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FR 609 Rev, 10/59 Minutes for To: February 3, 1960. 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, 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. Chin. Martin Gov. Szymczak „ WI" Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King A1VV) iii Minutes of the Board of Governors of the Federal Reserve System on Wednesday, February 3, 1960. The Board met in the Special Library at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary, Molony, Assistant to the Board Solomon, Director, Division of Examinations Johnson, Director, Division of Personnel Administration Hexter, Assistant General Counsel O'Connell, Assistant General Counsel Daniels, Assistant Director, Division of Bank Operations Hostrup, Assistant Director, Division of Examinations Landry, Assistant to the Secretary Items circulated to the Board. The following items, which had been circulated to the Board and copies of which are attached to these nlinutes under the respective item numbers indicated, were approved unanimously: Item No. Letter to the Federal Reserve Bank of New York approving the payment of salary to thirteen °fficers at the rates fixed by the Board of D irectors. 1 Letter to the Federal Reserve Bank of New York aPproving the payment of salary to Madeline H. *Whinney as Manager at the rate fixed by the Board of Directors. 2 41 2/3/60 -2Item No. 3 Memorandum dated January 26, 1960, from Mr. Solomon recommending approval by the Board of an Examiners' Conference, including a dinner for Reserve Bank representatives and designated Board personnel, on March 28 and 29, 1960. Amendment to Loss Sharing Agreement (Items 4 and 5). There had been received from Mr. Fulton, Chairman of the Committee on Miscellaneous Operations of the Conference of Presidents of the Federal Reserve Banks, a letter dated January 19, 1960, recommending approval Of an amendment to the Loss Sharing Agreement of the Federal Reserve Banks that would (1) eliminate the reserve for registered mail losses and (2) remove the $15 million limitation on any shipment by registered mail, during 1960, from the U. S. Bullion Depository, Fort Knox, Kentucky, to one or more of the Federal Reserve Bank offices, of any Or all of the $300 million in Federal Reserve notes stored in said depository on December 31, 1959. Copies of a proposed revised agreement had been prepared and submitted to the Board and, in accordance with the procedures provided for in Section 17 of the Loss Sharing Agreement, a memorandum from Mr. Daniels dated January 27, 1960, recommended that the Board approve the agreement, after Which it would be sent to all Federal Reserve Banks for approval and, upon receipt of advice by the Board that all Federal Reserve Banks had acted to approve the revised agreement, the Board voUld notify the Reserve Banks of that fact and the revised agreement vould become effective. 4 -G -3- 2/3/60 The members of the Board indicated their approval of the proposed revised agreement, it being noted that the first revision would permit the closing of the reserve for registered mail losses discussed at the meetings of the Board on December 18 and 21, 1959, and the second, the from application of the Loss Sharing Agreement to shipment of currency Fort Knox, as discussed at the meeting on December 23, 1959. Mr. Daniels then noted that the elimination of the reserve for registered mail losses, something over $11 million, would be reflected in the interest payment to the Treasury for the month in which the account was closed, and he inquired as to when the Board desired that this action be taken. Chairman Martin suggested that as soon as the amendment to the Loss Sharing Agreement was effective, it would be appropriate to close out the reserve for registered mail losses, and there was agreement with this suggestion,with the understanding that letters would be sent to Chairman Fulton and to all Reserve Banks advising them of the Board's approval of the revised Loss Sharing Agreement. are attached as Items Copies of these letters 4 and 5. Mr. Fauver, Assistant to the Board, then entered the meeting end Mr. Daniels withdrew at this point. Registration requirements for corporations no longer bank holding companies (Items 6 and 7). There had been distributed a Memorandum dated February 1, 1960, from Mr. O'Connell regarding the -4- 2/3/60 registration requirement under the Bank Holding Company Act of 1956 for Barretville Bank & Trust Co., Barretville, Tennessee, and Allen Discount Corporation of Boulder, Colorado, corporations no longer bank holding companies. Noting that the circumstances with respect to each Of these corporations had been described in the memorandum distributed to the Board, Mr. OtConnell said that the question presented was whether two unrelated corporations that at one time had been bank holding companies but had since ceased to be such should be required to file registration statements with the Board pursuant to the Bank Holding Company Act. He recalled that in September 1956, the Board had taken the position that any organization that was a bank holding company on MaY 9, 1956, the date the Act became law, must register even though it subsequently reduced its percentage of stock ownership so as to fall without the statutory definition of a bank holding company; but that on two more recent occasions the Board had taken the position that where it appeared that an organization previously determined to be a bank holding company had taken action whereby it no longer was a bank holding company within the meaning of section 2(a) of the Act, no action would be taken to require such organization to file a registration statement pursuant to section 5(a) of the Act. This was the position taken, he said, with respect to Republic National Bank, Dallas, Texas, and Bankerts Life and Casualty Company, Chicago, Illinois. The facts Presented as to both Barretville Bank and Allen Discount Corporation 2/3/60 -5-- reflected the absence of any willful violation of the Act and there had been prompt action by both corporations fully to comply with the Act. The facts also reflected the lack of any special circumstances that would appear to necessitate the Board's taking a position contrary to that taken in the Republic Bank and the Banker's Life matters, and the fact that Barretville Bank & Trust Co. and Allen Discount Corporation had not otherwise submitted information paralleling that to be found in a registration statement would not alone seem to justify a requirement of registration. It vas Mr. O'Connell's recommendation, therefore, that no action be taken to require either corporation to file a registration statement and that no further action be taken in the matter other than to transmit an expression of the Board's position to the appropriate parties. Governor Szymczak observed that the letter to the Barretville Bank & Trust Co. did not include a positive statement to the effect that no action would be taken to require the filing of a registration Act, statement on behalf of the corporation under section 5(a) of the whereas the letter to the Kansas City Reserve Bank regarding Allen Discount Corporation included such a statement. He suggested that it %maid be desirable to give the Barretville Bank a similar indication, Unless there was good reason for not doing so. Messrs. Hexter and O'Connell indicated that no harm would be caused by furnishing such information to Barretville Bank & Trust Co. 414 2/3/60 -6- Thereupon, unanimous approval was given to the letters to Barretville Bank & Trust Co. and the Federal Reserve Bank of Kansas City in the forms attached as Items 6 and 7, with the understanding that in trans- mitting the letter to Barretville Bank & Trust Co. through the Federal Reserve Bank of St. Louis, an appropriate sentence would be included indicating that the Barretville Bank need not file a registration statement. The meeting then adjourned. Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board the following actions affecting the Board's staff: Ointment Elsie E. Anderson as Charwoman, Division of Administrative Services, at the rate of $1.57 per hour when actually employed. e'- alrY increase ! Richard M. Westebbe, Economist, Division of International Finance, from $9,050 to $9,890 per annum, effective February 7, 1960. Governor Shepardson also approved today on behalf of the Board the recommendation contained in a memorandum from the Division of Examinations dated February 3, 1960, that the Office of the Controller be authorized to make available for training purposes during each session of the School for Assistant Examiners SU= not to exceed $10,000, with the understanding that while the currency is in use it will be under the responsibility of a person or persons specifically designated in writing by the Board's representative on the Inter-Agency School Committee and reported to the Office of the Controller 2/3/6o and with the further understanding that, when not in use and in any event at the end of the day, it vill be returned to the Office of the Controller. Secretary ( BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 1 2/3/60 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCC TO THE BOARD February 3, 1960 CONFIDENTIAL (FR) Mr. Alfred Hayes, President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Hayes: salaries to The Board of Governors approves the payment of of New York Bank the following named officers of the Federal Reserve for the period January 7 through December 31, 1960, at the rates Directors as indicated, which are the rates fixed by your Board of reported in your letter of January 15, 1960: Name Tilford C. Gaines Fred W. Piderit, Jr. John P. Jensen Frank W. Schiff Robert W. Stone Martin Mr. Bergin Fred H. Klopstock Aloysius J. Stanton Robert C. Thoman Thomas M. Timlen, Jr. Robert Young, Jr. Karl L. Ege Annual Salary Title Assistant Vice President Assistant Vice President Manager Senior Economist Manager and Assistant Secretary Manager Manager Manager Manager Assistant Counsel Assistant Counsel Assistant General Auditor $17,000 17,500 16,500 15,000 14,500 12,500 15,000 13,250 11,500 11,500 11,500 13,000 H. The Board also approves the payment of salary to Carl at 1960, 30, Madden as Manager for the period January 7 through June the rate of $14,250 per annum. Palmer, The Board notes the changes in assignments of Messrs. Post, Pricher, and Rushmore. Very truly yours, (Signed) Merritt Sherman Merritt Shernan, Secretary. 0, „** 14 BOARD OF GOVERNORS OF THE Item No. 2 2/3/60 FEDERAL RESERVE SYSTEM ‘t\ WASHINGTON 25, O. C. ADDRESS OFFICIAL CORRIC•F'ONOILNCIC TO THE BOARD <4,, "t7,,At tAttF,,t.° February 3, 1960 CONFIDENTIAL (FR) Mr. Alfred Hayes, President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Hayes: The Board of Governors approves the payment of salary to the following officer of the Federal Reserve Bank of New York for the period 'January 21 through December 31, 1960, at the rate as indicated, which is the rate fixed by your Board of Directors 1960: 22, January reported in your letter of Name Madeline H. Mahinney Title Annual Salary Manager $14,000 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS or THE Item No. 3 2/3/60 FEDERAL RESERVE SYSTEM kace Corresponcle ce To Board of Governors Date Stibject: January 26, 1960 Examiners' Conference Protti_ric Solomon 1' Each year the Board has approved the holding of a conference of representatives of Bank Examination Departments for the purpose of discussing important supervisory, examination and legal questions. The Persons attending the meetings are the Vice Presidents, Assistant Vice Presidents, Chief Examiners, occasionally other representatives of the Federal Reserve Banks, and various members of the Board's staff. The most favorable dates for holding a conference this year appear to be March 28 and 29. It is proposed that a conference be held on those dates in the Board's building. Copies of an agenda would be available at a later time. The Board has customarily approved a dinner for the Reserve Bank representatives and a list of designated Board personnel. In this connection, the Board took action on November 10, 1949, to provide such a dinner at a cost not to exceed $10 per person. If the Board approves, the dinner will be held at The Shoreham Hotel since most of the representatives of the Reserve Banks stay there, and transportation problems vill be eliminated. Usually about 60 persons attend the dinner. The Board has required in the past that a list of those invited to attend the dinner be submitted for advance approval. This information will be Presented to the Board at a later date. It is recommended that the Board approve the conference to be held on the dates mentioned above and the proposed dinner. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item NO. 4 2/3/60 ADDRESS OFFICIAL, CORRESPONDENCE TO THE BOARD February 31 1960 Mrs W. D. Fulton, Chairman, Committee on Miscellaneous Operations, Federal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Milton: This refers to your letter of January 19, 1960, concerning the proposed amendment of the Loss-Sharing Agreement of the Federal Reserve Banks to (1) eliminate the reserve for registered mail losses and (2) remove the $15 million limitation on any shipment by registered mail, during the year 1960, from the United States Bullion Depository, Fort Krum, Kentucky, to one or more of the Federal Reserve Sank offices, of any or all of the $300 million in Federal Reserve notes stored in said depository on December 31, 1959. The Board has approved the proposed revisions of the LossSharing Agreement as outlined in your letter and as set forth in the revised Agreement, copies of which have been sent to the Board by Hodge, Chairman of the Insurance Committee. Two copies of the revised Agreement are being sent to each the Federal Reserve Banks for execution. Each Reserve Bank will then forward a duly executed counterpart original of the revised to the Board. When executed counterparts have been received from all the Banks, the Board will notify-each Bank by wire and, as Provided in Section 17 of the Agreement, the revised Agreement will eCQine effective as of the date of such notice. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 425 BOARD OF GOVERNORS OF THE Item No. 5 FEDERAL RESERVE SYSTEM 2/3/60 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 3, 1960. Lear Sir: Enclosed are two copies of the Loss-Sharing Agreement as revised to (1) eliminate the reserve for registered mail losses and (2) remove the :)1.5 million limitation on any shipment by registered mail, during the year 1960, from the United States Bullion Depository, Fort Knox, Kentucky, to one or more of the Federal Reserve Bank offices, of any or all of the $300 million in Federal Reserve notes stored in said depository on December 31, 1959. The Board of Governors has approved the Agreement as re:vised. After the enclosed copies of the revised Agreement have ee executed by your Bank, one of the duly executed counterpart (Tiginals should be forwarded to the Board. When executed counterParts have been received from all Federal Reserve Banks, the Board will notify your Bank by wire and, as provided in Section 17, the revised Agreement will become effective as of the date of such notice. Very truly yours, Merritt Sherman, Secretary. Enclosures 2 TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS 426 BOARD OF GOVERNORS 4a . te Sok*40 OF THE FEDERAL RESERVE SYSTEM * a 2/3/60 WASHINGTON 25. D. C. 4 4 \7% **:t1441P121vtio4** Item No. 6 .`` ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 3, 1960 Mr. Paul Barret, President, Barretville Bank & Trust Co., • Barretville, Tennessee. Dear Mr. Barret: This refers to the question of the status of the Barretville Bank & Trust Co. as a bank holding company under section 2(a) of the Bank Holding Company Act of 1956, in relation to/ which status you advised the Board by letter of March 9, 1959. 1/ Your letter states that as of March 1959, the Barretville B & Trust Co. held in excess of 50 per cent of the capital stock vf the Somerville Bank and Trust Company, Somerville, Tennessee, and 22.5 per cent of the capital stock of the First State Bank, Henderson, Tennessee, and that the Somerville Bank and Trust Company owned 11.25 per cent of the stock of the First State Bank, making a total 33.75 per cent of the total capital stock of the First State Bank 2.eld by Barretville Bank & Trust Co. and its affiliate, the Somerville and Trust Company. You state further that on the basis of the .101:egoing facts, the Federal Reserve Bank of St. Louis expressed the °Pinion that Barretville Bank & Trust Co. was in fact a bank holding °111pany as defined in the Bank Holding Company Act of 1956 and in the board's Regulation Y. Subsequent to the receipt of this opinion, it aPpears that the Somerville Bank and Trust Company disposed of its iltock of the First State Bank so that as of March 14, 1959, Barretville & Trust Co. owned but 22.5 per cent of the stock of First State and continued to own in excess of 50 per cent of the stock of Llumerville Bank and Trust Company. From your statement of facts, assuming no change therein as the present time, it would appear that the circumstances no longer exist that led to the conclusion expressed by the Federal Reserve Bank n St. Louis that your bank was a bank holding company. On the basis ur the information furnished the Board and, assuming that your bank Of 1/ This date should be March 14, 1959. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. Paul Barret does not in any other respect holding company as defined in Of the opinion that your bank company within the meaning of fall within the definition of a bank section 2(a) of the Act, the Board is has ceased to be a bank holding the Bank Holding Company Act of 1956. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item. No. 7 FEDERAL RESERVE SYSTEM 2/3/60 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 3, 1960 Mr. L. F. Mills, Vice President, Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Mills: from This has reference to a letter dated May 6, 1959, e Bank Reserv l Federa the of ent Presid Mr. D. W. Woolley, then Vice enta. Kansas City, enclosing correspondence exchanged with repres Of ure disclos tives of the Allen Discount Corporation resulting in the stock that the Corporation had sufficiently reduced its holdings of under the banks so that it was no longer a bank holding company stances, circum tank Holding Company Act of 1956. Under the latter need tion Woolley inquired as to whether Allen Discount Corpora of letter s 411e a registration statement as directed in the .Board' February 9, 1959, addressed to the Federal Reserve Bank. forwarded to As reflected by the copies of correspondence as of the 1959, -11e Board and confirmed by the letter of May 6, Discount Allen time, (.lat er, date, and presumably as of the present one only of shares -,orporation holds 25 per cent or more of the , sed expres usly previo n t'ank. Under these circumstances, the opinio y compan g holdin bank a as status QV- the Board as to the Corporation's no longer appears applicable. On the basis of the information furnished the Board and, in any other assuming that the Allen Discount Corporation does not re aPect holding company presently fall within the definition of a bank opinion defined in section 2(a) of the Act, the Board is of the _hat the Corporation has ceased to be a bank holding company within , .: ore, no meaning of the Bank Holding Company Act of 1956. Theref statement ration action will be taken to require the filing of a regist Act. the on behalf of the Corporation under section 5(a) of Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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