§2288 — Title 12 Banks and Banking | U.S. Code

Summary

The Bank can sell bonds to the public up to $15,000,000,000 outstanding at one time, unless Congress approves more. The Bank decides the length and interest rates of those bonds and can include an option to redeem them early. As much as possible, the Bank’s borrowing should match the types of assets it holds. The Secretary of the Treasury may buy the Bank’s bonds using proceeds from Treasury debt sales. The Secretary’s purchases must earn at least a minimum rate set by the Secretary based on similar U.S. marketable securities. The Secretary can later sell those bonds, and those buys and sells count as U.S. public-debt transactions. The Bank can require the Secretary to buy bonds so long as his holdings from required purchases do not go over $5,000,000,000 at any one time, though the Secretary may buy more if he chooses. The Bank’s bonds are lawful investments and can be used as security for public, trust, or fiduciary funds of the United States, the District of Columbia, Puerto Rico, U.S. territories, or their agencies and officers.

Title 12, §2288

Banks and Banking — Source: USLM XML via OLRC

(a)The Bank is authorized, with the approval of the Secretary of the Treasury, to issue publicly and have outstanding at any one time not in excess of $15,000,000,000, or such additional amounts as may be authorized in appropriations Acts, of obligations having such maturities and bearing such rate or rates of interest as may be determined by the Bank. Such obligations may be redeemable at the option of the Bank before maturity in such manner as may be stipulated therein. So far as is feasible, the debt structure of the Bank shall be commensurate with its asset structure.

(b)The Bank is also authorized to issue its obligations to the Secretary of the Treasury and the Secretary of the Treasury may in his discretion purchase or agree to purchase any such obligations, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under chapter 31 of title 31, and the purposes for which securities may be issued under chapter 31 of title 31 are extended to include such purchases. Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon such terms and conditions as to yield a return at a rate not less than a rate determined by the Secretary of the Treasury, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity. The Secretary of the Treasury may sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obligations acquired by him under this subsection. All purchases and sales by the Secretary of the Treasury of such obligations under this subsection shall be treated as public debt transactions of the United States.

(c)The Bank may require the Secretary of the Treasury to purchase obligations of the Bank issued pursuant to subsection (b) in such amounts as will not cause the holding by the Secretary of the Treasury resulting from such required purchases to exceed $5,000,000,000 at any one time. This subsection shall not be construed as limiting the authority of the Secretary to purchase obligations of the Bank in excess of such amount.

(d)Obligations of the Bank issued pursuant to this section shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States, or any agency or instrumentality of any of the foregoing, or any officer or officers thereof.

Editorial Notes

Codification In subsec. (b), “chapter 31 of title 31” substituted for “the Second Liberty Bond Act” on authority of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

§2288 Bank obligations

Summary

Title 12, §2288

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Editorial Notes

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