---
kind: "range"
citation: "12 U.S.C. §§ 342–347"
title: "12"
from: "342"
to: "347"
count: 6
release: "119-102"
url: "https://uscodex.org/usc/12/342..347"
---

# §342. Deposits; exchange and collection; member and nonmember banks or other depository institutions; charges


Any Federal [reserve bank](/usc/12/221.md) may receive from any of its [member banks](/usc/12/221.md), or other [depository institutions](/usc/12/24a.md?p=g-2), and from the United States, [deposits](/usc/12/5301.md?p=18-A) of current [funds](/usc/12/4702.md?p=10) in lawful money, national-[bank](/usc/12/1426a.md?p=g-1) notes, Federal reserve notes, or checks, and drafts, payable upon presentation or other items, and also, for collection, maturing notes and bills; or, solely for purposes of exchange or of collection may receive from other Federal [reserve banks](/usc/12/221.md) [deposits](/usc/12/5301.md?p=18-A) of current [funds](/usc/12/4702.md?p=10) in lawful money, national-[bank](/usc/12/1426a.md?p=g-1) notes, or checks upon other Federal [reserve banks](/usc/12/221.md), and checks and drafts, payable upon presentation within its [district](/usc/12/221.md) or other items, and maturing notes and bills payable within its [district](/usc/12/221.md); or, solely for the purposes of exchange or of collection, may receive from any nonmember bank or trust [company](/usc/12/24a.md?p=g-1) or other [depository institution](/usc/12/24a.md?p=g-2) [deposits](/usc/12/5301.md?p=18-A) of current [funds](/usc/12/4702.md?p=10) in lawful money, national-[bank](/usc/12/1426a.md?p=g-1) notes, Federal reserve notes, checks and drafts payable upon presentation or other items, or maturing notes and bills: Provided, Such nonmember bank or trust [company](/usc/12/24a.md?p=g-1) or other [depository institution](/usc/12/24a.md?p=g-2) maintains with the Federal [Reserve bank](/usc/12/221.md) of its [district](/usc/12/221.md) a balance in such amount as the [Board](/usc/12/221.md) determines taking into account items in transit, services provided by the Federal [Reserve bank](/usc/12/221.md), and other factors as the [Board](/usc/12/221.md) may deem appropriate: Provided further, That nothing in this or any other section of this chapter shall be construed as prohibiting a [member](/usc/12/1426a.md?p=g-1) or nonmember bank or other [depository institution](/usc/12/24a.md?p=g-2) from making reasonable charges, to be determined and regulated by the [Board](/usc/12/221.md) of Governors of the Federal Reserve System, but in no case to exceed 10 cents per $100 or fraction thereof, based on the total of checks and drafts presented at any one time, for collection or payment of checks and drafts and remission therefor by exchange or otherwise; but no such charges shall be made against the Federal [reserve banks](/usc/12/221.md).


# §343. Discount of obligations arising out of actual commercial transactions


Upon the indorsement of any of its [member banks](/usc/12/221.md), which shall be deemed a waiver of demand, notice and protest by such [bank](/usc/12/1426a.md?p=g-1) as to its own indorsement exclusively, any Federal [reserve bank](/usc/12/221.md) may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the [Board](/usc/12/221.md) of Governors of the Federal Reserve System to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this chapter. Nothing in this chapter contained shall be construed to prohibit such notes, drafts, and bills of exchange, secured by staple agricultural products, or other goods, wares, or merchandise from being eligible for such discount, and the notes, drafts, and bills of exchange of factors issued as such making advances exclusively to producers of staple agricultural products in their raw [state](/usc/12/1707.md?p=d) shall be eligible for such discount; but such definition shall not include notes, drafts, or bills covering merely investments or issued or drawn for the purpose of carrying or trading in stocks, bonds, or other investment securities, except [bonds and notes of the Government of the United States](/usc/12/221.md). Notes, drafts, and bills admitted to discount under the terms of this paragraph must have a maturity at the time of discount of not more than ninety days, exclusive of grace.

- (3)
  - (A) [^1] In unusual and exigent circumstances, the [Board](/usc/12/221.md) of Governors of the Federal Reserve System, by the affirmative vote of not less than five [members](/usc/12/1426a.md?p=g-1), may authorize any Federal [reserve bank](/usc/12/221.md), during such periods as the said [board](/usc/12/221.md) may determine, at rates established in accordance with the provisions of [section 357 of this title](/usc/12/357.md), to discount for any participant in any program or facility with broad-based eligibility, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal [reserve bank](/usc/12/221.md): Provided, That before discounting any such note, draft, or bill of exchange, the Federal [reserve bank](/usc/12/221.md) shall obtain evidence that such participant in any program or facility with broad-based eligibility is unable to secure adequate [credit](/usc/12/5481.md?p=7) accommodations from other banking institutions. All such discounts for any participant in any program or facility with broad-based eligibility shall be subject to such limitations, restrictions, and regulations as the [Board](/usc/12/221.md) of Governors of the Federal Reserve System may prescribe.
  - (B)
    - (i) As soon as is practicable after July 21, 2010, the [Board](/usc/12/221.md) shall establish, by regulation, in consultation with the Secretary of the Treasury, the policies and procedures governing emergency lending under this paragraph. Such policies and procedures shall be designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid a failing financial [company](/usc/12/24a.md?p=g-1), and that the security for emergency loans is sufficient to protect taxpayers from losses and that any such program is terminated in a timely and orderly fashion. The policies and procedures established by the [Board](/usc/12/221.md) shall require that a Federal [reserve bank](/usc/12/221.md) assign, consistent with sound risk management practices and to ensure protection for the taxpayer, a lendable value to all collateral for a loan executed by a Federal [reserve bank](/usc/12/221.md) under this paragraph in determining whether the loan is secured satisfactorily for purposes of this paragraph.
    - (ii) The [Board](/usc/12/221.md) shall establish procedures to prohibit borrowing from programs and facilities by borrowers that are insolvent. Such procedures may include a certification from the chief [executive officer](/usc/12/1831o.md?p=b-2-H) (or other authorized officer) of the borrower, at the time the borrower initially borrows under the program or facility (with a duty by the borrower to update the certification if the information in the certification materially changes), that the borrower is not insolvent. A borrower shall be considered insolvent for purposes of this subparagraph, if the borrower is in bankruptcy, resolution under title II of the Dodd-Frank Wall Street Reform and [Consumer](/usc/12/5481.md?p=4) Protection Act [[12 U.S.C. 5381](/usc/12/5381.md) et seq.], or any other Federal or [State](/usc/12/1707.md?p=d) insolvency proceeding.
    - (iii) A program or facility that is structured to remove assets from the balance sheet of a single and specific [company](/usc/12/24a.md?p=g-1), or that is established for the purpose of assisting a single and specific [company](/usc/12/24a.md?p=g-1) avoid bankruptcy, resolution under title II of the Dodd-Frank Wall Street Reform and [Consumer](/usc/12/5481.md?p=4) Protection Act, or any other Federal or [State](/usc/12/1707.md?p=d) insolvency proceeding, shall not be considered a program or facility with broad-based eligibility.
    - (iv) The [Board](/usc/12/221.md) may not establish any program or facility under this paragraph without the prior approval of the Secretary of the Treasury.
  - (C) The [Board](/usc/12/221.md) shall provide to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives—
    - (i) not later than 7 days after the [Board](/usc/12/221.md) authorizes any loan or other financial assistance under this paragraph, a report that [includes](/usc/12/25b.md?p=a-3)—
      - (I) the justification for the exercise of authority to provide such assistance;
      - (II) the identity of the recipients of such assistance;
      - (III) the date and amount of the assistance, and form in which the assistance was provided; and
      - (IV) the material terms of the assistance, [including](/usc/12/25b.md?p=a-3)—
        - (aa) duration;
        - (bb) collateral pledged and the value thereof;
        - (cc) all interest, fees, and other revenue or items of value to be received in exchange for the assistance;
        - (dd) any requirements imposed on the recipient with respect to employee compensation, distribution of dividends, or any other corporate decision in exchange for the assistance; and
        - (ee) the expected costs to the taxpayers of such assistance; and
    - (ii) once every 30 days, with respect to any outstanding loan or other financial assistance under this paragraph, written updates on—
      - (I) the value of collateral;
      - (II) the amount of interest, fees, and other revenue or items of value received in exchange for the assistance; and
      - (III) the expected or final cost to the taxpayers of such assistance.
  - (D) The information required to be submitted to Congress under [subparagraph (C)](#3-C) related to—
    - (i) the identity of the participants in an emergency lending program or facility commenced under this paragraph;
    - (ii) the amounts borrowed by each participant in any such program or facility;
    - (iii) identifying details concerning the assets or collateral held by, under, or in connection with such a program or facility,

    shall be kept confidential, upon the written request of the Chairman of the [Board](/usc/12/221.md), in which case such information shall be made available only to the Chairpersons or Ranking [Members](/usc/12/1426a.md?p=g-1) of the Committees described in [subparagraph (C)](#3-C).

  - (E) If an entity to which a Federal [reserve bank](/usc/12/221.md) has provided a loan under this paragraph becomes a covered financial [company](/usc/12/24a.md?p=g-1), as defined in [section 201](/usc/12/201.md) of the Dodd-Frank Wall Street Reform and [Consumer](/usc/12/5481.md?p=4) Protection Act [[12 U.S.C. 5381](/usc/12/5381.md)], at any time while such loan is outstanding, and the Federal [reserve bank](/usc/12/221.md) incurs a realized net loss on the loan, then the Federal [reserve bank](/usc/12/221.md) shall have a claim equal to the amount of the net realized loss against the covered entity, with the same priority as an obligation to the Secretary of the Treasury under [section 210(b)](/usc/12/210.md) of the Dodd-Frank Wall Street Reform and [Consumer](/usc/12/5481.md?p=4) Protection Act [[12 U.S.C. 5390(b)](/usc/12/5390.md?p=b)].

# §344. Discount or purchase of bills to finance agricultural shipments


Upon the indorsement of any of its [member banks](/usc/12/221.md), which shall be deemed a waiver of demand, notice, and protest by such [bank](/usc/12/1426a.md?p=g-1) as to its own indorsement exclusively, and subject to regulations and limitations to be prescribed by the [Board](/usc/12/221.md) of Governors of the Federal Reserve System, any Federal [reserve bank](/usc/12/221.md) may discount or purchase bills of exchange payable at sight or on demand which grow out of the domestic shipment or the exportation of nonperishable, readily marketable agricultural and other staples and are secured by bills of lading or other shipping documents conveying or securing title to such staples: Provided, That all such bills of exchange shall be forwarded promptly for collection, and demand for payment shall be made with reasonable promptness after the arrival of such staples at their destination: Provided further, That no such bill shall in any event be held by or for the account of a Federal [reserve bank](/usc/12/221.md) for a period in excess of ninety days. In discounting such bills Federal [reserve banks](/usc/12/221.md) may compute the interest to be deducted on the basis of the estimated life of each bill and adjust the discount after payment of such bills to conform to the actual life thereof.


# §345. Rediscount of notes, drafts, and bills for member banks; limitation of amount


The aggregate of notes, drafts, and bills upon which [any person](/usc/12/1715z–4a.md?p=a-2), copartnership, [association](/usc/12/1828.md?p=s-4-E-i), or [corporation](/usc/12/2277a.md?p=2) is liable as maker, acceptor, indorser, drawer, or guarantor, rediscounted for any [member bank](/usc/12/221.md), shall at no time exceed the amount for which such [person](/usc/12/5481.md?p=19), copartnership, [association](/usc/12/1828.md?p=s-4-E-i), or [corporation](/usc/12/2277a.md?p=2) may lawfully become liable to a [national banking association](/usc/12/221.md) under the terms of [section 84 of this title](/usc/12/84.md): Provided, however, That nothing in this section shall be construed to change the character or class of paper now eligible for rediscount by Federal [reserve banks](/usc/12/221.md).


# §346. Discount of acceptances


Any Federal [reserve bank](/usc/12/221.md) may discount acceptances of the kinds hereinafter described, which have a maturity at the time of discount of not more than ninety days’ sight, exclusive of days of grace, and which are indorsed by at least one [member bank](/usc/12/221.md): Provided, That such acceptances if drawn for an agricultural purpose and secured at the time of acceptance by warehouse receipts or other such documents conveying or securing title covering readily marketable staples may be discounted with a maturity at the time of discount of not more than six months’ sight exclusive of days of grace.


# §347. Advances to member banks on their notes


Any Federal [reserve bank](/usc/12/221.md) may make advances for periods not exceeding fifteen days to its [member banks](/usc/12/221.md) on their promissory notes secured by the [deposit](/usc/12/5301.md?p=18-A) or pledge of bonds, notes, certificates of indebtedness, or Treasury bills of the United States, or by the [deposit](/usc/12/5301.md?p=18-A) or pledge of debentures or other such obligations of Federal intermediate [credit](/usc/12/5481.md?p=7) [banks](/usc/12/221a.md?p=a) which are eligible for purchase by Federal [reserve banks](/usc/12/221.md) under [section 350 of this title](/usc/12/350.md), or by the [deposit](/usc/12/5301.md?p=18-A) or pledge of bonds issued under the provisions of [subsection (c)](/usc/12/1463.md?p=c) of section 1463[^1] of this title; and any Federal [reserve bank](/usc/12/221.md) may make advances for periods not exceeding ninety days to its [member banks](/usc/12/221.md) on their promissory notes secured by such notes, drafts, bills of exchange, or bankers’ acceptances as are eligible for rediscount or for purchase by Federal [reserve banks](/usc/12/221.md) under the provisions of this chapter, or secured by such obligations as are eligible for purchase under [section 355 of this title](/usc/12/355.md). All such advances shall be made at rates to be established by such Federal [reserve banks](/usc/12/221.md), such rates to be subject to the review and determination of the [Board](/usc/12/221.md) of Governors of the Federal Reserve System. If any [member bank](/usc/12/221.md) to which any such advance has been made shall, during the life or continuance of such advance, and despite an official warning of the [reserve bank](/usc/12/221.md) of the [district](/usc/12/221.md) or of the [Board](/usc/12/221.md) of Governors of the Federal Reserve System to the contrary, increase its outstanding loans secured by collateral in the form of stocks, bonds, debentures, or other such obligations, or loans made to [members](/usc/12/1426a.md?p=g-1) of any organized stock exchange, investment house, or dealer in securities, upon any obligation, note, or bill, secured or unsecured, for the purpose of purchasing and/or carrying stocks, bonds, or other investment securities (except obligations of the United States) such advance shall be deemed immediately due and payable, and such [member bank](/usc/12/221.md) shall be ineligible as a borrower at the [reserve bank](/usc/12/221.md) of the [district](/usc/12/221.md) under the provisions of this section for such period as the [Board](/usc/12/221.md) of Governors of the Federal Reserve System shall determine: Provided, That no temporary carrying or clearance loans made solely for the purpose of facilitating the purchase or delivery of securities offered for public subscription shall be included in the loans referred to in this section.