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Minutes of actions taken by the Board of Governors of the 4deral Reserve System on Monday, December 19, 1949. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman pro tem. Szymczak Draper Evans Vardaman Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Minutes of actions taken by the Board of Governors of the , ?sclera]. Reserve System on December 16, 1949, were approved unani111°Iltly. Memorandum dated December 16, 1949, from Mr. Leonard, Di' l ector of the Division of Bank Operations, recommending that E. Ph Massey, an Assistant Federal Reserve Examiner in the Division Of Examinations, be transferred to the Division of Bank Operations a8 a technical assistant, with an increase in basic salary from 45*4.n ) to $) 60o per annum, effective December 27, 1949. The memo- also stated that the Division of Examinations was agreeable t° this transfer. Approved unanimously. Memorandum dated December 15, 1949, from Mr. Betheal Diof the Division of Administrative Services recommending the 4PDointment of Miss Adele S. Hug as a stenogrpher in that Division, 111-th - basic salary at the rate of $2,875 per annum, effective as of date upon vhich she enters upon the performance of her duties 1941 12/1:149 after having passed the usual physical ex ination. Approved unanimously. Memoranda as indicated below recommending increaseL in the 134810 annual salaries of the following employoes in the offices inclicated, effective December 2), 1949: Date of 0- From 13 9 &9 Name Michael L. Jamison DRAPER 12/15/49 41. RIEFLER Otto E. Branic Salary Increase Title From To Messenger in Mr. $2,690 $2,770 Draper's office MeL;senG3r In the 2,690 2,770 Chair an's office Approved unanimously. Memorandum dated December 15, 1949, from 14±. Nelson, Diof the Division of Personnel Administration, recommending t11.4t Annie I. Gotten, Secretary in the Board Members' Offices, be tr 44sferred on a temporary basis to the Division of Personnel Adt1141.8 tratio1- Us secretary to Mx. Nelson, without change in her 14 ' e ent basic salary of $5,300 per annum, effective January 11 19:0 Llla. recommending further that Herbert Bundy, a messenger in the Board Ileinb rs t Offices be transferred on a temporary basis to the Division Of .'nistrative Services as an o7)erator (mimeograph), without change 14 1,4 ' 18 present basic salary of $2,530 per annum, effective as of he date won which he enters upon the performance of his duties. The trierao:canclum also stated that the Division of Administrative Services 48 Elgreeable to the transfer of Mr. Buney. Approved unanlmously. 19(12 12/19/49 -3- Letter to Mr. Peyton, President of the Federal Reserve Bank or u r ading as follows: "The Board of Governors approves the payment of salary to the following officers of the Federal Reserve Bank of Minneapolis at the rates indicated, which, according to your letter of December 6, 19491 are the rates fixed by the Board of Directors, for the period December 6, 1949, to May 31, 19)0, both dates inclusive: Annual Salary Title Name $10,000 Vice President Harold C. Core 9,500 E. B. Larson Vice President 8,00o M. H. Strothman, Jr. Assistant Vice President 7,000 Clayton E. Tillander Chief Examiner 6,000 George M. Rockwell Assistant Cashier 6,000 Cashier Ries Assistant Christian 6,000 Assistant Cashier Marcus 0. Sather 6,00o Assistant Cashier Arthur W. Johnson 6,000" Clement A. Van Nice Assistant Cashier Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading " f011OWS: "For some time, as you know, the Board has been giving consideration to the question whether a deposit Of uninvested trust funds made by the trust department of a member bank in its own banking department may Properly be classified as a time deposit under Regulations D and C.4 where the deposit consists of the commingled funds of various trust estates. "It will be recalled that, with its letters of November 19, 1948, and April 26, 1949, the Board submitted to the Federal Reserve Banks for comment two different Proposed approaches to this problem. The Reserve Banks are divided in their views on the subject. From a credit standpoint, however, it appears that, regardless of which approach is followed, no very significant effect upon the aggregate volume of reserves of member banks would be involved. "After careful consideration of all aspects of the 1943 12/19/49 _1 "problem in the light of the views expressed by the Reserve Banks, the Board has adopted a ruling on this subject in the form enclosed herewith which in effect Will permit the practice under consideration in certain circumstances. The ruling will be published in an early Issue of the Federal Reserve Bulletin, but you are, of course, at liberty, if you so desire, to furnish a copy of the ruling to any member banks in your district to which it may be of immediate interest." Approved unanimously, together with the following ruling: • "TIME DEPOSIT OF TRUST FUNDS IN MEMBER BANK'S OWN BANKING DEPARTMENT "The Board of Governors has been presented with a question as to whether certain deposits of uninvested trust funds made by the trust department of a member bank in its own banking department may properly be regarded as time deposits within the meaning of the Board's Regulation D, relating to reserves of member banks, as relating to payment of interest well as Regulation Oil deposits. "This question has arisen out of the practice followed by certain member banks of commingling uninvested trust funds and depositing a portion of them in a single time deposit in their own banking departments. Under this practice, it is understood that a certain portion of the aggregate amount of uninvested trust funds held by the trust department is placed in the banking department in a demand deposit and that another portion of such trust funds is placed In a time deposit subject to a written agreement between the two departments with respect to notice of withdrawal in conformity with the requirements of Regulations D and Q. However, the records of the hank do not show or identify the dollar amount of the funds of any particular trust estate Which are included in the time deposit. While the Practices of different banks vary in details, the portion of the aggregate amount of trust funds which is Placed in the time deposit is determined generally on the basis of periodic analyses of anticipated requirements for the disbursement or other use of trust funds belonging to particular trust estates within the near future. 194,1 12/19/49 -2- "After careful consideration of this problem, the Board has reached the conclusion that, where a portion ot commingled uninvested trust funds is thus placed in a single deposit in the bank's own banking department Without identification of the amount of each trust included in the deposit, such a deposit may be regarded as Complying with the requirements of the definition of a time deposit' contained in Regulations D and Ce, if (1) The amount of uninvested trust funds placed in such deposit is determined in good faith on a reasonable and conservative basis in the light of monthly reviews of anticipated requirements for the disbursement of trust funds within the near future which show that no trust funds included in the deposit will be needed for the Purpose of making such disbursements within the ensuing 30 days; (2) The deposit is subject to a written agreement between the trust department and the banking department which complies with the requirements of the definition of one of the types of time deposits set forth in Regulations D and Q and the deposit otherwise conforms to such definition; (3) The member bank is satisfied, either through consultation with its attorneys or otherwise, that the practice under which such a deposit is made is not inconsistent with applicable State law relating to trust administration or otherwise, and that the practice is not inconsistent With the terms of any applicable trust instrument or court order. "If the amount of uninvested trust funds placed in a time deposit in the member bank's banking department is determined arbitrarily and without consideration of Probable requirements for the disbursement of funds of particular trust accounts, it is the Board's view that -che deposit would not satisfy the conditions prescribed sloove," Letter to Mr. Besuden, Winchester, Kentucky, reading as follows: "Board of Governors of the Federal Reserve System has appointed you director of Cincinnati Branch of Fed'al Reserve Benk of Cleveland for three-year term beJanuary 1, 1950, and will be pleased to have Your acceptance by collect telegram." 1945 12/19/49 -6Approved unanimously. Letter to Harold Silver, Silver Engineering Works, Denver, Colorado, reading as follows: "Board of Governors of the Federal Reserve System has appointed you director of Denver Branch of the Federal Reserve Bank of Kansas City for two-year term beginning January 1, 1950, and will be pleased to have Your acceptance by collect telegram." Approved unanimously. Letter to Mr. W. A. Denecke, Bozeman, ontana, reading as 4110,48. "Board of Governors of Federal Reserve System has aPPointed you director of Helena Branch of Federal Reserve Bank of Minneapolis for two-year term beginning January 1, 1950, and will be pleased to have your acceptance by collect telegram." Approved unanimously. Secretary, 4.1iproved: 441_ Chalman pro tem.
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