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12 U.S.C. § 2279aa — Supervisory actions applicable to level III
Federal law — U.S. Code and appendices · legal_authorities
**(a) Mandatory supervisory actions**
(1) **Capital restoration plan** — If the Corporation is classified as within level III, the Corporation shall, within the time period determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.
(2) **Restrictions on dividends**
(A) *Prior approval* — If the Corporation is classified as within level III, the Corporation—
(i) may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and
(ii) may make any other payment of dividends only if the Director approves the payment before the payment.
(B) *Standard for approval* — If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.
(3) **Reclassification from level III to level IV** — The Director shall immediately reclassify the Corporation as within level IV if—
(A) the Corporation is classified as within level III; and
(B)
(i) the Corporation does not submit a capital restoration plan that is approved by the Director; or
(ii) the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.
**(b) Discretionary supervisory actions** In addition to any other actions taken by the Director (including actions under subsection (a)), the
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Stable record: federal_law:legal_authorities:record_usc_b4024626dd60867551ec61d6
Source file: Laws/federal/codes/united-states-code/title-12/section-2279aa-supervisory-actions-applicable-to-level-iii--16cbaf977d.md
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Source location: Title 12, Chapter 23, § 2279aa; chapter-023-farm-credit-system.md
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**(a) Mandatory supervisory actions**
(1) **Capital restoration plan** — If the Corporation is classified as within level III, the Corporation shall, within the time period determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.
(2) **Restrictions on dividends**
(A) *Prior approval* — If the Corporation is classified as within level III, the Corporation—
(i) may not make any payment of dividends that would result in the Corporation being reclassified as within level IV; and
(ii) may make any other payment of dividends only if the Director approves the payment before the payment.
(B) *Standard for approval* — If the Corporation is classified as within level III, the Director may approve a payment of dividends by the Corporation only if the Director determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.
(3) **Reclassification from level III to level IV** — The Director shall immediately reclassify the Corporation as within level IV if—
(A) the Corporation is classified as within level III; and
(B)
(i) the Corporation does not submit a capital restoration plan that is approved by the Director; or
(ii) the Director determines that the Corporation has failed to make, in good faith, reasonable efforts necessary to comply with such a capital restoration plan and fulfill the schedule for the plan approved by the Director.
**(b) Discretionary supervisory actions** In addition to any other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:
(1) **Limitation on increase in obligations** — Limit any increase in, or order the reduction of, any obligations of the Corporation, including off-balance sheet obligations.
(2) **Limitation on growth** — Limit or prohibit the growth of the assets of the Corporation or require contraction of the assets of the Corporation.
(3) **Prohibition on dividends** — Prohibit the Corporation from making any payment of dividends.
(4) **Acquisition of new capital** — Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as within level II.
(5) **Restriction of activities** — Require the Corporation to terminate, reduce, or modify any activity that the Director determines creates excessive risk to the Corporation.
(6) **Conservatorship** — Appoint a conservator for the Corporation consistent with this chapter.
**(c) Effective date** This section shall take effect on January 1, 1992.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Establishment** The banks established pursuant to the merger of each District Federal Intermediate Credit Bank and Federal Land Bank (hereinafter referred to in this subchapter as “Farm Credit Banks”), as provided in section 410 of the Agricultural Credit Act of 1987, shall be Federally chartered instrumentalities of the United States.
**(b) Charters** The Farm Credit Administration shall, consistent with this chapter, issue charters for, and approve amendments to charters of, the Farm Credit Banks.
**(c) Title** Each Farm Credit Bank may include in its title the name of the city in which it is located or other geographical designation.
**(d) Branches** Each Farm Credit Bank may establish such branches or other offices as may be appropriate for the effective operation of its business.
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2013
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Federal law — U.S. Code and appendices · legal_authorities
At the time a System institution or an agricultural mortgage loan originator (as defined in [section 2279aa of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2279aa&num=0&edition=prelim)) approves a loan made to a borrower that, in the opinion of the institution or originator, would be ineligible for a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act ([7 U.S.C. 1921](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section1921&num=0&edition=prelim) et seq.) by reason of subtitle B or C of title XII of the Food Security Act of 1985 ([16 U.S.C. 3811](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title16-section3811&num=0&edition=prelim) et seq.), the institution or originator, as the case may be, shall encourage the borrower to contact the Department of Agriculture Soil Conservation Service to obtain information about soil conservation methods and practices.
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2221
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Regulation**
(1) **Authority** — Notwithstanding any other provision of this chapter, the Farm Credit Administration shall have the authority to provide, acting through the Office of Secondary Market Oversight—
(A) for the examination of the Corporation and its affiliates; and
(B) for the general supervision of the safe and sound performance of the powers, functions, and duties vested in the Corporation and its affiliates by this subchapter, including through the use of the authorities granted to the Farm Credit Administration under—
(i) part C of subchapter V; and
(ii) beginning 6 months after December 13, 1991, [section 2252(a)(9) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2252/a/9&num=0&edition=prelim).
(2) **Considerations** — In exercising its authority pursuant to this section, the Farm Credit Administration shall consider—
(A) the purposes for which the Corporation was created;
(B) the practices appropriate to the conduct of secondary markets in agricultural loans; and
(C) the reduced levels of risk associated with appropriately structured secondary market transactions.
(3) **Office of Secondary Market Oversight**
(A) Not later than 180 days after December 13, 1991, the Farm Credit Administration Board shall establish within the Farm Credit Administration the Office of Secondary Market Oversight.
(B) The Farm Credit Administration Board shall carry out the authority set forth in this section through the Office of Secondary Market Oversight.
(C) The Office of Secondary Market Oversight shall be managed by a full-time Director who shall be selected by and report to the Farm Credit Administration Board.
**(b) Examinations and audits**
(1) **In general** — The financial trans
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2279aa–14
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Guarantee authorized for certified facilities**
(1) **In general** — Subject to the requirements of this section and on such other terms and conditions as the Corporation shall consider appropriate, the Corporation—
(A) shall guarantee the timely payment of principal and interest on the securities issued by a certified facility that represents interests solely in, or obligations fully backed by, any pool consisting solely of qualified loans which meet the applicable standards established under [section 2279aa–8 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2279aa-8&num=0&edition=prelim) and which are held by such facility; and
(B) may issue a security, guaranteed as to the timely payment of principal and interest, that represents an interest solely in, or an obligation fully backed by, a pool consisting of qualified loans that—
(i) meet the applicable standards established under [section 2279aa–8 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2279aa-8&num=0&edition=prelim); and
(ii) have been purchased and held by the Corporation.
(2) **Inability of facility to pay** — If the facility is unable to make any payment of principal or interest on any security for which a guarantee has been provided by the Corporation under paragraph (1), the Corporation shall make such payment as and when due in cash, and on such payment shall be subrogated fully to the rights satisfied by such payment.
(3) **Power of Corporation** — Notwithstanding any other provision of law, the Corporation is empowered, in connection with any guarantee under this subsection, whether before or after any default, to provide by contract with the facility for the extinguishment, on default by the
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2279aa–9
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Federal law — U.S. Code and appendices · legal_authorities
Page 1413
TITLE 12—BANKS AND BANKING
§ 2279aa
the Farm Credit Administration, provide for a
different number of directors to be selected in
a different manner, except that the bylaws
shall provide for at least one outside director.
(Pub. L. 92–181, title VII, § 7.12, as added Pub. L.
100–233, title IV, § 416, Jan. 6, 1988, 101 Stat. 1652;
amended Pub. L. 100–399, title IV, § 408(q), (r),
Aug. 17, 1988, 102 Stat. 1002, 1003.)
Editorial Notes
AMENDMENTS
1988—Subsec. (b). Pub. L. 100–399, § 408(q), substituted
‘‘Powers and capitalization’’ for ‘‘Procedures’’ in head-
ing and, in amending text generally, substituted ‘‘Sec-
tions 2279a–2 and 2279a–3 of this title’’ for ‘‘The provi-
sions of sections 2279a–2 through 2279a–4 of this title’’.
Subsec. (c)(2)(B). Pub. L. 100–399, § 408(r), substituted
‘‘directors’’ for ‘‘members’’.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100–399 effective as if enacted
immediately after enactment of Pub. L. 100–233, which
was approved Jan. 6, 1988, see section 1001(a) of Pub. L.
100–399, set out as a note under section 2002 of this title.
§ 2279f–1. Merger of similar associations
(a) In general
Associations may voluntarily merge with
other like associations if the plan of merger is
approved by—
(1) the Farm Credit Administration Board;
(2) the respective Boards of Directors of the
associations involved;
(3) a majority vote of the stockholders of
each association voting, in person or by proxy,
at a duly authorized stockholders’ meeting;
and
(4) the Farm Credit Banks involved.
(b) Procedures
The provisions of subsections (b) and (c) of sec-
tion 2279c–1 of this title shall apply to associa-
tions merged under this section.
(Pub. L. 92–181, title VII, § 7.13, as
Source: Supplied 2024 U.S. Code historical extraction · 12 U.S.C. § 2279aa
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