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 Federal Reserve Board. Failure to make such reports within 10 days after the date they are called for shall subject the offending bank to a penalty of $100 a day for each day that it fails to transmit such report, such penalty to be collected by the Federal reserve bank by suit or otherwise. As a condition of membership such banks shall likewise be subject to examinations made by direction of the Federal Reserve Board or of the Federal reserve bank by examiners selected or approved by the Federal Reserve Board. 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 Federal Reserve Board: 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, shall be assessed against and paid by the banks examined.] The expenses of all examinations, other than those made by State authorities, may, in the discretion of the Federal Reserve Board, be assessed against the banks examined and, when so assessed, shall 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 authorities having supervision of such banks, to officers, directors, or receivers of such banks, and to any other proper persons. If at any time it shall appear to the Federal Reserve Board that a member bank has failed to comply with the provisions of this section or the regulations of the Federal Reserve Board made pursuant thereto, 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 Federal Reserve Board may restore membership upon due proof of compliance with the conditions imposed by this section. 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 Federal Reserve Board, upon the surrender and cancellation of all of its holdings of capital stock in the Federal reserve bank: Provided, however, That no Federal reserve bank shall, except under express authority of the Federal Reserve Board, cancel within the same calendar year more than 25 per cent 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 Federal Reserve Board, 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 1 per cent per month from 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. No applying bank shall be admitted to membership in a Federal reserve bank unless (a) it possesses a paid-up, unimpaired capital sufficient to entitle it to become a national banking association in the place where it is situated under the provisions of the national bank act; or (b) it possesses a paid-up, unimpaired capital of at least 60 per cent of the amount sufficient to entitle it to become a national banking association in the place where it is situated under the provisions of the national bank act and, under penalty of loss of membership complies with rules and regulations which the Federal Reserve Board shall prescribe fixing the time within which and the method by which the unimpaired capital of such bank shall be increased out of net income to equal the capital which would have been required if such bank had been admitted to membership under the provisions of clause (a) of this paragraph: Provided, That every such rule or regulation shall require the applying bank to set aside annually not less than 20 per cent of its net income of the preceding year as a fund exclusively applicable to such capital increase. Banks becoming members of the Federal reserve system under authority of this section shall be subject to the provisions of this secton 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 5240 of the Revised Statutes as amended by section 21 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: Provided, however, That 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. 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 Federal Reserve Board. SEC. 21. Section 5240, United States Revised Statutes, is amended to read as follows: "The Comptroller of the Currency, with the approval of the Secretary of the Treasury, shall appoint examiners who shall examine every member bank at least twice in each calendar year and oftener if considered necessary: Provided, however, That the Federal Reserve Board may authorize examination by the State authorities to be accepted in the case of State banks and trust companies and may at any time direct the holding of a special examination of State banks or trust companies that are stockholders in any Federal reserve bank. The examiner making the examination of any national bank, or of any other member bank, shall have power to make a thorough examination of all the affairs of the bank, and in doing so he shall have power to administer oaths and to examine any of the officers and agents thereof under oath and shall make a full and detailed report of the condition of said bank to the Comptroller of the Currency. "The Federal Reserve Board, upon the recommendation of the Comptroller of the Currency, shall fix the salaries of all bank examiners and make report thereof to Congress. The expense of the examinations herein provided for shall be assessed by the Comptroller of the Currency upon the banks examined in proportion to assets or resources held by the banks upon the dates of examination of the various banks. "In addition to the examinations made and conducted by the Comptroller of the Currency, every Federal reserve bank may, with the approval of the Federal reserve agent or the Federal Reserve Board, provide for special examination of member banks within its district. [The expense of such examinations shall be borne by the bank examined.] The expense of such examinations may, in the discretion of the Federal Reserve Board, be assessed against the banks examined, and, when so assessed, shall be paid by the banks examined. Such examinations shall be so conducted as to inform the Federal reserve bank of the condition of its member banks and of the lines of credit which are being extended by them. Every Federal reserve bank shall at all times furnish to the Federal Reserve Board such information as may be demanded concerning the condition of any member bank within the district of the said Federal reserve bank. "No bank shall be subject to any visitatorial powers other than such as are authorized by law, or vested in the courts of justice or such as shall be or shall have been exercised or directed by Congress, or by either House thereof or by any committee of Congress or of either House duly authorized. The Federal Reserve Board shall, at least once each year, order an examination of each Federal reserve bank, and upon joint application of 10 member banks the Federal Reserve Board shall order a special examination and report of the condition of any Federal reserve bank." SECURITY BY NATIONAL BANKS IN THE FORM REQUIRED BY STATE LAW FOR DEPOSITS OF PUBLIC MONEYS MAY 26, 1930.-Referred to the House Calendar and ordered to be printed Mr. MCFADDEN, from the Committee on Banking and Currency, submitted the following REPORT [To accompany S. 486] The Committee on Banking and Currency, to whom was referred the bill (S. 486) to amend section 5153 of the Revised Statutes, as amended, having considered the same, report favorably thereon with the recommendation that the bill do pass. The purpose of the bill is to permit any national banking association to give security in the form required by State law for State banks to secure deposits of public funds of á State or any political subdivision thereof. In support thereof I embody letter, dated May 26, 1930, addressed to the chairman of your committee by Acting Secretary of the Treasury Seymour Lowman, as follows: Hon. L. T. MCFADDEN, TREASURY DEPARTMENT, Chairman House Committee on Banking and Currency, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to S. 486, 'An act to amend section 5153 of the Revised Statutes, as amended" which passed the Senate April 1, 1930, and which is now pending before the Committee on Banking and Currency of the House of Representatives. While the office of the Comptroller of the Currency has consistently taken the position that national banks have the right to give security for the safekeeping and prompt payment of public moneys of the State or political subdivision thereof deposited with such national banking associations, several recent decisions have thrown some doubt on this question with the result that in some States the State banks may secure the public deposits, but the officers of the State are in doubt about depositing with the national banks in the absence of any specific law by Congress on the subject. It would be extremely helpful, therefore, if it is possible for your committee to report out, and the House pass, S. 486.. Very truly yours, SEYMOUR LOWMAN, Acting Secretary of the Treasury. In conformity with section 2a, of Rule XIII, of the House Rules, there is herewith printed section 5153 of the Revised Statutes, as it will read with the amendment proposed in this bill, such amendment being printed in italics; as follows: 235. Sec. 5153 (as amended 1907): All national banking associations, 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 the associations thus designated to give satisfactory security, by the deposit of United States bonds and otherwise, for the safekeeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the Government: Provided, That the Secretary shall, on or before the first of January of each year, make a public statement of the securities required during that year for such deposits. And every association so designated as receiver or depositary of the public money shall take and receive at par all of the national currency bills, by whatever association issued, which have been paid into the Government for nternal revenue, or for loans or stocks: Provided, That the Secretary of the Treasury shall distribute the deposits herein provided for, as far as practicable, equitably between the different States and sections. Any association may, upon the deposit with it of public money of a State or any political subdivision thereof, give security for the safe-keeping and prompt payment of the money so deposited, of the same kind as is authorized by the law of the State in which such association is located in the case of other banking institutions in the State. VOLUNTARY SURRENDER OF TRUST POWERS BY NATIONAL BANKS MAY 26, 1930.-Referred to the House Calendar and ordered to be printed Mr. GOLDER, from the Committee on Banking and Currency, submitted the following REPORT [To accompany S. 3627] The Committee on Banking and Currency, to whom was referred the bill (S. 3627) to amend the Federal reserve act so as to enable national banks voluntarily to surrender the right to exercise trust powers and to relieve themselves of the necessity of complying with the laws governing banks exercising such powers, and for other purposes, having considered the same, report favorably thereon with the recommendation that the bill do pass. The enactment of this legislation is desired by the Federal Reserve Board. Appended hereto and made a part of this report are letters, dated February 14, 1930, and March 10, 1930, addressed to the chairman of your committee by Gov. Roy A. Young, of the Federal Reserve Board, together with the correspondence between the commissioner of banking of the State of Wisconsin, a national bank in that State, and the Federal Reserve Board, as mentioned in the letter of March 10, 1930, referred to above, as follows: Hon. LOUIS T. MCFADDEN, FEDERAL RESERVE BOARD, Chairman Committee on Banking and Currency, House of Representatives. SIR: The Federal Reserve Board recommends that subsection (k) of section 11 of the Federal reserve act (subsection (k) of section 248 of the United States Code, title 12) be amended so as to enable national banks to surrender voluntarily the right to exercise the trust powers granted by that subsection in order to relieve themselves of the necessity of complying with the provisions of that subsection or to obtain the return of any securities which they may have deposited with the State authorities for the protection of private or court trusts. This section of the Federal reserve act authorizes the Federal Reserve Board to grant by special permit to national banks applying therefor the right to exercise trust powers under certain conditions, and provides that banks exercising such powers shall maintain separate trust departments with separate sets of ★ 5-28-30 |