12 U.S.C. § 2121 — Establishment; titles; branches

Page 1309 TITLE 12—BANKS AND BANKING § 2121 § 2097. Liens on stock Each Federal land bank association shall have a first lien on the stock and participation cer- tificates it issues, except on stock or participa- tion certificates held by other Farm Credit Sys- tem institutions, for the payment of any liabil- ity of the stockholder to the association or to the bank, or to both of them. (Pub. L. 92–181, title II, § 2.15, formerly § 2.16, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1637; renumbered § 2.15, Pub. L. 100–399, title IV, § 401(w), Aug. 17, 1988, 102 Stat. 999.) Editorial Notes PRIOR PROVISIONS A prior section 2097, Pub. L. 92–181, title II, § 2.16, Dec. 10, 1971, 85 Stat. 602; Pub. L. 96–592, title II, § 211, Dec. 24, 1980, 94 Stat. 3443, related to other services, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2.15 of Pub. L. 92–181 was renumbered section 2.14 and is classified to section 2096 of this title. 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. § 2098. Taxation Each Federal land bank association and the capital, reserves, and surplus thereof, and the income derived therefrom, shall be exempt from Federal, State, municipal, and local taxation, except taxes on real estate held by a Federal land bank association to the same extent, ac- cording to its value, as other similar property held by other persons is taxed. The mortgages held by the Federal land bank associations and the notes, bonds, debentures, and other obliga- tions issued by the associations shall be consid- ered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder there- of under the Public Debt Act of 1941 (31 U.S.C. 3124). (Pub. L. 92–181, title II, § 2.16, formerly § 2.17, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1637; renumbered § 2.16 and amended Pub. L. 100–399, title IV, § 401(w), (x), Aug. 17, 1988, 102 Stat. 999.) Editorial Notes PRIOR PROVISIONS A prior section 2098, Pub. L. 92–181, title II, § 2.17, Dec. 10, 1971, 85 Stat. 602; Pub. L. 99–205, title II, § 205(e)(16), Dec. 23, 1985, 99 Stat. 1705; Pub. L. 100–233, title VIII, § 805(j), Jan. 6, 1988, 101 Stat. 1715, related to taxation, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2.16 of Pub. L. 92–181 was renumbered section 2.15 and is classified to section 2097 of this title. AMENDMENTS 1988—Pub. L. 100–399, § 401(x), substituted ‘‘derived therefrom, shall’’ for ‘‘derived therefrom shall’’, ‘‘by the associations’’ for ‘‘by the banks’’, and ‘‘3124’’ for ‘‘742(a)’’. 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. SUBCHAPTER III—BANKS FOR COOPERATIVES PART A—BANKS FOR COOPERATIVES Editorial Notes CODIFICATION Pub. L. 100–233, title IV, § 415(1), Jan. 6, 1988, 101 Stat. 1642, inserted part A heading. § 2121. Establishment; titles; branches The banks for cooperatives established pursu- ant to sections 2 and 30 of the Farm Credit Act of 1933, as amended, shall continue as federally chartered instrumentalities of the United States. The Farm Credit Administration shall approve amendments consistent with this chap- ter to charters and organizational certificates of banks for cooperatives. Unless an existing bank for cooperatives is merged with another bank, there shall be a bank for cooperatives in each farm credit district. A bank for cooperatives may include in its title the name of the city in which it is located or other geographical des- ignation. When authorized by the Farm Credit Administration each bank for cooperatives may establish such branches or other offices as may be appropriate for the effective operation of its business. (Pub. L. 92–181, title III, § 3.0, Dec. 10, 1971, 85 Stat. 602; Pub. L. 100–233, title IV, § 414(b), title VIII, § 802(m), Jan. 6, 1988, 101 Stat. 1641, 1711; Pub. L. 100–399, title IV, § 406(b), title IX, § 901(c), Aug. 17, 1988, 102 Stat. 1000, 1007; Pub. L. 115–334, title V, § 5411(4), Dec. 20, 2018, 132 Stat. 4679.) Editorial Notes REFERENCES IN TEXT Sections 2 and 30 of the Farm Credit Act of 1933, as amended, referred to in text, were classified to sections 1134 and 1134f, respectively, of this title prior to their repeal by section 5.26 of Pub. L. 92–181, which enacted this chapter. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–334 struck out ‘‘and a Central Bank for Cooperatives’’ after ‘‘each farm credit district’’ and ‘‘The Central Bank for Cooperatives may be located in such place as its board of directors may determine with the approval of the Farm Credit Ad- ministration.’’ after ‘‘other geographical designation.’’ 1988—Pub. L. 100–399, § 901(c), substituted ‘‘merged with another bank’’ for ‘‘merged with one or more other such banks under section 2181 of this title’’. Pub. L. 100–233, § 802(m), substituted ‘‘The Farm Cred- it Administration shall approve amendments con- Page 1310 TITLE 12—BANKS AND BANKING § 2121 sistent with this chapter to charters and organizational certificates of banks for cooperatives’’ for ‘‘Their char- ters or organization certificates may be modified from time to time by the Farm Credit Administration, not inconsistent with the provisions of this subchapter, as may be necessary or expedient to implement this chap- ter’’. Pub. L. 100–233, § 414(b), which designated existing provisions as subsec. (a), and added subsec. (b) reading ‘‘Each bank for cooperatives shall elect from its voting stockholders a board of directors of such number, for such term, in such manner, and with such qualifica- tions as may be required in its bylaws, except that, at least one member shall be elected by the other direc- tors, which member shall not be a director, officer, em- ployee, or stockholder of a System institution.’’, was repealed by section 406(b) of Pub. L. 100–399. See Con- struction of 1988 Amendment note below. 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. CONSTRUCTION OF 1988 AMENDMENT Pub. L. 100–399, title IV, § 406(b), Aug. 17, 1988, 102 Stat. 1000, provided that section 414(b) of Pub. L. 100–233, cited as a credit to this section, is repealed and that the Agricultural Credit Act of 1987 (Pub. L. 100–233) and this chapter shall be applied and adminis- tered as if such section had not been enacted. VOLUNTARY MERGER OF BANKS FOR COOPERATIVES Pub. L. 100–233, title IV, § 413, Jan. 6, 1988, 101 Stat. 1639, as amended by Pub. L. 100–399, title IV, § 405, Aug. 17, 1988, 102 Stat. 1000, provided that: ‘‘(a) SUBMISSION OF PROPOSAL.— ‘‘(1) SPECIAL COMMITTEE.— ‘‘(A) IN GENERAL.—Not later than 15 days after the date of the enactment of this section [Jan. 6, 1988], a special committee shall be selected pursuant to subparagraph (B), for the purpose of developing a proposal for the voluntary merger of the banks for cooperatives. ‘‘(B) COMPOSITION.—The special committee se- lected under subparagraph (A) shall be composed of— ‘‘(i) one member of each district board elected by the voting stockholders of the bank for co- operatives in the district; and ‘‘(ii) one member chosen from the board of di- rectors of the Central Bank for Cooperatives by the board of such Bank. ‘‘(C) DEVELOPMENT OF PLAN.—Not later than 75 days after the date of the enactment of this section [Jan. 6, 1988], the special committee shall develop a plan of merger for all such banks and the Central Bank for Cooperatives into a National Bank for Co- operatives. ‘‘(2) PREREQUISITES TO MERGER.— ‘‘(A) SUBMISSION TO FCA.—On completion of the plan of merger pursuant to paragraph (1)(C), the special committee shall submit the proposed plan, together with all information that is to be distrib- uted to the stockholders concerning such plan, to the Farm Credit Administration for approval. ‘‘(B) EXPEDITED REVIEW.—Not later than 30 days after the Farm Credit Administration receives the plan of merger, the Administration shall promptly review such plan and advise the special committee concerning any required changes that are necessary to the plan. ‘‘(3) SUBMISSION TO STOCKHOLDERS.—On approval of the plan by the Farm Credit Administration, the spe- cial committee shall, under such procedures as may be established by the committee, submit the plan and recommendations to all voting stockholders of the district banks for cooperatives and the Central Bank for Cooperatives. ‘‘(b) VOTING REQUIREMENTS.— ‘‘(1) MAJORITY VOTE REQUIRED.—An approval of the plan of merger developed and submitted under sub- section (a) shall— ‘‘(A) require a majority vote of the stockholders of each district bank for cooperatives voting, in person or by proxy, at a duly authorized stock- holders’ meeting, computed both— ‘‘(i) in accordance with the requirement that, except as provided in section 3.3(d) [12 U.S.C. 2124(d)], each cooperative that is the holder of voting stock in the bank for cooperatives shall be entitled to cast one vote; and ‘‘(ii) on the basis of the total equity interests in the bank (including allocated, but not unallocated, surplus and reserves) held by such stockholders; ‘‘(B) require a majority vote of the voting stock- holders of the Central Bank for Cooperatives voting on a one-bank-one-vote basis; ‘‘(C) take place not later than 180 days after the date of the enactment of this section [Jan. 6, 1988]; and ‘‘(D) take place prior to any other merger vote in- volving a bank for cooperatives. ‘‘(2) APPROVAL BY ALL BANKS FOR COOPERATIVES.—If the stockholders of all of the banks for cooperatives approve the merger, the merger shall take place. ‘‘(3) EFFECT OF LESSER VOTE.—If the stockholders of more than one but fewer than all of the banks ap- prove the plan, each such bank whose stockholders voted to approve the merger shall be merged into a single bank for cooperatives, as provided in para- graphs (4) or (5). ‘‘(4) NATIONAL BANK FOR COOPERATIVES.— ‘‘(A) CREATION.—If the stockholders of eight or more of the district banks for cooperatives approve the merger, such banks, and the Central Bank for Cooperatives, shall be merged into a single bank, which shall be referred to as the ‘National Bank for Cooperatives’. ‘‘(B) SERVICES PROVIDED.—The National Bank for Cooperatives may offer credit and related services to eligible borrowers located within any territory that may be served by Farm Credit System institu- tions under section 5.0 [12 U.S.C. 2221], or to any borrower otherwise eligible under section 3.7(b) [12 U.S.C. 2128(b)]. ‘‘(5) UNITED BANK FOR COOPERATIVES.— ‘‘(A) CREATION.—If the stockholders of more than one but fewer than eight of the district banks ap- prove the plan, each such bank, and the Central Bank for Cooperatives (if approved by a numerical majority of its stockholders), shall be merged into a single bank, which shall be referred to as the ‘United Bank for Cooperatives’. ‘‘(B) SERVICES PROVIDED.—The United Bank for Cooperatives shall offer credit and related services only in the territory included, as of the date of the enactment of this section [Jan. 6, 1988], within the boundaries of the districts that had been served by the constituent banks of the United Bank for Co- operatives, and to any borrower otherwise eligible under section 3.7(b) [12 U.S.C. 2128(b)]. ‘‘(6) NONCONSENTING BANKS.— ‘‘(A) IN GENERAL.— ‘‘(i) NATIONAL BANK FOR COOPERATIVES.—Any of the district banks whose stockholders did not ap- prove the plan of merger may offer credit and re- lated services to any eligible borrowers within any territory or area that may be served by the National Bank. ‘‘(ii) UNITED BANK FOR COOPERATIVES.—Any of the district banks whose stockholders did not ap- prove the plan of merger shall continue as dis- trict banks for cooperatives and shall continue to serve only the territory within the boundaries of Page 1311 TITLE 12—BANKS AND BANKING § 2122 the district that such banks served as of the date of the enactment of this section [Jan. 6, 1988]. ‘‘(B) NONDISCRIMINATION.—Any district bank whose stockholders did not approve the plan of merger shall be entitled to the availability, from the National Bank for Cooperatives or the United Bank for Cooperatives, as the case may be, of the same credit and related services now provided by the Central Bank for Cooperatives as of the date of the enactment of this section [Jan. 6, 1988], regard- less of the decision not to merge. ‘‘(C) SUBSEQUENT MERGERS.—Any district bank re- ferred to in subparagraph (A) may subsequently merge with the National Bank for Cooperatives or the United Bank for Cooperatives, as the case may be, on the approval of the voting stockholders of both banks proposing to merge based on the voting requirement of subsection (b)(1). ‘‘(c) REFERENCES.—References in this section to vot- ing stockholders shall include subscribers to the guar- anty fund.’’ BANK FOR COOPERATIVES INITIAL BOARD OF DIRECTORS Pub. L. 100–233, title IV, § 414(a), Jan. 6, 1988, 101 Stat. 1641, as amended by Pub. L. 100–399, title IV, § 406(a), Aug. 17, 1988, 102 Stat. 1000, provided that: ‘‘Notwith- standing section 3.2 [probably means section 3.2 of Pub. L. 92–181, 12 U.S.C. 2123], the initial board of each dis- trict bank for cooperatives shall be composed of the members of the district board (which is dissolved upon the creation of the district Farm Credit Bank) elected by the stockholders of the bank for cooperatives and one member elected by the other two members, which member shall not be a director, officer, employee, or stockholder of a System institution. The initial board shall operate for such term as is agreed to by the mem- bers of the board, except that such period shall not ex- ceed two years. Thereafter, the board shall be elected and serve in accordance with section 3.0 of the Farm Credit Act of 1971 [12 U.S.C. 2121].’’ § 2122. Corporate existence; general corporate powers Each bank for cooperatives shall be a body corporate and, subject to regulation by the Farm Credit Administration, shall have power to— (1) Adopt and use a corporate seal. (2) Have succession until dissolved under the provisions of this chapter or other Act of Con- gress. (3) Make contracts. (4) Sue and be sued. (5) Acquire, hold, dispose, and otherwise exer- cise all of the usual incidents of ownership of real and personal property necessary or conven- ient to its business. (6) Make loans and commitments for credit, provide services and other assistance as author- ized in this chapter, and charge fees therefor. (7) Operate under the direction of its board of directors. (8) Elect by its board of directors a president, any vice presidents, a secretary, a treasurer, and provide for such other officers, employees, and agents as may be necessary, including joint em- ployees as provided in this chapter, define their duties and require surety bonds or make other provisions against losses occasioned by employ- ees. (9) Prescribe by its board of directors its by- laws not inconsistent with law providing for the classes of its stock and the manner in which its stock shall be issued, transferred, and retired; its officers, employees, or agents elected or pro- vided for; its property acquired, held, and trans- ferred; its loans made; its general business con- ducted; and the privileges granted it by law ex- ercised and enjoyed. (10) Borrow money and issue notes, bonds, de- bentures, or other obligations individually or in concert with one or more other banks of the System, of such character, and such terms, con- ditions, and rates of interest as may be deter- mined. (11)(A) Participate in loans under this sub- chapter with one or more other banks for co- operatives and with commercial banks and other financial institutions upon such terms as may be agreed among them, and participate with one or more other Farm Credit System institutions in loans made under this subchapter or other subchapters of this chapter on the basis pre- scribed in section 2206 of this title. (B)(i) Participate in any loan of a type other- wise authorized under this subchapter that is made to a similar entity by any institution in the business of extending credit, including pur- chases of participations in loans to finance international trade transactions involving the sale of agricultural commodities or the products thereof, except that— (I) a bank for cooperatives may not partici- pate in a loan— (aa) if the participation would cause the total amount of all loan participations by the bank under this subparagraph involving a single credit risk to exceed 10 percent of the bank’s total capital; or (bb) if the participation by the bank will itself equal or exceed 50 percent of the prin- cipal of the loan or, when taken together with participations in the loan by other Farm Credit System institutions, will cause the cumulative amount of the participations by all Farm Credit System institutions in the loan to equal or exceed 50 percent of the principal of the loan; (II) a bank for cooperatives may not partici- pate in a loan to a similar entity under this subparagraph if the similar entity has a loan or loan commitment outstanding with a Farm Credit Bank or an association chartered under this chapter, unless agreed to by the Bank or association; and (III) the cumulative amount of participa- tions that a bank for cooperatives may have outstanding under this subparagraph at any time may not exceed 15 percent of the bank’s total assets. (ii) As used in this subparagraph, the term ‘‘similar entity’’ means an entity that, while not eligible for a loan under section 2129 of this title, is functionally similar to an entity eligi- ble for a loan under section 2129 of this title in that it derives a majority of its income from, or has a majority of its assets invested in, the con- duct of activities functionally similar to those conducted by the entity. (iii) As used in this subparagraph, the term ‘‘participate’’ or ‘‘participation’’ refers to multi- lender transactions, including syndications, as- signments, loan participations, subparticipa- tions, or other forms of the purchase, sale, or transfer of interests in loans, other extensions of