Section 19 of the Federal Reserve Act provides, in part, that “[n
]o member bank shall keep on deposit with any state bank or trust
company which is not a member a sum in excess of ten per centum of its own
paid-up capital and surplus.” The Board has noted that the limitation
contained in this provision is based upon a specific percentage of capital
and surplus of the member bank and that it would be possible for all the
funds of one trust to be deposited with a nonmember bank and still not exceed
such specific percentage. The Board is of the view that if Congress had
intended the limitation to apply to a deposit of trust funds, it would have
provided an appropriate limitation for the protection of individual trusts
bearing a relation to the funds of each individual trust rather than to the
capital and surplus of the member bank. Accordingly, the Board believes that
a deposit of trust funds with a state nonmember bank by a member bank as
fiduciary in excess of 10 percent of the member bank’s capital and surplus is
not prohibited by the provision of section 19 of the Federal Reserve Act.
X-9617; June 11, 1936.
