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Title 12 — Banks and BankingRelease 119-73not60

§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

Last updated Apr 3, 2026|Official source

Summary

Institutions in the Farm Credit System cannot wind up and close themselves voluntarily unless the Farm Credit Administration (FCA) agrees. If the FCA agrees, the institution must follow FCA rules for the liquidation. When an association is winding down, those rules will tell the supervising bank to take steps to reduce harm to borrowers whose loans are bought or moved to another System institution. The FCA Board can force an association to merge with another one if the association fails to meet obligations or follow the law, with the supervising bank’s agreement. The FCA Board can also name a conservator or receiver for an institution when certain problems exist: it is insolvent (assets are less than what it owes), losing assets or earnings because of illegal or unsafe practices, is not safe to do business, willfully broke a final cease-and-desist order, hid or refused to show records, or cannot pay principal or interest on any insured obligation. The FCA Board has the sole power to make this appointment. After the five-year period beginning January 6, 1988, the Farm Credit System Insurance Corporation will serve as the conservator or receiver. The Board can appoint one without notice. The institution may file a court case within 30 days in its home district or the District of Columbia to ask the court to remove the conservator or receiver; the court will decide on the merits. Starting that court case pauses other enforcement actions against the institution while the removal case is pending.

Full Legal Text

Title 12, §2183

Banks and Banking — Source: USLM XML via OLRC

(a)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)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)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

Apr 3, 2026

Release point: 119-73not60