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U9
Minutes for
To:
Members of the Board
From:
Office of the Secretary
April 14, 1966
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 indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
43
Minutes of the Board of Governors of the Federal Reserve
System on Thursday, April 14, 1966.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Shepardson, Acting Chairman
Daane
Maisel
Brimmer
Mr. Kenyon, Assistant Secretary
Mr. Young, Senior Adviser to the Board and
Director, Division of International Finance
Mr. Holland, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Sprecher, Assistant Director, Division of
Personnel Administration
Miss Wolcott, Technical Assistant, Office of
the Secretary
Messrs. Egertson and Poundstone of the Division
of Examinations
Approved letters.
The following letters were approved unan-
im°uslY after consideration of background information that had been
niade available to the Board.
Copies of the items are attached under
the respective numbers indicated.
Item No.
Letter to Wells Fargo Bank, San Francisco,
'llifornia, approving an extension of
tilte to establish a branch in San Mateo.
1
4/14/66
-2Item No.
Letter to Continental International Finance
Corporation, Chicago, Illinois, clarifying
a condition in the Board's letter of
November 9, 1965, consenting to the acquisition of shares of Continental and Overseas
Investments, N.V., Amsterdam, The Netherlands,
and suspending another condition contained
in the 1965 letter.
2
Letter to the Federal Reserve Bank of New
York approving the payment of salary to
Richard H. Hoenig as Manager at the rate
fixed by the Bank's Board of Directors.
3
The letter to Continental International Finance Corporation
(Item No. 2) indicated that the Board was suspending until further
notice a condition in its letter of November 9, 1965, to the effect
that, when required by the Board, Continental International would
cause Continental and Overseas Investments, N.V., or any subsidiary
t
hereof to permit examiners selected or auditors approved by the
hoard to examine the Netherlands institution, or any subsidiary
thereof, and to furnish the Board such reports as it might require
from time to time.
The suspension was granted subject to the provi-
siOn that Continental International would have available adequate
Information
from which the Board could satisfy itself as to the
soundness of the financial condition and character of management of
the Netherlands institution and its subsidiaries.
Continental Inter-
national, in requesting suspension of the original condition, had
expressed reservations about its ability to require conformity with
1345
4/14/66
-3-
the requirement and also about the possible effect of the requirement
under Belgian and Swiss banking laws.
(The Netherlands institution
currently held the shares of a Belgian bank and was studying the possibility
of investing in shares of a Swiss bank.)
Members of the Board raised questions about the advisability
of imposing conditions of this kind if they were to be suspended in
situations where, as in the instant case, it developed that problems
were involved from the standpoint of local laws.
Question also was
alsed about the equity of imposing such a condition in some cases
and not in others, depending on whether the laws of particular foreign
c°untries were a complicating factor.
In the discussion of these
questions, the staff brought out that in no case had steps been taken
to implement such a requirement.
However, reasons were given in
support of the view that the inclusion of such a condition, where
fe asible, might afford a desirable supervisory safeguard.
Mr. Solomon
indicated
that the staff would give further thought to the matter and
attemPt to develop language, for use in future instances, that would
at
least introduce a sufficient degree of flexibility to obviate the
Ileed for requests for suspension in circumstances such as those involved
in
the Continental case.
Report on competitive factors.
A modification of the con-
clusion having been agreed upon, unanimous approval was given to the
4/14/66
-4-
transmittal
to the Comptroller of the Currency of a report on the
com-
petitive factors involved in the proposed purchase of assets and assumption of liabilities of First State Bank, Albany, Minnesota, by Stearns
County National Bank, also of Albany.
In the form in which approved,
the conclusion read as follows:
The proposed purchase of assets and assumption of
liabilities of the First State Bank, Albany, Minnesota,
by the Stearns County National Bank, Albany, Minnesota,
would have only a limited effect upon competition. The
Proposal would eliminate one of two banks in the community, although both banks are now under common control
and management. The transaction would eliminate potential
competition between the institutions should the close
relationship be terminated.
H.R. 13157.
There had been distributed a draft of reply to a
request from the Chairman of the House Committee on Banking and Curfor a report on H.R. 13157, a bill to require the Board of
Go
vernors of the Federal Reserve System to obtain Congressional confirmation of changes in the discount rate.
During discussion, reservations were expressed regarding the
content of
the draft.
Whether
Of
It appeared that there was also a question
any report was necessary, in view of doubt about the likelihood
active consideration of the bill by the Committee.
It was understood that an alternative draft along lines sug-
gested by members of the Board would be prepared and that Mr. Cordon's
view
s would be sought on the question whether a report was required.
The meeting then adjourned.
1347
4/14/66
-5Secretary's Note: Governor Shepardson
today approved on behalf of the Board
memoranda recommending the following
actions relating to the Board's staff:
AaaaiaLmalL
Kenneth K. Pustilnik as Summer Law Clerk, Legal Division, with
annual salary at the rate of $5,181, effective the date of
ntrance
upon duty.
b lc
eas
following maternity leave
Mary Margaret Menegos, Stenographer, Division of Data Processing,
w th basic
annual salary at the rate of $4,641, effective April 13,
1966.
Assistant Secretary
1348
BOARD OF GOVERNORS
Item No. 1
4/14/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
ADDRESS{
orricum. CORRESPONDENCE
TO THE {BOARD
•
April 14, 1966
Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System extends to June 25, 1966, the time within which
Wells Fargo Bank, San Francisco, California, may
establish a branch in the vicinity of the northwest
corner of the intersection of 19th Avenue and Bayshore
Freeway, San Mateo, California.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
1_349
Item No. 2
4/14/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
OCNCIC
CORRCIFION
ADORCIIIII OFFICIAL
TO THE BOARD
April 14, 1966.
Continental International Finance Corporation,
231 South LaSalle Street,
Chicago 90, Illinois.
Gentlemen:
letter of November 9,
Reference is made to the Board's
oration to purchase and hold
1965, granting consent for your Corp
inental and Overseas
50 per cent of the ordinary shares of Cont
erlands. SubparaNeth
Investments N.V. ("COIN"), Amsterdam, The
letter contained
d's
Boar
graph (1) of the second paragraph of the
the following condition:
"(1)
stock in COIN if COIN
That CIFC shall not hold any
time fails to
or any subsidiary thereof at any
e
permissible to a
thos
restrict its activities to
organized under
ion
corporation in which a corporat
Act could,
rve
Rese
Section 25(a) of the Federal
rnors, purchase
Gove
of
d
with the consent of the Boar
idiary thereof
subs
any
or
and hold stock, or if COIN
s any action
take
or
cy
agen
establishes any branch or
nds or
erla
Neth
The
in
n
or undertakes any operatio
would
time
that
at
h
whic
er,
elsewhere, in any mann
were a corporation ornot be permissible if COIN
);"
ganized under said Section 25(a
)
lied
(underscoring supp
rman, CIFC, in a letter
Mr. Roger E. Anderson, Vice Chai
ation of the restricdated March 11, 1966, has requested a clarific
tion. It continues to be the Board's view that loan limitations, for
CIFC and not
e xample, should be based on the capital and surplus of
d. In order
erne
ion conc
the subsidiary or affiliated bank or corporat
Board's
the
of
ing
that there may be no question concerning the mean
arasubp
the
of
ion
letter of November 9, 1965, the underscored port
isperm
be
not
ld
"wou
graph above quoted is hereby amended to read:
sible to CIFC."
graph of the Board's
Subparagraph (2) of the second para
letter contained the following condition:
L RESERVE SYSTEM
BOARD OF CiOVERNORS OF THE FEDERA
Continental International
Finance Corporation
"(2)
1350
-2-
ors, CIFC
That when required by the Board of Govern
(a) to
f
will cause COIN or any subsidiary thereo
ed by
permit examiners selected or auditors approv
any subthe Board of Governors to examine COIN or
of
sidiary thereof, and (b) to furnish the Board
from
e
requir
Governors with such reports as it may
time to time."
condition be
Mr. Anderson has requested that the above
about its
ations
suspended. It is understood that CIFC has reserv
the
also
and
ability to require conformity with the requirement
g
bankin
Swiss
and
n
Possible effect of the requirement under Belgia
laws.
, the Board
Subject to continuing observation and review
ions of
provis
the
of Governors suspends, until further notice,
November 9,
of
letter
its
Sub paragraph (2) of the second paragraph of
which the
on
ation
inform
te
b965, provided CIFC has available adequa
the
of
ess
soundn
the
fpard of Governors can satisfy itself as to
subits
and
COIN
of
financial condition and character of management
s
idiaries.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
i51
Item No. 3
4/14/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 10551
ADORE'S orrsaim. CORRESPONDENCE
TO THE SOARD
April 14, 1966
CONFIDENTIAL (FR)
Ilk. William F. Treiber,
First Vice President,
Federal Reserve Bank of New York,
10045
New York, New York.
Dear Mr. Treiber:
The Board of Governors approves the payment of
salary to Mr. Richard H. Hoenig as Manager (assigned to the
Public Information Department) at the Federal Reserve Bank
of New York at the rate of $15,500 per annum for the period
April 1 through December 31, 1966. This is the rate fixed
by your Board of Directors as reported in your letter of
April 1 1966.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER