Definition
of Terms (a) The Board is authorized
for the purposes of this section to define the terms used in this
section, to determine what shall be deemed a payment of interest,
to determine what types of obligations, whether issued directly by
a member bank or indirectly by an affiliate of a member bank or by
other means, and, regardless of the use of the proceeds, shall be
deemed a deposit, and to prescribe such regulations as it may deem
necessary to effectuate the purposes of this section and to prevent
evasions thereof.
[12 USC 461(a). As
amended by acts of June 21, 1917 (40 Stat. 239) (which completely
revised this section); Aug. 23, 1935 (49 Stat. 714); Sept. 21, 1966
(80 Stat. 823) (as amended by acts of Sept. 21, 1967 (81 Stat. 226)
and Sept. 21, 1968 (82 Stat. 856)); Dec. 23, 1969 (83 Stat. 374);
Oct. 29, 1974 (88 Stat. 1557); and March 31, 1980 (94 Stat. 133, 138).
The amendment inserting the words “and, regardless of the use of the
proceeds,” made by the act of Oct. 29, 1974, “shall not apply to any
bank holding company which has filed prior to the date of enactment
of this Act an irrevocable declaration with the Board of Governors
of the Federal Reserve System to divest itself of all of its banks
under section 4 of the Bank Holding Company Act, or to any debt obligation
which is an exempted security under section 3(a)(3) of the Securities
Act of 1933” (12 USC 461 note).]
1-168
(b) Reserve requirements.
(1) Definitions. The following definitions and rules apply to this subsection, subsection
(c), section 11A, the first paragraph of section 13, and the second,
thirteenth, and fourteenth paragraphs of section 16:
(A) The
term “depository institution” means—
(i) any insured bank as defined
in section 3 of the Federal Deposit Insurance Act or any bank which
is eligible to make application to become an insured bank under section
5 of such Act;
(ii) any
mutual savings bank as defined in section 3 of the Federal Deposit
Insurance Act or any bank which is eligible to make application to
become an insured bank under section 5 of such Act;
(iii) any savings bank as defined in section
3 of the Federal Deposit Insurance Act or any bank which is eligible
to make application to become an insured bank under section 5 of such
Act;
(iv) any insured
credit union as defined in section 101 of the Federal Credit Union
Act or any credit union which is eligible to make application to become
an insured credit union pursuant to section 201 of such Act;
(v) any member as defined in section
2 of the Federal Home Loan Bank Act;
(vi) any savings association (as defined in
section 3 of the Federal Deposit Insurance Act) which is an insured
depository institution (as defined in such Act) or is eligible to
apply to become an insured depository institution under the Federal
Deposit Insurance Act; and
(vii) for the purpose of section 13 and the fourteenth paragraph
of section 16, any association or entity which is wholly owned
by or which consists only of institutions referred to in clauses (i)
through (vi).
(B) The term “bank” means any insured
or non-insured bank, as defined in section 3 of the Federal Deposit
Insurance Act, other than a mutual savings bank or a savings bank
as defined in such section.
(C) The term “transaction account” means
a deposit or account on which the depositor or account holder is permitted
to make withdrawals by negotiable or transferable instrument, payment
orders of withdrawal, telephone transfers, or other similar items
for the purpose of making payments or transfers to third persons or
others. Such term includes demand deposits, negotiable order of withdrawal
accounts, savings deposits subject to automatic transfers, and share
draft accounts.
(D) The term “nonpersonal time deposits” means a transferable time
deposit or account or a time deposit or account representing funds
deposited to the credit of, or in which any beneficial interest is
held by, a depositor who is not a natural person.
(E) The term “reservable liabilities”
means transaction accounts, nonpersonal time deposits, and all net
balances, loans, assets, and obligations which are, or may be, subject
to reserve requirements under paragraph (5).
(F) In order to prevent evasions of
the reserve requirements imposed by this subsection, after consultation
with the Board of Directors of the Federal Deposit Insurance Corporation,
the Comptroller of the Currency, and the National Credit Union Administration
Board, the Board of Governors of the Federal Reserve System is authorized
to determine, by regulation or order, that an account or deposit is
a transaction account if such account or deposit may be used to provide
funds directly or indirectly for the purpose of making payments or
transfers to third persons or others.
1-168.1
(2) Reserve requirements.
(A) Each depository institution shall
maintain reserves against its transaction accounts as the Board may
prescribe by regulation solely for the purpose of implementing monetary
policy—
(i) a ratio of not greater than 3 percent
(and which may be zero) for that portion of its total transaction
accounts of $25,000,000 or less, subject to subparagraph (C); and
(ii) in the ratio of 12
per centum, or in such other ratio as the Board may prescribe not
greater than 14 per centum (and which may be zero) for that portion
of its total transaction accounts in excess of $25,000,000, subject
to subparagraph (C).
(B) Each depository institution shall
maintain reserves against its nonpersonal time deposits in the ratio
of 3 per centum, or in such other ratio not greater than 9 per centum
and not less than zero per centum as the Board may prescribe by regulation
solely for the purpose of implementing monetary policy.
(C) Beginning in 1981, not
later than December 31 of each year the Board shall issue a regulation
increasing for the next succeeding calendar year the dollar amount
which is contained in subparagraph (A) or which was last determined
pursuant to this subparagraph for the purpose of such subparagraph,
by an amount obtained by multiplying such dollar amount by 80 per
centum of the percentage increase in the total transaction accounts
of all depository institutions. The increase in such transaction accounts
shall be determined by subtracting the amount of such accounts on
June 30 of the preceding calendar year from the amount of such accounts
on June 30 of the calendar year involved. In the case of any such
12-month period in which there has been a decrease in the total transaction
accounts of all depository institutions, the Board shall issue such
a regulation decreasing for the next succeeding calendar year such
dollar amount by an amount obtained by multiplying such dollar amount by
80 per centum of the percentage decrease in the total transaction
accounts of all depository institutions. The decrease in such transaction
accounts shall be determined by subtracting the amount of such accounts
on June 30 of the calendar year involved from the amount of such accounts
on June 30 of the previous calendar year.
(D) Any reserve requirement imposed
under this subsection shall be uniformly applied to all transaction
accounts at all depository institutions. Reserve requirements imposed
under this subsection shall be uniformly applied to nonpersonal time
deposits at all depository institutions, except that such requirements
may vary by the maturity of such deposits.
1-168.2
(3) Waiver of
ratio limits in extraordinary circumstances. Upon a finding by
at least 5 members of the Board that extraordinary circumstances require
such action, the Board, after consultation with the appropriate committees
of the Congress, may impose, with respect to any liability of depository
institutions, reserve requirements outside the limitations as to ratios
and as to types of liabilities otherwise prescribed by paragraph (2)
for a period not exceeding 180 days, and for further periods not exceeding
180 days each by affirmative action by at least 5 members of the Board
in each instance. The Board shall promptly transmit to the Congress
a report of any exercise of its authority under this paragraph and
the reasons for such exercise of authority.
1-168.3
(4) Supplemental
reserves.
(A) The Board may, upon the affirmative
vote of not less than 5 members, impose a supplemental reserve requirement
on every depository institution of not more than 4 per centum of its
total transaction accounts. Such supplemental reserve requirement
may be imposed only if—
(i) the sole purpose of such requirement is
to increase the amount of reserves maintained to a level essential
for the conduct of monetary policy;
(ii) such requirement is not imposed for the
purpose of reducing the cost burdens resulting from the imposition
of the reserve requirements pursuant to paragraph (2);
(iii) such requirement is not
imposed for the purpose of increasing the amount of balances needed
for clearing purposes; and
(iv) on the date on which the supplemental reserve requirement is
imposed, except as provided in paragraph (11), the total amount of
reserves required pursuant to paragraph (2) is not less than the amount
of reserves that would be required if the initial ratios specified
in paragraph (2) were in effect.
(B) The Board may require the supplemental
reserve authorized under subparagraph (A) only after consultation
with the Board of Directors of the Federal Deposit Insurance Corporation,
Comptroller of the Currency, and the National Credit Union Administration
Board. The Board shall promptly transmit to the Congress a report
with respect to any exercise of its authority to require supplemental
reserves under subparagraph (A) and such report shall state the basis
for the determination to exercise such authority.
(C) If a supplemental reserve under
subparagraph (A) has been required of depository institutions for
a period of one year or more, the Board shall review and determine
the need for continued maintenance of supplemental reserves and shall
transmit annual reports to the Congress regarding the need, if any,
for continuing the supplemental reserve.
(D) Any supplemental reserve imposed
under subparagraph (A) shall terminate at the close of the first 90-day
period after such requirement is imposed during which the average
amount of reserves required under paragraph (2) are less than the
amount of reserves which would be required during such period if the
initial ratios specified in paragraph (2) were in effect.
1-168.4
(5) Reserves
related to foreign obligations or assets. Foreign branches, subsidiaries,
and international banking facilities of nonmember depository institutions
shall maintain reserves to the same extent required by the Board of
foreign branches, subsidiaries, and international banking facilities
of member banks. In addition to any reserves otherwise required to
be maintained pursuant to this subsection, any depository institution
shall maintain reserves in such ratios as the Board may prescribe
against—
(A) net balances owed by domestic offices
of such depository institution in the United States to its directly
related foreign offices and to foreign offices of non-related depository
institutions;
(B)
loans to United States residents made by overseas offices of such
depository institution if such depository institution has one or more
offices in the United States; and
(C) assets (including participations)
held by foreign offices of a depository institution in the United
States which were acquired from its domestic offices.
(6) Exemption for certain deposits. The requirements imposed under
paragraph (2) shall not apply to deposits payable only outside the
States of the United States and the District of Columbia, except that
nothing in this subsection limits the authority of the Board to impose
conditions and requirements on member banks under section 25 of this
Act or the authority of the Board under section 7 of the International
Banking Act of 1978 (12 U.S.C. 3105).
(7) Discount
and borrowing. Any depository institution in which transaction
accounts or nonpersonal time deposits are held shall be entitled to
the same discount and borrowing privileges as member banks. In the
administration of discount and borrowing privileges, the Board and
the Federal Reserve banks shall take into consideration the special
needs of savings and other depository institutions for access to discount
and borrowing facilities consistent with their long-term asset portfolios
and the sensitivity of such institutions to trends in the national
money markets.
1-168.5
(8) Transitional adjustments.
(A) Any
depository institution required to maintain reserves under this subsection
which was engaged in business on July 1, 1979, but was not a member
of the Federal Reserve System on or after that date, shall maintain
reserves against its deposits during the first twelve-month period
following the effective date of this paragraph in amounts equal to
one-eighth of those otherwise required by this subsection, during
the second such twelve-month period in amounts equal to one-fourth
of those otherwise required, during the third such twelve-month period
in amounts equal to three-eighths of those otherwise required, during
the fourth twelve-month period in amounts equal to one-half of those
otherwise required, and during the fifth twelve-month period in amounts
equal to five-eighths of those otherwise required, during the sixth
twelve-month period in amounts equal to three-fourths of those otherwise
required, and during the seventh twelve-month period in amounts equal
to seven-eighths of those otherwise required. This subparagraph does
not apply to any category of deposits or accounts which are first
authorized pursuant to Federal law in any State after April 1, 1980.
(B) With respect to
any bank which was a member of the Federal Reserve System during the
entire period beginning on July 1, 1979, and ending on the effective
date of the Monetary Control Act of 1980, the amount of required reserves
imposed pursuant to this subsection on and after the effective date
of such Act that exceeds the amount of reserves which would have been
required of such bank if the reserve ratios in effect during the reserve
computation period immediately preceding such effective date were
applied may, at the discretion of the Board and in accordance with
such rules and regulations as it may adopt, be reduced by 75
per centum during the first year which begins after such effective
date, 50 per centum during the second year, and 25 per centum during
the third year.
(C) (i) With respect to any bank which
is a member of the Federal Reserve System on the effective date of
the Monetary Control Act of 1980, the amount of reserves which would
have been required of such bank if the reserve ratios in effect during
the reserve computation period immediately preceding such effective
date were applied that exceeds the amount of required reserves imposed
pursuant to this subsection shall, in accordance with such rules and
regulations as the Board may adopt, be reduced by 25 per centum during
the first year which begins after such effective date, 50 per centum
during the second year, and 75 per centum during the third year.
(ii) If a bank becomes a
member bank during the four-year period beginning on the effective
date of the Monetary Control Act of 1980, and if the amount of reserves
which would have been required of such bank, determined as if the
reserve ratios in effect during the reserve computation period immediately
preceding such effective date were applied, and as if such bank had
been a member during such period, exceeds the amount of reserves required
pursuant to this subsection, the amount of reserves required to be
maintained by such bank beginning on the date on which such bank becomes
a member of the Federal Reserve System shall be the amount of reserves
which would have been required of such bank if it had been a member
on the day before such effective date, except that the amount of such
excess shall, in accordance with such rules and regulations as the
Board may adopt, be reduced by 25 per centum during the first year
which begins after such effective date, 50 per centum during the second
year, and 75 per centum during the third year.
(D) (i) Any bank which was a member bank on July 1, 1979, and which
withdraws from membership in the Federal Reserve System during the
period beginning on July 1, 1979, and ending on March 31, 1980, shall
maintain reserves during the first twelve-month period beginning on
the date of enactment of this clause in amounts equal to one-half
of those otherwise required by this subsection, during the second
such twelve-month period in amounts equal to two-thirds of those otherwise
required, and during the third such twelve-month period in amounts
equal to five-sixths of those otherwise required.
(ii) Any bank which withdraws from membership
in the Federal Reserve System on or after the date of enactment of
the Depository Institutions Deregulation and Monetary Control Act
of 1980 shall maintain reserves in the same amount as member banks
are required to maintain under this subsection, pursuant to subparagraphs
(B) and (C)(i).
(E) This subparagraph applies to any
depository institution that, on August 1, 1978, (i) was engaged in
business as a depository institution in a State outside the continental
limits of the United States, and (ii) was not a member of the Federal
Reserve System at any time on or after such date. Such a depository
institution shall not be required to maintain reserves against its
deposits held or maintained at its offices located in a State outside
the continental limits of the United States until the first day of
the sixth calendar year which begins after the effective date of the
Monetary Control Act of 1980. Such a depository institution shall
maintain reserves against its deposits during the sixth calendar year
which begins after such effective date in an amount equal to one-eighth
of that otherwise required by paragraph (2), during the seventh such
year in an amount equal to one-fourth of that otherwise required, during the
eighth such year in an amount equal to three-eighths of that otherwise
required, during the ninth such year in an amount equal to one-half
of that otherwise required, during the tenth such year in an amount
equal to five-eighths of that otherwise required, during the eleventh
such year in an amount equal to three-fourths of that otherwise required,
and during the twelfth such year in an amount equal to seven-eighths
of that otherwise required.
1-168.6
(9) Exemption. This subsection shall not apply with respect to any financial institution
which—
(A) is organized solely to do business
with other financial institutions;
(B) is owned primarily by the financial
institutions with which it does business; and
(C) does not do business with the general
public.
(10) Waivers. In individual cases,
where a Federal supervisory authority waives a liquidity requirement,
or waives the penalty for failing to satisfy a liquidity requirement,
the Board shall waive the reserve requirement, or waive the penalty
for failing to satisfy a reserve requirement, imposed pursuant to
this subsection for the depository institution involved when requested
by the Federal supervisory authority involved.
1-168.7
(11) Additional
exemptions.
(A) (i) Notwithstanding
the reserve requirement ratios established under paragraphs (2) and
(5) of this subsection, a reserve ratio of zero per centum shall apply
to any combination of reservable liabilities, which do not exceed
$2,000,000 (as adjusted under subparagraph (B)), of each depository
institution.
(ii) Each
depository institution may designate, in accordance with such rules
and regulations as the Board shall prescribe, the types and amounts
of reservable liabilities to which the reserve ratio of zero per centum
shall apply, except that transaction accounts which are designated
to be subject to a reserve ratio of zero per centum shall be accounts
which would otherwise be subject to a reserve ratio of 3 per centum
under paragraph (2).
(iii)
The Board shall minimize the reporting necessary to determine whether
depository institutions have total reservable liabilities of less
than $2,000,000 (as adjusted under subparagraph (B)). Consistent with
the Board’s responsibility to monitor and control monetary and credit
aggregates, depository institutions which have reserve requirements
under this subsection equal to zero per centum shall be subject to
less overall reporting requirements than depository institutions which
have a reserve requirement under this subsection that exceeds zero
per centum.
(B) (i) Beginning in 1982, not later than
December 31 of each year, the Board shall issue a regulation increasing
for the next succeeding calendar year the dollar amount specified
in subparagraph (A), as previously adjusted under this subparagraph,
by an amount obtained by multiplying such dollar amount by 80 per
centum of the percentage increase in the total reservable liabilities
of all depository institutions.
(ii) The increase
in total reservable liabilities shall be determined by subtracting
the amount of total reservable liabilities on June 30 of the preceding
calendar year from the amount of total reservable liabilities on June
30 of the calendar year involved. In the case of any such twelve-month
period in which there has been a decrease in the total reservable
liabilities of all depository institutions, no adjustment shall be
made. A decrease in total reservable liabilities shall be determined
by substracting the amount of total reservable liabilities on June
30 of the calendar year involved from the amount of total reservable liabilities
on June 30 of the previous calendar year.
1-168.8
(12) Earnings on
balances.
(A) In general. Balances maintained at a Federal
Reserve bank by or on behalf of a depository institution may receive
earnings to be paid by the Federal Reserve bank at least once each
calendar quarter, at a rate or rates not to exceed the general level
of short-term interest rates.
(B) Regulations
relating to payments and distributions. The Board may prescribe
regulations concerning—
(i) the payment of earnings in accordance
with this paragraph;
(ii)
the distribution of such earnings to the depository institutions which
maintain balances at such banks, or on whose behalf such balances
are maintained; and
(iii)
the responsibilities of depository institutions, Federal Home Loan
Banks, and the National Credit Union Administration Central Liquidity
Facility with respect to the crediting and distribution of earnings
attributable to balances maintained, in accordance with subsection
(c)(1)(A), in a Federal Reserve bank by any such entity on behalf
of depository institutions.
(C) Depository institutions
defined. For purposes of this paragraph, the term “depository
institution”, in addition to the institutions described in paragraph
(1)(A), includes any trust company, corporation organized under section
25A or having an agreement with the Board under section 25, or any
branch or agency of a foreign bank (as defined in section 1(b) of
the International Banking Act of 1978).
[12 USC 461(b). As
amended by acts of June 21, 1917 (40 Stat. 239); Sept. 26, 1918 (40
Stat. 970); May 12, 1933 (48 Stat. 54); Aug. 23, 1935 (49 Stat. 706);
July 7, 1942 (56 Stat. 648); July 28, 1959 (73 Stat. 264) effective
July 28, 1962; Sept. 21, 1966 (80 Stat. 823) (as amended by acts of
Sept. 21, 1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856));
Dec. 23, 1969 (83 Stat. 375); March 31, 1980 (94 Stat. 133, 138);
Aug. 13, 1981 (95 Stat. 433); Oct. 15, 1982 (96 Stat. 1520, 1521);
Aug. 9, 1989 (103 Stat. 439); Oct. 13, 2006 (120 Stat. 1968, 1969);
and July 21, 2010 (124 Stat. 1556). Amendments to subsection 19(b)
act of October 13, 2006, were to be effective on October 1, 2011,
but section 128 of the act of October 3, 2008 (122 Stat. 3796) accelerated
the effective date to October 1, 2008.]
1-169
Composition of Reserves (c) (1) Reserves held by a depository
institution to meet the requirements imposed pursuant to subsection
(b) shall, subject to such rules and regulations as the Board shall
prescribe, be in the form of—
(A) balances maintained
for such purposes by such depository institution in the Federal Reserve
bank of which it is a member or at which it maintains an account,
except that (i) the Board may, by regulation or order, permit depository
institutions to maintain all or a portion of their required reserves
in the form of vault cash, except that any portion so permitted shall
be identical for all depository institutions, and (ii) vault cash
may be used to satisfy any supplemental reserve requirement imposed
pursuant to subsection (b)(4), except that all such vault cash shall
be excluded from any computation of earnings pursuant to subsection
(b); and
(B) balances
maintained by a depository institution in a depository institution
which maintains required reserve balances at a Federal Reserve bank,
in a Federal Home Loan Bank, or in the National Credit Union Administration
Central Liquidity Facility, if such depository institution, Federal
Home Loan Bank, or National Credit Union Administration Central Liquidity
Facility maintains such funds in the form of balances in a Federal
Reserve bank of which it is a member or at which it maintains an account.
Balances received by a depository institution from a second depository
institution and used to satisfy the reserve requirement imposed on
such second depository institution by this section shall not be subject
to the reserve requirements of this section imposed on such first
depository institution, and shall not be subject to assessments
or reserves imposed on such first depository institution pursuant
to section 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817),
section 404 of the National Housing Act (12 U.S.C. 1727), or section
202 of the Federal Credit Union Act (12 U.S.C. 1782).
(2) The balances maintained
to meet the reserve requirements of subsection (b) by a depository
institution in a Federal Reserve bank or passed through a Federal
Home Loan Bank or the National Credit Union Administration Central
Liquidity Facility or another depository institution to a Federal
Reserve bank may be used to satisfy liquidity requirements which may
be imposed under other provisions of Federal or State law.
[12 USC 461(c). As
amended by acts of Aug. 15, 1914 (38 Stat. 691); June 21, 1917 (40
Stat. 239); July 28, 1959 (73 Stat. 263); Sept. 21, 1966 (80 Stat.
823) (as amended by acts of Sept. 21, 1967 (81 Stat. 226) and Sept.
21, 1968 (82 Stat. 856)); Dec. 23, 1969 (83 Stat. 375); March 31,
1980 (94 Stat. 133, 138); and Oct. 13, 2006 (120 Stat. 1969, 1980).]
1-170
Member Banks Making Security
Loans for Others (d) No member bank
shall act as the medium or agent of any nonbanking corporation, partnership,
association, business trust, or individual in making loans on the
security of stocks, bonds, and other investment securities to brokers
or dealers in stocks, bonds, and other investment securities. Every
violation of this provision by any member bank shall be punishable
by a fine of not more than $100 per day during the continuance of
such violation; and such fine may be collected, by suit or otherwise,
by the Federal reserve bank of the district in which such member bank
is located.
[12 USC 374a. As added by act of June 16, 1933 (48 Stat. 181) and
amended by act of Sept. 21, 1966 (80 Stat. 824) (as amended by acts
of Sept. 21, 1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856)).]
1-171
Deposits with, and Discounts for, Nonmember
Banks (e) No member bank shall keep
on deposit with any depository institution which is not authorized
to have access to Federal Reserve advances under section 10(b) of
this Act a sum in excess of 10 per centum of its own paid-up capital
and surplus. No member bank shall act as the medium or agent of a
nonmember bank in applying for or receiving discounts from a Federal
reserve bank under the provisions of this Act, except by permission
of the Board of Governors of the Federal Reserve System.
[12 USC 463, 374. As
reenacted without change by act of Aug. 15, 1914 (38 Stat. 692); and
amended by acts of June 21, 1917 (40 Stat. 239) (which completely
revised this section) and Sept. 21, 1966 (80 Stat. 824) (as amended
by acts of Sept. 21, 1967 (81 Stat. 226); Sept. 21, 1968 (82 Stat.
856); and March 31, 1980 (94 Stat. 140).]
1-172
Checking Against and Withdrawal of Reserve Balance (f) The required balance carried by a member bank
with a Federal reserve bank may, under the regulations and subject
to such penalties as may be prescribed by the Board of Governors of
the Federal Reserve System, be checked against and withdrawn by such
member bank for the purpose of meeting existing liabilities.
[12 USC 464. As reenacted
without change by act of Aug. 15, 1914 (38 Stat. 692); as amended
by acts of June 21, 1917 (40 Stat. 239) (which completely revised
this section July 7, 1942 (56 Stat. 648)); and Sept. 21, 1966 (80
Stat. 824) (as amended by acts of Sept. 21, 1967 (81 Stat. 226) and
Sept. 21, 1968 (82 Stat. 856)).]
1-173
Deductions in Computing Reserves (g) In estimating the reserve balances required by this Act, member
banks may deduct from the amount of their gross demand deposits the
amounts of balances due from other banks (except Federal Reserve banks
and foreign banks) and cash items in process of collection payable
immediately upon presentation in the United States, within the meaning
of these terms as defined by the Board of Governors of the Federal
Reserve System.
[12 USC 465. As amended by acts of Aug. 15, 1914 (38 Stat. 692);
June 21, 1917 (40 Stat. 240) (which completely revised this section);
Aug. 23, 1935 (49 Stat. 714); and Sept. 21, 1966 (80 Stat. 824) (as
amended by acts of Sept. 21, 1967 (81 Stat. 226) and Sept. 21, 1968
(82 Stat. 856)).]
1-174
Banks in Dependencies and Insular
Possessions as Member Banks; Reserves (h) National banks, or banks organized under local laws, located
in the dependency or insular possession or any part of the United
States outside the continental United States may remain nonmember
banks, and shall in that event maintain reserves and comply with all
the conditions now provided by law regulating them; or said banks
may, with the consent of the Board of Governors of the Federal Reserve
System, become member banks of any one of the reserve districts, and
shall in that event take stock, maintain reserves, and be subject
to all the other provisions of this Act.
[12 USC 466. As reenacted
without change by act of Aug. 15, 1914 (38 Stat. 692); and as amended
by acts of June 21, 1917 (40 Stat. 240); June 25, 1959 (73 Stat. 142)
and Sept. 21, 1966 (80 Stat. 824) (as amended by acts of Sept. 21,
1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856)). The “continental
United States” is defined in the third paragraph of section 1 of the
Federal Reserve Act to mean the “States of the United States and the
District of Columbia.”]
1-175
Interest on Demand Deposits (i)
[Repealed]
[Subsection (i) (12 USC 371a) was repealed by act of July 21, 2010
(124 Stat. 1640)].
1-176
Interest on, and
Payment of, Time and Savings Deposits (j) The Board may from time to time, after consulting with the Board
of Directors of the Federal Deposit Insurance Corporation and the
Federal Home Loan Bank Board, prescribe rules governing the advertisement
of interest on deposits by member banks on time and savings deposits.
The provisions of this paragraph shall not apply to any deposit which
is payable only at an office of a member bank located outside of the
States of the United States and the District of Columbia. During the
period commencing on October 15, 1962, and ending on October 15, 1968,
the provisions of this paragraph shall not apply to the rate of interest
which may be paid by member banks on time deposits of foreign governments,
monetary and financial authorities of foreign governments when acting
as such, or international financial institutions of which the United
States is a member.
[12 USC 371b. As added
by act of June 16, 1933 (48 Stat. 182). Amended by acts of Aug. 23,
1935 (49 Stat. 714); Oct. 15, 1962 (76 Stat. 953); July 21, 1965 (79
Stat. 244); Sept. 21, 1966 (80 Stat. 824) (as amended by acts of Sept.
21, 1967 (81 Stat. 226) and Sept. 21, 1968 (82 Stat. 856), Joint Resolution
of Sept. 22, 1969 (83 Stat. 115); Act of Dec. 23, 1969 (83 Stat. 371);
Joint Resolution of March 31, 1971 (85 Stat. 13); and act of May 18,
1971 (85 Stat. 38)); Sept. 21, 1968 (82 Stat. 856); July 6, 1973 (87
Stat. 147); Aug. 16, 1973 (87 Stat. 342); Oct. 28, 1974 (88 Stat.
1505), Dec. 31, 1975 (89 Stat. 1124); April 19, 1977 (91 Stat. 49);
and Nov. 16, 1977 (91 Stat. 1387).]
(k) [Repealed]
[Subsection
(k) (12 USC 371b-1) was repealed by act of March 31, 1980 (94 Stat.
168).]
1-177
(l) Civil money penalty.
(1) First tier. Any member bank which, and any institution-affiliated
party (within the meaning of section 3(u) of the Federal Deposit Insurance
Act) with respect to such member bank who, violates any provision
of this section, or any regulation issued pursuant thereto, shall
forfeit and pay a civil penalty of not more than $5,000 for each day
during which such violation continues.
(2) Second tier. Notwithstanding paragraph (1), any member bank which, and any institution-affiliated
party (within the meaning of section 3(u) of the Federal Deposit Insurance
Act) with respect to such member bank who—
(A) (i) commits any violation described in paragraph (1);
(ii) recklessly engages in an
unsafe or unsound practice in conducting the affairs of such member
bank; or
(iii) breaches
any fiduciary duty;
(B) which violation, practice, or breach—
(i) is part of a pattern of misconduct;
(ii) causes or is likely to cause more than
a minimal loss to such member bank; or
(iii) results in pecuniary gain or other benefit
to such party,
shall forfeit and pay a civil penalty of not more than
$25,000 for each day during which such violation, practice, or breach
continues.
1-177.1
(3) Third tier. Notwithstanding paragraphs (1) and (2), any member
bank which, and any institution-affiliated party (within the meaning
of section 3(u) of the Federal Deposit Insurance Act) with respect
to such member bank who—
(A) knowingly—
(i) commits any
violation described in paragraph (1);
(ii) engages in any unsafe or unsound practice
in conducting the affairs of such member bank; or
(iii) breaches any fiduciary duty; and
(B)
knowingly or recklessly causes a substantial loss to such member bank
or a substantial pecuniary gain or other benefit to such party by
reason of such violation, practice, or breach,
shall forfeit and pay a civil penalty in an amount not
to exceed the applicable maximum amount determined under paragraph
(4) for each day during which such violation, practice, or breach
continues.
(4) Maximum amounts of penalties for any violation
described in paragraph (3). The maximum daily amount of any civil
penalty which may be assessed pursuant to paragraph (3) for any violation,
practice, or breach described in such paragraph is—
(A) in
the case of any person other than a member bank, an amount not to
exceed $1,000,000; and
(B) in the case of a member bank, an amount not to exceed the lesser
of —
(i) $1,000,000; or
(ii) 1 percent of the total assets of such
member bank.
1-177.2
(5) Assessment;
etc. Any penalty imposed under paragraph (1), (2), or (3) may
be assessed and collected by the Board in the manner provided in subparagraphs
(E), (F), (G), and (I) of section 8(i)(2) of the Federal Deposit Insurance
Act for penalties imposed (under such section) and any such assessment
shall be subject to the provisions of such section.
(6) Hearing. The member bank or other person against whom any penalty is assessed
under this subsection shall be afforded an agency hearing if such
member bank or person submits a request for such hearing within 20
days after the issuance of the notice of assessment. Section 8(h)
of the Federal Deposit Insurance Act shall apply to any proceeding
under this subsection.
1-177.3
(7) Disbursement. All penalties collected under authority of this subsection shall
be deposited into the Treasury.
(8) Violate defined. For purposes of this section, the term “violate” includes any action
(alone or with another or others) for or toward causing, bringing
about, participating in, counseling, or aiding or abetting a violation.
(9) Regulations. The Board shall prescribe
regulations establishing such procedures as may be necessary to carry
out this subsection.
[12 USC 505, as added
by act of Nov. 10, 1978 (92 Stat. 3642) and amended by acts of Oct.
15, 1982 (96 Stat. 1522, 1523) and Aug. 9, 1989 (103 Stat. 472).]
1-178
(m) Notice under this section
after separation from service. The resignation, termination of
employment or participation, or separation of an institution-affiliated
party (within the meaning of section 3(u) of the Federal Deposit Insurance
Act) with respect to a member bank (including a separation caused
by the closing of such a bank) shall not affect the jurisdiction and
authority of the Board to issue any notice and proceed under this
section against any such party, if such notice is served before the
end of the 6-year period beginning on the date such party ceased to
be such a party with respect to such bank (whether such date occurs
before, on, or after the date of the enactment of this subsection).
[12 USC 505.
As added by act of Aug. 9, 1989 (103 Stat. 461).]
