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FEDERAL RESERVE BOARD washington 1-7806 ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD February 28, 1934 SUBJECT: Examination of Member Banks for Certification to Federal Deposit Insurance Corporation. Dear Sir: There is attached, for your information, copy of a letter addressed by the Board under date of February 21, 1934, to the Federal Reserve Agent at the Federal Reserve Bank of Boston, with regard to the question whether it will be necessary to examine State banks after they have become members of the Federal Reserve System when such banks have already been certified as members of the Temporary Federal Deposit Insurance Fund and would automatically become eligible for permanent insurance if they continued to be non-members. Very truly yours Chester Merrill Secretary. Inclosure TO ALL FEDERAL RESERVE AGENTS EXCEPT BOSTON. 108 COPY X-7806-a February 21, 1934, Mr. Frederic H. Curtiss, Federal Reserve Agent, Federal Reserve Bank of Boston, Boston, Massachusetts. Dear Mr# Curtiss: In your letter of January 4, 1934, you referred to the fact that certain State banks which have applied for membership in the Federal Reserve System but which have not yet become members have been certified for the Temporary Federal Deposit Insurance Fund and you request to be advised whether it will be necessary for you to examine such banks after they may have become members of the System in view of the fact that they have already been certified as members of the Temporary Fund and would automatically become eligible for permanent insurance if they continued to be no n-members. As you know, under the provisions of Section 12B of the Federal Reserve Act, every member bank is required to apply to the Federal Deposit Insurance Corporation for Class A stock. Upon receipt of such an application from a State member bank, the corporation is required to request the Federal Reserve Board to certify upon the basis of a thorough examination of such bank whether or not its assets are adequate to enable it to meet all of its liabilities to depositors and other creditors as shown by the books of the bank; and the Board is required to make such certification as soon as practicable. Under the law, therefore, it appears that it will be Necessary for the Federal Reserve Board to make such certification with respect to every State member 109 -2- X-7806-a bank which becomes a Class A stockholder of the corporation on or before July 1, 1934, regardless of the time of its admission to membership in the Federal Reserve System; and, accordingly, as suggested in the Board's letter of December 7, 1933 (X-7702), there should be a thorough examination of all State member banks, including those which may have recently become members of the System, on the basis of which the Board may discharge the duties imposed upon it by the law. There is no requirement, however, that the certification by the Board be made upon the basis of an examination which takes place after a bank becomes a member and an examination made in connection with an application for membership may properly be used for this purpose if sufficiently current and thorough. The Board feels that, if at all possible, the certifica- tion with respect to every State member bank should be based upon a report of examination made since January 1, 1934, although if necessary a thorough examination made in December, 1933, may be used as the basis for such certification# Very truly yours, (Signed) Chester Morrill Chester Morrill, Secretary.
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