Page:Banking Act of 1933 (Federal Reserve Circular 1248).djvu/40

 SECTION 3(b)

Voting by groups or chains in elections of Federal reserve batik directors.

Section 4 of the Federal Reserve Act is amended to provide that when two or more member banks are affiliated with the same holding company affiliate only one of such banks, which may be designated by such affiliate, may participate in the nomination or election of Federal reserve bank directors.

SECTION 4 Distribution of earnings of Federal reserve banks.

Section 7 of the Federal Reserve Act is amended to provide that all net earnings of a Federal reserve bank after payment of expenses and dividend claims shall be paid into the surplus fund of the bank.

SECTION 5(a) Membership of Morris Plan Banks.

Section 9 of the Federal Reserve Act is amended to make eligible for membership in the Federal Reserve System Morris Plan Banks and other incorporated banking institutions engaged in similar business.

SECTION 5(b) Branches of State member banks.

Section 9 of the Federal Reserve Act is amended so as to provide that nothing contained in that Act shall prevent State member banks from establishing branches either in the United States or elsewhere upon the same terms and conditions as those applicable to branches of national banks.

(The provisions of the Act with reference to branches of national banks are contained in Section 23).

SECTION 5(c) Membership of mutual savings banks and other banking institutions without capital stock.

Section 9 of the Federal Reserve Act is amended so as to make eligible for membership in the Federal Reserve System mutual savings banks having no capital stock and other banking institutions the capital of which consists of time deposits which are segregated from other deposits and regarded as capital stock for purposes of taxation and dividends.

A mutual savings bank may be admitted to membership when it has surplus and undivided profits not less than the amount of capital required for the organization of a national bank in the same place. It must subscribe for Federal reserve bank stock in an amount equal to six-tenths of one per cent of its total deposit liabilities, such subscription to be adjusted semi-annually on the same basis.

If a mutual savings bank is not permitted by the law under which it was organized to purchase stock in a Federal reserve bank, it shall upon admission deposit with the Federal reserve bank the same amount which it would be required to pay in on a subscription to capital stock. The amount so deposited is subject to the same conditions regarding repayment as subscriptions to capital stock and the Federal reserve bank is required to pay interest at the same rate as dividends are paid on its stock. This is a temporary arrangement, however, and if the State law is not amended at the next session of the legislature following the admission of such bank to membership so as to authorize it to purchase Federal reserve bank stock, or if the bank fail to purchase such stock within six months after the enactment of such a law in lieu of such deposit with the Federal reserve bank, its membership shall be forfeited. Mutual savings banks admitted to membership will be subject to all provisions of law applicable to member state banks and trust companies.

Reports of affiliates of State member banks.

A State member bank shall obtain from each of its affiliates, other than member banks, and furnish to the Federal reserve bank and the Federal Reserve Board, not less than three reports of condition each year on dates identical with the reports of the affiliated member bank and such additional reports as the reserve bank or the Board may deem necessary. The provision