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1054 A meeting of the Board of Governors of the Federal Reserve System Was held ; Washington on Monday, August 25, 1941, at 11:30 a.m. PRESENT: Mr. Ransom, Vice Chairman Mr. Szymczak Mr. Draper Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinafter Nberred to was taken by the Board: Memorandum dated August 22, 1941, from Mr. Nelson, Assistant 8ecretary, recommending that Mrs. Fannie A. Kramer be appointed on a temporary .s ba31 for a period of not to exceed three months as a stenogNther in the Secretary's Office, with salary at the rate of $1,620 per "r1111141) effective as of the date upon which she enters upon the performance he duties after having passed satisfactorily the usual physical exami414 0n. Approved unanimously. Mem orandum dated August 22, 1941, from Governor Szymczak recom441c44g that the salary of Mrs. Ethelda M. Bultman, stenographer in his °1414e, be increased from $1,800 to $2,200 per annum, effective as of 8ePtember 1941. Approved unanimously. Letter to Mr. 13alaas Evans, Vice President of the Federal Reserve Bank ) reading as follows: 1055 8/25/41 "This refers to the application of the 'Security LA/ate Brk & Trust Company', Rails, Texas, for permission to exercise certain trust powers. "In view of the information submitted by you, and in accordance with your recommendation, the Board of Governors of the Federgl Reserve System grants the applicant bank perallsslon, under the provisions of its condition of membership abered 3, to act as executor, administrator, and guardian °f estates. The Board's approval is given subject to acceptce by the bank of the following conditions prescribed in ection with the admission to membership of banks exercising tasust powers: 1. Such bank shall not invest funds held by it aS fiduciary in stock or obligations of, or Property acquired from, the bank or its directors, officers, or employees, or their interests, or in stock or obligations of, or Property acquired from, affiliates of the bank. 2. Such bank, except as permitted in tne case of national banks exercising fiduciary powers, shall not invest collectively funds held by the bank as fiduciary and shall keep the securities and investments of each trust separate from those of all other trusts and separate also from the properties of the bank itself. 3. If funds held by such bank as fiduciary are deposited in its commercial or savings department or otherwise used in the conduct of its business, it shall deposit with its trust department security in the same manner and to the same extent as is required of national banks exercising fiduciary powers. an,:It is understo od, of course, that if the bank should at r148'lme desire to engage in any other types of fiduciary busithe than those authorized by this letter, it will first obtain Pi ?m ssion of the Board. Y°11 are requested to advise the Security State Bank & Tr118t (, tai ' °mPany, Rails, Texas, of the Board's action, and to obbank 64 aPpropriate resolution of the board of directors of the fied accePting the conditions listed above and forward a certicopy thereof to the Board." r Approved unanimously. Lettr to Mr. Peyton, President of the Federal Reserve Bank of -3'aPolis reading as follows: "This refers to your letter of July 25, 1941, and its eclosures, relating to the question whether certain certtificates issued by Ravalli County Bank, Hamilton, Montana, dePositors who waived a portion of their deposits in con13?ction 1 with a reorganization of the bank constitute a lia, ilitY of the bank which must be taken into consideration in r ft ermining_ whether its capital is impaired within the meaning _ the Federalrequirements relating to admission to mesibership in the Reserve System. 0 It is noted that counsel for your bank expressed the Pinion that the certificates constitute such a liability but POinted out that in its letter X-9418, dated January 6, 1936 10.1".S.#3388), the Board stated that certificates of the , -;nd issued to waiving depositors by certain banks should be ;Ir'sgarded. Since it was not clear to him that the Boards 00,11g applies to certificates of the kind issued by kavalli 6Y he suggested that the inatter be submitted to the ard. Bank,zo th. , "However, there would appear to be no need to rule upon /34kuestion in thjs case since, under section 345 of the b, 211g Act of 1935, the capital debentures of the bank owned t'lls Reconstruction Finance Corporation may be disregarded stodeterulining whether the capital is impaired. It is underwo2d that if such debentures we le disregarded the capital cind not be impaired even though the certificates were in' led as liabilities" Approved unanimously. Letter Of to Mr. Clerk, First Vice President of the Federal i,eserve San F rancisco, reading as follows: 4This refers to Mr. vest's letter of July 14, 1941, Yo IT two letters of July 30, 1941, and your letter of August T;a, 941, and their enclosures, relating to the status of wat;8anler1ca Corporation as a holding company affiliate of IcV Bank of shington, Tacoma, 1%ashington. 4:11e1,. 'iestis letter transmitted a request by Trans" i Corporation that the Board reconsider its ruling that Nati uhat corporation was a holding company affiliate of 30 °48.1 Bank of Washington, Tacoma, Washington, on August '4-940, and that such a relationship existed following 1_057 8/25/41 -4"the election of directors of the bank on January 14, 1941. However, Transamerica Corporation presented no facts or legal arguments bearing upon the relationship on the dates in question which were not considered by the Board prior to itS ruling and, accord ingly, the views previously expressed are reaffirmed. "It has been noted that, with the view of terminating such onship, the pledge agreement under which certain stockrelati of National Bank of Washington, Tacoma Washin , gton, is Pled by Pacific Coast Mortgage Company with Transamerica orporation was modified on June 13, 1941 to provide that Ijrre spective of any provision of law, or of this agreement, _tie lender shall not exercise any right to vote any of the ek held as collateral prior to the foreclosure of this ! dgs.' However, tlis provision of the pledge agreement is ;4,, conclusive and constitutes only one factor to be considered fl d etermining whether Transamerica Corporation is a holding 'omPany affiliate of the bank. af,.. "The existence or nonexistence of a holding company 'l te relationship talia at any time depends upon all of the ofe,: and circumstances concerning the ownership or control al "le stock of the bank or control in any manner of the a! ction of a majority of the bank's directors and, without horough investigation, the Board is not in a position to twt coLi eclude that the holding company affiliate relationship beto_en Transamerica Corporation and National Bank of Washin g'12 Tacoma, Washington, has been terminated. eh _ 'It is the duty of the organizations involved in any i cr eZ to determine whether, under the law and the pertinent tions,,nd circumstances, a holding company affiliate relacoll "-LP exists and, if so, to take the action necessary to avaltY with the law governing such relationship s, without reix lng action by supervisory author ities. Accordingly, tie:"'sd investigations and ruling s by supervisory authoricusoeshould be unnecessary. However, uffless upon your discox ,1°n of this matter with Transamerica Corporation, that itfr,ration is willing to recognize that it is still a holdWashi(laPanY affiliate of National Bank of Washington, Tacoma, takeilngton, the Board is of the opinion that steps should be kine Promptly to develop the information necessary to deterthe relationship has been terminated. With !lease advise Transamerica Corporation, in accordance tact t,he foregoing and, if the matter is not otherwise satis4 ArilY disposed of, proceed with the investigation. This r has been discussed informally with representatives of T 1058 8/25/41. -5"the office of the Comptroller of the Currency and, in view the responsibilities of that office with respect to the iling of reports by the bank, it is assumed, of course, anY such investigation will be undertaken in cooperaion with the Chief National Bank hxaminer for your district and an effort made to arrive, if possible, at comparable con ?lusions. It is believed that counsel for your bank should 1”tively participate in the direction of the investigation, :_th the view tt all information which he considers neces817 in order to render a definite opinion will be obtained." t Approved unanimously, together with a letter to Mr. Delano, Comptroller of the Currency, reading as follows: Bo- rit"There is enclosed for your information a copy of the "r " s letter of this date to the Federal neserve Bank of San as—A-asco relating to the status of Transamerica Corporation Ta,a holding company affiliate of National Bank of s.lington, di'°111a, Washington. Members of the Board's staff recently polcussed a tentative draft of this letter with Aiessrs. Upham, ger and Robertson of your office." Thereupon the meeting adjourned. Secretary. 4113roirecf:----------- - Chairman.
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