12 U.S.C. § 324 — Laws applicable on becoming members

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 607 words · no verdicts yet

in plain englishAI-generated · not legal advice

Banks that join the Federal Reserve System must follow reserve, capital, and dividend rules like national banks. Banks that file false or late reports face escalating daily penalties.

Every bank admitted to Federal Reserve membership under this section must follow the reserve and capital rules of this chapter. It must also follow the rules that apply to national banks: banks cannot lend on or buy their own stock, and there are limits on withdrawing or reducing their capital stock. Member banks must also follow sections 56 and 60(b) of this title on paying dividends. Wherever those rules mention the Comptroller of the Currency, that reference means the Board of Governors of the Federal Reserve System instead, for purposes of this rule. These banks, and their officers, agents, and employees, are also subject to the penalties in sections 334, 656, and 1005 of title 18. They must send condition and dividend reports to their Federal Reserve bank. The Federal Reserve bank must call for at least three of these reports each year, on dates the Board of Governors sets. There are three levels of penalty for reporting problems. First, a bank that keeps reasonable procedures to avoid mistakes, but still, by an unintentional error, fails to file or publish a required report on time or files false or misleading information, faces a penalty of up to $2,000 per day the problem continues uncorrected. The same $2,000-per-day cap applies to a bank that inadvertently sends or publishes a report that is only minimally late. The bank must prove the error was inadvertent, and that a late report was inadvertently late. Second, a bank that fails to report on time, or files false or misleading information, in a way that does not fit the situations above, faces a penalty of up to $20,000 per day the problem continues. Third, if a bank knowingly, or with reckless disregard for accuracy, files or publishes false or misleading information, the Board can assess a penalty of up to $1,000,000, or 1 percent of the bank's total assets, whichever is less, per day the problem continues. Penalties under any of these three levels are assessed and collected by the Board the same way as penalties under section 1818(i)(2), subparagraphs (E), (F), (G), and (I), and that section's procedures apply, including how the penalty amount is determined. Any bank facing a penalty gets an agency hearing if it asks within 20 days after the Board issues its notice of assessment. Section 1818(h) applies to that hearing. Condition reports must use the form and contain the information the Board of Governors requires.

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

All banks admitted to membership under authority of this section shall be required to comply with the reserve and capital requirements of this chapter, to conform to those provisions of law imposed on national banks which prohibit such banks from lending on or purchasing their own stock and which relate to the withdrawal or impairment of their capital stock, and to conform to the provisions of sections 56 and 60(b) of this title with respect to the payment of dividends; except that any reference in any such provision to the Comptroller of the Currency shall be deemed for the purposes of this sentence to be a reference to the Board of Governors of the Federal Reserve System. Such banks and the officers, agents, and employees thereof shall also be subject to the provisions of and to the penalties prescribed by sections 334, 656, and 1005 of title 18, and shall be required to make reports of condition and of the payment of dividends to the Federal Reserve bank of which they become a member. Not less than three of such reports shall be made annually on call of the Federal Reserve bank on dates to be fixed by the Board of Governors of the Federal Reserve System. Any bank which (A) maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error, fails to make or publish any report required under this paragraph, within the period of time specified by the Board, or submits or publishes any false or misleading report or information, or (B) inadvertently transmits or publishes any report which is minimally late, shall be subject to a penalty of not more than $2,000 for each day during which such failure continues or such false or misleading information is not corrected. The bank shall have the burden of proving that an error was inadvertent and that a report was inadvertently transmitted or published late. Any bank which fails to make or publish such reports within the period of time specified by the Board, or submits or publishes any false or misleading report or information, in a manner not described in the 2nd preceding sentence shall be subject to a penalty of not more than $20,000 for each day during which such failure continues or such false or misleading information is not corrected. Notwithstanding the preceding sentence, if any bank knowingly or with reckless disregard for the accuracy of any information or report described in such sentence submits or publishes any false or misleading report or information, the Board may assess a penalty of not more than $1,000,000 or 1 percent of total assets of such bank, whichever is less, per day for each day during which such failure continues or such false or misleading information is not corrected. Any penalty imposed under any of the 4 preceding sentences shall be assessed and collected by the Board in the manner provided in subparagraphs (E), (F), (G), and (I) of section 1818(i)(2) of this title (for penalties imposed under such section) and any such assessment (including the determination of the amount of the penalty) shall be subject to the provisions of such section. Any bank against which any penalty is assessed under this subsection shall be afforded an agency hearing if such bank submits a request for such hearing within 20 days after the issuance of the notice of assessment. Section 1818(h) of this title shall apply to any proceeding under this paragraph. Such reports of condition shall be in such form and shall contain such information as the Board of Governors of the Federal Reserve System may require.

Source credit: (Dec. 23, 1913, ch. 6, § 9 (par.), 38 Stat. 259; June 21, 1917, ch. 32, § 3, 40 Stat. 233; Aug. 23, 1935, ch. 614, title III, § 320, 49 Stat. 713; Sept. 3, 1954, ch. 1263, § 27, 68 Stat. 1236; Pub. L. 86–230, § 21(b), Sept. 8, 1959, 73 Stat. 466; Pub. L. 101–73, title IX, § 911(d), Aug. 9, 1989, 103 Stat. 480; Pub. L. 103–325, title III, § 308(c), Sept. 23, 1994, 108 Stat. 2218.)

history & why it existsrecord from the source credit

1913Enacted · Act of Dec. 23, 1913, ch. 6 · 38 Stat. 259
1917Amended · Act of June 21, 1917, ch. 32 · 40 Stat. 233
1935Amended · Act of Aug. 23, 1935, ch. 614 · 49 Stat. 713
1954Amended · Act of Sept. 3, 1954, ch. 1263 · 68 Stat. 1236
1959Amended · Pub. L. 86-230 · 73 Stat. 466
1989Amended · Pub. L. 101-73 · 103 Stat. 480
1994Amended · Pub. L. 103-325 · 108 Stat. 2218

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

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