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P u b l i c Act Bo. , 73d Congress. (H. H. 3757) AN ACT To provide f o r d i r e c t loans by Federal reserve banks to State banks and t r u s t companies i n c e r t a i n cases, and f o r other purposes• Be i t enacted by tlie Senate and House of Eepresentatives of the United States o f America i n Congress assembled, That T i t l e IV of the Act e n t i t l e d "An Act to provide r e l i e f i n the e x i s t i n g n a t i o n a l emergency i n banking, and f o r other purposes," approved March 9, 1933, i s amended by adding at the end thereof the f o l l o w i n g new section: "Sec* 404. During the e x i s t i n g emergency i n banking, or u n t i l t h i s s e c t i o n s h a l l he declared no longer operative by proclamation of the President, but i n no event beyond the p e r i o d of one year from the date t h i s s e c t i o n takes e f f e c t , any State bank or t r u s t company not a member of the Federal reserve system may apply to the Federal reserve bank i n the d i s t r i c t i n which i t i s l o c a t e d and s a i d Federal reserve bank, i n i t s d i s c r e t i o n and a f t e r i n s p e c t i o n and approval of the c o l l a t e r a l and a thorough examination o f the applying bank or t r u s t company, may make d i r e c t loans to such State bank or t r u s t company under the terms provided i n section 10 (b) of the Federal Reserve Act, as amended by s e c t i o n 402 of t h i s Act: provided, That loans may be made to any applying nonmember State bank or t r u s t company upon e l i g i b l e s e c u r i t y . A l l a p p l i c a t i o n s f o r such loans s h a l l be accom- panied "by the w r i t t e n approval of the State banking department or commission o f the State from which the State bank or t r u s t company has received i t s - 2 ~ charter and a statement from the s a i d State "banking department or coiimission that i n i t s judgment s a i d State bank o r t r u s t company i s i n a sound condition* The notes representing such loans s h a l l he e l i g i b l e as security f o r c i r c u l a t i n g notes issued under the provisions of the s i x t h paragraph of section 18 of the Federal Reserve Act, as amended "by section 401 of t h i s A c t t to the same extent as notes, d r a f t s , h i l l s of exchange, or bankers' acceptances acquired under the provisions of the f e d e r a l Reserve Act.. During the time that such bank or t r u s t company i s indebted i n any way to a Federal Reserve "bank i t s h a l l be required to comply i n a l l 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, That i n l i e u o f subs c r i b i n g to stock i n the Federal reserve bank i t s h a l l maintain the reserve balance required by section 19 of the Federal Reserve Act during the existence of such indebtedness. As used i n t h i s section and i n section 304, the term * State bank or t r u s t company1 s h a l l include a bank or t r u s t company •rganized 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 Act of March 9, 1933, i s amended by adding a f t e r the f i r s t sentence thereof the f o l l o w i n g new sentences: "Nothing i n t h i s s e c t i o n s h a l l be construed to authorize the Reconstruction Finance Corporation to subscribe f o r p r e f e r r e d stock i n any State bank or t r u s t company i f under the laws of the State i n which s a i d State hank or t r u s t company i s l o c a t e d the holders of such p r e f e r r e d stock are not exempt from double l i a b i l i t y . In any case i n which under the laws of the State i n which i t i s l o c a t e d a State bank or t r u s t company i s not permitted to issue p r e f e r r e d stock exempt from double l i a b i l i t y , or i f such laws permit such - 3 ~ issue o f p r e f e r r e d stock only "by unanimous consent of stockholders, the Reconstruction Finance Corporation i s authorized, f o r the purposes of t h i s section, to purchase the l e g a l l y issued c a p i t a l notes or debentures of such State bank or t r u s t company," (b) The second sentence of said! s e c t i o n 304 i s amended to read as follows: "The Reconstruction Finance Corporation may, w i t h the aioproval of the Secretary of the Treasury, and under such r u l e s and regulations as he may p r e s c r i b e , s e l l i n the ovpen market the whole or any part of the p r e f e r r e d stock, c a p i t a l notes, or debentures of any n a t i o n a l banking association, State bank or t r u s t company acquired by the corporation pursuant to t h i s section." Such s e c t i o n 304 i s f u r t h e r amended by adding at the end thereof the f o l l o w i i l g new sentence: (c) As used i n t h i s section, the term "State bank or trust company" s h a l l include other banking corporations engaged i n the business of i n d u s t r i a l banking and under the supervision of State banking departments or of the Comptroller of the Currency.
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