42 U.S.C. § 291j–6 — Loan guarantee and loan fund

submitted 82 years ago by Pub. L. 91-296 to r/title-42-THE-PUBLIC-HEALTH-AND-WELFARE · 668 words · no verdicts yet

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This section sets up a special Treasury fund to pay for loan guarantees, interest subsidies, and direct public loans. If the fund ever runs short, the Secretary can borrow more money from the Treasury by issuing government notes.

(a)(1) This section creates a "fund" in the U.S. Treasury that the Secretary can use, without any fiscal-year time limit, in whatever amounts Congress appropriates, to (i) meet the government's obligations under loan guarantees it has issued, (ii) pay interest subsidies on guaranteed nonprofit loans, (iii) make direct loans to public agencies that will later be sold and guaranteed, (iv) pay interest related to those loans, and (v) buy back sold and guaranteed public-agency loans if needed. Congress is authorized to appropriate whatever capital the fund needs. To the extent Congress authorizes it, interest payments, principal repayments, and any other money or property the Secretary gets from running this part — including proceeds from selling assets — go into the fund. (2) Money in the fund can only be used for direct loans to public agencies if it was specifically appropriated for that purpose under section 291j–7, or came from authorized proceeds of selling such loans. (b) If the fund doesn't have enough money to cover the Secretary's obligations — interest payments on guaranteed nonprofit loans, meeting the guarantees themselves, interest subsidies on public-agency loans, default payments to loan purchasers, or repurchasing sold public-agency loans — the Secretary may issue Treasury notes or similar obligations, in whatever forms, amounts, and terms the Secretary and the Secretary of the Treasury agree on, limited to what Congress has appropriated for this purpose. These notes bear interest set by the Secretary of the Treasury, based on comparable-maturity Treasury securities. The Secretary of the Treasury must buy these notes, using proceeds from selling regular government securities, and can later resell them; all these transactions count as ordinary public debt transactions. Money borrowed this way goes into the fund, and the notes get repaid out of the fund.

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

(a)

(1)

There is hereby established in the Treasury a loan guarantee and loan fund (hereinafter in this section referred to as the “fund”) which shall be available to the Secretary without fiscal year limitation, in such amounts as may be specified from time to time in appropriations Acts, (i) to enable him to discharge his responsibilities under guarantees issued by him under this part, (ii) for payment of interest on the loans to nonprofit agencies which are guaranteed, (iii) for direct loans to public agencies which are sold and guaranteed, (iv) for payment of interest with respect to such loans, and (v) for repurchase by him of direct loans to public agencies which have been sold and guaranteed. There are authorized to be appropriated to the fund from time to time such amounts as may be necessary to provide capital required for the fund. To the extent authorized from time to time in appropriation Acts, there shall be deposited in the fund amounts received by the Secretary as interest payments or repayments of principal on loans and any other moneys, property, or assets derived by him from his operations under this part, including any moneys derived from the sale of assets.

(2)

Of the moneys in the fund, there shall be available to the Secretary for the purpose of making of direct loans to public agencies only such sums as shall have been appropriated for such purpose pursuant to section 291j–7 of this title or sums received by the Secretary from the sale of such loans (in accordance with such section) and authorized in appropriations Acts to be used for such purpose.

(b)

If at any time the moneys in the fund are insufficient to enable the Secretary to discharge his responsibilities under this part—

(i)

to make payments of interest on loans to nonprofit private agencies which he has guaranteed under this part;

(ii)

to otherwise comply with guarantees under this part of loans to nonprofit private agencies;

(iii)

to make payments of interest subsidies with respect to loans to public agencies which he has made, sold, and guaranteed under this part;

(iv)

in the event of default by public agencies to make payments of principal and interest on loans which the Secretary has made, sold, and guaranteed, under this part, to make such payments to the purchaser of such loan;

(v)

to repurchase loans to public agencies which have been sold and guaranteed under this part,

he is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury, but only in such amounts as may be specified from time to time in appropriations Acts. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for that purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under that chapter, are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under this subsection shall be deposited in the fund and redemption of such notes and obligations shall be made by the Secretary from such fund.

Source credit: (July 1, 1944, ch. 373, title VI, § 626, as added Pub. L. 91–296, title II, § 201, June 30, 1970, 84 Stat. 347.)

history & why it existsrecord from the source credit

1944Enacted · Pub. L. 91-296 · 84 Stat. 347

A history note hasn’t been published yet. The record shows enactment by Pub. L. 91-296 on 1944-07-01.

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