
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: 12USC2206a]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
     SUBCHAPTER IV--PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF 
                       INSTITUTIONS OF THE SYSTEM
 
            Part D--Activities of Institutions of the System
 
Sec. 2206a. Authority of Farm Credit Banks and direct lender 
        associations to participate in loans to similar entities for 
        risk management purposes
        

(a) Definitions

    As used in this section:

                  (1) Participate and participation

        The terms ``participate'' and ``participation'' shall have the 
    meaning provided in section 2121(11)(B)(iv) of this title.

                         (2) Similar entity

        The term ``similar entity'' means a person that--
            (A) is not eligible for a loan from the Farm Credit Bank or 
        association; and
            (B) has operations that are functionally similar to a person 
        that is eligible for a loan from the Farm Credit Bank or 
        association in that the person derives a majority of the income 
        of the person from, or has a majority of the assets of the 
        person invested in, the conduct of activities that are 
        functionally similar to the activities that are conducted by an 
        eligible person.

(b) Loan participation authority

    Notwithstanding any other provision of this chapter, any Farm Credit 
Bank or direct lender association chartered under this chapter may 
participate in any loan of a type otherwise authorized under subchapter 
I or II of this chapter made to a similar entity by any person in the 
business of extending credit, except that a Farm Credit Bank or direct 
lender association may not participate in a loan under this section if--
        (1) the participation would cause the total amount of all 
    participations by the Farm Credit Bank or association under this 
    section involving a single credit risk to exceed 10 percent (or the 
    applicable higher lending limit authorized under regulations issued 
    by the Farm Credit Administration if the stockholders of the 
    respective Farm Credit Bank or association so approve) of the total 
    capital of the Farm Credit Bank or association;
        (2) the participation by the Farm Credit Bank or association 
    would equal or exceed 50 percent of the principal of the loan or, 
    when taken together with participations in the loan by other Farm 
    Credit System institutions, would cause the cumulative amount of the 
    participations by all Farm Credit System institutions in the loan to 
    equal or exceed 50 percent of the principal of the loan;
        (3) the participation would cause the cumulative amount of 
    participations that the Farm Credit Bank or association has 
    outstanding under this section to exceed 15 percent of the total 
    assets of the Farm Credit Bank or association; or
        (4) the loan is of the type authorized under section 2019(b) or 
    2075(a)(2) of this title.

(c) Prior approval required

                           (1) In general

        With respect to a similar entity that is eligible to borrow from 
    a bank for cooperatives under subchapter III of this chapter, the 
    authority of a Farm Credit Bank or association to participate in a 
    loan to the entity under this section shall be subject to the prior 
    approval of the bank for cooperatives having, at the time the loan 
    is made, the greatest loan volume in the State in which the 
    headquarters office of the similar entity is located.

                      (2) Terms and conditions

        Approval under paragraph (1) may be granted on an annual basis 
    and under such terms and conditions as may be agreed on between the 
    Farm Credit Bank or association, as the case may be, and the bank 
    for cooperatives granting the approval.

            (3) Approval by supervising Farm Credit Bank

        An association may not participate in a loan to a similar entity 
    under this section without the approval of the supervising Farm 
    Credit Bank of the association.

(Pub. L. 92-181, title IV, Sec. 4.18A, as added Pub. L. 103-376, Sec. 5, 
Oct. 19, 1994, 108 Stat. 3498.)
