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ISSUE OF DEBENTURES 12 U.S. C., & 1040

“Debentures" defined. The terms "debenture" and "debentures”, when used in any Act of Congress, whenever enacted, except the Federal Farm Loan Act [July 17, 1916, c. 245, 39 Stat. 360]*, 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, c. 704, $ 39,50 Stat. 718.)

Definition of debentures as used in Federal Farm Loan Act, see section 1044 of this title. 12 U.S.C., & 1041

F.F. L. Act, 8 203 (a) Collateral trust debentures or similar obligations; security for; maturity; limitation respecting amount.-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 this 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 issued for its benefit and account, shall not exceed ten times the surplus and paid-in capital of such bank. (July 17, 1916, c. 245, $ 203 (a); Mar. À, 1923, c. 252, § 2, 42 Stat. 1456; Mar. 27, 1933, Ex. Or. 6084; June 3, 1935, c. 164, $ 6 (a), 49 Stat. 315; Aug. 19, 1937, c. 704, $ 27,50 Stat. 715.)

"Farm Credit Administration” mentioned in the text was substituted for "Federal Farm Loan Board” pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter. 12 U.S. C., $ 1042

F. F. L. Act, $ 203 (b) Applicability of provisions of subchapter I; regulations governing collateral and handling thereof; interest rates.—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 hereby 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

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*See Subchapter I of this chapter.

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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, c. 245, $ 203' (b); Mar. 4, 1923, c. 252,8 2, 42 Stat. 1456; Mar. 27, 1933, Ex. Or. 6084; Aug. 19, 1937, c. 704, $ 28,50 Stat. 715.)

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12 U.S.C., & 1043

F.F. L. Act, $ 203 (c) Assumption of liability by Government prohibited; recital necessary to be included.—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, c. 245, $ 203 (c); Mar. 4, 1923, c. 252, § 2, 42 Stat. 1456; Mar. 27, 1933, Ex. Or. 6084.)

"Farm Credit Administration" mentioned in the text was substituted for "Federal Farm Loan Board” pursuant to the Executive Order cited thereto, which is set out in full at the bęginning of this chapter. 12 U.S.C., $ 1044

F.F.L, Act, $ 203 (d) Consolidated debentures; authority of intermediate credit banks to issue and sell.-Whenever it shall appear desirable to issue consolidated debentures 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 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 subchapter, the term "debentures" includes such consolidated debentures. (July 17, 1916, c. 245, § 203 (d); June 3, 1935, c. 164, § 6 (b), 49 Stat. 315.)

The United States Code contains the words "this act' instead of "this subchapter."

Definition of debentures as used in other acts of Congress, see section 1040 of this title. 12 U.S.C., $ 1045

F. F. L. Act, 8 203 (e) Investment of fiduciary and trust funds in debentures of intermediate credit banks; security for public deposits.--All debentures issued by Federal intermediate credit banks shall be lawful investments, and may be accepted as security, for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States or of any officer or officers thereof. (July 17, 1916, c. 245, $ 203 (e); June 3, 1935, c. 164, § 6 (b), 49 Stat. 316.)

DISCOUNT RATES

12 U. S.C., $ 1051

F. F. L. Act, $ 204 (a) Establishment of and approval of; limitations on. Any Federal intermediate credit bank may, with the approval of the Intermediate

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Credit Commissioner, from time to time establish rates of discount
and interest which, except with the approval of the Governor of the
Farm Credit Administration, shall not exceed by more than 1 per
centum per annum the rate borne by the last preceding issue of deben-
tures which it issued or in which it participated. Any Federal inter-
mediate credit bank may be required by the Governor of the Farm
Credit Administration to acquire, upon such terms as he may approve,
loans and/or discounts of any other Federal intermediate credit bank.
(July 17, 1916, c. 245, $ 204 (a); Mar. 4, 1923, c. 252, § 2, 42 Stat. 1456;
Mar. 4, 1925, c. 524, $ 2, 43 Stat. 1262; Mar. 27, 1933, Ex. Or. 6084;
June 3, 1935, c. 164, $ 7,49 Stat. 316.)
12 U.S. C., & 1052

F.F. L. Act, 8 204 (b) Limitation on interest rate charged original borrower on paper discounted with bank.-No organization entitled to the privileges of this subchapter, shall, without the approval of the Farm Credit Administration, be allowed to discount with any Federal intermediate credit bank any note or other obligation, upon which the original borrower has been charged a rate of interest exceeding by more than 112 per centum per annum the discount rate of the Federal intermediate credit bank at the time such loan was made. (July 17, 1916, c. 245, $ 204 (b); Mar. 4, 1923, c. 252, $ 2, 42 Stat. 1456; Mar. 27, 1933, Ex. Or. 6084.)

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12 U.S.C., $ 1053

F.F. L, Act, $ 204 (c) Purchase by bank of debentures issued by it.-Subject to the approval of the Farm Credit Administration, a Federal intermediate credit bank may buy for its own account any debentures or similar obligations issued by or for the benefit and account of such bank or other Federal intermediate credit bank or banks, and (1) hold until maturity any such debentures or similar obligations or (2) retire before maturity any such debentures or similar obligations issued by it or for its benefit and account. (July 17, 1916, C. 245, $ 204 (c); Mar. 4, 1923, c. 252, § 2, 42 Stat. 1456; Mar, 27, 1933, Ex. Or. 6084; Aug. 19, 1937, c. 704, $ 29,50 Stat. 715.)

CAPITAL STOCK

12 U.S.C., 8 1061

F.F. L. Act, 8 205 Amount, shares; subscriptions to by United States; assessments against other banks to restore capital impairment of one bank.(a) For the purpose of exercising the powers conferred by this subchapter, each Federal intermediate credit bank shall have a subscribed capital stock of $5,000,000, which amount may be increased from time to time with the approval of the Governor of the Farm Credit Administration. Capital stock of such amount shall be divided into shares of $5 each and shall be subscribed, held, and paid by the Government of the United States. It shall be the duty of the Secretary of the Treasury to subscribe to such capital stock on behalf of the United States, such subscription to be subject to call in whole or in part by directors of the said banks upon thirty days' notice to the Secretary

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of the Treasury and with the approval of the Farm Credit Administration. The Secretary of the Treasury is authorized and directed to take out shares as called and to pay for the same out of any money in the Treasury not otherwise appropriated.

(b) In the event that there shall be an impairment of the paid-in capital of any Federal intermediate credit bank, the Farm Credit Administration, at such time or times as it deems advisable, may determine and assess the amount thereof against the other Federal intermediate credit banks on such equitable basis of apportionment as it shall prescribe. Each bank against which such an assessment is made shall, out of its surplus and/or to an extent up to 50 per centum of its net earnings, in accordance with the terms of such assessment, pay the amount thereof as soon as possible to the bank having the impairment. In such event payments into the surplus fund and payments of the franchise tax prescribed by this chapter shall be determined on the basis of the net earnings remaining after providing for the payment of any such assessment.

(c) With the approval of the Secretary of the Treasury, the Governor of the Farm Credit Administration is authorized to subscribe from time to time to the capital stock and/or paid-in surplus of any Federal intermediate credit bank on behalf of the United States, in such amounts as he may determine are necessary for the purpose

of meeting the credit needs of eligible borrowers from the bank, and the amount of the capital stock and paid-in surplus of such bank may

be increased or decreased from time to time by the Governor, in accordance with such needs. Such stock shall be divided into shares of $100 each and subscriptions to such paid-in surplus shall be made in multiples of $100 out of the revolving fund created under subsection (e) of section 11317 of this title. The Governor on behalf of the United States shall make payment for stock and paid-in surplus of such bank and such payment shall be subject to call in whole or in part by the board of directors of the bank, with the approval of the Governor. (July 17, 1916, c. 245, $ 205; Mar. 4, 1923, c. 252, $ 2, 42 Stat. 1457; May 19, 1932, c. 191, § 2, 47 Stat. 159; Mar. 27, 1933, Ex. Or. 6084; Jan. 31, 1934, c. 7, § 15 (b), (c), 48 Stat. 348.)

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12 U.S.C., § 1062

F.F. L. Act, $ 206 (a) Salaries and expenses of Federal Farm Loan Bureau; assessment against banks for proportionate share.- The Farm Credit Administration shall equitably apportion the joint salaries and expenses incurred in behalf of Federal land banks, joint stock land banks, and Federal intermediate credit banks, and shall assess against each Federal intermediate credit bank its proportionate share of the salaries and expenses of the Federal Farm Loan Bureau made necessary in connection with the operation of this provision. (July 17, 1916, C. 245, $ 206 (a); Mar. 4, 1923, c. 252, 82, 42 Stat. 1457; Mar. 4, 1925, c. 524, § 1, 43 Stat. 1262; Mar. 27, 1933, Ex. Or. 6084.)

For salaries and expenses to be included in assessments, see § 832 of this title. also $ 1094, below, for assessment of examination costs.

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12 U.S.C., § 1072

F. F. L. Act, $ 206 (b) Net earnings; surplus fund; franchise tax; disposition by United States of sums received from net earnings of banks and from surplus remaining after liquidation of banks.-Subject only to review and approval by the Farm Credit Administration, each Federal intermediate credit bank, at the end of its fiscal year, after all its necessary expenses and costs of operation for such fiscal year have been paid or provided for, shall apply its net earnings then remaining, first, to making up any losses in excess of its reserves against unforeseen losses and assets of doubtful value; second, to the elimination of any impairment of its paid-in capital and paid-in surplus; third, to the creation and maintenance of reserves against unforeseen losses and assets of doubtful value in such amount as its board of directors may prescribe; fourth, to the payment of 25 per centum of the amount then remaining to the United States as a franchise tax; and, fifth, to the payment of the remaining net earnings into its surplus account. The amounts paid as franchise taxes to the United States by Federal intermediate credit banks shall, in the discretion of the Secretary of the Treasury, be used to supplement the gold reserve held against outstanding United States notes, or shals be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury. Should a Federal intermediate credit bank be dissolved or go into liquidation, after the payment of all debts and other obligations as hereinbefore provided, any surplus remaining shall be paid to and become the property of the United States and shall be similarly applied. (July 17, 1916, c. 245, $ 206 (b); Mar. 4, 1923, c. 252, $ 2, 42 Stat. 1457; May 19, 1932, c. 191, 83,47 Stat. 159; Aug. 19, 1937, c. 704, § 30, 50 Stat. 715.)

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LIABILITY ON DEBENTURES OR OTHER SUCH OBLIGATIONS

12 U.S.C., 8 1081

F. F. L. Act, § 207 Liability of one bank for debentures issued by other banks; agreements by banks for transfer of funds for debenture payments.-Any Federal intermediate credit bank issuing debentures or other such obligations under this subchapter shall be primarily liable therefor, and shall also be liable, upon presentation of the coupons for interest payments due upon any such debentures or obligations issued by any other Federal intermediate credit bank and remaining unpaid in consequence of the default of the other Federal intermediate credit bank. Any Federal intermediate credit bank shall likewise be liable for such portion of the principal of debentures or obligations so issued as are not paid after the assets of such other Federal intermediate credit bank have been liquidated and distributed. Such losses, if any, either of interest or of principal, shall be assessed by the Farm Credit Administration against solvent Federal intermediate credit banks liable therefor in proportion to the amount of capital stock, surplus, and debentures or other such obligations which each may have out

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