§ 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 § 673.7 shall be suspended.

§ 673.10 Accounts and reports.

Each Custodian shall keep a separate account of all his transactions relating to consolidated debentures of the banks for cooperatives and the collateral security, and shall furnish such reports and other documents as may be required by the Governor of the Farm Credit Administration.

The books and records of each Custodian and the collateral held by him relating to banks for cooperatives consolidated debentures shall be audited at least once each year by the Examination Division of the Farm Credit Administration.

LOST, STOLEN, DESTROYED, MUTILATED, OR DEFACED DEBENTURES

§ 673.12 Authorization for relief.

Whenever a consolidated debenture of the banks for cooperatives, or a coupon detached from such a debenture, is lost, stolen, destroyed, or so mutilated or defaced as to impair its value to the owner, the Director of Cooperative Bank Service may authorize the issuance of a new debenture or payment for the coupon at maturity, upon the owner's compliance with the requirements set forth in §§ 673.13 through 673.18. Wherever the term "owner" is used in said sections, it shall be deemed to include the authorized representative of the owner.

§ 673.13 Application.

In the event of the loss, theft, destruction, mutilation, or defacement of a consolidated debenture or coupon, the owner should file an application with the Director of Cooperative Bank Service for the issuance of another debenture or for payment of the coupon at maturity. Such application must be filed within a reasonable time after the loss, theft, destruction, mutilation, or defacement is discovered.

The owner of the consolidated debenture or coupon which has been lost, stolen, destroyed, mutilated, or defaced shall furnish to the Director of Cooperative Bank Service his affidavit duly acknowledged before a notary public or other officer authorized by law to administer oaths, setting forth:

(a) That he is the lawful owner of such debenture or coupon and that he is legally entitled to its possession;

(b) A complete identification of such debenture or coupon including serial number, date of issue, face amount, date of maturity, and interest rate;

(c) A detailed statement of the circumstances surrounding the loss theft,

destruction, mutilation, or defacement of such debenture or coupon;

(d) A statement that the affidavit is made for the purpose of obtaining a new debenture or payment for the coupon at maturity and an undertaking that should the original debenture or coupon come into the possession or control of the deponent, he will immediately surrender it to the Director of Cooperative Bank Service.

§ 673.15 Bond of indemnity.

(a) The owner of a lost, stolen, or destroyed consolidated debenture or coupon, or his authorized representative, shall also furnish to the Director of Cooperative Bank Service a bond of indemnity in a penal amount equal to 110 percent of the principal and interest to maturity of the said debenture, or equal to 110 percent of the face amount of said coupon, with corporate surety satisfactory to the Director of Cooperative Bank Service and with conditions to indemnify and save harmless the Farm Credit Administration and the 13 banks for cooperatives and any and all of their officers, employees, or representatives, from all liability, loss, claims, or demands arising in any manner by reason or on account of the debenture or coupon concerning which relief is requested.

(b) The owner of a mutilated or defaced consolidated debenture or coupon shall, before relief is granted, surrender such debenture or coupon or as much thereof as remains to the Director of Cooperative Bank Service and shall, if required by him, also furnish a bond of indemnity in a penal sum satisfactory to the Director of Cooperative Bank Service with corporate surety and conditions as stated in paragraph (a) of this section.

(c) A bond of indemnity which is otherwise satisfactory will be accepted if the corporation which is surety thereon holds a certificate from the Secretary of the Treasury as being acceptable on surety bonds. A list of such corporations may be obtained from the Surety Bonds Branch, Bureau of Accounts, United States Treasury Department, Washington, D.C.

§ 673.16 Additional evidence.

The owner of a lost, stolen, mutilated, defaced, or destroyed consolidated de

benture or coupon shall also furnish such other and further evidence relating to the loss, theft, destruction, mutilation, or defacement of the debenture or coupon for which relief is requested as may be required by the Director of Cooperative Bank Service in any specific case.

§ 673.17 Recovery of debenture or coupon reported lost, stolen, or destroyed.

If a consolidated debenture or coupon reported lost, stolen, or destroyed is recovered by the owner prior to the issuance of a new debenture or payment for the coupon, the Director of Cooperative Bank Service should be notified immediately whereupon the application for relief will be canceled and any bond or affidavit relative to it will be returned to the owner. If the original debenture or coupon is recovered by the owner after relief has been granted, the said original shall be returned to the Director of Cooperative Bank Service for cancellation, whereupon the bond and affidavit relative to it will be returned to the owner. § 673.18 Immaterial mutilation or de

facement.

Where a mutilation or defacement of a consolidated debenture or a coupon is such that the debenture or coupon may be clearly identified and the missing fragments could not by any possibility form the basis of a claim against

the 13 banks for cooperatives, the Farm Credit Administration, or the Director of Cooperative Bank Service, the Director of Cooperative Bank Service may authorize the issuance of a new debenture, upon application therefor and the surrender of the defaced or mutilated debenture or coupon, without requiring an affidavit or indemnity bond, or may authorize that such debenture or coupon be accepted and paid at maturity as if no mutilation or defacement had occurred.

§ 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.)