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Minutes for Februt- rv 18 1057 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 Chin. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Minutes of actions taken by the Board of Governors of the Federal Reserve System on Monday, February 18, 1957. The Board met la the Special Library at 3:00 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Vardaman Mills Robertson Shepardson Mr. Carpenter, Secretary Chairman Martin stated that when he was in Des Moines, Iowa, last Week Mr. Jesness, Deputy Chairman of the Federal Reserve Bank of Minneapolis, talked to him about the contemplated termination of Mr. Ib/lent s services as President of the Bank. Mr. Jesness commented, abaL'"--mun Martin said, that Mr. Deming, who is to be Mr. Powell's succese°r, would be at the Bank this week to meet the officers and, since tlfould not be possible to keep the proposed change from being known 131113lielY much longer, the directors would like to complete the details °I' the change as soon as possible. Chairman Martin then asked to what etellt the matter had been discussed last week while he was away. Governor Balderston stated that Chairman Perrin had called to 843r that the directors would like to provide for Mr. Powell the same l'Irement benefits that he would be entitled to if he were 65 years of 46e' at the time of retirement. He also said there was an informal dis- N88. 1°n of this proposal by the members of the Board and it was agreed that there should be no departure from the Rules and Regulations of the t' )F 2/18/57 -2- Retirement System of the Federal Reserve Banks. Mr. Perrin called Governor Balderston again last Friday morning and said that his board Of directors would like an opportunity to raise again the matter of retirement benefits, particularly in view of the fact that a liberalizati°11 of the benefits of the Retirement System was under consideration _ 11-11-ch) if adopted, would increase Mr. Powell's retirement benefits S ubstantially- Governor Balderston added that he had asked the Board's taff to check the possible increase in benefits and that in Mt. Powell's ease they would amount to approximately (13,500, but that Mr. Powell's el'aration undoubtedly would take place before the revision of the Rules Regulations could be approved and put into effect, if they were approved. Chairman Martin concurred in the decision of the Board not to cieDart from the Rules and Regulations of the Retirement System. However, he sa., ILL, Mr. Jesness had suggested that in view of Mr. Powell's long &erv -Lee) including his service as a member of the Board of Governors, the Reserve Bank should do everything it could to be liberal, particu4-J la view of the short notice that would be given to Mr. Powell if hi8 s ervices as President were terminated as of March 31 and if the 4-a-Lized retirement plan were made effective a short time thereafter. It 140,0 d be totally unreasonable for the sake of a few months to have Mr, p excluded from the increased retirement benefits, particularly he knows about the proposed changes and would feel badly if he 14 1.e. 4 Ot given the benefit of the higher allowances. Mr. Jesness emkat.. A eu, Chairman Martin said, that the directors were anxious to do 37S 2/18/57 -3- everything they could to handle the matter in an appropriate way. Chairman Martin agreed with this approach. During the ensuing discussion of the present status of the proPosed revision of the Retirement System and what could be done under the existing Rules and Regulations, the point was made that the Board 441 not had an opportunity to consider the revision and might not be /rilling to approve it. There was also a discussion of the payments that might be authorized for Mr. Powell under the Board's letter of 7, 1956, with respect to payments to or on behalf of an employee 4Pon involuntary separation from service. At the conclusion of the discussion there was unanimous agreement that Mr. Powell should be given the maximum benefits under existing authorizations, including if possible an arrangement which would continue his eligibility to receive the increased benefits which would be provided by the revision of the Retirement System of the Federal Reserve Banks if the revision should become effective within a reasonable time. Secretary's Note: Pursuant to this action, after conferring with the staff, Governor Balderston informed Mr. Perrin by telephone on Tuesday, February 19, as follows: The Board has given further consideration to the matter that you and I discussed last week. As I informed you, the l'oard is not willing to approve any action not authorized by the Rules and Regulations of the Retirement System and by the Board's letter of June 7, 1956, with respect to separa!Ion allowances. However, the Board desires, as you do, hat Mr. Powell be entitled to any increased retirement benefits that might result from the contemplated revision of the Retirement System. Accordingly, the Board would be 379 2/18/57 -4- willing to approve an arrangement, authorized by your directors, under which Mr. Powell would be retained on the payroll of your Bank as Adviser at the monthly rate of ea,250 for a period of not to exceed six months from the date of the termination of his service as President. The Board has not yet considered the proposed revision of the Retirement System of the Federal Reserve Banks. Therefore, it is not known whether or not the retirement benefits will be liberalized. However, in the event the increased benefits are approved within the six-month period already referred to, we are informed that this arrangement would preserve Mr. Powell's eligibility to receive such exPanded benefits. Because of the effect upon his insurance benefits in the event of death within the six-month interval, Mr. Powell might prefer to elect leave without pay and to forego the $7,500 pay as Adviser. Chairman Martin stated that Mr. Johns, President of the Federal Reserve Bank of St. Louis, had talked to him today and had recommended that mr. Guy S. Freutel, now serving as Assistant Vice President of the Louis Bank, be made First Vice President to succeed Mr. Deming, who 110111c1 be leaving to accept appointment as President of the Federal Reasl 7e Bank of ' Minneapolis. Mr. Johns had taken the matter up with his Iklaria in executive session and there was unanimous agreement with the l'ilnendation that Mr. Freutel be appointed as First Vice President ''it11(tsalarY at the rate of $20,000 per annum. Chairman Martin was authorized to advise President Johns informally that if formal action were taken by the board of directors of the Federal Reserve Bank of St. Louis, the Board of Governors would approve the appointment of Mr. Freutel as First Vice President at the salary proposed. 2/18/57 -5After an informal discussion of a question raised by Governor Yaraezari in connection with the program for the meeting with new Federal Res erve Bank directors on Wednesday, February 20, Governor Robertson suggested that the Board fix Wednesday, February 27, as the day upon which it would review the emergency planning memorandum prepared by the staff which was discussed previously at the meeting on February 6, 1957. This suggestion was approved unanimously. The meeting then adjourned. Secretary's Note: On February 15 and 18, 1957, Governor Shepardson approved on behalf of the Board the following items: Memoranda from appropriate individuals concerned recommending actio„ "s with respect to the Board's staff as follows: k12 -9-1-1821.1I 81.011 Arthur J. Ruhle as Assistant Federal Reserve Examiner in the Diviofre °f Examinations, with basic annual salary at the rate of 4;6,390, etive the date he assumes his duties. Saaa , 12pases 41e and title Morla E. Dingle) Ze onoznist "°1')ert R. Moss) conornist ;•e.t11Q1-ine B. effective Febriary 24, 1957 Davian, Sec retary '41earlor Staples, Statistical Clerk Division Research and Statistics Basic annual salary From To 0,2059,420 Research and Statistics 7,035 7,250 International Finance 3,940 4,075 4,075 4,210 Bank Operations 4/1041, 0, 2/18/57 -6February 24 and title W. J. McClelland, Supervisory Review Examiner Charles A. Noell, Guard Aces t 957 (Continued) Division Examinations Administrative Services Basic annual salary From To $10,750 $10,965 3,215 3,300 of resignation Mabel W. Jones, Statistical Clerk, Divisionof Bank Operations, effective February 11, 1957• the Office of the Controller re Memorandum dated February 14/ 1957, from Boc ommending that the practice be continued of disbursing salaries for the 0 , arcits employees on the first preceding business day when pay day falls holiday, thus resulting in 27 pay days in 1957, and that a memorandum 7 a eFent to the members of the Board's staff in order that those filing a l.ration of income for 1957 under the income tax laws might have this .414 nand.
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