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Minutes for April 13, 1961 To: Members of the Board Prom: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement 'with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If You were present at the meeting, your initials will present, indicate approval of the minutes. If you were not Your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King i Minutes of the Board of Governors of the Federal Reserve System on Thursday, April 13, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Shay, Legislative Counsel Hackley, General Counsel Noyes, Director, Division of Research and Statistics Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations Hooff, Assistant General Counsel Leavitt, Assistant Director, Division of Examinations Landry, Assistant to the Secretary Wood, Senior Economist, Division of Research and Statistics itport on S. 766 (Item No. 1). There had been distributed under 'late c/f April 12, 1961, with a covering memorandum from Mr. Noyes, a draft °r letter to Chairman Robertson of the Senate Banking and Currency Com- e replying to a request for the Board's views on S. 766, a bill to 1:1*t e''eat-p. a Federal Limited Profit Mortgage Corporation. As indicated in t • -0e' memorandum, S. 766, introduced by Senator Javits, was the sejaie 48 S. 1342, which the Senator introduced in the 86th Congress. The 'LL-aft reply was based on the Board's report of December 17, 1959, or s. 1342, a copy of which report was also attached td the memorandum. 4/13/61 -2- The Proposed reply would state that the Board would not favor passage of S 766, for reasons set forth in the letter. ' Following comments by Messrs. Shay and Noyes, the letter was 11-141. unanimously. A copy is attached hereto as Item No. 1. Messrs. Shay and Wood then withdrew from the meeting and Mr. 18.111rer, Assistant to the Board, entered the room. hadication of First Trust Company of Albany (Item No. 2). There had, been distributed a memorandum from the Division of Examinations cia.ted April 10, 1961, recommending approval of an application by First Trust Company of Albany, Albany, New York, to merge with The Johnstown ilank, Johnstown, New York, and to continue the office of the latter as EL 131'81101 of the resulting bank. The Comptroller of the Currency and L the , Rederal Deposit Insurance Corporation had both reported that the eftect of the proposed transaction on competition would not be adverse; that in fact, competition should be enhanced in the Johnstown area. The rePort of the Department of Justice stated in part: "Although the merger will eliminate a small independent ---- in the service area involved, there will still remain therein a number of larger independents. However, the entry c)f another large commercial bank into the service area of the four remaining smaller independent banks may further affect aaversely the ability of such banks to effectively compete. The application shows that one of the main reasons for the merging bank seeking merger with a large bank is its diffiaties in trying to compete with branches of much larger anks which have recently moved into its service area by means of mergers and acquisition of other independent banks." b Ani, T Nitik3 4/13/61 -3During discussion of the matter, Governor Balderston inquired as tO the distinctions seen by the staff between this application and the %aication of Marine Midland Trust Company of Southern New York, Elmira, t°1' Permission to merge with First National Bank and Trust Company, Ithaca) New York, which was disapproved by the Board on March 27, 1961. Mr. Solomon replied that (1) the impact of the proposed merger On the banking situation in Albany would not be significant, since the l'es°11rces of the merging bank would not substantially increase the size or the resulting institution, which would continue to rank a poor third 14 S. 1Z among Albany County's five commercial banks; (2) Johnstown and nville branches of other large Albany banks provided strong competiti °n to The Johnstown Bank; and (3) the six offices of First Trust Cr MPany - of Albany accounted for only 9 per cent of deposits of iliclividuals, partnerships, and corporations in the bank's area of cl3el 'ations. The application of First Trust Company of Albany was then ed unanimously. A copy of the letter of approval is attached as All members of the staff then withdrew and the Board went into :1(eelltive session. Actions taken in executive session. The Secretary was subse- T4erti Y advised that the Board took the following actions in executive Seasion: -4Authorized Merritt Sherman, Secretary of the Board, to make a trip to London, England, for a period of approximately 10 days beginning on or about May 11, 1961, for the purpose of visiting the Bank of England and conducting certain other official business. Approved a revision of the Board's Leave Regulations, as proposed in an attachment to a memorandum from the Division of Personnel Administration dated April 3, 1961. This included revisions approved by the Board since the last printing in 1953, additional revisions proposed, and elimination of obsolete, repetitious, and superfluous material. In this connection the Board also approved the recommendation in a memorandum from the Division of Personnel Administration dated March 29, 1961, that the Division be authorized to credit the sick leave account of any employee who has entered or enters on duty after May 14, 1954, from another Government agency with the sick leave certified to his credit with that agency, if the break in service between that agency and the Board does not exceed 52 continuous calendar weeks (to include recredit of the sick leave account of any employee reemployed by the Board under the same terms.) Approved the following recommendations contained in a memorandum from the Division of Personnel Administration dated April 12, 1961, with respect to insurance coverage while on official foreign travel: a. That the Board and members of the staff be provided additional coverage, while performing official foreign travel, under the endorsement privilege of the Federal Reserve Bank of New York's foreign accident travel insurance policy, effective immediately. b. That the present coverage under the Liberty Mutual Insurance Company's policy for employer's liability be continued, with the understanding that the question of the additional charges now being assessed by Liberty Mutual against the 4/13/61 -5Board for foreign travel be discussed with the Company, in view of the fact that the New York Bank pays no additional cost under Workmen's Compensation for approximately the same foreign travel coverage that the Board has. c. That, if and when the Department of Labor decides the Board is considered to be under the Federal Employees Compensation Act, a review be made of the foreign travel insurance coverage of Board employees to determine whether use of the New York policy should be continued. Secretary's Note: On April 17, 1961, Governor Shepardson, after checking with other available members of the Board, approved on behalf of the Board the inclusion, at the cost of the Board, of insurance coverage for baggage and personal effects of Board employees in a foreign travel status, such coverage to be in accordance with that provided under a supplemental travel insurance policy of the Federal Reserve Bank of New York, referred to in a memorandum from the Division of Personnel Administration dated April 17, 1961. The meeting then adjourned. Secretary's Notes: At 11:00 a.m. the members of the Board who were present at today's Board meeting heard an oral presentation by representatives of Dauphin Deposit Trust Company, Harrisburg, Pennsylvania, regarding that bank's application for permission to merge with Camp Curtin Trust Company, also of Harrisburg, which was denied by the Board on February 3, 1961. A stenographic transcript has been placed in the Board's files. 4/13/61 -6Pursuant to the recommendation contained in a memorandum from the Division of Examinations, Governor Shepardson today approved on behalf of the Board an increase in the basic annual salary of Susan Rowzie from $4,46o to $4,6751 with a change in title from Stenographer to Secretary in that Division, effective April 16, 1961. Secre- a.r3r) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WAS Item No. 1 4/13/61 OFFICE OF THE CHAIRMAN April 13, 1961 The Honorable A. Willis Robertson, Chairman, Banking. and Currency Committee, United States Senate, Washington 25, D. C. Dear Mr. Chairman: This is in reply to your request for the Board's views "S. 766, to create a Federal Limited Profit Mortgage Corporation. The Board is especially concerned by the provisions that would authorize issuance of $2 billion per year of taxexempt obligations after the first year. Such a program would Put upward pressure on interest rates in capital markets by offering what would be in effect federally-guaranteed tax-exempt obligations to compete with muncipal bonds, taxable direct °bligations of the United States, corporate security issues, and various types of mortgages. Apart from the aspect of tax exemption, the Board also questions the appropriateness of so considerably increasing the contingent liabilities of the Federal Government through a guaranty of the kind proposed. The Board would therefore not favor passage of S. 766. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm, McC. Martin, Jr. BOARD OF GOVERNORS .k,CItt41,444 4 W 4V.f'10 fp t5 ' 00 oltt .4 OF THE FEDERAL RESERVE SYSTEM Item No. 2 4/13/61 WASHINGTON 25. D. C. a0 ADDRESS arriciAL CORRESPONDENCE TO THE BOARD April 13, 1961 Board of Directors, First Trust Company of Albany, 35 State Street, Alb4nY, New York. Ge ntlemen: The Board of Governors of the Federal Reserve System) atter the consideration of all factors set forth in section I8(c) of IL Federal Deposit Insurance Act, hereby consents to merger of cif e Johnstown Bank, Johnstown, New York, into the First Trust ia-zr2Pa i rkIr of Albany, Albany, New York, under the charter of the "dLer bank, as such merger is believed to be in the public interest. The Board of Governors also approves the operation of a brat,L of the First Trust Company of Albany at 106 West Main Street, "Rstown, New York. This approval is given provided the transaction is consumtted within six months from the date of this letter substantially ocordance with the Plan of Merger submitted with the application, shares of stock acquired from dissenting shareholders are dieOf within six months of acquisition. 4 Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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