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[PUBLIC—No. 4—73d CONGRESS] fH. R . 3757] AN ACT T o provide for direct loans by Federal reserve banks to State banks and trust companies in certain cases, and for otfcer purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, T h a t T i t l e I V of the A c t entitled " A n A c t to provide relief i n the existing national emergency i n banking, and f o r other purposes," approved March 9, 1933, is amended by adding at the end thereof the following new section: " SEC. 404; D u r i n g the existing emergency i n banking, or u n t i l this section shall be declared no longer operative by proclamation of the President, but i n no event beyond the period of one year f r o m the date this section takes effect, any State bank or trust company not a member of the Federal reserve system may apply to the Federal reserve bank i n the district i n which i t is located and said Federal reserve bank, i n its discretion and after inspection and approval of the collateral and a thorough examination of the applying bank or trust company, may make direct loans to such State bank or trust company under the terms provided i n section 10 (b) of the Federal Reserve A c t , as amended by section 402 of this A c t : Provided, T h a t loans may be made to any applying nonmember State bank or trust company upon eligible security. A l l applications f o r such loans shall be accompanied by the w r i t t e n approval of the State banking department or commission of the State f r o m which the State bank or trust company has received its charter and a statement f r o m the said State banking department or commission that i n its judgment said State bank or trust company is i n a sound condition. The notes representing such loans shall be eligible as security f o r circulating notes issued under the provisions of the sixth paragraph of section 18 of the Federal Reserve A c t , as amended by section 401 of this A c t , to the same extent as notes, drafts, bills of exchange, or bankers' acceptances acquired under the provisions of the Federal Reserve Act. D u r i n g the time that such bank or trust company is indebted i n any way to a Federal Reserve bank i t shall be required to comply i n all respects to the provisions of the Federal Reserve'Act applicable to member State banks and the regulations of the Federal Reserve Board issued thereunder: Provided, T h a t i n lieu of subscribing to stock i n the f e d e r a l reserve bank i t shall maintain the reserve balance required by section 19 .of the Federal Reserve A c t d u r i n g the existence of such indebtedness. As used i n this section and i n section 304, the term ' S t a t e bank or trust company 5 shall include a bank or trust company organized Under the laws of any State, T e r r i t o r y , or possession of the United States, or the Canal Zone." SEC. 2. (a) Section 304 of such A c t of March 9, 1933, is amended by adding after the first sentence thereof the following new sen- case in which under the laws of the State i n which i t is located a State b^rik or trust company is not permitted to issue preferred stock exempt from double liability, or i f such laws permit such issue of preferred stock only by unanimous consent of stockholders, the Reconstruction Finance Corporation is authorized, for the purposes of this section, to purchase the legally'issued capital notes , or debentures of such State bank or trust company." (b) The second sentence of said section 304 is amended to read as follows: " The Reconstruction Finance Corporation may, w i t h the approval of the Secretary of the Treasury, and under such rules and regulations as he may prescribe, sell i n the open market the whole or any part of the preferred stock, capital notes, or debentures of any national banking association, State bank or trust company acquired by the corporation pursuant to this section." Such section 304 is further amended by adding at the end thereof the following new sentence-: (c) " A s used i n this section, the term State bank or trust company' shall include other banking corporations engaged i n the business of industrial banking and under the supervision of State banking departments or of the Comptroller of the Currency." Approved March 24th, 1933