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Form

P.

R.

511(a)

TO__________________________
FROM_________________________
REMARKS:

This will be taken up at a future
meeting, possibly next Tuesday or
Thursday.

GOVERNOR ECCLES' OFFICE



0

CERTAIN QUESTIONS REGARDING 3/12/51 DRAFT
______ OF LOAN EXPANSION BILL___________
1.

The draft contains a termination date of June 30, 1956,

Should some such termination date be retained, or should the measure be
suggested as permanent legislation?
2.
draft does —

Should the bill permit nonmember banks —

as the present

to carry the required balance with other insured banks?

Should the privilege also be given to member banks?
(The correspondent balances of almost all banks are so large —
even after deducting those required by State law —

that, if such balances

could be counted to meet the new requirements, the bill would have virtually
no effect.

The privilege might be limited to balances that exceed some

figure representing "normal1 balances, but this would add complexity.)
1
3.

The draft provides that the extra reserve balances that can

be required cannot exceed 50$ of the increase in the bank’ loans (and nons
Government securities) above the base.

Should the limit be stated in that

way as a rather high percentage of the increase, or should it be stated instead
as a smaller percentage, say 10$, of total assets?
4.

3/12/51




Should the bill authorize examination of nonmember banks?