12 U.S.C. § 461 — Reserve requirements

Page 163 TITLE 12—BANKS AND BANKING § 461 1 See References in Text note below. used in the printing of Federal Reserve notes and issue regulations relating to such examina- tions. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 267; Pub. L. 103–325, title VI, § 602(g)(6), Sept. 23, 1994, 108 Stat. 2293.) Editorial Notes CODIFICATION Section is comprised of the tenth (formerly the elev- enth) par. of section 16 of act Dec. 23, 1913. For classi- fication to this title of other pars. of section 16, see Codification note set out under section 411 of this title. AMENDMENTS 1994—Pub. L. 103–325, which directed general amend- ment of ‘‘[t]he 11th undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 421)’’, was exe- cuted to this section to reflect the probable intent of Congress. Prior to amendment, text read as follows: ‘‘The examination of plates, dies, bed pieces, and so forth, and regulations relating to such examination of plates, dies, and so forth, of national-bank notes pro- vided for in section 108 of this title, is extended to in- clude notes herein provided for.’’ § 422. Omitted Editorial Notes CODIFICATION Section, act Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 267, which made permanent appropriations for printing notes besides authorizing use of certain printing stock on hand Dec. 23, 1913, was superseded by act June 26, 1934, ch. 756, § 1(a), (b)(3), 48 Stat. 1225. SUBCHAPTER XIII—CIRCULATING NOTES AND BONDS SECURING SAME §§ 441 to 448. Omitted Editorial Notes CODIFICATION Sections, act Dec. 23, 1913, ch. 6, § 18, 38 Stat. 268, as amended by acts Mar. 9, 1933, ch. 1, title IV, § 401, 48 Stat. 6; Sept. 23, 1994, Pub. L. 103–325, title VI, § 602(g)(7), 108 Stat. 2293, are omitted as obsolete. Section 441 provided that at any time during a period of twenty years from Dec. 23, 1915, any member bank desiring to retire the whole or any part of its circu- lating notes file with the Treasurer of the United States an application to sell for its account, at par and accrued interest, United States bonds, securing circula- tion to be retired. Section 442 related to purchase of bonds by reserve banks. Section 443 related to transfer of bonds purchased, payment, and cancellation of circulating notes of mem- ber banks. Section 444 related to issuance of circulating notes to reserve banks purchasing bonds. Section 445 provided for issuance of circulating notes to Federal Reserve banks. Act June 12, 1945, ch. 186, § 3, 59 Stat. 238, provided that all power and authority with respect to the issuance of circulating notes, known as Federal Reserve bank notes, pursuant to this section would cease and terminate on June 12, 1945. Section 446 related to exchange by reserve banks of bonds bearing circulating privilege for those without such privilege. Section 447 related to form of bonds and conditions of issuance. Section 448 related to exchange of one-year gold notes for 3 per centum gold bonds. SUBCHAPTER XIV—BANK RESERVES § 461. Reserve requirements (a) Establishment of applicable definitions, pay- ment of interest, obligations as deposits, and regulations The Board is authorized for the purposes of this section 1 to define the terms used in this section,1 to determine what shall be deemed a payment of interest, to determine what types of obligations, whether issued directly by a mem- ber bank or indirectly by an affiliate of a mem- ber bank or by other means, and, regardless of the use of the proceeds, shall be deemed a de- posit, and to prescribe such regulations as it may deem necessary to effectuate the purposes of this section 1 and to prevent evasions thereof. (b) Additional definitions; required amounts of reserves maintained against transaction ac- counts; waiver of ratio limits in extraor- dinary circumstances; supplemental re- serves; reserves related to foreign obliga- tions or assets; exemption for certain depos- its; discount and borrowing; transitional ad- justments; additional exemptions and waiv- ers; earnings on balances (1) The following definitions and rules apply to this subsection, subsection (c), and sections 248–1, 248a, 342, 360, and 412 of this title: (A) The term ‘‘depository institution’’ means— (i) any insured bank as defined in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813] or any bank which is eligible to make application to become an insured bank under section 5 of such Act [12 U.S.C. 1815]; (ii) any mutual savings bank as defined in section 3 of the Federal Deposit Insurance Act or any bank which is eligible to make application to become an insured bank under section 5 of such Act; (iii) any savings bank as defined in section 3 of the Federal Deposit Insurance Act or any bank which is eligible to make applica- tion to become an insured bank under sec- tion 5 of such Act; (iv) any insured credit union as defined in section 1752 of this title or any credit union which is eligible to make application to be- come an insured credit union pursuant to section 1781 of this title; (v) any member as defined in section 1422 of this title; (vi) any savings association (as defined in section 3 of the Federal Deposit Insurance Act [12 U.S.C. 1813]) which is an insured de- pository institution (as defined in such Act [12 U.S.C. 1811 et seq.]) or is eligible to apply to become an insured depository institution under the Federal Deposit Insurance Act; and (vii) for the purpose of sections 248–1, 342 to 347, 347c, 347d, and 372 of this title, any as- sociation or entity which is wholly owned by or which consists only of institutions re- ferred to in clauses (i) through (vi). (B) The term ‘‘bank’’ means any insured or noninsured bank, as defined in section 3 of the Page 164 TITLE 12—BANKS AND BANKING § 461 Federal Deposit Insurance Act [12 U.S.C. 1813], other than a mutual savings bank or a savings bank as defined in such section. (C) The term ‘‘transaction account’’ means a deposit or account on which the depositor or account holder is permitted to make with- drawals by negotiable or transferable instru- ment, payment orders of withdrawal, tele- phone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. Such term includes demand deposits, negotiable order of with- drawal accounts, savings deposits subject to automatic transfers, and share draft accounts. (D) The term ‘‘nonpersonal time deposits’’ means a transferable time deposit or account or a time deposit or account representing funds deposited to the credit of, or in which any beneficial interest is held by, a depositor who is not a natural person. (E) The term ‘‘reservable liabilities’’ means transaction accounts, nonpersonal time depos- its, and all net balances, loans, assets, and ob- ligations which are, or may be, subject to re- serve requirements under paragraph (5). (F) In order to prevent evasions of the re- serve requirements imposed by this sub- section, after consultation with the Board of Directors of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the National Credit Union Administration Board, the Board of Governors of the Federal Reserve System is authorized to determine, by regulation or order, that an account or deposit is a transaction account if such account or de- posit may be used to provide funds directly or indirectly for the purpose of making payments or transfers to third persons or others. (2)(A) Each depository institution shall main- tain reserves against its transaction accounts as the Board may prescribe by regulation solely for the purpose of implementing monetary policy— (i) in a ratio of not greater than 3 percent (and which may be zero) for that portion of its total transaction accounts of $25,000,000 or less, subject to subparagraph (C); and (ii) in the ratio of 12 per centum, or in such other ratio as the Board may prescribe not greater than 14 per centum (and which may be zero), for that portion of its total transaction accounts in excess of $25,000,000, subject to subparagraph (C). (B) Each depository institution shall maintain reserves against its nonpersonal time deposits in the ratio of 3 per centum, or in such other ratio not greater than 9 per centum and not less than zero per centum as the Board may prescribe by regulation solely for the purpose of imple- menting monetary policy. (C) Beginning in 1981, not later than December 31 of each year the Board shall issue a regula- tion increasing for the next succeeding calendar year the dollar amount which is contained in subparagraph (A) or which was last determined pursuant to this subparagraph for the purpose of such subparagraph, by an amount obtained by multiplying such dollar amount by 80 per cen- tum of the percentage increase in the total transaction accounts of all depository institu- tions. The increase in such transaction accounts shall be determined by subtracting the amount of such accounts on June 30 of the preceding cal- endar year from the amount of such accounts on June 30 of the calendar year involved. In the case of any such 12-month period in which there has been a decrease in the total transaction ac- counts of all depository institutions, the Board shall issue such a regulation decreasing for the next succeeding calendar year such dollar amount by an amount obtained by multiplying such dollar amount by 80 per centum of the per- centage decrease in the total transaction ac- counts of all depository institutions. The de- crease in such transaction accounts shall be de- termined by subtracting the amount of such ac- counts on June 30 of the calendar year involved from the amount of such accounts on June 30 of the previous calendar year. (D) Any reserve requirement imposed under this subsection shall be uniformly applied to all transaction accounts at all depository institu- tions. Reserve requirements imposed under this subsection shall be uniformly applied to nonper- sonal time deposits at all depository institu- tions, except that such requirements may vary by the maturity of such deposits. (3) Upon a finding by at least 5 members of the Board that extraordinary circumstances require such action, the Board, after consultation with the appropriate committees of the Congress, may impose, with respect to any liability of de- pository institutions, reserve requirements out- side the limitations as to ratios and as to types of liabilities otherwise prescribed by paragraph (2) for a period not exceeding 180 days, and for further periods not exceeding 180 days each by affirmative action by at least 5 members of the Board in each instance. The Board shall prompt- ly transmit to the Congress a report of any exer- cise of its authority under this paragraph and the reasons for such exercise of authority. (4)(A) The Board may, upon the affirmative vote of not less than 5 members, impose a sup- plemental reserve requirement on every deposi- tory institution of not more than 4 per centum of its total transaction accounts. Such supple- mental reserve requirement may be imposed only if— (i) the sole purpose of such requirement is to increase the amount of reserves maintained to a level essential for the conduct of monetary policy; (ii) such requirement is not imposed for the purpose of reducing the cost burdens resulting from the imposition of the reserve require- ments pursuant to paragraph (2); (iii) such requirement is not imposed for the purpose of increasing the amount of balances needed for clearing purposes; and (iv) on the date on which the supplemental reserve requirement is imposed, except as pro- vided in paragraph (11), the total amount of reserves required pursuant to paragraph (2) is not less than the amount of reserves that would be required if the initial ratios specified in paragraph (2) were in effect. (B) The Board may require the supplemental reserve authorized under subparagraph (A) only after consultation with the Board of Directors of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the National Credit Union Administration Board. The Board Page 165 TITLE 12—BANKS AND BANKING § 461 shall promptly transmit to the Congress a re- port with respect to any exercise of its author- ity to require supplemental reserves under sub- paragraph (A) and such report shall state the basis for the determination to exercise such au- thority. (C) If a supplemental reserve under subpara- graph (A) has been required of depository insti- tutions for a period of one year or more, the Board shall review and determine the need for continued maintenance of supplemental reserves and shall transmit annual reports to the Con- gress regarding the need, if any, for continuing the supplemental reserve. (D) Any supplemental reserve imposed under subparagraph (A) shall terminate at the close of the first 90-day period after such requirement is imposed during which the average amount of re- serves required under paragraph (2) are less than the amount of reserves which would be required during such period if the initial ratios specified in paragraph (2) were in effect. (5) Foreign branches, subsidiaries, and inter- national banking facilities of nonmember depos- itory institutions shall maintain reserves to the same extent required by the Board of foreign branches, subsidiaries, and international bank- ing facilities of member banks. In addition to any reserves otherwise required to be main- tained pursuant to this subsection, any deposi- tory institution shall maintain reserves in such ratios as the Board may prescribe against— (A) net balances owed by domestic offices of such depository institution in the United States to its directly related foreign offices and to foreign offices of nonrelated depository institutions; (B) loans to United States residents made by overseas offices of such depository institution if such depository institution has one or more offices in the United States; and (C) assets (including participations) held by foreign offices of a depository institution in the United States which were acquired from its domestic offices. (6) The requirements imposed under paragraph (2) shall not apply to deposits payable only out- side the States of the United States and the Dis- trict of Columbia, except that nothing in this subsection limits the authority of the Board to impose conditions and requirements on member banks under section 25 of this Act [12 U.S.C. 601 et seq.] or the authority of the Board under sec- tion 3105 of this title. (7) Any depository institution in which trans- action accounts or nonpersonal time deposits are held shall be entitled to the same discount and borrowing privileges as member banks. In the administration of discount and borrowing privileges, the Board and the Federal Reserve banks shall take into consideration the special needs of savings and other depository institu- tions for access to discount and borrowing facili- ties consistent with their long-term asset port- folios and the sensitivity of such institutions to trends in the national money markets. (8)(A) Any depository institution required to maintain reserves under this subsection which was engaged in business on July 1, 1979, but was not a member of the Federal Reserve System on or after that date, shall maintain reserves against its deposits during the first twelve- month period following the effective date of this paragraph in amounts equal to one-eighth of those otherwise required by this subsection, dur- ing the second such twelve-month period in amounts equal to one-fourth of those otherwise required, during the third such twelve-month period in amounts equal to three-eighths of those otherwise required, during the fourth twelve-month period in amounts equal to one- half of those otherwise required, and during the fifth twelve-month period in amounts equal to five-eighths of those otherwise required, during the sixth twelve-month period in amounts equal to three-fourths of those otherwise required, and during the seventh twelve-month period in amounts equal to seven-eighths of those other- wise required. This subparagraph does not apply to any category of deposits or accounts which are first authorized pursuant to Federal law in any State after April 1, 1980. (B) With respect to any bank which was a member of the Federal Reserve System during the entire period beginning on July 1, 1979, and ending on the effective date of the Monetary Control Act of 1980, the amount of required re- serves imposed pursuant to this subsection on and after the effective date of such Act that ex- ceeds the amount of reserves which would have been required of such bank if the reserve ratios in effect during the reserve computation period immediately preceding such effective date were applied may, at the discretion of the Board and in accordance with such rules and regulations as it may adopt, be reduced by 75 per centum dur- ing the first year which begins after such effec- tive date, 50 per centum during the second year, and 25 per centum during the third year. (C)(i) With respect to any bank which is a member of the Federal Reserve System on the effective date of the Monetary Control Act of 1980, the amount of reserves which would have been required of such bank if the reserve ratios in effect during the reserve computation period immediately preceding such effective date were applied that exceeds the amount of required re- serves imposed pursuant to this subsection shall, in accordance with such rules and regula- tions as the Board may adopt, be reduced by 25 per centum during the first year which begins after such effective date, 50 per centum during the second year, and 75 per centum during the third year. (ii) If a bank becomes a member bank during the four-year period beginning on the effective date of the Monetary Control Act of 1980, and if the amount of reserves which would have been required of such bank, determined as if the re- serve ratios in effect during the reserve com- putation period immediately preceding such ef- fective date were applied, and as if such bank had been a member during such period, exceeds the amount of reserves required pursuant to this subsection, the amount of reserves required to be maintained by such bank beginning on the date on which such bank becomes a member of the Federal Reserve System shall be the amount of reserves which would have been required of such bank if it had been a member on the day before such effective date, except that the amount of such excess shall, in accordance with Page 166 TITLE 12—BANKS AND BANKING § 461 such rules and regulations as the Board may adopt, be reduced by 25 per centum during the first year which begins after such effective date, 50 per centum during the second year, and 75 per centum during the third year. (D)(i) Any bank which was a member bank on July 1, 1979, and which withdrew from member- ship in the Federal Reserve System during the period beginning July 1, 1979, and ending on March 31, 1980, shall maintain reserves during the first twelve-month period beginning on Oc- tober 15, 1982, in amounts equal to one-half of those otherwise required by this subsection, dur- ing the second such twelve-month period in amounts equal to two-thirds of those otherwise required, and during the third such twelve- month period in amounts equal to five-sixths of those otherwise required. (ii) Any bank which withdraws from member- ship in the Federal Reserve System after March 31, 1980, shall maintain reserves in the same amount as member banks are required to main- tain under this subsection, pursuant to subpara- graphs (B) and (C)(i). (E) This subparagraph applies to any deposi- tory institution that, on August 1, 1978, (i) was engaged in business as a depository institution in a State outside the continental limits of the United States, and (ii) was not a member of the Federal Reserve System at any time on or after such date. Such a depository institution shall not be required to maintain reserves against its deposits held or maintained at its offices located in a State outside the continental limits of the United States until the first day of the sixth cal- endar year which begins after the effective date of the Monetary Control Act of 1980. Such a de- pository institution shall maintain reserves against such deposits during the sixth calendar year which begins after such effective date in an amount equal to one-eighth of that otherwise required by paragraph (2), during the seventh such year in an amount equal to one-fourth of that otherwise required, during the eighth such year in an amount equal to three-eighths of that otherwise required, during the ninth such year in an amount equal to one-half of that otherwise required, during the tenth such year in an amount equal to five-eighths of that otherwise required, during the eleventh such year in an amount equal to three-fourths of that otherwise required, and during the twelfth such year in an amount equal to seven-eighths of that otherwise required. (9) This subsection shall not apply with re- spect to any financial institution which— (A) is organized solely to do business with other financial institutions; (B) is owned primarily by the financial insti- tutions with which it does business; and (C) does not do business with the general public. (10) In individual cases, where a Federal super- visory authority waives a liquidity requirement, or waives the penalty for failing to satisfy a li- quidity requirement, the Board shall waive the reserve requirement, or waive the penalty for failing to satisfy a reserve requirement, imposed pursuant to this subsection for the depository institution involved when requested by the Fed- eral supervisory authority involved. (11)(A)(i) Notwithstanding the reserve require- ment ratios established under paragraphs (2) and (5) of this subsection, a reserve ratio of zero per centum shall apply to any combination of reservable liabilities, which do not exceed $2,000,000 (as adjusted under subparagraph (B)), of each depository institution. (ii) Each depository institution may des- ignate, in accordance with such rules and regu- lations as the Board shall prescribe, the types and amounts of reservable liabilities to which the reserve ratio of zero per centum shall apply, except that transaction accounts which are des- ignated to be subject to a reserve ratio of zero per centum shall be accounts which would oth- erwise be subject to a reserve ratio of 3 per cen- tum under paragraph (2). (iii) The Board shall minimize the reporting necessary to determine whether depository in- stitutions have total reservable liabilities of less than $2,000,000 (as adjusted under subparagraph (B)). Consistent with the Board’s responsibility to monitor and control monetary and credit ag- gregates, depository institutions which have re- serve requirements under this subsection equal to zero per centum shall be subject to less over- all reporting requirements than depository in- stitutions which have a reserve requirement under this subsection that exceeds zero per cen- tum. (B)(i) Beginning in 1982, not later than Decem- ber 31 of each year, the Board shall issue a regu- lation increasing for the next succeeding cal- endar year the dollar amount specified in sub- paragraph (A), as previously adjusted under this subparagraph, by an amount obtained by multi- plying such dollar amount by 80 per centum of the percentage increase in the total reservable liabilities of all depository institutions. (ii) The increase in total reservable liabilities shall be determined by subtracting the amount of total reservable liabilities on June 30 of the preceding calendar year from the amount of total reservable liabilities on June 30 of the cal- endar year involved. In the case of any such twelve-month period in which there has been a decrease in the total reservable liabilities of all depository institutions, no adjustment shall be made. A decrease in total reservable liabilities shall be determined by subtracting the amount of total reservable liabilities on June 30 of the calendar year involved from the amount of total reservable liabilities on June 30 of the previous calendar year. (12) EARNINGS ON BALANCES.— (A) IN GENERAL.—Balances maintained at a Federal Reserve bank by or on behalf of a de- pository institution may receive earnings to be paid by the Federal Reserve bank at least once each calendar quarter, at a rate or rates not to exceed the general level of short-term interest rates. (B) REGULATIONS RELATING TO PAYMENTS AND DISTRIBUTIONS.—The Board may prescribe reg- ulations concerning— (i) the payment of earnings in accordance with this paragraph; (ii) the distribution of such earnings to the depository institutions which maintain bal- ances at such banks, or on whose behalf such balances are maintained; and Page 167 TITLE 12—BANKS AND BANKING § 461 (iii) the responsibilities of depository in- stitutions, Federal Home Loan Banks, and the National Credit Union Administration Central Liquidity Facility with respect to the crediting and distribution of earnings at- tributable to balances maintained, in ac- cordance with subsection (c)(1)(A), in a Fed- eral Reserve bank by any such entity on be- half of depository institutions. (C) DEPOSITORY INSTITUTIONS DEFINED.—For purposes of this paragraph, the term ‘‘deposi- tory institution’’, in addition to the institu- tions described in paragraph (1)(A), includes any trust company, corporation organized under section 25A [12 U.S.C. 611 et seq.] or hav- ing an agreement with the Board under sec- tion 25 [12 U.S.C. 601 et seq.], or any branch or agency of a foreign bank (as defined in section 3101 of this title). (c) Promulgation of rules and regulations re- specting maintenance of balances (1) Reserves held by a depository institution to meet the requirements imposed pursuant to sub- section (b) shall, subject to such rules and regu- lations as the Board shall prescribe, be in the form of— (A) balances maintained for such purposes by such depository institution in the Federal Reserve bank of which it is a member or at which it maintains an account, except that (i) the Board may, by regulation or order, permit depository institutions to maintain all or a portion of their required reserves in the form of vault cash, except that any portion so per- mitted shall be identical for all depository in- stitutions, and (ii) vault cash may be used to satisfy any supplemental reserve requirement imposed pursuant to subsection (b)(4), except that all such vault cash shall be excluded from any computation of earnings pursuant to sub- section (b); and (B) balances maintained by a depository in- stitution in a depository institution which maintains required reserve balances at a Fed- eral Reserve bank, in a Federal Home Loan Bank, or in the National Credit Union Admin- istration Central Liquidity Facility, if such depository institution, Federal Home Loan Bank, or National Credit Union Administra- tion Central Liquidity Facility maintains such funds in the form of balances in a Federal Reserve bank of which it is a member or at which it maintains an account. Balances re- ceived by a depository institution from a sec- ond depository institution and used to satisfy the reserve requirement imposed on such sec- ond depository institution by this section shall not be subject to the reserve require- ments of this section imposed on such first de- pository institution, and shall not be subject to assessments or reserves imposed on such first depository institution pursuant to sec- tion 7 of the Federal Deposit Insurance Act (12 U.S.C. 1817), section 404 of the National Hous- ing Act (12 U.S.C. 1727),1 or section 202 of the Federal Credit Union Act (12 U.S.C. 1782). (2) The balances maintained to meet the re- serve requirements of subsection (b) by a deposi- tory institution in a Federal Reserve bank or passed through a Federal Home Loan Bank or the National Credit Union Administration Cen- tral Liquidity Facility or another depository in- stitution to a Federal Reserve bank may be used to satisfy liquidity requirements which may be imposed under other provisions of Federal or State law. (Dec. 23, 1913, ch. 6, § 19(a)–(c), formerly § 19 (pars.), 38 Stat. 270; June 21, 1917, ch. 32, § 10, 40 Stat. 239; Aug. 23, 1935, ch. 614, title III, § 324(a), 49 Stat. 714; renumbered § 19(a)–(c) and amended Pub. L. 89–597, § 2(a), Sept. 21, 1966, 80 Stat. 823; Pub. L. 91–151, title I, §§ 4(a), 5, Dec. 23, 1969, 83 Stat. 374, 375; Pub. L. 93–501, title I, § 101(a), Oct. 29, 1974, 88 Stat. 1557; Pub. L. 96–221, title I, §§ 103, 104(a), Mar. 31, 1980, 94 Stat. 133, 138; Pub. L. 97–35, title III, § 385, Aug. 13, 1981, 95 Stat. 433; Pub. L. 97–320, title IV, § 411, title VII, § 708, Oct. 15, 1982, 96 Stat. 1520, 1540; Pub. L. 101–73, title VII, § 744(i)(2), (3), Aug. 9, 1989, 103 Stat. 439; Pub. L. 109–351, title II, §§ 201, 202, title VI, § 603, Oct. 13, 2006, 120 Stat. 1968, 1969, 1980; Pub. L. 111–203, title III, § 366(2), July 21, 2010, 124 Stat. 1556.) Editorial Notes REFERENCES IN TEXT This section, referred to in subsec. (a), means section 19 of act Dec. 23, 1913, which is classified to sections 142, 371b, 371b–1, 374, 374a, 461, 463 to 466, 505, and 506 of this title. The Federal Deposit Insurance Act, referred to in subsec. (b)(1)(A)(vi), is act Sept. 21, 1950, ch. 967, § 2, 64 Stat. 873, which is classified generally to chapter 16 (§ 1811 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1811 of this title and Tables. Section 25 of this Act and section 25, referred to in subsec. (b)(6), (12)(C), mean section 25 of act Dec. 23, 1913, ch. 6, which is classified to subchapter I (§ 601 et seq.) of chapter 6 of this title. For the effective date of the Monetary Control Act of 1980, referred to in subsec. (b)(8), see section 108 of Pub. L. 96–221, set out as an Effective Date of 1980 Amend- ment note under section 248 of this title. Section 25A, referred to in subsec. (b)(12)(C), means section 25A of act Dec. 23, 1913, ch. 6, known as the Edge Act, which is classified to subchapter II (§ 611 et seq.) of chapter 6 of this title. Section 404 of the National Housing Act (12 U.S.C. 1727), referred to in subsec. (c)(1)(B), was repealed by Pub. L. 101–73, title IV, § 407, Aug. 9, 1989, 103 Stat. 363. CODIFICATION Section is comprised of subsecs. (a) to (c), formerly first six pars., of section 19 of act Dec. 23, 1913 (such first, second through fifth, and sixth pars. formerly classified to sections 461, 462, and 462b of this title, re- spectively), as redesignated by Pub. L. 89–597. For cred- its prior to enactment of Pub. L. 89–597 on Sept. 21, 1966, see notes set out under sections 462 and 462b of this title. AMENDMENTS 2010—Subsec. (b)(1)(F), (4)(B). Pub. L. 111–203 sub- stituted ‘‘Comptroller of the Currency’’ for ‘‘Director of the Office of Thrift Supervision’’. 2006—Subsec. (b)(2)(A). Pub. L. 109–351, § 202, sub- stituted ‘‘a ratio of not greater than 3 percent (and which may be zero)’’ for ‘‘the ratio of 3 per centum’’ in cl. (i) and ‘‘(and which may be zero),’’ for ‘‘and not less than 8 per centum,’’ in cl. (ii). Subsec. (b)(4)(C) to (E). Pub. L. 109–351, § 201(b)(1), re- designated subpars. (D) and (E) as (C) and (D), respec- tively, and struck out former subpar. (C) which read as Page 168 TITLE 12—BANKS AND BANKING § 461 follows: ‘‘The supplemental reserve authorized under subparagraph (A) shall be maintained by the Federal Reserve banks in an Earnings Participation Account. Except as provided in subsection (c)(1)(A)(ii) of this sec- tion, such Earnings Participation Account shall receive earnings to be paid by the Federal Reserve banks dur- ing each calendar quarter at a rate not more than the rate earned on the securities portfolio of the Federal Reserve System during the previous calendar quarter. The Board may prescribe rules and regulations con- cerning the payment of earnings on Earnings Participa- tion Accounts by Federal Reserve banks under this paragraph.’’ Subsec. (b)(12). Pub. L. 109–351, § 201(a), added par. (12). Subsec. (c)(1)(A). Pub. L. 109–351, § 201(b)(2), sub- stituted ‘‘subsection (b)’’ for ‘‘subsection (b)(4)(C)’’. Subsec. (c)(1)(B). Pub. L. 109–351, § 603, struck out ‘‘which is not a member bank’’ after ‘‘balances main- tained by a depository institution’’. 1989—Subsec. (b)(1)(A)(vi). Pub. L. 101–73, § 744(i)(2), amended cl. (vi) generally. Prior to amendment, cl. (vi) read as follows: ‘‘any insured institution as defined in section 1724 of this title or any institution which is eli- gible to make application to become an insured institu- tion under section 1726 of this title; and’’. Subsec. (b)(1)(F), (4)(B). Pub. L. 101–73, § 744(i)(3), sub- stituted ‘‘Director of the Office of Thrift Supervision’’ for ‘‘Federal Home Loan Bank Board’’. 1982—Subsec. (b)(1)(E), (F). Pub. L. 97–320, § 411(c), added subpar. (E) and redesignated former subpar. (E) as (F). Subsec. (b)(4)(A)(iv). Pub. L. 97–320, § 411(b), inserted ‘‘except as provided in paragraph (11)’’. Subsec. (b)(8)(D)(i). Pub. L. 97–320, § 708(1), substituted provisions relating to reserve requirements for banks which withdraw from the Federal Reserve System for provision that any bank which was a member bank on July 1, 1979, and which withdrew from membership in the Federal Reserve System during the period begin- ning on July 1, 1979, and ending on the day before March 31, 1980, would maintain reserves beginning on March 31, 1980, in an amount equal to the amount of re- serves it would have been required to maintain if it had been a member bank on March 31, 1980, and that after March 31, 1980, any such bank was directed to maintain reserves in the same amounts as member banks were required to maintain under this subsection, pursuant to subparagraphs (B) and (C)(i). Subsec. (b)(8)(D)(ii). Pub. L. 97–320, § 708(2), struck out ‘‘on or’’ after ‘‘Reserve System’’. Subsec. (b)(11). Pub. L. 97–320, § 411(a), added par. (11). 1981—Subsec. (b)(8)(E). Pub. L. 97–35 substituted pro- visions relating to applicability to any depository in- stitution that was on Aug. 1, 1978, engaged in such busi- ness in a State outside the continental limits and was not a member of the Federal Reserve System at any time on or after such date, for provisions relating to applicability to any depository institution that was on Aug. 1, 1978, engaged in such business under the laws of a State, was not a member of the Federal Reserve Sys- tem on that date, and the principal office of which was outside the continental limits on that date and has re- mained outside ever since. 1980—Subsec. (b). Pub. L. 96–221, § 103, substituted pro- visions setting forth additional definitions applicable to reserve requirements and requirements respecting amounts of reserves maintained against transaction ac- counts, waiver of ratio limits in extraordinary cir- cumstances, supplemental reserves, reserves related to foreign obligations or assets, exemptions for certain de- posits, discounts and borrowings, transitional adjust- ments, and additional exemptions and waivers, for pro- visions relating to determinations respecting mainte- nance of reserves against deposits. Subsec. (c). Pub. L. 96–221, § 104(a), substituted provi- sions relating to the promulgation of rules and regula- tions respecting maintenance of balances, for provi- sions relating to form of reserves held by member banks. 1974—Subsec. (a). Pub. L. 93–501 substituted ‘‘and, re- gardless of the use of the proceeds, shall be deemed a deposit’’ for ‘‘shall be deemed a deposit’’. 1969—Subsec. (a). Pub. L. 91–151, § 4(a), authorized Board to determine type of obligations that would be deemed deposits. Subsec. (b). Pub. L. 91–151, § 5, authorized Board to prescribe ratio of indebtedness of member banks to for- eign banks, up to a maximum of 22 percent. 1966—Pub. L. 89–597 designated first par. provisions of section 19 of act Dec. 23, 1913, as subsec. (a), substituted a general provision authorizing Board to define terms used in sections 142, 371a, 371b, 374, 374a, and 463 to 466 of this title for former provisions defining terms ‘‘de- mand deposits’’, ‘‘gross demand deposits’’, ‘‘deposits payable on demand’’, ‘‘time deposits’’, ‘‘savings depos- its’’, and ‘‘trust funds’’, struck out inclusion of ‘‘sav- ings deposits’’ in term ‘‘time deposits’’ in regard to re- serve requirements of member banks, and added sub- secs. (b) and (c) to such section 19, superseding second through sixth pars., which authorized Board to fix re- serve requirements against time deposits between the limits of 3 and 10 percent, in lieu of prior limits of 3 and 6 percent, and struck out provision for modification of reserve requirements to prevent injurious credit to ex- pansion or contraction. 1935—Act Aug. 23, 1935, abrogated statutory construc- tion of demand deposits. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the trans- fer date, see section 351 of Pub. L. 111–203, set out as a note under section 906 of Title 2, The Congress. EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–351, title II, § 203, Oct. 13, 2006, 120 Stat. 1969, as amended by Pub. L. 110–343, div. A, title I, § 128, Oct. 3, 2008, 122 Stat. 3796, provided that: ‘‘The amend- ments made by this title [amending this section] shall take effect October 1, 2008.’’ EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–221 effective on first day of sixth month which begins after Mar. 31, 1980, except that the amendments regarding subsec. (b)(7) and (8)(D) effective on Mar. 31, 1980, see section 108 of Pub. L. 96–221, set out as a note under section 248 of this title. EFFECTIVE DATE OF 1974 AMENDMENT Pub. L. 93–501, title I, § 101(b), Oct. 29, 1974, 88 Stat. 1557, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall not apply to any bank holding company which has filed prior to the date of enactment of this Act [Oct. 29, 1974], an irrev- ocable declaration with the Board of Governors of the Federal Reserve System to divest itself of all of its banks under section 4 of the Bank Holding Company Act [12 U.S.C. 1843], or to any debt obligation which is an exempted security under section 3(a)(3) of the Secu- rities Act of 1933 [15 U.S.C. 77c(a)(3)].’’ EFFECTIVE AND TERMINATION DATES OF 1966 AMENDMENT Pub. L. 89–597, § 7, Sept. 21, 1966, 80 Stat. 825, as amended by Pub. L. 90–87, Sept. 21, 1967, 81 Stat. 226; Pub. L. 90–505, § 1, Sept. 21, 1968, 82 Stat. 856; Pub. L. 91–71, Sept. 22, 1969, 83 Stat. 115; Pub. L. 91–151, title I, § 1, Dec. 23, 1969, 83 Stat. 371; Pub. L. 92–8, § 1, Mar. 31, 1971, 85 Stat. 13; Pub. L. 92–15, § 1, May 18, 1971, 85 Stat. 38; Pub. L. 93–63, July 6, 1973, 87 Stat. 147; Pub. L. 93–100, § 1, Aug. 16, 1973, 87 Stat. 342; Pub. L. 93–495, title I, § 107, Oct. 28, 1974, 88 Stat. 1505; Pub. L. 94–200, title I, § 101, Dec. 31, 1975, 89 Stat. 1124; Pub. L. 95–22, title I, § 101, Apr. 19, 1977, 91 Stat. 49; Pub. L. 95–188, title I, § 101, Nov. 16, 1977, 91 Stat. 1387; Pub. L. 95–630, title XVI, § 1601, Nov. 10, 1978, 92 Stat. 3713, which provided effec- tive and termination dates for 1966 amendments by Pub. L. 89–597 (affecting sections 371b, 1425b, and 1828(g) Page 169 TITLE 12—BANKS AND BANKING § 463 1 See References in Text note below. of this title), was repealed by Pub. L. 96–221, title II, § 207(a), Mar. 31, 1980, 94 Stat. 144. ELIMINATION OR REDUCTION OF INTEREST RATE DIF- FERENTIAL BETWEEN SAVINGS BANKS AND SAVINGS AND LOAN, BUILDING AND LOAN, OR HOMESTEAD AS- SOCIATIONS Pub. L. 94–200, title I, § 102, Dec. 31, 1975, 89 Stat. 1124, as amended by Pub. L. 95–630, title XVI, § 1602, Nov. 10, 1978, 92 Stat. 3713, which had provided that an interest rate differential for any category of deposits or ac- counts which was in effect on December 10, 1975, be- tween (1) any bank (other than a savings bank) the de- posits of which were insured by the Federal Deposit In- surance Corporation and (2) any savings and loan, building and loan, or homestead association (including cooperative banks) the deposits or accounts of which were insured by the Federal Savings and Loan Insur- ance Corporation or any mutual savings bank as de- fined in section 3(f) of the Federal Deposit Insurance Act (12 U.S.C. 1813(j)) [section 1813(f) of this title] could not be eliminated or reduced unless (A) written notifi- cation was given by the Board of Governors of the Fed- eral Reserve System to the Congress; and (B) the House of Representatives and the Senate approved, by concur- rent resolution, the proposed elimination or reduction of the interest rate differential, was repealed by Pub. L. 97–320, title III, § 326(a), Oct. 15, 1982, 96 Stat. 1500. See section 326(b)–(d) of Pub. L. 97–320, set out as a note under section 1828 of this title. See, also, section 207(b)(1) of Pub. L. 96–221 providing for repeal of section 102 of Pub. L. 94–200 effective 6 years after Mar. 31, 1980. INTEREST RATES: CONTROLS Pub. L. 89–597, § 1, Sept. 21, 1966, 80 Stat. 823, provided that: ‘‘The Secretary of the Treasury, the Board of Governors of the Federal Reserve System, the Board of Directors of the Federal Deposit Insurance Corpora- tion, and the Federal Home Loan Bank Board, in imple- mentation of their respective powers under existing law and this Act [enacting section 1425b of this title, amending this section, sections 355, 371b, and 1828 of this title, and section 771 of former Title 31, Money and Finance, repealing section 462a–1 of this title and en- acting provisions set out as notes under this section], shall take action to bring about the reduction of inter- est rates to the maximum extent feasible in the light of prevailing money market and general economic con- ditions.’’ Effective and termination dates of control of interest rates provisions, see Effective and Termination Dates of 1966 Amendment note above. OUTSTANDING RATE REGULATIONS Pub. L. 89–597, § 5, Sept. 21, 1966, 80 Stat. 825, provided that: ‘‘Any regulation prescribed by the Board of Gov- ernors of the Federal Reserve System or the Board of Directors of the Federal Deposit Insurance Corporation with respect to the payment of deposits and interest thereon by member banks or insured nonmember banks which is in effect when this Act is enacted [Sept. 21, 1966] shall continue in effect unless and until it is modi- fied or rescinded after consultation with the Board of Directors or the Board of Governors, as the case may be, and the Federal Home Loan Bank Board.’’ Effective and termination dates of existing rate regu- lations, see Effective and Termination Dates of 1966 Amendment note under this section. § 462. Omitted Editorial Notes CODIFICATION Section, acts Dec. 23, 1913, ch. 6, § 19 (par.), 38 Stat. 270; Aug. 15, 1914, ch. 252, 38 Stat. 691; June 21, 1917, ch. 32, § 10, 40 Stat. 239; Sept. 26, 1918, ch. 177, § 4, 40 Stat. 970; July 28, 1959, Pub. L. 86–114, §§ 1, 2(a), 3(b)(7)–(9), 73 Stat. 863, which related to balances member banks were required to keep in reserve banks, was omitted from the Code in view of the striking out of second through fifth pars. of section 19 of act Dec. 23, 1913 (formerly comprising this section), and incorporation of provi- sions of such paragraphs in subsecs. (a) to (c) of section 19 of act Dec. 23, 1913 by section 2(a) of Pub. L. 89–597, Sept. 21, 1966, 80 Stat. 823. See section 461 of this title. § 462a. Repealed. Pub. L. 97–258, § 5(b), Sept. 13, 1982, 96 Stat. 1068 Section, act Apr. 24, 1917, ch. 4, § 7, 40 Stat. 37, related to reserves against United States deposits. § 462a–1. Repealed. Pub. L. 89–597, § 2(d), Sept. 21, 1966, 80 Stat. 824 Section, act Dec. 23, 1913, ch. 6, § 19 (par.), as added Aug. 23, 1935, ch. 614, title III, § 324(d), 49 Stat. 715; amended Apr. 13, 1943, ch. 62, § 2, 57 Stat. 65, prescribed maintenance of same bank reserves against deposits by United States as were required against other deposits. §§ 462b, 462c. Omitted Editorial Notes CODIFICATION Section 462b, act Dec. 23, 1913, ch. 6, § 19 (par.), as added May 12, 1933, ch. 25, title III, § 46, 48 Stat. 54; amended Aug. 23, 1935, ch. 614, title II, § 207, 49 Stat. 706; July 7, 1942, ch. 488, § 2, 56 Stat. 648; July 28, 1959, Pub. L. 86–114, §§ 2(b), 3(b)(10), (11), 73 Stat. 263, 264, related to change of requirements as to reserves in order to pre- vent credit expansion or contraction, and was omitted from the Code in view of the striking out of the sixth par. of section 19 of act Dec. 23, 1913 (formerly com- prising this section), and incorporation of its provisions in subsecs. (a) to (c) of section 19 of act Dec. 23, 1913 by section 2(a) of Pub. L. 89–597, Sept. 21, 1966, 80 Stat. 823. See section 461 of this title. Section 462c, act Dec. 23, 1913, ch. 6, § 19 (par.), as added Aug. 16, 1948, ch. 836, § 2, 62 Stat. 1291, related to change of requirements as to reserves to check credit expansion, and terminated on June 30, 1949. § 463. Limitation on amount of balance with any depository institution without access to Fed- eral Reserve advances No member bank shall keep on deposit with any depository institution which is not author- ized to have access to Federal Reserve advances under section 347b 1 of this title a sum in excess of 10 per centum of its own paid-up capital and surplus. (Dec. 23, 1913, ch. 6, § 19(e), formerly § 19 (par. 8), 38 Stat. 270; Aug. 15, 1914, ch. 252, 38 Stat. 691; June 21, 1917, ch. 32, § 10, 40 Stat. 239; renumbered § 19(e), Pub. L. 89–597, § 2(b), Sept. 21, 1966, 80 Stat. 824; Pub. L. 96–221, title I, § 105(e), Mar. 31, 1980, 94 Stat. 140.) Editorial Notes REFERENCES IN TEXT Section 347b of this title, referred to in text, was in the original a reference to section 10(b) of this Act, meaning section 10(b) of the Federal Reserve Act. Sec- tion 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 sec- tion. CODIFICATION Section is comprised of part of subsec. (e), formerly eighth par., of section 19 of act Dec. 23, 1913, as redesig-