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Form P. R. 131 BOARD OF GOVERNORS OPTHC FEDERAL RESERVE SYSTEM Office Correspondence o t h e r TO gmm ( T h e Files) CIaA . M r . w y a t t * General Counsel, and Board Members Date January 2S,194Qt Bank o f America H . T . & 8 . A . ~ Conversion i n t o i n s u r e d nonmember S t a t e Judge B i r d z e l l , General Counsel f o r t h e F e d e r a l Deposit I n s u r ance C o r p o r a t i o n , c a l l e d me on t h e phone t h i s morning and s t a t e d t h a t M r . Charles Vf. C o l l i n s had i n q u i r e d of him w h e t h e r , i n t h e event t h e Bank of i m e r i c a M . T . & S . A . converts i n t o a s t a t e nonmember bank and d e s i r e s t o r e t a i n i t s deposit i n s u r a n c e , i t would be necessary f o r t h e S t a t e bank t o a p p l y f o r d e p o s i t i n s u r a n c e . Judge B i r d z e l l s a i d t h a t he had answered the q u e s t i o n v e r b a l l y i n t h e a f f i r m a t i v e and t h a t he had no doubt as t o t h e c o r r e c t n e s s o f t h e answer® Judge B i r d z e l l a l s o went on t o say t h a t he understood t h a t C o l l i n s had i n q u i r e d o f me w h e t h e r , i n t h e event t h e bank converted i n t o a S t a t e bank which d e s i r e d t o be a member o f t h e F e d e r a l Reserve System, i t would be necessary f o r t h e S t a t e bank t o f i l e an a p p l i c a t i o n f o r membership and t h a t I had answered t h i s q u e s t i o n i n t h e a f f i r m a t i v e . Judge B i r d z e l l s a i d t h a t he thought my answer was c l e a r l y c o r r e c t and t h a t he was g l a d t h a t we were i n a c cord as t o t h e underlying p r i n c i p l e s o f law i n v o l v e d . Judge B i r d * e l l a l s o s t a t e d t h a t i n response t o an i n q u i r y from ^ r . C o l l i n s he had advised him t h a t , i f t h e n a t i o n a l bank c o n v e r t e d i n t o a S t a t e bank which became a member o f t h e F e d e r a l Reserve ^ysteayfcfeacb i t s d e p o s i t s would be a u t o m a t i c a l l y i n s u r e d w i t h o u t any a c t i o n on t h e p a r t o f t h e F.D.I.C* Judge ^ i r d z e l l then i n q u i r e d whether I had g i v e n Collins a w r i t t e n o p i n i o n on t h e q u e s t i o n and I t o l d him t h a t I had n o t . I e x p l a i n e d that C o l l i n s had m e r e l y c a l l e d me on t h e telephone and i n q u i r e d as t o what i s t h e ^oard*s e s t a b l i s h e d p o s i t i o n on t h a t s u b j e c t and t h a t I had t o l d h i m , basing my r e p l y upon a r u l i n g which t h e Board had made i n 1923 and from which i t has never d e p a r t e d . I t h e n explained t h a t i t was t h e b o a r d ' s p r a c t i c e not t o give a r u l i n g i n w r i t i n g except i n response t o a w r i t t e n i n q u i r y requesting a formal r u l i n g . Judge B i r d z e l l r e p l i e d t h a t he had been c o n s i d e r i n g a b i l i t y of g i v i n g C o l l i n s a w r i t t e n o p i n i o n on t h d s u b j e c t thought our p r a c t i c e was a good one and d i d not t h i n k he would C o l l i n s a w r i t t e n o p i n i o n unless he r e c e i v e d a w r i t t e n request which he has not y e t done* the advisbut t h a t he give Mr. from h i m , During t h e course o f t h e d i s c u s s i o n , Judge B i r d z e l l s a i d t h a t he understood t h a t M r . F e r r a r i ' s o p i n i o n t o t h e e f f e c t t h a t t h e bank could convert i n t o a S t a t e bank and r e t a i n i t s membership i n t h e F e d e r a l Reserve System and i t s d e p o s i t insurance w i t h o u t any approval or o t h e r a c t i o n by t h e Board or t h e F . D . I . C . was based upon a Michigan d e c i s i o n which Judge B i r d z e l l had r e a d , and t h a t he f e l t t h a t t h e Michigan d e c i s i o n had no r e a l b e a r i n g on t h e q u e s t i o n * / ^ ^ ^ a i t e r Wyatt, General c o u n s e l .
@FedFRASER