agreements from, any of its affiliates, or invest in the stock or obligations of such affiliates, or accept such stock or obligations as security for advances, if the aggregate amount thereof, in the case of any one affiliate, will exceed ten per cent of the capital stock and surplus of the member bank, or if, in the case of all such affiliates, the aggregate amount thereof will exceed twenty per cent of the capital stock and surplus of such member bank. Each loan or extension of credit to an affiliate shall be secured by collateral, in the form of stocks, bonds, debentures or other such obligations, having a market value of at least twenty per cent more than the amount of the loan or extension of credit or at least ten per cent more than the amount thereof if secured by State or municipal obligations. Loans or extensions of credit secured by obligations of the United States, Federal intermediate credit banks, Federal land banks, Federal Home Loan Banks, the Home Owners' Loan Corporation or paper eligible for rediscount by Federal reserve banks are excepted from the requirement as to marginal collateral. The provisions of this section do not apply to an affiliate engaged solely in holding the bank premises of the affiliated member bank or conducting a safe-deposit business or the business of an agricultural credit corporation or live stock loan company, or to an affiliate in the capital stock of which a national bank is authorized to invest under Section 25 of the Federal Reserve Act, or an affiliate organized under Section 25(a) of the Federal Reserve Act, or to an affiliate engaged solely in holding obligations of the United States Government, Federal Intermediate credit banks, Federal land banks, Federal Home Loan Banks or the Home Owners' Loan Corporation.
Limitation on Investments in Bank Premises.
A new section, 24(a), is added to the Federal Reserve Act which provides that no national bank, without the approval of the Comptroller of the Currency, and no State member bank, without the approval of the Board, shall invest in bank premises, or in stock or obligations of, or make loans to or upon the security of the stock of, any corporation holding its bank premises, in an aggregate sum exceeding the amount of the bank's capital stock.
Jurisdiction of Federal Courts over cases involving foreign banking transactions.
A new section 25(b), is added to the Federal Reserve Act which confers upon District Courts of the United States jurisdiction over any case to which a corporation (organized) under the laws of the United States is a party and which arises out of transactions involving international or foreign banking, either directly or through the agency, ownership or control of branches or of local institutions in foreign countries.
Jurisdiction of suits by or against Federal reserve banks.
The new Section 25(b) restores to the District Courts of the United States jurisdiction of all suits to which a Federal reserve bank shall be a party and provides that Federal reserve banks shall not be subject to attachment or garnishment proceedings before final judgment in any case.
Dealings in investment securities.
The Act provides in effect that after one year after the passage of the Act: Dealings in investment securities by a member bank are limited to the purchase and sale of such securities, without recourse, solely upon the order and for the account of customers, except that a member bank may purchase for its own account investment securities under limitations and restrictions prescribed by regulation of the Comptroller of the Currency.
No member bank shall underwrite any issue of securities.
The total amount of investment securities of any one obligor purchased after this section takes effect and held by a member bank for its own account shall not exceed 10 per cent of the total amount of such issue outstanding, but this limitation does not apply to any issue not in excess of $100,000 and not in excess of 50 per cent of the capital of the bank.
