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FEDERAL RESERVE BOARD WASHINGTON address official correspondence t o the federal reserve board X-7681 November 15, 1933* SUBJECT: Adequacy of Bonds Carried by Banks Admitted t o Membership. Dear S i r : In r e v i e w i n g a p p l i c a t i o n s f o r membership i n t h e F e d e r a l Reserve System, i t has been noted t h a t i n many i n s t a n c e s o f f i c e r s and employees of t h e a p p l i c a n t bank appear t o be i n a d e q u a t e l y bonded, and t h a t i n some i n s t a n c e s c e r t a i n o f f i c e r s and employees a r e n o t covered by any bond. The Board f e e l s t h a t as a m a t t e r of c o n s e r v a t i v e banking p r a c t i c e adequate s u r e t y bonds should be c a r r i e d by a l l banks• I n c e r t a i n l e t t e r s t o t h e F e d e r a l Reserve Agents a d v i s i n g of approval of a p p l i c a t i o n s f o r membership, t h e r e f o r e , t h e Board has c a l l e d a t t e n t i o n t o t h e l a c k , or a p p a r e n t inadequacy, of t h e bonds, and has suggested t h a t t h e F e d e r a l Reserve Agents r e q u e s t t h e boards of d i r e c t o r s of t h e a p p l i c a n t banks t o give c a r e f u l cons i d e r a t i o n t o t h e a d v i s a b i l i t y of having bonds i n a d e q u a t e amount provided f o r a l l o f f i c e r s and employees having a c c e s s t o t h e banks f c a s h , s e c u r i t i e s , or r e c o r d s of a c c o u n t . You a r e r e q u e s t e d t o give c a r e f u l c o n s i d e r a t i o n t o t h e adequacy of the bonds c a r r i e d by banks a p p l y i n g f o r membership, and 2 X-7681 t o make a p p r o p r i a t e recommendation t o t h e d i r e c t o r s of an a p p l i c a n t bank whenever i t seems necessary# In the f u t u r e , t h e r e f o r e , no com- ment of t h i s n a t u r e w i l l be made i n t h e l e t t e r s t o t h e Federal Reserve Agents a d v i s i n g of approval of a p p l i c a t i o n s f o r membership. In t h i s co n n e c t i o n , i t i s assumed t h a t t h e Federal Reserve Agents w i l l give t h e same c o n s i d e r a t i o n t o t h e adequacy of bonds c a r r i e d by banks a l r e a d y admitted t o membership and w i l l make s i m i l a r recommendation "when deemed n e c e s s a r y . TO ALL FEDERAL Very t r u l y yours Chester M o r r i l l , Secretary. RESERVE AGENTS
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