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P1 6o9
Minutes for
To:
Members of the Board
From:
Office of the Secretary
December 7, 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
1
f3
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, December 7, 1966.
The Board met in the
Board Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Shepardson
Mitchell
Daane
Maisel
Brimmer
Sherman, Secretary
Kenyon, Assistant Secretary
Broida, Assistant Secretary
Young, Senior Adviser to the Board
Holland, Adviser to the Board
Solomon, Adviser to the Board and Director,
Division of International Finance
Mx. Molony, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Hexter, Associate General Counsel
Messrs. Shay and Hooff, Assistant General Counsel
Mr. Koch, Deputy Director, Division of Research
and Statistics
Mr. Smith, Associate Adviser, Division of Research
and Statistics
Mr. Sammons, Associate Director, Division of
International Finance
Mr. Irvine, Adviser, Division of International
Finance
Messrs. Leavitt and Dahl, Assistant Directors,
Division of Examinations
Mrs. Semia, Technical Assistant, Office of the
Secretary
Mr. Morgan, Staff Assistant, Board Members'
Offices
Miss Hart and Messrs. Forrestal, Sanders, and
Via, Senior Attorneys, Legal Division
Messrs. Golden, Senior Economist, and Greenspun,
Economist, Division of Research and Statistics
Mr. Egertson, Supervisory Review Examiner, Division
of Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
14,‘
-2-
12/7/66
Report on competitive factors.
A report to the Comptroller of
the Currency on the competitive factors involved in the proposed merger
of Tuscarora State Bank, Blairs Mills, Pennsylvania, and The Juniata
Valley National Bank, Mufflintown, Pennsylvania, was approved unanimously
for transmittal to the Comptroller.
The conclusion of the report stated
that the proposed merger would not have adverse competitive effects.
Application of Bank of Virginia.
There had been distributed a
memorandum dated November 29, 1966, from the Division of Examinations,
With other pertinent papers, regarding the application of The Bank of
Virginia, Richmond, Virginia, to merge with The Bank of LaCrosse,
LaCrosse, Virginia.
The Division recommended approval.
The Banking
Markets Section of the Division of Research and Statistics believed the
adverse
application should be denied, on the grounds that it would have
effects on potential competition and offered at best only moderate
improvements in convenience and needs.
The Legal Division's view was
that although the merger would not be anticompetitive within the meaning
of the antitrust laws, there was reason to conclude that the consequences
for
competition would be somewhat adverse.
The Legal Division thought
the banking factors should also be viewed as somewhat adverse and that
the
benefit for the
convenience and needs factor promised only a slight
area served by the LaCrosse bank.
approved
Governor Maisel mentioned two applications, one recently
by the
Comptroller of the Currency and one awaiting his decision, by a
1,1
12/7/66
relatively large national bank in Virginia for merger with smaller
banks in towns not far from the communities involved in the Bank of
Virginia application that was now before the Board.
Governor Maisel
suggested that it might be advisable to consult with the Coordinating
Committee on Bank Regulation, since he did not believe it was possible
for the Board to arrive at its best judgment in regard to the present
application without knowing the Comptroller's decision in regard to the
one pending before him.
Discussion of Governor Maisel's suggestion included comments
raising the question whether referral to the Coordinating Committee
would be consistent with the intent of Congress in its assignment of
re
sponsibilities under the Bank Merger Act.
It was noted that the Com-
mittee was taking some steps looking toward more uniform standards
among the several agencies in passing on mergers, and that there was
in effect
a channel for taking into account the views of other agencies
through the advisory competitive factor reports.
It was observed that,
rather than attempt to bring other agencies into
the Board's decisions,
an alternative
would be to expedite the studies now under way of
Virginia banking markets.
Summary comments by Mr. Egertson were followed by staff responses
t° queries in which members of the Board sought clarification of certain
Points.
mented
The Banking Markets Section and the Legal Division also com-
in explanation of the positions they had taken.
12/7 /66
-4The Chairman then requested the Board members' views, and
Governor Shepardson remarked that although Bank of Virginia had had a
chronic capital problem, steps the bank had taken in the past two years
and others that it planned in 1967 seemed to indicate good faith in
working toward improvement.
Moreover, recent money market conditions
admittedly had been unfavorable for the obtaining of new bank capital.
Although customers who wanted services that were unavailable from the
LaCrosse bank might be able to obtain them by going to towns 15 miles
or so away, it seemed clear that their convenienc
e would be served if
they could get those services in their home community.
He did not
agree with the view that a bank did not develop demand but rather met
demands that had already come into being; he had seen many instances
in which an agressive bank had been instrumental in generating demands.
In his view, the considerations in the present case balanced on the
constructive side rather than the adverse,
and he did not believe concentration of
bank resources had approached a dangerous level.
Governor Mitchell expressed the view that the balance of factors
was slightly on the plus side.
Studies of the banking structure of
Virginia thus far available, he believed, showed that there were many
credit
-deficit areas.
A State-wide branch banking system or holding
corn
PanY organization offered the possibility of meeting the needs of
such areas, and he believed that was a major reason in support of
a pproval in this particular case.
12/7/66
-5Governor Daane said he agreed with the general pattern of
Governor Mitchell's thinking.
The territory involved was sparse and
poor, and it appeared from the Richmond Reserve Bank's field report
that the majority of persons interviewed in the area felt the merger
would be of benefit to the community.
The management succession prob-
lem of the LaCrosse bank might have some substance, and the recruitment
resources of Bank of Virginia would provide a solution.
Governor Maisel observed that although the case was marginal,
the LaCrosse bank, with $6 million in deposits, was above the median
size of banks in the United States.
While he agreed that a State-wide
System of holding company and branch banks would help to reach creditdeficit areas, he believed the purpose of such a system was defeated
When, as in the present case, one or two institutions were doing all
the merging in a particular area.
It seemed to him that that was the
Point the Banking Markets Section and the Legal Division were making.
It was a strong enough factor, in his opinion, to offset the marginal
benefits
of the merger under the banking factors.
Governor Brimmer stated that although the case was a close one,
he had found the reasoning of the Banking Markets Section and the Legal
Division more persuasive than that of the Examinations Division.
A $6
million bank in rural Virginia was a fairly sizable institution.
More-
°I7er, in an agricultural community such as here involved, the 15 miles
or so some customers had been going for banking services was no great
12/7/66
-6-
distance; in other cases it had been stressed that such a distance was
no significant handicap in a rural area.
He believed it was important
to avoid allowing a high concentration of banking in Virginia to build
up through approval of successive increments that in themselves were
rather insignificant.
He did not think the management succession prob-
lem of the LaCrosse bank was serious; the surviving bank intended to
keep the chief officer of the LaCrosse bank as manager of the branch
that would be operated there.
Chairman Martin commented that he thought anything that would
help to improve the area in question would be a net plus.
This partic-
ular proposal might not, but it seemed to offer a better possibility
than maintenance of the status quo.
The application of The Bank of Virginia was thereupon approved,
Governors Maisel and Brimmer dissenting.
It was understood that an
order and statement reflecting this decision would be drafted for the
Board's consideration, and that a dissenting statement or statements
also would be prepared.
Messrs. Smith, Via, Golden, Greenspun, and Egertson then withdrew from
the meeting.
Gold loan (Item No. 1).
4
On September 6, 1966, the Board approved
gold collateral loan to Bank of the Republic, the central bank of
Colombia,
that
in the amount of $13 million for 90 days, it being understood
no renewal would be considered.
Bank of the Republic had made
12/7/66
-7-
three drawings against the loan -- $5 million on September 12, $5 million on September 19, and $3 million on September 29, 1966.
There had now been distributed a memorandum dated December 6,
1966, from the Division of International Finance stating that Bank of
the Republic had asked that the maturity dates of the first two drawings be extended from December 12 and 19 to December 28, 1966 (which
was the maturity date of the third drawing).
The request was occasioned
by certain monetary and financial conditions in Colombia, as described
in the memorandum.
The Departments of Treasury and State had registered
no objection to the prospective adjustment of maturity, although the
Treasury would oppose any extension of the loan beyond December 28.
The directors of the Federal Reserve Bank of New York had authorized
e xtension of the maturity dates of the two $5 million drawings to
December 28 on the same terms and conditions (other than maturity dates)
as the original loans, subject to the approval of the Board of Governors
The memorandum concluded with the recommendation that the Board approve
the request, and a draft of telegram in those terms to the New York
Reserve Bank was attached.
After discussion the telegram was approved unanimously in a
form in which, at Governor Brimmer's suggestion, it would again specify
that renewal of the loan beyond December 28 would not be considered.
A c°PY of the telegram in the form in which it was transmitted is
a
ttached as Item No. 1.
12/7/66
-8Asian Development Bank (Item No. 2).
There had been distributed
a memorandum dated December 2, 1966, from the Legal Division regarding
a request from the Bureau of the Budget for the Board's views on a proposed Executive Order, the principal purpose of which was to afford the
Asian Development Bank the same privileges and immunities in the United
States as were enjoyed by other international institutions of which the
United States was a member.
The principal provisions of the proposed
Executive Order were set out in the memorandum, and attached was a draft
of letter to the Budget Bureau that would state that the Board had no
objection.
The letter was approved unanimously.
A copy is attached as
Item No. 2.
Bankers' acceptances.
There had been distributed a memorandum
dated November 28, 1966, from the Legal Division referring to the Board's
assignment to the staff of the preparation of a revision of Regulation C,
Acceptance by Member Banks of Drafts or Bills of Exchange.
The provi-
sions of that regulation, which imposed qualitative and quantitative
restrictions
on the creation of acceptances by member banks, indirectly
affected
the authority of the Reserve Banks under other regulations to
d
iscount and purchase bankers' acceptances.
Consequently, the assign-
ment related to all aspects of the System's role in the field of bankers'
acceptances.
At its meeting on September 12, 1966, the Conference of
Presidents had approved a recommendation by the Committee on Discounts
12/7/66
-9-
and Credits "that the Subcommittee on Bankers' Acceptances make
a study
in depth of bankers' acceptances and recommend new System policies
regarding this subject."
The memorandum noted that it seemed desirable at this time to
present to the Board an outline of (1) rules governing bankers' acceptances as contained in the Federal Reserve Act and regulations and
interpretations of the Board and (2) practices followed by the New York
Reserve Bank in administering such rules (the practices were described
in an attachment to the memorandum).
It seemed advisable also to ascer-
tain the Board's current philosophy with respect to bankers' acceptances
Particularly as to whether the System's role should become more active
than at present or become predominantly passive.
To point up the possi-
bilities and problems, two alternatives to a continuation of the System's
current role were outlined in attachments to the memorandum, although
they were not intended to exhaust the possible approaches.
The outlined
alternativ
es were directed toward (1) greater assurance of the selfliquidating nature of bankers acceptan
'
ces discounted or purchased by
the Federal
Reserve, and (2) withdrawal of Federal Reserve qualitative
rules governing such acceptances.
The memorandum also commented on the
merits and probable consequences of continuation
of the present rules,
and
concluded with recommendations by the Legal Division, in the event
he Board was in favor of such continuation, for rearrangement of the
Present rules among the several pertinent regulat
ions.
1 1!
12/7/66
-10After comments by Mr. Sanders, Governor Maisel observed that
the treatment of bankers' acceptances was closely related to certain
phases of the comprehensive study of the discount mechanism now in
progress.
Mr. Holland then commented on the contemplated coordination
of efforts between the discount study task force and the Conference
Subcommittee on Bankers' Acceptances.
In essence, the feeling had been
that, since the Subcommittee had been directed to make a study in depth,
the study should proceed independently for the most part rather than as
an adjunct to the discount study, but that the two study groups should
keep in close touch.
Further comments indicated a view on the part of members of the
Board that rather than adopt any policy positions at this time in regard
to bankers' acceptances they would want to examine an objective analysis
of the pros and cons deriving from the pending studies.
Messrs. Solomon (Adviser), Shay, Sammons, Irvine, and Dahl, and
Miss Hart then
withdrew from the meeting.
Contract rate of interest on deposits.
There had been distrib-
uted a memorandum dated December 2, 1966, from the Legal Division regarding the rates of interest a bank may contract to pay on deposits.
An
interpretation of the Board had held that with respect to time deposits,
°Pen account, the Board's Regulation Q, Payment of Interest on Deposits,
did not prevent a member bank from contracting to accept deposits in the
future and to pay on them the maximum rate of interest in effect on the
12/7/66
-11-
contract date, irrespective of when the funds were received.
A more
troublesome question arose when the contract included a provision permitting modification of its terms to conform to the applicable regulations of the Board.
Section 217.3(b) of Regulation Q provides that
"every member bank shall take such action as may be necessary, as soon
as possible consistently with its contractual obligations, to bring all
of its outstanding certificates of deposit or other contracts into
conformity with the provisions of this part."
However, when the Board
recently reduced the maximum permissible rate on certain kinds of time
deposits it exempted such deposits already held by banks from the provisions of section 217.3(b).
Under the present regulation and the recent
interpretation, a member bank that submitted a bid for a deposit contract
including a provision reserving the right to modify the obligation to
Pay interest
would not be offering a bid as favorable to the depositor
as a bank
whose contract contained no provision for modification.
This
situation had worked an inequity especially with respect to bids by
member banks for municipal deposits to be made during a one-year or
two-year period.
Apart from legal considerations, there was also a policy question whether the Board considered it desirable for a bank to contract
to ,
Fa
Y Interest, at the rate current on the contract date, for a stated
Period of time -- for example, for 20 years.
The Legal Division in the
Past had favored giving member banks complete freedom with respect to
12/7/66
-12-
contracts for under one year, but modifying Regulation Q, with respect
to all contracts for over one year, to reserve to the Board the right
to require a reduction in the rate of interest to conform to the maximum prescribed in the Supplement to Regulation Q from time to time.
The Federal Reserve Bank of New York had suggested, in lieu of exempting contracts expiring within one year from date of deposit, that the
exemption be extended to time deposits with fixed maturities and with
no provision for earlier withdrawal upon prior written notice to the
bank.
The Reserve Bank's Counsel had expressed the belief that provid-
ing in certificates of deposit that the rate of interest was subject to
Change "would render the certificate nonnegotiable on the gound that it
would no longer contain a promise to pay a certain sum in money."
The
Federal Reserve Bank of Atlanta had suggested that deposit contracts
with a maturity date up to five years from the date of deposit be
exempted.
The proposal for modifying Regulation Q had been submitted to
the Board most recently in September 1966 at the time of the Board's
action reducing the maximum rate of interest on "consumer type" time
de posits.
At that time, the Board had indicated a desire to pursue the
Proposal by requesting comments from the Federal Deposit Insurance CorP°ration at an appropriate time and, if the Corporation agreed, subsequantlY publishing it in the Federal Register for comment.
Subsequent
informal discussions of the proposal with the legal staff of the Corporati°n gave the impression that the Corporation might not now be averse
12/7/66
-13-
to the proposal, although it had been in 1964 (apparently on the ground
that it did not believe there was substantial evidence that banks were
abusing the present provision by issuing long-term certificates containing unqualified promises to pay interest at the maximum rate in effect
on the contract date).
If the Board favored the proposal and its formal
submission to the Corporation at this time, the Legal Division recommended sending the Corporation a letter inviting it to join in publishing a notice of proposed rule making for public comment.
A draft of
such a notice was attached to the memorandum.
In introductory comments Mr. Hackley brought out that the
possible need for such an amendment to Regulation Q had been pointed
Up
about two years ago when some banks began to offer certificates of
deposit at a guaranteed rate of interest for a period of years.
The
question also had a bearing on the policy statement with respect to
bank
advertising that the Board and other supervisory authorities had
been considering.
some
The present situation presented inequities because
years ago the Board had suggested that member banks include in
their certificates or passbooks a statement that the rate of interest
was subject to change if the maximum permissible rate was changed by
the Board.
Some banks had conscientiously done so and were therefore
b°11hd by the language in Regulation Q to the effect that a bank must
take such action as may be necessary, as soon as possible consistent
With its
contractual obligations, to bring its outstanding contracts
12/7/66
-14-
Into conformity with a downward change in the maximum permissible rate
of interest.
Other banks that had not included such a reservation in
their deposit contracts were able to continue paying the contractual
rate of interest.
And, as the memorandum had pointed out, a bank bid-
ding for municipal or other deposits suffered a disadvantage if its
rate of interest was subject to change whereas another bank's bid was
based on a rate that could be guaranteed.
Governor Shepardson expressed the view that a limitation on the
length of time a bank could guarantee a rate appeared desirable, but
Where the line should be set was not so clear; a five-year period might
be excessive, but perhaps a one-year limitation would be stricter than
If two-year contracts were a general practice, perhaps there
needed.
was merit in allowing banks to guarantee a rate for that term.
Governor Maisel stated that the central question seemed to be
bank competition for certain kinds of money, especially municipal funds,
Which could
be attracted more readily if a guaranteed rate could be
offered.
In his opinion some flexibility was warranted.
In response to a request by Governor Brimmer for discussion of
he New York Reserve Bank's point that a one-year limitation would be
de
trimental to the marketing of certificates of deposit, the staff
indicated that the argument appeared to have some merit.
the notice
However, if
of proposed rule making were published, the volume and nature
f public
comments should help to clarify whether it would be desirable
12/7/66
-15-
to set a limit at one or two or five years.
The fundamental question
was whether the Board wished to encourage bank activity in certificates
of deposit with one-year or two-year terms, but not longer-term ones.
The Board could draw the line according to whatever structure it considered proper.
Governor Brimmer stated that if it was known in advance that a
one-year limitation would foreclose most of the activity in certificates
of deposit of longer term, he would object to such a limitation and to
the publication of the proposal in a form specifying such a limitation.
Governor Mitchell expressed the view that certainty between a
bank and its customer was essential, and therefore there was a question
whether the Board should reserve the right to force changes in contract
rates beyond a certain time limit.
If a limit had to be set, he agreed
that one year was too short, and he might object to five years as too
long-
Two or three years might be the best choice from an over-all
st
andpoint.
Mr. Holland commented that the research staff had been giving
thought
for some time to what would be a desirable maturity structure
among money market instruments.
It was not an open-and-shut case; there
could be varying
judgments as to what would be an appropriate maturity
structure that would combine a safe proportion of volatile funds with
a sufficient balance of longer and more stable maturities.
He suggested
that before the Board published the notice of proposed rule making it
12/7/66
-16-
might wish to have the economic pros and cons analyzed in a research
memorandum.
There was unanimous agreement that the question should be
deferred pending preparation of an economic analysis such as Mr. Holland
had suggested.
Open market operations in agency obligations (Item No. 3).
Pursuant to the discussion at yesterday's meeting there had been distributed a draft of statement, for possible release in conjunction with
the weekly statement of condition of the Federal Reserve Banks as of
December 7, 1966, regarding the first repurchase agreements involving
U. S. Government agency obligations under the authority granted in
Public Law 89-597, approved September 21, 1966.
After discussion the statement was approved unanimously for
issuance in the form attached as Item No. 3.
Members of the staff not concerned with the following matters
then withdrew from the meeting.
Designation of Chairman and Deputy Chairman.
(-1.iaaa.t.
The Board
Dolph Simons, Editor and President of the Lawrence Daily
Journal-World,
Lawrence, Kansas, as Chairman and Federal Reserve Agent
at the Federal Reserve Bank of Kansas City for the year 1967, with comPensation fixed at an amount equal to the fees that would be payable
to any other director of the Kansas City Bank for equivalent time and
ttend ance to
official business.
The Board also appointed Dean A. McGee,
12/7/66
-17-
Chairman of the Board, Kerr-McGee Corporation, Oklahoma City, Oklahoma,
as Deputy Chairman of the Federal Reserve Bank of Kansas City for the
Year 1967.
Director appointments.
It was agreed to ascertain through the
Chairman of the Federal Reserve Bank of Kansas City whether the following persons would accept appointment if tendered as Reserve Bank or
branch directors for the terms indicated, with the understanding that
if it were
found that they would accept, the appointments would be made:
Edd H. Bailey, President and Chief Executive Officer, Union
Pacific Railway, Omaha, Nebraska, as a Class C director of
the Federal Reserve Bank of Kansas City for the three-year
term beginning January 1, 1967. (If it developed that Mr.
Bailey could not accept the appointment, it was understood
that inquiry would be made with respect to Willard Deere
Hosford, Jr., Vice President, John Deere Company, Omaha,
Nebraska.)
D. R. C. Brown, President, Aspen Skiing Corporation, Aspen,
Colorado, as a director of the Denver Branch of the Federal
Reserve Bank of Kansas City for the two-year term beginning
January 1, 1967.
Florin Zaloudek, Manager, J. I. Case, Kremlin, Oklahoma, as
a director of the Oklahoma City Branch of the Federal Reserve
Bank of Kansas City for the two-year term beginning January 1,
1967.
Willard Deere Hosford, Jr., as a director of the Omaha Branch
of the Federal Reserve Bank of Kansas City for the two-year
term beginning January 1, 1967. (If it developed that Mr.
Hosford was appointed a Class C director, or was otherwise
unavailable for the Omaha Branch appointment, it was understood that inquiry would be made with respect to Willis A.
Strauss, President, Northern Natural Gas Company, Omaha,
Nebraska.)
12/7/66
-18Secretary's Note: It having been ascertained
that Mr. Bailey was unavailable for the Class C
directorship but that Mr. Hosford would accept
the appointment if tendered, an appointment telegram was sent to Mr. Hosford on December 9, 1966.
Word having been received that acceptances would
be forthcoming, appointment telegrams were sent
to Mr. Brown on December 8 and to Mr. Zaloudek
on December 9, 1966.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board memoranda
recommending the following actions relating
to the Board's staff:
ARaalatmal.
. Larry D. Higgins as Analyst, Division of Data Processing, with
basic annual salary at the rate of $11,306, effective the date of
entrance upon duty. (It was understood that the Board would pay for
che moving and transportation expenses of Mr. Higgins and his family
.Lrom Ogden, Utah, to Washington, D. C.)
Sal
jar
increases
effective December 18, 1966
Name and title
Division
Basic annual salary
To
From
Legal
Barbara Jane Sawyer, Stenographer
$4,269
$4,776
4,269
4,776
5,331
5,867
5,331
6,451
International Finance
Nancy L.
White, Stenographer
Examinations
8ernice Bell, Secretary
Data Processing
sane Ellen
Davis, Programmer
("Trainee"
deleted from title)
12/7/66
-19-
4504
§.212.Ey increases, effective December 18
Name and title
1966 (continued)
Basic annual salary
From
To
Division
Data Processing
Marilyn F. Metzger, Graphic Illustrator
("Trainee" deleted from title)
Christine V. Sebastian, Graphic Illustrator
("Trainee" deleted from title)
Dorothy B. Slagle, Statistical Assistant
Evelyn M. Swanner, Graphic Illustrator
("Trainee" deleted from title)
$4,269
$4,776
4,269
4,776
5,256
4,269
5,683
4,776
Transfer
Carrie Lee Hobson, Cafeteria Helper, Division of Administrative
Services, from a part-time position to a full-time position, with
basic annual salary at the rate of $3,609, effective December 7, 1966.
A.c.E.tptance of rf_ignation
Judith S. Scully, Secretary, Division of International Finance,
effective the close of business December 16, 1966.
OK
A' A ‘2_,^.",
Secreta
15(3.,
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
December 7, 1966.
Waage - New York
Re your wire of December 1, Board has approved extension
from December 12 and 19 to December 28, 1966, of maturity
dates of two drawings of $5 million each against $13 million
sold loan made by Federal Reserve Bank of New York to Banco
de la Republica of Colombia, subject in all other respects
to the same terms and conditions as those originally approved.
As indicated in Board wire of September 6, 1966, approving
Muting of loan, Board is not prepared to consider renewal
thereof
beyond December 28 maturity date.
(Signed) Merritt Sherman
Sherman
Item No. 1
12/7/66
BOARD OF GOVERNORS
Item No. 2
12/7/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
OFFICE OF THE CHAIRMAN
December 8, 1966
The Honorable Charles L. Schultze,
Director,
Bureau of the Budget,
Washington, D. C. 20503
Dear Charlie:
This is in reply to your letter of November 30,
1966, requesting the views of the Board with respect to
a proposed Executive Order entitled "Enjoyment of Certain
Privileges, Exemptions, and Immunities by the Asian
Development Bank and Coordination of United States Policies
with Regard to the Bank".
The Board has no objection to the implementation
Of this Executive Order.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wth. McC. Martin, Jr.
;
Item No. 3
12/7/66
For immediate release.
December 8, 1966.
The Federal Reserve System made known today in its
Weekly Statement of Condition of the Federal Reserve Banks that
the System's first repurchase agreements involving U. S. Government
Agency obligations were made, under authorization by the System
Open Market Committee, during the week ended December 7.
At the end of that period, the Condition Statement
Showed, the Federal Reserve held $21 million in these issues under
repurchase agreements similar in terms and conditions to its repurchase agreements involving direct obligations of the United States.
The repurchase agreements were entered into
Pursuant to a recent Act of Congress enlarging the authority of the
Federal Reserve to engage in transactions in obligations of the various
U. S. Government agencies in addition
to the direct obligations of the
United States.
In view of the importance of the market for Agency
issues, repurchase agreements involving these securities increase
the scope of the market in which System operatio
ns may be conducted,
thus adding to the means available to the System
for supplying and
a bsorbing reserves.
-0-
@FedFRASER