---
kind: "section"
citation: "12 U.S.C. § 2277a–10"
title: "12"
title_heading: "Banks and Banking"
number: "2277a–10"
heading: "Powers of Corporation with respect to troubled insured System banks"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/2277a-10"
units:
  - "Chapter 23 — Farm Credit System"
  - "Subchapter V — Farm Credit Administration Organization"
  - "Part E — Farm Credit System Insurance Corporation"
---

# §2277a–10. Powers of Corporation with respect to troubled insured System banks

- (a) **Authority to provide assistance—**
  - (1) **Stand-alone assistance—** The [Corporation](/usc/12/2277a.md?p=2), in its sole discretion and on such terms and conditions as the [Board of Directors](/usc/12/2277a.md?p=1) may prescribe, may make loans to, purchase the assets or securities of, assume the liabilities of, or make contributions to, any [insured System bank](/usc/12/2277a.md?p=4) if such action is taken—
    - (A) to prevent the placing of the bank in receivership;
    - (B) to restore the bank to normal operation; or
    - (C) to reduce the risk to the [Corporation](/usc/12/2277a.md?p=2) posed by the bank when severe financial conditions threaten the stability of a significant number of [insured System banks](/usc/12/2277a.md?p=4) or of [insured System banks](/usc/12/2277a.md?p=4) possessing significant financial resources.
  - (2) **Facilitation of mergers or consolidation—**
    - (A) **In general—** To facilitate a merger or consolidation of a qualifying [insured System bank](/usc/12/2277a.md?p=4), the sale of assets of such [insured System bank](/usc/12/2277a.md?p=4) to another [insured System bank](/usc/12/2277a.md?p=4), the assumption of such [insured System bank](/usc/12/2277a.md?p=4)’s liabilities by such other [insured System bank](/usc/12/2277a.md?p=4), or the acquisition of the stock of such [insured System bank](/usc/12/2277a.md?p=4) by such other [insured System bank](/usc/12/2277a.md?p=4), the [Corporation](/usc/12/2277a.md?p=2), in its sole discretion and on such terms and conditions as the [Board of Directors](/usc/12/2277a.md?p=1) may prescribe, may—
      - (i) purchase any such assets or assume any such liabilities;
      - (ii) make loans or contributions to, or purchase debt securities of, such other [insured System bank](/usc/12/2277a.md?p=4);
      - (iii) guarantee such other [insured System bank](/usc/12/2277a.md?p=4) against loss by reason of such other [insured System bank](/usc/12/2277a.md?p=4)’s merging or consolidating with, or assuming the liabilities and purchasing the assets of, such [insured System bank](/usc/12/2277a.md?p=4); or
      - (iv) take any combination of the actions referred to in the preceding clauses.
    - (B) **Qualifying insured System bank—** For purposes of [subparagraph (A)](#a-2-A), the term “qualifying [insured System bank](/usc/12/2277a.md?p=4)” means any [insured System bank](/usc/12/2277a.md?p=4) that—
      - (i) is in receivership;
      - (ii) is, in the judgment of the [Board of Directors](/usc/12/2277a.md?p=1), in danger of being placed in receivership; or
      - (iii) is, in the sole discretion of the [Corporation](/usc/12/2277a.md?p=2), an [insured System bank](/usc/12/2277a.md?p=4) that, when severe financial conditions exist that threaten the stability of a significant number of [insured System banks](/usc/12/2277a.md?p=4) or of [insured System banks](/usc/12/2277a.md?p=4) possessing significant financial resources, requires assistance under [subparagraph (A)](#a-2-A) to lessen the risk to the [Corporation](/usc/12/2277a.md?p=2) posed by such [insured System bank](/usc/12/2277a.md?p=4) under such threat of instability.
  - (3) **Limitation—**
    - (A) **Least-cost resolution—** Assistance may not be provided to an [insured System bank](/usc/12/2277a.md?p=4) under this subsection unless the means of providing the assistance is the least costly means of providing the assistance by the Farm [Credit](/usc/12/5481.md?p=7) Insurance Fund of all possible alternatives available to the [Corporation](/usc/12/2277a.md?p=2), including liquidation of the bank (including paying the [insured obligations](/usc/12/2277a.md?p=3) issued on behalf of the bank). Before making a least-cost determination under this subparagraph, the [Corporation](/usc/12/2277a.md?p=2) shall accord such other [insured System banks](/usc/12/2277a.md?p=4) as the [Corporation](/usc/12/2277a.md?p=2) determines to be appropriate the opportunity to submit information relating to the determination.
    - (B) **Determining least costly approach—** In determining the least costly alternative under [subparagraph (A)](#a-3-A), the [Corporation](/usc/12/2277a.md?p=2) shall—
      - (i) evaluate alternatives on a present-value basis, using a reasonable discount rate;
      - (ii) document the evaluation and the assumptions on which the evaluation is based; and
      - (iii) retain the documentation for not less than 5 years.
    - (C) **Time of determination—**
      - (i) **General rule—** For purposes of this subsection, the determination of the costs of providing any assistance under any provision of this section with respect to any [insured System bank](/usc/12/2277a.md?p=4) shall be made as of the date on which the [Corporation](/usc/12/2277a.md?p=2) makes the determination to provide the assistance to the [institution](/usc/12/2271.md?p=3) under this section.
      - (ii) **Rule for liquidations—** For purposes of this subsection, the determination of the costs of liquidation of any [insured System bank](/usc/12/2277a.md?p=4) shall be made as of the earliest of—
        - (I) the date on which a conservator is appointed for the [insured System bank](/usc/12/2277a.md?p=4);
        - (II) the date on which a receiver is appointed for the [insured System bank](/usc/12/2277a.md?p=4); or
        - (III) the date on which the [Corporation](/usc/12/2277a.md?p=2) makes any determination to provide any assistance under this section with respect to the [insured System bank](/usc/12/2277a.md?p=4).
    - (D) **Rule for stand-alone assistance—** Before providing any assistance under [paragraph (1)](#a-1), the [Corporation](/usc/12/2277a.md?p=2) shall evaluate the adequacy of managerial resources of the [insured System bank](/usc/12/2277a.md?p=4). The continued service of any [director](/usc/12/2279bb.md?p=3) or senior ranking officer who serves in a policymaking role for the assisted [insured System bank](/usc/12/2277a.md?p=4), as determined by the [Corporation](/usc/12/2277a.md?p=2), shall be subject to approval by the [Corporation](/usc/12/2277a.md?p=2) as a condition of assistance.
    - (E) **Discretionary determinations—** Any determination that the [Corporation](/usc/12/2277a.md?p=2) makes under this paragraph shall be in the sole discretion of the [Corporation](/usc/12/2277a.md?p=2).
    - (F) **Purchase of stock—** The [Corporation](/usc/12/2277a.md?p=2) may not use its authority under this subsection to purchase any stock of an [insured System bank](/usc/12/2277a.md?p=4). The preceding sentence shall not be construed to limit the ability of the [Corporation](/usc/12/2277a.md?p=2) to enter into and enforce covenants and agreements that it determines to be necessary to protect the financial interests of the [Corporation](/usc/12/2277a.md?p=2).
  - (4) **Subordination—** Any assistance provided under this subsection may be in subordination to the rights of owners of obligations and other creditors.
  - (5) **Reports—** The [Corporation](/usc/12/2277a.md?p=2), in its annual report to Congress, shall report the total amount saved, or it estimates to be saved, by the [Corporation](/usc/12/2277a.md?p=2) exercising the authority provided to the [Corporation](/usc/12/2277a.md?p=2) in this subsection.
- (b) **Authority to pledge or sell assets—** The [Corporation](/usc/12/2277a.md?p=2), in its discretion, may make loans on the security of, or may purchase, and liquidate or sell, any part of the assets of, any [insured System bank](/usc/12/2277a.md?p=4) that is placed in receivership because of the inability of the bank to pay principal or interest on any of its notes, bonds, debentures, or other obligations in a timely manner.
- (c) **Subrogation—**
  - (1) **In general—** On the payment to an owner of an [insured obligation](/usc/12/2277a.md?p=3) issued on behalf of an [insured System bank](/usc/12/2277a.md?p=4) in receivership, the [Corporation](/usc/12/2277a.md?p=2) shall be subrogated to all rights of the owner against the bank to the extent of the payment.
  - (2) **Receipt of dividends—** Subrogation under [paragraph (1)](#c-1) shall include the right on the part of the [Corporation](/usc/12/2277a.md?p=2) to receive the same dividends from the proceeds of the assets of the bank as would have been payable to the owner on a claim for the [insured obligation](/usc/12/2277a.md?p=3).
- (d) **Right to assets—** Any agreement that shall diminish or defeat the right, title, or interest of the [Corporation](/usc/12/2277a.md?p=2) in any asset acquired by such [Corporation](/usc/12/2277a.md?p=2) under this section, either as security for a loan or by purchase, shall not be valid against the [Corporation](/usc/12/2277a.md?p=2) unless the agreement—
  - (1) is in writing;
  - (2) is executed by the bank and the [person](/usc/12/5481.md?p=19) or [persons](/usc/12/5481.md?p=19) claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank;
  - (3) has been approved by the [board of directors](/usc/12/2277a.md?p=1) of the bank or its loan committee, which approval shall be reflected in the minutes of the [board](/usc/12/1861.md?p=b-3) or committee; and
  - (4) has been, continuously, from the time of its execution, an official record of the bank.
- (e) **Insured System bank—** As used in this section, the terms “[insured System bank](/usc/12/2277a.md?p=4)” and “bank” include each production [credit](/usc/12/5481.md?p=7) association and other association making direct loans under the authority provided under [section 2279b of this title](/usc/12/2279b.md).
- (f) **Effective date—** The [Corporation](/usc/12/2277a.md?p=2) shall not exercise any authority under this section during the 5-year period prior to January 1, 1993.

## Source credit

(Pub. L. 92–181, title V, § 5.61, as added Pub. L. 100–233, title III, § 302, Jan. 6, 1988, 101 Stat. 1616; amended Pub. L. 101–220, § 6(b)(4), Dec. 12, 1989, 103 Stat. 1880; Pub. L. 101–624, title XVIII, § 1836(b), Nov. 28, 1990, 104 Stat. 3833; Pub. L. 104–105, title II, § 217, Feb. 10, 1996, 110 Stat. 179.)

## Notes

### Editorial Notes

### Amendments

1996—Subsec. (a)(1). Pub. L. 104–105, § 217(b)(1), substituted “Stand-alone assistance” for “In general” in par. heading.

Subsec. (a)(2). Pub. L. 104–105, § 217(b)(2)(A), substituted “Facilitation of mergers or consolidation” for “Enumerated powers” in par. heading.

Subsec. (a)(2)(A). Pub. L. 104–105, § 217(b)(2)(B), substituted “In general” for “Facilitation of mergers or consolidation” in subpar. heading.

Subsec. (a)(3)(A). Pub. L. 104–105, § 217(a)(2), added subpar. (A) and struck out heading and text of former subpar. (A). Text read as follows: “Assistance shall not be provided to an insured System bank under this subsection if the amount of such assistance exceeds an amount determined by the Corporation to be the cost of liquidating the bank (including paying the insured obligations issued on behalf of the bank). This subparagraph shall not apply to the provision of assistance to a bank if the Corporation determines that the continued operation of the bank is essential to provide adequate agricultural credit services in the area of operations of the bank.”

Subsec. (a)(3)(B) to (F). Pub. L. 104–105, § 217(a), added subpars. (B) to (E) and redesignated former subpar. (B) as (F).

1990—Subsec. (f). Pub. L. 101–624 substituted “prior to January 1, 1993” for “beginning on the date of the enactment of this part”.

1989—Subsec. (e). Pub. L. 101–220 inserted “and other association making direct loans under the authority provided under section 2279b of this title,” after “production credit association”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1989 Amendment

Amendment by Pub. L. 101–220 effective for insurance premiums due to the Farm Credit System Insurance Corporation under this chapter on or after Jan. 1, 1990, based on the loan volume of each bank for each calendar year beginning with calendar year 1989, and effective for the calculation of the initial premium payment required under section 2277a–5(c) of this title, see section 6(c) of Pub. L. 101–220, set out as a note under section 2020 of this title.