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6 Minutes for To: Members of the Board From: Office of the Secretary August 14, 1961 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. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Monday, August 14, 1961. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Mills King Kenyon, Assistant Secretary Molony, Assistant to the Board Hackley, General Counsel Solomon, Director, Division of Examinations Mr. O'Connell, Assistant General Counsel Mr. Hostrup, Assistant Director, Division of Examinations Mr. Goodman) Assistant Director, Division of Examinations Mrs. Semia, Technical Assistant, Office of the Secretary Mr. Potter, Assistant Counsel Mr. A. N. Thompson, Supervisory Review Examiner, Division of Examinations Mr. R. N. Thompson, Review Examiner, Division of Examinations Mr. Mr. Mr. Mr. Items circulated or distributed to the Board. The following item 8, which had been circulated or distributed to the Board and copies Of 1.414 4-01 are attached to these minutes under the respective item numbers lieated, were approved unanimously: Item No. letter 4. 41?v- . 0 The Meadow Brook National Bank, New York, authorizing it to accept drafts or bills or ki.ihange drawn for the purpose of furnishing eXchange. "tter Ohio - to The Union Savings & Trust Company, Warren, bzietti,',8•13Proving an extension of time to establish a in Howland Township. 1 2 8/14/61 -.2Item No. Letter to The Vienna Trust Company, Vienna, Virginia, !Proving an extension of time to establish a branch ' - 144Ple Avenue and Berry Street. 3 IcIetter to Citizens Fidelity Bank and Trust Company, Kentucky, approving the establishment of %branch at Floyd and Gray Streets. 14. l etter to the Federal Reserve Bank of Boston approving revision of the employees' salary structure. 5 Mr. Goodman then withdraw from the meeting. A memorandum from the Division of Examinations and the Legal 17181.0n dated August 10) 1961, which had been distributed, presented the following matters: Merger and holding company applications--information regardine arranzements (Item No. 6). The Board's letter to the 8.1 Reserve Banks dated June 9, 1961, requested that reports of 4°14Lination of State member banks contain full information about all torms Of compensation paid to directors, officers, and employees of banks. 14 Etddition, the letter requested that such information be included in hoidi ng company applications and in merger applications as to which the 11%til 8 aPproval was sought. Further study of the matter, resulting in krt t Ilom questions raised by one of the Reserve Banks, indicated the ri 411.bility of amplifying and clarifying the latter request, and a tires+ -" of letter to the Presidents of all Federal Reserve Banks was %Lc hed to the memorandum. 8/14/61 There being no objection, the letter was approved unanimously. eqy is attached as Item No. A 6. Bank holding company applications--proposed salary and pension 2asat.E.: At the meeting of the Board on February 23, 1961, during - .128 e°nsideration of the application of First Virginia Corporation, Arlington, Virginia., for prior approval of the acquisition of shares of the Falls eillIrch Bank, Falls Church, Virginia, it was noted that the holding e°//iPanY had entered into an agreement with the two principal officers o f the bank providing for their continued employment, their lifetime 1..tention as consultants in the event of retirement or disability, and the PaYment of stipulated monthly amounts to their widows. The proposed -"cement represented an extra consideration offered to the two officers cr\rer and above the offer made to the other shareholders of the bank and 'in effect, an inducement to the officers to work toward consummation 118.8 otthe acquisition. Farther, these arrangements did not appear to have been .• 'klaclosed to the other shareholders of the bank. While the appli- n was subsequently approved, the Board requested the staff to study the Illestion whether bank holding companies should be notified that in the, Ilttlre the Board would require, in connection with applications of ' this kind, evidence of full disclosure to all shareholders. The recommendations of the staff, as set out in the August 10 kezor andum from the Division of Examinations and the Legal Division, that (a) it would not be necessary or advisable at this time to 8/14/61 l'equire -4that future applications give evidence of full disclosure to all 811areholders of all such agreements, and (b) that future applicants should, h°11ever, be required to include in their applications information regarding such agreements, including information as to whether and in what manner the 84eements had been disclosed to all shareholders of the bank to be acquired. The first recommendation was based on the fact that the Board had waY of ascertaining what a wide variety of provisions might be involved 1,that a range of significance or importance such provisions might have. The second recommendation, it was pointed out, would be implemented by the lette , - to the Reserve Bank Presidents submitted in connection with the first T"ion dealt with in the August 10 memorandum and approved by the Board. - °AY :Particular case the information obtained in an application showed the existence of a significant or important agreement that had not been &4e1 osed to pill shareholders of the bank, consideration could be given to the quest ion whether full disclosure should be required before action was te.ke, " on the application. There was general agreement with the recommendations of the Legal 1411,04 and the Division of Examinations. uktactIr. Nonvoting stock in bank holdin& companies. The third subject sed in the August 10 memorandum also had arisen during consideration tl, -4e First Virginia-Falls Church application, at which time the staff had bee4 4.equested to study what consideration should be given by the Board, in 11Qti 11Pon a holding company application, to the fact that a company's I 8/14/61 -5- callitalization included nonvoting stock, and whether the Board should arPrise bank holding companies of its concern with respect to such stock. It Iras noted in the memorandum that even without nonvoting stock, the 41cling company device made it possible for a small "inner circle" of ELetive management to control a large volume of banking resources with a l'elatively small investment. Nonvoting stock extended that capacity and 4401t also enable the 'inner circle" to perpetuate its control. However, a8 in the case of pension arrangements or similar inducements, the matter 1111101ved a wide range of possible situations, and there could be some LtIlations in which the issuance of nonvoting stock would be preferable to Other financing methods. On the other hand, it was possible to have ct situation in which the Board would be justified in refusing to approve ev-Lication because the use of nonvoting stock was involved. In summary, it seemed to the two Divisions that the existence of r1 °1.1v(Iting stock was merely one of the facts of a given case, to be conLel'ecl along with other facts. It further appeared that the use of 11°1111c/ting stock would probably be most relevant to consideration of the tht,,A statutory factor—character of management, and unsatisfactory ng COmpany management could in itself be a basis for denial of an ation. In view of the wide range of possible circumstances and , ' - 1-derations, the two Divisions felt that it would be inadvisable to •tEtke 4 general position adverse to the issuance of nonvoting stock by 8/14/61 -6- bank holding companies, and that it would be preferable to handle the matter on a case-by-case basis. In discussion, consideration was given to questions raised by aWernor Balderston relating to the feasibility of going further in the airection of discouraging the use of nonvoting stock by bank holding LLLes. The comments on this point were to the effect that a flat 131"oh1bition against the use of such stock would appear to be outside the " Pe of the Board's authority. Although it might be indicated to holding connyr, -wanies that the Board frowned upon the use of nonvoting stock as a 3*.tter of policy, on the other hand there could be cases where, in the il aistances involved, the use of such stock would appear preferable to s ue other type of financing. raCtor Whether the use of nonvoting stock was bearing upon the competency of management would seem to depend °Ilthe facts of the particular case; thus, it seemed doubtful whether the karri 'would want to take a flat position that the issuance of nonvoting stoo, - Iroul4 in all cases be regarded as an adverse consideration. It was 11°11Thea out that the coverage of the Bark Holding Company Act is limited to c eltain aspects of holding company operations, being different in that l'eE1De t e- from some other statutes. 1"1514.hr. Therefore, unless the issuance of non- stock should assume such proportions as to bear upon one of the tEteto I's required by the statute to be considered in connection with 4 ()11iing company applications, it would seem rather difficult to take a Btrb'le general position adverse to the use of such stock. 8/14/61 After further discussion along these lines, it was agreed that the recommendations of the Division of Examinations and the Legal Division ' letlected a position that was as far as the Board should go at the present ti334 in regard to the use of nonvoting stock by bank holding companies. Mr. Molony then left the meeting. Application of First Virginia Corporation. Two memoranda from the illrleion of Examinations dated July 24, 1961, had been distributed regarding the 1ication of First Virginia Corporation, Arlington, Virginia, for prior 13rclIrst1 of the acquisition of 4,000 or more of the 5,000 voting shares of Itie nd Bank and Trust Company, Richmond, Virginia. Both the Federal Reeerve Bank of Richmond and the Division of Examinations recommended EtrProva1 of the application. Also submitted was a memorandum from the Legal Division dated 44east 1961, which expressed the opinion that approval of the appli- Cation 1101.11d constitute a reasonable exercise of the Board's discretion the law and would be sustained in the event of judicial review. i+ could not be said that action denying the application would be ":1Ject to successful attack, it was felt that such action might be diffie1Qt t, support because of its apparent inconsistency with previous decisions °I the Board. A memorandum from Mr. Hackley dated August 4, 1961, which likewise haAi tte et distributed, informed the Board of a conversation he and Mr. Oleo 1111ell had had on July 13 with Mr. Robert R. MacMillan, an attorney 8/14/61 -8- Of Norfolk, Virginia, who stated that he represented the Southern Bank of N°rfolk, a nonmember insured bank. Mr. MacMillan said that the bank rece,,+, -v-LY had received a written offer from First Virginia Corporation to Purchase stock of the bank, but that the bank had not responded to the offer. In connection with the present application to acquire stock Of Richmond Bank and Trust Company, First Virginia stated on July 3, 1961, that Lt does not now have any plans, written or oral, to acquire shares °r another bank at this time. Mr. MacMillan, it was noted, did not indicate the date of First Virginia's offer to acquire stock of the Norfolk bank; cellrably, that date could have been later than July 3. the However, even if 04ier occurred after July 3, First Virginia's statement that it had no Mans to acquire shares of another bank might be considered misleading if 81111 an offer actually was made within 10 days after that date. Mr. MacMillan also related that stock of the Norfolk bank had always been held mostly by persons residing in the Norfolk trade area. However, aholt 8 Or 9 months ago the bank's transfer agent noted that the number of ztoro., ' Aholders in northern Virginia had increased to between 30 and 4o, and that the stock thus acquired had been purchased through a broker in Lynchburg, Ilia. A considerable block of stock was now held by persons who, according to mr4 MacMillan, were known to be related to First Virginia Corporation 1 e ests. The aggregate of the stock recently acquired by persons in "ern Virginia totaled about 8,0°0 shares out of the bank's outstanding t()t 41 4, 04 100,000 shares. 8/14/61 Mr. MacMillan had emphasized that he was making no charges that ?irst Virginia had indirectly acquired more than 5 per cent of the bank's stock without the Board's prior approval. He conceded that he did not have "ticient evidence on which such a charge could be based, and stated that the sole purpose of his visit was to inquire whether there was any procedure uricler which he might request the Board to investigate the situation. Messrs. Re ' ekleY and O'Connell had indicated to Mr. MacMillan that he was free, of c°11118e, to write a letter to the Board setting forth the facts and requesting that an investigation be made. However, no such letter had subsequently been l'eceived. In opening the discussion, Mr. Solomon remarked that about the only ile8etive elements in regard to First Virginia's application were the issuance c4n°11voting stock, a subject that the Board had just finished discussing, 411(Ithe fact that First Virginia seemed rather expansion-minded. that It appeared the entry of the holding company into Richmond would be conducive to eased competition in that area, and only a relatively small unit bank 1,tas being acquired. In the opinion of the Division of Examinations, it 1?°111c1 be fairly difficult to justify denial of the application. Governor Mills expressed concurrence with the view that on balance the ePPlication should be approved. However, he felt a growing uneasiness 'esPect to this bank holding company, its use of nonvoting stock, and the i Nection of debt into its financial structure, which did not seem 8/14/61 -10- 13ext1cularly strong. Further, the apparent possibility of an expansion into the Norfolk area had not been disclosed by the applicant. Governor King stated that he would vote for approval of the applie n, after which Governor Balderston asked for further comment on the EL13Parent inconsistency between First Virginia's statement on July 3 that it 1184 no plans for acquiring any other bank and the information given Mr. liEtekleY by Mr. MacMillan on July 13 to the effect that First Virginia had l'ecentlY made a written offer to purchase stock of the Southern Bank of NOrfolk. During discussion of this point, it was noted that there could be il'elanistances that would provide a satisfactory explanation of this seeming lalcon sistency. For example, the offer Mr. MacMillan mentioned might have been made some time prior to July 3, and in the absence of a favorable reMY First Virginia might have considered the offer no longer outstanding. /11 event, no written statement had been submitted by Mr. MacMillan, and it -,-(1 seem inappropriate to question First Virginia about the matter since 11r. m —ctelviillan had indicated that his remarks were being made in confidence. At the conclusion of the discussion, the application was approved 4(311813r and the staff was requested to draft an order and statement ' tc)1 'the Board's consideration. Messrs. A. N. Thompson and R. N. Thompson then left the meeting. ...21P222E11.1222gal. Regulation Y (Item No. 7). At its meeting on , 1901, the Board considered a request by Mr. J. H. Colman, President calf c3f)( 8/14/61 -11- the Association of Registered Bank Holding Companies, that the Board eMendRegulation Y1 Bank Holding Companies, in such manner as to permit litigation to test the correctness of the Board's definition of "discount", 4848eti in section 6(a)(4) of the Bank Holding Company Act. The Board N) ressed the view that the matter should preferably be dealt with by legislation, but authorized the Legal Division to explore the problem laththe Department of Justice to determine its reaction to a procedure elleh as suggested by Mr. Colman. In a memorandum dated August 111 1961, which had been distributed, N4% u xter, Assistant General Counsel, reported that the proposal had been clisellssed with Mr. George S. Leonard, First Assistant in the Civil Division °:ethe Department of Justice, since in the event of litigation the Board /1°Illabe represented by the local United States Attorney, under the direction c)rthe Civil Division. 111 Mr. Leonard expressed the view that it would be .priate for the Board to incorporate its interpretation of "discount" 111 e lation Y simply to permit a court test of the correctness of the If the Board did so amend the Regulation and a holding 841rbrought suit in the manner proposed, Mr. Leonard indicated that the Tartment of Justice probably would take the position that the Federal totiat t4 8 had no jurisdiction over such a suit and on this ground would oppose e rendition of any decision on the merits. The memorandum also stated that on August 7 Mr. Colman and other 4 company representatives conferred with representatives of the elt-1 400%. 8/14/61 1. -12- 13clard on a number of holding company questions, including the "discount" 1511°151ern. The visitors were informed of the Board's view that such a niatter should preferably be approached through legislation, as recom°Iiclecl by the Board to the Congress on several occasions since 1958, and Et/s° of the attitude of the Department of justice. It appeared to repre- sertatives of the Legal Division at the meeting that Mr. Colman had 13t°bablY anticipated an unfavorable response. A draft of letter to Mr. Colman was attached to the memorandum. After discussion, during which Mr. Hackley reported an indication bytelephone that the Association of Registered Bank Holding Companies 1318411ed to discuss the matter at its annual meeting in October, particularly lillather a legislative approach would be favored, and then to communicate with the Board, the letter to Mr. Colman was approved unanimously. A copy is attached as Item No. 7. esentationlklrBank of Alb. Reference was made to the ract that tomorrow at 10:00 a.m. there would be an oral presentation to the Board by the State Bank of Albany, Albany, New York, concerning its llt°1)°13ed merger with The Fort Plain Rational Bank, Fort Plain, New York. Secretary's Note: A stenographic transcript of the oral presentation has been placed in the Board's files. The meeting then adjourned. 8/14/61 -13Secretary's Note: In the absence of Governor Shepardson, Governor Balderston today approved on behalf of the Board the following items: Letter to the Federal Reserve Bank of New York (attached Item No. 8) .,--oving the appointment of Robert W. Burke and William Gbolsky as assistant eXaminers, Letter to the Federal Reserve Bank of Chicago (attached Item No. 9) PDroving the appointment of Robert F. Riley as an assistant examiner. a_ Memoranda from appropriate individuals concerned recommending the Owing actions relating to the Board's staff: t2.21-12an.t statiSandra K. Anderson as Statistical Clerk in the Division of Research and (late StiCS, with basic annual salary at the rate of $4,040, effective the of entrance upon duty. kali ---,-LILIcreases )effective August 20, 1961 N Division ---.4a2Lt_ILL2 Basic annual salary To From — Office of the Secretary tee E. Sawyer, Clearing Assistant $ 4,675 $ 4,840 Research and Statistics auaro., tlari 7a Carpenter, Secretary R. B. Hillard, Statistical Assistant 5,655 4,84o 5,820 5,005 4,250 4,355 11,155 5,490 11,415 5,655 6,015 6,180 International Finance Raofings Reaves, Clerk Examinations 4azik Attri e C. Guth, Jr., Review Examiner Tompros, Secretary Personnel Administration QerIEL 'Gander, Employee Relations Technician 2803 8/14/63. effective August 32.1 1961 (continued) Name title Basic annual salary From To Division Office of the Controller VIlfl akalec, Assistant to the Controller $10,635 $101895 3,500 3,760 Administrative Services 48211 "J. Cava, Operator, Tabulating Equipment a Assistant Secretar BOARD OF GOVERNORS 44aittoo*4 4o_400C01,44 OF THE Item No. 1 8/14/61 FEDERAL RESERVE SYSTEM 'It WASHINGTON 25, D. C. a ACIDNESS orriciAL CORREMPONDENCE TO THE CARO August .14, 1961 The Meadow Brook National Bank, New York, New York. Gentlemen: The Board of Governors of the Federal Reserve SYstem authorizes your Bank, pursuant to the provisions Of Section 13 of the Federal Reserve Act, to accept drafts or bills of exchange drawn for the purpose of furnishing dollar exchange as required by the usages of trade in such countries, dependencies, or insular possessions of the United States as may have been designated bY the Board of Governors, subject to the provisions of the Federal Reserve Act and the Board's Regulation C Issued pursuant thereto. Section 13 of the Federal Reserve Act provides that no member bank shall accept neh drafts or bills in an amount exceeding at any one .3-me the aggregate of one-half of its paid-up and unimpaired capital and surplus. The right is reserved to terminate this authorization upon 90 days' notice to your Bank as provided in the Regulation. Enclosed is a list of the countries with respect to which the Board of Governors has found that the usages Of trade require the furnishing of dollar exchange. The Board of Governors may at any time, after 90 days' published remove from such list the name of any country, deependency, or insular possession contained therein. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. E nclosure. 41-1, riCoo BOARD OF GOVERNORS OF THE Item No. 2 8/14/61 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADORIESS OffICIAL CORRESPONDENCE TO THt BOARD August 14, 1961 Board of Directors, The Union Savings & Trust Company, Warren, Ohio. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors has approved an extension until February 24, 1962, of the time within which The Union Savings & Trust Company may establish a branch at 132 Niles-Cortland Road, Howland Township, Ohio. The establishment of this branch was authorized in a letter dated February 24, 1961. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. )0 2S"leof; BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 3 8/14/61 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD 04440 August 14, 1961 Board of Directors, The Vienna Trust Company, Vienna, Virginia. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Richmond, the Board of Governors of the Federal Reserve System extends to February 8, 1962, the time within -which The Vienna Trust Company, Vienna, Virginia, may establish a branch at the intersection of Maple Avenue and Berry Street, Vienna, Virginia, under the authority granted in the Board's letter dated August 30, 1960. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS orricsAL CORRESPONDENCE TO THE BOARD August 14, 1961 Board of Directors, Citizens Fidelity Bank and Trust Company, Louisville, Kentucky. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of St. Louis, the Board of Governors of the Federal Reserve System approves the establishment by- Citizens Fidelity Bank and Trust Company, Louisville, Kentucky, of a branch in the Medical Towers Building on the northwest corner of Floyd and Gray Streets, Louisville, Kentucky, provided the branch is established within twelve months from the date of this letter. 4 8/14/61 Very truly yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. fit BOARD OF GOVERNORS C',,t0141) OF THE 4 Item No. 5 FEDERAL RESERVE SYSTEM 8/3.4/61 WASHINGTON 25, D. C. ADDRESS OFFICIA L CORRESPO :ttwv0:1 DENCE TO TH C HOARD August 14, 1961 kr, ri ?e " reQrge H. Ellis President, :114,43611re Bank of Boston, Yfassachusetts. 1)e4t Ellis: r In accordance with your letter of July 25, 1961, the Board of : : ; 14 1e8Q: 0 , aPProves the following minimuin and maximum salaries for the respective employeesi salary structure at the Federal Reserve Bank of Boston l'ugust 16, 1961. 1 2 3 4 5 6 7 8 9 10 12 13 114 is 16 Minimum Salary Maximum Salary $ 2,1100 2,420 2,650 2,940 30240 3,570 3,960 14.,400 14,900 5,480 $ 3,000 3,270 3.0 80 3,970 4,380 14,820 5,350 5,940 6,620 7,400 8,270 6,130 6,840 7,620 8,540 9,660 10,830 9,240 10,290 11,520 13,040 14,630 4144tLortieThe Board approves the payment of salaries to the employees, other " exI8 ) Ot - esn ,„ within the limits specified for the grades in which the positions t liftiZi'el'iVe employees are classified. It is understood that all employees 4creas_ ' - es are below the minimum of their grades as a result of this strucWill be brought within the appropriate ranges by November 1, 1961. • Geo rge H. Ellis for th,, - 2 It is understood that provision has been made in the 1961 budget increased salary costs resulting from this salary structure revision. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS S-1804 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 6 8/14/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 14, 1961. t/ear Sir: This refers to the Board's letter of June 9, 1961 (S-1796), tain ,requested that reports of examination of State member banks conc)ri.Lull information about all forms of compensation paid to directors, of il'ers, and employees of the banks. In addition, the third paragraph eom„"e letter requested the inclusion of such information in holding appl; anY applications and in merger applications as to which the Board's 13:04 ; va1 is sought, Further study of the matter indicates the advisatili or amplifying and clarifying the latter request, Accordingly, -Letter supersedes the third paragraph of the Board's letter of 9, which is herewith restated as follows: "rectiSuch financial arrangements, whether currently operative or not th,, ve until some future time, should be described in a supplement to prir;.7quired listing of the annual salaries of the proposed directors and appr--"Pal executive officers of the Resulting Bank in applications for 14 sc,,v21- of mergers (see page 7 of the merger application form, FR 70). l'11111; e',A, aPPlications, it is of especial importance that information be repr-s"ed with respect to arrangcri3nts of ,,he types described that offe,?,nt es paid, given, or "consideration, monetary or otherwise, ticl'eu to any shareholder, directory or officer of either of the parng banks as compensation or inducement for assistance in consum.Ltis tine Proposed transaction" (see second item on page 3 of form FR 70). as to requested also that applications on form FR 70 contain information ballta whether, and in what manner, the shareholders of the participating have been informed with respect to such arrangements, Holdin The forms for applications pursuant to section 3 of the Bank °mPany illtor;!, Act (F.R. Y-2 and F.R, Y-1) do not require submission of ?tfic;:,'1-011 regarding existing salaries and other remuneration of individual Ilt,erld'! and directors of the bank or banks to be acquired, and it is not , cINileu at this time to supplement these application forms by requesting ;t111.1 c1 information regarding existing individual remuneration, However, 13e noted that Forms F,R. Y-2 (item (6) of Exhibit C) and F.R, Y-1 Utet ', 11144 to of Exhibit D) require submission of a description of the offer *leom - the present shareholders of the bank or banks to be acquired, -"J-ed by a copy of any written offer, agreement, or contract and of S-1804 -2any tippli Pr"Pectus pertaining to the proposed transaction. Companies filing portications on Forms F.R. Y-2 or F.R. Y-1 should supplement the specified totet°118 of their applications with information regarding any consideration, hold.TbY or otherwise, that has been paid, given, or offered to any sharedirector, or officer of the bank as special compensation or induceforme assistance in consummating the proposed transaction, including any PrOpo, % informal agreement relating to payment, after consummation of the or 1,; 08 4'4 acquisition, of compensation in any form, such as salary, bonus, r,ernent allowance. Information should be furnished also as to whether, has b"l'Inat manner, any such special compensation, inducement, or agreement een disclosed to all shareholders of the bank or banks involved. Very truly yours, c-VA 61.2, Kenneth A. Kenyon, Assistant Secretary. 1'11E81:DENTS OF ALL FEDERAL RESERVE BANKS BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 7 8/14/61 WASHINGTON 25. D. C. ADDRESS OFrICIAL CORRESPONDENCE TO THE BOARD August 14, 1961 Joseph H. Colman, President, ' Irssc'elation of Registered Bank Holding Companies, 'Iost office Box 522, 411111eaPoli3 40, Minnesota. bear Mr. Colman: Your letter to the Board of Governors dated December 9, 1960, to the Board's interpretation of the term "discount", in the OIl 6(a)(4) of the Bank Holding Company Act of.19561 as including ir1 , ' 4 urchase of third-party paper, with or without recourse, by a bankfrom such holding company or 4-17148"sidiary of a bank holding company int "el' subsidiary thereof. In order to obtain judicial review of this NierPretation, you requested that the Board amend section 222.5(b) of 1111(1 , 41 Reserve Regulation Y, relating to applications for determinations : tla r section 4(c)(6) of the Act, so as to embody said interpretation crein. reeteetrired At the meeting on August 7 attended by you, other representatives the Association, and representatives of the Board of Governors, Yoilr thetrequest was discussed at some length. As indicated at that time, thin 011rd has concluded that the appropriate procedure for dealing with ReeWroblem is legislative amendment rather than the incorporation in Iltipn°n Y of a provision designed solely to provide the occasion for to 0.;"'pri. As you know, the Board has emphasized, in its Annual Reports De.rt4-gress, the desirability of legislative action with respect to this 4.eular matter. Your proposal was discussed informally with the Department of ortal 5t1ce,e) since that Department would represent the Board in litigation elltecie, ,k_Ind You proposed. A Department of Justice representative indiRee , a at the Department would regard the proposed amendment of thet:'1°n Y as inappropriate and that, in the event of such litigation, qttia.i: .14rtnient of Justice probably would take the position that the te,ite "4.0n did not present a controversy of which the Federal courts could ,IlLij°gnizance, and on this ground would oppose this method of seeking a '41 determination of the question. For these and other reasons mentioned at the recent meeting, thet tiO4 °4rd has decided that it would not be justified in amending Regulait in the manner you suggested. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 8 8/IA/6i WASHINGTON 25. D. C. ADDRESS arrictAL CORRESPONDENCE TO THE BOARD August 15 1961 CONFIDENTIAL (FR) Mr. Howard D. Crosse, Vice President, Federal Reserve Bank of New York, New York 45, New York. rear Mr. Crosse: In accordance with the request contained in your letter of August 7, 19610 the Board approves the appointment of Robert W. Burke and William Obolsky as assistant examiners for the Federal Reserve Bank of New York. Please advise the effective dates of the appointments. It is noted that Mr. Obolsky is indebted to National Community Bank, Rutherford, New Jersey, in the !r_aount of $400. Accordingly, the Board's approval of Obolsky's appointment is given with the understanding that he will not participate in any examination of that bank until his indebtedness has been liquidated. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 9 FEDERAL RESERVE SYSTEM 8/14/61 WASHINGTON 25, D. C. ADDREBB OFFICIAL CORRESPONDENCE TO THE BOARD August 15, 1961 921221E.21.1E-SFR/ Mi. Hugh J. Helmer, Vice Presidents Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Helmer: In accordance with the request contained in Your letter of August 8, 1961, the Board approves the appointment of Robert F. Riley as an assistant examiner for the Federal Reserve Bank of Chicago. Please advise the effective date of the appointment. It is noted that Mr. Riley's father is a vice President of Manufacturers National Bank of Detroit, Detroit, Michigan. Accordingly, the Board's approval of the appointment of Mr Riley is given with the understandthat he will not participate in any examination of ' Iatufacturers National Bank of Detroit as long as his father is an officer of that bank. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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