1. Authority
of Reserve Banks to Make Advances Upon
receiving the consent of not less than five members of the Board of
Governors of the Federal Reserve System, any Federal reserve bank
may make advances, in such amount as the board of directors of such
Federal reserve bank may determine, to groups of five or more member
banks within its district, a majority of them independently owned
and controlled, upon their time or demand promissory notes, provided
the bank or banks which receive the proceeds of such advances as herein
provided have no adequate amounts of eligible and acceptable assets
available to enable such bank or banks to obtain sufficient credit
accommodations from the Federal reserve bank through rediscounts or
advances other than as provided in section 10(b). The liability of
the individual banks in each group must be limited to such proportion
of the total amount advanced to such group as the deposit liability
of the respective banks bears to the aggregate deposit liability of
all banks in such group, but such advances may be made to a lesser
number of such member banks if the aggregate amount of their deposit
liability constitutes at least 10 per centum of the entire deposit
liability of the member banks within such district. Such banks shall
be authorized to distribute the proceeds of such loans to such of
their number and in such amount as they may agree upon, but before
so doing they shall require such recipient banks to deposit with a
suitable trustee, representing the entire group, their individual
notes made in favor of the group protected by such collateral security
as may be agreed upon. Any Federal reserve bank making such advance
shall charge interest or discount thereon at a rate not less than
1 per centum above its discount rate in effect at the time of making
such advance. No such note upon which advances are made by a Federal
reserve bank under this section shall be eligible under section 16
of this Act as collateral security for Federal reserve notes.
[12 USC 347a. As added
by act of Feb. 27, 1932 (47 Stat. 56).]
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2. Foreign Obligations as Security for Advances No obligations of any foreign government, individual,
partnership, association, or corporation organized under the laws
thereof shall be eligible as collateral security for advances under
this section.
[12 USC 347a. As added by act of Feb. 27, 1932 (47 Stat. 56).]
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3. Authority of Member Banks to Obligate
Themselves Member banks are authorized
to obligate themselves in accordance with the provisions of this section.
[12 USC 347a.
As added by act of Feb. 27, 1932 (47 Stat. 56).]
