class D stock shall have the same rights and status as a holder of class B, class C, or class D stock, respectively. The rights and obligation of the electric bank in respect of such special fund equivalents shall be identical to its rights and obligations in respect of class B, class C, or class D stock, respectively.

"(h) After payment of all operating expenses of the electric bank, including interest and dividends on class C and class D stock, setting aside appropriate funds for reserves for losses, and making payments in lieu of taxes, the Electric Bank Board shall annually set aside the remaining earnings of the electric bank for the payment of dividends on class A stock and patronage refunds. Such remaining earnings shall be divided at the time they are set aside in proportion to the total amount of outstanding class A and class B stock at such time. The proportion available for the payment of patronage refunds shall be distributed in accordance with the bylaws of the Electric Bank Board. At the time of such distribution, the proportion available for the payment of dividends on class A stock shall be paid into miscellaneous receipts of the Treasury.

"SEC. 406. BORROWING POWER.-(a) The electric bank is authorized to obtain funds through the public or private sale of its bonds, debentures, notes, and other evidences of indebtedness (herein collectively called electric debentures). Electric debentures shall be issued at such times, bear interest at such rates, and contain such other terms and conditions as the Electric Bank Board shall determine with the approval of the Secretary of the Treasury: Provided, however, That the amount of electric debentures which may be outstanding at any one time pursuant to this subsection (a) shall not exceed ten times the paid-in capital and retained earnings of the electric bank, unless an appropriation Act shall specify another amount, and it shall be in order for appropriation Acts to contain such provisions subject to the aforesaid limitations. The electric bank shall insert in all its electric debentures appropriate language indicating that such electric debentures, together with interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States or of any agency or instrumentality thereof other than the electric bank. Electric debentures shall not be exempt, either as to principal or interest, from any taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State or local taxing authority. Electric debentures shall be lawful investments and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority and control of the United States or any officer or officers thereof.

"(b) If there are insufficient funds in the assets of the electric bank available for the purpose to pay interest or principal on its electric debentures, the electric bank may obtain funds for this purpose by making and issuing notes to the Secretary of the Treasury. Such notes shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield, during the month preceding the issuance of the notes, on outstanding marketable obligations of the United States having comparable maturities. Such notes may be redeemable before maturity in such manner as may be stipulated in the notes. Interest payments on such notes may be deferred with approval of the Secretary of the Treasury, but any interest payments so deferred shall themselves bear interest. The Secretary of the Treasury is authorized and directed to purchase any notes issued by the electric bank pursuant to this subsection (b) and for such purchases may use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which such securities may be issued under such Act, as amended, are hereby extended to include any such purchases.

"SEC. 407. USE OF DEPARTMENT OF AGRICULTURE FACILITIES AND EMPLOYEES.In order to perform its responsibilities under this title, the electric bank may utilize the facilities and the services of employees of the Rural Electrification Administration or of any other agency of the Department of Agriculture, without cost to the electric bank, except to the extent that administrative expenses are recovered by the electric bank under section 410(b) (2) of this title.

"SEC. 408. ANNUAL REPORTS; FISCAL AGENT.-(a) The Governor of the electric bank shall make an annual report to the Secretary for transmittal to the Congress on the administration of this title IV and any other matters relating to the effectuation of the policies of title IV, including recommendations for legislation. "(b) The electric bank when designated for that purpose by the Secretary of the Treasury shall act as fiscal or other agent of the United States and when acting as such shall perform such duties as shall be prescribed by the Secretary of the Treasury.

"SEC. 409. TAX EXEMPTIONS.-The electric bank shall be deemed to be an instrumentality of the United States, and as such, its property, franchise, capital, reserves, surpluses, security holdings, and other funds, and its income shall be exempt from all taxation now or hereafter imposed by the United States, or by any State, territorial, or local taxing authority: Provided, That the electric bank is authorized to make payments to State, territorial, and local governments in lieu of property taxes upon real property and tangible personal property which was subject to State, territorial, and local taxation before acquisition by the electric bank. Such payment may be in the amounts, at the times, and upon such terms as the electric bank deems appropriate, but the electric bank shall be guided by the policy of making payments not in excess of the taxes which would have been payable upon such property in the condition in which it was acquired.

"SEC. 410. LENDING POWER.-(a) The Governor of the electric bank is authorized on behalf of the electric bank to make loans, in conformance with policies established by him, to corporations or public bodies which have received a loan or loan commitment pursuant to section 4 of this Act, or which are owned or controlled by organizations which have received such a loan or commitment, (1) for the same purposes for which loans may be made under section 4 of this Act, and (2) for the purposes of financing, or refinancing, the construction, improvement, expansion, acquisition, and operation of electric generating plants and electric transmission and distribution lines or systems, in order to improve the efficiency, effectiveness or financial stability of electric systems of such corporations or public bodies financed under sections 4 and 410 of this Act, subject, as to the purposes set forth in (2) hereof, to the following provisos: That in the case of any such loans for acquisitions of electric facilities, the acquisitions shall be approved by the Secretary, the location and character thereof shall be such as to improve the efficiency, effectiveness or financial stability of the electric system of the borrower, and the cumulative size thereof shall be not greater than the borrower's existing system at the time it receives its first loan from the electric bank, taking into account the number of consumers served, miles of line, and plant investment; that in the case of any such loan made to effect an exchange of properties, such exchange shall be an appropriate means of achieving a reasonable and logical adjustment of the service areas of the borrower and another electric supplier; and that in the case of any such loan for the construction, improvement, expansion, or operation of electric generating and related transmission facilities, these facilities shall be utilized in reciprocal power or energy arrangements between the borrower and one or more other electric suppliers and shall be of a capacity not in excess of the power requirements of the ultimate consumers of (i) the borrower, (ii) its members, and (iii) members of the latter, in respect of which consumers loans have been made under section 4 and 410 of this Act, projected over the estimated life of such facilities.

"(b) Loans under this section shall be on such terms and conditions as the Governor of the electric bank shall determine, subject, however, to the following restrictions:

"(1) No loan may be made hereunder for a period exceeding fifty years. "(2) Intermediate loans shall bear interest at a rate equal to (i) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield, during the month of May preceding the fiscal year in which the loans are made, on outstanding marketable obligations of the United States with remaining periods of maturity comparable to the average maturities of such loans, or (ii) 4 per centum per annum, whichever is lower. All other loans made hereunder shall bear interest at a rate which reflects the current average rate payable by the electric bank on its electric debentures, and administrative expenses and estimated losses of the electric bank in respect of such other loans, all as determined by the Governor of the electric bank. Intermediate loans shall not be made to a borrower which is determined by the Governor of the electric bank, under standards to be established by the Secretary, to be capable of both paying the interest rate applicable hereunder to loans other than intermediate loans and achieving the objectives of the Federal rural electricfication program. The authority to make intermediate loans hereunder shall terminate on June 30, 1981: Provided, That on or before July 1, 1971, the Secretary shall make a report to the President for transmittal to the Congress on the status of the intermediate loan program with recommendations concerning is continuation thereafter.

"(3) Loans shall not be made unless the Governor of the electric bank finds and certifies that in his judgment the security therefor is reasonably adequate and such loan will be repaid within the time agreed.

"(4) No loan for the construction, operation, or enlargement of any generating plant shall be made unless the consent of the State authority having jurisdiction in the premises is first obtained.

"(c) The Governor of the electric bank is authorized to adjust the schedule of payments of interest or principal of loans made under this section upon his determination that with such readjustment there is reasonable assurance of repayment: Provided, however, That no adjustment shall extend the period of such loans beyond fifty years.

"SEC. 411. ELECTRIC BANK RECEIPTS.-Any receipts from the activities of the electric bank shall be available for all obligations and expenditures of the electric bank.

"SEC. 412. CONVERSION OF ELECTRIC BANK TO PRIVATE OWNERSHIP, CONTROL AND OPERATION. As promptly as practicable after all class A stock issued to the United States has been retired pursuant to section 405 (e) of this title, the Secretary shall transmit to the President for submission to the Congress recommendations for such legislation as may be necessary or desirable to make appropriate provisions for the transfer to class B, class C and class D stockholders of the ownership and control of the electric bank in order that its operations may thereafter be carried on as a privately owned, operated and financed banking corporation. Such legislation shall provide for the termination of the authority to borrow from the Secretary of the Treasury under section 406(b) in respect of electric debentures thereafter issued, and for the termination of the provisions for tax exemption provided under section 409.

"SEC. 413. CUMULATIVE NATURE OF TITLE IV; AMENDMENTS THERETO.-Notwithstanding anything in this Act, powers and authority provided for in this title IV shall be cumulative, and nothing herein shall be deemed to limit powers and authority provided for in any other title of this Act. The right to repeal, alter, or amend this title IV at any time is expressly reserved.

"TITLE V

"SEC. 501. RURAL TELEPHONE ACCOUNT.-There is hereby established in the Treasury of the United States an account, to be known as the rural telephone account, consisting of:

"(1) all notes, bonds, obligations, and property delivered or assigned to the Administrator pursuant to loans heretofore or hereafter made under section 201 of this Act, including notes, bonds, obligations, and property held in trust by him on behalf of the Secretary of the Treasury, as of the effective date of this title, which shall be transferred to and be assets of the rural telephone account;

"(2) undisbursed balances of telephone loans made under section 201, which, as of the effective date of this title, shall be transferred to and be assets of the rural telephone account;

"(3) all collections of principal and interest received on and after July 1, 1965, on notes, bonds, judgments, or other obligations made or held under title II of this Act, which shall be paid into and be assets of the rural telephone account;

"(4) all appropriations for telephone loans made under the authority of section 3 of this Act and funds obtained in accordance therewith and the unexpended balances of any funds available on the effective date of this title for telephone loans under section 201 of this Act, including any funds made available for telephone loans under the item 'Rural Electrification Administration,' in the Department of Agriculture Appropriation Acts current on the date of enactment of this title, and said appropriations and funds shall be assets of the rural telephone account; and

"(5) shares of the capital stock of the Federal Bank for Rural Telephone Systems acquired by investment of the rural telephone account pursuant to section 502(b)(3) of this title, and moneys received from said Bank upon retirement of said shares of stock in accordance with the provisions of title VI of this Act, which said shares and moneys shall be assets of the rural telephone account.

"SEC. 502. LIABILITIES AND USES OF ACCOUNT.-(a) The notes of the Administrator issued to the Secretary of the Treasury to obtain funds for loans under

section 201 of this Act, and all other liabilities against the appropriations or assets in the rural telephone account in connection with telephone loan operations shall be liabilities of the rural telephone account, and all other obligations against such appropraitions or assets arising out of telephone loan operations shall be obligations of the rural telephone account.

"(b) The assets of the rural telephone account shall be available for the following purposes:

"(1) loans under section 201 of this Act and for advances in connection therewith, except that no such loans shall be made in any year in excess of the amounts previously authorized therefor in appropriation acts for such year or available pursuant to section 3 of this Act; the amounts so authorized for loans and advances shall remain available until expended;

"(2) payment of interest as it accrues on loans to the Administrator from the Secretary of the Treasury for telephone purposes pursuant to section 3(a) of this Act;

"(3) investment in the capital stock of the Federal Bank for Rural Telephone Systems in accordance with section 605(a) of this Act: Provided, That such investment shall be deemed paid in capital of the said bank notwithstanding that funds representing the proceeds from the purchase of such stock shall remain in the rural telephone account until required for actual disbursement in cash by the said bank; and

"(4) payment of principal when due on loans to the Administrator from the Secretary of the Treasury for telephone purposes pursuant to section 3(a) of this Act.

"SEC. 503. DEPOSIT OF ACCOUNT MONEYS.-Moneys in the rural telephone ac count shall remain on deposit in the Treasury of the United States until disbursed.

"TITLE VI

"SEC. 601. ESTABLISHMENT AND GENERAL PURPOSES OF THE TELEPHONE BANK.There is hereby established a body corporate to be known as the Federal Bank for Rural Telephone Systems (hereinafter called the telephone bank), subject to the supervision and direction of the Secretary of Agriculture (hereinafter called the Secretary). The general purposes of the telephone bank shall be to obtain an adequate supply of supplemental funds to the extent feasible from nonFederal sources, to utilize said funds in the making of loans under section 610 of this title, and to conduct its operations to the extent practicable on a selfsustaining basis. The telephone bank shall be an agency of the United States, and shall, for purposes of jurisdiction and venue, be deemed a citizen and resident of the District of Columbia.

"SEC. 602. GENERAL POWERS.-To carry out the specific powers herein authorized, the telephone bank shall have power to: (a) adopt, alter and use a corporate seal; (b) sue and be sued in its corporate name: Provided, however, That nothing herein shall be construed to exempt the telephone bank from the application of sections 507(b) and 2679 of title 28, United States Code, or section 367 of the Revised Statutes (5 U.S.C. 316); (c) make contracts, leases and cooperative agreements, or enter into other transactions as may be necessary in the conduct of its business, and on such terms as it may deem appropriate; (d) acquire, in any lawful manner, hold, maintain, use and dispose of property; (e) accept gifts or donations of services, or of property in aid of any of the purposes herein authorized; (f) appoint such officers, attorneys, agents, and employees, vest them with such powers and duties, fix and pay such compensation to them for their services as the telephone bank may determine, and obtain services as authorized by section 15 of the Act of August 2, 1946 (5 U.S.C. 55a); (g) determine the character of and the necessity for its obligations and expenditures, and the manner in which they shall be incurred, allowed and paid. subject to provisions of law specifically applicable to Government corporations; (h) use the United States mails in the same manner and under the same conditions as the executive departments of the Federal Government; (i) execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers; (j) here, in the perment of debts out of bankrupt insolvent and decedents' estates. the priority of the United States, except where such priority is waived by the telephone bank; (k) collect or compromise all obligations assigned to or held by it and all legal or equitable rights accruing to it in connection with the payment of such obligations until such time as such obliga

tion may be referred to the Attorney General for suit or collection; and (1) exercise all such other powers as shall be necessary or incidental to carrying out its functions under this title: Provided, That the telephone bank shall undertake no new types of activities not included in the annual budget program.

"SEC. 603. BOARD OF DIRECTORS.-(a) The management of the telephone bank, within the limitations prescribed by law, shall be vested in a board of directors (hereinafter called the Telephone Bank Board) consisting of seven members.

"(b) Four members of the Telephone Bank Board shall be designated by the Secretary from among officers and employees of the Department of Agriculture, and shall serve as members of the Telephone Bank Board without additional compensation.

"(c) Three members of the Telephone Bank Board, who are not regularly employed by the Federal Government, shall be initially appointed by the Secretary for a term of two years, with regard to fair representation of the rural telephone systems of the Nation. Thereafter, three members of the Telephone Bank Board shall be elected for a term of two years by holders of class B and class C stock, in accordance with such rules and regulations as the Secretary may prescribe. An appointive or elective member may continue to serve as such after the expiration of the term for which he was appointed or elected until his successor has been elected and has qualified. Vacancies among appointive or elective members shall be filled for the unexpired term in the same manner in which the vacant office was filled. Appointive and elective members shall receive $100 for each day or part thereof spent in the performance of official duties, and shall be reimbursed for travel and other expenses as authorized by section 5 of the Administrative Expenses Act of 1946 (5 U.S.C. 73(b)-2) for persons employed intermittently in the Government service.

(d) The Telephone Bank Board shall prescribe bylaws, not inconsistent with law, regulating the manner in which the telephone bank's business shall be conducted, its officers elected, its stock issued, held and disposed, of its property transferred, its bylaws amended, and the powers and privileges granted to it by law exercised and enjoyed.

"SEC. 604. GOVERNOR.-The Administrator of the Rural Electrification Administration shall serve as the chief executive officer of the telephone bank (hereinafter called the Governor of the telephone bank). Except as to matters specifically reserved to the Telephone Bank Board in this title, the Governor of the telephone bank shall exercise and perform all functions, powers, and duties of the telephone bank.

"SEC. 605. CAPITALIZATION.-(a) The telephone bank's capital shall consist of capital subscribed by the United States, by borrowers from the telephone bank, and by corporations eligible to become borrowers from the telephone bank. Beginning on July 1, 1966, and ending fifteen years thereafter, the United States shall furnish capital to the telephone bank, in the amount of $20,000,000 in any fiscal year from net collection proceeds in the rural telephone account created under title V of this Act, unless an appropriation Act shall specify another amount, and it shall be in order for appropriation Acts to contain such provisions but not in amounts exceeding $20,000,000 in any fiscal year: Provided, That on or before July 1, 1971, the Secretary shall make a report to the President for transmittal to the Congress on the status of capitalization of the telephone bank by the United States with recommendations concerning the continuation hereafter of such capitalization. As used in this section, the term 'net collection proceeds' shall be deemed to mean payments from and after July 1, 1966, of principal and interest on loans heretofore or hereafter made under section 201 of this Act, less an amount representing interest payable to the Secretary of the Treasury on loans to the Administrator for telephone purposes pursuant to section 3(a) of this Act.

“(b) The capital stock of the telephone bank shall consist of three classes, class A, class B, and class C, the rights, powers, privileges and preferences of the separate classes to be as specified, not inconsistent with law, in the bylaws of the telephone bank. Class B and class C stock shall be voting stock, but no holder of said stock shall be entitled to more than one vote, nor shall class B and class C stockholders, regardless of their number, which are owned or controlled by the same person, group of persons, firm, association or corporation, be entitled in any event to more than ten votes.

"(c) Class A stock shall be issued only to the Administrator of the Rural Electrification Administration on behalf of the United States in exchange for