Chapter 177. To amend and reenact sections four, eleven, sixteen, nineteen, and twenty-two of the Act approved December twenty-third, nineteen hundred and thirteen, and known as the Federal reserve Act, and sections fifty-two hundred and eight and fifty-two hundred and nine, Revised Statutes
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CHAP. 177.— An Act To amend and reenact sections four, eleven, sixteen, nineteen, and twenty-two of the Act approved December twenty-third, nineteen hundred and thirteen, and known as the Federal reserve Act, and sections fifty-two hundred and eight and fifty-two hundred and nine, Revised Statutes. September 26, 1918.[[H. R. 11283](/us/bill/65/hr/11283).][[Public, No. 218](/us/pl/65/218).] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled*, That section four of the Act Federal Reserve Act amendments.approved December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, be amended and reenacted by striking out that part of such section which reads as follows:
" “Directors of Class A and Class B shall be chosen in the following Matter stricken out.manner: “The chairman of the board of directors of the Federal reserve bank of the district in which the bank is situated or, pending the appointment of such chairman, the organization committee shall classify the member banks of the district into three general groups or divisions. Each group shall contain as nearly as may be one-third of the aggregate number of the member banks of the district, and shall consist, as nearly as may be, of banks of similar capitalization.
The groups shall be designated by number by the chairman. “At a regularly called meeting of the board of directors of each member bank in the district it shall elect by ballot a district reserve elector and shall certify his name to the chairman of the board of directors of the Federal reserve bank of the district. The chairman shall make lists of the district reserve electors thus named by banks in each of the aforesaid three groups and shall transmit one list to each elector in each group. 968 “Each member bank shall be permitted to nominate to the chairman 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 elector. “Every director shall, within fifteen days after the receipt of the said list, certify to the chairman his first, second, and other choices of a director of Class A and Class B, respectively, upon a preferential ballot, on a form furnished by the chairman of the board of directors of the Federal reserve bank of the district.
Each elector 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 New matter.Federal reserve banksDirectors of Class A and Class B.Procedure for choosing.Vol. 38, p. 256, amended.more than one choice for any one candidate,” and by substituting therefor the following: “Directors of Class A and Class B shall be chosen in the following manner: “The Federal Reserve Board 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 Federal reserve bank of the district one candidate for director Nomination of candidates.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. Balloting for directors.“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 Preferential ballots.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 Eligibility of Class A candidates.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. Restriction on Class A candidates.“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.
” " Sec. 2. Authority of Reserve Board. That section eleven
(k)of the Federal reserve Act be amended and reenacted to read as follows: " “
(k)Fiduciary permits to national banks extended.Vol. 38, p. 262, amended. To grant by special permit to national banks applying therefor, when not in contravention of State or local law, the right to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies, or other corporations which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located. Permits not deemed contravention of State, etc., laws.“Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State banks, trust companies, or other corporations winch compete with national banks, 969the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of this Act. “National banks exercising any or all of the powers enumerated Separate accounting, etc., required.in this subsection shall segregate all assets held in any fiduciary capacity from the general assets of the bank and shall keep a separate set of books and records showing in proper detail all transactions engaged in under authority of this subsection. Such books and records shall be open to inspection by the State authorities to the same extent as the books and records of corporations organized under State law which exercise fiduciary powers, but nothing in this Act shall be construed as authorizing the State authorities to examine State examinations limited.the books, records, and assets of the national bank which are not held in trust under authority of this subsection. “No national bank shall receive in its trust department Trust department business restricted.deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes. Funds deposited or held in trust by the bank awaiting investment shall be carried in a separate account and shall not be used by the bank in the conduct of its business unless it shall first set aside in the trust department United States bonds or other securities approved by the Federal Reserve Board. “In the event of the failure of such bank the owners of the funds Lien of owners on deposited bonds, etc.held in trust for investment shall have a lien on the bonds or other securities so set apart in addition to their claim against the estate of the bank. “Whenever the laws of a State require corporations acting in a Securities deposited subject to State law.fiduciary capacity, to deposit securities with the State authorities for the protection of private or court trusts, national banks so acting shall be required to make similar deposits and securities so deposited shall be held for the protection of private or court trusts, as provided by the State law. “National banks in such cases shall not be required to execute Bond exemption.the bond usually required of individuals if State corporations under similar circumstances are exempt from this requirement. “National banks shall have power to execute such bond when so Execution of bond.required by the laws of the State. “In any case in which the laws of a State require that a corporation Execution of affidavits, etc.acting as trustee, executor, administrator, or in any capacity specified in this section, shall take an oath or make an affidavit, the president, vice president, cashier, or trust officer of such national bank may take the necessary oath or execute the necessary affidavit. “It shall be unlawfid for any national banking association to lend Loans of trust funds to officers, etc., unlawful.Punishment for act of officer, etc.any officer, director, or employee any funds held in trust under the powers conferred by this section. Any officer, director, or employee making such loan, or to whom such loan is made, may be fined not more than $,000, or imprisoned not more than five years, or may be both fined and imprisoned, in the discretion of the court. “In passing upon applications for permission to exercise the powers Action of Board on abdications for permits.enumerated in this subsection, the Federal Reserve Board may take into consideration the amount of capital and surplus of the applying bank, whether or not such capital and surplus is sufficient under the circumstances of the case, the needs of the community to be served, and any other facts and circumstances that seem to it proper, and may grant or refuse the application accordingly: *Provided*, That no *Proviso*.Capital, etc., requirement.permit shall be issued to any national banking association having a capital and surplus less than the capital and surplus required by State law of State banks, trust companies, and corporations exercising such powers.” " Sec. 3. That the ninth paragraph of section sixteen of the Federal Federal reserve notes.reserve Act, as amended by the Acts approved September sev970enth, nineteen hundred and sixteen, and June twenty-first, nineteen hundred and seventeen, be further amended and reenacted so as to read as follows: " Provision for printing, etc.Vol. 38, p. 267, amended.“In order to furnish suitable notes for circulation as Federal reserve notes, the Comptroller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered Larger notes authorized.*Ante*, p. 536.such quantities of such notes of the denominations of $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000 as may be required to supply the Federal reserve banks. Such notes shall be in form and tenor as directed by the Secretary of the Treasury under the provisions of this Act and shall bear the distinctive numbers of the several Federal reserve banks through which they are issued.” " Sec. 4. Reserves required for deposits.Vol. 38, pp. 270, 691.*Ante*, p. 239, amended. That paragraphs
(b)and
(c)of section nineteen of the Federal reserve Act, as amended by the Acts approved August fifteenth, nineteen hundred and fourteen, and June twenty-first, nineteen hundred and seventeen, be further amended and reenacted to read as follows: " “
(b)Balances to be kept in reserve city. If in a reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district an actual net balance equal to not less than ten per centum of the aggregate amount of its demand deposits and three per centum of its time *Proviso*.If bank in outlying district, etc.deposits: *Provided, however*, That if located m the outlying districts of a reserve city or in territory added to such a city by the extension of its corporate charter, it may, upon the affirmative vote of five members of the Federal Reserve Board, hold and maintain the *Ante*, p. 239.In central reserve city.reserve balances specified in paragraph
(a)hereof. “
(c)If in a central reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district an actual net balance equal to not less than thirteen per centum of the aggregate amount of its demand deposits and three per centum of *Proviso*.If bank In outlying district, etc.its time deposits: *Provided, however*, That if located in the outlying districts of a central reserve city or in territory added to such city by the extension of its corporate charter, it may, upon the affirmative vote of five members of the Federal Reserve Board, hold and *Ante*, p. 239.maintain the reserve balances specified in paragraphs
(a)or
(b)thereof.” " Sec. 5. Loans to officials, etc.Vol. 38, p. 272, amended. That section twenty-two of the Federal Reserve Act, as amended by the Act of June twenty-first, nineteen hundred and seventeen, be further amended and reenacted to read as follows: " “
(a)Loans to bank examiners forbidden. No member bank and no officer, director, or employee thereof shall hereafter make any loan or grant any gratuity to any bank Punishment for violation by bank official.examiner. Any bank officer, director, or employee violating this provision shall be deemed guilty of a misdemeanor and shall be imprisoned not exceeding one year or fined not more than $5,000, or both; and may be fined a further sum equal to the money so loaned or gratuity given. Punishment for acceptance by examiner.“Any examiner accepting a loan or gratuity from any bank examined by him or from an officer, director, or employee thereof shall be deemed guilty of a misdemeanor and shall be imprisoned one year or fined not more than $5,000, or both, and may be fined a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from holding office as a national bank examiner. “
(b)Other service by examiner forbidden. No national bank examiner shall perform any other service for compensation while holding such office for any bank or officer, director, or employee thereof. Unauthorized disclosing information forbidden.“ No examiner, public or private, shall disclose the names of borrowers or the collateral for loans of a member bank to other than the proper officers of such bank without first having obtained 971the express permission in writing from the Comptroller of the Currency, or from the board of directors of such bank, except when ordered to do so by a court of competent jurisdiction, or by direction of the Congress of the United States, or of either House thereof, or any committee of Congress, or of either House duly authorized. Any bank examiner violating the provisions of this subsection shall Punishment for violation.be imprisoned not more than one year or fined not more than $5,000, or both. “
(c)Except as herein provided, any officer, director, employee, or Receiving fees, etc., for loans by officials, etc., restricted.*Ante*, p. 240, amended.attorney of a member bank who stipulates for or receives or consents or agrees to receive any fee, commission, gift, or thing of value from any person, firm, or corporation, for procuring or endeavoring to procure for such person, firm, or corporation, or tor any other person, rm, or corporation, any loan from or the purchase or discount of any paper, note, draft, check, or bill of exchange by such member bank shall be deemed guilty of a misdemeanor and shall be imprisoned Punishment for violation.not more than one year or fined not more than $5,000, or both. “
(d)Any member bank may contract for, or purchase from, any Business transactions with directors permitted.of its directors or from any firm of which any of its directors is a member, any securities or other property, when (and not otherwise) such purchase is made in the regular course of business upon terms not less favorable to the bank than those offered to others, or when such purchase is authorized by a majority of the board of directors not interested in the sale of such securities or property, such authority to be evidenced by the affirmative vote or written assent of such directors: *Provided, however*, That when any director, or firm of which *Proviso*.Full disclosures, etc., required.any director is a member, acting for or on behalf of others, sells securities or other property to a member bank, the Federal Reserve Board by regulation may, in any or all cases, require a full disclosure to be made, on forms to be prescribed by it, of all commissions or other considerations received, and whenever such director or firm, acting in his or its own behalf, sells securities or other property to the bank the Federal Reserve Board, by regulation, may require a full disclosure of all profit realized from such sale. “Any member bank may sell securities or other property to any Sales of securities, etc., to directors permitted.of its directors, or to a firm of which any of its directors is a member, in the regular course of business on terms not more favorable to such director or firm than those offered to others, or when such sale is authorized by a majority of the board of directors of a member bank to be evidenced by their affirmative vote or written assent: *Provided, however*, *Proviso*.Restriction.That nothing in this subsection contained shall be construed as authorizing member banks to purchase or sell securities or other property which such banks are not otherwise authorized by law to purchase or sell. “
(e)No member bank shall pay to any director, officer, attorney, Interest allowed on deposits of directors, etc., restricted.or employee a greater rate of interest on the deposite of such director, officer, attorney, or employee than that paid to other depositors on similar deposits with such member bank. “
(f)If the directors or officers of any member bank shall knowingly Liability of directors, etc., for prohibited acts.violate or permit any of the agents, officers, or directors of any member bank to violate any of the provisions of this section or regulations of the board made under authority thereof, every director and officer participating in or assenting to such violation shall be held liable in his personal and individual capacity for all damages which the member bank, its shareholders, or any other persons shall have sustained in consequence of such violation.” " Sec. 7. That section fifty-two hundred and eight of the Revised Amendments to Revised Statutes.Statutes as amended by the Act of July twelfth, eighteen hundred and eighty-two, and section fifty-two hundred and nine of the Revised Statutes as amended by the Acts of April sixth, eighteen hundred 972and sixty-nine, and July eighth, eighteen hundred and seventy, be, and the same are hereby, amended and reenacted to read as follows: " “Sec. 5208. Falsely certifying checks by Reserve or member banks, unlawful.[R.S., sec. 5208, p. 1007, amended](/us/rs/s5208/p1007). It shall be unlawful for any officer, director, agent, or employee of any Federal reserve bank, or of any member bank as denned in the Act of December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, to certify any check drawn upon such Federal reserve bank or member bank unless the person, firm, or corporation drawing the check has on deposit with such Federal reserve bank or member bank, at the times such check is certified, an amount of money not less than the amount specified Responsibility of bank.in such check. Any check so certified by a duly authorized officer, director, agent, or employee shall be a good and valid obligation against such Federal reserve bank or member bank; but the act of any officer, director, agent, or employee of any such Federal reserve bank or member bank in violation of this section shall, in the discretion Penalty for violations.Vol. 38, p. 262.of the Federal Reserve Board, subject such Federal reserve bank to the penalties imposed by section eleven, subsection (h), of the Federal reserve Act, and shall subject such member bank if a national bank to the liabilities and proceedings on the part of the Comptroller [R. S., sec. 5234, p. 1012](/us/rs/s5234/p1012).Vol. 38, p. 200.of the Currency provided for in section fifty-two hundred and thirty-four, Revised Statutes, and shall, in the discretion of the Federal Reserve Board, subject any other member bank to the penalties imposed by section nine of said Federal reserve Act for the violation Punishment for violations by bank officers, etc.of any of the provisions of said Act. Any officer, director, agent, or employee of any Federal reserve bank or member bank who shall willfully violate the provisions of this section, or who shall resort to any device, or receive any fictitious obligation, directly or collaterally, in order to evade the provisions thereof, or who shall certify a check before the amount thereof shall have been regularly entered to the credit of the drawer upon the books of the bank, shall be deemed guilty of a misdemeanor and shall, on conviction thereof in any district court of the United States, be fined not more than $5,000, or shall be imprisoned for not more than five years, or both, in the discretion of the court. “Sec. 5209. Embezzling and specified offenses by Reserve or member bank officials.[R. S sec. 5209, p. 1007, amended](/us/rs/s5209/p1007). Any officer, director, agent, or employee of any Federal reserve bank, or of any member bank as defined in the Act of December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of such Federal reserve bank or member bank, or who, without authority from the directors of such Federal reserve bank or member bank, issues or puts in circulation any of the notes of such Federal reserve bank or member bank, or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement of such Federal reserve bank or member bank, with intent in any case to injure or defraud such Federal reserve bank or member bank, or any other company, body politic or corporate, or any individual person, or to deceive any officer of such Federal reserve bank or member bank, or the Comptroller of the Currency, or any agent or examiner appointed to examine the affairs of such Federal reserve bank or member bank, By receivers of national banks.or the Federal Reserve Board; and every receiver of a national hanking association who, with like intent to defraud or injure, embezzles, abstracts, purloins, or willfully misapplies any of the moneys, funds, or assets of his trust, and every person who, with like intent, aids or abets any officer, director, agent, employee, or receiver in any violation Punishment.of this section shall be deemed guilty of a misdemeanor, and upon conviction thereof in any district court of the United States shall be fined not more than 35,000 or shall be imprisoned for not more than five years, or both, in the discretion of the court. 973 “Any Federal reserve agent, or any agent or employee of such Punishment for embezzling, etc., by Federal reserve agents, etc.Federal reserve agent, or of the Federal Reserve Board, who embezzles, abstracts, or willfully misapplies any moneys, funds, or securities intrusted to his care, or without complying with or in violation of the provisions of the Federal reserve Act, issues or puts in circulation any Federal reserve notes shall be guilty of a misdemeanor and upon conviction in any district court of the United States shall be fined not more than $5,000 or imprisoned for not more than five years, or both, in the discretion of the court.” " Approved, September 26, 1918.