12 U.S.C. § 2162 — Protection of borrower stock

(a) Despite other provisions of this chapter, when a Farm Credit^* System institution retires eligible borrower stock as this chapter allows, it must retire it at par value. (b) This does not affect an institution's power to retire or cancel borrower stock at par value against a defaulted loan, cancel it under section 2202b, or apply the par value of stock frozen in a liquidation against debt owed to a System association from or connected with that liquidation. (c)(1) If liquidation prevents an institution from retiring eligible stock at par value, the Farm Credit System Insurance Corporation, as receiver, must retire it at par value as the institution would have in ordinary business. (c)(2) The Corporation must use enough money from the Farm Credit Insurance Fund to carry out this section. (d)(1) "Borrower stock" means voting or nonvoting stock, equivalent guaranty-fund contributions, participation certificates, allocated equities, and similar equities issued by a System institution, subject to retirement under a revolving cycle, and held by someone other than a System institution. (d)(2) "Eligible borrower stock" means borrower stock outstanding on January 6, 1988; issued or allocated after that date but before the earlier of the institution's stockholder approval of capitalization requirements under section 2154a or nine months after that date; frozen after January 1, 1983 and before January 6, 1988 by an institution later placed in liquidation; or retired below par value by an institution placed in liquidation after January 1, 1983 and before January 6, 1988. (d)(3) "Institution" means a bank or association chartered under this chapter. (d)(4) "Par value" means par value for stock; face or equivalent value for participation certificates and other equities or interests not in subparagraph (C); and, for participation certificates and allocated equities subject to a revolving-cycle retirement but elected for out-of-order retirement against a defaulted loan or otherwise under this chapter, par or face value discounted at the institution's rate to reflect present value on the retirement date.