Farm Credit System Central Reserve Act of 1985

Farm Credit System Central Reserve Act of 1985 - Amends the Farm Credit Act of 1971 to decrease the maximum amount of a loan which a Federal land bank may originate, or in which such a bank may participate with a lender that is not a Farm Credit System (FCS) institution, from 85 to 60 percent of the appraised value of the real estate security, or from 97 to 75 percent of that value as may be authorized by the Farm Credit Administration for loans guaranteed by a governmental agency.

Directs the Administration to establish and maintain a central reserve for FCS which the Governor of the Administration may use to make temporary deposits and investments in financially troubled FCS banks or production credit associations. Authorizes appropriations. Provides for funding of the reserve from the proceeds of FCS notes, bonds, and debentures and from payments from FCS banks and associations. Directs the Governor to report annually to specified congressional committees and to FCS investors on the condition of such central reserve.

Provides that from the date that funds are appropriated to the reserve until the later of one year after such date or the date equivalent funds are repaid to the Treasury, the appointment of the Governor shall be subject to the President's approval and the President shall have the power to remove the Governor.

Authorizes the Secretary of Agriculture, during any such period, to designate two additional members to the Federal Farm Credit Board. Requires such members to have commercial agricultural lending or academic agricultural financial backgrounds. Allows the Secretary to designate as his or her representative to the Board a former member of a farm credit district board, officer or employee of the Administration, or officer or employee of any institution operating under the Administration's supervision.

Requires Federal land banks and their associations to offer to farmers, ranchers, and producers or harvesters of aquatic products, for the purpose of purchasing land for any agricultural or aquacultural use, fixed-rate real estate mortgage loans with terms of at least 20 years. Allows such banks and associations to assess prepayment penalties on such mortgages under certain conditions.

Directs the Governor to require each Federal intermediate credit bank, Federal land bank, Federal land bank association, and production credit association to: (1) provide to its stockholders and members, at least annually and upon request, copies of its bylaws, current director and officer lists, and schedules of stockholder meetings; (2) conduct an annual financial audit of its accounts and each loan; and (3) hold an annual meeting of stockholders and members to consider a report on such audit.

Limits the total amount of loans and credit that may be extended to any person by a FCS bank or association to the greater of: (1) $200,000; or (2) five percent of the total of all outstanding loans and credit extensions of the institution.

Sets forth provisions governing Administration enforcement actions, including: (1) the issuance of cease and desist orders directed at institutions or persons conducting institution activities who engage in unsafe or unsound practices or violate applicable laws or Administration rules; (2) the removal or suspension of an FCS institution director or officer who engages in such a practice, violates such rules or such an order, or breaches his or her fiduciary duty; and (3) the prohibition against participation in institution affairs by a person, or the removal or suspension of an FCS institution director or officer, whose conduct results in a substantial financial loss or other damage to the institution and evidences either personal dishonesty or a negligent, willful, or continuing disregard for the safety and soundness of the institution and unfitness to participate in institution affairs; and (4) the suspension or removal of a director or officer charged or convicted of a felony involving dishonesty or breach of trust. Sets forth penalties for violations of cease and desist orders or regulations issued under this Act. Provides for notice and Administration hearings for, and judicial review and enforcement of, such actions.

Requires forfeiture of all rights, privileges, and franchises by any FCS institution whose directors knowingly violate, or knowingly permit any person participating in institution affairs to violate, the Farm Credit Act of 1971 as determined by a U.S. district court in a suit brought by the Administration. Provides that any institution director or officer who knowingly violates or permits the violation of such act shall be held personally liabile for all damages that the institution, its stockholders, or other persons sustain as a result of such violation.

Grants the Administration subpoena power in connection with enforcement action proceedings under this Act.

Repeals the authority of the Federal Farm Credit Board to require the merger of FCS associations. Authorizes the Governor to require two or more FCS institutions to merge if the merger would promote efficient and effective service to borrowers and if one or more of such institutions: (1) is insolvent or not financially viable; or (2) has failed to comply with an order issued under this Act or to conduct its operations in accordance with the Farm Credit Act of 1971.

Directs the Comptroller General to audit FCS, evaluate the programs and activities authorized by such Act, and report the results to the Congress every three years.