§2009cc–5 Issuance and guarantee of trust certificates

Summary

The Secretary may create and sell trust certificates that show ownership of all or part of debentures issued by a rural business investment company and guaranteed by the Secretary. Those certificates must be based on a trust or pool made only of guaranteed debentures. The Secretary may guarantee prompt payment of principal and interest on those certificates, but the guarantee only covers the same principal and interest that the underlying debentures represent. Debentures can be prepaid at any time with no penalty. If a debenture is prepaid or defaults, the certificate guarantee is reduced in proportion to that debenture’s share. Interest on prepaid or defaulted debentures is guaranteed only up to the date the guarantee is paid. A certificate can be called for redemption if all underlying debentures are prepaid or default. Section 2009g(i) applies to these guarantees. If the Secretary pays a claim, the United States gets the rights that were satisfied by that payment. No law can stop the Secretary from using ownership rights in a debenture in a trust or pool. The Secretary must keep a central registration of all certificates. The Secretary may keep bank accounts or U.S. obligations to help form trusts or pools and may issue certificates to do so. Agents must carry bonds or insurance the Secretary requires. The Secretary may regulate brokers and dealers, and electronic or book-entry registration is allowed.