12 U.S.C. § 356 — Purchase of commercial paper from member banks and sale of same

Every Federal reserve bank has the power to buy bills of exchange from member banks. These bills of exchange must arise out of "commercial transactions" — a term this section doesn't define itself, since it says "as hereinbefore defined," pointing back to a definition given earlier elsewhere in this law. A Federal reserve bank can also sell these bills of exchange after buying them. When it resells them, the bank can choose to add its own endorsement — essentially a guarantee standing behind the paper — or sell them without one. That choice is left to the bank.