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897 A meeting of the Board of Governors of the Federal Reserve System waa held in Washington on Monday, April 27, 1956, at 4:15 p. m. PRESENT: Mr. Eccles, Chairman Mr. Broderick Mr. McKee Mr. Morrill, Secretary Mr. Betheal Assistant Secretary Mr. Clayton, Assistant to the Chairman Consideration was given to each of the matters hereinafter referred to and the action stated with respect thereto was taken by the Board: Telegram to Mr. Walsh, Chairman of the Federal Reserve Bank of 1)allas, stating that the Board approves the establishment without change by the bank today of the rates of discount and purchase in its existing schedule. Approved unanimously. Telegram to Mr. Young, Assistant Federal Reserve Agent at the l'ederal Reserve Bank of Chicago, requestin-, that he advise the "Security State Bank", Algona, Iowa, that, subject to the conditions of membership tillinbere I to 3 contained in the Board's Regulation "H", and the following Special condition, the Board approved the bank's application for member— in the Federal Reserve System and for the appropriate amount of stock in the Federal Reserve Bank of Chicago: "4. Such bank shall make adequate provision for depreciation in its banking house and furniture and fixtures." he telegram also stated that it had been noted that the Security State Bahlwas authorized to exercise trust powers; that there was no indication, how ever, that the bank proposed to exercise trust powers nor that it had 4/27/36 0 made any preparations either through the designation of a trust officer Or otherwise to handle such business, and that it had been assumed, therefore, that the bank did not contemplate the exercise of trust powers at this time. The telegram stated further that if in the future the bank Should desire to exercise trust powers it should, in accordance with the Provisions of condition of membership numbered 1, submit a request for the Pernlission of the Board to make such change in the scope of the corporate Powers exercised by the bank at the time of its admission to membership. Approved unanimously. Letter to Mr. Delano, Federal Reserve Agent at the Federal Reserve 8ank of Richmond, reading as follows: "This refers to Mr. Fry's letter of February 15, 1956, and its inclosures, relating to the status of 'City Certificates Corporation', Baltimore, Maryland, as a holding company affiliate under the provisions of section 2(c) of the Banking Act of 1933, as amended by section 501 of the Banking Act of 1935. "The Board has determined that City Certificates Corporation is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, within the meaning of section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935, and, accordingly, that corporation is not a holding company affiliate for any purposes other than those of section 23A of the Federal Reserve Act. "Inclosed herewith is a letter to City Certificates Corporation advising it concerning the Board's action in this matter. Please transmit the letter to that corporation. A copy of the letter is also inclosed for your files. "As you will note, the Board expressly reserves the right to make a further determination of this matter at any time on the basis of the then existing facts. In this connection, it is requested that you advise the Board if, at any time, you believe this matter should again be considered by it." 899 4/27/36 Approved unanimously, together with a letter to "City Certificates Corporation", Baltimore, Maryland, reading as follows: "This refers to the application of your corporation for a voting permit entitling it to vote the stock which it owns or controls of 'Union Trust Company of Maryland', Baltimore, Maryland; to the general voting permit issued to your corporation on December 30, 1933; and to your corporation's request that the Board determine that it is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies. "The Board understands that your corporation was organized as a part of the plan under which Union Trust Company of Maryland, Baltimore, Maryland, was reorganized in 1933; that it performs no functions except in that connection; that it owns or controls 232,798 of the 250,000 outstanding shares of stock of Union Trust Company of Maryland; and that it indirectly controls relatively insignificant amounts of stock of a number of other banks held by Union Trust Company of Maryland but does not manage or control any bank other than Union Trust Company of Maryland. "In view of such facts, the Board has determined that Your corporation is not engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies, Within the meaning of section 2(c) of the Banking Act of 1933, as amended by section 301 of the Banking Act of 1935, and, accordingly, your corporation is not a holding company affiliate for any purposes other than those of section 23A of the Federal Reserve Act. "If, however, your corporation acquires control over any Other bank, or if the facts should at any time otherwise differ from those set out above to an extent which would Indicate that your corporation might be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, this matter should again be submitted to the Board. The Board reserves the right to make a further determination of this matter at any time on the basis of the then existing facts. "In view of the fact that your corporation is no longer a holding company affiliate for any purposes other than those of section 23A of the Federal Reserve Act, the voting permit heretofore issued to your corporation is no longer of any effect. If your corporation is later determined by the Board to be a holding company affiliate subject to the provisions of 900 4A7/56 "law relating to voting permits, it will be necessary for your corporation to obtain a new voting permit before the stock which it then owns or controls of any subsidiary member bank can lawfully be voted." Telegram to Mr. Fletcher, Assistant Federal Reserve Agent at the Federal Reserve Bank of Cleveland, reading as follows: "Answering your wire Board has no objection to your circulating ruling No. 1 interpreting Regulation U but auggests for your consideration that if you do so it might be well to include nonmember as well as member banks." Approved unanimously. Letter to Mr. J. M. Landis, Chairman of the Securities and Exchange Commission, reading as follows: "Chairman Eccles has received your letter and inclosures with reference to the applicability of the Public Utility Holding Company Act of 1935 to banks. It is noted that you have written to a number of the largest banks in the country regarding the matter and have released a copy of the letter to the press. "In the circumstances, the Federal Reserve Agents at the twelve Federal Reserve Banks are being advised of the contents of your letter in order that they may be in a position to answer any questions which may arise in connection with member banks in their respective Federal reserve districts." Approved unanimously, together zith a letter to the Federal reserve agents at all Federal reserve banks, reading as follows: "There is inclosed a copy of a letter dated April 7, 1936, addressed to the Chairman of the Board by the Chairman Of the Securities and Exchange Commission, with reference to the applicability of the Public Utility Holding Company Act of 1935 to banks, as well as a copy of the letter referred to therein and a copy of the Commission's Rule 3A3-1 and of its Form U-3A3-1. "In view of the fact that the matter has been brought to the attention of a number of the largest banks in the 901 4/27/56 —5— "country and that a statement regarding it has been released to the press, the office of the Comptroller of the Currency has not thought it desirable to circularize the national banks regarding the matter, and it is not suggested that you should circularize the State member banks in your district. However, the matter is being brought to your attention in order that you may be in a position to answer any questions which may arise in connection with member banks in your district." Thereupon the meeting adjourned. Secretary. Approved: Chairman.
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