The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
A BILL To amend the Federal Reserve Act and th© National Bank Act, and for other purposes^ Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled^ TITLE Sec* !• (a) !• uoaraoartfi TO THE FEDERAL RESERVE ACT. Section 4 of the Federal Reserve Act, as amended, is further amended by striking out the paragraph i«hieh commences ¥&th the words, nClass C directors shall be appointed by the Federal Reserve Board11 and the next succeeding paragraph, and inserting in lieu thereof the follomngt lf Class C directors shall be appointed by the Federal Re- serve Boards They shall have been for at least two years resi- dents of the districts for which they are appointed, except that this requirement shall not apply to the Governor and Yie© Governor of the bank* Eaoh Glass C director shall hold office for a term of three years except that the Governor's term as a Glass C director shall expire 'when he ceases to be Governor of th© bank and, if the Vice Governor be designated as a Class 0 director, his term as a Class G director shall expire ishen he ceases to be Vic© Governor* One of the directors of Class G shall be appointed by the Federal - 2 ~ Reserve Board as Deputy Chairman to exercise the powers of the Chairman of the board when necessary* In case of the absence of the Chairman and Deputy Chairman, the third Class C director shall preside at meetings of the board* 1f lffective ninety days after the enactment of the Act con- taining this amendment, the offices of Governor and Chairman of the Board of Directors of each Federal Reserve bank shall be COSH bined* fh® Governor shall be the chief executive officer of the bank and shall be appointed annually by the Federal Reserve Board, -which shall fix his salary to be paid by the Federal Heserve bank* He shall be ex officio a Class C director of the bank, Chairman of the Board of Directors and Chairman of the Executive Ooismitteej and all other officers and employees of the bank shall be directly responsible to him* For each Federal Reserve bank there shall be ap- pointed annually in the same manner as the Governor a Vic© Governor, isho shall, in the absence or disability of the Governor or during a vacancy in the office of Governor, serve as the chief executive officer of the bank and act as Chairman of the Executive Committee of the bank* He may be appointed by the Federal B.®$®rr® Board as a Class C director of th© bank and in such case may be designated as Deputy Chairman of the Board of Directors# Yfti©never a vaaancy shall occur in the office of the Governor or Yice C?overnor of a Federal Reserve bank, it shall be filled in the manner provided for original appointments; and the person so appointed shall hold office until the expiration of the term of his predecessor* *EffectiTe ninety days after the enactment of the Act containing this amendment, any Federal Reserve Agent uho shall not have been appointed Governor of the bank shall cease to be a Class C director and Chairman of the Board of Directors * All duties of the Federal Reserve Agent under this Act shall be performed by such person as the Federal Reserve Board shall designate* n lo member of the Board of Directors of a Federal Eeserve bank, other than the Governor and Vice Governor, shall serve as a director for mor© than two consecutive terms of three years, but this shall not prevent the present incumbents from serving out the remainders of their present terms*1* (b) Mxe last paragraph of section 4 of the Federal Reserve Act, as amended, is further amended by striking out th© words, nThereafter ©very director of a Federal Reserve bank chosen as hereinafter provided shall hold office for a term of three years*, and substituting the words, nThereafter each director of Glass A and each director of Class B chosen as hereinafter provided shall hold of fie® for a term of three years«Sf Sec* 2* Section 9 of th© Federal Easerve Act, as amended, is further amended in the following respects $ (1) The fifth paragraph thereof is amended by adding at th© end thereof a new sentence to read as follows s n Such reports of condition shall b© in such form and shall contain such information as the Federal Reserve Board may require and shall be published by the reporting banks in such manner and in accordance with such regulations as the said Board may prescribe*11 - 4 - (2) The tenth paragraph is wnend&d by changing the period at the end thereof to a colon and adding the following? "Provided, furtherf That, upon application to the Federal Reserve Board at any time prior to July 1, 1937, by any nonmember bank which at the tisne of such application has been admitted to the benefits of insurance by the Federal Deposit Insurance Corporation under section 1EB of this Act, the Federal Reserve Board, is its discretion, in order to facilitate the admission of such bank to meiibership in the Federal Reserve System, may waive in -whole or in part the requirements of this section relating to the amount of capital required of such bank* Such bank shall comply with such requirements within such period or periods after admission as in the Board's judgment shall be reasonable in view of all the circumstances•" (S) The following new paragraph is added at the end of the said section 9i tt lhenever member banke ar© required to obtain re- ports from affiliates, or ishenever affiliates of member banks are required to submit to examination, the Federal Reserve Board or the Comptroller of the Currency, ae the case may be* may waive such requirements with respect to any such report or examination of any affiliate if in the judgment of the said Board or Comptroller, respectively, such report or examination Is not necessary to disclose fully the relations between such affiliate and such m b * *&& the otfoot thereof ttjwtt the- affair* of tttefc J* £-eotis$i 10 of tb* r*.-.«aral iMNMi Aetf an «tt«i&t£* i t In u*# fvll<jwliv retpectot (I) The eeeasA tentonee i f the ririst ptptgN^I la •fc Mdi*fcift£ MM tim fti^i«iftM HMMft H MM MM hNfflttet « a l l 0 OWHI 9MWMHI MIS f to ywtleipat* in tkm to %# of mt i#a#t t*o fwinsmt fnmlifi«d fey t D H i i i i OJT ^«A«tml iiMPNi b«aka# fent prmml (8) tho r«^f^4»t^mt i f irtaitaf MtriMfi of tho Ihi t l r « t faracjrmi* I t further «^m4#fi b^ wirtlug Kt t h i tee MIS July l # liS$* t&oll M0h r<^#i^# «aa of ia3#0CKI# i^prAblo ^#mtlilj# %0go^fe#r wife actual | Q rotiro if W W • ! our **«• P l U i i ^f#m reaching tfco t # i of mmfam ®t tbm - oard #0 r i U g j i fimi M«1T» ««rrot for at louit firo QOBOoeatlre yomro lug %fe« roMftlMlor of hit l l l e , roUr«Mmt pi^ In - 6 - to the annual salary paid to board members prior to the enactment of the act containing this amendment! Provided, That, if he shall not have served for as much as 12 consecutive years, his retirement pay shall be at the rate of one-twelfth of such annual salary for each year and for any fraction of an additional year of such services Provided, further, That any member whose term expires between the ages of 65 and 70 and who is not reappointed shall receive retirement pay upon the same basis as if he had been retired under the provisions of this paragraph© The funds neces- sary for such retirement pay shall be provided by the Federal R e serve banks in such manner as the Federal Reserve Board shall prescribe*" (3) The second paragraph is amended by striking out the fourth sentence thereof and inserting in lieu thereof the following: "Of the six appointive members of the Board one shall be designated by the President as Governor and one as Vice Governor of the Federal Reserve Board, and the provisions of th© next preceding sentence of this paragraph shall not apply to the member designated as Governor* The term of office of the member designated as Governor shall be the period during which he shall continue as Governor and, upon the termination of his designation as Governor, he shall be deemed to have served the full term for which he was appointed** - 7 Sec« 4« Section 11 of the Federal He serve Act, as amended, is further amended in the following respects: (1) Subsection (i) is amended by adding the following at the end thereoft ''The Board may assign to designated members of the Board or officers or representatives of the Board, under such rules and regulations, the performance of duties, functions or services so specified, but any such assignment shall not include the determination of any national or system policy or any power to make rules and regulation^ or any power which under the terms of this Act is required to be exercised by a specifiedfttim&§¥of ma&bers of th^Board* * (2) The first sentence of subsection (m) is amended by changing the period at the end thereof to a colon and adding at the end thereof the following$ n Pryyidedf That with respect to loans secured by obligations of the United States, member banks shall be subject to the limitations and conditions applicable to national banks under paragraph (8) of section 5200 of the Revised Statutes, as amended*" (S) At the end of the said section 11, there is added a new subsection reading as follows: ft (o) The Federal Reserve Board shall adopt such regulations and/or take such other action as laay be appropriate in its judgment to carry out the purposes of the provisions of this Act** - 8 - See* 5* Effective ninety days after the enactment of this Act, section 12A of the Federal Reserve Act, as amended, is amended to read as follows; ^Sec* 12A# There is hereby created a Federal Open Market Coxmaittee (hereinafter referred to as the Committee), which shall consist of the Governor of the Federal Reserve Board, who shall be Chairman of the Committee, two members of the Federal Reserve Board, selected by the Board, and tiwo Governors of the Federal Reserve banks, selected by the Governors of the Federal Reserve banks in accordance with procedure prescribed by regulations of the Federal Reserve Board* The terms of the members of the Committee, other than the Governor of the Federal Reserve Board* shall expire at the end of each calendar year* Whenever a vacancy shall occur a successor shall be selected in the same manner as his predecessor was selected* Meetings of the Committee shall be held from time to time upon the call of the Governor, at the request of the Board or of any two members of the Committee, or upon his own initiative* ^The Conanittee from time to time shall consider, adopt and transmit to the Federal Reserve Board resolutions setting forth policies "which in the judgment of the Committee should be followed with respect to open market operations and discount rates of the Federal Reserve banks, and the Board shall give prompt consideration thereto* Upon notification of the Board1 s approval of any such resolution, the Federal Reserve banks shall conform their open market operations to the provi- •A sions thereof, and the Coinmittee shall aid in the execution of such policies and/or perform such other duties relating thereto as the Board may prescribe* All open market operations of the Federal Reserve banks shall be subject to regulations, limitations and restrictions prescribed by the Federal Reserve Board* which shall not be inconsistent with resolutions approved by the Board as hereinbefore provided*H See* 6« Section 13 of the Federal Reserve Act, as amended, is further amended by adding at the end thereof a new paragraph reading as follows 5 *Upon the indorsement of any member bank, which shall be deemed a waiver of demand, notice and protest as to its own indorsement exclusively, and subject to such regulations as to maturities and other matter* as»the Federal Reserve • I Board m y prescribe, any Federal Heserve bank may discount any sound assets of such member bank and may make advances to any such member bank on its promissory notes secured by such assets*f! Sec* 7* Subsection (b) of section 14 of the Federal Reserve Act, as amended, is further amended by changing the semicolon at the end thereof to a colon and adding the followings ^Provided, That any bonds, notes or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to principal and interest may be bought and sold without regard to maturities*n -10- Sec* 8* Section 16 of the Federal Reserve Act, as amended, is farther amended in the following respects: (1) Strike out the first 10 paragraphs and substitute therefor the following: rt Sec* IS* Each Federal Reserve bank may issue Feder- al Reserve notes, which shall be obligations of the United States, secured by a first and paramount lien on all of the assets of such bank* Federal Reserve notes shall be issued and retired under such rules and regulations as the Federal Reserve Board may prescribe and shall be legal tender for all purposes* "Every Federal Reserve bank shall maintain reserves in lawful money (other than Federal Reserve notes or Federal Reserve bank notes) of not less than 38 per centum against its deposits and reserves in gold certificates of not less than 40 per centum against its Federal Reserve notes in actual circulation* Each Federal Reserve note shall bear upon its face a distinctive letter, which shall be assigned by the Federal Reserve Board to each Federal Reserve bank, and also a serial number* tf lhen received by the Ireasuw of the United States from a source other than a Federal Reserve bank* Federal Reserve notes unfit for further use shall be canceled and retired; and, upon receipt of advice of such cancelation and retirement, the issuing Federal Reserve bank shall reimburse the Treasurer of the United States for the notes so canceled and retired* Y/hen received by a - 11 - Federal Reserve bank, Federal Reserve notes unfit for further use shall be canceled and forwarded to the Treasurer of the United States for retirement% and, if issued by another Federal Reserve bank, such issuing bank shall reimburse the Federal Reserve bank ?*iich canceled such notes and forwarded them to the Treasurer of the United States• "In order to furnish suitable notes for circulation as Federal Reserve notes, the Secretary of the Treasury shall cause plates and dies to be engraved in the best manner to guard against counterfeiting and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the denominations of f 5, flO, |20, #50, #100, |5Q0, |l,000, #5,000, and |10,000 as may be required to aupply the Federal Reserve banks* Such notes shall be in form and tenor as directed by the Secretary of the Treasury and shall bear the distinctive numbers of the several Federal Reserve banks through -which they are issued* Tflhenu such notes have been prepared, they shall be held in the Treasury subject to the order of the Federal Reserve Board for delivery to the Federal Reserve banks «n (2) The 16th paragraph is amended by striking out the words wor Federal Reserve Agent" -where they occur in three different places and also the words "or his11 and the ^rords !fat the Treasury or at the Subtreasury of the United States nearest the place of business of such Federal Reserve bank or such Federal Reserve Agent#!t - IE - Sec* 9« Section 19 of the Federal Reserve Act, as amended, is further amended in the following respects: (1) The first paragraph thereof is amended to read as follows: n Sec« 19* The Federal Reserve Board is authorized to define the terms 'demand deposits*, fdeposits payable on demand1, 'time deposits1, 'savings deposits1, and 'trust finals', to determine what shall be deemed to be a payment of interest for the purposes of this section, and to prescribe such rules and regulations as it may deem necessary to effectuate the purposes of this section and prevent evasions thereof** (2) The sixth paragraph thereof is amended to read as follows: Notwithstanding the other provisions of this section, the Federal Reserve Board, in order to prevent injurious credit expansion or contraction, may by regulation change the requirements as to reserves to be maintained against demand or time deposits or both by member banks in any or all Federal Reserve districts and/or any or all of the three classes of cities referred to above*11 (3) The tenth paragraph thereof is amended to read as follows: n In estimating the reserve balances required by this Act, member banks may deduct from the amount of their gross demand deposits the amounts of balances due from other banks (except Federal Reserve banks and foreign banks), including cash items with Federal Reserve banks and other banks in process of collection, checks on other banks in the same place, and exchanges for clearing houses**1 (4) The last two paragraphs thereof are amended to read as follows: w ¥o member bank shall, directly or indirectly by any device whatsoever* pay any interest on any deposit which is payable on demand: Provided, That nothing herein contained shall be construed as prohibiting th® payment of interest in accordance with the terms of any certificate of deposit or other contract entered into in good faith which is in force on the date on which the bank becomes subject to the provisions of this paragraph! but no such certificate of deposit or other contract shall be renewed or extended unless it shall be modified to conform to this paragraph, and every member bank shall take such action as may be necessary to conform to this paragraph as soon as possible consistently with its contractual obligations 2 Provided, however, That this paragraph shall not apply (1) to any deposit of such bank which is payable only at an offioe thereof located outside of the States of the United States and the District of Columbia, (2) to any deposit made by a mutual savings bank, (S) to any deposit of public fund* made by or on behalf of any State, county, school distriot, or other subdivision or municipality, or to any deposit of trust funds, if the payment of interest with respect to such deposit of public funds or of trust fuids is required by State law, or (4) to any deposit of funds by the United States, any Territory, District, or possession thereof( including the Philippine Islands) or any public instrumentality or agency of the foregoing, with respect to which interest is required to be paid by law. -14- n The Federal lieserve Board shall from tine to tirae limit by regulation the rate of interest -which may be paid by member banks on time and savings deposits, may classify time and savings deposits according to maturities, conditions respecting receipt, withdrawal, or repayment, locations of banks or otherwise as it may deem necessary in the public interest, and may prescribe different rates for deposits of different classes• Ho member bank shall pay any time deposit before its maturity except upon such conditions and in accordance with such rules and regulations as may be prescribed by the Federal Reserve Board, or waive any requirement of notice before payment of any savings deposit except as to all savings deposits having the same requirements Provided, however, That the provisions of this paragraph shall not apply to any deposit which is payable only at an office of a member bank located outside of the States of the United States &xid the District of Columbia*" (5) At the end of the said section 19, there is added the following new paragraph: "Notwithstanding the provisions of section 7 of the First Liberty Bond Act, approved April 24, 1917, as amended, section 8 of the Second Liberty Bond Act, approved September 24, 1917, as amended, and section 8 of the Third Liberty Bond Act, approved April 4, 1918, as amended, member banks shall be required to maintain the same reserves against deposits of public moneys by the United States as they are required by this section to main tain against other deposits*" Sac* 10, Section M of the Federal Aes&nre Act, as ia further amaudad by etrjjcln*: out the third sentence thereof• Lee. H i Effective ftttMQT X* ISM* the Act entitled "An Act to supleHusut axl^iiru; lawe against unlawful restraint § ami monopolies* ittdl for athar purposes* approved October 15 f 13141 an amended^ Is further asended (a) % striking out section BA thereof m l (b) by g for the f i r s t thra-e p&r&gr^phe of seetloa 8 thereof the 8* Mo director, offiear 02* Miploy©^ of aiay bajruk of iha Fedtr-al lieiiervci System rtwii be «t the same tine a diraetor f officer ox* employee of any other blinking association ^ eaying^ bank or trust company except in limited tlMMMM of I M I in which tlia Federal /taeerire iHWi may allovf eoieh seririca hgr general regulations whan i t deems i t in the public intereat to do BQ.® t e c 12* Section 2 of the Banking Act of 19SS la animd^d "by ing at the and thereof a new paragraph reading H follow** f! flotwlxhi;ta^clirig the foregoing^ the t e r s v holding (BMipAiagr affiliate 1 shall not include $my ari.rariiMitiori wkicfaj in the judgaent of the Fdder&l Reaex*ve Boards ie not principally ^igag^l d i r e c t ^ or indirectly in the bugiaees of holu;ing UN atoek off or mana^tog 02* controlling^ banks» banking as^oeiationa, sairinga banks mui/or truat companies»tt £ec« 15* Para^ruph numbered (1) of section Zl of the Baitking Act of 1955 is amended by striking out the word *or* at the Ml thereof --16- mid aubttitutiag WH *but nothing iaa tfalt paragraph shall spply to &ay ta ut baak or tru^t oo^p^iy incurd under the l a w of the Unitedfc-tfct&fior of imy thereof f a fiibi'kmtii:-.! portion offehateiitiao{&i»of NMdSfcf of recoiviati aopa^.it^ or fiduciary i>o^0ri3 »iailfir t o llMMN (MH^IMd to uttdur aeetion ll(fc) of t t e Federal E«»enr& Aot^ aft <- or deral authority ijMvin;. t ipcnditai ov^r b»nktx and which i^ not #pereied for tfa® pmrpoM of avading MM pnytiaiona of thifc ;xiro^ri,ph or of the i © c r i t i c <jccUan^o l®% of 19S4*11 BRANCH BASKIHG PROVISION Sec* « Section 5155 of the Revised Statutes of the United States, as amended, is further amended by adding at the end thereof a new paragraph as follows: n (i) Subject to the limitations of this subsection and the pro- visions of the last sentence of subsection (c) and subsection (d) of this section, a national banking association may, with the approval of the Comptroller of the Currency, establish a new branch or branches at any point or points within the head office or branch territory of a Federal Reserve bank, as the case may be, in which the head office of such association is located* Mo branch shall be established under this subsection (l) except within the limits of a city, town, or village having a population of more than fifty thousand inhabitants, or in which there is no unit bank or head office of any bank, or in which all then existing banks consent to the establishment of such branch, or (2) except / in lieu of a bank or branch existing on the date of such establishment a substantial portion of whose assets and liabilities are acquired by such association, including a bank or branch in the hands of a conservator, receiver or other liquidator, but not including any bank organized after the enactment of this subsection until five years after its authorization to com&ence business* Mothing in this subsection shall be construed as limiting, restricting or affecting the right of any such association to retain, establish or operate branches in accordance with other subsections of this section*11