Not later than 5 days after January 6, 1988, the Farm Credit Administration shall charter the Farm Credit System Financial Assistance Corporation (hereinafter referred to in this chapter as the “Financial Assistance Corporation”) which shall be—

(1) an institution of the Farm Credit System; and

(2) a Federally chartered instrumentality of the United States.

(Pub. L. 92–181, title VI, §6.20, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1595.)

Section 206 of Pub. L. 100–233 provided that: “During the period beginning September 30, 2001, and ending December 31, 2001, the Farm Credit Administration shall review and evaluate the financial condition of the Farm Credit System and report to the Secretary of the Treasury and the appropriate committees of Congress on—

“(1) the general financial condition of each System institution;

“(2) the total outstanding principal of debt obligations issued under section 6.26 of the Farm Credit Act of 1971 (as added by section 201 of this Act) [12 U.S.C. 2278b–6]; and

“(3) the ability of each System institution to retire, at par value, preferred stock issued by the institution in accordance with section 6.27 of the Farm Credit Act of 1971 (as added by section 201 of this Act) [12 U.S.C. 2278b–7].”

The purpose of the Financial Assistance Corporation shall be to carry out a program to provide capital to institutions of the Farm Credit System that are experiencing financial difficulty and to assist, pursuant to section 2278a–9(e) of this title and subsections (c) through (g) of section 2278b–6 of this title, in the repayment by System institutions to those persons who provided funds in connection with the program.

(Pub. L. 92–181, title VI, §6.21, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1595; amended Pub. L. 102–552, title III, §307(a), Oct. 28, 1992, 106 Stat. 4116.)

**1992**—Pub. L. 102–552 inserted before period at end “and to assist, pursuant to section 2278a–9(e) of this title and subsections (c) through (g) of section 2278b–6 of this title, in the repayment by System institutions to those persons who provided funds in connection with the program”.

The Board of Directors of the Financial Assistance Corporation (hereinafter referred to in this part as the “Board of Directors”) shall consist of the Board of Directors of the Federal Farm Credit Banks Funding Corporation.

The Board of Directors shall elect annually a Chairman from among the members of the Board.

The members of the Board of Directors shall receive compensation for the time devoted to meetings and other activities of the Board and reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Board of Directors in amounts not exceeding levels set by the Farm Credit Administration Board.

The Board of Directors shall adopt such rules as it may deem appropriate for the transaction of its business and shall keep permanent and accurate records and minutes of its acts and proceedings.

No business may be conducted at a meeting of the Board of Directors unless a quorum of the members of the Board is present, and a vote to approve an action requires a majority vote of the members voting.

A chief executive officer of the Financial Assistance Corporation shall be selected by the Board of Directors and shall serve at the pleasure of the Board.

(Pub. L. 92–181, title VI, §6.22, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1595; amended Pub. L. 100–399, title II, §201(*o*), Aug. 17, 1988, 102 Stat. 991.)

**1988**—Subsec. (a)(1). Pub. L. 100–399 substituted “part” for “chapter”.

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.

The Financial Assistance Corporation shall issue stock with a par value of $5 to System institutions, as provided for in this part, and such stock shall not be transferable, except in the event of a restructuring or liquidation to a successor System institution.

(Pub. L. 92–181, title VI, §6.23, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1595; amended Pub. L. 102–237, title V, §502(m), Dec. 13, 1991, 105 Stat. 1869.)

**1991**—Pub. L. 102–237 inserted before period at end “, except in the event of a restructuring or liquidation to a successor System institution”.

The Financial Assistance Corporation shall have the power to—

(1) operate under the direction of its Board of Directors;

(2) adopt, alter, and use a corporate seal, which shall be judicially noted;

(3) provide for such officers, employees, and agents, including joint employees with the Funding Corporation, as may be necessary, define their duties, and require surety bonds or make other provisions against losses occasioned by acts of such persons;

(4) adopt a salary scale for officers and employees of the Financial Assistance Corporation, in accordance with the directives of the Board of Directors;

(5) prescribe by its Board of Directors bylaws, that are not inconsistent with law, and that shall provide for the manner in which—

(A) its officers, employees, and agents are selected;

(B) its property is acquired, held, and transferred;

(C) its general business is conducted; and

(D) the privileges granted by law are exercised and enjoyed;

(6) enter into contracts and make advance, progress, or other payments with respect to such contracts;

(7) sue and be sued in its corporate name and complain and defend in courts of competent jurisdiction;

(8) acquire, hold, lease, mortgage, or dispose of, at public or private sale, real and personal property, and otherwise exercise all the usual incidents of ownership of property necessary and convenient to its business;

(9) obtain insurance against loss;

(10) modify or consent to the modification of any contract or agreement to which it is a party or in which it has an interest under this part;

(11) borrow from any commercial bank on its own individual responsibility and on such terms and conditions as it may determine with the approval of the Farm Credit Administration;

(12) deposit its securities and its current funds with any member bank of the Federal Reserve System or any insured State nonmember bank (within the meaning of section 1813 of this title) and pay fees therefor and receive interest thereon as may be agreed; and

(13) exercise such other incidental powers as are necessary to carry out its powers, duties, and functions in accordance with its charter and this part.

Notwithstanding any other provision of law, any civil action, suit, or proceeding to which the Financial Assistance Corporation is a party shall be deemed to arise under the laws of the United States, and the United States District Court for the District of Columbia shall have exclusive jurisdiction over such. The Financial Assistance Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States District Court for the District of Columbia.

(Pub. L. 92–181, title VI, §6.24, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1596; amended Pub. L. 100–399, title II, §201(a), (b), Aug. 17, 1988, 102 Stat. 990.)

**1988**—Subsec. (a)(12). Pub. L. 100–399, §201(a), substituted “(within the meaning of section 1813 of this title)” for “(as defined in section 1813(b) of this title)”.

Subsec. (b). Pub. L. 100–399, §201(b), substituted “exclusive” for “original”.

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.

The Financial Assistance Corporation shall establish an account called the Farm Credit Assistance Fund (referred to in this chapter as the “Assistance Fund”) which shall be available to the Financial Assistance Corporation as a revolving fund to carry out this part. The moneys of such Assistance Fund shall be invested in direct obligations of the United States or obligations guaranteed by the United States or an agency thereof.

The Assistance Fund shall be funded through the issuance of debt obligations and payments, as provided in section 2278b–6 of this title, and payments, as provided in section 2278b–8 of this title.

The Financial Assistance Corporation shall establish an account called the Financial Assistance Corporation Trust Fund (hereinafter referred to in this chapter as the “Trust Fund”) that shall consist of securities of the United States Treasury purchased by the Financial Assistance Corporation with the funds received from the purchase of stock by System institutions from the Financial Assistance Corporation under section 2278b–9 of this title.

(Pub. L. 92–181, title VI, §6.25, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1597.)

During the period beginning 61 days after January 6, 1988, and ending September 30, 1992, the Financial Assistance Corporation, subject to the approval of the Assistance Board, may issue uncollateralized bonds, notes, debentures, and similar obligations, guaranteed as to the timely payment of principal and interest by the Secretary of the Treasury as set forth in subsection (d) of this section, with semiannual interest coupon payments and a maturity period of 15 years—

(1) in an aggregate amount not to exceed $2,800,000,000; and

(2) beginning January 1, 1989, in an additional amount, not to exceed $1,200,000,000, if—

(A) debt obligations have been issued by the Corporation to the full extent authorized under paragraph (1);

(B) the Assistance Board determines that such additional funds are needed to carry out this subchapter; and

(C) at least 90 days before the issuance of any debt obligations under this paragraph, the Assistance Board submits a report to Congress that sets forth the determination of the Assistance Board that such additional debt obligations should be issued, and that contains a detailed evaluation supporting the determination.

The debt obligations shall be in such forms and denominations, bear such rates of interest, be subject to such conditions, be issued in such manner, and be sold at such prices as may be prescribed by the Financial Assistance Corporation.

During each year of the first 5-year period of the 10-year period beginning on the date of issuance of each obligation under subsection (a) of this section, the Financial Assistance Corporation shall pay, without recourse to System institutions, other than that described in paragraph (5), all of the interest due on such obligation.

During each year of the second 5-year period of the 10-year period beginning on the date of issuance of each obligation under subsection (a) of this section, the Financial Assistance Corporation shall pay all of the interest due on such obligation.

During each year of the second 5-year period, System banks shall pay to the Financial Assistance Corporation 50 percent of the interest due on the obligations, except that System banks shall pay an additional 10 percent of the interest expense for each 1 percent that the unallocated retained earnings of the System (as determined under generally accepted accounting principles) exceed 5 percent of net assets (total assets less allowance for loan losses) based on a year-end financial statement for the preceding year.

During each year of the second 5-year period, each System bank shall pay to the Financial Assistance Corporation a proportion, as calculated by the Financial Assistance Corporation, of the interest due from System banks under this paragraph equal to—

(i) the amount of the average accruing retail loan volume of the bank and its affiliated associations for the preceding year; divided by

(ii) the total average accruing retail loan volume of all such banks and their affiliated associations for the preceding year.

The Secretary of the Treasury, in accordance with section 2278b–8 of this title, shall pay to the Financial Assistance Corporation, in a timely manner, the balance of each interest payment not made by the System banks.

During each year of the third 5-year period of the 15-year period beginning on the date of the issuance of each obligation under subsection (a) of this section, the Financial Assistance Corporation shall pay all of the interest due on such obligation. During each year of such 5-year period, System banks shall pay the entire amount of interest due on the obligation allocated in the same manner as under paragraph (2)(C). Such payments shall be made to the Financial Assistance Corporation at such times as the Financial Assistance Corporation shall determine.

On the maturity date of the last-maturing debt obligation issued under subsection (a) of this section, the Financial Assistance Corporation shall repay to the Secretary of the Treasury the total amount of any annual interest charges on the debt obligations that Farm Credit System institutions (other than the Financial Assistance Corporation) have not previously paid, and the Financial Assistance Corporation shall not be required to pay any additional interest charges on the payments.

In order to provide for the orderly funding by the banks of the System of the repayment by the Financial Assistance Corporation to the Secretary of the Treasury, the Financial Assistance Corporation shall assess each System bank, on or about December 31 of each year beginning in 1992, and each System bank shall promptly pay to the Financial Assistance Corporation, an annual annuity type payment in an amount designed to accumulate, in total, including earnings thereon, the amount of the bank's ultimate obligation (as determined by the Corporation on a fair and equitable basis), and no greater than .0006 nor less than .0004 times the bank's and its affiliated associations’ average accruing retail loan volume for the preceding year, subject to—

(i) upward or downward adjustment, as appropriate, by the Financial Assistance Corporation during each of the last 5 years prior to the date the Financial Assistance Corporation is obligated to make the repayment, in order to ensure that the Financial Assistance Corporation will have the amount of funds needed to make the repayment on the due date; and

(ii) reduction or termination in any year when the funds paid to the Financial Assistance Corporation, including any anticipated future earnings on the funds, are sufficient to make the repayment on the due date.

The Financial Assistance Corporation shall invest funds derived from the investment in eligible investments as defined in section 2278b–5(a)(1) of this title. The funds and the earnings on the funds shall be available only for the repayment to the Secretary of the Treasury provided for in subparagraph (A).

A bank may (and, to the extent necessary to satisfy its obligations, shall) pass on (either directly, or indirectly through loan pricing or otherwise) all or part of the assessments to its affiliated direct lender associations based on proportionate average accruing retail loan volumes for the preceding year, but the bank shall remain primarily liable for the amounts.

Any bank terminating System status pursuant to section 2279d of this title shall be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of all future such assessments against the bank had the bank remained in the System. A liability to the Financial Assistance Corporation in this amount (calculated as if the bank had left the System on the date the bank was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of any bank undergoing liquidation.

The obligations of other banks shall not be reduced in anticipation of any recoveries under this subparagraph from banks leaving the System or in liquidation.

The Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.

Any association terminating System status pursuant to section 2279d of this title shall be required, under regulations of the Farm Credit Administration, to pay to its supervising bank a share, based on the association's retail loan volume relative to the retail loan volume of the bank and its affiliated associations had the association remained in the System, of the estimated present value of all future such assessments against the bank. A liability to the bank in this amount (calculated as if the association had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the bank against the estate of any association undergoing liquidation.

Until the date that is 5 years prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), all assessments paid by banks to the Financial Assistance Corporation pursuant to subparagraph (B), and any part of the obligation to pay future assessments to the Financial Assistance Corporation under subparagraph (B) that is recognized as an expense on the books of any System bank or association, shall nonetheless be included in the capital of the bank or association for purposes of determining its compliance with regulatory capital requirements.

During the—

(I) period beginning 5 years, and ending 4 years, prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 60 percent;

(II) period beginning 4 years, and ending 3 years, prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 30 percent; and

(III) period beginning 3 years prior to the date on which the Financial Assistance Corporation is required to repay the Secretary of the Treasury pursuant to subparagraph (A), 0 percent,

of all assessments paid by banks to the Financial Assistance Corporation pursuant to subparagraph (B), and of any part of the obligation to pay future assessments to the Financial Assistance Corporation under subparagraph (B) that is recognized as an expense on the books of any System bank or association, shall nonetheless be included in the capital of the bank or association for purposes of determining its compliance with regulatory capital requirements.

On maturity of an obligation issued under subsection (a) of this section, the obligation shall be repaid by the Financial Assistance Corporation.

Except as provided in subparagraph (C), in order to enable the Financial Assistance Corporation to repay the obligation referred to in subparagraph (A), each institution that issued preferred stock under section 2278b–7(a) of this title with respect to the obligation (or the successor to the institution) shall pay to the Financial Assistance Corporation, before the maturity date of the obligation, an amount equal to the par value of the stock outstanding for the institution.

Except as provided in clause (iii), each year beginning in 1992, as soon as practicable following the end of the prior year, each such institution (except institutions in receivership and institutions that have previously redeemed their preferred stock) shall appropriate from its earnings in the prior year to an appropriated unallocated surplus account with respect to preferred stock, the sum of—

(I) the greater of—

(aa) such amount as the institution may be required to appropriate under any assistance agreement the institution has with the Farm Credit System Assistance Board or the Farm Credit System Insurance Corporation; or

(bb) the amount that, if appropriated to the account in equal amounts in each year thereafter until the maturity of the obligation referred to in subparagraph (A), would cause the amount in the account to equal the par value of the preferred stock issued by the institution with respect to the obligation; plus

(II) any amount that had been appropriated to the account in a previous year but had thereafter been offset by losses.

An annual appropriation shall not be made to the extent that the appropriation would exceed the institution's net income (as determined pursuant to generally accepted accounting principles) in that year or to the extent that the appropriation would cause the institution's preferred stock to be impaired.

The amount in the appropriated unallocated surplus account shall be unavailable to pay dividends or other allocations or distributions to shareholders or holders of participation certificates. The account shall be senior to all other unallocated surplus accounts but junior to all preferred and common stock for purposes of the application of operating losses.

The appropriations of surplus by an institution shall not affect the treatment of its preferred stock (and of the appropriated unallocated surplus) as equity for purposes of regulatory permanent capital requirements.

In order to enable the Financial Assistance Corporation to repay the obligations issued to provide assistance under subsections (c) and (e) of section 410 of the Agricultural Credit Act of 1987 (12 U.S.C. 2011 note) and section 2162(c) of this title, or issued to provide funds to cover the expenses of the Assistance Board or the Financial Assistance Corporation under sections 2278a–7(a) and 2278b–4, respectively, of this title, each System bank shall pay to the Financial Assistance Corporation a proportion, as calculated by the Financial Assistance Corporation, of the obligation equal to—

(I) the average accruing retail loan volume of the bank and its affiliated associations for the preceding 15 years; divided by

(II) the average accruing retail loan volume of all such banks and their affiliated associations for the same period.

The annual increase in the present value of the estimated obligation of each bank to the Financial Assistance Corporation under this subparagraph shall be recorded each year as an expense item, in accordance with generally accepted accounting principles, on the books of the bank.

A bank may (and, to the extent necessary to satisfy its obligations, shall) pass on (either directly, or indirectly through loan pricing or otherwise) all or part of the amount necessary to satisfy the payment requirement to its affiliated direct lender associations based on proportionate average accruing retail loan volumes for the preceding 15 years, except that the bank shall remain primarily liable for the amount.

Any bank leaving the Farm Credit System pursuant to section 2279d of this title shall be required, under regulations of the Farm Credit Administration, to pay to the Financial Assistance Corporation the estimated present value of the payment required under this subparagraph had the bank remained in the System. A liability to the Financial Assistance Corporation in this amount (calculated as if the bank had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the Financial Assistance Corporation against the estate of any bank undergoing liquidation. The obligations of other banks shall not be reduced in anticipation of any such recoveries from banks leaving the System or in liquidation, but the Financial Assistance Corporation shall apply the recoveries, when received, and all earnings on the recoveries, to reduce the other banks’ payment obligations, or, to the extent the recoveries are received after the other banks have met their entire payment obligation, shall refund the recoveries, when received, to the other banks in proportion to the other banks’ payments.

Any association leaving the Farm Credit System pursuant to section 2279d of this title shall be required, under regulations of the Farm Credit Administration, to pay to its supervising bank a share, based on the association's retail loan volume relative to the retail loan volume of the bank and its affiliated associations had the association remained in the System, of the present value of the future payment obligation of its supervising bank. A liability to the bank in this amount (calculated as if the association had left the System on the date it was placed in liquidation) shall be recognized as a claim in favor of the bank against the estate of any association undergoing liquidation.

Payments under subparagraphs (B) and (C) shall be made by each such institution from the funds of the institution or from funds raised by the institution through the issuance of debt obligations, which may be issued without a collateral requirement and without any guarantee by the Secretary of the Treasury.

The refinanced obligations issued under paragraph (1) shall be solely the obligations of the institutions refinancing such, and sections 2154 and 2155 of this title shall not apply to such obligations.

If a System bank defaults on the payment of interest due under subsection (c) of this section during the first 15 years after an obligation is issued under subsection (a) of this section, on the payment of principal or interest due under subparagraphs (B) and (C) of section 2278a–9(e)(3) of this title, on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B) of this section, the Financial Assistance Corporation shall pay the amount due by the System bank out of the Trust Fund, and shall recover the amount due from the defaulting System bank, and such amount shall be paid to the Trust Fund.

If the Financial Assistance Corporation has not recovered the full amount due from a defaulting bank by the end of the 12-month period beginning on the date of default, any uncollected amount shall be paid to the Trust Fund from the Insurance Fund established under section 2277a–9 of this title, to the full extent of funds available in the Insurance Fund as of the date the Financial Assistance Corporation notified the Farm Credit System Insurance Corporation of amounts due under this section.

To the extent that the payment from the Insurance Fund is insufficient to reimburse the Trust Fund, the remaining balance shall be allocated to other System banks in accordance with the allocation mechanism applicable under this chapter to the particular defaulted obligation.

Not later than 90 days before the maturity of any obligation issued under subsection (a) of this section, the Farm Credit Administration shall complete an evaluation of the general financial condition of each System institution that issued preferred stock under section 2278b–7(a) of this title with respect to such obligation to determine whether such System institution will be able to redeem such stock at par value on the maturity of the obligation, and remain a viable institution capable of providing credit to eligible borrowers at equitable and competitive interest rates.

A copy of the evaluation required under clause (i) shall be furnished to the Secretary of the Treasury and the appropriate committees of Congress.

If the Farm Credit Administration determines, in consultation with the Secretary of the Treasury, on the basis of the evaluation required under clause (i), that the redemption of such stock at par value would impair the other stock or equities of such institution or render such institution incapable of meeting its capital adequacy standards, the institution shall be prohibited from redeeming the preferred stock it issued under section 2278b–7 of this title with respect to the maturing obligation. If the Farm Credit Administration determines, in consultation with the Secretary of the Treasury, on the basis of the evaluation required under clause (i), that such institution will be able to redeem, in a timely manner and at par value, the preferred stock it issued under section 2278b–7 of this title with respect to the maturing obligation, and remain a viable and competitive institution, such institution shall have the option of redeeming or not redeeming such stock. If such institution is prohibited from redeeming or elects not to redeem such stock, the Financial Assistance Corporation shall withdraw funds from the Trust Fund in an amount equal to the par value of the preferred stock issued by such institution under section 2278b–7 of this title so as to enable the Financial Assistance Corporation to pay the principal of the maturing obligation. Simultaneously with such withdrawal of funds from the Trust Fund, the Financial Assistance Corporation shall transfer to the Insurance Fund an equal amount, at par value, of preferred stock of such institution. To the extent that the Trust Fund is insufficient to enable the Financial Assistance Corporation to pay the full principal of the maturing obligation, the Insurance Fund shall be used by the Farm Credit System Insurance Corporation to purchase, at par value, the preferred stock issued by such institution under section 2278b–7(a) of this title to enable the Financial Assistance Corporation to pay the principal of the maturing obligation. To the extent that the Insurance Fund is insufficient to enable the Financial Assistance Corporation to pay the full principal of the maturing obligation, the Secretary of the Treasury shall purchase, at par value, the remaining quantity of the preferred stock issued by such institution to enable the Financial Assistance Corporation to make such full payment. For that purpose, the Secretary of the Treasury may use, as a public debt transaction, the proceeds from the sale of any securities issued under chapter 31 of title 31. The purposes for which such securities may be issued under such chapter are extended to include such purchases of stock. Any preferred stock transferred to, or purchased by, the Farm Credit System Insurance Corporation under this clause shall be retired by the issuing institution at such times and under such terms and conditions as are agreed to between the Insurance Corporation and such institution.

A defaulting bank shall be liable to the remaining System banks for any amounts paid by the remaining banks under this paragraph.

Notwithstanding any other provision of this chapter, if the Financial Assistance Corporation is unable to pay the principal or interest of any obligation issued under subsection (a) of this section or section 2278a–9(e)(3)(A) of this title, the Secretary of the Treasury shall pay to the Financial Assistance Corporation the amount due which shall be used by the Financial Assistance Corporation to pay the obligation.

In each instance in which the Secretary of the Treasury is required to make a payment under subparagraph (A) to the Financial Assistance Corporation as a result of a default made by a System bank on interest due from such System bank under subsection (c) of this section, on the payment of principal or interest due under subparagraphs (B) and (C) of section 2278a–9(e)(3) of this title, on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B) of this section, the Secretary of the Treasury shall recover the amount of the payments the Secretary made, with respect to each defaulting bank, from such defaulting bank. If the Secretary has not recovered the full amount due from the defaulting bank by the end of the 12-month period beginning on the date of payment by the Secretary, the uncollected amount shall be paid to the Secretary from the Insurance Fund established under section 2277a–9 of this title.

In each instance in which the Secretary of the Treasury is required under paragraph (3)(B)(iii) to purchase preferred stock issued by a System institution under section 2278b–7(a) of this title, the Farm Credit System Insurance Corporation shall use funds deposited in the Insurance Fund to repurchase, at par value, from the Secretary of the Treasury such stock required to be purchased under paragraph (3)(B)(iii) as funds become available for such repurchase.

Notwithstanding any other provision of this chapter except for section 2277a–9(c)(2)(B) of this title, during any year in which payments are due to the Secretary of the Treasury from the Insurance Fund under clause (i), or preferred stock held by the Secretary is due to be repurchased by the Insurance Fund under clause (ii), the funds in such Fund, and all funds deposited in such Fund during such year, shall be used first for the purposes specified in clauses (i) and (ii).

As used in this section, the term “retail loan volume” means all loans (as defined in accordance with generally accepted accounting principles) by a System bank or association, excluding loans by such a bank or association to another System institution.

For purposes of this section and section 2278a–9 of this title, average annual loan volumes shall be calculated using month-end balances.

For purposes of this section and section 2278a–9 of this title, the term “bank” shall not include a bank that had entered liquidation prior to October 28, 1992.

(Pub. L. 92–181, title VI, §6.26, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1597; amended Pub. L. 100–399, title II, §201(p)–(x), Aug. 17, 1988, 102 Stat. 991, 992; Pub. L. 102–552, title III, §§302–304(a), 305, 306, Oct. 28, 1992, 106 Stat. 4109–4111, 4114.)

**1992**—Subsec. (c)(2)(B). Pub. L. 102–552, §305(1)(A), (B), substituted “banks” for “institutions” wherever appearing in heading and text.

Subsec. (c)(2)(C), (D). Pub. L. 102–552, §305(1)(C), added subpar. (C) and struck out former subpars. (C) and (D) which read as follows:

“(C)

“(i) the amount of the performing loan volume of the institution (based on the average loan volume for the preceding year); divided by

“(ii) the total performing loan volume of the System for the preceding year.

“(D)

Subsec. (c)(3), (4). Pub. L. 102–552, §305(1)(B), substituted “banks” for “institutions”.

Subsec. (c)(5). Pub. L. 102–552, §304(a), amended par. (5) generally, substituting present provisions for provisions relating to repayments by System institutions generally, time of payments, and terms of payments.

Subsec. (d)(1)(B). Pub. L. 102–552, §302, amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “Except as provided in subparagraph (C), in order to enable the Financial Assistance Corporation to repay the obligation referred to in subparagraph (A), each institution that issued preferred stock under section 2278b–7(a) of this title with respect to such obligation (or the successor thereto) shall pay to the Financial Assistance Corporation, before the maturity date of such obligation, an amount equal to the par value of such stock outstanding for such institution.”

Subsec. (d)(1)(C). Pub. L. 102–552, §303, amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “In order to enable the Financial Assistance Corporation to repay the obligations issued to provide assistance under section 410(c) of the Agricultural Credit Act of 1987 and section 2162(c) of this title, or issued to provide funds to cover the expenses of the Assistance Board under section 2278a–7(a) of this title, each System institution shall pay to the Financial Assistance Corporation a proportion of such obligation equal to—

“(i) the average performing loan volume of the institution for the preceding 15 years; divided by

“(ii) the average performing loan volume of all of the System institutions for the same period.”

Subsec. (d)(1)(D), (E). Pub. L. 102–552, §305(2), redesignated subpar. (E) as (D) and struck out former subpar. (D) which read as follows: “(D)

Subsec. (d)(3)(A). Pub. L. 102–552, §306(1)(A), inserted heading and struck out former heading “Interest”, in cl. (i), inserted “on the payment of principal or interest due under subparagraphs (B) and (C) of section 2278a–9(e)(3) of this title, on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B) of this section,”, struck out “of the interest” after “the amount” in two places, and substituted “bank” for “institution” wherever appearing, in cl. (ii), struck out “of interest” after “the full amount”, and substituted “defaulting bank” for “defaulting institution” and “any uncollected amount” for “such uncollected interest”, and in cl. (iii), substituted “allocated to other System banks in accordance with the allocation mechanism applicable under this chapter to the particular defaulted obligation.” for “added to the amount of interest due from remaining System institutions, under subsection (c) of this section, and each remaining System institution, subject to the special rule provided in subsection (c)(2)(D) of this section, shall pay to the Trust Fund a proportion of the uncollected interest equal to—

“(I) the amount of the performing loan volume of the institution (based on the average loan volume for the preceding year); divided by

“(II) the total performing loan volume of the System.”

Subsec. (d)(3)(B). Pub. L. 102–552, §306(1)(B), inserted heading and struck out former heading “Principal”.

Subsec. (d)(3)(C). Pub. L. 102–552, §306(1)(C), substituted “banks” for “institutions” wherever appearing in heading and text, “bank” for “institution”, and “any amounts” for “the amount of any interest”.

Subsec. (d)(4)(A). Pub. L. 102–552, §306(2)(A), inserted “or section 2278a–9(e)(3)(A) of this title”.

Subsec. (d)(4)(B)(i). Pub. L. 102–552, §306(2)(B)(i), inserted heading and struck out former heading “Interest payments”, substituted “bank” for “institution” wherever appearing, and inserted “on the payment of principal or interest due under subparagraphs (B) and (C) of section 2278a–9(e)(3) of this title, on the payment of principal due under paragraph (1)(C), or on the payment of an assessment due under subsection (c)(5)(B) of this section,”.

Subsec. (d)(4)(B)(ii). Pub. L. 102–552, §306(2)(B)(ii), inserted heading and struck out former heading “Principal payments”.

Subsec. (e). Pub. L. 102–552, §305(3), added subsec. (e).

**1988**—Subsec. (c)(2)(D). Pub. L. 100–399, §201(q), substituted “Farm Credit Banks” for “Federal intermediate credit banks and Federal land banks”.

Pub. L. 100–399, §201(p), inserted “and Federal land banks” after “credit banks” and struck out “production credit” before “associations”.

Subsec. (c)(5)(B). Pub. L. 100–399, §201(r)(1), substituted “payments under this paragraph” for “interest payments”.

Pub. L. 100–399, §201(r)(2), substituted “referred to in subsection (d)(1)(E)” for “issued under subsection (d)(1)(C)”.

Subsec. (c)(5)(C)(i). Pub. L. 100–399, §201(r)(1), substituted “payments under this paragraph” for “interest payments”.

Subsec. (d). Pub. L. 100–399, §201(s), inserted “; defaults” after “principal” in heading.

Subsec. (d)(1)(C). Pub. L. 100–399, §201(t), in introductory provisions substituted “issued to provide assistance under section 410(c) of the Agricultural Credit Act of 1987 and section 2162(c) of this title, or issued to provide funds to cover the expenses of the Assistance Board under section 2278a–7(a) of this title,” for “referred to in section 410(c) of the Agricultural Credit Act of 1987,” and “such obligation” for “such principal”, in cl. (i) substituted “institution” for “bank”, and in cl. (ii) substituted “institutions” for “banks”.

Subsec. (d)(1)(D). Pub. L. 100–399, §201(q), substituted “Farm Credit banks” for “Federal intermediate credit banks and Federal land banks”.

Pub. L. 100–399, §201(p), inserted “and Federal land banks” after “credit banks” and struck out “production credit” before “associations”.

Subsec. (d)(1)(E). Pub. L. 100–399, §201(u), substituted “subparagraphs (B) and (C)” for “subparagraph (B)”.

Subsec. (d)(3)(A)(i), (iii). Pub. L. 100–399, §201(v), substituted “subsection (c) of this section” for “this subsection”.

Subsec. (d)(3)(B)(iii). Pub. L. 100–399, §201(w), inserted “is prohibited from redeeming or” after “If such institution”.

Subsec. (d)(4)(B)(iii). Pub. L. 100–399, §201(x), substituted “section 2277a–9(c)(2)(B) of this title” for “section 2277a–9 of this title”.

Amendment by section 201(q) of 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, and amendment by section 201(p), (r)–(x) of 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 of Pub. L. 100–399, set out as a note under section 2002 of this title.

Each System institution that is certified under section 2278a–4 of this title may issue a special class of preferred stock only in an amount, and subject to such terms and conditions, as authorized by the Assistance Board.

Except as provided in subparagraph (B), dividends shall not be payable on stock issued under this section.

Stock issued under this section shall be issued under such terms and conditions as to enable the Secretary of the Treasury, with respect to any of such stock the Secretary purchases under section 2278b–6(d)(3)(B)(iii) of this title, and the Farm Credit System Insurance Corporation, with respect to any of such stock that the Insurance Corporation purchases or otherwise acquires under section 2278b–6(d)(3)(B)(iii) of this title or section 2278b–6(d)(4)(B)(ii) of this title, to establish for such stock a stated dividend rate equal to the current market yield on outstanding, marketable obligations of the United States with maturities of 30 years, plus a premium to reflect the cost of capital for institutions in financial distress.

A holder of stock issued under this subsection shall have no voting rights with respect to the stock.

The Financial Assistance Corporation shall purchase shares of stock issued by certified System institutions under subsection (a) of this section to the extent that the issuance of such stock is approved by the Assistance Board.

(Pub. L. 92–181, title VI, §6.27, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1602; amended Pub. L. 100–399, title II, §201(y)–(aa), Aug. 17, 1988, 102 Stat. 992.)

**1988**—Subsec. (a)(1). Pub. L. 100–399, §201(y), struck out “(a) or (b)” after “section 2278a–4”.

Subsec. (a)(2)(B). Pub. L. 100–399, §201(z), substituted “Farm Credit System Insurance Corporation” for “Reserve Account Board” and “Insurance Corporation purchases” for “Board purchases”.

Subsec. (b). Pub. L. 100–399, §201(aa), substituted “subsection (a)” for “subsections (a) and (b)”.

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.

Beginning in fiscal year 1989, the Secretary of the Treasury shall reimburse the Financial Assistance Corporation for any amounts such Corporation pays in interest charges under section 2278b–6(c) of this title during fiscal year 1988, and thereafter the Secretary shall pay the Financial Assistance Corporation any amounts due from the Secretary to such Corporation under section 2278b–6(c) of this title.

There is authorized to be appropriated to the Secretary of the Treasury such sums on an annual basis as may be necessary to carry out this part.

(Pub. L. 92–181, title VI, §6.28, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1603; amended Pub. L. 100–399, title II, §201(bb), Aug. 17, 1988, 102 Stat. 992; Pub. L. 102–552, title III, §304(b), Oct. 28, 1992, 106 Stat. 4114.)

**1992**—Subsecs. (b), (c). Pub. L. 102–552 redesignated subsec. (c) as (b) and struck out former subsec. (b) which read as follows:

“(b)

“(1)

“(2)

“(A) the amount of the performing loan volume of the institution, determined in accordance with section 2278b–6(c)(2)(D) of this title (based on the average loan volume for the preceding year); divided by

“(B) the total performing loan volume of the System for the preceding year.”

**1988**—Subsec. (b)(2). Pub. L. 100–399 in introductory provision substituted “paragraph (1) equal” for “this paragraph” and in subpar. (A) substituted “section 2278b–6(c)(2)(D) of this title” for “subsection (c)(1)(D) of this section”.

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.

Except as provided in paragraphs (2) and (3), for the purpose of obtaining funds for the Trust Fund, each System institution shall purchase from the Financial Assistance Corporation stock issued in accordance with section 2278b–3 of this title in an amount equal to the amount by which the unallocated retained earnings of the institution (after taking into account any funds received by the institution under section 2278a–9(c) of this title) exceeds—

(A) in the case of a System bank, 5 percent of assets; or

(B) in the case of a production credit association or a Federal land bank association, 13 percent of assets.

The district board of a district, subject to the unanimous consent of the bank and associations in the district that would be affected by the reallocation, may reallocate the amount of stock required to be purchased by banks and associations in the district under paragraph (1) to equitably reflect the ability of the banks and associations to pay, except that—

(A) the total amount of stock purchased by banks and associations in the district under this paragraph shall equal the total amount of stock required to be purchased by the banks and associations under paragraph (1); and

(B) the board may not impair the stock of an association in carrying out this paragraph; and

(C) a district board's authority to reallocate stock purchases under this paragraph shall be limited to reallocation among like associations of the amount of stock required to be purchased by such associations; reallocation of the amount of stock required to be purchased by production credit associations among such associations and the district Federal intermediate credit bank; and reallocation of the amount of stock required to be purchased by Federal land bank associations among such associations and the district Federal land bank. Other reallocations than those enumerated above shall not be permitted.

(A) Notwithstanding any other provision of this section, the Financial Assistance Corporation shall establish a program under which System institutions shall purchase, as debt obligations are issued under section 2278b–6(a) of this title, stock of the Corporation in amounts described in this paragraph.

(B) The program shall provide, with respect to each issuance of debt obligations under section 2278b–6(a) of this title, that each System institution originally required to purchase stock under paragraph (1), or the successor thereto, shall purchase Corporation stock in an amount determined by multiplying the amount of stock such institution was originally required to purchase under that paragraph by a percentage equal to the percentage which the amount of the issuance bears to $4,000,000,000.

(C) The Financial Assistance Corporation shall promptly rescind purchases of stock of the Corporation made under paragraph (1) or (2) by System institutions and refund to such institutions, or their successors, the purchase price for the stock, except that, with respect to each issuance of debt obligations that occurs before October 1, 1988, the Corporation shall deduct from any refund due any System institution, and retain, the amount payable by such institution.

For purposes of subsection (a) of this section, the unallocated retained earnings and assets of a System institution shall be computed in accordance with generally accepted accounting principles on the basis of the financial statement of the institution on December 31, 1986.

(1) Within 15 days after the retirement of the obligations of the Capital Corporation under section 2278a–9 of this title—

(A) the Financial Assistance Corporation shall notify each System institution of the amount of stock such institution is required to purchase under subsection (a) of this section; or

(B) in the case of a district in which the district board has reallocated the stock purchase requirement in accordance with subsection (a)(2) of this section, the district board shall notify each System institution in the district of the amount of stock such institution is required to purchase under subsection (a) of this section.

(2) Not later than 15 days before each issuance of debt obligations under section 2278b–6(a) of this title occurring after September 30, 1988, the Financial Assistance Corporation shall notify each System institution required to purchase Corporation stock under subsection (a)(3) of this section of the amount of the stock it is required to purchase.

Within 15 days after a System institution is notified of the amounts due under subsection (c) of this section, the institution shall purchase from the Financial Assistance Corporation the amount of stock required to be purchased by the institution under this section. No further stock purchases, obligations, or assessments shall be required beyond that provided in section 2278b–6 of this title and this section.

Notwithstanding any other provision of law, the United States district court for the District of Columbia shall have exclusive jurisdiction over any action brought under or arising out of this section. No suit or proceeding shall be maintained for the recovery of any amount of stock alleged to have been erroneously or illegally purchased, and no suit or proceeding shall be maintained to enjoin or otherwise prevent or impede the giving of notice or the purchase of stock required under this section, unless the amount of stock required to be purchased under this section has been purchased and paid for in full.

(Pub. L. 92–181, title VI, §6.29, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1603; amended Pub. L. 100–460, title VI, §646, Oct. 1, 1988, 102 Stat. 2266.)

**1988**—Subsec. (a)(1). Pub. L. 100–460, §646(1), substituted “paragraphs (2) and (3)” for “paragraph (2)” in introductory provisions.

Subsec. (a)(3). Pub. L. 100–460, §646(2), added par. (3).

Subsec. (c). Pub. L. 100–460, §646(3), (4), designated existing provisions as par. (1), redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively, and added par. (2).

Pub. L. 101–220, §7(a), Dec. 12, 1989, 103 Stat. 1881, and Pub. L. 101–239, title I, §1006(a), Dec. 19, 1989, 103 Stat. 2109, provided that: “Notwithstanding any other provision of law, the amendments to section 6.29 of the Farm Credit Act of 1971 (12 U.S.C. 2278b–9) made by section 646 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1989 (Public Law 100–460; 102 Stat. 2266) shall be effective on October 1, 1992.”

Section 646 of Pub. L. 100–460 provided that the amendment made by that section is effective Oct. 1, 1989.

Pub. L. 101–239, title I, §1006(b), Dec. 19, 1989, 103 Stat. 2109, directed Financial Assistance Corporation to pay, out of Financial Assistance Corporation Trust Fund established under section 2278b–5(b) of this title, to each of institutions of Farm Credit System that purchased stock in Financial Assistance Corporation under section 2278b–9 of this title, four annual payments, required the annual payments to be made available as soon as practicable after October 1 of each of calendar years 1989 through 1992, established method of calculating payments, and provided that payments be made available to such institutions in an amount equal to total amount of annual payments to be made available times the ratio of the amount of stock each institution purchased divided by $177,000,000.

Similar provisions were contained in Pub. L. 101–220, §7(b), Dec. 12, 1989, 103 Stat. 1881.

The Financial Assistance Corporation, 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 the Financial Assistance Corporation to the same extent, according to its value, as other similar property held by other persons is taxed.

The notes, bonds, debentures, and other obligations issued by the Financial Assistance Corporation shall be accorded the same tax treatment as System-wide obligations.

(Pub. L. 92–181, title VI, §6.30, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1604.)

The Financial Assistance Corporation and the authority provided to such Corporation by this part shall terminate on the complete discharge by the Financial Assistance Corporation of its responsibilities under section 2278a–9(e) of this title and subsections (c) through (g) of section 2278b–6 of this title with regard to repayments by System institutions, but in no event later than 2 years following the maturity and full payment of all debt obligations issued under section 2278b–6(a) of this title.

Simultaneously with the termination of the Financial Assistance Corporation as provided in subsection (a) of this section, any funds in the accounts established under section 2278b–5 of this title shall be transferred to the Insurance Fund established under section 2277a–9 of this title.

(Pub. L. 92–181, title VI, §6.31, as added Pub. L. 100–233, title II, §201, Jan. 6, 1988, 101 Stat. 1605; amended Pub. L. 102–552, title III, §307(b), Oct. 28, 1992, 106 Stat. 4116.)

**1992**—Subsec. (a). Pub. L. 102–552 substituted “terminate on the complete discharge by the Financial Assistance Corporation of its responsibilities under section 2278a–9(e) of this title and subsections (c) through (g) of section 2278b–6 of this title with regard to repayments by System institutions, but in no event later than 2 years following” for “terminate on”.