§288 Cancellation of Stock Held by Member Bank on Insolvency or Discontinuance of Banking Operations for Sixty Days; Repayment of Cash-paid Subscriptions

Summary

When a member bank is declared insolvent and a receiver is named, the bank’s shares in its Federal Reserve Bank are canceled, but the bank still keeps its legal obligations. The money the bank paid for those shares, plus one-half of 1 percent per month from the last dividend if earned (but not more than the shares’ book value), must first be used to pay what the bank owes the Federal Reserve Bank. Any remainder goes to the receiver. If a national bank stops banking for 60 days and has no receiver, the Comptroller of the Currency may appoint one. The bank’s Federal Reserve shares are then canceled, and the bank is paid under rules the Board of Governors sets an amount equal to its cash payments for the shares plus one-half of 1 percent per month from the last dividend if earned (not to exceed book value), minus any amount the bank owes the Federal Reserve Bank.