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7 6 FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE BOARD X-6660 J u l y 22, 1930. SUBJECT: Adoption of Amendments to Regulation J . Dear Sir* You a r e a d v i s e d t h a t , e f f e c t i v e September 1, 1930, the Federal Reserve BOard has adopted the amendments to Regulation J recommended by the Conference of Counsel of a l l Federal r e s e r v e banks with c e r t a i n s l i g h t changes i n phraseology recommended by Hen. Newton D. Baker and the Board's General Counsel, whidh Were s e t f o r t h i n a memorandum addressed to the Board by i t s General Counsel under date of June 27, 1930, a copy of which (X-6636) was t r a n s m i t t e d to you i n the Board'fe- c i r c u l a r l e t t e r of June 2?* 1930 (X-6645). For your information, t h e r e i s enclosed a copy of a r e s o l u t i o n adopted by the Federal Reserve Board oh J u l y 22, 1930, promulgating these amendments. These amendments w i l l be p u b l i s h e d i n the August number of the Federal Reserve B u l l e t i n ; and, as soon as they can be p r i n t e d , ti. supply of o f f i c i a l copies of the amended r e g u l a t i o n w i l l be f u r n i s h e d to each Federal r e s e r v e bank. You are r e q u e s t e d to see t h a t a copy of the amended r e g u l a t i o n i s f u r n i s h e d promptly to each member bank and to each nonmember c l e a r i n g bank i n your d i s t r i c t . P l e a s e advise the Board how many copies of the p r i n t e d r e g u l a t i o n w i l l be r e q u i r e d by your bank. By Order of the Federal Reserve Board. Very t r u l y yours, J . C. Noell, Assistant Secretary. Enclosure. TO CHAIRMEN AND GOVERNORS OF ALL F . R. BANKS. i: X-6660-a BE IT RESOLVED BY THE FEDERAL RESERVE BOARD, t h a t , e f f e c t i v e September 1, 1930, Regulation J i s hereby amended a s f o l l o w s : (1) Paragraph 1 of Section I I I i s amended "by changing the words "acceptable to the Federal Reserve Bank of the D i s t r i c t i n which such nonmember barks a r e l o c a t e d " to read "acceptable to the c o l l e c t i n g Fede r a l r e s e r v e bank." (2) Paragraph 3 of Section I I I i s amended by changing the words "acceptable to the Federal Reserve Bank of the D i s t r i c t i n which such nonmember bank i s l o c a t e d " to r e a d "acceptable to the c o l l e c t i n g Fede r a l r e s e r v e bank." (3) Paragraph 2 of S e c t i o n IV i s amended by changing the p e r i o d a t the end thereof to a comma and by adding the following words: "provided, however, t h a t the Federal r e s e r v e bank may i n i t s d i s c r e t i o n r e f u s e a t any time t o p e r mit the withdrawal or o t h e r use of c r e d i t given f o r any item f o r which the Federal r e s e r v e bank h a s not y e t r e c e i v e d payment i n a c t u a l l y and f i n a l ly collected funds." (4) Paragraph 3 of S e c t i o n IV i s amended by changing the p e r i o d a t the end thereof to a comma and by adding the following words; "provided, however, t h a t the Federal r e s e r v e bank may i n i t s d i s c r e t i o n r e f u s e a t any time to permit the withdrawal or other use of c r e d i t given f o r any item f o r which the Federal reserve bank has not y e t r e c e i v e d payment i n a c t u a l l y and f i n a l l y c o l l e c t e d funds." (5) S e c t i o n V i s amended to r e a d as f o l l o w s : "SECTION V. TERMS OF COLLECTION. "The Federal Reserve Board hereby a u t h o r i z e s the Federal r e s e r v e banks to handle such checks s u b j e c t to the f o l l o w i n g terms and c o n d i t i o n s ; and each member and nonmember c l e a r i n g bank which sends checks to any Federal r e s e r v e bank f o r deposit or c o l l e c t i o n s h a l l by such a c t i o n be deemed (a) to a u t h o r i z e the Federal r e s e r v e banks t o handle such checks s u b j e c t to the f o l l o w i n g terms and c o n d i t i o n s , (b) to warrant i t s own a u t h o r i t y to give the Federal r e s e r v e banks such a u t h o r i t y , and ( c ) t o agree to indemnify any Federal r e s e r v e bank f o r any l o s s r e s u l t i n g from the f a i l u r e of such sending bank t o have such a u t h o r i t y . 77 X-6660~a -2- " ( l ) A Federal reserve "bank w i l l act only as agent of the bank from which i t receives such checks and w i l l assume no l i a b i l i t y except for i t s own negligence and i t s guaranty of prior indorsements. "(2) A Federal reserve bank may present such checks for payment or send such checks f o r c o l l e c t i o n direct to the bank on which they are drawn or a t which they are payable, or in i t s d i s c r e t i o n may f o r ward them to another agent with authority to present them for payment or send them for c o l l e c t i o n direct to the bank on which they are drawn or at which they are payable. "(3) A Federal reserve bank may, i n i t s d i s c r e t i o n and at i t s option, e i t h e r d i r e c t l y or through or from an agent, accept in payment of or i n remittance for such checks, cash, bank drafts, transfers of funds or bank c r e d i t s , or other forms of payment or remittance, acceptable to the c o l l e c t i n g Federal reserve bank, the Federal reserve bank shall not be l i a b l e for the f a i l u r e of the drawee bank or any agent to pay or remit for such checks, nor for any l o s s r e s u l t i n g from the acceptance from the drawee bank or any c o l l e c t i n g agent, i n l i e u of cash, of any other form of payment or remittance authori z e d herein, nor f o r the nonpayment o f , or f a i l u r e to r e a l i z e upon, any bank draft or other medium of payment or remittance which may be accepted from the drawee bank or any c o l l e c t i n g agent. "(4) Checks received by a Federal reserve bank which axe payable i n i t s own d i s t r i c t w i l l ordinarily be forwarded or presented direct to the banks on which they are drawn, and such banks w i l l be required to remit or pay therefor at par i n such one or more of the forms of payment or remittance authorized under paragraph ( 3 ) hereof as may be acceptable to the Federal reserve bank. "(5) Checks received by a Federal reserve bank payable i n other d i s t r i c t s w i l l ordinarily be forwarded f o r c o l l e c t i o n to the Federal reserve bank of the d i s t r i c t i n which such checks are payable; •provided, however, that, where arrangements can be made s a t i s f a c t o r y to the c o l l e c t ing bank or agent and to the Federal reserve bank of the d i s t r i c t i n which such checks are payable, any such checks may be forwarded for c o l l e c t i o n direct to the bank on which they are drawn or at which they are payable, or may be f o r - X-666Q-& 3warded f o r c o l l e c t i o n to another agent with a u t h o r i t y to p r e s ent them f o r payment d i r e c t to the "bank on which they a r e drawn or a t which they a r e p a y a b l e . A l l such checks s h a l l he handled s u b j e c t to a l l the terms and c o n d i t i o n s of t h i s r e g u l a tion. " ( 6 ) Bank d r a f t s r e c e i v e d by a Federal r e s e r v e "bank i n payment of or i n remittance f o r checks handled under the terms of t h i s r e g u l a t i o n s h a l l l i k e w i s e he handled f o r c o l l e c t i o n s u b j e c t t o a l l the terms and c o n d i t i o n s of t h i s r e g u l a t i o n . " ( 7 ) The amount of any check f o r which payment i n a c t u a l l y and f i n a l l y c o l l e c t e d funds i s not received s h a l l be charged back to the forwarding bank, r e g a r d l e s s of whether or not the check i t s e l f can be r e t u r n e d . In such event, n e i t h e r the owner or h o l d e r of any such check, nor the bank which sent such check to t h e Federal r e s e r v e bank f o r c o l l e c t i o n s h a l l have any r i g h t of recourse upon, i n t e r e s t i n , or r i g h t of payment from, any r e s e r v e balance, c l e a r i n g account, deposit a c count, or o t h e r such fund of the drawee bank or of any bank to which such checks have been s e n t f o r c o l l e c t i o n , i n the poss e s s i o n of the Federal r e s e r v e bank. No d r a f t , a u t h o r i z a t i o n to charge, o r o t h e r o r d e r , upon any r e s e r v e balance, c l e a r i n g account, deposit account, or o t h e r such funds of a paying, r e m i t t i n g , or c o l l e c t i n g bark i n the p o s s e s s i o n of a Federal r e serve bank, i s s u e d f o r the purpose of s e t t l i n g items handled under t h e terms of t h i s r e g u l a t i o n w i l l be p a i d , a c t e d upon, or honored a f t e r r e c e i p t by such Federal r e s e r v e bank of n o t i c e of suspension or c l o s i n g of such paying, r e m i t t i n g , or c o l l e c t i n g bank."
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