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OOPY
X-5090
February 28, 1928.
Federal Reserve Board.
Proposed Amendments to the
Mr. Wyatt, General Counsel.
Federal Reserve Act.
In accordance with the Board's request, I respectfully submit
herewith drafts of bills to effect the following proposed amendments to
the Federal Reserve Act:
1. A proposed amendment to the first paragraph of Section 19
more clearly defining demand deposits, time deposits, savings deposits,
etc., and making it more difficult to evade the pro~er classification
of deposits for the purpose of computing reserves.
2. ~ amendment to Section 19 authorizing member banks in co~
puting their reserves to deduct "balances due from banks" from their
gross demand deposits instead of from "balances due to other banks",
as at present.
3. A complete rev1s1on of Section 19 adjusting, clarif~ing and
simplifying the reserve requirements in accordance with the proposed
plan suggested by Mr.Smead in a memorandum addressed to the Board under
date of June 27, 1927 (St. 5420), a copy of which is attached hereto.
This would make important changes in the reserve requirements and it is
suggested that it should be subjected to careful study and criticism by
both the Board and the Federal reserve banks before being recommended
to Congress.
4. A proposed amendment to Section 13 ~liminating the word
"agricultural" from the provision authorizing the discount of sight and
demand drafts secured by bills of lading, in order to eliminate the
difficulty in determining what is, or what is not, a"non-perishable,
readily marketable, staple agricultural product. 11 A bill for this purpose, S. 1989, was introduced by Senator Sheppard on January 4th and
has already been reported out by the Senate Banking and Currency Committee.
5. A proposed amendment restoring the jurisdiction of the
States District Courts over suits brought by or against Federal
reserve banks, Federal Land Banks, and Joint Stock Land Banks. It is
i~ortant to the Federal reserve banks that this amendment be obtained
at the earliest favorable opportunity, and the Treasury Department has
requested that Federal Land Banks and Joint Stock Land :Banks be included. (Letter from Mr. Dewey dated September 20, 1926.) This bill would
be referred to the Judiciary Committee instead of the :Banking and Cafrency Committee, and any riders amending the Federal Reserve Act would
not be germane to the purpose of the bill.
U~ited
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X-50~0
6. A proposed amcnd;nont oxc:l_ptinj:?; Fcders.l reserve banks fro'n
attachment or garnishment proceedings in tho same .-nanncr as national
banks arc now exempted. This is in the form of an a'llend.ment to Section 4
of the Federal Reserve Act and nrobably would be referred to the Banking
and Currency Com'llittce.
7. A proposed runendment to Section 13 of the Federal Reserve
Act increasing the maximum maturity of advances made by Federal reserve
banks to member banks on their promissory notes from 15 days to 90 days
when such notes are secured. by paper eligible for rediscount or for purchase by Federal reserve bunks. Such an amendment was recommended by
the Board in a letter addressed to Congressman McFadden under date of
January 16, 1926 (X-4508) and a bill containing such an amendment nas
introduced in the Fifty-Ninth Congress by Congressman McFadden as H.R.
7894 but was never reported out by the House Banking and Curre1my Committee.
8. The prooosed amendment to Section 8 of the Clayton Act designed to give the Board more latitude in the matter of granting perinits
for interlocking bank directorates. This proposed amendment has been
introduced in the present Congress as H.R. 6491, has passed the House,
and is now in the hands of the Senate Comrrdttee on Banking and Currency.
9. A proposed &~endment to Section 4 of the Federal Reserve
Act to permit an officer, director or erro;>loyee of a mutual savings bank
to serve as a Class B or Class C director of a Federal reserve bank. I
understand that in January, 1927, the Board apuroved such an amendment
but voted to withhold any recommendation to Congress until the present
session.
10. An amendment to Section 9, as amended by the McFadden Act,
permitting State member banks to have foreign branches.
11. An amendment permitting the cancellation and surrender of
Federal reserve bank stock held by member banks which go out of the
banking business or cease to fUnction without any receiver or liquidating
agent being appointed therefor.
12. An amendment to Section 21 of the Federal Reserve Act
suggested by the Comptroller of the Currency to provide that the salaries
of national bank examiners shall be fixed by the Comptroller of the Currency instead of the Federal Reserve Board. This has been covered by
~king a change in the longer of the two bills submitted with my me~oran
~um of January 7th amending Sections 9 and 21 of the Federal Re~erve Act.
In deciding whether or not to recommend such amendments in its
annual report, I respectfully suggest tltat the Board give very careful
~onsideration to the question whether the present is a favorable or safe
time to recommend any amendments to the Federal Reserve Act, especially
in view of the debates on the nroposed amendment to the Clayton Act and
the Retirement Bill, and in view of the number of pending amendments of
more or less radical nature which have been introduced by various
Congressmen an4 Senators,
http://fraser.stlouisfed.org/
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Federal Reserve Bank of St. Louis
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If I may be permitted to record my Dersonal op~;:uon on this
matter, I 7"0uld say that I agree "ri th the view expressed by the Comptroller of the Currency, to ,.,.it: That it would be impossible to secure
constructive legislation in connection ···ith the Federal Reserve System
at the present time and the introduction of legislation recommended by
the Board would lead to amendments and bearings before committees ~hich
would be broad in their scope and dangerous to the Federal Reserve
System. It would also give the proponents of radical amendments to
the Federal Reserve Act an opportunity of forcing action upon such radical amendments by tacking them on as riders to any bills which might
be introduced at the Board's suggestion.
Respectfully,
Walter Wyatt,
General Counsel.
Bills attached.
WW MD
2 28 28
X-5090Ja
COPY
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A BILL
To amend Section 19 of the Federp.l F.eserve Act.
BE IT E..'IACTED BY TH.""3 SENATE AND HOUSE OF REPnES.ENTATIVES OF THE
UNITED STATES OF AMERICA IN OONGRESS ASSEl,lBLED, That the first paragra~h of Section 19 of the Federal Reserve Act, as amended, be further
amended anQ re-enacted to read as follows:
11 Bank
Reseryes .• 11
"Sec. 19. The term 1 demand deposits' within the meaning
of this act shall includa all deposit balances due to other
banks, bankers, and. trust companies in the United States and
foreign countries• a11 certified checkS; cashier's cheeksj
treasurer's checks, demand letters of credit, and travellers'
checks outstanding; and all other de-posits except 1 time deposits' as hereinafter defined, artd deposits of public moneys
by tl1e United Sta.tet in designated depositaries.
11 the
term t time deposits' •.*11 thin the meaning of this act
shali.incltide all 'savings acc~nts•, 'time certificates of deposit1, '1>ostal savings deposits' and '~en account time deposits! as hereinafter defined, except that whenever, by the
lapse of time or the giving of notice of an intended withdrawal, savings accounts, time certificates of deposit, and
open account time deposits becowe payable in less· than 30 days,
such deposits shall be considered demand deposits.
11 The
term 1 savings accounts 1 shall mean deposits of individuals and religious, charitable or similar corporations,
in res-;>ect to which -
(1) A pass book, certiiicate or other similar form of
delivered to and retained by the depositor
or his assignee, must actually be presented to the
bank wrenever a wi thdrawal is made;
.
receip~.
(2) The depositor or his assignee may at any time be required by the bank to give notice of an intended withdrawal not less than thirty days before a withdrawal
is rmde; and
(3) The bank's printed regulations, accepted by the depositor include the above requirements.
Depos its which are permit ted to be withdrawn by check
or otherwise, without the actual presentation of the pass book,
certificate, or other similar form of recei~t whenever a withdrawal is made, shall not be considered 'savings accounts' with11
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X-5090-a
in the meaning of this act. The retention of the ~ass book,
certificate or other similar form of receipt or a du~licate of
same, by the bank or by an officer, agent or employee thereof,
and the presentation of same by the bank or by an officer,
agent or employee thereof, shall not be considered an actual
presentation within the meaning of this act. A deposit made
by one bank in another or a deposit of a business co~oration
or firm shall not in any case be considered a 'savings account'
within the meaning of this act.
The term 1 time certificate of deposit' shall mean a deposit evidenced by written instruments delivered ~o andretained by the depositor evidencing the deposit with a bank,.
either with or without interest, of a certain sum epecified
on the fac$ of the certificate, payable in whole or in ~art
to the depositor or on his order 11
(1) On a certain date, specified on the certificate,
more than thirty days after the date of the deposit;
or
(2) After the lapse of a certain time subsequent to the
date of the certificate, in no case less than thirty
days; or
(3) After written notice which the bank may at its option require to be ·given a certain specified number
of days, .not less than thirty days before the date
of repayment; and
(4) In all cases only upon the actual presentation of
the certificate at each withdrawal for proper endorsement or surrender.
The retention of the 'certificate, or a duplicate of
same, by the bank or by an officer, agent or employee thereof,
and the ~resentation by the bank or by an officer, agent or
employee thereof shall not be considered an actual presentation
within the meaning of this act. A deposit made by one bank in
another shall not in cny case be considered a 'time certificate
of deposit 1 within the meaning of this act.
'
11
The term 'postal savings deposits,. as used in this act
shall mean deposits of postal savings funds in banks under the
terms of the postal savings act apnroved June 25, 1919, as amended.
11
11 The term 1 open account time deposits' as used in this act
shall mean deposits not evidenced by certificates of deposits
or savings pass books, in respect to which a wri~ton contract is
entered into with the depositor at the time the deposit is made
providing that neither the whole or any part of such deposit
may be withdrawn, by cheCk or otherwise, except on a given date
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more than thirty days after the date of the deposit, or on
written notice whi~~ must be given by the de~ositor a certain
specified number of days in advance, in no case less than thirty
days. In order for deposits to be classified as 'open account·
time deposits' the bank in which such de:9osi ts are made il1ll.S t
actually re~~ire such written notice before permitting withdrawals to be made.
t.
32C
COPY
X-5090-b
An Act
·~o .Amend Section 19 of the Federal
Reserve Act, As Amended.
BE IT EUACTED BY THE SENATE .AHD THE HOUSE OF REPRESEN'I:ATIVES OF THE UNITED STATES OF A.\mRI CA HT CONGRESS
ASSEMBLED, That the eighth paragraph of Section 19 of
the Federal Reserve Act, as amended, is further amended and reenacted to read as follows:
In estimating the reserve balances required by
this Act, member banks may deduct from the amount
of their gross demand deposits the amounts of
balances due from other banks (except Federal Reserve Banks and ·.foreign banks), cash i terns with
Federal Reserve Banks and other banks in process
of collection, checks on other banks in the same
place, and exchanges for clearing house.
A BILL
To amend Section 19 of the Federal Reserve Act.
BE IT ENACTED BY THE SJ\NATE AND HOUSE OF REPRESENTATIVES
OF THE UNITED STATES OF AME;RICA IN CONGRESS ASSEMBLED, That the
first paragraph of Section 19 of the Federal Reserve Act, as
amended, be further amended and re-enacted to read as follows:
11
Bank Reserves. 11
,_}:9. ·The term 'demand deposits 1 within the meaning of this act shall include all deposits of public
moneys of the United States, all certified cheCks, cashier's ched:s, treasurer's checks, demand letters of
credit, and travellers' checks outstanding, and all
other deposits except 'time deposits 1 and ·Hbank deposits 1
as hereinafter defined.
11 Sec~
"The term 1 time deposits 1 within the meaning of this
act shall include all 1 savings accounts', 1 time certificates of deposit', 'postal savings deposits' and 'open
account time deposits' as hereinafter defined, EjXce:p:t
that whenever, by the lapse of time or the _giving of
notice of an intended withdrawal, sav~ngs accounts, time
certificates of deposit, and. open account time de'l?osi ts
become payable in less than 30 days, such deposits shall
be c9nsidered demand deposits.
"The term 'savings. accounts n shall mean deposits of
individuals and religious, d1ar.itable or similar corpora~
tions, in respect to which·
·
'
•
¥
.•
J.
'
'
..•
'
,.
(1) A pass book, ~ertificate or other similar form o.:f
delivered to and retained by the depositor
or his assignee, must actually be presented to the
bank whenever a withdrawal is made;
r~ceipt,
(2) The depositor or his assignee may at any time be
required by tl')3 bank to give notice of an in tended withdrawal not less than thirty days before
a withdrawal is 1nade; and
(3) The bank's printed regulations, accepted by the
depositor include the above requirements.
Deposi ts which are permitted to be withdrawn by check
or otherwise, without the actual presentation of the pass
book, certificate, or other similar form of receipt whenever
a withdrawal is made, shall not be considered 'savings accounts 1 within the meaning of this act. The retention of
11
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X-5090c
L.
("~6.--, r: •
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the pass book, certificate or other similar form of
receipt or a duplicate of same, by the bank or by an
officer, agent or employee thereof, and the presentation of same by the bank, or by an officer, agent
or employee thereof, shall not be considered an actual
presentation withirl the meaning of this act. A deposit made by one bank in another or a deposit of a
business corporation or firm shall not in any case be
considered a 'savings account' within the meaning of
this act.
"The term 1 time certificate of deposit 1 shall
mean a deposit evidenced by written instrument delivered to and retained by the depositor evidencing the deposit with a bank, either with or without interest, of
a certain sum specified on the fac~ of the certificate,
payable in whole or in part to the depositor or on his
order(1) On a certain date, specified on the certificate,
more than thirty days after tpe date of the doposit; or
(2) After the lapse of a certain time subsequent to
the date of the certificate, in no case less
than thirty days; or
(3) After written notice which the bank may at its
option require to be given a certain specified
number of days, not less than thirty days before
tre date of repayment; and
(4) In all cases only upon the actual presentation
of the certificate at each ~rithdrawal for proper
endorsement or surrender.
~
"The retention of the certificate, or a duplicate of same,
by the bank or by an officer, agent or employee thereof, and
the presentation of same by the bank or by an officer, agent
or employee thereof shall not be consider.ed an actual presentation within the meaning of this act. A d.eposi t made by one bank
in another shall not in any case be considered a 1 time certificate
of deposit' within the me~~ing of this act.
"The term 'postal savings deposits' as used in t}-:cis act
shall me?U deposits of postal savings funds in banks under the
terms of the postal savings act. . approved Ju·ne 25, 1919, as a.rnended.
~
"The term 1 ouen account time deposits' as used in this act
shall' mean deposits not evidenced by. certificates of deposits or
savings pass books, in respect to which a written contract is entered into with the depositor at t~e time the deposit is made providing that neither the whole or any part of such deposit may be
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X-5090-c
withdrawn, by check or otherwise, e;;;:ce·Qt on a given date, more than
thirty days after the date of the _qeposi t, or on v1ri tten notice
which must be given by the depositor a certain specified number of
days in advance, in no case less than thirty days. In order for
deposits to be classified as lopen account time deyosits' the bank
in which such deposits are made must actually require such written
notice before permitting withdrawals to be made.
11 The term lbanlc deposits' shall include all deposit balances
due to other ba1ucs, ba1Ucers, and trust companies in the United
States and foreign countries.
.Every bank, banking association, and trust company which is
or which becomes a member of any Federal reserve bank shall
establish and maintain a reserve consisting of an actual net
balance with the Federal reserve bank of its district equal
to not less than thirteen per centum of the aggregate amount
of its bru1k deposits, three per centum of the aggregate amount
of its time deposits, and the following per centum of the aggregate amount of its net demand deposits:
11
Eanks in central reserve cities, 13 per centum;
Ea11ks in reserve cities, 9 per centum; and
Other banks, 7 per centum;
"PROVIDED, HOWEVER, That, upon the affirmative vote of five
members of the Federal Reserve Eoard, any baruc located in an outlying district of a central reserve city nay be permitted to main-tain a reserve balance equal to not less than seven or nine per·
centura of its net demand deposits, and any bank located in an outlying district of a reserve city may be permitted to maintain a
reserve balance equal to not less than seven per centum of its
net demand deposits; .AND PROVIDED FUR-THER, That, in computing the
amounts of net demand deposits against which reserves must be
n~intained, all member barucs may deduct from the amount of their
gross demand deposits, all balances due to them from other banks
(except Federal reserve banks and foreign ba:.tks), all cash i terns
deposited by them with Federal reserve barJ].{s and other ba..'ik:s in
process of collection, all exchanges for the clearing house,
and all checks in other banlcs in the same place.
"The Federal Reserve Eoard shall have authority to prescribe
regulations governing the maintenance of the reserves required
by this section and further defining the various classes of deposi t·s herein mentioned.
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·X-5090-c
L 330
11 No
member bank shall keep on deposit with any State bank
or trust company which is not a member bank a sum in excess of
ten per centum of its own paid-up capital and surplus. No member bank shall act as the medium or agent of a nonmember bank
in applying for or receiving discounts from a Federal reserve
bank und,er the provisions of this Act, except by permission
of the Federal Reserve Eoard.
11 The required balance carried by a member bank with a
Federal reserve bank may, under the regulations and subject
to such penalties as may be prescribed by the Federal Reserve
Eoard, be checked against and withdrawn by such member bank
for the purpose of meeting existing liabilities: PROVIDED ...
HOWEVER, That no bank shall at any time make new loans or
shall pay any dividends unless and until the total balance
required by law is fully restored.
"National banks, or banks organized under local laws,
located in Alaska or in a dependency or insular possession
or any part of the United States outside the continental
United States may remain nonmember banks, and shall in that
event maintain reserves and comply with all the conditrnns
now provided by law regulating them; or said banks may, with
the consent of the Reserve Eoard, become member banks of
any one of the reserve districts, and shall in that event
take stock, maintain reserves, and be subject to all the
other provisions of this Act. 11
,r~~, ,!.·
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X-5090-d
C.ALEITD.AR NO. 346
70th COi'TGRESS
1st Session
s
1 9 8 9 -
(Report No. 335)
DT THE SENA':i'E OF TF..E IDHTCD STATES
January 4, 1928.
"·.r. Sheppard introduced the follovJing bill; which Ylas read twice and
referred_ to the Comr::i ttee on J3anldng and Currency.
February l6(calendar day, February 20), 1928.
Reported by
N~.
Edwards, with amendments
(Omit the :part struck through and insert the part
printed in italic)
To amend the third paraE::raph of section 13 of the Federal Reserve
Act.
Be it enacted bv the Senate and House of Re-oresentativm of the
United States of_ .America in Congress assem'bled, That the third paragraph
of section 13 of the Federal Resurvo Act be amended and reenacted to
read as follows:
11 U"_pon
the indorsement of any of its member baDks, which
shall be deemed a waiver of demand, notice, and protest by such bank ns
to its own indorsement exclusively, and subject to regulations and li1;1itations to be prescribed by the Federal Reserve :Soard, any Federal reserve bank may discount or purchase bills of exchange payable,at sight
or on dernand which are-aFawn-te-f!nanee grow out of the domestic shipment or the er2ortation of nonperishable, readily marketable
agricultur~
al and other staples and are secured by bills of lading or other shipping documents conveying or securing title to such staples: Provided,
X-5090-d
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That all such bills of exchange shall be forwarded promptly for collection, and demand for payment shall be made with reasonable promptness after the arrival of such staples at their destination: Provided
further, That no such bill shall in any event be held by or for the
account of a Federal reserve barik for a period in excess of ninety
days.
In discounting such bills Federal reserve bariks
m~
compute
the interest to be deducted on the basis of the estimated life of
each bill and adjust the discount after payment of such bills to conform to the actual life thereof".
i
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C~tr-..
X-5090-e
A BILL
To amend section 12 of the Act entitled 11 An Act to amend the Judicial
Code, and to further define the jurisdiction of the circuit courts
of ap})eals and of the Supreme Court, and for other purposes," approved February 13, 1925, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of A~erica in Congress assembled, that section 12 of the
Act entitled 11 And Act to amend the· Judicial Code, and to further define the jurisdiction of the circuit courts of appeals and of the
Supreme Court, and for other purposes, 11 approved February 13, 1925,
be amended and reenacted to read as follows:
"Sec. 12. That no district court shall have jurisdiction of any action or suit by or against any corporation
upon the ground that it was incorporated by or under an Act
of Congress: Provided, That this section shall not apply to
any suit, action, or proceeding brought by or against a Federal Land Bank, Joint Stock Land Bank, Federal reserve bank
or any corporation incorporated by or under an Act of Congress
wherein the Government of the United States is the owner of
more than one-half of its capital stock."
.: '
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X-5090-f
A :SILL
To amend section 4 of the Federal Reserve Act and for other purposes.
BE IT ENACTED BY TEE SENATE .Alffi HOUSE OF
SENTATIVES OF T'"rt:E UNITED STATES OF AMERICA IN
ASSEMBLED, That the fourth subdivision of the
paragraph of section 4 of the Federal Reserve
amended to read as follows:
REPRECONGRESS
fourth
Act be
11 Fourth.
To sue and be sued, complain and defend,
in any court of law or equity; but no attachment,
injunction or execution, shall be issued against such
bank or its property before final judgment in a~
suit, action, or proceeding in a~ State, county,
municipal or United States court. 11
:·',)""'
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X-"5090-g
A :BILL
•
To amend section 13 of the Federal Reserve Act, and for other purposes.
:BE IT ZNACTED :BY TI-lE SENATE .Aim HOUSE OF REPP..ESZNTATIVES OF THE
UNITED STATES OF AMERICA IN CONGRESS .ASSEMBLED, That the seventh paragraph of section 13 of the Federal Reserve Act, as amended, be amended
and reenacted to read as follows:
•
11 Any Federal reserve bank may make advances for
periods not exceeding fifteen days to its member b&~s
on their promissory notes secured by the deposit or
pledge of bonds or notes of the United States or of
bonds of the War Finance Corporation, or when authorized by the Federal Reserve :Board and subject to
such conditions, regulations, limitations, andrestrictions as the said board may prescribe, may
mal~e advances for periods not exceeding ninety days
to its member banks on their promissory notes secured
by such notes, drafts, bill of exchange, or bankers'
acceptances as are eligible for rediscount or for
purchase by Federal reserve banks under the provisions of this Act. All such advances shall be made
at rates of interest to be established by such Federal reserve banks, subject to the review and determination of the Federal Reserve Board. 11
...
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COPY
X-5090-h
70th CONGRESS
1st Session
H. R. 6491
IN THE .SEUATE OF THE UNITED STATES
February 1 (calendar day, February 2), 1928
Read twice and referred to the Committee on Banking and Currency
.AL~
ACT
To amend section 8 of the Act entitled "An Act to sup.plement existing laws against unlawful restraints and monopolies,
other purposes , 11
Be
an~
for
approved October 15, 1914, as amended.
it enacted by tho Senate and House of Representa-
•
tives of the United States of America .in Congress assembled,
That the last proviso of the second paragraph of section 8 of
the Act entitled 11 A.'1. Act to supplement existing laws against
unl~wful
restraints and monopolies, and for other purposes,"
found in title 15, chapter 1, section 19, United States Code,
approved October 15,' 1914, as amended, is amended to read
as follows:
"And provided further, That nothing in this .Act shall
prohibit any private banker from being an officer, director,
or employee of not more than two banks• banking associations,
or trust companies, or prohibit any officer, director, or
employee of any bank, banking association, or trust company,
or any Class A director of a Federal reserve bank, from
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X-5090-h
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beiug an officer, director, or
e~~1oyee
of not more tl1an
tvro other banks, banking ass ocia tiol1S, or trt.lS t companie.s,
whotrer organized U...""lder the 10.'7S of the United States or
any State, if in
~""ly
such caso there is
i~
force a permit
therefor issued by the Feuera1 Reserve Board; and the Fedoral Reserve Board is authorized to issue such permit if
in its judgment it is not incompatible with the public
interest, a:J?.d. to revoke any such permit '-'J"henever it finds,
after reasonable notice
m1d
opportunity to be heard, that
the public interest requires its revocation. 11
Passed the House of Representatives February 1, 1928.
Attest:
WM. TYLER PAGE,
Clerk.
X-509D-i
A BILL
To amend Section 4 of the Federal Reserve Act and for other purposes.
:BE IT ENACTED BY TEE SENATE .AND HOUSE OF REPRESE1lTATITIS OF T""n::J UNITED
STATES OF M.iElRICA nr cmTGRESS .ASSEI,il3L:ED, That Section 4 of the Act approved
Dece~ber 23, 1913, known as the Federal Reserve Act, as amended, be further
amended by striking out that part of said section which reads as follows:
11 lio director of Class ::S shall be an officer, director or
employee of any bank.
11 Uo director of Class C shall be an officer, director,
employee or stockholder of any ba.11k. 11
And by substituting
t~crefor
the following:
"No director of Class :B shall be an officer, director,
or employee of any bank, other than a mutual savings bank
not having a capital stock represented by shares.
Uo dir~ctor of Class C shall be an officer, director,
employee or stockholder of any batik, other tr~n a mutual
savings bank not having a capital stock represented by shares."
11
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X-5090-j
A :SILL
To amend section 9 of the Federal Reserve Act and for other purposes.
:BE IT ENACTED :BY Tr:::E SEl!ATE .AliD HOUSE OF REPRES:E!:TTATIVES OF THE
UJ:U'IillD STATES OF .Al.iERICA IN COliGrolSS .ASSEI,:BL:ED, That the second para...
5Taph of section 9 of the Federal Reserve Act be amended by changing
the period at the end thereof to a comma and by adding the following
words:
11 provid.ed, however, that the establishment
or operation of any branch or branches in
a foreign country or dependency or insular
possession of the United States shall not
affect the right of any such State bank to
retain or acquire stock in a Federal reserve bank. u
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X-5090-k
A. :SILL
To amend Section 6 and Section 9 of the Federal Reserve Act and
for other purposes.
:83 IT El\I'.A.CTED :BY TI-IID SENATE AlTD HOUSE O:B' REPRES:SliT..i>..'::'IVES OF THE
UNIT.ED STATES OF .Al':i:ERICA IN CONGRESS ASS:SM:SLED, That Section 6 of
the Act of December 23, 1913, known as the "Federal Reserve Act 11 be
amended and re-enacted to read as follows:
"Sec. 6. If any member bank shall be declared insolvent and
a receiver appointed therefor, the stock held by it in said Federal
reserve ba~~ shall be canceled, without impairment of its liability, and all cash-paid subscriptions on said stock, with onehalf of one per centum per month from the period of last dividend,
not to exceed the book value thereof, shall be first applied to
all debts of the insolvent member ba11k to the Federal reserve bank,
and the balance, if any, shall be paid to the receiver of the insol vent banl<:.
"If any national bank which has not gone into liquidation as
provided in Section 5220 of the Revised Statutes and for which a
receiver has not already been appointed for other lawful cause,
shall discontinue its ba1iking operations for a period of 60 days
the Comptroller of the Currency may, if he deems it advisable,
appoint a receiver for such bank. The stock held by the said national baruc in the Federal reserve ba11k of its district shall
thereupon be canceled and said national bank shall receive in payment therefor, under regulations to be prescribed by the Federal
Reserve :Soard, a sum equal to its cash paid subscriptions on the
shares canceled and one-half of one per centum a month from the
period of the last dividend, not to exceed the book value thereof,
less a~r liability of such national bank to the Federal reserve
bank.
"Whenever the capital stock of a Federal reserve ~nk is reduced either on account of a reduction in capital stock of any
member batik or of the liquidation or insolvency of such bank or
on account of the appointment of a receiver for a national bank
following discontinuance of its banking operations as provided in
this section, the board of directors shall cause to be executed
a certificate to the Comptroller of the Currency showing such reduction of capital stock and the amount repaid to such bank. 11
Sec. 2. That the eighth paragraph of Section 9 of the Federal
serve Act as ~ended be amended and re-enacted to read as follows:
~e
11 If at any time it shall appear to the Federal Reserve
:Soard that a member bank has failed to comply with the provisions
of this section or the regulations of the Federal Reserve :Soard
made pursuant thereto, or has ceased to exercise banking functions
without a receiver or liquidating agent having been appointed therefor, it shall be within the power of the board after hearing to require such bank to surrender its stock in the Federal reserve bank
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X-5090-k
-2and to forfeit all rights and privileges of membership.
The Federal Reserve :Board may restore membership upon
due proof of compliance with the conditions i~posed by
this section. 11
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34~~
X-5090-1
A BILL
To amend Sections 9 and 21 of the Federal Reserve Act and Section
5240 of the Revised Statutes.
:BE lT :81T.ACTED :BY T}:ID SEllAT:il AUD HOUSE OF REP?JJS]ThTT.ATIVES OF THE
illHTED STNL'3S OF .AMERICA HJ COlTGRESS .ASS:!:l.::BLED, That the si;~th and
seventh ~aragra:phs of Section 9 of the Federal Reserve Act, as amended,
be further ruuended to read as follows:
As a condition of membership such banks shall likevrise be
subject to ex&~i~tions made by direction of the Federal Reserve
Board or of the Federal reserve batik by examiners selected or approved by the Federal Reserve Board.
11
Wnenever the Federal Reserve Board shall approve the examinations made by the State authorities, such examinations and
the reports thereof may be accepted in lieu of exruninations made
by examiners selected or approved by the Federal Reserve :Board:.
PROVIDED, nO'Ii::TI'ilTIR, That when it deems i t necessary the Federal
Reserve :Board may order special examinations by examiners of its
own selection and shall in all cases approve the form of the report. The expenses of all examinations, other than those made by
State authorities, may, in the discretion of the Federal Reserve
Board, be assessed against the ba1~cs exmainod and, when so assessed, shall be paid by the banks examined. Copies of the reports
of such exarninatio'ns may, in the discretion of the Federal Reserve Board, be furnished to the State authorities having superv1s1on of such banks, to officers, directors or receivers of such
banks, and to any other proper persons.
11
"Sec. 2. That Section 21 of the Federal Reserve Act be
amended to read as follows:
"BANK EXAldN.ATIOUS.
•
"Sec. 21. Section fifty-two hundred and forty, United States
Revised Statutes, is amended to read as follo~s:
"The Comptroller of the Currency, with the approval of the
of the T+easury, shall appoint examiners who shall e~
amine·every national bank at least twice in each calendar year
and oftener if considered necessary. The examiner making the
examination of any national bank shall have power to make a thorough
exan1ination of all the affairs of the bank, and in doing so he
shall have power to a&~inister oaths and to examine any of the
officers and agents thereof under oath and shall make a full and
detailed report of the condition of said bank to the Comptroller
of the Currency.
Secreta~J
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X-5090-1
2
)
11 The Comytroller of the Currency shall fix the salaries of
all national bank exaLJ.iners and malce report thereof to Congress.
~1e expense of the exruninations herein provided for shall be
assessed by the Comptroller of the Currency upon the ba:nks exarnined
in proportion to assets or resources held by the ba1iks u~on the
dates of exanh1.ation of tho vttrious banks.
11 I11 addition to the examinations of national ba1iks ma.O.e and
cor.ductod by the Comptroller of the Currency, evcr3r Federal reserve ba11.k may, with the approval of tho Federal reserve agent or
the Federal Reserve 3oard, provide for special exami11~tion of
member banks within its district. The e;;:~Jense of such examinations
may, in the discretion of the Federal Reserve :Board, oe assessed
against the banks exrudned, and, when so assensed, shall be paid
by the baru;:s exmnined. Such examinations shall be so conducted
as to inform the Federal reserve bank of the condition of its member
banks and of the lines of credit which are being extended by them.
Every Federal reserve bank shall at all times furnish to the Fe&eral Reserve :Soard such information as ma;y· be dema:1ded concerning
the condition of any member barik within the district of the s&id
Federal reserve bank.
11 Uo bailie shall be subject to any visitatorial powers other
than such as are authorized by law, or vested in the courts of
justice or such as shall be or shall have been exercised or directed by Congress, or by either Eouse thereof or 03T any comrni ttee
of Congress, or of either House duly authorized.
11 The Federal Reserve :Board shall, at least once each year,
order an exw~ination of each Federal reserve bank, and upon joint
application of ton member oa1u~s the Federal Reserve Board shall
order a spacial examination and report of the condition of any
Federal reserve ba~~.n
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@FedFRASER