may be necessary to reduce the rate of interest on the indebtedness secured by the mortgage, purchase-money mortgage, or contract acquired or purchased to the same rate of interest the bank is charging on first-mortgage loans which it is then making."