1-001 To provide for the establishment of Federal reserve banks, to furnish an
elastic currency, to afford means of rediscounting commercial paper, to establish
a more effective supervision of banking in the United States, and for other
purposes.
1. Short Title Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled, That the short title of this Act shall be
the "Federal Reserve Act." [12 USC 226. Part of original Federal Reserve Act; not amended.] 1-002 2. Definition of "Bank" Wherever the word "bank" is used in this Act, the word shall be held to include
State bank, banking association, and trust company, except where national
banks or Federal reserve banks are specifically referred to. [12 USC 221. Part of original Federal Reserve Act; not amended.] 1-003 3. Definitions of Other Terms The terms "national bank" and "national banking association" used in this
Act shall be held to be synonymous and interchangeable. The term "member bank"
shall be held to mean any national bank, State bank, or bank or trust company
which has become a member of one of the reserve banks created by this Act.
The term "board" shall be held to mean Board of Governors of the Federal Reserve
System; the term "district" shall be held to mean Federal reserve district;
the term "reserve bank" shall be held to mean Federal reserve bank; the term
"the continental United States" means the States of the United States and
the District of Columbia. 1-003.1 4. Definition of "Bonds and Notes of the United States" The terms "bonds and notes of the United States," "bonds and notes of the
Government of the United States," and "bonds or notes of the United States"
used in this Act shall be held to include certificates of indebtedness and
Treasury bills issued under section 3104 of title 31. [12 USC 221. As amended by acts of June 25, 1959 (73 Stat. 142) and Sept.
13, 1982 (96 Stat. 1058). For further definitions, see section 2 of Banking
Act of 1933, approved June 16, 1933. Section 203(a) of the Banking Act of
1935, approved Aug. 23, 1935 (49 Stat. 704), provided: "Hereafter the Federal
Reserve Board shall be known as the `Board of Governors of the Federal Reserve
System', and the governor and vice governor of the Federal Reserve Board shall
be known as the `chairman' and the `vice chairman', respectively, of the Board
of Governors of the Federal Reserve System." Accordingly, the words "Federal
Reserve Board", "governor" and "vice governor", wherever they formerly appeared
in the Federal Reserve Act (or in other acts of Congress), have been changed
here to read "Board of Governors of the Federal Reserve System", "chairman"
and "vice chairman", respectively, notwithstanding the fact that such change
has not been made by specific amendment of the law.]
1-004 1. Establishment of Reserve Cities and Districts As soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture
and the Comptroller of the Currency, acting as "The Reserve Bank Organization
Committee," shall designate not less than eight nor more than twelve cities
to be known as Federal reserve cities, and shall divide the continental United
States, excluding Alaska, into districts, each district to contain only one
of such Federal reserve cities. The determination of said organization committee
shall not be subject to review except by the Board of Governors of the Federal
Reserve System when organized: Provided, That the districts shall be apportioned
with due regard to the convenience and customary course of business and shall
not necessarily be coterminous with any State or States. The districts thus
created may be readjusted and new districts may from time to time be created
by the Board of Governors of the Federal Reserve System, not to exceed twelve
in all. Such districts shall be known as Federal reserve districts and may
be designated by number. When the State of Alaska or Hawaii is hereafter admitted
to the Union the Federal Reserve districts shall be readjusted by the Board
of Governors of the Federal Reserve System in such manner as to include such
State. Every national bank in any State shall, upon commencing business or
within ninety days after admission into the Union of the State in which it
is located, become a member bank of the Federal Reserve System by subscribing
and paying for stock in the Federal Reserve bank of its district in accordance
with the provisions of this Act and shall thereupon be an insured bank under
the Federal Deposit Insurance Act, and failure to do so shall subject such
bank to the penalty provided by the sixth paragraph of this section. [Partly incorporated in 12 USC 222 and 223. As amended by acts of July 7,
1958 (72 Stat. 350); March 18, 1959 (73 Stat. 12).] 1-005 2. Powers of Organization Committee Said organization committee shall be authorized to employ counsel and expert
aid, to take testimony, to send for persons and papers, to administer oaths,
and to make such investigation as may be deemed necessary by the said committee
in determining the reserve districts and in designating the cities within
such districts where such Federal reserve banks shall be severally located.
The said committee shall supervise the organization in each of the cities
designated of a Federal reserve bank, which shall include in its title the
name of the city in which it is situated, as "Federal Reserve Bank of Chicago." [Omitted from U.S. Code except part of last sentence, which is incorporated
in 12 USC 225. Part of original Federal Reserve Act; not amended. ] 1-006 3. Subscription to Stock by National Banks Under regulations to be prescribed by the organization committee, every national
banking association in the United States is hereby required, and every eligible
bank in the United States and every trust company within the District of Columbia,
is hereby authorized to signify in writing, within sixty days after the passage
of this Act, its acceptance of the terms and provisions hereof. When the organization
committee shall have designated the cities in which Federal reserve banks
are to be organized, and fixed the geographical limits of the Federal reserve
districts, every national banking association within that district shall be
required within thirty days after notice from the organization committee,
to subscribe to the capital stock of such Federal reserve bank in a sum equal
to six per centum of the paid-up capital stock and surplus of such bank, one-sixth
of the subscription to be payable on call of the organization committee or
of the Board of Governors of the Federal Reserve System, one-sixth within
three months and one-sixth within six months thereafter, and the remainder
of the subscription, or any part thereof, shall be subject to call when deemed
necessary by the Board of Governors of the Federal Reserve System, said payments
to be in gold or gold certificates. [Partly incorporated in 12 USC 282. Part of original Federal Reserve Act;
not amended. For provisions concerning stock subscriptions by state banks
and trust companies, see section 9.] 1-007 4. Liability of Shareholders of Reserve Banks The shareholders of every Federal reserve bank shall be held individually
responsible, equally and ratably, and not one for another, for all contracts,
debts, and engagements of such bank to the extent of the amount of their subscriptions
to such stock at the par value thereof in addition to the amount subscribed,
whether such subscriptions have been paid up in whole or in part, under the
provisions of this Act. [12 USC 502. Part of original Federal Reserve Act; not amended.] 1-008 5. Failure of National Bank to Accept Terms of Act Any national bank failing to signify its acceptance of the terms of this
Act within sixty days aforesaid, shall cease to act as a reserve agent, upon
thirty days' notice, to be given within the discretion of the said organization
committee or of the Board of Governors of the Federal Reserve System. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-009 6. Penalty for Violation of Act by National Banks Should any national banking association in the United States now organized
fail within one year after the passage of this Act to become a member bank
or fail to comply with any of the provisions of this Act applicable thereto,
all of the rights, privileges, and franchises of such association granted
to it under the national-bank Act, or under the provisions of this Act, shall
be thereby forfeited. Any noncompliance with or violation of this Act shall,
however, be determined and adjudged by any court of the United States of competent
jurisdiction in a suit brought for that purpose in the district or territory
in which such bank is located, under direction of the Board of Governors of
the Federal Reserve System, by the Comptroller of the Currency in his own
name before the association shall be declared dissolved. In cases of such
noncompliance or violation, other than the failure to become a member bank
under the provisions of this Act, every director who participated in or assented
to the same shall be held liable in his personal or individual capacity for
all damages which said bank, its shareholders, or any other person shall have
sustained in consequence of such violation. [12 USC 501a. Part of original Federal Reserve Act; not amended.] 1-010 7. Effect of Dissolution Such dissolution shall not take away or impair any remedy against such corporation,
its stockholders or officers, for any liability or penalty which shall have
been previously incurred. [12 USC 501a. Part of original Federal Reserve Act; not amended.] 1-011 8. Stock Offered to Public Should the subscriptions by banks to the stock of said Federal reserve banks
or any one or more of them be, in the judgment of the organization committee,
insufficient to provide the amount of capital required therefor, then and
in that event the said organization committee may, under conditions and regulations
to be prescribed by it, offer to public subscription at par such an amount
of stock in said Federal reserve banks, or any one or more of them, as said
committee shall determine, subject to the same conditions as to payment and
stock liability as provided for member banks. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-012 9. Limitation on Amount to One Subscriber No individual, copartnership, or corporation other than a member bank of
its district shall be permitted to subscribe for or to hold at any time more
than $25,000 par value of stock in any Federal reserve bank. Such stock shall
be known as public stock and may be transferred on the books of the Federal
reserve bank by the chairman of the board of directors of such bank. [12 USC 283. Part of original Federal Reserve Act; not amended.] 1-013 10. Stock Allotted to United States Should the total subscriptions by banks and the public to the stock of said
Federal reserve banks, or any one or more of them, be, in the judgment of
the organization committee, insufficient to provide the amount of capital
required therefor, then and in that event the said organization committee
shall allot to the United States such an amount of said stock as said committee
shall determine. Said United States stock shall be paid for at par out of
any money in the Treasury not otherwise appropriated, and shall be held by
the Secretary of the Treasury and disposed of for the benefit of the United
States in such manner, at such times, and at such price, not less than par,
as the Secretary of the Treasury shall determine. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.
In a communication from the Board of Governors of the Federal Reserve System
dated March 7, 1941, it was stated, "As originally enacted the Federal Reserve
Act provided for a Reserve Bank Organization Committee to have charge of the
initial steps in organizing the Federal Reserve System and this Committee
was authorized to allot Federal Reserve Bank stock to the United States in
the event that subscriptions to such stock by banks and by the public were
inadequate. However, subscriptions by member banks were adequate and there
was no necessity or authority for the allocation of any stock to the United
States. Accordingly, [this paragraph] is now of no practical effect and may
be regarded as obsolete."] 1-014 11. Voting Rights Stock not held by member banks shall not be entitled to voting power. [12 USC 285. Part of original Federal Reserve Act; not amended.] 1-015 12. Transfer of Stock The Board of Governors of the Federal Reserve System is hereby empowered
to adopt and promulgate rules and regulations governing the transfers of said
stock. [12 USC 286. Part of original Federal Reserve Act; not amended.] 1-016 13. Minimum Capital; Status of Reserve Cities No Federal reserve bank shall commence business with a subscribed capital
less than $4,000,000. The organization of reserve districts and Federal reserve
cities shall not be construed as changing the present status of reserve cities,
except in so far as this Act changes the amount of reserves that may be carried
with approved reserve agents located therein. The organization committee shall
have power to appoint such assistants and incur such expenses in carrying
out the provisions of this Act as it shall deem necessary, and such expenses
shall be payable by the Treasurer of the United States upon voucher approved
by the Secretary of the Treasury, and the sum of $100,000, or so much thereof
as may be necessary, is hereby appropriated, out of any moneys in the Treasury
not otherwise appropriated, for the payment of such expenses. [Last sentence of this paragraph is omitted from U.S. Code; rest of paragraph
is incorporated in 12 USC 224 and 281. Amended by act of July 28, 1959 (73
Stat. 264).]
1-017
The Board of Governors of the Federal Reserve System and the Federal Open
Market Committee shall maintain long run growth of the monetary and credit
aggregates commensurate with the economy's long run potential to increase
production, so as to promote effectively the goals of maximum employment,
stable prices, and moderate long-term interest rates.
[12 USC 225a. As added by act of November 16, 1977 (91 Stat. 1387) and amended
by acts of October 27, 1978 (92 Stat. 1897); Aug. 23, 1988 (102 Stat. 1375);
and Dec. 27, 2000 (114 Stat. 3028).]
1-017.1
(a) Appearances before the Congress.
(1) The Chairman of the Board shall appear before the Congress at semi-annual
hearings, as specified in paragraph (2), regarding—
(A) the efforts, activities, objectives and plans of the Board and the Federal
Open Market Committee with respect to the conduct of monetary policy; and
(B) economic developments and prospects for the future described in the report
required in subsection (b).
(2) The Chairman of the Board shall appear—
(A) before the Committee on Banking and Financial Services of the House of
Representatives on or about February 20 of even numbered calendar years and
on or about July 20 of odd numbered calendar years;
(B) before the Committee on Banking, Housing, and Urban Affairs of the Senate
on or about July 20 of even numbered calendar years and on or about February
20 of odd numbered calendar years; and
(C) before either Committee referred to in subparagraph (A) or (B), upon
request, following the scheduled appearance of the Chairman before the other
Committee under subparagraph (A) or (B).
1-017.2
(b) Congressional report. The Board shall, concurrent with each semi-annual
hearing required by this section, submit a written report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee on
Banking and Financial Services of the House of Representatives, containing
a discussion of the conduct of monetary policy and economic developments and
prospects for the future, taking into account past and prospective developments
in employment, unemployment, production, investment, real income, productivity,
exchange rates, international trade and payments, and prices.
[12 USC 225b. As added by act of Dec. 27, 2000 (114 Stat. 3028).]
SECTION 3--Branch Offices 1-018 1. Establishment of Branches of Reserve Banks The Board of Governors of the Federal Reserve System may permit or require
any Federal reserve bank to establish branch banks within the Federal reserve
district in which it is located or within the district of any Federal reserve
bank which may have been suspended. Such branches, subject to such rules and
regulations as the Board of Governors of the Federal Reserve System may prescribe,
shall be operated under the supervision of a board of directors to consist
of not more than seven nor less than three directors, of whom a majority of
one shall be appointed by the Federal reserve bank of the district, and the
remaining directors by the Board of Governors of the Federal Reserve System.
Directors of branch banks shall hold office during the pleasure of the Board
of Governors of the Federal Reserve System. [12 USC 521. As amended by act of June 21, 1917 (40 Stat. 232). ] 1-019 2. Discontinuance of Branches The Board of Governors of the Federal Reserve System may at any time require
any Federal Reserve Bank to discontinue any branch of such Federal Reserve
Bank established under this section. The Federal Reserve Bank shall thereupon
proceed to wind up the business of such branch bank, subject to such rules
and regulations as the Board of Governors of the Federal Reserve System may
prescribe. [12 USC 521. As added by act of Feb. 25, 1927 (44 Stat. 1234). ] 1-020 3. Erection of Branch Buildings No Federal Reserve Bank shall have authority hereafter to enter into any
contract or contracts for the erection of any branch bank building of any
kind or character or to authorize the erection of any such building, except
with the approval of the Board of Governors of the Federal Reserve System. [12 USC 521. As added by act of Aug. 31, 1962 (76 Stat. 418).] SECTION 4--Federal Reserve Banks 1-021 1. Organization of Reserve Banks When the organization committee shall have established Federal reserve districts
as provided in section two of this Act, a certificate shall be filed with
the Comptroller of the Currency showing the geographical limits of such districts
and the Federal reserve city designated in each of such districts. The Comptroller
of the Currency shall thereupon cause to be forwarded to each national bank
located in each district, and to such other banks declared to be eligible
by the organization committee which may apply therefor, an application blank
in form to be approved by the organization committee, which blank shall contain
a resolution to be adopted by the board of directors of each bank executing
such application, authorizing a subscription to the capital stock of the Federal
reserve bank organizing in that district in accordance with the provisions
of this Act. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-022 2. Organization Certificate When the minimum amount of capital stock prescribed by this Act for the organization
of any Federal reserve bank shall have been subscribed and allotted, the organization
committee shall designate any five banks of those whose applications have
been received, to execute a certificate of organization, and thereupon the
banks so designated shall, under their seals, make an organization certificate
which shall specifically state the name of such Federal reserve bank, the
territorial extent of the district over which the operations of such Federal
reserve bank are to be carried on, the city and State in which said bank is
to be located, the amount of capital stock and the number of shares into which
the same is divided, the name and place of doing business of each bank executing
such certificate, and of all banks which have subscribed to the capital stock
of such Federal reserve bank and the number of shares, subscribed by each,
and the fact that the certificate is made to enable those banks executing
same, and all banks which have subscribed or may thereafter subscribe to the
capital stock of such Federal reserve bank, to avail themselves of the advantages
of this Act. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-023 3. Acknowledgment and Filing The said organization certificate shall be acknowledged before a judge of
some court of record or notary public; and shall be, together with the acknowledgment
thereof, authenticated by the seal of such court, or notary, transmitted to
the Comptroller of the Currency, who shall file, record and carefully preserve
the same in his office. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-024 4. General Corporate Powers Upon the filing of such certificate with the Comptroller of the Currency
as aforesaid, the said Federal reserve bank shall become a body corporate
and as such, and in the name designated in such organization certificate,
shall have power-- First. To adopt and use a corporate seal. Second. To have succession after the approval of this Act until dissolved
by Act of Congress or until forfeiture of franchise for violation of law. Third. To make contracts. Fourth. To sue and be sued, complain and defend, in any court of law or equity. Fifth. To appoint by its board of directors a president, vice presidents,
and such officers and employees as are not otherwise provided for in this
Act, to define their duties, require bonds for them and fix the penalty thereof,
and to dismiss at pleasure such officers or employees. The president shall
be the chief executive officer of the bank and shall be appointed by the board
of directors, with the approval of the Board of Governors of the Federal Reserve
System, for a term of five years; and all other executive officers and all
employees of the bank shall be directly responsible to him. The first vice
president of the bank shall be appointed in the same manner and for the same
term as the president, and shall, in the absence or disability of the president
or during a vacancy in the office of the president, serve as chief executive
officer of the bank. Whenever a vacancy shall occur in the office of the president
or the first vice president, it shall be filled in the manner provided for
original appointments; and the person so appointed shall hold office until
the expiration of the term of his predecessor. Sixth. To prescribe by its board of directors, by-laws not inconsistent with
law, regulating the manner in which its general business may be conducted,
and the privileges granted to it by law may be exercised and enjoyed. Seventh. To exercise by its board of directors, or duly authorized officers
or agents, all powers specifically granted by the provisions of this Act and
such incidental powers as shall be necessary to carry on the business of banking
within the limitations prescribed by this Act. Eighth. Upon deposit with the Treasurer of the United States of any bonds
of the United States in the manner provided by existing law relating to national
banks, to receive from the Secretary of the Treasury circulating notes in
blank, registered and countersigned as provided by law, equal in amount to
the par value of the bonds so deposited, such notes to be issued under the
same conditions and provisions of law as relate to the issue of circulating
notes of national banks secured by bonds of the United States bearing the
circulating privilege, except that the issue of such notes shall not be limited
to the capital stock of such Federal reserve bank. [12 USC 341. As amended by act of Feb. 25, 1927 (44 Stat. 1234), which amended
subparagraph "Second;" by act of Aug. 23, 1935 (49 Stat. 703), which amended
subparagraph "Fifth" effective March 1, 1936; and by act of Sept. 23, 1994
(108 Stat. 2293), which amended subparagraph "Eighth." As to issuance of Federal
Reserve bank notes and redemption of bonds securing such notes, see section
18, and note to the first paragraph of that section.] 1-025 5. Authority to Commence Business But no Federal reserve bank shall transact any business except such as is
incidental and necessarily preliminary to its organization until it has been
authorized by the Comptroller of the Currency to commence business under the
provisions of this Act. [12 USC 341. Part of original Federal Reserve Act; not amended. ] 1-026 6. Board of Directors Every Federal reserve bank shall be conducted under the supervision and control
of a board of directors. [12 USC 301. Part of original Federal Reserve Act; not amended. ] 1-027 7. Duties of Directors Generally The board of directors shall perform the duties usually appertaining to the
office of directors of banking associations and all such duties as are prescribed
by law. [12 USC 301. Part of original Federal Reserve Act; not amended. ] 1-028 8. Administration of Affairs; Extension of Credit Said board of directors shall administer the affairs of said bank fairly
and impartially and without discrimination in favor of or against any member
bank or banks and may, subject to the provisions of law and the orders of
the Board of Governors of the Federal Reserve System, extend to each member
bank such discounts, advancements, and accommodations as may be safely and
reasonably made with due regard for the claims and demands of other member
banks, the maintenance of sound credit conditions, and the accommodation of
commerce, industry, and agriculture. The Board of Governors of the Federal
Reserve System may prescribe regulations further defining within the limitations
of this Act the conditions under which discounts, advancements, and the accommodations
may be extended to member banks. Each Federal reserve bank shall keep itself
informed of the general character and amount of the loans and investments
of its member banks with a view to ascertaining whether undue use is being
made of bank credit for the speculative carrying of or trading in securities,
real estate, or commodities, or for any other purpose inconsistent with the
maintenance of sound credit conditions; and, in determining whether to grant
or refuse advances, rediscounts or other credit accommodations, the Federal
reserve bank shall give consideration to such information. The chairman of
the Federal reserve bank shall report to the Board of Governors of the Federal
Reserve System any such undue use of bank credit by any member bank, together
with his recommendation. Whenever, in the judgment of the Board of Governors
of the Federal Reserve System, any member bank is making such undue use of
bank credit, the Board may, in its discretion, after reasonable notice and
an opportunity for a hearing, suspend such bank from the use of the credit
facilities of the Federal Reserve System and may terminate such suspension
or may renew it from time to time. [12 USC 301. As amended by act of June 16, 1933 (48 Stat. 163). ] 1-029 9. Number and Classes of Directors Such board of directors shall be selected as hereinafter specified and shall
consist of nine members, holding office for three years, and divided into
three classes, designated as classes A, B, and C. [12 USC 302. Part of original Federal Reserve Act; not amended. ] 1-030 10. Class A Directors Class A shall consist of three members, without discrimination on the basis
of race, creed, color, sex, or national origin, who shall be chosen by and
be representative of the stockholding banks. [12 USC 302. As amended by act of Nov. 16, 1977 (91 Stat. 1387). ] 1-031 11. Class B Directors Class B shall consist of three members, who shall represent the public and
shall be elected without discrimination on the basis of race, creed, color,
sex, or national origin, and with due but not exclusive consideration to the
interests of agriculture, commerce, industry, services, labor, and consumers. [12 USC 302. As amended by act of Nov. 16, 1977 (91 Stat. 1388). ] 1-032 12. Class C Directors Class C shall consist of three members who shall be designated by the Board
of Governors of the Federal Reserve System. They shall be elected to represent
the public, without discrimination on the basis of race, creed, color, sex,
or national origin, and with due but not exclusive consideration to the interests
of agriculture, commerce, industry, services, labor and consumers. When the
necessary subscriptions to the capital stock have been obtained for the organization
of any Federal reserve bank, the Board of Governors of the Federal Reserve
System shall appoint the class C directors and shall designate one of such
directors as chairman of the board to be selected. Pending the designation
of such chairman, the organization committee shall exercise the powers and
duties appertaining to the office of chairman in the organization of such
Federal reserve bank. [12 USC 302. As amended by act of Nov. 16, 1977 (91 Stat. 1388). ] 1-033 13. Senator or Representative Ineligible No Senator or Representative in Congress shall be a member of the Board of
Governors of the Federal Reserve System or an officer or a director of a Federal
reserve bank. [12 USC 303. Part of original Federal Reserve Act; not amended. ] 1-034 14. Class B Directors as Employees of Banks No director of class B shall be an officer, director, or employee of any
bank. [12 USC 303. Part of original Federal Reserve Act; not amended. ] 1-035 15. Class C Directors as Employees or Stockholders of Banks No director of class C shall be an officer, director, employee, or stockholder
of any bank. [12 USC 303. Part of original Federal Reserve Act; not amended. ] 1-036 16. Nomination and Election of Class A and B Directors Directors of class A and class B shall be chosen in the following manner: The Board of Governors of the Federal Reserve System shall classify the member
banks of the district into three general groups or divisions, designating
each group by number. Each group shall consist as nearly as may be of banks
of similar capitalization. Each member bank shall be permitted to nominate
to the chairman of the board of directors of the Fed eral reserve bank of
the district one candidate for director of class A and one candidate for director
of class B. The candidates so nominated shall be listed by the chairman, indicating
by whom nominated, and a copy of said list shall, within fifteen days after
its completion, be furnished by the chairman to each member bank. Each member
bank by a resolution of the board or by an amendment to its by-laws shall
authorize its president, cashier, or some other officer to cast the vote of
the member bank in the elections of class A and class B directors: Provided,
That whenever any member banks within the same Federal Reserve district are
subsidiaries of the same bank holding company within the meaning of the Bank
Holding Company Act of 1956, participation in any such nomination or election
by such member banks, including such bank holding company if it is also a
member bank, shall be confined to one of such banks, which may be designated
for the purpose by such holding company. [12 USC 304. As amended by acts of Sept. 26, 1918 (40 Stat. 968); June 16,
1933 (48 Stat. 163); July 1, 1966 (80 Stat. 243).] 1-037 17. Preferential Ballot Within fifteen days after receipt of the list of candidates the duly authorized
officer of a member bank shall certify to the chairman his first, second,
and other choices for director of class A and class B, respectively, upon
a preferential ballot upon a form furnished by the chairman of the board of
directors of the Federal reserve bank of the district. Each such officer shall
make a cross opposite the name of the first, second, and other choices for
a director of class A and for a director of class B, but shall not vote more
than one choice for any one candidate. No officer or director of a member
bank shall be eligible to serve as a class A director unless nominated and
elected by banks which are members of the same group as the member bank of
which he is an officer or director. [12 USC 304. As amended by act of Sept. 26, 1918 (40 Stat. 968). ] 1-038 18. Candidates Serving More Than One Member Bank Any person who is an officer or director of more than one member bank shall
not be eligible for nomination as a class A director except by banks in the
same group as the bank having the largest aggregate resources of any of those
of which such person is an officer or director. [12 USC 304. As added by act of Sept. 26, 1918 (40 Stat. 968.) ] 1-039 19. Counting the Ballots Any candidate having a majority of all votes cast in the column of first
choice shall be declared elected. If no candidate . . . have a majority of
all the votes in the first column, then there shall be added together the
votes cast by the electors for such candidates in the second column and the
votes cast for the several candidates in the first column. The candidate then
having a majority of the electors voting and the highest number of combined
votes shall be declared elected. If no candidate have a majority of electors
voting and the highest number of votes when the first and second choices shall
have been added, then the votes cast in the third column for other choices
shall be added together in like manner, and the candidate then having the
highest number of votes shall be declared elected. An immediate report of
election shall be declared. [12 USC 304. As amended by act of June 26, 1930 (46 Stat. 815). ] 1-040 20. Class C Directors; Chairman and Federal Reserve Agent; Deputy Chairman Class C directors shall be appointed by the Board of Governors of the Federal
Reserve System. They shall have been for at least two years residents of the
district for which they are appointed, one of whom shall be designated by
said board as chairman of the board of directors of the Federal reserve bank
and as "Federal reserve agent." He shall be a person of tested banking experience,
and in addition to his duties as chairman of the board of directors of the
Federal reserve bank he shall be required to maintain, under regulations to
be established by the Board of Governors of the Federal Reserve System, a
local office of said board on the premises of the Federal reserve bank. He
shall make regular reports to the Board of Governors of the Federal Reserve
System and shall act as its official representative for the performance of
the functions conferred upon it by this Act. He shall receive an annual compensation
to be fixed by the Board of Governors of the Federal Reserve System and paid
monthly by the Federal reserve bank to which he is designated. One of the
directors of class C shall be appointed by the Board of Governors of the Federal
Reserve System as deputy chairman to exercise the powers of the chairman of
the board when necessary. In case of the absence of the chairman and deputy
chairman, the third class C director shall preside at meetings of the board. [12 USC 305. As amended by act of June 21, 1917 (40 Stat. 232). ] 1-041 21. Assistant Federal Reserve Agents Subject to the approval of the Board of Governors of the Federal Reserve
System, the Federal reserve agent shall appoint one or more assistants. Such
assistants, who shall be persons of tested banking experience, shall assist
the Federal reserve agent in the performance of his duties and shall also
have power to act in his name and stead during his absence or disability.
The Board of Governors of the Federal Reserve System shall require such bonds
of the assistant Federal reserve agents as it may deem necessary for the protection
of the United States. Assistants to the Federal reserve agent shall receive
an annual compensation, to be fixed and paid in the same manner as that of
the Federal reserve agent. [12 USC 306. As added by act of June 21, 1917 (40 Stat. 232).] 1-042 22. Compensation and Expenses of Directors, Officers, and Employees Directors of Federal reserve banks shall receive, in addition to any compensation
otherwise provided, a reasonable allowance for necessary expenses in attending
meetings of their respective boards, which amounts shall be paid by the respective
Federal reserve banks. Any compensation that may be provided by boards of
directors of Federal reserve banks for directors, officers or employees shall
be subject to the approval of the Board of Governors of the Federal Reserve
System. [12 USC 307. Part of original Federal Reserve Act; not amended. ] 1-043 23. Meetings of Directors Pending Organization The Reserve Bank Organization Committee may, in organizing Federal reserve
banks, call such meetings of bank directors in the several districts as may
be necessary to carry out the purposes of this Act, and may exercise the functions
herein conferred upon the chairman of the board of directors of each Federal
reserve bank pending the complete organization of such bank. [Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.] 1-044 24. Terms of Directors; Vacancies At the first meeting of the full board of directors of each Federal reserve
bank, it shall be the duty of the directors of classes A, B and C, respectively,
to designate one of the members of each class whose term of office shall expire
in one year from the first of January nearest to date of such meeting, one
whose term of office shall expire at the end of two years from said date,
and one whose term of office shall expire at the end of three years from said
date. Thereafter every director of a Federal reserve bank chosen as hereinbefore
provided shall hold office for a term of three years. Vacancies that may occur
in the several classes of directors of Federal reserve banks may be filled
in the manner provided for the original selection of such directors, such
appointees to hold office for the unexpired terms of their predecessors. [12 USC 308. Part of original Federal Reserve Act; not amended. ] SECTION 5--Stock Issues; Increase and Decrease of Capital 1-045 1. Amount of Shares; Increase and Decrease of Capital; Surrender and Cancellation
of Stock The capital stock of each Federal reserve bank shall be divided into shares
of $100 each. The outstanding capital stock shall be increased from time to
time as member banks increase their capital stock and surplus or as additional
banks become members, and may be decreased as member banks reduce their capital
stock or surplus or cease to be members. Shares of the capital stock of Federal
reserve banks owned by member banks shall not be transferred or hypothecated.
When a member bank increases its capital stock or surplus, it shall thereupon
subscribe for an additional amount of capital stock of the Federal reserve
bank of its district equal to 6 per centum of the said increase, one-half
of said subscription to be paid in the manner hereinbefore provided for original
subscription, and one-half subject to call of the Board of Governors of the
Federal Reserve System. A bank applying for stock in a Federal reserve bank
at any time after the organization thereof must subscribe for an amount of
the capital stock of the Federal reserve bank equal to 6 per centum of the
paid-up capital stock and surplus of said applicant bank, paying therefor
its par value plus one-half of 1 per centum a month from the period of the
last dividend. When a member bank reduces its capital stock or surplus it
shall surrender a proportionate amount of its holdings in the capital stock
of said Federal Reserve bank. Any member bank which holds capital stock of
a Federal Reserve bank in excess of the amount required on the basis of 6
per centum of its paid-up capital stock and surplus shall surrender such excess
stock. When a member bank voluntarily liquidates it shall surrender all of
its holdings of the capital stock of said Federal Reserve bank and be released
from its stock subscription not previously called. In any such case the shares
surrendered shall be canceled and the member bank shall receive in payment
therefor, under regulations to be prescribed by the Board of Governors of
the Federal Reserve System, a sum equal to its cash-paid subscriptions on
the shares surrendered and one-half of 1 per centum a month from the period
of the last dividend, not to exceed the book value thereof, less any liability
of such member bank to the Federal Reserve bank. [12 USC 287. As amended by act of Aug. 23, 1935 (49 Stat. 713). ] SECTION 6--Insolvency of Member Banks 1-046 1. Insolvency of Member Banks If any member bank shall be declared insolvent and a receiver appointed therefor,
the stock held by it in said Federal reserve bank shall be canceled, without
impairment of its liability, and all cash-paid subscriptions on said stock,
with one-half of 1 per centum per month from the period of last dividend,
if earned, not to exceed the book value thereof, shall be first applied to
all debts of the insolvent member bank to the Federal reserve bank, and the
balance, if any, shall be paid to the receiver of the insolvent bank. [12 USC 288. As amended by act of April 23, 1930 (46 Stat. 250). ] 1-047 2. National Bank Discontinuing Banking Operations If any national bank which has not gone into liquidation as provided in section
5220 of the Revised Statutes (United States Code, title 12, section 181) and
for which a receiver has not already been appointed for other lawful cause,
shall discontinue its banking operations for a period of sixty days the Comptroller
of the Currency may, if he deems it advisable, appoint a receiver for such
bank. The stock held by the said national bank in the Federal reserve bank
of its district shall thereupon be canceled and said national bank shall receive
in payment therefor, under regulations to be prescribed by the Board of Governors
of the Federal Reserve System, a sum equal to its cash-paid subscriptions
on the shares canceled and one-half of 1 per centum a month from the period
of the last dividend, if earned, not to exceed the book value thereof, less
any liability of such national bank to the Federal reserve bank. [12 USC 288. As added by act of April 23, 1930 (46 Stat. 250). As amended
by act of Aug. 23, 1935 (49 Stat. 713).] SECTION 7--Division of Earnings 1-048 Dividends and Surplus Fund of Reserve Banks (a)(1)(A) After all necessary expenses of a Federal reserve bank
have been paid or provided for, the stockholders of the bank shall be entitled
to receive an annual dividend of 6 percent on paid-in capital stock. (B) The entitlement to dividends under subparagraph (A) shall be cumulative. (2) That portion of net earnings of each Federal reserve bank which remains
after dividend claims under subparagraph (1)(A) have been fully met shall
be deposited in the surplus fund of the bank. (b) Transfer for fiscal year 2000. (1) The Federal reserve banks shall transfer from the surplus funds of such
banks to the Board of Governors of the Federal Reserve System for transfer
to the Secretary of the Treasury for deposit in the general fund of the Treasury,
a total amount of $3,752,000,000 in fiscal year 2000. (2) Of the total amount required to be paid by the Federal reserve banks
under paragraph (1) for fiscal year 2000, the Board shall determine the amount
each such bank shall pay in such fiscal year. (3) During fiscal year 2000, no Federal reserve bank may replenish such bank's
surplus fund by the amount of any transfer by such bank under paragraph (1). [12 USC 289. As amended by acts of March 3, 1919 (40 Stat. 1314); June 16,
1933 (48 Stat. 163); Aug. 10, 1993 (107 Stat. 337); Sept. 23, 1994 (108 Stat.
2291); and Nov. 29, 1999 (113 Stat. 1501A-304).] 1-049 Use of Earnings Transferred to the Treasury (b) The net earnings derived by the United States from Federal reserve
banks shall, in the discretion of the Secretary, be used to supplement the
gold reserve held against outstanding United States notes, or shall be applied
to the reduction of the outstanding bonded indebtedness of the United States
under regulations to be prescribed by the Secretary of the Treasury. Should
a Federal reserve bank be dissolved or go into liquidation, any surplus remaining,
after the payment of all debts, dividend requirements as hereinbefore provided,
and the par value of the stock, shall be paid to and become the property of
the United States and shall be similarly applied. [12 USC 290. Part of original Federal Reserve Act; not amended. Designated
subsection (b) by act of Aug. 10, 1993 (107 Stat. 337).] 1-050 Exemption from Taxation (c) Federal reserve banks, including the capital stock and surplus
therein, and the income derived therefrom shall be exempt from Federal, State,
and local taxation, except taxes upon real estate. [12 USC 531. Part of original Federal Reserve Act; but in effect amended
by 31 USC 3124(a), which reads as follows: SECTION 8--Conversion of State Banks into National Banks 1-051 1. Conversion of State Banks into National Banks Section fifty-one hundred and fifty-four, United States Revised Statutes,
is hereby amended to read as follows: Any bank incorporated by special law of any State or of the United States
or organized under the general laws of any State or of the United States and
having an unimpaired capital sufficient to entitle it to become a national
banking association under the provisions of the existing laws may, by the
vote of the shareholders owning not less than fifty-one per centum of the
capital stock of such bank or banking association, with the approval of the
Comptroller of the Currency be converted into a national banking association,
with any name approved by the Comptroller of the Currency. [12 USC 35. Part of original Federal Reserve Act; not amended. ] 1-052 2. Organization of New Bank; Amount of Shares; Powers and Duties Provided, however, That said conversion shall not be in contravention of
the State law. In such case the articles of association and organization certificate
may be executed by a majority of the directors of the bank or banking institution,
and the certificate shall declare that the owners of fifty-one per centum
of the capital stock have authorized the directors to make such certificate
and to change or convert the bank or banking institution into a national association.
A majority of the directors, after executing the articles of association and
the organization certificate, shall have power to execute all other papers
and to do whatever may be required to make its organization perfect and complete
as a national association. The shares of any such bank may continue to be
for the same amount each as they were before the conversion, and the directors
may continue to be directors of the association until others are elected or
appointed in accordance with the provisions of the statutes of the United
States. When the Comptroller has given to such bank or banking association
a certificate that the provisions of this Act have been complied with, such
bank or banking association, and all its stockholders, officers, and employees,
shall have the same powers and privileges, and shall be subject to the same
duties, liabilities, and regulations, in all respects, as shall have been
prescribed by the Federal Reserve Act and by the National Banking Act for
associations originally organized as national banking associations. [12 USC 35. Part of original Federal Reserve Act; not amended. ] 1-053 3. Retention of Assets by Converting Bank The Comptroller of the Currency may, in his discretion and subject to such
conditions as he may prescribe, permit such converting bank to retain and
carry at a value determined by the Comptroller such of the assets of such
converting bank as do not conform to the legal requirements relative to assets
acquired and held by national banking associations. [12 USC 35. As added by act of Aug. 23, 1935 (49 Stat. 711).] SECTION 9--State Banks as Members 1-054 1. Applications for Membership by State Banks Any bank incorporated by special law of any State, or organized under the
general laws of any State or of the United States, including Morris Plan banks
and other incorporated banking institutions engaged in similar business, desiring
to become a member of the Federal Reserve System, may make application to
the Board of Governors of the Federal Reserve System, under such rules and
regulations as it may prescribe, for the right to subscribe to the stock of
the Federal reserve bank organized within the district in which the applying
bank is located. Such application shall be for the same amount of stock that
the applying bank would be required to subscribe to as a national bank. For
the purposes of membership of any such bank the terms "capital" and "capital
stock" shall include the amount of outstanding capital notes and debentures
legally issued by the applying bank and purchased by the Reconstruction Finance
Corporation. The Board of Governors of the Federal Reserve System, subject
to the provisions of this Act and to such conditions as it may prescribe pursuant
thereto, may permit the applying bank to become a stockholder of such Federal
reserve bank. [12 USC 321. As amended by act of June 21, 1917 (40 Stat. 232), which completely
revised this section; and by acts of Feb. 25, 1927 (44 Stat. 1229); June 16,
1933 (48 Stat. 164); June 16, 1934 (48 Stat. 971). For admission to membership
of mutual savings banks, see paragraph 16.] 1-055 2. Continued Membership in Federal Reserve System Upon the conversion of a national bank into a State bank, or the merger or
consolidation of a national bank with a State bank which is not a member of
the Federal Reserve System, the resulting or continuing State bank may be
admitted to membership in the Federal Reserve System by the Board of Governors
of the Federal Reserve System in accordance with the provisions of this section,
but, otherwise, the Federal Reserve bank stock owned by the national bank
shall be canceled and paid for as provided in section 5 of this Act. Upon
the merger or consolidation of a national bank with a State member bank under
a State charter, the membership of the State bank in the Federal Reserve System
shall continue. [12 USC 321. As added by act of Aug. 17, 1950 (64 Stat. 458).] 1-056 3. Branches of State Member Banks Any such State bank which, at the date of the approval of this Act, has established
and is operating a branch or branches in conformity with the State law, may
retain and operate the same while remaining or upon becoming a stockholder
of such Federal reserve bank; but no such State bank may retain or acquire
stock in a Federal reserve bank except upon relinquishment of any branch or
branches established after the date of the approval of this Act beyond the
limits of the city, town, or village in which the parent bank is situated.
Provided, however, That nothing herein contained shall prevent any State member
bank from establishing and operating branches in the United States or any
dependency or insular possession thereof or in any foreign country, on the
same terms and conditions and subject to the same limitations and restrictions
as are applicable to the establishment of branches by national banks except
that the approval of the Board of Governors of the Federal Reserve System,
instead of the Comptrol ler of the Currency, shall be obtained before any
State member bank may hereafter establish any branch and before any State
bank hereafter admitted to membership may retain any branch established after
February 25, 1927, beyond the limits of the city, town, or village in which
the parent bank is situated. The approval of the Board shall likewise be obtained
before any State members bank may establish any new branch within the limits
of any such city, town, or village (except within the District of Columbia). [12 USC 321. As added by act of Feb. 25, 1927 (44 Stat. 1229); and amended
by acts of June 16, 1933 (48 Stat. 164); Aug. 23, 1935 (49 Stat. 721); July
15, 1952 (66 Stat. 633). The act referred to in this paragraph was approved
Feb. 25, 1927. For provisions governing domestic branches of national banks,
see section 5155, Revised Statutes; for provisions governing foreign branches,
see section 25, this act.] 1-057 4. Financial Condition, Management, and Powers In acting upon such applications the Board of Governors of the Federal Reserve
System shall consider the financial condition of the applying bank, the general
character of its management, and whether or not the corporate powers exercised
are consistent with the purposes of this Act. [12 USC 322. As added by act of June 21, 1917 (40 Stat. 233), which completely
revised this section.] 1-058 5. Payment of Subscription Whenever the Board of Governors of the Federal Reserve System shall permit
the applying bank to become a stockholder in the Federal reserve bank of the
district its stock subscription shall be payable on call of the Board of Governors
of the Federal Reserve System, and stock issued to it shall be subject to
the provisions of this Act. [12 USC 323. As amended by act of June 21, 1917 (40 Stat. 233), which completely
revised this section.] 1-059 6. Provision of Law to Be Complied with; Reports of Condition All banks admitted to membership under authority of this section shall be
required to comply with the reserve and capital requirements of this Act,
to conform to those provisions of law imposed on national banks which prohibit
such banks from lending on or purchasing their own stock and which relate
to the withdrawal or impairment of their capital stock, and to conform to
the provisions of sections 5199(b) and 5204 of the Revised Statutes with respect
to the payment of dividends; except that any reference in any such provision
to the Comptroller of the Currency shall be deemed for the purposes of this
sentence to be a reference to the Board of Governors of the Federal Reserve
System. Such banks and the officers, agents, and employees thereof shall also
be subject to the provisions of and to the penalties prescribed by sections
334, 656, and 1005 of Title 18, United States Code, and shall be required
to make reports of condition and of the payment of dividends to the Federal
Reserve bank of which they become a member. Not less than three of such reports
shall be made annually on call of the Federal Reserve bank on dates to be
fixed by the Board of Governors of the Federal Reserve System. Any bank which
(A) maintains procedures reasonably adapted to avoid any inadvertent error
and, unintentionally and as a result of such an error, fails to make or publish
any report required under this paragraph, within the period of time specified
by the Board, or submits or publishes any false or misleading report or information,
or (B) inadvertently transmits or publishes any report which is minimally
late, shall be subject to a penalty of not more than $2,000 for each day during
which such failure continues or such false or misleading information is not
corrected. The bank shall have the burden of proving that an error was inadvertent
and that a report was inadvertently transmitted or published late. Any bank
which fails to make or publish such reports within the period of time specified
by the Board, or submits or publishes any false or misleading report or information,
in a manner not described in the 2nd preceding sentence shall be subject to
a penalty of not more than $20,000 for each day during which such failure
continues or such false or misleading information is not corrected. Notwithstanding
the preceding sentence, if any bank knowingly or with reckless disregard for
the accuracy of any information or report described in such sentence submits
or publishes any false or misleading report or information, the Board may
assess a penalty of not more than $1,000,000 or 1 percent of total assets
of such bank, whichever is less, per day for each day during which such failure
continues or such false or misleading information is not corrected. Any penalty
imposed under any of the 4 preceding sentences shall be assessed and collected
by the Board in the manner provided in subparagraphs (E), (F), (G), and (I)
of section 8(i)(2) of the Federal Deposit Insurance Act (for penalties imposed
under such section) and any such assessment (including the determination of
the amount of the penalty) shall be subject to the provisions of such section.
Any bank against which any penalty is assessed under this subsection shall
be afforded an agency hearing if such bank submits a request for such hearing
within 20 days after the issuance of the notice of assessment. Section 8(h)
of the Federal Deposit Insurance Act shall apply to any proceeding under this
paragraph. Such reports of condition shall be in such form and shall contain
such information as the Board of Governors of the Federal Reserve System may
require and shall be published. [12 USC 324. As amended by act of June 21, 1917 (40 Stat. 233), which completely
revised this section; and by acts of Aug. 23, 1935 (49 Stat. 713); Sept. 3,
1954 (68 Stat. 1236); Sept. 8, 1959 (73 Stat. 466); Aug. 9, 1989 (103 Stat.
480); and Sept. 23, 1994 (108 Stat. 2218). For provisions covering loans on
or purchase of their own stock by national banks, see section 5201, Revised
Statutes (at 1-302); for provisions covering withdrawal of capital or payment
of unearned dividends by national banks, see sections 5204 and 5199, Revised
Statutes (at 1-305 and 1-304); for provisions relating to impairment of capital
of national banks, see section 5205, Revised Statutes (at 1-306) and section
345 of Banking Act of 1935 (at 1-307).] 1-060 7. Examinations As a condition of membership such banks shall likewise be subject to examinations
made by direction of the Board of Governors of the Federal Reserve System
or of the Federal reserve bank by examiners selected or approved by the Board
of Governors of the Federal Reserve System. [12 USC 325. As added by act of June 21, 1917 (40 Stat. 233), which completely
revised this section.] 1-061 8. Acceptance of State Examinations; Expenses; Reports of Examinations
and Confidential Supervisory Information Whenever the directors of the Federal reserve bank shall approve the examinations
made by the State authorities, such examinations and the reports thereof may
be accepted in lieu of examinations made by examiners selected or approved
by the Board of Governors of the Federal Reserve System: Provided, however,
That when it deems it necessary the board may order special examinations by
examiners of its own selection and shall in all cases approve the form of
the report. The expenses of all examinations, other than those made by State
authorities, may, in the discretion of the Board of Governors of the Federal
Reserve System, be assessed against the banks examined and, when so assessed,
shall be paid by the banks examined. The Board of Governors of the Federal
Reserve System, at its discretion, may furnish any report of examination or
other confidential supervisory information concerning any State member bank
or other entity examined under any other authority of the Board, to any Federal
or State agency or authority with supervisory or regulatory authority over
the examined entity, to any officer, director, or receiver of the examined
entity, and to any other person that the Board determines to be proper. [12 USC 326. As added by act of June 21, 1917 (40 Stat. 233), which completely
revised this section; and amended by acts of June 26, 1930 (46 Stat. 814)
and Nov. 12, 1999 (113 Stat. 1475).] 1-062 9. Forfeiture of Membership If at any time it shall appear to the Board of Governors of the Federal Reserve
System that a member bank has failed to comply with the provisions of this
section or the regulations of the Board of Governors of the Federal Reserve
System made pursuant thereto, or has ceased to exercise banking functions
without a receiver or liquidating agent having been appointed therefor, it
shall be within the power of the board after hearing to require such bank
to surrender its stock in the Federal reserve bank and to forfeit all rights
and privileges of membership. The Board of Governors of the Federal Reserve
System may restore membership upon due proof of compliance with the conditions
imposed by this section. [12 USC 327. As amended by act of June 21, 1917 (40 Stat. 233), which completely
revised this section; and further amended by act of April 23, 1930 (46 Stat.
251).] 1-063 10. Voluntary Withdrawal from Membership Any State bank or trust company desiring to withdraw from membership in a
Federal reserve bank may do so, after six months' written notice shall have
been filed with the Board of Governors of the Federal Reserve System, upon
the surrender and cancellation of all of its holdings of capital stock in
the Federal reserve bank: Provided, That the Board of Governors of the Federal
Reserve System, in its discretion and subject to such conditions as it may
prescribe, may waive such six months' notice in individual cases and may permit
any such State bank or trust company to withdraw from membership in a Federal
reserve bank prior to the expiration of six months from the date of the written
notice of its intention to withdraw: Provided, however, That no Federal reserve
bank shall, except under express authority of the Board of Governors of the
Federal Reserve System, cancel within the same calendar year more than twenty-five
per centum of its capital stock for the purpose of effecting voluntary withdrawals
during that year. All such applications shall be dealt with in the order in
which they are filed with the board. Whenever a member bank shall surrender
its stock holdings in a Federal reserve bank, or shall be ordered to do so
by the Board of Governors of the Federal Reserve System, under authority of
law, all of its rights and privileges as a member bank shall thereupon cease
and determine, and after due provision has been made for any indebtedness
due or to become due to the Federal reserve bank it shall be entitled to a
refund of its cash paid subscription with interest at the rate of one-half
of one per centum per month from the date of last dividend, if earned, the
amount refunded in no event to exceed the book value of the stock at that
time, and shall likewise be entitled to repayment of deposits and of any other
balance due from the Federal reserve bank. [12 USC 328. As added by act of June 21, 1917 (40 Stat. 233), which completely
revised this section; and amended by act of April 17, 1930 (46 Stat. 170).] 1-064 11. Capital Required for Membership No applying bank shall be admitted to membership unless it possesses capital
stock and surplus which, in the judgment of the Board of Governors of the
Federal Reserve System, are adequate in relation to the character and condition
of its assets and to its existing and prospective deposit liabilities and
other corporate responsibilities: Provided, That no bank engaged in the business
of receiving deposits other than trust funds, which does not possess capital
stock and surplus in an amount equal to that which would be required for the
establishment of a national banking association in the place in which it is
located, shall be admitted to membership unless it is, or has been, approved
for deposit insurance under the Federal Deposit Insurance Act. The capital
stock of a State member bank shall not be reduced except with the prior consent
of the Board. [12 USC 329. As amended by acts of June 21, 1917 (40 Stat. 234), which completely
revised this section; March 4, 1923 (42 Stat. 1478); June 16, 1933 (48 Stat.
185); and July 15, 1952 (66 Stat. 633). For provisions relating to minimum
capital and surplus of national banks, see section 5138, Revised Statutes.] 1-065 12. Waiver of Membership Requirements as to Insured Banks In order to facilitate the admission to membership in the Federal Reserve
System of any State bank which is required under subsection (y) of section
12B of this Act to become a member of the Federal Reserve System in order
to be an insured bank or continue to have any part of its deposits insured
under such section 12B, the Board of Governors of the Federal Reserve System
may waive in whole or in part the requirements of this section relating to
the admission of such bank to membership: Provided, That, if such bank is
admitted with a capital less than that required for the organization of a
national bank in the same place and its capital and surplus are not, in the
judgment of the Board of Governors of the Federal Reserve System, adequate
in relation to its liabilities to depositors and other creditors, the said
Board may, in its discretion, require such bank to increase its capital and
surplus to such amount as the Board may deem necessary within such period
prescribed by the Board as in its judgment shall be reasonable in view of
all the circumstances: Provided, however, That no such bank shall be required
to increase its capital to an amount in excess of that required for the organization
of a national bank in the same place. [Formerly 12 USC 329a, as added by act of Aug. 23, 1935 (49 Stat. 704). Omitted
from the U.S. Code. The provision of section 12B(y) requiring membership in
Federal Reserve System was repealed by act of June 20, 1939 (53 Stat. 842);
and all of section 12B was withdrawn and enacted as a separate Federal Deposit
Insurance Act by act of Sept. 21, 1950 (64 Stat. 873).] 1-066 13. Laws to Which Subject Banks becoming members of the Federal Reserve System under authority of this
section shall be subject to the provisions of this section and to those of
this Act which relate specifically to member banks, but shall not be subject
to examination under the provisions of the first two paragraphs of section
fifty-two hundred and forty of the Revised Statutes as amended by section
twenty-one of this Act. Subject to the provisions of this Act and to the regulations
of the board made pursuant thereto, any bank becoming a member of the Federal
Reserve System shall retain its full charter and statutory rights as a State
bank or trust company, and may continue to exercise all corporate powers granted
it by the State in which it was created, and shall be entitled to all privileges
of member banks, except that the Board of Governors of the Federal Reserve
System may limit the activities of State member banks and subsidiaries of
State member banks in a manner consistent with section 24 of the Federal Deposit
Insurance Act. No Federal reserve bank shall be permitted to discount for
any State bank or trust company notes, drafts, or bills of exchange of any
one borrower who is liable for borrowed money to such State bank or trust
company in an amount greater than that which could be borrowed lawfully from
such State bank or trust company were it a national banking association. The
Federal reserve bank, as a condition of the discount of notes, drafts, and
bills of exchange for such State bank or trust company, shall require a certificate
or guaranty to the effect that the borrower is not liable to such bank in
excess of the amount provided by this section, and will not be permitted to
become liable in excess of this amount while such notes, drafts, or bills
of exchange are under discount with the Federal reserve bank. [12 USC 330. As added by act of June 21, 1917 (40 Stat. 234), which completely
revised this section; and amended by acts of July 1, 1922 (42 Stat. 821) and
Dec. 19, 1991 (105 Stat. 2353). As to limitations on loans by national banks
to one person, see section 5200, Revised Statutes.] 1-067 14. False Certification of Checks It shall be unlawful for any officer, clerk, or agent of any bank admitted
to membership under authority of this section to certify any check drawn upon
such bank unless the person or company drawing the check has on deposit therewith
at the time such check is certified an amount of money equal to the amount
specified in such check. Any check so certified by duly authorized officers
shall be a good and valid obligation against such bank, but the act of any
such officer, clerk, or agent in violation of this section may subject such
bank to a forfeiture of its membership in the Federal Reserve System upon
hearing by the Board of Governors of the Federal Reserve System. [12 USC 331. As added by act of June 21, 1917 (40 Stat. 234), which completely
revised this section. For additional provisions covering false certification
of checks by officers of Federal Reserve Banks and member banks, see also
section 5208, Revised Statutes and 18 USC 1004.] 1-068 15. Government Depositaries and Financial Agents All banks or trust companies incorporated by special law or organized under
the general laws of any State, which are members of the Federal Reserve System,
when designated for that purpose by the Secretary of the Treasury, shall be
depositaries of public money, under such regulations as may be prescribed
by the Secretary; and they may also be employed as financial agents of the
Government; and they shall perform all such reasonable duties, as depositaries
of public money and financial agents of the Government, as may be required
of them. The Secretary of the Treasury shall require of the banks and trust
companies thus designated satisfactory security, by the deposit of United
States bonds or otherwise, for the safe keeping and prompt payment of the
public money deposited with them and for the faithful performance of their
duties as financial agents of the Government. [12 USC 332. As added by act of May 7, 1928 (45 Stat. 492).] 1-069 16. Admission to Membership of Mutual Savings Banks Any mutual savings bank having no capital stock (including any other banking
institution the capital of which consists of weekly or other time deposits
which are segregated from all other deposits and are regarded as capital stock
for the purposes of taxation and the declaration of dividends), but having
surplus and undivided profits not less than the amount of capital required
for the organization of a national bank in the same place, may apply for and
be admitted to membership in the Federal Reserve System in the same manner
and subject to the same provisions of law as State banks and trust companies,
except that any such savings banks shall subscribe for capital stock of the
Federal reserve bank in an amount equal to six-tenths of 1 per centum of its
total deposit liabilities as shown by the most recent report of examination
of such savings bank preceding its admission to membership. Thereafter such
subscription shall be adjusted semiannually on the same percentage basis in
accordance with rules and regulations prescribed by the Board of Governors
of the Federal Reserve System. If any such mutual savings bank applying for
membership is not permitted by the laws under which it was organized to purchase
stock in a Federal reserve bank, it shall, upon admission to the system, deposit
with the Federal reserve bank an amount equal to the amount which it would
have been required to pay in on account of a subscription to capital stock.
Thereafter such deposit shall be adjusted semiannually in the same manner
as subscriptions for stock. Such deposits shall be subject to the same conditions
with respect to repayment as amounts paid upon subscriptions to capital stock
by other member banks and the Federal reserve bank shall pay interest thereon
at the same rate as dividends are actually paid on outstanding shares of stock
of such Federal reserve bank. If the laws under which any such savings bank
was organized be amended so as to authorize mutual savings banks to subscribe
for Federal reserve bank stock, such savings bank shall thereupon subscribe
for the appropriate amount of stock in the Federal reserve bank, and the deposit
hereinbefore provided for in lieu of payment upon capital stock shall be applied
upon such subscription. If the laws under which any such savings bank was
organized be not amended at the next session of the legislature following
the admission of such savings bank to membership so as to authorize mutual
savings banks to purchase Federal reserve bank stock, or if such laws be so
amended and such bank fail within six months thereafter to purchase such stock,
all of its rights and privileges as a member bank shall be forfeited and its
membership in the Federal Reserve System shall be terminated in the manner
prescribed elsewhere in this section with respect to State member banks and
trust companies. Each such mutual savings bank shall comply with all the provisions
of law applicable to State member banks and trust companies, with the regulations
of the Board of Governors of the Federal Reserve System and with the conditions
of membership prescribed for such savings bank at the time of admission to
membership, except as otherwise hereinbefore provided with respect to capital
stock. [12 USC 333. As added by act of June 16, 1933 (48 Stat. 164). As to the amount
of capital required for the organization of a national bank, see section 5138,
Revised Statutes.] 1-070 17. Reports of Affiliates Each bank admitted to membership under this section shall obtain from each
of its affiliates other than member banks and furnish to the Federal reserve
bank of its district and to the Board of Governors of the Federal Reserve
System not less than three reports during each year. Such reports shall be
in such form as the Board of Governors of the Federal Reserve System may prescribe,
shall be verified by the oath or affirmation of the president or such other
officer as may be designated by the board of directors of such affiliate to
verify such reports, and shall disclose the information hereinafter provided
for as of dates identical with those fixed by the Board of Governors of the
Federal Reserve System for reports of the condition of the affiliated member
bank. Each such report of an affiliate shall be transmitted as herein provided
at the same time as the corresponding report of the affiliated member bank,
except that the Board of Governors of the Federal Reserve System may, in its
discretion, extend such time for good cause shown. Each such report shall
contain such information as in the judgment of the Board of Governors of the
Federal Reserve System shall be necessary to disclose fully the relations
between such affiliate and such bank and to enable the Board to inform itself
as to the effect of such relations upon the affairs of such bank. The reports
of such affiliates shall be published by the bank under the same conditions
as govern its own condition reports. [12 USC 334. As added by act of June 16, 1933 (48 Stat. 165). As to reports
of affiliates of national banks, see section 5211, Revised Statutes (12 USC
161).] 1-071 18. Additional Reports of Affiliates Any such affiliated member bank may be required to obtain from any such affiliate
such additional reports as in the opinion of its Federal reserve bank or the
Board of Governors of the Federal Reserve System may be necessary in order
to obtain a full and complete knowledge of the condition of the affiliated
member bank. Such additional reports shall be transmitted to the Federal reserve
bank and the Board of Governors of the Federal Reserve System and shall be
in such form as the Board of Governors of the Federal Reserve System may prescribe. [12 USC 334. As added by act of June 16, 1933 (48 Stat. 165). ] 1-072 19. Failure to Obtain Reports of Affiliates Any such affiliated member bank which fails to obtain from any of its affiliates
and furnish any report provided for by the two preceding paragraphs of this
section shall be subject to a penalty of $100 for each day during which such
failure continues, which, by direction of the Board of Governors of the Federal
Reserve System, may be collected, by suit or otherwise, by the Federal reserve
bank of the district in which such member bank is located. [12 USC 334. As added by act of June 16, 1933 (48 Stat. 165) and amended
by act of July 1, 1966 (80 Stat. 243). For definition of "affiliate" see section
2 of the Banking Act of 1933, approved June 16, 1933.] 1-073 20. Dealings in Investment Securities and Stock State member banks shall be subject to the same limitations and conditions
with respect to the purchasing, selling, underwriting, and holding of investment
securities and stock as are applicable in the case of national banks under
paragraph "Seventh" of section 5136 of the Revised Statutes, as amended. This
paragraph shall not apply to any interest held by a State member bank in accordance
with section 5136A of the Revised Statutes of the United States and subject
to the same conditions and limitations provided in such section. [12 USC 335. As added by act of June 16, 1933 (48 Stat. 165) and amended
by act of Nov. 12, 1999 (113 Stat. 1381).] 1-074 21. Stock Representing Stock of Other Corporations After the date of the enactment of the Banking Act of 1935, no certificate
evidencing the stock of any State member bank shall bear any statement purporting
to represent the stock of any other corporation, except a member bank or a
corporation engaged on June 16, 1934 in holding the bank premises of such
member bank, nor shall the ownership, sale, or transfer of any certificate
representing the stock of any State member bank be conditioned in any manner
whatsoever upon the ownership, sale, or transfer of a certificate representing
the stock of any other corporation, except a member bank or a corporation
engaged on June 16, 1934 in holding the bank premises of such member bank:
Provided, That this section shall not operate to prevent the ownership, sale,
or transfer of stock of any other corporation being conditioned upon the ownership,
sale, or transfer of a certificate representing stock of a State member bank. [12 USC 336. As added by act of June 16, 1933 (48 Stat. 165); and amended
by act of Aug. 23, 1935 (49 Stat. 710). The Banking Act of 1935, referred
to in this paragraph, was approved Aug. 23, 1935. For similar provision applicable
to stock of national banks, see section 5139, Revised Statutes (12 USC 52).] 1-075 22. Examinations of Affiliates In connection with examinations of State member banks, examiners selected
or approved by the Board of Governors of the Federal Reserve System shall
make such examinations of the affairs of all affiliates of such banks as shall
be necessary to disclose fully the relations between such banks and their
affiliates and the effect of such relations upon the affairs of such banks.
The expense of examination of affiliates of any State member bank may, in
the discretion of the Board of Governors of the Federal Reserve System, be
assessed against such bank and, when so assessed, shall be paid by such bank.
In the event of the refusal to give any information requested in the course
of the examination of any such affiliate, or in the event of the refusal to
permit such examination, or in the event of the refusal to pay any expense
so assessed, the Board of Governors of the Federal Reserve System may, in
its discretion, require any or all State member banks affiliated with such
affiliate to surrender their stock in the Federal reserve bank and to forfeit
all rights and privileges of membership in the Federal Reserve System, as
provided in this section. [12 USC 338. As added by act of June 16, 1933 (48 Stat. 166). As to examinations
of affiliates of national banks, see this act, section 21.] 1-075.1 23. Community Development Authority State member banks may make investments designed primarily to promote the
public welfare, including the welfare of low- and moderate-income communities
or families (such as by providing housing, services, or jobs), to the extent
permissible under State law, and subject to such restrictions and requirements
as the Board of Governors of the Federal Reserve System may prescribe by regulation
or order. A bank shall not make any such investment if the investment would
expose the bank to unlimited liability. The Board shall limit a bank's investments
in any 1 project and bank's aggregate investments under this paragraph. A
bank's aggregate investments under this paragraph shall not exceed an amount
equal to the sum of 5 percent of the bank's capital stock actually paid in
and unimpaired and 5 percent of the bank's unimpaired surplus fund, unless
the Board determines by order that the higher amount will pose no significant
risk to the Deposit Insurance Fund, and the bank is adequately capitalized.
In no case shall a bank's aggregate investments under this paragraph exceed
an amount equal to the sum of 10 percent of the bank's capital stock actually
paid in and unimpaired and 10 percent of the bank's unimpaired surplus fund. [12 USC 338a. As added by act of Oct. 23, 1992 (106 Stat. 2774). As amended
by act of Sept. 30, 1996 (110 Stat. 3009-489).] SECTION 9A--Participation in Lotteries Prohibited 1-076 (a) A State member bank may not-- (1) deal in lottery tickets; (2) deal in bets used as a means or substitute for participation in a lottery; (3) announce, advertise, or publicize the existence of any lottery; (4) announce, advertise, or publicize the existence or identity of any participant
or winner, as such, in a lottery. (b) A State member bank may not permit-- (1) the use of any part of any of its banking offices by any person for any
purpose forbidden to the bank under subsection (a), or (2) direct access by the public from any of its banking offices to any premises
used by any person for any purpose forbidden to the bank under subsection
(a). (c) As used in this section-- (1) The term "deal in" includes making, taking, buying, selling, redeeming,
or collecting. (2) The term "lottery" includes any arrangement whereby three or more persons
(the "participants") advance money or credit to another in exchange for the
possibility or expectation that one or more but not all of the participants
(the "winners") will receive by reason of their advances more than the amounts
they have advanced, the identity of the winners being determined by any means
which includes-- (A) a random selection; (B) a game, race, or contest; or (C) any record or tabulation of the result of one or more events in which
any participant has no interest except for its bearing upon the possibility
that he may become a winner. (3) The term "lottery ticket" includes any right, privilege, or possibility
(and any ticket, receipt, record, or other evidence of any such right, privilege,
or possibility) of becoming a winner in a lottery. (d) Nothing contained in this section prohibits a State member bank
from accepting deposits or cashing or otherwise handling checks or other negotiable
instruments, or performing other lawful banking services for a State operating
a lottery, or for an officer or employee of that State who is charged with
the administration of the lottery. (e) The Board of Governors of the Federal Reserve System shall issue
such regulations as may be necessary to the strict enforcement of this section
and the prevention of evasions thereof. [12 USC 339. As added by act of Dec. 15, 1967 (81 Stat. 609) effective April
1, 1968. Corresponding prohibitions are contained in section 5136A of the
Revised Statutes, section 20 of the Federal Deposit Insurance Act, and section
410 of the National Housing Act with respect to national banks, nonmember
insured banks, and institutions insured by the Federal Savings and Loan Insurance
Corporation, respectively.]
1-076.1
(a) Conservatorship or receivership.
(1) Appointment. The Board may appoint a conservator or receiver to take
possession and control of any uninsured State member bank which operates,
or operates as, a multilateral clearing organization pursuant to section 409
of the Federal Deposit Insurance Corporation Improvement Act of 1991 to the
same extent and in the same manner as the Comptroller of the Currency may
appoint a conservator or receiver for a national bank.
(2) Powers. The conservator or receiver for an uninsured State member bank
referred to in paragraph (1) shall exercise the same powers, functions, and
duties, subject to the same limitations, as a conservator or receiver for
a national bank.
(b) Board authority. The Board shall have the same authority with
respect to any conservator or receiver appointed under subsection (a), and
the uninsured State member bank for which the conservator or receiver has
been appointed, as the Comptroller of the Currency has with respect to a conservator
or receiver for a national bank and the national bank for which the conservator
or receiver has been appointed.
(c) Bankruptcy proceedings. The Board (in the case of an uninsured
State member bank which operates, or operates as, such a multilateral clearing
organization) may direct a conservator or receiver appointed for the bank
to file a petition pursuant to title 11, United States Code, in which case,
title 11, United States Code, shall apply to the bank in lieu of otherwise
applicable Federal or State insolvency law.
[12 USC 339a. As added by act of Dec. 21, 2000 (114 Stat. 2763).
SECTION 10--Board of Governors of the Federal Reserve System 1-077 1. Appointment and Qualification of Members The Board of Governors of the Federal Reserve System (hereinafter referred
to as the "Board") shall be composed of seven members, to be appointed by
the President, by and with the advice and consent of the Senate, after the
date of enactment of the Banking Act of 1935, for terms of fourteen years
except as hereinafter provided, but each appointive member of the Federal
Reserve Board in office on such date shall continue to serve as a member of
the Board until February 1, 1936, and the Secretary of the Treasury and the
Comptroller of the Currency shall continue to serve as members of the Board
until February 1, 1936. In selecting the members of the Board, not more than
one of whom shall be selected from any one Federal Reserve district, the President
shall have due regard to a fair representation of the financial, agricultural,
industrial, and commercial interests, and geographical divisions of the country.
The members of the Board shall devote their entire time to the business of
the Board and shall each receive an annual salary of $15,000, payable monthly,
together with actual necessary traveling expenses. [12 USC 241. As amended by acts of June 3, 1922 (42 Stat. 620); Aug. 23,
1935 (49 Stat. 704). Prior to the enactment of the Banking Act of 1935, approved
Aug. 23, 1935, the Board of Governors of the Federal Reserve System was known
as the Federal Reserve Board. See note to the third paragraph of section 1.
The portion of this paragraph dealing with salaries of Board members has in
effect been amended numerous times, most recently by Executive Order. The
salary of the chairman of the Board is set at executive schedule level 2,
and the salary of other members at executive schedule level 3 (see 2 USC 358
and 5 USC 5313 and 5314).] 1-078 2. Members Ineligible to Serve Member Banks; Term of Office; Chairman
and Vice Chairman The members of the Board shall be ineligible during the time they are in
office and for two years thereafter to hold any office, position, or employment
in any member bank, except that this restriction shall not apply to a member
who has served the full term for which he was appointed. Upon the expiration
of the term of any appointive member of the Federal Reserve Board in office
on the date of enactment of the Banking Act of 1935, the President shall fix
the term of the successor to such member at not to exceed fourteen years,
as designated by the President at the time of nomination, but in such manner
as to provide for the expiration of the term of not more than one member in
any two-year period, and thereafter each member shall hold office for a term
of fourteen years from the expiration of the term of his predecessor, unless
sooner removed for cause by the President. Of the persons thus appointed,
one shall be designated by the President, by and with the advice and consent
of the Senate, to serve as Chairman of the Board for a term of four years,
and one shall be designated by the President, by and with the consent of the
Senate, to serve as Vice Chairman of the Board for a term of four years. The
chairman of the Board, subject to its supervision, shall be its active executive
officer. Each member of the Board shall within fifteen days after notice of
appointment make and subscribe to the oath of office. Upon the expiration
of their terms of office, members of the Board shall continue to serve until
their successors are appointed and have qualified. Any person appointed as
a member of the Board after the date of enactment of the Banking Act of 1935
shall not be eligible for reappointment as such member after he shall have
served a full term of fourteen years. [12 USC 242. As amended by acts of March 3, 1919 (40 Stat. 1315); June 3,
1922 (42 Stat. 620); June 16, 1933 (48 Stat. 166); Aug. 23, 1935 (49 Stat.
704) and November 16, 1977 (91 Stat. 1388). The Banking Act of 1935, referred
to in this paragraph, became effective Aug. 23, 1935. Prior to the enactment
of that act, the chairman and vice chairman of the Board of Governors of the
Federal Reserve System were known as the governor and vice governor of the
Federal Reserve Board, respectively. See note to the third paragraph of section
1. The act of November 16, 1977 amended the second sentence of this paragraph.
The amendment takes effect on Jan. 1, 1979, and applies to individuals who
are designated by the President on or after such date to serve as chairman
or vice chairman.] 1-079
3. Assessments on Federal Reserve Banks
The Board of Governors of the Federal Reserve System shall have power to
levy semiannually upon the Federal reserve banks, in proportion to their capital
stock and surplus, an assessment sufficient to pay its estimated expenses
and the salaries of its members and employees for the half year succeeding
the levying of such assessments, together with any deficit carried forward
from the preceding half year, and such assessments may include amounts sufficient
to provide for the acquisition by the Board in its own name of such site or
building in the District of Columbia as in its judgment alone shall be necessary
for the purpose of providing suitable and adequate quarters for the performance
of its functions. After September 1, 2000, the Board may also use such assessments
to acquire, in its own name, a site or building (in addition to the facilities
existing on such date) to provide for the performance of the functions of
the Board. After approving such plans, estimates, and specifications as it
shall have caused to be prepared, the Board may, notwithstanding any other
provision of law, cause to be constructed on any site so acquired by it a
building or buildings suitable and adequate in its judgment for its purposes
and proceed to take all such steps as it may deem necessary or appropriate
in connection with the construction, equipment, and furnishing of such building
or buildings. The Board may maintain, enlarge, or remodel any building or
buildings so acquired or constructed and shall have sole control of such building
or buildings and space therein.
[12 USC 243. As reenacted without change by act of June 3, 1922 (42 Stat.
621); and amended by acts of June 19, 1934 (48 Stat. 1108) and Dec. 27, 2000
(114 Stat. 3027). By act approved June 27, 1935 (49 Stat. 425), provision
was made for the furnishing of steam from the central heating plant to the
Federal Reserve Board, now the Board of Governors of the Federal Reserve System.]
1-080 4. Principal Offices; Expenses; Deposit of Funds; Members Not to Be Officers
or Stockholders of Banks The principal offices of the Board shall be in the District of Columbia.
At meetings of the Board the chairman shall preside, and, in his absence,
the vice chairman shall preside. In the absence of the chairman and the vice
chairman, the board shall elect a member to act as chairman pro tempore. The
Board shall determine and prescribe the manner in which its obligations shall
be incurred and its disbursements and expenses allowed and paid, and may leave
on deposit in the Federal Reserve banks the proceeds of assessments levied
upon them to defray its estimated expenses and the salaries of its members
and employees, whose employment, compensation, leave, and expenses shall be
governed solely by the provisions of this Act, specific amendments thereof,
and rules and regulations of the Board not inconsistent therewith; and funds
derived from such assessments shall not be construed to be Government funds
or appropriated moneys. No member of the Board of Governors of the Federal
Reserve System shall be an officer or director of any bank, banking institution,
trust company, or Federal Reserve bank or hold stock in any bank, banking
institution, or trust company; and before entering upon his duties as a member
of the Board of Governors of the Federal Reserve System he shall certify under
oath that he has complied with this requirement, and such certification shall
be filed with the secretary of the Board. Whenever a vacancy shall occur,
other than by expiration of term, among the six members of the Board of Governors
of the Federal Reserve System appointed by the President as above provided,
a succcessor shall be appointed by the President, by and with the advice and
consent of the Senate, to fill such vacancy, and when appointed he shall hold
office for the unexpired term of his predecessor. [12 USC 244. As amended by acts of June 3, 1922 (42 Stat. 621); June 16,
1933 (48 Stat. 167); Aug. 23, 1935 (49 Stat. 705). The reference to "the six
members" of the Board of Governors is an apparent error in the law and should
read "the seven members." See section 10, first paragraph.] 1-081 5. Vacancies During Recess of Senate The President shall have power to fill all vacancies that may happen on the
Board of Governors of the Federal Reserve System during the recess of the
Senate by granting commissions which shall expire with the next session of
the Senate. [12 USC 245. As amended by act of June 3, 1922 (42 Stat. 621).] 1-082 6. Reservation of Powers of Secretary of Treasury Nothing in this Act contained shall be construed as taking away any powers
heretofore vested by law in the Secretary of the Treasury which relate to
the supervision, management, and control of the Treasury Department and bureaus
under such department, and wherever any power vested by this Act in the Board
of Governors of the Federal Reserve System or the Federal reserve agent appears
to conflict with the powers of the Secretary of the Treasury, such powers
shall be exercised subject to the supervision and control of the Secretary. [12 USC 246. As reenacted without change by act of June 3, 1922 (42 Stat.
621).] 1-083
7. Annual Report
The Board of Governors of the Federal Reserve System shall annually make
a full report of its operations to the Speaker of the House of Representatives,
who shall cause the same to be printed for the information of the Congress.
The report required under this paragraph shall include the reports required
under section 707 of the Equal Credit Opportunity Act, section 18(f)(7) of
the Federal Trade Commission Act, section 114 of the Truth in Lending Act,
and the tenth undesignated paragraph of this section.
[12 USC 247. As reenacted without change by act of June 3, 1922 (42 Stat.
621) and amended by act of Dec. 27, 2000 (114 Stat. 3030).]
1-084 8. Issuance of National Currency and Federal Reserve Notes Section three hundred and twenty-four of the Revised Statutes of the United
States shall be amended so as to read as follows: Sec. 324. There shall be in the Department of the Treasury a bureau charged
with the execution of all laws passed by Congress relating to the issue and
regulation of national currency secured by United States bonds, and under
the general supervision of the Board of Governors of the Federal Reserve System,
of all Federal Reserve notes, except for the cancellation and destruction,
and accounting with respect to such cancellation and destruction, of Federal
Reserve notes unfit for circulation, the chief officer of which bureau shall
be called the Comptroller of the Currency and shall perform his duties under
the general directions of the Secretary of the Treasury. The Comptroller of
the Currency shall have the same authority over matters within the jurisdiction
of the Comptroller as the Director of the Office of Thrift Supervision has
over matters within the Director's jurisdiction under section 3(b)(3) of the
Home Owners' Loan Act. The Secretary of the Treasury may not delay or prevent
the issuance of any rule or the promulgation of any regulation by the Comptroller
of the Currency. [12 USC 1. As reenacted without change by act of June 3, 1922 (42 Stat. 621);
and amended by acts of May 20, 1966 (80 Stat. 161) and Sept. 23, 1994 (108
Stat. 2232).] 1-085 9. Branch Federal Reserve Bank Buildings No Federal Reserve bank may authorize the acquisition or construction of
any branch building, or enter into any contract or other obligation for the
acquisition or construction of any branch building, without the approval of
the Board. [12 USC 522. As added by act of June 3, 1922 (42 Stat. 622); and amended
by acts of Feb. 6, 1923 (42 Stat. 1223); July 30, 1947 (61 Stat. 520); May
29, 1953 (67 Stat. 41); Aug. 31, 1962 (76 Stat. 418); Oct. 28, 1974 (88 Stat.
1505); and Oct. 24, 1992 (106 Stat. 3144).] 1-086 10. Record of Open Market and Other Policies The Board of Governors of the Federal Reserve System shall keep a complete
record of the action taken by the Board and by the Federal Open Market Committee
upon all questions of policy relating to open-market operations and shall
record therein the votes taken in connection with the determination of open-market
policies and the reasons underlying the action of the Board and the Committee
in each instance. The Board shall keep a similar record with respect to all
questions of policy determined by the Board, and shall include in its annual
report to the Congress a full account of the action so taken during the preceding
year with respect to open-market policies and operations and with respect
to the policies determined by it and shall include in such report a copy of
the records required to be kept under the provisions of this paragraph. [12 USC 247a. As added by act of Aug. 23, 1935 (49 Stat. 705).] SECTION 10A--Emergency Advances to Groups of Member Banks 1-087 1. Authority of Reserve Banks to Make Advances Upon receiving the consent of not less than five members of the Board of
Governors of the Federal Reserve System, any Federal reserve bank may make
advances, in such amount as the board of directors of such Federal reserve
bank may determine, to groups of five or more member banks within its district,
a majority of them independently owned and controlled, upon their time or
demand promissory notes, provided the bank or banks which receive the proceeds
of such advances as herein provided have no adequate amounts of eligible and
acceptable assets available to enable such bank or banks to obtain sufficient
credit accommodations from the Federal reserve bank through rediscounts or
advances other than as provided in section 10(b). The liability of the individual
banks in each group must be limited to such proportion of the total amount
advanced to such group as the deposit liability of the respective banks bears
to the aggregate deposit liability of all banks in such group, but such advances
may be made to a lesser number of such member banks if the aggregate amount
of their deposit liability constitutes at least 10 per centum of the entire
deposit liability of the member banks within such district. Such banks shall
be authorized to distribute the proceeds of such loans to such of their number
and in such amount as they may agree upon, but before so doing they shall
require such recipient banks to deposit with a suitable trustee, representing
the entire group, their individual notes made in favor of the group protected
by such collateral security as may be agreed upon. Any Federal reserve bank
making such advance shall charge interest or discount thereon at a rate not
less than 1 per centum above its discount rate in effect at the time of making
such advance. No such note upon which advances are made by a Federal reserve
bank under this section shall be eligible under section 16 of this Act as
collateral security for Federal reserve notes. [12 USC 347a. As added by act of Feb. 27, 1932 (47 Stat. 56).] 1-088 2. Foreign Obligations as Security for Advances No obligations of any foreign government, individual, partnership, association,
or corporation organized under the laws thereof shall be eligible as collateral
security for advances under this section. [12 USC 347a. As added by act of Feb. 27, 1932 (47 Stat. 56).] 1-089 3. Authority of Member Banks to Obligate Themselves Member banks are authorized to obligate themselves in accordance with the
provisions of this section. [12 USC 347a. As added by act of Feb. 27, 1932 (47 Stat. 56).] SECTION 10B--Advances to Individual Member Banks 1-090 (a) Any Federal Reserve bank, under rules and regulations prescribed
by the Board of Governors of the Federal Reserve System, may make advances
to any member bank on its time or demand notes having maturities of not more
than four months and which are secured to the satisfaction of such Federal
Reserve bank. Notwithstanding the foregoing, any Federal Reserve bank, under
rules and regulations prescribed by the Board of Governors of the Federal
Reserve System, may make advances to any member bank on its time notes having
such maturities as the Board may prescribe and which are secured by mortgage
loans covering a one-to-four family residence. Such advances shall bear interest
at a rate equal to the lowest discount rate in effect at such Federal Reserve
bank on the date of such note. [12 USC 347b(a). As added by act of Feb. 27, 1932 (47 Stat. 56); and amended
by acts of Feb. 3, 1933 (47 Stat. 794); March 9, 1933 (48 Stat. 7); Aug. 23,
1935 (49 Stat. 705); Oct. 18, 1974 (88 Stat. 1368); March 31, 1980 (94 Stat.
140); and Dec. 19, 1991 (105 Stat. 2279).] Limitations on Advances (b)(1) Except as provided in paragraph (2), no advances to any undercapitalized
depository institution by any Federal Reserve bank under this section may
be outstanding for more than 60 days in any 120-day period. (b)(2)(A) If-- (i) the head of the appropriate Federal banking agency certifies in advance
in writing to the Federal Reserve bank that any depository institution is
viable; or (ii) the Board conducts an examination of any depository institution and
the Chairman of the Board certifies in writing to the Federal Reserve bank
that the institution is viable, the limitation contained in paragraph (1)
shall not apply during the 60-day period beginning on the date such certification
is received. (B) The 60-day period may be extended for additional 60-day periods upon
receipt by the Federal Reserve bank of additional written certifications under
subparagraph (A) with respect to each such additional period. (C) The authority of the head of any agency to issue a written certification
of viability under this paragraph may not be delegated to any other person. (D) Notwithstanding paragraph (1), an undercapitalized depository institution
which does not have a certificate of viability in effect under this paragraph
may have advances outstanding for more than 60 days in any 120-day period
if the Board elects to treat-- (i) such institution as critically undercapitalized under paragraph (3);
and (ii) any such advance as an advance described in subparagraph (A)(i) of paragraph
(3). 1-090.2 (b)(3)(A) Notwithstanding any other provision of this section, if-- (i) in the case of any critically undercapitalized depository institution-- (I) any advance under this section to such institution is outstanding without
payment having been demanded as of the end of the 5-day period beginning on
the date the institution becomes a critically undercapitalized depository
institution; or (II) any new advance is made to such institution under this section after
the end of such period; and (ii) after the end of that 5-day period, the Deposit Insurance Fund of the
Federal Deposit Insurance Corporation incurs a loss exceeding the loss that
the Corporation would have incurred if it had liquidated that institution
as of the end of that period, the Board shall, subject to the limitations in subparagraph (B), be liable
to the Federal Deposit Insurance Corporation for the excess loss, without
regard to the terms of the advance or any collateral pledged to secure the
advance. (B) The liability of the Board under subparagraph (A) shall not exceed the
lesser of the following: (i) The amount of the loss the Board or any Federal Reserve bank would have
incurred on the increases in the amount of advances made after the 5-day period
referred to in subparagraph (A) if those increased advances had been unsecured. (ii) The interest received on the increases in the amount of advances made
after the 5-day period referred to in subparagraph (A). (C) The Board shall pay the Federal Deposit Insurance Corporation the amount
of any liability of the Board under subparagraph (A). (D) The Board shall report to the Congress on any excess loss liability it
incurs under subparagraph (A), as limited by subparagraph (B)(i), and the
reasons therefore, not later than 6 months after incurring the liability. 1-090.3 (b)(4) A Federal Reserve bank shall have no obligation to make, increase,
renew, or extend any advance or discount under this Act to any depository
institution. (b)(5)(A) The term "appropriate Federal banking agency" has the same
meaning as in section 3 of the Federal Deposit Insurance Act. The term "critically undercapitalized" has the same meaning as in section
38 of the Federal Deposit Insurance Act. (C) The term "depository institution" has the same meaning as in section
3 of the Federal Deposit Insurance Act. (D) The term "undercapitalized depository institution" means any depository
institution which-- (i) is undercapitalized, as defined in section 38 of the Federal Deposit
Insurance Act; or (ii) has a composite CAMEL rating of 5 under the Uniform Financial Institutions
Rating System (or an equivalent rating by any such agency under a comparable
rating system) as of the most recent examination of such institution. (E) A depository institution is "viable" if the Board or the appropriate
Federal banking agency determines, giving due regard to the economic conditions
and circumstances in the market in which the institution operates, that the
institution-- (i) is not critically undercapitalized; (ii) is not expected to become critically undercapitalized; and (iii) is not expected to be placed in conservatorship or receivership. [12 USC 347b(b). As added by act of Dec. 19, 1991 (105 Stat. 2279). As amended
by act of Sept. 30, 1996 (110 Stat. 3009-489).] SECTION 11--Powers of Board of Governors of the Federal Reserve System 1-091 The Board of Governors of the Federal Reserve System shall be authorized
and empowered: 1-092 Examinations and Reports (a)(1) To examine at its discretion the accounts, books, and affairs
of each Federal reserve bank and of each member bank and to require such statements
and reports as it may deem necessary. The said board shall publish once each
week a statement showing the condition of each Federal reserve bank and a
consolidated statement for all Federal reserve banks. Such statements shall
show in detail the assets and liabilities of the Federal reserve banks, single
and combined, and shall furnish full information regarding the character of
the money held as reserve and the amount, nature, and maturities of the paper
and other investments owned or held by Federal reserve banks. (2) To require any depository institution specified in this paragraph to
make, at such intervals as the Board may prescribe, such reports of its liabilities
and assets as the Board may determine to be necessary or desirable to enable
the Board to discharge its responsibility to monitor and control monetary
and credit aggregates. Such reports shall be made (A) directly to the Board
in the case of member banks and in the case of other depository institutions
whose reserve requirements under section 19 of this Act exceed zero, and (B)
for all other reports to the Board through the (i) Federal Deposit Insurance
Corporation in the case of insured State nonmember banks, savings banks, and
mutual savings banks, (ii) National Credit Union Administration Board in the
case of insured credit unions, (iii) the Director of the Office of Thrift
Supervision in the case of any savings association which is an insured depository
institution (as defined in section 3 of the Federal Deposit Insurance Act)
or which is a member as defined in section 2 of the Federal Home Loan Bank
Act, and (iv) such State officer or agency as the Board may designate in the
case of any other type of bank, savings and loan association, or credit union.
The Board shall endeavor to avoid the imposition of unnecessary burdens on
reporting institutions and the duplication of other reporting requirements.
Except as otherwise required by law, any data provided to any department,
agency, or instrumentality of the United States pursuant to other reporting
requirements shall be made available to the Board. The Board may classify
depository institutions for the purposes of this paragraph and may impose
different requirements on each such class. [12 USC 248(a). As amended by acts of March 31, 1980 (94 Stat. 132) and Aug.
9, 1989 (103 Stat. 439).] Rediscounts by One Reserve Bank for Another (b) To permit, or, on the affirmative vote of at least five members
of the Board of Governors of the Federal Reserve System to require Federal
reserve banks to rediscount the discounted paper of other Federal reserve
banks at rates of interest to be fixed by the Board of Governors of the Federal
Reserve System. [12 USC 248(b). Part of original Federal Reserve Act; not amended.] 1-094 Suspension of Reserve Requirements (c) To suspend for a period not exceeding thirty days, and from time
to time to renew such suspension for periods not exceeding fifteen days, any
reserve requirements specified in this Act. [12 USC 248(c). As amended by acts of June 12, 1945 (59 Stat. 237) and March
18, 1968 (82 Stat. 50).] 1-095 Issue and Retirement of Federal Reserve Notes (d) To supervise and regulate through the Secretary of the Treasury
the issue and retirement of Federal reserve notes, except for the cancellation
and destruction, and accounting with resp
SECTION 1--Short Title and Definitions
SECTION 2--Federal Reserve Districts
SECTION 2A--Monetary Policy Objectives
SECTION 2B—Appearances Before and Reports to the Congress
"(a) Stocks and obligations of the United States Government are exempt from
taxation by a State or political subdivision of a State. The exemption applies
to each form of taxation that would require the obligation, the interest on
the obligation, or both, to be considered in computing a tax, except--
(1) a nondiscriminatory franchise tax or another nonproperty tax instead of
a franchise tax, imposed on a corporation; and
(2) an estate or inheritance tax."
Designated subsection (c) by act of Aug. 10, 1993 (107 Stat. 338).]
SECTION 9B—Resolution of Clearing Banks