、

other six directors shall be appointed by the governor, of whom the successors of three first appointed shall be appointed from nominees selected by borrowers as provided in subsection (b) of this section. The terms of the directors first appointed shall be for one, two, and three years as designated by the governor at the time of appointment and their successors shall hold their offices during a term of three years, but a director appointed to fill a vacancy shall hold his office for the unexpired term of the director whose place he is selected to fill. Any appointed director may at any time be removed for cause by the governor. No compensation shall be paid any director as a director of the corporation but the corporation, subject to the approval of the governor, may allow directors a reasonable per diem and expenses.

(b) The successors of three of the directors first appointed shall be selected one each year by the governor from among individuals nominated by borrowers (except Banks for Cooperatives). The governor shall, not less than sixty days prior to the end of the term of any director whose successor is to be appointed from among nominees as herein provided, or as soon as practicable after a vacancy occurs in the office of such director other than by the expiration of his term, cause notice of the vacancy to be sent to each borrower eligible to vote for nominees. Each such borrower shall be eligible to cast one vote. The governor shall not count any ballot received after the expiration of thirty days after the sending of notice. From those (not exceeding three) receiving the highest number of votes, as shown by his count, the governor shall appoint the director. (June 16, 1933, c. 98, § 31, 48 Stat. 262.)

Person convicted of felony or adjudged liable in damages for fraud ineligible to be administrative or executive official of Central Bank for Cooperatives, see § 640i of this title. 12 U.S. C., § 1134h

Powers of board of directors; chairman of board.-The chairman of the board of the corporation shall be the executive officer of the corporation and the powers of the board of directors shall be such powers as may be prescribed in the charter and bylaws. (June 16, 1933, c. 98, § 32, 48 Stat. 262.)

Person convicted of felony or adjudged liable in damages for fraud ineligible to be administrative or executive official of Central Bank for Cooperatives, see § 640i of this title.

12 U. S. C., § 1134i

Capital stock.-The capital stock of the central bank shall be in such amount as the governor determines is required for the purpose of meeting the credit needs of eligible borrowers from the bank`under this subchapter, and the governor may from time to time increase or decrease such amount, subject to the limitations contained in sections 1134k and 1134m of this title in accordance with such needs. The stock of such bank shall be divided into shares of $100 each. Out of the revolving fund created under section 1141d of this title, the governor, on behalf of the United States, shall subscribe for and make payments for stock in the Central Bank and such payments shall be subject to call in whole or in part by the chairman of the Board of the Central Bank with the approval of the governor. (June 16, 1933, c. 98, § 33, 48 Stat. 262.)

12 U. S. C., § 1134j

Lending power; prevention of duplication of effort on the part of central bank and banks for cooperatives.-Subject to such terms and conditions as may be prescribed by the chairman of its board of directors, the Central Bank is authorized: (a) to make loans to cooperative associations as defined in Subchapter VII of this chapter, for any of the purposes and subject to the conditions and limitations set forth in such subchapter, as amended; (b) to make loans (by way of discount or otherwise) to banks for cooperatives organized under section 1134 of this title; (c) to buy from, and sell to, any such bank or any Federal intermediate credit bank any note, draft, bill of exchange, debenture, or other obligation, or any interest therein; and (d) to borrow from, and discount or rediscount paper with, any and all such banks and commercial banks.

The governor shall, by regulation or by prescribing the terms of the charters issued to the Central Bank for Cooperatives and the Banks for Cooperatives, or both, provide such limitations, as between the two type of banks, on the classes of borrowers to which loans may be made and the amount of the loans which may be made to individual borrowers, as will best insure the absence of duplication of effort by the two types of banks and will secure the greatest efficiency in extending the benefits of this subchapter to borrowers. (June 16, 1933, c. 98, §§ 34, 38, 48 Stat. 262, 264; June 3, 1935, c. 164, § 13, 49 Stat. 317; Aug. 19, 1937, c. 704, § 35, 50 Stat. 717.)

Instead of the words "this subchapter" in the last sentence, the United States Code uses "sections 1134b, 1134m and 1141d of this title." Loans on lands in drainage, irrigation, or conservancy districts, see § 773a of this title.

12 U. S. C., § 1134k

Ownership of stock by associations borrowing from bank; payment into bank's guaranty fund by associations not authorized to purchase stock. (a) Cooperative associations borrowing from the Central Bank shall be required to own, at the time the loan is made, an amount of stock of the bank equal in fair book value (not to exceed par), as determined by the bank, to $100 per $2,000 or fraction thereof of the amount of the loan, except that, in connection with any loan made on the security of commodities, the borrower shall be required to own, at the time the loan is made, only such amount of stock as may be prescribed by rules and regulations of the governor. Upon discharge of the loan, stock held by the borrowing association may be, and upon the concurrent or subsequent request of the borrowing association shall be, retired and canceled, and the association shall be paid therefor an amount equal to the amount paid for such stock or loaned to subscribe therefore, as the case may be, minus the pro rata impairment, if any, of capital and guaranty fund of the Central Bank, as determined by the Chairman of the Board of the Central Bank.

(b) In any case in which a cooperative association applying for a loan is not authorized, under the law of the State in which it is organized, to subscribe for stock in the Central Bank, the bank shall, in lieu of stock subscription, require the borrowing association to pay into a guaranty fund, or the bank may retain out of the amount of the loan and credit to the guaranty fund, an amount equal to the amount

stock if such association had been authorized to hold such stock. Upon discharge of its loan, the provisions of the last sentence of subsection (a) shall apply with respect to sums of such association in the guaranty fund in the same manner as if such sums were represented by stock.

(c) In any case where the debt of a borrower to the Central Bank is in default, the bank may, in accordance with rules and regulations prescribed by the governor, retire and cancel all or a part of the stock of the defaulting borrower at the fair book value thereof (not exceeding par), in total or partial liquidation of the debt, as the case may (June 16, 1933, c. 98, § 35, 48 Stat. 263; June 3, 1935, c. 164, § 15, 49 Stat. 318.)

12 U. S. C., § 11341

be

Earnings and reserves; guaranty fund; surplus; dividends to stockholders and subscribers to guaranty fund; application of dividends on Government-owned stock.-The Central Bank for Cooperatives shall, at the end of its fiscal year, apply the amount of its earnings in excess of operating expenses during such fiscal year, first, to making up any losses incurred; second, to the restoration of the amount of the impairment, if any, of capital and guaranty fund as determined by the chairman of the board; and at least 25 per centum of the remainder of such excess of earnings shall be applied to the creation and maintenance of a surplus equal to at least 25 per centum of the amount of the capital and guaranty fund. Any sums remaining may, with the approval of the chairman of the board, be devoted to the payment of dividends. Subscribers to the guaranty fund shall be entitled to dividends in the same amounts as subscribers to stock. No rate of dividend in excess of 7 per centum per annum shall be paid. Dividends on stock held by the governor, when paid, shall be credited to the revolving fund created under section 1141d of this title. (June 16, 1933, c. 98, § 36, 48 Stat. 263.)

12 U. S. C., § 1134m

Debentures; amount; security; preparation and issue; custody of collateral. The Central Bank is authorized to issue debentures, but the amount of debentures which may be outstanding may not exceed at any one time five times the paid-in capital and surplus of the bank. Such debentures shall be issued at such times and subject to such terms and conditions as the board of directors shall determine but shall bear such interest rates as may be fixed by the chairman of the board. Such debentures shall be secured by collateral which shall be at least equal in value to the amount of debentures outstanding and which shall consist of cash, direct obligations of the United States, or notes or other obligations discounted or purchased or representing loans made under section 1134j of this title. The provisions of law applicable to the preparation and issue of Federal intermediate credit bank debentures shall, so far as applicable, govern the preparation and issue of debentures issued under this section. The governor shall appoint a custodian of such collateral who shall have power subject to such rules and regulations as the governor may prescribe to approve and accept substitutions of collateral. (June 16, 1933, c. 98, § 37, 48 Stat. 263.)

SUBCHAPTER VI.-PROVISIONS COMMON TO PRODUC- TION CREDIT CORPORATIONS, PRODUCTION CREDIT ASSOCIATIONS, REGIONAL AND CENTRAL BANKS FOR COOPERATIVES

12 U.S. C., § 1138

General corporate powers.-The Central Bank for Cooperatives, and the Production Credit Corporations, the Production Credit Associations, and the Banks for Cooperatives, organized under subchapters IV and V of this chapter shall have succession, until dissolved in accordance with this subchapter or any other Act of Congress; shall have power to sue and be sued in any court, to adopt and use a corporate seal, to make contracts, to acquire, hold, and dispose of real and personal property necessary and incident to the conduct of their business, to prescribe fees and charges (which in any case shall be subject to the rules and regulations prescribed by the governor) for loans and other services; and shall have such other powers necessary and incident to carrying out their powers and duties under this subchapter or any other Act of Congress as may be provided by the governor in their charters or in any amendments thereto. Each such bank, association, or corporation shall, for the purposes of jurisdiction, be deemed a citizen of the State or District within which its principal office is located. No district court of the United States shall have jurisdiction of any action or suit by or against any Production Credit Corporation or Production Credit Association upon the ground that it was incorporated under this chapter or that the United States owns a majority of the stock in it, nor shall any district court of the United States within the farm credit district served by such association or corporation have jurisdiction by removal or otherwise of any suit by or against any such association or corporation except in cases by or against the United States or by or against any officer of the United States and except in cases by or against any receiver of any such corporation or association appointed in accordance with section 1138e of this title. (June 16, 1933, c. 98, § 60, 48 Stat. 266; Aug. 19, 1937, c. 704, § 5 (a), 50 Stat. 704.)

Financial control of corporations, see Chap. 14, Title 31, Money and Finance.

12 U. S. C., § 1138a

Examinations; assessments against corporations for cost of examinations.-At least once each year and at such other times as the governor deems necessary, the Central Bank for Cooperatives, and each Production Credit Corporation, Production Credit Association, and Bank for Cooperatives, organized under this chapter, shall be examined by examiners designated by the governor. The governor shall assess the cost of such examinations against the bank, association, or corporation examined, which shall pay such costs to the governor. The amount so assessed and unpaid shall be a prior lien on all assets of the bank, association, or corporation examined except on assets pledged to secure loans. (June 16, 1933, c. 98, § 61, 48 Stat. 267).

Auditing procedures and costs, see sections 850, 857, 858, and 866 of Title 31, Money and Finance.

12 U. S. C., § 1138b

Fiscal agents of United States.-The Central Bank for Cooperatives, the Production Credit Corporations, Production Credit Associations, the Federal Farm Mortgage Corporation, and Banks for Cooperatives, organized under this chapter, when designated for that purpose by the Secretary of the Treasury, shall act as fiscal agents of the United States Government and when acting as such shall perform such duties as shall be prescribed by the Secretary of the Treasury. (June 16, 1933, c. 98, § 62, 48 Stat. 267; Jan. 31, 1934, c. 7, § 11, 48 Stat. 347.)

12 U. S. C., § 1138c

Tax exemption; realty and tangible personalty as subject to taxation; termination of tax exemption after retirement of Government-owned stock.-The Central Bank for Cooperatives, and the Production Credit Corporations, Production Credit Associations, and Banks for Cooperatives, organized under this chapter, and their obligations, shall be deemed to be instrumentalities of the United States, and as such, any and all notes, debentures, bonds, and other such obligations issued by such banks, associations, or corporations shall be exempt both as to principal and interest from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States or by any State, Territorial, or local taxing authority. Such banks, associations, and corporations, their property, their franchises, capital, reserves, surplus, and other funds, and their income, shall be exempt from all taxation now or hereafter imposed by the United States or by any State, Territorial, or local taxing authority; except that any real property and any tangible personal property of such banks, associations, and corporations shall be subject to Federal, State, Territorial, and local taxation to the same extent as other similar property is taxed. The exemption provided herein shall not apply with respect to any Production Credit Association or its property or income after the stock held in it by the Production Credit Corporation has been retired, or with respect to the Central Bank for Cooperatives, or any Production Credit Corporation or Bank for Cooperatives, or its property or income after the stock held in it by the United States has been retired. (June 16, 1933, c. 98, § 63, 48 Stat. 267.)

United States obligations and evidences of ownership issued after March 27, 1942, as subject to Federal taxation. See section 742a of Title 31, Money and Finance.

12 U. S. C., § 1138e

Receivership; voluntary liquidation.-Upon default of any obligation of any Production Credit Corporation, Production Credit Association, or regional Bank for Cooperatives, such bank, association, or corporation may be declared insolvent and placed in the hands of a receiver by the governor and proceedings shall thereupon be had in accordance with the provisions of law relating to the insolvency of national farm loan associations. Any such bank, association, or corporation may, with the consent of the governor, liquidate voluntarily, but only in accordance with such rules and regulations as the governor may prescribe. (June 16, 1933, c. 98, § 65, 48 Stat. 269.)

Insolvency of national farm loan associations, see sections 961 et seq. of this title.