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73D CONGRESS

2d Session

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J U Z 5

IN T H E SENATE OF T H E U N I T E D STATES
M a t 28,1934
Ordered to be printed with the amendment of the House of Representatives

AN

ACT

To amend section 12B of the Eederal Reserve Act so as to extend
for one year the temporaiy plan for deposit insurance, and
for other purposes.
1
2

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

3

section 4£B of the Eederal IfcsciVc Aet is amended—

4

-{4}- B y striking eat - Jtriy

5

pears in subsections

6

1934 - wherever it ap-

thereof ^ J r i y

7

-{i}7 and -(yf? and inserting m

-{Sf B y striking etrt - June

whe^e it ap-

8

pea^s in the last sentence ef the third paragraph ef Gubscetion

9

-{fh ^




inserting m lieu thereof " December

4034 " j

2
1
2

-(g)- B y striking ewt - Jaae

4 3 3 4 " where it ap-

pears hi the hist sentence of the fifth paragraph el subsection

3

and inserting » lieu thereof - Jimc

4

1935

amending the second sentence of the fifth

5

paragraph ef subsection

to comprise two sentences

6

reading as follows: -

7

relating te State member banks shall be extended for the

8

purposes ef this subsection te members ef the Fund which

9

ai c not members ef tke Federal Reserve System, Mid tke

10

provisions ef such subsection -(l-)" relating te the appoint

11

mcnt ef the Corporation as receiver shall be applicable te

12

all the members ef the Fund.

13

section shall apply only te deposits ef members ef the

14

Fund which have been made available since March

15

1933, fef withdrawal m the usual course ef the banking

16

business."; and

provisions ef sueh subsection -{!)•

provisions ef tins sub-

17

B y adding at the end ef the sisth paragraph ef

18

subsection -(y)- the following new sentencesf "3?he G&r-

19

poration shall prescribe by regulations the inanncr ef exer-

20

eise ef the right ef termination ef membership m the Fund

21

en Jtriy

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g k e thirty days' notice prior te July

23

as ft condition te withdrawal.

24

the Fund en J t r i y ^ 1931, shall be entitled te a refund

25

ef their proportionate share ef any estimated balance in




1931? and may require members ef the Fund te
19347 ef election

Banks which withdraw from

3
1

ike Fund en the same basis as if the Fund bad terminated

2

on

1931."

g

Seer gr The fest paragraph of section 9 of the Federal

4

Reserve A e ^ as amended (U.S.C., title i S j seer 321) y is

K

amended by adding after fee second sentence thereof ft new

q

sentence to read as follows: —For the purposes el member

7

ship ef any sueh bank the terms

g

stock - shall include the amount ef outstanding capital notes

9

and debentures legally issued by the applying bank and p w -

£

capital • and - capital

10

eliased by the Reconstruction Finance Corporation."

H

That section 12B of the Federal Reserve Act is amended—

12

(1)

by striking out "July

13

pears in subsections (e),

14

(3)

and (y),

wherever it ap-

lieu thereof " July 1, 1935 ";

15

(1),

1, 1934"

and inserting in

by striking out " June 15,1934 " where it appears

16

in the last sentence of the third paragraph of subsection (y),

17

and inserting in lieu thereof " October 1, 1934 ";

18

(3) by striking out " June 30,1934 " where it appears

19

in the first sentence of the fifth paragraph of subsection (y),

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and inserting in lieu thereof " June SO,

21

(4)

1935";

by adding after the first clause of the second sen-

22

tence of the fifth paragraph of subsection (y) the following:

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"and

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appointment of the Corporation as receiver shall be applicable

25

to the members of the temporary Federal deposit insur-




the provisions of such subsection (1) relating to the

4
1

-ance fund"

2

in the second clause of the second sentence of the fifth para-

3

graph. of subsection (y)

4

word " The

5

(5)

; and by striking out the initial words " and the "

and inserting in lieu thereof the

by adding to the sixth paragraph of subsection

6

(y)

the following:

"The

Corporation shall prescribe by

7

regulations the manner of exercise of the right of nonmember

8

banks to withdraw from membership in the fund on July 1,

9

1334, except that no bank shall be permitted to withdraw

10

unless twenty days prior thereto it has given written notice

11

to each of its depositors and to the Corporation of its election

12

so to do.

13

1934, shall be entitled to a refund of their proportionate

14

share of any estimated balance in the fund on the same basis

15

as if the fund had terminated on July

Banks which withdraw from the fund on July 1,

1T1934.";

(6) by adding to the end of the fourth paragraph of
subsection (y) the following two additional
IS

paragraphs:

" On and after July 1, 1934, the amount eligible for

19

insurance under this subsection for the purposes of the Octo-

20

ber 1,1934, certified statement, any entrance assessment, and,

21

if levied, the additional assessment shall be the amounts not
in excess of $5,000 of the deposits of each depositor.

23

" Each mutual savings bank, unless it becomes subject

24

to tjie provisions of the preceding paragraph in the manner

25

hereinafter provided, shall be excepted from the operation of




5
1

the preceding paragraph and for each such bank which is

2

so excepted the amount eligible for insurance under this sub-

3

section for the purposes of the October 1, 1934, certified

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statement, any entrance assessment, and, if levied, the addi-

5

tional assessment shall be the amounts not in excess of $2,500

6

for the deposits of each depositor.

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savings bank shall be closed on account of inability to meet

8

its deposit liabilities the Corporation shall pay not more than

9

$2,500 on account of the net approved claim of any owner

10

of deposits in such bank: Provided, however, That should any

11

mutual savings bank make manifest to the Corporation its

12

election to be subject to the provisions of the preceding para-

13

graph the Corporation may, in the discretion of the board of

In the event any mutual

directors, permit such bank to become so subject and the
15

insurance of its deposits to continue on the same basis and

1®

to the same extent as that of fund members other than mutual

17

savings banks"

1®

(7)

by striking out the period at the end of the first

sentence of the fifth paragraph of subsection (y) and inserting
in lieu thereof a comma and the following:

" if the member

2

closed on or before June 30,1934, and nopmore than $5,000

22

if closed on or after July 1,

1

(8)

1934";

by (a) striking out " and until Jxdy 1, 1936 " in

the first sentence of subsection (1)> (b) striking out the words
" until July 1, 1936," in the seventh paragraph of subsection




6
1

(y)

2

standing any provision of this section to the

3

(c) adding after the seventh paragraph of subsection (y)

4

the following new paragraph:

5

and inserting in lieu thereof the follotving: " notwithcontraryand

"Any State bank may obtain the benefits of this section

6

on and after the date the fund is terminated upon the con-

7

ditions with regard to examination, certification, and approval

8

governing the admission of State banks to the fund and upon

9

purchasing such class A stock or making such a deposit as is

10

prescribed in the preceding paragraph

for former

fund

11 members
12

(9) by (a) striking out the word " three " in subsection

13

(o) and inserting in lieu thereof the word "five",

L4

by inserting the word " subscribed

15

ital " in said subsection.

16
17

and (b)

before the word " cap-

(10) by adding at the end of subsection (o) the following new paragraph:

18

" Such of the obligations authorized to be issued under

19

this subsection as the Corporation,

20

the Secretary of the Treasury,

21

ftdly

22

and principal by the United States and such guaranty shall

23

be expressed on the face thereof.

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poration shall be unable to pay upon demand, when due,

25

the principal




and unconditionally

with the approval of

may determine, shall be

guaranteed both as to interest

In the event that the Cor-

of qt interest on notes, debentures, bonds, or

7
^

other such obligations issued by it, and guaranteed by the

2

United States under this paragraph,

g

Treasury shall pay the amount thereof, which is hereby

^

authorized to be appropriated

g

Treasury not otherwise appropriated, and thereupon, to the

q

extent of the amounts so paid, the Secretary of the Treasury

7

shall succeed to all the rights of the holders of such notes,

g

debentures, bonds, or other obligations.

g

the Treasury, in his discretion, is authorized to purchase

10

any obligations of the Corporation to be issued under this

H

subsection which are guaranteed by the United States under

12

this paragraph, and for such purpose the Secretary of the

the Secretary of the

out of any money in the

The Secretary of

Treasury is authorized to use as a public-debt transaction
14

the proceeds from the sale of any securities hereafter issued

15

under the Second Liberty Loan Act, as amended, and the

16

purposes for which securities may be issued under the Sec-

17

ond Liberty Loan Act, as amended, are extended to include

18

am

19

paragraph.

20

time sell any of the obligations of the Corporation acquired

21

by him under this paragraph.

22

and sales by the Secretary of the Treasury of the obligations

23

of the Corporation shall be treated as public-debt transac-

24

Hons of the United States• The Secretary of the Treasury,

25

at the request of the Federal Deposit Insurance

J purchases of the Corporation s obligations under this




The Secretary of the Treasury may at any

All redemptions, purchases,

Corpora-

8
1

tion, is authorized to market for the Corporation such of its

2

notes, debentures, bonds, and other such obligations as are

3

guaranteed by the United States under this paragraph, using

4

therefor all the facilities of the Treasury Department now

5

authorized by law for the marketing of obligations of the

6

United States.

7

poration so marketed shall be deposited in the same manner

8

as proceeds derived from the sale of obligations of the United

9

States, and the amount thereof shall be credited to the Cor-

10

The proceeds of the obligations of the Cor-

poration on the books of the Treasury";

11

and

(11) by inserting after the first sentence of subscction

12

(p)

IB

which are guaranteed by the United States under the second

14

paragraph of subsection (o) shall be exempt from all such

J5

taxation

10

taxes)"

17

the following

new sentence: "Any

such obligations

(except surtaxes, estate, inheritance,

and

gift

SEC. 2. The first paragraph of section 9 of the Fed-

18

eral Reserve Act, as amended (U.S.C.,

J9

is amended by adding after the second sentence thereof a new

20

sentence to read as follows: " For the purposes of member-

21

ship of any such bank the terms

22

stock9 shall include the amount of outstanding capital notes

23

and debentures legally issued by the applying bank and pur-

24

chased by the Reconstruction Finance




6

title 12, sec. 321),

capital9

and

(

capital

Corporation."

9
1

SEO•

(a) The first sentence of the eighth paragraph

3.

2

of section 13 of the Federal Reserve Act, as amended, is

3

further

4

words "section 13 (a) of this Act"

5

lowing: "or

Q

Federal Deposit Insurance Corporation which are guar an-

7

teed both, as to principal and interest by the United States

8

amended by inserting before the- comma. after the
a comma and the fol-

by the deposit or pledge of obligations of the

(b) Paragraph

(b) of section 14 of the Federal Re-

9

serve Act, as amended, is further amended by inserting be-

10

fore the comma after the words " bonds and notes' of the

11

United States " a comma and the following:

12

of the Federal Deposit Insurance Corporation which arc

13

guaranteed both as to principal

14

States

15

" obligations

and interest by the United

(c) Section 31 of the Banking Act of 1933 is amended
e<

16

cis follows:

so much of section 31 of the Banking Act of

17

1933 as relates to stock ownership by directors of member

18

banks of the Federal Reserve System is hereby repealed "

19

SEC. 4. Section 12B of the Federal Reserve Act is

20

amended (a) by adding after subsection (y)

21

section to read as follows:

22

"(z)

a mew sub-

The Federal Deposit Insurance Corporation is

23

hereby authorized and empowered to loan upon or purchase

24

assets of any bank, savings bank, or trust company, which

25

has been closed on or after December 31, 1929, and prior




10
1

to January 1, 1934, and the affairs of ivhich have not been

2

fully liquidated or wound v,p, the assets of any such bank

3

or any part of such assets upon such terms and conditions

4

as the Corporation may by regulations prescribe.

5

nection with the reorganization, stabilization, or liquidation of

6

any such bank, asse/s Aaw

7

for the benefit of depositors or depositors and others, the

8

authority, subject to regulations, as provided in the preceding

9

sentence shall be extended for the purpose of authorizing the

10

Corporation to purchase or make loans on such assets held for

11

the benefit of such depositors or depositors and others.

12

authority

13

reopened without payment of deposits in full.

14

tion is further

15

Reconstruction Finance Corporation

16

any such closed bank, to negotiate with the liquidating agent

17

or receiver of such bank for an appraisal of its assets and

18

the purchase thereof or the making of a loan thereon to

19

take up the loan or any part thereof made by the Becon-

20

struction Finance

21

Insurance

22

interest and the loan anil be reasonably secured. In making

23

any purchase of or loan on assets of any closed bank, the

trusteed or are otherwise held

shall extend to any such institution

Corporation
25

If in con-

This

that lias

The Corpora-

authorized and empowered; in case the

Corporation,

Corporation

if

has made a loan to

the Federal

deems it desirable in

Deposit

the public

shall appraise such assets in anticipation of

aj\ orderly liquidation over a period of years, rather than




11
1

on the basis of forced selling values in a period of business

2

depression.

3

to sell any dssets acquired under this subsection and shall

4

with respect to such selling and to the liquidation of assets

5

of closed banks pursue and encourage a policy of extending

6

the period of liquidation so as best to conserve the value of

7

such assets and to prevent unreasonable sacrifice thereof.

8

"Not more than one half of the obligations authorized

9

to be issued by the Corporation shall be used for the pur-

10

poses set forth in this subsection. No portion of the capital

11

stock or other funds of the Corporation raised for the pur-

12

pose of insuring deposits in banks shall be used for the

13

purchase of or loans on assets in banks closed prior to

14

January

15

proceeds of which were used under the provisions of this

16

section. Such obligations as are so used shall be paid only

17

out of the funds received from the repayment of loans made

18

and disposition of assets acquired pursuant to this subsection.

19

"(b)

The Corporation is authorized and empowered

1, 1934, nor for the repayment of obligations the

by striking out the sixth sentence of the first para-

20

graph of subsection (1)

21

following:

22

tiously as possible the net amount due to depositors of the closed

23

bank and shall make available to the new bank tin amount

24

equal to the insured deposit liabilities of such closed bank,

25

whereupon such new bank shall assume the insured deposit




"The

and substituting in lieu thereof the

Corporation

shall determine as expedi-

12
1

liability

2

the Corporation shall be sxibrogated as hereinafter stated to

3

the rights against the closed bank of the owners of such

4

deposits* Where the net approved claim of a depositor on

5

account of his deposits does not exceed the insured deposit

6

liability

7

dividends from the proceeds of the assets of such closed bank

8

ivhich would have been payable to such depositor on account

9

of such deposits, and where the net approved deposit claim

10

exceeds the insured deposit liability the Corporation and the

11

depositor shall share ratably in the dividends insofar as the

12

same are based. upon deposit liability

13

cording to the ratio that, the insured liability to such depositor

14

bears to the total amount of the net approved claim of such

15

of such closed bank to each of its depositors, and

the Corporation shall be entitled to receive all the

to such depositor ac-

depositorand

16

u

(c)

By adding y at the end of the first paragraph of

17

subsection (v) the following additional paragraph:

18

insured bank shall display at each place of business main-

19

tained by it a sign or signs, to the effect that its deposits are

20

insured by the Federal

21

The Corporation shall prescribe by regulation the form of

22

such sign and the manner of its display.

23

may impose a maximum penalty of $100 for each day an

24

insured bank continues to violate any lawful provisions of

25

said regulation/ "




Deposit Insurance

' Every

Corporation.

Such regulation

13
1

SEC. 5. Section 12B of the Federal Reserve Act is

2

amended by inserting within the parentheses and immediately

3

after the words

4

in the first sentence of the second paragraph of subsection (y)

5

the following: " and the Territories of Hawaii and Alaska

11

District of Columbia " where they appear

Passed the Senate February 28 (calendar day, March
12), 1934.
Attest:

E D W I N A. HALSEY,
Secretary.

Passed the House of Representatives with an amendment May 24, 1934.




Attest:

SOUTH T R I M B L E ,
Clerh




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