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BANKING ACT OF 1933

BANKING ACT OF 1933

(Enacted June 16, 1933; 48 Stat. 162)

AN ACT To provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.

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 "Banking Act of 1933."

SEC. 2. [12 U.S.C. 221a] As used in this Act and in any provision of law amended by this Act

(a) The terms "banks" "national bank”, “national banking association", "member bank", "board", "district", and "reserve bank" shall have the meanings assigned to them in section 1 of the Federal Reserve Act, as amended.

(b) Except where otherwise specifically provided, the term "affiliate" shall include any corporation, business trust, association, or other similar organization

(1)1 Of which a member bank, directly or indirectly, owns or controls either a majority of the voting shares or more than 50 per centum of the number of shares voted for the election of its directors, trustees, or other persons exercising similar functions at the preceding election, or controls in any manner the election of a majority of its directors, trustees, or other persons exercising similar functions; or 2

(2) Of which control is held, directly or indirectly, through stock ownership or in any other manner, by the shareholders of a member bank who own or control either a majority of the shares of such bank or more than 50 per centum of the number of shares voted for the election of directors of such bank at the preceding election, or by trustees for the benefit of the shareholders of any such bank; or 2

(3)1 Of which a majority of its directors, trustees, or other persons exercising similar functions are directors of any one member bank; or

(4)1 Which owns or controls, directly or indirectly, either a majority of the shares of capital stock of a member bank or more than 50 per centum of the number of shares voted for the election of directors of a member bank at the preceding election, or controls in any manner the election of a majority of the directors of a member bank, or for the benefit of whose shareholders or members all or substantially all the capital stock of a member bank is held by trustees.

1 Indentation so in original. The first letter of the first word in paragraphs (1 trong 16 probably should be lower case.

2 So in original. The word "or" probably should not appear.

236.]

[Subsection (c) repealed. Section 13(b) of P.L. 89-485, 80 Stat. [Secs. 3-19 amend other Acts.]

SEC. 20. [12 U.S.C. 377] After one year from the date of the enactment of this Act, no member bank shall be affiliated in any manner described in section 2 (b) hereof with any corporation, association, business trust, or other similar organization engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of stocks, bonds, debentures, notes, or other securities: Provided, That nothing in this paragraph shall apply to any such organization which shall have been placed in formal liquidation and which shall transact no business except such as may be incidental to the liquidation of its affairs.

For every violation of this section the member bank involved shall be subject to a penalty not exceeding $1,000 per day for each day during which such violation continues. Such penalty may be assessed by the Federal Reserve Board, in its discretion, and, when so assessed, may be collected by the Federal reserve bank by suit or otherwise.

If any such violation shall continue for six calendar months after the member bank shall have been warned by the Federal Reserve Board to discontinue the same, (a) in the case of a national bank, all the rights, privileges, and franchises granted to it under the National Bank Act may be forfeited in the manner prescribed in section 2 of the Federal Reserve Act, as amended (U.S.C., title 12, secs. 141, 222–225, 281–286, and 502) or, (b) in the case of a State member bank, all of its rights and privileges of membership in the Federal Reserve System may be forfeited in the manner prescribed in section 9 of the Federal Reserve Act, as amended (U.S.C., title 12, secs. 321-332).

SEC. 21. [12 U.S.C. 378] (a) After the expiration of one year after the date of enactment of this Act it shall be unlawful—

(1) For any person, firm, corporation, association, business trust, or other similar organization, engaged in the business of issuing, underwriting, selling, or distributing, at wholesale or retail, or through syndicate participation, stocks, bonds, debentures, notes, or other securities, to engage at the same time to any extent whatever in the business of receiving deposits subject to check or to repayment upon presentation of a passbook, certificate of deposit, or other evidence of debt, or upon request of the depositor: Provided, That the provisions of this paragraph shall not prohibit national banks or State banks or trust companies (whether or not members of the Federal Reserve System) or other financial institutions or private bankers from dealing in, underwriting, purchasing, and selling investment securities, or issuing securities, to the extent permitted to national banking associations by the provisions of section 5136 of the Revised Statutes, as amended (U.S.C. title 12, sec. 24; Supp. VII, title 12, sec. 24): Provided further, That nothing in this paragraph shall be construed as affecting in any way such right as any bank, banking association, savings bank, trust company, or other banking institution, may otherwise possess to sell, without recourse or agreement to repurchase, obligations evidencing loans on real estate; or

(2) For any person, firm, corporation, association Duties: trust, or other similar organization to engage, to any extem what ever with others than his or its officers, agents or employees II 12 business of receiving deposits subject to check or u repaymen upon presentation of a pass book, certificate of depost or cet exdence of debt, or upon request of the depositor, uuest su DeTBIL firm, corporation, association, business trust, or other simber vrge nization (A) shall be incorporated under, and authorizer

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E in such business by, the laws of the United States or of ar ban Territory, or District, and subjected, by the laws of States, or of the State, Territory, or District where we amination and regulation, or (B) shall be permutter in the States, any State, territory, or district to engage n butt and shall be subjected by the laws of the Unner ba State, territory, or district to examination and regzur: shall submit to periodic examination by the tanong art the State Territory, or District where suct DUSHES I and shall make and publish periodic reports of IL IN iting in detail its resources and liabilities Bust reports to be made and published at the sane Live same manner and under the same condition

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