12 U.S.C. § 2162 — Protection of borrower stock

Page 1330 TITLE 12—BANKS AND BANKING § 2161 ‘‘(A) ASSISTANCE BOARD.—During the period in which the Assistance Board is in existence, the board of direc- tors of the Assistance Board shall designate one of its directors to serve as a nonvoting representative to the board of directors of the Corporation. ‘‘(B) INSURANCE CORPORATION.—After such period, the board of directors of the Farm Credit System Insurance Corporation may designate one of its directors to serve as a nonvoting representative to the board of directors of the Corporation. ‘‘(C) MEETINGS.—The persons so designated by the As- sistance Board and by the Farm Credit System Insur- ance Corporation may attend and participate in all de- liberations of the board of directors of the Corpora- tion.’’ 1988—Pub. L. 100–233 amended section generally. Prior to amendment, section read as follows: ‘‘A fiscal agen- cy shall be established by the banks for such of their functions relating to the issuance, marketing, and han- dling of their obligations, and interbank or intersystem flow of funds as may from time to time be required.’’ Subsec. (b)(3). Pub. L. 100–399, § 203(b), inserted ‘‘pred- ecessor Federal Farm Credit Banks’’ before ‘‘Funding Corporation’’. Subsec. (d)(2)(B), (C). Pub. L. 100–399, § 203(c), sub- stituted ‘‘directors of the Corporation’’ for ‘‘directors of the Federal Farm Credit Banks Funding Corpora- tion’’. Subsec. (e). Pub. L. 100–399, § 203(d), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: ‘‘Until a quorum of the board of directors of the Corporation is elected or appointed, the finance committee established under section 2156 of this title in effect before January 6, 1988, and the fiscal agency established under section 2160 of this title in effect be- fore January 6, 1988, shall continue to operate as if this section had not been enacted.’’ Subsec. (f). Pub. L. 100–399, § 203(a), added subsec. (f). 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. § 2161. Repealed. Pub. L. 100–399, title I, § 101(a), Aug. 17, 1988, 102 Stat. 989 Section, Pub. L. 92–181, title IV, § 4.9A, as added Pub. L. 99–205, title I, § 105, Dec. 23, 1985, 99 Stat. 1687, author- ized a central reserve for Farm Credit System. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal effective immediately after enactment of Pub. L. 100–233, approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title. § 2162. Protection of borrower stock (a) Retirement of stock Notwithstanding any other section of this chapter, each institution of the Farm Credit System, when retiring eligible borrower stock in accordance with this chapter, shall retire such stock at par value. (b) Certain powers not affected This section does not affect the authority of any institution of the Farm Credit System— (1) to retire or cancel borrower stock at par value for application against a loan in default; (2) to cancel borrower stock at par value under section 2202b of this title; or (3) to apply, against any outstanding indebt- edness to a System association arising out of or in connection with a liquidation referred to in subsection (d)(2), the par value of borrower stock frozen in such liquidation. (c) Inability to retire stock at par value (1) In general If an institution is unable to retire eligible borrower stock at par value due to the liquida- tion of the institution, the Farm Credit Sys- tem Insurance Corporation, acting as receiver, shall retire such stock at par value as would have been retired in the ordinary course of business of the institution. (2) Funding The Farm Credit System Insurance Corpora- tion shall use such funds from the Farm Credit Insurance Fund as are sufficient to carry out this section. (d) Definitions For purposes of this section: (1) Borrower stock The term ‘‘borrower stock’’ means voting and nonvoting stock, equivalent contributions to a guaranty fund, participation certificates, allocated equities, and other similar equities that are subject to retirement under a revolv- ing cycle issued by any System institution and held by any person other than any System in- stitution. (2) Eligible borrower stock The term ‘‘eligible borrower stock’’ means borrower stock that— (A) is outstanding on January 6, 1988; (B) is issued or allocated after January 6, 1988, but prior to the earlier of— (i) in the case of each bank and associa- tion, the date of approval, by the stock- holders of such bank or association, of the capitalization requirements of the institu- tion in accordance with section 2154a of this title; or (ii) the date that is 9 months after Janu- ary 6, 1988; (C) was, after January 1, 1983, but before January 6, 1988, frozen by an institution that was placed in liquidation; or (D) was retired at less than par value by an institution that was placed in liquidation after January 1, 1983, but before January 6, 1988. (3) Institution The term ‘‘institution’’ means a bank or as- sociation chartered under this chapter. (4) Par value The term ‘‘par value’’ means— (A) in the case of stock, par value; (B) in the case of participation certificates and other equities and interests not de- scribed in subparagraph (C), face or equiva- lent value; or (C) in the case of participation certificates and allocated equities subject to retirement under a revolving cycle but that a System institution elects to retire out of order for application against a loan in default or oth- Page 1331 TITLE 12—BANKS AND BANKING § 2183 erwise as provided in this chapter, par or face value discounted, at a rate determined by the institution, to reflect the present value of the equity or interest as of the date of such retirement. (Pub. L. 92–181, title IV, § 4.9A, as added Pub. L. 100–233, title I, § 101, Jan. 6, 1988, 101 Stat. 1572; amended Pub. L. 100–399, title I, § 101(b)–(d), Aug. 17, 1988, 102 Stat. 989; Pub. L. 115–334, title V, § 5411(20), Dec. 20, 2018, 132 Stat. 4681.) Editorial Notes PRIOR PROVISIONS A prior section 4.9A of Pub. L. 92–181, which author- ized a central reserve for Farm Credit System, was classified to section 2161 of this title and was repealed by Pub. L. 100–399, § 101(a). AMENDMENTS 2018—Subsec. (c). Pub. L. 115–334 inserted par. (1) des- ignation and heading before ‘‘If an institution’’, sub- stituted ‘‘the Farm Credit System Insurance Corpora- tion, acting as receiver,’’ for ‘‘the receiver of the insti- tution’’ and ‘‘business of the institution.’’ for ‘‘business of the institution, and—’’, added par. (2), and struck out former pars. (1) and (2) which read as follows: ‘‘(1) during the 5-year period beginning on January 6, 1988, the Assistance Board shall direct the Financial Assistance Corporation to provide the receiver with sufficient funds to enable the receiver to carry out this subsection; and ‘‘(2) after such 5-year period, the Farm Credit System Insurance Corporation shall provide the receiver with sufficient funds from the Farm Credit Insurance Fund to enable the receiver to carry out this subsection.’’ 1988—Subsec. (a). Pub. L. 100–399, § 101(b), struck out provision that an institution whose capital stock is im- paired coordinate retirement of stock under this sec- tion with the activities of the Assistance Board and the Financial Assistance Corporation. Subsec. (c). Pub. L. 100–399, § 101(c), inserted ‘‘stock’’ in subsec. heading and amended text generally. Prior to amendment, text read as follows: ‘‘If an institution is unable to retire eligible borrower stock at par value due to the freezing of such stock during a liquidation of the institution, the receiver of the institution shall retire such stock at par value as would have been re- tired in the ordinary course of business of the institu- tion and the Financial Assistance Corporation, on re- quest of the Assistance Board, shall provide the re- ceiver with sufficient funds to enable the receiver to carry out this subsection.’’ Subsec. (d)(2)(B). Pub. L. 100–399, § 101(d), in introduc- tory provision substituted ‘‘issued or allocated’’ for ‘‘required to be purchased, and is purchased, as a condi- tion of obtaining a loan made’’ and in cl. (i) substituted ‘‘section 2154a of this title’’ for ‘‘section 4.9B’’. 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. PART B—DISSOLUTION Editorial Notes CODIFICATION Pub. L. 100–233, title IV, § 418(a)(1), formerly § 415(a)(1), Jan. 6, 1988, 101 Stat. 1653, renumbered § 418(a)(1), Pub. L. 100–399, title IV, § 409(a), Aug. 17, 1988, 102 Stat. 1003, substituted ‘‘Dissolution’’ for ‘‘Dissolution and merg- er’’ as part B heading. §§ 2181, 2182. Repealed. Pub. L. 100–233, title IV, § 418(a)(2), (3), formerly § 415(a)(2), (3), Jan. 6, 1988, 101 Stat. 1653; renumbered § 418(a)(2), (3), Pub. L. 100–399, title IV, § 409(a), Aug. 17, 1988, 102 Stat. 1003 Section 2181, Pub. L. 92–181, title IV, § 4.10, Dec. 10, 1971, 85 Stat. 612; Pub. L. 96–592, title IV, § 402, Dec. 24, 1980, 94 Stat. 3446, related to merger of similar banks. Section 2182, Pub. L. 92–181, title IV, § 4.11, Dec. 10, 1971, 85 Stat. 612; Pub. L. 99–205, title II, § 205(f)(4), Dec. 23, 1985, 99 Stat. 1706, related to board of directors for merged bank. § 2183. Dissolution; voluntary or involuntary liq- uidation; mergers; receiverships or conserva- tors (a) Voluntary liquidation; consent of Farm Cred- it Administration; rules and regulations; minimization of adverse effect; voluntary merger; mandatory merger on failure to com- ply or meet obligations No institution of the System shall go into vol- untary liquidation without the consent of the Farm Credit Administration and with such con- sent may liquidate only in accordance with reg- ulations prescribed by the Farm Credit Adminis- tration. In the case of a voluntary liquidation of an association, such regulations, among other things, shall direct the supervising bank to in- stitute such measures as it deems appropriate to minimize the adverse effect of the liquidation on those borrowers whose loans are purchased by or otherwise transferred to another System insti- tution. The Farm Credit Administration Board may require an association to merge with an- other association whenever it determines, with the concurrence of the board of the supervising bank, that an association has failed to meet its outstanding obligations or failed to conduct its operations in accordance with this chapter. (b) Appointment of conservator or receiver; grounds; action for removal; stay of actions or proceedings The Farm Credit Administration Board may appoint a conservator or receiver for any Sys- tem institution on the determination by the Farm Credit Administration Board that one or more of the following exists, or is occurring, with respect to the institution: (1) insolvency, in that the assets of the institution are less than its obligations to its creditors and others, in- cluding its members; (2) substantial dissipation of assets or earnings due to any violation of law, rules, or regulations, or to any unsafe or un- sound practice; (3) an unsafe or unsound condi- tion to transact business; (4) willful violation of a cease and desist order that has become final; (5) concealment of books, papers, records, or as- sets of the institution or refusal to submit books, papers, records, or other material relat- ing to the affairs of the institution for inspec- tion to any examiner or to any lawful agent of the Farm Credit Administration; (6) the institu- tion is unable to timely pay principal or interest on any insured obligation (as defined in section 2277a(3) of this title) issued by the institution. The Farm Credit Administration Board shall have exclusive power and jurisdiction to appoint a conservator or receiver, and such receiver or conservator, after the 5-year period beginning