The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
i » ‘' 'l iy'u 7$. December 8, 1914# The members of the Federal Reserve Board, sitting as a cojn~ mittee this morning, listened to a discussion presented-by representatives of Trust Companies* Savings Banks and State Banks, members of American Bankers Association, with reference to the conditions under which insti tutions holding State charters may be permitted to enter the Federal Reserve System# ' Those present included Messrs. Hamlin, Williams, Harding, Warburg, Delano and Miller of the Federal Reserve Board, and the following bankers: W. H. McCarter, President, Fidelity Trust Co., Newark, N. J. John W. Platten, President, United States Mortgage & Trust.Co., New York City, Oliver C. Fuller, President, Wisconsin Trust Co., Milwaukee,Wis* A, A. Jackson, Vice-President, Cirard Trust Co., Philadelphia,Pa# John H. MdsOn, Vice-President, Commercial Trust C o P h i l a d e l p h i a , Pennsylvania, B. F. Saul, President, Home Savings Bank, Washington, D. C. Geo. E. Lawson, Vice-President, peoples State Bank, Detroit, Mich. A Statement embracing the views of the bankers was presented to the Board, as follows: O • Wi Dec^j&ber 8* 191^* STATEMENT FOR THE PRESS * «— i n ■ '» ii iiiiwiiniii> iin « i>i«iwi i ...... . i WPW" >1.1111 1 m m mm The representatives of the banking institutions who are present to-day desire to express to your associates of the Federal Reserve Board their appreciation of the courtesy extended to them in permitting them to appear before you and of the efforts which have been-made by your Board to meet the convenience of our committee in the postponement of the meet ing from December 2nd until to-day. While we are appreciative of your efforts in this direction, we nevertheless feel that sufficient time has not elapsed since the appointment of our committee by the president of the American Bankers Association, said committee being appointed only on November 9, to have given proper and full consideration to the weighty problems involved- in this subject and to have arrived at any conclusion in the settlement of the problems. The resolution passed by the American Bankers Asso ciation, and under which this committee is acting, had for its object the suggestion of such change or- changes in the Federal Reserve Act as would permit state chartered institu tions to enter the System and, as before stated and for the reasons given, the committee has been unable to offer any <>CJ L -2- suggestions to the purpose for which they were appointed, ,and if, in offering sqme suggestions as to the rules and regula tions to be promulgated by the Federal Reserve Board, they have strayed afield, from the purpose of their appointment, they would plead their desire of full co-operation with the Govern ment in the furthering of the banking interests of the country by doing' everything, in their power tc assist the Federal Reserve Board in the determination of the problems with which they are now confronted. While the Trust Companies have given a great deal of consideration involving'the subject, frankly we are compelled to admit, for’ the reasons outlined in the beginning of my remarks, viz: the short time ve have had between the date of /t our appointment and the date of this meeting, that we have been unable to arrive at any conclusion among ourselves by which we could make any suggestions to you looking toward such amendments as might be made to the Act which would encourage / Trust Companies to enter the System. Since, however, it is the intention of the Federal Reserve Board to promulgate certain rules and regulations, it may not be inappropriate to bring to your attention one or two thoughts which have occurred to us and which we would like to suggest to you for your consideration. • -3- fc POWSRS AND RESTRICTIONS. Fourth. banks and trust companies may con tinue to exercise those banking or trust company powers granted them by their state charters when suck powers are not in conflict with the limitations imposed by the Federal Reserve Act or the regulations of the Board. No power however granted by a state charter which is not customarily exercised by a bank or trust company and which is not incident to the business of a bank or trust company shall be exercised by any associa tion (incorporated under the laws of any State) which becomes a member of the Federal Reserve Systenj. The Reserve Board reserves to itself the determination as to whether these unusual powers are admissible and consistent, The applying bank must file with its application, as an exhibit, its statement showing powers granted to it by its stats charter and those powers which it desires and intends to exercise." It occurs- to u 3 that it may be difficult to determine what are the powers usually exercised by trust companies. Their powers are enumerated in the several state statutes under which they are incorporated. There is considerable difference between the pov/ers- granted such companies by the different state laws. In addition to this some of the trust companies are operating under private charters and exercising net only the powers given under such charters, but also the powers given under the general statutes. Under these conations an applying trust company will be confronted with the necessity of immediately determining what powers it would like tc exercise in! the future and possibly of being compelled to discard some of the powe*s granted by its charter because the Federal Reserve Bo^rd, which is a con tinuing .power, might be of the opinion that scgie of these powers not customarily exercised were inconsistent with the Federal Reserve System and therefore inadmissible. Our disposition being in every respect that of sup porting the Federal Reserve Board and the recent banking legis lation we had thought possibly, after an opportunity had been afforded to the trust companies of watching the operations of the Act as applied to National Banks, that later on any state' chartered institution would be able to enter the System and, after a fair trial of the same, if it so desired, might retire therefrom. As the law now reads this cannot be done. The Federal Reserve Act opens the door- for voluntary entcyy of state institutions, but does not permit voluntary exit except through liquidation.. Sec. 10. "The Federal Reserve Board will from time to time make such amendments and adopt and publish such addition al regulations and by-laws as may be deemed necessary and advis able." This regulation seems to us to contain elements of great danger to state chartered institutions entering the System and to impose hardships upon them "<hich are .not imposed upon national banks, for the duties, the privileges, and the limita tions as applied to national banks in the Federal Reserve Act are defined and prescribed, while under this regulation a future Federal Reserve Board may prescribe regulations for the conduct and management of state chartered institutions which may be difficult to comply with, and the above mentioned class of institutions would have no remedy or power to escape their enforcement except again by liquidation. In offering these comments,.we trust that you will realize that, for the reasons I have- already stated, they merely represent the personal views of the members of the legislation committee of the Trust Company Section.