§697b Pooling of debentures

Summary

Allows the Administration to sell trust certificates that represent all or part of debentures issued by state or local development companies, as long as those certificates come from a pool made only of debentures the Administration guaranteed. The Administration can promise to pay principal and interest on those certificates, but only up to the amount provided by the guaranteed debentures in the pool. If a debenture is paid off early or defaults, the Administration’s promise is reduced in the same proportion. Interest on a prepaid or defaulted debenture is covered only until the date it is paid. The U.S. government fully backs any payments the Administration guarantees. The Administration cannot charge a fee for these guarantees, though an approved agent may collect a fee for certain services. If the Administration pays a claim, it receives the rights of the holder it paid, and no law can stop it from using those rights. The Administration must keep a central record of all trust certificates and hire an agent to handle registration and issuing. The agent must have a bond or insurance to protect the government. Sellers must give buyers clear information about the terms and yield. The Administration can regulate brokers and dealers, and electronic or book-entry registration is allowed.