Subcollateral, consisting of all valuable items securing collateral which directly secures outstanding consolidated debentures of the banks for cooperatives, shall be held either by a Custodian of collateral, a bank for cooperatives, or a focal custodian employed by a bank for cooperatives. When subcollateral is not held by the Custodian, he shall be furnished with a statement by the holder that it is held in trust for the Custodian's account, and with periodic reports by the holder of the subcollateral thus held. § 73.9 Disposition of collateral and subcollateral in the event of default on consolidated debentures.

In the event of default by any bank for cooperatives in the payment of principal or interest on any consolidated debentures outstanding on its behalf, all collateral and subcollateral held by or for the Custodian under assignment by such bank 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 § 73.7 shall be suspended.

§ 73.10 Accounts and reports.

Each Custodian shall keep a separate account of all his transactions relating to consolidated debentures of the banks for cooperatives 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

§ 73.12 Authorization for relief.

Whenever a consolidated debenture of the banks for cooperatives, or a coupon detached from such a debenture, is lost, stolen, destroyed, or so mutilated or defaced as to impair its value to the owner, the 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 §§ 73.13 through 73.18. Wherever the term "owner" is used in said sections, it shall be deemed to include the authorized representative of the owner.

§ 73.13 Application.

In the event of the loss, theft, destruction, mutilation, or defacement of a consolidated debenture or coupon, the owner should file an application with the 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 consolidated debenture or coupon which has been lost, stolen, destroyed, mutilated, or defaced shall furnish to the 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 Director of Cooperative Bank Service.

§ 73.15 Bond of indemnity.

(a) The owner of a lost, stolen, or destroyed consolidated debenture or coupon, or his authorized representative, shall also furnish to the 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 Director of Cooperative Bank Service and with conditions to indemnify and save harmless the Farm Credit Administration and the 13 banks 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 consolidated debenture or coupon shall, before relief is granted, surrender such debenture or coupon or as much thereof as remains to the Director of Cooperative Bank Service and shall, if required by him, also furnish a bond of indemnity in a penal sum satisfactory to the 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 Surety Bonds Branch, Bureau of Accounts, United States Treasury Department, Washington, D. C.

covered by the owner prior to the issuance of a new debenture or payment for the coupon, the 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 Director of Cooperative Bank Service for cancellation, whereupon the bond and affidavit relative to it will be returned to the owner. § 73.18 Immaterial mutilation or de

facement.

Where a mutilation or defacement of a consolidated 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 13 banks for cooperatives, the Farm Credit Administration, or the Director of Cooperative Bank Service, the 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.

§ 73.19 Restrictive endorsements of bearer securities.

When consolidated debentures issued by the 13 banks for cooperatives are being presented to Federal Reserve Banks or Branches, or to the Treasurer of the United States, by or through banks (including banks for cooperatives) for redemption, such debentures may be restrictively endorsed. The restrictive endorsement shall be placed thereon in substantially the same manner and with the same effects as prescribed in United States Treasury Department regulations, now or hereafter in force, governing like transactions in United States bonds; and consolidated debentures issued by the 13 banks for cooperatives so endorsed shall be prepared for shipment and shipped in the manner prescribed in such regulations for United States bonds. (See 31 CFR 328.1-328.6.)

[23 F.R. 3139, May 13, 1958]

PART 200-PROCEDURES

Sec. 200.1 Loans pursuant to section 4 of Rural Electrification Act.

200.2

200.3 200.4 200.5 200.6

Loans pursuant to section 5 of Rural
Electrification Act.

Loans pursuant to section 201 of
Rural Electrification Act.

Studies, investigations, and reports.
Loan security activities.

Issuances implementing procedure. AUTHORITY: §§ 200.1 to 200.6 issued under 49 Stat. 1363, as amended; 7 U.S.C. 901-915, 921-924.

SOURCE: §§ 200.1 to 200.6 appear at 28 FR. 117, Jan. 4, 1963.

$ 200.1 Loans pursuant to section 4 of Rural Electrification Act.

(a) General. These loans are made to finance the construction and operation of generating plants, electric transmission and distribution lines or systems to provide initial and continued adequate electric service to persons in rural areas. The loans must be self-liquidating within a period of not to exceed thirty-five years, bear interest at the rate of two per centum per annum, and must be reasonably secured in the judgment of the Administrator. They may be made to persons, corporations, public bodies, and to cooperative, non-profit, or limited dividend associations. Preference is to be given to public bodies and to cooperative, non-profit, or limited dividend associations.

sisted, as necessary, in perfecting their organization, in the conduct of their surveys and in the preparation of the loan application. After the information provided by the application has been examined, the applicant is notified of any further steps to be taken. If an application is acceptable after legal, engineering, economic, and financial studies, funds are obligated by a loan contract and the borrower gives a note, mortgage, and, in some cases, other security.

(c) Construction. Under the loan agreements REA reserves the right to approve the design and construction of the facilities, and to require progress reports on construction and audits of the borrower's records relating to construction.

(d) Advance of loan funds. Loan funds are advanced on the basis of requisitions submitted by borrowers in accordance with the loan contract.

§ 200.2 Loans pursuant to section 5 of Rural Electrification Act.

(a) General. These loans are made to the borrowers of funds loaned under section 4 of the Rural Electrification Act for financing the wiring of the premises of persons in rural areas and for purchase and installation of electrical and plumbing appliances and equipment, including machinery. The loans are required to be repaid, generally over a period of ten years, and bear interest at two per centum per annum. The funds made available to REA borrowers under these loans are reloaned to their consumers.

(b) Loan applications. There is no standard or prescribed form of application for this type of loan. A letter accompanied by a resolution of the board

of directors is submitted in support of the application setting forth the purposes for which the loan is requested and the amounts required for each purpose. Supplemental data is required of the applicant as necessary to complete the particular application. If the Administrator approves a loan proposal, the applicant is notified and loan documents are forwarded for the signature of the borrower.

(c) Advance of loan funds. Loan funds are advanced on the basis of requisitions submitted by borrowers in accordance with the loan contract.

§ 200.3 Loans pursuant to section 201 of Rural Electrification Act.

(a) General. These loans are made for the purpose of financing the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems to furnish or improve telephone service in rural areas. Borrowers may be required to provide a portion of the investment themselves. The loans must be self-liquidating within a period of not to exceed thirty-five years, bear interest at the rate of two per centum per annum and must be reasonably secured in the judgment of the Administrator. The loans may be made to any type of commercial or non-profit corporation now providing or who may hereafter provide telephone service in rural areas. Preference is to be given to persons providing telephone service in rural areas, and to cooperative, nonprofit, limited dividend, or mutual associations.

(b) Loan applications. Applications for these loans are made on forms prescribed by REA, copies of which are made available by REA on request. Applicants for loans from the Rural Electrification Administration are assisted as necessary in perfecting their organization, in the conduct of their surveys and in the preparation of loan applications. After the information provided by the application has been examined, the ap

plicant is notified of any further steps to be taken. If an application is acceptable after legal, engineering, economic, and financial studies, funds are obligated by a loan contract and the borrower gives a note, mortgage, and, in some cases, other security.

(c) Construction. Under the loan agreements, REA reserves the right to approve the design and construction of the facilities, and to require progress reports on construction and audits of the borrower's records relating to construction.

(d) Advance of loan funds. Loan funds are advanced on the basis of req→ uisitions submitted by borrowers in accordance with the loan contract.

§ 200.4 Studies, investigations, and reports.

Pursuant to section 2 of the Act, the agency may make or cause to be made studies, investigations, and reports concerning the condition and progress of electrification and telephony in rural areas in the several States and territories and may publish and disseminate information with respect thereto.

§ 200.5 Loan security activities.

In carrying out the program of rural electrification and rural telephony provided by the Act, and in the interest of loan security, the agency requires of borrowers periodic reports on operations, annual audits, etc., and provides specialized and technical accounting, engineering, and other managerial assistance to borrowers in respect to the construction and operation of their facilities, and to help them establish efficient and economical service in rural areas.