PUBLIC LAW
95-351—AUG.
20, 1978
92 STAT.
499
Public Law
95-351
95th Congress
An Act
National
Consumer
Cooperative Bank
Act
12
use
3001
note.
12
use
3001.
To provide for consumers a further means of minimizing the impact of inflation Aug. 20,
197a_
and economic depression by narrowing the price spread between costs to the [H.R. 2777]
producer and the consumer of needed goods, services, facilities, and com-
modities through the development and funding of specialized credit sources
for, and technical assistance to, self-help,
not-for-profit
cooperatives, and for
other purposes.
Be it enacted
hy
the
Se7iate arid
House of Representatives of the
United States of
America
in Congress
assembled^
That this Act may
be cited as the "National Consumer Cooperative Bank Act".
STATEMENT OF FINDINGS AND PURPOSE
SEC.
2. The economic and financial structure of this country in com-
bination with the Nation's natural resources and the productivity of
the American people has produced one of the highest average stand-
ards of living in the world. However, the Nation has been experienc-
ing inflation and unemployment together with an increasing gap
between producers' prices and consumers' purchasing power. This has
resulted in a growing number of our citizens, especially the elderly,
the poor, and the inner city resident, being unable to share in the
fruits
of our Nation's highly efficient economic system. The Congress finds
that user-owned cooperatives are a proven method for broadening
ownership and control of the economic organizations, increasing the
number of market participants, narrowing price spreads, raising the
quality of goods and services available to their membership, and build-
ing bridges between producers and consumers, and their members and
patrons. The Congress also finds that consumer and other types of
self-
help cooperatives have been hampered in their formation and growth
by lack of access to
adequate
cooperative credit
facilities
and lack of
technical assistance. Therefore, the Congress finds a need for the
establishment of a National Consumer Cooperative Bank which will
make available necessary financial and technical assistance to coopera-
tive self-help endeavors as a means of strengthening the Nation's
economy.
TITLE
I—NATIONAL
CONSUMER COOPERATIVE
BANK
CREATION AND CHARTER OF BANK
SEC.
101. There is hereby created and chartered a body corporate, 12
USC
3011.
the National Consumer Cooperative Bank, hereinafter referred to as
the "Bank", as an instrumentality of the United States, and until
otherwise provided, shall be a mixed ownership Government corpora-
tion. The Bank shall have perpetual existence unless and until its
charter is revoked or modified by Act of Congress. The right to revise,
amend, or modify the charter of the Bank is specifically and exclu-
sively reserved to the Congress. The principal office of the Bank shall
be in Washington, District of Columbia, and, for the purpose of
venue, shall be considered a resident
thereof.
It shall make loans and
92 STAT. 500 PUBLIC LAW
95-351—AUG.
20, 1978
offer its services throughout the United States, its territories and
possessions, and in the Commonwealth of Puerto Rico. The Bank
shall—
(1) encourage the development of new and existing coopera-
tives eligible for its assistance by providing specialized credit and
technical assistance;
(2) maintain broad-based control of the Bank by its voting
stockholders;
(3) encourage broad-based ownership, control, and active par-
ticipation by members in eligible
cooperatives;
(4) assist in improving the quality and availability of goods
and services to
consumers;
and
(5) encourage ownership of its equity securities by cooperatives
and others as provided in section 104, so that the date when all
of the Bank's class A stock owned by the United States has been
fully redeemed (the "Final Government Equity Redemption
Date") occurs as early as practicable.
GENERAL CORPORATE POWERS
12
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3012.
SEC.
102. The Bank shall have the power to make and service loans,
commitments for credit, guarantees, furnish financially related serv-
ices,
technical assistance and the results of research, issue its obliga-
tions within the limitations imposed by section 107 in such amounts,
at such times, and on such terms as the Bank may determine, and to
exercise the other powers and duties prescribed in this Act, and shall
have the power
to—
(1) operate under the direction of its Board of Directors;
(2) adopt, alter, and use a corporate seal, which shall be judi-
cially noted;
(3) elect by its Board of Directors a president, one or more
vice presidents, a secretary, a treasurer, and provide for such
other officers, employees, and agents as may be necessary, and
define their duties in accordance with regulations and standards
adopted by the Board, and require surety bonds or make other
provisions against losses occasioned by acts of employees;
(4) prescribe by its Board of Directors its bylaws not incon-
"
sistent with law, which shall establish the terms of office and the
procedure
for
election of elective
members;
provide in a manner
not inconsistent with this Act for the classes of its stock and the
manner in which its stock shall be issued, transferred, and
retired;
and prescribe the manner in which its officers, employees, and
agents are elected or selected, its property acquired, held and
transferred, its loans, commitments, other financial assistance,
guarantees and appraisals may be made, its general business con-
ducted, and the privilege granted it by law exercised and
enjoyed;
(5) enter into contracts and make advance, progress, or other
payments with respect to such contracts, without regard to the
31
use
529. provisions of section 3648 of the Revised
Statutes;
(6) sue and be sued in its corporate name and complain and
defend, in any court of competent
jurisdiction.
State or
Federal;
(7) acquire, hold, lease, mortgage, or dispose of, at public or
private sale, real and personal property and sell or exchange any
securities or obligations, and otherwise exercise all the usual inci-
dents of ownership of property necessary or convenient to its
PUBLIC LAW
95-351—AUG.
20, 1978
92 STAT. 501
31
use
529.
business:
Provided^
That any such acquisition or ownership of
real property shall not deprive a State or political subdivision
thereof of its civil or criminal jurisdiction in and over such prop-
erty or impair the civil rights of the inhabitants of such property
under Federal, State, or local
laws;
(8) obtain insurance against loss in connection with property
and other
assets;
(9) modify or consent to the modification with respect to the
rate of interest, time of payment of any installment of principal
or interest, security, or any other term of any contract or agree-
ment to which it is a party or has an interest pursuant to this
Act;
(10) utilize and act through any Federal, State, or local public
agency or instrumentality, or private agency or organization,
with the consent of the agency or organization concerned, and
contract with such agency, instrumentality, or organization for
furnishing or receiving technical services and benefits of research,
services,
funds
or
facilities;
and make advance, progress, or other
payments
wdth
respect to such contracts without regard to section
3648 of the Revised
Statutes;
(11) within the limitations of section 107, borrow money and
issue notes, bonds and debentures or other obligations individ-
ually or in concert with other financial institutions, agencies
or instrumentalities, of such character and such terms and con-
ditions and at rates of interest as may be
determined;
(12) issue certificates of indebtedness to its stockholders or
members and pay interest on
funds
left with the Bank, and accept
grants or interest
free
temporary use of
funds
made available to
it;
(13) participate with one or more other financial institutions,
agencies, instrumentalities, or foundations in loans or guarantees
under this Act on terms as may be agreed upon;
(14) accept guarantees from other agencies for which loans
made by the Bank may be
eligible;
(15) establish one or more branch offices and one or more advi-
sory councils in connection with any such branch offices, as may
from
time to time be authorized by the Board of
Directors;
(16) buy and sell obligations of, or insured by, the United
States or any agency or instrumentalities
thereof,
or securities
backed by the full faith and credit of any such agency or instru-
mentality and, after the final Government Equity Redemption
Date,
make such other investments as may be authorized by the
Board of
Directors;
(17) approve the salary scale of officers and employees of the Regulations.
Bank, in accordance with regulations and standards adopted by
the Board of Directors, without regard to the provisions of
chapter 51 and subchapter ITT of chapter 53 of such title relating
to classification and General Schedule pay rates, but, except as
otherwise provided in this Act, the General Schedule pay rates
shall be applicable until all class A stock held by the Secretary of
the Treasury has been
retired:
and
(18) have such other incidental powers as may be necessary
or expedient to carrv out its duties under this Act.
The stock or other securities or instruments issued by the Bank shall,
to the same extent as securities which are the direct obligations of the
United States, be "exempt securities" within the meaning of the laws
administered by the Securities and Exchange Commission.
5
use
5101
et
seq.
5
use
5331.
92 STAT. 502 PUBLIC LAW
95-351—AUG.
20, 1978
BOARD OF DIRECTORS
12
use
3013.
SEC.
103. (a) The Bank shall be governed by a Board of Directors
(hereinafter referred to as the "Board") which shall consist of thirteen
members. Subject to the provisions of subsection (b) of this section,
all members of the Board shall be appointed by the President, with
the advice and consent of the Senate, for terms of three years or
until their successors have been appointed and qualified. The Presi-
dent shall appoint seven
membere
of the Board from
an\ong
the
officers of the agencies and departments of the United States Govern-
ment
:
Provided^
That at any one time no more than one member shall
be
from
any one agency or department. The remaining members shall
be from the general public (and not from the officers or employees
of the United States Government) but shall have extensive experience
in the cooperative field representative of the following classes of
cooperatives: (1) housing, (2) consumer goods, (3) low-income coop-
eratives, (4) consumer services, and (5) all other eligible cooperatives,
and
for
these appointments the President shall consider nominees sub-
mitted by national associations of cooperatives. Any member appointed
by the President may be removed at any time with or without cause
by the President. If a vacancy occurs on the Board for any reason
other than a resignation pursuant to subsection (b) of this section,
a new member shall be appointed by the President to serve until the
next annual meeting of the Bank, at which time the vacancy shall be
filled for the remainder of the unexpired term by the President or
the holders of class B and class C stock, as provided in this section 104.
(b) At the first annual meeting occurring after the time when the
amount of paid-in capital of the Bank attributable to the shares of
class B stock and class C stock equals or exceeds $3,000,000, three
members of the Board appointed by the President from the general
public shall resign. Similarly, when the amount of paid-in capital
attributable to the shares of class B and class C stock equals or exceeds
SfilO,000,000
the terms of the other three members appointed by the
President
from
the general public shall terminate. An additional mem-
ber of the Board designated by the President (who shall be a member
who had been appointed by the President) shall resign at each of the
annual meetings occurring after the time when the amount of paid-in
capital attributable to the class B and class C stock equals or exceeds
seven-thirteenths and eight-thirteenths of the total amount of paid-in
capital of the Bank. As members of the Board resign in accordance
with the foregoing provisions, the directorships vacated shall be
deemed shareholder directorships and shall be filled by the holders of
class B stock and class C stock in accordance with the provisions of
subsection (c) of this section. Five remaining members of the Board
appointed by the President shall resign on the Final Government
Equity Redemption Date. Thereafter, one member of the Board shall
continue to be appointed by the President
from
among proprietors of
small business concerns, as defined under section 3 of the Small Busi-
15
use
632. ness Act, which are manufacturers or retailers.
(c) At all elections of Directors by holders of class B stock and
class C stock, nominations shall be made by the classes of eligible
cooperatives specified in subsection (a). Vacant shareholder director-
ships shall be filled, whether by appointment or election, so that at
any time when there are three or more shareholder directors on the
board, there shall be at least one director representing each of the
classes of housing cooperatives, low-income cooperatives, and consumer
goods and services cooperatives. Each nominee for shareholder direc-
PUBLIC LAW
95-351—AUG.
20, 1978
92 STAT. 503
torship
of a particular class shall have at least three years experience
as a director or senior officer in the class of cooperatives to be repre-
sented. No one class of cooperatives specified in subsection (a) shall
be represented on the Board by more than three directors.
(d) When all five remaining members of the Board appointed by
the President have resigned pursuant to subsection (b) of this section,
their successors and the successors to shareholder directors shall there-
after be elected pursuant to such rules as the Board may
from
time to
time prescribe in the bylaws of the Bank.
(e) No director shall be eligible to be elected for more than two
consecutive full three-year terms. No officer of the Bank shall be
eligible to serve simultaneously as a director on the Board of the
Bank. The Bank shall give adequate advance notice to all voting stock-
holders of nominees and of the procedures for nominating other candi-
dates.
Each voting stockholder shall make the information required
in this paragraph available to its members.
(f)
The Board shall annually elect from among its
membei's
a chair-
man and vice chairman and select a secretary who need not be a mem-
ber. The Board shall establish the policies of the Bank governing its
funding, lending, and other financial and technical assistance, and
shall direct the management of the Bank.
(g) The Board shall meet at least quarterly. Its meeting shall be
Rules,
open to members or representatives or all eligible cooperatives and
other eligible organizations, as observers only, and to persons or repre-
sentatives of groups who identify their interest in the Bank and who
are invited to attend a meeting, subject to such rules as the Board may
establish for the conduct of such meetings. Those rules shall include
the manner of giving notice of meetings, the procedure for the conduct
of meetings, the manner of submitting topics for the agenda, the allo-
cation of time of presentations, and debate. The chairman, when sus-
tained by the majority of the Board present, may adjourn the open
meeting into an executive session on motion of the chairman, any Board
member, or at the request of any applicant, borrower, officer, or
employee when the matter under discussion involves an application, a
loan, a personnel action, or other matter which might tend to impinge
on the right of privacy of any person.
(h) Members of the Board appointed by the President from among
the officers of the agencies and departments of the United States Gov-
ernment shall not receive any additional compensation by virtue of
their service on the Board. Until the Final Government Equity
Redemption Date, members of the Board appointed by the President
from among the general public or elected by the holders of the class
B and class C stock shall (1) receive compensation at a rate equal to
the daily equivalent of the rate prescribed for grade
GS-18
under sec-
tion 5332 of title 5, United States Code, for each day that they are
engaged in the performance of their duties on the Board, and (2) be
allowed travel expenses, including per diem in lieu of subsistence, in
,
the same manner as persons employed intermittently in the Govern-
ment service are allowed expenses under section 5703(b) of title 5,
United States Code, for each day that they are away from their homes
or regular places of business in the performance of their duties on the
Board.
CAPITALIZATION
SEC.
104. (a) The capital of the Bank shall consist of capital sub- 12
USC
3014.
scribed by borrowers from the Bank, by cooperatives eligible to
become borrowers, by organizations owned and controlled by such bor-
5 USC 5332
note.
92 STAT. 504 PUBLIC LAW
95-3i51—AUG.
20, 1978
Appropriation
authorization.
rowers, by foundations, trust or charitable funds, by public bodies, and
by the United States. Beginning with the fiscal year ending September
30,
1979, the United States shall purchase class A stock and for that
fiscal year there are authorized to be appropriated $100,000,000 for
such purposes, and there are authorized to be appropriated for the
next four succeeding fiscal years an amount not to exceed $200,000,000
in the aggregate. Any amounts so authorized but not appropriated or
not utilized to purchase such stock of the Bank in any such fiscal year
is authorized to be appropriated or reappropriated and so used in
subsequent fiscal years.
(b) The capital stock of the Bank shall include class A, class B, and
class C stock and such other classes with such rights, powers, priv-
ileges,
and preferences of the separate classes as may be specified,
not inconsistent with law, in the bylaws of the Bank. Class A pre-
ferred stock held by the United States shall be a preferred stock with
first preference with respect to assets and dividends over all other
classes of stock issued by the Bank. So
lon^
as any class A stock is
outstanding, the Bank shall not pay any dividend on any other class
of stock at a rate greater than the statutory dividend payable on the
class A stock. Class B and class C stock shall be common stock with
voting rights as provided for herein and shall be issued only to eligible
borrowers and organizations controlled by such borrowers or organiza-
tions eligible to borrow, and shall be transferable only on the books
of the Bank and then only to another eligible borrower. No holder of
voting stock of the Bank shall be entitled to more than one vote
regardless of the number of shares of stock of other classes held, except
as provided in subsection (g) of this section.
(c) Class A stock with a par value of $100 per share shall be issued
by the Bank to the Secretary of the Treasury on behalf of the United
States in exchange for capital furnished pursuant to subsection (a)
of this section. The holder of class A stock shall be entitled to dividends
at a rate determined by the Secretary of the Treasury taking into
consideration the average market yield, during the month preceding
the close of each fiscal year, on outstanding marketable obligations of
the United States of comparable
maturity:
Provided^
That until
October 1, 1990, such dividends shall not exceed 25 per centum of
gross revenues for the year less necessary operating expenses, includ-
ing a reserve for possible losses. Such dividends shall be payable
annually into miscellaneous receipts of the Treasury and shall be
cumulative. Any such dividend payment may be deferred by the
Board of Directors with the approval of the Secretary of the Treasury,
but any dividend payment so deferred shall bear interest at the same
rate as the rate at
w^hich
dividends accumulate on the class A stock.
Without the approval of the Secretary of the Treasury, the Bank
shall not pay any dividend or distribution on, or make any redemption
or repurchase of, any other class of stock at any time when the
cumulative dividends on the class A stock shall not have been paid
in full (together with any unpaid interest thereon). Upon any liqui-
dation or dissolution of the Bank, the holder of class A stock shall be
entitled to receive out of the assets of the Bank available for distribu-
tion to its stockholders, prior to any payment to the holders of any
other class of stock of the Bank, an amount not less than the aggregate
par value of all class A stock outstanding, plus all accrued and unpaid
dividends accrued thereon to and including the date of payment
(together with all unpaid interest thereon). The class A stock shall
be redeemed and retired as soon as practicable consistent with the
purposes of this Act (such redemption to be at a price equal to the
PUBLIC LAW
95-351—AUG.
20, 1978 92 STAT.
SO'S
par value of the class A stock so redeemed plus cumulative dividends
accrued thereon to the date of redemption) :
Provided^
That begin-
ning on October 1, 1990, there shall be redeemed as a minimum with
respect to each fiscal year a number of shares of class A stock having
an aggregate par value equal to the aggregate consideration received
by the Bank
for
the issue of its class B and class C stock
during
that
fiscal year. Each such redemption shall take place not later than ninety
days after the close of each fiscal year.
(d) Class B stock shall be held only by recipients of loans under
section 105 of this Act, and such borrowers shall be required to own
class B stock in an amount not less than 1 per centum of the face
amount of the loan at the time the loan is made. Such borrowers
may be required by the Bank to own additional class B or class C
stock at the time the loan is made, but not to exceed an amount equal
to 10 per centum of the face amount of the loan, or from time to time,
as the Bank may determine. Such additional stock ownership require-
ments may be on the basis of the face amount of the loan, the out-
standing balances, or on a percentage of interest payable during any
year or any quarter
thereof,
as the Bank may determine will provide
adequate capital for the operation of the Bank and equitable owner-
ship thereof among borrowers.
(e) Class C stock shall be available for purchase and shall be held
only by borrowers or by organizations eligible to borrow under section
105 of this Act or by organizations controlled by such borrowers, and
shall be entitled to dividends in the manner specified in the bylaws of
the Bank. Such dividends shall be payable only from income, and,
until all class A stock has been retired, the rate of such dividends shall
not exceed the rate of the statutory dividend on class A stock.
(f) Nonvoting stock of other classifications and other priorities may
be issued at the discretion of the Board, to other investors, except that
so long as any class A stock is outstanding, the Board shall not
authorize or issue any class of stock, whether voting or nonvoting, that
would rank prior or equal to the class A stock as to dividends or upon
liquidation or dissolution.
(g)(1) The bylaws of the Bank may provide for more than one vote
on
the basis
of—
(A) the amount of class B stock, class C stock, or both classes
N
,
held, with such limitations as will encourage investments in class
C
stock;
(B) the amount of patronage of the Bank; and
(C)
number of members in the
cooperative.
(2) Such bylaws shall
avoid—
,
(A) voting control of the Bank from becoming concentrated
with the larger affluent or smaller less affluent
organizations;
(B) a disproportionately larger vote in one or more of the
groups of cooperatives referred to in section 103(c) of this Act;
and
(C) the concentration of more than 5 per centum of the total
voting control in any one class B or class C stockholder.
(h) The Bank may accept nonreturnable capital contributions on
^
which no interest, dividend, or patronage refund shall be payable from
associations, foundations, or funds or public bodies or agencies at the
discretion of the Board. For the purpose of accepting such contribu-
tions,
the Bank will be a governmental unit within
tlie
meaning of
section 170(b) (1) (A) (v) of the Internal Revenue Code of 1954. 26
USC
170.
(i) After payment of all operating expenses of the Bank, including
interest on its obligations, and after setting aside appropriate funds
92 STAT. 506 PUBLIC LAW
95-351—AUG.
20, 1978
for reserves for losses, for cumulative dividends on class A stock and
dividends on class C stock and for any redemption of class A stock in
accordance with subsection (c), the Bank shall annually set aside the
remaining earnings of the Bank for patronage refunds in the form
of class B or C stock or allocated surplus in accordance with the bylaws
of the Bank. After ten years
from
the date of issue of any such stock, or
at such earlier time as all the Government-held stock is retired, patron-
age refunds may be made in cash, or partly in stock and partly in
cash.
ELIGIBILITY
12
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3015.
SEC.
105. (a) For the purpose of all titles of this Act, subject to
the limitations of subsection (d) of this section, an eligible coopera-
tive is an organization chartered or operated on a cooperative, not-
for-profit basis for producing or
furnishing
goods,
services or
facilities,
primarily for the benefit of its members or voting stockholders who
are ultimate consumers of such goods, services, or
facilities,
or a legally
chartered entity entirely owned and controlled by any such organiza-
tion or organizations, if
it—
(1)
makes such goods, services or
facilities
directly or indirectly
available to its members or voting stockholders on a not-for-profit
basis;
(2) does not pay dividends on voting stock or membership
capital in excess of such percentage per annum as may be approved
under the bylaws of the
Bank;
(3) provides that its net savings shall be allocated or dis-
tributed to all members or patrons, in proportion to their patron-
age,
or shall be retained for the actual or potential expansion of
its services or the reduction of its charges to the patrons, or for
such other purposes as may be authorized by its membership not
inconsistent with its
purposes;
(4) makes membership available on a voluntary basis, without
any social, political, racial, or religious discrimination and with-
out any discrimination on the basis of age, sex, or marital status,
to all persons who can make use of its services and are willing
to accept the responsibilities of membership, subject only to limi-
tations under applicable Federal or State laws or regulations;
(5) in the case of primary cooperative organizations restricts
its voting control to members or voting stockholders on a one
vote per person basis and takes positive steps to insure economic
democracy and maximum participation by members of the coop-
erative including the holding of annual meetings and, in the case
of organizations owned by groups of cooperatives, provides posi-
tive protections to insure economic
democracy;
and
(6) is not a credit union, mutual savings bank, or mutual sav-
ings and loan association.
(b)
No
organization shall be ineligible because it produces, markets,
or furnishes goods, services, or facilities on behalf of its members as
primary producers, unless the dollar volume of loans made by the
Bank to such organizations exceeds 10 per centum of the gross assets
of the Bank.
"Net savings." (c) As used in this section, the term "net savings" means, for any
period, the borrower's gross receipts, less the operating and other
expenses deductible therefrom in accordance with generally accepted
accounting principles, including, without limitation, contributions to
92 STAT. 508
PUBLIC LAW
95-351—AUG.
20, 1978
^
upon such terms and conditions and at such price or prices as he shall
determine any of the obligations of the Bank acquired by him under
/
this subsection.
(c) The Bank may purchase its own obligations, and may provide
for the sale of any such obligations through a
jfiscal
agent or agents,
by negotiation, offer, bid, syndicate sale, or otherwise, and may deliver
such obligations by book entry, wire transfer, or such other means
as may be appropriate.
(d) Obligations issued under this section shall not be guaranteed
by the United States and shall not constitute a debt or obligation of
the United States or any agency or instrumentality thereof other than
the Bank.
LENDING POWERS
12
use
3018.
SEC.
108. (a) The Bank may make loans and commitments for loans
under this subsection to any organization determined by the Bank to
be eligible under the provisions of section 105 of this Act, and may
purchase or discount obligations of members of such organizations if
the Bank, to the exclusion of all other persons, entities, agencies, or
jurisdictions,
also determines that the applicant has or will have a
'
sound organizational and financial structure, income in excess of its
operating costs and assets in excess of its obligations, and a reason-
able expectation of a continuing demand for its production, goods,
commodities, or services, or the use of its facilities, so that the loan
will be fully repayable in accordance with its terms and conditions.
Commencing on October 1, 1983, the Bank shall not make any loan
to a cooperative for the purpose of financing the construction, owner-
ship,
acquisition, or improvement of any structure used primarily for
residential purposes if, after giving effect to such loan, the aggregate
amount of all loans outstanding for such purpose would exceed 30 per
centum of the gross assets of the Bank. The Board of Directors shall
use its best efforts to insure that at the end of each fiscal year of the
Bank at least 35 per centum of its outstanding loans are
to—
(1) cooperatives at least a majority of the members of which
are low-income persons, and
(2) other cooperatives, if the proceeds of such loans are directly
applied to finance a facility, activity, or service that the Board
finds will be used predominantly by low-income persons.
Publication in The Board shall adopt and publish in the Federal Register rules defin-
Federal
Register,
j^g
the term
"low-income
persons"
for
purposes of this subsection. The
criteria to be applied and the factors to be considered by the Bank in
making loans, loan commitments,
purchases,
discounts, and guarantees
shall include an assessment of the impact of the loan on existing small
businesses in the eligible
organizations'business
territory. The criteria
and factors shall be stated in rules of the Bank which shall be pub-
lished and made available to applicants and, upon request, to any other
person or organization.
(b) Loans under this section shall be repayable in not more than
forty years and, except for loans with final due date not longer than
five years from the date of the loan, shall be amortized as to principal
and interest. In setting the terms, rates, and charges, it shall be the
objective of the Bank to provide the type of credit needed by eligible
borrowers, at the lowest reasonable cost on a sound business basis, tak-
ing into account the cost of money to the Bank, necessary reserve and
PUBLIC LAW
95-351—AUG.
20, 1978 92 STAT. 509
expenses of the Bank, and the technical and other assistance attrib-
utable to loans under this section made available by the Bank, but
so long as the Bank makes loans
from
the proceeds of the sale of class
A stock, the interest rate shall not be less than the rates generally
prevailing in the area from other sources for loans for similar pur-
poses and maturities, taking into consideration the cost to the borrower
of required purchase of class B stock in the Bank. The loan terms may
provide for interest rates to vary from time to time during the repay-
ment period of the loan in accordance with the rates being charged by
the Bank for new loans at such times. The proceeds of a loan under
, '
j^
this subsection may be advanced by the borrower to its members or
stockholders under circumstances described in the bylaws or rules
of the Bank.
(c) Subject to section 102(13), the Bank may guarantee all or any
part of the principal and interest of any loan made by any State
or
federally chartered lending institution to any borrower if such loan
is to an organization that would be an eligible borrower from the
Bank for a direct loan and is on terms and conditions (including the
rate of interest) which would be permissible terms and conditions for
such a direct loan. The Bank may impose a charge for any such
guarantee. No loan may be guaranteed by the Bank if the income
therefrom to the lender is excluded from such lender's gross income
for purposes of chapter 1 of the Internal Revenue Code of 1954. 26
USC
1
et
seq.
(d) Any loan guaranteed under subsection (c) shall be assignable
to the extent provided in the contract of
guarantee
as may be deter-
mined by the Bank. The guarantee shall be uncontestable, except for
fraud or misrepresentation of which the holder had actual knowledge
at the time he acquired the loan. The Bank in lieu of requiring such
lender to service such guaranteed loan until final maturity or liquida-
tion, may purchase the loan for the balance of the principal and
accrued interest thereon without penalty, if it determines that (1) the
liquidation of the loan would result in the insolvency of the borrower
or deprive the borrower of assets essential to its continued operation,
and (2) the loan will be repayable with revision of the loan rates,
terms,
or payment periods or other conditions not inconsistent with
loans made by the Bank under subsection (a) of this section, which
revisions the lender or other holder of such guaranteed loan is unwill-
ing to make.
(e) As long as any of the class A stock of the Bank is held by the
Secretary of the Treasury, the aggregate amount of commitments by
the Bank to make or guarantee loans shall not exceed such amounts
as may be specified in annual appropriation Acts.
TAXATTON-
SEC.
109. Until the Final Government Equity Redemption Date, 12
USC
3019.
but not thereafter, the Bank, including its franchise, capital, reserves,
surplus, mortgages, or other security holdings and income shall be
exempt from taxation now or hereafter imposed by any State, county,
municipality, or local taxing authority, but any real property held
by the Bank shall be subject to any State, county, municipal, or local
taxation to the same extent according to its value as other real property
is taxed.
92 STAT.
510
PUBLIC LAW
95-351—AUG.
20,
1978
QUARTERS
AND
SPACE
12
use
3020.
SEC.
110. Until
the
Final Government Equity Redemption Date,
space
for
the principal office and any branch offices
of
the Bank shall
be provided
by the
General Services Administration. Thereafter,
the
Bank may lease, construct,
or
own quarters and provide
for
the space
requirements of its principal and other offices.
REPORTS
TO
CONGRESS
12
use
3021.
SEC.
111. The Board
of
the Bank shall report annually to the appro-
priate committees
of the
Congress
on the
Bank's capital, operations,
and financial condition
and
make recommendations
for
legislation
needed to improve its services.
/
AUTHORIZATION
12
use
3022.
SEC.
112.
In
addition
to
appropriations specifically authorized
in
this Act, there
are
authorized
to be
appropriated $2,000,000
for the
fiscal year ending September
30,1979,
and
for
each
of
the two succeed-
ing fiscal years, ending September 30, 1980,
and
September 30, 1981,
such sums
as
may
be
necessary:
Provided^
That none
of
these appro-
priated sums shall
be
used
to
retire
any
indebtedness
of the
Bank
'»»s
incurred pursuant to section 107
of
this Act. Any sums so appropriated
shall remain available until expended.
APPEALS
12
use
3023.
SEC.
113.
(a) If
an application for assistance under this Act is denied
in whole
or
in part, the applicant shall be informed within thirty days
in writing of the reasons for the denial or restriction.
(b) Any applicant
for
assistance under this Act receiving notice
of
denial
or
restriction
of the
application may, within thirty days
of
receipt
of
such notice, request
the
Board
of
Directors
to
review
the
application
and
notice
of
denial
or
restriction
for a
determination
of
whether the action
of
the Bank was correctly within the terms
of
the
Act,
the
regulations,
and the
policy
of the
Board.
The
Board shall
consider
the
request
for
review
at its
next meeting
and
promptly
inform the applicant
of
its determination and the reasons therefor.
CONFLICT
OF
INTEREST
12 use 3024.
SEC.
114.
The
Board
of
Directors shall adopt
and
publish
its
own
conflict
of
interest rules which shall be no less stringent
in
effect than
the Federal Executive conflict
of
interest rules contained
in
Executive
18 use 201
note.
Order Numbered
11222 in
prohibiting participation
or
action
or
the
use of
inside information
for
personal advantage
on any
matter
involving
a
corporation, trust, partnership,
or
cooperative organiza-
tion
in
which
a
board member, officer,
or
employee holds
a
substantial
financial interest
or
holds
a
position as board member
or
senior officer,
the activities
of
which organization might be relevant to, be competi-
tive with,
or be
inconsistent with
the
objectives
of
any bank created
under this Act. These rules shall
require—
(1) each nominee
for
elected membership
on the
Board estab-
lished under this
Act to
make public
and
file with
the
election
PUBLIC LAW
95-351—AUG.
20, 1978
92 STAT. 511
official before the date of election a statement of his financial
interest and position, if any, in such
organizations;
and
(2) each senior executive officer and appointed member of the
Board to file with the appointing officer, before entering that office
a statement of his financial interest and position, if any, in such
organizations, which shall be available for inspection upon
request.
The provisions of this section shall remain in effect until the Final
Government Equity Redemption Date.
EXAMINATION AND AUDIT
SEC.
115. Until the stock of the Bank held by the United States has
been fully retired, the operations of the Bank shall be examined
annually under the direction of an agency or instrumentality of the
Fedeial
Government designated by the President, including the Gen-
eral Accounting Office, and reports of such examination shall be for-
warded to the Congress. The President shall, no later than the date
that 66% per centum of the class A stock is held by others than the
Secretary of the Treasury, establish an Office of Supervision and
Audit which shall be responsible for audits and examinations of the
Banlv,
shall assure that the objectives of this title are carried out, and
shall review and comment on the bylaws of the Bank and the general
policies of the Bank and shall make an annual report to the Congress.
TITLE
II—OFFICE
OF SELF-HELP DEVELOPMENT AND
TECHNICAL ASSISTANCE
12
use
3025.
Office of
Supervision and
Audit.
Presidential
report to
Congress.
ESTABLISHMENT
SEC.
201. (a) There is hereby established within the Bank an Office 12
USC
3041.
of
Self-Help
Development and Technical Assistance (hereinafter the
"Office").
(b)
The Office shall have a Director who shall be appointed by
the President, with the advice and consent of the Senate, and who
shall not be a member of the Board. Subject to review by the Board,
the Director shall promulgate and publish in the Federal Register
policies and procedures governing the operation of the Office.
Publication in
Federal
Register.
AUTHORIZATION
SEC.
202. There are hereby authorized to be appropriated to the 12
USC
3042.
Office $10,000,000 for
the
fiscal year ending September 30, 1979, and
for the next two succeeding fiscal years an aggregate amount not to
exceed $65,000,000, for the purpose of making advances under section
203 of this Act. Any amounts appropriated to the Office shall be
deposited by the Office in a separate account in the Bank (hereinafter
the "Account"), and shall remain available until expended. Repay-
ments of capital investment advances made pursuant to section 203(a)
and interest supplement advances made pursuant to section 203(b)
and payments of interest thereon pursuant to section
203
(c) shall also
be deposited in the Account. No other funds of the Bank shall be
transferred into the Account. The Account shall be used by the Office
only as authorized in section 203.
92 STAT. 512 PUBLIC LAW
95-351—AUG.
20, 1978
CAPITAL INVESTMENTS AND INTEREST SUPPLEMENTS
12
use
3043.
SEC.
203. (a) The Office may make a capital investment advance out
of the Account to any eligible cooperative, either in conjunction with
or without a loan if the Office determines
that—
(1) (A) the applicant's initial or supplemental capital require-
ments exceeds its ability to obtain such capital through a loan
under section 108 or
from
other
sources;
or
(B) the membership of the applicant is, or will consist, sub-
stantially of low-income persons, as defined by the Board of
Directors, or the applicant proposes to undertake to provide
specialized goods, services, or facilities to serve their needs; and
(2) the applicant cannot obtain sufficient funds through a loan
under section 108 or otherwise, and the applicant presents a plan
which the Office determines will permit the replacement of a capi-
tal investment advance out of member equities within a period
not to exceed thirty years.
(b) The Office may make advances out of the Account to pay all or
..•s
part of the interest payable to the Bank or any other lender by an
eligible cooperative applicant which the Office determines cannot pay
a market rate of interest because it sells goods or services
to,
or provides
facilities for
the use of, persons of low
income:
Provided,
That such
advances will not exceed an amount equal to 4 per centum of the
principal amount of the indebtedness of such applicant to the Bank
,
or such other lender for any year in which the net income of the
cooperative is insufficient to meet scheduled interest payments.
(c) Capital investment advances made by the Office pursuant to
subsection (a) and interest supplement advances made by the Office
pursuant to subsection (b) shall bear interest at a rate determined
by the Board of Directors of the Bank, and the Board of Directors
'
i'
V
may authorize an interest rate applicable to such advances lower than
the rate applicable to loans by the Bank pursuant to section 108.
ORGANIZATIONAL ASSISTANCE
12
use
3044.
SEC.
204. The Office shall make available information and services
concerning the organization, financing, and management of coopera-
tives to best achieve the objectives of this Act and to best provide the
means
through
which various types of
goods,
services, and facilities
can be made available to members and patrons. The Office may enter
into agreements with other agencies of Federal, State, and local
governments, colleges and universities, foundations, or other organiza-
tions for the development and dissemination of such information, and
services described in this title. The Office may make or accept grants
or transfer of funds
for
such purposes.
INVESTIGATION AND REVENUES
12
use
3045.
SEC.
205. The Office may undertake investigations of new types of
services which can more effectively be provided through cooperative
not-for-profit organizations and make surveys of areas where the
increased use of such organizations will contribute to the economic
well-being of the community.
PUBLIC LAW
95-351—AUG.
20, 1978 92 STAT. 513
FINANCIAL ANALYSIS AND MARKET SURVEYS
SEC.
206. The Office may, at the request of any eligible cooperative, 12
USC
3046.
provide a financial analysis of the applicant's capital structure and
needs and its cost of operations, survey the market for the goods or
services the cooperative makes or desires to make available to its
members or patrons or the users of its facilities.
DIRECTOR AND MANAGEMENT TRAINING AND ASSISTANCE
SEC.
207. The Office shall develop and make available, alone or in 12 USC 3047.
concert with other organizations, a program for training directors and
staff of eligible cooperatives to improve their understanding of their
responsibilities; the problems of and solutions for effective and effi-
cient operation of their organizations or of cooperatives in
general;
and may by any means it deems appropriate, conduct membership
studies, provide membership education programs, and programs for
informing consumers and the general public of the advantages of
cooperative action. Management supervision, review, and consulta-
tions shall be available from the Office to any eligible cooperative.
GOVERNMENT
ASSISTANCE PROGRAMS
SEC.
208. The Office shall work closely with all United States Gov- 12
USC
3048.
ernment agencies offering programs for which consumer cooperatives
may be eligible to assure that information concerning all such pro-
grams is made available to eligible cooperatives.
AUTHORIZATION
SEC.
209. There are authorized to be appropriated to the Office 12
USC
3049.
$2,000,000 for the fiscal year ending September
30,1979,
and for each
of the two succeeding fiscal years, such sums as may be necessary for
the administration of this title. Any sums so appropriated shall
remain available until expended.
FEES FOR SERVICES
SEC.
210. The Office may make the technical assistance services under 12
USC
3050.
this title available for such fees as it may establish, except that such
services as the Office may determine may be made available without
charge to eligible cooperatives depending on the nature of the services
or on ability to pay. Any fees collected shall be accounted for sep-
arately and be available for expenses of the Office.
TITLE
III—GENERAL
PROVISIONS
AMENDMENTS TO EXISTING LAW
SEC.
301. (a) Section 201 of the Government Corporation Control
Act (31 U.S.C. 856) is amended by redesignating paragraph (6) the
second time it appears therein as paragraph (7), by striking out "and"
immediately before "(9)" and by inserting ", and (10) the National
Consumer Cooperative Bank" immediately before the period at the
end
thereof.
92 STAT. 514 PUBLIC LAW
95-351—AUG.
20, 1978
(b) Section 302 of the Government Corporation Control Act (31
:;
U.S.C. 867) is amended by striking out "or" before "the Federal Land
Banks" and inserting immediately after "the Federal Land Banks,"
the
following:
"or the National Consumer Cooperative Bank,".
(c) The second sentence of subsection (d) of section 303 of the Gov-
ernment Corporation Control Act (31 U.S.C. 868(d)) is amended by
inserting "National Consumer Cooperative Bank," immediately before
"Rural Telephone Bank".
SEC.
302. Section 5315 of title 5, United States Code, is amended by
.:;
adding at the end thereof the
following:
"(122^
President, National Consumer Cooperative Bank.
"(123) Director, Office of
Self-Help
Development and Techni-
cal Assistance, National Consumer Cooperative Bank.".
Approved August 20, 1978.
SMi
LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 95-311 (Comm. on Banking, Finance, and Urban Affairs) and
No.
95-1399 (Comm. of Conference).
SENATE REPORT No. 95-795 (Comm. on Banking, Housing, and Urban Affairs).
CONGRESSIONAL RECORD:
Vol. 123 (1977): July 13, 14, considered and passed House.
Vol. 124 (1978): July 13, considered and passed Senate, amended.
July 24, 25,
In\the!
House:
\objection,
to
|request
for
j
unanimous
consent to
Senate|
amendment; conference requested.
July 27, Senate agreed to conference report.
Aug. 9, House agreed to conference report.