Public Law 72–522

The term “board” means the Federal Home Loan Bank

“Board.”

Board.

The term “Federal Home Loan Bank” means a bank established

“Federal Home Loan Bank.”

by the board under authority of this Act.

The term “State” includes the District of Columbia, Puerto

“State.”

Rico, the Virgin Islands of the United States, and the Territories of Alaska and Hawaii.

The term “member” (except when used in reference to a

“Member,” exception.

member of the board) means any institution which has subscribed for the stock of a Federal Home Loan Bank.

The term “home mortgage loan” means a loan made by a

“Home mortgage loan.”

member or a nonmember borrower upon the security of a home mortgage.

The term “home mortgage” means a first mortgage upon real

“Home mortgage.”

estate, in fee simple, or leasehold under a renewable lease for not less than ninety-nine years, upon which there is located a dwelling for not more than three families, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this Act to become members, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, or savings bank, shall be eligible to become a member of, or a

Conditions.

nonmember borrower of, a Federal Home Loan Bank if such institution (1) is duly organized under the laws of any State or of the United States; (2) is subject to inspection and regulation under the banking laws, or under similar laws, of the State or of the United States; and (3) makes such home mortgage loans as, in the judgment of the board, are long-term loans (and in the case of a savings bank, if, in the judgment of the board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such

Disqualifications.

loans). No institution shall be eligible to become a member of, or a nonmember borrower of, a Federal Home Loan Bank if, in the judgment of the board, its financial condition is such that advances may not safely be made to such institution or the character of its management or its home-financing policy is inconsistent with sound and economical home financing, or with the purposes of this Act.

Notwithstanding the provisions of clause (2) of subsection

Building, etc., associations not under State regulation eligible if subjecting to prescribed inspection.

(a) of this section requiring inspection and regulation under law as a condition with respect to eligibility for memberhip, any building and loan association which would be eligible to become a member of a Federal Home Loan Bank except for the fact that it is not subject to inspection and regulation under the banking laws or similar laws of the State in which such association is organized shall, upon subjecting itself to such inspection and regulation as the board shall prescribe, be eligible to become a member.

Any home owner who comes within the limits of this Act

Home owners may obtain mortgage money if unable elsewhere.

Proviso.

Limitation.

and who is unable to obtain mortgage money from any other source may obtain same from any bank organized under this Act: Provided, That this subsection shall not be effective when the Federal Government has had its stock retired.

As soon as practicable after the enactment of this Act,

Minimum capital.

the board, with the approval of the Secretary of the Treasury, shall determine the minimum capital of each Federal Home Loan Bank which shall be not less than $5,000,000. The board shall, as

Subscriptions.

soon as practicable thereafter, open books in each district established under section 3 for subscription to the capital stock of the Federal Home Loan Bank of the district.

The capital stock of each Federal Home Loan Bank shall be

Shares of stock.

divided into shares of a par value of $100 each. The minimum capital stock shall be issued at par. Stock issued thereafter shall be issued at such price not less than par as may be fixed by the board.

The original stock subscription for each institution eligible to

Original investment.

become a member under section 4 shall be an amount equal to 1 per centum of the aggregate of the unpaid principal of the subscriber’s home mortgage loans, but not less than $1,500. The board shall from

Adjustments of amounts.

time to time adjust the amount of stock held by each member so that, as nearly as possible, such member shall at all times have invested in the stock of the Federal Home Loan Bank at least an amount calculated in the manner provided in the preceding sentence (but not less than $1,500). If the board finds that the investment of any

If stock held is greater, member’s holdings may be reduced.

member in stock is greater than that required under this section, upon application of such member, the bank shall pay such member for each share of stock in excess of the amount so required an amount equal to the value of such stock, or, at the election of the bank, the whole or any part of the payments which would be so made shall be credited upon the indebtedness of the member to the bank. In

Payment for canceled stock.

either such event, stock equal in value to the amount of the payment or credit, or both, as the case may be, shall be surrendered and canceled. No share of stock shall be surrendered and canceled if the

Restriction.

Post, p. 732.

effect of such surrender and cancellation would be to violate the provisions of section 10 (c) requiring the amount of stock held by such member to equal at least one-twelfth of the outstanding advances to such member.

After the amount of capital of a Federal Home Loan Bank

Capital stock held by United States.

To be retired when that paid in by members is at par.

paid in by members equals the amount paid in by the Secretary of the Treasury under subsection (f), such bank shall apply annually to the payment and retirement of the shares of the capital stock held by the United States, 50 per centum of all sums thereafter paid in as capital until all such capital stock held by the United States is retired at par. Stock held by the United States may at any time, in the

Retirement at any time if resources permit.

discretion of the Federal Home Loan Bank, and with the approval of the board, be paid off at par and retired in whole or in part; and the board may at any time require such stock to be paid off at par and retired in whole or in part if in the opinion of the board the Federal Home Loan Bank has resources available therefor: Provided,

Proviso.

Payment of dividends.

That accumulated dividends, as provided in subsection (k), have been paid.

Stock subscribed for otherwise than by the United States, and

Unauthorized transfers, etc.

the right to the proceeds thereof, shall not be transferred or hypothecated except as hereinafter provided and the certificates therefor shall so state.

Any member may withdraw from membership in a Federal

Withdrawals from membership.

Home Loan Bank six months after filing with the board written notice of intention so to do, and the board may, after hearing, remove any member from membership, or deprive any nonmember borrower of the privilege of obtaining further advances, if, in the opinion of the board, such member or nonmember borrower has failed to comply with any provision of this Act or the regulations of the board made pursuant thereto or if, in the opinion of the board, such member or nonmember borrower is insolvent. In any such case,

Indebtedness to be liquidated.

the indebtedness of such member or nonmember borrower to the Federal Home Loan Bank shall be liquidated, and the capital stock in the Federal Home Loan Bank owned by such member shall be surrendered and canceled. Upon the liquidation of such indebtedness such member or nonmember borrower shall be entitled to the return

Return of collateral, etc.

of its collateral, and, upon surrender and cancellation of such capital stock, the member shall receive a sum equal to its cash paid subscriptions for the capital stock surrendered, except that if at any time

Exception.

the board finds that the paid-in capital of a Federal Home Loan Bank is or is likely to be impaired as a result of losses in or depreciation of the assets held, the Federal Home Loan Bank shall on the order of the board withhold from the amount to be paid in retirement of the stock a pro rata share of the amount of such impairment as determined by the board.

A Federal Home Loan Bank may, with the approval of the

Transfer of stock.

board, permit the disposal of stock to another member, or to an institution eligible to become a member, but only to enable such an institution to become a member.

All stock of any Federal Home Loan Bank shall share in

Dividends.

dividend distributions without preference, except that stock subscribed for by the United States shall be entitled to dividends at

Stock held by United States.

a rate of 2 per centum per annum cumulative from the date of investment but in any case in which the rate of dividend is in excess of 2 per centum, the stock subscribed for by the United States, shall be entitled to dividends at a rate not in excess of that paid on other stock.

The management of each Federal Home Loan Bank shall be vested in a board of eleven directors, all of whom shall be citizens of the United States and bona fide residents of the district in which such bank is located.

Such board of directors shall administer the affairs of the bank

Administration.

fairly and impartially and without discrimination in favor of or against any member or nonmember borrower, and shall, subject to the provisions hereof, extend to each institution authorized to secure advances such advances as may be made safely and reasonably with due regard for the claims and demands of other institutions, and with due regard to the maintenance of adequate credit standing for the Federal Home Loan Bank and its obligations.

Each Federal Home Loan Bank is authorized to make

Authority to make, on security of home mortgages conferred.

advances to members and nonmember borrowers, upon the security of home mortgages, such advances to be made subject to such regulations, restrictions, and limitations as the board may prescribe. Any such advance shall be subject to the following limitations as to

Subject to specified limitations.

amount:

Each Federal Home Loan Bank shall have power,

Borrow money, etc.

Issue bonds, etc.

subject to the approval of the board, (1) to borrow money, to give security therefor, and to pay interest thereon, and (2) to issue bonds and debentures having such maturities as may be determined by the board, secured by the transfer of eligible obligations of borrowing institutions on advances made by the bank to borrowing institutions and by the deposit of home mortgages.

The board shall prescribe rules and regulations governing

To prescribe regulations governing obligations of borrowing institutions, etc.

the assignment, deposit, custody, substitution, and release of the obligations of borrowing institutions to the bank which are transferred and of the home mortgages securing such bonds and debentures, the forms and terms of such bonds and debentures, and the conditions under which they may be issued and retired, including any option with respect to payment and retirement thereof in advance of maturity, and such regulations shall provide for the deposit in trust, under such terms and conditions as it may deem advisable, of the home mortgages securing such bonds and debentures. For the purposes of this section the board is authorized to appoint, and fix the compensation and prescribe the duties of, a registrar in each district, who shall not be connected with or interested in any Federal Home Loan Bank, any member, any nonmember borrower, or any institution of a class eligible to become a member or a nonmember borrower under this Act, and to require

Registrar to be appointed in each district.

Surety required.

of such registrar a bond, in such amount and with such sureties as the board may fix, conditioned on the faithful performance of the duties required of him.

Such deposits in trust shall be so maintained that the aggregate

Issue of bonds, etc.

Unpaid principal of mortgages deposited as security for, must equal 190 per cent of issue.

unpaid principal of the home mortgage loans secured by the home mortgages deposited as security for bonds or debentures shall, as nearly as possible, be at all times not less than an amount equal to 190 per centum of the total outstanding amount of such issue. Cash deposited under authority of subsection (d) shall be security for an amount of bonds and debentures equal to the amount of cash deposited. Direct obligations of the United States deposited under authority of subsection (d) shall be security for an amount of bonds and debentures equal to the par value of such obligations.

The board may at any time require any Federal Home Loan

Deposit of additions or substitutions as security.

Bank to deposit additional home mortgages or to make substitutions of home mortgages to secure such bonds and debentures, except that when in the opinion of the board home mortgages are not available for such purpose, it may permit, for such limited periods as it may deem advisable, the deposit of cash or direct obligations of the

Cash, etc., in lieu.

United States in lieu of the deposit of substitute or additional home loan mortgages.

The board shall approve or determine the rates of interest

Interest rates on notes, bonds, etc.

Limitation.

to be paid by the Federal Home Loan Banks upon the notes, debentures, or bonds which they may issue except that no bond or debenture issued within seven years after the enactment of this Act shall bear a rate of interest in excess of 5½ per centum per annum, and no bond or debenture issued thereafter shall bear a rate of interest in excess of 5 per centum per annum, and shall provide such margins

Margin, to cover expenses.

(not to exceed 1½ per centum) between interest rates received upon advances made to borrowing institutions and interest paid upon obligations which the Federal Home Loan Bank may issue as will cover expenses of operation and reserves and, under such regulations as may be provided by the board, some part of such reserve may be

Retirement of Federal subscription.

devoted to retirement of the stock subscribed by the United States.

There is hereby authorized to be appropriated the

Sum authorized for salaries and expenses.

sum of not to exceed $300,000 for salaries, travel and subsistence expenses, rents, printing and binding, furniture and equipment, law books, books of reference, periodicals, newspapers, maps, contract stenographic reporting services, telephone and telegraph services, and all other necessary expenses of the board, together with expenses preliminary to the organization and establishment of the banks created hereunder, until the end of the fiscal year 1933.

The board shall have power to levy semiannually upon the

Semiannual assessments to be levied upon banks.

Federal Home Loan Banks, and they shall pay, on such equitable basis as the board shall determine, an assessment sufficient in its judgment to provide for the payment of its estimated expenses for the half year succeeding the levying of each such assessment, beginning with the second half of the calendar year 1933. All expenses of

Available for payment of expenses.

the board incurred in carrying out the provisions of this Act, as determined by it, beginning July 1, 1933, shall be paid from the proceeds of such assessments, and if any deficiency shall occur in such fund at any time between such semiannual assessments the board shall

Provision in event of deficiency or surplus.

have power to make an immediate assessment against the banks to cover such deficiency on the same basis as the original assessment. If any surplus shall remain from any assessment after the expiration of the semiannual period for which it was levied, such surplus may be deducted from the next following assessment.

Whoever makes any statement, knowing it to be false, or whoever willfully overvalues any security, for the purpose of influencing in any way the action of a Federal Home Loan Bank or the board upon any application, advance, discount, purchase, or repurchase agreement, or loan, under this Act, or any extension thereof by renewal, deferment, or action or otherwise, or the

Punishment for.

acceptance, release, or substitution of security therefor, shall be punished by a fine of not more than $5,000, or by imprisonment for not more than two years, or both.

It shall be unlawful for any individual, partnership, association,

Unauthorized use of name, etc.

or corporation (1) which is not a Federal Home Loan Bank to use the words “Federal home loan bank,” or a combination of the word “Federal” with any of such words, as a name or a part of a name under which he or it shall do business (except in the case of a name under which business is being done at the time of the enactment of this Act), or (2) which is not a Federal Home Loan

Misrepresentations.

Bank, to advertise or represent in any way that he or it is a Federal Home Loan Bank, or to publish or display any sign, symbol, or advertisement reasonably calculated to convey the impression that he or it is a Federal Home Loan Bank, or (3) which is not a member,

Falsely claiming membership.

to advertise or represent in any way that he or it is a member, or to publish or display any sign, symbol, or advertisement reasonably calculated to convey the impression that he or it is a member. Violations of this section shall be punishable by a fine of not

Punishment for.

exceeding $1,000 or by imprisonment of not exceeding one year, or both.

The provisions of sections 112, 113, 114, 115, 116, and 117

Contracts and agreements.

Designated provisions of Criminal Code made applicable.

Vol. 35, pp. 1108–1109.

U. S. C., p. 475.

of the Criminal Code of the United States (U. S. C., title 18, secs. 202 to 207, inclusive), in so far as applicable, are extended to apply to contracts or agreements of any Federal Home Loan Bank under this Act, which, for the purposes hereof, shall be held to include advances, loans, discounts, and purchase and repurchase agreements; extensions and renewals thereof; and acceptances, releases, and substitutions of security therefor.

In order to enable the board to carry out the provisions

Designated offices to make available in confidence, needed data, etc.

of this Act, the Treasury Department, the Comptroller of the Currency, the Federal Reserve Board, and the Federal reserve banks are hereby authorized, under such conditions as they may prescribe, to make available to the board in confidence for its use and the use of any Federal Home Loan Bank such reports, records, or other information as may be available, relating to the condition of institutions with respect to which any such Federal Home Loan Bank has had or contemplates having transactions under this Act or relating to persons whose obligations are offered to or held by any Federal Home Loan Bank, and to make through their examiners or other employees, for the confidential use of the board or any Federal Home Loan Bank, examinations of such institutions.

Every institution which shall apply for advances under this

Consent to examinations a condition precedent, etc.

Act shall, as a condition precedent thereto, consent to such examination as the bank or the board may require for the purposes of this Act and/or that reports of examinations by constituted authorities may be furnished by such authorities to the bank or the board upon request therefor.

Any organization organized under the laws of any

Eligibility for membership.

State and subject to inspection and regulation under the banking or similar laws of such State shall be eligible to become a member under this Act if—