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PROVISION AUTHORIZING FEDERAL RESERVE BOARD TO
SUSPEND MEMBER BANKS FOR UNDUE USE OF BANK CREDIT.

The following is quoted from section 4 of the Federal Reserve
Aot (page 8 of present edition) as amended by the Banking Act of 1933i




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• • • • The Federal Reserve Board may prescribe
regulations further defining within the limitations of
this Aot the conditions under whioh discounts, advancements,
and the accommodations may be extended to member banks.
Each Federal reserve bank shall keep itself informed of the
general character and amount of the loans and investments
of its member banks with a view to ascertaining whether
undue use is being made of bank credit for the speculative
carrying of or trading in securities, real estate, or commodities, or for any other purpose inconsistent with the
maintenance of sound credit conditions; and, in determining
whether to grant or refuse advances, rediscounts or other
credit accommodations, the Federal reserve bank shall give
consideration to such information. The chairman of the
Federal reserve bank shall report to the Federal Reser^o
Board any such undue use of bank credit by any member bank,
together with his recommendation, TShenever, in the judgment
of the Federal Reserve Board, any member bank is making such
undue use of bank credit, the Board may, in its discretion,
after reasonable notice and an opportunity for a hearing,
suspend such bank from the use of the credit facilities of
the Federal Reserve System and may terminate such suspension
or may renew it from time to time,1*