(a) Advances to and discounts for a depository institution.
(1) A Federal Reserve Bank
may lend to a depository institution either by making an advance secured
by acceptable collateral under section 201.4 of this part or by discounting
certain types of paper. A Federal Reserve Bank generally extends credit
by making an advance.
(2) An advance to a depository institution must be secured to the
satisfaction of the Federal Reserve Bank that makes the advance. Satisfactory
collateral generally includes United States government and federal
agency securities, and, if of acceptable quality, mortgage notes covering
one- to four-family residences, state and local government securities,
and business, consumer, and other customer notes.
(3) If a Federal Reserve Bank concludes
that a discount would meet the needs of a depository institution or
an institution described in section 13A of the Federal Reserve Act
(12 U.S.C. 349) more effectively, the Reserve Bank may discount any
paper indorsed by the institution, provided the paper meets the requirements
specified in the Federal Reserve Act.
(b) No obligation to make advances or discounts. This section does not entitle any person or entity to obtain any
credit or any increase, renewal or extension of maturity of any credit
from a Federal Reserve Bank.
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(c) Information requirements.
(1) Before extending credit to a depository
institution, a Federal Reserve Bank should determine if the institution
is an undercapitalized insured depository institution or a critically
undercapitalized insured depository institution and, if so, follow
the lending procedures specified in section 201.5.
(2) Each Federal Reserve Bank shall require
any information it believes appropriate or desirable to ensure that
assets tendered as collateral for advances or for discount are acceptable
and that the borrower uses the credit provided in a manner consistent
with this part.
(3) Each Federal Reserve Bank shall—
(i) keep itself informed of the general character and amount of the
loans and investments of a depository institution as provided in section
4(8) of the Federal Reserve Act (12 U.S.C. 301); and
(ii) consider such information in determining
whether to extend credit.
(d) Indirect credit for others. Except
for depository institutions that receive primary credit as described
in section 201.4(a), no depository institution shall act as the medium
or agent of another depository institution in receiving Federal Reserve
credit except with the permission of the Federal Reserve Bank extending
credit.
