PRIA, Government Policy, Made Personal

Summary

Banks in the System can get money by borrowing, lending, issuing debt, and investing extra cash. They may borrow from or lend to other System banks, borrow from commercial banks, issue notes or other debt on their own responsibility, and invest surplus funds as they choose. They can also issue their own bonds or similar obligations that are fully backed by the loans, mortgages, and security instruments they hold, but those issues need approval from the Farm Credit Administration. Banks may join with other System banks to issue consolidated or System-wide debt. Any joint or System-wide issue must be approved by the Farm Credit Administration, and a System-wide issue also needs agreement from each participating bank’s board. Except for the simple borrowing and lending in the first paragraph, banks must issue debt through the Federal Farm Credit Banks Funding Corporation unless they sell investment-type bonds outside it at interest rates not higher than the allowable savings-deposit rates under Federal Reserve rules for member banks.

Title 12, §2153

Banks and Banking, Source: USLM XML via OLRC

Each of the banks of the System, in order to obtain funds for its authorized purposes, shall have power, subject to regulation by the Farm Credit Administration, and subject to the limitations of paragraph (e) of this section, to—

(a)Borrow money from or loan to any other institution of the System, borrow from any commercial bank or other lending institution, issue its notes or other evidence of debt on its own individual responsibility and full faith and credit, and invest its excess funds in such sums, at such times, and on such terms and conditions as it may determine.

(b)Issue its own notes, bonds, debentures, or other similar obligations, fully collateralized as provided in section 2154(c) of this title by the notes, mortgages, and security instruments it holds in the performance of its functions under this chapter in such sums, maturities, rates of interest, and terms and conditions of each issue as it may determine with approval of the Farm Credit Administration.

(c)Join with any or all banks organized and operating under the same subchapter of this chapter in borrowing or in issuance of consolidated notes, bonds, debentures, or other obligations as may be agreed with approval of the Farm Credit Administration.

(d)Join with other banks of the System in issuance of System-wide notes, bonds, debentures, and other obligations in the manner, form, amounts, and on such terms and conditions as may be agreed upon with approval of the Farm Credit Administration. Such System-wide issue by the participating banks and such participations by each bank shall not exceed the limits to which each such bank is subject in the issuance of its individual or consolidated obligations and each such issue shall be subject to approval of the Farm Credit Administration: Provided, however, There shall be no issues of System-wide obligations without the concurrence of the boards of directors of each bank and the approval of the Farm Credit Administration for such issues shall be conditioned on and be evidence of the compliance with this provision.

(e)No bank or banks shall issue notes, bonds, debentures, or other obligations individually or in concert with one or more banks of the System other than through the Federal Farm Credit Banks Funding Corporation under any provision of this chapter except under subsection (a) of this section: Provided, That any bank or banks may issue investment bonds or like obligations other than through the Federal Farm Credit Banks Funding Corporation if the interest rate is not in excess of the interest allowable on savings deposits of commercial banks of comparable amounts and maturities under Federal Reserve regulation on its member banks.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1988—Subsec. (d). Pub. L. 100–233 substituted “the boards of directors of each bank” for “the boards of directors of each of the 12 districts and the Central Bank for Cooperatives”. Subsec. (e). Pub. L. 100–399, § 203(e), substituted “System other than through the” for “System other than through their”, and substituted “Federal Farm Credit Banks Funding Corporation” for “fiscal agent” in two places. 1985—Pub. L. 99–205 substituted “regulation by” for “supervision of” in provision preceding subsec. (a). Subsec. (b). Pub. L. 99–205 substituted references to section “2154(c)” for “2154(b)” and “Farm Credit Administration” for “Governor”. Subsecs. (c), (d). Pub. L. 99–205 substituted “Farm Credit Administration” for “Governor” wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title.

Effective Date

of 1985 AmendmentAmendment by Pub. L. 99–205 effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as a note under section 2001 of this title.

§2153 Power to Borrow; Issuance of Notes, Bonds, Debentures, and Other Obligations

Summary

Title 12, §2153

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata