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73D CONGRESS istSession - » f H . <fl K . 5 I N T H E H O U S E OF b o l REPRESENTATIVES M A Y 26, 1933 Ordered to be printed with the amendment of the Senate A BILL To provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes. X Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 That the short title of this Aet shall be the - Banking Aet 4 e* 1933." 5 TITLE 6 SECTION 4-t A S OSED I m this Act and m AAY provision ef 7 tow amended by this A e t — 8 9 -(a)- The terms "banks"? "national bank", "national banking association", "member bank", "board", 2 1 trict and " reserve bank^ shall have the meanings assigned 2 to them in section 4- of the Federal Reserve as amended. 3 -(fe}- Except where otherwise specifically provided, 4 the te^m - affiliate - shall include any corporation, business 5 trust, association^ or ether similar organization— 6 -{if Of which a member bank, directly or indirectly, 7 owns er controls cither a majority of the voting shares er 8 more than 9 the election of its directors, trustees, er other persons exer 10 cising similar functions at the preceding election, er een- per centum of the number of shares voted for 11 feels in any manner the election of a "majority of its directors, 12 trustees, or other persons exercising similar functions; or 13 -{2-f Of which control is held, directly or indirectly, 14 through steek ownership or in any ether manner, by the 15 shareholders ef a member bank whe own er control cither 16 a majority ef the shares ef sueh bank or more than 50 per 17 centum ef the number ef shares voted for the election ef 18 directors ef such bank at the preceding election, er fey 19 trustees fer the benefit ef the shareholders ef any such 20 bank; er 21 Of which a mai oritv el its directors, trustees, er 22 ether persons exorcising similar functions are directors ef 23 any one member bank. 24 -(ef ¥he term - holding company affiliate " shall include 25 ttfty corporation, business trast, association^ ef otker similar 26 organization— 3 1 Which owns or eontrols, directly or indirectly, 2 either a majority of the shares of capital stock el a? member 3 bank or more than oO per centum of the number ef shares 4 voted for the election ef directors ef any one bank at the 5 preceding election, er controls in any manner the election 6 ef €b majority ef the directors ef my one bank; or 7 For the benefit ef whose shareholders er members 8 afl er substantially aH the capital stock ef a member bank 9 is heldfeytrustees. 10 SEC. -FAR)- The fourth paragraph after paragraph 11 " Eight " ef section 4 ef the Federal Reserve Aety as 12 amended (U.S.C., title seer 301), is amended te read 13 ftS follows: 14 " Said board ef directors shall administer the affairs 15 ef said bank fairly and impartially and without discrimina 16 ties in favor ef or against any member bank or banks and 17 may, subject- te the previsions ef k w and the orders ef 18 the Federal Reserve Board, extend te eaeh member bank 19 sueh discounts, advancements, and accommodations as may 20 fee safely and reasonably made with due regard for the 21 claims and demands ef other member banks, the maintc 22 nance ef sound credit conditions, and the accommodation ef 23 commerce, industry, and agriculture. 24 Board may prescribe regulations further defining within the 25 limitations ef this Aet the conditions under wThich discounts, The Federal Reserve 4 1 advancements, and accommodations may be extended te 2 member banks.—Each Federal Reserve bank shall keep 3 itself informed of the general character and amount Or the 4 loans and investments of its member banks with a view te 5 ascertaining whether undue use IS being made of bank credit 6 for the speculative carrying of or trading in securities, real 7 estate? or commodities, or for any other purpose inconsist 8 ent with the maintenance of sound credit conditions; and^ 9 in determining whether to grant ef refuse advances, redis 10 counts, or other credit accommodations, the Federal Reserve 11 bank shall give consideration to sueh information. 12 chairman of the Federal Reserve bank shall report te the 13 Federal Reserve Board any sueh undue use of bank- credit The 14 fey any member bank, together with his recommendation. 15 Whenever, in the judgment ef the Federal Reserve Board, 16 any member bank is making sueh undue use ef bank credit, 17 the Board may, in its discretion, afte? reasonable notice and 18 an opportunity for a hearing, suspend sueh bank from the use 19 ef the credit facilities ef the Federal Reserve System and 20 terminate sueh suspension or may renew it hem time 21 te time." 22 3T The first paragraph ef section 7- ef the Federal 23 Reserve Aet7 as amended (U.S.C., title iSj seer 289), is 24 amended, effective July iy 1933, te read as follows: 26 shall have been paid er provided for? the stockholders shall 5 1 fee entitled te receive an annual dividend ef % per centum en 2 the paid in capital stock, wMefe dividend shallfeecumulative. 3 After the aforesaid dividend claims have feeen felly met? 4 the net earnings shall fee paid into the surplus fend ef the 5 Federal Reserve bank.-" 6 7 S E O T 4T •• (a) The first paragraph ef section 9 ef the Federal Reserve Aety as amended (U.S.C., title • 12j sec. 8 Suppr A^fj title seer 321) 7 is amendedfeyinserting 9 immediately after fee words " United States " a comma and 10 the following: - including Mems Kan banks and other fe- ll corporatcd banking institutions engaged fe similar business." 12 -(fe)- The second paragraph ef section 0 ef the Federal 13 Reserve Aety as amended (U.S.C., title seer 329), is 14 amendedfeyadding at the end thereof the following: " Pre- 15 vided, however, 16 any State member bank from establishing and operating 17 branches fe the United States e* any dependency or insular 18 possession thereof or fe any foreign country, en fee same 19 terms and conditions and subject te fee same limitations and 20 restrictions as are applicable te fee establishment ef branches That nothing herein contained shall prevent 21 fey national banks." 22 -fe)- Section 0 ef fee Federal Reserve Aetj as amended 23 (U.S.C., title ^ seesr 321 331; Suppr 24 321 331), is further amended fey adding at fee end thereof 25 fee following new paragraphs: title seesr 6 1 " Any mutual savings bank having no eapital steeky but 2 having surplus and undivided profits net less than the amount 3 el eapital required for the organization ef a national bank 4 in the same plaeej may apply for and be admitted te member- 5 ship in the Federal -Reserve System in the same manner and 6 subject te the same previsions ef law as State banks and trust 7 eempanie% exeept that such savings bank shah subscribe for 8 eapital stock ef the Federal Reserve bank in an amount equal 9 te sis tenths ef 4 per centum ef its total deposit liabilities as 10 shown by the most recent report ef examination ef sueh 11 savings bank- preceding its admission te membership. There 12 after sueh subscription shall be adjusted semiannually en the 13 same percentage basis in aeeerda^ee with rules and regular- 14 tions proscribed by the Federal Reserve Beard? 15 mutual sa?vings bank- applying for membership is net per- 16 mittcd by the laws under which it was organized te purchase 17 stock in a Federal Reserve bankj it shall7 upon admission te 18 the system, deposit wife the Federal Reserve bank an amount 19 equal te the amount whieh it w7ould have been required te 20 pay in en account ef a subscription te eapital stock. There 21 after sueh deposit shallfeeadjusted semiannually in the same 22 manner as subscriptions for stock. 23 subject to the same conditions with respect te repayment as 24 amounts paid upon subscriptions te eapital steek by other 25 member banks and the Federal Reserve bank shall pay inter 4f any Sueh deposit shall be 7 1 est thereon at the same rate as dividends arc actually paid 2 en outstanding shares el steek ef sueh Federal Reserve baafe. 3 If the laws under which sueh savings bank was er ganized be 4 amended so as te authorize mutual savings banks to subscribe 5 for Federal Reserve bank stock sueh savings bank shall there- 6 upon subscribe for the appropriate amount ef stock in the 7 Federal Reservefeankyand the deposit hereinbefore provided 8 for in lieu ef payment upon capital stock shall be applied 9 upon sueh subscription. If the laws under which sueh sav- 10 ings bank was organizedfeenet amended at the nest session 11 ef the legislature following the admission ef sneh savings 12 bank te membership so as to authorize mutual savings banks 13 te purchase Federal Reserve bank stock, er if sueh lawsfeeso 14 amended and suehfeankfail within sis months thereafter te 15 purchase such steeky aH ef its rights and privileges as a 16 member bank shall fee forfeited and its membership in the 17 Federal Reserve System shall be terminated in the manner 18 prescribed elsewhere in this section with respect te State 19 banks and trust companies. Each mutual savings bank shall 20 comply with all the provisions ef law applicable te State 21 member banks and trust companies, with the regulations ef 22 the Federal Reserve Board and with the conditions ef 23 membership prescribed for such savingsfeankat the tunc of 24 admission te membership, exeept as otherwise hereinbefore 25 provided with respect te eapital stock. 8 1 S B O T -(ft)- Tfee second paragraph ef section 4Q ef 2 tfee Federal Reserve Aetj as amended -(•U.S.C., title v SCO. 242)-, is amended te read as follows: 4 -Tfee Secretary ef tfee Treasury and tfee Comp 5 troller ef tfee Currency U 6 time tfeey are in office and fer twe years thereafter te 7 hold any office, position, or employment in any member 8 bank. 9 Board shall fee ineligible during the time they arc in office 10 and fer two years thereafter te held any office, position, ef 11 employment m any member bank, except that this restric 12 tien shall net apply te a member who has served the fuB 13 term fer which he was appointcdr 14 the term ef any appointive member ef the Federal Reserve 15 Board in office when this paragraph as amended takes effect? 16 the President shall & 17 member at net te exceed twelve years, as designatedfeythe 18 -President at the time ef nomination? but in sueh manner as 19 te provide for the expiration ef the term ef net mere than one 20 appointive member in any two year period? and thereafter 21 eaeh appointive member shall held effiee for a term ef twelve 22 years from the expiration ef the term ef bk predecessor. 23 the six persons thus appointed? one shah fee designated fey 24 the President as governor and one a^s vice governor ef the 25 Federal Reserve Board. fee ineligible during tfee The appointive members el the Federal Eeserve Upon the expiration ef the term Of the successor te such Of Tfee governor ef tfee Federal 9 1 Reserve Board, subject to its supervision, shall fee its active 2 executive officer. 3 Board shall within fifteen days after notice ef appointment 4 make and subscribe to the oath ef office." 5 Each member of the Federal Reserve -(fe)- The fourth paragraph ef section -10 ef the Federal 6 Reserve Aet? as amended (U.S.C., title 7 amended te read as seer 8 4 4 ) , is folloWS-7 8 - The principal offices ef the Board shall fee i n •the JJis 9 triet ef Columbia? A t meetings ef the Board the Secretary 10 ef the Treasury shall preside as chairman, and? i n Ms 11 absence,- the governor shall preside- I n the absence ef 12 feeth the Secretary ef the Treasury and the governor the 13 viee governor shall preside. I n the absence ef the Score - 14 tary ef the Treasury, the governor, and the viee governor 15 the Board shall eleet a member to act as chairman pro 16 tempore. 17 manner i n which its obligations shall fee incurred and 18 its disbursements and expenses allowed and paid? and may 19 20 leave en deposit i n the Federal Reserve banks the proceeds ef assessments levied npen them to defray its estimated expenses 22 mont, compensation, leave, and expenses shall fee governed 23 solely fey the provisions ef this Aet? spocifie amendments 24 thereof? and rales and regulations ef the Beard net inoonsist 25 ent therewith; and funds derived from sneh assessments shall The Board shall determine and proscribe the 10 1 net fee construed to be Government funds er appropriated 2 moneys. o an officer er an cctor el any bank, banking institution^ trust 4 company, er Federal Reserve bank er held stock in any bank, 5 banking institution, er trust company; and before entering 6 upon his duties as a member ef the Federal Reserve Board he 7 shall certify under eath that he has complied with this re- 8 quiremcntj and sueh certification shall be filed with the seere- 9 tary ef the Beardv £fe member ef the Federal Reserve Board shall be Whenever a vacancy shall occur, other 10 than fey expiration ef terna^ among the sis members ef the 11 Federal Reserve Board appointedfeythe President as above 12 provided, a successor shallfeeappointedfeythe President7 fey 13 ami with the advice and consent ef the Senate, te fill sueh 14 vacancy, and when appointed he shall held office for the 15 imexpired term ef his predecessor." 16. S E O t 6 t Paragraph -fn*)- ef section 4 - i ef the Federal 17 Reserve Aefc as amended (U.S.O., title 12, see. 218), is 18 amended te read as follows: 19 " (m) Upon the affirmative vote ef not less than six 20 ef its members the Federal Reserve Board shall have power 21 te fis from thne te time for eaeh Federal Reserve distriet the 22 percentage ef individualfeankcapital and surplus which may 23 fee represented fey leans secured fey stock er bond collateral 24 madefeymember banks within sueh district, but ne sueh lean 25 sfeaHfeemadefeyany suehfeankte any person in an amount 11 1 m excess el 4-0 per centum ef tfee unimpaired capital an4 2 surplus el suehfeanfe-Any percentage se fixedfeythe Fed 3 eral Eeserve Board shallfeesubject te change from time te 4 time upon ten days' notice, and it shall fee the duty ef the 5 Board te establish sueh percentages with a view te prevent- 6 ing the undue use el bank loans fer the speculative carrying 7 ef securities. 8 te direct any member bank te refrain from further increase 9 ef its loans securedfeystock er bond collateral ler any period 10 up te ene year under penalty el suspension el aH rediscount 11 privileges at Federal Eeserve banks." 12 13 14 15 The Federal Eeserve Board shall have newer SEC. ^ The Federal Eeserve Aet? as amended, is amended fey inserting between sections title seesr and (U.S.C., and £42} thereof the Mlewing new section: 16 " SEC. 12A. -(a)- There is hereby created a Federal 17 Open Market Committee (hereinafter referred te as the 18 ' committee '), which shall consist ef as many members as 19 there are Federal Eeserve districts. 20 bank fey its board el directors shall annually select ene 21 member el said committee. 22 mittee shall fee held at Washington, District el Columbia, 23 at least leur times each year, upon the eaH el the governor 24 el the Federal Eeserve Board er at tfee reoucst et anv Each Federal Eeserve The meetings el said com 12 1 three members ef the committee, andj m the discretion ef 2 the Board, may be attended fey the members ef the Board. 3 ^{fef iNe Federal Reserve bank shall engage in open- 4 market operations under section 44 ef this Aet except in 5 accordance with regulations adopted by the Federal Reserve 6 Board. • the committee and to the several Federal Reserve banks 8 regulations relating te the open market transactions el sueh 9 banks and the relations ef the Federal Reserve System with 10 The Board shall consider, adopt, and transmit te foreign central er other foreign banks. 11 " (c) The timej character? and volume ef aH purchases 12 and sales ef paper described in section 14 of this Aet as 13 eligible for open market operations shaH be governed with 14 a view te accommodating commerce and business and with 15 regard te their bearing upon the general credit situation ef 16 the country. 17 ^ If any Federal Reserve bank shall decide not te 18 participate in open market operations recommended and ap- 19 proved as provided in paragraph -(b)- hereof, it shah file 20 with the chairman ef the committee within thirty days a 21 notice el its decision, and transmit a copy thereof to the 22 Federal Reserve Board." 23 24 SeOT 8T The eighth paragraph ef section Federal Reserve Aetj as amended (U.S.C., title ef the seer 13 1 2 3 4 1 I S V P F , TIDE SCCT 347), is amended read as follows:- 3 "Any Federal Reserve bank may make advances for 4 periods net exceeding fifteen days te its member banks en 5 their promissory notes secured by the deposit er pledge 6 ef bonds,- notes, certificates ef indebtedness, or Treasury 7 biHs ef the United States, er by fee deposit er pledge ef 8 debentures or other sueh obligations ef Federal intor- 9 mediate credit banks which are eligible for purchase fey 10 Federal Reserve banks under section 11 any -{&)- ef this Act; and Federal Reserve bank may make advances for periods 12 net exceeding ninety days te its member banks en their 13 promissory notes secured fey sueh notes? drafts, biHs ef e^- 14 change, or bankers' acceptances as are eligible for rediscount 15 er for purchase fey Federal Reserve banks under fee provi 16 sions ef this Aetr AH sueh advances shaHfeemade at rates 17 tefeeestablishedfeysneh Federal Reserve banks, sueh rates 18 tefeesubject te fee review7 and determination ef fee Federal 19 Reserve Board. If any member bank te which any sneh ad- 20 vance has been made shall? during fee hie or continuance ef 21 sueh advance, and despite an official warning ef fee Reserve 22 bank ef fee district or ef fee Federal Reserve Board te fee 23 contrary? increase its outstanding loans secured fey collateral 24 in fee feraa ef stocks? bonds? debentures, or other sneh efeh- 25 gajtions, or loans made te members ef any organized stock 14 1 exchange, investment house, or dealer in securities, upon any 2 obligation, note? or b i t t y secured er unsecured? for the purpose 8 ef purchasing and/or carrying stocks, bonds, er other invest 4 mcnt securities (except obligations ef the United States) 5 sueh advance shallfeedeemed immediately due and payable? o and sueh member bank shall be ineligible as a borrower at 7 the Reserve bank ef the district under the provisions ef this 8 paragraph for sueh period as the Federal Reserve Rea^d 9 shall determine: Provided, That no temporary carrying er 10 clearance loans made solely for the purpose ef facilitating 11 the purchase er delivery ef securities offered for public sub- 12 scription shall be included in the leans referred te in this 13 paragraph." 14 SbOT 9T Section 44 ef the Federal Reserve Aet? as 15 amended (U.S.C., title 42? sees? 353 te 358), is amended 16 by adding at the end thereof the following new paragraph: 17 " (g) The Federal Reserve Board shall receive special 18 supervision ever all relationships and transactions ef any 19 kind entered into by any Federal Reserve bank with any 20 foreign bank er banker, er with any group ef foreign banks 21 er bankers, and aH sueh relationships and transactions shall 22 fee subject te sueh regulations, conditions, and limitations as 23 the Board may prescribe? 24 tive ef any Federal Reserve bank shall conduct negotiations 25 ef any kind with the officers er representatives ef any officer er other rcprcscnta- 15 1 foreign feank er banker without first obtaining the pcrmis 2 sien ef the Federal Reserve Board. 3 Board shall have the right7 in its discretion, te fee rcprc 4 sented in any conference er negotiations fey sueh reprcsenta 5 tive er representatives as the Board may designate, 6 report ef aH conferences er negotiations, and ali understand 7 ings er agreements arrived at er transactions agreed upon, 8 and aH other material faets appertaining te sueh conferences 9 er negotiations, shall fee filed with the Federal Reserve 10 Board in writing by a duly authorized officer ef each 11 Federal Reserve bank which shall have participated in sueh 12 conferences er negotiations." 13 SeOT I O T -(a)- Section The Federal Reserve A fuH ef the Federal Reserve Aetj 14 as amended, is amended by inserting after the sixth para 15 graph thereof the following new paragraph: 16 " member bank shall aet as the medium er agent ef 17 any nonbanking corporation, partnership? association, busi 18 ncss trust, er individual in making loans en the security ef 19 stocks? bonds, and: other investment securities te brokers er 20 dealers in stocks, bonds, and ether investment securities. 21 Every violation of this provision fey any member bank shaH 22 fee punishable fey a fine ef net mere than $100 per day dur23 ing the continuance ef sueh violation; and sueh fine may fee 24 collected,feysuit er otherwise, by the Federal Reserve bank 25 of' the district in wThich sueh member bank is located." 16 - 1 2 (b) • Such scctien 19 ef the Federal Reserve Act, as amended (U.S.C,, title 42? seesr 443? £74? 161 166; Supfb B 4 title seer 462a), is further amended fey adding at the end thereef the following new paragraph: 5 - T h e Federal Reserve Beard shatt from time te time 6 limit fey regulation the rate Ox interest which may fee paid 7 fey memfeer hanks en deposits? and may prescribe differ 8 ent rates for such navment en time and savings deposits 9 having different maturities er subject te different conditions 10 respecting withdrawal er repayment. 11 shah pay any time deposit before its maturity? er waive any 12 requirement ef notice before payment ef any savings deposit 13 except as te all saving deposits having the same require- 14 mcnt." 15 Section ife member bank ef the Federal Reserve Aet? as 16 amended (U.S.C., title 42? seesr £75? 326? £03? 593 595; 17 Supp. :s£E? title 42? seer 593) ? is further amendedfeyadding 18 at the end thereof thefollowingnew paragraph: " (g) ife executive officer ef any memberfeanfeshall 20 borrow from er otherwise become indebted te any member 21 bank ef which he is an executive officer, and ne member 22 bank shall make any lean er extend credit in any other man- 23 nor te any ef its ewn executive officers: Provided, 24 loans heretofore made te any sueh officer may fee renewed 25 er extended net more than twe years from the effective That 17 1 -date ef this title? if in aeeerd wife sound banking practice? 2 H any cxccutiye officer ef any member bank borrow from er if fee fee er become indebted te any bank other fean a 4 member bank ef which he is an executive officer, he shaH 5 make a written report te fee chairman ef fee board ef 6 directors ef fee member bank ef wrhich he is an executive 7 officer, stating fee date and amount ef sueh lean er indebted 8 noss, the security therefor, and fee purpose for which fee 9 proceeds have been er arc te fee used. Any executive 10 officer ef any member bank violating the provisions ef this 11 paragraph shall fee deemed guilty ef a misdemeanor and 12 shall fee imprisoned net exceeding one year-,- er fined net 13 more than $5,000, er both; and any member bank violating 14 the provisions ef this paragraph shall fee fined net more 15 than $10,000, and mayfeefineda further sum equal te the 16 amount so loaned er credit se extended." 17 S E O T 4-ST The Federal Eeserve Aet? as amended, is 18 amended fey inserting bctwrccn section 24 and section 19 (U.S.C., title 20 42? see? WWf- hereof fee following new section: 21 " SEC. 34AT see? m and Supp? title Hereafter no national bank, without fee 22 approval ef fee Comptroller ef fee Currency, and no State 23 member bank, without the approval ef fee Federal Eeserve 24 Beard? shaH -(4)- invest in bank premises? er in the steek? 25 bonds, debentures, er other sueh obligations ef any corpora H. E, 5661 2 18 1 tien holding the premises e l sueh hank or make loans 2 to er upon the security ef the steefe ef any sneh corporation, 3 if the aggregate ef all sueh investments and loans will 4 exceed the amount ef the capital steefe ef sneh feanfer^ SEC. 5 The Federal Eeserve Act? as amended, is 6 further amended fey inserting after section 36- -{af (U.S.C., • title 12^ sees* 611 631) thereof tke following new section: 8 9 -fhf ^etwith standing any other pro vision "SEOT r \ f 1 f t -ITT tTT l e t Vv r> 1 1 FTNIFN A ! n ^ITTII T\ n f n - n n n j- r* / \ r v ^ T >~> M i l i S l l l l u V7T tt! V 1 V 1J 11 t i l i l l U tttI U U l l l l l l U l l 1 r> TTT A T i - n n / V l l i F\ r 1 M W t / T TTT t / U U l l y 10 te which any corporation organised under the laws ef the 11 United States shall fee a party? arising ent ef transactions 12 involving international or fetoign bankmg,* or banking i n 13 a dependency er insular possession ef the United States, 14 er out ef other international er foreign financial operations, 15 cither directly er through the agency, ownership, er control 16 ef branches or loeal institutions m dep endeneics or insular 17 possessions ef the United States or i n foreign countries, 18 shallfeedeemed te arise under the laws ef the United States? 19 and the distriet eeurts ef the United States shall have 20 original jurisdiction ef all sueh suits; and any defendant i n 21 any sueh suit may? at any time before the trial thereof? 22 remove sueh suits from a State court into the district court- 23 ef the United States for the preper district fey following the 24 procedure for the removal ef eauses otherwise provided fey 25 law? 19 1 " Notwithstanding any other prevision ef law? aH suits 2 ef a eivil nature at common law er in equity te which any 3 Federal Reserve bank shaH be a party shaH he deemed te 4 arise under the laws ef the United States? and the district 5 courts ef the United States shall have original jurisdiction 6 ef aH sueh suits; and any Federal Reserve bank which is a 7 defendant in any sueh suit may, at any time before the trial 8 thereof, remove sueh suit from a State court into the district 9 court ef the United States for the proper district by following 10 the procedure for the removal ef causes otherwise provided 11 by lawr 12 any Federal Reserve bank er its property before final judg 13 ment in any suit? action, er proceeding in any State? county, 14 municipal, er United States court." 15 No attachment er execution shall be issued against SfiGr 14T Paragraph -Seventh" ef section 5136 ef 16 the Revised Statutes? as amended (U.S.C., title 12? seer 24-? 17 Supp. ^^E? title 12? seer is amended te read as follows: 18 " Seventh? ¥e exercise by its board ef directors er 19 duly authorized officers er agents, subject te law? aH sueh 20 incidental powers as shall fee necessary te carry en the 21 business ef banking; fey discounting and negotiating promis 22 sery notes, drafts,feiHsef exchange, and other evidences ef 23 debt;feyreceiving deposits-?feybuying and selling exchange, 24 coin, and bullion; by loaning money en personal security; 25 ftftd by obtaining, issuing," and circulating notes according te 20 1 the provisions ef this title? and generally by engaging in aH 2 forms ef banking business and undertaking aH types ef bank- 3 ing transactions that may? fey the laws ef the State in 4 which sueh bank is situated, fee permitted te banks ef 5 deposit and discount organized and incorporated under tfee 6 laws ef sueh State? except insofar as they may be forbidden • fey the provisions ef any Aet ef Congress. 8 The business ef dealing in investment securities fey the association shall 9 fee limited te purchasing and selling sueh securities without 10 recourse, solely upon the order, and fer the account ef 11 customers, and in no ease for its own aecou-nt? and the asse- 12 ciation shall net underwrite any issue ef securities: Pro • 13 vided, 14 investment securities under sueh limitations and restrictions 15 as the Comptroller ef the Currency may fey regulation pre- 16 scribe, but in ne event -(4)- shah the total amount ef any 17 issue ef investment securities ef any ene obligor er maker 18 purchased after this seetien as amended takes effect and held 19 by the association fer its own account exceed at any time 40 20 per centum ef the total amount ef sueh issue outstanding, but That the association may purchase fer its own account this limitation shall net apply te any sueh issue the total 22 amount ef which dees net exceed $100,000 and dees net 23 exceed 50 per centum ef the ea^ital ef the association? nor 24 -ffl- shah the tetal amount ef the investment securities ef 25 any ene obligor er maker purchased after this section as 21 1 amended fakes effect and held by fee association for its own 2 account eseeed at any fene 45 per centum ef fee amount ef 3 fee capital stock ef fee association actually paid in and un4 impaired and 3S per centum ef its unimpaired surplus fund. 5 As used in feis section fee term - investment securities - 6 shall mean marketable obligations evidencing indebtedness 7 ef any person, copartnership, association, er corporation m 8 fee form ef bonds, notes, and/or debentures commonly 9 known as investment securities under sueh further definition 10 ef fee term - investment securities - as may fey regulation 11 fee prescribed fey fee Comptroller ef fee Currency. Except 12 as hereinafter provided er otherwise permittedfeylaw? noth 13 ing herein contained shaH authorize fee purchasefeyfeeasso 14 ciation ef any shares ef steek ef any corporation. 15 tations herein contained as te investment securities shall net 16 apply te obligations ef fee United States, er obligations ef 17 any State er ef any political subdivision thereof, er obliga 18 tions issued under authority ef fee Ecdcral Earm Loan Aet? 19 as amended, er any other Acts creating Ecdcral corpora 20 tiens-? 21 monly known as fee safe deposit business fee association shaH 22 net invest in fee capital stock ef a corporation organized 23 under fee law ef any State te conduct a safe deposit busi 24 ness in an amount in excess ef 4# per centum ef the capital Provided, The limi That in carrying en the business eem- 22 1 steefe ef the association actually paid m and unimpaired and 2 1 PC p r v r i A | l~f"C; n-n-iynThfll"P/^/I ClIVnlllQ ^ 1 0 JJ Ui uCirl^rrrr trr Ttt? ttllllli U'MII UU bU.1 JJllU% 3 The restrictions ef this seetien as te dealing in invest- 4 ment securities shall take eSeet two years after the date el 5 the aj)proval el tins A_et. 6 Seot -faf Section ef the Revised Statutes, i as ameneee 8 seer ^ t f j is amended te Fead as follows: 9 ., title 12? see. 51 j Supp? title - SeGt After this section as amended takes effect, 10 no national hanking association shall he organized with a 11 less eapital than $400?000? except that sueh associations 12 with a eapital ef not less than $ou,lHA> may he organized 13 in any place the population ef whieh dees net exceed six 14 thousand inhabitants? -N-o sueh association shall he organ 15 wed m a city the population ol whieh exceeds fifty thousand 16 persons with a eapital ol less than $200,000? except that 17 in the outlying districts el sueh a eity where the State laws 18 permit- the organization el State banks with a capital el 19 $100,000 er less? national banking associations now organ- 20 ized er hereafter organized may? with the approval ef the 21 99 Comptroller jftl no 000 " of the Currcney? have a capital ef net less than ZiLi r[p ± V/VJKTXTV). 23 -(hf The tenth prnzgrnph ef section 0 ef the Federal Reserve Aety as 24 25 amended te read amended -f&rSrOry title 12, sec? 329) ? is as follows- 23 1 "-Ne applying bank- shall be admitted te membership 2 in a Federal Reserve bank unless it possesses a paid up unim- 3 paired capital sufficient te entitle it te become a national 4 banking association in the plaee where it is situated under 5 the provisions el the National Bank Aet? as amended." 6 S E O T 4&T Seetien 5139 ef the Revised Statutes, as 7 amended (U.S.C., title 43? seer Suppr title 42? 8 seer 53f? is amended by adding at the end thereof the follow 9 ing new paragraph: 10 "After twe years frem the date ef the enactment ef 11 the Banking Aet ef 4933? ne certificate representing the 12 stock el any sueh association shall represent the stock ef 13 any other corporation, except a member bank, nor shah the 14 ownership? sale? er transfer ef any certificate representing 15 the steek ef any sueh association fee conditioned m any 16 manner whatsoever upon the ownership, sale? er transfer 17 ef a certificate representing the stock ef any other corpora 18 tien? except a member bank." 19 S E O T 47T -(ftf Alter the expiration el twe years after 20 the date ef enactment ef this Aetr it shall fee unlawful— 21 -(4-f Fer any person, firm, corporation, association, 22 business trust, er other similar organization, engaged prin 2o crpallv in the business ef issuing, underwriting, selling, er 24 distributing, at wholesale er retail, er through syndicate 25 participation, stocks? bonds, debentures, notes, er other se- 24 1 curitics, te engage at the same fene te any extent 2 in fee business ef receiving deposits sufejeet te eheek er te 3 repayment upon presentation ef a passbook? certificate ef 4 deposit, er efeer evidence ef debt? er upon request ef the 5 depositor; er 6 -(2)- For any person, firm, corporation, association? 7 business trust? er other similar organization, efeer than a 8 banking institution er private banker subject te examination 9 and regulation under State er -Federal law? te engage te 10 extent whatever in the business ef receiving deposits 11 subject te check er te repayment upon presentation ef a 12 passbook, certificate ef deposit, er other evidence ef debt, 13 er upon request ef fee depositor? unless sneh person, firm? 14 corporation, association^ business trust? er other similar 15 organization shall submit te periodic examination by fee 16 Comptroller ef the Currency erfeyfeeFederal Reserve Bank 17 ef fee district and shaH make and publish periodic reports 18 ef its condition, exhibiting in detail its resources and -hafeili- 19 ties? sneh examination and reports tefeemade and published 20 at fee same times and in fee same manner and wife like effect and penalties as are new provided fey law in respect 22 ef national banking associations transacting business in the 23 same locality. -ffef Whoever shall willfully violate any ef fee pre- 25 visions ef this section shaH upon conviction fee fined net 25 1 mere tfeas $§t§9Q w imprisoned set more than five years? 2 er ketfey and any officer, directory employee, er agent ef 3 any person-, firm, corporation, association, business trust, 4 er etfeer similar organization wbe knowingly participates 5 ffi any sueh violation shall fee punished fey a like foe er 6 imprisonment or feetfer 7 Sect 18. The first two sentences ef secton m m 8 the ^ o tt> riUilvl t*^ ^U ™U f.n T rl joe a I I a3 tX t7 j1 o1 jU l V ctlll Jt*o t7 oI'Uu ll tTtt5 V 73 . H Revised Statutes (U.S.C., title seer 8#f ef a*e - 10 - A n y association may take? receive? reserve? and eharge 11 en any loan er diseeunt made? er upon any notes, feiHs ef l^5 exchange? er other evidences ef debt, interest at the rate 13 allowed fey the laws ef the State, Territory, er District where 14 the bank is located? or at a rate ef i per ecntum m oxecss 15 ef the discount rate en ninety day eemmereial paper in effect 16 at the Federal Reserve bank in the Federal Eeserve distriet 17 where the bank is leeated? whichever may fee the greater? 18 and no more, exeept that where fey the laws ef any State 19 a different rate is limited for banks organized under State 20 laws? the rate so limited shall fee allowed for associations 21 organized er easting in any sueh State under this title? 22 When no rate is fixed by the laws ef the State, er Territery? 23 er District, the bank may take? receive? reserve? er charge a 24 mte net exceeding 7- per eentuna? er 4- per ecntum in exeess 25 ef the discount- rate en ninety day commercial paper in 26 1 effect at the Federal Reserve bank m the Federal Reserve 9 district where the bank is located, whichever may be the 3 greater, and sueh interest may be taken in advance, reckon 4 ' y Mi YA» tnu R\ nil /-If>yTTfj fnf W w Il Il Ii UpIlIl trtu fV>r> N~ r> nfn N TUT UTUY 5 V>-|11 U Rnt'u tnfli ny QTH A p-nnp R\f ni'I U V IUUIIIJU U I UIIJ , debt has te run." 6 SEC. 4-9T IN any ease in which, in the opinion ef the 7 Comptroller ef the Currency, it would be te the advantage g ef the depositors and unsecured creditors ef any national 9 banking association whose business has been closed, fer sueh 10 association te resume business upon the retention by the 11 association, f©¥ a reasonable period te fee prescribed fey tfee 12 Comptroller, el all er any part ef its deposits, the Comjp 13 troller is authorized, in his discretion, te permit the associa 14 tien te resume business if depositors and unsecured creditors 15 ef the association representing a least 85 per centum ef its 16 total deposit and unsecured credit liabilities consent in writing 17 te sueh retention ef deposits. 18 be construed te affeet in any manner any powers ef the 19 Comptroller under the provisions ef law in feree en the date 20 of enactment ef this Aet with rcspeet te the reorganization 21 of national banking associations. Nothing in this section shall 22 SeOt 20t Whenever-, m the opinion ef the Comp— 23 troller ef the Currency? and director er officer ef a national 24 bank, er ef a bank er trust company doing business in the 25 District ef Columbia, er whenever, in the opinion ef a Fed 27 1 era! agent? any direetor er officer el ef a State member eral Reserve agenty fray director 2 bank in his district sfeaH shall have eentinued continued te violate any law 3 to sueh such Bftftfe hank er or trust eemp eompany relating te anv er shall have con- 4 tinued tinucd unsafe er unsound praetiees in eondueting the business 5 ef sueh bank or trust company? after having been warned 6 fhA i ImnrtfT'n Ipt' tjr A the fhA 0urrcney er the Federal Reserve un-vyT the iiiu (J vj u m ij troiler i i uiitT titu fey omp el 7 agent, as the ease may he? te discontinue sueh -violations violations agent. mav fee? 8 ol law er such unsafe er unsound praetiees? the Comptroller 9 ef the Currency er the Federal Reserve agent? as the case 10 may he? may eertify the faets te the Federal Reserve Board. 11 I n any sueh ease the Federal Reserve Board may cause 12 notice to he served upon sueh director or officer te appear 13 before sueh Board te show eausc why he should not fee 14 removed from office. 15 eaeh director of the hank affected? by registered mail;- 16 after granting the accused director er effieer a reasonable 17 epportunity to fee heard? the Federal Reserve Board finds 18 that he has continued te violate any law relating te sueh 19 bank er trust company er has eentinued unsafe er unsound 20 praetiees in eondueting the business ef sueh bank er trust 21 company after having been warned fey the Comptroller ef 22 the Lurrencv er the Federal Reserve agent te discontinue 23 sueh violation ef law er sueh unsafe er unsound practices? 24 the Federal Reserve Beard? in its discretion? may order that 25 sueh director er officer fee removed from office-. A eepy of sueh order shall fee sent te If A copy ef 28 1 such order shell he served upon sueh director er officer? 2 A copy ef sueh order shall also he served upon the hank- ef 3 which he is a director er officer, whereupon sueh director er 4 officer shall eease te he a director er officer ef sueh bank: 5 Provided? 6 whieh it is based shall not be made public er disclosed te 7 anyone except the director er officer involved and the dircc 8 tors ef the bank involved, otherwise than in connection with 9 proceedings for a violation of this section. That sueh order and the findings ef faet upon Any sueh director 10 er officer removed from office as herein provided who there - 11 after participates in any manner in the management ef sueh 12 bank shah be fined net mere than $5,000 er imprisoned 13 for net more than five years, er both, in the discretion ef 14 the court. 15 See? 34-t After one year from the date ef enactment 16 of this Act-, notwithstanding any ether provision ef law? the 17 board ef directors, beard ef trustees, er ether similar gev- 18 erning body ef every national banking association and ef 19 every State bank er trust company which is a member ef the 20 Federal Eeserve System shaH eensist ef net less than five 21 nor more than twenty five members; and every director, 22 trustee? er other member ef sueh governing body shall be the 23 bona fide owner in his own right ef shares ef stock ef sueh 24 hanking association, State bank er trust company having a 25 par value in the aggregate ef net less than $2,000. If any 29 1 national banking association violates the provisions ef 2 seetion and continues sueh violation after thirty days' notice 3 frena the Comptroller ef the Currency, the said Comptroller 4 may appoint a receiver er conservator thorcfor7 in accordance 5 with the previsions ef existing lawr 6 trast company which is a member ef the Federal Reserve 7 System violates the provisions ef this section and continues 8 soeh violation after thirty days' notice from the Federal 9 Reserve Board., it shall ho subject to the forfeiture ef its 10 membership in the Federal Reserve System m accordance 11 with the previsions of section 9 ef the federal Reserve Aet? 12 as amended. 13 SEGT te If any State bank ef From and after January 4? 1934, no officer 14 er director ef any member bank shall be an officer, director, 15 er manager ef any corporation? partnership? er unincorpo 16 rated association engaged primarily in the business ef pur- 17 chasing? selling? er negotiating securities? and no member 18 bank shall perform the functions of a correspondent bank 19 en behalf ef any sueh individual, partnership, corporation, 20 or unincorporated association-? and no sueh individual,- part- 21 nership? corporation? er unincorporated association shall 22 perform fee functions ef a correspondent for any member 23 bank or hold en deposit any funds en behalf ef any member 24 bank, unless in any sueh ease there is a permit therefor 25 issued by fee Federal Reserve Board;- and the Board is 30 X authorized te issue sueh permit if Hi its judgment it is not 2 incompatible with tfee public interest, and to revoke any 3 such permit whenever it finds alter reasonable notice and 4 opportunity te be heard? that the pufehe interest requires 5 sueh revocation. 6 S®6r The Aet entitled ii A n Aet te supplement 7 existing laws against unlawful restraints and monopolies, 8 and ler other purposes— approved October 45? 1914, as 9 amended, is hereby amended by adding alter section 8 10 thereof -(U.S.C., title 46? seer " 1 1 S E O T 8 A T thefollowingnew section That Irem and alter fee 4st day el Janu 12 ary 4934, ne director? efeeer? er employee el any feank? 13 banking association, er trust company organized er opcrat- 14 ing under the laws el the United States shall be at the same 15 tnne a director? ofheer? er employee el a corporation er a 16 member el a partnership organised ler any purpose what- 17 soever whieh shall make leans secured by stock er bond 18 collateral te any individual? association? partnership, er 19 corporation other than its own subsidiaries^ 20 S®6T S4T Tfee previsions el section 5454 el the Revised 21 Statutes and section 23 ef the Federal Reserve Aet? as 22 amended (U.S.C., title 42? seesr 63 and 23 bility upon shareholders in national banking associations in 24 addition te the amount invested in shares) ? shall net apply te 25 held any shareholder m any national banking association (imposing lia- 31 1 individually responsible in any amounts ie excess of the 2 amount invested in shares in sueh association, on account 3 of any shares acquired by him after the date ef enactment 4 ef this title? 5 TITLE 6 H AFFILIATES SECTION 7 2Q4T The paragraph ef section 4 ef the 8 Federal Reserve Aety as amended (U.S.C.- title 12y sec. 9 304), which commences with the wrords - T h e Federal 10 Reserve Board shall classify - is amendedfeyinserting before 11 the period at the end thereof a colon and the following: 12 " 13 within the same Federal Reserve district are affiliated with 14 the same holding company affiliate, participation fey sueh 15 member banks in any sueh nomination er election shall fee 16 confined te one ef sueh banks, which may be designated for 17 the purpose by such holding company affiliate." 18 Provided, SEOT That whenever any two er more member banks 202T Section 0 ef the Federal Reserve Aety as 19 amended (U.S.C., title 12y sees? 321 331; Supp? title 20 12r sees? 321 331), is amended by adding at the end thereof 21 the following new paragraphs: 22 " Eaehfeankadmitted te membership under this section 23 shaH obtain from eaeh ef its affiliates other than: member 24 banks and furnish te the Federal reserve bank ef its district 25 and te the Federal Reserve Board net less than three reports 32 1 during eaefe year. Suefe reports sfeali fee » suefe lore* as 2 #te Ecdcral Eeserve Beard may nrescribeT shall be verified 3 by the eath er affirmation ef the president er sueh other 4 officer as may be designated by the board ef directors ef 5 suefe affiliate te verify suefe reports? and shall disclose the 6 information hereinafter provided for as ef dates identical 7 with those feed by the Federal Reserve Beard for 8 reports ef the condition ef the affiliated member bank? 9 Each sueh report ef an affiliate shah be transmitted as 10 herein provided at the same time as the corresponding 11 report ef the affiliated member bank? except that the Fed- 12 eral Reserve Board may? in its discretion, extend sueh time 13 for good eanse shown. 14 information as in the judgment ef the Federal Reserve 15 Beard shall fee necessary to disclose felly the relations 16 between sueh affiliate and sueh bank and te enable the Board 17 te inform itself as te the effect ef sneh relations upon the 18 affairs ef sueh bank? 19 be published by the bank nnder the same conditions as 20 govern its own condition reports. Each sueh report shall contain sueh The reports ef sueh affiliates shaH 21 —iiYriy such affiliated member bank may be required te 22 obtain from any sueh affiliate sueh additional reports as 23 in the opinion ef its -Federal Jcteserve bank er the Federal 24 Reserve Board may be necessary fe order to obtain a full 25 and complete knowledge ef the condition ef the affiliated 33 1 member bank? Sueh additional reports shah be transmitted 2 te fee Federal Reserve bank and fee Federal Reserve Board 3 and shall be in sueh form as fee Federal Reserve Board 4 may prescribe. 5 "Any sueh affiliated member bank which fails te 6 obtain from any ef its affiliates and furnish any report 7 provided for by the two preceding paragraphs of this section ~ shall be subject to a penalty ef $400 for eaeh day during 9 which sueh failure continues, which? by direction ef the Federal Reserve Board, may be collected, by suit er other H wise, by the Federal Reserve bank ef the district in which sueh member bank is located. For fee purposes of this 13 paragraph and fee two preceding paragraphs ef this section, 14 the term 6 affiliate ' shall include holding company affiliates 15 as weH as other affiliates. 16 " State member banks shall be subject te the same 17 limitations and conditions wife respect te the purchasing, 18 soiling, underwriting, and holding ef investment securities 19 and stock as arc applicable in the ease ef national banks 20 under paragraph ' Seventh- ef section 21 Statutes, as amended. ef the Revised 22 "After two years from the date ef the enactment ef 23 the Banking Aet ef 1933? no certificate representing fee 24 stock ef any State member bank shah represent the stock 25 of any ether corporation, except a member bank, nor shah H. R. 5661 3 34 1 the ownership, sale? or transfer of any certificate represent 2 ing the stock ef any sueh bank-feeconditioned in any manner 3 whatsoever upon the ownership? sale? er transfer ef a cer- 4 tificate representing the stock of any other corporation, 5 except a member feank? 6 " Each State member bank affiliated with a holding 7 company affiliate shah obtain from sueh holding company 8 affiliate, within sueh time as the Federal Reserve Board shah 9 prescribe, an agreement that sueh holding c o mp any affiliate 10 shallfeesubject te the same conditions and limitations as are 11 applicable under section 5144 ef the Revised Statutes, as 12 amended, in the ease ef holding company affiliates ef national 13 banks. 14 the Federal. Reserve Board. 15 member bank affiliated with a holdmg company affiliate to 16 obtain sueh an agreement within the time so prescribed, the 17 Federal Reserve Board shall require sueh bank- te surrender 18 its stock in the Federal Reserve bank and te forfeit aH rights 19 and privileges ef membership in the Federal Reserve System A copy ef eaeh sueh agreement shall be filed with Upon the failure ef a State 20 as pro vi d c d m this section. Whenever the Federal Reserve 21 Board shaH have revoked the voting permit ef any sueh 22 holding company affiliate, the Federal Reserve Board may, 23 ie its discretion, require any er all State member banks 24 affiliated with sueh holding company affiliate te surrender 25 their stock in the Federal Reserve bank and te forfeit aH 35 1 rights and privileges el membership in the Federal Reserve 2 System as provided in this section.- 3 " I n connection with examinations el State member 4 banks, examiners selected er approved by the Federal 5 Reserve Board shall make sueh examinations el the affairs 6 el all affiliates el sueh banks as shall be necessary te disclose 7 fully fee relations between such banks and their affiliates 8 and the effect el sueh relations upon the affairs el sueh banks. 9 The expense el examination ol affiliates el any State member 10 bank may, in fee discretion el the Federal Reserve Board, 11 be assessed against sueh bank and when so assessed, shall 12 fee paid by sueh bank. In the event el the refusal te give 13 any information requested in the course ot the examination 14 ef any sueh affiliate, er in the event ef the refusal te permit 15 sueh examination, er in the event ef the refusal te pay 16 any expense so assessed, the Federal Reserve Board may, 17 m its discretion, require any er all State member banks 18 affiliated wife sueh affiliate te surrender their stock in the 19 Federal Reserve bank and te forfeit all rights and privileges 20 ef membership in the Federal Reserve System, as provided 21 in this section." 22 The Federal Reserve Aet? as amended, is 23 amended by inserting between sections 2& and 34 thereof 24 (U.S.C., title 43? seesr 64 and 374- Supjb 25 see. 374-)- the following new section: title 43? 36 1 - SfiOr S&Av member kb»fe s M -(-if make any lem 2 or a w extension Or credit to, or purchase securities under 3 repurchase agreement from, any of its affiliates, er (2-)- in 4 vest any ef its funds in the capital stock, bonds, debentures, 5 er ether sueh obligations ef any sueh affiliate, er -(&)- accept 6 fee capital stock, bonds? debentures, er other sneh obliga 7 tions ef any sneh affiliate as collateral security for advances 8 made te any person, partnership, association, er eorporatin, 9 if? in fee ease ef any sneh affiliate? fee aggregate amount ef 10 sneh loans, extensions ef credit, repurchase agreements, 11 investments, and advances against sneh collateral security 12 wiH exceed 40 per centum ef the capital steek and surplus 13 ef sneh member bank? er if? in the ease ef ail sneh affiliates, 14 fee aggregate amount ef sneh loans, extensions ef credits, 15 repurchase agreements, investments, and advances against 16 sneh collateral security will exceed 80 per centum ef the 17 capital stock and surplus ef sneh member bank. 18 " Within the foregoing limitations, eaeh lean er extcn 19 sien ef credit ef any kind er character te an affiliate shall be 20 secured by collateral in the form of stocks, bonds, debentures, 21 er other sneh obligations having a market value at the time 22 ef making the lean er extension ef credit ef at least 80 per 23 centum more than the amount of the lean er extension ef 24 credit, er ef at least 40 per centum more than the amount ef 25 fee loan er extension ef eredit if it is secured by obligations 37 1 ef any State, er ef any political subdivision er agency 2 thereof: ProvidedT 3 shah net apply to loans or extensions of eredit seeured by 4 obligations ef the United States Government, the Federal 5 intermediate credit banks? er the Federal land banks? er by 6 sueh notes, drafts? bills of exchange, or bankers' acceptances • as arc eligible for rediscount er lor purchase 8 Reserve banks? 9 officer, elerk? er other employee or anv representative ef 10 any sueh affiliate shall be deemed a loan te the affiliate to 11 the extent that the proceeds ef sueh lean are used for the 12 benefit el? er transferred te? the affiliate. 13 That the provisions of this paragraph fey cdcral A loan or extension of eredit to a director " For the purposes of this section the term ' affiliate ' 14 s U 15 affiliates, and the previsions ef this section shall net apply 16 te any affiliate -(4-)- engaged solely i n holding the bank 17 premises of the member bank w i t h which it is affiliated? 18 -(2}- engaged solely i n eondueting a safe deposit business or 19 the business ef an agrieultural credit corporation er livestock 20 lean eompany, -f3)- i n the eaptial steek ef whieh a national 21 banking association is authorized to invest pursuant 22 section 23 organized under section 25 -(a)- ef the Federal Reserve 24 Aet? as amended. but as te any such affiliate, member 25 banks shah eontinue to fee subject te ether provisions ef inefode holding company affiliates m well as other te ef the Federal Reserve Act? as amended, er 38 2 law applicable te loans by sueh banks and investments by 2 sueh banks in stocks, bonds, debentures, er other sueh 3 obligations." 4 S®Or 204-7 Section #444 ef the Revised Statutes, as 5 amended (U.S.C., title g as follows : 7 see? 64-fj is amended te read " SEO. 5144. In all elections ef directors and in de- 3 elding aH questions at meetings ef shareholders, eaeh share 9 holder shaH fee entitled to one vote en eaeh share ef stock 10 held fey him; except -flf- that shares ef its own stock held 11 by a national bank as sole trustee shaH net be voted, and 12 shares ef its own stock held by a national bank and one 13 er more persons as trustees may fee voted fey sueh other 14 person er persons, as trustees, in the same manner as if he 15 er they were the sole trustee, and -fSf shares controlled 16 fey any holding company affiliate ef a national bank shaH 17 net fee voted unless sueh holding company affiliate shaH 18 have first obtained a voting permit as hereinafter provided, 19 which permit is in force at the time sueh shares are voted. 20 Shareholders may vote fey proxies duly authorized in 21 wrriting; but no officer, clerk, teller, er bookkeeper ef sueh 22 bank shaH act as proxy; and no shareholder w^hose liability 23 is past due and unpaid shaHfeeallowred te vote. 24 25 " For the purposes ef this section shares shaH fee deemed te fee controlled fey a holding company affiliate if 39 1 tfeey are owned er controlled directly ef indirectly fey suefe 2 holding company affiliate, er feeM fey any trustee for the 3 benefit of the shareholders er members thereof. 4 "Any sueh holding company affiliate may make appli- 5 cation te the Federal Eeserve Board for a voting permit 6 entitling it te east ene vote at all elections ef directors and 7 in deciding ah questions at meetings ef shareholders ef sueh 8 bank en each share ef stock controlled by it er authoriz 9 ing the trustee er trustees holding the steek fer its benefit 10 er fer the benefit ef its shareholders so to vote fee same. 11 The Federal Eeserve Board may, in its discretion, grant er 12 withhold sueh permit as the public interest may require. 13 In acting upon sueh application, the Board shall consider 14 thefinancialcondition ef fee applicant, the general character 15 ef its management, and the probable effect ef the granting 16 ef sueh permit upon the affairs ef sueh bank, but no sueh 17 permit shall be granted except upon the following conditions: 18 " (a) Every sueh holding company affiliate shall? in 19 making the application fer sueh permit, agree -{if te 20 receive, en dates identical wife those fixed fer the examina 21 tien ef banks with which it is affiliated, examiners duly 22 authorized te examine sueh banks, who shall make sueh 23 examinations ef sueh holding company affiliate as shall be 24 necessary te disclose fully the relations between sueh banks 25 and sueh holding company affiliate and the effect ef sueh 40 1 relations upon the affairs ef sneli banks, suefe examinations 2 te DC at tllO expense ef the holding company affiliate so 8 examined; 4 contain such information as shall he neeessary te disclose 5 fully the relations between sueh affiliate and sueh banks 6 and the effect of such relations upon the affairs ef sueh 7 hanks-j -f&f feat sueh examiners may examine eaeh bask 8 owned er eentrehed by the holding eempany affiliate? both 9 individually and in conjunction with ether hanks owned er 10 controlled by sueh holding eempany affiliate? and -(4)- that 11 publication ef individual er consolidated statements ef een- 12 dition ef sueh hanks may be required; that the reports ef sueh examiners shall 13 " (b) After five years after the enactment ef the 14 Banking Aet ef 1933? every sueh holding eempany affiliate 15 -fi)- shall possess? and shall continue te possess during 16 the life ef sueh permit, free and elear ef any hen? pledge? 17 er hypothecation ef any nature, readily marketable assets 18 other than bank stock in an amount net less than 4-2 per 19 centum ef the aggregate par value ef all bank stocks een- 20 trolled by sueh holding eempany affiliate? which amount 21 shall be increased by net less than 2 per centum per annum 22 ef sueh aggregate par value until sueh assets shall amount te 23 per ecntum ef the aggregate par value ef sueh bask stocks- 24 and -£2f shall reinvest in readily marketable assets other than ^ni hnn oil HUr net earnings ever and above 6 per centum ucllliv\z gfnr*Ir ll/Uiv ttlx 41 1 per a f f i m en the keek value el ite ewft shares outstanding- 2 until sueh assets shall amount te sueh 3 aggregate par value ef aH bank stocks controlled by it? 4 9 per centum el the ^-fef Notwithstanding the foregoing provisions ef tins 5 section,- alter five years after the enactment ef the Bank 6 ing Aet ef 1933, -ft}- any sueh holding company affiliate 7 the shareholders 8 vidually and severally liable i n proportion te the number N Ftrr ohNYNA v7T rvi S enoh wJLJLMIUft llUii er members ef whieh rnnlriTnn* r t r t U r i t g Lpnmr^nnv Ullijmliy lfi l l Hhn l i l i c fil lIr* A shall hrln xxtTttt be indi- HTT fLr>orn tr^yiiUIlI 10 respectively, i n addition to amounts invested therein, for 11 all statutory liability imposed en sueh holding company 12 affiliate by reason ef its control ol shares e l stock e l hanks, 13 shall be required only te establish and maintain out e l net 14 earnings ever and above % per centum per annum en the 15 book value el its own shares outstanding a reserve ef readily 16 marketable assets in an amount net less than 4-2 per centum 17 ef the aggregate par value ef bank steeks controlled by it? 18 and -f2f the assets required by this section te be possessed 19 by sueh holding eempany aitihate may be used by it I or 20 replacement ef capital i n hanks affiliated with it and for 21 losses incurred in sueh banks, but any deficiency i n sueh 22 assets resulting from sueh use shall be made up within sueh 23 period as the Federal Reserve Board may by regulation 24 prescribe; 42 1 - (d) Every officer, director, agent, and employee ef 2 every sueh holding company affiliate shall he subject te the 3 same penalties for false entries m any book, report? er 4 statement ef such holding company affiliate as are applicable 5 te officers, directors? agents, arid employees ef member 6 banks under section 5209 ef the Revised Statutes, as 7 amended; and 8 " (e)- Every sueh holding company affiliate shall, m rts 9 application for sueh voting permit, -f4)- shew that it dees net 10 own, control, er have any interest in? and is net participating 11 in the management er direction ef? any corporation, business 12 trust? association? er other similar organization formed for 13 the purpose ef? er engaged principally in? the issue, fieta- 14 tion, underwriting? public sale? er distribution, at wholesale 15 er retail er through syndicate participation, ef stocks? bonds, 16 debentures, notes, or ether securities ef any sort -{here- 17 inafter referred te as - securities company ^j-j -(£)- agree that 18 during the period that the permit remains in force it will 19 not acquire any ownership, eentrel? er interest in any sueh 20 securities company er participate in the management er 21 direction thereof-? 22 the application for such permit? it owns, controls, er has an 23 interest in? er is participating in the management er dircc 24 tion ef? any sueh securities company, it wiH? within hve 25 years after fee filing ef sueh application? divest itself ef its agree that if? at the time ef filing 43 1 ownership^ control, and interest m suefe securities company 2 and wiH cease participating in tfee management er direction 8 thereof-,- and will set thereafter, during tfee period tfeat fee 4 permit remains is force, acquire any further ownership, 5 control, er interest in any sueh securities company ef par- 6 ticipate in fee management er direction thereof; and -f4}- 7 agrco feat thenceforth it wife declare dividends esly eut ef 8 actual set earnings. 9 at any tfene it shall appear te tfee Federal Reserve 10 Board feat any holding company affiliate feas violated any 11 ef tfee provisions ef tfee Banking Aet ef 1933 er ef aey 12 agreement made pursuant te tfeis section,- tfee Federal B e 13 serve Board may, is its discretion revoke any such voting 14 permit after giving sixty days' notice fey registered mail ef 15 its intention te tfee holding company affiliate and affording 16 it an opportunity tefeeheard. Whenever fee Federal Re- 17 serve Board shall have revoked any sueh voting permit, ne 18 national bank whose stock is controlled fey fee holding com 19 pany affiliate whoso permit is se revoked shall receive depos 20 its ef public moneys ef tfee United States, ner shall any snefe 21 national bank pay any further dividend te suefe holding com 22 pany affiliate upon any shares ef suefe bank controlled by 23 suefe holding company affiliate. 24 " Whenever fee Federal Reserve Board shall have re- 25 voked asy voting permit as hereinbefore provided, fee 44 1 rights, privileges, and franchises ef any er all national banks 2 the stock ef which is controlled by sueh holding company 3 affiliate shall, in the discretion ef the Federal Reserve Board? 4 be subject te forfeiture in accordance with section 3- ef the 5 Federal Reserve Aet? as amended/' 6 S E C . 205T After twe years from the date ef the enact 7 ment ef this Aetr no member bank shall be affiliated m any 8 manner described in seetien 4 -fb}- ef this title wife any eer- 9 poration, association, business trust, er other similar organiza 10 tien engaged principally in fee issue, flotation? underwriting, 11 public sale? er distribution at wholesale er retail er through 12 syndicate participation ef stocks, bonds, debentures, notes, 13 er other securities. 14 Fer every violation ef this section the member bank 15 involved shall be subject te a penalty net exceeding $1,000 16 per <lay fer eaeh day during which sueh violation continues. 17 Sueh nenaltv may be assessed by the Federal Reserve Board? 18 in its discretion, and? when se assessed, may be collected by 19 fee Federal Reserve bank by suit er otherwise. 20 If any sueh violation shall continue fer s s calendar 21 months after the member bank shall have been warned by 22 fee Federal Reserve Board te discontinue the same, -faf in 23 the ease ef a national bank? aH rights? privileges, and 24 franchises granted te it under the National Bank Aet may 25 fee forfeited in the manner prescribed in section 2- ef the Fed- 45 1 efaA Reserve Act, as amended, ef? -fb)- in the ease ef a State 2 member bank? ah of its rights arid privileges ef membership 3 in the Federal Reserve System may be forfeited in the 4 manner prescribed m section 0 of the Federal Reserve Aet? O ftS amended. 6 •SEGT 306? -(a)- The second sentence ef the first parar 7 graph ef section 5200 ef the Revised Statutes? as amended 8 (U.S.C., title 43? see? 84- Supp? ^4? title 43? see? 84f? 9 is amended by inserting before fee period at fee end thereof 10 fee following: " and shall include in the ease ef obligations 11 ef a corporation ah obligations ef all subsidiaries thereof in 12 which sueh corporation owns or 13 interest/- controls a majority 14 -(h)- The amendment made by this section shah net 15 apply te sueh obligations of subsidiaries held by such asse- 16 ciation en fee date this section takes effect? 17 S®e? 307? Section 5344 ef the Revised Statutes, as 18 amended (U.S.C., title 43? see? 464- Supp? ¥4? title 43? 19 see? 161), is amended by adding at the end thereof the 20 following new paragraph: 21 " Each national banking association shall obtain from 22 eaeh ef its affiliates other than member banks arid furnish 23 te fee Comptroller ef the Currency not less than three 24 reports during eaeh year, in such form as the Comptroller 25 may proscribe? verified by the oath er affirmation ef the 46 1 president er such other officer as may fee designated fey the 2 board ef directors ef sneh affiliate te verify sneh reports, 3 disclosing the information hereinafter provided fer as ef 4 dates identical with these fer which the Comptroller shaH 5 during sueh year require the reports ef the conditions ef the 6 association. 7 - affiliate - shall include holding company affiliates as weH 8 as ether affiliates? Fer the purpose ef this section the term Eaeh sueh report ef an affiliate shaH 9 fee transmitted te the Comptroller at the same time as the 10 corresponding report ef the association, except that the 11 Comptroller may, in his discretion, extend sueh time fer 12 good cause shewn? 13 information as in the judgment ef the Comptroller ef the 14 Currency shaH fee necessary te disclose fuHy the relations 15 between sueh affiliate and such bank and te enable the 16 Comptroller te inform himself as te the effect ef sueh rekt- 17 tions upon the affairs ef sueh bank. 18 affiliates shaH be published by the association under fee same 19 conditions as govern its own condition reports, The Comp 20 troHer shaH alse have power to eaH fer additional reports 21 wife respect te any sueh affiliate wrhcncvcr in his judgment Eaeh such report shaH contain sueh The reports ef sueh 22 fee same are necessary in order te obtain a fuH and com 23 plctc knowledge ef the conditions ef the association wife 24 which it is affiliated. 25 transmitted te fee Comptroller ef fee Currency m sueh form Such additional reports shall fee 47 1 as he may prescribe. Any seek affiliated bank which fails 2 te obtain and furnish any report required under this scctiop 3 shall be subject te a penalty of $100 fer eaeh day during 4 which sueh failure continues/' 5 Seer 208 -(a)- The first paragraph ef section 5240 ef 6 The Revised Statutes, as amended (IT.S.C.? title 42? 7 seer 481)7 is amended by inserting before the period 8 at the end thereof a colon and the following proviso: 9 " Provided, That in making the examination ef any 10 national bank the examiners shall include sueh an cxam- 11 ination ef the affairs ef aH its affiliates other than member 12 banks as shall be necessary te disclose fully the relations be- 13 tween sueh bank and sueh affiliates and the effect ef sueh 14 relations upon the affairs of such bank j and in the event ef 15 the refusal to give any information required in the course 16 ef the examination ef any sueh affiliate, er in the event ef the 17 refusal te permit such examination, aH the rights,- privileges, 18 and franchises ef the bank shall be subject te forfeiture in 19 accordance with section 2- ef the Federal Reserve Act, as 20 amended. The Comptroller ef the Currency shall have power? and ho is hereby authorized? te publish the report ef his examination ef any national banking association er 23 affiliate which shall net within ene hundred and twenty 24 alter notification ef fee recommendations er suggestions ^ ef fee Comptroller, based on said examination, have com- 48 I plied wife the same te bis satisfaction.- ^finety days1 netiee prior to such publicity shaH be given- to the bank or 3 affiliate." a (b) Section o2 40 of the Ivc vised Statutes? as amended 5 (U.S.C., title 42? see? 481 )7 is further amended by adding 6 after the first paragraph thereof 7 paragraph- the following new 8 " The examiner making the examination ef any affiliate 9 ef a national bank shaH have powrcr te make a thorough 10 examination ef aH the affairs ef the affiliate, and in doing 11 so he shall have power te administer oaths and te examine 12 any ef fee officers, directors, employees, and agents thereof 13 under oath and te make a report ef Ins findings te the 14 Comptroller ef the Currency. 15 ef sueh affiliates may he assessed by the Comptroller ef fee 16 Currency upon the affiliates examined in proportion to assets 17 er resources held by the affiliates upon the dates ef cxamina 18 tion of the various affiliates. 19 refuse te pay sueh expenses er shall fail te do se within 20 sixty- days after the date ef such assessment, then sueh 21 expenses may be assessed against the affiliated national bank 22 and? when se assessed? shaH be paid by sueh national bankr 23 Provided, 24 more national banks, sueh expenses may be assessed against? 25 and collected from, any er aH ef sueh national banks in sueh howevevj The expense ef examinations 4f any sueh affiliate shah That, if the affiliation is wife two or, 49 I groportiona as prcocribc. Comptroller ef the Currency may If any affiliate ef a nationalfeanfesfeafl refuse te g permit- an examiner te make an examination ef tbe affiliate ^ or shall refuse to give any information required in the course 5 of any sueh examination? the national bank with which it is q affiliated shall he subject te a penalty ef net mere than $400 rj for eaeh day that any sueh refusal shall continue. Such pen- g alty may be assessed by the Comptroller ef the Currency and 9 collected in the same manner as expenses ef examinations.-' 10 TITLE III II F E D E B A L ©EPOSIT INSUBANCE COBROBATION 12 13 S E C T I O N 304? -(a)- There is hereby created a Federal Deposit Insurance Corporation (hereinafter referred te as the - Corporation tyy whose duty it shah be te purchase, 15 hold, and hquidate as hereinafter provided, the assets ef 16 national banks which have been closed by action ef the 17 Comptroller ef the Currency? er by vote ef their directors, lg and the assets ef State member banks, and te make loans te 19 State banks and trust companies as hereinafter provided, 20 which have been closed by action ef the appropriate State 21 authorities, or by vote ef their directors. 22 (b)' The management of the Corporation shah be 23 vested in a beard ef directors? consisting ef five members, 24 one ef whom shall be the Comptroller ef the Currency, one H. R. 5661 1 50 1 a member ef the Federal Reserve Beard designated by the 2 Board for the purpose? and tkree eitizens ef the United 3 States appointed fey the President, fey and with the advice 4 and eonscnt el the Senate? who shall held their offices dur- 5 ing a term ef sis years? 6 pointivo members ef the beard shaH be members ef the 7 same political party. Jfet mere than two ef the ap- The terms ef tlie appointive members 8 first appointed shahfeefor two? four? and sis years? as desig 9 natcd fey-the President? The appointive members ef the 10 beard shaH receive compensation at the rate ef $10,000 11 per annum, payable monthly out ef the funds ef the Cer- 12 poration, but no other member ef the board shaH rccciyc additional compensation for service as a member. 14 fc; is hereby authorized tofeeappropriated? out 15 ef any money in the Treasury net otherwise appropriated, 16 the sum ef $150,000?000?' which shaHfeeavailable for pay- 17 feent fey the Secretary ef the Treasury for capital stock of 18 the Corporation m an equal amount, which shafl fee sufe- 19 seribed fer by him en behalf of the United States. 20 mcnts upon sueh subscription shaH be subject te eaH in whole 21 er in part by the beard of directors of the Corporation? Such 22 stock shaH fee in addition te the amount ef eapital stock 23 acquired te be subscribed fer by Federal Reserve banks and 24 member and nonmember banks as hereinafter provided 25 the United States shaH be entitled te the payment ef divi- Pay- 51 1 dcnds en snefe steek te tfee ssffio extent as member and 2 nonmember banks are entitled te sueh payment en the 3 elass A stock el tfee Corporation feeld fey them. 4 fer payments fey the United States ler er en account el 5 sueh stock shahfeeissued fey fee Corporation te the Scerc 6 tary el the Treasury and shall fee evidence el fee stock 7 ownership el the United States. 8 9 Receipts -(df The capital stock el the Corporation shall fee divided into shares of #400 each. Certificates el stock el 10 the Corporation shallfeeel twe classes, elass A and class Br 11 Class A stock shall be held by member and nonmember 12 banks only and they shall be entitled te payment el divi- 13 dcnds out el net earnings at the rate el 0 per centum per 14 annum en the capital stock paid in by them, which divt- 1° dcnds shall be cumulative, er te the extent el 30 per 16 centum el sueh net earnings in any ene year, whichever amount shall be fee greater, but sueh stock shall have no 18 wfee at meetings el stockholders. Class B stock shall fee 19 held fey Federal Reserve banks only and shah net fee 20 entitled te the payment el dividends. 21 Reserve bank shall subscribe te shares el elass B stock m Every Federal the Corporation te an amount equal te one half ef the 23 surplus ef sueh bank en January 4? and its subscrip 24 tions shall be accompanied by a certified check payable te fee Corporation in an amount equal te one half ef sueh 52 1 subscription. The remainder of suefe subscription shaH be 2 subject te eaH from time to time by tfee board ef directors 3 upon ninety days' notice 4 -(e)- Every member bank shaH subscribe te tfee class A 5 capital stock ef tfee Corporation in an amount equal to one 6 half ef 4 per centum ef its total net outstanding time 7 and demand deposits en January 4? 1933, as computed in 8 accordance with regulations ef tfee Ecdcral Reserve -Board 9 governing tfee computation ef reserves? One fealf ef suefe 10 subscription shaH fee paid in fuH within ninety days after 11 receipt ef notice from the chairman ef the board ef directors 12 of the Corporation, and the remainder ef sueh subscription 13 shall be subject te eaH from time te time by the feoard 14 ef directors ef the Corporation. 15 -(f)- The amount ef the outstanding elass A stock 16 ef the Corporation held fey member banks shall be 17 annually adjusted as hereinafter provided as of the last 18 preceding eaH date as member banks increase their time 19 and demand deposits or as additional banks become mem 20 bcrs, er subscribe te the stock ef the Corporation, and sueh 21 stock may be decreased in amount as member banks reduce 22 their time and demand deposits or cease te be members. 23 Shares ef the capital stock ef the Corporation owned by 24 member banks shall net be transferred er hypothecated. 25 When a member bank increases its time and demand 53 1 deposits? it shall, at the beginning ef eaeh calendar year, 2 subscribe for an additional amount of capital stock ef the 3 Corporation equal to one half of 4 per ecntum ef sueh 4 increase in deposits. 5 tienal stock shall be paid for at the time ef fee subscription 6 therefor and the balance shah be subject te eah by the board 7 ef directors of the Corporation. 8 bership in the Federal Reserve System at any time after the 9 organization of the Corporation shall be required te sub- 10 scribe for an amount of class A eapital stock equal te one 11 half ef 4 per centum ef the time and demand deposits ef the 12 applicant bank as ef the date ef sueh admission, paying 13 therefor its par value plus one half ef 4 per centum a month 14 from the period ef the last dividend en the elass A steek ef 15 the Corporation? 16 and demand -deposits it shall surrender. not later than fee 17 4st day ef January thereafter, a proportionate amount ef One half ef the amount of sueh addi A bank admitted te mem When a member bank reduces its time 1 ft TtJty jifi jTinl gT l m pfiTtifnl pfnplr t / TrvPt±±t? a t t v 7 l Urjin .TilM r oy x t lfli i u aV. U jJltctl {511/CIV I O nvn r>T* O i fi rvntfcllU. n-nrl v7Txl 11U11, 19 when a mcmber bank voluntarilv liquidates it shah surrender 20 ah its holdings ef fee eapital steek ef the Corporation andr 21 be released from its stock subscription net previously callcd;- 22 The shares so surrendered shall be canceled and the member 9Q Ko-nlr qT~> oil mnmyn ~ i n n o T^TH r>~n ~ f fli rvT*rt"f AT* TITI./I OT* yn cm Ifif] nn ci O M i l l IIV tslllixt VU itt jJiljllUjlJ: t t l l U l tJJLtJl? LlllU-vJl I l l l c l tlt/llkT 24 to be prescribed by the Board? a sum equal te its cash paid 25 subscriptions en fee shares surrendered and its proportionate 54 1 share ef dividends net te eseeed ene half ef 4- per centum 2 a month? frem the period ef the last dividend on such stock, 3 less any liability el sueh member bank te the Corporation. 4 S©e? ? -(af A n y State hank er trust eompanv, 5 not a member bank ef the Federal Eeserve System? with 6 the approval el the State authority having supervision el 7 sueh bank er trust company awl certification te the Gerpe- 8 ration by sueh authority that sueh hank er trust company 9 is in solvent condition? alter examination by? and approval 1 A Jl \J trr? n fKn. till' p r\y*Y\ r \ r n f i n n V j U i UUxUJt/lUil, fliin f i -fi n n-n/\t-> tUttt t" 1 I t ! llpUIi n 11 nttTtxT t7t7 o /vt»amrt rv f a ilLll. U U l I l i r on fi f1 pn vl lll liutt 4-r\ -f a vrr lilt? PHTY) T i l TT TTH t i l ert trt7TlTpT\~ T r t t r r rvn 1 r* ry i \ c / ^^ •pxt v^liu^v o T7t t i l l Of, t i f i n ti l i N titbit' OT1 f l ttrrvt m^ ttUlJll 12 subscribing te the same amount ol steek as would he re quire d 13 i l sueh bank er trust eempany became a member bank? 14 The Corporati on is authorized te prescribe rules and regu- 15 lations ler the further examination ef sueh bank er trust 16 company and fix the compensation ef exammors employed 17 for sueh examination. 18 and -(4f el section £04- and el section 19 State bank or trust company and te its holding el such steek 20 as i l it were a member bask? 21 directors e l the Corporation is el opinion that any sueh State 22 bank er trust company has lailed te eemply with the previ- 23 sions el this title applicable te sueh State bank er trust com 24 pany er feat the continued partieipatien by any sueh State 25 bank er trust eempany is detrimental te fee sale and eeenem- A l l the previsions el subsections -fef shall apply to sueh II at any time the beard el 55 1 ieal carrying out ef fee duties ef fee Corporation under this 2 title? fee beard shaH give notice thereof te sneh State bank er 3 trust company and? after hearing? the board may by order 4 require the withdrawal ef such State bank er trust company 5 from participation in the benefits ef this title, whieh order shall 6 become effective at sueh time? not less than thirty days after 7 the issuance thereof? as the board may fi% and fee Corpora- 8 tien shaH pay te sueh State bank er trust company the 9 amount paid fer stock held by it (and its stock shaH be 10 retired and canceled). 11 -(-fe)- fe ease any State bank er trust company, net 12 a member ef the Federal Reserve System, is prohibited by 13 State law? er fey the State authority, from complying with 14 the requirement ef subscribing fer stock in the Corporation 15 pursuant te subsection -(a)- ef this section, it shall be entitled 16 te the privileges of this title upon complying with the ether 17 requirements ef sneh snbscction, and upon making a deposit 18 hi law lul money with the Corporation equal te tne lace 19 amount ef stock which it wrould be required te subscribe fer 20 if it became a member bank? 21 interest en any sneh deposit to the bank er trust company 22 making suefe deposit at a rate equal te the rate of the divi • 23 dend paid en steek ef member banks? The Corporation shall pay Such deposit shaH 24 fee adjusted in like manner as holdings ef stock in the Corpo 25 ration fey member banks are adjusted under subsection -(f)- 56 1 ef section §04t7 2 company making the deposit, sueh deposit and accrued inter - 3 est thereon shall he applied in the same manner as cash 4 paid subscriptions and dividends are applied under section 5 S03r 6 ef this section shall apply to any bank er trust company 7 making sueh deposit, except that in lieu ol payments by the 8 Corporation te the bank er trust company ef amounts paid 9 for stock the Corporation shall return te sueh bank er trust 10 The provisions ef the last sentence ef subsection -(a)- company the amount of the deposit. H 12 Upon insolvency ef the State bank er trust S E C . S03T If any member bank shall be declared in- solvent, the stock held by it in the Corporation shall be canceled, without impairment ef the liability ef sueh bank, 14 and all cash paid subscriptions en sueh stock, with its pre- 15 portionatc share ef dividends net te exceed one half el I 16 per centum per month from the period ef last dividend en 17 sueh steek shall fee first applied te all debts ef the insolvent 18 bank or the receiver thereof te the Corporation, and the feaU 19 ancc, if any? shall fee paid te the receiver ef the insolvent 20 bank. 21 SEC. 304. Upon the appointment ef all the appointive 22 members ef the board ef the Corporation? the Corporation 23 shah become a body corporate and as such shall have 24 power— 57 1 First. Te adept and use a corporate seal? 2 Second. Te have succession until dissolved by an Aet 3 el Congress. 4 Third. Te make contracts? 5 Fourth. Te sue and he sued? complain and defend, in 6 any court el law er equity, State or Federal. 7 Filth? Te appoint hy its heard el directors sueh officers 8 and employees as are net otherwise provided ler in this 9 section, te define their duties, fix their compensation, 11( )w -- vomnvn N N rlC* Attx | 1 V>nm v^ A TX£ZVS:. ilit? FV> r\ ULl NR^N N L H trrrtJTlJUl, ILLfVPnf txO 1UL1LLL1 UK tjUlltiD txxvlll "rtrttx letitry^ x-tRt>xRLt/t/F A 11 dismiss at pleasure sueb officers er employees. 12 tfeis or any other Act shall he construed te prevent the 13 appointment and compensation, as an officer er employee 14 el the Corporation? el any officer er employee of the U mted 16 or executive department thereof. 7 Nothing i» 17 Sixth? Te prescribe by its board ef directors, bylaws 18 net inconsistent with law? regulating the manner in which 19 its general business may be conducted? and fee privileges 20 granted te it by law may be exercised and enjoyed? 21 Seventh? Te exercise by its beard ef directors, er duly 22 authorized officers er agents? all powers specifically granted '23 by the previsions ef this section and sueh incidental powers 24 as shall be neeessary te earry out the powers se granted. 58 1 8eOT 3Q&7 Tfee beard ef direeters shall administer tfee 2 affairs ef tfee Corporation faMy and impartially and without 3 discrimination? 4 shall dctorniine and prescribe the manner in which its ebh- 5 gations shallfeeincuired and its expenses allowed and paid. The heard ef directors ef the Corporation 6'1'lan 'nrTlnvn nII G Ar>fif AHwf a vr f}>n Tnt? ivjUrpUl cXftin /IU k5xC ln tTt11TTu UlltitluU tllvf n1J 11y 7vAA ttnun^ta Xx /"ttlu 7 T ^ m f r>rl ^ i f f>f AC| *y > A i l n I U JLlllUU. KTttfctTJO TrittTTn t v> xTT -f V> A XTtt Of> r V > A OC1JXTT7 V> ) O V 1 TV f\ 1* rrittxiilt?l (to r> r< I1 IT* ^-Vt A avaaii TTA I'Atjv"txt7Tvt7 8 departments ef the Government? The Corporation with 9 the consent ef any Federal Reserve bank er ef any feeard? 11 ment ef tfee Government, including any field serviee thereof? 12 may avail itself ef the use ef information? services, and 13 facilities thereof m carrying ent the provisions ef this section. 14 See? -faf The Corporation shaH insure the time 15 and demand deposits ef aH memberfeankswhich are class A 16 stockholders of the C orp oration a*s herein alter ore sen b c d? 17 Notwithstanding any ether provision ef law? whenever any 18 national bank whieh is a elass A stockholder ef the Cerpera- 19 tien shall have been closed by action ef its beard ef directors 20 er by the Comptroller ef the Currency, as the ease may be? 21 en account ef inability te meet the demands ef its depositors, 22 the Comptroller ef the Currency shaH appoint the Cerpe- 23 ration receiver fer sueh bank. 24 after the Corporation shaH organize a new national bank 25 te assume the insured deposit liabilities ef sueh closed bank? As seen as possible there- 59 1 Wj 2 rarily the functions provided for it in this paragraph. 3 the purposes ef this subsection, the term insured deposit 4 liability shall mean with rcspcet te the owner ef any claim 5 arising out ef a depesit liability ef sueh elesed bank the 6 following nereentaffes ef the net amount due te 7 owner by sueh elesed bask en account ef deposit 8 bilities : 400 per eentum ef the amount by which sueh 9 net amount does net exceed ftOyOOO^ and -f-5 per centum 10 ef the amount, if any? by whieh sueh net amount exceeds 11 $-10,000 but dees not exceed $50,000?- and 50 per centum 12 ef the amount? if any? by whieh sueh net amount exceeds 13 $50,000: Provided, 14 te such owner for the purpose of fixing sueh percentage, 15 there shall be added together all net amounts due te sueh 16 owner in the same capacity er the same right? en account 17 ef deposits, regardless ef whether sueh deposits be main- 18 tained in his name er m the names ef others for his benefit? 19 3?er the purposes ef this subsection? the term 20 posit liabilities - shall mean the aggregate amount ef all 21 sueh insured deposit liabilities ef sueh elesed bank? 22 Corporation shall determine as expeditiously as possible the 23 net amounts due te depositors ef the closed bank and shall 24 make available te the new bank an amount equal te the 25 insured deposit liabilities of sueh closed bank, whereupon TuvaTTu IIU W deposits and otherwise te perform tempoFor such lia- That? in determining the amount due 1 insured de- The 60 1 sueh new bank shall assume fee insured deposit liability ef 2 such closed bank te each ef its depositees? and fee Corpora- 3 tien shall be subrogated te ah rights against the closed bank 4 ef the owners ef sneh deposits and shah be entitled te receive 5 the same dividends from the proceeds of the assets ef sneh 6 closed bank as would have been payable to eaeh sneh depesi- 7 tor nntil sneh dividends shall equal fee insured deposit liabil- 8 ity te such depositor assumed by the new bank, whereupon 9 ail further dividends shah be navable to such depositor? Of 10 the amount thus made available by the the 11 new bank? sueh portion shah be paid te it in cafe: as may be 12 necessary te enable it te meet immediate cash demands and 13 the remainder shah be credited te it on fee books ef the Cer- 14 poration subject to withdrawal en demand and shah bear 15 interest at the rate ef £ per centum per annum until with 16 drawn. 17 peratien? accept new deposits, which? together with ah 18 amounts made available to the new bank by the Corporation, 19 shall be kept en hand in cash, invested in direct obligations 20 of fee United States, er deposited wife the Corporation er 21 wife a Federal Reserve bank. 22 tain en deposit wife the Federal Reserve bank of its district 23 the The new bank may? wife the approval ef the Cer- Such new bank shah main reserves required by law of member banks but shall net 24 be required te subscribe for stock of the Federal Reserve 25 bank until its own capital stock has been subscribed 61 1 ftftd paid fef in the manner hereinafter provided. The 2 articles ef association and organization certificate of sneh 8 new hank may fee executed fey sueh representatives ef the 4 Corporation as it may designate; the new bank shaH net 5 fee required to have any directors at the time ef its organiza 6 tien? but shah be managed by an executive officer tofeedesig 7 natedfeythe Corporation; and no capital stock needfeepaid 8 in fey the Corporation; but in other respects sueh bank shah 9 fee organized in accordance with the existing provisions ef 10 law relating te the organization ef national banks; and? 11 until the requisite amount of capital stock for sueh bank has 12 been subscribed and paid fer in the manner hereinafter pre- 13 vided, sueh bank shall transact no business except that 14 authorized by this subsection and sueh business as may be 15 incidental te its organization. 16 Corporation it is desirable te de sej the Corporation shall 17 offer capital steek ef the new bank fer sale on sueh terms and 18 conditions as the Corporation shall deem advisable, m an 19 amount sufficient in the opinion ef the Corporation te make When in the judgment ef the possible the conduct ef the business ef the new bank on a 21 sound basis, but in no event less than that requiredfeysection 22 §4-58 of the Revised Statutes? as amended, fer the organiza tion ef a national bank in the place wrherc sueh new bank is 24 located, giving the stockholders ef the closed bank the first 25 opportunity te purchase sueh stock. Upon proof that an 62 1 adequate amount ef capital stock ef the new bank has been 2 subscribed and paid for in east* by subscribers satisfactory 3 to the Comptroller of the Currency, he shall issue te sueh 4 bank a certificate ef authority te commence business and 5 thereafter it shall be managed by directors elected by its own 6 shareholders and may exercise ail ef the powers granted by 7 law to national banking associations. 8 ef capital for sueh new bank is net subscribed and paid in? 9 the Corporation may offer te transfer its business te any 10 other banking institution m the same place which will take 11 ever its assets, assume its liabilities, and pay te the Corpora 12 tien for sueh business sueh amount as the Corporation may 4f an adequate amount deem adequate. Unless the capital stock of the new bank is 14 sold er its assets acquired and its liabilities assumed by 15 another banking institution, in the manner herein prescribed, within two years from the date ef its organization, the Cor 1 • poration shall place the new bank in voluntary llq uidation 18 and wind up its affairs. The Corporation shall open en its 19 books a deposit insurance account and? as seen as possible 20 after taking possession ef any closed national bank, the Cer- 21 poration shah make an estimate ef the amount which wih 22 ke available from ah sources for application in satisfaction 23 ef the portion ef the claims ef depositors te which it has been 94. subrogated and shah debit te sueh deposit insurance account the excess, if any? ef the amount made available by the Cor ES 1 poration te the new bank for depositors over and above the 2 amount el sueh estimate. 3 ration te realise e-s rapidly as possible upon fee assets of sueh 4 elosed bank, having due regard to the condition, of credit in 5 fee It shall be fee duty of fee Gorpo district in which sueh closed bank is located; to enforce 6 the individual liability ef the stockholders asd 7 thereof; and te wind up fee affairs of sueh closed bank in 8 conformity with fee provisions ef law relating to the liquida 9 tien ef closed national banks, except as herein otherwise pre- 10 vidcd, retaining for its own account sueh portion of the 11 amount realized from sueh liquidation as it shall fee entitled 1 ^ JL.Li tftn 7 13 depositors and paying to depositors and other creditors the 14 amount available for distribution to them, after deducting 15 therefrom their share ef the eests of the liquidation of the 16 elesed bank. 17 tien en account of its subrogation te the claims of depositors 18 he less than the amount ef the estimate hereinabove provided 19 for? the deposit insurance aeeeunt shall fee charged w i f e fee 20 deficiency and? if the total amount so realize*1 shall exceed 21 the amount of sueh estimate? such aeeount shall fee ere dit od 22 wife sueh excess? 23 banks, fee Corporation shall have aH the rights? powers, and 24 privileges now possessed by er hereafter given receivers of 25 insolvent national banks and shah he subject to fee obliga- l"ppppivp tJUUI VU on v7lr nnJ P C ft iumuilTl il i A I I llv tTT to directors o n K-pa (yn f a t i £t tl?m C i t c inim BU.U1 UgC t t Lfir>r> U l I V\7 t T r o o vTTn | If fee total amount realized by the Corpora With respect to sueh elesed national 64 1 tions and penalties net inconsistent with tfee previsions ef 2 this paragraph: te whieh sueh receivers are new er may 4 Whenever any State member bank which is a elass A 5 stockholder ef fee Corporation shall have been closed by 6 action ef its board ef directors er fey the appropriate State 7 authority, as the ease may be, en account ef inability te 8 meet fee demands ef its depositors, the Corporation shall 9 accept appointment as receiver thereof, if sueh appointment 10 be tendered by the appropriate State authority and be 11 authorized er permitted by State law? 12 poration shall organize a new national bank, in accordance 13 wife the provisions ef this subsection, te assume the insured 14 deposit liabilities ef such closed State bank, te reccivc new 15 deposits and otherwise te perform temporarily the functions 16 provided for in this subsection. 17 tien ef the right ef the Corporation te receive dividends en 18 the same basis as m the ease ef a closed national bank under 19 this subsection, sueh recognition being accorded by State 20 law? by allowance ef claims by the appropriate State 21 authority, by assignment ef claims by depositors, er by any 22 other effective method, the Corporation shall make available 23 te sueh new national bank, in the manner prescribed by this 24 subsection, an amount equal te the insured deposit liabilities 25 ef sueh closed State bank; and the Corporation and sueh new Thereupon the COP- Upon satisfactory recogni 65 1 national bank shaH perform aH of tfee functions and duties 2 and shall have aH the rights and privileges with respect to 8 sueh State bank and the depositors thereof which are pre- 4 scribed by this subsection with respect te closed national 5 banks holding elass A stock- in the Corporation: Provided, @ That therightsel depositors and other creditors ef sueh State KNNLT- NIL LIN < 1 NFNYRNI IN/I/1 RN, O ( { IVFL l l ) l I' TTTIFLI FLI A FT NA T~VL A 7UMilIV kTrTcCTT T7t~ trl v'tTt 111 M l 11 l l TIT tt\ rt^rtlTTTtrr' VVTTlT TiTV7 M [J jj 1 icuniu g previsions ef State law-? 9 respeet te sueh State bank? the Corporation shah possess the j () powers and privileges provided by State law with respect te 11 a receiver ef such State bankT except insofar as the same 12 are in eenSiet with the previsions ef this subsection? And pramded further That, with 13 Whenever any State member bank which is a class A 15 ef its beard ef directors er by the appropriate State authority, 1 ^ as the ease may be? en aeeount ef inability to meet the demands 17 ef its depositors? and the applicable State law does net permit jg the appointment ef the Corporation as receiver ef sneh bank, 19 the Corporation shall organize a new national bank? in 20 accordance with the provisions ef this subsection? te assume 21 the insured deposit liabilities ef sneh elesed State bank? te 22 reeeive new deposits? and otherwise to perform temporarily 23 the functions provided fer in this subsection? 24 factory recognition ef the right ef the Corporation te receive H. R. 5661 5 Upon satis 66 1 d i v i d e n d s Oft t h e Same baSIS aS 1ft t h e ease e l a c l o s e d n a t i o n a l 2 bank under this subsection? sueh recognition being accorded 3 by State law? by allowance el claims by the appropriate 4 State authority, by assignment ol claims by depositors, er 5 by any other effective method? the Corporation shall make 6 available te sueh new bank? in accordance with the pre- 7 visions el this subsection? the amount ol insured deposit 8 liabilities as te whieh sueh recognition has been accorded; 9 and sueh new hank shall assume sueh insured deposit liabili 10 ties and shall in other respects comply with the provisions 11 ef this subsection respecting new banks organized to assume 12 insured deposit liabilities el closed national banks. Insofar as possible in view of the applicable provisions of State law? 14 the Corporation shall proceed with respect te the receiver ef 15 sueh closed bank and with respect te the new bank organized 16 te assume its insured deposit liabilities in the manner pre- 17 scribed by this subsection with respect te closed national 18 banks and new banks organized te assume their insured l^ deposit liabilities, except that the Corporation shall have none e l the powers, duties, or responsibilities ef a receiver with respect te the windng up ef the affairs ef sueh closed ^ State bank. ^^ Baay purchase and liquidate any er all of the assets of sueh 24 bank? The Corporation, m its discretion, however, 67 1 Whenever the net debit balance ef the deposit insur 2 anee account ef the Corporation shall equal er exceed ene 3 fourth ef i per centum ef the total deposit liabilities ef aH 4 elass A stockholders as ef fee date ef the last preceding eah 5 report, the Corporation shall levy upon such stockholders 6 an assessment equal te ene fourth ef 4 per centum ef their 7 total deposit liabilities and shall credit the amount collected 8 from sueh assessment te sueh deposit insurance account. Jfe 9 bank which is a holder ef elass A stock shah pay any divi- 10 dcnds until aH assessments levied upon it by the Corporation 11 shall have been paid in fuh-j and any director er officer ef 12 any sueh bank who participates in the declaration er pay- 13 mcnt ef any sueh dividend may? upon conviction, be fined 14 net more than I^OOOy er imprisoned for net more than ene 15 year, er both. 16 The term " receiver " as used in this section shall 17 mean a receiver, liquidating agent, er conservator ef a 18 national bank, and a receiver, liquidating agent, eenserva- 19 tor? commission, person, er other agency charged by State 20 law with fee responsibility and the duty ef winding up the 21 affairs ef an insolvent State member bank. 22 Eer the purposes ef this section only, the term 23 - -national bank " shall include all national banking associa 24 tions and all banks,- banking associations, trust companies, 68 1 savings banks, and ether banking institutions located in the 2 District ef Columbia which are members ef the Federal 3 4 5 Reserve System; and the term - State member bank - shall include ah State banks? banking associations, trust eompaniesj savings banks, and ether banking institutions organized 6 under the laws ef any State, which are members ef the I Federal Reserve System. any determination ef the insured deposit liabilities 8 9 ef any closed bank or of the total deposit liabilities of any 10 bank which is a holder of class A steek ef the Corporation, 11 tor the purposes ef this subsection? there shall be excluded 12 13 the amounts ef ah deposits of sueh bank which are payable 14 enJy at an office thereof located in a foreign country. The Corporation may make sueh rules, regulations, 15 16 and contracts as it may deem necessary in order te carry 17 out the provisions of this section. Money of the C orporation not 18 19 otherwise employed 20 shall be invested in securities ef the Government ef the 21 United States, except that for temporary periods, in the 22 discretion ef the board ef directors, funds of the Corporation 23 may be deposited in any Federal Reserve bank er with the 24 Treasurer ef the United States. 25 purpose by the Secretary ef the Treasury, the Corporation When designated for that shallfeea depositary ef public moneys, except receipts from customs, under sueh regulations as may be prescribed fey 69 1 the said Secretary, and may also be employed as a financial 2 agent effeeGovernment. 3 able duties as depositary ef public moneys and financial 4 agent effeeGovernment as may be required ef it? It shaH perform aH sueh reason 5 -(fe)- Nothing herein contained shall be construed to 6 prevent the Corporation from making loans te national 7 banks closed by action ef the Comptroller ef the Currency, 8 er by vote ef their directors, er te State banks closed fey 9 action ot the appropriate State authorities, erfeyvote ef 10 their directors, er from entering into negotiations te secure 11 the reopening ef sueh banks. 12 -(e)- Receivers er liquidators ef State banks which 13 are new er may hereafter become insolvent er suspended 14 shall be entitled te offer the assets ef sueh banks for sale 15 te the Corporation or 1 Ct T^ r>T*f> O j/tTTTttTt/TTj L Y U I N I TTI V> tlJJUII security fer leans from the Ger^rv r r v r t A i liJLi, V\ n-NMI nmn-n | H I IlitnhJiM 1 ~ f ttUIII 111 tIIU A r FL T > T T T A ' l > T ' 1 ofn M j J J J I U j J l lcfclU 17 State autheritv in accordance wife express provision ef 18 State law in the ease ef State banks? er from the Comp- 19 troller ef the Currency in the ease ef national banks? The 20 proceeds ef every sueh sale er lean shall be utilized fer fee 21 same purposes and in the same manner as other funds reafe- 22 ized: from the liquidation of the assets ef sueh banks? The 23 Comptroller ef the Currency may? in his discretion, pay 24 dividends on proved elaims at any time after the expiration 25 ef the period ef advertisement made pursuant te section 5235 70 1 ef fee Revised Statutes? and no liability shah attaeh te fee 2 Comptroller of fee Currency or to the receiver ef any 3 national bank by reason of any sueh payment for failure to 4 pay dividends to a claimant whose elaim is net proved at 5 the time ef any sueh payment? 7 to issue and to have outstanding at any one time in an 8 amount aggregating not mere than three times the amount 9 ef its eapital? its notes, debentures? bends? er ether sueh ebh- 10 gatiens? te be redeemable at the option of the Corporation 11 before maturity in such manner as may be stipulated i n 12 such obligations? and te bear sueh rate er rates ef interest? 13 and te mature at sueh time er times as may be determined 14 by the Corporation: Provided, "I _L y That the Corporation may f> /I -i n/^/MTr>4- knnin nlinvt "i'AT'TTl rtl^l 1 . fi rvn TTf>V>1 A nt KjtvTI UI1 CC LLlo"U lllltJ U(lolo 1511 UI IIU1 111 t7 IJ11ol11U1 lr? pel y M fJlVJ ttu 16 maturity without interest. The notes, debentures? bends? 17 and other sueh obligations of 18 secured by assets ef the Corporation in sueh manner as 19 shah be prescribed by its beard ef directors? 20 tions may be offered for sale at sueh priee er priees as the 21 Corporation fee Corporation may be Such ebhga- may cietermine? 22 -(e)- A h notes, debentures, bonds, er other sueh ebh- 23 24 25 gations issued by the Corporation shall be exempt? both as principal and interest, all taxation (exceptby estate andto inheritance taxes) newfrom or hereafter imposed the 71 1 •XTin ted States^ b y any Territory? dependency, er possession 2 thereof er b y any State? eonnty, nmnieipality? er leeal taxing 3 authority? 4 tal? reserves, and surplus? and its income, shall be exempt 5 f r e i n a l l taxation n e w er hereafter imposed b y the United 7 er b y any State? county? municipality, er local taxing author 8 ity? exeept that any real property ef the Corporation shah be T h e Corporation? including? its franchise? rts eapr- 9ail 'Jj rit tv? Tc/tTtttJty? _l i n iiui nil, "ttiiiii y ? nlnili"J pmi? trr lUv'Mt ttta o n m Q l n j - £./-X S i t o / ~ > : t * r » i j - A T * 1 f ) 1 O A l l Y 1 ! 17" YV~1 T i l l ' m f i 1._ A T 1A P f i l I n v 10 fttie» te tke same extent according to rts value as other real 11 property is taxed? 12 UH: order that the Corporation may be supplied 13 with sueh forms of notes? debentures, bonds? or other 14 sueh obligations as i t m a y need for issuance under this Act? 15 the Secretary ef the Treasury is authorized t e prepare sueh 16 forms as shall be suitable and approved by the Corporation, 17 to be held i n the Treasury subjeet to delivery, upon order 18 ef the Corporation? 19 and ether material executed in connection therewith shall 20 remain i n the custody of the Secretary of the Treasury. 21 T h e Corporation: shah reimburse the Secretary ef the Treas 22 e r y for any expenses incurred i n the preparation, custody, ^^ and delivery et sueh notes? debentures? bonds? or other sueh T h e engraved plates, dies? bed pieces, 72 1 -(g)- Tlie Corporation shah annually make ft report ef 2 its ot) orations to the Congress as soon as practicable after 3 the 1st day of January in each year. 4 -fh)- Whoever, for the purpose ef obtaining any leas 5 from the Corporation, or any extension or renewal thereof, • or tor the purpose ef inducing the Corporation te purchase 8 any assets, er lor the purpose of influencing in any way 9 the action ef the Corporation under this section, makes any 10 statement? knowing it te be false, or willfully overvalues any 11 security, shall he punished by a fine ef not mere than $5,000? 12 er by imprisonment for not more than two years? er both? 13 Whoever -(4)- falsely makes, forges, er counter 14 feits any obligation or eeupen? in imitation ef er purporting 15 to be an obligation or coupon issued by the Corporation, er 16 passes, utters, or publishes, or attempts to pass? utter? 17 er publish? any false? forged? or counterfeited obligation or 18 coupon purporting to have been issued by the Corporation? 19 knowing the same te be false? forged? or counterfeited? or falsely alters any obligation or coupon issued er pur- 21 porting to have been issued by the Corporation? er -f4)- 22 passes, utters, or publishes? or attempts to pass? utter? or 23 publish? as true, any falsely altered or spurious obligation 24 or coupon? issued er purporting to have been issued by the 25 Corporation, knowing the same te be falsely altered or 73 1 spurious-, sli all fee punished m¥ a foe ef net more fean 2 $10,000, erfeyimprisonment fer net more fean five years? 3 er both. 4 5 -(if Whoever? being connected in any capacity wife fee Corporation, -{4f embezzles? abstracts, purloins? er 6"\TTI 11 4~i "i 11 -R T TY11 NN RTNLI NN N Tl^T" ^ A N ATTH FLLNFLR1 RN A AI I finn AT; A^II AT W lltrttci V Ilil^llU UlJLUb Mi ij lliUttt^TTJ? Ittlltlhy bU lull LIUh, "r ULIIUI 7 things ef value, whether belonging to it or pledged, or 8 otherwise intrusted te it? er -f^f with intent te defraud fee 9 Corporation or any other body, politic er corporate, er any 10 individual, er to deceive any officer, auditor, er exam 11 iner ef -the Corporation? makes any false entry in any 12 book, report, er statement ef er te the Corporation, er 13 without being duly authorized draws any order or issues, 14 puts forth, er assigns any note? debenture, bond, er other 15 such obligation, or draft, bih ef exchange, mortgage, judg- 16 ment? er decree thereof, shaH be punished by a fine ef net 17 more than $10,000,- er by imprisonment for not more than 18 five years, er both. 19 -fkf £fe individual, association? partnership? er eerpe- 20 ration shall use the words - Federal Bank Deposit Insurance 21 VJon)oration « or a combination ef any three ef these five 22 words? as fee name er a part thereof under which he er it 23 shall eta business, 24 or corporation shall advertise er otherwise represent falsclv 25 by any device whatsoever that his er its deposit liabilities ^e individual, association, partnership? 74 1 are insured er in anywise guaranteed fey the Federal Bank 2 Deposit 3 e l tfee United States? er fey any instrumentality thereof 4 and no elass A stockholder of tfee Federal Bank Deposit 5 Insurance Corporation shah advertise er otherwise repre 6 sent falsely fey by any deviee device whatsoever to extent te which 7 er the manner in which its deposit liabilities are insured 8 by the fey 9 Every individual? partnership? Insurance Corporation, Bank Deposit Federal Bank er fey tfee Government Insurance Corporation. 10 violating this subdivision shall fee punished by a fane e l not 11 exceeding $1,000? er by imprisonment net exceeding one 12 year? er both? 13 -{If 142? 443? 413? 444? 444? 415? -{±f The provisions of sections 142? 14 446? and 447 ef the Criminal Cede ef the United States 15 (U.S.C., title 48? eh? 5? sees? 202 te SOTy inclusive) in- 16 solar ICO OJU K/HVUiMlVj UI Vv extended te apply te eontracts er 17 agreements with the Corporation under this section, which for 18 the purposes hereof shall be held te include loans? advances, 19 extensions? and renewals thereof? and aeeeptanccs, releases, 20 and substitutions ef security therefor? purchases er sales ef 21 assets, and all contracts and agreements pertaining te the 22 samc.- 23 - ( » f The Secret Service Division ef the Treasury 24 Department is authorized te detect? arrest? and deliver into 25 the custody ef the United States marshal having jurisdiction 75 1 any person committing any ef tfee offenses punishable under 2 this section. 3 307T member bank e l tfee Federal Eeserve 4 System shall? after tfee date e l enactment ef tfeis Aet? and no 5 State bank- or trust company, not a member bank? shall? 6 after it feas become entitled to participation i n tfee benefits 7 ef tfeis title, pay interest at a greater rate tfean # per eentum 8 per annum with respect to any time deposit -(as defined i n 9 section 40 ef tfee Federal Reserve Aet? as amended) made 10 m suefe bank- 11 gEOr 308T Section 0 of tfee A e t entitled ^ A n A e t to 12 establish postal savings depositories for depositing savings at 13 interest with tfee security of tfee Government for repayment 14 thereof, and for other purposes 15 as amended (U.S.C., title approved June 25? 1910, seer 759), is amended fey 16 striKinsr out the period at the end thereof and inserting i n 17 lieu thereof a eelen and the following: " Provided, 18 sueh security shall fee required i n ease ef sueh part of the 19 deposits as are insured under title 141 of the Banking A e t 20 ef493£r 21 SEOT&O&T That no A national bank? reserve bank? or other mem 22 feer bank as defined by section 4 of title 4 of this Aet? or any 23 bank or trust company whose deposits are guaranteed i n any 24 respect under the provisions of this title? er any employee of 25 any sueh bank, shall not cither directly er indirectly aet as 76 1 en agent er broker for any partnership, association, er eer- 2 poration engaged in the business ef writing er selling any 3 form ef insurance. 4 er corporation violating this section ef this Act shall be guilty 5 ef a misdemeanor and shall be punished by a nnc not ex- • 6 cccding $4,000 er imprisonment not exceeding one year, 7 er both. 8 9 10 SEC. 34-QT Any individual, partnership, association, Terms used in this title shah have the mean ing assigned te sueh terms under the Federal Reserve Aet? as amended -(U.S.C., title 42? dn Si Suppt ¥4? title 43? ehT 11 S E C . S44T The foregoing provisions ef this title shah 12 take effect at sueh time as the President by proclamation 13 declares that sueh surveys have been made as he finds nee- 14 cssary for the proper execution of sueh provisions, but in no 15 event shall sueh provisions take effect later than one year 16 after the enactment ef this Aetr 17 SEOR S43T The right te alter, amend, er repeal this Aet 18 is hereby expressly reserved. 19 er the application thereof te any person or circumstances, 20 is held invalid, the remainder ef the Act7 and the appli- 21 cation ef sueh provision te other persons er circumstances, 22 shall net be affected thereby. 23 24 If any provision of this Aet? That the short title of this Act shall be the " Banking of 1933." Act 77 1 2 SEC. 2. As used in this Act and in any provision law amended by this 3 (a) of Act— The terms " banks bank " member bank " " board national 4 banking 5 trict 6 to them in section 1 of the Federal Reserve Act, as amended. 7 association " national and " reserve bank " shall have the meanings assigned (b) Except where otherwise specifically 8 term " affiliate " shall include any corporation, 9 association, or other similar 10 " dis- (1) provided, the business trust, organization— Of which a member bank, directly or indirectly, 11 owns or controls either a majority 12 than 50 per centum of the number of shares voted for the 13 election of its directors, 14 similar 15 manner the election of a majority 16 other persons exercising similar functions; 17 of the voting shares or more trustees, or other persons exercising functions at the preceding election, or controls in any (2) of its directors, trustees, or or Of which control is held, directly or indirectly, 18 through stock ownership or in any other manner, by the share- 19 holders of a member bank who own or control either a 20 of the shares of such bank or more than 50 per centum of the 21 number of shares voted for the election of directors 22 bank at the preceding election, or by trustees for the benefit 23 of the shareholders of any such bank; or majority of such 78 1 (3) Of which a majority of its directors, trustees, or 2 other persons exercising similar functions are directors of any 3 one member bank. 4 (c) The term " holding company affiliate " shall include 5 any corporation, 6 organization— 7 (1) business trust, association, or other Which owns or controls, directly or similar indirectly, 8 either a majority 9 bank or more than 50 per centum of the number of shares of the shares of capital stock of a member 10 voted for the election of directors 11 preceding election, or controls in any manner 12 of a majority 13 (2) For the benefit of whose shareholders or members all or substantially 15 is held by trustees. SEC. 3 (a) all the capital The fourth stock of a member bank paragraph 17 " Eighth99 18 amended, is amended to read as follows: 19 of section 4 of the Federal " Said the election of the directors of any one bank; or 14 16 of any one bank at the board of directors after paragraph Reserve Act, shall administer the as affairs 20 of said bank fairly 21 tion in favor 22 may, 23 the Federal 24 such discounts, advancements, and accommodations as may 25 be safely for and impartially and without discrimina- of or against any member bank or banks and subject to the provisions Reserve Board, and reasonably of law and the orders of extend to each member bank made with due regard the 79 1 claims and demands of other member banks, the 2 nance of sound credit conditions, and the accommodation 3 commerce, industry, 4 Board may prescribe regulations further 5 limitations 6 advancements, and the accommodations may be extended to 7 member 8 itself informed 9 loans and investments of its member banks with and agriculture. The Federal Each Federal defining within reserve of the general character bank of Reserve of this Act the conditions under which banks. mainte- the discounts, shall keep and amount of the a view to 10 ascertaining 11 for the speculative carrying 12 estate, or commodities, or for any other purpose 13 ent with the maintenance 14 in determining 15 counts or other credit accommodations, 16 bank shall give consideration 17 chairman 18 Federal 19 by any member bank, together with 20 Whenever, 21 any member bank is making such undue use of bank 22 the Board may, in its discretion, after reasonable notice and 23 an opportunity 24 of the credit facilities whether undue use is being made of bank credit of or trading of sound credit whether to grant of the Federal Reserve Board in securities, real inconsist- conditions; and, or refuse advances, redis- the Federal reserve to such information. The reserve bank shall report to the any such undue use of bank credit his in the judgment of the Federal recommendation. Reserve Board, credit, for a hearing, suspend such bank from the use of the Federal Reserve System and 80 1 may terminate 2 to time 3 such suspension or may renew it from (b) The paragraph of section 4 of the Federal 4 Act, as amended, which commences with 5 Federal 6 ing before the period 7 following: 8 member banks within 9 affiliated with the same holding company affiliate, time Reserve the words " The Reserve Board shall classify " is amended by insert- u at the end thereof a colon and the Provided, That whenever the same Federal any two or Reserve district tion 11 election shall be confined to one of such banks, which 12 be designated for the purpose any are participa- 10 by such member banks in more such nomination by such holding or may company affiliate" 14 SEC. 4. The first paragraph 15 Reserve Act, 16 1932j 17 as amended, is amended, effective July to read as "After of section 7 of the Federal follows: all necessary expenses of a Federal Reserve bank 18 shall have been paid or provided 19 be entitled to receive an annual dividend 20 the paid-in 21 After 22 the net earnings shall be paid into the surplus 23 Federal 24 25 dividend shall of 6 per centum on cumulative. claims have been fully fund met, of the Reserve bank " SEC. 5. (a) for, the stockholders capital stock, which, dividend shall be the aforesaid Federal 1, The first paragraph of section 9 of the Reserve Act, as amended, is amended by inserting 81 ^ immediately after 2 and the following: 3 o^er incorporated 4 business 5 (b) the words " United "including banking Morris institutions The second paragraph Reserve Act, States" Plan a comma banks engaged in and similar of section 9 of the Fed- 6 eral as amended, 7 at the end thereof the following: 3 nothing 9 bank from establishing and operating branches in the United herein contained is amended "Provided, shall prevent by however, States or any dependency or insular 11 any foreign 12 subject to the same limitations 13 cable to the establishment of branches by national 14 (c) 15 is further 16 new 17 That any State member 10 country, adding possession thereof or in on the same terms and conditions and restrictions as are and appli- banks" Section 9 of the Federal Reserve Act, as amended, amended by adding at the end thereof the following paragraphs: 66 Any mutual savings bank having no capital stock (and 18 any other banking institution 19 weekly or other time deposits which are segregated from 20 other deposits and are regarded as capital stock for the pur- 21 poses of taxation 22 having surplus and undivided profits not less than the amount 23 of capital 24 in the same place, may apply for and be admitted to member- H . required R . 5661 the capital of which consists of and the declaration for the organization 6 of dividends), of a national all but bank 82 1 ship in the Federal 2 subject to the same provisions 3 companies, 4 capital stock of the Federal 5 to six-tenths of 1 per centum of its total deposit liabilities 6 shown 7 savings bank preceding its admission 8 after such subscription shall be adjusted semiannually 9 same percentage basis in accordance 10 tions prescribed by the Federal 11 mutual 12 mitted by the laws under 13 stock in a Federal 14 the system, deposit with the Federal 15 equal 16 pay in on account of a subscription 17 after such deposit shall be adjusted semiannually 18 manner 19 subject to the same conditions 20 amounts 21 member banks and the Federal 22 est thereon at the same rate as dividends 23 on outstanding 24 If the laws under which such savings bank was organized 25 amended so as to authorize Reserve System in the same manner of law as State banks and trust except that such savings savings bank applying of examination with for Board. membership subscriptions Thereon the regulaIf any is not per- to purchase admission Such stock. to in the same deposit shall be respect to repayment to capital as stock by other inter- are actually shares of stock of such Federal to There- reserve bank shall pay mutual such have been required to capital stock. with as reserve bank an amount it would for of rules and Reserve for equal to membership. which it was organized which as subscriptions upon report reserve bank, it shall, upon to the amount paid bank shall subscribe Reserve bank in an amount by the most recent and reserve paid bank. be savings banks to subscribe 83 1 for Federal reserve bank stock such savings bank shall there- 2 upon subscribe for the appropriate 3 Federal 4 for in lieu of payment upon capital 5 upon such subscription. 6 ings bank was organized be not amended at the next session 7 of the legislature 8 bank to membership so as to authorize mutual savings banks 9 to purchase Federal amount of stock in the reserve bank, and the deposit hereinbefore provided stock shall be applied If the laws under which such sav- following the admission of such savings reserve bank stock, or if such laws be so 10 amended and such bank fail within 11 purchase such stock, all of its rights 12 member bank shall be forfeited 13 Federal 14 prescribed 15 banks and trust companies. 16 comply 17 member banks and trust companies, with the regulations of 18 the Federal of 19 membership prescribed for such savings bank at the time of 20 admission 21 provided with respect to capital stock. 22 six months thereafter to and privileges and its membership in the Eeserve System shall be terminated elsewhere with in this section Board to membership, ivith in the manner respect to State Each mutual savings bank shall all the provisions Reserve as a of law applicable and with to State the conditions except as otherwise hereinbefore " Each bank admitted to membership under this section 23 shall obtain from each of its affiliates other than member 24 banks and furnish to the Federal 25 and to the Federal Reserve Board not less than three reports reserve bank of its district 84 1 during each year. Such reports shall be in such form as 2 the Federal 3 hj 4 officer as may be designated by the board of directors of such 5 affiliate to verify 6 mation 7 irith 8 reports 9 Each Reserve Board may prescribe, shall be verified the oath or affirmation of the president or such other such reports, and shall disclose the hereinafter those fixed provided by the of the condition such report for as Federal of of dates Reserve the affiliated, of an affiliate shall infor- identical Board member for bank. be transmitted herein provided 11 report of the affiliated 12 eral Reserve Board 13 jor 14 information 15 Board shall be necessary to disclose fully the relations between 1® such affiliate and such bank and to enable the Board to inform 17 itself as to the effect of such relations upon the affairs of such 18 bank. 19 bank under the same conditions as govern its own 20 oo 94. as in corresponding member bank, except that the Fed- may, in its discretion, good cause shown. extend such time Each such report shall contain such the judgment of the Federal Reserve The reports of such affiliates shall be published by the condition reports. 91 99 at the same time as the as 66 Any such affiliated member bank may be required obtain from any such affiliate such additional reports as in the opinion of its Federal reserve bank or the Federal Board may be necessary in order complete knowledge of the condition to obtain to Reserve a full and of the affiliated member 85 1 bank. Such additional 2 Federal 3 shall be in such form 4 prescribe. 5 "Any reports shall be transmitted reserve bank and the Federal such as the Federal affiliated member Reserve Board and Reserve Board may bank which 6 obtain 7 provided for by the two preceding paragraphs 8 shall be subject to a penalty 9 which from any of its affiliates such failure and furnish which, Federal 11 wise, by the Federal 12 such member bank is located. 13 paragraph 14 the term ' affiliate ' shall include holding 15 as well as other affiliates. 17 limitations 18 selling, 19 and stock as are applicable 20 under paragraph 21 Statutes, as amended. 22 and conditions u After i report of this section reserve bank of the district For member banks shall underwriting, to during of the may be collected, by suit or other- with Seventh 9 one year from which of this section, company be subject affiliates to the same respect to the and holding in the purposes of this and the two preceding paragraphs " State any by direction 10 16 fails of $100 for each day continues, Reserve Board, to the of investment purchasing, securities in the case of national banks of section 5136 of the Revised the date of the enactment of 23 the Banking 24 stock of any State member bank shall represent the stock 25 of any other corporation, Act of 1933, no certificate representing the except a member bank or a corpo- 86 j ration 2 gaged solely in holding 3 member bank, nor shall the ownership, 4 any certificate 5 conditioned in any manner whatsoever upon the (j sale, or transfer of a certificate representing the stock of any 7 other corporation, 3 " Each 9 existing on the date this paragraph company takes effect en- the bank premises of such representing State sale, or transfer of the stock of any such bank be except a member bank. State member bank affiliated affiliate shall obtain from ownership, with a such holding holding company 10 affiliate, within such time as the Federal Reserve Board 11 prescribe, an agreement that such holding company affiliate 12 shall be subject to the same conditions and limitations as are 13 applicable 14 amended, in the case of holding company affiliates of 15 banks. 16 the Federal 17 member bank affiliated 18 obtain such an agreement within 19 Federal Reserve Board shall require such bank to surrender 20 its stock in the Federal 21 and privileges of membership in the Federal 22 as provided in this section. 23 Board 24 holding company affiliate, the Federal under section 5144 shall of the Revised Statutes, as national A copy of each such agreement shall be filed Reserve Board. Upon the failure with a holding with of a State company affiliate the time so prescribed, reserve bank and to forfeit the rights Reserve System Whenever the Federal shall have revoked the voting all to permit Reserve of any Reserve Board such may, 87 1 in its discretion, 2 - affiliated require any or all State member banks with such holding company 3 their stock in the Federal 4 rights and privileges 5 System as provided in this section. 6 " In to surrender reserve bank and to forfeit of membership in the Federal connection examiners affiliate with examinations selected or approved all Reserve of State member 7 banks, by 8 Reserve Board 9 of all affiliates of such banks as shall be necessary to disclose shall make such examinatins Federal of the between such banks and their affairs 10 fully 11 and the effect of such relations upon the affairs of such banks. 12 The expense of examination 13 bank may, in the discretion 14 be assessed against such bank and, when so assessed, shall 15 be paid by such bank. 16 any information 17 of any such affiliate, or in the event of the refusal to permit 18 such examination, 19 any expense so assessed, the Federal 20 in its discretion, 21 affiliated 22 Federal 23 of membership in the Federal 24 in this section." the relations the of affiliates of any State member of the Federal Reserve Board, In the event of the refusal requested in the course of the or in affiliates to give examination the event of the refusal require with such affiliate to pay Reserve Board may, any or all State member banks to surrender reserve bank and to forfeit their stock in the all rights and privileges Reserve System, as provided 88 1 SEC. 6. (a) 2 the Federal 3 as follows: 4 " The Reserve Act, as amended, is amended to read Secretary of 5 trailer 6 time they are in 7 hold 8 bank. The appointive 9 Board shall be ineligible of the the Currency any of section 10 of The second paragraph Treasury shall Comp- during the two years thereafter to or employment members of during the he ineligible office and for office, position, and in any member the Federal Reserve the time they are in office 10 and for two years thereafter 11 employment 12 tion shall not apply 13 term for which he was appointed. 14 the term of any appointive 15 Board 16 the President 17 member at not to exceed twelve years, as designated by the 18 President 19 to provide for the expiration 20 appointive 21 each appointive 22 years from the expiration 23 the six persons thus appointed, 24 the President 25 Federal to hold any office, position, in any member bank, except that this restric- to a member who has served the Upon the expiration member of the Federal in office when this paragraph shall fix or full of Reserve as amended takes effect, the term of the successor to such at the time of nomination, but in such manner as of the term of not more than one member in any two-year period, and thereafter member shall hold office for a term of twelve as governor Reserve Board. of the term of his predecessor. one shall be designated by and one as vice governor The Of governor of the of the Federal 89 1 Reserve Board, 2 executive officer. 3 Board 4 make and subscribe to the oath of office " 5 6 subject to its supervision, Each shall within member of shall be its active the Federal fifteen days after notice of (b) The fourth paragraph appointment of section 10 of the Federal Reserve Act, as amended, is amended to read as 7 " The principal 8 trict of Columbia. 9 of the Treasury offices of the Board shall preside as chairman, absence, the governor 11 both the Secretary 12 vice governor the Board shall preside. 15 tern/pore. 16 manner shall The in preside. In of the Treasury tary of the Treasury, 14 shall In follows: shall be in the Dis- At meetings of the Board 10 Reserve the Secretary and, in the absence of and the governor and the vice governor elect a member to act as chairman which shall the the absence of the Secre- the governor, Board, his determine its obligations and shall prescribe he incurred, its disbursements and expenses allowed and paid, pro the and and may 18 leave on deposit in the Federal Reserve banks the proceeds of 19 assessments levied upon them to defray its estimated expenses 20 and the salaries of its members and employees, ivhose employ- 21 ment, compensation, 22 solely by the provisions 23 thereof, and rules and regulations of the Board 24 ent 25 not therewith; leave, and expenses shall be governed of this Act, specific amendments not inconsist- and funds derived from such assessments shall be construed to be Government funds or appropriated 90 1 moneys. No member of the Federal Reserve Board shall be 2 an officer or director of any bank, banking institution, 3 company, or Federal Reserve bank or hold stock in any bank, 4 banking 5 upon his duties as a member of the Federal Reserve Board he 6 shall certify under oath that he has complied with this require- 7 merit, and such certification shall be filed with the secretary of 8 the Board. 9 expiration institution, or trust company; and before trust entering Whenever a vacancy shall occur, other than by of term, among the six members of the Federal 10 Reserve Board appointed by the President as above provided, 11 a successor shall be appointed by the President, 12 the advice and consent of the Senate, to fill such vacancy, 13 and when appointed the unexpired 14 term of his predecessor." 15 SEC. 7. Paragraph 16 Reserve Act, 17 "(m) he shall hold office for with of section 11 of the Federal as amended, is amended to read as follows: Upon (m) by and the affirmative vote of not less than six 18 of its members the Federal Reserve Board 19 to fix from time to time for each Federal 20 percentage of individual 21 be represented by loans secured by stock or bond 22 made by member banks within such district, 23 shall be made by any such bank to any person in an amount 24 %n excess of 10 per centum of the unimpaired 25 surplus of such bank. shall have power reserve district the bank capital and surplus which may collateral but no such loan capital and Any percentage so fixed by the Fed- 91 1 eral Reserve Board 2 time upon ten days? notice, and it shall be the duty of the 3 Board, to establish such percentages with a view to prevent- 4 ing the undue use of bank loans for the speculative 5 of securities. 6 to direct any member bank to refrain 7 of its loans secured by stock or bond collateral 8 up to one year under penalty of suspension of all 9 privileges at Federal reserve banks " 10 shall be subject to change from The Federal Reserve Board SEC. 8. The Federal 11 amended by inserting 12 the following carrying shall have power from further Reserve Act, increase for any period rediscount as amended, between sections 12 and 13 is thereof new sections: U 13 time to SEC. 12A. (a) There is hereby created a Federal 14 Open 15 'committee'), 16 there are Federal 17 bank by its board 18 member of said 19 mittee shall be held at Washington, 20 at least four times each year, upon the call of the governor 21 of the Federal 22 three members of the committee, and, in the discretion 23 the Board, 24 25 Market "(b) market Committee (hereinafter referred which shall consist of as many reserve districts. of directors committee. Reserve Board Each shall to as the members as Federal annually The meetings District reserve select one of said of Columbia, or at the request of may be attended by the members of the No Federal operations com- reserve bank shall engage in under section 14 of this Act any of Board. open- except in 92 1 accordance with regulations 2 Board. 3 the committee 4 regulations 5 banks and the relations of the Federal 6 foreign central or other foreign banks. 7 The Board and relating "(c) adopted by the Federal Reserve shall consider, adopt, and transmit to the several Federal reserve to the open-market transactions to banks of such Reserve System with The time, character, and volume of all purchases 8 and sales of paper described in section 14 of this Act as 9 eligible for open-market operations a view to accommodating 11 regard 12 the shall be governed with commerce and business and with to their bearing upon the general credit situation country. 13 "(d) 14 participate 15 proved 16 with 17 notice of its decision, and transmit 18 Federal 19 of If any Federal reserve bank shall decide not to in open-market operations recommended and, ap- as provided the chairman Reserve "SEC. in paragraph (b) hereof, it shall of the committee within thirty file days a a copy thereof to the Board. 12B. (a) There is hereby created a 20 Bank Deposit Insurance 21 to as the 22 hold, and liquidate, 23 national 24 Comptroller 25 and the assets of State member banks which have been closed 6 Corporation9), Corporation referred whose duty it shall be to purchase, as hereinafter banks which (hereinafter Federal provided, the assets of have been closed by action of the Currency, or by vote of their of the directors, 93 1 by action of the appropriate 2 of their directors; 3 as hereinafter 4 all member banks which shall have become class A 5 holders of the 6 " (b) State authorities, and on and after July provided, 1, 1934, to insure, the time and demand deposits of stock- Corporation. The management of the Corporation 7 vested in a board of directors 8 one of whom shall be,the Comptroller 9 a member of the Federal consisting Board 11 governors of the twelve Federal 12 procedure 13 Board. 14 any additional shall be of five members, of the Currency, Reserve Board 10 15 or by vote designated by the for the purpose, and three selected annually by the reserve banks under as may be prescribed one by the Federal such Reserve No member of such board of directors shall receive (c) compensation for his services as such member. to be appropriated, 16 out of any money in the Treasury not otherwise appropriated, 17 the 18 for payment by the Secretary 19 stock of the Corporation 20 be subscribed for 21 Payments upon such subscription 22 whole or in part by the board of directors of the 23 Such stock shall be in addition to the amount of capital stock 24 required 25 member banks as hereinafter provided, and the United sum There is hereby authorized of $150,000,000, which shall of the Treasury in an equal amount, be available for which by him on behalf of the United capital shall States. shall be subject to call to be subscribed for by Federal in Corporation. reserve banks and States 94 1 shall 2 to the same extent as member banks are entitled to such 3 ment on the class A stock of the Corporation 4 Receipts for payments by the United 5 of such stock shall be issued by the Corporation to the Secre- 6 tary of 7 ownership 8 "(d) 9 be entitled of divided to the payment the Treasury and of the United The into capital of dividends shall on such stock held by them. States for or on account be evidence the stock States. stock of shares of $100 the Corporation each. Certificates shall the Corporation 11 Class 12 shall 13 at the rate of 6 per centum per annum 14 paid 15 to the extent of 30 per centum of such net earnings 16 one year, 17 stock shall 18 B 19 shall 20 Federal reserve 21 stock in the Corporation 22 of the surplus 23 subscriptions 24 able to the Corporation 25 such subscription. shall be of two classes—class be of stock of 10 pay- A and class B. A stock shall be held by member banks only and they be entitled to payment of dividends in by them, which whichever dividends amount shall out of net earnings on the capital shall be cumulative, be the greater, in be held by Federal not be entitled reserve to the payment bank shall subscribe of such bank on January only and Every of class to one 1, 1933, by a certified in an amount The remainder equal any Class of dividends. to an amount shall be accompanied banks to shares or but such have no vote at meetings of stockholders. stock shall stock B half and its check pay- equal to one half of of such subscription shall 95 1 be subject to call from time to time by the board 2 upon ninety days' Every of directors notice. 3 "(e) bank which is or which 4 of the Federal 5 shall 6 A stockholder of the Corporation 7 and thereafter 8 ship 9 class A Reserve becomes a member System on or before July 1, 1934, take all steps necessary to enable it to become a class in on or before July no State bank shall the Federal stockholder Reserve be admitted System until of the Corporation, 1, 1934; to member- it becomes no national a bank 10 in the continental Lt by the Comptroller of the Currency 12 mence the business of banking 13 of the Federal 14 of the Corporation, 15 United 10 appointed 17 its banking 18 of the Corporation. 19 the Corporation 20 amount equal to one half of 1 per centum of its total deposit 21 liabilities 22 scribed 23 case of a member 24 tion takes effect, the amount 25 for United Reserve States shall be granted a receiver be permitted business until for it to com- a class A stockholder bank in the continental or conservator to resume member has been the transaction it becomes a class A Every certificate it becomes a member and and no national States for which shall authorizing until System a bank stockholder shall apply class A stock of the Corporation as computed by the Federal in accordance Reserve Board; bank organized by such member bank with after in regulations to an pre- except that in the the date of such class A during of the first this sec- stock applied twelve months 96 1 after its organization 2 paid-up 3 ration 4 class A 5 annually 6 member 7 Corporation 8 the case of a member State bank, or the Comptroller 9 Currency, capital shall and surplus, equal 5 per and beginning of such twelve months' period stock of in such member the same manner banks. centum as in of shall shall request the Federal in the case of a national of such be adjusted the case of such other application the Reserve Board, the basis of a thorough examination 11 not the assets of the applying 12 quate to enable it to meet all of its liabilities 13 and other creditors; 14 the Comptroller in of the bank, to certify 10 upon of such bank whether or bank are unquestionably and the Federal of the Currency its after the expi- the amount bank TJpon receipt of ade- to depositors Reserve Board shall make such or certification * 15 as soon as practicable. 16 ative, the Corporation 17 applying 18 and shall 19 Corporation: 20 required 21 stockholder of the Corporation 22 remainder of such subscription 23 time to time by the board of directors 24 Tf such certification 25 deny such application. If such certification be in the affirm- shall grant such application and the bank shall pay one half of its subscription thereupon become a class A Provided, That to make such payment in stockholder no member bank full of the shall be or shall become a class A before July 1, 1934. shall be subject to call of the from Corporation. be in the negative, the Corporation If any national The shall bank shall not have 97 1 become a class A stockholder of the Corporation 2 July 1, 1934, the Comptroller 3 a receiver or conservator therefor in accordance with the pro- 4 visions of existing law. 5 not have become a class A stockholder of the 6 on or before July 7 terminate its membership in the Federal 8 accordance with the provisions of section 9 of this Act. 9 If of the Currency on or before shall appoint any State member bank shall Corporation 1, 1934, the Federal Reserve Board shall Reserve System in " ( f ) Any State bank or trust company which has ap- 10 plied for membership in the Federal 11 conversion into a national 12 consent of the Corporation, 13 tion, pending action on such application, 14 paying 15 it would be required 16 ing a member bank. 17 tion applicable 18 State bank or trust 19 were already 20 cation of such State bank or trust company for 21 in the Federal 22 national 23 complete its membership in the Federal 24 its conversion into a national H . R . Reserve System or for banking association may, with the obtain the benefits of this secby subscribing and for the same amount of stock of the Corporation 5661 to subscribe and pay for upon becomThereupon the provisions of this sec- to member banks shall be applicable company it That if the appli- Reserve System or for membership conversion association be approved 7 to such to the same extent as if a member bank: Provided, banking as into a and it shall not Reserve System or banking association within a 98 1 reasonable time, or if such application 2 then the amount paid 3 account of its subscription 4 ration shall be repaid to it and it shall no longer be subject 5 to the provisions 6 "(g) If shall be disapproved, by such bank or trust company on to the capital stock of the Corpo- or entitled to the privileges of this section. any mutual savings bank which hereafter be- 7 comes a member of the Federal Reserve System is not per- 8 mitted by the laws under which it was organized to purchase 9 stock in the Corporation, it shall apply to the Corporation 10 for 11 application 12 accordance with this section, it shall deposit with the Cor- 13 poration an amount equal to the amount which it would have 14 been required 15 capital 16 shall be adjusted in the same manner 17 stock by class A stockholders. 18 to the same conditions with respect to repayment as amounts admission to the benefits of this section and, if be granted after appropriate such certification to pay in on account of a subscription stock of the Corporation. Thereafter in to such deposit as subscriptions for Such deposit shall be subject paid on subscriptions to class A stock by other member banks 20 and the Corporation shall pay interest thereon at the same 21 rate as dividends 22 of class A stock. 23 with the Corporation, 24 the purposes of this section, be deemed to be a class A stock- 25 holder of the Corporation. 19 are actually paid on autstanding As long as such deposit is such mutual If shares maintained savings bank shall, for the laws under which such 99 1 savings bank was organized be amended so as to authorize 2 mutual 3 Corporation, 4 thereafter 5 class A stock and the deposit hereinafter Q of payment upon class A stock shall be applied upon such 7 subscription. 8 was organized 9 legislature savings banks to subscribe for class A stock of the such savings subscribe for If bank shall within an appropriate the law under six amount months of such provided for in lieu which such savings bank be not amended at the next session of the following the admission of such savings bank 10 to the benefits of this section so as to authorize mutual 11 banks to purchase class A stock, or, if the law be so amended 12 and such bank shall fail 13 purchase such class A stock, the deposit previously 14 with the Corporation 15 and it shall no longer be entitled to the benefits of this section, 16 unless it shall have been closed in the meantime on account 17 of inability 18 "(h) within savings six months thereafter shall be returned to made to such savings bank to meet the demands of its depositors. The amount of the outstanding class A stock 19 of the Corporation 20 adjusted 21 call date as member banks increase their time and demand 22 deposits or as additional 23 scribe to the stock of the Corporation, 24 decreased in amount 25 and demand deposits or cease to be members. held by member banks shall be annually as hereinafter provided as of the last preceding banks become members or suband such stock may be as member banks reduce their time Shares of 100 1 the capital stock 2 banks shall not be transferred 3 member 4 shall, 5 for an additional 6 equal 7 posits. One half of the amount of such additional 8 be paid for at the time of the subscription 9 balance shall bank at of the increases the beginning Corporation by its time and of each calendar be subject to call demand Corporation therefor, by the board 12 Federal 13 of the Corporation 14 amount of class A capital stock equal to one half 15 centum demand 16 cant bank as of the date of such admission, 17 for 18 from 19 of 20 time and 21 than the 1st day 22 amount of its holdings in the capital 23 and when a member bank voluntarily 24 render all its holdings 25 and its par value the period plus demand be released When deposits of from January a it the of appli- paying there- bank a month a not its later proportionate stock of the liquidates stock of the its stock subscription stock reduces surrender, thereafter, an the on the class A member of the capital for of 1 per of 1 per centum shall in the organization to subscribe deposits of the last dividend the Corporation. to membership be required one half of on or before the date at any time after and and the of directors this section takes effect and admitted the time in de- stock shall 11 of it of such increase bank organized shall deposits subscribe the Corporation. System a year, 10 Reserve When stock of the of 1 per centum A member or hypothecated. amount of capital to one half owned not Corporation, it shall sur- Corporation previously 101 1 called. 2 the member bank shall 3 regulations 4 a sum 5 surrendered 6 exceed one half 7 of the last dividend 8 member bank to the The so surrendered be canceled by the Federal to its cash-paid and therefor, under Reserve Board, subscriptions and its proportionate If shall receive in payment to be prescribed equal "(i) 9 shares on the shares share of dividends of 1 per centum a month, from not to the period on such stock, less any liability of such Corporation. any member bank shall be declared insolvent, 10 01 shall 11 the Corporation 12 liability 13 stock, with its proportionate 14 one half of 1 per centum per month from the period 15 dividend to all debts of the 16 insolvent bank or the receiver thereof to the Corporation, 17 the balance, if any, shall be paid to the receiver of the insolvent 18 bank. cease to be a member bank, the stock held by it in of such bank, and all cash-paid Upon 1933, the Corporation 21 such shall have 22 " First. 23 " Second. of 25 subscriptions share of dividends shall become a body corporate on such of last and Act of and as poiver— To adopt and use a corporate seal. To have succession until dissolved by an Act Congress. " Third. of the not to exceed the date of enactment of the Banking 20 24 impairment on such stock shall be first applied "(j) 19 shall be canceled, without To make contracts. 102 1 2 " Fourth. To sue and be sued, complain and defend, in any court of law or equity, State or 8 " Fifth. Federal. To appoint by its board of directors such officers 4 and employees as are not otherwise 5 section, 6 require 7 dismiss at pleasure such officers or employees. 8 this or any other Act 9 appointment and compensation to define their duties, provided fix their bonds of them and fix the penalty shall be construed Nothing to prevent in the as an officer or employee 11 States in any board, commission, independent 12 or executive department of any officer or employee of the United establishment, thereof. To prescribe by its board of directors, 14 not inconsistent with 15 its general business may be conducted, 16 granted to it by law may be exercised and enjoyed. 17 this thereof, and to of the Corporation " Sixth. in compensation, 10 13 for law, regulating the manner and the bylaws in which privileges " Seventh. To exercise by its board of directors, or duly 18 authorized 19 by the provisions 20 as shall be necessary to carry 21 " (k) officers or agents, all powers specifically The of this section and such incidental board of directors shall affairs of the Corporation 23 discrimination 24 banks and may, subject to the provisions 25 each national powers out the powers so granted. 22 in favor granted fairly administer and impartially the and without of or against any member bank or of law, extend to bank which is closed by action of the Comp- 103 1 troiler 2 each State member bank which is closed by action 3 appropriate 4 accommodations 5 with due regard for the claims and demands of other mem- 6 ber banks. 7 determine and prescribe the manner in which its 8 shall be incurred 9 Corporation of the Currency, or by vote of its directors, State authorities, as may be safely and reasonably made The board of directors of the Corporation shall be entitled to the free use of the 11 merits of the Government 12 sent of any Federal 13 sion, 14 of the Government, 15 avail itself of the use of information, 16 thereof in carrying independent with The United as the executive The Corporation shall obligations and its expenses allowed and paid. States mails in the same manner "(I) of the or by vote of its directors, such 10 17 and to departthe con- reserve bank or of any board, commisestablishment, including or executive department any field service thereof, may services, and facilities out the provisions of this section. Effective on and after July 1, 1934 (thus afford- 18 ing 19 Corporation 20 all member banks which 21 Corporation 22 any other provision of law, 23 which stockholder of the Corporation shall 24 have been closed by action of its board of directors or by 25 the Comptroller ample time for examination shall insure preparation), the the time and demand deposits of are class A as hereinafter is a class A and prescribed. stockholders Notwithstanding whenever any national of the Currency, of the bank as the case may be, or 104 1 account of inability 2 the Comptroller 3 ration 4 after 5 to assume the insured deposit liabilities 6 to receive new deposits and otherwise 7 rarily 8 the purposes of this subsection, the term ' insured 9 liability9 10 arising 11 following 12 owner by 13 bilities: 100 per centum of such net amount not exceeding 14 $10,000; 15 such net amount exceeds $10,000 but does not exceed $50,000; 16 and 50 per centum of the amount, if any, by which such net 17 amount exceeds $50,000: 18 amount due to such owner for the purpose of fixing such per- 19 centage, there shall be added together all net amounts due to 20 such owner in the same capacity or the same right, on account 21 of deposits, regardless 22 tained in his name or in the names of others for his benefit. 23 For 24 posit 25 such insured to meet the demands of its of the Currency receiver for such bank. the Corporation shall appoint depositors, the Corpo- As soon as possible there- shall organize a new national bank of such closed bank. to perform tempo- the functions provided for it in this paragraph. For deposit shall mean with respect to the owner of any out of a deposit liability percentages of the such closed bank claim of such closed bank the net amount on account due of to such deposit lia- and 75 per centum of the amount, if any, by which Provided, of whether That, in determining such deposits be main- the purposes of this subsection, the term liabilities? shall mean the aggregate deposit liabilities the 6 insured amount of such closed bank. of deall The 105 1 Corporation 2 net amounts due to depositors of the closed bank and 3 make available 4 insured 5 such new bank shall assume the insured 6 such closed bank to each of its depositors, and the 7 tion shall be subrogated to all rights against the closed bank 8 of the owners of such deposits and shall be entitled to receive 9 the same dividends from the proceeds of the assets of such 10 closed bank as would have been payable to each such deposi- 11 tor until such dividends shall equal the insured deposit 12 ity to such depositor assumed by the new bank, 13 all further 14 the amount thus made available 15 new bank, such portion shall be paid to it in cash as may be 10 necessary to enable it to meet immediate cash demands and 17 the remainder shall be credited to it on the books of the Cor- 18 poration 19 interest at the rate of 3 per centum per annum until 20 drawn. 21 poration, 22 amounts made available to the new bank by the 23 shall be kept on hand in cash, invested in direct 24 of the United 25 with a Federal shall determine as expeditiously as possible the to the new bank an amount deposit liabilities shall equal to the of such closed bank, whereupon deposit liability Corpora- liabil- whereupon dividends shall be payable to such depositor. subject to withdrawal by the Corporation on demand accept new deposits, which, States, or deposited with Reserve bank. Of to the and shall The new bank may, with the approval of bear with- of the Cor- together ivith all Corporation, obligations the Corporation Such new bank shall or main- 106 1 tain on deposit with the Federal Reserve bank of its 2 the reserves required 3 be required 4 serve bank until 5 and paid 6 articles 7 new bank may be executed by such representatives 8 Corporation 9 be required by law of member banks but shall not to subscribe for for district stock of its own capital in the manner Re- stock has been subscribed hereinafter of association and organization as it may designate; the Federal provided. certificate The of such of the the new bank shall to have any directors at the time of its not organiza- 10 tion, but shall be managed by an executive officer to be desig- 11 nated by the Corporation; 12 in by the Corporation; 13 be organized in accordance with the existing provisions 14 law to the organization 15 until the requisite amount of capital stock for such bank has 16 been subscribed and paid for in the manner hereinafter pro- 17 videdj that 18 authorized 19 incidental 20 Corporation 21 offer capital stock of the new bank for sale on such terms and 22 conditions 23 amount sufficient in the opinion of the Corporation 24 possible the conduct of the business of the new bank on a 25 sound basis, but in no event less than that required relating and no capital stock need be paid but in other respects such bank shall such bank shall transact of national of banks; and, no business except by this subsection and such business as may be to its organization. When in the judgment of the it is desirable to do 'so, the Corporation shall as the Corporation shall deem advisable, in an to make by section 107 1 5138 of the Revised Statutes, as amended, for the 2 o/ a national organiza- bank in the place where such new bank is 3 located, giving 4 opportunity 5 adequate amount of capital stock of the new bank has been 6 subscribed and paid for in cash by subscribers 7 to the Comptroller of the Currency, 8 bank a certificate of authority 9 thereafter it shall be managed by directors elected by its own the stockholders of the closed bank the first to purchase such stock. Upon proof that satisfactory he shall issue to such to commence business and 10 shareholders and may exercise all of the powers granted 11 law to national banking associations. 12 of capital for such new bank is not subscribed and paid 13 the Corporation 14 other banking institution 15 over its assets, assume its liabilities, 16 tion for such business such amount as the Corporation 17 deem adequate. 18 sold or its assets acquired 19 another banking institution, 20 within 21 poration 22 and wind up its affairs. 23 books a deposit insurance 24 after taking possession of any closed national 25 poration an by If an adequate amount may offer to transfer in, its business to any in the same place which will and pay to the take Corporamay Unless the capital stock of the new bank is and its liabilities assumed by in the manner herein prescribed, two years from the date of its organization, the Cor- shall place the new bank in voluntary liquidation The Corporation shall open on its account and, as soon as possible bank, the Cor- shall make an estimate of the amount which will 108 1 be available 2 of the portion 3 subrogated and shall debit to such deposit insurance 4 the excess, if any, of the amount made available by the Cor- 5 poration 6 amount of such estimate. It shall be the duty of the Corpo- 7 ration to realize as rapidly as possible upon the assets of such 8 closed bank, having due regard to the condition 9 the district from all sources for application in satisfaction of the claims of depositors to which it has been account to the new bank for depositors over and above the of credit in in which such closed bank is located; to enforce 10 the individual 11 thereof; 12 conformity 13 tion of closed national banks, except as herein otherwise 14 vided, 15 amount realized from such liquidation 16 to receive on account of its subrogation 17 positors and paying 18 amount available 19 therefrom 20 closed bank. 21 tion on account of its subrogation 22 be less than the amount of the estimate hereinabove 23 for, the deposit insurance account shall be charged with the 24 deficiency 25 the amount of such estimate, such account shall be credited liability of the stockholders and to wind up the affairs for to the its own account such portion liquida- of the to the claims of de- to depositors and other creditors for distribution pro- as it shall be entitled to them, after their share of the costs of the liquidation If directors of such closed bank in with the provisions of law relating retaining and the total amount realized by the the deducting of the Corpora- to the claims of depositors provided and, if the total amount so realized shall exceed 109 1 with such excess. With respect to such closed national 2 the Corporation 3 leges now possessed by or hereafter given receivers of insol- 4 vent national banks and shall be subject to the obligations 5 penalties not inconsistent with the provisions 6 graph 7 become subject. 8 9 banks, shall have all the rights, powers, and of this to which such receivers are now or may privi- and para- hereafter " Whenever any State member bank which is a class A stockholder of the Corporation action of its board of directors shall have been closed by or by the appropriate 11 auhority, 12 meet the demands of its depositors, 13 accept 14 be tendered by the appropriate 15 thorized or permitted 16 poration 17 with the provisions 18 deposit liabilities 19 deposits and otherwise to perform 20 provided for in this subsection. 21 tion of the right of the Corporation 22 the same basis as in the case of a closed national 23 this subsection, such recognition 24 law, by allowance of claims by the appropriate 25 thority, as the case may be, on account appointment State of inability the Corporation as receiver thereof, if such and be au- Thereupon shall organize a new national shall appointment State authority by State law. to the bank, in Cor- accordance of this subsection, to assume the insured of such closed State bank, to receive new temporarily the functions Upon satisfactory recogni- to receive dividends bank under being accorded by assignment of claims by depositors, on by State State au- or by any 110 1 other effective method, the Corporation 2 to such new national bank, in the manner prescribed by this 3 subsection, an amount equal to the insured deposit 4 of such closed State bank; and the Corporation 5 national 6 and shall have all the rights and privileges 7 such State bank and the depositors thereof which are pre- 8 scribed by this subsection with respect to closed national 9 holding bank shall perform shall make liabilities and such new all of the functions class A stock in the Corporation: available and duties with respect to Provided, banks That 10 the rights of depositors and other creditors of such State bank 11 shall be determined 12 visions 13 respect to such State bank, the Corporation 14 powers and privileges provided by State law with respect to 15 a receiver 16 are in conflict with the provisions of this subsection. 17 in accordance with the applicable of State law: And provided further, That, prowith shall possess the of such State bank, except insofar as the same " Whenever any State member bank which is a class A 18 stockholder of the Corporation 19 of its board of directors or by the appropriate 20 as the case may be, on account of inability 21 of its depositors, and the applicable State law does not permit 22 the appointment of the Corporation 23 the Corporation shall organize 24 accordance with the provisions 25 the insured deposit liabilities shall have been closed by action State authority, to meet the demands as receiver of such bank, a new national bank, in of this subsection, to assume of such closed State bank, to Ill 1 receive new deposits, and otherwise 2 the functions 3 factory 4 dividends 5 bank under 6 by State 7 State authority, 8 by any 9 available provided recognition visions for to perform temporarily in this subsection. Upon of the right of the Corporation to receive on the same basis as in the case of a closed this subsection, such recognition law, by allowance of claims by assignment of new bank, this subsection, accordance the amount such recognition appropriate shall with of insured 12 and such new bank shall assume such insured deposit 13 ties and shall the 14 of this subsection respecting 15 insured 16 as possible in view of the applicable 17 the Corporation 18 such closed bank and with respect to the new bank 19 to assume its insured 20 scribed 21 banks 22 deposit 23 none of the powers, 24 with respect to the winding 25 State deposit liabilities liabili- provisions to assume banks. provisions Insofar of State law, shall proceed with respect to the receiver new liabilities, bank. accorded; new banks organized of closed national deposit liabilities by this subsection and with pro- deposit liabilities in other respects comply has been The banks with respect organized except that in to closed duties, or responsibilities up of the affairs Corporation, in insured shall of a have receiver of such its discretion, pre- national their the Corporation of organized the manner to assume or make the 11 as to which in accorded by depositors, other effective method, the Corporation to such national being by the of claims satis- closed however, 112 1 may purchase and liquidate 2 bank. 8 any or all of the assets of such " Whenever the net debit balance of the deposit insur- 4 ance account of the Corporation shall equal or exceed one 5 fourth 6 class A stockholders as of the date of the last preceding 7 report, 8 an assessment equal to one fourth 9 total deposit liabilities of 1 per centum of the total deposit liabilities the Corporation of all call shall levy upon such stockholders of 1 per centum of their and shall credit the amount collected 10 from such assessment to such deposit insurance account. No 11 bank which is a holder of class A stock shall pay any divi- 12 dends until all assessments levied upon it by the 13 shall have been paid in full; 14 any such bank who participates 15 ment of any such dividend 16 not more than $1,000, or imprisoned for not more than one 17 year, or both. 18 " The term ' receiver' or officer of in the declaration may, upon conviction, or pay- be fined as used in this section shall mean 19 a receiver, 20 bank, and a receiver, liquidating 21 sion, person, or other agency charged by State law with the 22 responsibility 23 insolvent State member bank. 24 2 5 " For ' national liquidating and any director Corporation agent, or conservator of a national agent, conservator, commis- and the duty of winding the purposes bank' of this up the affairs section shall include all national only, banking of an the term associa- 113 1 tions and all banks, banking 2 savings banks, and other banking institutions 3 District 4 Reserve System; 5 include all State banks, banking 6 nies, savings banks, and other banking institutions 7 under 8 Federal Reserve System. 9 of Columbia associations, trust which 6 and the term any determination located in the are members of the Federal State member bank9 associations, trust the laws of any State, which "In companies, shall compa- organized are members of the of the insured deposit liabilities 10 of any closed bank or of the total deposit liabilities 11 bank which is a holder of class A stock of the 12 for 13 the amounts of all deposits of such bank which are payable 14 only at an office thereof located in a foreign of any Corporation, the purposes of this subsection, there shall be excluded 15 " The Corporation country. may make such rules, regulations, 16 and contracts as it may deem necessary in order to carry out 17 the provisions of this section. 18 " Money of the Corporation not otherwise employed 19 shall be invested in securities of the Government of the United 20 States, except that for temporary 21 the board of directors, 22 deposited in any Federal reserve bank or with the Treasurer 23 of the United States. 24 the Secretary H . K . 5661 funds of the Corporation may be When designated for that purpose by of the Treasury, 8 periods, in the discretion of the Corporation shall be a 114 1 depositary 2 under such regulations 3 Secretary, 4 of the Government. 5 duties as depositary of public moneys and financial 6 the Government as may be required of it. "(m) 7 of public moneys, except receipts from as may be prescribed Nothing It shall perform agent all such reasonable agent of herein contained shall be construed to prevent the Corporation 9 closed by action of the Comptroller from making loans to national 10 vote of their directors, 11 action of the appropriate 12 their directors, 13 the reopening of such banks. " (n) by the said and may also be employed as a financial 8 14 customs, of the Currency, banks or by or to State member banks closed by State authorities, or by vote of or from, entering into negotiations Receivers or liquidators to secure of member banks which 15 are now or may hereafter 16 shall be entitled to offer the assets of such banks for sale to 17 the Corporation 18 tion, upon receiving 19 authority 20 law in the case of State member banks, or from the Comp- 21 troller 22 proceeds of every such sale or loan shall be utilized for the 23 same purposes and in the same manner as other funds 24 ized from the liquidation 25 Comptroller in become insolvent or suspended or as security for loans from the permission from accordance of the Currency with Corpora- the appropriate express provisions in the case of national of banks. of the assets of such banks. of the Currency may, in his discretion, State State The realThe pay 115 1 dividends 2 of the period of advertisement made pursuant 3 of the Revised 4 Comptroller 5 national 6 pay 7 the time of any such 8 9 on proved claims Statutes, of the at any time after the and no liability Currency or expiration to section 5235 shall attach to the to the receiver of any bank by reason of any such payment for failure dividends "(o) to a claimant The to issue and whose claim to is not proved at payment. Corporation to have outstanding an the amount of its capital, 12 gations, 13 before maturity in 14 such obligations, and to bear such rate or rates of interest, 15 and to mature 16 by the Corporation: 17 sell on a discount 18 maturity 19 and 20 secured 21 shall 22 tions may be offered for sale at such price 23 corporation its notes, debentures, to be redeemable by such such be prescribed may issued bonds, or other such at the option manner Provided, of the as may That basis short-term interest. The obligations of assets of All twice obli- Corporation be stipulated in at such time or times as may be determined without other gations than one time in 11 "(p) more empowered amount 25 not at any and 10 24 aggregating is authorized the Corporation obligations notes, the the Corporation payable debentures, Corporation in such by its board of directors. may at bonds, may be manner as Such obliga- or prices as the determine. notes, debentures, by bonds, or other such the Corporation shall be exempt, obliboth 116 1 as to principal and interest, from 2 and 3 United 4 thereof, or by any State, county, municipality, 5 authority. 6 tal, reserves, and surplus, 7 /rom all taxation 8 States, by any Territory, 9 or by any State, county, municipality, inheritance taxes) now or States, by any Territory, The Corporation, all taxation hereafter including 11 subject 12 taxation imposed 13 reaZ property Territorial, United author- of the Corporation county, municipal shall be or to its value that the Corporation 16 obligations 17 Secretary 18 forms as shall be suitable and approved of notes, debentures, local as other the Treasury held in the Treasury 0/ the Corporation. 21 and 22 remain 23 The Corporation 24 ury for other material under is authorized executed in any expenses incurred supplied this Act, the by the such Corporation, upon order plates, dies, bed pieces, connection of the Secretary shall reimburse be to prepare subject to delivery, The engraved the custody may bonds, or other such as it may need for issuance 20 by the or local taxing with such forms in be exempt is taxed. I71 order to ite capi- thereof, 15 19 taxing or possession to the same extent according of or local its franchise, dependency, ity, except that any real property by the or possession and its income, shall 10 14 imposed dependency, now or hereafter to State, (except estate therewith of the the Secretary shall Treasury. of the Treas- in the preparation, custody, 117 1 and delivery 2 obligations. 3 "(r) its of such notes, debentures, bonds, or other such The Corporation 4 of 5 after the 1st day of January 6 operations "(s) annually to the Congress Whoever, for as soon in each or 8 thereof, or the acceptance, release, or substitution 9 therefor, or for 10 purchase any assets, or for the purpose 11 way the action of the Corporation 12 any statement, knowing 13 any security, 14 $5,000, 15 both. shall of inducing be punished Whoever (1) falsely any obligation or coupon, 18 porting 19 poration, 20 to pass, utter, or publish, 21 obligation 22 Corporation, knowing 23 terfeited, (3) 24 issued or purporting 25 or (4) passes, uttersr or publishes, of to be an obligation of influencing to in any this section, makes makes, forges, in imitation or coupon passes, utters, or issued publishes, any false, forged, purporting overvalues or or of than alters counteror pur- by the Cor- or attempts counterfeited to have been issued by the the same to be false, forged, falsely security by a fine of not more feits or renewal the Corporation under 17 or coupon or loan for not more than two years, or "(t) (2) extension any it to be false, or willfully or by imprisonment or practicable of obtaining from the purpose any as report year. the purpose Corporation, make a 7 16 the shall any obligation to have been issued by the or or councoupon Corporation, or attempts to pass, utter, 118 1 or publish, as true, any falsely altered or spurious 2 or coupon, issued or purporting 3 Corporation, 4 spurious, shall 5 $10,000, or by imprisonment 6 or both. 7 "(u) knowing Whoever, to have been issued by the the same to be falsely be punished obligation altered by a fine of not more or than for not more than five years, being connected in any capacity with 8 the 9 willfully 10 things 11 otherwise intrusted 12 Corporation 13 any individual, 14 iner 15 book, report, 16 without 17 puts forth, 18 such obligation, 19 ment, or decree thereof, shall be punished by a fine of not 20 more than $10,000, 21 five years, or both. 22 Corporation, (1) misapplies of value, embezzles, abstracts, or any moneys, funds, securities, or other whether belonging to it, or (2) or any to it or pledged, with intent to defraud other body, politic or corporate, or to deceive any officer, auditor, of the Corporation, makes any false the or or examany or statement of or to the Corporation, or authorized draws entry or in being duly "(v) purloins, any order or issues, or assigns any note, debenture, bond, or other or draft, bill of exchange, mortgage, or by imprisonment No individual, judg- for not more than association, partnership, or corpo- 6 Insurance 23 ration shall use the words 24 Corporation 25 ivords, as the name or a part thereof under which he or it Federal Bank Deposit \ or a combination of any three of these five 119 1 shall do business. 2 or Corporation 3 by any device whatsoever that his or its deposit 4 are 5 Bank 6 ment of the United States, or by any instrumentality thereof; 7 and no class A stockholder Deposit 8 Insurance 9 sent falsely insured No individual, association, partnership, shall advertise or otherwise represent or Deposit in anywise Insurance Corporation guaranteed Corporation, shall advertise or the manner 11 by 12 Every 13 violating 14 exceeding $1,000, 15 year, or both. IQ "(w) in which the Federal individual, Bank partnership, this subdivision Federal or by the Govern- Bank or otherwise repre- the extent to which its deposit liabilities Deposit liabilities the of the Federal by any device whatsoever 10 by falsely Insurance association, are insured Corporation. or corporation shall be punished by a fine of not or by imprisonment The provisions not exceeding one of sections 112, 113, 114, 17 116, and 117 of the Criminal 18 (U.S.C., 19 so far 20 agreements with the Corporation 21 the purposes hereof shall be held to include loans, advances, 22 extensions, and renewals thereof, and acceptances, releases, 23 and substitutions 24 assets, and all contracts 25 same. Code of the United 115, States title 18, ch. 5, sees. 202 to 207, inclusive), as applicable, are extended to apply of security in to contracts or under this section, which for therefor, purchases or sales of and agreements pertaining to the 120 1 "(x) The Secret Service 2 Department 3 into 4 jurisdiction 5 punishable 6 is authorized the custody any of the person of the to detect, arrest, United States committing any Treasury and marshal of Federal Bank Deposit Insurance 8 to as the 'Fund'), 1933, hereinafter 11 "(b) having the offenses " SEC. 12G. (a) There is hereby created a 9 deliver under this section. 7 10 Division Fund Temporary (hereinafter which shall become operative and whose duty it shall be to insure provided until July 1, referred on July deposits as 1934. Each member bank licensed before July 1, 1933, 12 by the Secretary 13 vested in him by the proclamation 14 March 10, 1933, shall, on or before July 15 a member of the Fund; 16 such date, and each State bank or trust 17 becomes a member of the Federal 18 such date, shall, upon being so licensed or so admitted 19 membership, become a member of the Fund; 20 bank or trust company and/or mutual savings bank which 21 is not a member of the Federal Reserve System may, upon 22 application 23 before January 24 by a certificate 25 State bank or trust company or mutual of the Treasury, therefor, pursuant to the authority of the President issued 1, 1933, become each member bank so licensed after company Reserve System of the State banking after to and any State become a member of the Fund 1, 1934, if such application which on or is accompanied authority that such savings bank is, on 121 1 the date of such application, 2 unrestricted 3 "(c) solvent with respect to its deposits. The Fund shall insure the amounts owed to each 4 of the depositors of each of its members, but not to exceed 5 $2,500 6 of this section shall not apply to any impounded 7 any impounded portion thereof. 8 or hereafter 9 shall not render a deposit ineligible for 10 in the case of any one depositor; "(d) proclaimed Each but the deposit or Any restrictions by the Secretary of the which a member on or before July 12 Fund 13 oath showing 14 amount 15 eligible for 16 certified check in an amount equal to one half 17 centum of the total 18 and each member bank, State bank, 19 which shall become a member of the Fund 20 1933, shall at the time of its admission 21 with the Fund 22 depositors 23 fifteenth 24 it was so admitted, 25 this section, together with 1, 1933, shall file with on or before such date, a certified insurance statement of its depositors under amount Treasury shall become 11 of its deposits as of June heretofore insurance. member of the Fund the number provisions 15, and 1933, the under the total which are this section, together with of the deposits and a of 1 per so certified; trust company after July 1, to membership file such a statement showing the number of its and the total amount of its deposits as of the day of the month preceding in which which are eligible for insurance under a certified the month check in an amount 122 1 equal to one half of 1 per centum of the total amount 2 the deposits so certified. 3 by each such member on January 4 number of its depositors and the total amount of its deposits 5 as of December 15, 1933, which are eligible for such in- 6 surance, together with a certified check in an amount 7 to one half of 1 per centum of the increase, if any, in the 8 total amount of such deposits since the date covered by the 9 statement 10 statement shall be filed 1, 1934, filed upon its admission showing to membership the equal in the Fund. 11 12 A similar of "(e) requires If at any time prior additional to July 1, 1934, the funds with which to meet its Fatid obligations 13 under 14 ject to one additional assessment only in an amount not 15 exceeding the total amount theretofore paid to the Fund by 16 such member. ;u 17 this section, each member of the Fund " ( f ) During shall be subr the period that deposits are insured under 18 this section, no member of the Fund 19 rate in excess of M per centum per annum on the amount 20 of any of its deposits so insured. 21 22 "(g) shall pay interest at a Whenever any member of the Fund been closed by the appropriate legal authorities, shall have the Fund 23 shall pay to the depositors of such member as soon as possible 24 thereafter 25 closing which the amount of their deposits on the date of such are insured under this section. After such 123 1 payment the Fund 2 the closed bank of the owners of such insured 3 shall 4 proceeds of the assets of such closed bank as would 5 been payable 6 insured 7 be entitled shall be subrogated to all rights deposits and to receive the same dividends to each such depositor ivith the have respect to his In the event that the Fund shall be unable to pay 8 any of its obligations, when due, the Secretary 9 ury shall pay the amount thereof, which is hereby 10 to be appropriated 11 otherwise appropriated. 12 by the Secretary of the Treasury, 13 reimbursed 14 Insurance 15 ment on the members of the Fund 16 centum of the total insured 17 January 18 ized to collect until 19 been fully 20 after the expiration of the Treasauthorized out of any money in the Treasury If to the Treasury Corporation any such advances are not made they shall be subsequently by the Federal Bank Deposit by means of a special annual assessof one fourth of 1 per deposits of such members on 1, 1934, which the Corporation is hereby author- such time as such advances shall have reimbursed, but no such assessment shall be made "(i) In 22 obligations 23 (h) 24 on July from deposit. "(h) 21 against of ten years after July the event that the Fund without 1, shall pay all of its recourse to the provisions of this section, any balance remaining 1, 1934, shall be transferred 1934. of subsection in the to the Federal Fund Bank 124 1 Deposit 2 insurance 3 Insurance Corporation and credited to its deposit account. " ( j ) The Fund shall be a body corporate with power 4 to adopt and use a corporate seal; to make contracts; to sue 5 and be sued, complain Q equity, State or Federal; to appoint by its board of directors, 7 which shall consist of the members of the Federal Reserve g Board, 9 to carry and defend in any court of law or such officers and employees as may be necessary out the powers granted to the Fund by this sec- 10 tion, to define their duties, fix their compensation, 11 bonds of them and fix the penalty 12 at pleasure 13 board of directors 14 lating the manner in which its general business may be con- 15 ducted and the privileges granted to it by law may be exer- 16 cised and enjoyed; and to exercise by its board of 17 or duly authorized 18 granted 19 be necessary to carry out the powers so granted. 20 her of the board of directors of the Fund 21 additional 22 "(k) thereof, and to dismiss such officers or employees; to prescribe bylaws, not inconsistent with officers or agents, all powers by this section and such incidental law, by its regu- directors, specifically powers as shall No mem- shall receive any compensation for his services as such member. There is hereby authorized 23 out of any money in the Treasury 24 priated, require the sum of $10,000,000, to be appropriated, not otherwise appro- which shall be made im- 125 1 mediately available 2 any of its expenses or obligations. 3 "(I) to the Fund for the purpose of All functions of the Fund shall cease on July 4 1934; 5 dividends 6 of this section. 7 after July 8 Insurance 9 account, unless there is a balance due the Treasury except that it may proceed to collect any The net proceeds of all 1,1934, for credit 11 tions shall first be paid into the Treasury 12 such of this section, in which Deposit insurance under event such collecto the extent of balance" SE<1. 9. (a) Federal 15 (g) collections to its deposit subsection (h) 14 such shall be paid to the Federal Bank Corporation 1, liquidating to which it may be entitled under subsection 10 13 paying of section 13 of the The eighth paragraph Reserve Act, as amended, is amended to read as follows: 16 "Any Federal reserve bank may make advances for 17 periods not exceeding fifteen days to its member banks on 18 their 19 of bonds, notes, certificates 20 bills of the United 21 debentures 22 mediate credit 23 Federal 24 any Federal 25 not exceeding ninety promissory or notes secured by the deposit of indebtedness, or or pledge Treasury States, or by the deposit or pledge of other such banks which obligations of are eligible reserve banks under section 13 (a) Federal for purchase of this Act; reserve bank may make advances for days to its member interby and periods banks on their 126 1 promissory notes secured by such notes, drafts, bills of ex- 2 change, or bankers' acceptances as are eligible for 3 or for purchase by Federal 4 sions of this Act. 5 to be established by such Federal (J the review and determination 7 If 8 made shall, during 9 and despite an official warning rediscount reserve banks under the provi- All such advances shall be made at rates reserve banks, subject to of the Federal Reserve Board. any member bank to which any such advance has been the life or continuance of such advance, of the reserve bank of the 10 district 11 increase its outstanding 12 form 13 or loans made to members of any organized stock exchange, 14 investment 15 tion, note, or bill, secured or unsecured, for the purpose of 16 purchasing 17 ment securities 18 such advance shall be deemed immediately due and 19 and such member bank shall be ineligible as a borrower 20 the reserve bank of the district 21 paragraph 22 shall determine: 23 clearance loans made solely for 24 the puchase or delivery or of the Federal Reserve Board to the contrary, loans secured by collateral of stocks, bonds, debentures, or other such obligations, house, or dealer in securities, upon any and/or carrying stocks, bonds, or other (except obligations of the United Provided, obliga- investStates) payable, under the provisions for such period as the Federal in the of this Reserve That no temporary the purpose of at Board carrying or facilitating of securities offered for public sub- 127 1 scription 2 paragraph (b) 3 shall be included in the loans referred The of paragraph section 13 of the 4 Reserve Act, as amended, beginning 5 the powers now vested in national 6 amended (effective six months hence) to read as "Any 7 national banking " That banking to in Federal in addition business in any place the population 9 five thousand inhabitants, to associations " is follows: association located and 8 this doing of which does not exceed as shown by the last preceding 10 decennial census, may, under such rules and regulations 11 may be prescribed by the Comptroller 12 as the broker or agent for others in making 13 loans on real estate located within 14 place in which such association is located, receiving for such 15 services a reasonable fee or commission; 16 ciation shall in any case guarantee either the principal 17 interest of any such 18 of the Currency, one hundred 19 amended, is amended by adding 20 following 21 "(g) procuring miles of the but no such assoor Reserve Act, at the end thereof as the paragraph: The Federal Reserve Board shall exercise special 22 supervision 23 kind 24 foreign bank or banker, or with any group of foreign 25 or bankers, and all such relationships act loan" SEC. 10. Section 14 of the Federal new or as over all relationships and transactions entered into by any Federal of any reserve bank with and transactions any banks shall 128 1 be subject to such regulations, 2 I/IE Board 3 tive of any Federal reserve bank shall conduct 4 of the officers or representatives 5 foreign 6 sion of the Federal 7 Board 8 in any conference or negotiations by such representative 9 representatives any may prescribe. kind with conditions, arid limitations No officer or other bank or banker without first obtaining Reserve Board. representanegotiations of any the permis- The Federal Reserve shall have the right, in its discretion, to be represented as the Board may designate. A full of all conferences or negotiations, and all understandings 11 agreements arrived 12 other 13 negotiations, 14 in writing 15 bank which shall have participated material at or transactions facts appertaining or report 10 16 as or agreed upon, and all to such conferences or shall be filed with the Federal Reserve by a duly authorized officer of each Federal Board reserve in such conferences or negotiations." 17 SEC. 11. (a) 18 Act, 19 paragraph 20 Section 19 of the Federal as amended, is amended by inserting thereof the following new after Reserve the sixth paragraph: " No member bank shall act as the medium or agent of 21 any nonbanking 22 ness trust, or individual 23 stocks, bonds, and other investment securities to brokers or 24 dealers 25 Every in corporation, partnership, busi- in making loans on the security of stocks, bonds, and violation association, of this provision other investment securities. by any member bank shall m 1 be punishable by a fine of not more than $100 per day dur- 2 ing the continuance of such violation; 3 collected, by suit or otherwise, by the Federal 4 of the district in which such member bank is located (b) 5 Such section 19 of the Federal 6 amended, is further 7 the following 8 9 and such fine may be new reserve bank Reserve Act, as amended by adding at the end thereof paragraphs: " No member bank shall, directly or indirectly by any device whatsoever, pay any interest on any deposit which is 10 payable on demand: Provided, 11 shall be construed as prohibiting 12 accordance with 13 other contract 14 is in force on the date of the enactment of this 15 but no such certificate 16 renewed or extended unless it shall be modified to conform 17 to this paragraph, 18 action as may be necessary to conform 19 as soon as possible consistently 20 tions: Provided, 21 apply to any deposit of such bank which is payable only at 22 an office thereof located in a foreign 23 24 H . heretofore 5661 in of deposit or entered into in good faith which paragraph; of deposit or other contract shall be and every member bank shall take such however, That to this paragraph with its contractual this paragraph Reserve Board by regulation R . the payment of interest the terms of any certificate " The Federal limit That nothing herein contained obligashall n6t country. shall from time to time the rate of interest which may be paid 9 130 1 by member banks on time deposits, and may prescribe 2 ent rates for 3 having different 4 respecting 5 shall pay any time deposit before its maturity, 6 requirement 7 except as to all saving deposits having the same requirement 8 9 (c) lish such payment maturities withdrawal or on time and savings or subject to different repayment. No differdeposits conditions member bank or waive any of notice before payment of any savings deposit Section 8 of the Act entitled postal savings depositories for "An Act depositing " to estab- savings at 10 interest with the security of the Government 11 thereof, and for other purposes", 12 as amended, is amended by striking 13 thereof and inserting 14 depositor may withdraw 15 deposited to his or her credit with the accrued interest 16 on notice given sixty days in advance and under such regu- 17 lations as the Postmaster General may prescribe; 18 drawal of any part of such funds may be made upon demand, 19 but no interest shall be paid on any funds so 20 Provided, 21 funds 22 prescribed by the Postmaster 23 That approved June 25, the following new "Any the whole or any part of the funds Savings depositories but only with- withdrawn: may regulations deposit to be General" SEC. 12. Section 22 of the Federal 25 1910, out the first sentence in member banks on time under amended, is further repayment in lieu thereof the following: Postal 24 for Reserve Act, as amended by adding at the end thereof paragraph: 131 1 u 2 borrow 3 bank of which 4 bank shall make any loan or extend credit in any other man- 5 ner to any of its own executive officers. 6 officer of any member bank borrow from or if he be or become 7 indebted to any bank other than a member bank of which 8 he is an executive officer, he shall make a written 9 the chairman (y) No executive officer of any member bank shall from or otherwise become indebted to any member he is an executive officer, and no member If any executive report to of the board of directors of the member bank 10 of which he is an executive officer, stating the date and amount 11 of such loan or indebtedness, the security 12 purpose for which the proceeds have been or are to be used. 13 Any executive officer of any member bank violating 14 visions of this paragraph 15 meanor and shall be imprisoned 16 fined not more than $5,000, 17 violating 18 more than $10,000, 19 to the amount so loaned or credit so extended." 20 the provisions shall be deemed guilty amended by inserting 22 the following 23 "SEC. 23A. the pro- of a misde- or both; and any member bank shall be fined not and may be fined a further 21 and the not exceeding one year, or of this paragraph SEC. 13. The Federal new therefor, Eeserve Act, sum equal as amended, is between sections 23 and 24 thereof section: No member bank shall (1) make any loan 24 or any extension of credit to, or purchase securities under 25 repurchase agreement from, any of its affiliates, or (2) invest 132 1 any of its funds in the capital 2 other such obligations of any such affiliate, or (3) 3 capital stock, bonds, debentures, or other such obligations of 4 any such affiliate 5 to any person, partnership, 6 the case of any such affiliate, the aggregate amount of such 7 loans, extensions of credit, 8 ments, and advances against 9 exceed 10 per centum of the capital as collateral stock, bonds, debentures, or security for accept the advances made association, or corporation, repurchase agreements, such collateral stock and surplus such member bank, or if, in the case of all such 11 the aggregate amount 12 repurchase 13 such collateral 14 capital stock and surplus of such member bank. 15 " Within will the foregoing will of affiliates, of such loans, extensions of security in invest- security 10 agreements, investments, if, credits, and advances against exceed 20 per centum of the limitations, each loan or exten- 16 sion of credit of any kind or character to an affiliate shall be 17 secured by collateral in the form, of stocks, bonds, debentures, 18 or other such obligations 19 of making the loan or extension of credit of at least 20 per 20 centum more than the amount of the loan or extension of 21 credit, or of at least 10 per centum more than the amount of 22 the loan or extension of credit if it is secured by 23 of any State, 24 thereof: Provided, 25 shall not apply having a market value at the time or of any political That subdivision the provisions of this obligations or agency paragraph to loans or extensions of credit secured by 133 1 obligations 2 intermediate 3 such notes, drafts, 4 as are eligible for 5 Reserve banks. 6 officer, clerk, 7 any such affiliate shall be deemed a loan to the affiliate to 8 the extent that the proceeds of such loan are used for the 9 benefit of, or transferred 10 of the United " For States Government, credit banks, or the Federal the Federal land banks, or by bills of exchange, or bankers} acceptances rediscount or for purchase by Federal A loan or extension of credit to a director or other employee or any representative of to, the affiliate. the purposes of this section the term ' affiliate9 11 shall 12 affiliates, and the provisions 13 to 14 premises of the member bank with 15 (2) 16 the business of an agricultural 17 loan company, 18 banking 19 section 25 20 or organized 21 Reserve Act, as amended; but as to any such affiliate, mem- 22 ber banks shall continue to be subject to other provisions 23 law applicable 24 such banks in 25 include any holding affiliate (1) company affiliates (4) association obligations of engaged solely in holding which it is affiliated, a safe-deposit business or credit corporation is authorized the Federal apply the bank or livestock in the capital stock of which a under as other of this section shall not engaged solely in conducting (3) as well to invest Reserve section 25 Act, (a) national pursuant as to amended, of the Federal of to loans by such banks and investments by stocks, bonds, debentures, or other such 134 1 SEC. 14. The Federal 2 amended by inserting 3 thereof the following " SEC. 24A. 4 Reserve Act, as amended, between section 24 and section 25 new section: Hereafter no national bank, without 5 approval of the Comptroller 6 member bank, without 7 Board, 8 bonds, debentures, or other such obligations of any 9 tion holding shall (1) is of the Currency, the approval the and no State of the Federal Reserve invest in bank premises, or in the stock, corpora- the premises of such bank or (2) make loans 10 to or upon the security of the stock of any such corporation, 11 if the aggregate of all such investments and loans will exceed 12 the amount of the capital stock of such bank." 13 SEC. 15. The Federal 14 further 15 the following 16 U Reserve Act, amended by inserting as amended, is after section 25 (a) thereof new section: SEC. 25. (b) Notwithstanding any other provision 17 of law all suits of a civil nature at common law or in equity 18 to which any corporation 19 United 20 involving 21 a dependency or insular 22 or out of other international 23 either directly 24 of branches or local institutions 25 possessions of the United organized States shall be a party, international under the laws of the arising out of or foreign banking, transactions or banking possession of the United or foreign financial or through the agency, ownership, in States, operations, or control in dependencies or insular States or in foreign countries, 135 1 shall be deemed to arise under 2 and the district courts 3 original jurisdiction 4 any 5 remove such suits from 6 of the United 7 procedure 8 law. such suit the United may, at any time before a State court States for the proper for States States, shall have of all such suits; and any defendant the removal " Notwithstanding 9 of the laws of the United the trial thereof, into the district district any other provision court by following of causes otherwise in the provided by of law, all suits 10 of a civil 11 Federal 12 arise 13 courts 14 of all such suits; and any Federal 15 defendant 16 thereof, remove such suit from a State court into the district 17 court of the United 18 the procedure 19 by law. 20 any Federal 21 ment in any suit, action, or proceeding 22 municipal, nature Reserve under bank shall be deemed to be a party the laws of the United States shall shall States, and the have original Reserve any district jurisdiction bank which is a in any such suit may, at any time before the trial No 24 the Revised 25 follows: to which of the United SEC. 23 at common law or in equity for States for the proper the removal attachment Reserve or United 16. by following of causes otherwise provided or execution shall be issued bank or its property States Paragraph Statutes, district before against final in any State, judg- county, court.'' " Seventh " as amended, of section is amended 5136 of to read as 136 1 " Seventh. To exercise by its board of directors or authorized officers or agents, subject to law, all such 2 duly 3 incidental 4 ness of banking; 5 notes, drafts, 6 by receiving deposits; by buying and selling exchange, coin, 7 and bullion; 8 by obtaining, issuing, 9 the provisions of this title; and generally powers as shall be necessary to carry by discounting on the busi- and negotiating promissory bills of exchange, and other evidences of debt; by loaning money on personal and circulating security; notes according and to by engaging in all 10 forms 11 banking 12 in which such bank is situated, 13 deposit and discount organized 14 laws of such State, except in so far 15 bidden by the provisions 16 ness of dealing in investment securities by the association shall 17 be limited 18 recourse, solely upon 19 customers, and in no case for its own account, and the asso- 20 ciation 21 vided, That the association may purchase for its own account 22 investment securities under such limitations 23 as the Comptroller 24 scribe, but in no event (1) 25 issue of investment securities of any one obligor of banking business and undertaking transactions that may, to purchasing all types of by the laws of the State be permitted to banks of and incorporated under the as they may be for- of any Act of Congress. The busi- and selling such securities the order, shall not underwrite and for the account any issue of securities: of the Currency without and of, Pro- restrictions may by regulation pre- shall the total amount of any or maker 137 1 purchased after this section as amended takes effect and held 2 by the association for its own account exceed at any time 10 3 per centum of the total amount of such issue outstanding, 4 this limitation 5 amount 6 exceed 50 per centum of the capital 7 (2) 8 any one obligor 9 amended takes effect and held by the association for its own 10 account exceed at any time 15 per centum of the amount of 11 the capital stock of the association actually 12 impaired 13 As 14 shall mean marketable 15 of any person, copartnership, 16 the form 17 known as investment securities under such further 18 of the term 19 be prescribed by the Comptroller 20 as hereinafter 21 ing herein contained shall authorize the purchase by the asso- 22 ciation of any shares of stock of any corporation. 23 tations herein contained as to investment securities shall not 24 apply 25 any State or of any political shall not apply to any such issue the total of which does not exceed $100,000 and does not of the association, shall the total amount of the investment or maker purchased after this section the term of obligations paid in and surplus ' investment fund. securities' indebtedness debentures as may by in commonly definition regulation of the Currency. provided or otherwise permitted of the United Except by law, noth- The limi- States, or obligations subdivision of un- association, or corporation investment securities9 to obligations securities evidencing bonds, notes and/or i nor this section as and 25 per centum of its unimpaired used in but thereof, or of obliga- 138 1 tions issued under authority 2 as amended: 3 commonly 4 tion shall not invest in the capital g organized the law of any State to conduct a safe- g deposit business in an amount in excess of 15 per centum 7 of the capital g unimpaired 9 Provided, known under of the Federal Farm That in carrying as the safe-deposit Loan on the business business the associa- stock of a stock of the association actually corporation paid in and and 15 per centum of its unimpaired The restrictions Act, surplus of this section as to dealing in invest- 10 ment securities shall take effect one year after the date of 11 the approval 12 13 of this Act. SEC. 17. (a) Section 5138 of the Revised Statutes, as amended, is amended to read as follows: 14 " SEC. 5138. After this section as amended takes effect, 15 no national 10 capital than $100,000, 17 capital of not less than $50,000 18 place the population 19 inhabitants. 20 wty the population 21 with a capital of less than $200,000, 22 tying 23 organization 24 less, national banking association shall be organized with a less except that such associations with a may be organized of which does not exceed six in thousand No such association shall be organized of which exceeds fifty any in a thousand persons except that in the out- districts of such a city where the State laws permit the of State banks with a capital banking of $100,000 associations now organized or or here- 139 1 after organized may, with the approval 2 the Currency, 3 (b) 4 Reserve Act, 5 of the Comptroller have a capital of not less than The tenth paragraph $100,000 of section 9 of the Federal as amended, is amended to read as follows: " No applying bank shall be admitted to membership Q in a Federal reserve bank unless it possesses a paid-up 7 paired g banking association in the place where it is situated 9 the provisions capital sufficient to entitle it to become a of the National unim- national under Bank Act, as amended: 10 vided, That this paragraph 11 and trust companies organized prior 12 graph 13 less than 14 of shall not apply Pro- to State banks to the date this as amended takes effect and having a capital paraof not $25,000." SEC. 18. Section 5139 of the Revised Statutes, as 15 amended, is amended by adding at the end thereof the fol- 16 lowing new 17 "After paragraph: one year from the date of the enactment 18 the Banking 19 stock of any such association shall represent 20 an 21 tion existing on the date this paragraph 22 solely in holding the bank premises of such association, 23 shall the ownership, sale, or transfer of any certificate 24 senting the stock of any such association be conditioned y Act of 1933, other corporation, no certificate representing of the the stock of except a member bank or a corpora- takes effect engaged nor reprein 140 1 any manner whatsoever upon the ownership, sale, or transfer 2 o/ a certificate representing the stock of any other 3 tion, except a member bank " 4 SEC. 19. Section 5 5144 corpora- of the Revised Statutes, as amended, is amended to read as follows: 6 " 5144. In all elections of directors, each share- 7 holder shall have the right to vote the number of shares owned 8 by him for as many persons as there are directors to be elected, 9 or to cumulate such shares and give one candidate as many 10 votes as the number of directors multiplied 11 his shares shall equal, or to distribute them on the same prin- 12 ciple among as many candidates as he shall think fit; 13 in deciding 14 each shareholder shall be entitled to one vote on each share 15 of stock held by him; except (1) 16 held by a national bank as sole trustee shall not be voted, and 17 shares of its own stock held by a national 18 or more persons as trustees may be voted by such other 19 person or persons, as trustees, in the same manner as if he 20 or they were the sole trustee, and 21 by any holding 22 not be voted unless such holding company 23 have first obtained a voting permit as hereinafter 24 which permit is in force at the time such shares are voted. 25 Shareholders may by the number of all other questions at meetings of shareholders, that shares of its own stock (2) bank and one shares company affiliate of a national vote by and proxies duly controlled bank shall affiliate shall provided, authorized in 141 1 writing; but no officer, clerk, ieZZer, or bookkeeper of such 2 ftanife s/iaZZ ac£ as proxy; 3 and no shareholder whose liability is past due and unpaid shall be allowed to vote. 4 " For the purposes of this section shares 5 deemed to be controlled Q they are owned or controlled directly 7 holding 8 benefit of the shareholders or members thereof. 9 company "Any by a holding affiliate, company shall affiliate or indirectly or held by any be if by such trustee for such holding company affiliate may make the appli- 10 cation to the Federal 11 entitling 12 in deciding all questions at meetings of shareholders of such 13 bank on each share of stock controlled 14 ing the trustee or trustees holding 15 or for 16 The Federal Reserve Board may, in its discretion, 17 withhold 18 In 19 the financial 20 of its management, and the probable effect of the 21 of such permit 22 permit shall be granted except upon the following 23 Reserve Board a voting permit it to cast one vote at all elections of directors by it or the stock for and authorizits benefit the benefit of its shareholders so to vote the same. such permit as the public acting upon such application, "(a) upon the affairs Every such holding making 25 receive, on dates identical the application for interest the Board condition of the applicant, 24 for grant or may require. shall consider the general character granting of such bank, but no such company such permit, affiliate agree with those fixed for the conditions: shall, in (1) to examina- 142 1 tion 2 authorized 8 examinations 4 necessary to disclose fully 5 and such holding 6 relations 7 to be at the expense of the holding 8 examined; 9 contain of banks with which it is affiliated, to examine such banks, who shall of such holding company company affiliate upon the affairs (2) such information 11 and the effect of such relations 12 banks; 13 owned or controlled (3) 14 individually and the effect of such upon that such examiners by the holding and in conjunction the affairs company shall of such affiliate, both with other banks owned or 16 publication 17 dition of such banks may be required; After so and such banks by such holding company affiliate; " (b) affiliate may examine each bank controlled Banking company between such affiliate of individual examinations of such examiners 15 19 between such banks as shall be necessary to disclose fully the relations as shall be of such banks, such that the reports duly make such affiliate the relations 10 18 examiners and (4) that or consolidated statements of con- five years after the enactment Act of 1933, every such holding company of the affiliate 20 (1) 21 the life of such permit, 22 or hypothecation 23 other than bank stock in an amount not less than 12 per 24 centum of the aggregate par value of all bank stocks con- 2 5 trolled shall possess, and shall continue free and clear of any lien, of any nature, by such holding to possess company readily during pledge, marketable assets affiliate, which amount 143 1 shall be increased by not less than 2 per centum per annum of 2 such aggregate par value until such assets shall amount to 25 3 per centum of the aggregate par value of such bank stocks; 4 and (2) shalVreinvest in readily marketable assets other than 5 bank stock all net earnings over and above 6 per 6 per annum on the book value of its own shares 7 until such assets shall amount to such 25 per centum of the 8 aggregate par 9 "(c) 10 section, after 11 ing Act of 1933, 12 the 13 vidually 14 of shares of such holding 15 respectively, 16 all 17 affiliate by reason of its control of shares of stock of banks, 18 shall be required 19 earnings over and above 6 per centum per annum on the 20 book value of its own shares outstanding readily 21 marketable assets in an amount of not less than 12 per centum 22 of the aggregate par value of bank stocks controlled 23 and (2) 24 by such holding 25 replacement value of all Notwithstanding shareholders or statutory the foregoing in of which company of the shall to amounts company indi- number held by them invested only to establish and maintain of capital be therein, imposed on such holding the assets required Bankaffiliate to the affiliate it; of this company liable in proportion addition liability the enactment members by provisions any such holding and severally outstanding bank stocks controlled five years after (1) centum for company out of net a reserve of by it, by this section to be possessed affiliate may be used by it in banks affiliated with it and for for 144 1 losses incurred in such banks, but any deficiency in such 2 assets resulting from such use shall be made up within 3 period 4 as the Federal Reserve Board may by such regulation prescribe; 5 "(d) Every officer, director, agent, and employee of 6 every such holding company affiliate shall be subject to the 7 same penalties for false entries in any book, report, or state- 8 mewf o/ s^c/fc holding company affiliate as are applicable 9 officers, directors, 10 11 under to agents, and employees of member banks section 5209 of the Revised Statutes, as amended; and 12 Every such holding company affiliate shall, in its 13 application 14 oum, control, or have any interest in, and is not 15 iw the management or direction of, any corporation, 16 imsi, association, or other similar 17 the purpose of, or engaged principally 18 tion, underwriting, 19 or retail or through syndicate participation, 20 debentures, notes, or other securities of any sort 21 after referred 22 during 23 not acquire any ownership, control, or interest in any such 24 securities company 25 direction thereof; for such voting permit, organization company9); that the permit or participate (3) participating business formed at wholesale of stocks, bonds, (2) (herein- agree that remains in force it in agree that if, for in, the issue, flota- public sale, or distribution, to as 'securities the period (1) show that it does not the management at the time of will or filing 145 1 the application 2 interest in, or is participating for such permit, it owns, controls, or has a,n in the management or direc- 3 tion of, any such securities company, 4 years after the filing 5 ownership, 6 and will 7 thereof, and will 8 permit 9 control, or interest in any such securities company or par- control, of such application, not thereafter, in force, acquire ticipate 11 agree that thenceforth it will 12 actual net earnings. "If 15 of the provisions 17 18 19 any further thereof; declare dividends direction that the ownership, and Reserve that any holding company affiliate has violated of the Banking agreement made pursuant serve Board permit after giving its intention Act of 1933 it an opportunity 21 serve Board 22 national Re- revoke any such voting sixty days' notice by registered mail of to the holding company affiliate 20 any or of any to this section, the Federal may, in its discretion, (4) only out of at any time it shall appear to the Federal Board company the period in the management or direction 14 16 during five divest itself of its in the management or 10 13 within and interest in such securities cease participating remains it will, to be heard. and affording Whenever the Federal shall have revoked any such voting permit, bank whose stock is controlled Reno by the holding com- 23 pany affiliate whose permit is so revoked shall receive depos- 24 its of public moneys of the United States, nor shall any such H . R . 5661 10 146 1 national 2 pany affiliate upon any shares of such bank controlled 3 such holding company 4 bank pay any further dividend to such holding com- affiliate. " Whenever the Federal Reserve Board shall have re- 5 voked Q rights, privileges, and franchises of any or all national 7 the stock of which is controlled 8 affiliate shall, in the discretion of the Federal Reserve 9 be subject to forfeiture 10 any voting by permit as hereinbefore provided, by such holding the banks company Board, in accordance with section 2 of the Federal Reserve Act, as amended 11 SEC. 20. After one year from the date of the enact- 12 ment of this Act, no member bank shall be affiliated in any 13 manner described in section 2 (b) 14 ration, 15 tion engaged principally 16 public sale, or distribution 17 syndicate 18 or other securities. 19 hereof with any association, business trust, or other similar For participation every violation in the issue, flotation, organizaunderwriting, at wholesale or retail or through of stocks, bonds, debentures, notes, of this section the member bank 20 involved shall be subject to a penalty not exceeding 21 per day for each day during 22 Such penalty may be assessed by the Federal Reserve 23 in its discretion, 24 the Federal reserve bank by suit or otherwise. corpo- which such violation $1,000 continues. Board, and, when so assessed, may be collected by 147 1 If 2 months after 3 the Federal 4 the case of a national 5 franchises granted to it under the National Q be forfeited in the manner prescribed in section 2 of the Fed- 7 eral Reserve Act, as amended, or, (b) in the case of a State 8 member bank, all of its rights and privileges 9 in any such violation shall continue for six the member bank shall have been warned Reserve Board the Federal to discontinue the same, (a) bank, all the rights, privileges, Reserve System may 11 as amended. 13 (a) After the expiration (1) For any person, firm, and in the Reserve of one year the date of enactment of this Act it shall be 14 in of membership be forfeited manner prescribed in section 9 of the Federal SEC. 21. by Bank Act may 10 12 calendar Act, after unlawful— corporation, association, 15 business trust, or other similar 16 business of issuing, underwriting, 17 wholesale or retail, or through syndicate participation, 18 bonds, debentures, notes, or other securities, to engage at the 19 same time to any extent whatever in the business of receiv- 20 ing deposits subject to check or to repayment 21 tion of a passbook, certificate 22 of debt, or upon request of the depositor; 23 (2) For any person, organization, firm, business trust, or other similar 25 banking institution selling, or distributing, at stocks, upon presenta- of deposit, or other evidence 24 or private engaged in the or corporation, organization, banker subject to association, other than a examination 148 1 and regulation under State or Federal law, to engage to 2 any extent whatever g subject to check or to repayment ^ passbook, certificate g or upon request of the depositor, unless such person, g corporation, association, 7 organization shall g Comptroller Q of the district in the business of receiving upon presentation business trust, submit to periodic or exhibiting firm, other similar examination by the or by the Federal Reserve bank and shall make and publish periodic 10 of its condition, 11 ties, such examination 12 at the same times and in the same manner 13 effect and penalties as are now provided 14 of national 15 same locality. 16 (b) Whoever of a of deposit, or other evidence of debt, of the Currency banking deposits reports in detail its resources and liabili- and reports to be made and published violate like by law in respect associations transacting shall willfully and with business in the any of the pro- 17 visions of this section shall upon conviction be fined not more 18 than $5,000 or imprisoned not more than five years, or both, 19 and any officer, director, 20 firm, corporation, 21 organization 22 lation shall be punished by a like fine or imprisonment 23 both. 24 25 employee, or agent of any person, association, business trust, or other who knowingly SEC. 22. Paragraph participates (c) in any such vio- of section 5155 or of the Re- vised Statutes, as amended, is amended to read as similar follows: 149 1 "(c) A national banking association may with the 2 approval 3 operate neiv branches within 4 or village, 5 association is situated, if such establishment and 6 are at the time expressly authorized 7 law of the State in question and subject to the restrictions as 8 to location imposed by the law of the State on State banks. 9 No such association shall establish a branch outside of the 10 city, town, or village in which it is situated unless it has a 11 paid-in 12 $500,000: 13 less than one million, and which have no cities located therein 14 with exceeding one hundred 15 capital shall be not less than $250,000: 16 States ivith a population 17 which ham no cities located therein with a population exceed- 18 ing 19 or at any point and unimpaired Provided, a population fifty thousand, of the 'Currency the limits within capital establish and of the city, town, the State in whieh said operation to State banks by the stock of That in States with not less than a population thousand, Provided, That of less than one-half million, the capital shall not of the in and, be less than $100,ooor 20 21 of the (Urmptroller Paragraph (d) of section 5155 of the Revised Statutes, as amended, is amended to read as follows: 22 "(d) The aggregate capital of every national banking 23 association and its branches shall at no time be less than the 24 aggregate minimum 25 Ushment of an equal number of national banking associations capital required by law for the estah- 150 1 situated in the various 2 its branches are situated 3 SEC. 23. (a) places where such association Sections 1 and 3 of the Act 4 "An Act to provide for the consolidation 5 associations Q amended by striking 7 village" wherever 8 inserting in lieu 9 iotro, or village " 10 entitled of national banking approved November 7, 1918, as amended, are out the words " county, city, town, or they occur thereof in each such section, the words " State, amended, is further 12 sentence thereof and inserting 13 " The capital 14 not be less than that required 15 organization 16 in 17 such a consolidation, 18 national 19 the corporate 20 national 21 dation shall be merged into and continued 22 dated national 23 association shall be deemed to be the same corporation 24 each of the constituent 25 chises, and interests of each of such constituent of a national banking such consolidated banking under following: association existing law for shall the association in the place association is located. or upon a consolidation associations under as out the second in lieu thereof the stock of such consolidated city, 7, 1918, 11 amended by striking and county, Section 3 of such Act of November which and Upon of two or more section 1 of this Act, existence of each of the constituent banks and banking associations participating banking association institutions. and All in such consoliin the consolithe consolidated the rights, as fran- banks and 151 1 national hanking associations 2 property, 3 thereto belonging, s/iaZZ 4 vested in 5 without any deed or other transfer; 6 national 7 and without 8 court or otherwise, shall hold and enjoy the same and 9 rights of property, real, personal, in and to every species of and mixed, and choses in action deemed to be transferred such consolidated national to and banking association and such consolidated banking association, by virtue of such consolidation any order or other action on the part franchises, of any and interests, including all ap- 10 pointments, designations, and 11 rights interests trustee, 12 registrar 13 receiver, committee of estates of lunatics and in every other 14 fiduciary 15 as such rights, 16 joyed by any such constituent institution 17 consolidation: 18 constituent institution 19 acting under appointment 20 administrator, 21 estates, assignee, receiver, 22 or in any other fiduciary 23 banking 24 of competent jurisdiction 25 same extent as was such constituent and as nominations and executor, of stocks and bonds, guardian all other administrator, of estates, assignee, capacity, in the same manner and to the same extent franchises, Provided, and interests were held or en- any such at the time of such consolidation was registrar however, at the time of such That where of any court as trustee, executor, of stocks and bonds, guardian committee of estates of capacity, the consolidated association shall be subject to removal in the same manner corporation of lunatics national by a court and to the prior to 152 1 the consolidation, and nothing herein contained shall he con- 2 sJrwed! to impair in any manner 3 remove such a consolidated national 4 to appoint 5 of/ier fiduciary, 6 m s^c/i, a manner 7 ing associations, nor shall any such consolidated, 8 9 banking of any court banking in lieu thereof a substitute association to and trustee, executor, or e^ce^J that such right shall not be exercised as to discriminate removed solely because of the fact 10 11 the right against national bank- association that it is a national association SEC. 24. The first two sentences of section 5197 of the Revised Statutes are amended to read as follows: 12 "Any association may take, receive, reserve, and charge 13 on any loan or discount 14 exchange, or other 15 allowed by the laws of the State, Territory, 16 the bank is located, or at a rate of 1 per centum in excess 17 of the discount rate on ninety-day 18 at the Federal 19 ivhere the bank is located, whichever 20 and no more, except that where by the laws of any State 21 a different State 22 laws, 23 organized 24 When no rate is fixed by the laws of the State, or 25 or pistrict, made, or upon any notes, bills of evidences of debt, interest rate is limited the rate so limited or existing in for shall any or District commercial Reserve bank in the Federal may such State rate where paper in effect Reserve district be the greater, banks organized be allowed at the under for under associations this title. Territory, the hank may take, receive, reserve, or charge a 153 1 rate not exceeding 7 per centum, or 1 per centum in excess 2 of the discount 3 effect at the Federal 4 district may be the 5 greater, and such interest may be taken in advance, reckon- 6 ing the days for which the note, bill, 7 debt has to run " 8 9 rate on ninety-day commercial paper Eeserve bank in the Federal where the bank is located, whichever in Eeserve or other evidence of SEC. 25. (A) The second sentence of the first para- graph of section 5200 of the Eevised Statutes, as amended, 10 is amended by inserting 11 the following: 12 of a corporation 13 which 14 before the period at the end thereof " and shall include in the case of such all obligations of all subsidiaries corporation owns or controls obligations thereof a in majority interest" 15 (b) The amendment made by this section shall 16 apply 17 ciation on the date this section takes effect. 18 to such obligations of subsidiaries SEC. 26. Section 5211 not held by such asso- of the Eevised Statutes, as 19 amended, is amended by adding at the end thereof the fob 20 lowing new 21 paragraph: " Each national banking association shall obtain 22 each of its affiliates other than member banks and 23 to the Comptroller 24 reports during 25 ^iay prescribe, of the Currency each year, in such form verified not less than as the from furnish three Comptroller by the oath or affirmation of the 154 1 president 2 board of directors 3 disclosing 4 dates identical 5 during 6 association. 7 1 or such other officer as may be designated by the of such affiliate the information to verify provided reports, for as of the Comptroller shall such year require the reports of the condition of the affiliate' hereinafter such with those for which For the purpose shall include of holding this section the company affiliates term as well 8 as other affiliates. 9 be transmitted to the Comptroller 10 corresponding report 11 Comptroller 12 good cause shown. 13 information 14 Currency 15 between such affiliate and such bank 16 Comptroller himself as to the effect of such rela- 17 tions upon the affairs 18 affiliates shall be published by the association under the same 19 conditions 20 troller 21 with respect to any such affiliate whenever in his 22 the same are necessary in order to obtain a full 23 plete knowledge 24 which 25 transmitted Each such report of of an affiliate at the same time as the the association, may, in his discretion, Each except that the extend such time for such report as in the judgment shall contain of the Comptroller shall be necessary to disclose fully to inform of such bank. as govern its own condition and of the conditions is affiliated. Such to the Comptroller such of the the relations to enable the The reports reports. of such The shall also have power to call for additional it shall Compreports judgment and com- of the association additional reports of the Currency shall with be in such form 155 1 as he may prescribe. Any such affiliated 2 to obtain and furnish any report required 8 shall be subject to a penalty of $100 for 4 which such failure SEC. 27. 5 bank which fails under this section each day during continues." (a) The first paragraph of section 5240 of 6 the Revised Statutes, as amended, is amended by inserting 7 before the period at the end thereof a colon and the following 8 proviso: 9 any national "Provided, That in making the examination of bank the examiners shall include such an exam- 10 ination 11 banks as shall be necessary to disclose fully 12 tween such bank and such affiliates and the effect of such 13 relations upon the affairs of such bank; and in the event of 14 the refusal 15 of the examination of the affairs of all its affiliates other than member to give any information required refusal to permit such examination, 17 and franchises 18 accordance with section 2 of the Federal amended. The all the rights, Comptroller 21 of his examination 22 affiliate 23 days after notification 24 of the Comptroller, 25 plied with the same to his satisfaction. and he is hereby authorized, of any national shall not within in Reserve Act, of the Currency power, privileges, of the bank shall be subject to forfeiture 20 which in the course of any such affiliate, or in the event of the 16 19 the relations be- to publish banking of the recommendations have the report and or twenty or suggestions based on said examination, Ninety shall association one hundred as have comdays' notice 156 1 prior 2 to such publicity shall be given to the bank or affiliate." 3 (b) Section 5240 of the Revised Statutes, as amended, 4 is further 5 thereof the following 6 amended by adding new after the first paragraph paragraph: " T h e examiner making the examination 7 of a national 8 examination 9 so he shall have power to administer bank shall have power of all the affairs of any to make a of the affiliate, affiliate thorough and in doing oaths and to examine 10 any of the officers, directors, employees, and agents thereof 11 under 12 Comptroller 13 of such affiliates may be assessed by the Comptroller 14 Currency 15 or resources held by the affiliates upon the dates of examina- 16 tion 17 refuse to pay such expenses or shall fail 18 sixty 19 expenses may be assessed against the affiliated national bank 20 and, when so assessed, shall be paid by such national bank: 21 Provided, 22 more national 23 and collected from, any or all of such national 24 proportions 25 prescribe. oath and to make a report of the Currency. of his findings The expense of examinations upon the affiliates examined in proportion of the various days after affiliates. any of the to assets such affiliate shall to do so within the date of such assessment, then such however, That, if the affiliation is with two or banks, such expenses may be assessed against> as the If If to the Comptroller of the any affiliate of a national banks in such Currency may bank shall refuse 157 1 to permit an examiner to make an examination 2 or shall refuse to give any information required 3 of any such examination, bank with which it is 4 affiliated shall be subject to a penalty of not more than 5 for each day that any such refusal shall continue. 6 alty may be assessed by the Comptroller 7 collected in the same manner as expenses of 8 9 the national of the affiliate in the course Such pen- of the Currency of the Currency, and examinations SEC. 28. In any case in which, in the opinion Comptroller $100 it would be to the of the advantage 10 of the depositors and unsecured creditors 11 banking association whose business has been closed, for such 12 association 13 association, for a reasonable period to be prescribed by the 14 Comptroller, Comp- 15 troiler is authorized, in his discretion, 16 tion to resume business if depositors and unsecured 17 of the association representing at least 85 per centum of its 18 total deposit and unsecured credit liabilities 19 to such retention of deposits. 20 be construed to affect in any manner 21 Comptroller 22 of enactment of this Act with respect to the 23 of national 24 25 to resume business upon the retention of all or any part of its deposits, the Nothing to permit national by the the associa- consent in creditors writing in this section shall any powers of the under the provisions of law in force on the date banking reorganization associations. SEC. 29. Whenever, troller of any of the Currency, in the opinion of the any director or officer of a Compnational 158 1 bank, or of a bank or trust company doing business in the 2 District 3 4 5 6 7 8 9 of Columbia, or whenever, in the opinion of a Fed- eral Reserve agent, any director or officer of a State member bank in his district relating shall have continued to violate any law to such bank or trust company or shall have con- tinued unsafe or unsound practices in conducting the business of such bank or trust company, after having by the Comptroller of the Currency been warned or the Federal agent, as the case may be, to discontinue such 10 of law or such unsafe or unsound practices, the 11 of the Currency 12 may be, may certify the facts to the Federal 13 14 15 16 17 18 19 In or the Federal any such case the Federal removed from office. each director after Comptroller Reserve Reserve Board Board. may cause or officer to appear to show cause why he should not be A copy of such order shall be sent to of the bank affected, by registered mail. granting opportunity violations Reserve agent, as the case notice to be served upon such director before such Board Reserve the accused director to be heard, the Federal If or officer a reasonable Reserve Board 20 that he has continued to violate 21 bank or trust company or has continued unsafe or unsound 22 practices in conducting company after 23 24 2 5 any law relating finds the business of such bank or having been warned by the Comptroller the Currency or the Federal such violation of law or such unsafe or unsound to such Reserve agent to trust of discontinue practices, 159 1 the Federal Reserve Board, in its discretion, 2 such director 3 such order 4 A copy of such order shall also be served upon the bank of 5 which he is a director or officer, whereupon such director Q officer shall cease to be a director 7 Provided, g which it is based shall not be made public or disclosed to 9 anyone except the director or officer involved and the direc- or officer be removed from shall That may order office. A copy of be served upon such director or officer. or officer of such such order and the findings tors of the bank involved, 11 proceedings for a violation of this section. 12 or officer removed from office as herein provided in after participates upon otherwise than in connection Any such or bank: of fact 10 with director who there- in any manner in the management of such bank shall be fined not more than $5,000, or imprisoned 15 not more than five years, or both, in the discretion lg court. 17 that SEC. 30. After for of the one year from the date of enactment of 18 this Act, 19 board of directors, 20 erning 21 every State bank or trust company which is a member of the 22 Federal 23 nor 24 trustee, or other member of the governing 25 banking notwithstanding any other provision of law, board of trustees, or other similar body of every national banking association than twenty-five members; and association, State bank, or trust every body of a company, gov- and of Reserve System shall consist of not less than more the five director, national which 160 1 has a paid-in 2 shall be the bona fide owner in his own right 3 stock of such banking association, State bank or trust com- 4 pany having a par value in the aggregate of not less than 5 $2,000. 6 provisions 7 thirty 8 the said Comptroller 9 therefor, If and unimpaired any national capital banking in excess of $50,000 of shares of association violates the of this section and continues such violation days' notice from the Comptroller of the after Currency, may appoint a receiver or conservator in accordance with the provisions of existing laic. 10 If any State bank or trust company which is a member of 11 the Federal 12 section and continues such violation 13 from the Federal 14 forfeiture 15 in accordance with the provisions of section 9 of the Federal 16 Reserve Act, as amended. 17 SEC. 31. From Reserve System violates the provisions Reserve Board, after thirty and after January days' notice Reserve System 1, 1934, no officer 18 or director of any member bank shall be an officer, 19 or manager of any corporation, 20 rated association engaged primarily 21 chasing, selling, 22 bank shall perform 23 on behalf of any such individual, 24 or unincorporated 25 nership, the functions partnership, or director, unincorpo- in the business of securities, of a correspondent partnership, or unincorporated pur- and no member bank corporation, association; and no such individual, corporation, thu it shall be subject to the of its membership in the Federal or negotiating of association partshall 161 1 perform 2 bank or hold on deposit any funds on behalf of any member 3 bank, unless in any such case there is a permit 4 issued by the Federal 5 authorized Q incompatible 7 such permit whenever it finds after 8 opportunity to be heard, 9 such revocation. 10 the functions of a correspondent Reserve Board; to issue such permit with the public SEC. 32. The Act for if in its judgment interest, "An reasonable notice and Act 12 and for other purposes ", approved 13 amended, is hereby amended by adding 14 thereof the following unlawful it is not any that the public entitled is and to revoke existing 15 therefor and the Board 11 laws against any member restraints interest to requires supplement and monopolies> October 15, 1914, after as section 8 new section: " SEC. 8A. That from and after the 1st day of Janu- 1934, bank, 16 ary 17 banking association, or trust company, organized or ic ing under the laws of the United States shall be at the same 19 time a director, 20 member of a partnership 21 soever which 22 collateral 23 corporation 24 25 no director, operat- officer, or employee of a corporation organized for any purpose shall make loans secured by stock or to any individual, association, other than its own SEC. 33. Nothing prohibit officer, or employee of any in or a whatbond partnership, or be construed to subsidiaries." this Act shall a national banking association from holding stock in H. R. 5661 11 162 1 a corporation 2 of its assets pursuant to the direction of the Comptroller 3 organized by such association to liquidate a part of the Currency. 4 SEC. 34. The right to alter, is hereby reserved. 5 Act expressly 6 this Act, 7 cumstances, is held invalid, 8 application 9 stances, shall not be affected thereby. or the application amend, or repeal If provision of thereof to any person or cir- the remainder of such provision any this of the Act, and the to other persons or circum- Passed the House of Eepresentatives May 23, 1933. Attest: SOUTH TBIMBLE, Clerk. Passed the Senate amended May 15 (calendar day, May 25), 1933. Attest: E D W I N A. H A L S E Y , Secretary. H3 o S. P ^ § 3- ® 3 0 o O O O Ha Q ^ rf O fli * CD I H ^ HH » P Hs g 3 & sa 5 r| & ® * k, o « ^ bd * i I | 1 S O 3 5? r? rf CO H-C? Q & a I 00 3 H, H. IS £ i-b OQ (D S pt- P 4 IfW. - Mr^ ^ s& £^ gO ^^ Sg. Tr+ ® £ ? ° c * ftf t?1 CD C £ M M jXi t-lg-s C r * S : ! ; CJ1 •§ I I 8 §f>8» cn Cft gt p j rt- B^ S K'p 32* S i i O O Jr . rt- I ! "