§287 — Title 12 Banks and Banking | U.S. Code

Summary

Each Federal Reserve bank must sell its stock in $100 shares. The total stock can go up when member banks raise their capital or more banks join, and it can go down when member banks shrink their capital or leave. Member banks may not sell or pledge their Reserve Bank shares. When a member bank raises its capital or surplus, it must buy extra Reserve Bank stock equal to 6 percent of that increase. Half of that new subscription must be paid like the original purchase and the other half can be called later by the Board of Governors of the Federal Reserve System. A bank joining later must subscribe to stock equal to 6 percent of its paid-up capital and surplus and pay the par value plus 0.5% per month from the last dividend. If a member bank cuts its capital or surplus, it must give up a matching share of Reserve Bank stock. Any bank holding more than the 6 percent required must surrender the excess. A bank that voluntarily closes must give up all its Reserve Bank stock and is freed from any uncalled subscriptions. Surrendered shares are canceled. The bank is paid for the cash it already paid on those shares plus 0.5% per month from the last dividend, up to the shares’ book value, minus any amounts it owes to the Reserve Bank, under rules set by the Board of Governors.

Title 12, §287

Banks and Banking — Source: USLM XML via OLRC

The capital stock of each Federal reserve bank shall be divided into shares of $100 each. The outstanding capital stock shall be increased from time to time as member banks increase their capital stock and surplus or as additional banks become members, and may be decreased as member banks reduce their capital stock or surplus or cease to be members. Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated. When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of capital stock of the Federal reserve bank of its district equal to 6 per centum of the said increase, one-half of said subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at any time after the organization thereof must subscribe for an amount of the capital stock of the Federal reserve bank equal to 6 per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus one-half of 1 per centum a month from the period of the last dividend. When a member bank reduces its capital stock or surplus it shall surrender a proportionate amount of its holdings in the capital stock of said Federal Reserve bank. Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the basis of 6 per centum of its paid-up capital stock and surplus shall surrender such excess stock. When a member bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and be released from its stock subscription not previously called. In any such case the shares surrendered shall be canceled and the member bank shall receive in payment therefor, under regulations to be prescribed by the Board of Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and one-half of 1 per centum a month from the period of the last dividend not to exceed the book value thereof, less any liability of such member bank to the Federal Reserve bank.

Editorial Notes

Amendments

1935—Act Aug. 23, 1935, § 319(a), amended last four sentences.

Statutory Notes and Related Subsidiaries

Change of Name

section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System.

§287 Value of Shares of Stock; Increase and Decrease of Stock; Member Banks as Shareholders; Surrender of Shares