Full text of An Act to Amend Section 12B of the Federal Reserve Act so as to Extend for One Year the Temporary Plan for Deposit Insurance, and for Other Purposes

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[PUBLIC—No. 362—73D

CONGRESS]

[S. 3025]
A N ACT
To amend section 12B of the Federal Reserve Act so as to extend for oner year
the temporary plan for deposit insurance, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of Am&rica in Congress assembled, T h a t section 12B
of the Federal Reserve A c t is amended—
(1) B y striking out " J u l y 1, 1934" wherever i t appears i n subsections (e), (1), and ( y ) , and inserting i n lieu thereof " J u l y 1,
1935";
(2) B y striking out," June 15, 1934 " where i t appears i n the last
sentence of the t h i r d paragraph of subsection ( y ) and inserting
i n lieu thereof " October 1,1934 " ;
(3) B y striking out u June 30,1934 " where i t appears i n the first
sentence of the fifth 'paragraph of subsection' ( y ) , and inserting
i n lieu thereof " June 30,1935 " ;
(4) B y amending the* second sentence of the f i f t h paragraph of
subsection (y) to comprise two sentences reading as follows: " T h e
provisions of such subsection (1) relating to State member banks
shall be extended f o r the purposes of this subsection to members of
the F u n d which are not members of the Federal Reserve System,
and the provisions o f such subsection (1) relating to the appointment
of the Corporation as receiver shall be applicable to all members of
the Fund. The provisions of this subsection shall apply only to
deposits of members of the F u n d which have been made available
since March 10,
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1933, fi U
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(5) B y adding to the sixth paragraph of subsection ( y ) the
f o l l o w i n g : " T h e . C o r p o r a t i o n snail prescribe by regulations the
manner of exercise of the r i g h t of nonmember banks to withdraw
f r o m membership i n the f u n d on J u l y 1, 1934, except that no bank
shall be permitted to withdraw unless ten days p r i o r thereto i t has
given w r i t t e n notice to the Corporation o f its election so to do.
Banks which withdraw f r o m the F u n d on J u l y 1, 1934, shall be
entitled to a refund of their proportionate share of any estimated
balance i n the F u n d on the same basis as i f the F u n d had terminated
on J u l y 1,1934.";
(6) B y adding to the end of the f o u r t h paragraph of subsection
(y) the following new paragraphs:
" On and after J u l y 1, 1934, the amount eligible f o r insurance
under this subsection for the purposes of the October 1,1934 certified
statement, any entrance assessment, and, i f levied, the additional
assessment, shall be the amounts not i n excess of $5,000 of the
deposits of each depositor.
" Each mutual savings bank, unless i t becomes subject to the
provisions of the preceding paragraph i n the manner hereinafter
provided, shall be excepted f r o m the operation of the preceding




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[PUB. 362.)

paragraph and for each such bank which is so excepted the amount
eligible for insurance under this subsection for the purposes of the
October 1, 1934 certified statement, any entrance assessment, and,
i f levied, the additional assessment, shall be the amounts not i n
excess of $2,500 f o r the deposits of each depositor. I n the event
any mutual savings bank shall be closed on account of inability to
meet its deposit liabilities the Corporation shall pay not more than
$2,500 on account of the net approved claim of any owner of deposits
i n such bank: Provided, however, That should any mutual savings
bank make manifest to the Corporation its election to be subject
to the provisions of the preceding paragraph the Corporation may,
i n the discretion of the board of directors, permit such bank t o
become so subject and the insurance of its deposits to continue on
the same basis and to the same extent as that of f u n d members
other than mutual savings banks.
" The Corporation, i n the discretion of the board of directors, may
open on its books solely f o r the benefit of mutual savings banks an
additional Temporary Federal Deposit Insurance F u n d (hereinafter
referred to as the ' F u n d For Mutuals') which, i f opened, shall
become operative on or after J u l y 1, 1934, but prior to August 1,
1934, and shall continue to J u l y 1, 1935. I f the F u n d For Mutuals
is opened on the books of the Corporation, each mutual savings bank
which is or becomes entitled to the benefits of insurance during the
period of its operation shall be a member thereof and shall not be
a F u n d member. A l l assessments on each mutual savings bank,
including payments heretofore made to the Corporation less an
equitable deduction for liabilities and expenses of the F u n d incurred
prior to the opening of the F u n d For Mutuals, i f opened, shall be
transferred or paid, as the case may be, to the F u n d For Mutuals.
A l l provisions of this section applicable to the F u n d and not inconsistent w i t h this paragraph shall be applicable to the Fund F o r
Mutuals i f opened, except that as to any period the two are i n
operation the Fund shall not be subject to the liabilities of the F u n d
F o r Mutuals and the F u n d For Mutuals shall not be subject to the
liabilities of the Fund. Each mutual savings bank admitted to the
F u n d shall bear its equitable share of the liabilities of the Fund for
the period i t is a member thereof, including exj$enses of operation
and allowing for anticipated recoveries.";
(7J B y striking out the period at the end of the first sentence of
the fifth paragraph of subsection (y) and inserting i n lieu thereof
a comma and the following: " i f the member closed on or before
June 30, 1934, and not more than $5,000 i f closed on or after
J u l y 1, 1934.";
(8) B y (a) striking out " J u l y 1, 1936 " i n the first sentence of
subsection (1) and inserting i n lieu thereof " J u l y 1, 1937", (b)
striking out the words " J u l y 1, 1936 " i n the seventh paragraph of
subsection (y) and inserting i n lieu thereof " J u l y 1, 1937 and (c)
adding after the seventh paragraph of subsection ( y ) the following
new paragraph:
" U n t i l J u l y 1,1937, any State bank may obtain the benefits of this
section on and after the date the F u n d is terminated upon the conditions w i t h regard to examination, certification, and approval governi n g the admission of State banks to the F u n d and upon purchasing




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«

such class A stock or making such a deposit as is prescribed in the
preceding paragraph for-former fund members.";
(9) B y adding at the end of the first paragraph of subsection (v)
the following new paragraph:
" Every insured bank shall display at each place of business maintained by i t a sigrn or signs to the effect that its deposits are insured
by the Federal Deposit Insurance Corporation. The Corporation
shall prescribe by regulation the form of such sign and the manner
of its display. Such regulation may impose a maximum penalty of
$100 for each day an insured bank continues to violate any lawful
provisions of said regulation."; and
(10) B y amending the first sentence of the second paragraph of
subsection (y) by inserting within the parentheses and immediately
after the words " D i s t r i c t of Columbia'' the words " a n d the T e r r i tories of Hawaii and Alaska ".
SEC. 2. The first paragraph of section 9 of the Federal Reserve
Act, as amended (U.S.C., title 12, sec. 321), is amended by adding
after the second sentence thereof a new sentence to read as follows:
" F o r the purposes of membership of any such bank the terms
4
capital' and 4 capital stock ' shall include the amount of outstanding
capital notes and debentures legally issifed by the applying bank
and purchased by the Reconstruction Finance Corporation."
SEO. 3. (a) The Reconstruction Finance Corporation Act, as
amended, is amended by adding before section 6 thereof the following new section:
" SEO. 5e. (a) The Corporation is authorized and empowered to
make loans upon or purchase the assets of any bank, savings bank,
or trust company, which has been closed on or after December 31,
1929, and prior to January 1,1934, and the affairs of which have not
been f u l l y liquidated or wound up, upon such terms and conditions
as the Corporation may by regulations prescribe. I f i n connection
with the reorganization, stabilization, or liquidation of any such
bank, assets have been trusteed or are otherwise held for the benefit
of depositors or depositor and others, the authority, subject to regulations, as provided i n the preceding sentence shall be extended for
the purpose of authorizing the Corporation to purchase or make
loans on such assets held for the benefit of such depositors or depositors and others. This authority shall also extend to any such institution that has reopened without payment of deposits i n f u l l . I n
making any purchase of or loan on the assets of any closed bank,
the Corporation shall appraise such assets i n anticipation of an
orderly liquidation over a period of years, rather than on the basis
of forced selling values i n a period of business depression. This
authority shall also extend to assets of the character made eligible
by this section as security for loans without regard to whether the
Corporation has heretofore made loans thereon.
" (b) The Corporation shall purchase at par value such debentures
or other obligations of the Federal Deposit Insurance Corporation
as are authorized to be issued under subsection (o) of section 12B
of the Federal Reserve Act, as amended, upon request of the board of
directors of the Federal Deposit Insurance Corporation, whenever i n
the judgment of said board additional funds are required for insurance purposes: Provided, That the Corporation shall not purchase




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or hold at any time said debentures or other obligations i n excess of
$250,000,000 par value: Provided fwrther, That the proceeds derived
from the purchase by the Corporation of any such debentures or
other such obligations shall be used by the Federal Deposit Insurance Corporation solely i n carrying out its functions with respect
to such insurance.
" ( c ) The amount of notes, bonds, debentures, and other such obligations which the Corporation is authorized and empowered to issue
and to have outstanding at any one time under existing law is hereby
increased by $250,000,000."
SEC. 4. So much of section 31 of the Banking Act of 1933 as relates
to stock ownership by directors, trustees or members of similar governing bodies of member banks of the Federal Reserve System, is
hereby repealed.
Approved, June 16, 1934.