7 U.S.C. § 940c — Cushion of credit payments program

submitted 90 years ago by Pub. L. 100-203 to r/title-7-AGRICULTURE · 502 words · no verdicts yet

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This section created voluntary cushion-of-credit accounts for borrowers, sets their interest and permitted uses, and directs related fund accounting. New deposits ended December 20, 2018, and special prepayment rules applied through September 30, 2020.

(a) Establishment. (1) The Secretary must develop and promote a program encouraging borrowers to voluntarily deposit money into cushion-of-credit accounts in the Rural Electrification and Telephone Revolving Fund. No deposits under that program may be made after December 20, 2018. (2) Account amounts generally earn the borrower 5 percent annual interest. Instead, they earn 4 percent in fiscal year 2021 and the applicable one-year Treasury rate afterward. (3) A borrower may reduce its account balance only to make scheduled payments on chapter loans or guarantees. From December 20, 2018, through September 30, 2020, it could also choose to use a reduction to prepay chapter loans. No prepayment premium may be imposed on the part prepaid this way. Despite 2 U.S.C. § 661c, the Treasury Secretary must make available from otherwise unappropriated Treasury funds whatever is needed for loan-modification costs defined in 2 U.S.C. § 661a. (b) Uses. (1) Cushion payments are held in the Fund as account cash balances. All balances from cushion payments, loan payments, and other sources earn the Fund interest at the weighted average rate on the Fund’s outstanding certificates of beneficial ownership. That interest is credited to the Fund as an offset against interest the Fund pays on those certificates. (2) The Secretary must maintain a rural economic development subaccount. Each month it receives an amount calculated by multiplying outstanding cushion payments made after October 1, 1987, by the difference, converted monthly, between the average weighted rate paid on the Fund’s outstanding certificates and 5 percent.

the actual law source: uscode.house.gov ↗public domain

(a) Establishment

(1) In general

(A) Development and promotion of program

The Secretary shall develop and promote a program to encourage borrowers to voluntarily make deposits into cushion of credit accounts established within the Rural Electrification and Telephone Revolving Fund.

(B) Termination

Effective on December 20, 2018, no deposits may be made under subparagraph (A).

(2) Interest

(A) In general

Amounts in each cushion of credit account shall accrue interest to the borrower at a rate of 5 percent per annum.

(B) Reduction

Notwithstanding subparagraph (A), amounts in each cushion of credit account shall accrue interest to the borrower at a rate equal to—

(i)

4 percent per annum in fiscal year 2021; and

(ii)

the then applicable 1-year Treasury rate thereafter.

(3) Balance

(A) In general

A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guaranteed under this chapter.

(B) Prepayment

Notwithstanding subparagraph (A) and subject to subparagraph (C), beginning on December 20, 2018, and ending with September 30, 2020, a borrower may, at the sole discretion of the borrower, reduce the balance of its cushion of credit account if the amount obtained from the reduction is used to prepay loans made or guaranteed under this chapter.

Notwithstanding any other provision of this chapter, no prepayment premium shall be imposed or collected with respect to that portion of a loan that is prepaid by a borrower in accordance with subparagraph (B).

(D) Mandatory funding

Notwithstanding section 661c of title 2, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall make available such sums as necessary to cover any loan modification costs as defined in section 661a of title 2.

(b) Uses of cushion of credit payments

(1) In general

(A) Cash balance

Cushion of credit payments shall be held in the Rural Electrification and Telephone Revolving Fund as a cash balance in the cushion of credit accounts of borrowers.

(B) Interest

All cash balance amounts (obtained from cushion of credit payments, loan payments, and other sources) held by the Fund shall bear interest to the Fund at a rate equal to the weighted average rate on outstanding certificates of beneficial ownership issued by the Fund.

The amount of interest accrued on the cash balances shall be credited to the Fund as an offsetting reduction to the amount of interest paid by the Fund on its certificates of beneficial ownership.

(2) Rural economic development subaccount

The Secretary shall maintain a subaccount within the Rural Electrification and Telephone Revolving Fund to which shall be credited, on a monthly basis, a sum determined by multiplying the outstanding cushion of credit payments made after October 1, 1987, by the difference (converted to a monthly basis) between the average weighted interest rate paid on outstanding certificates of beneficial ownership issued by the Fund and 5 percent.

Source credit: (May 20, 1936, ch. 432, title III, § 313, as added Pub. L. 100–203, title I, § 1403, Dec. 22, 1987, 101 Stat. 1330–21; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 115–334, title VI, §§ 6503, 6504(b), Dec. 20, 2018, 132 Stat. 4772, 4773.)

history & why it existsrecord from the source credit

1936Enacted · Pub. L. 100-203 · 101 Stat. 1330
1994Amended · Pub. L. 103-354 · 108 Stat. 3221
2018Amended · Pub. L. 115-334 · 132 Stat. 4772, 4773

A history note hasn’t been published yet. The record shows enactment by Pub. L. 100-203 on 1936-05-20.

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