An Act to authorize emergency loan guarantees to major business enterprises
PL 92-70 (H.R.8432), enacted 08/09/1971

178 
PUBLIC LAW 92.69-AUG. 6, 1971 
[85 STAT. 
Public Law 92-69 
August 6,1971 
[H. R. 4762] 
Veterans. 
Medical infor-
mation exchange, 
extension. 
80 Stat. 1375. 
AN ACT 
To amend section •jOo.j of title 38, United States Code, in order to extend the 
authority of the Administrator of Veterans Affairs to establish and carry 
out a pro}?rani of exchange of medical information. 
Be if emu'ted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ Tliat section 5055 
of title 88, United States Code, is amended by deleting in the first 
sentence of subsection (c) (1) "of the first four fiscal years following 
the fiscal year in which this subchapter is enacted" and inserting in 
lieu thereof the following: "fiscal year 1968 through 1971, and such 
sums as may be necessary for each fiscal year 1972 through 1975,". 
Approved August 6, 1971. 
August 9,1971 
[H. R. 8432] 
Emergency Loan 
Guarantee Act. 
Public Law 92-70 
AN ACT 
To authorize emergency loan guarantees to major businesis enterprises. 
Be it enacted by the Senate aTid House of Represejitatives 
of the 
United States of Ametica in Congress assembled^ 
Membership. 
SHORT TITLE 
SECTION 1. This Act may be cited as the "Emergency Loan (juaran-
tee Act". 
ESTABLISHMENT OP T H E BOARD 
SEO. 2. There is created an Emergency Loan Guarantee Board 
(referred to in this Act as the "Board") composed of the Secretary of 
the Treasury, as Chairman, the Chairman of the Board of Governors 
of the Federal Reserve System, and the Chairman of the Securities 
and Exchange Commission. Decisions of the Board shall be made by 
majority vote. 
AUTHORITY 
SEC. 3. The Board, on such terms and conditions as it deems appro-
priate, may guarantee, or make commitments to guarantee, lender 
against loss of principal or interest on loans that meet the requirements 
of this Act. 
LIMITATIONS AND CONDITIONS 
SEC. 4. (a) A guarantee of a loan may be made under this Act 
only if— 
(1) the Board finds that (A) the loan is needed to enable 
the borrower to continue to furnish goods or services and failure 
to meet this need would advei-sely and seriously affect the economy 
of or employment in the Nation or any region thereof, (B) credit 
is not otherwise available to the borrower under reasonable terms 
or conditions, and (C) the prospective earning power of the 
borrower, together with the character and value of the security 
pledged, furnish reasonable assurance that it will be able to repay 
the loan within the time fixed, and afford reasonable protection 
to the United States; and 
(2) the lender certifies that it would not make the loan without 
such guarantee. 
85 STAT.] 
PUBLIC LAW 92-70-AUG. 9, 1971 
179 
(b) Loans guaranteed under this Act shall be payable in not more 
than five years, but may be renewable for not more than an additional 
three years. 
(c)(1) Loans guaranteed under this Act shall bear interest pay-
able to the lending institutions at rates determined by the Board 
taking into account the reduction in risk afforded by the loan guaran-
tee and rates charged by lending institutions on otherwise comparable 
loans. 
(2) The Board shall prescribe and collect a guarantee fee in 
connection with each loan guaranteed under this Act. Such fee shall 
reflect the Government's administrative expense in making the guaran-
tee and the risk assumed by the Government and shall not be less 
than an amount which, when added to the amount of interest payable 
to the lender of such loan, produces a total charge appropriate for 
loan agreements of comparable risk and maturity if supplied by 
the normal capital markets. 
Interest rates 
determination. 
Guarantee fee. 
SECURITY FOR LOAN GUARANTEES 
SEC. 5. In negotiating a loan guarantee under this Act, the Board 
shall make every effort to arrange that the payment of the principal 
of and interest on any plan guaranteed shall be secured by sufficient 
property of the enterprise to collateralize fully the amount of the 
loan guarantee. 
Waiver, 
Managerial 
changes. 
REQUIREMENTS APPLICABLE TO LOAN 
GUARANTEES 
SEC. 6. (a) A guarantee agreement made under this Act with respect 
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or other payments 
to an enterprise shall require that while there is any principal or prohibition. 
interest remaining unpaid on a guaranteed loan to that enterprise the 
enterprise may not— 
(1) declare a dividend on its common stock; or 
(2) make any payment on its other indebtedness to a lender 
whose loan has been guaranteed under this Act. 
The Board may waive either or both of the requirements set forth in 
this subsection, as specified in the guarantee agreement covering a loan 
to any particular enterprise, if it determines that such waiver is not 
inconsistent with the reasonable protection of the interests of the 
United States under the guarantee. 
(b) If the Board determines that the inability of an enterprise to 
obtain credit without a guarantee under this Act is the result of a 
failure on the part of management to exercise reasonable business 
prudence in the conduct of the affairs of the enterprise, the Board shall 
req[uire before guaranteeing any loan to the enterprise that the enter-
prise make such management changes as the Board deems necessary 
to give the enterprise a sound managerial base. 
(c) A guarantee of a loan to any enterprise shall not be made under 
this Act unless— 
(1) the Board has received an audited financial statement of 
the enterprise; and 
(2) the enterprise permits the Board to have the same access 
to its books and other documents as the Board would have under 
section 7 in the event the loan is guaranteed. 
(d) No payment shall be made or become due under a guarantee 
entered into under this Act unless the lender has exhausted any reme-
dies which it may have under the guarantee agreement. 
(e) (1) Prior to making any guarantee under this Act, the Board 
shall satisfy itself that the underlying loan agreement on which the 
guarantee is sought contains all the affirmative and negative covenants 
Financial state-
ment. 
75-432 O - 72 - 14 
180 
PUBLIC LAW 92-70-AUG. 9, 1971 
[85 STAT. 
Advances. 
Loan security, 
priority. 
"Collateral." 
52 Stat. 878. 
11 u s e 108. 
GAO audit. 
Report to Board 
and Congress. 
and other protective provisions which are usual and customary in 
loan agreements of a similar kind, including previous loan agree-
ments between the lender and the borrower, and that it cannot be 
amended, or any provisions waived, without the Board's prior consent, 
(2) On each occasion when the borrower seeks an advance under 
the loan agreement, the guarantee authorized by this Act shall be in 
force as to the funds advanced only if— 
(A) the lender gives the Board at least ten days' notice in 
writing of its intent to provide the borrower with funds pursuant 
to the loan agreement; 
(B) the lender certifies to the Board before an advance is made 
that, as of the date of the notice provided for in subparagraph (A), 
the borrower is not in default under the loan agreement: Provided^ 
That if a default has occurred the lender shall report the facts and 
circumstances relating thereto to the Board and the Board may 
expressly and in writing waive such default in any case where it 
determines that such waiver is not inconsistent with the reasonable 
protection of the interests of the United States under the guar-
antee; and 
(C) the borrower provides the Board with a plan setting forth 
the expenditures for which the advance will be used and the period 
during which the expenditures will be made, and, upon the expira-
tion of such periods, reports to the Board any instances in which 
amounts advanced have not been expended in accordance with the 
plan. 
(f) (1) A guarantee agreement made under this Act shall contain a 
requirement that as between the Board and the lender, the Board shall 
have a priority with respect to, and to the extent of, the lender's inter-
est in any collateral securing the loan and any earlier outstanding 
loans. The Board shall take all steps necessary to assure such priority 
against any other persons. 
(2) As used in paragraph (1) of this subsection, the term "col-
lateral" includes all assets pledged under loan agreements and, if 
appropriate in the opinion of the Board, all sums of the borrower on 
deposit with the lender and subject to offset under section 68 of the 
Bankruptcy Act. 
INSPECTION o r DOCUMENTS; AUTHORITY TO DISAPPROVE CERTAIN 
TRANSACTIONS 
SEC. 7. (a) The Board is authorized to inspect and copy all accounts, 
books, records, memoranda, correspondence, and other documents of 
any enterprise which has received financial assistance under this Act 
concerning any matter which may bear upon (1) the ability of such 
enterprise to repay the loan within the time fixed therefor; (2) the 
interests of the United States in the property of such enterprise; and 
(3) the assurance that there is reasonable protection to the United 
States. The Board is authorized to disapprove any transaction of such 
enterprise involving the disposition of its assets which may affect the 
repayment of a loan that has been guaranteed pursuant to the 
provisions of this Act. 
(b) The General Accounting Office shall make a detailed audit of 
all accounts, books, records, and transactions of any borrower with 
respect to which an application for a loan guarantee is made under this 
Act. The General Accounting Office shall report the results of such 
audit to the Board and to the Congress. 
85 STAT. ] 
PUBLIC LAW 92-70-AUG. 9, 1971 
181 
MAXIMUM OBLIGATION 
SEC. 8. The maximum obligation of the Board under all out-
standing loans guaranteed by it sliall not exceed at any time 
$250,000,000. 
EMERGENCY IX>AN GUARANTEE FUND 
SEC. 9. (a) There is established in the Treasury an emergency loan 
guarantee fund to be administered by the Board. The fund shall 
be used for the payment of the expenses of the Board and for the 
purpose of fulfilling the Board's obligations under this Act. Moneys 
in the fund not needed for current operations may be invested in 
direct obligations of, or obligations that are fully guaranteed as to 
principal and interest by, the United States or any agency thereof. 
(b) The Board shall prescribe and collect a guarantee fee in con-
nection with each loan guaranteed by it under this Act. Sums realized 
from such fees shall be deposited in the emergency loan guarantee 
fund. 
(c) Payments required to be made as a consequence of any guar-
antee by the Board shall be made from the emergency loan guarantee 
fund. In the event that moneys in the fund are insufficient to make 
such payments, in order to discharge its responsibilities, the Board is 
authorized to issue to the Secretary of the Treasury notes or other 
obligations in such forms and denominations, bearing such maturities, 
and subject to such terms and conditions as may be prescribed by the 
Board with the approval of the Secretary of the Treasury. Such notes 
or other obligations shall bear interest at a rate determined by the 
Secretary of the Treasury, taking into consideration the current aver-
age market yield on outstanding marketable obligations of the United 
States of comparable maturities during the month preceding the issu-
ance of the notes or other obligations. The Secretary of the Treasury 
is authorized and directed to purchase any notes and other obligations 
issued hereunder and for that purpose he is authorized to 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 pur-
poses for which securities may be issued under that Act are extended 
to include any purchase of such notes and obligations. 
Establishment; 
Guarantee fee. 
Payments. 
40 Stat. 288, 
506. 
31 use 774. 
FEDERAL RESERVE B A N K S AS F I S C A L AGENTS 
SEC. 10. Any Federal Reserve bank which is requested to do so shall 
act as fiscal agent for the Board. Each such fiscal agent shall be 
reimbursed by the Board for all expenses and losses incurred by it in 
acting as agent on behalf of the Board. 
PROTECTION o r GOVERNMENT'S INTEREST 
SEC. 11. (a) The Attorney General shall take such action as may 
be appropriate to enforce any right accruing to the United States or 
any officer or agency thereof as a result of the issuance of guarantees 
under this Act. Any sums recovered pursuant to this section shall be 
paid into the emergency loan guarantee fund. 
(b) The Board shall be entitled to recover from the borrower, or 
any other person liable therefor, the amount of any payments made 
pui'suant to any guarantee agreement entered into under this Act, and 
upon making any such payment, the Board shall be subrogated to all 
the rights of the recipient thereof. 
Attorney General, 
enforcement au-
thority. 
Recovery rights. 
182 
PUBLIC LAW 92-71-AUG. 9, 1971 
[85 STAT. 
Reports to 
Congress; rec-
ommendations. 
REPORTS 
SEC. 12. The Board shall submit to the Congress annually a full 
report of its operations under this Act. In addition, the Board shall 
submit to the Congress a special report not later than June 30, 1973, 
which shall include a full report of the Board's operations together 
with its recommendations with respect to the need to continue the 
guarantee program beyond the termination date specified in section 
13. If the Board recommends that the program should be continued 
beyond such termination date, it shall state its recommendations with 
respect to the appropriate board, agency, or corporation which should 
administer the program. 
TERMINATION" 
SEC. 13. The authority of the Board to enter into any guarantee or 
to make any commitment to guarantee imder this Act terminates on 
December 31,1973. Such termination does not affect the carrying out 
of any contract, guarantee, commitment, or other obligation entered 
into pursuant to this Act prior to that date, or the taking of any 
action necessary to preserve or protect the interests of the United 
States in any amounts advanced or paid out in carrying on operations 
under this Act. 
Approved August 9, 1971. 
August 9, 1971 
[H. J. Res. 829] 
Public Law 92-71 
JOINT RESOLUTION 
Making further continuing appropriations for the fiscal year 1972, 
and for other purposes. 
Continuing 
appropriations, 
1972. 
Ante, 
p. 91; 
Post, p. 680. 
Resolved hy the Senate aTid House of Representatives 
of the United 
States of America in Congress assembled^ That clause (c) of section 
102 of the joint resolution of July 1, 1971 (Public Law 92-38), is 
hereby amended by striking out "August 6, 1971" and inserting in 
lieu thereof "October 15, 1971": Provided, That obligations may be 
incurred for the activities of the Federal Power Commission from 
July 1,1971, in anticipation of appropriations for the fiscal year 1972, 
and are hereby ratified and confirmed if otherwise in accord with the 
applicable terms of Public Law 92-38, as amended. 
Approved August 9, 1971. 
August 9,1971 
[H. J. Res. 833] 
Public Law 92-72 
JOINT RESOLUTION 
Making an appropriation for the Department of Labor for the fiscal year 1972, 
and for other purposes. 
Department of 
Labor. 
Appropriation. 
Resolved hy the Senate and House of Representatives 
of the United 
States of America in Congress assembled, That the following sum is 
appropriated, out of any money in the Treasury not otherwise appro-
priated, for the fiscal year ending June 30, 1972, namely: