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FEDERAL RESERVE BOARD X-45A7 WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD A p r i l 16, 1926. SUBJECT: E x e r c i s e of T r u s t Powers by N a t i o n a l Banks. Bear S i r : There i s e n c l o s e d h e r e w i t h , copy of a l e t t e r r e c e i v e d from t h e Chairman of t h e F e d e r a l Reserve Bank of C l e v e l a n d , which i s s e l f e x p l a n a t o r y . The Board h a s heon g i v i n g c o n s i d e r a b l e thought to the q u e s t i o n of t h e g r a n t i n g of a u t h o r i t y to n a t i o n a l hanks to e x o r c i s e f i d u c i a r y p o w e r s , the manner i n which the departments i n t h e hanks a r e conductod and t h e method and e x t e n t of s u p e r v i s i o n and examination; The l a s t mentioned p h a s e of t h e q u e s t i o n h a s been tak en up w i t h t h e Comptroller of t h e Currency, who l i k e w i s e h a s been c o n s i d e r i n g t h e m a t t e r , and i t i s hoped t h a t w i t h i n a s h o r t time some e f f e c t i v e p l a n of examination w i l l - b e worked o u t . I n t h e meantime, t h e Board would l i k e to have your views and t h o s e of your d i r e c t o r s on t h e s u g g e s t i o n s c o n t a i n e d i n Mr. DeCazsp's l e t t e r , which commend themselves t o t h e Board. We would be p l e a s e d to r e c e i v e i n a d d i t i o n any o t h e r s u g g e s t i o n s which you or your d i r e c t o r s may c a r e to o f f e r . Very .truly y o u r s , Edmund P i a t t . Vice Governor. (Enclosure) TO CMIKMEH OF ALL FEDERAL RESERVE BABES EXCEPT CLEVELAND FEDERAL 0 F RESERVE BANK C L E V E L A IT D 291l X-4587-a A p r i l 13, 1926 F e d e r a l Reserve Board, Washington, D. C. Gentlemen: Under d a t e of A p r i l 10 we forwarded to your Board a p p l i c a t i o n s of t h e and th„e f o r p e r m i s s i o n to e x o r c i s e f i d u c i a r y powers, w i t h the f a v o r a b l e recommendations of our E x e c u t i v e Committee. I n our recommendations we s u g g e s t e d t h a t the t r u s t departments of t h e s e i n s t i t u t i o n s should he under the s u p e r v i s i o n of t r u s t committees c o n s i s t i n g of members of the Boards of D i r e c t o r s of t h e r e s p e c t i v e b a n k s . I n making t h i s s u g g e s t i o n i t i s n o t the purpose of our committee to q u a l i f y i t s recommendations i n any way. . . . At each m e e t i n g of our E x e c u t i v e Committee we c o n s i d e r from one to t h r e e a p p l i c a t i o n s f o r p e r m i s s i o n to e x e r c i s e f i d u c i a r y powers. The f r e q u e n c y w i t h which t h e s e a p p l i c a t i o n s come t o - u s s u g g e s t s t h e thought t h a t t h e a p p l y i n g bank may n o t i n every i n s t a n c e f u l l y a p p r e c i a t e the importance of t h e f u n c t i o n s which i t seeks or p e r h a p s t h e r e s p o n s i b i l i t i e s i n v o l v e d . R e g a r d l e s s of whether or not t h e a p p l y i n g bank i s i n any way s u b j e c t i n g i t s e l f to c i s t t i c i s m by the Department of Examination or t h e C o m p t r o l l e r ' s o f f i c e , we b e l i e v e t h a t t h e g r a n t i n g of f i d u c i a r y powers s h o u l d c a r r y w i t h i t an u r g e n t s u g g e s t i o n to t h e e f f e c t t h a t t h e management of a t r u s t department should meet w i t h e s p e c i a l l y c l o s e s u p e r v i s i o n and t h a t t h e importance of t h i s department should be impressed upon t h e Board of D i r e c t o r s of t h e a p p l y i n g bank. Another p h a s e of t h i s q u e s t i o n r w h i c h we t h i n k w i l l come under t h e immediate concern of t h e C o m p t r o l l e r ' s o f f i c e and t h e Department of Examination i s t h e m a t t e r of p r o v i d i n g f o r p r o p e r i n v e s t i g a t i o n or examinat i o n of t h e department a f t e r i t i s i n o p e r a t i o n . This a p p l i e s , of c o u r s e , . t o b o t h n a t i o n a l and s t a t e r n e n b e r b a n k s . I t i s n o t t h e d i s p o s i t i o n of our committee to s u g g e s t a method of p r o c e d u r e on t h e p a r t of t h e o f f i c e of t h e Comptroller of t h e Currency n o t to o u t l i n e a p o l i c y , but we a r e impressed w i t h t h e v e r y i m p o r t a n t p l a c e whidh a t r u s t department occupies i n t h e g e n e r a l conduct ©f t h e a f f a i r s of our b a n k s . These m a t t e r s have had s e r i o u s and d e t a i l e d d i s c u s s i o n a t the l a s t s e v e r a l m e e t i n g s of our E x e c u t i v e Committee, and I have been r e q u e s t e d by t h e committee t o p l a c e i n t h e hands of your Board i t s views w i t h r e s p e c t t o t h e g r a n t i n g of t h e s e powers. Very t r u l y y o u r s , ( s ) Geo. DoCamp, Chairman-of the Board.
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