12 U.S.C. § 83 — Loans by bank on its own stock

submitted 26 years ago by Pub. L. 106-569 to r/title-12-BANKS-AND-BANKING · 72 words · no verdicts yet

in plain englishAI-generated · not legal advice

National banks cannot lend money using their own stock as collateral. The only exception is when a bank takes its own stock to avoid losing money on a debt already owed to it in good faith.

(a) General prohibition: A national bank cannot make a loan or extend credit secured by shares of its own capital stock. (b) Exclusion: A bank is not treated as violating rule (a) if it acquires its own stock only to prevent a loss on a debt that was legitimately owed to it beforehand.

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

(a) General prohibition

No national bank shall make any loan or discount on the security of the shares of its own capital stock.

(b) Exclusion

For purposes of this section, a national bank shall not be deemed to be making a loan or discount on the security of the shares of its own capital stock if it acquires the stock to prevent loss upon a debt previously contracted for in good faith.

Source credit: (R.S. § 5201; Pub. L. 106–569, title XII, § 1207(a), Dec. 27, 2000, 114 Stat. 3034.)

history & why it existsrecord from the source credit

2000Enacted · Pub. L. 106-569 · 114 Stat. 3034

A history note hasn’t been published yet. The record shows enactment by Pub. L. 106-569 on 2000-12-27.

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