To amend the Federal Reserve Act to adjust the circumstances under which Federal reserve bank stock is callable, and for other purposes.

SECTION 1. CALLABLE STOCK OF FEDERAL RESERVE BANKS.

    (a) In General.--The Federal Reserve Act (12 U.S.C. 221 et seq.) is 
amended--
            (1) in the third undesignated paragraph of section 2--
                    (A) by striking ``Under regulations'' and inserting 
                the following:
            ``(3) Subscription to stock.--
                    ``(A) In general.--Under regulations'';
                    (B) by striking ``one-sixth of the subscription to 
                be payable on call of the organization committee or of 
                the Board of Governors of the Federal Reserve System, 
                one-sixth within three months and one-sixth within six 
                months thereafter, and the remainder of the 
                subscription, or any part thereof, shall be subject to 
                call when deemed necessary by the Board of Governors of 
                the Federal Reserve System'' and inserting ``one-
                twelfth of the subscription to be paid at such time as 
                the Board of Governors of the Federal Reserve System 
                directs (or, in the case of a member bank with total 
                consolidated assets of $10,000,000,000 or less, as 
                provided under subparagraph (B)) and the remainder of 
                the subscription, or any part thereof, shall be subject 
                to call by the Board of Governors of the Federal 
                Reserve System in the manner described under 
                subparagraph (C)''; and
                    (C) by adding at the end the following:
                    ``(B) Treatment of member banks with 
                $10,000,000,000 or less in assets.--
                            ``(i) In general.--With respect to the 
                        payment of subscription under subparagraph (A) 
                        or section 5, a member bank with total 
                        consolidated assets of $10,000,000,000 or less 
                        may elect to pay one-half of the subscription 
                        in lieu of the one-twelfth amount specified 
                        under such subparagraph (A) or section 5.
                            ``(ii) Timing of election.--The election 
                        described under clause (i)--
                                    ``(I) may only be made once; and
                                    ``(II) shall be made before the end 
                                of the 1-year period beginning on the 
                                date the entity becomes a member bank.
                    ``(C) Subscription subject to call.--
                            ``(i) In general.--The Board of Governors 
                        of the Federal Reserve System may only call the 
                        subscription of a member bank under 
                        subparagraph (A) or section 5 if the aggregate 
                        amount of surplus funds of the Federal reserve 
                        banks is exhausted.
                            ``(ii) Return of called amounts.--With 
                        respect to amounts called under clause (i), a 
                        member bank may elect to have such amounts 
                        returned to the member bank if the aggregate 
                        amount of surplus funds of the Federal reserve 
                        banks is $1,000,000,000 or more.
                    ``(D) Inflation adjustment.--The Board of Governors 
                of the Federal Reserve System shall annually adjust the 
                dollar amounts of total consolidated assets specified 
                under subparagraphs (A) and (B)(i) of this paragraph 
                and under section 5 to reflect the change in the Gross 
                Domestic Product Price Index, published by the Bureau 
                of Economic Analysis.''; and
            (2) in section 5, by striking ``one-half of said 
        subscription to be paid in the manner hereinbefore provided for 
        original subscription, and one-half subject to call of the 
        Board of Governors of the Federal Reserve System'' and 
        inserting ``one-twelfth of said subscription to be paid in the 
        manner hereinbefore provided for original subscription (or, in 
        the case of a member bank with total consolidated assets of 
        $10,000,000,000 or less, as provided under section 2(3)(B)) and 
        the remainder of the subscription, or any part thereof, subject 
        to call of the Board of Governors of the Federal Reserve System 
        in the manner described under section 2(3)(C)''.
    (b) Transition Provisions.--
            (1) Election by member banks with $10,000,000,000 or less 
        in assets.--Notwithstanding section 2(3)(B)(ii) of the Federal 
        Reserve Act, as added by subsection (a), a member bank with 
        total consolidated assets of $10,000,000,000 or less shall make 
        the election described under section 2(3)(B) of such Act before 
        the end of the 1-year period beginning on the date of the 
        enactment of this Act.
            (2) Return of payments.--With respect to an entity that is 
        a member bank on the date of the enactment of this Act, the 
        Board of Governors of the Federal Reserve System shall direct 
        the appropriate Federal reserve bank to return to the member 
        bank an amount equal to 2.5 percent of the paid-up capital 
        stock and surplus of the member bank if, on the date of the 
        enactment of this Act--
                    (A) the member bank has total consolidated assets 
                of more than $10,000,000,000; or
                    (B) the member bank has total consolidated assets 
                of $10,000,000,000 or less and elects, pursuant to 
                paragraph (1), to pay one-twelfth of the subscription 
                amount described under section 2(3) of the Federal 
                Reserve Act instead of one-half.
            (3) Member bank defined.--For purposes of this subsection, 
        the term ``member bank'' has the meaning given that term under 
        section 1 of the Federal Reserve Act.

Summary: This bill amends the Federal Reserve Act to revise the formula for subscription of national banking associations to the stock of their regional Federal Reserve Bank. Instead of one-sixth of an association's subscription to be payable on call by the Board of Governors of the Federal Reserve System, a member bank shall pay one-twelfth of its subscription when the Federal Reserve Board directs, and the remainder subject to the call of the Board. If a member bank has total consolidated assets of $10 billion or less, however, it may elect to pay one-half of its subscription instead of one-twelfth, but only once, and only within the first year after it becomes a member bank. The bill makes similar revisions to the formula for an increase in a member bank's capital stock or surplus. The Board may only call the subscription of a member bank if the aggregate amount of surplus funds of the Federal Reserve Banks is exhausted. A member bank may elect to have called amounts returned to it if the aggregate amount of surplus funds of the Federal Reserve Banks is $1 billion or more. The Board shall make annually inflation adjustments to the dollar amounts of total consolidated assets specified in the Act and in this bill to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis of the Department of Commerce.