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X-6279 tf")~ March 30, 1929. Dear Mr. Strater: In accordance with your letter a day or two ago requesting that you be advised in advanc~.,if possible, of any added topics which the Board may have to su.gg~st :tor discussion at the conference beginning Monday, the following is herevrith submitted: "Should $elf-instti"anoe reserves be carried by the Federal reset've banks an.i · if so when and for what 1?UrPoses should they be used and what effect if any should they have on the cost of. fidelity or other insurance ca.rHed by the banks," At the 'Present time, five of the Fedez'~.=tl reserve banks are maintaining self-insurance reserves as follows: New York ............................. $1,443,870. Cleve land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,017. Richmond............................. 300,000. St. Louis............................ 250,000. Minne~olis •••..•..• ·:............... 250,000. The New York and Cleveland banks established the reserves for the purpose of ultimately carrying a fairly substantial amount of their own fidelity insurance, thus reducing materially their annue.l insurance premiums. The New York bank is carrying less fidelity insurance than it would carry if it were not for its !!Jelf-insurance reserve, and available information indicates that the same is probably true of Cleveland. The Federal Reserve Batik of Richmond holds its reserve primarily as a protection against losses not covered, or only partly covered by insurance which it carries. It is understood that the St. Louis fund, which was established the first of the year, h intended for the same use. Very truly yours, (signed) Mr. H. F. Strater, Secretary, Governors' Conference. E. M. McClelland, Assistant Secretary. - ....,, (_... dt-j()