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228 A meeting of the Board of Governors of the Federal Reserve SlAtera was held in 'Washington on Saturday, February 10, 1945, at 10:30 a.ra. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Thurston, Assistant to the Chairman The action stated with respect to each of the matters herein— EtIt.,er r eferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the J:kt Reserve System held on February 9, 1945, were approved unani44184. M emorandum dated February 10, 1945/ from Mr. Bethea, Director the D ivision of Administrative Services, recommending that Mrs. Mabel IleCoY be reappointed as a charwoman in that Division on a temporary 13418 for an indefinite period, with basic salary at the rate of 81,200 Peralltamly effective as of the date upon which she enters upon the per— 41111allee of her duties. The memorandum stated that Mrs. McCoy was a Meraber of the Civil Service Retirement System and, therefore, would not beeote a member of the Board's retirement system. Approved unanimously. Letter to Mr. Rice, Vice President of the Federal Reserve Bank 229 2/10/45 -2of New York, reading as follows: "In view of the circumstances described in your letter of February 6, 1945, the Board of Governors approves or a further period of six months beginning March 1, 1945, he continuation of Mr. Howard D. Crosse in an 'unassigned' Position in conjunction with the executive development proar of your Bank." Approved unanimously. Letter to Mr. Arthur C. Lueder, Auditor of Public Accounts, Ing Department, State of Illinois, Chicago, Illinois, reading as to, ow "This refers to your letter of January 3, 1945, with ;t;esPect to certain conditions prescribed by the Board of 'iTvernors of the Federal Reserve System and accepted by ,rle South Chicago Savings Bank prior to the exercise of 6rust powers. "The first paragraph of section 9 of the Federal Reerve bank Act authorizes the Board to permit applying State . s to become members of the Federal Reserve System 'suba Js ect to the provisio ns of this Act and to such conditions may prescribe pursuant thereto'. Among the condi' be rls accepted by the South Chicago Savings Bank when it e a member of the Federal Reserve System, was one Which eh provided that, 'except with the permission of the Board of Governors of the Federal Reserve System, such tl7suK shall not cause or permit any change to be made in general character of its business or in the scope of the eie corporate powers exercised by it at the time of admis: 11 tc membership.' As the exercise of trust powers b,°1:111ts to a change in the general character of the bank's theit was therefore necessary for the bank to get threerd's permission before exercising such powers. The the catrust power conditions prescribed by the Board in aee of the South Chicago Savings Bank are standard conj the ltions, prescribed in all cases regardless of whether aws of a particular State may or may not cover the Ject dealt with by the conditions. Acceptance of the 230 2110/45 -3- "trust conditions prior to admission to membership is re1, 1ired if the applying bank is exercising trust powers at e time of its application; and, as in the case of the "South Chicago Savings Bank, is required later if a member rnk which was not doing a trust business at the time of it3 admission to membership wishes to expand the scope (4 its corporate powers to that extent after becoming a illeillber of the Federal Reserve System. , "Acceptance of the trust power conditions, however, '°es not result in a State bank being governed by the pro— of the National Bank Act. The conditions merely f'quire that the State bank exercise trust powers in con— With regulations which the Board has prescribed .1-(31" national banks as being necessary for the proper ad— Min istration of trusts. t "In connection with the condition relating to coMmon arllst funds, your attention is called to the fact that un— er section 169 of the Internal Revenue Code, such funds are not entitled to tax exemption unless maintained in con— With the rules and regulations of the Board of Gov— ors pertaining to the collective investment of trust undsbY i national banks. th .,'For your information, there is enclosed a copy of 4Doard's Regulation H, which, on pages 6 and 7, contains !three standard trust power conditions of membership, iz. r page 15, contains the provision of section 9 author— niemb Ing the Board of Governors to prescribe conditions of , Re ershiP• There is also enclosed a copy of the Board's of51:4-Lation F, which, on pages 28-30, contains section 169 the Internal Revenue Code." 2 4 Approved unanimously. Thereupon the meeting adjourned. Chairman.
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