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BANKS AS AGENTS AND BROKERS FOR

REAL ESTATE LOANS

NDER the same provision of the Federal Reserve Act which

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makes it legal for certain national banks to act as insurance agents, a national bank located in any place the population of which does not exceed 5,000 (last decennial census) may also act as broker or agent for others in making or procuring loans on real estate, under the following provisions:

(a) The real estate by which the loan negotiated is secured must be located within 100 miles of the place in which the bank is located.

(b) The bank shall in no case guarantee either the principal or interest of such loan.

(c) The bank may receive for such services a reasonable fee or commission.

As is the case when a national bank acts as an insurance agent the powers conferred by the law may be exercised only under such regulations as are prescribed by the Comptroller of the Currency. Copies of these regulations are furnished by the Comptroller.

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POWER TO HOLD REAL PROPERTY

HE Federal law prescribed that a national bank may “purchase, hold, and convey" real estate for the following purposes only:

1-Such as shall be necessary for its immediate accommodation in the transaction of its business.

2-Such as shall be mortgaged to it in good faith by way of security for debts previously contracted.

3-Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealing.

4-Such as it shall purchase at sales under judgments, decrees, or mortgages held by the bank, or shall purchase to secure debts due to it.

It is, however, unlawful for a national bank to hold for a longer period than five years any real estate under mortgage or title and possession of any real estate purchased to secure debt.

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REPORT OF CONDITION

OT less than three times each year every national bank is required to make a report to the Comptroller, according to the form prescribed by him, verified by the oath of the bank's president or cashier and attested to by the signatures of at least three of the bank's directors other than the verifying officers. Forms for these reports are furnished by the Comptroller usually in advance of the date upon which formal notice of the call reaches the bank. The information asked for must be transmitted to the Comptroller within five days after the receipt of the call at the bank, and in the same form in which it is furnished to the Comptroller the information must be inserted in a newspaper published in the place where the bank is located.

The Comptroller has power to call for special reports from any particular bank whenever in his opinion it is necessary to obtain such information.

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TRUST DEPARTMENT

NDER the Federal Reserve Act it is possible for a national bank to maintain and operate its own trust department, exercising through this department all of the fiduciary powers granted to state banks, trust companies, etc., by the laws of the state in which the national bank is located.

Permission to establish such a department is granted, not by the Comptroller's office, but by the Federal Reserve Board. Proper forms for the applications are furnished by the Board and the application, after it is executed by the president or cashier of the bank, should be mailed to the Chairman of the Board of Directors of the Federal Reserve Bank in the particular district, who will transmit it to Washington.

National banks which are permitted by the Federal Reserve Board to function in fiduciary capacities are required to establish a separate trust department under the management of an officer or officers, and to abide by certain other special rules laid down in the Federal Reserve Act and by the Federal Reserve Board.

BRANCHES

1. Domestic Branches-The National Bank Act, as it now stands, does not give national banks the privilege of establishing domestic branch banks. It does, however, contain the following provision permitting state banks which enter the national system to retain branches already established:

It shall be lawful for any bank or banking association, organized under state laws and having branches, the capital being joint and assigned to and used by the mother bank and branches in definite proportions, to become a national banking association in conformity with existing laws and to retain and keep in operation its branches, or such one or more of them as it may elect to retain.

2. Foreign Branches-Under the Federal Reserve Act, however, any national bank having a capital and surplus of not less than $1,000,000 may, with the permission of the Federal Reserve Board, and upon such conditions as may be prescribed by the Board, exercise either or both of the following powers:

1-Establish branches in foreign countries for the furtherance of the foreign commerce of the United States, and to act if required to do so as fiscal agents of the United States.

2-To invest an amount not exceeding in the aggregate 10 per cent. of its paid-in capital stock and surplus in the stock of one or more banks or corporations chartered or incorporated under the laws of the United States or of any state and principally engaged in international or foreign banking, either directly or through agencies, ownership, or control of local institutions in foreign countries.

Every national bank either operating foreign branches or owning stock in a bank or corporation engaged in international banking must furnish to the Comptroller of the Currency, upon demand, information concerning the condition of such branches, banks or corporations.

Before any national bank can purchase stock in such a corporation as that described above, the corporation itself must enter into an agreement with the Federal Reserve Board to restrict its opera

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