Agricultural Credit Act of 1986

Agricultural Credit Act of 1986 - Title I: Interest Subsidy Incentives for Restructuring Loans - Directs the Secretary of Agriculture, and a State at its option, to provide interest rate subsidies to lenders who defer principal or interest payments on agricultural loans. Limits eligible aggregate loan amounts. Sets forth rate reductions.

Establishes a three-year deferral period. States that at the end of such period lenders may not charge interest rates in excess of existing comparable rates.

Permits lenders to enforce pre-deferral loan terms in the event of a nonmonetary borrower default.

Requires lenders to make a good faith effort to reduce principal or interest due before foreclosing, except in the case of a bankruptcy.

Requires lenders to develop debt restructuring guidelines.

Terminates Federal and State subsidy payments upon foreclosure.

Directs the Secretary to use the Agricultural Credit Insurance Fund to carry out such subsidy program. Authorizes the use of additional specified funds under the Consolidated Farm and Rural Development Act.

Title II: Conservation Provisions - Amends the Food Security Act of 1985 to prohibit such loan deferral assistance to producers who cultivate crops on erodible land or wetlands.

Title III: Accounting Provisions - Amends the Federal Deposit Insurance Act to require the appropriate Federal banking agency to: (1) permit an insured agricultural bank to account for debt restructuring according to generally accepted accounting principles by not requiring a change in the recorded investment unless the investment exceeds total, reasonably anticipated, future receipts given the new terms of the loan; (2) establish a program of capital standard forbearance for such an insured bank for which capital reduction is attributable to problems in the agricultural sectors of the economy; and (3) implement call report requirements for renegotiated loans which authorize such loans to be disclosed as "restructured and in compliance with modified terms." Requires States to conform their appropriate regulations to such amendments.

Prohibits a national banking association from holding real estate under mortgage or purchased to secure debts for longer than ten years with no extension (currently, five years with a five-year extension if approved by the Comptroller of the Currency).

Directs the Comptroller of the Currency to establish new lending limits for banks covered by the capital standard forbearance program. Prohibits such lending limitation from exceeding 20 percent of the unimpaired capital and unimpaired surplus of the lending institution.

Title IV: Miscellaneous - Directs the Secretary to prescribe implementing regulations within 30 days.

States that any State law prohibiting fixed rate loans shall not apply to credit extensions under this Act.

Sets forth penalties for misuse of funds under this Act.