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Form F. R. 131
BDARD DF GOVERNORS
or
THE
FEDERAL RESERVE SYSTEM
Office C o r r e s p o n d e n c e
T0
Governor Eccles
From
Mr, Baumann
Date
May n, 1950
Subject: Bank Holding Company B i l 1
For your information, I am attaching copies of Senator
Robertson's substitute bank holding company bill (S. 35A7), and five
amendments thereto intended to be proposed by Senator Douglas on
behalf of himself and Senator Tobey.
Attachments
U/H/50)
A
BILL
and regulation of bank holding companies, and for other purposes
bed by the Senate and House of Representatives of the United States
of America in Congress assembled, That this Act may be cited as the "Bank Holding
Company Act of 1950".
Section 2. Definitions,
(a) "Bank holding company" means
any corporation, business trust, partnership, association, or other
similar organization vhich at any time after April 15, 1950 owns
or controls, directly or indirectly, 50 per centum or more of the
shares of an insured bank (as defined in Section 12B(c) (8) of the
Federal Reserve Act) or 50 per centum or more of the shares voted for
the election of directors of an insured bank at the preceding election, or controls in any manner the election of a majority of the
directors of an insured bank, or for the benefit of whose shareholders or members more than 50 per centum of the shares of an insured bank is held by trustees at any time after April 15, 1950;
or a successor to any such organization. Notvithstanding the foregoing, the term "bank holding company" shall not include any corporation all of the stock of vhich is ovned by the United States.
(b) The term "successor" shall include rny organization T'hich
acquires from a bank holding company stock of f-n insured bank, when
and if the relationship between the organization and the bank holding
m2 company i s such that the transaction effects no substantial ch
in tho control or beneficial ownership of sucn stock.
The Board
of Goverr»r» of th© Federal Usserv'e System aay, by regulation, further define the* torts "successor" to the extent necessary to prevent
evasion of the purposes of this Act.
faction 3« No bank holding company shall, utrhlle i t cma or
controls loor© than $ p«r centum of tti« ahara* of ary ir»«ur«d bank,
(a)
acyxir© any siiaras of any ^*sk excopt vitli the approval of
(1) the Board of tovernors of th* Pectoral Keservo
astern i f th« bank i s a state meabor bank (other
than a district bank),
(2) th© Controller of tho Currency i f the bunk i s
a national or a District bank, or
(3) tlie Federal Deposit Insurance Corporation i f the
bank i s a Boo-ooaber bank;
(b) acquire aj^y shares of any bank i f after «uch acquisition
i t would am shares in banks which, in the aggregate, at the end
of the preceding calendar y«&r, CD operated aore tlian 25 per centra
of tha banking officer (inabidirv branch officea) in any Federal
ilOBerve district or (2) !*sld sore Uian 25 per centos® of the bank
deposits in any Fsderal lleserve district; except in exigent casos
and with the prior approval of a l l throe srjperrisory agencies
designated in subsection (a)}
.
1 •
(c) acc.uire «ny alia res of b«.nk« located In fftfttol vhich rre
vholly outside th« Federal Reserve d i s t r i c t in which are centered
i t s rojor banking int#»r*ets as detsrnrined by the Bosrd of Governors
of the Federal llMVfl System; except in exigent cases feic vith the
prior approval of t i l three supervisory s^encies design*, tfrd in
subfiletion (»).
Section 4.
No bank holding company, vhile i t ovns or controle
wore than 5 per centua o r the shares of sny insured be.ifc, shall
acquire, or retain ftftcv January A, 1953, (1) tny shares or 3iiailar
acuity interest in any nonbankin^ corporations or organization*
other then those engaged exclusively in conducting e s«?fe depoait
or fiduciary business, or (£) any obligation? other than "investment securities" of the types* i.ac in the r.counts vhich it could
purchase or retain if i t vere a bank subject to the Seventh pi regraph of Section 5136 of the Bpvised Ststutea; hovever, thi« subsection shell not apply to benk holding companies vhich ere bsnks
of deposit organiaed under the lava of a HsUi or of tlM United
Section 5.
No beni holding coaspeay, vhile i t o^ns or controls
more than 5 P*r centuui of the shares or eny insured benx, shall,
after Janucry U, 1953, engage in *ny business rtfeer IkMI that of
banking or oscn&gin^ or controlling bsnk*.
Section 6.
Sections 3, I, and 5 sh^il not apply to
one by banks or trust companies {«) in * fiduciary c£.p&city, or (b) In the regular course of securing or collecting debts
previously contracted.
Section 7.
No b*nic holding conpii.ny ahfcil eci.uire eny ri
of a stat* ben'* located in « state la vhich Mill acquisition
he contrary to 3Vtp lsv.
Section 8.
In thH exercise of HM di&crstlon vmrt#i in
M
by tiiig Act sne other provisions of lev vith respect to approving
or peraittin^ expansion of multiple-office
h
Tmt*4TigmttwPof-rc of
uovernurs of th« federal heserv* Syttem, the Comptroller of Uie
Currency, and the Federal leposit Inaursnce rorporr:tion sheil trke
into considereti.on the fee to re specified in Section LS(g) of the
Federal Reserve Act, Ml -lac the policy of Congress, hereby to*
clared, in favor of locel ovnerahip end control of beru.e e.nc competition in the field of banking, Mti in opposition to excessive
concentration of po^er la tne field of banking through undue
expension of multiple-office banking ay s t e m .
Section 9.
Any torporrtion, >iila><j trust, partnership,
association, or other siniler or^.niz&tion vhich vilfuily violtte*
any provision of this Act she. 11 upon conviction be fined not more
thin one thousand itUtjra for ench d&y ourir^ ^hich the violfttion
continue3.
Any individual vho vilfuily ptrticipfit«»e in k violation
-5 of any provision of this Act shall upon conviction be fined not
more than ten thousand dollars or imprisoned not more then tvo
years, or both.
I "
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@FedFRASER