rower has been retired and canceled. All allocations of surplus to a defaulting borrower shall be retired and canceled before any allocations of contingency reserves to such borrower are retired and canceled.

§ 70.165a Cancellation and retirement of stock and other equities of borrower in liquidation or dissolution.

In the case of liquidation or dissolution of any present or former borrower from a bank for cooperatives, the bank may retire and cancel any capital stock or allocated surplus or contingency reserves or other equity interest in the bank owned by such borrower at the fair book value thereof, not exceeding par, as hereinafter indicated.

(a) The bank has reasonable assurance that the liquidation or dissolution is or soon will be completed and that the business of the borrower is not being continued in circumstances in which it would be appropriate and feasible for the successor to acquire and hold the interests of its predecessor in the bank.

(b) The retirement of stock and other equities of any such borrower would not unduly affect the financial position of the bank.

(c) Any such retirement shall be subject to authorization as follows:

(1) Whenever the total amount of equities to be retired in any one case is $5,000 or less the Executive or Loan Committee of the bank may approve the retirement when authorized to do so by the Board of Directors;

(2) Whenever the total amount of equities to be retired in any one case is in excess of $5,000 but does not exceed $25,000, retirement may be made only upon prior approval of the Board of Directors; and

(3) Whenever the total amount of equities to be retired in any one case is in excess of $25,000, retirement may be made only upon prior approval of the Board of Directors, subject to approval of the Farm Credit Administration.

(d) At the same time, corresponding shares of stock which the regional bank was required to purchase in the Central Bank shall also be retired.

(e) A report of any retirements made hereunder showing the name of the association and the amount of separate equities retired for each shall be for

tures, the Farm Credit Administration shall have a statement in writing by the Custodian of Collateral for debentures of the Central Bank for Cooperatives that, as of the effective date of the issuance, the collateral held by him or for his account securing debentures of the Central Bank, including the issue for which application is being made, will be adequate according to law and the rules and regulations of the Farm Credit Administration.

§ 72.2

CUSTODIANSHIP OF COLLATERAL

Custodian and Acting Custodian. The Chief, Collateral Section, Farm Credit Administration, shall serve, ex officio, as Custodian of collateral for debentures issued by the Central Bank for Cooperatives individually. The Chief, Securities Section, Farm Credit Administration, shall serve, ex officio, as Acting Custodian of collateral for debentures issued by the Central Bank for Cooperatives individually, in the event the said Custodian is unable to serve for any reason. The operating titles when so serving shall be Custodian and Acting Custodian, respectively.

[19 F. R. 9172, Dec. 24, 1954]

§ 72.3 Bonding of Custodian and Acting Custodian.

The Custodian and the Acting Custodian shall be covered under a fidelity bond with a corporate surety on the approved list of the Treasury Department and in the amounts of $50,000 and $25,000, respectively, to insure the faithful performance of their duties and provide against financial loss.

§ 72.4 Classifications of collateral.

The Custodian shall accept, either originally or by substitution, collateral of the following classifications:

(a) Seasonal loans consisting of:
(1) Commodity loans.

(2) Operating capital loans.

(3) Loans secured by Commodity Credit Corporation documents. (b) Term loans consisting of: (1) Operating capital loans. (2) Facility loans.

(c) Participations in loans of classifications (a) and (b) made by the district banks for cooperatives or any of them.

(d) Direct loans to the district banks for cooperatives or any of them.

(e) Cash or direct obligations of the United States.

§ 72.5 Segregation and safeguarding of collateral.

The Custodian shall maintain exclusive possession of collateral, other than cash and United States Government obligations, which directly secures Central Bank for Cooperatives debentures. He shall keep the collateral which is in his immediate custody separate and apart from all other property held by him either for himself or for others, and he shall keep it in a suitable vault or other recognized place of safe deposit. § 72.6 Holding of cash and Government securities.

Cash collateral shall be kept by the Custodian on deposit in a symbol account with the Treasurer of the United States, and collateral consisting of direct obligations of the United States shall be kept by him in a safekeeping account with a Federal reserve bank or branch or with the Treasurer of the United States, both types of accounts to be subject to the order of the Governor of the Farm Credit Administration.

§ 72.7 Deposits and withdrawals of collateral.

(a) Each deposit of collateral with the Custodian shall be accompanied by a specific assignment to him in trust of such collateral. All the collateral shall be held by him, or for his account, in trust for the joint, ratable benefit of all owners of Central Bank for Cooperatives debentures outstanding irrespective of the dates of issue of such debentures. No duty or responsibility shall be assumed by or imposed upon the Custodian to determine the values, genuineness, or legal sufficiency of any collateral deposited with him, but he shall be satisfied that (1) such collateral is of the character authorized by law and appears to be legal and sufficient on its face; and (2) the collateral assigned to him is at all times not less in amount than the amount of debentures outstanding.

(b) Except as provided in § 72.9, the Custodian shall release to the Central Bank for Cooperatives any collateral requested by it which is not needed for meeting the collateral requirements specified by law, and any additional collateral requirements specified by the Farm Credit Administration, for outstanding debentures of the Central Bank for Cooperatives. Further, except as provided in § 72.9, the Custodian shall release to the Central Bank for Coopera

tives any collateral held by him or for his account upon the substitution of cash or other collateral of the character authorized by law sufficient in amount to maintain the collateral requirements specified, as mentioned in paragraph (a) of this section.

§ 72.8 Subcollateral.

Subcollateral, consisting of all valuable items securing collateral which directly secures outstanding Central Bank for Cooperatives debentures, shall be held either by the Custodian, a farm loan registrar, a district bank for cooperatives, the Central Bank for Cooperatives, or a local custodian employed by the latter institution. When subcollateral is not held by the Custodian, he shall be furnished with a statement by the holder that it is held for the Custodian's account, and with periodic reports by the holder of the subcollateral thus held.

[FCA Order 509, 15 F. R. 1581, Mar. 22, 1950] § 72.9 Disposition of collateral and sub

collateral in the event of default on Central Bank for Cooperatives debentures.

In the event of default by the Central Bank for Cooperatives in the payment of principal or interest on any of its debentures, all collateral and subcollateral held by or for the Custodian shall automatically with the occurrence of the default be held subject to the order of the Governor of the Farm Credit Administration for the protection of debenture holders, and the withdrawal and substitution provisions of § 72.7 shall be suspended.

§ 72.10 Accounts and reports.

The Custodian shall keep a separate account of all his transactions relating to Central Bank for Cooperatives debentures and the collateral security, and shall furnish such reports and other documents as may be required by the Governor of the Farm Credit Administration.

LOST, STOLEN, DESTROYED, MUTILATED, OR

DEFACED DEBENTURES

§ 72.12 Authorization for relief.

Whenever a debenture or a coupon detached from a debenture is lost, stolen, destroyed, or so mutilated or defaced as to impair its value to the owner, the Deputy Governor and Director of Cooperative Bank Service may authorize the issuance of a new debenture or payment for the coupon at maturity, upon the owner's compliance with the requirements set forth in §§ 72.13 through 72.18. Wherever the term "owner" is used in said sections, it shall be deemed to include the authorized representative of the owner.

§ 72.13 Application.

In the event of the loss, theft, destruction, mutilation, or defacement of a debenture or coupon, the owner should file an application with the Deputy Governor and Director of Cooperative Bank Service for the issuance of another debenture or for payment of the coupon at maturity. Such application must be filed within a reasonable time after the loss, theft, destruction, mutilation, or defacement is discovered.

The owner of the debenture or coupon which has been lost, stolen, destroyed, mutilated, or defaced shall furnish to the Deputy Governor and Director of Cooperative Bank Service his affidavit duly acknowledged before a notary public or other officer authorized by law to administer oaths, setting forth:

(a) That he is the lawful owner of such debenture or coupon and that he is legally entitled to its possession;

(b) A complete identification of such debenture or coupon including serial number, date of issue, face amount, date of maturity, and interest rate;

(c) A detailed statement of the circumstances surrounding the loss, theft, destruction, mutilation, or defacement of such debenture or coupon;

(d) A statement that the affidavit is made for the purpose of obtaining a new debenture or payment for the coupon at maturity and an undertaking that should the original debenture or coupon come into the possession or control of the deponent, he will immediately surrender it to the Deputy Governor and Director of Cooperative Bank Service.

§ 72.15 Bond of indemnity.

(a) The owner of a lost, stolen, or destroyed debenture or coupon, or his authorized representative, shall also furnish to the Deputy Governor and Director of Cooperative Bank Service a bond of indemnity in a penal amount equal to 110 percent of the principal and interest to maturity of the said debenture, or equal to 110 percent of the face amount of said coupon, with corporate surety satisfactory to the Deputy Governor and Director of Cooperative Bank Service and with conditions to indemnify and save harmless the Farm Credit Administration and the Central Bank for Cooperatives and any and all of their officers, employees, or representatives, from all liability, loss, claims, or demands arising in any manner by reason or on account of the debenture or coupon concerning which relief is requested.

(b) The owner of a mutilated or defaced debenture or coupon shall, before relief is granted, surrender such debenture or coupon or as much thereof as remains to the Deputy Governor and Director of Cooperative Bank Service and shall, if required by him, also furnish a bond of indemnity in a penal sum satisfactory to the Deputy Governor and Director of Cooperative Bank Service with corporate surety and conditions as stated in paragraph (a) of this section.

(c) A bond of indemnity which is otherwise satisfactory will be accepted if the corporation which is surety thereon holds a certificate from the Secretary of the Treasury as being acceptable on surety bonds. A list of such corporations may be obtained from the Section of Surety Bonds, United States Treasury Department, Washington, D. C. § 72.16 Additional evidence.

The owner of a lost, stolen, mutilated, defaced, or destroyed debenture or coupon shall also furnish such other and further evidence relating to the loss, theft, destruction, mutilation, or defacement of the debenture or coupon for which relief is requested as may be required by the Deputy Governor and Director of Cooperative Bank Service in any specific case.

§ 72.17 Recovery of debenture or coupon reported lost, stolen, or destroyed.

If a debenture or coupon reported lost, stolen, or destroyed is recovered by the owner prior to the issuance of a new

debenture or payment for the coupon, the Deputy Governor and Director of Cooperative Bank Service should be notified immediately whereupon the application for relief will be canceled and any bond or affidavit relative to it will be returned to the owner. If the original debenture or coupon is recovered by the owner after relief has been granted, the said original shall be returned to the Deputy Governor and Director of Cooperative Bank Service for cancellation, whereupon the bond and affidavit relative to it will be returned to the owner. § 72.18 Immaterial mutilation or de

facement.

Where a mutilation or defacement of a debenture or a coupon is such that the debenture or coupon may be clearly identified and the missing fragments could not by any possibility form the basis of a claim against the Central Bank for Cooperatives, the Farm Credit Administration, or the Deputy Governor and Director of Cooperative Bank Service; the Deputy Governor and Director of Cooperative Bank Service, may authorize the issuance of a new debenture, upon application therefor and the surrender of the defaced or mutilated debenture or coupon, without requiring an affidavit or indemnity bond, or may authorize that such debenture or coupon be accepted and paid at maturity as if no mutilation or defacement had occurred.

a

A bank for cooperatives desiring to participate in an issue of consolidated debentures shall make written application to the Farm Credit Administration for approval of its participation in such issue of debentures. No debentures shall be issued without approval of the Farm Credit Administration in writing. Before approving each bank's participation in an issue of debentures, the Farm Credit Administration shall have statement in writing by a Custodian of collateral for consolidated debentures of the banks for cooperatives that the collateral held by him or for his account securing consolidated debentures which will be outstanding on behalf of the bank making the application, including the debentures applied for, as of the date of their issuance, will be adequate according to law and the rules and regulations of the Farm Credit Administration. CUSTODIANSHIP OF COLLATERAL

§ 73.2

Custodian and Acting Custodian. The Chief, Collateral Section, Farm Credit Administration, shall serve, ex officio, as Custodian of Collateral pledged by the Central Bank for Cooperatives for consolidated debentures. The Chief, Securities Section, Farm Credit Administration, shall serve, ex officio, as Acting Custodian of collateral pledged by the Central Bank for Cooperatives for consolidated debentures, in the event the said Custodian is unable to serve for any reason. The Farm Loan Registrar in each farm credit district shall serve, ex officio, as Custodian of collateral pledged

by the bank for cooperatives of the district for consolidated debentures; and the Deputy Registrar in the first farm credit district and the Acting Deputy Registrar in each other farm credit district shall serve, ex officio, as Acting Custodian of collateral pledged by the bank for cooperatives of the district for consolidated debentures, in the event the said Custodian is unable to serve for any reason. The operating titles when so serving shall be Custodian and Acting Custodian, respectively.

§ 73.3 Bonding of Custodian and Acting Custodian.

Each Custodian and Acting Custodian shall be covered under a fidelity bond with a corporate surety on the approved list of the Treasury Department and in the amounts of $50,000 and $25,000, respectively, to insure the faithful performance of their duties and provide against financial loss.

8 73.4

Classifications of collateral.

Each Custodian shall accept, either originally or by substitution, collateral for consolidated debentures as prescribed by the Farm Credit Act of 1933, as amended.

§ 73.5 Segregation and safeguarding of collateral.

Each Custodian shall maintain exclusive possession of collateral, other than cash and United States Government obligations, which directly secures consolidated debentures of the banks for cooperatives. He shall keep the collateral which is in his immediate custody separate and apart from all other property held by him either for himself or for others, and he shall keep it in a suitable vault or other recognized place of safe deposit.

§ 73.6 Holding of cash and Government securities.

Cash collateral shall be kept by each Custodian on deposit in a symbol account with the Treasurer of the United States, and collateral consisting of direct obligations of the United States shall be kept by him in a safekeeping account with a Federal reserve bank or branch or with the Treasurer of the United States, both types of accounts to be sub