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U.S. Code as of:
01/19/04
Section 1431. Powers and duties of banks
(a) Borrowing money; issuing bonds and debentures; general powers
Each Federal Home Loan Bank shall have power, subject to rules
and regulations prescribed by the Board, to borrow and give
security therefor and to pay interest thereon, to issue debentures,
bonds, or other obligations upon such terms and conditions as the
Board may approve, and to do all things necessary for carrying out
the provisions of this chapter and all things incident thereto.
(b) Issuance of consolidated Federal Home Loan Bank debentures;
restrictions
The Board may issue consolidated Federal Home Loan Bank
debentures which shall be the joint and several obligations of all
Federal Home Loan Banks organized and existing under this chapter,
in order to provide funds for any such bank or banks, and such
debentures shall be issued upon such terms and conditions as the
Board may prescribe. No such debentures shall be issued at any time
if any of the assets of any Federal Home Loan Bank are pledged to
secure any debts or subject to any lien, and neither the Board nor
any Federal Home Loan Bank shall have power to pledge any of the
assets of any Federal Home Loan Bank, or voluntarily to permit any
lien to attach to the same while any of such debentures so issued
are outstanding. The debentures issued under this section and
outstanding shall at no time exceed five times the total paid-in
capital of all the Federal Home Loan Banks as of the time of the
issue of such debentures. It shall be the duty of the Board not to
issue debentures under this section in excess of the notes or
obligations of member institutions held and secured under section
1430(a) of this title by all the Federal Home Loan Banks.
(c) Issuance of Federal Home Loan Bank bonds
At any time that no debentures are outstanding under this
chapter, or in order to refund all outstanding consolidated
debentures issued under this section, the Board may issue
consolidated Federal Home Loan Bank bonds which shall be the joint
and several obligations of all the Federal Home Loan Banks, and
shall be secured and be issued upon such terms and conditions as
the Board may prescribe.
(d) Additional or substituted collateral on adjustment of equities
The Board shall have full power to require any Federal Home Loan
Bank to deposit additional collateral or to make substitutions of
collateral or to adjust equities between the Federal Home Loan
Banks.
(e) Acceptance of deposits; restrictions on transaction of banking
business; collection and settlement of checks, drafts, etc.;
charges; rules and regulations
(1) Each Federal Home Loan Bank shall have power to accept
deposits made by members of such bank or by any other Federal Home
Loan Bank or other instrumentality of the United States, upon such
terms and conditions as the Board may prescribe, but no Federal
Home Loan Bank shall transact any banking or other business not
incidental to activities authorized by this chapter.
(2)(A) The Board may, subject to such rules and regulations,
including definitions of terms used in this paragraph, as the Board
shall from time to time prescribe, authorize Federal Home Loan
Banks to be drawees of, and to engage in, or be agents or
intermediaries for, or otherwise participate or assist in, the
collection and settlement of (including presentment, clearing, and
payment of, and remitting for), checks, drafts, or any other
negotiable or nonnegotiable items or instruments of payment drawn
on or issued by members of any Federal Home Loan Bank or by
institutions which are eligible to make application to become
members pursuant to section 1424 of this title, and to have such
incidental powers as the Board shall find necessary for the
exercise of any such authorization.
(B) A Federal Home Loan Bank shall make charges, to be determined
and regulated by the Board consistent with the principles set forth
in section 248a(c) of this title, or utilize the services of, or
act as agent for, or be a member of, a Federal Reserve bank,
clearinghouse, or any other public or private financial institution
or other agency, in the exercise of any powers or functions
pursuant to this paragraph.
(C) The Board is authorized, with respect to participation in the
collection and settlement of any items by Federal Home Loan Banks,
and with respect to the collection and settlement (including
payment by the payor institution) of items payable by Federal
savings and loan associations and Federal mutual savings banks, to
prescribe rules and regulations regarding the rights, powers,
responsibilities, duties, and liabilities, including standards
relating thereto, of such Federal Home Loan Banks, associations, or
banks and other parties to any such items or their collection and
settlement. In prescribing such rules and regulations, the Board
may adopt or apply, in whole or in part, general banking usage and
practices, and, in instances or respects in which they would
otherwise not be applicable, Federal Reserve regulations and
operating letters, the Uniform Commercial Code, and clearinghouse
rules.
(f) Rediscount of notes held by other banks; purchase of bonds of
other banks
The Board is authorized and empowered to permit,,(!1) to
require,(!1) Federal Home Loan Banks, upon such terms and
conditions as the Board may prescribe, to rediscount the discounted
notes of members held by other Federal Home Loan Banks, or to make
loans to, or make deposits with, such other Federal Home Loan
Banks, or to purchase any bonds or debentures issued under this
section.
(g) Reserves
Each Federal Home Loan Bank shall at all times have at least an
amount equal to the current deposits received from its members
invested in (1) obligations of the United States, (2) deposits in
banks or trust companies, (3) advances with a maturity of not to
exceed five years which are made to members, upon such terms and
conditions as the Board may prescribe, and (4) advances with a
maturity of not to exceed five years which are made to members
whose creditor liabilities (not including advances from the Federal
home loan bank) do not exceed 5 per centum of their net assets, and
which may be made without the security of home mortgages or other
security, upon such terms and conditions as the Board may
prescribe.
(h) Investment of surplus funds
Such part of the assets of each Federal Home Loan Bank (except
reserves and amounts provided for in subsection (g) of this
section) as are not required for advances to members, may be
invested, to such extent as the bank may deem desirable and subject
to such regulations, restrictions, and limitations as may be
prescribed by the Board, in obligations of the United States, in
obligations, participations, or other instruments of or issued by
the Federal National Mortgage Association or the Government
National Mortgage Association, in mortgages, obligations, or other
securities which are or ever have been sold by the Federal Home
Loan Mortgage Corporation pursuant to section 1454 or section 1455
of this title, in the stock of the Federal National Mortgage
Association, in stock, obligations, or other securities of any
small business investment company formed pursuant to section 681 of
title 15, for the purpose of aiding members of the Federal Home
Loan Bank System, and in such securities as fiduciary and trust
funds may be invested in under the laws of the State in which the
Federal Home Loan Bank is located.
(i) Treasury purchase of banks' obligations; exercise of authority
The Secretary of the Treasury is authorized in his discretion to
purchase any obligations issued pursuant to this section, as
heretofore, now, or hereafter in force and for such purpose the
Secretary of the Treasury is authorized to use as a public-debt
transaction the proceeds of the sale of any securities hereafter
issued under chapter 31 of title 31, as now or hereafter in force,
and the purposes for which securities may be issued under chapter
31 of title 31, as now or hereafter in force, are extended to
include such purchases. The Secretary of the Treasury may, at any
time, sell, upon such terms and conditions and at such price or
prices as he shall determine, any of the obligations acquired by
him under this subsection. All redemptions, purchases, and sales by
the Secretary of the Treasury of such obligations under this
subsection shall be treated as public-debt transactions of the
United States. The Secretary of the Treasury shall not at any time
purchase any obligations under this paragraph if such purchase
would increase the aggregate principal amount of his then
outstanding holdings of such obligations under this paragraph to an
amount greater than $4,000,000,000. Each purchase of obligations by
the Secretary of the Treasury under this subsection shall be upon
terms and conditions as shall be determined by the Secretary of the
Treasury and shall bear such rate of interest as may be determined
by the Secretary of the Treasury taking into consideration the
current average market yield for the month preceding the month of
such purchase on outstanding marketable obligations of the United
States.
In addition to obligations authorized to be purchased by the
preceding paragraph, the Secretary of the Treasury is authorized to
purchase any obligations issued pursuant to this section in amounts
not to exceed $2,000,000,000. The authority provided in this
paragraph shall expire August 10, 1975.
Notwithstanding the foregoing, the authority provided in this
subsection may be exercised during any calendar quarter beginning
after October 28, 1974, only if the Secretary of the Treasury and
the Chairperson of the Board certify to the Congress that (1)
alternative means cannot be effectively employed to permit members
of the Federal Home Loan Bank System to continue to supply
reasonable amounts of funds to the mortgage market, and (2) the
ability to supply such funds is substantially impaired because of
monetary stringency and a high level of interest rates. Any funds
borrowed under this subsection shall be repaid by the Home Loan
Banks at the earliest practicable date.
(j) Audits
Notwithstanding the provisions of section 9105(a)(1)(B) (!2) of
title 31, audits by the General Accounting Office of the financial
transactions of a Federal Home Loan Bank shall not be limited to
periods during which Government capital has been invested therein.
The provisions of sections 9107(c)(2) and 9108(d)(1) of title 31
shall not apply to any Federal Home Loan Bank.
(k) Bank loans to SAIF
(1) Loans authorized
Subject to paragraph (3), the Federal Home Loan Banks may, upon
the request of the Federal Deposit Insurance Corporation, make
loans to such Corporation for the use of the Savings Association
Insurance Fund.
(2) Liability of the Fund
Any loan by a Federal Home Loan Bank pursuant to paragraph (1)
shall be a direct liability of the Savings Association Insurance
Fund.
(3) Interest on and security for such loans
Any loan by a Federal Home Loan Bank pursuant to paragraph (1)
shall -
(A) bear a rate of interest not less than such Bank's current
marginal cost of funds, taking into account the maturities
involved; and
(B) be adequately secured.
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