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Legal Opinion Summary
Topic:Territorial Concurrence/Farmers’ Notes: May a Farm Credit System association provide funding for a borrower’s finance company subsidiary by discounting its customers’ notes without obtaining territorial concurrence?
ID Number:99-06
Issue Date:03/05/1999
An association asked whether it could provide funding for a borrower’s finance company subsidiary by discounting its customers’ notes without obtaining territorial concurrence. The subsidiary provides short and intermediate-term credit to its farmer and rancher customers. OGC concluded that consent was not required.


This inquiry raised the question of the relationship between 12 C.F.R. § 614.4070, which addresses out-of-territory lending, and 12 C.F.R § 615.5172, which addresses investments in farmers’ notes. Associations make out-of-territory loans under their lending authority; they purchase farmers’ notes under their investment authority. Section 614.4070 has no applicability to investments in farmers’ notes and, thus, the consent of other Farm Credit System lenders is not required.

(March 5, 1999)