§2015 Lending Authority

Summary

Farm Credit Banks can make or join long-term real estate mortgage loans in rural areas or to people who produce or harvest aquatic products. Those loans must be for at least 5 years and no more than 40 years. They can also agree in advance to make such loans, give other financial help, and buy or discount notes from Federal land bank associations when those notes were used to finance eligible borrowers under section 2279b(a). The banks can lend to and buy paper from many kinds of farm lenders and banks, and they can work with production credit associations and other Farm Credit System institutions. All of these loans and purchases must follow rules set by the Farm Credit Administration and usually must be secured by collateral. A lender’s paper plus its direct and contingent liabilities cannot exceed ten times its paid-in and unimpaired capital and surplus, or any smaller legal limit. A national bank that already owes money to a Farm Credit Bank cannot borrow more if that would push it past this limit. The rules must make services reasonably available to institutions that mainly lend for agricultural or aquatic purposes, need extra funds, have limited access to capital markets, and will not use the funds to lend for other purposes. A Farm Credit Bank may charge fees for commitments. The bank normally counts a financing institution together with its affiliates as one for these rules; the bank decides first and the Farm Credit Administration decides if the bank denies service. Existing discount relationships that existed on December 24, 1980 do not have to end.