Page:Banking Act of 1933 (Federal Reserve Circular 1248).djvu/44

 to depositors and other creditors, it may not become a member of the corporation.

A national bank, which shall not become a member by July 1, 1934, shall be placed in receivership or conservatorship, and a State member bank, which shall not have done so by July 1, 1934, shall be expelled from the Federal Reserve System.

In addition to member banks, nonmember banks which are members of the temporary insurance fund may, until July 1, 1936, be Class A stockholders in the corporation and be entitled to the benefits of the permanent insurance plan.

Banks applying for Membership in the Federal Reserve System.

Provision is made for State banks after July 1, 1936, to obtain the benefits of the insurance plan while their applications for membership in the Federal Reserve System or for conversion into national banks are pending.

Banks which are not authorized to subscribe to Class A stock.

Provision is also made for deposits with the Corporation by banks (in lieu of payments on capital stock), in cases where they are not authorized to subscribe to the stock of such Corporation, for a temporary period until the State law can be amended.

Time and Amount of Insurance of Deposits.

Effective on and after July 1, 1934, the Corporation shall insure the deposits of all member banks, and until July 1, 1936, of all nonmember banks, which are Class A stockholders in the following amounts: 100 per cent of the liability to a depositor not exceeding $10,000; 75 per cent of the amount of such liability in excess of $10,000 but not in excess of $50,000; and 50 per cent of the amount in excess of $50,000.

Deposits payable only at an office of a bank located in a foreign country are not to be insured and are not to be counted in computing the total deposit liabilities of a bank as a basis for determining the amount of Class A stock to which it must subscribe.

Manner of Operation of the Insurance Fund—National Banks.

When a national bank is closed, the Corporation shall be appointed receiver therefor and shall organize a new national bank to assume the insured deposit liabilities of the closed bank and to receive new deposits. The Corporation shall make available to the new bank the amount of the insured deposit liabilities of the closed bank, and the new bank shall then assume such liabilities to depositors and the Corporation shall be subrogated to the rights of such depositors against the closed bank.

The Corporation shall then proceed to wind up the affairs of the closed bank, collect its assets and enforce the liability of the stockholders and directors.

The new bank is to be organized without capital stock and managed by the Corporation. It is not to transact banking business unless and until it shall have capital stock (sufficient in the judgment of the Corporation) subscribed and paid in on the same terms and in the same manner as provided for the organization of other national banks. If sufficient capital stock is not thus paid in or if the business of the new bank is not sold by the Corporation to another bank in the community, it shall, after two years from its organization, be liquidated.

Manner of Operation of Insurance Funds—State Banks.

When a State member or nonmember bank is closed, the Corporation may accept appointment as receiver thereof if such appointment is authorized by State law, and in any case shall organize a new national bank to assume the insured deposit liabilities of the closed bank. Upon satisfactory recognition of the right of the Corporation to receive dividends on the same basis as in the case of a closed national bank either by State law, by allowance of claims by State authority, by assignment of claims by depositors, or by other effective method, the Corporation shall make available to the new national bank the amount of insured deposit liabilities of the closed bank. In so far as consistent with State law, the plan is then to proceed as provided with respect to closed national banks.

Loans to Closed Banks.

The Corporation may also make loans to closed national or State member banks of the