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609
9/61
Minutes for
To:
Members of the Board
From:
Office of the Secretary
April 31 1962
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.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
Minutes of the Board of Governors of the Federal Reserve System
on Tuesday, April 3, 1962.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Roam at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
King
Mitchell
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Hackley, General Counsel
Farrell, Director, Division of
Bank Operations
Mr. Solomon, Director, Division of
Examinations
Mr. Hexter, Assistant General Counsel
Mr. Hooff, Assistant General Counsel
Mr. Daniels, Assistant Director,
Division of Bank Operations
Mr. Goodman, Assistant Director,
Division of Examinations
Mr. Leavitt, Assistant Director,
Division of Examinations
Mr. Thompson, Assistant Director,
Division of Examinations
Mrs. Semia, Technical Assistant,
Office of the Secretary
Mr. Young, Senior Attorney, Legal
Division
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the
Federal Reserve Banks of Boston and Atlanta on April 2, 1962, of the
rates on discounts and advances in their existing schedules, was
approved unanimously, with the understanding that appropriate advice
would be sent to those Banks.
4/3/62
-2Temporary branch quarters (Chemical Bank New York Trust
Company)(Item No. 1).
On March 28, 1962, a letter was sent to Chemical
Bank New York Trust Company, New York, New York, approving the
establishment of a temporary branch for relocation of portions of the
Operations of a branch at 9 East 167th Street, Bronx, the quarters of
which had been damaged by fire.
The sending of the letter was ratified by unanimous vote.
A
copy of the letter is attached as Item No. 1.
Circulated or distributed items.
The following items, which
had been circulated or distributed to the Board and copies of which
are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to the Federal Reserve Bank of New York
regarding the amount considered to constitute
1961 net earnings of Marine Midland Corporation,
Buffalo, New York, for purposes of determining
the amount of readily marketable assets required
to be established and maintained pursuant to
subsection (c) of section 51hh, Revised Statutes.
2
Letter to Bank of America, New York, New York,
granting permission to increase its investment and
that of Banca d'America e d'Italia in United
Overseas Financial Corporation, Geneva, Switzerland.
3
Letter to the Federal Reserve Bank of Chicago
regarding the question whether a savings deposit may
bear a maximum rate of interest of h per cent from
the date of the transfer to such deposit of funds that
have been on deposit for one year as a time certificate.
4/3/62
-3Item No.
Letter to the Presidents of all Federal Reserve
Banks requesting comments on a Post Office
Department proposal to extend to field officials
authority to use direct air flights for dispatching
Federal Reserve shipments of currency and negotiable
securities valued at $250,000 or more.
5
Letter to the Bureau of the Budget reporting on a
revised draft of a bill "To amend title V of the
Housing Act of 1949, as amended, to provide for
insuring rural housing loans."
6
With respect to Item No. 6, Governor Mills observed that the
Board's letter of March 23, 1962, reporting to the Bureau of the Budget
on an earlier draft of the bill to amend the Housing Act of 1949 had
expressed reservations in regard to several provisions of the bill,
Including the proposed sale of guaranteed obligations by the Department
of Agriculture outside of budget limitations.
He noted that
the letter
now under consideration stated that the Board had no objection to the
Present proposal, and asked if the revisions made in the bill had
Staff
resolved the points about which the Board had raised questions.
comments in response indicated that such was the case.
Report on competitive factors (Algona-Lu Vern, Iowa).
There
had been distributed a draft of report to the Federal Deposit Insurance
Corporation on the competitive factors involved in the proposed
absorption of Security State Bank, Algona, Iowa, by The Security
State Bank, Algona, Iowa, and merger of the latter bank with Farmers
State Bank, Lu Verne, Iowa.
follows:
The conclusion of the report read as
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The proposed establishment of a new bank under the
title of The Security State Bank, Algona, Iowa, to
acquire the assets and assume the deposits of Security
State Bank, Algona, Iowa, and its merger with Farmers
State Bank, Lu Verne, Iowa, will strengthen the competitive
position of the resulting bank without adverse competitive
effects on other banks in the area.
After a brief discussion, the report was approved unanimously
for transmission to the Federal Deposit Insurance Corporation.
Messrs. Hooff, Daniels, Goodman, Leavitt, and Young then
Withdrew from the meeting.
Dormant bank accounts.
Governor Robertson referred to the
letter sent to Representative Patman on March
7, 1962, indicating
that, since it was understood that the Comptroller of the Currency
had reservations about the survey of dormant bank accounts Mr. Patman
had requested, the Board felt that it would be inappropriate for the
FederAl Reserve to proceed with a survey that did not include
national banks.
Governor Robertson had learned that yesterday the
Treasury Department asked the Federal Deposit Insurance Corporation
to transmit to all insured banks a request from the Secretary of the
Treasury for a report on dormant accounts consisting of public funds.
The fact that a survey was being made in regard to public funds might
have some bearing, he thought, on the appropriateness of a survey in
regard to private funds.
He was reporting this latest development
simply as a matter of information.
Messrs. Fauver and Farrell then withdrew from the meeting.
4/3/62
Procedure in holding company and merger cases.
Chairman
Martin suggested that it would be well to agree upon the procedure
to be followed in connection with the four major holding company and
merger cases scheduled for consideration this week.
The principal
question was whether an immediate announcement of each decision
Should be made, with the order and statement to follow, or whether
the announcement should be withheld until the order and statement
were prepared. His own feeling was that the latter would be the
better course, even though it involved some risk of news 0:leaks"
during the time the order and statement were being prepared. He
asked Mr. Hackley if it was correct to assume that two or three
weeks probably would be needed for the preparation of each order
and statement.
Mr. Hackley responded that this was correct.
He mentioned
another possible procedure that had been discussed, which contemplated
that the Board would consider the merits of each case but not take
an actual vote.
Then the Board could vote when an order and statement
were available. One disadvantage of such a procedure would be that
the members of the Board who considered the merits of a case might
not s3) be available when the order and statement were submitted.
After further discussion it was the consensus that it would
be best to follow the customary procedure; that is, to make no
announcement of a decision until the order and statement relating
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to it were issued. In the meantime, should questions be raised,
the Board would decline to comment on the status of the respective
cases.
Application of Whitney Holding Corporation.
Consideration
was given at this time to an application of Whitney Folding
Corporation, New Orleans, Louisiana.
The proposal contemplated that
the Corporation would be established as a new bank holding company
having as subsidiaries: (1) Whitney Nationsl Bank, the largest bank
in New Orleans; and (2) a proposed new national bank that would have
its head office in the eastern part of Jefferson Parish (which adjoins
New Orleans) and a branch at another location in east Jefferson Parish.
Louisiana banking laws did not permit branches beyond the head office
Parish, but also did not prevent holding company arrangements such as
here proposed.
The objective would be accomplished by the chartering of a
'phantom bank", Crescent City National Bank of New Orleans, into which
would be consolidated the present Whitney- National Bank of New Orleans
under Crescent's charter and the name of the present bank.
By this
means, the holding company would be enabled to acquire all of the
shares of the resulting Whitney National Bank and retain all but
directors' qualifying shares.
Whitney National Bank would then con-
tribute $650,000 to the holding company, which would, in turn, use
these funds to acquire the stock of, and capitalize the new Whitney
National Bank in Jefferson Parish.
4/3/62
-7A memorandum from the Division of Examinations dated
November 3, 1961, analyzed the application at considerable length
from the point of view of the five factors required by the Bank
Holding Company Act of 1956 to be considered. Elements in the ease
included several objections that had been filed.
One such objection,
filed by Mr. Louis J. Roussel, a minority shareholder in Whitney
National Bank, had to do with the absence of provision for cumulative
voting in the proposed holding company's charter, the propriety of
Whitney National Bank's action in reducing the number of its directors
from 20 to 7, and certain real estate transactions entered into by
the bank with one of its directors.
The President of Bank of Gonzales,
Gonzales, Louisiana, entered an objection on the ground that Whitney's
request to establish a bank in Jefferson Parish was in effect an effort
to circumvent the law of the State prohibiting establishment of
branches outside the parish in which the head office was located.
A
group of banks in east Jefferson Parish, Louisiana, entered an
objection on the ground that there was no need for any new banking
facilities in the East Bank of Jefferson Parish.
Another element in the case was the pendency of an application
for establishment of a nonmember State bank, Metropolitan Bank of
Jefferson Parish, in the Airline Park Shopping Center, the location
intended for the branch of Whitney National Bank in Jefferson Parish.
Still another element was the point made by the applicant that many
of Whitney National's large customers were located between two offices
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of the Jefferson Parish affiliate of Whitney- National's largest New
Orleans competitor, National Bank of Commerce.
A second large New
Orleans competitor, The National American Bank, was represented in
Jefferson Parish through a common ownership connection with a
Jefferson Parish bank (Merchants Trust and Savings Bank, Kenner).
The Federal Reserve Bank of Atlanta recommended approval of
the application, as did Comptroller of the Currency Gidney in a
letter of October 11, 1961.
The Comptroller of the Currency had given
Preliminary approval of the establishment of Crescent City National
Bank and Whitney National Bank in Jefferson Parish, but had held in
abeyance, until the Board had acted on the holding company application,
the application for approval of Jefferson's proposed branch.
The memorandum ended with a statement that after considering
the application as submitted, which involved Whitney Holding
Corporation's acquisition of Whitney National Bank, New Orleans, and
Whitney National Bank in Jefferson Parish, the latter to have two
Offices, the Division of Examinations recommended that the application
be denied, irrespective of whether Metropolitan Bank of Jefferson
Parish was or was not established.
The Division's memorandum was accompanied by a memorandum
dated November 17, 1961, from Mr. Solomon, who stated that he was
inclined to concur in the recommendation for denial principally
because of (1) the predominant position that Whitney National already
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held in the relevant geographical areas, and (2) the adequacy of
banking service already available in east Jefferson Parish, into
which Whitney proposed to expand.
There had also been distributed a memorandum of November 24,
1961, in which the Legal Division pointed out that consideration of
the Whitney application was complicated by two factual uncertainties,
first, whether the proposed branch of Whitney National Bank in
Jefferson Parish would be established, and second, whether the
Proposed Metropolitan Bank of Jefferson Parish would be established.
The memorandum explored the circumstances surrounding those
uncertainties and stated the Legal Division's conclusion, as to the
first, that the Board should make its decision on the basis of the
application as submitted, namely, with Jefferson proposing to have
two offices.
As to the second uncertainty, the Legal Division
concluded that, if the Board decided there was reasonable assurance
that Metropolitan
an
would be established and would adequately
serve its area, it was legally permissible to proceed on that basis
and therefore give relatively little weight to the "convenience" factor
in considering Jefferson's proposed branch.
The memorandum concluded by stating the Legal Division's opinion
that it was unlikely, in the event of judicial review, that the courts
would regard either approval or denial of the application as an abuse
Of the broad discretion conferred upon the hoard by the Bank Holding
Company Act.
4/3/62
-10The question of holding a hearing or an oral presentation
in regard to the Whitney application was discussed by the Board at
its meeting on October 19, 1961, and at the meeting of the Board on
December 12, 1961, it was decided that an oral presentation should
be held.
Such a presentation was heard on January 17, 1962, at
Which time witnesses for the applicant were Mr. Keehn W. Berry,
President of Whitney National Bank, and Mr. Malcolm L. Monroe,
counsel for the applicant.
Those opposing the application were
Messrs. Louis J. Roussel, Clem H. Sehrt (on behalf of Mr. Roussel
and others), and Victor J. Passera, Jr., President of National Bank
of Commerce in Jefferson Parish.
A transcript of this proceeding
has been placed in the Board's files.
There had subsequently been distributed a memorandum dated
March 14, 1962, in which the Division of Examinations reviewed the
arguments made at the oral presentation, and other developments
relating to the Whitney application.
It was brought out that
Metropolitan Bank of Jefferson Parish opened for business on March 1,
1962, and National Bank of Commerce in Jefferson Parish had announced
the establishment of another branch.
Also, another group had sought
to establish a new bank in the East Bank area of Jefferson Parish,
but the State Bank Commissioner had rejected the application on the
ground that further banking institutions were unnecessary in the
area, and his position had been sustained in a court action instituted
4/3/62
-11-
by the group that wished to establish the bank.
The memorandum
concluded by stating that on balance it was not felt that the oral
Presentation produced information and facts such as to justify a
Change in the previous recommendation of the Division of Examinations.
In a memorandum dated March 30, 1962, the Legal Division
discussed developments since its earlier memorandum, including the
It was
statements and arguments heard at the oral presentation.
observed that Messrs. Roussel and Sehrt had charged that a number
of transactions and policies of Whitney National Bank involved
violations of law or reflected unfavorably on the management of the
bank.
However, these charges had been brought to the attention of
the Comptroller of the Currency, and his response and the most
recent report of examination both indicated that the Comptroller's
0 fice was satisfied with the condition and operations of the bank.
After weighing developments since its earlier memorandum, the Legal
Division saw no reason to change its opinion that, in the event of
judicial review, the courts would regard either approval or denial
of the Whitney application as a proper exercise of the broad discretion
conferred upon the Board by the Bank Holding Company Act.
On behalf of the Division of Examinations, Mr. Thompson
outlined the proposed transaction and then stated the conclusions
of the Division relating to the five statutory factors.
The first
and second factors, financial condition and prospects of the
Ii/3/62
-12-
institutions involved, were judged to be satisfactory.
The third
factor, character of management, was also satisfactory, subject to
any adverse view the Board might take in regard to the propriety of
Whitney National Bank's real estate transactions with one of its
directors and its action in reducing the number of its directors in
an apparent effort to exclude minority stockholder representation.
As to the fourth factor, convenience, needs, and welfare of
the community, the Division felt there would be little effect in
Orleans Parish, where the operations of Whitney National Bank would
be unchanged.
As to Whitney's proposed entry into Jefferson Parish,
the population of the Parish had increased from 60 thousand in 1950
to 136.6 thousand in 1960.
In the proposed head office area of the
Jefferson bank there was considerable industry and a number of
canmercial and residential districts.
The proposed branch would be
in the Airline Park Shopping Center, which was surrounded by a
residential area of about 1,800 to 2,000 homes, with more in progress.
The Metropolitan Bank was now established in that area, and a new
branch had been authorized for National Bank of Commerce.
With those
offices the Parish would have a banking facility for about each
12,400 persons, compared with one for each 14,940 persons in New
Orleans proper.
On that basis the area would not be overbanked.
The Federal Reserve Bank of Atlanta felt that there was no
Present need for another bank in the head office location proposed
4/3/62
-13-
for Jefferson, but that the coming years would probably see sufficient
economic growth to provide business for one.
Therefore, in the light
of the expansion potential and the fact that Whitney National already
had numerous customers in the East Bank area, the Federal Reserve
Bank of Atlanta favored the establishment of the head office of
Jefferson to serve those customers more conveniently and to compete
for new business in the area.
With regard to the proposed branch
of Jefferson, the Reserve Bank felt that a banking office in the
contemplated location would be a convenience to many individuals and
businesses, but that there was not an actual need for an additional
Office.
The Metropolitan Bank was now open for business in about
the same location proposed for the Jefferson branch.
The Comptroller
Of the Currency had held in abeyance the application for the proposed
branch of Jefferson, and Mr. Berry did not mention the branch in his
statement at the oral presentation.
The Division of Examinations concluded, Mr. Thompson
said, that the head office of the Jefferson bank would contribute
to the convenience of the present customers of Whitney National in
the area and some others.
However, the need was not pressing.
Jefferson Parish was essentially a suburb of New Orleans, and
Whitney National had a branch only about five miles distant from
the proposed location of the Jefferson head office via what was
Probably the most traveled route and a shorter distance by what
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-1)4-
appeared to be a lesser traveled route.
Therefore, it was felt
that there was some, but not strong support for the head office,
with less support for the branch, for which there seemed to be no
Special need.
Mr. Thompson then turned to considerations under the fifth
statutory factor--banking concentration--and drew the following
comparisons, all of which related to deposits of individuals,
Partnerships, and corporations.
In June 1961, Whitney National
had about 40 per cent of such deposits in the New Orleans metropolitan
area,
4h
per cent of deposits in Orleans Parish, and 42 per cent of
deposits of all banks in Orleans Parish and those having head offices
in the East Bank area combined.
The addition of the Jefferson bank
would not affect those percentages significantly.
was the dominant bank in the area.
However, Whitney
On June 30, 1961, its deposits
were almost 78 per cent greater than those of its next largest
competitor and the affiliate of that competitor in the East Bank area.
Whitney National's deposits were in excess of 84 per cent of its
three next largest New Orleans competitors and the National Bank of
Commerce in Jefferson Parish combined.
Two of Whitney National's
Offices had deposits originating from the East Bank area equal to
$10.2 million, or 30.2 per cent of the total deposits of all banks
having head offices in the East Bank area.
LI/3/62
-15Considering only Whitney National and the head office of
the Jefferson bank, conclusions relating to the fifth statutory
factor were not clear-cut.
The two principal competitors were well-
established institutions, but with Whitney National already dominant,
and with the potential it would have of obtaining an even greater
Proportion of deposits from the East Bank area, the Division of
Examinations felt that adverse elements with respect to the fifth
factor outweighed the favorable elements with respect to the fourth
factor.
Therefore, it was the conclusion of the Division that, even
considering only the head office of the Jefferson subsidiary bank,
the holding company application should be denied.
There seemed to
be more weight under the fifth factor against the proposed branch of
the Jefferson bank.
The Reserve Bank had expressed the view that
the branch might give competitive trouble to Merchants Trust and
Savings Bank, in Kenner, and Metropolitan Bank had filed a written
objection with the Board on the basis of the competitive factor.
Mr. Solomon spoke of certain broad considerations relating
to the application.
He noted that the case was filled with irrel-
evancies that confused the issue:
a proxy fight, the use of the
"Phantom bank," the claim that the application was a device to
circumvent the State law on branches.
Once these irrelevancies had
been brushed aside, one might be inclined to think that the application
Should be approved, but Mr. Solomon thought that was jumping from one
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4/3/62
side to the other too quickly, because Whitney National was the
dominant bank in the area.
The Division of Examinations had tried
to identify the issues in the case, and then give its recommendation.
It seemed that a principal issue was whether a dominant bank should
be encouraged, through a holding company arrangement, to go into an
area that was already being reasonably well served.
The proposed
new offices could increase convenience to some extent, but it did
not appear that they would meet any strong need.
It seemed probable
that, if branching across parish lines were permitted in Louisiana,
an application for a branch of Whitney National in the proposed
location of the head office of the Jefferson bank would be approved
under the standards applied to branch applications by the three
Federal supervisory agencies.
There seemed less likelihood that
establishment of a branch of Whitney National in the area of the
proposed Jefferson branch would be approved.
Mr. Solomon thought
it was probably true that the standards by which branch applications
were judged had "just grown." With three Federal banking agencies
dealing with branches of various classes of banks, the least common
denominator could prevail, and, without having thought through the
question fully, he believed there might have been some tendency in
that direction.
However, there had not been that tendency on holding
company applications, because the Board had been given the sole
authority.
Thus the Board was free to say, if it wished, that it
4/3/62
Would not approve an effort by a bank to strengthen its already
dominant position by going into an area that was adequately banked.
Governor Balderston alluded to the fact that two of Whitney
National's offices had a substantial amount of business in Jefferson
Parish--total deposits of over $10 million, including demand deposits
Of more than $6 million.
The fact had been cited as evidence of
Whitney- National's dominance in the metropolitan area.
However,
Governor Balderston asked Mr. Solomon whether the fact might not
support the argument that, if Whitney had that many customers in
Jefferson Parish, it should be permitted to operate a banking office
nearer to them than the one five miles away.
Mr. Solomon replied that it was often argued, in support of
branch applications, that the bank involved already had business in
the proposed branch location and could serve its customers in that
area better by having an office near them. In a certain sense the
extent of Whitney National's present business originating in Jefferson
Parish could be used as an argument in favor of the current proposal;
however, the argument also ran in the other direction when dealing
With a dominant institution.
Governor Mills observed that Whitney National's growth had
been within its own corporate structure rather than as a result of
mergers, which would seem to indicate that the bank had won favor
in its community through the quality of the service it rendered.
4/3/62
-18Governor Balderston remarked that the proposal before the
Board was not clear-cut, in that it was uncertain whether or not
it contemplated establishment of the branch of the Jefferson bank
or only the head office.
The terms of the application had included
the branch, but at the oral presentation Mr. Berry had not mentioned
it, and the Board members had not asked him to specify whether or not
the branch was included in the proposal.
Therefore, as a point of
procedure, Governor Balderston asked whether the Board must give a
flat answer to the proposal, or whether it could give an answer with
a stipulation that the branch not be established.
Mr. Hackley replied that consideration had been given by the
Staff to the question whether or not the branch of the Jefferson bank
was part of the proposal, and the conclusion reached was in the
affirmative.
He thought it would be somewhat awkward to impose a
condition that the branch not be established, at least without
sPecifying a definite time period.
Mr. Hexter noted that although the Board could impose a
ondition that the branch not be established, the general experience
vith such conditions had been unsatisfactory.
Should the Board feel
that the application would be clarified if the branch were definitely
out of the picture, it might be well to ask the applicant whether it
wanted to withdraw its pending branch application.
The proponents
had indicated a willingness to make adjustments in the holding
4/3/62
-19-
company's articles of incorporation if the Board thought such changes
desirable, and conceivably they might also be willing to eliminate the
branch from their plans.
Hexer also pointed out that in September 1960, in
connection with a change in the location of Southgate National Bank,
a subsidiary of First Wisconsin Bankshares, Milwaukee, Wisconsin,
the Board had been of the opinion that it could not prevent a change
in the location of a subsidiary national bank, for that fell within
the jurisdiction of another supervisory authority.
The situation
under discussion seemed somewhat similar.
Mr. Hackley commented that the fact that the Board was the
sole Federal authority under the Bank Holding Company Act might
suPport the imposition of a requirement that no branch of the
Jefferson bank be established.
However, such a requirement might
be viewed as an encroachment upon the jurisdiction of the Comptroller
of the Currency, especially since the law specified that the means
through which the Board should control holding companies was approval
or disapproval of their proposed acquisitions of bank stock.
Mr. Hexter remarked that the Board might approve a holding
comPany application viewed against the background of certain circumstances.
After approval was given, those circumstances could Change.
Yet this possibility was an inherent part of bank supervision.
For
this reason, it seemed to the Legal Division that the Board had little
L/3/62
alternative but to look at a proposal as it was submitted and on
the basis of the then existing circumstances.
Governor Shepardson noted that references had been made to
the possibility of changes in the articles of incorporation
applicant holding company.
of the
He asked whether any purpose would appear
to be served by suggesting changes to the applicant, if the Board
were disposed to favor the application but thought such changes would
be desirable.
Hexter responded that it would seem legally proper for
the Board to suggest changes if it saw fit in the public interest,
especially in view of the indication that the applicant would be
receptive to such suggestions.
There ensued a further discussion of the desirability of
suggesting changes in the articles of incorporation.
Reservations
were expressed on the ground that the approach to the applicant
would have to be made before the Board voted an the case, yet the
making of suggestions would almost be tantamount to telling the
applicant that the Board would approve the application if the suggested changes were made. It was pointed out that any such negotiations
might be prolonged, that the application had already been on file for
some time, and that negotiations at this time might raise the question
Why any suggestions had not been made earlier.
Question was asked as to whether there was any implication
that the proposed transaction would be illegal in any way, to which
L1/3/62
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the staff responded that the proposal appeared to be in accord with
Louisiana law.
At the conclusion of the discussion it was the consensus
that, in the absence of any implication of illegality, the Board
should not approach the applicant with suggestions for changes in
the articles of incorporation, and instead should proceed to consider
the merits of the application as submitted.
The members of the Board then stated their views, beginning
with Governor Mills, who presented the following statement:
Disposition of the Whitney Holding Corporation's
application to become a bank holding company through which
ownership would be acquired of all of the 20,000 shares
to be issued of the Whitney National Bank in Jefferson
Parish should be favorable to the applicant on both counts.
The power of the Board of Governors to authorize the
establishment of a bank holding company is implicit in the
Bank Holding Company Act of 1956. The five factors
required to be considered by the Board with respect to a
Proposed expansion of an existing bank holding company are
equally applicable to the establishment of a new bank
holding company. The first three factors, namely, (1) the
financial history and condition of the company or companies
and the banks concerned; (2) their prospects; and (3) the
character of their management, pertain to the organizational
and managerial characteristics of the proposed Whitney
Holding Corporation, and are all favorable. The chosen
form of corporate organization under the direction of a
Prescribed and limited number of directors is legally
Permissible and not a subject within the purview of the
Board's authority to dispute but, rather, a matter for the
corporation's shareholders to determine. The excellent
reputation of the proposed holding company's officials
Should assure equitable treatment to all interests
concerned and evidence thereto is implicit in what is
understood to have been a court decision dismissing the
h/3/62
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contentions of a dissident shareholder in the Whitney
National Bank.
The remaining two factors, namely, (4) the
convenience, needs, and welfare of the communities and
the area concerned; and (5) whether or not the effect of
such acquisition or merger or consolidation would be to
expand the size or extent of the bank holding company
system involved beyond limits consistent with adequate
and sound banking, the public interest, and the
Preservation of competition in the field of banking,
pertain to the community needs of the service area of
the proposed Whitney National Bank of Jefferson Parish
and whether its establishment would be consistent with
the public interest with respect to the competitive
environment involved. Both factors are favorable to the
applicant.
The community needs under review must envision and
encompass the metropolitan area of New Orleans and not
merely the more narrowly defined boundaries of the City
of New Orleans proper. Where the banking requirements of
a metropolitan area are concerned and in localities where
branch banking is prohibited, existing banking institutions
are proscribed from extending their facilities into areas
already inhabited by long-time customers except, as in this
case, through the holding company route. The holding
company vehicle of banking extension represented by the
applicant's proposal would not vest in the holding company
or its component subsidiary banks a financial dominance
contrary to the public interest either with respect to
over-all financial power or a monopolized control over
choice banking locations. The area in which it is
Proposed to locate the Tilhitney National Bank of Jefferson
Parish has enjoyed continuous growth and can look forward
to equally good prospects, all of which indicate the area's
ability to support its existing banks, together with the
Proposed institution, in a competitive climate conducive to
fostering the most efficient community banking services.
In giving tentative approval to chartering the proposed
Whitney National Bank of Jefferson Parish, the Comptroller
of the Currency has indicated that the conditions surrounding the application for a charter are favorable, which
conditions are largely similar to the factors the Board of
Governors is required to analyze under the Bank Holding
Company Act of 1956.
4/3/62
-23Governor Robertson stated that he agreed with the
recommendation of the Division of Examinations for disapproval,
largely for the reasons cited by the Division.
It seemed to him
that a proposal whereby an already dominant institution sought to
further its concentration of banking power through the holding
company device was inconsistent with the public interest and the
Preservation of competition.
The proposal appeared to be a device
further to concentrate control of Whitney National in the hands of
very few people by eliminating what was today a statutory right of
shareholders of a national bank, namely, cumulative voting, and
also by authorizing the use of directors' proxies.
Those two devices
seemed not to be in the public interest, and neither did the further
concentration of market power envisaged by the application.
The
purpose of the Bank Holding Company Act was to control holding
companies—not to further their use.
The Act did provide for the
creation of new holding companies, but put that matter under the
complete control of the Board.
He believed it incumbent upon the
Board to see that the use of the holding company mechanism was in
the public interest, and to direct the holding company movement in
a way that conformed to Congressional policies.
Governor Shepardson commented that there were a number of
factors on both sides that tended to obscure the basic issues.
Essentially, however, the proposal was permissible under State law,
4/3/62
and the Legal Division had assured the Board that there was no
question of legal impropriety.
From the banking standpoint, he
was impressed with the fact that the applicant had a considerable
number of customers in the Jefferson Parish area, and that the area
was developing and stood in the path of further development.
He
also gave weight to the fact that Whitney National had grown on
the merits of its service to the community rather than through
mergers, and the further fact that the
proposed action had received
the support of the vast majority of the stockholders of the bank.
The question whether the Jefferson banks branch, if established,
might cause competitive difficulty for Metropolitan Bank did not seem
to him to be too significant, because the application for establishment
Of the branch was still to be ruled upon by the Comptroller of the
Currency, who would doubtless take account of the recent establishment of Metropolitan Bank in the same location as proposed for the
branch.
Balancing all considerations, it seemed to Governor
Shepardson that the proposal of Whitney National to move to a point
Where it could be of greater service to its existing customers in a
growing part of the metropolitan area justified approval of the
application.
Governor King commented that by statute it was the
responsibility of the Comptroller of the Currency to pass upon the
application for the Jefferson bank's branch.
Therefore, he (Governor
4/3/62
King) did not feel that he was required to be much concerned with
aspects of the holding company application relating to the branch.
As to the possibility of suggesting changes in the holding company's
articles of incorporation, he did not believe that the public interest
was served by having a Government agency such as the Board try to
bargain.
Further, it would be difficult to dictate the proper number
of directors; it would not seem reasonable simply to say that there
Should be more than seven.
Accordingly, he doubted the wisdom of
making such a suggestion. He noted, also, that at least one banking
institution had already started banking through the affiliate
arrangement in a part of metropolitan New Orleans outside Orleans
Parish.
In his view, a refusal of the holding company application
now before the Board would be a signal to other banks in New Orleans
that if they desired to expand across parish lines they should do so
through the affiliate route.
From the standpoint of supervision,
he considered it preferable to permit expansion through the holding
company device rather than affiliates.
Therefore, he would favor
approval of the application.
Governor Mitchell presented the following statement of his
views:
There are three issues of concern in this case. Let
US examine each in turn.
1. The first issue is the bona fides of the holding
company form of organization. The dissidents Roussel and
4/3/62
—26-
Sehrt allege that the purpose of the organization is to
remove effective dissent within the existing corporation
by using the Holding Company Act to remove cumulative
voting. It is implied that approval of this application
would strengthen the grip of the present management over
the corporation and enable it to pursue devious ends.
The present management, however, asserts that the purpose
of the organization is to build facilities in a rapidly
growing section of the metropolitan area which is
partitioned by the fiction of a political boundary.
Complaint could be expected from the Comptroller and
the State Banking authorities if the Holding Company Act
were being used illegally. Since these authorities have
not demurred but rather have given assent, the weight of
the dissidents' objections seems to reduce to an effort to
Involve the Board in an internal struggle for the control
of the corporation. If the minority stockholders' rights
are being infringed upon, the proper source of relief is
the courts, not the Board.
The State of Louisiana branching rule would, it is
alleged, be avoided by approval of this application.
Whatever the historical justification for the rule, it is
evident that these parish lines do not realistically
delineate independent economic communities: individuals
and firms do business across them and Whitney presently
attracts a good share of East Bank deposits. There is
clearly no economic rationale for the no-branching rule.
If there were a political rationale, I should have expected
objection to this application from the State Banking
authorities. There is mitigation in the fact that this
rule has been circumvented before through the common ownership device of the National Bank of Commerce.
2. The second issue is the alleged increase in
concentration that would come about from approving the
application. Whitney presently accounts for about 35 per
cent of New Orleans metropolitan area deposits. Whitney's
Present position is a fait accompli: No matter how Whitney
Holding divides its deposit share among the banks it may
create, its present share will not be changed. Whitney
Holding Corporation would still have 35 per cent of area
deposits even if it were to create and operate a score of
banks. This is because the plan of the application does
4/3/62
-27-
not include purchasing other banks but rather intends
de novo facilities to be built in East Bank. Thus,
approval of this action will not increase concentration
by any meaningful measure whether deposits, loans, assets,
or offices are used. Whitney has what it has.
Will "concentration" increase in the future? If
Whitney can convince increasing numbers of individual and
corporate depositors and loan applicants to bank with its
new set of offices because it offers better services and
more attractive rates, then we might expect its share of
deposits and loans to increase. Denying this application
on grounds of containing an anticipated increase in
"concentration" of this sort would be denying one of the
very things this Board is directed to preserve, competition.
3. The third issue is the alleged existence of "an
overbanked situation" in the East Bank of Jefferson Parish.
The use of "overbanking" as a policy criterion may
have been justified in a time when the creation of banks
was imperfectly regulated and deposits uninsured. The
obsolescence of this concept is apparent in today's context
of widespread deposit insurance and regulation of entry by
State and Federal agencies based on responsible management
and adequate capital. To impose further restrictions on
entry by deciding, ad hoc, that a given area is "overbanked"
is to preserve comfortable closed markets for established
institutions. Decisions with this effect can only be hostile
to the public interest.
Since this authority does not possess perfect foresight,
it must depend on some rough and general rules of thumb if
it is to avoid decisions harmful to the public interest.
The fact that the "overbanked" community of today may be
the "underbanked" community of tomorrow if the growth of
the community is rapid and substantial suggests that such
rules of thumb might be formulated in terms of trends in
population, in business expansion, and in deposits. Strong
Upward movements in these indicia would shortly undo any
initial condition of "too many" banks.
h/3/62
-28-
What can be said in terms of these rules of thumb
in the present case? The population of Jefferson Parish
has more than doubled since 1950. The Reserve Bank
reports that further residential growth in the area is
assured, Rising business activity in the East Bank area
reflects a growing industrial community. Reserve Board
data on deposits of individuals, partnerships, and
corporations by county show that both deposits and
deposits per capita in Jefferson Parish have increased
by more than 300 per cent in the past decade, far outstripping any other urban parish in the State. The
average annual rate of deposit growth of First National
Bank of Gretna was 10 per cent over the 10-year period
1951-61. Merchants Trust and Savings Bank of Kenner has
averaged 25 per cent and Metairie Savings Bank and Trust
'Company 12 per cent over the same period. National Bank
of Commerce of Jefferson Parish has averaged 7 per cent
In its 6 years of operation. Taken together, these data
indicate that an "overbanked situation" could not exist
for long in Jefferson Parish.
Approval of this application will strengthen
competition by allowing an active New Orleans bank to
create de novo facilities in the rapidly growing East Bank
of Jefferson Parish. Rejection of the application would
preserve sanctuary for existing Jefferson Parish banks or
abet entry through devices with a less competitive impact.
Governor Balderston stated that in his view the application
represented an effort by a metropolitan bank to locate banking
offices in a part of the same city from which it had been barred by
State statute from branching.
However, the statute did not prohibit
banks from crossing parish barriers either by the affiliate method,
as did the National Bank of Commerce a half dozen years ago, or by
the holding company method.
New Orleans was now divided by an
artificial line beyond which Whitney National could not extend
service to its customers by locating banking offices convenient to
4/3/62
-29-
them. Improved service to the bank's present customers in Jefferson
Parish, as well as the opportunity to serve additional customers who
might desire to deal with a convenient office of Whitney- National,
argued for approval of the application unless that was incompatible
With the preservation of competition.
However, Whitney- National's
share of the total deposits of the metropolitan area had fallen
from 38 to 35.4 per cent since 1956.
Therefore, since the application
was not in violation of State law, he thought the opportunity sought
bY Whitney National should not be denied to it.
Chairman Martin stated that he concurred with all of the
Points that had been made for approval.
An additional argument
for approval lay in the fact that he thought Whitney National was,
to a degree, making its move in self-defense.
He considered that
quite different from an effort by a bank to assume a dominant
Position in a community where it had not already earned dominance.
Whitney National need not assume a dominant position; it had long
since earned one.
Through the years this bank had been criticized
for being too conservative and sound, and not for being too aggressive.
It had not been accused of unsound banking or of lowering standards.
It had a number
of customers in the East Bank area who would be
better served by the operation the bank sought to undertake. For
these reasons, Chairman Martin said, he would favor approval of
the application.
,
4/3/62
-30Chairman Martin then called for a recording of votes,
and the application of Whitney Holding Corporation was approved,
Governor Robertson being the only member of the Board to vote "no."
It was understood that the Legal Division would prepare for the
Board's consideration an order and statement reflecting this decision,
and that a dissenting statement by Governor Robertson also would be
Prepared.
All of the members of the staff then withdrew and the Board
went into executive session.
Appointment of Mr. Helmer.
The Secretary was informed later
by the Chairman that during the executive session the Board approved
the appointment of Hugh J. Helmer as First Vice President of the
Federal Reserve Bank of Chicago, effective April 1, 1962, for the
unexpired portion of the five-year term that began March 11 1961.
The Board also approved the payment of salary to Mr. Helmer as First
Vice President at the rate of $25,000 per annum for the period
APril 1 through December 31, 1962, this being the rate fixed by the
Board of Directors of the Federal Reserve Bank of Chicago, as reported
in President Scanlon's letter of March 29, 1962.
The meeting then adjourned.
Secretary's Note: Pursuant to reconmendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson
today approved an behalf of the Board the
following actions relating to the Board's
staff:
4/3/62
—31—
.
42E9L
ritn.:_
t
James L. Pierce as Research Assistant (temporary summer position)
in the Division of Research and Statistics, with basic annual salary
at the rate of $5,2O, effective the date of entrance upon duty.
increancrease
Susan Rowzie, Secretary, Division of Examinations, from $4,840
to $5,160 per annum, effective April 15, 1962.
Acceptance of resignation
Vita Rose Monaco, Statistical Clerk, Division of Research and
Statistics, effective at the close of business April 130 1962.
\.SecretaY
BOARD OF GOVERNORS
OF THE
000'440,14
041 CR*:
44°
4to
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
$
1
4%
A*
411
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
4 4.
\NI
Item No. 1
4/3/62
*1
March 28, 1962.
Board of Directors,
Chemical Bank New York Trust Company,
New York, New York.
Gentlemen:
Reserve
The Board of Governors of the Federal
temporary branch
System approves the establishment of a
New York, New
by Chemical Bank New York Trust Company,
New York, in connection
York, at 1220 Jerome Avenue, Bronx,
branch operations
with the relocation of portions of its
167th Street. This
from the damaged quarters at 9 East
orary branch is esapproval is given provided the temp
the date of this letter.
tablished within three months from
at this temporary
It is understood that operations
with the
usly
taneo
location will be discontinued simul
9 East 167th
at
h
branc
restoration of the functions of the
Street.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
AltvaiX
Item NO. 2
4/3/62
ADDRESS OrrICIAL CORRESPONDENCE
TO THE BOARD
4t%44**4
April 3, 1962
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr, Crosse:
This refers to your letter of March 6, 1962, and the attached
letters from Marine Midland Corporation, Buffalo, New York ("Marine"),
Pertaining to Marine's request for a ruling as to the amount which contituted its net earnings for 1961 for purposes of establishing and maintaining a reserve of readily marketable assets pursuant to subsection (c)
of Section 5144, Revised Statutes. In effect, with respect to stocks of
11
,aning and nonbanking organizations distributed in 1961 to Marine as
dividends by four of its subsidiary banks, Marine asks wnether such dividends should be treated as net earnings at (1) the amount of $1,560,336
which was shown as part of net income in its 1961 published annual report,
Or (2)the market value of the stocks so received.
It is understood (1) that the stocks declared as dividends to
larine by the banks were carried in their assets at amounts aggregating
4
4j1
2560,336 which were less than the original acquisition or "tax" cost
r the banks; (2) that before such stocks were declared as dividends the
'.'anIcs wrote up such stocks $1,526,707 to their original cost of
1!3,087,043; and (3) that such stocks were declared as dividends by the
k_:tinks at their cost, with Marine taking such stocks as it received as
trividends on its books at the $3,087,043 cost to the banks. However, in
s
Plarine's statement of operating income and surplus for the year 1961, only
,
1)560,336 was used in arriving at Marine's reported net income for the
%Tear, and $11 526,707 was shown as a surplus adjustment.
t
The $1,560,336 written down value on the books of the banks and
the
, amount shown as a part of net income of Marine is not regarded as the
ki4
ls 'oper amount of Marine's net earnings attributable to dividends in the
„t°ck3, since the balance of the cost to the banks and of such dividends
'
4 eceived by Marine was reflected in the 1961 increase in Marine's "UndistIlbuted income of corporation." Net earnings as computed for purposes of
establishing a reserve of readily marketable assets need not be the same
!? "net income" shown by Marine in its published annual reports. Appropri"e adjustments to earned surplus or undistributed income affect net
(
earnings.
BOARD OF GOVERNORS or
HE FEDERAL RESERVE SYSTEM
Mr. Howard D. Cross
Also, market value of the stocks, which is far in excess
Of the amount at which they were reflected on Marine's books, is not
regarded as part of Marine's net earnings for 1961, because the difference between the $3,0870043 carrying value and market would represent an unrealized gain. Marine's net earnings will be affected by
the profit or loss on the sale of such stocks in the year or years in
which sold.
Therefore, it is the Board's view (which agrees with that
held by your Bank) that, when presuming that no other adjustments to
net earnings are necessary for the year, Marine's net earnings for 1961
'Were its reported net income of $121565,513 plus the $10526,707 included
as a surplus adjustment and as a part of the increase in undistributed
income, or $14,0921220.
Six per cent of the $204,980031 book value of Marine's own
Shares outstanding at December 31, 1961, is $1212980820, and on the
foregoing basis Marine was required to establish and maintain a reserve
Of readily marketable assets of $1,793,400 at December 31, 19610
represented by the difference between "net earnings" for the year and
aiX per cent of the book value of its own shares outstanding.
Please advise Marine accordingly.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
4/3/62
WASHINGTON 25, D. C.
ADDRESS
orricIAL
CORRESPONDENCE
TO THE BOARD
April 31 1962
Bank of America,
41 Broad Street,
New York 15, New York.
Gentlemen:
In accordance with the request and on the basis of the
ir.ifermation furnished in your letter of December 20, 1961, transmitted through the Federal Reserve Bank of New York, the Board of
Governors grants its consent
to:
(1) Bank of America to increase its investment
in United Overseas Financial Corporation,
("UOFC") Geneva, Switzerland, by Swiss
Francs 2,026,000, or approximately
US$465,980; and
(2) Banca d'America e d'Italial ("BAI") Man,
Italy, to increase its investment in UOFC
by Swiss Francs 963,000, or approximately
US$221,490.
The Board's consent is granted upon condition that Bank of
America and BAI shall dispose of their holdings of stock in UOFC, as
rcomptly as practicable, in the event that UOFC should at any time
9-) engage in issuing, underwriting, selling or distributing securities
1/1 the United States; (2) engage in the general business of buying or
8ell1ng goods, wares, merchandise, or commodities in the United States
°r transact any business in the United States except such as is
Incidental to its international or foreign business; or (3) otherwise
.Fscalduct its operations in a manner which, in the judgment of the
!
,
6oard of Governors, causes the continued holding of its stock by
tdank of America and BAI to be inappropriate under the provisions of
uection 25(a) of the Federal Reserve Act or regulations thereunder.
SCIARD OF 13OVERNORS OF THE FEDERAL RESERVE SYSTEM
Bank of America
Considnration has been given to your letter of March 13,
1962, addressed to the Board of Governors outlining the views of
Your Corporation with respect to audits of UOFC and its subsidiaries,
Particularly as regards provision for periodic audits by your own
personnel or that of one of the other participants or by a firm of
public accountants. Your letter of March 15, 1902, described the
audit arrangements for various present and proposed subsidiaries
of UOFC. In the circumstances, no specific condition has been
included in this consent with respect to examinations by the Board's
examiners, by inspectors of the participating partners, or by
independent public accountants in the expectation,by the Board of
Governors,that your Bank will use its good offices, through
representation on the board of directors of UOFC, to see that
Independent external inspections are made by qualified and independent
auditors or inspectors on a regular basis, and that reports of such
engagements are available for review by the Board's examiners in
connection with periodic examinations of Bank of America.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
LI
BOARD OF GOVERNORS
OF THE
at 4019
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No.4
4/3/62
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 3, 1962
Mr. Paul C. Hodge, Vice President,
General Counsel & Secretary,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
Dear Mr. Hodge:
This refers to your letter of March 16, 1962, presenting
the question asked by a member bank whether a savings deposit may
bear a maximum rate of interest of 4 per cent from the date of the
establishment of the savings deposit by the transfer thereto of
funds that have been on deposit for one year as a time certificate.
As you know, section 217.6 of Regulation Q provides, in
Part, that the maximum rate of 4 per cent may be paid on that
Portion of any savings deposit that has remained on deposit for
not less than 12 months." This language necessarily implies that
the funds must have remained on deposit for 12 months as a savings
4229111. To construe the provision otherwise would nullify its
purpose. The fact that the depositor was eligible to maintain a
savings deposit at all times does not have any significant bearing
on the question.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
4/3/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 3, 1962.
1)ear sir,
Enclosed is a copy of letter dated March 14, 1962, from
Post Office Department concerning a proposal to extend
to field
'
,s fficials authority to use direct air flights for
dispatching Federal
rserve shipments of currency and negotia
ble securities valued at
r50,000 or more when in the judgmen
t of the official the number of
;
l'arisfers and transit time by rail
would be unfavorable, either from
time or security standpoint, or both.
the
The Board would like to know whether your Bank sees any
ob
.
jection to the proposed procedure.
To assist in the consideration of this proposal, the followi
ng
111,1formation has been obtained informally from representatives
of the
v8t Office Departm
ents
Registered mail shipments of under $250,000 value may naw
be made by plane under the given circums
tances.
The Department believes that protect
ion might be better
under the proposed procedure, particularly when many
transfers are otherwise required. There would be no
armed guard on the plane, but shipments would be under
guard until placed on the plane and also during unloading at destination. All planes used would be passenger
planes.
The proposalwould not apply
at this time to shipments of
Federal Reserve notes from Washington, because rail
service to all Reserve Bank and Branch cities is deemed
to be adequate.
1164
-2-
If a field official decided to use direct air flights,
this procedure would presumably become standard for the
particular destination.
Arrangements could probably be made for the convoy from the
plane at destination to deliver the shipment direct to
the addressee bank.
Very truly yours,
Merritt
Secre
triclosure.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
BOARD OF GOVERNORS
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
4/3/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE DOARD
April 3, 1962
Mr. Phillip S. Hughes,
Assistant Director,
Legislative Reference,
Bureau of the Budget,
:Washington 25, D. C.
Dear Mr. Hughes:
This is in response to your memorandum request of
March 27, 19621 for the views of the Board on a revised draft of
a bill proposed by the Department of Agriculture "To amend title V
of the Housing Act of 1949, as amended, to provide for insuring
rural housing loans".
The revised draft proposes to expand the present insured
loan program, now limited to farm labor housing, by authorizing
the Farmers Home Administration to insure loans made by private
..enders in situations where the borrower would be eligible for
direct Government loans under section 502 of title V. The draft
bill would place a limitation of 3250 million on the maximum amount
of rural housing loans which could be insured in any one year. At
the same time the present authorization for direct loans would be
continued. It is understood that the Department of Agriculture
contemplates that for the current fiscal year 5() million of
additional funds for direct loans be made available immediately
and that at least $75 million which is estimated for section 502
10ans and other budgeted rural housing items in the 1963 Budget
would be made available.
This is to advise that the Board offers no objection to
the proposal.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER