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956 A meeting of the Board of Governors of the Federal Reserve 8Yetem was held in Washington on Tuesday, August 1, 1939, at 3:15 P. m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman McKee Davis Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Wyatt, General Counsel Mr. Paulger, Chief of the Division of Examinations Mr. Goldenweiser, Director of the Division of Research and Statistics Mr. Dreibelbis, Assistant General Counsel Mr. Cagle, Assistant Chief of the Division of Examinations Mr. Chase, Assistant Counsel Chairman Eccles referred to previous informal discussions releting to the action to be taken to amend Regulation L, Interlocking Bank D irectorates Under the Clayton Act, on or before August 1 in case the President had approved or had not acted on Senate Bill 2150, which 1144 been passed by both houses of Congress and sent to the President " f signature, and which would amend the second paragraph of Section 8 of the Clayton Act to authorize a director, officer, or employee t a member bank who was lawfully serving other banks on the date of the enactment of the Banking Act of 1935 to continue such service 44til February 1, 1943. 11411a Of In view of all the circumstances, the mem- the Board who were present indicated that they would favor 44 extension of the time limit in sections 3(a) and 3(e) of the Reg414ti0oa from August 1, 1939, to February 1, 1940. It was pointed 957 8/1/39 -2- out that this action would have the effect of permitting directors, °rficers and employees within the scope of these two provisions of the Board's Regulation to serve out their present terms as annual elections are usually held in the early part of January. Thereupon, upon motion by Mr. McKee, the following resolution was adopted by unanimous vote: RESOLVED, That Regulation L, Interlocking Bank Directorates Under the Clayton Act, be amended, effective immediately, as follows: 1. By changing the date "August 1, 1939" in section 3(a) to the date "February 1, 1940"; and 2. By changing the date "August 1, 1939" in section 3(e) to the date "February 1, 1940". This action was taken with the understanding that a statement of the Board's action would be prepared and, after approval by Mr. McKee, released to the press immediately and sent by telegraph to the Federal Reserve banks. It was also understood that in order that it might be clear to interested persons that no other amendments to Regulation L were adopted the Regulation should not be reprinted at this time. The statement for the press as approved by Mr. McKee and released to the press today in accordance with the above action read as follows: "The Board of Governors of the Federal Reserve System has amended subsections 3(a) and 3(e) of its Regulation L, relating to interlocking bank directorates under the Clayton Act, effective immediately, so as to extend until Iebruary 1, 1940, the time during which certain persons Who have been serving member banks may continue to serve a member bank and not more than one other bank." At this point Messrs. Wyatt, Peulger, Goldenweiser, Dreibelbis, Cle, and Chase left the meeting and the action stated with respect 958 8/1/39 -3- to each of the matters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on Tuly 31, 1939, were approved unanimously. Letter to the "Farmers State Bank of West Concord", West Minnesota, stating that, subject to conditions of membership numbered 1 to 3 contained in the Board's Regulation H and the following aPecial conditions, the Board approves the bank's application for Illeillbership in the Federal Reserve System and for the appropriate amount °D stock in the Federal Reserve Bank of Minneapolis: "4. Such bantc shall make adequate provision for depreciation in its banking house and furniture and fixtures. "5. Prior to admission to membership, such bank, if it has not already done so, shall charge off or Otherwise eliminate depreciation in defaulted bonds, which depreciation, on date of examination for membership as of March 4, 1939, amounted to $5,125. Approved unanimously, together with a letter to Mr. Peyton, President of the Federal Reserve Bank of Minneapolis, reading as follows: "The Board of Governors of the Federal Reserve System approves the application of the 'Farmers State Bank Of West Concord', West Concord, Minnesota, for membership in the Federal Reserve System, subject to the conditions Prescribed in the enclosed letter which you are requested to forward to the Board of Directors of the institution. Two copies of such letter are also enclosed, one of which Is for your files and the other of which you are requested to forward to the Commissioner of Banks for the State of Minnesota for his information. 959 8/1/39 -4- "It will be noted that the Board has not prescribed the special condition recyamended by the Reserve bank regarding the elimination or satisfactory adjustment of a reported contingent liability of $1,000 in connection with the contribution of that amount made by Director Naylor. Such a condition could be complied with by returning the amount to the director, thereby weakening the bank to that extent and the only purpose served would be to clear the records. The liability, whether deferred, subordinated, or contingent, should of course be properly shown in the bank's reports of condition. The nature of the liability depends upon the terms and conditions under which the so-called contribution was made to the bank, including the action taken by the bank's directors on April 9, 1938. Sufficient information to enable a determination as to the nature of the liability thus created has not been tarnished, but it is assumed that your counsel will consider the matter and that the bank will be advised as to the proper method of showing the liability in its rePorts of condition. It is assumed also that your counsel has considered the terms under which the entire ;p5,000 was contributed and is satisfied that the bank has no liability on the remaining $4,000. "It has been noted that examiners for the Reserve bank, the Federal Deposit Insurance Corporation and the Comptroller's office agree that the banking needs of West Concord could be adequately served by one bank and it would appear that a consolidation of the applicant and the competitor national bank on a sound basis mild be desirable. If the applicant is admitted to membership, it is assumed that, in accordance with the views expressed in the Board's letter S-6 with respect to a Program for strengthening banking situations where such need is indicated, the influence of the Federal Reserve Bank will be joined with that of the State department and the Chief National Bank Examiner in endeavoring to bring about such a consolidation at an opportune time." Memorandum dated July 26, 1939, from Air. Smead, Chief of the slon of Bank Operations, recommending that the Board adopt a condensed form of member bank call report (Form F.R. 105) for use on the 411ing' and autumn calls, subject to the adoption of a similar form by 960 8/1/39 the Comptroller of the Currency for the use of national banks. A eoPY of the proposed condensed form was attached to the memorandum. Approved unanimously. Thereupon the meeting adjourned. Chairman.
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