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poration in production credit associations is transferred to the Governor of the Farm Credit Administration and the Governor shall cancel an equal par amount of stock of the corporation.

(b) Services to and supervision

of production credit associations

In order to carry out the declared policy of this Act with respect to the production credit associations, the Farm Credit Administration shall, by appropriate provisions in the charter and bylaws, or otherwise, provide for such organization and assignment of functions within the Federal intermediate credit banks as will assure proper supervision of and assistance to the production credit associations in a manner which will enable them to make sound credit available to farmers and ranchers. The income derived from the surplus transferred from the production credit corporation to the Federal intermediate credit bank of the district shall be used to pay expenses of the bank in providing such supervision and assistance, and expenses in excess of such income may be paid out of other resources of the bank.

(c) Officers and employees

Notwithstanding any other provision of law, the employment of the officers and employees of each Federal intermediate credit bank and each production credit corporation is terminated on January 1, 1957 and the board of directors of the Federal intermediate credit bank shall, not later than sixty days prior to January 1, 1957, take all necessary action to reemploy as of January 1, 1957, such of the officers and employees so terminated in such capacities as the board determines they are qualified and needed to carry out the functions, powers, and duties of the Federal intermediate credit bank. Such reemployment shall be subject to the approval of the Farm Credit Administration. (July 26, 1956, ch. 741, title I, § 101 (a–c), 70 Stat. 659.)

Section 202 (a) of act July 26, 1956 (Farm Credit Act of 1956), provided that: "This Act [adding sections 1023b and 1027 of this title, amending sections 24, 636g, 640d (2) (B), 640h, 6401, 781, 832 (a-c), 1022, 1031, 1033, 1041, 1044, 1045, 1051, 1061, 1072, 1131c-1131g, 1131i (a), (b), (c), 1134, 1134a, 1134c, 1134j, 1138-1138c, and 1138e of this title, sections 658 and 1014 of Title 18, Crimes and Criminal Procedure, and sections 846, 856, 867, and 868 (d) of Title 31, Money and Finance, and repealing sections 1131b and 1131g-1 of this title] shall become effective on January 1, 1957, except subsections (a) and (b) of section 201 [adding sections 1023b of this title and amending sections 846, 856, 867 and 868 (d) of Title 31], which shall become effective January 1, 1959."

Section 2 of act July 26, 1956 (Farm Credit Act of 1956), provided that: "It is declared to be the policy of the Congress to continue to provide agriculture with a sound, dependable, and effective source of credit; to promote the efficiency of the farm credit system by merging production credit corporations in Federal intermediate credit banks and to facilitate increased farmer participation in the management, control, and ownership of the merged banks and retirement of Government capital therein; to encourage and promote the continued growth and development of the production credit associations as self-supporting cooperative lending institutions

operating on a sound credit basis with maximum local authority to determine credit needs and loan policies consistent with the maintenance of a national production credit system; and to continue to provide other financing institutions making loans to farmers and ranchers with the right to borrow from and rediscount with such merged banks on a basis comparable with the production credit associations regardless of the ownership of such banks. The provisions of this Act shall be construed in keeping with this declaration of policy."

12 U. S. C. § 1031

Discounts and Loans

Lending powers; discount or purchase

of obligations; approval of collateral; loans to and discount of paper for other credit banks

F. F. L. Act § 202 (a)

The Federal intermediate credit banks, when chartered and established, shall have power, subject solely to the restrictions, limitations, and conditions contained in this Act or as may be prescribed by the Farm Credit Administration not inconsistent with the provisions of this Act

(1) to discount for, or purchase from, any production credit association organized under the Farm Credit Act of 1933, as amended, with its endorsement, any note, draft, or other such obligation presented by such association; and to make loans and advances to any such association secured by such collateral as may be approved by the Governor of the Farm Credit Administration;

(2) to discount for, or purchase from, any national bank, State bank, trust company, agricultural credit corporation, incorporated livestock loan company, savings institution, credit union, and any association of agricultural producers engaged in the making of loans to farmers and ranchers, with its endorsement, any note, draft, or other such obligation the proceeds of which have been advanced or used in the first instance for any agricultural purpose, including the breeding, raising, fattening, or marketing of livestock; and to make loans and advances to any such financing institution secured by such collateral as may be approved by the Governor of the Farm Credit Administration: Provided, That no such loan or advance shall be made upon the security of collateral other than notes or other such obligations of farmers and ranchers eligible for discount or purchase under the provisions of this section, unless such loan or advance is made to enable the financing institution to make or carry loans for any agricultural purpose; and

(3) to make loans to and discount paper for any other Federal intermediate credit bank, any Federal land bank, or any bank for cooperatives organized under the Farm Credit Act of 1933, as amended, all upon terms and at rates of interest or discount approved by the Farm Credit Administration. (July 17, 1916, ch. 245, title II, § 202 (a), as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1455, and amended

Mar. 4, 1925, ch. 524, § 7, 43 Stat. 1264; June 26, 1930, ch. 616, § 1, 46 Stat. 816; May 19, 1932, ch. 191, § 1, 47 Stat. 159; June 16, 1933, ch. 98, title VII, § 76 (b), (c), 48 Stat. 271; Ex. Ord. No. 6084, Mar. 27, 1933; June 3, 1935, ch. 164, § 5 (a), (b), 49 Stat. 315; July 26, 1956, ch. 741, title I, § 104 (b), 70 Stat. 663.)

12 U. S. C. § 1032

Purchase or discount of paper from or for national banks, State banks, trust companies, savings institutions, or corporations making loans for agricultural or livestock purposes; limitations upon amount

F. F. L. Act § 202 (b)

No paper shall be purchased from or discounted for any national bank, State bank, trust company or savings institution under sections 1031-1033 of this title, if the amount of such paper added to the aggregate liabilities of such national bank, State bank, trust company, or savings institution, whether direct or contingent (other than bona fide deposit liabilities), exceeds the amount of such liability permitted under the laws of the jurisdiction creating the same; or exceeds twice the paid-in and unimpaired capital and surplus of such national bank, State bank, trust company, or savings institution. No paper shall under said sections be purchased from or discounted for any other corporation engaged in making loans for agricultural purposes or for the raising, breeding, fattening, or marketing of livestock, if the amount of such paper added to the aggregate liabilities of such corporation exceeds the amount of such liabilities permitted under the laws of the jurisdiction creating the same; or exceeds ten times the paid-in and unimpaired capital and surplus of such corporation. It shall be unlawful for any national bank which is indebted to any Federal intermediate credit bank, upon paper discounted or purchased under said sections, to incur any additional indebtedness, if by virtue of such additional indebtedness its aggregate liabilities, direct or contingent, will exceed the limitations herein contained. (July 17, 1916, ch. 245, title II, § 202 (b), as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1455.)

12 U. S. C. § 1033

Maturity and sale of loans, advances, or discounts

F. F. L. Act § 202 (c)

Loans, advances, or discounts made under sections 1031-1033 of this title shall have a maturity at the time they are made or discounted by the Federal intermediate credit bank of not more than five years. Any Federal intermediate credit bank may in its discretion sell loans or discounts made under said sections, with or without its endorsement. (July 17, 1916, ch. 245, title II, § 202 (c), as added Mar. 4, 1923,

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ch. 252, title I, § 2, 42 Stat. 1455, and amended June 26, 1930, ch. 616, § 2, 46 Stat. 816; July 26, 1956, ch. 741, title I, § 104 (c), 70 Stat. 664.)

Issue of Debentures

12 U. S. C. § 1040

F. C. Act 1937 § 39

"Debentures" defined

The terms "debenture" and "debentures", when used in any Act of Congress, whenever enacted, except the Federal Farm Loan Act, relating to the purchase, sale, or use as security, of debentures issued by or for the benefit and account of any Federal intermediate credit bank or banks, shall be deemed to mean debentures issued by any such bank individually and consolidated debentures issued by such banks acting together. (Aug. 19, 1937, ch. 704, § 39, 50 Stat. 718.)

12 U. S. C. § 1041

Collateral trust debentures or similar obligations; security for; maturity;

limitation respecting amount

F. F. L. Act § 203 (a)

Federal intermediate credit banks shall have power, subject to the approval of the Farm Credit Administration, to borrow money and to issue and to sell collateral trust debentures or other similar obligations with a maturity at the time of issue of not more than five years, which shall be secured by at least a like face amount of cash, United States Government bonds, Federal Farm Mortgage Corporation bonds, or notes or other such obligations discounted or purchased or representing loans made under sections 1031-1033 of the title: Provided, That the aggregate amount of the outstanding debentures and similar obligations issued individually by any Federal intermediate credit bank, together with the amount of outstanding consolidated debentures or other similar obligations issued for its benefit and account, shall not exceed ten times the surplus and paid-in capital of such bank. (July 17, 1916, ch. 245, title II, § 203 (a), as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1456, and amended Ex. Ord. No. 6084, Mar. 27, 1933; June 3, 1935, ch. 164, § 6 (a), 49 Stat. 315; Aug. 19, 1937, ch. 704, § 27, 50 Stat. 715; July 26, 1956, ch. 741, title I, § 104 (ƒ), 70 Stat. 664.)

12 U. S. C. § 1042

Applicability of provisions of Subchapter I;

regulations governing collateral

and handling thereof; interest rates

F. F. L. Act § 203 (b)

The provisions of subchapter I of this chapter relating to the preparation and issue of farm loan bonds shall, so far as applicable, govern the preparation and issue of debentures or other such obligations issued under

section 1041 of this title; but the Farm Credit Administration shall prescribe rules and regulations governing the receipt, custody, substitution, and release of the cash, obligations of the United States Government, and notes or other obligations securing such debentures, the right of substitution being granted, and in the event such notes or other obligations are secured by warehouse receipts, shipping documents, or other similar credit instruments, may permit the substitution of trust receipts therefor in such manner and subject to such conditions as may be approved by the said Administration. Rates of interest upon debentures and other such obligations issued under said section shall, subject to the approval of the Farm Credit Administration, be fixed by the Federal intermediate credit bank making the issue, not exceeding 6 per centum per annum. (July 17, 1916, ch. 245, title II, § 203 (b), as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1456, and amended Ex. Ord. No. 6084, Mar. 27, 1933; Aug. 19, 1937, ch. 704, § 28, 50 Stat. 715.) 12 U. S. C. § 1043

Assumption of liability by Government

prohibited; recital necessary to be included

F. F. L. Act § 203 (c)

The United States Government shall assume no liability, direct or indirect, for any debentures or other obligations issued under section 1041 of this title, and all such debentures and other obligations shall contain conspicuous and appropriate language, to be prescribed in form and substance by the Farm Credit Administration and approved by the Secretary of the Treasury, clearly indicating that no such liability is assumed. (July 17, 1916, ch. 245, title II, § 203 (c), as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1456, and amended Ex. Ord. No. 6084, Mar. 27, 1933.)

12 U. S. C. § 1044

Consolidated debentures or other similar obligations; authority of intermediate credit banks to issue and sell

F. F. L. Act § 203 (d)

Whenever it shall appear desirable to issue consolidated debentures or other similar obligations of the twelve Federal intermediate credit banks and to sell them through a common selling agency, and the Federal intermediate credit banks shall, by resolutions, consent to the same, the banks may issue and sell said debentures or other similar obligations subject to the provisions of sections 1041-1045 of this title and the provisions of sections 871-886 of this title, insofar as applicable. As used in this Act, the term "debentures" includes such consolidated debentures. (July 17, 1916, ch. 245, title II, § 203 (d), as added June 3, 1935, ch. 164, § 6 (b), 49 Stat. 315, and amended July 26, 1956, ch. 741, title I, § 104 (f), 70 Stat. 664.)

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