12 U.S.C. § 288 — Cancellation of stock held by member bank on insolvency or discontinuance of banking operations for sixty days; repayment of cash-paid subscriptions

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 245 words · no verdicts yet

in plain englishAI-generated · not legal advice

If a member bank becomes insolvent, its Federal Reserve Bank stock gets canceled. The bank's cash-paid subscriptions, plus interest, first pay off its debts to the Reserve Bank. A national bank that stops banking for 60 days can also get a receiver and canceled stock.

If a member bank is declared insolvent and a receiver is appointed for it, its stock in that Federal Reserve Bank is canceled, without weakening its other debts. All the cash it paid to subscribe for that stock — plus half of 1 percent interest per month since its last dividend, if it earned one, capped at the stock's book value — first goes toward paying off the insolvent member bank's debts to the Federal Reserve Bank. Whatever's left over goes to the insolvent bank's receiver. If a national bank hasn't gone into liquidation under section 181, and no receiver has already been appointed for another lawful reason, but the bank stops its banking operations for 60 days, the Comptroller of the Currency may appoint a receiver for it, if the Comptroller thinks that's wise. That cancels the national bank's stock in its district's Federal Reserve Bank. In exchange, under regulations the Board of Governors of the Federal Reserve System prescribes, the national bank is paid a sum equal to its cash-paid subscriptions for the canceled shares, plus half of 1 percent interest per month since its last dividend (if earned, capped at book value), minus whatever the national bank still owes the Federal Reserve Bank.

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

If any member bank shall be declared insolvent and a receiver appointed therefor, the stock held by it in said Federal reserve bank shall be canceled, without impairment of its liability, and all cash-paid subscriptions on said stock, with one-half of 1 per centum per month from the period of last dividend, if earned, not to exceed the book value thereof, shall be first applied to all debts of the insolvent member bank to the Federal reserve bank, and the balance, if any, shall be paid to the receiver of the insolvent bank.

If any national bank which has not gone into liquidation as provided in section 181 of this title, and for which a receiver has not already been appointed for other lawful cause, shall discontinue its banking operations for a period of sixty days the Comptroller of the Currency may, if he deems it advisable, appoint a receiver for such bank. The stock held by the said national bank in the Federal reserve bank of its district shall thereupon be canceled and said national 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 canceled and one-half of 1 per centum a month from the period of the last dividend, if earned, not to exceed the book value thereof, less any liability of such national bank to the Federal reserve bank.

Source credit: (Dec. 23, 1913, ch. 6, § 6, 38 Stat. 258; Apr. 23, 1930, ch. 207, § 1, 46 Stat. 250; Aug. 23, 1935, ch. 614, title II, § 203(a), title III, § 319(b), 49 Stat. 704, 713.)

history & why it existsrecord from the source credit

1913Enacted · Act of Dec. 23, 1913, ch. 6 · 38 Stat. 258
1930Amended · Act of Apr. 23, 1930, ch. 207 · 46 Stat. 250
1935Amended · Act of Aug. 23, 1935, ch. 614 · 49 Stat. 704, 713

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

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