The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes of actions taken by the Board of Governors of the Federal Reserve System on Monday, February PRESENT: Mr. Mr. Mr. Mr. Mr. 4, 1952. Martin, Chairman Szymczak Evans Vardaman Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Minutes of actions taken by the Board of Governors of the Federal Reserve Fystem on January 31, 1952, were approved unanimously. Minutes of actions taken by the Board of Governors of the Federal Re"rve E;ystem on February 1, 1952, were approved and the actions recorded therein were ratified unanimously. Memorandum dated December 29, 1951, from Mr. Kelleher, Assistant 1)1rect°r) Division of Administrative Services, recommending an increase -4 basic salary of L. N. Bertol, Captain of the Guard in that Division, 40 to 34,615 per annum, effective February 17, 1952. Approved unanimously. Letter to Mr. Hill, Vice President, Federal Reserve Bank of Philavule-) reading as follows: "Irl accordance with the request contained in your approves the appointlettermerit Ofof January 30, 1952, the Board of Stanley Omwake as an assistant examiner for the a'ueral Reserve Bank of Philadelphia. If Mr. Omwake's J, 1 illtment is not effective on February 1), 1952, as '"emPlated, please advise us of the effective date. "It is noted that arrangements will be made to nate Mr. Omwake's indebtedness to a member bank." Approved unanimously. ff,!11. 2/4/52 -2Letter to Mr. Pondrom, Vice President, Federal Reserve Bank of Nlizs, reading as follows: "Reference is made to your letter of January 24, 1952, enclosing a certified copy of a resolution adopted by the board of directors of the Muleshoe State Bank, Muleshoe, Texas, signifying its intention to withdraw from member"AP in the Federal Reserve System and requesting waiver Of the six months' notice of such withdrawal. 'Application for continuance of insurance has been 121ade to the Federal Deposit Insurance Corporation and the Board of Governors waives the requirement of six months' notice of withdrawal. Accordingly, upon surrender of the ederal Reserve Bank stock issued to the Muleshoe State rank, Muleshoe, Texas, you are authorized to cancel such stock and make appropriate refund thereon. Under the proof, the Board's letter of February 19, 1937 (F.R.L.S. 3548) the bank may accomplish the termination of its memberat any time within four months of the date of this letter If a longer period is required, the bank should request 8_11 e xtension of time. Please advise when cancellation is effected and refund is made. "The certificate of membership issued to the bank should be obtained, if possible, and forwarded to the Board. The State banking authorities should be advised of the bank's , 41-r°Pc'eed withdrawal from membership and the date such withbecomes effective. It is noted that the bank is withdrawing because its mans. , gement does not feel that the community has need for Federal Reserve Bank at this time." Approved unanimously. ,ter to Mr. Echeffer, Manager, Real Estate and Consumer Credit „extrael:t Federal Reserve Bank of New York, reading as follows: IL:Le e"Tis refers to your letter of January 18, 1952, and nc-Lesures, concerning a question under Regulation W esented by Mr. G. F. Nichols, Vice President of the First ti°11a1 Bank, Highland Falls, New York. The matter has /.11,!° 1)een Presented by congresswoman Et. George of New York 'se letter to Chairman Martin of January 14, like yours, 4 7 2/4/52 -3- "forwarded a copy of Mr. Nichols' letter to your Bank dated December 27, 1951, and a copy of your reply of January 10, 1952. Enclosed herewith are copies of Mrs. St. George's letter of January 14, Mr. Nichols' letter to her of January 11) and the 'Board's reply to Mrs. Et. George of this date. "From the above correspondence it appears that Mr. Nichols, bank wishes to make instalment loans to certain cadets at the United F:tates Military Academy at West Point 1 /10 are to be graduated in the spring and assigned to duty a8 Commissioned officers. Although the proceeds of such 1°ans would be applied toward present purchases of new cars bY the cadets and limited to amounts not exceeding the maxiloan value prescribed by the regulation, it is desired, ,rieflY, that the applicable maximum maturity for any such -wan and the time specified for scheduling the first instaltent Payment thereon be calculated from a date at or about -the time of the obligor's graduation. "In Mr. Nichols' letter to your Bank of December 27, 1951, it is claimed that a calculation on the basis above indicated v.ould he permJssible under the regulation because, folJowing the Purchase of an automobile by any one of the cadets •and til the cadet's graduation, the automobile would be held in ead storage at West Point under supervision of the Commanant of Cadets or an officer designated by him. It appears 11.:urther that if the automobile, for any reason, should be ceincved from storage at an earlier date for the.use of the naclet, the Commandant would notify the lending bank and the ur1tY and instalment payment schedule for the loan would be v accelerated accordingly. It also appears that there a°uld not be outstanding in connection with the purchase of such automobile any other credit of any kind. ty, "Certain details, particularly of the storage arrangeInt with the Commandant, however, are not altogether clear. the last paragraph of his letter of December 27, Mr. c12.018 indicated that storage at the Academy would not occur 11, after actual physical delivery of the automobile to the Cad. et by the dealer who sold the automobile. On the other his subsequent letter to Congresswoman St. George inated that the automobiles sold to the cadets would be stelivered by the dealers direct to 1,iest Point' for immediate toc)rage under the control of the Commandant, without reference allY intervening delivery to the cadets. instalment credit to purcha "As you know, in the case of an ce a listed article, such as an automobile, the extension n 192 2/4/52 it -4- of credit for the purposes of the regulation shall be regarded as occurring as of the date of delivery of the article to the purchaser or instalment obligor. As you know also, this rule permits transactions known generally as 'lay away plans'. Such plans were permitted also under the regulation previously in effect prior to its reinstitution in September 1950, pursuant to the authority granted in the Defense Production Act of that year. In any case, including arrangements such as those proposed by Mr. Nichols, a principal question always is whether there has been delivery of the listed article to the purchaser prior to the time used for calculating the maximum maturity and the inception of the instalment payment schedule. "On the basis of Mr. Nichols' letter to Congresswoman St. George, referred to above, it is apparently contemplated now that the automobile dealers involved will make delivery direct to the Commandant at nearby West Point and that storage will occur without any intervening delivery to the cadets. &Burning this to be true and that the Commandant, in holding the automobiles in storage, will be the agent of the instalent obligee, the arrangements in question would not appear to he contrary to the regulation. "A definite answer concerning the application of the regulation, of course, cannot be given where, as in this case, . .he precise facts are not clear. The foregoing view, therer?re, should be regarded as applicable only if the proposed ricing and storage are arranged and carried out to conform with our understanding of the facts as set forth herein." T Approved unanimously, together with the following letter to the Honorable Katharine St. George, House of Representatives, Washington, D. C.: "This is in further reference to your letter to Chairan Martin of January 14, 1952, and its enclosures, concern:',11g the question under Regulation k presented by Mr. G. E. Vice President of the First National Bank, High:a, Palls, New York. As indicated in our letter to you January 24, 1952, Mr. Nichols' question was also received, for consideration by the Board from the Federal Reserve Bank of New York. T f_Jg %firtit 2/4/52 -5- "Enclosed herewith is a copy of the Board's letter of this date to the New York Reserve Bank in reply to the question raised by Mr. Nichols. You will note from the Board's reply that the automobile financing arrangements of the kind in question would appear to be permissible under the regulation/ although a definite answer cannot be given because of certain lack of clarity as to how the arrangements will be carried out as a practical matter. "If we can be of further assistance to you in this matter or in connection with any other matter under the regulation which may come to your attention, please call upon us. , 11e Board always welcomes the opportunity to be of all possible assistance in connection with the regulation and its adm inistration. "The correspondence submitted with your letter is reriled herewith as you requested." Letter to Mr. Millard, Vice President, Federal Reserve Bank of San reading as follows: "This refers to Mr. Earhart's telegram of January 31, 19 4,_52, and telephone discussions between you and members of Board's staff concerning the application of Landrum & e-lls Realty Company for an amendment to the certificate of 4"tion your Bank issued the company under authority of -ei°n 5(6) of Regulation Y on March 31, 1951. ' comn "We agree that there is no authority for approving the e -anY's application for an amendment to its certificate of t10 n. However, after discussions on February 1, 1952 Tlip cweerl the Company's counsel, Mr. Charles L. Etrouss, and °Ders of the Board's staff, we understand that the Company 12 ' 178 been able to arrange the necessary secondary financing , a Registrant named in the certificate of exemption, namely, First National B,Ink of Arizona, Phoenix. We understand at Mr. ;:trouss plans to request your approval of a proPosed a secondary financing plan and he has furnished us with leuraft of a letter he plans to send you for that purpose. st are enclosing a copy of the draft furnished us by Mr. thr°uss and, in view of all the circumstances, we believe 111€t You properly may approve the proposed plan as outlined the draft of his letter insofar as Regulati: 00010 concerned." 13: j Approved unanimously. 41101PIAI VT Lecretary.
@FedFRASER