General Statutory Provisions in Connection With the Above Relating to Transactions Based on the Importation or Exportation of Goods

Limitation of amount fifty per cent - No bank is permitted to accept bills to an amount equal at any time in the aggregate to more than one-half of its unimpaired capital stock and surplus, provided, however, that the Federal Reserve Board, under such general regulations as it may prescribe, which shall apply to all banks alike, regardless of the amount of capital and surplus, may authorize any member bank to accept such bills to an amount not exceeding at the time in the aggregate one hundred percentum of its unimpaired paid up capital stock and surplus.

Regulations Of The Federal Reserve Board

In Connection with Aggregate Amount Bank May Accept

Application required to be filed with Board for power to accept up to one hundred per cent - Any member bank, having an unimpaired capital equal to at least twenty percentum of its paid up capital, which desires to accept drafts or bills of exchange up to an amount not exceeding at any time in the aggregate one hundred percentum of its paid up capital stock and surplus, may file an application for that purpose with the Federal Reserve Board, which application must be forwarded through the Federal Reserve bank of the district in which the applying bank is located.

Report On Application To Be Made By Federal Reserve Bank To The Board

The Federal Reserve bank is required to report to the Federal Reserve Board upon the standing of the applying bank, stating whether the business and banking conditions prevailing in its district warrant the granting of such application.

Reversal Of Approval

The approval of any such application may be rescinded upon ninety days' notice to the bank affected.

Opinions Of Counsel And Rulings In Connection With Aggregate Amount Bank May Accept

No requirement of permission necessary to accept up to fifty per cent - It is not necessary to obtain the authority of the Federal Reserve Board in the case of member banks desiring to undertake acceptance business unless the bank wishes to exceed fifty per cent. of its capital and surplus.

Acceptances Of Correspondents Under Guaranty Of National Banks

Drafts accepted by foreign correspondents at the request and under the guaranty of a national bank in the United States should be reported as a direct liability of such national bank and should be treated as subject to the limitations imposed by the Federal Reserve Act on the acceptance powers of national banks.

Bank Purchasing Own Acceptances

When a member bank purchases its own acceptances before maturity, such acceptances need not be included in the aggregate of acceptances authorized by Section 13 of the Federal Reserve Act.

Limitations Of Section 5202

The limitations imposed by Section 5202, Revised Statutes, on the liabilities incurred by any national bank do not apply to acceptances of such banks.

Summary Of Bank Acceptances Based On Imports And Exports

From the foregoing, it may be noted by way of general summary. that:

1. A member bank may not accept bills to a greater amount than fifty per cent. of its capital and surplus, unless the Federal Reserve Board has authorized it to accept to one hundred per cent.

2. The amount of domestic bills accepted shall in no event exceed fifty per cent. of capital and surplus.

3. Acceptances purchased by the accepting banks are exempt from the above limitations.