
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: 12USC2278a-9]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
             SUBCHAPTER VI--ASSISTANCE TO FARM CREDIT SYSTEM
 
                        Part A--Assistance Board
 
Sec. 2278a-9. Succession


(a) Assets and liabilities

    On the issuance by the Farm Credit Administration of the charter for 
the Assistance Board under this part, the Assistance Board shall succeed 
to the assets of and assume all debts, obligations, contracts, and other 
liabilities of the Capital Corporation, matured or unmatured, accrued, 
absolute, contingent or otherwise, and whether or not reflected or 
reserved against on balance sheets, books of account, or records of the 
Capital Corporation.

(b) Contracts

    The existing contractual obligations, security instruments, and 
title instruments of the Capital Corporation shall, by operation of law 
and without any further action by the Farm Credit Administration, the 
Capital Corporation, or any court, become and be converted into 
obligations, entitlements, and instruments of the Assistance Board 
chartered under this part.

(c) Adjustment of assessments

    Not later than 15 days after the issuance of the charter of the 
Assistance Board, the Board shall retire all debt and equity obligations 
issued to any System institution under section 2216f(a)(14) or 2216g \1\ 
of this title (as in effect immediately before January 6, 1988) at the 
book value of such obligations (determined as of January 6, 1988) and 
shall pay such amounts to the holders of such debt and equity 
obligations.
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    \1\ See References in Text note below.
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(d) Surplus funds

    To the extent that, on the extinguishing of liabilities assumed by 
the Assistance Board under this section, and on full performance or 
other final disposition of contract obligations of the Assistance Board, 
there remain surplus funds attributable to such obligations or 
contracts, the Assistance Board shall distribute such surplus funds 
among the System institutions that contributed funds to the Capital 
Corporation on the basis of the relative amount of funds so contributed 
by each institution.

(e) Preservation agreements

                     (1) Transfer of obligations

        Notwithstanding any other provision of this chapter or the terms 
    and conditions of the Thirty-Seven Banks Capital Preservation 
    Agreement, the Federal Land Banks Capital Preservation Agreement, 
    the Federal Intermediate Credit Banks Capital Preservation 
    Agreement, and the Banks for Cooperatives Loss Sharing Agreement--
            (A) at the time the receiving bank receives funds from the 
        Financial Assistance Corporation in an equal and equivalent 
        amount in accordance with this subsection, any amounts received 
        by, or that remain accrued to, any System bank in accordance 
        with the activation of any such agreement for the calendar 
        quarter ending on September 30, 1986, shall be--
                (i) repaid to the contributing bank by the bank that 
            received such payments; or
                (ii) cancelled;

            (B) on the date the Financial Assistance Corporation is 
        chartered, the accounts payable of each contributing bank under 
        such agreements for the calendar quarter ending on September 30, 
        1986, shall, by operation of law and without any further action 
        by such contributing bank, any other bank, or any court, become 
        and be converted into accounts payable of the Financial 
        Assistance Corporation to each receiving bank under such 
        agreement for such calendar quarter in the same amounts as 
        previously carried on the books of each such receiving bank; and
            (C) on the date the Financial Assistance Corporation is 
        chartered, the accounts receivable of each receiving bank under 
        such agreements for the calendar quarter ending September 30, 
        1986, shall, by operation of law and without any further action 
        by such receiving bank or any other bank, or any court, become 
        and be converted into accounts receivable to such receiving bank 
        from the Financial Assistance Corporation, in the same amount as 
        previously carried on the books of such receiving bank and such 
        receivables shall, for all financial reporting purposes, be 
        accounted for as an asset on the books of such receiving bank in 
        accordance with generally accepted accounting practices.

                   (2) Payments to receiving banks

        (A) Not later than 30 days after the first issuance of 
    obligations by the Financial Assistance Corporation in accordance 
    with section 2278b-6 of this title, the Corporation shall pay to 
    each receiving bank such sums as are necessary to permit each 
    receiving bank to repay, in accordance with paragraph (1), the 
    amounts each such receiving bank received under any such agreement.
        (B) The accruals shall be paid by the Corporation to each 
    receiving bank for the actual net loan charge-offs recorded on the 
    books of each such bank before January 1, 1993, not previously paid 
    by the contributing banks.

                        (3) Debt obligations

        (A) Issuance

            For the purpose of obtaining funds to carry out this 
        subsection, the Financial Assistance Corporation shall issue 
        debt obligations under section 2278b-6 of this title. Such 
        obligations shall be subject to the terms and conditions of such 
        section, except as provided for in this paragraph.

        (B) Payment of interest

            During each year of the 15-year period of such obligation 
        issued pursuant to subparagraph (A), the banks operating under 
        this chapter shall pay to the Financial Assistance Corporation, 
        at such times as the Corporation shall determine, an amount 
        equal to the entire amount of interest due on such obligation. 
        Each bank shall pay a proportion of such interest equal to--
                (i) the average accruing loan volume of the bank during 
            the year preceding the year of such payment; divided by
                (ii) the average accruing loan volume of all of the 
            banks of the System for the same period.

        (C) Payment of principal

            (i) In general

                After the end of the 15-year period beginning on the 
            date of the issuance of any obligation issued to carry out 
            this subsection, the banks operating under this chapter 
            shall pay to the Financial Assistance Corporation, on 
            demand, an amount equal to the outstanding principal of the 
            obligation. Each bank shall pay a proportion of the 
            principal equal to--
                    (I) the average accruing loan volume of the bank for 
                the preceding 15 years; divided by
                    (II) the average accruing loan volume of all banks 
                of the System for the same period.
            (ii) Banks leaving system

                Any bank leaving the Farm Credit System pursuant to 
            section 2279d of this title shall be required, under 
            regulations of the Farm Credit Administration, to pay to the 
            Financial Assistance Corporation the estimated present value 
            of the payment required under this subparagraph had the bank 
            remained in the System.
            (iii) Banks undergoing liquidation

                With respect to any bank undergoing liquidation under 
            this chapter, a liability to the Financial Assistance 
            Corporation in the amount of the payment required under this 
            subparagraph (calculated as if the bank had left the System 
            on the date it was placed in liquidation) shall be 
            recognized as a claim in favor of the Financial Assistance 
            Corporation against the estate of the bank.
            (iv) Obligations of other banks

                The obligations of other banks shall not be reduced in 
            anticipation of any recoveries under this subparagraph from 
            banks leaving the System or in liquidation, but the 
            Financial Assistance Corporation shall apply the recoveries, 
            when received, and all earnings on the recoveries, to reduce 
            the other banks' payment obligations, or, to the extent the 
            recoveries are received after the other banks have met their 
            entire payment obligation, shall refund the recoveries, when 
            received, to the other banks in proportion to the other 
            banks' payments.

        (D) Annual payments

            (i) In general

                In order to provide for the orderly funding and 
            discharge over time of the obligation of each System bank to 
            the Financial Assistance Corporation under subparagraph (C), 
            each System bank shall enter into or continue in effect an 
            agreement with the Financial Assistance Corporation under 
            which the bank will make annual annuity-type payments to the 
            Financial Assistance Corporation, beginning no later than 
            December 31, 1992 (except for any bank that did not meet its 
            interim capital requirement on December 31, 1990, in which 
            case the bank shall begin making the payments no later than 
            December 31, 1993) in amounts designed to accumulate, in 
            total, including earnings on the amounts, to 90 percent of 
            the bank's ultimate obligation. The Financial Assistance 
            Corporation shall partially discharge the bank from its 
            obligation under subparagraph (C) to the extent of each such 
            payment and the earnings on the payment as earned.
            (ii) Capital requirements

                The agreement shall not require payments to be made to 
            the extent that making a particular payment or part of a 
            payment would cause the bank to fail to satisfy applicable 
            regulatory permanent capital requirements, but shall provide 
            for recalculation of subsequent payments accordingly.
            (iii) Investment; availability

                The funds received by the Financial Assistance 
            Corporation pursuant to the agreements shall be invested in 
            eligible investments as defined in section 2278b-5(a)(1) of 
            this title. The funds and the earnings on the funds shall be 
            available only for the payment of the principal of the bonds 
            issued by the Financial Assistance Corporation under this 
            subsection.

        (E) Financial reporting

            Until each obligation issued in accordance with this 
        subsection reaches maturity, for all financial reporting 
        purposes, such obligation shall be considered to be the sole 
        obligation of the Financial Assistance Corporation and shall not 
        be considered a liability of any System bank, nor shall the 
        obligation to make future annuity payments to the Financial 
        Assistance Corporation under subparagraph (D) be considered a 
        liability of any System bank.

            (4) Funds not considered financial assistance

        The funds made available to each bank, whether through the 
    issuance of stock or otherwise, by the Financial Assistance 
    Corporation to meet obligations under any agreement referred to in 
    paragraph (1) or to meet any obligations of the contributing banks 
    under any such agreement, as required by this subsection, shall not 
    be considered financial assistance under this chapter.

              (5) Suspension of preservation agreements

        During the 5-year period beginning on January 6, 1988, and 
    thereafter whenever funds from the Farm Credit System Insurance Fund 
    are available for use in assisting System institutions to meet their 
    obligations on their debt instruments, activation of the Thirty-
    Seven Banks Capital Preservation Agreement, the Federal Land Banks 
    Capital Preservation Agreement, the Federal Intermediate Credit 
    Banks Capital Preservation Agreement, and the Banks for Cooperatives 
    Loss Sharing Agreement shall be suspended, in exchange for the 
    benefits flowing to the signatories to such agreements under the 
    Agricultural Credit Act of 1987.

(Pub. L. 92-181, title VI, Sec. 6.9, as added Pub. L. 100-233, title II, 
Sec. 201, Jan. 6, 1988, 101 Stat. 1591; amended Pub. L. 100-399, title 
II, Sec. 201(k), (l), Aug. 17, 1988, 102 Stat. 991; Pub. L. 102-552, 
title III, Sec. 301, Oct. 28, 1992, 106 Stat. 4107.)

                       References in Text

    Sections 2216f and 2216g of this title, referred to in subsec. (c), 
were repealed by Pub. L. 100-233, title II, Sec. 207(a)(3), Jan. 6, 
1988, 101 Stat. 1607, effective 15 days after Jan. 6, 1988.
    The Agricultural Credit Act of 1987, referred to in subsec. (e)(5), 
is Pub. L. 100-233, Jan. 6, 1988, 101 Stat. 1568, as amended. For 
complete classification of this Act to the Code see Short Title of 1988 
Amendment note set out under section 2001 of this title and Tables.


                               Amendments

    1992--Subsec. (e)(3)(C). Pub. L. 102-552, Sec. 301(1), added subpar. 
(C) and struck out former subpar. (C) which read as follows:
    ``(C) Payment of principal.--After the end of the 15-year period 
beginning on the date of the issuance of any obligation issued to carry 
out this subsection, the banks operating under this chapter shall pay to 
the Financial Assistance Corporation, on demand, an amount equal to the 
outstanding principal of such obligation. Each bank shall pay a 
proportion of such principal equal to--
        ``(i) the average accruing loan volume of the bank for the 
    preceding 15 years; divided by
        ``(ii) the average accruing loan volume of all banks of the 
    System for the same period.''
    Subsec. (e)(3)(D). Pub. L. 102-552, Sec. 301(2), (3), added subpar. 
(D) and redesignated former subpar. (D) as (E).
    Subsec. (e)(3)(E). Pub. L. 102-552, Sec. 301(2), (4), redesignated 
subpar. (D) as (E) and inserted before period at end ``, nor shall the 
obligation to make future annuity payments to the Financial Assistance 
Corporation under subparagraph (D) be considered a liability of any 
System bank''.
    1988--Subsec. (a). Pub. L. 100-399, Sec. 201(k), inserted in heading 
``Assets and''.
    Subsec. (e)(5). Pub. L. 100-399, Sec. 201(l), inserted ``activation 
of'' after ``instruments,'' and struck out closing quotation mark and 
following period, which for purposes of codification had been previously 
struck out requiring no change in text.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-399 effective as if enacted immediately 
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988, see 
section 1001(a) of Pub. L. 100-399, set out as a note under section 2002 
of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 2278b-1, 2278b-6, 2278b-9, 
2278b-11 of this title.
