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No credit information shall be furnished concerning any cooperative association or other institutional borrower except with its specific written consent and subject to the foregoing conditions.
(b) Refusal of information; exceptions. All information obtained by officers, agents, and employees of the Farm Credit Administration and/or corporations operating under its supervision, in connection with applicants for loans and their property, shall be received and held in strict confidence; and, except with the specific approval of the Governor of the Farm Credit Administration, access to and/or copies of the following listed documents are to be denied any person, firm, or corporation other than the Farm Credit Administration (its duly accredited officers, agents, or employees) and corporations operating under the supervision of the Farm Credit Administration; loan applications, supplementary statements by applicants, reports of appraisers and/or inspectors, letters and/or statements relative to the character and credit standing of applicants, recommendations of loan committees or other groups authorized to consider and/or act upon loan applications, etc. Nothing herein shall be deemed to prohibit access to information in the possession of the Farm Credit Administration or of a corporation under its supervision, where such access is officially requested by some department or independent office of the Government of the United States, for use in connection with the execution of the official duties of such department or office.t (Sec. 209, as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)
41.210 Candidates for office of director. No officer or employee of a Federal intermediate credit bank should undertake any activity furthering the interest of any candidate for director of the district units (Federal land bank, Federal intermediate credit bank, production credit corporation, and bank for cooperatives) or take any action that might be construed as using an official position to influence any votes in such election.
Official stationery should not be used by a director for correspondence in the interest of his own or another's candidacy.t (Sec. 209, as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)
PART 42-LOANS AND DISCOUNTS
and reports of borrowing and rediscounting organizations.
42.303 Character of paper.
(a) Notes from financing insti-
(b) Notes of dairymen.
42.306 Notes of farming corporations. (a) Eligibility.
(b) Indorsements of stockholders.
42.308 Rates of interest or discount
charged note makers by financing institutions. 42.309 Fees and other charges.
Section 42.301 Applications. Federal intermediate credit banks shall require, as a condition precedent to making loans to or discounting paper for any eligible organization, an application for such priv
For source citation, see note to § 41.204.
ilege duly executed by the applicant institution in form prescribed by the bank and approved by the Intermediate Credit Commissioner.† (Secs. 209, 202 (a), as added by sec. 2, 42 Stat. 1459, 1455; 12 U.S.C. 1101, 1031, and Sup.)
In $$ 42.301 to 42.309, inclusive, the numbers to the right of the decimal point correspond with the respective section numbers in the Manual for Federal Intermediate Credit Banks issued as of September 1, 1937.
42.302 Examinations and reports of borrowing and rediscounting organizations. Federal intermediate credit banks shall require, as a condition precedent to making loans to or discounting paper for any eligible organization (other than a production credit association or bank for cooperatives, organized under the Farm Credit Act of 1933, 48 Stat. 257) its agreement to furnish to the bank and/or the Farm Credit Administration and/or any land bank examiner at any time upon call, a detailed statement of its financial condition in such form as may be prescribed; and its agreement to submit, at its own expense, to periodic examinations by examiners for the Federal intermediate credit bank, by national bank examiners and/or by land bank examiners; provided, however, that any bank, trust company, or savings institution operating under the supervision of State or national banking authorities, in lieu of such agreement, may submit its authorization to such supervising authority, in writing, to furnish the Federal intermediate credit bank and/or the Farm Credit Administration upon request any report of condition or examination, or other confidential information in the possession of such supervising authority.† (Secs. 209, 208 (a) as added by sec. 2, 42 Stat. 1459, 1458; 12 U.S.C. 1101, 1091)
42.303 Character of paper. To be acceptable to a Federal intermediate credit bank, paper offered by a financing institution for discount or as collateral security for a loan shall be of such character as to assure liquidation of the obligation within a reasonable time, consistent with sound banking and agricultural practices. In any case where the collateral offered is the principal factor in determining the acceptability of a note, a margin of security adequate to protect the bank during the full term of the obligation will be required. (Secs. 209, 202 (a), as added by sec. 2, 42 Stat. 1459, 1455; 12 U.S.C. 1101, 1031, and Sup.)
42.304 Maturities-(a) Notes from financing institutions. Maturities of notes or other obligations discounted by a Federal intermediate credit bank or accepted as collateral for loans to financing institutions should coincide, as nearly as may be practicable, with the usual time for marketing the crops or livestock from which liquidation is expected. Except as hereinafter provided, maturities of such notes will not exceed one growing and/or marketing season, usually not more than twelve months.
(b) Notes of dairymen. A Federal intermediate credit bank may discount, or accept as collateral, notes of dairymen secured by chattel mortgages on dairy cattle and maturing not more than two and onehalf years from the date of discount or pledge, except that in the event the dairy cattle are subjected to intensive feeding and milk pro
For source citation, see note to § 42.301.
duction, the maturity shall be not more than two years from the date of discount or pledge; provided that, in either case, such notes are payable in regular monthly or semi-monthly installments in amounts ordinarily sufficient to liquidate the paper within such period but consistent with sound farming practices of the operator. In the discretion of the intermediate credit bank, such installments may be for fixed amounts or for a percentage of proceeds from dairy products and should, ordinarily, be covered by assignment of an appropriate part of future milk or cream checks. (Secs. 209, 202 (c), as added by sec. 2, 42 Stat. 1459, 1456; 12 U.S.C. 1101, 1033) 42.306 Notes of farming corporations-(a) Eligibility. Notes of a corporation are eligible for discount only if the corporation is principally engaged in farming or in raising, breeding, fattening, or marketing of livestock. To be considered so principally engaged, the major portion of the corporation's assets must be represented by property actually devoted to farming and/or livestock production; at least half of its gross income must be derived from such operations; and at least half of the time of its active officers and personnel must be spent in the conduct of such business.
(b) Indorsements of stockholders. (1) Notes of a farming corporation (as herein defined), to be accepted for discount or as collateral for a loan by a Federal intermediate credit bank, will be required to be indorsed, or signed as co-maker (s) by (i) the holder or holders of at least the majority of the outstanding shares of voting stock of the corporation or (ii) under certain conditions, by the principal stockholder or stockholders; or the bank will require that such stockholders execute a continuing guaranty of all indebtedness of such corporation to the financing institution and its successors or assigns.
(2) The Federal intermediate credit banks will require such stockholders' indorsements or guaranties on any renewals or extensions of obligations of farming corporations whose paper they may now hold, as a condition precedent to accepting such renewals or extensions. This requirement may not be waived in any case except with the express consent of the Intermediate Credit Commissioner.t (Secs. 209, 202 (a), as added by sec. 2, 42 Stat. 1459, 1455; 12 U.S.C. 1101, 1031, and Sup.)
42.308 Rates of interest or discount charged note makers by financing institutions. The rate of interest or discount charged farmers and stockmen on notes or other obligations that may be discounted for, or accepted as collateral for loans to, production credit associations and other financing institutions shall not exceed by more than 3 percent per annum the loan and discount rate of the Federal intermediate credit bank in effect at the time the loan is made.t (Secs. 209, 204 (b), as added by sec. 2, 42 Stat. 1459, 1457; 12 U.S.C. 1101, 1052)
42.309 Fees and other charges. No paper shall be eligible for discount, or as collateral for a loan by Federal intermediate credit bank, if the financing institution ch from interest at a rate conformin
v fee or commission aside rulations of the Farm
+For source citation, see no
Credit Administration and reimbursement for reasonable and necessary actual costs incurred by the financing institution in making the loan, such as the expenses of necessary inspections of the security, obtaining chattel mortgage abstracts or other evidences of title and priority of its liens, and filing or recording mortgages.† (Secs. 209, 204 (b), as added by sec. 2, 42 Stat. 1459, 1457; 12 U.S.C. 1101, 1052) PART 43-PRIVATELY CAPITALIZED FINANCING
43.501 Eligibility of institutions.
(a) Incorporation and capital-
(b) Compliance with statutes.
43.504 Loans to financing institutions.
43.505 Eligibility of paper.
(a) Summary of eligibility re-
(b) Notes given to merchants.
(d) Maximum individual notes
43.507 Insolvent financing institutions.
Section 43.501 Eligibility of institutions-(a) Incorporation and capitalization. In order to be eligible to obtain credit from a Federal intermediate credit bank, a privately capitalized financing institution must meet the following requirements:
It must be incorporated with a paid-in and unimpaired capital commensurate with the volume of business it expects to handle and, in any event, not less than $10,000.
(b) Compliance with statutes. It must comply with State laws applicable to it. Violations of State laws will be cause for revocation by an intermediate credit bank of the borrowing and rediscounting privilege of any concern which does not immediately rectify such conditions upon notice from the bank. Particular attention should be given to the corporation's articles of incorporation and bylaws; the issuance, sale, and retirement of its capital stock or other securities; and, in the case of foreign corporations, evidence will be required that the concern has complied with the laws of the State in which it is operating.
(c) Nature of principal business. It must be engaged, principally, in the business of extending seasonal short-term credit for agricultural and livestock production purposes.
(d) Corporations acting under banking laws. A corporation engaged in a banking business and operating under the banking laws of a State, but having the powers of an agricultural credit corporation, livestock loan company, or similar financing institution, must be limited to the amount of credit which may be granted to a banking institution under section 202 (b) of the Federal Farm Loan Act, as amended.tt (Secs. 209, 202 (a), (b), as added by sec. 2, 42 Stat. 1459, 1455; 12 U.S.C. 1101, 1031, 1032, and Sup.)
In 88 43.501 to 43.507, inclusive, the numbers to the right of the decimal point correspond with the respective section numbers in the Manual for Federal Intermediate Credit Banks issued as of September 1, 1937.
For source citation, see note to § 42.301.
43.504 Loans to financing institutions. Loans may be made to a financing institution (other than a bank for cooperatives or a production credit association organized under the Farm Credit Act of 1933, as amended, or a production credit association in which a production credit corporation organized under that Act owns stock) only when such loans are secured by paper that is in itself eligible for discount, that is, "the proceeds of which have been advanced or used in the first instance for any agricultural purpose or for the raising, breeding, fattening, or marketing of livestock," and which otherwise conforms to the requirements of eligibility for discount.t (Secs. 209, 202 (a), as added by sec. 2, 42 Stat. 1459, 1455; 12 U.S.C. 1101, 1031, and Sup.)
43.505 Eligibility of paper-(a) Summary of eligibility requirements. To be eligible for discount or as collateral for loans, notes offered to a Federal intermediate credit bank by privately capitalized financing institutions must meet the following require
(1) The rate of interest or discount charged the note maker may not exceed the limitations set out in the rules and regulations promulgated by the Farm Credit Administration.
(2) Maturity dates may not exceed the limitations fixed by Farm Credit Administration rules and regulations and may not, in any event, exceed the legal limit of three years from the date discounted or accepted as collateral by the banks.
(3) The total indebtedness of the note maker to the financing institution may not exceed the maximum amount permitted by rules and regulations of the Farm Credit Administration.
(4) The proceeds of the notes must have been advanced or used in the first instance for an agricultural purpose, as defined by the Farm Credit Administration, and the Federal intermediate credit bank will require appropriate certificates or other suitable evidence that the proceeds have been or will be so used.
(b) Notes given to merchants. Notes given by farmers and stockmen to dealers or merchants for the purchase of livestock, machinery, farm supplies, fertilizer, etc., ordinarily are not eligible for discount by (or as collateral for loans from) a Federal intermediate credit bank.
Where the proceeds of such notes are used primarily for the benefit of a merchant or dealer, rather than a farmer (e. g., to finance a merchant's credit sales) the purpose is commercial, or mercantile, not agricultural. A farmer's note given to a financing institution, when the proceeds have been used to purchase for cash from a merchant, or to pay a merchant for, farm supplies, machinery, fertilizer, etc., if otherwise acceptable, is eligible for discount by Federal intermediate credit bank.
(c) Notes of irrigation companies, etc. Notes of irrigation companies, canal companies, and similar concerns engaged in the business of supplying farmers with irrigation water or other services or supplies, are not eligible for discount by (or as collateral for loans from) a Federal intermediate credit bank.
+For source citation, see note to § 43.501.