PRIA, Government Policy, Made Personal

Summary

When a loan principal is canceled under section 2202a, the borrower’s stock connected to that loan must be canceled dollar for dollar, up to how much stock the borrower actually owns. For Farm Credit Banks, the borrower’s Federal land bank association must cancel the borrower's stock and the bank must retire an equal amount of its own association stock if its bylaws allow. For production credit associations, the association must cancel the borrower's stock. The borrower must be allowed to keep at least one share to keep membership and voting rights.

Title 12, §2202b

Banks and Banking, Source: USLM XML via OLRC

(a)Farm Credit Bank

If a Farm Credit Bank forgives and writes off, under section 2202a of this title, any of the principal outstanding on a loan made to any borrower, the Federal land bank association of which the borrower is a member and stockholder shall cancel the same dollar amount of borrower stock held by the borrower in respect of the loan, up to the total amount of such stock, and, to the extent provided for in the bylaws of the bank relating to its capitalization, the bank shall retire an equal amount of stock owned by the Federal land bank association.

(b)Production credit association

If a production credit association forgives and writes off, under section 2202a of this title, any of the principal outstanding on a loan made to any borrower, the association shall cancel the same dollar amount of borrower stock held by the borrower in respect of the loan, up to the total amount of such stock.

(c)Retention of stock

Notwithstanding subsections (a) and (b), the borrower shall be entitled to retain at least one share of stock to maintain the borrower’s membership and voting interest in the association.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1988—Subsec. (a). Pub. L. 100–399 substituted in subsec. heading “Farm Credit Bank” for “Federal land bank” and in text “a Farm Credit Bank” for “a Federal land bank” and “, to the extent provided for in the bylaws of the bank relating to capitalization, the bank shall” for “the Federal land bank shall”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see section 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title.

§2202b Effect of Restructuring on Borrower Stock