INCORPORATING INSTITUTIONS TO ENGAGE IN INTERNATIONAL OR FOREIGN BANKING. WEDNESDAY, JULY 23, 1919. UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, The committee met, pursuant to adjournment, at 10 o'clock a. m. in the committee room, Senate Office Building, Senator George P. McLean presiding. Present: Senators MeLean (chairman), Gronna, Calder, Newberry, Keyes, Owen, Fletcher, Henderson, and Walsh. The committee had under consideration the following bill (S. 2472): [S. 2472, Sixty-sixth Congress, First Session.] A BILL To amend the act approved December 23, 1913, known as the Federal Reserve Act. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the act approved December 23, 1913, known as the Federal Reserve Act, as amended, be further amended by adding a new section as follows: "BANKING CORPORATIONS AUTHORIZED TO DO FOREIGN BANKING BUSINESS. SEC. 25a. Corporations to be organized for the purpose of engaging principally in international or foreign banking or other financial operations, or banking or other financial operations in a dependency or insular possession of the United States, either directly or through the agency, ownership, or control of local institutions in foreign countries, or in such dependencies or insular possessions as provided by this section, and to act when required as fiscal agents of the United States, may be formed by any number of natural persons, not less in any case than five. "Such persons shall enter into articles of association which shall specify in general terms the objects for which the association is formed and may contain any other provisions not inconsistent with law which the association may see fit to adopt for the regulations of its business and the conduct of its affairs. "Such articles of association shall be signed by all of the persons intending to participate in the organization of the corporation and, thereafter, shall be forwarded to the Federal Reserve Board and shall be filed and preserved in its office. The persons signing the said articles of association shall, under their hands, make an organization certificate which shall specifically state: "First. The name assumed by such corporation, which shall be subject to the approval of the Federal Reserve Board. "Second. The place or places where its operations are to be carried on, "Third. The place in the United States where its home office is to be located. "Fourth. The amount of its capital stock and the number of shares into which the same shall be divided. "Fifth. The names and places of business or residence of the persons executing the certificate and the number of shares to which each has subscribed. "Sixth. The fact that the certificate is made to enable the persons subscribing to the same, and all other persons, firms, companies, and corporations, who or which may thereafter subscribe to or purchase shares of the capital stock of such corporation, to avail themselves of the advantages of this section. "The persons signing the organization certificate shall duly acknowledge the execution thereof before a judge of some court of record or notary public, who shall certify thereto under the seal of such court or notary, and thereafter the certificate shall be 3 forwarded to the Federal Reserve Board to be filed and preserved in its office. Upon duly making and filing articles of association and an organization certificate the association shall become and be a body corporate, and as such and in the name designated therein shall have power under such conditions and regulations as the Federal Reserve Board may prescribe to adopt and use a corporate seal, which may be changed at the pleasure of its board of directors; to have succession for a period of twenty years unless sooner dissolved by an act of Congress or unless its franchises become forfeited by some violation of law; to make contracts; to sue and be sued, complain, and defend in any court of law or equity; to elect or appoint directors, a majority of whom shall be citizens of the United States; and, by its board of directors, to appoint such officers and employees as may be deemed proper, define their authority and duties, require bonds of them, and fix the penalty thereof; dismiss such officers or employees, or any thereof, at pleasure and appoint others to fill their places; to prescribe, by its board of directors, by-laws not inconsistent with law or with the regulations of the Federal Reserve Board regulating the manner in which its stock shall be transferred, its directors elected or appointed, its officers and employees appointed, its property transferred, and the privileges granted to it by law exercised and enjoyed. "Each corporation so organized shall also have power: "(a) To purchase, sell, discount, and negotiate notes, drafts, checks, bills of exchange, acceptances, including bankers' acceptances, cable transfers, and other evidences of indebtedness; to purchase and sell securities, including the obligations of the United States or of any State thereof; to accept bills or drafts drawn upon it subject to such limitations and restrictions as the Federal Reserve Board may impose; to issue letters of credit; to purchase and sell, exchange, coin and bullion; to borrow and to lend money on real and personal security; to receive deposits; and generally to exercise such powers as are incidental to the powers conferred by this act or as may be usual in connection with the transaction of the business of banking or other financial operations in the countries, colonies, dependencies, or possessions in which it shall transact business. (b) To establish and maintain for the transaction of its business branches or agencies in foreign countries, their dependencies or colonies, and in the dependencies or insular possessions of the United States, at such places as may be approved by the Federal Reserve Board and under such rules and regulations as it may prescribe; and to establish and maintain such additional branches or agencies as the Federal Reserve Board may from time to time authorize even in countries or dependencies not specified in the original organization certificate. 66 "(c) With the consent of the Federal Reserve Board to purchase and hold stock or other certificates of ownership in any other corporation organized under the provisions of this section, or under the laws of any foreign country or a colony or dependency thereof, or under the laws of any State, dependency, or insular possession of the United States not transacting business in the United States, except such as in the judgment of the Federal Reserve Board may be incidental to its international or foreign business: Provided, however, That without the consent of the Federal Reserve Board, no corporation organized hereunder shall invest in any one corporation an amount in excess of 10 per centum of its own capital and surplus. The provisions of section 7 of the act approved October 15, 1914, entitled 'An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,' shall not apply to corporations or to officers, directors or employees of corporations organized under this section. "(d) Corporations organized under authority of this section may be granted permission by the Federal Reserve Board to exercise any or all of the powers specified in section 11 (k) of the Federal Reserve act in so far as the exercise of said power may be necessary in the conduct of the foreign or international business engaged in by such corporations. "No corporation organized under this section shall carry on any part of its business in the United States except such as, in the judgment of the Federal Reserve Board, shall be incidental to its international or foreign business: And provided further, That except such as is incidental and preliminary to its organization no such corporation shall exercise any of the powers conferred by this section until it has been duly authorized by the Federal Reserve Board to commence business as a corporation organized under the provisions of this section. "No corporation shall be organized under the provisions of this section with a capital stock of less than $2,000,000, one-quarter of which must be paid in before the corporation may be authorized to begin business. The capital stock of any such corporation may be increased at any time, with the approval of the Federal Reserve Board, by a vote of two-thirds of its shareholders or by unanimous consent in writing of the shareholders without a meeting and without a formal vote; and may be reduced in like manner, provided that in no event shall it be less than $2,000,000. |