SUBCHAPTER V—FARM CREDIT ADMINISTRATION ORGANIZATION
Editorial Notes
Codification
Part A —District Organization
§2221. Transferred
Editorial Notes
Codification
Section,
§§2222 to 2227. Repealed. Pub. L. 100–399, title IV, §409(d), Aug. 17, 1988, 102 Stat. 1003
Sections 2222 to 2227 were directed to be repealed by
Section 409(c) of
Section 2222,
Section 2223,
Section 2224,
Section 2225,
Section 2226,
Section 2227,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective immediately after amendments made by section 401 of
Part B—Farm Credit Administration Organization
Executive Documents
Ex. Ord. No. 6084. Reorganizing Agricultural Credit Agencies of the United States
Ex. Ord. No. 6084, Mar. 27, 1933, provided in part: . . . it is hereby ordered that:
(1) The functions of the Secretary of Agriculture as a member of the Federal Farm Board, and the offices of the appointed members of the Federal Farm Board, except the office of the member designated as chairman thereof, are abolished.
(2) The name of the Federal Farm Board is changed to the Farm Credit Administration.
(3) The name of the office of Chairman of the Federal Farm Board is changed to Governor of the Farm Credit Administration, and he is vested with all the powers and duties of the Federal Farm Board.
(4) The functions of the Secretary of the Treasury as a member of the Federal Farm Loan Board, and the offices of the appointed members of the Federal Farm Loan Board, except the office of the member designated as farm loan commissioner, are abolished, and all the powers and functions of the Federal Farm Loan Board, are transferred to and vested in the Farm Loan Commissioner, subject to the jurisdiction and control of the Farm Credit Administration as herein provided.
(5) There are transferred to the jurisdiction and control of the Farm Credit Administration:
(a) The Federal Farm Loan Bureau and the functions thereof; together with the functions of the Federal Farm Loan Board, including the functions of the Farm Loan Commissioner;
(b) The functions of the Treasury Department and the Department of Agriculture, and the Secretaries thereof, under Executive authorizations to give aid to farmers, dated July 26, 1918, and any extensions or amendments thereof;
(c) The functions of the Secretary of Agriculture under all provisions of law relating to the making of advances or loans to farmers, fruit growers, producers and owners of livestock and crops, and to individuals for the purpose of assisting in forming or increasing the capital stock of agricultural-credit corporations, livestock-loan companies, or like organizations, except Public Resolution No. 74, Seventieth Congress, approved December 21, 1928, providing for the Puerto Rican Hurricane Relief Commission;
(d) The Crop Production Loan Office and the Seed Loan Office of the Department of Agriculture, and the functions thereof;
(e) The functions of the Reconstruction Finance Corporation and its Board of Directors relating to the appointment of officers and agents to manage regional agricultural credit corporations formed under [former] section 201(e) of the Emergency Relief and Construction Act of 1932 [former
(6) The functions vested in the Federal Farm Board by section 9 of the Agricultural Marketing Act [
(7) The records, property (including office equipment), and personnel used and employed in the execution of the functions hereinbefore transferred are transferred to the jurisdiction and control of the Farm Credit Administration.
(8) The sum of $2,000,000 of the unexpended balances of appropriations made to the Federal Farm Board by Public Resolutions No. 43 and No. 51 of the Seventy-second Congress shall be impounded and returned to the Treasury, which sum shall be in addition to the other savings to be effected by the Farm Credit Administration as a result of this order.
(9) The unexpended balances of appropriations to the Secretary of Agriculture, the Federal Farm Loan Bureau, and the Federal Farm Board for salaries, expenses, and all other administrative expenditures in the execution of the functions herein vested in the Farm Credit Administration shall be transferred to and vested in the Farm Credit Administration as a single fund for its use for salaries, expenses, and all other administrative expenditures for the execution of any or all of such functions without restriction as to the particular functions for the execution of which the same were originally appropriated. All other appropriations, allotments, and other funds available for use in connection with the functions and executive agencies hereby transferred and consolidated are hereby transferred to and vested in the Farm Credit Administration, and shall be available for use by it, for the same purposes as if the Farm Credit Administration were named in the law or authority providing such appropriations, allotments, or other funds.
(10) All power, authority, and duties conferred by law upon any officer, executive agency, or head thereof, from which or from whom transfer is hereinbefore made, in relation to the executive agency or function transferred, are transferred to and vested in the Governor of the Farm Credit Administration.
(11) The Governor of the Farm Credit Administration is directed to dismiss, furlough, transfer, or make other appropriate disposition of such of the officers and employees under his jurisdiction and control as are not required for the proper execution of the functions of the Farm Credit Administration.
(12) The Governor of the Farm Credit Administration is authorized to execute any and all functions and perform any and all duties vested in him through such persons as he shall by order designate or employ.
(13) The Governor of the Farm Credit Administration, by order or rules and regulations, may consolidate, regroup, and transfer offices, bureaus, activities, and functions in the Farm Credit Administration, so far as may be required to carry out the purposes to which this order is directed, and may fix or change the names of such offices, bureaus, and activities and the duties, powers, and titles of their executive heads.
This order shall take effect upon the sixty-first calendar day after its transmission to Congress unless otherwise determined in accordance with the provisions of section 407 of the act cited above, as amended.
Franklin D. Roosevelt.
[All functions, powers and duties of the Governor of the Farm Credit Administration which relate to the making, administration, and liquidation of all loans identified or referred to in pars. 5(b), 5(c), and 5(d) of this Executive Order were abolished by act Aug. 14, 1946, ch. 964, §2(a)(2),
§2241. Farm Credit Administration
The Farm Credit Administration shall be an independent agency in the executive branch of the Government. It shall be composed of the Farm Credit Administration Board and such other personnel as are employed in carrying out the functions, powers, and duties vested in the Farm Credit Administration by this chapter.
(
Editorial Notes
Amendments
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
Interim Implementation of 1985 Amendment
"(a) Until the Chairman of the Farm Credit Administration Board provided for under the amendment made by section 201(1) of this Act [see
"(b)(1) Except as provided in paragraph (2), until at least two members of the Farm Credit Administration Board provided under the amendment made by section 201(1) of this Act [see
"(2) When the Chairman of such Board is so appointed and confirmed, the Chairman shall assume any responsibilities and powers of the Board being exercised by the Governor under this subsection.
"(c) In carrying out the duties and functions specified in subsections (a) and (b), the Governor of the Farm Credit Administration shall serve at the pleasure of the President.
"(d) All regulations of the Farm Credit Administration or the institutions of the System, and all charters, bylaws, resolutions, stock classifications, and policy directives issued or approved by the Farm Credit Administration, and all elections held and appointments made under the Farm Credit Act of 1971 [this chapter], before the date of enactment of this Act [Dec. 23, 1985], shall be continuing and remain valid until superseded, modified, or replaced under the authority of this Act [
§2242. Farm Credit Administration Board
(a) Appointment
The management of the Farm Credit Administration shall be vested in a Farm Credit Administration Board (referred to in this part as "the Board"). The Board shall consist of three members, who shall be citizens of the United States and broadly representative of the public interest. Members of the Board shall be appointed by the President, by and with the advice and consent of the Senate. Not more than two members of the Board shall be members of the same political party. Of the persons thus appointed, one shall be designated by the President to serve as Chairman of the Board for the duration of the member's term. The members of the Board shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any institution of the Farm Credit System.
(b) Terms of office
The term of office of each member of the Board shall be six years, except that the terms of the two members, other than the Chairman, first appointed under subsection (a) shall expire, one on the expiration of two years after the date of appointment, and one on the expiration of four years after the date of appointment. Members of the Board shall not be appointed to succeed themselves, except that the members first appointed under subsection (a) for a term of less than six years may be reappointed for a full six-year term and members appointed to fill unexpired terms of three years or less may be reappointed for a full six-year term. Any vacancy shall be filled for the unexpired term on like appointment. Any member of the Board shall continue to serve as such after the expiration of the member's term until a successor has been appointed and qualified.
(c) Organization
Each member of the Board, within fifteen days after notice of appointment, shall subscribe to the oath of office. The Board may transact business if a vacancy exists, provided a quorum is present. A quorum shall consist of two members of the Board. The Board shall hold at least one meeting each month and such additional meetings at such times and places as it may fix and determine. Such meetings shall be held on the call of the Chairman or any two Board members. The Board shall adopt such rules as it deems appropriate for the transaction of business by the Board, and shall keep permanent and accurate records and minutes of the actions and proceedings of the Board.
(d) Compensation
The members of the Board shall devote their full time and attention to the business of the Board. The Chairman of the Board shall receive compensation at the rate prescribed for level III of the Executive Schedule under
(e) Qualifications of Farm Credit Administration Board members
The President shall appoint members of the Board who—
(1) are experienced or knowledgeable in agricultural economics and financial reporting and disclosure;
(2) are experienced or knowledgeable in the regulation of financial entities; or
(3) have a strong financial, legal, or regulatory background.
(
Editorial Notes
Amendments
1992—Subsec. (e).
1988—Subsec. (c).
1985—
1980—Subsec. (h).
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
Interim Implementation of 1985 Amendment
For provisions authorizing interim implementation by Governor of Farm Credit Administration of amendments to this section by
§2243. Powers of Board
The Board shall manage and administer, and establish policies for, the Farm Credit Administration. It—
(1) shall approve the rules and regulations for the implementation of this chapter not inconsistent with its provisions;
(2) shall provide for the examination of the condition of, and general regulation of the performance of the powers, functions, and duties vested in, each institution of the Farm Credit System;
(3) shall provide for the performance of all the powers and duties vested in the Farm Credit Administration; and
(4) may require such reports as it deems necessary from the institutions of the Farm Credit System.
(
Editorial Notes
Amendments
1988—
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
Interim Implementation of 1985 Amendment
For provisions authorizing interim implementation by Governor of Farm Credit Administration of amendments to this section by
§2244. Chairman; responsibilities; governing standards
(a) Chairman of Farm Credit Administration Board; power and authority
(1) The Chairman of the Board shall be the chief executive officer of the Farm Credit Administration.
(2) In carrying out the responsibilities of the chief executive officer, the Chairman shall be responsible for directing the implementation of policies and regulations adopted by the Board and, after consultation with the Board, the execution of the administrative functions and duties of the Farm Credit Administration.
(3) In carrying out policies as directed by the Board, the Chairman shall act as spokesperson for the Board and represent the Board and the Farm Credit Administration in their official relations within the Federal Government.
(4) Under policies adopted by the Board, the Chairman shall consult on a regular basis with—
(A) the Secretary of the Treasury concerning the exercise, by the System, of the powers conferred under
(B) the Board of Governors of the Federal Reserve System concerning the effect of System lending activities on national monetary policy; and
(C) the Secretary of Agriculture concerning the effect of System policies on farmers, ranchers, and the agricultural economy.
(b) Governing standards
In carrying out responsibilities under this chapter, the Chairman of the Board shall be governed by general policies adopted by the Board and by such regulatory decisions, findings, and determinations as the Board may by law be authorized to make and, as to third persons, all acts of the Chairman of the Board shall be conclusively presumed to be in compliance with such general policies and regulatory decisions, findings, and determinations.
(c) Enforcement of rules, regulations, and orders of Board; civil proceedings; representation by attorneys
The Chairman of the Board shall enforce the rules, regulations, and orders of the Board. Except as provided in
(
Editorial Notes
Amendments
1988—Subsec. (a).
1985—
1980—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
Interim Implementation of 1985 Amendment
For provisions authorizing interim implementation by Governor of Farm Credit Administration of amendments to this section by
§2245. Organization of Farm Credit Administration
(a) Policies of Board
The Chairman of the Farm Credit Administration Board, in carrying out the powers and duties vested in the Chairman by this chapter, and Acts supplementary thereto, shall be governed by policies of the Board and by such regulatory decisions, findings, and determinations as the Board may by law be authorized to make.
(b) Appointments
The Chairman of the Board shall appoint such personnel as may be necessary to carry out the functions of the Farm Credit Administration. The appointment by the Chairman of the heads of major administrative divisions under the Board shall be subject to the approval of the Board.
(c) Personnel
(1) Appointments by Board members
Personnel employed regularly and full-time in the immediate offices of Board members shall be appointed by each such Board member.
(2) Officers and employees
(A) Appointment, compensation, and benefits
The Chairman shall fix the compensation and number of, and appoint and direct, employees of the Administration. The Chairman may set and adjust the rates of basic pay for employees of the Administration without regard to the provisions of
(B) "Other Federal bank regulatory agencies" defined
For purposes of this subsection, the term "other Federal bank regulatory agencies" has the same meaning given to the term "appropriate Federal banking agency" in
(C) Ethics in Government
The officers and employees of the agency shall be—
(i) subject to
(ii) considered officers or employees of the United States for the purposes of sections 201 through 203, and
(3) Delegation
The powers of the Chairman as chief executive officer necessary for day to day management may be exercised and performed by the Chairman through such other officers and employees of the Administration as the Chairman shall designate, except that the Chairman may not delegate powers specifically reserved to the Chairman by this chapter without Board approval.
(d) Funding
The operations of the Farm Credit Administration, and the salaries of members of the Board and employees of the Administration, shall be funded and paid for from the fund created under
(
Editorial Notes
Amendments
2022—Subsec. (c)(2)(C)(i).
1989—Subsec. (c)(2).
"(A) subject to the Ethics in Government Act of 1978 (
"(B) considered officers or employees of the United States for the purposes of sections 201 through 203, and
"(C) subject to
1988—
Subsec. (c)(2)(C).
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by section 415(a) of
Effective Date of 1985 Amendment
Amendment by
Construction of 1988 Amendment
Interim Implementation of 1985 Amendment
For provisions authorizing interim implementation by Governor of Farm Credit Administration of amendments to this section by
§2246. Advisory committees
The Chairman of the Board, subject to the approval of the Board, may establish one or more advisory committees in accordance with
(
Editorial Notes
References in Text
The Farm Credit Amendments Act of 1985, referred to in text, is
Amendments
2022—
1988—
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
Interim Implementation of 1985 Amendment
For provisions authorizing interim implementation by Governor of Farm Credit Administration of amendments to this section by
§2247. Repealed. Pub. L. 99–205, title II, §201(2), Dec. 23, 1985, 99 Stat. 1690
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective thirty days after Dec. 23, 1985, see section 401 of
§2248. Seal of the Farm Credit Administration
The Farm Credit Administration shall have a seal, as adopted by the Board, which shall be judicially noted.
(
Editorial Notes
Prior Provisions
A prior section 5.13 of
Amendments
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
§2249. Administrative expenses
The Farm Credit Administration may, within the limits of funds available therefor, make necessary expenditures for personnel services and rent at the seat of Government and elsewhere; contract stenographic reporting services; purchase and exchange lawbooks, books of reference, periodicals, newspapers, expenses of attendance at meetings and conferences; purchase, operation, and maintenance at the seat of Government and elsewhere of motor-propelled passenger-carrying vehicles and other vehicles; printing and binding; and for such other facilities and services, including temporary employment by contract or otherwise, as it may from time to time find necessary for the proper administration of this chapter. The Farm Credit Administration may dispose of property so acquired and any amounts collected from the disposition of such property shall be deposited in the special fund provided for in
(
Editorial Notes
Prior Provisions
A prior section 5.14 of
Amendments
1985—
1980—
Statutory Notes and Related Subsidiaries
Effective Date of 1985 Amendment
Amendment by
§2250. Farm Credit Administration operating expenses fund
(a) Determinations required
(1) Generally
Prior to the first day of each fiscal year, the Farm Credit Administration shall determine—
(A) the cost of administering this chapter for the subsequent fiscal year, including expenses for official functions;
(B) the amount of assessments that will be required to pay such administrative expenses, taking into consideration the funds contained in the Administrative Expense Account, and maintain a necessary reserve; and
(C) the amount of assessments that will be required to pay the costs of supervising and examining the Mortgage Corporation established under subchapter VIII.
(2) Apportionments
On the basis of the determinations made under paragraph (1), the Farm Credit Administration shall—
(A) apportion the amount of the assessment described in paragraph (1)(B) among the System institutions on a basis that is determined to be equitable by the Farm Credit Administration;
(B) assess and collect such apportioned amounts from time to time during the fiscal year as determined necessary by the Farm Credit Administration; and
(C) assess and collect from the Mortgage Corporation, from time to time during the fiscal year, the amount described in paragraph (1)(C).
(b) Deposits into fund
(1) Treasury fund
The amounts collected under subsection (a) shall be deposited in the Farm Credit Administration Administrative Expense Account. The Expense Account shall be maintained in the Treasury of the United States and shall be available, without regard, for purposes of sequestration, to the Balanced Budget and Emergency Deficit Control Act of 1985 [
(2) Nongovernment funds
The funds contained in the Expense Account shall not be construed to be Federal Government funds or appropriated moneys.
(3) Investment
(A) Authority
On request of the Farm Credit Administration, the Secretary of the Treasury shall invest and reinvest such amounts contained in the Expense Account as, in the determination of the Farm Credit Administration, are in excess of the amounts necessary for current expenses of the Farm Credit Administration.
(B) Returns
All income earned from such investments and reinvestments shall be deposited in the Expense Account.
(C) Type
Such investments shall be made in public debt securities with maturities suitable to the needs of the Expense Account, as determined by the Farm Credit Administration, and bearing interest at rates determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.
(
Editorial Notes
References in Text
The Balanced Budget and Emergency Deficit Control Act of 1985, referred to in subsec. (b)(1), is title II of
Prior Provisions
A prior section 5.15 of
Amendments
1992—Subsec. (b)(1).
1988—
"(a) The Farm Credit Administration shall prior to the first day of each fiscal year estimate the cost of administrative expenses for the ensuing fiscal year in administering this chapter, including official functions, and shall apportion the amount so determined among the institutions of the System on such equitable basis as the Farm Credit Administration shall determine, and shall assess against and collect in advance the amounts so apportioned from the institutions among which the apportionment is made.
"(b) The amounts collected pursuant to subsection (a) of this section shall be covered into the Treasury, and credited to a special fund and, without regard to other law, shall be available to the Farm Credit Administration for expenditure during each fiscal year for salaries and expenses of the Farm Credit Administration. As soon as practicable after the end of each such fiscal year, the Farm Credit Administration shall determine, on a fair and reasonable basis, the cost of operation of the Farm Credit Administration and the part thereof which fairly and equitably should be allocated to each bank and association as its share of the cost during the fiscal year of the Farm Credit Administration. If the amount so allocated is greater than the amount collected from the bank or other institutions, the difference shall be collected from such bank or other institutions, and, if less, shall be refunded from the special fund to the bank or other institutions entitled thereto or credited in the special fund to such bank or other institutions for use for the same purposes in future fiscal years."
Subsec. (a)(2)(A).
Subsec. (a)(2)(C).
1985—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1985 Amendment
Amendment by
§2251. Quarters and facilities for the Farm Credit Administration
(a) Location of principal office
The Farm Credit Administration shall maintain its principal office within the Washington D.C.-Maryland-Virginia standard metropolitan statistical area, and such other offices within the United States as in its judgment are necessary.
(b) Alternate property authorizations for System banks
As an alternate to the rental of quarters under
(1) To lease or acquire real property in the District of Columbia or elsewhere for quarters of the Farm Credit Administration.
(2) To construct, develop, furnish, and equip such building thereon and such facilities appurtenant thereto as in their judgment may be appropriate to provide, to the extent the Board may deem advisable, suitable, and adequate quarters and facilities for the Farm Credit Administration.
(3) To enlarge, remodel, or reconstruct the same.
(4) To make or enter into contracts for any of the foregoing.
(5) To sell or otherwise dispose of any interest in property leased or acquired under the foregoing if authorized by the Board.
(c) Financing
(1) In general
The Board may require of the respective banks of the System, and they shall make to the Farm Credit Administration, such advances of funds for the purposes set out in this section as in the sole judgment of the Board may from time to time be advisable for the purposes of this section.
(2) Advances
The advances of funds described in paragraph (1) shall be in addition to and kept in a separate fund from the assessments authorized in
(3) Powers of banks
The powers of the banks of the System and purposes for which obligations may be issued by such banks are hereby enlarged to include the purpose of obtaining funds to permit the making of advances required by this section.
(4) Approval of board
The plans and decisions for such building and facilities and for the enlargement, remodeling, or reconstruction thereof shall be such as is approved in the sole discretion of the Board.
(5) Agent for banks
In actions undertaken by the banks pursuant to this section, the Farm Credit Administration may act as agent for the banks.
(
Editorial Notes
Prior Provisions
A prior section 5.16 of
Amendments
2018—Subsecs. (a), (b).
Subsec. (c).
Subsec. (c)(2).
Subsec. (c)(5).
1988—
1985—
1980—
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1985 Amendment
Amendment by
§2252. Powers and duties
(a) Enumerated powers
The Farm Credit Administration shall have the following powers, functions, and responsibilities in connection with the institutions of the Farm Credit System and the administration of this chapter:
(1) Modify the boundaries of farm credit districts, with due regard for the farm credit needs of the country, as approved by the Board, with the concurrence of the district banks involved.
(2) Where necessary or appropriate to carry out the policy and objectives of this chapter, issue and approve amendments to Federal charters of institutions of the System; approve change in names of banks operating under this chapter; approve the merger of districts when agreed to by the district bank boards involved and by a majority vote of the voting stockholders and contributors to the guaranty funds of each bank for each of such districts, voting in the same manner as is provided in
(3) Make annual reports directly to Congress on the condition of the System and its institutions, based on the examinations carried out under
(4) Approve the issuance of obligations of the System under subsections (c) and (d) of
(5) Grant approvals provided for under this chapter either on a case-by-case basis or through regulations that confer approval on actions of Farm Credit System institutions.
(6) Establish standards for the System institutions with respect to loan security requirements and regulate the borrowing, repayment, and transfer of funds and equities between institutions of the System.
(7) Conduct loan and collateral security review.
(8) Regulate the preparation by System institutions and the dissemination to stockholders and investors of information on the financial condition and operations of such institutions, except that the requirements of the Farm Credit Administration governing the dissemination to stockholders of quarterly reports of System institutions may not be more burdensome or costly than the requirements applicable to national banks, and the Farm Credit Administration may not require any System institution to disclose in any report to stockholders information concerning the condition or classification of a loan—
(A) to a director of the institution—
(i) who has resigned before the time for filing the applicable report with the Farm Credit Administration; or
(ii) whose term of office will expire no later than the date of the meeting of stockholders to which the report relates; or
(B) to a member of the immediate family of a director of the institution unless—
(i) the family member resides in the same household as the director; or
(ii) the director has a material financial or legal interest in the loan or business operation of the family member.
(9) Prescribe rules and regulations necessary or appropriate for carrying out this chapter.
(10) Exercise the powers conferred on it under part C of this subchapter for the purpose of ensuring the safety and soundness of System institutions.
(11) Exercise such incidental powers as may be necessary or appropriate to fulfill its duties and carry out the purposes of this chapter.
(12) Require surety bonds or other provisions for protection of the assets of the institutions of the System against losses occasioned by employees.
(13)(A) Subject to subparagraph (B), the Farm Credit Administration may approve an amendment to the charter of any institution of the Farm Credit System operating under subchapter I or II, which would authorize the institution to exercise lending authority in any territory—
(i) in the geographic area served by an association that was reassigned pursuant to section 433 of the Agricultural Credit Act of 1987 (
(ii) in which the charter of an institution that is not seeking the charter amendment authorizes the institution to exercise the type of lending authority that is the subject of the charter request.
(B) The Farm Credit Administration may approve a charter amendment under subparagraph (A) only on the approval of—
(i) the respective boards of directors of the associations that, if the charter request is approved, would exercise like lending authority in any of the territory that is the subject of the charter request;
(ii) a majority of the stockholders of each association described in clause (i) voting, in person or by proxy, at a duly authorized stockholders' meeting; and
(iii) the respective boards of directors of the Farm Credit Banks that, if the charter request is approved, would exercise, either directly or through associations, like lending authority in any of the territory described in subparagraph (A)(i).
(14)(A) Subject to subparagraph (B), the Farm Credit Administration may approve a request to charter an association of the Farm Credit System to operate under subchapter II where the proposed charter—
(i) will include any of the geographic area included in the territory served by an association that was reassigned pursuant to section 433 of the Agricultural Credit Act of 1987 (
(ii) will authorize the association to exercise lending authority in any territory in the geographic area in which the charter of an association that is not requesting the charter authorizes the association to exercise the type of lending authority that is the subject of the charter request.
(B) The Farm Credit Administration may approve a charter request under subparagraph (A) only on the approval of—
(i) the respective boards of directors of the associations that, if the charter request is approved, would exercise like lending authority in any of the territory that is the subject of the charter request;
(ii) a majority vote of the stockholders (if any) of each association described in clause (i) voting, in person or by proxy, at a duly authorized stockholder's meeting; and
(iii) the respective boards of directors of the Farm Credit Banks that, if the charter request is approved, would exercise, either directly or through associations, like lending authority in any of the territory described in subparagraph (A)(i).
(15)(A) Approve amendments to the charters of institutions of the Farm Credit System to implement the equalization of loan-making powers of a Farm Credit System association under
(B) Amendments described in subparagraph (A) to the charters of an association and the related Farm Credit Bank shall be approved by the Farm Credit Administration, subject to any conditions of approval imposed, by not later than 30 days after the date on which the Farm Credit Administration receives all approvals required by
(b) Exclusions
The Farm Credit Administration shall not have authority, either direct or indirect, to approve bylaws, or any amendments or modifications or changes to bylaws, of System institutions.
(c) Proposed and final regulations; procedures applicable
(1) At least thirty days prior to publishing any proposed regulation in the Federal Register, the Farm Credit Administration shall transmit a copy of the regulation to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. The Farm Credit Administration shall also transmit to such committees a copy of any final regulation prior to its publication in the Federal Register. Except as provided in paragraph (2) of this subsection, no final regulation of the Farm Credit Administration shall become effective prior to the expiration of thirty calendar days after it is published in the Federal Register during which either or both Houses of the Congress are in session.
(2) In the case of an emergency, a final regulation of the Farm Credit Administration may become effective without regard to the last sentence of paragraph (1) of this subsection if the Farm Credit Administration notifies in writing the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate setting forth the reasons why it is necessary to make the regulation effective prior to the expiration of the thirty-day period.
(d) Legislative veto of regulations; procedures applicable
(1) If there are any unresolved differences between the Farm Credit Administration and the Board of Governors of the Federal Reserve System as to whether any regulation implementing
(2) If at the end of sixty calendar days of continuous session of Congress after the date of promulgation of a regulation, no committee of either House of Congress has reported or been discharged from further consideration of a concurrent resolution disapproving the regulation, and neither House has adopted such a resolution, the regulation may go into effect immediately. If, within such sixty calendar days, such a committee has reported or been discharged from further consideration of such a resolution, or either House has adopted such a resolution, the regulation may go into effect not sooner than ninety calendar days of continuous session of Congress after its promulgation unless disapproved as provided in paragraph (1).
(3) For the purposes of paragraphs (1) and (2) of this subsection—
(i) continuity of session is broken only by an adjournment of Congress sine die; and
(ii) the days on which either House is not in session because of an adjournment of more than three days to a day certain are excluded in the computation of sixty and ninety calendar days of continuous session of Congress.
(4) Congressional inaction on or rejection of a resolution of disapproval shall not be deemed an expression of approval of such regulation.
(
Editorial Notes
Codification
Prior Provisions
A prior section 5.17 of
Amendments
2018—Subsec. (a)(2).
2008—Subsec. (a)(2).
Subsec. (a)(15).
1996—Subsec. (a)(2)(A).
Subsec. (a)(8).
1992—Subsec. (a)(2).
Subsec. (a)(13), (14).
1991—Subsec. (a)(8)(B)(ii).
1990—Subsec. (a)(13).
1988—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (a)(5).
Subsec. (a)(8).
Subsec. (a)(9).
Subsec. (a)(10) to (12).
Subsec. (a)(13).
Subsec. (a)(14).
Subsec. (a)(15).
Subsecs. (b), (c).
Subsec. (d).
Subsec. (d)(1).
1986—Subsec. (a)(5)(A).
1985—Subsec. (a).
1980—
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Amendment of this section and repeal of
[
Effective Date of 1991 Amendment
Amendment by
Effective Date of 1988 Amendments
Amendment by sections 205 and 409(a), (e) of
Amendment by section 207(a)(2) of
Effective Date of 1985 Amendment
Amendment by
Regulations
Termination of Reporting Requirements
For termination, effective May 15, 2000, of provisions in subsec. (a)(3) of this section relating to requirement to make annual reports to Congress, see section 3003 of
Compensation Disclosure by Farm Credit System Institutions
"(a)
"(1) the reasonable disclosure to stockholders by Farm Credit System institutions regarding the compensation of Farm Credit System institution senior officers is beneficial to stockholders' understanding of the operation of their institutions;
"(2) transparency regarding compensation practices reinforces the cooperative nature of Farm Credit System institutions;
"(3) the unique cooperative structure of the Farm Credit System should be considered when promulgating rules;
"(4) the participation of stockholders in the election of the boards of directors of Farm Credit System institutions provides stockholders the opportunity to participate in the management of their institutions;
"(5) as representatives of stockholders, the boards of directors of Farm Credit System institutions importantly establish and oversee the compensation practices of Farm Credit System institutions to ensure the safe and sound operation of those institutions; and
"(6) any regulation should strengthen and not hinder the ability of Farm Credit System boards of directors to oversee compensation practices.
"(b)
Regulatory Review
"(a)
"(1) the Farm Credit Administration, in the role of the Administration as an arms-length safety and soundness regulator, has made considerable progress in reducing the regulatory burden on Farm Credit System institutions;
"(2) the efforts of the Farm Credit Administration described in paragraph (1) have resulted in cost savings for Farm Credit System institutions; and
"(3) the cost savings described in paragraph (2) ultimately benefit the farmers, ranchers, agricultural cooperatives, and rural residents of the United States.
"(b)
Forbearance and Restructuring for Farm Loans; Farm Credit Administration
"(1) ensure that Farm Credit System institutions exercise forbearance in the collection of principal and interest on loans outstanding to such farmers and ranchers;
"(2) expedite the use of credit restructuring and other credit relief mechanisms authorized under the Agricultural Credit Act of 1987 [
"(3) encourage other lenders participating with Farm Credit System institutions in mutual loan agreements to exercise forbearance before declaring loans to such farmers and ranchers in default."
§2253. Repealed. Pub. L. 115–334, title V, §5411(30), Dec. 20, 2018, 132 Stat. 4682
Section,
A prior section 2253,
A prior section 5.18 of
§2254. Examinations
(a) Scope and frequency of examinations; power, authority, and liability of examiners
Each institution of the System shall be examined by Farm Credit Administration examiners at such times as the Board may determine, but in no event less than once during each 18-month period. Such examinations may include, if appropriate, but are not limited to, an analysis of credit and collateral quality and capitalization of the institution, and appraisals of the effectiveness of the institution's management and application of policies governing the carrying out of this chapter and regulations of the Farm Credit Administration and servicing all eligible borrowers. Examination of banks shall include an analysis of the compensation paid to the chief executive officer and the salary scales of the employees of the bank. At the direction of the Board, Farm Credit Administration examiners also shall make examinations of the condition of any organization, other than federally regulated financial institutions, to, for, or with which any institution of the System contemplates making a loan or discounting paper. For the purposes of this chapter, examiners of the Farm Credit Administration shall be subject to the same requirements, responsibilities, and penalties as are applicable to examiners under the National Bank Act [
(b) Annual report of condition
Each institution of the System shall make and publish an annual report of condition as prescribed by the Farm Credit Administration. Each such report shall contain financial statements prepared in accordance with generally accepted accounting principles and contain such additional information as the Farm Credit Administration by regulation may require. Such financial statements of System institutions shall be audited by an independent public accountant.
(c) Report of examination of noncomplying institution; publication; notice of intention
The Farm Credit Administration may publish the report of examination of any System institution that does not, before the end of the 120th day after the date of notification of the recommendations and suggestions of the Farm Credit Administration, based on such examination, comply with such recommendations and suggestions to the satisfaction of the Farm Credit Administration. The Farm Credit Administration shall give notice of intention to publish in the event of such noncompliance at least 90 days before such publication. Such notice of intention may be given any time after such notification of recommendations and suggestions.
(d) Duties of Farm Credit Administration
On receipt of a request made under
(1) furnish for the confidential use of the Farm Credit System Insurance Corporation reports of examination of the institution and other reports or information on the institution; and
(2)(A) examine, or obtain other information on, the institution and furnish for the confidential use of the Farm Credit System Insurance Corporation the report of the examination and such other information; or
(B) if the Farm Credit Administration Board determines that compliance with the request would substantially impair the ability of the Farm Credit Administration to carry out the other duties and responsibilities of the Farm Credit Administration under this chapter, notify the Board of Directors of the Farm Credit System Insurance Corporation that the Farm Credit Administration will be unable to comply with the request.
(e) Sharing of privileged and confidential information
A System institution shall not be considered to have waived the confidentiality of a privileged communication with an attorney or an accountant if the System institution provides the content of the communication to the Farm Credit Administration pursuant to the supervisory or regulatory authorities of the Farm Credit Administration.
(
Editorial Notes
Prior Provisions
A prior section 5.19 of
References in Text
The National Bank Act, referred to in subsec. (a), is act June 3, 1864, ch. 106,
The Federal Reserve Act, referred to in subsec. (a), is act Dec. 23, 1913, ch. 6,
The Federal Deposit Insurance Act, referred to in subsec. (a), is act Sept. 21, 1950, ch. 967, §2,
Amendments
2018—Subsec. (a).
Subsec. (b).
"(2) In accordance with the regulations of the Farm Credit Administration, for the period ending December 31, 1992, System institutions are authorized to use the authorities contained in the third sentence of paragraph (1) except as otherwise provided in
"(3) Any preferred stock issued under
Subsec. (e).
1996—Subsec. (a).
1992—Subsec. (a).
Subsec. (d).
1990—Subsec. (a).
1988—Subsec. (a).
Subsec. (b).
Subsec. (b)(2).
1986—Subsec. (b).
1985—
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1985 Amendment
Amendment by
Restraint by Federal Bank Regulatory Agencies in Overseeing Agricultural Borrowers
"(a) Congress finds and declares that—
"(1) high production costs and low commodity prices have combined to reduce farm income to the lowest levels since the depths of the Depression in the 1930's, to subject many agricultural producers, through no fault of their own, to severe economic hardship, and in many cases temporarily but seriously to impair producers' ability to meet loan repayment schedules in a timely fashion; and
"(2) a policy of adverse classification of agricultural loans by bank examiners under these circumstances will trigger a wave of foreclosures and similar actions on the part of banks, thereby depressing land values and prices for agricultural facilities and equipment and having a devastating effect on farmers and the banking industry, and upon rural areas of the United States in general.
"(b) It is therefore the sense of Congress that the Federal bank regulatory agencies should ensure, in their examination procedures, that examiners exercise caution and restraint and give due consideration not only to the current cash flow of agricultural borrowers under financial stress, but to factors such as their loan collateral and ultimate ability to repay as well, for so long as the adverse economic effects of the cost-price squeeze of recent years continue to impair the ability of these borrowers to meet scheduled repayments on their loans."
§2255. Conditions of other banks and lending institutions
The Comptroller of the Currency is authorized and directed, upon request of the Farm Credit Administration to furnish for confidential use of an institution of the System such reports, records, and other information as he may have available relating to the financial condition of national banks through, for, or with which such institution of the System has made or contemplates making discounts or loans and to make such further examination, as may be agreed, of organizations through, for, or with which such institution of the Farm Credit System has made or contemplates making discounts or loans.
(
Editorial Notes
Prior Provisions
A prior section 5.20 of
§2256. Consent to the availability of reports and to examinations
Any organization other than State banks, trust companies, and savings associations shall, as a condition precedent to securing discount privileges with a bank of the Farm Credit System, file with such bank its written consent to examination by farm credit examiners as may be directed by the Farm Credit Administration; and State banks, trust companies, and savings associations may be required in like manner to file a written consent that reports of their examination by constituted State authorities may be furnished by such authorities upon the request of the Farm Credit Administration.
(
Editorial Notes
Prior Provisions
A prior section 5.21 of
§2257. Reports on conditions of institutions receiving loans or deposits
The executive departments, boards, commissions, and independent establishments of the Government of the United States, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Reserve banks are severally authorized under such conditions as they may prescribe, upon request of the Farm Credit Administration, to make available to it or to any institution of the System in confidence all reports, records, or other information relating to the condition of any organization to which such institution of the System has made or contemplates making loan or for which it has or contemplates discounting paper, or which it is using or contemplates using as a custodian of securities or other credit instruments, or a depository. The Federal Reserve banks in their capacity as depositories, agents, and custodians for bonds, debentures, and other obligations issued by the banks of the System or book entries thereof are also authorized and directed, upon request of the Farm Credit Administration, to make available for audit by farm credit examiners all appropriate books, accounts, financial records, files, and other papers.
(
Editorial Notes
Prior Provisions
A prior section 5.22 of
§2257a. Uniform financial reporting instructions
(a) In general
Each System institution shall comply with uniform financial reporting instructions required by the Farm Credit Administration, to standardize and facilitate the reporting of System data.
(b) Computerized system
If the financial reports are maintained by a computer system, each System institution may develop an internal computer system or it may contract out to a vendor under open competitive bidding any or all aspects of the computerized system.
(c) Submission of proposal
Within 6 months of January 6, 1988, each System institution shall submit to the Farm Credit Administration a report on the plan of that institution to bring the operations of the institution into compliance with the uniform financial reporting instructions required by the Farm Credit Administration.
(
§2258. Jurisdiction
Each institution of the System shall for the purposes of jurisdiction be deemed to be a citizen of the State, commonwealth, or District of Columbia in which its principal office is located.
(
Editorial Notes
Prior Provisions
A prior section 5.23 of
Amendments
1975—
§2259. State legislation
Whenever it is determined by the Farm Credit Administration, or by judicial decision, that a State law is applicable to the obligations and securities authorized to be held by the institutions of the System under this chapter, which law would provide insufficient protection or inadequate safeguards against loss in the event of default, the Farm Credit Administration may declare such obligations or securities to be ineligible as collateral for the issuance of new notes, bonds, debentures, and other obligations under this chapter.
(
Editorial Notes
Prior Provisions
A prior section 5.24 of
§2260. Transferred
Editorial Notes
Codification
Section,
Part C—Enforcement Powers of Farm Credit Administration
§2261. Cease and desist proceedings
(a) If, in the opinion of the Farm Credit Administration, any institution in the Farm Credit System, or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such an institution is engaging or has engaged, or the Farm Credit Administration has reasonable cause to believe that the institution or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution is about to engage, in an unsafe or unsound practice in conducting the business of such institution, or is violating or has violated, or the Farm Credit Administration has reasonable cause to believe that the institution or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Farm Credit Administration in connection with the granting of any application or other request by the institution or any written agreement entered into with the Farm Credit Administration, the Farm Credit Administration may issue and serve upon the institution or such director, officer, employee, agent, or other person a notice of charges in respect thereof. The notice shall contain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist therefrom should issue against the institution or the director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Farm Credit Administration at the request of any party so served. Unless the party or parties so served shall appear at the hearing personally or by a duly authorized representative, they shall be deemed to have consented to the issuance of the cease and desist order. In the event of such consent, or if upon the record made at any such hearing, the Farm Credit Administration shall find that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Farm Credit Administration may issue and serve upon the institution or the director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution an order to cease and desist from any such violation or practice. Such order may, by provisions that may be mandatory or otherwise, require the institution or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such institution to cease and desist from the same, and, further, to take affirmative action to correct the conditions resulting from any such violation or practice.
(b) A cease and desist order shall become effective at the expiration of thirty days after the service of such order upon the institution or other person concerned (except in the case of a cease and desist order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided therein except to such extent as it is stayed, modified, terminated, or set aside by action of the Farm Credit Administration or a reviewing court.
(
Editorial Notes
Prior Provisions
A prior section 5.25 of
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2262. Temporary cease and desist orders
(a) Whenever the Farm Credit Administration shall determine that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the institution or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution under
(b) Within ten days after the institution concerned or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution has been served with a temporary cease and desist order, the institution or such director, officer, employee, agent, or other person may apply to the United States district court for the judicial district in which the home office of the institution is located, or the United States district court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the administrative proceedings pursuant to the notice of charges served upon the institution or such director, officer, employee, agent, or other person under
(
Editorial Notes
Prior Provisions
A prior section 5.26 of
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2263. Enforcement of temporary cease and desist orders
In the case of violation or threatened violation of, or failure to obey, a temporary cease and desist order issued under
(
Editorial Notes
Prior Provisions
A prior section 5.27 of
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2264. Suspension or removal of director or officer
(a) Written notice of intention to remove; violation of law, rule, regulation, or final cease and desist order; unsafe or unsound practice; breach of fiduciary duty
Whenever, in the opinion of the Farm Credit Administration, any director or officer of any institution in the Farm Credit System has committed any violation of law, rule, or regulation or of a cease and desist order that has become final, or has engaged or participated in any unsafe or unsound practice in connection with the institution, or has committed or engaged in any act, omission, or practice which constitutes a breach of a fiduciary duty as such director or officer, and the Farm Credit Administration determines that the institution has suffered or will probably suffer substantial financial loss or other damage or that the interests of its shareholders or investors in Farm Credit System obligations could be seriously prejudiced by reason of such violation or practice or breach of fiduciary duty, or that the director or officer has received financial gain by reason of such violation or practice or breach of fiduciary duty, and that such violation or practice or breach of fiduciary duty is one involving personal dishonesty on the part of such director or officer, or one that demonstrates a willful or continuing disregard for the safety or soundness of the System institution, the Farm Credit Administration may serve upon such director or officer a written notice of its intention to remove him from office.
(b) Written notice of intention to remove or suspend director, officer or other person; personal dishonesty; willful or continuing disregard; unfitness to continue in office or to participate in affairs of institution
Whenever, in the opinion of the Farm Credit Administration, any director or officer of an institution in the Farm Credit System, by conduct or practice with respect to another institution in the Farm Credit System or other business institution that resulted in substantial financial loss or other damage, has evidenced either his personal dishonesty or a willful or continuing disregard for its safety and soundness and, in addition, has evidenced his unfitness to continue as a director or officer, and whenever, in the opinion of the Farm Credit Administration, any other person participating in the conduct of the affairs of an institution in the Farm Credit System, by the conduct or practice with respect to such institution or other institution in the Farm Credit System or other business institution that resulted in substantial financial loss or other damage, has evidenced either personal dishonesty or a willful or continuing disregard for its safety and soundness and, in addition, has evidenced his unfitness to participate in the conduct of the affairs of such institution, the Farm Credit Administration may serve upon such director, officer, or other person a written notice of its intention to remove that director, officer, or other person from office or to prohibit his further participation in any manner in the conduct of the affairs of the institution.
(c) Suspension from office; prohibition from further participation in conduct of affairs of institution; service of notice
In respect to any director or officer of an institution in the Farm Credit System or any other person referred to in subsection (a) or (b) of this section, the Farm Credit Administration may, if it deems it necessary for the protection of the institution or the interests of its shareholders and the investors in the Farm Credit System obligations, by written notice to such effect served upon such director, officer, or other person, suspend such director, officer, or other person from office or prohibit such director, officer, or other person from further participation in any manner in the conduct of the affairs of the institution. Such suspension or prohibition shall become effective upon service of such notice and, unless stayed by a court in proceedings authorized by subsection (e) of this section, shall remain in effect pending the completion of the administrative proceedings pursuant to the notice served under subsection (a) or (b) and until such time as the Farm Credit Administration shall dismiss the charges specified in such notice, or, if an order of removal or prohibition is issued against the director or officer or other person, until the effective date of any such order. Copies of any such notice shall also be served upon the institution of which the person is a director or officer or in the conduct of whose affairs the person has participated.
(d) Statement of grounds for removal or prohibition; notice and hearing; order of suspension, removal or prohibition; service of order
A notice of intention to remove a director, officer, or other person from office or to prohibit such director's, officer's, or other person's participation in the conduct of the affairs of an institution in the Farm Credit System, shall contain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after the date of service of such notice, unless an earlier or a later date is set by the Farm Credit Administration at the request of (1) such director or officer or other person, and for good cause shown, or (2) the Attorney General of the United States. Unless such director, officer, or other person shall appear at the hearing in person or by a duly authorized representative, such director, officer, or other person shall be deemed to have consented to the issuance of an order of such removal or prohibition. In the event of such consent, or if upon the record made at any such hearing the Farm Credit Administration shall find that any of the grounds specified in such notice have been established, the Farm Credit Administration may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the institution, as it may deem appropriate. A copy of an order issued under this subsection shall be served upon the institution concerned. Any such order shall become effective at the expiration of thirty days after service upon such institution and the director, officer, or other person concerned (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the agency or a reviewing court.
(e) Stay of suspension or prohibition
Within ten days after any director, officer, or other person has been suspended from office or prohibited from participation in the conduct of the affairs of a System institution under subsection (c) of this section, such director, officer, or other person may apply to the United States district court for the judicial district in which the home office of the institution is located, or the United States district court for the District of Columbia, for a stay of either such suspension or prohibition, or both, pending the completion of the administrative proceedings pursuant to the notice served upon such director, officer, or other person under subsection (a) or (b), and such court shall have jurisdiction to stay either such suspension or prohibition, or both.
(
Editorial Notes
Prior Provisions
A prior section 5.28 of
Amendments
1988—Subsec. (a).
Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2265. Suspension or removal of director or officer charged with felony
(a) Whenever any director or officer of an institution in the Farm Credit System, or other person participating in the conduct of the affairs of such institution, is charged in any information, indictment, or complaint authorized by a United States attorney, with the commission of or participation in a crime involving dishonesty or breach of trust that is punishable by imprisonment for a term exceeding one year under State or Federal law, the Farm Credit Administration may, if continued service or participation by the individual may pose a threat to the interests of the institution's shareholders or investors in Farm Credit System obligations or threaten to impair public confidence in the institution or the Farm Credit System, by written notice served upon such director, officer, or other person, suspend such director, officer, or other person from office or prohibit such director, officer, or other person from further participation in any manner in the conduct of the affairs of the institution. A copy of such notice shall also be served upon the institution. Such suspension or prohibition shall remain in effect until such information, indictment, or complaint is finally disposed of or until terminated by the Farm Credit Administration. In the event that a judgment of conviction with respect to such crime is entered against such director, officer, or other person, and at such time as such judgment is not subject to further appellate review, the Farm Credit Administration may, if continued service or participation by the individual may pose a threat to the interests of the institution's shareholders or the investors in Farm Credit System obligations or may threaten to impair public confidence in the institution or the Farm Credit System, issue and serve upon such director, officer, or other person an order removing such director, officer, or other person from office or prohibiting such director, officer, or other person from further participation in any manner in the conduct of the affairs of the institution except with the consent of the Farm Credit Administration. A copy of such order shall also be served upon such institution, whereupon such director or officer shall cease to be a director or officer of such institution. A finding of not guilty or other disposition of the charge shall not preclude the Farm Credit Administration from thereafter instituting proceedings to remove such director, officer, or other person from office or to prohibit further participation in Farm Credit System affairs under
(b) Within thirty days from service of any notice of suspension or order of removal issued under subsection (a), the director, officer, or other person concerned may request in writing an opportunity to appear before the Farm Credit Administration to show that the continued service to or participation in the conduct of the affairs of the institution by such individual does not, or is not likely to, pose a threat to the interest of the institution's shareholders or the investors in Farm Credit System obligations or threaten to impair public confidence in the institution or the Farm Credit System. Upon receipt of any such request, the Farm Credit Administration shall fix a time (not more than thirty days after receipt of such request, unless extended at the request of the concerned director, officer, or other person) and place at which the director, officer, or other person may appear, personally or through counsel, before the Chairman of the Farm Credit Administration or designated employees of the Farm Credit Administration to submit written materials (or, at the discretion of the Farm Credit Administration, oral testimony) and oral argument. Within sixty days of such hearing, the Farm Credit Administration shall notify the director, officer, or other person whether the suspension or prohibition from participation in any manner in the conduct of the affairs of the institution will be continued, terminated, or otherwise modified, or whether the order removing such director, officer, or other person from office or prohibiting such individual from further participation in any manner in the conduct of the affairs of the institution will be rescinded or otherwise modified. Such notification shall contain a statement of the basis for the Farm Credit Administration's decision, if adverse to the director, officer, or other person. The Farm Credit Administration may prescribe such rules as may be necessary to effectuate the purposes of this subsection.
(
Editorial Notes
Prior Provisions
A prior section 5.29 of
Amendments
1988—Subsec. (a).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2265a. Removal and prohibition authority; industry-wide prohibition
(a) Definition of person
In this section, the term "person" means—
(1) an individual; and
(2) in the case of a specific determination by the Farm Credit Administration, a legal entity.
(b) Industry-wide prohibition
Except as provided in subsection (c), any person who, pursuant to an order issued under
(1) any insured depository institution subject to
(2) any institution subject to
(3) any insured credit union under the Federal Credit Union Act (
(4) any Federal home loan bank;
(5) any institution chartered under this chapter;
(6) any appropriate Federal financial institutions regulatory agency (as defined in
(7) the Federal Housing Finance Agency; or
(8) the Farm Credit Administration.
(c) Exception for institution-affiliated party that receives written consent
(1) In general
(A) Affiliated parties
If, on or after the date on which an order described in subsection (b) is issued that removes or suspends an institution-affiliated party from office at a System institution or prohibits an institution-affiliated party from participating in the conduct of the affairs of a System institution, that party receives written consent described in subparagraph (B), subsection (b) shall not apply to that party—
(i) to the extent provided in the written consent received; and
(ii) with respect to the institution described in each written consent.
(B) Written consent described
The written consent referred to in subparagraph (A) is written consent received from—
(i) the Farm Credit Administration; and
(ii) each appropriate Federal financial institutions regulatory agency (as defined in
(2) Disclosure
Any agency described in clause (i) or (ii) of paragraph (1)(B) that provides a written consent under that paragraph shall—
(A) report the action to the Farm Credit Administration; and
(B) publicly disclose the action.
(3) Consultation between agencies
The agencies described in clauses (i) and (ii) of paragraph (1)(B) shall consult with each other before providing any written consent under that paragraph.
(d) Violations
A violation of subsection (b) by any person who is subject to an order described in that subsection shall be treated as violation 2 of that order.
(
Editorial Notes
References in Text
The Federal Credit Union Act, referred to in subsec. (b)(3), is act June 26, 1934, ch. 750,
2 So in original. Probably should be preceded by "a".
§2266. Hearings and judicial review
(a) Venue; closed hearings; decisions and findings of fact; orders; modification or other action by Farm Credit Administration; judicial review
Any hearing provided for in this part (other than the hearing provided for in
(b) Judicial review; commencement of proceedings; filing of petition and record; exclusive jurisdiction; finality of judgment and decree
Any party to the proceeding, or any person required by an order issued under this part to cease and desist from any of the violations or practices stated therein, may obtain a review of any order served under subsection (a) (other than an order issued with the consent of the System institution or the director or officer or other person concerned, or an order issued under
(c) Proceedings operating as stays of orders
The commencement of proceedings for judicial review under subsection (b) shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Farm Credit Administration.
(
Editorial Notes
Prior Provisions
A prior section 5.30 of
Amendments
1988—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2267. Jurisdiction and enforcement
The Farm Credit Administration may in its discretion apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the home office of the institution is located, for the enforcement of any effective and outstanding notice or order issued under this part, and such courts shall have jurisdiction and power to order and require compliance herewith; but except as otherwise provided in this part no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this part, or to review, modify, suspend, terminate, or set aside any such notice or order. For purposes of this section, any directive issued under
(
Editorial Notes
Amendments
2018—
1988—
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2267a. Jurisdiction over institution-affiliated parties
(a) In general
For purposes of
(b) Effect of separation on jurisdiction and authority
Subject to subsection (c), the resignation, termination of employment or participation, or separation of an institution-affiliated party (including a separation caused by the merger, consolidation, conservatorship, or receivership of a Farm Credit System institution) shall not affect the jurisdiction and authority of the Farm Credit Administration to issue any notice or order and proceed under this part against that party.
(c) Limitation
To proceed against a party under subsection (b), the notice or order described in that subsection shall be served not later than 6 years after the date on which the party ceased to be an institution-affiliated party with respect to the applicable Farm Credit System institution.
(d) Applicability
The date on which a party ceases to be an institution-affiliated party described in subsection (c) may occur before, on, or after December 20, 2018.
(
§2268. Penalty
(a) Forfeiture and payment; compromise, modification, or remitting by Farm Credit Administration; assessment and collection by written notice
Any institution in the System that violates or any officer, director, employee, agent, or other person participating in the conduct of the affairs of such an institution who violates the terms of any order that has become final and was issued under
(b) Factors determining amount
Before determining whether to assess a civil money penalty and determining the amount of such penalty, the Farm Credit Administration shall notify the institution or person to be assessed of the violation or violations alleged to have occurred or to be occurring, and shall solicit the views of the institution or person regarding the imposition of such penalty. In determining the amount of the penalty, the Farm Credit Administration shall take into account the appropriateness of the penalty with respect to the size of financial resources and good faith of the System institution or person charged, the gravity of the violation, the history of previous violations, and such other matters as justice may require.
(c) Notice and hearing; final orders
The System institution or person assessed shall be afforded an opportunity for a hearing by the Farm Credit Administration, upon request made within ten days after issuance of the notice of assessment. In such hearing all issues shall be determined on the record pursuant to
(d) Judicial review
Any System institution or person against whom an order imposing a civil money penalty has been entered after a Farm Credit Administration hearing under this section may obtain review by the United States court of appeals for the circuit in which the home office of the System institution is located, or the United States Court of Appeals for the District of Columbia Circuit, by filing a notice of appeal in such court within twenty days after the service of such order, and simultaneously sending a copy of such notice by registered or certified mail to the Farm Credit Administration. The Farm Credit Administration shall promptly certify and file in such Court the record upon which the penalty was imposed, as provided in
(e) Action by Attorney General to recover amount assessed
If any System institution or person fails to pay an assessment after it has become a final and unappealable order, or after the court of appeals has entered final judgment in favor of the Farm Credit Administration, the Farm Credit Administration shall refer the matter to the Attorney General, who shall recover the amount assessed by action in the appropriate United States district court. In such action, the validity and appropriateness of the final order imposing the penalty shall not be subject to review.
(f) Rules and regulations
The Farm Credit Administration shall promulgate regulations establishing procedures necessary to implement
(g) Payment into Treasury
All penalties collected under authority of this section shall be covered into the Treasury of the United States.
(h) Directives as final orders
For purposes of this section, any directive issued under
(
Editorial Notes
Amendments
2018—Subsec. (h).
1988—Subsec. (a).
Subsec. (b).
Subsec. (d).
Subsec. (f).
Subsec. (h).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2269. Further penalties
Any director or officer, or former director or officer of a System institution, or any other person, against whom there is outstanding and effective any notice or order (which is an order which has become final) served upon such director, officer, or other person under
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2270. Replacement of suspended or removed directors
If at any time, because of the suspension or removal of one or more directors pursuant to
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2271. Definitions
As used in this part—
(1) the terms "cease and desist order that has become final" and "order which has become final" mean a cease and desist order, or an order, issued by the Farm Credit Administration with the consent of the System institution or the director or officer or other person concerned, or with respect to which no petition for review of the action of the Farm Credit Administration has been filed and perfected in a court of appeals as specified in
(2) the term "violation" includes without limitation any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation;
(3) the terms "institution in the System", "System institution", and "institution" mean all institutions enumerated in
(4) the term "institution-affiliated party" means—
(A) a director, officer, employee, shareholder, or agent of a System institution;
(B) an independent contractor (including an attorney, appraiser, or accountant) who knowingly or recklessly participates in—
(i) a violation of law (including regulations) that is associated with the operations and activities of 1 or more System institutions;
(ii) a breach of fiduciary duty; or
(iii) an unsafe practice that causes or is likely to cause more than a minimum financial loss to, or a significant adverse effect on, a System institution; and
(C) any other person, as determined by the Farm Credit Administration (by regulation or on a case-by-case basis) who participates in the conduct of the affairs of a System institution; and
(5) the term "unsafe or unsound practice" shall—
(A) have the meaning given to it by the Farm Credit Administration by regulation, rule, or order; and
(B) mean any significant noncompliance by a System institution (as determined by the Farm Credit Administration, in consultation with the Farm Credit System Insurance Corporation) with any term or condition imposed on the institution by the Farm Credit System Insurance Corporation under
(
Editorial Notes
Amendments
2018—Pars. (4), (5).
Par. (5)(B), (C).
1992—Par. (4)(C).
1991—Par. (3).
1988—Par. (3).
Par. (4).
Statutory Notes and Related Subsidiaries
Effective Date of 1991 Amendment
Amendment by
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2272. Notice of service
Any service required or authorized to be made by the Farm Credit Administration under this section may be made by registered mail, or in such other manner reasonably calculated to give actual notice as the Farm Credit Administration may by regulation or otherwise provide. Any such service by mail is complete upon mailing. Copies of any notice or order served by the Farm Credit Administration on any association or any director or officer thereof or other person participating in the conduct of its affairs, under the provisions of this part, shall also be sent to the supervisory bank.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2273. Ancillary provisions; subpena power; etc.
In the course of or in connection with any proceeding under this part or any examination or investigation under this chapter, the Farm Credit Administration or any designated representative thereof, including any person designated to conduct any hearing under this part, shall have the power to administer oaths and affirmations, to take or cause to be taken depositions, and to issue, revoke, quash, or modify subpenas and subpenas duces tecum; and the Farm Credit Administration is empowered to make rules and regulations with respect to any such proceedings, examinations, or investigations. The attendance of witnesses and the production of documents provided for in this section may be required from any place in any State or in any territory or other place subject to the jurisdiction of the United States at any designated place where such proceeding is being conducted. The Farm Credit Administration or any party to proceedings under this part may apply to the United States District Court for the District of Columbia, or the United States district court for the judicial district or the United States court in any territory in which such proceeding is being conducted, or where the witness resides or carries on business, for enforcement of any subpena or subpena duces tecum issued pursuant to this part, and such courts shall have jurisdiction and power to order and require compliance therewith. Witnesses subpenaed under this section shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States. Any court having jurisdiction of any proceeding instituted under this part by a System institution or a director or officer thereof, may allow to any such party such reasonable expenses and attorneys' fees as it deems just and proper; and such expenses and fees shall be paid by the System institution or from its assets. Any person who willfully shall fail or refuse to attend or testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, contracts, agreements, or other records, if in such person's power so to do, in obedience to the subpena of the Farm Credit Administration, shall be guilty of a misdemeanor and, upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than one year or both.
(
Editorial Notes
Amendments
1988—
Statutory Notes and Related Subsidiaries
Effective Date
Section effective thirty days after Dec. 23, 1985, see section 401 of
§2274. Power to remove directors and officers
Notwithstanding any other provision of this chapter, a Farm Credit Bank board, officer, or employee shall not remove any director or officer of any association.
(
Editorial Notes
Amendments
2018—
Part D—Miscellaneous
§2275. Repealed. Pub. L. 115–334, title V, §5411(36), Dec. 20, 2018, 132 Stat. 4683
Section,
Editorial Notes
Codification
Section was formerly classified to
§2275a. Transition rules relating to amendment of certain FCA approval authorities
(a) In general
Any approvals granted by the Farm Credit Administration before January 6, 1988, shall remain in effect on and after such date.
(b) Authority to issue regulations
(1) In general
Any approval authority of the Farm Credit Administration that, under the amendments made by section 802 of the Agricultural Credit Act of 1987, became an authority to issue regulations may be exercised only until the earlier of the date the Farm Credit Administration issues final regulations under such authority, or 1 year after January 6, 1988.
(2) Enforcement actions
At the close of the 1-year period referred to in paragraph (1), the Farm Credit Administration shall not take any enforcement action against any System institution with respect to any provision so amended, until the Farm Credit Administration issues final regulations under such provision.
(c) Effect of section
This section shall not affect the authority of the Farm Credit Administration to exercise any other approval authority either on a case-by-case basis or through regulation, as provided in
(
Editorial Notes
References in Text
The amendments made by section 802 of the Agricultural Credit Act of 1987, referred to in subsec. (b)(1), are the amendments made by section 802 of
§2276. Access to and examination by Comptroller General of books, documents, etc., of farm credit system banks and institutions
On and after December 19, 1985, the Comptroller General or his duly authorized representatives shall have access to and the right to examine all books, documents, papers, records, or other recorded information within the possession or control of the Federal land banks and Federal land bank associations, Federal intermediate credit banks and production credit associations and banks for cooperatives.
(
Editorial Notes
Codification
Section was not enacted as part of the Farm Credit Act of 1971 which comprises this chapter.
Part E—Farm Credit System Insurance Corporation
§2277a. Definitions
As used in this part:
(1) Board of Directors
The term "Board of Directors" means the Board of Directors of the Corporation.
(2) Corporation
The term "Corporation" means the Farm Credit System Insurance Corporation established in
(3) Insured obligation
The term "insured obligation" means any note, bond, debenture, or other obligation issued under subsection (c) or (d) of
(A) on or before January 5, 1989, on behalf of any System bank; and
(B) after such date, which, when issued, is issued on behalf of any insured System bank.
(4) Insured System bank
The term "insured System bank" means any System bank whose participation in notes, bonds, debentures, and other obligations issued under subsection (c) or (d) of
(5) State
The term "State" means any of the 50 States, the District of Columbia, any Territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, or the Virgin Islands.
(
Editorial Notes
Amendments
1996—Pars. (5), (6).
1988—Par. (3)(A), (B).
"(A) on or before January 6, 1988, on behalf of any System bank; and
"(B) after such date, on behalf of any insured System bank."
Par. (5).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
Executive Documents
Termination of Trust Territory of the Pacific Islands
For termination of Trust Territory of the Pacific Islands, see note set out preceding
§2277a–1. Establishment of Farm Credit System Insurance Corporation
There is hereby established the Farm Credit System Insurance Corporation which shall insure, in accordance with this part, the timely payment of principal and interest on notes, bonds, debentures, and other obligations issued under subsection (c) or (d) of
(
§2277a–2. Board of Directors
(a) Establishment
The Corporation shall be managed by a Board of Directors that shall consist of the members of the Farm Credit Administration Board.
(b) Chairman
The Board of Directors shall be chaired by any Board member other than the Chairman of the Farm Credit Administration Board.
(
Editorial Notes
Amendments
1996—
1992—
"(a)
"(b)
Statutory Notes and Related Subsidiaries
Effective Date of 1992 Amendment; Transition Provision
"(1)
"(2)
§2277a–3. Commencement of insurance
Effective beginning on January 1, 1989, or 12 months after January 6, 1988, whichever is later, each System bank shall be an insured System bank and shall be subject to this part. Each System bank that is authorized to commence or resume operations under a subchapter of this chapter shall be an insured System bank from the time of such authorization. A bank resulting from the merger or consolidation of insured System banks shall be an insured System bank.
(
§2277a–4. Premiums
(a) Amount in Fund not exceeding secure base amount
(1) In general
If at the end of any calendar year the aggregate of amounts in the Farm Credit Insurance Fund does not exceed the secure base amount, subject to paragraph (3), the premium due from any insured System bank for the calendar year shall be equal to the sum of—
(A) the average outstanding insured obligations issued by the bank for the calendar year, after deducting from the obligations the percentages of the guaranteed portions of loans and investments described in paragraph (2), multiplied by 0.0020; and
(B) the product obtained by multiplying—
(i) the sum of—
(I) the average principal outstanding for the calendar year on loans made by the bank that are in nonaccrual status; and
(II) the average amount outstanding for the calendar year of other-than-temporarily impaired investments made by the bank; by
(ii) 0.0010.
(2) Deductions from average outstanding insured obligations
The average outstanding insured obligations issued by the bank for the calendar year referred to in paragraph (1)(A) shall be reduced by deducting from the obligations the sum of (as determined by the Corporation)—
(A) 90 percent of each of—
(i) the average principal outstanding for the calendar year on the guaranteed portions of Federal government-guaranteed loans made by the bank that are in accrual status; and
(ii) the average amount outstanding for the calendar year of the guaranteed portions of Federal government-guaranteed investments made by the bank that are not permanently impaired; and
(B) 80 percent of each of—
(i) the average principal outstanding for the calendar year on the guaranteed portions of State government-guaranteed loans made by the bank that are in accrual status; and
(ii) the average amount outstanding for the calendar year of the guaranteed portions of State government-guaranteed investments made by the bank that are not permanently impaired.
(3) Reduced premiums
The Corporation, in the sole discretion of the Corporation, may reduce by a percentage uniformly applied to all insured System banks the premium due from each insured System bank during any calendar year, as determined under paragraph (1).
(4) Definition of government-guaranteed loans or investments
In this section, the term "government-guaranteed", when applied to a loan or an investment, means a loan, credit, or investment, or portion of a loan, credit, or investment, that is guaranteed—
(A) by the full faith and credit of the United States Government or any State government;
(B) by an agency or other entity of the United States Government whose obligations are explicitly guaranteed by the United States Government; or
(C) by an agency or other entity of a State government whose obligations are explicitly guaranteed by such State government.
(b) Amount in Fund exceeding secure base amount
At any time the aggregate of amounts in the Farm Credit Insurance Fund exceeds the secure base amount, the Corporation shall reduce the premium due from each insured System bank, as determined under subsection (a)(1), by a percentage determined by the Corporation so that the aggregate of the premiums payable by all System banks is sufficient to ensure that the aggregate of amounts in the Farm Credit Insurance Fund after such premiums are paid is not less than the secure base amount at such time.
(c) Secure base amount
(1) In general
For purposes of this part, the term "secure base amount" means, with respect to any point in time, 2 percent of the aggregate outstanding insured obligations of all insured System banks at such time (as adjusted under paragraph (2)), or such other percentage of the aggregate amount as the Corporation in its sole discretion determines is actuarially sound to maintain in the Insurance Fund taking into account the risk of insuring outstanding insured obligations.
(2) Adjustment
The aggregate outstanding insured obligations of all insured System banks under paragraph (1) shall be adjusted downward to exclude an amount equal to the sum of (as determined by the corporation)—
(A) 90 percent of each of—
(i) the guaranteed portions of principal outstanding on Federal government-guaranteed loans in accrual status made by the banks; and
(ii) the guaranteed portions of the amount of Federal government-guaranteed investments made by the banks that are not permanently impaired; and
(B) 80 percent of each of—
(i) the guaranteed portions of principal outstanding on State government-guaranteed loans in accrual status made by the banks; and
(ii) the guaranteed portions of the amount of State government-guaranteed investments made by the banks that are not permanently impaired.
(d) Determination of loan and investment amounts
For the purpose of subsections (a) and (c), the principal outstanding on all loans made by an insured System bank, and the amount outstanding on all investments made by an insured System bank, shall be determined based on—
(1) all loans or investments made by any production credit association, or any other association making direct loans under authority provided under
(2) all loans or investments made by any bank, company, institution, corporation, union, or association described in
(3) all loans or investments made by such insured System bank (other than loans made to any party described in paragraph (1) or (2)).
(e) Allocation to System institutions of excess reserves
(1) Establishment of Allocated Insurance Reserves Accounts
There is hereby established in the Farm Credit Insurance Fund an Allocated Insurance Reserves Account—
(A) for each insured System bank; and
(B) subject to paragraph (6)(C), for all holders, in the aggregate, of Financial Assistance Corporation stock.
(2) Treatment
Amounts in any Allocated Insurance Reserves Account shall be considered to be part of the Farm Credit Insurance Fund.
(3) Annual allocations
If, at the end of any calendar year, the aggregate of the amounts in the Farm Credit Insurance Fund exceeds the secure base amount, the Corporation shall allocate to the Allocated Insurance Reserves Accounts the excess amount less the amount that the Corporation, in its sole discretion, determines to be the sum of the estimated operating expenses and estimated insurance obligations of the Corporation for the immediately succeeding calendar year.
(4) Allocation formula
From the total amount required to be allocated at the end of a calendar year under paragraph (3)—
(A) 10 percent of the total amount shall be credited to the Allocated Insurance Reserves Account established under paragraph (1)(B), subject to paragraph (6)(C); and
(B) there shall be credited to the allocated insurance reserves account 1 of each insured system 2 bank an amount that bears the same ratio to the total amount (less any amount credited under subparagraph (A)) as—
(i) the average principal outstanding for the calendar year on insured obligations issued by the bank (after deducting from the principal the percentages of the guaranteed portions of loans and investments described in subsection (a)(2)); bears to
(ii) the average principal outstanding for the calendar year on insured obligations issued by all insured System banks (after deducting from the principal the percentages of the guaranteed portions of loans and investments described in subsection (a)(2)).
(5) Use of funds in Allocated Insurance Reserves Accounts
To the extent that the sum of the operating expenses of the Corporation and the insurance obligations of the Corporation for a calendar year exceeds the sum of operating expenses and insurance obligations determined under paragraph (3) for the calendar year, the Corporation shall cover the expenses and obligations by—
(A) reducing each Allocated Insurance Reserves Account by the same proportion; and
(B) expending the amounts obtained under subparagraph (A) before expending other amounts in the Fund.
(6) Other disposition of Account funds
(A) In general
As soon as practicable during each calendar year, the Corporation may—
(i) subject to subparagraph (D), pay to each insured System bank, in a manner determined by the Corporation, an amount equal to the balance in the Allocated Insurance Reserves Account of the System bank; and
(ii) subject to subparagraphs (C) and (E), pay to each System bank and association holding Financial Assistance Corporation stock a proportionate share, determined by dividing the number of shares of Financial Assistance Corporation stock held by the institution by the total number of shares of Financial Assistance Corporation stock outstanding at the time of the termination of the Financial Assistance Corporation, of the balance in the Allocated Insurance Reserves Account established under paragraph (1)(B).
(B) Authority to eliminate or reduce payments
The Corporation may eliminate or reduce payments during a calendar year under subparagraph (A) if the Corporation determines, in its sole discretion, that the payments, or other circumstances that might require use of the Farm Credit Insurance Fund, could cause the amount in the Farm Credit Insurance Fund during the calendar year to be less than the secure base amount.
(C) Reimbursement for Financial Assistance Corporation stock
(i) Sufficient funding
Notwithstanding paragraph (4)(A), on provision by the Corporation for the accumulation in the Account established under paragraph (1)(B) of funds in an amount equal to $56,000,000, the Corporation shall not allocate any further funds to the Account except to replenish the Account if funds are diminished below $56,000,000 by the Corporation under paragraph (5).
(ii) Termination of account
On disbursement of an amount equal to $56,000,000, the Corporation shall—
(I) close the account established under paragraph (1)(B); and
(II) transfer any remaining funds in the Account to the remaining Allocated Insurance Reserves Accounts in accordance with paragraph (4)(B) for the calendar year in which the transfer occurs.
(D) Distribution of payments received
Not later than 60 days after receipt of a payment made under subparagraph (A)(i), each insured System bank, in consultation with affiliated associations of the insured System bank, and taking into account the direct or indirect payment of insurance premiums by the associations, shall develop and implement an equitable plan to distribute payments received under subparagraph (A)(i) among the bank and associations of the bank.
(E) Exception for previously reimbursed associations
For purposes of subparagraph (A)(ii), in any Farm Credit district in which the funding bank has reimbursed 1 or more affiliated associations of the bank for the previously unreimbursed portion of the Financial Assistance Corporation stock held by the associations, the funding bank shall be deemed to be the holder of the shares of Financial Assistance Corporation stock for which the funding bank has provided the reimbursement.
(
Editorial Notes
Codification
Amendments
2008—Subsec. (a)(1).
Subsec. (a)(1)(A) to (D).
Subsec. (a)(2) to (4).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (d)(1) to (3).
Subsec. (e)(3).
Subsec. (e)(4)(B).
Subsec. (e)(6)(A).
Subsec. (e)(6)(A)(i).
"(I) 20 percent of the balance in the insured System bank's Allocated Insurance Reserves Account as of the preceding December 31; or
"(II) 20 percent of the balance in the bank's Allocated Insurance Reserves Account on the date of the payment; and".
Subsec. (e)(6)(A)(ii).
"(I) 20 percent of the balance in the Allocated Insurance Reserves Account established under paragraph (1)(B) as of the preceding December 31; or
"(II) 20 percent of the balance in the Allocated Insurance Reserves Account established under paragraph (1)(B) on the date of the payment."
Subsec. (e)(6)(C)(i).
Subsec. (e)(6)(C)(ii).
Subsec. (e)(6)(F).
2002—Subsec. (a)(1)(A).
Subsec. (a)(1)(D).
Subsec. (a)(4).
Subsec. (e)(4)(B).
1996—Subsec. (a).
Subsec. (a)(2), (3).
Subsec. (b).
Subsec. (d).
Subsec. (e).
1989—Subsec. (a).
"(1) the annual average principal outstanding for such year on loans made by the bank that are in accrual status, multiplied by 0.0015; and
"(2) the annual average principal outstanding for such year on loans made by the bank that are in nonaccrual status, multiplied by 0.0025."
Subsec. (b).
Subsec. (c).
Subsec. (d).
1988—Subsec. (d).
Subsec. (d)(2).
Subsec. (d)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Amendment of this section and repeal of
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
GAO Reports on Risk-Based Insurance Premiums, Access to Association Capital, Supplemental Premiums, and Consolidation
1 So in original. Probably should be "Allocated Insurance Reserves Account".
2 So in original. Probably should be "System".
§2277a–5. Certification of premiums
(a) Filing certified statement
On a date to be determined in the sole discretion of the Board of Directors of the Corporation, each insured System bank that became insured before the beginning of the period for which premiums are being assessed (referred to in this section as the "period") shall file with the Corporation a certified statement showing—
(1) the average outstanding insured obligations for the period issued by the bank;
(2)(A) the average principal outstanding for the period on the guaranteed portion of Federal government-guaranteed loans that are in accrual status; and
(B) the average amount outstanding for the period of Federal government-guaranteed investments that are not permanently impaired (as defined in
(3)(A) the average principal outstanding for the period on State government-guaranteed loans that are in accrual status; and
(B) the average amount outstanding for the period of State government-guaranteed investments that are not permanently impaired (as defined in
(4)(A) the average principal outstanding for the period on loans that are in nonaccrual status; and
(B) the average amount outstanding for the period of other-than-temporarily impaired investments; and
(5) the amount of the premium due the Corporation from the bank for the period.
(b) Contents and form of statement
The certified statement required to be filed with the Corporation under subsection (a) shall be in such form and set forth such supporting information as the Board of Directors shall prescribe, and shall be certified by the president of the bank or any other officer designated by its board of directors that to the best of the person's knowledge and belief the statement is true, correct, complete, and has been prepared in accordance with this part and all regulations issued thereunder.
(c) Premium payments
(1) In general
Except as provided in paragraph (2), each insured System bank shall pay to the Corporation the premium payments required under subsection (a), not more frequently than once in each calendar quarter, in such manner and at such 1 or more times as the Board of Directors shall prescribe.
(2) Premium amount
The amount of the premium shall be established not later than 60 days after filing the certified statement specifying the amount of the premium.
(d) Regulations
The Board of Directors shall prescribe all rules and regulations necessary for the enforcement of this section. The Board of Directors may limit the retroactive effect, if any, of any of its rules or regulations.
(
Editorial Notes
Codification
Amendments
2008—Subsec. (a).
Subsec. (c).
Subsecs. (d), (e).
2002—Subsec. (a)(1).
Subsec. (a)(4) to (6).
1996—Subsec. (a)(2), (3).
1990—Subsec. (a).
1988—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Amendment of this section and repeal of
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
§2277a–6. Overpayment and underpayment of premiums; remedies
(a) Overpayments
The Corporation may refund to any insured System bank any premium payment made by the bank exceeding the amount due the Corporation.
(b) Underpayments
(1) Recovery
The Corporation, in a suit brought at law or in equity in any court of competent jurisdiction, may recover from any insured System bank the amount of any unpaid premium lawfully payable by the bank to the Corporation, whether or not the bank has filed any certified statement under
(2) Limitation
Any action or proceeding for the recovery of any premium due the Corporation under paragraph (1), or for the recovery of any amount paid to the Corporation exceeding the amount due the Corporation, shall be brought within 5 years after the right accrued for which the claim is made. If an insured System bank has filed with the Corporation a false or fraudulent certified statement with the intent to evade, in whole or in part, the payment of a premium, the claim shall not be deemed to have accrued until the Corporation discovers that the certified statement is false or fraudulent.
(c) Failure to file statement or pay premium
(1) Forfeiture of rights
If any insured System bank fails to file any certified statement required to be filed by such bank under
(2) Enforcement
The Corporation may bring an action to enforce this subsection against any such bank in any court of competent jurisdiction for the judicial district in which the bank is located.
(3) Liability of directors
Every director who participated in or assented to a failure (described in paragraph (1)) shall be held personally liable for all consequential damages.
(d) Effect on other remedies
The remedies provided in subsections (b) and (c) shall not be construed as limiting any other remedies against any insured System bank, but shall be in addition thereto.
(
Editorial Notes
Amendments
1988—Subsec. (b)(1).
Subsec. (b)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
§2277a–7. General corporate powers
On January 6, 1988, the Corporation shall become a body corporate and as such shall have the following powers:
(1) Seal
The Corporation may adopt and use a corporate seal.
(2) Succession
The Corporation may have succession until dissolved by an Act of Congress.
(3) Contracts
The Corporation may make contracts.
(4) Legal actions
(A) In general
The Corporation may sue and be sued, complain and defend, in any court of law or equity, State or Federal.
(B) Jurisdiction
All suits of a civil nature at common law or in equity to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy, and the Corporation, in any capacity, without bond or security, may remove any such action, suit, or proceeding from a State court to the United States district court for the district or division embracing the place where the same is pending by following any procedure for removal then in effect.
(C) Attachment and execution
No attachment or execution may be issued against the Corporation or its property before final judgment in any suit, action, or proceeding in any State, county, municipal, or United States court.
(D) Agent for service of process
The Board of Directors shall designate an agent on whom service of process may be made in any State or jurisdiction in which any insured System bank is located.
(5) Officers and employees
(A) In general
The Corporation may appoint by its Board of Directors such officers and employees as are not otherwise provided for in this part, define their duties, fix their compensation, and require bonds of them and fix the penalty thereof, and dismiss at pleasure such officers or employees.
(B) Employees of the United States
Nothing in this chapter or any other Act shall be construed to prevent the appointment and compensation, as an officer or employee of the Corporation, of any officer or employee of the United States in any board, commission, independent establishment, or executive department thereof.
(6) Bylaws
The Corporation may prescribe, by its Board of Directors, bylaws not inconsistent with law, regulating the manner in which its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed.
(7) Incidental powers
The Corporation may exercise by its Board of Directors, or duly authorized officers or agents, all powers specifically granted by the provisions of this part, and such incidental powers as shall be necessary to carry out the powers so granted.
(8) Information
The Corporation may, when necessary, make examinations of, and require information and reports from, System institutions, as provided in this part.
(9) Conservator or receiver
The Corporation may act as a conservator or receiver.
(10) Rules and regulations
The Corporation may prescribe by its Board of Directors such rules and regulations as it considers necessary to carry out this part and
(
Editorial Notes
Codification
Amendments
2018—Par. (2).
2008—Par. (10).
1996—Par. (9).
1992—Par. (2).
1991—Par. (4)(B).
1988—Par. (5)(A).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Amendment of this section and repeal of
Effective Date of 1988 Amendment
Amendment by
§2277a–8. Conduct of corporate affairs; examination of System institutions
(a) Conduct of corporate affairs
(1) Fair administration
The Board of Directors shall administer the affairs of the Corporation fairly and impartially and without discrimination.
(2) Obligations and expenses
The Board of Directors shall determine and prescribe the manner in which the obligations of the Corporation may be incurred and the expenses of the Corporation may be allowed and paid.
(3) Use of mails
The Corporation may use the United States mails in the same manner and under the same conditions as the executive departments of the Federal Government.
(4) Use of information
The Corporation, with the consent of any board, commission, independent establishment, or executive department of the Federal Government, including any field service thereof, may avail itself of the use of information, services, and facilities thereof in carrying out this part.
(5) Use of Farm Credit Administration personnel
To the extent practicable, the Corporation shall use the personnel and resources of the Farm Credit Administration to minimize duplication of effort and to reduce costs.
(b) Examination of System institutions
(1) Examination authority
(A) In general
If the Board of Directors considers it necessary to examine an insured System bank, a production credit association, an association making direct loans under the authority provided under
(B) Request for additional examination or other information
If the Board determines that such reports or information are not adequate to enable the Corporation to carry out the duties of the Corporation under this subsection, the Board shall request the Farm Credit Administration to examine or to obtain other information from or about the System institution and provide to the Corporation the resulting examination report or such other information.
(2) Appointment of examiners
If the Farm Credit Administration informs the Corporation that the Farm Credit Administration is unable to comply with a request made under paragraph (1)(B) with respect to a System institution, the Board may appoint examiners to examine the institution.
(3) Powers and report
Each examiner appointed under paragraph (2) shall make such examination of the affairs of the System institution as the Board may direct, and shall make a full and detailed report of the examination to the Corporation.
(4) Appointment of claim agents
The Board of Directors of the Corporation shall appoint claim agents who may investigate and examine all claims for insured obligations.
(c) Oath, affirmations, and testimony
In connection with examinations under this section, the Corporation or its designated representatives may administer oaths and affirmations, and may examine, take, and preserve testimony under oath, as to any matter with respect to the affairs of any such institution.
(d) Cooperation with FCA examiners
The examiners appointed by the Board of Directors shall cooperate to the maximum extent possible with examiners of the Farm Credit Administration to minimize duplication of effort and minimize costs.
(
Editorial Notes
Amendments
1996—Subsec. (b)(1)(A).
1992—
Subsec. (a)(5).
Subsec. (b).
"(1)
"(2)
"(3)
1989—Subsec. (b)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 1989 Amendment
Amendment by
1 So in original. Probably should be capitalized.
§2277a–9. Insurance Fund
(a) Establishment
There is hereby established a Farm Credit Insurance Fund (hereinafter referred to in this section as the "Insurance Fund") for insuring the timely payment of principal and interest on insured obligations. The assets in the Fund shall be held by the Corporation for the uses and purposes of the Corporation.
(b) Amounts in Fund
The Corporation shall deposit in the Insurance Fund all premium payments received by the Corporation under this part.
(c) Uses of Fund
(1) Mandatory use
Beginning January 1, 1993, the Corporation shall expend amounts in the Insurance Fund to the extent necessary to insure the timely payment of interest and principal on insured obligations.
(2) Other mandatory uses
Beginning January 1, 1993, the Corporation shall use amounts in the Insurance Fund to ensure the retirement of eligible borrower stock at par value under
(3) Permissive uses
The Corporation may expend amounts in the Insurance Fund to carry out
(4) Corporate payment or refunds
The Corporation shall make all payments and refunds required to be made by the Corporation under this part from amounts in the Insurance Fund.
(
Editorial Notes
Amendments
2018—Subsec. (b).
Subsec. (c)(2).
"(A) satisfy System institution defaults through the purchase of preferred stock or other payments as provided for in
"(B) ensure".
1990—Subsec. (c)(1), (2).
1988—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(2)(B).
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Amendment by
§2277a–10. Powers of Corporation with respect to troubled insured System banks
(a) Authority to provide assistance
(1) Stand-alone assistance
The Corporation, in its sole discretion and on such terms and conditions as the Board of Directors may prescribe, may make loans to, purchase the assets or securities of, assume the liabilities of, or make contributions to, any insured System bank if such action is taken—
(A) to prevent the placing of the bank in receivership;
(B) to restore the bank to normal operation; or
(C) to reduce the risk to the Corporation posed by the bank when severe financial conditions threaten the stability of a significant number of insured System banks or of insured System banks possessing significant financial resources.
(2) Facilitation of mergers or consolidation
(A) In general
To facilitate a merger or consolidation of a qualifying insured System bank, the sale of assets of such insured System bank to another insured System bank, the assumption of such insured System bank's liabilities by such other insured System bank, or the acquisition of the stock of such insured System bank by such other insured System bank, the Corporation, in its sole discretion and on such terms and conditions as the Board of Directors may prescribe, may—
(i) purchase any such assets or assume any such liabilities;
(ii) make loans or contributions to, or purchase debt securities of, such other insured System bank;
(iii) guarantee such other insured System bank against loss by reason of such other insured System bank's merging or consolidating with, or assuming the liabilities and purchasing the assets of, such insured System bank; or
(iv) take any combination of the actions referred to in the preceding clauses.
(B) Qualifying insured System bank
For purposes of subparagraph (A), the term "qualifying insured System bank" means any insured System bank that—
(i) is in receivership;
(ii) is, in the judgment of the Board of Directors, in danger of being placed in receivership; or
(iii) is, in the sole discretion of the Corporation, an insured System bank that, when severe financial conditions exist that threaten the stability of a significant number of insured System banks or of insured System banks possessing significant financial resources, requires assistance under subparagraph (A) to lessen the risk to the Corporation posed by such insured System bank under such threat of instability.
(3) Limitation
(A) Least-cost resolution
Assistance may not be provided to an insured System bank under this subsection unless the means of providing the assistance is the least costly means of providing the assistance by the Farm Credit Insurance Fund of all possible alternatives available to the Corporation, including liquidation of the bank (including paying the insured obligations issued on behalf of the bank). Before making a least-cost determination under this subparagraph, the Corporation shall accord such other insured System banks as the Corporation determines to be appropriate the opportunity to submit information relating to the determination.
(B) Determining least costly approach
In determining the least costly alternative under subparagraph (A), the Corporation shall—
(i) evaluate alternatives on a present-value basis, using a reasonable discount rate;
(ii) document the evaluation and the assumptions on which the evaluation is based; and
(iii) retain the documentation for not less than 5 years.
(C) Time of determination
(i) General rule
For purposes of this subsection, the determination of the costs of providing any assistance under any provision of this section with respect to any insured System bank shall be made as of the date on which the Corporation makes the determination to provide the assistance to the institution under this section.
(ii) Rule for liquidations
For purposes of this subsection, the determination of the costs of liquidation of any insured System bank shall be made as of the earliest of—
(I) the date on which a conservator is appointed for the insured System bank;
(II) the date on which a receiver is appointed for the insured System bank; or
(III) the date on which the Corporation makes any determination to provide any assistance under this section with respect to the insured System bank.
(D) Rule for stand-alone assistance
Before providing any assistance under paragraph (1), the Corporation shall evaluate the adequacy of managerial resources of the insured System bank. The continued service of any director or senior ranking officer who serves in a policymaking role for the assisted insured System bank, as determined by the Corporation, shall be subject to approval by the Corporation as a condition of assistance.
(E) Discretionary determinations
Any determination that the Corporation makes under this paragraph shall be in the sole discretion of the Corporation.
(F) Purchase of stock
The Corporation may not use its authority under this subsection to purchase any stock of an insured System bank. The preceding sentence shall not be construed to limit the ability of the Corporation to enter into and enforce covenants and agreements that it determines to be necessary to protect the financial interests of the Corporation.
(4) Subordination
Any assistance provided under this subsection may be in subordination to the rights of owners of obligations and other creditors.
(5) Reports
The Corporation, in its annual report to Congress, shall report the total amount saved, or it estimates to be saved, by the Corporation exercising the authority provided to the Corporation in this subsection.
(b) Authority to pledge or sell assets
The Corporation, in its discretion, may make loans on the security of, or may purchase, and liquidate or sell, any part of the assets of, any insured System bank that is placed in receivership because of the inability of the bank to pay principal or interest on any of its notes, bonds, debentures, or other obligations in a timely manner.
(c) Subrogation
(1) In general
On the payment to an owner of an insured obligation issued on behalf of an insured System bank in receivership, the Corporation shall be subrogated to all rights of the owner against the bank to the extent of the payment.
(2) Receipt of dividends
Subrogation under paragraph (1) shall include the right on the part of the Corporation to receive the same dividends from the proceeds of the assets of the bank as would have been payable to the owner on a claim for the insured obligation.
(d) Right to assets
Any agreement that shall diminish or defeat the right, title, or interest of the Corporation in any asset acquired by such Corporation under this section, either as security for a loan or by purchase, shall not be valid against the Corporation unless the agreement—
(1) is in writing;
(2) is executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank;
(3) has been approved by the board of directors of the bank or its loan committee, which approval shall be reflected in the minutes of the board or committee; and
(4) has been, continuously, from the time of its execution, an official record of the bank.
(e) Insured System bank
As used in this section, the terms "insured System bank" and "bank" include each production credit association and other association making direct loans under the authority provided under
(f) Effective date
The Corporation shall not exercise any authority under this section during the 5-year period prior to January 1, 1993.
(
Editorial Notes
Amendments
1996—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(2)(A).
Subsec. (a)(3)(A).
Subsec. (a)(3)(B) to (F).
1990—Subsec. (f).
1989—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1989 Amendment
Amendment by
§2277a–10a. Oversight actions by Corporation
(a) "Institution" defined
In this section, the term "institution" means—
(1) an insured System bank; and
(2) a production credit association or other association making loans under
(b) Consultation regarding participation of undercapitalized banks in issuance of insured obligations
The Farm Credit Administration shall consult with the Corporation prior to approving an insured obligation that is to be issued by or on behalf of, or participated in by, any insured System bank that fails to meet the minimum level for any capital requirement established by the Farm Credit Administration for the bank.
(c) Consultation regarding applications for mergers and restructurings
(1) Corporation to receive copy of transaction applications
On receiving an application for a merger or restructuring of an institution, the Farm Credit Administration shall forward a copy of the application to the Corporation.
(2) Consultation required
If the proposed merger or restructuring involves an institution that fails to meet the minimum level for any capital requirement established by the Farm Credit Administration applicable to the institution, the Farm Credit Administration shall allow 30 days within which the Corporation may submit the views and recommendations of the Corporation, including any conditions for approval. In determining whether to approve or disapprove any proposed merger or restructuring, the Farm Credit Administration shall give due consideration to the views and recommendations of the Corporation.
(
§2277a–10b. Authority to regulate golden parachute and indemnification payments
(a) Definitions
In this section:
(1) Golden parachute payment
The term "golden parachute payment"—
(A) means a payment (or any agreement to make a payment) in the nature of compensation for the benefit of any institution-related party under an obligation of any Farm Credit System institution that—
(i) is contingent on the termination of the party's relationship with the institution; and
(ii) is received on or after the date on which—
(I) the institution is insolvent;
(II) a conservator or receiver is appointed for the institution;
(III) the institution has been assigned by the Farm Credit Administration a composite CAMEL rating of 4 or 5 under the Farm Credit Administration Rating System, or an equivalent rating; or
(IV) the Corporation otherwise determines that the institution is in a troubled condition (as defined in regulations issued by the Corporation); and
(B) includes a payment that would be a golden parachute payment but for the fact that the payment was made before the date referred to in subparagraph (A)(ii) if the payment was made in contemplation of the occurrence of an event described in any subclause of subparagraph (A); but
(C) does not include—
(i) a payment made under a retirement plan that is qualified (or is intended to be qualified) under
(ii) a payment made under a bona fide supplemental executive retirement plan, deferred compensation plan, or other arrangement that the Corporation determines, by regulation or order, to be permissible; or
(iii) a payment made by reason of the death or disability of an institution-related party.
(2) Indemnification payment
The term "indemnification payment" means a payment (or any agreement to make a payment) by any Farm Credit System institution for the benefit of any person who is or was an institution-related party, to pay or reimburse the person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Farm Credit Administration that results in a final order under which the person—
(A) is assessed a civil money penalty; or
(B) is removed or prohibited from participating in the conduct of the affairs of the institution.
(3) Institution-related party
The term "institution-related party" means—
(A) a director, officer, employee, or agent for a Farm Credit System institution or any conservator or receiver of such an institution;
(B) a stockholder (other than another Farm Credit System institution), consultant, joint venture partner, or any other person determined by the Farm Credit Administration to be a participant in the conduct of the affairs of a Farm Credit System institution; and
(C) an independent contractor (including any attorney, appraiser, or accountant) that knowingly or recklessly participates in any violation of any law or regulation, any breach of fiduciary duty, or any unsafe or unsound practice that caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the Farm Credit System institution.
(4) Liability or legal expense
The term "liability or legal expense" means—
(A) a legal or other professional expense incurred in connection with any claim, proceeding, or action;
(B) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and
(C) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.
(5) Payment
The term "payment" means—
(A) a direct or indirect transfer of any funds or any asset; and
(B) any segregation of any funds or assets for the purpose of making, or under an agreement to make, any payment after the date on which the funds or assets are segregated, without regard to whether the obligation to make the payment is contingent on—
(i) the determination, after that date, of the liability for the payment of the amount; or
(ii) the liquidation, after that date, of the amount of the payment.
(b) Prohibition
The Corporation may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment by a Farm Credit System institution (including any conservator or receiver of the Federal Agricultural Mortgage Corporation) in troubled condition (as defined in regulations issued by the Corporation).
(c) Factors to be taken into account
The Corporation shall prescribe, by regulation, the factors to be considered by the Corporation in taking any action under subsection (b). The factors may include—
(1) whether there is a reasonable basis to believe that an institution-related party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Farm Credit System institution involved that has had a material effect on the financial condition of the institution;
(2) whether there is a reasonable basis to believe that the institution-related party is substantially responsible for the insolvency of the Farm Credit System institution, the appointment of a conservator or receiver for the institution, or the institution's troubled condition (as defined in regulations prescribed by the Corporation);
(3) whether there is a reasonable basis to believe that the institution-related party has materially violated any applicable law or regulation that has had a material effect on the financial condition of the institution;
(4) whether there is a reasonable basis to believe that the institution-related party has violated or conspired to violate—
(A)
(B)
(5) whether the institution-related party was in a position of managerial or fiduciary responsibility; and
(6) the length of time that the party was related to the Farm Credit System institution and the degree to which—
(A) the payment reasonably reflects compensation earned over the period of employment; and
(B) the compensation represents a reasonable payment for services rendered.
(d) Certain payments prohibited
No Farm Credit System institution may prepay the salary or any liability or legal expense of any institution-related party if the payment is made—
(1) in contemplation of the insolvency of the institution or after the commission of an act of insolvency; and
(2) with a view to, or with the result of—
(A) preventing the proper application of the assets of the institution to creditors; or
(B) preferring 1 creditor over another creditor.
(e) Rule of construction
Nothing in this section—
(1) prohibits any Farm Credit System institution from purchasing any commercial insurance policy or fidelity bond, so long as the insurance policy or bond does not cover any legal or liability expense of an institution described in subsection (a)(2); or
(2) limits the powers, functions, or responsibilities of the Farm Credit Administration.
(
§2277a–10c. Corporation as conservator or receiver; certain other powers
(a) Definition of institution
In this section, the term "institution" includes any System institution for which the Corporation has been appointed as conservator or receiver.
(b) Certain powers and duties of Corporation as conservator or receiver
In addition to the powers inherent in the express grant of corporate authority under
(1) Rulemaking authority of Corporation
The Corporation may prescribe such regulations as the Corporation determines to be appropriate regarding the conduct of conservatorships or receiverships.
(2) General powers
(A) Successor to System institution
The Corporation shall, as conservator or receiver, and by operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the System institution, and of any stockholder, member, officer, or director of such System institution with respect to the System institution and the assets of the System institution; and
(ii) title to the books, records, and assets of any previous conservator or other legal custodian of such System institution.
(B) Operate the System institution
The Corporation may, as conservator or receiver—
(i) take over the assets of and operate the System institution with all the powers of the stockholders or members, the directors, and the officers of the System institution and conduct all business of the System institution;
(ii) collect all obligations and money due the System institution;
(iii) perform all functions of the System institution in the name of the System institution which are consistent with the appointment as conservator or receiver;
(iv) preserve and conserve the assets and property of such System institution; and
(v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as conservator or receiver.
(C) Functions of System institution's officers, directors, members, and stockholders
The Corporation may, by regulation or order, provide for the exercise of any function by any stockholder, member, director, or officer of any System institution for which the Corporation has been appointed conservator or receiver.
(D) Powers as conservator
Subject to any Farm Credit Administration approvals required under this chapter, the Corporation may, as conservator, take such action as may be—
(i) necessary to put the System institution in a sound and solvent condition; and
(ii) appropriate to carry on the business of the System institution and preserve and conserve the assets and property of the System institution.
(E) Additional powers as receiver
The Corporation may, as receiver, liquidate the System institution and proceed to realize upon the assets of the System institution, in such manner as the Corporation determines to be appropriate.
(F) Organization of new System bank
The Corporation may, as receiver with respect to any System bank, organize a bridge System bank under subsection (h).
(G) Merger; transfer of assets and liabilities
(i) In general
Subject to clause (ii), the Corporation may, as conservator or receiver—
(I) merge the System institution with another System institution; and
(II) transfer or sell any asset or liability of the System institution in default without any approval, assignment, or consent with respect to such transfer.
(ii) Approval
No merger or transfer under clause (i) may be made to another System institution (other than a bridge System bank under subsection (h)) without the approval of the Farm Credit Administration.
(H) Payment of valid obligations
The Corporation, as conservator or receiver, shall, to the extent that proceeds are realized from the performance of contracts or the sale of the assets of a System institution, pay all valid obligations of the System institution in accordance with the prescriptions and limitations of this section.
(I) Incidental powers
(i) In general
The Corporation may, as conservator or receiver—
(I) exercise all powers and authorities specifically granted to conservators or receivers, respectively, under this section and such incidental powers as shall be necessary to carry out such powers; and
(II) take any action authorized by this section, which the Corporation determines is in the best interests of—
(aa) the System institution in receivership or conservatorship;
(bb) System institutions;
(cc) System institution stockholders or investors; or
(dd) the Corporation.
(ii) Termination of rights and claims
(I) In general
Except as provided in subclause (II), notwithstanding any other provision of law, the appointment of the Corporation as receiver for a System institution and the succession of the Corporation, by operation of law, to the rights, titles, powers, and privileges described in subparagraph (A) shall terminate all rights and claims that the stockholders and creditors of the System institution may have, arising as a result of their status as stockholders or creditors, against the assets or charter of the System institution or the Corporation.
(II) Exceptions
Subclause (I) shall not terminate the right to payment, resolution, or other satisfaction of the claims of stockholders and creditors described in that subclause, as permitted under paragraphs (10) and (11) and subsection (d).
(iii) Charter
Notwithstanding any other provision of law, for purposes of this section, the charter of a System institution shall not be considered to be an asset of the System institution.
(J) Utilization of private sector
In carrying out its responsibilities in the management and disposition of assets from System institutions, as conservator, receiver, or in its corporate capacity, the Corporation may utilize the services of private persons, including real estate and loan portfolio asset management, property management, auction marketing, legal, and brokerage services, if the Corporation determines utilization of such services is practicable, efficient, and cost effective.
(3) Authority of receiver to determine claims
(A) In general
The Corporation may, as receiver, determine claims in accordance with the requirements of this subsection and regulations prescribed under paragraph (4).
(B) Notice requirements
The receiver, in any case involving the liquidation or winding up of the affairs of a closed System institution, shall—
(i) promptly publish a notice to the System institution's creditors to present their claims, together with proof, to the receiver by a date specified in the notice which shall be not less than 90 days after the publication of such notice; and
(ii) republish such notice approximately 1 month and 2 months, respectively, after the publication under clause (i).
(C) Mailing required
The receiver shall mail a notice similar to the notice published under subparagraph (B)(i) at the time of such publication to any creditor shown on the System institution's books—
(i) at the creditor's last address appearing in such books; or
(ii) upon discovery of the name and address of a claimant not appearing on the System institution's books within 30 days after the discovery of such name and address.
(4) Rulemaking authority relating to determination of claims
The Corporation may prescribe regulations regarding the allowance or disallowance of claims by the receiver and providing for administrative determination of claims and review of such determination.
(5) Procedures for determination of claims
(A) Determination period
(i) In general
Before the end of the 180-day period beginning on the date any claim against a System institution is filed with the Corporation as receiver, the Corporation shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim.
(ii) Extension of time
The period described in clause (i) may be extended by a written agreement between the claimant and the Corporation.
(iii) Mailing of notice sufficient
The requirements of clause (i) shall be deemed to be satisfied if the notice of any determination with respect to any claim is mailed to the last address of the claimant which appears—
(I) on the System institution's books;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowance
If any claim filed under clause (i) is disallowed, the notice to the claimant shall contain—
(I) a statement of each reason for the disallowance; and
(II) the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim.
(B) Allowance of proven claims
The receiver shall allow any claim received on or before the date specified in the notice published under paragraph (3)(B)(i) by the receiver from any claimant which is proved to the satisfaction of the receiver.
(C) Disallowance of claims filed after end of filing period
(i) In general
Except as provided in clause (ii), claims filed after the date specified in the notice published under paragraph (3)(B)(i) shall be disallowed and such disallowance shall be final.
(ii) Certain exceptions
Clause (i) shall not apply with respect to any claim filed by any claimant after the date specified in the notice published under paragraph (3)(B)(i) and such claim may be considered by the receiver if—
(I) the claimant did not receive notice of the appointment of the receiver in time to file such claim before such date; and
(II) such claim is filed in time to permit payment of such claim.
(D) Authority to disallow claims
(i) In general
The receiver may disallow any portion of any claim by a creditor or claim of security, preference, or priority which is not proved to the satisfaction of the receiver.
(ii) Payments to less than fully secured creditors
In the case of a claim of a creditor against a System institution which is secured by any property or other asset of such System institution, any receiver appointed for any System institution—
(I) may treat the portion of such claim which exceeds an amount equal to the fair market value of such property or other asset as an unsecured claim against the System institution; and
(II) may not make any payment with respect to such unsecured portion of the claim other than in connection with the disposition of all claims of unsecured creditors of the System institution.
(iii) Exceptions
No provision of this paragraph shall apply with respect to—
(I) any extension of credit from any Federal Reserve bank or the United States Treasury to any System institution; or
(II) any security interest in the assets of the System institution securing any such extension of credit.
(E) No judicial review of determination pursuant to subparagraph (D)
No court may review the Corporation's determination pursuant to subparagraph (D) to disallow a claim.
(F) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12) and the determination of claims by a receiver, the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the receiver.
(6) Provision for judicial determination of claims
(A) In general
Before the end of the 60-day period beginning on the earlier of—
(i) the end of the period described in paragraph (5)(A)(i) with respect to any claim against a System institution for which the Corporation is receiver; or
(ii) the date of any notice of disallowance of such claim pursuant to paragraph (5)(A)(i),
the claimant may request administrative review of the claim in accordance with paragraph (7) or file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the System institution's principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).
(B) Statute of limitations
If any claimant fails to file suit on such claim (or continue an action commenced before the appointment of the receiver), before the end of the 60-day period described in subparagraph (A), the claim shall be deemed to be disallowed (other than any portion of such claim which was allowed by the receiver) as of the end of such period, such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(7) Review of claims; administrative hearing
If any claimant requests review under this paragraph in lieu of filing or continuing any action under paragraph (6) and the Corporation agrees to such request, the Corporation shall consider the claim after opportunity for a hearing on the record. The final determination of the Corporation with respect to such claim shall be subject to judicial review under
(8) Expedited determination of claims
(A) Establishment required
The Corporation shall establish a procedure for expedited relief outside of the routine claims process established under paragraph (5) for claimants who—
(i) allege the existence of legally valid and enforceable or perfected security interests in assets of any System institution for which the Corporation has been appointed receiver; and
(ii) allege that irreparable injury will occur if the routine claims procedure is followed.
(B) Determination period
Before the end of the 90-day period beginning on the date any claim is filed in accordance with the procedures established pursuant to subparagraph (A), the Corporation shall—
(i) determine—
(I) whether to allow or disallow such claim; or
(II) whether such claim should be determined pursuant to the procedures established pursuant to paragraph (5); and
(ii) notify the claimant of the determination, and if the claim is disallowed, provide a statement of each reason for the disallowance and the procedure for obtaining agency review or judicial determination.
(C) Period for filing or renewing suit
Any claimant who files a request for expedited relief shall be permitted to file a suit, or to continue a suit filed before the appointment of the receiver, seeking a determination of the claimant's rights with respect to such security interest after the earlier of—
(i) the end of the 90-day period beginning on the date of the filing of a request for expedited relief; or
(ii) the date the Corporation denies the claim.
(D) Statute of limitations
If an action described in subparagraph (C) is not filed, or the motion to renew a previously filed suit is not made, before the end of the 30-day period beginning on the date on which such action or motion may be filed in accordance with subparagraph (B), the claim shall be deemed to be disallowed as of the end of such period (other than any portion of such claim which was allowed by the receiver), such disallowance shall be final, and the claimant shall have no further rights or remedies with respect to such claim.
(E) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the filing of a claim with the receiver shall constitute a commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (12), the filing of a claim with the receiver shall not prejudice any right of the claimant to continue any action which was filed before the appointment of the receiver.
(9) Agreement as basis of claim
(A) Requirements
Except as provided in subparagraph (B), any agreement which does not meet the requirements set forth in
(B) Exception to contemporaneous execution requirement
Notwithstanding
(10) Payment of claims
(A) In general
The receiver may, in the receiver's discretion and to the extent funds are available from the assets of the System institution, pay creditor claims which are allowed by the receiver, approved by the Corporation pursuant to a final determination pursuant to paragraph (7) or (8), or determined by the final judgment of any court of competent jurisdiction in such manner and amounts as are authorized under this chapter.
(B) Liquidation payments
The receiver may, in the receiver's sole discretion, pay from the assets of the System institution portions of proved claims at any time, and no liability shall attach to the Corporation (in such Corporation's corporate capacity or as receiver), by reason of any such payment, for failure to make payments to a claimant whose claim is not proved at the time of any such payment.
(C) Rulemaking authority of Corporation
The Corporation may prescribe such rules, including definitions of terms, as it deems appropriate to establish a single uniform interest rate for or to make payments of post insolvency interest to creditors holding proven claims against the receivership estates of System institutions following satisfaction by the receiver of the principal amount of all creditor claims.
(11) Priority of expenses and claims
(A) In general
Amounts realized from the liquidation or other resolution of any System institution by any receiver appointed for such System institution shall be distributed to pay claims (other than secured claims to the extent of any such security) in the following order of priority:
(i) Administrative expenses of the receiver.
(ii) If authorized by the Corporation, wages, salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual—
(I) in an amount that is not more than $11,725 for each individual (as indexed for inflation, by regulation of the Corporation); and
(II) that is earned 180 days or fewer before the date of appointment of the Corporation as receiver.
(iii) In the case of the resolution of a System bank, all claims of holders of consolidated and System-wide bonds and all claims of the other System banks arising from the payments of the System banks pursuant to—
(I)
(II) an agreement, in writing and approved by the Farm Credit Administration, among the System banks to reallocate the payments.
(iv) In the case of the resolution of a production credit association or other association making direct loans under
(I) including interest accrued before and after the appointment of the receiver; and
(II) not including any setoff for stock or other equity of that System bank owned by the association, on that condition that, prior to making that setoff, that System bank shall obtain the approval of the Farm Credit Administration Board for the retirement of that stock or equity.
(v) Any general or senior liability of the System institution (which is not a liability described in clause (vi) or (vii)).
(vi) Any obligation subordinated to general creditors (which is not an obligation described in clause (vii)).
(vii) Any obligation to stockholders or members arising as a result of their status as stockholders or members.
(B) Payment of claims
(i) In general
(I) Payment
All claims of each priority described in clauses (i) through (vii) of subparagraph (A) shall be paid in full, or provisions shall be made for that payment, prior to the payment of any claim of a lesser priority.
(II) Insufficient funds
If there are insufficient funds to pay in full all claims in any priority described clauses (i) through (vii) of subparagraph (A), distribution on that priority of claims shall be made on a pro rata basis.
(ii) Distribution of remaining assets
Following the payment of all claims in accordance with subparagraph (A), the receiver shall distribute the remainder of the assets of the System institution to the owners of stock, participation certificates, and other equities in accordance with the priorities for impairment under the bylaws of the System institution.
(iii) Eligible borrower stock
Notwithstanding subparagraph (C) or any other provision of this section, eligible borrower stock shall be retired in accordance with
(C) Effect of State law
(i) In general
The provisions of subparagraph (A) shall not supersede the law of any State except to the extent such law is inconsistent with the provisions of such subparagraph, and then only to the extent of the inconsistency.
(ii) Procedure for determination of inconsistency
Upon the Corporation's own motion or upon the request of any person with a claim described in subparagraph (A) or any State which is submitted to the Corporation in accordance with procedures which the Corporation shall prescribe, the Corporation shall determine whether any provision of the law of any State is inconsistent with any provision of subparagraph (A) and the extent of any such inconsistency.
(iii) Judicial review
The final determination of the Corporation under clause (ii) shall be subject to judicial review under
(D) Accounting report
Any distribution by the Corporation in connection with any claim described in subparagraph (A)(vii) shall be accompanied by the accounting report required under paragraph (15)(B).
(12) Suspension of legal actions
(A) In general
After the appointment of a conservator or receiver for a System institution, the conservator or receiver may request a stay for a period not to exceed—
(i) 45 days, in the case of any conservator; and
(ii) 90 days, in the case of any receiver,
in any judicial action or proceeding to which such System institution is or becomes a party.
(B) Grant of stay by all courts required
Upon receipt of a request by any conservator or receiver pursuant to subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction of such action or proceeding, the court shall grant such stay as to all parties.
(13) Additional rights and duties
(A) Prior final adjudication
The Corporation shall abide by any final unappealable judgment of any court of competent jurisdiction which was rendered before the appointment of the Corporation as conservator or receiver.
(B) Rights and remedies of conservator or receiver
In the event of any appealable judgment, the Corporation as conservator or receiver shall—
(i) have all the rights and remedies available to the System institution (before the appointment of such conservator or receiver) and the Corporation in its corporate capacity, including removal to Federal court and all appellate rights; and
(ii) not be required to post any bond in order to pursue such remedies.
(C) No attachment or execution
No attachment or execution may issue by any court on—
(i) assets in the possession of the receiver; or
(ii) the charter of a System institution for which the Corporation has been appointed receiver.
(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court shall have jurisdiction over—
(i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any System institution for which the Corporation has been appointed receiver, including assets which the Corporation may acquire from itself as such receiver; or
(ii) any claim relating to any act or omission of such System institution or the Corporation as receiver.
(E) Disposition of assets
In exercising any right, power, privilege, or authority as receiver in connection with any sale or disposition of assets of any System institution for which the Corporation is acting as receiver, the Corporation shall, to the maximum extent practicable, conduct its operations in a manner which—
(i) maximizes the net present value return from the sale or disposition of such assets;
(ii) minimizes the amount of any loss realized in the resolution of cases;
(iii) ensures adequate competition and fair and consistent treatment of offerors;
(iv) prohibits discrimination on the basis of race, sex, or ethnic groups in the solicitation and consideration of offers; and
(v) mitigates the potential for serious adverse effects to the rest of the System.
(14) Statute of limitations for actions brought by conservator or receiver
(A) In general
Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as conservator or receiver shall be—
(i) in the case of any contract claim, the longer of—
(I) the 6-year period beginning on the date the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of—
(I) the 3-year period beginning on the date the claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the statute of limitations begins to run on any claim described in such subparagraph shall be the later of—
(i) the date of the appointment of the Corporation as conservator or receiver; or
(ii) the date on which the cause of action accrues.
(C) Revival of expired state causes of action
(i) In general
In the case of any tort claim described in clause (ii) for which the statute of limitation applicable under State law with respect to such claim has expired not more than 5 years before the appointment of the Corporation as conservator or receiver, the Corporation may bring an action as conservator or receiver on such claim without regard to the expiration of the statute of limitation applicable under State law.
(ii) Claims described
A tort claim referred to in clause (i) is a claim arising from fraud, intentional misconduct resulting in unjust enrichment, or intentional misconduct resulting in substantial loss to the System institution.
(15) Accounting and recordkeeping requirements
(A) In general
The Corporation as conservator or receiver shall, consistent with the accounting and reporting practices and procedures established by the Corporation, maintain a full accounting of each conservatorship and receivership or other disposition of System institutions in default.
(B) Annual accounting or report
With respect to each conservatorship or receivership to which the Corporation was appointed, the Corporation shall make an annual accounting or report, as appropriate, available to the Farm Credit Administration Board.
(C) Availability of reports
Any report prepared pursuant to subparagraph (B) shall be made available by the Corporation upon request to any stockholder of the System institution for which the Corporation was appointed conservator or receiver or any other member of the public.
(D) Recordkeeping requirement
(i) In general
Except as provided in clause (ii), after the end of the 6-year period beginning on the date the Corporation is appointed as receiver of a System institution, the Corporation may destroy any records of such System institution which the Corporation, in the Corporation's discretion, determines to be unnecessary unless directed not to do so by a court of competent jurisdiction or governmental agency, or prohibited by law.
(ii) Old records
Notwithstanding clause (i), the Corporation may destroy records of a System institution which are at least 10 years old as of the date on which the Corporation is appointed as the receiver of such System institution in accordance with clause (i) at any time after such appointment is final, without regard to the 6-year period of limitation contained in clause (i).
(16) Fraudulent transfers
(A) In general
The Corporation, as conservator or receiver for any System institution, may avoid a transfer of any interest of a System institution-affiliated party, or any person who the Corporation determines is a debtor of the System institution, in property, or any obligation incurred by such party or person, that was made within 5 years of the date on which the Corporation was appointed conservator or receiver if such party or person voluntarily or involuntarily made such transfer or incurred such liability with the intent to hinder, delay, or defraud the System institution, the Farm Credit Administration, or the Corporation.
(B) Right of recovery
To the extent a transfer is avoided under subparagraph (A), the Corporation may recover, for the benefit of the System institution, the property transferred, or, if a court so orders, the value of such property (at the time of such transfer) from—
(i) the initial transferee of such transfer or the System institution-affiliated party or person for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of any such initial transferee.
(C) Rights of transferee or obligee
The Corporation may not recover under subparagraph (B) from—
(i) any transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith; or
(ii) any immediate or mediate good faith transferee of such transferee.
(D) Rights under this paragraph
The rights under this paragraph of the Corporation shall be superior to any rights of a trustee or any other party (other than any party which is a Federal agency) under title 11.
(17) Attachment of assets and other injunctive relief
Subject to paragraph (18), any court of competent jurisdiction may, at the request of the Corporation (in the Corporation's capacity as conservator or receiver for any System institution or in the Corporation's corporate capacity with respect to any asset acquired or liability assumed by the Corporation under
(18) Standards
(A) Showing
Rule 65 of the Federal Rules of Civil Procedure shall apply with respect to any proceeding under paragraph (17) without regard to the requirement of such rule that the applicant show that the injury, loss, or damage is irreparable and immediate.
(B) State proceeding
If, in the case of any proceeding in a State court, the court determines that rules of civil procedure available under the laws of such State provide substantially similar protections to such party's right to due process as Rule 65 (as modified with respect to such proceeding by subparagraph (A)), the relief sought by the Corporation pursuant to paragraph (17) may be requested under the laws of such State.
(19) Treatment of claims arising from breach of contracts executed by the receiver or conservator
Notwithstanding any other provision of this subsection, any final and unappealable judgment for monetary damages entered against a receiver or conservator for a System institution for the breach of an agreement executed or approved by such receiver or conservator after the date of its appointment shall be paid as an administrative expense of the receiver or conservator. Nothing in this paragraph shall be construed to limit the power of a receiver or conservator to exercise any rights under contract or law, including terminating, breaching, canceling, or otherwise discontinuing such agreement.
(c) Provisions relating to contracts entered into before appointment of conservator or receiver
(1) Authority to repudiate contracts
In addition to any other rights a conservator or receiver may have, the conservator or receiver for a System institution may disaffirm or repudiate any contract or lease—
(A) to which such System institution is a party;
(B) the performance of which the conservator or receiver, in the conservator's or receiver's discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or receiver determines, in the conservator's or receiver's discretion, will promote the orderly administration of the System institution's affairs.
(2) Timing of repudiation
The Corporation as conservator or receiver for any System institution shall determine whether or not to exercise the rights of repudiation under this subsection within a reasonable period following such appointment.
(3) Claims for damages for repudiation
(A) In general
Except as otherwise provided in subparagraph (C) and paragraphs (4), (5), and (6), the liability of the conservator or receiver for the disaffirmance or repudiation of any contract pursuant to paragraph (1) shall be—
(i) limited to actual direct compensatory damages; and
(ii) determined as of—
(I) the date of the appointment of the conservator or receiver; or
(II) in the case of any contract or agreement referred to in paragraph (8), the date of the disaffirmance or repudiation of such contract or agreement.
(B) No liability for other damages
For purposes of subparagraph (A), the term "actual direct compensatory damages" does not include—
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of financial contracts
In the case of any qualified financial contract or agreement to which paragraph (8) applies, compensatory damages shall be—
(i) deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized in the industries for such contract and agreement claims; and
(ii) paid in accordance with this subsection and subsection (j), except as otherwise specifically provided in this section.
(4) Leases under which the System institution is the lessee
(A) In general
If the conservator or receiver disaffirms or repudiates a lease under which the System institution was the lessee, the conservator or receiver shall not be liable for any damages (other than damages determined pursuant to subparagraph (B)) for the disaffirmance or repudiation of such lease.
(B) Payments of rent
Notwithstanding subparagraph (A), the lessor under a lease to which such subparagraph applies shall—
(i) be entitled to the contractual rent accruing before the later of the date—
(I) the notice of disaffirmance or repudiation is mailed; or
(II) the disaffirmance or repudiation becomes effective, unless the lessor is in default or breach of the terms of the lease; and
(ii) have no claim for damages under any acceleration clause or other penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all appropriate offsets and defenses, due as of the date of the appointment, which shall be paid in accordance with this subsection and subsection (j).
(5) Leases under which the System institution is the lessor
(A) In general
If the conservator or receiver repudiates an unexpired written lease of real property of the System institution under which the System institution is the lessor and the lessee is not, as of the date of such repudiation, in default, the lessee under such lease may either—
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest for the balance of the term of the lease, unless the lessee defaults under the terms of the lease after the date of such repudiation.
(B) Provisions applicable to lessee remaining in possession
If any lessee under a lease described in subparagraph (A) remains in possession of a leasehold interest pursuant to clause (ii) of such subparagraph—
(i) the lessee—
(I) shall continue to pay the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease; and
(II) may offset against any rent payment which accrues after the date of the repudiation of the lease, any damages which accrue after such date due to the nonperformance of any obligation of the System institution under the lease after such date; and
(ii) the conservator or receiver shall not be liable to the lessee for any damages arising after such date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II).
(6) Contracts for the sale of real property
(A) In general
If the conservator or receiver repudiates any contract that meets the requirements of paragraphs (1) through (4) of
(i) treat the contract as terminated by such repudiation; or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in possession
If any purchaser of real property under any contract described in subparagraph (A) remains in possession of such property pursuant to clause (ii) of such subparagraph—
(i) the purchaser—
(I) shall continue to make all payments due under the contract after the date of the repudiation of the contract; and
(II) may offset against any such payments any damages which accrue after such date due to the nonperformance (after such date) of any obligation of the System institution under the contract; and
(ii) the conservator or receiver shall—
(I) not be liable to the purchaser for any damages arising after that date as a result of the repudiation, other than the amount of any offset allowed under clause (i)(II);
(II) deliver title to the purchaser in accordance with the contract; and
(III) have no obligation under the contract, other than the performance required under subclause (II).
(C) Assignment and sale allowed
(i) In general
No provision of this paragraph shall be construed as limiting the right of the conservator or receiver to assign the contract described in subparagraph (A) and sell the property subject to the contract and this paragraph.
(ii) No liability after assignment and sale
If an assignment and sale described in clause (i) is consummated, the Corporation, acting as conservator or receiver, shall have no further liability under the applicable contract described in subparagraph (A) or with respect to the real property which was the subject of such contract.
(7) Provisions applicable to service contracts
(A) Services performed before appointment
In the case of any contract for services between any person and any System institution for which the Corporation has been appointed conservator or receiver, any claim of such person for services performed before the appointment of the conservator or the receiver shall be—
(i) a claim to be paid in accordance with subsections (b) and (d); and
(ii) deemed to have arisen as of the date the conservator or receiver was appointed.
(B) Services performed after appointment and prior to repudiation
If, in the case of any contract for services described in subparagraph (A), the conservator or receiver accepts performance by the other person before the conservator or receiver makes any determination to exercise the right of repudiation of such contract under this section—
(i) the other party shall be paid under the terms of the contract for the services performed; and
(ii) the amount of such payment shall be treated as an administrative expense of the conservatorship or receivership.
(C) Acceptance of performance no bar to subsequent repudiation
The acceptance by any conservator or receiver of services referred to in subparagraph (B) in connection with a contract described in such subparagraph shall not affect the right of the conservator or receiver, to repudiate such contract under this section at any time after such performance.
(8) Certain qualified financial contracts
(A) Definitions
In this paragraph:
(i) Commodity contract
The term "commodity contract" means—
(I) with respect to a futures commission merchant, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade;
(II) with respect to a foreign futures commission merchant, a foreign future;
(III) with respect to a leverage transaction merchant, a leverage transaction;
(IV) with respect to a clearing organization, a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization, or commodity option traded on, or subject to the rules of, a contract market or board of trade that is cleared by such clearing organization;
(V) with respect to a commodity options dealer, a commodity option;
(VI) any other agreement or transaction that is similar to any agreement or transaction referred to in this clause;
(VII) any combination of the agreements or transactions referred to in this clause;
(VIII) any option to enter into any agreement or transaction referred to in this clause;
(IX) a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (VIII), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this clause, except that the master agreement shall be considered to be a commodity contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), (IV), (V), (VI), (VII), or (VIII); or
(X) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.
(ii) Forward contract
The term "forward contract" means—
(I) a contract (other than a commodity contract) for the purchase, sale, or transfer of a commodity or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than 2 days after the date the contract is entered into, including a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a repurchase agreement), consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;
(II) any combination of agreements or transactions referred to in subclauses (I) and (III);
(III) any option to enter into any agreement or transaction referred to in subclause (I) or (II);
(IV) a master agreement that provides for an agreement or transaction referred to in subclauses (I) through (III), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a forward contract under this clause, except that the master agreement shall be considered to be a forward contract under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), or (III); or
(V) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in subclause (I), (II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
(iii) Person
The term "person"—
(I) has the meaning given the term in
(II) includes any governmental entity.
(iv) Qualified financial contract
The term "qualified financial contract" means any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar agreement that the Corporation determines by regulation, resolution, or order to be a qualified financial contract for purposes of this paragraph.
(v) Repurchase agreement
(I) In general
The term "repurchase agreement" (including with respect to a reverse repurchase agreement)—
(aa) means—
(AA) an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage-related securities (as such term is defined in
(BB) any combination of agreements or transactions referred to in subitems (AA) and (CC);
(CC) any option to enter into any agreement or transaction referred to in subitem (AA) or (BB);
(DD) a master agreement that provides for an agreement or transaction referred to in subitem (AA), (BB), or (CC), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a repurchase agreement under this item, except that the master agreement shall be considered to be a repurchase agreement under this item only with respect to each agreement or transaction under the master agreement that is referred to in subitem (AA), (BB), or (CC); and
(EE) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in any of subitems (AA) through (DD), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subitem; and
(bb) does not include any repurchase obligation under a participation in a commercial mortgage,1 loan unless the Corporation determines by regulation, resolution, or order to include any such participation within the meaning of such term.
(II) Related definition
For purposes of subclause (I)(aa), the term "qualified foreign government security" means a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development (as determined by regulation or order adopted by the appropriate Federal banking authority).
(vi) Securities contract
The term "securities contract"—
(I) means—
(aa) a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or any option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not the repurchase or reverse repurchase transaction is a repurchase agreement);
(bb) any option entered into on a national securities exchange relating to foreign currencies;
(cc) the guarantee (including by novation) by or to any securities clearing agency of any settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, certificates of deposit, or mortgage loans or interests therein (including any interest therein or based on the value thereof) or option on any of the foregoing, including any option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not the settlement is in connection with any agreement or transaction referred to in any of items (aa), (bb), and (dd) through (kk));
(dd) any margin loan;
(ee) any extension of credit for the clearance or settlement of securities transactions;
(ff) any loan transaction coupled with a securities collar transaction, any prepaid securities forward transaction, or any total return swap transaction coupled with a securities sale transaction;
(gg) any other agreement or transaction that is similar to any agreement or transaction referred to in this subclause;
(hh) any combination of the agreements or transactions referred to in this subclause;
(ii) any option to enter into any agreement or transaction referred to in this subclause;
(jj) a master agreement that provides for an agreement or transaction referred to in any of items (aa) through (ii), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this subclause, except that the master agreement shall be considered to be a securities contract under this subclause only with respect to each agreement or transaction under the master agreement that is referred to in item (aa), (bb), (cc), (dd), (ee), (ff), (gg), (hh), or (ii); and
(kk) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this subclause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this subclause; and
(II) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan unless the Corporation determines by regulation, resolution, or order to include any such agreement within the meaning of such term.
(vii) Swap agreement
The term "swap agreement" means—
(I) any agreement, including the terms and conditions incorporated by reference in any such agreement, that is—
(aa) an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap;
(bb) a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange precious metals or other commodity agreement;
(cc) a currency swap, option, future, or forward agreement;
(dd) an equity index or equity swap, option, future, or forward agreement;
(ee) a debt index or debt swap, option, future, or forward agreement;
(ff) a total return, credit spread or credit swap, option, future, or forward agreement;
(gg) a commodity index or commodity swap, option, future, or forward agreement;
(hh) a weather swap, option, future, or forward agreement;
(ii) an emissions swap, option, future, or forward agreement; or
(jj) an inflation swap, option, future, or forward agreement;
(II) any agreement or transaction that is similar to any other agreement or transaction referred to in this clause and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference in such agreement) and that is a forward, swap, future, option or spot transaction on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;
(III) any combination of agreements or transactions referred to in this clause;
(IV) any option to enter into any agreement or transaction referred to in this clause;
(V) a master agreement that provides for an agreement or transaction referred to in any of subclauses (I) through (IV), together with all supplements to any such master agreement, without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this clause, except that the master agreement shall be considered to be a swap agreement under this clause only with respect to each agreement or transaction under the master agreement that is referred to in subclause (I), (II), (III), or (IV); and
(VI) any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in any of subclauses (I) through (V), including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in any such subclause.
(viii) Transfer
The term "transfer" means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the equity of redemption of a System institution.
(ix) Treatment of master agreement as 1 agreement
For purposes of this subparagraph—
(I) any master agreement for any contract or agreement described in this subparagraph (or any master agreement for such a master agreement or agreements), together with all supplements to the master agreement, shall be treated as a single agreement and a single qualified financial contact; and
(II) if a master agreement contains provisions relating to agreements or transactions that are not qualified financial contracts, the master agreement shall be deemed to be a qualified financial contract only with respect to those transactions that are themselves qualified financial contracts.
(B) Rights of parties to contracts
Subject to paragraphs (9) and (10), and notwithstanding any other provision of this chapter (other than subsection (b)(9) and
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a System institution which arises upon the appointment of the Corporation as receiver for such System institution at any time after such appointment;
(ii) any right under any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts described in clause (i); or
(iii) any right to offset or net out any termination value, payment amount, or other transfer obligation arising under, or in connection with, 1 or more contracts and agreements described in clause (i), including any master agreement for such contracts or agreements.
(C) Applicability of other provisions
Subsection (b)(12) shall apply in the case of any judicial action or proceeding brought against any receiver referred to in subparagraph (A), or the System institution for which such receiver was appointed, by any party to a contract or agreement described in subparagraph (B)(i) with such System institution.
(D) Certain transfers not avoidable
(i) In general
Notwithstanding paragraph (11) or any other Federal or State law relating to the avoidance of preferential or fraudulent transfers, the Corporation, whether acting as such or as conservator or receiver of a System institution, may not avoid any transfer of money or other property in connection with any qualified financial contract with a System institution.
(ii) Exception for certain transfers
Clause (i) shall not apply to any transfer of money or other property in connection with any qualified financial contract with a System institution if the Corporation determines that the transferee had actual intent to hinder, delay, or defraud such System institution, the creditors of such System institution, or any conservator or receiver appointed for such System institution.
(E) Certain protections in event of appointment of conservator
Notwithstanding any other provision of this chapter (other than subparagraph (G), paragraph (10), subsection (b)(9), and
(i) any right such person has to cause the termination, liquidation, or acceleration of any qualified financial contract with a System institution in a conservatorship based upon a default under such financial contract which is enforceable under applicable noninsolvency law;
(ii) any right under any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts described in clause (i); and
(iii) any right to offset or net out any termination values, payment amounts, or other transfer obligations arising under or in connection with such qualified financial contracts.
(F) Clarification
No provision of law shall be construed as limiting the right or power of the Corporation, or authorizing any court or agency to limit or delay, in any manner, the right or power of the Corporation to transfer any qualified financial contract in accordance with paragraphs (9) and (10) or to disaffirm or repudiate any such contract in accordance with paragraph (1).
(G) Walkaway clauses not effective
(i) Definition of walkaway clause
In this subparagraph, the term "walkaway clause" means any provision in a qualified financial contract that suspends, conditions, or extinguishes a payment obligation of a party, in whole or in part, or does not create a payment obligation of a party that would otherwise exist—
(I) solely because of—
(aa) the status of the party as a nondefaulting party in connection with the insolvency of a System institution that is a party to the contract; or
(bb) the appointment of, or the exercise of rights or powers by, the Corporation as a conservator or receiver of the System institution; and
(II) not as a result of the exercise by a party of any right to offset, setoff, or net obligations that exist under—
(aa) the contract;
(bb) any other contract between those parties; or
(cc) applicable law.
(ii) Treatment
Notwithstanding the provisions of subparagraphs (B) and (E), no walkaway clause shall be enforceable in a qualified financial contract of a System institution in default.
(iii) Limited suspension of certain obligations
In the case of a qualified financial contract referred to in clause (ii), any payment or delivery obligations otherwise due from a party pursuant to the qualified financial contract shall be suspended from the time the receiver is appointed until the earlier of—
(I) the time such party receives notice that such contract has been transferred pursuant to subparagraph (B); or
(II) 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver.
(H) Recordkeeping requirements
The Corporation, in consultation with the Farm Credit Administration, may prescribe regulations requiring more detailed recordkeeping by any System institution with respect to qualified financial contracts (including market valuations), only if such System institution is subject to subclause (I), (III), or (IV) of
(9) Transfer of qualified financial contracts
(A) Definitions
In this paragraph:
(i) Clearing organization
The term "clearing organization" has the meaning given the term in
(ii) Financial institution
The term "financial institution" means a System institution, a broker or dealer, a depository institution, a futures commission merchant, or any other institution, as determined by the Corporation by regulation to be a financial institution.
(B) Requirement
In making any transfer of assets or liabilities of a System institution in default which includes any qualified financial contract, the conservator or receiver for such System institution shall either—
(i) transfer to one financial institution, other than a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed, or that is otherwise the subject of a bankruptcy or insolvency proceeding—
(I) all qualified financial contracts between any person or any affiliate of such person and the System institution in default;
(II) all claims of such person or any affiliate of such person against such System institution under any such contract (other than any claim which, under the terms of any such contract, is subordinated to the claims of general unsecured creditors of such System institution);
(III) all claims of such System institution against such person or any affiliate of such person under any such contract; and
(IV) all property securing or any other credit enhancement for any contract described in subclause (I) or any claim described in subclause (II) or (III) under any such contract; or
(ii) transfer none of the qualified financial contracts, claims, property or other credit enhancement referred to in clause (i) (with respect to such person and any affiliate of such person).
(C) Transfer to foreign bank, foreign financial institution, or branch or agency of a foreign bank or financial institution
In transferring any qualified financial contracts and related claims and property under subparagraph (B)(i), the conservator or receiver for the System institution shall not make such transfer to a foreign bank, financial institution organized under the laws of a foreign country, or a branch or agency of a foreign bank or financial institution unless, under the law applicable to such bank, financial institution, branch or agency, to the qualified financial contracts, and to any netting contract, any security agreement or arrangement or other credit enhancement related to one or more qualified financial contracts, the contractual rights of the parties to such qualified financial contracts, netting contracts, security agreements or arrangements, or other credit enhancements are enforceable substantially to the same extent as permitted under this section.
(D) Transfer of contracts subject to the rules of a clearing organization
In the event that a conservator or receiver transfers any qualified financial contract and related claims, property, and credit enhancements pursuant to subparagraph (B)(i) and such contract is cleared by or subject to the rules of a clearing organization, the clearing organization shall not be required to accept the transferee as a member by virtue of the transfer.
(10) Notification of transfer
(A) Definition of business day
In this paragraph, the term "business day" means any day other than any Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
(B) Notification
If—
(i) the conservator or receiver for a System institution in default makes any transfer of the assets and liabilities of such System institution; and
(ii) the transfer includes any qualified financial contract, the conservator or receiver shall notify any person who is a party to any such contract of such transfer by 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver in the case of a receivership, or the business day following such transfer in the case of a conservatorship.
(C) Certain rights not enforceable
(i) Receivership
A person who is a party to a qualified financial contract with a System institution may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(B) of this subsection, solely by reason of or incidental to the appointment of a receiver for the System institution (or the insolvency or financial condition of the System institution for which the receiver has been appointed)—
(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of the receiver; or
(II) after the person has received notice that the contract has been transferred pursuant to paragraph (9)(B).
(ii) Conservatorship
A person who is a party to a qualified financial contract with a System institution may not exercise any right that such person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection, solely by reason of or incidental to the appointment of a conservator for the System institution (or the insolvency or financial condition of the System institution for which the conservator has been appointed).
(iii) Notice
For purposes of this paragraph, the Corporation as receiver or conservator of a System institution shall be deemed to have notified a person who is a party to a qualified financial contract with such System institution if the Corporation has taken steps reasonably calculated to provide notice to such person by the time specified in subparagraph (B).
(D) Treatment of bridge System institutions
The following System institutions shall not be considered to be a financial institution for which a conservator, receiver, trustee in bankruptcy, or other legal custodian has been appointed or which is otherwise the subject of a bankruptcy or insolvency proceeding for purposes of paragraph (9):
(i) A bridge System bank.
(ii) A System institution organized by the Corporation or the Farm Credit Administration, for which a conservator is appointed either—
(I) immediately upon the organization of the System institution; or
(II) at the time of a purchase and assumption transaction between the System institution and the Corporation as receiver for a System institution in default.
(11) Disaffirmance or repudiation of qualified financial contracts
In exercising the rights of disaffirmance or repudiation of a conservator or receiver with respect to any qualified financial contract to which a System institution is a party, the conservator or receiver for such System institution shall either—
(A) disaffirm or repudiate all qualified financial contracts between—
(i) any person or any affiliate of such person; and
(ii) the System institution in default; or
(B) disaffirm or repudiate none of the qualified financial contracts referred to in subparagraph (A) (with respect to such person or any affiliate of such person).
(12) Certain security interests not avoidable
No provision of this subsection shall be construed as permitting the avoidance of any legally enforceable or perfected security interest in any of the assets of any System institution except where such an interest is taken in contemplation of the System institution's insolvency or with the intent to hinder, delay, or defraud the System institution or the creditors of such System institution.
(13) Authority to enforce contracts
(A) In general
The conservator or receiver may enforce any contract, other than a director's or officer's liability insurance contract or a System institution bond, entered into by the System institution notwithstanding any provision of the contract providing for termination, default, acceleration, or exercise of rights upon, or solely by reason of, insolvency or the appointment of or the exercise of rights or powers by a conservator or receiver.
(B) Certain rights not affected
No provision of this paragraph may be construed as impairing or affecting any right of the conservator or receiver to enforce or recover under a director's or officer's liability insurance contract or institution bond under other applicable law.
(C) Consent requirement
(i) In general
Except as otherwise provided by this section, no person may exercise any right or power to terminate, accelerate, or declare a default under any contract to which the System institution is a party, or to obtain possession of or exercise control over any property of the System institution or affect any contractual rights of the System institution, without the consent of the conservator or receiver, as appropriate, during the 45-day period beginning on the date of the appointment of the conservator, or during the 90-day period beginning on the date of the appointment of the receiver, as applicable.
(ii) Certain exceptions
No provision of this subparagraph shall apply to a director or officer liability insurance contract or an institution bond, to the rights of parties to certain qualified financial contracts pursuant to paragraph (8), or shall be construed as permitting the conservator or receiver to fail to comply with otherwise enforceable provisions of such contract.
(14) Exception for Federal Reserve and the United States Treasury
No provision of this subsection shall apply with respect to—
(A) any extension of credit from any Federal Reserve bank or the United States Treasury to any System institution; or
(B) any security interest in the assets of the System institution securing any such extension of credit.
(15) Savings clause
The meanings of terms used in this subsection—
(A) are applicable for purposes of this subsection only; and
(B) shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other law, regulation, or rule, including—
(i) the Gramm-Leach-Bliley Act (
(ii) the Legal Certainty for Bank Products Act of 2000 (
(iii) the securities laws (as that term is defined in
(iv) the Commodity Exchange Act (
(d) Valuation of claims in default
(1) In general
Notwithstanding any other provision of Federal law or the law of any State and regardless of the method which the Corporation determines to utilize with respect to a System institution in default or in danger of default, including transactions authorized under subsection (h) and
(2) Maximum liability
The maximum liability of the Corporation, acting as receiver or in any other capacity, to any person having a claim against the receiver or the System institution for which such receiver is appointed shall equal the amount such claimant would have received if the Corporation had liquidated the assets and liabilities of such System institution without exercising the Corporation's authority under subsection (h) or
(3) Additional payments authorized
(A) In general
The Corporation may, in its discretion and in the interests of minimizing its losses, use its own resources to make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants. Notwithstanding any other provision of Federal or State law, or the constitution of any State, the Corporation shall not be obligated, as a result of having made any such payment or credited any such amount to or with respect to or for the account of any claimant or category of claimants, to make payments to any other claimant or category of claimants.
(B) Manner of payment
The Corporation may make the payments or credit the amounts specified in subparagraph (A) directly to the claimants or may make such payments or credit such amounts to an open System institution to induce such System institution to accept liability for such claims.
(e) Limitation on court action
Except as provided in this section, no court may take any action, except at the written request of the Board of Directors, to restrain or affect the exercise of powers or functions of the Corporation as a conservator or a receiver.
(f) Liability of Directors and Officers
(1) In general
A director or officer of a System institution may be held personally liable for monetary damages in any civil action—
(A) brought by, on behalf of, or at the request or direction of the Corporation;
(B) prosecuted wholly or partially for the benefit of the Corporation—
(i) acting as conservator or receiver of that System institution;
(ii) acting based on a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed by that receiver or conservator; or
(iii) acting based on a suit, claim, or cause of action purchased from, assigned by, or otherwise conveyed in whole or in part by a System institution or an affiliate of a System institution in connection with assistance provided under
(C) for, as determined under the applicable State law—
(i) gross negligence; or
(ii) any similar conduct, including conduct that demonstrates a greater disregard of a duty of care than gross negligence, such as intentional tortious conduct.
(2) Effect
Nothing in paragraph (1) impairs or affects any right of the Corporation under any other applicable law.
(g) Damages
In any proceeding related to any claim against a System institution's director, officer, employee, agent, attorney, accountant, appraiser, or any other party employed by or providing services to a System institution, recoverable damages determined to result from the improvident or otherwise improper use or investment of any System institution's assets shall include principal losses and appropriate interest.
(h) Bridge Farm Credit System banks
(1) Organization
(A) Purpose
(i) In general
When 1 or more System banks are in default, or when the Corporation anticipates that 1 or more System banks may become in default, the Corporation may, in its discretion, organize, and the Farm Credit Administration may, in its discretion, charter, 1 or more System banks, with the powers and attributes of System banks, subject to the provisions of this subsection, to be referred to as "bridge System banks".
(ii) Intent of Congress
It is the intent of the Congress that, in order to prevent unnecessary hardship or losses to the customers of any System bank in default with respect to which a bridge System bank is chartered, the Corporation should—
(I) continue to honor commitments made by the System bank in default to creditworthy customers; and
(II) not interrupt or terminate adequately secured loans which are transferred under this subsection and are being repaid by the debtor in accordance with the terms of the loan instrument.
(B) Authorities
Once chartered by the Farm Credit Administration, the bridge System bank may—
(i) assume such liabilities of the System bank or banks in default or in danger of default as the Corporation may, in its discretion, determine to be appropriate;
(ii) purchase such assets of the System bank or banks in default or in danger of default as the Corporation may, in its discretion, determine to be appropriate; and
(iii) perform any other temporary function which the Corporation may, in its discretion, prescribe in accordance with this chapter.
(C) Articles of association
The articles of association and organization certificate of a bridge System bank as approved by the Corporation shall be executed by 3 representatives designated by the Corporation.
(D) Interim directors
A bridge System bank shall have an interim board of directors consisting of not fewer than 5 nor more than 10 members appointed by the Corporation.
(2) Chartering
(A) Conditions
The Farm Credit Administration may charter a bridge System bank only if the Board of Directors determines that—
(i) the amount which is reasonably necessary to operate such bridge System bank will not exceed the amount which is reasonably necessary to save the cost of liquidating 1 or more System banks in default or in danger of default with respect to which the bridge System bank is chartered;
(ii) the continued operation of such System bank or banks in default or in danger of default with respect to which the bridge System bank is chartered is essential to provide adequate farm credit services in the 1 or more communities where each such System bank in default or in danger of default is or was providing those farm credit services; or
(iii) the continued operation of such System bank or banks in default or in danger of default with respect to which the bridge System bank is chartered is in the best interest of the Farm Credit System or the public.
(B) Bridge System bank treated as being in default for certain purposes
A bridge System bank shall be treated as being in default at such times and for such purposes as the Corporation may, in its discretion, determine.
(C) Management
A bridge System bank, upon the granting of its charter, shall be under the management of a board of directors consisting of not fewer than 5 nor more than 10 members appointed by the Corporation, in consultation with the Farm Credit Administration.
(D) Bylaws
The board of directors of a bridge System bank shall adopt such bylaws as may be approved by the Corporation.
(3) Transfer of assets and liabilities
(A) Transfer upon grant of charter
Upon the granting of a charter to a bridge System bank pursuant to this subsection, the Corporation, as receiver, may transfer any assets and liabilities of the System bank to the bridge System bank in accordance with paragraph (1).
(B) Subsequent transfers
At any time after a charter is granted to a bridge System bank, the Corporation, as receiver, may transfer any assets and liabilities of such System bank in default as the Corporation may, in its discretion, determine to be appropriate in accordance with paragraph (1).
(C) Effective without approval
The transfer of any assets or liabilities of a System bank in default or danger of default transferred to a bridge System bank shall be effective without any further approval under Federal or State law, assignment, or consent with respect thereto.
(4) Powers of bridge System banks
Each bridge System bank chartered under this subsection shall, to the extent described in the charter of the System bank in default with respect to which the bridge System bank is chartered, have all corporate powers of, and be subject to the same provisions of law as, any System bank, except that—
(A) the Corporation may—
(i) remove the interim directors and directors of a bridge System bank;
(ii) fix the compensation of members of the interim board of directors and the board of directors and senior management, as determined by the Corporation in its discretion, of a bridge System bank; and
(iii) waive any requirement established under Federal or State law which would otherwise be applicable with respect to directors of a bridge System bank, on the condition that the waiver of any requirement established by the Farm Credit Administration shall require the concurrence of the Farm Credit Administration;
(B) the Corporation may indemnify the representatives for purposes of paragraph (1)(B) and the interim directors, directors, officers, employees, and agents of a bridge System bank on such terms as the Corporation determines to be appropriate;
(C) no requirement under any provision of law relating to the capital of a System institution shall apply with respect to a bridge System bank;
(D) the Farm Credit Administration Board may establish a limitation on the extent to which any person may become indebted to a bridge System bank without regard to the amount of the bridge System bank's capital or surplus;
(E)(i) the board of directors of a bridge System bank shall elect a chairperson who may also serve in the position of chief executive officer, except that such person shall not serve either as chairperson or as chief executive officer without the prior approval of the Corporation; and
(ii) the board of directors of a bridge System bank may appoint a chief executive officer who is not also the chairperson, except that such person shall not serve as chief executive officer without the prior approval of the Corporation;
(F) the Farm Credit Administration may waive any requirement for a fidelity bond with respect to a bridge System bank at the request of the Corporation;
(G) any judicial action to which a bridge System bank becomes a party by virtue of its acquisition of any assets or assumption of any liabilities of a System bank in default shall be stayed from further proceedings for a period of up to 45 days at the request of the bridge System bank;
(H) no agreement which tends to diminish or defeat the right, title or interest of a bridge System bank in any asset of a System bank in default acquired by it shall be valid against the bridge System bank unless such agreement—
(i) is in writing;
(ii) was executed by such System bank in default and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by such System bank in default;
(iii) was approved by the board of directors of such System bank in default or its loan committee, which approval shall be reflected in the minutes of said board or committee; and
(iv) has been, continuously from the time of its execution, an official record of such System bank in default;
(I) notwithstanding subsection 2 2277a–10(d)(2) of this title, any agreement relating to an extension of credit between a System bank, Federal Reserve bank, or the United States Treasury and any System institution which was executed before the extension of credit by such lender to such System institution shall be treated as having been executed contemporaneously with such extension of credit for purposes of subparagraph (H); and
(J) except with the prior approval of the Corporation and the concurrence of the Farm Credit Administration, a bridge System bank may not, in any transaction or series of transactions, issue capital stock or be a party to any merger, consolidation, disposition of substantially all of the assets or liabilities of the bridge System bank, sale or exchange of capital stock, or similar transaction, or change its charter.
(5) Capital
(A) No capital required
The Corporation shall not be required to—
(i) issue any capital stock on behalf of a bridge System bank chartered under this subsection; or
(ii) purchase any capital stock of a bridge System bank, except that notwithstanding any other provision of Federal or State law, the Corporation may purchase and retain capital stock of a bridge System bank in such amounts and on such terms as the Corporation, in its discretion, determines to be appropriate.
(B) Operating funds in lieu of capital
Upon the organization of a bridge System bank, and thereafter, as the Corporation may, in its discretion, determine to be necessary or advisable, the Corporation may make available to the bridge System bank, upon such terms and conditions and in such form and amounts as the Corporation may in its discretion determine, funds for the operation of the bridge System bank in lieu of capital.
(C) Authority to issue capital stock
Whenever the Farm Credit Administration Board determines it is advisable to do so, the Corporation shall cause capital stock of a bridge System bank to be issued and offered for sale in such amounts and on such terms and conditions as the Corporation may, in its discretion, determine.
(6) Employee status
Representatives for purposes of paragraph (1)(C), interim directors, directors, officers, employees, or agents of a bridge System bank are not, solely by virtue of service in any such capacity, officers or employees of the United States. Any employee of the Corporation, the Farm Credit Administration, or any Federal instrumentality who serves at the request of the Corporation as a representative for purposes of paragraph (1)(C), interim director, director, officer, employee, or agent of a bridge System bank shall not—
(A) solely by virtue of service in any such capacity lose any existing status as an officer or employee of the United States for purposes of any provision of law; or
(B) receive any salary or benefits for service in any such capacity with respect to a bridge System bank in addition to such salary or benefits as are obtained through employment with the Corporation or such Federal instrumentality.
(7) Assistance authorized
The Corporation may, in its discretion, provide assistance under
(8) Duration of bridge System banks
Subject to paragraphs (10) and (11), the status of a bridge System bank as such shall terminate at the end of the 2-year period following the date it was granted a charter. The Farm Credit Administration Board may, in its discretion, extend the status of the bridge System bank as such for 3 additional 1-year periods.
(9) Termination of bridge System banks status
The status of any bridge System bank as such shall terminate upon the earliest of—
(A) the merger or consolidation of the bridge System bank with a System institution that is not a bridge System bank, on the condition that the merger or consolidation shall be subject to the approval of the Farm Credit Administration;
(B) at the election of the Corporation and with the approval of the Farm Credit Administration, the sale of a majority or all of the capital stock of the bridge System bank to a System institution or another bridge System bank;
(C) at the election of the Corporation, and with the approval of the Farm Credit Administration, either the assumption of all or substantially all of the liabilities of the bridge System bank, or the acquisition of all or substantially all of the assets of the bridge System bank, by a System institution that is not a bridge System bank or other entity as permitted under applicable law; and
(D) the expiration of the period provided in paragraph (8), or the earlier dissolution of the bridge System bank as provided in paragraph (11).
(10) Effect of termination events
(A) Merger or consolidation
A bridge System bank that participates in a merger or consolidation as provided in paragraph (9)(A) shall be for all purposes a System institution, with all the rights, powers, and privileges thereof, and such merger or consolidation shall be conducted in accordance with, and shall have the effect provided in, the provisions of applicable law.
(B) Charter conversion
Following the sale of a majority or all of the capital stock of the bridge System bank as provided in paragraph (9)(B), the Farm Credit Administration Board may amend the charter of the bridge System bank to reflect the termination of the status of the bridge System bank as such, whereupon the System bank shall remain a System bank, with all of the rights, powers, and privileges thereof, subject to all laws and regulations applicable thereto.
(C) Assumption of liabilities and sale of assets
Following the assumption of all or substantially all of the liabilities of the bridge System bank, or the sale of all or substantially all of the assets of the bridge System bank, as provided in paragraph (9)(C), at the election of the Corporation, the bridge System bank may retain its status as such for the period provided in paragraph (8).
(D) Amendments to charter
Following the consummation of a transaction described in subparagraph (A), (B), or (C) of paragraph (9), the charter of the resulting System institution shall be amended by the Farm Credit Administration to reflect the termination of bridge System bank status, if appropriate.
(11) Dissolution of bridge System bank
(A) In general
Notwithstanding any other provision of State or Federal law, if the bridge System bank's status as such has not previously been terminated by the occurrence of an event specified in subparagraph (A), (B), or (C) of paragraph (9)—
(i) the Corporation, after consultation with the Farm Credit Administration, may, in its discretion, dissolve a bridge System bank in accordance with this paragraph at any time; and
(ii) the Corporation, after consultation with the Farm Credit Administration, shall promptly commence dissolution proceedings in accordance with this paragraph upon the expiration of the 2-year period following the date the bridge System bank was chartered, or any extension thereof, as provided in paragraph (8).
(B) Procedures
The Farm Credit Administration Board shall appoint the Corporation as receiver for a bridge System bank upon determining to dissolve the bridge System bank. The Corporation as such receiver shall wind up the affairs of the bridge System bank in conformity with the provisions of law relating to the liquidation of closed System banks. With respect to any such bridge System bank, the Corporation as such receiver shall have all the rights, powers, and privileges and shall perform the duties related to the exercise of such rights, powers, or privileges granted by law to a receiver of any insured System bank and, notwithstanding any other provision of law in the exercise of such rights, powers, and privileges, the Corporation shall not be subject to the direction or supervision of any State agency or other Federal agency.
(12) Multiple bridge System banks
The Corporation may, in the Corporation's discretion, organize, and the Farm Credit Administration may, in its discretion, charter, 2 or more bridge System banks under this subsection to assume any liabilities and purchase any assets of a single System institution in default.
(i) Certain sales of assets prohibited
(1) Persons who engaged in improper conduct with, or caused losses to, System institutions
The Corporation shall prescribe regulations which, at a minimum, shall prohibit the sale of assets of a failed System institution by the Corporation to—
(A) any person who—
(i) has defaulted, or was a member of a partnership or an officer or director of a corporation that has defaulted, on 1 or more obligations the aggregate amount of which exceed $1,000,000, to such failed System institution;
(ii) has been found to have engaged in fraudulent activity in connection with any obligation referred to in clause (i); and
(iii) proposes to purchase any such asset in whole or in part through the use of the proceeds of a loan or advance of credit from the Corporation or from any System institution for which the Corporation has been appointed as conservator or receiver;
(B) any person who participated, as an officer or director of such failed System institution or of any affiliate of such System institution, in a material way in transactions that resulted in a substantial loss to such failed System institution;
(C) any person who has been removed from, or prohibited from participating in the affairs of, such failed System institution pursuant to any final enforcement action by the Farm Credit Administration;
(D) any person who has demonstrated a pattern or practice of defalcation regarding obligations to such failed System institution; or
(E) any person who is in default on any loan or other extension of credit from such failed System institution which, if not paid, will cause substantial loss to the System institution or the Corporation.
(2) Defaulted debtors
Except as provided in paragraph (3), any person who is in default on any loan or other extension of credit from the System institution, which, if not paid, will cause substantial loss to the System institution or the Corporation, may not purchase any asset from the conservator or receiver.
(3) Settlement of claims
Paragraph (1) shall not apply to the sale or transfer by the Corporation of any asset of any System institution to any person if the sale or transfer of the asset resolves or settles, or is part of the resolution or settlement, of—
(A) 1 or more claims that have been, or could have been, asserted by the Corporation against the person; or
(B) obligations owed by the person to any System institution, or the Corporation.
(4) Definition of default
For purposes of this subsection, the term "default" means a failure to comply with the terms of a loan or other obligation to such an extent that the property securing the obligation is foreclosed upon.
(j) Expedited procedures for certain claims
(1) Time for filing notice of appeal
The notice of appeal of any order, whether interlocutory or final, entered in any case brought by the Corporation against a System institution's director, officer, employee, agent, attorney, accountant, or appraiser or any other person employed by or providing services to a System institution shall be filed not later than 30 days after the date of entry of the order. The hearing of the appeal shall be held not later than 120 days after the date of the notice of appeal. The appeal shall be decided not later than 180 days after the date of the notice of appeal.
(2) Scheduling
A court of the United States shall expedite the consideration of any case brought by the Corporation against a System institution's director, officer, employee, agent, attorney, accountant, or appraiser or any other person employed by or providing services to a System institution. As far as practicable the court shall give such case priority on its docket.
(3) Judicial discretion
The court may modify the schedule and limitations stated in paragraphs (1) and (2) in a particular case, based on a specific finding that the ends of justice that would be served by making such a modification would outweigh the best interest of the public in having the case resolved expeditiously.
(k) Bond not required; agents; fee
The Corporation as conservator or receiver of a System institution shall not be required to furnish bond and may appoint an agent or agents to assist in its duties as such conservator or receiver. All fees, compensation, and expenses of liquidation and administration shall be fixed by the Corporation and may be paid by it out of funds coming into its possession as such conservator or receiver.
(l) Consultation regarding conservatorships and receiverships
To the extent practicable—
(1) the Farm Credit Administration shall consult with the Corporation prior to taking a preresolution action concerning a System institution that may result in a conservatorship or receivership; and
(2) the Corporation, acting in the capacity of the Corporation as a conservator or receiver, shall consult with the Farm Credit Administration prior to taking any significant action impacting System institutions or service to System borrowers.
(m) Applicability
This section shall become applicable with respect to the power of the Corporation to act as a conservator or receiver on the date on which the Farm Credit Administration appoints the Corporation as a conservator or receiver under
(
Editorial Notes
References in Text
The Federal Rules of Civil Procedure, referred to in subsec. (b)(17), (18), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure.
The Gramm-Leach-Bliley Act, referred to in subsec. (c)(15)(B)(i), is
The Legal Certainty for Bank Products Act of 2000, referred to in subsec. (c)(15)(B)(ii), is title IV of H.R. 5660, as enacted by
The Commodity Exchange Act, referred to in subsec. (c)(15)(B)(iv), is act Sept. 21, 1922, ch. 369,
1 So in original. The comma probably should not appear.
2 So in original. Probably should be "section".
§2277a–11. Investment of funds
Money of the Corporation not otherwise employed shall be invested in obligations of the United States or in obligations guaranteed as to principal and interest by the United States.
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§2277a–12. Exemption from taxation
Notwithstanding any other provision of law, the Corporation, including its franchise, and its capital, reserves, surplus, and income, shall be exempt from all taxation imposed by the United States, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, county, municipal, and local taxation to the same extent according to its value as other real property is taxed.
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§2277a–13. Omitted
Editorial Notes
Codification
Section,
§2277a–14. Prohibitions
(a) Corporate name
(1) Use of corporate name
It shall be unlawful for any person or entity to use the words "Farm Credit System Insurance Corporation" or any combination of such words that would have the effect of leading the public to believe that there is any connection between such person or entity and the Corporation, by virtue of the name under which such person or entity does business.
(2) False representation
(A) By outside person or entities
It shall be unlawful for any person or entity to falsely represent by any device, that the notes, bonds, debentures, or other obligations of the person or entity are insured or in any way guaranteed by the Corporation.
(B) System banks
It shall be unlawful for any insured System bank or person that markets insured obligations to falsely represent the extent to which or the manner in which such obligations are insured by the Corporation.
(3) Penalty
Any person or entity that willfully violates any provision of this subsection shall be fined not more than $1,000, imprisoned for not more than 1 year, or both.
(b) Payments or distributions while in default
(1) In general
It shall be unlawful for any insured System bank to pay any dividends on bank stock or participation certificates or interest on the capital notes or debentures of such bank (if such interest is required to be paid only out of net profits) or distribute any of the capital assets of such bank while the bank remains in default in the payment of any premium due to the Corporation.
(2) Liability of directors
Each director or officer of any insured System bank who willfully participates in the declaration or payment of any dividend or interest or in any distribution in violation of this subsection shall be fined not more than $1,000, imprisoned not more than 1 year, or both.
(3) Applicability
This subsection shall not apply to any default that is due to a dispute between the insured System bank and the Corporation over the amount of such premium if such bank deposits security satisfactory to the Corporation for payment on final determination of the issue.
(c) Failure to file statement or pay premium
(1) In general
Any insured System bank that willfully fails or refuses to file any certified statement or pay any premium required under this part shall be subject to a penalty of not more than $100 for each day that such violations continue, which penalty the Corporation may recover for its use.
(2) Applicability
This subsection shall not apply to conduct with respect to any default that is due to a dispute between the insured System bank and the Corporation over the amount of such premium if such bank deposits security satisfactory to the Corporation for payment on final determination of the issue.
(d) Employment of persons convicted of criminal offenses
(1) In general
Except with the prior written consent of the Farm Credit Administration, it shall be unlawful for any person convicted of any criminal offense involving dishonesty or a breach of trust to serve as a director, officer, or employee of any System institution.
(2) Penalty
For each willful violation of paragraph (1), the institution involved shall be subject to a penalty of not more than $100 for each day during which the violation continues, which the Corporation may recover for its use.
(e) Prohibition on uses of funds related to Federal Agricultural Mortgage Corporation
No funds from administrative accounts or from the Farm Credit System Insurance Fund may be used by the Corporation to provide assistance to the Federal Agricultural Mortgage Corporation or to support any activities related to the Federal Agricultural Mortgage Corporation.
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Editorial Notes
Amendments
2018—Subsec. (e).
1991—Subsec. (d)(1).
1990—Subsec. (d)(1).
Subsec. (d)(2).