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Minutes for
To:
Members of the Board
From:
Office Of the Secretary
August
9, 1963
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.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
3,e. r 1-7
,aQuh).
Minutes of the Board of Governors of the Federal Reserve
SYstem on Friday,
August 9, 1963. The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mt.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Shepardson
Mitchell
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and
Director, Division of International
Finance
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Brill, Adviser, Division of Research
and Statistics
Mr. Solomon, Associate Adviser, Division of
Research and Statistics
Mr. Sammons, Adviser, Division of International
Finance
Mx. Katz, Associate Adviser, Division of
International Finance
Mr. Mattras, General Assistant, Office of
the Secretary
Mr. Axilrod, Senior Economist, Division of
Research and Statistics
Miss Dingle, Senior Economist, Division of
Research and Statistics
Mr. Keir, Senior Economist, Division of
Research and Statistics
Mr. Bernard, Economist, Division of Research
and Statistics
Mr. Goldstein, Economist, Division of
International Finance
Money market review.
There were distributed a chart and a table
l'elating to public holdings of short-term Treasury debt along with a
table summarizing monetary developments during the four-week period
encii7ng August
7, 1963.
8/9/63
-2Mr. Keir discussed recent developments in the Government securi-
ties market, after which Miss Dingle reported on bank reserves, bank
credit, and the money supply.
Mr. Goldstein then discussed recent foreign
exchange market developments.
All members of the staff except Messrs. Kenyon, /bung, Cardon,
Pauver, Noyes, Brill, Solomon, and Mattras then withdrew and the following
entered the room:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
O'Connell, Assistant General Counsel
Conkling, Assistant Director, Division of Bank
Operations
Goodman, Assistant Director, Division of
Examinations
Leavitt, Assistant Director, Division of
Examinations
Thompson, Assistant Director, Division of
Examinations
Sprecher, Assistant Director, Division of Personnel
Administration
/bung, Senior Attorney, Legal Division
Discount
rates. The establishment without change by the Federal
I/eserve Banks of Cleveland, Richmond, St. Louis, Minneapolis, Kansas City,
flcl. Dallas on August
8, 1963, 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.
Circulated or distributed items.
or
The following items, copies
.
which are attached to these minutes under the respective item numbers
lcated, were approved unanimously:
r-
111 teAter
8/9/63
-3Item No.
Letter to First National City Bank, New York,
New York, noting without objection its intention to
establish an additional branch in Buenos Aires,
Argentina.
1
Letter to Valley Bank and Trust Company, Springfield,
Massachusetts, approving the establishment of a branch
at Allen and Cooley Streets.
2
Letter to Chemical Bank New York Trust Company, New
York, New York, approving the establishment of a
uranch at 124 East Park Avenue, Long Beach.
3
Letter to The Union and New Haven Trust Company, New
Haven, Connecticut, approving the establishment of a
uranch in Old Saybrook.
4
Letter to Wachovia Bank and Trust Company, WinstonSalem/ North Carolina, approving the establishment of
a branch at Robin Hood and Peace Haven Roads.
5
Letter to The Continental Bank and Trust Company, Salt
18.ke City, Utah, approving the establishment of a branch
!;11 the vicinity of 21st South Street and 21st or 23rd
44st Streets.
6
Letter to M-V Co., Inc., Marion, Iowa, granting a
determination exempting it from all holding company
affiliate requirements except those contained in
section
23A of the Federal Reserve Act.
7
Letter to Mr. J. Russell Klosner, President, The First
National Bank of Park Falls, Park Falls, Wisconsin,
granting a determination exempting The First National
,,€elleY, Inc., Park Falls, Wisconsin, from all holding
'omPany affiliate requirements except those contained in
section 23A of the Federal Reserve Act.
8
With reference to Item No. 2, Mr. Leavitt pointed out that Valley
84nk and Trust Company was being granted a period of two years within
141-lieh to establish the branch.
This was because the branch was to be
Ott
4."
,,4
)
8/9/63
-4-
located in a large shopping center.
According to the Reserve Bank
funds
for construction definitely were available, but it appeared that quarters
Probably would not be ready for occupancy for approximately two years.
Governor Mills, who had raised a question when the file was in circulation
concerning the reason for the two-year period, commented that the situation
seemed much the same as when a branch was to be located in a large new
°trice building, erection of which would require a considerable period
°f time.
With reference to Item No.
6,
Governor Mills commented that the
TIality of assets of Continental Bank and Trust Company seemed somewhat
dis
appointing and deposit trends did not appear very promising.
Mr.
teavitt noted, however, that apparently the bank was making a sincere
effort to improve its capital position, which was now regarded as fairly
satisfactory.
It had recently cut back its dividends, with advice to
shareholders that this was being done to add more funds to the capital
structure.
With a few well-placed branches, Mr. Leavitt felt that the
bank probably could increase its deposits considerably.
With the bank
located in an area dominated by holding company systems, it seemed desirable
t° Permit the establishment of such branches as long as the bank was not
in
unsatisfactory condition.
With reference to Item No.
Wisconsin
8,
Governor Mills recalled that the
Superintendent of Banks, on the occasion of a recent visit to
the Board's offices, had expressed concern about a movement under which
_5-
8/9/63
same of the larger banks were financing parties in the acquisition of
smaller banks, sometimes on a shoestring basis, with the possibility
that the smaller banks would not be properly capitalized and managed.
Messrs. Noyes, Goodman, and Thompson then withdrew from the
meeting.
Report on competitive factors (Horton, Kansas).
There had been
distributed a draft of report to the Federal Deposit Insurance Corporation
0/1 the competitive factors involved in the proposed purchase of assets
and assumption of liabilities of Home State Bank, Horton, Kansas, by
Bank of
Horton, Horton, Kansas.
In discussion, Governor Mitchell referred to the second sentence
of the conclusion of the report, which stated that since these were two
sMall banks in a small town whose economy had declined significantly
over the past three decades, and since there were four other banks within
13 miles of Horton, the over-all effect of the proposed transaction on
competition would not be adverse.
He questioned whether such a statement
could be fully substantiated and suggested alternative language.
Mr. Leavitt commented that the Division of Examinations had
Proceeded on the reasoning that this was essentially a one-bank town.
Re recalled that several competitive factor reports had indicated that
the over-all effect on competition would not be adverse in cases of
this kind where there were reasonably accessible alternative sources of
king services.
Vr4
41-S0
.1.
8/9/63
-6Governor Mitchell responded that he found in current studies
evidence that the worst banking monopolies existed in such situations.
He would prefer not to go beyond mentioning that there were four other
banks within 13 miles of Horton that were moderately competitive.
The report was then approved unanimously for transmission to
to the Corporation, with the understanding that the conclusion would
be revised to read as follows:
The proposed purchase of assets and assumption of
liabilities of Home State Bank, Horton, Kansas, by Bank
of Horton, Horton, Kansas, would eliminate one of two
banks in this community, and therefore, eliminate all
competition between the subject institutions. However,
there are four other banks within 13 miles of Horton
which are moderately competitive.
Window dressing (Item No. 9).
Or reply
There had been distributed a draft
to a letter dated July 31, 1963, from Chairman Fascell of the
tegal and Monetary Affairs Subcommittee of the House Committee on Goverarasnt Operations, who had requested the Board's views regarding a notice
sent by the Comptroller of the Currency to all national banks under date
"July
3, 1963, particularly the statement therein that "the legislative
history of the call report laws clearly indicates a design to employ these
reports as a supervisory device and on a surprise basis" but that in practice "this design has not been followed."
In the notice the Comptroller stated that he would have preferred
a date other than June 29 for the second call report for 1963.
He contended
8/9/63
-7-
that failure to make more calls on a surprise basis had caused the supervisory purpose of call reports to fall into disregard and that this default
from sound bank supervision had brought about the widespread practice of
window dressing.
The practice of end-of-month calls had been defended
by some
as a means of providing statistical information on a comparable
basis for analytical purposes, but the practice of window dressing had
imPaired the validity of the figures.
Lack of strict comparability of
data Would, in his view, be less serious from a statistical viewpoint
than the consequences of window dressing.
Thus the procedure of surprise
calls would serve supervisory responsibilities more effectively without
imPalzirT, and perhaps improving, the statistical worth of the data.
After discussion, the proposed letter was approved unanimously
With the understanding that it would be changed in certain respects to
'
leflect changes suggested at this meeting.
A copy of the letter, in
the form in which it was transmitted to Chairman Fascell, is attached
t0 these minutes as Item No.
9.
Messrs. Farrell, Brill, and Conkling then withdrew from the
meeting.
Investment powers of Federal savings and loan associations
No. 10). Pursuant to the understanding at yesterday's meeting,
there had been distributed a revised draft of letter to the Bureau of the
'1-Idget reporting on a draft bill proposed by the Federal Home Loan Bank
13.0ard
to enlarge the investment powers of Federal savings and loan
associations.
8/9/63
-8After a general discussion, the letter was approved unanimously
With the understanding that the language would be modified at one point
along lines suggested at this meeting.
A copy of the letter, as trans-
mitted to the Bureau of the Budget, is attached to these minutes as
aI2111
-112.:_12'
Quality Stabilization Act.
Reporting on a matter discussed at
Yesterday's meeting, Mr. Hackley said that the Bureau of the Budget had
exPressed disappointment in learning that the Board had decided against
sending, without a specific request from the Committee, a letter to the
Senate Commerce Committee expressing opposition to S. 774, referred to
as the "Quality Stabilization Act."
The bill would permit manufacturers
to establish, maintain, and enforce through the courts resale prices for
goods bearing their brand, name, or trademark.
Mr. Hackley said the Budget Bureau had inquired whether the Board
Illight be willing to send a letter or memorandum to the Bureau expressing
It
a
views on the bill.
After discussion, Mr. Hackley was authorized to suggest to the
Ekudget Bureau that if the Bureau wanted a formal expression of the Board's
ie s, it
should write a letter to the Board making such a request.
All members of the staff except Mr. Sprecher then withdrew from
the meeting.
The Secretary's Office subsequently was informed by Governor
She
pardson that the following actions were taken by the Board in executive
8easion.
8/9/63
-9Granting of requests for annual leave.
The Division of Personnel
Administration was authorized to distribute to the Board's staff a notice
stating that the Civil Service Commission was encouraging Federal agencies
to be as liberal as possible in granting requests for annual leave for
Wednesday, August 28, 1963, the day of a civil rights demonstration in
Washington; that the Board would grant annual leave to any employee
l'equesting it for August 28, with the exception of those who could not
be spared because of the essential nature of their work; that if an
emPloyee had no annual leave to his credit on that date, he would be
advanced one day of annual leave for this purpose; and that in order
to facilitate planning to insure that the Board's operations would be
carried on with the least interruption, requests for leave were to be
Submitted by August 22.
Foreign travel.
As recommended in a memorandum dated August 8,
1963, from Mr. Young, Adviser to the Board and Director, Division of
International Finance, Robert F. Emery, Economist in the Division of
International Finance, was authorized to serve as a U. S. representative
to the meeting of the ECAFE Working Party on Economic Development and
i'lanning to be held in Bangkok, Thailand, September 16-23, 1963, with
the understanding that his travel would be at Board expense and that his
tI.4 would include visits to Japan and some of the other countries assigned
to Mr. Emery in his work at the Board, requiring in all a period of three
°I* four weeks, including the time spent in Bangkok.
8/9/63
-10The meeting then adjourned.
Secretary's Note: Governor Shepardson
today approved on behalf of the Board
a letter to the Federal Reserve Bank of
Now York (attached Item No. 11) approving
the appointment of Charles F. Clark as
assistant examiner.
Assistant Secreta
dr.
BOARD OF GOVERNORS
Item No. 1
8/9/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORREOPONDENCE
TO THE BOARD
August
9, 1963
Pirst National City Bank,
399 Park
Avenue,
New York
22, New York.
Ge
ntlemen:
Reference is made to your letter dated July 8, 1963, transmitted
throu ,
Boa gn the Federal Reserve Bank of New York, requesting permission of the
Ar"01 Governors to establish an additional branch in Buenos Aires,
gentina, to be located in the Liniers Section of Buenos Aires.
Subsequent to the receipt of your application, the Board adopted
sion of Regulation M, effective August 1, 1963, which provides that,
1;4 national bank has established a branch in a foreign country, it may,
e
eo "
otherwise advised by the Board, establish other branches in that
bruntrY after thirty days' notice to the Board with respect to each such
ooaneh. The Board considers that in this case such notice was received
M, and
notAugust 1, 1963, the effective date of the revised Regulation
in es without objection the intention of your bank to establish a branch
the Liniers Section of Buenos Aires, Argentina.
a rev;
•
i F
Unless the branch is actually established and opened for business
est un or before August 1, 1964, it will be deemed that plans for its
44
have been abandoned, in which event authority to establish.
the /ishment
l ranch under the notice furnished in your letter of July 8, 1963,
44. atitomatically terminate.
Please advise the Board of Governors, in writing, through the
4de
1.41 Reserve Bank of New York, when the branch is opened for business,
f
-urni •
slung information as to the exact location of the branch.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2666
Item No. 2
8/9/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August
1963
Board of Directors,
Valley Bank and Trust Company,
Springfield, Massachusetts.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Valley Bank and Trust Company, Springfield,
Massachusetts, of a branch in a proposed shopping
center at the southwest corner of Allen and Cooley
Streets in Springfield, provided the branch is
established within two years 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.)
41,
4,,k3T) t
BOARD OF GOVERNORS
Item No.
OF THE
3
8/9/63
FEDERAL RESERVE SYSTEM
WASH INGTON 25. O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August
9, 1963
Board of Directors,
Chemical Bank New York Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch at 124 East Park Avenue, Long Beach, Nassau
County, New York, by Chemical Bank New York 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.
(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.)
Item No.
8/9/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OrFtCIAL CORRESPONDENCE
TO THE SOARED
August 9, 1963
Board of Directors,
The Union and New Haven Trust Company,
New Haven, Connecticut.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Union and
New Haven Trust Company, New Haven, Connecticut, of a
branch in the Old Saybrook Shopping Center at the
intersection of Route 1 and Elm Street, Old Saybrook,
Connecticut, 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.
(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.)
BOARD OF GOVERNORS
otottts'ig„
4° 001%k:4,
Item No. 5
OF THE
FEDERAL RESERVE SYSTEM
i4
8/9/63
WASHINGTON 25. D. C.
*
ADDRESS OFFICIAL CORRESPONDENCE
*0
*
oh-A.KS%
ott****
TO THE BOAFt0
August 9, 1963
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
G
entlemen:
The Board of Governors of the Federal Reserve
SYstem approves the establishment of a branch by Wachovia
Bank and Trust Company at the intersection of Robin Hood
and Peace Haven Roads in Winston-Salem, North Carolina,
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 91 1962 (S-1846), should be followed.
24;70
Item No.
BOARD OF GOVERNORS
.
.
,• ,ov cot,Fi•e•••
6
8/9/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August
9, 1963
Board of Directors,
The Continental Bank and Trust
Company,
Salt Lake City, Utah.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by The
Continental Bank and Trust Company, Salt Lake City, Utah,
in the vicinity of 21st South Street and 21st or 23rd
East Streets, Salt Lake City, Utah, 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 prescribei inthe Board's letter
Of November 9, 1962 (S-1846), should be followed.
A-WO
BOARD OF GOVERNORS
e.
Item No. 7
8/9/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 9, 1963.
Mr. John G. Vernon,
Vice
President and Secretary,
11 V Co., Inc.,
9O 7th Avenue
* ar1) Iowa.
'
e
1/ear Mr. Vernon:
This refers to the request contained in a letter dated
Julv
‘, 1963, submitted to the Federal Reserve Bank of Chicago,
for
determination by the Board of Governors of the Federal Reserve
as to the status of M-V Co., Inc. ("M-v"), as a holding company
From the information presented, the Board understands that
14..v
is primarily an insurance agency; that it is a holding company
ffil4
out -Late by reason of the fact that it owns 1,004 of the 2,000
4
/02,tanding shares of stock of The First National Bank of Marion,
not, directly or indirectly, awn or control any
and
st"';
ook of, that it does
or manage or control, any other banking institution.
In view of these facts the Board has determined that M-V is
gaged, directly or indirectly, as a business in holding the
4 4 of, or managing or controlling banks, banking associations,
sa.n.
ot,"'ngs banks, or trust companies within the meaning of section 2(c)
40+tIls Banking Act of 1933 (12 U.S.C. 221a); and, accordingly, it is
or" u.semed to be a holding company affiliats except for the purposes
pel.ntim 23A of the Federal Reserve Act and does not need a voting
from the Board of Governors in order to vote the bank stock
"-Loh it owns.
noten
8toeL
If, however, the facts should at any time indicate that M-V
tlight be deemed to be so engaged, this matter should again be submitted
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
John G
Vernon
tjO
the Board. The Board reserves the right to rescind this determination
make further determination of this matter at any time on the basis
r the then
existing facts. Particularly, should future activities of
r acquisitions by M-V, particularly in bank stocks, even though not
!
(Instituting
control, result in its attaining a position whereby the
ild3.10.1ard may deem
desirable a determination that M-V is engaged as a
,,,,,siness in the holding of bank stock, or the managing or controlling
sd4 ba s, the determination herein granted may be rescinded.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
- it
Ai
BOARD OF GOVERNORS
A
Item No. 8
8/9/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADORERS OFFICIAL CORRESPONOCNCE
TO THE BOARD
Air;ust 9, 1963.
J. Russel Klosner, President,
First National lkink of
,Park
Falls,
arkPalls, t;isconsin.
"
1)ear Mr. Klosner:
This refers to the request contained in a letter dated
I, 1963, submitted tL, the Federal Reserve Bank of Einneapolis,
?I' a determination by the Board of Governors of the Federal Reserve
p'stom as to the status of The First National Agency, Inc. ("Agency),
aisconsin, as a holding company afZiliate.
From the information presented,the Board understands that
encY is enr7
uafred in the insurance sales business; that it is a holding
com,
-vanY affiliate by reason of the fact that it owns 543 of the 1,000
aadin shares of stock of The First National Bank of Park Falls,
consin; and that it does not, directly or indirectly, own or control
J stock of, or manage or control, any other banking institution.
.
'
In view of these facts the Board has determined that Agency
la
n4 not engaged, directly or indirectly, as a business in holding the
1. :a4) k of, or managing or controlling banks, banking associations, savings
of the
33 or trust companies within the meaning of section 2(c)
not deemed
is
it
accordingly,
and,
221a);
U.S.C.
(12
1933
of
Act
of ue a holding company affiliate except for the purposes of section 23A
Bn the Federal Reserve Act and does not need a voting permit from the
-rcl of Governors in order to vote the bank stock which it awns.
If, however, the facts should at any time indicate that
might be decmod to be so engaged, this matter should. again be
111)Plittod to the Board. The Board reserves the right tc mcind this
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
lir• 3, Russel Klosner
-2-
determination and make further determination oj this natter at any
on the basis o the then emisting facts. Particularly, should
luture acquisitions by or activities of Agency result in its attaining
"„P(=leitien whereby the Board may deem desirable a determination that
1-1" Is enga7ed as a business in the holding of bank stock or the managing
vr controllin of banks, the determination herein granted may be rescinded.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2€;q?,,,r;
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
9
8/9/63
WASHINGTON
OFFICE OF THE CHAIRMAN
„ItitatOV
August 9, 1963
The
Honorable Dante B. Fascell, Chairman,
°gal and Monetary Affairs Subcommittee of
4 the Committee on Government Operations,
ii°11se of Representatives,
ashington 25, D. C.
bear Mr. Chairman:
ng
This is in response to your letter of July 31, requesti
the
by
the Doard's comments on a notice to national banks, transmitted
Comptroller of the Currency under date of July 3, 1963.
CompThe problem of "window dressing," referred to by the
let in his notice, is an important one, but it should be viewed
available to them,
1 13r°Per perspective. With the other information
.
4
e is no danger that the supervisory authorities themselves are
lij
'
re elY to be misled by "window dressing." Furthermore, it should be
fact, limited to
a "gnized that the "window dressing" practice is, in
eptelatively small number of comparatively large banks, and to certain
As a
precific asset and liability items on their balance sheets.
e
corporat
,
balances
k
interban
in
ated
concentr
deectical matter it is
dress"window
itj,ts and loans to large corporate customers. Thus,
has practically no effect on such economically significant figures
10 consumer, mortgage and agricultural loans by banks, or many other
an and deposit classifications.
"window
Nevertheless, we would agree with the Comptroller that
as to
public
the
mislead
may
the Sing" should be discouraged, since it
frequent
more
The
banks.
al
individu
48 size and liquidity position of
is
10
call dates might help in this respect, but there
at f"surprise"
the
in
ly
especial
eness,
effectiv
li ::esst some question as to their
1962.
Thet of our experience with the "surprise" call in December
r 17,
Septembe
of
report
its
in
ler
Comptrol
19 Advisory Committee to the
reportrequire
to
revised
be
report
41 2) recommended that "the call
'
quarter," adding
Publication of daily averages for each calendar
nollt "under this procedure the practice of calling on odd dates would
be
longer be necessary since any efforts at 'window dressing' would
be
lageffective in the average figures." This alternative might well
1110re effective way of dealing with the problem than "surprise" calls.
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Honorable Dante B. Fascell
-2-
The legislative history contemplates that the call reports be
for
purposes and that the use of "surprise" dates was
sinarlY envisaged. In fact, more than half of the four calls each year
!
evi c 1949 have been on "surprise" dates. At the same time there is no
itiueace to suggest that call reports should not also be used to obtain
°rmation needed as a basis for Governmental policy decisions.
userl
Most of the statistical information on banking operations is
Z:entlY obtained from representative samples of banks who report
and we are making a continuing effort to obtain as much
inf°rmation in this way as possible. To assure the accuracy of this
for°rmation, however, and to be able to produce geographical breakdowns
fromillai°r cities, States and regions, it is necessary that we obtain,
that- time to time, reports from all banks in the United States on dates
doll are compatible with other statistical series. This is presently
:
11 through the call report, with a considerable saving to both the
4
alternative of separate censuses of
bankss and the Government over the
Recent studies by the Federal Reserve System indicate that
it wo
444 uld be possible to reduce considerably the detail presently reit ed in two, or perhaps three, of the calls each year. Furthermore,
poiwi°uld not seriously impair the accuracy of the data needed for
repocY- making purposes in and outside Government if three of the call
Thusrta each year were on "surprise" rather than end-of-month dates.
imProv '. in our judgment, considerable progress is possible toward
purposes,
supervisory
for
report
the usefulness of the call
Poii°11t impairing its major contributions to the statistics needed for
coliocY formulation and with a reduction in the reporting burden on
ercial banks.
The Federal Reserve System hopes that it will have the coof the Comptroller of the Currency and the FDIC in moving
"
- I'd with a program to these ends.
onerat'
Sincerely yours,
/
•
Wm. McC. Martin, Jr.
ar1f
KA)e
4
Item No. 10
8/9/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. 0, C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 9, 1963.
14r. Phillip S. Hughes,
Assistant Director for
Legislative Reference,
:TIreau of the Budget,
washington 25, D. C.
bear 14r. Hughes:
This is in response to your communication of July 190 1963,
!equesting the views of the Board on a draft bill, proposed by the
;ederal Home Loan Bank Board, "To amend section 5 of the Home 'Owners'
L4Iall Act of 1933, as amended", so as to broaden the present investment
,
utherity of Federal savings and loan associations. Under existing
'taw, these assoications may make loans on the security of real estate
4nd invest, without limit, in obligations of the United States, stocks
t.bonds of Federal Home Loan Banks, and obligations of the Federal
4 lonal Mortgage Association.
r
The proposed legislation would extend the present investment
.J.,ority to include, without limit, obligations of all agencies of the
1 ted States and of the States and local governmental entities. This
4!uter group would include special obligations as might be defined by
Federal Home Loan Bank Board. The broadened authority requested
,0414 also include loans for the acquisition of major household durable
:2
b °de, for the payment of expenses of college or university education,
'
44 for the financing of mobile dwellings.
Without attempting to comment on the provisions of the draft
bill
be,
J- at this time, the Board believes that such legislation should not
H considered until it is determined what action Congress takes on
p!11. 74°4. The latter bill, based on the report of the Committee on
3.,
-11ancial Institutions, provides for strengthening the safety and
uidity of insured institutions and safeguarding against conflicts of
nterest, while also raising the limit on deposit and share insurance.
O
Any broadening of loan and investment powers of savings and
10
„411 associations, just as an increase in the insurance limit, would place
'" additional burden on the supervisory authority. It is important,
g
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
'II
4013
Mr. Phillip S. Hughes
therefore, first to strengthen the hand of the Federal Home Loan Bank
Board by appropriate legislation before considering any additional investMent powers for these institutions.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2679
BOARD OF GOVERNORS
Item No. 11
8/9/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August
9, 1963
..
92EELDEEKIALIEE/
14r. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Crosse:
In accordance with the request contained in Mr.
Bilby's letter of August 2, 1963, the Board approves the
appointment of Charles F. Clark as an assistant examiner for
the Federal Reserve Bank of New York. Please advise the
effective date of the appointment.
It is noted that Mr. Clark is indebted to First
Trust & Deposit Company, Syracuse, New York, a State member bank.
Accordingly, the Board's approval of Mr. Clark's appointment is
glven with the understanding that he will not participate in any
examination of that bank until his indebtedness has been liquidated.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER