§ 343. — Discount of obligations arising out of actual commercial transactions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC343]
TITLE 12--BANKS AND BANKING
CHAPTER 3--FEDERAL RESERVE SYSTEM
SUBCHAPTER IX--POWERS AND DUTIES OF FEDERAL RESERVE BANKS
Sec. 343. Discount of obligations arising out of actual
commercial transactions
Upon the indorsement of any of its member banks, which shall be
deemed a waiver of demand, notice and protest by such bank as to its own
indorsement exclusively, any Federal reserve bank 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 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 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. 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.
In unusual and exigent circumstances, the Board of Governors of the
Federal Reserve System, by the affirmative vote of not less than five
members, may authorize any Federal reserve bank, during such periods as
the said board may determine, at rates established in accordance with
the provisions of section 357 of this title, to discount for any
individual, partnership, or corporation, 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:
Provided, That before discounting any such note, draft, or bill of
exchange for an individual or a partnership or corporation the Federal
reserve bank shall obtain evidence that such individual, partnership, or
corporation is unable to secure adequate credit accommodations from
other banking institutions. All such discounts for individuals,
partnerships, or corporations shall be subject to such limitations,
restrictions, and regulations as the Board of Governors of the Federal
Reserve System may prescribe.
(Dec. 23, 1913, ch. 6, Sec. 13 (pars.), 38 Stat. 263; Sept. 7, 1916, ch.
461, 39 Stat. 752; Mar. 4, 1923, ch. 252, title IV, Sec. 402, 42 Stat.
1478; July 21, 1932, ch. 520, Sec. 210, 47 Stat. 715; Aug. 23, 1935, ch.
614, title II, Sec. 203(a), title III, Sec. 322, 49 Stat. 704, 714; Pub.
L. 102-242, title IV, Sec. 473, Dec. 19, 1991, 105 Stat. 2386.)
Codification
Section is comprised of the second and third pars. of section 13 of
act Dec. 23, 1913, as amended. The act of Mar 4, 1923, split the second
par. of section 13, as amended in 1916 (39 Stat. 752), into two pars.,
the first of which constitutes the first par. of this section and the
second as section 344 of this title. The act of July 21, 1932, added the
second par. of this section which was designated to follow the second
par. of section 13. For classification to this title of other pars. of
section 13, see Codification note set out under section 342 of this
title.
Amendments
1991--Pub. L. 102-242 struck out ``of the kinds and maturities made
eligible for discount for member banks under other provisions of this
chapter'' after first reference to ``bills of exchange'' in second par.
1935--Act Aug. 23, 1935, Sec. 322, substituted words immediately
preceding proviso for ``indorsed and otherwise secured to the
satisfaction of the Federal reserve bank.''
1932--Act July 21, 1932, added second par.
Change of Name
Section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve
Board to Board of Governors of the Federal Reserve System.
Section Referred to in Other Sections
This section is referred to in sections 84, 248, 371, 412, 461 of
this title.
