12 U.S.C. § 343 — Discount of obligations arising out of ac-

Page 122 TITLE 12—BANKS AND BANKING § 342 ficer of the bank and shall be appointed by the Class B and Class C directors of the bank, with the approval of the Board of Governors of the Federal Reserve System, for a term of 5 years; and all other executive officers and all employees of the bank shall be directly respon- sible to the president.’’ for ‘‘The president shall be the chief executive officer of the bank and shall be ap- pointed by the board of directors, with the approval of the Board of Governors of the Federal Reserve System, for a term of five years; and all other executive officers and all employees of the bank shall be directly respon- sible to him.’’ 1994—Pub. L. 103–325 amended eighth power by sub- stituting ‘‘Secretary of the Treasury’’ for ‘‘Comptroller of the Currency’’. 1935—Act Aug. 23, 1935, amended fifth power. 1927—Act Feb. 25, 1927, amended second power. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of this title. EFFECTIVE DATE OF 1935 AMENDMENT Act Aug. 23, 1935, ch. 614, title II, § 201, 49 Stat. 703, provided that the amendment made by that section is effective Mar. 1, 1936. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions to Secretary of the Treas- ury, see note under section 55 of this title. § 342. Deposits; exchange and collection; member and nonmember banks or other depository institutions; charges Any Federal reserve bank may receive from any of its member banks, or other depository in- stitutions, and from the United States, deposits of current funds in lawful money, national-bank notes, Federal reserve notes, or checks, and drafts, payable upon presentation or other items, and also, for collection, maturing notes and bills; or, solely for purposes of exchange or of collection may receive from other Federal re- serve banks deposits of current funds in lawful money, national-bank notes, or checks upon other Federal reserve banks, and checks and drafts, payable upon presentation within its dis- trict or other items, and maturing notes and bills payable within its district; or, solely for the purposes of exchange or of collection, may receive from any nonmember bank or trust com- pany or other depository institution deposits of current funds in lawful money, national-bank notes, Federal reserve notes, checks and drafts payable upon presentation or other items, or maturing notes and bills: Provided, Such non- member bank or trust company or other deposi- tory institution maintains with the Federal Re- serve bank of its district a balance in such amount as the Board determines taking into ac- count items in transit, services provided by the Federal Reserve bank, and other factors as the Board may deem appropriate: Provided further, That nothing in this or any other section of this chapter shall be construed as prohibiting a member or nonmember bank or other depository institution from making reasonable charges, to be determined and regulated by the Board of Governors of the Federal Reserve System, but in no case to exceed 10 cents per $100 or fraction thereof, based on the total of checks and drafts presented at any one time, for collection or pay- ment of checks and drafts and remission there- for by exchange or otherwise; but no such charges shall be made against the Federal re- serve banks. (Dec. 23, 1913, ch. 6, § 13 (par.), 38 Stat. 263; Sept. 7, 1916, ch. 461, 39 Stat. 752; June 21, 1917, ch. 32, § 4, 40 Stat. 235; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 96–221, title I, § 105(a), Mar. 31, 1980, 94 Stat. 139.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. For complete classi- fication of this Act to the Code, see References in Text note set out under section 226 of this title and Tables. CODIFICATION Section is comprised of the first par. of section 13 of act Dec. 23, 1913. The second par., par. (3), and the fourth to eighth and tenth to fourteenth pars. of sec- tion 13 are classified to sections 92, 343 to 347, 347c, 347d, 361, 372, and 373 of this title. For decision by U.S. Supreme Court that, despite faulty placement of quotation marks, act Sept. 7, 1916, placed within section 13 of act Dec. 23, 1913, each of the ten pars. located between the phrases that introduced the amendments to sections 13 and 14 of said act, that only the seventh par. (rather than seventh to tenth pars.) comprised the amended R.S. § 5202, and that sec- tion 20 of act Apr. 5, 1918 (40 Stat. 512) (which amended R.S. § 5202 comprised of a single par.), did not amend section 13 of said act so as to repeal the eighth to tenth pars., see United States National Bank of Oregon v. Inde- pendent Insurance Agents of America, Inc., et al., 508 U.S. 439, 113 S.Ct. 2173, 124 L.Ed. 2d 402 (1993). As the result of subsequent amendments, such seventh to tenth pars. of section 13 now constitute the ninth to twelfth pars. The ninth par. amended former section 82 of this title, and the tenth to twelfth pars. are classified to sections 361, 92, and 373, respectively, of this title. AMENDMENTS 1980—Pub. L. 96–221 inserted references to other de- pository institutions and provisions respecting applica- bility to other items presented for payment, and sub- stituted provisions setting forth items to constitute re- quired balance to include items in transit, Federal Re- serve bank services, and other appropriate factors, for provisions requiring the balance to be sufficient to off- set items in transit held for the account of the bank. 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. 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. § 343. Discount of obligations arising out of ac- tual commercial transactions Upon the indorsement of any of its member banks, which shall be deemed a waiver of de- Page 123 TITLE 12—BANKS AND BANKING § 343 1 So in original. mand, notice and protest by such bank as to its own indorsement exclusively, any Federal re- serve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, in- dustrial, or commercial purposes, or the pro- ceeds of which have been used, or are to be used, for such purposes, the Board of Governors of the Federal Reserve System to have the right to de- termine or define the character of the paper thus eligible for discount, within the meaning of this chapter. Nothing in this chapter contained shall be construed to prohibit such notes, drafts, and bills of exchange, secured by staple agricul- tural products, or other goods, wares, or mer- chandise from being eligible for such discount, and the notes, drafts, and bills of exchange of factors issued as such making advances exclu- sively to producers of staple agricultural prod- ucts in their raw state shall be eligible for such discount; but such definition shall not include notes, drafts, or bills covering merely invest- ments or issued or drawn for the purpose of car- rying or trading in stocks, bonds, or other in- vestment securities, except bonds and notes of the Government of the United States. Notes, drafts, and bills admitted to discount under the terms of this paragraph must have a maturity at the time of discount of not more than ninety days, exclusive of grace. (3)(A) 1 In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal re- serve bank, during such periods as the said board may determine, at rates established in ac- cordance with the provisions of section 357 of this title, to discount for any participant in any program or facility with broad-based eligibility, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal reserve bank: Provided, That before dis- counting any such note, draft, or bill of ex- change, the Federal reserve bank shall obtain evidence that such participant in any program or facility with broad-based eligibility is unable to secure adequate credit accommodations from other banking institutions. All such discounts for any participant in any program or facility with broad-based eligibility shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Re- serve System may prescribe. (B)(i) As soon as is practicable after July 21, 2010, the Board shall establish, by regulation, in consultation with the Secretary of the Treasury, the policies and procedures governing emer- gency lending under this paragraph. Such poli- cies and procedures shall be designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid a failing finan- cial company, and that the security for emer- gency loans is sufficient to protect taxpayers from losses and that any such program is termi- nated in a timely and orderly fashion. The poli- cies and procedures established by the Board shall require that a Federal reserve bank assign, consistent with sound risk management prac- tices and to ensure protection for the taxpayer, a lendable value to all collateral for a loan exe- cuted by a Federal reserve bank under this para- graph in determining whether the loan is se- cured satisfactorily for purposes of this para- graph. (ii) The Board shall establish procedures to prohibit borrowing from programs and facilities by borrowers that are insolvent. Such proce- dures may include a certification from the chief executive officer (or other authorized officer) of the borrower, at the time the borrower initially borrows under the program or facility (with a duty by the borrower to update the certification if the information in the certification materi- ally changes), that the borrower is not insol- vent. A borrower shall be considered insolvent for purposes of this subparagraph, if the bor- rower is in bankruptcy, resolution under title II of the Dodd-Frank Wall Street Reform and Con- sumer Protection Act [12 U.S.C. 5381 et seq.], or any other Federal or State insolvency pro- ceeding. (iii) A program or facility that is structured to remove assets from the balance sheet of a single and specific company, or that is established for the purpose of assisting a single and specific company avoid bankruptcy, resolution under title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or any other Fed- eral or State insolvency proceeding, shall not be considered a program or facility with broad- based eligibility. (iv) The Board may not establish any program or facility under this paragraph without the prior approval of the Secretary of the Treasury. (C) The Board shall provide to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Serv- ices of the House of Representatives— (i) not later than 7 days after the Board au- thorizes any loan or other financial assistance under this paragraph, a report that includes— (I) the justification for the exercise of au- thority to provide such assistance; (II) the identity of the recipients of such assistance; (III) the date and amount of the assist- ance, and form in which the assistance was provided; and (IV) the material terms of the assistance, including— (aa) duration; (bb) collateral pledged and the value thereof; (cc) all interest, fees, and other revenue or items of value to be received in ex- change for the assistance; (dd) any requirements imposed on the re- cipient with respect to employee com- pensation, distribution of dividends, or any other corporate decision in exchange for the assistance; and (ee) the expected costs to the taxpayers of such assistance; and (ii) once every 30 days, with respect to any outstanding loan or other financial assistance under this paragraph, written updates on— (I) the value of collateral; Page 124 TITLE 12—BANKS AND BANKING § 344 (II) the amount of interest, fees, and other revenue or items of value received in ex- change for the assistance; and (III) the expected or final cost to the tax- payers of such assistance. (D) The information required to be submitted to Congress under subparagraph (C) related to— (i) the identity of the participants in an emergency lending program or facility com- menced under this paragraph; (ii) the amounts borrowed by each partici- pant in any such program or facility; (iii) identifying details concerning the assets or collateral held by, under, or in connection with such a program or facility, shall be kept confidential, upon the written re- quest of the Chairman of the Board, in which case such information shall be made available only to the Chairpersons or Ranking Members of the Committees described in subparagraph (C). (E) If an entity to which a Federal reserve bank has provided a loan under this paragraph becomes a covered financial company, as defined in section 201 of the Dodd-Frank Wall Street Re- form and Consumer Protection Act [12 U.S.C. 5381], at any time while such loan is out- standing, and the Federal reserve bank incurs a realized net loss on the loan, then the Federal reserve bank shall have a claim equal to the amount of the net realized loss against the cov- ered entity, with the same priority as an obliga- tion to the Secretary of the Treasury under sec- tion 210(b) of the Dodd-Frank Wall Street Re- form and Consumer Protection Act [12 U.S.C. 5390(b)]. (Dec. 23, 1913, ch. 6, § 13 (pars.), 38 Stat. 263; Sept. 7, 1916, ch. 461, 39 Stat. 752; Mar. 4, 1923, ch. 252, title IV, § 402, 42 Stat. 1478; July 21, 1932, ch. 520, § 210, 47 Stat. 715; Aug. 23, 1935, ch. 614, title II, § 203(a), title III, § 322, 49 Stat. 704, 714; Pub. L. 102–242, title IV, § 473, Dec. 19, 1991, 105 Stat. 2386; Pub. L. 111–203, title XI, § 1101(a), July 21, 2010, 124 Stat. 2113.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in the first par., 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. The Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in par. (3)(B)(ii), (iii), is Pub. L. 111–203, July 21, 2010, 124 Stat. 1376. Title II of the Act is classified principally to subchapter II (§ 5381 et seq.) of chapter 53 of this title. For complete classi- fication of the Act to the Code, see Short Title note set out under section 5301 of this title and Tables. CODIFICATION Section is comprised of the second par. and par. (3) of section 13 of act Dec. 23, 1913. Act Mar. 4, 1923, split the second par. of section 13, as amended in 1916 (39 Stat. 752), into two pars., the first of which constitutes the first par. of this section and the second of which con- stitutes section 344 of this title. Act July 21, 1932, added the second par. of this section which was designated to follow the second par. of section 13. Pub. L. 111–203, § 1101(a)(1), designated the second par. as par. (3). For classification to this title of other pars. of section 13, see Codification note set out under section 342 of this title. AMENDMENTS 2010—Pub. L. 111–203, § 1101(a)(1)–(4), designated sec- ond par. as par. (3)(A), substituted ‘‘any participant in any program or facility with broad-based eligibility’’ for ‘‘any individual, partnership, or corporation’’, ‘‘bill of exchange,’’ for ‘‘bill of exchange for an individual or a partnership or corporation’’, and ‘‘such participant in any program or facility with broad-based eligibility’’ for ‘‘such individual, partnership, or corporation’’. Par. (3)(A). Pub. L. 111–203, § 1101(a)(5), which directed substitution of ‘‘for any participant in any program or facility with broad-based eligibility’’ for ‘‘for individ- uals, partnerships, corporations’’, was executed by making the substitution for ‘‘for individuals, partner- ships, or corporations’’, to reflect the probable intent of Congress. Par. (3)(B) to (E). Pub. L. 111–203, § 1101(a)(6), added subpars. (B) to (E). 1991—Pub. L. 102–242 struck out ‘‘of the kinds and ma- turities made eligible for discount for member banks under other provisions of this chapter’’ after first ref- erence to ‘‘bills of exchange’’ in second par. 1935—Act Aug. 23, 1935, § 322, substituted words imme- diately preceding proviso for ‘‘indorsed and otherwise secured to the satisfaction of the Federal reserve bank.’’ 1932—Act July 21, 1932, added second par. 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. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of this title. CONSTRUCTION OF DIV. N OF PUB. L. 116–260 Pub. L. 116–260, div. N, title X, § 1006, Dec. 27, 2020, 134 Stat. 2147, provided that: ‘‘Except as expressly set forth in paragraphs (1) and (2) of subsection (c) of section 4029 of the CARES Act [15 U.S.C. 9063(c)(1), (2)], as added by this Act, nothing in this Act [div. N of Pub. L. 116–260, see Tables for classification] shall be construed to mod- ify or limit the authority of the Board of Governors of the Federal Reserve System under section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)) as of the day be- fore the date of enactment of the CARES Act (Public Law 116–136) [Mar. 27, 2020].’’ REFERENCES TO THIRD UNDESIGNATED PARAGRAPH DEEMED TO BE REFERENCES TO PARAGRAPH (3) Pub. L. 111–203, title XI, § 1101(c), July 21, 2010, 124 Stat. 2115, provided that: ‘‘On and after the date of en- actment of this Act [July 21, 2010], any reference in any provision of Federal law to the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343) shall be deemed to be a reference to section 13(3) of the Federal Reserve Act [12 U.S.C. 343(3)], as so designated by this section.’’ § 344. Discount or purchase of bills to finance ag- ricultural shipments 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, and subject to reg- ulations and limitations to be prescribed by the Board of Governors of the Federal Reserve Sys- tem, any Federal reserve bank may discount or