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The Papers of Eugene Meyer(mss52019)
118_02_001-
Subject File, Federal Reserve Board, Glass Bill (S. 3215), Confidential
Committee Prints, 1932
,Ap.e-494 "ewe, AIR.P
CieAss 8,4.4 5.3.21SCoA1rtbelv7me.641W772*-40-AP403--
72D CONGRESS
1ST SESSION
S. 3215
IN THE SENA TE OF THE UNITED STATES
JANUARY-2t; 1932
Mr. GLASS introduced the following bill; which was read twice and referred
to the Committee on Banking and Currency
A
ILL
To provide for the safer and more effective use of the assets of
Federal reserve banks and of national banking associations,
to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other
purposes.
Be it enacted by the Senate and House of Representa•1
lives of the United States of America in Congress assembled,
3 That the short title of this Act shall be the "Banking Act
4
5
of 1932."
SEC. 2. As used in this Act—
(a) The terms "bank," "national bank," "national
7 banking association," "member bank," "board," "district,'
2
3
and "reserve bank" shall have the meanings assigned tu
1
them in section 1 of the Federal Reserve Act, as amended.
2 of the shares voted for the election of directors at the pre3 ceding annual meeting of such corporation, is directly or
(b) The term "affiliate" (except where otherwise
4 expressly defined) shall include the following:
5
(1) Any corporation in \vhich a national bank or a
6
member bank, directly or indirectly owns or controls a
4 indirectly owned or controlled by the same or substantially
5 the same stockholders as directly or indirectly own or con-
7 majority of the voting shares of its capital, or a lesser
number of such shares if such lesser number shall amount
9 to more than 50 per centum of the shares voted for the
10 election of directors at the preceding annual meeting of such
11
corporation; or any corporation in which a national bank
12
or a member bank in any other manner directly or indirectly
13 controls the election of a majority of its board of directors; or
II
(2) Any corporation which directly or indirectly owns
i5
or controls a majority of the shares of capital stock of a
16
national bank or member bank, or a lesser number of shares
17
if such lesser number shall amount to more than 50 per
18
centum of the shares voted for the election of directors at
19 the preceding annual meeting of such national bank or
20
member bank; or any corporation which in any other man-
21
ner directly or indirectly controls the election of a majority
22
of the board of directors of such national bank or member
93
bank; or
C
trol a majority of the shares of capital stock of such national
7
bank or member bank, or a lesser number of shares if such
8 lesser number shall amount to more than 50 per centum of
9 the shares voted for the election of directors at the preced10 ing annual meeting of such national bank or member bank;
1
(4) Any corporation a majority of directors of which
13
shall be directors of any such national bank or member
14
bank, or of which a majority of the executive committee of
15 its board of directors are directors of such national bank or
16
(5) Any corporation the board of directors of which
18
shall comprise a majority of the board of directors of any
19 such national bank or member bank, or the executive com20
mittee of the board of directors of which shall comprise a
21
majority of the executive committee of such national bank
or member bank.
24
member bank; or
17
(3) Any corporation of which a majority of the voting
25 shares of the capital stock, or a lesser number of shares of
or
12
23
24
such lesser number shall amount to more than 50 per centum
(c) "Holding company" means any affiliate specified
in subdivision (2) of subsection (b) of this section.
4
5
(d) "Subsidiary" means any affiliate specified in
1
j
credit faces of the Federal reserve system within the
2 subdivision (1) of subsection (a) of this section.
2 limitations of this Act. Such facilities shall not be extended
0
(e) "Commerce" means commerce as defuied by
3 to member banks kr the purpose of making or carrying
4 section 1 of the Act entitled "An Act To supplement existing
4 loans covering investments, or facilitating the carrying of,
5 laws against unlawful restraints and monopolies, and for
5 or trading in, stocks, bonds, or other investment securities
6 other purposes," approved October 15, 1914, as amended.
6 other than obligations of the Government of the United
deposits" means all deposits payable
7 States. Each Federal reserve bank shall keep itself in-
(f) "Demand
7
8
within thirty days.
8 formed of the loan and investment practices of its member
9
(g) "Time deposits"includes all deposits payable after
10
thirty days, all savings accounts and certificates of deposit
11
which are subject to not less than thirty days' notice before
eral reserve bank shall report to the Federal Reserve Board
12
payment (except thrift deposits), and all postal-savings
12 any undue, unauthorized, or improper use of such credit
13
deposits.
13 facilities, together with his recommendation kr remedial
9
banks and the uses made by them of the credit facilities of
10 the Federal reserve system. The chairman
a each
Fed-
14
(h) "Thrift deposits" means all deposits subject to
15
not less than sixty days' notice before payment which are
15
16
not subject to transfer by check and the total monthly bal-
16 the use of the credit faces of the Federal reserve system
17
ance of which in any individual case does not exceed $5,000.
17
SEC. 3. The fourth paragraph after
paragraph
14 action in the matter. The Federal Reserve Board may,
in its discretion, suspend kr not more than one year from
any member bank making undue, unauthorized, or improper
18 use of such facilities."
a the
19 "Eighth" of section 4 of the Federal Reserve Act, as
19
20 amended, is amended by inserting before the period at the
20
Federal Reserve Act, as amended, is amended by inserting
end thereof a comma and the following: "but only if
21
before the period at the end thereof a colon and the follow-
21
22 such discounts, advancements, and accommodations are in-
SEC. 4. The twenty-fifth paragraph of section 4
23 tended for the accommodation of commerce, industry, and
22 ing: "Provided, That no such vote shall be cast by or on
member bank, if a majority of its stock shall
behalf
24 agriculture. The Federal Reserve Board may prescribe
24
ations further defining and regulating the use of the
25
25
e
a any
be held or owned by any holding company, affiliate, or other
corporation, which is in fact one of a ch&m, or of a jointly
6
7
controlled group of banks, controlled by an individual, or if
1
2 its stock is in the hands of a voting trust, or if in any other
3
way such bank is prevented from acting subject to the un-
4
511414-6rilts-freariencling
2
which relate to the withdrawal or impairment of their capital
3 stock, and which relates to the payment of unearned divi-
controlled decision of the general body of stockholders of
4
5 such bank locally resident in the town or city in which such
6
8
12
The first paragraph of section 7 of the Federal
"After all necessary expenses of a Federal reserve bank
shall have been paid or provided lor,,the stockholders shall
f\
be entitled to receive an annual dividend of 6 per centum on
the paid-in capital stock, which dividend shall be cumulative.
13
After the aforesaid dividend claims have been fully met the
14
net earnings, beginning with the net earnings for the year
15
ending December 31, 1932, shall be paid to the Federal
16
Liquidating Corporation provided for in section 12B of this
17
Act and shall be used by the said corporation for carrying
18
6
officers, agents, and employees thereof shall also be subject
7
to the provisions of and to the penalties prescribed by section
5209 of the Revised Statutes, and shall be required to make
9
reports of condition and of the payment of dividends to the
10
Federal reserve bank of which they become a member. Not
11
less than three of such reports shall be made annually on call
12
of the Federal reserve bank on dates to be fixed by the
13
Federal Reserve Board.
14
within ten days after the date they are called for shall subject
15
the offending bank to a penalty of $100 a day for each day
16
that it fails to transmit such report; such penalty to be col-
S---en--Section 9 of the Federal Reserve Act, as
20 amended, is'-amended by changing the fifth paragraph
4e,c,
18
A,Section 9 of the Federal Reserve Act, as amended, is
19
further amended by inserting between the fifth and sixth
20
paragraphs thereof the following new paragraph:
thereof to read as follows:
21
22
"All banks admitted to iiieml?,ership under authority of
23 this section shall be required to comply with the reserve and
24
25
capital requirements of this Act and to conform to those
provisions of law ithposed on national banks which prohibit
Failure to make such report§
17 leeted-hrthe-Federal---reser-ve bank by suit or otherwise."
out the purposes of such section."
19
21
5 this Act applicable to national banks. Such banks and the
Reserve Act, as amended, is amended to read as follows:
9
11
dends. They shall also comply with all the requirements of
bank is established."
Sc. 5.
10
on or -purchasing their own stock,
1
"Each affiliate of a bank admitted to membersh.
22
under authority of this section shall, during the period of I-wilt-
23
years after this section as amended takes effect, make and
21
furnish to the president of the bank, for transmission by him
to the Federal Reserve Board, not less than three reports
UM
9
8
during each year. Such reports shall be in such form as
pany, a finance company, securities company, investment
the Federal Reserve Board may prescribe, shall be verified
2 trust or other similar institution, or any other corporation,
by the oath or affirmation of the president or such other
3 of which control is held, directly or indirectly, through stock
officer as may be designated by the board of directors of
4 ownership or in any other manner, by any such bank or by
5 such affiliate to verify such reports, and shall cover the
5 the shareholders thereof who own or control a majority of
6 condition of such affiliate on dates identical with those fixed
6 the stock of such bank."
7
by the Federal Reserve Board for reports of the condition
7
SEC. 7. (a) The first paragraph of section 10 of the
8
of the member bank. Each such report of an affiliate shall
8
Federal Reserve Act, as amended, is amended to read as
9
be transmitted to the Federal Reserve Board at the same
9 follows:
10
time as the corresponding report of the member bank,
10
"A Federal Reserve Board is hereby created which
11
except that the Federal Reserve Board may, in its discre-
11
shall consist of seven members, including the Comptroller
12
tion, extend such time for good cause shown. Each such
12
of the Currency, who shall be a member ex officio, and six
13
report shall exhibit in detail and under appropriate heads,
13
members appointed by the President of the United States,
14
the holdings of the affiliate in question, their cost and present
14
by and with the advice and consent of the Senate. In select-
15
value, the expenses of operation for the preceding year, and
15
ing the six appointive members of the Federal Reserve
16
the balance sheet of the enterprise. It shall be the duty
1C
Board, not more than one of whom shall be selected from
17
of the president of such member bank to satisfy himself
17
any one Federal reserve district, the President shall have
18
as to the correctness of the report before transmitting the
18
due regard to a fair representation of the financial, agricul-
19 same to the Federal Reserve Board. Any affiliate which
19
tural, industrial, and commercial interests, and geographical
20 fails to make and furnish any report required of it under
20
divisions of the country, and at least two of such members
21
this section, and any member bank whose president fails
21
shall be persons of tested banking experience.
22
to transmit, as required by this section, any such report
22
members of the Federal Reserve Board appointed by the
9‘-.1
furnished to him, shall be subject to a penalty of $100 for
93 President and confirmed as aforesaid shall devote their entire
24
each day during which such failure continues. As used in
24
25
this paragraph the term 'affiliate' includes a trust com-
The six
time to the business of the Federal Reserve Board and shall
each receive an annual salary of $12,000, payable monthly,
11
10
2
together with actual necessary traveling expenses, and the
1
years. Of the six persons thus appointed, one shall be desig-
Comptroller of the Currency, as ex officio member of the
2
nated by the President as governor and one as vice governor
3 Federal Reserve Board, shall, in addition to the salary now
4
paid him as Comptroller of the CluTeney. receive the sum
3 of the Federal Reserve Board. The governor of the Federal
4 Reserve Board, subject to its supervision, shall be its activ.
5 of $7,000 annually for his services as a member of said
5 executive officer. Each member of the Federal Reserve
6 board."
6 Board shall within fifteen days after notice of appointment
7
(b) The second paragraph of section 10 of the Federal Reserve Act, as amended, is amended to read as follows:
"The Comptroller of the Currency shall be ineligible
7 make and subscribe to the oath of office."
8
(c) The fourth paragraph of section 10 of the Federal
9 Reserve Act, as amended, is amended to read as follows:
10
during the time he is in office and for two years thereafter
10
"No member of the Federal Reserve Board shall be an
ji
to hold any office, position, or employment in any member
11
officer or director of ally bank, banking institution, trust
12
bank. The appointive members of the Federal Reserve
12 company, or Federal reserve bank or hold stock in any bank,
13
Board shall be ineligible during the time they are in office
13
banking institution, or trust company; and before entering
14 and for two years thereafter to hold ally office, position,
14
upon his duties as a member of the Federal Reserve Board
15
or employment in any member bank, except that this
15
he shall certify under oath to be filed with the secretary of
16
restriction shall not apply to a member who has served
16 the board that he has complied with this requirement.
17
the full term for which he was appointed. Upon the ex-
17
18
piration of the term of any member of the Federal Reserve
18 term, among the six members of the Federal Reserve Board
19 Board in office when this paragraph as amended takes
19 appointed by the President, as above provided, a successor
20
effect, the President shall fix the term of the successor to
20 shall be appointed by the President, with the advice and
21
such member at not to exceed twelve years, as designated
21
consent of the Senate, to fill such vacancy, and when ap-
22
by the President at the time of nomination, but in such
22
pointed he shall hold office for the unexpired term of the
23
manner as to provide for the expiration of the term of not
23 member whose place he is selected to fill."
24
more than one member in any two-year period, and there-
24
(e) of-section 11 of the Federal
25
after each member shall hold office for a term of twelve
25
eerV'eV as amended, is amended to read as follows:
Whenever a vacancy shall occur, other than by expiration of
13
12
1
per centum of the unimpaired capital and surplus of such
"(e) To add to the number of cities classified as
2 reserve and central reserve cities under existing law in
3 which national banking associations are subject to the re4 serve requirements set forth in section 20 of this Act; or to
5 reclassify reserve or central reserve cities or to terminate
6 their designation as such: Provided, however, That the
7 Federal Reserve Board shall, within two years after this
8 subsection as amended takes effect, prepare and put into
9 effect a complete reclassification of reserve and central
10 reserve cities, but such reclassification shall be so effected
2 bank. Any percentage so fixed by the Federal Reserve
3 Board shall be subject to change from time to time upon
4 ten days' notice, and it shall be the duty of the board to
5 establish such percentages with a view to preventing the
6 undue use of bank loans for the speculative carrying of
7 securities. The Federal Reserve Board shall have power
8 to direct any member bank to refrain from further increase
^s
0^-,L r-i,e-bAkte,
9 of its security loans for any period up to one year. under
-
/
(
e
10
penalty of suspension of a/1 rediseount privilege
reserve banks."
•
/- '
t Federal
11
as to maintain a total reserve requirement for the national
11
12
banking system as a whole which shall not be less in the
12
SEC. IA The Federal Reserve Act, as amended, is
13
further amended by inserting between sections 11 and 12
13 aggregate than the total reserves of national banking asso14
ciations computed on the basis of the last all-member-bank
15 report furnished to the Federal Reserve Board preceding
16
17
18
such reclassification."
SEC.--9: Subsection (m) of section 11 of the Federal
Reserve Act, as amended, is amended to read as follows:
14 thereof the following new section:
15
"SEC. 11A. Upon receiving the unanimous consent of
16 the members of thOlederal Reserve Board, any Federal
17 reserve bank may make -advances to groups of ten or more
18
member banks within its district upon their joint and several
Po
demand promissory notes in such amounts as the board of
19
(m) Upon the affirmative vote of not less than six
20
of its members the Federal Reserve Board shall have power
20 directors of such Federal reserve bank may determine, but
21
to fix from time to time for,each Federal reserve district the
21
22
percentage of individual bankcapital and surplus which may
22 member banks if the aggregate amount of their demand and
be represented by loan secured by collateral, by member
23
time deposits constitutes at least 10 per centum of the entire
23
24
banks within such district but no loan shall be made by
24
demand and time deposits of the member banks within such
25 any such bank to any person in an amount in excess of 10
25
district. Such banks shall be authorized to distribute the
such advances may be made to a lesser number of such
15
14
Ii
loans_ to_sach._of.their number and in such
unts as they may agree upon, but before so doing they
3 shall \request such recipient banks to deposit with a suitable
4
trustee, representing the entire group, their individual notes
1
to any affiliate organized and existing for the purpose of buy-
2 ing and selling stocks, bonds, real estate, or real-estate m5rt3
gages, or for the purpose of holding title to any such prop-
4 erty, or (2) invest any of its funds in the capital stock, bonds,
5 made in favor of the group and protected by such collateral
5
or other obligations of any such affiliate, or (3) accept the
6 security as may be agreed upon. The Federal reserve bank
6
capital stock, bonds, or other obligations of any such affiliate
making any such advance shall charge and reserve a rate
7
as collateral security to protect loans made to any person,
8
of interest of not less than one-half of 1 per centum
8
copartnership, or corporation, if the aggregate amount of
9
month for the first period of ninety days of the life of such
9 such loans, extensions of credit, investments, and acceptances
10 advance, and thereafter the rate of interest shall be increased
10
of collateral security in the case 4 any such affiliate, will
11
by one-fourth of 1 per centum a month for each succeeding
11
exceed 10 per centum of the outstanding capital socisa
12
period of ninety days or fraction thereof. The banks
12
surplus of such national banking association or member bank.
13 included in any such group which receive the proceeds of
13
Each loan made to an affiliate within the foregoing
14-
any such advance shall pay to the group collectively interest
44
limitations shall be secured by stocks or bonds listed on a
1b
equal to the entire interest paid by the group during the life
15
stock exchange which have an ascertained market value at
16
of the advance, plus an indorsement fee of 1 per centum
16
the time of making the loan of at least 20 per centum more
17
upon the total amount of the advance.
17
than the amount of such loan, or shall be secured by notes,
18
ment fee so received by the group shall, after pay-
18
drafts, bills 4 exchange or acceptances, eligible for re
19
ment of all expenses, be distributed to the members of the
19
count at Federal reserve banks, or by bonds or other 1bliga-
20 group in proportion to their capital funds. No such joint
20
tions eligible for inyestment by savings banks in the State
21
notes upon which advances are made by a Federal reserve
21
in which the association or member bank making the loan is
22
bank under this section shall be eligible under section 16
22
located. A loan to a director, officer, clerk, or other em-
2:3
of this .A.ct as collateral security for Federal reserve notes."
23
ployee of any such affiliate shall be deemed a loan to the
24
SEc.41-. No national banking association and no mem-
24
affiliate to the extent that the proceeds of such loan are
25
ber bank shall (1) make any loan or any extension of credit
25
transferred to the affiliate.
The indorse-
16
1
SEC. 12. The Federal Reserve Act, as amended, is
2 amended by inserting between sections 12 and 13 thereof
3 the following new sections:
4
"SEC. 12A. (a) There is hereby created a Federal
5 Open Market Committee (hereinafter referred to as the
6
committee "), which shall consist of the Governor of the
7 Federal Reserve Board and as many additional members
8 as there are Federal reserve districts. Each Federal reserve
9
bank by its board of directors shall annually select from
10
among the officers of the said bank one member of said
if
committee subject to the confirmation of the Federal Re-
12
serve Board.
13
held at Washington, District of Columbia, at least four times
14
each year. Additional meetings may be held elsewhere
15
upon the call of the Federal Reserve Board, either upon the
1€
motion of the board or at the request of any three members
17
of the committee. In the absence or inability of the Gov-
18
ernor of the Federal Reserve Board to act at such meetings
19
the board shall designate the vice governor or some other
20
member of the board to act in place of the governor.
The meetings of said committee shall be
21
"(b) No Federal reserve bank shall engage in open
22
market operations described in section 14 of this Act except
23
after approval and authorization by the committee. The
24
committee shall discuss, adopt, and transmit to the several
2E
Federal reserve banks resolutions relating to all matters
17
affecting the open market transactions of such banks and to
2
all matters affecting the relations of the Federal reserve
9
system with foreign central or other banks. Every such
4
resolution shall be reported within three days to the Federal
5 Reserve Board and shall be subject to its approval. The
6
board shall annually include in its report to the Speaker
7
of the House of Representatives a review of the decisions
8 of the committee for the preceding year and an explanation
9
of the reasons for such decisions and the results thereof, so
10 far as they may be ascertained.
11
(c) The time, character, and volume of purchases
12 and sales in the open market shall be governed with a
13
view to accommodating commerce and business and with
14 regard to their bearing upon the general credit situation of
15 the country. Such purchases and sales shall include all
1C
paper described in section 14 of this Act as eligible for
17 open market operations.
18
"(d) The conclusions and recommendations of the
19 committee when approved by the Federal Reserve Board
20 shall be submitted to each Federal reserve bank for de21
termination whether it will participate in any purchases or
99
or -4
sales recommended. If any Federal reserve bank shall
23
decide not to participate in the open market operations
24
so recommended, it shall file with the chairman of the com-
25
mittee within thirty days a notice of its decision.
S. 3215
2
18
"SEC.
19
(a) There is hereby created a Federal
tion to an amount equal to one-fourth of the surplus of
2
Liquidating Corporation (hereinafter referred to as the
such bank on December 31, 1931, and its subscription shall
3
corporation "), whose duty it shall be to purchase, hold,
be accompanied by a certified check payable to the Comp-
4
and liquidate as hereinafter provided, the assets of banks
1
5
6
7
12B.
which have been ordered closed by the Comptroller of the
,I
) Currency awl member banks which have been ordered
"(b) The Comptroller of the Currency and the mem-
9
bers of the Federal Open Market Committee created by
10
section 12A of this Act shall constitute the directors of
11
the corporation. The Comptroller of the Currency shall
12
be the chairman of the board of directors of the corporation.
14
"(c) The capital stock of the corporation shall be
15
divided into shares of $100 each. Certificates of stock of
16
the corporation shall be of two classes, class A and class
17
B. Class A stock shall be held by member banks only and
1t,
shall be entitled to prior payment of dividends out of net
19
earnings, to the extent of 30 per centum of such net
20
earnings in any one year, after payment of all expenses
21
of the corporation, but such stock shall have no vote at
22
meetings of stockholders. Class B stock shall be held by
23
Federal reserve banks only and shall not be entitled to
24
the payment of dividends. Every Federal reserve bank
2k
shall subscribe to shares of class B stock in the corpora-
troller of the Currency in an amount equal to one-half of
5
1 per centum of such subscription. The remainder of such
et
subscription shall be subject to call from time to time by
closed by the appropriate State authorities,
8
Rif
4
the board of directors upon ninety days' notice and annual
subscriptions to such stock shall be made by each such bank
!)
in an amount equal to one-fourth of the annual increase
10
of such surplus.
11
"(d) Every member bank shall subscribe to the class
12
A capital stock of the corporation in an amount equal to
it 3
one-half of 1 per centum of its total net outstanding time
14
and demand deposits on the last call date in the year 1931.
15
One-half of such subscription shall be paid in full within
ninety days after receipt of notice from the chairman of
17
the board of directors of the corporation; and the remainder
`r
of such subscription shall be subject to call from time to
19
time by the board of directors of the corporation.
20
"(e) The amount of the outstanding class A stock of
21
the corporation held by member banks shall be annually
22 adjusted as hereinafter provided as member banks increase
23 their time and demand deposits or as additional banks be24 come members, and such stock may be decreased in amount
25 as member banks reduce their time and demand deposits or
Is
cease to be members. Shares of the capital stock of the
21
1
the 1 st day of Januaiy thereafter, a proportionate amount
2 corporation o-wned by member banks shall not be transferred
2 of its holdings in the capital stock of the corporation, and
3 or hypothecated. When a member bank increases its time
when a, menther bank voluntarily liquidates it shall surrender
4 and demand deposits, it shall at the beginning of each calen-
4 all its holdings of the capital stock of the corporation and,be
dar year subscribe for an additional amount of capital stock
5 released from its stock subscription -not previously called.
6 of the corporation equal to one-half of 1 per centum of such
6 The shares so surrendered shall be cancelled and the mem-
7 increase in deposits. One-half of the amount of such addi-
7 ber bank shall receive in payment therefor, under regula-
8 tional stock shall be paid for at the time of the subscription
8 tions to be prescribed by the Federal Reserve Board, a sum
9 therefor and the balance shall be subject to call by the board
9 equal to its cash-paid subscriptions on the shares surrendered
10 of directors of the corporation. A bank applying for stock
10 and its proportionate share of earnings not to exceed one-half
11 in the corporation at any time after the organization thereof
of 1 per centum a month, from the period of the last divi-
12 shall be required to subscribe for an amount of class A capital
12
dend on such stock but not above the book value of such
13 stock equal to one-half of 1 per centum of the time and
13
earnings, less any liability of such member bank to the
14 demand deposits of the applicant bank, paying therefor its
14 corporation.
15 par value plus one-half of 1 per centum a month from the
15
"(f) If any member bank shall he declared insolvent,
16 period of the last dividend on the class A stock of the cor-
16
the stock held by it in the corporation shall be cancelled,
17 poration. When the capital stock of the corporation shall
17
-without impairment of the liability of such bank, and all
18 have been increased either on account of the increase of the
18
cash-paid subscriptions on such stock, with its proportionate
19 time and demand deposits of member banks or on account
P.) share of earnings not, to exceed one-half of 1 per centum
20 of the increase in the number of member banks, the board
20 per month from the period of last dividend on such stock
of directors of the corporation shall cause to be executed a
21
but not above the book value of such earnings, shall be first
22 certificate to the Comptroller of the Currency showing the
29
applied to all debts of the insolvent bank to the corpora-
21
9'1
increase in capital stock of the corporation, the amount paid
24 in, and by whom paid.
tion, and the balance, if any, shall be paid to the receiver
When a member bank reduces its
24
of the insolvent bank. Whenever the capital stock of the
25 time and demand deposits it shall surrender, not later than
25
corporation is reduced, either on account of a reduction in
22
23
time and demand deposits of any member bank or on account
1
of the liquidation or insolvency of such bank, the board
2 transmitted to the Comptroller of the Currency, who shall
of directors shall cause to be executed a certificate to the
3 file, record, and carefully preserve the same in his office.
Comptroller of the Currency showing such reduction of
4
(i) Upon the filing of such certificate with the
5
Comptroller of the Currency as aforesaid, the said corpora-
"(g) When the minimum amount of class A and class
6
tion shall become a body corporate and as such shall have
7 B capital stock required by this Act shall have been sub-
7
power-
scribed and paid for by such banks, the Comptroller shall
8
"First. To adopt and use a corporate seal.
designate five reserve banks to execute a certificate of organi-
9
"Second. To have succession for a period of twenty
10 zation, and thereupon the banks so designated shall, under
10
years from its organization unless it is sooner dissolved by
11
their seals, make an organization certificate which shall
11
an Act of Congress, or unless its franchise becomes forfeited
12
specifically state the name of the corporation and the city
12
by some violation of law.
113
and State in which the corporation is to be located, the
13
"Third. To make contracts.
14
amount of capital stock and the number of shares into
14
"Fourth. To sue and be sued, complain and defend,
15
which the same is divided, the name and place of doing
15
1.1
business of each bank executing such certificate and of all
16
"Fifth. To appoint by its board of directors such officers
17
banks which have subscribed to the capital stock of such
17
and employees as are not otherwise provided for in this
18
corporation, the number of shares subscribed by each such
18
section, to define their duties, require bonds of them and
19
bank, and the fact that the certificate is made to enable the
;9
fix the penalty thereof, and to dismiss at pleasure such
20
banks executing the same and all banks which have sub-
20
officers or employees.
21
scribed or may thereafter subscribe to such capital stock to
21
"Sixth. To prescribe by its board of directors, by-laws
22
avail themselves of the advantages of this section.
22
not inconsistent with law, regulating the manner in which
2
4
5 capital stock and the amount repaid to such bank.
6
23
"(h) Such organization certificate shall be acknowledged before a judge of a court of record or a notary public
25
and shall, together with the acknowledgment thereof au-
thenticated by the seal of such court or notary public, be
in any court of law or equity.
23 its general business may be conducted, and the privileges
24
granted to it by law may be exercised and enjoyed.
ION
25
24
"Seventh. To exercise by its board of directors, or duly
of the valuation ag-reed upon, the Comptroller shall make
2 authorized officers or agents, all powers specifically granted
2 a formal tender of such assets to the corporntion which
3 by the provisions of this section and such incidental powers
3
may purchase the same in whole or in part as its board of
4 as shall be necessary to carry out the powers so granted.
4
directors may determine. It shall be the duty of the cor-
"(j) The board of directors shall administer the af-
5
poration to proceed to realize as rapidly as possible, having
6 fairs of the corporation fairly and impartially and without
6
due regard to the condition of credit in the district in which
1
5
7
such bank is located, the assets so purchased, and if the
discrimination in favor of or against any member bank or
8 tanks and shall, subject to the provisions of la,w and the
8
amount realized from such assets exceeds the sum paid
orders of the Federal Reserve Board, extend to each ba,nk
9
theTher, the corporation shall make an additional payment
9
10
which is ordered closed
the Comptroller of the Currency,
10
to the receiver of the bank equal to the amount of such
11
and to eacli member bank which is ordered closed by the
11
excess, if any, after deducting a liquidation fee of 6 per
12 'appropriate State authorities, such accommodations as may
12
centum of the sum thus realized. Money belonging to the
13
be safely and reasonably made with due regard for the claims
13
corporation shall be kept invested in the assets of insolvent
14
and demands of other member banks..
14-
or closed banks or in securities of the Government of the
"(k) 'Whenever any national bank shall be declared
15
United States.
16 insolvent or placed in the hands of a, receiver it shall be
16
15
"(1) The corporation may, in its discretion, purchase
hands of receivers on the date of
17
the dut37 of the Comptroller of the Currency to appoint a
17 the assets of banks fit
18
valuation committee of three members which shall include
18 its organization but on the same conditions and terms as are
19
the receiver of such bank, a member to be named by the
19
20
board of directors of such bank, and a person to be chos6n
20 be closed after such date. Nothing herein contained shall
21
by the receiver and the member named by the board of
21
be construed to prevent the corporation from making loans
22
directors. The receiver shall be chairman of the commit-
29
23 tee, and the committee shall at once proceed to make a pre-
to banks ordered cl9sed by the Comptroller of the Currency
tYx, Ap-r-ti- (9-flPAA... ThA e
or fo member banks ordered closed by the appropriate
24 liminary valuation of the assets of the bank. Thereupon
State authorities or from entering into negotiations to secure
25 the receiver shall notify the Comptroller of the Currency
the reopening of such banks.
applicable in the case of assets of banks which may fail or
26
"(m) Member banks organized under the law of any
2 State which are now or may hereafter become insolvent
or
3 suspended shall be entitled to offer their assets for sal
e to
4 the corporation upon receiving permission in accordance
with
5 law from the banking superintendent or commissioner
of
6 the State, under the same conditions as are applic
able to the
sale of assets of insolvent or suspended banks under the
law
8
of the State in which such member bank is located.
9
"(n) For a period of not to exceed two yea afte
rs
r
10 this section takes effect the corporation is authorize
d to pur11 chase and for a period of five years the
reafter to hold and
12 liquidate the assets of closed State banks, to mak
e loans to
such banks and to enter into negotiations to secure
the re14 opening of such banks under the sam
e terms and conditions
15 as are applicable in the case of nation
al banks and member
13
16
banks; except that (1) no such purchase or lpa
n shall be
17 made and no such negotiations sha
ll be entered into unless
18 it is permitted under the laws of
the State in which such
19 State bank is located, and (2) the amo
unt realized upon the
20 sale of the assets of any such Sta ban
te
k in excess of the
21 amount paid for such assets by the
corporation shall, after
22 deducting the amount of the liquidati
on fee authorized to be
23 charged by the corporation under paragr
aph (k), be paid
24 into the Treasury of the United Sta
tes as miscellaneous
25
receipts. For the purpose of carrying
out the provisions of
2't
this parairraph, there is hereby authorized to be appropriated
0
the
which shall he paid by the Seere-
• qrs) The corporation..iutheris
4A0 aml
ed aril
issue and to have outirt
anding at any one time
in an
ag,pregating r#54,t_ssore thaitt
our tiris*(thw &hi:Witt of amount
ital, its notes, debent
i lfteletiiiir•
ures, bonds, or other
such obligatiops,
to. be red‘mtl)l t the
option of the aoribratiena
bcede, •
maturity in such manner as
may be stipulated in
tions, and to bear such
such oblica.
rate fffseor4,?stfpf loa
terestAi,and t.
mature('at iuch time or
timiii as may be detern
dned by the corporation: Prcrvidcd, th4
the!,479.rp2
coiint basil% ehort-ter
r4
Rr
ik
iedblitatIoni mrible''at iffw44,srminterest. The notes,
maturity without
debentures, bonds ai4
tiens ,at the corObratik)n
i,rsuob..(R414
i
SetSUred'by. assets Of the ige....
poration in such manner
'coras shall be prescirib
ettN its bovai
of)dinigfter,1541)r;§uatitt'cibLigattiol
io
such price or prices as
ids ati
the corporation may
deterndne. The
oorporatipp,liflitemig*heit
of'any promissory note eauthtoriiint1find!iliapcskteediIto dispose
of any receiver ervidert
by:the corRoratifc"
oing loans made
, • ap.a
11441M .0401%;rtioalvorikIcnotie tind
any of the . dorporation'
l
s assets as collatera
l security to the
oorporation'; promissor
y , 1o4s in4 tisuRh
dition ü
ps401,4424 oactn,i
ó'eigros& tty5n by'the
corporation, provided
that the obligations so
incurred, together with
oUtztandint Obligations
all other
of the corporations
shk;.11 not be in
excess of four times the
amount of its capital,1
,• S .
\c'
"(p) ,.,11 notes, deb
entures, bonds, or oth
tats
er.such obliza
ta,SWildri ; tor thw ,eorporatitt.
Isciii*Ipt,114;781.Tafi':0 -.
principal and interest,
from all taxation (ex
oeRt estate or inheritangtop tipcp*Lirtoill eiv
nteerzer .ittpeteditr.tho',U
by any Territory, dep
nited Statei,
endency, or possession
St e„ acl,,tnty, .3;i1fll
the
reo
f, or by any
icipa;ityir -10.:0.0fro.1
oo orAion, including
aut
hor
ity'. The
its franchise, its cap
and surplus., and its
ita
l,
res
erves,
,income,.22,14410ofiftxiiRv
4,0gre sactatiatiaa
now' or hereartdi inciba
ed by- thó Arnited sta
tes, by any Territory,
dependency, or
pos
ses
sio
n.1
3.e
lpo
;fl
i qrmunicipality* oil`loatii 'taj
4;v7
0,P4trtl•teretile iikuthdiiity,'
except that any real
property of the corporati
on shall be gubject
territoriari4dovi.44 nuniol
4ftf-4'tfili
oal, or loWittaXi
tsaxamoede. xtent. according to
tión tothe pro•mits value us other
real lpriaperyk lij,s
710 1
(11. ).
1110
"(q) In,,orthurr t4last the
corp
Viar
such forms or notes,
itUpitriteitorain 1LAIXUsdebentures, bonds, or
other such oblige.ti°
"
issliar410,1m4OrAhtiesitttilitho
of theauti
aury s ticfor
llaikkifiiy
herized'to prepare suc
h forms as shall
be suitable.and agprov
ed b
TreaSurirliaileot t6 'Atiliver tlys ooirMq4.97:4ity, upon order'of the iWtAyAdtltbithit-,
The enalsaved plates die
sfr. bold Rp1918, and, oth corporation.
er jaffcrial
excetztettrini( ineirti.on
all renain in the cus '
of the 4e0retary or the
tody
Treasury. Tho corporati
the Secretary of the
on shall reimburse
Treasury for any expens
es incurred in the
preparation, custody, and
delivery or such notes,
bonds, or other obliga
debentures,
tions,"
poyeer
29
e
fbrSection 14 of the Federal Reserve Act, as
A
amended, is further amended by adding at the end thereof
28
I
which any such advance has been made shall, during the
2 life or continuance of such advance, increase its outstanding
A
the following new paragraph:
lt(g) Subject to the powers conveyed to and be-
loans made to-any borrower upon collateral security, or made
4 to the members of any organized stock exchange, investment
5 stowed
5 house, or dealer in securities, upon any obligation, note, or
IS the Federal Open Market Committee by sec-
6
bill, secured or unsecured, for the purpose of purchasing
6
tion 12A of this Act, the Federal Reserve Board shall
'1
and/or carrying investment securities (except obligations
7
exercise special supervision and control over all relation-
of the -United States) such advance shall be immediately
8
ships and transactions of any kind entered into by any Federal reserve bank with any foreign bank or banker, or with
9
due and payable, and such member bank shall he ineligible
10
as a borrower at the reserve bank of the district upon fifteen-
10
any group of foreign banks or bankers, and all such rela-
11
day paper. The Federal Reserve Board shall have power
11
tionships and transactions shall be subject to such regula-
12 from time to time in its discretion by unanimous vote of its
12
tions, conditions, and limitations as the board may prescribe.
13
members to suspend the provisions of this paragraph in whole
13
No Federal- reserve agent,-nor- any officer, director,
14
or in part, whenever in its opinion the public interest shall
14
15
call for such action. Each such suspension shall he for a
15
ployee or other representative of any Federal reserve bank,(-shall paxticipate- any- coufer-eme4 or-other negotiations of
16
period of ninety days and may be renewed for one addi-
16
any kind with the officers,--clireetors, employees, or other
17
tional period of ninety days upon unanimous vote of the
17
representatives of way foreign bank or banker without first
18
members of the board."
18
obtaining the permission of the Federal Reserve Board.
19
The Federal Reserve Board shall have the right, in its dis-
19
--SEe. 14. (a) The second paragraph of section 14 of
20 cretion, to be represented in any such- conference or nego-
20 the Federat-Reserve Act, as amended, is amended by
striking out the words "Every Federal reserve bank shall
21
tiations by such representative or representatives as the
22 have power" and inserting in lieu thereof the words"Sub-
22
IS
23 ject to such regulations, limitations, and restrictions as the
23
or negotiations setting_farth_thesubjects &cussed, the views
Federal Reserve Board may prescribe, every Federal re-
24
expressed both on behalf of the Federal reserve bank and
25
oll-iaehalf 4 the-foreign bank or banker, all understandings
21
24
25 serve bank shall be empowered and authorized ".
Lu
may designate. A full report of all -sad' conferences
31
30
or agreements arrived at or transactions agreed upon, and
2
1
of section 14 of this Act, or bankers' acceptances made
against shipment of goods actually sold in -the foreign
all other material facts appertaining to such conferences or
3 negotiations, shall be filed with the Federal Reserve Board
3
trade 4—the—United States and purchased under the pro-
4 in writing and signed by all representatives of the Federal
4
visions of section 14 (but not including acceptances made
reserve bank attending such conferences or negotiations re-
5
under any revolving or renewal credit), or gold or gold
6
crardless of whether or not the Federal Reserve Board shall
6
certificates; but in no event shall such collateral security
7
be represented at such conference or negotiations."
7
be less than the amount of Federal reserve notes applied for.
The second, third,- and fourth paragraphs
8
The Federal reserve agent shall each day notify the Federal
of section 16 of the Federal Reserve Act, as amended, are.
9
Reserve Board of all issues and withdrawals of Federal
10
reserve notes to and by the Federal reserve bank to which he
8
9
SEC.
15.
10 amended to read as follows:
11
"Any Federal reserve bank may make application
11
is accredited. The said Federal Reserve Board may at
19
to the local Federal reserve agent for such amount of the
12
any time call upon a Federal reserve bank for additional
13
Federal reserve notes hereinbefore provided for as it may
13
security to protect the Federal reserve notes issued to it.
14
require. Such application shall be accompanied with a
14
"Every Federal reserve bank shall maintain reserves
15
tender to the local Federal reserve agent of collateral in
15
16
an amount equal to the sum of the Federal reserve notes
1i
17
thus applied for and issued pursuant to such application.
17
18
The collateral security thus offered shall be notes, drafts,
16
per centum against s Federal reserve notes in actual cir,
eulation and not offset by gold or lawful money deposited
19
bills of exchange, or acceptances acquired under the pro-
19
with the Federal reserve agelit. Notes so paid out shall
20
visions of section 13 of this Act (except promissory
21
notes of member banks acquired under the provisions of the
01
which shall be assigned by the Federal Reserve Board to
22 seventh paragraph of such section 13 secured by the
22
each Federal reserve bank. Whenever Federal reserve
awful money of not less than 35 per centum
.
against its depos s and reserves in gold of not less than 40
in gold o
bear upon their faces a distinctive letter and serial number
23
deposit or pledge of bonds or notes of the United States),
24
or bills of exchange indorsed by a member bank of any
24
ceived by another Federal reserve bank, they shall be
25
Federal reserve district and purchased under the provisions
25
promptly returned for credit or redemption to the Federal
notes issued through one Federal reserve bank shall be re-
32
1
reserve bank through which they were originally issued or,
2
upi direction of such Federal reserve bank, they shall be
3 forwafded direct to the Treasurer of the United States to
4
be retired. No Federal reserve bank shall pay out notes
5 issued through another under penalty of a tax of 10 per
6
centum upon the face value of notes so paid out. Notes
7
presented for redemption at the Treasury of the United
8
States shall be paid out of the redemption fund and returned
9 to the Federal reserve banks through which they were
10
originally issued, and thereupon such Federal reserve bank
11
shall, upon demand of the Secretary of the Treasury, reim-
19
burse such redemption fund in lawful money or, if such Fed-
13
reserve notes have been redeemed by the Treasw:er in
14
gold or gold certificates, then such funds shall be reimbursed
15
to the extent deemed necessary by the Secretary of the Treas-
1G
ury in gold or gold certificates, and such Federal reserve
17
bank shall, so long as any of its Federal reserve notes re-
18
main outstanding, maintain with the Treasurer in gold an
19
amount sufficient in the judgment of the Secretary to provide
20
for all redemptions to be made by the Treasurer. Federal
21
reserve notes received by the Treasurer otherwise than
22
for redemption may be exchanged for gold out of the redemption fund hereinafter provided and returned to the reserve
24
bank through which they were originally issued, or they
25
may be returned to such bank for the credit of the United
33
States. Federal reserve notes unfit for circulation shall be
2
returned by the Federal reserve agents to the Comptroller
3
of the Currency for cancellation and destruction.
4
"The Federal Reserve Board shall require each Federal reserve bank to maintain on deposit in the Treasury of
0 the United States a sum in gold sufficient in the judgment
7
of the Secretary of the Treasury for the redemption of the
t3
Federal reserve notes issued to such bank, but in no event
9 less than 5 per centum; but such deposit of gold shall be
10 counted and included as part of the 40 per centum reserve
11
hereinbefore required.
The board shall have the right,
12 acting through the Federal reserve agent, to grant in whole
13 or in part, or to reject entirely the application of any Federal
14 reserve bank for Federal reserve notes; but to the extent
15 that such application may be granted the Federal Reserve
16 Board shall, through its local Federal reserve agent, supply
17 Federal reserve notes to the banks so applying, and such
18 bank shall be charged with the amount of such notes issued
19 to it and shall pay such rate of interest on said amount as
20 may be established by the Federal Reserve Board and the
21
amount of such Federal reserve notes so issued to any such
22 bank shall, upon delivery, together with such notes of such
23 Federal reserve bank as may be issued under section 18 of
24 this Act upon security of United States 2 per centum Gov-
S. 3215
3
35
34
1
enament bonds, become a first and paramount lien on all the
2 assets of such bank."
3
4
SEc. 1-6-; Section 19 of the Federal Reserve Act, as
amended, is amended to read as follows:
5
"SEC. 19. (a) 'Demand deposits' within the mean-
6
ing of this Act shall comprise all deposits payable within
1
That the said net balance maintained against time and thrift
2
deposits shall be 3 per centum during the calendar year
19344—per-eentum-during the calendar year 1933, 5 per
sxofttai.
of
rifgrf.ifrela
htti
t,
1. ,rate
I;Tilt-L.al taili4
tildpeerltitibt
zsar th reafter until it shall equal
calendar year 1065, and
3
6 thereafter 7 per centum as hereinbefore prescribed.
7 thirty days; 'time deposits' shall comprise all deposits
7
8
payable after thirty days, all savings accounts and certifi-
8 it shall hold and maintain with the Federal reserve bank
9
cates of deposit which are subject to not less than thirty days'
9
of its district an actual net balance equal to not less than 10
10
notice before payment (except thrift deposits), and all
10
per centum of the aggregate amount of its demand and time
11
postal-savings deposits;-awl--thrift -deposits shall comprise all
11
deposits: and 5 per centum of the aggregate amount of its
12
deposits subject to not -less than sixty days' notice before
12
thrift deposits:
13
payment which are not subject to transfer by check and
13
before required to be maintained against time and. thrift
14
the total monthly balance of which in any individual case
14
deposits shall be 3 per centum during the calendar year
15
15
1932, 4 per
17
does not exceed $5,000.
I
1),,t;P,
(b) Every bank, banking association, or trust corn^
pany which is or which becomes a member of any Federal
18
reserve bank shall establish and maintain realized reserve
18
centum during the calendar year 1936, 8 per centum during
19
balances with its Federal reserve bank as follows:
19
the calendar year .1937, 9 per centum during the calendar
e,
it
"(2) If hi a reserve city as now or hereafter defined
Provided, That
the said net balance herein-
emiturn during the (“Ilenfl—
193?,, -,T1(1
per
2/5
and
and shall be increased at the rate of 1
-ON!
calendar
kienimb' on Viet liitfitisoilot tainuary in each
thereafter until it shall equal
5
ueposns 6 per central' during the calendar year 1935, 7 per
20
"(1) If not in a reserve or central reserve city as
90
year 1938, and thereafter 10 per centum as hereinbefore
21
now or hereafter defined, it shall hold and maintain with
21
prescribed:
22
the Federal reserve bank of its district an actual net bal-
92 lying districts of a reserve city or in territory added to such
23
ance equal to not less than 7 per centum of the aggregate
23 a city by the extension of its corporate charter it may,
24
amount of its demand and time deposits and 5 per centum
24
25
of the aggregate amount of its thrift deposits:
Provided,
Provided further,
That if located in the out-
upon the affirmative vote of five members of the Federal
36
Reserve Board, hold and maintain the reserve balances
specified in paragraph (1) hereof.
9
"(3) If in a central reserve city as now or hereafter
4
defined it shall hold and maintain with the Federal reserve
5
bank of its district an actual net balance equal to not less
"(c) Yram and aftNy V44,9J1414Afaar,otiliv
arY. 1938=abet.
••
• -..
id the
e-eeriber bank sleall ostablfih(hemaietAn
ere'
nerwe
equal to 5 per cantele of the amouut of itu net depoeits„
plus
as:
I. r centum of the amount of its
average daily debits to depesit
accounts; but, in no event, dial/ the aggregate raberves required
to be maintained by aey member - baek exceed 15 per centum
of its
groEs deposits or be less than the corresponding reserve requirement to which such bank was eubject at the data of the final allmember bank report 141 ii37; aza
ep
,
,agis daily debits to, dip° t. c acetuntse
b.a4
tk:e vnity c: the - .Ted-'4
eral reserve beta of its disct ee a branch thereof Chall reeinr
tain not lose than feur-fiftlee of ite total required reserves in
the forw.a a reserve balance ondeposit with such Federal reverve'
baIk, and every other mer,ler bank ehall maintain not less than
two-fifths of its total required reserves in thes form of a reserve
balance on dexeAt with the "rederel reServe baLVZ:Of ite distriet.
The remainder of the total required reserves 04 each member bank,
over and above the aeount requited to be maintained in the form
of a reserve balance on deposit with its Federal reserve tank. may,
at the option ef :such me:I
oe,is of a reeerve balance on
deposwith its 7ederal reierve balLe, or cf cash owned by sudh
member bank in its actual
seseiou or in tra.14.sit beteeen =eh
meHIer baUk and ite 145eral reserve bank: Frovidede lpievor, Tkiat
when, in the oLlinion of tho .0ederal ':IeLarve 2oara. the public
interest ehall require. the ife4eral seeserve Board on the affirdl.
ative vote of five of it. _....r.lfa
s rs t4y. ,lizit the aniou.ut or cash
which member banks or ii:roups
of
member beelcs Inv count e.:c reserve
.
to less than one-fifth Cr the tetal rt“erve required by this subsection in the ease of 'member banks Ideated in the vicinity of
Federal reserve baak.s or branches thereof. and to 'glee than threefifths of such total reeerve ia the ease a cthi2r memlwr banks;
Provided further. That tIm makina such limitations, the !tderal
Reserve Board shall be cuided by the general pririciplo,11rA MeOr
ber banke
.dermitted to count as reserve, within the
general limita Of this uubsectiou, as muCh cash as they roasole..,„„
ably need in view of the dharacter of their businees and theit i;i
accesste to Ole currency face':; of tho "rederel reserlii
banks.
•
6
than 13 per centum of the aggregate amount of its demand
and time deposits and 5 per centum of the aggregate amount
8
of its thrift deposits: Provided, That the said net balance
9
hereinbefore required to be maintained against time and
10
thrift deposits shall be 3 per centum during the calendar
11
year 1932 4 per centum during the calendar year 1933,
12 arid • sisal be inCriotaSed
13
tie.'`I'Atei oi 2 per, ceattagginst
lst day. of ianuary in ea.ch .cappnclar year th.,:re,ait,
,f3,
4tritigivecitieacentlim wiring IN. (-
14
7 per centum during the calendar year 1936, 8 per centum
15
during the calendar year 1937, 9 per centum during the
16
calendar year 1938, 10 per centum during the calendar year
17
1939, 11 per centum during the calendar year 1940, 12 per
18
centum during the calendar year 1941, and thereafter 13
19
per centum as hereinbefore prescribed: Provided further,
“(1,9' midis d
20
That if located in the outlying districts of a central reserve
21
city or in territory added to such city by the extension of
22
its corporate charter it may, upon the affirmative vote of five
23
members of the Federal Reserve Board, hold and maintain
24
the reserve balances specified in paragraphs (2) and (3)
25
hereof.
(ctid4
*7.
'Li
ons cef seclogVULItliZiasj4.
r*
tem
depositishall luclade all dei)osit
liabiliiies of any member bank whether or not immediately evailable for 14.thdrawal 14 the delieultor. 41/ liabilities for certified dhecks, caihiers'. treasurcaz' ind other °Mears' c'hecks.
cash letter.; (Jr credit, travelers' caedii.s. aud all ether similar
liabes. as further defined and specified by the Federal lieserve Board: 2rovided., That in computing the amount of gross de.
posits, amounts shown on the boaks of any member bank as lia
es of such bank payaLle to a branch of such bank located in a
foreign country or in a dependency or poseession of the United
itates. or payable at such branch, shall be treated as though
said liabilities were due to or payable at a nonmember bank.
36--
4
5
6
7
8
10
11
i
14
15
16
tzet orutunust. 10 \gib 4,71.n
tai: Ions
aqvteept al.,8414m Acja
a*4e 17Lakis. licusd tedium
Reserve Board, holdatiMbelillYidOeL'h
(1)It
a
io
5a to matte* leg a 0 sAITN
Staoce,0
aildeb ilIab Er/belays 3$1 to
lairoms
specified in paragraktitlirietliffilitiii6s
lo =Sae° 13;
t etaastglie
'Leda .Mov
e
oa
.
tad ;8*Zuot•ei
a*I lo muMeo :seq
beeoxe „7140d ,eplarem Ina lei
boutaalam sti
" 3)
in a-trilmiltr4leteilietitialItneit'tserrioo'-ifi
llnki* &eel ed to aglaoqeb
v:otl
-lie
ad* to s*sh ed$ J.; 0404dA, saw
Ahm4 dem ffolAw OS Sao
defined' it shall hold and maintain witli
• • • "SW
Met al Stociat *Lad ledxsi
bank of its district aTibigtfla
glitatetv ,4010.'at Wk
. 41".211344`
led:ma dassa (0"
-atom 'lade toeTari/ rioastif
te Soktialb an to ia.ed, evzsa
lvc lay
soties4.1,:tifri:utelaaainzed...walruLditeart aello arzIoaoli
telitio
than 13 per centu*sattrz_rlaMeerryaleslata
Sad* sit el.,
#11,,,.ALAcia aitandt.11041:.lem .tedi
and time deposits Apftilrioei4ter.,,:
o lteve has .;;1141
kriltritsv-Isast LetIsipa
t Is,o* BSI lo
.$0/ Vella ASA
.3044,.srme*7 Lareg4,-.61kti4
of its thrift deposit*wWwitiithigi,thii
Staocie.b
**aillal
illeieirteaei: bottopet Laio$
eta to tehalamri
mtot ad* al Imals,lalatz
o/ 4!47q4liW hrLUOLAS
hereinbefore reqiisedaskidAretiiii4
atibe4i''a 11 anii $1110q6b no eonaL evoda luta twig
no .3aalad evteart
sO eirleeert
Saloopo ..494,1Nodzera Lioire
aol$qo eta 1J
thrift deposili,s shallsbore3v1Kirsilni tifaito
'
,artsct. teteairz rarlabay as1
is0404
dorm tobew/ed flaisz.3.J
4aolagftligic lainboa aS1 .a.L. :load
ledlief
year 1932, 4-flettos.wiweilt4bab:vvrei • ighiscshir tart
ebel aSI Amu; Iliad ledasea
oildmq ad$ ,biLsoti evteaeR
latebe$: ad*
aolalgo sA4 al ,aewb
manta 00 no •
•
ertp
si&i
:
• 47. kaivw
I*AS
.371i
.54....•
ati
Ic lpe7
fern 10 stov
oval
Seste
Ssd
the 114 day. of .f.:Arrams , viii,Nizrobiti
iight
ailitria
82Itted wine/ AD/di
Iti;gfatil t iodise .L.-U
bellsrp..,7 91,19/
1
4ZrX iatOS
tatzt-eao sad$ aael
IR -14,114,1oAy ekki*.,,,i1,
434it)o.C.a.lfaseit!tisdiseal to okaao tut
7 per centtu "-voltir
al 114:1110118
,
:z
astOautd.
aAaad svteeet latabsi
;agnsd te4rifira,7e41.9
Re,k4.1
011Mseet
during the calenfla
4sknis
Bala
farilietaiabiawr
I '"
-I.
-obig hal
al
Jae
•led/741 aigthivoiri
vatqlonkukeawors
lhott.(
topPlizalisd
tfoitimk;ics46fil$,0,10;iciussi
zeoda
a s)lialculdisri
calendar ye: 1(;)38.11
artaa
. lictiaftxtuttolavilivochigif
as
18
1939, 11 pu tenth." Attilikkall1
Nslig tO to$:Airdilio wit
erteset 1.abelt tat
Rell.fillet -ipritirriLID
centum dtuittg the ctiletidar year 1”--1-1,
19
per centuni as hereinbefo"Ti t140.ifilAttisi loY'S0)..x.t.totiettus
17
37
bus
10 ti5.hr at been Ude
edit 01
Vlildtageoos
AAVAJ
20
21
22
23
24
25
)14
$1
,
0q0bi
That if located iu.itiwrio f%t5p411141 .4aftoqtai.
tiao eSi' (I)"
sant *ea to lel-Os:Iv
lard tedmem vs to
-top 1101
ae11111di:11:
Ila., .7oititetiab
city or in terrifioilboAtitetitiati ,14$
LewstbrilIit 101 eidel
1 0 :).tt s r/- utessIS*it
tirlelsisap ,e.;i.0
lallX111 erLto 1141,
ben
4444
.4
•leme
assiv
t
a/beta to latr4/el
its corporw-e charillg iLarmallATIS40 ttf, hif4t.
dame
ttlerps
osisriat: teititut aa
•eb aeon to Innoos
,aal*
/.1/d
ali
er
members of the /1444441111 keeietait 4iterist tits o
Stl
exa
oll
*TT*
*
lo saiood 6t1S
a al baSsool. load
aworia aSameaus se*Iseq
dosit.,..to do,c445* ..4
.
, ,„ :1 •o*-,e1,;_voq *Led dot* to
the reserv•J
Ila
ael,t1
• tdgsbnneb
Ozatareb
t ria
usoloac
4.1torf* aa be.ta
t0 1,;:iSagoo au
atS ed
alat t
xio.oe :fa eldry.aq
anad tedasamaoa A ta
hereof.
.astar
014.8Ing 70 0, evb
SIMF ee11111.ia
d ll bliss
"(2) ,.'rel.,t!1?)11(1ffi,;.41iPrilifill1W,10Rgalk,PARitaiaiiintlto,if the
gross deposit's r any meanoer ank Mi121113 (a) the sum of all balances d.-ae to such membetr, 1?a4* fr.wu
#tii#14
United Statei'alici their'doiestic branch'es and (b) checks and
other cash items in. pr,9cess. of iollect4 w
1VIARqn0w,!W
;,,;& (1
immediately ttplit.
be,.1 t s
tan the
meanin..1; of these terms as farther defined by the Fed.exal Aeserve
urplus. .1No member bank shalt act as the ille(11U111 01
Biaard.4•fi ,
"(:4.1f Irbw,t.orsttAmiiellaggi: itaLiW•dtibittir.td)rdOiSbf•ftini
ciktts,
•
shall mean the average daily amount of checks. drafts...and c.) tiler
izris .ciebi tea. or cherge4„)by-, ear.-swab° bask rt anyr MittI
'
accounts included in gross deposits, except charges resulting
fr9m • IN1110.14 .9X ;Periti-P4d.irilleck,A4(0014elltligtirt‘reitteurersi.
and other brficersi checks.
nui(nnin or wlein, of any
‘.1 ;
mut-.
N• late
ierm Caen. stiai inclu.de all kinds of currency
and coin issued or coined under. autir,ri:4:10f;,t,:atiTi foofic4ff•
United.'ttltateS Socceiif
Feserve
bank notes.
• ,;
)NT collaterat; 6.nd Ito member bank shall Inakc•
"(5) The term 'reserve balance.1 shall. mean &member
bankia actual sit(balance 1 tra the' btibk 6't
ItediiaViiiik
bank representing fand.s available for reserve purposes unde
r
.
regulationw:prescribed•
tliemlatieral ..,-;eserve 13oard,
"(6) The tern 'vicinity of a 5ederal reserve- bank. or
branch tnereof, shall mem the city in y.-hich alieciSZal reserve bank or branciikJhereot
•Luiless otherwise defined "by the Federal' Reserve :board.
•
'
' le(e) Thal' FeWeAVRoSialiet; Yoggilfs.I tiliuthOriied and empici' wered
t9 pre scribe rogu.latIo ns defining ..furcparitapp l;r841,01.1, terpsi s.p.sed
subsectiiiiivOirof:thAW sWetitln; fbitniujie`ricidi oiter
reserve requirements and actual reseves play be .avera.4.e4c_ n
ditermining (titelrtie'thddiiitti iiriV6h;t4iiseliSe'tiesliiire6'enctiiiifituatfual
reserves shall be computed. not inconsistent with subswction,(c)
pentatio , faradoritiaisie
of thiii
tolls! AUL Trtisttri
reserves.
,"
!•(‘, se
nt t0..f
ffien pr
o.retviiisscio0uni
ich
ss,itch
st3
9
11(rnir\iy:nri
ti94 7,0cil y,4,(4.110
and of' section B of the becond Liberty Bon.d Act, wpproved Sept..
ember 2,44,•,917, as artend?4,:by ;,Ehe
, 9f ,V:ifICr14,
":41?QT-tir
.A.dtraioproved
`4; 1918. Which eiemPt dePosits of
public moneys by the United States in designated depositaries
from the reserve requirements of this section. shall not be
applicable with respect to tlaq_ 4epo sits rig:aired undex sub.. ,
section (C) affithit-Sittlikit4(1 uaiaiice carried oy a member
with a Federal reserve bank ma,y under the regulations, and
.5
ubject to such penalties as may he prescribed by the Fed-
Reserve Boa
specified in pc.
9
"(3)
4
defined it sht,11.
5
bank of its (ti
(3
than 13 per cc
If i
7 and time dep.,
8
of its thrift
9
hereinbefore
10
thrift depos
11
year 1932,,
*
aria'-sikdit.
the 10 day.
until 411Pii
14
7 per cent':
15
during the
16
calendar y(
17
1939,11 1'
18
centum du
19
per centw:
20
That if lo(
21
city or in
22
its corpor.
23
members
24
the reser
25
hereof.
ad$ to &am= ad/
ItfleatI
-Led /le lo mua ei (z) Lcthledreocret. twO m/t4 adT (S)°
avid= .›LczA .1-ad,.aaw
erf/
e/taoqab-aao
led4aocc /utrzto eccv.C.
‘ledisem rfoza 0: alit ser,),40
(d) irasAndsld !'3Ilatmlob
ateJs:i,1 144/all
SICrir .
rloidt awth*IIo
1cavepvic
ad/
eae$EV,:: beItztr.1 cal/ d
dol.;Le./sieseN 'tow vrozraifiemsa
everac
117.17eLe)1;`. ad/
t
a
au-e.rij
1 0t4atmows $leockeb GI ,Jtd
ba..7% ,efbrip
U
,"
[Is bars 140..e o:
nr1/11mwx anTed: $410o
,,aaallyeena 0),n:9111240
nre..45ibluin
10 ablibi ILA 0141,„,:l
etf%1
acca edS
34/
arxentr) Ikerabs- furs
37
1
C)
S satt!aLit xls$ odT
(kr
Lettiu 73 btursei
izan.e.'tza tgeoxe as,ts;ra bethi
ti
.asIoct .x;uktcf
Isdcle.ta
,a2.1sx !!!!4:. e soas174
lisv7.849e'r
eta (a)"
ermest t'teb
çfe..:14).),S 5'11 L:,.)
$9a
VOUTIT seaor,:wri ovIaaal 101
ellictsd
#41d...:Iteire abanl
,kialirmalqe7 Jaail
Jrif evleat)A
telehe iibed
noualq cfrsclIalv4eq
fto Aatd
4.
, 1 7 ,1 1:1 1 00
.4,J1Aw ia 0.1z) Jii-J
,elowsad/ 41:1z11
-F4.6 eabirtedlo a291„7,7
dtit$Qool ?;
rt4.iazad lo .1.1d4d tArIed
.Li
19h57
xo" beall
bev,woqua
le,n114,11 el ;57;sod „rvTea:1,, fierabs$ se? (e)?
bae.v a!7:7
,nsoPTAY
:;otb,1:171- aolaoaelq
1-evc;
od
w,2-$:11
.1. Io ;*)
uoLioaa
dsin
zio
saTle,1%
two ba4 a/a
aztelliworx CrIf.rg-/617
OV18287
ad4
icol$tfaed.ila A$1w
aalzim7
1r
aleb
cpL4JIIVAA,t)
11Bda ar,vasszici
Itsioaf)13.'10171 tot eel/licl
.„).a1=2.7-1nrt-14 ;dais
c/.64
..4:261P1036
-s tocaole1Yo7ici
b.c.4•
eVlei
.;),a.f3 rikra
itf1j;
tr,Ift se,/ 16 I" zolj
.bevoizqqa.
;.1.6d. '10 8 aot$oezi
Vladla triter e4.4.$ Io a
'to bsie
.u.olnea
belbs;w
1 sa met ,1N3
al.boqab /cNexa Ablri-17
1.-edze
‘,1\ 1/1 :1
tovolv
b
,1011.'br
zoa
asi/sIle07e6:b641.761)•er,fn .7;NI;71;
lzd aviluon nlidzq
to /Irr2,..ao!$5t.:,
nlf.$ 1(: ;:!ftf,ar.;1).1.!;4197
-dza.1 . 7abstra .ts.:2:;pr7
orreee7 6.11 of
cl
11417/ f,„tdf;o/lqqz.
iolol4t.peR &V:1/ 'to (6)
nol/o64
No member bank shall keep on deposit with any
State bank or trust company which is not a member bank a
sum in excess of 10 per centum of its own paid-up capital
4
fwiej etiT (E)!
,;„1. lab638"Leir,-,-,i f.41',2
=mg
sio baildeb
;;:ccriziLT befatioul
lo $hem101(1 edl m0
.ixg.oefL 'R7apillo aeSlo 71
baz
"(c)
and surplus. No member bank shall act as the medium or
5 agent of a nonmember bank in applying for or receiving dis6
counts from a Federal reserve bank under the provisions of
this Act except by permission of the Federal Reserve Board.
8
No member bank shall
act
as the medium or agent of any
9 nonbanking corporationi_ or individual in making loans
/i-e-GlAr7'4,1
10 secured by collateral; and no member bank shall make
11
loans or discount paper for any corporation or individual
12 ,who shall at the time of making or renewing any such loan
41 in favor
15a04-10,
;if the. proc0044,1
41,ftcti.011'14te btp=
loans
m
oi
purpose
the
for
inArec
tly
Girectly or
Oro Wte414041.19041tehltalhAftWiltrol.,i c, member of any stock
15
exchange, or any dealer in securities. Every violation of
16
this provision by any member bank shall be punishable by
17
a fine of not less than $100 per day during the continuance
18
of such violation, but it shall be a good defense that the
19
borrower at the time of obtammu such loan o discount from
20
21
a member hank made a sworn statement, of condition in
-7444`
which he failed to show the existence of such a loan secured
29
by collateral.
00
"(d) The required balance carried by a member bank
24
with a Federal reserve bank may under the regulations, and
25
subject to such penalties as may be prescribed by the Fed-
-7
88
1
89
eral Reserve Board, be checked against and withdrawn by
Federal reserve banks shall be determined; and the liability
2 such member bank for the purpose of meeting existing
2 created by every repurchase or other similar agreement,
3 liabilities: Provided, however, That no bank shall at any
3
4 time make any new loans or shall pay any dividends unless
4 difference as ascertained under the provisions of this
5 and until the total balance required by law is fully restored.
(.)
6
"..e3' No member bank shall sell or transfer to another
5 paragraph.
member bank, or to a nonmember bank, private banking
entered into by a member bank shall be added to such net
National banks, or banks organized under local
7 laws, located in Alaska or in a dependency or insular
8 house, or banker, any balance standing to its credit upon
8
9 the books of the Federal reserve bank of its district in excess
9 continental -United States may remain nonmember banks
10 of the balances required by this section unless the Federal
10 and shall in that event maintain reserves and comply with
11
11
Reserve Board shall have first authorized by general order
possession or any part of the -United States outside the
all the conditions now provided by law regulating them; or
12 the making of such sales or transfers within such district
12 said banks may, with the consent of the board, 'become
13 or between such district and another Federal reserve dis-
13 member banks of any one of the reserve districts and shall
14 trict, but no such sale or transfer shall be made by any such
14 in that event take stock, maintain reserves, and be subject
15
bank without first charging and reserving a lee to be fixed
16
by the Federal Reserve Board on the basis of the rate of
17
discount then charged upon ninety-day paper by the Federal
15 to all the other provisions of this Act."
SEC.
17
18 reserve bank of the district in which the bank making such
19 sale or transfer is located.
Section 24 of the Federal Reserve Act, as
amended, is amended to read as follows:
"SEC. 24. Any national banking association may make
19
loans secured by first lien upon improved real estate, includ-
(k)
20
"(1) The Federal Reserve Board shall have power to
21
suspend all dealings in reserve balances for such period
91
district or within a radius of one hundred miles of the place
22 as it may deem best. In estimating the reserve balances
22
in which such bank is located, irrespective of district lines.
23 required by this Act, the net difference of amounts due to
23
A loan secured by real estate within the meaning of this
24 and from other banks shall be taken as the basis for ascer-
24
section shall be in the form of an obligation or obligatigns
25
taming the deposits against which required balances with
90 ing improved farm land, situated within its Federal reserve
25 "secured by mortgage, trust deed, or, other such instrument
40
41
1
upon real estate when the entire amount of such obligation
2
or obligations is made or is sold to such association. The
1
securities in which savings banks may invest under the
law of the State where such national bank is situated, or
3 amount of any such loan shall not exceed 50 per centum
where there is no such law relating to investments by
4
of the actual value of the real estate offered for security,
4.
savings banks, in such property and securities as may be
5
but no such loan upon such security shall be made for a
5
specified by the Comptroller of the Currency: Provided,
6 longer term than five years. Such valuations shall be
6
That every member bank shall be required to report its
7 revised by the Comptroller of the Currency at the time
8
of each examination of the bank making the loan and
9 he shall have power to order changes therein and to require
10
the adjustment of loans to such revised valuations. A ny
11
such bank may make such loans in an aggregate
7 investments in, or holdings of, any such property and
8 securities at an aggregate valuation which shall not
9 exceed the aggregate market value thereof at the time
10
such reports to the Comptroller or to the Federal Reserve
in-
I
Board are made: Provided further, That the reserve
12
eluding in such aggregate any such loans on which it
12
against time and thrift deposits required by section 19
13
is liable as indorser or guarantor or otherwise, equal to
13
of this Act shall be counted as a couesponding part of
14
15 per centum of the amount of the capital stock of such
14
15
such investments. All the property of any insolvent
association actually paid in and unimpaired and 15 per
15
16
national bank acquired under this section shall be applied
centum of its unimpaired surplus fund, or to one-half of
16
by the receiver thereof in the first place ratably and 5r5-
17 its time and-thrift deposits, at the election of the association,
17
portionately to the payment in full of its time and thrift
S11111,
18
subject to the general limitation contained in section 5200
18
deposits. Such banks may continue hereafter as heretofore
19
of the Revised Statutes. Investments in bank premises
19
20
to receive time and thrift deposits and to pay interest
and unsecured loans whose eventual safety depends upon
21
the value of real estate shall be counted for the purposes
21
may pay upon such time deposits or upon thrift or other
22
of this section as real-estate loans. Every such bank may
22
99
deposits shall not exceed the maximum rate authorized by
apply the moneys deposited therein as time or-thrift deposits
23 law to be paid
to the loans herein authorized and the balance of such
24
trust companies organized under the laws of the State
time and thrift deposits shall be invested in property and
25
wherein such national banking association is located.
24
25
20 on the same, but the rate of interest which such banks
is
SIM4ftr
deposits by State banks or
43
4,2
"Every natiIll l banking association and every mem2
1
her hank which is in existence at the dnte this section
deposit and discount organized and itrorporated under ate
laws of such State, except in
SI) fill'
as Illoy may be for-
3, as amended takes effect shall be required, within a period
3
bidden by the provisions of the National It:ink Act, as
4 .of two years from such date, to comply fully with the pro-
4
mended, the Federal Reserve Act, as amended, or any
5
ons of this section, and every national banking associa-
5 other laws of the United States.
The business of pur-
6 tion hereafter organized and every State bank or trust
6 chasing and selling investment securities shall hereafter
7 compan:y hereafter becoming a member of the Federal
7
be limited to purchasing and selling such securities without
8 reserve system shall comply with the provisions of this
8
recourse, solely upon the order, and for the account of,
9 section from the date of its organization or admission to
9
customers, and in no case for its own account, and no such
10
association shall underwrite any issue of securities; except
11
membership, as t10 he case may be."
/e9
• Paragraph "Seventh" of section 5136 of
SEC. 4,8:
12
the Revised Statutes, as amended, is amended to read as
12
own account investment securities to such an amount and
13
of such kind as May be by regulation prescribed by Ow
13 follows:
that any such association may purchase and hold for its
14
"Seventh. To exercise by its board of directors or
14
Comptroller of the Currency, but in no eyent shall the
15
duly authorized officers or agents subject to law, all such
15
total amount of such investment securities of any one °blip'.
16
or maker held by such association exceed 10 per centum.of
16 incidental powers as shall be necessary to carry on the b
17
ncss of banking; by discounting and negotiating promissory
17
the total amount of such issue outstanding, nor shall the total
18
notes, drafts, bills of exchange, and other evidences of debt;
18
amount of the securities so purchased and held for its own
19
by receiving deposits; by buying and selling exchange, coin,
19
accotmt at any time exceed 15 per centum of the amount
20
and bullion; by loaning money on personal security; and
20
of the capital stock of such association actually paid in and
21
by obtaining, issuing, and circulating notes according to
21
unimpaired and 25 per centum of its unimpaired surplus fund.
22
the proons of this title; and generally by engaging in
22
Except as hereinafter pmvided, nothing herein contained
23 0 forms of banking business and undertaking 0 types of
23 shall authorize the purchase or holding of any shares of stock
of any corporation by any such association. -No such associa-
24
banking transactions that may, by the. laws of the State
24
25
in which such bank is situated, be permitted to banks of
25 -tion shall.puFolitow or hold ally obligation of any corporation
44
45
unless- such corporation and any predecessor thereof earned
2 for 'each-of-the five years preceding such purchase at least
3 4 per cent= upon the outstanding capital stock of the cor4
p4Ffition:. The limitations herein. contained as to the pur-
5
chasing and selling of investment securities shall not apply
6 to obligations of the -United States, or general obligations
7
of any State or of any political subthvision thereof, or o
8
gations issued under authority of the Federal Farm Loan
9
Act: Provided, That in carrying on the business commonly
10
known as the safe deposit business no such association shall
11
invest in the capital stock of a, corporation orga,nized under
12
the law of any State to conduct a safe deposit business in
an amount in excess of 15 per centum of the capital stock
14
15
of such association. actually paid in and unimpaired and 15
per centum of its unimpaired surplus."
SEet--
51-3H
17. Sz.ction 5138 of the Revised Statutes,. as
1.*; &Ala:14414s isime4dad(1;13;'rose*foItiaweiad thereof the foitow-Ike*
( ;; i!!8,10. Fi
Atter this section as amended takes effect,
no III-Atonal banki.ng association shall be organised with a
•
1 lesa
44etP ig99/9qql-Pt
ufi9c-t4
. 49Ps
- with a cai)itai -of not less than *50,000 aziy fbe
organited.
p9Ally,0I , awhlch, ckoef in,cexcaed,
thOUgalid 1 InhalA talitit, t
iiOetiatIdnt
formed .for the purpose of succeeding to the basiness of
21 an
' a'the ca"sdietS I lOts
of the clarre;wy. be,organise4 with a less capital than
22$56006 ttitokW]
ciation shall be organised in a city th population of
23which:iiisseettaletf*!thouittind sperm* with' ofdot
iof
less than 4200,000. except that in the oung_districts
24.of litacti(kdakritutre 'the Stati
rphiraxiti the ttivIrate,-,i
tion of State banks with a capital of $1000,000 or less,
2 .nat49004vankingf-lasi$50(40444**in*H4atesin4"wk.],4.f. 400140•411ky
organisedwith the approval of the Comptroller of
the Currency, have a capital of not less than .i10'),000."
•
1
to continue in individual cases under this Act for periods of
2 ninety days subject to successive renewals for like periods
9
but not to exceed one,zar in all. Failure on the part of
4 any such association to comply with the provisions of this
5 section shall be penalized by revocation of its charter in
6 accordance with the procedure contained in section 5239 of
7 the Revised Statutes."
SEC.
20. Section 5139 of the Revised Statutes is
9 amended to read as follows:
5139. That after this section as amended takes
1 I_
effect, the capital stock of each association shall be divided
12 into shares of $100 each and be deemed personal property
and transferable on the books of the association in such
14
manner as may be prescribed in the by-laws or articles
15
of association; and any such association which has certificates
16
of stock outstanding on the date this section as amended
17
takes effect which do not comply with the proons of this
18
section as amended shall, wn two years after such date,
issue ne-w certificates in compliance with such provisions.
19
20
No certificate representing the stock of any such association
21
shall represent the stock of any other corporation, nor shall
the ownership, sale, or transfer of any certificate represen
t-
22
ing the stock of any such association be conditioned
ir•
24 any manner whatsoever upon the ownership, sale,
or
25
transfer of a certificate representing the stock of any other
47
46
1
corporation. Every person becoming a shareholder by
ii
holder shall be entitled to one vote on each share of stock
2 transfer as permitted by this section shall in proportion to
actually owned by him as the result of bona fide purchase,
3
his shares succeed to all the rights and liabilities of the prior
3 gift, or inheritance and no shareholder who shall become
4
holder of such shares, and no change shall be made in the
4
such through nominal transfer, or ownership on behalf of
5
articles of association by which the rights, remedies, or
5
another, shall cast such vote. No corporation, association,
6 security of the existing creditors of the association shall be
6
or partnership which is the owner of more than 10 per
7 impaired."
1'7
centum of the stock of any such bank and no officer, director,
SEC. 21. From and after January 1, 1933, no officer
8 or employee of such corporation, association, or partnership,
9 of any national bank or member bank shall be (a) an officer
9 shall cast a ballot in such elections or meetings either on
10 of any unincorporated association or corporation engaged
10 shares of stock owned by the corporation or by such officer,
8
primarily in the business of purchasing, selling, or negoti-
11
director, or employee. Shareholders may vote by proxies
12 ating securities, or (b) an employee of any such unincorpo-
12
duly authorized in writing; but no officer, clerk, teller, or
13 rated association or corporation, or of any individual or
13
bookkeeper of such association shall act as proxy; and no
14 copartnership engaged in such business; and no national
14
shareholder whose liability is past due and unpaid shall be
bank or member bank shall perform the functions of a
15
allowed to vote."
16 correspondent bank on behalf of any such individual, co-
16
17 rartnership, unincorporated association or corporation; and
17 every pel=son who is a shareholder in a national banking
18 no such individual, copartnership, unincorporated association
1S
association on March 1, 1934, and every person who be-
19 or corporation shall perform the functions of a correspondent
19
comes such a shareholder after such date, shall file with
20 for any national bank or member bank or hold on deposit
20 the association a sworn statement that he is not at the time
11
15
S. 23. Except as provided in section 24 of this Act,
21
any funds on behalf of any national bank or member bank.
21
a stockholder in any affiliate of such association organized
22
SEC. .22.- Section 5144 of the Revised Statutes, as
22
under the law of any State for the purpose of underwriting,
23
dealing or trading in securities, and that he does not intend
23
24
amended, is amended to read as follows:
"SEC. 5144. In all elections of directors and in decid-
25 ing all questions at meetings of shareholders, each share-
24 to become a stockholder in any such affiliate.
I!
Z
021
48
Ss it
of
the
provisions sections 22
SEC. 24 Notwithstanding
itn({),
tex
affiliate, or any association, corporaan
Act,
this
of
23
2
3 tion, or partnership other than an affiliate, which owns or
4
controls shares of stock in any national banking association
5 may make application to the Comptroller of the Currency
6 for a voting permit entitling it to cast one vote at all elec7 tions of directors of such national banking association on each
8 share of stock actually owned or coptrolled by it.
The
9 CiptroAer of the Currency may, in his discretion, grant or
10
withhold such permit as the public interest may require but
11
no such permit shall be granted except upon the following
12 conditions:
13
(a) Every such affiliate, association, corporation, or
14
partnership shall, at the time of making the application
15 for such permit, enter into an agreement with the Comp16
troller of the Currency (1) to receive at such periodical
17 intervals as shall be prescribed by the Comptroller, not
18
more frequent than those designated for the examination
19
of national banks, examiners representing and acting for
20 the Comptroller who shall make an examination of its
21
financial condition with the same degree of care as in the
22 case of an examination of a national bank, such examination
23
to be at the expense of the affiliate, corporation, association,
24 or partnership so examined; (2) that the report of the exam25 iner shall set forth all the facts ascertained by the examina-
49
1
tion and shall include the name, location, capital, surplus,
2 and undivided profits of each bank in which the applicant
3 owns stock and the number of .shares so owned; and (3)
4 that the Comptroller may examine each of the national
5 banks owned or controlled by such affiliate, association,
6 corporation, or partnership, both individually and in con7 junction with others so owned or controlled, and may
8 require publication periodically of individual or consoli9
dated statements of condition of such bank;
11
(b) Every such affiliate, association, corporation, or
tA
fe I
0/414partnership shall deposit with the Comptroller of the Cur-
12
rency at such times and under such conditions as he shall
13
designate, obligations of the United States in an amount
14
equal to 10 per centum of the total of capital stock owned
15
by it in any national bank and shall agree (1) that in the
1(;
event of failure of any national bank in which it shall hold
17
stock the stockholders' liability accruing on account of such
18
stock shall be a first lien upon the fund so deposited with the
19
Comptroller and shall, if not paid upon demand of the re-
20
ceiver of such bank, be paid by the Comptroller so long as
21
there shall be a balance in such fund, and (2) that any
22
deficiency in such fund shall be made up within ninety days
10
23 after notice from the Comptroller of the Cturency;
24
(c) Every such affiliate, association, corporation, or
25
partnership (1) shall possess at the time of the issuance of
8. 3215-4
NeLAht-c-
51
50
1
such voting permit, and shall continue to possess during the
1
stocks, bonds, debentures, notes, or other securities of any
2 life of such permit, free and clear of any lien, pledge, or by-
2 sort, and that during the period that the permit remains
pothecation of any nature, assets other than bank stock
3 in force it will not acquire any ownership, control, or
3
•
4 which, together with the fund hereinbefore required to be
A
W),
5 deposited with the Comptroller of the Currency, shall not
4 interest in any such affiliate or participate in the management
6
be less than 25 per centum of the aggregate par value of
6 filing the application for such permit it owns, controls,
7
bank stocks held or owned by such 'affiliate, association, cor-
7 or has an interest in, or is participating in the management
8
poration, or partnership, and (2) shall reinvest in assets
8
5 or direction thereof, or (2) agree that if at the time of
or direction of, any such affiliate, it will, within two years
10
the
MrsAdvanced , duAl.ng the years 1931 and. 46'4 for
tate,
11
skiti)Paff
o4
1
iSiirelcillyyt
64
9-'er CAW-fttill
may !)e counted
partnership
or
corpor9.tion,
association
emittippiift winitetwii4„Mky; ic value ot its own ,,,,rosnut-
10 ship, control, and interest in such affiliate and will cease
11
standing until such assets shall equal the outstanding par
11.
participating in the management or direction thereof, and
12
value of bank shares owned by it;
12
will not thereafter, during the period that the permit remains
9
-1 0
1
Evn-rx7 /Ifs oral.
T-1
r
-
•
Ctligstt- Per
crlvid.ed That from and, al ter jLLnuary 1, 1±3t
,Ot,s inshall
for
icti*ank ro444.reuvantiereqi•REotird
annum;
-')Tier
2
- pee'.an cen
cr2-ailed tiy not les t
9 after the filing of such application, divest itself of its owner-
13 in force, acquire any further ownership, control, or interest
14 in any such affiliate or participate in the management or
15 same penalties tor taise statement as are applicable at the
15
16 time of making such statement to the officers and employees
16
17
17 tion, revoke any such voting peymit after giving sixty
of national banks; and
18
direction thereof.
The Comptroller of the Currency may, in his discre-
18
(e) Every such affiliate, association, corporation, or
19
partnership shall, at the time of application for such voting
19 ate, association, corporation, or partnership. Whenever the
20 permit, (1) file a statement with the Comptroller of the
20 Comptroller of the Currency shall have revoked any such
days' notice by registered mail of his intention to the affilie
,
• /./
Currency that it does not own, control, or have any interest
21
voting permit, no national bank whose stock is owned in
22 in, or is not participating in the management or direction of,
22
whole or in part by the affiliate, association, corporation, or
any affiliate formed for the purpose of, or engaged in, the
93
partnership whose permit is so revoked shall receive depos-
21
619
24 issue, flotation, underwriting, public sale, or distribution
25
at wholesale or retail or through syndicate participation of
24 its of -United States moneys, nor shall any such national
25
bank pay any further dividend to such affiliate, association,
53
52
1
corporation, or partnership upon any shares of such bank
1
such branch is situated. The aggregate capital of every
2 owned or controlled by such affiliate, association, corpora-
2 national banking association and its branches shall at po
3 tion, or partnership.
9
4
T1‘--provisions of paragraph "Seventh" of section
time be less than the aggregate minimum capital required
4 by law for the establishment of an equal number of national
banking associations situated in the various places where
5 5136 of the Revised Statutes, as amended, shall be appli-
5
6 cable not only to individual national banking associations
6 such association and its branches are situated."
7
SEC. 26. Sections 1 and 3 of the Act entitled "An Act
but also to their affiliates and to all affiliates controlled
7
through other affiliates or holding companies.
8 to provide for the consolidation of national banking associa-
SEC. -2.5. Paragraph (c) of section 5155 of the Re-
9 tions," approved November 7, 1918, as amended, are
10
vised Statutes, as amended, is amended to read as follows:
10 amended by striking out the words "county, city, town, or
13
(c) A national banking association may, after the
12
date this paragraph as amended takes effect, establish and
12 inserting in lieu thereof the words "State, county, city,
13
operate new branches within the limits of the city, town, or
13 town, or village."
14
village, or at any point within the State in which said asso-
14
15
ciation is situated, if such establishment and operation are at
1 r.
16
the time permitted to State banks by the law of the State
It;
"Any association may take, receive, reserve, and
17
in question; except that no such association shall establish
17
charge on any loan or discount made, or upon any notes,
oi such
Providitt; ThaV.' itritorleeilloon
orainary
and
the
an ,association to a :State boundqxy line,
jg
fotind to extend into
atiotii41.1Leti
an adjacent State, the Federal eserve Board may permit
of nthicintabilliktiotit,60Cla biaush. CW‘itireachee by suds, asociation in an adjacent State but not Leyond a distance of
Pi
bills of exchange, or other evidences of debt, interest at the
19
rate allowed by the laws of the State, Territory, or District
20
Where the bank is located, or at a rate of 1 per centum in
21
excess of the discount rate of the Federal reserve bank in the
22
Federal reserve district where the bank is located, whichever
19
20
21
• sfifty.tilles from the •nec4t o4s,tAgs 40.ri!nteAp1?k.
11
village" wherever they occur in each such section, and
SEC. 27. The first two sentences of section 5197 of the
Revised Statutes are amended to read as follows:
22
village in which the association is situated shall set aside
9'
for the use of that branch a total amount of capital at least
24
equal to the minimum capital required by law for the organ-
24
laws of any State a different rate is limited for banks of issue
25
ization of a national banking association in the place in which
25
organized under State laws, the rate so limited shall be
may be the greater, and no more, except that where by the
55
54
allowed for associations organized or existing in any such
SEC. 29. (a) The second sentence of the first para-
2 State under this Title. When no rate is fixed by the laws
2 graph of section 5200 of the Revised Statutes, as amended,
3
of the State, or Territory, or District, the bank may take,
3 is amended by inserting before the period at the end thereof
4 receive, reserve, or charge a rate not exceeding 7 per centum,
4 the following: "and shall include in the case of obligations
1
of a corporation all obligations of all subsidiaries or affiliates
5
or 1 per centum in excess of the discount rate of the Federal
5
6
reserve bank in the Federal reserve district where the bank
6 thereof."
7 is located, whichever may be the greater, and such interest
7
(b) Paragraph (8) of section 5200 of the Revised
8
may be taken in advance, reckoning the days for which the
8 Statutes, as amended, is amended by inserting before the
9
note, bill, or other evidence of debt has to run."
9
period at the end thereof a colon and the following; "Pro-
10
SEC. -2-8. No national banking association or member
10
vided, That no obligation of a broker or member of any
11
bank shall promise or pay to its depositors as a eonsidera-
11
stock exchange or similar organization, or of any finance
12
tion for the maintenance of deposit balances or accounts a
12
company, securities company, investment trust, or other
13 rate of interest in excess of one-half the rate of interest spec-
13
similar institution, or of any affiliate, shall be entitled to the
14 ified in section 5197 of the Revised Statutes, as amended,
14 benefits of the foregoing exceptions, but such obligations
15
and whenever such depositors are bankers• who maintain
15
16
balances with other banks, no such association or member
16 centum hereinbefore set forth in this section; except that the
17
bank shall promise or pay for the maintenance with it of
17
18
such bankers' balances a rate of interest in excess of the
18 said 10 per centum limitations, or the amount of the capital
19
current rate of discount of the Federal reserve bank of the
19
shall in every case be subject to the limitations of 10 per
total obligations of an affiliate shall in no case exceed the
stock of said affiliate actually paid in and unimpaired, which-
20 district in which the depository bank is located, or in excess
20 ever may be the smaller."
21
21
(c) Section 5200 of the Revised Statutes, as amended,
22
is further amended by adding at the end thereof the follow-
of 2+ per centum, whichever rate shall be the smaller.
22
No-such association or member bank shall promise or
23
pay to any depositor any interest or other compensation for
24 the maintenance of balances subject to check,
23 ing new paragraphs:
24
"The aggregate amount of the obligations (including
25
repurchase agreements) of all the affiliates of a national
57
56
per
banking association shall not at any time exceed 10
paid
centum of the capital stock of such association actually
1
9
in and unimpaired and 10 per centum of its unimpaired
by Govern4 surplus fund: Provided, That loans collateraled
which such
5 ment bonds, or by bonds issued by the State in
vision of
6 bank is situated, or issued by any political subdi
limisuch State, shall not be included within the foregoing
such bank.
8 tations if actuality owned by the borrower from
"Within ,,two years after this section as amended takes
9
10
11•
12
13
effect, every affiliate shall be capitalized through the sale
of its own stock which shall be paid for in full in cash upon
the same terms and conditions as provided in section 5140
of the Revised Statutes, as amended, in the case of national
bank stock; and no national bank shall establish or capitalize
15 an affiliate through cash or stock dividend declarations made
14
16
from its surplus or from undivided profits. No affiliate shall
17
at any time during such two-year period hold, or lend upon,
18
more than 10 per centum of the shares of the capital stock
as shall
the percentage of such capital and surplus fund
from time to time be designated by the Federal Reserve
1
2
of the
:1; Board in accordance with subsection (m) of section 13
smaller.
4 Federal Reserve Act, as amended, whichever is the
SEC. 31. Section 5211 of the Revised Statutes, as
5
thereof the
6 amended, is amended by adding at the end
7 following new paragraph:
8
9
of the Currency,
10 transmission by him to the Comptroller
in such form
11 not less than three reports during each year,
by the oath or
12 as the Comptroller may prescribe, verified
be
13 affirmation of the president or such other officer as may
designated by the board of directors of such affiliate to
15 verify such reports, covering the condition of such affiliate
16 on dates identical with those for which the Comptroller
14
17
16
19
19
20
of the parent institution."
SE°.-3-0. Nothing in section 5200 of the Revised Stat-
21
utes, as amended, shall be construed to permit a member
9
bank to lend to any individual or corporation upon collateral
security an amount in excess of 10 per centum of its capital
stock actually paid in and unimpaired and 10 per centum
F. its unimpaired surplus fund, or an amount in excess of
"Each affiliate of a national banking association shall
for
make and furnish to the president of the association,
20
21
22
shall during such year require the reports of the condition
of the association. Each such report of an affiliate shall
be transmitted to the Comptroller at the same time as the
corresponding report of the association; except that the
Comptroller may, in his discretion, extend such time for
good cause shown. Each such report shall exhibit
the holdings of the
23 in detail and under appropriate heads,
nt vale, the ex24 affiliate in question, their cost and prese
the balance
25 penses of operation for the preceding year, and
4
IMM
59
58
notice therefor from the Comptroller, but such publication
] sheet of the enterprise. It shall be the duty of the presi-
1
2 dent of such association to satisfy himself as to the correctness
2 shall not be considered as a substitute for the annual pub-
3 of the report before transmitting the same to the Comptroller.
3 lication hereinbefore required."
4 The reports of its affiliates shall be published by the
4
5 association under the same conditions as govern its own
5 Revised Statutes, as amended, is amended by adding at the
6 condition reports. The Comptroller shall also have power
6 end of the first paragraph thereof the following proviso:
7 to call for special reports with respect to any such affiliate
7 "Provided, That during the period of two years after this
whenever in his judgment the same are necessary in order
S section as amended takes effect, in making the examination
9 to obtain a full and complete knowledge of the conditions
9 of any national bank or of any other member bank, the
10
of the association with which it is affiliated. Any affiliate
10 examiner shall include an examination of the affairs of all
11
which fails to make and furnish any report required of
1] affiliates of such bank, and in the event of the refusal to give
12 it under this section, and any association whose president
12 any information required in the course of the examination
13 fails to transmit as required by this section, any such report
13 of any such affiliate, or in the event of the refusal to permit
14 furnished to him, shall be subject to a penalty of 100 for
14 such examination, all the rights, privileges, and franchises
15 each day during which such failure continues: Provided,
15 of the bank shall be thereby forfeited, if a national bank,
16
That every affiliate which shall be indebted to any bank
16 and if a bank or trust company organized under the law of
17
or banks to an amount exceeding 5 per centum of the
17 any State, membership in the Federal reserve bank of its
18
capital and surplus of its parent bank shall publish its entire
18
19
portfolio at a date and in a manner to be prescribed by
19 such membership shall be required. The Comptroller of the
20 the Comptroller of the Currency but not oftener than once
20 Currency shall have power, and he is hereby authorized, to
8
SEC. 32. The first paragraph of section 5240 of the
district shall be forfeited and no notice of the termination of
21
annually, and every affiliate which shall be so indebted to
21
22
an amount in excess of 10 per centum of the capital and
22 ing association or affiliate which shall not within one
23 surplus of its parent bank, shall be required to publish its
23 hundred and twenty days after notification of the recom-
24
portfolio in at least one daily newspaper issued in the place
24 mendations or suggestions of the Comptroller, based on said
25
where such bank is located within ten days after receiving
25 examination, have complied with the same to his satisfac-
publish the report of his examination of any national bank-
60
61
tion. Ninety days' notice prior to such publicity shall be
"No corporation engaged in commerce as defined in .
2 given to the bank or affiliate."
3
2 this Act shall place its funds on deposit with any individual,
SEC. 33. The Act entitled "An Act to supplement
3 private banker, or banking association, or trust company,
existing laws against unlawful restraints and monopolies, and
4
for other purposes," approved October 15, 1914, as
5 the -United States or of some one of the States or Territories
6 amended, is hereby amended by adding after section 8
6 thereof; and every violation of the provisions of this para-
7
8
thereof the following new section:
"SEC. 8A. That from and after the 1st day of January, 1932, no person shall be at the same time a director,
except banking associations incorporated under the la-ws of
7
graph shall be punishable by a fine of not less than $1,000
8
per day for each day during -which such violation continues;
9 and no corporation which shall fail to deposit its funds in
10
officer, or employee of any bank, banking association, or
10
banking associations incorporated under the United States
11
trust company, organized or operating under the laws of
11
or of some one of the States or Territories thereof shall
12
the United States and of a corporation organized for any
12
engage in such commerce."
13
purpose whatsoever which shall make loans secured by
13
SEC. 34. The right to alter, a-mend, or repeal this
14
collateral to any individual, association, partnership. or
14
Act is hereby expressly reserved. If any clause, sentence,
15
paragraph, or part of this Act shall for any reason be
'5 corporation other than its own subsidiaries.
16
"No corporation, foreign or domestic other than
16
adjudged by any court of competent jurisdiction to be invalid,
17
banks incorporated under the laws of a State or of the
17
such judgment shall not affect, impair, or invalidate the
18
United States operating within the United States and en-
18
remainder of this Act, but shall be confined in its operation
19
gaged in commerce as defined in this Act, shall make to
19
to the clause, sentence, paragraph, or part thereof directly
20 any individual, other corporation (except its own subsidi21
aries), private banker, or incorporated banker, loans secured
22
by collateral; and every violation of the provisions of this
23
paragraph shall be punishable by a fine of $5,000 per day
20 involved in the controversy in which such judgment shall
21
24 during the continuance of such violation.
A
have been rendered.
72D
SESSION
laT
CONGRES1S1
S.3215
A BILL
To provide for the safer and more effective use
If the assets of Federal reserve banks and
of national banking associations, to regulate interbank control, to prevent the undue
IIiversion of funds into speculative operations, and for other purposes.
By Mr. GLASS
JANUARY 21, 1932
Read
twice and referred to the Committee on
Banking and Currency
[CONFIDENTIAL COMMITTEE PRINT]
MARCH 17, 1932
[Existing law is shown in
in
striekeft-thr-eugh
72D CONGRESS
1ST SESSION
roman type; existing
law omitted is shown
type; new matter is shown in
italics]
S.
IN THE SENATE OF THE UNITED STATES
MARCH --, 1932
Mr. GLASS introduced the following bill; which was read twice and referred
to the Committee on Banking and Currency
A BILL
To provide for the safer and more effective use of the assets of
Federal reserve banks and of national banking associations,
to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other
purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
That the short title of this Act shall be the "Banking Act
4
5
of 1932."
SEC. 2. As used in this Act—
(a) The terms "bank," "national bank," "national
banking association," "member bank," "board," "district,"
J. 107143-1
2
1 and "reserve bank" shall have the meanings assigned
to
2 them in section 1 of the Federal Reserve Act, as amended.
(b) The term "affiliate" includes a trust
company, a
4 finance company, securities company,
discount or acceptance
5 company, investment trust, or other
similar institution, or a
6 Corporation7
(1) Of which a national bank
or member bank,
8 directly or indirectly, owns or contr
ols either a majority of
9 the voting shares or more than 50 per centum of the number
10 of shares voted for the election of its directors, trustees, or
it other managing officers at the preceding annual meeting,
or
12 controls in any manner the election of a majority
of its
13 directors, trustees, or other managing officers; or
(2) Of which control is held, directly or
indirectly,
15 through stock ownership or in any other mann
er, by the
16 shareholders of a national bank or member bank
who own or
3
(4) Which owns or controls, directly or indirectly,
2
either a majority of the shares of capital stock of a national
3
bank or member bank or more than 50 per centum of the
4 number of shares voted for the election of directors of such
5
bank at the preceding annual meeting, or controls in any
6
manner the election of a majority of the directors of such
7
bank; or
8
(5) For the benefit of whose shareholders or members
9
all or substantially all the capital stock of a national bank
10
or member bank is held by trustees.
ii
S'Ec. 3. The fourth paragraph after paragraph
12
"Eighth" of section 4 of the Federal Reserve Act, as
13
amended, is amended by inserting before the period at the
14
end thereof a comma and the following: "but only if
15
such discounts, advancements, and accommodations are in-
16
tended for the accommodation of commerce, industry, and
17
agriculture. The Federal Reserve Board may prescribe
18
regulations further defining and regulating the use of the
19
credit facilities of the Federal reserve system within the
20
limitations of this Act. Such facilities shall not be extended
2t
to member banks for the purpose of making or carrying
22
loans covering investments, or facilitating the carrying of,
93
or trading in, stocks, bonds, or other investment securities
24
other than obligations of the Government of the United
25
States. Each Federal reserve bank shall keep itself in-
14
control either a majority of the shares of such
bank or more
18 than 50 per centum of the number of shares
voted for the
19 election of directors of such bank at the
preceding annual
20 meeting, or by trustees for the benefit of the
§hareholders
17
21
of any such bank; or
(3) Of which either a majority of the
members of its
23 executive committee or a
majority of its directors, trust
ees,
24 or other managing officers are directors
of a national bank
25 or member bank; or
22
4
1. formed of the loan and
investment practices of its
member
2 banks and the uses ma
de by them of the credit
facilities of
3 the Federal reserve
system. The chairman
of each Fed4 eral reserve bank shall rep
ort to the Federal Reserve
Board
5 any undue, unauthorized
, or improper use of suc
h credit
6 facilities, together with
his recommendation for
remedial
7 action in the matter.
The Federal Reserve Boar
d may,
8 in its discretion, suspend
for not more than one year
from
the use of the credit facilities
of the Federal reserve sys
tem
10 any member bank making
undue, unauthorized, or
improper
11 use of such facilities."
•
12
SEC. 4. The twenty-fifth par
agraph of section 4 of the
13 Federal Reserve Act
, as amended, is amended
by inserting
14 before the period at the
end thereof a colon and the
follow15 ing: "Provided, That
no such vote shall be cast by
or on
16 behalf of any member
bank, if a majority of its sto
ck shall
17 be held or owned by
any affiliate, or other corporati
on, which
18 is in fact one of a
chain, or of a jointly contro
lled group
19 of banks, controlled
by an individual, or if its sto
ck is in the
20 hands of a voting
trust, or if in any other way
such bank
21 is prevented from
acting subject to the uncontrol
led decision
22 of the general bod
y of stockholders of such
_bank locally
resident in the town or city in whi
ch such bank is established."
24
SEC. 5. The first paragraph of
section 7 of the Federal
25 Reserve Act, as ame
nded, is amended to read as
follows:
1
"After all necessary expenses of a Federal
reserve bank
2 shall have been paid or provided for, an
d provision shall
8 have been made, when necessary, for res
toring the surplti's
4 of the bank to its position as of Decemb
er 31, 1931, the
5 stockholders shall be entitled to rec
eive an annual
6
7
8
9
10
dividend of 6 per eentum on the pai
d-in capital stock,
which dividend shall be cumulative. Aft
er the aforesaid
dividend claims have been fully met,
the net earnings
shall be paid to the ig-nited Sta-tes as
a frailehise taa€
except that the whole of sat-41 net earftirigs,including
11
those fOf the year ending December 31, 191
8, shall be paid
12
into a surplus ft:Bid until it shall amount te 4-0
0 per centum
)3
of the subscribed capital steek of such bankT an
d 414 there
14
after 4-0 per centurn of such net irnings shall
be paid in-to
15 the eat-This, beginning with the net earnin
gs for the year
16 ending December 31, 1932, shall be pai
d to the Federal
17
Liquidating Corporation provided for in sec
tion 12B of this
18 Act and shall be used by the said corpor
ation for carrying
19 out the purposes of such section."
20
SEC. 6. Section 9 of the Federal Reserve
Act, as
21
amended, is further amended by inserting betwee
n the fifth
22 and sixth paragraphs thereof the following
new paragraph:
23
"Each affiliate of a bank admitted to mem
bership
24 under authority of this section shall
make and furnish
25
to the president of the bank, for transmission
by him
6
I.
7
to the Federal Reserve Board, not less than three reports
SEC. 7. (a) The first paragraph of section 10 of the
2 during each year. Such reports shall be in such form as
2 Federal Reserve Act, as amended, is amended to read as
3 the Federal Reserve Board may prescribe, shall be verified
3 follows:
4 by the oath or affirmation of the president or such other
4
5 officer as may be designated by the board of directors of
5 shall consist of eight seven members, including the SeefetaTt,
6 such affiliate to verify such reports, and shall cover the
6 of the Treasury tHiii the Comptroller of the Currency, who
7 condition of such affiliate on dates identical with those fixed
7 shall be members a member ex officio, and six members
8 by the Federal Reserve Board for reports of the condition
8 appointed by the President of the -United States, by
9 of the member bank. Each such report of an affiliate shall
9 and with the advice and consent of the Senate. In select-
"A Federal Reserve Board is hereby created which
10
be transmitted to the Federal Reserve Board at the same
10 ing the six appointive members of the Federal Reserve
1 1._
time as the corresponding report of the member bank,
11
Board, not more than one of whom shall be selected from
12 except that the Federal Reserve Board may, in its discre-
12
any one Federal reserve district, the President shall have
13 tion, extend such time for good cause shown. Each such
13
due regard to a fair representation of the financial, agricul-
14 report shall exhibit in detail and under appropriate heads,
14
tural, industrial, and commercial interests, and geographical
15 the holdings of the affiliate in question, their cost and present
15
divisions of the country, and at least two of such members
value, the expenses of operation for the preceding year, and
16
shall be persons of tested banking experience. The six
17 the balance sheet of the enterprise. It shall be the duty
17
members of the Federal Reserve Board appointed by the
18 of the president of such member bank to satisfy himself
18
President and confirmed as aforesaid shall devote their entire
19 as to the correctness of the report before. transmitting the
20 same to the Federal Reserve Board. Any affiliate which
19
time to the business of the Federal Reserve Board and shall
16
20 each receive an annual salary of $12,000, payable monthly,
21 fails to make and furnish any report required of it under
22 this section, and any member bank whose president fails
21
together with actual necessary traveling expenses, and the
22
Comptroller of the Currency, as ex officio member of the
23 to transmit, as required by this section, any such report
24 furnished to him, shall be subject to a penalty of $100 for
23 Federal Reserve Board, shall, in addition to the salary now
25
each day during which such failure continues."
24
paid him as Comptroller of the Currency, receive the sum
8
1
9
3
any two-year period, and thereafter
each member shall hold
2 office for a term of twelve years. Of the six per
sons thus
appointed, one shall be designated
by the President as
of $7,000 annually for his servic
es as a member of said
2 board."
4
5
6
7
8
(b) The second paragraph of sec
tion 10 of the Federal Reserve Act, as amended, is
amended to read as follows:
"The Secretary of the Treasury
and the Comptroller
of the Currency shall be ineligible
during the time they are
he is in office and for two years
thereafter to hold any office,
position, or employment in any
member bank. The ap-
9 pointive members of the Federa
l Reserve Board shall be
10 ineligible during the time they
are in office and for two years
11 thereafter to hold any office, positi
on, or employment in any
12 member bank, except that this
restriction shall not apply
13
to a member who has served the full
term for which he was
14 appointed. Of the six members thu
s appointed by the P-resi15 dent one shall be design
ated by the President to serve for
16 two, one for fettr7 one for six, one
for eight, and the halftnee
17
of the members for ten years, and
thereafter each member
18
so appointed shall serve for ft ter
19
renttwed for cause by the Presid
ent.
20
of the term of any member of the
Federal Reserve Board in
m of ten years, unless SOffilef
Upon the expiration
office when this paragraph as ame
nded takes effect, the Presi,-
22
dent shall fix the term of the
successor to such member at
23 not to exceed twelve years,
as designated by the President
24 at the time of nomination,
but in such manner as to provide
25 for the expiration of the ter
m of not more than one member in
4 governor and one as vice governor of the
Federal Reserve
5. Board. The governor of the Fed
eral Reserve Board, subject to its supervision, shall be the its act
ive executive officer.
7 The Secretary of the Treasury may
assign offices in the
8 Department of the Treasury for the
use of the Federal
9 Reserve Board, Each member
of the Federal Reserve
10 Board shall within fifteen days
after notice of appointment
it make and subscribe to the oath of office
."
12
(c) The fourth paragraph of section 10
of the Federal
13 Reserve Act, as amended,
is amended to read as follows:
14
if-The first meeting of the Federal Res
erve Rear-4 shall
15
be held in Washington-,- Distfiet
of Columbia, as seen as
16
may be aft-e; the passage of this Act,
at et date to be fixed
17 by the Reserve Bank gfgflfffrifbtief
i Committee, The See18 retar-y of the T-r-eftStify shall he
e-3E effieie chairman of the
19 Federal Reserve Beard, No me
mber of the Federal Re20 serve Board shall
be an officer or director of any ban
k,
21 banking institution,
trust company, or Federal reserve bank
22 nor or hold stock
in any bank, banking institution, or
trust
23 company, and bef
ore entering upon his duties as a memb
er
24
of the Federal Reserve Board he shall cer
tify under oath
5
to the Secretary of the Treasury that he
has complied with
11
10
this requirement and such certification shall be filed with the
thereof, or certificates of indebtedness of the United States:
2 secretary of the board. Whenever a vacancy shall occur,
2 Provided further, That the provisions of this subsection (m)
1
other than by expiration of term, among the six members of
4 the Federal Reserve Board appointed by the President, as
3 shall not be eperatii;e after October 31, 1921.
4
"(m) Upon the affirmative vote of not less than six of
5 above provided, a successor shall be appointed by the Presi-
its members the Federal Reserve Board shall have power
dent, with the advice and consent of the Senate, to fill such
6 to fix from time to time for any member bank the percentage
7 vacancy, and when appointed he shall hold office for the
7 of the capital and surplus of such bank which may be repre-
8 unexpired term of the member whose place he is selected
sented by loans protected by collateral security. Any per-
9 to fill."
SEC. 8. Subsection (m) of section 11 of the Federal
10
9 centage so fixed by the Federal Reserve Board shall be sub10 ject to change from time to time upon ten days' notice, and it
11
shall be the duty of the board to establish such percent-
(m) Ilton the affirmative -8,4e of not less than ft-ve
12
ages with a view to preventing the undue use of bank
13 of its members,the Federal Reserve Board shall have power
13
loans for the speculative carrying of securities. The Federal
14
to permit Federal reserve hanks to +Eliseo-tint for any member
14
Reserve Board shall have power to direct any member bank
15
hank notes, drafts, or hills of exehange bearing the signature
15
to refrain from further increase of its security loans for
16
Of
endorsement of any one borrower in excess of the amount
16
any period up to one year. Any violation of this subsection
17
per-mitted by section :9 and seetien 4- of this Aet7 hut in no
17 may be penalized by suspension of all rediscount privileges
18
ease to exceed 20 per eentum of the member bfifik-ls eftital
18
19
and surplus: Provided, however, That all such notes, drafts,
19
20
or bills of exchange diseounted for any member hank in
20 ber bank shall (1) make any loan or any extension of credit
21
excess of the amount permitted ender such sections shall he
21
11
Reserve Act, as amended, is amended to read as follows:
12
at Federal reserve banks."
SEC. 9. No national banking association and no mem-
to any affiliate organized and existing for the purpose of buy-
22 secured by not less than a like face amount of bends Of notes
22 ing and selling stocks bonds, real estate, or real-estate mort-
23 of the United States issued since April 247 1917, for which
23
gages, or for the purpose of holding title to any such prop-
24
the borrower shall in good faith prior to January 4-7 1921,
24
erty, or(2) invest any of its funds in the capital stock, bonds,
25
have paid Of agreed to pay not less than the fall faee amount
c):-) 9r other obligations of any such affiliate, or (3) accept the
imm;•agallkailligigtlrlli••mmmmskia
13
12
of the
committee"), which shall consist of the governor
members
Federal Reserve Board and as many additional
I.
capital stock, bonds, or other obligations of any 'such affiliate
1
2
as collateral security to protect loans made to any person,
9
;
partnership, or corporation, if the aggregate amount of
2
3 as there are Federal reserve districts. Each Federal reserve
annually select from
4 bank by its board of directors shall
bank one member of said
5 among the officers of the said
shall be held
6 committee. The meetings of said committee
4 such loans, extensions of credit, investments, and acceptances
5 of collateral 'security in the case of any such affiliate, will
6 exceed 10 per centum of the outstanding capital stock and
7 surplus of such national banking association or member bank.
8
Each loan made to an affiliate within the foregoing
at least four times
7 at Washington, District of Columbia,
be held elsewhere
8 eabh year. Additional meetings may
9 limitations shall be secured by stocks or bonds listed on a
9
10 stock exchange which have an ascertained market value at
10
the time of making the loan of at least 20 per centum more
11
12 than the amount of such loan, or shall be secured by notes,
12
13 drafts, bills of exchange or acceptances, eligible for redis-
13
14 count at Federal reserve banks, or by bonds or other obliga-
14
15
tions eligible for investment by 'savings banks in the State
15
16
in which the association or member bank making the loan is
16
17
located. A loan to a director, officer, clerk, or other em-
17
18
ployee of any such affiliate shall be deemed a loan to the
18
19
affiliate to the extent that the proceeds of such loan are
19
11
20. transferred to the affiliate.
21
SEC. 10. The Federal Reserve Act, as amended, is
22
amended by inserting between sections 12 and 13 thereof
23
the following new sections:
24
"SEC. 12A. (a) There is hereby created a Federal
25
Open Market Committee (hereinafter referred to as the
20
either upon the
upon the call of the Federal Reserve Board,
members
motion of the board or at the request of any three
of the govof the committee. In the absence or inability
meetings
ernor of the Federal Reserve Board to act at such
other
the board shall designate the vice governor or some
member of the board to act in place of the governor.
"(b) No Federal reserve bank shall engage in open
market operations described in section 14 of this Act except
The
after approval and authorization by the committee.
committee shall discuss, adopt, and transmit to the several
Federal reserve banks resolutions relating to all matters
affecting the open market transactions of such banks and to
all matters affecting the relations of the Federal reserve
22 system with foreign central or other banks. Every such
23 resolution shall be reported within three days to the Federal
21
24
Reserve Board and shall be subject to its approval. The
25
board shall annually include in its report to the Speaker
14
of the House of Representatives a review of the decisions
2 of the committee for the preceding year and an explanation
3 of the reasons for such decisions and the results thereof, so
4 far as they may be ascertained.
5
"(c) The time, character, and volume of purchases
6 and sales in the open market shall be governed with a
7
view to accommodating commerce and business and with
8 regard to their bearing upon the general credit situation of
9 the country. Such purchases and sales shall include all
10
paper described in section 14 of this Act as eligible for
11
open market operations.
12
"(d) The conclusions and recommendations of the
13 committee when approved by the Federal Reserve Board
14 shall be submitted to each Federal reserve bank for de15
termination whether it will participate in any purchases or
16 sales recommended. If any Federal reserve bank shall
17 decide not to participate in the open market operations
so recommended, it shall file with the chairman of the corn19
mittee within thirty days a notice of its decision.
20
"SEc. 12B. (a) There is hereby created a Federal
21
Liquidating Corporation (hereinafter referred to as the
29 'corporation'), whose duty it shall be to purchase, hold,
23 and liquidate as hereinafter provided, the assets of banks
24
which have been ordered closed by the Comptroller of the
25
Currency or by vote of their directors, and the assets of
15
the
have been ordered closed by
which
banks
member
1
authorities.
2 appropriate State
memComptroller of the Currency and the
The
"(b)
3
by
Open Market Committee created
Federal
the
of
bers
4
constitute the directors of
shall
Act
this
of
12A
5 section
Comptroller of the Currency shall
The
corporation.
6 the
corporation.
board of directors of the
the
of
chairman
the
be
7
shall be
capital stock of the corporation
The
"(c)
8
of
$100 each. Certificates of stock
of
shares
into
divided
9
class
of two classes, class A and
be
shall
corporation
the
10
held by member banks only and
be
shall
stock
A
Class
11 B.
of net
prior payment of dividends out
to
entitled
be
shall
1‘:
2
net
of 30 per centum of such
13 earnings, to the extent
after payment of all expenses
year,
one
any
in
earnings
14
vote at
but such stock shall have no
corporation,
the
of
15
Class B stock shall be held by
10 meetings of stockholders.
to
only and shall not be entitled
banks
reserve
Federal
17
bank
dividends. Every Federal reserve
of
payment
18 the
corporashares of class B stock in the
19 shall subscribe to
to one-fourth of the surplus of
equal
amount
an
to
20 tion
shall
31, 1931, and its subscriptions
December
on
bank
such
21.
certified check payable to the Compa
by
accompanied
22 be
amount equal to one-half of
an
in
Currency
the
of
troller
0
subscription. The remainder of such
such
of
centum
per
24 1
call from time to time by
to
subject
be
shall
25 subscription
16
1
the board of directors upon ninety days' notice and annual
‘2
subscriptions to such stock shall be made by each such bank
3 in an amount equal to one-fourth of the annual increase
4 of such surplus.
5
"(d) Every member bank shall subscribe to the class
6 A capital stock of the corporation in an amount equal to
7 one-half of 1 per centum of its total net outstanding time
8
and demand deposits on the last call date in the year 1931.
9
One-half of such subscription shall be paid in full within
10
ninety days after receipt of notice from the chairman of
11
the board of directors of the corporation; and the remainder
1.9
of such subscription shall be subject to call from time to
13
time by the board of directors of the corporation.
14
"(e) The amount of the outstanding class A stock of
15
the corporation held by member banks shall be annually
16
adjusted as hereinafter provided as member banks increase
17
their time and demand deposits or as additional banks be-
18
come members, and such stock may be decreased in amount
19
as member banks reduce their time and demand deposits or
90
cease to be members. Shares of the capital stock of the
21
corporation owned by member banks shall not be transferred
22 or hypothecated.
When a member bank increases its time
23 and demand deposits, it shall at the beginning of each calen24
dar year subscribe for an additional amount of capital stock
of the corporation equal to one-half of 1 per centum of such
17
1 increase in deposits. One-half of the amount
of such
555i-
2 tional stock shall be paid for at the time of the subscription
3 therefor and the balance shall be subject to call by the board
4. of directors of the corporation. A bank applying for stock
5 in the corporation at any time after the organization thereof
6 shall be required to subscribe for an amount of class A capital
7 stock equal to one-half of 1 per centum of the time and
8 demand deposits of the applicant bank, paying therefor its
9 par value plus one-half of 1 per centum a month from the
of the COr-
io
period of the last dividend on the class A stock
11
poration.
12
have been increased, either on account of the increase
When the capital stock
of
the corporation shall
of the
13 time and demand deposits of member banks or on account
14 of the increase in the number of member banks, the board
15 of directors of the corporation shall cause to be executed a
io
certificate to the Comptroller
of
the Currency showing the
17 increase in capital stock of the corporation, the amount paid
is in, and by whom paid. TVhen a member bank reduces its
19
time and demand deposits it shall surrender, not later than
20 the lst day of January thereafter, a proportionate amount
of the
21
of its holdings in the capital stock
22
when a member bank voluntarily liquidates it shall surrender
23
all its holdings of the capital stock of the corporation and be
24
released from its stock subscription not previously called.
J. 107143
2
corporation, and
18
19
1
The shares so surrendered shall be canceled and the mem-
1
2
ber bank shall receive in payment therefor, under regula-
2 B capital stock required by this Act shall have been sub-
3 (ions to be prescribed by the Federal Reserve Board, a sum•
3 scribed and paid for by such banks, the Comptroller shall
4 equal to its cash-paid subscriptions on the shares surrendered
4 designate five reserve banks to execute a certificate of organi-
5 and its proportionate share of earnings not to exceed one-half
5 zation, and thereupon the banks so designated shall, under
i;
of 1 per centum a month, from the period of the last divi-
6
dend on such stock, but not above the book value of such
7 specifically state the name of the corporation and the city**
earnings, less any liability of such member bank to the
8
!) corporation.
g) When the minimum amount of class A and class
their seals, make an organization certificate which shall
and State in which the corporation is to be located, the
amount of capital stock and the number of shares into
"
(f)If any member bank shall be declared insolvent,
10
which the same is divided, the name and place of doing
1
the stock held by it in the corporation shall be canceled,
11
business of each bank executing such certificate and of all
12
without impairment of the liability of such bank, and all
12
banks which have subscribed to the capital stock of such
13
cash-paid subscriptions on such stock, with its proportionate
13
corporation, the number of shares subscribed by each such
14
share of earnings not to exceed one-half of 1 per centuni
14
bank, and the fact that the certificate is made to enable the
15
per month from the period of last dividend on such stock
15
banks executing the same and all banks which have sub-
but not above the book value of such earnings, shall be first
16
scribed or may thereafter subscribe to such capital stock to
17
applied to all debts of the insolvent bank to the corpora-
17
avail themselves of the advantages of this section.
18
tion, and the balance, if any, shall be paid to the receiver
18
"(h) Such organization certificate shall be acknowl-
of the insolvent bank.
Whenever the capital stock of the
19
edged before a judge of a court of record or a notary public
corporation is reduced, either on account of a reduction in
20
and shall, together with the acknowledgment thereof au-
91
time and demand deposits of any member bank or on account
21
thenticated by the seal of such court or notary public, be
22
of the liquidation or insolvency of such bank, the board
.1
of directors shall cause to be executed a certificate' to the
10
24
'
)5
Comptroller of the Currency showing such reduction of
capital stock and the amount repaid to such bank.
'
)9
•)•..
21
transmitted to the Comptroller of the Currency, who shall
file, record, and carefully preserve the same in his office.
"(i) Upon the filing of such certificate with the
Comptroller of the Currency as aforesaid, the said corpora-
20
tion shall become a body corporate and as such shall have
power3
"First. To adopt and use a corporate seal.
4
"Second. To have succession for a period of twenty
. ed by
5 years from its organization unless it is sooner dissolv
6 an Act of Congress, or unless its franchise becomes forfeited
7 by some violation of law.
"Third. To make contracts.
"Fourth. To sue and be sued, complain and defend,
9
10 in any court of law or equity.
"Fifth. To appoint by its board of directors such offi-
11
12 cers and employees as are not otherwise provided for in this
13 section, to define their duties, require bonds of them and
14 fix the penalty thereof, and to dismiss at pleasure such
15
Ii
discrimination in favor of or against any member bank or
9
banks and shall, subject to the provisions of law and the
orders of the Federal Reserve Board, extend to each bank
4
which is ordered closed by the Comptroller of the Currency,
r,
or by vote of its directors, and to each member bank which is
6
ordered closed by the appropriate State authorities, eu,ch
7
accommodations as may be safely and reasonably made with
8
due regard for the claims and demands of other member
9 banks.
its
"(k) -Whenever any national bank shall be declared
11
insolvent or placed in the hands of a receiver it shall be
12
the duty of the Comptroller of the Currency to appoint a
13
valuation committee of three members which shall include
-t
the receiver of such bank, a member to be named by the
officers or employees.
"Sixth. To prescribe by its board of directors, by-laws
16
17 not inconsistent with law, regulating the manner in which
18 its general business may be conducted, and the privileges
19 granted to it by law may be exercised and enjoyed.
20
"Seventh. To exercise by its board of directors, or duly
21
authorized officers or agents, all powers specifically granted
22
21
board of directortq of such bank, and a person to be chasen
16
17 directors. The receiver shall be chairman of the cominit18
24
20 the receiver shall notify the Comptroller of the Currency
21
of the valuation agreed upon, the Comptroller shall make
22
a formal tender of such assets to the corporation which
23
may purchase the same in whole or in part as its board of
24
directors may determine. It shall be the duty of the cor-
n
poration to proceed to realize as rapidly as possible, having
(j) The board of directors shall administer the af"
25 fairs of the corporation fairly and impartially and without
tee, and the committee shall at once proceed to make a pre-
19 liminary valuation of the assets of the bank. Thereupon
by the provisions of this section and such incidental powers
23 as shall be necessary to carry out the powers so granted.
by the receiver and the member named by the board of
23
22
1
due regard to the condition of credit in the district in which
I
law from the banking superintendent or commissioner of
2 such bank is located, the assets so purchased, and if the
2 the State, under the same conditions as are applicable to the
3 amount realized from such assets exceeds the sum paid
3 sale of assets of insolvent or suspended banks under the law
4
therefor, the corporation shall make an additional payment
4 of the State in which such member bank is located.
5
to the receiver of the bank equal to the amount of such
5•
6
excess, if any, after deducting a liquidation fee of 6 per
6 this section takes effect the corporation is authorized to pur-
7 centum of the sum thus realized. Money belonging to the
7 chase and for a period of five years thereafter to hold and
8 corporation over and above such funds as may be.required
8 liquidate the assets of closed State banks, to make loans to
9 for current operating expenses shall be kept invested in the
9 such banks and to enter into negotiations to secure the re-
10 assets of insolvent or closed banks or in securities of the
10 opening of such banks under the same terms and conditions
11.
Government of the United States.
"(n) For a period of not to exceed two years after
11
as are applicable in the case of national banks and member
12
banks; except that (1) no such purchase or loan shall be
12
"(1) The corporation may, in its discretion, purchase
13
the assets of banks in the hands of receivers on the date of
13 made and no such negotiations shall be entered into unless
14 its organization, but on the same conditions and terms as are
14 it is permitted under the laws of the State in which such
15
applicable in the case of assets of banks which may fail or
15 State bank is located, and (2) the amount realized upon the
16
be closed after .such date. Nothing herein contained shall
10 -sale of the assets of any such State bank in excess of the
17
be construed to prevent the corporation from making loans
17 amount paid for such assets by the corporation shall, after
is
to banks ordered closed by the Comptroller of the Currency
iS
deducting the amount of the liquidation fee authorized to be
19 or by vote of their directors, or to member banks ordered closed
19
charged by the corporation under paragraph (k), be paid
20
by the appropriate State authorities, or from entering into
20 into the Treasury of the United States as miscellaneous
23
negotiations to secure the reopening of such banks.
21
receipts. For the purpose of carrying out the provisions of
"(m) Member banks organized under the law of any
22
this paragraph, there is hereby authorized to be appropriated
9:
State which are now or may hereafter become insolvent or
23
the sum of $200,000,000, which shall be paid by the Secre-
24-
suspended shall be entitled to offer their assets for sale to
24
tary of the Treasury to the corporation in 'such amounts and
25
the corporation upon receiving permission in accordance with
25
at such .times as the board of directors thereof may require,
22
24
25
I
The sums so paid to the corporation shall be used exclusively
rr)
for such purposes. As used in this paragraph the term
9
under such terms and conditions as may be agreed upon
'State bank' shall include any savings bank, trust com-
9
by the corporation, provided that the obligations so incurred,
pany, or other banking institution, authorized to accept de-
4
together with all other outstanding obligations of the corpo-
4
collateral security to the corporation's promissory notes,
ration, shall not be in excess of four times the amount of its
5 posits, organized under the laws of any State, and which
6 is not a member of the Federal reserve system.
"(o) The corporation is authorized and empowered
6 capital.
7
"(p) All notes, debentures, bonds, or other such obliga-
8
to issue and to have outstanding at any one time in an
tions issued by the corporation shall be exempt, both as to
9
amount aggregating not more than four times the amount
9 principal and interest, from all. taxation (except estate and
10 of its capital, its notes, debentures, bonds, or other such obli-
10 inheritance taxes) now or hereafter imposed by the United
11
gations, to be redeemable at the option of the corporation
12
before maturity in such manner as may be stipulated in
12
or by any State, county, municipality, or local taxing author-
13
such obligations, and to bear such rate or rates of interest,
13
ity. The corporation, including its franchise, its capital,
14
and to mature at such time or times as may be determined
14
reserves, and surplus, and its income, shall be exempt from
15
by the corporation: Provided, That the corporation may sell
15
all taxation now or hereafter imposed by the United States,
16
on a discount basis short-term obligations payable at maturity
16
by any Territory, dependency, or possession thereof, or by
17
without interest. The notes, debentures, bonds and other
17
any State, county, municipality, or local taxing authority,
18
such obligations of the corporation may be secured by assets
16
except that any real property of the corporation shall be
19
of the corporation in such manner as shall be prescribed
19
subject to State, Territorial, county, municipal, or local tax-
20
by its board of directors. Such obligations may be offered
20
ation to the sameextent according to its value as other real
21
for sale at such price or prices as the corporation may
21
property is taxed.
22
determine.
22
23
empowered to dispose of any promissory note of any receiver
such forms of notes, debentures, bonds, or other such obliga-
24
evidencing loans made by the corporation, and to pledge
21. tions as it may need for issuance under this Act, the Secre-
such receivers' notes and any of the corporation's assets ,as
25
The corporation is further authorized and
States, by any Territory, dependency, or possession thereof,
"(q) In order that the corporation may be supplied with
tary of the Treasury is authorized to prepare such forms as
27
• 26
1 shall be suitable and approved by the corporation, to be held
warning of the reserve bank of the district or of the Federal
2 in the Treasury subject to delivery, upon order of the corpo-
Reserve Board to the contrary, increase its outstanding
The engraved plates, dies, bed pieces, and other
3 loans made upon collateral security, or made to the mem-
3 ration.
4 material executed in connection therewith shall remain in the
4
bers of any organized stock exchange, investment house,
5 custody of the Secretary of the Treasury. The corporation
5
or dealer in securities, upon any obligation, note, or bill,
6 shall reimburse the Secretary of the Treasury for any
6 secured or un:gecured, for the purpose of purchasing
7 expenses incurred in the preparation, custody, and delivery
7 and/or carrying investment securities (except obligations
8 of such notes, debentures, bonds, or other obligations."
8 of the United States) such advance shall be immediately
9
SEC. 11. The seventh paragraph of section 13 of the
9
due and payable, and such member bank shall be ineligible
10
Federal Reserve Act, as amended, is amended to read as
10
as a borrower at the reserve bank of the district upon fifteen-
11
day paper for such period as the Federal Reserve Board shall
"Any Federal reserve bank may make advances to its
12
determine. The Federal Reserve Board shall have pother
13 member banks on their promissory notes for a period of not
13
from time to time in its discretion by unanimous vote of its
14 exceeding fifteen days at rates to be established by such Fed-
14-
members to suspend the provisions of this paragraph in whole
15 oral reserve banks bank, which rates shall in all cases be at
15
or in part, whenever in its opinion the public interest shall
16 least 1 per centum higher than the rediscount rate then in
16
call for such action. Each such suspension shall be for a
17 force at such reserve bank, subject to the review and deter-
17
period of ninety days and may be renewed for one addi-
mination of the Federal Reserve Board, provided such prom-
18
tional period of ninety days' upon unanimous vote of the
19 issory notes are secured by such notes, drafts, bills of
19
members of the board."
20 exchange, or bankers' acceptances as are eligible for redis-
20
SEC. 12. Section 14 of the Federal Reserve Act,
count or for purchase by Federal reserve banks under the
21
as amended, is amended by adding at the end thereof
if follows:
12
18
21
22 provisions of this Act, or by the deposit or pledge of bonds
22 the following new paragraph:
23 or notes of the United States. If any member bank to
23
24
which any such advance has been made shall, during the
24 stowed upon the Federal Open Market Committee by sec-
25
life or continuance of such advance, and despite an official
25
"(g) Subject to the powers conveyed to and be-
tion 12A of this Act, the Federal Reserve Board shall
29
.28
• exercise special supervision and control over all relationships and transactions of any kind entered into by any Fed-
1
"SEC. 19.(a) 'Demand deposits' within the mean-
2 ing of this Act shall comprise all deposits payable within
3 eral reserve bank with any foreign bank or banker, or with
3 thirty days,. and 'time deposits' shall comprise all deposits.
any group of foreign banks or bankers, and all such rela-
4 payable after thirty days, all savings accounts and certifi,
tionships and transactions shall be subject to such regula-
5 cates of deposit which are subject to not less than thirty daysf
tions, conditions, and limitations as the board may prescribe.
6 notice before payment, and all postal-savings deposits."
4
"(b) Every bank, banking association, or trust corn-
7 No officer or other representative of any Federal reserve
7
8 bank shall conduct negotiations of any kind with the officers
8 pany which is or which becomes a member of any Federal
9 or representatives of any foreign bank or banker without
9 reserve bank shall establish and maintain reserve balances
10 first obtaining the permission of the Federal Reserve Board.
10 with its Federal reserve bank as follows:
11
11
The Federal Reserve Board shall have the right, in its dis-
"(a) (1) If not in a reserve or central reserve city as
12 cretion, to be represented in any conference or negotiations
12 now or hereafter defined, it shall hold and maintain with'
13 by such representative or representatives as the board may
13 the Federal reserve bank of its district an actual net
14 designate. A full report of all conferences or negotiations,
14 balance equal to not less than 7 per centum of the aggre-
15 and all understandings or agreements arrived at or trans-
15
gate amount of its demand and time depOsits Em4
16
16
per ecntum of its time deposits: Provided, That the said
actions agreed upon, and all other material facts appertain-
17 ing to such conferences or negotiations, shall be filed with the
17 net balance maintained against time deposits shall be 3 per
18 Federal Reserve Board in writing and signed by all repre-
18 centum -during the calendar year 1932, and shall be increased
19 sentatives of the Federal reserve bank attending such confer-
19 at the rate of four-fifths of 1 per centum on the 1st day of
20
ences or negotiations regardless of whether or not the Federal
20
January in each calendar year thereafter until it shall
21
Reserve Board shall be represented at such conferences or
21
equal 7 per centum as hereinbefore prescribed.
22
negotiations."
23
24
SEC. 13. Section 19 of the Federal Reserve Act, as
amended, is amended to read as follows:
22
"(1)) (2) If in a reserve city as now or hereafter de-
23 fined it shall hold and maintain with the Federal reserve bank
24
of its district an actual net balance equal to not less than 10
31,-
30 •
1
per centum of the aggregate amount of its demand and time
2 deposits awl
i
reserve city or in territory added to such city by the extension of its corporate charter it may, upon the affirmative.
pef centum of its time deposits: Provided:
3 That the said net balance hereinbefore required to be main-
3
vote of five members of the Federal Reserve Board, hold
4 tamed against time deposits shall be 3 per centum during the
4
and maintain the reserve balances specified in paragraphs
5 calendar year 1932, and shall be increased at the rate of 11
5
(a) (1) and (la) (2) hereof.
6 per centum, on the 1st day of January in each calendar year
"(c) No member bank shall keep on deposit with any
7 thereafter until it shall equal'10 per centum as hereinbefore
7
8 prescribed: Provided further, That if located in the outlying
8 sum in excess of 10 per centum of its own paid-up capital,
9 districts of a reserve city or in territory added to such a
9 and surplus. No member bank shall act as the medium or,
State bank or trust company which is not a member bank a
10 city by the extension of its corporate charter it may, upon
10 agent of a nonmember bank in applying for or receiving dis-
IX
the affirmative vote of five members of the Federal Reserve
11
counts from a Federal reserve bank under the provisions of.
D. Board, hold and maintain the reserve balances specified in
12
this Act except by permission of the Federal Reserve Board.
13 paragraph -(ft-)- (1) hereof.
13
"(d) No member bank shall act as the medium or
14
"(c) (3) If in a central reserve city as now or here-
15
after defined it shall hold and maintain with the Federal
15
making loans protected by collateral security; and no mem-
16 reserve bank of its district an actual net balance equal
it;
ber bank shall make loans or discount paper for any
17
to not less than 13 per centum of the aggregate amount
17 corporation or individual if the proceeds of such trans-
18
of its demand and time deposits ft-fri
pef ccntum of
18
action are to be used directly or indirectly for the purpose
19 its time deposits: Provided, That the said net balance
19
of making loans protected by collateral security in favor
20
hereinbefore required to be maintained against time deposits
20 of any investment banker, broker, member of any stock
21
shall be 3 per centum during the calendar year 1932, and shall
21 exchange, or any dealer in securities. Every violation of
22
be increased at the rate of 2 per centum on the 1st day of Jan-
22
14 agent of any nonbanking corporation or individual in
this provision by any member bank shall be punishable by
23 uary in each calendar year thereafter until it shall equal 13
23 a fine of not less titan $100 per day during the continuance
24 per centum as hereinbefore prescribed: Provided, however
24
25
further, That if located in the outlying districts of a central
of such violation, but it shall be a good defense that the
32
1
borrower at the time of obtaining such loan or discount from
2 a member bank made a sworn statement that the proceeds
3 of the transaction would not be used for such purpose.
4
"(e) The required balance carried by a member bank
5 with a Federal reserve bank may under the regulations, and
6 subject to such penalties as may be prescribed by the Fed7 eral Reserve Board, be checked against and withdrawn by
8 such member bank for the purpose of meeting existing
9 liabilities: Provided, however, That no bank shall at any
10 time make any new loans or shall pay any dividends unless
11.' and until the total balance required by law is fully restored.
12
"(f) No member bank shall sell or transfer to another
13
member bank, or to a nonmember bank, private banking
14
house, or banker, any balance standing to its credit upon
15
the books of the Federal reserve bank of its district in excess
16
of the balances required by this section unless the Federal
17 Reserve Board shall have first authorized by general order
18
the making of such sales or transfers within such district
19
or between such district and another Federal reserve dis-
• 20
trict, but no such sale or transfer shall be made by any such
21
bank without first charging and reserving a fee to be fixed
22
by the Federal Reserve Board on the basis of the rate of
23 discount then charged upon ninety-day paper by the Federal
24
reserve bank of the district in which the bank making such
25
sale or transfer is located.
33'
"(g) The Federal Reserve Board shall have power to
2 suspend all dealings in reserve balances for such period
3
as it may deem best. In estimating the reserve balances
4 required by this Act, the net difference of amounts due to
5 and from other banks shall be taken as the basis for ascertaining the deposits against which required balances with
7
Federal reserve banks shall be determined; and the liability
Ei
created by every repurchase or other similar agreement
9 entered into by a member. bank shall be added to such net
10
difference as ascertained under the provisions of this
11
paragraph.
12
"(h) National banks, or banks organized under local
13 laws, located in Alaska or in a dependency or insular
14
possession or any part of the United States outside the
15
continental United States may remain nonmember banks
16
and shall in that event maintain reserves and comply with
17
all the conditions now provided by law regulating them; or
11.4
said banks may, with the consent of the Reserve Bear-4
19
board, become member banks of any one of the reserve dis-
20
tricts and shall in that event take stock, maintain reserves,
21
and be subject to all the other provisions of this Act."
22
_J o
24
Sm. 14. Section 24 of the Federal Reserve Act, as
amended, is amended to read as follows:
"SEC. 24. Any national banking association may make
25 loans secured by first lien upon improved real estate, includ-
J. 107143
3
31
86
I
ing improved farm land, situated within its Federal reserve
2
district or within a radius of one hundred miles of the place
I
2 upon the value of real estate shall be counted for the purposes
3 in which such bank is located, irrespective of district lines.
4
3 of this section as real-estate loans. Every such bank may apply
A loan secured by real estate within the meaning of this
4 the moneys deposited therein as time deposits to the loans herein
5 section shall be in the form of an obligation or obligations
41
5
secured by mortgage, trust deed, or other such instrument
I
7 invest under the law of the State where such national bank is
or obligations is made or is sold to such association. The
8 situated, or where there is no such law relating to investments
amount of any such loan shall not exceed 50 per centum
of the actual value of the real estate offered for security,
11
but no such loan upon such security shall be made for a
authorized and the balance of such tinie deposits shall be
6 invested in property and securities in'which savings banks may
upon real estate when the entire amount of such obligation
10
premises and unsecured loans whose eventual safety depends
9
by savings banks, in such property and securities as may be
10 specified by the Comptroller of the Currency: Provided, That
12 longer term than five years. Such valuations shall be
11
every member bank shall be required to report its investments
12
in, or holdings of, any such property and securities at an
13
aggregate valuation which shall not exceed the aggregate
13
revised by the Comptroller of the Currency at the time
14
of each examination of the bank making the loan and he
14
market value thereof at the time such reports to the Comp--
15
shall have power to order changes therein and to require
15
troller or to the Federal Reserve Board are made: Provided
16
the adjustment of loans to such revised valuations. Any
16
further,' That the reserve against time deposits required by
•
17
such bank may make such loans in an aggregate sum, in-
17
section 19 of this Act shall be counted as a corresponding
18
cluding in such aggregate any such loans on which it
18
part of such investments. All the property of any insolvent
19 is liable as indorser or guarantor .or otherwise, equal to
19
national bank acquired under this section sh('ill be applied by
2.5 15 per centum of the amount of the capital stock of such
2()
the receiver thereof in the first place ratably and
21
association actually paid in and unimpaired and 25 15 per
21
to the payment in full of its time deposits. Such banks
92
centum of its unimpaired surplus fund, or to one-half of
92
may continue hereafter as heretofore to receive time and
-0
savings deposits and to pay interest on the same, but the
24 ject to the general limitation contained in section 5200 of the
24
rate of interest which such banks 'hay pay upon such time
25 Revised Statutes of the -United States. Investments in bank
25
deposits of u-pen savings or other deposits shall• not exceed
2(1
93 its savings time deposits, at the election of the association, sub-
portion-
36
G:e
4
31
the maximum rate authorized by law to be paid upon such
the provisions of this title: Provided, T-litit the business of
deposits by State banks or trust companies organized under
buying and selling iffixestment fleeuritiefi shall hereafter be
the laws of the State wherein such national banking
3 limited to buying and selling without feeourse marketable
association is located.
4-
obligations Q-A-dewing indelitedness of any person, eopart-
5
nership, asseeiation, of corporation, in the feffli of bonds
5
"Every national banking association and every mem-
6
ber bank which is in existence at the date this section as
Rotes, and/or 4ebentures, commonly known as investment
7
amended takes effect shall be required, within, a period of
securities, under suet} further definition of the term "invest
8 two years from such date, to comply fully with the provisions
9 of this section, and every national banking association here-
S
ment fleeurities" as may by regulation be prescribed by the
9
Comptroller of the Currene
and the total amount of such
10
after organized and every State bank or trust company
11
hereafter becoming a member of the Federal reserve system
t
such ftsseeifttioft shall at no time ei-ceed 2-5 per ceRtum of
12
shall comply with the provisions of this section from the date
12
the amount of the eft-pital stock of such association
13
of its organization or admission to membership, as the case
13
actually paid in and unimpaired and .25 per centum of
14
may be."
14
its unimpaired surplus fund, but this limitation as to
15
total fifftettfit; and generally by engaging in all forms
16
of banking business and undertaking all types of bank-
17
ing transactions that may, by the laws of the State
18
in which such bank is situated, be permitted to banks of
19
deposit and discount organized and incorporated under the
20
laws of such State, except in so far as they may be for-
21
bidden by the provisions of the National Bank Act, as
22
amended, the Federal Reserve Act, as amended, or any
99
-0
other laws of the United States.
24
chasing and selling investment securities shall hereafter
25
be limited to purchasing and selling such securities without
13
SEC. 15. Paragraph "Seventh" of section 5136 of
16
the Revised Statutes, as amended, is amended to read as
17
follows:
1R
"Seventh. To exercise by its board of directors or
19
duly authorized officers or agents, subject to law, all such
20 incidental powers as shall be necessary to carry on the busi21
ness of banking; by discounting and negotiating promissory
29 notes, drafts, bills of exchange, and other evidences of debt;
23
by receiving deposits; by buying and selling exchange, coin,
24
and bullion; by loaning money on personal security; and
25
by obtaining, issuing, and circulating notes according to
10 investment fleeuritief3 of any one obligor
Of
maker held by
The business of pur-
38
3"
recourse, solely upon the order, and for the account of,
the law of any State to conduct a safe deposit business in
2 customers, and in no case for its own account, and no such
2 an amount in excess of 15 per centum of the capital stock
of such association actually paid in and unimpaired and
3.
association shall underwrite any isme of securities; except
4
that any such association may purchase and hold for its
5 own account investment securities to such an amount and
4 per centum of its unimpaired surplus."
5
SEC. 16. Section 5138 of the Revised Statutes, As
6
of such kind a may be by regulation prescribed by the
7
Comptroller of the Currency, but in no event shall the
8
total amount of such investment securities of any one obligor
9
or maker held by such association exceed 10 per centum of
10
the total amount of such issue outstanding, nor shall the total
ciations with a capital of not less than $50,000 may, with
11
amount of the securities so purchased and held for its own
the approval of the Secretary of the Treasury, be organized
12
account at any time exceed 15 per centum of the amount
13
of the capital stock of such association actually paid in
and unimpaired ,and 25 per centum of its unimpaired sur-
13 thousand inhabitants, and except that such associations with
- plus fund. Except as hereinafter provided or otherwise per-,•
j.)
I 6 mitted by law, nothing herein contained. shall •authorize the
15 of the Secretary of the !freasury, he or-gal:timed in any iike6
lc the population of which flees +let ex-eee€1 three thettsfttifl
17
purchase or holding of any shares of stock of any corporation
17 itthabitaats formed for the purpose of succeeding to the busi4
is
by any such association. The limitations herein contained as
18
ness of an existing bank may, in the discretion of the Comp-i
19
to the purchasing and selling of investment securities shall not
19
troller of the Currency, be organized with a lesS capital thaii
20
apply to obligations of the United States, or general obliga-
21) $50,000, but in no event less than $25,000. No such ass'o.:
21
tions of any State or of any political subdivision thereof, or
21
22
obligations issued under authority of the Federal Farm Loan
22 exceeds fifty thousand persons with a capital of less than
23 Act: Provided, That in carrying on the business commonly
93 $200,000, except that in the outlying districts of such 'a
24 known as the safe deposit business no such association shall
24 city where the State laws permit the organization of State
25 invest in the capital stock of a corporation organized under
25
14
amended, is amended to read as follows:
7
"SEC. 5138. After this section as amended takes effeqt,
8
no AT-e national banking association shall be organized
9
with a less capital than $100,000, except that such asso-
12
in any place the population of which does not exceed six
14 a capital of Rot less than $-2-53000 may, with the safietieft
ciation shall be organized in a city the population of which_
banks with a capital of $100,000 or less, national banking
40
associations now organized or hereafter organized may, with
tion to his shares succeed to all the rights and liabilities of the
2 the approval of the Comptroller of the Currency, have a
2 prior holder of such shares, and no change shall be ma4e
3 capital of not less than $100,000."
9
1
4
SEC. 17. Section 5139 of thr Revised Statutes is
5 amended to read as follows:
in the articles of association by which the rights, remedies,
4 or security of the existing creditors of the association shall
5 be impaired."
"SEC. 5139. The After this section as amended takes
6
SEC. 18. From and after January 1, 1933, no directdt,
7 effect, the capital stock .of each association shall be
7
officer, or employee, of any national bank or member bank
8 divided into shares of $100 each-5--or into shapes of saell lees
8
shall be (a) an officer of any unincorporated association or
9 amotaft as may he pre-IT-Wed in. the articles of ffsseeiation, and
9
corporation engaged primarily in the business of purchasing,
10
be deemed personal property and transferable on the books
10
selling, or negotiating securities, or (b) an employee of any
11
of the association in such manner as may be prescribed in
11
such unincorporated association or corporation, or of any
12 the by-laws or articles of association; and any such associa-
12
4
individual or partnership engaged in such business, or (c)
13
tion which has certificates of stock outstanding on the date
13
director, officer, or employee of a corporation organized for
14
this section as amended takes effect which do not comply with
14
any purpose whatsoever which shall make loans secured by
15
the provisions of this section as amended shall, within two
15 'collateral to any corporation other than its own subsidiaries,
6
16 years after such date, issue new certificates in compliance
ig
or to any individual, association, or partnership; and no
17
17
national bank or member bank shall perform the functions of
with such provisions. No certificate representing the stock
18 of any such association shall represent the stock of any other
18 a correspondent bank on behalf of any such individual,
19 corporation, nor shall the ownership, sale, or transfer of any
19 partnership, unincorporated association or corporation; and
20 certificate representing the stock of any such association be
90 no such individual, partnership, unincorporated association
21
21
conditioned in any manner whatsoever upon the ownership,
or corporation shall perform the functions of a correspondent
22 sale, or transfer of a certificate representing the stock of any
22 for any national bank or member bank or hold on deposit
23 other corporation. Every person becoming a shareholder
2:1
any funds on behalf of any national bank or member bank.
24 by such transfer as permitted by this section shall in propor-
24
SEC. 19. Section 5144 of the Revised Statutes, as
25 amended, is amended to read as follows:
43
42
1
"SEC. 5144. In all elections of directors and in decid-
1
Reserve Board may, in its discretion,
or Withhold
such permit as the public, interest may require but no such
ing all questions at meetings .of shareholders, each share3 holder shall be entitled to one vote on each share of
stock
permit shall be granted except upon the following conditions:
(a) Every such affiliate, association, corporation, or
4 held actually owned by him as the result of bona fide
4
5 purchase, gift, or inheritance and no shareholder who
shall
A. partnershiy
. 6 become such sthroggh.nomin,al transfer, or ownership on behalf
timid
shall, at the time of making the application
6 for such permit, enter into an agreement with the, pomp-
No corporation, associa-
7
troller of the Currency (1) to receive at such periodical
lion, or partnership which is the owner of more than 10 per
8
intervals as shall .be prescribed by the Comptroller, on dates
.7 'of another, shall cast such vote.
9 centum of the stock of any such national bank and no officer,
9 identical with those fixed for the examination, of national
10 disrectoror employee of such corporation, association, or part-
10
banks, examiners representing and acting for the Comp-
nership,sk,all cast a ballot in such elections or meetings either
11_
troller who .shall make an examination of its financial condition with the same degree of care as in the case of anl
12 on shares,of stock owned by the corporation pr by such officer,
13
director, or employee. Shareholders may vote by proxies
1.3
examination of a national bank, such examination' to ,be at
14
duly authorized in writing; but no officer, clerk, teller, or
14
the expense of the affiliate, corporation, association, or
15
bookkeeper of such fts.seeiettitai bank shall act as proxy; and
15
partnership so examined; (2) that the report of the xam-
10
no shareholder whose liability is past due and unpaid shall
10
shall set forth all the facts ascertained by the examina-
17
be allowed to vote."
17
tion and shall include a statement of the name, location,
18 capital, surplus, and undivided profits of each bank in which
18
SEC. 20. Notwithstanding the provisions of section
19
5144 of the Revised Statutes, as amended by this Act, any
19
the applicant owns stock, the number of shares so owned, the
20
affiliate, or any association, corporation, or partnership other
than an affiliate, which owns or controls shares of stock in any
20
par and book value of such shares, the number of shares of
21
bank stock acquired and sold since the last examination, and
national bank may make application to the Federal Reserve
22
other assets of such affiliate, corporation, association, or
Board for a voting permit entitling it to cast one vote at all
elections of directors of such national bank on each share of
23
partnership (including under separate headings obligations
24
of the United States, and the value and nature of other
25
securities owned)
; and (3) that the Comptroller may
21
25
stock actually owned or controlled by it.
The Federal
45
44
1
examine each national bank owned or controlled by such
or owned by such affiliate association, corporation, or part-
9
affiliate, association, corporation, or partnership, both indi-
nership (but sums advanced during the years 1931 and 1932
vidually and in conjunction with others so owned or
for the replacement of capital in banks owned by such affiliate,
4
controlled, and may require publication periodically of
5 individual or consolidated statements of condition of such
4
5 incurred or charge-offs made by it during those years, may
6 bank;
•
association, corporation, or partnership, or for losses
be counted, up to 10 per centum of the aggregate par value
7
(b) Every such affiliate, association, corporation, or
8
partnership shall hold free of any lien or claim thereon
8
and (2) shall reinvest in assets other than bank stock all
9
obligations of the United States in an amount equal
9
net earnings over and above •6 per centum per annum on
10 to 10 per centum of the total of capital stock owned by
io
the book value of its own shares outstanding until such
11
it in any national bank and shall agree (1) that in the
11
assets shall equal the outstanding par value of bank shares
12
event of failure of any national bank in which it shall hold
19
owned by it: Provided, That from and after January 1,
13
stock the stockholders' liability accruing on account of such
13 1935, the 25 per centum requirement hereinbefore provided
14
stock shall be a first lien upon the obligations so held, and(2)
14
for shall be increased by not less than 2 per centum per
15
that any deficiency in such obligations due to their use in
15
annum, but at no time shall the assets held Jo meet any future
I
meeting claims under (1) above shall be made up within
1r) stockholders' liability be less than the total assets held by
17
ninety days after such deficiency occurs;
17
such affiliate, association, corporation, or partnership on
January 1, 1932;
of bank stocks held or owned by it, as a part of such assets);
18
(c) Every such affiliate, association, corporation, or
1S
19
partnership (1) shall possess at the time of the issuance of
19
(d) Every officer and employee of such affiliate, asso-
20
such voting permit, and shall continue to possess during the
20
ciation, corporation, or partnership shall be subject to the
21
life of such permit, free and clear of any lien, pledge, or hy-
21
same penalties for false statement as are applicable at the
22
pothecation of any nature, assets other than bank stock which.
9)
time of making such statement to the officers and employees
23
together with the amount of the obligations of the United
2:3
of national banks; and
24
States hereinbefore required to be held, shall not be less than
24
(e) Every such affiliate, association, corporation, or
25
25 per centum of the aggregate par value of bank stocks held
25
partnership shall, at the time of application for such voting
47
46
The Federal Reserve Board may, in its cliscretion,
1
permit, (1) file a statement with the Comptroller of the
1
2
Currency that it does not own, control, or have. any interest
2 revoke any such voting permit after giving sixty days'
notice by registered mail of its intention to the affiliate,
3 in, 07' is not participating in the management or direction of,
3
4 any affiliate formed for the purpose of, or engaged in, the
4 association, corporation, or partnership.
Federal Reserve Board shall have revoked any such
5 issue, 'IIIn underwriting public sale, or distribution
6 at wholesale dr retail or through syndicate participation of
Whenever the
6
voti?igs permit 0,o n,ational ban,k whose stock is owned in
whole or in part
stS cks, bonds, debentures, notes, or other securities of any
by the affiliate, association, corporation, or
sort, and that during the. period that the permit remains
8
partnership whose permit -is so revoked shall receive depos-
in force it will not acquire any ownership; control, or
9
its of United States moneys, nor shall any such national
II' in the management
10
bank pay any further dividend to such affiliate, association,
or direction thereof, or (2) agree that if at the time of
11
corporation, or partnership
12 filing the application for such permit it owns, controls,
12
owned or controlled
13
or has an interest
or is participating in. the management
13
tion, or partnership.
14
or direction of, any such affiliate, it will, within two years
14
15
after the filing of such application, divest itself of its owner-
15
8
10 interest in any such affiliate or II
11
by such
IS
any shares of such bank
affiliate, association, corpora-
SEC. 21. Paragraph (c) of section 5155 of the Reviged
Statutes, as amended, is amended to read as follows:
A national banking association may, with -the
ship, control, and interest in s'ueli, affiliate and will cease
17
participating in the management or direction thereof, and
17
approval of the Federal Reserve Board, after the date
18
will not thereafter, during the period that the permit remains
18
ef the appr-ei.ial ef this Aet this paragraph as amended
19
in force, acq-uire any further ownership, control, or interest
19
takes effect, establish and operate new branches widlin the
20 ;n any such affiliate or participate in the m,anagement or
20 limits of the city, town, or village, or at any point within the
21
21
direction thereof, and (3) agree that thenceforth it will
ment and operation are at the time permitted to State banks
22 declare dividends only out of actual net earnings as indi23
cam by
24
Comptroller.
the last preceding examination made by the
State in which said association is situated, if such establish-
23
by the law of the State in pestion: Provided, That, if by
24
reason of the proximity of such an association to a State
48
1
•
boundary line, the ordinary and usual business of such asso-
2 ciation is found to extend into an adjacent State, the Federal
3 Reserve Board may permit the establishment of a branch or
4 branches by such association in an adjacent State but not
5
beyond a distance of fifty miles from the seat of the parent
6
bank. No such association shall establish a branch out-
7
side of the city, toivn, or village in which it is situated unless
8
it has a paid-in and unimpaired capital stock of. not less
9 than $500,000. The aggregate capital of every national
10
banking association and its branches shall at no time be
11
less than the aggregate minimum'capital required by law
19 for the establishment of an equal number of national bank13 ing associations situated in the various places ivhere such 14
association and its branches are situated."
15
SEC. 22. Sections 1 and 3 of the Act entitled "An Act
16
IIIovide for the consolidation of national banking associa-
17
tions
18
amended by striking out the words "county, city, town, or
19
village" wherever they occur in each such section, and
approved November 7, 1918, as amended, are
20 inserting in lieu thereof the words "State, county, city,
21
9.)
town, or village."
SEC. 23. The first two sentences of section 5197 of the
23 Revised Statutes are amended to read as follows:
24
"Any association may take, receive, reserve, and
charge on any loan or discount made, or upon any notes,
49.
.1
bill bills of exchange, or other evidences of debt, interest at
9
the rate allowed by the laws of the State, Territory, or Dis-
3
trict where the bank is located, or at a rate of 1 per centum
4
in excess of the discount rate of the Federal reserve bank in
5
the Federal reserve district where the bank is located, which-
6 ever may be the greater, and no more, except that where by
7 the laws of any State a different rate is limited for banks of
8
issue organized under State laws, the rate so limited shall be
9 allowed for associations organized or existing in any such
10
State under this title. When no rate is fixed by the laws
11
of' the State, or Territory, or District, the bank m4y take,
12
receive, reserve, or charge a rate not exceeding 7 per centum,
3 or 1 per centum in excess of the discount rate of the Federal
14
reserve bank in the Federal reserve district where the bank
15
is located, whichever may be the greater, and such interest
16
may be taken in advance, reckoning the days for which the
17
note, bill, or other evidence of debt has to run."
18
SEC. 24: No national banking association or member
10
bank shall promise or pay to its depositors as a considerar
20
tion for the maintenance of deposit balances or accounts a
21
rate of interest in excess of one-half the rate of interest spec-
22
ified in section 5197 of the Revised Statutes, as amended)
and whenever such depositors are bankers who maintain
24
balances with other banks, no such association or member
J 107143-1
51
50
1
(c) Section 5200 of the Revised Statutes, as amended,
1
bank shall promise or pay for the maintenance with it of
excess of the
2 such bankers' balances a rate of interest in
reserve bank of the
3 current rate of discount of the Federal
2 is further amended by adding at the end thereof the follow-
located, or in excess
4 district in which the depositary 'bank is
r rate shall be the
5 of 24--- per centum per annum, whicheve
4
3 ing new paragraphs:
"The aggregate amount of the obligations (including
5 repurchase agreements) of all the affiliates of a national
6 banking association shall not at any time exceed 10 per
6 smaller.
As
•
SEC. 25. (a) The second sentence of the first para-
7 centum of the capital stock of such association actually paid
as amended,
8 graph of section 5200 of the Revised Statutes,
is amended by inserting before the period at the end thereof
, in and unimpaired and 10 per centum of its unimpaired
9 surplus fund: Provided, That loans collateraled by Govern
and shall include in the case of obligations
10
ment bonds, or by bonds issued by the State in which such
11
of.a corporation all obligations of all subsidiaries thereof."
11
bank is situated, or issued by any political subdivision of
19
(b) Paragraph (8) of section 5200 of the Revised
10 the following:
44
12 such State, shall not be included within the foregoing limi-
the
13 Statutes, as amended, is amended by inserting before
14 period at the end thereof a colon and the following: "Pro-
13
tations if actually owned by the borrower from such bank.
14
"Within three years after this section as amended takes
vided, That no obligation of a broker or member of any
15
effect, every affiliate shall be capitalized through the sale of
stock exchange or similar organization, or of any finance
16 its own stock, which shall be paid for in full in cash upon
17 company, securities company, investment trust, or other
18 similar institution, or of any affiliate, shall be entitled to the
17
the same terms and conditions'as provided in section 5140
18
of the Revised Statutes, as amended, in the case of national
benefits of the foregoing exceptions, but such obligations
19
bank stock; and no national bank shall establish or capitalize
19
per
20 shall in every case be subject to the limitations of 10
21 centum hereinbefore set forth in this section; except that the
20 an affiliate through cash or stock dividend declarations made
the
22 total obligations of an affiliate shall in no case exceed
`) said 10 per centuin limitations, or the amount of the capital
22 at any time during such three-year period hold, or lend upon,
24 stock of said affiliate actually paid in and unimpaired, which-
24 of the parent institution."
25 ever may be the smaller."
21
23
from its surplus or from undivided profits. No affiliate shall
more than 10 per centum of the shares of the capital stock
sa3
52
(SEe. 26. Nothing in section 5200 f the Revised Stat-
‘I
corresponding report of the associ,ation; except that the
2 •utes, as amended, shall be construed to permit a member
Comptroller m,ay, in his discretion, extend such time for
bank to lend to any individual or corporation upon collateral
good cause shown. Each such report shall exhibit in
3
detail and under appropriate heads, the h,oldings of the
4 security an amount in excess of 10 per centum of its capital
4
5 stock actually paid in and unimpaired and 10 per centum
5 affiliate in question, their cost and present value, the ex-
6 of its unimpaired surplus fund, or an amount in excess of
6 penses of operation for the preceding year, and the balance
the percentage of sueh capital and surplus fund as shall
, sheet of the enterpri,se. It shall be the duty of the presi-
from time to time be designated by the Federal Reserve
dent of such association to.satisfy himself as to the correctness
9 Board in accordance with subsection (m).of section 13 of the
$) of the report before transmitting the same to the Comptroller.
10 Federal Reserve Act, as amend,ed, whichever ,is the smaller.
I()
The reports of its affiliates shall be published by the
SEC. ,27. Section 5211 of the Bevis.ed Statutes, as
i
association under the same conditions as govern its own
11
12 amended, is amended by adding at the end thereof the
12 condition reports. Ile Comptroller shall also have power
13 following new paragraph:
13 ,to ,call for special reports with respect to any such affiliate
"Each affiliate of a national banking association shall
14
whenever in his judgment the same are necessary in order
15 make and furnish to the president of the association, for
15
to obtain a full and complete knowledge of the conditions
transmission by him to the Comptroller of the Currency,
16
of the association with which it is affiliated. Any affiliate
17 not less than three reports during each year, in such form
17
which fails to make and furnish any report required of
14
16
L18
as the Comptroller may prescribe, verified by th,e oath or
18 it under this section, and any association whose president
19
affirmation of the president or such .other o
as may be
19 fails to transmit as required by this section any such report
20 designated by the board of directors of such affiliate to
20 furnished to him, shall be subject to a penalty of $100 for
verify such reports, covering the condition of such affiliate
21
. Provided,
each day during whi,ch such failure continues:
22 on dates identical with those for which the Comptroller
22
That every affiliate which shall be indebted to any bank
23 ,shall during such year require the reports of the co.ndition
23 or banks to an amount exceeding 5 per centum of the
24 of the association. Each such, report of an affiliate shall
24 capital and surplus of its parent bank shall publish its entire
21
25
be transmitted to the Comptroller at the same time as the
25
portfolio at a date and in a manner to be prescribed by
'54
the Comptroller of the Currencey but not oftener than once
1
annually, and every affiliate which shall 1)6 so indebted to
2
authorized, to
Currency shall have power, and he is hereby
any national bankpublish the report of his examination of
4
shall not within one
ing association or affiliate whieh
tion of the recomhundred and twenty days after notifica
6
ller, based on said
mendations or suggestions of the Comptro
satisfacexamination, have complied with the same to his
an amount in excess of 10 per centum of the capital and
4 surplus of its parent bank shall be required to publish its
t, portfolio in at least one daily newspaper issued in the place
6
where such bank is located within ten days after receiving
2
notice therefor from the Comptroller, but such publication
8
shall not be considered as a substitute for the annual pub-
9
lication hereinbefore required."
10
SEC. 28. The first paragraph of section 5240 of the
prior to such publicity shall be
notice
days'
Ninety
tion'.
7
given to the bank or affiliate."
of the CompSEC. 29. (a)• Whenever, in the opinion
9
director or officer of a national
10 troller of the Currency, any
11
Revised Statutes, as amended, is amended by inserting before
ii
12
the period at the end thereof a colon and the following proviso:
12
13
"Provided, That during the period of three years after this
13
14
section as amended takes effect, in making the examination
15
of any national bank or of any other member bank, the
16
examiner shall include an examination of the affairs of all
17
affiliates of such bank, and in the event of the retusal to give
18
any information required in the course of the examination
19
of any such affiliate, or in the event of the refusal to permit
20 such examination, all the rights, privileges, and franchises
21
of the bank shall be thereby forfeited, if a national bank,
22
and if a bank or trust company organized under the law of
23 any State, membership in the Federal reserve bank of its
24
district shall be forfeited and no notice of the termination of
25
such membership shall be required. The Comptroller of the
Digitized lim
for FRASER
business in the
bank, or of a bank or trust compang doing
opinion of a FedDistrict of Columbia, or whenever, in the
of a member bank
eral reserve agent any director or officer
l bank), shall have per14 of his district (other than a nationa
to such bank or trust
15 sistently violated any law relating
unsound praccompany or shall have continued unsafe or
or trust company,
tices in conducting the business of such bank
agent, as the case may
18 the Comptroller or the Federal reserve
Governor ,of. the Federal
19 •be, shall certify the facts to the
Governor of the Federal
20 Reserve Board. Thereupon the
such director or officer
21 Reserve Board shall serve notice upon
the Governor, the
to appear before a committee consisting of
17
22
reserve agent
Comptroller of the Currency, and the Federal
trust company is located
24 of the district in which such bank or
removed from office. If
25 to show cause why he should not be
56'
upon such, hearing the committee finds that such. director or
2 officer has persistently violated any such provision or has
3
been responsible for the continuance of any such unsafe and
4 unsound practices the committee may, in its discretion, by a
5, majority vote order that he be removed from office. A copy
6 of each su,ch order shall be served
IS
such director or
7 officer and upon the bank or trust company of tvhich he is a
8
director or officer. Any such director or officer upon whom
9 any such order has been served as herein provided and who
10 thereafto. participates in any manner in the management of
such bank or trust company shall be fined not more than
12
$5,000 or imprisoped not more than five years, or both.
113
SEC. 30. The right to alter, amend, or repeal this
14 Act is hereby expressly reserved. If any clause, sentence,
lo, paragraph, or part of this Act shall for any reason be
16 adjudged by any court of competent jurisdiction to be invalid,
17, such judgment shall not affect, impair, or invalidate the
18
remainder of this Act but shall be confined in its operation
19, to the clause, sentence, paragraph, or part thereof directly
20
involved in the controversy in which such judgment shall
91
have been rendered.
• ar
[CONFIDENTIAL COMMITTEE PRINT]
MARCH 17, 1932
72D CONGRESS1
1.11T SEBSION J
S
•
A BILL
To provide for the safer and more effective use
of the assets of Federal reserve banks and
of national banking associations, to regulate interbank control, to prevent the undue
diversion of funds into speculative operations, and for other purposes.
By Mr. Grass
MARCH —, 1932
Read
twice and referred to the Committee on
Banking and Currency
sytow --)1,1) (-)r)(1,
0-10-0t-t e
72D CONGRESS
1ST SESSION
Iv\ a.c
CI 0 Yurc t e.rttla
P -r )it ofI1r c )(_ t
QS
S. 3215
IN THE SENA TE OF THE UNITED STATES
4:44+tm4+1.,-2-1, 1932
c.)t
Mr. Gr,Ass introduced the following bill; which was read twice and referred
to the Committee on Banking and Currency
A. BILL
To provide for the safer and more effective use of the assets of
Federal reserve banks and of national banking associations,
to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other
purposes.
1
Be it enacted by the Senate and House of Representa-
0
tires of the United States of America in Congress assembled,
3 That the short title of this Act shall be the "Banking Act
4 of 1932."
5
SEC. 2. As used in this Act-
6
(a) The terms "hank," "national bank," "nation&
7 banking association," "member bank," "board," "district,
2
1 and "reserve bank" shall have the meanings assigned to
0 them in section 1 of the Federal Reserve Act, as
amended.
4
5
(b) The term "affiliate" -(except where otherwise
expressly defined) shall include the following:
(1) Any corporation in which a national ban
or a
member bank, directly or indirectly owns or controls a
7
majority of the voting shares of its capital, or a lesser
8
number of such shares if such lesser number shall amount
to more than 50 per centum of the share's' voted for the
9
10
election of directors at the preceding annual meeting of such
11
corporation; or any corporation in which a national bank
12
or a member bank in any other manner directly or indirectly
r2berbF-41a;c, (1/roptWfal9r Indirectly,
ar-
Itajority
ovns or. contr)ls either
.
•
• ,•
;,
or
2:)
21
member bay1; or any corporation which in any other manner direc V or indirectly controls the election of a majority
93
of the, oard of directors of such national bank or member
/
bank; or
24
(3) Any corporation of which a majority of the voting
25-
shares of the capital stock, or a lesser number of shares of
22
rpf :eftli,oppn 50 i.oer
other asnaii:ing officers; or
(7-1
i( pi of kfil`Cet(orS a t the preeeti
f which control is held, dtriieectly or indirectly, tlarour)t
stock oener-e).,...1 nor'ic:n 1fP(11:101iCif1;;
ilkn;tt ti onni
)aa
l rsolf
llltlie
w ieiber
;"k
Ittihr(reho
'b
()11'4:' i''',:t
bank or rnadt:ir bnnk who own or control, either a majority of the shares of
dire to
.blicei for the
toli.-number- oresrarei 4e
cent:;1
or ore. thatit'50'
such s
trustees! for:Atke ,bermN t:,ttr
national bank or membØ bank, or a lesser number of shares
17 if such lesser numbie/
r shall amount to more than 50 per
/,
18 centum of the shies voted for the election of directors at
/
19 the preceding annual meeting of such national bank or
„t41,41 v.2 ti n.f;
voted for tiAfs !election .of, lits.i ptire.ctors,
hp
cent= of the nuiaber of sres
tech
1.,
tinr, or
other maanging officers et the r.,receditiennual.,:nee
trustees,
it Sur 1,1
.
controls in any luonner the election of i;nnjorito of its riirnctorc, triis tat.. s,
14
16
UnWe hen t trug t,
4; c4,Prrctpnrlii`,
or other 81411.1.r
almetleiti of
(2) Any corporation which directly or indirectly owns
finrnco co'r-
try:4 t
'ny, stem:ri ties 40prpanyv 44s6ourikt(o1lomdtiten teh0àtVCo,M
13 controls the election of a majority of its board of directors; or
U) or controls a majority of/the shares of capital stock of a
to* inclufAs
(b) The Avis
ch brnk-
(Z)
or by
t ti/1
e.411Nrolloilki.36* of &.friii*tifiliabaliiiiiotiaoi
Of. .102.1ch a.i ther • e, rrojertir, of thel.netribiorsiiobatio *Ism ti vs
coluittee or a. .4r,.,joritl• or .itr; ''Irectors, tractecs, or other anna.iing officern Ara directors of.a .rptioa.1bnk. or lupiiiber, part.c.; or
.11)
-"lie.). owls or control, c:'(i.rctitx
,
t
or ,4714i..1%."Ztl.,V,
itr
loonk
ban;c,
cant tpl tIck. 9f a natiral
aftlority of the shabres
..(. •
,
or
,0J
ich national
for the election
or alre then 50 ?er centu.a of the number of shares, vp tad
lit
41 tin,
n.lt4 rk, ,,f
of direct-?s orslich bank at the ',receding annual r*e.ttrzg, or, controls in
cm:owl...
11anh
the executive
,
erty arriner the electIon of a nalority of the directors of such bank; or
•
f.'
• .;
vor the benefit of whi)srt shareholders or aembers all or sub(
1;114* 4.i-pecifiet1
'
,
..
etantially All the Capital stoe,.. of r nation.al bank or -somber bank is held
truitees.;'
"
*.:1.01
+4 of:section_
4thisik)A
•
01
•
1
3
1
-eentum
i -such lesser numberihallitmoufit-to-more4haft-54--per
.1
301 21.;•7f • 4i sjavil7
the p em
of the shares voted for the election of directors at
fl),,!
or
direc
..11.
0
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i).i "- Ailieitt '' ''.—:: ",' '
„, ceding annual meeting of such corporation, is
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the same stockholders as directly or indirectly 0
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trol a majority of the shares of capital stock o such
(1
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1.;;:lpr/ii
rflt
7 bank or member bank, or a lesser numbe
oracin,yr-ir3 n3.1 per centum of
llm'of ;‹1.!!'it
F2 lesser number shall amount to more th 50
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or member bank;
10 ing annual meeting of such natio 1 bank
9
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• fl'-'''''l f'"-:(' '''''
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shall be directors of an
14
bank, or of which a
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117,
or (-filly:4.4k z4. m:Ilortry oi.,:tu(
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15
its board of directo
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16
member bank;
if
17
,
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rt4
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D:pwir "e4r.f,E.-
7
such national bank or member
jority of the executive committee of
are directors of such national bank or
corporation the board of directors of which
of any
shall corn Ise a majority of the board of directors
bank, or the executive corn19 such n ional bank or member
of which shall comprise a
20 mitt7e of the board of directors
committee of such national bank
21 nAjority of the executive
,-!1141cf larto17Pz
Tt2fsiT
4..; 3 11:11111411:''i
22
'
rt
mplubpr hank.
CP":
23
t,!r1 r
.e!"ertn!
2.
(5) A
majority of directors of which
18
2
9
• :
--iiLi;7!! :•1
1
2
1.•fr cod
. - .-H•-....' --i:N.. 4..:V."?;
.
1
4.1..f4
'''''.''
to $1,-.±, t.,,,i-,,,,,,ev, r. ,.;.-'
1. .2) ..‘11\- 7•L,, 4n...
'
r;: •(_.1! ,:l i.A`h (.1''‘'(..7..•.,.
1-
(4) Any corporation
13
f;t.tr;tr.‘.;1F Yffe.1.9,.,r4..srtirt Wr
.J .c.lh.-7(7.,:47 ,1..K.;!Ilti'lF‘,,-'
3-!.:4: '7,
••
or
24
(c)--tHolding cullipaay" means any affiliate specified
in-subdivisiarrtithsee14011 (b) of this section.
4
1
2
5
If
(414-
I
subdivision (1) of subsection (a) of this section.
2 limitations of this Act. Such facilities shall not be extended
(e) "Commerce" means commerce as • fined by
3
credit facilities of the Federal reserve system within the
3
to member banks for the purpose of making or carrying
4 section 1 of the Act entitled "An Act To sup ement existing
4 loans covering investments, or facilitating the carrying of,
5 laws against unlawful restraints and
5
or trading in, stocks, bonds, or other investment securities
6
other than obligations of the Government of the United
6 other purposes," approved Octob
onopolies, and for
15, 1914, as amended.
tfai,
(f) "Demand deposits
7
8
formed of the loan and investment practices of its member
(g) "Time • I osits "includes all deposits payable after
10
thirty days,
11
which a
12
pa
savings accounts and certificates of deposit
subject to not less than thirty days' notice before
ent (except thrift deposits), and all postal-savings
13
S.
14
(14
nil deposits_s.u1.444-40-
"Thia.diePaSitLLJalell1')
not ipss ihnn Rix_ty dnys' -notie
1E,
• a
I,
SEC. 3. The fourth
a
I .
4aes-Dat—excee,d-$5;000.
paragraph
after paragraph
20 amended, is amended by inserting before the period at the
end thereof a comma and the following: "but only if
22 such discounts, advancements, and accommodations are in23
tended for the accommodation of commerce, industry, and
24 agriculture. The Federal Reserve Board may prescribe
25
banks and the uses made by them of the credit facilities of
10
the Federal reserve system. The chaifman of each Fed-
i
eral reserve bank shall report to the Federal Reserve Board
12
any undue, unauthorized, or improper use of such credit
13
facilities, together with his recommendation for remedial
14
action in the matter. The Federal Reserve Board may,
in its discretion, suspend for not more than one year from
1111
19 "Eighth" of section 4 of the Federal Reserve Act, as
21
9
Al • a
IS
17
States. Each Federal reserve bank shall keep itself in-
within thirty days.
9
15
means all deposits payable
regulations further defining and regulating the use of the
16
the use of the credit facilities of the Federal reserve system
17
any member bank making undue, unauthorized, or improper
18
use of such facilities."
t-
19
SEC. 4. The twenty-fifth paragraph of section 4 of the
90
Federal Reserve Act, as amended, is amended by inserting
21
before the period at the end thereof a colon and the follow-
22
ing: "Provided, That no such vote shall be cast by or on
i)3
94
behalf of any member bank, if a majority of its stock shall
be held or owned by any laulding company, affiliate, or other
corporation, which is in fact one of a chain, or of a jointly
7
6
ewil-stock
1 -such baRks-fr-em--lefifling--off-kw-pli4:44444,siRgc-thsg-or impairment of their ca tal
2 which relate to the withdrawal
to the payment of unear .4 divi3 stock, and which relates
y with all the res rements of
4 dends. They shall also compl
controlled group of banks, controlled by an individual, or if
its stock is in the hands of a voting trust, or if in any other
way such bank is prevented from acting subject to the un4
controlled decision of the general body of stockholders of
5 such bank locally resident in the town or city in which such
6
••:":
bank is established."
et
al banks. Suci sanks and the
5 this Act applicable to nation
subject
6 officers, agents, and employees thereof all also be
n
to the provisions of and to the penalf s prescribed by sectio
to make
8 5209 of the Revised Statutes a shall be required
to the
9 reports of condition and of t e payment of dividends
become a member. Not
10 Federal reserve bank of 'eh they
on call
less than three of sue reports shall be made annually
7
7
SEC. 5. The first paragraph of section 7 ot the Federal
8
Reserve Act, as amended, is amended to read as follows:
9
"After all necessary expenses of a Federal reserve bank
10
shall have been paid or provided foN the stockholders shall
11
be entitled to receive an annual dividend of 6 per centum on
12
the paid-in capital stock, which dividend shall be cumulative.
12
of the Federal
13
After the aforesaid dividend claims have been fully met the
13
Federal Re rve Board.
14
net earnings, beginning with the net earnings for the year
14
within t
15
ending December 31, 1932, shall be paid to the Federal
15
the
16
Liquidating Corporation provided for in section 12B of this
16
17
Act and shall be used by the said corporation for carrying
1.
18
out the purposes of such section."
18
11
4-#
•
I
•
.
serve bank on dates to be fixed by the
Failure to make such reports
days after the date they are called for shall subject
ending bank to a penalty of $100 a day for each day
to be coli at it fails to transmit such report; such penalty
rwise."
I'
19
Six. 6. Section 9 -a-the Federal Reserve Act, as
19
S e c la
ed, is
Section 9 of the Federal Reserve Act, as amend
A
and sixth
further amended by inserting between the fifth
20 amended, is—an,w44p41—by
20
21 -ther4(444-re.a.41-as-fallaws:
21
paragraphs thereof the following new paragraph:
membership
"Each affiliate of a bank admitted to
22
under authority of this section shall, during
22
•4:kr-authority of
3z-wit14-414e-r-43ser-v-e-and
"
24 Rapital—reiRir
e-those
24
25--provisions_ of-1
•h -prohibit
23 t
period
make and
transmission by him
furnish to the president of the bank, for
less than three reports
25 to the Federal Reserve Board, not
B
4
9
during each year. Such reports shall be in such form as
1
the Federal Reserve Board may prescribe, shall be verified
by the oath or affirmation of the president or such other
2 trust or other similar institution, or any o9o1foration,
directly•
3 of which control is held,
or
•rectly, through stoek
officer as may be designated by the board of directors of
4 ownership or in any otl
pany,a-Ena.nce-compaik
anner, by any such bank or by
5 such affiliate to verify such reports, and shall cover the
5 the sharehole riIeof who own or control a majority of
6
condition of such affiliate on dates identical with those fixed
6
7
by the Federal Reserve Board for reports of the condition
7
8
of the member bank. Each such report of an affiliate shall
8 Federal Reserve Act, as amended, is amended to read as
9
be transmitted to the Federal Reserve Board at the same
9 follows:
10
time as the corresponding report of the member bank,
10
"A Federal Reserve Board is hereby created which
11
except that the Federal Reserve Board may, in its discre-
11
shall consist of seven members, including the Comptroller
12
tion, extend such time for good cause shown. Each such
12
of the Currency, who shall be a member ex officio, and six
13
report shall exhibit in detail and under appropriate heads,
13
members appointed by the President of the United States,
14 the holdings of the affiliate in question, their cost and present
14
by and with the advice and consent of the Senate. In select-
15
value, the expenses of operation for the preceding year, and
15
ing the six appointive members of the Federal Reserve
16
the balance sheet of the enterprise. It shall be the duty
1C
Board, not more than one of whom shall be selected from
17
of the president of such member bank to satisfy himself
.17
any one Federal reserve district, the President shall have
18 as to the correctness of the report before transmitting the
18
due regard to a fair representation of the financial, agricul-
19 same to the Federal Reserve Board. Any affiliate which
19
tural, industrial, and commercial interests, and geographical
20 fails to make and furnish any report required of it under
20
divisions of the country, and at least two of such members
this section, and any member bank whose president fails
21
shall be persons of tested banking experience.
22 to transmit, as required by this section, any such report
22
members of the Federal Reserve Board appointed by the
23 furnished to him, shall be subject to a penalty of $100 for
23 President and confirmed as aforesaid shall devote their entire
24 each day during which such failure continues. -As--tifted-iit
24
25
2:, each receive an annual salary of $12,000, payable monthly,
21
•
a •
•
nnk caf znpla
SEC. 7. (a) The first paragraph of .section 10 of the
The six
time to the business of the Federal Reserve Board and shall
11
10
9
together with actual necessary traveling expenses, and the
1
years. Of the six persons thus appointed, one shall be desig-
Comptroller of the Currency, as ex officio member of the
2
nated by the President as governor and one as vice governor
3' Federal Reserve Board, shall, in addition to the salary now
of the Federal Reserve Board. The governor of the Federal
paid him' as Comptroller of the Currency. receive the sum
4 Reserve Board, subject to its supervision, shall be its active
5 of $7,000 armually for his services as a member of said
5 executive officer. Each member of the Federal Reserve
6
6 Board shall within fifteen days after notice of appointment
4
board."
(b) The second paragraph of section 10 of the Fed-
8
eral Reserve Act, as amended, is amended to read as follows:
"The Comptroller of the Currency shall be ineligible
7 make and subscribe to the oath of office."
8
(c) The fourth paragraph of section 10 of the Federal
9 Reserve Act, as amended, is amended to read as follows:
10
during the time he is in office and for two years thereafter
10
"No member of the Federal Reserve Board shall be an
11
to hold any office, position, or employment in any member
11
officer or director of any bank, banking institution, trust
12
bank. The appointive members of the Federal Reserve
12 company, or Federal reserve bank or hold stock in any bank,
13 Board shall be ineligible during the time they are in office
14 and for two years thereafter to hold any office, position,
13 banking institution, or trust company; and before entering
15
or employment in any member bank, except that this
14
upon his duties as a member of the Federal Reserve Board
15 he shall certify under oath t
17
the full term for which he was appointed. Upon the ex-
16 4140-1Natizi that . he has complied with this requirement.a,li d soot
sxait be.j IQ wttk the Sec/tearyorh e boxrd.
ciq -rt tc. at
17 Whenever a vacancy shall occur, other than by expiration of
18
piration of the term of any member of the Federal Reserve
18 term, among the six members of the Federal Reserve Board
19 Board in office when this paragraph as amended takes
20 effect, the President shall fix the term of the successor to
19 appointed by the President, as above provided, a successor
16 restriction shall not apply to a member who has served
20 shall be appointed by the President, with the advice and
21
such member at not to exceed twelve years, as designated
21
consent of the Senate, to fill such vacancy, and when ap-
22
by the President at the time of nomination, but in such
22
pointed he shall hold office for the unexpired term of the
23
manner as to provide for the expiration of the term of not
23 member whose place he is selected to fill."
24
more than one member in any two-year period, and there-
24
25
after each member shall hold office for a term of twelve
25 Itogoltve,--Ac,
-Sfe: 8. Sttbsection-tef-ef-seetiett-14-14-the-Fetlerttl
Er
13
12
••
•
•• •
"(0) To 44(1 to
2 reserve and central reserve cities under existing F. v in
3
which national banking associations are subject
4 serve requirements set forth in section 20 of t
the reAct; or to
reclassify reserve or central reserve citie or to terminate
C1
1•0444: Any percentage so fixed by the Federal Reserve
3
Board shall be subject to change from time to time upon
4 ten days' notice, and it shall be the duty of the board to
5
establish such percentages with a view to preventing the
undue use of bank loans for the speculative carrying of
6
their designation as such: Provided however, That the
Federal Reserve Board shall, wi m two years after this
7
securities. The Federal Reserve Board shall have power
6
S
subsection as amended takes ffect, prepare and put into
8
to direct any member bank to refrain from further increase
9
effect a complete reeks
cation of reserve and central
9
reclassification shall be so effected
10
of its security loans for any period up to one yeart,mider.
-nlis sub sectIolt 1.n.ay be pe)14.117_ed locr
peRalty-of suspension of all rediscount privileges at Federal
10
reserve cities, but su
ii
as to maintain a Vtal reserve requirement for the national
12
banking syst i as a whole which shall not be less in the
SEer-I{*----Tlte-Fefl-erftl-Rese-rre---Act—as-arnentterl-,—is
han the total reserves of national banking asso-
ferther-ftmerrdetl-lly-inserting.-between sections-It and 12
I3 aggregat
14
ciatio s computed on the basis of the last all-member-bank
15
ort furnished to the Federal Reserve Board preceding
reserve banks."
14
theieof the following new-section:
LSE°,jj. 'Upon receiving the unanimous consent of
the members of the Federal Reserve Board, any Federal
17
18
SEC.
Subsection (m) of section 11 of the Federal
Reserve Act, as amended, is amended to read as follows:
"(m) -Upon the affirmative vote of not less than six
20
2
.)
-40
of its members the Federal Reserve Board shall have power
.1.1<
e-ryt bQT ba)
to fix from time to time for
Of suc)-tban K
txe
which may
surplus4
and
percentage of-inclividual-140441i4capital
sectit
protected
by-Fneffibef
collateral
by
loans,roar4dbe represented by
"\
.
17
reserve bank may make advances to groups of t6n or more
18
member banks within its district upon theirloint and several
1;;
demand promissory notes in suchimounts as the board of
2r) directors of such Federal resier‘ bank may determine, but
9]
such advances may b made to a lesser number of such
22
member banks ifAiie aggregate amount of their demand and
23 time des constitutes at least 10 per centum of the entire
24 de
25 414-Y--gual.
;
•'
and time deposits of the member banks within such
disttict.......Such_laulis_thall he mithorized_to_distrthate_the
14
15
I -+,rac.00ds,of- fitiolt-loaris-tty-sttel-t-of-their- minther-and-hrnteh
to any affiliate organized and existing for the purpose of buy-
amounts as they may agree upon, but before so doing hey
2 ing and selling stocks, bonds, real estate, or real-estate mort-
Co
shall request such recipient banks to deposit with a
i3 table
3
gages, or for the purpose of holding title to any such prop-
4 trustee, representing the entire group, their indivildtal notes
4 erty, or (2) invest any of its funds in the capital stock, bonds,
5 made in favor of the group and protected by Tth. collateral
5
or other obligations of any such affiliate, or (3) accept the
C
capital stock, bonds, or other obligations of any such affiliate
7 making any such advance shall charge a/d reserve a rate
7
as collateral security to protect loans made to any person,
8
of interest of not less than one-half/f 1 per centum a
8
copartnership, or corporation, if the aggregate amount of
9
month for the first period of ninety ays of the life of such
9 such loans, extensions of credit, investments, and acceptances
6 security as may be agreed upon. The Feder l reserve bank
ink
10 advance, and thereafter the rate of nterest shall be increased
10
of collateral security in the case of any such affiliate, will
11
by one-fourth of 1 per centum
month for each succeeding
11
exceed 10 per centum of the outstanding capital stock and
12
period of ninety days or raction thereof. •The banks
12
surplus of such national banking association or member bank.
which receive the proceeds of
13
Each loan made to an affiliate within the foregoing
13 included in any such gro
14 any such advance shall jay to the group collectively interest
14 limitations shall be secured by stocks or bonds listed on a
lb
equal to the entire in rest paid by the group during the life
15
stock exchange which have an ascertained market value at
16
of the advance, Otis an indorsement fee of 1 per centurn
16
the time of making the loan of at least 20 per centum more
17
17
than the amount of such loan, or shall be secured by notes,
18
upon the total' amount of the advance. The indorse/
ment fee sV received by the group shall, after pay-
1S
drafts, bills of exchange or acceptances, eligible for redis-
19
ment of a expenses, be distributed to the members of the
19
count at Federal reserve banks, or by bonds or other obliga-
proportion to their capital funds. No such joint
20
tions eligible for investment by savings banks in the State
21
note upon which advances are made by a Federal reserve
21
in which the association or member bank making the loan is
22
b k under this section shall be eligible under section 16
22
located. A loan to a director, officer, clerk, or other em-
23
ployee of any such affiliate shall be deemed a loan to the
20 group
24
SEC.-0. No national banking association and no mem-
24
affiliate to the extent that the proceeds of such loan are
25
ber bank shall (1) make any loan or any extension of credit
25
transferred to the affiliate.
16
14
SEC. .1-2.
1 The Federal Reserve Act, as amended, is
amended by inserting between sections 12 and 13 thereof
the following new sections:
"SEC. 12A. (a) There is hereby created a Federal
is
Open Market Committee (hereinafter referred to as the
"committee "), which shall consist of the Governor of the
7
Federal Reserve Board and as many additional members
as there are Federal reserve districts. Each Federal reserve
9
bank by its board of directors shall annually select from
10
among the officers of the said bank one member of said
11
committee subjed AciAlle---confillmation-of -the-Federal Re-
12 -.wawa—Baud,
The meetings of said committee shall be
13
held at Washington, District of Columbia, at least four times
4
each year. Additional meetings may be held elsewhere
15
upon the call of the Federal Reserve Board, either upon the
IC
motion of the board or at the request of any three members
17
of the committee. In the absence or inability of the Gov-
18
ernor of the Federal Reserve Board to act at such meetings
19
the board shall designate the vice governor or some other
20
member of the board to act in place of the governor.
21
"(b) No Federal reserve bank shall engage in open
99
market operations described in section 14 of this Act except
; after approval and authorization by the committee. The
24
committee shall discuss, adopt, and transmit to the several
..`)i
Federal reserve banks resolutions relating to all matters
17
affecting the open market transactions of such banks and to
2,
all matters affecting the relations of the Federal reserve
system with foreign central or other banks. Every such
4
resolution shall be reported within three days to the Federal
5
Reserve Board and shall be subject to its approval. The
6
board shall annually include in its report to the Speaker
7
of the House of Representatives a review of the decisions
8
of the committee for the preceding year and an explanation
9
of the reasons for such decisions and the results thereof, so
10 far as they may be ascertained.
11
"(c) The time, character, and volume of purchases
and sales in the open market shall be governed with a
13
view to accommodating commerce and business and with
14
regard to their bearing upon the general credit situation of
13 the country. Such purchases and sales shall include all
1G
paper described in section 14 of this Act as eligible for
17
open market operations.
]
"(d) The conclusions and recommendations of the
ic
committee when approved by the Federal Reserve Board
20
shall be submitted to each Federal reserve bank for de-
21
termination whether it will participate in any purchases or
,b, sales recommended. If any Federal reserve bank shall
decide not to participate in the open market operations
94 so recommended, it shall file with the chairman of the corn-
mittee within thirty days a notice of its decision.
S. 3215
2
19
1
"Sc.
tion to an amount equal to one-fourth of the surplus of
12B. (a) There is hereby created a Federal
2 Liquidating Corporation (hereinafter referred to as the
,)
such bank on December 31, 1931, and its subscription shall
3 "corporation "), whose duty it shall be to purchase, hold,
9
be accompanied by a certified check payable to the Comp-
4 and liquidate as hereinafter provided, the assets of banks
4
troller of the Currency in an amount equal to one-half of
5
which have been ordered closed by the Comptroller of the
or by vote o•f Vitexv-dir•ecto-rs,a.A.dt)le as5Q;L$
6 Currencyvvarrel member banks which have been ordered
5
1 per centum of such subscription. The remainder of such
6
subscription shall be subject to call from time to time by
7 closed by the appropriate State authorities.
7
the board of directors upon ninety days' notice and annual
8
subscriptions to such stock shall be made by each such bank
"(b) The Comptroller of the Currency and the mem-
9 bers of the Federal Open Market Committee created by
9
10 section 12A of this Act shall constitute the directors of
10
11
the corporation. The Comptroller of the Currency shall
11
"(d) Every member bank shall subscribe to the class
12
be the chairman of the board of directors of the cor-
12
A capital stock of the corporation in an amount equal to
n
poration.
13
one-half of 1 per centum of its total net outstanding time
in an amount equal to one-fourth of the annual increase
of such surplus.
14
"(c) The capital stock of the corporation shall be
14
and demand deposits on the last call date in the year 1931.
15
divided into shares of $100 each. Certificates of stock of
15
One-half of such subscription shall be paid in full within
16 the corporation shall be of two classes, class A and class
ninety days after receipt of notice from the chairman of
17
B. Class A stock shall be held by member banks only and
17
the board of directors of the corporation; and the remainder
18
shall be entitled to prior payment of dividends out of net
1F
of such subscription shall be subject to call from time to
19 earnings, to the extent of 30 per centum of such net
19
time by the board of directors of the corporation.
20
earnings in any one year, after payment of all expenses
20
21
of the corporation, but such stock shall have no vote at
21. the corporation held by member banks shall be annually
22
meetings of stockholders. Class B stock shall be held by
22 adjusted as hereinafter provided as member banks increase
23
Federal reserve banks only and shall not be entitled to
23 their time and demand deposits or as additional banks be-
24
the payment of dividends. Every Federal reserve bank
24 come members, and such stock may be decreased in amount
2k
shall subscribe to shares of class B stock in the corpora-
25 as member banks reduce their time and demand deposits or
"(e) The amount of the outstanding class A stock of
20
21
cease to be members. Shares of the capital stock of the
the 1st day of January thereafter, a proportionate amount
2 corporation owned by member banks shall not be transferred
of its holdings in the capital stock of the corporation, and
or hypothecated. When a member bank increases its time
when a member bank voluntarily liquidates it shall surrender
and demand deposits, it shall at the beginning of each calen-
all its holdings of the capital stock of the corporation and be
5 dar year subscribe for an additional amount of capital stock
released from its stock subscription not previously called.
6 of the corporation equal to one-half of 1 per centum of such
The shares so surrendered shall be cancelled and the mem-
increase in deposits. One-half of the amount of such addi-
ber bank shall receive in payment therefor, under regula-
8 tional stock shall be paid for at the time of the subscription
tions to be prescribed by the Federal Reserve Board, a sum
9 therefor and the balance shall be subject to call by the board
equal to its cash-paid subscriptions on the shares surrendered
10 of directors of the corporation. A bank applying for stock
and its proportionate share of earnings not to exceed one-half
11
in the corporation at any time after the organization thereof
of 1 per centum a month, from the period of the last divi-
12
shall be required to subscribe for an amount of class A capital
dend on such stockibut not above the book value of such
stock equal to one-half of 1 per centum of the time and
earnings, less any liability of such member bank to the
4
14
demand deposits of the applicant bank, paying therefor its
15
par value plus one-half of 1 per centum a month from the
"(f) If any member bank shall be declared insolvent,
16
period of the last dividend on the class A stock of the cor-
the stock held by it in the corporation shall be cancelled,
17 poration. When the capital stock of the corporation shall
without impairment of the liability of such bank, and all
IS
have been increased,either on account of the increase of the
cash-paid subscriptions on such stock, with its proportionate
19 time and demand deposits of member banks or on account
share of earnings not to exceed one-half of 1 per centum
20 of the increase in the number of member banks, the board
per month from the period of last dividend on such stock
21
of directors of the corporation shall cause to be executed a
but not above the book value of such earnings, shall be first
9)
certificate to the Comptroller of the Currency showing the
applied to all debts of the insolvent bank to the corpora-
increase in capital stock of the corporation, the amount paid
tion, and the balance, if any, shall be paid to the receiver
2:3
24 in, and by whom paid.
corporation.
When a member bank reduces its
of the insolvent bank. Whenever the capital stock of the
25 time and demand deposits it shall surrender, not later than
corporation is reduced, either on account of a reduction in
23
22
time and demand deposits of any member bank or on account
of the liquidation or insolvency of such bank, the board
3
of directors shall cause to be executed a certificate to the
4
Comptroller of the Currency showing such reduction of
5 capital stock and the amount repaid to such bank.
6
(g) When the minimum amount of class A and class
1
thenticated by the seal of such court or notary public, be
2 transmitted to the Comptroller of the Currency, who shall
3 file, record, and carefully preserve the same in his office.
4
"(i) Upon the filing of such certificate with the
5 Comptroller of the Currency as aforesaid, the said corpora6 tion shall become a body corporate and as such shall have
7 B capital stock required by this Act shall have been sub-
7 power-
8 scribed and paid for by such banks, the Comptroller shall
8
"First. To adopt and use a corporate seal.
9
"Second. To have succession for a period of twenty
10
years from its organization unless it is sooner dissolved by
their seals, make an organization certificate which shall
11
an Act of Congress, or unless its franchise becomes forfeited
12 specifically state the name of the corporation and the city
12
by some violation of law.
13
and State in which the corporation is to be located, the
13
"Third. To make contracts.
14
amount of capital stock and the number of shares into
14
"Fourth. To sue and be sued, complain and defend,
15
which the same is divided, the name and place of doing
10
business of each bank executing such certificate and of all
17
banks which have subscribed to the capital stock of such
17 and employees as are not otherwise provided for in this
18
corporation, the number of shares subscribed by each such
18 section, to define their duties, require bonds of them and
19
bank, and the fact that the certificate is made to enable the
20
banks executing the same and all banks which have sub-
20
21
scribed or may thereafter subscribe to such capital stock to
21
"Sixth. To prescribe by its board of directors, by-laws
avail themselves of the advantages of this section.
22
not inconsistent with law, regulating the manner in which
22
designate five reserve banks to execute a certificate of organi10 zation, and thereupon the banks so designated shall, under
Ii
"(h) Such organization certificate shall be acknowl24
edged before a judge of a court of record or a notary public
25
and shall, together with the acknowledgment thereof au-
15 in any court of law or equity.
16
"Fifth. To appoint by its board of directors such officers
[9 fix the penalty thereof, and to dismiss at pleasure such
officers or employees.
23 its general business may be conducted, and the privileges
24
granted to it by law may be exercised and enjoyed.
24
1
"Seventh. To exercise by its board of directors, or duly
25
1.
of the valuation agreed upon, the Comptroller shall make
2 authorized officers or agents, all powers specifically granted
2 a formal tender of such assets to the corporation which
3, by the provisions of this section and such incidental powers
3 may purchase the same in whole or in part as its board of
4 as shall be necessary to carry out the powers so granted.
4
directors may determine. It shall be the duty of the cor-
"(j) The board of directors shall administer the al-
5
poration to proceed to realize as rapidly as possible, having
6 fairs of the corporation fairly and impartially and without
6
due regard to the condition of credit in the district in which
7
discrimination in favor of or against any member bank or
7
such bank is located, the assets so purchased, and if the
8
banks and shall, subject to the provisions of law and the
S
amount realized from such assets exceeds the sum paid
9
orders of the Federal Reserve Board, extend to each bank
5
10
which is ordered closed by the Comptroller of the Currency,
,ATO by vote. or Its d •re.cto-r.S.)
11 4and tO each member bank which is ordered closed by the
19
appropriate State authorities, such accommodations as may
13
be safely and reasonably made with due regard for the claims
14
and demands of other member banks.
therefor, the corporation shall make an additional payment
10
to the receiver of the bank equal to the amount of such
11
excess, if any, after deducting a liquidation fee of 6 per
centum of the sum thus realized. Money belonging to the
:)
corporation(
shall
be kept invested in the assets of insolvent
14
or closed banks or in securities of the Government of the
United States.
15
"(k) Whenever any national bank shall be declared
15
16
insolvent or placed in the hands of a receiver it shall be
1G
"(1) The corporation may, in its discretion, purchase
17
the duty of the Comptroller of the Currency to appoint a
17
the assets of banks in the hands of receivers on the date of
Is
valuation committee of three members which shall include
18 its organization but on the same conditions and terms as are
19
the receiver of such bank, a member to be named by the
19
applicable in the case of assets of banks which may fail or
20
board of directors of such bank, and a person to be chosen
20
be closed after such date. Nothing herein contained shall
21
by the receiver and the member named by the board of
21
be construed to prevent the corporation from making loans
directors. The receiver shall be chairman of the commit-
22
24
tee, and the committee shall at once proceed to make a pre-
to banks ordered closed by the Comptroller of the Currency
d 1-r ct o rs,
0-r
vote of'
23 4 or to member banks ordered closed by the appropriate
liminary valuation of the assets of the bank. Thereupon
24
State authorities or from entering into negotiations to secure
the receiver shall notify the Comptroller of the Currency
25
the reopening of such banks.
26
1
(n) Member banks organized under the law of any
2
State which are now or may hereafter become insolvent or
3
suspended shall be entitled to offer their assets for sale to
4
the corporation upon receiving permission in accordance with
••••
a
"(o) . The a',i3'ittian 1I
t1 tzé&
ero:•.1. to
outs ta.nriing at any one tine
in en anputsti eggregattl,n4 ‘-cy•rue and to
four
7.1,3pre than
ttnes?Pf,uffiRiffttelt,t)ti),6641.titiii"-iteliititei.
P841
other ouch -obligati
5eMu
ti,',
'br4t.i.s, or
ons, to bo recieezable at tlw.
) ootion of the cc3.7
tion biforr,.),JF4.%f4A,,,
)oraLI0W74
obligationit.Land "to belr suoh Aettottr(*spear ba
rttte or rotas of intoreut,
at such time 9r1 tlyiKs
and to 'nature
4sky be40tikrartntttbr the.
that th'e
corw!
irdtt
alifil rOirovi de d.
sell on a
ia 77,
t pturltywtthovt 1.441 (ii:4count bia h,-)rt-tarn obligations
..”t, Th,WOO b(Oeben
other
thq eor )ciration may be .cur tires, bo'ncls and
ed by ?soots of
the corolr;tion in suchnrinner
las shall
,FR1360ti.041-11W. its blard of
dizioctorts. cArtlek • obli
ons
'for'soli at such srico
orices es the corlorationr:1'
or
7, atçr 1 o.rht.
,.qq.r.),V?rttAk 4ytt4er
nuthorilied ./ind:14harloweite tn4144
#.1... of
11%1
5 law from the banking superintendent or commissioner of
6
the State, under the same conditions as are applicable to the
7
sale of assets of insolvent or suspended banks under the law
8
of the State in which such member bank is located.
•
9
(n) For a period of not to exceed two years after
10
this section takes effect the corporation is authorized to pur-
11
chase and for a period of five years thereafter to hold and
12
liquidate the assets of closed State banks, to make loans to
13
such banks and to enter into negotiations to secure the re-
14
opening of such banks under the same terms and conditions
15
as are applicable in the case of national banks and member
16
banks; except that (1) no such purchase or loan shall be
17
made and no such negotiations shall be entered into unless
18
it is permitted under the laws of the State in which such
19
State bank is located, and (2) the amount realized upon the
20
sale of the assets of any such State bank in excess of the
21
amount paid for such assets by the corporation shall, after
22
deducting the amount of the liquidation fee authorized to be
93
charged by the corporation under paragraph (k), be paid
24
into the Treasury of the United States as miscellaneous
25
receipts. For the purpose of carrying out the provisions of
pn' iroltlesory rv)te of any
roc:-Avor evidencing loAns wade
by
thq
cDrlo
rati,onf Pnd tople,40 euch
receive
-,9011I ;AO.',o pal,' 'of
t:tag
e.
tovidi
i•ittk
ia
te
security to'
'the corporation's lrols
issory notes, uncler such One
ditionsse msbe
ne. conAWf44, il4v#A141n7ttic elmsrit
ttilifi;'ie
ob1ii7ationsi. e0 1nc61",-ed, together
with all oth,)r outstfinr.3i
of the Co r1;.1
n,i7
1., if:RAI:I,. rtilt, lb:Oetxciaseat \i've
r-Agi
o)i
tlia
p4ount of it
• •
..•1' 4.? 1' ri'rut=:42'%" !.'!
1;2*
qt..0
o4tei, -'4ebo
es, on s, or other suc..
obligations true
cormorstion. 8h!11 be Ircrn7q,
botismasdtoirAft4R4kte,0 fitticireit.• d
from 1LtaJta.tlorticifr4
4on+*te lornctutiiiiiiiiiVanCie taxes)
imoosed -by the Untrad .3ta
now or hereafter
tes, by r.liy 'Territory,
dele
ndon
thereof„.l orjmany: $tate,
cy, or cosueision
county. :aunicilnlity, or loca
ThO corlort,tion,
l
taxing authority,
ir.cluding it, frrInchise,
tBcz Itr1,reee.rro affid
nurllusi ,pnd its 4
./49-wrieieJzcJ be'maraertli.rma'.:
tanoser..1 `Ii-y the Tint ted S tau'
,f(A;i or 14ereafter
s, by Any' Trfrri tory,
deoendpncy, or.„-wsfsiession
thereof, r#Tin i y,l.t,isloi
lffligillytii(44rintriallt
"
(
.71)
Al
,r; ate Ltedel trng'M.zt,orjtj,
iti)t61'Ironarty of the c;orr
iornt
ion *hell be s124,1ect %40
State, torritori, 14,.*.
..,„,%Tertep,41.4411,!,
oaccelt
i?gt444albitsititIliAitti4k$1
ttnt acaliiiditikei tci'lts"Ofille'
exea o't-,.br *real ,roerty
Is taxed.
ts shall in all
"Cc07 Tttitroftt #16tts'tnei 'c:Yrt
k,l
c;i:tbe sno,lisd with such fora
of notes, debentures,
s
bonds, or o,,,quoT tifue.h
toiwzmnpartko nilyunied
for s ;uattx-;:e l'undhar. Veit
(*AS;nthielkilike- Elm
of the 'Tres.Bury is authorizert
orepare such forts as shall
bop suitribps
to be .6141 14olimo rrl-neittryt-Etbjtot
641.1CieVsl;ati
flp
;rnIM
'Ord'h!
.,00ration.. The engraved
"
r
ti4
a:gn
eo7-timn'
Ditt
os,
dies
bed
4
1
eces
,
ezacu te d,)41
and,:?itberntaiterial
c-it4eii*If ightire‘Iithr41- mat*
litiCii‘dte toay bf the
seers ter,' •.!!'cRq4
the Treasury. Tho corporation
shal
l reitablirfte
iecre tens iof
r Tralzwir7 r ent
esiee"Itiou14041n 146''Yirei5srail'on
custody,''Snd itittivery of such
,
notes, debentures. bonds,
tono"
Rr
othe
r
()Olt
•
; zis ,t,.,
acceptanc,- ,
count or for plin'liase iV Fedeitti roser..e banks under Ow
91
provisions., of
or note!-; of 1.10
AM, or
by the deposit (.1
C
I.
s,• '
1
2
4
26
oS `‘‘rril west! at .ei crfrit.;Etel Ita
kettWSUS C .± not,,,
t7oirc.r)
cc
Memberfillitninotirgaaiii14/~it
kl
ftllt
ztro
vjuit
311 7amilf,nallt:.i -4: :4
lo ,R.t..zcff ,evtlilar:I.:,
,, ,*&tog qfib,t IN las* si I
it0 $noon' ertt sew .1:,#'• it
state w,„,-r6 are no v7-71:tantr
t
i.tr.elet
oula
14,
ga
iz
t-77;rV44
n(
.4x
A liri
e limbrow,scrffluess ff,tizxos.t.tetxtst..iad..e
elisiss
nt"....y,,,,,,f.-1:
. I shall /3 Ntitim*
foffor,xtisft- syte. ativ td "43 Net sious
suspenc - ._
toed cd tai i*n,‘
--7
,DoDive-17 motirnocic:J, f,r4 V. 7,
,ob ed yiwit as esatfl -to arl$ tto3ki
iteksko•
the cor )ration up0
.
4"111x
/f469 -eftAftitIoiCrirti.tiolscf sive,tr.41!!it. IIN ., iti no 1i va %sr ne4,47c,r.-roo
, witd nectar,
at; I6 0fiIP
ae altar" A),4440-17Aift Ki:.Ago 4v0.1$417 Mil
no i‘e ':i 10 IMO fteaiIik rf.W.TP
.03
RilgliAtif i'ltr-d—.4. -....r/i-..,,, r.';.~ f,.i. ' 7- -"*. f:q
1 Iritrtirt rfova eft
trof$114,1-, •-•,,
4...4.;4477.4sdr1,4) .41*
1,„ fug
the St Le, undt-r ibi-; setottqvili-1011:".4. 44-t-&-yets"','it- .!..,rfert- Ostb
v,-tr no tS4rvx-roo-tect ftst eile
lerfe 't c., 44 -,: ., NT ri Ot r,•1-,..y,iy; 7tc, '4.4%t- r 7. .; l', aS
has herfeed
-;g
i
rort-tmiztPeittr(Irlikii!tf'.: -tmf
Sale 0
27
this paragraph, there is hereby authorized to be appropriated
2
the sum of $200,000,000, which shall be paid by the Setre-
3
tary of the Treasury to the corporation in such amounts and
4
at such times as the board of &rectors thereof may require.
5
The sums so paid to the corporation shall be used exclusively
6
for such purposes.
•
5
6
5 pet ear0
CI:*
16
izittin,etiiisckfg *
• ;
1.''''te ill vv.119?' 44.r...-;1
/1"3
/
49"41Ifitirui'
Jr.rtl
f);.1t, tv10,:r1
,
.'::1
7
0"1) -- fe
- "yd ant-tc7:):17.41°;.'774°
:*-1 l'Irdtest:'.$411101.71441;
-1.-.
V 41
ittrlAtteoci
.
f401
,
0
I
fit0.011
4'4orb aly,mt .ber,•ruarl on
(To
um"httiff
.96 $ r...f, I rafa.
,
triOtt• litt
:
• .1 .,.;•,,•• ri ;, • our1 ,
thiS . ixtiou Lakes:. etTect t e coipotai.(
.Slifft
. an 11,4 ts7 t
4.4:4. Is.
:
f it_44104Lit*til ,;-.1 ntesieff,5 ,S ot r.r: 1 IA (e`:.
chas, Paid for a. perietioilArI6blaaA
At ixf eirsizetx',-.: 4..44
- I I ten'a lin .?1 Frr
,.
1conga'I et! lc!. WOIT ( uz
1,̀
ci*fk t
4t-e,tas 1'793X r.) tYr,I trxteS its . , ,.
waekvisir
elese$1$46ifi
%,
liqui'
" -:'...r..
.L,,
.. xft-, vd ,ae,In.i:: ht.,1 II:- erl vi
tfialto
.3:4 $ 1-1ce,J.R1 ,- ,tsixs1 .r.a*of le .xl/Itac..
1*44yo: 033criff.* ,e4ft,IX I.:iv- N.,d tr:
„tip
.410
,
,
t
ri
to 44,6r.41PM iMliotigiiikettosbo atiell,le,z.!qtrh'It iili
such
? 'pm 1b. L•r xii ,ri c
!
1 try or.rdat7er,t1pc:
!W 1,-, rot! noftsizat III z,e,1*-2 :.!•riwttt-, F.--41 r .114;* ,scexi# ad I br.,/
one,
, i „..4t1,
4
1,
‘
„
at,Ki%s
iilise:
1
1011001TirttithiltrO'iliiic tii or 4t1J ''. 5ol I:'
oper ,.): ut'
‘,. 1.:,;:4 /cif hit*.
- 4,01-1'",
66;la •An lxv Iimo1 lo
,t.liftwl*Nunt ASernoo ,e1s3'-' vuo
xd Itt e ttitloontirloriee
.
tryp
ittitber.. lilleyrrole- I. crt ...,.. S, t
'-_-1
}
3:34:4
as a
11...
144
., r .
00...7.ta A2 .1q:All 1c
,fsclorzarf. ,xlstre:::: ,intleslint).." ..2)
riliefle 901 sa T RV et f oat nr 1 T.?,-,3ptb
':
rIil,snitrtegif,4titiffet.
-
17
/nide ana
18
it
19
State
20
SEA
21
arn^tl'f"
8
9
10
11
12
13
14
As used in this paragraph the term
7 "State bank" shall include any savings bank, trust company, or other banking institution, authorized to accept I.
of thl
posits, organized under the laws of any State and which
10
is not a member, of the Feder,alygge.rie _system
11
II
SEC. 1,8'. The seventh paragraph of section 13 of the
12
Federal Reserve Act, as amended, is amended to read as
13
follows:
14
"Any Federal reserve bank may make advances to
15
its member banks on their promissory notes kr a period of
1t;
not exceeding fifteen days at rates to be established by such
17
Federal reserve bank, which rates shall in all cases be at
18
least 1 per centum higher than the rediscount rate then in
19
kree at such reserve bank, subject to the review and deter-
20
mination of the Federal Reserve Board, provided such prom-
21
issory notes are secured by such notes, drafts, bills of
22
exchange, or bankers' acceptances as are eligible for redis-
, 23
23
count or for purchase by Federal reserve banks under the
24
24
provisions of this Act, or by the deposit or pledge of bonds
25
or notes of the TTnited States.
15
ii4, ,
,isfivi
t4
re-
4
*7_ 01
tf
, MhiCUsi.,,KAM ffftbitenown
Ieqfl
"
enbailgAwlins Ertelatonr
a*inret moan IWO Ct
,
!)4,*tod
SelLit tmett s4cr.
finel-tetttvn el rwasr".7
ale/ iichrw tvotwoilil
tigiterrir
161" rid
• *eget 14-mje peraell •
—705,, Wit 10
fIrk
Amer tsb
apjoi-_,4„
hitOteipi
Tat.eatimite4406.e taartvale.§4441k-stietbiriqt.z.;esisqc
bovirtmic
ster
avist49
fees
ictootelm offi el filasp.A
freis,ftt_twimittt troUseetn,--o rt b.:yr(
%
Litio°
11
;0414
14eltr
i4r4g
oKi **Ivi
nI bIllithiV
sprtigan frgeelf"lik
epl,no;
1
:
1441 -6ots
14fr
*to, 47."rolut
ual"'
ref
"
vrisik0
11"
:
fl-lahtgif R:1149 1;10 tiOnOrpoiquitaltdestit,s4w tbria
,
wr6triffq, t•itv't
,;.
22
25
r
III
If any member bank to
issfelt"
\--)
29
28
1
tOr) Section 14 of the Federal Reserve Act, as
which any such advance has b_n_ made shall, during the
2
advance4ncrease its outstanding
'2 life or continuance of such
3 loans made to any on o-wur upon collateral security, or made
3 the following new paragraph:
4
4
to the members of any organized stock exchange, investment
6
bill, secured or unsecured, for the purpose of purchasing
•
of the United States) such advance shall be immediately
10
as a borrower at the reserve bank of the district upon fifteen-
i
day paperA The Federal Reserve Board shall have power
12
from time to time in its discretion by unanimous vote of its
13
members to suspend the provisions of this paragraph in whole
14
or in part, whenever in its opinion the public interest shall
-reir Such
pe-rIod ast.Feje-a-&)
e ser
i6oaYd
1:5
call for such action. Each such suspension shall be for a
16
period of ninety days and may be renewed for one addi-
17
tional period of ninety days upon unanimous vote of the
members of the board."
20
the Federal Reserve Act, as amended, is
21
striking out the words "Every Federal-reserve bank shall
22
have power" and inserting ixru thereof the words "Sub-
24
25
Federal
("4
8 ships and transactions of any kind entered into by any Fed9
eral reserve bank with any foreign bank or banker, or with
10
any group of foreign banks or bankers, and all such rela-
11
tionships and transactions shall be subject to such regula-
12
tions, conditions, and limitations as the board may prescribe.
13
No Fcdcral reserve agent, nor any officer, -€1441444erl-e+14-
14 -ployee or other representative of any Federal reserve bank)r
onduct
negotiations of
15
shall
16
any kind with the officers, directors, employees, or etlw,r-
17
representatives of any foreign bank or banker without first
18
obtaining the permission of the Federal Reserve Board.
19
The Federal Reserve Board shall have the right, in its dis-
20
cretion, to be represented in any gook conference or nego-
21
tiations by such representative or representatives as the
22
board may designate. A full report of all
•
19
ject to such regal
tion 12A of this Act, the Federal Reserve Board shall
exercise special supervision and control over all relation-
and/or carrying investment securities (except obligations
due and payable, and such member bank shall be ineligible
"(g) Subject to the powers conveyed to and be-
5 stowed upon the Federal Open Market Committee by sec-
5 house, or dealer in securities, upon any obligation, note, or
9
amended, is -fttilTker amended by adding at the end thereof
nded by
ens, limitations, and restrictions as the
'serve Board may prescribe, every Federal re21
.
,
23 or negotiations
h conferences
::2
24 ,..expre.ssed-both-au-heilalf,-JaLthe-Eaderal-r-asenze-bank and
a)Ld
25 - -on-behalf-of-thrirtreigrrimrk-or-tranker, an understandings
'I
8t
go
3
4
t3
7
4
trade of the United States and purchased uns • the provisions of section 14 (but not including ; eptances made
negotiations, shall be filed with the Federal Reserve Board
in writing and signed by all representatives of the Federal
reserve bank attending such conferences or negotiations reshall
uardless of whether or not the Federal Reserve Board
be represented at such conference or negotiations."
•
•
9
2
of section 14 of this Act, or bankers' acceptances ma
against shipment of goods actually sold in the , reign
1
and
11 or agreements arrived at or transactions agreed upon,
9 all other material facts appertaining to such conferences or
of section 16 of the Federal Reserve Act, as amended are
under any revolving or renewal cre ), or gold or gold
6 certificates; but in no event skad such collateral security
7 be less than the amount of F eral reserve notes applied for.
9
al
The Federal reserve lent shall each day notify the Feder
ral
Reserve Board of/all issues and withdrawals of Fede
11
reserve notesjo and by the Federal reserve bank to which he
at
is accredited. The said Federal Reserve Board may
8
10 amended to read as follows:
11
12
13
"Any Federal reserve bank may make application
to the local Federal reserve agent for such amount of the
Federal reserve notes hereinbefore prov ed for as it may
any time call upon a Federal reserve bank for additional
13 security to protect the Federal reserve notes issued to it.
14
"-Every -.Federal---mserve—hank shall maintain reserve(
12
require. Such application shall be accompanied with a
15 tender to the local Federal rese e agent of collateral in
16 an amount equal to the sum if the Federal reserve notes
14
pursuant to such application.
17
thus applied for and issu
18
The collateral security hus offered shall be notes, drafts,
19
bills of exchange,
20
visions of sectS in 13 of this Act (except promissory
notes of me er banks acquired under the provisions of the
21
acceptances acquired under the pro-
ed by the
22 seventh iaragraph of such section 13 secur
States),
23 depo or pledge of bonds or notes of the United
bank of any
24 o bills of exchange indorsed by a member
the provisions
25 Federal reserve district and purchased under
in gold or lawful money of not less than 35 per ,etntum
against its deposits and reserves in gold of not)f'ss than 40
4
17
is
•
per centum against its Federal reserve ilotes in actual eirere
ited
culation and not offset by gold or „1,8Nv1u1 money depos
shall
with the Federal reserve agent. Notes so paid out
l number
)t) bear upon their faces a sli4inctive letter and seria
21 which shall be assigned by the Federal Reserve Board to
19
reserve
each Federal/f.e' serve bank. Whenever Federal
23 notes issnt'd through one Federal reserve bank shall be re24 cei id by another Federal reserve bank, they shall be
to....the Federal
25 z Ili Ia I • I
22
32
1 -reserve b5wk tbroug
2
II
't t
upon direction of such Federal reserve bank, they sh
forwarded direct to the Treasurer of the United
be
ates to
4
be retired. No Federal reserve bank shall pailout notes
5
issued through another under penalty of a t
of 10 per
centum upon the face value of notes so paiá out. Notes
7
presented for redemption at the Treasu
8
States shall be paid out of the redemptioIi fund and returned
of the United
9 to the Federal reserve banks throt h which they were
10
originally issued, and thereupon st
11
shall, upon demand of the Secre ry of the Treasury, reim-
12
ourse such redemption fund inxiawful money or, if such Fed-
10
.)
eral reserve notes have bee'redeemed by the Treasurer in
14
gold or gold certificates, t en such funds shall be reimbursed
15
to the extent deemed n essary by the Secretary of the Treas-
16
ury in gold or gold certificates, and such Federal reserve
i7
bank shall, so lot - as any of its Federal reserve notes re-
18
main outstandit, maintain with the Treasurer in gold an
Federal reserve bank
•
19
amount suffic nt in the judgment of the Secretary to provide
for all red nptions to be made by the Treasurer. Federal
21
reserve
otes received by the Treasurer otherwise than
for re emption may be exchanged for gold out of the redemptio t fund hereinafter provided and returned to the reserve
94
ank through which they were originally issued, or they
a
33
1
States.
•
•I
a A
11
2 returned by the Federal reserve agents to the Comptro
3
•
of the Currency for cancellation and destruction.
"The Federal Reserve Board shall require ea
4
Fed-
5 eral reserve bank to maintain on deposit in the Veasury of
the United States a sum in gold sufficient in
e judgment
7 of the Secretary of the Treasury for the re emption of the
15
Federal reserve notes issued to such bany, but in no event
9 less than 5 per centum; but such d
sit of gold shall be
10 counted and included as part of th 40 per centum reserve
11
The boAd shall have the right,
hereinbefore required.
i 2 acting through the Federal re rve agent, to grant in whole
13 or in part, or to reject entire
14 reserve bank for Feder
15 that such application
the application of any Federal
reserve notes; but to the extent
ay be granted the Federal Reserve
16 Board shall, throu. its local Federal reserve agent, supply
17 Federal reserve otes to the banks so applying, and such
18 bank shall be harged with the amount of such notes issued
19 to it and s all pay such rate of interest on said amount as
20 may be/stablished by the Federal Reserve Board and the
21
amou t of such Federal reserve notes so issued to any such
22 b
23
24
shall, upon delivery, together with such notes of such
ederal reserve bank as may be issued under section 18 of
.,
i• e
11 •
S. 3215
3
35
:14
..ermaleRty-biRtflt-ifeeeme-iit-first-and -ptivamount-liert-orr- all--the
2 Mets-of-s44-1441i.”
3
SEc. tg. Section 19 of the Federal Reserve Act, as
That the said net balance maintained against time arehtinift
2
deposits shall be 3 per centum during the calendar year
3 1932,1
ar year 1933,-5 per
4 cenium_auring-the—aalaiulaD---yea.r.--1-934.;-an41-againet—tiffie
4 amended, is amended-to read as follows:
5
1
"SEC. 19. (a) Demand deposits'within the mean-
5 dep
aleicitir---year 1985, awl-
° ing of this Act shall comprise all deposits payable within
6 glormaitder 7 per centum as hereinbefore prescribed.
7 thirty days),(A time deposits' shall comprise all deposits
7
8
payable after thirty days, all savings accounts and certifi-
9 cates of deposit which are subject to not less than thirty days'
10 notice before payment
) and all
"(2) If in a reserve city as now or hereafter defined
8 it shall hold and maintain with the Federal reserve bank
9
of its district an actual net balance equal to not less than 10
10 per centum of the aggregate amount of its demand and time
ri
postal-savings deposits2.5 ancl,thrift-ilei4osits-shall comprise
11
12
deposits subject to not less than sixty da ' otice before
12 —t-Iffiit,d4pasit,-s-: Provided, That the said net balance herein-
13
payment which are not subject-TO- transfer by check and
1:i
before required to be maintained against time ami—thrift
14
the total moDt,liff balance of which in any individual case
14
deposits shall be 3 per centum during the calendar year
depositsSft
:
'mount—of its
ealeyiklax—year-4-93 :• 8 5
1932r
r;
amst time
le, per centum during the calendar year 1934; an
15
15 11‘44-oetmexteetilitte06-.
16
"(b) Every bank, banking association, or trust com-
17
pany which is or which becomes a member of any Federal
17
deposits 6 per centum during the 9.arleridar year 1935, 7 per
18
reserve bank shall establish and maintain realized reserve
18
eentum during the eale
19 balances with its Federal reserve bank as follows:
19
the calenda
20
"(1) If not in a reserve or central reserve city as
20
-8,44-4144oettitier- 10 per centum as hereinbefore
21
now or hereafter defined, it shall hold and maintain with
21
prescribed: Provided further, That if located in the out-
22
the Federal reserve bank of its district an actual net bal-
99
lying districts of a reserve city or in territory added to such
23
once equal to not less than 7 per centum of the aggregate
23 a city by the extension of its corporate charter it may,
24
amount of its demand and time deposits,and 5. par----celltunt
24
25
Provided,
year 1936, 8 per centum during
ar 1937, 9 per centum during the calendar
upon the affirmative vote of five members of the Federal
0
36
37
(c) No member bank shall keep on deposit with any
Reserve Board, hold and maintain the reserve balances
2 State bank or trust company which is not a member bank a
specified in paragraph (1) hereof.
44
(3) If in a central reserve city as now or hereafter
sum in excess of 10 per centum of its own paid-up capital
4 defined it shall hold and maintain with the Federal reserve
4 and surplus. No member bank shall act as the medium or
5 bank of its district an actual net balance equal to not less
5 agent of a nonmember bank in applying for or receiving dis-
6 than 13 per centum of the aggregate amount of its demand
6 counts from a Federal reserve bank under the provisions of
7 and time deposits:and-5-reircurrtimrttthe aggregrate-affteaRt
7 this Act except by permission of the Federal Reserve Board.
((i)
8 ANo member bank shall act as the medium or agent of any
8
of-its-thrift-ierresitml Provided, That the said net balance
hereinbefore required to be maintained against time wad-
10
thrift deposits shall be 3 per centum during the calendar
,‘\
11. year 1932,
• s
lei
12
and 5 per cent
13
time deposits, 6 p
14
7 per centum d-uring t e calend
15
during the calendar y
I
calendar year 1
es
-e.--etlentiar-year-itat
during the calendar year 1934 : against
dar year 1935,
centum during the c
1939 1
loans or discount paper for any corporation or individual
_
shall at the-tinae-ef-malciug-or-4eRwARg-ttEty-stieh loan
12 torlItt
11
13 have-eatstawling
lottleettrtfl-by-eelittterftl- in favor
ear 1936, 8 per centum
14
of any investment banker, broker, member of any stock
937 9 per centum during the
15
exchange, or any dealer in securities. Every violation of
10 per cen m during the calendar year
16
this provision by any member bank shall be punishable 1)3,-
vrt,
17
9 nonbanking corporation or individual in making loans
Se.curt't
)‘"ec:tly collater • and no member bank shall make
10 13.g000feel-
er centum during the ca
18 eeisktuni-tittring--- e ca en ar year
dar year_ 1940, 12 per
17 a fine of not less than $100 per day during the continuance
and thereafter 13
18
of such violation, but it shall be a good defense that the
19
per centum as hereinbefore prescribed: Provided further,
19
borrower at the time of obtaining such loan or discount from
20
That firlocated in the outlying districts of a central reserve
20
a member bank made a sworn statement
21
city or in territory added to such city by the extension of
21
whieja_he
its corporate charter it may, upon the affirmative vote of five
22 ..4...e040,ter.al.
23
members of the Federal Reserve Board, hold and maintain
23
The required balance carried by a member bank
24
the reserve balances specified in paragraphs
24
with a Federal reserve bank may under the regulations, and
25
hereof.
25
subject to such penalties as may be prescribed by the Fed-
•
and
44-stioh-a-leall--Reettfed
c.•
-
I
f;
•
•
89
eral Reserve Board, be checked against and withdrawn by
Federal reserve banks shall be determined; and the liability
2 such member bank for the purpose of meeting existing
2 created by every repurchase or other similar agreement
3 liabilities: Provided, however, That no bank shall at any
entered into by a member bank shall be added to such net
1
4
time make any new loans or shall pay any dividends unless
5 and until the total balance required by law is fully restored.
4
difference as ascertained under the provisions of this
5 paragra h.
No member bank shall sell or transfer to another
National banks, or banks organized under local
7 member bank, or to a nonmember bank, private banking
7 laws, located in Alaska or in a dependency or insular
8 house, or banker, any balance standing to its credit upon
8 possession or any part of the United States outside the
the books of the Federal reserve bank of its district in excess
9 continental United States may remain nonmember banks
10 of the balances required by this section unless the Federal
10 and shall in that event maintain reserves and comply with
11
Reserve Board shall ha-ve first authorized by general order
11
all the conditions now provided by law regulating them:, or
12 the making of such sales or transfers within such district
12
said banks may, with the consent of the board, become
13 or between such district and another Federal reserve dis-
13
member banks of any one of the reserve districts and shall
9
trict, but no such sale or transfer shall be made by any such
14 in that event take stock, maintain reserves, and be saject
15
bank without first charging and reserving a fee to be fixed
1>
16
by the Federal Reserveall
17
discount then charged upon ninety-day paper by the Federal
18
reserve bank of the district in which the bank making such
to all the other provisions of this Act."
SEC. Pr./ Section 24 of the Federal Reserve Act, as
on the basis of the rate of
17
amended, is amended to read as follows:
24. Any national banking association may make
19 loans secured by first lien upon improved real estate inclu5-
19 sale or transfer is located.
')0
ing improved farm land, situated within its Federal reserve
suspend all dealings in reserve balances for such period
21
clistrict or within a ratlius of one hundred miles of the place
22 as it may deem best. In estimating the reserve balances
22
in which such bank is located, irrespective of district lines.
23 required by this Act, the net difference of amounts due to
23
A loan secured by real estate within the meaning of this
24 and frhula banks shall be taken as the basis for ascer-
24
section shall be in the form of an obligation or obligations
taining the deposits against which required balances with
25
.ge, trust deed, 5r other such instrument
secured 5y mortga
20
21
25
The Federal Reserve Board shall have pOWer
to
40
1
41
upon real estate when the entire amount of such obligation
securities in which savings banks may invest under the
2 or obligations is made or is sold to such association. The
law of the State where such national bank is situated, or
3 amount of any such loan shall not exceed 50 per cent=
where there is no such law relating to investments by
4 of the actual value of the real estate offered for security,
4 savings banks, in such property and securities as may be
5 but no such loan upon such security shall be made for a
5 specified by the Comptroller of the Currency: Provided,
6 longer term than five years. Such valuations shall be
6
7 revised by the Comptroller of the Currency at the time
8 of each examination of the bank making the loan and
9 he shall have power to order changes therein and to require
10 the adjustment of loans to such revised valuations. Any
That every member bank shall be required to report its
7 investments in, or holdings of, any such property and
8 securities at an aggregate valuation which shall not
9 exceed the aggregate market value thereof at the time
10 such reports to the Comptroller or to the Federal Reserve
11
such bank may make such loans in an aggregate sum, in-
11
Board are made: Provided further, That the reserve
12
eluding in such aggregate any such loans on which it
12
13 is liable as indorser or guarantor or otherwise, equal to
13
against time arr+—thrift deposits required by section 19
of this Act shall be counted as a corresponding part of
14
15 per centum of the amount of the capital stock of such
15
association actually paid in and unimpaired and 15 per
14 such investments. All the property of any insolvent
15 national bank acquired under this section shall be applied
16
centum of its unimpaired surplus fund, or to one-half of
16
17 its time apd-tirrift—deposits, at the election of the association,
17
by the receiver thereof in the first place ratably and proportionately to the payment in full of its time Eta44-443444
18
subject to the general limitation contained in section 5200
18
19
of the Revised Statutes. Investments in bank premises
19
20
and unsecured loans whose eventual safety depends upon
21
the value of real estate shall be counted for the purposes
20 on the same, but the rate of interest which such banks
21 may pay upon such time deposits Or...opon-amiiiiit or other
22 of this section as real-estate loans. Every such bank may
23 apply the moneys deposited therein as time ear. thrift deposits
24
to the loans herein authorized and the balance of such
25
time aiattf—thrift deposits shall be invested in property and
deposits. Such banks may continue hereafter as heretofore
to receive time ancl_Ligati,deposits and to pay interest
22
deposits shall not exceed the maximum rate authorized by
Sp c)1.
r
23 law to be paid upon ~An deposits by State banks or
24 trust companies organized under the laws of the State
25
wherein such national banking association is located.
42
1
"Every national banking association and every mem-
43
1
deposit and discount organized and incorporated under the
2 ber bank which is in existence at the date this section
2 laws of such State, except in so far as they may be f5r-
8 as amended takes effect shall be required, wn a period
3
4 of two years from such date, to comply fully with the pro-
4 amended, the Federal Reserve Act, as amended, or any
5
ons of this section, and every national banking asso
bidden by the provisions of the National Bank Act, as
5
other laws of the United States.
6 tion hereafter organized and every State bank or trust
6
chasing and selling investment securities shall hereafter
7 company hereafter becoming a member of the Federal
7
be limited to purchasing and selling such securities without
8 reserve system shall comply with the provisions of this
8
recourse, solely upon the order, and for the account of,
9 section from the date of its orgathzation or admission to
9
customers, and in no case for its own account, and no such
10
association shall underwrite any issue of securities; except
1
membership, as the case may be."
t5
Paragraph "Seventh" of section 5136 of
SEC.
11
that any such association may purchase and hold for its
12
the Revised Statutes, as amended, is amended to read
12
own account investment securities to such an amount and
13
of such kind as may be by regulation prescribed by the
10
13 follows:
The business of pur-
14
"Seventh. To exercise by its board of directors or
14
Comptroller of the Currency, but in no event shall the
15
duly authorized officers or agents, stibject to law, all such
15
total amount of such investment securities of any one obligor
16
incidental powers as shall be necessary to carry on the busi-
16
or maker held by such association exceed 10 per centum of
17
ness of banking; by discounting and negotiatillg promissory
17
the total amount of such issue outstanding, nor shall the total
18
notes, drafts, bills of exchange, and other evidences of debt;
18
amount of the securities so purchased and held for its own
19
by receiving deposits; by buying and selling exchange, coin,
19
account at any time exceed 15 per centum of the amount
20
and bullion; by loaning money on personal security; and
20
of the capital stock of such association actually paid in and
21
by obtaining, issuing, and circulating notes according to
21
unimpaired and 25 per centum of its unimpaired surplus fund.
22
the provisions of this title; and generally by engaging in
22
23
all forms 4 banking business and undertaking all types of
93 shall authorize the purchase or holding. of any shares of stock
24
banlmg transactions that may, by the laws of the State
24
25
in wMch such bank is situated, be permitted to banks of
25 -tion-shall.purchase-ef-h
or o"Ole-rwtse perMLitt
ioy Law.,
Except as hereinafter provided,Anothing herein contained
of any corporation by any such association. Ne-ott4311-etteeitti ;
• iiesr:o
ittiken
45
44
-to-continue in- individual-cases- under -this-Act,fer-pet4edt*
cessOFTWeTeof -e-arrred
9
--for-rfreh-o-f-thyrars-precedintrstrelr"15ilieliaST-artarst
2
ninety days subject to successive renewals for _like periods
---4---per-eentanr-upo-n-the--outstending capital stock- of -the cor-
e#
but not to exceed one year in all. Failure on the part of
4 ..paxation. The limitations herein contained as to the pur-
4 any such association to comply with the provisions of this
5 chasing and selling of investment securities shall not apply
5 section shall be penalized by revocation of its charter in
6 to obligations of the United States, or general obligations
acc1r14lle4rWith the procedure contained in section 5239 of
J
7
of any State or of any political subdivision thereof, or obli-
8
gations issued under authority of the Federal Farm Loan
7.„--th:e-iteA4,se0-Statates1"
t7
SEC. 2feSection 5139 of the Revised Statutes is
1-3
9
Act: Provided, That in carrying on the business commonly
9 amended to read as follows:
10 known as the safe deposit business no such association shall
5139. That after this section as amended takes
11
invest in the capital stock of a corporation organized under
effect, the capital stock of each association shall be divided
12
the la-w of any State to conduct a safe deposit business in
12 into shares of $100 each and be deemed personal property
13
an amount in excess of 15 per centum of the capital stock
Vi
14
ot such association actually paid in and unimpaired and 15
15
per centum of its unimpaired surplus."
r'r *) 4' •
;
. '• • %‘'•
manner as may be prescribed in the by-laws or articles
15
of association; and any such association which has certificates
16
of stock outstanding on the date this section as amended
17
takes effect which do not comply with the provisions of this
18
section as amended shall, within two years after such date,
4
19 issue new certificates in compliance with such pmvisions.
20 No certificate representing the stock of any such association
•
• 4f4,
'•
..
•,
•
4„„t:
1
•
-'S
t,,•-1'
„
.
. 12:
1
'
•
4.1114
.•
.cr
ttrtt
17/(.;
hi.4 t9tC,
.•
.;
,
-1=itio‘44.:44br
tft_
• .-.ar;
21
rs,..7'
4.
0.!
,
'
•
:
3.**!":7,•
est.otnia
•
ti":44.2
orrig.tttrt.1
••'
•
and. transferable on the books of the association in such.
shall represent the stock of any other corporation, nor shall
22 the ownership, sale, or transfer of any certificate represent23 ing the stock of any such association be conditioned
24 any manner wbatsoever upon. the ownersliip, sale, or
25 tramsfer of a certificate representing the stock of any other
46
corporation. Every person becoming a shareholder by
2 transfer as permitted by this section shall in proportion to
3 his shares succeed to all the rights and liabilities of the prior
4 holder of such shares, and no change shall be made in the
5 articles of association by which the rights, remedies, or
6 security of the existing creditors of the association shall be
7 impaired."
4 1-rectcrib
SEC. 21. From and after January 1, 1933, no,offieer
or e>vi.ploN<QQ.
9 of any national bank or member bank shall be (a) an officer
10 of any =incorporated association or corporation engaged
11
primarily in the business of purchasing, selling, or negoti-
12 ating securities, or (b) an employee of any such unincorpo1
'
•
01"
* •*+.1.11'14
1.
"
116 correslYo'
t4i affAffiffhtt3,4011111*u n d;vidua
1-;„
riv , or
17
clatto4,
t
"i
S,
aft
01.,t11.1 !4.0‘
11191.'
i...1():f•
•
T
'-
,
iT'd
7.
‘,1
19 or corporation shall pertorm me MiletioLIS ot a cofrespunueut
20 for any national bank or member bank or hold on deposit
21
any funds on behalf of any national bank or member bank.
22
SEc.)2': Section 5144 of the Revised Statutes, as
93
24
\
amended, is amended to read as follows:
"SEc. 5144. In all elections of directors and in decid-
25 ing all questions at meetings of shareholders, each share-
47
holder shall be
entitled to one vote
on each share
of stock
2 actually owned
by him as the
result of bona fide
3 gift, or
purchase,
inheritance and no
shareholder who shall
4 such through
become
nominal transfer, or
ownership on behalf of
5 another, shall
cast such vote.
No corporation,
6 or
association,
partnership which is
the owner of
more than 10 per
7 centum of the
stock of any suchn4b4
alnik°and no
officer, director,
8 or employee
of such
corporation, association, or
9 shall cast a
partnership,
ballot in such
elections or meetings
10 shares of stock
either on
owned by the
corporation or by such
1 director, or
officer,
proxies,
employee. Shareholders
may vote by
12 duly
authorized in writing;
but no officer,
13 bookkeeper
clerk, teller, or
bah,
K,
of
suchiftwaeettoten shall act as
proxy; and no
14 shareholder
whose liability is
past due and
unpaid shall be
15 allowed to
vote."
16
-1Slie-.-28-.---Exeept -as-pros,17 every
person who is a
shareholder in a
ngtion,. anking
association on March 1,
1934, and
eve,rp-person who beComes such a
shareholder after such'
date, shall file
20 the
with
association a sworn
statenient that he is
not at the time
21 a stockholder
in any affiliate
of such
association organized
22 under the law
of any State for
the purpose of
23 dealineor
underwriting,
trading in securities,
and that he does
not intend
24,zjo
become,a,stocillokler—in_any.,9af3li-affiliate.
48
$0,
:±!con_ 5
cyc‘
SEC.
Notwithstanding the provisions of,i §ectirmis-22r, •
;
-tAt.utQc,
ovt.,
2 ant1-23-44 this Act, any affiliate, or any associat
ion, corpora3 tion, or partnership other than an affiliate,
which owns or
1
‘‘
4 controls shares of stock in any national bankin
g association
F.
r6D
ct
5 may make application to the emnptirtizi-i,
rr-of- the Currency
6 for a voting permit entitling it to cast one
vote at all elec7 tions of directors of such national banking-associati
on on each
8 share of stock actually owned or controll
ed by it. The
60a-ro
9 -Comptraieluef-the Currency may, in i discreti
on, grant or
10
11
12
withhold such permit as the public interest may
require but
no such permit shall be granted except upon the
following
conditions:
13
(a) Every such affiliate, association, corporation,
or
14 partnership shall, at the time of making the
application
15 for such permit, enter into an agreement
with the Comp16
troller of the Currency (1) to receive at such peri
odical
OYL
17 intervals as shall be prescribed by tile Comp
troller, Rat
da:t e, Icie-nt‘cal w
t:se fINA-Qd
18 Nimare f
for the examination
19 of national banks, examiners representing
and acting for
20
the Comptroller who shall make an examination
of its
21 financial condition with the same degree of
care as in the
22 case of an examination of a national bank, such
examination
')3 to be at the expense of the affiliate, corporation, asso
ciation,
24
or partnership so examined; (2) that the report of
25
iner s5all set f5rth all the facts ascertained by the exa
mina-
the exa55-
1
40
a state 71.1.4:a )1,t.cif
tion arid shall includelthe name, location, capital, surplus,
and undivided profits of each bank in which the, applicant
ft-I/1 th,
;ltia 1,•
sidtkuicartioaktipor
t-
so34 eifteliikitaue
or *he somuitir banitilitsmOk
la* eamparbion.
tother-ebtfAtaimdt; ahlati‘ategktatitet;
,e0:1101114404.4031490414004 0- §7 .P941.10451tiltoi $40.144041.
U1111r .6tfiVRAvrttle hettC/UWI ,C)L
YT4I'Vg941
\ art;Pt..
44
ill V
;
;1'
consofi-
.111:4 PRIrAr
-:1y
3*,?°60T l'!
*unott)
affiliate, association, corporation, or
a./t: tt or c.. a olik
4 -V e e
„
partnership shall
(_
o)-sutlr-conditions-Tts-ire
••••
12
sta
13
tiesiroftte, obligations of the United States in an amount
14
equal to 10 per centum of the total of capital stock owned
15
by it in any national bank and shall agree (1) that in the
1‘;
event of failure of any national bank in which it shall hold
17
stock the stockholders' liability accruing on account of sat+
0131Aatioy, ,,c„))1.06
stock shall be a first lien upon theifttftil so deper4441-3,1,44•14
18
domankl-€4-41-te-re-
(
c:
20
ceiver of such bank, be_ paid ky_the-fairapttallex_so-luags
01
there shall be...a...balance in such fund, and (2) that any
22
2F.
inaul shall be made up within ninety days
deficiency in suchf—
ciur5*
sbc ci.J4it i ell cgy oe
-4'
.
after netiee ::. ,.• ...
24
(c) Every such affiliate, association, corporation, or
25
partnership (1) shall possess at the time of the issuance of
OA
S. 3215-4
•
1
such voting permit, and shall continue to possess during the
2
life of such permit, free and clear of any lien, pledge, or hy-
3
pothecation of any nature, assets other than bank stock
4
which, together with the4,
5
tleposited with the Comptroller of the Currency, shall not
6
be less than 25 per centum of the aggregate par value of
7
bank stocks held or owned by such affiliate, association, cor-
• II • I
I
/**
'
2(but
tor the reviaccry:qt or etvmat
bwka, errno by
.
antithdtilitat tistmettitt tothkitatligasatil-el:
li4.A44* : 1) r
nernbip, or r.ur looses inottived or cht, -orrs
.4.:x4.4,,WrittpiPt4iXttuitmat tissivolipirvealbe ct)lilt(bib • tnit
to 10 por ma=
t.he accayeAte par value or
bal4ailitR44i8
Almix#4.4,t1r.t 114 4.strAt.!PIO
•-aaaertar;
V 1:11U.e
0
'U
u%do
(4) 17.,..er.,7
1-:
16
17
18 --
qt.41100tAding
v AAA,Mi.
wheel. and employci.3 ci suf h affiliate, asso-
nut frail and after Zeman. 1. 1935,
MoilutelonsiC 11$0$31Vra-- •Pnr.t
it to the
vi(tea ror ellall be inereased by 'not loss tliiiir
pea, epetratiCrIrt Wo4-414_ VtiteraitifF:'*.ilP11(L:' at tile
lolu*rs4 ..1.241.-r‘ssuts h.e...14 to nest *Nr
c'1
thiti.44f AftkliMasVIR'td..frilSel tekf#8e4 .held b7- s"
tu •:
is
„,
afriliatAss aiseelittent tibt'!'01•tlii'ipii;- iitir
org* •
remerr istf9sfa•
(e) Every such affiliate, association, corporation, or
19
partnership shall, at the time of application for such voting
20
permit, (1) file a statement with the Comptroller of the
21.
Currency that it does not own, control, or have any interest
22
in, or is not participating in the management or direction of,
99
any affiliate formed for the purpose of, or engaged in, the
24 - issue, flotation, underwriting, public sale, or distribution
25
at wholesale or retail or through syndicate participation of
51
1
stocks, bonds, debentures, notes, or other securities of any
2 sort, and that during the period that the permit remains
3 in force it will not acquire any ownership, control, or
4 interest in any such affiliate or participate in the management
5 or direction thereof, or (2) agree that if at the time of
6 filing the application for such permit it owns, controls,
7 or has an interest in, or is participating in the management
or direction of, any such affiliate, it will, within two years
9 after the filing of such application, divest itself of its owner10 ship, control, and interest in such affiliate and will cease
11
participating in the management or direction thereof, and
12
will not thereafter, during the period that the permit remains
13 in force, acquire any further ownership, control, or interest
14 in any such affiliate or participate in the management or
15 direction thereof,
16
iiJs
oa.)la
F.
The Comptreller—of—the—Ctirrency may, in
discre-
17 tion, revoke any such voting permit after giving sixty
it
18 days' notice by registered mail of his- intention to the affili19 ate, association corporation, or partnership. Whenever the
ii_.16oacd
20 Gomptraller—of—tlie—Cuffehey shall have revoked any such
21
voting permit, no national bank whose stock is owned in
22
whole or in part by the affiliate, association, corporation, or
93 partnership whose permit is so revoked shall receive depos24 its of -United States moneys, nor shall any such national
25
bank pay any further dividend to such affiliate, association,
59
The aggregate capital of
corporation, or. partnership upon any shares of such bank
2
owned or controlled by such affiliate, association, corpora-
2
4
by la-w for the establishment of an equal number of national
all be appli-
5
banking associations situated in the various places wheiv
ional banking associations
6
such association and its branches are situated."
but also to t eir—affiliates and to all affiliates controlled
7
--The --provisions of—paragra-pir—'1---Ste. ventir'Of se-
4
5 5136 of the Revised Statutes, as amende
I
6 cable not only to individual..
9
tions," approved November 7, 1918, as amended, are
10
amended by striking out the words "county, city, town, or
11
village" -wherever they occur in each such section, and
(bite this paragraph as amended takes effect, establish and
12
inserting in lieu thereof the words "State, county, city,
operate new branches within the limits of the city, town, or
13
town, or village."
SEC.
aI
. Paragraph
r
(e) of section 5155 of the Re-
vised Statutes, as amended, is amended to read as follow's:
t)te xeprov.i. brtbe Fit.003:r
(c) A national banking association may 4,after the
i4
village or at any point within the State in which said asso-
i4
16
"Any association may take, receive, reserve, and
17
charge on any loan or discount made, or upon any notes,
18
bills of exchange, or other evidences of debt, interest at the
19
rate allowed by the laws of the State, Territory, or District
2t)
where the bank is located, or at a rate of 1 per cenlim in
21
excess of the discount rate of the Federal reserve bank in the
ated shall set aside
22
Federal reserve district where the bank is located, whichever
otal amount of capital at least
91:,
may be the greater, and no more, except that where by the
equal to the minimtlin capital required by law for the organ-
24
laws of any State a different rate is limited for banks of issue
n of-a nationalla.nking association-in--the-place-in which
25
organized under State laws, the rate so limited shall be
the time permitted to State banks by the law of the State
• 1:,
1 PI
t)
such
t4f,
- )011.0,6 ,Ast• tit bit Waffip
arid
orairarj
tlte
boandari.
:itate
a
to
a!„ ainooirtion
ox
.tond
inta
to
round
is
'Ion
!ljeo
.cla
aserioebtaktncti*,or 'ma
•
raw}
"
tkiro.d
'
,
*):morro
Federal
t"'o
an Adjacent itote,
alsootition
rveh
e
oe
gr,brant
the lifittabil":"nr,t of ,
st disbar:6e or
in an ad)aefrit -Asti) but'rot
r-114Pi rr9r t?Ii)
° 1;11.1r7t!iricti
village in which the association is
23 for the use of that branch
24
,25_
SEC. `A.r. The first two seitences of section 5197 of the
Revised Statutes are amended to read as follows:
15 ciation is situated, if such establishment and operation are at
22
Sections 1 and :3 of the Act entitled "An Act
to provide for the consolidation of national banking associa-
9
16
SEc.
S
8 ,throdi,th—e4,144p—afliliates oi--11.01fling—eoirrranies.
14
national banking association and its branches shall al no
time be less than the aggregate minimum capital require()
3 tion, or partnership.
7
PVCry
_
54
55
1
allowed for associations organized or existing in any such
1
2
State under this Title. When no rate is fixed by the laws
2 graph of section 5200 of the Revised Statutes, as amended,
3
of the State, or Territory, or District, the bank may take,
3 is amended by inserting before the period at the end thereof
4
receive, reserve, or charge a rate not exceeding 7 per centum,
4 the following: "and shall include in the case of obligations
5
or 1 per centum in excess of the discount rate of the Federal
5 of a corporation all obligations of all subsidiaries er--ttiftlistteis
6
reserve bank in the Federal reserve district where the bank
6 thereof."
7
is located, whichever may be the greater, and such interest
7
8
may be taken in advance, reckoning the days for which the
8 Statutes, as amended, is amended by inserting before the
9
note, bill, or other evidence of debt has to run."
9
period at the end thereof a colon and the following: "Pro-
No national banking association or member
10
vided, That no obligation of a broker or member of any
1.1
bank shall promise or pay to its depositors as a considera-
11
stock exchange or similar organization, or of any finance
12
don for the maintenance of deposit balances or accounts a
12
company, securities company, investment trust, or other
13
rate of interest in excess of one-half the rate of interest spec-
13 similar institution, or of any affiliate, shall be entitled to the
14
ified in section 5197 of the Revised Statutes, as amended,
14
benefits of the foregoing exceptions, but such obligations
15
and whenever such depositors are bankers who maintain
15
shall in every case be subject to the limitations of 10 per
16
balances with other banks, no such association or member
16 centum hereinbefore set forth in this section; except that the
17
bank shall promise or pay for the maintenance with it of
17
total obligations of an affiliate shall in no case exceed th6
18
such bankers' balances a rate of interest in excess of the
18
said 10 per centum limitations, or the amount of the capital
10
SEC.
19
current rate of discount of the Federal reserve bank of the
24,) district in which the depositorgyY bank is located, or in excess
Pe'r arrn )n.
21 of 24- per centum,iwhichever rate shall be the smaller.
22
2:;
24
k
SEC. 2‹(a) The second sentence of the first par-
(b) Paragraph (8) of section 5200 of the Revised
19 stock of said affiliate actually paid in and unimpaired, which=
20 ever may be the smaller."
21
(c) Section 5200 of the Revised Statutes, as amended;
22 is further amended by adding at the end thereof the folloivc:
all-promin—or
pay_ta..any-depokitiar-auy-intereat-or ether-compensation-kw
23 ing new paragraphs:
--cheek,
24
"The aggregate amount of the obligations (includitig
25
repurchase agreements) of all the affiliates of a national
V.
57
banking association shall not at any time exceed to per
1
the percentage of such capital and surplus fund as shall
2
centum of the capital stock of such association actually paid
2
from time to time be designated by the Federal Reserve
3
in and unimpaired and i0 per centum of its unimpaired
4 surplus fund: Provided, That loans collateraled by Govern
Board in accordance with subsection (m) of section 13 of the
5
ment bonds, or by bonds issued by the State in which such
5
Federal Reserve Act, as amended, wMchever is the smaller.
0117
SEC.
Section 5211 of the Revised Statutes, as
6
Lank is situated, or issued by any political subdivision of
6
amended, is amended by adding at the end thereof the
7
such State, shall not be included within the foregoing limi-
7 following new paragraph:
8
tations if actually owned by the borrower from such bank.
8
"Each afate of a national banking association shall
9
Within tow years after th'is section as amended takes
9
make and furnish to the president of the association, for
10
effect, every affiliate shall be capitalized through the sale
10
transmission by him to the Coinptroller of the Currency,
11
of its own stock which shall be paid for in full in cash upon
11
not less than three reports during each year, in such form
12
the same terms and conditions as provided in section 5140
12
as the Comptroller may prescribe, verd by the oath or
13
of the RevisedEli
as amended, in the case of national
13
affirmation of the president or such other officer as may be
14
bank stock; and no national bank shall establish or capitalize
14
designated by the board of directors of such affiliate to
15
an affiliate through cash or stock dividend declarations made
15
verify such reports, covering the conclition of such affiliate
16
16
on dates identical with those for which the Comptroller
17
from its surplus or from undivided profits. No affiliate shall
th,
re e.
at any time during such tvero-year period hold, or lend upon,
17
shall during such year require the reports of the condition
18
more than 10 per centum of the shares of the capital stock
16
of the association. Each such report of an affiliate shall
of the parent institution."
(1(
20
SEC. X Nothing in section 5200 of the Revised Stat-
19
be transmitted to the Comptroller at the same time as the
20
corresponcling report of the association; except that the
21
utes, as amended, shall be construed to permit a member
21
Comptroller may, in his cliscretion, extend such time for
22
bank to lend to any individual or corporation upon collateral
22
good cause shown.
23
security an amount in excess of 10 per centum of its capital
23 in detail and under appropriate heads, the holdings of the
19
4
Each such report shall exhibit
24 stock actually paid in and unimpaired and 10 per centum
24
affiliate in question, their cost and present value, the ex-
Qi its unimpaired surplus fund, or an amotint in excess of
25
penses of operation for the preceding year, and the balance
25
59
58
3
sheet of the enterprise. It shall be the duty of the presi-
notice therefor from the Comptroller, but such publication
dent of such association to satisfy himself as to the correctness
shall not be considered as a substitute for the annual pub-
of the report before transmitting the same to the Comptroller.
4 The reports of its affiliates shall be published by the
association under the same conditions as govern its own
6 condition reports. The Comptroller shall also have power
7 to call for special reports with respect to any such affiliate
"Provided, That during the period of two years after this
8
whenever in his judgment the same are necessary in order
section as amended takes effect, in making the examination
9 to obtain a full and complete knowledge of the conditions
of any national bank or of any other member bank, the
10
of the association with which it is affiliated. Any affiliate
10 examiner shall include an examination of the affairs of all
11
which fails to make and furnish any report required of
1!
affiliates of such bank, and in the event of the refusal to give
12
it under this section, and any association whose president
12
any information required in the course of the examination
13 fails to transmit as required by this section, any such report
I :3
of any such affiliate, or in the event of the refusal to permit
14 furnished to him, shall be subject to a penalty of 100 for
14 such examination, aLl the rights, privileges, and franchises
15 each day during which such failure continues: Provided,
15 of the bank shall be thereby forfeited, if a national bank,
16
That every affiliate which shall be indebted to any bank
111
17
or banks to an amount exceeding 5 per centum of the
17 any State, membership in the Federal reserve bank of its
18
capital and surplus of its parent bank shall publish its entire
district shall be forfeited and no notice of the termination of
19
portfolio at a date and in a manner to be prescribed by
19 such membership shall be required. The Comptroller of the
20 the Comptroller of the Currency but not oftener than once
20 Currency shall have power, and he is hereby authorized, to
21
annually, and every affiliate which shall be so indebted to'
22 an amount in excess of 10 per centum of the capital and23 surplus of its parent bank, shall be required to publish its
•
lication hereinbefore required."
)51'
SEC. Se'The first paragraph of section 5240 of the
4
hetoy.{.;-0142
oci at
Revised Statutes, as amended, is aranaed by,\Ettidiereethe
a colo'n zind
(; end of-414e—first-Taragrafeh therealthe following proviso:
9-I
•.•
and if a bank or trust company organized under the law of
publish the report of his examination of any national banking association or affiliate which shall not within one
23 hundred and twenty days after notification of the recom-
24
portfolio in at least one daily newspaper issued in the place
24
25
where such bank is located within ten days after receiving
25 examination, have complied with the same to his satisfac-
mendations or suggestions of the Comptroller, based on said
Q
60
61
Ninety days' notice prior to such publicity shall be
tion.
given to the bank or affiliate."
:. 31,-.,.... -:1.3,--T114.-, •L\i-c't•--eitiitki4 -'±Ai, -.....,-. .-try. r-Tiirpv!IIR.t..f 6ea. 29. (a) ,I.lortavor. in V-te erpinion or the ts,',orp-
•;
troWiricoOt:t444,44,0g4w4;AVY:f44,~44.;f4r40.0z,,lig,i44 .attAtirra
or of ti bank or trunt comprtriv tbizag businonti in V.,.
.
:
0, ftl (t
481f4atofg.i.;.;°NPRiF ve4 :FitTII i*AARP *AIrti-,b,w
.stilk
'oral rt.-13011re no it, tiv dir tor or officer oi! 6
14-ilit.14,4,,TAIII\ors. ihtp,k 11
or 1;sta ;444riot i ci:'0
lit* sfaktAtizie ,;, eittiti bok o'*i46.4.t '
'it3t:di-AkritoktSet
1 ."4,;-.1.ilto conti.nod un,afe or unsound pAtooarri:Ari, o.f ,s;
Tot Fuel bank or ttust corr.:Any,
:yitii.t4iititt liiirl
tioditit-iitti'',
i'l:.o ,kripte.rollor or tbp Fo414.)ra1 resorro acep.t„ el Ahe mule Nay
.
be. shall04kis:. -ififlthCittiatitilb :Shia aitovairior illf 1/10 Vedtimilil
A.:.serve ilon.ri• Thereapen the (.roveriser of the Oderel
3asaieF.a itiarA aitcalLoarreinsitisc alpeiscsestutitiOxitor tiricoltUcer
0004
or 1e Governor, ea
to oplpotar boro:ro a covnittee eoaelating
.,. recortftt.4.241.
QuilrelissilleaC$0.
i Pannttitletion:01' MO,
banP.
or
trot
meow is loosted
wach
vflich
of ti district in
O tfORIt aefWi LOT_
= Carriff .4
hert4fi
t'ILIA director or
U!1 u&ibootrliV the 0
h1,
,x0vileion. or .hca
i 41
'
11V tf141q1,ilf;a110,
,4fi-V4I*Td
toott.ro1190
in It iscmtior.„ by a
siixiacti4e3 the ca- wittoo
itirfidte'' .,;.raot*
it'aiiiiai**Ote\•16itt4`tifat`)iict6
of ono, ftuctt order aU,bp ,r,A.rv00 upon ,auch diroct:›r or
18 •
itttlJt .eerwativi *um
Ml
I err/4ton Att4 u
ciiroctor or officer upon uhoct
a director or ori'lear• Aro"
1özy Ciliaqh)cltiler Clinfbeionsitsved itArtheigiitztivzitnrided and who
thereafter pcirtieipatee th er!;,, •7.7ann..r in the noneseneut of
liguah bank teitttinuitollinow *4044floe,On411;rot imosinitiOor
tzto...4 or Imprisoned noVtare than fire years, or both.
17 banks incorporated Ander the laws of a State or of tile
4
1
No corporation—engagefl—in—poniniefee—ffs-4444444-4i
2
/1
this Act shall place its funds on deposit with any ind4ual.
3
private banker, or banking association, or trust/ company.
4
except banking associations incorporated tinder the laws of
5
the United States or of some one of the States or Territories
C,
thereof; and every violation of the provisions of this para-
7
graph shall be punishable by a fine of not less than $1,000
S
per day for each day during which such violation continues;
0
and no corporation which shall fail to deposit its funds in
10
banking associations incorporated under the United States
11
or of some one of the States or Territories thereof shall
12 -.engage in such• commerce."
13
SEC.
R. The
right to alter, amend, or repeal this
14
Act is hereby expressly reserved. If any clause, sentence,
15
paragraph, or part of this Act shall for any reason be
16
adjudged by any court of competent jurisdiction to be invalid,
17
such judgment shall not affect, impair, or invalidate the
United States o'erating within the United States and en-
18
remainder of this Act, but shall be confined in its operation
erce as defined in this Act, shall make to
19
to the clause, sentence, paragraph, or part thereof directly
')()
any indivi ual, other corporation (except its own subsidi-
20
involved in the controversy in which such judgment shall
21
aries)
rivaie banker, or incorporated banker, loans secured
21
have been rendered.
92
by
18
gaged in co
lateral; and every violation of the provisions of this
237ragraph shall be punishable by a fine of $5,000 per day
24
du
!
.8
.
I
II
• II
!4
ha
72D CONGRESS1
181'SUWON J•
S 3215
A BILL
To provide for the safer and more effective use
of the assets of Federal reserve banks and
of national banking associations, to regulate interbank control, to prevent the undue
diversion of funds into speculative operations, and for other purposes.
By Mr. GLASS
Bead
JANUARY 21, 1932
twice and referred to the Committee on
Banking and Currency
@FedFRASER