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73D CONGRESS
istSession

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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

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