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US (United States) Code. Title 12. Chapter 23: Farm Credit System

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-CITE-

12 USC CHAPTER 23 - FARM CREDIT SYSTEM 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

-HEAD-

CHAPTER 23 - FARM CREDIT SYSTEM

-MISC1-

Sec.

2001. Congressional declaration of policy and objectives.

2002. Farm Credit System.

(a) Composition.

(b) Farm credit districts.

SUBCHAPTER I - FARM CREDIT BANKS

2011. Establishment, charters, titles, branches.

(a) Establishment.

(b) Charters.

(d) Branches.

2012. Board of directors.

2013. General corporate powers.

2014. Farm Credit Bank capitalization.

2015. Lending authority.

(a) Real estate loans and related assistance.

(b) Intermediate credit.

2016. Interest rates and other charges.

(a) In general.

(b) Setting rates and charges.

2017. Eligibility.

2018. Security; terms.

(a) Real estate loans.

(b) Intermediate credit.

2019. Purposes for extensions of credit.

(a) Agricultural or aquatic purposes.

(b) Rural housing financing.

2020. Related services.

(a) In general.

(b) Authority to pass along cost of insurance

premiums.

2021. Loans through associations or agents.

(a) In general.

(b) No active association.

2022. Liens on stock.

2023. Taxation.

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

PART A - PRODUCTION CREDIT ASSOCIATIONS

2071. Organization and charters.

(a) Charter.

(b) Organization.

2072. Board of directors.

2073. General corporate powers.

2074. Production credit association capitalization.

(a) In general.

(b) Application of earnings.

2075. Short- and intermediate-term loans; participation;

other financial assistance; terms; conditions;

interest; security.

(a) Short- and intermediate-term loans.

(b) Rural housing.

(d) Special district rule.

2076. Other services.

2076a. Liens on stock.

2077. Taxation.

PART B - FEDERAL LAND BANK ASSOCIATIONS

2091. Organizations; articles; charters; powers of the

Farm Credit Administration.

(a) Charter.

(b) Organizations.

2092. Board of directors.

2093. General corporate powers.

2094. Federal land bank association capitalization.

2095. Repealed.

2096. Agreements for sharing gains or losses.

2097. Liens on stock.

2098. Taxation.

SUBCHAPTER III - BANKS FOR COOPERATIVES

PART A - BANKS FOR COOPERATIVES

2121. Establishment; titles; branches.

2122. Corporate existence; general corporate powers.

2123. Board of directors.

2124. Stock of banks for cooperatives.

(a) Amount.

(b) Value.

(d) Entitlement to vote.

(e) Nonvoting investment stock.

(f) Participation certificates.

2125. Dividends.

2126. Retirement of stock.

2127. Guaranty fund subscriptions in lieu of stock.

2128. Loans, commitments, and technical and financial

assistance.

(a) Authorities.

(b) Additional authorities.

(d) Regulatory limitations.

(e) Speculative futures transactions.

(f) Installation, expansion, or improvement of

water and waste disposal facilities.

2129. Eligibility.

2130. Ownership of stock by borrowers.

2131. Loans.

(a) Interest rates and charges.

(b) Security.

(d) Cancellation; application on indebtedness.

2132. Earnings and reserves; application of savings.

(a) Application of savings.

(b) Patronage refunds.

(d) Loss carryover.

(e) Charge of unrecognized costs or expenses to

reserve, surplus, or patronage

allocations.

(f) Payment of patronage refunds in cash.

2133. Distribution of assets on liquidation or

dissolution.

2134. Taxation.

PART B - UNITED AND NATIONAL BANKS FOR COOPERATIVES

2141. Charter, powers, and operation.

(a) Charter.

(b) Powers.

2142. Board of directors provisions.

(a) Initial board of directors.

(b) Permanent board of directors.

provisions.

2143. Credit delivery office.

2144. Consolidation of functions.

2145. Exchange of ownership interests.

2146. Capitalization.

2147. Patronage pools.

2148. Transactions to accomplish merger.

2149. Lending limits.

2149a. Reports by merged banks for cooperatives.

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

PART A - FUNDING

2151. Revolving fund.

2152. Repealed.

2153. Power to borrow; issuance of notes, bonds,

debentures, and other obligations.

2154. Capital adequacy of banks and institutions.

(a) Minimum levels of capital.

(b) Failure to maintain minimum levels;

directives; plans for achieving minimum

levels; proposals affecting compliance.

2154a. Capitalization of System institutions.

(a) Definitions.

(b) Adoption of bylaws.

(d) Reduction of capital.

(e) Compliance.

(f) Loans designated for sale or sold into

secondary market.

(g) Construction.

(h) Controlling authority.

2155. Liability of banks; United States not liable.

(a) Joint and several liability of banks.

(b) Resolutions as to liability; execution of

obligations.

(d) Insurance Fund called on before invoking

joint and several liability.

2156. Repealed.

2157. Bonds as investments.

2158. Purchase and sale by Federal Reserve System.

2159. Purchase and sale of obligations; additional

powers.

2160. Federal Farm Credit Banks Funding Corporation.

(a) Establishment.

(b) Duties.

(d) Board of directors.

(e) Transitional authority.

(f) Succession.

2161. Repealed.

2162. Protection of borrower stock.

(a) Retirement of stock.

(b) Certain powers not affected.

(d) Definitions.

PART B - DISSOLUTION

2181, 2182. Repealed.

2183. Dissolution; voluntary or involuntary liquidation;

mergers; receiverships or conservators.

(a) Voluntary liquidation; consent of Farm

Credit Administration; rules and

regulations; minimization of adverse

effect; voluntary merger; mandatory

merger on failure to comply or meet

obligations.

(b) Appointment of conservator or receiver;

grounds; action for removal; stay of

actions or proceedings.

regulations; minimization of adverse

effect.

2184. Communications with stockholders.

(a) Provision of stockholder lists.

(b) Alternative communications.

PART C - RIGHTS OF BORROWERS; LOAN RESTRUCTURING

2199. Disclosure.

(a) In general.

(b) Differential interest rates.

2200. Access to documents and information.

2201. Notice of action on application.

(a) Loan applications.

(b) Distressed loans.

2202. Reconsideration of actions.

(a) Credit review committees.

(b) Review of decisions.

(d) Independent appraisal.

(e) Notification of applicant.

2202a. Restructuring distressed loans.

(a) Definitions.

(b) Notice.

(d) Consideration of applications.

(e) Restructuring.

(f) Least cost alternative.

(g) Restructuring policy.

(h) Reports.

(i) Compliance.

(j) Permitted foreclosures.

(k) Application of section.

(l) Assistance in restructuring.

2202b. Effect of restructuring on borrower stock.

(a) Farm Credit Bank.

(b) Production credit association.

2202c. Review of restructuring denials.

(a) Requirements for restructuring by System

institutions.

(b) Special asset groups.

(d) Report.

(e) Restructuring factors.

2202d. Protection of borrowers who meet all loan

obligations.

(a) Foreclosure prohibited.

(b) Prohibition against required principal

reduction.

(d) Placing loans in nonaccrual status.

2202e. Waiver of mediation rights by borrowers.

PART D - ACTIVITIES OF INSTITUTIONS OF THE SYSTEM

2203. Nomination of association directors; representative

selection of nominees.

2204. Repealed.

2205. Interest rates.

2206. Participation loans.

2206a. Authority of Farm Credit Banks and direct lender

associations to participate in loans to similar

entities for risk management purposes.

(a) Definitions.

(b) Loan participation authority.

2207. Young, beginning, and small farmers and ranchers.

2208. Prohibition against use of signed ballots.

2209. Compensation of bank directors.

(a) In general.

(b) Waiver.

PART E - SERVICE ORGANIZATIONS

2211. Establishment.

2212. Powers of Farm Credit Administration.

2213. Regulation and examination.

2214. State laws.

2214a. ''Bank'' defined.

PART D1 - FARM CREDIT SYSTEM CAPITAL CORPORATION

2216 to 2216k. Repealed.

PART F - SALE OF INSURANCE

2218. Lines of insurance.

(a) Regulatory authorization.

(b) Contents of regulations.

PART G - MISCELLANEOUS

2219. Limitation on separate sale.

2219a. Right of first refusal.

(a) General rule.

(b) Application of right of first refusal to

sale of property.

leasing of property.

(d) Public offerings.

(e) Term or condition.

(f) Financing.

(g) Mailing of notice.

(h) State laws.

(i) Applicability.

2219b. Application of uninsured accounts.

(a) In general.

(b) Regulations.

2219c. Affirmative action.

2219d. Encouragement of conservation practices.

2219e. Liability for making criminal referrals.

(a) In general.

(b) No prohibition on disclosure.

SUBCHAPTER V - FARM CREDIT ADMINISTRATION ORGANIZATION

PART A - DISTRICT ORGANIZATION

2221 to 2227. Transferred or Repealed.

PART B - FARM CREDIT ADMINISTRATION ORGANIZATION

2241. Farm Credit Administration.

2242. Farm Credit Administration Board.

(a) Appointment.

(b) Terms of office.

(d) Compensation.

(e) Qualifications of Farm Credit

Administration Board members.

2243. Powers of Board.

2244. Chairman; responsibilities; governing standards.

(a) Chairman of Farm Credit Administration

Board; power and authority.

(b) Governing standards.

orders of Board; civil proceedings;

representation by attorneys.

2245. Organization of Farm Credit Administration.

(a) Policies of Board.

(b) Appointments.

(d) Funding.

2246. Advisory committees.

2247. Repealed.

2248. Seal of the Farm Credit Administration.

2249. Administrative expenses.

2250. Farm Credit Administration operating expenses fund.

(a) Determinations required.

(b) Deposits into fund.

2251. Quarters and facilities for the Farm Credit

Administration.

2252. Powers and duties.

(a) Enumerated powers.

(b) Exclusions.

applicable.

(d) Legislative veto of regulations; procedures

applicable.

2253. Prior delegations.

2254. Examinations.

(a) Scope and frequency of examinations; power,

authority, and liability of examiners.

(b) Annual report of condition.

institution; publication; notice of

intention.

(d) Duties of Farm Credit Administration.

2255. Conditions of other banks and lending institutions.

2256. Consent to the availability of reports and to

examinations.

2257. Reports on conditions of institutions receiving

loans or deposits.

2257a. Uniform financial reporting instructions.

(a) In general.

(b) Computerized system.

2258. Jurisdiction.

2259. State legislation.

2260. Transferred.

PART C - ENFORCEMENT POWERS OF FARM CREDIT ADMINISTRATION

2261. Cease and desist proceedings.

2262. Temporary cease and desist orders.

2263. Enforcement of temporary cease and desist orders.

2264. Suspension or removal of director or officer.

(a) Written notice of intention to remove;

violation of law, rule, regulation, or

final cease and desist order; unsafe or

unsound practice; breach of fiduciary

duty.

(b) Written notice of intention to remove or

suspend director, officer or other

person; personal dishonesty; willful or

continuing disregard; unfitness to

continue in office or to participate in

affairs of institution.

further participation in conduct of

affairs of institution; service of

notice.

(d) Statement of grounds for removal or

prohibition; notice and hearing; order of

suspension, removal or prohibition;

service of order.

(e) Stay of suspension or prohibition.

2265. Suspension or removal of director or officer

charged with felony.

2266. Hearings and judicial review.

(a) Venue; closed hearings; decisions and

findings of fact; orders; modification or

other action by Farm Credit

Administration; judicial review.

(b) Judicial review; commencement of

proceedings; filing of petition and

record; exclusive jurisdiction; finality

of judgment and decree.

2267. Jurisdiction and enforcement.

2268. Penalty.

(a) Forfeiture and payment; compromise,

modification, or remitting by Farm Credit

Administration; assessment and collection

by written notice.

(b) Factors determining amount.

(d) Judicial review.

(e) Action by Attorney General to recover

amount assessed.

(f) Rules and regulations.

(g) Payment into Treasury.

(h) Directives as final orders.

2269. Further penalties.

2270. Replacement of suspended or removed directors.

2271. Definitions.

2272. Notice of service.

2273. Ancillary provisions; subpena power; etc.

2274. Power to remove directors and officers.

PART D - MISCELLANEOUS

2275. General Accounting Office audit; report to

Congress.

2275a. Transition rules relating to amendment of certain

FCA approval authorities.

(a) In general.

(b) Authority to issue regulations.

2276. Access to and examination by Comptroller General of

books, documents, etc., of farm credit system

banks and institutions.

PART E - FARM CREDIT SYSTEM INSURANCE CORPORATION

2277a. Definitions.

2277a-1. Establishment of Farm Credit System Insurance

Corporation.

2277a-2. Board of Directors.

(a) Establishment.

(b) Chairman.

2277a-3. Commencement of insurance.

2277a-4. Premiums.

(a) Amount in Fund not exceeding secure base

amount.

(b) Amount in Fund exceeding secure base

amount.

(d) Determination of principal outstanding.

(e) Allocation to System institutions of excess

reserves.

2277a-5. Certification of premiums.

(a) Filing certified statement.

(b) Contents and form of statement.

(d) Subsequent premium payments.

(e) Regulations.

2277a-6. Overpayment and underpayment of premiums; remedies.

(a) Overpayments.

(b) Underpayments.

(d) Effect on other remedies.

2277a-7. General corporate powers.

2277a-8. Conduct of corporate affairs; examination of System

institutions.

(a) Conduct of corporate affairs.

(b) Examination of System institutions.

(d) Cooperation with FCA examiners.

2277a-9. Insurance Fund.

(a) Establishment.

(b) Amounts in Fund.

2277a-10. Powers of Corporation with respect to troubled

insured System banks.

(a) Authority to provide assistance.

(b) Authority to pledge or sell assets.

(d) Right to assets.

(e) Insured System bank.

(f) Effective date.

2277a-10a. Oversight actions by Corporation.

(a) ''Institution'' defined.

(b) Consultation regarding participation of

undercapitalized banks in issuance of

insured obligations.

mergers and restructurings.

2277a-10b. Authority to regulate golden parachute and

indemnification payments.

(a) Definitions.

(b) Prohibition.

(d) Certain payments prohibited.

(e) Rule of construction.

2277a-11. Investment of funds.

2277a-12. Exemption from taxation.

2277a-13. Omitted.

2277a-14. Prohibitions.

(a) Corporate name.

(b) Payments or distributions while in default.

(d) Employment of persons convicted of criminal

offenses.

SUBCHAPTER VI - ASSISTANCE TO FARM CREDIT SYSTEM

PART A - ASSISTANCE BOARD

2278a. Establishment of Board.

(a) Charters.

(b) Use of Capital Corporation staff.

2278a-1. Purposes.

2278a-2. Board of Directors.

(a) Membership.

(b) Chairman.

(d) Compensation of Board members.

(e) Rules and records.

(f) Quorum required.

(g) Chief executive officer.

2278a-3. Corporate powers.

(a) In general.

(b) Power to remove; jurisdiction.

2278a-4. Certification of eligibility to issue preferred

stock.

(a) Book value less than par value of stock and

equities.

(b) Book value less than 75 percent of par

value of stock and equities.

(d) Implementation.

(e) ''Other similar equities'' defined.

2278a-5. Assistance.

(a) In general.

(b) ''High-cost debt'' defined.

(d) Limitation.

2278a-6. Special powers.

(a) In general.

(b) Suspension of assistance.

(d) Reports.

2278a-7. Administration.

(a) Expenses.

(b) Interim funding.

(d) Access to FCA documents.

2278a-8. Limitation of powers.

(a) Purposes.

(b) Prohibition.

2278a-9. Succession.

(a) Assets and liabilities.

(b) Contracts.

(d) Surplus funds.

(e) Preservation agreements.

2278a-10. Effect of regulations; audits.

(a) Issuance.

(b) Regulation by Farm Credit Administration.

2278a-11. Exemption from taxation.

2278a-12. Termination.

2278a-13. Transitional provisions.

(a) Exercise of powers.

(b) Limitation on assistance.

(d) Repayment.

PART B - FINANCIAL ASSISTANCE CORPORATION

2278b. Establishment of Corporation.

2278b-1. Purpose.

2278b-2. Board of Directors.

(a) Board of Directors.

(b) Rules and records.

(d) Chief executive officer.

2278b-3. Stock.

2278b-4. Corporate powers.

(a) In general.

(b) Power to remove, and jurisdiction.

2278b-5. Accounts.

(a) Farm Credit Assistance Fund.

(b) Financial Assistance Corporation Trust

Fund.

2278b-6. Debt obligations.

(a) Issuance.

(b) Conditions.

(d) Refinancing and payment of principal;

defaults.

(e) Administration.

2278b-7. Preferred stock.

(a) Issuance.

(b) Purchase.

2278b-8. Payments.

(a) In general.

(b) Authorization of appropriations.

2278b-9. One-time stock purchase.

(a) Amount of stock purchase.

(b) Computations.

(d) Institution requirements after notice.

(e) Jurisdiction over actions.

2278b-10. Exemption from taxation.

(a) Assets.

(b) Obligations.

2278b-11. Termination.

(a) Financial Assistance Corporation.

(b) Accounts.

SUBCHAPTER VII - RESTRUCTURING OF SYSTEM INSTITUTIONS

PART A - MERGER OF BANKS WITHIN A DISTRICT

2279a. Power to merge.

2279a-1. Board of directors.

2279a-2. Powers of merged banks.

(a) In general.

(b) Regulations.

2279a-3. Capitalization.

2279a-4, 2279a-5. Repealed or Transferred.

PART B - MERGERS, TRANSFERS OF ASSETS, AND POWERS OF ASSOCIATIONS

WITHIN A DISTRICT

SUBPART 1 - TRANSFERS BY FEDERAL LAND BANKS TO FEDERAL LAND BANK

ASSOCIATIONS

2279b. Transfer of lending authority.

(a) Voluntary transfers.

(b) Direct loans and financial assistance.

(d) Mandatory transfer.

SUBPART 2 - MERGER OF LIKE AND UNLIKE ASSOCIATIONS

2279c. Transferred.

2279c-1. Merger of associations.

(a) In general.

(b) Powers, obligations, and consolidation.

SUBPART 3 - RECONSIDERATION

2279c-2. Reconsideration.

(a) Period.

(b) Reconsideration.

SUBPART 4 - TERMINATION AND DISSOLUTION OF INSTITUTIONS

2279d. Termination of System institution status.

(a) Conditions.

(b) Effect.

PART C - APPROVAL OF DISCLOSURE INFORMATION AND ISSUANCE OF

CHARTERS BY THE FARM CREDIT ADMINISTRATION BOARD

2279e. Approval of disclosure information and issuance of

charters.

(a) Disclosure of information.

(b) Notice of reasons for disapproval.

PART D - MERGERS OF LIKE ENTITIES

2279f. Merger of similar banks.

(a) In general.

(b) Powers and capitalization.

2279f-1. Merger of similar associations.

(a) In general.

(b) Procedures.

PART E - TAXATION OF MERGER TRANSACTIONS

2279g. Transactions to accomplish mergers exempt from

certain State taxes.

SUBCHAPTER VIII - AGRICULTURAL MORTGAGE SECONDARY MARKET

2279aa. Definitions.

PART A - ESTABLISHMENT AND ACTIVITIES OF FEDERAL AGRICULTURAL

MORTGAGE CORPORATION

2279aa-1. Federal Agricultural Mortgage Corporation.

(a) Establishment.

(b) Duties.

2279aa-2. Board of directors.

(a) Interim board.

(b) Permanent board.

2279aa-3. Powers and duties of Corporation and Board.

(a) Guarantees.

(b) Duties of Board.

(d) Federal Reserve banks as depositaries and

fiscal agents.

(e) Access to book-entry system.

2279aa-4. Stock issuance.

(a) Voting common stock.

(b) Required capital contributions.

(d) Nonvoting common stock.

(e) Preferred stock.

2279aa-5. Certification of agricultural mortgage marketing

facilities.

(a) Eligibility standards.

(b) Certification by Corporation.

(d) Revocation.

(e) Affiliation of FCS institutions with

facility.

2279aa-6. Guarantee of qualified loans.

(a) Guarantee authorized for certified

facilities.

(b) Other responsibilities of and limitations

on certified facilities.

(d) Aggregate principal amounts of qualified

loans.

(e) Purchase of guaranteed securities.

2279aa-7. Repealed.

2279aa-8. Standards for qualified loans.

(a) Standards.

(b) Minimum criteria.

(d) Congressional review.

(e) Nondiscrimination requirement.

2279aa-9. Exemption from restructuring and borrowers rights

provisions for pooled loans.

(a) Restructuring.

(b) Borrowers rights.

2279aa-10. Funding for guarantee; reserves of Corporation.

(a) Guarantee.

(b) Guarantee fees.

losses required.

(d) Fees to cover administrative costs

authorized.

2279aa-11. Supervision, examination, and report of condition.

(a) Regulation.

(b) Examinations and audits.

(d) FCA assessments to cover costs.

(e) ''Affiliate'' defined.

(f) Employees and personnel.

2279aa-12. Securities in credit enhanced pools.

(a) Federal laws.

(b) State securities laws.

(d) State usury laws superseded.

2279aa-13. Authority to issue obligations to cover guarantee

losses of Corporation.

(a) Sale of obligations to Treasury.

(b) Expeditious transaction required.

obligations.

(d) Terms of obligation.

(e) Coordination with title 31.

(f) Authorization of appropriations.

2279aa-14. Federal jurisdiction.

PART B - REGULATION OF FINANCIAL SAFETY AND SOUNDNESS OF FEDERAL

AGRICULTURAL MORTGAGE CORPORATION

2279bb. Definitions.

2279bb-1. Risk-based capital levels.

(a) Risk-based capital test.

(b) Considerations.

(d) Specified contents.

(e) Availability of model.

2279bb-2. Minimum capital level.

(a) In general.

(b) Transition period.

2279bb-3. Critical capital level.

2279bb-4. Enforcement levels.

(a) In general.

(b) Discretionary classification.

(d) Notice.

(e) Implementation.

2279bb-5. Mandatory actions applicable to level II.

(a) Capital restoration plan.

(b) Restriction on dividends.

III.

(d) Effective date.

2279bb-6. Supervisory actions applicable to level III.

(a) Mandatory supervisory actions.

(b) Discretionary supervisory actions.

2297bb-7. Recapitalization of Corporation.

(a) Mandatory recapitalization.

(b) Raising core capital.

(d) Enforcement.

PART C - RECEIVERSHIP, CONSERVATORSHIP, AND LIQUIDATION OF FEDERAL

AGRICULTURAL MORTGAGE CORPORATION

2279cc. Conservatorship; liquidation; receivership.

(a) Voluntary liquidation.

(b) Involuntary liquidation.

(d) Judicial review of appointment.

(e) General powers of conservator or receiver.

(f) Borrowings for working capital.

(g) Agreements against interests of conservator

or receiver.

(h) Report to Congress.

(i) Termination of authorities.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 1786, 1818 of this title;

title 7 section 2009cc-9; title 15 sections 1607, 1691c, 6505,

6809, 6827; title 18 section 1030; title 42 section 9601; title 46

section 31322.

-CITE-

12 USC Sec. 2001 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

-HEAD-

Sec. 2001. Congressional declaration of policy and objectives

-STATUTE-

(a) It is declared to be the policy of the Congress, recognizing

that a prosperous, productive agriculture is essential to a free

nation and recognizing the growing need for credit in rural areas,

that the farmer-owned cooperative Farm Credit System be designed to

accomplish the objective of improving the income and well-being of

American farmers and ranchers by furnishing sound, adequate, and

constructive credit and closely related services to them, their

cooperatives, and to selected farm-related businesses necessary for

efficient farm operations.

(b) It is the objective of this chapter to continue to encourage

farmer- and rancher-borrowers participation in the management,

control, and ownership of a permanent system of credit for

agriculture which will be responsive to the credit needs of all

types of agricultural producers having a basis for credit, and to

modernize and improve the authorizations and means for furnishing

such credit and credit for housing in rural areas made available

through the institutions constituting the Farm Credit System as

herein provided.

needs of farmers, ranchers, and their cooperatives are best served

if the institutions of the Farm Credit System provide equitable and

competitive interest rates to eligible borrowers, taking into

consideration the creditworthiness and access to alternative

sources of credit for borrowers, the cost of funds, including any

costs of defeasance under section 2159(b) of this title, the

operating costs of the institution, including the costs of any loan

loss amortization under section 2254(b) of this title, the cost of

servicing loans, the need to retain earnings to protect borrowers'

stock, and the volume of net new borrowing. Further, it is

declared to be the policy of Congress that Farm Credit System

institutions take action in accordance with the Farm Credit Act

Amendments of 1986 in such manner that borrowers from the

institutions derive the greatest benefit practicable from that Act:

Provided, That in no case is any borrower to be charged a rate of

interest that is below competitive market rates for similar loans

made by private lenders to borrowers of equivalent creditworthiness

and access to alternative credit.

-SOURCE-

(Pub. L. 92-181, Sec. 1.1, Dec. 10, 1971, 85 Stat. 583; Pub. L.

99-509, title I, Sec. 1032, Oct. 21, 1986, 100 Stat. 1877.)

-REFTEXT-

REFERENCES IN TEXT

The Farm Credit Act Amendments of 1986, referred to in subsec.

(c), is subtitle D of Pub. L. 99-509, title I, Sec. 1031-1037, Oct.

21, 1986, 100 Stat. 1877, which amended sections 2001, 2015, 2075,

2131, 2159, 2205, 2252, and 2254 of this title and enacted

provisions set out as a note below. For complete classification of

this Act to the Code, see Short Title of 1986 Amendment note below

and Tables.

-MISC2-

AMENDMENTS

1986 - Subsec. (c). Pub. L. 99-509 added subsec. (c).

EFFECTIVE DATE OF 1985 AMENDMENT

Pub. L. 99-205, title IV, Sec. 401, Dec. 23, 1985, 99 Stat. 1709,

provided that: ''The provisions of titles I, II, III, and VI of

this Act (enacting sections 2152, 2161, 2199, 2200, 2216 to 2216k,

2219, 2219a, 2253, 2261 to 2273 of this title and provisions set

out as notes under section 2001 of this title, amending sections

2002, 2012, 2013, 2031, 2033, 2034, 2051, 2052, 2054, 2072 to 2074,

2077, 2078, 2091, 2093 to 2096, 2098, 2122 to 2126, 2132 to 2134,

2151, 2153 to 2156, 2182, 2183, 2201, 2202, 2205, 2206, 2211 to

2213, 2221 to 2223, 2227, 2241 to 2246, 2248 to 2252, and 2254 of

this title, and repealing sections 2152, 2247, and 2253 of this

title) shall become effective thirty days after enactment (Dec. 23,

1985).''

SHORT TITLE OF 1996 AMENDMENT

Pub. L. 104-105, Sec. 1(a), Feb. 10, 1996, 110 Stat. 162,

provided that: ''This Act (enacting sections 2214a, 2219e,

2277a-10a, 2277a-10b, 2279bb-7, and 2279cc of this title, amending

sections 2013, 2018, 2020, 2129, 2154a, 2199, 2202a, 2252, 2254,

2277a, 2277a-2, 2277a-4, 2277a-5, 2277a-7, 2277a-8, 2277a-10,

2279aa, 2279aa-1, 2279aa-3, 2279aa-5, 2279aa-6, 2279aa-8, 2279aa-9,

2279aa-11 to 2279aa-13, 2279bb-1 to 2279bb-4 of this title,

sections 5314 and 5315 of Title 5, Government Organization and

Employees, and section 1999 of Title 7, Agriculture, repealing

section 2279aa-7 of this title, and enacting provisions set out as

notes under this section and sections 2013 and 2252 of this title)

may be cited as the 'Farm Credit System Reform Act of 1996'.''

SHORT TITLE OF 1994 AMENDMENT

Pub. L. 103-376, Sec. 1, Oct. 19, 1994, 108 Stat. 3497, provided

that: ''This Act (enacting section 2206a of this title and amending

sections 2122, 2128, and 2129 of this title) may be cited as the

'Farm Credit System Agricultural Export and Risk Management Act'.''

SHORT TITLE OF 1992 AMENDMENT

Pub. L. 102-552, Sec. 1(a), Oct. 28, 1992, 106 Stat. 4102,

provided that: ''This Act (see Tables for classification) may be

cited as the 'Farm Credit Banks and Associations Safety and

Soundness Act of 1992'.''

SHORT TITLE OF 1988 AMENDMENTS

Pub. L. 100-399, Sec. 1, Aug. 17, 1988, 102 Stat. 989, provided

that: ''This Act (see Tables for classification) may be cited as

the 'Agricultural Credit Technical Corrections Act of 1988'.''

Pub. L. 100-233, Sec. 1(a), Jan. 6, 1988, 101 Stat. 1568,

provided that: ''This Act (see Tables for classification) may be

cited as the 'Agricultural Credit Act of 1987'.''

SHORT TITLE OF 1986 AMENDMENT

Section 1031 of title I of Pub. L. 99-509 provided that: ''This

subtitle (subtitle D (Sec. 1031-1037) of title I of Pub. L. 99-509,

amending sections 2001, 2015, 2075, 2131, 2159, 2205, 2252, and

2254 of this title) may be cited as the 'Farm Credit Act Amendments

of 1986'.''

SHORT TITLE OF 1985 AMENDMENT

Pub. L. 99-205, Sec. 1, Dec. 23, 1985, 99 Stat. 1678, provided:

''That this Act (enacting sections 2152, 2161, 2199, 2200, 2216 to

2216k, 2219, 2219a, 2253, 2261 to 2273 of this title and provisions

set out as notes under this section and section 2241 of this title,

amending sections 2002, 2012, 2013, 2031, 2033, 2034, 2051, 2052,

2054, 2072 to 2074, 2077, 2078, 2091, 2093 to 2096, 2098, 2122 to

2126, 2132 to 2134, 2151, 2153 to 2156, 2182, 2183, 2201, 2202,

2205, 2206, 2211 to 2213, 2221 to 2223, 2227, 2241 to 2246, 2248 to

2252, and 2254 of this title, and repealing sections 2152, 2247,

and 2253 of this title) may be cited as the 'Farm Credit Amendments

Act of 1985'.''

SHORT TITLE OF 1980 AMENDMENT

Pub. L. 96-592, Sec. 1, Dec. 24, 1980, 94 Stat. 3437, provided:

''That this Act (enacting sections 2205 to 2208, 2211 to 2214,

2218, and 2260 of this title and amending sections 1141b, 2012 to

2020, 2033, 2034, 2051 to 2054, 2072 to 2077, 2091, 2093, 2094,

2096, 2097, 2122, 2124, 2126, 2128 to 2132, 2156, 2181, 2221, 2223,

2242, 2244, 2249, 2251, and 2252 of this title and section 3802 of

Title 7, Agriculture) may be cited as the 'Farm Credit Act

Amendments of 1980'.''

SHORT TITLE

Section 1 of Pub. L. 92-181 provided: ''That this Act (enacting

this chapter and provisions set out as notes under this section,

amending sections 5314 and 5315 of Title 5, Government Organization

and Employees, and section 393 of this title, and repealing section

636 et seq. of this title) may be cited as the 'Farm Credit Act of

1971'.''

REGULATIONS

Pub. L. 104-105, title III, Sec. 301, Feb. 10, 1996, 110 Stat.

185, provided that: ''The Secretary of Agriculture and the Farm

Credit Administration shall promulgate regulations and take other

required actions to implement the provisions of this Act (see Short

Title of 1996 Amendment note above) not later than 90 days after

the effective date of this Act (Feb. 10, 1996).''

Pub. L. 100-233, title IX, Sec. 901, Jan. 6, 1988, 101 Stat.

1717, as amended by Pub. L. 100-399, title VIII, Sec. 801, Aug. 17,

1988, 102 Stat. 1006, provided that:

''(a) Issuance of Regulations. -

''(1) Authority. - The Farm Credit Administration Board shall

issue such regulations as the Board considers necessary for the

orderly and efficient implementation of the provisions of, and

the amendments made by, this Act (see Tables for classification)

relating to the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.).

''(2) Timing. - To the extent the Farm Credit Administration is

required to issue regulations to implement this Act and the

amendments made by this Act, the Farm Credit Administration shall

issue such regulations as expeditiously as possible, and, except

as otherwise provided in this Act, not later than 180 days after

the date of the enactment of this Act (Jan. 6, 1988).

''(b) Temporary Retention of Certain Regulations. -

''(1) In general. - Except as otherwise provided in this

subsection, the regulations issued by the Farm Credit

Administration before the date of the enactment of this Act (Jan.

6, 1988) under provisions amended by this Act shall remain in

effect, notwithstanding such amendments, until the Farm Credit

Administration issues regulations to implement such amendments,

but in no event later than 180 days after such date of enactment.

''(2) Certain regulations relating to borrowers' rights. - The

regulations implementing, interpreting, or applying part C of

title IV (12 U.S.C. 2201 et seq.) (12 U.S.C. 2199 et seq.) (other

than section 4.13(a) (12 U.S.C. 2199(a))) (in effect immediately

before the date of the enactment of this Act), to the extent that

such regulations are not contrary to this Act and the amendments

made by this Act, shall remain in effect until January 1, 1989.

''(3) Regulations relating to disclosure by banks and

associations. - Any regulation issued or approved by the Farm

Credit Administration that implements, interprets, or applies

section 4.13(a) (12 U.S.C. 2201(a) (12 U.S.C. 2199(a))) (in

effect immediately before the date of the enactment of this Act)

shall remain in effect for 120 days after such date of

enactment.''

REPEALS

Pub. L. 92-181, which enacted this chapter, represents a complete

rewriting of the farm credit laws and a fundamental reworking of

the statutory basis for the farm credit system. In connection with

such reworking of material, the existing statutory provisions

covering this area were repealed and their substance revised,

reenacted, and expanded by Pub. L. 92-181.

The repealed provisions constituted the bulk of chapter 7 of this

title. Section 5.40(a), formerly 5.26(a), of Pub. L. 92-181, as

renumbered by Pub. L. 99-205, title II, Sec. 205(a)(2), Dec. 23,

1985, 99 Stat. 1703, enumerated the repealed statutes as follows:

The Federal Farm Loan Act, as amended; section 2 of the Act of

March 10, 1924 (Public Numbered 35, Sixty-eighth Congress, 43 Stat.

17), as amended; section 6 of the Act of January 23, 1932 (Public

Numbered 3, Seventy-second Congress, 47 Stat. 14), as amended; the

Farm Credit Act of 1933, as amended; sections 29 and 40 of the

Emergency Farm Mortgage Act of 1933; Act of June 18, 1934 (Public

Numbered 381, Seventy-third Congress, 48 Stat. 983); Act of June 4,

1936 (Public Numbered 644, Seventy-fourth Congress, 49 Stat. 1461),

as amended; sections 5, 6, 20, 25(b) and 39 of the Farm Credit Act

of 1937, as amended; sections 601 and 602 of the Act of September

21, 1944 (Public Law 425, Seventy-eighth Congress, 58 Stat. 740,

741), as amended; sections 1, 2, 3, 4, 5, 6, 7, 8, 16, and 17(b) of

the Farm Credit Act of 1953, as amended; sections 2, 101, and

201(b) of the Farm Credit Act of 1956.

SAVINGS PROVISION

Section 5.40(b), formerly Sec. 5.26(b), of Pub. L. 92-181, as

renumbered by Pub. L. 99-205, title II, Sec. 205(a)(2), Dec. 23,

1985, 99 Stat. 1703, provided that: ''All regulations of the Farm

Credit Administration or the institutions of the System and all

charters, bylaws, resolutions, stock classifications, and policy

directives issued or approved by the Farm Credit Administration,

and all elections held and appointments made under the Acts

repealed by subsection (a) of this section (see Repeals note above)

shall be continuing and remain valid until superseded, modified, or

replaced under the authority of this Act (this chapter). All

stock, notes, bonds, debentures, and other obligations issued under

the repealed acts shall be valid and enforceable upon the terms and

conditions under which they were issued, including the pledge of

collateral against which they were issued, and all loans made and

security or collateral therefor held by, and all contracts entered

into by, institutions of the System shall remain enforceable

according to their terms unless and until modified in accordance

with the provisions of this Act; it being the purpose of this

subsection to avoid disruption in the effective operation of the

System by reason of said repeals.''

SEPARABILITY

Section 5.42, formerly Sec. 5.28, of Pub. L. 92-181, as

renumbered by Pub. L. 99-205, title II, Sec. 205(a)(2), Dec. 23,

1985, 99 Stat. 1703, provided that: ''If any provision of this Act

(this chapter), or the application thereof to any persons or in any

circumstances, is held invalid, the remainder of this Act and the

application of such provision to other persons or in other

circumstances shall not be affected thereby.''

REFERENCES TO EARLIER FARM CREDIT ACTS

Section 5.40(a), formerly Sec. 5.26(a), of Pub. L. 92-181, as

renumbered by Pub. L. 99-205, title II, Sec. 205(a)(2), Dec. 23,

1985, 99 Stat. 1703, provided in part that: ''All references in

other legislation, State or Federal, rules and regulations of any

agency, stock, contracts, deeds, security instruments, bonds,

debentures, notes, mortgages and other documents of the

institutions of the System, to the Acts repealed hereby (see

Repeals note above), shall be deemed to refer to comparable

provisions of this Act (this chapter).''

RESERVATION OF RIGHT TO AMEND OR REPEAL

Section 5.43, formerly Sec. 5.29, of Pub. L. 92-181, as

renumbered by Pub. L. 99-205, title II, Sec. 205(a)(2), Dec. 23,

1985, 99 Stat. 1703, provided that: ''The right to alter, amend, or

repeal any provision or all of this Act (this chapter) is expressly

reserved.''

STUDY ON DEMAND FOR AND AVAILABILITY OF CREDIT IN RURAL AREAS FOR

AGRICULTURE, HOUSING, AND RURAL DEVELOPMENT

Pub. L. 104-127, title VI, Sec. 650, Apr. 4, 1996, 110 Stat.

1105, provided that:

''(a) In General. - The Secretary of Agriculture shall conduct a

study 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 demand for and availability of credit

in rural areas for agriculture, housing, and rural development.

''(b) Purpose. - The purpose of the study shall be to ensure that

Congress has current and comprehensive information to consider as

Congress deliberates on rural credit needs and the availability of

credit to satisfy the needs of rural areas of the United States.

''(c) Items in Study. - In conducting the study, the Secretary

shall base the study on the most current available data and analyze

''(1) rural demand for credit from the Farm Credit System, the

ability of the Farm Credit System to meet the demand, and the

extent to which the Farm Credit System provides loans to satisfy

the demand;

''(2) rural demand for credit from the United States banking

system, the ability of banks to meet the demand, and the extent

to which banks provide loans to satisfy the demand;

''(3) rural demand for credit from the Secretary, the ability

of the Secretary to meet the demand, and the extent to which the

Secretary provides loans to satisfy the demand;

''(4) rural demand for credit from other Federal agencies, the

ability of the agencies to meet the demand, and the extent to

which the agencies provide loans to satisfy the demand;

''(5) what measure or measures exist to gauge the overall

demand for rural credit, the extent to which rural demand for

credit is satisfied, and what the measures have demonstrated;

''(6) a comparison of the interest rates and terms charged by

the Farm Credit System Farm Credit Banks, production credit

associations, and banks for cooperatives with the rates and terms

charged by the banks of the United States for credit of

comparable risk and maturity;

''(7) the advantages and disadvantages of the modernization and

expansion proposals of the Farm Credit System on the Farm Credit

System, the United States banking system, rural users of credit,

local rural communities, and the Federal Government, including -

''(A) any added risk to the safety and soundness of the Farm

Credit System that may result from approval of a proposal; and

''(B) any positive or adverse impacts on competition between

the Farm Credit System and the banks of the United States in

providing credit to rural users;

''(8) the nature and extent of the unsatisfied rural credit

need that the Farm Credit System proposals are supposed to

address and what aspects of the present Farm Credit System

prevent the Farm Credit System from meeting the need;

''(9) the advantages and disadvantages of the proposal by

commercial bankers to allow banks access to the Farm Credit

System as a funding source on the Farm Credit System, the United

States banking system, rural users of credit, local rural

communities, and the Federal Government, including -

''(A) any added risk to the safety and soundness of the Farm

Credit System that may result from approval of the proposal;

and

''(B) any positive or adverse impacts on competition between

the Farm Credit System and the banks of the United States in

providing credit to rural users; and

''(10) problems that commercial banks have in obtaining capital

for lending in rural areas, how access to Farm Credit System

funds would improve the availability of capital in rural areas in

ways that cannot be achieved in the system in existence on the

date of enactment of this Act (Apr. 4, 1996), and the possible

effects on the viability of the Farm Credit System of granting

banks access to Farm Credit System funds.

''(d) Interagency Task Force. - In completing the study, the

Secretary shall use, among other things, data and information

obtained by the interagency task force on rural credit.''

GAO STUDY OF RURAL CREDIT COST AND AVAILABILITY

Pub. L. 101-624, title XVIII, Sec. 1842, Nov. 28, 1990, 104 Stat.

3835, directed Comptroller General of the United States to conduct

a study relating to cost and availability of credit in rural

America and, not later than 2 years after Nov. 28, 1990, submit a

report to Committee on Agriculture of House of Representatives and

Committee on Agriculture, Nutrition, and Forestry of Senate.

AUTHORIZATION OF APPROPRIATIONS FOR NATIONAL COMMISSION ON

AGRICULTURAL FINANCE AND NATIONAL COMMISSION ON AGRICULTURE AND

RURAL DEVELOPMENT POLICY

Pub. L. 100-71, title V, Sec. 519(b), July 11, 1987, 101 Stat.

475, authorized and appropriated (1) for National Commission on

Agricultural Finance established under section 501 of Pub. L.

99-205, $100,000, to remain available until expended, and (2) for

National Commission on Agriculture and Rural Development (Policy)

established under section 5002 of this title, $100,000, to remain

available until expended.

LOAN REVIEW BY LOCAL LENDING INSTITUTIONS

Pub. L. 99-205, title III, Sec. 307, Dec. 23, 1985, 99 Stat.

1709, required each local lending institution of Farm Credit System

established under this chapter to (1) review each loan that had

been placed in non-accrual status by such institution to determine

whether such loan could be restructured based on changes in

circumstances of such institution as the result of this Act and the

amendments made by this Act, and (2) notify in writing borrower of

each such loan of provisions of this section.

NATIONAL COMMISSION ON AGRICULTURAL FINANCE

Pub. L. 99-205, title V, Sec. 501, Dec. 23, 1985, 99 Stat. 1710,

directed President to appoint a National Commission on Agricultural

Finance, comprised of 15 members, representing the financial

community, the agricultural sector, and government, to conduct a

study of methods to ensure availability of adequate credit to

agricultural producers and agribusiness, taking into account

long-term financing needs of agricultural economy, roles of

commercial banks, Farm Credit System, and Farmers Home

Administration in meeting those financial needs, with the

Commission, in conducting such study, to (1) evaluate financial

circumstances relative to both lenders and borrowers of farm

credit, (2) evaluate structure, performance, and conduct of private

lenders - commercial bankers and Farm Credit System - and public

lenders, (3) explore need for long-term assistance in stabilizing

value of agricultural assets, and (4) evaluate effect on suppliers,

producers, processors, and local communities when financial

institutions fail, and not later than Dec. 23, 1986, to submit to

Congress a report containing results of study, together with

comments and recommendations for legislation providing for a sound,

reasonable, and primarily self-supporting credit program for

farmers and ranchers as Commission considers appropriate.

-CITE-

12 USC Sec. 2002 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

-HEAD-

Sec. 2002. Farm Credit System

-STATUTE-

(a) Composition

The Farm Credit System shall include the the (FOOTNOTE 1) Farm

Credit Banks, the Federal land bank associations, the production

credit associations, the banks for cooperatives, and such other

institutions as may be made a part of the System, all of which

shall be chartered by and subject to regulation by the Farm Credit

Administration.

(FOOTNOTE 1) So in original.

(b) Farm credit districts

There shall be not more than twelve farm credit districts in the

United States, which may be designated by number, one of which

districts shall include the Commonwealth of Puerto Rico and one of

which districts may, if authorized by the Farm Credit

Administration, include the Virgin Islands of the United States:

Provided, That the extension of credit and other services

authorized by this chapter in the Virgin Islands of the United

States shall be undertaken only if determined to be feasible under

regulations of the Farm Credit Administration. The boundaries of

the twelve farm credit districts existing on December 10, 1971, may

be readjusted from time to time by the Farm Credit Administration,

with the concurrence of the boards of the banks in each district

involved. Two or more districts may be merged as provided in

section 2252(a)(2) of this title.

-SOURCE-

(Pub. L. 92-181, Sec. 1.2, formerly Sec. 1.2, 5.0, Dec. 10, 1971,

85 Stat. 583, 614; Pub. L. 96-592, title V, Sec. 501, Dec. 24,

1980, 94 Stat. 3448; Pub. L. 99-205, title II, Sec. 205(c), (g)(1),

Dec. 23, 1985, 99 Stat. 1703, 1706; Pub. L. 100-233, title IV, Sec.

434, title VIII, Sec. 805(a), (v), Jan. 6, 1988, 101 Stat. 1662,

1715, 1716; Pub. L. 100-399, title IX, Sec. 901(q)-(s), Aug. 17,

1988, 102 Stat. 1008.)

-COD-

CODIFICATION

Pub. L. 100-399, Sec. 901(r), transferred section 5.0 of Pub. L.

92-181, which was classified to section 2221 of this title, to

subsec. (b) of this section.

-MISC3-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-399, Sec. 901(s), designated

existing provisions as subsec. (a), inserted heading, and

substituted ''regulation'' for ''the regulation''.

Pub. L. 100-233, Sec. 434, amended provisions generally. Prior

to amendment, provisions read as follows: ''The Farm Credit System

shall include the Federal land banks, the Federal land bank

associations, the Federal intermediate credit banks, the production

credit associations, the banks for cooperatives, and such other

institutions as may be made a part of the System, all of which

shall be chartered by and subject to regulation by the Farm Credit

Administration.''

Pub. L. 100-233, Sec. 805(a), substituted ''subject to

regulation'' for ''subject to the regulation''.

Subsec. (b). Pub. L. 100-399, Sec. 901(q), (r), designated

section 2221 of this title as subsec. (b), inserted heading, and

substituted ''boards of the banks in each district'' for ''district

boards''.

Pub. L. 100-233, Sec. 805(v), substituted ''section 2252(a)(2) of

this title'' for ''section 2252(2) of this title''.

1985 - Subsec. (a). Pub. L. 99-205, Sec. 205(c), substituted

''regulation by'' for ''supervision of''.

Subsec. (b). Pub. L. 99-205, Sec. 205(g)(1), substituted ''Farm

Credit Administration'' for ''Federal Farm Credit Board'' in first

and second sentences, and made a technical amendment to reference

to section 2252(2) of this title to reflect the renumbering of the

corresponding section of the original act.

1980 - Subsec. (b). Pub. L. 96-592 inserted provisions relating

to Virgin Islands of the United States.

EFFECTIVE DATE OF 1988 AMENDMENTS

Section 1001 of Pub. L. 100-399 provided that:

''(a) General Rule. - Except as provided in subsection (b), the

amendments made by this Act (see Tables for classification) shall

take effect as if enacted immediately after the enactment of the

1987 Act (Pub. L. 100-233, which was enacted Jan. 6, 1988).

''(b) Exceptions. - The amendments made by sections 102(b),

102(f), 102(g), 102(h), 201(q), 302(c), 302(d), 302(e), 401,

402(b), 409(d), 411, 414, and 901 (other than by subsections (a),

(b), (c), (e), (f), and (g) thereof) of this Act (see Tables for

classification) shall take effect immediately after the amendment

made by section 401 of the 1987 Act takes effect (section 401 of

Pub. L. 100-233, effective 6 months after Jan. 6, 1988).''

Section 434 of Pub. L. 100-233 provided in part that the

amendment of this section by section 434 of Pub. L. 100-233 is

effective 6 months after Jan. 6, 1988.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

CONSOLIDATION OF DISTRICT FARM CREDIT BANKS

Section 412 of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 404, Aug. 17, 1988, 102 Stat. 999, provided that:

''(a) Submission of Proposal. -

''(1) Special committee. -

''(A) In general. - Not later than 6 months after the date of

the enactment of this section (Jan. 6, 1988), a special

committee shall be selected pursuant to regulations of the Farm

Credit Administration for the purpose of developing a proposal

for the consolidation of Farm Credit System districts.

''(B) Composition. - The special committee selected under

subparagraph (A) shall be composed of one representative from

each Farm Credit Bank board and the members of the Board of

Directors of the Assistance Board.

''(2) Development of proposal. - Not later than 6 months after

the formation of the special committee, the committee shall

develop a proposal to consolidate the Farm Credit Banks into no

less than six financially viable Farm Credit Banks through

inter-district mergers.

''(3) Report. - Not later than the end of each calendar quarter

beginning at least 6 months after the selection of the special

committee, such committee shall prepare and submit, to the

Committee on Agriculture of the House of Representatives, and the

Committee on Agriculture, Nutrition, and Forestry of the Senate,

a report on the progress of the committee in developing a

proposal under this subsection.

''(b) Prerequisites to Consolidation. -

''(1) FCA review of proposal. - Prior to the submission of the

proposal developed under subsection (a)(2) to the stockholders

under paragraph (3), the proposal together with all information

to be presented to the stockholders, shall be submitted to the

Farm Credit Administration for approval.

''(2) Prerequisites. - The proposal developed under subsection

(a)(2) shall not be submitted to stockholders under paragraph (3)

unless the proposal is approved by -

''(A) a majority of the members of the Board of Directors of

the Assistance Board; and

''(B) the members of the special committee that represent the

districts affected by the terms of the proposal.

''(3) Submission to stockholders. - Not later than the end of

the 18-month period after the date of enactment of this Act (Jan.

6, 1988), each Farm Credit Bank involved, in consultation with

the special committee, shall submit the proposed merger affecting

such bank to the voting stockholders of each such bank.

''(4) Stockholder vote. - Each association shall be entitled to

cast a number of votes equal to the number of voting stockholders

of such association.''

(For termination, effective May 15, 2000, of reporting provisions

in section 412(a)(3) of Pub. L. 100-233, set out above, see section

3003 of Pub. L. 104-66, as amended, set out as a note under section

1113 of Title 31, Money and Finance, and page 166 of House Document

No. 103-7.)

APPLICABILITY OF LAWS ENACTED AFTER JANUARY 1, 1960

Pub. L. 86-168, title II, Sec. 203(b), Aug. 18, 1959, 73 Stat.

390, provided that: ''Any Act of Congress enacted after the

effective date of this title (Jan. 1, 1960) and which states that

it shall be applicable to agencies or instrumentalities of the

United States or to corporations controlled or owned, in whole or

in part, by the United States, or to officers and employees of the

United States or such agencies or instrumentalities or

corporations, shall not be applicable to a Federal land bank,

Federal intermediate credit bank, or bank for cooperatives, or to

its directors, officers, or employees unless such Act specifically

so provides by naming such banks.''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2271 of this title; title

7 section 2009cc-9.

-CITE-

12 USC SUBCHAPTER I - FARM CREDIT BANKS 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

SUBCHAPTER I - FARM CREDIT BANKS

-COD-

CODIFICATION

Title I of the Farm Credit Act of 1971, comprising this

subchapter, was originally enacted by Pub. L. 92-181, title I, Dec.

10, 1971, 85 Stat. 583, and amended by Pub. L. 96-592, Dec. 24,

1980, 94 Stat. 3437; Pub. L. 99-205, Dec. 23, 1985, 99 Stat. 1678;

Pub. L. 99-509, Oct. 21, 1986, 100 Stat. 1874; Pub. L. 100-233,

Jan. 6, 1988, 101 Stat. 1568. Such title is shown herein, however,

as having been added by Pub. L. 100-233, title IV, Sec. 401, Jan.

6, 1988, 101 Stat. 1622, without reference to such intervening

amendments because of the extensive revision of the title's

provisions by Pub. L. 100-233.

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in sections 2202a, 2206a, 2218,

2252 of this title.

-CITE-

12 USC Sec. 2011 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2011. Establishment, charters, titles, branches

-STATUTE-

(a) Establishment

The banks established pursuant to the merger of each District

Federal Intermediate Credit Bank and Federal Land Bank (hereinafter

referred to in this subchapter as ''Farm Credit Banks''), as

provided in section 410 of the Agricultural Credit Act of 1987,

shall be Federally chartered instrumentalities of the United

States.

(b) Charters

The Farm Credit Administration shall, consistent with this

chapter, issue charters for, and approve amendments to charters of,

the Farm Credit Banks.

Each Farm Credit Bank may include in its title the name of the

city in which it is located or other geographical designation.

(d) Branches

Each Farm Credit Bank may establish such branches or other

offices as may be appropriate for the effective operation of its

business.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.3, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1622; amended Pub. L.

100-399, title IV, Sec. 401(a), (b), Aug. 17, 1988, 102 Stat. 995.)

-REFTEXT-

REFERENCES IN TEXT

Section 410 of the Agricultural Credit Act of 1987, referred to

in subsec. (a), is section 410 of Pub. L. 100-233, which is set out

as a note below.

-MISC2-

PRIOR PROVISIONS

A prior section 2011, Pub. L. 92-181, title I, Sec. 1.3, Dec. 10,

1971, 85 Stat. 583; Pub. L. 100-233, title VIII, Sec. 802(a), Jan.

6, 1988, 101 Stat. 1710, related to establishment, title, and

branches of Federal land banks prior to the general amendment of

this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-399, Sec. 401(a), inserted '', as

provided in section 410 of the Agricultural Credit Act of 1987,''

before ''shall''.

Subsec. (b). Pub. L. 100-399, Sec. 401(b), amended subsec. (b)

generally. Prior to amendment, subsec. (b) read as follows: ''The

charters or organization certificates of Farm Credit Banks may be

modified from time to time by the Farm Credit Administration Board,

not inconsistent with the provisions of this subchapter, as may be

necessary or expedient to implement this chapter.''

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.

EFFECTIVE DATE

Section 401 of Pub. L. 100-233 provided that this subchapter is

effective 6 months after Jan. 6, 1988.

LONG-TERM LENDING AUTHORITY OF FARM CREDIT BANK OF TEXAS WITH

RESPECT TO STATES OF ALABAMA, LOUISIANA, AND MISSISSIPPI

Pub. L. 102-552, title IV, Sec. 401(b), Oct. 28, 1992, 106 Stat.

4128, provided that:

''(1) In general. - Notwithstanding any other provision of law,

the Farm Credit Bank of Texas may act in accordance with the

exclusive charter of the bank, as amended by the Farm Credit

Administration on February 7, 1989, and effective February 9, 1989

(except to the extent that the charter may be further amended by

the Farm Credit Administration in accordance with its general

authorities under the Farm Credit Act of 1971 (12 U.S.C. 2001 et

seq.), subject to such limitations on the issuance of competitive

charters as may be provided in section 5.17 of such Act (12 U.S.C.

2252)).

''(2) Effective date. - Paragraph (1) shall take effect as if

such paragraph had become law on February 7, 1989.''

MANDATORY MERGER OF SYSTEM INSTITUTIONS

Section 410 of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 402, Aug. 17, 1988, 102 Stat. 999; Pub. L. 102-552,

title IV, Sec. 401(a), Oct. 28, 1992, 106 Stat. 4116, provided

that:

''(a) In General. - Not later than 6 months after the date of the

enactment of this section (Jan. 6, 1988), the Federal land bank and

the Federal intermediate credit bank of each Farm Credit System

district shall merge into a Farm Credit Bank in such district

pursuant to a plan of merger agreed on by the Boards of Directors

of such banks and approved by the Farm Credit Administration, or if

such banks fail to agree, a plan of merger prescribed by the Farm

Credit Administration. The mergers required by this section shall

be implemented without regard to title VII (enacting sections

2279aa to 2279aa-14 of this title, amending sections 2012, 2033,

2072, and 2093 of this title, section 1988 of Title 7, Agriculture,

and section 9105 of Title 31, Money and Finance, and enacting

provisions set out as notes under section 2279aa of this title and

section 1988 of Title 7).

''(b) Capital Stock. - Notwithstanding section 1.6 (as added by

section 401 of this Act) (12 U.S.C. 2014), the number of shares of

capital stock issued by a Farm Credit Bank to stockholders and

other owners of the institution involved in the merger, and the

rights and privileges of such shares (including voting power,

redemption rights, preferences on liquidation, and the right to

dividends) shall be determined by the plan of merger adopted by the

merging banks, and shall be consistent with section 4.3A (12 U.S.C.

2154a) and the regulations issued by the Farm Credit

Administration.

''(c) Assistance. - The Assistance Board established under

section 6.0 (12 U.S.C. 2278a) shall direct the Financial Assistance

Corporation established under section 6.20 (12 U.S.C. 2278b) to

provide any Farm Credit Bank with that amount of financial

assistance as is necessary to ensure that the stock of the Farm

Credit Bank, upon implementation of the merger, has a book value

equal to 75 percent of par, and such Farm Credit Bank shall be

subject to all of the requirements of title VI of the Farm Credit

Act of 1971 (12 U.S.C. 2278a et seq.).

''(d) Initial Board. - Notwithstanding section 1.4 (as added by

section 401 of this Act) (12 U.S.C. 2012), the initial board of

each Farm Credit Bank shall be composed of the members of the

district board (which is dissolved upon the creation of such bank)

elected by the production credit associations, Federal land bank

associations, and stockholders at large. Such initial board shall

operate for such term as is agreed to by the members of the board,

except that such period shall not exceed two years. Thereafter the

board shall be elected and serve in accordance with the provisions

of section 1.4 of the Farm Credit Act of 1971 (12 U.S.C. 2012).

''(e) Clarification of Authority Regarding Remaining Federal

Intermediate Credit Bank. -

''(1) Negotiated merger. -

''(A) Requirement. -

''(i) In general. - Not later than June 30, 1993, except as

provided in subparagraph (C), the Federal Intermediate Credit

Bank of Jackson (as chartered on the date of enactment of

this subsection (Oct. 28, 1992)) shall merge with a Farm

Credit Bank pursuant to the procedures prescribed by section

7.12 of the Farm Credit Act of 1971 (12 U.S.C. 2279f).

''(ii) Merger of entire bank. - Notwithstanding

subparagraph (B), or any other provision of law, the Farm

Credit Administration shall approve a merger of the Federal

Intermediate Credit Bank of Jackson only if the Bank (as

chartered on the date of enactment of this subsection (Oct.

28, 1992), except as provided in subparagraph

(B)(ii)(II)(bb)) merges in its entirety with a Farm Credit

Bank.

''(iii) Limited lending authority. - Notwithstanding any

provision of the Farm Credit Act of 1971 (12 U.S.C. 2001 et

seq.), the Farm Credit Bank resulting from a merger under

this subsection shall have only the lending authorities in

the States of Alabama, Louisiana, and Mississippi that the

constituent banks exercised in such States immediately prior

to the merger, except as may be provided in section

5.17(a)(2) of such Act (12 U.S.C. 2252(a)(2)).

''(B) Operating and merger authority. -

''(i) In general. - Except as provided in clause (ii), the

Federal Intermediate Credit Bank of Jackson may operate

subject to such provisions of part A of title II of the Farm

Credit Act of 1971 (12 U.S.C. 2071 et seq.) (as in effect

immediately before the amendment made by section 401 took

effect) and such provisions of the Farm Credit Act of 1971

(12 U.S.C. 2001 et seq.) (as in effect after the amendment),

as the Farm Credit Administration deems appropriate to carry

out the purposes of this subsection and such Act. This

subparagraph shall take effect as if it had become law at the

same time as the amendment made by section 401 and shall

remain in effect until the Bank's merger with a Farm Credit

Bank under this subsection, or July 1, 1994, whichever is

sooner.

''(ii) Limitation on operating authority. -

''(I) In general. - Notwithstanding clause (i) and subparagraph

(A)(ii), the authority of the Federal Intermediate Credit

Bank of Jackson to operate as provided under clause (i)

shall expire, and the Farm Credit Administration shall

revoke the Bank's charter, immediately on the Bank's merger

with a Farm Credit Bank under this subsection, or July 1,

1994, whichever is sooner.

''(II) District boundary modification. - Notwithstanding clause

(i), the authority of the Federal Intermediate Credit Bank

of Jackson shall not include the authority for the Bank to

modify, nor shall the Farm Credit Administration approve

such a modification to, the boundaries of the Fifth Farm

Credit District to reaffiliate any portion of the District

with another Farm Credit Bank, except -

''(aa) in the case of the merger of the entire Bank as

an entity with a Farm Credit Bank such that the entire

chartered territory of the Federal Intermediate Credit

Bank of Jackson (except as provided in item (bb)) is

merged with the Farm Credit Bank; and

''(bb) in the case of the reaffiliation of the

Northwest Louisiana Production Credit Association with

another farm credit district pursuant to the Farm Credit

Act of 1971 (12 U.S.C. 2001 et seq.) and any applicable

regulations under such Act.

''(iii) Limitation on authority to merge. -

''(I) In general. - Notwithstanding clause (i), the authority of

the Federal Intermediate Credit Bank of Jackson to merge

with a Farm Credit Bank as provided under clause (i) shall

expire, and the Farm Credit Administration shall revoke the

Bank's charter, immediately on the Bank's merger with a

Farm Credit Bank under this subsection, or July 1, 1994,

whichever is sooner.

''(II) Bank integrity. - Notwithstanding clause (i), the authority

of the Federal Intermediate Credit Bank of Jackson to merge

with a Farm Credit Bank shall be limited to a merger of the

Federal Intermediate Credit Bank of Jackson (as chartered

on the date of enactment of this subsection (Oct. 28, 1992)

to include the territory in the States of Alabama,

Louisiana, and Mississippi, except as provided in clause

(ii)(II)(bb)) as a whole entity such that the entire

chartered territory of the Federal Intermediate Credit Bank

of Jackson is merged with the Farm Credit Bank.

''(III) Limitation. - Beginning on the date of an order issued by

the Farm Credit Administration under subparagraph (D), the

authority of the Federal Intermediate Credit Bank of

Jackson to merge with a Farm Credit Bank shall be limited

to the arbitrated merger provided for in paragraph (2).

''(C) Extension. -

''(i) Letter of intent. - If no later than June 30, 1993,

the Federal Intermediate Credit Bank of Jackson delivers to

the Farm Credit Administration a letter of intent to merge

with a Farm Credit Bank, summarizing the terms and conditions

of the merger (including, but not limited to, board

composition, capital structure, exchange, or transfer of

equities, and termination) signed by the chief executive

officer and the members of the boards of directors of the

Federal Intermediate Credit Bank of Jackson and the Farm

Credit Bank, the Farm Credit Administration shall, on its

determination that the letter of intent represents a bona

fide good faith agreement in principle between the two banks

to merge, and that there is at least a reasonable prospect

that the merger will be completed in an expeditious manner,

grant a one-time extension, until a date certain not later

than October 31, 1993, of the requirement under subparagraph

(A). Any extension provided under this subparagraph may be

conditioned on such terms and conditions as the Farm Credit

Administration determines necessary to ensure that the merger

described in the letter of intent is completed by the closing

date of the extension.

''(ii) Compliance. - If the Farm Credit Administration

grants an extension under clause (i), it shall issue an order

under subparagraph (D) immediately if -

''(I) the Federal Intermediate Credit Bank of Jackson, or the Farm

Credit Bank that is a signatory to the letter of intent

under clause (i), provides written notification to the Farm

Credit Administration that the bank does not intend to

complete the merger described in the letter of intent;

''(II) the Farm Credit Administration determines that the Federal

Intermediate Credit Bank of Jackson is not complying with

any term or condition on which an extension under clause

(i) was conditioned; or

''(III) the Farm Credit Administration determines that the Federal

Intermediate Credit Bank of Jackson is not pursuing in good

faith the merger provided for in the letter of intent.

If the Farm Credit Administration issues an order under

subparagraph (D) pursuant to this clause, the Federal

Intermediate Credit Bank of Jackson shall be deemed to have

failed to comply with the requirements of subparagraph (A).

''(D) Failure to merge; issuance of order. - If the Federal

Intermediate Credit Bank of Jackson fails to comply, or

notifies the Farm Credit Administration in writing that it does

not intend to comply, with the requirements of subparagraph

(A), the Farm Credit Administration shall, within 5 days after

the date specified in subparagraph (A), or such other date

specified by the Farm Credit Administration under subparagraph

(C), issue, notwithstanding any other provision of law, an

order requiring the Federal Intermediate Credit Bank of Jackson

to merge with the Farm Credit Bank of Texas in accordance with

paragraph (2).

''(2) Arbitrated merger. -

''(A) In general. - Not later than 30 days after the issuance

of an order by the Farm Credit Administration under paragraph

(1)(D), an arbitrator (or panel of arbitrators) shall be named

by the American Arbitration Association in accordance with the

Commercial Arbitration Rules of the American Arbitration

Association to serve as the arbitrator referred to in this

paragraph.

''(B) Duties. - The arbitrator shall determine the terms and

conditions of the merger required under an order issued under

paragraph (1)(D), such that the terms and conditions are fair

and equitable to the two banks, their affiliated associations,

the stockholders and borrowers of the associations, and the

other institutions of the Farm Credit System, and are designed

to protect or enhance the safety and soundness of the Farm

Credit System. The arbitrator shall have the authority to hire

staff and secure the services of consultants as necessary to

discharge the duties of the arbitrator under this paragraph.

''(C) Expenses. - Notwithstanding any other provision of law,

the compensation and expenses of the arbitrator, the fees and

expenses of the American Arbitration Association, and any

expenses associated with the referendum required under

subparagraph (F) shall be paid from the Farm Credit Assistance

Fund established under section 6.25 of the Farm Credit Act of

1971 (12 U.S.C. 2278b-5).

''(D) Development of merger plans. -

''(i) In general. - Not later than 100 days after the

issuance of an order by the Farm Credit Administration under

paragraph (1)(D), the arbitrator shall develop and submit for

certification to the Farm Credit Administration a plan

specifying the terms and conditions of the merger of the two

banks required under this paragraph, such that the terms and

conditions are fair and equitable to the two banks, their

affiliated associations, the stockholders or farmer-borrowers

of the associations, and the other institutions of the Farm

Credit System, and are designed to protect or enhance the

safety and soundness of the Farm Credit System. In devising

the plan, the arbitrator shall, to the extent practicable,

achieve the following objectives:

''(I) Implementation of the preferences expressed by the affected

and interested parties in submissions under clause (ii).

''(II) Valuation of assets fairly, equitably, and consistently for

all parties involved.

''(III) Establishment of capitalization and funding terms in a

manner that treats farmer-borrowers and stockholders in the

two involved farm credit districts equitably and takes

account of risk.

''(IV) Ensure the viability of the resulting Farm Credit Bank and

associations of the bank and the ability of the resulting

bank and associations of the bank to lend to eligible

borrowers at reasonable and competitive rates of interest.

''(ii) Submission of views and information. - The

arbitrator shall receive from affected and interested parties

written submissions, in accordance with fair and reasonable

procedures established by the arbitrator, regarding the terms

and conditions of an appropriate plan for the merger of the

two banks required under this paragraph. The Federal

Intermediate Credit Bank of Jackson, the Farm Credit Bank of

Texas, and their affiliated associations shall make available

all books, records, financial information, and other material

that the arbitrator determines is necessary to the

development of the plan or the fulfillment of any other

requirement under this paragraph. A copy of any submission

or information provided to the arbitrator by any party under

this paragraph shall be furnished to the Federal Intermediate

Credit Bank of Jackson or the Farm Credit Bank of Texas on

the written request of the bank and at the bank's expense.

The arbitrator shall provide both banks with a reasonable

opportunity to review and respond to any submission or

information provided by any party.

''(iii) Content of plan; farm credit bank. - The plan

developed and submitted under clause (i) shall include

provisions regarding the following matters:

''(I) The initial composition, following the merger, of the board

of directors of the resulting Farm Credit Bank (which shall

be subject to change thereafter in accordance with the Farm

Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any

applicable regulations).

''(II) The valuation, for purposes of the merger, of the assets

and liabilities of the merging banks.

''(III) The terms and conditions on which the shares of capital

stock of the Federal Intermediate Credit Bank of Jackson

and, if necessary, the Farm Credit Bank of Texas, will be

converted into shares of the resulting Farm Credit Bank.

''(IV) The capital structure and capitalization levels of the

resulting Farm Credit Bank and the affiliated associations

of the Farm Credit Bank in the States of Alabama,

Louisiana, and Mississippi as the arbitrator determines

necessary to carry out the purposes of this paragraph

(which shall be subject to change thereafter in accordance

with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.)

and any applicable regulations).

''(V) The terms of financing agreements between any production

credit associations or agricultural credit associations

described in clause (iv), and the resulting Farm Credit

Bank (which shall be subject to change thereafter in

accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001

et seq.) and any applicable regulations).

''(VI) Any other terms and conditions or other matters that the

arbitrator considers necessary.

''(iv) Content of plan; agricultural credit associations. -

If the arbitrator determines that the chartering of

agricultural credit associations in the States of Alabama,

Louisiana, and Mississippi will be in the best interests of

the farmers, ranchers, and aquatic producers eligible to

borrow from Farm Credit System associations, the plan

required under this subparagraph shall also include, based on

submissions from the Federal Intermediate Credit Bank of

Jackson and the Farm Credit Bank of Texas, provisions for the

establishment of agricultural credit associations to operate

in the States, subject to approval in the referendum under

subparagraph (F). Such provisions shall include provisions

regarding the following matters:

''(I) A proposal for the establishment of an agricultural credit

association in each of the geographic areas specified in

subparagraph (F)(iii) (the charters of which, if validly

issued under subparagraph (G)(i) pursuant to approval in

the referendum under subparagraph (F), shall be subject to

change thereafter in accordance with the Farm Credit Act of

1971 (12 U.S.C. 2001 et seq.) and any applicable

regulations).

''(II) The initial composition, if the proposal for the

establishment of agricultural credit associations is

approved, of the board of directors of each such

agricultural credit association (which shall be subject to

change thereafter in accordance with the Farm Credit Act of

1971 (12 U.S.C. 2001 et seq.) and any applicable

regulations).

''(III) The valuation, for purposes of the proposed merger of the

production credit association and the Federal land bank

association in each of the geographic areas specified in

subparagraph (F)(iii), of the assets and liabilities of the

associations.

''(IV) The terms and conditions on which the shares of capital

stock of any associations that may merge under the plan to

form agricultural credit associations will be converted

into shares of the resulting agricultural credit

associations.

''(V) The capital structure and capitalization levels of the

resulting Farm Credit Bank and such affiliated associations

of the Farm Credit Bank in the States of Alabama,

Louisiana, and Mississippi as the arbitrator determines

necessary to carry out the purposes of this paragraph

(which capital structure and capitalization levels shall be

subject to change thereafter in accordance with the Farm

Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any

applicable regulations).

''(VI) The terms of financing agreements between any agricultural

credit associations and the resulting Farm Credit Bank

(which shall be subject to change thereafter in accordance

with the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.)

and any applicable regulations).

''(VII) Any other terms and conditions or other matters that the

arbitrator considers necessary.

''(v) Consultation with insurance corporation. - The

arbitrator shall consult with the Farm Credit System

Insurance Corporation regarding the valuation of the assets

and liabilities under the plan of merger, the capitalization

of the Farm Credit System institutions resulting under the

plan, and any other matters relevant to the assistance to be

provided by the Insurance Corporation to facilitate the

merger under subparagraph (H).

''(E) Certification of plan. - Not later than 30 days after

the receipt of the plan developed by the arbitrator, the Farm

Credit Administration shall -

''(i) certify; or

''(ii) recommend to the arbitrator revisions to the plan

that, if incorporated into the plan, will allow the Farm

Credit Administration to certify,

that the resulting bank and any resulting associations are

proposed to be organized in such a fashion that they will, on

implementation of the plan, operate in compliance with

applicable laws and regulations. The arbitrator and the Farm

Credit Administration shall work cooperatively to ensure the

expeditious issuance of the certification. If the Farm Credit

Administration recommends to the arbitrator revisions to the

plan that, if incorporated into the plan, will allow the Farm

Credit Administration to certify the plan, the arbitrator

shall, not later than 15 days after receipt of the recommended

revisions, incorporate the revisions into the plan as the

arbitrator deems appropriate to secure the certification.

''(F) Referendum on association structure. -

''(i) In general. - Not later than 170 days after the

issuance of an order by the Farm Credit Administration under

paragraph (1)(D), the American Arbitration Association shall

conduct, and compile and forward to the Farm Credit

Administration the results of, a vote of current

farmer-borrowers of the production credit associations and

the Federal land bank associations in the States of Alabama,

Louisiana, and Mississippi, in accordance with the Election

Rules of the American Arbitration Association, to determine

whether the farmer-borrowers of each association in the

geographic areas described in clause (iii) prefer to have

credit delivered -

''(I) in the case of production credit association

farmer-borrowers, through a production credit association

or through an agricultural credit association as proposed

in the plan; and

''(II) in the case of Federal land bank association

farmer-borrowers, through a Federal land bank association

or through an agricultural credit association as proposed

in the plan.

Each farmer-borrower shall be entitled to one vote. The

arbitrator shall establish record dates and other procedures

for conducting the referendum. The Federal Intermediate

Credit Bank of Jackson, the Farm Credit Bank of Texas, and

their affiliated associations shall cooperate in the conduct

of the referendum, as determined necessary by the Arbitrator.

''(ii) Disclosure. - The arbitrator shall send to

farmer-borrowers eligible to vote under this subparagraph,

with their ballot, a statement describing the potential

consequences to the farmer-borrowers, and to the associations

from which they borrow, of voting to charter an agricultural

credit association and setting forth factors that

farmer-borrowers should consider relevant to the choice

between credit delivery through the current association

structure and the chartering of an agricultural credit

association. The arbitrator shall develop the disclosure

materials in cooperation with the Farm Credit Administration

and ensure that the materials are not inconsistent with

applicable laws and regulations.

''(iii) Tabulation of results. - The results of the vote

under this subparagraph shall be compiled separately for

production credit association farmer-borrowers and Federal

land bank association farmer-borrowers in each of the

following seven geographic areas:

''(I) The area served by the Federal Land Bank Association of

South Mississippi.

''(II) The area served by the Federal Land Bank Association of

North Mississippi.

''(III) The area served by the Federal Land Bank Association of

South Alabama.

''(IV) The area served by the Federal Land Bank Association of

North Alabama.

''(V) The area served by the Federal Land Bank Association of

South Louisiana.

''(VI) The area served by both the Federal Land Bank Association

of North Louisiana and the First South Production Credit

Association.

''(VII) The area served by both the Federal Land Bank Association

of North Louisiana and the Northwest Louisiana Production

Credit Association.

''(iv) Publication of results. - The results of the vote

under this subparagraph, as tabulated by the American

Arbitration Association, shall be made promptly available to

the public in a manner determined appropriate by the Farm

Credit Administration.

''(G) Implementation. - Not later than 10 days after the date

of the receipt of the results of the referendum conducted under

subparagraph (F), the Farm Credit Administration shall issue

such charters or charter amendments and take such other

regulatory actions as may be necessary to implement the merger

or mergers as provided for under the certified plan. In this

regard, the Farm Credit Administration shall -

''(i) issue a charter or charter amendment and take any

such other regulatory actions as may be necessary to provide

for the establishment of an agricultural credit association

in each of the geographic areas described in subparagraph

(F)(iii) where a majority of the farmer-borrowers of both the

production credit association and the Federal land bank

association voted under subparagraph (F)(i) that they

preferred to have credit delivered through an agricultural

credit association (which charter shall be subject to change

thereafter in accordance with the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.) and any applicable regulations); and

''(ii) not issue a charter or charter amendment or take any

such other regulatory action to provide for the establishment

of an agricultural credit association in any of the

geographic areas described in subparagraph (F)(iii) where

less than a majority of the farmer-borrowers of the

production credit association or the Federal land bank

association voted in the referendum under subparagraph (F)(i)

that they preferred to have credit delivered through an

agricultural credit association (provided that the charter of

any remaining association in such geographic area shall be

subject to change thereafter in accordance with the Farm

Credit Act of 1971 (12 U.S.C. 2001 et seq.) and any

applicable regulations).

''(H) Facilitation. -

''(i) In general. - Beginning on the date of the issuance

of an order by the Farm Credit Administration under paragraph

(1)(D), the Farm Credit System Insurance Corporation shall

expend amounts from the Farm Credit Insurance Fund to the

extent necessary to facilitate the merger prescribed in the

plan.

''(ii) Maintenance of book value. - Assistance provided by

the Corporation under this subparagraph shall be in amounts

not to exceed that required to maintain book value per share

of stockholders' equity at the same value reflected on the

most recent audited financial statements of the Federal

Intermediate Credit Bank of Jackson and the Farm Credit Bank

of Texas prior to or effective with the date of the merger.

''(iii) Other assistance. - Until the expiration of 5 years

from the effective date of a merger authorized by this

subsection, or the final resolution of any litigation against

the Federal Intermediate Credit Bank of Jackson or any of its

stockholders pending on the date of the enactment of this

subsection (Oct. 28, 1992), whichever is later, the

Corporation shall guarantee prompt payment of any loss

experienced by the merged bank, which loss is caused by the

failure of any association-stockholder of the merged bank

that was a stockholder of the Federal Intermediate Credit

Bank of Jackson immediately prior to the merger, or any

successor to the association, to pay when due any obligation

of principal or interest owed by the association or its

successor to the resulting bank.

''(iv) Terms and conditions. - Assistance provided by the

Corporation under this subparagraph shall be on such terms

and conditions as the Corporation deems appropriate to

facilitate the merger.

''(I) Safety and soundness. -

''(i) In general. - Except as provided in clause (ii), if

at any time prior to the completion of the merger required

under this subsection the Farm Credit Administration

determines that the Federal Intermediate Credit Bank of

Jackson is being operated in an unsafe or unsound manner (as

determined in accordance with the Farm Credit Act of 1971 (12

U.S.C. 2001 et seq.)), the Farm Credit Administration, after

consultation with the respective boards of directors of the

affected banks and taking into consideration the purposes of

this subsection, may require the Federal Intermediate Credit

Bank of Jackson to merge with a Farm Credit Bank, subject to

such terms and conditions as the Farm Credit Administration

may prescribe. The Farm Credit System Insurance Corporation

shall expend amounts in the Farm Credit Insurance Fund to the

extent necessary to facilitate the merger prescribed under

this subparagraph, including the provision of assistance as

provided in section 5.61(a)(2)(A)(iii) of the Farm Credit Act

of 1971 (12 U.S.C. 2277a-10(a)(2)(A)(iii)), on such terms and

conditions as the Corporation deems appropriate.

''(ii) Arbitrated merger. - If at any time after the Farm

Credit Administration issues an order under paragraph (1)(D),

but prior to the completion of the merger required under this

subsection, the Farm Credit Administration determines that

the Federal Intermediate Credit Bank of Jackson is being

operated in an unsafe or unsound manner (as determined in

accordance with the Farm Credit Act of 1971 (12 U.S.C. 2001

et seq.)), the Farm Credit Administration shall, after

consultation with the boards of directors of the Federal

Intermediate Credit Bank of Jackson and the Farm Credit Bank

of Texas, take such action as it deems necessary pursuant to

the authorities provided under the Farm Credit Act of 1971

(12 U.S.C. 2001 et seq.) to return the operation of the

Federal Intermediate Credit Bank of Jackson to a safe and

sound condition, pending the completion of the merger under

paragraph (2).

''(J) Merger plan for agricultural credit associations. - In

any of the States of Alabama, Louisiana, or Mississippi where

all of the associations are chartered as agricultural credit

associations, the boards of directors of each such association

in each State are encouraged to submit to the farmer-borrowers

of each such association for their approval a plan for merging

the associations into one statewide agricultural credit

association, in accordance with the applicable provisions of

the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.).

''(K) Definitions. - As used in this paragraph:

''(i) Agricultural credit association. - The term

'agricultural credit association' means an association having

the same authorities, attributes, and obligations as, and for

all purposes an agricultural credit association resulting

from the implementation of the plan under this paragraph

shall be deemed to be, an association resulting from the

merger of a production credit association and a Federal land

bank association under section 7.8 of the Farm Credit Act of

1971 (12 U.S.C. 2279c-1).

''(ii) Farmer-borrower. - The term 'farmer-borrower' means

a borrower from a Farm Credit System association in the State

of Alabama, Louisiana, or Mississippi who holds voting stock,

or is eligible to hold voting stock, in the association or a

stockholder in any such association.

''(3) Review. -

''(A) In general. - Actions and determinations of the

arbitrator, the Farm Credit Administration, or the Farm Credit

System Insurance Corporation pursuant to this subsection shall

not be subject to judicial review except as provided in this

paragraph, nor shall they be subject to the requirements of

subchapter II of chapter 5 or chapter 7 of title 5, United

States Code.

''(B) Agency determinations. -

''(i) In general. - Any petition for review of a

determination or other action of the Farm Credit

Administration or the Farm Credit System Insurance

Corporation under this subsection shall be filed in the

United States Court of Appeals for the District of Columbia

Circuit not later than 10 days after the determination, or

the petition shall be barred. The court shall have exclusive

jurisdiction to determine the proceeding in accordance with

standard procedures as supplemented by procedures hereinafter

provided and no other district court or court of appeals of

the United States shall have jurisdiction over any such

challenge in any proceeding instituted prior to, on, or after

the date of enactment of this subsection. The review of any

determination or action of the Farm Credit Administration or

the Farm Credit System Insurance Corporation under this

subsection shall be based on the examination of all of the

information before the Farm Credit Administration or the Farm

Credit System Insurance Corporation, as the case may be, at

the time the determination was made. The court reviewing the

determination or action shall not enter a stay or order of

mandamus unless the court has determined, after notice and a

hearing before a panel of the court, that the agency action

complained of was arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.

''(ii) Procedures. - Notwithstanding any other provision of

law, the court may set rules governing the procedures of any

such proceeding that set page limits on briefs and time

limits for filing briefs and motions and other actions that

are shorter than the limits specified in the Federal Rules of

Civil or Appellate Procedure.

''(iii) Expedited review. - Any such proceeding before the

court shall be assigned for hearing and completed at the

earliest possible date, and shall be expedited in every way.

The court shall render its final decision relative to any

challenge not later than 50 days from the date the challenge

is brought unless the court determines that a longer period

of time is required to satisfy the requirements of the

Constitution.

''(C) Arbitrator determinations. -

''(i) In general. - Except as otherwise provided in this

paragraph, any petition for review of a determination or

other action of the arbitrator named under paragraph (2)

shall be filed in accordance with the United States

Arbitration Act (9 U.S.C. 1 et seq.). Such Act shall apply

to the arbitration conducted pursuant to paragraph (2) to the

same extent as if the arbitration were established in a

contract evidencing a transaction in commerce between the

Federal Intermediate Credit Bank of Jackson and the Farm

Credit Bank of Texas.

''(ii) Procedures. - Notwithstanding the United States

Arbitration Act (9 U.S.C. 1 et seq.), any petition for review

of a determination or other action of the arbitrator under

this subsection shall be filed not later than 10 days after

the determination, or the petition shall be barred. The

court specified under such Act shall have exclusive

jurisdiction to determine the proceeding in accordance with

the applicable procedures under such Act, as supplemented by

procedures hereinafter provided, and no other district court

shall have jurisdiction over any such challenge in any such

proceeding. Notwithstanding any other provision of law, the

court may set rules governing the procedures of any such

proceeding that set page limits on briefs and time limits for

filing briefs and motions and other actions that are shorter

than the limits specified in the United States Arbitration

Act or the Federal Rules of Civil or Appellate Procedure (28

App. U.S.C.).

''(iii) Expedited review. - Any such proceeding before the

court shall be assigned for hearing and completed at the

earliest possible date, and shall be expedited in every way.

The court shall render its final decision relative to any

challenge as soon as possible in accordance with the United

States Arbitration Act (9 U.S.C. 1 et seq.), or not later

than 30 days from the date the challenge is brought,

whichever is sooner, unless the court determines that a

longer period of time is required to satisfy the requirements

of the Constitution.''

-CITE-

12 USC Sec. 2012 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2012. Board of directors

-STATUTE-

Each Farm Credit Bank shall elect a board of directors of such

number, for such term, in such manner, and with such

qualifications, as may be required in its bylaws, except that, at

least one member shall be elected by the other directors, which

member shall not be a director, officer, employee, or stockholder

of a System institution.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.4, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1622; amended Pub. L.

100-399, title IV, Sec. 401(c), Aug. 17, 1988, 102 Stat. 995.)

-MISC1-

PRIOR PROVISIONS

A prior section 2012, Pub. L. 92-181, title I, Sec. 1.4, Dec. 10,

1971, 85 Stat. 584; Pub. L. 96-592, title I, Sec. 101, Dec. 24,

1980, 94 Stat. 3437; Pub. L. 99-205, title II, Sec. 205(d)(1), Dec.

23, 1985, 99 Stat. 1703; Pub. L. 100-233, title VII, Sec. 705(a),

title VIII, Sec. 802(b), Jan. 6, 1988, 101 Stat. 1706, 1710; Pub.

L. 100-399, title VI, Sec. 604, Aug. 17, 1988, 102 Stat. 1006,

related to corporate existence and general corporate powers, prior

to the general amendment of this subchapter by Pub. L. 100-233,

Sec. 401.

AMENDMENTS

1988 - Pub. L. 100-399 struck out ''from its voting

stockholders'' after ''shall elect''.

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.

-CITE-

12 USC Sec. 2013 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2013. General corporate powers

-STATUTE-

Each Farm Credit Bank shall be a body corporate and, subject to

regulation by the Farm Credit Administration, shall have power to -

(1) adopt and use a corporate seal;

(2) have succession until dissolved under the provisions of

this chapter or other Act of Congress;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all the

usual incidents of ownership of real and personal property

necessary or convenient to its business;

(6) make, participate in, and discount loans, make commitments

for credit, accept advance payments, and provide services as

authorized in this chapter, and charge fees for such;

(7) operate under the direction of its board of directors;

(8) provide by its board of directors for a president, one or

more vice presidents, a secretary, a treasurer, and provide for

such other officers, employees, and agents as may be necessary,

as provided in this chapter, define their duties, and require

surety bonds or make other provision against losses occasioned by

employees;

(9) prescribe, by its board of directors, its bylaws that shall

be consistent with law, and that shall provide for -

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred, and retired; and

(B) the manner in which it is to -

(i) select officers, employees, and agents;

(ii) acquire, hold, and transfer property;

(iii) make loans and discounts;

(iv) conduct general business; and

(v) exercise and enjoy the privileges granted to it by law;

(10) borrow money and issue notes, bonds, debentures, or other

obligations individually, or in concert with one or more other

banks of the System, of such character, terms, conditions, and

rates of interest as may be determined as provided for in this

chapter;

(11) purchase nonvoting stock in, or pay in surplus to, and

accept deposits of securities or funds from associations in its

district, and pay interest on such funds;

(12) participate with -

(A) one or more other Farm Credit Banks in loans under this

subchapter on such terms as may be agreed on among such banks;

(B) one or more other Farm Credit System institutions in

loans made under this subchapter or other subchapters of this

chapter on the basis prescribed in section 2206 of this title;

and

loans that the bank is authorized to make under this

subchapter;

(13) approve the salary scale of the officers and employees of

the associations in its district and supervise the exercise by

such associations of the functions vested in or delegated to

them;

(14) deposit the securities and current funds of the bank with

any member bank of the Federal Reserve System or any insured

State nonmember bank (within the meaning of section 1813 of this

title) and pay fees and receive interest on such as may be

agreed, and when designated for that purpose by the Secretary of

the Treasury, such bank -

(A) shall be a depository of public money, except receipts

from customs, under such regulations as may be prescribed by

the Secretary;

(B) may be employed as a fiscal agent of the Government; and

of public money or financial agent of the Government as may be

required of such bank;

except that no Government funds deposited under the provisions of

this paragraph shall be invested in loans or bonds or other

obligations of the bank;

(15) buy and sell obligations of, or insured by, the United

States or any agency thereof, or securities backed by the full

faith and credit of any such agency, and make other investments

as may be authorized under regulations issued by the Farm Credit

Administration;

(16) sell to lenders that are not Farm Credit System

institutions interests in loans, and buy from and sell to Farm

Credit System institutions interests in loans and other

extensions of credit, and nonvoting stock as may be authorized

under regulations issued by the Farm Credit Administration;

(17) conduct studies and make and adopt standards for lending;

(18) delegate to associations such functions as the bank

determines appropriate;

(19) amend and modify loan contracts, documents, and payment

schedules, and release, subordinate, or substitute security for

any of such items;

(20) for loans made by the bank, require associations to

endorse notes and other obligations of borrowers from the bank;

(21) exercise through the board of directors or authorized

officers, employees, or agents of the bank, all such incidental

powers as may be necessary or expedient to carry on the business

of the bank;

(22) accept contributions to the capital of the bank from

associations and account for such in accordance with generally

accepted accounting principles, except as may be authorized by

the Farm Credit Administration;

(23) as may be authorized by the board of directors of the

bank, agree with other Farm Credit System institutions to share

loan and other losses, whether to protect against capital

impairment or for any other purpose; and

(24) operate as an originator and become certified as a

certified facility under subchapter VIII of this chapter.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.5, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1623; amended Pub. L.

100-399, title IV, Sec. 401(d), Aug. 17, 1988, 102 Stat. 995; Pub.

L. 104-105, title II, Sec. 201, Feb. 10, 1996, 110 Stat. 172.)

-MISC1-

PRIOR PROVISIONS

A prior section 2013, Pub. L. 92-181, title I, Sec. 1.5, Dec. 10,

1971, 85 Stat. 585; Pub. L. 96-592, title I, Sec. 102, Dec. 24,

1980, 94 Stat. 3437; Pub. L. 99-205, title II, Sec. 205(d)(2), (3),

title VI, Sec. 601, Dec. 23, 1985, 99 Stat. 1703, 1711; Pub. L.

100-233, title VIII, Sec. 802(c), Jan. 6, 1988, 101 Stat. 1710,

related to land bank stock, prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1996 - Par. (13). Pub. L. 104-105 struck out '', and the

appointment and compensation of the chief executive officer

thereof,'' after ''in its district''.

1988 - Par. (9). Pub. L. 100-399, Sec. 401(d)(1), amended par.

(9) generally. Prior to amendment, par. (9) read as follows:

''prescribe by its board of directors -

''(A) the bylaws of such bank that shall not be inconsistent

with law, providing for the classes of the stock of the bank and

the manner in which such stock shall be issued, transferred, and

retired;

''(B) the officers, employees, and agents of the bank as

provided for;

''(C) the property of the bank acquired, held, and transferred;

''(D) the loans and discounts made by the bank;

''(E) the general business conducted by the bank; and

''(F) the privileges granted to the bank by law exercised and

enjoyed;''.

Par. (11). Pub. L. 100-399, Sec. 401(d)(2), substituted ''of

securities or'' for ''or securities of''.

Par. (12)(B), (C). Pub. L. 100-399, Sec. 401(d)(3), struck out

''participate with'' before ''one or more'' in subpar. (B) and

''participate with'' before ''lenders that'' in subpar. (C).

Par. (14). Pub. L. 100-399, Sec. 401(d)(4), substituted ''(within

the meaning of section 1813 of this title)'' for ''as defined in

section 1813 of this title''.

Par. (18). Pub. L. 100-399, Sec. 401(d)(5), struck out ''Federal

land bank'' after ''delegate to''.

Par. (22). Pub. L. 100-399, Sec. 401(d)(6), substituted ''in

accordance with generally accepted accounting principles, except as

may be authorized by the Farm Credit Administration;'' for ''as

authorized by the Farm Credit Administration; and''.

Par. (23). Pub. L. 100-399, Sec. 401(d)(7), struck out ''and

approved by the Farm Credit Administration Board'' after ''of the

bank'' and substituted ''purpose; and'' for ''purpose.''

Par. (24). Pub. L. 100-399, Sec. 401(d)(8), added par. (24).

EFFECTIVE DATE OF 1996 AMENDMENT

Section 302 of Pub. L. 104-105 provided that: ''Except as

otherwise provided in this Act, this Act (see Short Title of 1996

Amendment note set out under section 2001 of this title) and the

amendments made by this Act shall become effective on the date of

enactment (Feb. 10, 1996).''

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.

-CITE-

12 USC Sec. 2014 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2014. Farm Credit Bank capitalization

-STATUTE-

In accordance with section 2154a of this title, the Farm Credit

Banks shall provide, through bylaws and subject to Farm Credit

Administration regulations, for the capitalization of the bank and

the manner in which bank stock shall be issued, held, transferred,

and retired and bank earnings distributed.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.6, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1624.)

-MISC1-

PRIOR PROVISIONS

A prior section 2014, Pub. L. 92-181, title I, Sec. 1.6, Dec. 10,

1971, 85 Stat. 585; Pub. L. 96-592, title I, Sec. 103, Dec. 24,

1980, 94 Stat. 3438, related to real estate mortgage loans, prior

to the general amendment of this subchapter by Pub. L. 100-233,

Sec. 401.

-CITE-

12 USC Sec. 2015 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2015. Lending authority

-STATUTE-

(a) Real estate loans and related assistance

(1) Real estate loans

The Farm Credit Banks may make or participate with other

lenders in long-term real estate mortgage loans in rural areas,

as defined by the Farm Credit Administration, or to producers or

harvesters of aquatic products, and make continuing commitments

to make such loans under specified circumstances, for a term of

not less than 5 nor more than 40 years.

(2) Financial assistance

The Farm Credit Banks may provide and extend financial

assistance to, and discount for, or purchase from, a Federal land

bank association any note, draft, or other obligation with the

endorsement or guarantee of the association, the proceeds of

which have been advanced to persons eligible and for purposes of

financing by the association, as authorized under section

2279b(a) of this title.

(b) Intermediate credit

(1) In general

The Farm Credit Banks are authorized to make loans and extend

other similar financial assistance to and to discount for or

purchase from -

(A) any production credit association, or

(B) any national bank, State bank, trust company,

agricultural credit corporation, incorporated livestock loan

company, savings institution, credit union, or any association

of agricultural producers engaged in the making of loans to

farmers and ranchers, and any corporation engaged in the making

of loans to producers or harvesters of aquatic products,

any note, draft, or other obligation with the institution's

endorsement or guarantee, the proceeds of which note, draft, or

other obligation have been advanced to persons and for purposes

eligible for financing by production credit associations as

authorized by this chapter.

(2) Participation with other entities

The Farm Credit Banks may participate with one or more

production credit associations or other Farm Credit Banks in the

making of loans to eligible borrowers and may participate with

one or more other Farm Credit System institutions in loans made

under this subchapter or other subchapters of this chapter on the

basis prescribed in section 2206 of this title.

(3) Limitations on extension of financial services

(A) General rule

No paper shall be purchased from or discounted for, and no

loans shall be made or other similar financial assistance

extended by a Farm Credit Bank to any entity identified in

paragraph (1)(B) of this subsection if the amount of such paper

added to the aggregate liabilities of such entity, whether

direct or contingent (other than bona fide deposit

liabilities), exceeds ten times the paid-in and unimpaired

capital and surplus of such entity or the amount of such

liabilities permitted under the laws of the jurisdiction

creating such institution, whichever is the lesser.

(B) Limitation on national bank

It shall be unlawful for any national bank which is indebted

to any Farm Credit Bank, on paper discounted or purchased under

paragraph (1), to incur any additional indebtedness, if by

virtue of such additional indebtedness its aggregate

liabilities direct or contingent, will exceed the limitation

described in subparagraph (A).

(4) FCA regulations

(A) In general

All of the loans, financial assistance, discounts and

purchases authorized by this subsection shall be subject to

regulations of the Farm Credit Administration and shall be

secured by collateral, if any, as may be required in such

regulations.

(B) Requirement of regulations

The regulations shall assure that such loans, financial

assistance, discounts, and purchases are available on a

reasonable basis to any financing institution authorized to

receive such services under paragraph (1)(B) of this

subsection, and that -

(i) is significantly involved in lending for agricultural

or aquatic purposes;

(ii) demonstrates a continuing need for supplementary

sources of funds to meet the credit requirements of its

agricultural or aquatic borrowers;

(iii) has limited access to national or regional capital

markets; and

(iv) does not use such services to expand its financing

activities to persons and for purposes other than those

authorized under subchapter II of this chapter.

The regulations may authorize a Farm Credit Bank to charge

reasonable fees for any commitment to extend service under this

section to such a financing institution.

(D) Subsidiaries and affiliates

For purposes of this subsection, a financing institution

together with the subsidiaries and affiliates of such may be

considered as one, but such determination to consider such

institution together with the subsidiaries and affiliates of

such as one shall be made in the first instance by the bank and

in the event of a denial by the bank of its services to a

financial institution, then by the Farm Credit Administration

on a case-by-case basis with due regard to the total

relationship of the financing institution, its subsidiaries,

and affiliates.

(5) Effective date

Nothing in this section shall require termination of discount

relationships in existence on December 24, 1980.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.7, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1625; amended Pub. L.

100-399, title IV, Sec. 401(e), (f), Aug. 17, 1988, 102 Stat. 995,

996.)

-COD-

CODIFICATION

In subsec. (b)(5), ''December 24, 1980'' substituted for ''the

effective date of the Farm Credit Act Amendments of 1980''.

-MISC3-

PRIOR PROVISIONS

A prior section 2015, Pub. L. 92-181, title I, Sec. 1.7, Dec. 10,

1971, 85 Stat. 585; Pub. L. 96-592, title I, Sec. 104, Dec. 24,

1980, 94 Stat. 3438; Pub. L. 99-509, title I, Sec. 1033(a), Oct.

21, 1986, 100 Stat. 1877, related to interest rates and other

charges, prior to the general amendment of this subchapter by Pub.

L. 100-233, Sec. 401.

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-399, Sec. 401(e), inserted in

heading ''and related assistance'' and amended text generally.

Prior to amendment, text read as follows: ''The Farm Credit Banks

are authorized to make or participate with other lenders in

long-term real estate mortgage loans in rural areas, as defined by

the Farm Credit Administration, or to producers or harvesters of

aquatic products, and make continuing commitments to make such

loans under specified circumstances, for a term of not less than 5

nor more than 40 years.''

Subsec. (b)(2). Pub. L. 100-399, Sec. 401(f)(1), struck out

provision that banks may own and lease or lease with an option to

purchase to persons eligible for assistance under this subchapter,

equipment needed in the operations of such persons.

Subsec. (b)(3). Pub. L. 100-399, Sec. 401(f)(2), substituted in

heading ''services'' for ''assistance'' and in subpar. (B)

''described in subparagraph (A)'' for ''herein contained''.

Subsec. (b)(4)(A). Pub. L. 100-399, Sec. 401(f)(3), substituted

''subsection'' for ''section''.

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2020, 2021, 2091, 2202a,

2252, 2277a-4 of this title.

-CITE-

12 USC Sec. 2016 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2016. Interest rates and other charges

-STATUTE-

(a) In general

Loans and discounts made by a Farm Credit Bank shall bear such

rate or rates of interest or discount, and be on such terms and

conditions, as may be determined by the board of directors of the

bank from time to time.

(b) Setting rates and charges

In setting rates and charges, it shall be the objective to

provide the types of credit needed by eligible borrowers at the

lowest reasonable costs on a sound business basis taking into

consideration the cost of money to the bank, necessary reserve and

expenses of the bank and associations, and providing services to

members. The loan documents or discounting and financing

agreements, may provide for the interest rate or rates to vary from

time to time during the repayment period of the loan or agreement.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.8, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1626; amended Pub. L.

100-399, title IV, Sec. 401(g), Aug. 17, 1988, 102 Stat. 996.)

-MISC1-

PRIOR PROVISIONS

A prior section 2016, Pub. L. 92-181, title I, Sec. 1.8, Dec. 10,

1971, 85 Stat. 586; Pub. L. 96-592, title I, Sec. 105, Dec. 24,

1980, 94 Stat. 3438, related to eligibility, prior to the general

amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-399 substituted ''such rate or

rates of interest or discount, and be'' for ''interest at a rate or

rates, and''.

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.

-CITE-

12 USC Sec. 2017 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2017. Eligibility

-STATUTE-

The credit and financial services authorized in this subchapter

may be made available to persons who are or become stockholders or

members of the bank or associations in the district, and who are -

(1) bona fide farmers, ranchers, or producers or harvesters of

aquatic products;

(2) persons furnishing to farmers and ranchers farm-related

services directly related to their on-farm operating needs; or

(3) owners of rural homes.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.9, as added Pub. L. 100-233, title

IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1626.)

-MISC1-

PRIOR PROVISIONS

A prior section 2017, Pub. L. 92-181, title I, Sec. 1.9, Dec. 10,

1971, 85 Stat. 586; Pub. L. 96-592, title I, Sec. 106, Dec. 24,

1980, 94 Stat. 3438; Pub. L. 100-233, title IV, Sec. 426, title

VIII, Sec. 802(d), Jan. 6, 1988, 101 Stat. 1657, 1710; Pub. L.

100-399, title IV, Sec. 412, title VII, Sec. 701, Aug. 17, 1988,

102 Stat. 1004, 1006, related to security, prior to the general

amendment of this subchapter by Pub. L. 100-233, Sec. 401.

-CITE-

12 USC Sec. 2018 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2018. Security; terms

-STATUTE-

(a) Real estate loans

(1) Maximum level of loans

(A) In general

Real estate mortgage loans originated by a Farm Credit Bank,

or in which a Farm Credit Bank participates in with a lender

that is not a System institution, shall not exceed 85 percent

of the appraised value of the real estate security, except as

provided for in subparagraphs (C) and (D).

(B) Regulation

The Farm Credit Administration may, by regulation, require

that loans not exceed 75 percent of the appraised value of the

real estate security.

If the loan is guaranteed by Federal, State, or other

governmental agencies, the loan may not exceed 97 percent of

the appraised value of the real estate security, as may be

authorized under regulations of the Farm Credit Administration.

(D) Private mortgage insurance

A loan on which private mortgage insurance is obtained may

exceed 85 percent of the appraised value of the real estate

security to the extent that the loan amount in excess of such

85 percent is covered by the insurance.

(2) Security

All loans originated or participated in by a bank under this

section shall be secured by first liens on interests in real

estate of such classes as may be prescribed by regulations of the

Farm Credit Administration.

(3) Value of security

To adequately secure the loan, the value of security shall be

determined by appraisal under standards prescribed by the bank in

accordance with regulations of the Farm Credit Administration.

(4) Additional security

Additional security for any loan may be required by the bank to

supplement real estate security. Credit factors, other than the

ratio between the amount of the loan and the security value,

shall be given due consideration.

(b) Intermediate credit

Loans, other than real estate loans, and discounts made under the

provisions of this subchapter shall be repayable in not more than 7

years (15 years if made to producers or harvesters of aquatic

products) from the time that such are made or discounted by the

Farm Credit Bank, except that the Board of Directors, under

regulations of the Farm Credit Administration, may approve policies

permitting loans, advances, or discounts (other than those made to

producers or harvesters of aquatic products) to be repayable in not

more than 10 years from the time that such are made or discounted

by such bank.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.10, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1627; amended Pub. L.

100-399, title IV, Sec. 401(h), (i), Aug. 17, 1988, 102 Stat. 996;

Pub. L. 104-105, title II, Sec. 202, 203, Feb. 10, 1996, 110 Stat.

172.)

-MISC1-

PRIOR PROVISIONS

A prior section 2018, Pub. L. 92-181, title I, Sec. 1.10, Dec.

10, 1971, 85 Stat. 586; Pub. L. 96-592, title I, Sec. 107, Dec. 24,

1980, 94 Stat. 3438, related to purposes, prior to the general

amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1996 - Subsec. (a)(1)(A). Pub. L. 104-105, Sec. 202(b),

substituted ''subparagraphs (C) and (D)'' for ''paragraphs (2) and

(3)''.

Subsec. (a)(1)(D). Pub. L. 104-105, Sec. 202(a), added subpar.

(D).

Subsec. (a)(5). Pub. L. 104-105, Sec. 203, struck out heading and

text of par. (5). Text read as follows: ''Each Farm Credit Bank

shall require a financial statement from each borrower at least

once every 3 years, or during such shorter period of time as may be

required under regulations of the Farm Credit Administration.''

1988 - Subsec. (a)(2). Pub. L. 100-399, Sec. 401(h)(1),

substituted ''prescribed by regulations of'' for ''approved by''.

Subsec. (a)(3). Pub. L. 100-399, Sec. 401(h)(2), substituted

''under standards'' for ''under appraisal standards'' and ''in

accordance with regulations of'' for ''and approved by''.

Subsec. (b). Pub. L. 100-399, Sec. 401(i), substituted

''harvesters of aquatic products) from'' for ''harvester of aquatic

products) from''.

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.

-CITE-

12 USC Sec. 2019 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2019. Purposes for extensions of credit

-STATUTE-

(a) Agricultural or aquatic purposes

(1) In general

Loans made by a Farm Credit Bank to farmers, ranchers, and

producers or harvesters of aquatic products may be for any

agricultural or aquatic purpose and other credit needs of the

applicant, including financing for basic processing and marketing

directly related to the applicant's operations and those of other

eligible farmers, ranchers, and producers or harvesters of

aquatic products, except that the operations of the applicant

shall supply some portion of the total processing or marketing

for which financing is extended.

(2) Limitation on loans for basic processing and marketing

operations

The aggregate of the financing provided by any Farm Credit Bank

for basic processing and marketing directly related to the

operations of farmers, ranchers, and producers or harvesters of

aquatic products, if the operations of the applicant supply less

than 20 percent of the total processing or marketing for which

financing is extended, shall not exceed 15 percent of the total

of all outstanding loans of such bank.

(b) Rural housing financing

(1) In general

Loans and discounts may be made to rural residents for rural

housing financing under regulations of the Farm Credit

Administration.

(2) Limitations

Rural housing financed under this subchapter shall be for

single-family, moderate-priced dwellings and their appurtenances

not inconsistent with the general quality and standards of

housing existing in, or planned or recommended for, the rural

area where it is located, except that a Farm Credit Bank may not

at any one time have a total amount of loans outstanding for such

rural housing to persons other than farmers or ranchers in

amounts exceeding 15 percent of the total of all loans

outstanding in such bank.

(3) Rural areas

For rural housing purposes under this section the term ''rural

areas'' shall not be defined to include any city or village

having a population in excess of 2,500 inhabitants.

(1) In general

Loans to persons furnishing farm-related services to farmers

and ranchers directly related to their on-farm operating needs

may be made for the necessary capital structures and equipment

and initial working capital for such services.

(2) Facilities

The banks may own and lease, or lease with option to purchase,

to persons eligible for credit under this subchapter or

subchapter II of this chapter, equipment or facilities needed in

the operations of such persons.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.11, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1627; amended Pub. L.

100-399, title IV, Sec. 401(j), Aug. 17, 1988, 102 Stat. 996; Pub.

L. 101-624, title XVIII, Sec. 1832(a), Nov. 28, 1990, 104 Stat.

3832; Pub. L. 102-237, title V, Sec. 502(a), Dec. 13, 1991, 105

Stat. 1868.)

-MISC1-

PRIOR PROVISIONS

A prior section 2019, Pub. L. 92-181, title I, Sec. 1.11, Dec.

10, 1971, 85 Stat. 586; Pub. L. 96-592, title I, Sec. 108, Dec. 24,

1980, 94 Stat. 3438, related to services related to borrower's

operations, prior to the general amendment of this subchapter by

Pub. L. 100-233, Sec. 401.

AMENDMENTS

1991 - Subsec. (a). Pub. L. 102-237 made technical amendments to

headings of subsec. (a) and pars. (1) and (2).

1990 - Subsec. (a). Pub. L. 101-624 designated existing

provisions as par. (1), inserted heading, substituted ''some

portion'' for ''at least 20 percent, or such larger percent as may

be required by the board of directors of the bank under regulations

of the Farm Credit Administration,'', and added par. (2).

1988 - Subsec. (c)(2). Pub. L. 100-399 substituted ''this

subchapter or subchapter II of this chapter, equipment or

facilities'' for ''this subchapter, facilities''.

EFFECTIVE DATE OF 1991 AMENDMENT

Amendment by Pub. L. 102-237 effective as if included in the

provision of the Food, Agriculture, Conservation, and Trade Act of

1990, Pub. L. 101-624, to which the amendment relates, see section

1101(b)(4) of Pub. L. 102-237, set out as a note under section 1421

of Title 7, Agriculture.

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2206a of this title.

-CITE-

12 USC Sec. 2020 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2020. Related services

-STATUTE-

(a) In general

The Farm Credit Banks may provide technical assistance to

borrowers, members, and applicants from the bank and associations

in the district, including persons obligated on paper discounted by

the bank, and may make available to them at their option such

financial related services appropriate to their on-farm and aquatic

operations as determined to be feasible by the board of directors

of the bank, under regulations of the Farm Credit Administration.

(b) Authority to pass along cost of insurance premiums

Each Farm Credit Bank may assess each production credit

association, other association making direct loans under the

authority provided under section 2279b of this title, and other

financing institution described in section 2015(b)(1)(B) of this

title in the district in which the bank is located to cover the

costs of making premium payments under part E of subchapter V of

this chapter. The assessment on any such association or other

financing institution for any calendar year shall be computed on

the same basis as is used to compute the premium payment and shall

not exceed the sum of -

(1) the annual average principal outstanding for such year on

loans made by the association, or on loans made by the other

financing institution and funded by or discounted with the Farm

Credit Bank, that are in accrual status, excluding the guaranteed

portions of government-guaranteed loans (as defined in section

2277a-4(a)(3) of this title) provided for in paragraph (3) and

Government Sponsored Enterprise-guaranteed loans (as defined in

section 2277a-4(a)(4) of this title) provided for in paragraph

(4), multiplied by 0.0015;

(2) the annual average principal outstanding for such year on

loans made by the association, or on loans made by the other

financing institution and funded by or discounted with the Farm

Credit Bank, that are in nonaccrual status, multiplied by 0.0025;

(3)(A) the annual average principal outstanding for such year

on the guaranteed portions of Federal government-guaranteed loans

(as so defined) made by the association, or by the other

financing institution and funded by or discounted with the Farm

Credit Bank, that are in accrual status, multiplied by 0.00015;

and

(B) the annual average principal outstanding for such year on

the guaranteed portions of State government-guaranteed loans (as

so defined) made by the association, or by the other financing

institution and funded by or discounted with the Farm Credit

Bank, that are in accrual status, multiplied by 0.0003; and

(4) the annual average principal outstanding for such year on

the guaranteed portions of Government Sponsored

Enterprise-guaranteed loans (as so defined) made by the

association, or by the other financing institution and funded by

or discounted with the Farm Credit Bank, that are in accrual

status, multiplied by a factor, not to exceed 0.0015, determined

by the Corporation for the purpose of setting the premium for

such guaranteed portions of loans under section 2277a-4(a)(1)(D)

of this title.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.12, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1628; amended Pub. L.

100-399, title IV, Sec. 401(k), Aug. 17, 1988, 102 Stat. 996; Pub.

L. 101-220, Sec. 6(b)(1), (2), Dec. 12, 1989, 103 Stat. 1880; Pub.

L. 104-105, title II, Sec. 215(a)(2)(C), Feb. 10, 1996, 110 Stat.

176; Pub. L. 107-171, title V, Sec. 5403(a)(2)(A), May 13, 2002,

116 Stat. 350.)

-MISC1-

PRIOR PROVISIONS

A prior section 2020, Pub. L. 92-181, title I, Sec. 1.12, Dec.

10, 1971, 85 Stat. 586; Pub. L. 96-592, title I, Sec. 109, Dec. 24,

1980, 94 Stat. 3439, related to loans through associations or

agents, prior to the general amendment of this subchapter by Pub.

L. 100-233, Sec. 401.

AMENDMENTS

2002 - Subsec. (b)(1). Pub. L. 107-171, Sec. 5403(a)(2)(A)(i),

inserted ''and Government Sponsored Enterprise-guaranteed loans (as

defined in section 2277a-4(a)(4) of this title) provided for in

paragraph (4)'' after ''government-guaranteed loans (as defined in

section 2277a-4(a)(3) of this title) provided for in paragraph

(3)''.

Subsec. (b)(4). Pub. L. 107-171, Sec. 5403(a)(2)(A)(ii)-(iv),

added par. (4).

1996 - Pub. L. 104-105, Sec. 215(a)(2)(C), which directed

amendment of ''section 1.12(b)'', without specifying the name of

the Act being amended, was executed to this section, which is

section 112 of the Farm Credit Act of 1971, to reflect the probable

intent of Congress.

Subsec. (b)(1). Pub. L. 104-105, Sec. 215(a)(2)(C)(i), inserted

''(as defined in section 2277a-4(a)(3) of this title)'' after

''government-guaranteed loans''.

Subsec. (b)(3). Pub. L. 104-105, Sec. 215(a)(2)(C)(i), inserted

''(as so defined)'' after ''government-guaranteed loans'' in

subpars. (A) and (B).

1989 - Subsec. (b). Pub. L. 101-220, Sec. 6(b)(1), inserted '',

other association making direct loans under the authority provided

under section 2279b of this title,'' after ''production credit

association''.

Subsec. (b)(1). Pub. L. 101-220, Sec. 6(b)(2)(A), inserted

''funded by or'' before ''discounted with'' and ''excluding the

guaranteed portions of government-guaranteed loans provided for in

paragraph (3),'' and struck out ''and'' after ''multiplied by

0.0015;''.

Subsec. (b)(2). Pub. L. 101-220, Sec. 6(b)(2)(B), inserted

''funded by or'' before ''discounted with'' and substituted

''0.0025; and'' for ''0.0025.''.

Subsec. (b)(3). Pub. L. 101-220, Sec. 6(b)(2)(C), added par. (3).

1988 - Subsec. (a). Pub. L. 100-399 designated existing provision

as subsec. (a), inserted heading, substituted ''directors of the

bank'' for ''directors of each district bank'', and added subsec.

(b).

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-171, title V, Sec. 5403(b), May 13, 2002, 116 Stat.

351, provided that: ''The amendments made by this section (amending

this section and sections 2277a-4 and 2277a-5 of this title) shall

apply with respect to determinations of premiums for calendar year

2002 and for any succeeding calendar year, and to certified

statements with respect to such premiums.''

EFFECTIVE DATE OF 1989 AMENDMENT

Section 6(c) of Pub. L. 101-220 provided that: ''The amendments

made by subsections (a) and (b) (amending sections 2020, 2277a-4,

2277a-8, and 2277a-10 of this title) shall be effective for

insurance premiums due to the Farm Credit System Insurance

Corporation under the Farm Credit Act of 1971 (12 U.S.C. 2001 et

seq.) on or after January 1, 1990, based on the loan volume of each

bank for each calendar year beginning with calendar year 1989, and

shall be effective for the calculation of the initial premium

payment required under section 5.56(c) of the Farm Credit Act of

1971 (12 U.S.C. 2277a-5(c)).''

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2277a-4 of this title.

-CITE-

12 USC Sec. 2021 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2021. Loans through associations or agents

-STATUTE-

(a) In general

The Farm Credit Banks shall, except as otherwise herein provided,

make loans of the type authorized under section 2015(a) of this

title through a Federal land bank association chartered to serve

the territory in which the real estate of the borrower is located.

(b) No active association

If there is no active association chartered to serve territory

where the real estate is located, the bank may make the loan

directly or through such bank or trust company or savings or other

financial institution as such bank may designate.

When the loan is not made through a Federal land bank

association, the applicant shall purchase stock in the bank in

accordance with the capitalization requirements provided for in the

bylaws of the bank.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.13, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1628.)

-MISC1-

PRIOR PROVISIONS

A prior section 1.13 of Pub. L. 92-181 was classified to section

2031 of this title prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

-CITE-

12 USC Sec. 2022 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2022. Liens on stock

-STATUTE-

The Farm Credit Banks shall have a first lien on the stock or

participation certificates it issues for the payment of any

liability of the stockholders to the bank.

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.14, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1629.)

-MISC1-

PRIOR PROVISIONS

A prior section 1.14 of Pub. L. 92-181 was classified to section

2032 of this title prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

-CITE-

12 USC Sec. 2023 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER I - FARM CREDIT BANKS

-HEAD-

Sec. 2023. Taxation

-STATUTE-

The Farm Credit Banks and the capital, reserves, and surplus

thereof, and the income derived therefrom, shall be exempt from

Federal, State, municipal, and local taxation, except taxes on real

estate held by a Farm Credit Bank to the same extent, according to

its value, as other similar property held by other persons is

taxed. The mortgages held by the Farm Credit Banks and the notes,

bonds, debentures, and other obligations issued by the banks shall

be considered and held to be instrumentalities of the United States

and, as such, they and the income therefrom shall be exempt from

all Federal, State, municipal, and local taxation, other than

Federal income tax liability of the holder thereof under the Public

Debt Act of 1941 (31 U.S.C. 3124).

-SOURCE-

(Pub. L. 92-181, title I, Sec. 1.15, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1629; amended Pub. L.

100-399, title IV, Sec. 401(l), Aug. 17, 1988, 102 Stat. 997.)

-MISC1-

PRIOR PROVISIONS

A prior section 1.15 of Pub. L. 92-181 was classified to section

2033 of this title prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2031, Pub. L. 92-181, title I, Sec. 1.13, Dec.

10, 1971, 85 Stat. 587; Pub. L. 99-205, title II, Sec. 205(d)(4),

Dec. 23, 1985, 99 Stat. 1703; Pub. L. 100-233, title VIII, Sec.

802(e), Jan. 6, 1988, 101 Stat. 1710, related to organizations,

articles, and charters of Federal land bank associations, and

powers of Farm Credit Administration, prior to the general

amendment of this subchapter by Pub. L. 100-233, Sec. 401. See

section 2011 of this title.

A prior section 2032, Pub. L. 92-181, title I, Sec. 1.14, Dec.

10, 1971, 85 Stat. 587, related to board of directors, prior to the

general amendment of this subchapter by Pub. L. 100-233, Sec. 401.

See section 2012 of this title.

A prior section 2033, Pub. L. 92-181, title I, Sec. 1.15, Dec.

10, 1971, 85 Stat. 587; Pub. L. 96-592, title I, Sec. 110, Dec. 24,

1980, 94 Stat. 3439; Pub. L. 99-205, title II, Sec. 205(d)(5), Dec.

23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VII, Sec. 705(b),

title VIII, Sec. 805(b), Jan. 6, 1988, 101 Stat. 1707, 1715; Pub.

L. 100-399, title VI, Sec. 604, title VII, Sec. 702(a), Aug. 17,

1988, 102 Stat. 1006, related to general corporate powers, prior to

the general amendment of this subchapter by Pub. L. 100-233, Sec.

401. See section 2013 of this title.

A prior section 2034, Pub. L. 92-181, title I, Sec. 1.16, Dec.

10, 1971, 85 Stat. 589; Pub. L. 96-592, title I, Sec. 111, Dec. 24,

1980, 94 Stat. 3439; Pub. L. 99-205, title III, Sec. 304(a), Dec.

23, 1985, 99 Stat. 1708, related to association stock, value of

shares, voting, and purchase, prior to the general amendment of

this subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2051, Pub. L. 92-181, title I, Sec. 1.17, Dec.

10, 1971, 85 Stat. 589; Pub. L. 96-592, title I, Sec. 112, Dec. 24,

1980, 94 Stat. 3439; Pub. L. 99-205, title II, Sec. 205(d)(6),

title VI, Sec. 602, Dec. 23, 1985, 99 Stat. 1704, 1711; Pub. L.

100-233, title VIII, Sec. 802(f), Jan. 6, 1988, 101 Stat. 1711,

related to land bank reserves, dividends, and patronage refunds,

prior to the general amendment of this subchapter by Pub. L.

100-233, Sec. 401.

A prior section 2052, Pub. L. 92-181, title I, Sec. 1.18, Dec.

10, 1971, 85 Stat. 589; Pub. L. 96-592, title I, Sec. 113, Dec. 24,

1980, 94 Stat. 3439; Pub. L. 99-205, title VI, Sec. 603, Dec. 23,

1985, 99 Stat. 1711; Pub. L. 100-233, title VIII, Sec. 802(g), Jan.

6, 1988, 101 Stat. 1711, related to association reserves,

dividends, and patronage refunds, prior to the general amendment of

this subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2053, Pub. L. 92-181, title I, Sec. 1.19, Dec.

10, 1971, 85 Stat. 590; Pub. L. 96-592, title I, Sec. 114, Dec. 24,

1980, 94 Stat. 3439, related to agreements for sharing gains or

losses, prior to the general amendment of this subchapter by Pub.

L. 100-233, Sec. 401.

A prior section 2054, Pub. L. 92-181, title I, Sec. 1.20, Dec.

10, 1971, 85 Stat. 590; Pub. L. 96-592, title I, Sec. 115, Dec. 24,

1980, 94 Stat. 3439; Pub. L. 99-205, title II, Sec. 205(d)(7), Dec.

23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VIII, Sec. 805(c),

Jan. 6, 1988, 101 Stat. 1715, related to liens on stock and

participation certificates, prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2055, Pub. L. 92-181, title I, Sec. 1.21, Dec.

10, 1971, 85 Stat. 590; Pub. L. 100-399, title IX, Sec. 901(a),

Aug. 17, 1988, 102 Stat. 1007, related to tax exempt status, prior

to the general amendment of this subchapter by Pub. L. 100-233,

Sec. 401. See section 2023 of this title.

AMENDMENTS

1988 - Pub. L. 100-399 inserted a comma after ''therefrom'' and

substituted ''3124'' for ''742(a)''.

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2214 of this title.

-CITE-

12 USC SUBCHAPTER II - FARM CREDIT ASSOCIATIONS 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

-HEAD-

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

-COD-

CODIFICATION

Title II of the Farm Credit Act of 1971, comprising this

subchapter, was originally enacted by Pub. L. 92-181, title II,

Dec. 10, 1971, 85 Stat. 590, and amended by Pub. L. 95-443, Oct.

10, 1978, 92 Stat. 1066; Pub. L. 96-592, Dec. 24, 1980, 94 Stat.

3437; Pub. L. 99-205, Dec. 23, 1985, 99 Stat. 1678; Pub. L. 99-509,

Oct. 21, 1986, 100 Stat. 1874; Pub. L. 100-233, Jan. 6, 1988, 101

Stat. 1568. Such title is shown herein, however, as having been

added by Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101

Stat. 1622, without reference to such intervening amendments

because of the extensive revision of the title's provisions by Pub.

L. 100-233.

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in sections 2015, 2019, 2202a,

2206a, 2214a, 2218, 2252 of this title.

-CITE-

12 USC Part A - Production Credit Associations 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Part A - Production Credit Associations

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101

Stat. 1629, substituted ''Farm Credit Associations'' for ''Federal

Intermediate Credit Banks and Production Credit Associations'' as

subchapter heading, and substituted ''Production Credit

Associations'' for ''Federal Intermediate Credit Banks'' as heading

for part A.

-CITE-

12 USC Sec. 2071 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2071. Organization and charters

-STATUTE-

(a) Charter

Each production credit association shall continue as a Federally

chartered instrumentality of the United States.

(b) Organization

(1) In general

Production credit associations may be organized by 10 or more

farmers or ranchers or producers or harvesters of aquatic

products desiring to borrow money under the provisions of this

part.

(2) Articles of association

The proposed articles of association shall be forwarded to the

Farm Credit Bank for the district accompanied by an agreement to

subscribe on behalf of the association for stock in the bank in

such amounts as may be required by the bank.

(3) Contents of articles

The articles shall specify in general terms the -

(A) objects for which the association is formed;

(B) powers to be exercised by the association in carrying out

the functions authorized by this part; and

(4) Signatures

The articles shall be signed by persons desiring to form such

an association and shall be accompanied by a statement signed by

each such person establishing eligibility to borrow from the

association in which such person will become a stockholder.

(5) Copy to FCA

A copy of the articles of association shall be forwarded to the

Farm Credit Administration with the recommendations of the bank

concerning the need for such an association in order to

adequately serve the credit needs of eligible persons in the

proposed territory and whether that territory includes any area

described in the charter of another production credit

association.

(6) Denial of charter

The Farm Credit Administration for good cause shown may deny

the charter.

(7) Approval of articles

On approval of the proposed articles by the Farm Credit

Administration, and on the issuance of a charter, the association

shall become as of such date a federally chartered body corporate

and an instrumentality of the United States.

(8) Powers of FCA

The Farm Credit Administration shall have the power, under

rules and regulations prescribed by the Farm Credit

Administration or by prescribing in the terms of the charter, to

(A) provide for the organization of the association;

(B) provide for the initial amount of stock of the

association;

operations may be carried on; and

(D) approve amendments to the charter of the association.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.0, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1629; amended Pub. L.

100-399, title IV, Sec. 401(m), Aug. 17, 1988, 102 Stat. 997; Pub.

L. 102-237, title V, Sec. 502(b), Dec. 13, 1991, 105 Stat. 1868.)

-MISC1-

PRIOR PROVISIONS

A prior section 2071, Pub. L. 92-181, title II, Sec. 2.0, Dec.

10, 1971, 85 Stat. 590; Pub. L. 100-233, title VIII, Sec. 802(h),

Jan. 6, 1988, 101 Stat. 1711, related to establishment and branches

of Federal intermediate credit banks, prior to the general

amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1991 - Subsec. (b)(8). Pub. L. 102-237 substituted ''charter,

to'' for ''charter to'' in introductory provisions.

1988 - Subsec. (b)(1). Pub. L. 100-399, Sec. 401(m)(1),

substituted ''this part'' for ''this subchapter''.

Subsec. (b)(3)(B). Pub. L. 100-399, Sec. 401(m)(2), (3), struck

out ''the'' before ''powers'' and substituted ''this subtitle'' for

''this part'', both of which for purposes of codification were

translated as ''this part'', requiring no change in text.

Subsec. (b)(3)(C). Pub. L. 100-399, Sec. 401(m)(3), struck out

''the'' before ''territory''.

Subsec. (b)(8). Pub. L. 100-399, Sec. 401(m)(4), struck out in

introductory provision ''or by approval of bylaws of the

association'' after ''the charter'' and amended subpar. (D)

generally. Prior to amendment, subpar. (D) read as follows:

''direct at any time such changes in the charter as the Farm Credit

Administration finds necessary for the accomplishment of the

purposes of this chapter''.

EFFECTIVE DATE OF 1991 AMENDMENT

Amendment by Pub. L. 102-237 effective as if included in the

provision of the Food, Agriculture, Conservation, and Trade Act of

1990, Pub. L. 101-624, to which the amendment relates, see section

1101(b)(4) of Pub. L. 102-237, set out as a note under section 1421

of Title 7, Agriculture.

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.

EFFECTIVE DATE

Section 401 of Pub. L. 100-233 provided in part that this

subchapter is effective 6 months after Jan. 6, 1988.

MERGER OF PRODUCTION CREDIT ASSOCIATIONS AND FEDERAL LAND BANK

ASSOCIATIONS

Section 411 of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 403, Aug. 17, 1988, 102 Stat. 999, provided that:

''(a) Submission of Proposal. - Not later than 6 months after the

date of the merger of the Federal land bank and the Federal

intermediate credit bank in a district, the Boards of Directors of

each Federal land bank association and each production credit

association in such district, that share substantially the same

geographical territory with each other, shall submit to the voting

stockholders of each such association for their approval, a plan,

approved by the supervising bank and the Farm Credit

Administration, for merging such associations.

''(b) Prerequisites to Merger. -

''(1) Stockholder vote. - The stockholder vote required for

approval of a merger under subsection (a) shall be a majority of

the voting stockholders of each association voting, in person or

by written proxy, at a duly authorized stockholders meeting.

''(2) Submission to fca. - Not later than 60 days prior to the

end of the 12-month period beginning on the date of the enactment

of this section (Jan. 6, 1988), the plan of merger under

subsection (a), together with all information to be presented to

the stockholders, shall be submitted to the Farm Credit

Administration.

''(3) Expedited consideration by fca. - The Farm Credit

Administration shall expedite its consideration of the plan and

accompanying information submitted under paragraph (2) so that

review and approval of such plan and information shall be

completed by the Administration so as to enable a stockholder

vote to occur within the 12-month period referred to in paragraph

(2).

''(c) Direct Lenders. - On approval of a merger under this

subsection, the resulting association shall be a direct lender in

the same manner as applies to production credit associations.''

REASSIGNMENT OF ASSOCIATIONS TO ADJOINING DISTRICTS

Section 433 of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 417, Aug. 17, 1988, 102 Stat. 1004, provided that:

''(a) Petition of Bank. - Notwithstanding any other provision of

law, effective for the 12-month period beginning on the date of

enactment of this Act (Jan. 6, 1988), each Federal land bank

association or production credit association, whose chartered

territory adjoins the territory of another district, may petition

the Farm Credit Administration to amend the charters of the

association and the adjoining district bank to provide that the

territory of the association is part of the adjoining district.

''(b) Requirements of Petition. - To be considered under this

section, the petition must be signed by not less than 15 percent of

the stockholders of the association. Only one such petition may be

filed by an association under this section.

''(c) FCA Action. - The Farm Credit Administration shall take any

action necessary -

''(1) to amend the charters of the association and the district

bank; and

''(2) to incorporate the petitioning association into the

adjoining district if the reassignment is approved by -

''(A) a majority of the stockholders of the association

voting, in person or by proxy, at a duly authorized

stockholders' meeting held for such purpose;

''(B) the board of directors of the adjoining district bank;

''(C) the Farm Credit System Assistance Board; and

''(D) the Farm Credit Administration Board.''

-CITE-

12 USC Sec. 2072 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2072. Board of directors

-STATUTE-

Each production credit association shall elect from the voting

members of such association, a board of directors of such number,

for such terms, with such qualifications, and in such manner as may

be required by the bylaws of the association, except that at least

one member shall be elected by the other directors, which member

shall not be a director, officer, employee, stockholder, or agent

of a System institution.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.1, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1630; amended Pub. L.

100-399, title IV, Sec. 401(n), Aug. 17, 1988, 102 Stat. 997; Pub.

L. 102-237, title V, Sec. 502(c), Dec. 13, 1991, 105 Stat. 1868.)

-MISC1-

PRIOR PROVISIONS

A prior section 2072, Pub. L. 92-181, title II, Sec. 2.1, Dec.

10, 1971, 85 Stat. 591; Pub. L. 96-592, title II, Sec. 201, Dec.

24, 1980, 94 Stat. 3439; Pub. L. 99-205, title II, Sec. 205(e)(1),

Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VII, Sec.

705(c), title VIII, Sec. 802(i), 805(d), Jan. 6, 1988, 101 Stat.

1707, 1711, 1715; Pub. L. 100-399, title VI, Sec. 604, title IX,

Sec. 901(b), Aug. 17, 1988, 102 Stat. 1006, 1007, related to

corporate existence and general corporate powers, prior to the

general amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1991 - Pub. L. 102-237 substituted ''stockholder, or agent'' for

''or stockholder''.

1988 - Pub. L. 100-399 struck out the comma after ''except

that''.

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.

-CITE-

12 USC Sec. 2073 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2073. General corporate powers

-STATUTE-

Each production credit association shall be a body corporate and,

subject to supervision by the Farm Credit Bank for the district and

regulation by the Farm Credit Administration, shall have the power

to -

(1) have succession until terminated in accordance with this

chapter or any other Act of Congress;

(2) adopt and use a corporate seal;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all of the

usual incidents of ownership of real and personal property

necessary or convenient to the business of the association;

(6) operate under the direction of the board of directors of

the association in accordance with the provisions of this

chapter;

(7) subscribe to stock of the bank;

(8) purchase stock of the bank held by other production credit

associations and stock of other production credit associations;

(9) contribute to the capital of the bank or other production

credit associations;

(10) invest funds of the association as may be approved by the

Farm Credit Bank under regulations of the Farm Credit

Administration and deposit the current funds and securities of

such with the Farm Credit Bank, a member bank of the Federal

Reserve System, or any bank insured under the Federal Deposit

Insurance Corporation, and may pay fees therefor and receive

interest thereon as may be agreed;

(11) buy and sell obligations of or insured by the United

States or of any agency thereof or of any banks of the Farm

Credit System and buy from and sell to such banks, interests in

loans and in other financial assistance extended and nonvoting

stock, as may be authorized by the Farm Credit Bank in accordance

with regulations of the Farm Credit Administration;

(12) borrow money from the Farm Credit Bank, and with the

approval of such bank, borrow from and issue notes or other

obligations to any commercial bank or other financial

institution;

(13) make and participate in loans, accept advance payments,

and provide services and other assistance as authorized in this

part and charge fees therefor, and when authorized by the bank

participate with one or more other Farm Credit System

institutions in loans made under this subchapter or other

subchapters of this chapter on the basis prescribed in section

2206 of this title;

(14) endorse and become liable on loans discounted or pledged

to the Farm Credit Bank;

(15) as may be authorized by the Farm Credit Bank in accordance

with regulations of the Farm Credit Administration, agree with

other Farm Credit System institutions to share loan or other

losses, whether to protect against capital impairment or for any

other purpose;

(16) prescribe, by its board of directors, its bylaws that

shall be consistent with law, and that shall provide for -

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred, and retired; and

(B) the manner in which it is to -

(i) select officers and employees;

(ii) acquire, hold, and transfer property;

(iii) conduct general business; and

(iv) exercise and enjoy the privileges granted to it by

law;

(17) provide by its board of directors for a manager or other

chief executive officer, and provide for such other officers or

employees as may be necessary, including joint employees as

provided in this chapter, define their duties, and require surety

bonds or make other provisions against losses occasioned by

employees, but no director shall, within one year after the date

when such director ceases to be a member of the board, serve as a

salaried employee of the association on the board of which he

served;

(18) elect by the board of directors of the association a loan

committee with power to approve applications for membership in

the association and loans or participations or, with the approval

of the bank, delegate the approval of applications for membership

and loans or participations within specified limits to other

committees or to authorized officers and employees of the

association;

(19) perform any functions delegated to the association by the

bank;

(20) exercise by the board of directors or authorized officers

or employees of the association, all such incidental powers as

may be necessary or expedient to carry on the business of the

association; and

(21) operate as an originator and become certified as a

certified facility under subchapter VIII of this chapter.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.2, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1630; amended Pub. L.

100-399, title IV, Sec. 401(o), Aug. 17, 1988, 102 Stat. 997.)

-MISC1-

PRIOR PROVISIONS

A prior section 2073, Pub. L. 92-181, title II, Sec. 2.2, Dec.

10, 1971, 85 Stat. 592; Pub. L. 96-592, title II, Sec. 202, Dec.

24, 1980, 94 Stat. 3440; Pub. L. 99-205, title II, Sec.

205(e)(2)-(5), title VI, Sec. 604, Dec. 23, 1985, 99 Stat. 1704,

1711; Pub. L. 100-233, title VIII, Sec. 802(j), 805(e), Jan. 6,

1988, 101 Stat. 1711, 1715, related to Federal intermediate credit

bank stock, prior to the general amendment of this subchapter by

Pub. L. 100-233, Sec. 401.

AMENDMENTS

1988 - Par. (16). Pub. L. 100-399, Sec. 401(o)(1), amended par.

(16) generally. Prior to amendment, par. (16) read as follows:

''prescribe by the board of directors of the association the bylaws

not inconsistent with law providing for -

''(A) the classes of association stock and the manner in which

the stock shall be issued, transferred, and retired;

''(B) the officers and employees elected or provided for;

''(C) the property acquired, held, and transferred by the

association; and

''(D) the general business conducted, and the privileges

granted to the association by law exercised and enjoyed;''.

Par. (17). Pub. L. 100-399, Sec. 401(o)(2), substituted ''provide

by its board of directors for'' for ''elect by the board of

directors of the association'' and ''serve as'' for ''be elected or

designated''.

Par. (21). Pub. L. 100-399, Sec. 401(o)(3)-(5), added par. (21).

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.

-CITE-

12 USC Sec. 2074 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2074. Production credit association capitalization

-STATUTE-

(a) In general

In accordance with section 2154a of this title, each production

credit association shall provide, through its bylaws and subject to

Farm Credit Administration regulations, for its capitalization and

the manner in which its stock shall be issued, held, transferred,

and retired and, except as provided in subsection (b) of this

section, its earnings distributed.

(b) Application of earnings

At the end of each fiscal year, each production credit

association shall apply the amount of the earnings of the

association for the fiscal year in excess of the operating expenses

of the association (including provision for valuation reserves

against loan assets in accordance with generally accepted

accounting principles) -

(1) first, to the restoration of the impairment (if any) of

capital; and

(2) second, to the establishment and maintenance of the surplus

accounts, the minimum aggregate amount of which shall be

prescribed by the Farm Credit Bank.

When the bylaws of an association so provide and subject to the

general directions of the Farm Credit Administration, available net

earnings at the end of any fiscal year may be distributed on a

patronage basis in stock, participation certificates, or in cash.

Any part of the earnings of the fiscal year in excess of the

operating expenses for such year held in the surplus account may be

allocated to patrons on a patronage basis.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.3, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1632; amended Pub. L.

102-552, title V, Sec. 501, Oct. 28, 1992, 106 Stat. 4129.)

-MISC1-

PRIOR PROVISIONS

A prior section 2074, Pub. L. 92-181, title II, Sec. 2.3, Dec.

10, 1971, 85 Stat. 593; Pub. L. 96-592, title II, Sec. 203, Dec.

24, 1980, 94 Stat. 3440; Pub. L. 99-205, title II, Sec. 205(e)(6),

Dec. 23, 1985, 99 Stat. 1704, related to loans, discounts,

participation, and leasing, prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1992 - Subsec. (b). Pub. L. 102-552 amended subsec. (b)

generally. Prior to amendment, subsec. (b) read as follows: ''Each

production credit association at the end of each fiscal year shall

apply the amount of the earnings of the association for such year

in excess of the operating expenses of the association (including

provision for valuation reserves against loan assets in an amount

equal to one-half of 1 percent of the loans outstanding at the end

of the fiscal year to the extent that such earnings in such year in

excess of other operating expenses permit, or in such greater

amounts as are deemed necessary under generally accepted accounting

principles, until such reserves equal or exceed 3 1/2 percent of

the loans outstanding at the end of the fiscal year, beyond which 3

1/2 percent further additions to such reserves may be made, if

deemed necessary under generally accepted accounting principles)

first to the restoration of the impairment, if any, of capital, and

second, to the establishment and maintenance of the surplus

accounts, the minimum aggregate amount of which shall be prescribed

by the Farm Credit Bank.''

-CITE-

12 USC Sec. 2075 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2075. Short- and intermediate-term loans; participation; other

financial assistance; terms; conditions; interest; security

-STATUTE-

(a) Short- and intermediate-term loans

Each production credit association, under standards prescribed by

the board of directors of the Farm Credit Bank of the district, may

make, guarantee, or participate with other lenders in short- and

intermediate-term loans and other similar financial assistance to -

(1) bona fide farmers and ranchers and the producers or

harvesters of aquatic products, for agricultural or aquatic

purposes and other requirements of such borrowers, including

financing for basic processing and marketing directly related to

the operations of the borrower and those of other eligible

farmers, ranchers, and producers or harvesters of aquatic

products, except that the operations of the borrower shall supply

some portion of the total processing or marketing for which

financing is extended, except that the aggregate of the financing

provided by any association for basic processing and marketing

directly related to the operations of farmers, ranchers, and

producers or harvesters of aquatic products, if the operations of

the applicant supply less than 20 percent of the total processing

or marketing for which financing is extended, shall not exceed 15

percent of the total of all outstanding loans of all associations

in the district at the end of its preceding fiscal year;

(2) rural residents for housing financing in rural areas, under

regulations of the Farm Credit Administration; and

(3) persons furnishing to farmers and ranchers farm-related

services directly related to their on-farm operating needs.

(b) Rural housing

(1) In general

Rural housing financed under this part shall be for

single-family, moderate-priced dwellings and the appurtenances of

such not inconsistent with the general quality and standards of

housing existing in, or planned or recommended for, the rural

area where it is located.

(2) Limitation

The aggregate of such housing loans in an association to

persons other than farmers or ranchers shall not exceed 15

percent of the outstanding loans at the end of its preceding

fiscal year except on prior approval by the Farm Credit Bank of

the district. The aggregate of such housing loans in any farm

credit district shall not exceed 15 percent of the outstanding

loans of all associations in the district at the end of the

preceding fiscal year.

(3) Rural areas

For rural housing purposes under this section the term ''rural

areas'' shall not be defined to include any city or village

having a population in excess of 2,500 inhabitants.

(4) Equipment

Each association may own and lease, or lease with option to

purchase, to stockholders of the association equipment needed in

the operations of the stockholder.

(1) In general

Loans authorized in subsection (a) of this section shall bear

such rate or rates of interest as are determined under standards

prescribed by the board of the bank subject to the provisions of

section 2205 of this title, and shall be made upon such terms,

conditions, and upon such security, if any, as shall be

authorized in such standards.

(2) Setting of rates

In setting rates and charges, it shall be the objective to

provide the types of credit needed by eligible borrowers, at the

lowest reasonable cost on a sound business basis, taking into

account the cost of money to the association, necessary reserves

and expenses of the association, and services provided to

borrowers and members.

(3) Varying rates

The loan documents may provide for the interest rate or rates

to vary from time to time during the repayment period of the loan

in accordance with the rate or rates currently being charged by

the association.

(4) Prior approval

Such standards may require prior approval of the bank on

certain classes of loans, and may authorize a continuing

commitment to a borrower of a line of credit.

(d) Special district rule

(1) Provision of credit and technical assistance outside service

territory

Notwithstanding any territorial limitation in the charter of a

production credit association located in a district in which

there are only two such associations, the Farm Credit

Administration Board, on request of such association, may permit

such association to provide credit and technical assistance to

any borrower who is denied credit by the other production credit

association in the district if the Board determines that such

other production credit association in the district is unduly

restrictive in the application of credit standards.

(2) Timing of determination

If the Farm Credit Administration Board approves the extension

of credit and technical assistance under paragraph (1), the

association shall approve or deny the application for credit

within 90 days after receipt of the application from the

borrower.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.4, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1632; amended Pub. L.

100-399, title IV, Sec. 401(p), (q), Aug. 17, 1988, 102 Stat. 997;

Pub. L. 101-624, title XVIII, Sec. 1832(b), Nov. 28, 1990, 104

Stat. 3832.)

-MISC1-

PRIOR PROVISIONS

A prior section 2075, Pub. L. 92-181, title II, Sec. 2.4, Dec.

10, 1971, 85 Stat. 594; Pub. L. 95-443, Oct. 10, 1978, 92 Stat.

1066; Pub. L. 96-592, title II, Sec. 204, Dec. 24, 1980, 94 Stat.

3441; Pub. L. 99-509, title I, Sec. 1033(b), Oct. 21, 1986, 100

Stat. 1877, related to terms, prior to the general amendment of

this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1990 - Subsec. (a)(1). Pub. L. 101-624 substituted ''some portion

of the total processing or marketing for which financing is

extended, except that the aggregate of the financing provided by

any association for basic processing and marketing directly related

to the operations of farmers, ranchers, and producers or harvesters

of aquatic products, if the operations of the applicant supply less

than 20 percent of the total processing or marketing for which

financing is extended, shall not exceed 15 percent of the total of

all outstanding loans of all associations in the district at the

end of its preceding fiscal year'' for ''at least 20 percent, or

such larger percent as is required by the supervising bank under

regulations of the Farm Credit Administration, of the total

processing or marketing for which financing is extended''.

1988 - Subsec. (b)(1). Pub. L. 100-399, Sec. 401(p), substituted

''this part'' for ''this subchapter'' and substituted ''or

planned'' for ''planned''.

Subsec. (d). Pub. L. 100-399, Sec. 401(q), added subsec. (d).

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2206a of this title.

-CITE-

12 USC Sec. 2076 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2076. Other services

-STATUTE-

Each production credit association may provide technical

assistance to borrowers, applicants, and members and may make

available to them at their option such financial related services

appropriate to their on-farm and aquatic operations as is

determined feasible by the board of directors of each Farm Credit

Bank, under regulations prescribed by the Farm Credit

Administration.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.5, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1633.)

-MISC1-

PRIOR PROVISIONS

A prior section 2076, Pub. L. 92-181, title II, Sec. 2.5, Dec.

10, 1971, 85 Stat. 595; Pub. L. 96-592, title II, Sec. 205, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 100-233, title III, Sec. 305, Jan.

6, 1988, 101 Stat. 1621, related to services related to borrowers'

operations, prior to the general amendment of this subchapter by

Pub. L. 100-233, Sec. 401.

-CITE-

12 USC Sec. 2076a 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2076a. Liens on stock

-STATUTE-

Except with regard to stock or participation certificates held by

other Farm Credit System institutions, each production credit

association shall have a first lien on stock and participation

certificates the association issues, on allocated surplus, and on

investments in equity reserve, for any indebtedness of the holder

of the capital investments and, in the case of equity reserves, for

charges for association losses in excess of reserves and surpluses.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.6, as added Pub. L. 101-624,

title XVIII, Sec. 1833(2), Nov. 28, 1990, 104 Stat. 3832.)

-MISC1-

PRIOR PROVISIONS

A prior section 2.6 of Pub. L. 92-181 was renumbered section 2.7

and is classified to section 2077 of this title.

EFFECTIVE DATE

Section effective Jan. 7, 1988, see section 1861(d) of Pub. L.

101-624, set out as an Effective Date of 1990 Amendment note under

section 2001 of Title 7, Agriculture.

-CITE-

12 USC Sec. 2077 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part A - Production Credit Associations

-HEAD-

Sec. 2077. Taxation

-STATUTE-

Each production credit association and its obligations are

instrumentalities of the United States and as such any and all

notes, debentures, and other obligations issued by such

associations shall be exempt, both as to principal and interest,

from all taxation (except surtaxes, estate, inheritance, and gift

taxes) now or hereafter imposed by the United States or any State,

territorial, or local taxing authority, except that interest on

such obligations shall be subject to Federal income taxation in the

hands of the holder.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.7, formerly Sec. 2.6, as added

Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1633;

amended Pub. L. 100-399, title IV, Sec. 401(r), Aug. 17, 1988, 102

Stat. 998; renumbered Sec. 2.7, Pub. L. 101-624, title XVIII, Sec.

1833(1), Nov. 28, 1990, 104 Stat. 3832.)

-MISC1-

PRIOR PROVISIONS

A prior section 2077, Pub. L. 92-181, title II, Sec. 2.6, Dec.

10, 1971, 85 Stat. 595; Pub. L. 96-592, title II, Sec. 206, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 99-205, title II, Sec. 205(e)(7),

(8), Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VIII,

Sec. 802(k), 805(f), Jan. 6, 1988, 101 Stat. 1711, 1715, related to

net earnings, prior to the general amendment of this subchapter by

Pub. L. 100-233, Sec. 401.

A prior section 2078, Pub. L. 92-181, title II, Sec. 2.7, Dec.

10, 1971, 85 Stat. 597; Pub. L. 99-205, title II, Sec. 205(e)(9),

Dec. 23, 1985, 99 Stat. 1704, related to distribution of assets on

liquidation, prior to the general amendment of this subchapter by

Pub. L. 100-233, Sec. 401.

A prior section 2079, Pub. L. 92-181, title II, Sec. 2.8, Dec.

10, 1971, 85 Stat. 597; Pub. L. 100-399, title IX, Sec. 901(a),

Aug. 17, 1988, 102 Stat. 1007, related to taxation, prior to the

general amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1988 - Pub. L. 100-399 substituted ''interest,'' for ''interest''

and inserted '', except that interest on such obligations shall be

subject to Federal income taxation in the hands of the holder''.

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2214 of this title.

-CITE-

12 USC Part B - Federal Land Bank Associations 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Part B - Federal Land Bank Associations

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101

Stat. 1634, substituted ''Federal Land Bank Associations'' for

''Production Credit Associations'' as heading for part B.

-CITE-

12 USC Sec. 2091 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2091. Organizations; articles; charters; powers of the Farm

Credit Administration

-STATUTE-

(a) Charter

Each Federal land bank association shall continue as a federally

chartered instrumentality of the United States.

(b) Organization

(1) In general

A Federal land bank association may be organized by any group

of 10 or more persons desiring to borrow money from a Farm Credit

Bank under section 2015(a) of this title, including persons to

whom the Farm Credit Bank has made a loan directly or through an

agent and has taken as security real estate located in the

territory proposed to be served by the association.

(2) Articles of association

(A) Description of territory

The articles of association shall describe the territory

within which the association proposes to carry on its

operations.

(B) Submission to FCB

Proposed articles shall be forwarded to the Farm Credit Bank

for the district, accompanied by an agreement to subscribe on

behalf of the association for stock in accordance with the

bylaws of the Farm Credit Bank.

Association stock may be paid for by surrendering for

cancellation stock in the bank held by a borrower and the

issuance of an equivalent amount of stock to such borrower in

the association.

(D) Statement

The articles shall be accompanied by a statement signed by

each of the members of the proposed association establishing -

(i) the individual's eligibility and request for a Farm

Credit Bank loan;

(ii) that the real estate with respect to which the

individual desires the loan for is not being served by

another Federal land bank association; and

(iii) that the individual is or will become a stockholder

in the proposed association.

(E) Submission to FCA

A copy of the articles of association shall be forwarded to

the Farm Credit Administration with the recommendations of the

bank concerning the need for the proposed association in order

to adequately serve the credit needs of eligible persons in the

proposed territory and a statement as to whether or not the

territory includes any territory described in the charter of

another Federal land bank association.

(3) Denials of charters

The Farm Credit Administration for good cause shown may deny

the charter applied for.

(4) Approval of articles

On the approval of the proposed articles by the Farm Credit

Administration and the issuance of such charter, the association

shall become as of such date a federally chartered body corporate

and an instrumentality of the United States.

The Farm Credit Administration shall have power, in the terms of

the charter, under rules and regulations prescribed by the Farm

Credit Administration -

(1) to provide for the organization of the association;

(2) to provide for the initial amount of stock of the

association;

(3) to provide for the territory within which the association

may carry on its operations; and

(4) to approve amendments to the charter of such association.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.10, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1634; amended Pub. L.

100-399, title IV, Sec. 401(s), (t), Aug. 17, 1988, 102 Stat. 998.)

-MISC1-

PRIOR PROVISIONS

A prior section 2091, Pub. L. 92-181, title II, Sec. 2.10, Dec.

10, 1971, 85 Stat. 597; Pub. L. 96-592, title II, Sec. 207, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 99-205, title II, Sec. 205(e)(10),

Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VIII, Sec.

802(l), 805(g), Jan. 6, 1988, 101 Stat. 1711, 1715, related to

organization and charters of production credit associations, prior

to the general amendment of this subchapter by Pub. L. 100-233,

Sec. 401.

AMENDMENTS

1988 - Subsec. (b)(1). Pub. L. 100-399, Sec. 401(s)(1), inserted

''under section 2015(a) of this title'' after ''a Farm Credit

Bank''.

Subsec. (b)(2)(D)(i). Pub. L. 100-399, Sec. 401(s)(2), amended

cl. (i) generally. Prior to amendment, cl. (i) read as follows:

''the individual's eligibility for, and request or need of the

individual of a Farm Credit Bank loan;''.

Subsec. (c). Pub. L. 100-399, Sec. 401(t), amended subsec. (c)

generally. Prior to amendment, subsec. (c) read as follows: ''The

Farm Credit Administration shall have power, in the terms of the

charter, under rules and regulations prescribed by the Farm Credit

Administration or by approving the bylaws of the association, to

provide for the -

''(1) organization of the association;

''(2) the initial amount of stock of such association;

''(3) the territory within which the operations of the

association may be carried on; and

''(4) to direct at any time changes in the charter of such

association as the Farm Credit Administration finds necessary in

accomplishing the purposes of this chapter.''

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.

-CITE-

12 USC Sec. 2092 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2092. Board of directors

-STATUTE-

Each Federal land bank association shall elect from its voting

shareholders a board of directors of such number, for such terms,

in such manner, and with such qualifications as may be required by

its bylaws except that, at least one member shall be elected by the

other directors, which member shall not be a director, officer,

employee, stockholder, or agent of a System institution.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.11, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1635; amended Pub. L.

102-237, title V, Sec. 502(d), Dec. 13, 1991, 105 Stat. 1868.)

-MISC1-

PRIOR PROVISIONS

A prior section 2092, Pub. L. 92-181, title II, Sec. 2.11, Dec.

10, 1971, 85 Stat. 598, related to board of directors, prior to the

general amendment of this subchapter by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1991 - Pub. L. 102-237 substituted ''stockholder, or agent'' for

''or stockholder''.

-CITE-

12 USC Sec. 2093 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2093. General corporate powers

-STATUTE-

Each Federal land bank association shall be a body corporate and,

subject to supervision of the Farm Credit Bank for the district and

the regulation of the Farm Credit Administration, shall have the

power to -

(1) adopt and use a corporate seal;

(2) have succession until dissolved under the provisions of

this chapter or other Act of Congress;

(3) make contracts;

(4) sue and be sued;

(5) acquire, hold, dispose, and otherwise exercise all of the

usual incidents of ownership of real estate and personal property

necessary or convenient to the business of the association;

(6) operate under the direction of the board of directors of

the association in accordance with this chapter;

(7) provide by its board of directors for a manager or other

chief executive officer, and provide for such other officers or

employees as may be necessary, including joint employees as

provided in this chapter, define the duties of such, and require

surety bonds or make other provision against losses occasioned by

employees, except that no director shall, within one year after

the date when such director ceases to be a member of the board,

serve as a salaried employee of the association on the board of

which such director served;

(8) prescribe, by its board of directors, its bylaws that shall

be consistent with law, and that shall provide for -

(A) the classes of its stock and the manner in which such

stock shall be issued, transferred, and retired; and

(B) the manner in which it is to -

(i) select officers and employees;

(ii) acquire, hold, and transfer property;

(iii) conduct general business; and

(iv) exercise and enjoy the privileges granted to it by

law;

(9) accept applications for Farm Credit Bank loans and receive

from such bank and disburse to the borrowers the proceeds of such

loans;

(10) subscribe to stock of the Farm Credit Bank of the

district;

(11) elect by its board of directors a loan committee with

power to elect applicants for membership in the association and

recommend loans to the Farm Credit Bank, or with the approval of

the Farm Credit Bank, delegate the election of applicants for

membership and the approval of loans within specified limits to

other committees or to authorized employees of the association;

(12) on agreement with the bank, take such additional actions

with respect to applications and loans and perform such functions

as are vested by law in the Farm Credit Banks as may be agreed to

by the association;

(13) endorse and become liable to the bank on loans it makes to

association members;

(14) receive such compensation and deduct such sums from loan

proceeds with respect to each loan as may be agreed between the

association and the bank and make such other charges for services

as may be approved by the bank;

(15) provide technical assistance to members, borrowers,

applicants, and other eligible persons and make available to

them, at their option, such financial related services

appropriate to their operations as it determines, with Farm

Credit Bank approval, are feasible, under regulations of the Farm

Credit Administration;

(16) borrow money from the bank and, with the approval of such

bank, borrow from and issue association notes or other

obligations to any commercial bank or other financial

institution;

(17) buy and sell obligations of or insured by the United

States or any agency thereof or of any banks of the Farm Credit

System;

(18) invest association funds in such obligations as may be

authorized in regulations of the Farm Credit Administration and

approved by the bank and deposit securities and current funds of

the association with any member bank of the Federal Reserve

System, with the Farm Credit Bank, or with any bank insured by

the Federal Deposit Insurance Corporation, and pay fees therefor

and receive interest thereon as may be agreed;

(19) perform such other function delegated to the association

by the Farm Credit Bank of the district;

(20) exercise by its board of directors or authorized officers

or agents all such incidental powers as may be necessary or

expedient in the conduct of its business;

(21) contribute to the capital of the bank; and

(22) operate as an originator and become certified as a

certified facility under subchapter VIII of this chapter.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.12, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1635; amended Pub. L.

100-399, title IV, Sec. 401(u), Aug. 17, 1988, 102 Stat. 998.)

-MISC1-

PRIOR PROVISIONS

A prior section 2093, Pub. L. 92-181, title II, Sec. 2.12, Dec.

10, 1971, 85 Stat. 598; Pub. L. 96-592, title II, Sec. 208, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 99-205, title II, Sec. 205(e)(11),

Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100-233, title VII, Sec.

705(d), Jan. 6, 1988, 101 Stat. 1707; Pub. L. 100-399, title VI,

Sec. 604, Aug. 17, 1988, 102 Stat. 1006, related to general

corporate powers, prior to the general amendment of this subchapter

by Pub. L. 100-233, Sec. 401.

AMENDMENTS

1988 - Par. (7). Pub. L. 100-399, Sec. 401(u)(1), substituted

''provide by its board of directors for'' for ''elect by its board

of directors'' and ''serve as'' for ''be elected or designated''.

Par. (8). Pub. L. 100-399, Sec. 401(u)(2), amended par. (8)

generally. Prior to amendment, par. (8) read as follows:

''prescribe by its board of directors, association bylaws, not

inconsistent with law, providing for the classes of association

stock and the manner in which such stock shall be issued,

transferred, and retired; the officers and employees of the

association elected or provided for, the property of the

association that is acquired, held, and transferred, the general

business of the association conducted, and the privileges granted

to the association by law exercised and enjoyed;''.

Par. (12). Pub. L. 100-399, Sec. 401(u)(3), substituted ''agreed

to by'' for ''agreed to or delegated to''.

Par. (22). Pub. L. 100-399, Sec. 401(u)(4)-(6), added par. (22).

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.

-CITE-

12 USC Sec. 2094 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2094. Federal land bank association capitalization

-STATUTE-

In accordance with section 2154a of this title, the Federal land

bank association shall provide, through its bylaws and subject to

Farm Credit Administration regulations, for its capitalization and

the manner in which its stock shall be issued, held, transferred,

and retired and its earnings distributed.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.13, as added Pub. L. 100-233,

title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1636.)

-MISC1-

PRIOR PROVISIONS

A prior section 2094, Pub. L. 92-181, title II, Sec. 2.13, Dec.

10, 1971, 85 Stat. 599; Pub. L. 96-592, title II, Sec. 209, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 99-205, title II, Sec.

205(e)(12)-(14), title III, Sec. 304(b), Dec. 23, 1985, 99 Stat.

1705, 1708; Pub. L. 100-233, title VIII, Sec. 805(h), Jan. 6, 1988,

101 Stat. 1715, related to stock and participation certificates,

prior to the general amendment of this subchapter by Pub. L.

100-233, Sec. 401.

-CITE-

12 USC Sec. 2095 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2095. Repealed. Pub. L. 100-399, title IV, Sec. 401(v), Aug.

17, 1988, 102 Stat. 999

-MISC1-

Section, Pub. L. 92-181, title II, Sec. 2.14, as added Pub. L.

100-233, title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1636, provided

that whenever any Federal land bank association was liquidated, a

sum equal to its reserve account as required in this chapter was to

be paid and become the property of the bank in which such

association was a shareholder.

A prior section 2095, Pub. L. 92-181, title II, Sec. 2.14, Dec.

10, 1971, 85 Stat. 600; Pub. L. 99-205, title II, Sec. 205(e)(15),

title VI, Sec. 605, Dec. 23, 1985, 99 Stat. 1705, 1711, related to

application of earnings, restoration of capital impairment, and

surplus account, prior to the general amendment of this subchapter

by Pub. L. 100-233, Sec. 401.

CONSTRUCTION OF REPEAL

Section 401(v) of Pub. L. 100-399 repealed this section and

provided that this chapter be applied and administered as if this

section had not been enacted.

-CITE-

12 USC Sec. 2096 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2096. Agreements for sharing gains or losses

-STATUTE-

Each Farm Credit Bank may enter into agreements with Federal land

bank associations in its district for sharing the gain or losses on

loans or on security held therefor or acquired in liquidation

thereof, and associations are authorized to enter into any such

agreements and also, subject to bank approval, agreements with

other associations in the district for sharing the risk of loss on

loans endorsed by each such association. As may be authorized by

the bank in accordance with regulations of the Farm Credit

Administration, associations also may enter into agreements with

other Farm Credit System institutions to share loan and other

losses, whether to protect against capital impairment or for any

other purpose.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.14, formerly Sec. 2.15, as added

Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1636;

renumbered Sec. 2.14, Pub. L. 100-399, title IV, Sec. 401(w), Aug.

17, 1988, 102 Stat. 999.)

-MISC1-

PRIOR PROVISIONS

A prior section 2096, Pub. L. 92-181, title II, Sec. 2.15, Dec.

10, 1971, 85 Stat. 601; Pub. L. 96-592, title II, Sec. 210, Dec.

24, 1980, 94 Stat. 3442; Pub. L. 99-205, title II, Sec. 205(b),

Dec. 23, 1985, 99 Stat. 1703; Pub. L. 100-233, title IV, Sec.

431(f), title VIII, Sec. 805(i), Jan. 6, 1988, 101 Stat. 1660,

1715; Pub. L. 100-399, title IV, Sec. 415(b), Aug. 17, 1988, 102

Stat. 1004, related to short- and intermediate-term loans,

participation, other financial assistance, terms, conditions,

interest, and security, prior to the general amendment of this

subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2.14 of Pub. L. 92-181 was classified to section

2095 of this title and was repealed by Pub. L. 100-399, Sec.

401(v).

-CITE-

12 USC Sec. 2097 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2097. Liens on stock

-STATUTE-

Each Federal land bank association shall have a first lien on the

stock and participation certificates it issues, except on stock or

participation certificates held by other Farm Credit System

institutions, for the payment of any liability of the stockholder

to the association or to the bank, or to both of them.

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.15, formerly Sec. 2.16, as added

Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1637;

renumbered Sec. 2.15, Pub. L. 100-399, title IV, Sec. 401(w), Aug.

17, 1988, 102 Stat. 999.)

-MISC1-

PRIOR PROVISIONS

A prior section 2097, Pub. L. 92-181, title II, Sec. 2.16, Dec.

10, 1971, 85 Stat. 602; Pub. L. 96-592, title II, Sec. 211, Dec.

24, 1980, 94 Stat. 3443, related to other services, prior to the

general amendment of this subchapter by Pub. L. 100-233, Sec. 401.

A prior section 2.15 of Pub. L. 92-181 was renumbered section

2.14 and is classified to section 2096 of this title.

-CITE-

12 USC Sec. 2098 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER II - FARM CREDIT ASSOCIATIONS

Part B - Federal Land Bank Associations

-HEAD-

Sec. 2098. Taxation

-STATUTE-

Each Federal land bank association and the capital, reserves, and

surplus thereof, and the income derived therefrom, shall be exempt

from Federal, State, municipal, and local taxation, except taxes on

real estate held by a Federal land bank association to the same

extent, according to its value, as other similar property held by

other persons is taxed. The mortgages held by the Federal land

bank associations and the notes, bonds, debentures, and other

obligations issued by the associations shall be considered and held

to be instrumentalities of the United States and, as such, they and

the income therefrom shall be exempt from all Federal, State,

municipal, and local taxation, other than Federal income tax

liability of the holder thereof under the Public Debt Act of 1941

(31 U.S.C. 3124).

-SOURCE-

(Pub. L. 92-181, title II, Sec. 2.16, formerly Sec. 2.17, as added

Pub. L. 100-233, title IV, Sec. 401, Jan. 6, 1988, 101 Stat. 1637;

renumbered Sec. 2.16 and amended Pub. L. 100-399, title IV, Sec.

401(w), (x), Aug. 17, 1988, 102 Stat. 999.)

-MISC1-

PRIOR PROVISIONS

A prior section 2098, Pub. L. 92-181, title II, Sec. 2.17, Dec.

10, 1971, 85 Stat. 602; Pub. L. 99-205, title II, Sec. 205(e)(16),

Dec. 23, 1985, 99 Stat. 1705; Pub. L. 100-233, title VIII, Sec.

805(j), Jan. 6, 1988, 101 Stat. 1715, related to taxation, prior to

the general amendment of this subchapter by Pub. L. 100-233, Sec.

401.

A prior section 2.16 of Pub. L. 92-181 was renumbered section

2.15 and is classified to section 2097 of this title.

AMENDMENTS

1988 - Pub. L. 100-399, Sec. 401(x), substituted ''derived

therefrom, shall'' for ''derived therefrom shall'', ''by the

associations'' for ''by the banks'', and ''3124'' for ''742(a)''.

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.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2214 of this title.

-CITE-

12 USC SUBCHAPTER III - BANKS FOR COOPERATIVES 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

-HEAD-

SUBCHAPTER III - BANKS FOR COOPERATIVES

-CITE-

12 USC Part A - Banks for Cooperatives 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Part A - Banks for Cooperatives

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233, title IV, Sec. 415(1), Jan. 6, 1988, 101

Stat. 1642, inserted part A heading.

-CITE-

12 USC Sec. 2121 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2121. Establishment; titles; branches

-STATUTE-

The banks for cooperatives established pursuant to sections 2 and

30 of the Farm Credit Act of 1933, as amended, shall continue as

federally chartered instrumentalities of the United States. The

Farm Credit Administration shall approve amendments consistent with

this chapter to charters and organizational certificates of banks

for cooperatives. Unless an existing bank for cooperatives is

merged with another bank, there shall be a bank for cooperatives in

each farm credit district and a Central Bank for Cooperatives. A

bank for cooperatives may include in its title the name of the city

in which it is located or other geographical designation. The

Central Bank for Cooperatives may be located in such place as its

board of directors may determine with the approval of the Farm

Credit Administration. When authorized by the Farm Credit

Administration each bank for cooperatives may establish such

branches or other offices as may be appropriate for the effective

operation of its business.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.0, Dec. 10, 1971, 85 Stat. 602;

Pub. L. 100-233, title IV, Sec. 414(b), title VIII, Sec. 802(m),

Jan. 6, 1988, 101 Stat. 1641, 1711; Pub. L. 100-399, title IV, Sec.

406(b), title IX, Sec. 901(c), Aug. 17, 1988, 102 Stat. 1000,

1007.)

-REFTEXT-

REFERENCES IN TEXT

Sections 2 and 30 of the Farm Credit Act of 1933, as amended,

referred to in text, were classified to sections 1134 and 1134f,

respectively, of this title prior to their repeal by section 5.26

of Pub. L. 92-181, which enacted this chapter.

-MISC2-

AMENDMENTS

1988 - Pub. L. 100-399, Sec. 901(c), substituted ''merged with

another bank'' for ''merged with one or more other such banks under

section 2181 of this title''.

Pub. L. 100-233, Sec. 802(m), substituted ''The Farm Credit

Administration shall approve amendments consistent with this

chapter to charters and organizational certificates of banks for

cooperatives'' for ''Their charters or organization certificates

may be modified from time to time by the Farm Credit

Administration, not inconsistent with the provisions of this

subchapter, as may be necessary or expedient to implement this

chapter''.

Pub. L. 100-233, Sec. 414(b), which designated existing

provisions as subsec. (a), and added subsec. (b) reading ''Each

bank for cooperatives shall elect from its voting stockholders a

board of directors of such number, for such term, in such manner,

and with such qualifications as may be required in its bylaws,

except that, at least one member shall be elected by the other

directors, which member shall not be a director, officer, employee,

or stockholder of a System institution.'', was repealed by section

406(b) of Pub. L. 100-399. See Construction of 1988 Amendment note

below.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

CONSTRUCTION OF 1988 AMENDMENT

Section 406(b) of Pub. L. 100-399 provided that section 414(b) of

Pub. L. 100-233, cited as a credit to this section, is repealed and

that the Agricultural Credit Act of 1987 (Pub. L. 100-233) and this

chapter shall be applied and administered as if such section had

not been enacted.

VOLUNTARY MERGER OF BANKS FOR COOPERATIVES

Section 413 of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 405, Aug. 17, 1988, 102 Stat. 1000, provided that:

''(a) Submission of Proposal. -

''(1) Special committee. -

''(A) In general. - Not later than 15 days after the date of

the enactment of this section (Jan. 6, 1988), a special

committee shall be selected pursuant to subparagraph (B), for

the purpose of developing a proposal for the voluntary merger

of the banks for cooperatives.

''(B) Composition. - The special committee selected under

subparagraph (A) shall be composed of -

''(i) one member of each district board elected by the

voting stockholders of the bank for cooperatives in the

district; and

''(ii) one member chosen from the board of directors of the

Central Bank for Cooperatives by the board of such Bank.

''(C) Development of plan. - Not later than 75 days after the

date of the enactment of this section (Jan. 6, 1988), the

special committee shall develop a plan of merger for all such

banks and the Central Bank for Cooperatives into a National

Bank for Cooperatives.

''(2) Prerequisites to merger. -

''(A) Submission to fca. - On completion of the plan of

merger pursuant to paragraph (1)(C), the special committee

shall submit the proposed plan, together with all information

that is to be distributed to the stockholders concerning such

plan, to the Farm Credit Administration for approval.

''(B) Expedited review. - Not later than 30 days after the

Farm Credit Administration receives the plan of merger, the

Administration shall promptly review such plan and advise the

special committee concerning any required changes that are

necessary to the plan.

''(3) Submission to stockholders. - On approval of the plan by

the Farm Credit Administration, the special committee shall,

under such procedures as may be established by the committee,

submit the plan and recommendations to all voting stockholders of

the district banks for cooperatives and the Central Bank for

Cooperatives.

''(b) Voting Requirements. -

''(1) Majority vote required. - An approval of the plan of

merger developed and submitted under subsection (a) shall -

''(A) require a majority vote of the stockholders of each

district bank for cooperatives voting, in person or by proxy,

at a duly authorized stockholders' meeting, computed both -

''(i) in accordance with the requirement that, except as

provided in section 3.3(d) (12 U.S.C. 2124(d)), each

cooperative that is the holder of voting stock in the bank

for cooperatives shall be entitled to cast one vote; and

''(ii) on the basis of the total equity interests in the

bank (including allocated, but not unallocated, surplus and

reserves) held by such stockholders;

''(B) require a majority vote of the voting stockholders of

the Central Bank for Cooperatives voting on a one-bank-one-vote

basis;

''(C) take place not later than 180 days after the date of

the enactment of this section (Jan. 6, 1988); and

''(D) take place prior to any other merger vote involving a

bank for cooperatives.

''(2) Approval by all banks for cooperatives. - If the

stockholders of all of the banks for cooperatives approve the

merger, the merger shall take place.

''(3) Effect of lesser vote. - If the stockholders of more than

one but fewer than all of the banks approve the plan, each such

bank whose stockholders voted to approve the merger shall be

merged into a single bank for cooperatives, as provided in

paragraphs (4) or (5).

''(4) National bank for cooperatives. -

''(A) Creation. - If the stockholders of eight or more of the

district banks for cooperatives approve the merger, such banks,

and the Central Bank for Cooperatives, shall be merged into a

single bank, which shall be referred to as the 'National Bank

for Cooperatives'.

''(B) Services provided. - The National Bank for Cooperatives

may offer credit and related services to eligible borrowers

located within any territory that may be served by Farm Credit

System institutions under section 5.0 (12 U.S.C. 2221), or to

any borrower otherwise eligible under section 3.7(b) (12 U.S.C.

2128(b)).

''(5) United Bank for Cooperatives. -

''(A) Creation. - If the stockholders of more than one but

fewer than eight of the district banks approve the plan, each

such bank, and the Central Bank for Cooperatives (if approved

by a numerical majority of its stockholders), shall be merged

into a single bank, which shall be referred to as the 'United

Bank for Cooperatives'.

''(B) Services provided. - The United Bank for Cooperatives

shall offer credit and related services only in the territory

included, as of the date of the enactment of this section (Jan.

6, 1988), within the boundaries of the districts that had been

served by the constituent banks of the United Bank for

Cooperatives, and to any borrower otherwise eligible under

section 3.7(b) (12 U.S.C. 2128(b)).

''(6) Nonconsenting banks. -

''(A) In general. -

''(i) National bank for cooperatives. - Any of the district

banks whose stockholders did not approve the plan of merger

may offer credit and related services to any eligible

borrowers within any territory or area that may be served by

the National Bank.

''(ii) United bank for cooperatives. - Any of the district

banks whose stockholders did not approve the plan of merger

shall continue as district banks for cooperatives and shall

continue to serve only the territory within the boundaries of

the district that such banks served as of the date of the

enactment of this section (Jan. 6, 1988).

''(B) Nondiscrimination. - Any district bank whose

stockholders did not approve the plan of merger shall be

entitled to the availability, from the National Bank for

Cooperatives or the United Bank for Cooperatives, as the case

may be, of the same credit and related services now provided by

the Central Bank for Cooperatives as of the date of the

enactment of this section (Jan. 6, 1988), regardless of the

decision not to merge.

''(C) Subsequent mergers. - Any district bank referred to in

subparagraph (A) may subsequently merge with the National Bank

for Cooperatives or the United Bank for Cooperatives, as the

case may be, on the approval of the voting stockholders of both

banks proposing to merge based on the voting requirement of

subsection (b)(1).

''(c) References. - References in this section to voting

stockholders shall include subscribers to the guaranty fund.''

BANK FOR COOPERATIVES INITIAL BOARD OF DIRECTORS

Section 414(a) of Pub. L. 100-233, as amended by Pub. L. 100-399,

title IV, Sec. 406(a), Aug. 17, 1988, 102 Stat. 1000, provided

that: ''Notwithstanding section 3.2 (probably means section 3.2 of

Pub. L. 92-181, 12 U.S.C. 2123), the initial board of each district

bank for cooperatives shall be composed of the members of the

district board (which is dissolved upon the creation of the

district Farm Credit Bank) elected by the stockholders of the bank

for cooperatives and one member elected by the other two members,

which member shall not be a director, officer, employee, or

stockholder of a System institution. The initial board shall

operate for such term as is agreed to by the members of the board,

except that such period shall not exceed two years. Thereafter,

the board shall be elected and serve in accordance with section 3.0

of the Farm Credit Act of 1971 (12 U.S.C. 2121).''

-CITE-

12 USC Sec. 2122 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2122. Corporate existence; general corporate powers

-STATUTE-

Each bank for cooperatives shall be a body corporate and, subject

to regulation by the Farm Credit Administration, shall have power

to -

(1) Adopt and use a corporate seal.

(2) Have succession until dissolved under the provisions of this

chapter or other Act of Congress.

(3) Make contracts.

(4) Sue and be sued.

(5) Acquire, hold, dispose, and otherwise exercise all of the

usual incidents of ownership of real and personal property

necessary or convenient to its business.

(6) Make loans and commitments for credit, provide services and

other assistance as authorized in this chapter, and charge fees

therefor.

(7) Operate under the direction of its board of directors.

(8) Elect by its board of directors a president, any vice

presidents, a secretary, a treasurer, and provide for such other

officers, employees, and agents as may be necessary, including

joint employees as provided in this chapter, define their duties

and require surety bonds or make other provisions against losses

occasioned by employees.

(9) Prescribe by its board of directors its bylaws not

inconsistent with law providing for the classes of its stock and

the manner in which its stock shall be issued, transferred, and

retired; its officers, employees, or agents elected or provided

for; its property acquired, held, and transferred; its loans made;

its general business conducted; and the privileges granted it by

law exercised and enjoyed.

(10) Borrow money and issue notes, bonds, debentures, or other

obligations individually or in concert with one or more other banks

of the System, of such character, and such terms, conditions, and

rates of interest as may be determined.

(11)(A) Participate in loans under this subchapter with one or

more other banks for cooperatives and with commercial banks and

other financial institutions upon such terms as may be agreed among

them, and participate with one or more other Farm Credit System

institutions in loans made under this subchapter or other

subchapters of this chapter on the basis prescribed in section 2206

of this title.

(B)(i) Participate in any loan of a type otherwise authorized

under this subchapter that is made to a similar entity by any

institution in the business of extending credit, including

purchases of participations in loans to finance international trade

transactions involving the sale of agricultural commodities or the

products thereof, except that -

(I) a bank for cooperatives may not participate in a loan -

(aa) if the participation would cause the total amount of all

loan participations by the bank under this subparagraph

involving a single credit risk to exceed 10 percent of the

bank's total capital; or

(bb) if the participation by the bank will itself equal or

exceed 50 percent of the principal of the loan or, when taken

together with participations in the loan by other Farm Credit

System institutions, will cause the cumulative amount of the

participations by all Farm Credit System institutions in the

loan to equal or exceed 50 percent of the principal of the

loan;

(II) a bank for cooperatives may not participate in a loan to a

similar entity under this subparagraph if the similar entity has

a loan or loan commitment outstanding with a Farm Credit Bank or

an association chartered under this chapter, unless agreed to by

the Bank or association; and

(III) the cumulative amount of participations that a bank for

cooperatives may have outstanding under this subparagraph at any

time may not exceed 15 percent of the bank's total assets.

(ii) As used in this subparagraph, the term ''similar entity''

means an entity that, while not eligible for a loan under section

2129 of this title, is functionally similar to an entity eligible

for a loan under section 2129 of this title in that it derives a

majority of its income from, or has a majority of its assets

invested in, the conduct of activities functionally similar to

those conducted by the entity.

(iii) As used in this subparagraph, the term ''participate'' or

''participation'' refers to multilender transactions, including

syndications, assignments, loan participations, subparticipations,

or other forms of the purchase, sale, or transfer of interests in

loans, other extensions of credit, or other technical and financial

assistance.

(12) Deposit its securities and its current funds with any member

bank of the Federal Reserve System or any insured State nonmember

bank (within the meaning of section 1813 of this title) or, to the

extent necessary to facilitate transactions which may be financed

under section 2128(b) of this title, any other financial

organization, domestic or foreign, as may be authorized by its

board of directors, and pay fees therefor and receive interest

thereon as may be agreed. When designated for that purpose by the

Secretary of the Treasury, it shall be a depository of public

money, except receipts from customs, under such regulations as may

be prescribed by the Secretary; may be employed as a fiscal agent

of the Government, and shall perform all such reasonable duties as

a depository of public money or financial agent of the Government

as may be required of it. No Government funds deposited under the

provisions of this subsection shall be invested in loans or bonds

or other obligations of the bank.

(13)(A) Buy and sell obligations of or insured by the United

States or of any agency thereof, or securities backed by the full

faith and credit of any such agency and make such other investments

as may be authorized under regulations issued by the Farm Credit

Administration.

(B) As may be authorized by its board of directors, buy from and

sell to Farm Credit System institutions interests in loans and in

other financial assistance extended and nonvoting stock.

for the purposes of obtaining credit information and other services

needed to facilitate transactions which may be financed under

section 2128(b) of this title, invest in ownership interests in

foreign business entities that are principally engaged in providing

credit information to and performing such servicing functions for

their members in connection with the members' international

activities.

(14) Conduct studies and adopt standards for lending.

(15) Amend and modify loan contracts, documents, and payment

schedules, and release, subordinate, or substitute security for any

of them.

(16) Exercise by its board of directors or authorized officers,

employees, or agents all such incidental powers as may be necessary

or expedient to carry on the business of the bank.

(17) As may be authorized by the board of directors, maintain

credit balances and pay or receive fees or interest thereon, for

the purpose of assisting in the transfer of funds to or from

parties to transactions that may be financed under section 2128(b)

of this title: Provided, however, That nothing herein shall

authorize the banks for cooperatives to engage in the business of

accepting domestic deposits.

(18) As may be authorized by its board of directors, agree with

other Farm Credit System institutions to share loan or other

losses, whether to protect against capital impairment or for any

other purpose.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.1, Dec. 10, 1971, 85 Stat. 602;

Pub. L. 96-592, title III, Sec. 301, Dec. 24, 1980, 94 Stat. 3443;

Pub. L. 99-205, title II, Sec. 205(e)(1), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-233, title VIII, Sec. 802(n), Jan. 6, 1988, 101

Stat. 1712; Pub. L. 100-399, title IX, Sec. 901(b), Aug. 17, 1988,

102 Stat. 1007; Pub. L. 102-552, title V, Sec. 502, Oct. 28, 1992,

106 Stat. 4130; Pub. L. 103-376, Sec. 2, 6, Oct. 19, 1994, 108

Stat. 3497, 3500; Pub. L. 107-171, title V, Sec. 5401(a), May 13,

2002, 116 Stat. 349.)

-MISC1-

AMENDMENTS

2002 - Par. (11)(B)(iii), (iv). Pub. L. 107-171 redesignated cl.

(iv) as (iii) and struck out former cl. (iii) which read as

follows: ''With respect to similar entities that are eligible to

borrow from a Farm Credit Bank or association under subchapter I or

II of this chapter, the authority of a bank for cooperatives to

participate in loans to the entities under this subparagraph shall

be subject to the prior approval of the Farm Credit Bank or Banks

in whose chartered territory the entity is eligible to borrow. The

approval may be granted on an annual basis and under such terms and

conditions as may be agreed on between the bank for cooperatives

and the Farm Credit Bank or Banks that serve the territory.''

1994 - Par. (11)(B)(i)(I)(bb). Pub. L. 103-376, Sec. 6,

substituted ''other Farm Credit System institutions'' for ''the

other banks for cooperatives under this subparagraph'' and ''all

Farm Credit System institutions'' for ''all banks for

cooperatives''.

Par. (11)(B)(iv). Pub. L. 103-376, Sec. 2, added cl. (iv).

1992 - Par. (11). Pub. L. 102-552 designated existing provisions

as subpar. (A) and added subpar. (B).

1988 - Par. (12). Pub. L. 100-399 substituted ''(within the

meaning of section 1813 of this title)'' for ''as defined in

section 1812 of this title.''

Pars. (12), (13)(B), (C), (17), (18). Pub. L. 100-233 struck out

''and approved by the Farm Credit Administration'' after ''board of

directors''.

1985 - Pub. L. 99-205 substituted ''regulation'' for

''supervision'' in provision preceding par. (1).

Par. (13)(A). Pub. L. 99-205 inserted ''under regulations

issued'' after ''authorized''.

Pars. (16) to (19). Pub. L. 99-205 struck out par. (16)

respecting power of bank for cooperatives to perform any function

delegated to it by the Farm Credit Administration, and redesignated

pars. (17) to (19) as (16) to (18), respectively.

1980 - Par. (11). Pub. L. 96-592, Sec. 301(1), inserted

provisions respecting participation with one or more other Farm

Credit System institutions in loans.

Par. (12). Pub. L. 96-592, Sec. 301(2), inserted applicability to

any insured State nonmember bank and to other domestic or foreign

financial organizations.

Par. (13). Pub. L. 96-592, Sec. 301(3), designated existing

provisions as subpar. (A) and added subpars. (B) and (C).

Pars. (18), (19). Pub. L. 96-592, Sec. 301(4), added pars. (18)

and (19).

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2206a of this title.

-CITE-

12 USC Sec. 2123 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2123. Board of directors

-STATUTE-

(a)(1) Each bank for cooperatives not merged into the United Bank

for Cooperatives or the National Bank for Cooperatives shall elect

a board of directors of such number, for such term, in such manner,

and with such qualifications as may be required in its bylaws,

except that at least one member shall be elected by the other

directors, which member shall not be a director, officer, employee,

or stockholder of a System institution.

(2)(A) If approved by the stockholders through a bylaw amendment,

the nomination and election of one member from a bank for

cooperatives (other than the National Bank for Cooperatives) shall

be carried out with each voting stockholder of a bank for

cooperatives having one vote, plus a number of votes (or fractional

part thereof) equal to -

(i) the number of stockholders eligible to vote; multiplied by

(ii) the percentage (or fractional part thereof) of the total

equity interest (including allocated, but not unallocated,

surplus and reserves) in the bank of all stockholders held by the

individual voting stockholder at the close of the immediately

preceding fiscal year of the bank.

(B) The total number of votes under this paragraph shall be the

number of voting stockholders of a bank for cooperatives multiplied

by two.

(b) The board of directors of the Central Bank for Cooperatives

shall consist of one member elected by the board of each bank for

cooperatives, including the United Bank for Cooperatives if the

Central Bank for Cooperatives is not merged into such bank, and one

member appointed by the Farm Credit Administration.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.2, Dec. 10, 1971, 85 Stat. 603;

Pub. L. 99-205, title II, Sec. 205(e)(2), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-399, title IX, Sec. 901(d), Aug. 17, 1988, 102

Stat. 1007; Pub. L. 102-552, title V, Sec. 503, Oct. 28, 1992, 106

Stat. 4130.)

-MISC1-

AMENDMENTS

1992 - Subsec. (a). Pub. L. 102-552 designated existing

provisions as par. (1) and added par. (2).

1988 - Subsec. (a). Pub. L. 100-399 amended subsec. (a)

generally. Prior to amendment, subsec. (a) read as follows: ''In

the case of a district bank for cooperatives, the board of

directors shall be the farm credit district board and in the case

of the Central Bank for Cooperatives shall be a separate board of

not more than thirteen members, one from each farm credit district

and one at large. One district director of the Central Bank Board

shall be elected by each district farm credit board and the member

at large shall be appointed by the Farm Credit Administration.''

Subsec. (b). Pub. L. 100-399 amended subsec. (b) generally.

Prior to amendment, subsec. (b) read as follows: ''For the purposes

of this section the provisions of sections 2222(b) and (c), 2225,

2226, and 2227 of this title shall apply to and shall be the

authority of the Central Bank for Cooperatives the same as though

it were a district bank.''

1985 - Subsec. (a). Pub. L. 99-205 substituted ''Farm Credit

Administration'' for ''Governor with the advice and consent of the

Federal Farm Credit Board''.

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.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-CITE-

12 USC Sec. 2124 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2124. Stock of banks for cooperatives

-STATUTE-

(a) Amount

The Capital stock of each bank for cooperatives shall be in such

amount as its board determines is required for the purpose of

providing adequate capital to permit the bank to meet the credit

needs of borrowers from the bank and such amounts may be increased

or decreased from time to time in accordance with such needs.

(b) Value

The capital stock of each bank shall be divided into shares of

par value of $100 each and may be of such classes as the board may

determine. Such stock may be issued in fractional shares.

Voting stock may be issued or transferred to and held only by (i)

cooperative associations eligible to borrow from the banks and (ii)

other banks for cooperatives, and shall not be otherwise

transferred, pledged, or hypothecated except as consented to by the

issuing bank under regulations of the Farm Credit Administration.

(d) Entitlement to vote

Each holder of one or more shares of voting stock which is

eligible to borrow from a bank for cooperatives shall be entitled

only to one vote and only in the affairs of the bank in the

district in which its principal office is located unless otherwise

authorized under regulations issued by the Farm Credit

Administration, except that if such holder has not been a borrower

from the bank in which it holds such stock within a period of two

years next preceding the date fixed by the Farm Credit

Administration prior to the commencement of voting, it shall not be

entitled to vote.

(e) Nonvoting investment stock

Nonvoting investment stock may be issued in such series and in

such amounts as may be determined by the board and may be exchanged

for voting stock or sold or transferred to any person subject to

the approval of the issuing bank.

(f) Participation certificates

Participation certificates may be issued to parties to whom

voting stock may not be issued.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.3, Dec. 10, 1971, 85 Stat. 603;

Pub. L. 96-592, title III, Sec. 302, Dec. 24, 1980, 94 Stat. 3443;

Pub. L. 99-205, title II, Sec. 205(e)(3), (4), Dec. 23, 1985, 99

Stat. 1705; Pub. L. 100-233, title VIII, Sec. 802(o), 805(k), Jan.

6, 1988, 101 Stat. 1712, 1715.)

-MISC1-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-233, Sec. 802(o)(1), struck out

'', with the approval of Farm Credit Administration,'' after

''board determines''.

Subsec. (b). Pub. L. 100-233, Sec. 802(o)(2), struck out ''with

the approval of the Farm Credit Administration'' after ''board may

determine''.

Subsec. (d). Pub. L. 100-233, Sec. 805(k), substituted ''by'' for

''by by'' after ''regulations issued''.

Subsec. (e). Pub. L. 100-233, Sec. 802(o)(3), struck out ''and

approved by the Farm Credit Administration'' after ''Board''.

1985 - Subsec. (d). Pub. L. 99-205, Sec. 205(e)(3), inserted

''under regulations issued by'' after ''authorized''.

Subsec. (e). Pub. L. 99-205, Sec. 205(e)(4), struck out '',

except for stock held by the Governor,'' before ''may be

exchanged''.

1980 - Subsec. (f). Pub. L. 96-592 added subsec. (f).

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2142 of this title.

-CITE-

12 USC Sec. 2125 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2125. Dividends

-STATUTE-

Dividends may be payable only on nonvoting investment stock, if

declared by the board of directors of the bank, subject to the

general direction of the Farm Credit Administration.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.4, Dec. 10, 1971, 85 Stat. 604;

Pub. L. 99-205, title II, Sec. 205(e)(5), title VI, Sec. 606, Dec.

23, 1985, 99 Stat. 1705, 1711; Pub. L. 100-233, title VIII, Sec.

805(l), Jan. 6, 1988, 101 Stat. 1715.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233 struck out ''other than stock held by the

Farm Credit Administration,'' after ''investment stock,''.

1985 - Pub. L. 99-205 struck out ''the Governor of'' before ''the

Farm Credit Administration'' and inserted '', subject to the

general direction of the Farm Credit Administration''.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-CITE-

12 USC Sec. 2126 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2126. Retirement of stock

-STATUTE-

Nonvoting investment stock and participation certificates may be

called for retirement at par. With the approval of the issuing

bank, the holder may elect not to have the called stock or

participation certificates retired in response to a call, reserving

the right to have such stock or participation certificates included

in the next call for retirement. Voting stock may also be retired

at par, on call or on such revolving basis as the board may

determine with due regard for its total capital needs: Provided,

however, That all equities in the district banks issued or

allocated with respect to 1971 and prior years shall be retired on

a revolving basis according to the year of issue with the oldest

outstanding equities being first retired. Equities issued for

subsequent years shall not be called or retired until equities

described in the preceding sentence of this proviso have been

retired.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.5, Dec. 10, 1971, 85 Stat. 604;

Pub. L. 96-592, title III, Sec. 303, Dec. 24, 1980, 94 Stat. 3444;

Pub. L. 99-205, title II, Sec. 205(e)(6), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-233, title VIII, Sec. 802(p), Jan. 6, 1988, 101

Stat. 1712.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233 struck out ''with approval of the Farm

Credit Administration'' after ''board may determine''.

1985 - Pub. L. 99-205 substituted ''Nonvoting investment stock''

for ''Any nonvoting stock held by the Governor of the Farm Credit

Administration shall be retired to the extent required by section

2151(b) of this title before any other outstanding voting or

nonvoting stock or participation certificates shall be retired

except as may be otherwise authorized by the Farm Credit

Administration. When those requirements have been satisfied,

nonvoting investment stock'', and substituted ''Voting'' for ''When

the requirements of section 2151(b) of this title have been met,

voting''.

1980 - Pub. L. 96-592 inserted provisions respecting

applicability to participation certificates and struck out

provisions relating to maximum amount of fair book value at

retirement.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2132 of this title.

-CITE-

12 USC Sec. 2127 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2127. Guaranty fund subscriptions in lieu of stock

-STATUTE-

If any cooperative association is not authorized under the laws

of the State in which it is organized to take and hold stock in a

bank for cooperatives, the bank shall, in lieu of any requirement

for stock purchase, require the association to pay into or have on

deposit in a guaranty fund, or the bank may retain out of the

amount of the loan and credit to the guaranty fund account of the

borrower, a sum equal to the amount of stock which the association

would otherwise be required to own. Each reference to stock of the

banks for cooperatives in this chapter shall include such guaranty

fund equivalents. The holder of the guaranty fund equivalent and

the bank shall each be entitled to the same rights and obligations

with respect thereto as the rights and obligations associated with

the class or classes of stock involved.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.6, Dec. 10, 1971, 85 Stat. 604.)

-CITE-

12 USC Sec. 2128 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2128. Loans, commitments, and technical and financial

assistance

-STATUTE-

(a) Authorities

The banks for cooperatives are authorized to make loans and

commitments to eligible cooperative associations and to extend to

them other technical and financial assistance at any time (whether

or not they have a loan from the bank outstanding), including but

not limited to discounting notes and other obligations, guarantees,

currency exchange necessary to service individual transactions that

may be financed under subsection (b) of this section, collateral

custody, or participation with other banks for cooperatives and

commercial banks or other financial institutions in loans to

eligible cooperatives, under such terms and conditions as may be

determined to be feasible by the board of directors of each bank

for cooperatives under regulations of the Farm Credit

Administration. Such regulations may include provisions for

avoiding duplication between the Central Bank and district banks

for cooperatives. Each bank may own and lease, or lease with

option to purchase, to stockholders eligible to borrow from the

bank equipment needed in the operations of the stockholder and may

make or participate in loans or commitments and extend other

technical and financial assistance to other domestic parties for

the acquisition of equipment and facilities to be leased to such

stockholders for use in their operations in the United States.

(b) Additional authorities

(1) A bank for cooperatives is authorized to make or participate

in loans and commitments to, and to extend other technical and

financial assistance to a domestic or foreign party with respect to

its transactions with an association that is a voting stockholder

of the bank for the import of agricultural commodities or products

thereof, agricultural supplies, or aquatic products through

purchases, sales or exchanges, if the bank for cooperatives

determines, under regulations of the Farm Credit Administration,

that the voting stockholder will benefit substantially as a result

of such loan, commitment, or assistance.

(2)(A) A bank for cooperatives may make or participate in loans

and commitments to, and extend other technical and financial

assistance to -

(i) any domestic or foreign party for the export, including

(where applicable) the cost of freight, of agricultural

commodities or products thereof, agricultural supplies, or

aquatic products from the United States under policies and

procedures established by the bank to ensure that the

commodities, products, or supplies are originally sourced, where

reasonably available, from one or more eligible cooperative

associations described in section 2129(a) of this title on a

priority basis, except that if the total amount of the balances

outstanding on loans made by a bank under this clause that -

(I) are made to finance the export of commodities, products,

or supplies that are not originally sourced from a cooperative,

and

(II) are not guaranteed or insured, in an amount equal to at

least 95 percent of the amount loaned, by a department, agency,

bureau, board, commission, or establishment of the United

States or a corporation wholly-owned directly or indirectly by

the United States,

exceeds an amount that is equal to 50 percent of the bank's

capital, then a sufficient interest in the loans shall be sold by

the bank for cooperatives to commercial banks and other

non-System lenders to reduce the total amount of such outstanding

balances to an amount not greater than an amount equal to 50

percent of the bank's capital; and

(ii) except as provided in subparagraph (B), any domestic or

foreign party in which an eligible cooperative association

described in section 2129(a) of this title (including, for the

purpose of facilitating its domestic business operations only, a

cooperative or other entity described in section 2129(b)(1)(A) of

this title) has an ownership interest, for the purpose of

facilitating the domestic or foreign business operations of the

association, except that if the ownership interest by an eligible

cooperative association, or associations, is less than 50

percent, the financing shall be limited to the percentage held in

the party by the association or associations.

(B) A bank for cooperatives shall not use the authority provided

in subparagraph (A)(ii) to provide financial assistance to a party

for the purpose of financing the relocation of a plant or facility

from the United States to another country.

(3) A bank for cooperatives is authorized to provide such

services as may be customary and normal in maintaining

relationships with domestic or foreign entities to facilitate the

activities specified in paragraphs (1) and (2), consistent with

this chapter.

(4) Definition of agricultural supply. - In this subsection, the

term ''agricultural supply'' includes -

(A) a farm supply; and

(B)(i) agriculture-related processing equipment;

(ii) agriculture-related machinery; and

(iii) other capital goods related to the storage or handling of

agricultural commodities or products.

Loans, commitments, and assistance authorized by subsection (b)

of this section shall be extended in accordance with policies

adopted by the board of directors of the bank under regulations of

the Farm Credit Administration.

(d) Regulatory limitations

The regulations of the Farm Credit Administration implementing

subsection (b) of this section and other provisions of this

subchapter relating to the authority under subsection (b) of this

section may not confer upon the banks for cooperatives powers and

authorities greater than those specified in this subchapter. The

Farm Credit Administration shall, during the formulation of such

regulations, closely consult on a continuing basis with the Board

of Governors of the Federal Reserve System to insure that such

regulations conform to national banking policies, objectives, and

limitations.

(e) Speculative futures transactions

Notwithstanding any other provision of this subchapter, the banks

for cooperatives shall not make or participate in loans or

commitments for the purpose of financing speculative futures

transactions by eligible borrowers in foreign currencies.

(f) Installation, expansion, or improvement of water and waste

disposal facilities

The banks for cooperatives may, for the purpose of installing,

maintaining, expanding, improving, or operating water and waste

disposal facilities in rural areas, make and participate in loans

and commitments and extending other technical and financial

assistance to -

(1) cooperatives formed specifically for the purpose of

establishing or operating such facilities; and

(2) public and quasi-public agencies and bodies, and other

public and private entities that, under authority of State or

local law, establish or operate such facilities.

For purposes of this subsection, the term ''rural area'' means all

territory of a State that is not within the outer boundary of any

city or town having a population of more than 20,000 based on the

latest decennial census of the United States.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.7, Dec. 10, 1971, 85 Stat. 605;

Pub. L. 96-592, title III, Sec. 304, Dec. 24, 1980, 94 Stat. 3444;

Pub. L. 101-624, title XXIII, Sec. 2323(a), Nov. 28, 1990, 104

Stat. 4013; Pub. L. 102-237, title V, Sec. 502(e)(1), Dec. 13,

1991, 105 Stat. 1868; Pub. L. 102-552, title V, Sec. 504, 505, Oct.

28, 1992, 106 Stat. 4131; Pub. L. 103-376, Sec. 3, Oct. 19, 1994,

108 Stat. 3497; Pub. L. 107-171, title V, Sec. 5402, May 13, 2002,

116 Stat. 350.)

-MISC1-

AMENDMENTS

2002 - Subsec. (b)(1), (2)(A)(i). Pub. L. 107-171, Sec. 5402(1),

substituted ''agricultural supplies'' for ''farm supplies''.

Subsec. (b)(4). Pub. L. 107-171, Sec. 5402(2), added par. (4).

1994 - Subsec. (b)(1). Pub. L. 103-376, Sec. 3(A), substituted

''assistance to'' for ''assistance to (A)'', ''bank for the

import'' for ''bank for the export or import'', and ''if the bank

for cooperatives'' for ''and (B) a domestic or foreign party in

which such an association has at least the minimum ownership

interest approved under regulations of the Farm Credit

Administration for the purpose of facilitating the association's

export or import operations of the type described in subparagraph

(A): Provided, That a'' bank for cooperatives''.

Subsec. (b)(2). Pub. L. 103-376, Sec. 3(B), added par. (2) and

struck out former par. (2) which read as follows: ''A bank for

cooperatives is authorized to make or participate in loans and

commitments, and to extend other technical and financial

assistance, to any domestic or foreign entity that is eligible for

a guarantee or insurance as described in subparagraphs (A) and (B)

with respect to transactions involving the Soviet Union (its

successor entities or any of the individual republics of the Soviet

Union) or an emerging democracy (as defined in section 1542(f) of

the Food, Agriculture, Conservation, and Trade Act of 1990 (7

U.S.C. 5622 note)) for the export of agricultural commodities and

products thereof from the United States, including (where

applicable) the cost of freight, if in each case -

''(A) the loan involved is unconditionally guaranteed or

insured by a department, agency, bureau, board, commission, or

establishment of the United States or any corporation wholly

owned directly or indirectly by the United States; and

''(B) the guarantee or insurance -

''(i) covers at least 95 percent of the amount loaned for the

purchase of the commodities or products; and

''(ii) is issued on or before September 30, 1995.''

1992 - Subsec. (a). Pub. L. 102-552, Sec. 504, inserted ''at any

time (whether or not they have a loan from the bank outstanding)''

after ''assistance'' in first sentence.

Subsec. (f). Pub. L. 102-552, Sec. 505, in introductory

provisions, substituted ''installing, maintaining, expanding,

improving, or operating'' for ''the installation, expansion, or

improvement of'' and ''extending'' for ''to extend''.

1991 - Subsec. (b). Pub. L. 102-237 designated existing

provisions as par. (1), redesignated cl. (1) as (A) and inserted

''or products thereof'' after ''commodities'', redesignated cl. (2)

as (B) and substituted ''subparagraph (A)'' for ''clause (1) of

this subsection'', and added pars. (2) and (3).

1990 - Subsec. (f). Pub. L. 101-624 added subsec. (f).

1980 - Pub. L. 96-592 designated existing provisions as subsec.

(a), inserted provisions relating to currency exchanges and

provisions relating to loans, etc., to domestic parties, and added

subsecs. (b) to (e).

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2122, 2129, 2252 of this

title.

-CITE-

12 USC Sec. 2129 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2129. Eligibility

-STATUTE-

(a) Any association of farmers, producers or harvesters of

aquatic products, or any federation of such associations, which is

operated on a cooperative basis, and has the powers for processing,

preparing for market, handling, or marketing farm or aquatic

products; or for purchasing, testing, grading, processing,

distributing, or furnishing farm or aquatic supplies or furnishing

farm or aquatic business services or services to eligible

cooperatives and conforms to either of the two following

requirements:

(1) no member of the association is allowed more than one vote

because of the amount of stock or membership capital he may own

therein; or

(2) does not pay dividends on stock or membership capital in

excess of such per centum per annum as may be approved under

regulations of the Farm Credit Administration; and in any case

(3) does not deal in farm products or aquatic products, or

products processed therefrom, farm or aquatic supplies, farm or

aquatic business services, or services to eligible cooperatives

with or for nonmembers in an amount greater in value than the

total amount of such business transacted by it with or for

members, excluding from the total of member and nonmember

business transactions with the United States or any agency or

instrumentality thereof or services or supplies furnished as a

public utility; and

(4) a percentage of the voting control of the association not

less than 80 per centum (60 per centum (A) in the case of rural

electric, telephone, public utility, and service cooperatives;

(B) in the case of local farm supply cooperatives that have

historically served needs of the community that would not

adequately be served by other suppliers and have experienced a

reduction in the percentage of farmer membership due to changed

circumstances beyond their control such as, but not limited to,

urbanization of the community; and (C) in the case of local farm

supply cooperatives that provide or will provide needed services

to a community and that are or will be in competition with a

cooperative specified in paragraph (B)) or, with respect to any

type of association or cooperative, such higher percentage as

established by the bank board, is held by farmers, producers or

harvesters of aquatic products, or eligible cooperative

associations as defined herein;

shall be eligible to borrow from a bank for cooperatives. Any such

association that has received a loan from a bank for cooperatives

shall, without regard to the requirements of paragraphs (1) through

(4), continue to be eligible for so long as more than 50 percent

(or such higher percentage as is established by the bank board) of

the voting control of the association is held by farmers, producers

or harvesters of aquatic products, or eligible cooperative

associations.

(b) Notwithstanding any other provision of this section:

(1) The following entities shall also be eligible to borrow

from a bank for cooperatives:

(A) Cooperatives and other entities that have received a

loan, loan commitment, or loan guarantee from the Rural

Electrification Administration, or a loan or loan commitment

from the Rural Telephone Bank, or that are eligible under the

Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) for a

loan, loan commitment, or loan guarantee from the

Administration or the Bank (or a successor of the

Administration or the Bank), and subsidiaries of such

cooperatives or other entities.

(B) Any legal entity that (i) holds more than 50 percent of

the voting control of an association or other entity that is

eligible to borrow from a bank for cooperatives under

subsection (a) of this section or subparagraph (A) of this

paragraph, and (ii) borrows for the purpose of making funds

available to that association or entity, and makes funds

available to that association or entity under the same terms

and conditions that the funds are borrowed from a bank for

cooperatives.

(b) or (f) of section 2128 of this title.

(D) Any creditworthy private entity that satisfies the

requirements for a service cooperative under paragraphs (1),

(2), and (4), or under the last sentence, of subsection (a) of

this section and subsidiaries of the entity, if the entity is

organized to benefit agriculture in furtherance of the welfare

of its farmer-members and is operated on a not-for-profit

basis.

(2) Notwithstanding the provisions of section 2130 of this

title, the board of directors of a bank for cooperatives may

determine that, with respect to a loan to any borrower eligible

to borrow from a bank under paragraph (1)(A) that is fully

guaranteed by the United States, no stock purchase requirement

shall apply, other than the requirement that a borrower eligible

to own voting stock shall purchase one share of such stock.

(3) Each association and other entity eligible to borrow from a

bank for cooperatives under this subsection, for purposes of

section 2128(a) of this title, shall be treated as an eligible

cooperative association and a stockholder eligible to borrow from

the bank.

(4) Nothing in this subsection shall be construed to adversely

affect the eligibility, as it existed on January 6, 1988, of

cooperatives and other entities for any other credit assistance

under Federal law.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.8, Dec. 10, 1971, 85 Stat. 605;

Pub. L. 94-184, Sec. 1(a), Dec. 31, 1975, 89 Stat. 1060; Pub. L.

96-592, title III, Sec. 305, Dec. 24, 1980, 94 Stat. 3445; Pub. L.

99-198, title XIII, Sec. 1322, Dec. 23, 1985, 99 Stat. 1534; Pub.

L. 100-233, title IV, Sec. 421, title VIII, Sec. 805(m), Jan. 6,

1988, 101 Stat. 1654, 1715; Pub. L. 100-399, title IV, Sec. 410,

title IX, Sec. 901(e), Aug. 17, 1988, 102 Stat. 1003, 1007; Pub. L.

101-624, title XXIII, Sec. 2323(b), Nov. 28, 1990, 104 Stat. 4013;

Pub. L. 102-237, title V, Sec. 502(e)(2), (f), Dec. 13, 1991, 105

Stat. 1869; Pub. L. 102-552, title V, Sec. 506, Oct. 28, 1992, 106

Stat. 4131; Pub. L. 103-376, Sec. 4, Oct. 19, 1994, 108 Stat. 3498;

Pub. L. 104-105, title II, Sec. 204, 205, Feb. 10, 1996, 110 Stat.

172.)

-REFTEXT-

REFERENCES IN TEXT

The Rural Electrification Act of 1936, referred to in subsec.

(b)(1)(A), is act May 20, 1936, ch. 432, 49 Stat. 1363, as amended,

which is classified generally to chapter 31 (Sec. 901 et seq.) of

Title 7, Agriculture. For complete classification of this Act to

the Code, see section 901 of Title 7 and Tables.

-MISC2-

AMENDMENTS

1996 - Subsec. (a). Pub. L. 104-105, Sec. 204(a), inserted at end

''Any such association that has received a loan from a bank for

cooperatives shall, without regard to the requirements of

paragraphs (1) through (4), continue to be eligible for so long as

more than 50 percent (or such higher percentage as is established

by the bank board) of the voting control of the association is held

by farmers, producers or harvesters of aquatic products, or

eligible cooperative associations.''

Subsec. (b)(1)(A). Pub. L. 104-105, Sec. 205, substituted ''are

eligible under the Rural Electrification Act of 1936 (7 U.S.C. 901

et seq.) for'' for ''have been certified by the Administrator of

the Rural Electrification Administration to be eligible for such''

and ''loan guarantee from the Administration or the Bank (or a

successor of the Administration or the Bank), and'' for ''loan

guarantee, and''.

Subsec. (b)(1)(D). Pub. L. 104-105, Sec. 204(b), substituted

''and (4), or under the last sentence, of subsection (a) of this

section'' for ''and (4) of subsection (a) of this section''.

1994 - Subsec. (b)(1)(B) to (E). Pub. L. 103-376 redesignated

subpars. (C) to (E) as (B) to (D), respectively, realigned margin

of subpar. (D), and struck out former subpar. (B) which read as

follows: ''Any legal entity more than 50 percent of the voting

control of which is held by one or more associations or other

entities that are eligible to borrow from a bank for cooperatives

under subsection (a) of this section or subparagraph (A) of this

paragraph, except that any such legal entity, when considered

together with one or more such associations or other entities that

hold such control, meet the requirement of subsection (a)(3) of

this section.''

1992 - Subsec. (b)(1)(E). Pub. L. 102-552 added subpar. (E).

1991 - Subsec. (a)(4). Pub. L. 102-237, Sec. 502(f)(1),

substituted ''a percentage'' for ''A percentage''.

Subsec. (b)(1)(D). Pub. L. 102-237, Sec. 502(e)(2), (f)(2),

substituted ''subsection (b) or (f) of section 2128 of this title''

for ''section 2128(f) of this title'' and realigned margin of

subpar. (D).

1990 - Subsec. (b)(1)(D). Pub. L. 101-624 added subpar. (D).

1988 - Pub. L. 100-399, Sec. 901(e), substituted ''bank board''

for ''district board'' in subsec. (a)(4).

Pub. L. 100-399, Sec. 410, substituted ''makes'' for ''make'' in

subsec. (b)(1)(C).

Pub. L. 100-233, Sec. 805(m), redesignated subsec. (1) as subsec.

(a) and pars. (a) to (d) as pars. (1) to (4), respectively, in par.

(4) redesignated cls. (1) to (3) as (A) to (C), respectively, and

in cl. (C) substituted ''paragraph (B)'' for ''paragraph (2)''.

Pub. L. 100-233, Sec. 421, added subsec. (b) and struck out

former subsec. (2) which read as follows: ''Notwithstanding any

other provision of this subchapter, cooperatives and other entities

that have received a loan, loan commitment, or loan guarantee from

the Rural Electrification Administration, or a loan or loan

commitment from the Rural Telephone Bank, or that have been

certified by the Administrator of the Rural Electrification

Administration to be eligible for such a loan, loan commitment, or

loan guarantee, and subsidiaries of such cooperatives or other

entities, shall also be eligible to borrow from a bank for

cooperatives.''

1985 - Pub. L. 99-198, Sec. 1322(1), designated existing

provisions as subsec. (1) and added subsec. (2).

1980 - Pub. L. 96-592, Sec. 305(1), inserted reference to aquatic

business in introductory text.

Subsec. (c). Pub. L. 96-592, Sec. 305(2), inserted reference to

aquatic business services or services to eligible cooperatives.

Subsec. (d). Pub. L. 96-592, Sec. 305(3), substituted ''60'' for

''70'', and designated former parenthetical material as item (1),

and added items (2) and (3) and limitation with respect to any type

of association or cooperative.

1975 - Subsec. (d). Pub. L. 94-184 inserted provision relating to

70 per centum of voting control in the case of rural electric,

telephone, and public utility cooperatives.

EFFECTIVE DATE OF 1991 AMENDMENT

Amendment by section 502(f) of Pub. L. 102-237 effective as if

included in the provision of the Food, Agriculture, Conservation,

and Trade Act of 1990, Pub. L. 101-624, to which the amendment

relates, see section 1101(b)(4) of Pub. L. 102-237, set out as a

note under section 1421 of Title 7, Agriculture.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2122, 2128 of this title.

-CITE-

12 USC Sec. 2130 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2130. Ownership of stock by borrowers

-STATUTE-

(a) Each borrower entitled to hold voting stock shall, at the

time a loan is made by a bank for cooperatives, own at least one

share of voting stock and shall be required by the bank to invest

in additional voting stock or nonvoting investment stock at that

time, or from time to time, as the lending bank may determine, but

the requirement for investment in stock at the time the loan is

closed shall not exceed an amount equal to 10 per centum of the

face amount of the loan. Such additional ownership requirements

may be based on the face amount of the loan, the outstanding loan

balance or on a percentage of the interest payable by the borrower

during any year or during any quarter thereof, or upon such other

basis as the bank determines will provide adequate capital for the

operation of the bank and equitable ownership thereof among

borrowers. In the case of a direct loan by the Central Bank, the

borrower shall be required to own or invest in the necessary stock

in a district bank or banks and such district bank shall be

required to own a corresponding amount of stock in the Central

Bank, but voting stock shall be in the one district bank,

designated by the Farm Credit Administration.

(b) Notwithstanding the provisions of subsection (a) of this

section, the purchase of stock need not be required with respect to

that part of any loan made by a bank for cooperatives which it

sells to or makes in participation with financial institutions

other than any of the banks for cooperatives. In such cases the

distribution of earnings of the bank for cooperatives shall be on

the basis of the interest in the loan retained by such bank.

-SOURCE-

(Pub. L. 92-181 title III, Sec. 3.9, Dec. 10, 1971, 85 Stat. 605;

Pub. L. 96-592, title III, Sec. 306, Dec. 24, 1980, 94 Stat. 3445;

Pub. L. 100-233, title VIII, Sec. 802(q), Jan. 6, 1988, 101 Stat.

1712.)

-MISC1-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-233 substituted ''by the bank to

invest'' for ''by the bank with the approval of the Farm Credit

Administration to invest'', ''or upon such other basis as the bank

determines'' for ''or upon such other basis as the bank, with the

approval of the Farm Credit Administration, determines'', and ''in

a district bank or banks and such district bank shall be required''

for ''in a district bank or banks as may be approved by the Farm

Credit Administration and such district bank shall be required''.

1980 - Subsec. (a). Pub. L. 96-592 inserted provisions respecting

entitlement to hold voting stock.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2129 of this title.

-CITE-

12 USC Sec. 2131 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2131. Loans

-STATUTE-

(a) Interest rates and charges

Loans made by a bank for cooperatives shall bear interest at a

rate or rates determined by the board of directors of the bank from

time to time. In setting rates and charges, it shall be the

objective to provide the types of credit needed by eligible

borrowers at the lowest reasonable cost on a sound business basis,

taking into account the net cost of money to the bank, necessary

reserves and expenses of the bank, and services provided. The loan

documents may provide for the interest rate or rates to vary from

time to time during the repayment period of the loan, in accordance

with the rate or rates currently being charged by the bank.

(b) Security

Loans shall be made upon such terms, conditions, and security, if

any, as may be determined by the bank in accordance with

regulations of the Farm Credit Administration.

Each bank for cooperatives shall have a first lien on all stock

or other equities in the bank as collateral for the payment of any

indebtedness of the owner thereof to the bank. In the case of a

direct loan to an eligible cooperative by the Central Bank, the

Central Bank shall have a first lien on the stock and equities of

the borrower in the district bank and the district bank shall have

a lien thereon junior only to the lien of the Central Bank.

(d) Cancellation; application on indebtedness

In any case where the debt of a borrower is in default, or in any

case of liquidation or dissolution of a present or former borrower

from a bank for cooperatives, the bank may, but shall not be

required to, retire and cancel all or a part of the stock,

allocated surplus or contingency reserves, or any other equity in

the bank owned by or allocated to such borrower, at the fair market

value thereof not exceeding par, and, to the extent required in

such cases, corresponding shares and allocations and other equity

interests held by a district bank in another district bank on

account of such indebtedness, shall be retired or equitably

adjusted. In no event shall the bank's equities be retired or

canceled if the retirement or cancellation would adversely affect

the bank's capital structure, as determined by the Farm Credit

Administration.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.10, Dec. 10, 1971, 85 Stat. 606;

Pub. L. 96-592, title III, Sec. 307, Dec. 24, 1980, 94 Stat. 3445;

Pub. L. 99-509, title I, Sec. 1033(c), Oct. 21, 1986, 100 Stat.

1877.)

-MISC1-

AMENDMENTS

1986 - Subsec. (a). Pub. L. 99-509 struck out '', with the

approval of the Farm Credit Administration as provided in section

2205 of this title'' after ''from time to time''.

1980 - Subsec. (a). Pub. L. 96-592, Sec. 307(1), inserted

reference to section 2205 of this title.

Subsec. (d). Pub. L. 96-592, Sec. 307(2), substituted ''market''

for ''book'' and inserted provisions respecting retirement or

cancellation of equities as affected by the capital structure.

-CITE-

12 USC Sec. 2132 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2132. Earnings and reserves; application of savings

-STATUTE-

(a) Application of savings

At the end of each fiscal year, the net savings shall, under

regulations prescribed by the Farm Credit Administration, continue

to be applied on a cooperative basis with provision for sound,

adequate capitalization to meet the changing financing needs of

eligible cooperative borrowers and prudent corporate fiscal

management, to the end that current year's patrons carry their fair

share of the capitalization, ultimate expenses, and reserves

related to the year's operations and the remaining net savings

shall be distributed as patronage refunds as provided in

subsections (b) and (c) of this section. Such regulations may

provide for application of net savings to the restoration or

maintenance of an allocated surplus account, reasonable additions

to unallocated surplus, or to unallocated reserves after payment of

operating expenses, and provide for allocations to patrons not

qualified under title 26, or payment of such per centum of

patronage refunds in cash, as the board may determine.

(b) Patronage refunds

The net savings of each district bank for cooperatives, after the

earnings for the fiscal year have been applied in accordance with

subsection (a) of this section shall be paid in stock,

participation certificates, or cash, or in any of them, as

determined by its board, as patronage refunds to borrowers to whom

such refunds are payable who are borrowers of the fiscal year for

which such patronage refunds are distributed. Except as provided

in subsection (c) below, all patronage refunds shall be paid in

proportion that the amount of interest and service fees on the

loans to each borrower during the year bears to the interest and

service fees on the loans of all borrowers during the year or on

such other proportionate patronage basis as may be approved by the

board of directors.

The net savings of the Central Bank for Cooperatives after the

earnings for the fiscal year have been applied in accordance with

subsection (a) of this section shall be paid in stock or cash, or

both, as determined by the board, as patronage refunds to the

district banks on the basis of interests held by the Central Bank

in loans made by the district banks and upon any direct loans made

by the Central Bank to cooperative associations, or on such other

proportionate patronage basis as may be approved by the board of

directors. In cases of direct loans, such refund shall be paid to

the district bank or banks which issued their stock to the borrower

incident to such loans, and the district bank or banks shall issue

a like amount of patronage refunds to the borrower.

(d) Loss carryover

In the event of a net loss in any fiscal year after providing for

all operating expenses (including reasonable valuation reserves and

losses in excess of any applicable reserves), such loss may be

carried forward or carried back, if appropriate, or otherwise shall

be absorbed by charges to unallocated reserve or surplus accounts

established after December 10, 1971; charges to allocated

contingency reserve account; charges to allocated surplus accounts;

charges to other contingency reserve and surplus accounts; the

impairment of voting stock; or the impairment of all other stock.

(e) Charge of unrecognized costs or expenses to reserve, surplus,

or patronage allocations

Notwithstanding any other provisions of this section any costs or

expenses attributable to a prior year or years but not recognized

in determining the net savings for such year or years may be

charged to reserves or surplus of the bank or to patronage

allocations for such years, as may be determined by the board of

directors.

(f) Payment of patronage refunds in cash

A bank for cooperatives may pay in cash such portion of its

patronage refunds as will permit its taxable income to be

determined without taking into account savings applied as allocated

surplus, allocated contingency reserves, and patronage refunds

under subsection (a) of this section.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.11, Dec. 10, 1971, 85 Stat. 606;

Pub. L. 96-592, title III, Sec. 308, Dec. 24, 1980, 94 Stat. 3445;

Pub. L. 99-205, title II, Sec. 205(e)(7), (8), Dec. 23, 1985, 99

Stat. 1705; Pub. L. 100-233, title VIII, Sec. 802(r), 805(n), Jan.

6, 1988, 101 Stat. 1712, 1716.)

-MISC1-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-233, Sec. 802(r)(1), 805(n)(1),

(5), redesignated subsec. (b) as (a), substituted ''(b) and (c)''

for ''(c) and (d)'', struck out ''as may be approved by the Farm

Credit Administration'' after ''payment of operating expenses'',

and struck out at end ''If during the fiscal year but not at the

end thereof a bank shall have had outstanding capital stock held by

the United States, provision will be made for payment of franchise

taxes required in section 2151 of this title.''

Subsec. (b). Pub. L. 100-233, Sec. 802(r)(2), 805(n)(2), (5),

redesignated subsec. (c) as (b) and substituted ''(a) of this

section'' for ''(b) of this section, whichever is applicable,'',

''(c) below'' for ''(d) below'', and ''may be approved by the board

of directors'' for ''the Farm Credit Administration may approve''.

Former subsec. (b) redesignated (a).

Subsec. (c). Pub. L. 100-233, Sec. 802(r)(3), 805(n)(3), (5),

redesignated subsec. (d) as (c) and substituted ''(a) of this

section'' for ''(b) of this section whichever is applicable,'' and

''may be approved by the board of directors'' for ''the Farm Credit

Administration may approve''. Former subsec. (c) redesignated (b).

Subsecs. (d), (e). Pub. L. 100-233, Sec. 805(n)(5), redesignated

subsecs. (e) and (f) as (d) and (e), respectively. Former subsec.

(d) redesignated (c).

Subsecs. (f), (g). Pub. L. 100-233, Sec. 805(n)(4), (5),

redesignated subsec. (g) as (f), substituted ''A bank for

cooperatives'' for ''For any year that a bank for cooperatives is

subject to Federal income tax, it'', and struck out ''or (b)''

after ''subsection (a)''. Former subsec. (f) redesignated (e).

1985 - Subsec. (a). Pub. L. 99-205, Sec. 205(e)(7), struck out

subsec. (a) which provided for application of savings when bank for

cooperatives has outstanding stock held by the Governor.

Subsec. (b). Pub. L. 99-205, Sec. 205(e)(8)(A), substituted ''At

the end of each fiscal year, the net'' for ''Whenever at the end of

any fiscal year a bank for cooperatives shall have no outstanding

capital stock held by the Governor of the Farm Credit

Administration, the net''.

Subsecs. (c), (d). Pub. L. 99-205, Sec. 205(e)(8)(B), substituted

''subsection (b) of this section'' for ''subsection (a) or (b) of

this section''.

1980 - Subsec. (b). Pub. L. 96-592, Sec. 308(1), struck out

provisions relating to 25 per centum requirement for net savings.

Subsec. (c). Pub. L. 96-592, Sec. 308(2), inserted applicability

to participation certificates and to borrowers to whom refunds are

payable.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-CITE-

12 USC Sec. 2133 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2133. Distribution of assets on liquidation or dissolution

-STATUTE-

In the case of liquidation or dissolution of any bank for

cooperatives, after payment or retirement, first, of all

liabilities; second, of all capital stock issued before January 1,

1956, at par, and all nonvoting stock at par; and third, all voting

stock at par; any surplus and reserves existing on January 1, 1956,

shall be paid to the holders of stock issued before that date, and

voting stock pro rata; and any remaining allocated surplus and

reserves shall be distributed to those entities to which they are

allocated on the books of the bank, and any other remaining surplus

shall be paid to the holders of outstanding voting stock. If it

should become necessary to use any surplus or reserves to pay any

liabilities or to retire any capital stock, unallocated reserves or

surplus, allocated reserves and surplus shall be exhausted in

accordance with rules prescribed by the Farm Credit Administration.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.12, Dec. 10, 1971, 85 Stat. 608;

Pub. L. 99-205, title II, Sec. 205(e)(9), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-233, title VIII, Sec. 805(o), Jan. 6, 1988, 101

Stat. 1716.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233 inserted ''the'' before ''Farm Credit

Administration''.

1985 - Pub. L. 99-205 struck out '', any stock held by the

Governor of the Farm Credit Administration at par'' before '', and

all nonvoting stock at par'', and struck out ''stock held by the

Governor of the Farm Credit Administration,'' before ''and voting

stock pro rata'' in first sentence.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-CITE-

12 USC Sec. 2134 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part A - Banks for Cooperatives

-HEAD-

Sec. 2134. Taxation

-STATUTE-

Each bank for cooperatives and its obligations are

instrumentalities of the United States and as such any and all

notes, debentures, and other obligations issued by such bank shall

be exempt, both as to principal and interest from all taxation

(except surtaxes, estate, inheritance, and gift taxes) now or

hereafter imposed by the United States or any State, territorial,

or local taxing authority, except that interest on such obligations

shall be subject to Federal income taxation in the hands of the

holder.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.13, Dec. 10, 1971, 85 Stat. 608;

Pub. L. 99-205, title II, Sec. 205(e)(10), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-233, title VIII, Sec. 805(p), Jan. 6, 1988, 101

Stat. 1716.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-233 inserted before period at end '', except

that interest on such obligations shall be subject to Federal

income taxation in the hands of the holder''.

1985 - Pub. L. 99-205 struck out last two sentences relating to

exemption of banks for cooperatives and their property, franchises,

capital, reserves, surplus, other funds, and income from Federal

and non-Federal taxation except for Federal income taxation of

interest on obligations of such banks and for Federal and

non-Federal taxation of real and tangible personal property of such

banks to same extent as similar property is taxed, and making such

exemption provisions applicable only for any year or part thereof

in which stock in such banks was held by the Governor of the Farm

Credit Administration.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2214 of this title.

-CITE-

12 USC Part B - United and National Banks for

Cooperatives 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Part B - United and National Banks for Cooperatives

-CITE-

12 USC Sec. 2141 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2141. Charter, powers, and operation

-STATUTE-

(a) Charter

The National Bank for Cooperatives or the United Bank for

Cooperatives, as the case may be (hereinafter in this part referred

to as the ''consolidated bank''), established under section 413 of

the Agricultural Credit Act of 1987, shall be a federally chartered

instrumentality of the United States and an institution of the Farm

Credit System.

(b) Powers

The consolidated bank and the board of directors of such bank

shall have all of the powers, rights, responsibilities, and

obligations of the district banks for cooperatives and the Central

Bank for Cooperatives and the boards of directors of such banks,

except as otherwise provided for in this chapter.

The consolidated bank shall be organized and operated on a

cooperative basis.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.20, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1642; amended Pub.

L. 100-399, title IV, Sec. 407(a), (b), Aug. 17, 1988, 102 Stat.

1000.)

-REFTEXT-

REFERENCES IN TEXT

Section 413 of the Agricultural Credit Act of 1987, referred to

in subsec. (a), is section 413 of Pub. L. 100-233, as amended,

which is set out as a note under section 2121 of this title.

-MISC2-

AMENDMENTS

1988 - Subsec. (a). Pub. L. 100-399, Sec. 407(a), struck out ''in

this section'' after ''referred to'' and inserted '', established

under section 413 of the Agricultural Credit Act of 1987,'' before

''shall''.

Subsec. (b). Pub. L. 100-399, Sec. 407(b), inserted ''except''

before ''as otherwise''.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-CITE-

12 USC Sec. 2142 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2142. Board of directors provisions

-STATUTE-

(a) Initial board of directors

The initial board of directors of a consolidated bank shall

include the members of the boards of directors of the farm credit

districts who were elected by voting stockholders of the

constituent district banks for cooperatives (as such banks existed

on January 6, 1988) and who shall serve out the terms for which

they were elected.

(b) Permanent board of directors

(1) Composition

The permanent board of directors of a consolidated bank shall

consist of -

(A) three members, elected by the voting stockholders of the

consolidated bank, from each of the farm credit districts that

had been served by constituent banks, as such districts existed

on January 6, 1988, at least one of whom, from each such

district, shall be a farmer;

(B) one member elected by the voting stockholders of each

district bank for cooperatives that is not a constituent of the

consolidated bank; and

subparagraphs (A) and (B) who shall not be a stockholder or

borrower of a System institution or an officer or director of

any such stockholder or borrower.

(2) Nomination and election

For purposes of nominating and electing members of the board of

directors under paragraph (1)(A):

(A) First member

The nomination and election of the first member from each

district shall be carried out on the basis provided for in

section 2124(d) of this title.

(B) Second member

(i) In general

The nomination and election of the second member from each

district shall be carried out with each voting stockholder of

the consolidated bank located in the district having one

vote, plus a number of votes (or fractional part thereof)

equal to the number of stockholders eligible to vote in that

district multiplied by the percentage (or fractional part

thereof) of the total equity interest (including allocated,

but not unallocated, surplus and reserves) in the

consolidated bank of all such stockholders located in that

district held by the individual voting stockholder -

(I) at the close of the immediately preceding fiscal year

of the consolidated bank; or

(II) with respect to the first election held under this

subsection, as of such date as the Farm Credit

Administration shall prescribe.

(ii) Total number of votes

The total number of votes for each district under this

subparagraph shall be the number of voting stockholders of

the consolidated bank located in the district multiplied by

two.

The nomination and election of the third member from each

district shall be carried out in accordance with procedures

prescribed in the bylaws of the consolidated bank.

(3) Terms

(A) In general

The members of the board of directors of the consolidated

bank shall serve for a term of 3 years.

(B) Timing of elections

Procedures for electing members of the board of directors of

the consolidated bank under this subsection shall ensure that

the beginning of the terms of such members coincide with the

expiration of the terms of members of the interim board of

directors of the bank under subsection (a) of this section.

(4) FCA regulations

The nomination and election of the members of the board of

directors of the consolidated bank under this subsection shall be

carried out in accordance with regulations issued by the Farm

Credit Administration.

The provisions of subsection (b) of this section relating to the

board of directors of the consolidated bank, other than the

provisions relating to the initial composition, nomination, and

election of the members of the board, may be modified on an

affirmative vote of at least two-thirds of the voting stockholders

of the bank, with each such stockholder to have, for such purposes,

only one vote. Any proposals for modifying such provisions shall

be submitted for a vote by such stockholders in accordance with

procedures prescribed by the Farm Credit Administration.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.21, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1642; amended Pub.

L. 100-399, title IV, Sec. 407(c), (d), Aug. 17, 1988, 102 Stat.

1000.)

-MISC1-

AMENDMENTS

1988 - Subsec. (b)(2)(B)(i)(I). Pub. L. 100-399, Sec. 407(d),

amended subcl. (I) generally. Prior to amendment, subcl. (I) read

as follows: ''as of the final date of the fiscal year of the

consolidated bank; or''.

Subsec. (b)(2)(C). Pub. L. 100-399, Sec. 407(c), added subpar.

(C).

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-CITE-

12 USC Sec. 2143 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2143. Credit delivery office

-STATUTE-

On a determination by the board of directors of the consolidated

bank that the bank's loan portfolio is concentrated in any one

district or districts (according to the district boundaries in

effect immediately prior to the effective date of the establishment

of the bank under section 413 of the Agricultural Credit Act of

1987), the bank may consider the creation of regional service

centers to accommodate such loan concentrations.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.22, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1643; amended Pub.

L. 100-399, title IV, Sec. 407(e), Aug. 17, 1988, 102 Stat. 1000.)

-REFTEXT-

REFERENCES IN TEXT

Section 413 of the Agricultural Credit Act of 1987, referred to

in text, is section 413 of Pub. L. 100-233, as amended, which is

set out as a note under section 2121 of this title.

-MISC2-

AMENDMENTS

1988 - Pub. L. 100-399 substituted ''consolidated bank'' for

''United Bank for Cooperatives or the National Bank for

Cooperatives'' and ''establishment of the bank under section 413 of

the Agricultural Credit Act of 1987'' for ''merger''.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 2144 of this title.

-CITE-

12 USC Sec. 2144 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2144. Consolidation of functions

-STATUTE-

Subject to section 2143 of this title, to the greatest extent

practicable, the functions of the consolidated bank shall be

consolidated in the central office of the bank.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.23, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644.)

-CITE-

12 USC Sec. 2145 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2145. Exchange of ownership interests

-STATUTE-

On the establishment of the consolidated bank, ownership

interests of the stockholders and subscribers to the guaranty funds

of the constituent district banks for cooperatives (including

stock, participation certificates, and allocated equities) shall be

exchanged for like ownership interests in the consolidated bank on

a book value basis.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.24, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644.)

-CITE-

12 USC Sec. 2146 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2146. Capitalization

-STATUTE-

In accordance with section 2154a of this title, each consolidated

bank shall provide, through bylaws and subject to Farm Credit

Administration regulations, for the capitalization of the bank and

the manner in which bank stock shall be issued, held, transferred,

and retired and bank earnings distributed.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.25, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644; amended Pub.

L. 100-399, title IV, Sec. 407(f), Aug. 17, 1988, 102 Stat. 1000.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-399 amended section generally. Prior to

amendment, section read as follows: ''The board of directors of the

consolidated bank shall provide for the capitalization of such bank

in accordance with the provisions of section 2154a of this title.''

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-CITE-

12 USC Sec. 2147 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2147. Patronage pools

-STATUTE-

Under such terms and conditions as may be determined by its board

of directors, the consolidated bank may -

(1) for a period of at least 3 years following January 6, 1988,

establish separate patronage pools consisting of loans to

eligible borrowers located in each constituent farm credit

district (as such district existed on January 6, 1988); and

(2) allocate revenues, expenses, and net savings among such

pools on an equitable basis.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.26, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644.)

-CITE-

12 USC Sec. 2148 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2148. Transactions to accomplish merger

-STATUTE-

The receipt of assets or assumption of liabilities by the

consolidated bank, the exchange of stock, equities, or other

ownership interests, and any other transaction carried out in

accomplishing the merger of the banks for cooperatives shall not be

treated as a taxable event under the laws of the United States or

of any State or political subdivision thereof. The preceding

sentence shall also apply to the receipt of assets and liabilities

by a cooperative to the extent that the net amount of the

distribution is immediately reinvested in stock of a consolidated

bank (and in such case the basis of such stock shall be

appropriately reduced by the amount of gain not recognized by

reason of this sentence).

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.27, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644; amended Pub.

L. 100-399, title IV, Sec. 407(g), Aug. 17, 1988, 102 Stat. 1001.)

-MISC1-

AMENDMENTS

1988 - Pub. L. 100-399 substituted ''cooperative'' for ''taxable

institution''.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

-CITE-

12 USC Sec. 2149 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2149. Lending limits

-STATUTE-

The Farm Credit Administration may not establish lending limits

for the consolidated bank with respect to any loans or borrowers

that are more restrictive than the combined lending limits that

were previously established by the Farm Credit Administration for a

district bank for cooperatives and the Central Bank for

Cooperatives with respect to such loans or borrowers.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.28, as added Pub. L. 100-233,

title IV, Sec. 415(2), Jan. 6, 1988, 101 Stat. 1644.)

-CITE-

12 USC Sec. 2149a 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER III - BANKS FOR COOPERATIVES

Part B - United and National Banks for Cooperatives

-HEAD-

Sec. 2149a. Reports by merged banks for cooperatives

-STATUTE-

(a) In general

When two or more banks for cooperatives merge, the resulting bank

shall, not later than December 31 of each year of the succeeding 5

years following the date of the merger, file an annual report with

the Farm Credit Administration that -

(1) analyzes the effect of the merger;

(2) includes a breakdown of loans outstanding according to the

size of the cooperative stockholders of the bank; and

(3) describes the adequacy of credit and other assistance

services provided to smaller cooperatives.

(b) Availability

A copy of the report required in subsection (a) of this section

shall be made available to the Committee on Agriculture of the

House of Representatives and the Committee on Agriculture,

Nutrition, and Forestry of the Senate.

-SOURCE-

(Pub. L. 92-181, title III, Sec. 3.29, formerly title VII, Sec.

7.5, as added Pub. L. 100-233, title IV, Sec. 416, Jan. 6, 1988,

101 Stat. 1646; renumbered Sec. 3.29, Pub. L. 100-399, title IV,

Sec. 408(e), Aug. 17, 1988, 102 Stat. 1001.)

-COD-

CODIFICATION

Section was classified to section 2279a-5 of this title prior to

renumbering by Pub. L. 100-399.

-CITE-

12 USC SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR

MORE CLASSES OF INSTITUTIONS OF THE SYSTEM 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

-HEAD-

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

-CITE-

12 USC Part A - Funding 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Part A - Funding

-CITE-

12 USC Sec. 2151 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Sec. 2151. Revolving fund

-STATUTE-

The revolving fund established by this section (in effect

immediately before January 6, 1988) shall be available to the Farm

Credit Administration and the Assistance Board during the periods,

and for the purposes, provided for in sections 2278a-13 and 2278a-7

of this title, respectively.

-SOURCE-

(Pub. L. 92-181, title IV, Sec. 4.0, Dec. 10, 1971, 85 Stat. 609;

Pub. L. 99-205, title I, Sec. 101(1), Dec. 23, 1985, 99 Stat. 1678;

Pub. L. 100-233, title II, Sec. 202, Jan. 6, 1988, 101 Stat. 1605;

Pub. L. 100-399, title II, Sec. 202, Aug. 17, 1988, 102 Stat. 992.)

-REFTEXT-

REFERENCES IN TEXT

For explanation of the revolving fund established by this section

(in effect immediately before January 6, 1988), referred to in

text, see Revolving Funds note below.

-MISC2-

AMENDMENTS

1988 - Pub. L. 100-399 amended section generally. Prior to

amendment, section read as follows:

''(a) Revolving Fund. - The revolving fund established by this

section (in effect immediately before January 6, 1988) shall be

available to the Farm Credit Administration during the period, and

for the purposes provided for, in sections 2278a-7(b) and 2278a-13

of this title.

''(b) Farm Credit Insurance Fund. - On the date the first premium

is due and payable under section 2277a-5(c) of this title, any

funds remaining in the revolving fund shall be transferred to the

Farm Credit Insurance Fund in accordance with the terms and

conditions established by the Farm Credit Administration.''

Pub. L. 100-233 amended section generally. Prior to amendment,

section read as follows: ''The revolving fund established by Public

Law 87-343, 75 Stat. 758, as amended, and the revolving fund

established by Public Law 87-494, 76 Stat. 109, as amended, and

continued by Public Law 96-592, shall be merged and shall be

available to the Farm Credit Administration for the purchase, on

behalf of the United States, of capital stock of the Capital

Corporation. The Farm Credit Administration may make such purchases

of stock as the Farm Credit Administration determines, in its

discretion, are necessary to achieve the purposes of this

chapter.''

1985 - Pub. L. 99-205 substituted provisions relating to

revolving funds and investments for provisions respecting stock

purchased by the Governor for the Farm Credit Administration,

retirement, and franchise tax.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

REVOLVING FUNDS

The revolving fund established by this section (in effect

immediately before January 6, 1988), referred to in text, means the

revolving fund created by former provisions of this section, which

merged the revolving fund established by Public Law 87-343, 75

Stat. 758, as amended (described below as ''first fund''), with the

revolving fund established by Public Law 87-494, 76 Stat. 109, as

amended (described below as ''second fund''), which was regarded as

continued by Pub. L. 96-592.

At the time of enactment of former section 2152 of this title

(see second par. of note under former section 2152 of this title)

by Pub. L. 92-181 funds for temporary investment by the Governor of

the Farm Credit Administration in the farm credit system were

available from two revolving funds.

The first fund, providing moneys for investment in production

credit associations and intermediate credit banks, was covered by

former section 1131i of this title. Such fund was itself the

result of an earlier merger of two revolving funds, the first

having been created by the Farm Credit Act of 1933 and the second

having been created by the Federal Farm Mortgage Corporation Act of

1934. These two were combined into a single fund pursuant to Pub.

L. 87-343, Sec. 2(1), Oct. 3, 1961, 75 Stat. 758. Each of the

statutory steps in the establishment of such fund was cast in the

form of an amendment to the Farm Credit Act of 1933. Since such

Farm Credit Act of 1933 has been repealed by section 5.26 of Pub.

L. 92-181, section 1131i of this title is carried as repealed.

Notwithstanding such apparent repeal, statements of Congressional

intent indicate an intention to retain the fund using as its

statutory base the law (Pub. L. 87-343) which had effected the

consolidation in 1961.

The second fund, providing moneys for investment in banks for

cooperatives, is covered by section 1141d of this title. Although

the basic authority for such fund would be the Agricultural

Marketing Act of 1929, a more updated authority for such fund is

the Agricultural Marketing Act Amendment of 1962, Pub. L. 87-494,

June 25, 1962, 76 Stat. 109, under which the fund was reduced to

$150,000,000 and the amount in such fund in excess of such figure

was returned to the Treasury as miscellaneous receipts.

Pub. L. 96-592, referred to above as continuing the revolving

fund established by Pub. L. 87-494, is the Farm Credit Act

Amendment of 1980, Pub. L. 96-592, Dec. 24, 1980, 94 Stat. 3437.

For complete classification of this Act to the Code, see Short

Title of 1980 Amendment note set out under section 2001 of this

title and Tables.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2277a-9, 2278a-7,

2278a-13 of this title.

-CITE-

12 USC Sec. 2152 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Sec. 2152. Repealed. Pub. L. 100-233, title II, Sec. 207(a)(1),

Jan. 6, 1988, 101 Stat. 1607

-MISC1-

Section, Pub. L. 92-181, title IV, Sec. 4.1, as added Pub. L.

99-205, title I, Sec. 104, Dec. 23, 1985, 99 Stat. 1687, contained

requirements for purchase of stock and payment of assessments and

contribution of capital to Capital Corporation.

A prior section 2152, Pub. L. 92-181, title IV, Sec. 4.1, Dec.

10, 1971, 85 Stat. 609, related to revolving funds and government

deposits, prior to repeal, effective thirty days after Dec. 23,

1985, by Pub. L. 99-205, title I, Sec. 101(2), Dec. 23, 1985, 99

Stat. 1678. See section 2151 of this title.

EFFECTIVE DATE OF REPEAL

Section 207(b) of Pub. L. 100-233 provided that: ''The repeals

made by subsection (a) (repealing this section and sections 2216 to

2216k, and 2252(a)(8) of this title) shall take effect 15 days

after the date of the enactment of this Act (Jan. 6, 1988).''

-CITE-

12 USC Sec. 2153 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Sec. 2153. Power to borrow; issuance of notes, bonds, debentures,

and other obligations

-STATUTE-

Each of the banks of the System, in order to obtain funds for its

authorized purposes, shall have power, subject to regulation by the

Farm Credit Administration, and subject to the limitations of

paragraph (e) of this section, to -

(a) Borrow money from or loan to any other institution of the

System, borrow from any commercial bank or other lending

institution, issue its notes or other evidence of debt on its own

individual responsibility and full faith and credit, and invest its

excess funds in such sums, at such times, and on such terms and

conditions as it may determine.

(b) Issue its own notes, bonds, debentures, or other similar

obligations, fully collateralized as provided in section 2154(c) of

this title by the notes, mortgages, and security instruments it

holds in the performance of its functions under this chapter in

such sums, maturities, rates of interest, and terms and conditions

of each issue as it may determine with approval of the Farm Credit

Administration.

same subchapter of this chapter in borrowing or in issuance of

consolidated notes, bonds, debentures, or other obligations as may

be agreed with approval of the Farm Credit Administration.

(d) Join with other banks of the System in issuance of

System-wide notes, bonds, debentures, and other obligations in the

manner, form, amounts, and on such terms and conditions as may be

agreed upon with approval of the Farm Credit Administration. Such

System-wide issue by the participating banks and such

participations by each bank shall not exceed the limits to which

each such bank is subject in the issuance of its individual or

consolidated obligations and each such issue shall be subject to

approval of the Farm Credit Administration: Provided, however,

There shall be no issues of System-wide obligations without the

concurrence of the boards of directors of each bank and the

approval of the Farm Credit Administration for such issues shall be

conditioned on and be evidence of the compliance with this

provision.

(e) No bank or banks shall issue notes, bonds, debentures, or

other obligations individually or in concert with one or more banks

of the System other than through the Federal Farm Credit Banks

Funding Corporation under any provision of this chapter except

under subsection (a) of this section: Provided, That any bank or

banks may issue investment bonds or like obligations other than

through the Federal Farm Credit Banks Funding Corporation if the

interest rate is not in excess of the interest allowable on savings

deposits of commercial banks of comparable amounts and maturities

under Federal Reserve regulation on its member banks.

-SOURCE-

(Pub. L. 92-181, title IV, Sec. 4.2, Dec. 10, 1971, 85 Stat. 610;

Pub. L. 99-205, title II, Sec. 205(f)(1), Dec. 23, 1985, 99 Stat.

1705; Pub. L. 100-233, title IV, Sec. 418(b), formerly Sec. 415(b),

Jan. 6, 1988, 101 Stat. 1653, renumbered Sec. 418(b), Pub. L.

100-399, title IV, Sec. 409(a), Aug. 17, 1988, 102 Stat. 1003; Pub.

L. 100-399, title II, Sec. 203(e), Aug. 17, 1988, 102 Stat. 993.)

-MISC1-

AMENDMENTS

1988 - Subsec. (d). Pub. L. 100-233 substituted ''the boards of

directors of each bank'' for ''the boards of directors of each of

the 12 districts and the Central Bank for Cooperatives''.

Subsec. (e). Pub. L. 100-399, Sec. 203(e), substituted ''System

other than through the'' for ''System other than through their'',

and substituted ''Federal Farm Credit Banks Funding Corporation''

for ''fiscal agent'' in two places.

1985 - Pub. L. 99-205 substituted ''regulation by'' for

''supervision of'' in provision preceding subsec. (a).

Subsec. (b). Pub. L. 99-205 substituted references to section

''2154(c)'' for ''2154(b)'' and ''Farm Credit Administration'' for

''Governor''.

Subsecs. (c), (d). Pub. L. 99-205 substituted ''Farm Credit

Administration'' for ''Governor'' wherever appearing.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-399 effective as if enacted immediately

after enactment of Pub. L. 100-233, which was approved Jan. 6,

1988, see section 1001(a) of Pub. L. 100-399, set out as a note

under section 2002 of this title.

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2244, 2252, 2277a,

2277a-1 of this title.

-CITE-

12 USC Sec. 2154 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Sec. 2154. Capital adequacy of banks and institutions

-STATUTE-

(a) Minimum levels of capital

The Farm Credit Administration shall cause System institutions to

achieve and maintain adequate capital by establishing minimum

levels of capital for such System institutions and by using such

other methods as the Farm Credit Administration deems appropriate.

The Farm Credit Administration may establish such minimum level of

capital for a System institution as the Farm Credit Administration,

in its discretion, deems to be necessary or appropriate in light of

the particular circumstances of the System institution.

(b) Failure to maintain minimum levels; directives; plans for

achieving minimum levels; proposals affecting compliance

(1) Failure of a System institution to maintain capital at or

above its minimum level as established under subsection (a) of this

section may be deemed by the Farm Credit Administration, in its

discretion, to constitute an unsafe and unsound practice within the

meaning of this chapter.

(2) In addition to, or in lieu of, any other action authorized by

law, including paragraph (1), the Farm Credit Administration may

issue a directive to a System institution that fails to maintain

capital at or above its required level as established under

subsection (a) of this section. Such directive may require the

System institution to submit and adhere to a plan acceptable to the

Farm Credit Administration describing the means and timing by which

the System institution shall achieve its required capital level,

but may not require merger or consolidation without a majority vote

of the voting stockholders or the contributors to the guaranty fund

of the institution.

(3) The Farm Credit Administration may consider such System

institution's progress in adhering to any plan required under

paragraph (2) whenever such System institution, or an affiliate

thereof, seeks the requisite approval of the Farm Credit

Administration for any proposal that would divert earnings,

diminish capital, or otherwise impede such System institution's

progress in achieving its minimum capital level. The Farm Credit

Administration may deny such approval where it determines that such

proposal would adversely affect the ability of the System

institution to comply with such plan.

Each bank shall have on hand at the time of issuance of any note,

bond, debenture, or other similar obligation and at all times

thereafter maintain, free from any lien or other pledge, notes and

other obligations representing loans made under this chapter or

real or personal property acquired in connection with loans made

under this chapter, obligations of the United States or any agency

thereof direct or fully guaranteed, other bank assets (including

marketable securities) approved by the Farm Credit Administration,

or cash, in an aggregate value equal to the total amount of notes,

bonds, debentures, or other similar obligations outstanding for

which the bank is primarily liable.

-SOURCE-

(Pub. L. 92-181, title IV, Sec. 4.3, Dec. 10, 1971, 85 Stat. 611;

Pub. L. 99-205, title I, Sec. 101(3), Dec. 23, 1985, 99 Stat. 1678;

Pub. L. 100-233, title III, Sec. 304, title VIII, Sec. 804(a)(3),

805(q), Jan. 6, 1988, 101 Stat. 1621, 1715, 1716; Pub. L. 100-399,

title VII, Sec. 702(b), Aug. 17, 1988, 102 Stat. 1006.)

-MISC1-

AMENDMENTS

1988 - Subsec. (b)(2). Pub. L. 100-233, Sec. 804(a)(3), struck

out subpar. (A) designation and struck out subpar. (B) which read

as follows: ''Any directive issued under this paragraph, including

plans submitted pursuant thereto, shall be enforceable under the

provisions of section 2267 of this title to the same extent as an

effective and outstanding order issued under section 2261 of this

title that has become final.''

Subsec. (c). Pub. L. 100-233, Sec. 805(q), which directed the

amendment of subsec. (c) by substituting ''direct or fully

guaranteed'' for ''direct of fully guaranteed'' was repealed by

Pub. L. 100-399, Sec. 702(b). See Construction of 1988 Amendment

note below.

Pub. L. 100-233, Sec. 304, amended subsec. (c) generally. Prior

to amendment, subsec. (c) read as follows: ''Each bank shall have

on hand at the time of issuance of any long-term notes, bonds,

debentures, or other similar obligations and at all times

thereafter maintain, free from any lien or other pledge, notes and

other obligations representing loans made under the authority of

this chapter, obligations of the United States or any agency

thereof direct or fully guaranteed, other readily marketable

securities approved by the Farm Credit Administration, or cash, in

an aggregate value equal to the total amount of long-term notes,

bonds, debentures, or other similar obligations outstanding for

which the bank is primarily liable.''

1985 - Pub. L. 99-205 substituted ''Capital adequacy of banks and

associations'' for ''Aggregate of obligations; collateral'' in

section catchline.

Subsec. (a). Pub. L. 99-205 amended subsec. (a) generally. Prior

to amendment, subsec. (a) read as follows: ''No issue of long-term

notes, bonds, debentures, or other similar obligations by a bank or

banks shall be approved in an amount which, together with the

amount of other bonds, debentures, long-term notes, or other

similar obligations issued and outstanding, exceeds twenty times

the capital and surplus of all the banks which will be primarily

liable on the proposed issue, or such lesser amount as the Farm

Credit Administration shall establish by regulation.''

Subsecs. (b), (c). Pub. L. 99-205 added subsec. (b) and

redesignated former subsec. (b) as (c).

EFFECTIVE DATE OF 1985 AMENDMENT

Amendment by Pub. L. 99-205 effective thirty days after Dec. 23,

1985, see section 401 of Pub. L. 99-205, set out as a note under

section 2001 of this title.

CONSTRUCTION OF 1988 AMENDMENT

Section 702(b) of Pub. L. 100-399 provided that section 805(q) of

Pub. L. 100-233, cited as a credit to this section, is repealed and

that subsec. (c) of this section shall be applied and administered

as if such section had not been enacted.

MINIMUM CAPITAL ADEQUACY STANDARDS

Section 301(a) of Pub. L. 100-233, as amended by Pub. L. 100-399,

title III, Sec. 301(a), Aug. 17, 1988, 102 Stat. 993, provided

that:

''(1) In general. -

''(A) Establishment. - Within 120 days after the date of the

enactment of this Act (Jan. 6, 1988), the Farm Credit

Administration shall issue regulations under section 4.3(a) of

the Farm Credit Act of 1971 (12 U.S.C. 2154(c) (12 U.S.C.

2154(a))) that establish minimum permanent capital adequacy

standards for Farm Credit System institutions.

''(B) Basis for establishment. - The standards established

under subparagraph (A) shall apply to an institution based on the

financial statements of the institution prepared in accordance

with generally accepted accounting principles.

''(C) Ratio of capital to assets. - The standards established

under subparagraph (A) shall specify fixed percentages

representing the ratio of permanent capital of the institution to

the assets of the institution, taking into consideration relative

risk factors as determined by the Farm Credit Administration.

''(D) Phase-in period. - The standards established under

subparagraph (A) shall be phased in during the 5-year period

beginning on the date of the enactment of this Act (Jan. 6,

1988).

''(2) Emergency power not available. - The Farm Credit

Administration shall not invoke the emergency provisions of section

5.17(c)(2) of the Farm Credit Act of 1971 (12 U.S.C. 2251(c)(2) (12

U.S.C. 2252(c)(2))) with respect to the issuance of the regulations

required under paragraph (1)(A).

''(3) Prohibitions during transition period. - During the 5-year

period specified in paragraph (1)(D), the Farm Credit

Administration shall not initiate any receivership,

conservatorship, liquidation, or enforcement action against any

System institution certified to issue preferred stock under section

6.27 of the Farm Credit Act of 1971 (as added by section 201 of

this Act) (12 U.S.C. 2278b-7), solely because of the failure of

such institution to meet minimum permanent capital adequacy

standards unless such action is recommended or concurred in by the

Farm Credit System Assistance Board established under section 6.0

of such Act (as added by section 201 of this Act) (12 U.S.C.

2278a).

''(4) Permanent capital. - For purposes of this subsection, the

term 'permanent capital' has the same meaning given that term in

section 4.3A(a)(1) of the Farm Credit Act of 1971 (12 U.S.C.

2154a(a)(1)).''

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2153, 2154a, 2155, 2267,

2268, 2278b-6 of this title.

-CITE-

12 USC Sec. 2154a 01/06/03

-EXPCITE-

TITLE 12 - BANKS AND BANKING

CHAPTER 23 - FARM CREDIT SYSTEM

SUBCHAPTER IV - PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF

INSTITUTIONS OF THE SYSTEM

Part A - Funding

-HEAD-

Sec. 2154a. Capitalization of System institutions

-STATUTE-

(a) Definitions

As used in this section:

(1) Permanent capital

The term ''permanent capital'' means -

(A) current year retained earnings;

(B) allocated and unallocated earnings (which, in the case of

earnings allocated in any form by a System bank to any

association or other recipient and retained by the bank, shall

be considered, in whole or in part, permanent capital of the

bank or of any such association or other recipient as provided

under an agreement between the bank and each such association

or other recipient);

(D) stock issued by a System institution, except -

(i) stock that may be retired by the holder of the stock on

repayment of the holder's loan, or otherwise at the option or

request of the holder; or

(ii) stock that is protected under section 2162 of this

title or is otherwise not at risk; and

(E) any other debt or equity instruments or other accounts

that the Farm Credit Administration determines appropriate to

be considered permanent capital.

(2) Stock

The term ''stock'' means voting and nonvoting stock (including

preferred stock), equivalent contributions to a guaranty fund,

participation certificates, allocated equities, and other forms

and types of equities.

(b) Adoption of bylaws

Subject to approval by shareholders under subsection (c)(2) of

this section, each bank and association shall adopt bylaws,

developed by its board of directors, that provide for the

capitalization of the institution in accordance with subsection

(c)(1) of this section.

(1) In general

Notwithstanding any other provision of this chapter, the bylaws

adopted under subsection (b) of this section -

(A) shall provide for such classes, par value, and amounts of

the stock of the institution, the manner in which such stock

shall be issued, transferred, and retired, and the payment of

dividends and patronage refunds, as determined appropriate by

the Board of Directors, subject to this section;

(B) may provide for the charging of loan origination fees as

determined appropriate by the Board of Directors;

standards established under the regulations issued under

section 2154(a) of this title;

(D) shall provide for the issuance of voting stock, which may

only be held by -

(i) borrowers who are farmers, ranchers, or producers or

harvesters of aquatic products, and cooperative associations

eligible to borrow from System institutions under this

chapter;

(ii) in the case of a Central Bank for Cooperatives, other

banks for cooperatives; and

(iii) in the case of banks other than banks for

cooperatives, System associations;

(E) shall require that -

(i) as a condition of borrowing from or through the

institution, any borrower who is entitled to hold voting

stock or participation certificates shall, at the time a loan

is made, acquire voting stock or participation certificates

in an amount not less than $1,000 or 2 percent of the amount

of the loan, whichever is less; and

(ii) within 2 years after the loan of a borrower is repaid

in full, any voting stock held by the borrower be converted

to nonvoting stock;

(F) may provide that persons who are not borrowers from the

institution may hold nonvoting stock of the institution;

(G) shall require that any holder of voting stock issued

before the adoption of bylaws under this section exchange a

portion of such stock for new voting stock;

(H) do not need to provide for maximum or minimum standards

of borrower stock ownership based on a percentage of the loan

of the borrower, except as otherwise provided in this section;

(I) shall permit the retirement of stock at the discretion of

the institution if the institution meets the capital adequacy

standards established under section 2154(a) of this title; and

(J) shall permit stock to be transferable.

(2) Effective date

The bylaws adopted by the board of directors of a System

institution under subsection (b) of this section shall take

effect only on approval of a majority of the stockholders of such

institution present and voting, or voting by written proxy, at a

duly authorized stockholders' meeting.

(d) Reduction of capital

(1) General rule

Except as provided in paragraph (2), the board of directors of

a System institution may not reduce the permanent capital of the

institution through the payment of patronage refunds or

dividends, or the retirement of stock if, after or due to such

action, the permanent capital of the institution would thereafter

fail to meet the minimum capital adequacy standards established

under section 2154(a) of this title.

(2) Exceptions

Paragraph (1) shall not apply to the payment of noncash

patronage refunds by any institution exempt from Federal income

tax if the entire refund paid qualifies as permanent capital.

Notwithstanding paragraph (1), any System institution subject to

Federal income tax may pay patronage refunds partially in cash as

long

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