Title 12, Banks and BankingRelease 119-110
§2183 Dissolution; Voluntary or Involuntary Liquidation; Mergers; Receiverships or Conservators
Title 12 › CHAPTER 23 — FARM CREDIT SYSTEM › SUBCHAPTER IV — PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF INSTITUTIONS OF THE SYSTEM › Part B — Dissolution › § 2183
Summary
Any Farm Credit System institution must get the Farm Credit Administration's approval before it can close itself and liquidate. If approved, the institution must follow the Administration's rules. For associations, those rules make the supervising bank take steps to reduce harm to borrowers whose loans are sold or moved to another System institution. The Administration's Board can also require an association to merge with another if, with the supervising bank's board, it finds the association failed to meet its obligations or follow this law. The Board may put a conservator or receiver in charge when an institution is insolvent, is losing assets because of illegal or unsafe practices, is unsafe to do business, willfully disobeys a final cease-and-desist order, hides or refuses to give records, or cannot timely pay principal or interest on any insured obligation (as defined in section 2277a(3)). The Board has exclusive power to make that appointment. After the 5-year period beginning on January 6, 1988, the Farm Credit System Insurance Corporation will serve as conservator or receiver. The Board can act without prior notice. The institution has thirty days to ask a federal court to remove the conservator or receiver, and that court case pauses other enforcement actions while it proceeds.
Full Legal Text
Title 12, §2183
Banks and Banking, Source: USLM XML via OLRC
(a)Voluntary liquidation; consent of Farm Credit Administration; rules and regulations; minimization of adverse effect; voluntary merger; mandatory merger on failure to comply or meet obligations
No institution of the System shall go into voluntary liquidation without the consent of the Farm Credit Administration and with such consent may liquidate only in accordance with regulations prescribed by the Farm Credit Administration. In the case of a voluntary liquidation of an association, such regulations, among other things, shall direct the supervising bank to institute such measures as it deems appropriate to minimize the adverse effect of the liquidation on those borrowers whose loans are purchased by or otherwise transferred to another System institution. The Farm Credit Administration Board may require an association to merge with another association whenever it determines, with the concurrence of the board of the supervising bank, that an association has failed to meet its outstanding obligations or failed to conduct its operations in accordance with this chapter.
(b)Appointment of conservator or receiver; grounds; action for removal; stay of actions or proceedings
The Farm Credit Administration Board may appoint a conservator or receiver for any System institution on the determination by the Farm Credit Administration Board that one or more of the following exists, or is occurring, with respect to the institution: (1) insolvency, in that the assets of the institution are less than its obligations to its creditors and others, including its members; (2) substantial dissipation of assets or earnings due to any violation of law, rules, or regulations, or to any unsafe or unsound practice; (3) an unsafe or unsound condition to transact business; (4) willful violation of a cease and desist order that has become final; (5) concealment of books, papers, records, or assets of the institution or refusal to submit books, papers, records, or other material relating to the affairs of the institution for inspection to any examiner or to any lawful agent of the Farm Credit Administration; (6) the institution is unable to timely pay principal or interest on any insured obligation (as defined in section 2277a(3) of this title) issued by the institution. The Farm Credit Administration Board shall have exclusive power and jurisdiction to appoint a conservator or receiver, and such receiver or conservator, after the 5-year period beginning on January 6, 1988, shall be the Farm Credit System Insurance Corporation. If the Farm Credit Administration Board determines that a ground for the appointment of a conservator or receiver as herein provided exists, the Farm Credit Administration Board may appoint ex parte and without notice a conservator or receiver for the institution. In the event of such appointment, the institution, within thirty days thereafter, may bring an action in the United States district court for the judicial district in which the home office of such institution is located, or in the United States District Court for the District of Columbia, for an order requiring the Farm Credit Administration Board to remove such conservator or receiver, and the court shall on the merits, dismiss such action or direct the Farm Credit Administration Board to remove such conservator or receiver. On the commencement of such an action, the court having jurisdiction of any other action or enforcement proceeding authorized under this chapter to which the institution is a party shall stay such action or proceeding during the pendency of the action for removal of the conservator or receiver.
(c)Involuntary liquidation; rules and regulations; minimization of adverse effect
In the case of an involuntary liquidation of an association, regulations of the Farm Credit Administration, among other things, shall direct the supervising bank to institute such measures as it deems appropriate to minimize the adverse effect of the liquidation on those borrowers whose loans are purchased by or otherwise transferred to another System institution.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
1988—Subsec. (a). Pub. L. 100–399, § 901(f), substituted “board of the supervising bank” for “district board”. Pub. L. 100–233, § 415(a)(4), struck out third sentence which provided that Associations may voluntarily merge with other like associations upon the vote of a majority of each of their stockholders present and voting or voting by written proxy at duly authorized meetings, and with the approval of the supervising bank and the Farm Credit Administration, and substituted “Board may require an association to merge with another association” for “may require such merger” in fourth sentence. Subsec. (b). Pub. L. 100–233, § 431(g), substituted “Farm Credit Administration Board” for “Farm Credit Administration” wherever appearing other than in cl. (5). Pub. L. 100–233, § 306, added cl. (6) and inserted “, and such receiver or conservator, after the 5-year period beginning on January 6, 1988, shall be the Farm Credit System Insurance Corporation” before the period at end of second sentence. Pub. L. 100–233, § 805(r), substituted “court shall” for “court, shall”. 1985—Subsec. (a). Pub. L. 99–205, § 205(f)(5), substituted “Farm Credit Administration” for “Federal Farm Credit Board” in last sentence. Pub. L. 99–205, § 305(a), inserted after first sentence a sentence requiring the
Regulations
, in the case of a voluntary liquidation of an association, to direct the supervising bank to institute appropriate measures to minimize the adverse effect of the liquidation on borrowers whose loans are purchased by or otherwise transferred to another System institution. Subsec. (b). Pub. L. 99–205, § 102, in revising subsec. (b), substituted expanded provisions respecting appointment of conservator or receiver for former provision, which read as follows: “Upon default of any obligation by any institution of the System, such institution may be declared insolvent and placed in the hands of a conservator or a receiver appointed by the Governor and the proceedings thereon shall be in accordance with
Regulations
of the Farm Credit Administration regarding such insolvencies.” Subsec. (c). Pub. L. 99–205, § 305(b), added subsec. (c).
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.
Reference
Citations & Metadata
Citation
12 U.S.C. § 2183
Title 12, Banks and Banking
Last Updated
Sep 22, 2026
Release point: 119-110