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'orm.No. 131
Dffice Correspondence
Mr. Clayton
Date_^ May 10^ 1955
Subject: Form In uhloh BaiOrtng
Mr« Wyatt, General Counsel
FEDERAL RESERVE
BOARD
Aet of 1936
pa a3©d th© House of
For your information there is attached a copy of
the bill *hioh shows on pages 43* 60 and 88 the changes rtiieh
the House made in the bill before passing it.
Respectfully,
TfaLter
General C
"17"'" pp
Union Calendar No. 2 2 2
.R. 7617
[Report No. 742]
,
(
/ , ..
THE HOUSE OF KEPBESENTATIVES
APRIL
Mr.
19,1935
introduced the following bill; which was referred to the Committee on Banking and Currency and ordered to be printed
STIAGAIJI
APRIL
19,1935
Committed to the Committee of the Whole House on the state of the Union
and ordered to be printed
A BILL
To provide for the sound, effective, and uninterrupted operation
of the banking system, and for other purposes.
1
Be. it enacted by the Senate and House of Bepresentor-
2
tives of the United States of America in Congress assembled,
3
This Act may be cited as the " Bankkg Act of 1#35 v.
4
TITLE I—EEDEKAL DEPOSIT MSUEAM3E
5
SECTION
101. Section 12B of the Federal Beserre
6
Act, as amended (XL S. C, Supp. VII, title 12, see. 264),
7
is further amended as follows :
8
9
h By striking out subsection (a) and inserting in lieu
thereof the following:
10
" (a) There is hereby created a Federal Deposit Insur-
11
auce Corporation (hereinafter referred to as th& ' Corpora-
2
1
tion'), which shall insure, as hereinafter provided, the de-
2
posits of all banks which are entitled to the benefits of insur-
3
ance under this section, and which shall have the right to
4
exercise all powers hereinafter granted."
5
2. By adding at the end of subsection (b) the
6
following: " In the event of a vacancy in the office of the
7
Comptroller of the Currency, and pending the appointment
8
of his successor, the Acting Comptroller of the Currency shall
9
be a member of the board of directors in the place and stead
10
of the Comptroller.
In the absence of the Comptroller of
11
the Currency any Deputy Comptroller of the Currency, as
12
designated from time to time by the Comptroller, may,
13
within the limits prescribed by the Comptroller, act as a
14 member of the board of directors in his place and stead.
In
15
the event of a vacancy in the office of the chairman of the
16
board of directors, and pending the appointment of his
17
successor, the Comptroller of the Currency shall act as
18
chairman.
19
gible during the time he is in office and for two years there-
20
after to hold any office, position, or employment in any
21
insured bank.
22
directors shall be ineligible during the time they are in
23
office and for two years thereafter to hold any office, position,
24
or employment in any insured bank, except that this restric-
25
tion shall not apply to a member who has served the full
The Comptroller of the Currency shall be ineli-
The appointive members of the board of
3
1
term for which he was appointed.
No member of the board
2
of directors shall be an officer or director of any bank, bank-
3
ing institution, trust company, or Federal reserve bank or
4
hold stock in any bank, banking institution, or trust com-
5
pany; and before entering upon his duties as a member of
6
the board of directors he shall certify under oath that he has
7
complied with this requirement and such certification shall be
8 filed with the secretary of the board of directors.
No mem-
9
ber of the board of directors serving on the board of direc-
10
tors at the effective date shall be subject to any of the pro-
11
visions of the three preceding sentences until the expiration
12
of his present term of office."
13
3. By inserting a new subsection to read as follows:
14
" (c) As used in this section—
15
" (1) The term ' State bank' means any bank, banking
16
association, trust company, savings bank, or other banking
17
institution which is engaged in the business of receiving de-
18
posits and which is incorporated under the laws of any State
19
or the Territory of Hawaii or Alaska or which is operating
20
under the Code of the District of Columbia (except a national
21
bank).
22
"(2) The term ' State member bank' means any
23
State bank which is a member of the Federal Reserve Sys-
24
tern, and the term ' State nonmember bank' means any
25
other State bank.
4
1
2
" (3) The term ' District bank ' means any State bank
operating under the Code of the District of Columbia.
3
"(4) The term 'national member bank' means any
4
national bank located in the States of the United States, the
5
District of Columbia, or the Territories of Hawaii or Alaska,
6
except a national nonmember bank as hereinafter defined.
7
"{&) The term ' national nonmember bank' means
8
any national bank located in the Territories of Hawaii or
9
Alaska which is not a member of the Federal Reserve
10
System.
11
" (6) The term ' mutual savings bank ' means a bank
12
without capital stock transacting a savings bank business,
13
the net earnings of which inure wholly to the benefit of its
14
depositors after payment of obligations for any advances by
15
its organizers.
16
"(7) The term 'savings bank' means a bank, other
17
than a mutual savings bank, transacting a strictly savings
18
bank business under State laws imposing special require-
19
ments on such banks governing the manner of investing
20
their funds and of conducting their business: Provided, That
21
the bank maintains, until maturity date or until withdrawn,
22
all deposits made with it, exclusive of funds held by it in a
23 fiduciary capacity, as time savings deposits of the specific
24
term type or of the type where the right to require written
25
notice before permitting withdrawal is reserved: Provided
5
1
further, That such bank to be considered a savings bank
2
must elect to become subject to regulations of the Corpora-
$
tion respecting the redeposit of maturing deposits and pro-
4
hibiting withdrawal of deposits by checking except from
5
specifically designated deposit accounts totaling not more
6
than 15 per centum of the bank's total deposits.
7
"(8) The term 'insured bank' means any bank the
8
deposits of which are insured in accordance with the pro-
9
visions of this section, and the term ' noninsured bank'
10
means any other bank,
11
"(9) The term 'new bank' means a new national
12
banking association organized by the Corporation to assume
13
the insured deposits of an insured bank closed on account
14
of inability to meet the demands of its depositors and other-
15
wise to perform temporarily the functions prescribed in this
16
section.
17
"(10) The term 'receiver' shall include a receiver,
18
liquidating agent, conservator, commission, person, or other
19
agency charged by law with the duty of winding up the
20
affairs of a bank.
21
22
" (11) The term ' board of directors ' means the board
of directors of the Corporation.
23
"(12) The term 'deposit' means the unpaid balance
24
of money or its equivalent received by a bank in the usual
25
course of business and for which it has given or is obligated
6
1
to give unconditional credit to a commercial, checking, sav-
2
ings, time or thrift account, or which is evidenced by its
3
certificate of deposit, and trust funds held by such bank
4
whether retained or deposited in any department of such
5
bank or deposited in another bank, together with such other
6
obligations of a bank as the board of directors shall find
7
and shall prescribe by its regulations to be deposit liabilities
8
by general usage: Provided, That any obligation of a bank
9
which is paj'able only at an office of the bank located out-
10
side the States of the United States, the District of Colum-
11
bia, and the Territories of Hawaii and Alaska shall not be
12
a deposit for purposes of this section or be included as a part
13
of total deposits or of an insured deposit.
14
directors may by regulation further define the terms used
The board of
m
15
in this paragraph.
16
"(13) The term 'insured deposit' means such part
17
of the net amount of money due to any depositor for deposits
18
in an insured bank, after deducting offsets, as shall not exceed
19
the maximum prescribed by paragraph (1) of subsection
20
(1) of this section.
21
cording to such regulations as the board of directors may
22
prescribe. In determining the amount due to any depositor .
23
there shall be added together all deposits in the bank main-
24
tained in the same capacity and the same right for his
25
benefit either in his own name or in the names of others,
Such amount shall be determined ac-
7
1
except trust funds which shall be insured as provided in
2
paragraph (8) of subsection (h) of this section.
3
"(14) The term 'transferred deposit' means a de-
4
posit in a new bank or other insured bank made available
5
to a depositor by the Corporation as payment of the insured
6
deposit of such depositor in a closed bank, and assumed by
7
such new bank or other insured bank.
8
9
"(15) The term ' effective date 9 means the date of
enactment of the Banking Act of 1935."
10
4. By striking out in subsection (c) " (c)" and in-
11
serting " ( d ) " ; by striking out in said subsection (c) that
12
part of the third sentence following the words " Federal
13 reserve banks " in said sentence and inserting a period;
14
by striking out in subsection (d) " (d)" and the first four
15
sentences of said subsection (d) ; and by striking out in
16
the fifth sentence of said subsection the following: "class
17
B "; and by inserting at the end of subsection " ( d ) " the
18
following: " The capital stock of the Corporation shall con-
19
sist of the shares subscribed for prior to the effective date.
20
Such stock shall be without nominal or par value, and shares
21
issued prior to the effective date shall be exchanged and
22
reissued at the rate of one share for each $100 paid into the
23
Corporation for capital stock.
24
by the Corporation for the capital stock shall be allocated to
25
capital and to surplus in such amounts as the board of
The consideration received
8
1
directors shall prescribe.
2
and shall not be entitled to the payment of dividends."
3
4
Such stock shall have no vote
5. By striking out subsection (e) and inserting in lieu
thereof the following:
5
"(e)
(1) Every operating member bank, including
6
a bank incorporated since March 10, 1933, licensed on or
7
before the effective date by the Secretary of the Treasury
8
shall be and continue without application or approval an
9
insured bank and shall be subject to the provisions of this
10
section.
11
"(2) After the effective date any national member
12
bank authorized to commence or resume the business of
13
banking, State bank converting into a national member
14
bank, or State bank becoming a member of the Federal
15
Reserve System shall be an insured bank from the time
16
the certificate herein prescribed shall be issued to the Cor-
17
poration by the Comptroller of the Currency in the case
18
of such national member bank, or by the Federal Reserve
19
Board in the case of such State member bank: Provided,
20
That in the case of an insured bank admitted to membership
21
in the Federal Reserve System or insured State bank con-
22
verting into a national member bank, such certificate shall
23
not be required, and the bank shall continue as an insured
24
bank. Such certificate shall state that the bank is authorized
25
to transact the business of banking in the case of a national
9
1
member bank, or is a member of the Federal Reserve
2
System in the case of a State member bank, and that con-
3
sideration has been given to the factors enumerated in
4
subsection (g) of this section/'
5
6
6. By striking out subsection (f) and inserting in
lieu thereof the following:
7
"(f) (1) Every bank not a member of the Federal
8
Eeserve System which on the effective date is a member
9
of the Temporary Federal Deposit Insurance Fund or of
10
the Fund for Mutuals created pursuant to the provisions of
11
the Banking Act of 1933, as amended (48 Stat. 168, 969;
12
chs. 89, 546), shall be and continue without application
13
or approval an insured bank and shall be subject to the
14
provisions of this section, unless in accordance with regula-
15
tions to be prescribed by the board of directors such bank
16
shall give to the Corporation and to the Reconstruction
17
Finance Corporation, if it owns or holds as pledgee any
18
preferred stock, capital notes, or debentures of such bank,
19
within thirty days after the effective date written notice of
20
its election not to continue after June 30, 1935, as an
21
insured bank and shall give to its depositors, by publication
22
or by any reasonable means, as the board of directors may
28
prescribe, not less than twenty days' notice prior to June
24
30, 1935, of such election: Provided, That any State non-
25
member bank which was admitted to said Temporary
10
1
Federal Deposit Insurance Fund or Fund for Mutuals but
2
which did not file on or before the effective date an October
3
1, 1934, certified statement and make the payments thereon
4
required by law as it existed prior to the effective date,
5
shall cease to be an insured bank on June 30, 1935: Pro-
0
vided further, That no bank admitted to the said Temporary
7
Federal Deposit Insurance Fund or the Fund for Mutuals
8
prior to the effective date shall, after June 30, 1935, be
9
an insured bank or have its deposits insured by the Oor-
10
poration, if such bank shall have permanently discontinued
11
its banking operations prior to the effective date. Deposits
12
of the bank giving such notice shall continue to be insured
13
until June 30, 1935, and the rights of the bank shall be
14
as provided by law existing prior to the effective date, and
15
such bank shall not be insured by the Corporation beyond
10
June 30, 1935.
17
"(2) Subject to the provisions of this section, any
18
national nonmember bank, on application by the bank and
19
certification by the Comptroller of the Currency in the
20
manner prescribed in subsection (e) of this section, and any
21
State nonmember bank, upon application to and examination
22
by the Corporation and approval by the board of directors,
23
may become an insured bank.
24
cation of any such State nonmember bank, the board of direc-
25
tors shall give consideration to the factors enumerated in sub-
Before approving the appli-
11
1
section (g) of this section and shall determine, upon the basis
2
of a thorough examination of such bank, that its assets in
3
excess of its capital requirements are adequate to enable it to
4
meet all of its liabilities as shown by the books of the bank to
5
depositors and other creditors/5
6
7
7. By striking out subsection (g) and inserting in lieu
thereof the following:
8
" (g) The factors to be enumerated in the certificate
9
required under subsection (e) and to be considered by the
10
board of directors under subsection (f) shall be the financial
11
condition of the bank and the adequacy of its capital
12
structure."
13
14
15
8. By striking out subsection (h) and inserting in lieu
thereof the following:
"(h)
(1) The assessment rate shall be one^eighth
16
of 1 per centum per annum based upon the average of the
17
total amount of the liability of the bank for deposits (ac-
18
cording to the definition of the term ' deposit' in and pur-
19
suant to paragraph (12) of subsection (c) of this section,
20
without any deduction for indebtedness of depositors).
21
average of such total shall be determined as of the close of
22
business on one day of each of three or more months pre-
23
ceding July and January of each year, such days to be desig-
24
nated by the directors in the manner provided in the next
25
succeeding paragraph.
The
In the event a separate fund for
12
1
mutuals be established the board of directors from time to
2
time may fix a lower rate operative for such period as the
3
board may determine applicable to insured mutual savings
4
banks only.
5
"(2) During the months of June and December of
6
each year the board of directors shall designate three or more
7
dates, one in each of three or more months of the current
8
semiannual period, for which the insured banks shall report
9
their deposit liabilities for the purpose of assessment
On
10
or before the 15th day of July of each year, each
I"!
insured bank shall file with the Corporation a certified
12
statement under oath showing the total amount of its liability
13
for deposits as of the close of business on the three or more
14
days so designated and shall pay to the Corporation the
15
portion of the annual assessment equal to one-half of the
16
annual rate fixed by this subsection (h) multiplied by the
17
average of its total deposits for such days as are designated.
18
On or before the 15th day of January of each year each
19
insured bank shall file a like statement showing the total
20
amount of its liability for deposits as of the close of business
21
on the three or more days designated as hereinbefore pro-
22
vided, and shall pay to the Corporation the portion of the
23
annual assessment equal to one-half of the annual rate fixed
24
by this subsection (b) multiplied by the average of its
25
deposits for such days as are designated,
13
1
"(3) Every bank which becomes an insured bank
2
after the effective date shall be admitted without liability
3
for the current semiannual payment but it shall file with the
4
Corporation a certified statement under oath showing the
5
total amount of its liability for deposits at the close of busi-
6
ness on the fifteenth day after it becomes an insured bank
7
and it shall pay to the Corporation as an initial assessment
8
the prorated portion for the period between the date such
9
bank became an insured bank and the next succeeding last
10
day of June or December, as the case may be, of an amount
11
equal to one-half the annual assessment rate provided in this
12
section multiplied by such total deposits.
13
annual payment after the initial payment shall be made
14
according to the provisions of paragraphs (1) and (2) of
15
this subsection in all cases where the bank shall have been
16
in operation throughout the preceding semiannual period
17
and in all other cases according to its certified statement
18
under oatla showing the deposit liability at a date designated
19
by the board of directors.
The first semi-
20
" (4) Each bank which shall be and continue without
21
application or approval an insured bank in accordance with
22
the provisions of subsection (e) or (f) of this section,
23
shall, in lieu of all right to refund, be credited with any
24
balance to which such bank shall become entitled upon
25
the teraaiiiation of said Temporary Federal Deposit Insur-
14
1
ance Fund or the Eund for Mutuals. The credit shall be
2
applied by the Corporation toward the payment of the ~
3
assessment next becoming due from such bank and upon
4
succeeding assessments until the credit is exhausted.
5
" (5) Any insured bank which fails to file such certi-
g fied statement or statements as it is lawfully required to
7 file in connection with determining the amount of assess8
ment or assessments due the Corporation, may be compelled
9
to file such statement or statements by mandatory injunction
10
or other appropriate remedy in a suit brought by the Cor-
11
poration against the bank and any officer or officers thereof,
12
for the purpose stated, in any court of the United States of
13
competent jurisdiction in the district or territory in which
14
such bank is located.
15
" (6) The Corporation, in a suit brought at law or in
16
equity in any court of competent jurisdiction, shall be
17
entitled to recover from any insured bank any unpaid
18
assessment or assessments lawfully due from such insured
19
bank to the Corporation, regardless of whether or not such
20
bank shall have filed the certified statement or statements
21
it is lawfully required to file, and regardless of whether
22
or not suit shall have been brought to compel such statement
2$
or statements to be filed.
24
" (7) Should any national member bank now or here-
25
after organized, or should any national nonmember bank
15
1
which is now or hereafter becomes an insured bank, omit to
2 file any certified statement required to be filed by such bank
3
under any provision of this section, or to pay the assessment
4
required to be paid under any provision of this section by
5
such bank on any certified statement filed by it, and should
6
any such bank not correct such omission to file or to pay
7
within thirty days after written notice has been given by the
8
Corporation to an officer of the bank, citing this paragraph,
9
and stating that the bank has omitted to file or pay as re-
10
quired by law, all the rights, privileges, and franchises of the
11
offending bank granted to it under the National Bank Act
12
or under the provisions of the Federal Eeserve Act, as
13
amended, shall be thereby forfeited.
14
penalty provided in this paragraph has been incurred shall
15
be determined and adjudged in the manner provided in the
16
sixth paragraph of section 2 of this Act, as amended. The
17
remedies provided in this paragraph and in the two preced-
18
ing paragraphs shall not be construed as limiting any other
19
remedies against any bank, but shall be in addition thereto.
20
Whether or not the
" (8) Trust funds held by an insured bank in a fiduciary
21
capacity whether held in its trust or deposited in any other
22
department or in another bank shall be insured subject
23
to a $5,000 limit for each trust estate and when deposited
24
by the fiduciary bank in another insured bank, shall be
25
similarly insured to the fiduciary bank according to the
16
1
trust estates represented.
2
vision of this section, such insurance shall be separate from
3
and additional to that covering other deposits of the owners
4
of such trust funds or beneficiaries of such trust estates:
5
Provided, That where thefiduciarybank deposits any of such
6
trust funds in other insured banks, the amount so held by
7
other insured banks on deposit shall not for the purpose of
8
the certified statement required under paragraph (2) or
9
(3) of subsection (h) of this section, be considered to be a
10
deposit liability of the fiduciary bank, but shall be considered
11
a deposit liability of the bank in which such funds are so
12
deposited by such fiduciary bank.
13
shall have power by regulation to prescribe the manner of
14
reporting and of depositing such funds/'
15
16
17
Notwithstanding any other pro-
The board of directors
9. By striking out subsection (i) and inserting in lieu
thereof the following:
"(i)
(1) Any insured bank (except a national mem-
18
ber bank or State member bank) may, upon not less than
19
ninety days' written notice to the Corporation, and to the
20
Eeconstruction Finance Corporation if it owns or holds as
21
pledgee any preferred stock, capital notes, or debentures of
22
such bank, terminate its status as an insured bank. Wher*
23
ever the board of directors shall find that an insured bank
24
or its directors or trustees have continued unsafe or unsound
25
practices in conducting the business of such bank or have
17
1
knowingly or negligently permitted any of its officers or
2
agents to violate any provision of this section or of any
3
material regulation made thereunder, or of any law or
4
material regulation made pursuant to law to which the
5
insured bank is subject, the board of directors shall first give
6
to the Comptroller of the Currency in the case of a national
7
bank or district bank, to the authority having supervision
8
in case of a State bank, and also to the Federal Reserve
9
Board in case of a State member bank, a statement of such
10
violation by the bank for the purpose of securing a correc-
11
tion of such practices or conditions. Unless such correction
12
shall be made within one hundred and twenty days or such
13
shorter period of time as the Comptroller of the Currency,
14
the State authority, or Federal Reserve Board, as the case
15
may be, shall require, the board of directors, if it shall
16
determine to proceed further, shall give to the bank not less
17
than thirty days' written notice of intention to terminate the
18
status of the bank as an insured bank, fixing a time and
19
place for a hearing before the board of directors or before
20
a person designated by it to conduct such hearing, at which
21
evidence may be produced, and upon such evidence the
22
board of directors shall make written findings which shall
23
be conclusive. Unless the bank shall appear at the hearing
24
by a duly authorized representative, it shall be deemed to
25
have consented to the termination of its status as an insured
H. R. 7617
2
18
1
bank.
2
specified in such notice has been established, the board of
3
directors may order that the insured status of the bank be
4
terminated on a date subsequent to such finding and to the
5
expiration of the time specified in such notice of intention.
6
The Corporation may publish notice of such termination
7
and the bank shall give notice of such termination to its
8
depositors, in such manner and at such time as the board
9
of directors may find necessary and may order for the
10
protection of depositors. After termination of the insured
11
status of any bank under the provisions of this paragraph,
12
the insured deposits of each depositor in the bank on the
13
date of such termination, less all subsequent withdrawals
14
from any deposits of such depositor, shall continue for a
15
period of two years to be insured and the bank shall con-
16
tinue to pay to the Corporation assessments as in the case
17
of an insured bank for such period of two years from such
18
termination, but no additions to any deposits or any new
19
deposits shall be insured by the Corporation, and the bank
20
shall not advertise or hold itself out as having insured
21
deposits unless in the same connection it shall state with
22
equal prominence that additions to deposits and new
23
deposits made after the date of such termination, specifying
24
such date, are not insured.
25
respects be subject to the duties and obligations of an
If the board of directors shall find that any violation
Such bank shall in all other
19
1
insured bank for the period of two years from such termina-
2
tion and in the event of being closed on account of inability
3
to meet the demands of its depositors within such period
4
of two years, the Corporation shall have the same powers
5
and rights with respect to such bank as in case of an
6
insured bank.
7
" (2) Whenever the insured status of a member bank
8
shall be terminated by action of the board of directors, the
9
Federal Reserve Board in the case of a State member bank
10
shall terminate its membership in the Federal Reserve
11
System in accordance with the provisions of section 9
12
of this Act and in the case of a national member bank
13
the Comptroller of the Currency shall appoint a receiver
14
for the bank (to be the Corporation whenever the bank
15
shall be unable to meet the demands of its depositors).
16
"(3) When the liabilities of an insured bank for de-
17
posits shall have been assumed by another insured bank or
18
banks, the insured status of the bank whose liabilities are so
19
assumed shall terminate on the date of receipt by the Cor-
20
poration of satisfactory evidence of such assumption with like
21
effect as if terminated on said date by the board of directors
22
after proceedings under paragraph (1) of this subsection
23
(i) : Provided, That if the bank whose liabilities are so
24
assumed gives to its depositors notice of such assumption
25
within thirty days after such assumption takes effect, by
20
1
publication or by any reasonable means, in accordance with
2
regulations to be prescribed by the board of directors, the
3
insurance of its deposits shall terminate at the end of six
4
months from the date such assumption takes effect and such
5
bank shall be relieved of all future obligations to the Cor-
Q poration, including the obligation to pay future assessments."
7
10. By adding at the end of paragraph " Fourth "
8
of subsection (j) the following: "All suits of a civil nature
9
at common law or in equity to which the Federal Deposit
10
Insurance Corporation shall be a party shall be deemed
11
to arise under the laws of the United States: Provided,
12
That any such suit to which the Corporation is a party in
13
its capacity as receiver of a State bank and which involves
14
only the rights or obligations of depositors, creditors, stock-
15
holders and such State bank under State law shall not be
16
deemed to arise under the laws of the United States. No
17
attachment or execution shall be issued against the Cor-
18
poration or its property before final judgment in any suit,
19
action, or proceeding in any State, county, municipal, or
20
United States court. The board of directors shall designate
21
an agent upon whom service of process may be made in
22
any State, Territory, or jurisdiction in which any insured
23
bank is located."; and by inserting at the end of said
24
subsection the following:
21
2
" Eighth. To make examinations of and to require
o
information and reports from banks, as provided in this
o
section.
A
" Ninth. To act as receiver.
g
" Tenth. To prescribe by its board of directors such
g
rules and regulations as it may deem necessary to carry out
rj the provisions of this section."
g
11. By striking out in subsection (k) the following:
9
" ( k ) " , and inserting in lieu thereof " (k) ( 1 ) " ; and by
10
adding to said subsection three new paragraphs to read as
H
follows:
12
"(2) The board of directors shall appoint examiners,
13 who shall have power on behalf of the Corporation (except
14 as to a District bank) to examine any insured State non1^
member bank, State nonmember bank making application to
10
become an insured bank, or closed insured bank, whenever
yj
considered necessary. Such examiners shall have like power
lg
to examine, with the written consent of the Comptroller
19
of the Currency, any national bank, or District bank and,
20
with the written consent of the Federal Eeserve Board, any
21
State member bank. Each examiner shall have power to
22
make a thorough examination of all of the affairs of the
23 bank and in doing so he shall have power to administer
24
oaths and to examine and take and preserve the testimony
22
1 of any of the officers and agents thereof under oath and shall
2
make a full and detailed report of the condition of the bank
3
to the Corporation. The board of directors in like manner
4
shall appoint claim agents who shall have power to investi-
5
gate and examine all claims for insured deposits and trans-
Q ferred deposits. Each claim agent shall have power to admin7
ister oaths and to examine under oath and take and pre-
8
serve testimony of any persons relating to such claims. Any
9
such examiner or claim agent in relation to any such exam-
10 ination, investigation, or taking of testimony may apply
11 to any judge or clerk of any court of the United States to
12 issue subpenas and to compel the appearance of witnesses
13 and the production and taking of any such testimony and
14 to punish disobedience in like manner as provided in sec15 tions 184 to 186 of the Eevised Statutes (U. S. 0., title 5,
16
sees. 94 to 96).
17
"(3) Each insured State nonmember bank (except a
18
District bank) shall make to the Corporation reports of
19
condition in such form and at such times as the board of
20
directors may require of such bank. The board of directors
21
may require such reports to be published in such manner,
22
not inconsistent with any applicable law, as it may direct.
23
Every such bank which fails to make or publish any such
24
report within such time, not less than five days, as the
25
board of directors may require, may be subject to a penalty
23
1
of $100 for each day of such failure, recoverable by the Cor-
2
poration for its use.
3
"(4) The Corporation shall have access to reports
4
of examinations made by and reports of condition made to
5
the Comptroller of the Currency or any Federal Reserve
6
bank, and may accept any report made by or to any com-
7
mission, board, or authority having supervision of a State
8
nonmember bank (except a District bank), and may fur-
9
nish to the Comptroller of the Currency, or any such Federal
10
Reserve bank, commission, board, or authority reports of
11
examinations made on behalf of and reports of condition
12
made to the Corporation."
13
12. By striking out all of subsection (1) preceding
14
the last paragraph thereof and inserting in lieu thereof the
15
following:
16
"(1) (1) The Temporary Federal Deposit Insurance
17
Fund and the Fund for Mutuals are hereby consolidated
18
into the permanent insurance fund for deposits created by
19
this section and the assets therein shall be held by the Cor-
20
poration for the uses and purposes of the Corporation: Pro-
21
vided, That the obligations to and rights of the Corpora-
22
tion, depositors, banks, and other persons arising out of
23
any event or transaction prior to the effective date shall
24
remain unimpaired. From the effective date the Corpora-
25
tion shall insure the deposits of all insured banks as de-
24
1 fined and provided in this section.
The maximum amount
2
of the insured deposit of any depositor shall be $5,000.
3
The Corporation, in the discretion of the board of directors,
4
may open on its books solely for the benefit of mutual sav-
5
ings banks and depositors therein a Separate Fund for
6
Mutuals. If such a fund is opened, all assessments of each
7
mutual savings bank shall be made part of such fund and
8
the other permanent insurance funds of the Corporation
9
shall cease to be liable for losses sustained in mutual savings
10
banks: Provided, That the capital assets of the Corpora-
11
tion shall be so liable and all expenses of operation of the
12
Corporation shall be allocated on an equitable basis,
13
"(2) An insured bank shall, for the purposes of this
14
section, be deemed to have been closed on account of in-
15
ability to meet the demands of its depositors in any case
16
where it has been closed for the purpose of liquidation
17
without adequate provision for payment of its depositors.
18
"(3)
Notwithstanding any other provision of law,
19
whenever any insured national bank or insured District bank
20
shall have been closed by action of its board of directors
21
or the Comptroller of the Currency, as the case may be, on
22
account of inability to meet the demands of its depositors,
23
the Comptroller of the Currency shall appoint the Corpora-
24
tion receiver for such closed bank and no other person shall
25
be appointed as receiver of such closed bank.
25
1
"(4) It shall be the duty of the Corporation as such
2
receiver to realize upon the assets of such closed bank, hav-
3
ing due regard to the condition of credit in the locality; to
4
enforce the individual liability of the stockholders and direc-
5
tors thereof; and to wind up the affairs of such closed bank in
6
conformity with the provisions of law relating to the liquida-
7
tion of closed national banks, except as herein otherwise pro-
8
vided, retaining for its own account such portion of the
9
amount realized from such liquidation as it shall be entitled
10
to receive on account of its subrogation to the claims of de-
ll
positors and paying to depositors and other creditors the
12
net amount available for distribution to them.
13
spect to such closed bank, the Corporation as such receiver
14
shall have all the lights, powers, and privileges now pos-
15
sessed by or hereafter given a receiver of an insolvent
16
national bank.
With re-
17
" (5) Whenever any insured State bank, except a Dis-
18
trict bank, shall have been closed by action of its board of
19
directors or by the authority having supervision of such
20
bank, as the case may be, on account of inability to meet
21
the demands of its depositors, the Corporation shall accept
22
appointment as receiver thereof, if such appointment be
23
tendered by the authority having supervision of such bank
24
and be authorized or permitted by State law. With respect
25
to such insured State bank, the Corporation shall possess
26
1
the powers and privileges given by State law to a receiver
2
of such State bank.
3
" (6) When an insured bank shall have been closed on
4
account of inability to meet the demands of its depositors,
5
payment of the insured deposits shall be made by the Cor-
6
poration as soon as possible, subject to the provisions of
7
paragraph (7) of this subsection (1), either (a) by making
8
available to each depositor a transferred deposit in a new
9
bank in the same community or in another insured bank
10
in an amount equal to the insured deposit of such depositor
11
and subject to withdrawal on demand, or (b) in accordance
12
with any other procedure adopted by the board of directors:
13
Provided, That the Corporation, in its discretion, may
14
require proof of claims to be filed before paying the insured
15
deposits, and that in any case where the Corporation is not
16
satisfied as to the validity of a claim for an insured deposit,
17
it may require the final determination of a court of com-
18
petent jurisdiction before paying such claim.
19
" (7) In the case of a closed national bank or District
20
bank the Corporation, upon payment of any depositor as
21
provided in paragraph (6) of this subsection (1), shall
22
become and be subrogated to all rights of the depositor to
23
the extent of such payment.
24
insured bank, the Corporation shall not pay any depositor
25
until the right of the Corporation to be subrogated to the
In the case of any other closed
27
1
rights of such depositor on the same basis as provided in the
2
case of a closed national bank under this section shall have
3
been recognized, by express provisions of State law, by
4
allowance of claims by the authority having supervision
5
of such bank, by assignment of claims by depositors, or by
6
any other effective method. Such subrogation in the case
7
of any closed bank shall include the right to receive the same
8
dividends from the proceeds of the assets of such closed
9
bank and recoveries on account of stockholders' liability
10
as would have been payable to such depositor on a claim
11
for the insured deposit, such depositor retaining his claim
12
for any uninsured portion of his deposit: Provided, That
13
the rights of depositors and other creditors of any State bank
14
shall be determined in accordance with the applicable pro-
15
visions of State law.
16
"(8) As soon as possible, the Corporation, if it finds
17
that it is advisable and in the interest of the depositors of the
18
closed bank or the public, shall organize a new bank to as-
19
sume the insured deposits of such closed bank and otherwise
20
to perform temporarily the functions provided for in this
21
section.
22
the same community as the closed bank.
The new bank shall have its place of business in
23
"(9) The articles of association and the organization
24
certificate of the new bank shall be executed by representa-
25
tives designated by the Corporation. No capital stock need
28
1
be paid in by the Corporation.
2
have a board of directors, but shall be managed by an execu-
3
tive officer appointed by the board of directors of the Cor-
4
poration and who shall be subject to its directions.
5
other respects such bank shall be organized in accordance
6
with the existing provisions of the law relating to the or-
7
ganization of national banking associations. The new bank
8
may, with the approval of the Corporation, accept new
9
deposits which shall be subject to withdrawal on demand
10
and which, except where the new bank is the only bank in
11
the community, shall not exceed $5,000 from any depositor.
12
The new bank, without application or approval, shall be an
13
insured bank and shall maintain on deposit with the Fed-
14
eral Reserve bank of its district the reserves required by
15
law for member banks, but shall not be required to subscribe
16
for stock of the Federal Reserve bank. Funds of the new
17
bank shall be kept on hand in cash, invested in securities of
18
the Government of the United States, or in securities guar-
19
anteed as to principal and interest by the Government of the
20
United States, or deposited with the Corporation, or with a
21
Federal Reserve bank, or, to the extent of the insurance
22
coverage thereon, with an insured bank. The new bank,
23
unless otherwise authorized by the Comptroller of the Cur-
24
rency, shall transact no business except that authorized
25
by this section and such business as may be incidental
The new bank shall not
In
29
1
to its organization. Notwithstanding.any other provision of
2
law, it, its franchise, property, and income shall be exempt
3
from all taxation now or hereafter imposed by the United
4
States, by any Territory, dependency, or possession thereof,
5
or by any State, county, municipality, or local taxing
6
authority.
7
"(10) On the organization of a new bank, the Cor-
8
poration shall promptly make available to the new bank
9
an amount equal to the estimated insured deposit of such
10
closed bank plus the amount of its estimated expenses of
11
operation and shall determine as soon as possible the amount
12
due each depositor for his insured deposit in the closed bank,
13
and the total expenses of operation of the new bank. Upon
14
determination thereof, the amounts so estimated and made
15
available shall be adjusted to conform to the amounts so
16
determined.
17
or credited to the Corporation in such adjustment.
18
new bank, during the period it continues its status as such,
19
sustains any losses with respect to which it is not effectively
20
protected except by reason of being an insured bank, the
21
Corporation shall furnish to it additional funds in the amount
22
of such losses. The new bank shall assume as transferred
23
deposits the payment of the insured deposits of such closed
24
bank to each of its depositors. Of the amount so made
25
available, the Corporation shall transfer to the new bank,
Earnings of the new bank shall be paid over
If any
30
1
in cash, such amount as is necessary to enable it to meet
2
expenses and immediate cash demands on such transferred
3
deposits and the remainder shall be subject to withdrawal
4
by the new bank on demand.
5
"(11) When in the judgment of the board of direc-
6
tors it is desirable to do so, the Corporation shall cause
7
capital stock of the new bank to be offered for sale on such
8
terms and conditions as the board of directors shall deem
9
advisable, in an amount sufficient, in the opinion of the
10
board of directors, to make possible the conduct of the
11
business of the new bank on a sound basis, but in no event
12
less than that required by section 5138 of the Revised
13
Statutes, as amended (TJ. S. C, Supp. VII, title 12,
14
sec. 51), for the organization of a national bank in the
15
place where such new bank is located, giving the stock-
16
holders of the closed bank the first opportunity to purchase
17
any shares of common stock so offered-
18
an adequate amount of capital stock in the new bank has
19
been subscribed and paid for in cash, the Comptroller of
20
the Currency shall require the articles of association and
21
the organization certificate to be amended to conform to
22
the requirements for the organization of a national bank,
23
and thereafter, when the requirements of law with respect
24
to the organization of a national bank have been complied
25
with, he shall issue to the bank a certificate of authority to
Upon proof that
31
1
commence business, which shall thereupon cease to have
2
the status of a new bank and shall be managed by directors
3
elected by its own shareholders and may exercise all the
4
powers granted by law and shall be subject to all of the
5
provisions of law relating to national banks.
6
shall thereafter be an insured national bank, without certi-
Such bank
7 fication to or approval by the Corporation.
8
"(12) If the capital stock of the new bank shall not
9
be offered for sale, or if an adequate amount of capital for
10
such new bank is not subscribed and paid in, the board of
11
directors may offer to transfer its business to any insured
12
bank in the same community which will take over its assets,
13
assume its liabilities, and pay to the Corporation for such
14
business such amount as the board of directors may deem
15
adequate; or the board of directors in its discretion may
16
change the location of the new bank to the office of the
17
Corporation or to some other place or may at any time wind
18
up its affairs as herein provided. Unless the capital stock
19
of the new bank is sold or its assets acquired and its liabilities
20
assumed by an insured bank, as provided above, within two
21
years from the date of its organization, the Corporation shall
22
wind up its affairs, after giving such notice, if any, as the
23
Comptroller of the Currency may require, and- shall certify
24
to the Comptroller of the Currency the termination of the
25
new bank and thenceforth the Corporation shall be liable
32
1
for its obligations and be the owner of its assets. The pro-
2
visions of sections 5220 and 5221 of the Eevised Statutes
3
(IT. S. 0., title 12, sees. 181 and 182) shall not apply to
4
such new banks/'
5
13. By inserting before the said last paragraph of sub-
6
section (1) the following: " (n) (1)"; and by striking out
7
the comma after the words " United States " in the first sen-
8
tence of said paragraph and inserting before the word
9
" except " the following: " or in securities guaranteed as to
10
principal and interest by the Government of the United
11
States,"; and by transposing said paragraph to subsection
12
(n) as amended, as paragraph (1) thereof.
13
14. By striking out in subsection (m) the following:
14
" ( m ) " ; and by striking out in said subsection the word
15
"herein" and inserting in lieu thereof "in this section";
16
and by transposing said subsection to subsection (n), as
17
amended, as paragraph (2) thereof.
18
15. By inserting a new subsection to read as follows:
19
"(m)
(1) The Corporation as receiver of a closed
20
national bank or District bank shall not be required to furnish
21
bond and shall have the right to appoint an agent or agents
22
to assist it in its duties as such receiver, and all fees, com-
23
pensation, and expenses of liquidation and administration
24
thereof shall be fixed by the Corporation, subject to the
25
approval of the Comptroller of the Currency, and may be
33
1
paid by it out of funds coming into its possession as such
2
receiver.
3
and empowered to waive and relieve the Corporation from
4
complying with any regulations of the Comptroller of the
5
Currency with respect to receiverships where in his discre-
The Comptroller of the Currency is authorized
Q tion such action is deemed advisable to simplify administra7
tion.
8
" (2) Payment of an insured deposit to any person by
9
the Corporation shall discharge the Corporation, and pay-
10
ment of a transferred deposit to any person by the new bank
11
or the other insured bank shall discharge the Corporation
12
and such new bank or other insured bank, to the same
13
extent that payment to such person by the closed bank
14
would have discharged it from liability for the insured
15
deposit.
16
"(3) Except as otherwise prescribed by the board of
17
directors, neither the Corporation, such new bank, nor such
18
other insured bank, shall be required to recognize as the
19
owner of any portion of a deposit appearing on the records
20
of the closed bank under a name other than that of the
21
claimant, any person whose name or interest as such owner
22
is not disclosed on the records of such closed bank, or on
23
its outstanding certificates or passbooks, as part owner
24
of said account, where such recognition would increase
H. E. 7617
3
34
1
the aggregate amount of the insured deposits in such closed
2
bank.
3
" (4) The Corporation may withhold payment of such
4
portion of the insured deposit of any depositor in a closed
5
bank as may be required to provide for the payment of
6
any liability of such depositor as a stockholder of the bank,
7
or of any liability of such depositor to the bank or its
8
receiver, not offset against a claim due from the bank, pend-
9
ing the determination and payment of such liability by such
10
depositor or any other person liable therefor.
11
" (5) If, after the Corporation shall have given at
12
least three months' notice to the depositor by mailing a
13
copy thereof to his last known address appearing on the
14
records of the closed bank, any depositor in a closed bank
15
shall fail to claim his insured deposit from the Corporation
16
within eighteen months after the appointment of the re-
17
ceiver for the closed bank, or shall fail to claim or arrange
18
to continue the transferred deposit with the new bank or
Id
other bank assuming liability therefor within such eighteen
20
months' period, all rights of the depositor against the Cor-
21
poration in respect to the insured deposit or against the new
22
bank and such other bank in respect to the transferred de-
23
posit shall be barred, and all rights of the depositor against
24
the closed bank, its shareholders or the receivership estate
25
to which the Corporation may have become subrogated shall
35
1
thereupon revert to the depositor.
The amount of any
2
transferred deposits not claimed within such eighteen months'
3
period, shall be refunded to the Corporation."
4
16. By striking out in subsection (n) the following:
5
" ( n ) " and inserting " ( 3 ) " ; and by retaining said sub-
6
section in paragraph (3) of subsection (n), as amended;
7
and by striking out in said subsection (n) the words
8
" member banks which are now or may hereafter become
9
insolvent or suspended" and inserting in lieu thereof
10
" insured banks closed on account of inability to meet the
11
demands of depositors "; and by striking out " State mem-
12
ber " and inserting in lieu thereof " insured State "; and
13
by striking out the period at the end of the first sentence
14
and inserting in lieu thereof " or District banks."; and
15
by adding at the end of said subsection two new sentences
16
to read: "The Corporation, in its discretion, may upon
17
application make loans on the security of or may purchase
18
and liquidate or sell any part of the assets of an insured bank
19
which is now or may hereafter be closed on account of
20
inability to meet the demands of its depositors. In any case
21
where the Corporation is acting as receiver of such insured
22
bank such loan or purchase shall not be made without
23
approval of a court of competent jurisdiction."; and by
24
adding to subsection (n), as amended, a new paragraph to
25
read as follows:
36
1
"(4) Until July 1, 1936, whenever in the judgment
2
of the board of directors such action will reduce the risk or
3
avert a threatened loss to the Corporation and will facilitate
4
a merger or consolidation, or facilitate the sale of the assets
5
of an open or closed insured bank to and assumption of its
6
liabilities by another insured bank, the Corporation may,
7
upon such terms and conditions as it may determine, make
8
loans secured in whole or in part by assets of such open or
9
closed insured bank, which loans may be in subordination
10
to the rights of depositors and other creditors, or it may
11
purchase such assets, or may guarantee any other insured
12
bank against loss by reason of assuming the liabilities and
13
purchasing the assets of such open or closed insured bank.
14
Any insured national bank or District bank or, with the
15
approval of the Comptroller of the Currency, any receiver
16
thereof is authorized to contract for such sales or loans and
17
to pledge any assets of the bank to secure such loans.
18
19
20
17. By striking out subsection (o) and inserting in
lieu thereof the following:
"(o)
(1) The Corporation is authorized and em-
21
powered to issue and to have outstanding its notes, deben-
22
tures, bonds, or other such obligations, in a par amount
23
aggregating not more than three times the amount received
24
by the Corporation in payment of its capital stock and of
25
the first annual assessments. Notes, debentures, bonds, or
37
1
other such obligations issued under this subsection shall be
2
redeemable at the option of the Corporation before maturity
3
in such manner as may be stipulated in such obligations,
4
and shall bear such rate or rates of interest, and shall mature
5
at such time or times as may be determined by the Cor-
6
poration: Provided, That the Corporation may sell on a
7
discount basis short-term obligations payable at maturity
8
without interest.
9
such obligations of the Corporation may be secured by
10
assets of the Corporation in such manner as shall be pre-
11
scribed by its board of directors. Such obligations may be
12
offered for sale at such price or prices as the Corporation
13
may determine.
The notes, debentures, bonds, and other
14
"(2) Such of the obligations authorized to be issued
15
under this subsection, as the Corporation, with the approval
16
of the Secretary of the Treasury, may determine, shall be
17
fully and unconditionally guaranteed, both as to interest and
IB
principal, by the United States and such gaarafflty shall be
19
expressed on the face thereof. In thefevfentthttt the Cor-
20
poration shall be unable to pay upon demand, when due,
21
principal of or interest on notes, debentures, bonds, or other
22
such obligations issued by it and guaranteed by the United
23
States under this paragraph, the Secretary of the Treasury
24
shall pay the amount thereof, which is hereby authorized
25
to be appropriated out of any money in the Treasury not
38
1
otherwise appropriated, and thereupon, to the extent of the
2
amounts so paid, the Secretary of the Treasury shall succeed
3
to all the rights of the holders of such notes, debentures, or
4
other obligations.
5
" (3) The Secretary of the Treasury, in his discretion,
6
is authorized to purchase any obligations of the Corporation
7
which are guaranteed by the United States under this sub-
8
section, and for such purpose the Secretary of the Treasury
9
is authorized to use as a public-debt transaction the pro-
10
ceeds from the sale of any securities hereafter issued under
11
the Second Liberty Bond Act, as amended, and the pur-,
12
poses for which securities may be issued under the Second
13
Liberty Bond Act, as amended, are extended to include
14
any purchases of the Corporation's obligations hereunder.
15
The Secretary of the Treasury may, at any time, sell any
16
of the obligations of the Corporation acquired by him under
17
this subsection. All redemptions, purchases, and sales by
18
the Secretary of the Treasury of the obligations of the Cor-
19
poration: shall be treated as public-debt transactions of the
20
United States*
21
"(4) The Secretary of the Treasury, at the request
22
of the Corporation, is authorized to market for the Cor-
23
poration such of its notes, debentures, bonds, and other such
24
obligations as are guaranteed by the United States under
25
this subjection, using therefor all the facilities of the Treas-
39
f
ury Department now authorized by law for the marketing of
2
the obligations of the United States.
3
obligations of the Corporation so marketed shall be deposited
4
in the same manner as proceeds derived from the sale of
5
the obligations of the United States, and the amount thereof
6
shall be credited to the Corporation on the books of the
7
Treasury."
The proceeds of the
8
18. By inserting in subsection (s) following the words
9
" purchase any assets/9 the following: "or for the purpose
10
of obtaining the payment of any insured deposit or trans-
11
ferred deposit or the allowance, approval, or payment of
12
any claim,".
13
19. By striking out in subsection (v) the following:
14
" ( v ) " , and inserting in lieu thereof " (v) (1)"; and by
15
striking out in said subsection " class A stockholder of the
16
Federal Deposit Insurance Corporation " and inserting in
17
lieu thereof " insured bank ".
18
20. By striking out the second paragraph of subsection
19
(v) and inserting in lieu thereof the following;
20
.
> • .
"(2) Every insured bank shall display at each place
21
of business maintained by it a sign or signs, and shall include
22
in advertisements relating to deposits a statement to the
23
effect that its deposits are insured by the Corporation.
24
board of directors shall prescribe by regulation the forms of
25
such signs and the manner of display and the forms of such
The
40
1
statements and the manner of use. For each day an insured
2
bank continues to violate any provision of this paragra]ih
3 . or any lawful provision of said regulations, it may be subject
4
to a penalty of $100, recoverable by the Corporation for its
5
use."
6
7
21. By adding to subsection (v) five new paragraphs
to read as follows:
8
" (3) No insured bank shall pay any dividends on its
9
capital stock or interest on its capital notes or debentures
10
(if such interest is required to be paid only out of net
11
profits) while it remains in default in the payment of any
12
assessment due to the Corporation: Provided, That if such
!:•* default is due to a dispute between the insured bank and
14
the Corporation over such assessment, this paragraph shall
15
not apply, if such bank shall deposit security satisfactory to
16
the Corporation for payment upon final determination of
17
the issue.
18
" (4) Unless, in addition to compliance with other
19
provisions of law, it shall have the prior written consent
20
of the Corporation, no insured bank shall enter into any
21
consolidation or merger with any noninsured bank, or
22
assume liability to pay any deposits made in any noninsured
23
bank, or transfer assets to any noninsured bank in con-
24
sideration of the assumption of liability for any portion of
25
the deposits made in such insured bank, and no insured
44
1
State nonmember bank (except a District bank) without
2
such consent shall reduce the amount or retire any part of
3
its common or preferred capital stock, or retire any part of
4
its capital notes or debentures.
5
" (5) The Corporation may require any insured bank
g
to provide protection and indemnity against burglary, de-
7
falcation, and other similar insurable losses. Whenever any
g
insured bank refuses to comply with any such requirement,
9
the Corporation may contract for such protection and in-
10
demnity and add the cost thereof to the assessment other-
11
wise payable by such bank.
12
" (6) Whenever an insured bank, except a national
13
bank or District bank, for a period of one hundred and twenty
14
days after written notice of the recommendations of the
15
Corporation, based on a report of examination of such bank
lg
by an examiner of the Corporation, shall fail to comply with
17
such recommendations, the Corporation shall have the
18 power, and is hereby authorized, to publish any part of
19
such report of examination in such manner as it majr deter-
20
mine: Provided, That such notice of intention to make
21
such publication shall be given at the time such recom-
22
mendations are made, or at any time thereafter and at
23
least ninety days before such publication.
24
"(7) The board of directors shall by regulation pro-
25
hibit the payment of interest on demand deposits in insured
42
1
nonmember banks and for such purpose may define the
2
term " demand deposits ", provided such exceptions from
3
said prohibition shall be made as are now or may here-
4
after be prescribed with respect *, to deposits payable on
5
demand in member banks by section 19 of this Act,
Q
as amended, or by regulation of the Federal Reserve
7
Board.
8
limit by regulation the rates of interest or dividers pay-
9
able by insured nonmember banks on deposits other than
10
demand deposits, provided such regulations shall fee con-
11
sistent with the contractual obligations of such banks to
12
their depositors. For the purpose of fixing rates the board
13
of directors may classify deposits according to maturities,
14
conditions respecting receipt, withdrawal, or repayment, and
From time to time the board of directors shall
15 may classify banks according to locations or kinds of bank16 ing business chiefly done as it may deem necessary in the
17
public interest. It may prescribe different rates for differ-
18
ejat classes of deposits or different classes of banks, provided
19
such different rates are reasonable when the bases for the
20
classifications are considered.
21
regulations shall define what constitutes savings deposits,
22
in an insured nonmember bank.
23
prohibit insured nonmember banks from paying deposits
24
prior to maturity and from waiving any notice requirement
25
with respect to withdrawal of deposits: Provided, That
The board of directors by
Such regulations shall
43
1
exceptions may be prescribed where by reason of special
2
circumstances the prohibitions respecting withdrawal would
3
cause unnecessary hardship to depositors and provided the
4
prohibitions respecting withdrawal shall not apply to sav-
5
ings deposits. For each violation of any provision of this
6
paragraph or any lawful provision of the Corporation's
7
regulations relating to paying interest or dividends on de-
8
posits or to withdrawal of deposits the offending bank shall
^
be subject to a penalty of $100, recoverable by the
10 Corporation for its use."
H
22. By striking out all of subsection (y) preceding
I2
the last paragraph thereof and inserting in lieu thereof the
^
following:
14
" (1) ^For the purposes of this section, and notwith-
15
standing any other provision thereof, any unincorporated
16
bank which continues to be an insured bank without appli-
l^
cation or approval under the provisions of paragraph (1) of
18
subsection (f) of this section shall be included in the term
19
' State bank ' and ' State nonmember bank V
2
^
21
23. By inserting at the beginning of the last paragraph
of subsection (y) the Mowing:
22
2
TITLE II—AMENDMENTS TO THE FEDERAL
3
24
25
"{2)".
RESERVE ACT
SECTION
201. (a) Section 4 of the Federal Reserve
t, as amended, is further amended by striking out the
1
paragraph which commences with the words " Class C di-
2
rectors shall be appointed by the Federal Reserve Board "
3
and the next succeeding paragraph, and inserting in lieu
4
thereof the' following:
5
" Class C directors shall be appointed by the Federal
6
Reserve Board.
7
years residents of the districts for which they are appointed,
8
except that this requirement shall not apply to the Governor
9
and Vice Governor of the bank. Each class C director shall
10
hold office for a term of three years except that the Gover-
11
nor's term as a class C director shall expire when he ceases
12
to be Governor of the bank and, if the Vice Governor be
13
designated as a class C director, his term as a class C director
14
shall expire when he ceases to be Vice Governor.
15
the directors of class C shall be appointed by the Federal
16
Reserve Board as deputy chairman to exercise the powers
17
of the chairman of the board when necessary. In the case
18
of the absence of the chairman and deputy chairman, the
19
third class C director shall preside at meetings of the Board.
20
" Effective ninety days after the enactment of the
21
Banking Act of 1935, the offices of Governor and ohair-
22
man of the board of directors of each Federal Reserve
23
bank shall be combined. The Governor shall be the chief
^^
executive officer of the bank and' sh&ll he <appoirited annu-
^}
ally by the board of directors. His first appointment shaH
They shall have been for at least two
One of
45
1
be subject to the approval of the Federal Eeserve Board.
2
He shall not take office until approved by the Federal
3
Eeserve Board and thereupon he shall become a class C
4
director of the bank for the unexpired portion of the term
5
held by his predecessor as chairman of the board of directors
6
or, if such term was completed, then for the next regular
7
term of three years. At the expiration of such term as a
8
class 0 director, and of each term of three years thereafter,
9
his continuance in office shall be subject to the approval of
10
the Federal Eeserve Board, and he shall cease .to be Gover-
11
nor at the expiration of any such term unless his reappoint-
12
ment be approved by the Federal Eeserve Board.
13
such approval he shall become a class 0 director for the
Upon
14. ensuing term of three years. He shall be ex officio chair15
man of the board of directors and chairman of the executive
16
committee; and all other officers and employees of the bank
17
shall be directly responsible to him.
For each Federal
18 Eeserve, bank, there shall be appointed annually in the same
19
manner, as the Governor, a Vice Governor, who shall, in the
20
absence,or disability of the Governor or during a vacancy in
21
the office of Governor, serve as the chief executive officer of
22. the bank and act as chairman of the executive committee of
23
the bank. His appointment and reappointment shall be
24
subject i to approval by the Federal Eeserve Board in the
25
same manner as that of the Governor.
He may be ap-
46
1
pointed by the Federal Reserve Board as a class C director
2
of the bank and, in such case, may be appointed as deputy
3
chairman of the board of directors. Whenever a vacancy
4
shall occur in the office of the Governor or Vice Governor of
5
a Federal Eeserve bank, it shall be filled in the manner pro-
6
vided for original appointments; and the person so ap-
7
pointed shall hold office until the expiration of the term of
8
his predecessor.
9
" Effective ninety days after the enactment of the
10
Banking Act of 1935, any Federal Eeserve agent who
11
shall not have been appointed Governor of the bank shall
12
cease to be a class C director and chairman of the board of
13
directors.
14
Eeserve agent shall be performed by the Governor df the
All duties prescribed by law for the Federal
15 bank or by such other person or persons as he shall designate.
16
"No member of the board of directors of a Federal
17
Eeserve bank, other than the Governor and Vice Governor,
18
shall serve as a director for more than two consecutive terms
19
of three years each, but nothing in this paragraph shall pre-
20
vent the present incumbents from serving out the remainders
21
of their present terms."
22
(b) The last paragraph of such section 4 is amended
23
by striking out the words " Thereafter every director of a
24
Federal Eeserve bank chosen as hereinbefore provided shdll
25
hold office for a term of three years " tod^bftittitifeg thfc
47
1
words " Thereafter each director of class A and each director
2
of class B chosen as hereinbefore provided shall hold office
3
for a term of three years ".
4
(c) The paragraph of such section 4 which commences
5
with the words " Such board of directors shall be selected "
Q
is amended by striking therefrom the words " holding office
7
for three years, and ".
g
SEC. 202. Section 9 of the Federal Reserve Act, as
9
amended, is amended by inserting after the tenth para-
10
graph thereof the following new paragraph:
11
"Upon application to the Federal Reserve Board
12
by any nonmember bank which at the time of such
13
application has been admitted to the benefits of insur-
14
ance by the Federal Deposit Insurance
Corporation
15 . under section 12B of this Act, the Federal Reserve
16
Board, in its discretion, in order to facilitate the admis-
17
sion of such bank to membership in the Federal Reserte
18
System, may waive in whole or in part the requirements
19
of this section relating to the admission of such bank
20
to membership: Provided, That, if such bank is admitted
21
with a capital less than that required for the organization
22
of a national bank in the same place and its capital and siir-
23
plus $re not, in the judgment of the Federal Reserve Board,
24
adequate in relation to its liabilities to depositors and other
25
creditors, the Federal Reserve Board may, in its discretion,
46
1
require such bank to increase its capital and surplus to such
2
aanount as the Board may deem necessary within such period
3
prescribed by the Board as in its judgment shall be reason-
4
able in view of all the circumstances: Provided, however,
5
That no such bank shall be required to increase its capital
6
to an amount in excess of that required for the organization
7
of a national bank in the same place."
8
9
SEC. 203. Section 10 of the Federal Reserve Act, as
amended, is further amended in the following respects:
10
(1) By striking out the second sentence of the first
11
paragraph and substituting the following: " I n selecting
12
the six appointive members of the Federal Eeserve Board
13
the President shall choose persons well qualified by edu-
14
cation or experience or both to participate in the formulation
15
of national economic and monetary policies. Not more
16
than one of the appointive members shall be selected from
17
any one Federal Eeserve district, except that this limita-
18
tion shall not apply to the selection of the Governor."
19
(2) By adding nMhp end of w h fli
20
the following: "Each appointive member of
21
Eeserve Board heretofore appointed um^rmre from service
22. upon reaching the age of seventy or at any time thereafter,
23
and all members heres^tef appointed shall retire upon reach-
24
ing the age;of*eventy. Each member of the Board so retired
25
fijum iwiviwi wlw ulmll ham-Buiitd-Im mi lung na twelve
43
2
retirement pay in an amount equal to hi& annual afflary
3
at the tinae of retiremeirt: Provided, That, if tie sjfolil have
4
served for as long as five years, but less than tonslve years,
5
his annual retirement pay shall he at tba rate/w ona-twelfth
6
ol such annual saJa^y for each year seeded ami for any
7
fraction of an additional year oi swcX service: Provided
8
further, That any member whose t^rai expires and who is
9
not reappointed shall receive retji'eraemt pay upon the same
10
basis as if he had been retired under the provisions of this
11
paragraph, except that, ifiiis term expire before he reaches
12
the age of sixty-five and he be offered and decline to accept
13
reappomtment, he >&all not receive any retirement pay*
14
The funds necessary for such retirement pay shall be pro-
15
vided .by the federal Reserve banks in such manner as the
16
Federal Reserve Board shall prescribe-
17
sectionr shall prevent tbt Pxesideat from reapp^utBt^g any
18
mender of the E^dorol Rogflimo H.mni Trifling Qffioo on
20
(3) By striking oat the foiwtbL sente»ee <rf the second
21
paragraph and inserting in lieu thereof the-fcAl«wingr:" Of
22
the six appointive jnsmb«r* erf the Bo»r4 QW sbatt be desig-
23
nated by the Puesident as Goveroor and (me a* Vka Gov-
24
ernor of the Pedexal Reserve Bofted, to serve as msh until
25
the further order of the President, and the provisions of the
H. R. 7617-
Nothing in this
50
1
next preceding sentence of this paragraph shall not apply
2
to the member designated as Governor. If the Governor's
3
designation as such be terminated, he may continue to serve
4
as a member of the Board for the remainder of his term as
5
such; but, if he resign within ninety days from the date
6
of the termination of his designation as Governor, he shall
7
not be subject thereafter to any restriction of this section
8
with respect to holding any office, position, or employment
9
in any member bank."
10
(4) By adding at the end of the second paragraph the
11
following: "Upon the expiration of their terms of office,
12
members of the Federal Reserve Board shall continue to
13
serve until their successors are appointed and have qualified."
14
SEC. 204. (a) Subsection (i) of section 11 of the
15
Federal Reserve Act, as amended, is amended- by adding
1G the following at the end thereof: " The Board may assign
17
to designated members of the Board or officers or representa-
18
tives of the Board, under rules and regulations prescribed
19
by the Board, the performance of any of its duties, func-
20
tions, or services; but any such assignment shall not include
21
the determination of any national or system policy or any
22
power to make rules and regulations or any power which
23
under the terms of this Act is required to be exercised by a
24
specified number of members of the Board."
51
1
(b) Section 11 of the Federal Eeserve Act, as
2
amended, is amended by adding at the end thereof a new
3
subsection as follows :
4
"(o) It shall be the duty of the Federal Keserve Board
5
to exercise such powers as it possesses in such manner as to
6
promote conditions conducive to business stability and to
7
mitigate by its influence unstabilizing fluctuations in the
8
general level of production, trade, prices, and employment,
9
so far as may be possible within the scope of monetary
10
action and credit administration."
11
SEC. 205. Effective ninety days after the enactment
12
of this Act, section 12A of the Federal Eeserve Act, as
13
amended, is amended to read as follows:
14
" SEC. 12A. (a) There is hereby created an Op&i
15
Market Advisory Committee (hereinafter referred to as tfce
16
' Committee'), which shall consist of five representativfes
17
of the Federal Reserve banks. The members of the Com-
18
mittee and an alternate to serve in the absence of each of
19
them shall be elected annually by the governors of the
20
twelve Federal Eeserve banks in accordance with pro-
21
cedure prescribed by regulations of the Federal Eeserve
^
Board.
23
terms of the members of the Committee shall expire at the
24
end of each calendar year, and a person elected to fill a va-
Vacancies shall be filled in the same manner.
The
52
1
eancy shall serve for the remainder of the term of his
2
predecessor.
3
Meetings of the Committee shall be held from time to time
4
upon the call of th« chairman or upon the call of the Grov-
5
earner of the Federal Reserve Board.
6
called whenever requested by a majority of members of
7
the Committee or by a majority of the members of the
8
Federal Eeserve Board.
The Committee shall elect its own chairman.
Meetings shall be
9
"(b) The Committee shall consult and advise with,
10
and make recommendations to, the Federal Reserve Board
11
from time to time with regard to the open-market policy
12
of the Federal Reserve System.
13
aid in the execution of open-market policies adopted from
S
time to time by the Federal Reserve Board and shall per-
15
form such other duties relating thereto as the Federal Re-
16
serve Board may prescribe.
17
shall consult the Committee before making any changes on
18
its* own initiative in the open-market policy, in the rates of
19
interest or discount to be charged by the Federal Reserve
20
banks, oar in the reserve balances required to be maintained
21
by member banks.
The Committee shall also
The Federal Reserve Board
22
" (e) After consulting with and considering the recom-
23
mendatioias of the Committee, the Federal Reserve Board,
24
from time to time, shall prescribe the open-market policy
25
of the Federal Reserve System. Each Federal Reserve
53
1
bank shall purchase or sell obligatior&s erf the TJmted States,
2
bankers' acceptances, bills of exchange, and other obliga-
3
tions of the kinds and maturities made eligible lor purchase
4
under the provisions of section 14 of t\m Act to /sack extent
5
and in such mamer as may be required by the Federal
6
Reserve Board in order to effectuate the <Dpen~marfcet
7
policies adopted by the Board from time to time under the
8
provisions of this section and each Federal Reserve ba&k
9
shall cooperate fully, in every way, in making such policies
10
effective.
11
" (d) All transactions of Federal Reserve banks under
12
authority of section 14 of this Act shall be subject to such
13
regulations, limitations, and restrictions as the Federal Re-
14
serve Board may prescribe."
15
SEC. 206. Section 13 of the Federal Reserve Act, as
16
amended, is further amended by adding at the end thereof
17
a new paragraph reading as follows:
18
" Notwithstanding any other provision ®t law, upon
19
the endorsement of any member bank, wbifth shall be
20
deemed a waiver of demand, notice and protest as to its
21
own endorsement exclusively, and subject to such regulations
22
as to maturities and other matters as the Feieral Reserve
23
Board may prescribe, any Federal Reserve bank may dis-
24
count any commercial, agricultural, or industrial paper and
25
may make advances to any such member bank on its
54
1
sory notes secured by any sound assets of such member
2
bank/'
3
SEC. 207. Subsection (b) of section 14 of the Federal
4
Reserve Act, as amended, is further amended by changing
5
the semicolon at the end thereof to a colon and adding the
6
following: " Provided, That any bonds, notes, or other obli-
7
gations which are direct obligations of the United States or
8
which are fully guaranteed by the United States as to prin-
9
cipal and interest may be bought and sold without regard to
10
maturities;"
11
12
SEC. 208. Section 16 of the Federal Reserve Act, as
amended, is further amended in the following respects:
13
14
(1) By striking out the first ten paragraphs and substituting therefor the following:
15
" SEC. 16. Each Federal Reserve bank may issue Fed-
16
eral Reserve notes, which shall be obligations of the United
17
States, secured by a first and paramount lien on all of the
18
assets of such bank. Federal Reserve notes shall be issued
19
and retired by Federal Reserve banks under such rules and
20
regulations as the Federal Reserve Board may prescribe
21
and shall be legal tender for all purposes.
22
" Every Federal Reserve bank shall maintain reserves
23
in lawful money (other than Federal Reserve notes or
24
Federal Reserve bank notes) of not less than 35 per
25
centum against its deposits and reserves in gold certificates
55
1
of not less than 40 per centum against its Federal Reserve
2
notes in actual circulation.
3
shall bear upon its face a distinctive letter, which shall be
4
assigned by the Federal Reserve Board to each Federal
5
Reserve bank, and also a serial number.
Each Federal Reserve note
6
"When received by the Treasurer of the United
7
States from a source other than a Federal Reserve bank,
8
Federal Reserve notes unfit for further use shall be canceled
9
and retired; and, upon receipt of advice of such cancelation
10
and retirement, the issuing Federal Reserve bank shall
11 reimburse the Treasurer of the United States for the notes
12
so canceled and retired.
When received by a Federal
13
Reserve bank, Federal Reserve notes unfit for farther use
14
shall be canceled and forwarded to the Treasurer of the
15
United States for retirement; and, if issued by another
16
Federal Reserve bank, such issuing baantk shall reimburse
17
the Federal Reserve bank which canceled such notes and
18
forwarded them to the Treasurer of the United States.
19
" In order to furnish suitable notes for circulation as
20
Federal Reserve notes, the Comptroller of the Currency,
21
under the direction of the Secretary of the Treasury, shall
22
cause plates and dies to be engraved in the best manner
23
to guard against counterfeiting and fraudulent alterations,
24
and shall have printed therefrom and numbered such quails
25
tities of such notes of the denominations of $5, $10, $20,
56
1
$50, $100, $500, $1,000, $5,000, and $10,000 as may be
2
required to supply the Federal Reserve fcanks. Such notes
3
shall be m form and tenor as directed by the Secretary of
4
the Treasury and shall bear'the distinctive letters of the
5
several Federal iReserve banks through which they are
@ issued.
7
When such notes have been *pre*paq?ed, they shall
be held in the Treasury subject to the order of the Comp-
8 tooller of tbe Currency for delivery to the Federal Reserve
9
banks.
Federal Eeserve notes unfit for circulation shall be
10
returned to the Comptroller of the Currency for cancelation
11
and destraeftion."
12
(2) By striking from the sixteenth paragraph the
13
words " or federal reserve agent" where they occur in
14
three different places, the words " or his ", the words " at
15
the Treasury or at *he •Subteeasury <of the United States
lg
nearest the pkwse &i basinjess of suda Federal reserve bank
17
m such Federal reserve agent", tbe words " or any
18
Assistant Treasurer ", the words " or Aesietent Treasurer }\
19
and tke wo<pds u by the Treasurer a/t Wasbinigton upon proper
gO
advices front aay A$sista/nt TreasMer tkat sach deposit has
21
be.en inado ".
22
#EC. 200. Tbe skth pamgrfl^h d s&tiim 19 of the
23
Federal IteeerFe Act, as amended, is ^m^nded to read a§
24
foiows;
57
1
" Notwithstanding the other provisions of this section,
2
the Federal Ee&erve Board, in order to prevent injurious
3
credit expansion or contraction, may by regulation change
4
the requirements as to reserves to fee maintained against
5
demand or time deposits or both by member banks in re-
g
serve and central reserve cities or fey member banks not in
7
reserve or central reserve cities or by all member banks."
g
SEC. 210. The first paragraph of section 24 of the
Q
Federal Reserve Act, as amended, is amended to read as
10
follows:
11
" SEC. 24. 'Subject to such regulations as the Federal
12
Reserve Board may prescribe, any national banking asso-
13
ciation may make real estate loans secured by first liens
14
upon improved real estate, including improved farm land
15
and improved business and residential properties.
\Q
aiaount flf any si*ch loan hereafter made shall not exceed
17
60 per centum of the appraised value of the real estate;
18
but this limitation shall not prevent the Tenewal or extension
19
of loaas heretofore made and shall not apply to real estate
20
loans which are insured under the provisions of Title I I of
21
the K&tiopal Housing Act. No bank shall make such loans
22
in a# aggregate sum in excess of the amount of the capital
23
stock of such association paid in and unimpaired plus its
g4
unimpaired surplus fund, or in excess of 60 per centum of the
The
58
1
amount of its time and savings deposits, whichever is the
2
greater.
3
prescribe from time to time regulations defining the
4
term ' real estate loans' and other terms used in this
5
section and regulating and limiting the making of real
6
estate loans by member banks, with a view of preventing an
7
unreasonably large proportion of each bank's assets from
8
being invested in real estate and real estate loans, preventing
9
such loans from exceeding a reasonable percentage of the
10
appraised value of the real estate in view of the circum-
11
stances existing at the time and otherwise requiring the
12
banks to conform to sound practices in making real estate
13
loans/'
14
TITLE III—TECHNICAL AMENDMENTS TO THE
15
BANKING LAWS
16
The Federal Keserve Board is authorized to
SECTION
301. Subsection (c) of section 2 of the Bank-
17
ing Act of 1933, as amended, is amended by adding at the
18
end thereof the following paragraph:
19
" Notwithstanding the foregoing, the term
i
holding
20
company affiliate ' shall not include (except for the purposes
21
of section 23A of the Federal Reserve Act, as amended)
22
any corporation all of the stock of which is owned by the
23
United States of America or any organization which, in the
24
judgment of the Federal Reserve Board, is not engaged,
25
directly or indirectly, as a business in holding the stock of,
59
1
or managing or controlling, banks, banking associations,
2
savings banks, or trust companies."
3
SEC. 302. The first paragraph of section 20 of the
4
Banking Act of 1933, as amended, is amended by inserting
5
before the period at the end thereof a colon and the follow-
6
ing: " Provided, That nothing in this paragraph shall apply
7
to any such organization which shall have been placed in
8
formal liquidation and which shall transact no business except
9
such as may be incidental to the liquidation of its affairs ".
10
SEC. 303. (a) Paragraph (1) of subsection (a) of
11
section 21 of the Banking Act of 1933, as amended, is
12
amended by inserting before the semicolon at the end thereof
13
a colon and the following: "Provided, That the provisions
14
of this paragraph shall not prohibit national banks or State
15
banks or trust companies (whether or not members of the
16
Federal Reserve System) or other financial institutions or
17
private bankers from dealing in, underwriting, purchasing,
18
and selling investment securities to the extent permitted to
19
national banking associations by the provisions of section
20
5136 of the Eevised Statutes, as amended (U. S. C, title
21
12, sec. 24; Supp. VII, title 12, sec. 24) : Provided further,
22
That nothing in this paragraph shall be construed as affect-
23
ing in any way such right as any bank, banking association,
24
savings bank, trust company, or other banking institution,
25
may otherwise possess to sell, without recourse or agree-
60
1
ment to repurchase, obligations evidencing loans on real
2
estate ".
3
4
(b) Paragraph (2) of subsection (a) of such section
21 is hereby repealed.
5
SEC. 304. Section 22 of the Banking Act of 1933, as
6
amended, is amended by adding at the end thereof the
7
following sentence: " Such additional liability shall cease on
8
July 1, 1937, with respect to all shares issued by any asso-
9
eiation which shall be transacting the business of banking
10
on Juty 1, 1937: Provided, That not less than six months
11
prior to such date, such association shall have caused notice
12!
of such prospective termination of liability to be published in
13
a newspaper published in the city, town, or county in which
14
such association is located, and if no newspaper is pub-
15
lished in such city, town, or county, then in a newspaper
16
of general circulation therein.
17
give such notice as and when above provided, a termination
18
of such additional liability may thereafter be accomplished as
19
of the date six months subsequent to publication, in the man-
20
ner above provided."
If the association fail to
i
21
21
S E C . 3£5. Section 4 of the Act entitled "An Act to
22
amend section 12B of the Federal Eeserve Act so as to
23
extend for one year the temporary plan for deposit insurance,
24
and for other purposes ", approved June 16, 1934 (48 Stat.
25
969), is amended to read as follows:
60
1
merit to repurchase, obligations evidencing loans on real
2
estate ".
3
4
(b) Paragraph (2) of subsection (a) of such section
21 is hereby repealed.
5
SEC. 304. Section 22 of the Banking Act of 1933, as
6
amended, is amended by adding at the end thereof the
7
following sentence: " Such additional liability shall cease on
8
July 1, 1937, with respect to all shares issued by any asso-
9
ciation which shall be transacting the business of banking
10
on July 1, 1937: Provided,
That not less than six months
6« 8C«* -mragraph ( c ) of «#oticm £1£S «£ %h* P«ris*d
ifltl (Vm%.e,§ *vp* W g t l t t i U0 «••>«• 3 € ) t I s «ww*3«* (I)
ftiwr t*» r t w v a^nt#no« fci»pwr the follcndnc a»
• In any ftftfet i n whloh ?,tate %&*&$ sr* w n d t t ^ d hy tfc'*tn.ta ISP? t «
mintmin branch** wtt!*ia emmty or fr««t»r Xlnlt«, i f no baxdc i t
i
to b« Xo<mt«4# say fmtiooftl bmaklsi^ a#tot»iatioa elt\mt«d in
« ftparovftl of the C««(itrttll»r af
y9
without ref^rd t o th» anpital rrnqpLirmmafe* of thi« aootion,
f,*3«y lit any r^ftart «9as«.*fti^y within th» Xlatits of tlum
y l a i»hiah the m l n offloo of »u«h *»«0 -tatioa 1«, looatod, for
tkt |
Thgitfta^pvnsit ls«u»d «a»S«r t h i s s»at#so« e t ^ l l be r&Teleti' upon tha
of & Si-*t« or rstiociftX baak i n «u«h eosmmit . f l ft£td (2 by
rirt*. mri lathe
in
it/
Ul
20
ner above provided."
21
Ll-lC UCltC »1A
SEC. 306. Section 4 of the Act entitled "An Act to
22
amend section 12B of the Federal Reserve Act so as to
23
extend for one year the temporary plan for deposit insurance,
24
and for other purposes ", approved June 16, 1934 (48 Stat.
25
9 6 9 ) , is amended to read as follows:
1
" SEC. 4. So much of section 31 ei the Banking Act
2
of 1933, as amended, as relates to sto€k ownership by di-
3
rectors, trustees, or members of similar governing bodies of
4
any national banking association or of any State bank or
5
trust company which is a member of the Eederal Reserve
6
System is hereby repealed/'
7
SEC. m& Effective January 1, I936y section 32 of
8
the Banking Act of 19&3, as amended, is amended to read
9
as follows :
10
" SEC. 32. No officer, director, or employee of any
11
corporation o?r unincorporated association, no partner or em-
12
ployee of any partnership, and no individual, primarily
13
engaged in the issue, flotation, underwriting, public sale, or
14
distribution, at wholesale or retail, or through syndicate par-
15
tieipation, of stocks, bonds, or other similar securities, sh^ll
16
serve at the same time as an officer, director, or employee
17
of any member bank except in limited classes of cases in
18
which the Federal Reserve Board may allow such service
19
by general regulations when in the judgpient of the Federal
20
Reserve Board it would not unduly influence the investment
21
policies of such member bank or the advice it gives its
22
customers regarding investments/'
23
SEC. %QR*. (a) The second sentence of paragraph
24
seventh of section 5136 of the Revised Statutes, as amended
25
{TJ. S. C, Supp. VII, title 12, sea 24), is amended to
62
1
read as follows: " The business of dealing in securities and
2
stock by the association shall be limited to purchasing and
3
selling such securities and stock without recourse, solely upon
4
the order, and for the account of, customers, and in no case
5
for its own account, and the association shall not underwrite
6
any issue of securities or stock: Provided, That the associa-
7
tion may purchase for its own account investment securities
8
under such limitations and restrictions as the Comptroller of
9
the Currency may by regulation prescribe. In no event
10
shall the total amount of the investment securities of any
11
one obligor or maker, held by the association for its own
12
account, exceed at any time 10 per centum of its capital
13
stock actually paid in and unimpaired and 10 per centum of
14
its unimpaired surplus fund, except that this limitation shall
15
not require any association to dispose of any securities law-
16
fully held by it on the date of enactment of the Banking Act
17
of 1935."
18
(b) The fourth sentence of such paragraph seventh
19
is amended to read as follows: " Except as hereinafter pro-
20
vided or otherwise permitted by law, nothing herein con-
21
tained shall authorize the purchase by the association for its
22
own account of any shares of stock of any corporation."
23
SEC. 308. Section 5138 of the Eevised Statutes, as
24
amended (TJ. S. C, Supp. VII, title 12, sec. 51), is
25
amended by adding the following sentence at the end
63
1
thereof: "No such association shall hereafter be authorized
2
to commence the business of banking until it shall have a
3
paid-in surplus equal to 20 per centum of its capital: Pro-
4
vided, That the Comptroller of the Currency may waive this
5
requirement as to a State bank converting into a national
6
banking association."
7
SEC. $09? The last paragraph of section 5139 of the
8
Revised Statutes, as amended (U. S. C, Supp. VII, title
9
12, sec. 52), is amended to read as follows:
10
"After the date of the enactment of the Banking Act
11
of 1935, no certificate evidencing the stock of any such
12
association shall bear any statement purporting to represent
13
the stock of any other corporation, except a member bank
14
or a corporation existing on such date engaged primarily
15
in holding the bank premises of such association, nor shall
16
the ownership, sale, or transfer of any certificate represent-
17
ing the stock of any such association be conditioned in any
18
manner whatsoever upon the ownership, sale, or trans-
19
fer of a certificate representing the stock of any other
20
corporation, except a member bank or a corporation ex-
21
isting on such date engaged primarily in holding the
22
bank premises of such association: Provided, That this
23
section shall not operate to prevent the ownership,
24
sale, or transfer of stock of any other corporation being
25
conditioned upon the ownership, sale, or transfer of
64
1
a certificate representing stoek of a national banking
2
association."
1//
3
SEC. B+& (&) The first paragraph of section 5144
4
of the Hevised Statutes, as amended (U. S. C , Supp. VII,
5
title 12., sec. 61}, is ameaadcd to read as follows:
6
" SEC. 5144. In all elections of directors, each share-
7
holder shall have the right to vote the number of shares
8
owned by him for as maaiy persons as there are directors
9
to be elected* oar to eianralate such shares and give one can-
10
did&fce as many votes as the number of directors multiplied
11
by the number of his shares shall equal, or to distribute them
12
on the same principle among as many candidates as he
13
shall think fit; and in deciding all other questions at meet-
14
ings of shareholders, each shareholder shall be entitled to
15
one vote on each share of stock held by him; except that
16
(1) this shall not be construed as limiting the voting rights
17
of holders of preferred stock under the terms and provisions
18
of articles of association, or amendments thereto, adopted
19
pursuant to the provisions of section 3G2 (a) of the Emer-
20
gency Banking Act of March 9, 1933, as, amended, (2)
21
in the election of directors, shares of its own stock held by
22
a national bank as. sole trustee, whether registered in its
23
own name as such trustee or in the name of its nominee,
24
shaB not be voted by the registered own&r unless under the
25
terms of the trust the manner m which such shares shall
65
1
be voted may be determined by a donor or beneficiary of
2
the trust and unless such donor or beneficiary actually directs
3
how such shares shall be voted, (3) shares of its own stock
4
held by a national bank and one or more persons as, trustees
5
may be voted by such other person or persons, as trustees,
6
in the same manner as if he or they were the sole trustee,
7
and {4) shares controlled by any holding, coia|i|^ aflSliate
8
of a national bank shall not be voted unless such, holding
9
company affiliate shall have first obtained a voting permit
10
as hereinafter provided, which permit is in force at the time
11
such shares are voted, but such holding company affiliate
12
may, without obtaining such permit, vote in favor of plac-
13
ing the association in voluntary liquidation or taking any
14
other action pertaining to the voluntary liquidation of such
15
association.
16
ized in writing; but no officer, clerk, teller, or bookkeeper
17
of such bank shall act as proxy; and no shareholder whose
18
liability is past due and unpaid shall be allowed to vote.
19
Whenever shares of stock cannot be voted by reason of being
20
held by the bank as sole trustee, such shares shall be ex-
21
eluded in determining whether matters voted upon by the
22
shareholders were adopted by the requisite percentage of
23
shares."
24
25
Shareholders may vote by proxies duly author-
(b) The first sentence of the third paragraph of
SUch
section 5144 is amended to read: "Any such folding
H. R. 7617
66
1
company affiliate may make application to the Federal
2
Reserve Board for a voting permit entitling it to vote
3
the stock controlled by it at any or all meetings of share-
4
holders of such bank or authorizing the trustee or trustees
5
holding the stock for its benefit or for the benefit of its
6
shareholders so to vote the same."
7
SB0:f"9H. Section 5154 of the Revised Statutes, as
8
amended (IT. S. C, title 12, sec. 35), is amended by adding
9
at the end thereof the following paragraph:
10
" The Comptroller of the Currency may, in his discre-
11
tion and subject to such conditions as he may prescribe,
12
permit such converting bank to retain and carry at a value
13
determined by the Comptroller such of the assets of such
14
converting bank as do not conform to the legal requirements
15
relative to assets acquired and held by national banking
16
associations."
17
SEC. 3*2: Section 5162 of the Revised Statutes
18
(U. S. C, title 12, sec. 170) is amended by adding at the
19
end thereof the following paragraph:
20
" The Comptroller of the Currency may designate
21
one or more persons to countersign in his name and on his
22
behalf such assignments or transfers of bonds as require his
23
countersignature."
24
SEC. 3*4. Section 5197 of the Revised Statutes, as
25
amended (U. S. C, Supp. VII, title 12, sec. 85), is
67
1
amended by inserting after the second sentence thereof the
2
following new sentence: " The maximum amount of interest
3
or discount to be charged at a branch of an association
4
located outside of the States of the United States and the
5
District of Columbia shall be at the rate allowed by the laws *
6
of the country, territory, dependency, province, dominion,
7
insular possession, or other political suibdi'vision where the
8
branch is located."
9
SEC. £44. Section 5199 of the Revised Statutes
10
(U. S. C, title 12, sec. 60), is amended to read as follows:
11
" SEC. 5199. The directors of any association may,
12
semiannually, declare a dividend of so much of the net
13
profits of the association as they shall judge expedient; but'
14
each association shall, before the declaration of a dividend
15
on its shares of common stock, carry not less than one-tenth'
16
part of its net profits of the preceding half year to its surplus
17
fund until the same shall equal the amount of its common*
18
capital/'
Kb
19
SEC. 346. Section 5209 of the Revised Statutes*
20
(TJ. S. C, title 12, sec. 592), is hereby amended by insert-
:
21
ing after the words "known as the Federal Reserve Act",
:
22
the words " or of any insured bank as defined in subsection"
23
(c) of section 12B of the Federal Reserve Act"; and by"
24
inserting after the words " such Federal Reserve bank or
25
member bank ", wherever they appear in such section, the
68
1
words " or insured bank "; and by inserting after the words
2
" or the Comptroller of the Currency ", the words " or the
3
Federal Deposit Insurance Corporation/'.
4
SEC. 31fi. Section 5220 of the Revised Statutes
5
(U. S, C , title 12, sec. 181), is amended by adding at the
6. end thereof the following paragraph:
7
" The shareholders shall designate one or more persons
8
to act as liquidating agent or committee, who shall conduct
9
the liquidation in accordance with law and under the super-
10
vision of the board of directors, who shall require a suitable
11
bond to be given by said agent or committee. The liquidat-
12
ing agent or committee shall render annual reports to the
13
Comptroller of the Currency on the 31st day of December
14
of each year showing the progress of said liquidation until
15
the same is completed. The liquidating agent or committee
16
shall also make an annual report to a meeting of the share-
17
holders to be held on the date fixed in the articles of
18
association for the annual meeting, at which meeting the
19
shareholders may, if they see fit, by a vote representing
20
a majority of the entire stock of the bank, remove the
21
liquidating agent or committee and appoint one or more
22
others in place thereof. A special meeting of the share-
23
holders may be called at any time in the same manner as
24
if the bank continued an active bank and at said meeting
25
the shareholders may- by vote of the majority of the stock,
1
remove the liquidating agent or committee.
The Comp-
2
troUer of the Currency is authorized to have an examination
3
made at any time into the affairs of the liquidating bank
4
until the claims of all creditors have been satisfied, and
5
the expense of making such examinations shall be assessed
6
against such bank in the same manner as in the case of
7
examinations made pursuant to section 5240Mof the Kevised
8
Statutes, as amended (U. S. C , title 12, sees. 484, 485;
9
10
11
Supp. V I I , title 12, sees. 4 8 1 - 4 8 3 ) . "
MY
SEC. SWr Section 5243 of the Revised Statutes
(U. S. C , title 12, sec. 583) is amended by striking out
12
the semicolon therein and all that precedes it and substituting
13
the following:
14
" S E C . 5243. The use of the word 'national', the
15
word ' Federal' or the words ' United States \ separately,
16
in any combination thereof, or in combination with other
17
words or syllables, as part of the name or title used by
18
any person, corporation, firm, partnership, business trust,
,19
association or other business entity, doing the business of
fiO bankers, brokers, or trust or savings institutions is prohibited
'21
except where such institution is organised under the laws
22
of the United States, or is otherwise permitted by the laws
23
of the United States to use such name or title, or is lawfully
24
using such name or title on the date when this section,
25
as amended, takes effect;"
317
.70
1
SEC. 3*8. (a) Section 5 of the Federal Eeserve Act,
2
as amended, is amended by striking out the last three sen-
3
tences thereof and inserting in lieu thereof the following:
4
" When a member bank reduces its capital stock or surplus
5
it shall surrender a proportionate amount of its holdings in
Q
the capital stock of said Federal Reserve bank. Any mem-
7
ber bank which holds capital stock of a Federal Reserve
.8
bank in excess of the amount required on the basis of 6 per
9
centum of its paid-up capital stock and surplus shall surren-
10
der such excess stock. When a member bank voluntarily
11 liquidates it shall surrender all of its holdings of the capital
12
stock of said Federal Reserve bank and be released from its
13
stock subscription not previously called. In any such case
14
the shares surrendered shall be canceled and the member
i;>
bank shall receive in payment therefor, under regulations
t(;
to be prescribed by the Federal Reserve Board, a sum
J7
equal to its cash-paid subscriptions on the shares surren-
18
dered and one-half of 1 per centum a month from the period
19
of the last dividend, not to exceed the book value thereof,
. 20
less any liability of such member bank to the Federal
21
Reserve bank."
22
(b) Section 6 of the Federal Reserve Act, as
23
amended, is amended by striking out the last paragraph
24
thereof,
71
1
SEC. U&. The fifth paragraph of section 9 of the Fod-
2
eral Kescrve Act, as amended, is amended by adding at
3
the end thereof the following sentence: "Such reports of
4
condition shall be in such form and shall contain such infor-
5
mation as the Federal Reserve Board may require and shall
6
be published by the reporting banks in such mariner aiid in
7
accordance with such regulations as the s^jfl Board- may
8
prescribe."
9
SEC. THH). (a) The first sentence of paragraph r (m)
10
of section 11 of the Federal Reserve Act, as amende, is
11
amended by inserting before the period at the -end thereof a
12
colon and the following: "Provided,
13
loans represented by obligations in the form of notes se-
N
cured bv not less than a like amount of bonds or notes
1.")
of the United States issued since April 24, 1917, .certificates
That with respect to
H) of indebtedness of the United States, or Treasury bills of
17 the United States, such limitation of 10 per centum on
18
loans to any person shall not apply, but State member banks
19
shall be subject to the same limitations and-conditions as
20
are applicable in the case of national banks * under $ara-
21
graph (8) of section 5200 of the Revised' Statutes,- as
22
amended (U. S. C , Supp. VII, title 12, sec. 8 4 ) . "
23
(b) Paragraph (8) of section 5200 of the Revised
24
Statutes, as amended (V. S. C , Supp. VII, title 12, .sec.
72
1
84), is amended by inserting after the comma following the
2
words " certificates of indebtedness of the United States ",
3
the words " or Treasury bills of the United States ".
4
SEC. 9£1. The third paragraph of section 13 of the
5
Federal Reserve Act, as amended, is amended by changing
6
the words " indorsed and otherwise secured to the satisfac-
7
tion of the Federal Reserve bank " in that paragraph to
8
read "indorsed or otherwise secured to the satisfaction of
9
the Federal Reserve bank."
10
SEC. M%. Subsection (e) of section 13b of the Fed-
11 eral Reserve Act, as amended, is amended by striking out
12
" upon the date this section takes effect", and inserting in
13
lieu thereof " on and after June 19, 1934 "; and by striking
14
out " the par value of the holdings of each Federal Reserve
15
bank of Federal Deposit Insurance Corporation stock ", and
16
inserting in lieu thereof " the amount paid by each Federal
17
Reserve bank for stock of the Federal Deposit Insurance
18 Corporation "•
19
SEC. 3TO: (a) The first paragraph of section 19 of
20
the Federal Reserve Act, as amended, is amended to read
21
as follows:
22
" SEC. 19. The Federal Reserve Board is authorized,
23
for the purposes of this section, to define the terms ' demand
24
deposits', 'gross demand deposits', 'deposits payable on
25
demand', ' time deposits ', ' savings deposits ', and ' trust
73
1
funds ', to determine what shall be deemed to be a payment
2
of interest, and to prescribe such rules and regulations as it
3
may deem necessary to effectuate the purposes of this section
4
and prevent evasions thereof: Provided, That, within the
5
meaning of the provisions of this section regarding the
6
reserves required of member banks, the term ' time deposits '
7 ^hall include ' savings deposits \ "
8
9
(b) The tenth paragraph of such section 19 is
amended to read as follows :
10
" In estimating the reserve balances required by this
11
Act, member banks may deduct from the amount of their
12
gross demand deposits the amounts of balances due from
13
other banks (except Federal Reserve banks and foreign
14
banks) and cash items in process of collection payable
15
immediately upon presentation in the United States, within
16
the meaning of these terms as defined by the Federal
17
Eeserve Board/'
18
19
(c) The last two paragraphs of such section 19 are
amended to read as follows:
20
" No member bank shall, directly or indirectly, by any
21
device whatsoever, pay any interest on any deposit which is
22
payable on demand: Provided, That nothing herein con-
23
tained shall be construed as prohibiting the payment of in-
24
terest in accordance with the terms of any certificate of
25
deposit or other contract entered into in good faith which is
74
1
in force on the date on which the bank becomes subject to
2
the provisions of this paragraph; but no such certificate of
3
deposit or other contract shall be renewed or extended unless
4
it shall be modified to conform to this paragraph, and every
5
member bank shall take such action as may be necessary to
6
conform to this paragraph as soon as possible consistently
7
with its contractual obligations: Provided further, That this
8
paragraph shall not apply (1) to any deposit of such bank
9
which is payable only at an office thereof located outside of
10
the States of the United States and the District of Columbia;
11
(2) to any deposit made by a mutual savings bank or a
12
savings bank as defined in section 12B of the Federal Re-
13
serve Act, as amended; (3) to any deposit of public funds
14
made by or on behalf of any State, county, school district,
15
or other subdivision or municipality, or to any deposit of
16
trust funds if the payment of interest with respect to such
17
deposit of public funds or of trust funds is required by State
18
kw; or (4) to any deposit of funds by the United States,
19
any Territory, District, or possession thereof (including the
20
Philippine Islands), or any public instrumentality or agency
21
of the foregoing, with respect to which interest is required
22
by law to be paid.
23
" The Federal Reserve Board shall from time to time
21
limit by regulation the rate of interest which may be paid
75
1
by member banks on time and savings deposits; may classify
2
time and savings deposits according to maturities, locations
3
of banks, conditions respecting receipt, withdrawal, or
4. repayment, or otherwise as it may deem necessary in the
5
public interest; and may prescribe different rates for deposits
Q
of different classes. No member bank shall pay any time
7
deposit before its maturity except upon such conditions and
g
in accordance with such rules and regulations as may be
9
prescribed by the Federal Reserve Board, or waive any
10
requirement of notice before payment of any savings deposit
11
except as to all savings deposits having the same require-
12
ment: Provided, That the provisions of this paragraph
13
shall not apply to any deposit which is payable only at
14
an office of a member bank located outside of the States
15
of the United States and the District of Columbia."
IQ
17
(d) Such section 19 is amended by adding at the end
thereof the following new paragraph:
18
" Notwithstanding the provisions of the Eirst Liberty
19
Bond Act, as amended, the Second Liberty Bond Act, as
20
amended, and the Third Liberty Bond Act, as amended.
21
member banks shall be required to maintain the same
22
reserves against deposits of public moneys by the United
23
States as they are required by this section to maintain
24
against other deposits."
76
1
SEC, %te. Section 21 of the Federal Reserve Act, as
2
amended, is amended by adding at the end thereof the fol-
3
lowing paragraph:
4
" Whenever member banks are required to obtain re-
5
ports from affiliates, or whenever affiliates of member banks
6
are required to submit to examination, the Federal Reserve
7
Boar<5fA($r the Comptroller of the Currency, as the case may
8
be, may waive such requirements with respect to any such
9
report or examination of any affiliate if in the judgment of
10
the said Board or Comptroller, respectively, such report or
11
examination is not necessary to disclose fully the. relations
12
between such affiliate and such bank and the effect thereof
13
upon the affairs of such bank."
14
SEC. %%5. (a) Subsection (a) of section 22 of the
15
Federal Reserve Act, as amended, is amended by inserting
16
in the first paragraph thereof after " No member bank "
17
the following: "and no insured bank as defined in sub-
18
section (c) of section 12B of this Act "; by inserting before
19
the period at the end of the first sentence of such paragraph
20
" or assistant examiner, who examines or has authority to
21
examine such bank "; and by inserting after " any member
22
bank " in the second paragraph thereof " or insured bank ";
23
by inserting before the period at the end thereof " or Federal
24
Deposit Insurance Corporation examiner "; and by adding
25
at the end of such subsection a new paragraph, as follows:
77
1
" The provisions of this subsection shall apply to all
2
public examiners and assistant examiners who examine mem-
3
ber banks of the Federal Eeserve System or insured banks,
4
whether appointed by the Comptroller of the Currency, by
5
the Federal Reserve Board, by a Federal Reserve agent, by
6
a Federal Reserve bank, or by the Federal Deposit Insur-
7
ance Corporation, or appointed or elected uqctyr the laws
8
of any State; but shall not apply to private examiners or
9
assistant examiners employed only by a clearing-house asso-
10
ciation or by the directors of a bank."
11
(b) Subsection (b) of such section 22 is amended by
12
inserting therein after "no national bank examiner" the
13
following: " and no Federal Deposit Insurance Corporation
14
examiner"; and by inserting after "member bank" the
15
following: "or insured bank"; and by inserting after
16
" from the Comptroller of the Currency," the following: " as
17
to a national bank, the Federal Reserve Board as to a State
18
member bank, or the Federal Deposit Insurance Cor-
19
poration as to any other insured bank,",
20
21
(c) Subsection (g) of such section 22 is amended to
read as follows :
22
" (g) No executive officer of any member bank shall
23
borrow from or otherwise become indebted to any member
24
bank of which he is an executive officer, and no member
25
bank shall make any loan or extend credit in any other
78
1
manner to any of its own executive officers: Provided,
2
That loans made to any such officer prior to June 16,
3
1933, may be renewed or extended for periods expiring
4
not more than five years from such date where the board
g
of directors of the member bank shall have satisfied them-
Q
selves that sueh extension or renewal is in the best interest
7
of the bank and that the officer indebted has made reason-*
g
able effort to reduce his obligation, these findings to be
9
evidenced by resolution of the board of directors spread
10
upon the minute book of the bank: Provided further, That
H* with the prior approval of a majority of the entire board
12
of directors, any member bank may extend credit to
13
any executive officer thereof, and such officer may become
14
indebted thereto, in an amount not exceeding $2,500. If
15
any executive officer of any member bank borrow from
16
or if he be or become indebted to any bank other than a
17
member bank of which he is an executive officer, he shall
18
make a written report to the board of directors of the mem-
19
ber bank of which he is an executive officer, stating the date
20
and amount of such loan or indebtedness, the security there-
21
for, and the purpose for which the proceeds have been or are
22
to be used.
23
in which one or more executive officers of a member bank
24
are partners having either individually or together a ma-
Borrowing by, or loaning to, a partnership
79
1
jority interest in said partnership, shall be considered within
2
the prohibition of this subsection.
3
this subsection shall prohibit any executive officer of a
4
member bank from endorsing or guaranteeing for the pro-
5
tection of such bank any loan or other asset which shall
6
have been previously acquired by such bank in good faith
7
or from incurring any indebtedness to suchrfcank for the
8
purpose of protecting such bank against loss or giving
9 financial assistance to it.
Nothing contained in
The Federal Eeserve Board is
10
authorized to define the term * executive officer \ to deter-
11
mine what shall be deemed to be a borrowing, indebted-
12
ness, loan, or extension of credit, for the purposes of this
13
subsection, and to prescribe such rules and regulations as it
14
may deem necessary to effectuate the provisions of this
15
subsection in accordance with its purposes and to prevent
16
evasions of such provisions.
17
member bank accepting a loan or extension of credit which
18
is in violation of the provisions of this subsection shall be
19
subject to removal from office in the manner prescribed
20
in section 30 of the Banking Act of 1933: Provided,
21
That for each day that a loan or extension of credit made
^
in violation of this subsection exists, it shall be deemed to
23
be a continuation of such violation within the meaning of
24
said section 30/'
Any executive officer of a
80
3
SEC. &&6. The third paragraph of section 23A of the
2
Federal Reserve Act, as amended, is amended to read as
3
follows:
4
"For the purpose of this section, the term * affiliate'
5
shall include holding company affiliates as well as other affil-
6
iates, and the provisions of this section shall not apply to any
7
affiliate (I) ^engaged primarily in holding the bank prfljnises
8
of the member bank with which it is affiliated or in main-
9
taining and operating properties acquired for banking pur-
10
poses prior to the date this section, as amended, takes effect;
11
(2) engaged solely in conducting a safe-deposit business or
12
the business of an agricultural credit corporation or live-
13
stock loan company; (3) in the capital stock of which a
14
national banking association is authorized to invest pur-
15
suant to section 25 of this Act, as amended, or a sub-
16
sidiary of such affiliate, all the stock of which (except
17
qualifying shares of directors in an amount not to ex-
18
ceed 10 per centum) is owned by such affiliate;
19
organized under section 25 (a) of this Act, as amended, or
20
a subsidiary of such affiliate, all the stock of which (except
21
qualifying shares of directors in an amount not to exceed 10
22
per centum) is owned by such affiliate; (5) engaged solely
23
in holding obligations of the United States Government or
24
obligations fully guaranteed by the United States Govern-
25
ment as to principal and interest, the Federal intermediate
(4)
81
1
credit banks, the Federal land banks, the Federal home-loan
2
banks, or the Home Owners' Loan Corporation; (6) where
3
the affiliate relationship has arisen out of a bona fide debt
4
contracted prior to the date of the creation of such relar
5
tionship; or (7) where the affiliate relationship exists by
6
reason of the ownership or control of any voting shares
7
thereof by a member bank as executor, administrator,
8
trustee, receiver, agent, depositary, or in any other fiduciary
9
capacity, except where such shares are held for the bene-
10 fit of all or a majority of the stockholders of such member
11
bank; but as to any such affiliate, member banks shall con-
12
tinue to be subject to other provisions of law applicable to
13
loans by such banks and investments by such banks in
14
stocks, bonds, debentures, or other such obligations. The pro-
15
visions of this section shall likewise not apply to indebted-
16
ness of any affiliate for unpaid balances due a bank on assets
17
purchased from such bank or to loans secured by, extensions
18
of credit against, or purchases under repurchase agreement
19
of, obligations of the United States Government or obliga-
20
tions fully guaranteed by the United States Government as
21
to principal and ijjterest."
22
SEC. 92*7. Section 24 of the Federal Eeserve Act, as
23
amended, is amended by adding at the end thereof the fol-
24
lowing new paragraph:
H. K. 7617
6
82
1
" Loans made to established industrial or commercial
2
businesses (a) which are in whole or in part discounted or
3
purchased or loaned against as security by a Federal re-
4
serve bank under the provisions of section 13b of this
5
Act, (b) for any part of which a commitment shall have
6
been made by a Federal reserve bank under the pro-
7
visions of said section, (c) in the making of which a Federal
8
reserve bank participates under the provisions of said sec-
9
tion, or (d) in which the Reconstruction Finance Oorpora-
10
tion cooperates or purchases a participation under the provi-
l!
sions of section 5d of the Reconstruction Finance Corpora-
12
tion Act, shall not be subject to the restrictions or limitations
13
of this section upon loans secured by real estate."
14
SEC. S2S. Effective January 1, 1936, the Act entitled
15
"An Act to supplement existing laws against unlawful
16
restraints and monopolies, and for other purposes", ap-
17
proved October 15, 1914 (38 Stat. 730), as amended, is
18
further amended (1) by striking out section 8A thereof and
19
(2) by substituting for the first three paragraphs of section
20
8 thereof the foUowuig:
21
" SEC. 8. No director, officer, or employee of any
22
member bank of the Federal Reserve System shall be at the
23
same time a private banker or a director, officer, or employee
24
of any other bank, banking association, savings bank (other
25
thai} a mutual savings bank), or trust company except in
83
1
limited classes of cases in which the Federal Reserve Board
2
may allow such service by general regulations when in the*
3
judgment of the Federal Reserve Board such classes of
4
institutions are not in substantial competition."
5
SEC. £S©. (a) Section 1 of the Act of November 7,
6
1918, as amended (U. S. C, title 12, sec. 33; Supp. VII,
7
title 12, sec. 33), is amended by striking out the second
8
proviso down to and including the words " to be ascer-
9
tained " and inserting in lieu thereof the following: "And
10
provided further, That if such consolidation shall be voted
11
for at said meetings by the necessary majorities of the share-
12
holders of each of the associations proposing to consolidate,
13
any shareholder of any of the associations so consolidated,
14
who has voted against such consolidation at the meeting of
15
the association of which he is a shareholder or has given
16
notice in writing at or prior to such meeting to the presiding
17
officer that he dissents from the plan of consolidation, shall
18
be entitled to receive the value of the shares so held by him
19
if and when said consolidation shall be approved by the
20
Comptroller of the Currency, such value to be ascertained
21
as of the date of the Comptroller's approval ".
22
23
(b) Such section 1 is further amended by adding at
the end thereof the following paragraphs:
24
" Publication of notice and notification by registered
25
mail of the meeting provided for in the foregoing paragraph
84
1
may be waived by unanimous action of the shareholders of
2
the respective associations. Where a dissenting shareholder
3
has given notice as above provided to the association of
4
which he is a shareholder of his dissent from the plan of
5
consolidation, and the directors thereof fail for more than
6
thirty days thereafter to appoint an appraiser of the value
7
of his shares, said shareholder may request the Comptroller
8
of the Currency to appoint such appraiser to act oil the
9
appraisal committee for and on behalf of such association.
10
"If shares, when sold at public auction in accordance
11
with this section, realize a price greater than their final
12
appraised value, the excess in such sale price shall be paid
13
to the shareholder.
14
liable for all liabilities of the respective consolidating associa-
15
tions. In the event one of the appraisers fails to agree with
16
the others as to the value of said shares, then the valuation
17
of the remaining appraisers shall govern."
The consolidated association shall be
18
SEG. 330. (a) Section 3 of the Act of November 7,
19
1918, as amended (U. S. C, Supp. VII, title 12, sec.
20
34 ( a ) ) , is amended by striking out the first sentence
21
following the proviso down to and including the words
22
" to be ascertained " and inserting in lieu thereof the fol-
23
lowing: " If such consolidation shall be voted for at said
24
meetings by the necessa^ majorities of the shareholders
25
of the association and of the State or other bank proposing
85
1
to consolidate, and thereafter the consolidation shall be
2
approved by the Comptroller of the Currency, any share-
3
holder of either the association or the State or other bank
A
so consolidated, who has voted against such consolidation
g
at the meeting of the association of which he is a stock-
Q
holder, or has given notice in writing at or prior to such
rj
meeting to the presiding officer that he dissents from the
g
plan of consolidation, shall be entitled to receive the value
g
of the shares so held by him if and when said consolidation
10
shall be approved by the Comptroller of the Currency, such
H
value to be ascertained as of the date of the Comptroller's
12
approval."
13
14
(b) Such section 3 is further amended by adding
at the end thereof the following paragraph:
15
" Where a dissenting shareholder has given notice as
16
provided in this section to the bank of which he is a share-
17
holder of his dissent from the plan of consolidation, and the
18
directors thereof fail for more than thirty days thereafter
19
to appoint an appraiser of the value of his shares, said
20
shareholder may request the Comptroller, of the Currency
21
to appoint such appraiser to act on the appraisal committee
22
for and on behalf of such bank.
23
appraisers fails to agree with the others as to the value
24
of said shares, then the valuation of the remaining appraisers
25
shall govern."
In the event one of the
33
1
SEC. $34. The Act entitled "An Act to prohibit offer-
2
ing for sale as Federal farm-loan bonds any securities not
3
issued under the terms of the Farm Loan Act, to limit the
4
use of the words ' Federal', i United States \ or ' reserve ',
5
or a combination of such words, to prohibit false advertising,
6
and for other purposes ", approved May 24, 1926 (U. S. C,
7
Supp. VII, title 12, sees. 584-588), is amended by insert-
8
ing in section 2 thereof after " the words ' United States ' ",
9
the following: " the words 'Deposit Insurance'"; and by
10
inserting in said section after the words " the laws of the
11
United States", the following: "nor to any new bank
12
organized by the Federal Deposit Insurance Corporation as
13 provided in section 12B of the Federal Eeserve Act, a^
14
amended," and by striking out the period at the end of
15
section 4 and inserting the following: "or the Federal
16 Deposit Insurance Corporation."
17
SEC. S£2. The Act entitled "An Act to provide pun-
18
ishment for certain offenses committed against banks or-
19
ganized or operating under laws of the United States or
20
any member of the Federal Eeserve System", approved
21
May 18, 1934 (48 Stat. 783), is amended by striking
22
out the period after " United States " in the first section
23
thereof and inserting the following: " and any insured bank
24
as defined in subsection (c) of section 12B of the Federal
25
Reserve Act, as amended."
87
1
SEO. 9$&. Section 5143 of the Revised Statutes, as
2
amended, is hereby amended by striking out everything
3
following the words " Comptroller of the Currency ", where
4
such words last appear in such section, and substituting the
5
following: " and no shareholder shall be entitled to any
6
distribution of cash or other assets by reason of any reduc-
7
tion of the common capital of any association unless such
8
distribution shall have been approved by the Comptroller
9
of the Currency and by the affirmative vote of at least two-
10
thirds of the shares of each class of stock outstanding, voting
11
as classes."
12
SEC. 334. Section 5139 of the Revised Statutes, as
13
amended, is amended by adding at the end of the first para-
14
graph the following new paragraph :
15
" Certificates hereafter issued representing shares of
16
stock of the association shall state (1) the name and location
17
of the association, (2) the name of the holder of record of
18
the stock represented thereby, (3) the number and class of
19
shares which the certificate represents, and (4) if the asso-
20
ciation shall issue stock of more than one class, the respective
21
rights, preferences, privileges, voting rights, powers, re-
22
strictions, limitations, and qualifications of each class of stock
23
issued shall be stated in full or in summary upon the front
24
or back of the certificates or shall be incorporated by a ref-
25
erence to the articles of association set forth on the front of
88
1
the certificates.
Every certificate shall be signed by the
2
president and the cashier of the association, or by such other
3
officers as the bylaws of the association shall provide, and
4
shall be sealed with the seal of the association."
5
SEC. 346. The last sentence of section 301 of the
6
Emergency Banking Act of March 9, 1933, as amended,
7
is amended to read as follows: " JSTo issue of preferred stock
8
shall be valid until the par value of all stock so issued shall
9
be paid in and notice thereof, duly acknowledged before a
10
notary public by the president, vice president, or cashier
If
of said association, has been transmitted to the Comptroller
12
of the Currency and his certificate obtained specifying the
13
amount of such issue of preferred stock and his approval
l£
thereof and that the amount has been duly paid in as a part
1J5>
of the capital of such association; which certificate shall be
16
deemed to be conclusive evidence that such preferred stock
17
has been duly and validly issued/'
18 Ci
19
21
SEO. 830. The additional liability impused by tire
O^H41~2£^
<rf-g»»iiifto bank, fcuiufej Louinniiiig, «id banking iwrita-
22 tioao and the ad<titiraa^Kabi%. impotiod by oootion 4^of
23
tho Aot of March"*r*$3»-fI); CJ,- Cod6r4itle~5,-sec.361),
24
upon the shareholders of trust companies, shall cease to
25
apply on July 1, 1937, with respect to such savings banks,
88
1
the certificates.
2
president and the cashier of the association, or by such other
3
officers as the bylaws of the association shall provide, and
4
shall be sealed with the seal of the association.'7
••.
5
•
Every certificate shall be signed by the
u
SEC. %%&. The last sentence of section 301 of the
6
Emergency Banking Act of March 9, 1933, as amended,
7
is amended to read as follows: " IsTo issue of preferred stock
8
shall be valid until the par value of all stock so issued shall
9
be paid in and notice thereof, duty acknowledged before a
10
notary public by the president, vice president, or cashier
11
of said association, has been transmitted to the Comptroller
12
of the Currency and his certificate obtained specifying the
13
amount of such issue of preferred stock and his approval
14"
thereof and that the amount has been duly paid in as a part
l(j
of the capital of such association; which certificate shall be
16
deemed to be conclusive evidence that such preferred stock
17
has been duly and validly issued."
18
\\
22
tions-and the additional "liability imposed by-section 4 of
23
tho .Ad; of Mai eh • t r ^ 9 8 (D. C Code, title 5, sec. 361),
24
upon the shareholders of trust companies, shall cease to
25
apply on July 1, 1937, with respect to such savings banks,
SEO. DOG. The Additional liability impu!5'eflHb5rtfaE Act
of
89
1
savings companies, banking institutions, and trust companies
2
which shall be transacting business on such date: Provided,
3
That not less than six months prior to such date, the savings
4
bank, savings company, banking institution, or trust com-
5
pany, desiring to take advantage hereof, shall have caused
6
notice of such prospective termination of liability to be pub-
7
lished in a newspaper published in the District of Columbia
8
and having general circulation therein.
9
ure to give such notice as and when above provided, a ter-
10
mination of such additional liability may thereafter be
11
accomplished as of the date six months subsequent to pub-
12
lication in the manner above provided.
13
bank, savings company, banking institution, and trust com-
14
pany shall, before the declaration of a dividend on its shares
15
of common stock, carry not less than one-tenth part of its
16
net profits of the preceding half year to its surplus fund
17
until the same shall equal the amount of its common stock.
18
SEC. drft. The second paragraph of section 9 of the
19
Federal Reserve Act, as amended, is amended by striking
20
out the period at the end thereof and adding thereto the
21
following: " except that the approval of the Federal Re-
22
serve Board, instead of the Comptroller of the Currency,
23
shall be obtained before any State member bank may here-
24
after establish any branch and before any State bank here-
25
after admitted to membership may retain any branch estabH. R. 7617
1
In the event of fail-
Each such savings
90
1
lished after February 25, 1927, beyond the limits of the
2
city, town, or village in which the parent bank is
3
situated."
4
SEC, 9-3£. Section 5234 of the Eevised Statutes, as
5
amended (U. S. C, title 12, sec. 192), is amended by
6
striking out the period after the words " money so depos-
7
ited " at the end of the next to the last sentence of such
8
section and inserting in lieu of such period a colon and the
9
following: "Provided, That no security in the form of
10
deposit of United States bonds, or otherwise, shall be
11
required in the case of such parts of the deposits as are
12
insured under section 12B of the Federal Keserve Act, as
13
amended."
14
SEC. 38©. Section 61 of the Act entitled "An Act
15 to establish a uniform system of bankruptcy throughout
16
the United States", approved July 1, 1898, as amended,
17
is amended by inserting before the period at the end thereof
18
a colon and the following: "Provided, That no security
19
in form of a bond or otherwise shall be required in the
20
case of such part of the deposits as are insured under section
21
12B of the Federal Eeserve Act, as amended ".
22
SEC. 340. Section 8 of the Act entitled "An Act to
23
establish postal savings depositories for depositing savings
24
at interest with the security of the Government for repay-
25
ment thereof, and for other purposes ", approved June 25,
26
1910, as amended (U. S. C, title 39, sec. 758; Supp. VII,
91
1
title 39, sec. 758), is amended by striking out the first
2
sentence thereof and inserting in lieu thereof the following:
3
" Subject to such regulations as the Postmaster General may
4
prescribe, any depositor may withdraw the whole or any
5
part of the funds deposited to his or her credit with the
6
accrued interest after the expiration of sixty days after
7
giving notice in writing of intention to withdraw, and any
8
depositor may withdraw the whole or any part of such
9
funds without such notice only on condition that there be
10
deducted from the funds to his or her credit derived from
11
interest an amount equivalent to interest for a period of
12
not less than three months on the amount withdrawn.
13
Notwithstanding any other provision of law, no interest
14
shall be paid on any deposit in any postal savings deposi-
15
tory office at a rate in excess of that which may lawfully
16
be paid on savings deposits under regulations prescribed
17
by the Federal Eeserve Board pursuant to the Federal
18
Eeserve Act for member banks of the Federal Keserve
19
System located in or nearest to the place where such de-
20
pository office is situated.
21
deposit funds on time in member banks of the Federal
22
Eeserve System subject to the provisions of the Federal
23
Eeserve Act and the regulations of the Federal Eeserve
24
Board regarding the payment of time deposits and interest
25
thereon/'
Postal savings depositories may
bmc Calendar No. 222
74TH CONGRESS 1
j
. K. 7617
[Report No. 742]
A BILL
To provide for the sound, effective, and uninterrupted operation of the banking system,
and for other purposes.
By Mr. STEAGALL
APRIL 19,1935
Referred to the Committee on Banking and Currency
and ordered to be printed
APRIL 19,1935
Committed to the Committee of the Whole House on
the state of the Union and ordered to be printed
@FedFRASER