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BOARD OF GOVERNORS

FEDERAL RESERVE SYSTEM
WASHINGTON

OFFICE OF THE CHAIRMAN

May 16 1 1944

Honorable II* S. Eccles,
Hotel Ben Lomond,
Ogden, Utah*
Dear Karriner:
I would have liked to have a verbatim report of the meeting with the Federal Advisory Council yesterday. They had evidently worked up some heat in their sessions on Sunday, due to the fact
that they were not informed as to the holding company bill and the
13b bill which they found (evidently via the grapevine) had been prepared and would likely be introduced shortly* As Matt was in New
York attending a meeting at the urgent request of Nelson Rockefeller,
the Board had three members present - John, Ernest and Spike* John,
being senior and having a clear road, did most of the talking for the
Board. He did a pretty good job of removing the Council's "peeve"
as regards the holding company bill* On the other hand, he gave the
impression that the 15b proposal, which he admitted was approved by
a majority of the Board, might well have been discussed fully with
the Council since it is of direct interest to the banking system
generally, I think the Council had expected the bill to be quite
different from what it was and, after being furnished with a copy of
the bill and the supporting statement and having it read by Walter
Lichtenstein, they seemed much less concerned. I was advised by Mr*
Traphagen late yesterday afternoon that the Council had passed a
resolution approving the 13b proposal. I think they were much impressed by the fact that the bill actually takes away from the Federal Reserve Banks power to make loans directly in competition with
banks. On the other hand, they were somewhat suspicious of the fact
that the bill did not limit the percentage of guarantee, even though
the statement explained that such guarantees would not exceed 90 per
cent*
I was sorry you were not there but, on the whole, not very
much damage was done.




Sincerely,