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Upon call of the Governor a meeting of the Executive Committee of the Federal Reserve Board was held in the office of the Governor on 'Ilriday, February 20, 1931, at 3:30 p. m. PRESENT: Governor Meyer Mr. Hamlin Mr. Tames Er. McClelland, Assistant Secretary. ALSO PRESENT: Er. Wyatt, General Counsel 11r. Drinnen, Examiner in Charge. Consideration was given to alternative drafts of letters to the l'eaeral Reserve Bank of St. Louis, prepared by Messrs. Wyatt and Drinnen in " cordance with instructions given at the meeting of the T3oard on February 1441 With reference to the alleged policy of the St. Louis bank in the ' ' 'rantin 11 of accommodation to member banks, reported by Er. Drinnen at the ineetin(?) of the Board on February 11th and discussed in the report of the e'll:Lination of the Federal Reserve Bank which was recently comnleted. After some discussion, upon motion, it was voted to transmit a letter to the Chairman of the Board of Directors of the St. Louis bank reading as follows: 'Your attention is invited to the statement appearing on page 11 Of the report of the examination of the Federal Reserve Bank of St. Louis as of January 24, 1931, under the caption, 'Collateral Requirements.' "If the Federal Reserve Bank of St. Louis has adopted a general policy or oractice of (1) declining to rediscount eligible c°mmercial and agricultural paper and granting credit accommodations to its member banks on Paper of this character only in the form ?f advances for Periods not exceeding fifteen days on their Prom188°rY notes secured by such paper, (2) requiring marginal ?al-lateral on advances made by it to member banks without regard 10 the condition of each borrowing bank, the character of the 1 "er offered, the total amount borrowed by such bank or other , 81mllar facts and circumstances affecting each individual case, requiring a certain minimum nercentage of marginal llateral of all borrowing banks outside of Federal Reserve i ltles, Without applying the same recuirements to banks located Federal reserve cities, such action would anpear to be out of arm°nY with the spirit and purpose of the Federal Reserve Act, r .2/20/31 -2- "if not contrary to the provisions of the Act itself. It is also believed that the adoption of any such policy or practice might add to any feeling of uneasiness existing in your District and tend to prevent member banks from availing themselves of the facilities of the Federal Reserve Bank of St. Louis to the extent which might be justified by conditions in the territory. "'You are requested to address a letter to the Federal Reserve Board clearly describing the policy and practice of the Federal Reserve Bank of St. Louis with respect to the method of granting credit accommodations to member banks on eligible commercial and agricultural paper, the requiring of marginal collateral, and the percentages of marginal collateral required of Federal reserve city banks and of banks outside of Federal reserve cities, both under the revised policy adopted by your Executive Committee during the recent examination of your bank and during the three months preceding the adoption of such revised policy. Please advise the Board whether any general Policy or practice adopted by your bank on this subject was authorized or approved by your Board of Directors and also Whether you have received any unfavorable reaction from your member banks. "By Order of the Federal Reserve Board." The Governor then presented for consideration by the Committee a letter dated February 19th from the Assistant Federal Reserve Agent at New l'(111:1 recommending approval of an application of the American Union Bank, " 11 York, Ilew York, for permission to reduce the capital stock of the brink 1111 62,000,000 to 1.,000,000, transferring this amount to undivided profits the purpose of setting up such reserves as may be advisable at the time °t the it next examination, and charging off such losses as may be shown. After discussion, the Assistant Secretary was instructed to advise the Assistant Federal Reserve Agent that the Board does not feel that it has information regarding the condition of the member bank at the Present time on which to base consideration of the Proposed reduction in capital and, therefore, action on the application will be deferred until a more recent report of the bank can be submitted. He was also instructed to request that when the matter is resubmitted to the Board following the next examination it be accompanied by a -1 64 2h0/31 -3recommendation of the Executive Committee of the Federal Reserve Bank of New York. The meeting adjourned at 3:50 p. Assistant Secretary.
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