12 U.S.C. § 2288: Bank obligations

Summary

The Bank may sell up to $15,000,000,000 in debt to the public at any one time, unless Congress allows more. The Bank decides how long the debt lasts and the interest it pays. It can also pay the debt off early if it wants. When it can, the Bank should make its debts line up with its assets. The Treasury Secretary may buy the Bank’s debt using money from sales of government securities under chapter 31 of title 31. Each Treasury purchase must give at least the minimum return the Secretary sets, based on the current average yield of similar U.S. marketable debt. The Secretary can later sell those holdings, and all buys and sales are treated as public debt transactions. The Bank can require the Treasury Secretary to buy enough of its debt so the Secretary’s holdings from those required buys do not go over $5,000,000,000 at any one time. That limit does not stop the Secretary from buying more on his own. The Bank’s debt is a lawful investment and can be used as security for trust, fiduciary, and public funds of the U.S., the District of Columbia, Puerto Rico, U.S. territories, their agencies, and officers.

Title 12, §2288

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(a)Maximum amount of obligations issued publicly and outstanding at any one time

The Bank is authorized, with the approval of the Secretary of the Treasury, to issue publicly and have outstanding at any one time not in excess of $15,000,000,000, or such additional amounts as may be authorized in appropriations Acts, of obligations having such maturities and bearing such rate or rates of interest as may be determined by the Bank. Such obligations may be redeemable at the option of the Bank before maturity in such manner as may be stipulated therein. So far as is feasible, the debt structure of the Bank shall be commensurate with its asset structure.

(b)Purchase and sale of obligations of Federal Financing Bank by Secretary of the Treasury as public debt transactions

The Bank is also authorized to issue its obligations to the Secretary of the Treasury and the Secretary of the Treasury may in his discretion purchase or agree to purchase any such obligations, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under chapter 31 of title 31, and the purposes for which securities may be issued under chapter 31 of title 31 are extended to include such purchases. Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon such terms and conditions as to yield a return at a rate not less than a rate determined by the Secretary of the Treasury, taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity. The Secretary of the Treasury may sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obligations acquired by him under this subsection. All purchases and sales by the Secretary of the Treasury of such obligations under this subsection shall be treated as public debt transactions of the United States.

(c)Authority of Federal Financing Bank to require Secretary of the Treasury to purchase obligations of the Bank

The Bank may require the Secretary of the Treasury to purchase obligations of the Bank issued pursuant to subsection (b) in such amounts as will not cause the holding by the Secretary of the Treasury resulting from such required purchases to exceed $5,000,000,000 at any one time. This subsection shall not be construed as limiting the authority of the Secretary to purchase obligations of the Bank in excess of such amount.

(d)Bank obligations as lawful investments

Obligations of the Bank issued pursuant to this section shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States, or any agency or instrumentality of any of the foregoing, or any officer or officers thereof.

Editorial Notes

Codification In subsec. (b), “chapter 31 of title 31” substituted for “the Second Liberty Bond Act” on authority of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

§2288 Bank Obligations

Summary

Title 12, §2288

Notes & Related Subsidiaries

Editorial Notes

Citations & Metadata