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COMMITTEE ON RULES

EDWARD W. POU, North Carolina, Chairman WILLIAM B. BANKHEAD, Alabama.

FRED S. PURNELL, Indiana. JOHN J. O'CONNOR, New York.

EARL C. MICHENER, Michigan. ADOLPH J. SABATH, Illinois.

HARRY C. RANSLEY, Pennsylvania. DANIEL E. GARRETT, Texas.

JOSEPH W. MARTIN, JR., Massachusetts.
ARTHUR H. GREENWOOD, Indiana.
E. E. COX, Georgia.
THOMAS S. MCMILLAN, South Carolina.

WILLIAM S. MOYE, Clerk
II

HOME LOAN BANK BILL

THURSDAY, MAY 26, 1932

HOUSE OF REPRESENTATIVES,

COMMITTEE ON RULES,

Washington, D. C. The committee met at 10.30 o'clock a. m., Hon. Edward W. Pou (chairman) presiding.

(H. R. 12280, Seventy-second Congress, first session]

A BILL To create Federal home loan banks, to provide for the supervision thereof, 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 “ Federal home loan bank act.”

DEFINITIONS

SEC. 2. As used in this act-
(1) The term “board " means the Federal home-loan bank board.

(2) The term “ Federal Home-loan bank” means a bank established by the board under authority of this act.

(3) The term “ State" includes the District of Columbia and the Territories of Alaska and Hawaii.

(4) The term “member" (except when used in reference to a member of the board) means any institution which has subscribed for the stock of a Federal home-loan bank.

(5) The term “home-mortgage loan” means a loan made by a member or a nonmember borrower upon the security of a home mortgage.

(6) The term “home mortgage” means a first mortgage upon real estate, in fee simple, or leaseho d under a renewable lease for not less than 99 years, upon which there is located a dwelling for not more than two families, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this act to become members, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(7) The term “unpaid principal,” when used in respect of a loan secured by a home mortgage means the principal thereof less the sum of (1) payments made on such principal, and (2) in cases where shares or stock are pledged as security for the loan, the payments made on such shares or stock plus earnings or dividends apportioned or credited thereon.

(8) An "amortized” or “ installment ” home mortgage loan shall, for the purposes of this act, be a home mortgage loan to be repaid or liquidated in not less than eight years by means of regular weekly, monthly, or quarterly payments made directly in reduction of the debt or upon stock or shares pledged as collateral for the repayment of such loan.

(9) The term “nonmember borrower” includes an institution authorized to secure advances from a Federal home-loan bank under the provisions of section 5(e).

FEDERAL HOME-LOAN BANKS

Sec. 3. As soon as practicable the board shall divide the continental United States and the Territories of Alaska and Hawaii into not less than 8 nor more than 12 districts. Such districts shall be apportioned with due regard to the

convenience and customary course of business of the institutions eligible to and likely to subscribe for stock of a Federal home-loan bank to be formed under this act, but no such district shall contain a fractional part of any State. The districts thus created may be readjusted and new districts may from time to time be created by the board, not to exceed 12 in all. Such districts shall be known as Federal home-loan bank districts and may be designated by number. As soon as practicable the board shall establish in each district a Federal home-loan bank at such city as may be designated by the board. Its title shall include the name of the city at which it is established.

CAPITAL OF FEDERAL HOME LOAN BANKS AND SUBSCRIPTIONS THERETO

SEC. 4. (a) Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, trust company, State bank, or other banking organization (except a national bank) shall be eligible to become a member of, or a nonmember borrower of, a Federal home loan bank if such institution (1) is duly organized under the laws of any State or of the United States; (2) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and (3) makes such home mortgage loans as, in the judgment of the board, are long-term loans (and in the case of a savings bank, trust company, State bank, or other banking organization (except a national bank), if, in the judgment of the board, its time deposits, as defined in section 19 of the Federal reserve act, warrant its making such loans). No institution shall be eligible to become a member of, or a nonmember borrower of, a Federal home-loan bank if, in the judgment of the board, its financial condition is such that advances may not safely be made to such institution or the character of its management or its home-financing policy is inconsistent with sound and economical home financing or with the purposes of this act.

(b) An institution eligible to become a member or a nonmember borrower under this section may become a member only of, or secure advances from, the Federal home-loan bank of the district in which is located the institution's principal place of business, or of the bank of a district adjoining such district, if demanded by convenience, and then only with the approval of the board.

(c) Notwithstanding the provisions of clause (2) of subsection (a) of this section requiring inspection and regulation under law as a condition with respect to eligibility for membership, any building and loan association which would be eligible to become a member of a Federal home loan bank except for the fact that it is not subject to inspection and regulation under the banking laws or similar laws of the State in which such association is organized shall, for the period of forty-two months after the enactment of this act, be eligible to become a member of a Federal home loan bank. If, at the end of such period, legislation providing for inspection and regulation of building and loan associations has not been enacted by such State, such association shall cease to be a member and the same provisions shall apply with respect to the termination of its relations with the Federal home loan bank as apply in the case of involuntary withdrawal of members under section 5(i).

SEC. 5. (a) As soon as practicable after the enactment of this act, the board, with the approval of the Secretary of the Treasury, shall determine the minimum capital of each Federal home loan bank which shall be not less than $5,000,000. The board shall, as soon as practicable thereafter, open books in each district established under section 3 for subscription to the capital stock of the Federal home loan bank of the district.

(b) The capital stock of each Federal home loan bank shall be divided into shares of a par value of $100 each. The minimum capital stock shall be issued at par. Stock issued thereafter shall be issued at such price not less than par as may be fixed by the board.

(c) The original stock subscription for each institution eligible to become a member under section 4 shall be an amount equal to 1 per centum of the aggregate of the unpaid principal of the subscriber's home mortgage loans, but not less than $1,500. The board shall from time to time adjust the amount of stock held by each member so that, as nearly as possible, such member shall at all times have invested in the stock of the Federal home loan bank at least an amount calculated in the manner provided in the preceding sentence (but not less than $1,500). If the board finds that the investment of any member in stock is greater than that required under this section, upon application of such member, the bank shall pay such member for each share of stock in excess

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