Full text of An Act to Provide for Direct Loans by Federal Reserve Banks to State Banks and Trust Companies in Certain Cases, and for Other Purposes

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[PUBLIC—No. 4—73d

CONGRESS]

fH. R . 3757]
AN ACT
T o provide for direct loans by Federal reserve banks to State banks and trust
companies in certain cases, and for otfcer purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, T h a t T i t l e I V of
the A c t entitled " A n A c t to provide relief i n the existing national
emergency i n banking, and f o r other purposes," approved March
9, 1933, is amended by adding at the end thereof the following new
section:
" SEC. 404; D u r i n g the existing emergency i n banking, or u n t i l
this section shall be declared no longer operative by proclamation
of the President, but i n no event beyond the period of one year
f r o m the date this section takes effect, any State bank or trust
company not a member of the Federal reserve system may apply
to the Federal reserve bank i n the district i n which i t is located and
said Federal reserve bank, i n its discretion and after inspection
and approval of the collateral and a thorough examination of the
applying bank or trust company, may make direct loans to such
State bank or trust company under the terms provided i n section
10 (b) of the Federal Reserve A c t , as amended by section 402 of
this A c t : Provided, T h a t loans may be made to any applying
nonmember State bank or trust company upon eligible security.
A l l applications f o r such loans shall be accompanied by the w r i t t e n
approval of the State banking department or commission of the
State f r o m which the State bank or trust company has received
its charter and a statement f r o m the said State banking department
or commission that i n its judgment said State bank or trust company
is i n a sound condition. The notes representing such loans shall be
eligible as security f o r circulating notes issued under the provisions
of the sixth paragraph of section 18 of the Federal Reserve A c t , as
amended by section 401 of this A c t , to the same extent as notes,
drafts, bills of exchange, or bankers' acceptances acquired under
the provisions of the Federal Reserve Act. D u r i n g the time that
such bank or trust company is indebted i n any way to a Federal
Reserve bank i t shall be required to comply i n all respects to the
provisions of the Federal Reserve'Act applicable to member State
banks and the regulations of the Federal Reserve Board issued
thereunder: Provided, T h a t i n lieu of subscribing to stock i n the
f e d e r a l reserve bank i t shall maintain the reserve balance required
by section 19 .of the Federal Reserve A c t d u r i n g the existence of
such indebtedness. As used i n this section and i n section 304, the
term ' S t a t e bank or trust company 5 shall include a bank or trust
company organized Under the laws of any State, T e r r i t o r y , or
possession of the United States, or the Canal Zone."
SEC. 2. (a) Section 304 of such A c t of March 9, 1933, is amended
by adding after the first sentence thereof the following new sen-




case in which under the laws of the State i n which i t is located a
State b^rik or trust company is not permitted to issue preferred
stock exempt from double liability, or i f such laws permit such issue
of preferred stock only by unanimous consent of stockholders, the
Reconstruction Finance Corporation is authorized, for the purposes
of this section, to purchase the legally'issued capital notes , or debentures of such State bank or trust company."
(b) The second sentence of said section 304 is amended to read as
follows: " The Reconstruction Finance Corporation may, w i t h the
approval of the Secretary of the Treasury, and under such rules and
regulations as he may prescribe, sell i n the open market the whole
or any part of the preferred stock, capital notes, or debentures of
any national banking association, State bank or trust company
acquired by the corporation pursuant to this section."
Such section 304 is further amended by adding at the end thereof
the following new sentence-: (c) " A s used i n this section, the term
State bank or trust company' shall include other banking corporations engaged i n the business of industrial banking and under the
supervision of State banking departments or of the Comptroller of
the Currency."
Approved March 24th, 1933