APPLICATION FOR ISSUE

§ 673.1 Approval by Farm Credit Administration.

A bank for cooperatives desiring to participate in an issue of consolidated debentures shall make written application to the Farm Credit Administration for approval of its participation in such issue of debentures. No debentures shall be issued without approval of the Farm Credit Administration in writing. Before approving each bank's participation in an issue of debentures, the Farm Credit Administration shall have a statement in writing by a Custodian of collateral for consolidated debentures of the banks for cooperatives that the collateral held by him or for his account securing consolidated debentures which will be outstanding on behalf of the bank making the application, including the debentures applied for, as of the date of their issuance, will be adequate according to law and the rules and regulations of the Farm Credit Administration.

CUSTODIANSHIP OF COLLATERAL

§ 673.2

Custodian and Acting Custodian. The Chief, Collateral Section, Farm Credit Administration, shall serve, ex officio, as Custodian of collateral pledged by the Central Bank for Cooperatives for consolidated debentures. The Chief, Finance Division, Farm Credit Administration, shall serve, ex officio, as Acting Custodian of collateral pledged by the Central Bank for Cooperatives for consolidated debentures, in the event the said Custodian is unable to serve for any reason. For any period that the aforesaid officials are both unable to serve for any reason as Custodian or Acting Custodian, respectively, any chief or acting chief of a division or section in the Farm Credit Administration designated by the Governor of the Farm Credit Administra

tion may serve, ex officio, as such Acting Custodian. The Farm Loan Registrar in each farm credit district shall serve, ex officio, as Custodian of collateral pledged by the bank for cooperatives of the district for consolidated debentures; and the Deputy Registrar and any Acting Deputy Registrar in each farm credit district shall serve, ex efficio, as Acting Custodian of collateral pledged by the bank for cooperatives of the district for consolidated debentures, in the event the said Custodian is unable to serve for any reason. The operating title of the Farm Loan Registrar when so serving shall be Custodian. The operating title of the Deputy Registrar and any Acting Deputy Registrar when so serving shall be Acting Custodian.

§ 673.3 Bonding of Custodian and Acting Custodian.

Each Custodian and Acting Custodian shall be covered under a fidelity bond with a corporate surety on the approved list of the Treasury Department and in the amounts of $50,000 and $25,000, respectively, to insure the faithful performance of their duties and provide against financial loss.

§ 673.4

Classifications of collateral.

Each Custodian shall accept, either originally or by substitution, collateral for consolidated debentures as prescribed by the Farm Credit Act of 1933, as amended.

§ 673.5 Segregation and safeguarding of collateral.

Each Custodian shall maintain exclusive possession of collateral, other than cash and United States Government obligations, which directly secures consolidated debentures of the banks for cooperatives. He shall keep the collateral which is in his immediate custody separate and apart from all other property held by him either for himself or for others, and he shall keep it in a suitable vault or other recognized place of safe deposit.

with a Federal reserve bank or branch or with the Treasurer of the United States, both types of accounts to be subject to the order of the Governor of the Farm Credit Administration.

§ 673.7

Deposits and withdrawals of collateral.

(a) Each deposit of collateral with a Custodian shall be accompanied by a specific assignment to him in trust of such collateral. All the collateral shall be held by him, or for his account, in trust for the joint, ratable benefit of all owners of consolidated debentures of the banks for cooperatives outstanding irrespective of the dates of issue of such debentures. No duty or responsibility shall be assumed by or imposed upon a Custodian to determine the values, genuineness, or legal sufficiency of any collateral deposited with him, but he shall be satisfied that (1) such collateral is of the character authorized by law and appears to be legal and sufficient on its face; and (2) the collateral assigned to him is at all times not less in amount than the amount of debentures outstanding.

(b) Except as provided in § 673.9, a Custodian shall release to the bank for cooperatives which he serves any collateral requested by it which is not needed for meeting the collateral requirements specified by law, and any additional collateral requirements specified by the Farm Credit Administration, for outstanding consolidated debentures of the banks for cooperatives. Further, except as provided in § 673.9, a Custodian shall release to the bank for cooperatives which he serves any collateral held by him or for his account upon the substitution of cash or other collateral of the character authorized by law sufficient in amount to maintain the collateral requirements specified, as mentioned in paragraph (a) of this section.

§ 673.8 Subcollateral.

Subcollateral, consisting of all valuable items securing collateral which directly secures outstanding consolidated debentures of the banks for cooperatives, shall be held either by a Custodian of collateral, a bank for cooperatives, or a local custodian employed by a bank for cooperatives. When subcollateral is not held by the Custodian, he shall be furnished with a statement by the holder

that it is held in trust for the Custodian's account, and with periodic reports by the holder of the subcollateral thus held. § 673.9 Disposition of collateral and subcollateral in the event of default on consolidated debentures.

In the event of default by any bank for cooperatives in the payment of principal or interest on any consolidated debentures outstanding on its behalf, all collateral and subcollateral held by or for the Custodian under assignment by such bank shall automatically with the occurrence of the default be held subject to the order of the Governor of the Farm Credit Administration for the protection of debenture holders, and the withdrawal and substitution provisions of 637.7 shall be suspended.

The statutes of the United States, now or hereafter in force, and the regulations of the Treasury Department, now or hereafter in force, governing relief on account of the loss, theft, destruction, mutilation, or defacement of U.S. securities, and the regulations of the Treasury Department, now or hereafter in force, governing the payment of mutilated or defaced coupons of U.S. securities, so far as such statutes and regulations may be applicable, and as modified to relate to consolidated collateral trust debentures of the 13 banks for cooperatives, and coupons of such debentures, shall govern the granting of relief on account of lost, stolen, destroyed, mutilated, or defaced consol

idated collateral trust debentures of the 13 banks for cooperatives, and mutilated or defaced coupons of such debentures. [33 F.R. 8809, June 18, 1968]

§ 673.13 Claims and proof of loss.

Claims shall be presented, and proof shall be made, by applicants for relief on account of the loss, theft, destruction, mutilation, or defacement of consolidated collateral trust debentures of the thirteen banks for cooperatives, and the mutilation or defacement of coupons of such debentures, in accordance with the statutes of the United States, now or hereafter in force, and the regulations of the Treasury Department, now or hereafter in force, with respect to securities of the United States, and coupons of such securities.

[33 F.R. 8809, June 18, 1968; 33 F.R. 9252, June 22, 1968]

§ 673.19 Restrictive endorsements of bearer securities.

When consolidated debentures issued by the 13 banks for cooperatives are being presented to Federal Reserve Banks or Branches, or to the Treasurer of the United States, by or through banks (including banks for cooperatives) for redemption, such debentures may be restrictively endorsed. The restrictive endorsement shall be placed thereon in substantially the same manner and with the same effects as prescribed in United States Treasury Department regulations, now or hereafter in force, governing like transactions in United States bonds; and consolidated debentures issued by the 13 banks for cooperatives so endorsed shall be prepared for shipment and shipped in the manner prescribed in such regulations for United States bonds. (See 31 CFR 328.1-328.6.)

709

715

720

§ 700.1

PART 700-DEFINITIONS

Definitions.

and possessions of the United States, the Panama Canal Zone, and the Commonwealth of Puerto Rico.

(g) The term, "credit union," means a credit union chartered under the Federal Credit Union Act or, as the context permits, under the laws of any State. (Sec. 16, 48 Stat. 1221, as amended; 12 U.S.C. 1766) [25 F.R. 5286, June 14, 1960, as amended at 34 F.R. 1398, Jan. 29, 1969; Redesignated at 35 F.R. 17398, Nov. 13, 1970]

701.18

Petitions.

701.19 Retirement benefits for employees of Federal credit unions.

701.20 Surety bond coverage for Federal credit unions.

701.21 Payment or amortization of loans. 701.22 Selling checks and money orders. 701.23 Cashing checks and money orders. 701.24 Refund of interest.

701.25 Insured loans to student members in eligible higher education or vocational institutions.

701.26 Purchase of accounting services. 701.27 Participation in accounting service center.

701.28 Joint operations and activities. 701.29 Purchase of notes of a liquidating credit union.

701.30 Safe deposit box service.

AUTHORITY: The provisions of this Part 701 issued under sec. 21, 73 Stat. 635, 12 U.S.C. 1766, unless otherwise noted.

SOURCE: The provisions of this Part 701 appear at 25 F.R. 5286, June 14, 1960, unless otherwise noted. Redesignated at 35 F.R. 17398, Nov. 13, 1970.

(a) Persons desiring to form a Federal credit union shall submit, in duplicate, on forms prescribed by the Bureau, а proposed organization certificate (Form FCU 503B). The certificate shall be subscribed to before an officer competent to administer oaths by not less than 7 natural persons who have a common bond of occupation, or association, or are within a well-defined neighborhood, community, or rural district, and shall specifically state:

(1) The proposed name of the association.

(2) The location of the proposed Federal credit union and the territory in which it will operate.

(3) The names and addresses of the subscribers to the certificate and the number of shares subscribed by each. (4) The par value of the shares, which shall be $5 each.

(5) The proposed field of membership, specified in detail.

(6) The term of the existence of the corporation, which may be perpetual.

(7) The fact that the certificate is made to enable such persons to avail themselves of the advantages of the Federal Credit Union Act, as amended.

Copies of the form of organization certificate may be obtained from the Washington Office of the Bureau or from any Regional Office.

(b) The proposed organization certificates shall be submitted to the Regional Representative together with a check or money order payable to the Bureau of Federal Credit Unions in the amount of $25.00 in payment of the investigation fee of $20.00 and charter fee of $5.00. The Regional Representative will investigate and make recommendations as to whether the proposed organization certificate conforms to the Act; as to the general character and fitness of the subscribers thereto; and as to the economic advisability of establishing the proposed Federal credit union. The report and recommendation of the Regional Representative shall be forwarded to the Bureau in Washington, D.C. The Director shall consider the proposed organization certificate and the recommendations of the Regional Representative and shall approve or disapprove the proposed organization certificate. The organization certificate, if approved, shall be the charter of the Federal credit union. If the organization certificate is disapproved, the incorporators shall be notified of the basis for such action and the charter fee of $5.00 shall be returned to them. Under no circumstances shall the investigation fee of $20.00 be returned.