12 U.S.C. § 2128 — Loans, commitments, and technical and fi-

Page 1315 TITLE 12—BANKS AND BANKING § 2128 1980—Pub. L. 96–592 inserted provisions respecting ap- plicability to participation certificates and struck out provisions relating to maximum amount of fair book value at retirement. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1985 AMENDMENT Amendment by Pub. L. 99–205 effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as a note under section 2001 of this title. § 2127. Guaranty fund subscriptions in lieu of stock If any cooperative association is not author- ized under the laws of the State in which it is organized to take and hold stock in a bank for cooperatives, the bank shall, in lieu of any re- quirement for stock purchase, require the asso- ciation to pay into or have on deposit in a guar- anty fund, or the bank may retain out of the amount of the loan and credit to the guaranty fund account of the borrower, a sum equal to the amount of stock which the association would otherwise be required to own. Each reference to stock of the banks for cooperatives in this chap- ter shall include such guaranty fund equiva- lents. The holder of the guaranty fund equiva- lent and the bank shall each be entitled to the same rights and obligations with respect thereto as the rights and obligations associated with the class or classes of stock involved. (Pub. L. 92–181, title III, § 3.6, Dec. 10, 1971, 85 Stat. 604.) § 2128. Loans, commitments, and technical and fi- nancial assistance (a) Authorities The banks for cooperatives are authorized to make loans and commitments to eligible cooper- ative associations and to extend to them other technical and financial assistance at any time (whether or not they have a loan from the bank outstanding), including but not limited to dis- counting notes and other obligations, guaran- tees, currency exchange necessary to service in- dividual transactions that may be financed under subsection (b) of this section, collateral custody, or participation with other banks for cooperatives and commercial banks or other fi- nancial institutions in loans to eligible coopera- tives, under such terms and conditions as may be determined to be feasible by the board of di- rectors of each bank for cooperatives under reg- ulations of the Farm Credit Administration. Each bank may own and lease, or lease with op- tion to purchase, to stockholders eligible to bor- row from the bank equipment needed in the op- erations of the stockholder and may make or participate in loans or commitments and extend other technical and financial assistance to other domestic parties for the acquisition of equip- ment and facilities to be leased to such stock- holders for use in their operations in the United States. (b) Additional authorities (1) A bank for cooperatives is authorized to make or participate in loans and commitments to, and to extend other technical and financial assistance to a domestic or foreign party with respect to its transactions with an association that is a voting stockholder of the bank for the import of agricultural commodities or products thereof, agricultural supplies, or aquatic prod- ucts through purchases, sales or exchanges, if the bank for cooperatives determines, under reg- ulations of the Farm Credit Administration, that the voting stockholder will benefit substan- tially as a result of such loan, commitment, or assistance. (2)(A) A bank for cooperatives may make or participate in loans and commitments to, and extend other technical and financial assistance to— (i) any domestic or foreign party for the ex- port, including (where applicable) the cost of freight, of agricultural commodities or prod- ucts thereof, agricultural supplies, or aquatic products from the United States under policies and procedures established by the bank to en- sure that the commodities, products, or sup- plies are originally sourced, where reasonably available, from one or more eligible coopera- tive associations described in section 2129(a) of this title on a priority basis, except that if the total amount of the balances outstanding on loans made by a bank under this clause that— (I) are made to finance the export of com- modities, products, or supplies that are not originally sourced from a cooperative, and (II) are not guaranteed or insured, in an amount equal to at least 95 percent of the amount loaned, by a department, agency, bureau, board, commission, or establishment of the United States or a corporation whol- ly-owned directly or indirectly by the United States, exceeds an amount that is equal to 50 percent of the bank’s capital, then a sufficient interest in the loans shall be sold by the bank for co- operatives to commercial banks and other non-System lenders to reduce the total amount of such outstanding balances to an amount not greater than an amount equal to 50 percent of the bank’s capital; and (ii) except as provided in subparagraph (B), any domestic or foreign party in which an eli- gible cooperative association described in sec- tion 2129(a) of this title (including, for the pur- pose of facilitating its domestic business oper- ations only, a cooperative or other entity de- scribed in section 2129(b)(1)(A) of this title) has an ownership interest, for the purpose of fa- cilitating the domestic or foreign business op- erations of the association, except that if the ownership interest by an eligible cooperative association, or associations, is less than 50 percent, the financing shall be limited to the percentage held in the party by the associa- tion or associations. (B) A bank for cooperatives shall not use the authority provided in subparagraph (A)(ii) to provide financial assistance to a party for the purpose of financing the relocation of a plant or facility from the United States to another coun- try. (3) A bank for cooperatives is authorized to provide such services as may be customary and normal in maintaining relationships with do- mestic or foreign entities to facilitate the ac- Page 1316 TITLE 12—BANKS AND BANKING § 2128 tivities specified in paragraphs (1) and (2), con- sistent with this chapter. (4) DEFINITION OF AGRICULTURAL SUPPLY.—In this subsection, the term ‘‘agricultural supply’’ includes— (A) a farm supply; and (B)(i) agriculture-related processing equip- ment; (ii) agriculture-related machinery; and (iii) other capital goods related to the stor- age or handling of agricultural commodities or products. (c) Applicable policies Loans, commitments, and assistance author- ized by subsection (b) of this section shall be ex- tended in accordance with policies adopted by the board of directors of the bank under regula- tions of the Farm Credit Administration. (d) Regulatory limitations The regulations of the Farm Credit Adminis- tration implementing subsection (b) of this sec- tion and other provisions of this subchapter re- lating to the authority under subsection (b) of this section may not confer upon the banks for cooperatives powers and authorities greater than those specified in this subchapter. The Farm Credit Administration shall, during the formulation of such regulations, closely consult on a continuing basis with the Board of Gov- ernors of the Federal Reserve System to insure that such regulations conform to national bank- ing policies, objectives, and limitations. (e) Speculative futures transactions Notwithstanding any other provision of this subchapter, the banks for cooperatives shall not make or participate in loans or commitments for the purpose of financing speculative futures transactions by eligible borrowers in foreign currencies. (f) Installation, expansion, or improvement of water and waste disposal facilities The banks for cooperatives may, for the pur- pose of installing, maintaining, expanding, im- proving, or operating water and waste disposal facilities in rural areas, make and participate in loans and commitments and extending other technical and financial assistance to— (1) cooperatives formed specifically for the purpose of establishing or operating such fa- cilities; and (2) public and quasi-public agencies and bod- ies, and other public and private entities that, under authority of State or local law, estab- lish or operate such facilities. For purposes of this subsection, the term ‘‘rural area’’ means all territory of a State that is not within the outer boundary of any city or town having a population of more than 20,000 based on the latest decennial census of the United States. (Pub. L. 92–181, title III, § 3.7, Dec. 10, 1971, 85 Stat. 605; Pub. L. 96–592, title III, § 304, Dec. 24, 1980, 94 Stat. 3444; Pub. L. 101–624, title XXIII, § 2323(a), Nov. 28, 1990, 104 Stat. 4013; Pub. L. 102–237, title V, § 502(e)(1), Dec. 13, 1991, 105 Stat. 1868; Pub. L. 102–552, title V, §§ 504, 505, Oct. 28, 1992, 106 Stat. 4131; Pub. L. 103–376, § 3, Oct. 19, 1994, 108 Stat. 3497; Pub. L. 107–171, title V, § 5402, May 13, 2002, 116 Stat. 350; Pub. L. 115–334, title V, § 5411(7), Dec. 20, 2018, 132 Stat. 4679.) Editorial Notes AMENDMENTS 2018—Subsec. (a). Pub. L. 115–334 struck out ‘‘Such regulations may include provisions for avoiding dupli- cation between the Central Bank and district banks for cooperatives.’’ before ‘‘Each bank may own’’. 2002—Subsec. (b)(1), (2)(A)(i). Pub. L. 107–171, § 5402(1), substituted ‘‘agricultural supplies’’ for ‘‘farm sup- plies’’. Subsec. (b)(4). Pub. L. 107–171, § 5402(2), added par. (4). 1994—Subsec. (b)(1). Pub. L. 103–376, § 3(A), substituted ‘‘assistance to’’ for ‘‘assistance to (A)’’, ‘‘bank for the import’’ for ‘‘bank for the export or import’’, and ‘‘if the bank for cooperatives’’ for ‘‘and (B) a domestic or foreign party in which such an association has at least the minimum ownership interest approved under regu- lations of the Farm Credit Administration for the pur- pose of facilitating the association’s export or import operations of the type described in subparagraph (A): Provided, That a’’. Subsec. (b)(2). Pub. L. 103–376, § 3(B), added par. (2) and struck out former par. (2) which read as follows: ‘‘A bank for cooperatives is authorized to make or partici- pate in loans and commitments, and to extend other technical and financial assistance, to any domestic or foreign entity that is eligible for a guarantee or insur- ance as described in subparagraphs (A) and (B) with re- spect to transactions involving the Soviet Union (its successor entities or any of the individual republics of the Soviet Union) or an emerging democracy (as de- fined in section 1542(f) of the Food, Agriculture, Con- servation, and Trade Act of 1990 (7 U.S.C. 5622 note)) for the export of agricultural commodities and products thereof from the United States, including (where appli- cable) the cost of freight, if in each case— ‘‘(A) the loan involved is unconditionally guaran- teed or insured by a department, agency, bureau, board, commission, or establishment of the United States or any corporation wholly owned directly or indirectly by the United States; and ‘‘(B) the guarantee or insurance— ‘‘(i) covers at least 95 percent of the amount loaned for the purchase of the commodities or prod- ucts; and ‘‘(ii) is issued on or before September 30, 1995.’’ 1992—Subsec. (a). Pub. L. 102–552, § 504, inserted ‘‘at any time (whether or not they have a loan from the bank outstanding)’’ after ‘‘assistance’’ in first sen- tence. Subsec. (f). Pub. L. 102–552, § 505, in introductory pro- visions, substituted ‘‘installing, maintaining, expand- ing, improving, or operating’’ for ‘‘the installation, ex- pansion, or improvement of’’ and ‘‘extending’’ for ‘‘to extend’’. 1991—Subsec. (b). Pub. L. 102–237 designated existing provisions as par. (1), redesignated cl. (1) as (A) and in- serted ‘‘or products thereof’’ after ‘‘commodities’’, re- designated cl. (2) as (B) and substituted ‘‘subparagraph (A)’’ for ‘‘clause (1) of this subsection’’, and added pars. (2) and (3). 1990—Subsec. (f). Pub. L. 101–624 added subsec. (f). 1980—Pub. L. 96–592 designated existing provisions as subsec. (a), inserted provisions relating to currency ex- changes and provisions relating to loans, etc., to do- mestic parties, and added subsecs. (b) to (e). Statutory Notes and Related Subsidiaries FUNDING TO BE CONSISTENT WITH OTHER LAWS Pub. L. 118–42, div. B, title VII, § 757, Mar. 9, 2024, 138 Stat. 114, provided that: ‘‘In this fiscal year and each fiscal year thereafter, and notwithstanding any other provision of law, none of the funds made available by this or any other Act may be used to implement sec- tion 3.7(f) of the Farm Credit Act of 1971 [12 U.S.C. Page 1317 TITLE 12—BANKS AND BANKING § 2129 2128(f)] in a manner inconsistent with section 343(a)(13) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1991(a)(13)].’’ § 2129. Eligibility (a) Any association of farmers, producers or harvesters of aquatic products, or any federa- tion of such associations, which is operated on a cooperative basis, and has the powers for proc- essing, preparing for market, handling, or mar- keting farm or aquatic products; or for pur- chasing, testing, grading, processing, distrib- uting, or furnishing farm or aquatic supplies or furnishing farm or aquatic business services or services to eligible cooperatives and conforms to either of the two following requirements: (1) no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; or (2) does not pay dividends on stock or mem- bership capital in excess of such per centum per annum as may be approved under regula- tions of the Farm Credit Administration; and in any case (3) does not deal in farm products or aquatic products, or products processed therefrom, farm or aquatic supplies, farm or aquatic busi- ness services, or services to eligible coopera- tives with or for nonmembers in an amount greater in value than the total amount of such business transacted by it with or for members, excluding from the total of member and non- member business transactions with the United States or any agency or instrumentality thereof or services or supplies furnished as a public utility; and (4) a percentage of the voting control of the association not less than 80 per centum (60 per centum (A) in the case of rural electric, tele- phone, public utility, and service cooperatives; (B) in the case of local farm supply coopera- tives that have historically served needs of the community that would not adequately be served by other suppliers and have experienced a reduction in the percentage of farmer mem- bership due to changed circumstances beyond their control such as, but not limited to, ur- banization of the community; and (C) in the case of local farm supply cooperatives that provide or will provide needed services to a community and that are or will be in competi- tion with a cooperative specified in paragraph (B)) or, with respect to any type of association or cooperative, such higher percentage as es- tablished by the bank board, is held by farm- ers, producers or harvesters of aquatic prod- ucts, or eligible cooperative associations as defined herein; shall be eligible to borrow from a bank for co- operatives. Any such association that has re- ceived a loan from a bank for cooperatives shall, without regard to the requirements of para- graphs (1) through (4), continue to be eligible for so long as more than 50 percent (or such higher percentage as is established by the bank board) of the voting control of the association is held by farmers, producers or harvesters of aquatic products, or eligible cooperative associations. (b) Notwithstanding any other provision of this section: (1) The following entities shall also be eligi- ble to borrow from a bank for cooperatives: (A) Cooperatives and other entities that have received a loan, loan commitment, or loan guarantee from the Rural Electrifica- tion Administration (or any successor agen- cy), or that are eligible under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) for a loan, loan commitment, or loan guarantee from the Administration or the Bank (or a successor of the Administration or the Bank), and subsidiaries of such co- operatives or other entities. (B) Any legal entity that (i) holds more than 50 percent of the voting control of an association or other entity that is eligible to borrow from a bank for cooperatives under subsection (a) or subparagraph (A) of this paragraph, and (ii) borrows for the purpose of making funds available to that associa- tion or entity, and makes funds available to that association or entity under the same terms and conditions that the funds are bor- rowed from a bank for cooperatives. (C) Any cooperative or other entity de- scribed in subsection (b) or (f) of section 2128 of this title. (D) Any creditworthy private entity that satisfies the requirements for a service coop- erative under paragraphs (1), (2), and (4), or under the last sentence, of subsection (a) and subsidiaries of the entity, if the entity is or- ganized to benefit agriculture in furtherance of the welfare of its farmer-members and is operated on a not-for-profit basis. (2) Notwithstanding the provisions of section 2130 of this title, the board of directors of a bank for cooperatives may determine that, with respect to a loan to any borrower eligible to borrow from a bank under paragraph (1)(A) that is fully guaranteed by the United States, no stock purchase requirement shall apply, other than the requirement that a borrower el- igible to own voting stock shall purchase one share of such stock. (3) Each association and other entity eligible to borrow from a bank for cooperatives under this subsection, for purposes of section 2128(a) of this title, shall be treated as an eligible co- operative association and a stockholder eligi- ble to borrow from the bank. (4) Nothing in this subsection shall be con- strued to adversely affect the eligibility, as it existed on January 6, 1988, of cooperatives and other entities for any other credit assistance under Federal law. (Pub. L. 92–181, title III, § 3.8, Dec. 10, 1971, 85 Stat. 605; Pub. L. 94–184, § 1(a), Dec. 31, 1975, 89 Stat. 1060; Pub. L. 96–592, title III, § 305, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 99–198, title XIII, § 1322, Dec. 23, 1985, 99 Stat. 1534; Pub. L. 100–233, title IV, § 421, title VIII, § 805(m), Jan. 6, 1988, 101 Stat. 1654, 1715; Pub. L. 100–399, title IV, § 410, title IX, § 901(e), Aug. 17, 1988, 102 Stat. 1003, 1007; Pub. L. 101–624, title XXIII, § 2323(b), Nov. 28, 1990, 104 Stat. 4013; Pub. L. 102–237, title V, § 502(e)(2), (f), Dec. 13, 1991, 105 Stat. 1869; Pub. L. 102–552, title V, § 506, Oct. 28, 1992, 106 Stat. 4131; Pub. L. 103–376, § 4, Oct. 19, 1994, 108 Stat. 3498; Pub. L. 104–105, title II, §§ 204, 205, Feb. 10, 1996,