§ 84. — Lending limits.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC84]
TITLE 12--BANKS AND BANKING
CHAPTER 2--NATIONAL BANKS
SUBCHAPTER IV--REGULATION OF THE BANKING BUSINESS; POWERS AND DUTIES OF
NATIONAL BANKS
Sec. 84. Lending limits
(a) Total loans and extensions of credit
(1) The total loans and extensions of credit by a national banking
association to a person outstanding at one time and not fully secured,
as determined in a manner consistent with paragraph (2) of this
subsection, by collateral having a market value at least equal to the
amount of the loan or extension of credit shall not exceed 15 per centum
of the unimpaired capital and unimpaired surplus of the association.
(2) The total loans and extensions of credit by a national banking
association to a person outstanding at one time and fully secured by
readily marketable collateral having a market value, as determined by
reliable and continuously available price quotations, at least equal to
the amount of the funds outstanding shall not exceed 10 per centum of
the unimpaired capital and unimpaired surplus of the association. This
limitation shall be separate from and in addition to the limitation
contained in paragraph (1) of this subsection.
(b) Definitions
For the purposes of this section--
(1) the term ``loans and extensions of credit'' shall include
all direct or indirect advances of funds to a person made on the
basis of any obligation of that person to repay the funds or
repayable from specific property pledged by or on behalf of the
person and, to the extent specified by the Comptroller of the
Currency, such term shall also include any liability of a national
banking association to advance funds to or on behalf of a person
pursuant to a contractual commitment; and
(2) the term ``person'' shall include an individual, sole
proprietorship, partnership, joint venture, association, trust,
estate, business trust, corporation, sovereign government or agency,
instrumentality, or political subdivision thereof, or any similar
entity or organization.
(c) Exceptions
The limitations contained in subsection (a) of this section shall be
subject to the following exceptions:
(1) Loans or extensions of credit arising from the discount of
commercial or business paper evidencing an obligation to the person
negotiating it with recourse shall not be subject to any limitation
based on capital and surplus.
(2) The purchase of bankers' acceptances of the kind described
in section 372 of this title and issued by other banks shall not be
subject to any limitation based on capital and surplus.
(3) Loans and extensions of credit secured by bills of lading,
warehouse receipts, or similar documents transferring or securing
title to readily marketable staples shall be subject to a limitation
of 35 per centum of capital and surplus in addition to the general
limitations if the market value of the staples securing each
additional loan or extension of credit at all times equals or
exceeds 115 per centum of the outstanding amount of such loan or
extension of credit. The staples shall be fully covered by insurance
whenever it is customary to insure such staples.
(4) Loans or extensions of credit secured by bonds, notes,
certificates of indebtedness, or Treasury bills of the United States
or by other such obligations fully guaranteed as to principal and
interest by the United States shall not be subject to any limitation
based on capital and surplus.
(5) Loans or extensions of credit to or secured by unconditional
takeout commitments or guarantees of any department, agency, bureau,
board, commission, or establishment of the United States or any
corporation wholly owned directly or indirectly by the United States
shall not be subject to any limitation based on capital and surplus.
(6) Loans or extensions of credit secured by a segregated
deposit account in the lending bank shall not be subject to any
limitation based on capital and surplus.
(7) Loans or extensions of credit to any financial institution
or to any receiver, conservator, superintendent of banks, or other
agent in charge of the business and property of such financial
institution, when such loans or extensions of credit are approved by
the Comptroller of the Currency, shall not be subject to any
limitation based on capital and surplus.
(8)(A) Loans and extensions of credit arising from the discount
of negotiable or nonnegotiable installment consumer paper which
carries a full recourse endorsement or unconditional guarantee by
the person transferring the paper shall be subject under this
section to a maximum limitation equal to 25 per centum of such
capital and surplus, notwithstanding the collateral requirements set
forth in subsection (a)(2) of this section.
(B) If the bank's files or the knowledge of its officers of the
financial condition of each maker of such consumer paper is
reasonably adequate, and an officer of the bank designated for that
purpose by the board of directors of the bank certifies in writing
that the bank is relying primarily upon the responsibility of each
maker for payment of such loans or extensions of credit and not upon
any full or partial recourse endorsement or guarantee by the
transferor, the limitations of this section as to the loans or
extensions of credit of each such maker shall be the sole applicable
loan limitations.
(9)(A) Loans and extensions of credit secured by shipping
documents or instruments transferring or securing title covering
livestock or giving a lien on livestock when the market value of the
livestock securing the obligation is not at any time less than 115
per centum of the face amount of the note covered, shall be subject
under this section, notwithstanding the collateral requirements set
forth in subsection (a)(2) of this section, to a maximum limitation
equal to 25 per centum of such capital and surplus.
(B) Loans and extensions of credit which arise from the discount
by dealers in dairy cattle of paper given in payment for dairy
cattle, which paper carries a full recourse endorsement or
unconditional guarantee of the seller, and which are secured by the
cattle being sold, shall be subject under this section,
notwithstanding the collateral requirements set forth in subsection
(a)(2) of this section, to a limitation of 25 per centum of such
capital and surplus.
(10) Loans or extensions of credit to the Student Loan Marketing
Association shall not be subject to any limitation based on capital
and surplus.
(d) Authority of Comptroller of the Currency
(1) The Comptroller of the Currency may prescribe rules and
regulations to administer and carry out the purposes of this section,
including rules or regulations to define or further define terms used in
this section and to establish limits or requirements other than those
specified in this section for particular classes or categories of loans
or extensions of credit.
(2) The Comptroller of the Currency also shall have authority to
determine when a loan putatively made to a person shall for purposes of
this section be attributed to another person.
(R.S. Sec. 5200; June 22, 1906, ch. 3516, 34 Stat. 451; Sept. 24, 1918,
ch. 176, Sec. 6, 40 Stat. 967; Oct. 22, 1919, ch. 79, Sec. 1, 41 Stat.
296; Feb. 25, 1927, ch. 191, Sec. 10, 44 Stat. 1229; May 20, 1933, ch.
35, Sec. 1, 48 Stat. 73; June 16, 1933, ch. 89, Sec. 26(a), 48 Stat.
191; Aug. 23, 1935, ch. 614, title III, Sec. 321(b), 49 Stat. 713; June
11, 1942, ch. 404, Sec. 8, 56 Stat. 356; July 15, 1949, ch. 338, title
VI, Sec. 602(b), 63 Stat. 440; July 22, 1937, ch. 517, Sec. 15(a), as
added Aug. 14, 1946, ch. 964, Sec. 5, 60 Stat. 1079; amended Pub. L. 85-
748, Sec. 1(c), Aug. 25, 1958, 72 Stat. 841; Pub. L. 86-251, Sec. 3,
Sept. 9, 1959, 73 Stat. 488; Pub. L. 87-723, Sec. 4(c)(4), Sept. 28,
1962, 76 Stat. 672; Pub. L. 90-19, Sec. 27(b), May 25, 1967, 81 Stat.
29; Pub. L. 92-318, title I, Sec. 133(c)(2), June 23, 1972, 86 Stat.
270; Pub. L. 97-320, title IV, Sec. 401(a), Oct. 15, 1982, 96 Stat.
1508; Pub. L. 97-457, Sec. 17(a), Jan. 12, 1983, 96 Stat. 2509.)
References in Text
Section 372 of this title, referred to in subsec. (c)(2), was in the
original a reference to ``section 13 of the Federal Reserve Act''.
Provisions of section 13 describing bankers' acceptances are classified
to section 372 of this title. Other provisions of section 13 are
classified to sections 342 to 347, 347c, 347d of this title.
Codification
R.S. Sec. 5200 derived from act June 3, 1864, ch. 106, Sec. 29, 13
Stat. 108, which was the National Bank Act. See section 38 of this
title.
Amendments
1983--Subsec. (b)(1). Pub. L. 97-457 inserted a comma before ``to
the extent specified by the Comptroller of the Currency''.
1982--Pub. L. 97-320 amended section generally. Prior to amendment,
section read as follows: ``The total obligations to any national banking
association of any person, copartnership, association, or corporation
shall at no time exceed 10 per centum of the amount of the capital stock
of such association actually paid in and unimpaired and 10 per centum of
its unimpaired surplus fund. The term `obligations' shall mean the
direct liability of the maker or acceptor of paper discounted with or
sold to such association and the liability of the indorser, drawer, or
guarantor who obtains a loan from or discounts paper with or sells paper
under his guaranty to such association and shall include in the case of
obligations of a copartnership or association the obligations of the
several members thereof and shall include in the case of obligations of
a corporation all obligations of all subsidiaries thereof in which such
corporation owns or controls a majority interest. Such limitation of 10
per centum shall be subject to the following exceptions:
``(1) Obligations in the form of drafts or bills of exchange
drawn in good faith against actually existing values shall not be
subject under this section to any limitation based upon such capital
and surplus.
``(2) Obligations arising out of the discount of commercial or
business paper actually owned by the person, copartnership,
association, or corporation negotiating the same shall not be
subject under this section to any limitation based upon such capital
and surplus.
``(3) Obligations drawn in good faith against actually existing
values and secured by goods or commodities in process of shipment
shall not be subject under this section to any limitation based upon
such capital and surplus.
``(4) Obligations as indorser or guarantor of notes, other than
commercial or business paper excepted under paragraph (2) of this
section, having a maturity of not more than six months, and owned by
the person, corporation, association, or copartnership indorsing and
negotiating the same, shall be subject under this section to a
limitation of 15 per centum of such capital and surplus in addition
to such 10 per centum of such capital and surplus.
``(5) Obligations in the form of banker's acceptances of other
banks of the kind described in section 372 of this title shall not
be subject under this section to any limitation based upon such
capital and surplus.
``(6) Obligations of any person, copartnership, association or
corporation, in the form of notes or drafts secured by shipping
documents, warehouse receipts or other such documents transferring
or securing title covering readily marketable nonperishable staples
when such property is fully covered by insurance, if it is customary
to insure such staples, shall be subject under this section to a
limitation of 15 per centum of such capital and surplus in addition
to such 10 per centum of such capital and surplus when the market
value of such staples securing such obligation is not at any time
less than 115 per centum of the face amount of such obligation, and
to an additional increase of limitation of 5 per centum of such
capital and surplus in addition to such 25 per centum of such
capital and surplus when the market value of such staples securing
such additional obligation is not at any time less than 120 per
centum of the face amount of such additional obligation, and to a
further additional increase of limitation of 5 per centum of such
capital and surplus in addition to such 30 per centum of such
capital and surplus when the market value of such staples securing
such additional obligation is not at any time less than 125 per
centum of the face amount of such additional obligation, and to a
further additional increase of limitation of 5 per centum of such
capital and surplus in addition to such 35 per centum of such
capital and surplus when the market value of such staples securing
such additional obligation is not at any time less than 130 per
centum of the face amount of such additional obligation, and to a
further additional increase of limitation of 5 per centum of such
capital and surplus in addition to such 40 per centum of such
capital and surplus when the market value of such staples securing
such additional obligation is not at any time less than 135 per
centum of the face amount of such additional obligation, and to a
further additional increase of limitation of 5 per centum of such
capital and surplus in addition to such 45 per centum of such
capital and surplus when the market value of such staples securing
such additional obligation is not at any time less than 140 per
centum of the face amount of such additional obligation, but this
exception shall not apply to obligations of any one person,
copartnership, association, or corporation arising from the same
transactions and/or secured by the identical staples for more than
ten months. Obligations of any person, copartnership, association,
or corporation in the form of notes or drafts secured by shipping
documents, warehouse receipts, or other such documents transferring
or securing title covering refrigerated or frozen readily marketable
staples when such property is fully covered by insurance, shall be
subject under this section to a limitation of 15 per centum of such
capital and surplus in addition to such 10 per centum of such
capital and surplus when the market value of such staples securing
such obligation is not at any time less than 115 per centum of the
face amount of such additional obligation, but this exception shall
not apply to obligations of any one person, copartnership,
association or corporation arising from the same transactions and/or
secured by the identical staples for more than six months.
``(7) Obligations of any person, copartnership, association, or
corporation in the form of notes or drafts secured by shipping
documents or instruments transferring or securing title covering
livestock or giving a lien on livestock when the market value of the
livestock securing the obligation is not at any time less than 115
per centum of the face amount of the notes covered by such documents
shall be subject under this section to a limitation of 15 per centum
of such capital and surplus in addition to such 10 per centum of
such capital and surplus. Obligations arising out of the discount by
dealers in dairy cattle of paper given in payment for dairy cattle,
which bear a full recourse endorsement or unconditional guarantee of
the seller and are secured by the cattle being sold, shall be
subject under this section to a limitation of 15 per centum of such
capital and surplus in addition to such 10 per centum of such
capital and surplus.
``(8) Obligations of any person, copartnership, association, or
corporation secured by not less than a like amount of bonds or notes
of the United States issued since April 24, 1917, or certificates of
indebtedness of the United States, Treasury bills of the United
States, or obligations fully guaranteed both as to principal and
interest by the United States, shall (except to the extent permitted
by rules and regulations prescribed by the Comptroller of the
Currency, with the approval of the Secretary of the Treasury) be
subject under this section to a limitation of 15 per centum of such
capital and surplus in addition to such 10 per centum of such
capital and surplus.
``(9) Obligations representing loans to any national banking
association or to any banking institution organized under the laws
of any State, or to any receiver, conservator, or superintendent of
banks, or to any other agent, in charge of the business and property
of any such association or banking institution, when such loans are
approved by the Comptroller of the Currency, shall not be subject
under this section to any limitation based upon such capital and
surplus.
``(10) Obligations shall not be subject under this section to
any limitation based upon such capital and surplus to the extent
that such obligations are secured or covered by guaranties, or by
commitments or agreements to take over or to purchase, made by any
Federal Reserve bank or by the United States or any department,
bureau, board, commission, or establishment of the United States,
including any corporation wholly owned directly or indirectly by the
United States: Provided, That such guaranties, agreements, or
commitments are unconditional and must be performed by payment of
cash or its equivalent within sixty days after demand. The
Comptroller of the Currency is authorized to define the terms herein
used if and when he may deem it necessary.
``(11) Obligations of a local public agency (as defined in
section 110(h) of the Housing Act of 1949 [42 U.S.C. 1460(h)]) or of
a public housing agency (as defined in the United States Housing Act
of 1937, as amended [42 U.S.C. 1437 et seq.]) which have a maturity
of not more than eighteen months shall not be subject under this
section to any limitation, if such obligations are secured by an
agreement between the obligor agency and the Secretary of Housing
and Urban Development in which the agency agrees to borrow from the
Secretary, and the Secretary agrees to lend to the agency, prior to
the maturity of such obligations, monies in an amount which
(together with any other monies irrevocably committed to the payment
of interest on such obligations) will suffice to pay the principal
of such obligations with interest to maturity, which monies under
the terms of said agreement are required to be used for that
purpose.
``(12) Obligations insured by the Secretary of Agriculture
pursuant to the Bankhead-Jones Farm Tenant Act, as amended [7 U.S.C.
1000 et seq.], or the Act of August 28, 1937, as amended (relating
to the conservation of water resources), or title V of the Housing
Act of 1949 [42 U.S.C. 1471 et seq.], shall be subject under this
section to a limitation of 15 per centum of such capital and surplus
in addition to such 10 per centum of such capital and surplus.
``(13) Obligations as endorser or guarantor of negotiable or
nonnegotiable installment consumer paper which carries a full
recourse endorsement or unconditional guarantee by the person,
copartnership, association, or corporation transferring the same,
shall be subject under this section to a limitation of 15 per centum
of such capital and surplus in addition to such 10 per centum of
such capital and surplus: Provided, however, That if the bank's
files or the knowledge of its officers of the financial condition of
each maker of such obligations is reasonably adequate, and upon
certification by an officer of the bank designated for that purpose
by the board of directors of the bank, that the responsibility of
each maker of such obligations has been evaluated and the bank is
relying primarily upon each such maker for the payment of such
obligations, the limitations of this section as to the obligations
of each such maker shall be the sole applicable loan limitation:
Provided further, That such certification shall be in writing and
shall be retained as part of the records of such bank.
``(14) Obligations of the Student Loan Marketing Association
shall not be subject to any limitation based upon such capital and
surplus.''
1972--Par. (14). Pub. L. 92-318 added par. (14).
1967--Par. (11). Pub. L. 90-19 substituted ``Secretary of Housing
and Urban Development'' for ``Housing and Home Finance Administrator or
the Public Housing Administration'' and ``Secretary'' for
``Administrator or Administration'' wherever appearing, respectively.
1962--Par. (12). Pub. L. 87-723 inserted ``or title V of the Housing
Act of 1949'' before ``shall be subject under this section''.
1959--Par. (6). Pub. L. 86-251, Sec. 3(a), substituted ``secured
by'' for ``secured upon'' and inserted exception with respect to
obligations secured by documents transferring or securing title covering
refrigerated or frozen readily marketable staples.
Par. (7). Pub. L. 86-251, Sec. 3(b), inserted exception with respect
to obligations arising out of the discount by dealers in dairy cattle of
paper given in payment for dairy cattle.
Par. (8). Pub. L. 86-251, Sec. 3(c), struck out ``in the form of
notes'' after ``corporation''.
Par. (13). Pub. L. 86-251, Sec. 3(d), added par. (13).
1958--Par. (12). Pub. L. 85-748 amended section 15(a) of act July
22, 1937, as added by act Aug. 14, 1946, by inserting sentence amending
R.S. Sec. 5200 by adding par. (12).
1949--Par. (11). Act July 15, 1949, added par. (11).
1942--Par. (10). Act June 11, 1942, added par. (10).
1935--Par. (8). Act Aug. 23, 1935, inserted ``Treasury bills of the
United States, or obligations fully guaranteed both as to principal and
interest by the United States''.
1933--Par. (1). Act June 16, 1933, inserted provision relating to
obligations of a corporation and its subsidiaries in second sentence.
Par. (9). Act May 20, 1933, added par. (9).
1927--Act Feb. 25, 1927, reenacted section, subdividing it into
eight numbered exceptions.
Effective Date of 1982 Amendment
Section 401(b) of Pub. L. 97-320 provided that: ``This section
[amending this section] shall take effect upon the expiration of one
hundred and eighty days after the date of its enactment [Oct. 15,
1982].''
Repeals
Repealing provisions of Consolidated Farmers Home Administration Act
of 1961 as not having the effect of repealing the amendment to this
section enacted by act July 22, 1937, Sec. 15(a), as added Aug. 14,
1946, see section 341(a) of Pub. L. 87-128, title III, Aug. 8, 1961, 75
Stat. 318, set out as a note under section 1921 of Title 7, Agriculture.
Savings Provision
Section 26(b) of act June 16, 1933, provided: ``The amendment made
by this section [amending this section] shall not apply to such
obligations of subsidiaries held by such association on the date this
section takes effect.''
Exception as to Transfer of Functions
Functions vested by any provision of law in Comptroller of the
Currency, referred to in this section, not included in transfer of
functions to Secretary of the Treasury, see note set out under section 1
of this title.
Application to District of Columbia
Provisions of this section were made applicable to banks, etc., in
the District of Columbia by act Mar. 4, 1933, ch. 274, Sec. 3, 47 Stat.
1567.
Section Referred to in Other Sections
This section is referred to in sections 345, 375b, 1464 of this
title.
