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(a) Advances to and
discounts for a depository institution. (1) A Federal Reserve Bank may
lend to a depository institution either by making an advance secured
by acceptable collateral under Sec. 201.4 of this part or by
discounting certain types of paper. A Federal Reserve Bank generally
extends credit by making an advance.
(2) An advance to a depository institution must be secured to the
satisfaction of the Federal Reserve Bank that makes the advance.
Satisfactory collateral generally includes United States government
and federal-agency securities, and, if of acceptable quality, mortgage
notes covering one-to four-family residences, state and local
government securities, and business, consumer, and other customer
notes.
(3) If a Federal Reserve Bank concludes that a discount would
meet the needs of a depository institution or an institution described
in section 13A of the Federal Reserve Act (12 U.S.C. 349) more
effectively, the Reserve Bank may discount any paper indorsed by the
institution, provided the paper meets the requirements specified in
the Federal Reserve Act.
(b) No obligation to make advances or discounts. A Federal
Reserve Bank shall have no obligation to make, increase, renew, or
extend any advance or discount to any depository institution.
(c) Information requirements. (1) Before extending credit to a
depository institution, a Federal Reserve Bank should determine if the
institution is an undercapitalized insured depository institution or a
critically undercapitalized insured depository institution and, if so,
follow the lending procedures specified in Sec. 201.5.
(2) Each Federal Reserve Bank shall require any information it
believes appropriate or desirable to ensure that assets tendered as
collateral for advances or for discount are acceptable and that the
borrower uses the credit provided in a manner consistent with this
part.
(3) Each Federal Reserve Bank shall:
(i) Keep itself informed of the general character and amount of
the loans and investments of a depository institution as provided in
section 4(8) of the Federal Reserve Act (12 U.S.C. 301); and
(ii) Consider such information in determining whether to extend
credit.
(d) Indirect credit for others. Except for depository
institutions that receive primary credit as described in Sec.
201.4(a), no depository institution shall act as the medium or agent
of another depository institution in receiving Federal Reserve credit
except with the permission of the Federal Reserve Bank extending
credit.
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