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Minutes for December 26, 1956. To: Members of the Board From: Office of the Secretary 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, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. A Chm. Martin Gov. Szymczak 1/Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston x Gov. Shepardson I/ The attached set of minutes was sent to Governor Vardamants office in accordance with the procedure approved at the meeting of the Board on November 29, 1955. The set was returned by Governor Vardaman's office With the statement (see Mr. Kenyonts memorandum of February 12, 1957) that hereafter Governor Vardaman would not initial any minutes of meetings of the Board at which he was not present. Therefore, with Governor ohepardsonts approval, these minutes are being filed without Governor Vardaman s initial. Minutes of actions taken by the Board of Governors of the Federal Reserve System on Wednesday, December 26, 1956. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Szymczak, Acting Chairman Mills Robertson Shepardson Mt. Mt. Mt. Mt. Sherman, Assistant Secretary Fauver, Assistant Secretary Vest, General Counsel Sloan, Director, Division of Examinations Mt. Hackley, Associate General Counsel Mt. O'Connell, Assistant General Counsel Mt. Molony, Special Assistant to the Board Governor Szymczak opened the meeting by asking Mt. Vest to discuss his memorandum of December 21, 1956, relating to the matter of a public hearing on the pending applications under the Bank Holding Company Act of 1956, of First New York Corporation, The First National City Bank of New York, and International Banking Corporation. Attached to the memo- randum, which had been distributed to the members of the Board prior to the meeting, were drafts of the following: 1. 2. 3. 4. 5. 6. An order for a public hearing to be published in the Federal Register; A press release to be issued; A letter to the applicant companies transmitting copies of the letters of the Superintendent of Banks for the State of New York and the Comptroller of the Currency expressing their views in this matter; Letters to the Comptroller of the Currency and the State Superintendent of Banks advising of the hearing and inviting them to testify; A letter to the Assistant Attorney General submitting a copy of the application and inviting the Department of Justice to testify, if it should so desire. A letter to the Federal Deposit Insurance Corporation inviting it to testify. '696 12/26/56 -2- The memorandum also suggested that letters be sent to Congressmen Celler and Multer advising them of the hearing. Mr. Vest reported that the matter of a public hearing had been discussed by telephone with Mr. Harfield, Counsel for The First National City Bank of New York, and that a letter dated December 19, 1956, had been received from Mr. Harfield confirming that there was no objection on the part of the applicants to a public hearing. Mr. Vest suggested January 24, 1957, as an appropriate date within the 30 day statutory provision for starting the hearing, noting that this would allow time for preliminary matters to be considered so that taking of testimony might begin on January 28. He then reviewed pro- cedures involved in the hearing and particularly invited the Board's attention to two matters: (1) the invitation to the Department of Justice to testify; and (2) the role of Counsel for the Board in this proceeding. With respect to participation by the Department of Justice, Mr. Vest pointed out the possibility that the Department and perhaps competing banks might petition the Board to be admitted as "parties in interest" which would give them status considerably different from that of persons merely testifying in the case. As parties in interest, they would be represented by counsel and would have the right to cross-examine witnesses and otherwise participate in the proceeding. Should this hap- pen, Mr. Vest mentioned the possibility the Department of Justice might wish to convert the hearing, in effect, into an antitrust proceeding Which would considerably broaden its nature. It would, or course, be 12/26/56 -3- up to the hearing officer to make some of the decisions in this regard, subject to appeal to the Board. With regard to the role of the Board's legal staff in the hearing, Mr. Vest felt that Mr. O'Connell should represent the Board and be accompanied by Mr. Chase. It would be their purpose to be as neutral and objective as possible and to see that all evidence that the Board would need to have before it in considering public interest aspects of this case was developed and introduced into the record. He pointed out that the Board's consideration of this matter, once the hearing was concluded and the hearing officer's report was completed, would be limited to the record developed in the case. The information developed by the applicants would naturally tend to be favorable to their position. Therefore, it might well be that to develop sufficiently the negative aspects of the matter, the Board's Counsel would appear at times to take an antagonistic attitude. This situation would be almost inevitable unless some of the competing institutions or other parties came in as parties in interest, thereby resulting in a more adequate development of the pros and cons. Governor Robertson expressed the view that Counsel for the Board had the responsibility for seeing that all pertinent information, both favorable and unfavorable, was developed during the hearing. Governor Mills raised a question as to the propriety of Counsel for the Board initiating action to develop adverse information and of the possible influence on the hearing officer if it should appear that the Board's staff was concentrating on the development of adverse testimony. He won- dered whether the Board's Counsel should be other than a good listener. 12/26/56 , As an alternative he suggested that the Board might wait until the hearing officer's report had been received and if, at that time, there did not appear to be a balanced presentation of pros and cons, the matter could be returned to the hearing officer for further testimony. Mr. Vest felt that the Board might be subject to criticism if sufficient adverse information was not a part of the original report, and he reiterated his earlier comment that Board consideration of this matter would be limited to the record in the case. Governor Robertson stated that the development of adverse material by Counsel for the Board did not mean that he should argue such matters or express opinions regarding them; his role should be the introduction of facts into the record, and it would be incumbent upon him to ask sufficient questions to make that record complete. A ques- tion of equal importance, he said, was what would be done by the Board after the record of the hearing has been made and who would carry out that assignment for the Board. Mr. Vest explained that, under the Board's Rules of Procedure, after the hearing was concluded counsel for both parties could file statements with the hearing officer making suggestions as to the findings they felt the hearing officer should make. Then the hearing officer would make his findings and, at least in the usual type of hearing, would make a recommendation as to the decision by the Board, after which the matter would come to the Board for its consideration. He added that inasmuch as this was in the nature of an application for a license rather than an adversary proceeding, the doctrine of "separation of 2699 . 12/26/56 -5- functions" was not applicable and it would not be necessary to assign certain members of the legal staff for the hearing and others for consideration of the hearing officer's report. There was some discussion about the requests of Congressmen Celler and Multer to be kept informed of developments in this matter. Inasmuch as Congressman Celler hAil written the Board in his capacity as Chairman of the Antitrust Subcommittee of the Judiciary Committee of the House of Representatives, it was the consensus that a complete copy of the applications in this matter should be made available to the Congressman and his staff. With regard to Congressman Multer's request, it was felt that a copy of the order for a public hearing would be sufficient. There was also some discussion about making available generally the reply received by the Board from the Comptroller of the Currency in response to the Board's request for his views. Mr. Vest stated he felt that release of the Comptroller's letter should be made once a final decision was made in regard to a public hearing. To do other- wise, he felt, might provide the basis for a continuance of the proceeding on the ground that someone interested had been denied access to the documents and had been handicapped thereby in preparing adequately for the hearing. There was concurrence with this view. Regarding physical arrangements for the hearing, Mr. Vest said that Room 1202 in the Board's building had been reserved and that preliminary contacts had also been made to determine the availability of a grand jury room in the U. S. District Court Building, if Room 1202 were not large enough. There was also some possibility of suitable -6- 12/26/56 space being available in the Department of Interior Building. It was understood that Mr. Vest would arrange for appropriate space. Following the discussion, unanimous approval was given to (1) a Notice of applications to become bank holding companies and an Order for a public hearing, as set forth below, with the understanding that the Notice and Order would be filed in the Federal Register and that a press release would be issued to which would be attached a copy of said Notice and Order; (2) letters to the applicant companies, as follows; (3) letters to the Assistant Attorney General, Antitrust Division, Department of Justice, and Congressmen Celler and Multer, as follows; and (4) a letter to the Superintendent of Banks of the State of New York, as set forth below, with the understanding that similar letters would be sent to the Comptroller of the Currency and the Chairman of the Federal Deposit Insurance Corporation notifying them of hearing and inviting them to submit testimony. It was also understood that copies of the correspondence with the applicant companies, of the Notice and Order, and of the press release would be sent to Mr. Hayes, President of the Federal Reserve Bank of New York: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM NOTICE OF APPLICATIONS FTLED FOR APPROVAL OF ACTION TO BECOME BANK HOLDING COMPANIES & ORDER FOR HEARING THEREON Notice is hereby given that applications have been made to the Board of Governors of the Federal Reserve System, pursuant to section 3(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 131842), by the following applicants for the prior approval by the Board of the following actions: First New York Corporation, a Delaware corporation, seeks Board approval of action whereby 2701 12/26/56 -7- it would become a bank holding company with respect to each of the following banks: The Metropolitan National Bank, into which would be consolidated The First National City Bank of New York, under the latter name; The First National City Trust Company of New York, into which would be consolidated City Bank Farmers Trust Company, and County Trust National Bank, into which would be consolidated County Trust Company of White Plains, New York; The First National City Bank of New York seeks Board approval of action whereby it would become a bank holding company with respect to The Metropolitan National Bank, The First National City Trust Company of New York, County Trust National Bank, and International Banking Corporation; International Banking Corporation seeks Board approval of action whereby it would become a bank holding company with respect to The Metropolitan National Bank, The First National City Trust Company of New York, and County Trust National Bank. It is proposed that First New York Corporation will operate as a holding company of the three subsidiary national banks, namely, The Metropolitan National Bank, The First National City Trust Company, and County Trust National Bank. It is further proposed that The First National City Bank of New York, City Bank Farmers Trust Company, and County Trust Company will respectively consolidate with these subsidiaries pursuant to the provisions of the national banking laws. It appearing to the Board of Governors that it is appropriate in the public interest that a hearing be held with respect to these applications: IT IS HEREBY ORDERED, That, pursuant to section 7(a) of the Board's Regulation Y /12 CFR Part 222.7(a) promulgated under the Bank Holding Company Act of 1956; a public hearing with respect to these applications be held commencing January 24, 1957, at 10 a.m., in Room 1202 of the offices of the Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N. W., Washington, D. C., before a hearing examiner selected by the Civil Service Commission pursuant to Sec. 11 of the Administrative Procedure Act, such hearing to be conducted in accordance with 7, -8- 12/26/56 the Rules of Practice for Foria:,,i Hearings of the Board of Governors of the Federal Reserve System 52 CFR Part 2637. The right is reserved to the Board or such hearing examiner to designate any other place for such hearing or any part thereof which may be determined to be necessary or appropriate for the convenience of the parties. Ti? IS FURTHER ORDERED, That the following matters will be the subject of consideration at said hearing, without prejudice to the designation of additional related matters and questions upon further examination: 1. The financial history and condition of the companies and tile banks concerned; 2. The prospects of said companies and banks; 3. The character of their management; The convenience, needs, and welfare of the communities and the area concerned; 5. Whether or not the effect of such action would be to expand the size or extent of the bank holding companies' system involved beyond limits consistent with adequate and sound banking, the public interest, and the preservation of competition in the field of banking. IT IS FURTHER ORDERED, That any person desiring to give testimony in this proceeding should file with the Secretary of the Board on or before January 14, 1957, a written request relative thereto, said request to contain a statement of the reasons for wishing to appear, the nature of the petitioner's interest in the proceeding, and a summary of the matters concerning which said petitioner wishes to give testimony. Such request will be presented to the designated hearing examiner for his determination in the matter at the appropriate time. Persons submitting timely requests will be notified of the hearing examiner's decision in due course. (signed) Merritt Sherman Merritt Sherman Assitant Secretary. Seal Dated December 26, 1956. 2703 12/26/56 -9- To The First National City Bank of New York, New,York, New York, with identical letters to the First New York Corporation, International Banking Corporation, City Bank Farmers Trust Company of New York, and County Trust Company of White Plains, New York. This refers to the application made pursuant to the Bank Holding Company Act of 1956 for the Board's approval of action whereby First New York Corporation would become a holding company with respect to The First National City Bank of New York, City Bank Farmers Trust Company of New York, and County Trust Company of White Plains, New York, together with companion applications for the Board's approval of action whereby The First National City Bank and International Banking Corporation would likewise become bank holding companies. In accordance with the provisions of the Bank Holding Company Act the Board gave notice of these applications to the Comptroller of the Currency and also gave similar notice to the State Superintendent of Banks in New York. There are enclosed copies of the letters of the Comptroller and the Superintendent addressed to the Board expressing their views in this matter. The Board has now ordered a public hearing in connection with its consideration of these applications. The hearing will be conducted before a hearing examiner selected by the Civil Service Commission in accordance with the provisions of Sec. 11 of the Administrative Procedure Act and will commence on January 24, 1957, in the offices of the Board of Governors or at such other place in the City of Washington as convenience may require. A copy of the Board's order for the hearing as it will appear in the Federal Register is enclosed herewith. To Mr. Victor R. Hansen, Assistant Attorney General, Antitrust Division, Department of Justice, Washington, D. C. This refers to your letter of December 11, 1956, with further reference to the applications under the Bank Holding Company Act for the formation of certain bank holding companies involving The First National City Bank of New York, City Bank Farmers Trust Company of New York, and County Trust Company of White Plains, New York. The Board has now ordered a public hearing in this matter, and there is enclosed for your information a copy 12/26/56 -10- of the order for such hearing, as it will appear in the Federal Register in due course. I enclose copies of letters received from the Comptroller of the Currency and the State Superintendent of Banks of New York, dated, respectively, December 13, 1956 and December 121 19561 expressing their views with reference to these applications. In response to your request for any basic competitive information we have relating to this matter, I am enclosing a copy of the applications filed with the Board and of the attachments thereto. The Board or its staff would be glad to discuss any phase of this matter with you at any time that you should wish to do so. Also, in the event that you should wish to have a representative of the Department of Justice submit testimony at the hearing, it will be appreciated if you will advise the Board in order that a convenient time may be arranged for such testimony. To The Honorable Emanuel Celler, Chairman, Committee on the Judiciary, )Washington, D. C. House of Representatives Further reference is made to your letter of November 261 19561 and to a telephone communication between Mr. Herbert Maletz, Chief Counsel, House Anti-trust Sub-committee, and Mr. O'Connell of the Board's staff, with reference to the applications filed with the Board of Governors for the formation of certain bank holding companies involving The First National City Bank of New York, City Bank Farmers Trust Company of New York, and County Trust Company of White Plains, New York. Please be advised that the Board has ordered a public hearing in this matter and has set January 24, 1957, as the date for commencement of the hearing to be held in Room 1202 of the Federal Reserve Building, Twentieth Street and Constitution Avenue, N. W., Washingtion, D. C. A copy of this order is enclosed. In view of our understanding that you would like to make a statement during the course of this hearing, we will be glad to communicate with you at a later date to arrange a time convenient to you. In connection with Mr. Maletz's request that you be furnished with information relating to the subject applications, I am enclosing a copy of the applications filed with the Board and of the attachments thereto. 12/26/56 -11- To The Honorable Abraham J. Multer, House of Representatives, Washington, D. C. Further reference is made to your letter of December 10, 1956, requesting that you be notified of the date of any hearing to be held in connection with the holding company applications involving The First National City Bank of New York and City Bank Farmers Trust Company of New York. Please be advised that the Board has by order set January 24, 1957, as the date for commencement of a public hearing in this matter to be held in Room 1202 of the Federal Reserve Building,Twentieth Street and Constitution Avenue, N. W., Washington, D. C. A copy of this order is enclosed. Prior to the hearing we will communicate with your office to arrange a time convenient to you for presenting your views. To Mt. George A. Mooney, Superintendent of Banks of the State of New York, 270 Broadway, New York, New York; with similar letters to The Honorable, the Comptroller of the Currency, Washington, D. C. and to The Honorable H. Earl Cook, Chairman, Federal Deposit Insurance Cor2oration, Washington, D. C. This will acknowledge receipt of your letter of December 12, 1956, with reference to the applications under the Bank Holding Company Act of 1956 now pending before the Board of Governors which seek the Board's approval of the formation of certain bank holding companies involving The First National City Bank of New York, City Bank Farmers Trust Company of New York, and County Trust Company of White Plains, New York. This is to advise you that the Board has ordered a public hearing in connection with its consideration of these applications, and a copy of the Board's order for the hearing as it will appear in the Federal Register is enclosed. The hearing will be conducted before a hearing examiner and will commence on January 24, 1957, in the offices of the Board of Governors or at such other place in the City of Washington as convenience may require. The Board will be glad to have you submit any testimony that you may care to at the hearing in this matter. If you desire to do so, will you be good enough to advise the Board before the hearing commences, in order that a convenient time may be arranged for such testimony. 12/26/56 -12- The meeting then adjourned. Secretary's Note: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved, on behalf of the Board, the following matters relating to members of the Board's staff: Salary increases, effective December 3O, 1956 Name and title Division Basic annual salary From To 111.0.1.010. Research and Statistics Monica F. Joneo, Statistical Assistant Winofred J. Baez, Statistical Assistant *41 480 $4,62o 4,480 4,62o 10,065 10,320 Bank Operations J. J. Connell, Chief, Reserve Bank Operations Section Additional leave without pay LaRue S. Stahler, Operator, Key Punch, Division of Administrative Services) through June 30) 1957, effective at the expiration of her present leave, December 31, 1956. Pursuant to the recommendation contained in a memorandum dated December 17, 1956, Governor Shepardson also approved today on behalf of the Board meritorious increases in the basic annual salaries of the following persons on the Board's staff, effective January 13, 1957: Name and title Division Basic annual salary From To Office of the Secretary Beatrice Hunter, Assistant Chief) Records Section Marjorie Eaton, Secretary $6,25o 4,755 27(1r( 12/26/56 -13- Salary increases )effective January 131 1956 (continued) Name and title Division Basic annual salary From To Office of the Secretary Gladys I. Trimble, Index Clerk Edythe J. Bascom, Records Clerk Joann J. Connor, Minutes Clerk Beverly Ann Murphy, Records Clerk Pearl S. Thompson, Records Clerk *41075 3,415 3,500 3,585 3,415 $4,210 3,500 3,585 3,670 3,500 4,620 5,510 4,755 12,150 12,420 11,610 11,880 10,320 10,320 10,750 8,990 9,420 8,990 8,990 7,570 7,570 7,570 7,570 7,250 5,440 5,575 4,660 3,670 10,535 10,535 10,965 9,205 9,635 9,205 9,205 7,785 7,785 7,785 7,785 7,465 5,575 5,710 4,795 3,805 Legal Jean Crosby, Secretary Lucy I. McColloch, Secretary 5,614-5 Research and Statistics Daniel H. Brill, Chief, Business Finance and Capital Markets Section Donald C. Miller, Chief, Government Finance Section Arthur L. Broida, Economist Stanley J. Sigel, Economist Murray S. Wernick, Economist Eleanor S. Frase, Economist Milton Moss, Economist Maurice H. Schwartz, Economist Paul F. Smith, Economist Bernard N. Freedman, Economist Peter M. Keir, Economist Gerald F. Millea, Administrative Assistant Stephen P. Taylor, Economist Elizabeth B. Sette, Economist Frank de Leeuw, Economist Edward R. Fry, Economist Athens J. Messick, Secretary Esther P. Locke, Secretary International Finance Frederick R. Dahl, Economist J. Herbert Furth, Chief, Financial Operations and Policy Section Arthur B. Hersey, Chief, Special Studies Section Katherine P. Hichborn, Secretary Mary J. Katinas, Secretary Franc S. Valentine, Secretary 6,390 6,6o 12,420 12,690 12,420 12,690 3,605 3,940 3,805 5,065 3,940 5,200 -14- 12/26/56 Salary increases Name and title effective January 13 1956 (continued) Division Basic annlinl salary From To Examinations Winifred J. Black, Special Assistant Federal Reserve Examiner Francis D. Dargo, Assistant Federal Reserve Examiner Clinton R. Dow, Assistant Federal Reserve Examiner Patricia R. Faust, Stenographer Paula G. Hauprich, Stenographer J. Frank Holahan, Supervisory Review Examiner W. J. McClelland, Supervisory Review Examiner Lloyd M. Schaeffer, Senior Federal Reserve Examiner 3,940 $ 4,075 4)525 4)66o 4)660 14 .,795 3,415 3)670 10,965 31500 3,755 11,180 10,535 10,750 7,785 8l000 5)44o 5,440 4,795 5,575 5,575 4,930 6,390 5,845 6)605 5,980 41075 4)075 3)515 3,215 3,385 31300 2,775 41 210 41 210 3,600 3,300 31470 3,385 2,860 4,930 5,065 Bank Operations Robert L. Hill, Analyst Thomas 0. McConnell, Analyst Eleanor Omohundro, Secretary Personnel Administration Harry B. Stone, Personnel Assistant Harold L. Emerson, Personnel Technician Administrative Services Margaret C. Caldow, Secretary J. Frank Bell, Head Chauffeur Lyla E. Szillat, Operator (Key Punch) Vera V. Dulin„ Cashier, Cafeteria James T. Stewart, Mail Clerk Abner Thompson, Mail Clerk Robert I. Stewart, Messenger Office of the Controller Ruth H. Goodyear, Secretary v 2709 12/26/56 -15- Salary increases, effective January 13, 1956 (continued) Name and title Division Basic annual salary From To Office of the Controller Dorothy Werner, Secretary $4,620 Assistant Sec $4,755 tary
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