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

Summary

Federal Reserve Banks may make short-term loans to their member banks. They can lend up to 15 days when the loan is backed by U.S. Treasury securities, certain Federal intermediate credit bank obligations, or bonds under subsection (c) of section 1463. They can lend up to 90 days when the loan is backed by eligible commercial paper such as notes, drafts, bills of exchange, bankers’ acceptances, or other obligations eligible under section 355. Each Reserve Bank sets the interest rate, but the Board of Governors can review and change those rates. If a member bank, after an official warning, increases loans secured by stocks, bonds, or similar securities, or makes loans to securities dealers so they can buy or hold investment securities (except U.S. obligations), any advance becomes due immediately and the bank can be barred from borrowing under this rule for a time the Board decides. Temporary loans made only to help buy or deliver securities offered to the public are not counted as those forbidden loans.

Title 12, §347

Banks and Banking — Source: USLM XML via OLRC

Any Federal reserve bank may make advances for periods not exceeding fifteen days to its member banks on their promissory notes secured by the deposit or pledge of bonds, notes, certificates of indebtedness, or Treasury bills of the United States, or by the deposit or pledge of debentures or other such obligations of Federal intermediate credit banks which are eligible for purchase by Federal reserve banks under section 350 of this title, or by the deposit or pledge of bonds issued under the provisions of subsection (c) of section 1463 11 See References in Text note below. of this title; and any Federal reserve bank may make advances for periods not exceeding ninety days to its member banks on their promissory notes secured by such notes, drafts, bills of exchange, or bankers’ acceptances as are eligible for rediscount or for purchase by Federal reserve banks under the provisions of this chapter, or secured by such obligations as are eligible for purchase under section 355 of this title. All such advances shall be made at rates to be established by such Federal reserve banks, such rates to be subject to the review and determination of the Board of Governors of the Federal Reserve System. If any member bank to which any such advance has been made shall, during the life or continuance of such advance, and despite an official warning of the reserve bank of the district or of the Board of Governors of the Federal Reserve System to the contrary, increase its outstanding loans secured by collateral in the form of stocks, bonds, debentures, or other such obligations, or loans made to members of any organized stock exchange, investment house, or dealer in securities, upon any obligation, note, or bill, secured or unsecured, for the purpose of purchasing and/or carrying stocks, bonds, or other investment securities (except obligations of the United States) such advance shall be deemed immediately due and payable, and such member bank shall be ineligible as a borrower at the reserve bank of the district under the provisions of this section for such period as the Board of Governors of the Federal Reserve System shall determine: Provided, That no temporary carrying or clearance loans made solely for the purpose of facilitating the purchase or delivery of securities offered for public subscription shall be included in the loans referred to in this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1463 of this title, referred to in text, was repealed by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 648. This chapter, referred to in text, was in the original “this Act”, meaning act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. For complete classification of this Act to the Code, see

References in Text

note set out under section 226 of this title and Tables. Codification Section is comprised of the eighth par. of section 13 of act Dec. 23, 1913, as amended. The eighth par. constituted the sixth par. of section 13 in 1916 (39 Stat. 752, 753), became the seventh par. in 1923 (42 Stat. 1478), and became the eighth par. in 1932 (47 Stat. 715). For further details, see Codification notes under section 343 and 344 of this title. For classification to this title of other pars. of section 13, see Codification note set out under section 342 of this title.

Amendments

1968—Pub. L. 90–505 added promissory notes of members banks secured by such obligations as are eligible for purchase under section 355 of this title to the list of types of promissory notes of member banks on which the Federal reserve bank may make advances for periods not exceeding 90 days. 1961—Pub. L. 87–353 struck out provision authorizing any Federal reserve bank to make advances to its member banks on their promissory notes secured by the deposit or pledge of Federal Farm Mortgage Corporation bonds issued under the Federal Farm Mortgage Corporation Act. 1934—Act Apr. 27, 1934, inserted first phrase preceding the semicolon in first sentence. Act Jan. 31, 1934, inserted second phrase preceding the semicolon in first sentence. 1933—Act

June 16, 1933, amended section generally. Act

May 12, 1933, added Federal farm-loan bonds as security for advances. 1932—Act

May 19, 1932, inserted clause in first sentence which begins “or by the deposit or pledge of debentures”.

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.

§347 Advances to Member Banks on Their Notes

Summary

Title 12, §347

Notes & Related Subsidiaries

Editorial Notes

References in Text

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Change of Name

Citations & Metadata