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R O B E R T V. F L E M I N G PRESIDENT ANO CHAIRMAN OF T H E BOARD Of afesiftitgtott.ìa.c POSTAL ZONE CHARLES C.GLOVER, JR. V I C E CHAIRMAN O F T H E BOARD 13 June 26, 1947 IN R E P L Y I N G P L E A S E Q U O T E I N I T I A L S RVFJRS The Honorable Marriner S* Eccles Chairman, Board of Governors Federal Reserve System Washington, D« C . Dear Marriner: I am enclosing a copy of the letter I have addressed to Senator Taft -which I hope will be helpful. As I advised Miss Egbert this morning, when I tried to reach Senator Taft, I learned he was out of town but would return this afternoon» Hence, the letter is the only thing I can do. Enclosure PR 407 Copy of letter sent by The Riggs National Bank, Washington 13, D . C., to below named addressee Jtoe 20, 1947 KVFiRg The Honorable Robert A* Taft Senate Offt&m Building Washington 25, D* C# Dear Bobf 1 learned last evening that Senate Bill 403 which lias been reported out favorably by the Banking Ciarremy CCRimittee of the Senate la probably coming up for vote in the Senate today« I triad to reach you this morning but Mr a« Shattuck advised ma you are out of tha oity but will return some time this afternoon* Hence* I am taking the libarty of writing to you« As you ara undoubtedly aware* this Bill has two sections« The first ona repeals Section 13B of the Fadaral Reeerve Aet which eliminates tha power of tha Fadaral Reserve Banks to maks diraat loans out of #139*000*000 whioh was sat asida from the gold increment which enabled tha Fadaral Reserve Banks to saake thasa diraat loans to industrial and commercial enterprises* Tha second seotion of tha Bill substitutes for the direct landing authority a provision whioh would enable Federal Re~ serve Banks -to guarantee in part loans by ohartarad banks up to ninaty par cent* using tha surplus of the Fadaral Reeerve B i J e to protect tha aafs guarantee* Also* undar regulations whioh will ba prescribed by tha Board of Governore* a service oharga would ba sat up whara guaranteee wara asked for, whioh ara estimated would be of sufficient amount to offset any losses whioh might occur* this Bill was w r y earefully considered by tha Fadaral Advisory Council* araatad under the Federal Reserve Act* at ita meeting in March* 1947* and the Counoil reported to the Board of Governor* that it favored this Bill with two modifications* First* it should be restrioted in its n application not to "any financing Institution" but to chartered banking institutions* * Second* guaranteee and ooimdtments should be made only after a showing that the loans could not be handled through normal bank* ing ohannela* These amen&aents were approved fcy the Board of Governors and are now incorporated in the Bill S~408# The Council felt that if the Congress believed guarantees should be continued it was sounder for it to be handled ty the Federal Reserve Banka* under rules and regulations of tha Beard of Governors of tha Federal Reserve System* which is a paimanant Institution* rather than the RFC* although* of course* the Council recognised that the RFC would probably be extended with soma limitations for a limited period of time« PR 407 Copy of letter sent by The Riggs National Bank, Washington 13, D . C., to below named addressee The Honorable Robert A . faft • 2 - June 26, 1947 I an now writing to say that we on the Federal Advisory Council and I might add that I represant the Fifth Federal Reserve District - feel that the Federal Reserve Banks will handle these loans where applied for through chartered banking institutions in a safe and sound manner, and I am hopeful that «hen this Bill eon® a up for a vote it will reoeive your support. Yours very sinoerely,