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A
B I L L .
TO AMEND THE ACT APPROVED DECEMBER 23, 1913,
KNOWN AS
. THE FEDERAL RESERVE ACT.
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l3E IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES
OF THE Ut'IITED STATES OF AMERICA IN CONGRESS ASSEMBLED, That
·the Act approved December 23, 1913, known.as the Federal ~e-·
serve Act, as amended, be ·further amended by adding a new section as follows:
BANKING CORPORATIONS
.AUTHOE.~
TO DO FOREIGN :JMNK!NG
BUSI1\"ESS.
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section 25 {a): Corporations to be organized for the ~urp9se
of engaging principally in international or foreign banking or
other financial operations, or banking or other financial operations in a de~ndency or insular possession of the United
States, either directly or through the agsncy, ownership, or
control of local institutions in foreign countriGs, or in such
dependencies or insular possessions as 1•rovided by this· section, and to act when required as fiscal agents of the United
States, may be formed by any ntunb"'r of natur.al persons, not
less in any case than five.
SUch persons shall enter into articles of association
'JIIhich shall specify in general terms the objects for which the
association is formed and may contain any other provisions not
inconsistent with law which the association may see fit to
adopt for the regulations of its business and the conduct of
its affairs.
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~ch articles of association shall be signed by all of the
persons intending to ).Jarticil>ate in the organization of the
co~oration and, thereafter, shall be forwarded to the Federal
Reserve Board and shall be filed and preserved in its office.
The persons signing the said articles of association shall, under their hands, make an organization certificate which Shall
specifically state;
First: The name assumed by such corporation, which shall
be subject to the ayjJroval of the Federal Reserve Board.
Second:
The }!lace or places where its operations are to
be carried on.
Third: The place in the United States where its home office is to be located.
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Fourth: The amount of its capital stock and the number
of shares into which the sarr~ shall be divided.
Fifth: The names and places of business or residence
of the ~ersons executing the certificate and the number of
shares to which each has subscribed.
Sixth: The fact that the certificate is made to enable
the IJersons subscribing the same, and all other l'ersons,
firms, companies and cor:r.orations, who or which may thereafter subscribe to or ~urchase shares of the capital stock
of such corporation, to avail themselves of the advantages
of this Section.
The ~ersons signing the organization certificate shall
duly acknowledge the execution thereof before a judge of
some court of record or notary public, who shall certify
thereto under the seal of such court or notary and, thereafter, the certificate shall be forwarded to the Federal
Reserve Board to be filed and preserved in its office.
~on duly making and filing articles of assoc~ation and an
organization certificate the association shall become and
be a body corporate, and, as such, and in the name designated therein, shall have :)ower under such conditions and
regulations as the Federal Reserve Board may ~rescribe to
adopt and use a cor1;orate seal which rna; be changed at the
pleasure of its board of directors; to have succession for
a ~eriod of twenty years unless sooner dissolved by an Act
of Congress or unless its franchises become forfeited by
some violation of law; to make contracts; to sue and be
sued, coJIUJlain and defend in any court of law or equity;,
to elect or all}}Oint directors, a. wajority of whow shall be
citizens of the United States; and, by its board of directors, to appoint such officers and employees as may be
deemed proper, define th~ir authority and duties, re~uire
bonds of them and fix the penalty thereof; dismiss ~ch
officers or e~loyees , or any thereof, at pleasure, and
a.:•llOint others to fill their ;places; to prescribe, by its
board of directors,by-laws not inconsistent with law or
with the regulations of the Federal Reserve Board regulating the manner in which its stock shall be tr~sferred,
its directors elected or apvointed, its officers and employees appointed, its property transferred, and the
privileges granted to it by law exercised and enjoyed.
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Each
eorpor~tion
so
org~ized s~ll ~lso
have power:
(a) Tm purchase, sell, discount ~nd negotiate notes, drafts,
checks, bills of exc~nge, ~ccept~nces, including b~nkers 1 accept~nces, ~ble transfers ~d other evidences of indebtedness; to
purchase ~ sell securities, including the oblig~tions of the
United St~tes or of ~y St~te thereof; to ~ccapt bills or dr~fts
dr~wn upon it subject to such limit~tions ~nd restrictions
~s the Federal Reserve Bo~rd may tmpose; to issue letters of
credit; to purchas~ ~nd sell, exch~nge,· coin~ bullion; to
borrow' .:3.nd to lend money on re~l or person~l security; to receive
deposits; and gener~lly to exercise such powers as ~re incident~l
to the powers ·conferred by this act or ~s ~Y be usu~l in co.n·nection with the transaction of the business of bc:mlting or other
financial operations in the countries, colonies, dependencies, or
possessions in which it s~ll tr~nsact business.
(b) To establish ~nd m.:3.int.:3.in for the tr~s~tion of its
business branches or ~gencies in foreign co1mtries, ti:leir dependencies or colonies and in the dependencies or insular possessions
of the United States, at such places as ~Y be approved by the
Federal Reserve Board ~d under such rules ~nd regul~tions ~s it
may prescribe; ~nd to establish and maintain such ~ditio~l
br~nches or agencies as the Feder.:3.l Reserve Bo~rd ~Y from tirue to
t~e authorize even in countries or dependencies not specified in
the original organization certifica~e.
(c) With the consent of the Feder..:il Resenr8 Bo...1.rd to
and hold stock or other certificates of ownership
in any other co~oration org~ized under the provisions of this
section, or under the laws of any foreign country or ~ colony
or dependency thereof, or under the ~ws of any State, dependency
or insular possession of the United States, not tr..:ins~cting
business in the United States 7 except such as in the JUd~ent
of the Federal Reserve Board may be incidental to its inter~tian
al or foreign business; provided 1 however, that without the consent of the Federal Reserve Board, no corpor~tion orgQnized hereunder slull invest in any one corpor.J.tion an .J.Inount in excess of
ten per centum of its own capit~l and surplus.
The provisions of
purch~se
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Section 1 of the Act ;l.pproved October 15, 1914, entitled WAn Act
to Supplement Existing taws ~~inst unlawful restraints and
monopolies and for other purposes," shall not ~pply to corporations or to officers, directors or employees of corporations
. "'•r.~bed under this section ..
(d) Corpor~tion~ organized under authority of this section
may be granted perrission by the Feder~l Reserve ~~rd to exercise
~Y or ~11 of the powers specified in section ll(k) of the Feder~l
Reserve Act in so· far as the exercise of s~id power rw.y be
necessary in the conduct of the foreign or internatio~l business
eng~ged in by such corporations~
No corporation organized under this section shall c~rry
on ~ny part of its business in the United States except such as,
in the judgment of the Federal Reserve Bo~rd, shall be incidental to its international or foreign business; and provided further
that except such as is incidental and preliminary to its organiz~
tion no such corporation sh~ll exercise any of the powers conG
ferred by this sectiQn until it has been duly authorized by the
Federal Reserve Board to commence businass as ~ corpor~tion org~n
ized under the provisions of this Section.
No corporation shall be organized u...-'lder the provisions of
this section with a capital stock of less th.J.n two ruiJ.lion dollars,
one quarter of which must be paid in before the corpord.th'n m.;:~.y be
authorized to begin business. The capital stock of ~ny such corporation may be increased at any ti~et with the approval of the
Federal Reserve Board» by a vote of two-thirds of its sh~reholders, or by unanimous consent in writing of the shareholdera without ·
a meeting and without a formal vote;and may be reduced in like ~art
provided that, in no event, shall it be iess than two willian doll~rsA majority of the shares of the ea.pital stock of .my such
corporation shall be held .and owned by citizens of the United
States, by corporations ~har~$red under the laws of the United
States or of a State of the United states or by firms or comp~ies,
th~ controlling interest in which is owned by the citizens of the
Un1ted States or of ~ st~te thereof. The provisions of section ei~ht
of. the Act approved October 15, 1914, entitled 11 .An Act to Supplement
Ex1sting Laws ~g~inst unlawful Restraints and Monopolies, and for
other pnrposes," shall not be construed to apply to the directors,
other officers, ~gents} or employees of ~orpor~tions org~nized under
the provisions of this section.
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Sbareholders in ..1.n:r corporation organized under t:te prov~s1ons of this
section shc:cll not be :!.i~ble for tl:.e contracts, ·iebts rend en;-;a-:c.::ents of such
cor~oration except to tl·e extent of their unpuid stocl: subscri_;_:>tions.
Any
member bank ~Jay act c.:..s ~-<~ent for any corporation erg<:mized unier the ;:Jrovisions of this section for the pur:?ose of dealing ni th any Federal resorYe
bc:..n.l.r .i.nd tl1e Federal Reserve Eou.rd shall es ta·~usl:J c:..nd pror.m.lgate ru.les &.nd
regul&.tions defining <.Uld ;:::overning transactions whic:l corporations organized
hereunder may have ''it}~ Federal reserve banks, either directly or through
the agency of a r.:.e;:.1ber burl::. No suc~1 corporc.:..tion, ho"tever, shall becor.Je a
mer:cer of any Federal reserve bn.:nl::.
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Should c..ny corporation orgc...nized llsreunder fE~-il to cooplzr ~-.rith any
of t:~e ·.3rovisions of the laws of t1Je United States) all of its rightst
privileges ~nd franchises derived herefroD r::d.~" thereb? be forfeited. Be fore any such corporation sl~ll be declu.red dissolved, or its rights,
privileges and franchises forfeited, uny noncoopliu.nce nith, or violation
of s....,_ch le:..ws sl>..all, ho,rever, be deter:llned ar..d ad,judged by a court o! the
United States of coopetent ,iurisdiction: in a suit brought for that pur pose in the district or territorz;• in nhicl'. the haDe office of such corporation is located, which suit shall be brought by the United States at the
inst~nce of the FeC!.eri!.l Reserve .:Board.
Upon ad,iudicD-tion of such noncocpli•
a.nce or violation, each director u.nd officer r1ho ?U.rtieipatod ~n, or ass'ented to, the illegal act or acts, sl>~ll be liable in his personal~r in.
di vidual eapaci ty for a.ll d.ar:~ages nhich the s .... id corporation shail have
sus ta.i ned in consequence thereof. No dissolution shall take at.,ay o·r impair
any remedy against the corporc.tion, its stockholders or officers for any liability or penalty previously incurred •
.Any such corpor.:..tion my go into volunt<lry liq,nida.tion and be
closed by a vote of its s11£Lreholders owning trro- thirds of its s took ..
ruenever the Federal Reserve Board shall becooe satisfied of the
insolvency of any such corporation, it r:ay appoint a receiver who shall
take possession of all of the property and assets of the corporation and
~ercise the sat:e rights} privileges, powers c..nd authorit~r \7itl1 respect
thareto as are now exercised by receivers of national ba.nl::s appointed by
the Comptrollar of the Currency of the United. States; provi((,ed, however,
that the assets of the corporation subject to the laws of other countries
or _.;-g.r;Lsdictions shall be dea.lt with in accordi..nce with· the tert1S of such
laws.
Every corpor~tion or&w.nized under the provisions of this section
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shall hold a meeting of its stockholders annually upon a date fixed
in its by-laws, such meeting to be held at its horne office in the United
States. Every such corporation shall keep at its home office books containing the names of all stocYJlolders thereof, and the naoes and addresses
of the members of its board of directors, together with copies of all reports made by it to the Federal Reserve Board. Every such corporation
shall make reports to the Federal Reserve Board at such times and in such
form as it may require; and shall be subject to exnoinatio:m whenever
deemed necessary bW the Federal Reserve Board by e~iners appointed by
the Federal Reserv~ Board, the cost of such exaoinations) including the
compensation of the e~ners, to be fixed by the Federal Reserve Board
and to be paid by the corporation examined.
July II. I9I9.
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@FedFRASER