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U.S. Code as of:
01/19/04
Section 347a. Advances to member bank groups; inadequate amounts of eligible and acceptable assets; liability of individual banks in group; distribution of loans among banks of group; rate of interest; notes accepted for advances as collateral security for Federal reserve notes; foreign obligations as security for advances
Upon receiving the consent of not less than five members of the
Board of Governors of the Federal Reserve System, any Federal
reserve bank may make advances, in such amount as the board of
directors of such Federal reserve bank may determine, to groups of
five or more member banks within its district, a majority of them
independently owned and controlled, upon their time or demand
promissory notes, provided the bank or banks which receive the
proceeds of such advances as herein provided have no adequate
amounts of eligible and acceptable assets available to enable such
bank or banks to obtain sufficient credit accommodations from the
Federal reserve bank through rediscounts or advances other than as
provided in section 347b (!1) of this title. The liability of the
individual banks in each group must be limited to such proportion
of the total amount advanced to such group as the deposit liability
of the respective banks bears to the aggregate deposit liability of
all banks in such group, but such advances may be made to a lesser
number of such member banks if the aggregate amount of their
deposit liability constitutes at least 10 per centum of the entire
deposit liability of the member banks within such district. Such
banks shall be authorized to distribute the proceeds of such loans
to such of their number and in such amount as they may agree upon,
but before so doing they shall require such recipient banks to
deposit with a suitable trustee, representing the entire group,
their individual notes made in favor of the group protected by such
collateral security as may be agreed upon. Any Federal reserve bank
making such advance shall charge interest or discount thereon at a
rate not less than 1 per centum above its discount rate in effect
at the time of making such advance. No such note upon which
advances are made by a Federal reserve bank under this section
shall be eligible under section 412 of this title as collateral
security for Federal reserve notes.
No obligations of any foreign government, individual,
partnership, association, or corporation organized under the laws
thereof shall be eligible as collateral security for advances under
this section.
Member banks are authorized to obligate themselves in accordance
with the provisions of this section.
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