12 U.S.C. § 83

Loans by bank on its own stock

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(a) General prohibition

No national bank shall make any loan or discount on the security of the shares of its own capital stock.

(b) Exclusion

For purposes of this section, a national bank shall not be deemed to be making a loan or discount on the security of the shares of its own capital stock if it acquires the stock to prevent loss upon a debt previously contracted for in good faith.

(R.S. § 5201; Pub. L. 106–569, title XII, § 1207(a), Dec. 27, 2000, 114 Stat. 3034.)Editorial NotesCodification

R.S. § 5201 derived from act June 3, 1864, ch. 106, § 35, 13 Stat. 110, which was the National Bank Act. See section 38 of this title.

Amendments

2000—Pub. L. 106–569 amended section catchline and text generally. Prior to amendment, text read as follows: “No association shall make any loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall, within six months from the time of its purchase, be sold or disposed of at public or private sale; or, in default thereof, a receiver may be appointed to close up the business of the association, according to section 192 of this title.”

Notes of Decisions

Cited in 41 cases (8 in the last 5 years), 1932–2026 · leading case: Trazell v. Wilmers

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Trazell v. Wilmers (2013) dcd · cites it 9× “In his amended complaint, plaintiff alleges that defendants repossessed his vehicle on June 19, 2012, in violation of: • the Treaty of Watertown of 1776; • the Fourth and Fifth Amendments to the United States Constitution; • 12 U.S.C. § 83 ; • 15 U.S.C. § 1681S-2; • 18 U.”

Deitrick v. Greaney (1940) scotus · cites it 4× “§ 5201, 12 U.S.C. § 83 , which declares that "no association shall .”

Bloomington National Bank v. Telfer (1988) insd · cites it 11× “The Telfer group argues that the Bank’s purchase of the stock of minority shareholders violated 12 U.S.C. § 83 , which provides in pertinent part: No [national banking] association shall make any loan or discount on the security of the shares of its own capital stock, nor be the…”

Atherton v. Anderson (1938) ca6 · cites it 3× “, 12 U.S.C.A. § 83 . We reversed that portion of the decree.”

Michelsen v. Penney (1943) ca2 · cites it 2× “Significant on this point is 12 U.S.C.A. § 83 , which permits a bank to acquire its own stock where "necessary to prevent loss upon a debt previously contracted in good faith," provided a resale is made within six months.”

Riedel v. NCNB Nat. Bank of Florida, Inc. (1991) fladistctapp · cites it 3× “Furthermore, appellant has not alleged a cognizable cause of action for violation of 12 U.S.C. § 83 . See Pan American Bank of Tampa v.”

Bankr. L. Rep. P 75,292 in Re Lloyd C. March, Jr., Debtor. Coastal Virginia Bank v. Lloyd C. March, Jr., Unsecured Credi (1993) ca4 · cites it 3× “Those statutes each provide an exception where the loan has already first been made, and, after some lapse of time, steps are taken, including the acquisition of stock of the lending bank to improve the loan’s collectibility. The language in § 6.1-60.1 reads "except to protect…”

United States v. Leonard W. Evans (1994) ca10 “12 U.S.C. § 83 (1988). The loans in this case were not secured by bank stock, but by other collateral.”

Federal Deposit Insurance Corporation, Etc., and v. Santino D. Meo, And (1974) ca9 “Failure at an early date to avoid the note on grounds of the loan’s illegality, appellee argues, estops Meo from raising the defense of failure of consideration.”

Ned McDaniel Mary E. McDaniel and Robert A. Collier v. R. D. Painter, Dale Painter and Rhodes Danehower (1969) ca10 “Appellants urge that a fiduciary relationship existed between majority and minority stockholders of the banking corporation, which obligation was breached by the act of selling and purchasing, in five particulars: (1) by unlawfully financing the stock purchase with a pledge of…”

Atherton v. Anderson (1936) ca6 “( 12 U.S.C.A. § 83 ). It provides that “No association shall make any loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt…”

Dorsey v. Reconstruction Finance Corp. (1952) ca7 · cites it 2× “First, plaintiff claims that $11,000 of the $85,000 note was unenforceable because it represented a loan to the plaintiff by the bank secured by shares of the bank’s capital stock in violation of 12 U.S.C.A. § 83 , which provides that a national bank shall not make a loan on the…”

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