frsbog_mim_v28_0345.pdf
TRANSCRIPT
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X-5093
L E G I S L A T I O ~ J RECOU£8I DE1D
The
Federal
Reserve Board
has heretofore
recomrnended
the
enactment
of S. 1989 and H. R. 6491 two bil ls pending
in the
present Congress, and
desires to renew i t s recornrnendation
that
these bil ls be enacted into law.
The third paragraph
of
Section 13
of
the Federal
Reserve
Act now
authorizes
Federal
reserve banks to rediscount or
purchase bil ls
of exchange
payable at
s i ~ h t or
on demand which are drawn to finance the
domestic ship-
ment
of
nonperishable,
readily
marketable,
staple
agricultural
products;
and S. 1989 would ~ n e n d
this
paragraph
in two respects: 1) t would
make
the provisions
thereof
applicable
to
bil ls
of
exchange payable at sight
or
on demand covering
not
only nonperishable,
readily marketable, staple,
agricultural products but also other nonperishable, readily
PJarketable
staples,
whether
agricultural or not; and 2) i t would make such sight
and
demand
drafts
eligible
for
rediscount
when drawn
to finance the ex-
portation
as well as
the
domestic shipment of non:c;erishable
readily
marketable staples. The
Board
has had
some
difficulty
in construing and
applying the term agricul tural produ cts
; and due to certain court de-
cisions defining similar terms, i t
has
been
constrained
to
rule that a
number of
products
such
as
cotton seed oil , flour,
bran, and
canned food
products
are
not
agricultural
products
within
the
meaning
of
the
statute.
The
Board
feels that these
commodities and other
nonperishable, readily
marketable, staples
are equally
as
good
security
for. sight and demand
drafts
as are products which are technically agricul tural products
and
also
that there is no good reason why
this
privilege should not
be
ex-
tended to
bil ls drawn to finance the exportation as well as the domestic
shipment
of
such products. The enactment
of
S. 1989 therefore, would
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broaden
the
scope of
this
particular rediscount
faci l i ty of the Federal
reserve banks in a manner
beneficial
both
to
the member banks
of
the
FedeYal Reserve System and
to
our domestic and foreign o m ~ e r e in general.
H
R. 6491 would amend that part of Section 8
of
the
Clayton
Anti-
t rust Act which authorizes the Federal Reserve
Board
to permit
inter-
locking directorates between not more than three banks in the classes
affected by the Clayton Act,
provided that
such banks are not
11
in sub-
stantial
competi t ion
•
The
Board has found this :provision very diff i
cult
to
administer
anc1 experience
has
shown that i t sometimes defeats
the purpose for which i t was enacted, since i t
discourages
rather than
'
encourages o n ~ e t i t i o n
between
banks
and penalizes
those directors which
permit
their
ba1iks to compete. The runendment would authorize the Board
to permit
interlocking directorates
between
not
more
than three
banks
affected by the
provisions
of the Clayton Act whenever in the Board s
jud@nent
i t
is
not
incompatible with the public
interest
and would ex-
pressly
authorize the Board
to
revoke any such
permit
whenever
i t finds,
af ter reasonable
notice and
opportunity to
be
heard, that the
public in-
terest requires i t s revocation.
In
the
Board s opinion, such an
runend-
ment
would
be much more
effective
than
the
present
law
in
carrying out
the original intent of the
Clayton
Anti-trust
Act; and the Board desires
to
renew the recommendations cont.ained in i t s Annual Reports for
several
years
past that this amen nent be
enacted.
The
Board is
of
the
opinion
that
no major
amendments to the
Federal
Reserve Act are
necessary or
desirable,
but
desires
to
reconu:1end the
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3
following amenilinents concerning matters
of
detail which
have
arisen in
the
administration of
the Federal Reserve
System:
1)
A
amendment
to
Section
9
of
tho
Federal
Reserve
Act
to
~ e r r r i t
State
member
ba11ks
of
the Federal
Reserve System
to
have
foreign branches.
This section, as amended by the McFadden Act
~ p r o v e d
February 25 1927,
provides that
no
State
ba1lk
may
retain
or
acquire stock in
a
Federal re-
serve
bank except upon
relinquishment of
any
branch
or
branches estab-
lished af ter
February
25,
1927 beyond
the l imits of the city,
town
or
village
in
which the
?arent
baruc is
situated. I t
is obvious that
Congress
intended
to
deal with
domestic
branches, but the
language of
the act
is
so
broad that
i t
clearly
applies
to foreign branches
and
forbids any State
bank
to acquire or retain stock
in a
Federal reserve
bank
i f i t
has a
foreign branch established subsequent to February 25, 1927. The
McFadden
Act expressly provides that the
restrictions
on the establishment
of
branches by
national banks
shall
not
be construed
to affect
the
estab-
lishment by
national
b a r u ~ s
of branches
in
foreign countries, dependencies,
or
insular
possessions
of
the United States; but
no
exception
was
l J.ade as
to foreign branches of State 1nember banks of the Federal
Reserve
System.
There
is
no
justif ication for such
a
discrimination against State
member
banks, and
the
Board is of
the opinion that
the
law should be amended as
soon
as possible
so
as to
remove such discrimination3
2) An
amendment
to Section
4
of
the Federal
Reserve Act to
permit
an officer, director or
employee
of
a
mutual savings bank to serve as
a
Class
l3
director
or
Class C
director
of
a
Federal
reserve
bank. Section
4
6f the Federal
Reserve
Act
provides
that
no
Class E director
of
a Federal
reserve
bank
shall
be
an
officer,
director
or
employee
of
any
bank
and
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X-5093 _
no
Class
C
director
shall be
an
officer,
director,
e u ~ l o y e e or
s t o l ~ o l d e r
of
any bank;
and
the Attorney General has ruled that rrmtual savings ba ks
are banks
within
these
:provisions
of law and
that,
accordingly, an
officer,
director or
employee
of
a mutual savinGs bank may
not
be a Class
B
or Class
C
director of
a
Federal
reserve bank.
The
Federal
Reserve
Board
is thoroughly
in accord
with
the
principle that Class Band Class
C
directors should not
be
connected
with
co1rrnercial
banking institutions;
but there
is
no reason why this principle
should
alJPlY
to officers,
di-
rectors or
employees of mutual
savings
banks, which are essentially dif-
ferent
from
ordinary
commercial ba11king institutions and are not
permitted
to be members of
the
Federal
Reserve
System. A number of cases
have
arisen
in which persons
eminently
f i t ted
to serve
as
directors of
Federal re-
serve
banks were ineligible to
do
so
merely because of their connections
with mutual savings banks, and the Board feels that the
law
should
be
amended so as to exclude directors, officers, and employees of mutual
savings
banks from this
prohibition.
(3)
An amendment
permitting the cancellation of Federal reserve
bank
stock
held
by
member
banks which have gone
out
of
business
without a re-
ceiver or liquidating agent having been appointed therefor. The present
law
authorizes the surrender and cancellat·i.on of
l l
of the
stock
hold
by
a member bank
only
when such member bank ( goes
into
voluntary
liq_uida-
tion,
(2)
is placed in
the hands
of
a
receiver,
or (3)
withdraws
from the
Federal
Reserve
System either
voluntarily
or
invol mtarily;
and,
in
a
number
of
cases, Federal
reserve
banks have experienced
great difficulty
in
securing the surrender
of Federal
reserve
bank stock
held
by member
banks which
have
ceased
entirely
to
do
business but
which have
not
techni-
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cally gone into voluntary liquidation
or
into
the
haBds of receivers.
Under such
eircumstances, Federal
reserve
banlcs
have
sometimes
been
com-
welled
to
pay dividends in large amounts on stock held by banks which have
ceased
to
do business and ceased
to
maintain reserve accounts with them.
The Board believes
that
this situation should be remedied by
an
appropriate
amendment
to the
law
providing
means whereby
Federal
reserve bank
stock
held by such member banks
may
be
cancelled
and the proceeds paid to them.
(4)
n
amendment making i t discretionary with the Federal Reserve
Eoard
to assess
the
costs
of
examinins State
member
banks against the banks
examined. The
Federal
Reserve Board has been
handicaOJ::_Jed in i ts efforts
to
establish
a nore effective supervision of bariking by the fact that
the present law requires the
e } ~ e n s e s
of
l l
examinations of State member
banks made by the
Federal
Reserve
Board
or by the
Federal reserve
banks to
be
assessed
against the
banks examined. ~ ~ e
State
banks object to
bearing
the expenses of
such
examinations
on
the
ground that i t subjects them to
the expenses of
double examinations; since
they are also
required, either
directly or indirectly, to bear the expenses of
examinations
made by the
State authorities, whereas national ba11ks
only
have
to
bear
the
expenses
of
examinations
made
by
the
Comptroller
of
the
Currency.
As
a
result
of
this opposition, both the
Federal
Reserve Board
and
the
Federal
reserve
banks have
been reluctant to
mru{e
independent examinations of State
~ e r
banks
and
have had to rely very largely upon
re,orts
of
examinations made
by the State authorities. Such
examinations
frequently are inadequate for
the Board's purpose, since the
State
authorities
are
not
charged
with the
duty
of
enforcing
the
provisions of
the
Federal
Reserve
Act
and
do
not
consider i t
necessary
to broaden the
scope of their
examinations
so as
to
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6
disclose violations of the Federal Reserve Act. The
fear of having to bear
the expenses of double exruninations
has also
been frequently given as one
of the reasons why more State banks do not join the Federal Reserve System.
The
:Board, therefore, believes
that an
ar;1endr 1ent granting
i t
the
dis-
ctetionary
authority
to absorb the
expenses of such e x ~ ~ i n a t i o n s
to
permit
the Federal
reserve banks to absorb them,
or to assess
the ex-
penses
against
the banks examined when deemed necessary, would be
very
beneficial.·
5) An amendment exempting
Federal reserve
banks from attachment
or g a r n i s l l i ~ e n t proceedings before final j u d ~ e n t in any
case
or proceeding.
Under
the
provisions
of
Section 5242
of the
Revised
Statutes, national
barks are exempted from attachment,
injunction or
execution before final
judgment in any
case
or proceeding; and
the
Board feels that
the
law should
be amended so
as
to give
Federal
reserve
banks
the
same
protection
in
this
respect.
I t is conceivable
that
i f large amounts of the funds
or
credits
,\
of the Federal
reserve
banks should be
t ied
up
through
attachment or
·
, t
garnishment
proceedings
the a b i l ~ k . y of the reserve banks
to
meet the
credit needs of
the
country might be
seriously
hampered.
6)
A amen nent to the Judicial
Code
restoring
to
the United States
District
Courts
jurisdiction of suits by and
against
Federal
reserve
banks.
Formerly, the Federal courts had jurisdiction of such suits , because the
F e d e ~ a l
reserve
banks were
incorporated
under
an act
of
Congress; but
S e ~ t i o n 12 of the Act
of
February 13, 1925, provides that
no
distr ict
court of the United States
shall
have jurisdiction
of
any action or suit
by or
against
any corporation upon
the
ground
that
i t was incorporated by
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X-509 _3
cr under an act of
Co:1cress,
e;;:ceut co:nor2,tio:.1s
in :1ich t:1.e
Government
of
the
United States is the mmer of 1..:o:ce than one-hc:clf of the ca-.Ji
ta l
stock. I t
is not believed that Concress
ho,d
the
FeC.eral reserve baill{s in
mind
when
i t
e:.1acted this ame:1.dment,
but the c'I:le:ldDEmt deprives the United
States District Courts of jur isdict ion of a l l
suits
by or acainst Federal
reserve ba:.1ks unless a question involving the
L1 1iGryretation
of
the
Con-
s t i tut ion of the United States or
some Fed.eral s tatute
is ra ised
by
the
orir;inal
~ o l e a d i n r ; s
of
the
plair . t i f f .
The
Federa.l
reserve
banks
frequently
have to
re ly
upon the
r o v i s i o ~ s
of the Federal Reserve Act or
the
Re5ula-
tions
of the Federal Reserve Board
in
defenC:i l£ suits brought
against
them;
but
this
i s not
a
gruu::J.d uf original
jur isdict ion
in the United States
Distr ict Courts. : 1ha Federal reserve banks are thus forced to defend in
the State courts suits which
turn
upon essential ly Federal questions. Not
infrequently
the
judges
and
jur ies
in
the
State
courts
are
unreasonably
prejudiced against or host i le to the Federal
reserve
banks and i t is
some-
times diff icult
for them to get
fa i r
t r i a l s in
the
State
courts . Unlike
national baru:s, they can not
reBove
suits
brought acainst
them
by persons
I
located in other States to
the United States
Dis tr ic t
Courts
on
the
ground
of
diversi ty
of
citizenship, because the
Supreme Court
has held
that a
Federal corporation is not
a ci t izen
of
any
State, and there is
no
pro
vision in the Federal Reserve Act similar to
that
in the National
Ba11k
Act
providing that
they shal l be
deemed
ci t izens
of the
States in which they
are located. Section 12 of the Act of February
13,
1925,
makes an
e ~ c e p t i o n
in the case of cor
Jorations in which
the
Government
of the
United
States
is the owner of more than one-half of
the
ca:_)i t l stock;
and
i t would seem
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L
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U U f . ~ •
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that
the same exception should be
extended
to cover Federal reserve banks,
since ti1ey act
as
f i sca l agents and
sub-treasuries
and perform many other
important
functions
for the Government.
Moreover,
the excess earnings of
the
Federal reserve
banks are payable
to the United
States
in the form
of
a francl1ise tax and, in the event of the l iquidat ion
of
the Federal r.e-
serve
banks,
a l l
of the i r su:c-rlu£>, which amounts to
al)proximately
twice
their
capi ta l stock, would become the -property
of
the United States.
For the
protection of
the Federal
reserve
l::anks
and
for
the
protect ion of
the in teres ts of the
Government in
them, i t is believed that the law
should be amended so
as
to restore
to
the
United States is tr ict Courts
jur i sd ic t ion over sui t s brought by and against Federal reserve banks;
and
the Board strongly recommends
the
enactment of
such
an
amendment.
The
Treasury Department has expressed the opinion that such an amendment should
apply
also
to
Federal
Land
Banks
and
Joint
Stock
Land
Banks.
(7)
An
amen nent to Section 13 of the
Federal
Reserve
Act increasing
from f i f teen
days
to
ninety
days
the maximum maturi ty
of
advances made. by
Federal
reserve
banks
to
member
banks
on their promissory notes
secured
by paper el ig ib le for
rediscount
or for purchase
by
Federal reserve banks.
Such an
~ n e n d m e n t
was
suggested
to
the
Board
under
date
of October 31,
1 ~ 2 5 by Honorable L. T. McFadden, Chairman of the ::SanJ:dng and Currency
Committee
of the House of
Representat ives, and
was
favored
by
the
:Soard
after very careful consideration and
af ter
consultation with the Federal
R e s e ~ v e Agents and
the
Governors
of
the Federal
reserve banks.
I t would
save
rauch trouble and expense to both the member banks and the Federal
reserve banks,
since
i t would
eliminate
the necessity of l i s t ing separately
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the various pieces of eligible paper offered as
collateral
and
would at
the
same
time
eliminate
the
necessity
of
frequent renewals. t
would be
espefial ly
helpful
to country batiks which are
now deterred
by the neces
si ty of frequent
renewals
fron using this more convenient form of
borrowing fron the Federal reserve banks.
The
Eoard is of
the opinion
however, that the
maturity
of
promissory
notes of member
ba ks
secured
by Government bonds should not be extended beyond fifteen days since
i t
is
theoretically
unsound to
perillit the issue of
Federal
reserve notes
against
promissory notes secured by Government bonds
as
collateral.
Proposed forms of bil ls to effect each of
the
tlendments recom-
mended above
are
published
in the appendix to
this Report.
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DRAFTS OF
BILLS
TO EFFECT
A.'I ENDMENTS
RECOMMENDED IN
THIS REPORT.
l
X 5093 a
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(41)
A
:BILL
L
X-5093-a
To amend
section
9
of the Federal
ReGerve Act alid
for other p u ~ ; o s e s
E IT ENACTED :BY T1 :::E SEI:ATE .AJ.;n HOUSE
OF
P:ill?3.ES:Bl7T.A.T 'V".8S OF THE
Ulr ::::.ED
STATES OF AHERICA
IN COUGP3SS
.ASS:ill.::BLED,
Tl1at
the
s e c o ~ 1 d
_;>ara-
graph
of
section 9
of the Federal
Reserve
Act oe amended by
changing
the
period at the end thereof
to a
conma
a.nd by adding the
following
words:
provided, however,
that the
esta blisbmont
or operation
of any
branch
or branches
in
a
foreign
country or dependency
or
insular
possession of
the
United States shall ~ o t
affect
the
right
of
any such State baruc to
retain
or acquire stock in a Federal
re
serve
bank.
11
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(
2.
if
.A
:SIL1
X 50 93 a
35C
...
To amend Section 4
cf the
Federal f.e;:;erve
.Act
a.nd
for
other pur"t_':'Oses.
:.SE
IT
ENACTED :SY THE SENATE lUJD
HOUS3
OF
REPBES::c:aTATIVJJS
07 TIQ: m;ITED
STAT .SS OF . U£EiiiCA HT CQ}TGRESS
.ASSEl.i:BL:SD, That
Section
4 of
the .Act approved
Dece1::.ber
23,
1913, lmown as the Federal
Reserve Act,
as amended, be
further
m e ~ d e d
by striking out
that
part of said
section
which reads as follows:
No
director of Class B
shall be an officer,
director
or
employee
of
any
bank.
No director of Class
C
shall
be
an
officer,
director,
er.:rployee or
stocld1older
of any
bank.
And by substituting therefor
the
following:
11
Ho director of Class
:S
shall be an
officer,
director,
or
e ~ ~ l o y e e
of
any batik, other than a
mutual
savings baruc
not
having
a capital stock represented by
shares.
No
director of Class
C
shall
be
an t ff icer, director,
employee
or
stockholder of
any bank,
other
than
a
mutual
savings
bank
not having
a
capital stock
represented
by shares.
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l
A :BILL
X-5093-a
To
amend
Section
6
and Section
9
of the Federal Reserve
Act
and
for other p U ~ o s e s .
:BE IT ENACTED :BY TilE SENATE A:m HOUSE OF P E P B Z S 3 T T i ~ : : I V E S OF TEE
UNI : :ED
STil. rES
OF
A l i ; ~ I C A
IN
CONGRESS .ASS:3MBLED, That Section
5
of
the
Act
of
December
23, 1913,
known
as
the
Federal Reserve
Act be
amended and
re-enacted to
read· as follows:
11
Sec.
6. If any member bank shAll be declared insolvent and
a receiver appointed tncrefor, the stock h e l ~ by i t in said Federal
reserve
bank shall be canceled,
without
imyairraent of i t s ia
bili ty, and al l
cash-paid
subscriptions
on
said
stoCk, with
one
half
of one
per
centum
per
month from
the period
of las t dividend,
not to exceed the book value thereof, shall be
f i rs t applied
to
al l
debts of the insolvent member
ba<1k
to the Federal reserve bank,
and the
balance, i f
any,
shall
be
paid
to
the
receiver
of
the
in
solvent bank.
If
any
national
bank which
has
not
g o ~ 1 e into
l iquidation
as
provided
in
Section 5220 of the Revised Statutes
and for
which a
receiver has not
already
been appointed for other lawful cause,
shall discontinue
i t s banking
operations for a period of 60 days
the Comptroller of the Currency may, i f he deems i t advisable,
appoint a receiver for such
bank.
The
stock held by the said na
tional bank in the Federal
reserve
ba11k
of
i t s
distr ict
shall
thereu?on be
canceled and
said
national
bank
shall
receive
in
pay
ment
therefor,
under regulations
to
be
prescribed
by
the
Federal
Reserve Board,
a ~
equal
to
i t s cash
paid
subscriptions
on
the
shares canceled and one-half
of
one
per
centum a month from
the
period
of
the
las t dividend, not to
exceed
the book value thereof,
less ~ r
l iabi l i ty of such national bank to the Federal reserve
bank.
Whenever the capital
stock
of a Federal reserve bank is re
duced either on account of a reduction in capital stoCk of any
oember bank
or
of the liquidation or insolvency of such bank
t r
on
account of
the
appointment
of a
receiver for
a
national
bank
following discontinuance of
i t s banking operations
as provided
in
this section, the
board
of
directors shall
cause
to be executed
a
certif icate
to the Comptroller of the Currency
showing
such
re
duction of capital stock and the amount repaid to such bank.
11
Sec. 2. That the
eighth
paragraph of
Section
9 of
the
Federal Re
serve Act
as
amended be amended
and
re-enacted te
read
as
follews:
f
at
any time i t shall appear to the Federal
Reserve
~ o r d that a member patik has failed to comply with the provisions
of this section or the regulations of the Federal
Reserve
Board
made
pursuant thereto, or
has ceased
to exercise banking
functions
without
a
receiver or
l iquidating agent having been appointed
there
for, i t
shall
be
within
the
power
of the
board
after
hearing
to
re
quire
such
barik
to
surrender
i t s
stock
in
the Federal reserve barik
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it.3a)
and to forfeit l l rights and privileges of m e m ~ e r s h i p
The Federal
Reserve
]oard may
restore
membership
u ~ o n
due
proof
of
compliance
with
the
concli
tions
iri i?Osed
y
this
section. u
:\ 5093a
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( 4)
A BILL
To
amend
Section
9
of the Federal Reserve
Act and
Section
5240
of
the
Revised
Statutes of
the
United States, and for other
purposes.
BE IT ENACTED BY THE S:El TATE AND HOUSE OF REPRESENTATIVES OF THE
UNITED
STATES GF Ali{EEI CA UT
CONGRESS
ASSEMBLED,
That the
seventh
paragraph of
Section 9
of
the Federal
Reserve
Act, as amended, is
further amended by striking out the l s t sentence thereof and in
sert ing
the
following:
The expenses
of l l examinations,
other
than those
made
by State
authorit ies,
may, in the discretion of the
Federal Reserve Board, be assessed against
the
b n l ~
ex
amined and, when so assessed,
s r ~ l l
be paid by the banks
examined. Copies of the reports
of
such examinations
may, in the discretion of the
Federal
Reserve Board, be
furnished to
the State
authorit ies
having
s u ~ e r v i s i o n of
such banks, to
officers,
directors
or
receivers of such
banks, and to any other pro 9er -persons.
Sec.
2.
That
section fifty-two
hundred
and
forty,
United
States
Revised
Statutes, as
amended by Section 21
of the
Federal Reserve
Act,
is
further amended by striking out the second
sentence
of
the
third
paragraph
thereof
and inserting
in
l ieu thereof the following:
The
expense of
such
examinations
may,
in
the
dis
cretion of
the
Federal Reserve Board, be assessed against
the banks examined,
and,
when so assessed, shall be naid
by the banks examined.
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36C:
X-5093-a
A
BILL
To amend section 4
of
the Federal Reserve Act and for
other
purposes.
BE IT
ENACTED
Y
THE SENATE Alm
HOUSE
OF REPRE-
SENTATIVES
OF THE
UNITED STATES
OF . .\iERICA IN CONGRESS
ASSEEBLED,
That
the
fourth
subdivision
of the
fourth
paragraph of
section
4 of the Federal Reserve Act be
amended to
read
as
follows:
Fourth.
To
sue
and
be sued complain
and
defend
in
any court of law or equity;
but no
attachment,
injunction or execution,
shall
be issued against such
bank or
t s
property before final judgment in any
suit ,
action,
or proceeding in any State, county,
municipal
or
United
States court.
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( 6)
~ Z 5 0 9 3 a
A
:BILL
To amend section 12 of the Act enti t led An Act to amend the Judicial
Code and
to
further define the jurisdiction of the circui t
courts
of
appeals
and of
the
Supreme Court,
and for other purposes,
ap
proved
February 13, 1925 and for other
purposes.
Be t enacted bx the Senate and House of Representatives of the
United States of America in Congress assembled, that section 12 of the
Act
enti t led
And
Act
to
amend
the Judicial
Code
and to further
de
fine the jurisdiction of the
circuit courts
of
appeals
and of the
Supreme Court,
and
for
other
purposes,
approved February
13, 1925
be
amended and reenacted to read
as
follows:
Sec. 12.
That no distr ict court
shall
have jurisdic
tion of any action or suit by or against any
corporation
upon the ground that t was incorporated by or under
an
ct
of Congress: Provided, That
this
section shall not apply to
any suit, action,
or
proceeding brought by or against a Fed
eral
Land :Batik,
Joint
Stock Land
:Bank,
Federal
reserve
bank
or
any
corporation
incorporated
by
or
~ n e r
an Act
of
Congress
wherein
the Government of the United States
is
the owner of
more than one-half of t s
capital
stock.
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(:f/:7
:X. 5093 a.
A PILL
To
amend
section
13 of the
Federal
Reserve
ACt,
and
for
other
p ~ o s e s
BE IT ENACTED :SY THE S E l ~ A T E
AJ:ffi HOUSE
OF
REP2ESJNTATIVES OF
THE
UNITED
ST ATES
OF
AiAERICA IN
CONGRESS ASSEM:SLED
7
That
the seventh para-
graph
of
section
13 of the
Federal
Reserve Act, as amended, be amended
and reenacted to read as follows:
Any
Federal reserve
bank
may
make
advances
for
periods not
exceeding
fifteen days
to
i ts
member
banks
on their promissory notes secured by the deposit or
pledge of
bonds or
notes
of
the United
States or
of
bondso.f
the War Finance Corporation, or when auth-
orized
by
the Federal
Reserve :Soard
and subject to
such conditions, regulations,
limitations, andre-
strictions the said board may prescribe, may
make
advances f.or
periods not exceeding
ninety days
to i t s member banks on their
promissory
notes
secured
by such
notes, drafts, i l l
of exchange,
or
bankers
acceptances
as are eligible for rediscount or
for
purchase
by
Federal reserve
banks
under the
provi-
sions ·of th
Act.
All such advances .shall be
made
at
rates
of
interest to
be established by such
Fed-
eral reserve banks,
subject to the review and
deter-
mination
of the Federal Reserve :Soard.
·.···