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FEDERAL RESERVE BOARD * WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD B-977. SQBJICft . Sank Sxaftination Function Deer Sirs It has recently been suggested by one of the federal Reserve banks that the expenses of the Bank Sxamination Function as shown la the Functional expense reports, Fora 5, be divided so as to show separately the cost incident to the examination of member banks and their affiliates and of State banks (including affiliated organizations) applying for membership, and the cost of other work performed in the Examination departments of the Federal Reserve banks, exclusive of administrative costs. Accordingly, we have prepared, for consideration, the attached statement showing how the suggested new set-up might be incorporated in the manual of instructions governing the preparation of functional expense reports. It will be noted from the statement that four units are provided as follows; 1, Administration 2, Examinations 3* Field Investigations 4 e Analyst* and Review 442 - 2 At present, all expenses of the Bank Examination function are included, as you know, in the one expense unit "Bank Examination11. It will "be appreciated if you will "be good enough to go over the attached statement and advise us whether in your opinion it would be desirable to subdivide the expenses of the Bank Examination function along the lines suggested and, if so, whether the proposed set-up meets with your approval. We would also be glad to have any specific suggestions that you may care to make regarding the enumerated operations of, and expense items chargeable to, each of the four proposed units of this function. Very truly yours E. L. Smead, Chief, Division of Bank Operations. TO ALL FEDERAL RESERVE AGENTS* (Effective Jan, 1, 193*0 67 443 Symbol E - BANK EXAMINATION 1. ADMINISTRATION Operations Includes salaries of officers and their stenographers assigned to the general administration of this function and any other expenses incidental thereto. Salaries of examiners, department heads, division chiefs, etc., other than officers, should be allocated entirely to expense units other than Administration, Expense Accounts (Shown on Porn E) a. Salaries - officers b. Salaries - employees c. Traveling expenses Includes expenses incurred in connection with distinctly functional matters which cannot be charged to a particular unit under this function. Does not include traveling expenses of officers charged to this function when attending conventions, grout) meetings, conferences , or committee meetings where general procedure or policy of the hank is affected, even though it "be for consideration of matters pertaining to this function, d. Printing and stationery and other supplies Includes hank circulars affecting this function e. Telephone and telegraph Distributed to this unit from Telephone and Telegraph units f. All other 2. EXAMINATIONS Operations Examinations or credit investigations of: Member banks Affiliates of member banks State banks (including affiliated organizations) applying for membership All other work incident to examinations or credit investigations of member banks, State banks applying for membership, and affiliated organizations. (St. 6541) (Effective Jan. 1, 193^) 6ja Symbol B - BAKE EXAMINATION (CONT'D) 2. EXAMINATIONS (Cont'd) Expense Accounts (Shown on Form S) a. Salaries - officers b. Salaries - employees c. Traveling expenses Includes all traveling expenses incurred by officers and employees in connection with the examination work outlined above. d. Printing and stationery and other supplies e. Telephone and telegraph Distributed to this unit from Telephone and Telegraph units f. All other DEDUCT - EXPENSES CHARGED AGAIITST THE INSTITUTIONS EXAMINED g. Salaries h. Traveling expenses Amount of salaries and traveling expenses charged against the institutions examined should be deducted but not the number of employees. Charges made to cover the cost of examination work in accordance with the Board's letter X-6665 dated July 26, 1930, and the Federal Reserve Act, should be credited to Current Expense Account and the amount of all such credits shown as a deduction from the gross expense of this expense unit. 3. FIELD INVESTIGATIONS Operations Investigations made in connection with applications for National bank charters. Investigations made in connection with applications of National banks for authorization to exercise fiduciary powers. All other field investigations(not connected with examinations or follow-up of examinations) incident to the work of the Bank Examination function. * (St. 6541) (Effective Jan. 1, 193*0 Symbol E - 67b 4 4 5 B A M EXAMINATION (C0TTT'D) 3. FIELD INVESTIGATIONS (CONT'D) Expense Accounts (Shown on Form E) a. Salaries - officers b. Salaries - employees c. Traveling expenses Includes traveling expenses incurred in making investigations of the type outlined above. d. Printing and stationery and other supplies e. Telephone and telegraph Distributed to this unit from Telephone and Telegraph units f. All other 4. ANALYSIS AND REVIEW Operations Review and preparation for submission to the Federal Reserve Board of: Applications of National banks for fiduciary powers Applications for acceptance oov.'ers up to 100 percent Applications for acceptance powers for dollar exchange Applications for voting permits by holding company affiliates of member banks Applications to establish branches Applications for decrease in capital stock of member banks Applications under Clayton Act Applications for permits under Section 32 of the Banking Act of 1933 Applications for adjustment of Federal Reserve bnnk stock Prepnration of recommendations to the Comptroller of the Currency on applications to organize National banks. Analysis of reports of earnings and dividends Analysis of bank examiners' renorts Analysis of call reports of condition - National and State banks Preparation of correspondence in connection with mergers, liquidations, etc. All other work incident to this unit. Expense Accounts (Shown on Form E) a. Salaries - employees b. Printing and stationery and other supplies c. Telephone and telegraph Distributed to this unit from Telephone and Telegraph units d. National bank examiners' reports e. State bank exaniners' reports f. All other (St. 6541)