Full text of Federal Deposit Insurance Corporation Act (FDIC Act)

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[P u b lic Law
[C h a p te r

797— 8 1 s t
967— 2 d

C on gress]

S e ssio n ]

[S. 2822]
AN ACT
T o amend the Federal Deposit Insurance A ct (U. S. C.j title 12, sec. 264).

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That section 12 B
of the Federal Reserve Act, as amended, is hereby withdrawn as
a part of that Act and is made a separate Act to be known as the
“Federal Deposit Insurance Act”.
S e c . 2. The Federal Deposit Insurance Act is amended to read
as follows:
“ S e c . 1 There is hereby created a Federal Deposit Insurance Cor­
poration (hereinafter referred to as the ‘Corporation5) which shall
insure, as hereinafter provided, the deposits of all banks which are
entitled to the benefits of insurance under this Act, and which shall
have the powers hereinafter granted.
“ S e c . 2. The management of the Corporation shall be vested in a
Board of Directors consisting of three members, one of whom shall be
the Comptroller of the Currency, and two of whom shall be citizens
of the United States to be appointed by the President, by and with the
advice and consent of the Senate. One of the appointive members
shall be the Chairman of the Board of Directors of the Corporation
and not more than two of the members of such Board of Directors shall
be members of the same political party. Each such appointive member
shall hold office for a term of six years. In the event of a vacancy in
the office of the Comptroller of the Currency, and pending the appoint­
ment of his successor, or during the absence of the Comptroller from
Washington, the Acting Comptroller of the Currency shall be a member
of the Board of Directors in the place and stead of the Comptroller.
In the event of a vacancy in the office of the Chairman of the Board
of Directors, and pending the appointment of his successor, the Comp­
troller of the Currency shall act as Chairman. The members of the
Board of Directors shall be ineligible during the time they are in office
and for two years thereafter to hold any office, position, or employment
in any insured bank, except that this restriction shall not aj)ply to any
member who has served the full term for which he was appointed. No
member of the Board of Directors shall be an officer or director of any
insured bank or Federal Reserve bank or hold stock in any insured
bank; and before entering upon his duties as a member of the Board
of Directors he shall certify under oath that he has complied with this
requirement and such certification shall be filed with the secretary of
the Board of Directors.
“Sec. 3. As used in this Act—
“ (a) The term ‘ State bank’ means any bank, banking association,
trust company, savings bank, or other banking institution which is

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2

engaged in the business of receiving deposits, other than trust funds
as herein defined, and which is'incorporated under the laws of any
State, any Territory of the United States, Puerto Rico, or the Virgin
Islands, or which is operating under the Code of Law for the District
of Columbia (except a national bank), and include any unincorpo­
rated bank the deposits of which are insured on the effective date of
this amendment.
“ (b) The term ‘State member bank’ means any State bank which
is a member of the Federal Reserve System, and the term ‘State non­
member bank’ means any State bank which is not a member of the
Federal Reserve System.
“ (c) The term ‘District bank’ means any State bank operating
under the Code of Law for the District of Columbia.
“ (d) The term ‘national member bank5 means any national bank
located in any of the States of the United States, the District of Colum­
bia, any Territory of the United States, Puerto Rico, or the Virgin
Islands which is a member of the Federal Reserve System,
“ (e) The term ‘national nonmember bank5 means any national
bank located in any Territory of the United States, Puerto Rico, or
the Virgin Islands which is not a member of the Federal Reserve
System.
“ (f) The term ‘mutual savings bank’ means a bank without capital
stock transacting a savings bank business, the net earnings of which
inure wholly to the benefit of its depositors after payment of obliga­
tions for any advances by its organizers.
“ (g) The term ‘savings bank5 means a bank (other than a mutual
savings bank) which transacts its ordinary banking business strictly
as a savings bank under State laws imposing special requirements on
such banks governing the manner of investing their funds and of
conducting their business: Provided, That the bank maintains, until
maturity date or until withdrawn, all deposits made with it (other
than funds held by it in a fiduciary capacity) as time savings deposits
of the specific term type or of the type where the right is reserved
to the bank to require written notice before permitting withdrawal:
Provided ft&rther, That such bank to be considered a savings bank must
elect to become subject to regulations of the Corporation with respect
to the redeposit of maturing deposits and prohibiting withdrawal of
deposits by checking except in cases where such withdrawal was
permitted by law on August 23, 1935, from specifically designated
deposit accounts totaling not more than 15 per centum of the bank’s
total deposits.
“ (h) The terin ‘insured bank5means any bank the deposits of which
are insured in accordance with the provisions of this Act; and the
term ‘noninsured bank5 means any bank the deposits of which are
not so insured.
“ (i) The term ‘new bank5means a new national banking association
organized by the Corporation to assume the insured deposits of an
insured bank closed on account of inability to meet the demands of
its depositors and otherwise to perform temporarily the functions
prescribed in this Act.
“ (j) The term ‘receiver’ includes a receiver, liquidating agent,
conservator, commission, person, or other agency charged by law with
the duty of winding up the affairs of a bank.




3

^

[P ub . L a w 797.]

“ (k) The term ‘Board of Directors’ means the Board of Directors
of the Corporation.
.
“ (1) The term ‘deposit’ means the unpaid balance of money or its
equivalent received by a bank in the usual course of business and for
which it has given or is obligated to give credit to a commercial,
checking, savings, time, or thrift account, or which is evidenced by its
certificate of deposit, and trust funds held by such bank whether
retained or deposited in any department of such bank or deposited
in another bank, together with such other obligations of a bank as
the Board of Directors shall find and shall prescribe by its regulations
to be deposit liabilities by general usage: Provided, That any obliga­
tion of a bank which is payable only at an office of the bank located
outside the States of the United States, the District of Columbia, any
Territory of the United States, Puerto Rico, and the Virgin Islands,
shall not be a deposit for any of the purposes of this Act or be
included as a part of total deposits or of an insured deposit: Provided
further, That any insured bank having its principal place of business
in any of the States of the United States or in the District of Columbia
which maintains a branch in any Territory of the United States,
Puerto Rico, or the Virgin Islands may elect to exclude from insurance
under this Act its deposit obligations which are payable only at such
branch, and upon so electing the insured bank with respect to such
branch shall comply with the provisions of this Act applicable to the
termination of insurance by nonmember banks: Provided further,
That the bank may elect to restore the insurance to such deposits at
any time its capital stock is unimpaired.
“ (m) The term ‘insured deposit’ means the net amount due to any
depositor for deposits in an insured bank (after deducting offsets) less
any part thereof which is in excess of $10 ,000. Such net amount shall
be determined according to such regulations as the Board of Directors
may prescribe* and in determining^ the amount due to any depositor
there shall be added together all deposits in the bank maintained in the
same capacity and the same right for his benefit either in his own name
or in the names of others except trust funds which shall be insured as
provided in subsection (i) of section 7. Each officer, employee, or
agent of the United States, of any State of the United States, of the
District of Columbia, of any Territory of the United States, of Puerto
Rico, of the Virgin Islands, of any county, of any municipality, or of
any political subdivision thereof, herein called ‘public unit’, having
official custody of public funds and lawfully depositing the same in an
insured bank shall, for the purpose of determining the amount of the
insured deposits, be deemed a depositor in such custodial capacity sepa­
rate and distinct from any other officer, employee, or agent of the same
or any public unit having official custody of public funds and lawfully
depositing the same in the same insured bank in custodial capacity.
“ (n) The term ‘transferred deposit’ means a deposit in a new bank
or other insured bank made available to a depositor by the Corporation
as payment of the insured deposit of such depositor in a closed bank,
and assumed by such new bank or other insured bank.
“ (o) The term ‘branch7 includes any branch bank, branch office,
branch agency, additional office, or any branch place of business located
in any State of the United States or in any Territory of the United




IP ub . L a w 797.]

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4

States, Puerto Rico, or the Virgin Islands at which deposits are received
or checks paid or money lent.
“ (p) The term ‘trust funds’ means fnnds held by an insured bank
in a fiduciary capacity and includes, without being limited to, funds
held as trustee, executor, administrator, guardian, or agent.
“Sec. 4. (a) Every bank, which is an insured bank on the effective
date of this amendment, shall be and continue to be, without appli­
cation or approval, an insured bank and shall be subject to the provi­
sions of this Act.
“ (b) Every national member bank which is authorized to commence
or resume the business of banking, and which is engaged in the busi­
ness of receiving deposits other than trust funds as herein defined,
and every such national nonmember bank which becomes a member
of the Federal Reserve System, and every State bank which is con­
verted into a national member bank or which becomes a member of
the Federal Reserve System, and which is engaged in the business
of receiving deposits, other than trust funds as herein defined, shall
be an insured bank from the time it is authorized to commence or
resume business or becomes a member of the Federal Reserve System.
The certificate herein prescribed shall be issued to the Corporation
by the Comptroller of the Currency in the case of such national
member bank, or by the Board of Governors of the Federal Reserve
System in the case of such State member bank: Provided, That in
the case of an insured bank which is admitted to membership in the
Federal Reserve System or an insured State bank which is converted
into a national member bank, such certificate shall not be required,
and the bank shall continue as an insured bank. Such certificate
shall state that the bank is authorized to transact the business of
banking in the case of a national member bank, or is a member of
the Federal Reserve System in the case of a State member bank, and
that consideration has been given to the factors enumerated, in
section 6 . A State bank, resulting from the conversion of an insured
national bank, shall continue as an insured bank. A State bank,
resulting from the merger or consolidation of insured^ banks, or from
the merger or consolidation of a noninsured bank or institution with
an insured State bank, shall continue as an insured bank.
“Sec. 5. Subject to the provisions of this Act, any national non­
member bank which is engaged in the business of receiving deposits,
other than trust funds as herein defined, upon application by the
bank and certification by the Comptroller of the Currency in the
manner prescribed in subsection (b) of section 4 and any State non­
member bank, upon application to and examination by the Cor­
poration and approval by the Board of Directors, may become an
insured bank. Before approving the application of any such State
nonmember bank, the Board of Directors shall give consideration to
the factors enumerated in section 6 and shall determine, upon the
basis of a thorough examination of such bank, that its assets in
excess of its capital requirements are adequate to enable it to meet
all of its liabilities to depositors and other creditors as shown by
the books of the bank.
^
.
^
“Sec. 6. The factors to be enumerated in the certificate required
under section 4 and to be considered by the Board of Directors under
section 5 shall be the following: The financial history and condition




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[Pub. L a w 797.]

of the bank, the adequacy of its capital structure, its future earnings
prospects, the general character of its management, the convenience
and needs of the community to be served by the bank, and whether
or not its corporate powers are consistent with the purposes of
this Act.
^‘Sec.7. (a) The assessment rate shall be one-twelfth of 1 per centum
per annum. The semiannual assessment for each insured bank shall
be in the amount of the product of one-half the annual assessment rate
multiplied by the assessment base. The assessment base shall be the
amount of the liability of the bank for deposits, according to the defi­
nition of the term ‘deposit’ in and pursuant to subsection ( 1 ) of section
3, without any deduction for indebtedness of depositors: Provided,
That the bank—
44( 1 ) may deduct (i) from the deposit balance due to an insured
bank the deposit balance due from such insured bank (other than
trust funds deposited by it in such bank) which is subject to
immediate withdrawal; (ii) trust funds held by the bank in a
fiduciary capacity and which are deposited in another insured
bank; and (iii) cash items as determined by either of the following
methods, at the option of the bank: (aa) By multiplying by 2
the total of the cash items forwarded for collection on the assess­
ment base days (being the days on which the average deposits are
computed) and cash items held for clearings at the close of business
on said days, which are in the process of collection and which the
bank has paid in the regular course of business or credited to
deposit accounts; or (bb) by deducting the total of cash items for­
warded for collection on the assessment base days and cash items
held for clearings at the close of business on said days, which are
in the process of collection and which the bank has paid in the
regular course of business or credited to deposit accounts, plus
such uncollected items paid or credited on preceding days which
are in the process of collection: Provided. That the Board of
Directors may define the terms ‘cash items’, ^process of collection’,
and ‘uncollected items’ and shall fix the maximum period for
which any such item may be deducted; and
44( 2 ) may exclude from its assessment base (i) drafts drawn by
it on deposit accounts in other banks which are issued in the regular
course of business; and the amount of any advices or authoriza­
tions, issued by it for cash letters received, directing that its deposit
account in the sending bank be charged writh the amount thereof;
and (ii) cash funds which are received and held solely for the
purpose of securing a liability to the bank but not in an amount
in excess of such liability, and which are not subject to withdrawal
by the obligor and are carried in a special non-interest-bearing
account designated to properly show their purpose.
Each insured bank, as a condition to the right to make any such
deduction or exclusion in determining its assessment base, shall main­
tain such records as will readily permit verification of the correctness
thereof. The semiannual assessment base for one semiannual period
shall be the average of the assessment base of the bank as of the
close of business on March 31 and June 30, and the semiannual assess­
ment base for the other semiannual period shall be the average of the
assessment base of the bank as of the close of business on September




[P ub . L a w 797.]

6

30 and December 31: Provided, That when any of said days is a
nonbusiness day or a legal holiday, either National or State, the pre­
ceding business day shall be used. The certified statements required
to be filed with the Corporation under subsections (b) and (c) of
this section shall be in such form and set forth such supporting infor­
mation as the Board of Directors shall prescribe. The assessment
payments required from insured banks under subsections (b) and. (c)
of this section shall be made in such manner and at such time or times
as the Board of Directors shall prescribe, provided the time or times
so prescribed shall not be later than sixty days after filing the certified
statement setting forth the amount of assessment.
“ (b) On or before the 15th day of July of each year, each insured
bank shall file with the Corporation a certified statement showing
for the six months ending on the preceding June 30 the amount of
the assessment base and the amount of the semiannual assessment
due to the Corporation for the period ending on the following Decem­
ber 31, determined in accordance with subsection (a) of this section,
which shall contain or be verified by a written declaration that it is
made under the penalties of perjury. Each insured bank shall pay
to the Corporation the amount of the semiannual assessment it is
required to certify. On or before the 15th day of January of each
year, each insured bank shall file with the Corporation a similar
certified statement for the six months ending on the preceding Decem­
ber 31 and shall pay to the Corporation the amount of the semiannual
assessment for the period ending on the following June 30 which it is
required to certify.
“ (c) Each bank which becomes an insured bank shall not be
required to file any certified statement or pay any assessment for the
semiannual period in which it becomes an insured bank. On the
expiration of such period, each such bank shall comply with the
provisions of subsection (b) of this section except that the semiannual
assessment base for its first certified statement shall be the assessment
base of the bank as of the close of business on the preceding June 30
or December 31, whichever is applicable, determined in accordance
with subsection (a) of this section. If such bank has assumed the
liabilities for deposits of another bank or banks, it shall include such
liabilities in its assessment base. The first certified statement shall
show as the amount of the first semiannual assessment due to the
Corporation, an amount equal to the product of one-half of the annual
assessment rate multiplied by such assessment base.
“ (d) As of December 31, 1950, and as of December 31, of each
calendar year thereafter, the Corporation shall transfer 40 per centum
of its net assessment income to its capital account and the balance
of the net assessment income shall be credited pro rata to the insured
banks based upon the assessments of each bank becoming due during
said calendar year. Each year such credit shall be applied by the Cor­
poration toward the payment of the total assessment becoming due
for the semiannual assessment period beginning the next ensuing
July 1 and any excess credit shall be applied upon the assessment
next becoming due. The term ‘net assessment income5 as used herein
means the total assessments which become due during the calendar
year less ( 1 ) the operating costs and expenses of the Corporation
for the calendar year; ( 2 ) additions to reserve to provide for insur­




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[Pub. L aw 797.]

ance losses during the calendar year, except that any adjustments
to reserve which result in a reduction of such reserve shall be added;
and ( 3 ) the insurance losses sustained in said calendar year plus
losses from any preceding years in excess of such reserves. I f the
above deductions exceed in amount the total assessments which become
due during the calendar year, the amount of such excess shall be
restored by deduction from total assessments becoming due in sub­
sequent years.
“ (e) The Corporation ( 1 ) may refund to an insured bank any
payment of assessment in excess of the amount due to the Corporation
or ( 2 ) may credit such excess toward the payment of the assessment
next becoming due from such bank and upon succeeding assessments
until the credit is exhausted.
“ (f) Any insured bank which fails to file any certified statement
required to be filed by it in connection with determining the amount of
any assessment payable by the bank to the Corporation may be com­
pelled to file such statement by mandatory injunction or other appro­
priate remedy in a suit brought for such purpose by the Corporation
against the bank and any officer or officers thereof in any court of
the United States of competent jurisdiction in the District or Terri­
tory in which such bank is located.
“ (g) The Corporation, in a suit brought at law or in equity in any
court of competent jurisdiction, shall be entitled to recover from any
insured bank the amount of any unpaid assessment lawfully payable
by such insured bank to the Corporation, whether or not such bank
shall have filed any such certified statement and whether or not suit
shall have been brought to compel the bank to file any such statement.
No action or proceeding shall be brought for the recovery of any
assessment due to the Corporation, or for the recovery of any amount
paid to the Corporation in excess of the amount due to it, unless such
action or proceeding shall have been brought within five years after
the right accrued for which the claim is made, except where the
insured bank has made or filed with the Corporation a false or fraudu­
lent certified statement with the intent to evade, in whole or in part,
the payment of assessment, in which case the claim shall not be deemed
to have accrued until the discovery by the Corporation that the certi­
fied statement is false or fraudulent: Provided* however, That where a
cause of action has already accrued, and the period herein prescribed
within which an action may be brought has expired, or will expire
within one year from the date this amendment becomes effective, an
action may be brought on such cause of action within one year from
the effective date of this amendment: And 'provided further, That no
action or proceeding shall be brought for tlie recovery of any assess­
ment on deposits alleged to have been omitted from the assessment
base of any insured bank for any year prior to 1945 except that any
claim of the Corporation for the payment of any assessment may be
offset by it against any claim of the bank for the overpayment of any
assessment.
“ (h) Should any national member bank or any insured national
nonmember bank fail to file any certified statement required to be
filed by such bank under any provision of this section, or fail to pay
any assessment required to be paid by such bank under any provision
of this Act, and should the bank not correct such failure within




IP ub . L a w 797.]

8

thirty days after written notice has been given by the Corporation
to an officer of the bank, citing this subsection, and stating that the
bank has failed to file or pay as required by law, all the rights, privi­
leges, and franchises of the bank granted to it under the National
Bank Act, as amended, the Federal Reserve Act, as amended, or
this Act, shall be thereby forfeited. Whether or not the penalty
provided in this subsection has been incurred shall be determined
and adjudged in the manner provided in the sixth paragraph of
section 2 of the Federal Reserve Act, as amended. The remedies
provided in this subsection and in the two preceding subsections
shall not be construed as limiting any other remedies against any
insured bank, but shall be in addition thereto.
“ (i) Trust funds held by an insured hank in a fiduciary capacity
whether held in its trust or deposited in any other department or
in another bank shall be insured in an amount not to exceed $10,000
for each trust estate, and when deposited by the fiduciary bank in
another insured bank such trust funds shall* be similarly insured to
the fiduciary bank according to the trust estates represented. Not­
withstanding any other provision of this Act, such insurance shall
be separate from and additional to that covering other deposits of
the owners of such trust funds or the beneficiaries of such trust
estates: Provided, That where the fiduciary bank deposits any of
such trust funds in other insured banks, the amount so held by other
insured banks on deposit shall not for the purpose of any certified
statement required under subsections (b) and (c) of this section
be considered to be a'deposit liability of the fiduciary bank, but shall
be considered to be a deposit liability of the bank in which such
funds are so deposited by such fiduciary bank. The Board of Direc­
tors shall have power by regulation to prescribe the manner of report­
ing and of depositing such trust funds.
“Sec. 8. (a) Any insured bank (except a national member bank or
State member bank) may, upon not less than ninety days’ written
notice to the Corporation, and to the Reconstruction Finance Corpo­
ration if it owns or holds as pledgee any preferred stock, capital notes,
or debentures of such bank, terminate its status as an insured bank.
Whenever the Board of Directors shall find that an insured bank or its
directors or trustees have continued unsafe or unsound practices in
conducting the business of such bank, or have knowingly or negligently
permitted any of its officers or agents to violate any provision of any
law or regulation to which the insured bank is subject, the Board of
Directors shall first give to the Comptroller of the Currency in the case
of a national bank or a District bank, to the authority having supervision of the bank in the case of a State bank* or to the Board of Gov­
ernors of the Federal Reserve System in the case of a State member
bank, a statement with respect to such practices or violations for the
purpose of securing the correction thereof and shall give a copy
thereof to the bank. Unless such correction shall be made within one
hundred and twenty days or such shorter period of time as the Comp­
troller of the Currency, the State authority, or Board of Governors of
the Federal Reserve System, as the case may be, shall require, the Board
of Directors, if it shall determine to proceed further, shall give to the
bank not less than thirty days’ written notice of intention to terminate
the status of the bank as an insured bank, and shall fix a time and




9

[Pub. L a w 797.]

place for a hearing before the Board of Directors or before a person
designated by it to conduct such hearing, at which evidence may be
produced, and upon such evidence the Board of Directors shall make
written findings which shall be conclusive. Unless the bank shall
appear at the hearing by a duly authorized representative, it shall
be deemed to have consented to the termination of its status as an
insured bank. If the Board of Directors shall find that any unsafe
or unsound practice or violation specified in such notice has been
established and has not been corrected within the time above prescribed
in which to make such corrections, the Board of Directors may order
that the insured status of the bank be terminated on a date subsequent
to such finding and to the expiration of the time specified in such
notice of intention. The Corporation may publish notice of such ter­
mination and the bank shall give notice of such termination to each of
its depositors at his last address of record on the books of the bank, in
such manner and at such time as the Board of Directors may find to be
necessary and may order for the protection of depositors. After the
termination of the insured status of any bank under the provisions of
this subsection, the insured deposits of each depositor in the bank on
the date of such termination, less all subsequent withdrawals from any
deposits of such depositor, shall continue for a period of two years
to be insured, and the bank shall continue to pay to the Corporation
assessments as in the case of an insured bank during such period. No
additions to any such deposits and no new deposits in such bank made
after the date of such termination shall be insured by the Corporation,
and the bank shall not advertise or hold itself out as having insured
deposits unless in the same connection it shall also state with equal
prominence that such additions to deposits and new deposits made
after such date are not so insured. Such bank shall, in all other
inspects, be subject to the duties and obligations of an insured bank for
the period of two years from the date of such termination, and in the
event that such bank shall be closed on account of inability to meet
the demands of its depositors within such period of two years, the
Corporation shall have the same powers and rights with respect to such
bank as in case of an insured bank.
“ (b) Whenever the insured status of a State member bank shall be
terminated by action of the Board of Directors, the Board of Gov­
ernors of the Federal Reserve System shall terminate its membership
in the Federal Reserve System in accordance with the provisions of
section 9 of the Federal Reserve Act, and whenever the insured status
of a national member bank shall be so terminated the Comptroller
of the Currency shall appoint a receiver for the bank, which shall be
the Corporation. Except as provided in subsection (b) of section 4,
whenever a member bank shall cease to be a member of the Federal
Reserve System, its status as an insured bank shall, without notice
or other action by the board of directors, terminate on the date the
bank shall cease to be a member of the Federal Reserve System, with
like effect as if its insured status had been terminated on said date
by the board of directors after proceedings under subsection (a) of
this section.
“ (c) Notwithstanding any other provision of law, whenever the
Board of Directors shall determine that an insured banking institution
- is not engaged in the business of receiving deposits, other than trust
7 3 3 5 0 °— 5 0 - ------2




[P ub . L a w 797.J

10

funds as,herein defined, the Corporation shall notify the banking
institution that its insured status will terminate at the expiration of
the first full semiannual assessment period following such notice. A
finding by the Board of Directors that a banking institution is not
engaged m the business of receiving deposits, other than such trust
funds, shall be conclusive. The Board of Directors shall prescribe
the notice to be given by the banking institution of such termination
and the Corporation may publish notice thereof. Upon the termina­
tion of the insured status of any such banking institution^ its deposits
shall thereupon cease to be insured and the banking institution shall
thereafter be relieved of all future obligations to the Corporation,
including the obligation to pay future assessments.
“ (d) Whenever the liabilities of an insured bank for deposits shall
have been assumed by another insured bank or banks, the insured
status of the bank whose liabilities are so assumed shall terminate
on the date of receipt by the Corporation of satisfactory evidence
of such assumption with like effect as if its insured status had been
terminated on said date by the Board of Directors after proceedings
under subsection (a) of this section: Provided, That if the bank whose
liabilities are so assumed gives to its depositors notice of such assump­
tion within thirty days after such assumption takes effect, by publica­
tion or by any reasonable means, in accordance with regulations to
be prescribed by the Board of Directors, the insurance of its deposits
shall terminate at the end of six months from the date such assumption
. takes effect. Such bank shall be subject to the duties and obligations
of an insured bank for the period its deposits are insured: Provided,
That if the deposits are assumed by a newly insured bankj the bank
whose deposits are assumed shall not be required to pay any assess­
ment upon the deposits which have been so assumed after the semi. annual period in which the assumption takes effect.
“Sec. 9. Upon the date of enactment of the Banking Act of 1933,
the Corporation shall become a body corporate and as such shall
have power—
_ “First. To adopt and use a corporate seal.
“Second. To have succession until dissolved by an Act of Congress.
“Third. To make contracts.
“Fourth. To sue and be sued, complain and defend, in any eourt
of .law or equity, State or Federal. All suits of a civil nature at
common law or in equity to which the Corporation shall be a party
shall be deemed to arise under the laws of the United States: Provided,
That any such suit to which the Corporation is a party in its capacity
as receiver of a State bank and which involves only the rights or
obligations of depositors, creditors, stockholders, and such State bank
under State law shall not be deemed to arise under the laws of the
United States. No attachment or execution shall be issued against
the Corporation or its property before final judgment in any suit,
action, or proceeding in any State, county, municipal, or United
States court. The Board of Directors shall designate an agent upon
whom service of process may be nhade in any State, Territory, or
jurisdiction in which any insured bank is located.
“Fifth. To appoint by its Board of Directors such officers and
employees as are not otherwise provided for in this Act, to define
their duties, fix their compensation, require bonds of them and fix the -




11

(Pub. L a w 797.]

penalty thereof, and to dismiss at pleasure such officers or employees.
Nothing in this or any other Act shall be construed to prevent the
appointment and compensation as an officer or employee of the Cor­
poration of any officer or employee of the United States in any
board, commission, independent establishment, or executive depart­
ment thereof.
“Sixth. To prescribe, by its Board of Directors^ bylaws not incon­
sistent with law, regulating the manner in which its general business
may be conducted, and the privileges granted to it by law may be
exercised and enjoyed.
“Seventh. To exercise by its Board of Directors, or duly authorized
officers or agents, all powers specifically granted by the provisions of
this Act, and such incidental powers as shall be necessary to carry
out the powers so granted.
“Eighth. To make examinations of and to require information and
reports from banks, as provided in this Act.
“Ninth. To act as receiver.
“Tenth. To prescribe by its Board of Directors such rules and
regulations as it may deem necessary to carry out the provisions of this
Act.
“ Sec. 10. (a) The Board of Directors shall administer the affairs
of the Corporation fairly and impartially and without discrimination.
The Board of Directors of the Corporation shall determine and
prescribe the manner in which its obligations shall be incurred and
its expenses allowed and paid. The Corporation shall be entitled to
the free use of the United States mails in the same manner as the
executive departments of the Government. The Corporation with the
consent of any Federal Reserve bank or of any board, commission,
independent establishment, or executive department of the Govern­
ment, including any field service thereof, may avail itself of the use
of information, services, and facilities thereof in carrying out the
provisions of this Act.
“ (b) The Board of Directors shall appoint examiners who shall
have power, on behalf of the Corporation, to examine any insured
State nonmember bank (except a District bank), any State nonmember
bank making application to become an insured bank, and any closed
insured bank, whenever in the judgment of the Board of Directors
an examination of the bank is necessary. In addition to the examina­
tions provided for in the preceding sentence, such examiners shall
have like power to make special examination of any State member
bank and any national bank or District bank, whenever in the judg­
ment of the Board of Directors such special examination is necessary
to determine the condition o£ any such barilc for insurance purposes.
Each such examiner shall have power to make a thorough examination
of all the affairs of the bank and in doing so he shall have power to
administer oaths and to examine and take and preserve the testimony
of any of the officers and agents thereof, and shall make a full and
detailed report of the condition of the bank to the Corporation. The
Board of Directors in like manner shall appoint claim agents who
shall have power to investigate and examine all claims for insured
deposits and transferred deposits. Each claim agent shall have power
to administer oaths and to examine under oath and take and preserve
the testimony of any persons relating to such claims.




IP ob. L aw 707.1

12

“ (c) For the purpose of any hearing under this Act, the Board of
Directors, any member thereof or any person designated by the Board
of Directors to conduct any such hearing, is empowered to administer
oaths and affirmations, subpena any officer or employee of the insured
bank, compel his attendance, take evidence, take depositions and require
the production of any books, records, or other papers of the insured
bank which are relevant or material to the inquiry. For the purpose
of any hearing, examination, or investigation under this Act, the
Board of Directors may apply to any judge or clerk of any court of
the United States within the jurisdiction of which such hearing, exam­
ination, or investigation is carried on, or where such person resides
or carries on business, to issue a subpena commanding each person to
whom it is directed to attend and give testimony or for the taking
of his deposition and to produce books, records, or other papers rele­
vant or material to such hearing, examination, or investigation at a
time and place and before a person therein specified. Such attend­
ance of witnesses and the production of any such papers may be
required from any place in any State or in any Territory or other
place subject to the jurisdiction of the United States at any designated
place where such a hearing is being held or such examination or inves­
tigation is being made: Provided, however, That the production of a
person’s documents at any place other than his place of business shall
not be required in any case in which, prior to the return date specified
in the subpena with respect thereto, such person either has furnished
as directed a copy of such documents (certified by such person under
oath to be a true and correct copy) or has entered into a stipulation
with any authorized representative of the Corporation as to the in­
formation contained in such documents. Witnesses subpenaed under
this section shall be paid the same fees and mileage that are paid
witnesses in the district courts of the United States,
“ (d) In cases of refusal to obey a subpena issued to, or contumacy
by, any person, the Board of Directors may invoke the aid of any
court of the United States within the jurisdiction of which such hear­
ing, examination or investigation is carried on, or where such person
resides or carries on business, in requiring the attendance and testi­
mony of witnesses and the production of books, records, or other
papers. And such court may issue an order requiring such person
to appear before the Board of Directors or member or person desig­
nated by the Board of Directors, there to produce records, if so
ordered, or to give testimony touching the matter in question; and any
failure to obey such order of the court may be punished by such court
as a contempt thereof. All process in any such case may be served
in the judicial district whereof such person is an inhabitant or carries
on business or wherever he may be found. No person shall be excused
from attending and testifying or from producing books, records, or
other papers in obedience to a subpena issued under the authority of
this Act on the ground that the testimony or evidence, documentary
or otherwise, required of him may tend to incriminate him or subject
him to penalty or forfeiture; but no individual shall be prosecuted
or subject to any penalty or forfeiture for or on account of any trans­
action, matter, or thing concerning which he is compelled to testify'
or produce evidence, documentary or otherwise, after having claimed
his privilege against self-incrimination, except that such individual




13

[Pub. L aw 797.]

so testifying shall not be exempt from prosecution and punishment
for perjury committed in so testifying.
“ (e) Each insured State nonmember bank (except a District bank)
shall make to the Corporation reports of condition in such form and at
such times as the Board of Directors may require. The Board of
Directors may require such reports to be published in such manner,
not inconsistent with any applicable law, as it may direct. Every
such bank which fails to make or publish any such report within
such time, not less than five days, as the Board of Directors may
require, shall be subject to a penalty of not more than $100 for eacli
day of such failure recoverable by the Corporation for its use.
“ (f) The Corporation shall have access to reports of examination
made by, and reports of condition made to, the Comptroller of the
Currency or any Federal Reserve bank, may accept any report made
by or to any commission, board, or authority having supervision of
a State nonmember bank (except a District bank), and may furnish
to the Comptroller of the Currency, to any Federal Reserve bank, and
to any such commission, board, or authority, reports of examinations
made on behalf of, and reports of condition made to, the Corporation.
“ (g) The Corporation may cause any and all records, papers, or
documents kept by it or in its possession or cust ody to be photographed
or microphotographed or otherwise reproduced upon film, which
photographic film shall comply with the minimum standards
of quality approved for permanent photographic records by the
National Bureau of Standards. Such photographs, microphoto­
graphs, or photographic film or copies thereof shall be deemed to be
an original record for all purposes, including introduction in evidence
in all State and Federal courts or administrative agencies and shall
be admissible to prove any act, transaction, occurrence, or event
therein recorded. Such photographs, microphotographs, or repro­
duction shall be preserved in such manner as the Board of Directors
of the Corporation shall prescribe and the original records, papers,
or documents may be destroyed or otherwise disposed of as the Board
shall direct.
“ S e c . 1 1 . (a) The Temporary Federal Deposit Insurance Fund and
the Fund For Mutuals heretofore created pursuant to the provisions
of section 12B of the Federal Reserve Act, as amended, are hereby
consolidated into a Permanent Insurance Fund for insuring deposits,
and the assets therein shall be held by the Corporation for the uses
and purposes of the Corporation: Provided, That the obligations to
and rights of the Corporation, depositors, banks, and other persons
arising out of any event or transaction prior to the effective date of
this amendment shall remain unimpaired. On and after August 23,
1935, the Corporation shall insure the deposits of all insured banks
as provided in this Act: Provided further, That the insurance shall
apply only to deposits of insured banks which have been made available
since March 10,1933, for withdrawal in the usual course of the banking
business: Provided further, That if any insured bank shall, without
the consent of the Corporation, release or modify restrictions on dr
deferments of deposits which had not been made available for with­
drawal in the usual course of the banking business on or before August
23, 1935, such deposits shall not be insured. The maximum amount
of the insured deposit of any depositor shall be $10,000: And provided




(P ub . L a w 797J .

14

further. That in the case of banks closing prior to the effective date
of this amendment, the maximum amount of the insured deposit of
any depositor shall be $5,000.
“ (b) For the purposes of this Act an insured bank shall be deemed
to have been closed on account of inability to meet the demands of its
depositors in any case in which it has been closed for the purpose of
liquidation without adequate provision being made for payment of
its depositors.
“ (c) Notwithstanding any other provision of law, whenever the
Comptroller of the Currency shall appoint a receiver other than a con­
servator of any insured national bank or insured District bank, or of
any noninsured national bank or District bank hereafter closed, he shall
appoint the Corporation receiver for such closed bank.
“ (d) Notwithstanding any other provision of law, it shall be
the auty of the Corporation as such receiver to cause notice to be given,
by advertisement in such newspapers as it may direct, to all persons
having claims against such closed bank pursuant to section 5235 of
the Revised Statutes (U. S. C., title 12 , sec. 193); to realize upon the
assets of such closed bank, having due regard to the condition of credit
in the locality; to enforce the individual liability of the stockholders
and directors thereof; and to wind up the affairs of such closed bank
in conformity with the provisions of law relating to the liquidation
of closed national banks, except as herein otherwise provided. The
Corporation as such receiver shall pay to itself for its own account such
portion of the amounts realized from such liquidation as it shall be
entitled to receive on account of its subrogation to the claims of deposi­
tors, and it shall pay to depositors and other creditors the net amounts
available for distribution to them. The Corporation as such receiver,
however, may, in its discretion, pay dividends on proved claims at any
time after the expiration of the period of advertisement made pursuant
to the aforesaid section of the Revised Statutes, and no liability shall
attach to the Corporation itself or as such receiver by reason of any
such payment for failure to pay dividends to a claimant whose claim
is not proved at the time of any such payment. With respect to any
such closed bank, the Corporation as such receiver shall have all the
rights, powers, and privileges now possessed by or hereafter granted
by law to a receiver of a national bank or District bank and notwith­
standing any other provision of law in the exercise of such rights,
powers, and privileges the Corporation shall not be subject to the
direction or supervision of the Secretary of the Treasury or the
Comptroller of the Currency.
“ (e) Whenever any insured State bank (except a District bank)
shall have been closed by action of its board of directors or by the
authority having supervision of such bank, as the case may be, on
account of inability to meet the demands of its depositors, the Cor­
poration shall accept appointment as receiver thereof, if such appoint­
ment is tendered by the authority having supervision of such bank
and is authorized or permitted by State law. With respect to any
such insured State bank, the Corporation as such receiver shall
possess all the rights, powers and privileges granted by State law to
a receiver of a State bank.
“ (f) Whenever an insured bank shall have been closed on account
of inability to meet the demands of its depositors, payment of the




15

DPtm. L a w 707.]

insured deposits in such bank shall be made by the Corporation as
soon as possible, subject to the provisions of subsection (g) of this
section either ( 1 ) by cash or ( 2 ) by making available to each depositor
a transferred deposit in a new bank in the same community or in
another insured bank in an amount equal to the insured deposit of
such depositor: Provided} That the Corporation, in its discretion,
may require proof of claims to be filed before paying the insured
deposits, and that in any case where the Corporation is not satisfied
as to the validity of a claim for an insured deposit, it may require
the final determination of a court of competent jurisdiction before
paying such claim.
“ (g) In the case of a closed national bank or District bank, the
Corporation, upon the payment to any depositor as provided in sub­
section (f) of this section, shall be subrogated to all rights of the
depositor against the closed bank to the extent of such payment. In
the case of any other closed insured bank, the Corporation shall not
make any payment to any depositor until the right of the Corporation
to be subrogated to the rights of such depositor on the same basis as
provided in the case of^ a closed national bank under this Act shall
have been recognized either by express provision of State law, by
allowance of claims by the authority having supervision of such bank,
by assignment of claims by depositors,/or by any other effective
method. In the case of any closed insured bank, such subrogation
shall include the right on the part of the Corporation to receive the
same dividends from the proceeds of the assets of such closed bank
and recoveries on account of stockholders’ liability as would have been
payable to the depositor on a claim for the insured deposit, but such
depositor shall retain his claim for any uninsured portion of his
deposit: Provided, That, with respect to any bank which closes after
May 25,1938, the Corporation shall waive, in favor only of any person
against whom stockholders’ individual liability may be asserted, any
claim on account of such liability in excess of the liability, if any, to
the bank or its creditors? for the amount unpaid upon his stock in such
bank 3 but any such waiver shall be effected in such manner and on
such terms and conditions as will not increase recoveries or dividends
on account of claims to which the Corporation is not subrogated:
Provided further, That the rights of depositors and other creditors of
any State bank shall be determined in accordance with the applicable
provisions of State law.
“ (h) As soon as possible after the closing of an insured bank, the
Corporation, if it finds that it is advisable and in the interest of the
depositors of the closed bank or the public, shall organize a new
national bank to assume the insured deposits of such closed bank and
otherwise to perform temporarily the functions hereinafter provided
for. The new bank shall have its place of business in the same com­
munity as the closed bank.
“ (i) The articles of association and the organization certificate of
the new bank shall be executed by representatives designated by the
Corporation. No capital stock need be paid in by the Corporation.
The new bank shall not have a board of directors, but shall be managed
by an executive officer appointed by the Board of Directors of the
Corporation who shall be subject to its directions. In all other
respects the new bank shall be organized in accordance with the then




. {Pub. Law 797.]

16

existing provisions of law relating to the organization of national
banking associations. The new bank may, with the approval of the
Corporation, accept new deposits which shall be subject to withdrawal
on demand and which, except where the new bank is the only bank
in the community, shall not exceed $10,000 from any depositor. The
new bank, without application to or approval by the Corporation, shall
be an insured bank and shall maintain on deposit with the Federal
Reserve bank of its district reserves in the amount required by law
for member banks, but it shall not be required to subscribe for stock
of the Federal Reserve bank. Funds of the new bank shall be kept
on hand in cash, invested in obligations of the United States, or in
obligations guaranteed as to principal and interest by the United
States, or deposited with the Corporation, with a Federal Reserve
bank, or, to the extent of the insurance coverage thereon, with an
insured bank. The new bank, unless otherwise authorized by the
Comptroller of the Currency, shall transact no business except that
authorized by this Act and as may be incidental to its organization.
Notwithstanding any other provision of law the new bank, its fran­
chise, property, and income shall be exempt from all taxation now
or hereafter imposed by the United States, by any Territory, depend­
ency, or possession thereof, or by any State, county, municipality,
or local taxing authority.
“ (j) Upon the organization of a new bank, the Corporation shall
promptly make available to it an amount equal to the estimated insured
deposits of such closed bank plus the estimated amount of the expenses
of operating the new bank, and shall determine as soon as possible the
amount due each depositor for his insured deposit in the closed bank,
and the total expenses of operation of the new bank. Upon such deter­
mination, the amounts so estimated and made available shall be
adjusted to conform to the amounts so determined. Earnings of the
new bank shall be paid over or credited to the Corporation in such
adjustment I f any new bank, during the period it continues its
status as such, sustains any losses with respect to which it is not effec­
tively protected except by reason of being an insured bank, the Corpo­
ration shall furnish to it additional funds in the amount of such losses.
The new bank shall assume as transferred deposits the payment of the
insured deposits of such closed bank to each of its depositors. Of
the amounts so made available, the Corporation shall transfer to the
new bank, in cash, such sums as may be necessary to enable it to meet
its expenses of operation and immediate cash demands on such trans­
ferred deposits, and the remainder of such amounts shall be subject
to withdrawal by the new bank on demand.
“ (k) -Whenever in the judgment of the Board of Directors it is
desirable ,to do so, the Corporation shall cause capital stock of the
new bank to be offered for sale on such terms and conditions as the
Board of Directors shall deem advisable in an amount sufficient, in
the opinion of the Board of Directors, to make possible the conduct
of the business of the new bank on a sound basis, but in no event less
than that required by section 5138 of the Revised Statutes, as amended
(U. S. C., title 12 , sec. 51), for the organization of a national bank
in the place where such new bank is located. The stockholders of the
closed insured bank shall be given the first opportunity to purchase
any shares of common stock so offered. Upon proof that an adequate




17

{P u b . L a w 797.J

amount of capital stock in the new bank has been subscribed and paid
for in cash, the Comptroller of the Currency shall require the articles
of association and the organization certificate to be amended to conform
to the requirements for the organization of a national bank, and there­
after, when the requirements of law with respect to the organization of
a national bank have been complied with, he shall issue to the bank
a certificate of authority to commence business, and thereupon the
bank shall cease to have the status of a new bank, shall be managed
by directors elected by its own shareholders and may exercise all the
powers granted by law, and it shall be subject to all the provisions of
law relating to national banks. Such bank shall thereafter be an
insured national bank, without certification to or approval by the
Corporation.
“ (1) I f the capital stock of the new bank is not offered for sale,
or if an adequate amount of capital for such new bank is not sub­
scribed and paid for, the Board of Directors may offer to transfer
its business to any insured bank in the same community which will
take over its assets, assume its liabilities, and pay to the Corporation
for such business such amount as the Board of Directors may deem
adequate; or the Board of Directors in its discretion may change
the location of the new bank to the office of the Corporation or to some
other place or may at any time wind up its affairs as herein provided.
Unless the capital stock of the new bank is sold or its assets are taken
over and its liabilities are assumed by an insured bank as above
provided within two years from the date of its organization, the
Corporation.shall wind up the affairs of such bank, after giving
such notice, if any, as the Comptroller of the Currency may require,
and shall certify to the Comptroller of the Currency the termination
of the new bank. Thereafter the Corporation shall be liable for the
obligations of such bank and shall be the owner of its assets. The
provisions of sections 5220 and 5221 of the Revised Statutes (U. S. C.,
title 12 , secs. 181 and 182) shall not apply to such new banks.
“S eo. 12. (a) Notwithstanding any other provision of law, the
Corporation as receiver of a closed national bank or District bank
shall not be required to furnish bond and shall have the right to
appoint an agent or agents to assist it in its duties as such receiver,
and all fees, compensation, and expenses of liquidation and adminis­
tration thereof shall be fixed by the Corporation, and may be paid
by it out of funds coming into its possession as such receiver.
“ (b) Payment of an insured deposit to any person by the Cor­
poration shall discharge the Corporation, and payment of a trans­
ferred deposit to any person by the new bank or bv an insured bank
in which a transferred deposit has been made available shall discharge
the Corporation and such new bank or other insured bank, to the
same extent that payment to such person by the closed bank would have
discharged it from liability for the insured deposit.
“ (c) Except as otherwise prescribed by the Board of Directors,
neither the Corporation nor such new bank or other insured bank shall
be required to recognize as the owner of any portion of a deposit
appearing on the records of the closed bank under a name other than
that of the claimant, any person whose name or interest as such owner
is not disclosed on the records of such closed bank as part owner of




said deposit, if such recognition would increase the aggregate amount
of the insured deposits in such closed bank.
“ (d) The Corporation may withhold payment of such portion of
the insured deposit of any depositor in a closed bank as may be
required to provide for the payment of any liability of such depositor
as a stockholder of the closed bank, or of any liability of such depositor
to the closed bank or its receiver, which is not offset against a claim
due from such bank, pending the determination and payment of such
liability by such depositor or any other person liable therefor.
“ (e) If, after the Corporation shall have given at least three months’
notice to the depositor by mailing a copy thereof to his last-known
address appearing on the records of the closed bank, any depositor in
the closed bank shall fail to claim his insured deposit from the Cor­
poration within eighteen months after the appointment of the receiver
for the closed bank, or shall fail within such period to claim or
arrange to continue the transferred deposit with the new bank or with
the other insured bank which assumes liability therefor, all rights of
the depositor against the Corporation with respect to the insured
deposit, and against the new bank and such other insured bank with
respect to the transferred deposit, shall be barred, and all rights of
the depositor against the closed bank and its shareholders, or the
receivership estate to which the Corporation may have become sub­
rogated, shall thereupon revert to the depositor. The amount of any
transferred deposits not claimed within such eighteen months’ period,
shall be refunded to the Corporation.
“Sec. 13. (a) Money of the Corporation not otherwise employed
shall be invested in obligations of the United States or in obligations
guaranteed as to principal and interest by the United States: Provided,
That the Corporation shall not sell or purchase any such obligations
for its own account and in its own right and interest, at any one time
aggregating in excess of $100,000, without the approval of the Secre­
tary of the Treasury: And provided further, That the Secretary of
the Treasury may waive the requirement of his approval with respect
to any transaction or classes of transactions subject to the provisions
of this subsection for such period of time and under such conditions
as he may determine.
“ (b) The banking or checking accounts of the Corporation shall be
kept with the Treasurer of the United States, or, with the approval of
the Secretary of the Treasury, with a Federal Reserve bank,,or with
a bank designated as a depositary or fiscal agent of the United States:
Provided^That the Secretary of the Treasury may waive the require­
ments of this subsection under such conditions as he may determine :
And provided further\ That this subsection shall not apply to the
establishment and inaintenance in any bank for temporary purposes
of banking and checking accounts not in excess of $50,000 in any one
bank, or to the establishment and maintenance in any bank of any
banking and checking accounts to facilitate the payment of insured
deposits, or the making of loans to, or the purchase of assets of,
insured banks. When designated for that purpose by the Secretary
of the Treasury, the Corporation shall be a depositary of public
moneys, except receipts from customs, under such regulations as may
be prescribed by the said Secretary, and may also be employed as a
financial agent of the Government. It shall perform all such reason-




19

[Pub. L aw 797.1

' able duties as depositary of public moneys and financial agent of the
Government as may be required of it.

; “ (c) In order to reopen a closed insured bank or, when the Corpora­
tion has determined that an insured bank is in danger of closing, in
order to prevent such closing, the Corporation, in the discretion ttf its
Board of Directors, is authorized to make loans to, or purchase the
assets of, or make deposits in, such insured bank, upon such terms and
conditions as the Board of Directors may prescribe, when in the
opinion of the Board of Directors the continued operation of such
bank is essential to provide adequate banking service in the community.
Such loans and deposits may be in subordination to the rights of
depositors and other creditors.
“ (d) Receivers or liquidators of insured banks closed on account of
inability to meet the demands of their depositors shall be entitled to
offer the assets of such banks for sale to the Corporation or as security
for loans from the Corporation, upon receiving permission from the
appropriate State authority in accordance with express provisions of
State law in the case of insured State banks. The proceeds of every
such sale or loan shall be utilized for the same purposes and in the same
manner as other funds realized from the liquidation of the assets of
such banks. In any case where prior to the effective date of this amend­
ment, the Comptroller of the Currency has appointed a receiver of a
closed national bank other than the Corporation, he may, in his discre­
tion, pay dividends on proved claims at any time after the expiration
of the period of advertisement made pursuant to section 5235 of the
Revised Statutes (U. S. C., title 12 , sec. 193), and no liability shall
attach to the Comptroller of the Currency or to the receiver of any
such national bank by reason of any such payment for failure to pay
dividends to a claimant whose claim is not proved at the time of any
such payment. The Corporation, in its discretion, may make loans
on the security of or may purchase and liquidate or sell any part
of the assets of an insured bank which is now or may hereafter be
closed on account of inability to meet the demands of its depositors, but
in any case in which the Corporation is acting as receiver of a closed
insured bank, no such loan or purchase shall be made without the
approval of a court of competent jurisdiction.
“ (e) Whenever in the judgment of the Board of Directors such
action will reduce the risk or avert a threatened loss to the Corporation
and will facilitate a merger or consolidation of an insured bank with
another insured bank, or will facilitate the sale of the assets of an
open or closed insured bank to and assumption of its liabilities by
another insured bank, the Corporation may, upon such terms and
conditions as it may determine, make loans secured in whole or in
part by assets of an open or closed insured bank, which loans may
be in subordination to the rights of depositors and other creditors, or
the Corporation may purchase any such assets or may guarantee any
other insured bank against loss by reason of its assuming the liabilities
and purchasing the assets of an open or closed insured bank. Any
insured national bank or District bank, or the Corporation as receiver
thereof, is authorized to contract for such sales or loans and to pledge
any assets of the bank to secure such loans.
“No agreement which tends to diminish or defeat the right, title
or interest of the Corporation in any asset acquired by it under this




[P ub . L a w 797.J

20

section, either as security for a loan or by purchase, shall be valid
against the Corporation unless such agreement ( 1 ) shall be in writing,
(2 ) shall have been executed by the bank and the person or persons
claiming an adverse interest thereunder, including the obligor, con­
temporaneously with the acquisition of the asset by the bank, (3)
shall have been approved by the board of directors of the bank or its
loan committee, which approval shall be reflected in the minutes of
said board or committee, and (4) shall have been, continuously, from
the time of its execution, an official record of the bank.
“ (f) Prior to July 1 , 1951, the Corporation shall pay out of its
capital account to the Secretary of the Treasury an amount equal to
2 per centum simple interest per annum on amounts advanced to the
Corporation on stock subscriptions by the Secretary of the Treasury
and the Federal Reserve banks, from the time of such advances until
the amounts thereof were repaid. The amount payable hereunder
shall be paid in two equal installments, the first installment to be paid
prior to December 31, 1950.
“Sec. 14. The Corporation is authorized to borrow from the
Treasury, and the Secretary of the Treasury is authorized and directed
to loan to the Corporation on such terms as may be fixed by the
Corporation and the Secretary, such funds as in the judgment of
the Board of Directors of the Corporation are from time to time
required for insurance purposes, not exceeding in the aggregate
$3,000^000,000 outstanding at any one time: Provided, That the rate
of interest to be charged in connection with any loan made pursuant
to this section shall not be less than the current average rate on out­
standing marketable and nonmarketable obligations of the United
States as of the last day of the month preceding the making of such
loan. For such purpose the Secretary of the Treasury is authorized
to use as a public-debt transaction the proceeds of the sale of any
securities hereafter issued under the Second Liberty Bond Act, as
amended, and the purposes for which securities may be issued under
the Second Liberty Bond Act, as amended, are extended to include
such loans. Any such loan shall be used by the Corporation solely in
carrying out its functions with respect to such insurance. A ll loans
and repayments under this section shall be treated as public-debt
transactions of the United States.
“Sec. 15. All notes, debentures, bonds, or other such obligations
issued by the Corporation shall be exempt, both as to principal and
interest, from all taxation (except estate and inheritance taxes) now
or hereafter imposed by the United States, by any Territory, depend­
ency, or possession thereof, or by any State, county, municipality, or
local taxing authority : Provided, That interest upon or any income
from any such obligations and gain from the sale or other disposition
of such obligations shall not have any exemption, as such, and loss
from the sale or other disposition of such obligations shall not have
any special treatment, as such, under the Internal Revenue Code, or
laws amendatory or supplementary thereto. The Corporation,
including its franchise, its capital, reserves, and surplus, and its
income, shall be exempt from all taxation now or hereafter imposed
by the United States, by any Territory, dependency, or possession
thereof, or by any State, county, municipality, or local taxing author­
ity, except that any real property of the Corporation shall be subject




21

[P ub . L aw 797.]

to State, Territorial, county, municipal, or local taxation to the same
extent according to its value as other real property is taxed.
“Sec. 16. In order that the Corporation may be supplied with such
forms of notes, debentures, bonds, or other such obligations as it
may need for issuance under this Act, the Secretary of the Treasury
is authorized to prepare such forms as shall be suitable and approved
by the Corporation, to be held in the Treasury subject to delivery,
upon order of the Corporation. The engraved plates, dies, bed pieces,
and other material executed in connection therewith shall remain in
the custody of the Secretary of the Treasury. The Corporation shall
reimburse the Secretary of the Treasury for any expenses incurred
in the preparation, custody, and delivery of such notes, debentures,
bonds, or other such obligations.
“Seo. 17. (a) The Corporation shall annually make a report of its
operations to the Congress as soon as practicable after the 1 st day of
J anuary in each year.
“ (b) The financial transactions of the Corporation shall be audited
by the General Accounting Office in accordance with the principles
and procedures applicable to commercial corporate transactions and
under such rules and regulations as may be prescribed by the Comp­
troller General of the United States. The audit shall be conducted at
the place or places where accounts of the Corporation are normally
kept. The representatives of the General Accounting Office shall have
access to all books, accounts, records, reports, files, ana all other papers,
things, or property belonging to or in use by the Corporation pertain­
ing to its financial transactions and necessary to facilitate the audit,
and they shall be afforded full facilities for verifying transactions
with the balances or securities held by depositaries, fiscal agents, and
custodians. All such books, accounts, records, reports, files, papers,
and property of the Corporation shall remain in possession and custody
of the Corporation. The audit shall begin with financial transactions
occurring on and after August 31,1948.
“ (c) A report of the audit for each fiscal year ending on June 30
shall be made by the Comptroller General to the Congress not later
than January 15 following the close of such fiscal year. On or
before December 15 following such fiscal year the Comptroller Gen­
eral shall furnish the Corporation a short form report showing the
financial position of the Corporation at the close of the fiscal year.
The report to the Congress shall set forth the scope of the audit and
shall include a statement of assets and liabilities and surplus or
deficit; a statement of surplus or deficit analysis; a statement of
income and expenses; a statement of sources and application of
funds and such comments and information as may be deemed neces­
sary to inform Congress of the financial operations and condition
of the Corporation, together with such recommendations with respect
thereto as the Comptroller General may deem advisable. The report
shall also show specifically any program, expenditure, or other finan­
cial transaction or undertaking observed in the course of the audit,
which, in the opinion of the Comptroller General, has been carried
on or made without authority of law. A copy of each report shall
be furnished to the President, to the Secretary of the Treasury, and
to the Corporation at the time submitted to the Congress.




[Pub. L a w 797.]

22

“ (d) For the purpose of conducting such audit the Comptroller
General is authorized in his discretion to employ by contract, without
regard to section 3709 of the Revised Statutes, professional services
of firms and organizations of certified public accountants, with the
concurrence of the Corporation, for temporary periods or for special
purposes. The Corporation shall reimburse the General Accounting
Office for the cost ox any such audit as billed therefor by the Comp­
troller General, and the General Accounting Office shall deposit the
sums so reimbursed into the Treasury as miscellaneous receipts.
“Seo. 18. (a) Every insured bank shall display at each place of
business maintained by it a sign or signs, and shall include a state­
ment to the effect that its deposits are insured by the Corporation in
all of its advertisements: Provided, That the Board of Directors
may exempt from this requirement advertisements which do not
relate to deposits or when it is impractical to include such statement
therein. The Board of Directors shall prescribe by regulation the
forms of such signs and the manner of display and the substance
of such statements and the manner of use. For each day an insured
bank continues to violate any provisions of this subsection or any
lawful provisions of said regulations, it shall be subject to a penalty
of not more than $ 100, which the Corporation may recover for its use.
“ (b) No insured bank shall pay any dividends on its capital stock
or interest on its capital notes or debentures (if such interest is
required to be paid only out of net profits) or distribute any of its
capital assets while it remains in default in the payment of any
assessment due to the Corporation; and any director or officer of any
insured bank who participates in the declaration or payment of any
such dividend or interest or in any such distribution shall, upon con­
viction, be fined not more than $ 1,000 or imprisoned not more than
one year, or both: Provided, That, if such default is due to a dispute
between the insured bank and the Corporation over the amount of
such assessment, this subsection shall not apply, if such bank shall
deposit security satisfactory to the Corporation for payment upon
final determination of the issue.
“ (c) Without prior written consent by the Corporation, no insured
bank shall ( 1 ) merge or consolidate with any noninsured bank or
institution or convert into* a noninsured bank or institution or
( 2 ) assume liability to pay any deposits made in, or similar
liabilities of, any noninsured bank or institution or (3) transfer
assets to any noninsured bank or institution in consideration of
the assumption of liabilities for any portion of the deposits made
in such insured bank. No insured bank shall convert into an insured'
State bank if its capital stock, or its surplus will be less than the
capital stock or surplus, respectively, of the converting bank at the
time of the shareholders’ meeting approving such conversion, with­
out prior written consent by the Comptroller of the Currency if the
resulting bank is to be a District bank, or by the Board of Governors
of the Federal Reserve System if the resulting bank is to be a State
member bank (except a District bank), or by the Corporation if the
resulting bank is to be a State nonmember insured bank (except a
District bank). No insured bank shall (i) merge or consolidate
with an insured State bank under the charter of a State bank or
(ii) assume liability to pay any deposits made in another insured




23

[P u b , L aw 707.]

bank, if the capital stock or surplus of the resulting or assuming
bank will be less than the aggregate cai)ital stock or aggregate surplus,
respectively, of all the merging or consolidating banks or of all the
parties to the assumption of liabilities, at the time of the shareholders’
meetings which authorized the merger or consolidation or at the time
of the assumption of liabilities, unless the Comptroller of the Cur­
rency shall give prior written consent if the assuming bank is to be
a national bank or the assuming or resulting bank is to be a District
bank; or unless the Board of Governors of the Federal Reserve Sys­
tem gives prior written consent if the assuming or resulting bank
is to he a State member bank (except a District bank),; or unless the
Corporation gives prior written consent if the assuming or resulting
bank is to be a nonmember insured bank (except a District bank).
No insured State nonmember bank (except a District bank) shall,
without the prior consent of the Corporation, reduce the amount or
retire any part of its common or preferred capital stock, or retire any
part of its capital notes or debentures.
“ (d) No State nonmember insured bank (except a District bank)
shall establish and operate any new branch unless it shall have the
prior written consent of the Corporation, and no State nonmember
insured bank (except a District bank) shall move its main office or any
branch from one location to another without such consent. The fac­
tors to be considered in granting or withholding the consent of the
Corporation under this subsection shall be those enumerated in section
6 of this Act.
if(e) The Corporation may require any insured bank to provide
protection and indemnity against burglary, defalcation, ana other
similar insurable losses. Whenever any insured bank refuses to
comply with any such requirement the Corporation may contract for
such protection and indemnity and add the cost thereof to the assess­
ment otherwise payable by such bank.
“ (f) Whenever any insured bank (except a national bank or a Dis­
trict bank), after written notice of the recommendations of the Corpo­
ration based on a report of examination of such bank by an examiner
of the Corporation, shall fail to comply with such recommendations
within one hundred and twenty days after such notice, the Corporation
shall have the power, and is hereby authorized, to publish only such
part of such report of examination as relates to any recommendation
not complied with: Provided, That notice of intention to make such
publication shall be given to the bank at least ninety days before such
publication is made.
“ (g) The Board of Directors shall by regulation prohibit the pay­
ment of interest on demand deposits in insured nonmember banks and
for such purpose it may define the term ‘demand deposits’ ; but such
exceptions from this prohibition shall be made as are now or may
hereafter be prescribed with respect to deposits payable on demand
in member banks by section 19 of the Federal Reserve Act, as amended,
or by regulation of the Board of Governors of the Federal Reserve
System. The Board of Directors shall from time to time limit by
regulation the rates of interest or dividends which may be paid by
insured nonmember banks on time and savings deposits, but such
regulations shall be consistent with the contractual obligations of
such banks to their depositors. For the purpose of fixing such rates




[Pub. La w 797J

24

of interest or dividends, the Board of Directors shall by regulation
prescribe different rates for such payment on time and savings deposits
having different maturities, or subject to different conditions respect*
ing withdrawal or repayment, or subject to different conditions by
reason of different locations, or according to the varying discount rates
of member banks in the several Federal Reserve districts. The Board
of Directors shall by regulation define what constitutes time and
savings deposits in an insured nonmember bank. Such regulations
shall prohibit any insured nonmember bank from paying any time
deposit before its maturity except upon such conditions and in accord­
ance with such rules and regulations as may be prescribed by the
Board of Directors, and from waiving any requirement of notice before
payment of any savings deposit except as to all savings deposits
having the same requirement. For each violation of any provision
of this subsection or any lawful provision of such regulations relating
to the payment of interest or dividends on deposits or to withdrawal
of deposits, the offending bank shall be subject to a penalty of not
more than $100, which the Corporation may recover for its use.
44(h j "Any insured bank which willfully fails or refuses to file any
certified statement or pay any assessment required under this Act
shall be subject to a penalty of not more than $100 for each day that
such violations continue, which penalty the Corporation may recover
for its use: Provided, That this subsection shall not be applicable under
the circumstances stated in the proviso of subsection (b) of this
section.
“Sec. 19. Except with the written consent of the Corporation, no
person shall serve as a director, officer, or employee of an insured bank
who has been convicted, or who is hereafter convicted, of any criminal
offense involving dishonesty or a breach of trust. For each willful
violation of this prohibition, the bank involved shall be subject to a
penalty of not more than $100 for each day this prohibition is violated,
which the Corporation may recover for its use.
“ Sec. 20. It is not the purpose of this Act to discriminate in any
manner against State nonmember banks and in favor of national or
member banks; but the purpose is to provide all banks with the same
opportunity to obtain and enjoy the benefits of this Act. No bank
shall be discriminated against because its capital stock, is less than the
amount required for eligibility for admission into the Federal Reserve
System.
“Sec. 21. The provisions of this Act limiting the insurance of the
deposits of any depositor to a maximum less than the full amount shall
be independent and separable from each and all of the provisions of
this Act.”
Sec. 3. (a) The third paragraph of section 709, title 18, United
States Code, is amended to read as follows:
“Whoever, except as expressly authorized by Federal law, uses the
words ‘Federal Deposit’, ‘Federal Deposit Insurance’, or ‘Federal
Deposit Insurance Corporation’ or a combination of any three of these
words, as the name or a part thereof under which he or it does business,
or advertises or otherwise represents falsely by any device whatsoever
that his or its deposit liabilities, obligations, certificates, or shares are
insured or guaranteed by the Federal Deposit Insurance Corporation,
or by the United States or by any instrumentality thereof, or whoever




25

[P u b . L a w 797.]

advertises that his or its deposits, shares, or accounts are federally
insured, or falsely advertises or otherwise represents by any device
whatsoever the extent to which or the manner in which the deposit
liabilities of an insured bank or banks are insured by the Federal
Deposit Insurance Corporation; or”.
(b) The amendment made by subsection (a) of this section shall
become effective on January 1,1951.
Sec. 4. Section 220, title 18, United States Code, is amended to read
as follows:
“Whoever, being an officer, director., employee, agent, or attorney
of any bank, the deposits of which are insured by the Federal Deposit
Insurance Corporation, of a Federal intermediate credit bank, or of a
National Agricultural Credit Corporation, except as provided by law,
stipulates for or receives or consents or agrees to receive any fee, com­
mission, gift, or thing of value, from any person, firm, or corporation,
for procuring or endeavoring to procure for such person, firm, or cor­
poration, or for any other person, firm, or corporation, from any such
bank or corporation, any loan or extension or renewal of loan or sub­
stitution of security, or the purchase or discount or acceptance of
any paper, note, draft, check, or bill of exchange by any such bank or
corporation, shall be fined not more than $5,000 or imprisoned not
more than one year or both.”
Sec. 5. Subsection (b) of section 405 of Title IV of the National
Housing Act, as amended, is amended to read as. follows:
“ (b) In the event of a default by any insured institution, payment
of each insured account in such insured institution which is surren­
dered and transferred to the Corporation shall be made by the Corpo­
ration as soon as possible either (1) by cash or (2) by making available
to each insured member a transferred account in a new insured insti­
tution in the same community or in another insured institution in an
amount equal to the insured account of such insured member: Provided,
That the Corporation, in its discretion, may require proof of claims to
be filed before paying the insured accounts, and that in any case where
the Corporation is not satisfied as to the validity of a claim for an
insured account, it may require the final determination of a court of
competent jurisdiction before paying such claim.55
Approved September 21, 1950.