12 U.S.C. § 2015 — Lending authority

Page 1294 TITLE 12—BANKS AND BANKING § 2014 other losses, whether to protect against cap- ital impairment or for any other purpose; and (24) operate as an originator and become cer- tified as a certified facility under subchapter VIII. (Pub. L. 92–181, title I, § 1.5, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1623; amended Pub. L. 100–399, title IV, § 401(d), Aug. 17, 1988, 102 Stat. 995; Pub. L. 104–105, title II, § 201, Feb. 10, 1996, 110 Stat. 172.) Editorial Notes PRIOR PROVISIONS A prior section 2013, Pub. L. 92–181, title I, § 1.5, Dec. 10, 1971, 85 Stat. 585; Pub. L. 96–592, title I, § 102, Dec. 24, 1980, 94 Stat. 3437; Pub. L. 99–205, title II, § 205(d)(2), (3), title VI, § 601, Dec. 23, 1985, 99 Stat. 1703, 1711; Pub. L. 100–233, title VIII, § 802(c), Jan. 6, 1988, 101 Stat. 1710, re- lated to land bank stock, prior to the general amend- ment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1996—Par. (13). Pub. L. 104–105 struck out ‘‘, and the appointment and compensation of the chief executive officer thereof,’’ after ‘‘in its district’’. 1988—Par. (9). Pub. L. 100–399, § 401(d)(1), amended par. (9) generally. Prior to amendment, par. (9) read as fol- lows: ‘‘prescribe by its board of directors— ‘‘(A) the bylaws of such bank that shall not be in- consistent with law, providing for the classes of the stock of the bank and the manner in which such stock shall be issued, transferred, and retired; ‘‘(B) the officers, employees, and agents of the bank as provided for; ‘‘(C) the property of the bank acquired, held, and transferred; ‘‘(D) the loans and discounts made by the bank; ‘‘(E) the general business conducted by the bank; and ‘‘(F) the privileges granted to the bank by law exer- cised and enjoyed;’’. Par. (11). Pub. L. 100–399, § 401(d)(2), substituted ‘‘of securities or’’ for ‘‘or securities of’’. Par. (12)(B), (C). Pub. L. 100–399, § 401(d)(3), struck out ‘‘participate with’’ before ‘‘one or more’’ in subpar. (B) and ‘‘participate with’’ before ‘‘lenders that’’ in subpar. (C). Par. (14). Pub. L. 100–399, § 401(d)(4), substituted ‘‘(within the meaning of section 1813 of this title)’’ for ‘‘as defined in section 1813 of this title’’. Par. (18). Pub. L. 100–399, § 401(d)(5), struck out ‘‘Fed- eral land bank’’ after ‘‘delegate to’’. Par. (22). Pub. L. 100–399, § 401(d)(6), substituted ‘‘in accordance with generally accepted accounting prin- ciples, except as may be authorized by the Farm Credit Administration;’’ for ‘‘as authorized by the Farm Cred- it Administration; and’’. Par. (23). Pub. L. 100–399, § 401(d)(7), struck out ‘‘and approved by the Farm Credit Administration Board’’ after ‘‘of the bank’’ and substituted ‘‘purpose; and’’ for ‘‘purpose.’’ Par. (24). Pub. L. 100–399, § 401(d)(8), added par. (24). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–105, title III, § 302, Feb. 10, 1996, 110 Stat. 185, provided that: ‘‘Except as otherwise provided in this Act, this Act [see Short Title of 1996 Amendment note set out under section 2001 of this title] and the amendments made by this Act shall become effective on the date of enactment [Feb. 10, 1996].’’ EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2014. Farm Credit Bank capitalization In accordance with section 2154a of this title, the Farm Credit Banks shall provide, through bylaws and subject to Farm Credit Administra- tion regulations, for the capitalization of the bank and the manner in which bank stock shall be issued, held, transferred, and retired and bank earnings distributed. (Pub. L. 92–181, title I, § 1.6, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1624.) Editorial Notes PRIOR PROVISIONS A prior section 2014, Pub. L. 92–181, title I, § 1.6, Dec. 10, 1971, 85 Stat. 585; Pub. L. 96–592, title I, § 103, Dec. 24, 1980, 94 Stat. 3438, related to real estate mortgage loans, prior to the general amendment of this sub- chapter by Pub. L. 100–233, § 401. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2015. Lending authority (a) Real estate loans and related assistance (1) Real estate loans The Farm Credit Banks may make or par- ticipate with other lenders in long-term real estate mortgage loans in rural areas, as de- fined by the Farm Credit Administration, or to producers or harvesters of aquatic products, and make continuing commitments to make such loans under specified circumstances, for a term of not less than 5 nor more than 40 years. (2) Financial assistance The Farm Credit Banks may provide and ex- tend financial assistance to, and discount for, or purchase from, a Federal land bank associa- tion any note, draft, or other obligation with the endorsement or guarantee of the associa- tion, the proceeds of which have been ad- vanced to persons eligible and for purposes of financing by the association, as authorized under section 2279b(a) of this title. (b) Intermediate credit (1) In general The Farm Credit Banks are authorized to make loans and extend other similar financial assistance to and to discount for or purchase from— (A) any production credit association, or (B) any national bank, State bank, trust company, agricultural credit corporation, incorporated livestock loan company, sav- ings institution, credit union, or any asso- ciation of agricultural producers engaged in Page 1295 TITLE 12—BANKS AND BANKING § 2015 the making of loans to farmers and ranchers, and any corporation engaged in the making of loans to producers or harvesters of aquat- ic products, any note, draft, or other obligation with the institution’s endorsement or guarantee, the proceeds of which note, draft, or other obliga- tion have been advanced to persons and for purposes eligible for financing by production credit associations as authorized by this chap- ter. (2) Participation with other entities The Farm Credit Banks may participate with one or more production credit associa- tions or other Farm Credit Banks in the mak- ing of loans to eligible borrowers and may par- ticipate with one or more other Farm Credit System institutions in loans made under this subchapter or other subchapters of this chap- ter on the basis prescribed in section 2206 of this title. (3) Limitations on extension of financial serv- ices (A) General rule No paper shall be purchased from or dis- counted for, and no loans shall be made or other similar financial assistance extended by a Farm Credit Bank to any entity identi- fied in paragraph (1)(B) of this subsection if the amount of such paper added to the ag- gregate liabilities of such entity, whether di- rect or contingent (other than bona fide de- posit liabilities), exceeds ten times the paid- in and unimpaired capital and surplus of such entity or the amount of such liabilities permitted under the laws of the jurisdiction creating such institution, whichever is the lesser. (B) Limitation on national bank It shall be unlawful for any national bank which is indebted to any Farm Credit Bank, on paper discounted or purchased under paragraph (1), to incur any additional in- debtedness, if by virtue of such additional indebtedness its aggregate liabilities direct or contingent, will exceed the limitation de- scribed in subparagraph (A). (4) FCA regulations (A) In general All of the loans, financial assistance, dis- counts and purchases authorized by this sub- section shall be subject to regulations of the Farm Credit Administration and shall be se- cured by collateral, if any, as may be re- quired in such regulations. (B) Requirement of regulations The regulations shall assure that such loans, financial assistance, discounts, and purchases are available on a reasonable basis to any financing institution authorized to receive such services under paragraph (1)(B) of this subsection, and that— (i) is significantly involved in lending for agricultural or aquatic purposes; (ii) demonstrates a continuing need for supplementary sources of funds to meet the credit requirements of its agricultural or aquatic borrowers; (iii) has limited access to national or re- gional capital markets; and (iv) does not use such services to expand its financing activities to persons and for purposes other than those authorized under subchapter II. (C) Fees The regulations may authorize a Farm Credit Bank to charge reasonable fees for any commitment to extend service under this section to such a financing institution. (D) Subsidiaries and affiliates For purposes of this subsection, a financ- ing institution together with the subsidi- aries and affiliates of such may be consid- ered as one, but such determination to con- sider such institution together with the sub- sidiaries and affiliates of such as one shall be made in the first instance by the bank and in the event of a denial by the bank of its services to a financial institution, then by the Farm Credit Administration on a case-by-case basis with due regard to the total relationship of the financing institu- tion, its subsidiaries, and affiliates. (5) Effective date Nothing in this section shall require termi- nation of discount relationships in existence on December 24, 1980. (Pub. L. 92–181, title I, § 1.7, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1625; amended Pub. L. 100–399, title IV, § 401(e), (f), Aug. 17, 1988, 102 Stat. 995, 996.) Editorial Notes CODIFICATION In subsec. (b)(5), ‘‘December 24, 1980’’ substituted for ‘‘the effective date of the Farm Credit Act Amend- ments of 1980’’. PRIOR PROVISIONS A prior section 2015, Pub. L. 92–181, title I, § 1.7, Dec. 10, 1971, 85 Stat. 585; Pub. L. 96–592, title I, § 104, Dec. 24, 1980, 94 Stat. 3438; Pub. L. 99–509, title I, § 1033(a), Oct. 21, 1986, 100 Stat. 1877, related to interest rates and other charges, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1988—Subsec. (a). Pub. L. 100–399, § 401(e), inserted in heading ‘‘and related assistance’’ and amended text generally. Prior to amendment, text read as follows: ‘‘The Farm Credit Banks are authorized to make or participate with other lenders in long-term real estate mortgage loans in rural areas, as defined by the Farm Credit Administration, or to producers or harvesters of aquatic products, and make continuing commitments to make such loans under specified circumstances, for a term of not less than 5 nor more than 40 years.’’ Subsec. (b)(2). Pub. L. 100–399, § 401(f)(1), struck out provision that banks may own and lease or lease with an option to purchase to persons eligible for assistance under this subchapter, equipment needed in the oper- ations of such persons. Subsec. (b)(3). Pub. L. 100–399, § 401(f)(2), substituted in heading ‘‘services’’ for ‘‘assistance’’ and in subpar. (B) ‘‘described in subparagraph (A)’’ for ‘‘herein con- tained’’. Subsec. (b)(4)(A). Pub. L. 100–399, § 401(f)(3), sub- stituted ‘‘subsection’’ for ‘‘section’’. Page 1296 TITLE 12—BANKS AND BANKING § 2016 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2016. Interest rates and other charges (a) In general Loans and discounts made by a Farm Credit Bank shall bear such rate or rates of interest or discount, and be on such terms and conditions, as may be determined by the board of directors of the bank from time to time. (b) Setting rates and charges In setting rates and charges, it shall be the ob- jective to provide the types of credit needed by eligible borrowers at the lowest reasonable costs on a sound business basis taking into consider- ation the cost of money to the bank, necessary reserve and expenses of the bank and associa- tions, and providing services to members. The loan documents or discounting and financing agreements, may provide for the interest rate or rates to vary from time to time during the re- payment period of the loan or agreement. (Pub. L. 92–181, title I, § 1.8, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1626; amended Pub. L. 100–399, title IV, § 401(g), Aug. 17, 1988, 102 Stat. 996.) Editorial Notes PRIOR PROVISIONS A prior section 2016, Pub. L. 92–181, title I, § 1.8, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 105, Dec. 24, 1980, 94 Stat. 3438, related to eligibility, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1988—Subsec. (a). Pub. L. 100–399 substituted ‘‘such rate or rates of interest or discount, and be’’ for ‘‘inter- est at a rate or rates, and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2017. Eligibility The credit and financial services authorized in this subchapter may be made available to per- sons who are or become stockholders or mem- bers of the bank or associations in the district, and who are— (1) bona fide farmers, ranchers, or producers or harvesters of aquatic products; (2) persons furnishing to farmers and ranch- ers farm-related services directly related to their on-farm operating needs; or (3) owners of rural homes. (Pub. L. 92–181, title I, § 1.9, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1626.) Editorial Notes PRIOR PROVISIONS A prior section 2017, Pub. L. 92–181, title I, § 1.9, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 106, Dec. 24, 1980, 94 Stat. 3438; Pub. L. 100–233, title IV, § 426, title VIII, § 802(d), Jan. 6, 1988, 101 Stat. 1657, 1710; Pub. L. 100–399, title IV, § 412, title VII, § 701, Aug. 17, 1988, 102 Stat. 1004, 1006, related to security, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2018. Security; terms (a) Real estate loans (1) Maximum level of loans (A) In general Real estate mortgage loans originated by a Farm Credit Bank, or in which a Farm Cred- it Bank participates in with a lender that is not a System institution, shall not exceed 85 percent of the appraised value of the real es- tate security, except as provided for in sub- paragraphs (C) and (D). (B) Regulation The Farm Credit Administration may, by regulation, require that loans not exceed 75 percent of the appraised value of the real es- tate security. (C) Guaranteed loans If the loan is guaranteed by Federal, State, or other governmental agencies, the loan may not exceed 97 percent of the appraised value of the real estate security, as may be authorized under regulations of the Farm Credit Administration. (D) Private mortgage insurance A loan on which private mortgage insur- ance is obtained may exceed 85 percent of the appraised value of the real estate secu- rity to the extent that the loan amount in excess of such 85 percent is covered by the insurance. (2) Security All loans originated or participated in by a bank under this section shall be secured by first liens on interests in real estate of such classes as may be prescribed by regulations of the Farm Credit Administration. (3) Value of security To adequately secure the loan, the value of security shall be determined by appraisal under standards prescribed by the bank in ac-