U.S. Code > Appendix to Title 46 > CHAPTER 27—MERCHANT MARINE ACT, 1936 (§§ 1101—1295g) > SUBCHAPTER XI—FEDERAL SHIP MORTGAGE INSURANCE (§§ 1271—1280b) > § 1279b. Deposit fund

§ 1279b. Deposit fund

(a) Establishment of deposit fund
There is established in the Treasury a deposit fund for purposes of this section. The Secretary or Administrator may, in accordance with an agreement under subsection (b) of this section, deposit into and hold in the deposit fund cash belonging to an obligor to serve as collateral for a guarantee under this subchapter made with respect to the obligor.
(b) Agreement
(1) In general
The Secretary or Administrator and an obligor shall enter into a reserve fund or other collateral account agreement to govern the deposit, withdrawal, retention, use, and reinvestment of cash of the obligor held in the deposit fund established by subsection (a) of this section.
(2) Terms
The agreement shall contain such terms and conditions as are required under this section and such additional terms as are considered by the Secretary or Administrator to be necessary to protect fully the interests of the United States.
(3) Security interest of United States
The agreement shall include terms that grant to the United States a security interest in all amounts deposited into the deposit fund.
(c) Investment
The Secretary or Administrator may invest and reinvest any part of the amounts in the deposit fund established by subsection (a) of this section in obligations of the United States with such maturities as ensure that amounts in the deposit fund will be available as required for purposes of agreements under subsection (b) of this section. Cash balances of the deposit fund in excess of current requirements shall be maintained in a form of uninvested funds and the Secretary of the Treasury shall pay interest on these funds.
(d) Withdrawals
(1) In general
The cash deposited into the deposit fund established by subsection (a) of this section may not be withdrawn without the consent of the Secretary or Administrator.
(2) Use of income
Subject to paragraph (3), the Secretary or Administrator may pay any income earned on cash of an obligor deposited into the deposit fund in accordance with the terms of the agreement with the obligor under subsection (b) of this section.
(3) Retention against default
The Secretary or Administrator may retain and offset any or all of the cash of an obligor in the deposit fund, and any income realized thereon, as part of the Secretary’s or Administrator’s recovery against the obligor in case of a default by the obligor on an obligation.