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73D CONGRESS
2d Session
O
o
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r
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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
thereof ^ J r i y
7
1934 - wherever it ap-
-{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
22
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
lieu thereof " July 1, 1935 ";
15
(3)
(1),
1, 1934"
and (y),
wherever it apand 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),
20
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:
23
"and
24
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
4
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.
7
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.
24
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 ,
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