12 U.S.C. § 304 — Class A and class B directors; selection

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 604 words · no verdicts yet

in plain englishAI-generated · not legal advice

This law sets the process for choosing class A and class B directors of Federal Reserve Banks. The Federal Reserve Board sorts member banks into three groups by size, and each bank nominates one candidate for each director class. Banks then rank candidates on a preferential ballot, and the candidate with majority support after adding first, second, and other-choice votes together wins.

This section has no lettered subsections; it lays out a multi-step nomination and election process, described here in the order the steps happen. First, the Board of Governors of the Federal Reserve System sorts the member banks in each district into three groups, numbered by group, based on similar capital size. Each member bank can then nominate one candidate for class A director and one candidate for class B director. The chairman of the district Federal Reserve Bank's board lists all nominated candidates, showing which bank nominated each one, and sends a copy of that list to every member bank within 15 days after the list is finished. Each member bank must, by a board resolution or bylaw amendment, authorize its president, cashier, or another officer to cast that bank's vote in these elections. If several member banks in the same district are all owned by the same bank holding company, only one of those banks — designated by the holding company — can take part in the nomination or election; this includes the holding company itself if it is also a member bank. Within 15 days of getting the candidate list, each authorized bank officer must certify, on a preferential ballot the district Reserve Bank's chairman provides, their first, second, and other choices for class A director and separately for class B director. The officer marks one choice per rank and cannot give more than one vote to the same candidate. An officer or director of a member bank can only be elected as a class A director by banks in the same group as their own bank. If someone is an officer or director of more than one member bank, they can only be nominated as a class A director by banks in the group containing whichever of those banks has the largest total resources. To win, a candidate needs a majority of all first-choice votes. If no one gets a first-choice majority, the second-choice votes are added to the first-choice votes for each candidate; whoever then has both a majority of voting banks and the highest combined vote total wins. If that still doesn't produce a winner, the process repeats by adding in the third-column ("other choices") votes, and whoever then has the highest total wins. An immediate report of the election must be made once a director is chosen this way.

the actual law source: uscode.house.gov ↗public domain

Directors of class A and class B shall be chosen in the following manner: The Board of Governors of the Federal Reserve System shall classify the member banks of the district into three general groups or divisions designating each group by number. Each group shall consist as nearly as may be of banks of similar capitalization. Each member bank shall be permitted to nominate to the chairman of the board of directors of the Federal reserve bank of the district one candidate for director of class A and one candidate for director of class B. The candidates so nominated shall be listed by the chairman, indicating by whom nominated, and a copy of said list shall, within fifteen days after its completion, be furnished by the chairman to each member bank. Each member bank by a resolution of the board or by an amendment to its bylaws shall authorize its president, cashier, or some other officer to cast the vote of the member bank in the elections of class A and class B directors: Provided, That whenever any member banks within the same Federal Reserve district are subsidiaries of the same bank holding company within the meaning of the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.], participation in any such nomination or election by such member banks, including such bank holding company if it is also a member bank, shall be confined to one of such banks, which may be designated for the purpose by such holding company.

Within fifteen days after receipt of the list of candidates the duly authorized officer of a member bank shall certify to the chairman his first, second, and other choices for director of class A and class B, respectively, upon a preferential ballot upon a form furnished by the chairman of the board of directors of the Federal reserve bank of the district. Each such officer shall make a cross opposite the name of the first, second, and other choices for a director of class A and for a director of class B, but shall not vote more than one choice for any one candidate. No officer or director of a member bank shall be eligible to serve as a class A director unless nominated and elected by banks which are members of the same group as the member bank of which he is an officer or director.

Any person who is an officer or director of more than one member bank shall not be eligible for nomination as a class A director except by banks in the same group as the bank having the largest aggregate resources of any of those of which such person is an officer or director.

Any candidate having a majority of all votes cast in the column of first choice shall be declared elected. If no candidate have a majority of all the votes in the first column, then there shall be added together the votes cast by the electors for such candidates in the second column and the votes cast for the several candidates in the first column. The candidate then having a majority of the electors voting and the highest number of combined votes shall be declared elected. If no candidate have a majority of electors voting and the highest number of votes when the first and second choices shall have been added, then the votes cast in the third column for other choices shall be added together in like manner, and the candidate then having the highest number of votes shall be declared elected. An immediate report of election shall be declared.

Source credit: (Dec. 23, 1913, ch. 6, § 4 (pars.), 38 Stat. 256; Sept. 26, 1918, ch. 177, § 1, 40 Stat. 968; June 26, 1930, ch. 614, 46 Stat. 815; June 16, 1933, ch. 89, § 3(b), 48 Stat. 163; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 89–485, § 13(e), July 1, 1966, 80 Stat. 243.)

history & why it existsrecord from the source credit

1913Enacted · Act of Dec. 23, 1913, ch. 6 · 38 Stat. 256
1918Amended · Act of Sept. 26, 1918, ch. 177 · 40 Stat. 968
1930Amended · Act of June 26, 1930, ch. 614 · 46 Stat. 815
1933Amended · Act of June 16, 1933, ch. 89 · 48 Stat. 163
1935Amended · Act of Aug. 23, 1935, ch. 614 · 49 Stat. 704
1966Amended · Pub. L. 89-485 · 80 Stat. 243

A history note hasn’t been published yet. The record shows enactment by ch. 6 on 1913-12-23.

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