Collapse to view only § 2155. Liability of banks; United States not liable
- § 2151. Repealed.
- § 2152. Repealed.
- § 2153. Power to borrow; issuance of notes, bonds, debentures, and other obligations
- § 2154. Capital adequacy of banks and institutions
- § 2154a. Capitalization of System institutions
- § 2155. Liability of banks; United States not liable
- § 2156. Repealed.
- § 2157. Bonds as investments
- § 2158. Purchase and sale by Federal Reserve System
- § 2159. Purchase and sale of obligations
- § 2160. Federal Farm Credit Banks Funding Corporation
- § 2161. Repealed.
- § 2162. Protection of borrower stock
§ 2151. Repealed. Pub. L. 115–334, title V, § 5411(17), Dec. 20, 2018, 132 Stat. 4680
§ 2152. Repealed. Pub. L. 100–233, title II, § 207(a)(1), Jan. 6, 1988, 101 Stat. 1607
§ 2153. Power to borrow; issuance of notes, bonds, debentures, and other obligations
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.
(c) Join with any or all banks organized and operating under the 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.
(Pub. L. 92–181, title IV, § 4.2, Dec. 10, 1971, 85 Stat. 610; Pub. L. 99–205, title II, § 205(f)(1), Dec. 23, 1985, 99 Stat. 1705; Pub. L. 100–233, title IV, § 418(b), formerly § 415(b), Jan. 6, 1988, 101 Stat. 1653, renumbered § 418(b), Pub. L. 100–399, title IV, § 409(a), Aug. 17, 1988, 102 Stat. 1003; Pub. L. 100–399, title II, § 203(e), Aug. 17, 1988, 102 Stat. 993.)
§ 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
(1) Failure of a System institution to maintain capital at or above its minimum level as established under subsection (a) 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). 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.
(c) Enhancement of capital adequacy of banks
(Pub. L. 92–181, title IV, § 4.3, Dec. 10, 1971, 85 Stat. 611; Pub. L. 99–205, title I, § 101(3), Dec. 23, 1985, 99 Stat. 1678; Pub. L. 100–233, title III, § 304, title VIII, §§ 804(a)(3), 805(q), Jan. 6, 1988, 101 Stat. 1621, 1715, 1716; Pub. L. 100–399, title VII, § 702(b), Aug. 17, 1988, 102 Stat. 1006.)
§ 2154a. Capitalization of System institutions
(a) DefinitionsAs used in this section:
(1) Permanent capitalThe 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);
(C) all surplus (less allowances for losses);
(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
(b) Adoption of bylaws
(c) Requirements of bylaws
(1) In generalNotwithstanding any other provision of this chapter, the bylaws adopted under subsection (b)—
(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;
(C) shall enable the institution to meet the capital adequacy 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) persons and entities eligible to borrow from the banks for cooperatives, as described in section 2124(c)(ii) of this title;
(iii) in the case of a Central Bank for Cooperatives, other banks for cooperatives; and
(iv) 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
(d) Reduction of capital
(1) General rule
(2) Exceptions
(e) Compliance
(f) Loans designated for sale or sold into secondary market
(1) In generalSubject to paragraph (2) and notwithstanding any other provision of this section, the bylaws adopted by a bank or association under subsection (b) may provide—
(A) in the case of a loan made on or after February 10, 1996, that is designated, at the time the loan is made, for sale into a secondary market, that no voting stock or participation certificate purchase requirement shall apply to the borrower for the loan; and
(B) in the case of a loan made before February 10, 1996, that is sold into a secondary market, that all outstanding voting stock or participation certificates held by the borrower with respect to the loan shall, subject to subsection (d)(1), be retired.
(2) Applicability
(3) Exception
(A) In general
(B) Retirement
(g) Construction
(h) Controlling authority
(Pub. L. 92–181, title IV, § 4.3A, as added Pub. L. 100–233, title III, § 301(b), Jan. 6, 1988, 101 Stat. 1608; amended Pub. L. 100–399, title III, § 301(b)–(f), Aug. 17, 1988, 102 Stat. 994; Pub. L. 102–552, title I, § 101, Oct. 28, 1992, 106 Stat. 4103; Pub. L. 104–105, title II, § 206, Feb. 10, 1996, 110 Stat. 173; Pub. L. 110–234, title V, § 5403(b), May 22, 2008, 122 Stat. 1154; Pub. L. 110–246, § 4(a), title V, § 5403(b), June 18, 2008, 122 Stat. 1664, 1916.)
§ 2155. Liability of banks; United States not liable
(a) Joint and several liability of banks
(1) Each bank of the System shall be fully liable on notes, bonds, debentures, or other obligations issued by it individually, and shall be liable for the interest payments on long-term notes, bonds, debentures, or other obligations issued by other banks operating under the same subchapter of this chapter.
(2)
(A) Each bank shall also be primarily liable for the portion of any issue of consolidated or System-wide obligations made on its behalf and be jointly and severally liable for the payment of any additional sums as called upon by the Farm Credit Administration in order to make payments of interest or principal which any bank primarily liable therefor shall be unable to make.
(B) Such calls first shall be made on all nondefaulting banks in proportion to each such bank’s proportionate share of the aggregate available collateral held by all such banks.
(C) For purposes of this paragraph, the term “available collateral” means the amount (determined at the close of the last calendar quarter ending before such call) by which a bank’s collateral as described in section 2154 of this title exceeds the collateral required to support the bank’s outstanding notes, bonds, debentures, and other similar obligations.
(D) If the Farm Credit Administration makes any such call and the available collateral of all such banks does not fully satisfy the liability necessitating such calls, such calls shall be made on all nondefaulting banks in proportion to each such bank’s remaining assets.
(E) Any System bank that, pursuant to a call by the Farm Credit Administration, makes a payment of principal or interest to the holder of any consolidated or System-wide obligation issued on behalf of another System bank shall be subrogated to all rights of the holder against such other bank to the extent of such payment.
(F) On making such a call with respect to obligations issued on behalf of a System bank, the Farm Credit Administration shall appoint a receiver for the bank, which shall expeditiously liquidate or otherwise wind up the affairs of the bank.
(b) Resolutions as to liability; execution of obligations
(c) United States liability
(d) Insurance Fund called on before invoking joint and several liability
(Pub. L. 92–181, title IV, § 4.4, Dec. 10, 1971, 85 Stat. 611; Pub. L. 99–205, title I, § 101(4), title II, § 205(f)(2), Dec. 23, 1985, 99 Stat. 1679, 1706; Pub. L. 100–233, title II, § 207(c), title III, § 303, Jan. 6, 1988, 101 Stat. 1608, 1620; Pub. L. 100–399, title III, § 303, Aug. 17, 1988, 102 Stat. 995.)
§ 2156. Repealed. Pub. L. 100–233, title II, § 204(b), Jan. 6, 1988, 101 Stat. 1607
§ 2157. Bonds as investments
The bonds, debentures, and other similar obligations issued under the authority of this chapter shall be lawful investments for all fiduciary and trust funds and may be accepted as security for all public deposits.
(Pub. L. 92–181, title IV, § 4.6, Dec. 10, 1971, 85 Stat. 612.)
§ 2158. Purchase and sale by Federal Reserve System
Any member of the Federal Reserve System may buy and sell bonds, debentures, or other similar obligations issued under the authority of this chapter and any Federal Reserve bank may buy and sell such obligations to the same extent and subject to the same limitations placed upon the purchase and sale by said banks of State, county, district, and municipal bonds under section 355 of this title.
(Pub. L. 92–181, title IV, § 4.7, Dec. 10, 1971, 85 Stat. 612.)
§ 2159. Purchase and sale of obligations
Each bank of the System may purchase its own obligations and the obligations of other banks of the System and may provide for the sale of obligations issued by it, consolidated obligations, or Systemwide obligations through a fiscal agent or agents, by negotiation, offer, bid, syndicate sale, and to deliver such obligations by book entry, wire transfer, or such other means as may be appropriate.
(Pub. L. 92–181, title IV, § 4.8, Dec. 10, 1971, 85 Stat. 612; Pub. L. 99–509, title I, § 1034, Oct. 21, 1986, 100 Stat. 1878; Pub. L. 100–233, title II, § 205(a), Jan. 6, 1988, 101 Stat. 1607; Pub. L. 115–334, title V, § 5411(18), Dec. 20, 2018, 132 Stat. 4680.)
§ 2160. Federal Farm Credit Banks Funding Corporation
(a) Establishment
(b) DutiesThe Corporation—
(1) shall issue, market, and handle the obligations of the banks of the Farm Credit System, and interbank or intersystem flow of funds as may from time to time be required;
(2) acting for the banks of the Farm Credit System, subject to approval of the Farm Credit Administration, shall determine the amount, maturities, rates of interest, terms, and conditions of participation by the several banks in each issue of joint, consolidated, or System-wide obligations; and
(3) shall exercise such other powers as were provided to the predecessor Federal Farm Credit Banks Funding Corporation in accordance with its charter issued under section 2211 of this title, in effect immediately before January 6, 1988.
(c) Officers and committees
(1) Designation
(2) Issuance of obligations
(d) Board of directors
(1) CompositionThe board of directors shall be composed of nine voting members and one nonvoting member, as follows:
(A) Four voting members shall be current or former directors of the System banks elected by the shareholders of the Corporation.
(B) Three voting members shall be chief executive officers or presidents of System banks elected by the shareholders of the Corporation.
(C) Two voting members shall be appointed by the members elected under subparagraphs (A) and (B) after the elected members have received recommendations for such appointments from, and consulted with, the Secretary of the Treasury and the Chairman of the Board of Governors of the Federal Reserve System. The appointed members shall be selected from United States citizens—
(i) who are not borrowers from, shareholders in, or employees or agents of any System institution, who are not affiliated with the Farm Credit Administration, and who are not actively engaged with a bank or investment organization that is a member of the Corporation’s selling group for System-wide securities; and
(ii) who are experienced or knowledgeable in corporate and public finance, agricultural economics, and financial reporting and disclosure.
(D) The president of the Corporation shall serve as a nonvoting member of the board.
(2) Considerations
(3) Representation of board
(e) Succession
(1) Assets and liabilities
(2) Contracts
(3) Stock
(4) Taxation
(Pub. L. 92–181, title IV, § 4.9, Dec. 10, 1971, 85 Stat. 612; Pub. L. 100–233, title II, § 204(a), Jan. 6, 1988, 101 Stat. 1605; Pub. L. 100–399, title II, § 203(a)–(d), Aug. 17, 1988, 102 Stat. 992, 993; Pub. L. 102–552, title V, § 507, Oct. 28, 1992, 106 Stat. 4131; Pub. L. 115–334, title V, § 5411(19), Dec. 20, 2018, 132 Stat. 4681.)
§ 2161. Repealed. Pub. L. 100–399, title I, § 101(a), Aug. 17, 1988, 102 Stat. 989
§ 2162. Protection of borrower stock
(a) Retirement of stock
(b) Certain powers not affectedThis section does not affect the authority of any institution of the Farm Credit System—
(1) to retire or cancel borrower stock at par value for application against a loan in default;
(2) to cancel borrower stock at par value under section 2202b of this title; or
(3) to apply, against any outstanding indebtedness to a System association arising out of or in connection with a liquidation referred to in subsection (d)(2), the par value of borrower stock frozen in such liquidation.
(c) Inability to retire stock at par value
(1) In general
(2) Funding
(d) DefinitionsFor purposes of this section:
(1) Borrower stock
(2) Eligible borrower stockThe term “eligible borrower stock” means borrower stock that—
(A) is outstanding on January 6, 1988;
(B) is issued or allocated after January 6, 1988, but prior to the earlier of—
(i) in the case of each bank and association, the date of approval, by the stockholders of such bank or association, of the capitalization requirements of the institution in accordance with section 2154a of this title; or
(ii) the date that is 9 months after January 6, 1988;
(C) was, after January 1, 1983, but before January 6, 1988, frozen by an institution that was placed in liquidation; or
(D) was retired at less than par value by an institution that was placed in liquidation after January 1, 1983, but before January 6, 1988.
(3) Institution
(4) Par valueThe term “par value” means—
(A) in the case of stock, par value;
(B) in the case of participation certificates and other equities and interests not described in subparagraph (C), face or equivalent value; or
(C) in the case of participation certificates and allocated equities subject to retirement under a revolving cycle but that a System institution elects to retire out of order for application against a loan in default or otherwise as provided in this chapter, par or face value discounted, at a rate determined by the institution, to reflect the present value of the equity or interest as of the date of such retirement.
(Pub. L. 92–181, title IV, § 4.9A, as added Pub. L. 100–233, title I, § 101, Jan. 6, 1988, 101 Stat. 1572; amended Pub. L. 100–399, title I, § 101(b)–(d), Aug. 17, 1988, 102 Stat. 989; Pub. L. 115–334, title V, § 5411(20), Dec. 20, 2018, 132 Stat. 4681.)