I
103D CONGRESS
1ST SESSION
H. R. 28
To promote accountability, diversity, and the public interest in the operation
of the Federal Reserve System, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. GONZALEZ introduced the following bill; which was referred to the
Committee on Banking, Finance and Urban Affairs
MARCH 15, 1993
Additional sponsors: Mr. CRAMER, Mr. FRANK
of Massachusetts, Mr.
HINCHEY, Mr. GUTIERREZ, Mr. RUSH, Mrs. MALONEY, Mr. KLEIN, Ms.
ROYBAL-ALLARD, Mr. WYNN, Mr. FLAKE, Mr. MFUME, Mr. CHAPMAN,
Mr. DEFAZIO, and Mr. BILIRAKIS
A BILL
To promote accountability, diversity, and the public interest
in the operation of the Federal Reserve System, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Federal Reserve Sys-
tem Accountability Act of 1993’’.
SEC. 2. PUBLIC ACCOUNTABILITY OF PRESIDENTS AND
BOARDS OF DIRECTORS OF FEDERAL RE-
SERVE BANKS.
‘‘(a) IN GENERAL.—Section 4 of the Federal Reserve
Act (12 U.S.C. 341, 301 et seq.) is amended to read as
follows:
‘‘SEC. 4. FEDERAL RESERVE BANKS.
‘‘(a) GENERAL CORPORATE POWERS.—Upon the fil-
ing of an organization certificate with the Comptroller of
the Currency in accordance with this Act, a Federal re-
serve bank shall become a body corporate and as such,
and in the name designated in such organization certifi-
cate, shall have the following powers:
‘‘(1) CORPORATE SEAL.—To adopt and use a
corporate seal.
‘‘(2) SUCCESSION.—To have succession until
dissolved by an Act of Congress or until forfeiture
of franchise for violation of law.
‘‘(3) CONTRACT
AUTHORITY.—To make con-
tracts.
‘‘(4) LITIGATION AUTHORITY.—To sue and be
sued, complain and defend, in any court of law or
equity.
‘‘(5) APPOINTMENT OF OFFICERS OTHER THAN
THE PRESIDENT.—To appoint, by the board of di-
rectors, vice presidents and such other officers and
employees as are not otherwise provided for in this
Act, to define their duties, require bonds for them
and fix the penalty thereof, and to dismiss at pleas-
ure such officers or employees.
‘‘(6) ADOPTION OF BY-LAWS AND OTHER AD-
MINISTRATIVE
AUTHORITY.—To prescribe by the
board of directors, by-laws not inconsistent with law,
regulating the manner in which its general business
may be conducted, and the privileges granted to it
by law may be exercised and enjoyed.
‘‘(7) INCIDENTAL POWERS.—To exercise by the
board of directors, or duly authorized officers or
agents, all powers specifically granted by the provi-
sions of this Act and such incidental powers as shall
be necessary to carry on the business of banking
within the limitations prescribed by this Act.
‘‘(8) CIRCULATING NOTES.—Upon deposit with
the Treasurer of the United States of any bonds of
the United States in the manner provided by exist-
ing law relating to national banks, to receive from
the Comptroller of the Currency circulating notes in
blank, registered and countersigned as provided by
law, equal in amount to the par value of the bonds
so deposited, such notes to be issued under the same
conditions and provisions of law as relate to the
issue of circulating notes of national banks secured
by bonds of the United States bearing the circulat-
ing privilege, except that the issue of such notes
shall not be limited to the capital stock of such Fed-
eral reserve bank.
‘‘(b) PRESIDENT AND FIRST VICE PRESIDENT.—
‘‘(1) OFFICE OF THE PRESIDENT.—
‘‘(A) IN GENERAL.—Each Federal reserve
bank shall have a president who shall be the
chief executive officer of the bank and all other
executive officers and all employees of the bank
shall be directly responsible to the president.
‘‘(B) APPOINTMENT.—The president of
each Federal reserve bank shall be appointed by
the President of the United States, by and with
the consent of the Senate, without discrimina-
tion on the basis of race, creed, color, sex, or
national origin.
‘‘(C) DIVERSIFIED REPRESENTATION.—In
appointing the presidents of the Federal reserve
banks, the President shall include representa-
tives of agriculture, small business, labor,
consumer 
and 
community 
organizations,
women, and minorities.
‘‘(2) OFFICE OF THE FIRST VICE PRESIDENT.—
‘‘(A) IN GENERAL.—Each Federal reserve
bank shall have a first vice president who shall,
in the absence or disability of the president or
during a vacancy in the office of president,
serve as chief executive officer of the bank.
‘‘(B) TIME LIMIT ON SERVICE AS ACTING
CHIEF
EXECUTIVE
OFFICER.—The first vice
president of a Federal reserve bank may serve
as the chief executive officer of the bank under
subparagraph (A) for not more than 120 days.
‘‘(3) TERMS.—The president of any Federal re-
serve bank shall be appointed for a term of 5 years.
‘‘(4) VACANCIES.—Whenever a vacancy shall
occur in the office of the president, the vacancy shall
be filled in the manner in which the original appoint-
ment was made and the person so appointed shall
hold office until the expiration of the term to which
such person’s predecessor was appointed.
‘‘(c) BOARD OF DIRECTORS.—
‘‘(1) IN GENERAL.—Each Federal reserve bank
shall be conducted under the supervision and control
of a board of directors.
‘‘(2) DUTIES OF DIRECTORS.—
‘‘(A) IN GENERAL.—The board of directors
shall perform the duties usually appertaining to
the office of directors of banking associations
and all such duties as are prescribed by law.
‘‘(B) ADMINISTRATION
OF
AFFAIRS
EX-
TENSION OF CREDIT.—Each board of directors
of a Federal reserve bank—
‘‘(i) shall administer the affairs of the
bank fairly and impartially and without
discrimination in favor of or against any
member bank; and
‘‘(ii) may, subject to the provisions of
law and the orders of the Board of Gov-
ernors of the Federal Reserve System, ex-
tend to each member bank such discounts,
advancements, and accommodations as
may be safely and reasonably made with
due regard for the claims and demands of
other member banks, the maintenance of
sound credit conditions, and the accommo-
dation of commerce, industry, and agri-
culture.
‘‘(3) REGULATION BY BOARD OF GOVERNORS
OF
EXTENSION
OF
CREDIT.—The Board of Gov-
ernors of the Federal Reserve System may prescribe
regulations defining (within the limitations of this
Act) the conditions under which discounts, advance-
ments, and the accommodations may be extended by
a Federal reserve bank to member banks.
‘‘(4) REGULATION BY BOARD OF DIRECTORS OF
EXTENSION OF CREDIT.—
‘‘(A) COLLECTION AND REVIEW OF INFOR-
MATION.—Each Federal reserve bank shall keep
itself informed of the general character and
amount of the loans and investments of its
member banks with a view to ascertaining
whether undue use is being made of bank credit
for the speculative carrying of or trading in se-
curities, real estate, or commodities, or for any
other purpose inconsistent with the mainte-
nance of sound credit conditions.
‘‘(B) CONSIDERATION OF INFORMATION IN
MAKING
CREDIT
DECISIONS.—In determining
whether to grant or refuse any advance, redis-
count, or other credit accommodation, a Fed-
eral reserve bank shall give consideration to the
information maintained pursuant to subpara-
graph (A).
‘‘(5) REPORT
TO
BOARD
OF
GOVERNORS
OF
UNDUE USE OF CREDIT.—The chairperson of the
board of directors of each Federal reserve bank shall
report to the Board of Governors of the Federal Re-
serve System any undue use of bank credit by any
member bank, together with the chairperson’s rec-
ommendation.
‘‘(6) SUSPENSION OF MEMBER BANK FROM USE
OF CREDIT FACILITIES.—Whenever, in the judgment
of the Board of Governors of the Federal Reserve
System, any member bank is making such undue use
of bank credit, the Board may, in the Board’s dis-
cretion and after reasonable notice and an oppor-
tunity for a hearing, suspend such bank from the
use of the credit facilities of the Federal Reserve
System and may terminate or renew the suspension
at any time.
‘‘(d) NUMBER AND CLASSES OF DIRECTORS AND RE-
LATED REQUIREMENTS.—
‘‘(1) IN GENERAL.—The board of directors of
each Federal reserve bank shall consist of a total of
9 members divided into 2 classes, designated as
classes A and B.
‘‘(2) CLASS A DIRECTORS.—Class A shall con-
sist of 3 members elected in accordance with sub-
section (e) by the stock-holding banks without dis-
crimination on the basis of race, creed, color, sex, or
national origin who shall be representative of such
banks.
‘‘(3) CLASS B DIRECTORS.—Class B shall con-
sist of 6 members appointed in accordance with sub-
section (f) by the Board without discrimination on
the basis of race, creed, color, sex, or national origin
who shall represent the public and be representative
of the public.
‘‘(4) CHAIRPERSON.—The Board shall des-
ignate 1 of the class B members of any Federal re-
serve bank to serve as the chairperson of the board
of directors of such bank.
‘‘(5) INELIGIBILITY
OF
MEMBERS
OF
CON-
GRESS.—No Senator or Representative in Congress
shall be a member of the Board of Governors of the
Federal Reserve System or an officer or a director
of a Federal reserve bank.
‘‘(6) TERMS OF DIRECTORS.—
‘‘(A) IN GENERAL.—Each member of the
board of directors of a Federal reserve bank
shall be elected or appointed, as the case may
be, for a term of 3 years.
‘‘(B) INTERIM
APPOINTMENTS.—Any di-
rector elected or appointed to fill a vacancy oc-
curring before the expiration of the term for
which the director’s predecessor was elected or
appointed shall be elected or appointed only for
the remainder of such term.
‘‘(7) VACANCIES.—Any vacancy on the board of
directors of any Federal reserve bank shall be filled
in the manner in which the original selection was
made.
‘‘(e) NOMINATION AND ELECTION OF CLASS A DI-
RECTORS.—
‘‘(1) DESIGNATION OF VOTING BLOCS.—
‘‘(A) IN
GENERAL.—The Board of Gov-
ernors of the Federal Reserve System shall clas-
sify the member banks of the district of each
Federal reserve bank into 3 general groups,
designating each group by number.
‘‘(B) CRITERIA.—In classifying member
banks into groups pursuant to subparagraph
(A), the Board shall take such action as may be
reasonable to ensure that each group consists
as nearly as may be of banks of similar capital-
ization.
‘‘(2) NOMINATION PROCESS.—Subject to para-
graphs (3) and (4)—
‘‘(A) BANK NOMINATIONS.—Each member
bank shall be permitted to nominate to the
chairperson of the board of directors of the
Federal reserve bank of the district 1 candidate
for director of Class A.
‘‘(B) PREPARATION
OF
LISTS
OF
NOMI-
NEES.—The candidates nominated by the mem-
ber banks of each group shall be listed by the
chairperson of the board of directors of the
Federal reserve bank of the district, indicating
by whom nominated, and a copy of the list for
such group shall, within 15 days after the com-
pletion of the list, be furnished by the chair-
person to each member bank of the group.
‘‘(3) ELECTION
PROCESS.—Subject to para-
graph (4)—
‘‘(A) APPOINTMENT
OF
ELECTOR
FOR
EACH BANK.—Each member bank, by a resolu-
tion of the board or by an amendment to the
bank’s by-laws, shall authorize the bank’s presi-
dent, cashier, or some other officer to cast the
vote of the member bank in the elections of
class A directors.
‘‘(B) PREFERENTIAL BALLOT.—Before the
end of the 15-day period beginning on the date
of the receipt of the list of candidates in accord-
ance with paragraph (2)(B), the officer ap-
pointed by a member bank pursuant to sub-
paragraph (A) shall certify to the chairperson
of the board of directors of the Federal reserve
bank of the district the officer’s 1st, 2d, and
other choices for class A director from such list
upon a preferential ballot upon a form fur-
nished by the chairperson of the board of direc-
tors of the Federal reserve bank of the district
by making a cross opposite the name of such
1st, 2d, and other choices but shall not vote
more than 1 choice for any 1 candidate.
‘‘(C) COUNTING THE BALLOTS.—
‘‘(i) 1ST COLUMN WINNER.—Any can-
didate having a majority of all votes cast
in the column for 1st choice on the ballot
for any group shall be declared elected.
‘‘(ii) TAKING
2D
COLUMN
INTO
AC-
COUNT.—If no candidate has been declared
elected by any group under clause (i), the
candidate who has the highest number of
votes after taking into account the total
number of votes cast for each candidate in
the columns for 1st and 2d choice on the
ballot for such group by a majority of the
electors voting in such group shall be de-
clared elected.
‘‘(iii) TAKING OTHER CHOICES INTO
ACCOUNT.—If no candidate has been de-
clared elected by any group under clause
(i) or (ii), the candidate who has the high-
est number of votes after taking into ac-
count the total number of votes cast for
each candidate in the columns for 1st, 2d,
and other choices on the ballot for such
group shall be declared elected.
‘‘(4) RULES GOVERNING ELIGIBILITY OF DIREC-
TORS AND ELECTORS.—
‘‘(A) ELIGIBILITY OF DIRECTORS ON BASIS
OF GROUP.—No individual who is a director or
officer of a member bank shall be eligible to
serve as a Class A director unless nominated
and elected by banks which are members of the
same group as the member bank of which such
individual is an director or officer.
‘‘(B) SPECIAL
RULE
IN
CASE
OF
CAN-
DIDATE SERVING MORE THAN 1 BANK.—If any
individual is a director or officer of more than
1 member bank, subparagraph (A) shall be ap-
plied by taking into account only the member
bank (of which such individual is the director or
officer) which has the largest aggregate re-
sources of all of the banks of which such indi-
vidual is a director or officer.
‘‘(C) ELECTORS
FOR
HOLDING
COMPA-
NIES.—
‘‘(i) IN GENERAL.—If 2 or more mem-
ber banks in a Federal reserve district are
subsidiaries of the same bank holding com-
pany (as defined in section 2 of the Bank
Holding Company Act of 1956), only 1
member bank affiliate of such holding com-
pany shall be eligible to participate in the
nomination or election of class A directors
for such district under this subsection by
such member banks.
‘‘(ii) DESIGNATION OF ELIGIBLE PAR-
TICIPANT.—Any bank holding company
which has 2 or more member bank subsidi-
aries in a Federal reserve district shall des-
ignate 1 such bank as the eligible bank for
purposes of clause (i).
‘‘(iii) RULE
APPLICABLE
TO
BANK
WHICH IS A BANK HOLDING COMPANY.—A
member bank which is a bank holding
company (as defined in section 2 of the
Bank Holding Company Act of 1956) shall
be treated as a subsidiary of a bank hold-
ing company for purposes of determining
the number of member banks within a
bank holding company which are eligible to
participate in the nomination or election of
class A directors and the designation of the
bank pursuant to clauses (i) and (ii).
‘‘(D) INELIGIBILITY
OF
OFFICERS
AND
EMPLOYEES OF BANKS CONTROLLED BY A FOR-
EIGN GOVERNMENT.—
‘‘(i) IN GENERAL.—A director, officer,
employee, or controlling shareholder of—
‘‘(I) any foreign bank which is
controlled by the government of a for-
eign country; or
‘‘(II) any branch or agency of, or
company controlled by, any such for-
eign bank,
shall not be eligible for appointment or
election to the board of directors of any
Federal reserve bank.
‘‘(ii) PROHIBITION ON PARTICIPATION
IN NOMINATION AND ELECTION OF CLASS
A DIRECTORS.—A foreign bank which is
controlled by the government of a foreign
country and a branch or agency of, or
company controlled by, any such foreign
bank may not participate in the nomina-
tion or election of class A directors.
‘‘(iii) 
DETERMINATION
OF
CON-
TROL.—Any foreign government which,
under section 2 of the Bank Holding Com-
pany Act of 1956, would be a bank holding
company with respect to a foreign bank
if—
‘‘(I) such government were a
company (as defined in such Act)
which is subject to the Act; and
‘‘(II) the foreign bank were a
bank within the meaning of the Act,
shall be deemed to control the foreign bank
for purposes of this section.
‘‘(iv) APPLICABILITY
OF
SECTION
OF THE BANK HOLDING COMPANY ACT.—
Section 2 of the Bank Holding Company
Act of 1956 shall apply to—
‘‘(I) any determination by the
Board, pursuant to clause (iii), of the
applicability of this subparagraph to
any foreign bank; and
‘‘(II) the procedures for making
and reviewing any such determination.
‘‘(f) PROVISIONS RELATING
TO CLASS B DIREC-
TORS.—
‘‘(1) DIVERSIFIED
REPRESENTATION.—In ap-
pointing class B members of the board of directors
of each Federal reserve bank, the Board shall in-
clude representatives of agriculture, small business,
labor, consumer and community organizations,
women, and minorities.
‘‘(2) ELIGIBILITY
PROVISION.—No individual
may be appointed as the director of a Federal re-
serve bank who—
‘‘(A) has resided in such bank’s district for
less than 2 years; or
‘‘(B) has been a director, officer, employee,
or controlling shareholder of a depository insti-
tution (as defined in section 19(b)(1)(A)) or
any affiliate of a depository institution at any
time during the preceding 2-year period.
‘‘(3) INELIGIBILITY
OF
CLASS
B
DIRECTORS
FOR OTHER OFFICES.—No class B director may be
a director, officer, employee, or shareholder of any
depository 
institution 
(as 
defined 
in 
section
19(b)(1)(A)) or depository institution holding com-