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t°9
6/61
Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 16, 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
/?elow. If you were present at the meeting, your
initials will indicate approval of the minutes. If
Y°11. were not present, your initials will indicate
°n1Y that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
uts, .1
Minutes of the Board of Governors of the Federal Reserve System on
Wednesday, August 16, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
King
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Reserve
The Board met in the Board Room at 10:00 a.m.
Kenyon, Assistant Secretary
Molony, Assistant to the Board
Fauver, Assistant to the Board
Hackley, General Counsel
Noyes, Director, Division of Research and
Statistics
Farrell, Director, Division of Bank Operations
Solomon, Director, Division of Examinations
Chase, Assistant General Counsel
Conkling, Assistant Director, Division of
Bank Operations
Benner, Assistant Director, Division of
Examinations
Smith, Assistant Director, Division of
Examinations
Spencer, General Assistant, Office of the
Secretary
Langham, Chief, Call Report Section, Division
of Bank Operations
The establishment without change by the Federal
Bank of Atlanta on August 14, 1961, of the rates on discounts
4414 advances in its existing schedule was approved unanimously, with
the understanding that appropriate advice would be sent to that Bank.
Items circulated or distributed to the Board.
item.
The following
which had been circulated or distributed to the Board and copies
lihich are attached to these minutes under the respective item numbers
()1' '
441-cated, were approved unanimously:
8/16/61
-2Item No.
Letter to Security Trust Company, Lynn, Massaehusetts, approving an investment in bank premises.
1
Letter to Manufacturers Trust Company, New York,
York, approving an extension of time to
establish a branch at 685 Third Avenue.
2
Letter to Union Bank pnd Trust Company, Grand
RaPlds, Michigan, approving the establishment of
Et branch at 1225 Leonard Street, N. E.
3
Letter to Santa Barbara National Bank, Santa
lI
tarbara) California, approving its application
Or fiduciary powers.
4
n tia
—a' to United California Bank, Los Angeles,
alifornia, approving the establishment of a
raach in El Centro.
5
t
letters to Wells Fargo Bank American Trust Company,
.a4
e Francisco
8C01 California, approving the establishOf branches
in (1) Chico, (2) Redding, (3)
Salinas.
411441.1 and (4)
6-9
Lette
„r to the Presidents of all Federal Reserve
tfr
r;'14,cs transmitting instructions for the review of
2rte of condition for deposit insurance assessP
Purposes.
10
•
In connection with Items 6-9, there was a general discussion,
4ibthe instance of Governor Balderston, concerning the standards according
to
-J.eh applications for additional branch banking offices in California
blight be appraised, reference being made by Governor Balderston in the
Co
of his remarks to the staff study of banking in California that
been distributed to the Board under date of August 3, 1961.
2H1
8/16/61
-3Governor Mills raised the question whether such applications,
48 a practical matter, did not have to be approached on a basis somewhat
different from applications by banks in other States.
He suggested
that in California there was the fact that several large branch banking
institutions were in existence, and that undue severity in appraising
their applications would seem to run counter to developments in that
State where, according to the study, additional banking facilities were
liequired rather than a limitation on such facilities.
Although the unit
3
1414k had dropped behind, that seemed almost to be something that must
be accepted.
at aC),e
The question of drawing a line might deserve discussion
time, but the situation in California was a difficult one and
it 4PPea1ed to him that branch applications might have to be treated
differently from those in other States where branch banking was not so
hi
Y developed or so concentrated in a relatively few institutions.
Mr. Solomon expressed agreement with the view that it was
tleeeesary to accept the facts of the situation. Quite possibly there
/kAfl
lLibe more smaller banks entering the field if the present situation
1184 not developed.
Under existing conditions, however, although a few
tiel4 hanks had been started and seemed to be coming along fairly well,
it aPPeared likely that the large branch organizations would continue to
e(4*°1 the major share of the banking business.
Governor Balderston indicated that his views were similar to
those
expressed by Governor Mills.
In his opinion, perhaps the best
ir4
8/16/61
-4-
competitive situation could be created by fostering the growth and
8trengthening of the leading competitors to the largest bank in the State.
In connection with Item No. 10, Mr. Hackley noted that a purpose
cf the 1960 amendments to the Federal Deposit Insurance Act was to
eliminate differences in the definition of deposits.
In this respect,
he suggested that the Board might wish to reverse two rulings, published
14 1942 and 1944, which held that income taxes withheld from employees'
salaries, and deductions of Social Security taxes, by member banks should
be treated as "other liabilities" in condition reports and for reserve
Poses.
The Federal Deposit Insurance Corporation had always treated
eUch moneys as deposits and had two court decisions (handed down subseqUent to the Board's rulings) to support its position.
Mr. Hackley
acicled that the Legal Division had prepared a draft letter on this subject
that could be sent to the Federal Reserve Banks if the Board approved the
1111171aion's recommendation that the 1942 and 1944 rulings be reversed.
At the request of the Chairman, Mr. Hackley then read the
141°Posed letter.
There being no objection, the Board approved unani-
111°1181Y the transmittal of the letter to the Federal Reserve Banks, with
the Understanding that the substance of the letter would be published
ill the Federal Register and the Federal Reserve Bulletin.
A copy of
the letter is attached as Item No. 11.
Revision of member bank call report (Item No. 12).
There had
bee,,
Qistributed a memorandum from the Division of Bank Operations dated
'
8/16/61
-5-
August 14,
report.
1961) submitting a proposed revision of the member bank call
Attached to the memorandum was a sample of the revised report,
based on the April 1961 call, together with a draft of letter to the
Federal Reserve Banks requesting their comments.
The proposed letter
Ngested that the new format might be adopted as the official report,
effective with the forthcoming call date.
Aside from suggesting that the experimental report be distributed
t° the Reserve Banks for comment, the Division of Bank Operations recomIllended in its memorandum that future call reports be published without
cle'ta for individual reserve cities, because such data were believed to
be
largely meaningless and because in some instances this would result
14 the disclosure of unpublished figures for individual banks.
As a
Peesible compromise, it was suggested that such data might be included
tenVorarily in a supplement to the call report that would be distributed
°41Y within the System, and that the supplement eventually be discontinued
tulless there was a demand for it.
be
The Division also recommended that it
authorized to negotiate with the Federal Deposit Insurance Corporation
l'e"-ing the possibility of developing a joint report that would show
tissets and liabilities of all insured commercial banks in a format
Iteeable to both agencies and similar to the proposed new member bank
eeal
report.
At the request of the Board, Messrs. Farrell and Longhorn described
the development
of the experimental report, which was made possible by
8/16/61
-6-
the use of electronic equipment, together with the substantial improveraents in terms of data, time, and expense and the questions remaining to
be resolved, as stated in the memorandum.
In discussion, during which all of the members of the Board
exPressed themselves favorably with respect to the revised procedures
844 format, Governor Mills raised the question whether the issuance of
a •
Joint report for all insured commercial banks would result in undue
aelay, and the reply by Mr. Langham was to the effect that the extension
°f the member bank report to a report for all insured commercial banks
84°11.14 not result in a delay of more than a couple of days, in view of
151'°eessing procedures currently utilized by the Federal Deposit Insurance
Cor
poration.
In reply to a question by Governor Balderston, Mr. Farrell
l'eviewed
the reasons, stated in the Division memorandum, why data for
14cilvidua1 cities were often misleading or meaningless.
Mr. Noyes
13°111tecl out that such data could always be made available if needed
8°me particular purpose.
aEtta
Thus, t:le only question was whether these
suould be made available for public distribution or, in the
B'lternative, for distribution within the System on a regular basis.
After further discussion, the recommendations of the Division
Of t
Operations were approved unanimously.
t° the
A copy of the letter sent
Presidents of all Federal Reserve Banks in accordance with this
14°r1 13 attached as Item No. 12.
8/16/61
-7Messrs. Noyes, Conkling, Benner, and Langham withdrew from the
aleeting at this point.
Report of examination of Federal Reserve Bank of Dallas.
The
report of the examination of the Federal Reserve Bank of Dallas made by
the Board's examining staff as of May 11, 1961, had been circulated to
the Board, along with the usual accompanying memoranda.
Mr. Smith commented on matters disclosed by the examination, and
On
the basis of his comments it was agreed that there were no matters
8.1313earing to require action on the part of the Board.
Salaries of Reserve Bank examiners and auditors.
Governor
BEticlerston said that Mr. Solomon had discussed with him certain questions
arcling salary scales for Federal Reserve Bank examiners and auditors.
'
l*eE
this connection, he indicated that the members of the Budget Committee
14°41c1 appreciate the advice of the Board with respect to a point that
8°10mon had raised.
Governor Balderston then commented that it had been the general
111111°80Phy of System salary administration that the individual Reserve
tatik
a should have responsibility for internal alignment of salaries, but
that i
-nconsistencies developing between Banks should be watched and
%11111.1
-.4141Cated
to the Reserve Banks in order to prevent inequities as the
Of lack of knowledge.
He mentioned this philosophy because it was
hia v.
lew that the Budget Committee, in its discussions with the respective
Ptiesia
-ente, ought not indicate what salaries should be paid to particular
8/16/61
-8-
14dividuals or for particular occupations.
At the same time, various
references in the Board's minutes over a period of years reflected
cohcern regarding the compensation of Reserve Bank examiners, who have
t
regularly with bank presidents and other senior bank officials.
Re had heard the view expressed frequently that the salary scales for
ecelniners, and to a lesser degree Reserve Bank auditors, were not adequate
to attract and retain men of sufficient caliber, but up to this point
little appeared to have been done about the problem.
In that connection,
G°vernor Balderston said, he had asked Mr. Solomon to prepare some
161terial that could be used by the Budget Committee, and Mr. Solomon
1184 furnished two tables--one showing the salary scale for examiners
hr°11ghout the System, and the other showing the scale for auditors.
G°vernor Balderston indicated he felt these data might be useful to the
Reserve Bank Presidents, each of whom could use his discretion as to
vhet
11 .E. or not it would seem desirable to re-examine the existing salary
BeEtles for examiners and auditors at his Bank. Distribution of such
14to
Ilnation to the respective Presidents, Governor Balderston noted,
VO1 a
Probably have the effect of encouraging some upward movement in
the ,_,
-L
'
itaries
of examiners, and possibly also auditors.
At the request of Governor Balderston, Mr. Solomon commented that
it h
e4 been found that 27 examiners from the Office of the Comptroller
°rthe
Currency, including at least one from each district, received at
le,e4t
,515,000 a year.
'
However, no Federal Reserve Bank examiner received
8/16/61
-9-
that amount, most of the top salaries running in the neighborhood of
$12,
•
Mr. Solomon said he had some question whether, at the Reserve
13arilte) there might not be something of a psychological factor involved,
814ce the Banks to a considerable degree are production organizations
441i there may be a rather strong inclination to think in terms of a
PYramid type of salary structure.
This type of structure, however,
kight not be appropriate for the bank examining field.
In further discussion of this matter, Governor Mills commented
that examiners for the Comptroller of the Currency and Federal Deposit
Illstirance Corporation are in a sense United States Government officials,
vhil
e examiners for a Reserve Bank are employees of a banking institution
that is different in theory and concept from the Federal establishment.
The Reserve Banks, he judged, felt it necessary to relate the salaries
or the examining staff to the salary scales for the other departments
Qt the Bank so as to maintain a balance.
His awn feeling had been,
11(tht along, that Reserve Bank examiners tended to be underpaid, even
t4
-Lon to employees in other divisions of the Bank. However,
-,
the u
'teeerve Bank Presidents could not ignore the problem of maintaining
beaartee within the organizations for which they were responsible.
ft'. Solomon responded to the effect that the problem referred
to ,
b
Governor Mills was recognized by the Division of Examinations.
A4 to
the managements of the Reserve Banks, he felt that perhaps it had
b
Igefghed too heavily. In his opinion, there may have been a tendency
4
8/16/61
t0
-10-
underemphasize the distinctions between duties in the examining field
ma other departments of the Banks.
After further comments regarding the concern felt about this
nutter in various quarters throughout the System, Mr. Solomon turned to
the duties of Reserve Bank auditors and referred to a tendency to look
UPQ4 auditing as a largely routinized and mechanical type of function.
While this was true in part, more so than in the examining function, he
believed the current general thinking in regard to the function of
illternal auditing was in the direction of giving more emphasis to what
the aUditor could contribute toward the improvement of operations and
le
"attention to the purely mechanical aspects of the work.
He felt
the Reserve Banks might not be quite in step with the times in respect
to
/711et the audit function should be expected to accomplish in an
titution. The function of internal analysis would require staffing
tbe audit departments at a higher level, and the very fact of the
itd
ePendence of the auditor might create some problem, in that the
4141tor reports not to the President of the Bank but to the Audit Review
Con-lutIttee, which may not have a great deal to do with setting salary
ti.4s
e.Lfications. In this connection, Mr. Solomon added that the revised
exana,,,
"-mg techniques now being put into effect by the Board's field
staff would require that the audit staffs of the respective
Elel'e Banks perform a thorolIgh and imaginative job.
8/16/61
-11At the conclusion of the discussion, Governor Balderston inquired
whether any objection would be seen to the Budget Committee making
avail.able to the individual Reserve Bank Presidents the tabulations, to
141lich he had referred previously, on the salary structures for examiners
and.
auditors throughout the System, and no objection was indicated.
Matters relating to current examination of Kansas City Reserve
Batik
Governor Balderston commented that about a year ago he was asked
bY the Board to talk with the Chairman of the Kansas City Reserve Bank
liegarcling a fund that was not recorded on the general books of the Bank
el4d did not appear in any of the Bank's statements.
The fund, which was
llsed for the purpose of making small charitable and similar contributions,
its origin in an arrangement that was in effect prior to 1924 whereby
riot
e•rY fees derived from the protesting of unpaid items were placed in
the furi _.
When this matter was discussed at the meeting on August 18,
1960 the Board expressed the view that the Bank should not continue to
11113.111tain and administer such a fund, and he (Governor Balderston) was
lieltlested to suggest to the Chairman of the Bank that some appropriate
Posltion be made of the assets. Subsequently, Governor Balderston
said
'he talked with Chairman Hall and gained the impression that the
tnatte
r would be taken care of. However, it had recently come to his
4tter,l,
—10n through the Division of Examinations that the fund was still
14.
stence and was being used in the same manner as previously. He
ra.E1
'therefore, requesting the Board's guidance as to the manner in which
the
Tlestion should be pursued.
utc,
/Cot 14.4 Y.
8/16/61
-12After discussion, it was agreed that Governor Balderston would
again discuss this subject with the management of the Reserve Bank with
view to ascertaining the full facts and bringing the matter to a
conclusion.
Governor Balderston then commented that in the course of examining
the Kansas City- Bank the examiners had noted that the Bank was paying
associate membership dues to the Kansas City Athletic Club for certain
°tit-of-town directors.
the
Apparently, this was done in order to assure
directors suitable accommodations while in the city to attend
directors' meetings.
However, this raised the question whether the
14tYlnent of such dues went beyond the Board's letter of December
PeeifYing
6, 1956,
maximum directors' fees and allowances.
In a discussion that ensued, reference was made to various
Uper.4.
-.8 of the matter, such as the difficulty experienced in obtaining
Utatarding individuals to serve as Reserve Bank directors, the amount
cltieslqtY that should be reserved to the individual Reserve Banks in
*Ike,.4
tig out arrangements for accommodations and similar items in the
3-1611t of local circumstances, Find the possibility that the Kansas City
tilliectors concerned were unaware of the fact that payments were being
tade
to the
Club on their behalf. It was the general view that the
silbiect should be explored with the Reserve Bank and that the full facts
1435. be made available to the Board for consideration.
4
."
8/16/61
-13At the conclusion of the discussion
it was understood that
this matter, like the matter of the special fund referred to previously
at this meeting, would be discussed with the management of the Kansas
CitY Reserve Bank.
The meeting then adjourned.
Secretary's Notes: Acting in the absence of
Governor Shepardson, Governor Balderston today
approved on behalf of the Board a letter to
the Federal Reserve Bank of Richmond (attached
Item No. 13) approving the appointment of
Robert G. Murphy as an assistant examiner.
Pursuant to the recommendation contained in
a memorandum from the Division of Personnel
Administration, Governor Balderston also
approved today on behalf of the Board
acceptance of the resignation of Sally. B.
Kirby, Substitute Nurse, effective August 8,
1961.
146101).—
(";
424'24(-P‘
ssistant Secretary
oCok
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGT,ON 25. D. C.
Item No. 1
8/16/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 16, 1961
Board of Directors,
Security Trust Company,
liynn, Massachusetts.
Gentlemen:
The Board of Governors of the Federal Reserve
SYstem approves, under the provisions of Section 24A of
the Federal Reserve Act, an investment in bank premises
bY Security Trust Company of not to exceed $650,000 for
the Purpose of renovating and remodeling present
main
office quarters and installing drive-in facilities.
It is understood that, in accordance with
approval given by the Commissioner of Banks of the
Commonwealth of Massachusetts, the carrying value of
bank premises will be reduced $100,000 under a program
Of accelerated depreciation within the next
ten years.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 2
8/16.
FEDERAL RESERVE SYSTEM
WASHINGTON 23, D. C
4
ADOSCSIS
arrintAL
O0141
,
COPONOUNCE
TO THC 1110ARD
August 16 1961
Board of Directors,
Manufacturers Trust Company,
New York, New York,
Gentlemen:
The Board of Governors of the Federal
Reserve System extends to February 23, 1962, the
time within which Manufacturers Trust Company,
New York, New York, may establish a branch at
685 Third Avenue, New Yorks New York.
Very truly youres
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 3
FEDERAL RESERVE SYSTEM
8/16/61
WASHINGTON 25. D. C.
ADOIHEMIll
orriciAL
CORMESPONOENCE
TO THE BOARD
August 16, 1961
Board of Directors,
Union Bank and Trust Company,
Grand Rapids, Michigan.
Gentlemen:
Pursuant to your request submitted
through the Federal Reserve Bank of Chicago,
the Board of Governors of the Federal Reserve
System approves the establishment of a branch
at 1225 Leonard Street$ N. E., Grand Rapids,
Michigan, by Union Bank and Trust Company,
Provided the branch is established within one
year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 4
8/16/61
WASHINGTON 25, D. C.
ADDRESS orricIAL CORRESPONOENCE
TO THE BOARD
0,
41 Vitt
444***
August 16, 1961
Board of Directors,
Santa Barbara National Bank,
Santa Barbara, California.
Gentlemen:
The Board of Governors of the Federal Reserve
SYetem has given consideration to your application for
fiduciary powers and grants Santa Barbara National Bank
authority to act, when not in contravention of State or
local law, as trustee, executor, administrator, registrar
of stacks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other
fiduciary capacity in which State banks, trust companies,
or other corporations which come into competition with
national banks are permitted to act under the laws of the
State of California. The exercise of such rights shall
be subject to the provisions of Section 11(k) of the
Federal Reserve Act and Regulation F of the Board of
Governors of the Federal Reserve System.
A formal certificate indicating the fiduciary
Powers that your bank is now authorized to exercise will
be farwarded in due course.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2832
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O. C.
A001,11t11.
orricbm. CORPICIIIPONOCNCE
TO TUC 1110AND
August 16, 1961
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch in the
downtown business section of El Centro, Imperial County,
California, by United California Bank, provided the
branch is established within six months from the date
of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
5
8/16/61
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
6
8/16/61
WASHINGTON 25. 13. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 160 1961
Board of Directors,
Wells Fargo Bank American Trust
San Francisco, California.
riPanYy,
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch at the
northeast corner of Camellia lekr and Memorial Way, Chico,
Butte County, CPTifornia, by 1/Jells Fargo Bank American
Trust Company, provided the branch is established
'ithin one year from the date of this letter.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 7
FEDERAL RESERVE SYSTEM
8/16/61
WASHINGTON 25, D. C.
A0011E8111
orrtctAL
COMPICOPONOUNCE
TO THC AOARO
August 16, 1961
Board of Directors,
Wells Fargo Bank American Trust Company,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch in the downtown business section of Redding,
Shasta County, California, by Wells Fargo Bank
American Trust Company, provided the branch is
established within one year from the date of this
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 8
8/16/61
ACORES/ OFFICIAL consturamagsce
TO THE BOARD
August 16, 1961
Board of Directors,
Wells Fargo Bank American Trust Company,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch in the downtown business section of Eureka,
Humboldt County, California, by Wells Fargo Bank
American Trust Company, provided the branch is
established within six months from the date of this
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
283f3
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 9
8/3.6/63.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
August 16, 1961
Board of Directors,
Wells Fargo Bank American Trust Company,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch on U. S.
Highway 101 in the vicinity of East Laurel Drive and
Alvin Drive, Sa)inas, California, by Wells Fargo Bank
American Trust Company, provided the branch is
established uithin one year from the date of this letter.
Very truly your
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
S-1805
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 10
8/16/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
August 16, 1961.
1)"'r Six%
Under the revised Federal Deposit Insurance Act, it will be
teces_
17 for deposit insurance assessment purposes that Federal Reserve
0
beizners verify certain portions of all reports of condition published
1.96ieen examinations starting with the report of condition dated April 129
41,1 For this purpose, there is attached a copy of "Instructions for the
and ew of Reports of Condition for Deposit Insurance Assessment Purposes,"
surficient number of copies will be sent under separate cover for
Of ;,11€1:11ber of your examining staff. If any questions arise from the use
"ese instructions, please refer them to this office for consideration.
tvh
Until page 16 of the report of examination is revised, please
vre in
441 a the dates of all reports of condition verified, instead of merely
ete of the last report, and list on a supplemental page (16(1)) any
erro,
%II': in these reports, identified with the date of the report of condi—
be r .
0 which they refer. An extra copy of the supplemental page should
1)15;45°Jawrded with the report of examination for transmittal to the Federal
tzleC't Insurance Corporation. The copy prepared for the FDIC should also
prevre the dates of the reports of condition reviewed, the dates of the
4Et
.
°1-18 and current examinations, and the name and address of the member
Dank. For purposes of identification, this FDIC copy could be cap—
:: "Reports of Condition." If no errors in reports of condition are
,
1114:eCIP only the FDIC copy of the supplemental page should be forwarded
.111tC comment such as "No exceptions noted," and none should be included
"e report of examination.
Nip:
!tport. Examiners should continue to advise banks of all errors in
viteen
'
'
I of condition and to obtain necessary correction. If there are
ti;""red questions resulting from a disagreement between the examiner
1tnk9 the ratter should be fully discussed on the supplemental
:
1 (1
,
1,
plii 449 and a copy of the examiner's comments should be included in
coPY.
Very truly yours,
itritlosure
Kenneth A. Kenyon,
Assistant Secretary.
PRESIDENTS OF ALL FEDERAL RESERVE BANKS
jThf
S-1806
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 11
8/16/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 18, 1961
Dear Sir:
In a ruling published in the 1942 Federal Reserve Bulletin,
Page
se 532 (F.R.L.S. #5981), the Board stated that deductions of Social
t"
r l'ity taxes by a bank from salaries of its employees should be
fceated as "Other liabilities" in condition reports and not as deposits
'
1 reserve purposes.
(P41 T , In a ruling published in the 1944 Bulletin, page 670
(1) :'°°.#5982),the Board applied the same principle with respect to
wh/oState income taxes withheld from salaries of a bankls own employees
reside outside the State, and (2) Federal income taxes withheld from
etc ente made by a bank as disbursing agent for dividends, bond interest,
Act') where withholding at source is required under the Internal Revenue
On the other hand, the Federal Deposit Insurance Corporation
has
that'waYs regarded moneys withheld for these purposes as deposits
/ts should be included in the assessment base for deposit insurance.
ped Position was upheld in two cases decided by Federal Courts under the
rec,?!,'al Deposit Insurance Act prior to its amendment in 1960 and the
Dir
4'Lations of the FDIC in force at the time. In 1955 the United States
ict Court for the Southern District of New York decided that withtrite income and Social Security taxes, and taxes on dividends and
cor
;
est oh securities,
by the bank as agent for the issuing
(PI)/c
°?ations, should be included as deposits in the assessment base
'
T1117i, vo Irving Trust
Co., 137 Fed, Suppy. 145; 154)c In 1957 the
withr States Court of Appealsfor the Seventh Circuit held that money
eld by the bank for payment of Federal income taxes on its
Soci ses' salaries and for payment of employees' share of Federal
Security taxes were deposits and should be included in the assess(7DTc v, Cont. Ir. 7
v, 2d 5 - 77,V
•
1960,
When the Federal Deposit Insurance Act was amended on July
ekpa the definition of the term "deposit" in 12 U.S.C. 1813 (1) was 14,
ridscl to include specifically "withheld taxes."
Since one of the
f„..)
S-1806
j
I i4erY purposes of the 1960 amendment was to eliminate differences in
.4e definition of deposits for purposes of (a) reports of condition
:tatted to the three Federal supervisory agencies, (b) reserve requireand:
(c) Federal deposit insurance assessments, and in view of the
1.;Irt decisions referred to above, the Board has decided that the two
r.tings published in the Federal Reserve Bulletin for 1942 and 1944,
aerred to above, should be regarded as superseded and that withheld
, including withheld income taxes and Social Security taxes of a
+4 44K 8 °Wn employee; should be classified hereafter as deposits in condiwn reports and in computing required reserves.
cT
Very truly yours,
Kenneth A. Kenyon,
Assistant Secretary.
SIDES OF ALL FEDERAL
R
BANKS
284()
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 12
8/16/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 16, 1961.
Dear sir:
Enclosed are 10 copies of a revised and experimental format
Member Bank Call Report as of April 12, 1961, and of a self:Paamatory memorandum regarding it. It will be appreciated if you
tla distribute these copies among the users of these data at your
and submit any comments or suggestions within 30 days.
Qf th
-e
i
The Board is considering a recommendation of the Division
Operations that the new techniques and format be adopted
'he official report, effective with the forthcoming call date
Of tk._
48
The major problems would seem to be with respect to the
l
Il ac'eure of detailed data of groups containing less than three
B4" and whether data regarding individual reserve cities are necestij
n.in the report itself or in a supplement for internal distribuprod) a minor question involves the method of stitching the final
ut
All of these matters are set forth in the memorandum.
Very truly yours,
a
Kenneth A. Kenyon,
Assistant Secretary.
th-clo
sures
111 PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD OF GOVERNORS
OF THE
Item No. 13
8/16/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
ADDRESS
orricum. CORRESPONDENCE
TO THE BOARD
August 16, 1961
Ni". John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond 13, Virginia.
Dear Mr. Nosker:
In accordance with the request contained in
your letter of August 11, 1961, the Board approves the
appointment of Robert G. Murphy as an assistant examiner
for the Federal Reserve Bank of Richmond, effective
today,
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER