The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Ilk 609
Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 3, 1966
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. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
2804
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, August 3, 1966.
The Board met in the Board Room
at 9:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Robertson, Vice Chairman
Shepardson
Mitchell
Daane
Brimmer
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Senior Adviser to the Board and
Director, Division of International Finance
Mr. Holland, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Farrell, Director, Division of Bank Operations
Mr. Solomon, Director, Division of Examinations
Mr. Johnson, Director, Division of Personnel
Administration
Mr. Kakalec, Controller
Mr. Harris, Coordinator of Defense Planning
Mr. Byrne, Director, Division of Data Processing
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Koch, Deputy Director, Division of Research
and Statistics
Mr. Gramley, Associate Adviser, Division of
Research and Statistics
Mr. Sigel, Associate Adviser, Division of
Research and Statistics
Mr. Sammons, Associate Director, Division of
International Finance
Mr. Kiley, Assistant Director, Division of Bank
Operations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Kern, Assistant Director, Division of
Administrative Services
Mr. Forrestal of the Legal Division
Mr. Dahl of the Division of International Finance
Mr. White of the Division of Bank Operations
Messrs. Goodfellow, Poundstone, and Sundberg of
the Division of Examinations
Mr. Smith of the Division of Administrative Services
Mr. Staiger of the Division of Data Processing
2805
8/3/66
-2Approved items.
The following items, copies of which are
attached to these minutes under the respective numbers indicated, were
-U.P.I.Z.Loi unanimously after consideration of background information that
had been made available to the Board:
Item No.
Letter to Union County Trust Company, Elizabeth, •
New Jersey, approving the establishment of a
branch in Summit.
1
Letter to Marine Midland Trust Company of
Western New York, Buffalo, New York, approving
the establishm
ent of a branch at 714 Tonawanda
Street.
2
Letter to Manufacturers Hanover Trust Company,
New York, New York, approving the establishment
of a branch at 2 Pennsylvania Plaza, Borough of
Manhattan.
3
Letter to Manufacturers Hanover Trust Company,
New York,
New York, approving the establishment
of a branch at 5910 Clarendon Road, Borough of
Brooklyn.
4
Letter to Fidelity-Philadelphia Trust Company,
Ph
iladelphia, Pennsylvania, approving the establishment of a branch at Broad Street and Columbia
Avenue and an additional investment in bank premises.
5
Letter to The Union Commerce Bank, Cleveland,
Ohio, granting an extension of time to establish
a branch
in the Rockport Shopping Center, Rocky
River.
6
Letter to United California Bank, Los Angeles,
California,
granting an extension of time to
e
stablish a branch in Fresno.
7
Letter to Chase International Investment Corporation, New York, New York, suspending until further
notice certain provisions in the Board's letter of
March 30, 1965, relating to restrictions on acquisition by Liga Financiera S.A., Madrid, Spain, of
shares of other corporations.
8
)f;
_3_
8/3/66
Item No.
Order extending the period of time prescribed in
the Board's order dated May 26, 1966, for United
Bancshares of Florida, Inc., Miami Beach, Florida,
to become a bank holding company through the acquisition of shares of The Miami Beach First National
Bank, Miami Beach, and United National Bank, Miami.
9
Letter to Northwest International Bank, New York,
New York, regarding a proposal by that bank to form
a corporation under Bahamian law and to acquire its
issued and outstanding stock, to prevent loss on a
debt previously contracted.
10
In connection with Item No. 8, the Division of Examinations had
suggested, as
one alternative, revoking all of the conditions contained
in the Board's letter of 'March 30, 1965, on condition that Chase International Investment Corporation would at no time hold more than 50 per
cent of the outstanding shares of Liga Financiera S.A.
The Board pre-
ferred at this time only to suspend the provisions of subparagraph (1)
of the second paragraph of the 1965 letter so far as they related to
restrictions
on the acquisition by Liga Financiera of shares of other
cor porations.
The Board concluded that the broader question involved
in the instant request was one to be considered in connection with the
Pending staff report on the current study of foreign operations of U.S.
banks.
In connection with Item No. 10, the Legal Division had submitted
a draft letter stating that the stock of the corporation to be formed in
the Bahamas
by Northwest International Bank should be disposed of upon
8/3/66
repayment of the obligations secured by the mortgage to be held by said
corporation, and in any event within four years from the date of acquisition of the stock of such corporation unless the time was extended by
the Board or permission was obtained to hold such stock on a permanent
basis.
Question was raised why a period as long as four years should
be granted, and Mr. Forrestal said he would now propose a period of five
Years, the reason being that the obligations presently guaranteed by
Butler's Bank, Ltd., of Nassau were secured by a mortgage.
The final
debt would mature in 1970, which meant that the mortgage would secure
the Obligations until that time.
It was understood that the proposed
Bahamian corporation would not do anything except hold the mortgage.
The proposed
letter was approved in a form providing a five-year period,
but making it clear that the Bahamian corporation would not be used for
anY purpose except to hold the mortgage.
Reorganization of data processing.
Discussion continued at this
meeting concerning proposals for the reorganization of data processing,
as set forth in the following memoranda that had been submitted with a
cover memorandum from the Division of Data Processing dated July 20,
1966: (1) proposed computer-communications planning for the Federal
Reserve System; (2) proposed reorganization of the Division of Data
Processing;
(3) a proposed interim solution to the Data Processing Division's space problems.
At the Board's request, there had subsequently
8W-4
8/3/66
-5-
been distributed memoranda from the Divisions of Resdarch and Statistics,
International Finance, Examinations, and Bank Operations commenting on
the foregoing proposals, particularly the reorganization, operating
Procedures, and responsibilities of the Data Processing Division.
In a distributed memorandum of August 1, Mr. Byrne summarized
the results of discussions with the other four divisions in the light
of their respective memoranda.
He concluded that the common concern for
flexibility and responsiveness was a valid one, that many "wrinkles"
would have to be ironed out as the new philosophy was implemented, and
that the Data Processing Division must be prepared to shift as required
to respond to needs properly; that the Division should remain basically
a service organization, charged with providing the best possible service
it was capable of rendering; and that that should remain the principal
concern of the Division.
In order to assure sufficient flexibility in
the proposed
approach, he recommended:
(1) that the scheduling of com-
puter time to provide quick turnaround be performed in any way that would
Provide sufficient turnaround for all users and was consistent with the
computer hardware-software system, with the understanding, however, that
this would be done within the context of the proposed closed shop for
computer operations; (2) that a group be established to provide continuing assessment of all computer-related services and to initiate whatever
m°d ifications to procedures were necessary in order to assure satisfactory
service and adequate utilization of resources.
He recommended that the
2809
8/3/66
-6-
group consist of a Board member, the heads of the Divisions of Research
and Statistics, Bank Operations, Examinations, International Finance,
Personnel Administration, and Data Processing, and the Controller.
Today's discussion began with a summarization by Mr. Farrell of
the points raised in the memorandum from the Division of Bank Operations.
He expressed concern that it be made clear that responsibility for monitoring the effectiveness of the use of resources in the operations of
the Federal Reserve Banks would continue to reside in the Division of
Bank Operations, with the understanding that the Division would call on
the Division of Data Processing, where needed, for technical assistance.
He Pointed out that the proposal in one of the memoranda submitted with
the July 20 cover memorandum from the Data Processing Division would
assign a leadership role to that Division in the planning of a System
communications network, and its expansion, whereas until now reliance
for leadership had been placed primarily on System committees.
Such a
Shift, he thought, might lead to unbalanced planning as opposed to an
integration of System efforts.
Governor Shepardson responded that the first point mentioned by
11r. Farrell could be easily resolved.
tives
In May 1965 the Board issued direc-
Specifying staff assignments in assisting the Board to discharge
its responsibilities for exercising supervision over the Federal Reserve
Banks.
The directives clearly indicated that the function of the Division
of Bank Operations was to monitor the efficiency of operations at the
28 0
8/3/66
Reserve Banks.
That responsibility should remain with the Division.
If situations developed that required technical expertise, the Division
of Bank Operations would go to the Division with particular competence
in the given area, Data Processing for example, but the principal assignment to follow the operational efficiency of the Reserve Banks would
remain with Bank Operations.
As to the second point mentioned by Mr. Farrell, Governor
Shepardson said he inferred from yesterday's discussion that the Board
Proposed to defer detailed consideration of planning for a Systemwide
computer-communications network.
However, if the Board could arrive at
a general position, that could be implemented through a committee of the
kind proposed in Mr. Byrne's memorandum.
Governor Daane said he understood that it was not proposed to
rule out continuing work by System committees; that is, parallel efforts.
Governor Mitchell noted that the tone of the original staff memorandum
had carried the implication of a shift of leadership responsibility away
fromthe Federal Reserve Banks and System committees to a division of
the Board's staff.
to
He added that more work seemed necessary in order
negotiate the optimum leadership format in this area.
Governor
Shepardson commented that he saw a need for more leadership through
Par ticipation in System committee work by Board staff members whose comPetence and ability would lift them into positions of influence.
Governor
Brimmer indicated that he favored productive participation by management
281 i
8/3/66
-8-
personnel in the work of System committees rather than primary reliance
on technical competence.
Where management problems were involved, man-
agement people should be representing the Board on System committees,
drawing on technical people as necessary for support.
Mr. Solomon then reviewed the memorandum from the Division of
Examinations, his remarks indicating that no significant problems that
could not be worked out in due course were seen by that Division in the
Proposed reorganization of the Data Processing Division.
Mr. Koch reported that a meeting of staff members of Research
and Statistics and Data Processing yesterday had resulted in clearing up
s number of misunderstandings, in terms of the problems and needs of the
respective divisions and the manner in which computer operations were proposed to be conducted.
As the Research Division now understood it, what
was proposed was essentially a closed shop in terms of machine operation
but not in terms of programming.
However, the Research Division saw a
need for the preparation of an addendum to the documentation illustrating how the proposed procedures would operate in specific cases.
If that
were done, with satisfactory results, he felt that the Research Division
could support the program outlined by the Data Processing Division.
Mr. Byrne called attention to the distinction between Boardoriented operations at Culpeper and Systemwide operations.
There was need
for prompt decisions with respect to Culpeper so far as Board-oriented
computer operations were concerned, whereas it was his understanding
2t
8/3/66
2
-9-
that the Board favored shelving temporarily the proposed computercommunications planning for the System as a whole so far as the Culpeper
project was involved.
Mr. Byrne then listed several items, as follows, that he believed
required immediate consideration in connection with the reorganization
of the Board's data processing activities.
First, he would like approval
to proceed, along the general lines that had been proposed, to reorganize
and staff the Division of Data Processing.
Second, he would like approval
for the Division of Administrative Services to proceed with the acquisition of necessary space.
Third, he would suggest that the proposed
committee be established and given responsibility for the ongoing assessment and arbitration of any details or problems that needed consideration.
Fourth, consideration should be given to the organizational elements that
should be moved when outside space became available.
Fifth, considera-
tion should be given to contracting for outside programming or related
technical services to get over the hump of conversion to the new computer
System.
Governor Robertson said that the discussions had been helpful to
him and that he thought there were a number of items on which basic agreement could be achieved.
In essence, what the Board desired was the best
P°ssible utilization of the computer to assist the various divisions of
the Board in carrying out their functions.
With the increase in computer
c apacity the Board must take into consideration the most efficient way
8/3/66
-10-
to do that, keeping in mind that it was not the equipment that was
important but the use made of it.
He would think that it was not fea-
sible to resolve all of the problems today, for some of the issues were
too large.
However, the Board could register its general approval of
the concept of a closed-shop approach, with that term subjected to all
of the refinements and limitations indicated by the Board's discussions
and the exchange of staff memoranda, in order to facilitate the use of
the computer equipment.
The Board could also indicate that the type of
Division organization that had been outlined bore its approval.
That
would not extend to approval of specific proposals, such as the exact
number of people to be employed or the name of the Division.
The Board's
action today should relate primarily to the Board's own organization and
computer operations, but that would not preclude further consideration
of the long-range goal, which as he saw it was to bring into being an
integrated System computer operation, with tie-ins from the Reserve
Banks so that every Bank would have access to all of the information on
the computer.
While such a system would cost money, it would be econom-
ical in the long run because it would reduce some of the machine needs
at individual Reserve Banks.
The first thing to do, Governor Robertson continued, seemed to be
to establish a committee of the kind referred to in Mr. Byrne's memorandum.
He was inclined to favor a small committee, but with the understanding
that all divisions of the Board's staff could participate to the extent
214
8/3/66
-11-
appropriate on an ad hoc basis.
As its first job, the committee could
undertake to reduce the memoranda already distributed to the Board to
a concise document phrased in language that could be more easily understood, and worked out in such a way that there would be no doubt about
the meaning of the closed-shop concept.
When such a paper was avail-
able, the Board could decide whether to place a stamp of approval upon
it and proceed from there.
In the meantime, however, one of the things
necessary was to provide the required space for the Board's data processing operations.
The Board should authorize Governor Shepardson to
proceed with plans for the required space.
The Board should also autho-
rize the retention of contractual programming assistance in order
to
expedite the conversion to the new computer system.
Regarding the
S ystemwide computer-communications program,
the Board should merely give
its endorsement to the long-range objective, with plans expected to proceed on a cooperative basis.
The Board should determine the best way of
bringing together the most competent minds in the System for the purpose
of working out ways and means of developing such a program.
turn,
This, in
related to the operations at Culpeper, for it involved determining
the kind of computer system needed at that place, not only for the short
run but having in mind the desirability of being in such a position that
at some point it would be possible to add machinery that would permit
tying in all of the Federal Reserve Banks and branches.
Governor Shepardson suggested that the Board might be somewhat
more specific in acting on the type and scope of organization that was
t
8/3/66
-12-
contemplated.
As stated in the pertinent distributed memorandum, it had
been agreed with the Personnel Division and the Controller that the steps
taken in recruitment of staff would be reviewed in the same manner as
Other positions in the Board's organization.
But the Board could give
Specific approval to the type and general scope of organization that was
c ontemplated, so that the Data Processing Division would be able to start
recruiting for badly-needed
help.
Governor Mitchell noted that there were already several full-time
Programming positions on the Board's staff outside the Data Processing
Division.
He assumed it was agreed that they should be transferred to
the Division of Data Processing.
It also seemed clear that the Division
Should be authorized to proceed with recruiting for statisticians and
ma thematicians having capabilities such as described in the memorandum.
Beyond that, he was not so sure what was needed.
Perhaps experts should
be employed in data transmission and related fields to start working with
the Reserve Banks, but that was a rather delicate area.
Governor Robertson said he understood that Governor Shepardson
waS proposing that the Board give general approval to the contemplated
reorganizational approach, with the understanding that specific steps
taken to employ additional staff would be subject to the usual review
Procedures and approval at Board level on behalf of the Board.
Governor Daane referred to the question of the closed-shop definition and said it was evident that staff could not have personal access
2S16
-13-
8/3/66
to complex computer equipment in a free and easy way.
However, he would
like to have an addendum such as referred to by Mr. Koch prepared, in
order to assure that potential users would have sufficient access to
machine time.
He would endorse the closed-shop approach, but only within
the scope of the caveats introduced by the Research Division during the
discussion.
He agreed that steps should be taken as promptly as possible
to obtain first-rate people for the Data Processing Division.
Governor Brimmer said he also would subscribe to the general
aPproach only on the understanding that an addendum such as mentioned
by the Research Division become part of the package.
In further discussion Governor Mitchell suggested that the proposed committee's assignment apparently would include the preparation
of such an addendum as part of the package that would be brought back to
the Board.
Governor Robertson again stated that there seemed to be no need
to settle the whole issue today.
However, the Board could give its
aPproval to the general concept of a closed shop, as that term would be
defined in the committee's document, and give its approval to the general
type of proposed Division organization.
Such an approach would be based
on the idea of moving forward to build up an organization that would
Provide the best service to users when the new computer system came into
full operation.
Mr. Byrne then discussed various staffing and conversion problems,
along with the reasonable time table that might be involved, following
.44C1
8/3/66
-14-
which Governor Robertson said he hoped the proposed committee would
also take into consideration the question Mr. Farrell had raised as to
allocation of staff responsibilities.
There followed discussion of the make-up of the proposed committee, with the result that the Board approved the appointment of a committee consisting of a Board member (Governor Mitchell) as chairman, along
with all of the division heads of the Board's staff except the Secretary
and the General Counsel.
Governor Shepardson then commented that if the Board concurred
With the principal facets of the proposed reorganization of the Data
Processing Division it would not appear necessary that the organizational
details be spelled out in the committee document.
Instead, it would
seem preferable to have a document slanted toward general principles
and objectives.
This would be, so to speak, a permanent charter, rather
than just an addendum to the documentation already available.
There was
general agreement that that kind of charter document was desired from
the committee.
Governor Shepardson also commented that up to now the space problem had been discussed on the theory that the Division of Data Processing
would be the one to use the outside space.
If there was sufficient objec-
t;
-011 to moving that unit--or parts of it--rather than some other unit,
that would be a problem the Board would have to decide.
By general agreement the working out of the space problem was
:4.t.t2,ELts1 to Governor Shepardson for further study.
8/3/66
-15The Board then approved the retention of contractual programming
or related assistance for the Division of Data Processing as necessary
in the conversion period, subject to the understanding that the steps
taken to implement this action would comply with standing procedures and
that specific arrangements for contractual assistance would be subject
to the approval of Governor Shepardson.
As to the longer-range System program and the Culpeper operation,
Governor Robertson suggested that consideration of those matters await
the recommendations of the committee, and Governor Mitchell commented
that it would seem well first to formulate the aforementioned charter
document.
Governor Shepardson suggested that the Board might endorse
the general approach to the long-range program, subject to its working
out by the committee, after which Governor Briumter inquired whether it
was intended that the leadership role be assigned to the Division of
Data Processing.
Governor Robertson observed that there was no intent
today to go beyond endorsement of the broad objective; the committee
would be expected to bring back implementing suggestions to the Board.
Governor Briumter agreed with this procedure, but added that he would not
want to vest in the Division of Data Processing a leadership role such as
a ppeared to be envisaged in the original memorandum.
Governor Robertson
noted that the Board was not at this stage vesting leadership in anyone.
That matter would have to be considered by the Board when the committee
d eveloped
suggestions on how to move toward the objective.
On the basis
°f such recoumtendations, the Board would decide what formula to adopt.
8/3/66
-16Governor Mitchell indicated that it was his understanding that
at this point the Board was simply indicating its broad interest in a
Systemwide computer-communications network.
The first step would be to
get the Board's own house in order so far as computer operations were
concerned.
Governor Shepardson concluded the discussion with the observation that the Board had had before it staff documents that had struck
fire, as might have been expected.
A staff couuuittee could have been
appointed to work on the problems and try to evolve a document, but that
would have been time-consuming.
Under the procedure that had been fol-
lowed, the Board had progressed much faster by having documentation put
before it--with whatever faults it contained--to look at and consider
Specific problems.
The debate had been wholesome, for it had brought
out the nature of the principal problems involved.
Investments in and loans to foreign banks by member banks.
Governor Robertson referred to a distributed memorandum from the Legal
Division dated July 29, 1966, submitting proposed draft regulations
concerning investments in and loans to foreign banks by member banks,
in order to supplement the recently enacted amendment to section 25 of
the Federal Reserve Act authorizing member banks, with approval of the
Board, to invest directly or indirectly in foreign banks and to make
loans to such banks without regard to section 25 of the Federal Reserve
Act, subject to such regulations and limitations as prescribed by the
,4,4820
-17-
8/3/66
Board.
(The amendment was part of the Act (Public Law 89-485) approved
July 1, 1966, amending the Bank Holding Company Act.)
He suggested that
the Board also be presented a draft of alternative proposal that would
eliminate the general consent provided by one section of the proposed
draft regulations, and it was understood that that would be done.
All of the members of the staff except Messrs. Sherman, Kenyon,
Young, and Holland then withdrew from the meeting.
Reports by Board members.
Governor Robertson summarized the
extent of his participation in steps being taken by the Administration
to expedite Congressional consideration of proposed legislation to provide more flexible authority for the regulation of interest and dividends
on time deposits and share accounts.
Following Governor Robertson's report, Governor Daane summarized
the outcome of the Group of Ten meetings held at The Hague in the latter
Part of July on the subject of international monetary reform.
He indicated
that copies of the communique issued at the end of the meeting at The
Hague would be distributed to the members of the Board for their information.
Fund and Bank meetings.
Governor Shepardson reviewed alternative
P°ssibilities that had been considered for the entertainment of foreign
central bankers attending the Fund-Bank annual meetings the latter part
of September and stated reasons in favor of holding a reception at the
Federal Reserve Building in place of the luncheons that had been tendered
04o(144
8/3/66
-18-
in the past, with invitations perhaps extended to a list of persons
going somewhat beyond foreign central bankers.
It was agreed that a reception should be held, tentatively on
the afternoon of Monday, September 26, and it was understood that plans
would go forward on that basis.
Secretary's Note: In subsequent discussions the Board decided that the reception
should be held on Wednesday, September 28,
and that invitations would be limited to
foreign central bankers and their wives.
The meeting then adjourned.
C
.".4,1",C4.4/1
.,17\AA-71/-vt_
Secretary)
2822
BOARD OF GOVERNORS
Item No. 1
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON,
P.
C. 20551
ONDENCE
ADDRESS OFFICIAL CORRESP
TO TI-4E BOARD
August 3, 1966
Board of Directors,
Union County Trust Company,
Elizabeth, New Jersey.
Gentlemen:
The Board of Governors of the Federal
by
Reserve System approves the establishment
Jersey,
Union County Trust Company, Elizabeth, New
,
of a branch at 295-299 Morris Avenue, Summit
ished
establ
New Jersey, provided the branch is
within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
2s2,1
BOARD OF GOVERNORS
Item No. 2
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, .0. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
August 3, 1966
Board of Directors,
Marine Midland Trust Company
of Western New York,
Buffalo, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Marine Midland Trust Company of Western New York,
Buffalo, New York, of a branch at 714 Tonawanda
ng
Street (approximately 385 feet from your existi
York,
New
branch at 752 Tonawanda Street), Buffalo,
year
provided the branch is established within one
from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
2824
Item No. 3
8/3/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 3, 1966
Board of Directors,
Manufacturers Hanover Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Manufacturers Hanover Trust Company, New York,
Plaza,
New York, of a branch at 2 Pennsylvania
York,
Borough of Manhattan, New York, New
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.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
2825
BOARD OF GOVERNORS
Item No. 4
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ENCE
CORRESPOND
ADDRESS OFrICIAL
TO THE BOARD
August 3, 1966
Board of Directors,
ny,
Manufacturers Hanover Trust Compa
New York, New York.
Gentlemen:
Federal
The Board of Governors of the
by
ent
establishm
Reserve System approves the
York,
ny, New
Manufacturers Hanover Trust Compa
ndon Road,
Clare
5910
at
h
branc
New York, of a
branch is
Brooklyn, New York, provided the
the date of this
established within one year from
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
2826
BOARD OF GOVERNORS
Item No. 5
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
D
C
C. 2051•
PONDENCE
ADDRESS orraciAL CORRES
TO THE BOARD
August 3, 1966
Board of Directors,
Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania.
Gentlemen:
al Reserve
The Board of Governors of the Feder
adelphia
-Phil
ity
Fidel
by
ent
System approves the establishm
h at
branc
a
of
ia,
ylvan
Penns
Trust Company, Philadelphia,
Columbia Avenue,
the northwest corner of Broad Street and
branch is
the
ded
Philadelphia, Pennsylvania, provi
of this letter.
date
the
established within one year from
under the
The Board of Governors also approves
Act, an
ve
Reser
al
Feder
the
of
provisions of Section 24A.
bank premises incident
additional investment of $48,000 in
to the establishment of the branch.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
2827
BOARD OF GOVERNORS
Item No. 6
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 3, 1966
Board of Directors,
The Union Commerce Bank,
Cleveland, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve
System extends to February 17, 1967, the time within
which The Union Commerce Bank, Cleveland, Ohio, may
establish a branch in the Rockport Shopping Center,
located in the vicinity of the intersection of Center
Ridge Road and Wooster Road, Rocky River, Ohio.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2828
BOARD OF GOVERNORS
Item No. 7
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON., D. C. 20551
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
August 3, 1966
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System extends to February 5, 1968, the time within
which United California Bank, Los Angeles, California,
may establish a branch in the vicinity of Van Ness Avenue,
between Fresno and Tulare Streets, Fresno, California.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2829
BOARD OF GOVERNORS
Item No. 8
8/3/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON,
p.
C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 3, 1966.
Chase International
Investment Corporation,
1 Chase Manhattan Plaza,
New York, New York. 10005
Gentlemen:
In response to your request of April 28, 1966,
the Board of Governors has reviewed the conditions contained in its letter of March 30, 1965, granting consent
for your Corporation to purchase and hold up to 50 per
cent of the shares of Liga Financiera S.A. ("LIGA"),
Madrid, Spain, at a cost of approximately US$833,334.
Subject to continuing observation and review,
the Board of Governors suspends, until further notice,
the provisions of subparagraph (1) of the second paragraph of its letter of March 30, 1965, so far as they
relate to restrictions on acquisitions by LIGA of shares
of other corporations.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2830
UNITED STATES OF AMERICA
Item No. 9
8/3/66
AL RESERVE SYSTEM
BEFORE THE BOARD OF GOVERNORS OF THE FEDER
WASHINGTON, D. C.
In the Matter of the Application of
UNITED BANCSHARES OF FLORIDA, INC.,
MIAMI BEACH, FLORIDA,
for permission to become a bank holding
COMPany through acquisition of stock of
two banks in Florida.
RIBED
ORDER EXTENDING PERIOD OF TIME PRESC
VAL
APPRO
OF
ORDER
BY PROVISO IN
the Board of Governors,
WHEREAS, by Order dated May 26, 1966,
ng Company Act of 1956
Pursuant to section 3(a)(1) of the Bank Holdi
(a)(1) of Federal Reserve
(12 U.S.C. 1042(a)(1)) and section 222.4
ved an application on behalf
Regulation Y (12 CFR 222.4(a)(1)), appro
Florida, pursuant
Of United Bancshares of Florida, Inc., Miami Beach,
the acquisito which it would become a bank holding company through
shares of The Miami Beach
tion of 30 per vent or more of the voting
d National Bank, Miami,
First National Bank, Miami Beach, and Unite
subject to the proviso
both in Florida; and said Order was made
be consummated ...
"that the acquisition so approved shall not
date [of Order]", and
(b) later than three months after said
2831
-2-
applied
WHEREAS, United Bancshares of Florida, Inc. has
to the Board for an extension of time within which the approved
the Board that
acquisition may be consummated, and it appearing to
requested,
reasonable cause has been shown for the extension of time
public
and that such extension would not be inconsistent with the
interest;
May 26, 1966,
IT IS HEREBY ORDERED, that the Board's Order of
l
as published in the Federal Register on June 3, 1966 (31 Federa
that the proviso
Register 7927), be, and it hereby is, amended so
d shall be
relating to the date by which the acquisition approve
1966."
consummated shall read "(b) later than October 25,
, 1966.
Dated at Washington, D. C., this 3rd day of August
By Order of the Board of Governors.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
28
Item No. 10
8/3/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTOIst, D. C. 20551
AODRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 3, 1966
Hr. H. Peter Giordano, Cashier,
Northwest International Bank,
40 Wall Street,
New York, New York. 10005
Dear Mr. Giordano:
This refers to your letter of July 19, 1966, requesting an
advisory opinion of the Board as to whether the formation by Northwest
International Bank ("NIB") of a corporation under Bahamian law, and
the acquisition of 100 per cent of its issued and outstanding stock,
Would be permissible under the ninth paragraph of section 25(a) of
the Federal Reserve Act (12 U.S.C. 615).
In your letter you state that NIB has extended credit to
various companies in the Bahamas owned by Sir Sydney Oakes in connection with financing the shipment of U. S. manufactured equipment to
Such companies, and that these companies have now defaulted on their
O bligations in the aggregate principal amount of $472,921.75, in which
the interest of NIB is $440,641.48 together with accrued interest of
1
$ 8,968.06 as of June 15, 1966.
You further state that a refinancing of a portion of the
defaulted obligations in the principal amount of $216,753,52 has been
Ptoposed whereby such obligations plus accrued interest would be
t• 'ePayable over a three-year period commencing February 18, 1967. As
atturity for the defaulted obligations NIB would be given certain
collateral of which the most important would be a mortgage on 'real
estate under development in the Bahamas. Because of provisions of
Bahamian law, a mortgage on Bahamian real estate may be held only by
a Bahamian resident, and, therefore, it is proposed to organize a
Bahamian corporation to hold the mortgage as trustee for NIB. This
corporation would be named "Northwest International Ltd." and have
an authorized capital of $2,000, of which $1,000 would be paid in
by
NIB.
Mr. H. Peter Giordano
-2-
Although judgments have been obtained on a substantial
portion of these debts, it is understood that enforcement of the
judgments in the Bahamas would be difficult in view of the lack of
liquid assets held by the debtors. It is also understood that some
of the debts are covered by Export-Import Bank and FCIA insurance
but that certain irregularities have been reported in connection with
the latter insurance, and a suit against FCIA, if successfully defended,
Would result in a very substantial loss to NIB.
The ninth paragraph of section 25(a) of the Federal Reserve
Act provides, in part, that:
"Nothing contained herein shall prevent corporations
organized hereunder from purchasing and holding stock in
any corporation where such purchase shall be necessary to
prevent a loss upon a debt previously contracted in good
faith;".
It is the opinion of the Board that the above-quoted provision
of section 25(a) has applicability to situations of the type described
in your letter of July 19, 1966. On the basis of the facts presented,
therefore, the Board has concluded that the formation of a Bahamian
corporation and the acquisition of all of its stock (exclusive of
qualifying shares) as part of the proposed refinancing arrangement are
necessary to prevent a loss upon a debt previously contracted in good
faith within the meaning of the ninth paragraph of section 25(a) of
the Federal Reserve Act.
The Board's opinion is rendered on the understanding that
the Bahamian corporation will engage in no activity, in the Bahamas
or elsewhere, except that of holding a mortgage to secure the described
debts previously contracted. The stock of the corporation to be formed
in the Bahamas pursuant to the opinion expressed herein shall be disposed of when the obligations secured by the mortgage to be held by
said corporation have been repaid, and in any event within five years
from the date of acquisition of the stock of such corporation unless
such time is extended by the Board or permission is obtained to hold
such stock on a permanent basis.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER