Full text of Banking Act of 1935
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[Public— No. 305— 74th C ongress]
[H. R. 7617]
AN ACT
To provide for the sound, effective, and uninterrupted operation of the banking
system, and for other purposes.
Be it enacted by the Senate and Home of Representatives of the
United States of America in Congress assembled. That this Act may
be cited as the “ Banking Act of 1935 ”.
TITLE I—FEDERAL DEPOSIT INSURANCE
S e c t io n 101. Section 12B of the Federal Reserve Act, as amended
(U. S . C., Supp. V II, title 12, sec. 264), is amended to read as
follows:
“ S e c. 12B. (a) There is hereby created a Federal Deposit Insur
ance Corporation (hereinafter referred to as the 4Corporation ’)
which shall insure, as hereinafter provided, the deposits oi all banks
which are entitled to the benefits of insurance under this section,
and which shall have the powers hereinafter granted.
“ (b) The management of the Corporation shall be vested in a
ioard of directors consisting of three members, one of whom shall
be the Comptroller of the Currency, and two oi whom shall be citi
zens of the United States to be appointed by the President, by and
with the advice and consent of the Senate. One of the appointive
members shall be the chairman of the board of directors of the
Corporation and not more than two of the members of such board
of directors shall be members of the same political party. Each
such appointive member shall hold office for a term of six years and
shall receive compensation at the rate of $10,000 per annum, pay
able monthly out of the funds of the Corporation, but the Comp
troller of the Currency shall not receive additional compensation for
his services as such member. In the event of a vacancy in the office
of the Comptroller of the Currency, and pending the appointment of
his successor, or during the absence of the Comptroller from Wash
ington, the Acting Comptroller of the Currency shall be a member of
the board of directors in the place and stead of the Comptroller.
In the event of a vacancy in the office of the chairman of the board
of directors, and pending the appointment of his successor, the
Comptroller of the Currency shall act as chairman. The Comptroller
of the Currency shall be ineligible during the time he is m office
and for two years thereafter to hold any office, position, or employ
ment in any insured bank. The appointive members of the board of
directors shall be ineligible during the time they are in office and
for two years thereafter to hold any office, position, or employment
in any insured bank, except that this restriction shall not apply to
any appointive member who has served the full term for which he
was appointed. No member of the board of directors shall be an
officer or director of any bank, banking institution, trust company,
or Federal Reserve bank or hold stock in any bank, banking institu
2
[P ub. 305.J
tion, or trust company; and before entering upon his duties as a
member of the board of directors he shall certify under oath that he
has complied with this requirement and such certification shall bo
filed with the secretary of the board of directors. No member of
the board of directors serving on the board of directors on the effec
tive date shall be subject to any of the provisions of the three
preceding sentences until the expiration of has present term of office.
44(c) As used in this section—
44(l) The term 4State bank5means any bank, banking association,
trust company, savings bank, or other banking institution which is
engaged in the business of receiving deposits and which is incorpo
rated under the laws of any State, Hawaii, Alaska, Puerto Rico, or
the Virgin Islands, or whicn is operated under the Code of Law for
the District of Columbia (except a national bank), and includes any
unincorporated bank the deposits of which are insured on the effective
date under the provisions of this section.
“ (2) The term 4State member bank ’ means any State bank which
is a member of the Federal Reserve System, and the term 4State
nonmember bank ’ means any State bank which is not a member of
the Federal Reserve System.
44(3) The term 4District bank5 means any State bank operating
under the Code of Law for the District of Columbia.
44(4) The term 4national member bank ’ means any national bank
located in any of the States of the United States, the District of
Columbia, Hawaii, Alaska, Puerto Rico, or the Virgin Islands which
is a member of the Federal Reserve System.
44(5) The term 4national nonmember bank’ means any national
bank located in Hawaii, Alaska, Puerto Rico, or the Virgin Islands
which is not a member of the Federal Reserve System.
44(6) The term 4mutual savings bank5means a bank without capi
tal stock transacting a savings bank business, the net earnings of
which inure wholly to the benefit of its depositors after payment of
obligations for any advances by its organizers.
44(7) The term 4savings bank ’ means a bank (other than a mutual
savings bank) which transacts its ordinary banking business strictly
as a savings bank under State laws imposing special requirements
on such banks governing the manner of investing their funds and of
conducting their business: Provided, That the bank maintains, until
maturity date or until withdrawn, all deposits made with it (other
than funds held by it in a fiduciary capacity) as time savings deposits
of the specific term type or of the type where the right is reserved
to the bank to require written notice before permitting withdrawal:
Provided further, That such bank to be considered a savings bank
must elect to become subject to regulations of the Corporation with
respect to the redeposit of maturing deposits and prohibiting with
drawal of deposits by checking except in cases where such withdrawal
is permitted oy law on the effective date from specifically designated
deposit accounts totaling not more than 15 per centum of the bank’s
total deposits.
44(8) The term 4insured bank’ means any bank the deposits of
which are insured in accordance with the provisions of this section:
and the term 4noninsured bank’ means any bank the deposits oi
which are not so insured.
[P ub. 305.]
3
“ (9) The term 6new bank ’ means a new national banking associa
tion organized by the Corporation to assume the insured deposits of
an insured bank closed on account of inability to meet the demands
of its depositors and otherwise to perform temporarily the functions
prescribed in this section.
“ (10) The term ‘ receiver5 includes a receiver, liquidating agent,
conservator, commission, person, or other agency charged by law with
the duty of winding up the affairs of a bank.
“ (11) The term 4board of directors ’ means the board, of directors
of the Corporation.
“ (12) The term 4deposit ’ means the unpaid balance of money or
its equivalent received by a bank in the usual course of business and
for which it has given or is obligated to give credit to a commercial,
checking, savings, time or thrift account, or which is evidenced by its
certificate of deposit, and trust funds held by such bank whether
retained or deposited in any department of such bank or deposited in
another bank, together with such other obligations of a bank as the
board of directors shall find and shall prescribe by its regulations to
be deposit liabilities by general usage: Provided, That any obliga
tion of a bank which is payable only at an office of the bank: located
outside the States of the United States, the District of Columbia,
Hawaii, Alaska, Puerto Rico, and the Virgin Islands, shall not be a
deposit for any of the purposes of this section or be included as a
part of total deposits or of an insured deposit : Provided further,
That any insured bank having its principal place of business in any
of the States of the United States or in the District of Columbia
which maintains a branch in Hawaii, Alaska, Puerto Rico, or the
Virgin Islands may elect to exclude from insurance under this sec
tion its deposit obligations which are payable only at such branch,
and upon so electing the insured bank with respect to such branch
shall comply with the provisions of this section applicable to the ter
mination of insurance by nonmember banks: Provided further, That
the bank may elect to restore the insurance to such deposits at any
time its capital stock is unimpaired.
“ (13) The term 4insured deposit’ means the net amount due to
any deposit or deposits in an insured bank (after deducting offsets)
less any part thereof which is in excess of $5,000. Such net amount
shall be determined according to such regulations as the board of
directors may prescribe, and in determining the amount due to any
depositor there shall be added together all deposits in the bank main
tained in the same capacity and the same right for his benefit either
in his own name or in the names of others, except trust funds which
shall be insured as provided in paragraph (9) of subsection (h) of
this section.
“ (14) The term ‘ transferred deposit’ means a deposit in a new
bank or other insured bank made available to a depositor by the Cor
poration as payment of the insured deposit of such depositor in a
closed bank, and assumed by such new bank or other insured bank.
“ (15) The term ‘ branch’ includes any branch bank, branch office,
branch agency, additional office, or any branch place of business
located in any State of the United States or in Hawaii, Alaska,
Puerto Rico, or the Virgin Islands at which deposits are received or
checks paid or money lent.
4
[P ub . 305.]
w(16) The term ‘ effective date’ means the date of enactment o f
the Banking Act of 1935.
“ (d) There is hereby authorized to be appropriated, out of any
money in the Treasury not otherwise appropriated, the sum of
$150,000,000, which shall be available for payment by the Secretary
of the Treasury for capital stock of the Corporation in an equal
amount, which shall be subscribed for by him on behalf of the United
States. Payments upon such subscription shall be subject to call in
whole or in part by the board of directors of the Corporation. Such
stock shall be in addition to the amount of capital stock required to
be subscribed for by Federal Reserve banks. Receipts for payments
by the United States for or on account of such stock shall be issued
by the Corporation to the Secretary of the Treasury and shall be
evidence of the stock ownership of the United States. Every Fed
eral Reserve bank shall subscribe to shares of stock in the Corpora
tion to an amount equal to one-half of the surplus of such bank on
January 1, 1933, and its subscriptions shall be accompanied by &
certified check payable to the Corporation in an amount equal to onehalf of such subscription. The remainder of such subscription shall
be subject to call from time to time by the board of directors upon
ninety days’ notice. The capital stock of the Corporation shall con
sist of the shares subscribed for prior to the effective date. Such
stock shall be without nominal or par value, and shares issued
prior to the effective date shall be exchanged and reissued at the
rate of one share for each $100 paid into the Corporation for capital
stock. The consideration received by the Corporation for the capital
stock shall be allocated to capital and to surplus in such amounts as
the board of directors shall prescribe. Such stock shall have no
vote and shall not be entitled to the payment of dividends.
“ (e) (1) Every operating State or national member bank, includ
ing a bank incorporated since March 10, 1933, licensed on or before
the effective date by the Secretary of the Treasury shall be and con
tinue to be, without application or approval, an insured bank and
shall be subject to the provisions of this section.
“ (2) After the effective date, every national member bank which
is authorized to commence or resume the business of banking, and
every State bank which is converted into a national member bank or
which becomes a member of the Federal Reserve System, shall be an
insured bank from the time it is authorized to commence or resume
business or becomes a member of the Federal Reserve System. The
certificate herein prescribed shall be issued to the Corporation by the
Comptroller of the Currency in the case of such national member
bank, or by the Board of Governors of the Federal Reserve System
in the case of such State member bank: Provided, That in the case of
an insured bank which is admitted to membership in the Federal Re
serve System or an insured State bank which is converted into a
national member bank, such certificate shall not be required, and the
bank shall continue as an insured bank. Such certificate shall state
that the bank is authorized to transact the business of banking in the
case of a national member bank, or is a member of the Federal
Reserve System in the case of a State member bank, and that con
sideration has been given to the factors enumerated in subsection (g)
of this section.
[P ub. 305.1
5
“ (f) (1) Every bank which is not a member of the Federal Reserve
System which on June 30, 1935 was or thereafter became a member
of the Temporary Federal Deposit Insurance Fund or of the Fund
For Mutuals heretofore created pursuant to the provisions of this
section, shall be and continue to be, without application or approval,
an insured bank and shall be subject to the provisions of this section:
Provided, That any State nonmember bank which was admitted to
the said Temporary Federal Deposit Insurance Fund or the Fund
For Mutuals but which did not file on or before the effective date
an October 1,1934 certified statement and make the payments thereon
required by law, shall cease to be an insured bank on August 31,
1935: Provided further, That no bank admitted to the said Tem
porary Federal Deposit Insurance Fund or the Fund For Mutuals
prior to the effective date shall, after August 31, 1935, be an insured
bank or have its deposits insured by the Corporation, if such bank
shall have permanently discontinued its banking operations prior to
the effective date.
“ (2) Subject to the provisions of this section, any national non
member bank, upon application by the bank and certification by the
Comptroller of the Currency in the manner prescribed in subsection
(e) of this section, and any State nonmember bank, upon application
to and examination by the Corporation and approval by the board of
directors, may become an insured bank. Before approving the appli
cation of any such State nonmember bank, the board of directors
shall give consideration to the factors enumerated in subsection (g)
of this section and shall determine, upon the basis of a thorough
examination of such bank, that its assets in excess of its capital
requirements are adequate to enable it to meet all its liabilities to
depositors and other creditors as shown by the books of the bank.
“ (g) The factors to be enumerated in the certificate required under
subsection (e) and to be considered by the board of directors under
subsection (f) shall be the following: The financial history and con
dition of the bank, the adequacy of its capital structure, its future
earnings prospects, the general character of its management, the con
venience and needs of the community to be served by the bank, and
whether or not its corporate powers are consistent with the purposes
of this section.
“ (h) (1) The assessment rate shall be one-twelfth of 1 per centum
er annum. The semiannual assessment for each insured bank shall
e in the amount of the product of one-half the annual assessment
rate multiplied by an assessment base which shall be the average for
six months of the differences at the end of each calendar day between
the total amount of liability of the bank for deposits (according to
the definition of the term ‘ deposit ’ in and pursuant to paragraph
(12) of subsection (c) of this section, without any deduction for
indebtedness of depositors) and the total of such uncollected items as
are included in such deposits and credited subject to final payment:
Provided, however, That the daily total of such uncollected items
shall be determined according to regulations prescribed by the board
of directors upon a consideration o f the factors of general usage and
ordinary time of availability, and for the purposes of such deduction
no item shall be regarded as uncollected for longer periods than those
prescribed by such regulations. Each insured bank shall, as a condi
S
6
{F ub. 305.]
tion to the right to deduct any specific uncollected item in determin
ing its assessment base, maintain such records as will readily permit
verification of the correctness of the particular deduction claimed.
The certified statements required to be filed with the Corporation
under paragraphs (2), (3), and (4) of this subsection shall be in sueh
form and set forth such supporting information as the board of
directors shall prescribe. The assessment payments required from
insured banks under paragraphs (2), (3), and (4) of this subsection
shall be made in such manner and at such time or times as the board
of directors shall prescribe, provided the time or times so prescribed
shall not be later than sixty days after filing the certified statement
setting forth the amount of the assessment. In the event that a sepa
rate Fund For Mutuals is established as provided in subsection (1),
the board of directors from time to time may fix a lower assessment
rate operative for such period as the board may determine which
shall be applicable to insured mutual savings banks only, and the
remainder of this paragraph shall not be applicable to such banks.
66(2) On or before the 15th day of July of each year, each insured
bank shall file with the Corporation a certified statement under oath
showing for the six months ending on the preceding June 30 the
amount of the assessment base and the amount of the semiannual
assessment due to the Corporation, determined in accordance with
paragraph (1) of this subsection. Each insured bank shall pay to
the Corporation the amount of the semiannual assessment it is
required to certify. On or before the 15th day of January of each
year after 1936 each insured bank shall file with the Corporation a
similar certified statement for the six months ending on the preceding
December 81 and shall pay to the Corporation the amount of the
semiannual assessment it is required to certify.
“ (3) Each bank which becomes an insured bank according to the
provisions of subsection (e) or (f) of this section shall, on or before
the 15th day of November 1935, file with the Corporation a certified
statement under oath showing the amount of the assessment due to
the Corporation for the period ending December 31,1935, which shall
be an amount equal to the product of one-third the annual assess
ment rate multiplied by the assessment base determined in accord
ance with paragraph (1) of this subsection, except that the assess
ment base shall be the average for the 31 days in the month of
October 1935, and payment shall be made to the Corporation of the
amount of the assessment so required to be certified. Each such
bank shall, on or before the 15th day of January 1936, file with the
Corporation a certified statement under oath showing the amount
of the semiannual assessment due to the Corporation lor the period
ending June 30,1936, which shall be an amount equal to the product
of one-half the annual assessment rate multiplied by the assessment
base determined in accordance with paragraph (1) of this subsection,
except that the assessment base shall be the average for the days or
the months of October, November and December of 1935, and pay
ment shall be made to the Corporation of the amount of the assess
ment so required to be certified.
“ (4) Eacn bank which becomes an insured bank after the effective
date shall be relieved from complying with the provisions of para
graph (2) of this subsection until it has operated as an insured Dank
[P ub. 305.]
7
for a full semiannual period ending on June 30 or December 31 as
the case may be. Each such bank, on or before the forty-fifth day
after its first day of operation as an insured bank, shall file with the
Corporation its first certified statement which shall be under oath
and shall, show the amount of the assessment base determined in
accordance with paragraph (1) of this subsection, except that the
assessment base shall be the average for the first thirty-one calendar
days it operates as an insured bank. Each such certified statement
shall also show as the amount of the first assessment due to the Cor
poration the prorated portion (for the period between its first day
of operation as an insured bank and the next succeeding last day of
June or December, as the case may be) of an amount equal to the
product of one-half the annual assessment rate multiplied by the
base required to be set forth on its first certified statement. Each
bank which becomes an insured bank after the effective date which
has not operated as an insured bank for a full semiannual period
ending on June 30 or December 31, as the case may be, shall, on or
before the 15th day of the first month thereafter (except that banks
becoming insured in June or December shall have thirty-one addi
tional days) file with the Corporation its second certified statement
under oath showing the amount of the assessment base and the amount
of the semiannual assessment due to the Corporation. Such assess
ment base and amount shall be determined in accordance with para
graph (1) of this subsection, except that if the bank became an
insured bank in the month of December or June the assessment base
shall be the average for the first thirty-one calendar days it operates
as an insured bank, and except that ix it became an insured bank in
any other month than December or June the assessment base shall be
the average for the days between its first day of operation as an
insured bank and the next succeeding last day of June or December,
as the case may be. Each bank required to file a certified statement
under this paragraph shall pay to the Corporation the amount of the
assessment the bank is required to certify.
“ (5) Each bank which shall be and continue without application
or approval an insured bank in accordance with the provisions of
subsection (e) or (f) of this section, shall, in lieu of all right to
refund (except as authorized in paragraph (3) of subsection (i)),
be credited with any balance to which such bank shall become entitled
upon the termination of the said Temporary Federal Deposit Insur
ance Fund or the Fund For Mutuals. The credit shall be applied
by the Corporation toward the payment of the assessment next
becoming due from such bank and upon succeeding assessments until
the credit is exhausted.
“ (6) Any insured bank which fails to file any certified statement
required to be filed by it in connection with determining the amount
of any assessment payable by the bank to the Corporation may be
compelled to file such statement by mandatory injunction or other
appropriate remedy in a suit brought for such purpose by the Cor
poration against the bank and any officer or officers thereof in any
court of the United States of competent jurisdiction in the district
or territory in which such bank is located.
“ (7) The Corporation, in a suit brought at law or in equity in any
court of competent jurisdiction, shall be entitled to recover from any
insured bank the amount of any unpaid assessment lawfully payable
2 0366 0 — 58------ 46
8
[P ub . 305.1
by such insured bank to the Corporation, whether or not such bank
shall have filed any such certified statement and whether or not suit
shall have been brought to compel the bank to file any such statement.
“ (8) Should any national member bank or any insured national
nonmember bank fail to file any certified statement required to be
filed by such bank under any provision of this subsection, or fail to
pay any assessment required to be paid by such bank under any pro
vision of this section, and should the bank not correct such failure
within thirty days after written notice has been given by the Corpo
ration to an officer of the bank, citing this paragraph, and stating
that the bank has failed to file or pay as required by law, all the
rights, privileges, and franchises of the bank granted to it under the
National Bank Act or under the provisions of this Act, as amended,
shall be thereby forfeited. Whether or not the penalty provided in
this paragraph has been incurred shall be determined and adjudged
in the manner provided in the sixth paragraph of section 2 of this
Act, as amended. The remedies provided in this paragraph and in
the two preceding paragraphs shall not be construed as limiting any
other remedies against any insured bank, but shall be in addition
thereto.
“ (9) Trust funds held by an insured bank in a fiduciary capacity
whether held in its trust or deposited in any other department or iix
another bank shall be insured in an amount not to exceed $5,000 for
each trust estate, and when deposited by the fiduciary bank in another
insured bank such trust funds shall be similarly insured to the fidu
ciary bank according to the trust estates represented. Notwithstand
ing any other provision of this section, such insurance shall be
separate from and additional to that covering other deposits of the
owners of such trust funds or the beneficiaries of such trust estates:
Provided, That where the fiduciary bank deposits any of such trust
funds in other insured banks, the amount so held by other insured
banks on deposit shall not for the purpose of any certified statement
required under paragraph (2), (3), or (4) of this subsection be con
sidered to be a deposit liability of the fiduciary bank, but shall be
considered to be a deposit liability of the bank in which such funds
are so deposited by such fiduciary bank. The board of directors
shall have power by regulation to prescribe the manner of reporting
and of depositing such trust funds.
“ (i) (1) Any insured bank (except a national member bank or
State member bank) may, upon not less than ninety days’ written
notice to the Corporation, and to the Reconstruction Finance Cor
poration if it owns or holds as pledgee any preferred stock, capital
notes, or debentures of such bank, terminate its status as an insured
bank. Whenever the board of directors shall find that an insured
bank or its director or trustees have continued unsafe or unsound
practices in conducting the business of such bank, or have knowingly
or negligently permitted any of its officers or agents to violate any
provision of any law or regulation to which the insured bank is
subject, the board of directors shall first give to the Comptroller of
the Currency in the case of a national bank or a District bank, to the
authority having supervision of the bank in the case of a State bank,
or to the Board of Governors of the Federal Reserve System in the
case of a State member bank, a statement with respect to such prac
EPUB. 305.]
9
tices or violations for the purpose of securing the correction thereof.
Unless such correction shall be made within one hundred and twenty
days or such shorter period of time as the Comptroller of the Cur
rency, the State authority, or Board of Governors of the Federal
Reserve System, as the case may be, shall require, the board of direc
tors, if it shall determine to proceed further, shall give to the bank
not less than thirty days’ written notice of intention to terminate
the status of the bank as an insured bank, and shall fix a time and
place for a hearing before the board of directors or before a person
designated by it to conduct such hearing, at which evidence may be
produced, and upon such evidence the board of directors shall make
written findings which shall be conclusive. Unless the bank shall
appear at the hearing by a duly authorized representative, it shall
be deemed to have consented to the termination of its status as an
insured bank. If the board of directors shall find that any violation
specified in such notice has been established, the board of directors
may order that the insured status of the bank be terminated on a
date subsequent to such finding and to the expiration of the time
specified in such notice of intention. The Corporation may publish
notice of such termination and the bank shall give notice of such
termination to each of its depositors at his last address of record on
the books of the bank, in such manner and at such time as the board
of directors may find to be necessary and may order for the protec
tion of depositors. After the termination ox the insured status of
any bank under the provisions of this paragraph, the insured deposits
of each depositor in the bank on the date of such termination, less all
subsequent withdrawals from any deposits of such depositor, shall
continue for a period of two years to be insured, and the bank shall
continue to pay to the Corporation assessments as in the case of an
insured bank during such period. No additions to any such deposits
and no new deposits in such bank made after the date of such termi
nation shall be insured by the Corporation, and the bank shall not
advertise or hold itself out as having insured deposits unless in the
same connection it shall also state with equal prominence that such
additions to deposits and new deposits made after such date are not
so insured. Such bank shall, in all other respects, be subject to the
duties and obligations of an insured bank for the period of two years
from the date of such termination, and in the event that such bank
shall be closed on account of inability to meet the demands of its
depositors within such, period of two years, the Corporation shall
have the same powers and rights with respect to such bank as in
case of an insured bank.
“ (2) Whenever the insured status of a State member bank shall be
terminated by action of the board of directors, the Board of Gov
ernors of the Federal Reserve System shall terminate its membership
in the Federal Reserve System in accordance with the provisions of
section 9 of this Act, and whenever the insured status of a national
member bank shall be so terminated the Comptroller of the Currency
shall appoint a receiver for the bank, which shall be the Corporation
whenever the bank shall be unable to meet the demands of its
depositors. Whenever a member bank shall cease to be a member
of the Federal Reserve System, its status as an insured bank shall,
10
[Pur. 305.1
without noticeor other action by the board of directors, terminate on
the date the bank shall cease to be a member of the Federal Reserve
System, with like effect as if its insured status had been terminated
on said date by the board of directors after proceedings under para
graph (1) of this subsection.
“ (3) If any nonmember bank which becomes an insured bank
under the provisions of paragraph (1) of subsection (f) of this sec
tion shall elect, within thirty days after the effective date, not to
continue as an insured bank, and shall within such period give writ
ten notice to the Corporation of its election, in accordance with regu
lations to be prescribed by the board of directors, and to the Recon
struction Finance Corporation if it owns or holds as pledgee any
preferred stock, capital notes, or debentures of such bank, it shau
cease to be an insured bank and cease to be subject to the provisions
of this section and the rights of the bank (including its right to any
refund) shall be as provided by law existing prior to the effective
date. The board of directors shall cause notice of termination of
insurance to be given to the depositors of such bank by publication
or otherwise as tne board of directors may determine, and tne deposits
in such bank shall continue to be insured for twenty days beyond
such thirty day period.
“ (4) Whenever the liabilities of an insured bank for deposits shall
have been assumed by another insured bank or banks, the insured
status of the bank whose liabilities are so assumed shall terminate on
the date of receipt by the Corporation of satisfactory evidence of
such assumption with like effect as if its insured status had been ter
minated on said date by the board of directors after proceedings
under paragraph (1) of this subsection: Provided, That if the bank
whose liabilities are so assumed rives to its depositors notice of such
assumption within thirty days after such assumption takes effect, by
publication or by any reasonable means, in accordance with regula
tions to be prescribed by the board of directors, the insurance of its
deposits shall terminate at the end of six months from the date such
assumption takes effect, and such bank shall thereupon be relieved of
all future obligations to the Corporation, including the obligation to
pay future assessments.
(j) Upon the date of enactment of the Banking Act of 1933, the
Corporation shall become a body corporate and as such shall have
power—
“ First. To adopt and use a corporate seal.
“ Second. To have succession until dissolved by an Act of Congress.
“ Third. To make contracts.
“ Fourth. To sue and be sued, complain and defend, in any court
of law or equity, State or Federal. All suits of a civil nature at
common law or in equity to which the Corporation shall be a party
shall be deemed to arise under the laws of the United States: Pro
videdxThat any such suit to which the Corporation is a party in its
capacity as receiver of a State bank and which involves only the
rights or obligations of depositors, creditors, stockholders and such
State bank under State law shall not be deemed to arise under the
laws of the United States. No attachment or execution shall be
issued against the Corporation or its property before final judgment
in any suit, action, or proceeding in any State, county, municipal, or
[P ub. 305.]
11
United States court. The boards! directors shall designate an agent
upon whom service of process may be made in any State, Territory,
or jurisdiction in which any insured bank is located.
6 Fifth. To appoint by its board of directors such officers and
employees as are not otherwise provided for in this section, to define
their duties, fix their compensation, require bonds of them and fix
the penalty thereof, and to dismiss at pleasure such officers or
employees. Nothing in this or any other Act shall be construed to
prevent the appointment and compensation as an officer or employee
of the Corporation of any officer or employee of the United States in
any board, commission, independent establishment, or executive
department thereof.
“ Sixth. To prescribe by its board of directors, bylaws not incon
sistent with law, regulating the manner in which its general business
may be conducted, and the privileges granted to it by law may be
exercised and enjoyed.
“ Seventh. To exercise by its board of directors, or duly authorized
officers or agents, all powers specifically granted by the provisions of
this section and such incidental powers as shall be necessary to carry
out the powers so granted.
“ Eighth. To make examinations of and to require information
and reports from banks, as provided in this section.
“ Ninth. To act as receiver.
“ Tenth. To prescribe by its board of directors such rules and regu
lations as it may deem necessary to carry out the provisions of this
section.
“ (k) (1) The board of directors shall administer the affairs of the
Corporation fairly and impartially and without discrimination. The
board of directors of the Corporation shall determine and prescribe
the manner in which its obligations shall be incurred and its expenses
allowed and paid. The Corporation shall be entitled to the free use
of the United States mails in the same manner as the executive
departments of the Government. The Corporation with the consent
of any Federal Reserve bank or of any board, commission, inde
pendent establishment, or executive department of the Government,
mcluding any field service thereof, may avail itself of the use oi
information, services, and facilities thereof in carrying out the
provisions of this section.
“ (2) The board of directors shall appoint examiners who shall
have power, on behalf of the Corporation, to examine any insured
State nonmember bank (except a District bank), any State non
member bank making application to become an insured bank, and any
closed insured bank, whenever in the judgment of the board of direc
tors an examination of the bank is necessary. Such examiners shall
have like power to examine, with the written consent of the Comp
troller of the Currency, any national bank or District bank, and,
with the written consent of the Board of Governors of the Federal
Reserve System, any State member bank. Each such examiner shall
have power to make a thorough examination of all the affairs of the
bank and in doing so he shall have power to administer oaths and
to examine and take and preserve the testimony of any of the officers
and agents thereof, and shall make a full and detailed report of the
condition of the bank to the Corporation. The board of directors in
12
[P ub . 305.]
like manner shall appoint claim agents who shall have power to
investigate and examme all claims for insured deposits and trans
ferred deposits. Each claim agent shall have power to administer
oaths and to examine under oath and take and preserve the testimony
of any persons relating to such claims. The provisions of sections 184
to 186 (both inclusive) of the Revised Statutes (U. S. C., title 5,
secs. 94 to 96) are hereby extended to examinations and investigations
authorized by this paragraph.
“ (3) Each insured State nonmember bank (except a District bank)
shall make to the Corporation reports of condition in such form and
at such times as the board of directors may require. The board of
directors may require such reports to be published in such manner,
not inconsistent with any applicable law, as it may direct. Every
such bank which fails to mate or publish any such report within
such time, not less than five days, as the board of directors may
require, shall be subject to a penalty of not more than $100 for eacn
day of such failure recoverable by the Corporation for its use.
“ (4) The Corporation shall have access to reports of examinations
made by, and reports of condition made to, the Comptroller of the
Currency or any Federal Reserve bank, may accept any report made
by or to any commission, board, or authority having supervision of
a State nonmember bank (except a District bank), and may furnish
to the Comptroller of the Currency, to any Federal Reserve bank,
and to any such commission, board, or authority, reports of examina
tions made on behalf of, and reports of condition made to, the
Corporation.
“ (1) (1) The Temporary Federal Deposit Insurance Fund and the
Fund For Mutuals heretofore created pursuant to the provisions of
this section are hereby consolidated into a Permanent Insurance
Fund for insuring deposits, and the assets therein shall be held by the
Corporation for tne uses and purposes of the Corporation: Provided,
That the obligations to and rights of the Corporation, depositors,
banks, and other persons arising out of any event or transaction
prior to the effective date shall remain unimpaired. On and after
the effective date, the Corporation shall insure the deposits of all
insured banks as provided in this section: Provided, That the insur
ance shall apply only to deposits of insured banks which have been
made available since March 10. 1933, for withdrawal in the usual
course of the banking business: Provided further, That if any insured
bank shall, without tne consent of the Corporation, release or modify
restrictions on or deferments of deposits which had not been made
available for withdrawal in the usual course of the banking business
on or before the effective date, such deposits shall not be insured.
The maximum amount of the insured deposit of any depositor shall
be $5,000. The Corporation, in the discretion of the board of direc
tors, may open on its books solely for the benefit of mutual savings
banks and depositors therein a separate Fund For Mutuals. If sucn
Fund is opened, all assessments upon mutual savings banks shall be
paid into such Fund and the Permanent Insurance Fund of the Cor
poration shall cease to be liable for insurance losses sustained in
mutual savings banks: Provided, That the capital assets of the Cor
poration shall be so liable and all expenses of operation of the Cor
poration shall be allocated between such Funds on an equitable basis.
[P ub. 305.]
13
44(2) For the purposes of this section, an insured bank shall be
deemed to have been closed on account of inability to meet the
demands of its depositors in any case in which it has been closed for
the purpose of liquidation without adequate provision being made
for payment of its depositors.
“ (3) Notwithstanding any other provision of law, whenever any
insured national bank or insured District bank shall have been closed
by action of its board of directors, or by the Comptroller of the
Currency, as the case may be, on account of inability to meet the
demands of its depositors, the Comptroller of the Currency shall
appoint the Corporation receiver for such closed bank, and no other
person shall be appointed as receiver of such closed bank.
“ (4) It shall be the duty of the Corporation as such receiver to
realize upon the assets of such closed bank, having due regard to the
condition of credit in the locality; to enforce the individual liability
of the stockholders and directors thereof; and to wind up the affairs
of such closed bank in conformity with the provisions of law relating
to the liquidation of closed national banks, except as herein other
wise provided. The Corporation shall retain for its own account
such portion of the amounts realized from such liquidation as it shall
be entitled to receive on account of its subrogation to the claims of
depositors, and it shall pay to depositors and other creditors the net
amounts available for distribution to them. With respect to any
such closed bank, the Corporation as such receiver shall have all the
rights, powers, and privileges now possessed by or hereafter granted
by law to a receiver of an insolvent national bank.
“ (5) Whenever any insured State bank (except a District bank)
shall have been closed by action of its board of directors or by the
authority having supervision of such bank, as the case may be,
on account of inability to meet the demands of its depositors, the
Corporation shall accept appointment as receiver thereof, if such
appointment is tendered by the authority having supervision of such
bank and is authorized or permitted by State law. With respect to
any such insured State bank, the Corporation as such receiver shall
possess all the rights, powers and privileges granted by State law to
a receiver of a State bank.
“ (6) Whenever an insured bank shall have been closed on account
of inability to meet the demands of its depositors, payment of the
insured deposits in such bank shall be made by the Corporation as
soon as possible, subject to the provisions of paragraph (7) of this
subsection, either (A) by making available to each depositor a
transferred deposit in a new bank in the same community or in
another insured bank in an amount equal to the insured deposit of
such depositor and subject to withdrawal on demand, or (B) in such
other manner as the board of directors may prescribe: Provided,
That the Corporation, in its discretion, may require proof of claims
to be filed before paying the insured deposits, and that in any case
where the Corporation is not satisfied as to tne validity of a claim
for an insured deposit, it may require the final determination of a
court of competent jurisdiction before paying such claim.
“ (7) In the case of a closed national bank or District bank, the
Corporation, upon the payment of any depositor as provided in para
graph (6) of this subsection, shall be subrogated to all rights of the
depositor against the closed bank to the extent of such payment.
14
[P ub . 305.1
In the case of any other closed insured bank, the Corporation shall
not make any payment to any depositor until the right of the Corpo
ration to be subrogated to the rights of such depositor on the same
basis as provided in the case of a closed national bank under this
section shall have been recognized either by express provision of
State law, by allowance of claims by the authority having super
vision of such bank, by assignment of claims by depositors, or by
any other effective method. In the case of any closed insured bank,
such subrogation shall include the right on the part of the Corpora
tion to receive the same dividends from the proceeds of the assets of
such closed bank and recoveries on account of stockholders’ liability
as would have been payable to the depositor on a claim for the
insured deposit, but such depositor shall retain his claim for any
uninsured portion of his deposit: Provided, That the rights of
depositors and other creditors of any State bank shall be determined
in accordance with the applicable provisions of State law.
w(8) As soon as possible after the closing of an insured bank, the
Corporation, if it finds that it is advisable and in the interest oi the
depositors of the closed bank or the public, shall organize a new
national bank to assume the insured deposits of such closed bank and
otherwise to perform temporarily the functions hereinafter provided
for. The new bank shall have its place of business in the same
community as the closed bank.
“ (9) The articles of association and the organization certificate of
the new bank shall be executed by representatives designated by the
Corporation. No capital stock need oe paid in by the Corporation.
The new bank shall not have a board of directors, but shall be man
aged by an executive officer appointed by the board of directors of
the Corporation who shall be subject to its directions. In all other
respects the new bank shall be organized in accordance with the then
existing provisions of law relating to the organization of national
banking associations. The new bank may, with the approval of the
Corporation, accept new deposits which shall be subject to with
drawal on demand and which, except where the new bank is the
only bank in the community, shall not exceed $5,000 from any depos
itor. The new bank, without application to or approval by the
Corporation, shall be an insured bank and shall maintain on deposit
with the Federal Reserve bank of its district reserves in the amount
required by law for member banks, but it shall not be required to
subscribe for stock of the Federal Reserve bank. Funds of the
new bank shall be kept on hand in cash, invested in obligations of
the United States, or in obligations guaranteed as to principal and
interest by the United States, or deposited with the Corporation,
with a Federal Reserve bank, or, to the extent of the insurance
coverage thereon, with an insured bank. The new bank, unless other
wise authorized by the Comptroller of the Currency, shall transact
no business except that authorized by this section and as may be
incidental to its organization. Notwithstanding any other provision
of law the new bank, its franchise, property, and income shall be
exempt from all taxation now or hereafter imposed by the United
States, by any Territory, dependency, or possession thereof, or by any
State, county, municipality, or local taxing authority.
IPUB. 305.]
15
“ (10) Upon the organization of a new bank, the Corporation shall
promptly make available to it an amount equal to the estimated
insured deposits of such closed bank plus the estimated amount of
the expenses of operating the new bank, and shall determine as soon
as possible the amount due each depositor for his insured deposit
in the closed bank, and the total expenses of operation of the new
bank. Upon such determination, the amounts so estimated and made
available shall be adjusted to conform to the amounts so determined.
Earnings of the new bank shall be paid over or credited to the
Corporation in such adjustment. If any new bank, during the period
it continues its status as such, sustains any losses with respect to
which it is not effectively protected except by reason of being an
insured bank, the Corporation shall furnish to it additional funds
in the amount of such losses. The new bank shall assume as trans
ferred deposits the payment of the insured deposits of such closed
bank to each of it1 depositors. Of the amounts so made available, the
Corporation shall transfer to the new bank, in cash, such sums as may
be necessary to enable it to meet its expenses of operation and imme
diate cash demands on such transferred deposits, and the remainder
of such amounts shall be subject to withdrawal by the new bank on
demand.
“ (11) Whenever in the judgment of the board of directors it is
desirable to do so, the Corporation shall cause capital stock of the
new bank to be offered for sale on such terms and conditions as the
board of directors shall deem advisable in an amount sufficient, in the
opinion of the board of directors, to make possible the conduct of the
business of the new bank on a sound basis, but in no event less than
that required by section 5138 of the Revised Statutes, as amended
(U. S. C., Supp. VII, title 12, sec. 51), for the organization of a
national bank in the place where such new bank is located. The
stockholders of the closed insured bank shall be given the first oppor
tunity to purchase any shares of common stock so offered. Upon
roof that an adequate amount of capital stock in the new bank has
een subscribed and paid for in cash, the Comptroller of the Cur
rency shall require the articles of association and the organization
certificate to be amended to conform to the requirements for the
organization of a national bank, and thereafter, when the require
ments of law with respect to the organization of a national bank have
been complied with, he shall issue to the bank a certificate of author
ity to commence business, and thereupon the bank shall cease to have
the status of a new bank, shall be managed by directors elected by its
own shareholders and may exercise all the powers granted by law,
and it shall be subject to all the provisions of law relating to national
banks. Such bank shall thereafter be an insured national bank, with
out certification to or approval by the Corporation.
“ (12) If the capital stock of the new bank is not offered for sale,
or if an adequate amount of capital for such new bank is not sub
scribed and paid for, the board of directors may offer to transfer its
business to any insured bank in the same community which will take
over its assets, assume its liabilities, and pay to the Corporation for
such business such amount as the board of directors taay deem ade
quate; or the board of directors in its discretion may change the
location of the new bank to the office of the Corporation or to some
other place or may at any time wind up its affairs as herein provided.
E
1 So
in original.
16
[P ub . 305.]
Unless the capital stock of the new bank is sold or its assets are taken
over and its liabilities are assumed by an insured bank as above pro
vided within two years from the date of its organization, the Corpo
ration shall wind up the affairs of such bank, after giving such notice,
if any, as the Comptroller of the Currency may require, and shall
certify to the Comptroller of the Currency the termination of the
new bank. Thereafter the Corporation shall be liable for the obli
gations of such bank and shall be the owner of its assets. The provi
sions of sections 5220 and 5221 of the Revised Statutes (U. S. C., title
secs. 181 and 182) shall not apply to such new banks.
“ (m) (1) The Corporation as receiver of a closed national bank
or District bank shall not be required to furnish bond and shall have
the right to appoint an agent or agents to assist it in its duties as
such receiver, and all fees, compensation, and expenses of liquidation
and administration thereof shall be fixed by the Corporation, subject
to the approval of the Comptroller of the Currency, and may be paid
by it out of funds coming into its possession as such receiver. The
Comptroller of the Currency is authorized and empowered to waive
and relieve the Corporation from complying with any regulations of
the Comptroller of the Currency with respect to receiverships where
in his discretion £uch action is*deemed advisable to simplify admin
istration.
“ (2) Payment of an insured deposit to any person bv the Corpora
tion shall discharge the Corporation, and payment oi a transferred
deposit to any person by the new bank or by an insured bank in which
a transferred deposit has been made available shall discharge the
Corporation and such new bank or other insured bank, to the same
extent that payment to such person by the closed bank would have
discharged it irom liability for the insured deposit.
“ (3) Except as otherwise prescribed by tne board of directors,
neitner the Corporation nor such new bank or other insured bank
shall be required to recognize as the owner of any portion of a deposit
appearing on the records of the closed bank under a name other than
that of the claimant, any person whose name or interest as such owner
is not disclosed on the records of such closed bank as part owner of
said deposit, if such recognition would increase the aggregate amount
of the insured deposits in such closed bank.
w(4) The Corporation may withhold payment of such portion of
the insured deposit of any depositor in a closed bank as may be
required to provide for the payment of any liability of such deposi
tor as a stockholder of the closed bank, or of any liability of such
depositor to the closed bank or its receiver, which is not offset against
a claim due from such bank, pending the determination and payment
of such liability by such depositor or any other person liable therefor.
“ (5) If, after the Corporation shall have given at least three
months’ notice to the depositor by mailing a copy thereof to his last
known address appearing on the records of the closed bank, any
depositor in the closed bank shall fail to claim his insured deposit
from the Corporation within eighteen months after the appoint
ment of the receiver for the closed bank, or shall fail within such
period to claiirf or arrange to continue the transferred deposit with
the new bank or with the other insured bank which assumes liability
therefor, all rights of the depositor against the Corporation witn
[P ub. 305.]
17
respect to the insured deposit, and against the new bank and such
other insured bank with respect to the transferred deposit, shall be
barred, and all rights of the depositor against the closed bank and its
shareholders, or the receivership estate to which the Corporation may
have become subrogated, shall thereupon revert to the depositor.
The amount of any transferred deposits not claimed within such
eighteen months’ period, shall be refunded to the Corporation.
u(n) (1) Money of the Corporation not otherwise employed shall
be invested in obligations of the United States or in obligations
guaranteed as to principal and interest by the United States, except
that for temporary periods, in the discretion of the board of direc
tors, funds of the Corporation may be deposited in any Federal
Reserve bank or with the Treasurer of the United States. When
designated for that purpose by the Secretary of the Treasury, the
Corporation shall be a depositary of public moneys, except receipts
from customs, under such regulations as may be prescribed by the
said Secretary, and may also be employed as a financial agent of
the Government. It shall perform all such reasonable duties as
depositary of public moneys and financial agent of the Government
as may be required of it.
“ (2) Nothing contained in this section shall be construed to pre
vent the Corporation from making loans to national banks closed by
action of the Comptroller of the Currency, or by vote of their direc
tors, or to State member banks closed by action of the appropriate
State authorities, or by vote of their directors, or from entering into
negotiations to secure the reopening of such banks.
“ (3) Receivers or liquidators of insured banks closed on account of
inability to meet the demands of their depositors shall be entitled
to offer the assets of such banks for sale to the Corporation or as
security for loans from the Corporation^ upon receiving permission
from the appropriate State authority in accordance with express
provisions of State law in the case of insured State banks, or from
the Comptroller of the Currency in the case of national banks or
District banks. The proceeds of every such sale or loan shall be
utilized for the same purposes and in the same manner as other funds
realized from the liquidation of the assets of such banks. The Comp
troller of the Currency may, in his discretion, pay dividends on
proved claims at any time after the expiration of the period of adver
tisement made pursuant to section 5235 of the Revised Statutes
(U. S. C., title 12, sec. 193), and no liability shall attach to the
Comptroller of the Currency or to the receiver of any national bank
by reason of any such payment for failure to pay dividends to a
claimant whose claim is not proved at the time of any such payment.
The Corporation, in its discretion, may make loans on the security
of or may purchase and liquidate or sell any part of the assets of
an insured bank which is now or may hereafter be closed on account
of inability to meet the demands of its depositors, but in any case
in which the Corporation is acting as receiver of a closed insured
bank, no such loan or purchase shall be made without the approval
of a court of competent jurisdiction.
“ (4) Until July 1, 1936, whenever in the judgment of the board of
directors such action will reduce the risk or avert a threatened loss to
the Corporation and will facilitate a merger or consolidation of an
18
[Pub. 305.]
insured bank with another insured bank, or will facilitate the sale of
the assets of an open or closed insured bank to and assumption of its
liabilities by another insured bank, the Corporation may, upon such
terms and conditions as it may determine, make loans secured ^in
whole or in part by assets of an open or closed insured bank, which
loans may be in subordination to the rights of depositors and other
creditors, or the Corporation may purchase any such assets or may
guarantee any other insured bank against loss by reason of its
assuming the liabilities and purchasing the assets of an open or closed
insured bank. Any insured national bank or District bank, or* with
the approval of the Comptroller of the Currency, any receiver
thereof, is authorized to contract for such sales or loans and to pledge
anv assets of the bank to secure such loans.
“ (o) (1) The Corporation is authorized and empowered to issue
and to have outstanding its notes, debentures, bonds, or other such
obligations, in a par amount aggregating not more than three times
the amount received by the Corporation in payment of its capital
stock and in payment of the assessments upon insured banks for the
year 1936. The notes, debentures, bonds, and other such obligations
issued under this subsection shall be redeemable at the option of the
Corporation before maturity in such manner as may be stipulated in
such obligations, and shall bear such rate or rates of interest, and
shall mature at such time or times, as may be determined by the
Corporation: Provided, That the Corporation may sell on a discount
basis short-term obligations payable at maturity without interest.
The notes, debentures, bonds, and other such obligations of the Co**
poration may be secured by assets of the Corporation in such manner
as shall be prescribed by its board of directors. Such obligations
may be offered for sale at such price or prices as the Corporation may
determine.
“ (2) The Secretary of the Treasury, in his discretion, is authorized
to purchase any obligations of the Corporation to be issued hereunder,
and for such purpose the Secretary of the Treasury is authorized to
use as a public-debt transaction the proceeds of the sale of any
securities hereafter issued under the Second Liberty Bond Act^ as
amended, and the purposes for which securities may be issued under
the Second Liberty Bond Act, as amended, are extended to include
such purchases: Provided, That if the Reconstruction Finance Cor
poration fails for any reason to purchase any of the obligations of
the Corporation as provided in subsection (b) of section 5e of the
Reconstruction Finance Corporation Act, as amended, the Secretary
of the Treasury is authorized and directed to purchtise such obliga
tions in an amount equal to the amount of such obligations the
Reconstruction Finance Corporation so fails to purchase: Provided
further, That the Secretary of the Treasury is authorized and
directed, whenever in the judgment of the board of directors of the
Corporation additional funds are required for insurance purposes, to
purchase obligations of the Corporation in an additional amount of
not to exceed $250,000,000 par value: Provided further, That the pro
ceeds derived from the purchase by the Secretary of the Treasury of
any such obligations shall be used by the Corporation solely in carry*
ing out its functions with respect to such insurance. The Secretary
of the Treasury may, at any time, sell any of the obligations of the
Corporation acquired by him under this subsection. All redemp
(P ub. 305.]
19
tions, purchases, and sales by the Secretary of the Treasury of the
obligations of the Corporation shall be treated as public-debt transac
tions of the United States.
“ (p) All notes, debentures, bonds, or other such obligations issued
by the Corporation shall be exempt, both as to principal and interest,
from all taxation (except estate and inheritance taxes) now or here
after imposed by the United States, by any Territory, dependency,
or possession thereof, or by any State, county, municipality, or local
taxing authority. The Corporation, including its franchise, its
capital, reserves, and surplus, and its income, shall be exempt from
all taxation now or hereafter imposed by the United States, by any
Territory, dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority, except that any real property
of the Corporation shall be subject to State, Territorial, county,
municipal, or local taxation to the same extent according to its value
as the other real property is taxed.
“ (q) In order that the Corporation may be-supplied with such
forms of notes, debentures, bonds, or other such obligations as it may
need for issuance under this Act, the Secretary of the Treasury is
authorized to prepare such forms as shall be suitable and approved
by the Corporation, to be held in the Treasury subject to delivery,
upon order of the Corporation. The engraved plate, dies, bed pieces,
and other material executed in connection therewith shall remain in
the custody of the Secretary of the Treasury. The Corporation shall
reimburse the Secretary 0 1 the Treasury for any expenses incurred
in the preparation, custody, and delivery of such notes, debentures,
bonds, or other such obligations.
“ (r) The Corporation shall annually make a report of its opera
tions to the Congress as soon as practicable after the 1st day of
January in each year.
“ (s) Whoever, for the purpose of obtaining any loan from the
Corporation, or any extension or renewal thereof, or the acceptance,
release, or substitution of security therefor, or for the purpose of
inducing the Corporation to purchase any assets, or for the purpose
of obtaining the payment of any insured deposit or transferred
deposit or the allowance, approval, or payment of any claim, or for
the purpose of influencing in any way the aqtion of the Corporation
under this section, makes any statement, knowing it to be false, or
willfully overvalues any security, shall be punished by a fine of not
more than $5,000, or by imprisonment for not more than two years
or both.
“ (t) Whoever (1) falsely makes, forges, or counterfeits any obliga
tion or coupon, in imitation of or purporting to be an obligation or
coupon issued by the Corporation, or (2) passes, utters, or publishes,
or attempts to pass, utter, or publish, any false, forged, or counter
feited obligation or coupon purporting to have been issued by the
Corporation, knowing the same to be false, forged, or counterfeited,
or (3) falsely alters any obligation or coupon issued or purporting to
have been issued by the Corporation, or (4) passes, utters, or pub
lishes, or attempts to pass, utter, or publish, as true, any falsely
altered or spurious obligation or coupon, issued or purporting to
have been issued by the Corporation, knowing the same to be falsely
altered or spurious, shall be punished by a fine of not more than
$10,000, or by imprisonment for not more than five years, or both.
20
[P ub . 305.]
“ (u) Whoever, being connected in any capacity with the Corpora
tion, (1) embezzles, abstracts, purloins, or willfully misapplies any
moneys, funds, securities, or other things of value, whether belong
ing to it or pledged, or otherwise entrusted to it, or (2) with intent
to defraud the Corporation or any other body, politic or corporate,
or any individual, or to deceive any officer, auditor, or examiner of
the Corporation, makes any false entry in any book, report, or state
ment of or to the Corporation, or without being duly authorized
draws any order or issues, puts forth, or assigns any note, debenture,
bond, or other such obligation, or draft, bill of exchange, mortgage,
judgment, or decree thereof, shall be punished by a fine of not more
than $10,000, or by imprisonment for not more than five years, or
both.
“ (v) (1) No individual, association, partnership, or corporation
shall use the words ‘ Federal Deposit insurance Corporation’, or a
combination of any three of these four words, as the name or a part
thereof under which he or it shall do business. No individual, asso
ciation, partnership, or corporation shall advertise or otherwise repre
sent falsely by any device whatsoever that his or its deposit liabilities
are insured or in anywise guaranteed by the Federal Deposit Insur
ance Corporation or by the United States or any instrumentality
thereof; and no insured bank shall advertise or otherwise represent
falsely by any device whatsoever the extent to which or the manner
in which its deposit liabilities are insured by the Federal Deposit
Insurance Corporation. Every individual, partnership, association,
or corporation violating this subsection shall be punished by a fine
of not exceeding $1,000, or by imprisonment not exceeding one year,
or both.
“ (2) Every insured bank shall display at each place of business
maintained by it a sign or signs, and shall include m advertisements
relating to deposits a statement to the effect that its deposits are
insured by the Corporation. The board of directors shall prescribe
by regulation the forms of such signs and the manner of display and
the substance of such statements and the manner of use. For each
day an insured bank continues to violate any provision of this para
graph or any lawful provision of said regulations, it shall be subject
to a penalty of not more than $100, recoverable by the Corporation
for its use.
“ (3) No insured bank shall pay any dividends on its capital stock
or interest on its capital notes or debentures (of such interest is
required to be paid only out of net profits) while it remains in
default in the payment of any assessment due to the Corporation;
and any director or officer of any insured bank who participates in
the declaration or payment of any such dividend shall, upon convic
tion, be fined not more than $1,000, or imprisoned not more than one
vear, or both: Provided, That if such default is due to a dispute
between the insured bank and the Corporation over the amount of
such assessment, this paragraph shall not apply, if such bank shall
deposit security satisfactory to the Corporation for payment upon
final determination of the issue.
“ (4) Unless, in addition to compliance with other provisions of
law, it shall have the prior written consent of the Corporation, no
insured bank shall enter into any consolidation or merger with any
noninsured bank, or assume liability to pay any deposits made in any
[P ub. 305.]
21
noninsured bank, or transfer assets to any noninsured bank in con
sideration of the assumption of liability for any portion of the
deposits made in such insured bank, and no insured State nonmem
ber bank (except a District bank) without such consent shall reduce
the amount or retire any part of its common or preferred capital
stock, or retire any part of its capital notes or debentures.
“ (5) No State nonmember insured bank (except a District bank)
shall establish and operate any new branch after thirty days after
the effective date unless it shall have the prior written consent of the
Corporation, and no branch of any State nonmember insured bank
shall be"moved from one location to another after thirty days after
the effective date without such consent. The factors to be consid
ered in granting or withholding the consent of the Corporation under
this paragraph shall be those enumerated in subsection (g) of this
section.
“ (6) The Corporation may require any insured bank to provide
protection and indemnity against burglary, defalcation, and other
similar insurable losses. Whenever any insured bank refuses to
comply with any such requirement the Corporation may contract
for such protection and indemnity and add the cost thereof to the
assessment otherwise payable by such bank.
“ (7) Whenever any insured bank (except a national bank or a
District bank), after written notice of the recommendations of the
Corporation based on a report of examination of such bank by an
examiner of the Corporation, shall fail to comply with such recom
mendations within one hundred and twenty days after such notice,
the Corporation shall have the power, and is hereby authorized, to
publish only such part of such report of examination as relates to
any recommendation not complied with: Provided, That notice of
intention to make such publication shall be given to the bank at
least ninety days before such publication is made.
“ (8) The board of directors shall by regulation prohibit the pay
ment of interest on demand deposits in insured nonmember banks and
for such purpose it may define the term 4demand deposits ’ ; but such
exceptions from this prohibition shall be made as are now or may
hereafter be prescribed with respect to deposits payable on demand
in member banks by section 19 of this Act, as amended, or by regula
tion of the Board of Governors of the Federal Reserve System. The
board of directors shall from time to time limit by regulation the
rates of interest or dividends which may be paid by insured non
member banks on time and savings deposits, but such regulations
shall be consistent with the contractual obligations of such banks to
their depositors. For the purpose of fixing such rates of interest or
dividends, the board of directors shall by regulation prescribe
different rates for such payment on time and savings deposits having
different maturities, or subject to different conditions respecting with
drawal or repayment, or subject to different conditions by reason of
different locations, or according to the varying discount rates of
member banks in the several Federal Reserve districts. The board
of directors shall by regulation define what constitutes time and
savings deposits in an insured nonmember bank. Such regulations
shall prohibit any insured nonmember bank from paying any time
deposit before its maturity except upon such conditions and in
\
22
[P ub . 305.]
accordance with such rules and regulations as may be prescribed by
the board of directors, and from waiving any requirement of notice
before payment of any savings deposit except as to all savings
deposits having the same requirement. For each violation of any
provision of this paragraph or any lawful provision of such regula
tions relating to the payment of interest or dividends on deposits or
to withdrawal of deposits, the offending bank shall be subject to a
penalty or 1 not more than $100, recoverable by the Corporation for
its use.
“ (w) The provisions of sections 112, 113, 114,115, 116, and 117 of
the Criminal Code of the United States (U. S. C., title 18, ch. 5, secs.
202 to 207, inclusive), insofar as applicable, are extended to apply to
contracts or agreements with the Corporation under this section,
which for the purposes hereof shall be held to include loans, advances,
extensions, and renewals thereof, and acceptances, releases, and sub
stitutions of security therefor, purchases or sales of assets, and all
contracts and agreements pertaining to the same.
“ (x) The Secret Service Division of the Treasury Department is
authorized to detect, arrest, and deliver into the custody of the United
States marshal having jurisdiction any person committing any of
the offenses punishable under this section.
“ (y) (1) No State bank which during the calendar year 1941 or any
succeeding calendar year shall have average deposits of $1,000,000
or more shall be an insured bank or continue to have any part of its
deposits insured after July 1 of the year following any such calendar
year during which it shall have had such amount of average deposits,
unless such bank shall be a member of the Federal Reserve System:
Provided, That for the purposes of this paragraph the term 4State
bank ’ shall not include a savings bank, a mutual savings bank, a
Morris Plan bank or other incorporated banking institution engaged
only in a business similar to that transacted by Morris Plan banks,
a State trust company doing no commercial banking business, or a
bank located in Hawaii, Alaska, Puerto Rico, or the Virgin Islands.
“ (2) It is not the purpose of this section to discriminate^ in any
manner, against State nonmember, and in favor of, national or
member banks; but the purpose is to provide all banks with the
same opportunity to obtain and enjoy the benefits of this section.
No bank shall be discriminated against because its capital stock is less
than the amount required for eligibility for admission into the
Federal Reserve System.
“ (z) The provisions of this section limiting the insurance of the
deposits of any depositor to a maximum less than the full amount
shall be independent and separable from each and all of the provisions
of this section.”
TITLE II—AMENDMENTS TO THE FEDERAL RESERVE
ACT
Section 201. Paragraph “ Fifth55 of section 4 of the Federal
Reserve Act, as amended, is amended, effective March 1,1936, to read
as follows:
“ Fifth. To appoint by its board of directors a president, vice
presidents, and such officers and employees as are not otherwise provided for in this Act, to define their duties, require bonds for them
1 So In original.
23
[P ub. 306.]
and fix the penalty thereof, and to dismiss at pleasure such officers ot
employees. The president shall be the chief executive officer of the
bank and shall be appointed by the board of directors, with the
approval of the Board of Governors of the Federal Reserve System,
for a term of five years; and all other executive officers and all
employees of the bant shall be directly responsible to him. The first
vice president of the bank shall be appointed in the same manner and
for the same term as the president, and shall, in the absence or dis
ability of the president or during a vacancy in the office of president,
serve as chief executive officer of the bank. Whenever a vacancy
shall occur in the office of the president or the first vice president, it
shall be filled in the manner provided for original appointments;
and the person so appointed shall hold office until the expiration of
the term of his predecessor.”
S ec. 202. Section 9 of the Federal Reserve Act, as amended, is
amended by inserting after the tenth paragraph thereof the following
new paragraph:
“ In order to facilitate the admission to membership in the Federal
Reserve System of any State bank which is required under subsection
(y) of section 12B of this Act to become a member of the Federal
Reserve System in order to be an insured bank or continue to have
any part of its deposits insured under such section 12B, the Board
of Governors of the Federal Reserve System may waive in whole or
in part the requirements of this section relating to the admission of
such bank to membership: Provided, That, if such bank is admitted
with a capital less than that required for the organization of a
national bank in the same place and its capital and surplus are not,
in the judgment of the Board of Governors of the Federal Reserve
System, adequate in relation to its liabilities to depositors and other
creditors, the said Board may, in its discretion, require such bank to
increase its capital and surplus to such amount as the Board may
deem necessary within such period prescribed by the Board as in its
judgment shall be reasonable in view of all the circumstances: Pro
vided, however, That no such bank shall be required to increase its
capital to an amount in excess of that required for the organization
of a national bank in the same place.”
Sec. 203. (a) Hereafter the Federal Reserve Board shall be known
as the “ Board of Governors of the Federal Reserve System ”, and
the governor and the vice governor of the Federal Reserve Board
shall be known as the u chairman ” and the u vice chairman ”, respec
tively, of the Board of Governors of thp Federal Reserve System.
(b)
The first two paragraphs of section 10 of the Federal Reserve
Act, as amended, are amended to read as follows:
“ S ec. 10. The Beard of Governors of the Federal Reserve System
(hereinafter referred to as the 6Board ’) shall be composed of seven
menjbers, to be appointed by the President, by ai}d with the advice
and consent of the Senate, after the date of enactment of the Bank
ing Act of 1935, for terms of fourteen years except as hereinafter
provided, but each appointive member of the Federal Reserve Board
in office on such date shall continue to serve as a member of the Board
ujitil February 1, 1936, and the Secretary of the Treasury and the
Comptroller of the Currency shall continue to serve as members of
the Board until February 1, 1936. In selecting the members of the
20 3 6 6 O— 58—
47
24
[P ub . 306.]
Board, not more than one of whom shall be selected from any one
Federal Reserve district, the President shall have due regard to a
fair representation of the financial, agricultural, industrial, and com
mercial interests, and geographical divisions of the country. The
members of the Board shall devote their entire time to the business of
the Board and shall each receive an annual salary of $15,000, payable
monthly, together with actual necessary traveling expenses.
“ The members of the Board shall be ineligible during the time
they are in office and for two years thereafter to hold any office,
position, or employment in any member bank, except that this
restriction shall not apply to a member who has served the full term
for which he was appointed. Upon the expiration of the term of
any appointive member of the Federal Reserve Board in office oh the
date of enactment of the Banking Act of 1935, the President shall
fix the term of the successor to such member at not to exceed fourteen
years, as designated by the President at the time of nomination, but
m such manner as to provide for the expiration of the term of not
more than one member in any two-year period, and thereafter each
member shall hold office for a term of fourteen years from the expi
ration of the term of his predecessor, unless sooner removed for cause
by the President. Of the persons thus appointed? one shall be desig
nated by the President as chairman and one as vice chairman of the
Board, to serve as such for a term of four years. The chairman of
the Board, subject to its supervision, shall be its active executive
officer. Each member of the Board shall within fifteen days after
notice of appointment make and subscribe to the oath of office. Upo*
the expiration of their terms of office, members of the Board shall
continue to serve until their successors are appointed and have quali
fied. Any person appointed as a member of the Board after the
date of enactment of the Banking Act of 1935 shall not be eligible
for reappointment as such member after he shall have served a full
term of fourteen years.”
(c) The fourth paragraph of section 10 of the Federal Reserve
Act, as amended, is amended by striking out the second, third, and
fourth sentences thereof and inserting in lieu thereof the following :
“At meetings of the Board the chairman shall preside, and, in his
absence, the vice chairman shall preside. In the absence of the chair
man and the vice chairman, the Board shall elect a member to act as
chairman pro tempore.”
(d) Section 10 of the Federal Reserve Act, as amended, is further
amended by adding at the end thereof the following new paragraph:
“ The Board of Governors of the Federal Reserve System shall
keep a complete record of the action taken by the Board and by the
Federal Open Market Committee upon all questions of policy relat
ing to open-market operations and shall record therein the votes
taken in connection with the determination of open-market policies
and the reasons underlying the action of the Board and the Com
mittee in each instance. The Board shall keep a similar record with
respect to all questions of policy determined by the Board, and shall
include in its annual report to the Congress a full account of the
action so taken during the preceding year with respect to openmarket policies and operations and with respect to the policies deter
mined by it and shall include in such report a copy of the records
required to be kept under the provisions of this paragraph.”
[P ub. 305]
25
S e c . 204. Section 10 (b) of the Federal Reserve Act, as amended,
is amended to read as follows:
“ S e c . 10 (b). Any Federal Reserve bank, under rules and regula
tions prescribed by the Board of Governors of the Federal Reserve
System, may make advances to any member bank on its time or
demand notes having maturities of not more than four months and
which are secured to the satisfaction of such Federal Reserve bank.
Each such note shall bear interest at a rate not less than one-half of
1 per centum per annum higher than the highest discount rate in
effect at such Federal Reserve bank on the date of such note.”
S e c. 205. Section 12A of the Federal Reserve Act, as amended, is
amended, effective March 1, 1936. to read as follows:
“ S ec. 12A. (a) There is hereoy created a Federal Open Market
Committee (hereinafter referred to as the ‘ Committee’), which
shall consist of the members of the Board of Governors of the Fed
eral Reserve J^stim m
representatives of the Federal Reserve
banks to be selected as hereinafter provided. Such representatives
o! the Federal Reserve banks shall be elected annually as follows:
One by the boards of directors of the Federal Reserve Banks of
Boston and New ^
1 1 1 ards of directors of the Federal
Reserve Banks
Cleveland, one by the boards
of directors of
..... ____ . Banks of Chicago and ,Saint
Louis, one by the boards of directors of the Federal Reserve Banks
of Richmond, Atlanta, and Dallas, and one by the boards of direc
tors of the Federal Reserve Banks of Minneapolis, Kansas City,
mnd San Francisco. An alternate to serve in the absence of each
such representative shall be elected annually in the same manner.
The meetings of said Committee shall be held at Washington, Dis
trict of Columbia, at least four times each year upon the call of
the-chairmaiL-olJJiie^ Board of Governors or the Federal Reserve
System, or at the request of any three members of the Committee.
“ (b) No Federal Reserve bank shall engage or decline to engage
in open-market operations under section 14 of this Act except in
accordance with ..0ie,jd.ir§citiQn ^of jncl regulations adopted by the
Committee. The Comnuttee shall consider, adopt, and transmit to
the several Federal IleserveHbanks, regulations relating to the openmarket transactions of such banks.
“ (c) Th& time, character, and volume of all purchases and sales
of paper described in section 14 of this Act as eligible for openmarket operations shall be governed with a view to accommodating
commerce and business and with regard to their bearing upon the
general credit situation of the country.”
S ec. 206. (a) Subsection (b) of section 14 of the Federal Reserve
Act, as amended, is amended by inserting before the semicolon at
the end thereof a colon and the following: Provided, That any
bonds, notes, or other obligations which are direct obligations of
the United States or which are fully guaranteed by the United
States as to principal and interest may be bought and sold without
regard to maturities but only in the open market ”.
(b) Subsection (d) of section 14 of the Federal Reserve Act, as
amended, is amended by adding at the end thereof the following:
“ but each such bank shall establish such rates every fourteen days,
or oftener if deemed necessary by the Board;
26
[PT7B. 305.]
Sec. 207. The sixth paragraph of section 19 of the Federal Reserve
Act, as amended, is amended to read as follows:
“ Notwithstanding the other provisions of this section, the Board
of Governors of the Federal Reserve System, upon the affirmative
Vote of not less than four of its members, in order to prevent
injurious credit expansion or contraction, may by regulation change
the requirements as to reserves to be maintained against demand
or time deposits or both by member banks in reserve and central
reserve cities or by member banks not in reserve or central reserve
cities or by all member banks; but the amount of the reserves
required to be maintained by any such member bank as a result
of any sueh change shall not be less than the amount of the reserves
required by law to be maintained by such bank on the date of
enactment of the Banking Act of 1935 nor more than twice such
amount.”
Sec. 208. The first paragraph of section 24 of the Federal Reserve
Act, as amended, is amended to read as follows:
“ S ec . 24. Any national banking association may make real-estate
loans secured bv first liens upon improved real estate, including
improved farm land and improved business and residential proper
ties. A loan secured by real estate within the meaning of this section
shall be in the form of an obligation or obligations secured by mort
gage, trust deed, or other such instrument upon real estate, and any
national banking association may purchase any obligation so secured
when the entire amount of such obligation is sold to the association.
The amount of any such loan hereafter made shall not exceed 50 per
centum of the appraised value of the real estate offered as security
and no such loan shall be made for a longer term than five years;
except that (1) any such loan may be made in an amount not to
exceed 60 per centum of the appraised value of the real estate offered
as security and for a term not longer than ten years if the loan is
secured by an amortized mortgage, deed of trust, or other such instru
ment under the terms of which the installment payments are sufficient
to amortize 40 per centum or more of the principal of the loan within
a period of not more than ten years, ana (2) the foregoing limita
tions and restrictions shall not prevent the renewal or extension of
loans heretofore made and shall not apply to real-estate loans which
are insured under the provisions of Title II of the National Housing
Act. No such association shall make such loans in an aggregate sum
in excess of the amount of the capital stock of such association paid
in and unimpaired plus the amount of its unimpaired surplus fund,
or in excess of 60 per centum of the amount of its time and savings
deposits, whichever is the greater. Any such association may con
tinue hereafter as heretofore to receive time and savings deposits and
to pay interest on the same, but the rate of interest which such associ
ation may pay upon such time deposits or upon savings or other
deposits shall not exceed the maximum rate authorized by law to be
paid upon such deposits by State banks or trust companies organized
under the laws of the State in which such association is located.”
S ec. 209. Section 325 of the Revised Statutes is amended to read as
follows:
“ S ec. 325. The Comptroller of the Currency shall be appointed by
the President, by and with the advice and consent of the Senate, ana
[P ub. 305.1
27
shall hold his office for a term of five years unless sooner removed by
the President, upon reasons to be communicated by him to the Sen
ate ; and he shall receive a salary at the rate of $15,000 a year.”
TITLE III—TECHNICAL AMENDMENTS TO THE
BANKING LAWS
S ection 301. Subsection (c) of section 2 of the Banking Act of
1933, as amended, is amended by adding at the end thereof the
following paragraph:
“ Notwithstanding the foregoing, the term ‘ holding company
affiliate ’ shall not include (except for the purposes of section 23A of
the Federal Reserve Act, as amended) any corporation all of the
stock of which is owned by the United States, or any organization
which is determined by the Board of Governors of the Federal
Reserve System not to be engaged, directly or indirectly, as a business
in holding the stock of, or managing or controlling, banks, banking
associations, savings banks, or trust companies.”
S e c. 302. The first paragraph of section 20 of the Banking Act of
1933, as amended, is amended by inserting before the period at the
end thereof a colon and the following: “Provided, That nothing in
this paragraph shall apply to any such organization which shall have
been placed in formal liquidation and which shall transact no busi
ness except such as may be incidental to the liquidation of its affairs
S e c . 303. (a) Paragraph (1) of subsection (a) of section 21 of the
Banking Act of 1933, as amended, is amended by inserting before
the semicolon at the end thereof a colon and the following: “ Pro
vided, That the provisions of this paragraph shall not prohibit
national banks or State banks or trust companies (whether or not
members of the Federal Reserve System) or other financial institu
tions or private bankers from dealing in, underwriting, purchasing,
and selling investment securities to the extent permitted to national
banking associations by the provisions of section 5136 of the Revised
Statutes, as amended (U. S. C., title 12, sec. 24; Supp. VII, title 12,
sec. 24) : Provided further, That nothing in this paragraph shall
be construed as affecting in any way such right as any bank, banking
association, savings bank, trust company, or other banking institu
tion, may otherwise possess to sell, without recourse or agreement to
repurchase, obligations evidencing loans on real estate ”.
(b)
Paragraph (2) of subsection (a) of such section 21 is amended
to read as follows:
“ (2) For any person, firm, corporation, association, business trust,
or other similar organization to engage, to any extent whatever with
others than his or its officers, agents or employees, in the business of
receiving deposits subject to check or to repayment upon presenta
tion of a pass book, certificate of deposit, or other evidence of debt, or
upon request of the depositor, unless such person, firm, corporation,
association, business trust, or other similar organization (A) shall
be incorporated under, and authorized to engage in such business by,
the laws of the United States or of any State, Territory, or District,
or (B) shall be permitted by any State, Territory, or District to
engage in such business and shall be subjected by the law of such
State, Territory, or District to examination and regulation, or (C)
shall submit to periodic examination by the banking authority of the
28
[P ub. 305.]
State, Territory, or District where such business is carried on and
shall make and publish periodic reports of its condition, exhibiting
in detail its resources and liabilities, such examination and reports
to be made and published at the same times and in the same manner
and under the same conditions as required by the law of such State,
Territory, or District in the case oi incorporated banking institu
tions engaged in such business in the same locality.”
S ec. 304. Section 22 of the Banking Act of 1933, as amended, is
amended by adding at the end thereof the following sentences:
“ Such additional liability shall cease on July 1,1937, with respect to
all shares issued by any association which shall be transacting the
business of banking on July 1, 1937: Provided, That not less than
six months prior to such date; such association shall have caused
notice of such prospective termination of liability to be published in
a newspaper published in the city, town, or county in which such
association is located, and if no newspaper is published in such city,
town, or county, then in a newspaper of general circulation therein.
If the association fail to give sucn notice as and when above pro
vided, a termination of such additional liability may thereafter be
accomplished as of the date six month1 subsequent to publication, in
the manner above, provided.”
S ec. 305. Paragraph (c) of section 5155 of the Revised Statutes,
as amended (U. S. C., Supp. VII, title 12, sec. 36), is amended (1)
by inserting after the first sentence thereof the following new sen
tence : “ In any State in which State banks are permitted by statute
law to maintain branches within county or greater limits, if no baitk
is located and doing business in the place where the proposed agency
is to be located, any national banking association situated in sucn
State may, with the approval of the Comptroller of the Currency,
establish and operate, without regard to the capital requirements of
this section, a seasonal agency in any resort community within the
limits of the county in which the main office of such association is
located, for the purpose of receiving and paying out deposits, issuing
and cashing checks and drafts, and doing business incident thereto:
Provided, That any permit issued under this sentence shall be
revoked upon the opening of a State or national bank in such com
munity.” ; and (2) by striking out the first word in the last sentence
of such paragraph (c) and inserting in lieu thereof the following:
“ Except as provided in the immediately preceding sentence, no ”.
S ec. 306. Section 4 of the Act entitled An Act to amend section
12B of the Federal Reserve Act so as to extend for one year the
temporary plan for deposit insurance, and for other purposes ”,
approved June 16,1934 (48 Stat. 969). is amended to read as follows:
“ S ec. 4. So much of section 31 oi the Banking Act of 1933, as
amended, as relates to stock ownership by directors, trustees, or
members of similar governing bodies o f any national banking asso
ciation, or of any State bank or trust company which is a member of
the Federal Reserve System, is hereby repealed.”
Sec. 307. Effective January 1,1936, section 32 of the Banking Act
of 1933, as amended, is amended to read as follows:
“ Sec. 32. No officer, director, or employee of any corporation or
unincorporated association, no partner or employee of any partner
ship, and no individual, primarily engaged in th6 issue, flotation,
underwriting, public sale, or distribution, at wholesale or retail, or
i So in original*
[P ub. 305:]
29
through syndicate participation, of stocks^ bonds, or other similar
securities, shall serve the same time as an officer, director^ or employee
of any member bank except in limited classes of cases m which the
Board of Governors of the Federal Reserve System may allow such
service by general regulations when in the judgment of the said
Board it would not unduly influence the investment policies of such
member bank or the advice it gives its customers regarding
investments.”
S e c. 308. (a) The second sentence of paragraph Seventh of section
5136 of the Revised Statutes, as amended (U. S. C., Supp. VII, title
12, sec. 24), is amended to read as follows: “ The business of dealing
in securities and stock by the association shall be limited to purchas
ing and selling such securities and stock without recourse, solely upon
the order, ana for the account of, customers, and in no case for its
own account, and the association shall not underwrite any issue of
securities or stock: Provided, That the association may purchase for
its own account investment securities under such limitations and
restrictions as the Comptroller of the Currency may by regulation
prescribe. In no event shall the total amount of the investment
securities of any one obligor or maker, held by the association for its
own account, exceed at any time 10 per centum of its capital stock
actually paid in and unimpaired and 10 per centum of its unimpaired
surplus fund, except that this limitation shall not require any asso
ciation to dispose of any securities lawfully held by it on the date of
eiractment of the Banking Act of 1935.”
(b) The fourth sentence of such paragraph Seventh is amended to
read as follows: “ Except as hereinafter provided or otherwise per
mitted by law, nothing herein contained shall authorize the purchase
by the association for its own account of any shares of stock of any
corporation.”
(c) The last sentence of such paragraph Seventh is amended by
inserting before the colon after the words “ Home Owners’ Loan
Corporation ” a comma and the following: “ or obligations which are
insured by the Federal Housing Administrator pursuant to section
207 of the National Housing Act, if the debentures to be issued in
payment of such insured obligations are guaranteed as to principal
and interest by the United States ”.
S e c . 309. (Section 5138 of the Revised Statutes, as amended,
(U. S. C., Supp. VII, title 12, sec. 51), is amended by adding the
following sentences at the end thereof: “ No such association shall
hereafter be authorized to commence the business of banking until it
shall have a paid-in surplus equal to 20 per centum of its capital:
Provided, That the Comptroller of the Currency may waive this
requirement as to a State bank converting into a national banking
association, but each such State bank which is converted into a
national banking association shall, before the declaration of a divi
dend on its shares of common stock, carry not less than one-half part
of its net profits of the preceding half year to its surplus fund until
it shall have a surplus equal to 20 per centum of its capital: Provided.
That for the purposes of this section any amounts paid into a fund
for the retirement of any preferred stock of any such converted State
bank out of its net earnings for such half-year period shall be deemed
to be an addition to its surplus fund if, upon the retirement of such
preferred stock, the amount so paid into such retirement fund for
30
[Pub. 805.]
such period may then properly be carried to surplus. In any such
case the converted State bank snail be obligated to transfer to surplus
the amount so paid into such retirement fund for such period on
account of the preferred stock as such stock is retired.”
S ec. 310. (a) The last paragraph of section 5139 of the Revised
Statutes, as amended (U. S. C., Supp. V II, title 12, sec. 52), is
amended to read as follows:
“After the date of the enactment of the Banking Act of 1935, no
certificate evidencing the stock of any such association shall bear any
statement purporting to represent the stock of any other corporation,
except a member bank or a corporation engaged on June 16, 1934 in
holding the bank premises of such association, nor shall the owner
ship, sale, or transfer of any certificate representing the stock of any
such association be conditioned in any manner whatsoever upon the
ownership, sale, or transfer of a certificate representing the stock of
any other corporation, except a member bank or a corporation
engaged on June 16, 1934 in holding the bank premises of such asso
ciation: Provided, That this section shall not operate to prevent the
ownership, sale, or transfer of stock of any other corporation being
conditioned upon the ownership, sale, or transfer of a certificate
representing stock of a national banking association.”
(b)
The nineteenth paragraph of section 9 of the Federal Reserve
Act, as amended, is amended to read as follows:
“After the date of the enactment of the Banking Act of 1935, no
certificate evidencing the stock of any State member bank shall bear
any statement purporting to represent the stock of any other cor
poration except a member bank or a corporation engaged on June
16,-1934 m holding the bank premises of such member bank, nor shall
the ownership, sale, or transfer of any certificate representing the
stock of any State member bank be conditioned in any manner what
soever upon the ownership, sale, or transfer of a certificate represent
ing the stock of any other corporation, except a member bank or a
corporation engaged on June 16, 1934 in holding the bank premises
of such member bank: Provided, That this section shall not operate
to prevent the ownership, sale, or transfer of stock of any other cor
poration being conditioned upon the ownership, sale, or transfer of a
certificate representing stock of a State member bank.”
S e c. 311. (a) The first paragraph of section 5144 of the Revised
Statutes, as amended (U. S. C., Supp. V II, title 12, sec. 61), is
amended to read as follows:
“ S e c . 5144. In all elections of directors, each shareholder shall
have the right to vote the number of shares owned by him for as
many persons as there are directors to be elected, or to cumulate such
shares and give one candidate as many votes as the number of direc
tors multiplied by the number of his shares shall equal, or to dis
tribute them on the same principle among as many candidates as he
shall think fit; and in deciding all other questions at meetings of
shareholders, each shareholder shall be entitled to one vote on each
share of stock held by him; except that (1) this shall not be con
strued as limiting the voting rights of holders of preferred stock
under the terms and provisions of articles of association, or amend
ments thereto, adopted pursuant to the provisions of section 302 (a)
of the Emergency Banking and Bank Conservation Act, approved
[P ub. 305.]
31
March 9, 1933, as amended, (2) in the election of directors, shares of
its own stock held by a national bank as sole trustee, whether regis
tered in its own name as such trustee or in the name of its nominee,
shall not be voted by the registered owner unless under the terms
of the trust the manner in which such shares shall be voted may be
determined by a donor or beneficiary of the trust and unless such
donor or beneficiary actually directs how such shares shall be voted,
(3) shares of its own stock held by a national bank and one or more
persons as trustees may be voted by such other person or persons, as
trustees, in the same manner as if he or they were the sole trustee,
and (4) shares controlled by any holding company affiliate of a
national bank shall not be voted unless such holding company affili
ate shall have first obtained a voting permit as hereinafter provided,
which permit is in force at the time such shares are voted, but such
holding company affiliate may, without obtaining such permit, vote
in favor of placing the association in voluntary liquidation or taking
any other action pertaining to the voluntary liquidation of such
association. Shareholders may vote by proxies duly authorized in
writing; but no officer, clerk, teller, or bookkeeper of such bank shall
act as proxy: and no shareholder whose liability is past due and
unpaid shall oe allowed to vote. Whenever shares of stock cannot
be voted by reason of being held by the bank as sole trustee, such
shares shall be excluded in determining whether matters voted upon
by the shareholders were adopted by the requisite percentage of
shares.”
(b) The first sentence of the third paragraph of such section 5144
is amended to read; “Any such holding company affiliate may make
application to the Board of Governors of the Federal Reserve Sys
tem for a voting permit entitling it to vote the stock controlled by it
at any or all meetings of shareholders of such bank or authorizing
the trustee or trustees holding the stock for its benefit or for the
benefit of its shareholders so to vote the same.”
(c) Section 5144 of the Revised Statutes, as amended, is further
amended by adding at the end of subsection (c) thereof the follow
ing: “ and the provisions of this subsection? instead of subsection (b),
shall apply to all holding company affiliates with respect to any
shares of bank stock owned or controlled by them as to which there
is no statutory liability imposed upon the holders of such bank
stock;
S e c. 312. Section 5154 of the Revised Statutes, as amended (U. S.
CL title 12, sec. 35), is amended by adding at the end thereof the
following paragraph:
“ The Comptroller of the Currency may, in his discretion and
subject to such conditions as he may prescribe, permit such convert
ing bank to retain and carry at a value determined by the Comp
troller such of the assets of such converting bank as do not conform
to the legal requirements relative to assets acquired and held by
national banking associations.”
S e c . 313. Section 5162 of the Revised Statutes (U. S. C.. title 12,
sec. 170) is amended by adding at the end thereof the following
paragraph:
“ The Comptroller of the Currency may designate one or more
persons to countersign in his name and on his behalf such assign
ments or transfers c3 bonds as require his countersignature.”
32
[P ub . 305.]
Sec. 314. Section 5197 of the Revised Statutes, as amended (U. S.
C., Supp. V II, title 12, sec. 85), is amended by inserting after the
second sentence thereof the following new sentence: “ The maximum
amount of interest or discount to be charged at a branch of an associ
ation located outside of the States of the United States and the Dis
trict of Columbia shall be at the rate allowed by the laws of the
country, territory, dependency, province, dominion, insular posses
sion, or other political subdivision where the branch is located.”
S e c . 315. Section 5199 of the Revised Statutes (U. S. C., title 12,
sec. 60), is amended to read as follows:
“ S e c . 5199. The directors of any association may, semiannually,
declare a dividend of so much of the net profits of the association as
they shall judge expedient; but each association shall, before the dec
laration of a dividend on its shares of common stock, carrying not
less than one-tenth part of its net profits of the preceding half year
to its surplus fund until the same shall equal the amount of its com
mon capital: Provided, That for the purposes of this section, any
amounts paid into a fund for the retirement of any preferred stock
of any such association out of its net earnings for such half-year
period shall be deemed to be an addition to its surplus fund if, upon
the retirement of such preferred stock, the amount so paid into such
retirement fund for such period maj then properly be carried to sur
plus. In any such case tne association shall be obligated to transfer
to surplus the amounts so paid into such retirement fund for such
period on account of the preferred stock as such stock is retired.”
S e c. 316. Section 5209 of the Revised Statutes (U. S. C., title 12,
sec. 592) , is hereby amended by inserting after the words “ known as
the Federal Reserve A ct”, the words “ or of any national banking
association, or of any insured bank as defined in subsection (c) ox
section 12B of the Federal Reserve Act ” ; and by inserting after the
words “ such Federal Reserve bank or member bank ”, wherever they
appear in such section, the words “ or such national banking associa
tion or insured bank” ; and by inserting after the words “ or the
Comptroller of the Currency ”, the words “ or the Federal Deposit
Insurance Corporation,”.
S e c . 317. Section 5220 of the Revised Statutes (U. S . C.. title 12,
sec. 181), is amended by adding at the end thereof the iollowing
paragraph:
“ The shareholders shall designate one or more persons to act as
liquidating agent or committee, who shall conduct the liquidation in
accordance with law and under the supervision of the board of direc
tors, who shall require a suitable bond to be given by said agent or
committee. The liquidating agent or committee shall render annual
reports to the Comptroller of the Currency on the 31st day of Decem
ber of each year showing the progress of said liquidation until the
same is completed. The liquidating agent or committee shall also
make an annual report to a meeting of the shareholders to be held on
the date fixed in the articles of association for the annual meeting,
at which meeting the shareholders may, if they see fit, by a vote rep
resenting a majority of the entire stock of the bank, remove the
liquidating agent or committee and appoint one or more others in
place thereof. A special meeting of the shareholders may be called
at any time in the same manner as if the bank continued an active
bank and at said meeting the shareholders may, by vote of the
{P ub. 805.J
33
majority of the stock, remove the liquidating agent or committee.
The Comptroller of the Currency is authorized to have an examina
tion made at any time into the affairs of the liquidating bank until
the claims of all creditors have been satisfied, and the expense of
making such examinations shall be assessed against such bank in the
same manner as in the case of examinations made pursuant to section
5240 of the Revised Statutes, as amended (U. S. C., title 12, secs. 484,
485; Supp. VII, title 12, secs. 481-483).”
S e c. 318. Section 5243 of the Revised Statutes (U. S. C., title 12,
sec. 583) is amended by striking out the semicolon therein and all
that precedes it and substituting the following:
“ S e c . 5243. The use of the word ‘ national’, the word ‘ Federal’
or the words ‘ United States ’, separately, in any combination thereof,
or in combination with other words or syllables, as part of the name
or title used by any person, corporation, firm, partnership, business
trust, association or other business entity, aoing the business of
bankers, brokers? or trust or savings institutions is prohibited except
where such institution is organized under the laws of the United
States, or is otherwise permitted by the laws of the Ufiited States to
use such name or title, or is lawfully using such name or title on the
date when this section, as amended, takes effect;
S e c . 319. (a) Section 5 of the Federal Reserve Act, as amended,
is amended by striking out the last three sentences thereof and
inserting in lieu thereof the following: “ When a member bank
reduces its capital stock or surplus it shall surrender a proportionate
amount of its holdings in the capital stock of said Federal Reserve
bank. Any member bank which holds capital stock of a Federal
Reserve bank in excess of the amount required on the basis of 6 per
centum of its paid-up capital stock and surplus shall surrender such
excess stock. When a member bank voluntarily liquidates it shall
surrender all of its holdings of the capital stock of said Federal
Reserve bank and be released from its stock subscription not pre
viously called. In any such case the shares surrendered shall be
canceled and the member bank shall receive in payment therefor,
under regulations to be prescribed by the Board or Governors of the
Federal Reserve System, a sum equal to its cash-paid subscriptions
on the shares surrendered and one-half of 1 per centum a month
from the period of the last dividend, not to exceed the book value
thereof, less any liability of such member bank to the Federal Reserve
bank.”
(b)
Section 6 of the Federal Reserve Act, as amended, is amended
by striking out the last paragraph thereof.
S e c . 320. The fifth paragraph of section 9 of the Federal Reserve
Act? as amended, is amended by adding at the end thereof the fol
lowing sentence: “ Such reports of condition shall be in such form
and shall contain such information as the Board of Governors of
the Federal Reserve System may require and shall be published by
the reporting banks in such manner and in accordance with such
regulations as the said Board may prescribe.”
Sec. 321. (a) The first sentence of paragraph (m) of section 11
of the Federal Reserve Act, as amended, is amended by inserting
before the period at the end thereof a colon and the following:
“ Provided, That with respect to loans represented by obligations m
the form of notes secured by not less than a like amount of bonds
34
[Pub. 305J
or notes of the United States issued since April 24, 1917, 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, such limitation of 10 per centum on
loans to any person shall not apply, but State member banks shall
be subject to the same limitations and conditions as are applicable
in the case of national banks under paragraph (8) of section 5200
of the Revised Statutes, as amended (U. S. C., Supp. V II, title 12,
sec. 84)”.
(b) Paragraph (8) of section 5200 of the Revised Statutes, as
amended (U. S. C., Supp. VII, title 12, sec. 84), is amended bv insert
ing after the comma following the words 44certificates of indebtedness
of the United States”, the words “ Treasury bills of the United
States, or obligations fully guaranteed both as to principal and
interest by the United States ’.
Sec. 322. The third paragraph of section 13 of the Federal Reserve
Act, as amended, is amended by changing the words 44indorsed and
otherwise secured to the satisfaction of the Federal Reserve bank ”
in that paragraph to read 44indorsed or otherwise secured to the
satisfaction of the Federal Reserve bank ”.
S e c . 323. Subsection (e) of section 13b of the Federal Reserve
Act, as amended, is amended by striking out 44upon the date this
section takes effect”, and inserting in lieu thereof “ on and after
June 19, 1934” ; and by striking out “ the par value of the holdings
of each Federal Reserve bank of Federal Deposit Insurance Corpo
ration stock ”, and inserting in lieu thereof 44the amount paid by
each Federal Reserve bank for stock of the Federal Deposit
Insurance Corporation ”.
S e c . 324. (a) The first paragraph of section 19 of the Federal
Reserve Act, as amended, is amended to read as follows:
44 S e c . 19. The Board of Governors of the Federal Reserve Sys
tem is authorized, for the purposes of this section, to define the
terms 4demand deposits ’, 4gross demand deposits ’, 4deposits pay
able on demand ’, 4time deposits ’, 4savings deposits ’, and 4trust
funds ’, to determine what shall be deemed to be a payment of
interest, and to prescribe such rules and regulations as it may deem
necessary to effectuate the purposes of this section and prevent
evasions thereof: Provided, That, within the meaning of the provi
sions of this section regarding the reserves required of member
banks, the term 4time deposits’ shall include 4savings deposits
(b) The tenth paragraph of such section 19 is amended to read
as follows:
44In estimating the reserve balances required by this Act, member
banks may deduct from the amount of their gross demand deposits
the amounts of balances due from other banks (except Federal
Reserve banks and foreign banks) and cash items in process of
collection payable immediately upon presentation in the United
States, within the meaning of these terms as defined by the Board
of Governors of the Federal Reserve System.”
(c) The last two paragraphs of such section 19 are amended to
read as follows:
44No member bank shall, directly or indirectly, by any device
whatsoever, pay any interest on any deposit which is payable on
demand: Provided, That nothing herein contained shall be con
IPUB, 305.]
35
strued as prohibiting the payment of interest in accordance with
the terms of any certificate of deposit or other contract entered into
in good faith which is in force on the date on which the bank
becomes subject to the provisions of this paragraph; but no such
certificate of deposit or other contract shall be renewed or extended
unless it shall be modified to conform to this paragraph, and every
member bank shall take such action as may be necessary to con
form to this paragraph as soon as possible consistently with its
contractual obligations: Provided further, That this paragraph shall
not apply to any deposit of such bank which is payable only at an
office thereof located outside of the States of the United States and
the District of Columbia: Provided further, That until the expira
tion of two years after the date of enactment of the Banking Act
of 1935 this paragraph shall not apply (1) to any deposit made
by a savings bank as defined in section 12B of this Act, as amended,
or by a mutual savings bank, or (2) to any deposit of public funds
made by or on behalf of any State, county, school district, or other
subdivision or municipality, or to any deposit of trust funds if the
payment of interest with respect to such deposit of public funds or
of trust funds is required by State law. So much of existing law
as requires the payment of interest with respect to any funds depos
ited by the United States, by any Territory, District, or possession
thereof (including the Philippine Islands), or by any public instru
mentality, agency, or officer of the foregoing, as is inconsistent with
the provisions of this section as amended, is hereby repealed.
“ The Board of Governors of the Federal Reserve System shall
from time to time limit by regulation the rate of interest which
may be paid by member banks on time and savings deposits, and
shall prescribe different rates for such payment on time and savings
deposits having different maturities, or subject to different condi
tions respecting withdrawal or repayment, or subject to different
conditions by reason of different locations, or according to the vary
ing discount rates of member banks in the several Federal Reserve
districts. No member bank shall pay any time deposit before its
maturity except upon such conditions and in accordance with such
rules and regulations as may be prescribed by the said Board; or
waive any requirement of notice before payment of any savings
deposit except as to all savings deposits having the same require
ment: Provided, That the provisions of this paragraph shall not
apply to any deposit which is payable only at an office of a mem
ber bank located outside of the States of the United States and
the District of Columbia.”
(d)
Such section 19 is amended by adding at the end thereof the
following new paragraph:
“ Notwithstanding the provisions of the First Liberty Bond Act, as
amended, the Second Liberty Bond Act, as amended, and the Third
Liberty Bond Act, as amended, member banks shall be required to
maintain the same reserves against deposits of public moneys by the
United States as they are required by this section to maintain against
Other deposits.”
Sec. 325. Section 21 of the Federal Reserve Act, as amended, is
amended by adding at the end thereof the following paragraph:
“ Whenever member banks are required to obtain reports from
affiliates, or whenever affiliates of member banks are required to sub
36
[P ub . 305.]
mit to examination, the Board of Governors of tlfe Federal Reserve
System or the Comptroller of the Currency, as the case may be, may
waive such requirements with respect to any such report or examina
tion of any affiliate if in the judgment of the said Board or
Comptroller, respectively, such report or examination is not necessary
to disclose fully the relations between such affiliate and such bank
and the effect thereof upon the affairs of such bank.”
S e c . 326. (a) Subsection (a) of section 22 of the Federal Reserve
Act, as amended, is amended by inserting in the first paragraph
thereof after “ No member bank ” the following: “ and no insured
bank as defined in subsection (c) of section 12B of this A ct” ; by
inserting before the period at the end of the first sentence of such
paragraph “ or assistant examiner, who examines or has authority to
examine such bank ” ; and by inserting after “ any member bank ”
in the second paragraph thereof “ or insured bank ” ; by inserting
before the period at the end thereof “ or Federal Deposit Insurance
Corporation examiner ” ; and by adding at the end of such subsection
a new paragraph, as follows:
“ The provisions of this subsection shall apply to all public exami
ners and assistant examiners who examine member banks of the
Federal Reserve System or insured banks, whether appointed by the
Comptroller of the Currency, by the Board of Governors of the
Federal Reserve System, by a Federal Reserve agent, by a Federal
Reserve bank, or by the Federal Deposit Insurance Corporation, or
appointed or elected under the laws of any State; but shall not apply
to private examiners or assistant examiners employed only by a
clearing-house association or by the directors of a bank.”
(b) Subsection (b) of such section 22 is amended by inserting
therein after “ no national bank examiner” the following: “ and no
Federal Deposit Insurance Corporation examiner ” ; and by inserting
after “ member bank” the following: “ or insured bank” ; and by
inserting after “ from the Comptroller of the Currency,” the follow
ing: “ as to a national bank, the Board of Governors of the Federal
Reserve System as to a State member bank, or the Federal Deposit
Insurance Corporation as to any other insured bank,”.
(c) Subsection (g) of such section 22 is amended to read as
follows:
“ (g) No executive officer of any member bank shall borrow from
or otnerwise become indebted to any member bank of which he is an
executive officer, and no member bank shall make any loan or extend
credit in any other manner to any of its own executive officers: Pro
vided, Thatloans made to any such officer prior to June 16,1933, may
be renewed or extended for periods expiring not more than five years
from such date where the board of directors of the member "bank
shall have satisfied themselves that such extension or renewal is in
the best interest of the bank and that the officer indebted has made
reasonable effort to reduce his obligation, these findings to be evi
denced by resolution of the board of directors spread upon the
minute book of the bank: Provided further, That with the prior
approval of a majority of the entire board of directors, any member
bank may extend credit to anv executive officer thereof, and such
officer may become indebted thereto, in an amount not exceeding
$2,500. If any executive officer of any member bank borrow from or
if he be or become indebted to any bank other than a member bank
[P ub. 805.]
37
of which he is an executive officer, he shall make a written report to
the board of directors of the member bank of which he is an executive
officer, stating the date and amount of such loan or indebtedness, the
security therefor, and the purpose for which the proceeds have been
or are to be used. Borrowing by, or loaning to, a partnership in
which one or more executive officers of a member bank are partners
having either individually or together a majority interest in said
partnership, shall be considered within the prohibition of this sub
section. Nothing contained in this subsection shall prohibit any
executive officer of a member bank from endorsing or guaranteeing
for the protection of such bank any loan or other asset which shall
have been previously acquired by such bank in good faith or from
incurring any indebtedness to such bank for the purpose of protect
ing such bank against loss or giving financial assistance to it. The
Board of Governors of the Federal Reserve System is authorized to
define the term ‘ executive officer ’, to determine what shall be deemed
to be a borrowing, indebtedness, loan, or extension of credit, for the
purposes of this subsection, and to prescribe such rules and regula
tions as it may deem necessary to effectuate the provisions of this sub
section in accordance with its purposes and to prevent evasions of
such provisions. Any executive officer of a member bank accepting
a loan or extension of credit which is in violation of the provisions
of this subsection shall be subject to removal from office in the man
ner prescribed in section 30 of the Banking Act of 1933: Provided,
That for each day that a loan or extension of credit made in violation
of this subsection exists, it shall be deemed to be a continuation of
such violation within the meaning of said section 30.”
S e c. 327. The third paragraph of section 23A of the Federal
Reserve Act, as amended, is amended to read as follows:
“ For the purpose of this section, the term i affiliate ’ shall include
holding-company affiliates as well as other affiliates, and the pro
visions of this section shall not apply to any affiliat§)((l) engaged on
June 16,1934, in holding the bank premises of the member bank with
which it is affiliated or in maintaining and operating properties
acquired for banking purposes prior to such date;V(2) engaged solely
in conducting a safe-deposit business or the business of an agricul
tural credit corporation or livestock loan company; (3) in the capital
stock of which a national banking association is authorized to invest
pursuant to section 25 of this Act; as amended, or a subsidiary of
such affiliate, all the stock of which (except qualifying shares of
directors in an amount not to exceed 10 per centum) is owned by such
affiliate; (4) organized under section 25 (a) of this Act, as amended,
or a subsidiary of such affiliate, all the stock of which (except quali
fying shares of directors in an amount not to exceed 10 per centum)
is owned by such affiliate; (5) engaged solely in holding obligations
of the United States or obligations fully guaranteed by the United
States as to principal and interest, the Federal intermediate credit
banks, the Federal land banks, the-Federal Home Loan Banks, or the
Home Owners’ Loan Corporation; (6) where the affiliate relationship
has arisen out of a bona fide debt contracted prior to the date of the
creation of such relationship; or (7) where the affiliate relationship
exists by reason of the ownership or control of any voting shares
thereof by a member bank as executor, administrator, trustee, receiver,
38
[P ub . 305.]
agent, depositary, or in any other fiduciary capacity, except where
such shares are held for the benefit of all or a majority of the stock
holders of such member bank; but as to any such affiliate, member
banks shall continue to be subject to other provisions of law appli
cable to loans by such banks and investments by such banks in stocks,
bonds, debentures, or other such obligations. The provisions of this
section shall likewise not apply to indebtedness of any affiliate for
unpaid balances due a bank on assets purchased from such bank or
to loans secured by, or extensions of credit against, obligations of
the United States or obligations fully guaranteed by the United
States as to principal and interest.”
S e c. 328. Section 24 of the Federal Reserve Act, as amended, is
amended by adding at the end thereof the following new paragraph:
“ Loans made to established industrial or commercial businesses (a)
which are in whole or in part discounted or purchased or loaned
against as security by a Federal Reserve bank under the provisions
of section 13b of this Act, (b) for any part of which a commitment
shall have been made by a Federal Reserve bank under the provisions
of said section, (c) in the making of which a Federal Reserve bank
participates under the provisions of said section, or (d) in which the
Keconstruction Finance Corporation cooperates or purchases a par
ticipation under the provisions of section 5d of the Reconstruction
Finance Corporation Act, shall not be subject to the restrictions or
limitations of this section upon loans secured by real estate.”
S e c . 329. Section 25 of the Federal Reserve Act, as amended, is
further amended by striking out the last paragraph of such section;
the paragraph of section 25 (a) of the Federal Reserve Act, as
amended, which commences with the words “A majority of the shares
of the capital stock of any such corporation ” is amended by striking
out all of said paragraph except the first sentence thereof; and the
Act entitled “An Act to supplement existing laws against unlawful
restraints and monopolies, and for other purposes” (38 Stat. 730),
approved October 15, 1914, as amended, is further amended (a) by
striking out section 8A thereof and (b) by substituting for the first
three paragraphs of section 8 thereof the following:
“ S e c. 8. N o private banker or director, officer, or employee of any
member bank of the Federal Reserve System or any branch thereof
shall be at the same time a director, officer, or employee of any other
bank, banking association, savings bank, or trust company organized
under the National Bank Act or organized under the laws of any
State or of the District'of Columbia, or any branch thereof, except
that the Board of Governors of the Federal Reserve System may by
regulation permit such service as a director, officer, or employee of not
more than one other such institution or branch thereof; but the fore
going prohibition shall not apply in the case of any one or more
of the following or any branch thereof :
“ (1) A bank, banking association, savings bank, or trust company,
more than 90 per centum of the stock of which is owned directly or
indirectly by the United States or by any corporation of which the
United States directly or indirectly owns more than 90 per centum
of the stock.
“ (2) A bank, banking association, savings bank, or trust company
which has been placed formally in liquidation or which is in the
[P ub. 305.]
39
hands of a receiver, conservator, or other official exercising similar
functions.
“ (3) A corporation, principally engaged in international or foreign
banking or banking in a dependency or insular possession of the
United States which has entered into an agreement with the Board
of Governors of the Federal Reserve System pursuant to section 25
of the Federal Reserve Act.
“ (4) A bank, banking association, savings bank, or trust company,
more than 50 per centum of the common stock of which is owned
directly or indirectly by persons who own directly or indirectly
more than 50 per centum of the common stock of such member bank.
“ (5) A bank, banking association, savings bank, or trust company
not located and having no branch in the same city, town, or village
as that in which such member bank or any branch thereof is located,
or in any city, town, or village contiguous or adjacent thereto.
“ (6) A bant, banting association, savings bank, or trust company
not engaged in a class or classes of business in which such member
bank is engaged.
“ (7) A mutual savings bank having no capital stock.
“ Until February 1,1939, nothing in this section shall prohibit any
director, officer, or employee of any member bank of the Federal
Reserve System, or any branch thereof, who is lawfully serving at
the same time as a private banker or as a director, officer, or employee
of any other bank, banking association, savings bank, or trust com
pany, or any branch thereof, on the date of enactment of the Banking
Act of 1935, from continuing such service.
“ The Board of Governors of the Federal Reserve System is
authorized and directed to enforce compliance with this section, and
to prescribe such rules and regulations as it deems necessary for that
purpose.”
S e c. 330. (a) Section 1 of the Act of November 7,1918, as amended
(U. S. C., title 12, sec. 33; Supp. VII, title 12, sec. 33), is amended
by striking out the second proviso down to and including the words
“ to be ascertained ” and inserting in lieu thereof the following:
“And provided further, That if such consolidation shall be voted for
at said meetings by the necessary majorities of the shareholders of
each of the associations proposing to consolidate, any shareholder of
any of the associations so consolidated, who has voted against such
consolidation at the meeting of the association of which he is a
shareholder or has given notice in writing at or prior to such meeting
to the presiding officer that he dissents from the plan of consolida
tion, shall be entitled to receive the value of the shares so held by him
if and when said consolidation shall be approved by the Comptroller
of the Currency, such value to be ascertained as of the date of the
Comptroller’s approval ”.
(b) Such section 1 is further amended by adding at the end thereof
the following paragraphs:
“ Publication of notice and notification by registered mail of the
meeting provided for in the foregoing paragraph may be waived by
unanimous action of the shareholders of the respective associations.
Where a dissenting shareholder has given notice as above provided
to the association of which he is a shareholder of his dissent from the
plan of consolidation, and the directors thereof fail for more than
2 036 6 0 — 58------ 48
40
[Pub . 305.]
thirty days thereafter to appoint an appraiser of the value of his
shares, said shareholder may request the Comptroller of the Cur
rency to appoint such appraiser to act on the appraisal committee
for and on behalf of such association.
“ I f shares, when sold at public auction in accordance with this
section^ realize a price greater than their final appraised value, the
excess m such sale price shall be paid to the shareholder. The con
solidated association shall be liable for all liabilities of the respec
tive consolidating associations. In the event one of the appraisers
fails to agree with the others as to the value of said shares, then the
valuation of the remaining appraisers shall govern.”
S ec . 331. (a) Section 3 of the Act of November 7,1918, as amended
(U. S. C., Supp. V II, title 12, sec. 34 (a )), is amended by striking
out the first sentence following the proviso down to and including the
words “ to be ascertained 55 and inserting in lieu thereof the follow
ing : “ I f such consolidation shall be voted for at said meetings by
the necessary majorities of the shareholders of the association and
o f the State or other bank proposing to consolidate, and thereafter
the consolidation shall be approved by the Comptroller of the Cur
rency, any shareholder of either the association or the State or other
bank so consolidated, who has voted against such consolidation at
the meeting of the association of which he is a stockholder, or has
given notice in writing at or prior to such meeting to the presiding
officer that he dissents from the plan of consolidation, shall be entitled
to receive the value of the shares so held by him if and when said
consolidation shall be approved by the Comptroller of the Currency,
such value to be ascertained as of the date o f the Comptroller’s
approval.”
(b)
Such section 3 is further amended by adding at the end thereof
the following paragraph:
“ Where a dissenting shareholder has given notice as provided in
this section to the bank of which he is a shareholder o f his dissent
from the plan of consolidation, and the directors thereof fail for more
than thirty days thereafter to appoint an appraiser o f the value o f his
shares, said shareholder may request the Comptroller o f the Currency
to appoint such appraiser to act on the appraisal committee for and
on behalf of such bank. In the event one o f the appraisers fails to
agree with the others as to the value of said shares, then the valuation
o f the remaining appraisers shall govern.”
S ec . 332. The Act entitled “An Act to prohibit offering for sale as
Federal farm-loan bonds any securities not issued under the terms o f
the Farm Loan Act, to limit the use of the words ‘ Federal ’, 1United
States ’, or ‘ reserve ’, or a combination o f such words, to prohibit
false advertising, and for other purposes ” , approved May 24, 1926
(U. S. C., Supp. V II, title 12, secs. 584^588), is amended by inserting
in section 2 thereof after “ the words 6United States ’ ” , the follow
ing: “ the words ‘ Deposit Insurance’ ” ; and by inserting in said
section after the words “ the laws of the United States ” , the follow
ing: “ nor to any new bank organized by the Federal Deposit Insur
ance Corporation as provided m section 12B of the Federal Reserve
Act, as amended,” ; and by striking out the period at the end o f
section 4 and inserting the following: “ or the Federal Deposit
Insurance Corporation.”
[PUB.305.J
41
S ec . 833. The Act entitled “ An Act to provide punishment for
certain offenses committed against banks organized or operating
under laws o f the United States or any member of the Federal
Reserve System ” , approved May 18, 1934 (48 Stat. 783), is amended
by striking out the period after “ United iStates 55 in the first section
thereof and inserting the follow ing: “ and any insured bank as
defined in subsection (c) of section 12B of the Federal Reserve Act,
as amended.”
S ec . 334. Section 5143 of the Revised Statutes, as amended, is
hereby amended by striking out everything following the words
“ Comptroller of the Currency ” , where such words last appear in
such section, and substituting the following: “ and no shareholder
shall be entitled to any distribution of cash or other assets by reason
of any reduction of the common capital of any association unless such
distribution shall have been approved by the Comptroller of the Cur
rency and by the affirmative vote of at least two-thirds of the shares
of each class of stock outstanding, voting as classes.”
S ec . 335. Section 5139 of the Revised Statutes, as amended, is
amended by adding at the end of the first paragraph the following
new paragraph:
“ Certificates hereafter issued representing shares of stock of the
association shall state (1) the name and location of the association,
(2) the name of the holder of record of the stock represented thereby,
(3) the number and class of shares which the certificate represents,
and (4) if the association shall issue stock of more than one class,
the respective rights, preferences, privileges, voting rights, powers,
restrictions, limitations, and qualifications of each class of stock
issued shall be stated in full or in summary upon the front or back
of the certificates or shall be incorporated by a reference to the
articles o f association set forth on the front of the certificates. Every
certificate shall be signed by the president and the cashier of the
association, or by such other officers as the bylaws of the association
shall provide, and shall be sealed with the seal of the association.”
Sec. 336. The last sentence of section 301 of the Emergency Bank
ing and Bank Conservation Act, approved March 9,1933, as amended,
is amended to read as follow s: u No issue of preferred stock shall be
valid until the par value of all stock so issued shall be paid in and
notice thereof, duly acknowledged before a notary public by the
president, vice president, or cashier of said association, has been
transmitted to tne Comptroller of the Currency and his certificate
obtained specifying the amount of such issue of preferred stock and
his approval thereof and that the amount has been dulv paid in as a
part of the capital of such association; which certificate shall be
deemed to be conclusive evidence that such preferred stock has been
duly and validly issued.”
S ec . 337. The additional liability imposed by section 4 of the Act
of March 4,1933, as amended (D. C. Code, Supp. I, title 5, sec. 300a),
upon the shareholders of savings banks, savings companies, and
banking institutions and the additional liability imposed by section
734 of the Act of March 3, 1901 (D. C. Code, title 5, sec. 361), upon
the shareholders of trust companies, shall cease to apply on July 1,
1937, with respect to such savings banks, savings companies, banking
institutions, and trust companies which shall be transacting business
42
[Pub . 305.]
on such date: Provided, That not less than six months prior to such
date, the savings bank, savings company, banking institution, or
trust company, desiring to take advantage hereof, shall have caused
notice of such prospective termination of liability to be published in
a newspaper published in the District of Columbia and having gen
eral circulation therein. In the event of failure to give such notice as
and when above provided, a termination of such additional liability
may thereafter be accomplished as of the date six months subsequent
to publication in the manner above provided. Each such savings
bank, savings company, banking institution, and trust company shall,
before the declaration of a dividend on its shares o f common stock,
carry not less than one-tenth part of its net profits o f the preceding
half year to its surplus fund until the same shall equal the amount
of its common stock: Provided, That for the purposes of this section,
any amounts paid into a fund for the retirement of any preferred
stock or debentures of any such savings bank, savings company, bank
ing institution, or trust company, out of its net earnings for such
half-year period shall be deemed to be an addition to its surplus if,
upon the retirement of such preferred stock or debentures, the amount
so paid into such retirement fund for such period may then properly
be carried to surplus. In any such case the savings bank, savings
company, banking institution, or trust company shall be obligated
to transfer to surplus the amount so paid into such retirement fund
for such period on account of the preferred stock or debentures as
such stock or debentures are retirea.
Sec. 338. The second paragraph of section 9 of the Federal Reserve
Act, as amended, is amended by striking out the period at the end
thereof and adding thereto the follow ing: “ except that the approval
o f the Board o f Governors of the Federal Reserve System, instead
o f the Comptroller of the Currency, shall be obtained before any
State member bank may hereafter establish any branch and before
any State bank hereafter admitted to membership may retain any
branch established after February 25, 1927, beyond the limits of the
city, town, or village in which the parent bank is situated.”
S ec . 339. Section 5234 of the Revised Statutes, as amended (U. S .
C., title 12, sec. 192), is amended by striking out the period after
the words “ money so deposited ” at the end of the next to the last
sentence of such section and inserting in lieu of such period a colon
and the following: “ Provided, That no security in the form o f
deposit of United States bonds, or otherwise, shall be required in
the case o f such parts of the deposits as are insured under section
12B of the Federal Reserve Act, as amended.”
S ec . 340. Section 61 of the Act entitled “An Act to establish a
uniform system of bankruptcy throughout the United States” ,
approved July 1, 1898, as amended, is amended by inserting before
the period at the end thereof a colon and the follow ing: “ Provided ,
That no security in form of a bond or otherwise shall be required in
the case o f such part of the deposits as are insured under section 12B
of the Federal Reserve Act, as amended ” .
S ec . 341. Section 8 of the Act entitled “ An Act to establish postal
savings depositories for depositing savings at interest with the secur
ity of the Government for repayment thereof, and for other pur
poses” , approved June 25, 1910, as amended (U. S . C., title 39, sec.
[Pub . 305J
43
758; Supp. V II, title 39, sec. 758), is amended by striking out the*
first sentence thereof and inserting in lieu thereof the following:
“ Notwithstanding any other provision of law, (1) each deposit
in a postal savings depository office shall be a savings deposit, and
interest thereon shall oe allowed and entered to the credit of the
depositor once for each quarter beginning with the first day of the
month following the date of such deposit, but no interest shall be
allowed to any such depositor with respect to the whole or any part
o f the funds to his or her credit for any period of less than three
months; (2^ no interest shall be paid on any such deposit at a rate
in excess o i that which may lawfully be paid on savings deposits
under regulations prescribed by the Board of Governors of the Fed
eral Reserve System pursuant to the Federal Reserve Act, as
amended, for member banks of the Federal Reserve System located
in or nearest to the place where such depository office is situated;
and (3) postal savings depositories may deposit funds on time in
member banks o f the Federal Reserve System subject to the pro
visions of the Federal Reserve Act, as amended, and the regulations
of the Board of Governors of the Federal Reserve System, with
respect to the payment of time deposits and interest thereon.”
S ec . 342. The last sentence of the third paragraph of subsection
(k) of section 11 o f the Federal Reserve Act, as amended (U. S. C.,
title 12, sec. 248 (k )), is amended to read as follows: “ The State
banking authorities may have access to reports of examination
made by the Comptroller o f the Currency insofar as such reports
relate to the trust department of such bank, but nothing in this
Act shall be construed as authorizing the State banking authorities
to examine the books, records, and assets of such bank.”
S ec . 843. The first sentence after the third proviso of section 5240
o f the Revised Statutes, as amended (TF. S. (J., Supp. V II, title 12,
secs. 481 and 482), is amended by striking out the word “ i s ” after
the words “ whose compensation ” and inserting in lieu thereof a
comma and the follow ing: “ including retirement amiuities to be
fixed by the Comptroller of the Currency, is and shall b e ” ; and
such section 5240 is further amended by striking out “ The Federal
Reserve Board, upon the recommendation of the Comptroller of
the Currency,” and inserting in lieu thereof “ The Comptroller of
the Currency ” .
S ec . 344. (a) Section 1 of the National Housing Act is amended
by adding at the end thereof the following new sentence: “ The
Administrator shall, in carrying out the provisions of this title and
titles I I and III, be authorized, in his official capacity, to sue and be
sued in any court of competent jurisdiction, State or Federal.”
(b) The first sentence of section 2 of the National Housing Act,
as amended, is further amended by striking out the words “ includ
ing the installation of equipment and machinery ” and inserting in
lieu thereof the words “ and the purchase and installation of equip
ment and machinery on real property ” .
(c) Subsection (a) of section 203 of the National Housing Act is
amended by inserting the words “ property and” before the word
“ projects ” in clause (1) of such subsection.
(d) The last sentence o f section 207 of the National Housing Act
is amended by inserting the words “ property or ” before the word
u project ” .
44
[Pub . 305.]
S ec . 345. I f any part of the capital of a national bank, State
member bank, or bank applying for membership in the Federal
Reserve System consists of preferred stock, the determination of
whether or not the capital of such bank is impaired and the amount
o f such impairment shall be based upon the par value of its stock
even though the amount which the holders o f such preferred stock
shall be entitled to receive in the event of retirement or liquidation
shall be in excess of the par value of such preferred stock. I f any
such bank or trust company shall have outstanding any capital
notes or debentures of the type which the Reconstruction Finance
Corporation is authorized to purchase pursuant to the provisions
o f section 304 of the Emergency Banking and Bank Conservation
Act, approved March 9, 1933, as amended, the capital of such bank
may be deemed to be unimpaired if the sound value of its assets is
not less than its total liabilities, including capital stock, but exclud
ing such capital notes or debentures and any obligations o f the bank
expressly subordinated thereto. Notwithstanding any other provi
sion o f law, the holders of preferred stock issued by a national
banking association pursuant to the provisions of the Emergency
Banking and Bank Conservation Act, approved March 9, 1933, as
amended, shall be entitled to receive such cumulative dividends
at a rate not exceeding six per centum per annum on the purchase
price received by the association for such stock and? in the event
o f the retirement o f such stock, to receive such retirement price,
not in excess o f such purchase price plus all accumulated dividends,
as may be provided in the articles o f association with the approval
o f the Comptroller o f the Currency. I f the association is placed
in voluntary liquidation, or i f a conservator or a receiver is
appointed therefor, no payment shall be made to the holders of
common stock until the holders o f preferred stock shall have been
paid in full such amount as may be provided in the articles o f
association with the approval o f the Comptroller o f the Currency,
not in excess o f such purchase price of such preferred stock plus
all accumulated dividends.
S eo . 346. I f any provision o f this Act, or the application thereof
to any person or circumstances, is held invalid, the remainder o f
the Act, and the application o f such provision to other persons and
circumstances, shall not be affected thereby.
Approved, August 23, 1935.
@FedFRASER