Lending power
Loans for prescribed purposes; requisite conditions
Terms and conditions of loans; restrictions on loans
Loans under this section shall be on such terms and conditions as the Governor of the telephone bank shall determine, subject, however, to the following restrictions:
Amortization period
Preference in loans; election of loans for telephone system with certain subscriber density per mile
Interest rate
Loans under this section shall bear interest at the “cost of money rate”. The cost of money rate is defined as the average cost of moneys to the telephone bank as determined by the Governor, but not less than 5 per centum per annum.
On and after
The rate determined under this subparagraph shall be—
for the period beginning on the date the advance is made and ending at the close of the fiscal year in which the advance is made, the average yield (on the date of the advance) on outstanding marketable obligations of the United States having a final maturity comparable to the final maturity of the advance; and
after the fiscal year in which the advance is made, the cost of money rate for such fiscal year, as determined under subparagraph (D).
Within 30 days after the end of each fiscal year, the Governor shall determine to the nearest 0.01 percent the cost of money rate for the fiscal year, by calculating the sum of the results of the following calculations:
The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class A stock, multiplied by the rate of return payable by the telephone bank during the fiscal year, as specified in section 946(c) of this title, to holders of class A stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class B stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, as specified in section 946(d) of this title, to holders of class B stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. For purposes of the calculation under this subparagraph, such rate shall be zero.
The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class C stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, under section 946(e) of this title, to holders of class C stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
The sum of the results of the calculations described in subclause (II).
The amounts received by the telephone bank during the fiscal year from each issue of telephone debentures and other obligations of the telephone bank, multiplied, respectively, by the rates at which interest is payable during the fiscal year by the telephone bank to holders of each issue, each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
The amount by which the aggregate of the amounts advanced by the telephone bank during the fiscal year exceeds the aggregate of the amounts received by the telephone bank from the issuance of class A stock, class B stock, class C stock, and telephone debentures and other obligations of the telephone bank during the fiscal year, multiplied by the historic cost of money rate as of the close of the fiscal year immediately preceding the fiscal year, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
For purposes of this clause, the term “historic cost of money rate”, with respect to the close of a preceding fiscal year, means the sum of the results of the following calculations: The amounts advanced by the telephone bank in each fiscal year during the period beginning with fiscal year 1974 and ending with the preceding fiscal year, multiplied, respectively, by the cost of money rate for the fiscal year (as set forth in the table in subparagraph (E)) for fiscal years 1974 through 1987, and as determined by the Governor under this subparagraph for fiscal years after fiscal year 1987), each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the period.
For purposes of subparagraph (D)(II), the cost of money rate for the fiscal years in which each advance was made shall be as set forth in the following table:
For advances made in— | The cost of money rate shall be— |
|---|---|
Fiscal year 1974 | 5.01 percent |
Fiscal year 1975 | 5.85 percent |
Fiscal year 1976 | 5.33 percent |
Fiscal year 1977 | 5.00 percent |
Fiscal year 1978 | 5.87 percent |
Fiscal year 1979 | 5.93 percent |
Fiscal year 1980 | 8.10 percent |
Fiscal year 1981 | 9.46 percent |
Fiscal year 1982 | 8.39 percent |
Fiscal year 1983 | 6.99 percent |
Fiscal year 1984 | 6.55 percent |
Fiscal year 1985 | 5.00 percent |
Fiscal year 1986 | 5.00 percent |
Fiscal year 1987 | 5.00 percent. |
Notwithstanding subparagraph (B), if a borrower holds a commitment for a loan under this section made on or after
If the telephone bank, pursuant to section 947(b) of this title, issues telephone debentures on any date to refinance telephone debentures or other obligations of the telephone bank, the telephone bank shall, in addition to any interest rate reduction required by any other provision of this paragraph, for the period applicable to the advance, reduce the interest rate charged on each advance made under this section during the fiscal year in which the refinanced debentures or other obligations were originally issued by the amount applicable to the advance.
For purposes of subclause (I), the term “the period applicable to the advance” means the period beginning on the issue date described in subclause (I) and ending on the earlier of the date the advance matures or is completely prepaid.
For purposes of subclause (I), the term “the amount applicable to the advance” means an amount which fully reflects that percentage of the funds saved by the telephone bank as a result of the refinancing which is equal to the percentage representation of the advance in all advances described in subclause (I).
Within 60 days after any issue date described in subclause (I), the Governor shall amend the loan documentation for each advance described in subclause (I), as necessary, to reflect any interest rate reduction applicable to the advance by reason of this clause, and shall notify each affected borrower of the reduction.
Within 30 days after the publication of any determination made under subparagraph (D), any affected borrower may obtain review of the determination, or any other equitable relief as may be determined appropriate, by the United States court of appeals for the judicial circuit in which the borrower does business by filing a written petition requesting the court to set aside or modify such determination. On receipt of such a petition, the clerk of the court shall transmit a copy of the petition to the Governor. On receipt of a copy of such a petition from the clerk of the court, the Governor shall file with the court the record on which the determination is based. The court shall have jurisdiction to affirm, set aside, or modify the determination.
Within 5 days after determining the cost of money rate for a fiscal year, the Governor shall—
cause the determination to be published in the Federal Register in accordance with section 552 of title 5; and
furnish a copy of the determination to the Comptroller General of the United States.
The telephone bank shall not sell or otherwise dispose of any loan made under this section, except as provided in this paragraph.
Required qualifications of applicants
The Governor of the telephone bank may make a loan under this section only to an applicant for the loan who meets the following requirements:
The average number of subscribers per mile of line in the service area of the applicant is not more than 15, or the applicant is capable of producing net income or margins before interest of not less than 100 percent (but not more than 500 percent) of the interest requirements on all of the outstanding and proposed loans of the applicant.
The Secretary has approved, under section 935(d)(3) of this title, a telecommunications modernization plan for the State in which the applicant is located and, if the plan was developed by telephone borrowers under subchapter III, the applicant is a participant in the plan.
Certificate of convenience and necessity required from State regulatory agency or statement of telephone bank’s Governor of nonduplication of lines, facilities, or systems
Definitions: telephone service; telephone lines, facilities, or systems
Sale or disposal of property, rights, or franchises prior to repayment of loan
Prepayment without penalty
A borrower with a loan from the Rural Telephone Bank may prepay such loan (or any part thereof) by paying the face amount thereof without being required to pay the prepayment penalty set forth in the note covering such loan, except for any prepayment penalty provided for in a loan agreement entered into before
If a borrower prepays part or all of a loan made under this section, then, notwithstanding section 947(b) of this title, the Governor of the telephone bank shall—
use the full amount of the prepayment to repay obligations of the telephone bank issued pursuant to section 947(b) of this title before
in repaying the obligations, first repay the advances bearing the greatest rate of interest.
Applications considered under this section and section 935(d)(2)
On request of any applicant for a loan under this section during any fiscal year, the Governor of the telephone bank shall—
consider the application to be for a loan under this section and a loan under section 935(d)(2) of this title; and
if the applicant is eligible for a loan, make a loan to the applicant under this section in an amount equal to the amount that bears the same ratio to the total amount of loans for which the applicant is eligible under this section and under section 935(d)(2) of this title, as the amount made available for loans under this section for the fiscal year bears to the total amount made available for loans under this section and under section 935(d)(2) of this title for the fiscal year.
Applications considered under section 935(d)(2)
Payment schedule; adjustment; loan period
Borrowers to determine amortization period for rural telephone bank loans
Except as provided in paragraph (2), the term of any loan made under this subchapter shall be determined by the borrower at the time the application for the loan is submitted.
The term of any loan made under this subchapter shall not exceed the maximum term for which a loan may be made under section 904 of this title.
Interest on loans and advances
Source
(May 20, 1936, ch. 432, title IV, § 408, as added Pub. L. 92–12, § 2,Notes
Amendments
Effective Date of 1990 Amendment
Effective Date of 1973 Amendment
Effective Date
Congressional Findings Covering Interest Rates and Loan Prepayments
overcharging of Rural Telephone Bank borrowers has resulted in $179,000,000 in excess profits and has imperiled borrowers by raising costs to ratepayers;
borrowers will be able to seek redress under section 408(b)(3)(G) of the Rural Electrification Act of 1936 [subsec. (b)(3)(G) of this section], as added by subsection (c), or may leave the Rural Telephone Bank, but in no case may the Governor of the Bank issue regulations requiring any penalty from borrowers seeking to retire debt prior to maturity; and
any reduction in Federal Government expenditures in the operation of the Rural Telephone Bank, from borrowers’ conduct resulting from the implementation of the amendments made by subsections (b) and (c) [amending this section], should be included in all calculations of the budget of the United States Government, authorized under the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 [title I of Pub. L. 100–119, see Short Title of 1987 Amendment note set out under section 900 of Title 2, The Congress].”