12 U.S.C. § 347b — Advances to individual member banks on

Page 127 TITLE 12—BANKS AND BANKING § 347b bank making such advance shall charge interest or discount thereon at a rate not less than 1 per centum above its discount rate in effect at the time of making such advance. No such note upon which advances are made by a Federal re- serve bank under this section shall be eligible under section 412 of this title as collateral secu- rity for Federal reserve notes. No obligations of any foreign government, in- dividual, partnership, association, or corpora- tion organized under the laws thereof shall be eligible as collateral security for advances under this section. Member banks are authorized to obligate themselves in accordance with the provisions of this section. (Dec. 23, 1913, ch. 6, § 10A, formerly § 10(a), as added Feb. 27, 1932, ch. 58, § 1, 47 Stat. 56; amend- ed Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; renumbered § 10A, Pub. L. 102–242, title I, § 142(a)(1), Dec. 19, 1991, 105 Stat. 2279.) Editorial Notes REFERENCES IN TEXT Section 347b of this title, referred to in first par., was in the original a reference to section 10(b), meaning section 10(b) of the Federal Reserve Act. Section 10(b) of that Act was renumbered section 10B by Pub. L. 102–242, title I, § 142(a)(2), Dec. 19, 1991, 105 Stat. 2279, without a corresponding amendment to this section. Statutory Notes and Related Subsidiaries CHANGE OF NAME Section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System. § 347b. Advances to individual member banks on time or demand notes; maturities; time notes secured by mortgage loans covering one-to- four family residences (a) In general Any Federal Reserve bank, under rules and regulations prescribed by the Board of Gov- ernors of the Federal Reserve System, may make advances to any member bank on its time or demand notes having maturities of not more than four months and which are secured to the satisfaction of such Federal Reserve bank. Notwithstanding the foregoing, any Federal Reserve bank, under rules and regulations pre- scribed by the Board of Governors of the Federal Reserve System, may make advances to any member bank on its time notes having such ma- turities as the Board may prescribe and which are secured by mortgage loans covering a one- to-four family residence. Such advances shall bear interest at a rate equal to the lowest dis- count rate in effect at such Federal Reserve bank on the date of such note. (b) Limitations on advances (1) Limitation on extended periods Except as provided in paragraph (2), no ad- vances to any undercapitalized depository in- stitution by any Federal Reserve bank under this section may be outstanding for more than 60 days in any 120-day period. (2) Viability exception (A) In general If— (i) the head of the appropriate Federal banking agency certifies in advance in writing to the Federal Reserve bank that any depository institution is viable; or (ii) the Board conducts an examination of any depository institution and the Chairman of the Board certifies in writing to the Federal Reserve bank that the insti- tution is viable, the limitation contained in paragraph (1) shall not apply during the 60-day period be- ginning on the date such certification is re- ceived. (B) Extensions of period The 60-day period may be extended for ad- ditional 60-day periods upon receipt by the Federal Reserve bank of additional written certifications under subparagraph (A) with respect to each such additional period. (C) Authority to issue a certificate of viabil- ity may not be delegated The authority of the head of any agency to issue a written certification of viability under this paragraph may not be delegated to any other person. (D) Extended advances subject to paragraph (3) Notwithstanding paragraph (1), an under- capitalized depository institution which does not have a certificate of viability in ef- fect under this paragraph may have ad- vances outstanding for more than 60 days in any 120-day period if the Board elects to treat— (i) such institution as critically under- capitalized under paragraph (3); and (ii) any such advance as an advance de- scribed in subparagraph (A)(i) of paragraph (3). (3) Advances to critically undercapitalized de- pository institutions (A) Liability for increased loss Notwithstanding any other provision of this section, if— (i) in the case of any critically under- capitalized depository institution— (I) any advance under this section to such institution is outstanding without payment having been demanded as of the end of the 5-day period beginning on the date the institution becomes a critically undercapitalized depository institution; or (II) any new advance is made to such institution under this section after the end of such period; and (ii) after the end of that 5-day period, the Deposit Insurance Fund of the Federal De- posit Insurance Corporation incurs a loss exceeding the loss that the Corporation would have incurred if it had liquidated that institution as of the end of that pe- riod, the Board shall, subject to the limitations in subparagraph (B), be liable to the Federal Deposit Insurance Corporation for the excess loss, without regard to the terms of the ad- Page 128 TITLE 12—BANKS AND BANKING § 347b vance or any collateral pledged to secure the advance. (B) Limitation on excess loss The liability of the Board under subpara- graph (A) shall not exceed the lesser of the following: (i) The amount of the loss the Board or any Federal Reserve bank would have in- curred on the increases in the amount of advances made after the 5-day period re- ferred to in subparagraph (A) if those in- creased advances had been unsecured. (ii) The interest received on the in- creases in the amount of advances made after the 5-day period referred to in sub- paragraph (A). (C) Federal Reserve to pay obligation The Board shall pay the Federal Deposit Insurance Corporation the amount of any li- ability of the Board under subparagraph (A). (D) Report The Board shall report to the Congress on any excess loss liability it incurs under sub- paragraph (A), as limited by subparagraph (B)(i), and the reasons therefore, not later than 6 months after incurring the liability. (4) No obligation to make advances A Federal Reserve bank shall have no obli- gation to make, increase, renew, or extend any advance or discount under this chapter to any depository institution. (5) Definitions (A) Appropriate Federal banking agency The term ‘‘appropriate Federal banking agency’’ has the same meaning as in section 1813 of this title. (B) Critically undercapitalized The term ‘‘critically undercapitalized’’ has the same meaning as in section 1831o of this title. (C) Depository institution The term ‘‘depository institution’’ has the same meaning as in section 1813 of this title. (D) Undercapitalized depository institution The term ‘‘undercapitalized depository in- stitution’’ means any depository institution which— (i) is undercapitalized, as defined in sec- tion 1831o of this title; or (ii) has a composite CAMEL rating of 5 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rat- ing system) as of the most recent examina- tion of such institution. (E) Viable A depository institution is ‘‘viable’’ if the Board or the appropriate Federal banking agency determines, giving due regard to the economic conditions and circumstances in the market in which the institution oper- ates, that the institution— (i) is not critically undercapitalized; (ii) is not expected to become critically undercapitalized; and (iii) is not expected to be placed in con- servatorship or receivership. (Dec. 23, 1913, ch. 6, § 10B, formerly § 10(b), as added Feb. 27, 1932, ch. 58, § 2, 47 Stat. 56; amend- ed Feb. 3, 1933, ch. 34, 47 Stat. 794; Mar. 9, 1933, ch. 1, title IV, § 402, 48 Stat. 7; Aug. 23, 1935, ch. 614, title II, § 204, 49 Stat. 705; Pub. L. 93–449, § 5, Oct. 18, 1974, 88 Stat. 1368; Pub. L. 96–221, title I, § 106, Mar. 31, 1980, 94 Stat. 140; renumbered § 10B and amended Pub. L. 102–242, title I, § 142(a)(2), (b), Dec. 19, 1991, 105 Stat. 2279; Pub. L. 104–208, div. A, title II, § 2704(d)(9), Sept. 30, 1996, 110 Stat. 3009–489; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 9(c), Feb. 15, 2006, 119 Stat. 3616.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (b)(4), was in the original ‘‘this Act’’, meaning act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. For com- plete classification of this Act to the Code, see Ref- erences in Text note set out under section 226 of this title and Tables. AMENDMENTS 2006—Subsec. (b)(3)(A)(ii). Pub. L. 109–173 substituted ‘‘the Deposit Insurance Fund of’’ for ‘‘any deposit in- surance fund in’’. Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(9). See 1996 Amendment note below. 1996—Subsec. (b)(3)(A)(ii). Pub. L. 104—208, § 2704(d)(9), which directed the amendment of cl. (ii) by sub- stituting ‘‘the Deposit Insurance Fund of’’ for ‘‘any de- posit insurance fund in’’, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above. 1991—Pub. L. 102–242, § 142(b), designated existing pro- visions as subsec. (a), inserted heading, and added sub- sec. (b). 1980—Pub. L. 96–221 struck out second sentence of first par. relating to interest on notes under this sec- tion. 1974—Pub. L. 93–449 inserted provisions relating to ad- vances on time notes secured by mortgage loans cov- ering one-to-four family residences. 1935—Act Aug. 23, 1935, struck out provision pre- scribing termination date of section. 1933—Act Mar. 9, 1933, struck out proviso which ex- tended applicability to member banks regardless of their capital, and empowered President to extend ter- mination date one year beyond March 3, 1934. Act Feb. 3, 1933, extended termination date from ‘‘March 3, 1933’’ to ‘‘March 3, 1934’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–173 effective Mar. 31, 2006, see section 9(j) of Pub. L. 109–173, set out as a note under section 24 of this title. Amendment by Pub. L. 109–171 effective no later than the first day of the first calendar quarter that begins after the end of the 90-day period beginning Feb. 8, 2006, see section 2102(c) of Pub. L. 109–171, set out as a Merger of BIF and SAIF note under section 1821 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–208 effective Jan. 1, 1999, if no insured depository institution is a savings asso- ciation on that date, see section 2704(c) of Pub. L. 104–208, formerly set out as a note under section 1821 of this title. EFFECTIVE DATE OF 1991 AMENDMENT Pub. L. 102–242, title I, § 142(d), Dec. 19, 1991, 105 Stat. 2281, provided that: ‘‘The amendment made by sub- Page 129 TITLE 12—BANKS AND BANKING § 348 section (b) [amending this section] shall take effect at the end of the 2-year period beginning on the date of enactment of this Act [Dec. 19, 1991].’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–221 effective on first day of sixth month which begins after Mar. 31, 1980, see sec- tion 108 of Pub. L. 96–221, set out as a note under sec- tion 248 of this title. Executive Documents EXPIRATION Proclamation No. 2076, Feb. 16, 1934, 48 Stat. 1734, ex- tended section to Mar. 3, 1935. See 1935 amendment note above. § 347c. Advances to individuals, partnerships, and corporations; security; interest rate Subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe, any Fed- eral reserve bank may make advances to any in- dividual, partnership, or corporation on the promissory notes of such individual, partner- ship, or corporation secured by direct obliga- tions of the United States or by any obligation which is a direct obligation of, or fully guaran- teed as to principal and interest by any agency of the United States. Such advances shall be made for periods not exceeding 90 days and shall bear interest at rates fixed from time to time by the Federal reserve bank, subject to the review and determination of the Board of Governors of the Federal Reserve System. (Dec. 23, 1913, ch. 6, § 13 (par.), as added Mar. 9, 1933, ch. 1, title IV, § 403, 48 Stat. 7; amended Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 90–505, § 3(b), Sept. 21, 1968, 82 Stat. 856.) Editorial Notes CODIFICATION Section is comprised of the thirteenth par. of section 13 of act Dec. 23, 1913, as added by act Mar. 9, 1933. For additional details concerning the enactment and num- bering of the first twelve and fourteenth pars. of sec- tion 13, see Codification notes set out under sections 92, 342 to 347, 347d, 361, 372, and 373 of this title. AMENDMENTS 1968—Pub. L. 90–505 added promissory notes secured by any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States to the list of types of promissory notes on which federal reserve banks may make advances to individuals, partnerships, and cor- porations. Statutory Notes and Related Subsidiaries CHANGE OF NAME Section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System. § 347d. Transactions between Federal Reserve banks and branch or agency of foreign bank; matters considered Subject to such restrictions, limitations, and regulations as may be imposed by the Board of Governors of the Federal Reserve System, each Federal Reserve bank may receive deposits from, discount paper endorsed by, and make ad- vances to any branch or agency of a foreign bank in the same manner and to the same ex- tent that it may exercise such powers with re- spect to a member bank if such branch or agen- cy is maintaining reserves with such Reserve bank pursuant to section 3105 of this title. In ex- ercising any such powers with respect to any such branch or agency, each Federal Reserve bank shall give due regard to account balances being maintained by such branch or agency with such Reserve bank and the proportion of the as- sets of such branch or agency being held as re- serves under section 3105 of this title. For the purposes of this paragraph, the terms ‘‘branch’’, ‘‘agency’’, and ‘‘foreign bank’’ shall have the same meanings assigned to them in section 3101 of this title. (Dec. 23, 1913, ch. 6, § 13 (par.), as added Pub. L. 95–369, § 7(b), Sept. 17, 1978, 92 Stat. 621.) Editorial Notes CODIFICATION Section is comprised of the fourteenth (last) par. of section 13 of act Dec. 23, 1913, as added by act Sept. 17, 1978. For additional details concerning the enactment and numbering of the first thirteen pars. of section 13, see Codification notes set out under sections 92, 342 to 347, 347c, 361, 372, and 373 of this title. PRIOR PROVISIONS A prior section 347d, act Mar. 9, 1933, ch. 1, § 404, as added Mar. 24, 1933, ch. 8, § 1, 48 Stat. 20, which related to direct loans to State banks and trust companies, was omitted from the Code as terminated since by its own terms, it was effective for only one year following date of its enactment, Mar. 24, 1933. § 348. Discount of obligations given for agricul- tural purposes or based upon livestock; col- lateral security for Federal reserve notes Upon the indorsement of any of its member banks, which shall be deemed a waiver of de- mand, notice, and protest by such bank as to its own indorsement exclusively, any Federal re- serve bank may, subject to regulations and limi- tations to be prescribed by the Board of Gov- ernors of the Federal Reserve System, discount notes, drafts, and bills of exchange issued or drawn for an agricultural purpose, or based upon livestock, and having a maturity, at the time of discount, exclusive of days of grace, not exceed- ing nine months, and such notes, drafts, and bills of exchange may be offered as collateral se- curity for the issuance of Federal reserve notes under the provisions of section 16 of this Act: Provided, That notes, drafts, and bills of ex- change with maturities in excess of six months shall not be eligible as a basis for the issuance of Federal reserve notes unless secured by ware- house receipts or other such negotiable docu- ments conveying or securing title to readily marketable staple agricultural products or by chattel mortgage upon livestock which is being fattened for market. (Dec. 23, 1913, ch. 6, § 13A (par.), formerly § 13a, as added Mar. 4, 1923, ch. 252, title IV, § 404, 42 Stat. 1479; amended Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; renumbered § 13A, Pub. L. 102–242, title I, § 142(e)(1), Dec. 19, 1991, 105 Stat. 2281.)