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provision exempting an affiliate engaged "primarily" in holding bank premises so that the exemption would apply only to an affiliate engaged "on June 16, 1934" in holding such premises. The conference agreement retains the provision of the Senate amendment.

Section 329 of the Senate amendment repealed section 8A of the Clayton Act relating to interlocking relationships between banks and institutions making loans secured by stock or bond collateral, and repealed the provisions of sections 25 and 25 (a) of the Federal Reserve Act which relate to interlocking relationships. The first three paragraphs of section 8 of the Clayton Act were also amended, but the provision in the Senate amendment was materially different from that in the House bill. The House bill prohibited any director, officer, or employee of a member bank from being at the same time a private banker or a director, officer, or employee of another banking institution (other than a mutual savings bank) except in limited classes of cases in which the Federal Reserve Board might allow such service by general regulation when in its judgment such classes of institutions were not in substantial competition. The provision in the Senate amendment prohibited a director, officer, or employee of a member bank or branch thereof from being at the same time a private banker, or a director, officer, or employee of more than one other bank or trust company or branch thereof, except in the following cases:

(1) Where such other bank is more than 90 percent controlled by the United States or a corporation in which the United States owns more than 90 percent of the stock.

(2) Where such other bank has been placed in liquidation or is in the hands of a receiver or conservator.

(3) Where such other bank is principally engaged in international or foreign banking in a possession of the United States and has entered into an agreement with the Board of Governors of the Federal Reserve System as provided by section 25 of the Federal Reserve Act.

(4) A bank more than 50 percent of the common stock of which is owned by persons owning more than 50 percent of the common stock of a member bank.

(5) A bank not located and having no branch in the same place in which a member bank or a branch thereof is located or in a place contiguous thereto.

(6) A bank not engaged in a class of business in which a member bank is engaged.

(7) A mutual savings bank having no capital stock.

A further provision not contained in the House bill suspended the operation of the amendment until February 1, 1939, insofar as it affects interlocking relationships of any director, officer, or employee of a member bank or branch thereof lawfully existing on the date the act takes effect.

The conference agreement amends section 8 of the Clayton Act so as to provide that no private banker or director, officer, or employee of any member bank or any branch thereof shall be at the same time a director, officer, or employee of any other bank or branch thereof, except that the Board of Governors of the Federal Reserve System may by regulation permit such service as a director, officer, or employee of not more than one other such institution or branch thereof. The prohibitions are not to apply, however, to the cases excepted under the provisions of the Senate amendment, and the remaining provisions of the Senate amendment are also retained.

Section 337 of the House bill provided for terminating the liability of shareholders of banks and trust companies in the District of Columbia on July 1, 1937, under the same conditions as are applicable under section 304 of the bill in the case of national banks. Each such nstitution is required to carry one-tenth part of its net profits of the preceding half year to surplus before declaring a dividend and to continue to do so until the surplus equals the amount of its common stock, and under the Senate amendment it is allowed to treat as surplus any amounts paid into a fund for retiring its preferred stock or debentures. The conference agreement retains the provisions of the Senate amendment.

Section 341 of the House bill which amended the provisions of section 8 of the Postal Savings Depository Act of June 25, 1910, relating to the withdrawal of and interest on postal savings deposits, was eliminated by the Senate amendment. Under this provision of the House bill any depositor was allowed to withdraw the whole or any part of his deposit with accrued interest after giving 60 days' written notice but subject to regulations of the Postmaster General. It was further provided that in the absence of such notice withdrawal would be permitted only on condition that not less than 3 months' interest be deducted. Provisions were also included requiring that the interest rate paid on any such deposit should not exceed that which might lawfully be paid on savings deposits in member banks located in or nearest to the place where the depository office is located and authorizing such depositories to deposit funds on time in member banks subject to the provisions of the Federal Reserve Act with respect to payment and interest. The conference agreement restores the last two provisions referred to, and provides that postal savings deposits shall be savings deposits, that interest shall be allowed and credited quarterly, and that no interest shall be allowed to any depositor for any period of less than 3 months.

Section 341 of the Senate amendment amended section 11 (k) of the Federal Reserve Act to provide that State banking authorities may have access to the reports of examination of trust departments of national banks made by the Comptroller of the Currency. This provision was not included in the House bill. The conference agreement retains this provision as section 342.

Section 342 of the Senate amendment amended section 5240 of the Revised Statutes, relating to payment of compensation of employees of the Office of the Comptroller of the Currency by means of assessments on banks, so as to include the payment of retirement annuities for such employees. There was no corresponding provision in the House bill. The conference agreement retains it as section 343.

Section 343 of the Senate amendment, which was not included in the House bill, amends the National Housing Act in several respects. Subsection (a) authorizes the Federal Housing Administrator, in carrying out the provisions of titles I, II, and III of such act, to sue and be sued in any court of competent jurisdiction, State or Federal. Subsection (b) is intended merely to clarify and not to extend the provisions of existing law relating to insured loans for financing alterations, repairs, and improvements on real property so that the purchase and installation of equipment and machinery on real property may be included. Subsections (c) and (d) also clarify existing law with respect to mortgage insurance in connection with low-cost

housing projects and property. The conference agreement retains the provisions of the Senate amendment as section 344.

Section 344 of the Senate amendment added a provision which was not contained in the House bill relating to preferred stock, capital notes, and debentures of member banks of the Federal Reserve System and the consideration to be given to such securities in determining whether the capital stock of any such bank is impaired. It was also provided that the dividends on preferred stock of national banks shall not exceed 6 percent of the original purchase price of such stock, and that in the event of the retirement of such stock or the liquidation of the bank the holders of the stock shall be entitled to receive not more than the original purchase price plus accumulative dividends. The conference agreement retains the provisions of the Senate amendment with clarifying amendments.

Section 345 of the Senate amendment contains the usual provision relating to separability in the event any part of the act should be held unconstitutional. There was no corresponding provision in the House bill. The conference agreement retains it.

HENRY B. STEAGALL,

T. ALAN GOLDSBOROUGH,
JOHN B. HOLLISTER,
Managers on the part of the House.

O

[PUBLIC NO. 305-74TH CONGRESS]

[H. R. 7617]

AN ACT

To provide for the sound, effective, and uninterrupted operation of the banking system, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Banking Act of 1935 ".

TITLE I—FEDERAL DEPOSIT INSURANCE

SECTION 101. Section 12B of the Federal Reserve Act, as amended (U. S. C., Supp. VII, title 12, sec. 264), is amended to read as follows:

"SEC. 12B. (a) There is hereby created a Federal Deposit Insurance Corporation (hereinafter referred to as the Corporation') which shall insure, as hereinafter provided, the deposits of all banks which are entitled to the benefits of insurance under this section, and which shall have the powers hereinafter granted.

"(b) The management of the Corporation shall be vested in a board of directors consisting of three members, one of whom shall be the Comptroller of the Currency, and two of whom shall be citizens of the United States to be appointed by the President, by and with the advice and consent of the Senate. One of the appointive members shall be the chairman of the board of directors of the Corporation and not more than two of the members of such board of directors shall be members of the same political party. Each such appointive member shall hold office for a term of six years and shall receive compensation at the rate of $10,000 per annum, payable monthly out of the funds of the Corporation, but the Comptroller of the Currency shall not receive additional compensation for his services as such member. In the event of a vacancy in the office of the Comptroller of the Currency, and pending the appointment of his successor, or during the absence of the Comptroller from Washington, the Acting Comptroller of the Currency shall be a member of the board of directors in the place and stead of the Comptroller. In the event of a vacancy in the office of the chairman of the board of directors, and pending the appointment of his successor, the Comptroller of the Currency shall act as chairman. The Comptroller of the Currency shall be ineligible during the time he is in office and for two years thereafter to hold any office, position, or employment in any insured bank. The appointive members of the board of directors shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any insured bank, except that this restriction shall not apply to any appointive member who has served the full term for which he was appointed. No member of the board of directors shall be an officer or director of any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institu

tion, or trust company; and before entering upon his duties as a member of the board of directors he shall certify under oath that he has complied with this requirement and such certification shall be filed with the secretary of the board of directors. No member of the board of directors serving on the board of directors on the effective date shall be subject to any of the provisions of the three preceding sentences until the expiration of his present term of office. "(c) As used in this section

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"(1) The term 'State bank' means any bank, banking association, trust company, savings bank, or other banking institution which is engaged in the business of receiving deposits and which is incorporated under the laws of any State, Hawaii, Alaska, Puerto Rico, or the Virgin Islands, or which is operated under the Code of Law for the District of Columbia (except a national bank), and includes any unincorporated bank the deposits of which are insured on the effective date under the provisions of this section.

"(2) The term 'State member bank' means any State bank which is a member of the Federal Reserve System, and the term 'State nonmember bank' means any State bank which is not a member of the Federal Reserve System.

"(3) The term 'District bank' means any State bank operating under the Code of Law for the District of Columbia.

"(4) The term 'national member bank' means any national bank located in any of the States of the United States, the District of Columbia, Hawaii, Alaska, Puerto Rico, or the Virgin Islands which is a member of the Federal Reserve System.

"(5) The term 'national nonmember bank' means any national bank located in Hawaii, Alaska, Puerto Rico, or the Virgin Islands which is not a member of the Federal Reserve System.

"(6) The term 'mutual savings bank' means a bank without capital stock transacting a savings bank business, the net earnings of which inure wholly to the benefit of its depositors after payment of obligations for any advances by its organizers.

"(7) The term 'savings bank' means a bank (other than a mutual savings bank) which transacts its ordinary banking business strictly as a savings bank under State laws imposing special requirements on such banks governing the manner of investing their funds and of conducting their business: Provided, That the bank maintains, until maturity date or until withdrawn, all deposits made with it (other than funds held by it in a fiduciary capacity) as time savings deposits of the specific term type or of the type where the right is reserved to the bank to require written notice before permitting withdrawal: Provided further, That such bank to be considered a savings bank must elect to become subject to regulations of the Corporation with respect to the redeposit of maturing deposits and prohibiting withdrawal of deposits by checking except in cases where such withdrawal is permitted by law on the effective date from specifically designated deposit accounts totaling not more than 15 per centum of the bank's total deposits.

"(8) The term 'insured bank' means any bank the deposits of which are insured in accordance with the provisions of this section; and the term 'noninsured bank' means any bank the deposits of which are not so insured.

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