12 U.S.C. § 412 — Application for notes; collateral required

Page 158 TITLE 12—BANKS AND BANKING § 412 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. § 412. Application for notes; collateral required Any Federal Reserve bank may make applica- tion to the local Federal Reserve agent for such amount of the Federal Reserve notes herein- before provided for as it may require. Such ap- plication shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title, or bills of exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of sections 348a and 353 to 359 of this title, or bankers’ acceptances purchased under the provisions of said sections 348a and 353 to 359 of this title, or gold certificates, or Spe- cial Drawing Right certificates, or any obliga- tions which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof, or assets that Federal Reserve banks may purchase or hold under sections 348a and 353 to 359 of this title or any other asset of a Federal Reserve bank. In no event shall such collateral security be less than the amount of Federal Reserve notes applied for. The Federal Reserve agent shall each day notify the Board of Governors of the Federal Reserve System of all issues and withdrawals of Federal Reserve notes to and by the Federal Reserve bank to which he is accred- ited. The said Board of Governors of the Federal Reserve System may at any time call upon a Federal Reserve bank for additional security to protect the Federal Reserve notes issued to it. Collateral shall not be required for Federal Re- serve notes which are held in the vaults of, or are otherwise held by or on behalf of, Federal Reserve banks. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 265; Sept. 7, 1916, ch. 461, 39 Stat. 754; June 21, 1917, ch. 32, § 7, 40 Stat. 236; Feb. 27, 1932, ch. 58, § 3, 47 Stat. 57; Feb. 3, 1933, ch. 34, 47 Stat. 794; Jan. 30, 1934, ch. 6, § 2(b)(2), 48 Stat. 338; Mar. 6, 1934, ch. 47, 48 Stat. 398; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Mar. 1, 1937, ch. 20, 50 Stat. 23; June 30, 1939, ch. 256, 53 Stat. 991; June 30, 1941, ch. 264, 55 Stat. 395; May 25, 1943, ch. 102, 57 Stat. 85; June 12, 1945, ch. 186, § 2, 59 Stat. 237; Pub. L. 90–349, § 5(a), June 19, 1968, 82 Stat. 189; Pub. L. 95–630, title I, § 113, Nov. 10, 1978, 92 Stat. 3671; Pub. L. 96–221, title I, § 105(b)(1), Mar. 31, 1980, 94 Stat. 140; Pub. L. 106–122, Dec. 6, 1999, 113 Stat. 1638; Pub. L. 108–100, § 19(d), Oct. 28, 2003, 117 Stat. 1193.) Editorial Notes CODIFICATION Section is comprised of second par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title. AMENDMENTS 2003—Pub. L. 108–100 inserted ‘‘or any other asset of a Federal Reserve bank’’ before period at end of third sentence and ‘‘, or are otherwise held by or on behalf of,’’ after ‘‘in the vaults of’’ in last sentence. 1999—Pub. L. 106–122 substituted ‘‘acceptances ac- quired under section 92, 342 to 348, 349 to 352, 361, 372, or 373 of this title’’ for ‘‘acceptances acquired under the provisions of sections 92, 342 to 347, 347c, 347d, 361, 372, and 373 of this title’’. 1980—Pub. L. 96–221 inserted provisions relating to purchase, etc., of assets by Federal Reserve banks, and eliminating collateral requirement for Federal Reserve notes held in Federal Reserve bank vaults. 1978—Pub. L. 95–630 substituted ‘‘any obligations which are direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency thereof’’ of ‘‘direct obligations of the United States’’. 1968—Pub. L. 90–349 added Special Drawing Right cer- tificates to the types of allowable collateral security which may be tendered for Federal Reserve notes. 1945—Act June 12, 1945, substituted ‘‘, or direct obli- gations of the United States.’’ for proviso after ‘‘gold certificates’’ in first sentence which limited period dur- ing which direct obligations of the United States could be accepted as collateral security. 1943—Act May 25, 1943, substituted ‘‘June 30, 1945’’ for ‘‘June 30, 1943,’’ in proviso. 1941—Act June 30, 1941, substituted ‘‘June 30, 1943’’ for ‘‘June 30, 1941’’ in proviso. 1939—Act June 30, 1939, substituted ‘‘June 30, 1941’’ for ‘‘June 30, 1939’’ in proviso. 1937—Act Mar. 1, 1937, extended until June 30, 1939, period within which direct obligations of the United States may be accepted as collateral security under this section, and struck out provision authorizing President to extend period. 1934—Act Mar. 6, 1934, amended proviso and two sen- tences immediately following. Act Jan. 30, 1934, amended portion of third sentence before proviso. 1933—Act Feb. 3, 1933, substituted ‘‘March 3, 1934’’ for ‘‘March 3, 1933’’ wherever appearing. 1932—Act Feb. 27, 1932, inserted proviso and two sen- tences immediately following. 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. EFFECTIVE DATE OF 1978 AMENDMENT Amendment effective upon expiration of 120 days after Nov. 10, 1978, see sec. 2101 of Pub. L. 95–630 set out as an Effective Date note under section 375b of this title. UNITED STATES OBLIGATIONS AS COLLATERAL; EXTENSION OF PERIOD The period within which direct obligations of the United States could be accepted as collateral security under this section was extended to Mar. 3, 1937, by Proclamation No. 2117, of Feb. 14, 1935, 49 Stat. 3437; ex- tended to June 30, 1939, by act Mar. 1, 1937; extended to June 30, 1941, by act June 30, 1939; extended to June 30, 1943, by act June 30, 1941; and extended to June 30, 1945, by act May 25, 1943. Act June 12, 1945, amended section to remove the time limitation. Page 159 TITLE 12—BANKS AND BANKING § 414 1 See References in Text note below. § 413. Distinctive letter and serial number of notes; cancellation of notes unfit for circula- tion; accounting; apportionment of credit among Federal Reserve banks Federal Reserve notes shall bear upon their faces a distinctive letter and serial number which shall be assigned by the Board of Gov- ernors of the Federal Reserve System to each Federal Reserve bank. Federal Reserve notes unfit for circulation shall be canceled, de- stroyed, and accounted for under procedures pre- scribed and at locations designated by the Sec- retary of the Treasury. Upon destruction of such notes, credit with respect thereto shall be appor- tioned among the twelve Federal Reserve banks as determined by the Board of Governors of the Federal Reserve System. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 266; June 21, 1917, ch. 32, § 7, 40 Stat. 236; Jan. 30, 1934, ch. 6, § 2(b)(3), (4), 48 Stat. 338; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; June 12, 1945, ch. 186, § 1(a), 59 Stat. 237; July 19, 1954, ch. 547, 68 Stat. 495; Pub. L. 89–3, § 1, Mar. 3, 1965, 79 Stat. 5; Pub. L. 89–427, § 3, May 20, 1966, 80 Stat. 161; Pub. L. 90–269, § 3, Mar. 18, 1968, 82 Stat. 50.) Editorial Notes CODIFICATION Section is comprised of third par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title. AMENDMENTS 1968—Pub. L. 90–269 substituted requirement that Federal Reserve notes bear upon their faces a distinc- tive letter and serial number which shall be assigned by the Board of Governors to each Federal Reserve bank for former requirement that each Federal Reserve bank maintain reserves in gold certificates of not less than 25 percent against its Federal Reserve notes in actual circulation and former provisions respecting redemp- tion by the Treasury of Federal Reserve notes. 1966—Pub. L. 89–427 substituted provisions that Fed- eral Reserve notes unfit for circulation be canceled, de- stroyed, and accounted for under procedures prescribed and at locations designated by the Secretary of the Treasury and that credit with respect to the destruc- tion of the notes be apportioned among the twelve Fed- eral Reserve banks as determined by the Board of Gov- ernors of the Federal Reserve System for provisions that Federal Reserve notes unfit for circulation be re- turned by the Federal Reserve agents to the Comp- troller of the Currency for cancellation and destruc- tion. 1965—Pub. L. 89–3 struck out requirement that each Federal Reserve bank maintain reserves in gold certifi- cates against deposit liabilities. 1954—Act July 19, 1954, which directed striking out ‘‘Whenever Federal reserve notes issued through one Federal Reserve bank shall be received by another Fed- eral Reserve bank, they shall be promptly returned for credit or redemption to the Federal Reserve bank through which they were originally issued or, upon di- rection of such Federal Reserve bank, they shall be for- warded direct to the Treasurer of the United States to be retired. No Federal Reserve bank shall pay out notes issued through another under penalty of a tax of 10 per centum upon the face value of notes so paid out.’’, was executed, to reflect the probable intent of Congress, by striking out the third and fourth sentences, which read as follows: ‘‘Whenever Federal reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank, they shall be promptly returned for credit or redemption to the Federal re- serve bank through which they were originally issued or, upon direction of such Federal reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten per centum upon the face value of notes so paid out.’’ 1945—Act June 12, 1945, amended first sentence gen- erally by striking out ‘‘or lawful money’’ after ‘‘re- serves in gold certificates’’, substituting ‘‘25 per cen- tum’’ for ‘‘35 per centum’’ and ‘‘40 per centum’’, respec- tively. 1934—Act Jan. 30, 1934, amended first, fifth, and sixth sentences. 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. § 414. Authority of Board of Governors respecting issuance of notes; interest; lien The Board of Governors of the Federal Reserve System shall have the right, acting through the Federal Reserve agent, to grant in whole or in part, or to reject entirely the application of any Federal Reserve bank for Federal Reserve notes; but to the extent that such application may be granted the Board of Governors of the Federal Reserve System shall, through its local Federal Reserve agent, supply Federal Reserve notes to the banks so applying, and such bank shall be charged with the amount of the notes issued to it and shall pay such rate of interest as may be established by the Board of Governors of the Federal Reserve System on only that amount of such notes which equals the total amount of its outstanding Federal Reserve notes less the amount of gold certificates held by the Federal Reserve agent as collateral security. Federal Re- serve notes issued to any such bank shall, upon delivery, together with such notes of such Fed- eral Reserve bank as may be issued under sub- chapter XIII 1 of this chapter upon security of United States 2 per centum Government bonds, become a first and paramount lien on all the as- sets of such bank. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 266; June 21, 1917, ch. 32, § 7, 40 Stat. 237; Jan. 30, 1934, ch. 6, § 2(b)(5), 48 Stat. 338; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; June 12, 1945, ch. 186, § 1(b), 59 Stat. 237; Pub. L. 90–269, § 4, Mar. 18, 1968, 82 Stat. 50.) Editorial Notes REFERENCES IN TEXT Subchapter XIII of this chapter, referred to in text, was in the original ‘‘section 18 of this Act’’, meaning section 18 of act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. Section 18 of the act was classified generally to subchapter XIII (§ 441 et seq.) of this chapter. CODIFICATION Section is comprised of fourth par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title.