The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
C.QIFID5NTIAL 195. A p r i l 5. 1015, Circular No. Series 1915. F E D E R A L R E S E R V E B O A R D . Demission granted under Section 11. Sub-Section K, of the Federal Reserve Act for National Banks to act. as trustee, executor, administrator, and registrar of stocks and bonds. To Federal Reserve Agents; In order that the. powers of national and State banks and trust companies as members of the Federal Reserve System may be equal ized as far as possible, the^8oard desires to grant to national banks applying therefor, when not in contravention of State or local laws, permission to act as trustee, executor, adraiais'crator, and registrar of stocks and bonds. In acting On applications, Rpwever, for such permits, it is necessary that the Board should take into consideration First? ‘ Whether or not the exercise of these powers, or any of these powers, will be in contravention pf State or local law. Second:Whether the applying bank is in proper condition and is equipped to handle this cl^ss of business, and. whether a per mit will, under the circumstances, prove pf benefit to such bank. In order to pass upon the question of whether or not action under the permit will contravene jtat| or local laws, the Board has requested Counsel for the various Federal reserve banks to analyze the laws of the States in the several districts and file his opinion with the Board. In view of the lack of uniformity in the laws of the several States it is difficult, if not impossible, to prescribe any fixed rules by which this question may be determined. Inasmuch as Na tional banks are incorporated under Federal lav/, the statutes of the various States necessarily have a very limited application, but in this instance Congress has expressly provided that State laws shall not be contravened, just as it did in the case of usury laws of the several States. There are probably no States whose statutes in terms pro hibit National banks from exercising these powers, and few which ex pressly authorize their exercise. The question under consideration, therefore, cannot be determined by ascertaining Sierely whether a State law specifically prohibits or specifically authorizes National banks to act as provided by Section 11 (k). Nor is it within the province of the Federal Reserve Board to pass upon the constitution ality of this section. In general, the Board will grant permits in accordance with this section where the exercise of the powers granted dos s not contravene the general policy of the State laws as indicated by the statutes dealing with banking institutions and other corporations, and will refuse permits in those cases where such exercise would be clearly in contravention of the general policy of such State laws • In determining the second question, that is whether or not, in a given case the granting of the permit will prove to the best interest of the applying bank, the Board must necessarily take into consideration the particular circumstances in each instance* Banks having small capital and surplus should, there** fore, be requested to indicate the nature and extent of the business it contemplates undertaking* Its equipment and the efficiency of its organization must of necessity be taken into consideration in determin ing the general character of the estates to be admin istered. While the Board does not desire to promulgate at this time any fixed rules as to the proportion that the capital and surplus cf the'applying bank should bear to the size of the estates to be handled, it is at once manifest that small institutions should not undertake to administer estates which will require a larger and more efficient trust department than such banks will be justified in establishing* Before mak ing any reconmendation, therefore, to the Federal Re serve Board that application should be approved or dis approved, Federal Reserve Banks should give considera tion to the circumstances, as indicated above* It is the desire of the Board to cooperate with the member banks through the Federal Reserve Banks in a gradual and conservative development of this class of business. To this end, applications received by the Federal Reserve Bank should be handled in the following manner : First : They should be submitted to Counsel for the Federal Reserve Bank*, who will certify 'hereon whether or not, in his opinion, there is reasonable ground for believing that the exercise of the powers applied for will not be in contravention of the laws $f the State in which the applying bank is located. The application should then be referred to the Board of Directors of the Federal Reserve Bank. >3o Second: The Board pf Director?, after due considera tion, should forward the application to the Federal Reserve Board with its recommendation. If, for any reason, the direct ors are of the opinion that che permission applied for should not be granted, the application should be accompanied by its reasons in writing. Third: The Federal Reserve Board, under the terms of the Act, can authorize national banks to exercise only those powers which are not in contravention of State or loca^ laws, and if, after a peimit is granted, the right to act under it should be questioned by the State authorities, membej? banks should promptly notify the Federal reserve bank and the Federal Reserve Board, so that arrangements may be made for an adjustment or for a proper adjudication by a court of compe tent jurisdiction. Circular letter of March 4, 1915 is superseded by, this circular. 00
@FedFRASER