§2153 Power to borrow; issuance of notes, bonds, debentures, and other obligations

Summary

Each Farm Credit System bank can get money for its work by borrowing, lending, issuing its own debt, or investing extra cash. It may borrow from other System banks, from commercial banks, or other lenders. A bank may issue notes, bonds, or similar obligations backed by its own promise to pay. It can also join with other banks to issue combined or system-wide debt. All of these actions must follow rules set by the Farm Credit Administration and, when required, get that agency’s approval. When a bank issues securities, they must be fully backed as required in section 2154(c). System-wide issues need the boards of the participating banks to agree and the Farm Credit Administration to approve. Banks may not issue debt on their own or with other banks except through the Federal Farm Credit Banks Funding Corporation, except for the borrowing and lending allowed above. A bank may issue investment bonds outside the Funding Corporation only if the interest rate does not exceed the rate allowed on comparable savings deposits of commercial banks under Federal Reserve rules for member banks.