7 U.S.C. § 934: Authorized financial…

Summary

The Secretary can issue short-term IOUs to the Secretary of the Treasury to get money needed to pay the fund’s bills, make loans and advances, and cover allowed expenses. The Treasury and the Secretary agree on the IOU details. The Treasury sets the interest rate based on similar government securities and must buy those IOUs. The Treasury may use money from selling federal securities under chapter 31 to buy them. Those IOU transactions are treated as federal debt operations and are not counted in the government’s budget totals or subject to general budget limits. The Treasury must also buy, then resell, obligations insured by the fund when the Secretary offers them, on terms the Treasury decides, and those buys/resales are likewise excluded from budget totals and limits. The Secretary may sell or assign fund notes or sell ownership certificates, insured or not, to the Treasury or in the private market. Such sales count as asset sales under chapter 11 of title 31 even if the Secretary keeps custody of the loans for the buyer. Security interests taken with the notes can give the United States a legal claim, even after sale.

Title 7, §934

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(a)The Secretary is authorized to make and issue interim notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations of the fund and for making loans, advances and authorized expenditures out of the fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be agreed upon by the Secretary and the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this section. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States: Provided, however, That such interim notes to the Secretary of the Treasury shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States.

(b)The Secretary of the Treasury is authorized and directed to purchase for resale obligations insured through the fund when offered by the Secretary. Such resales shall be upon such terms and conditions as the Secretary of the Treasury shall determine. Purchases and resales by the Secretary of the Treasury hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and not lending (budget outlays) of the United States.

(c)The Secretary may, on an insured basis or otherwise, sell and assign any notes in the fund or sell certificates of beneficial ownership therein to the Secretary of the Treasury or in the private market. Any sale by the Secretary of notes individually or in blocks shall be treated as a sale of assets for the purposes of chapter 11 of title 31, notwithstanding the fact that the Secretary, under an agreement with the purchaser or purchasers, holds the debt instruments evidencing the loans and holds or reinvests payments thereon as trustee and custodian for the purchaser or purchasers of the individual note or of the certificate of beneficial ownership in a number of such notes. Security instruments taken by the Secretary in connection with any notes in the fund may constitute liens running to the United States notwithstanding the fact that such notes may be thereafter held by purchasers thereof.

Notes & Related Subsidiaries

Editorial Notes

Codification In subsecs. (a) and (c), “chapter 31 of title 31”, “such chapter”, and “chapter 11 of title 31” substituted for “the Second Liberty Bond Act, as amended”, “such Act, as amended”, and “the Budget and Accounting Act, 1921 [31 U.S.C. 1 et seq.]”, respectively, 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.

Amendments

1994—Pub. L. 103–354 substituted “Secretary” for “Administrator” wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective May 11, 1973, see section 12 of Pub. L. 93–32, set out as a note under section 930 of this title.

§934 Authorized Financial Transactions; Interim Notes; Purchase of Obligations for Resale; Sale of Notes and Certificates; Liens