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Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 27, 1965.
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. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Minutes of the Board of Governors of the Federal Reserve
System on Friday, August 27, 1965.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Daane
Maisel
Mr. Kenyon, Assistant Secretary
Miss Carmichael, Assistant Secretary
Mr. Broida, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Noyes, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Goodman, Assistant Director, Division
of Examinations
Mr. Furth, Consultant
Mr. Morgan, Staff Assistant, Board Members'
Offices
Miss Eaton, General Assistant, Office of the
Secretary
Messrs. Brill, Holland, Solomon, Bernard, Ettin,
and Gramley of the Division of Research and
Statistics
Messrs. Katz, Reynolds, and Baker of the Division
of International Finance
Money market review.
Reports on the Government securities
market, bank credit developments, and foreign exchange matters were
given by Messrs. Bernard, Ettin, and Baker.
Distributed material
referred to during these presentations included charts showing recent
credit flows, tables relating to dealer positions and official account
-2-
8/27/65
purchases of Government securities, and tables providing perspective
on the money market and bank reserve utilization.
After discussion in the light of these reports, all members of
the staff except Messrs. Kenyon, Broida, Young, Brill, and Furth and
Miss Carmichael withdrew and the following entered the room:
Mr. Hexter, Assistant General Counsel
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of Examinations
Miss Hart, Senior Attorney, Legal Division
Mr. Robinson, Attorney, Legal Division
Mr. Lyon, Review Examiner, Division of Examinations
Mr. McClintock, Supervisory Review Examiner, Division
of Examinations
Miss McShane, Assistant Review Examiner, Division of
Examinations
Discount rates.
The establishment without change by the Federal
Reserve Banks of Cleveland, Richmond, Atlanta, Chicago, Kansas City, and
Dallas on August 26, 1965, 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.
Application of Virginia Commonwealth Corporation (Items 1 and 2).
There had been distributed a proposed order and statement reflecting
approval by the Board on July 12, 1965, of the application of Virginia
Commonwealth Corporation, Richmond, Virginia, to acquire more than 80
Per cent of the voting shares of First National Bank of Vienna, Vienna,
Virginia.
After minor changes in the wording of the statement had been
agreed upon, issuance of the order and statement was authorized.
of the documents, as issued, are attached as Items 1 and 2.
Copies
8/27/65
-3Messrs. O'Connell, Robinson, and Lyon then withdrew from the
meeting.
Topics for Federal Advisory Council (Item No. 3).
There had
been distributed a draft of topics proposed for discussion at the
meeting of the Federal Advisory Council on September 20, 1965, and at
the joint meeting of the Board and the Council on September 21.
During discussion several changes in the wording of the topics
were agreed upon, after which unanimous approval was given to the transmittal of the suggested topics to the Secretary of the Council.
A copy
of the transmittal letter, with enclosure, is attached as Item No. 3.
Messrs. Broida, Young, Brill, and Furth then withdrew from the
meeting.
Application of New Jersey Bank and Trust Company.
There had
been distributed memoranda dated August 19 and 25, 1965, from the Division of Examinations, and other pertinent papers, regarding the application of New Jersey Bank and Trust Company, Clifton, New Jersey, to merge
into itself Wayne State Bank, Wayne, New Jersey.
The Division recom-
mended approval.
At the Board's request, Mr. Leavitt reviewed the facts of the
case, the competitive factor reports received from the other Federal
bank supervisory agencies and the Department of Justice, and the reasons
underlying the favorable recommendation of the Division, his comments
being based principally on the material that had been distributed.
8/27/65
-4After the staff answered several questions that were raised for
informational purposes, the members of the Board expressed their views.
Governor Robertson stated that he disagreed with the recommendation of the Division of Examinations.
Obviously Wayne Township, in which
the smaller bank was located, was a profitable and rapidly growing area.
The substantial premium being offered for the stock of Wayne State Bank
indicated that New Jersey Bank and Trust Company had to outbid other
banks in the area that might also be interested in acquiring Wayne Bank.
If the presently proposed merger were consummated, New Jersey Bank (the
largest bank in Passaic County) and First National Bank of Passaic County
(the second largest bank) would control the entire area.
In his judgment
neither of these large banks should be permitted to acquire Wayne State
Bank.
While there was presently a management problem in the smaller
bank, he thought that capable management could be provided through other
means than the proposed merger.
It was true that under present manage-
ment Wayne State Bank was not an aggressive, vigorous bank; it was not
meeting fully the banking needs of the community.
There was a close
relationship between the two banks involved in the proposed merger,
Wayne Bank being operated at the moment almost as a branch of the larger
bank.
It was therefore only natural that Wayne Bank would turn to New
Jersey Bank in considering a merger, if the latter bank was willing to
Pay a substantial premium.
Without question the smaller bank wanted to
sell, but potential competition would definitely be eliminated by the
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8/27/65
merger.
If it were effected, area competition would be confined to two
large banks, and although competition between them would be intensified
he did not consider the creation of a duopoly to be in the public interest.
Accordingly, he would turn down the application and hope that Wayne Bank
might merge with some other institution.
Governor Shepardson said there admittedly was the problem that
the proposed merger involved a further expansion of the largest bank in
the county and that it apparently would confine area competition to two
banks.
However, other factors were persuasive in favor of approval.
While some other bank might conceivably enter into the situation and
seek to merge with Wayne Bank, he thought that the disadvantages of the
proposed merger were not sufficient to warrant preventing it.
Accord-
ingly, he would follow the Division recommendation for approval.
Governor Mitchell expressed the view that the banking factors
in the proposal weighed toward approval.
smaller bank should be changed.
Clearly the management of the
He believed that the convenience and
needs factor also weighed toward approval, since it seemed clear from
the record that the smaller bank was not serving the community nearly
as adequately as it might.
With respect to the competitive factor, he
believed that the merger would increase rather than decrease competition.
He would, of course, like to see a smaller bank come into the
Picture, but the community in question was in the middle of a metropolitan area where many other banking alternatives were available.
In
8/27/65
-6-
his judgment, bringing the better managed and more aggressive bank into
Wayne Township would increase competition.
This was not the first time
that problems had arisen by virtue of State laws that allowed only banks
headquartered in a community to establish branches there.
In such cir-
cumstances, any duopoly or anti-competitive structure was in fact attributable to the State law that fostered it.
With this situation in mind,
he concluded that the application was approvable on all grounds.
Governor Daane commented that he had no great enthusiasm for
this particular merger.
However, the banking factors and the convenience
and needs of the community lent weight and support to approval.
On the
matter of competition, he agreed with the analysis of the Federal Deposit
Insurance Corporation that the merger would have no significantly adverse
effect and that competition would in fact be increased in the area now
being served by Wayne Bank.
On balance, therefore, he would approve the
application.
Governor Maisel expressed disagreement with the analysis favorable to the application that had been expressed by some of the members
of the Board and by the Division of Examinations.
To him, the critical
factor was that at the present time three banks were competing in the
area, with every indication that this situation could continue.
Wayne
Bank was providing competition, as evidenced by the fact that it was
Paying a higher rate of interest on savings accounts than New Jersey
Bank and its checking account maintenance charges were lower.
Also,
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8/27/65
the operating earnings of Wayne Bank were higher than those of banks
of comparable size in its general area.
It was understood that other
banks in the area had expressed interest in merging with Wayne Bank,
so a three-bank situation apparently could be maintained in such manner.
The application before the Board therefore came down essentially to a
basic question of belief--a question on which he had been somewhat
disturbed by the point of view that seemed to have been advanced on
occasion by the Division of Examinations.
Almost always it could be
said that if there was a large bank operating in a particular area and
another large bank entered the area, theoretically there would be an
increase in competition, that is, in terms of increased competition for
the bank originally established in the area.
concern was with the community welfare.
But the matter of real
There was every evidence that
over the longer run three-bank competition normally was better for a
colluaunity than a two-bank situation.
In the present case a rapidly
growing area was involved that could easily support a three-bank situation, and he regarded it as vital to attempt to maintain that kind of
competitive climate.
Governor Balderston said that his views were much like those
expressed by Governor Mitchell.
the New Jersey statute.
The basic trouble here resulted from
He recognized that a three-bank proposition
was involved, but the realities of the situation supported the position
of the Division of Examinations.
The mere fact that a third bank existed
did not necessarily mean that the service provided was adequate.
-8-
8/27/65
Chairman Martin stated that Governor Mitchell had expressed
his own position completely.
Thereupon the application was approved, Governors Robertson
and Maisel dissenting.
It was understood that an order and statement
reflecting this decision would be drafted for the Board's consideration
and that a dissenting statement or statements also would be prepared.
The meeting then adjourned.
Secretary's Notes: On August 26, 1965,
Governor Shepardson approved on behalf of
the Board the following items:
Memorandum dated August 24, 1965, from Mr. Holland, Associate
Director, Division of Research and Statistics, recommending that five
specified members of the staff of that Division be authorized to attend
at Board expense the annual meeting of the American Statistical Association to be held in Philadelphia, Pennsylvania, September 8-11, 1965.
Memoranda recommending the following actions relating to the
Board's staff:
Appointment
Linda Kay Goukler as Records Clerk, Office of the Secretary, with
basic annual salary at the rate of $4,480, effective the date of entrance
upon duty.
Acceptance of resignations
Roberta M. O'Rourke, Secretary, Office of the Secretary, effective
at the close of business September 7, 1965.
Irene M. Fender, Statistical Clerk, Division of Research and
Statistics, effective at the close of business September 10, 1965.
Governor Shepardson today approved on
behalf of the Board memoranda recommending
the following actions relating to the
Board's staff:
8/27/65
-9-
Salary increases
Dorothy E. Swink, Statistical Assistant, Division of Research and
Statistics, from $5,660 to $6,060 per annum, with a change in title to
Research Assistant, effective August 29, 1965.
Paul L. Tedrow, Operating Engineer, Division of Administrative
Services, from $6,074 to $6,282 per annum, effective August 29, 1965.
Acceptance of resignation
Daniel Gordon, Suumier Research Assistant, Division of Research
and Statistics, effective at the close of business August 27, 1965.
Assistant Secretary
Item No. 1
8/27/65
UNITED STATES OF AMEDICA
SYSTEM
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
WASHINGTON, D, C.
In the Matter of the Application of
VIRGINIA COMMONWEALTH CORPORATION,
RICHMOND, VIRGINIA,
for approval of the acquisition of voting
shares of First National Bank of Vienna,
Vienna, Virginia,
0.
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
t to
There has come before the Board of Governors, pursuan
1956 (12 U.S.C.
section 1(a)(2) of the Bank Holding Company Act of
Regulation Y
1242(a)(2)), and sectiod 222.4(a)(2) of Federal Reserve
tion,
(12 CFR 222.4(a)(2)), an application by Virginia Commonwealth Corpora
, for the Board's
RichwInd, Virginia, a ragistered bank holding company
cent of the
Prior approval of the acquisition of more than 80 per
Vienna, Virginia.
voting shares of First National Bank of Vienna,
the Board
In accordance with section 3(b) of the Act,
receipt of the application
notified the Comptroller of the Currency of
and requested his views and recommendation with respect to the
application.
tion.
The Comptroller recommended approval of the applica
hed in the Federal
Notice of receipc of the application was Publis
ing an opportunity for
Register of Avil 23, 1965 (30 F.R. 5771), provid
views with rc.cpect to the proposed
interested persons to submit ;:emments and
acquisition.
has expired, and
The time for filing such comments and views
all those received have been considered by the Board.
set forth in the Board's
IT IS HEREBY ORDERED, for the reasons
ation be and hereby is approved,
Szateme-At of this date, that said applic
not be consummated
provided that the acquisition so approved shall
of. this Order or (b) later
(a) within seven calendar days after the date
than three mouths after said date.
Dated at Washington, D. C., this 27th day oE August, 1965.
By order of the Board of Governor3.
Voting for this action:
Unanimous, with all members present.
(Signed) Kenneth Ac Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(sEAL)
98
BOARD OF GOVERNORS
Item No. 2
8/27/65
CF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY VIRGINIA COMMONWEALTH CORPORATION
FOR APPROVAL OF THE ACQUISITION OF SHARES OF
FIRST NATIONAL BANK OF VIENNA
STATEMENT
("Applicant"),
Virginia Commonwealth Corporation, Richmond, Virginia
a registered bank holding company, has filed with the Board, pursuant to
Act"), an
section 3(a)(2) of the Bank Holding Company Act of 1956 ("the
80 per cent of
aPPlication for approval of the acquisition of more than
a
the votin3 shares of First National Bank of Vienna, Vienna, Virgini
("Bank").
Views and recommendation of supervisory authority, -
As
the application
required by section 3(b) of the Act, notice of receipt of
of, the Comptroller
Ilas given to, and views and recommendation requested
Of the Currency°
The Comptroller recommended approval of the application.
Statutory factors. -
Section 3(c) of the Act requires the Board
to take into consideration the following five factors in acting on this
application:
(1) the financial history and condition of the holding
er
company and the banks concerned; (2) their prospects; (3) the charact
Of their management; (4) the convenience, needs, and welfare of the
o ommun4 ties and the area concerned; and (5) whether or not the effect of
9
0
" 71".
:.
?
'‘.1C
-2-
the acquisition would be to expand the size or extent of the bank holding
company system involved beyond limits consistent with. adcquate and sound
banking, the public interest, and the preservation of competition in the
field of banking.
Financial history, pondition
and prospects of Anplicant and
Applicant became a bank holding company on
the barks concerned. -
December 21, 1962, through an exchange of its stock for stock in five
1/
banks. At December 31, 1964,— Applicant, with total assets of $20.4
million, controlled six banks operating 42 banking offices with total
deposits of $260.3 million.
Though Ppplicant's financial history has
been relatively brief, it is considered satisfactory and its financial
condition, largely determined by the condition of its six subsidiary
banks, is also satisfactory.
Bank opened for business in February 1962, and presently
operates its main office and one branch in Vienna.
Bank has been given
permission to operate a second branch that would be located three miles
northeast of Vienna.
After 34 months of operation, Bank had total
deposits of $4.2 million, the amcunt Bank's organizers projected would
be attained after three years of operation.
Offsetting the favorable
condition suggested by Bank's deposit growth is the unfavorable circumstance of its heavy loan position.
At year-end 1964, Bank's total loans
amounted to approximately 8R per cent of deposits and more than 5 times
total capital accounts.
These facts, and others of record, require the
1/ Unless otherwise indicated, all banking data noted are as of this
date.
-3-
y and condition are somewhat less
conclusion that Bank's financial histor
than satisfactory.
ly of shares of its
Applicant's assets consist almost entire
six subsidiary banks.
largely
Consequently, Applicant's prospects depend
particularly, Bank of
upon the prospects of these subsidiary banks,
Virginia, by far the largest in the group.
Applicant has recently
of Virginia.
contributed additional capital to the Bank
With this contri-
s, commencing in 1963, to
bution and with that bank's successful effort
to conclude that the
reduce opetating expenditures, it is reasonable
bank's prospects are generally satisfactory.
Viewing the asset con-
anticipated growth of each
dition, the quality of management, and the
of Applicant are conof Applicant's banks, their prospects and those
sidered to be generally satisfactory.
is one of the fastest
Bank is located in Fairfax County, which
the Washington, D. C.
growing communities in the Virginia portion of
Metropolitan Statistical Area ("WMSA").
Although Bank's $4.2 million
reflect a deposit
of deposits after less than three years of operation
economic growth and development
growth reasonably commensurate with the
the probability of Bank's
of the area in which it operates, and suggest
independent institution, the Board
future successful operation as an
will sufficiently better Bank's
finds that affiliation with Applicant
approval.
Prospects as to lend some support for
Manaement. experienced.
Applicant's management appears capable and
as the senior
It is noted that its officers serve also
S-11
-4-
officers of Bank of Virginia.
The managements of the subsidiary banks
ally upon the
also appear satisfactory - a conclusion based princip
sound asset condition of each of the banks.
had five senior
At the time this application was filed, Bank
officer.
Officers, only one of whom was an active operating
This
s who had previous
Officer was the only one of the five senior officer
Bank.
banking experience prior to their association with
Subsequent
the Bank.
to the filing of the application, this one officer has left
Applicant has
In order to provide Bank with essential top management,
where he is
loaned one of its subsidiary's operating officers to Bank
Presently serving.
approved,
It is proposed that if this application is
ve officer
this officer will continue in his position as chief executi
officer will
of Bank, but that, if the application is denied, this
return to his former position in Applicant's system.
The foregoing
on a temporary
arrangement whereby Bank has been assured, at least
of assistance
basis, top management direction, exemplifies the type
within its system.
that Applicant can, and has, rendered to the banks
d, offers reasonable
Bank's affiliation with Applicant, as propose
competent, experienced,
assurance of the installation and continuity of
needed, second line manageexecutive management, as well as access to
ment talent.
solution
Although Applicant's proposal is not the only
and reasonto Bank's managerial problem, it appears to be an immediate
able solution.
manageAccordingly, Applicant's proposal in respect to
consideration
ment succession at Bank constitutes a somewhat favorable
toward approval of the application.
•
2
-5-
Convenience
needs
and welfare of the comlaunities and the
area concerned. -
, Fairfax
Bank and its one branch are located in Vienna
County, Virginia.
by an
The population of Fairfax County has increased
estimated 55,000 over its 1960 figure of 275,000.
Vienna, situated about
11,500. Bank,
15 miles west of Washington, D. C., had a 1960 population of
2/
population of about
including its branch, has a primary service area
population growth since
90,000, based on the 1960 census and estimates of
that time made by the Fairfax County Planning Commission.
Thirteen bank-
addition to
ing offices are located in Bank's primary service area in
Bank's two offices.
bank holdFive of the thirteen offices are those of
indeing company subsidiaries; the remaining eight are offices of four
pendent banks, three of which are larger than Bank.
In addition, banks
cities of
in Washington, D. C., Arlington and Fairfax Counties, and the
convenient to those
Alexandria, Fairfax, and Falls Church, are fairly
y service area, and
businesses and individuals located in Bank's primar
to residents thereof who work in the areas mentioned above.
believes would
Applicant asserts several benefits that it
of Bank.
accrue to the public as a result of its acquisition
According
to Applicant, the proposed affiliation would result in Bank's having
Applicant regarding
immediate access to advice and assistance from
of managethe furnishing of specialized banking services, and a source
a more
ment personnel which would enable Bank to offer immediately
p a service potential
complete line of services and, in turn, to develo
21
are derived.
The area from which 79 per cent of its IPC deposits
-6further needs for banking services
that would assure its ability to meet the
ce area expands and develops.
which are anticipated as Bank's primary servi
in the areas
The record before the Board reflects that,
alternative banking
concerned, the public presently has convenient
However,
of those areas.
sources that are adequately serving the needs
s proposed affiliation
the Board concurs in Applicant's position that Bank'
ty to offer a more
with Applicant would better somewhat Bank's abili
complete line of services to the public.
Accordingly, considerations
involved are consistent
bearing on the convenience and needs of the areas
weight for such approval.
With approval of the application, and offer some
sound banking,
Effect of proposed acquisition on adequate and
principal market areas
Public interest, and banking competition. - The
ble competitive effects
involved in the Board's determination of the proba
Fairfax County
of Applicant's proposal encompass the City of Vienna in
and the Virginia - D.C. portion of the WMSA.
es are located in
None of Applicant's subsidiary banks' offic
to any measurable extent
Bank's primary service area, and none compete
With Bank.
cant's banks is in
The closest to Bank of an office of Appli
Bank's location.
Springfield, Virginia, about 11 miles from
There are
en these offices.
several other banking offices situated betwe
The Board
losure of competition between Bank
concludes that the elimination or forec
ion adverse to approval of
and Applicant's subsidiaries is not a considerat
this application.
-.7-
At June 30, 1964, Bank operated 14.3 per cent (2 of 14) of the
banking offices and held 7.2 per cent ($3.5 of $47.8 million) of the
total deposits in its primary service area.
Bank is substantially
smaller than five of the other seven banks with offices in its primary
service area, and is the smallest of the banks with offices in Vienna.
All banks, other than Bank, with offices in Vienna are affiliated with
bank holding companies.
There is no reason to believe that Applicant's
acquisition and operation of Bank will afford Bank any significantly competitive advantage over banks located in its primary service area.
The
Virginia banks that are located outside of Bank's primary service area, but
that are competing therein lhave met the competition offered both by
subsidiaries of the two bank holding companies located in Bank's service
area and by banks in Washington, D. C., Arlington, and Alexandria that
compete for accounts originating within Bank's service area.
No adverse
competitive effect on the aforementioned banks is reasonably foreseen
following consummation of Applicant's proposal.
Applicant's subsidiary banks hold combined deposits of $261.7
2/
Applicant's acquisition of Bank would increase this figure to
million.
$265.9 million.
There has been approved a merger of Farmers Bank of
Boydton, Boydton, Virginia (deposits of $3.4 million), into Applicant's
Bank of Virginia.
Consummation of this merger would bring the aggregate
deposits of Applicant's banks to $269.3 million.
Bank's deposits rep-
resent, respectively, less than 1/10 and 2/10 of 1 per cent of the deposits
of all banks in the State and in the Virginia - D.C. portion of the WMSA.
2/
Includes $1.4 million of deposits acquired as a result of the merger
on May 17, 1965, of The Guardian National Bank of Fairfax County, Springfield,
Into Bank of Prince William, Woodbridge.
43
,
Following :_pplicant's acquisition of Bank, Applicant would remain the
fourth in size of the banking organizations in Virginia, controlling less
than 6 per cent of the bank deposits in the State.
Bank holding company
subsidiaries, combined, would control approAmately 26 per cent of such
deposits.
In the Virginia portion of the
taisA, which portion includes
Arlington and Fairfax Counties and the cities of Alexandria, Fairfax,
4/
operate. Following
and Falls Church, four holding company groups
consummation of Applicant's proposal, the percentage of the deposits in
that area controlled by these groups would increase from 73.5 to 74.2.
Uhile these data reflect a considerable concentration of banking resources
in holding company groups, any potentially adverse effect from such concentration is significantly lessened by the fact earlier mentioned of the
extent to which banks in Uashington, D. C., serve the area under discussion.
Iiithin the Virginia - D. C. portion of the U/ISA, the four holding company
C;roup S now control 72 banking offices and combined deposits of $648 million,
Or 2/:.2 per cent of the deposits of all banks in the area.
Consummation
of this proposal would increase the total deposits controlled by holding
company groups by only 2/10 of 1 per cent.
Measured within the geographic area last discussed, the degree
to which banking resources would be concentrated in holdinE, company groups,
\Jere Applicant's acquisition of Bank to be consummated, is not viewed by
the Board as a consideration requiring denial of the application.
In sum,
the Board concludes that Applicant's acquisition of Bank would not expand
TirTiTie. are registered
bank holding companies, the fourth is a
"rlregistered bank holding company.
'S`J6
-9..
the size or extent of Applicant's system beyond limits consistent with
adequate and sound banking, the public interest, and the preservation of
competition in the field of banking.
On the basis of all relevant facts as contained in the record
before the Board, and in light of the factors set forth in section 3(c)
of the Act, it is the Board's judgment that the proposed acquisition
would be consistent with the public interest and that the application
should therefore be approved.
August 27, 1965.
BOARD OF GOVERNORS
* ....
Nit,•
°
V*,
Cfsi,
•
.
Item No. 3
8/27/65
OF THE
FEDERAL RESERVE SYSTEM
•
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 27, 1965.
AIR MAIL
Mr. Herbert V. Prochnow, Secretary,
Federal Advisory Council,
38 South Dearborn Street,
Chicago, Illinois. 60690
Dear Mr. Prochnow:
The Board of Governors suggests the topics shown on the
Advisory
attached list for discussion at the meeting of the Federal
Board
the
of
meeting
joint
the
and
1965,
Council on September 20,
21.
r
and the Council on Septembe
Very truly yours,
07
7
/Z12-217"‘,4Z;,./57
Kenneth A. Kenyon,
Assistant Secretary.
Attachment
August 27, 1965
Suggested Topics
1.
Economic conditions and prospects.
A.
B.
C.
D.
2.
How does the Council appraise prospects for the U.S. economy
during the remainder of the current year? Have recent developments in steel had any significant effect on the Council's
view as to the general outlook?
in
Are Council members aware of any substantial revisions
aexpect
g
changin
of
result
a
as
s
policie
ry
business invento
t
curren
other
or
ties
hostili
Vietnam
the
g
tions--reflectin
in
developments? Have significant revisions been observed
capital expenditure or other business plans?
ses
How strong does the Council judge pressures to be on busines
from the demand or cost sides to raise prices?
bond
How does the Council appraise the current status of the
markets? What trends does it foresee over the rest of the
ent
year in interest rates on corporate, municipal, and Governm
rates?
these
among
ntials
differe
the
securities, and in
Banking developments.
A.
B.
C.
D.
ing
What is the Council's appraisal of the factors underly
time
and
s
deposit
savings
both
in
es
increas
the more rapid
?
midyear
since
d
occurre
CDs that have
this
Does the Council expect business demands for bank credit
l
needs?
fall to be substantially in excess of usual seasona
or other
Does it anticipate any firming of bank interest rates
lending terms and conditions?
l
What are the prospects for further bank issuance of capita
and
year
this
of
er
notes and debentures during the remaind
next year?
near-term
What are the Council's expectations with regard to
t to both
respec
,
with
market
developments in the Federal funds
and
medium
by
market
this
in
the extent of participation
the disto
e
relativ
levels
smaller-size banks and likely rate
count rate?
-2-
3.
Balance of payments.
A.
How does the Council appraise the results of the voluntary
foreign credit restraint effort to date? In particular, does
it appear that the priorities for export financing and for
the less developed countries are being reasonably met?
B. What changes does the Council anticipate in the volume of U.S.
bank lending to foreigners over the rest of the year?
AS the Council appraises the balance of payments outlook,
what does it believe would be the best course of Government
action in this area in 1966?
4. What are the Council's views on monetary and credit policy under
current circumstances?
@FedFRASER