Title 12 — Banks and Banking
Part A · Chapter 23 — Farm Credit System
§ 2131. Loans
Statutory text
Interest rates and charges
Loans made by a bank for cooperatives shall bear interest at a rate or rates determined by the board of directors of the bank from time to time. In setting rates and charges, it shall be the objective to provide the types of credit needed by eligible borrowers at the lowest reasonable cost on a sound business basis, taking into account the net cost of money to the bank, necessary reserves and expenses of the bank, and services provided. The loan documents may provide for the interest rate or rates to vary from time to time during the repayment period of the loan, in accordance with the rate or rates currently being charged by the bank.
Security
Loans shall be made upon such terms, conditions, and security, if any, as may be determined by the bank in accordance with regulations of the Farm Credit Administration.
Lien
Each bank for cooperatives shall have a first lien on all stock or other equities in the bank as collateral for the payment of any indebtedness of the owner thereof to the bank.
Cancellation; application on indebtedness
In any case where the debt of a borrower is in default, or in any case of liquidation or dissolution of a present or former borrower from a bank for cooperatives, the bank may, but shall not be required to, retire and cancel all or a part of the stock, allocated surplus or contingency reserves, or any other equity in the bank owned by or allocated to such borrower, at the fair market value thereof not exceeding par, and, to the extent required in such cases, corresponding shares and allocations and other equity interests held by a bank in another bank for cooperatives (or any successor bank) on account of such indebtedness, shall be retired or equitably adjusted. In no event shall the bank’s equities be retired or canceled if the retirement or cancellation would adversely affect the bank’s capital structure, as determined by the Farm Credit Administration.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Farm Credit Act of 1971
Pub. L. 92–181 title III § 3 · 85 Stat. 583
Enacted · 12 U.S.C. § 2131
Pub. L. 92–181, title III, § 3.10, Dec. 10, 1971, 85 Stat. 606
Source evidence
Code source credit
Pub. L. 92–181, title III, § 3.10, Dec. 10, 1971, 85 Stat. 606Enacted provision · exact public law section
(3) Make contracts.Farm Credit Act Amendments of 1980
Pub. L. 96–592 § 307(1) · 94 Stat. 3437
Inserted · 12 U.S.C. § 2131(a)
Pub. L. 96–592, § 307(1), inserted reference to section 2205 of this title
Source evidence
Code amendment note
Subsec. (a). Pub. L. 96–592, § 307(1), inserted reference to section 2205 of this title.Enacted provision · exact public law section
(1) inserting before the period in the first sentence of subsection (a) “as provided in section 4.17 of this Act”; andFarm Credit Act Amendments of 1980
Pub. L. 96–592 § 307(2) · 94 Stat. 3437
Substituted · 12 U.S.C. § 2131(d)
Pub. L. 96–592, § 307(2), substituted “market” for “book”
Inserted · 12 U.S.C. § 2131(d)
Pub. L. 96–592, § 307(2), inserted provisions respecting retirement or cancellation of equities as affected by the capital structure
Source evidence
Code amendment note
Subsec. (d). Pub. L. 96–592, § 307(2), substituted “market” for “book” and inserted provisions respecting retirement or cancellation of equities as affected by the capital structure.Enacted provision · exact public law section
(2) striking out in the first sentence of subsection (d) “book” and inserting in lieu thereof “market” and adding a new sentence as follows: “In no event shall the bank’s equities be retired or canceled if the retirement or cancellation would adversely affect the bank’s capital structure, as determined by the Farm Credit Administration.”.Farm Credit Act Amendments of 1986
Pub. L. 99–509 title I § 1033(c) · 100 Stat. 1874
Struck · 12 U.S.C. § 2131(a)
Pub. L. 99–509 struck out “, with the approval of the Farm Credit Administration as provided in section 2205 of this title” after “from time to time”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–509 struck out “, with the approval of the Farm Credit Administration as provided in section 2205 of this title” after “from time to time”.Enacted provision · exact public law section
(c) Banks for Cooperatives.— The first sentence of section 3.10(a) of the Farm Credit Act of 1971 (12 U.S.C. 2131(a)) is amended by striking out “, with the approval of the Farm Credit Administration as provided in section 4.17 of this Act”.Agriculture Improvement Act of 2018
Pub. L. 115–334 § 5411(10)(A) · 132 Stat. 4490
Struck · 12 U.S.C. § 2131(c)
Pub. L. 115–334, § 5411(10)(A), struck out at end “In the case of a direct loan to an eligible cooperative by the Central Bank, the Central Bank shall have a first lien on the stock and equities of the borrower in the district bank and the district bank shall have a lien thereon junior only to the lien of the Central Bank.”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 115–334, § 5411(10)(A), struck out at end “In the case of a direct loan to an eligible cooperative by the Central Bank, the Central Bank shall have a first lien on the stock and equities of the borrower in the district bank and the district bank shall have a lien thereon junior only to the lien of the Central Bank.”Enacted provision · exact public law section
(A) in subsection (c), by striking the second sentence; andAgriculture Improvement Act of 2018
Pub. L. 115–334 § 5411(10)(B) · 132 Stat. 4490
Substituted · 12 U.S.C. § 2131(d)
Pub. L. 115–334, § 5411(10)(B), substituted “held by a bank in another bank for cooperatives (or any successor bank) on account of such indebtedness” for “held by a district bank in another district bank on account of such indebtedness”
Source evidence
Code amendment note
Subsec. (d). Pub. L. 115–334, § 5411(10)(B), substituted “held by a bank in another bank for cooperatives (or any successor bank) on account of such indebtedness” for “held by a district bank in another district bank on account of such indebtedness”.Enacted provision · exact public law section
(B) in subsection (d)— (i) by striking “district” each place it appears; and (ii) by inserting “for cooperatives (or any successor bank)” before “on account”.
7 of 7 references resolved to an enrolled provision
Editorial Notes
Amendments1980–2018 · 3 rounds
2018
Subsec. (c). Pub. L. 115–334, § 5411(10)(A), struck out at end “In the case of a direct loan to an eligible cooperative by the Central Bank, the Central Bank shall have a first lien on the stock and equities of the borrower in the district bank and the district bank shall have a lien thereon junior only to the lien of the Central Bank.”
Subsec. (d). Pub. L. 115–334, § 5411(10)(B), substituted “held by a bank in another bank for cooperatives (or any successor bank) on account of such indebtedness” for “held by a district bank in another district bank on account of such indebtedness”.
1986
Subsec. (a). Pub. L. 99–509 struck out “, with the approval of the Farm Credit Administration as provided in section 2205 of this title” after “from time to time”.
1980
Subsec. (a). Pub. L. 96–592, § 307(1), inserted reference to section 2205 of this title.
Subsec. (d). Pub. L. 96–592, § 307(2), substituted “market” for “book” and inserted provisions respecting retirement or cancellation of equities as affected by the capital structure.