Chap. 60.—An ACT to amend and re-enact Section 50, as heretofore amended,
of an act entitled “An act to revise, collate and codify into one act the
general statutes of the Commonwealth relating to banks and banking, which
act shall constitute and be designated and cited as the Virginia Banking
Act, and to repeal all Code sections and all acts and parts of acts incon-
sistent therewith. and to provide penalties for the violations thereof”, ap-
proved March 27, 1928, relating to preferences and pledges, and the giving
of security, by banks and trust companies, as defined in the said section.

[H B 172]

Approved March 4, 1938

1. Be it enacted by the General Assembly of Virginia, That sec-
tion fiftv, as heretofore amended, of an act entitled an act to revise,
collate, and codify into one act the general statutes of the Common-
wealth relating to banks and banking, which act shall constitute and
be designated and cited as the Virginia Banking Act, and to repeal
all Code sections and all acts and parts of acts inconsistent therewith,
and to provide penalties for the violations thereof, approved March
twenty-seventh, nineteen hundred and twenty-eight, be amended and
re-enacted so as to read as follows:

Section 50. No bank or trust company to give preference to
depositor or creditor by pledging assets; exceptions; limitations —No
bank or trust company shall give preference to any depositor or
creditor by pledging the assets of such bank or trust company, except
as otherwise authorized in this section; provided, that any bank or
trust company may deposit securities for the purpose of securing de-
posits of the United States government, and its agencies, and the
Commonwealth of Virginia, its agencies, and its political subdivisions,
and for the purpose of securing sureties on surety bonds furnished
to secure such deposits, or may, in lieu of depositing such securities
to secure deposits of political subdivisions of the Commonwealth, by
its board of directors, adopt a resolution before such public funds
are deposited therein, to the effect that, in the event of the insolvency
or failure of such bank or trust company, such public funds there-
after deposited therein shall, in the distribution of the assets of such
bank or trust company, be paid in full before any other depositors
shall be paid deposits thereafter made therein, and the adoption of
such resolution shall be deemed to constitute a binding obligation on
such bank or trust company; and further provided, that any bank or
trust company is authorized:

First, for any temporary purpose to pledge its assets as security
for amounts of borrowed money which shall not, without the approval
of the State Corporation Commission given in advance in writing,
exceed in the aggregate the amount of its capital and surplus ac-
tually paid in or earned, and remaining undiminished by losses or
otherwise ; provided that the amount of assets pledged for the security
of a loan shall not without such approval, so given, exceed one hundred
and fifty per centum of the amount borrowed, provided also, that no
excess loan made to any such bank or trust company shall be invalid
or illegal as to the lender, even though made without the consent of
the State Corporation Commission; provided, also, that rediscounting
with or without guarantee or indorsement of notes, drafts, bills of
exchange or loans is hereby authorized and shall not be limited by
the terms of this act, and shall not be considered as borrowed money
within the meaning of this section.

Second. To borrow from a Federal Reserve Bank and to redis-
count with and sell to a Federal Reserve Bank any and all notes,
drafts, bills of exchange, acceptances and other securities, and to give
security for all money so borrowed and for all liabilities incurred by
the discount of such notes, drafts, bills of exchange and other securities
without restriction in like manner and to the same-extent as national
banks may lawfully do under the acts of Congress and the regulations
of the Board of Governors of the Federal Reserve System.