
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2131]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
                 SUBCHAPTER III--BANKS FOR COOPERATIVES
 
                     Part A--Banks for Cooperatives
 
Sec. 2131. Loans


(a) 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.

(b) 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.

(c) 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. 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.

(d) 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 district 
bank in another district 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.

(Pub. L. 92-181, title III, Sec. 3.10, Dec. 10, 1971, 85 Stat. 606; Pub. 
L. 96-592, title III, Sec. 307, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 
99-509, title I, Sec. 1033(c), Oct. 21, 1986, 100 Stat. 1877.)


                               Amendments

    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, Sec. 307(1), inserted reference 
to section 2205 of this title.
    Subsec. (d). Pub. L. 96-592, Sec. 307(2), substituted ``market'' for 
``book'' and inserted provisions respecting retirement or cancellation 
of equities as affected by the capital structure.
